<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
[IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS FORM 8-K IS BEING FILED
IN PAPER PURSUANT TO A CONTINUING HARDSHIP EXEMPTION.]
Date of Report: October 1, 1998
- ----------------------------------
(Date of earliest event reported)
Morgan Stanley Capital I Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 033-45467-02 13-3291626
- -------------------- ---------------------------------- --------------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
1585 Broadway, New York, N.Y. 10036
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 761-4000
<PAGE>
ITEM 5. OTHER EVENTS.
Attached as exhibits to this Current Report are (i) the
consents of Cushman & Wakefield, Inc. ("Cushman & Wakefield") furnished to the
Registrant by Cushman & Wakefield in respect of the Registrant's proposed
offering of the Commercial Mortgage Pass-Through Certificates, Series 1998-XL2
(the "Certificates"); (ii) the consent of O.Marshall Dodds Co., Inc.
("Marshall") furnished to the Registrant by Aaron & Wright in respect of the
Registrant's proposed offering of the Certificates; and (xiv) certain property
appraisals (the "Property Appraisals") furnished to the Registrant by Cushman &
Wakefield and Marshall (the "Appraisers") in respect of the Registrant's
proposed offering of the Certificates.
The Certificates will be offered pursuant to a Prospectus and
related Prospectus Supplement (together, the "Prospectus"), which will be filed
with the Commission pursuant to Rule 424 under the Securities Act of 1933, as
amended (the "Act"). The offer and sale contemplated by the Prospectus of the
Certificates will be registered pursuant to the Act under the Registrant's
Registration Statement on Form S-3 (No. 033-45467) (the "Registration
Statement"). The Registrant hereby incorporates the Appraisers' consents and
the Property Appraisals by reference in the Prospectus and the Registration
Statement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
<TABLE>
<CAPTION>
- ---------------------------------- ----------------------------------------------------------------------------
Item 601(a) of Regulation
S-K Exhibit No. Description
- ---------------------------------- ----------------------------------------------------------------------------
<S> <C>
23.1 Consents of Cushman & Wakefield, Inc. for 36 various retail properties
23.2 Consents of O.Marshall Dodds Co., Inc. for 5 various retail properties
dated September 22, 1998
99.1 Appraisal for Grapevine Mills
99.2 Appraisal for Edens & Avant - Fairlawn Town Centre
99.3 Appraisal for Edens & Avant - Bishops Corner
99.4 Appraisal for Edens & Avant - South Bay Center
99.5 Appraisal for Edens & Avant - Brookside/Brookway
99.6 Appraisal for Edens & Avant - Winchester Court Shopping Center
- ---------------------------------- ----------------------------------------------------------------------------
-2-
<PAGE>
<CAPTION>
- ---------------------------------- ----------------------------------------------------------------------------
Item 601(a) of Regulation
S-K Exhibit No. Description
- ---------------------------------- ----------------------------------------------------------------------------
99.7 Appraisal for Edens & Avant - Westown Square Shopping Center
99.8 Appraisal for Edens & Avant - Middlesex Mall
99.9 Appraisal for Edens & Avant - Burlington Crossroads
99.10 Appraisal for Edens & Avant - Shrewsbury Crossing
99.11 Appraisal for Edens & Avant - Buckeye Plaza
99.12 Appraisal for Edens & Avant - Acton Plaza
99.13 Appraisal for Edens & Avant - Eastchester Plaza
99.14 Appraisal for Edens & Avant - Elkhart Shopping Center
99.15 Appraisal for Edens & Avant - Columbia Detroit Shopping Center
99.16 Appraisal for Edens & Avant - Center at Patchogue
99.17 Appraisal for the Mall of New Hampshire
99.18 Appraisal for Westside Pavilion
99.19 Appraisal for Northtown Mall Shopping Center
99.20 Appraisal for Edens & Avant - Promenade at Manassas
99.21 Appraisal for Edens & Avant -Marietta Trade Center
99.22 Appraisal for Edens & Avant - Fulton Crossing Shopping Center
99.23 Appraisal for Edens & Avant - Cypress Point Shopping Center
99.24 Appraisal for Edens & Avant - Rio Panar Shopping Center
99.25 Appraisal for Edens & Avant - Baldwin Square Shopping Center
99.26 Appraisal for Edens & Avant - Mountain Island Market Place
99.27 Appraisal for Edens & Avant - Butler Square
99.28 Appraisal for Edens & Avant - Shields Plaza Shopping Center
- ---------------------------------- ----------------------------------------------------------------------------
-3-
<PAGE>
<CAPTION>
- ---------------------------------- ----------------------------------------------------------------------------
Item 601(a) of Regulation
S-K Exhibit No. Description
- ---------------------------------- ----------------------------------------------------------------------------
99.29 Appraisal for Edens & Avant - Plantation Point Shopping Center
99.30 Appraisal for Edens & Avant - Kenilworth Commons
99.31 Appraisal for Edens & Avant - Landing Station
99.32 Appraisal for Edens & Avant - Ellis Isle Shopping Center
99.33 Appraisal for Edens & Avant - Old Canton Road Shopping Center
99.34 Appraisal for Edens & Avant - Reservoir Square Shopping Center
99.35 Appraisal for Edens & Avant - Magee Shopping Center
99.36 Appraisal for Edens & Avant - English Village Shopping Center
99.37 Appraisal for Edens & Avant - Gateway Plaza - Shops
99.38 Appraisal for Edens & Avant - Midway Plaza - Shops
99.39 Appraisal for Edens & Avant - Daniel Lake Shopping Center
99.40 Appraisal for Edens & Avant - Village Square Shopping Center
99.41 Appraisal for Crystal Park IV
- ---------------------------------- ----------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on behalf of
the Registrant by the undersigned thereunto duly authorized.
MORGAN STANLEY CAPITAL I INC.
By: /s/ James Flaum
--------------------------
Name: James Flaum
Title: Principal
Date: October 1, 1998
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
- ---------------------------------- ----------------------------------------------------------------------- ----------------
Item 601(a) of Regulation Paper (P) or
S-K Exhibit No. Description Electronic (E)
- ---------------------------------- ----------------------------------------------------------------------- ----------------
<S> <C> <C>
23.1 Consents of Cushman & Wakefield, Inc. for 36 various retail properties P
23.2 Consents of O.Marshall Dodds Co., Inc. for 5 various retail properties P
dated September 22, 1998
99.1 Appraisal for Grapevine Mills E
99.2 Appraisal for Edens & Avant - Fairlawn Town Centre P
99.3 Appraisal for Edens & Avant - Bishops Corner P
99.4 Appraisal for Edens & Avant - South Bay Center P
99.5 Appraisal for Edens & Avant - Brookside/Brookway P
99.6 Appraisal for Edens & Avant - Winchester Court Shopping Center P
99.7 Appraisal for Edens & Avant - Westown Square Shopping Center P
99.8 Appraisal for Edens & Avant - Middlesex Mall P
99.9 Appraisal for Edens & Avant - Burlington Crossroads P
99.10 Appraisal for Edens & Avant - Shrewsbury Crossing P
99.11 Appraisal for Edens & Avant - Buckeye Plaza P
99.12 Appraisal for Edens & Avant - Acton Plaza P
99.13 Appraisal for Edens & Avant - Eastchester Plaza P
- ---------------------------------- ----------------------------------------------------------------------- ---------------
<PAGE>
<CAPTION>
- ---------------------------------- ----------------------------------------------------------------------- ----------------
Item 601(a) of Regulation Paper (P) or
S-K Exhibit No. Description Electronic (E)
- ---------------------------------- ----------------------------------------------------------------------- ----------------
99.14 Appraisal for Edens & Avant - Elkhart Shopping Center P
99.15 Appraisal for Edens & Avant - Columbia Detroit Shopping Center P
99.16 Appraisal for Edens & Avant - Center at Patchogue P
99.17 Appraisal for the Mall of New Hampshire E
99.18 Appraisal for Westside Pavilion E
99.19 Appraisal for Northtown Mall Shopping Center E
99.20 Appraisal for Edens & Avant - Promenade at Manassas P
99.21 Appraisal for Edens & Avant -Marietta Trade Center P
99.22 Appraisal for Edens & Avant - Fulton Crossing Shopping Center P
99.23 Appraisal for Edens & Avant - Cypress Point Shopping Center P
99.24 Appraisal for Edens & Avant - Rio Panar Shopping Center P
99.25 Appraisal for Edens & Avant - Baldwin Square Shopping Center P
99.26 Appraisal for Edens & Avant - Mountain Island Market Place P
99.27 Appraisal for Edens & Avant - Butler Square P
99.28 Appraisal for Edens & Avant - Shields Plaza Shopping Center P
99.29 Appraisal for Edens & Avant - Plantation Point Shopping Center P
- ---------------------------------- ----------------------------------------------------------------------- ---------------
-2-
<PAGE>
<CAPTION>
- ---------------------------------- ----------------------------------------------------------------------- ----------------
Item 601(a) of Regulation Paper (P) or
S-K Exhibit No. Description Electronic (E)
- ---------------------------------- ----------------------------------------------------------------------- ----------------
99.30 Appraisal for Edens & Avant - Kenilworth Commons P
99.31 Appraisal for Edens & Avant - Landing Station P
99.32 Appraisal for Edens & Avant - Ellis Isle Shopping Center P
99.33 Appraisal for Edens & Avant - Old Canton Road Shopping Center P
99.34 Appraisal for Edens & Avant - Reservoir Square Shopping Center P
99.35 Appraisal for Edens & Avant - Magee Shopping Center P
99.36 Appraisal for Edens & Avant - English Village Shopping Center P
99.37 Appraisal for Edens & Avant - Gateway Plaza - Shops P
99.38 Appraisal for Edens & Avant - Midway Plaza - Shops P
99.39 Appraisal for Edens & Avant - Daniel Lake Shopping Center P
99.40 Appraisal for Edens & Avant - Village Square Shopping Center P
99.41 Appraisal for Crystal Park IV E
- ---------------------------------- ----------------------------------------------------------------------- ---------------
</TABLE>
-3-
<PAGE>
- -----------------------------------------------------
COMPLETE APPRAISAL OF
REAL PROPERTY
GRAPEVINE MILLS
Northwest corner of State Highway 121 and
State Highway 26
Grapevine, Tarrant County, Texas
- -----------------------------------------------------
IN A SELF-CONTAINED REPORT
As of July 17, 1998
Prepared For:
MORGAN STANLEY MORTGAGE CAPITAL, INC.
1585 Broadway
37th Floor
New York, NY 10036
Prepared By:
CUSHMAN & WAKEFIELD, INC.
Valuation Advisory Services
51 West 52nd Street
New York, New York 10019
<PAGE>
[CUSHMAN & WAKEFIELD LETTERHEAD]
July 30, 1998
Mr. James Flaum
Principal
MORGAN STANLEY MORTGAGE CAPITAL, INC.
1585 Broadway
37th Floor
New York, NY 10036
Re: Complete Appraisal of Real Property
GRAPEVINE MILLS
Northwest corner of State Highway 121 and
State Highway 26
Grapevine, Tarrant County, Texas
Dear Mr. Flaum:
In fulfillment of our agreement as outlined in the Letter of Engagement,
Cushman & Wakefield, Inc. is pleased to transmit our self-contained appraisal
report estimating the market value of the leased fee estate in the referenced
real property.
As specified in the Letter of Engagement, the value opinion reported below
is qualified by certain assumptions, limiting conditions, certifications, and
definitions, which are set forth in the report.
This is a complete appraisal report prepared in accordance with the Uniform
Standards of Professional Appraisal Practice of The Appraisal Foundation. The
results of the appraisal are being conveyed in a Self-Contained report
according to our agreement and the guidelines of your institution.
This report was prepared for Morgan Stanley Mortgage Capital, Inc. and
is intended for the specified use of said Client. The report may not be
distributed to or relied upon by other persons or entities without the express
written permission of Cushman & Wakefield, Inc.
The property was inspected by Brian K. Johnson. Brian K. Johnson and Brian
J. Booth prepared the report. Richard W. Latella, MAI, has reviewed the
appraisal report and is in concurrence with the findings contained herein, but
has not inspected the property.
<PAGE>
[Cushman & Wakefield Letterhead]
Mr. James Flaum
July 30, 1998
Page 2
Based on our complete appraisal, as defined by the Uniform Standards of
Professional Appraisal Practice of The Appraisal Foundation, we have formed an
opinion that the market value of the leased fee estate, which represents the As
Is Value Estimate, subject to the assumptions, limiting conditions,
certifications and definitions, as of July 17, 1998, was:
TWO HUNDRED THIRTY FIVE MILLION DOLLARS
$235,000,000
The preceding estimate of the subject's market value is based upon a
forecasted marketing period of 12 months, which we believe to be typical of the
market at this point in time.
This letter is invalid as an opinion of value if detached from the report,
which contains the text, exhibits, and an Addenda.
Respectfully submitted,
CUSHMAN & WAKEFIELD, INC.
Brian K. Johnson Brian J. Booth
Associate Director Retail Valuation Group
Valuation Advisory Services
Certification No. TX-1326012-G
Richard W. Latella, MAI
Senior Director
Retail Valuation Group
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
PROPERTY NAME: Grapevine Mills
PROPERTY TYPE: Entertainment and Value-Oriented Mall
LOCATION: Northwest corner of State Highway 121
and State Highway 26; also fronting the
west side of FM 2499 (Grapevine Mills
Parkway) as well as the east side of
Anderson-Gibson Road, Grapevine, Tarrant
County, Texas.
INTEREST APPRAISED Leased Fee Estate
DATE OF VALUE July 17, 1998
DATE OF INSPECTION: July 17, 1998
OWNERSHIP Grapevine Mills Limited Partnership
LAND AREA: 131.823 acres or 5,742,210 square feet
The total mall site is 201.668 acres
when including the various contiguous
outparcels associated with the property.
However, the Mills Corporation also owns
other tracts in the vicinity of the mall
which are not contiguous with the main
site. Furthermore, several of the mall
outparcels have been sold or ground
leased, however, we were not furnished
with a survey delineating the area sold
to the various pad users.
PARKING 8,724 spaces or 7.0 spaces per 1,000
square feet
ZONING: CC - Community Commercial
HIGHEST AND BEST USE:
As Vacant: Commercial, retail, office or industrial
development or a mixed use development
As Improved: As improved with a value-oriented mall
IMPROVEMENTS
Description: The subject property consists of a
1,241,769 square foot entertainment and
value-oriented, enclosed mall. As
presently configured, the property
includes 16 major or anchor tenants
(based on management's classifications),
although plans include adding up to five
more major tenants as demand requires.
The major tenants include retail outlets
and entertainment
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
facilities (a 30 screen movie theater, a
theme restaurant, and a
Gameworks/arcade) The property's
construction consists of a concrete slab
with steel framing and a painted dryvit
exterior. Construction of the property
was complete in 1997. The layout of the
facility is a large oval or racetrack
with the majority of the anchors
situated along the perimeter. As of the
date of inspection, the property was
over 95 percent occupied by more than
170 tenants.
GROSS LEASEABLE AREA: The following area data is based on a
rent roll provided by management. All of
the tenants within the mall lease their
space versus owning their own building.
----------------------------------------
COMPONENTS GLA ALLOCATION
----------------------------------------
Anchors 699,303+/-SF 56.4%
----------------------------------------
In Line Shops 511,394+/-SF 41.4%
----------------------------------------
Food Court 11,532+/-SF 0.9%
----------------------------------------
Restaurants 16,158+/-SF 1.3%
----------------------------------------
Kiosks 2,584+/-SF 0.0%
----------------------------------------
TOTAL 1,240,971+/-SF 100.0%
----------------------------------------
=============================
INCOME APPROACH ASSUMPTIONS
Discounted Cash Flow
=============================
Current Occupancy: 94.2% (Based Upon Total GLA)
Forecasted Stabilized Occupancy: 95.0% (Based Upon Total GLA with 5.0%
vacancy and collection loss, excluding
downtime between leases).
Forecasted Date of Stabilization: June 1999
Holding Period 10 Years
Growth Rate Assumptions
Sales Growth: 6.0% - 1998
5.0% - 1999
4.0% - 2000
3.5% - Thereafter
Rent Growth: 3.0% - 1998
3.5% - Thereafter
Expense Growth: 3.5%
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
Tenant Alterations
New (Turnover) Tenants: $15.00/SF
Renewal Tenants: $5.00/SF
Leasing Commissions
New Tenants: $2.50/SF
Renewal Tenants: $1.50/SF
Tenant Renewal Probability: 65.0%
Cost of Sale at Reversion: 2.0%
=============================
INVESTMENT RATE PARAMETERS
Discounted Cash Flow
=============================
Going-In Capitalization Rate: 8.50 - 9.00%
Terminal Capitalization Rate: 9.00 - 9.50%
Discount Rate: 11.00 - 11.50%
=============================
VALUE INDICATORS
"As Is Valuation"
=============================
Sales Comparison Approach: $230,000,000 to $240,000,000
Income Capitalization Approach
Discounted Cash Flow Analysis: $236,000,000
Direct Capitalization: $235,000,000
VALUE CONCLUSION: $235,000,000
Resulting Indicators
Value Per SF Owned GLA: $189.37 (Based Upon 1,240,971+/- SF)
Value Per SF Non-Anchor GLA: $433.85 (Based Upon 541,668 SF)
Net Operating Income (FY 1999): $20,400,171
Implicit Overall Cap Rate: 8.68%
Exposure Time Implicit in
Market Value Conclusion: Not to Exceed 12 Months
SPECIAL ASSUMPTIONS AFFECTING VALUATION:
The following special assumptions have been considered for the analysis at
hand and are in addition to our assumptions and limiting conditions following
the report:
1. We were not provided building plans for the subject improvements. As
a result, the gross leaseable area is based on the rent roll, as well
as other information provided by management. Any significant
deviations from the information we were provided resulting in a
different building area for the subject could impact the value
estimate contained herein.
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
2. The forecasts of income, expenses, and absorption of vacant space
included herein are not predictions of the future. Rather, they are
our best estimates of current market thinking on future income,
expenses, and demand. We make no warranty or representation that
these forecasts will materialize.
3. Please refer to the complete list of assumptions and limiting
conditions included at the end of this report.
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the Flag Folley mall entrance at Grapevine Mills
[PICTURE]
View of the Football Folley mall entrance to Grapevine Mills
- -------------------------------------------------------------------------------
-1-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the movie theater building
[PICTURE]
View of the Rainforest Cafe building exterior
- -------------------------------------------------------------------------------
-2-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of a typical common area corridor
[PICTURE]
View of a typical common area corridor
- -------------------------------------------------------------------------------
-3-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the food court
[PICTURE]
View of the roof
- -------------------------------------------------------------------------------
-4-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the exterior entrance of Burlington Coat Factory
[PICTURE]
View of the interior entrance of Burlington Coat Factory
- -------------------------------------------------------------------------------
-5-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the exterior entrance of Off 5th
[PICTURE]
View of the interior entrance of Off 5th
- -------------------------------------------------------------------------------
-6-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the exterior entrance of Bed, Bath, & Beyond
[PICTURE]
View of the interior entrance of Bed, Bath, & Beyond
- -------------------------------------------------------------------------------
-7-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the exterior entrance of the JC Penney Outlet Store
[PICTURE]
View of the interior of the JC Penney Outlet Store
- -------------------------------------------------------------------------------
-8-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the interior entrance of Marshalls
[PICTURE]
View of the interior entrance of Group USA
- -------------------------------------------------------------------------------
-9-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the interior entrance of Old Navy
[PICTURE]
View of the interior entrance of Rainforest Cafe
- -------------------------------------------------------------------------------
-10-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the interior entrance of Books-A-Million
[PICTURE]
View of the interior entrance of Sports Authority
- -------------------------------------------------------------------------------
-11-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the interior entrance of Gameworks
[PICTURE]
View of the interior entrance of Virgin Records
- -------------------------------------------------------------------------------
-12-
<PAGE>
PHOTOGRAPHS OF THE SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View of the interior entrance of Off Rodeo Drive
- -------------------------------------------------------------------------------
-13-
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PAGE
INTRODUCTION.................................................................1
Identification of Property...............................................1
Property Ownership and Recent History....................................1
Purpose and Intended Use of the Appraisal................................1
Date of Value and Property Inspection....................................2
Extent of the Appraisal Process..........................................2
Property Rights Appraised................................................2
Definitions of Value, Interest Appraised, and Other Pertinent Terms......3
Legal Description........................................................4
REGIONAL ANALYSIS............................................................5
CITY/NEIGHBORHOOD ANALYSIS..................................................19
VALUE RETAIL MALL CONCEPT...................................................22
RETAIL MARKET ANALYSIS......................................................36
TRADE AREA ANALYSIS.........................................................44
PROPERTY DESCRIPTION........................................................57
Site Description........................................................57
REAL PROPERTY TAXES AND ASSESSMENTS.........................................63
ZONING......................................................................66
HIGHEST AND BEST USE........................................................68
Highest and Best Use of Site, As Though Vacant..........................68
Highest and Best Use of Property, As Improved...........................69
VALUATION PROCESS...........................................................70
SALES COMPARISON APPROACH...................................................72
INCOME CAPITALIZATION APPROACH..............................................91
RECONCILIATION AND FINAL VALUE ESTIMATE....................................128
ASSUMPTIONS AND LIMITING CONDITIONS........................................130
CERTIFICATION OF APPRAISAL.................................................132
ADDENDA....................................................................133
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
IDENTIFICATION OF PROPERTY
The subject of this appraisal is Grapevine Mills, a single-level,
entertainment and value-oriented mall development. The subject is typical of
the Mills mega mall developments. By definition, a mega mall is a hybrid retail
concept first pioneered by The Mills Corporation. They contain a mix of retail
formats, primarily off-price in nature, ranging from manufacturer and retail
outlets, to catalog stores, category dominant retailers, and specialty tenants.
Entertainment, including a cinema component, virtual reality, and several theme
restaurants has become an integral part of the merchandising mix as well.
Anchor and junior anchor stores can comprise 10 to 15 locations and account for
50.0 to 60.0 percent of the GLA. In-line shops include a mix of off-price and
traditional retailers and typically account for 40.0 to 50.0 percent of the
total GLA.
Grapevine Mills possesses a strategic location at the northwest corner of
State Highway 121 and State Highway 26 in Grapevine, Tarrant County, Texas. The
subject property consists of a 1,240,971 square foot entertainment and
value-oriented, enclosed mall. As presently configured, the property includes
16 major or anchor tenants (based on management's classifications), although
plans include adding up to five more major tenants as demand requires. This
report does not consider the potential for future major tenants. The major
tenants include retail outlets and entertainment facilities (a 30 screen movie
theater, a theme restaurant, and a gameworks/arcade). The property's
construction consists of a concrete slab with steel framing and a painted
dryvit exterior. Construction of the property was complete in 1997. The layout
of the facility is a large oval or racetrack with the majority of the anchors
situated along the perimeter. As of our date of value, the property was nearly
95 percent occupied based on total GLA.
PROPERTY OWNERSHIP AND RECENT HISTORY
Ownership of the subject is currently vested in Grapevine Mills Limited
Partnership. According to information provided by the Mills Corporation,
including copies of the actual agreements to purchase vacant land as well as
special warranty deeds, the subject site was purchased simultaneously from
Rosewood Property Company and Gateway Center Associates, Ltd. on July 9, 1996
for $21,961,994 or $2.88 per square foot. According to the Tarrant County
Appraisal District, each of the previous owners had owned their respective
properties well in excess of three years. Subsequent to the land purchase, the
Mills Corporation developed the existing mall improvements which were completed
in late 1997. According to the client, the property is not currently for sale
nor are there any contracts for sale pending.
PURPOSE AND INTENDED USE OF THE APPRAISAL
The purpose of this appraisal is to estimate the market value of the
leased fee estate in the subject property as of our date of inspection. The
function of this appraisal is to provide an independent valuation and analysis
for financing to be arranged by Morgan Stanley Mortgage Capital, Inc.
- -------------------------------------------------------------------------------
-1-
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
DATE OF VALUE AND PROPERTY INSPECTION
Our As Is market value date is July 17, 1998. On that date, Brian K.
Johnson inspected the property and its environs. Richard W. Latella, MAI
reviewed and approved the report, and Brian J. Booth helped prepare the
analyses, but neither inspected the property
EXTENT OF THE APPRAISAL PROCESS
In the process of preparing this appraisal, we:
o Inspected the subject property and its surrounding environs;
o Interviewed representatives of management;
o Reviewed leasing policy, concessions, tenant build-out allowances,
and recently negotiated rental rates, as well as forecasted operating
statements and a budget of income and expenses;
o Reviewed lease abstracts for anchor tenants;
o Conducted market research of occupancy rates, asking rents,
concessions, and operating expenses at competing properties;
o Conducted market inquiries into recent sales of similar retail
centers to ascertain sale prices per square foot and capitalization
rates;
o Determined a trade area and developed trade area specific data for
the property based upon our analysis of the market area as developed
by Equifax National Decision Systems (ENDS);
o Estimated market rental rates, absorption, and income and expenses
for the subject based upon available market data and current market
thinking relative to growth in market rents and market absorption;
o Prepared a detailed discounted cash flow (DCF) analysis using
Pro-Ject+ software for the purpose of discounting a forecasted net
income stream into a present value of the leased fee estate for the
center;
o Reconciled the value indications and concluded a final value estimate
for the subject on an As Is basis; and
o Prepared a complete appraisal of the subject property with the
results conveyed in this self-contained narrative report. A complete
appraisal involves an estimate of market value without any departure
from the Uniform Standards of Professional Appraisal Practice
maintained by the Appraisal Foundation. The report makes a
comprehensive presentation of the data and analyses which serve as
the basis of our value conclusion.
PROPERTY RIGHTS APPRAISED
In this instance, we have been asked to value the property As Is, which
represents the leased fee estate in the property.
- -------------------------------------------------------------------------------
-2-
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
DEFINITIONS OF VALUE, INTEREST APPRAISED, AND OTHER PERTINENT TERMS
The definition of market value taken from the Uniform Standards of
Professional Appraisal Practice of the Appraisal Foundation, is as follows:
The most probable price which a property should bring in a competitive and
open market under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently and knowledgeably, and assuming the price is
not affected by undue stimulus. Implicit in this definition is the
consummation of a sale as of a specified date and the passing of title
from seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised, and acting in what
they consider their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
EXPOSURE TIME
Under Paragraph 3 of the Definition of Market Value, the value estimate
presumes that "A reasonable time is allowed for exposure in the open
market". Exposure time is defined as the estimated length of time the
property interest being appraised would have been offered on the market
prior to the hypothetical consummation of a sale at the market value on
the effective date of the appraisal. Exposure time is presumed to precede
the effective date of the appraisal.
MARKETING TIME
Marketing time is an estimate of the time that might be required to sell a
real property interest at the appraised value. Marketing time is presumed
to start on the effective date of the appraisal. Marketing time is
subsequent to the effective date of the appraisal. The estimate of
marketing time uses some of the same data analyzed in the process of
estimating reasonable exposure time and it is not intended to be a
prediction of a date of sale.
The following definitions of pertinent terms are taken from the Dictionary
of Real Estate Appraisal, Third Edition (1993), published by the Appraisal
Institute. These definitions have been taken into account when arriving at the
estimate of market value reported in this appraisal assignment.
- -------------------------------------------------------------------------------
-3-
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
FEE SIMPLE ESTATE
Absolute ownership unencumbered by any other interest or estate, subject
to the limitations imposed by the governmental powers of taxation, eminent
domain, police power, and escheat.
LEASED FEE ESTATE
An ownership interest held by a landlord with the rights of use and
occupancy conveyed by lease to others. The rights of the lessor (the
leased fee owner) and the leased fee are specified by contract terms
contained within the lease.
MARKET RENT
The rental income that a property would most probably command on the open
market, indicated by the current rents paid and asked for comparable space
as of the date of appraisal.
CASH EQUIVALENT
A price expressed in terms of cash, as distinguished from a price
expressed totally or partly in terms of the face amounts of notes or other
securities that cannot be sold at their face amounts.
MARKET VALUE AS IS
The value of specific ownership rights to an identified parcel of real
estate as of the effective date of the appraisal; relates to what
physically exists and is legally permissible and excludes all assumptions
concerning hypothetical market conditions or possible rezoning.
LEGAL DESCRIPTION
The property is legally described as Lot 1, Block 1 of the Grapevine Mills
Addition, an addition to the City of Grapevine, Tarrant County, Texas. A metes
and bounds legal description of which the subject tract is a part was provided
for our review and is contained in the Addenda.
- -------------------------------------------------------------------------------
-4-
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[REGIONAL MAP]
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
INTRODUCTION
Following is an overview of the Dallas/Fort Worth Metroplex (the combined
Dallas/Fort Worth metropolitan area) focusing on such topics as population,
employment, income levels, retail sales, transportation, and the real estate
markets. Please note that a thorough discussion of the real estate market
directly affecting the subject property is included in the Market Analysis
section of this report.
POPULATION
The U.S. Census Bureau's final 1990 census showed the Dallas-Fort Worth
Consolidated Metropolitan Statistical Area's (CMSA's) population at 4,111,750
as of January 1, 1990. This estimate reflects an average annual compound growth
rate of 2.80 percent since the revised January 1980 census. As of January 1,
1996, the CMSA was re-configured to include Erath, Navarro, Palo Pinto,
Somervell, and Wise Counties. The estimated population for the sixteen-county
area as of January 1, 1997 was 4,654,325. Following is a summary of the 1980
and 1990 census population figures, along with the most recent population
estimates for the sixteen-county CMSA, as prepared by the North Central Texas
Council of Governments (NCTCOG).
===============================================================================
DALLAS/FORT WORTH
CMSA POPULATION
===============================================================================
AVERAGE ANNUAL ESTIMATED AVERAGE ANNUAL
COMPOUND POPULATION COMPOUND
1980 CENSUS 1990 CENSUS GROWTH RATE AS OF GROWTH RATE
COUNTY POPULATION POPULATION FROM 1980 JANUARY FROM 1990
TO 1990 1, 1997 TO 1997
===============================================================================
Collin 144,576 264,036 6.21% 397,100 6.23%
Dallas 1,556,419 1,852,810 1.76% 1,976,600 0.96%
Denton 143,126 273,525 6.69% 352,050 3.81%
Ellis 59,743 85,167 3.61% 96,800 1.91%
Erath 22,560 27,991 2.18% 30,200 1.13%
Hood 17,714 28,981 5.05% 35,000 2.84%
Hunt 55,248 64,343 1.54% 66,100 0.40%
Johnson 67,649 97,165 3.69% 107,850 1.56%
Kaufman 39,015 52,220 2.96% 59,350 1.91%
Navarro 35,323 39,926 1.23% 40,500 0.21%
Palo Pinto 24,062 25,055 0.41% 27,350 1.31%
Parker 44,609 64,785 3.80% 80,225 3.22%
Rockwall 14,528 25,604 5.83% 34,500 4.52%
Somervell 4,154 5,360 2.58% 5,750 1.05%
Tarrant 860,880 1,170,103 3.12% 1,306,800 1.65%
Wise 26,575 34,679 2.70% 38,250 1.46%
------ ------ ------
CMSA 3,119,806 4,111,750 2.80% 4,654,325 1.85%
Total
===============================================================================
Source: North Central Texas Council of Governments Research and Information
Services
===============================================================================
- -------------------------------------------------------------------------------
-5-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
Tarrant County experienced the greatest growth in total population from
1990 to 1997 with 136,697 new residents followed closely by Collin (133,064)
and Dallas (123,790) counties. Dallas County experienced a relatively low
compound growth rate from 1990 to 1997 (0.96 percent) principally because of
its urban influence and the limited amount of land available for residential
development. By comparison, Tarrant County experienced a 1.65 percent annual
compound growth rate over this same time period. Particularly notable among the
group are Collin (located north of Dallas), Rockwall (located east of Dallas),
Denton (located north of both Dallas and Tarrant) and Parker (west of Fort
Worth) counties with compound annual growth rates between 3.0 and 6.5 percent.
In addition to estimating annual population changes, the NCTCOG is also
charged with forecasting future population and employment growth in connection
with its regional transportation planning effort. Unfortunately, the East Texas
Council of Governments does not undertake a forecast for Henderson County,
therefore, this county is not included in our summary. Population projections
for the Dallas/Fort Worth CMSA (based on the 1990 census statistics) to the
year 2010 are as follows.
=================================================================
CMSA POPULATION PROJECTIONS
1990-2010
=================================================================
FORECASTED AVERAGE
COUNTY 1990 2010 ANNUAL COMPOUND
GROWTH RATE
1990-2010
=================================================================
Collin 264,036 461,857 2.84%
Dallas 1,852,810 2,431,660 1.37%
Denton 273,525 482,971 3.61%
Ellis 85,167 135,707 2.36%
Erath 27,991 36,910 1.39%
Hood 28,981 44,978 2.22%
Hunt 64,343 80,590 1.13%
Johnson 97,165 150,159 2.20%
Kaufman 52,220 79,209 2.10%
Navarro 39,926 47,400 0.86%
Palo Pinto 25,055 29,102 0.75%
Parker 64,785 102,000 2.30%
Rockwall 25,604 44,305 2.78%
Somervell 5,360 6,952 1.31%
Tarrant 1,170,103 1,677,985 1.82%
Wise 34,679 46,012 1.42%
------ ------
CMSA Total 4,111,750 5,857,797 1.79%
=================================================================
Sources: NCTCOG
=================================================================
- -------------------------------------------------------------------------------
-6-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
Note that all components of the CMSA population are forecasted to increase.
Although Dallas and Tarrant Counties should continue to register the largest
absolute increases, the five suburban counties of Collin, Denton, Ellis, Hood,
Johnson, Kaufman, Parker, and Rockwall are forecasted to continue with the
highest relative growth rates. Overall, rates of growth are forecasted to be
slightly less dynamic from the Year 1990 to 2010.
A comparison of the NCTCOG's forecast for the CMSA with the population
forecast for the state by the Census Bureau indicates that the CMSA should
maintain its ranking in the state's overall population picture over the next
two decades. The CMSA's 1990 year-end population of 4,111,750 was 24.21 percent
of the Census Bureau's estimate for the state of 16,986,510. Moving forward,
the population for the same area climbs to 5,066,975, or 25.12 percent of the
state forecast at the turn of the century, and then rises again slightly to
25.8 percent by the Year 2010. In other words, the growth of the Dallas/Fort
Worth CMSA is expected to exceed state-wide growth through 2010.
EMPLOYMENT
The NCTCOG's most recent non-agricultural employment forecasts for Dallas
County, Tarrant County, and for the nine Urban North Central Texas Counties
(Collin, Dallas, Denton, Ellis, Johnson, Kaufman, Parker, Rockwall, and Tarrant
Counties) are shown in the table set forth below.
====================================================================
EMPLOYMENT
1990-2010
====================================================================
FORECASTED
AVERAGE ANNUAL
COUNTY 1990 2010 COMPOUND
GROWTH RATE
1990-2010
====================================================================
Dallas 1,309,000 1,838,000 1.71%
Tarrant 565,000 865,000 2.15%
------- -------
Nine Urban 2,148,000 3,221,000 2.05%
Counties
====================================================================
Sources: NCTCOG
====================================================================
As can be seen from the table, the non-agricultural employment base for the
nine Dallas/Fort Worth urban counties is forecasted to increase at an average
annual compound growth rate of 2.05 percent through the year 2010 representing
an additional 1,073,000 jobs or 53,650 new jobs per year on the average.
Following is a summary of the most recently reported employment statistics,
allowing a comparison of February 1998 versus February 1997 activity:
-7-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
===============================================================================
WAGE/SALARY EMPLOYMENT BY SECTOR
===============================================================================
PERCENT CHANGE
PERCENT OF TOTAL FEBRUARY 1998
VERSUS FEBRUARY 1997
=====================================================
SECTOR FORT WORTH/ FORT WORTH/
DALLAS ARLINGTON DALLAS ARLINGTON
===============================================================================
Manufacturing 13.76% 15.33% +3.11% +3.58%
Mining 0.64% 0.59% -0.85% 0.00%
Construction 4.64% 4.84% +8.55% +5.15%
Transportation/Utilities 6.93% 9.36% +8.68% +6.34%
Trade 23.90% 25.41% +3.70% +5.08%
Finance/Real Estate 7.94% 4.55% +6.93% +4.49%
Service/Miscellaneous 30.91% 27.01% +9.31% +5.56%
Government 11.29% 12.91% +3.45% +1.76%
------ ------
Total 100.00%* 100.00% +6.05% +4.60%
===============================================================================
Source: Texas Workforce Commission
===============================================================================
* Does not equal 100% due to rounding
===============================================================================
These statistics reveal some important trends associated with the Dallas
and Fort Worth/Arlington employment sectors. Even though two sectors (i.e.,
Trade and Service/ Miscellaneous) combine for more than one half of total
nonagricultural wage and salary employment, growth has occurred in all sectors
except the smallest sector- Mining. Overall, wage and salary employment
statistics for Dallas and Fort Worth/Arlington demonstrate some of the highest
growth rates in recent times with 6.05 percent and 4.60 percent growth,
respectively, from February 1997 to February 1998. Exceptional growth has
occurred in the Construction, Transportation/Utilities, Finance/Real Estate and
Service/Miscellaneous categories, with Dallas posting 8.55, 8.68, 6.93 and 9.31
percent increases and Fort Worth/Arlington showing 5.15, 6.34, 4.49, and 5.56
percent increases, respectively. Considering that the Trade and
Service/Miscellaneous categories already represent over 50 percent of area
employment, it is especially impressive to note the rate of growth that has
continued in these categories with Dallas posting 3.70 and 9.31 percent
increases and Fort Worth/Arlington showing 5.08 and 5.56 percent increases,
respectively.
The following statistics indicate that the recent unemployment level in
Texas (4.8 percent) is slightly below that of the United States (5.0 percent)
as of February 1998 with Dallas (3.3 percent) and Fort Worth/Arlington (3.3
percent) quite a bit lower than the state and national levels. Austin/San
Marcus leads among Texas' largest cities with a 2.6 percent unemployment rate.
Among the second tier cities, Bryan-College Station reports a 1.7 percent
unemployment rate.
-8-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
==============================================================
UNEMPLOYMENT STATISTICS COMPARISON
(ACTUAL)
==============================================================
LOCATION FEBRUARY 1998 FEBRUARY 1997
==============================================================
United States 5.0% 5.7%
Texas 4.8% 5.8%
DALLAS 3.3% 4.0%
FORT WORTH/ARLINGTON 3.3% 4.1%
Houston 4.1% 5.4%
San Antonio 3.6% 4.1%
El Paso 10.1% 12.0%
Corpus Christi 6.4% 8.6%
Austin/San Marcus 2.6% 3.3%
==============================================================
Sources: Texas Workforce Commission and U.S. Bureau of
Labor Statistics.
==============================================================
Following is a brief listing of the largest private employers in the
Dallas-Fort Worth area as compiled from the Dallas Business Journal (January
1998) and The Business Press (August 1997).
-9-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
=====================================================
SUMMARY OF MAJOR EMPLOYERS
DALLAS/FORT WORTH AREA
=====================================================
LOCAL
NAME EMPLOYEES
=====================================================
AMR Corp. (a) 41,000
Texas Instruments, Inc.(b) 24,000
Baylor Health Care System 12,700
SBC Communications, Inc. 12,000
The Kroger Company 11,115
Lockheed Martin Corp. 11,000
EDS, Corp.(c) 10,000
J.C. Penney Co.(c) 10,000
Dallas County Community College 8,539
Tom Thumb Food and Pharmacy 8,425
Nationsbank of Texas 7,800
Minyard Food Stores, Inc. 7,500
Texas Health Resources 7,413
Harris Methodist Health Systems 6,957
Albertson's Inc. 6,500
Bell Helicopter Textron, Inc. 6,400
Nortel (Northern Telecom) 6,200
GTE 6,068
MCI Communications 6,000
=====================================================
(a) Headquartered in Fort Worth
(b) Headquartered in Dallas
(c) Headquartered in Plano
=====================================================
Over the past 25 years, Dallas/Fort Worth has continued to be among the top
cities considered for corporate relocations. Exxon Corp., Kimberly-Clark Corp.,
and Blockbuster Entertainment have headquarter offices in the area. Quaker
State moved their corporate office to the Dallas area from Oil City,
Pennsylvania in 1996. GTE Corporation planned to move their headquarters to
Dallas area from Stamford, Connecticut until their proposed merger with MCI
which has since dissolved. GTE's current relocation plans are uncertain. Union
Pacific Railroad, parent company of America's largest railroad, moved its
headquarters to Downtown Dallas from Pennsylvania.
-10-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
PER CAPITA INCOME
Following is a summary of per capita income for counties in the CMSA, the
State of Texas, and the nation:
=============================================================
PER CAPITA INCOME SUMMARY
=============================================================
AVERAGE
ANNUAL
COUNTY 1990 1993 1995 COMPOUND
GROWTH RATE
1990 TO 1995
=============================================================
Collin $23,370 $26,421 $28,922 4.36%
Dallas $21,175 $25,293 $28,367 6.02%
Denton $18,443 $20,646 $22,631 4.18%
Ellis $15,487 $17,881 $19,781 5.02%
Henderson $13,240 $15,031 $16,616 4.65%
Hood $17,891 $20,899 $22,872 5.03%
Hunt $14,853 $16,599 $17,368 3.18%
Johnson $14,914 $16,593 $17,944 3.77%
Kaufman $14,634 $17,005 $18,752 5.08%
Parker $15,824 $17,063 $19,017 3.74%
Rockwall $21,534 $24,045 $26,813 4.48%
Tarrant $19,150 $21,401 $23,266 3.97%
Texas $16,749 $19,452 $21,118 4.74%
United States $19,142 $21,223 $23,196 3.92%
=============================================================
Source: Texas Comptroller's Office, Austin, Texas
=============================================================
Collin County was second highest in per capita income for the state of
Texas in 1995 (the most recent year for which data is available) at $28,922
followed closely by Dallas County, its closest rival, at $28,367 per person.
From 1990 to 1995, the average annual compound growth rates for all
counties in the CMSA ranged from 3.2 to 6.0 percent with the more densely
populated counties (Collin, Dallas, and Tarrant Counties reflecting growth at
the upper end of this range from 4.0 to 6.0 percent. The highest per capita
income growth occurred in Dallas County at 6.0 percent with income in Ellis,
Hood and Kaufman counties increasing at a 5.0 percent rate.
-11-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
RETAIL SALES
Following is a summary of the Gross Retail Sales in the Dallas/Fort Worth
Metropolitan Area:
===============================================================================
DALLAS AND TARRANT COUNTIES
GROSS RETAIL SALES
===============================================================================
DALLAS COUNTY TARRANT COUNTY
YEAR RETAIL SALES PERCENT CHANGE RETAIL SALES PERCENT CHANGE
(000'S) (000'S)
===============================================================================
1984 $16,792,801 -- $ 7,966,241 --
1985 $18,354,106 +9.30% $ 8,893,697 +11.64%
1986 $17,937,831 -2.27% $ 8,946,783 +0.60%
1987 $18,089,447 +0.85% $ 8,698,008 -2.78%
1988 $18,562,210 +2.61% $ 8,914,670 +2.49%
1989 $19,630,480 +5.76% $ 9,778,478 +9.69%
1990 $21,233,049 +8.16% $10,843,192 +10.89%
1991 $22,533,538 +6.12% $11,065,900 +2.05%
1992 $23,768,898 +5.48% $12,184,664 +10.11%
1993 $26,110,105 +9.85% $12,095,350 -0.01%
1994 $28,771,909 +10.19% $13,666,610 +13.00%
1995 $31,614,624 +9.88% $14,739,613 +7.85%
1996 $34,306,156 +8.51% $15,461,608 +4.90%
1997 $15,683,413* NA $7,408,917* NA
===============================================================================
Source: Texas Comptroller of Public Accounts
* Through 2nd Quarter, 1997
===============================================================================
From 1985 through 1988, during a period of negative employment growth,
retail sales were flat to declining. Since 1988, retail sales have increased
substantially showing average annual compound growth rates ranging from 7.98 to
7.13 percent in Dallas and Tarrant counties, respectively. The growth rate for
both counties trends slightly higher than inflation for the period (3.4 percent
for the U.S. City Average, All Urban Consumers, 1982-84=100).
TRANSPORTATION
Due to its geographical location in the central part of the United States,
the Dallas/Fort Worth metropolitan area has developed into a major
transportation hub for air, truck, and automobile traffic. Key elements to the
system are the D/FW International Airport, a slowly emerging mass transit
system, a well-designed highway system, and major rail connections.
According to statistics compiled by the Federal Aviation Administration,
the Dallas/Fort Worth air space is among the busiest in the United States,
second only to New York in terms of total daily flights. Located less than 20
miles from the central cores of both Dallas and Fort Worth, the D/FW
International Airport provides a strong regional economic impact. D/FW recently
added a 7th runway in October, 1996 and over 1,800 parking spaces at American
terminal 3E. Future plans call for an additional 5 gates and 1800 to 1900
parking spaces at terminal 2W scheduled for completion in October, 1998.
Environmental work is underway that will eventually lead to 2,000 foot
extensions for three of the existing runways with related holding pads,
taxi-ways and taxi-lanes.
-12-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
This airport has seen its employee base of businesses (airline support
personnel and airport board) involved at the D/FW Airport climb from 730 in
1983 to more than 39,000 as of January 1997.
The following Airline Traffic Summary illustrates the growth in D/FW
International Airport airline traffic during the past seventeen years:
======================================================================
AIR TRAFFIC SUMMARY
======================================================================
TYPE OF TRAFFIC 1980 1990 1995 1996
======================================================================
Total(1) 21,618,002 48,515,464 54,369,613 58,034,503
Passengers:
Total(1) Air 303,200 547,008 777,696 774,854
Cargo (Tons)(2)
----------------------------------------------------------------------
(1) "Total" refers to both enplaned and deplaned passengers or
cargo.
(2) These are calculated estimations based on a formula.
Source: AAC/DFW Marketing Department, Dallas/Fort Worth
International Airport
======================================================================
The above statistics reflect an average annual compound growth rate of 8.4
percent from 1980 to 1990 for total passengers, with the average compound
growth rate from 1990 to 1996 being 3.03 percent. Total air cargo shows an
average annual compound growth rate of 6.7 percent from 1980 to 1990, with a
6.0 percent annual compound growth from 1990 to 1996. According to a
representative of the D/FW International Airport, several factors contributed
to the dramatic growth rates between 1980 and 1990. Initially, airline
deregulation was a primary factor. However, in recent years, both American and
Delta Airlines have used the airport as a hub, routing passengers through the
area on a regular basis. This strategy is a result of the good weather, as well
as additional runway and gate capacity. By 2010, approximately 104 million
passengers are expected to travel through the Dallas/Fort Worth International
Airport annually, with 90 percent traveling domestic airlines. Air cargo is
forecasted to increase 98 percent from 1992 to 2010.
Another significant aviation-related development is the emergence of the
418-acre, non-passenger Alliance Airport in north Tarrant County. Constructed
in late-1989, this airport is a result of the collective work and funding of
Ross Perot, Jr., the FAA, and city and state governments. Approximately 480
planes presently operate out of Alliance Airport with runway and taxiway
expansions currently being developed. Alliance operates as an industrial park
servicing large manufacturing companies in the export/transport of their
products. Alliance is home to more than 50 nationally and internationally
recognized companies, 12 of which are on the Fortune 500 list. Companies at
Alliance included on the Fortune 500 are: J.C. Penney Company, AMR Corporation/
American Airlines, Intel Corporation, FedEx, Nokia, Food Lion, Eli Lilly/PCS
Health Systems, Texas Instruments/Excel Logistics North America, James River
Corporation, Burlington Northern Santa Fe, Tech Data Corporation, and CompUSA.
Together, these firms generate annual revenues of more than $106.9 billion, or
from $2.8 billion to $21.4 billion each.
-13-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
Another major development that will have an economic impact on the
Metroplex is the 1,000 acre Texas Motor Speedway, which is located just north
of Alliance Airport in Denton County. Recently completed, the speedway seats
approximately 160,000 people. The speedway is expected to produce 6,200 new
permanent and temporary jobs for the area, and is forecasted to generate more
than $100 million annually in new tourism dollars. According to a University of
North Texas study, the speedway is expected to have an economic impact of $262
million to the local economy.
Another major airport in northwest Dallas is Love Field; home of Southwest
Airlines. Before the development of D/FW, the primary commercial airport in
Dallas was Love Field. With the construction of D/FW, restrictions were imposed
on passenger service from Love Field with direct flights limited to Texas
cities and adjacent states. These restrictions, resulting from the Wright
amendment (named for the former speaker of the House), have recently been
relaxed. In the future, direct flights from Love Field may be available for
travel as far east as Birmingham, AL and west into Arizona.
In an effort to improve public ground transportation, the Dallas Area Rapid
Transit (DART) system, comprised of 14 Dallas area communities, was established
in the mid-1980s. This $8.75 billion project will integrate a rail and bus
system to serve the area. Future plans consists of light rail transit, special
lanes for buses, carpools and vanpools, commuter rail service, and expansion of
the bus network. The light rail line is the biggest transportation project in
Dallas' history. The starter line, including a total of 21 stations, stretches
from Park Lane at North Central Expressway through downtown and into Oak Cliff.
The public transit system serving Fort Worth is known as The T.
Following is a summary of some the more major highway construction projects
which are either planned or underway:
===============================================================================
SUMMARY OF AREA HIGHWAY CONSTRUCTION
===============================================================================
HIGHWAY SCOPE OF CONSTRUCTION ESTIMATED COMPLETION
DATE
- -------------------------------------------------------------------------------
US 75 (North Central Ten-mile reconstruction into End of the decade
Expressway) an eight-lane, super-highway, (1999-2000)
with two-lane exit ramps and
emergency shoulders
- -------------------------------------------------------------------------------
US 75/LBJ Freeway A four-level interchange with 2003 (Starting 1997)
Interchange a fifth level for frontage
roads
- -------------------------------------------------------------------------------
State Highway 190 Twenty-mile highway Some frontage roads
Tollway (an outer loop connecting SH-78 in Garland and freeway lanes
for the northern suburbs to IH-35E in Carrollton are open - (2003)
of Dallas)
- -------------------------------------------------------------------------------
State Highway 170 To serve increased traffic Frontage roads have
near the Alliance Airport been completed.
development in Fort Worth and Remaining work is
provide a direct route from pending area demand.
the Alliance Airport to the
Dallas/Fort Worth
International Airport.
- -------------------------------------------------------------------------------
State Highway 114 A 14.6 mile project Phased from July
consisting of the widening through August 1998
and reconstruction to varying
widths (extends from Wise County
to the Tarrant County line). A
new 7.6 mile section from SH-170
to the DFW International Airport
will provide a route from this
airport to Alliance.
- -------------------------------------------------------------------------------
State Highway 161 A new, five-mile long highway Unknown
to be built from IH-635 to (Beyond 1999)
the intersection of SH-190
and IH-35E (presently
completed to south of Texas
114)
- -------------------------------------------------------------------------------
Dallas North Tollway A nine mile extension north Unknown
of SH 121. (Beyond 2000)
===============================================================================
-14-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
The Dallas/Fort Worth area is served by four major railway companies:
Southern Pacific; Atchison, Topeka & Santa Fe; Missouri and Kansas (Union
Pacific system); and St. Louis Southwestern. Additionally, numerous commercial
trucking firms provide regional and national overland freight service.
Passenger train service is offered by Amtrak.
As a result of relatively recent favorable national regulation, any trucker
with interstate authority can begin service in Texas. This decision redefines
interstate shipping to include transporting to a Texas warehouse, then shipping
to a final destination within the state. The rule will, most probably, have a
strong positive effect on Texas as a business location.
-15-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
REAL ESTATE MARKETS
The performance of the local real estate market segments continues to show
strong performances in all sectors. Following is a summary detailing the
existing occupancy levels, rental rate ranges (or monthly rental rates in the
case of the multi-family market), and estimated years' supply for the
commercial and multi-family markets in the Dallas area. Also provided is a
brief comment relative to current trends.
=============================================================================
OFFICE, RETAIL, INDUSTRIAL, MULTI-FAMILY, AND HOSPITALITY MARKET SUMMARIES
=============================================================================
REAL OVERALL LEASE ESTIMATED CURRENT
ESTATE OCCUPANCY RATE YEARS' TREND
MARKET AVERAGE SUPPLY
=============================================================================
Office 71.0%-CBD $17.40/SF N/A Citywide absorption was 4,713,524
(1st square feet during 1997 which included
Qtr 90.8%-Suburbs positive absorption of 1,295,378
1998) square feet in the Central Business
District. This was the second consecutive
year of positive absorption in the CBD
after several years of negative
absorption. The market in the CBD has
improved substantially with a current
Class A weighted rental rate of $20.15 per
square foot. In terms of office building
sales, activity remains strong with prices
exceeding $150 per square foot on the best
suburban Class A buildings. Both CBD and
suburban sectors have experienced
significant increases in quoted rental
rates. No new construction is planned for
the CBD but 10,000,000 square feet is
under construction in the suburbs.
Retail 87.9% $11.93/SF 5.8 Dallas and Fort Worth area occupancies
(Year-End (Ft. Years have reached a thirteen year high but
1997) Worth) are still below 90 percent with rental
88.9% rates continuing to edge up having
$13.62/SF 3.7 increased 4.3 percent over the past 12
(Dallas) Years months. Absorption for 1997 totaled
1.6 million square feet matching 1996 but
below the 2.5 to 2.75 million square feet
per year absorbed from 1992 through 1994.
With 1.56 million square feet scheduled
for completion in the first half of 1998
(78% pre-leased), rental rates are
expected to continue to increase with
rates in Dallas expected to increase at a
slightly faster pace than in neighboring
Fort Worth.
Industrial 94.1% $4.18/SF N/A With the addition of 13.9 million
(Year-End (Warehouse) square feet of space in 1996 and 8.7
1997) to million square feet in 1997,
$7.80/SF occupancies are down 0.7 percentage
(Off/ points from 1996 but rental rates
Showroom) continue to climb. The averaged
quoted gross rental rate for warehouse
space increased 5.6 percent while the rate
for office/showroom space increased 18.9
percent from Year End 1996. Leasing
activity (23.8 million square feet) and
absorption (7.1 million square feet)
continued at a strong pace. All but two
submarkets in the Greater Dallas area
experienced positive absorption.
Approximately 4.52 million square feet of
space is currently under construction.
Market sentiment remains slightly cautious
as bulk distribution rental rates have
been increasing at a slower rate and lease
up times have lengthened. Industrial
expansion is expected to continue into
1998 from increasing rental rates and
strong interest from investors.
Multi-Family 94.5% $0.752/SF 2.79 The multi-family market continues to
(Year-End(Dallas) (monthly- Years perform well; however, market 1997)
1997) Dallas) participants are guardedly optimistic.
93.7% 4.24 Currently, there are 15,371 units
(Ft. $0.664/SF Years under construction in the Dallas area
Worth) (monthly- and 4,395 units in the Fort Worth
Ft. Worth) area. Average rental rates for the
D/FW area posted a 4.8 percent gain
over the past year, with absorption
growth and rate growth being stronger
in the Dallas area. The performance
of selected submarkets varies
considerably with occupancies ranging
from 79.8 to 97.8 percent and average
rental rates ranging from $0.476 to
$1.078 per square foot (excluding
electricity). Absorption is
forecasted to trail the expected
delivery of new units in 1998.
Whereby, occupancy should weaken
slightly. Overall, the DFW apartment
market has outperformed expectations
with a surge of new completions in
4th quarter 1997.
Hospitality 70.5% $88.73 N/A Occupancy levels have increased 0.1
(November (ADR) percentage points since 1996 and
1997) average daily rates have improved by
6.3 percent in the Dallas/Fort Worth
area since year end 1996. Investors
are optimistic and prices are rising.
Suite and extended stay properties
comprise the majority of new construction.
The 1,825 room Adam's Mark Hotel in
downtown Dallas is scheduled for
completion in the fall of 1998.
=============================================================================
-16-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
In a similar fashion, we have prepared the following summary which provides
the overall state of the single-family housing market in the Dallas/Fort Worth
area.
===============================================================================
DETACHED SINGLE-FAMILY HOUSING MARKET SUMMARY
===============================================================================
NEW HOME
ABSORPTION EXISTING STARTS CURRENT
IN UNITS SUPPLY (UNITS) TRENDS
===============================================================================
Dallas-Fort Dallas Dallas The market is still strong. Less than
Worth Area 15,760(3) a seven-month supply in inventory is
22,875(1) 6.1 Fort available. Demand is forecasted to
(Twelve Months Months(2) Worth Area ease further during 1997 in the
Ending 1996) Fort 7,115 Dallas/Fort Worth area. Developed lot
Worth inventory is estimated at 2.9 years
Area 5.9 which is the lowest level since the
Months late 1970's
- -------------------------------------------------------------------------------
(1) This represents a 13.0 percent increase over the year ending 1996.
(2) A six-to-seven-month supply is considered healthy.
(3) This represents an 18.0 percent increase for the Dallas Area and a 21.0
percent increase for the Fort Worth area over (Year-End 1995).
===============================================================================
New single-family home starts jumped in both the Dallas and Fort Worth
areas during 1996, attaining their highest level since the mid-1980s. Strong
growth and immigration provided impetus for increasing new home output. In
addition, strong increases in sales of existing homes over the past several
years have greatly reduced these inventories, boosting the demand for new
single-family housing.
With the U.S. and local economies expected to moderate over the next year,
1997 job growth continues to support new home sales. Thus, Dallas area
single-family home starts should ease 8.0 percent to a still strong 14,508
units in 1997. The Fort Worth area should start 6,142 units, a 14.0 percent
decrease from 1996.
CONCLUSIONS
Having weathered a serious real estate and economic decline in the late
1980s and into the early 1990s, the Dallas/Fort Worth Metroplex is, once again,
in the throes of heightened activity. Forecasts for the CMSA indicate steady
population growth will occur through 2010 (an average annual compound growth
rate in the 1.4 percent range), which translates into approximately 41,398 new
jobs per year (1.85 percent annual compound growth). The employment sectors are
reasonably dispersed while the unemployment level is quite low relative to the
national average. The average annual compounded growth in per capita income has
been almost five percent in recent years, while local inflationary trends are
less than three percent (generally less than the U.S. average). Gross Retail
Sales increased at an average compound growth rate of 8.32 percent (Dallas
County) and 6.09 percent (Tarrant County) per year from 1990 through 1996. The
region continues to draw relocations by major corporations who are attracted by
the area's central location, favorable business environment, and relatively low
cost of living compared to other major metropolitan areas of the country.
As a compliment to the foregoing positive factors, the D/FW Metroplex is a
strong transportation center with one of the world's largest and busiest
airports (D/FW Regional airport) and a recently emerging industrial airport
(Alliance). A rapid transit system is currently under construction with
significant highway construction projects either planned or underway in
anticipation of future growth.
-17-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
The retail and industrial real estate markets continue to improve with
construction evident in many sectors. Detached single-family housing and
multi-family construction is presently very active although there is concern
that the surge in multifamily construction may weaken that market. The office
market has rebounded nicely. The Dallas Central Business District, which once
had the highest office vacancy levels of any major city in the United States,
is demonstrating significant rate growth and increasing absorption. Overall
investor interest remains strong.
In summary, the D/FW region is presently experiencing very good economic
growth relative to other parts of the country and is poised for continued
steady growth over the next 15 to 20 years. There is considerable strength in
the real estate market with significant construction underway in most product
types. Further, while not discussed in detail in this section because of its
relatively recent passage, the general consensus is that the North Atlantic
Free Trade Agreement will result in a significant boost to this region by
virtue of emerging ties to Mexico and the promise of a NAFTA administration
office in the City of Dallas. Given the growth projections for North Texas and
the Dallas area over the next decade, the outlook for the Dallas/Ft. Worth
Metroplex is considered to be very promising.
-18-
<PAGE>
[GRAPHIC OF NEIGHBORHOOD MAP]
<PAGE>
CITY/NEIGHBORHOOD ANALYSIS
- -------------------------------------------------------------------------------
CITY ANALYSIS
The property is situated in the northeast portion of Tarrant County within
the city limits of Grapevine. Grapevine is a bedroom community of the
Metroplex, located in the north central portion of the Dallas/Fort Worth
metropolitan area. Grapevine is bordered to the north by the cities of Flower
Mound and Lewisville (as well as Grapevine Lake), to the east by the city of
Coppell and the Dallas/Fort Worth International Airport, to the south by the
cities of Colleyville and Euless, and to the west by the cities of Southlake
and Colleyville.
In the past 27 years, Grapevine has experienced dynamic growth. In fact,
the population increased from 7,049 in 1970 to 35,400 in 1997, which translates
into a 6.2 percent compound annual rate of growth This population growth over
this period of time is attributable to the continued migration to the northern
suburbs of the Metroplex. Earlier growth is partially attributable to the
completion of the Dallas/Fort Worth International Airport in 1973. With this
growth in population, Grapevine, along with the bordering municipalities, has
been the focus of a significant amount of new single family construction over
the past few years. Generally speaking, homes in the area are geared toward
middle to upper income families. Supportive commercial/retail development has
ensued as the population of the area has continued upward.
As stated, the growth in the area is at least partially attributable to the
completion of the Dallas/Fort Worth (DFW) International Airport. The airport
itself requires a significant number of employees along with all the
businesses/employment (hotels, restaurants, etc.) created to serve the airport.
D/FW Airport, the nation's second busiest, is located between Dallas and Fort
Worth, just south of Grapevine. Situated on 17,800 acres, it is projected that
the airport will have the capability of handling 100 million passengers
annually by the year 2010.
The general location of the city of Grapevine results in excellent access
to other communities and cities throughout the Dallas/Fort Worth metropolitan
area and the North Texas region by way of the regional freeway system. Major
freeways serving the northern portions of the Dallas/Fort Worth area include
the Interstate Highways 35E, 35W, and 635. Interstate Highway 35 is a major
means of transportation through the center of the U.S., extending from Mexico
to Cananda. In the Metroplex, IH 35 splits into east and west sections with the
IH35W travelling through downtown Fort Worth and IH35E travelling through
downtown Dallas. Interstate Highway 635 serves the area in a mainly east/west
direction, forming a portion of a northern loop around Dallas. Another
important piece of the road infrastructure is the state highway system in place
between Dallas and Fort Worth. State Highway 183 (Airport Freeway) provides
access from the northern suburbs of Fort Worth through the Mid-Cities to
Dallas. State Highways 114 and 121 also extend through the area, providing
additional routes of transportation to D/FW Airport and the various bedroom
communities in Northeast Tarrant and South Denton Counties.
In summary, Grapevine is located between Dallas and Fort Worth and is part
of a group of municipalities that has experienced tremendous population growth
since 1970. Grapevine is characterized as a bedroom community of the Metroplex
with the existing development being focused on single family residential use
and supportive retail development. The area is served by a strong
infrastructure that includes numerous interstate freeways and state highways.
The area continues to benefit from the proximity of D/FW International Airport
at the southern edge of the city which has resulted in numerous companies
locating between Dallas and Fort Worth. Overall, the outlook for the city is
favorable.
-19-
<PAGE>
CITY/NEIGHBORHOOD ANALYSIS
- -------------------------------------------------------------------------------
NEIGHBORHOOD
The subject property resides at the northwest corner of State Highway 121
and State Highway 26; also fronting the east side of Anderson-Gibson Road and
the west side of FM 2499 in the northern extreme of Grapevine. By virtue of its
location, the property has very good access to the regional freeway system.
State Highway 121 traverses the immediate area of the property in a
northeast/southwest direction and intersects several of the aforementioned
major freeways, including Interstate Highway 635 (LBJ Freeway), Interstate
Highway 35E (Stemmons Freeway), State Highway 114 (John Carpenter Freeway) and
State Highway 183 (Airport Freeway). In fact, State Highway 121's intersection
with LBJ Freeway is located just one-half mile south of the site. Furthermore,
State Highway 121 intersects Interstate Highway 35E approximately four to five
miles northeast of the subject in Lewisville.
In the immediate vicinity of the property, substantial road improvements
have recently been completed. All of these improvements were be completed for
the opening of Grapevine Mills. There are numerous signaled entrances/exits for
Grapevine Mills Mall from State Highway 26 and from Anderson Gibson Road).
Directly in front of the mall between State Highway 26 and Anderson-Gibson
Road, FM 2499 is now called Grapevine Mills Parkway and is six lanes,
median-divided, with two median cuts at the mall entrances. North of
Anderson-Gibson Road, FM 2499 is a four-lane, median-divided roadway. State
Highway 26 is a four-lane, median-divided thoroughfare. Anderson-Gibson Road is
also a four-lane, median-divided road between FM 2499 and State Highway 121,
but it is a six-lane divided roadway immediately to the west of FM 2499,
narrowing to four lanes as it becomes the mall ring road and loops behind the
mall to exit onto State Highway 26.
The property has very good accessibility due to the presence of the
aforementioned major freeways, coupled with a network of primary and secondary
arterials. Primary access to the property is available via the previously
mentioned highways and major roads. In addition, other significant neighborhood
streets are available and currently providing access to and from the area
include Bethel Road, Royal Lane, Belt Line Road/Gateway Boulevard, and William
D. Tate Avenue.
In terms of surrounding development, there is limited existing development
in the immediate area of the property at the present time. The other
development in the area is largely tied to the outparcels of the mall itself.
In fact, several recently completed buildings exist with others under
construction as of our date of value. As for completed development, Michael's,
Chick-Fil-A, Discount Tire, and Prima Care have built on mall outparcels. A
Cozy Mel's Restaurant, Embassy Suites Hotel, and a Bass Pro Outlet are
currently under construction in the general area as well. Also of note, several
new industrial properties have been built in the general area of Grapevine
Mills in the past three to five years, including a large distribution center
known as D/FW Trade Center to the north along SH 121.
Extending outward several miles, development becomes more significant and
is characterized (similar to the city as a whole) as a homogeneous mixture of
residential and developing supportive commercial use. In the general area,
major developments exist such as the aforementioned Dallas/Fort Worth
International Airport (approximately two miles south of the property), a
significant concentration of hotels situated near the airport, and a relatively
large inventory of industrial and office properties. In fact, a short distance
south of the subject is the D/FW Lakes Hilton Executive Conference Center.
-20-
<PAGE>
CITY/NEIGHBORHOOD ANALYSIS
- -------------------------------------------------------------------------------
Outside of the subject's immediate area, the most notable retail
development, is located in the Vista Ridge area of Lewisville, which is
approximately four to five miles northeast of the property along Interstate
Highway 35E. The focal point of this area is Vista Ridge Mall, a 1.3 million
square foot regional mall. Over the past several years, a number of other uses
have been developed around the mall including apartments, community and power
retail centers, free-standing retail buildings and hotels. Similar development
has also taken place in other parts of the surrounding area, but primarily
along the major freeways mentioned previously.
From a retail perspective, the metropolitan area has a substantial
inventory of regional or super-regional malls, power centers, and outlet
centers which have captured an important share of retail spending in the
region. However, the Grapevine Mills development represents a new and different
type of development due to its size and the value-orientation of the anchor and
specialty stores. Its urban location should provide a distinct competitive
advantage over the existing outlet centers in distant locations such as
Gainesville, Terrell, and Hillsboro.
In summary, the neighborhood in which the subject resides is still in the
growth phase of its economic cycle with an abundant amount of vacant land
available for development. The area population has experienced and is projected
to continue to experience steady population and household growth in the
foreseeable future. Given the strategic location of the subject property's
immediate neighborhood and surrounding area between Dallas and Fort Worth,
coupled with the very positive influence of the Dallas/Fort International
Airport and the positive impact of the subject itself, we believe that the long
term outlook for this area is good. Both residential and commercial growth
should continue at a very rapid pace for the foreseeable future.
-21-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
OVERVIEW
The subject property is developed with a unique larger than life type of
neo-cityscape concept, incorporating entertainment, nightlife and value-retail
shopping. This concept is a hybrid of the Mills Corporation, including
characteristics from super-regional malls--which include a diverse mix of
retailers which depend on critical mass and market dominance--and factory
outlet centers--value-retail centers which are typically owned and operated by
the manufacturer. Catering both to entertainment-seekers, and to value-oriented
shoppers and retailers, the subject property offers more selection and shopping
conveniences than the typical mall, factory outlet center or power center
format.
The value-oriented mega-mall concept was originally conceived by The Mills
Corporation, constructing the Potomac Mills mall outside of Washington D.C. The
Mills Corporation is a full-service Washington D.C.-based retail developer with
a portfolio of approximately 10.1 million square feet. The company's concept,
The Mills project, combines anchor and specialty retail stores from all major
categories of value retailers in a fully enclosed super-regional mall setting.
Founded in 1967 as Western Development Corp., the company focuses primarily on
The Mills project concept and operates now as The Mills Corp. which went public
in April 1994. The company also owns and operates 11 community centers.
A second concept, the "Great Mall" format has been the property concept
developed by Petrie-Dierman-Kughn (PDK), co-developer of The Great Mall of The
Bay Area, a 1.2 million square foot mall in Milpitas, California. Opened in
September 1994, Great Mall of The Bay Area was over 75.0 percent leased after
its first year of operation. The property serves the San Francisco-Oakland
metro area which contains over 6.0 million people.
PDK initiated the design plan for The Great Mall of The Great Plains which
has been completed by Glimcher Realty Trust. PDK also set out to develop a 1.6
million square foot value-oriented super-regional mall in Phoenix to be called
The Great Mall of Arizona. This month was constructed by a partnership between
The Taubman Co. and Petrie-Dierman-Kughn. This project was in competition with
a project to be developed by The Mills Corp. and Simon Properties, a 1.5
million square foot Mills-style mall just 5.0 miles away in Chandler, Arizona
called Chandler Mills. The two joint-venture groups instead joined forces to
develop Arizona Mills in similar fashion to other Mills projects on the Taubman
site.
Glimcher Realty Trust is now developing value retail malls in New Jersey
and expects to follow in Los Angeles, having acquired a controlling interest in
both projects, each known as The Metro Mall.
Another developer, Hapsmith Development Corporation, opened The Great Mall
of The Northwest located outside of Seattle, Washington in 1995. This 1.2
million square foot project serves a population base of over 2.2 million people
in the Seattle-Tacoma market.
-22-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
The typical Mills project ranges in size from 1.2 to 1.9 million square
feet of total GLA. In aggregate, the seven existing Mills properties, including
the two newest Mills developments - Arizona Mills and Grapevine Mills which
opened in Fall 1997, contain about 10,600,000 square feet, with approximately
1,300 anchor and specialty stores. The mall portfolio can be roughly allocated
as 61 percent anchor/major tenants and 39 percent specialty stores. In 1996,
the overall occupancy was 95.0 percent described as 98.0 percent among the
majors and 91.0 percent among all specialty shops, exclusive of Ontario Mills
which was in lease-up and the two newly opened developments. On average, majors
generated sales of $218 per square foot and mall shops were $307 per square
foot. The top performer was Sawgrass Mills with specialty shop sales of $407
per square foot. The Mills projects are typically comprised of a mix of
off-price, outlet, big box, specialty, and value-oriented stores. Collectively,
they are referred to as value retail centers.
The grand opening of Ontario Mills, located about 40 miles northeast of
the subject City Mills at Orange site in Ontario, San Bernardino County,
California, was November 14, 1996. The center had an overall occupancy at
opening of 93.0 percent and an overall average rent of $12.00-$15.00 per square
foot per year. Mall shop rents average about $22.00-$23.00 per square foot per
year. The 1997 gross sales, based on year-to-date sales through October, are
estimated at almost $310.0 million, or $248 per square foot, including shops
and anchors. Specialty shops alone are projected to generate a first year sales
volume of $342 per square foot, and anchors/majors sales are projected to be
about $193 per square foot.
The two newest Mills projects opened in Fall 1997. Arizona Mills broke
ground on August 1, 1996 in Tempe, Arizona (Phoenix/Mesa). The grand opening
was November 1997, and the 1.2 million square foot project opened with an
overall occupancy of 93.0 percent. Grapevine Mills broke ground on July 10,
1996 in Grapevine, Texas (Dallas/Fort Worth). The center contains 1.5 million
square feet and opened in October 1997 at 82.0 percent occupancy overall, with
specialty shop occupancy of 83.0 percent.
The newest development, City Mills at Orange, broke ground in late Summer
1997. The grand opening is planned for November 1998 for this 811,909 square
foot entertainment oriented project. Opening occupancy is currently budgeted by
the Mills Corporation at 76.3 percent overall, with 75 percent occupancy at
opening for the specialty shop space alone. Average occupancy during the first
year is projected by Mills at 71.0 percent. These are reported to be
conservative estimates for budgeting purposes
Other Mills developments in the pipeline include: Candlestick Mills (San
Francisco, CA), Concord Mills (Charlotte, NC), Katy Mills (Houston, TX),
Meadowlands Mills (NY/Northern NJ) and Opry Mills (Nashville, TN).
VALUE RETAIL CONCEPT
The value retail projects are comprised of a mix of off-price and outlet
store formats. Collectively, they are referred to as value retail centers.
Value retail is generally segmented into seven merchandising categories:
Manufacturer Factory Outlets, Department Store Outlets, Specialty Retail Store
Outlets, Super Savings Stores, Off-Price Retailers, Catalog Outlets, and
Category Dominant Stores. The following is a brief overview of each category:
-23-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
MANUFACTURER FACTORY OUTLETS are owned and operated by manufacturers. They
sell merchandise directly to the consumer, eliminating mark-ups of the
traditional distribution channels. These stores feature the same designer
names and a major selection from each line. Manufacturer outlets in The
Mills include Calvin Klein, Carter's, London Fog, and Jockey.
DEPARTMENT STORE OUTLETS are operated by nationally or regionally
recognized department store chains traditionally found in regional malls.
They stock both excess inventory and out-of-season merchandise. Their
considerable buying strength allows them to purchase excess merchandise
directly from manufacturers, passing the savings onto the consumer in an
outlet store format. Department store outlets in The Mills constitute both
anchor and major stores and include such tenants as The Clearinghouse by
Saks Fifth Avenue, Neiman Marcus Last Call, and Nordstrom Rack.
SPECIALTY RETAIL STORE OUTLETS are operated by nationally or regionally
known specialty retail chains traditionally found in regional malls. These
stores are the outlets for excess inventory and out-of-season merchandise
of such specialty retailers as Ann Taylor, Benetton, and Nine West.
SUPER SAVINGS STORES offer a wide variety of branded merchandise typically
sold at moderate-level price points by adding branded goods in more
expanded formats than traditional off-price retailers. This merchandise is
excess inventory from manufacturers of the brand-name goods. Super savings
stores in The Mills projects include expanded formats of Burlington Coat
Factory, Syms, and T.J. Maxx.
OFF-PRICE RETAILERS buy excess inventory from manufacturers of brand-name
goods and offer these goods at mid- to higher-level price points.
Off-price retailers in The Mills include Clothestime, Payless ShoeSource,
and Dress Barn.
CATALOG OUTLETS are operated by nationally and regionally recognized
catalogers which sell at substantial discounts averaging 50.0 percent
below full-retail prices. The merchandise sold by these outlets consists
primarily of end-of-season or previous-season warehoused goods. Catalog
outlets in The Mills are represented by such tenants as ChildCraft,
JCPenney Catalog Outlet, and Spiegel Outlet.
CATEGORY DOMINANT STORES offer a dominant selection of products in a
defined merchandise category in great depth of inventory. The extensive
selection of merchandise in one location is the key to the success of a
category dominant store. Discounts from full-price retail are short-term
and item-specific, creating a sense of immediacy for the purchase.
Category dominant stores in The Mills include IKEA, Bed Bath & Beyond,
Just For Feet and The Sports Authority.
The Mills Corporation has provided us with a tenant mix profile of each of
several of their existing projects. As of April 1, 1996, the tenant
breakdown/merchandising mix at The Mills properties was:
-24-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
==========================================================================
MILLS TENANT MIX
==========================================================================
POTOMAC FRANKLIN SAWGRASS GURNEE ONTARIO
CATEGORY MILLS MILLS MILLS MILLS MILLS
==========================================================================
Manufacturers: 35% 23% 32% 34% 46%
--------------------------------------------------------------------------
Retail Outlets: 25% 32% 14% 33% 29%
--------------------------------------------------------------------------
Value/Off-Price: 26% 33% 46% 25% 6%
--------------------------------------------------------------------------
Food: 6% 8% 1% 4% 4%
--------------------------------------------------------------------------
Service: 6% 3% 7% 2% 1%
--------------------------------------------------------------------------
Catalogs: 1% 1% 0% 2% 0%
--------------------------------------------------------------------------
Other: n/a n/a n/a n/a 14%
--------------------------------------------------------------------------
Total: 100% 100% 100% 100% 100%
==========================================================================
Source: The Mills Corporation
==========================================================================
COMPETITIVE ADVANTAGES
Based in part from data provided by the Urban Land Institute, as well as
our analysis of The Mills project concept, The Mills principal competitive
advantages and distinctions of the value retail center can be summarized as
follows:
VALUE RETAIL FOCUS -- Each Mills property is tenanted almost exclusively
by value retailers offering a broad selection of brand-name and other
quality merchandise. Each Mills offers significant discounts from prices
charged by the traditional department and specialty store tenants of
conventional super-regional malls.
SIZE -- The Mills average size is approximately two-thirds larger than a
conventional super-regional mall, ranging from approximately 1.5 to 1.8
million square feet of gross leasable area. Conventional super-regional
malls average about 972,000 square feet of total occupancy area.
MARKET AREA -- The Mills typically serve a primary market area of
approximately 40 miles, with a secondary market area of up to 100 miles
from the center. Conventional super-regional malls typically serve a
primary market of 12 miles, with secondary markets of 20 miles.
NUMBER & SIZE OF ANCHOR/MAJOR STORES -- Each Mills project contains
between 14 and 19 anchor/major stores ranging in size from 20,000 to
156,000 square feet. The typical super-regional mall includes at least 3
full-line department stores of generally not less than 100,000 square feet
per store.
SIZE OF SPECIALTY STORES -- Specialty store tenants at The Mills, on
average, occupy approximately 3,100 square feet of GLA each, this compared
to about 1,875 square feet per store at conventional super-regional malls.
This larger store area allows specialty stores to sell a broader selection
of merchandise at a lower cost per square foot, thereby producing higher
unit volumes with virtually no increase in occupancy cost per unit as
compared to a typical mall location.
-25-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
EFFICIENT AND FLEXIBLE DESIGN -- Approximately 78.0 percent of the total
area of each Mills property is "leasable", this compared to an average of
63.0 percent for conventional super-regional malls. This design results in
comparatively lower common area maintenance costs at The Mills projects
due to the smaller sized common area. In addition, the single-story design
and physical structure of The Mills projects afford greater flexibility in
making configuration changes and expansions than the typical multi-level
mall.
The popularity and success of super-regional value retail malls is founded
on characteristics and trends which include:
VALUE-ORIENTED RETAIL is one of the fastest growing segments in the
industry today, drawing not only from lower- and middle-income consumers,
but also from middle- to upper- socioeconomic groups.
ENTERTAINMENT and attractive decoration is typically incorporated into the
design, adding to the shopping experience, improving the attraction, and
increasing the visitors time spent shopping. Such features may include
theaters, active food courts, specialty theme courts, video and/or
interactive systems, and lighted billboards.
LOCATIONS are much closer to major metropolitan areas than the typical
factory outlet center. Factory outlet centers are typically 60 to 80 miles
from major markets so as not to compete with their own product carried by
retailers at more traditional centers.
DESTINATION SHOPPING is the goal of retailers at value-oriented centers,
citing a few big trips from shoppers each year. The typical shopper will
stay 3 to 5 hours instead of the typical 1 to 2 hour visit at traditional
malls. Bus service helps facilitate this promotional concept.
TRADE AREAS can stretch up to 100 miles in radius from the center. This
enables retailers to efficiently reach a broad mass of shoppers.
RENTAL RATES are approximately two-thirds of the typical rent paid at
traditional regional malls. Minimum rents tend to by more in-line with
factory outlet centers, although common area costs are usually higher.
Sales, however, tend to be 20.0 to 25.0 percent higher than the
traditional mall. Lower rents and higher sales volumes help to create the
proper environment for value-priced merchandising.
-26-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
TOURISM DRAW
Each Mills project has a significant tourism/visitor program which
promotes The Mills in the travel industry both nationally and internationally,
thereby making The Mills a well-recognized tourist attraction. As a result, The
Mills have become destination shopping points, attracting, on average, over
13,000 bus tours and hundreds of thousands of tourists each year. Potomac
Mills, the first Mills project, is reportedly the top tourist attraction in the
Washington D.C. area and, as reported by The Washington Post on September 8,
1991, is the top rated tourist attraction in the State of Virginia. This
property reportedly draws more than 25.0 million visitors each year. Based on
data compiled by the City of Sunrise, Florida in 1992, Sawgrass Mills draws
more visitors than any other tourist attraction in the State of Florida except
for Walt Disney World in Orlando. According to the Philadelphia Scarborough
Report commissioned by The Philadelphia Inquirer, Franklin Mills has been the
number one shopping center destination in the greater Delaware Valley since its
opening. Based on data supplied by the State of Illinois, Gurnee Mills (with
approximately 13.0 million visitors each year) draws more visitors than the top
three Illinois tourist attractions combined.
PROPERTY PROFILES
To better understand the performance of The Mills projects, we have
included a brief overview of each of the existing properties. After the
summaries, we have included a review of the sales performance at each of the
centers. The chart on the ACCOMPANYING PAGE summarizes various characteristics
of each property. It is noted that we have analyzed each property's trade area
based upon a 40.0-mile radius.
POTOMAC MILLS
Potomac Mills is located at Exit 156 off of Interstate 95 in Woodbridge,
Virginia, a suburb of Washington, D.C. Potomac contains 1,639,000+/- square
feet of total GLA and features five anchors, several major tenants, and over
200+/- value-oriented and specialty retailers. It has been built in three
phases between 1985 and 1993. An allocation of the GLA is shown on the
following chart.
============================================================
COMPONENT # OF UNITS GLA (SF) RATIO OCCUPANCY
- ------------------------------------------------------------
Anchors 17 1,005,942 61.4% 100%
- ------------------------------------------------------------
Specialty 212 632,921 38.6% 93%
Stores
- ------------------------------------------------------------
Total 229 1,638,863 100.0% 97%
============================================================
Major tenants at Potomac include Burlington Coat Factory, Saks Off Fifth,
IKEA, JCPenney Outlet Store, Marshalls, Nordstrom Rack, Spiegel Outlet Store,
The Sports Authority, and Waccamaw Pottery. Anchor rents average about $6.76
per square foot, while mall shops average $25.32 per foot. The overall average
rent is approximately $14.00 per square foot.
-27-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
Potomac Mills generated total sales of $356.2 million, equivalent to $223
per square foot on an average occupied area basis. Mall shops report average
sales of $289 per square foot, while anchors are $185 per foot. The 40.0-mile
radius around the property shows a total population of 4.2 million which ranks
third among the portfolio. Average household income levels are the highest of
the group, with growth potential expected to rank better than the portfolio
mean. We would note that Potomac Mills has an excellent tourist draw. The
company is planning to add an entertainment zone in late 1997/early 1998
bringing in a major theater chain and several themed restaurants.
Based upon aggregate sales of $356.2 million, we have calculated that
Potomac captures approximately 1.61 percent of potential retail sales within a
40.0-mile radius of the property. Due to the urban nature of the Washington
D.C. market, we might consider a slightly smaller radius for Potomac Mills when
compared to, say, Sawgrass Mills. If we were to utilize a 30.0-mile radius, the
capture rate for Potomac would be about 2.04 percent.
FRANKLIN MILLS
Franklin Mills is located off of Interstate 95 at the intersection of
Woodhaven and Knights Road in Philadelphia, Pennsylvania. Franklin Mills
contains a total of 1,762,000+/- square feet with 18 anchor and major tenants
and over 200+/- value-oriented and specialty retailers. The mall opened in
1989. An allocation of the GLA is shown on the following chart.
============================================================
COMPONENT # OF UNITS GLA (SF) RATIO OCCUPANCY
- ------------------------------------------------------------
Anchors 18 1,155,303 65.6% 100%
- ------------------------------------------------------------
Specialty 207 606,923 34.4% 83%
Stores
- ------------------------------------------------------------
Total 225 1,762,226 100.0% 93%
============================================================
Major tenants include Burlington Coat Factory, Bed Bath & Beyond, Saks Off
Fifth, Filene's Basement, Last Call from Neiman Marcus, Marshalls, Nordstrom
Rack, and JCPenny Outlet. Anchor store rents average about $5.67 per square
foot, with mall shops producing an average rent of $22.16. The overall average
rent is calculated to be $11.40 per square foot.
The company has been remerchandising Franklin Mills by bringing in several
higher end outlets including Tommy Hilfiger, Brooks Brothers, Nautica, Talbot
and Polo. In addition, an 18 screen General Cinema is being added.
Franklin Mills has the most populated radius of The Mills properties at
6.1 million, and ranks third for average household income ($65,107). Yet
despite the higher expenditure potential within the 40.0-mile radius, Franklin
only ranks third for aggregate and average sales. The center generated total
sales of approximately $338.2 million, equivalent to $204 per square foot on an
average occupied basis. Mall shops here do roughly $254 per square foot in
sales, while anchors do $182 per foot. Franklin Mills has the lowest growth
projections over the next five years.
-28-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
Utilizing the reported aggregate sales of $338.2 million, Franklin
captures approximately 1.18 percent of potential sales within the 40.0-mile
radius. Similar to Potomac Mills, Franklin's market is characterized as being
more urban in nature. Looking toward a 30.0-mile radius, the capture ratio
would be 1.52 percent.
SAWGRASS MILLS
Sawgrass Mills was constructed in late-1990 in Sunrise, Florida,
approximately 11.0 miles west of Ft. Lauderdale and a 30.0 minute drive north
of Miami. In November, 1995 the company completed the Phase II expansion which
added 136,000 per square feet which opened at 100 percent occupancy. In the
third quarter of 1998, the company expects to open Phase III (270,000 square
feet) in concert with the opening of the new Florida Panthers Sports Arena
across the Ring Road. Included in the expansion is an entertainment zone
anchored by a 30 screen Cobb Theater. The 1,878,000+/- square foot center has
21 anchor/major tenants and 235+/- value-oriented and specialty retailers.
============================================================
COMPONENT # OF UNITS GLA (SF) RATIO OCCUPANCY
- ------------------------------------------------------------
Anchors 21 1,193,683 63.5% 98%
- ------------------------------------------------------------
Specialty 235 684,726 36.5% 97%
Stores
- ------------------------------------------------------------
Total 256 1,878,409 100.0% 97%
============================================================
Sawgrass Mills is by far the most productive of The Mills properties.
Anchored by Burlington Coat, JCPenney Outlet, Marshalls, Target, Brandsmart,
Spiegel, Bed Bath & Beyond, and Waccamaw, the center reports aggregate sales of
$655.2 million ($357/SF). Mall shops show average sales of $407 per square
foot, with anchors at $329.
Anchor tenant rents average $8.03 per square foot, while mall shops
average $27.90. The overall average rent for the center is reported to be
$16.55 per square foot.
Sawgrass has a very good tourism-base for customer draw, with a 40.0-mile
radius population of nearly 4.1 million. Average household income levels are
fourth among The Mills portfolio at $57,129. Based upon aggregate sales of
$655.2 million, it appears that Sawgrass captures approximately 3.23 percent of
potential retail sales within its 40.0-mile radius. Sawgrass is considered to
be more likely to draw from a larger area when compared to the other more urban
properties.
GURNEE MILLS
Gurnee Mills is located at the intersection of Interstate 94 and Route 132
in Lake County, Illinois, midway between Chicago and Milwaukee, Wisconsin.
Gurnee Mills opened in August 1991. It contains 1,468,000+/- square feet with
14 anchors and 200+/- specialty shops. The company is in the midst of upgrading
and enhancing the tenant mix. A 150,000 per square foot expansion includes a
125,000 per square foot Bass Pro Shops Outdoor World. By 1998, two additional
anchors are expected to be added. Recent leases have also been signed with
Rainforest Cafe and Planet Hollywood.
-29-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
============================================================
COMPONENT # OF UNITS GLA (SF) RATIO OCCUPANCY
- ------------------------------------------------------------
Anchors 18 827,872 56.4% 94%
- ------------------------------------------------------------
Specialty 204 639,742 43.6% 91%
Stores
- ------------------------------------------------------------
Total 218 1,467,614 100.0% 93%
============================================================
Gurnee Mills is the most densely populated 40-mile radius of The Mills
projects surveyed, with over 5.2 million. Average household income levels rank
second in the portfolio at $68,864. Sales levels, however, are generally the
lowest of the properties aggregated sales were 194 per square foot occupied
area basis. Mall shops average about $252 per square foot, while anchors
average $151 per foot.
The overall average rental rate at Gurnee is approximately $13.62 per
square foot, with mall shops averaging $20.50 and anchors averaging $6.78 per
square foot.
Gurnee captures an estimated 1.05 percent of potential retail sales within
its 40.0-mile radius. Much like Potomac and Franklin, it would appear that this
low ratio is due primarily to the fact Gurnee's trade area might not extend out
toward a 40.0-mile radius because of the urban nature of the Chicago region. If
we were to compare its capture rate to retail sales within a 30.0-mile radius,
the ratio would be 2.16 percent.
ONTARIO MILLS
Ontario Mills, the company's fifth project, opened its doors in November
1996, with a total GLA of about 1.7+/- million square feet and 19 anchor
stores, 13 of which were leased at opening. The project has a "Racetrack"
design and an entertainment component that is a new concept for Mills. The
property opened with an overall occupancy of 93.0 percent and an average rental
rate of $15.50 per square foot per year for all tenants. Mall shop rents
average about $23.00 per square foot and opened at an 87.0 percent occupancy
level. Anchor stores show average rental rates ranging from $5.00 to $18.00 per
square foot, with an overall average of $9.68. The $190.0 million project
created some 2,500 construction jobs and another 5,000 permanent jobs at
completion. The project attracted 4.0 million visitors in its first 45 days. A
400,000 square foot entertainment wing opened in summer 1997, including
American Wilderness Experience, Sega Game Works, IWERKS, and Dave Busters. The
1997 projected sales are estimated at $248 per square foot overall, with
specialty shops generating sales of $342 per square foot.
SALES PERFORMANCE
As noted, The Mills projects (excluding Ontario Mills) reflect major store
sales of $218 per square foot on average, with specialty mall shops reporting
sales of $307 per foot. The following chart summarizes the performance of each
property for calendar year 1996.
-30-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
===============================================================================
MILLS PROPERTY SALES PERFORMANCE - 1996 RESULTS*
===============================================================================
POTOMAC MILLS FRANKLIN MILLS SAWGRASS MILLS GURNEE MILLS
---------------------------------------------------================
SALES PER SF SALES PER SF SALES PER SALES PER
(000) (000) (000) SF (000) SF
===============================================================================
Specialty
Shops $170,110 $289 $127,952 $254 $270,323 $407 $146,706 $252
- -------------------------------------------------------------------------------
Anchors/
Majors* $186,099 $185 $210,265 $182 $384,867 $329 $117,508 $151
- -------------------------------------------------------------------------------
Total
Sales $356,209 $223 $338,217 $204 $655,190 $357 $264,214 $194
- -------------------------------------------------------------------------------
Shop Sales
Ratio 47.8% -- 37.8% -- 41.3% -- 55.5% --
- -------------------------------------------------------------------------------
Shop GLA
Ratio 38.6% -- 34.4% -- 36.5% -- 43.6% --
===============================================================================
* Includes Entertainment Shops. Unit rates are adjusted for average occupied
area.
===============================================================================
From the above, we see that Sawgrass Mills is by far the most productive
of The Mills projects with aggregate sales of $655.2 million ($357 per square
foot overall). Specialty shop sales were $270.3 million, or $407 per square
foot. Anchor store sales were about $329 per square foot. As can be seen,
specialty tenants accounted for 41.3 percent of total sales.
Potomac Mills is the second most productive property with sales of $356.2
million ($223 per square foot overall). Specialty shops accounted for
approximately 48.0 percent of sales at $308 per square foot, while anchors and
majors had sales of $185 per foot.
At Franklin Mills and Gurnee Mills, total sales averaged $204 and $194 per
square foot, respectively. Specialty tenants had sales of $254 and $252 per
square foot, while anchors had sales of $182 and $151 per square foot for
Franklin and Gurnee, respectively.
On an overall basis, exclusive of Ontario Mills which was newly opened
last year, the majors generated sales equal to $218 per square foot, while
specialty tenants had sales of $307 per square foot.
Ontario Mills 1997 projected sales, based on year-to-date actual sales
through October 1997, are approximately $310.0 million, or $248 per square
foot, while specialty tenants had sales of $342 per square foot, exceeding the
Mills averages noted above.
RENT ATTAINMENT LEVELS
The Mills projects have shown their ability to increase effective rents
over the last five years. Effective rents are defined as minimum and percentage
rents divided by the average occupancy within each center.
-31-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
==============================================================================
AVERAGE ANNUAL EFFECTIVE RENT PER SF*
==============================================================================
POTOMAC MILLS FRANKLIN MILLS SAWGRASS MILLS GURNEE MILLS
- ------------------------------------------------------------------------------
1992 $12.00 $12.92 $14.70 $13.76
- ------------------------------------------------------------------------------
1993 $11.99 $12.59 $15.69 $13.86
- ------------------------------------------------------------------------------
1994 $13.00 $11.64 $14.54 $12.83
- ------------------------------------------------------------------------------
1995 $13.30 $11.33 $15.66 $12.89
- ------------------------------------------------------------------------------
1996 $14.00 $11.40 $16.55 $13.62
==============================================================================
* Average for all space.
==============================================================================
A further allocation of the overall average rent attainment levels can be
made between anchor and specialty tenants as shown below.
==============================================================================
EFFECTIVE RENT ALLOCATIONS
==============================================================================
POTOMAC MILLS FRANKLIN MILLS SAWGRASS MILLS GURNEE MILLS
------------------------------------------------------------------------
ANCHOR SPECIALTY ANCHOR SPECIALTY ANCHOR SPECIALTY ANCHOR SPECIALTY
==============================================================================
1994 $6.47 $22.17 $5.78 $21.54 $7.56 $24.83 $6.48 $10.71
- ------------------------------------------------------------------------------
1995 $6.57 $23.14 $5.69 $21.29 $7.68 $27.58 $6.36 $20.08
- ------------------------------------------------------------------------------
1996 $6.76 $25.32 $5.67 $22.16 $8.03 $27.90 $6.78 $20.56
==============================================================================
As expected, Sawgrass Mills, the most productive project, generates the
highest effective rents. With specialty shop rents of $27.90 per square foot
and sales of $407 per square foot, a effective rent/sales ratio of 6.9 percent
is indicated. The following chart presents a summary of effective rent-to-sales
ratios at Mills properties.
========================================
EFFECTIVE RENT-TO-SALES RATIO
========================================
Sawgrass Mills 6.9%
- ----------------------------------------
Potomac Mills 8.8%
- ----------------------------------------
Franklin Mills 8.7%
- ----------------------------------------
Gurnee Mills 8.1%
========================================
Ontario Mills has an average rental rate of about $15.50 per square foot
for all tenants. Mall shop rents average about $23.00 per square foot. Anchor
stores show average rental rates ranging from $5.00 to $18.00 per square foot,
with an anchor average of $9.68 per square foot. Based on the average rent at
$15.50 and sales of $248 per square foot, the first year rent-to-sales ratio at
Ontario Mills equals 6.25 percent, which is lower than any of the other Mills
developments shown above.
PROPOSED/RECENTLY DEVELOPED
As noted, several new Mills projects are currently underway. Each of these
new projects are being developed as a newly formed joint venture with Simon
Property Group and Kan Am. An affiliation was also formed with Taubman Realty
Group and Grossman Company Properties on the recently developed Arizona Mills.
-32-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
CITY MILLS AT ORANGE (subject) is an open air, festival/entertainment
center in the Los Angeles/Orange County area. City Mills at Orange
comprises an approximate 74 acre site at the intersection of the Santa Ana
Freeway (I-5) and the Garden Grove Freeway in Orange California only four
miles from Disneyland. The 811,909 square foot open air center will
feature a 30-screen AMC Theater included in over 330,000 square feet of
entertainment and dining facilities. The approximate $187 million project
is expected to be completed in November 1998.
GRAPEVINE MILLS, which opened in October 1997, is a 1,500,001+/- square
foot project, with 593,120+/- square feet of specialty shops and food
court. Anchors include Off Fifth-Saks Fifth Avenue, Burlington Coat, Bed
Bath & Beyond, Group USA, Rain Forest Cafe, and 16 other major tenants.
Rental rates for mall shops range from $15.00 to $45.00 per square foot,
with an overall average of about $23.00. Anchor leases range from
$5.50-$20.00 per square foot, with an average of $12.75. The total project
budget is $203.0 million and was 55.0 percent pre-leased as of February
1997. Upon opening in October 1997, the project was 82.0 percent occupied,
with specialty store occupancy at 83.0 percent.
ARIZONA MILLS opened November 20, 1997 at one of Phoenix's most heavily
trafficked intersections. The site is highly visible from both Interstate
10 and Superstition Freeway. The center includes 1.2+/- million square
feet and has 17 anchor/major tenants. The average mall shop rent is
budgeted at $23.90 per square foot, and existing leases, accounting for 89
percent of the mall shop GLA, are on track at $23.83 per square foot on
average. Anchor leases are budgeted to average $10.74 per square foot,
with executed leases (96 percent of the anchor GLA has executed leases)
currently averaging $10.66 per foot. Anchor leases under negotiation are
showing an average rental rate of $12.80 per square foot. Anchor tenants
include JCPenney Outlet, IMAX, Sega, and Off Rodeo which have
substantially higher rental rates due to merchandising/sales potential.
All combined, the overall average budgeted rent for Arizona is
approximately $16.36 per foot, with executed leases at 93.0 occupancy
averaging $16.04 per square foot. Total sales at Arizona Mills are
forecasted to be over $300.0 million, with malls shops performing over
$300 per foot and anchors over $250 per foot. The property's 40.0-mile
radius is generally smaller than the other Mills projects. For 1996, a
total population of 2.5 million is estimated. Average household income is
$49,454, lower than the existing properties. Growth potential for Arizona
Mills, however, is considerably better than the existing Mills projects,
with population growth forecasted to be nearly 2.0 percent per year and
income growth 5.5 percent per year. The $183.0 million project was 62.0
percent pre-leased as of February 1997, and was 93.0 percent occupied at
opening.
-33-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
Planned developments include:
PROJECTED
NAME LOCATION GLA OPENING
---- -------- --- ---------
Katy Mills Houston, TX 1.6 million 1999
Meadowlands Mills NY/Northern NJ 2.1 million 1999
Concord Mills Concord, NC 1.2 to 1.8 million 2000
Opry Mills Nashville, TN 1.2 to 1.8 million 2000
Candlestick Mills San Francisco, CA 1.2 to 1.8 million 2000
Un-named North Aurora, IL 1.2 to 1.8 million 2001
OTHER MILLS-TYPE PROJECTS
GREAT MALL OF THE GREAT PLAINS
Glimcher Realty Trust recently (8/97) opened their first value oriented
mega-mall in Olathe Kansas, a suburb of Kansas City. The property has good
regional accessibility and is highly visible from both Interstate 35 and
Highway K-7/169. The center totals some 842,000+/- square feet and has 11
anchor/major tenants.
====================================================
COMPONENT GLA ALLOCATION
====================================================
Anchors 281,399 33.4%
- ----------------------------------------------------
Majors 166,472 19.8%
- ----------------------------------------------------
Specialty Stores 394,206 46.8%
- ----------------------------------------------------
Non-Owned 0 --
- ----------------------------------------------------
Total 842,077 100.0%
====================================================
Mall shop leases in-place average about $18.50 per foot. Anchor leases
average $9.67 per foot. The market (40.0-mile radius) is smaller than the other
Mills-type projects. For 1996, a total population of 1.7 million is estimated.
Average household income is $56,971, lower than all existing properties, but
comparable to Sawgrass Mills. Growth potential for Great Plains, however, is
generally better than the existing Mills projects on average, with population
growth forecasted to be nearly 1.0 percent per year and income growth 6.1
percent per year.
GREAT MALL OF THE GREAT NORTHWEST
Great Mall of The Great Northwest was opened in 1995 in the Seattle/Tacoma
MSA, at Highway 167 and Highway 18, with average accessibility to Interstate 5.
The 962,000 square foot project is anchored by 8 anchor stores and has reported
troubles in leasing-up in-line specialty tenant space.
Mall shop leases average about $20.17 per foot, while anchor leases
average $11.16 per foot. The market (40.0-mile radius) is somewhat smaller than
the other Mills-type projects. For 1996, a total population of 2.9 million is
estimated. Average household income is $64,652, which ranks fairly well against
other Mills-type projects. Growth potential for Great Northwest, is generally
better than the existing Mills projects on average, with population growth
forecasted to be nearly 1.4 percent per year and income growth 6.2 percent per
year. With estimated total sales of $148.1 million, the property captures
approximately 0.93 percent of sales within its 40.0-mile radius.
-34-
<PAGE>
VALUE RETAIL MALL CONCEPT
- ------------------------------------------------------------------------------
OTHER
Other similar projects which are currently under construction or are
planned include Great Lakes Crossing, a 1.6+/- million square foot value-retail
and entertainment center being developed by The Taubman Realty Group in Auburn
Hills, Michigan and the Dolphin Mall, a 1.4+/- million square foot value center
in Dade County being developed by Michael Swerdlow Companies.
SALES CAPTURE RATIOS
From the comparison to other Mills-type projects, we see that these
properties capture between 0.9 to 3.2 percent of retail sales within their
respective 40.0-mile radii. This type of comparison is difficult due to the
widely divergent markets these properties are located in. However, the analysis
provides a basis for comparison to what the subject property could reasonably
expect to achieve within its market.
As discussed, we believe that the more urban of the Mills projects likely
have smaller radii than 40.0 miles, while the other properties might have
larger market areas. This is due primarily to the shopping patterns, vis-a-vis
transportation and access, as well as competing property types and alternative
retail facilities in the varying markets.
The subject area has a myriad of retail alternatives from which to choose.
In addition, certain physical/geographic boundaries which influence travel time
will impact the degree of patronage from certain areas, including some of the
Inland Empire Cities such as Riverside and Ontario, which would opt for the
closeby Ontario Mills project, and areas generally north of Interstate 10 in
Los Angeles, which would tend to travel north and west to other
entertainment/shopping alternatives. The developed areas of North San Diego
County and the cities in the southern reaches of Orange County will likely opt
for the closer located Irvine Entertainment Center, under expansion and located
along Interstate 5 about 14 miles southeast of the subject. We believe the
subject will be capable of capturing retail sales toward the upper end of the
ratio range presented by other Mills-type projects. In addition, due to the
above noted physical influences, we would be inclined to compare the subject
property based upon a smaller radii when paired against the other Mills-type
projects. Further discussion of this capture potential is included in the
Retail Market Analysis section of this report.
-35-
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
GREATER DALLAS/FORT WORTH RETAIL MARKET
In order to present an accurate picture of the current state of the retail
market, as well as forecast future market conditions in the Dallas/Fort Worth
metropolitan area, data regarding the macro-market and various delineated
submarkets were compiled from the periodic reports published by M/PF Research,
Inc.
SUPPLY
As of Year End 1997, there was a total of 95,306,100 square feet of retail
space (non-regional) in the Dallas/Fort Worth market area, 65,838,800 square
feet of which was in Dallas and 29,467,300 square feet being in Fort Worth. Add
to this the 26,830,200 square feet of space in the Metroplex regional centers
(primarily regional and super regional malls) and the total multi-tenant retail
inventory exceeds 122 million square feet. The chart below focuses upon
non-regional shopping center space.
<TABLE>
<CAPTION>
======================================================================================================
SUPPLY (1987 TO 1997)
======================================================================================================
MARKET/CENTER 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
TYPE
======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------
DALLAS AREA
-----------
Number of
Centers(1) 818 826 826 888 886 898 898 919 942 951 1001
Total Square
Feet (000's)(1) 54,842 55,342 56,407 57,540 57,484 58,460 58,714 60,266 62,201 63,351 65,839
Percent
Change from
Previous
Period 9.8% -0.9% 1.9% 2.1% -0.1% 1.7% 0.4% 2.6% 3.2% 1.8% 3.9%
------------
FORT WORTH
AREA
------------
Number of
Centers(1) 454 469 479 490 492 489 488 492 506 511 509
Total Square
Feet (000's)(1) 22,885 23,997 25,263 25,239 25,887 25,950 26,781 27,171 28,470 29,009 29,467
Percent
Change from
Previous
Period 7.6% 4.9% 5.3% -0.1% 2.6% 0.2% 3.2% 1.5% 4.8% 2.0% 1.6%
------------------------------------------------------------------------------------------------------
(1) Excludes regional and super-regional centers
======================================================================================================
</TABLE>
The current multi-tenant inventory includes the completion of 1,448,500
square feet in the Dallas area and 579,000 square feet in the Fort Worth area
during the twelve months prior to Year End 1997, compared to 1,417,700 square
feet completed in Dallas and the 963,400 square feet completed in the Fort
Worth area for the same time period prior to Year End 1996. Thus, the new
multi-tenant construction activity in for the 12 months preceding Year End 1997
represents a 15 percent decrease from 1996 totals.
Single-tenant properties, as well as expansions to regional centers, are
excluded from the preceding completion numbers. According to M/PF, there was
195,000 square feet of additions to the regional centers in Dallas and
1,500,000 square feet (Grapevine Mills Mall) added in Fort Worth in 1997. As
for single tenant buildings, 2,478,100 square feet of single tenant space was
added to the Metroplex in the 12 months prior to Year End 1997. The single
tenant retail space includes 1,419,900 square feet in 32 buildings in Dallas
(10 were Eckerd and 8 were Walgreen's) and 1,058,100 square feet in 25
buildings in Fort Worth (6 were Eckerd and 6 were Walgreen's). These numbers
reflect an increase from Year End 1996 of almost 59 percent. In the 12 months
prior to Year End 1996, new construction of single tenant retail facilities
totaled slightly less than 1,500,000 square feet.
-36-
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
The most significant multi-tenant completions in the Dallas/Fort Worth area
are illustrated in the following table.
==================================================================
DALLAS/FORT WORTH MULTI-TENANT COMPLETION'S - YEAR END 1997(1)
==================================================================
SECTOR/ SIZE
SUBMARKET NAME (SF)
==================================================================
-----------------------
DALLAS
-----------------------
Far North Dallas Alpha Parkway Plaza 145,300
North Garland Shiloh Square 85,400
North Garland Shiloh Springs 84,200
East Plano Parker Central Plaza 96,700
Addition
East Plano 14 Jupiter Place 103,000
Southeast Denton County Colony Plaza I 89,100
Southeast Denton County Lakepoint Crossing II 140,000
Far West Plano Preston Stonebrook 105,000
Plaza
Allen/McKinney Plaza at Stonebridge 95,700
Allen/McKinney Tom Thumb Center 79,700
Allen/McKinney 1702 West University 174,000
==================================================================
-----------------------
FORT WORTH
-----------------------
Southeast Fort Worth Park Forest 82,300
Mid Arlington Woodland West - Tom 58,000
Thumb
NE Tarrant County Grapevine Mills Mall 1,500,000
NE Tarrant County Village Center 188,200
==================================================================
(1) Includes only the most notable completion's from January 1997
through December 1997.
==================================================================
The majority of the new multi-tenant shopping center space completed during
the past twelve months was located in Fort Worth. The Dallas area added
1,643,500 square feet (including Regional Centers) which was up 29.4 percent
from the amount added during the 12 months prior to Year End 1996. By
comparison, construction in Fort Worth totaled 2,079,000 square feet in 1997
compared to the 291,000 square feet during 1996 but 1,500,000 square feet of
this was the Grapevine Mills Mall. Excluding this regional center, construction
in Fort Worth rose to 579,000 square feet in 1997 demonstrating a near doubling
of the 1996 total.
The following chart illustrates the most notable multi-tenant space under
construction as of Year End 1997 in the Dallas/Fort Worth area.
-37-
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
========================================================================
DALLAS/FORT WORTH MULTI-TENANT SPACE UNDER CONSTRUCTION - YEAR END 1997
========================================================================
SECTOR/ NAME SIZE PRELEASED
SUBMARKET (SF) SPACE
(SF)
========================================================================
---------------------
DALLAS
---------------------
Oak Lawn/Park Cities Lincoln Center 135,000 115,000
Northwest Dallas Marketplace at 118,400 115,700
Webb's Chapel
Grande Prairie Carrier Towne 297,700 296,200
Crossing
Richardson Lennox Center 189,000 94,500
SE Denton County Marketplace at 140,000 70,000
Flower Mound
SE Denton County Vista Ridge Plaza II 94,000 85,000
---------------------
FORT WORTH
---------------------
South Fort Worth Trinity Commons I 168,100 122,000
North Arlington Tom Thumb Center 82,800 62,200
South Arlington Tom Thumb Center 85,500 81,100
Northeast Tarrant Vineyard Marketplace 111,200 63,200
County
Northeast Tarrant Keller Crossing 85,700 70,700
County
========================================================================
During the first half of 1998, approximately 1,562,300 square feet of
shopping center space is to be completed in the Dallas/Fort Worth area.
According to M/PF, approximately 78 percent of this space is pre-leased. The
Dallas area is expected to capture 63 percent of this new construction while
the Fort Worth area will capture the remaining 37 percent of the multi-tenanted
projects under construction.
These figures do not include single-tenant or regional mall projects. There
are no regional projects under construction. As for single tenant buildings, 7
are expected to be added to the Dallas area and 6 in Fort Worth with the square
footage of these properties totaling 813,700 square feet as compared with a
total of 1,561,000 square feet of single tenant completion's scheduled at year
end 1996. Interestingly, the bulk of the single tenant construction is planned
for only one retailer with Walgreen's showing a total of seven buildings. No
other retailer has more than one project under construction.
-38-
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
OCCUPANCY
As of Year End 1997, the average occupancy levels in Dallas and Fort Worth
were 88.9 and 87.9 percent, respectively and were expected by M/PF to increase
slightly in the first half of 1998. This occupancy level is the highest seen
metrowide since 1984. Major shopping centers with established anchor tenants
continue to enjoy the highest occupancy levels area wide. But there is only a
3.3 percent variance in occupancy between neighborhood community centers and
strip centers in the Dallas area. In contrast, a 0.9 percent variance exists in
the Fort Worth area. The following table displays the occupancy by center type
and summarizes gross occupancy trends (including regional and super regional
malls) for retail centers in the Dallas/Fort Worth area.
<TABLE>
<CAPTION>
=======================================================================================
SHOPPING CENTER GROSS OCCUPANCY
(1987 THROUGH YEAR END 1997)
=======================================================================================
MARKET/CENTER TYPE 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
=======================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------
DALLAS
------------
All Centers(1) 76% 76% 75% 76% 77% 82% 84% 86% 87.4% 88.3% 88.9%
Neighborhood/ 78% 79% 79% 79% 81% 82% 83% 86% 87.0% 87.6% 89.1%
Community Centers
Strip Centers 65% 63% 65% 66% 67% 72% 76% 81% 81.0% 83.9% 85.8%
=======================================================================================
------------
FORT WORTH
------------
All Centers(1) 76% 74% 74% 76% 77% 81% 82% 86% 86.5% 88.7% 87.9%
Neighborhood/ 81% 78% 78% 80% 81% 82% 82% 81% 85.2% 87.6% 86.8%
Community Centers
Strip Centers 66% 62% 66% 67% 69% 72% 78% 86% 83.9% 84.8% 85.9%
- ---------------------------------------------------------------------------------------
(1) Includes regional and super-regional centers.
=======================================================================================
</TABLE>
As can be seen from the chart, occupancy levels bottomed in 1989. In 1990
and 1991, absorption barely outpaced additions, which increased occupancy
levels nominally. However, between 1992 and Year End 1997, occupancy levels
have increased more rapidly as the Metroplex real estate market continues to
prosper. In their Year End 1997 forecast, M/PF projects that occupancy levels
should increase another 0.2 and 0.1 percentage points in the Dallas and Fort
Worth areas, respectively.
HISTORICAL ABSORPTION
M/PF Research, Inc., refers to absorption as the net change in occupied
space from one period to the next. Following is a historical summary of
absorption from 1989 to date:
-39-
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
========================================================================================
DALLAS/FORT WORTH ABSORPTION SUMMARY(1)
========================================================================================
SECTOR 1989 1990 1991 1992 1993 1994 1995 1996 1997
(000'S) (000'S) (000'S) (000'S) (000'S) (000'S) (000'S) (000'S) (000'S)
========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------
Dallas 52 791 1,040 2,150 1,470 1,867 1,198 958 709
- ----------------
Percentage -93% +1,421% +31% +107% -42% +162% -36% -20% -26%
Change
- ----------------
Fort Worth 539 367 674 438 1,139 891 645 633 899
- ----------------
Percentage +93% -30% +79% -35% +188% -229% -28% -2% 42%
Change
TOTAL 591 1,158 1,714 2,588 2,513 2,758 1,843 1,590 1,608
Percentage -43% +96% +48% +51% -3% +120% -33% -14% 1%
Change
- ----------------------------------------------------------------------------------------
(1) Includes only multi-tenant absorption figures in square feet.
========================================================================================
</TABLE>
As can be seen from the chart, absorption was near its low point in recent
times in 1989. However, fortunes were reversed in 1990, when net retail
absorption totaled approximately 1.2 million square feet (790,600 square feet
in the Dallas area and 366,800 square feet in the Fort Worth area). By 1992,
absorption was at its highest level since 1987. In fact, net absorption in the
Dallas/Fort Worth area totaled over 2.5 million square feet annually from 1992
through 1994. In 1995 and 1996, absorption levels throughout the Metroplex
moderated from the three previous years' totals, but activity still outpaced
construction, as evidenced by the increasing occupancy level.
In 1997, the Dallas area reported absorption of approximately 708,900
square feet. The submarkets reporting the largest gains in the Dallas area were
North Garland (244,200 square feet), Southeast Denton County (212,600 square
feet), Allen/McKinney (170,500 square feet), and East Plano (170,100 square
feet). The heaviest tenant losses were experienced in Far North Dallas
(negative 408,600 square feet), Richardson (negative 184,500 square feet), and
Carrollton (negative 96,800 square feet).
As of Year End 1997, the Fort Worth area reported twelve months of
absorption of roughly 899,400 square feet. The largest gain was reported in the
Northeast Tarrant County (1,450,600 square feet - Grapevine Mills Mall). Only
four other submarkets in Tarrant County showed a positive absorption gain and
those totaled only 48,600 square feet. The heaviest tenant losses were
experienced in Far Southwest Fort Worth (negative 209,400 square feet) and
South Arlington (negative 105,400 square feet).
As for absorption projections, M/PF forecasts Dallas gross absorption for
the first half of 1998 to be about 1,050,000 square feet to be concentrated in
five submarkets (Grande Prairie, Southeast Denton County, Richardson, Northwest
Dallas, and Oak Lawn/Park Cities). These submarkets are expected to capture
about 850,000 square feet or 81 percent of the total absorption. The bulk of
the Fort Worth gross absorption (600,000 square feet) is anticipated to be in
three submarkets (Northeast Tarrant County, South Fort Worth, and Far Southwest
Fort Worth).
-40-
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
In total, the gross absorption forecast for the metropolitan area during
the first half of 1998 represents a slight increase from the same period in
1997 with Fort Worth at 600,000 demonstrating a potential significant increase
from the same period in 1997.
YEARS' SUPPLY
Although absorption has remained relatively strong in recent years, the
metropolitan area (as a whole) remains in a slightly overbuilt state. According
to M/PF, as much as a 5.8 years' supply of space is available in the Dallas
area while a 3.7 years' supply exists in the Fort Worth market area. According
to M/PF, a well balanced market typically maintains a 1.5 to 2.0 year supply of
shopping center space. Therefore, the Dallas area retail market as a whole has
a ways to go before healthy market conditions will exist area wide, although
the new construction noted previously does attest to at least some healthy
submarket areas. The oversupply of space suggested by M/PF should be tempered
somewhat because much of the vacant space is either poorly located or in poorly
designed centers which, in all likelihood, will never lease or will not be a
competitive factor. While no formal estimates are available, it is our opinion
that about five to ten percent of the retail space inventory falls into a
category that will always experience low occupancies and, in fact, should not
be categorized with the remaining viable space.
Given the current amount of multi-tenant retail space (including regional
centers) in the Dallas/Fort Worth area (122.1 million square feet), combined
with the 1.65 million square feet under construction as of Year End 1997, the
total supply is projected to reach 123.8 million square feet by Mid Year 1998.
With a combined gross occupancy of 89.1 percent, this equates to a potential
13.5 million square feet of vacant space.
RENTAL RATES
Average quoted rental rates, including common area maintenance (CAM), in
the Metroplex began a decline in the late 1980s that continued, after a slight
statistical aberration in 1990, through 1991. The pattern reversed itself in
1992, with a rise of $0.10 per square foot to an average of $10.98 per square
foot. This slight upward trend continued in 1993, when average rents rose an
additional $0.07 per square foot, and again in 1994, as rents increased by
$0.41 per square foot. In 1995, retail rental rates increased another $0.62 per
square foot to $12.08 per square foot. In 1996, rental rates increased another
$0.46 per square foot to $12.54 per square foot. Although not shown in the
chart, the 1996 composite retail rental rate finally recovered to a level that
exceeded what was being achieved in 1986. Interestingly, it took almost exactly
ten years. In 1997, the average rental rate increase $0.54 per square foot, so
the upward trend continues.
The following chart presents a historical overview of average rents (base
rents and CAM) since 1987 for both the Dallas and Fort Worth areas, as well as
the Metroplex overall.
-41-
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
==============================================================================
DALLAS/FORT WORTH RETAIL RENTS(1)
(PER SQUARE FOOT)
==============================================================================
STRIP CENTERS NEIGHBORHOOD/COMMUNITY CENTERS DALLAS/FORT
------------- ------------------------------ WORTH
YEAR END DALLAS FORT WORTH DALLAS FORT WORTH (ALL CENTERS)
==============================================================================
1987 $12.31 $10.06 $12.00 $9.86 $11.44
1988 $10.84 $10.01 $12.00 $10.36 $11.33
1989 $10.35 $9.00 $11.16 $9.50 $10.51
1990 $10.83 $9.28 $11.95 $9.94 $11.11
1991 $10.43 $9.18 $11.64 $9.99 $10.88
1992 $10.20 $8.87 $11.71 $10.14 $10.98
1993 $10.23 $8.97 $11.89 $10.44 $11.05
1994 $10.50 $9.27 $12.33 $10.81 $11.46
1995 $10.90 $10.01 $12.95 $11.56 $12.08
1996 $11.42 $10.24 $13.52 $11.85 $12.54
1997 $11.87 $10.51 $14.09 $12.32 $13.08
==============================================================================
(1) Excluding regional malls and major tenants, but including CAM charges
==============================================================================
For all centers, retail rental rates as of Year End 1997 increased 4.05
percent in the Dallas area and 4.74 percent in the Fort Worth area compared to
Year End 1996. Combined, the two areas posted an overall increase of 4.3
percent. Strip center rents, including CAM, have increased 3.94 percent in the
Dallas area since Year End 1996 with a 2.64 percent increase posted in the Fort
Worth area. Rent changes in neighborhood/community centers increased 4.22 and
3.97 percent between Dallas and Fort Worth, respectively, over the same time
period.
The rental rate picture tends to mirror occupancy rates somewhat (in terms
of center type) with the highest rental rates being reported in the
neighborhood/community centers where anchor tenants continue to draw higher
traffic volumes. Comparatively, the rental rates in neighborhood centers are
approximately 18 percent higher than strip centers in both Dallas and Fort
Worth.
Rental rates (base rents and CAM) within specific submarkets reflect a very
broad range. For example, the Dallas submarket with the highest average rental
rate is the Central Business District (CBD) at $30.89 per square foot followed
successively by Oak Lawn/Park Cities at $24.49 per square foot, Far West
Plano/Frisco at $23.48 per square foot, the North Dallas submarket at $18.93
per square foot, and the Far North Dallas submarket at $17.65 per square foot.
With the exception of the CBD, all of these submarkets are located in the
Preston Road/Dallas North Tollway corridor, which is the highest profile
shopping alignment in the city. The lowest Dallas area rates are found in South
Dallas at $5.31 per square foot.
In the Fort Worth area, only the Fort Worth CBD and the Northeast Tarrant
County submarket have quoted rates (base rent and CAM) in excess of $16.00 per
square foot ($16.56 and $16.99 per square foot respectively). South Fort Worth,
North and South Arlington, and Far Southwest Fort Worth, follow with rates in
the $12.65 to $14.98 per square foot range. Rents in North Fort Worth and
Southeast Fort Worth are the lowest at $6.76 and $7.19 per square foot,
respectively.
-42-
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
SUMMARY
Overall, and despite the continuation of some new construction in certain
pockets of the Metroplex, rental rates (on the average) still have to increase
substantially before new construction will again be economically feasible
marketwide. It is our opinion that rental rates need to average about $13.00 to
$15.00 per square foot (with newer properties achieving rents of $15.00 to
$20.00 per square foot) before new construction will be viable on a more region
wide basis. Although the rates required by specific properties are dependent
upon a variety of factors including location, land cost, construction cost,
competition, and so on, only a few submarkets have reached this point.
The outlook for the Dallas/Fort Worth area appears promising. Given the
rapid expansion of the local economy that is on-going, we anticipate that
rental rate growth for the top tier properties will exceed the rate of
inflation over the next five to ten years thus enabling rates for such space to
catch up to the cost of construction. Rental rates for Class B space most
likely will mirror inflation during this time, while Class C and D space will
generally lag inflationary levels.
-43-
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
LOCATION AND ACCESS
The property is situated at the northwest corner of State Highway 121 and
State Highway 26 in the city of Grapevine, Texas. Grapevine is a bedroom
community of the Metroplex, located in the north central portion of the
Dallas/Fort Worth metropolitan area. As stated in the Neighborhood Analysis,
the northern suburbs of the Metroplex has been the recipient of much of the new
residential development in the past several decades as population growth has
focused on cities such as Grapevine, Colleyville, Lewisville, etc. At the
present time, there is little existing development in the subject's immediate
area. However, extending outward several miles, development becomes heavy and
is characterized as a homogeneous mixture or residential, commercial, retail,
office, industrial and special use properties.
The subject has very good access to the regional freeway system. State
Highway 121 traverses the area in a northeast/southwest direction and
intersects several major freeways including Interstate Highway 635 (LBJ
Freeway), Interstate Highway 35E (Stemmons Freeway), State Highway 114 (John
Carpenter Freeway) and State Highway 183 (Airport Freeway). The intersection
with LBJ Freeway is located approximately one-half mile south of the subject.
The subject is also located approximately two miles north of State Highway 114
and the Dallas/Fort Worth International Airport. State Highway 121 intersects
Stemmons Freeway approximately five miles northeast of the subject in
Lewisville.
All in all, Grapevine Mills is strategically located at the intersection of
two state highways in a growing bedroom community of the Metroplex. The locale
is in the central portion of Dallas/Fort Worth making it possible to draw from
the customer based for the entire area. Along those lines, the location of the
property allows for good access to the regional freeway system and increases
the potential trade area even further.
DEMOGRAPHICS
In analyzing the demographic profile of the subject trade area, we have
considered the population within a 10, 20, 40 and 100 mile radius of the
property. Generally, between 55 and 65 percent of a center's sales are
generated from within its primary trade area. The primary trade area for a
value-oriented regional shopping center of the subject's size and caliber could
extend to as far as 40 miles from the center. According to the property
manager, preliminary data indicates that the subject's primary trade area is
close to 40 miles. The secondary trade area generally refers to more outlying
areas which provide a less frequent group of customers to the center. Residents
within the secondary trade area would be more likely to shop at centers located
closer to their respective homes due to time and travel constraints. Typically,
an additional 20 to 25 percent of a center's sales will be generated from
within the secondary trade area. According to management, the secondary trade
area is generally defined as a radius between 40 and 100 miles from the subject
shopping center. The tertiary or peripheral trade area refers to more distant
areas from which occasional customers to the shopping center reside. The
residents of the peripheral trade areas may be drawn to the center by a
particular store or service which is not provided within their respective local
areas. Shoppers from the peripheral areas may account for ten to 15 percent of
a center's sales.
Detailed information provided by Equifax National Decision Systems is
illustrated on the following page.
-44-
<PAGE>
POPULATION AND INCOME ESTIMATES
<TABLE>
<CAPTION>
10 MILE 20 MILE 40 MILE 100 MILE DALLAS/FORT WORTH STATE OF
DESCRIPTION RADIUS RADIUS RADIUS RADIUS MSA TEXAS
- ---------------------------- ----------- ------------- ------------- ------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Population Statistics
Under 20 28.95% 29.97% 30.96% 30.78% 30.91% 32.38%
21-29 14.99% 14.93% 13.86% 13.41% 13.78% 13.16%
30-39 18.61% 18.39% 17.56% 16.59% 17.50% !5.82%
40-49 16.89% 15.31% 15.46% 14.99% 15.43% 14.35%
50-59 11.06% 9.88% 9.99% 10.14% 10.00% 9.66%
60 and over 9.50% 11.52% 12.18% 14.10% 12.37% 14.61%
1980 Population: 206,344 1,355,835 2,807,053 3,750,815 2,055,233 14,229,194
1990 Population: 388,388 1,874,962 3,736,929 4,801,395 2,676,248 16,986,510
1998 Population: 531,395 2,206,580 4,379,915 5,552,695 3,154,195 19,684,546
2003 Population: 601,477 2,376,326 4,713,227 5,956,521 3,399,780 21,047,244
Compound Annual Change:
1980-1990 6.53% 3.29% 2.90% 2.50% 2.68% 1.79%
1990-1998 5.36% 2.75% 2.68% 2.45% 2.78% 2.49%
1998-2003 2.51% 1.49% 1.48% 1.41% 1.51% 1.35%
Household Statistics
1980 Households: 72,245 513,519 1,016,501 1,367,093 747,511 4,929,268
1990 Households: 153,417 723,803 1,398,154 1,798,786 1,001,750 6,070,937
1998 Households: 213,304 867,035 1,662,731 2,105,539 1,195,521 7,112,275
2002 Households: 244,394 945,621 1,810,753 2,283,225 1,303,288 7,694,884
Compound Annual Change:
1980-1990 7.82% 3.49% 3.24% 2.78% 2.97% 2.11%
1990-1998 5.65% 3.06% 2.93% 2.66% 2.99% 2.67%
1998-2003 2.76% 1.75% 1.72% 1.63% 1.74% 1.59%
Income Statistics
$75K or over 31.25% 25.17% 24.19% 21.18% 24.66% 17.10%
$50K to $75K 24.13% 20.33% 20.93% 19.59% 20.46% 17.39%
$35K to $50K 16.93% 16.57% 16.69% 16.43% 16.42% 15.78%
$25K to $35K 11.28% 12.63% 12.51% 12.83% 12.44% 13.36%
$15K to $25K 9.39% 12.39% 12.30% 13.57% 12.16% 15.49%
Under $15K 7.04% 12.91% 13.38% 16.39% 13.87% 20.87%
1998 Average HH Income $ 70,104 $ 64,951 $ 61,552 $ 56,946 $ 62,597 $ 50,680
1998 Median HH Income $ 55,566 $ 45,929 $ 45,609 $ 41,577 $ 45,536 $ 35,264
1998 Per Capita HH Income $ 28,221 $ 25,712 $ 23,451 $ 21,777 $ 23,900 $ 18,570
Median Age 33.25 32.70 32.96 33.54 33.04 32.89
Home Ownership 52.85% 50.71% 56.29% 59.58% 56.04% 60.87%
Median Home Value $ 93,556 $ 85,509 $ 79,677 $ 72,113 $ 81,512 $ 60,154
Education
Bachelor's Degree 23.83% 20.87% 18.65% 16.29% 18.70% 13.85%
Graduate Degree 7.89% 8.30% 7.76% 7.05% 8.16% 6.47%
</TABLE>
Source: Equifax National Decision Systems
- -------------------------------------------------------------------------------
-45-
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
The primary trade area for Grapevine Mills (a 40 mile radius) has a
population of 4,379,915 persons, which increases to 5,552,695 persons in the
total trade area. Closer to the property, in a 10 and 20 mile radius, the
population is approximately half a million and over two million people,
respectively. From 1990 to 1998, population growth in the primary trade area
has been steady at 2.7 percent per year (compound rate). The total trade area
has posted a population growth rate of 2.5 percent per year (compound rate). In
comparison, population growth in the more immediate area of the property has
been significant between 1990 and 1998 at 5.4 percent per year (in a ten mile
radius around the property). The Dallas/Fort Worth metropolitan area posted a
growth rate of 2.8 percent from 1990 to 1998 and the State of Texas grew by 2.5
percent per year. Overall, the data indicates strong population statistics for
the Grapevine Mills trade area, especially closer to the property, and seems to
attests to the strong growth noted previously in the northern portions of the
Dallas/Fort Worth area.
As for the future of the population in the trade area, the trade area
population is projected to increase at annual rates in the range of 1.5 percent
(40 miles radius) to 1.4 percent (100 mile trade area) from 1998 to 2003. The
projected growth for the total trade area is fairly similar to the growth
projection for the metropolitan area (1.5 percent per year) as well as
statewide (1.4 percent per year) from 1998 to 2003. It is noted, however, that
the areas within ten miles of the property are expected to grow at a much
faster rate than the more outlying locales. As has been the case historically,
growth in a ten mile radius is expected to be 2.5 percent per annum, much
higher the Dallas/Fort Worth MSA.
The map on the following page illustrates the population density for the
10, 20, 40 and 100 mile trade areas. As would be expected, the most densely
populated areas are generally located to the south, east, and west (the central
portions of the MSA). However, the population is fairly dense to the north of
the property along the east and west corridors of Interstate Highway 35. It is
noted that portions of the area within a ten mile radius of the property have
the lowest population density categorization which indicates the undeveloped
areas of the immediate surroundings The map also indicates the undeveloped land
in outlying locals of surrounding counties which is clearly shown in the 40 to
100 mile concentric circles.
-46-
<PAGE>
[GRAPHIC OF POPULATION MAP]
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
The map on the following page illustrates the projected population growth
for the subject 10, 20, 40, and 100 mile trade areas from 1998 to 2003. As
indicated, a significant portion of the primary trade area (within 40 miles) is
projected to experience population growth in excess of ten percent over this
five year period. Furthermore, several areas surrounding the property and to
the northwest are expected to grow at more than 20 percent between 1998 and
2003. It is interesting to note that the areas immediately northwest and
southeast of the property fell in the lowest existing population category, but
are expected to experience the most growth in the next five years. This
information suggests that current undeveloped areas around the property should
experience strong levels of growth in the short term.
-48-
<PAGE>
[GRAPHIC OF POPULATION GROWTH MAP]
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
There are currently 213,304 households within ten miles of the subject
property. The number of households in a 20 mile radius of the property
increases to four times this amount (867,035) which is indicative of the
undeveloped nature of the property's immediate surroundings. Nevertheless, the
primary trade area of the property has a total number of households of 1.66
million. The number of households in the total trade area currently top two
million. Somewhat surprising, the total trade area of the property encompasses
nearly one third of the total households in the State of Texas.
In terms of household growth rates, the growth in the subject trade area
population over the past several years has been generally similar to the rate
of household formations in the trade area. The number of households in the
primary trade area increased at a rate of 2.9 percent per year from 1990 to
1998. The total trade area households increased 2.7 percent per year during the
same period. As was also the case with regards to population, the ten mile
trade area from 1990 to 1998 experienced increases in the rate of household
formations well above all other measures at 5.7 percent. In comparison, the
Dallas/Fort Worth MSA household formation growth was 3.0 percent during the
same period. The pace of household formations as compared to population growth
in the subject's trade areas is considered to be a favorable indicator of the
potential demand for consumer goods, especially consumer durables such as
appliances, furniture, and home electronics.
The primary trade area has an average household size of 2.63 persons per
household which is similar to the total trade area of 2.64 persons per
household. However, the ten and 20 mile concentric circles around the subject
indicate fewer persons per housed in a range of 2.49 to 2.54. By comparison,
Dallas/Fort Worth area has an average household size of 2.64 persons and the
State of Texas has an average household size of 2.77 persons. The slightly
smaller average household size for the ten and 20 mile trade areas reflects the
relatively strong pace of household formations as compared to total population
growth within the metropolitan area from 1990 to 1998. Coupled with household
formations, the smaller average household size in the subject ten and 20 mile
trade areas may bode well for potential demand for consumer durable items such
as appliances, home furnishings, and consumer electronics.
The residential population in the primary trade area has a median age in
the range of 32.96, and a median age for the ten and 20 mile areas of 33.25 and
32.70 years, respectively. The primary trade area population is similar to the
area wide population in terms of age, as the corresponding median age figures
for the Dallas/Fort Worth and the State of Texas were 33.04 years and 32.89
years, respectively. The age group from 21 to 49 years is a critical target
market for many retailers, and the subject trade area population has a
significant percentage of residents within this age range. Within the ten mile
trade area, 50.49 percent of the population is within the age range of 21 to 49
years. This percentage decreases slightly to 48.63 percent of the population in
the larger 20 mile trade area and totals 46.88 percent for the primary trade
area. In comparison, approximately 45.81 percent of the citywide population is
between the ages of 21 and 49 years and approximately 43.33 percent of the
statewide population is in this age range.
-50-
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
The educational level of the interior portions of the primary trade area
population is above the MSA and state statistics. In fact, 31.72 percent (ten
mile circle) to 29.17 percent (20 mile circle) of the residents aged 25 years
and over have a bachelors degree or higher. For the Dallas/Fort Worth Metroplex
population, approximately 26.86 percent of the population aged 25 years and
over has a bachelors degree or higher. The education of the trade area
population is reflected to a certain extent in the occupations of the
residents.
The median household income in the trade area decreases as the concentric
circles around the property increase from $55,566 (10 mile area) to $41,577
(100 mile area), as does the average household income from $70,104 (10 mile
area) to $56,946 (100 mile area). The interior portions of the trade area
household income figures are higher than the corresponding figures for the
Dallas/Fort Worth area as a whole, although when including the entire primary
trade (40 mile area) the numbers are almost identical.
The map on the following page illustrates the median household incomes for
the 10, 20, 40, and 100 mile trade areas. The ten mile trade area consists
primarily of households with median incomes in the range of $50,000 to $99,999.
Also, there are two sizable areas of the ten mile trade area that have median
incomes between $100,0000 and $131,383. Extending outward, the distribution of
median income becomes more varied. However, the median household income profile
of the primary (40 mile) trade area is generally at a level of $25,000 or
higher. The map shows that the preponderance of upper end households reside on
the northern side of the Metroplex.
-51-
<PAGE>
[GRAPHIC OF MEDIAN HOUSEHOLD INCOME]
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
Based on the data, 56.3 percent of the residents (40 mile radius) in the
primary trade area live in owner occupied housing. In the total trade area,
59.6 percent of the residents own homes. These amounts are above the
corresponding figure of 56.04 percent for the Metroplex but below 60.87 percent
for the State of Texas. Information provided by Equifax National Decision
Systems indicates that the median price for existing homes within a ten to 20
mile radius of the subject property is $93,556 and $85,509, respectively. The
primary trade area has a median home price of $79,677, and the total trade area
has a median home price of $72,113. In comparison, the median price for an
existing home in the overall Dallas/Fort Worth area is reported to be $81,512.
COMPETITIVE FACILITIES
Grapevine Mills is afforded a strategic location at the northwest corner
of State Highway 121 and State Highway 26 in Grapevine, Tarrant County, Texas.
The property is a single-level, entertainment and value-oriented mall
development. The subject is typical of the Mills mega mall developments. By
definition, the property is a hybrid retail concept (a mixture of an outlet
center and a traditional regional mall) first pioneered by The Mills
Corporation. They contain a mix of retail formats, primarily off-price in
nature, ranging from manufacturer and retail outlets, to catalog stores,
category dominant retailers, and specialty tenants. Entertainment, including a
cinema component, virtual reality, and several theme restaurants has become an
integral part of the merchandising mix as well. Anchor and junior anchor stores
can comprise 10 to 15 locations and account for 50.0 to 60.0 percent of the
GLA. In-line shops include a mix of off-price and traditional retailers and
typically account for 40.0 to 50.0 percent of the total GLA.
Given the hybrid nature of the property, the existing competition for the
property is formed by the upper-tiered Dallas/Fort Worth regional malls and, to
a certain extent, with the outlet centers situated in North Texas. According to
the property manager, all of the competition from other development is
considered indirect, with the local regional malls providing more competition
than the outlying outlet centers.
With respect to the regional malls, the chart on the FOLLOWING PAGE
summarizes the competing properties. These facilities are situated throughout
the Metroplex in Dallas, Tarrant, Collin and Denton Counties. The competitive
malls include Vista Ridge Mall, Valley View Mall, Collin Creek Mall, The Parks
at Arlington, Irving Mall, Ridgmar Mall, NorthPark Center, and Dallas Galleria
Mall.
Again, of the malls in the survey, none are considered to be direct
competitors for the subject due to the hybrid nature of the property. Having
said that, the subject does include some of the tenants typically found in a
regional mall. The closest facilities to the property geographically are Vista
Ridge and Irving Mall. These properties are considered the most similar to the
subject due to location. However, they have the traditional regional mall
tenant mix, price points and product lines. The Parks at Arlington represents
one of the newer malls in Dallas/Fort Worth. This mall is located in south
Tarrant County in between Dallas and Fort Worth similar to the subject. The
property recently added an anchor store to the mall. Valley View Center and
Collin Creek Mall are situated in north Dallas County and are the traditional
mid-scale, regional mall developments. Ridgmar Mall is similar in design but
located in east Tarrant County. NorthPark Center and Dallas Galleria form the
high-scale fashion malls in the Metroplex. Both of these properties are located
in the central portions of the city of Dallas and generally cater to upscale
tenants and customers.
-53-
<PAGE>
GRAPEVINE MILLS
NORTHWEST CORNER OF SH 121 AND SH 26
GRAPEVINE, TARRANT COUNTY, TEXAS
COMPETING MALL SUMMARY
<TABLE>
<CAPTION>
YEAR TOTAL MALL SHOP MALL SHOP
NO. NAME/LOCATION BUILT GLA GLA RATIO ANCHORS
- --- ------------- ----- --- --- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 VISTA RIDGE MALL 1989 1,060,000 380,000 35.8% Foley's 180,000
SWC I-35 & FM 3040 Dillard's 200,000
Lewisville, Texas J.C. Penney 150,000
Sears 150,000
---------
Total: 680,000
2 VALLEY VIEW CENTER 1973 1,600,000 542,103 33.9% Foley's 300,196
Preston and LBJ Dillard's 302,268
Dallas, Texas J.C. Penney 220,378
Sears 235,055
---------
Total: 1,057,897
3 COLLIN CREEK MALL 1981 1,123,551 333,468 29.7% Foley's 197,478
15th St. and North Central Expwy Dillard's 176,259
Plano, Texas J.C. Penney 156,772
Sears 161,742
Mervyn's 97,832
---------
Total: 790,083
4 THE PARKS AT ARLINGTON 1988 1,201,000 359,000 29.9% Foley's 200,000
NEC IH20 and Cooper Street Dillard's 260,000
Arlington, Texas J.C. Penney 150,000
Mervyn's 82,000
Sears 150,000
---------
Total: 842,000
5 IRVING MALL 1971 1,128,601 390,305 34.6% Dillard's 207,359
Bell Line Road and SH 183 J.C. Penney 176,740
Irving, Texas Foley's 183,012
Mervyn's 77,540
Sears 93,645
---------
Total: 738,296
6 RIDGMAR MALL 1976 1,500,00 804,014 53.6% Dillard's 199,000
IH 30 AND SH 183 J.C. Penney 203,407
Fort Worth, Texas Sears 173,579
Nieman-Marcus 120,000
---------
Total: 695,986
7 NORTHPARK CENTER** 1965 1,600,000 784,466 49.0 Dillard's 299,543
N. Central Expwy. & Northwest Hwy. J.C. Penney 176,686
Dallas Texas Lord & Taylor 125,482
Nieman-Marcus 213,823
---------
Total: 815,534
8 GALLERIA MALL 1982 1,391,468 670,893 48.2% Macy's 242,692
13350 Dallas Parkway Marshall Field's 155,063
Dallas, Texas Saks Fifth Avenue 108,335
Nordstrom's 214,485
---------
Total: 720,575
AVERAGE/TOTAL 10,604,620 4,264,249 40.2%
<CAPTION>
TRADE AREA
DISTANCE COMPETITIVE ESTIMATED AVG. SALES ----------------------------
NO. FROM SUBJ. STANCE OCCUPANCY PER SQ/FT POPULATION* AVG. HH INC.*
- --- ---------- ------ --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 5 plus and minus Miles Indirect 90% $301 437,500 $56,400
(East)
2 15 plus and minus Miles Indirect 97% $235 356,000 $62,800
(East)
3 20 plus and minus miles Indirect N/A N/A 268,231 $70,424
(East)
4 20 plus and minus Miles Indirect 96% $300 406,600 $49,000
(South)
5 5 plus and minus Miles Indirect 90% $270 530,980 $61,608
(South)
6 35 plus and minus Miles Indirect N/A N/A 337,451 $50,000
(Southwest)
7 20 plus and minus Miles Indirect 92% $400 400,000 $73,000
(Southeast)
8 15 plus and minus Miles Indirect 87% $425 4,000.000 $50,000
(Southeast)
AVERAGE/TOTAL 92% $322 842,095 $59,154
</TABLE>
*-- These statistics are based on data published in the Directory of Major
Malls.
**--Reportedly, this property is adding a Foley's in 1999 and a Nordstrom's in
2002.
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
The subject property also competes to a certain extent with the numerous
outlet centers situated in North Texas. The most prominent outlet centers
include The Southwest Factory Outlet located approximately 75 miles south of
Dallas Fort Worth, between Dallas and Waco, along Interstate Highway 35. This
property includes approximately 200,000 square feet and was built in phases
between 1989 and 1991. Gainesville Factory Shops is a 315,000 square foot
facility situated approximately 40 miles north of the Metroplex in Gainesville,
Texas. This center is also located along the Interstate Highway 35 corridor.
Denton Factory Shops are situated approximately 30 miles north of the Metroplex
along IH 35 and were built in 1992. The property is approximately 130,000
square feet in size with additional phases planned in the future. Smaller
outlet centers are also located in Terrell, just east of the Metroplex, and in
Sulphur Springs to the northeast.
DALLAS AREA SALES POTENTIAL
The Dallas metro area is one of the 20 most important retail markets in the
country, according to a recent survey of buying power by Sales and Marketing
Management Magazine. The Dallas metro's Buying Power Index was ranked 11th
among the 320 metropolitan areas included in the survey. The Buying Power Index
is a weighted index that converts the survey's three basic elements of
population, effective buying income, and retail sales into a measurement of a
market's ability to buy. The Dallas area ranked 11th in the country in terms of
population and 10th in terms of total effective buying income and retail sales.
A comparison is made of the Dallas MSA and State of Texas as shown in the
following.
================================================
RETAIL SALES ($000)
================================================
DALLAS/FORT
WORTH MSA STATE OF TEXAS
================================================
1990 $34,245,048 $120,458,993
- ------------------------------------------------
1995 $44,264,554 $165,526,050
- ------------------------------------------------
2000 $55,829,647 $212,284,497
Projections
- ------------------------------------------------
Compound
Annual Growth +5.27% +6.56%
1990-1995
- ------------------------------------------------
Projected
Compound +4.75% +5.10%
Annual Growth
1995-2000
- ------------------------------------------------
Source: Sales & Marketing Management
================================================
Sales within the Dallas/Fort Worth MSA increased at a compound annual rate
of 5.27 percent from 1990 to 1995, a slightly lower rate of increase versus the
state of Texas as a whole, which has posted a compound annual increase in
retail sales between 1990 and 1995 of 6.56 percent. Between 1995 and 2000,
sales in the D/FW area are expected to continue at a fairly strong pace, but at
slightly lower levels than posted in the first half of the decade. As was the
case in the first half of the 1990s, sales growth is expected to fall below the
sales growth for the state, as a whole, in the last half of the decade.
-54-
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
CONCLUSION
The Dallas/Fort Worth commercial sector is geared towards the local and
regional populations. The local area benefits from the excellent freeway
access. The subject trade area, as measured by the 40 mile circle around the
subject, comprises a significant target market for retailers and service
providers. The subject trade area has experienced significant population growth
over the past several years. The interior portions of the trade area has
household and per capita incomes higher than the corresponding figures for the
Dallas/Fort Worth population.
The subject property represents a major new development within the
Dallas/Fort Worth and North Texas area. The local area contains a significant
concentration of regional-serving commercial developments and/or facilities,
including Dallas/Fort Worth International Airport, the significant
concentration of hotels situated near the airport, and a relatively large
inventory of industrial and office properties. The completion of the subject
1.24 million square foot value-oriented shopping center is expected to enhance
the area's role as a center for commerce in the Dallas/Fort Worth area.
Within the competitive retail market, the subject is expected to encounter
significant competition for the discretionary spending of the local and
regional population. The overall area has an existing inventory of regional or
super-regional malls, and outlet centers which have captured an important share
of retail spending in the region. However, the subject represents a relatively
unique development due to its size, the quality of the shopping environment,
and the value-orientation of the anchor and specialty stores. The subject's
urban location provides a distinct competitive advantage over the existing
outlet centers in distant locations such as Gainesville, Terrell, and
Hillsboro.
From 1990 to 1995, retail sales in the Dallas/Fort Worth MSA increased at
an average rate of 5.27 percent per year. Information provided by Equifax
National Decision Systems indicates that the pace of population growth,
household formations, and household income growth will continue at a relatively
healthy pace from 1998 to 2003. As a result, the subject development appears to
be well-positioned to capture a significant share of increased consumer
spending.
MARKETABILITY AND MARKETING PERIOD
In this section, we consider the potential market appeal, marketability and
demand for a center like the subject in light of the current real estate
investment market. As discussed elsewhere in this report, the subject involves
an enclosed single-level retail mall anchored by 16 major stores. The combined
mall GLA totals approximately 1.24 million square feet.
We have considered the potential market demand and investor risk in our
analysis and valuation of the subject property through our selection of
investment parameters, growth rates, and various assumptions employed. In our
analysis, we have attempted to reflect current market conditions and investor
criteria. Most of the shopping center properties which have been offered for
sale at a reasonable price, have sold within twelve months exposure to the open
market or less. Properties for which seller expectations of value exceed the
market's perception have required more extended marketing periods and have
generally sold at below the initial asking price, or have been pulled off the
market. A reasonable price is defined as that price which offers a sufficient
return to the investor relative to the demand for and the risk associated with
the property.
-55-
<PAGE>
TRADE AREA ANALYSIS
- ------------------------------------------------------------------------------
These returns vary widely in the current market depending on the particular
investment, its occupancy level, the surrounding demographics, and upside or
downside of the income stream.
The subject is an excellent quality entertainment and value-oriented center
which represents a strong barrier to future competitive development. The
subject's primary trade area has a current population of approximately
4,379,915 people and is projected to experience steady population and household
growth in the foreseeable future. We believe that if the subject were offered
for sale, it would represent an important investment opportunity for a well
positioned center. Based on the above, it is our estimate that a market sale of
the subject property should be realized within twelve months exposure on the
market.
-56-
<PAGE>
[MAP OF SITE PLAN]
<PAGE>
PROPERTY DESCRIPTION
- ------------------------------------------------------------------------------
SITE DESCRIPTION
Location: The subject property is located at the northwest
corner of State Highway 121 and State Highway 26
in Grapevine, Tarrant County, Texas.
Shape: Irregular. A site plan is included on the facing
page visually depicting the shape of the
property.
Land Area: 131.823 acres or 5,742,210 square feet
Frontage: The overall mall development tract of which the
subject forms a part has frontage along SH 26,
Grapevine Parkway/FM 2499 and Anderson-Gibson
Road. Mall ring roads provide access within
the development.
Topography: Generally level and at street grade
Street Improvements: State Highway 121 is a bi-directional,
multi-lane, limited access freeway. Even though
State Highway 26 is a bi-directional, four-lane
highway, it is smaller in scope versus SH 121.
Grapevine Parkway/FM 2499 is a multi-lane,
bi-directional neighborhood street extending
northward from State Highway 121. Lastly,
Anderson-Gibson Road is a multi-lane, divided
street.
Soil Condition: We did not receive or review a soil report.
However, we assume that the soil's load-bearing
capacity is sufficient to support the existing
structures. We observed no evidence to the
contrary during our physical inspection of the
property. The tract's drainage appears to be
adequate.
Utilities: All utilities, including electricity, water,
sewer, natural gas and telephone, are currently
available to the site.
Water: Water service is provided by the City of
Grapevine.
Sewer: Sewer service is also provided by the City of
Grapevine.
Electricity: Electricity is provided by TU Electric.
Natural Gas: Natural Gas is provided by Lone Star Gas Company.
Telephone: Telephone service is provided by GTE.
Access: Access to the improvements is provided via
numerous entrances roads from the surrounding
streets including Grapevine Parkway/FM 2499,
State Highway 26, and Anderson-Gibson Road.
-57-
<PAGE>
PROPERTY DESCRIPTION
- ------------------------------------------------------------------------------
The overall access to and from the subject site
is very good due to its location at the
intersection of State Highway 121 and State
Highway 26, as well as the presence of nearby
Interstate Highway 635 (LBJ Freeway) and State
Highway 114.
Land Use Restrictions: We were provided with a copy of a title insurance
dated July, 10, 1996 by First American Title
Insurance Company. Additionally, we were provided
surveys of the subject site. These instruments
indicate several utility easements along the
periphery of the site. However, they are
considered typical and do not adversely affect
the development of the subject. We observed no
other evidence of easements, encroachments, or
restrictions that would potentially affect the
site's usage. However, these issues are beyond
the scope of an appraisal assignment.
Flood Hazard: According to Community Panel No. 480598-0010-B,
revised November 17, 1982, the subject property
is located in Zone X, which is outside of the
100-year floodplain. Thus, flood insurance is not
required.
Site Improvements: The property consists of a 1,241,769 square foot
entertainment and value-oriented, enclosed mall.
The property's construction consists of a
concrete slab with steel framing and a painted
dryvit exterior. Construction of the property was
complete in 1997. The layout of the facility is a
large oval or racetrack with the majority of the
major tenants situated along the perimeter.
Toxic Waste: According to a Phase I Environmental Site
Assessment prepared by Law Engineering, the
subject is free from any toxic waste pollution or
other environmental hazards. Since we are not
experts in this field, we have specifically
relied on this study for the final determination
of this condition.
Comments: The site has very good access and visibility due
to its location along State Highway 121 and State
Highway 26. Overall, the site is considered well
suited for its current use.
-58-
<PAGE>
[GRAPHIC OF MAP]
<PAGE>
PROPERTY DESCRIPTION
- ------------------------------------------------------------------------------
DESCRIPTION OF THE IMPROVEMENTS
The property consists of a 1,240,971 square foot entertainment and
value-oriented, enclosed mall. As presently configured, the property includes
16 major or anchor tenants (based on management's classifications), although
plans include adding up to five more major tenants as demand requires. The
major tenants include retail outlets and entertainment facilities (a 30 screen
movie theater, a theme restaurant, and a gameworks/arcade). The property's
construction consists of a concrete slab with steel framing and a painted
dryvit exterior. Construction of the property was complete in 1997. The layout
of the facility is a large oval or racetrack with the majority of the anchors
situated along the perimeter.
The data summarized below was obtained through our physical inspection of
the facility and conversations with management.
Year Built: 1997
Total Mall Area (GLA): 1,241,769 square feet
Gross Leaseable Area: The following area data is based on a
rent roll provided by management.
==========================================
COMPONENTS GLA ALLOCATION
==========================================
Anchors 699,303+/- SF 56.4%
------------------------------------------
In Line Shops 511,394+/- SF 41.4%
------------------------------------------
Food Court 11,532+/- SF 0.9%
------------------------------------------
Restaurants 16,158+/- SF 1.3%
------------------------------------------
Kiosks 2,584+/- SF 0.0%
------------------------------------------
TOTAL 1,240,971+/- SF 100.0%
------------------------------------------
Building Height: One story
Gross Floor Area to
Land Area Ratio(Owned
Mall to Owned Land Area): 0.216 to 1
Construction Detail
Foundation: Steel reinforced concrete slab
Framing: Steel framing including steel truss girders, bar
joists, and steel column supports
Exterior Walls: Painted dryvit exterior
Ceiling Heights: Varies
Floors: Flooring throughout the project is concrete.
-59-
<PAGE>
PROPERTY DESCRIPTION
- ------------------------------------------------------------------------------
Roof Structure/Cover: The roof is an asphalt membrane system over metal
deck with steel supports. Skylights are situated
in various areas throughout the facility
providing natural light to the common areas.
Windows: Glass windows in aluminum frames
Pedestrian Doors: Exterior pedestrian doors are glass in aluminum
frames at the main entrances. Metal security
doors provide access to the mall in most
secondary entrances.
Mall Entrances: The mall has six main entrances into the enclosed
shopping area, each of which is designed and/or
styled in a distinct theme (or neighborhood) in
order to aid the customers in locating the
appropriate parking fields. The themes
incorporated into the entrances include a
tornado, a bluebonnet, a vineyard, the American
and Texas flag, a football, and a
media/entertainment theme. In each neighborhood,
large video screens feature advertisements
displaying the merchandise offered by retailers
within the area. The advertisements are created
by the center's in-house media group which works
directly with the mall store operators in the
filming/production of the featured
advertisements. The advertisements have an audio
component which is audible through the center's
audio system. It is noted that several of the
larger major stores have exterior entrances. The
exterior main mall entrances consist primarily of
numerous glass doors in aluminum frames.
Service Areas: Service for the mall is provided by service
courts located along the periphery of the
development. Additionally, an underground tunnel
is available to provide service to the core areas
of the mall.
Mechanical Detail
Heating and Cooling: Grapevine Mills is heated and cooled via roof-top
HVAC package units. The common area is served by
85 units, and each tenant has one or more units
serving each respective suite.
Electrical Service: Electrical service is considered adequate for the
existing occupancy and is assumed to meet code.
Plumbing Service: Assumed to meet code
Fire Protection: The mall is fully sprinklered.
-60-
<PAGE>
PROPERTY DESCRIPTION
- ------------------------------------------------------------------------------
Security: The mall is equipped with extensive security
features including numerous surveillance cameras,
roof and back-of-the-house door monitoring, and
on-site security guards. Furthermore, a Grapevine
Police Substation is located within the facility.
Interior Detail
Layout: The mall is configured into an oval or racetrack
design with the majority of the major stores
located on the periphery. Some in-line space is
located between the major tenants on the outside
walls, but the majority is situated in the core
areas. Two major tenants reside in the center of
the core area. These stores provide the only
means for customers to pass through the core
retail areas without walking around the
periphery.
Floor Covering: The common area hallways have wood, carpet, and
stained concrete floors. The floor coverings vary
based on the neighborhood area. A mixture of
carpet, vinyl, tile, and/or wood is located in
the tenant suites.
Interior Walls: Steel-framed partitions with painted and textured
or vinyl-covered gypsum board
Ceilings: The mall common areas have unfinished ceilings
resulting in painted, exposed structural steel
throughout the complex. Tenant suites vary from
unfinished ceilings to acoustical tile in a metal
grid system.
Lighting: Lighting is a largely incandescent fixtures in
the common area corridors and fluorescent
fixtures in most tenant suites. Again, skylights
are present in various areas of the mall allowing
for some natural lighting.
Restrooms: The mall common area has six sets of public
restrooms scattered throughout the property. Each
tenant suite also has a set of restrooms.
Site Improvements
On-Site Parking: Parking is provided by 8,724 surface parking
spaces on the asphalt lots surrounding the mall.
Landscaping: Landscaping consists of trees, bushes, shrubs,
and grass.
-61-
<PAGE>
PROPERTY DESCRIPTION
- ------------------------------------------------------------------------------
Americans with Disabilities
Act Compliance: The Americans With Disabilities Act (ADA) became
effective January 26, 1992. Notwithstanding any
discussion of possible readily achievable barrier
removal construction items in this report, we
have not made a specific compliance survey and
analysis of this property to determine whether or
not it is in conformity with the various detailed
requirements of the ADA. It is possible that a
compliance survey of the property together with a
detailed analysis of the requirements of the ADA
could reveal that the property is not in
compliance with one or more of the requirements
of the Act. If so, this fact could have a
negative effect upon the value of the property.
Since we have no direct evidence relating to this
issue, we did not consider possible
non-compliance with the requirements of ADA in
estimating the value of the property.
Hazardous Substances: We are not aware of any potentially hazardous
material (such as formaldehyde foam insulation,
asbestos insulation, radon gas emitting
materials, or other potentially hazardous
materials) which may have been used in the
construction or maintenance of the improvements.
However, we are not qualified to detect such
materials and urge the client to employ an expert
in the field to determine if such hazardous
materials were thought to exist.
Comments: The quality of the subject improvements is rated
as excellent, and the layout is considered
functional and conducive to a regional mall.
Although only a year old, the property has been
well maintained. No major items of deferred
maintenance were noted by management
The subject improvements are approximately one
year old. The normal physical life expectancy for
a shopping mall of this type is 45 to 50 years.
Our estimate of effective age is equivalent to
the chronological age, thus the estimated
remaining physical life is between 44 and 49
years.
-62-
<PAGE>
REAL PROPERTY TAXES AND ASSESSMENTS
- ------------------------------------------------------------------------------
The subject property is under the taxing jurisdictions of the City of
Grapevine, Tarrant County, and the Grapevine/Colleyville Independent School
District. Taxes are levied against all real property in this locale for the
purpose of providing funding for the various municipalities. The amount of ad
valorem taxes is determined by the current assessed value for the property in
conjunction with the total combined tax rates of the taxing jurisdiction. In an
effort to project the future tax liability for the subject property, we have
analyzed the current tax rates and the assessment of the property.
TAX RATES
The following is a chart displaying the five and ten year trend in tax
rates levied by the above noted taxing jurisdictions:
=========================================================================
TAX RATES PER $100 OF ASSESSED VALUE
=========================================================================
1987 1992 1997
TAXING AUTHORITY TAX RATE TAX RATE TAX RATE
=========================================================================
Tarrant County $0.26050 $0.54490 $0.556596
City of Grapevine $0.44000 $0.42500 $0.405000
Grapevine/Colleyville I.S.D. $0.85000 $1.39000 $1.537790
- -------------------------------------------------------------------------
TOTAL $1.55050 $2.35990 $2.499386
=========================================================================
As the preceding chart indicates, the tax rates affecting the subject
property have increased by approximately 1.2 percent per year (compounded) over
the past five years (since 1992) but 4.9 percent per year (compounded) over the
past ten years (since 1987). Although not shown, the tax rates actually
decreased by 0.4 percent from 1996 to 1997.
The substantial increases that have occurred in tax rates over the past ten
years (principally between 1986 and about 1993) were a result of declining real
estate values and the corresponding county tax base (due to the real estate
recession), but also (between 1990 and 1992) because of a controversial school
finance bill enacted by the Texas Legislature. With the statewide school
funding issues apparently settled, coupled with the current economic recovery
(and the corresponding increases in county tax base), tax rate increases have
moderated quite dramatically over the past few years. In fact, they have
actually declined in many instances. As a result, we anticipate that any near
term tax rate increases will be more moderate rather than the historical
pattern of the past ten years. Tax rates should rise very modestly over the
next couple of years, if the total tax base continues to increase as it has
most recently.
TAX ASSESSMENT
The Tarrant County Appraisal District establishes the assessed value on
real property for all of the previously noted taxing jurisdictions. By state
law, the appraisal district is required to re-evaluate all real property every
three years. The subject property's parcel identification number is 06886027.
The preliminary 1998 assessment for the subject follows:
-63-
<PAGE>
REAL PROPERTY TAXES AND ASSESSMENTS
- ------------------------------------------------------------------------------
================================
PRELIMINARY
1998
================================
Land $ 22,418,232
Building $117,664,681
- --------------------------------
TOTAL $140,082,913
================================
The tract of land comprising the subject was purchased as a part of a
larger transaction in late 1996. Prior to 1997, the property was assessed as
vacant land. As of January 1, 1997, the development process had begun, but the
mall was reportedly approximately 10 percent complete, at least according to
the Tarrant County Appraisal District records. As such, the assessed value in
1997 represented only a portion of the market value of the property and was not
included in our chart. In 1998, the property was fully operational, and the
preliminary 1998 value is $140,082,913.
In an effort to evaluate the fairness of the current assessed value and
future prospects for a change in the assessment, we have
o Compared the assessment to the market value estimate concluded in this
report, and
o Considered the potential for future changes in the assessed value of
the subject brought about by changing occupancies, lease rates, and
hence, value.
In many cases, we would compare the subject's assessment to assessments of
similar mall properties in the county. In this case, Grapevine Mills is
somewhat atypical in terms of area malls in that it is the only recent
construction in the Metroplex, and the construction itself is not the standard
mall development. As such, tax comparables are less than ideal for the
analysis.
The assessed value for the subject, as established by the Tarrant County
Appraisal District, is technically suppose to represent 100 percent of the
market value for the property. In this case, the preliminary 1998 assessment is
well below the market value estimate for the property set forth in this report
at about 60 percent. In reality, although assessed values are suppose to
represent 100 percent of market value, we typically see assessed values falling
in a range of 70 to 90 percent of market values. Based on this factor, we
believe the 1998 assessed value is slightly low, and we have projected an
increase in the assessed value of 70.0 percent of our market value conclusion
in 1999 or $165,000,000.
AD VALOREM TAX CONCLUSIONS
Applying the preliminary 1998 assessment for the property to our the
projected 1998 tax rate of $2.54937372 (the 1997 tax rate of $2.499386 grown at
two percent), the combined tax burden for 1998 will be $579,243. Thus, our Year
One tax burden for the subject is calculated as follows:
=====================================================
$135,238,250 x $2.5493737 x / 100 = $3,447,728
=====================================================
Applying the projected 1999 assessment for the property to our the
projected 1999 tax rate of $2.6003612 (the 1997 tax rate of $2.499386 grown for
two years at two percent), the combined tax burden for 1999 will be $4,290,596.
Thus, our Year Two tax burden for the subject is calculated as follows:
-64-
<PAGE>
REAL PROPERTY TAXES AND ASSESSMENTS
- ------------------------------------------------------------------------------
=====================================================
$135,238,250 x $2.6003612 x / 100 = $4,290,596
=====================================================
Subsequent to 1998, we expect the tax burden to increase similar to the
rate of inflation which we forecast at 3.5 percent per annum.
-65-
<PAGE>
ZONING
- -------------------------------------------------------------------------------
Although the Grapevine zoning maps indicate the subject site is zone HCO,
the maps are in the process of being updated as of the date of this writing.
According to Grapevine city officials, the subject property is actually zoned
CC (Community Commercial)), under the City of Grapevine's zoning ordinance. On
October 17, 1995, the subject's zoning was changed from HCO to CC. The purpose
of the CC district is to provide locations for general commercial uses
representing various types of retail trade, businesses, services and planned
commercial centers that serve a community or regional area. This district is
intended for community and regional shopping centers as well as clusters of
commercial uses that draw from areas past the immediate neighborhood. Uses
include, but are not limited to, a vast array of commercial/retail businesses
including service uses, institutional and community service uses,
hotels/motels, office uses, recreational uses, residential uses, retail and
personal service uses, transportation uses, utility and public service uses.
Significant constraints imposed by the CC classification include:
Minimum Lot Size: 30,000 square feet
Minimum Open Space: 20 percent
Maximum Building Coverage: 60 percent
Maximum Impervious Coverage: 80 percent
Minimum Lot Width: 120 feet
Minimum Lot Depth: 120 feet
Setbacks:
Front:
25 feet
Side:
20 feet
Rear:
25 feet; except when adjacent to a
residential district in which case the distance
shall be increased two times the height of the tallest
building on the lot.
Minimum Distance Between Buildings:
40 feet
Maximum Building Height: 50 feet except when located
adjacent to a residential area (zoned R-20, R-12.5 or
R-7.5) in which case it will be one story not to exceed
25 feet.
-66-
<PAGE>
[GRAPHIC OF ZONING MAP]
<PAGE>
ZONING
- -------------------------------------------------------------------------------
Minimum Off-Street Parking: For regional malls the
parking minimum is five spaces per 1,000 square feet
of GLA. In addition, other uses such as theaters,
restaurants, etc. have varying requirements.
Based on the above information and our interpretation of the zoning
requirements, the improvements appear to comply with all of the constraints
imposed by the CC classification. Additionally, in conversations with Tommy
Hardy (the Director of Development with the City of Grapevine) before the
property was built, the proposed improvements complied with the zoning
regulations. However, it is noted that we are not experts in the interpretation
of complex zoning ordinances, but the property appears to be a conforming use
based on our review of public information. Nevertheless, the determination of
compliance is beyond the scope of a real estate appraisal.
We are not aware of any deed restrictions, private or public, which would
limit the use of the property. This statement should not be taken as a
guarantee or warranty that no such restrictions exist. Deed restrictions are a
legal matter and only a title examination by an attorney would normally uncover
such restrictive covenants. Thus, a title search of the subject property is
recommended to determine the existence of such restrictions do exist.
-67-
<PAGE>
HIGHEST AND BEST USE
- ------------------------------------------------------------------------------
HIGHEST AND BEST USE OF SITE, AS THOUGH VACANT
According to the Dictionary of Real Estate Appraisal, Third Edition (1993),
a publication of The Appraisal Institute, the highest and best use of the site,
as though vacant, is defined as:
Among all reasonable, alternative uses, the use that yields the highest
present land value, after payments are made for labor, capital, and
coordination. The use of a property based on the assumption that the parcel
of land is vacant or can be made vacant by demolishing any improvements.
In evaluating the site's highest and best use, as though vacant, the use
must be (1) legally permissible, (2) physically possible, (3) financially
feasible, and (4) maximally productive.
The first criteria for determining the highest and best use relates to
legally permissible uses. Under the existing commercial zoning classification,
a wide variety of commercial, retail and office development options are
possible for the subject property. Therefore, based solely on the legally
permissible possibilities, it appears that a wide variety of uses are possible.
The second criteria is what is physically possible. The overall mall site
is irregular in shape and contains over 200 acres. Approximately 33.505 acres
of land is reserved for future development and 36.34 acres is reserved for
outparcel development and is not included in this analysis. Therefore, the net
acreage for the mall itself equals 131.823 acres. All in all, the subject site,
although irregular in shape, is well suited for a variety of development
alternatives. The site has adequate frontage and depth, and it is conducive to
a variety of development options. As is evident from the Property Description
section of this report, the site's soil, topography, availability of utilities,
and other general physical attributes are adequate for most types of
development. Furthermore, we observed no evidence of toxic waste or soil
contaminants during our physical inspection, and based on a review of a Phase I
environmental report prepared by Law Engineering, we have specifically assumed
that the site is free of any environmental problems.
The third and fourth criteria of the highest and best use, as though
vacant, are financial feasibility and maximum productivity. These requirements
may be addressed in tandem.
The subject site is located at the intersection of State Highway 121 and
State Highway 26 in an area that is largely undeveloped. However, as mentioned
previously, the Dallas/Fort Worth metropolitan area is rapidly continuing to
expand in a northward direction. As such, communities such as Grapevine,
Colleyville, Irving, Coppell, Flower Mound, and Lewisville are experiencing
strong growth. Even though the immediate area is largely undeveloped at this
juncture, the accessibility of the subject tract, from both the immediate
neighborhood as well as various points throughout the Dallas/Fort Worth
metropolitan area, is very good due to the presence of the well designed
highway system. More specifically, State Highway 121, a major regional freeway,
is located adjacent to the subject. In addition, the subject is very near
Interstate Highway 635.
-68-
<PAGE>
HIGHEST AND BEST USE
- ------------------------------------------------------------------------------
Generally speaking, the surrounding development tends to heavily influence
the highest and best use of a site. As mentioned, the subject site is situated
in an area that is largely undeveloped. Land use in the general area is
primarily vacant land, development associated with mall outparcels, and some
industrial use in the more general area to the north and east. However,
Grapevine in general is a growing bedroom community with commercial development
continuing to take place to support the residential development in the area.
Based upon the subject's location at the intersection of two major
thoroughfares and the resulting vehicular traffic, plus the property's access
and visibility and its location relative to Dallas/Fort Worth International
Airport, some type of a commercial, retail or industrial oriented use seems
most likely for the site. Residential use would be less likely given the
location of the tract along SH 121 and SH 26.
HIGHEST AND BEST USE OF PROPERTY, AS IMPROVED
According to the Dictionary of Real Estate Appraisal, highest and best use
of the property, as improved, is defined as:
The use that should be made of a property as it exists. An existing
property should be renovated or retained as is so long as it continues to
contribute to the total market value of the property, or until the return
from a new improvement would more than offset the cost of demolishing the
existing building and constructing a new one.
As noted in the Property Analysis section of this report, the subject site
is improved with a 1,240,971 square foot entertainment and value-oriented
shopping mall and related site improvements that were built in 1997. The
improvements are functional in design and considered to be of good quality as
compared to other retail properties. The property has been adequately
maintained, and its current condition is considered to be excellent. The
subject property is currently performing quite well with strong rental rates
and occupancy over 95 percent as of the date of this writing. Additionally,
retail sales at the property are expected to approach $320 per square foot.
Based on the performance of the property, the subject property, as improved, is
considered capable of providing an adequate return to the land both on an
intermediate and long-term basis. This conclusion is supported by the data and
analysis presented in the balance of this report.
There is certainly sufficient value in the property, as improved, to negate
any possible redevelopment of the tract for the foreseeable future. This
premise is obviously contingent upon property management utilizing a course of
action which will be conducive to maximizing occupancy and rent levels.
However, it is equally important that the major tenants remain open for
business and the retail synergy of the facility continue. Overall, it is our
opinion that the highest and best use of this site, as improved, is for
continued use as a multi-tenant mall project.
-69-
<PAGE>
VALUATION PROCESS
- ------------------------------------------------------------------------------
In this appraisal, we have used the Sales Comparison Approach and the
Income Capitalization Approach to develop a market value estimate for the
property.
IN THE SALES COMPARISON APPROACH, WE PERFORMED THE FOLLOWING STEPS:
o Investigated the market for recent sales of similar regional malls;
o Analyzed those sales on the basis of the sales price per square foot
and by using various multipliers methodology; and
o Correlated the various value indications into a point value estimate
from within the range.
IN DEVELOPING THE INCOME CAPITALIZATION APPROACH WE:
o Studied the rents in effect in the mall's occupied space to estimate
the potential rental income at market levels;
o Studied the recent history of operating expenses at this and
competing properties to estimate an appropriate level of expenses and
reserves for replacement;
o Reviewed the historical and current occupancy and vacancy statistics
for the purpose of developing a vacancy and credit loss forecast;
o Estimated net operating income and cash flow by subtracting the
operating, fixed, and other expenses from the effective gross income;
and
o Prepared a discounted cash flow analysis in which the cash flow and
property value at reversion are discounted to an estimate of current
market value at a market-derived discount rate. Potential gross
revenues are estimated based on a modeling of the actual rents and
recovery provisions in effect through the term of existing leases. As
the existing leases expire, the space is estimated to rent at the
then current market rental rate with appropriate allowances for
downtime. From potential gross revenues, we subtract vacancy and
expenses (operating, fixed, and other) to arrive at an estimate of
cash flow over an 11 year forecast.
THE COST APPROACH HAS BEEN OMITTED FROM THIS ANALYSIS FOR A COUPLE OF REASONS:
First and foremost, we are valuing the leased fee estate. As noted above,
the Cost Approach, as classically presented, does not reflect this interest in
the property. To do so, the appraiser would have to accurately quantify the
difference between the contractual rents and current occupancy of the property
and prevailing market leases (e.g., deal structures that may include
concessions, moving allowances, enhanced work letters, an assumption of an
existing lease obligation, etc.) and a market occupancy (i.e., the absorption
or attrition of vacant and occupied space). On a theoretical level, an
adjustment for any single factor or reasonable combination seems plausible.
However, practically speaking, these factors combined are difficult to measure
and subject to varying interpretation, thus the adjustments to the Cost
Approach become highly subjective.
-70-
<PAGE>
VALUATION PROCESS
- ------------------------------------------------------------------------------
Secondly and probably more importantly, market participants rarely use this
approach as a determinant of value. Currently, most investors use only a very
elementary comparison of the purchase price/value to the replacement or
reproduction costs (absent any form of depreciation) as a benchmark in gauging
property acquisitions (i.e., the property is being acquired as a percentage of
replacement costs, say 40 to 50 percent). This comparison provides some
investors an additional level of comfort relative to the price paid, but in
fact, provides no support for market value. While the limited use of the Cost
Approach is not a sufficient reason to eliminate it from consideration, it does
underscore its limited usefulness.
As a result of all the various pitfalls noted above, we have not included a
Cost Approach to value.
The appraisal process is concluded by a review and re-examination of each
of the approaches to value that have been employed. Consideration is given to
the type and reliability of data used, and the applicability of each approach.
Finally, the approaches are reconciled and a final value conclusion is
estimated.
-71-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
METHODOLOGY
The Sales Comparison Approach provides an estimate of market value by
comparing recent sales of similar properties in the surrounding or competing
area to the subject property. Inherent in this approach is the principle of
substitution, which holds that, when a property is replaceable in the market,
its value tends to be set at the cost of acquiring an equally desirable
substitute property, assuming that no costly delay is encountered in making the
substitution.
By analyzing sales that qualify as arms-length transactions between
willing and knowledgeable buyers and sellers, market value and price trends can
be identified. Comparability in physical, location, and economic
characteristics is an important criterion when comparing sales to the subject
property. The basic steps involved in the application of this approach are as
follows:
1. Research recent, relevant property sales and current offerings
throughout the competitive marketplace;
2. Select and analyze properties considered most similar to the subject,
giving consideration to the time of sale, change in economic
conditions which may have occurred since date of sale, and other
physical, functional, or location factors;
3. Identify sales which include favorable financing and calculate the
cash equivalent price; and
4. Reduce the sale prices to a common unit of comparison, such as price
per square foot of gross leasable area sold;
5. Make appropriate adjustments between the comparable properties and
the property appraised; and
6. Interpret the adjusted sales data and draw a logical value
conclusion.
The most widely-used, market-oriented units of comparison for properties
such as the subject are the sale price per square foot of gross leasable area
(GLA) purchased, and the overall capitalization rate extracted from the sale.
This latter measure will be addressed in the Income Capitalization Approach
which follows this methodology. An analysis of the inherent sales multiple also
lends additional support to the Sales Comparison Approach.
MARKET OVERVIEW
The typical purchaser of properties of the subject's caliber includes both
foreign and domestic insurance companies, large retail developers, pension
funds, and real estate investment trusts (REITs). The large capital
requirements necessary to participate in this market and the expertise demanded
to successfully operate an investment of this type, both limit the number of
active participants and, at the same time, expand the geographic boundaries of
the marketplace to include the international arena. Due to the relatively small
number of market participants and the moderate amount of quality product
available in the current marketplace, strong demand exists for the nation's
quality retail developments.
-72-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
Most institutional grade retail properties are existing, seasoned centers
with good inflation protection. These centers offer stability in income and are
strongly positioned to the extent that they are formidable barriers to new
competition. They tend to be characterized as having three to five department
store anchors, most of which are dominant in the market. Mall shop sales are at
least $300 per square foot and the trade area offers good growth potential in
terms of population and income levels. Equally important are centers which
offer good upside potential after face-lifting, renovations, or expansion. With
new construction down, owners have accelerated their renovation and
remerchandising programs. Little competition from over-building is likely in
most mature markets within which these centers are located. Environmental
concerns and "no-growth" mentalities in communities continue to be serious
impediments to new retail developments.
Real estate investment remains an important part of many institutional
investors' diversified portfolios. Banks are aggressively competing for
business, trying to regain market share lost to Wall Street, while the more
secure life insurance companies are also aggressively competing in the market.
Furthermore real estate investment trusts (REITs) have helped to provide
liquidity within the real estate market, pushing demand for well-tenanted,
quality properties, particularly regional malls. Currently, REITs are one of
the most active segments of the industry and are particularly attractive to
institutional investors due to their liquidity. However, overbuilding in the
retail industry has resulted in the highest GLA per capita ever (19 square feet
per person). In addition, continued consolidation in certain retail sectors
along with bankruptcy filings among weaker chains has prompted some lenders and
investors to tighten their underwriting criteria. Some investors shun further
retail investment at this time, content that their portfolios have a sufficient
weighting in this segment.
Nonetheless the market for dominant Class A institutional quality malls is
tight, as characterized by the limited amount of good quality product
available. It is the consensus that Class A property would trade in the 7.0 to
8.5 percent capitalization rate range, with rates below 7.5 percent likely
limited to the top 15 to 20 malls with sales at least $400 per square foot and
good potential for real net income growth. Furthermore, there is a viable
market for the next tier product with cap rates in the 8.5 to 10.0 percent
range. Most of the transaction which have occurred over the last 18 months have
been in this category. Conversely, there are many third tier and lower quality
malls offered on the market at this time. With limited demand from a much
thinner market, cap rates for this class of malls are felt to be in the much
broader 10.0 to 14.0 percent range. Pessimism about the long term viability of
many of these lower quality malls has been fueled by the recent turmoil in the
retail industry.
To better understand where investors stand in today's marketplace, we have
surveyed active participants in the retail investment market. Based upon our
survey, the following points summarize some of the more important "hot buttons"
concerning investors:
-73-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
1. OCCUPANCY COSTS - This "health ratio" measure is of fundamental
concern today. The typical range for total occupancy cost-to-sales
ratios falls between 10.0 and 15.0 percent. With operating expenses
growing faster than sales in many malls, this issue has become even
more important. As a general rule of thumb, malls with sales under
$250 per square foot generally support ratios of 10.0 to 12.0
percent; $250 to $300 per square foot support 12.0 to 13.5 percent;
and over $300 per square foot support 13.5 to 15.0 percent.
Experience and research show that most tenants will resist total
occupancy costs that exceed 15.0 to 18.0 percent of sales. However,
ratios of upwards to 20.0 percent are not uncommon for some higher
margin tenants. This appears to be by far the most important issue to
an investor today. Investors are looking for long term growth in cash
flow and want to realize this growth through real rent increases.
High occupancy costs limit the amount of upside through lease
rollovers.
2. MARKET DOMINANCE - The mall should truly be the dominant mall in the
market, affording it a strong barrier to entry for new competition.
Some respondents feel this is more important than the size of the
trade area itself.
3. STRONG ANCHOR ALIGNMENT - Having at least three department stores
(four are ideal), two of which are dominant in that market. The
importance of the traditional department store as an anchor tenant
has returned to favor after several years of weak performance and
confusion as to the direction of the industry. As a general rule,
most institutional investors would not be attracted to a two-anchor
mall.
4. ENTERTAINMENT - Entertainment has become a critical element at larger
centers as it is designed to increase customer traffic and extend
customer staying time. This loosely defined term covers a myriad of
concepts available ranging from mini-amusement parks, to multiplex
theater and restaurant themes, to interactive virtual reality
applications. The capacity of regional/ super-regional centers to
provide a balanced entertainment experience well serve to distinguish
these properties from less distinctive formats such as power and
smaller outlet centers.
5. DENSE MARKETPLACE - Several of the institutional investors favor
markets of 300,000 to 500,000 people or greater within a 5 to 7 mile
radius. Population growth in the trade area is also very important.
One advisor likes to see growth 50.0 percent better than the U.S.
average. Another investor cited that they will look at trade areas of
200,000+/-but that if there is no population growth forecaster in the
market, a 50+/- basis point adjustment to the cap rate at the minimum
is warranted.
6. INCOME LEVELS - Household incomes of $50,000+ which tends to be
limited in many cases to top 50 MSA locations. Real growth with
spreads of 200 to 300 basis points over inflation are ideal.
7. GOOD ACCESS - Interstate access with good visibility and a location
within or proximate to the growth path of the community.
-74-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
8. TENANT MIX - A complimentary tenant mix is important. Mall shop
ratios of 35+/- percent of total GLA are considered average with 75.0
to 80.0 percent allocated to national tenants. Mall shop sales of at
least $250-$275 per square foot with a demonstrated positive trend in
sales is also considered to be important.
9. PHYSICAL CONDITION - Malls that have good sight lines, an updated
interior appearance and a physical plant in good shape are looked
upon more favorably. While several developers are interested in
turn-around situations, the risk associated with large capital
infusions can add at least 200 to 300 basis points onto a cap rate.
10. ENVIRONMENTAL ISSUES - The impact of environmental problems cannot be
understated. There are several investors who won't even look at a
deal if there are any potential environmental issues no matter how
seemingly insignificant.
11. OPERATING COVENANTS - Some buyers indicated that they would not be
interested in buying a mall if the anchor store operating covenants
were to expire over the initial holding period. Others weigh each
situation on its own merit. If it is a dominant center with little
likelihood of someone coming into the market with a new mall, they
are not as concerned about the prospects of loosing a department
store. If there is a chance of loosing an anchor, the cost of keeping
them must be weighed against the benefit. In many of their malls they
are finding that traditional department stores are not always the
optimum tenant but that a category killer or other big box use would
be a more logical choice.
REGIONAL MALL PROPERTY SALES
The 11 elements summarized above are all considered important from an
investors prospective. Department stores have also been, and continue to be,
the critical element on the feasibility and long term visibility of a regional
mall. Evidence has shown that mall property sales which include anchor stores
have lowered the square foot unit prices for some comparables, and have
affected investor perceptions. In our discussions with major shopping center
owners and investors, we learned that capitalization rates and underwriting
criteria have become more sensitive to the contemporary issues affecting
department store anchors. Traditionally, department stores have been an
integral component of a successful shopping center and, therefore, of similar
investment quality if they were performing satisfactorily.
Consolidation has resulted in dramatic changes in this industry and has
witnessed such dominant chains as Federated, Sears, JC Penney, Macy's, and
Dillard's continue to grow through acquisition and a return to profitability.
-75-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
With all this in mind, investors are looking more closely at the strength
of the anchors when evaluating an acquisition. Most of our survey respondents
were of the opinion that they were indifferent to acquiring a center that
included the anchors versus stores that were independently owned if they were
good performers. However, where an acquisition includes anchor stores, the
resulting cash flow is typically segregated with the income attributed to
anchors (base plus percentage rent) analyzed at a higher cap rate then that
produced by the mall shops.
Cushman & Wakefield has extensively tracked regional mall transaction
activity since 1991. We have summarized the most recent (1997-1998)
transactions on the FOLLOWING PAGES. Historical sales (1991 - 1996) are
retained in our files. These sales are inclusive of good quality Class A or
B+/- properties that are dominant in their market. Also included are weaker
properties in second tier cities that have a narrower investment appeal. As
such, the most recent mall sales (1997/98) presented in this analysis show a
wide variety of prices on a per unit basis, ranging from $21 per square foot up
to $594 per square foot of total GLA purchased. When expressed on the basis of
mall shop GLA acquired, the range is more broadly seen to be $36 to $770 per
square foot. Alternatively, the overall capitalization rates that can be
extracted from each transaction range from 6.90 percent to of 12.77 percent,
with the mean being in the mid-9 percent range.
One obvious explanation for the wide unit variation is the inclusion (or
exclusion) of anchor store square footage which has the tendency to distort
unit prices for some comparables. Other sales include only mall shop area where
small space tenants have higher rents and higher retail sales per square foot.
A shopping center sale without anchors, therefore, gains all the benefits of
anchor/small space synergy without the purchase of the anchor square footage.
This drives up unit prices to over $250 per square foot, with most sales over
$300 per square foot of salable area.
-76-
<PAGE>
REGIONAL MALL SALES 1997
1997 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
SALE SALE YEAR
NO. PROPERTY/LOCATION DATE BUILT
- --------- -------------------------------- -------- ---------
<S> <C> <C> <C>
97-1 THE FALLS SHOPPING CENTER Dec-97 1980/
Miami, Florida 96
97-2 NORTHWEST PLAZA S.C. Dec-97 1965/
St. Ann, Missouri 89
97-3 THE CITADEL Dec-97 1972/
Colorado Springs, Colorado 95
97-4 SALEM MALL Dec-97 1980/
(1) Salem, Oregon 87
97-5 FASHION MALL Dec-97 1973/
(1) Indianapolis, Indiana 93
97-6 UNIVERSITY MALL Dec-97 1974/
Tampa, Florida 96
97-7 MOORESTOWN MALL Dec-97 1963/
(5) Moorestown, New Jersey 94
97-8 NORTHWEST MALL Dec-97 1968
(4) Houston, Texas
97-9 ALMEDA MALL Dec-97 1968
(4) Houston, Texas
97-10 EASTPOINT MALL Dec-97 1956/
Baltimore, Maryland 91
97-11 CALPERS PORTFOLIO Dec-97
1) Metrocenter Mall 1978
Jackson, Mississippi
2) Lehigh Mall 1973/
Columbus, Mississippi 91/94
3) Greenville Mall 1972/
Greenville, Mississippi 86
97-12 SHELL PENSION PORTFOLIO Nov-97
1) Glynn Place Mall n/a
Burnswick, Georgia
2) Valdosta Mall n/a
Valdosta, Georgia
3) Lakeshore Mall n/a
Gainesville, Georgia
97-13 AETNA PORTFOLIO Nov-97
1) Mall of Abilene 1979
Abilene, Texas
2) Sunset Mall 1979
San Angelo, Texas
97-14 VALLEY MALL Nov-97 1974/
Hagerstown, Maryland 95
97-15 SHOPPING CTR. ASSOC. PORTFOLIO Nov-97 --
1) Fox Valley Mall
Aurora, Illinois
2) Hawthorn Center
Vernon Hills, Illinois
97-16 VALLEY HILLS MALL Oct-97 1978/96
Hickory, North Carolina
97-17 COLONIAL PARK MALL Oct-97 1960/87
Harrisburg, Pennsylvania
97-18 CROSSROADS OF SAN ANTONIO Oct-97 1961/87
San Antonio, Texas
<CAPTION>
MALL MALL MALL
SALE GRANTOR/ TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. GRANTEE SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF
- --------- ------------------------------------ --------------- ------------- ------------ ------------ ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
97-1 Heitman Retail Properties/ $156,000,000 825,000 370,000 310,000 37.6% 98.0% $500
Taubman Realty Group
97-2 Paramount Group/ $111,000,000 1,403,811 836,500 403,811 28.3% 84.0% $275
Westfield America, Inc.
97-3 Tri State Joint Venture/ $108,000,000 1,094,000 396,000 396,000 36.2% 90.0% $300
The Macerich Company
97-4 The Rouse Company/ $ 32,500,000 646,500 212,500 212,500 32.9% 97.0% $270
(1) JP Realty Inc.
97-5 Ameresco for Shell $122,000,000 682,912 682,912 349,222 51.1% 90.0% $360
(1) Pension Fund/
Simon DeBartolo Group
97-6 University Square Partners/ $121,000,000 1,302,752 650,491 412,009 31.6% 81.0% $260
Glimcher Realty Trust
97-7 Heitman/ $ 78,500,000 970,863 764,863 258,000 26.6% 75.0% $260
(5) The Rouse Company
97-8 The Rouse Company/ $ 19,725,000 800,250 292,075 276,475 34.5% 78.0% $200
(4) San Mall LLC
97-9 The Rouse Company/ $ 19,325,000 806,454 305,979 245,266 30.4% 77.0% $182
(4) San Mall LLC
97-10 Eastpoint Mall LP/ $ 81,000,000 862,313 693,344 241,146 28.0% 88.0% $312
Shopco Advisory Corp.
97-11 Calpers/ERE Yarmouth/ $ 54,000,000 1,897,185 1,024,507 569,138 30.0% 77.0% $238
Coyote Holdings
97-12 Shell Pension Fund Entities/ $ 97,000,000 1,428,401 1,129,120 530,744 37.2% 85.0% $229
Colonial Properties Trust
97-13 Aetna/ $ 43,800,000 1,248,573 742,688 442,285 35.4% 85.0% $106
Enterprise Asset Management
97-14 Equitable Prime Property Fund/ $ 31,700,000 664,831 541,431 277,083 41.7% 75.0% $265
Crown American Realty Trust
97-15 Shop. Ctr. Assoc.-JMB Group Trust/ $265,000,000 2,736,175 1,134,469 1,054,594 38.5% 87.0% $293
Urban Shopping Centers
97-16 Valley Hills LP/ $ 34,600,000 618,152 205,856 205,856 33.3% 89.0% $301
General Growth Properties
97-17 Catalina Partners LP/ $ 48,000,000 754,178 386,732 223,735 29.7% 94.0% $278
Glimcher Realty Trust
97-18 Crossroads Mall 1996 LP/ $ 15,000,000 711,231 711,231 176,109 24.8% 83.0% $137
Red Oak Realty
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
-------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- --------- -------------- --------- --------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
97-1 $12,090,000 $32.68 7.75% -- -- $422 $503 1.01
97-2 $11,000,000 $13.15 9.91% -- -- $133 $275 1.00
97-3 $ 8,700,000 $21.97 8.06% -- -- $273 $273 0.91
97-4 $ 3,168,750 $14.91 9.75% -- -- $153 $153 0.57
(1)
97-5 $10,300,000 $15.08 8.44% -- -- $179 $349 0.97
(1)
97-6 $11,495,000 $17.67 9.50% -- -- $186 $294 1.13
97-7 $ 7,850,000 $10.26 10.00% -- -- $103 $304 1.17
(5)
97-8 $ 2,400,000 $ 8.22 12.17% -- -- $ 68 $ 71 0.36
(4)
97-9 $ 2,400,000 $ 7.84 12.42% -- -- $ 63 $ 79 0.43
(4)
97-10 $ 8,006,400 $11.55 9.88% 10.00% 12.25% $117 $336 1.08
97-11 $ 6,560,000 $ 6.40 12.15% -- -- $ 53 $ 95 0.40
97-12 $ 9,409,000 $ 8.33 9.70% -- -- $ 86 $183 0.80
97-13 $ 4,599,000 $ 6.19 10.50% -- -- $ 59 $ 99 0.93
97-14 $ 3,170,000 $ 5.85 10.00% -- -- $ 59 $114 0.43
97-15 $22,000,000 $19.39 8.30% 8.50% 11.25% $234 $251 0.86
97-16 $ 3,287,000 $15.97 9.50% -- -- $168 $168 0.56
97-17 $ 4,800,000 $12.41 10.00% -- -- $124 $215 0.77
97-18 $ 1,500,000 $ 2.11 10.00% -- -- $ 21 $ 85 0.62
</TABLE>
Page 1
<PAGE>
REGIONAL MALL SALES 1997
1997 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- ---------- ------------------------------- -------- --------- -------------------------------------
<S> <C> <C> <C> <C>
97-19 THE OAKS MALL Sep-97 1978/ Prudential Insurance/
Gainesville, Florida 84/95 General Growth Properties
97-20 WESTROADS MALL Sep-97 1968/ Prudential Insurance/
Omaha, Nebraska 95 General Growth/Ivanhoe, Inc.
97-21 REGENCY SQUARE Sep-97 1975/ Prudential Insurance/
Richmond, Virginia 87 Taubman Realty Group
97-22 SPRINGDALE MALL Sep-97 1960/ Cigna/
Mobile, Alabama 88 CBL Associates Properties, Inc.
97-23 STONEWOOD CENTER MALL Aug-97 1958/ Hughes Investments/
(1) Downey, California 90 The MaceRich Company
97-24 SAN FRANCISCO CENTER Aug-97 1988 U.S. Power San Francisco, Inc./
(1) San Francisco, California Urban Shopping Centers
97-25 DADELAND MALL Aug-97 1962/ Equitable Life Assurance/
(2) Miami, Florida 91 Simon DeBartolo Group
97-26 VISALLA MALL Jul-97 1963/ Cigna Investments, Inc./
Visalla, California 95 JP Realty Inc.
97-27 WEST TOWN MALL Jul-97 1972/ Jaguar/RREEF USA Fund II/
(2) Knoxville, Tennessee 96 Simon DeBartolo Group
97-28 MAZZA GALLERIE Jun-97 1977 5300 Wisconsin JV (Prudential)/
Chevy Chase, Maryland City Center Retail Trust (McCaffery)
97-29 DAKOTA SQUARE Jun-97 1980/88 Equitable Life Prime Property Fund/
(3) Minot, North Dakota Concordia LLC (O'Connor)
97-30 TRI-COUNTY MALL Jun-97 1960/90 Equitable Life Prime Property Fund/
(3) Springfield, Cincinnati, Ohio Concordia LLC (O'Connor)
97-31 SOUTHDALE CENTER Jun-97 1956/ Equitable Life Prime Property Fund/
(3) Edina, Minnesota 91 Concordia LLC (O'Connor)
97-32 TOWN EAST MALL Jun-97 1971/ Atlantic Freeholds II/
(2) Dallas, Texas 86 General Growth Properties, Inc.
97-33 EDEN PRAIRIE CENTER Jun-97 1976/ GGP/Homart, Inc./
(2) Eden Prairie, Minnesota 89 General Growth Properties, Inc.
97-34 SILVER LAKE MALL Jun-97 1989 Silver Lake Mall Ltd./
Coeur D'Alene, Idaho JP Realty Inc.
97-35 SOUTHLAKE MALL Jun-97 1976/95 Southlake Retail Venture/
Morrow, Georgia General Growth Properties
97-36 WHEATON PLAZA May-97 1960/ Gudelsky Family/
(2) Wheaton, Maryland 92 Westfield America
97-37 BROOKWOOD VILLAGE MALL May-97 1973/ Berkshire Realty Company/
Birmingham, Alabama 91 Colonial Properties Trust
97-38 TOWNE MALL May-97 1985/ Heitman Retail Properties/
Elizabethtown, Kentucky 90 Towne Mall LLC
97-39 SECURITY SQUARE May-97 1972/ Security Square Associates/
Baltimore, Maryland 86 Mountain Development Corp.
97-40 CENTURY PLAZA May-97 1975/ Century Plaza Company/
Birmingham, Alabama 95 General Growth Properties
<CAPTION>
MALL MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF
- ---------- --------------- ------------ ---------- ----------- ---------- ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97-19 $116,000,000 909,120 771,392 351,199 38.6% 96.0% $ 303 $ 9,520,720 $ 12.34
97-20 $ 90,000,000 1,079,246 562,146 382,836 35.5% 94.9% $ 297 $ 7,798,307 $ 13.87
97-21 $123,900,000 825,891 463,002 239,179 29.0% 99.0% $ 426 $ 9,671,240 $ 20.89
97-22 $ 26,050,000 926,386 478,386 190,074 20.5% 96.0% $ 220 $ 2,900,000 $ 6.06
97-23 $ 92,000,000 927,000 927,000 356,253 38.4% 86.0% $ 259 $ 8,700,000 $ 9.39
(1)
97-24 $120,730,000 499,930 499,930 187,930 37.6% 96.0% $ 523 $ 8,947,952 $ 17.90
(1)
97-25 $268,000,000 1,433,552 451,130 348,067 24.3% 92.0% $ 649 $19,672,000 $ 43.61
(2)
97-26 $ 38,000,000 439,500 439,500 174,000 39.6% 95.0% $ 235 $ 3,800,000 $ 8.65
97-27 $140,792,000 1,336,598 764,066 381,707 28.6% 90.0% $ 350 $13,427,160 $ 17.57
(2)
97-28 $ 28,000,000 274,034 274,034 121,081 44.2% -- -- -- --
97-29 $ 51,500,000 693,606 566,722 327,088 47.2% -- $ 216 $ 4,583,500 $ 8.09
(3)
97-30 $141,300,000 1,340,803 836,062 439,891 32.8% -- $ 307 $12,010,500 $ 14.37
(3)
97-31 $118,000,000 1,240,888 467,104 467,104 37.6% 95.0% $ 354 $ 9,558,000 $ 20.46
(3)
97-32 $113,000,000 1,236,619 425,574 425,574 34.4% 93.0% $ 305 $10,000,000 $ 23.50
(2)
97-33 $ 19,900,000 864,443 325,843 325,843 37.7% 60.0% $ 225 $ 1,800,000 $ 5.52
(2)
97-34 $ 27,000,000 331,543 331,543 97,165 29.3% 98.0% $ 225 $ 2,700,000 $ 8.14
97-35 $ 67,000,000 1,023,847 284,847 284,847 27.8% 88.0% $ 280 $ 6,500,000 $ 22.82
97-36 $ 51,000,000 1,006,301 827,213 353,020 35.1% -- $ 332 $ 5,049,000 $ 6.10
(2)
7-37 $ 34,500,000 699,628 699,628 362,000 51.7% 92.0% $ 220 $ 3,460,350 $ 4.9597-37
$ 34,500,000 699,628 699,628 362,000 51.7% 92.0% $ 220 $ 3,460,350 $ 4.95
97-38 $ 22,100,000 340,564 340,564 149,692 44.0% 68.0% $ 223 $ 2,400,000 $ 7.05
97-39 $ 44,500,000 1,038,033 363,622 266,157 25.6% 78.0% $ 250 $ 4,904,898 $ 13.49
97-40 $ 32,000,000 727,309 574,943 237,896 32.7% 68.0% $ 246 $ 3,500,000 $ 6.09
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
-------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ---------- --------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
97-19 8.21% 8.75% 11.75% $150 $ 330 1.09
97-20 8.66% 9.25% 12.30% $160 $ 235 0.79
97-21 7.81% 8.25% 12.80% $268 $ 518 1.22
97-22 11.13% -- -- $ 54 $ 137 0.62
97-23 9.46% -- -- $ 99 $ 258 1.00
(1)
97-24 7.41% 7.40% -- $241 $ 642 1.23
(1)
97-25 7.34% -- -- $594 $ 770 1.19
(2)
97-26 10.00% -- -- $ 86 $ 218 0.93
97-27 9.54% 8.50% 11.00% $184 $ 369 1.05
(2)
97-28 -- -- -- $102 $ 231 --
97-29 8.90% 9.50% 12.00% $ 91 $ 157 0.73
(3)
97-30 8.50% 9.00% 11.90% $169 $ 321 1.05
(3)
97-31 8.10% 8.50% 11.90% $253 $ 253 0.71
(3)
97-32 8.85% -- -- $266 $ 266 0.87
(2)
97-33 9.05% -- -- $ 61 $ 61 0.27
(2)
97-34 10.00% -- -- $ 81 $ 278 1.24
97-35 9.70% -- -- $235 $ 235 0.84
97-36 9.90% -- -- $ 62 $ 144 0.44
(2)
97-37 10.03% -- -- $ 49 $ 95 0.43
97-38 10.86% -- -- $ 65 $ 148 0.66
97-39 11.02% 11.00% -- $122 $ 167 0.67
97-40 10.94% -- -- $ 56 $ 135 0.55
</TABLE>
Page 2
<PAGE>
REGIONAL MALL SALES 1997
1997 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- ---------- ----------------------------- -------- ------- -----------------------------------
<S> <C> <C> <C> <C>
97-41 SOMERSET MALL May-97 1981 N/A
Somerset, Kentucky N/A
97-42 PF PROPERTIES PORTFOLIO Apr-97 1973/ PF Properties
1) University Mall 79 University Mall and Parkwood Mall
Chapel Hill, North Carolina Properties, LLC
2) Parkwood Mall and Plaza
Wilson, North Carolina
97-43 MONTEHIEDRA TOWN CENTER Apr-97 1993/ Big Beaver Rio & Kmart Corp./
Rio Piedras, Puerto Rico 94 Vornado Montehiedra Acquisition
97-44 MANHATTAN MALL Apr-97 1989 SZS 33 Associaties/
New York, New York Andrew Penson
97-45 DAYTON MALL Mar-97 1969/ Heitman/JMB Advisory/
Dayton, Ohio 84/94 Glimcher Realty Trust
97-46 SOUTH TOWNE CENTER Mar-97 1986/ Zell Merril Lynch RE Opp./
Sandy, Utah 97 The Macerich Company
97-47 MARKETPLACE SHOPPING CENTER Mar-97 1976/ Champaign Venture/
Champaign, Illinois 1988 General Growth Properties
97-48 TYSONS CORNER CENTER Feb-97 1968/ State of Alaska Pension Fund/
(2) Fairfax, VA 98 Lsd Fee & Part Leasehold
97-49 PUEBLO MALL Feb-97 1976 The Hahn Company/
Pueblo, Colorado Equities Development Corp.
97-50 SHADY BROOK MALL Jan-97 1980/ Equitable Life Assurance Society/
Columbia, Tennessee 96 GE Investment Corp.
Survey Low:
Survey High:
Survey Mean:
Survey Mean For Centers Where No Anchors Are Owned By Mall Owner:
Survey Mean For Centers Where At Least One Anchor is Owned By Mall Owner:
<CAPTION>
MALL MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF
- ---------- -------------- ------------- ------------ ------------ ------- ---------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97-41 $ 3,865,000 215,140 157,286 105,961 49.3% 57.0% -- $ 493,580 $ 3.14
97-42 $ 47,400,000 948,842 948,842 401,134 42.3% 80.0% $ 250 $44,347,000 $ 4.58
97-43 $ 74,400,000 525,452 525,452 200,050 38.1% 99.0% $ 340 $ 7,621,000 $14.50
97-44 $135,000,000 847,602 847,602 195,728 23.1% 80.0% $ 350 $12,500,000 $14.75
97-45 $ 91,000,000 1,329,514 883,375 484,689 36.5% 80.1% $ 220 $ 8,645,000 $13.03
97-46 $ 98,000,000 1,229,054 1,229,054 450,000 36.6% 83.0% $ 250 $ 8,400,000 $ 6.83
97-47 $ 70,000,000 831,111 831,111 188,302 22.7% 92.0% $ 275 $ 6,300,000 $ 7.58
97-48 $412,000,000 1,874,101 1,874,101 832,473 44.4% 95.0% $ 455 $30,500,000 $16.27
(2)
97-49 $ 22,250,000 579,730 293,396 196,868 34.0% -- $ 200 $ 2,619,779 $ 8.93
97-50 $ 11,050,000 282,272 282,272 107,282 38.0% 94.0% $ 200 $ 1,289,488 $ 4.57
$ 3,865,000 215,140 157,286 97,165 20.5% 60.0% $ 106 $ 493,580 $ 2.11
$412,000,000 2,736,175 1,874,101 1,054,594 51.7% 99.0% $ 649 $30,500,000 $43.61
$ 83,367,740 946,225 608,149 324,301 34.9% 86.8% $ 286 $ 7,476,625 $12.55
$ 70,428,571 960,636 331,103 331,103 34.3% 87.4% $ 291 $ 6,144,821 $17.88
$ 85,474,116 943,879 653,249 323,194 35.0% 86.7% $ 286 $ 7,698,592 $11.66
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
-------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ---------- --------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
97-41 12.77% -- 13.43% $ 25 $ 36 --
97-42 9.17% 10.50% -- $ 50 $ 118 0.47
97-43 10.24% -- -- $142 $ 372 1.09
97-44 9.26% -- -- $159 $ 690 1.97
97-45 9.50% 9.25% 12.00% $137 $ 188 0.85
97-46 8.57% -- -- $ 80 $ 218 0.87
97-47 9.00% -- -- $ 84 $ 372 1.35
97-48 7.40% -- 10.50% $220 $ 495 1.09
(2)
97-49 11.77% -- -- $ 76 $ 113 0.57
97-50 11.67% -- -- $ 39 $ 103 0.51
7.34% 7.40% 10.50% $ 21 $ 36 0.27
12.77% 11.00% 13.43% $594 $ 770 1.97
9.65% 9.11% 11.92% $139 $ 250 0.84
9.00% 8.50% 11.90% $201 $ 201 0.68
9.76% 9.16% 11.93% $129 $ 258 0.87
</TABLE>
- ------
(1) Leasehold interest
(2) Partial interest adjusted to reflect 100% interest
(3) Based on allocated sale price, part of 3-property transaction
(4) Based on allocated sale price, part of 2-property transaction
(5) Based on stabilized net income
Page 3
<PAGE>
REGIONAL MALL SALES 1998
1998 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
SALE SALE YEAR
NO. PROPERTY/LOCATION DATE BUILT
- ------- ---------------------------------- -------- -------
<S> <C> <C> <C>
98- 1 BURNSVILLE CENTER Feb-98 1997/
Burnsville, Minnesota 89
98- 2 PHIPPS PLAZA Jan-98 1968/
Atlanta, Georgia 94
98- 3 ASHVILLE MALL Jan-98 1975/
Asheville, North Carolina 94
98- 4 CORDOVA MALL Jan-98 1971/
Pensacola, Florida 87
98- 5 CRESTWOOD PLAZA Jan-98 1957/
St. Louis, Missouri 97
98- 6 SUPER MALL OF THE GREAT N.W. (1) Jan-98 1956/
Auburn, Washington 91
98- 7 STROUD MALL Apr-98 1978/
Stroudsberg, PA 94
98-8 SOUTHWEST PLAZA Apr-98 1983/
Littleton, CO 95
98- 9 JACKSONVILLE MALL May-98 1981
Jacksonville, NC
98-10 CROSSROADS MALL May-98 1981/
Mount Hope, WV 97
98-11 ORLANDO FASHION SQUARE May-98 1973/
Orlando, FL 93
98-12 VILLAGE MALL Jun-98 1975/
(1) Danville, Ill 85/90
98-13 GREENVILLE MALL Jun-98 1978/
Greenville, SC 95
98-14 SOUTH PLAIN MALL Jun-98
Lubbock, TX
98-15 NORTHTOWN MALL Jun-98 1972/
Blaine, MN 86
98-16 WESTSIDE PAVILLION Jul-98 1985/
West Los Angeles, CA 1991
- ---------------------------------------------------------
Survey Low:
Survey High:
SURVEY MEAN:
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED:
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR
IS OWNED:
<CAPTION>
MALL MALL MALL
SALE GRANTOR/ TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. GRANTEE SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF
- ------- ----------------------------------- -------------- ----------- ----------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
98- 1 Corporate Property Investors/ $ 81,000,000 1,078,253 1,078,253 417,030 38.7% 84.0% $284
CBL & Associates
98- 2 ERE Yarmouth/ $188,000,000 823,000 823,000 372,457 45.3% N/A $450
Corporate Property Investors
98- 3 RL Coleman & Co. $ 65,000,000 1,042,000 489,000 440,000 42.2% 98.5% $280
CBL Associates
98- 4 Robert B Aikens & Associates LLC/ $ 85,000,000 874,000 376,368 376,368 43.1% 91.0% $300
Simon DeBartolo Group
98- 5 Crestwood Plaza S. C. LLC/ $106,400,000 1,021,132 1,021,132 382,214 37.4% 91.0% $300
Westfield America
98- 6 Hapsmith/Rosche Capital Corp./ $103,000,000 905,791 905,791 415,319 45.9% 75.0% $185
Glimcher Properties Inc.
98- 7 ERE Yarmouth/ $ 38,100,000 427,145 427,145 184,145 43.1% 86.0% $294
CBL & Associates Properties Inc.
98-8 Southwest Property Venture/ $113,000,000 1,292,110 591,245 438,000 33.9% 83.0% $265
General Growth Properties, Inc.
98- 9 Beckley--Jacksonville LP/ $ 38,000,000 384,000 384,000 167,640 43.7% 98.0% $286
Crown American Realty Trust
98-10 Beckley--Jacksonville LP/ $ 23,000,000 456,000 456,000 182,400 40.0% 76.0% $220
Crown American Realty Trust
98-11 Fund A Orlando, Inc./ $104,000,000 1,070,000 708,568 362,425 33.9% N/A $329
Colonial Properties Trust
98-12 Interstate RE Services/ $ 23,200,000 477,577 477,577 126,088 26.4% 72.0% $144
(1) DRA Advisors, Inc.
98-13 Marvest Property Trust/ $ 36,000,000 789,532 602,532 232,025 29.4% 55.0% $219
DRA Advisors, Inc.
98-14 South Plains Mall Assoc., LTD/ $115,700,000 1,107,000 1,107,000 365,215 33.5% 92.0% $300
The Macerich Co.
98-15 Northtown LLP/ $ 54,000,000 846,248 459,000 287,078 33.0% 70.0% $240
Glimcher Realty Trust
98-16 Westpal, LLC/ $170,500,000 755,912 535,912 354,349 46.9% 83.4% $373
The MaceRich Company
- -------------------------------------------------------------------------------------------------------------------------
$ 23,000,000 384,000 376,368 126,088 26.4% 55.0% $144
$188,000,000 1,292,110 1,107,000 440,000 46.9% 98.5% $450
$ 83,993,750 834,356 652,658 318,922 38.5% 82.5% $279
$ 85,000,000 874,000 376,368 376,368 43.1% 91.0% $300
$ 83,926,667 831,713 671,077 315,092 38.2% 81.8% $278
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MILTIPLE
- ------- ------------- ---------- ---------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
98- 1 $ 6,804,000 $ 6.31 8.40% -- -- $ 75 $194 0.68
98- 2 $13,912,000 $16.90 7.40% -- -- $228 $505 1.12
98- 3 $ 5,395,000 $11.03 8.30% -- -- $133 $148 0.53
98- 4 $ 7,560,000 $20.09 9.00% -- -- $226 $226 0.75
98- 5 $ 9,800,000 $ 9.60 9.21% -- -- $104 $278 0.93
98- 6 $12,370,000 $13.66 12.01% -- -- $114 $248 1.34
98- 7 $ 3,188,970 $ 7.47 8.37% -- -- $ 89 $207 0.70
98-8 $10,500,000 $17.76 9.29% -- -- $191 $258 0.97
98- 9 $ 3,572,000 $ 9.30 9.40% -- -- $ 99 $227 0.79
98-10 $ 2,760,000 $ 6.05 12.00% -- -- $ 50 -- --
98-11 $ 9,391,200 $13.25 9.03% -- -- $147 $287 0.87
98-12 $ 2,697,500 $ 5.65 11.63% -- -- $ 49 $184 1.28
(1)
98-13 $ 3,558,800 $ 5.91 9.89% -- -- $ 60 $155 0.71
98-14 $10,065,900 $ 9.09 8.70% -- -- $105 $317 1.06
98-15 $ 5,400,000 $11.76 10.00% -- -- $118 $188 0.78
98-16 $14,002,000 $26.13 8.21% 9.00% 11.00% $318 $481 1.29
- -------------------------------------------------------------------------------------------------------
$ 2,697,500 $ 5.65 7.40% 9.00% 11.00% $ 49 $148 0.53
$14,002,000 $26.13 12.01% 9.00% 11.00% $318 $505 1.34
$ 7,561,086 $11.87 9.43% -- -- $132 $260 0.92
$ 7,560,000 $20.09 9.00% -- -- $226 $226 0.75
$ 7,561,158 $11.32 9.46% -- -- $125 $263 #REFL
</TABLE>
- ----------
(1) Year 2 NOI
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
o The fourteen sales included for 1991 show a mean price per square
foot sold of $282. On the basis of mall shop GLA sold, these sales
present a mean of $357. Sales multiples range from .74 to 1.53 with a
mean of 1.17. Capitalization rates range from 5.60 to 7.82 percent
with an overall mean of 6.44 percent. The mean terminal
capitalization rate is approximately 100 basis points higher, or 7.33
percent. Yield rates range between 10.75 and 13.00 percent, with a
mean of 11.52 percent for those sales reporting IRR expectancies.
o In 1992, the eleven transactions display prices ranging from $136 to
$511 per square foot of GLA sold, with a mean of $259 per square
foot. For mall shop area sold, the 1992 sales suggest a mean price of
$320 per square foot. Sales multiples range from .87 to 1.60 with a
mean of 1.07. Capitalization rates range between 6.00 and 7.97
percent with the mean cap rate calculated at 7.31 percent for 1992.
For sales reporting a going-out cap rate, the mean is shown to be
7.75 percent. Yield rates range from 10.75 to around 12.00 percent
with a mean of 11.56 percent.
o For 1993, a total of sixteen transactions have been tracked. These
sales show an overall average sale price of $242 per square foot
based upon total GLA sold and $363 per square foot based solely upon
mall GLA sold. Sales multiples range from .65 to 1.82 and average
1.15. Capitalization rates continued to rise in 1993, showing a range
between 7.00 and 10.10 percent. The overall mean has been calculated
to be 7.92 percent. For sales reporting estimated terminal cap rates,
the mean is also equal to 7.92 percent. Yield rates for 1993 sales
range from 10.75 to 12.50 percent with a mean of 11.53 percent for
those sales reporting IRR expectancies. On balance, the year was
notable for the number of dominant Class A malls which transferred.
o Sales data for 1994 shows fourteen confirmed transactions with an
average unit price per square foot of $197 per square foot of total
GLA sold and $288 per square foot of mall shop GLA. Sales multiples
range from .57 to 1.43 and average .96. The mean going-in
capitalization rate is shown to be 8.37 percent. The residual
capitalization rates average 8.13 percent. Yield rates range from
10.70 to 11.50 percent and average 11.17 percent. During 1994, many
of the closed transactions involved second and third tier malls. This
accounted for the significant drop in unit rates and corresponding
increase in cap rates. Probably the most significant sale involved
the Riverchase Galleria, a 1.2 million square foot center in Hoover,
Alabama. LaSalle Partners purchased the mall of behalf of the
Pennsylvania Public School Employment Retirement System for $175.0
million. The reported cap rate was approximately 7.4 percent.
-81-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
o Cushman & Wakefield has researched 19 mall transactions for 1995.
With the exception of possibly Natick Mall and Smith Haven Mall, by
and large the quality of malls sold are lower than what has been
shown for prior years. For example, the average transaction price has
been slipping. In 1993, the peak year, the average deal was nearly
$133.8 million. In 1995, it is shown to be $88.6 million which is
even skewed upward by Natick and Smith Haven Malls which had a
combined price of $486.0 million. The average price per square foot
of total GLA sold is calculated to be $193 per square foot. The range
in values of mall GLA sold are $93 to $686 with an average of $285
per square foot. The upper end of the range is formed by Queens
Center with mall shop sales of nearly $700 per square foot.
Characteristics of these lesser quality malls would be higher initial
capitalization rates. The range for these transactions is 7.25 to
11.10 percent with a mean of 9.13 percent. Most market participants
indicated that continued turmoil in the retail industry will force
cap rates to move higher.
o 1996 saw a return of real estate investors to the regional mall
market. REITs were far and away been the most active buyers. The
increase in activity was a result of a combination of dynamics. The
liquidity of REITs as well as the availability of capital made
acquisitions much easier compared to previous two to three years. In
addition, sellers became much more realistic in there pricing,
recognizing that the long term viability of a regional mall requires
large infusions of capital. The 29 transactions we tracked for the
year range in size from approximately $22.2 million to $451.0
million. The malls sold also run the gamut of quality ranging from
several secondary properties in small markets to such higher profile
properties as Old Orchard Shopping Center in Chicago and The Plaza
and Court at King of Prussia in Philadelphia. Sale prices per square
foot of mall shop GLA range from $119 to $534 with a mean of $243.
REIT's primary focus on initial return with their underwriting
centered on in place income. As such, capitalization rates ranged
from 7.0 percent to 12.1 percent with a mean of 9.44 percent.
o Mall sales activity in 1997 exceeded the number of sales tracked in
1996. REITs have continued to show their appetite for acquisitions.
Most of the sales which have occurred in the past 12 months involve
"B" grade malls. Exceptions exist with respect to Regency Square, San
Francisco Shopping Center, Tysons Corner, and most recently The Falls
Shopping Center in Miami, Florida. These properties are viewed as
among the nation's premier retail properties. The 50 transactions we
have tracked to date range in size from $3.9 million to $412.0
million. Unit sale prices also vary widely from $21 to $594 per
square foot of GLA sold. On the basis of mall shop GLA, the range is
from $36 to $770 per square foot. Overall rates fall between 7.34
percent and 12.77 percent, and average 9.65 percent. Mall shop sales
per square foot range from $106 to $649, with a mean of $286 per
square foot.
-82-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
o Transactions during the first half of 1998 show that the pace of
acquisitions has not subsided. In addition to several portfolio
transactions, we have tracked 16 deals which point towards a further
lowering of cap rates as buyer's get more aggressive with their
pricing. REIT's are showing their persistent need to grow and we see
that the same players continue to compete for product. Cap rates are
expected to drop further into the second half of 1998.
While these unit prices implicitly contain both the physical and economic
factors affecting the real estate, the statistics do not explicitly convey many
of the details surrounding a specific property. Thus, this single index to the
valuation of the subject property has limited direct application. The price per
square foot of mall shop GLA acquired yields one common form of comparison.
However, this can be distorted if anchor and/or other major tenants generate a
significant amount of income. The following chart shows this relationship along
with other selected indices.
==========================================================================
REGIONAL & SUPER-REGIONAL MALL SALES
SELECTED AVERAGE INDICES
==========================================================================
TRANSACTION PRICE/SF OF PRICE/SF OF MALL MEAN SALES MEAN OAR
YEAR TOTAL GLA SHOPS RANGE/OVERALL MULTIPLE
RANGE/MEAN** MEAN
============= ================= ==================== =========== ========
1991 $156 - $556 $ 203 - $556 1.17 6.44%
$282 $357
------------- ----------------- --------------------- ---------- --------
1992 $136 - $511 $ 226 - $511 1.07 7.31%
$259 $320
------------- ----------------- --------------------- ---------- --------
1993 $ 73 - $471 $ 173 - $647 1.15 7.92%
$242 $363
------------- ----------------- --------------------- ---------- --------
1994 $ 83 - $378 $ 129 - $502 0.96 8.37%
$197 $288
------------- ----------------- --------------------- ---------- --------
1995 $ 53 - $686 $ 93 - $686 0.96 9.13%
$193 $284
------------- ----------------- --------------------- ---------- --------
1996 $ 44 - $534 $ 119 - $534 0.85 9.44%
$187 $243
------------- ----------------- --------------------- ---------- --------
1997 $ 21 - $594 $ 36 - $770 0.84 9.65%
$142 $253
------------- ----------------- --------------------- ---------- --------
1998 $ 49 - $258 $ 148 - $505 0.88 9.51%
$124 $244
=========================================================================
* Includes all transactions for particular year
** Based on total GLA acquired
=========================================================================
-83-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
The table above shows that the annual average price per square foot of
total GLA acquired has ranged from $124 to $282 per square foot. A declining
trend has been in evidence as cap rates have risen. As discussed, one of the
factors which may influence the unit rate is whether anchor stores are included
in the total GLA which is transferred. Thus, a further refinement can be made
between those malls which have transferred with anchor space and those which
have included only mall GLA. The price per square foot of mall shop GLA has
declined from a high of $363 per square foot in 1993 to $243 per square foot in
1996. In 1997 the price per square foot increased to $253 per square foot.
Through the first half of 1998 it is showing $260 per square foot.
ANALYSIS OF SALES
We have presented a summary of several transactions involving regional and
super-regional-sized retail shopping malls from which price trends may be
identified for the extraction of value parameters. These transactions have been
segregated by year of acquisition so as to lend additional perspective on our
analysis. Comparability in both physical and economic characteristics are the
most important criteria for analyzing sales in relation to the subject
property. However, it is also important to recognize the fact that regional
shopping malls are distinct entities by virtue of age and design, visibility
and accessibility, the market segmentation created by anchor stores and tenant
mix, the size and purchasing power of the particular trade area, and competency
of management. Thus, the Sales Comparison Approach, when applied to a property
such as the subject can, at best, only outline the parameters in which the
typical investor operates. The majority of these sales transferred either on an
all cash (100 percent equity) basis or its equivalent utilizing market-based
financing. Where necessary, we have adjusted the purchase price to its cash
equivalent basis for the purpose of comparison.
As the reader shall see, we have attempted to make comparisons of the
transactions to the subject primarily along economic lines. For the most part,
the transactions have involved dominant or strong Class A centers in top 50 MSA
locations which generally have solid, expanding trade areas and good income
profiles. Some of the other transactions are in decidedly inferior second tier
locations with limited growth potential and near term vacancy problems. These
sales tend to reflect lower unit rates and higher capitalization rates.
===========================================
APPLICATION TO SUBJECT PROPERTY
===========================================
Because the subject is theoretically selling both mall shop GLA and owned
department stores, we will focus on those properties which also sold both mall
and anchor GLA. As a basis for comparison, we will analyze the subject based
upon projected first year NOI. First year NOI (FY 1999) has been projected to
be $16.44 per square foot, based upon 1,240,971+/- square feet of owned GLA.
Derivation of the subject's projected net operating income is presented in the
Income Capitalization Approach section of this report as calculated by the
Pro-Ject model. With projected NOI of $16.44 per square foot, the subject falls
toward the upper-end of the range exhibited by most of the comparable sales.
-84-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
Since the income that an asset will produce has direct bearing on the
price that a purchaser is willing to pay, it is obvious that a unit price which
falls at the upper-end of the range indicated by the comparables would be
applicable to the subject. The subject's anticipated net income can be
initially compared to the composite mean of the annual transactions in order to
place the subject in a frame of reference. This is shown on the following
chart.
======================================================
COMPARISON TO SALES INCLUDING MALL SHOPS & ANCHORS
======================================================
SALES YEAR MEAN NOI SUBJECT FORECAST SUBJECT RATIO
- ------------------------------------------------------
1997 $11.66 $16.44 141%
- ------------------------------------------------------
1998 $ 9.69 $16.44 170%
======================================================
With first year NOI forecasted at approximately 141 to 170 percent of the
mean of these sales in each year, the unit price which the subject property
would command should be expected to fall within a relative range.
NET INCOME MULTIPLIER METHOD
Many of the comparables were bought on expected income, not gross leasable
area, making unit prices a somewhat subjective reflection of investment
behavior regarding regional malls. In order to quantify the appropriate
adjustments to the indicated per square foot unit values, we have compared the
subject's first year pro forma net operating income to the pro forma income of
the individual sale properties. In our opinion, a buyer's criteria for the
purchase of a retail property is predicated primarily on the property's income
characteristics. Thus, we have identified a relationship between the net
operating income and the sales price of the property. Typically, a higher net
operating income per square foot corresponds to a higher sales price per square
foot. Therefore, this adjustment incorporates factors such as location, tenant
mix, rent levels, operating characteristics, and building quality.
Provided below, we have extracted the net income multiplier from those
improved sales which we feel are the most comparable to the subject. The
equation for the net income multiplier (NIM), which is the inverse of the
equation for the capitalization rate (OAR), is calculated as follows:
NIM = Sales Price
-----------
Net Operating Income
-85-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
=========================================================
NET INCOME MULTIPLIER CALCULATION
=========================================================
= NET INCOME
SALE NO. PRICE/SF (divided by) NOI/SF MULTIPLIER
=========================================================
97-05 $179 $15.08 11.870
97-06 $186 $17.67 10.526
97-20 $160 $13.87 11.536
97-30 $169 $14.37 11.761
98-03 $133 $11.03 12.058
98-11 $147 $13.25 11.094
=========================================================
Mean $168 $14.85 11.357
=========================================================
Valuation of the subject property utilizing the net income multipliers
(NIMs) from the comparable properties accounts for the disparity of the net
operating incomes ($NOIs) per square foot between the comparables and the
subject. Within this technique, each of the adjusted NIMs are multiplied by the
$NOI per square foot of the subject, which produces an adjusted value
indication for the subject. The net operating income per square foot for the
subject property is calculated as the first year of the holding period, as
detailed in the Income Capitalization Approach section of this report.
======================================
ADJUSTED UNIT RATE SUMMARY
======================================
X =
SUBJECT NET INCOME INDICATED
SALE NO. NOI/SF MULTIPLIER PRICE $/SF
======================================
97-05 $16.44 11.870 $195
97-06 $16.44 10.526 $173
97-20 $16.44 11.536 $190
97-30 $16.44 11.761 $193
98-03 $16.44 12.058 $198
98-11 $16.44 11.094 $182
======================================
Mean $16.44 11.474 $188
======================================
From the process above, we see that the indicated net income multipliers
range from 10.5 to 12.1 with a mean of 11.5. The adjusted unit rates range from
$173 to $198 per square foot of owned GLA with a mean of $188 per square foot.
We recognize that the sale price per square foot of gross leasable area,
including land, implicitly contains both the physical and economic factors of
the value of a shopping center. Such statistics by themselves, however, do not
explicitly convey many of the details surrounding a specific income producing
property like the subject. Nonetheless, the process we have undertaken here is
an attempt to quantify the unit price based upon the subject's income producing
potential.
The subject is one the dominant malls within the Dallas MSA. We see it as
having good growth potential in the near-term, and good stability into the
foreseeable future.
-86-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
Considering the characteristics of the subject relative to the
comparables, we note that the stabilized growth rate for net operating income
is approximately 2.0 percent which is within the range with comparison to many
recently sold properties. We believe that a unit rate range of $190 to $195 per
square foot is appropriate. Applying this unit rate range to 1,240,971+/-
square feet of owned GLA results in a value of approximately $235.8 million to
$242.0 million for the subject as shown below.
1,240,971 SF 1,240,971 SF
x $190.00 x $195.00
------------ ------------
$235,800,000 $242,000,000
ROUNDED VALUE ESTIMATE - MARKET SALES UNIT RATE COMPARISON
$235,800,000 TO $242,000,000
SALES MULTIPLE METHOD
Arguably, it is the mall shop GLA sold and its intrinsic economic profile
that is of principal concern in the investment decision process. A myriad of
factors influence this rate, perhaps none of which is more important than the
sales performance of the mall shop tenants. Accordingly, the abstraction of a
sales multiple from each transaction lends additional perspective to this
analysis.
The sales multiple measure is often used as a relative indicator of the
reasonableness of the acquisition price. As a rule of thumb, investors will
look at a sales multiple of 1.00 as a benchmark, and will look to keep it
within a range of 0.75 to 1.25 times mall shop sales performance unless there
are compelling reasons why a particular property should deviate.
The sales multiple is defined as the sales price per square foot of mall
GLA divided by average mall shop sales per square foot. As this reasonableness
test is predicated upon the economics of the mall shops, technically, any
income (and hence value) attributed to anchors that are acquired with the mall
as tenants should be segregated from the transaction. As an income (or sales)
multiple has an inverse relationship with a capitalization rate, it is
consistent that, if a relatively low capitalization rate is selected for a
property, it follows that a correspondingly above-average sales (or income)
multiple be applied. In most instances, we are not privy to the anchor's
contributions to net income. As such, the sales multiples reported for those
sales may be slightly distorted to the extent that the imputed value of the
anchor's contribution to the purchase price has not been segregated. Therefore,
the following analysis is limited for those sales which involved mall shop GLA
only.
========================================
-87-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
========================================
SALES MULTIPLE SUMMARY
========================================
SALE NO. GOING-IN OAR SALES
MULTIPLE
========================================
97-16 9.50% 0.56
- ----------------------------------------
97-31 8.50% 0.71
- ----------------------------------------
97-32 8.55% 0.87
- ----------------------------------------
97-35 9.70% 0.84
- ----------------------------------------
98-04 9.00% 0.75
- ----------------------------------------
98-08 9.29% 0.97
========================================
MEAN 9.14% 0.78
========================================
The comparable sales show sales multiples that range from 0.56 to 0.97
with a mean of about 0.78. As evidenced, the more productive malls with higher
sales volumes on a per square foot basis tend to have higher sales multiples.
Furthermore, the higher multiples tend to be in evidence where an anchor(s) is
included in the sale.
Based upon forecasted sales performance in FY 1999, the subject is
expected to produce sales of about $315 per square foot for all specialty
tenants, including mall shops, food court, and restaurants.
In the case of the subject, the overall capitalization rate being utilized
for this analysis is considered to be within the mean exhibited by the
comparable sales. As such, we would be inclined to utilize a multiple within
the mean indicated by the sales which is applied to just the mall shop space.
Applying a ratio of 0.80 to 0.85 percent to the forecasted sales of $315 per
square foot, the following range in value is indicated:
Unit Sales Volume (Mall Shops) $315.00 $315.00
Sales Multiple x 0.80 x 0.85
- -------------- ------------- -------------
Adjusted Unit Rate $252.00 $267.75
Mall Shop GLA x 541,668 x 541,668
- -------------- ------------- -------------
Value Indication $136,500,000 $145,000,000
The analysis shows an adjusted value range of approximately $136.5 to
$145.0 million. Inherent in this exercise are mall shop sales which are
projections based on our investigation into the market which might not fully
measure investor's expectations. It is clearly difficult to project with any
certainty what the mall shops might achieve in the future. While we may
minimize the weight we place on this analysis, it does, nonetheless, offer a
reasonableness check against the other methodologies.
-88-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
We have also considered in this analysis the fact that owned anchors and
major tenants are forecasted to contribute approximately $9.3 million in
revenues in fiscal year 1999 (base and percentage rent obligations).
It is noted that we have not included reimbursement income. Some of the
major tenants are leased on a triple net basis with minimum rent and overage
rent flowing through intact to the landlord's position. Anchor tenants which
are a part of a regional center typically pay part of a fixed contribution
towards common area maintenance and taxes which seldom bares any relationship
to the actual expense. This contribution is utilized to offset the cost of
operating the center to the mall shop tenants. Since the mall shop tenants
effectively make up any slippage in recoveries from the anchors, the anchor's
base rent and percentage rent will flow through to the landlord's bottom line.
Thus capitalization of the anchor's minimum and percentage rent is the most
common and appropriate analysis. Capitalizing the revenue generated by the
anchor tenants at the subject at a 10.0 percent on value of approximately
$93,000,000.
Therefore, adding the anchor income's implied contribution to value of
$93.0 million, the resultant range is shown to be approximately $229.5 to
$238.0 million. Giving consideration to all of the above, the following value
range is warranted for the subject property based upon the sales multiple
analysis.
ROUNDED VALUE ESTIMATE - SALES MULTIPLE METHOD
ROUNDED TO $229,500,000 TO $238,000,000
================================
MARKET VALUE CONCLUSION
================================
We have considered all of the above relative to the physical and economic
characteristics of the subject. It is difficult to relate the subject to
comparables that are in such widely divergent markets with different cash flow
characteristics. After considering all of the available market data in
conjunction with the characteristics of the subject property, the indices of
investment that generated our value ranges are as follows:
UNIT PRICE PER SQUARE FOOT
Salable Square Feet: 1,240,971+/- SF
Price Per SF of Salable Area: $190 to $195
Indicated Value Range: $235,800,000 to $242,000,000
SALES MULTIPLE METHOD
Mall Shop Sales Volume: $315 per square foot
Sales Multiple: 0.80 to 0.85
Indicated Value Range: $229,500,000 to $238,000,000
-89-
<PAGE>
SALES COMPARISON APPROACH
- ------------------------------------------------------------------------------
The parameters above show a value range of approximately $229.5 to $242.0
million for the subject property. Based on our total analysis, relative to the
strengths and weaknesses of each methodology, it would appear that the Sales
Comparison Approach indicates a Market Value for the subject within the more
defined range of $230.0 - $240.0 million as of July 17, 1998.
MARKET VALUE - SALES COMPARISON APPROACH
ROUNDED TO $230,000,000 TO $240,000,000
-90-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
INTRODUCTION
The Income Capitalization Approach is based upon the economic principle
that the value of a property capable of producing income is the present worth
of anticipated future net benefits. The net income projected is translated into
a present value indication using the capitalization process. There are various
methods of capitalization that are based on inherent assumptions concerning the
quality, durability and pattern of the income projection. Where the pattern of
income is irregular due to existing leases that will terminate at staggered,
future dates, or to an absorption or stabilization requirement on a newer
development, discounted cash flow analysis is the most accurate.
Discounted Cash Flow Analysis (DCF) is a method of estimating the present
worth of future cash flow expectancies by individually discounting each
anticipated collection at an appropriate discount rate. The indicated market
value by this approach is the accumulation of the present worth of future
projected years' net income (before income taxes and depreciation) and the
present worth of the reversion (the estimated property value at the end of the
projection period). The estimated value of the reversion at the end of the
projection period is based upon capitalization of the next year's projected net
operating income. This is the more appropriate method to use in this
assignment, given the step up in lease rates and the long term tenure of retail
tenants.
A second method of valuation, using the Income Approach, is to directly
capitalize a stabilized net income based on rates extracted from the market or
built up through mortgage equity analysis. This is a valid method of estimating
the market value of the property as of the achievement of stabilized
operations.
DISCOUNTED CASH FLOW ANALYSIS
The Discounted Cash Flow (DCF) produces an estimate of value through an
economic analysis of the subject property in which the net income generated by
the asset is converted into a capital sum at an appropriate rate. First, the
revenues which a fully informed investor can expect the subject to produce over
a specified time horizon are established through an analysis of the current
rent roll, as well as the rental market for similar properties. Second, the
projected expenses incurred in generating these gross revenues are deducted.
Finally, the residual net income is discounted into a capital sum at an
appropriate rate which is then indicative of the subject property's current
value in the marketplace.
In this Income Capitalization Approach to the valuation of the subject, we
have utilized a 10-year holding period for the "AS IS" investment in the
subject property, with the cash flow analysis commencing on July 1, 1998.
Although an asset such as the subject has a much longer useful life, investment
analysis becomes more meaningful if limited to a time period considerably less
than the real estate's economic life, but of sufficient length for an investor.
A 10-year holding period for this investment is long enough to model the
asset's performance and benefit from its lease-up and lease turnover, but short
enough to reasonably estimate the expected income and expenses of the real
estate. It is also consistent with a prudent investor's assumption of disposing
the asset at the optimum time. Although our cash flow analysis is presented on
a fiscal year basis, it is noted that we will discuss income and expenses based
upon a calendar year basis.
-91-
<PAGE>
ANNUAL CASH FLOW REPORT
GRAPEVINE MILLS
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 2004
-------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING INCOME
MINIMUM RENT
Mall Shop Tenants $10,198,688 $ 10,962,494 $ 11,569,386 $ 11,874,603 $ 11,732,639 $ 13,095,360
Food Court Tenants $ 691,920 $ 691,920 $ 691,920 $ 691,920 $ 691,920 $ 691,920
Anchor/Major Tenants $ 9,191,264 $ 9,233,935 $ 9,251,058 $ 9,273,704 $ 9,246,778 $ 9,248,048
Kiosk Tenants $ 171,893 $ 352,443 $ 370,693 $ 370,693 $ 378,274 $ 368,340
Specialty Restaurants $ 323,160 $ 323,160 $ 323,160 $ 323,160 $ 323,160 $ 377,019
- --------------------------- ----------- ------------ ------------ ------------ ------------ ------------
SUBTOTAL: $20,576,925 $ 21,563,952 $ 22,206,217 $ 22,534,080 $ 22,372,771 $ 23,780,687
RECOVERIES
CAM-Anchor Tenants $ 798,995 $ 826,092 $ 855,004 $ 884,930 $ 824,325 $ 806,995
TAX-Anchor Tenants $ 1,277,183 $ 1,320,579 $ 1,366,800 $ 1,414,638 $ 1,422,941 $ 1,451,961
CAM-Mall Shops $ 4,393,284 $ 5,431,989 $ 5,951,557 $ 6,327,792 $ 6,388,087 $ 7,168,798
TAX-Mall Shops $ 1,387,110 $ 1,438,648 $ 1,475,582 $ 1,559,725 $ 1,519,736 $ 1,636,419
Water/Sewer Income $ 31,217 $ 34,576 $ 36,941 $ 38,520 $ 37,495 $ 41,435
Energy Recovery $ 174,660 $ 186,262 $ 191,484 $ 192,574 $ 182,107 $ 195,943
Food Court Recovery $ 344,464 $ 381,490 $ 394,842 $ 408,662 $ 422,965 $ 437,769
- --------------------------- ----------- ------------ ------------ ------------ ------------ ------------
SUBTOTAL: $ 8,406,913 $ 9,619,636 $ 10,272,210 $ 10,826,841 $ 10,797,656 $ 11,739,320
Overage Rent $ 197,828 $ 250,000 $ 350,000 $ 362,250 $ 374,929 $ 388,051
Sales Volume (000) $ 222,034 $ 243,157 $ 258,490 $ 269,559 $ 267,137 $ 289,508
GROSS RENTAL INCOME: $29,181,666 $ 31,433,588 $ 32,828,427 $ 33,723,171 $ 33,545,356 $ 35,908,058
- --------------------------- ----------- ------------ ------------ ------------ ------------ ------------
Credit Loss $ (934,269) $ (1,038,698) $ (1,098,246) $ (1,137,009) $ (1,133,326) $ (1,252,511)
Push Cart Income $ 913,500 $ 940,905 $ 969,132 $ 998,206 $ 1,028,152 $ 1,058,997
Temporary Tenants $ 420,000 $ 375,000 $ 355,250 $ 365,908 $ 376,885 $ 388,191
Miscellaneous $ 989,625 $ 1,019,314 $ 1,049,893 $ 1,081,390 $ 1,113,832 $ 1,147,247
- --------------------------- ----------- ------------ ------------ ------------ ------------ ------------
TOTAL INCOME: $30,570,522 $ 32,730,109 $ 34,104,456 $ 35,031,666 $ 34,930,899 $ 37,249,982
OPERATING EXPENSES
EXPENSES
CAM Expense $ 5,331,700 $ 5,518,310 $ 5,711,450 $ 5,911,351 $ 6,118,248 $ 6,332,387
Tax Expense $ 2,828,202 $ 2,927,189 $ 3,029,641 $ 3,135,679 $ 3,245,427 $ 3,359,017
Food Court $ 320,513 $ 331,730 $ 343,341 $ 355,358 $ 367,795 $ 380,668
General & Administrative $ 600,325 $ 621,336 $ 643,083 $ 665,591 $ 688,887 $ 712,998
Miscellaneous $ 50,875 $ 52,656 $ 54,499 $ 56,406 $ 58,380 $ 60,424
Management Fee $ 1,038,736 $ 1,087,862 $ 1,119,057 $ 1,134,801 $ 1,127,564 $ 1,199,027
- --------------------------- ----------- ------------ ------------ ------------ ------------ ------------
TOTAL EXPENSES: $10,170,351 $ 10,539,083 $ 10,901,071 $ 11,259,186 $ 11,606,301 $ 12,044,521
NET OPERATING INCOME $20,400,171 $ 22,191,026 $ 23,203,385 $ 23,772,480 $ 23,324,598 $ 25,205,461
Alterations $ 482,514 $ 650,723 $ 372,893 $ 154,532 $ 1,988,247 $ 75,635
Commissions $ 84,782 $ 107,307 $ 73,202 $ 29,310 $ 431,169 $ 19,888
Replacement Reserve $ 240,662 $ 249,085 $ 257,803 $ 266,826 $ 276,165 $ 285,831
- --------------------------- ----------- ------------ ------------ ------------ ------------ ------------
Subtotal: $ 807,958 $ 1,007,115 $ 703,898 $ 450,668 $ 2,695,581 $ 381,354
NET CASH FLOW $19,592,213 $ 21,183,911 $ 22,499,487 $ 23,321,812 $ 20,629,017 $ 24,824,107
<CAPTION>
CAGR CAGR
2005 2006 2007 2008 2009 1999-08 2001-08
---------------- ---------------- --------------- ---------------- ---------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING INCOME
MINIMUM RENT
Mall Shop Tenants $ 13,208,733 $ 13,261,448 $ 13,685,766 $ 13,902,300 $ 15,204,334 3.5% 2.7%
Food Court Tenants $ 691,920 $ 691,920 $ 691,920 $ 691,920 $ 691,920 0.0% 0.0%
Anchor/Major Tenants $ 9,248,048 $ 9,248,048 $ 9,248,048 $ 9,478,431 $ 9,651,823 0.3% 0.3%
Kiosk Tenants $ 445,242 $ 464,901 $ 464,901 $ 459,590 $ 447,091 11.5% 3.1%
Specialty Restaurants $ 403,950 $ 403,950 $ 403,950 $ 403,950 $ 403,950 2.5% 3.2%
- --------------------------- ------------ ------------ ------------ ------------ ------------ ---- ---
SUBTOTAL: $ 23,997,893 $ 24,070,267 $ 24,494,585 $ 24,936,191 $ 26,399,118 2.2% 1.7%
RECOVERIES
CAM-Anchor Tenants $ 835,241 $ 864,474 $ 894,733 $ 917,588 $ 945,159 1.5% 1.0%
TAX-Anchor Tenants $ 1,502,781 $ 1,555,377 $ 1,609,817 $ 1,621,759 $ 1,627,092 2.7% 2.5%
CAM-Mall Shops $ 7,371,921 $ 7,573,478 $ 7,890,282 $ 8,163,865 $ 9,076,634 7.1% 4.6%
TAX-Mall Shops $ 1,681,596 $ 1,732,563 $ 1,811,710 $ 1,815,393 $ 1,957,831 3.0% 3.0%
Water/Sewer Income $ 42,795 $ 43,934 $ 45,508 $ 45,325 $ 49,681 4.2% 3.0%
Energy Recovery $ 195,766 $ 195,177 $ 198,482 $ 199,897 $ 222,763 1.5% 0.6%
Food Court Recovery $ 453,090 $ 468,949 $ 485,362 $ 502,349 $ 519,932 4.3% 3.5%
- --------------------------- ------------ ------------ ------------ ------------ ------------ ---- ---
SUBTOTAL: $ 12,083,190 $ 12,433,952 $ 12,935,894 $ 13,266,176 $ 14,399,092 5.2% 3.7%
Overage Rent $ 401,633 $ 415,690 $ 430,239 $ 445,298 $ 460,883 9.4% 3.5%
Sales Volume (000) $ 299,033 $ 307,808 $ 318,521 $ 320,092 $ 342,952 4.1% 3.1%
GROSS RENTAL INCOME: $ 36,482,716 $ 36,919,909 $ 37,860,718 $ 38,647,665 $ 41,259,093 3.2% 2.4%
- --------------------------- ------------ ------------ ------------ ------------ ------------ ---- ---
Credit Loss $ (1,277,832) $ (1,295,275) $ (1,340,550) $ (1,346,156) $ (1,439,694) 4.1% 3.0%
Push Cart Income $ 1,090,767 $ 1,123,490 $ 1,157,195 $ 1,191,910 $ 1,227,668 3.0% 3.0%
Temporary Tenants $ 399,837 $ 411,832 $ 424,187 $ 436,913 $ 450,020 0.4% 3.0%
Miscellaneous $ 1,181,664 $ 1,217,114 $ 1,253,627 $ 1,291,236 $ 1,329,973 3.0% 3.0%
- --------------------------- ------------ ------------ ------------ ------------ ------------ ---- ---
TOTAL INCOME: $ 37,877,152 $ 38,377,070 $ 39,355,177 $ 40,221,568 $ 42,827,060 3.1% 2.4%
OPERATING EXPENSES
EXPENSES
CAM Expense $ 6,554,020 $ 6,783,411 $ 7,020,831 $ 7,266,560 $ 7,520,890 3.5% 3.5%
Tax Expense $ 3,476,583 $ 3,598,263 $ 3,724,202 $ 3,854,549 $ 3,989,459 3.5% 3.5%
Food Court $ 393,992 $ 407,781 $ 422,054 $ 436,826 $ 452,115 3.5% 3.5%
General & Administrative $ 737,953 $ 763,781 $ 790,513 $ 818,181 $ 846,818 3.5% 3.5%
Miscellaneous $ 62,538 $ 64,727 $ 66,993 $ 69,337 $ 71,764 3.5% 3.5%
Management Fee $ 1,211,266 $ 1,215,443 $ 1,240,027 $ 1,261,109 $ 1,334,711 2.2% 1.7%
- --------------------------- ------------ ------------ ------------ ------------ ------------ ---- ---
TOTAL EXPENSES: $ 12,436,352 $ 12,833,406 $ 13,264,620 $ 13,706,562 $ 14,215,757 3.4% 3.3%
NET OPERATING INCOME $ 25,440,800 $ 25,543,664 $ 26,090,557 $ 26,515,006 $ 28,611,303 3.0% 1.9%
Alterations $ 116,816 $ 423,075 $ 500,590 $ 2,215,295 $ 164,665 -- --
Commissions $ 25,144 $ 83,364 $ 95,692 $ 464,966 $ 36,534 -- --
Replacement Reserve $ 295,835 $ 306,189 $ 316,906 $ 327,998 $ 339,478 -- --
- --------------------------- ------------ ------------ ------------ ------------ ------------ ---- ---
Subtotal: $ 437,795 $ 812,628 $ 913,188 $ 3,008,259 $ 540,677 -- --
NET CASH FLOW $ 25,003,005 $ 24,731,036 $ 25,177,369 $ 23,506,747 2.0% 0.6%
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
The revenues and expenses which an informed investor may expect to incur
from the subject property will vary, without a doubt, over the holding period.
Major investors active in the market for this type of real estate establish
certain parameters in the computation of these cash flows and criteria for
decision making which this valuation analysis must include if it is to be truly
market-oriented. These current computational parameters are dependent upon
market conditions in the area of the subject property as well as the market
parameters for this type of real estate which we view as being national in
scale.
By forecasting the anticipated income stream and discounting future value
at reversion into a current value, the capitalization process may be applied to
derive a value that an investor would pay to receive that particular income
stream. Typical investors price real estate on their expectations of the
magnitude of these benefits and their judgment of the risks involved. Our
valuation endeavors to reflect the most likely actions of typical buyers and
sellers of property interest similar to the subject.
An analytical real estate computer model that simulates the behavioral
aspects of property and examines the results mathematically is employed for the
discounted cash flow analysis. In this instance, it is the PRO-JECT PLUS+
computer model. Since investors are the basis of the marketplace in which the
subject property will be bought and sold, this type of analysis is particularly
germane to the appraisal problem at hand.
A general outline summary of the major steps involved may be listed as
follows:
1. Analysis of the income stream: establishment of an economic (market)
rent for tenant space; projection of future revenues annually based
upon existing and pending leases; probable renewals at market
rentals; and expected vacancy experience;
2. Estimation of a reasonable period of time to achieve stabilized
occupancy of the existing property and make all necessary
improvements for marketability;
3. Analysis of projected escalation recovery income based upon an
analysis of the property's history as well as the experiences of
reasonably similar properties;
4. Derivation of the most probable net operating income and pre-tax cash
flow (net income less reserves, tenant improvements, leasing
commissions and any extraordinary expenses to be generated by the
property) by subtracting all property expenses from the effective
gross income; and
5. Estimation of a reversionary sale price based upon capitalization of
the net operating income (before reserves, tenant improvements and
leasing commissions or other capital items) at the end of the
projection period.
Following is a detailed discussion of the components which form the basis
of this analysis.
-92-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
=================================
DISCOUNTED CASH FLOW
"As Is" Analysis
=================================
POTENTIAL GROSS REVENUES
The total potential gross revenues generated by the subject property are
composed of a number of distinct elements: minimum rent determined by lease
agreement; additional overage rent based upon a percentage of retail sales;
reimbursement of certain expenses incurred in the ownership and operation of
the real estate; and other miscellaneous revenues.
Minimum base rent represents a legal contract establishing a return to
investors in the real estate, while the passing-on of certain expenses to
tenants serves to maintain this return in an era of continually rising costs of
operation. Additional rent based upon a percentage of retail sales experienced
at the subject serves to preserve the purchasing power of the residual income
to an equity investor over time. Finally, miscellaneous income adds an
additional source of revenue in the complete operation of the subject property.
MINIMUM RENTAL INCOME
Minimum rent produced by the subject property is derived from that paid by
the various tenant types. The projection utilized in this analysis is based
upon the actual rent roll and our projected leasing schedule in place as of the
date of appraisal, together with our assumptions as to the absorption of the
vacant space, market rent growth, and renewal/turnover probability. We have
also made specific assumptions regarding deals that are in progress and have a
strong likelihood of coming to fruition. In this regard, we have worked with
management and leasing personnel to analyze each pending deal on a case by case
basis. Typically, we incorporate all executed as well as high probability
leases in our analysis. These transactions represent a reasonable and prudent
assumption from an investor's standpoint.
The rental income which an asset such as the subject property will
generate for an investor is analyzed as to its quality, quantity, and
durability. The quality and probable duration of income will affect the amount
of risk which an informed investor may expect over the property's useful life.
Segregation of the income stream along these lines allows us to control the
variables related to the center's forecasted performance with greater accuracy.
Each tenant type lends itself to a specific weighting of these variables as the
risk associated with each varies.
Minimum rents forecasted at the subject property are essentially derived
from various tenant categories, namely specialty tenant revenues consisting of
all in-line shops, food court tenants, restaurants, kiosks and anchor/major
tenant revenues. In our investigation and analysis of the marketplace, we have
surveyed, and ascertained where possible, rent levels being commanded by
competing centers. However, it should be recognized that large retail shopping
centers are generally considered to be separate entities by virtue of age and
design, accessibility, visibility, tenant mix, and the size and purchasing
power of its trade area. Consequently, the best measure of minimum rental
income is its actual rent roll and leasing schedule.
-93-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
As such, our analysis of recently negotiated leases for tenants at the
subject provides important insight into perceived market rent levels for the
property. Inasmuch as a tenant's ability to pay rent is based upon expected
sales achievement, the level of negotiated rents is directly related to the
individual tenant's perception of their expected performance at the center. Due
to the newness of the subject, all leases in-place will be analyzed.
SPECIALTY/IN-LINE SHOPS
Our analysis of market rent levels for in-line shops has resolved itself
to a variety of influencing factors. Although it is typical that larger tenant
spaces are leased at lower per square foot rates and lower percentages, the
type of tenant as well as the variable of location within the mall can often
distort this size/rate relationship. The following chart presents an analysis
of in-line shop rents based upon executed and out-for-signature leases, and
several letters of intent on an annualized basis for 1998:
=========================================================================
LEASES IN-PLACE-1998*
GRAPEVINE MILLS
Cushman & Wakefield, Inc.
=========================================================================
SIZE CATEGORY ANNUALIZED RENT APPLICABLE GLA RENT/SF
=========================================================================
Under $ 948,152 22,946 SF $41.32
1,200 SF
- -------------------------------------------------------------------------
1,201 - $1,761188 53,054 SF $33.20
2,000 SF
- -------------------------------------------------------------------------
2,001 - $1,776753 73,089 SF $24.31
3,500 SF
- -------------------------------------------------------------------------
3,501 - $1,598,618 81,461 SF $19.62
5,000 SF
- -------------------------------------------------------------------------
5,001 - $1,612,771 84,400 SF $19.11
7,500 SF
- -------------------------------------------------------------------------
Over $1,385,988 86,670 SF $15.99
7,500 SF
=========================================================================
TOTAL/AVERAGE $9,083,470 401,620 SF $22.51
=========================================================================
* Includes existing and proposed leases for calendar year 1998 based
upon leasing activity. Partial year tenants have been annualized to
reflect the full 12-months.
=========================================================================
As can be seen, lease rates generally have an inverse relationship with
suite size and show and overall average rent of about $22.50 per square foot.
COMPARABLE MILLS CENTERS ATTAINED RENTS
To further support specialty tenant lease rates, a comparison of the
subject can also be made to the other Mills projects which are deemed to be
comparable in many respects. This information represents the latest data
available and is summarized in the following chart.
=============================================================================
EFFECTIVE RENT ALLOCATIONS - SPECIALTY TENANTS
=============================================================================
POTOMAC FRANKLIN SAWGRASS GURNEE SURVEY MEAN
YEAR MILLS MILLS MILLS MILLS
=============================================================================
1994 $22.17 $21.54 $24.83 $10.71 $19.81
-----------------------------------------------------------------------------
1995 $23.14 $21.29 $27.58 $20.08 $23.02
-----------------------------------------------------------------------------
1996 $25.32 $22.16 $27.90 $20.56 $23.98
=============================================================================
-94-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
From the above we see that the average attained rents for specialty shop
space (exclusive of food court tenants) ranges from $20.56 per square foot at
Gurnee Mills to $27.90 per square foot at Sawgrass.
Among the square feet leased, the mean rental rate is calculated to be
$23.98 per square foot. Minimum rents from specialty tenants reportedly
represent approximately 65.0 percent of all annual minimum rent revenues at
Mills properties. At the other Mills and Great Mall projects, rental rates are
much the same:
ONTARIO MILLS reports mall shop rents that average about $22.69 per square
foot, with anchor rental rates ranging from $5.00 to $18.00 per square
foot, with an average of $9.66.
ARIZONA MILLS reports an average mall shop rent of $23.00 per square foot,
although leases in-place average $23.83. Anchor leases are budgeted to
average about $11.06 per square foot, with executed leases currently
averaging $10.66 per foot. Anchor leases under negotiation are showing an
average rental rate of $12.80 per square foot and include a range of
tenants, from JCPenney Outlet, to IMAX, Sega, and Off Rodeo. All combined,
the overall average budgeted rent for Arizona is approximately $16.36 per
foot.
THE GREAT MALL OF THE GREAT PLAINS reports specialty tenant leases
in-place at an average about $18.50 per foot. Anchor leases average $9.67
per foot.
Finally, at The GREAT MALL OF THE GREAT NORTHWEST, mall shop leases
average about $20.17 per foot, while anchor leases average $11.16 per
foot.
Quite obviously, some of the averages are skewed downward by virtue of the
number of older leases that would characterize these projects having been built
over the period 1985 to 1993 with most of the construction occurring prior to
1991.
We would again note that the newest Mills projects, Ontario Mills and
Arizona Mills report average rents in-line with the subject. On balance, it
would appear that achieved rents are within an acceptable range when viewed in
comparison to the other Mills properties.
MARKET COMPARISONS - OCCUPANCY COST RATIOS
In further support of developing a forecast for market rent levels, we
have undertaken a comparison of minimum rent to projected sales and total
occupancy costs to sales ratios. Generally, our research and experience with
other regional malls shows that the ratio of minimum rent to sales falls within
the 7.0 to 10.0 percent range in the initial year of the lease, with 7.5
percent to 8.5 percent being most typical. By adding additional costs to the
tenant, such as real estate tax and common area maintenance recoveries, a total
occupancy cost may be derived. Expense recoveries and other tenant charges can
add up to 100 percent of minimum rent and comprise the balance of total tenant
costs.
-95-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
The typical range for total occupancy cost-to-sales ratios falls between
11.0 and 15.0 percent. As a general rule, where sales exceed $250 to $275 per
square foot, 14.0 to 15.0 percent would be a reasonable cost of occupancy.
Experience and research show that most tenants will resist total occupancy
costs that exceed 15.0 to 18.0 percent of sales. Obviously, this comparison
will vary from tenant to tenant and property to property.
In higher end markets where tenants are able to generate sales above
industry averages, tenants can generally pay rents which fall toward the upper
end of the ratio range. Moreover, if tenants perceive that their sales will be
increasing at real rates that are in excess of inflation, they will typically
be more inclined to pay higher initial base rents. Obviously, the opposite
would be true for poorer performing centers in that tenants would be squeezed
by the thin margins related to below average sales. With fixed expenses
accounting for a significant portion of the tenants contractual obligation,
there would be little room left for base rent.
In this context, we have provided an occupancy cost analysis for several
regional malls with which we have had direct insight over the past year. This
information is provided on the FOLLOWING PAGE. On average, these ratio
comparisons provide a realistic check against projected market rental rate
assumptions.
From this analysis we see that the ratio of base rent to sales ranges from
5.8 to 9.9 percent, while the total occupancy cost ratios vary from 8.5 to 17.0
percent when all recoverable expenses are included. The surveyed mean for the
malls analyzed is 8.1 percent and 12.9 percent, respectively.
These relative measures can be compared with two well known publications,
The Score (1996) by the International Council of Shopping Centers and Dollars &
Cents of Shopping Centers (1997) by the Urban Land Institute. The most recent
publications indicate base rent-to-sales ratios of approximately 6.0 to 8.0
percent and total occupancy cost ratios of 9.0 and 13.0 percent, respectively.
In general, while the rental ranges and ratio of base rent to sales vary
substantially from mall to mall and tenant to tenant, they do provide general
support for the rental ranges and ratio which is projected for the subject
property.
CONCLUSION - MARKET RENT ESTIMATE FOR IN-LINE SHOPS
Comparable in-line mall shop sales are forecasted to be approximately $300
per square foot for 1998 (exclusive of food court, restaurants, and kiosks).
Since tenant recoveries are forecasted in the middle-range for a property of
the subject's caliber, we feel that the subject's rent-to-sales ratio should
not exceed 8.0 percent. We can test the subject's rent achievement potential
relative to forecasted sales levels. This sensitivity is shown below:
==============================================================
BASE RENT TO SALES RATIO IMPLIED RENT AT $300/SF
==============================================================
7.00% $21.00
- --------------------------------------------------------------
7.25% $21.75
- --------------------------------------------------------------
7.50% $22.50
- --------------------------------------------------------------
8.00% $24.00
==============================================================
-96-
<PAGE>
OCCUPANCY COST ANALYSIS/COMPARISON
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
BUDGET YEAR NO.
NO. AREA LOCATION STATE YEAR BUILT STORIES
====== ========================================== ======= ======== ============ =========
<S> <C> <C> <C> <C> <C>
** ULI-Super-Regional Malls US 1996 -- --
** ULI-Regional Malls US 1996 -- --
** ICSC-All Enclosed Malls US 1995 -- --
** ICSC-Malls (greater than) 1,000,000 sf US 1995 -- --
==== ========================================== ======= ==== ========== ==
1 San Jose MSA CA 1997 1986 2
2 San Francisco MSA CA 1997 1954/88 2
3 San Francisco MSA CA 1997 1988 8
4 Ontario MSA CA 1997 1996 1
5 Sacramento County MSA CA 1996 1957/81/94 2
6 Riverside County MSA CA 1995 1970/91 1
7 Fairfield County MSA CT 1995 1986/91 2
8 Daytona Beach MSA FL 1996 1974/90/96 1
9 Miami MSA FL 1995 1982 1
10 Gainsville MSA GA 1997 1964/87/96 1
11 Bloomingdale MSA IL 1995 1981/88/91 2
12 Indianapolis MSA IN 1995 1968/87 1
13 North/Central Kansas KS 1995 1987/90 1
14 Alexandria MSA LA 1996 1973/86 1
15 Monroe MSA LA 1996 1985 1
16 Boston MSA MA 1997 1989 3
17 Boston MSA MA 1997 1989/92 1
18 Bristol County MSA MA 1996 1992/93 2
19 Boston MSA MA 1996 1996/93/94 2
20 Worcester County MSA MA 1996 1971/87 1
21 Baltimore MSA MD 1997 1959/82/92 4
22 Baltimore MSA MD 1997 1956/91 1
23 Westminster MSA MD 1997 1987/94 1
24 Washington-Baltimore MD 1996 1979/93 2
25 Genesee County MSA MI 1995 1980/93 1
26 Minneapolis MSA MN 1995 1962/94 1
27 St. Louis MSA MO 1996 1974/94 2
28 Las Vegas MSA NV 1997 1992/97 1
29 Rochester MSA NY 1997 1971/86/96 1
30 Orange County MSA NY 1997 1980 1
31 Chemung County MSA NY 1997 1967/81/95 2
32 Syracuse MSA NY 1997 1988/94 1
33 Syracuse MSA NY 1997 1954/97 1
34 White Plains MSA NY 1996 1980/93 4
35 Queens County MSA NY 1996 1973/90/95 4
36 Buffalo MSA NY 1996 1985/89 1
37 Dayton MSA OH 1997 1969/94 2
38 Cincinnati MSA OH 1996 1956/88/94 2
39 Bucks County MSA PA 1995 1968/75 1
40 Johnson City TN 1996 1971/91/96 2
41 Nashville MSA TN 1995 1990 2
42 Amarillo MSA TX 1995 1982/86 1
43 Burlington MSA VT 1995 1979/89/92 1
44 Washington D.C. MSA VA 1996 1968/86/91 2
45 Prince William Cty. MSA VA 1997 1972/88/96 1
46 Norfolk-Chesapeake MSA VA 1997 1981/88/97 2
47 Seattle MSA WA 1995 1979/95 1
==== ========================================== ======= ==== ========== ==
SURVEY LOW:
SURVEY HIGH:
SURVEY MEAN:
==== ==========================================
<CAPTION>
TOTAL SHOP AVG. AVG. RENT- TOTAL
NO. GLA GLA RENT RECOVERIES SALES SALES COSTS LOCATION
====== =========== ========= =========== ============ ============ ========= ========== ==========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
** 1,037,007 351,721 $ 16.54 $ 9.31 $ 203.87 8.1% 12.7% --
** 519,721 243,928 $ 10.44 $ 4.89 $ 180.78 5.8% 8.5% --
** 582,893 261,553 $ 12.05 $ 5.82 $ 176.16 6.8% 10.1% --
** 1,206,874 407,060 $ 20.01 $ 12.57 $ 271.64 7.4% 12.0% --
==== ========= ======= ======= ======= ========== === ==== ==
1 1,139,384 394,496 $ 38.95 $ 20.15 $ 593.00 6.6% 10.0% Suburban
2 854,164 266,413 $ 33.75 $ 22.52 $ 407.00 8.3% 13.8% Urban
3 499,930 183,430 $ 53.60 $ 32.45 $ 540.00 9.9% 15.9% Urban
4 1,536,223 508,942 $ 23.00 $ 13.10 $ 280.00 8.2% 12.9% Suburban
5 1,066,161 410,168 $ 34.40 $ 18.25 $ 400.00 8.6% 13.2% Suburban
6 1,044,536 411,640 $ 22.59 $ 17.00 $ 250.00 9.0% 15.8% Suburban
7 1,270,146 499,868 $ 32.00 $ 17.20 $ 425.00 7.5% 11.6% Suburban
8 1,064,922 246,379 $ 25.42 $ 12.12 $ 300.00 8.5% 12.5% Suburban
9 1,120,827 290,385 $ 29.36 $ 16.55 $ 355.00 8.3% 12.9% Suburban
10 518,422 191,919 $ 16.50 $ 8.06 $ 239.00 6.9% 10.3% Suburban
11 1,292,186 427,609 $ 21.84 $ 10.37 $ 250.00 8.7% 12.9% Suburban
12 1,239,059 260,359 $ 22.43 $ 9.00 $ 235.00 9.5% 13.4% Suburban
13 400,307 185,324 $ 14.97 $ 10.31 $ 212.00 7.1% 11.9% Suburban
14 873,833 292,560 $ 16.00 $ 12.67 $ 216.00 7.4% 13.3% Suburban
15 920,779 338,875 $ 19.62 $ 9.77 $ 271.00 7.2% 10.8% Surburban
16 650,804 329,573 $ 38.88 $ 22.80 $ 403.00 9.6% 15.3% Urban
17 770,575 276,681 $ 19.30 $ 13.19 $ 253.00 7.6% 12.8% Suburban
18 998,436 341,948 $ 21.80 $ 12.16 $ 257.00 8.5% 13.2% Suburban
19 1,155,068 431,068 $ 41.79 $ 13.08 $ 426.00 9.8% 12.9% Suburban
20 445,875 182,372 $ 22.36 $ 14.93 $ 288.00 7.8% 12.9% Suburban
21 952,021 532,892 $ 32.65 $ 14.08 $ 379.00 8.6% 12.3% Suburban
22 862,313 241,146 $ 19.00 $ 14.51 $ 255.00 7.5% 13.1% Suburban
23 525,702 194,271 $ 16.20 $ 14.67 $ 238.00 6.8% 13.0% Suburban
24 661,534 245,112 $ 19.22 $ 19.77 $ 257.00 7.5% 15.2% Suburban
25 451,036 230,625 $ 16.00 $ 9.01 $ 219.00 7.3% 11.4% Suburban
26 982,228 201,561 $ 21.00 $ 22.51 $ 262.00 8.0% 16.6% Suburban
27 442,321 181,608 $ 30.00 $ 13.93 $ 365.00 8.2% 12.0% Suburban
28 475,940 475,940 $ 90.00 $ 27.47 $ 1,250.00 7.2% 9.4% Urban
29 1,122,021 427,019 $ 24.00 $ 11.55 $ 280.00 8.6% 12.7% Suburban
30 465,984 153,331 $ 18.00 $ 14.64 $ 264.00 6.8% 12.4% Suburban
31 910,623 306,188 $ 15.25 $ 9.20 $ 220.00 6.9% 11.1% Suburban
32 789,032 302,979 $ 17.50 $ 13.25 $ 210.00 8.3% 14.6% Suburban
33 1,006,645 403,672 $ 17.00 $ 11.97 $ 200.00 8.5% 14.5% Suburban
34 882,728 326,813 $ 32.65 $ 25.84 $ 344.00 9.5% 17.0% Urban
35 625,659 149,971 $ 54.00 $ 46.37 $ 670.00 8.1% 15.0% Urban
36 753,105 285,771 $ 19.67 $ 14.83 $ 250.00 7.9% 13.8% Suburban
37 1,329,514 446,381 $ 26.20 $ 10.81 $ 286.00 9.2% 12.9% Suburban
38 1,117,491 381,943 $ 35.74 $ 13.67 $ 400.00 8.9% 12.4% Suburban
39 348,309 305,212 $ 19.35 $ 10.00 $ 239.00 8.1% 12.3% Suburban
40 557,715 223,110 $ 17.50 $ 8.71 $ 207.00 8.5% 12.7% Suburban
41 716,462 373,662 $ 15.25 $ 13.30 $ 180.00 8.5% 15.9% Suburban
42 889,508 316,190 $ 18.00 $ 7.53 $ 200.00 9.0% 12.8% Suburban
43 490,424 185,398 $ 23.00 $ 9.51 $ 294.00 7.8% 11.1% Suburban
44 1,446,222 784,575 $ 25.00 $ 12.63 $ 320.00 7.8% 11.8% Suburban
45 716,800 302,900 $ 21.50 $ 14.57 $ 240.00 9.0% 15.0% Suburban
46 770,209 306,890 $ 20.70 $ 12.30 $ 272.00 7.6% 12.1% Suburban
47 1,012,754 311,019 $ 27.35 $ 7.86 $ 325.00 8.4% 10.8% Suburban
==== ========= ======= ======= ======= ========== === ==== ========
348,309 149,971 $ 10.44 $ 4.89 $ 176.16 5.8% 8.5%
1,536,223 784,575 $ 30.00 $ 46.37 $ 1,250.00 9.9% 17.0%
853,185 320,205 $ 25.48 $ 14.56 $ 314.87 8.1% 12.9%
==== ========= ======= ======= ======= ========== === ====
</TABLE>
<PAGE>
AVERAGE MALL SHOP RENT CALCULATION GRAPEVINE MILLS (DALLAS, TX) Cushman &
Wakefield, Inc.
<TABLE>
<CAPTION>
SUITE SIZE APPLICABLE PRO-RATA RENT WEIGHTED
CATEGORY SQ/FT SHRE PER SQ. FT. AVERAGE
=========================== ============ ========== ============= =========
<S> <C> <C> <C> <C>
IN-LINE MALL SHOPS
Under - 1,200 SF 25,097 SF 4.91% $ 41.00 $ 2.01
1,201 - 2,000 SF 68,892 SF 13.47% $ 33.00 $ 4.45
2,001 1 3,500 SF 89,219 SF 17.45% $ 25.00 $ 4.36
3,501 - 5,000 SF 98,350 SF 19.23% $ 20.00 $ 3.85
5,000 - 7,500 SF 106,554 SF 20.84% $ 19.00 $ 3.96
Over - 7,500 SF 123,282 SF 24.11% $ 16.00 $ 3.86
=========================== ============ ====== ======= =======
MALL SHOP AVERAGE RENT: 511,394 SF 100.00% $ 22.48
=========================== ============ ====== =======
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
As discussed, the average rental rate for all in-place leases as of this
writing is approximately $22.50 per square foot. Leasing within other
Mills-type projects would suggest the leasing at the subject is in-line with
its peers. Looking at a pure rent-to-sales ratio, it would appear that the
subject could support an average rent between $21.00 and $24.00 per foot. After
considering all of the above, we have developed a weighted average rental rate
of approximately $22.50 per square foot based upon a relative weighting of
tenant space by size. The average rent is a weighted average rent for all
in-line mall tenants only and is summarized on the FACING PAGE CHART.
OCCUPANCY COST - TEST OF REASONABLENESS
Our weighted average rent can next be tested against total occupancy costs
in the mall based upon the standard recoveries for new mall tenants. A total
built-up occupancy cost can be derived by taking the weighted average rent and
adding projected occupancy costs for tenants in the mall. This total can then
be tested against the average sales for mall tenants. Our total occupancy cost
analyses can be found on the following chart.
=================================================================
TOTAL OCCUPANCY COST ANALYSIS - FY 1999
=================================================================
TENANT COST ESTIMATED EXPENSES/SF
=================================================================
Economic Base Rent
Weighted Average Rent $ 22.50
- -----------------------------------------------------------------
Occupancy Costs (A)
Common Area Maintenance (1) $ 11.80
- -----------------------------------------------------------------
Real Estate Taxes (2) $ 3.00
- -----------------------------------------------------------------
Other Recoveries (3) $ 0.45
- -----------------------------------------------------------------
Total Tenant Costs $ 37.75
- -----------------------------------------------------------------
Projected Average Sales $ 300.00
=================================================================
Rent to Sales Ratio 7.50%
- -----------------------------------------------------------------
Cost of Occupancy Ratio 12.58%
=================================================================
(A) Costs that are occupancy sensitive will decrease for tenants on a unit
rate basis as lease-up occurs.
(1) CAM reimbursement is based on leased mall area (LMA). Generally, the
standard lease clause provides for CAM to be passed through with a 15.0%
administrative fee and management fees, less major and anchor
contributions. The standard denominator is based on occupied area. A
complete discussion of the standard recovery formula is presented later in
this report.
(2) Tax pass-through is based upon total occupied gross leasable area (GOLO)
which is the recovery basis for taxes.
(3) Other recoveries include the profit portion of the energy recovery
($.37/SF) and water & sewer charges ($.07/SF).
=================================================================
-97-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
Total costs, on average, are shown to be 12.58 percent of projected
average 1998 retail sales which we feel is reasonable. Reimbursement charges
will be reduced with increased occupancy at the property. We would also note
that profit for energy has been included in this analysis which is not entirely
common in the industry since energy is a typical cost of doing business.
FOOD COURT TENANTS
Grapevine Mills has a food court totaling 11,532 square feet which is
leased to Mariott on a twelve year lease with a three-year option. The food
court contains ten units indicating an average space size of 1,153 square feet.
Mariott leases the space for $60.00 per square foot, or $691,920 annually. The
rent steps to $65.00 per square foot during the option period.
To better support rental rates for food court tenants at Grapevine, we
have again looked to Mills-type property comparisons.
MILLS PROPERTY FOOD COURT RENTS
The Mills Corporation has provided us with information on the food courts
at the other Mills malls. This information is summarized below.
=====================================================================
MILLS CENTERS
AVERAGE FOOD COURT RENTS *
=====================================================================
% OF ANNUAL
CENTER GLA (SF) ANNUAL RENT UNIT RATE MIN. RENT
=====================================================================
Franklin Mills 10,527 $ 619,860 $58.88 4.28%
- ---------------------------------------------------------------------
Potomac Mills 8,916 $ 569,739 $63.90 3.31%
- ---------------------------------------------------------------------
Gurnee Mills 12,502 $ 712,905 $57.02 5.51%
- ---------------------------------------------------------------------
Sawgrass Mills 24,468 $ 1,215,019 $49.66 5.57%
=====================================================================
TOTAL/AVERAGE 56,413 $ 3,117,523 $57.37 4.67%
=====================================================================
* As of Mid-1996
=====================================================================
From the above, we see that among the four Mills projects, food court
rents range from an average of $49.66 per square foot at Sawgrass to a high of
$63.90 per square foot at Potomac Mills. Overall, the average rent for the
nearly 56,500 square feet of food court space is $57.37 per square foot. Food
court revenues account for approximately 4.7 percent of all base rent at the
Mills projects.
At Ontario Mills, average food court rents are about $55.00 per square
foot, while Arizona Mills has a food court rent of about $70.00. At The Great
Mall of The Great Plains, ownership has forecasted average rent of about $75.00
per square foot.
Based upon ownership's budget, with support from existing Mills property,
we have forecasted food court sales to be approximately $800 per square foot.
This level can be compared to the following reported sales levels at other
Mills projects as of 1996:
-98-
<PAGE>
COMPARABLE FOOD COURT RENTS (AND SALES PRODUCTIVITY)*
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
TOTAL TOTAL
MALL FOOD AVG. AVG. RENT/SALES OCCUPANCY OCCUPANCY
PROPERTY SHOP GLA COURT GLA BASE RENT SALES RATIO COST** COST RATIO
======================================== ========== =========== =========== ======= ============ =========== ===========
<S> <C> <C> <C> <C> <C> <C> <C>
The Score -- 1995 N/A 8,591 $ 39.77 $472 8.4% $ 65.75 13.9%
All US Enclosed Malls
- ---------------------------------------- ------- ----- -------- ---- ---- -------- ----
The Score -- 1995 N/A 10,337 $ 59.42 $599 10.3% $ 91.86 15.3%
Malls (greater than) 1,000,000 Sq. Ft.
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Natick Mall 436,700 7,299 $ 136.39 $779 17.5% $ 176.00 22.7%
Natick, MA
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Galleria at Crystal Run 360,735 8,085 $ 109.13 $667 16.4% $ 147.00 22.0%
Middletown, NY
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Smith Haven Mall 505,200 6,047 $ 85.67 $815 10.5% $ 157.50 19.3%
Lake Grove, NY
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Carousel Center 652,700 10,154 $ 134.34 $800 16.8% $ 187.00 23.4%
Syracuse, NY
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Alderwood Mall 311,000 8,252 $ 73.24 $600 12.2% $ 88.00 14.6%
Lynnwood, WA
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Towson Town Center 532,892 8,941 $ 105.00 $810 13.0% $ 152.00 18.2%
Towson, Maryland
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Silver City Galleria 349,107 9,412 $ 106.44 $616 17.3% $ 139.00 22.5%
Taunton, MA
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Galleria at White Plains 326,800 9,693 $ 67.19 $773 8.9% $ 136.00 17.6%
White Plains, NY
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Wilton Mall 256,700 7,303 $ 46.33 $515 9.0% $ 75.00 14.5%
Saratoga, NY
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Manassas Mall 260,360 6,231 $ 46.97 $489 9.6% $ 79.11 16.2%
Manassas, VA
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
University Mall 185,400 5,502 $ 60.10 $489 12.3% $ 69.50 14.0%
South Burlington, VT
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Mall at Fairfield Commons 327,200 9,080 $ 90.09 $661 13.6% $ 100.50 15.2%
Beavercreek, OH
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Brandon Town Center 359,600 7,337 $ 65.56 $500 13.1% $ 95.25 19.1%
Brandon, FL
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
Boulevard Mall 260,749 8,945 $ 60.84 $496 12.3% $ 94.04 18.1%
Amherst, NY
======================================== ======= ====== ======== ==== ==== ======== ====
HI: 652,700 10,337 $ 136.39 $815 17.5% $ 187.00 23.4%
LOW: 185,400 5,502 $ 39.77 $472 8.4% $ 65.75 13.9%
MEAN: 366,082 8,201 $ 80.41 $630 12.6% $ 115.84 17.9%
- ---------------------------------------- ------- ------ -------- ---- ---- -------- ----
* All values are reported per square foot unless otherwise noted.
**Inclusive of all operating expenses including food court charges.
=========================================================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
====================================
MILLS PROJECTS
FOOD COURT SALES - 1996
====================================
Franklin Mills $480/SF
- ------------------------------------
Gurnee Mills $698/SF
- ------------------------------------
Potomac Mills $709/SF
- ------------------------------------
Sawgrass Mills $654/SF
====================================
The food court at Ontario Mills has far outperformed the levels at other
Mills projects. The 1997 food court sales are estimated at $1,371 per square
foot. This was also Ontario Mills' first year of operation.
With an average achieved rent of $60.00 per square foot (based on leases
out-for-signature), the subject clearly falls toward the middle of the mean for
the comparables presented, as well as other Mills-type projects. Based on
projected 1999 sales of about $800 per square foot, a rent-to-sales ratio of
.7.50 percent is indicated for the subject which is at the low end of the range
compared to the other centers.
In addition to the above, we have looked at a sampling of recent leasing
activity within other mall food courts. The table on the FACING PAGE
illustrates the average rent attainment levels for new food courts in various
mall for which we have documented information. The subject is achieving rents
within the indicated range of the comparables which have an overall mean of
$78.96 per square foot.
Food court tenants are expected to pay a higher cost of occupancy than
other tenants at the subject. In many regional malls, food court tenants will
generally pay the greater of 3.0 percent of sales or a flat cost per square
foot to account for the cost of operating the food court. In the case of the
subject, the Mills Corp. estimates a 1998 average recovery of $30.00 per square
foot. This charge is in addition to the standard mall charges and is based on
the tenants pro-rata share of the food court expense plus a 15 percent fee.
When other recovery items for taxes and miscellaneous expenses are
considered, total additional costs to a food court tenant in 1998 are expected
to be approximately $45.25 per square foot for all pass-through charges. Thus,
base rent ($60.00/SF) plus all pass-through charges can be estimated at
approximately $105.25 per square foot as shown within the following chart.
===============================================
FOOD COURT MARKET ANALYSIS
===============================================
Base Rent/SF $60.00
- -----------------------------------------------
Average Sales/SF $800.00
- -----------------------------------------------
Base Rent/Sales Ratio 7.5%
- -----------------------------------------------
Operating Costs* $45.25
- -----------------------------------------------
Total Occupancy Costs $105.25
- -----------------------------------------------
Occupancy Cost Ratio 13.16%
===============================================
* Inclusive of food court.
===============================================
-99-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
KIOSK TENANTS
The subject has space for seven permanent kiosks with a total size of
2,584 square feet, indicating an overall average of approximately 370 squarer
feet. Of the seven spaces, six are currently vacant. Ownership has forecasted
an annual rent of approximately $150.00 for the kiosk spaces.
At The Great Mall of The Great Plains, the leasing plain provides for 12
permanent kiosks plus one oversized `kiosk' to be leased to Bank of Kansas.
Kiosks average about 150 square feet, excluding Bank of Kansas, with a budgeted
average rental rate of about $33,000, or $220 per square foot. Our experience
at other regional malls including the other Mills projects shows that $150/SF
is readily achievable.
On balance, we would project that the subject could support a rental rate
of $150 per square foot for the 2,584 square feet of kiosk space. This equates
to a rent of $55,500 per year per unit.
RESTAURANT TENANTS
The leasing plan calls for 16,158 square feet of restaurant tenants,
excluding the food court. Tenants include Dick Clark's, Chili's Too, and Corner
Bakery. Similar to the food court, these spaces are lease directly to Mariott.
The leases are each for seven years with an initial annual lease rate of $20.00
per square foot, stepping to $25.00 in year five. Each lease includes two,
five-year options.
Based upon the lease in-place, we estimate a market rent for the
restaurant component of the subject property of $20.00 per square foot.
-100-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
ANCHOR/MAJOR TENANTS
An investor in Grapevine Mills would assume a leased fee interest in
several major and anchor tenants. The following schedule briefly summarizes the
rent obligation of each.
===============================================================================
ANCHOR AND MAJOR TENANT OBLIGATIONS
===============================================================================
SUITE TENANT AREA (SF)* BASE TERM OPTIONS ANNUAL RENT RENT/SF
===============================================================================
C Western Warehouse 20,130 10 yrs Two 5-yr $ 320,268 $15.91
- -------------------------------------------------------------------------------
D Sega Gameworks 32,223 10 yrs Four 5-yr $ 594,244 $18.44
- -------------------------------------------------------------------------------
E AMC Theatre 109,393 20 yrs Four 5-yr $ 2,625,432 $24.00
- -------------------------------------------------------------------------------
F1 American 32,285 15 yrs Three 5-yr $ 243,437 $7.54
Wilderness
- -------------------------------------------------------------------------------
H Marshalls 29,397 10 yrs Three 5-yr $ 235,176 $8.00
- -------------------------------------------------------------------------------
I Burlington Coat 100,102 15 yrs Three 5-yr $ 500,510 $5.00
- -------------------------------------------------------------------------------
J JCPenney 106,827 15 yrs Three 5-yr $ 528,794 $4.95
- -------------------------------------------------------------------------------
K Bed Bath & Beyond 40,340 15 yrs Three 5-yr $ 373,145 $9.25
- -------------------------------------------------------------------------------
L Group USA 23,257 10 yrs Two 5-yr $ 325,598 $14.00
- -------------------------------------------------------------------------------
M Old Navy 23,329 15 yrs Two 5-yr $ 279,948 $12.00
- -------------------------------------------------------------------------------
N Rainforest Cafe 22,602 10 yrs Three 5-yr $ 565,050 $25.00
- -------------------------------------------------------------------------------
N1 Books-A-Million 23,978 10 yrs Two 5-yr $ 299,725 $12.50
- -------------------------------------------------------------------------------
Q Off Rodeo Drive 24,203 10 yrs Two 5-yr $ 508,505 $21.01
- -------------------------------------------------------------------------------
R Virgin Megastore 27,490 10 yrs Three 5-yr $ 453,585 $16.50
- -------------------------------------------------------------------------------
S Off Saks Fifth 34,982 15 yrs Three 5-yr $ 248,372 $7.10
- -------------------------------------------------------------------------------
U Sports Authority 48,763 10 yrs Three 5-yr $ 585,156 $12.00
- -------------------------------------------------------------------------------
699,303 $ 8,686,945 $12.42
===============================================================================
* Represents leasable square footage for Sega Gameworks and American
Wilderness, as opposed to rentable areas of 21,223 square feet and 5,624
square feet respectively.
===============================================================================
The subject anchor leases can be compared to their peers at other Mills
developments as follows:
=============================================================================
EFFECTIVE RENT ALLOCATIONS - ANCHOR TENANTS
=============================================================================
POTOMAC FRANKLIN SAWGRASS GURNEE SURVEY MEAN
YEAR MILLS MILLS MILLS MILLS
=============================================================================
1994 $6.47 $5.78 $7.56 $6.48 $6.57
-----------------------------------------------------------------------------
1995 $6.57 $5.69 $7.68 $6.36 $6.58
-----------------------------------------------------------------------------
1996 $6.76 $5.67 $8.03 $6.78 $6.81
=============================================================================
As can be seen, achieved unit rents range from $5.67 to $8.03 per square
foot, with a survey mean of about $6.81 per square foot. Overall, we see that
rents range from a low of $0.41 per square foot for Port's at Franklin Mills to
a high of $15.00 per square foot for Loehmann's at Sawgrass. We would again
note that these leases are older and do not directly reflect the rent potential
of the subject. In addition, the subject includes several entertainment tenants
not found at other centers who typically pay a higher overall unit rent.
Additionally, we are advised that anchor/major tenants account for nearly 30.0
percent of minimum rents at Mills properties. Recent anchor rents and
commitments at other Mills projects are summarized on the following page.
-101-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
Ontario Mills reflects an average anchor/major tenant rental rate reported
to be approximately 11.00 per square foot. The rents range from $5.00 per
square foot for Totally-4-Kids, to $35.53 for Sony Iwerks Theatre and
25.00 per square foot at Rainforest Cafe. Other tenants include Sports
Authority ($10.15/SF), T.J. Maxx ($9.50/SF), Off Fifth-Saks Fifth Avenue
($7.10/SF), Neiman Marcus ($12.00/SF), Virgin Records ($14.00/SF), Bed
Bath & Beyond ($11.00/SF), and JCPenney Outlet ($5.50/SF).
Arizona Mills has anchor leases ranging from $5.00 per square foot
(Burlington Coat), to $11.75 per square foot (Harkins Theaters). Other
leases include Saks-Off Fifth ($7.00/SF), Linens `N Things ($11.00/SF),
Oshman's ($5.35/SF), and Ross ($10.00/SF). The overall average anchor
rent, including budgeted leases and proposals is $10.74 per foot.
At The Great Mall of The Great Plains, a total of 11 anchor spaces
involving 447,871 square feet show an overall average rental rate of $9.61
per square foot, including three leases out-for-signature and one budgeted
deal for an unassigned anchor space. Approximately 326,790 square feet has
been executed, reflecting an average rent of $9.78 per square foot. Nearly
all leases have incorporated some form of rent step with increases of
$0.25-$0.50-$1.00 per square foot appearing to be most typical.
OTHER ANCHOR RENTS
Finally, we can compare these rent levels to actual leases involving other
specialty tenants at various centers in which we have had direct insight. A
summary of these leases can be found on the ADDENDA.
DEPARTMENT STORE LEASES - Big Box leases for various regional/super
regional malls in the United States are included in the Addenda. From this
survey, the range in rents is from $2.34 to $20.00 per square foot,
averaging $10.42.
SPECIALTY TENANT LEASES - Specialty tenant leases from across the country
reflect a range between $5.00 and $31.69, with an overall survey mean of
approximately $14.60 per foot. This survey includes tenants at power
centers, community centers, and value-retail mega-malls. Such tenants as
Saks Off Fifth, Burlington Coat, Linens `N Things, Group USA, Old Navy,
and Bed Bath & Beyond--all tenants typically found at value-retail
supermalls--are included among the tenants on this survey.
CINEMA LEASES - This survey includes major cinema leases free standing and
within regional malls. As shown, the rental rates range from $10.50 to
$28.32 per square foot and suggest a mean overall rent of $18.78. At
$24.00 per square foot, the subject AMC Theatre falls towards the upper
end of the comparables.
-102-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
On balance, the average budgeted anchor rents of $12.42 per square foot at
the subject appears to be consistent with the experience of other projects.
The rents are also supported, to some extent, by other Mills projects. As
such, we believe that current anchor leases at the subject are at market
rates.
CONCESSIONS
Mall developers and owners have a number of methods to induce tenants to
locate at their properties. Included among these concession packages are free
rent, tenant build-out costs, and cash allowances. Concessions are typically
dependent upon local market practice and/or the strength of the particular
property or mall owner/developer.
FREE RENT
Free rent is an inducement offered by developers to entice a tenant to
locate in their project over a competitor's. This marketing tool has become
popular in the leasing of office space, particularly in view of the
over-building which has occurred in many markets. As a rule, most major
retail developers have been successful in negotiating leases without
including free rent. Our experience with regional malls shows that free rent
is generally limited to new projects in marginal locations without strong
anchor tenants that are having trouble leasing, as well as older centers that
are losing tenants to new malls in their trade area.
Management reports that free rent has been a relative non-issue with new
retail tenants at the subject and their other projects. When it has been
given, it has generally been limited to one or two months to prepare a suite
for occupancy when it has been given. Given the nature of the subject and its
location, we do not believe that free rent will be an overriding issue in the
future. Accordingly, we do not believe that it will be necessary to offer free
rent to tenants at the subject. It is noted that, while we have not ascribed
any free rent for new tenants, we have made rather liberal allowances for
tenant improvements which acts as a form of inducement to convince tenants
to locate at the subject.
TENANT IMPROVEMENTS
Similar to free rent, tenant improvement allowances over and above a
"vanilla box" have also been a relative non-issue. Although some
allowances were used as a form of inducement for tenants at the subject
and other Mills projects during lease-up, these allowances have generally
been included in the construction budgets. Based upon our experience with
other similar malls, an allowance of approximately $7.00 to $20.00 can be
fairly typical.
For this analysis, we have made an allowance of $15.00 per square foot
(1998) for future turnover space where a tenant is projected to leave their
space. Upon lease expiration, however, a cosmetic remodel may only be needed
as opposed to a complete renovation or reconfiguration of the space.
Furthermore, it is not uncommon for tenants to bear the cost of remodeling
space at their own expense. Therefore, we would be inclined to include a
relatively nominal renewal allowance of $1.00 to $2.00 per square foot. In
our analysis, we are utilizing typical underwriting practices which require
a renewal allowance of $5.00 per square foot which, in our opinion, is rather
conservative. Based upon the standard underwriting requirement of a 65/35
percent renewal probability for mall shop tenants, the weighted average
allowance is $8.50 per square foot.
-103-
<PAGE>
LEASE-UP/ABSORPTION PROJECTIONS APPLICABLE GLA
GRAPEVINE MILLS MALL SHOP GLA: 525,510
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SUITE DEMISED PROJECTED RENT PER PROJECTED
NO. DESCRIPTION AREA ANUAL RENT SQ/FT LEASE DATE
- ------- ---------------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
136 Vacant In-Line 2,757 $ 110,280 $ 40.00 Dec-98
215 Vacant In-Line 2,135 $ 53,375 $ 25.00 Jun-99
227 Vacant In-Line 1,875 $ 61,675 $ 33.00 Mar-00
548 Vacant In-Line 5,872 $ 111,568 $ 19.00 Dec-98
600 Vacant In-Line 5,133 $ 97,527 $ 19.00 Sep-99
430 Vacant In-Line 3,783 $ 75,660 $ 20.00 Mar-99
408 Vacant In-Line 4,887 $ 97,740 $ 20.00 Mar-00
312 Vacant In-Line 9,178 $ 146,848 $ 16.00 Sep-98
606 Vacant In-Line 4,546 $ 90,920 $ 20.00 Dec-99
608 Vacant In-Line 2,777 $ 69,425 $ 25.00 Mar-99
104 Vacant In-Line 2,566 $ 64,150 $ 25.00 Jun-00
315 Vacant In-Line 1,425 $ 47,025 $ 33.00 Jun-00
105 Vacant In-Line 1,716 $ 56,628 $ 33.00 Jun-00
335 Vacant In-Line 1,392 $ 45,936 $ 33.00 Mar-99
337 Vacant In-Line 1,471 $ 48,543 $ 33.00 Jun-00
139 Vacant In-Line 1,036 $ 42,476 $ 41.00 Jun-99
135 Vacant In-Line 1,215 $ 40,095 $ 33.00 Dec-99
202 Vacant In-Line 5,700 $ 108,300 $ 19.00 Jun-99
342 Vacant In-Line 1,448 $ 47,784 $ 33.00 Mar-00
341 Vacant In-Line 1,455 $ 48,015 $ 33.00 Dec-99
220 Vacant In-Line 3,289 $ 82,225 $ 25.00 Jun-00
625 Vacant In-Line 1,773 $ 58,509 $ 33.00 Sep-99
101 Vacant In-Line 1,812 $ 59,796 $ 33.00 Jun-00
2 Vacant Kiosk 400 $ 60,000 $ 150.00 Jul-98
3 Vacant Kiosk 400 $ 60,000 $ 150.00 Jun-99
9 Vacant Kiosk 292 $ 43,800 $ 150.00 Dec-99
1 Vacant Kiosk 400 $ 60,000 $ 150.00 Dec-98
4 Vacant Kiosk 400 $ 60,000 $ 150.00 Jan-99
5 Vacant Kiosk 400 $ 60,000 $ 150.00 Apr-99
----- ---------- -------- ------
SURVEY TOTAL: 71,533 $2,008,500 $ 28.08
====== ========== ========
Vacancy Rate: 13.61%
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
ABSORPTION/LEASE-UP
The subject opened in November 1997 and was the recipient of a significant
level of pre-leasing. According to the most recent rent roll, the subject has
approximately 71,533 square feet of vacant space, or approximately 13.61
percent of the total mall shop GLA.
We have also been provided with historical occupancy levels for several of
the Mills projects as they are considered to provide some direct insight into
the subject's potential. Typically, occupancy has increased dramatically over
the first 12+/- months, with most projects achieving stabilized occupancy
within approximately 24+/- months of opening. As of December 31, 1996, the
overall occupancy for the Mills projects can be summarized as follows.
=============================================================================
OCCUPANCY LEVELS
YEAR ENDING 1996
=============================================================================
TOTAL OCCUPIED OCCUPIED
CENTER GLA GLA OCCUPANCY MALL GLA MALL GLA OCCUPANCY
=============================================================================
Potomac Mills 1,638,863 1,589,697 97.0% 632,921 588,616 93.0%
- -----------------------------------------------------------------------------
Franklin 1,762,226 1,638,870 93.0% 606,923 503,746 83.0%
Mills
- -----------------------------------------------------------------------------
Sawgrass 1,878,409 1,822,057 97.0% 684,726 664,184 97.0%
Mills
- -----------------------------------------------------------------------------
Gurnee Mills 1,467,614 1,364,881 93.0% 639,742 582,165 91.0%
=============================================================================
TOTAL 6,747,112 6,415,505 95.1% 2,564,312 2,338,711 91.2%
=============================================================================
From the above, we see that at year ending 1996, among the nearly 6.7+/-
million square feet of total GLA at the four Mills projects, in excess of
6.4+/- million square feet were leased. This is indicative of an overall
weighted average occupancy level of 95.1 percent, up from 94.1 percent in 1995.
On the basis of mall shop GLA, the average occupancy ranges from 83.0 to 97.0
percent, with an overall weighted average of 91.2 percent, up from 86.5 percent
at year-end 1995.
In forecasting the scheduled absorption of the subject's vacant space, we
have considered the nature of the prospective activity remains excellent. To
this end, management has been working with potential tenants that will serve to
further improve the tenancy of the mall. Currently, several of the in-line
spaces which have been occupied by temporary tenants are being turned over to
permanent deals. We have utilized an approximate 24-month leas-up period for
the remaining vacant space.
Our schedule, provided on the FACING PAGE, reflects that the mall should
absorb vacant space through June 2000. The lease-up shows an average rent of
$28.08 per square foot is forecasted to be achieved based upon the available
space configuration. This is due to the fact that much of the vacant suites are
smaller units which should result in a higher achieved rent per square foot. WE
HAVE ASSUMED THAT ALL INITIAL LEASING WILL BE DONE AT 1998 BASE DATE MARKET
RENTS WHICH PROVIDES NO RENT INFLATION DURING LEASE-UP. This assumption helps
support the lease-up schedule utilized in this analysis.
-104-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
RENT GROWTH RATES
Market rent will, over the life of a prescribed holding period, quite
obviously follow an erratic pattern. A review of investor's expectations
regarding income growth shows that projections generally range between 3.0
and 4.0 percent for retail centers. Cushman & Wakefield's Spring 1998 survey
of pension funds, REITs, bank and insurance companies, and institutional
advisors reveal that current income forecasts are utilizing average annual
growth rates between 3.0 and 6.0 percent. The low and high mean is shown to
be 3.3 and 4.0 percent, respectively. The Second Quarter 1998 Korpacz Survey
cites an average growth rate of 3.00 percent for regional malls. Retail rents
within the Dallas area increased approximately 4.0 percent in 1997.
The tenants' ability to pay rent is closely tied to its increases in
sales. However, rent growth can be more impacted by competition and
management's desire to attract and keep certain tenants that increase the
mall's synergy and appeal. As such, we have forecasted the following rent
growth in our cash flow projection:
<TABLE>
<CAPTION>
MARKET RENT GROWTH RATE
FORECAST
============================
ANNUAL
PERIOD GROWTH RATE*
- ------------ --------------
<S> <C>
1998 +3.00%
Thereafter +3.50%
============ ==============
</TABLE>
RELEASING ASSUMPTION
The typical lease term for new in-line retail leases in centers such as
the subject generally ranges from 5 to 10 years. Market practice dictates
that it is not uncommon to get rent bumps throughout the lease terms either
in the form of fixed dollar amounts or a percentage increase based upon
changes in some index, usually the Consumer Price Index (CPI). Often the CPI
clause will carry a minimum annual increase and be capped at a higher maximum
amount.
Typical underwriting guidelines dictate a 65:35 rollover:turnover
probability. This retention rate is below that typically associated with a
well performing regional center. Given the subject's location and unique
position within the market, we would be inclined to include a tenant
retention rate of at least 75 percent. Nevertheless, we have included this
assumption based upon underwriting standards.
For new leases in the Mills malls, 5 to 10 year terms are most typical
with 7-10 years being a reasonable average. Recent leases at the subject have
been in the range of 7-8 years. Typical underwriting appraisal guidelines
require mall shop tenants have lease terms of 10-years. Our global market
assumptions for non-anchor tenants may be summarized as shown on the
following chart.
-105-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
==========================================================================
RENEWAL ASSUMPTIONS
==========================================================================
LEASE FREE TENANT LEASE
TENANT TYPE TERM RENT STEPS RENT ALTERATIONS COMMISSIONS
==========================================================================
Mall Shops 10 yrs 10.0+/-% in Yr. 6 No Yes Yes
- --------------------------------------------------------------------------
Food Court 10 yrs 10.0+/-% in Yr. 6 No Yes Yes
- --------------------------------------------------------------------------
Restaurants 10 yrs 10.0+/-% in Yr. 6 No Yes Yes
- --------------------------------------------------------------------------
Kiosk Tenant 5 yrs 10.0% in Yr. 3 No Yes Yes
==========================================================================
CONCLUSION - MINIMUM RENT
In the initial full year of the investment (FY 1999), it is projected that
the subject property will produce approximately $20.6 million in minimum rental
income. This estimate of base rental income is equivalent to $17.10 per square
foot of total owned GLA. Alternatively, minimum rental income accounts for 67.3
percent of all potential gross revenues. Further analysis shows that over the
holding period (FY 1999-08), minimum rent advances at an average compound
annual rate of 2.2 percent. This increase is a synthesis of the mall's
lease-up, fixed rental increases, as well as market rents from rollover or
turnover of space. On a stabilized basis (FY 2001-08), rent increases at an
annual rate of 1.7 percent.
OVERAGE RENT
In addition to minimum base rent, most tenants at the subject property
will contract to pay a percentage of their gross annual sales over a
pre-established base amount as overage rent. Most leases will have a natural
breakpoint although a number will likely have stipulated breakpoints. The
average overage percentage for small space retail tenants is in a range of 5.0
to 6.0 percent, with food court and kiosk tenants generally at 8.0 to 10.0
percent. Anchor tenants typically have the lowest percentage clauses with
ranges of 1.5 to 3.0 percent being common.
Traditionally, it takes a number of years for a retail center to mature
and gain acceptance before generating any sizable percentage income. As a
center matures, the level of overage rents typically becomes a larger
percentage of total revenue. It is a major ingredient protecting the equity
investor against inflation.
The standard lease provides for a natural breakpoint, which for specialty
shops, would typically be 6.0+/- percent. Assuming an average initial rent of
$22.50 per square foot and a 6.0 percent natural breakpoint, a tenant would
need to achieve a sales level of $375 per square foot before generating any
overage rent.
In the Retail Market Analysis and Value Retail Mall Concept sections of
this report, we discussed the historic sales levels at other value retail
projects and forecasted sales levels for the subject. Because of the dynamics
of the economy and marketplace, it is difficult to predict with accuracy what
sales will be on an individual tenant level.
-106-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
Historically, all of the Mills projects have generated overage rent. We
know that at Potomac Mills, percentage rent amounted to approximately $765,928
in 1994 and $539,950 in 1995. At Gurnee Mills, percentage rent was $468,957 in
1993, $334,485 in 1994, and $452,680 in 1995. At Arizona Mills, ownership has
budgeted that the subject will generate percentage rent of $398,000 in 1998,
$607,000 in 1999, $706,000 in 2000, and so on.
With this in mind, we believe that it is reasonable to assume that the
subject will ultimately collect some form of percentage rent. Sales have been
forecasted relatively conservatively at $300.00 per square foot for mall shop
tenants, while anchor tenants have been forecasted at $150.00 per square foot
in 1998. For fiscal year 1999, the subject is projected to produce close to
$200,000 in overage rent.
SALES GROWTH RATES
According to both the Cushman & Wakefield and Korpacz surveys, major
investors are looking at a range of growth rates of 0.0 percent initially, to a
high of 5.0 percent in their computational parameters. Most typically, growth
of 3.0-4.0 percent are seen in these surveys. After considering our analysis,
combined with the fact that the subject is new in the market, we have
forecasted sales growth based upon the following schedule.
============================================
SALES GROWTH RATE FORECAST
============================================
ANNUAL
PERIOD GROWTH RATE *
============================================
1998 6.00%
- --------------------------------------------
1999 5.00%
- --------------------------------------------
2000 4.00%
- --------------------------------------------
Thereafter 3.50%
============================================
In all, we believe our sales growth forecast is reasonable. At other Mills
projects, sales have generally trended 6.0 percent in year one, and 4.0-5.0
percent in year two, stabilizing at a rate closer to inflation thereafter.
EXPENSE REIMBURSEMENTS/MISCELLANEOUS INCOME
By lease agreement, tenants are required to reimburse the lessor for
certain operating expenses. Included among these operating items are real
estate taxes, common area maintenance (CAM), energy, a charge for water and
sewer, and a common seating charge for food court tenants. Management fees are
also recoverable as part of CAM. Miscellaneous income is essentially derived
from specialty leasing for temporary tenants, Christmas kiosks, and other
charges.
-107-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
COMMON AREA MAINTENANCE
Under the standard lease, specialty tenants will be required to reimburse
ownership for their pro-rata share of common area costs. A 15.0 percent
fee is added to common area costs to cover administrative expenses.
Management fees are also added. The standard CAM recovery is calculated on
the basis of a tenant's pro-rata share determined on occupied mall area,
net of major and anchor tenant contributions. Provided below is a summary
of the standard clause that exists for specialty tenants at the mall.
==================================================================
COMMON AREA MAINTENANCE RECOVERY CALCULATION
==================================================================
CAM Expense: Actual hard cost for year plus interest and
depreciation
- ------------------------------------------------------------------
Add: Management Fee
- ------------------------------------------------------------------
Add: 15.0% Administrative Fee
- ------------------------------------------------------------------
Less: Contributions from department stores
- ------------------------------------------------------------------
Equals: Net pro-ratable CAM billable to mall tenants on
the basis of gross leasable occupied area
(GLOA).
==================================================================
As an incentive to lease-up the mall during construction, ownership
offered capped CAM rates to new tenants of between $8.50 and $10.50 per
square foot for the first two years. During the third year, the majority
of the mall tenants pay the standard CAM recovery.
REAL ESTATE TAXES
Specialty tenants will also pay real estate tax recoveries based upon a
pro-rata share of the expense. The pass-through is based upon pro-rata
share of gross occupied area (GLOA).
FOOD COURT CAM
Food court tenants are assessed an additional seating charge for the costs
associated with maintaining the food court area, including common seating
costs, trash, and maintenance services. The assessment is passed through
on the basis of pro-rata share calculated over food court GLA. There will
be a 15.0 percent administrative fee added to the expense before passing
it through to food court tenants.
ENERGY (UTILITIES)
Energy return represents a small profit center to ownership for the
billing of energy usage. Ownership buys energy at wholesale levels and
redistributes it to tenants at a profit. This profit portion is reflected
in our cash flow.
-108-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
ANCHOR TENANT OBLIGATIONS
Anchor tenants generally have specified expense obligations. Ownership has
budgeted anchor tenants to pay a CAM contribution of $0.50 to as much as
$2.00 per square foot, along with pro-rata taxes. Fixed common area
maintenance billings tend to reflect a first year cap. Thereafter,
ownership is permitted to increase the charge based on the proportional
increase in actual costs annually in most of the leases, as proposed.
OTHER/MISCELLANEOUS INCOME
Other income consists of push cart income, temporary/specialty leasing,
and miscellaneous income consisting of telephone commissions, late charges,
vending commissions, interest income and storage rent.
Push cart income for 1998 is estimated at $900,000 based on ownership's
budget. In fiscal year 1999 this amount is equal to $913,500. Temporary tenant
income is equal to $420,000 in our fiscal year 1999 analysis, and based on
ownership's budget. This figure decreases to $375,000 in FY 2000, and $355,250
in FY 2001 to account for the lease-up of the mall. Miscellaneous income is
forecasted at $975,000 for 1998, equal to $989,625 in FY 1999 and is based on
ownership's budget.
Total other income is equal to approximately $2.3 million in our initial
fiscal year analysis. For support, this figure can be compared to similar
income levels at other Mills properties as summarized in the following chart.
======================================================
MISCELLANEOUS/OTHER INCOME
======================================================
MILLS CENTER 1995
======================================================
Potomac Mills $1,219,432
- ------------------------------------------------------
Franklin Mills $2,576,218
- ------------------------------------------------------
Gurnee Mills $2,767,071
- ------------------------------------------------------
Sawgrass Mills $1,723,193
======================================================
Based on the above, it would appear that miscellaneous/other income levels
at the subject are reasonable. Overall, it is our assumption that these other
revenues will increase by 3.0 percent per annum over the holding period.
-109-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
ALLOWANCE FOR VACANCY AND CREDIT LOSS
The investor of an income producing property is primarily interested in the
cash revenues that an income-producing property is likely to produce annually
over a specified period of time rather than what it could produce if it were
always 100.0 percent occupied with all tenants paying rent in full and on
time. It is normally a prudent practice to expect some income loss, either in
the form of actual vacancy or in the form of turnover, non-payment or slow
payment by tenants.
Based on typical underwriting guidelines, we have reflected a 5.0 percent
stabilized contingency for both stabilized and unforeseen vacancy and credit
loss at the subject. Please note that this vacancy and credit loss provision
is applied to all specialty tenants equally, but excludes anchor tenants.
In this analysis we have also forecasted that there is a 65.0 percent
probability that an existing tenant will renew their lease. Upon turnover, we
have forecasted that rent loss equivalent to six months would be incurred to
account for the time and/or costs associated with bringing space back on
line. Thus, minimum rent as well as overage rent and certain other income has
been reduced by this forecasted probability.
We have calculated the effect of the total provision of vacancy and credit
loss on the specialty in-line shops. Through the 10 years of the cash flow
analysis, the total allowance for vacancy and credit loss, including
provisions for downtime, ranges from a low of 5.40 percent of total potential
gross revenues to a high of 18.00 percent (1998). On average, the total
allowance for vacancy and credit loss over the 10-year projection period
averages 8.20 percent of these revenues. Excluding the initial lease-up years
(1998/1999), the average is a more market oriented 6.3 percent.
<TABLE>
<CAPTION>
TOTAL RENT LOSS FORECAST--"AT COMPLETION"
- -------------------------------------------------------
YEAR PHYSICAL VACANCY GLOBAL VACANCY TOTAL VACANCY*
====== ================ ============== ==============
<S> <C> <C> <C>
1998 13.0% 5.00% 18.00%
1999 7.1% 5.00% 12.10%
2000 1.8% 5.00% 6.80%
2001 0.8% 5.00% 5.80%
2002 5.4% 5.00% 10.40%
2003 1.4% 5.00% 6.40%
2004 0.4% 5.00% 5.40%
2005 0.5% 5.00% 5.50%
2006 1.4% 5.00% 6.40%
2007 2.4% 5.00% 7.40%
2008 3.6% 5.00% 8.60%
2009 0.6% 5.00% 5.60%
Avg. 3.20% 5.00% 8.20%
====== ================ ============== ==============
</TABLE>
- ------------
* Includes phased global vacancy provision for unseen vacancy and credit loss
as well as weighted downtime provision of lease turnover.
-110-
<PAGE>
OPERATING EXPENSE STATISTICS REGIONAL & SUPER-REGIONAL MALLS
CUSHMAN & WAKEFIELD, INC. SOUTH
<TABLE>
<CAPTION>
ULI ULI ULI ULI ULI
SUPER-REGIONAL SUPER-REGIONAL SUPER-REGIONAL SUPER-REGIONAL REGIONAL
CENTERS/ CENTERS/ CENTERS/ CENTERS/ CENTERS/
U.S. U.S. SOUTH SOUTH U.S.
AVERAGE MEDIAN AVERAGE MEDIAN AVERAGE
-------------- -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
PROPERTY PROFILE
Total GLA: 999,544 1,009,585 967,562 956,746 582,893
Total Owned GLA: 563,689 535,272 538,334 505,211 461,822
Shop Sales/sf: $203.09 $ 198.83 $ 210.30 $ 207.99 $ 176.16
Anchor Sales/sf: $149.38 $ 138.66 $ 159.23 $ 138.66 $ 156.30
OPERATING INCOME
Minimum Rent: $ 16.30 $ 16.79 $ 16.24 $ 16.26 $ 12.05
Overage Rent: $ 1.14 $ 1.04 $ 1.24 $ 1.15 $ 0.86
CAM Charges: $ 4.68 $ 4.60 $ 4.77 $ 4.71 $ 3.34
Property Taxes: $ 1.72 $ 1.54 $ 1.85 $ 1.57 $ 1.13
Insurance: $ 0.11 $ 0.06 $ 0.19 $ 0.13 $ 0.09
Utilities: $ 1.74 $ 1.84 $ 1.31 $ 1.14 $ 1.55
Other: $ 1.15 $ 0.62 $ 1.18 $ 0.62 $ 0.42
------ ------- -------- --------- --------- ---------
Total Income: $ 27.32 $ 27.32 $ 27.19 $ 27.11 $ 191.86
OPERATING EXPENSES
Total
Maintenance**: $ 4.50 $ 4.45 $ 4.38 $ 4.29 $ 3.43
Real Estate Taxes: $ 1.86 $ 1.55 $ 1.94 $ 1.51 $ 1.27
Insurance: $ 0.32 $ 0.28 $ 0.34 $ 0.32 $ 0.26
Advertising: $ 0.60 $ 0.44 $ 0.48 $ 0.38 $ 0.56
Administrative***: $ 0.87 $ 0.74 $ 1.02 $ 0.95 $ 0.93
Management Fee: $ 0.63 $ 0.59 $ 0.65 $ 0.62 $ 0.46
- --------------- ------- -------- --------- --------- ---------
Total Expenses: $ 9 25 $ 8 87 $ 9.25 $ 9.40 $ 7.35
OER: 33.9% 32.5% 34.0% 34.7% 37.0%
NET OPERATING INCOME $ 17.63 $ 17.12 $ 17.51 $ 17.23 $ 12.02
<CAPTION>
ULI ULI ULI ICSC ICSC ICSC
REGIONAL REGIONAL REGION ENCLOSED MALLS ENCLOSED MALLS ENCLOSED MALLS
CENTERS/ CENTERS/ CENTERS/ U.S. U.S. U.S.
U.S. SOUTH SOUTH TOTAL 50,000- 800,000-
MEDIAN AVERAGE MEDIAN SURVEY 799,999SF 999,999SF
-------------- ------------ -------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
PROPERTY PROFILE
Total GLA: 579,154 566,136 583,000 744,050 617,499 900,813
Total owned GLA: 435,855 405,090 379,768 441,394 460,399 515,392
Shop Sales/sf: $ 163.54 $ 156.27 $ 154.18 $ 222.04 $ 201.55 $ 259.74
Anchor Sales/sf: $ 152.29 $ 150.39 $ 150.58 $ 159.39 $ 145.82 $ 184.98
OPERATING INCOME
Minimum Rent: $ 11.33 $ 10.30 $ 9.89 $ 17.60 $ 15.38 $ 19.85
Overage Rent: $ 0.76 $ 0.70 $ 0.55 -- -- --
CAM Charges: $ 3.23 $ 2.72 $ 2.54 $ 5.73 $ 5.45 $ 8.23
Property Taxes: $ 1.08 $ 0.88 $ 0.77 $ 1.84 $ 1,14 $ 2.76
Insurance: $ 0.08 $ 0.13 $ 0.10 $ 0.15 $ 0.17 $ 0.19
Utilities: $ 1.18 $ 1.29 $ 0.76 $ 0.73 $ 1.56 $ 0.78
Other: $ 0.37 $ 0.28 $ 0.18 $ 0.60 $ 0.22 $ 0.380
------ --------- ---------- --------- --------- --------- ---------
Total Income: $ 18.98 $ 16.99 $ 15.01 $ 27.60 $ 26.22 $ 32.90
OPERATINI EXPENSES
Total
Maintenance**: $ 3.16 $ 2.90 $ 2.73 $ 4.33 $ 4.65 $ 5.45
Real Estate Taxes: $ 1.16 $ 1.15 $ 1.03 $ 2.31 $ 1.82 $ 3.32
Insurance: $ 0.23 $ 0.23 $ 0.23 $ 0.37 $ 0.34 $ 0.42
Advertising: $ 0.48 $ 0.63 $ 0.46 $ 1.18 $ 1.04 $ 1.37
Administrative***: $ 0.82 $ 0.76 $ 0.62 $ 1.05 $ 1.02 $ 1.21
Management Fee: $ 0.39 $ 0.40 $ 0.41 $ 0.75 $ 0.65 $ 0.91
- --------------- --------- ---------- --------- --------- --------- ---------
Total Expenses: $ 6.63 $ 6.50 $ 6.29 $ 11.06 $ 10.50 $ 12.65
OER: 34.9% 38.3% 41.9% 40.1% 40.0% 38.4%
NET OPERATING INCOME $ 10.85 $ 10.03 $ 9.28 $ 16.26 $ 14.55 $ 19.31
<PAGE>
<CAPTION>
ICSC ICSC ICSC
SUPER-REGIONAL ENCLOSED MALLS ENCLOSED MALLS ENCLOSED MALLS
CENTERS/ SOUTH SOUTH SOUTH
U.S. MEDIAN MEDIAN MEDIAN
AVERAGE (less than) 800,000SF (less than) 800,000SF (greater than) 800,000SF
- ---------------------- --------------------- --------------------- ------------------------
<S> <C> <C> <C>
PROPERTY PROFILE
Total GLA: 1,148,133 587,830 1,096,183
Total owned GLA: 575,309 352,314 541,385
Shop Sales/sf: $ 255.55 $ 199.91 $ 262.74
Anchor Sales/sf: $ 171.34 $ 143.48 $ 172.16
OPERATING INCOME
Minimum Rent: $ 21.60 $ 15.66 $ 19.94
Overage Rent: -- -- --
CAM Charges: $ 7.24 $ 5.04 $ 7.11
Property Taxes: $ 2.82 $ 1.22 $ 2.46
Insurance: $ 0.13 $ 0.20 $ 0.14
Utilities: $ 1.08 $ 0.60 $ 0.84
Other: $ 0.39 $ 0.25 $ 0.39
------ ----------- --------- -----------
Total Income: $ 36.05 $ 26.15 $ 33.33
OPERATINI EXPENSES
Total
Maintenance**: $ 5.52 $ 4.47 $ 4.88
Real Estate Taxes: $ 3.30 $ 1.43 $ 3.27
Insurance: $ 0.43 $ 0.34 $ 0.43
Advertising: $ 1.81 $ 1.07 $ 1.71
Administrative***: $ 1.29 $ 1.12 $ 0.93
Management Fee: $ 0.95 $ 0.67 $ 0.94
- --------------- ----------- --------- -----------
Total Expenses: $ 13.66 $ 10.36 $ 12.83
OER: 37.9% 39.6% 38.5%
NET OPERATING INCOME $ 21.19 $ 15.16 $ 19.26
</TABLE>
- -------
* Average sales include all mall shop tenants.
** CAM expenses include repairs & maintenance, utilities, and security.
*** Management fees & bad debt allowances have been deduced from
administrative costs. Management has been shown separately.
Source: Urban Land Institute "Dollars & Cents" (1995); International Council of
Shopping Centers "The Source" (1996). (Because the data are means/medians,
detailed amounts do not add to totals.)
<PAGE>
INCOME CAPITALIZATION APPROACH
- --------------------------------------------------------------------------------
On balance, the aggregate deductions of gross revenues reflected in this
analysis are based upon overall long-term market occupancy levels and are
considered what a prudent investor would allow for credit loss. The remaining
sum is effective gross income which an informed investor may anticipate the
subject property to produce.
EFFECTIVE GROSS INCOME
In the initial full year of investment, FY 1999, effective gross revenues
("Total Income" line on the cash flow) are forecasted to amount to
approximately $30,570,522, equivalent to $25.41 per square foot of total owned
GLA.
EFFECTIVE GROSS REVENUE SUMMARY
INITIAL YEAR OF INVESTMENT-FISCAL YEAR 1999
<TABLE>
<CAPTION>
AGGREGATE SUM UNIT RATE INCOME RATIO
--------------- ----------- -------------
<S> <C> <C> <C>
Potential Gross Income $31,506,791 $26.18 100.0%
Less Vacancy and Credit Loss $ (934,269) $ 0.78 3.0%
Effective Gross Income $30,570,522 $25.41 97.0%
</TABLE>
OPERATING EXPENSES
Total expenses incurred in the production of income from the subject
property are divided into two categories: reimbursable and non-reimbursable
items. The major expenses which are reimbursable include real estate taxes and
common area maintenance, including insurance and management fees, and food
court expenses. Nonreimbursable expenses associated with the subject property
include certain general and administrative expenses, including ownership's
contribution to the merchants association/marketing fund, and miscellaneous
expenses, including non-recoverable maintenance. Other expenses include a
reserve for the replacement of short-lived capital components, alteration costs
associated with bringing space up to occupancy standards, and leasing
commissions.
The various expenses incurred in the operation of the subject property
have been estimated from information provided by a number of sources. We have
reviewed the subject's operating budget and projection provided by ownership.
We have compared this information to published data which are available
(provided on the FACING PAGE). Finally, this information has been tempered by
our experience with other regional shopping centers.
EXPENSE GROWTH RATES
Expense growth rates are generally forecasted to be more consistent with
inflationary trends than with competitive market forces. The Spring 1998
Cushman & Wakefield survey of Class A regional malls found the low and high
mean from each respondent to be 2.9 and 3.3 percent, respectively. Overall, the
rates ranged from 1.0.0 to 4.0 percent. The Second Quarter 1998 Korpacz survey
reports that the range in expense growth rates runs from 3.0 percent to 4.0
percent with an average of 3.68 percent, down 7 basis points from one year ago.
For this analysis, unless otherwise stated, expenses are forecated to grow by
3.5 percent per annum over the remainder of the holding period.
- --------------------------------------------------------------------------------
-111-
<PAGE>
COMMON AREA MAINTENANCE EXPENSE COMPARABLES
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
BUDGET YEAR
NO. AREA LOCATION STATE YEAR BUILT
===== ========================= ======= ======== ============
<S> <C> <C> <C> <C>
1 Ontario MSA CA 1997 1996
- -- ------------------------- ------- ---- ----------
2 San Francisco MSA CA 1997 1988
- -- ------------------------- ------- ---- ----------
3 Sacramento County MSA CA 1997 1957/81/94
- -- ------------------------- ------- ---- ----------
4 Fairfield County MSA CT 1995 1986/91
- -- ------------------------- ------- ---- ----------
5 Dover MSA DE 1996 1982/95
- -- ------------------------- ------- ---- ----------
6 Daytona Beach MSA FL 1996 1974/90/96
- -- ------------------------- ------- ---- ----------
7 Miami MSA FL 1995 1982
- -- ------------------------- ------- ---- ----------
8 Coral Springs MSA FL 1995 1984/96
- -- ------------------------- ------- ---- ----------
9 Gainsville MSA GA 1997 1964/87/96
- -- ------------------------- ------- ---- ----------
10 Chicago/DuPage County IL 1996 1962/91
- -- ------------------------- ------- ---- ----------
11 Chicago/DuPage County IL 1995 1975/96
- -- ------------------------- ------- ---- ----------
12 Bloomingdale MSA IL 1995 1981/88/91
- -- ------------------------- ------- ---- ----------
13 Indianapolis MSA IN 1995 1968/87
- -- ------------------------- ------- ---- ----------
14 North/Central Kansas KS 1995 1987/90
- -- ------------------------- ------- ---- ----------
15 Monroe MSA LA 1996 1985
- -- ------------------------- ------- ---- ----------
16 Boston MSA MA 1997 1989/92
- -- ------------------------- ------- ---- ----------
17 Boston MSA MA 1996 1966/91/94
- -- ------------------------- ------- ---- ----------
18 Worcester County MSA MA 1996 1971/87
- -- ------------------------- ------- ---- ----------
19 Essex County MSA MA 1995 1993/94
- -- ------------------------- ------- ---- ----------
20 Baltimore MSA MD 1997 1959/82/92
- -- ------------------------- ------- ---- ----------
21 Baltimore MSA MD 1997 1956/91
- -- ------------------------- ------- ---- ----------
22 Westminister MSA MD 1997 1987/94
- -- ------------------------- ------- ---- ----------
23 Washington-Baltimore MD 1996 1979/93
- -- ------------------------- ------- ---- ----------
24 Genesee County MSA MI 1995 1980/93
- -- ------------------------- ------- ---- ----------
25 Minneapolis MSA MN 1995 1962/94
- -- ------------------------- ------- ---- ----------
26 Las Vegas MSA NV 1997 1992/97
- -- ------------------------- ------- ---- ----------
27 Rochester MSA NY 1997 1959/82/92
- -- ------------------------- ------- ---- ----------
28 Chemung County MSA NY 1997 1967/81/95
- -- ------------------------- ------- ---- ----------
29 Orange County MSA NY 1997 1980
- -- ------------------------- ------- ---- ----------
30 Syracuse MSA NY 1997 1988/94
- -- ------------------------- ------- ---- ----------
31 Syracuse MSA NY 1997 1954/97
- -- ------------------------- ------- ---- ----------
32 White Plains MSA NY 1996 1980/93
- -- ------------------------- ------- ---- ----------
33 Buffalo MSA NY 1996 1985/89
- -- ------------------------- ------- ---- ----------
34 Dayton MSA OH 1997 1969/94
- -- ------------------------- ------- ---- ----------
35 Cincinnati MSA OH 1996 1956/88/94
- -- ------------------------- ------- ---- ----------
36 Bucks County MSA PA 1995 1968/75
- -- ------------------------- ------- ---- ----------
37 Johnson City TN 1996 1971/91/96
- -- ------------------------- ------- ---- ----------
38 Amarillo MSA TX 1995 1982/86
- -- ------------------------- ------- ---- ----------
39 Burlington MSA VT 1995 1979/89/92
- -- ------------------------- ------- ---- ----------
40 Burlington MSA VT 1995 1979/89/92
- -- ------------------------- ------- ---- ----------
41 Washington D.C. MSA VA 1996 1968/86/91
- -- ------------------------- ------- ---- ----------
42 Prince William City MSA VA 1997 1972/88/96
- -- ------------------------- ------- ---- ----------
43 Norfolk-Chesapeake MSA VA 1997 1981/8/87
- -- ------------------------- ------- ---- ----------
44 Milwaukee MSA WN 1995 1972
== ========================= ======= ==== ==========
Survey Low:
Survey High:
SURVEY MEAN:
<CAPTION>
NO. TOTAL SHOP BUDGETED EXPENSE
NO. STORIES GLA GLA CAM EXPENSE PER SQ/FT LOCATION
===== ========= ============= ========= ============= =========== =========
<S> <C> <C> <C> <C> <C> <C>
1 1 1,536,223 508,942 $5,500,000 $10.81 Suburban
- -- --------- --------- ------- ---------- ------ ---------
2 1 $ 518,422 183,430 $2,800,000 $15.26 Urban
- -- --------- ----------- ------- ---------- ------ ---------
3 2 1,066,161 410,168 $3,065,000 $ 7.47 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
4 2 1,270,146 499,868 $3,583,000 $ 7.17 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
5 1 671,493 232,033 $1,330,000 $ 5.73 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
6 1 1,064,922 246,379 $1,700,000 $ 6.90 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
7 1 1,120,827 290,385 $1,820,000 $ 6.27 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
8 1 1,171,127 293,183 $1,700,000 $ 5.80 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
9 1 518,422 191,919 $1,116,375 $ 5.82 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
10 1 2,012,865 830,287 $5,790,000 $ 6.97 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
11 2 1,477,103 569,926 $4,928,000 $ 8.65 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
12 2 1,292,186 427,609 $2,030,000 $ 4.75 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
13 1 1,239,059 260,359 $1,431,000 $ 5.50 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
14 1 400,307 185,324 $ 830,000 $ 4.48 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
15 1 920,779 338,875 $1,500,000 $ 4.43 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
16 1 770,575 283,464 $2,100,000 $ 7.41 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
17 2 1,155,068 431,068 $3,210,000 $ 7.45 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
18 1 445,875 182,372 $1,410,000 $ 7.73 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
19 2 863,344 329,065 $2,315,000 $ 7.04 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
20 4 952,021 532,892 $4,860,000 $ 9.12 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
21 1 862,313 241,146 $1,925,000 $ 7.98 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
22 1 529,702 194,271 $1,300,000 $ 6.69 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
23 2 661,534 245,112 $1,800,000 $ 7.34 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
24 1 451,036 230,625 $ 902,000 $ 3.91 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
25 1 982,228 201,561 $1,950,000 $ 9.67 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
26 1 475,940 475,940 $7,000,000 $14.71 Urban
- -- --------- ----------- ------- ---------- ------ ---------
27 1 1,122,021 427,019 $2,830,000 $ 6.63 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
28 2 910,623 306,188 $1,800,000 $ 5.88 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
29 1 465,984 153,331 $1,130,000 $ 7.37 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
30 1 789,032 302,979 $2,135,000 $ 7.05 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
31 2 1,006,645 403,672 $2,860,000 $ 7.08 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
32 4 882,728 326,813 $3,000,000 $ 9.18 Urban
- -- --------- ----------- ------- ---------- ------ ---------
33 1 753,105 285,771 $ 1,665,00 $ 5.83 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
34 2 1,329,514 484,689 $2,340,000 $ 4.83 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
35 2 1,117,491 381,943 $3,100,000 $ 8.12 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
36 1 348,309 305,212 $1,824,000 $ 5.98 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
<PAGE>
37 2 557,715 223,110 $ 955,000 $ 4.28 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
38 1 889,508 316,190 $1,180,000 $ 3.73 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
39 1 490,424 185,398 $1,000,000 $ 5.39 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
40 1 490,424 185,398 $1,000,000 $ 5.39 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
41 2 1,446,222 784,575 $4,733,603 $ 6.03 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
42 1 716,800 302,900 $1,590,000 $ 5.25 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
43 2 770,209 306,890 $1,140,000 $ 3.71 Suburban
- -- --------- ----------- ------- ---------- ------ ---------
44 1 1,014,851 395,598 $2,420,000 $ 6.12 Suburban
== ========= =========== ======= ========== ====== =========
348,309 153,331 $ 830,000 $ 3.71
2,012,865 830,287 $7,000,000 $15.26
898,347 338,497 $2,377,277 $ 6.88
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
REIMBURSABLE OPERATING EXPENSES
We have analyzed each item of expense individually and attempted to
project what the typical investor in a property like the subject would consider
reasonable, based upon informed opinion, judgment and experience. The following
is a detailed summary and discussion of the reimbursable operating expenses
incurred in the operation of the subject property during the initial year of
the investment holding period. Please note that our expense estimates reflect a
fiscal year of operation.
COMMON AREA MAINTENANCE - This expense category includes the annual cost
of building maintenance contracts, recoverable labor, benefits, security,
landscaping, cleaning, janitorial, supplies, trash removal, exterior
lighting, common area energy, equipment rental, gas and fuel, and other
miscellaneous charges. In addition, ownership can recoup the cost of
extraordinary capital items from the tenants such as paving or other
expenses. For billing purposes, management is also permitted to add
certain non-operational charges for interest and depreciation of capital
repairs. The Mills corporation's standard lease also allows ownership to
pass along the cost of property management as a part of CAM. Management
will be discussed separately within this section.
Ownership has budgeted a 1998 CAM expense of approximately $5,240,000,
equivalent to $9.67 per square foot of mall GLA exclusive of anchors, and
net of administrative fees, management fees, and reserves. This is also
net of food court charges which we treat separately. A comparison can be
made to the other Mills-type projects as shown in the following table.
=====================================================================
MILLS CENTERS
ACTUAL CAM BUDGETS - 1996
=====================================================================
CENTER MALL GLA (SF) * 1996 BUDGET UNIT RATE
=====================================================================
Potomac Mills 641,204 $ 6,110,425 $ 9.53
- ---------------------------------------------------------------------
Franklin Mills 616,196 $ 7,388,303 $ 11.99
- ---------------------------------------------------------------------
Sawgrass Mills 703,923 $ 8,252,270 $ 11.72
- ---------------------------------------------------------------------
Gurnee Mills 637,390 $ 6,426,902 $ 10.08
- ---------------------------------------------------------------------
Ontario Mills 568,228 $ 5,250,350 $ 9.24
- ---------------------------------------------------------------------
Arizona Mills 527,600 $ 3,429,406 $ 6.50
=====================================================================
AVERAGE 612,523 $ 6,087,005 $ 9.94
=====================================================================
* Forecasted 1996. Ontario Arizona are budgeted first-year figures.
=====================================================================
At $9.67 per square foot, CAM expenses at Grapevine Mills are well
supported by comparable Mills' projects.
The cart on the FACING PAGE presents a summary of comparable CAM expenses
at other regional shopping malls. As can be seen, common area maintenance
costs generally range from roughly $3.70 to $15.26 per square foot, with
an overall mean of approximately $6.88 per foot. Most urban properties
show higher CAM costs.
-112-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
Overall, we believe that budgeted CAM expenses at the subject are well
supported by the comparable data. In FY 1999, our CAM expense is projected to
be $5,331,700, or $9.84 per square foot of mall shop (non-anchor) GLA,
excluding management.
REAL ESTATE TAXES -- The projected taxes to be incurred in 1998 are equal
to approximately $2,780,000, or $2.31 per square foot of total owned GLA.
A full discussion of taxes was previously presented within our analysis.
In our first fiscal year of analysis, taxes are equivalent to $2,828,202.
FOOD COURT CAM (Common Seating) -- The cost of maintaining the food court
is forecasted to be $315,000 in 1998 based upon ownership's budget, equal
to $320,513 on a fiscal basis. Included here are such items as payroll for
administration, maintenance and security, supplies, and other
miscellaneous expenses. On the basis of food court gross leasable area of
11,532 (plus or minus) square feet, this expense is equal to $27.79 per
square foot. As articulated, food court tenants are assessed a separate
charge for this expense based upon their pro-rata share of the expense
plus a 15.0 percent fee. Food court CAM expenses at the subject can be
compared to other Mills centers as follows:
<TABLE>
<CAPTION>
FOOD COURT CAM BUDGETS--1996
========================================================
CENTER FOOD COURT GLA EXPENSES UNIT RATE
- -------------- -------------- ------------ -----------
<S> <C> <C> <C>
Potomac Mills 10,654 SF $ 270,480 $25.39
Franklin Mills 11,875 SF $ 575,987 $48.50
Sawgrass Mills 26,737 SF $ 728,857 $27.26
Gurnee Mills 17,859 SF $ 670,213 $37.55
Ontario Mills 10,140 SF $ 332,735 $32.50
============== ============ ===========
77,265 SF $2,578,272 $33.37
============== ============ ===========
</TABLE>
From the data, the budgeted food court expense at Grapevine Mills appears
to be comparable to that of the other Mills projects.
MANAGEMENT -- Typical management fees for a regional shopping center
range from 3.0 to 5.0 percent of minimum and percentage rents depending
upon the size of the center. Given the characteristics of the subject
property coupled with the fact that we are separately accounting for
leasing commissions, we would be inclined to conclude at a management fee
within this typical range. Typical underwriting guidelines stipulate a
management fee of 5.0 percent of minimum and percentage rent, which
results in a first year expense of $1,038,736. Alternatively, this amount
is equivalent to approximately 3.4 percent of effective gross income and
$1.92 per square foot of mall shop GLA.
-113-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
NON-REIMBURSABLE EXPENSES
Total non-reimbursable expenses at the subject property are projected from
ownership's budget, accepted practices, and industry standards. Again, we have
analyzed each item of expenditure in an attempt to project what the typical
investor in a property similar to the subject would consider reasonable, based
upon actual operations, informed opinion, and experience. The following is a
detailed summary and discussion of non-reimbursable expenses incurred in the
operation of the subject property for the initial year.
GENERAL AND ADMINISTRATIVE - This expense category relates to
non-recoverable maintenance and administrative expenses incurred by
ownership. This category is provided for various miscellaneous and sundry
expenses that ownership typically incurs without pass-through to tenants.
Such items as unrecovered repair costs, preparation of suites for
temporary tenants, certain non-recurring expenses, expenses associated
with maintaining vacant space, and bad debts in excess of our credit loss
provision would be included here.
We would note that ownership has budgeted this expense at approximately
$590,000 per year, or $1.09 per square foot of mall shop GLA ($0.49 per
square foot of total owned GLA).
The general and administrative expense includes certain administrative
costs, as well as ownership's contribution to the marketing
fund/advertising. Industry averages suggest a marketing expense between
$0.40-$1.20 per square foot, with administrative costs between $0.60-$1.20
per foot of mall shop GLA.
Historical general and administrative expenses for the other Mills
projects is provided on the following chart.
=====================================================================
MILLS CENTERS
HISTORICAL G&A EXPENSES
=====================================================================
CENTER OWNED GLA 1996 UNIT RATE *
=====================================================================
Potomac Mills 1,559,674 $ 421,112 $0.27/SF
- ---------------------------------------------------------------------
Franklin Mills 1,593,297 $ 589,520 $0.37/SF
- ---------------------------------------------------------------------
Gurnee Mills 1,290,451 $ 477,467 $0.37/SF
- ---------------------------------------------------------------------
Sawgrass Mills 1,600,879 $ 912,501 $0.57/SF
- ---------------------------------------------------------------------
Ontario Mills 1,183,967 $ 663,063 $0.56/SF
- ---------------------------------------------------------------------
AVERAGE 1,453,045 $ 624,436 $0.43/SF
=====================================================================
* Based upon total owned GLA at year ending 1996. Ontario is
budgeted.
=====================================================================
From the above we see that general and administrative expenses in 1996
ranged from approximately $421,000 to $912,501, or $0.27 to $0.57 per
square foot. On average, they ran $0.43 per square foot of total owned
GLA. The budgeted expense is supported by these comparables. Our fiscal
year 1999 expense is equal to $600,325.
-114-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
MISCELLANEOUS -- This catch-all category is provided for various
miscellaneous and sundry expenses that ownership will typically incur. Such
items as unrecovered repair costs, non-recurring expenses, expenses
associated with maintaining vacant space, and bad debts in excess of our
credit loss provision would be included here. In the initial year, these
miscellaneous items are forecasted to amount to approximately $50,000,
equivalent to about $0.09 per square foot of mall shop GLA.
ALTERATIONS -- The principal component of this expense is ownership's
estimated cost to prepare a vacant suite for tenant use. At the expiration
of a lease, we have made a provision for the likely expenditure of some
monies on ownership's part for tenant improvement allowances. In this
regard, and based upon underwriting guidelines, we have forecasted a cost
of $15.00 per square foot for turnover space (initial cost growing at
expense growth rate) weighted by our turnover probability of 35.0 percent.
We have forecasted a rate of $5.00 per square foot for renewal (rollover)
tenants, based on a renewal probability of 65.0 percent. The blended rate
based on our 70/30 turnover probability is therefore $8.50 per square foot.
These costs are forecasted to increase at our implied expense growth rate.
LEASING COMMISSIONS--A typical structure for retail leasing commissions is
$3.00 to $4.00 per square foot for new tenants and $1.00 to $3.00 per
square foot for renewal tenants. Based upon typical underwriting
guidelines, we have utilized a rate of $2.50 for new tenants and $1.50 for
renewal tenants. The cost is weighted by our 65/35 percent renewal/turnover
probability. Thus, upon lease expiration, a leasing commission charge of
$1.85 per square foot would be incurred.
REPLACEMENT RESERVES -- It is customary and prudent to set aside an amount
annually for the replacement of short-lived capital items such as the roof,
parking lot and certain mechanical items. The repairs and maintenance
expense category has historically included some capital items which have
been passed through to the tenants. This appears to be a fairly common
practice among most malls. However, we feel that over a holding period some
repairs or replacements will be needed that will not be passed on to the
tenants. Typical replacement reserves range anywhere from $0.10 to $0.20
per square foot depending upon the age and quality of the center. For
purposes of this report, based upon the required underwriting guidelines,
we have estimated an expense of $0.20 per square foot of owned GLA. During
the first year this expense is equal to $240,662, thereafter increasing by
our expense growth rate.
NET INCOME/NET CASH FLOW
The total expenses of the subject property, including alterations,
commission, capital expenditures, and reserves, are annually deducted from
total income, thereby leaving a residual net operating income or net cash
flow to the investors in each year of the holding period before debt service.
In the initial year of investment, the net operating income is forecasted to
be equal to approximately $20.40 million which is equivalent to 66.7 percent
of effective gross income. Deducting other expenses including capital items
results in a net cash flow before debt service of approximately $19,592,213.
-115-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
=====================================================================
OPERATING SUMMARY
INITIAL YEAR OF INVESTMENT - FISCAL YEAR 1999
=====================================================================
Aggregate Sum Unit Rate* Operating Ratio
=====================================================================
Effective Gross $ 30,570,522 $ 24.63 100.0%
Income
- ---------------------------------------------------------------------
Operating Expenses $ 10,170,351 $ 8.20 33.3%
- ---------------------------------------------------------------------
Net Operating Income $ 20,400,171 $ 16.44 66.7%
- ---------------------------------------------------------------------
Other Expenses $ 807,958 $ 0.65 2.6%
- ---------------------------------------------------------------------
Cash Flow $ 19,592,213 $ 15.79 64.1%
=====================================================================
* Based on total owned GLA of 1,240,971+/- square feet.
=====================================================================
The rate of change to both net income and cash flow is important from an
investor's perspective. Our cash flow model has forecasted the following
compound annual growth rates over the holding period FY 1999 through FY 2008 on
a fiscal year basis.
==============================================
INCOME GROWTH
==============================================
Net Operating Income: 3.0%
----------------------------------------------
Net Cash Flow: 2.0%
==============================================
Growth rates in net operating income and net cash flow are forecasted to
approximate to 3.0 and 2.0. percent per annum, respectively, representing
moderate growth potential to an investor in the property.
================================
INVESTMENT PARAMETERS
Discounted Cash Flow
================================
After projecting the income and expense components of the subject
property, investment parameters must be set in order to forecast property
performance over the holding period. These parameters include the selection of
capitalization rates (both initial and terminal) and application of an
appropriate discount or yield rate, also referred to as the internal rate of
return (IRR).
SELECTION OF CAPITALIZATION RATES
OVERALL CAPITALIZATION RATE
The overall capitalization rate bears a direct relationship between net
operating income generated by the real estate in the initial year of investment
(or initial stabilized year) and the value of the asset in the marketplace.
Overall rates are affected by the existing leasing schedule of the property,
the strength or weakness of the local rental market, the property's position
relative to competing properties, and the risk/return characteristics
associated with competitive investments.
-116-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
=========================================================
OVERALL CAPITALIZATION RATES
REGIONAL MALL SALES
=========================================================
YEAR RANGE MEAN POINT CHANGE
=========================================================
1988 5.00% - 8.00% 6.19% --
- ---------------------------------------------------------
1989 4.57% - 7.26% 6.22% + 3
- ---------------------------------------------------------
1990 5.06% - 9.11% 6.29% + 7
- ---------------------------------------------------------
1991 5.60% - 7.82% 6.44% + 15
- ---------------------------------------------------------
1992 6.00% - 7.97% 7.31% + 87
- ---------------------------------------------------------
1993 7.00% -10.10% 7.92% + 61
- ---------------------------------------------------------
1994 6.98% -10.29% 8.37% + 45
- ---------------------------------------------------------
1995 7.25% -11.10% 9.13% + 76
- ---------------------------------------------------------
1996 7.00% -12.00% 9.44% + 31
- ---------------------------------------------------------
1997 7.34% -12.77% 9.56% + 12
- ---------------------------------------------------------
YTD 1998 7.40% -12.01% 9.43% - 13
- ----------------------===================================
BASIS POINT CHANGE
=========================================================
1988-1998 + 324 BPs
=========================================================
1992-1998 + 212 BPs
=========================================================
The data shows that the between 1988 and 1997 average capitalization rate
have demonstrated a rising trend each year. Year to date figures through July
1998 mark the first decrease in overall rates over the period studied.
Nevertheless the average for 1998 represents a 324 basis point increase since
1988 and 212 basis points since 1992. During the early 1990s the increase in
capitalization rates was a reflection of both rising interest rates and
increasing first year returns demanded by investors in light of several
fundamental changes in the retail sector. More recently the competition for
well location and performing centers has increased, fueled primarily by the
REITs and has resulted in declining capitalization rates. Although the year to
date figures represent a modest decline from 1997 it is important to note that
two thirds of the property transferred based capitalization rates of less than
9.5 percent with one third of the properties less than 9.0 percent. We believe
as 1998 continues a further decline in capitalization rate is likely.
The Cushman & Wakefield's Spring 1998 survey reveals that going-in cap
rates for CLASS A regional shopping centers range between 7.0 and 11.0 percent,
with a low average of 7.4 percent and high average of 8.9 percent,
respectively; a spread of 150 basis points. On an overall basis, when Class B
assets and "Value Added" opportunities are added, the low and high means are
8.0 percent and 9.3 percent, respectively. As expected, criteria for both Class
B and "Value Added" malls, going-in capitalization and yield rates range from
100 to 300 basis points above rates for Class A assets.
-117-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
Terminal, or going-out rates for CLASS A assets are now averaging 7.9 and
9.3 percent, indicating a spread of 50 basis points over the going-in rates.
Again, on an overall basis, including Class B and "value added" properties, the
respective averages are 8.1 percent and 9.0 percent. Finally, our current
survey also shows that investors have become more cautious in their
underwriting, positioning "retail" lower on their investment rating scales in
terms of preferred investments.
<TABLE>
<CAPTION>
=================================================================================
CUSHMAN & WAKEFIELD VALUATION ADVISORY SERVICES
NATIONAL INVESTOR SURVEY - REGIONAL MALLS (%)
=================================================================================
INVESTMENT AUTUMN 1996 SUMMER 1997* SPRING 1998 *
-------------------------------------------------------------------
PARAMETERS LOW HIGH LOW HIGH LOW HIGH
=================================================================================
<S> <C> <C> <C> <C> <C> <C>
OAR/Going-In 7.0 - 9.0 7.5 - 9.5 7.5 - 10.0 7.8 - 11.0 7.0 - 9.5 7.5 - 12.0
7.9 8.2 8.4 9.1 8.0 9.3
- ---------------------------------------------------------------------------------
OAR/Terminal 7.0 - 9.5 7.8 -11.0 8.0 -10.3 8.0 -11.0 7.5 - 9.0 7.9 - 11.5
8.2 8.6 8.7 9.4 8.1 9.0
- ---------------------------------------------------------------------------------
IRR 10.0-15.0 11.0-15.0 10.0-20.0 10.5-12.8 9.5 -18.0 10.5 - 18.0
11.4 11.8 13.4 13.9 12.8 13.6
=================================================================================
* Reflects overall results which includes Class A/B properties as well as value
added opportunities.
=================================================================================
</TABLE>
The Second Quarter 1998 Peter F. Korpacz survey concurs with these
findings, citing downward pressure on rates fueled by the strong competition
for regional malls. Mall portfolios continue to be actively traded as this
property type is clearly leading the consolidation of real estate ownership
into fewer but substantially larger entities. The Korpacz study also suggests
that cap rates are falling due to continued strong demand from REITs. Some
investors feel that pricing is still economic due to the overall pessimism
which prevailed during the past few years.
The survey also cites the considerable number of malls transferring as
compared with past years. In many cases the sellers are institutional investors
who are liquidating assets in commingled funds or other finite life vehicles.
Although most offerings tend to be Class "B" properties, there appears to be
ample demand for this product and an active transaction market is developing.
While pension funds and other institutional investors continue to seek only
trophy and Class "A" malls, REITs have been active in acquiring Class "B"
centers. Many of the available "B" malls are being marketed for
redevelopment--for example, to be de-malled into power centers. On such a
property, the survey cites seller expectations of cap rates in the
mid-teens--14.0 percent to 15.0 percent--because the buyer takes a substantial
risk in a redevelopment deal.
-118-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
==========================================================================
NATIONAL REGIONAL MALL MARKET
SECOND QUARTER 1998
==========================================================================
CURRENT LAST
KEY INDICATORS QUARTER QUARTER YEAR AGO
==========================================================================
FREE & CLEAR EQUITY IRR
==========================================================================
RANGE 10.00%-13.00% 9.50%-13.00% 10.50%-14.00%
AVERAGE 11.30% 11.50% 11.75%
- --------------------------------------------------------------------------
CHANGE (Basis Points) - -20 -45
==========================================================================
FREE & CLEAR GOING-IN CAP RATE
==========================================================================
RANGE 7.00%-11.00% 7.00%-11.00% 7.00%-11.00%
AVERAGE 8.45% 8.51% 8.57%
- --------------------------------------------------------------------------
CHANGE (Basis Points) - - 6 -12
==========================================================================
RESIDUAL CAP RATE
==========================================================================
RANGE 7.50%-11.00% 7.50%-11.00% 7.50%-11.00%
AVERAGE 8.76% 8.80% 8.78%
- --------------------------------------------------------------------------
CHANGE (Basis Points) - - 4 - 2
==========================================================================
Source: Peter Korpacz Associates, Inc. - Real Estate Investor Survey
(Second Qtr. 1998)
==========================================================================
As can be seen from the data, the average IRR has decreased by 20 basis
point to 11.30 percent from the previous quarter and is 45 basis points below
year-ago levels. The quarter's average initial free and clear equity cap rate
fell only 6 basis points to 8.45 percent from last quarter (and is only 12
points below year-ago levels). The residual cap rate is also virtually
unchanged at 8.76 percent (2 points lower than the prior year).
Most retail properties that are considered institutional grade are
existing, seasoned centers with good inflation protection that offer stability
in income and are strongly positioned to the extent that they are formidable
barriers to new competition. Equally important are centers which offer good
upside potential after face-lifting, renovations, or expansion. With new
construction down substantially, owners have accelerated renovation and
re-merchandising programs. Little competition from over-building is likely in
most mature markets within which these centers are located. Environmental
concerns and "no-growth" mentalities in communities are now serious impediments
to new retail development.
Finally, investors have recognized that the retail landscape has been
fundamentally altered by consumer lifestyles changes, industry consolidations
and bankruptcies. This trend was strongly in evidence as the economy proceeds
through 1998 in view of the wave of retail chains whose troublesome earnings
are forcing major restructures or even liquidations. Trends toward more casual
dress at work and consumers growing pre-occupation with their leisure and home
lives have created the need for refocused leasing efforts to bring those
tenants to the mall that help differentiate them from the competition. As such,
entertainment, a loosely defined concept, is one of the most common directions
malls have taken. A trend toward bringing in larger specialty and category
tenants to the mall is also in evidence. The risk from an owners standpoint is
finding that mix which works the best. Nonetheless, the cumulative effect of
these changes which had given to a rise in rates as investors found it
necessary to adjust their risk premiums in their underwriting, has been some
mitigated by the accelerated demand from buyers.
-119-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
Based upon this discussion, we are inclined to group and characterize
regional malls into the general categories following:
CAP RATE RANGE CATEGORY
-------------- --------
7.0% to 7.5% (A+) Top 15 to 20+/- malls in the country.
Excellent demographics with high sales
($400+/-/SF) and good upside.
7.5% to 8.5% (A) Dominant Class A investment grade
property, high sales levels, relatively good
health ratios, excellent demographics (top 50
markets), and considered to present a significant
barrier to entry within its trade area. Sales
tend to be in the $300 to $350 per square foot
range.
8.5% to 11.0% (B+/B-) Somewhat broad characterization of
investment quality properties ranging from
primary MSAs to second tier cities. Properties at
the higher end of the scale are probably somewhat
vulnerable to new competition in their market.
11.0% to 14.0% (B-/C) Remaining product which has limited appeal
or significant risk which will attract only a
smaller, select group of investors.
CONCLUSION - OVERALL CAPITALIZATION RATE
Based upon this analysis, we can develop a going-in capitalization rate
for the subject based upon its tenancy, investment appeal, quality, and
inherent risks.
To summarize, the following points present an overview of our analysis of
the subject's investment appeal:
o Grapevine Mills is situated in a strong trade area with a growing
population base and above average household income levels.
o The subject is expected to perform above regional norms for sales
productivity, and will have a unique tenancy not found at any of the
area's competing properties.
o The mall is benefited by the large volume of tourists.
Overall, we are inclined to group the subject property as a "A" to "B+"
category previously discussed.
Thus, we have looked toward a capitalization rate between 8.50 and 9.00
percent for the subject property.
-120-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
TERMINAL CAPITALIZATION RATE
The residual cash flows generated annually by the subject property
comprise only the first part of the return which an investor will receive. The
second component of this investment return is the pre-tax cash proceeds from
the resale of the property at the end of a projected investment holding period.
Typically, investors will structure a provision in their analyses in the form
of a rate differential over a going-in capitalization rate in projecting a
future disposition price. The view is that the improvement is then older and
the future is harder to visualize; hence a slightly higher rate is warranted
for added risks in forecasting. On average, the Cushman & Wakefield survey
shows a 30 basis point differential, while Korpacz reports 31 basis points.
For the subject, however, we believe that it is necessary to add 50 basis
points to the terminal capitalization rate. Although we have elected to utilize
a conservative posture in many of our assumptions, a significant amount of risk
is evident in the projected lease-up of the property. Therefore, to the range
of stabilized overall capitalization rates, we have added 50 basis points to
arrive at a projected terminal capitalization rate ranging from 9.0 to 9.50
percent. This provision is made for the risk of lease-up and maintaining a
certain level of occupancy in the center, its level of revenue collection, the
prospects of future competition, as well as the uncertainty of maintaining the
forecasted growth rates over such a holding period. In our opinion, this range
of terminal rates would be appropriate for the subject. Thus, this range of
rates is applied to the following year's net operating income before reserves,
capital expenditures, leasing commissions and alterations as it would be the
first received by a new purchaser of the subject property. Applying a rate of
say 9.25 percent for disposition, a current investor would dispose of the
subject property at the end of the investment holding period for an amount of
approximately $309.3 million based upon FY 2009 net income of $28.6 million.
From the projected reversionary value to an investor, we have made a
deduction to account for the various transaction costs associated with the sale
of an asset of this type. These costs consist of 2.0 percent of the total
disposition price of the subject property as an allowance for transfer taxes,
professional fees, and other miscellaneous expenses, including an allowance for
alteration costs that the seller pays at final closing. Deducting these
transaction costs from the computed reversion renders pre-tax the net proceeds
of sale to be received by an investor in the subject property at the end of the
holding period.
===============================================================================
NET PROCEEDS AT REVERSION
===============================================================================
LESS COSTS OF SALE AND
NET INCOME FY 2009 GROSS SALE MISCELLANEOUS EXPENSES @ 2.0% NET PROCEEDS
PRICE
===============================================================================
$28,611,303 $309,311,384 $6,186,278 $303,125,156
===============================================================================
SELECTION OF DISCOUNT RATE/INTERNAL RATE OF RETURN
The discounted cash flow analysis makes several assumptions which reflect
typical investor requirements for yield on real property. These assumptions are
difficult to directly extract from any given market sale or by comparison to
other investment vehicles. Instead, investor surveys of major real estate
investment funds and trends in bond yield rates are often cited to support such
analysis.
-121-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
Yield rates on long term real estate investments range widely between
property types. As cited in Cushman & Wakefield's Spring 1998 survey, investors
in regional malls are currently looking at broad rates of return between 9.50
and 18.00 percent. The average low IRR for CLASS A malls is 10.70 percent,
while the average high is 11.90 percent. The indicated low and high averages
for CLASS B properties are 16.00 percent. Peter F. Korpacz reports an average
internal rate of return of 11.30 percent for the Second Quarter 1998, down 20
basis points from the last quarter.
The yield rate on a long-term real estate investment can also be compared
with yield rates offered by alternative financial investments since real estate
must compete in the open market for capital. In developing an appropriate risk
rate for the subject, consideration has been given to a number of different
investment opportunities. The following is a list of rates offered by other
types of securities:
=================================================
MARKET RATES AND BOND YIELDS (%) JULY 22, 1998
=================================================
Reserve Bank Discount Rate 5.42%
-------------------------------------------------
Prime Rate 8.50%
-------------------------------------------------
6-Month Treasury Bills 5.34%
-------------------------------------------------
U.S. 10-Year Notes 5.46%
-------------------------------------------------
U.S. 30-Year Bonds 5.66%
-------------------------------------------------
Corporate Bonds Aaa 6.52%
=================================================
Source: Federal Reserve Statistical Release
=================================================
This compilation of yield rates from alternative investments reflects
varying degrees of risk as perceived by the market. Therefore, a riskless level
of investment might be seen in a six-month treasury bill at 5.34 percent. A
more risky investment, such as corporate bonds, would currently yield a much
higher rate of 6.52 percent. The prime rate is currently 8.50 percent, while
the discount rate is 5.42 percent. Ten-year treasury notes are currently
yielding around 5.46 percent, while 30-year bonds are at 5.66 percent.
Real estate investment typically requires a higher rate of return (yield)
and is much influenced by the relative health of financial markets. A retail
center investment tends to incorporate a blend of risk and credit based on the
tenant mix, the anchors that are included (or excluded) in the transaction, and
the assumptions of growth incorporated within the cash flow analysis. An
appropriate discount rate selected for a retail center thus attempts to
consider the underlying credit and security of the income stream, and includes
an appropriate premium for liquidity issues relating to the asset.
There has historically been a consistent relationship between the spread
in rates of return for real estate and the "safe rate" available through
long-term treasuries or high-grade corporate bonds. A wider gap between return
requirements for real estate and alternative investments has been created in
recent years due to illiquidity issues, the absence of third party financing,
and the decline in property values.
-122-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
Investors have suggested that the regional mall market has become
increasingly "tiered" over the past two years. The country's premier malls are
considered to have the strongest trade areas, excellent anchor alignments, and
significant barriers of entry to future competitive supply. These and other
"dominant" malls will have average mall shop sales above $350 per square foot
and be attractive investment vehicles in the current market.
It is our opinion that the subject would attract moderate to strong
interest from REITs. Given the occupancy status of the property institutional
investors, which prefer less management intensive properties, would also be a
likely purchaser of the property.
Finally, application of these rate parameters to the subject should entail
some sensitivity to the rate at which leases will be expiring over the
projection period. A complete expiration report is included in the ADDENDA.
WE WOULD ALSO NOTE THAT MUCH OF THE RISK FACTORED INTO SUCH AN ANALYSIS IS
REFLECTED IN THE ASSUMPTIONS EMPLOYED WITHIN THE CASH FLOW MODEL, INCLUDING
RENT AND SALES GROWTH, TURNOVER PROBABILITY, RESERVES FOR REPLACEMENT, AND
VACANCY PROVISIONS.
We have briefly discussed the investment risks associated with the
subject. On balance, it is our opinion that an investor in the subject property
would require an internal rate of return between 11.00 and 11.50 percent for
the mall operating on an "as is" basis.
PRESENT VALUE ANALYSIS
Analysis by the discounted cash flow method is examined over a holding
period that allows the investment to mature, the investor to recognize a return
commensurate with the risk taken, and a recapture of the original investment.
Typical holding periods usually range from 10 to 20 years and are sufficient
for the majority of institutional grade real estate such as the subject to meet
the criteria noted above. In the instance of the subject, we have analyzed the
"As Is" cash flows anticipated over a 10-year period commencing on July 1.
1998.
A sale or reversion is deemed to occur at the end of the 10th year based
upon capitalization of the following year's net operating income. This is based
upon the premise that a purchaser in the 10th year is buying the following
year's net income. Therefore, our analysis reflects this situation by
capitalizing the first year of the next holding period.
The present value is formulated by discounting the property cash flows at
various yield rates. The yield rate utilized to discount the projected cash
flow and eventual property reversion has been based on an analysis of
anticipated yield rates of investors dealing in similar investments. The rates
reflect acceptable expectations of yield to be achieved by investors currently
in the marketplace shown in their current investment criteria and as extracted
from comparable property sales.
-123-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
================================
CASH FLOW ASSUMPTIONS
================================
=============================================================================
SUMMARY OF CRITICAL ASSUMPTIONS FOR DISCOUNTED CASH FLOW
=============================================================================
SUBJECT PROPERTY GRAPEVINE MILLS
-----------------------------------------------------------------------------
LOCATION GRAPEVINE, TEXAS
=============================================================================
SQUARE FOOTAGE RECONCILIATION
=============================================================================
TOTAL GROSS LEASABLE AREA 1,240,971
-----------------------------------------------------------------------------
ANCHOR TENANT GLA 699,303
-----------------------------------------------------------------------------
IN LINE MALL SHOPS 511,394
-----------------------------------------------------------------------------
FOOD COURT 11,532
-----------------------------------------------------------------------------
SPECIALTY RESTAURANT 16,158
-----------------------------------------------------------------------------
KIOSK GLA 2,584
-----------------------------------------------------------------------------
TOTAL OWNED GLA 318,705
=============================================================================
=============================================================================
MARKET RENT CONCLUSIONS
=============================================================================
MARKET RENT ESTIMATES (1998)
-----------------------------------------------------------------------------
TENANTS < 1,200 SQ FT $ 41.00
-----------------------------------------------------------------------------
TENANTS 1,201 - 2,000 SQ FT $ 33.00
-----------------------------------------------------------------------------
TENANTS 2,001 - 3,500 SQ FT $ 25.00
-----------------------------------------------------------------------------
TENANTS 3,501 - 5,000 SQ FT $ 20.00
-----------------------------------------------------------------------------
TENANTS 5,001 - 7,500 SQ FT $ 19.00
-----------------------------------------------------------------------------
TENANTS > 7,500 SQ FT $ 16.00
-----------------------------------------------------------------------------
AVERAGE MALL SHOP RENT PER SQ FT $ 22.50
-----------------------------------------------------------------------------
FOOD COURT $ 60.00
-----------------------------------------------------------------------------
KIOSK $150.00
=============================================================================
=============================================================================
GROWTH RATE ASSUMPTIONS
=============================================================================
RETAIL SALES GROWTH RATE 1998 - 6.0%
1999 - 5.0%
2000 - 4.0%
Thereafter - 3.5%
-----------------------------------------------------------------------------
MARKET RENTAL GROWTH RATE 1998 - 3.0%
Thereafter 3.5%
-----------------------------------------------------------------------------
GENERAL EXPENSE GROWTH RATE 3.5%
-----------------------------------------------------------------------------
REAL ESTATE TAX GROWTH RATE 3.5%
=============================================================================
-124-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
=============================================================================
VACANCY & TYPICAL LEASE TERMS
=============================================================================
AVERAGE LEASE TERM 10 Years
-----------------------------------------------------------------------------
RENT STEP 10% after 60 months
-----------------------------------------------------------------------------
RENEWAL PROBABILITY 65.0 %
-----------------------------------------------------------------------------
WEIGHTED AVERAGE DOWNTIME 2 Months
-----------------------------------------------------------------------------
CREDIT RISK LOSS 5.0%
-----------------------------------------------------------------------------
STABILIZED OCCUPANCY 95.0%
-----------------------------------------------------------------------------
CURRENT VACANCY 71,553+/- SF
-----------------------------------------------------------------------------
FORECASTED DATE OF STABILIZATION June 2000
-----------------------------------------------------------------------------
ABSORPTION PERIOD 24 Months
=============================================================================
=============================================================================
OPERATING EXPENSE DATA
=============================================================================
TENANT IMPROVEMENT ALLOWANCES
-----------------------------------------------------------------------------
NEW TENANTS $15.00/SF
-----------------------------------------------------------------------------
RENEWAL TENANTS $ 5.00/SF
-----------------------------------------------------------------------------
LEASING COMMISSIONS
-----------------------------------------------------------------------------
NEW TENANTS $ 2.50/SF
-----------------------------------------------------------------------------
RENEWAL TENANTS $ 1.50/SF
-----------------------------------------------------------------------------
OTHER OPERATING ITEMS
-----------------------------------------------------------------------------
MANAGEMENT FEE (OF MIN.& % RENT) 5.0%
-----------------------------------------------------------------------------
CAPITAL RESERVES (OF OWNED GLA) $ 0.20/SF
=============================================================================
=============================================================================
"AS IS"
RATES OF RETURN ANALYSIS
=============================================================================
CASH FLOW START DATE July 1, 1998
-----------------------------------------------------------------------------
GOING-IN CAPITALIZATION RATE 8.50 - 9.00%
-----------------------------------------------------------------------------
TERMINAL CAPITALIZATION RATE 9.00 - 9.50%
-----------------------------------------------------------------------------
DISCOUNT RATE 11.00 - 11.50%
-----------------------------------------------------------------------------
REVERSIONARY SALES COSTS 2.00%
-----------------------------------------------------------------------------
HOLDING PERIOD 10 Years
=============================================================================
-125-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
================================
DISCOUNTED CASH FLOW
"As Is" Analysis
================================
For a property such as the subject, it is our opinion that an investor
would require an all cash discount rate in the range of 11.00 to 11.50 percent
on an "as is" operating basis. Accordingly, we have discounted the projected
future pre-tax cash flows to be received by an equity investor in the subject
property to a present value so as to yield 11.00 to 11.25 percent at 25 basis
point intervals on equity capital over the holding period. This range of rates
reflects the risks associated with the investment. Discounting these cash flows
over the range of yield and terminal rates now being required by participants
in the market for this type of real estate places additional perspective upon
our analysis. A prospective valuation matrix for the subject appears on the
FACING PAGE.
Through such a sensitivity analysis, it can be seen that the present value
of the subject property varies from approximately $233.5 to $242.8 million.
Giving consideration to all of the characteristics of the subject previously
discussed, we feel that a prudent investor would require a yield which falls
near the middle of the range outlined above for this property. Accordingly, we
believe that based upon all of the assumptions inherent in our cash flow
analysis, an investor would look toward an IRR around 11.25 percent and a
terminal rate around 9.25 percent as being most representative of the subject's
value in the market.
In view of the analysis presented here, it becomes our opinion that the
discounted cash flow analysis indicates an As Is Market Value of $236,000,000
for the subject property as of July 17, 1998. Based on this analysis, the
following investment indices are indicated.
Value Per SF of Owned GLA $190.17
Value Per SF of Shop GLA $435.69
Implicit Going-In Capitalization Rate 8.64%
Average Cash-on-Cash Return 9.8%
A summary of our Discounted Cash Flow Analysis can be found on the
FOLLOWING PAGE.
Approximately 55.8 percent of the concluded value is attributed to cash
flow and 44.2 percent to reversion which is considered a reasonable balance. We
note that the computed equity yield is not necessarily the true rate of return
on equity capital. This analysis has been performed on a pre-tax basis. The tax
benefits created by real estate investment will serve to attract investors to a
pre-tax yield which is not the full measure of the return on capital.
-126-
<PAGE>
DISCOUNTED CASH FLOW ANALYSIS GRAPEVINE MILLS Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
YEAR NET CASH DISCOUNT FACTOR PRESENT VALUE COMPOSITION ANNUAL CASH
NO. YEAR FLOW 11.25% OF CASH FLOWS OF YIELD ON CASH RETURN
- ------ ------ ------------------ ----------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1 1999 $ 19,592,213 x 0.8988764 = $ 17,610,978 7.46% 8.30%
2 2000 $ 21,183,911 x 0.8079788 = $ 17,116,151 7.25% 8.98%
3 2001 $ 22,499,457 x 0.7262731 = $ 16,340,772 6.92% 9.53%
4 2002 $ 23,321,812 x 0.6528297 = $ 15,225,172 6.45% 9.88%
5 2003 $ 20,629,017 x 0.5868132 = $ 12,105,380 5.13% 8.74%
6 2004 $ 24,824,107 x 0.5274726 = $ 13,094,036 5.55% 10.52%
7 2005 $ 25,003,005 x 0.4741326 = $ 11,854,741 5.02% 10.59%
8 2006 $ 24,731,036 x 0.4261867 = $ 10,540,038 4.47% 10.48%
9 2007 $ 25,177,369 x 0.3830891 = $ 9,645,176 4.09% 10.67%
10 2008 $ 23,506,747 x 0.3443498 = $ 8,094,543 3.43% 9.96%
- ---- ---- ------------- --------- ------------ ----- -----
TOTAL PRESENT VALUE OF CASH FLOWS: $131,626,986 55.77% 9.77%
Total Average
- ---- ----- ------
</TABLE>
<TABLE>
<CAPTION>
Reversion Year Terminal OAR Reversion
- ----------- ------ NOI/Income / -------------- = -----------------
<S> <C> <C> <C> <C> <C> <C>
11 2009 $26,611,303 / 9.25% = $309,311,386
Less: Cost of Sale 2.00% $(6,186,228)
Less: Tls & Commissions $ 0
-------------------------- ------------
Net Reversion $303,125,158
x Discount Factor 0.3443498
-------------------------- ------------
TOTAL PRESENT VALUE OF REVERSION $104,381,080 44.23%
TOTAL PRESENT VALUE OF CASH FLOWS & REVERSION: $236,008,066 100.00%
ROUNDED VALUE via
DISCOUNTED CASH FLOW: $236,000,000
-------------------------- ------------
TOTAL NET RENTABLE AREA 1,240,971
VALUE PER SAUARE FOOT (OWNED GLA): $ 190.17
OWNED MALL SHOP AREA: 579,329
VALUE PER SQUARE FOOT (SHOP GLA): $ 407.37
YEAR ONE NOI ( 12 MONTHS): $20,400,171
IMPLICIT GOING-IN CAPITALIZATION RATE: 8.64%
COMPOUND ANNUAL GROWTH RATE
CONCLUDED VALUE TO NET REVERSION VALUE: 2.82%
COMPOUND ANNUAL GROWTH RATE
NET CASH FLOW: 2.04%
------------------------------------------ ------------
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
=================================
DIRECT CAPITALIZATION
=================================
To further support our prospective value conclusion derived via the
discounted cash flow, we have also utilized the Direct Capitalization method.
In direct capitalization, an overall rate is applied to the net operating
income of the subject property. In this case, we will again consider the
indicated overall rates from the comparable sales in the Sales Comparison
Approach, as well as those rates established in our Investor Survey. As
previously discussed, in view of our total analysis, we would anticipate that
the subject property would trade at an overall rate of approximately 8.50 to
9.00 percent applied to first year income. Applying these rates to first
stabilized year net operating income before reserves, alterations, and other
expenses for the subject of $20,400,171 results in a value of approximately
$226.7 to $240.9 million. From this range, we would be inclined to conclude at
a Market Value of $235,000,000 via Direct Capitalization as of July 17, 1998.
This value is indicative of an overall rate of 8.68 percent.
-127-
<PAGE>
RECONCILIATION AND FINAL VALUE ESTIMATE
- ------------------------------------------------------------------------------
Reconciliation is the process of deriving a single point value estimate
for the subject property from the indications provided by the approaches at
hand. This process requires the weighing of each approach as they relate to the
appraisal assignment and resolving the differences among the valuation
procedures. In the end, a single estimate of market value is concluded based
upon the appropriateness of each value indication. A summary of the value
indications for the subject is set forth below.
===================================================
"AS IS VALUE SUMMARY
===================================================
Cost Approach N/A
- ---------------------------------------------------
Sales Comparison Approach $230,000,000 -
$240,000,000
- ---------------------------------------------------
Income Capitalization Approach
Discounted Cash Flow $236,000,000
Direct Capitalization $235,000,000
===================================================
Two approaches to value have been utilized for this analysis. In general
terms, the approaches included provide complimentary results, each technique
supporting the other. The range of values runs from $230.0 million to $240.0
million, a spread of 4.3 percent.
SALES COMPARISON APPROACH
The Sales Comparison Approach has arrived at a value for the subject
property by analyzing historical arms-length transactions, reducing the
gathered information to common units of comparison, adjusting the sale data for
differences with the subject, and interpreting the results to yield a
meaningful value conclusion. The basis of these conclusions was the
cash-on-cash return based on net income and the adjusted price per square foot
of gross leasable area sold.
The process of comparing historical sales data to assess what purchasers
have been paying for similar type properties is weak in estimating future
expectations. Although the unit sale price yields comparable conclusions, it is
not the primary tool by which the investor market for a property like the
subject operates. In addition, no two properties are alike with respect to
quality of construction, location, market segmentation and income profile. As
such, subjective judgment necessarily becomes a part of the comparative
process.
The usefulness of this approach is that it interprets specific investor
parameters established in their analysis and ultimate purchase of a property.
In light of the above, this methodology is best suited as support for the
conclusions of the Income Approach. It provides useful market extracted rates
of return, such as overall rates, to simulate investor behavior in the Income
Capitalization Approach.
INCOME CAPITALIZATION APPROACH
DISCOUNTED CASH FLOW ANALYSIS
The subject property is highly suited to analysis by the discounted cash
flow method (DCF) as it will be bought and sold in investment circles. The
focus on property value in relation to anticipated income is well founded since
the basis for investment is profit in the form of return or yield on invested
capital.
-128-
<PAGE>
RECONCILIATION AND FINAL VALUE ESTIMATE
- ------------------------------------------------------------------------------
The subject property, as an investment vehicle, is sensitive to all
changes in the economic climate and the economic expectations of investors. The
discounted cash flow analysis may easily reflect changes in the economic
climate of investor expectations by adjusting the variables used to qualify the
model. In the case of the subject property, the DCF can analyze existing
leases, probabilities of future rollovers and turnovers, and reflect the
expectations of overage rents. Essentially, the DCF can model many of the
dynamics of a complex shopping center. Particular emphasis is placed on the
results of the discounted cash flow analysis because of the applicability of
this method in accounting for the specific characteristics of the property, as
well as being the tool used by many purchasers.
CAPITALIZATION
Direct capitalization has its basis in capitalization theory and uses the
premise that the relationship between income and sales price may be expressed
as a rate or its reciprocal, a multiplier. This process selects rates derived
from the marketplace, in much the same fashion as the Sales Comparison
Approach, and applies this to a projected net operating income to derive a sale
price. The weakness here is the idea of using one year of cash flow as the
basis for calculating a sale price.
This is simplistic in its view of expectations and may sometimes be
misleading. If the year chosen for the analysis of the sale price contains an
income steam that is over or understated, this error is compounded by the
capitalization process. Nonetheless, real estate of the subject's caliber is
commonly purchased on a direct capitalization basis. Overall, this methodology
has been given important consideration in our total analysis of the subject
property upon stabilized operations.
CONCLUSIONS
We have briefly discussed the applicability of each of the methods
presented. Because of certain vulnerable characteristics in the Sales
Comparison Approach, it has been used as supporting evidence and as a final
check on the value conclusion indicated by the Income Approach methodologies.
The ranges in value exhibited by the Income Capitalization Approach are
consistent with the leasing profiles. Each indicates complimentary results with
the Sales Comparison Approach, the conclusions being supportive of each method
employed, and neither range being extremely high or low in terms of the other.
As a result of our analysis, we have formed an opinion that the AS IS
MARKET VALUE of the Leased Fee Estate in the referenced real property, subject
to the assumptions, limiting conditions, certifications, and definitions, as of
July 17, 1998, the date of analysis, was:
TWO HUNDRED THIRTY FIVE MILLION DOLLARS
$235,000,000
-129-
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
- ------------------------------------------------------------------------------
"Appraisal" means the appraisal report and opinion of value stated therein; or
the letter opinion of value, to which these Assumptions and Limiting Conditions
are annexed.
"Property" means the subject of the Appraisal.
"C&W" means Cushman & Wakefield, Inc. or its subsidiary which issued the
Appraisal.
"Appraiser(s)" means the employee(s) of C&W who prepared and signed the
Appraisal.
This appraisal is made subject to the following assumptions and limiting
conditions:
1. No opinion is intended to be expressed and no responsibility is assumed
for the legal description or for any matters which are legal in nature or
require legal expertise or specialized knowledge beyond that of a real
estate appraiser. Title to the Property is assumed to be good and
marketable and the Property is assumed to be free and clear of all liens
unless otherwise stated. No survey of the Property was undertaken.
2. The information contained in the Appraisal or upon which the Appraisal is
based has been gathered from sources the Appraiser assumes to be reliable
and accurate. Some of such information may have been provided by the owner
of the Property. Neither the Appraiser nor C&W shall be responsible for
the accuracy or completeness of such information, including the
correctness of estimates, opinions, dimensions, sketches, exhibits and
factual matters.
3. The opinion of value is only as of the date stated in the Appraisal.
Changes since that date in external and market factors or in the Property
itself can significantly affect property value.
4. The Appraisal is to be used in whole and not in part. No part of the
Appraisal shall be used in conjunction with any other appraisal.
Publication of the Appraisal or any portion thereof without the prior
written consent of C&W is prohibited. Except as may be otherwise stated in
the letter of engagement, the Appraisal may not be used by any person
other than the party to whom it is addressed or for purposes other than
that for which it was prepared. No part of the Appraisal shall be conveyed
to the public through advertising, or used in any sales or promotional
material without C&W's prior written consent. Reference to the Appraisal
Institute or to the MAI designation is prohibited.
5. The Appraisal assumes (a) responsible ownership and competent management
of the Property; (b) there are no hidden or unapparent conditions of the
Property, subsoil or structures that render the Property more or less
valuable (no responsibility is assumed for such conditions or for
arranging for engineering studies that may be required to discover them);
(c) full compliance with all applicable federal, state and local zoning
and environmental regulations and laws, unless noncompliance is stated,
defined and considered in the Appraisal; and (d) all required licenses,
certificates of occupancy and other governmental consents have been or can
be obtained and renewed for any use on which the value estimate contained
in the Appraisal is based.
-130-
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
- ------------------------------------------------------------------------------
6. Except as may be otherwise stated in the letter of engagement, the
Appraiser shall not be required to give testimony in any court or
administrative proceeding relating to the Property or the Appraisal.
7. The physical condition of the improvements considered by the Appraisal is
based on visual inspection by the Appraiser or other person identified in
the Appraisal. C&W assumes no responsibility for the soundness of
structural members nor for the condition of mechanical equipment, plumbing
or electrical components
8. The forecasted potential gross income referred to in the Appraisal may be
based on lease summaries provided by the owner or third parties. The
Appraiser has reviewed lease documents and assumes no responsibility for
the authenticity or completeness of lease information provided by others.
C&W recommends that legal advice be obtained regarding the interpretation
of lease provisions and the contractual rights of parties.
9. The forecasts of income and expenses are not predictions of the future.
Rather, they are the Appraiser's best estimates of current market thinking
on future income and expenses. The Appraiser and C&W make no warranty or
representation that these forecasts will materialize. The real estate
market is constantly fluctuating and changing. It is not the Appraiser's
task to predict or in any way warrant the conditions of a future real
estate market; the Appraiser can only reflect what the investment
community, as of the date of the Appraisal, envisages for the future in
terms of rental rates, expenses, supply and demand.
10. Unless otherwise stated in the Appraisal, the existence of potentially
hazardous or toxic materials which may have been used in the construction
or maintenance of the improvements or may be located at or about the
Property was not considered in arriving at the opinion of value. These
materials (such as formaldehyde foam insulation, asbestos insulation and
other potentially hazardous materials) may adversely affect the value of
the Property. The Appraisers are not qualified to detect such substances.
C&W recommends that an environmental expert be employed to determine the
impact of these matters on the opinion of value.
11. Unless otherwise stated in the Appraisal, compliance with the requirements
of the Americans With Disabilities Act of 1990 (ADA) has not been
considered in arriving at the opinion of value. Failure to comply with the
requirements of the ADA may adversely affect the value of the property.
C&W recommends that an expert in this field be employed.
-131-
<PAGE>
CERTIFICATION OF APPRAISAL
- ------------------------------------------------------------------------------
We certify that, to the best of our knowledge and belief:
1. Brian K. Johnson inspected the property. Brian K. Johnson and Brian J.
Booth have prepared this report and analysis contained herein. Richard W.
Latella, MAI reviewed and approved the report, but did not inspect the
property.
2. The statements of fact contained in this report are true and correct.
3. The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are our personal,
unbiased professional analyses, opinions, and conclusions.
4. We have no present or prospective interest in the property that is the
subject of this report, and we have no personal interest or bias with
respect to the parties involved.
5. Our compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the
amount of the value estimate, the attainment of a stipulated result, or
the occurrence of a subsequent event. The appraisal assignment was not
based on a requested minimum valuation, a specific valuation or the
approval of a loan.
6. No one provided significant professional assistance to the persons signing
this report.
7. Our analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice of the Appraisal Foundation and the Code
of Professional Ethics and the Standards of Professional Appraisal
Practice of the Appraisal Institute.
8. The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
9. As of the date of this report, Richard W. Latella, MAI has completed the
requirements of the continuing education program of the Appraisal
Institute.
------------------------------ -----------------------------
Brian K. Johnson Brian J. Booth
Associate Director Retail Valuation Group
Valuation Advisory Services
Certification No. TX-1326012-G
------------------------------
Richard W. Latella, MAI
Senior Director
Retail Valuation Group
-132-
<PAGE>
ADDENDA
- ------------------------------------------------------------------------------
NATIONAL RETAIL MARKET OVERVIEW
PRO-JECT TENANT REGISTER
PRO-JECT LEASE ABSTRACT REPORT
PRO-JECT ASSUMPTIONS REPORT
PRO-JECT LEASE EXPIRATION REPORT
NATIONAL ANCHOR, SPECIALTY TENANT, AND CINEMA LEASE COMPARABLES
APPRAISER QUALIFICATIONS
-133-
<PAGE>
CUSHMAN & WAKEFIELD, INC.
NATIONAL RETAIL OVERVIEW
RETAIL VALUATION GROUP
Richard W. Latella, MAI
Senior Director
July 28, 1998
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
INTRODUCTION
Shopping centers constitute the major form of retail activity in the
United States today. Approximately 55 percent of all non-automotive retail
sales occur in shopping centers. It is estimated that consumer spending
accounts for about two-thirds of all economic activity in the United States. As
such, retail sales patterns have become an important indicator of the country's
economic health.
The early part of the 1990s was a time of economic stagnation and
uncertainty in the country. The gradual recovery, which began as the nation
crept out of the last recession, has shown some signs of weakness as corporate
downsizing has accelerated. But as the recovery period reaches into its fifth
year and the retail environment remains volatile, speculation regarding the
nation's economic future remains. It is this uncertainty which has shaped
recent consumer spending patterns. We shall first provide a brief overview of
broad economic measures that are important in terms of long range retail sales
forecasting and general investment underwriting. This is followed by a
discussion of retail sales trends along with selected statistics of the
shopping center industry. Also included is a discussion of contemporary
industry trends, valuation issues and a brief overview of the REIT market.
PERSONAL INCOME AND CONSUMER SPENDING
Americans' PERSONAL INCOME (total income from wages, salaries, interest,
rents and all other sources) advanced by four-tenths of a percent in December,
which helped raise income for all of 1997 by 5.8 percent. This was less than
1995 but it far outpaced the 2.5 percent growth in 1994. Data for April 1998
shows that income rose four-tenths of a percent, led by a seven-tenths rise in
wages and salaries.
<TABLE>
<CAPTION>
PERSONAL INCOME CONSUMER SPENDING
- ------------------- -----------------
YEAR % CHANGE YEAR % CHANGE
- -------- ---------- ------ ---------
<S> <C> <C> <C>
1993 4.7 1993 5.8
1994 2.5 1994 5.5
1995 6.1 1995 4.8
1996 5.6 1996 5.0
1997 5.8 1997 5.4
- ------ --- ---- ---
Source: Commerce Dept.
- -------------------------------------
</TABLE>
CONSUMER SPENDING is another closely watched indicator of economic
activity. The importance of consumer spending is that it represents two-thirds
of the nation's economic activity. Total consumer spending rose by 5.4 percent
in 1997, in line with the long term trend. Spending rose five-tenths of a
percent in April 1998, after increasing at an annual rate of 6 percent for the
first quarter, the most in six years.
EMPLOYMENT TRENDS
The country's economic situation continues to generate a record number of
new jobs. Correspondingly, the nation's unemployment rate continues to decrease
from its recent peak in 1992. Selected statistics released by the Bureau of
Labor Statistics are summarized as follows:
1
<PAGE>
<TABLE>
<CAPTION>
SELECTED EMPLOYMENT STATISTICS
- --------------------------------------------------------------------------------
CIVILIAN LABOR FORCE EMPLOYED
- --------------------------------------- --------------------------
TOTAL WORKERS TOTAL WORKERS UNEMPLOYMENT
YEAR1 (000) % CHANGE (000) % CHANGE RATE
- ------------- -------------- ---------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
1990 125,840 -- 118,793 -- 5.6
1991 126,346 .4 117,718 -.9 6.8
1992 128,105 1.4 118,492 .7 7.5
1993 129,200 .9 120,259 1.5 6.9
1994 131,056 2.4 123,060 2.3 6.1
1995 132,304 1.0 124,900 1.5 5.6
1996 133,943 1.2 126,708 1.4 5.4
1997 4.9
=========== ===
CAGR
1990-1997 +1.05 +1.08
=========== ===== =====
1Year ending December 31
- ---------------------------------------------------------------------------------
Source: Bureau of Labor Statistics U.S. Department of Labor
- ---------------------------------------------------------------------------------
</TABLE>
During 1996, the labor force increased by 1,639,000 or approximately 1.2
percent. Correspondingly, the level of employment increased by 1,808,000 or 1.4
percent. As such, the year end unemployment rate dropped by two-tenths of a
percent to 5.4 percent. For 1996, monthly job growth averaged 224,000. On
balance, over 10.0 million jobs have been created since the recovery began.
Preliminary data for December 1997 shows that the unemployment rate rose
slightly to 4.7 percent from 4.6 percent following job growth of 370,000. For
the year, 1997's average unemployment rate of 4.9 percent matched the lows set
in 1970 and 1973. A record 64.1 percent of the population held jobs at the end
of the year. U.S. payrolls ended the year at 123.9 million, up by 3.2 million
or 2.6 percent over 1996. For the year job growth averaged nearly 267,000 per
month. For the final quarter, job growth averaged 333,000 per month. Most
analysts are forecasting monthly job growth in the 250,000 to 275,000 range in
early 1998. A Bank of America survey of 18 leading Wall Street economists
forecast unemployment rates of 4.8 and 5.0 percent in 1998 and 1999,
respectively.
In May 1998, the economy created 296,000 jobs. Nationally, the
unemployment rate remained unchanged at 4.3 percent.
HOUSING TRENDS
Housing trends are an important economic measure due to the substantial
economic activity generated when a home changes hands (i.e. spending on repairs
by sellers, redecorating by buyers, fees, commissions and taxes).
For all of 1997, a total of 1.476 million new homes and apartments were
started, barely down one-tenth of a percent from a total of 1.477 million in
1996 which was the fastest pace in eight years.
2
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Approximately 800,000 new homes were sold in 1997, up 5.7 percent from
756,000 in 1996. It was the highest total since 817,000 in 1978. The median
home price of new homes sold in 1996 was $140,000, up 4.6 percent from 1995.
April 1998 data shows that new home sales rose by 5.2 percent to an annual rate
of 888,000 units, a new record. This followed a revised 3 percent increase in
February. A record low interest rates and warm weather were cited as reasons
for the increase. Builders are currently reporting a 3.8 month inventory of
unsold homes, a record low. The median price of all homes sold in 1997 (new and
existing) rose 6.2 percent over 1996 to $124,800.
Sales of existing single family homes rose 3.1 percent for 1997 to a
record 4.22 million units from 4.09 million in 1996, a previous record. Resales
are an important measure of the housing industry's health as they account for
about 85 percent of all single family sales. Data for May 1998 shows that sales
rose by 1.0 percent to an annual rate of 4.82 million units. The median price
rose to $127,000.
The home ownership rate seems to be rising, after remaining stagnant over
the last decade. For 1996, the share of households that own their homes was
65.4 percent, compared to 64.7 percent for a year earlier. Lower mortgage rates
are cited as a factor.
GROSS DOMESTIC PRODUCT
The Commerce Department reports that the gross domestic product increased
by 3.8 percent in 1997, the largest growth in that measure since an identical
rate in 1988 when the Federal Reserve stimulated the economy to cushion the
impact of the 1987 stock market crash. For the year, Americans produced an
inflation adjusted $7.19 trillion in goods and services. The fourth quarter
1997 growth rate was a brisk 4.3 percent. The annual growth was viewed as
remarkable in view of its coming in the seventh year of an economic expansion
that was also characterized by low inflation. The Fed foresees a moderation of
this trend and expects the U.S. economy will expand at a 2.0 to 2.50 percent
pace during 1998 which is in-line with White House forecasts and a pace which
is viewed as the economy's non-inflationary growth limit.
The following chart cites the annual change in real GDP since 1990.
<TABLE>
<CAPTION>
REAL GDP
---------------------
YEAR % CHANGE
--------- ---------
<S> <C>
1990 1.2
1991 --.6
1992 2.3
1993 3.1
1994 4.1
1995* 2.0
1996 2.4
1997 3.8
</TABLE>
* Reflects new chain weighted system of measurement.
Comparable 1994 measure would be 3.5%.
Source: Bureau of Economic Analysis
- --------------------------------------------------------------------------------
3
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
First quarter 1998 growth was reported at a robust 5.4 percent versus 3.7
percent in the final three months of 1997. This was a surprisingly powerful
performance and above most analysts' opinions.
WHOLESALE PRICES
Soaring energy prices in December drove wholesale costs to a twelve month
high. For the year, the Producer Price Index (PPI) gained 2.8 percent. However,
excluding energy, the PPI rose just 1.4 percent in all of 1996. In 1995, the
index rose 2.3 percent. For November 1997, wholesale prices fell two-tenths of
a percent. For the twelve months ending November 1997, the index was --1.2
percent. Projections for 1997 show that most economists expect a 2.5 percent
rise and a core increase of 1.5 percent.
CONSUMER PRICES
The Bureau of Labor Statistics has reported that consumer prices rose by
only 1.7 percent in 1997, the lowest rate since 1986 when oil prices fell
sharply.
The following chart tracks the annual change in the CPI since 1990.
<TABLE>
<CAPTION>
CONSUMER PRICE INDEX1
------------------------------
YEAR CPI % CHANGE
-------- ------- ---------
<S> <C> <C>
1990 133.8 6.1
1991 137.9 3.0
1992 141.9 2.9
1993 145.8 2.7
1994 149.7 2.7
1995 153.5 2.5
1996 158.6 3.3
1997 162.3 1.7
</TABLE>
- --------
(1) All Urban Workers
Source: Dept. of Labor, Bureau of Labor Statistics
Over the past eight years, inflation has exceeded 3 percent only two times
(1996 -- 3.3 percent and 1990 -- 6.1 percent). Excluding food and energy, the
77 percent of the index known as the core index, the index rose 2.2 percent
during 1997, the lowest annual figure since 1965. The corresponding rate for
1996 was 2.6 percent. Recently, a special advisory panel of prominent
economists have contended that the current method of calculating the Consumer
Price Index overstates inflation by 1.1 percentage points annually. The
government is currently reviewing the far ranging implications a change in
procedure may have.
Based upon year end trends, most notably the economic turmoil in Asia,
some economists have begun debating the possibility of delation. For example,
the price of imported goods dropped by 4.9 percent for all of 1997; the largest
decline since the government began
- --------------------------------------------------------------------------------
4
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
collecting such data in 1983. The Bank of America survey of 17 leading Wall
Street economists have forecasted inflation for 1998 of 2.2 percent. Data for
June 1998 shows that the inflation index increased at a less than expected
one-tenth of a percent as energy prices fell for the eighth time in nine
months.
OTHER INDICATORS
The government's main economic forecasting gauge, the INDEX OF LEADING
ECONOMIC INDICATORS is intended to project economic growth over the next six to
nine months. The Conference Board, an independent business group, reported that
the index was unchanged in December (1997) ending five straight months of
gains. For all of 1997, the index rose at twice its historic pace. The April
1998 rate rose one-tenth of a percent.
The Conference Board also reported that CONSUMER CONFIDENCE rose in June
1998 to 137.6 from 136.3 in May. This was the highest level in three decades.
Consumers attitudes about the economy remain upbeat. Measures of consumer
confidence are watched closely for indications of future consumer spending.
The EMPLOYMENT COST INDEX is a measure of overall compensation including
wages, salaries and benefits. For 1997, the index rose at an annual amount of
3.3 percent, up from 2.9 percent for both 1995 and 1996. Wages and salaries
were up 1.1 percent, the largest increase in seven and one-half years while the
cost of benefits rose nine-tenths of a percent. For the first quarter (1998)
the index was up seven-tenths of a percent.
PRODUCTIVITY is a key element in measuring the standard of living since
increased efficiency allows businesses to increase workers compensation without
having to raise prices. Through the first 70 years of this century, non-farm
productivity rose at an annual rate of 2.2 percent. During the post war period
1947 to 1973, it was 2.8 percent. Between 1973 and 1995, a marked slowdown has
been in evidence with only a 1 percent annual rate and during the period marked
by the start of the current economic expansion in 1991, growth has averaged 1.2
percent. The Labor Department reports that the productivity of American workers
grew by 1.7 percent in 1997. This compares with 1.9 percent in 1996 and
three-tenths of a percent in 1995. Data for the first quarter of 1998 shows
that productivity slipped to an annual rate of 1.1 percent, in part because
employers hired more workers to handle an expanding workload.
CONSUMER CREDIT The Federal Reserve said consumer credit unexpectedly
declined by $4.2 billion to a $1.231 trillion annual rate in November, the
first drop in four years. All major categories of borrowing registered declines
including credit cards, auto loans, and personal loans. Nonetheless, credit
card delinquencies and personal bankruptcies remain near record levels
indicating that consumers may be reaching a point of saturation with respect to
new debt. A record 1.34 million Americans filed for bankruptcy in 1997 despite
growing prosperity for nearly seven years of economic growth. Visa USA reports
that filings were up 19.6 percent nationwide from 1.12 million in 1996.
Borrowing was up 6.9 percent in February 1998 to an annual rate of $1.244
trillion. The biggest component was credit card debt which rose to $3.9
billion.
- --------------------------------------------------------------------------------
5
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
SAVINGS RATE The U.S. Savings Rate is measured as that portion of
disposable income that goes into bank accounts, investments, and other forms of
savings. Americans are continuing a trend of spending faster than their
after-tax incomes grow. As a result of carrying more debt, consumers decreased
their savings to just 3.8 percent of after-tax income, the lowest rate since
1939. The savings rate was 4.3 percent in 1996.
NEW CONSTRUCTION activity rose one-tenth of a percent in December to an
annual rate of $611.8 billion. The report showed that spending on residential
construction, which makes up nearly half the total, rose nine-tenths of a
percent. Commercial spending also increased 1.2 percent, while public spending
rose eight-tenths of a percent. For all of 1997, construction spending rose 5.6
percent versus 6.5 percent in 1996.
ECONOMIC OUTLOOK
The WEFA Group, an economic consulting company, opines that the current
state of the economy is a "central bankers" dream, with growth headed toward
the Fed's 2.5 percent target, accompanied by stable if not falling inflation.
They project that inflation will track at about 2.5 percent through 1998. Over
the longer term, inflation is expected to average 2.7 percent. This will have a
direct influence on consumption (consumer expenditures).
Potential GDP provides an indication of the expansion of output, real
incomes, real expenditures, and the general standard of living of the
population. WEFA estimates that real U.S. GDP will grow at an average annual
rate of 2.3 percent over the next decade, and slow to about 2.1 percent by
2019.
Consumption expenditures are primarily predicated on the growth of real
permanent income, demographic influences, and changes in relative prices over
the long term. Changes in these key variables explain much of the consumer
spending patterns of the 1970s and mid-1980s, a period during which baby
boomers were reaching the asset acquisition stages of their lives; purchasing
automobiles and other consumer and household durables. Increases in real
disposable income supported this spending spurt with an average annual increase
of 2.9 percent per year over the past twenty years. Real consumption
expenditures increased at an average annual rate of 3.1 percent during the
1970s and by an average of 4.0 percent from 1983 to 1988. WEFA projects that
consumption expenditure growth will slow as a result of slower population
growth and aging. It is also projected that the share of personal consumption
expenditures relative to GDP will decline over the next decade. Consumer
spending as a share of GDP peaked in 1993 at 68.0 percent after averaging about
63.0 percent over much of the post-war period. WEFA estimates that real
consumption expenditure growth will average 2.2 percent per year through 2005
and slows to 2.1 percent thereafter.
RETAIL SALES
During the period 1980 through 1996, total retail sales in the United
States increased at a compound annual rate of 6.1 percent. Data for the period
1990 through 1996 shows that sales growth has slowed to an annual average of
5.0 percent. This information is summarized on the following chart.
- --------------------------------------------------------------------------------
6
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL U.S. RETAIL SALES(1)
- ---------------------------------------------------------------
YEAR AMOUNT (BILLIONS) ANNUAL CHANGE
- ---------------------------- ------------------- --------------
<S> <C> <C>
1980 $ 957,400 N/A
1985 $1,375,027 N/A
1990 $1,844,611 N/A
1991 $1,855,937 .61%
1992 $1,951,589 5.2%
1993 $2,074,499 6.3%
1994 $2,236,966 7.8%
1995 $2,340,817 4.6%
1996 $2,465,835 5.3%
1997(2) $2,569,400 4.2%
- ---------------------------------------------------------------
Compound Annual Growth Rate
1980-1997 +6.0%
- ---------------------------------------------------------------
CAGR: 1990-1997 +4.8%
- ---------------------------------------------------------------
</TABLE>
- -------------
(1) 1985 - 1995 data reflects recent revisions by the U.S. Department of
Commerce: Combined Annual and Revised Monthly Retail Trade.
(2) Preliminary advance estimates.
Source: Monthly Retail Trade Reports Business Division, Current Business
Reports, Bureau of the Census, U.S. Department of Commerce.
Retail sales rose seven-tenths of a percent during the month of December
1997. The Census Bureau of the Department of Commerce reports that advance
estimates for U.S. retail sales for 1997 were $2.569 trillion, an increase of
$103.6 billion, or 4.2 percent from 1996. This was below last year's gain and
the worst showing since 1991.
Nationally, retail sales rose one-tenth of a percent in June 1998
following a revised 1.2 percent rise in May.
Provided on the chart below is a summary of overall and same store sales
growth for selected national merchants for the most recent period.
- --------------------------------------------------------------------------------
7
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SAME STORE SALES FOR THE MONTH OF JUNE 1998
- -----------------------------------------------------------
% CHANGE FROM PREVIOUS YEAR
---------------------------
NAME OF RETAILER OVERALL SAME STORE BASIS
- ------------------------------- --------- -----------------
<S> <C> <C>
Wal-Mart +17.3% + 9.0%
Kmart + 1.7% + 1.5%
Sears, Roebuck & Company + 2.1% + 0.3%
J.C.Penney - 2.6% - 2.1%
Dayton Hudson Corporation +10.4% + 4.6%
May Department Stores + 6.1% + 4.5%
Federated Department Stores + 2.3% + 3.4%
The Limited Inc. -- + 1.0%
Gap Inc. +36.0% +15.0%
Ann Taylor +19.4% + 9.0%
TJX + 8.0% + 5.0%
Lowe's +21.2% + 4.9%
Circuit City +16.0% + 6.0%
</TABLE>
- --------
Source: New York Times/Wall Street Journal
Retailers reported perplexing results in June sales, following two months
of stellar sales for the entire industry.
The Goldman Sachs same store sales index was up 4.4 percent in June
compared with 4.0 percent last year. Same store sales growth was led by
Wal-Mart (+9.0%), Circuit City (+6.0%), and The Gap (+15.0%). Discounters again
did very well such as TJX, Dollar General and Ross Stores. Department stores
which cater to lower income shoppers also did well such as Kohl's and Target
which paced Dayton Hudson to a 4.6 percent gain.
The International Council of Shopping Centers (ICSC) publishes a MONTHLY
MALL MERCHANDISE INDEX which tracks sales by store type for more than 400
regional shopping centers. The index shows that total sales per square foot
rose by 2.9 percent to $278 per square foot in 1996. This compares to a .5
percent increase for the period 1994-1995. The following chart identifies the
most recent year-end results. The winners were shown to be Apparel and
Accessories (+4.8%) led by Men's Apparel and Shoes, while Furniture and
Furnishings suffered (-2.8%). The Home Improvement category rose an outstanding
100.0 percent to $302 per square foot.
Retailers reported a better than expected increase in January sales,
largely as a result of major post-holiday sales and clearance promotions. Data
for December 1997 shows that consumers were enticed to the stores with strong
promotional markdowns by the nation's retailers. The selling season seemed to
come two days before Christmas and continued for the week following.
- --------------------------------------------------------------------------------
8
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 YEAR END PERFORMANCE
NON-ANCHOR TENANT SALES IN U.S. MALLS
- ------------------------------------------------------------------------------------------
STORE TYPE 1997 (SF*) ICSC INDEX % CHANGE FROM YE 1996
- ------------------------------------------- ------------ ---------------------------------
<S> <C> <C>
GAFO CATGORIES:
APPAREL AND ACCESSORIES
Women's Accessories and Specialties $317 4.3%
Women's Ready-To-Wear 195 -2.7%
Men's Apparel 268 -1.9%
Children's Apparel 382 5.2%
Family Apparel 324 2.1%
Women's Shoes 342 0.2%
Men's Shoes 399 3.4%
Family Shoes 291 -0.3%
Shoes Miscellaneous 303 -3.2%
Apparel and Accessories - Misc. $276 -6.5%
- ------------------------------------------------------------------------------------------
SUBTOTAL $265 0.8%
- ------------------------------------------------------------------------------------------
FURNITURE AND FURNISHINGS:
Home Furniture & Furnishings $273 -0.3%
Home Entertainment & Electronics 329 5.0%
Home Furnishings -- Misc. 275 -0.8%
- ------------------------------------------------------------------------------------------
SUBTOTAL $307 2.6%
- ------------------------------------------------------------------------------------------
OTHER GAFO:
Jewelry $701 3.8%
Stationery/Cards/Gifts/Novelty 287 1.8%
Books 242 -3.7%
Sporting Goods/Bicycles 240 -2.8%
Other GAFO - Misc. 325 1.2%
- ------------------------------------------------------------------------------------------
SUBTOTAL $356 1.3%
- ------------------------------------------------------------------------------------------
TOTAL GAFO $295 1.3%
- ------------------------------------------------------------------------------------------
NON GAFO CATEGORIES
FOOD SERVICES
Fast Food $449 2.6%
Restaurants 289 0.8%
Food Services - Misc. 416 -7.1%
- ------------------------------------------------------------------------------------------
SUBTOTAL $362 1.7%
- ------------------------------------------------------------------------------------------
OTHER NON-GAFO CATEGORIES:
Specialty Food Stores $375 4.0%
Supermarkets 465 4.4%
Drug/HBA 317 3.3%
Personal Services 299 2.8%
Automotive 121 10.8%
Home Improvement 356 14.9%
Mall Entertainment 76 -2.3%
Other Non-GAFO - Misc. 397 3.2%
- ------------------------------------------------------------------------------------------
SUBTOTAL $230 1.8%
- ------------------------------------------------------------------------------------------
TOTAL NON-GAFO $278 1.7%
- ------------------------------------------------------------------------------------------
OTHER CATEGORIES-MISCELLANEOUS $243 8.7%
- ------------------------------------------------------------------------------------------
Memo: GAFO & Food Service Total $301 1.3%
- ------------------------------------------------------------------------------------------
GRAND TOTAL $291 1.5%
- ------------------------------------------------------------------------------------------
</TABLE>
- -----------
* SALES PER SQUARE FOOT DERIVED AS TOTAL NON-ANCHOR MALL SALES DIVIDED BY
TOTAL OCCUPIED SQUARE FOOTAGE.
SOURCE: ICSC - RESEARCH QUARTERLY
- --------------------------------------------------------------------------------
9
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
The ICSC has reported the following results:
MALL TENANT SALES
Data through the fourth quarter of 1997 shows that sales per square foot
for non-anchor tenants rose 1.5 percent over the comparable 12 month 1996
period. Year to date GAFO sales were up 1.3 percent led by the Furniture and
Furnishings category.
DEPARTMENT STORE SALES
Sales in U.S. Department Stores increased by 6.4 percent in 1997 according
to the Department of Commerce. The increase was largely fueled by the strong
performance of discount department stores such as Wal-Mart, Kmart and Target.
This compares with an overall increase of 4.6 percent in 1996.
Comparable sales for the latest 12 month period (YE 12/97) are shown
below:
<TABLE>
<CAPTION>
DEPARTMENT STORE TYPE YEAR OVER YEAR CHANGE
- -------------------------- ----------------------
<S> <C>
Discount 5.8%
National Chains 2.1%
Conventional/Full Line 4.3%
</TABLE>
FACTORY OUTLET
The ICSC FACTORY OUTLET INDEX increased by 4.0 percent in 1997 to $220 per
square foot from $212 per square foot in 1996. The fourth quarter gain of 2.8
percent was the highest quarterly gain during the year. Data for the fourth
quarter of 1997 shows that sales rose by 3.7 percent. This increase was fueled
by a 11.3 percent sales volume growth and a 7.3 percent square footage
expansion at centers open at least one year.
<TABLE>
<CAPTION>
PERIOD SALES/SF CHANGE
- -------- ---------- ---------
<S> <C> <C>
1995 $210 --
1996 $212 1.0%
1997 $220 4.0%
</TABLE>
The ICSC is now reporting comp or same store sales for outlet centers.
From their reporting data base, they report comp store growth of 2.8 percent
for all of 1997.
GAFO AND SHOPPING CENTER INCLINED SALES
In a true understanding of shopping center dynamics, it is important to
focus on both GAFO sales or the broader category of Shopping Center Inclined
Sales. GAFO goods comprise the overwhelming bulk of goods and products carried
in shopping centers and department stores and consist of the following
categories:
- --------------------------------------------------------------------------------
10
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o General merchandise stores including department and other stores;
o Apparel and accessory stores:
o Furniture and home furnishing stores; and
o Other miscellaneous shoppers goods stores.
Shopping Center Inclined Sales are somewhat broader and include such
classifications as home improvement and grocery stores. The store types that
comprise shopping centers comprised approximately 53 percent of total retail
sales in 1995. The balance were generated by auto dealers, gas stations, food
service facilities and other miscellaneous establishments.
Total retail sales grew by 4.6 percent in the United States in 1995 to
$2.341 trillion, an increase of $104 billion over 1994. This followed an
increase of 7.8 percent of $162 billion over 1993. Automobile dealers captured
$34 plus and minus billion of total retail sales growth last year, while
Shopping Center Inclined Sales accounted for nearly 50.0 percent of the
increase ($50 billion). GAFO sales increased by $32.5 billion. This group was
led by department stores which posted a $14.4 billion increase in sales. The
following chart summarizes the performance for this most recent comparison
period.
- --------------------------------------------------------------------------------
11
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
RETAIL SALES BY MAJOR STORE TYPE
1994-1995 ($MIL.)
<TABLE>
<CAPTION>
PERCENT OF 1994-1995
STORE TYPE 1994 1995 INCOME(1) % CHANGE
- ---------------------------- --------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
GAFO:
General Merchandise $ 282,541 $ 296,904 5.1%
Apparel & Accessories 109,603 109,962 .3%
Furniture & Furnishings 119,626 129,923 8.6%
Other GAFO 80,533 88,029 9.3%
- ---------------------------- ----------- ----------- ---
GAFO SUBTOTAL $ 592,303 $ 624,818 14.4% 5.5%
- ---------------------------- ----------- ----------- ---- ---
CONVENIENCE STORES:
Grocery $ 376,330 $ 389,134 3.4%
Other food 21,470 21,378 (.4)%
- ---------------------------- ----------- ----------- ---
SUBTOTAL $ 397,800 $ 410,512 9.5% 3.2%
Drug 81,538 84,240 2.0% 3.3%
- ---------------------------- ----------- ----------- ---- ---
CONVENIENCE SUBTOTAL $ 479,338 $ 494,752 3.2%
- ---------------------------- ----------- ----------- ---
OTHER:
Home Improvement & Building
Supplies Stores $ 122,533 $ 124,626 2.9% 1.7%
SHOPPING CENTER-INCLINED
Subtotal $ 1,194,174 $ 1,244,196 28.8% 4.2%
Automobile Dealers 526,319 560,624 6.5%
Gas Stations 142,193 148,192 4.2%
Eating and Drinking Places 228,351 233,606 2.3%
All Other 145,928* 154,199* 5.7%
- ---------------------------- ----------- ----------- ---
TOTAL RETAIL SALES $ 2,236,966 $ 2,340,817 4.6%
============================ =========== =========== ===
</TABLE>
- --------
* ESTIMATED SALES
1 CURRENT POPULATION REPORT, PAGE 60. ESTIMATED AT 96.8 MILLION HOUSEHOLDS @
$44,100 = 4.3 TRILLION.
SOURCE: U.S. DEPARTMENT OF COMMERCE, BUREAU OF THE CENSUS AND DOUGAL M. CASEY:
VARIOUS ICSC WHITE PAPERS.
GAFO sales grew by 5.5 percent in 1995 to $624.8 billion. From the above
it can be calculated that GAFO sales accounted for 26.7 percent of total retail
sales and nearly 50.0 percent of all shopping center-inclined sales. GAFO sales
have also risen relative to household income. In 1990 these sales represented
13.9 percent of average household income. By 1994/1995 they rose to 14.4
percent. Projections through 2000 show a continuation of this trend to 14.7
percent. On average, total sales were equal to nearly 55.0 percent of household
income in 1994.
- -------------------------------------------------------------------------------
12
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DETERMINANTS OF RETAIL SALES GROWTH AND U.S. RETAIL SALES BY KEY STORE TYPE
- ---------------------------------------------------------------------------------------
1990 1994 2000P
--------------- --------------- ---------------
<S> <C> <C> <C>
DETERMINANTS
Population 248,700,000 260,000,000 276,200,000
Households 91,900,000 95,700,000 103,700,000
Average Household Income $ 37,400 $ 42,600 $ 51,600
Total Census Money Income $ 3.4 Tril. $ 4.1 Tril. $ 5.4 Tril.
- --------------------------------------- ------------ ------------ ------------
% ALLOCATIONS OF INCOME TO SALES
GAFO Stores 13.9% 14.4% 14.7%
Convenience Stores 12.9% 11.7% 10.7%
Home Improvement Stores 2.8% 3.0% 3.3%
Total Shopping Center-Inclined Stores 29.6% 29.1% 28.8%
Total Retail Stores 54.3% 54.6% 52.8%
- --------------------------------------- ------------ ------------ ------------
SALES ($BILLION)
GAFO Stores $ 472 $ 592 $ 795
Convenience Stores 439 479 580
Home Improvement Stores 95 123 180
Total Shopping Center-Inclined Stores $ 1,005 $ 1,194 $ 1,555
TOTAL RETAIL SALES $ 1,845 $ 2,237 $ 2,850
- --------------------------------------- ------------ ------------ ------------
Note: Sales and income figures are for the full year; population and household figures
are as of April 1 in each
respective year. P = Projected.
- ----------------------------------------------------------------------------------------
Source: U.S. Census of Population, 1990; U.S. Bureau of the Census Current Population
Reports:
Consumer Income P6-168, 174, 180, 184 and 168; Berna Miller with Linda Jacobsen,
"Household Futures", American Demographics, March 1995; Retail Trade sources
already cited; and Dougal M.
Casey: ICSC White Paper
- ----------------------------------------------------------------------------------------
</TABLE>
GFAO Sales have risen at a compound annual rate of approximately 6.8
percent since 1991 based on the following annual change in sales.
<TABLE>
<S> <C>
1990/91 2.9%
- --------- ---
1991/92 7.0%
- --------- ---
1992/93 6.6%
- --------- ---
1993/94 7.0%
- --------- ---
1994/95 5.5%
- --------- ---
</TABLE>
According to a recent study by the ICSC, GAFO Sales are expected to grow
by 5.0 percent per annum through the year 2000, which is well above the 4.1
percent growth for all retail sales. This information is presented in the
following chart.
-13-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETAIL SALES FORECASTS IN THE UNITED STATES, BY MAJOR STORE TYPE
- ---------------------------------------------------------------------------------
1994 2000P PERCENT CHANGE
-------------- -------------- --------------------
COMPOUND
STORE TYPE ($ BILLIONS) ($ BILLIONS) TOTAL ANNUAL
- ------------------------------ -------------- -------------- ---------- ---------
<S> <C> <C> <C> <C>
GAFO:
General Merchandise $ 283 $ 370 30.7% 4.6%
Apparel & Accessories 110 135 22.7% 3.5%
Furniture/Home Furnishings 120 180 50.0% 7.0%
Other Shoppers Goods 81 110 35.8% 5.2%
- ------------------------------ ------ ------ ---- ---
GAFO SUBTOTAL $ 592 $ 795 34.3% 5.0%
- ------------------------------ ------ ------ ---- ---
CONVENIENCE GOODS:
Food Stores $ 398 $ 480 20.6% 3.2%
Drugstores 82 100 22.0% 3.4%
- ------------------------------ ------ ------ ---- ---
CONVENIENCE SUBTOTAL $ 479 $ 580 21.1% 3.2%
- ------------------------------ ------ ------ ---- ---
Home Improvement 123 180 46.3% 6.6%
- ------------------------------ ------ ------ ---- ---
SHOPPING CENTER-INCLINED $1,194 $1,555 30.2% 4.5%
SUBTOTAL
- ------------------------------
All Other 1,043 1,295 24.2% 3.7%
- ------------------------------ ------ ------ ---- ---
TOTAL $2,237 $2,850 27.4% 4.1%
- ------------------------------ ------ ------ ---- ---
Note: P = Projected. Some figures rounded.
- ----------------------------------------------------------------------------------
Source: U.S. Department of Commerce, Bureau of the Census and Dougal M. Casey.
- ----------------------------------------------------------------------------------
</TABLE>
Changes in consumer spending patterns has resulted in noticeable trends in
the way malls are merchandised. Apparel still accounts for the majority of all
mall space at 46 percent, however, it has slipped from 48.3 percent in 1990.
The largest percentage decline was in Women's Ready to Wear with a 14.8 percent
drop to 18.4 percent. The table below sumamrizes these trends.
-14-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHOPPING CENTER INCLINED STORE SALES
1972-1995 (BILLIONS)
- ----------------------------------------------------------------------------
1972 1980 1990 1995
--------- ------ --------- ---------
<S> <C> <C> <C> <C>
Sales $ 257 $532 $1,000 $1,244
Compound Annual Growth
1972-1995 7.1%
1972-1980 9.5%
1980-1990 6.6%
1990-1995 4.3%
Source: U.S. Bureau of The Census and ICSC White Paper: Overstoring - A
Look at Retail Space and Sales Performance.
</TABLE>
From the above, we see that the most recent annual rate of growth
(1990-1995) in Shopping Center Inclined Sales of 4.3 percent has decreased to
less than half of what it was during the 1970s (9.5 percent). Projections
through December 2000 are for a compound growth rate of 4.5 percent.
Shopping centers have stabilized their share of shopping center inclined
sales. In 1972 this share was estimated at 48 percent. Since the early 1980s,
this share has stabilized in the 72 to 73 percent range. For example, the
estimated sales total of $894 billion of shopping center sales in 1995 was
equal to 72 percent of total inclined sales.
NON-STORE RETAILING
In 1995, non-store retailing accounted for $69.7 billion, or 3.92 percent
of total non-automotive retail sales. Of this total, $49.7 billion was
attributed to mail/telephone order catalog retailers. The balance is comprised
of coin-operated vending machines, house-to-house canvassing, party plan (i.e.
tupperware parties) telemarketing and other non-store venues such a home
shopping networks and electronic commerce.
<TABLE>
<CAPTION>
NON-STORE AND TOTAL RETAIL SALES
- -------------------------------------------------------------------------------------
YEAR TOTAL MAIL ORDER NON-STORE TOTAL NON-AUTO SALES % OF TOTAL
- -------- ------------------ -------------- ---------------------- -----------
<S> <C> <C> <C> <C>
1985 $15,848 mil. $28,275 mil. $1,071,828 2.64%
1990 $26,577 mil. $45,632 mil. $1,457,006 3.13%
1995 $49,710 mil. $69,667 mil. $1,778,915 3.92%
Source: Department of Commerce
</TABLE>
Mail order sales, currently at only 2.8 percent of total retail sales,
continue to grow. Estimates currently place on-line sales at $518.0 million or
1 percent of the mail order tally. Estimates place total on-line sales as high
as $6.6 billion by the year 2000. Since 1990, mail order sales have grown at an
annual rate of 9.9 percent which is double the average growth of non-automotive
retail sales and 1.7 times the average growth of GAFO stores sales. One measure
of this growing trend is the November/December ratio of mail order to GAF store
sales. In 1990, the ratio was 5.4 percent. By 1992 it had grown to 6.9 percent
and by 1995 it was 7.6 percent.
-16-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
INDUSTRY TRENDS
According to the NATIONAL RESEARCH BUREAU, there were a total of 42,953
shopping centers in the United States at the end of 1997. During this year, 823
new centers opened, a 1.9 percent increase over 1996 but less than the 895 that
opened in 1996. The greatest growth came in the small center category (less
than 100,000 square feet) where 431 centers were constructed. In terms of GLA
added, new construction in 1997 was up 2.5 percent resulting in an addition of
128.9 million square feet of GLA from approximately 5.1 billion to 5.23 billion
square feet.
<TABLE>
<CAPTION>
CENSUS DATA: HISTORICAL TRENDS
- ------------------------------------------------------------------------------------------------------------------------
TOTAL AVERAGE AVERAGE % CHANGE % INCREASE
NO. OF TOTAL SALES GLA PER SALES PER IN SALES IN TOTAL
YEAR CENTERS GLA (BILLIONS) CENTER SQ. FT. PER SQ. FT. NEW CENTERS CENTERS
- --------- ----------- ----------------- ------------------ --------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1987 30,641 3,722,957,095 $ 602,294,426 121,502 $ 161.78 2.41% 2.145 7.53%
1988 32,563 3,947,025,194 $ 641,096,l793 121,212 $ 162.43 0.40% 1,922 6.27%
1989 34,683 4,213,931,734 $ 682,752,628 121,498 $ 162.02 -0.25% 2,120 6.51%
1990 36,515 4,390,371,537 $ 706,380,618 120,235 $ 160.89 -0.70% 1,832 5.28%
1991 37,975 4,563,791,215 $ 716,913,157 120,179 $ 157.09 -2.37% 1,460 4.00%
1992 38,966 4,678,527,428 $ 768,220,248 120,067 $ 164.20 4.53% 991 2.61%
1993 39,633 4,770,760,559 $ 806,645,004 120,373 $ 169.08 2.97% 667 1.71%
1994 40,368 4,860,920,056 $ 851,282,088 120,415 $ 175.13 3.58% 735 1.85%
1995 41,235 4,967,160,331 $ 893,814,776 120,460 $ 179.94 2.75% 867 2.15%
1996 42,130 5,100,605,534 $ 933,918,275 121,068 $ 183.10 1.75% 895 2.17%
1997 42,953 5,229,490,942 $ 980,026,364 121,749 $ 187.40 2.35% 823 1.95%
Compound
Annual
Growth +3.44% +3.46% +4.99% N/A +1.48% N/A N/A N/A
Source: National Research Bureau Shopping Center Database and Statistical Model
</TABLE>
From the chart we see that both total GLA and total number of centers have
increased at a compound annual rate of approximately 3.5 percent since 1987.
New construction was up 2.5 percent in 1996, a slight decrease over 1996 but
still well below the peak year 1987 when new construction increased by 7.5
percent. California was by far the most active state with 109 new centers
opening, followed by New Jersey (55), Georgia (49) and New York (42).
-17-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Among the 42,953 centers in 1997, the following breakdown by size is in
evidence.
<TABLE>
<CAPTION>
U.S. SHOPPING CENTER INVENTORY, YE DECEMBER 1997
- ------------------------------------------------------------------
NUMBER OF CENTERS SQUARE FEET (MILLIONS)
------------------ ----------------------
SIZE RANGE (SF) AMOUNT PERCENT AMOUNT PERCENT
- ------------------------ -------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Under 100,000 26,928 62.7% 1,318.1 25.2%
100,001 -- 200,000 10,400 24.2% 1,430.9 27.4%
200,001 -- 400,000 3,595 8.4% 959.5 18.3%
400,001 -- 800,000 1,324 3.0% 736.4 14.1%
800,001 -- 1,000,000 316 0.7% 284.8 5.4%
Over 1,000,000 390 0.9% 499.7 9.6%
------ ---- ------- ----
TOTAL 42,953 100.0% 5,229.5 100.0%
</TABLE>
- --------
Source: National Research Bureau (some numbers slightly mounded).
Empirical data shows that the average GLA per capita is increasing. In
1997, the average for the nation was 19.57. This was up nearly 3.5 square feet
or 21.6 percent from 16.1 in 1988. Among states, Delaware surpassed Florida and
now has the highest GLA per capita with 29.12 square feet. South Dakota has the
lowest at 9.12 square feet. Per capita GLA for regional malls (loosely defined
as all centers in excess of 400,000 square feet) has also been rising from 5.0
in 1988 to 5.7 in 1997. This information is presented on the following chart.
<TABLE>
<CAPTION>
GLA PER CAPITA
- --------------------------------------------------------------------------------
YEAR ALL CENTERS REGIONAL MALLS*
- ---------------------------------------- ------------- ----------------
<S> <C> <C>
1988 16.1 5.0
1989 17.0 5.2
1990 17.7 5.3
1991 18.1 5.3
1992 18.3 5.5
1993 18.5 5.5
1994 18.7 5.4
1995 18.9 5.5
1996 19.2 5.6
1997 19.6 5.7
</TABLE>
- ----------
Source: International Council of Shopping Center: The Scope of The Shopping
Center Industry and National Research Bureau
* Centers in excess of 400,000 square feet.
While per capita GLA has continued to increases, a key issue is that the
rate of increase has slowed. Per capita space has increased by only slightly
under 2.0 square feet during the period 1990 through 1997. This trend is
manifested in the pace of inventory increases from 165 million square feet per
year between 1972 and 1980, to 143 million square feet per year (1980-1990),
and 120 million square feet per year (1990-1997).
- --------------------------------------------------------------------------------
18
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Construction data also indicates that while the overall pace of shopping
center openings has eased, the pace of large store (50,000 to 200,000 square
feet) construction has more than doubled. During the more recent five year
period, big boxes have accounted for 41 percent of inventory additions.
TRENDS IN INVENTORY GROWTH*
1972-1995
<TABLE>
<CAPTION>
1972-1980 1980-1990 1990-1995
----------- ----------- ----------
<S> <C> <C> <C>
Shopping Center Space Added 164 143 115
Free-Standing Stores 36 34 79
(50,000 - 200,000 SF) --- --- ---
Total 200 177 194
--- --- ---
Big Box Allocation of Inventory Growth 18% 19% 41%
</TABLE>
- --------
* Average Annual Increase (Million Square Feet)
Source: NRB and F.W. Dodge
FW Dodge reports that total construction starts increased by 20 percent in
1997 to 11,167 projects. In terms of square footage, the increase was
approximately 7.0 percent as detailed below:
NATIONWIDE RETAIL CONSTRUCTION STARTS
<TABLE>
<CAPTION>
1996 1997
--------------------- --------------------
STARTS SF (000) STARTS SF (000)
-------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Malls 12 14,274 10 9,266
Shopping Centers 1,158 43,259 1,199 38,673
Free-standing Stores 2,981 120,799 3,331 127,962
Restaurants/Convenience 2,817 15,370 2,759 17,592
Other Retail 2,331 29,399 3,868 45,149
----- ------- ----- -------
Total 9,299 223,101 11,167 238,642
===== ======= ====== =======
</TABLE>
The National Research Bureau reports that growth in the power center
component continues to slow. The number of centers reporting to be positioned
as power centers grew by 61 percent between 1994 and 1995. However, this rate
slowed to 31 percent in 1996 and 18 percent in 1997. During 1997, 69 "new"
power centers opened with 63 percent representing actual first time openings
and 37 percent coming from renovation, expansion or repositionings.
In their publication, NRB/Shopping Centers Today 1997 Shopping Center
Census, the National Research Bureau reports that overall retail conditions
were good in 1997. Total shopping center sales increased 4.9 percent to $980.02
billion in 1997, up from $933.81 billion in 1996.
- --------------------------------------------------------------------------------
19
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
SELECTED SHOPPING CENTER STATISTICS
1990-1997
<TABLE>
<CAPTION>
COMPOUND
ANNUAL
1990 1995 1996 1997 GROWTH
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Retail Sales in Shopping Centers* $706.40 $893.81 $933.92 $980.03 4.8%
Total Leasable Area** 4.39 4.97 5.10 5.23 2.5%
Unit Rate $160.89 $179.94 $183.10 $187.40 2.2%
</TABLE>
- --------
* Billions of Dollars
** Billions of Square Feet
Source: National Research Bureau
According to the National Research Bureau, total sales in shopping centers
have grown at a compound rate of 5.0 percent since 1987. As described,
aggregate sales were up 4.9 percent nationwide from $933.9 billion (1996) to
$980.0 billion (1997). In 1997, average sales were $187.40 per square foot, up
2.3 percent over 1996 and 2.2 percent (compound growth) over the past several
years. The biggest gain came in the super-regional category (more than 1.0
million square feet) where sales were up 3.6 percent to $214.90 per square
foot. Nonetheless, with compound sales growth lagging the growth in GLA, there
is an indication of overbuilding by this broad measure.
The following chart tracks the change in average sales per square foot by
size category.
SALES TRENDS BY SIZE CATEGORY
1993-1997
<TABLE>
<CAPTION>
AVERAGE SALES PER SQUARE FOOT
COMPOUND
ANNUAL
CATEGORY 1993 1994 1995 1996 1997 GROWTH
- ------------------------- ---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Less than 100,000 SF $193.10 $199.70 $204.94 $209.74 $215.90 +2.8%
100,001 to 200,000 SF $156.18 $161.52 $166.00 $169.56 $173.98 +2.7%
200,001 to 400,000 SF $147.57 $151.27 $153.96 $154.07 $155.99 +1.4%
400,001 to 800,000 SF $157.04 $163.43 $168.21 $170.14 $172.39 +2.4%
800,001 to 1,000,000 SF $194.06 $203.20 $210.40 $213.93 $219.38 +3.1%
More than 1,000,000 SF $183.90 $193.13 $201.05 $207.44 $214.90 +4.0%
------- ------- ------- ------- ------- ----
TOTAL $169.08 $175.13 $179.94 $183.10 $187.40 +2.6%
======= ======= ======= ======= ======= ====
</TABLE>
- --------
Source: National Research Bureau
Per capita retail sales were $3,667 in the United States in 1997, up 4.1
over $3,521 in 1996. The highest per capita sales were in Florida ($6,039)
while the lowest were found in South Dakota ($1,665).
- --------------------------------------------------------------------------------
20
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Consumers demand for value and selection have led to an unprecedented
growth of the category killer, superstore and warehouse club concepts. In its
annual industry report, Discount Store News has identified the nation's top 200
merchants. Overall, these merchants posted sales of $336.6 billion, up 7.5
percent over 1995. The chart below highlights the year-to-year performance
along with 1997 projections.
<TABLE>
<CAPTION>
SALES BY SEGMENT (IN BILLIONS $)
- ----------------------------------------------------------------------------------------------------------------------
1995 1996 MARKET SHARE % CHANGE 1997 (PROJ.)
----------- ----------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Full-Line Discount Stores(1) ............. $ 150.9 $ 162.3 48% 7.6% $ 178.5
Specialty Discounters(2) ................. 67.5 76.3 23% 13.1% 87.5
Warehouse Clubs .......................... 41.1 43.5 13% 5.8% 45.9
Other Discount Mass Merchants(3) ......... 30.8 31.8 9% 5.0% 33.4
Off-Price Apparel Chains ................. 15.8 16.9 5% 6.2% 17.9
Jewelry/Hard Lines Retailers ............. 6.9 5.9 2% (15.0%) 5.1
-------- -------- -- ----- --------
Total Market ............................. $ 313.0 $ 336.6 100% 7.5% $ 368.5
-------- -------- --- ----- --------
</TABLE>
- --------
(1) Includes full-line discount department stores, supercenters, closeouters
and single-price retailers
(2) Includes home, automotive, crafts, toys, office supplies, book, computer
superstores, baby superstores, pet supplies, consumer electronics and
sporting goods specialty stores.
(3) Includes Sears, Ward, QVC, HSN and variety stores.
Source: DSN Research
As can be seen, the largest segment is comprised of full line discount
stores which was to 7.6 percent to $162.3 billion, or 48 percent of all sales.
Excluding Wal-Mart, by far the industry leader, 75 retailers in the DSN top 200
posted double digit sales gains. The biggest winners were baby superstores
(+47.2%), book superstores (+35.9%), and home furnishing superstores (33.1%).
Among the supercenter categories, Wal-Mart Supercenter's $19.3 billion in
sales, up 67.7 percent over 1995, accounted for more than half of the segment's
$36.2 billion in sales.
The Urban Land Institute, in the 1997 edition of Dollars and Cents of
Shopping Centers, reports that vacancy rates range from a low of 2.0 percent in
neighborhood centers to 14.0 percent for regional malls. Super-regional malls
reported a vacancy rate of 7.0 percent and community centers were 4.0 percent
based upon their latest survey.
MARKET SHIFTS -- CONTEMPORARY TRENDS IN THE RETAIL INDUSTRY
The mid 1990s have continued the trend of profound changes in the retail
industry. Department stores have emerged from the troubles of late 1980s and
early 1990s to be stronger than ever. Continued consolidations in this industry
segment should continue. Specialty retailers continue to experience a shakeout
of weaker, out of favor formats while discounters gain market share. Power
centers, the growth vehicle of the last several years have reached a point of
saturation that has undermined investor's interest in this product. Outlet
centers are still struggling, however, the super-regional mega-center appears
poised to be the hot concept for the next few years.
Some of the important recent developments in the industry can be
summarized as follows:
- --------------------------------------------------------------------------------
21
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o MONTGOMERY WARD & CO. -- With 400 stores in 43 states filed Chapter 11
in July 1997. They have announced the closure of 48 units which are
being acquired by Klaff Realty LP in partnership with the Lubert-Adler
Real Estate Opportunity Fund. Ward's reported a loss of $1.17 billion
in 1997, nearly five times the $237 million it lost in 1996.
o STRAWBRIDGE & CLOTHIER -- 128 year old Philadelphia based institution
sold 13 unit department store division to May Company. Its 27 unit
discount CLOVER division went to Kimco which is putting Kohl's in
several of the units, their initial foray into the East.
o RICH'S -- 26 unit New England based regional chain closes.
o Discounters are being attacked from two sides. Big Box category
killers have rapidly expanded on one side. Alternatively, full service
department stores have become more promotional, closing the price
advantage gap discounters have traditionally enjoyed. For example,
BRADLESS and CALDOR remain in bankruptcy and AMES continues to look for
the right strategy to compete against Wal-Mart, Kmart, Target and now
Kohl's, the latter two of which are aggressively expanding in the
Mid-Atlantic and northeast regions. Bradless and Caldor expect to
emerge from Chapter 11 in 1998 and there has been some talk of a
merger.
SPECIALTY RETAILERS
Troubles continues for several specialty retailers as the protracted
shake-out continued with several Chapter 11 filings, downsizings, and some
cases, out-right liquidations. Among the more notable:
o STRAUSS DISCOUNT AUTO filed (6/98) Chapter 11 less than one month
after a private investment group bought the chain from Merrill Lynch.
Founded in 1919, the New Jersey based company operates 111 units in the
mid-Atlantic region.
o LECHTERS announced (3/98) that it will close 60 to 70 mall based
stores in 1998 but open 25 new units in strip centers.
o THE LIMITED INC. announced (2/98) that it will close all but one of
its Henri Bendel stores, spin-off Abercrombie & Fitch to shareholders
and close 200 of its underperforming stores in its various apparel
divisions. This is in addition to the 200 stores it began closing in
December. In the largest revamping since 1969, Limited expects to close
about 10 percent of its stores.
o EGGHEAD SOFTWARE announced (1/98) it will close all 80 of its stores
in the first quarter of 1998 and sell its products exclusively over the
internet. Egghead thus becomes the first chain retailer to give up its
stores base for cyberspace sales.
- --------------------------------------------------------------------------------
22
<PAGE>
NATIONAL RETAILMARKET OVERVIEW
- --------------------------------------------------------------------------------
o YES CLOTHING COMPANY filed for bankruptcy (1/98) under Chapter 11.
The company had recapitalized in 1996 when the designer and co-founder
of Guess Inc., George Marciano, acquired 80 percent of the company.
o WINKLEMAN'S, a division of Petrie Retail, announced (1/98) that they
will liquidate the 49 store chain. Petrie has been ooperating under
Chapter 11 since 10/95 and has been trying to sell the chain for some
time. A letter of intent to purchase with Crowley, Milner & Col. was
recently withdrawn.
o ONE PRICE CLOTHING STORES, announced (1/98) they will close 75
performing stores and eliminate 6 percent of its workforce as part of a
restructuring plan. The company has 688 units in the United States,
Puerto Rico, and U.S. Virgin Islands.
o Cleveland based HOMEPLACE, a 98-unit, privately held chain, filed for
Chapter 11 (1/98) putting their expansion plans on hold until they can
sort out their financial situation.
o THE WIZ INC., the New York area based electronics retailer filed for
bankruptcy (12/97) saying it will close 17 of its 50 Nobody Beats The
Wiz stores.
o BERNARD CHAUS INC., the struggling maker of Chaus women's clothing and
Nautica Sportswear, announced (11/97) it would close 20 of its 21
outlet stores.
o HOME EXPRESS will liquidate its 12 remaining housewares and linens
stores by October 1997. The chain, which at one time had 33 units, had
filed Chapter 11 in February 1996.
o LEVITZ FURNITURE INC. filed for Chapter 11 on September 5, 1997. The
company operates 68 showrooms and 61 smaller stores in 26 states. It
will initially close 18 stores.
o KMART will shed BUILDERS SQUARE for $10.0 billion to Leonard Green &
Partners who will merge it with HECHINGERS.
o PAYLESS CASHWAYS filed Chapter 11 in July 1997, but emerged on
December 2, 1997.
o WAL-MART announces closure of 7 year old BUD'S chain in July 1997.
o WOOLWORTH announces closure of all remaining (400) variety stores in
July 1997.
o SERVICE MERCHANDISE announces (4/97) it would close 60 of its 400
stores.
o CONSOLIDATED STORES announced (3/97) it is scrapping its ALL FOR ONE
DOLLAR chain (175 units).
o GROSSMANS INC., a home improvement retail chain, filed Chapter 11 in
March 1997.
- --------------------------------------------------------------------------------
23
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o OSHMANS SPORTING GOODS announces closure (2/97) of 50 of its 84
conventional stores to concentrate on its superstore concept.
o LINEN SUPERMARKET (80 units) liquidated in June 1997.
o ROSES AUTO STORES filed Chapter 11 in June 1997 and immediately
closed all 62 stores. It then reopened 6.
o LURIA'S, the 99-year old apparel and hard goods chain filed Chapter
11 in August 1997 and is closing 11 of its 17 stores. The chain at
one time had 50 locations throughout Florida.
o ALL ABOUT SPORTS filed Chapter 11 in May 1997 and immediately
announced plans to liquidate.
o MCCRORY CORP. is seeking court approval to close 307 of its 461
remaining stores and liquidate. At one time it ran 820 stores in
1992 when it filed for protection.
o LIMITED will close 200 of its 4,500 units during 1997.
o HANDY ANDY - Regional home improvement chain closed remaining 54
stores.
o HERMAN'S liquidated all of its sporting goods stores in the
northeast (5/96).
o BARNEY'S - High profile New York based upscale retailer filed
Chapter 11.
o MERRY-GO-ROUND liquidated and closed its remaining 560 units
including Chess King, Dejaiz and Cignal units.
o JAMESWAY - Regional discount department store chain in the
northeast liquidated.
o INCREDIBLE UNIVERSE - After aggressive foray into this mega store
format (185,000 plus and minus square feet), TANDY closes division
down. Tandy will also close the remaining 53 units of its
struggling MCDUFF ELECTRONICS chain and 19 of its 108 COMPUTER CITY
units.
o ERNST HOME CENTERS - Board approved liquidation of 53-unit chain.
o KIDS MART - 144-unit childrens apparel chain rumored to be close to
filed Chapter 11 in January 1997 and liquidated in April 1997.
o SUN TELEVISION AND APPLIANCE is considering closing 9 of its 50
stores citing losses.
o BEST having sold its remaining units to Shottenstein Corp. in
November 1996, the new owner initiated a liquidation of the former
catalog showroom.
o AUTOWORKS (129 units) - Less than one month after filing Chapter 11
in July 1997, Hahn Automotive Warehouse got bankruptcy court
permission to liquidate the inventory of its 83 unit subsidiary.
- --------------------------------------------------------------------------------
-25-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o RICKEL HOME CENTERS - 86 unit home improvement chain filed Chapter
11 and announced (10/97) they will close its remaining 49 units in
New York, New Jersey, Pennsylvania, and Delaware, laying off 2,000
people.
o HOUSE OF FABRICS filed Chapter 11 and closes 86 of its 361 units.
o DISCOVERY ZONE - Fast expanding childrens' entertainment and
recreation oriented concept filed Chapter 11.
o BEN FRANKLIN - Arts and crafts retailer filed Chapter 11 and
subsequently ordered to liquidate.
o KUPPENHEIMER - Apparel retailer files Chapter 11 and plans to close
half of its 87 units in New Jersey, New York, Pennsylvania, and
Delaware, laying off 2,000 people.
o COUNTY SEAT - 740-unit apparel retailer has filed Chapter 11 and
will close 200 units. THE WET SEAL has made a proposal to acquire
508 of the stores.
o ALL FOR A DOLLAR - 111-unit close-out chain has filed Chapter 11.
SPECIALTY RETAILERS -- MERGERS/ACQUISITIONS
Mergers and consolidations among specialty retailers, drug, supermarket
and apparel categories continue. Evidence of changes among the movie business
is also a recognized trend.
o COMPUSA, INC. (6/98) has agreed to buy COMPUTER CITY from Tandy
Corp. for $275 million in cash and notes. CompUSA, the nation's
largest PC chain, operates 160 stores. Computer City has 100 units
and had sales of $1.9 billion.
o WOOLWORTH announced (5/98) their intention to acquire THE SPORTS
AUTHORITY for $570 million in stock and the assumption of $179
million in debt. Sports Authority operates 203 stores with annual
revenues of $1.4 billion.
o ROYAL AHOLD N.V. announced (5/98) their intent to acquire Giant
Foods Inc. in a $2.6 billion deal. Giant Foods operates 177 units
in the Mid-Atlantic states and had 1997 revenues of $4.2 billion.
o CLAIRE'S STORES announced (3/98) they will buy Lux Corporation, a
specialty unisex apparel chain for teenagers which operates 56
units under the name Mr. Rags.
o STAPLES agreed (4/98) to acquire Quill Corp., a privately held
office supplies company for $685 million in stock. Quill sells
through mail order catalogs, the Internet, and telemarketing.
o CVS CORP. announced (2/98) they plan to merge with ARBOR DRUGS in a
$1.48 billion stock-swap to create the nation's largest drug store
company with $15 billion in revenues and 4,100 stores in 25 states.
- --------------------------------------------------------------------------------
-26-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o PETCO has announced (9/97) their intended acquisition of PetCare,
an 81 store privately held chain based in Chicago.
o JITNEY JUNGLE STORES OF AMERICA (105 units) will acquire Delchamps
(118 units).
o CVS DRUG acquired Revco in February 1997 with combined total of
4,000 stores and $10 billion in sales.
o STAPLES proposed merger with OFFICE DEPOT in a $3.4 billion dean
nixed by FTC.
o TOYS R US acquired BABY SUPERSTORE in $407 million deal (2/97).
o MELVILLE sold KAY BEE TOYS to CONSOLIDATED STORES adding to its Toy
Liquidators, Toys Unlimited and Amazing Toys close-out units for
$315 million. Melville has officially changed its name to CVS Corp.
o SAFEWAY to acquire VON'S in a $1.65 billion deal, creating an
operation with 1,400 stores, 139,000 employees and $22.0 billion in
revenues. They will still trail the industry leader, KROGER, in
size.
o JC PENNEY, parent of THRIFT DRUG, announced they will acquire FAY'S
INC., operator of 272 units, making Thrift the nation's eight
largest chain. Penney's acquisition of ECKERD DRUG has been cleared
by the FTC.
o CVS CORP. sold BOB'S STORES in late 1997 to a group led by Bob's
management and Citicorp Venture Capital Ltd.
o SEARS & ROEBUCK acquired the 61 unit ORCHARD SUPPLY HARDWARE chain
for $415 million.
o WABAN, INC. - to spin off BJ'S WHOLESALE CLUB and change its name
to its other wholesale club division, HomeBase.
o FOOD LION - announced its pending acquisition of KASH N KARRY in a
$341.0 million deal.
o PETSMART - Announced plans to acquire PET CITY HOLDINGS, the
largest pet superstore chain in the UK.
o TJX COMPANIES - announced intent to sell its CHADWICK'S OF BOSTON
catalog to Brylane LP.
o REVCO - completed its tender offer for BIG B drug store chain.
o QUALITY FOOD CENTERS - Bellevue, WA based supermarket chain to
acquire 56-unit HUGHES FAMILY MARKETS for $360 million.
o REITs continued their aggressive acquisition posture during the year
being the most active buyer of product. Between 1994 and 1997, REITs
increased their ownership from 2.5 percent to 6.6 percent of all shopping
centers. Among regional malls, they own 23 percent of all centers.
- --------------------------------------------------------------------------------
-28-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o Simon DeBartolo has acquired DeBartolo Realty Corp. and derailed
the Wells Park JVJ/J.W. O'Connor REIT merger with the acquisition
of Retail Property Trust. Simon then teamed up with Macerich to
acquire 12 malls from ERE Yarmouth on behalf of IBM in December
1997. In February 1998 they announced a $5.781 billion merger with
Corporate Property Investors.
o Kimco and The Price REIT have merged (6/98) to form one of the
nation's largest shopping center REITs with nearly 51.0 million
square feet in 390 centers in 40 states and a market capitalization
of $3.4 billion.
o Trizec Hahn is selling 20 of their top performing malls to
Westfield and The Rouse Co. in a $2.55 billion transaction. The
properties contain 12.5 million square feet.
o Newport Beach, CA based Donahue Schriber has merged with
Diversified Shopping Centers which has created a combined company
with assets of $500 million.
o Regency Realty has been growing through large acquisitions. On
March 7, 1997 it acquired all of the assets of Branch Properties
for $232.4 million. On March 11, 1998 it acquired the real estate
assets of the Midland Group consisting of 21 centers and a
development pipeline of 11 centers.
o Mark Centers Trust announced (April 16, 1998) a definitive
agreement to merge the company with RD Capital, creating a combined
company with 51 retail properties and 5 multi-family apartments in
16 states.
o Kimco Realty Corp. announced (April 27, 1998) that it reached an
agreement with Venture Stores to purchase their leasehold position
at 89 locations including 30 properties pursuant to a master lease
with Metropolitan Life.
o Excel Realty Trust and New Plan Realty Trust have agreed to merge
(May 1998) in a $1.36 billion stock swap that would create the
nation's largest strip center REIT. The combined company is to be
known as New Plan Excel Realty Trust Inc. and would own 332
properties with a market capitalization of $3.5 billion.
o Consolidation in the Outlet Industry has been predicted for some
time. After announcing their intent to merge in November 1997,
Prime Retail completed its merger with Horizon Group Inc. in June
1998. As a result of the deal, Prime has integrated 22 of Horizon's
top performing outlet centers.
o Mergers and acquisitions in the outlet industry are expected to
continue. It is estimated that 13 developers own some 335 outlet
centers; the industry's five REITs collectively own 165, leaving
125 owners with the remaining 170 centers. Value Retail News
reports that over the period 1992 through 1997, twelve buyers have
acquired 103 centers from 25 owners (inclusive of Prime's pending
first quarter 1998 purchase of 20 centers from Horizon).
- --------------------------------------------------------------------------------
-29-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o Super-regional value-oriented megamalls such as The Mills concept
are expected to be one area of growth over the next several years.
This hybrid concept incorporates the diverse mix of super-regional
malls with the value-oriented aspects of factory outlets, category
killers, off-price merchants and retailer clearance outlets under
one roof. In addition, they add an entertainment component that is
designed to extend the stay of the patron from approximately one to
one and one-half hours in a traditional mall format to three to
five hours. These malls are at least 1.0 million square feet
although the Mills design averages 1.5 million square feet. They
can contain between 7 and 20 anchors and have trade areas
stretching upwards to 100 miles. According to Value Retail News, at
the end of 1997 there were 13 megamalls open with a total of 16.7
million square feet. Through 2001, there are an additional 16
megamalls planned totaling 20.3 million square feet.
INVESTMENT CRITERIA AND INSTITUTIONAL INVESTMENT PERFORMANCE
Investment criteria for mall properties range widely. Many firms and
organizations survey individuals active in this industry segment in order to
gauge their current investment criteria. These criteria can be measured against
traditional units of comparison such as price (or value) per square foot of GLA
and overall capitalization rates.
The price that an investor is willing to pay represents the current or
present value of all the benefits of ownership. Of fundamental importance is
their expectation of increases in cash flow and the appreciation of the
investment. Investors have shown a shift in preference to initial return,
placing probably less emphasis on the discounted cash flow analysis (DCF). A
DCF is defined as a set of procedures in which the quantity, variability,
timing, and duration of periodic income, as well as the quantity and timing of
reversions, are specified and discounted to a present value at a specified
yield rate. Understandably, market thinking has evolved after a few hard years
of reality where optimistic cash flow projections did not materialize. The DCF
is still, in our opinion, a valid valuation technique that when properly
supported, can present a realistic forecast of a property's performance and its
current value in the marketplace.
Equitable Real Estate Investment Management, Inc. reports in their
EMERGING TRENDS IN REAL ESTATE - 1998 that their respondents give retail
investments generally poor performance forecasts in their latest survey due to
the protracted merchant shakeout which will continue into 1997 and the general
overbuilding which has had a fundamental change on the industry. While
dominant, Class A malls are still considered to be one of the best real estate
investments anywhere, only 34 percent of the respondents recommended buying
malls. This was up from 20 percent in 1997.
- --------------------------------------------------------------------------------
-31-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
The following chart summarizes the results of their current survey.
<TABLE>
<CAPTION>
RETAIL PROPERTY RANKINGS AND FORECASTS
- -----------------------------------------------------------------------------------------------------
INVESTMENT POTENTIAL PREDICTED VALUE GAINS
-------------------------- 1998 -----------------------------------
PROPERTY TYPE RATING(1) RANKING(2) RENT CHANGE 1 YR. 5 YRS. 10 YRS.
- ------------------- ----------- ------------ ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Regional Malls 4.6 7th +0.6% +2.2% +11.9% +22.9%
Power Centers 3.9 8th -0.2% -0.4% 8.5% 17.1%
Community Centers 5.4 5th 1.8% 3.4% 12.7% 23.9%
</TABLE>
- --------
(1) Scale of 1 to 10
(2) Based on 9 property types
Source: Emerging Trends in Real Estate -- 1998
REGIONAL MALLS
It is felt that price declines in malls as an investment have bottomed out
and are slowly recovering. Thirty-four percent of all respondents recommend
buying up from 20 percent last year. However, interviewees regard malls as more
of a hold than a buy and generally counsel against selling at this time. Malls
now rank 7th overall in investment appeal, 9th in development potential, and
8th in overbuilding risk. Value gains of 2.2 percent are forecasted this year,
their 22.9 percent over ten years does not stack up well against other
investment choices. While dominant malls in strong growth markets continue to
be prime investments, older malls are clearly at risk as they are vulnerable to
new competition and have high maintenance costs which cannot compete with newer
open air centers that operate much more cost effectively.
POWER CENTERS
This ten year old phenomenon has pushed itself into a lowly 3.9 investment
ranking (last) and a high overbuilding risk (second). Anticipated rent and
value changes will be essentially flat (-.2 percent and _.4 percent,
respectively). Long term appreciation lacks any real appeal and interviewees
overwhelmingly recommend selling the centers and show little interest in buying
at this time.
COMMUNITY CENTERS
Emerging Trends cites that with larger retail formats struggling, certain
neighborhood and community centers may be well positioned to excel over the
next few years. Investment and development potential rank 5th and 6th,
respectively. Value gains of 3.4 percent are forecasted for 1998 along with
rent increases of 1.8 percent (1 year). Over the long term, a 23.9 percent
value gain is forecasted. Centers with "super" grocery stores provide a
convenient alternative for time pressed shoppers which adds to their appeal.
The NCREIF PROPERTY INDEX represents data collected from the Voting
Members of the National Council of Real Estate Investment Fiduciaries. As shown
in the following table, data through the fourth quarter of 1997 shows that the
retail sub-index posted a total return of 8.40 percent for the year versus a
13.74 percent return for the Index Aggregate. The fourth quarter appreciation
return of .83 percent was not enough to offset the negative return for the
year. On
- --------------------------------------------------------------------------------
32
<PAGE>
NATIONAL RETAILMARKET OVERVIEW
- --------------------------------------------------------------------------------
balance, positive trends are in evidence by the fact that restructuring in the
retail industry is better positioning the centers to meet growing consumer
demands influenced by the strong economy and growing consumer confidence.
Retail sales continue to outpace inflation and there are signs that
construction is slowly subsiding.
<TABLE>
<CAPTION>
RETAIL PROPERTY RETURNS
NCREIF INDEX (%)
- ------------------------------------------------------
PERIOD INCOME APPRECIATION TOTAL
- ----------------- -------- -------------- ------
<S> <C> <C> <C>
4th Qtr. 1997 2.13 .83 2.96
One Year 8.53 -.12 8.40
Three Years 8.29 -2.41 5.73
Five Years 7.95 -2.21 5.61
Ten Years 7.21 -1.51 5.62
</TABLE>
- --------
Source: Real Estate Performance Report
National Council of Real Estate Investment Fiduciaries
Retails total return of 8.40 percent of year ending 12/31/97 was
substantially behind the other investment categories including Apartment
(12.75%), Office (17.35%), R&D (26.01%), and Warehouse (13.77%). For the year,
retail property performance was negatively impacted by size with neighborhood
centers posting the best total performance, while regional malls were laggards.
<TABLE>
<CAPTION>
RETAIL SEGMENT PERFORMANCE
- -----------------------------------------------------------------------
CATEGORY INCOME APPRECIATION TOTAL
- ------------------------------ -------- -------------- ----------
<S> <C> <C> <C>
Neighborhood N/A N/A 10.54%
Community N/A N/A 9.73%
Regional Malls N/A N/A 9.09%
Super Regional Malls N/A N/A 6.31%
</TABLE>
Private investor underwriting has become more conservative with respect to
vacancy allowances, growth rates (rent, sales) and occupancy cost tolerance
levels. The reduced spread between cash returns and internal rate of returns is
evidence that buyers seek a higher proportion of their expected return from
income rather than from appreciation.
The Cushman & Wakefield Investor Survey also confirms trends that
capitalization rates for most retail categories have risen. Regional malls have
been the most affected. This is partly due to the fact that a large number of
malls are currently available for sale.
The Urban Land Institute, in their 1997 REAL ESTATE FORECAST -- MID YEAR
OUTLOOK, projects very small increases in effective rents through mid-1998 for
both regional malls and strip shopping centers. Even though rent increases will
likely be higher than 1996, they will likely not keep pace with inflation. In
fact, retail garnered the bottom two spots in ULI's ranking
- --------------------------------------------------------------------------------
33
<PAGE>
NATIONAL RETAILMARKET OVERVIEW
- --------------------------------------------------------------------------------
of 10 property types in measuring their expected performance change. The
downward pressure on rents has been attributed to the expansion of big-box
retailers, which has resulted in a changing tenant base that requires a
different type of space then exists in much of the older retail stock.
REAL ESTATE INVESTMENT TRUST MARKET (REITS)
To date, the impact of REITs on the retail investment market has been
significant, although the majority of Initial Property Offerings (IPOs)
involving regional malls, shopping centers, and outlet centers did not enter
the market until the latter part of 1993 and early 1994. It is noted that
REIT's have dominated the investment market for apartment properties and have
evolved into a major role for retail properties as well.
Currently, there are in excess of 300 REITs in the United States, more
than three-quarters of which are publicly traded. The advantages provided by
REITs, in comparison to more traditional real estate investment opportunities,
include the diversification of property types and location, increased liquidity
due to shares being traded on major exchanges, and the exemption from corporate
taxes when 95.0 percent of taxable income is distributed.
There are essentially three kinds of REIT's which can either be
"open-ended", or Finite-life (FREITs) which have specified liquidation dates,
typically ranging from eight to fifteen years.
o EQUITY REITS center around the ownership of properties where ownership
interests (shareholders) receive the benefit of returns from the
operating income as well as the anticipated appreciation of property
value. Equity REITs typically provide lower yields than other types of
REITs, although this lower yield is theoretically offset by property
appreciation.
o MORTGAGE REITS invest in real estate through loans. The return to
shareholders is related to the interest rate for mortgages placed by
the REIT.
o HYBRID REITS combine the investment strategies of both the equity and
mortgage REITs in order to diversify risk.
The influx of capital into REITs has provided property owners with a
significant alternative marketplace of investment capital and resulted in a
considerably more liquid market for real estate. In 1997 REITs became the
largest equity owner of commercial real estate, surpassing pension funds for
the first time. The total value of U.S. commercial real estate is $3.47
trillion of which $1.99 trillion is non-institutional grade property and $1.48
trillion is institutional grade.
Publicly traded REITs increased their total market capitalization from $56
billion as of December 31, 1991, to $159.18 billion as of April 1998.
- --------------------------------------------------------------------------------
34
<PAGE>
NATIONAL RETAILMARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE B -- MARKET CAPITALIZATION
- ----------------------------------------------------------------------------------------------
12/31/96 12/31/97
-------------------------------- ------------------------------
NO. OF MARKET NO. OF MARKET
SECURITIES CAPITALIZATION* SECURITIES CAPITALIZATION
------------ ----------------- ------------ ---------------
<S> <C> <C> <C> <C>
ALL RETAIL REITS ......... 43 $20,190.7 47 $28,730.1
Strip Centers .......... 26 $11,145.8 27 $15,772.2
Regional Malls ......... 10 $ 7,349.0 12 $10,418.7
Outlet Centers ......... 6 $ 1,300.2 6 $ 1,585.3
</TABLE>
- --------
* Number reported in thousands.
Source: Realty Stock Review
As can be seen, the 47 REIT securities at year end 1997 had a market
capitalization of approximately $28.7 billion which was up from $20.2 billion
at year end 1996. Total returns of nearly 17.0 percent lagged the stock market
as a whole and also lagged the 18.9 percent return for all REITs. This is in
contrast to the nearly 40 percent total return in 1996 when retail REITs
outperformed the market. The strip center segment led the way this year with
total returns of 21.4 percent, followed by regional malls 13.7 percent. Outlet
centers, which were posting negative returns through the third quarter,
recovered to a very modest .88 percent return for the year. Accordingly,
dividend yields for this group were 7.91 percent, some 174 basis points above
the composite average return.
While many of the country's best quality malls and shopping centers have
recently been offered in the public market, this heavily capitalized
marketplace has provided sellers with an attractive alternative to the more
traditional market for large retail properties.
REITs have been the most aggressive buyer of centers by virtue of their
need to grow FFO. TABLE C highlights the change in ownership between 1994 and
1997.
<TABLE>
<CAPTION>
TABLE C
PERCENTAGE OF U.S. CENTERS
OWNED BY REITS BY CENTER SIZE
- -------------------------------------------------------------------
CENTER SIZE (SF) % IN 1994 % IN 1997
- ---------------------------------------- ----------- ----------
<S> <C> <C>
(less than) 100,000 ............ 1.1% 3.9%
100,001-- 200,000 ............ 3.0% 7.9%
200,001-- 400,000 ............ 6.1% 13.8%
400,001-- 800,000 ............ 11.7% 20.3%
800,001-- 1,000,000............. 13.9% 30.6%
(less than) 1,000,000 ........... 12.6% 27.8%
---- ----
All Centers .................... 2.5% 6.6%
==== ====
</TABLE>
Source: ICSC Research Quarterly -- Fall 1997
- --------------------------------------------------------------------------------
-36-
<PAGE>
PRO-JECT + PLUS TENANT REGISTER & LEASE
ABSTRACT REPORTS
<PAGE>
GRAPEVINE MILLS (4/98)
PROJECT DESIGNATOR: GV98
TENANT REGISTER
7/30/98 @ 13:56
<TABLE>
<CAPTION>
TENANT SQUARE FEET BEGIN DATE END DATE
- ------------------------------------------ ------------- ------------ ---------
<S> <C> <C> <C> <C>
1 -- MALL SHOPS
# 17-SUITE 101 VACANT IN-LINE*** 1,812 6/2000 5/2007
# 18-SUITE 104 VACANT IN-LINE*** 2,566 6/2000 5/2007
# 19-SUITE 105 VACANT IN-LINE*** 1,716 6/2000 10/2006
# 20-SUITE 107 CUTTING EDGE 1,141 11/1997 10/2002
# 21-SUITE 108 SHERYL'S 5,101 11/1997 10/1999
# 22-SUITE 109 GREAT IDEAS 1,110 11/1997 11/2000
# 23-SUITE 111 STUDIO ONE 1,509 11/1997 10/1998
# 24-SUITE 113 TEXAS TREASURES 1,232 11/1997 10/2004
# 25-SUITE 114 TOTES/SUNGLASS 2,878 11/1997 12/1999
# 26-SUITE 115 ORBIT INTERNATIONAL 1,643 5/1998 5/2003
# 27-SUITE 117 MIKE BENET FACTORY 2,094 11/1997 10/2000
# 28-SUITE 118 POINT OF VIEW 1,199 11/1997 1/2008
# 29-SUITE 120 JEWELERS OF L.V. 1,207 11/1997 10/2002
# 30-SUITE 121 ATHLETIC ATTIC 2,996 11/1997 10/2007
# 31-SUITE 122 ALL TIED UP 973 11/1997 12/2002
# 32-SUITE 123 OBZEET IMPORTED 2,944 11/1997 10/2002
# 33-SUITE 124 PRETZEL TIME 846 11/1997 10/2007
# 34-SUITE 126 DALLAS COWBOYS 2,574 3/1998 2/2002
# 35-SUITE 127 BIG DOG SPORTSWEAR 2,530 11/1997 10/2002
# 36-SUITE 128 RACK ROOM 9,742 11/1997 10/2007
# 37-SUITE 129 SWIM 'N SPORT 2,346 11/1997 10/2007
# 38-SUITE 133 HOST MARRIOTT 1,413 11/1997 12/2009
# 39-SUITE 135 VACANT IN-LINE*** 1,215 12/1999 11/2006
# 40-SUITE 136 VACANT IN-LINE*** 2,757 12/1998 11/2005
# 41-SUITE 137 CLAIRE'S BOUTIQUE 1,260 11/1997 10/2007
# 42-SUITE 138 ANN TAYLOR 7,514 4/1998 1/2006
# 43-SUITE 139 VACANT IN-LINE*** 1,036 6/1999 5/2006
# 44-SUITE 200 BRITCHES 5,458 11/1997 10/2002
# 45-SUITE 202 VACANT IN-LINE*** 5,700 6/1999 5/2006
# 46-SUITE 204 HAGGAR 2,883 11/1997 10/2002
# 47-SUITE 205 LIZ CLAIBORNE 2,667 11/1997 10/2000
# 48-SUITE 206 ULTRA 1,124 11/1997 2/2003
# 49-SUITE 207 LEATHER LOFT 1,650 11/1997 10/2002
# 50-SUITE 208 CAR-LENE RESEARCH 972 11/1997 10/2007
# 51-SUITE 209 FRAGRANCE OUTLET 1,937 11/1997 10/2002
# 52-SUITE 210 BROOKS BROTHERS 5,365 11/1997 10/2002
# 53-SUITE 212 QUESS? 4,586 11/1997 1/2003
# 54-SUITE 214 ACCENTE 3,766 11/1997 12/2007
# 55-SUITE 215 VACANT IN-LINE*** 2,135 6/1999 5/2006
# 56-SUITE 216 NINE WEST OUTLET 3,759 11/1997 10/2002
# 57-SUITE 217 UNSIA 1,965 11/1997 10/2007
# 58-SUITE 218 CACHE 2,725 11/1997 10/2002
# 59-SUITE 219 BEBE 3,543 11/1997 2/2008
# 60-SUITE 220 VACANT IN-LINE*** 3,289 6/2000 5/2007
# 61-SUITE 221 MIKASA 15,500 1/1997 11/2007
# 62-SUITE 222 DONNA KARAN 5,845 11/1997 10/2002
# 63-SUITE 224 GAP 9,769 11/1997 1/2002
# 64-SUITE 225 SURREY'S OUTLET 2,635 11/1997 1/2008
# 65-SUITE 227 VACANT IN-LINE*** 1,875 3/2000 11/2007
# 66-SUITE 228 BOSE 4,134 11/1997 10/2002
# 67-SUITE 236 BUGLE BOY 7,093 11/1997 10/2002
# 68-SUITE 2463 COLOURS & SCENTS 2,463 11/1997 10/2002
# 69-SUITE 239 MATERNITY WORKS 1,610 11/1997 10/2000
# 70-SUITE 240 BANISTER SHOES 3,508 11/1997 10/2002
# 71-SUITE 241 COASTAL COTTON CO. 1,926 11/1997 10/2002
# 72-SUITE 242 CARTERS FOR KIDS 4,540 11/1997 10/2002
# 73-SUITE 244 FACTORY SHOES 9,795 11/1997 10/2002
# 74-SUITE 246 BAG N' BAGGAGE 5,125 11/1997 10/2002
# 75-SUITE 248 L'EGGS HANES 5,460 11/1997 10/2002
# 76-SUITE 250 FOOTQUARTERS 5,500 11/1997 1/2008
# 77-SUITE 252 OSHKOSH B'GOSH 5,005 11/1997 10/2002
</TABLE>
<PAGE>
GRAPEVINE MILLS (4/98) PAGE 3
<TABLE>
<CAPTION>
TENANT SQUARE FEET BEGIN DATE END DATE
- ----------------------------------------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
# 144-SUITE 510 FOOT LOCKER 8,518 11/1997 1/2008
# 145-SUITE 513 CASUAL MALE 2,803 11/1997 10/2002
# 146-SUITE 514 AMERICAN OUTPOST 3,251 11/1997 1/2000
# 147-SUITE 515 PERFUMANIA PLUS 3,442 11/1997 10/2002
# 148-SUITE 517 GLORIA JEANS 1,476 11/1997 10/2007
# 149-SUITE 520 GREAT TRAIN STORE 1,540 11/1997 1/2008
# 150-SUITE 522 STOP N SAVE 1,488 11/1997 10/2007
# 151-SUITE 530 WILSONS LEATHER 3,739 11/1997 1/2003
# 152-SUITE 532 PACIFIC SUNWEAR 3,896 11/1997 1/2008
# 153-SUITE 534 WINDSOR OUTLET 6,243 11/1997 10/2004
# 154-SUITE 536 WARNER BROTHERS 5,449 11/1997 10/2007
# 155-SUITE 542 CARLOTTE RUSSE 8,967 11/1997 1/2010
# 156-SUITE 544 VITAMIN WORLD 1,580 11/1997 10/2002
# 157-SUITE 546 ICING 1,580 11/1997 10/2007
# 158-SUITE 548 VACANT IN-LINE*** 5,872 12/1998 11/2005
# 159-SUITE 600 VACANT IN-LINE*** 5,133 9/1999 8/2006
# 160-SUITE 601 SUNGLASS HUT 1,208 11/1997 10/2007
# 161-SUITE 602 K.B. TOY WORKS 5,308 11/1997 10/2002
# 162-SUITE 604 BIBLE FACTORY 3,504 11/1997 12/2002
# 163-SUITE 606 VACANT IN-LINE*** 4,546 12/1999 11/2006
# 164-SUITE 608 VACANT IN-LINE*** 4,777 3/1999 2/2006
# 165-SUITE 610 WORLD TRAVELER 4,905 11/1997 10/2002
# 166-SUITE 611 JUST FOR FEET 19,920 11/1997 12/2007
# 167-SUITE 612 URBAN PLANET 4,264 11/1997 1/2001
# 168-SUITE 614 CINNAMONSTER 985 11/1997 10/2002
# 169-SUITE 615 SANRIO 1,495 11/1997 10/2007
# 170-SUITE 616 SUNBEAM AND OSTER 3,291 11/1997 12/2002
# 171-SUITE 617 KIRKLANDS 5,835 11/1997 1/2001
# 172-SUITE 623 HEALTH RIDER 1,327 11/1997 10/1998
# 173-SUITE 625 VACANT IN-LINE*** 1,773 9/1999 8/2006
------
157 TENANTS 511,394
2 -- FOOD COURT
# 174-SUITE FC FOOD COURT 11,532 11/1997 12/2009
-------
1 TENANTS 11,532
3 -- ANCHORS
# 1-SUITE C WESTERN WAREHOUSE 20,130 10/1997 12/2007
# 2-SUITE D SEGA GAMEWORKS 21,223 11/1997 10/2007
# 3-SUITE E AMERICAN MULTI-CIN 109,393 12/1997 12/2017
# 4-SUITE F1 AMERICAN WILDERNES 5,626 3/1998 12/2012
# 5-SUITE H MARSHALLS 29,397 10/1997 10/2007
# 6-SUITE I BURLINGTON COAT 100,102 10/1997 1/2013
# 7-SUITE J JCPENNEY 106,827 10/1997 10/2012
# 8-SUITE K BED BATH & BEYOND 40,340 10/1997 1/2013
# 9-SUITE L GROUP USA 23,257 11/1997 10/2007
# 10-SUITE M OLD NAVY 23,329 11/1997 10/2002
# 11-SUITE N RAINFOREST CAFE 22,602 11/1997 10/2007
# 12-SUITE N BOOKS-IN-A-MILLION 23,978 11/1997 1/2008
# 13-SUITE Q OFF RODEO DRIVE 24,203 11/1997 10/2007
# 14-SUITE R VIRGIN MEGASTORE 27,490 2/1998 1/2008
# 15-SUITE S OFF SAKS FIFTH AVE 34,982 11/1997 10/2012
-SUITE U SPORTS AUTHORITY 48,763 11/1997 1/2008
-------
16 TENANTS 661,642
4 -- KIOSKS
# 5-SUITE K9 VACANT KIOSK*** 292 12/1999 11/2004
# 6-SUITE K10 ZAP! 292 11/1997 10/2002
-SUITE K1 VACANT KIOSK*** 400 12/1998 11/2003
# 1-SUITE 2 VACANT KIOSK*** 400 7/1998 6/2003
</TABLE>
<PAGE>
GRAPEVINE MILLS (4/98)
PROJECT DESIGNATOR: GV98
LEASE ABSTRACT REPORT
FOR ALL TENANTS
7/30/98 @ 13:56
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 MALL SHOPS
#17-SUITE 101 1 1,812 6/00 5/07 -- 24.00
VACANT IN-LINE*** 3 6/04 26.50
#18-SUITE 104 1 2,566 6/00 5/07 -- 24.00
VACANT IN-LINE*** 4 6/04 26.50
#19-SUITE 105 1 1,716 6/00 10/06 -- 24.00
VACANT IN-LINE*** 3 6/04 26.50
#20-SUITE 107 1 1,141 11/97 10/02 -- 25.00
CUTTING EDGE 2
#21-SUITE 108 1 5,101 11/97 10/99 -- 21.00
SHERYL'S 6 11/98 24.00
#22-SUITE 109 1 1,110 11/97 11/00 -- 25.00
GREAT IDEAS 2
#23-SUITE 111 1 1,509 11/97 10/98 -- 0.00
STUDIO ONE 3
1-84 30.80
11/00 35.00
11/03 40.00
#24-SUITE 113 1 1,232 11/97 10/04 -- 24.00
TEXAS TREASURES 3 10/00 26.00
#25-SUITE 114 1 2,878 11/97 12/99 -- 10.00
TOTES/SUNGLASS 4
#26-SUITE 115 1 1,643 5/98 5/03 -- 28.00
ORBIT 3 5/01 30.00
INTERNATIONAL
#27-SUITE 117 1 2,094 11/97 10/00 -- 30.00
MIKE BENET 4
FACTORY
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
1 MALL SHOPS
#17-SUITE 101 43,488 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 48,018 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#18-SUITE 104 61,584 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 67,999 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#19-SUITE 105 41,184 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 45,474 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#20-SUITE 107 28,525 7.00 UNLIMITED NATURAL CAM-POOL 2
CUTTING EDGE TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#21-SUITE 108 107,121 4.00 UNLIMITED NATURAL ENERGY RECOVERY
SHERYL'S 122,424 WATER/SEWER
#22-SUITE 109 27,750 6.00 UNLIMITED NATURAL CAM
GREAT IDEAS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#23-SUITE 111 0 12.00 UNLIMITED NATURAL CAM-POOL 1
STUDIO ONE TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
46,477 12.00 UNLIMITED NATURAL NONE
52,815
60,360
#24-SUITE 113 29,568 6.00 UNLIMITED NATURAL CAM-POOL 1
TEXAS TREASURES 32,032 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#25-SUITE 114 28,780 10.00 UNLIMITED NATURAL ENERGY RECOVERY
TOTES/SUNGLASS WATER/SEWER
#26-SUITE 115 46,004 6.00 UNLIMITED NATURAL CAM-POOL 1
ORBIT 49,290 TAX-MALL RECOVERY
INTERNATIONAL ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
#40-SUITE 136 1 2,757 12/98 11/05 -- 20.00
VACANT IN-LINE*** 4 12/02 22.00
#41-SUITE 137 1 1,260 11/97 10/07 -- 45.00
CLAIRE'S 3 11/02 50.00
BOUTIQUE
#42-SUITE 138 1 7,514 4/98 1/06 -- 17.00
ANN TAYLOR 7
#43-SUITE 139 1 1,036 6/99 5/06 -- 40.00
VACANT IN-LINE*** 2 6/03 44.00
#44-SUITE 200 1 5,458 11/97 10/02 -- 21.00
BRITCHES 6
#45-SUITE 202 1 5,700 6/99 5/06 -- 19.00
VACANT IN-LINE*** 6 6/03 21.00
#46-SUITE 204 1 2,883 11/97 10/02 -- 18.00
HAGGAR 4
#47-SUITE 205 1 2,667 11/97 10/00 -- 23.00
LIZ CLAIBORNE 4
#48-SUITE 206 1 1,124 11/97 2/03 -- 45.00
ULTRA 2 11/00 55.00
#49-SUITE 207 1 1,650 11/97 10/02 -- 25.00
LEATHER LOFT 3
#50-SUITE 208 1 972 11/97 10/07 -- 28.00
CAR-LENE 2 11/02 32.00
RESEARCH
#51-SUITE 209 1 1,937 11/97 10/02 -- 45.84
FRAGRANCE 3 11/00 49.11
OUTLET
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
#27-SUITE 117 62,820 6.00 UNLIMITED NATURAL CAM
MIKE BENET TAX-MALL RECOVERY
FACTORY ENERGY RECOVERY
WATER/SEWER
#40-SUITE 136 55,140 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 60,654 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#41-SUITE 137 56,700 7.00 UNLIMITED NATURAL CAM-POOL 1
CLAIRE'S 63,000 TAX-MALL RECOVERY
BOUTIQUE ENERGY RECOVERY
WATER/SEWER
#42-SUITE 138 127,738 7.00 2,750 2,750 CAM-POOL 1
ANN TAYLOR 5.00 3,750 TAX-MALL RECOVERY
4.00 UNLIMITED ENERGY RECOVERY
WATER/SEWER
#43-SUITE 139 41,440 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 45,584 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#44-SUITE 200 114,618 5.00 UNLIMITED NATURAL CAM-POOL 2
BRITCHES TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#45-SUITE 202 108,300 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 119,700 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#46-SUITE 204 51,894 4.00 UNLIMITED NATURAL CAM-POOL 2
HAGGAR TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#47-SUITE 205 61,341 4.00 UNLIMITED NATURAL CAM-POOL 2
LIZ CLAIBORNE TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#48-SUITE 206 50,580 6.00 UNLIMITED NATURAL CAM-POOL 1
ULTRA 61,820 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#49-SUITE 207 41,250 6.00 UNLIMITED NATURAL CAM-POOL 2
LEATHER LOFT TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#50-SUITE 208 27,216 6.00 UNLIMITED NATURAL CAM-POOL 2
CAR-LENE 31,104 TAX-MALL RECOVERY
RESEARCH ENERGY RECOVERY
WATER/SEWER
#51-SUITE 209 88,792 6.00 UNLIMITED NATURAL CAM-POOL 1
FRAGRANCE 95,126 TAX-MALL RECOVERY
OUTLET ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
#64-SUITE 225 1 2,635 11/97 1/08 -- 22.00
SURREY'S OUTLET 4 11/02 24.00
#65-SUITE 227 1 1,875 3/00 11/07 -- 33.00
VACANT IN-LINE*** 3 3/04 36.00
#66-SUITE 228 1 4,134 11/97 10/02 -- 20.00
BOSE 5
#67-SUITE 236 1 7,093 11/97 10/02 -- 15.00
BUGLE BOY 6
#68-SUITE 2463 1 2,463 11/97 10/02 -- 32.00
COLOURS & 4 11/00 34.00
SCENTS
#69-SUITE 239 1 1,610 11/97 10/00 -- 24.94
MATERNITY 3
WORKS
#70-SUITE 240 1 3,508 11/97 10/02 -- 17.00
BANISTER SHOES 5
#71-SUITE 241 1 1,926 11/97 10/02 -- 28.00
COASTAL COTTON 3
CO.
#72-SUITE 242 1 4,540 11/97 10/02 -- 17.00
CARTERS FOR KIDS 5
#73-SUITE 244 1 9,795 11/97 10/02 -- 15.05
FACTORY SHOES 7
#74-SUITE 246 1 5,125 11/97 10/02 -- 18.00
BAG N' BAGGAGE 6 10/00 19.00
#75-SUITE 248 1 5,460 11/97 10/02 -- 17.50
L'EGGS HANES 6
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
#64-SUITE 225 57,970 5.00 UNLIMITED NATURAL CAM
SURREY'S OUTLET 63,240 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#65-SUITE 227 61,875 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 67,500 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#66-SUITE 228 82,680 3.00 UNLIMITED NATURAL CAM-POOL 2
BOSE TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#67-SUITE 236 106,395 3.00 UNLIMITED NATURAL CAM-POOL 2
BUGLE BOY TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#68-SUITE 2463 78,816 5.00 UNLIMITED NATURAL CAM-POOL 1
COLOURS & 83,742 TAX-MALL RECOVERY
SCENTS ENERGY RECOVERY
WATER/SEWER
#69-SUITE 239 40,153 6.00 UNLIMITED NATURAL CAM-POOL 2
MATERNITY TAX-MALL RECOVERY
WORKS ENERGY RECOVERY
WATER/SEWER
#70-SUITE 240 59,636 5.00 UNLIMITED NATURAL CAM
BANISTER SHOES TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#71-SUITE 241 53,928 6.00 UNLIMITED NATURAL CAM
COASTAL COTTON TAX-MALL RECOVERY
CO. ENERGY RECOVERY
WATER/SEWER
#72-SUITE 242 77,180 4.00 UNLIMITED NATURAL CAM-POOL 2
CARTERS FOR KIDS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#73-SUITE 244 147,415 4.00 UNLIMITED NATURAL CAM-POOL 2
FACTORY SHOES TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#74-SUITE 246 92,250 5.00 UNLIMITED NATURAL CAM-POOL 1
BAG N' BAGGAGE 97,375 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#75-SUITE 248 95,550 3.00 UNLIMITED NATURAL CAM-POOL 2
L'EGGS HANES TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- -------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 76-SUITE 250 1 5,500 11/97 1/08 -- 18.00
FOOTQUARTERS 6 11/02 20.00
# 77-SUITE 252 1 5,005 11/97 10/02 -- 17.00
OSHKOSH B'GOSH 6 11/98 18.00
# 78-SUITE 256 1 882 11/97 10/07 -- 60.00
SUNGLASS HUT 2 11/02 65.00
# 79-SUITE 258 1 884 11/97 10/02 -- 40.00
ROCKY MOUNTAIN 2
# 80-SUITE 260 1 1,464 11/97 12/09 -- 25.00
HOST MARRIOTT 3 11/03 30.00
T-48 35.00
# 81-SUITE 301 1 1,470 11/97 10/02 -- 55.00
C.R. JEWELERS 3
# 82-SUITE 302 1 15,664 11/97 1/08 -- 20.00
ATHLETE'S FOOT 7
# 83-SUITE 303 1 1,199 11/97 10/02 -- 50.21
PERFUMANIA 2
# 84-SUITE 305 1 1,477 11/97 10/07 -- 33.00
GUITARS & CADILLAC 3 11/00 35.00
11/04 38.00
# 85-SUITE 309 1 2,561 11/97 10/07 -- 20.00
WILD PAIR 4
# 86-SUITE 311 1 6,605 11/97 1/01 -- 18.00
CORNING REVERE 6
# 87-SUITE 312 1 9,178 9/98 8/05 -- 15.00
VACANT IN-LINE*** 7 9/02 17.50
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- -------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
# 76-SUITE 250 99,000 5.00 UNLIMITED NATURAL CAM
FOOTQUARTERS 110,000 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 77-SUITE 252 85,085 4.00 UNLIMITED NATURAL CAM-POOL 2
OSHKOSH B'GOSH 90,090 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 78-SUITE 256 52,920 10.00 UNLIMITED NATURAL CAM-POOL 2
SUNGLASS HUT 57,330 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 79-SUITE 258 33,760 6.00 UNLIMITED NATURAL CAM-POOL 2
ROCKY MOUNTAIN TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 80-SUITE 260 36,600 5.00 UNLIMITED NATURAL CAM-POOL 2
HOST MARRIOTT 43,920 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
51,240 5.00 UNLIMITED NATURAL NONE
# 81-SUITE 301 80,850 5.00 UNLIMITED NATURAL CAM-POOL 1
C.R. JEWELERS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 82-SUITE 302 313,280 5.00 UNLIMITED NATURAL CAM-POOL 2
ATHLETE'S FOOT TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 83-SUITE 303 60,202 6.00 UNLIMITED NATURAL CAM-POOL 1
PERFUMANIA TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 84-SUITE 305 48,741 6.00 UNLIMITED NATURAL CAM-POOL 1
GUITARS & CADILLAC 51,695 TAX-MALL RECOVERY
56,126 ENERGY RECOVERY
WATER/SEWER
# 85-SUITE 309 51,220 6.00 UNLIMITED NATURAL CAM-POOL 2
WILD PAIR TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 86-SUITE 311 118,890 9.00 UNLIMITED NATURAL CAM-POOL 1
CORNING REVERE TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 87-SUITE 312 137,670 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 160,615 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 88-SUITE 313 1 2,066 5/98 5/03 -- 33.00
I LOVE QUILTS 4 5/01 35.00
# 89-SUITE 315 1 1,425 6/00 5/07 -- 33.00
VACANT IN-LINE*** 3 6/04 56.00
# 90-SUITE 316 1 8,715 11/97 10/02 -- 16.00
DRESS BARN 7
# 91-SUITE 317 1 1,138 11/97 11/02 -- 35.00
WATCHES, ETC 2
# 92-SUITE 319 1 977 11/97 10/02 -- 50.00
LEE NAILS 2
# 93-SUITE 320 1 2,577 11/97 10/02 -- 23.00
NATURALIZER 4
# 94-SUITE 321 1 1,122 11/97 10/07 -- 33.00
BEAUTY EXPRESS 2 11/00 35.00
11/04 37.00
# 95-SUITE 322 1 1,168 11/97 10/02 -- 30.00
QUACKIN UP 2
# 96-SUITE 323 1 1,362 11/97 10/00 -- 35.00
DALLAS DANCEWEAR 3
# 97-SUITE 323 1 1,023 11/97 10/02 -- 37.50
FLAG SHOP 2
# 98-SUITE 326 1 858 11/97 10/07 -- 50.00
AUNTIE ANNES 2 11/02 60.00
# 99-SUITE 327 1 1,468 11/97 10/02 -- 25.00
TWO LIPS 3
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
# 88-SUITE 313 68,178 6.00 UNLIMITED NATURAL CAM-POOL 1
I LOVE QUILTS 72,310 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 89-SUITE 315 46,025 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 51,300 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
# 90-SUITE 316 139,440 4.00 UNLIMITED NATURAL CAM-POOL 2
DRESS BARN TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 91-SUITE 317 39,830 6.00 UNLIMITED NATURAL CAM-POOL 2
WATCHES, ETC TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 92-SUITE 319 48,850 8.00 UNLIMITED NATURAL CAM-POOL 1
LEE NAILS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 93-SUITE 320 59,271 4.00 UNLIMITED NATURAL CAM-POOL 2
NATURALIZER TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 94-SUITE 321 37,026 6.00 UNLIMITED NATURAL CAM-POOL 1
BEAUTY EXPRESS 39,270 TAX-MALL RECOVERY
41,514 ENERGY RECOVERY
WATER/SEWER
# 95-SUITE 322 35,040 6.00 UNLIMITED NATURAL CAM-POOL 2
QUACKIN UP TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 96-SUITE 323 47,670 6.00 UNLIMITED NATURAL CAM
DALLAS DANCEWEAR TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 97-SUITE 323 38,363 10.00 UNLIMITED NATURAL CAM-POOL 1
FLAG SHOP TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 98-SUITE 326 42,900 8.00 UNLIMITED NATURAL CAM-POOL 2
AUNTIE ANNES 51,480 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
# 99-SUITE 327 36,700 6.00 UNLIMITED NATURAL CAM-POOL 1
TWO LIPS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- -------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
#100-SUITE 328 1 1,027 11/97 10/04 -- 60.00
JEWELRY BOX OUTLET 2 11/00 63.00
#101-SUITE 330 1 1,247 11/97 10/07 -- 50.00
CANDY HEADQUARTERS 3 11/02 60.00
#102-SUITE 333 1 1,460 11/97 10/00 -- 35.00
EDWARD SOLOMON 3
#103-SUITE 334 1 3,002 11/97 10/02 -- 27.00
EARTHBOUND TRADING 4
#104-SUITE 335 1 1,392 3/99 2/06 -- 33.00
VACANT IN-LINE*** 3 3/03 36.00
#105-SUITE 337 1 1,471 6/00 10/06 -- 33.00
VACANT IN-LINE*** 3 6/04 36.00
#106-SUITE 338 1 1,742 11/97 1/08 -- 30.00
SPENCER GIFTS 3 11/03 33.00
#107-SUITE 339 1 1,309 11/97 10/02 -- 27.00
LIDS 3
#108-SUITE340 1 1,313 11/97 10/02 -- 30.00
T-SHIRTS PLUS 3
#109-SUITE 341 1 1,455 12/99 11/06 -- 33.00
VACANT IN-LINE*** 3 12/03 36.00
#110-SUITE 342 1 1,448 3/00 2/07 -- 33.00
VACANT IN-LINE*** 3 3/04 36.00
#111-SUITE 344 1 2,238 11/97 10/02 -- 24.00
COUNTRY CLUTTER 4
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- -------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
#100-SUITE 328 61,620 6.00 UNLIMITED NATURAL CAM-POOL 1
JEWELRY BOX OUTLET 64,701 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#101-SUITE 330 62,350 8.00 UNLIMITED NATURAL CAM-POOL 1
CANDY HEADQUARTERS 74,620 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#102-SUITE 333 51,100 6.00 UNLIMITED NATURAL CAM
EDWARD SOLOMON TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#103-SUITE 334 81,054 6.00 UNLIMITED NATURAL CAM-POOL 1
EARTHBOUND TRADING TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#104-SUITE 335 45,936 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 50,112 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#105-SUITE 337 48,543 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 52,956 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#106-SUITE 338 52,260 6.00 UNLIMITED NATURAL CAM-POOL 2
SPENCER GIFTS 57,486 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#107-SUITE 339 35,343 5.00 UNLIMITED NATURAL CAM-POOL 2
LIDS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#108-SUITE340 39,390 6.00 UNLIMITED NATURAL CAM-POOL 2
T-SHIRTS PLUS TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#109-SUITE 341 48,015 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 52,380 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#110-SUITE 342 47,784 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 52,128 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#111-SUITE 344 53,712 5.00 UNLIMITED NATURAL CAM-POOL 2
COUNTRY CLUTTER TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- -------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
#112-Suite 400 1 5,332 11/97 10/02 -- 18.00
WE'RE ENTERTAIN. 6
#113-SUITE 401 1 1,497 11/97 10/02 -- 27.00
NATIVES 3
#114-SUITE 403 1 1,092 11/97 10/01 -- 30.00
TODAY'S NEWS 2
#115-SUITE 404 1 1,115 5/98 5/02 -- 50.00
PREMIER CONCEPTS 2 2/00 52.00
#116-SUITE 406 1 3,054 11/97 1/01 -- 20.00
BAKERS OUTLET 4
#117-SUITE 408 1 4,887 3/00 2/07 -- 20.00
VACANT IN-LINE*** 5 3/04 22.00
#118-SUITE 411 1 1,509 11/97 10/00 -- 30.00
BERMUDA GOLD 3
#119-SUITE 412 1 4,987 11/97 10/02 -- 17.00
OPC FASHIONS 5
#120-SUITE 413 1 2,692 11/97 1/01 -- 20.00
5-7-9 OUTLET 4
#121-SUITE 414 1 3,833 11/97 10/07 -- 20.00
PAYLESS SHOESOURCE 5 11/02 22.00
#122-SUITE 416 1 4,553 11/97 1/03 -- 18.00
ANCHOR BLUE CLOTHI 5
#123-SUITE 417 1 2,391 11/97 10/00 -- 25.00
WHEELS AND FITNESS 4
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- -------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
#112-Suite 400 95,976 4.00 UNLIMITED NATURAL CAM-POOL 2
WE'RE ENTERTAIN. TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#113-SUITE 401 40,419 4.00 UNLIMITED NATURAL CAM-POOL 2
NATIVES TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#114-SUITE 403 32,760 6.00 UNLIMITED NATURAL CAM-POOL 2
TODAY'S NEWS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#115-SUITE 404 55,750 6.00 UNLIMITED NATURAL CAM-POOL 2
PREMIER CONCEPTS 57,980 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#116-SUITE 406 61,080 6.00 UNLIMITED NATURAL CAM-POOL 2
BAKERS OUTLET TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#117-SUITE 408 97,740 6.00 UNLIMITED NATURAL CAM-POOL 1
VACANT IN-LINE*** 107,514 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#118-SUITE 411 45,270 6.00 UNLIMITED NATURAL CAM-POOL 2
BERMUDA GOLD TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#119-SUITE 412 84,779 4.00 UNLIMITED NATURAL CAM
OPC FASHIONS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#120-SUITE 413 53,840 6.00 UNLIMITED NATURAL CAM-POOL 2
5-7-9 OUTLET TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#121-SUITE 414 76,660 6.00 UNLIMITED NATURAL CAM-POOL 2
PAYLESS SHOESOURCE 84,326 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#122-SUITE 416 81,954 4.00 UNLIMITED NATURAL CAM
ANCHOR BLUE CLOTHI TAX-MAL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#123-SUITE 417 59,775 5.00 UNLIMITED NATURAL CAM-POOL 2
WHEELS AND FITNESS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- -------------------- ----------- -------- ------- ------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
#124-SUITE 41B 1 3,486 11/97 10-02 -- 30.00
JUST SPORTS 4 11/00 32.00
#125-SUITE 419 1 3,525 11/97 1/03 -- 16.00
ALL THAT JAZZ 5
#126-SUITE 420 1 2,408 11/97 1/02 -- 23.00
BABY GUESS 4
#127-SUITE 421 1 1,308 11/97 10/07 -- 34.00
GNC 3 11/02 36.00
11/05 39.00
#128-SUITE 423 1 1,255 11/97 1/03 -- 35.00
REMINGTON FACTORY 3
#129-SUITE 424 1 2,915 11/97 1/01 -- 20.00
J. RIGGINS 4
#130-SUITE 425 1 1,144 11/97 10/02 -- 35.00
LETS TALK CELLULAR 2 11/00 37.00
#131-SUITE 426 1 1,080 11/97 10/07 -- 33.00
MASTER CUTS 2 11/00 35.00
11/04 37.00
#132-SUITE 427 1 1,506 11/97 12/09 -- 25.00
HOST MARRIOTT 3 11/03 30.00
#133-SUITE 428 1 1,042 11/97 1/08 -- 35.00
SWEET FACTORY 2 11/02 40.00
#134-SUITE 429 1 3,571 11/97 10/02 -- 21.00
SAMSONITE COMPANY 5 11/00 23.00
#135-SUITE 430 1 3,783 3/99 2/06 -- 20.00
VACANT IN-LINE*** 5 3/03 22.00
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- -------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
#124-SUITE 41B 104,580 8.00 UNLIMITED NATURAL CAM-POOL 2
JUST SPORTS 111,552 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#125-SUITE 419 56,400 4.00 UNLIMITED NATURAL CAM-POOL 2
ALL THAT JAZZ TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#126-SUITE 420 55,384 4.00 UNLIMITED NATURAL CAM-POOL 2
BABY GUESS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#127-SUITE 421 44,472 6.00 UNLIMITED NATURAL CAM-POOL 1
GNC 47,088 TAX-MALL RECOVERY
51,012 ENERGY RECOVERY
WATER/SEWER
#128-SUITE 423 43,925 6.00 UNLIMITED NATURAL CAM-POOL 2
REMINGTON FACTORY TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#129-SUITE 424 58,500 6.00 UNLIMITED NATURAL CAM-POOL 2
J. RIGGINS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#130-SUITE 425 40,040 5.00 UNLIMITED NATURAL CAM-POOL 2
LETS TALK CELLULAR 42,328 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#131-SUITE 426 35,640 6.00 UNLIMITED NATURAL CAM-POOL 1
MASTER CUTS 37,800 TAX-MALL RECOVERY
39,960 ENERGY RECOVERY
WATER/SEWER
#132-SUITE 427 37,650 5.00 UNLIMITED NATURAL CAM-POOL 2
HOST MARRIOTT 45,180 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#133-SUITE 428 36,470 8.00 UNLIMITED NATURAL CAM-POOL 1
SWEET FACTORY 41,680 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#134-SUITE 429 74,991 6.00 UNLIMITED NATURAL CAM-POOL 2
SAMSONITE COMPANY 82,133 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#135-SUITE 430 75,660 6.00 UNLIMITED NATURAL CAM-POOL 1
VACANT IN-LINE*** 83,226 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ------------------- ----------- -------- ------- ------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
#136-SUITE 431 1 3,579 11/97 10/02 -- 18.00
LENSCRAFTERS 5
#137-SUITE 432 1 3,783 5/98 4/03 -- 24.00
S.C.R.U.B.S. 5
#138-SUITE 500 1 4,382 11/97 1/03 -- 19.00
DOCKERS OUTLET 5
#139-SUITE 501 1 1,570 11/97 10/07 -- 25.00
RITZ CAMERA 3 11/02 27.00
#140-SUITE 505 1 1,307 11/97 10/07 -- 28.00
CAMPUS LIFESTYLES 3 11/02 30.00
#141-SUITE 506 1 5,125 11/97 1/03 -- 21.00
LEVIS 6
#142-SUITE 507 1 2,300 11/97 10/04 -- 25.93
FLORSHEIM SHOES 4 11/02 27.93
#143-SUITE 509 1 2,260 11/97 10/02 -- 26.00
VANS OUTLET 4
#144-SUITE 510 1 8,518 11/97 1/08 -- 17.00
FOOT LOCKER 7 11/02 19.00
#145-SUITE 513 1 2,803 11/97 10/02 -- 23.00
CASUAL MALE 4
#146-SUITE 514 1 3,251 11/97 1/00 -- 25.00
AMERICAN OUTPOST 4
#147-SUITE 515 1 3,442 11/97 10/02 -- 32.00
PERFUMANIA PLUS 4
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ------------------- --------- --------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
#136-SUITE 431 64,422 4.00 UNLIMITED NATURAL CAM-POOL 2
LENSCRAFTERS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#137-SUITE 432 90,792 6.00 UNLIMITED 1,513 CAM-POOL 2
S.C.R.U.B.S. TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#138-SUITE 500 83,258 3.00 UNLIMITED NATURAL CAM-POOL 2
DOCKERS OUTLET TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#139-SUITE 501 39,250 NATURAL CAM-POOL 2
RITZ CAMERA 42,390 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#140-SUITE 505 36,596 6.00 UNLIMITED NATURAL CAM-POOL 1
CAMPUS LIFESTYLES 39,210 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#141-SUITE 506 107,625 3.00 UNLIMITED NATURAL CAM-POOL 2
LEVIS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#142-SUITE 507 59,639 5.00 UNLIMITED NATURAL CAM-POOL 2
FLORSHEIM SHOES 64,239 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#143-SUITE 509 58,760 4.00 UNLIMITED NATURAL CAM-POOL 2
VANS OUTLET TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#144-SUITE 510 144.806 5.00 UNLIMITED NATURAL CAM-POOL 2
FOOT LOCKER 161,842 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#145-SUITE 513 64,469 4.50 UNLIMITED NATURAL CAM-POOL 2
CASUAL MALE TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#146-SUITE 514 81,275 5.00 UNLIMITED NATURAL CAM-POOL 2
AMERICAN OUTPOST TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#147-SUITE 515 110,144 6.00 UNLIMITED NATURAL CAM-POOL 2
PERFUMANIA PLUS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
#148-SUITE 517 1 1,476 11/97 10/07 -- 45.00
GLORIA JEANS 3 11/02 50.00
#149-SUITE 520 1 1,540 11/97 1/08 -- 30.00
GREAT TRAIN STORE 3 11/02 35.00
#150-SUITE 522 1 1,488 11/97 10/07 -- 35.00
STOP N SAVE 3 11/02 40.00
#151-SUITE 530 1 3,739 11/97 1/03 -- 22.00
WILSONS LEATHER 5
#152-SUITE 532 1 3,896 11/97 1/08 -- 25.00
PACIFIC SUNWEAR 5
#153-SUITE 534 1 6,243 11/97 10/04 -- 22.00
WINDSOR OUTLET 6 11/02 23.00
#154-SUITE 536 1 5,449 11/97 10/07 -- 0.00
WARNER BROTHERS 6
#155-SUITE 542 1 8,967 11/97 1/10 -- 12.50
CARLOTTE RUSSE 7
#156-SUITE 544 1 1,580 11/97 10/02 -- 33.50
VITAMIN WORLD 3
#157-SUITE 546 1 1,580 11/97 10/07 -- 41.93
ICING 3 11/02 45.74
#158-SUITE 548 1 5,872 12/98 11/05 -- 19.00
VACANT In-LINE*** 6 12/02 21.00
#159-SUITE 600 1 5,133 9/99 8/06 -- 19.00
VACANT In-LINE** 6 9/03 21.00
#160-SUTIE 601 1 1,208 11/97 10/07 -- 49.63
SUNGLASS HUT 3 11/02 54.59
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ------------------- --------- --------- ----------- -------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
#148-SUITE 517 66,420 6.00 UNLIMITED NATURAL CAM
GLORIA JEANS 73,000 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#149-SUITE 520 46,200 5.00 UNLIMITED NATURAL CAM-POOL 2
GREAT TRAIN STORE 53,900 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#150-SUITE 522 52,080 6.00 UNLIMITED NATURAL CAM-POOL 2
STOP N SAVE 59,520 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#151-SUITE 530 82,258 4.00 UNLIMITED NATURAL CAM-POOL 2
WILSONS LEATHER TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#152-SUITE 532 89,608 4.00 UNLIMITED NATURAL CAM-)OOL 2
PACIFIC SUNWEAR TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#153-SUITE 534 137,346 6.00 UNLIMITED NATURAL CAM-POOL 2
WINDSOR OUTLET 143,589 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#154-SUITE 536 0 4.00 UNLIMITED NATURAL NONE
WARNER BROTHERS
#155-SUITE 542 112,088 10.00 2,813 2,250 CAM-POOL 2
CARLOTTE RUSSE 5.00 UNLIMITED TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#156-SUITE 544 52,930 8.00 UNLIMITED NATURAL CAM-POOL 2
VITAMIN WORLD TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#157-SUITE 546 66,249 7.00 UNLIMITED NATURAL CAM-POOL 1
ICING 72,269 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#158-SUITE 548 111,568 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT In-LINE*** 123,312 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#159-SUITE 600 97,527 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT In-LINE** 107,793 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#160-SUTIE 601 59,953 10.00 UNLIMITED NATURAL CAM-POOL 2
SUNGLASS HUT 65,945 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ------------------- ----------- -------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
#161-SUITE 602 1 5,308 11/97 10/02 -- 20.00
K.B. TOY WORKS 6
#162-SUITE 604 1 3,504 11/97 12/02 -- 24.00
BIBLE FACTORY 5
#163-SUITE 606 1 4,546 12/99 11/06 -- 20.00
VACANT IN-LINE*** 5 12/03 22.00
#164-SUITE 608 1 4,777 3/99 2/06 -- 20.00
VACANT IN-LINE*** 5 3/03 22.00
#165-SUITE 610 1 4,905 11/97 10/02 -- 21.00
WORLD TRAVELER 5 11/99 23.00
11/00 25.00
#166-SUITE 611 1 19,920 11/97 12/07 -- 26.00
JUST FOR FEET 7 10/02 28.00
#167-SUITE 612 1 4,264 11/97 1/01 -- 18.00
URBAN PLANET 5
#168-SUITE 614 1 985 11/97 10/02 -- 55.00
CINNAMONSTER 2 11/00 60.00
#169-SUITE 615 1 1,495 11/97 10/07 -- 35.00
SANRIO 3 11/04 38.00
#170-SUITE 616 1 3,291 11/97 12/02 -- 23.00
SUNBEAM AND OSTER 4
#171-SUITE 617 1 5,835 11/97 1/01 -- 19.00
KIRKLANDS 6
#172-SUITE 623 1 1,327 11/97 10/98 -- 28.00
HEALTH RIDER 3
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ------------------- --------- --------- ----------- -------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
#161-SUITE 602 106,160 4.00 UNLIMITED NATURAL CAM-POOL 2
K.B. TOY WORKS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#162-SUITE 604 84,096 5.00 UNLIMITED NATURAL CAM-POOL 1
BIBLE FACTORY TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#163-SUITE 606 90,920 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 100,012 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#164-SUITE 608 95,540 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 105,094 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
#165-SUITE 610 103,005 5.00 UNLIMITED NATURAL CAM-POOL 2
WORLD TRAVELER 112,815 TAX-MALL RECOVERY
122,625 ENERGY RECOVERY
WATER/SEWER
#166-SUITE 611 517,920 4.00 UNLIMITED NATURAL CAM-POOL 1
JUST FOR FEET 557,760 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#167-SUITE 612 76,752 5.00 UNLIMITED NATURAL CAM
URBAN PLANET TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#168-SUITE 614 54,175 8.00 UNLIMITED NATURAL CAM-POOL 1
CINNAMONSTER 59,100 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#169-SUITE 615 52,325 6.00 UNLIMITED NATURAL CAM-POOL 2
SANRIO 56,810 TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#170-SUITE 616 75,693 4.00 UNLIMITED NATURAL CAM
SUNBEAM AND OSTER TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#171-SUITE 617 110,865 5.00 UNLIMITED NATURAL CAM
KIRKLANDS TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#172-SUITE 623 37,156 6.00 UNLIMITED NATURAL CAM
HEALTH RIDER TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- -------------------- ----------- ---------- ------- ------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
#175-SUITE 625 1 1,773 9/99 8/06 -- 33.00
VACANT IN-LINE*** 3 9/03 36.00
511,394
2 FOOD COURT
#174-SUITE FC 2 11,532 11/97 12/09 -- 60.00
FOOD COURT 8
11,532
3 ANCHORS
# 1-SUITE C 3 20,130 10/97 12/07 -- 15.91
WESTERN WAREHOUSE 9 10/02 7.50
1-120 19.25
1/13 21.18
# 2-SUITE D 3 21,223 11/97 10/07 -- 28.00
SEGA GAMEWORKS 9 10/02 29.50
1-108 31.00
3-SUITE E 3 109,393 12/97 12/17 -- 24.00
AMERICAN MULTI-CIN 9
1-240 26.40
1/23 29.04
12/27 35.13
# 4-SUITE F1 3 5,626 3/98 12/12 -- 43.27
AMERICAN WILDERNES 9 8/98 81.52
# 5-SUITE H 3 29,397 10/97 10/07 -- 8.00
MARSHALLS 9 11/02 8.50
1-180 9.00
11/12 9.50
11/17 10.00
5.00
# 6-SUITE I 3 100,102 10/97 1/13 -- 1/03 5.25
BURLINGTON COAT 9 1/08 5.50
1-109 5.75
2/17 6.00
1/22 6.25
# 7-SUITE J 3 106,827 10/97 10/12 -- 4.95
JCPENNEY 9 11/02 5.19
11/07 5.44
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- -------------------- ------------ --------- ----------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
#175-SUITE 625 58,509 6.00 UNLIMITED NATURAL CAM+AMOR+MGT+15%
VACANT IN-LINE*** 63,828 TAX-MALL RECOVERY
WATER/SEWER
ENERGY RECOVERY
2 FOOD COURT
#174-SUITE FC 691,920 5.00 UNLIMITED 11,760 CAM-POOL 2
FOOD COURT 11/00 9,800 TAX-MALL RECOVERY
11/04 8,400 ENERGY RECOVERY
WATER/SEWER
FCTE RECOVERY
3 ANCHORS
# 1-SUITE C 320,268 5.00 UNLIMITED 5,000 NONE
WESTERN WAREHOUSE 352,275 9/02 5,640
385,000 5.00 UNLIMITED 5,000 NONE
423,600 9/02 5,640
CAM-SEGA
# 2-SUITE D 594,244 5.00 UNLIMITED 7,400 GAMEWORKS
TAX-SEGA
SEGA GAMEWORKS 626,079 9/02 7,800 GAMEWORKS
CAM-SEGA
657,913 5.00 UNLIMITED 7,400 GAMEWORKS
TAX-SEGA
9/02 7,800 GAMEWORKS
3-SUITE E 2,625,432 6.00 UNLIMITED 44,000 CAM-AMC
AMERICAN MULTI-CIN TAX-AMC
2,904,000 6.00 UNLIMITED 48,400 NONE
3,194,400 1/23 53,240
3,864,300 1/28 58,557
1/33 64,405
# 4-SUITE F1 243,437 5.00 UNLIMITED 4,867 CAM-AMERICAN
AMERICAN WILDERNES 458,632 8/98 9,230 TAX-AMERICAN
9/98 11,141
9/07 10,140
# 5-SUITE H 235,176 2.00 UNLIMITED 12,000 CAM-MARSHALLS
MARSHALLS 249,875 11/02 12,600 TAX-MARSHALLS
264,573 2.00 UNLIMITED 13,230 CAM-MARSHALLS
279272 11/12 13,892 TAX-MARSHALLS
293,970 11/17 14,587
500,510
# 6-SUITE I 525,536 1.50 UNLIMITED 18,800 CAM-BURLINGTON
BURLINGTON COAT 550,561
575,587 1.50 UNLIMITED 18,800 NONE
600,612
625,638
# 7-SUITE J 58,794 1.00 UNLIMITED 27,000 CAM-JCPENNEY
JCPENNEY 554,432 11/02 29,000 TAX-JCPENNEY
581,139 11/07 31,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ----------------- ----------- -------- ------- ------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1-180 6.43
11/17 6.68
11/22 6.92
#8-SUITE K 3 40,340 10/97 1/13 -- 9.25
BED BATH & 9 10/02 9.75
BEYOND 10/07 10.25
1-180 10.75
2/18 11.25
2/23 11.75
#9-SUITE L 3 23,257 11/97 10/07 -- 14.00
GROUP USA 9
1-240 16.00
11/17 18.00
#10-SUITE M 3 23,329 11/97 10/02 -- 25.00
OLD NAVY 9 11/99 26.00
1-120 12.00
11/07 12.50
#11-SUITE N 3 22,602 11/97 10/07 -- 25.00
RAINFOREST CAFE 9 12/01 26.00
1-180 27.00
11/12 28.00
1/17 29.00
# 12-SUITE N 3 23,978 11/97 1/08 -- 12.50
BOOKS-A-MILLION 9 2/00 13.00
1-120 13.50
2/13 14.00
# 13-SUITE Q 3 24,203 11/97 10/07 -- 21.01
OFF RODEO 9 11/02 23.01
DRIVE 1-120 25.01
11/12 27.01
# 14-SUITE R 3 27,490 2/98 1/08 -- 16.50
VIRGIN 9 2/99 16.83
MEGASTORE
2/00 17.17
2/01 17.51
2/02 17.86
2/03 18.22
1-180 20.50
2/13 22.50
2/18 25.00
# 15-SUITE S 3 34,982 11/97 10/12 -- 7.10
0FF SAKS FIFTH 9 11/02 7.60
AVE
1-180 7.60
# 16-SUITE U 3 48,763 11/97 1/08 -- 12.00
SPORTS 9 2/03 13.00
AUTHORITY
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ----------------- --------- --------- ----------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
686,898 1.00 UNLIMITED 35,000 NONE
713,604 11/17 31,000
739,243 11/22 39,000
#8-SUITE K 373,145 3.00 UNLIMITED 12,000 CAM-BED/BATH
BED BATH & 393,315 TAX-BED/BATH
BEYOND 413,485
433,655 3.00 UNLIMITED 12,000 NONE
453,825
473,995
#9-SUITE L 325,598 3.00 UNLIMITED 7,084 NONE
GROUP USA
372,112 3.00 UNLIMITED 8,265 NONE
418,626 11/17 9,446
#10-SUITE M 583,225 5.00 UNLIMITED 13,909 CAM-OLD NAVY
OLD NAVY 606,554 TAX-OLD NAVY
279,948 5.00 UNLIMITED 13,909 NONE
291,613 11/07 14,487
#11-SUITE N 565,050 5.00 UNLIMITED 10,000 CAM-RAINFOREST
RAINFOREST CAFE 587,652 TAX-RAINFOREST
610,254 5.00 UNLIMITED 10,000 CAM-RAINFOREST
632,856 TAX-RAINFOREST
655,458
# 12-SUITE N 299,725 4.00 UNLIMITED 6,819 CAM-BOOKS
BOOKS-A-MILLION 311,714 1/03 7,092 TAX-BOOKS
323,703 4.00 UNLIMITED 7,364 CAM-BOOKS
335,692 1/13 7,637
# 13-SUITE Q 508,505 2.50 UNLIMITED 7,000 NONE
556,911
605,317 2.50 UNLIMITED 7,000 NONE
653,723
# 14-SUITE R 453,585 9,000 CAM-VIRGIN
VIRGIN 462,657 TAX-VIRGIN
MEGASTORE
472,003
481,350
490,971
500,868
563,545 9,000 CAM-VIRGIN
618,525 TAX-VIRGIN
687,250
# 15-SUITE U 248,372 0.75 UNLIMITED 15,581 CAM-SAKS
0FF SAKS FIFTH 265,863 11/02 17,914 TAX-SAKS
AVE
265,863 0.75 UNLIMITED 17,914 NONE
# 16-SUITE U 585,156 1.50 UNLIMITED 17,000 CAM-SPORTS
SPORTS 633,919 1/03 18,000 TAX-SPORTS
AUTHORITY
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY/
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF
- ---------------- ----------- ---------- ------- ------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1-180 14.00
2/13 15.00
2/18 16.00
------
661,642
4 KIOSKS
#175-SUITE K9 4 292 12/99 11/04 -- 150.00
VACANT KIOSK*** 10
#176-SUITE K10 4 292 11/97 10/02 -- 92.10
ZAPI 10
#180-SUITE K1 4 400 12/98 11/03 -- 150.00
VACANT KIOSK*** 10
#181-SUITE 2 4 400 7/98 6/03 -- 150.00
VACANT KIOSK*** 10
#182-SUITE K3 4 400 6/99 5/04 -- 150.00
VACANT KIOSK*** 10
#183-SUITE K4 4 400 1/99 12/03 -- 150.00
VACANT KIOSK*** 10
#184-SUITE K5 4 400 4/99 3/04 -- 150.00
VACANT KIOSK*** 10
-------
2,584
5 RESTAURANT
#177-SUITE R1 5 6,325 11/97 1/05 -- 20.00
HOST MARRIOTT 11 11/03 25.00
1-96 25.00
1/10 30.00
#178-SUITE R2 5 6,364 11/97 1/05 -- 20.00
HOST MARRIOTT 11 11/03 25.00
1-96 25.00
1/10 30.00
#179-SUITE R3 5 3,469 11/97 1/05 -- 20.00
HOST MARRIOTT 11 11/03 25.00
1-96 25.00
1/10 30.00
-------
<CAPTION>
ANNUAL
MINIMUM OVERAGE CEILING BREAKPOINT
TENANT RENT % (000'S) (000'S) RECOVERIES
- ----------------- --------- --------- ----------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
682,682 1.50 UNLIMITED 20,000 CAM-SPORTS
731,445 1/13 22,000 TAX-SPORTS
780,208 1/18 24,000
4 KIOSKS
#175-SUITE K9 43,800 15.00 UNLIMITED 200 NONE
VACANT KIOSK***
#176-SUITE K10 26,893 8.00 UNLIMITED NATURAL CAM - POOL 1
ZAPI TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#180-SUITE K1 60,000 10.00 UNLIMITED NATURAL CAM - POOL 1
TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#181-SUITE 2 60,000 10.00 UNLIMITED NATURAL CAM - POOL 1
VACANT KIOSK*** TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
#182-SUITE K3 60,000 10.00 UNLIMITED NATURAL CAM - POOL 1
VACANT KIOSK*** TAX-MALL RECOVERY
ENERGY RECOVERY
EATER/SEWER
#183-SUITE K4 60,000 10.00 UNLIMITED NATURAL CAM - POOL 1
VACANT KIOSK*** TAX-MALL RECOVERY
ENERGY RECOVERY
#184-SUITE K5 60,000 10.00 UNLIMITED NATURAL CAM - POOL 1
VACANT KIOSK*** TAX-MALL RECOVERY
ENERGY RECOVERY
WATER/SEWER
5 RESTAURANT
#177-SUITE R1 126,500 3.00 UNLIMITED NATURAL NONE
HOST MARRIOTT 158,125
158,125 3.00 UNLIMITED NATURAL NONE
189,750
#178-SUITE R2 127,280 3.00 UNLIMITED NATURAL NONE
HOST MARRIOTT 159,100
159,100 3.00 UNLIMITED NATURAL NONE
190,920
#179-SUITE R3 69,380 3.00 UNLIMITED NATURAL NONE
HOST MARRIOTT 86,725
86,725 3.00 UNLIMITED NATURAL NONE
104,070
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRIMARY ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM OVERAGE CEILING BREAKPOINT
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT % (000'S) (000'S) RECOVERIES
- -------- ----------- ------------ ------- ------- -------- -------- --------- --------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
16,158
------
1,203,310
=========
</TABLE>
<PAGE>
=================================
PRO-JECT +PLUS ASSUMPTIONS REPORT
=================================
<PAGE>
GRAPEVINE MILLS (4/98)
PROJECT DESIGNATOR: GV98
PROJECT ASSUMPTIONS REPORT
EXCLUDING TENANTS
7/30/98 @ 13:57
BUILDING PROLOGUE
- -----------------
LEASEHOLD ANALYSIS OF GRAPEVINE MILLS (4/98) BEGINNING 7/1997
FOR 25 YEARS ON A FISCAL YEAR BASIS
AREA MEASURES
- -------------
SGLA
DESCRIBED AS GLA MALL SHOPS ONLY (EXCL. FOOD COURT)
1997 VALUE - 511,394
THEREAFTER - CONSTANT
AGLA
DESCRIBED AS GROSS LEASEABLE AREA; ANCHOR SPACE ONLY
1997 VALUE - 661,642
THEREAFTER - CONSTANT
FGLA
DESCRIBED AS GLA, FOOD COURT (INCL. FOOD COURT KIOSKS)
1997 VALUE - 11,532
THEREAFTER - CONSTANT
MGLA
DESCRIBED AS TOTAL SPECIALTY SHOP GLA
+100.0% OF SGLA+100.0% OF FGLA
TAXA
DESCRIBED AS TOTAL GLA FOR ANCHOR TAX RECOVERY. EXCLUDES AMC.
+100.0% OF MGLA+100.0% OF AGLA
+100.0% OF RGLA+100.0% OF KGLA
GLOA
DESCRIBED AS AVERAGE OCCUPIED AREA FOR MALL SHOP RECOVERIES. EXCLUDES ANCHOR
TENANTS. (PRIMARY CODE 3)
1997 VALUE - 87,823
1998 VALUE - 466,749
1999 VALUE - 503,221
2000 VALUE - 531,887
2001 VALUE - 537,166
2002 VALUE - 512,434
2003 VALUE - 534,215
2004 VALUE - 539,610
2005 VALUE - 539,143
2006 VALUE - 534,055
2007 VALUE - 526,831
2008 VALUE - 522,016
2009 VALUE - 538,575
2010 VALUE - 503,823
2011 VALUE - 541,668
2012 VALUE - 538,338
2013 VALUE - 519,290
2014 VALUE - 518,823
2015 VALUE - 496,132
2016 VALUE - 522,684
2017 VALUE - 487,713
2018 VALUE - 525,461
2019 VALUE - 523,410
2020 VALUE - 517,598
2021 VALUE - 517,938
THEREAFTER - CONSTANT
<PAGE>
PAGE 2
RGLA
DESCRIBED AS SPECIALTY RESTAURANT GLA
1997 VALUE - 16,158
THEREAFTER - CONSTANT
KGLA
DESCRIBED AS KIOSK GLA
1997 VALUE - 2,584
THEREAFTER - CONSTANT
OGLA
+100.0% OF MGLA+100.0% OF RGLA
PCCF
DESCRIBED AS FOOD COURT OCCUPIED AREA; UTILIZED FOR FOOD COURT RECOVERY
1997 VALUE - 1,922
1998 VALUE - 11,532
1999 VALUE - 11,532
2000 VALUE - 11,532
2001 VALUE - 11,532
2002 VALUE - 11,532
2003 VALUE - 11,532
2004 VALUE - 11,532
2005 VALUE - 11,532
2006 VALUE - 11,532
2007 VALUE - 11,532
2008 VALUE - 11,532
2009 VALUE - 11,532
2010 VALUE - 9,610
2011 VALUE - 11,532
2012 VALUE - 11,532
2013 VALUE - 11,532
2014 VALUE - 11,532
2015 VALUE - 11,532
2016 VALUE - 11,532
2017 VALUE - 9,610
2018 VALUE - 11,532
2019 VALUE - 11,532
2020 VALUE - 11,532
2021 VALUE - 11,532
THEREAFTER - CONSTANT
GROWTH RATES
- ------------
RENG
DESCRIBED AS GROWTH RATE FACTOR; RENT GROWTH
1997 VALUE - 2.00
1998 VALUE - 2.00
1999 VALUE - 3.00
2000 VALUE - 3.00
THEREAFTER - CONSTANT
SALG
DESCRIBED AS GROWTH RATE FACTOR; SALES GROWTH
1997 VALUE - 6.00
1998 VALUE - 6.00
1999 VALUE - 5.00
2000 VALUE - 4.00
2001 VALUE - 3.00
THEREAFTER - CONSTANT
MISG
DESCRIBED AS GROWTH RATE FACTOR; MISCELLANEOUS
1997 VALUE - 3.00
THEREAFTER - CONSTANT
<PAGE>
PAGE 3
EXPG
DESCRIBED AS GROWTH RATE FACTOR; EXPENSES GROWTH
1997 VALUE - 3.50
THEREAFTER - CONSTANT
CPIG
DESCRIBED AS GROWTH RATE FACTOR; CONSUMER PRICE INDEX (CP1)
1997 VALUE - 3.50
THEREAFTER- CONSTANT
1\
DESCRIBED AS GROWTH RATE FACTOR; ENERGY GROWTH
ZERO
TAXG
DESCRIBED AS GROWTH RATE FACTOR; REAL ESTATE TAX GROWTH
1997 VALUE - 3.50
THEREAFTER - CONSTANT
MARKET RATES
- ------------
8501
DESCRIBED AS CAM RECOVERY WITH $8.50 CAP. FUTURE POOL 1 RECOVERY.
1997 VALUE - 8.50
1998 VALUE - 8.50
THEREAFTER - EXPENSE CAM1 DIVIDED BY AREA MEASURE GOLA
8502
DESCRIBED AS CAM RECOVERY WITH $8.50 CAP. FUTURE POOL 2 RECOVERY.
1997 VALUE - 8.50
1998 VALUE - 8.50
THEREAFTER - EXPENSE CAM2 DIVIDED BY AREA MEASURE GLOA
SALA
DESCRIBED AS MARKET RATE FOR ANCHOR SALES
1997 VALUE - 150
1998 VALUE - 150
THEREAFTER - GROWING AT GROWTH RATE SALG
SALM
DESCRIBED AS AVERAGE SALES RATE; MALL SHOP TENANTS
1997 VALUE - 250
1998 VALUE - 250
THEREAFTER - GROWING AT GROWTH RATE SALG
SALF
DESCRIBED AS AVERAGE SALES RATE; FOOD COURT TENANTS
1997 VALUE - 500
1998 VALUE - 500
THEREAFTER - GROWING AT GROWTH RATE SALG
MKTK
DESCRIBED AS MARKET RENT; KIOSKS
1997 VALUE - 150
1998 VALUE - 150
THEREAFTER - GROWING AT GROWTH RATE RENG
MKT1
DESCRIBED AS N/A
1997 VALUE - 40.00
1998 VALUE - 40.00
THEREAFTER - GROWING AT GROWTH RATE RENG
MKT2
DESCRIBED AS MARKET RENT; TENANTS LESS THAN 1200 SF
1997 VALUE - 40.00
<PAGE>
PAGE 5
2008 VALUE - 2.00
THEREAFTER - CONSTANT
COMB
DESCRIBED AS COMMISSION RATE; BLENDED BASED ON WEIGHTED RENEWAL PROBABILITY
+35.0% OF COMN +65.0% OF COMR
ALTN
DESCRIBED AS ALTERATION RATE; NEW TENANTS
1997 VALUE - 15.00
1998 VALUE - 15.00
THEREAFTER - GROWING AT GROWTH RATE EXPG
ALTR
DESCRIBED AS ALTERATION RATE; RENEWAL TENANTS
1997 VALUE - 5.00
1998 VALUE - 5.00
THEREAFTER - GROWING AT GROWTH RATE EXPG
ALTB
DESCRIBED AS ALTERATION RATE; BLENDED BASED ON WEIGHTED RENEWAL PROBABILITY
+35.0% OF ALTN+65.0% OF ALTR
RESR
DESCRIBED AS RESERVE RATE; STRUCTURAL RESERVES
1997 VALUE - 0.20
1998 VALUE - 0.20
THEREAFTER - GROWING AT GROWTH RATE EXPG
CAM1
DESCRIBED AS COMMON AREA MAINTENANCE RECOVERY; GLA BASIS
1997 VALUE - 13.22
1998 VALUE - 13.22
THEREAFTER - EXPENSE CAM DIVIDED BY AREA MEASURE GLOA
1051
DESCRIBED AS CAM RECOVERY WITH $10.50 CAP. FUTURE POOL 1 RECOVERY.
1997 VALUE - 10.50
1998 VALUE - 10.50
THEREAFTER - EXPENSE CAM1 DIVIDED BY AREA MEASURE GLOA
1052
DESCRIBED AS CAM RECOVERY WITH $10.50 CAP. FUTURE POOL 2 RECOVERY.
1997 VALUE - 10.50
1998 VALUE - 10.50
THEREAFTER - EXPENSE CAM2 DIVIDED BY AREA MEASURE GLOA
CAM2
DESCRIBED AS TAX RECOVERY; GLA BASIS
1997 VALUE - 11.50
1998 VALUE - 11.50
THEREAFTER - EXPENSE CAM2 DIVIDED BY AREA MEASURE GLOA
ENGR
DESCRIBED AS TAX RECOVERY; LMA 80% BASIS
1997 VALUE - 0.38
1998 VALUE - 0.38
THEREAFTER - EXPENSE ENGR DIVIDED BY AREA MEASURE GLOA
W/SR
DESCRIBED AS MISCELLANEOUS EXPENSE
1997 VALUE - 0.06
THEREAFTER GROWING AT GROWTH RATE EXPG
MK12
DESCRIBED WATER SEWER RECOVERY RATE; GLOA BASIS
1997 VALUE - 13.00
THEREAFTER - GROWING AT GROWTH RATE RENG
<PAGE>
PAGE 6
C105
1997 VALUE - 10.50
1998 VALUE - 10.50
THEREAFTER - EXPENSE CAM1 DIVIDED BY AREA MEASURE GLOA
MISCELLANEOUS INCOMES
- ----------------------
PUSH CART INCOME
1997 VALUE - 900,000
1998 VALUE - 900,000
THEREAFTER - GROWING ART GROWTH RATE MISG
TEMPORARY TENANTS
1997 VALUE - 440,000
1998 VALUE - 400,000
1999 VALUE - 400,000
2000 VALUE - 350,000
THEREAFTER - GROWING AT GROWTH RATE MISG
MISCELLANEOUS
1997 VALUE - 975,000
1998 VALUE - 975,000
THEREAFTER - GROWING AT GROWTH RATE MISG
EXPENSES
- ---------
COMMON AREA MAINT., REFERRED TO AS CAME
DESCRIBED AS COMMON AREA MAINTENANCE EXPENSE;
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 5,240,000
1998 VALUE - 5,240,000
THEREAFTER - GROWING AT GROWTH RATE ECPG
CAN-ANCHOR CONTR., REFERRED TO AS CAMA
DESCRIBED AS COMMON AREA MAINTENANCE; ANCHOR CONTRIBUTIONS
AN INFORMATIONAL EXPENSE
1997 VALUE - 262,023
1998 VALUE - 781,265
1999 VALUE - 811,883
2000 VALUE - 840,299
2001 VALUE - 869,710
2002 VALUE - 877,841
2003 VALUE - 793,177
2004 VALUE - 820,876
2005 VALUE - 849,605
2006 VALUE - 879,343
2007 VALUE - 908,194
2008 VALUE - 928,903
2009 VALUE - 961,413
2010 VALUE - 995,064
2011 VALUE -1,029,892
2012 VALUE -1,039,603
2013 VALUE - 701,078
2014 VALUE - 704,448
2015 VALUE - 729,104
2016 VALUE - 747,635
2017 VALUE - 737,646
2018 VALUE - 371,357
2019 VALUE - 378,182
2020 VALUE - 391,419
2021 VALUE - 405,118
THEREAFTER - CONSTANT
CAN-MALL RECOVERY, REFERRED TO AS CAMM
<PAGE>
PAGE 7
DESCRIBED AS COMMON AREA MAINTENANCE; MALL TENANT RECOVERY
AN INFORMATION EXPENSE
CONSTANT
MANAGEMENT FEE , REFERRED TO AS MGTE
DESCRIBED AS RECOVERABLE MANAGEMENT FEE
AN INFORMATION EXPENSE
1997 VALUE - 319,778
1998 VALUE - 1,003,682
1999 VALUE - 1,065,233
2000 VALUE - 1,107,436
2001 VALUE - 1,128,487
2002 VALUE - 1,109,021
2003 VALUE - 1,183,736
2004 VALUE - 1,204,029
2005 VALUE - 1,216,216
2006 VALUE - 1,221,315
2007 VALUE - 1,251,624
2008 VALUE - 1,304,917
2009 VALUE - 1,339,220
2010 VALUE - 1,335,381
2011 VALUE - 1,415,365
2012 VALUE - 1,437,656
2013 VALUE - 1,403,144
2014 VALUE - 1,449,025
2015 VALUE - 1,456,235
2016 VALUE - 1,516,666
2017 VALUE - 1,462,678
2018 VALUE - 1,529,928
2019 VALUE - 1,555,287
2020 VALUE - 1,570,531
2021 VALUE - 1,618,650
THEREAFTER - CONSTANT
REAL ESTATE TAXES, REFERRED TO AS TAXE
DESCRIBED AS REAL ESTATE TAX EXPENSE
ASSOCIATED WITH PROPERTY ASSESSMENT
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 2,779,560
1998 VALUE - 2,779,560
THEREAFTER - GROWING AT GROWTH RATE TAXG
TAX-ANCHOR CONTR., REFERRED TO AS TAXA
DESCRIBED AS REAL ESTATE TAX EXPENSE; ANY ANCHOR CONTRIBUTIONS
AN INFORMATIONAL EXPENSE
1997 VALUE - 1,323,264
1998 VALUE - 1,323,264
1999 VALUE - 1,377,428
2000 VALUE - 1,452,758
2001 VALUE - 1,523,338
2002 VALUE - 1,574,928
2003 VALUE - 1,632,842
2004 VALUE - 1,690,383
2005 VALUE - 1,751,209
2006 VALUE - 1,817,146
2007 VALUE - 1,883,207
2008 VALUE - 1,967,388
2009 VALUE - 2,038,388
2010 VALUE - 4,097,475
2011 VALUE - 2,175,900
THEREAFTER - GROWING AT GROWTH RATE TAXG
TAX-MALL RECOVERY, REFERRED TO AS TAXM
DESCRIBED AS REAL ESTATE TAX EXPENSE; MALL TENANT RECOVERY
AN INFORMATIONAL EXPENSE
+100.0% OF TAXE-100.0% OF TAXA
RESERVES , REFERRED TO AS RESE
DESCRIBED AS RECOVERABLE RESERVE EXPENSE
<PAGE>
PAGE 8
AN INFORMATIONAL EXPENSE
MARKET RATE RESR MULTIPLIED BY AREA MEASURE OGLA
AMORITZATION, REFERRED TO AS AMOR
DESCRIBED AS RECOVERABLE CAM BASIS, NET OF ADMIN. FEE
AN INFORMATIONAL EXPENSE
1997 VALUE - 30,000
1998 VALUE - 30,000
THEREAFTER - GROWING AT GROWTH RATE MISG
FOOD COURT EXPENSE, REFERRED AS FCTE
DESCRIBED AS FOOD COURT EXPENSE
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 315,000
1998 VALUE - 315,000
THEREAFTER - GROWING AT GROWTH RATE EXPG
FCTE RECOVERY , REFERRED TO AS FCTR
DESCRIBED AS RECOVERABLE FOOD COURT EXPENSE; INCL.ADMIN.FEE
1997 VALUE - 314,000
1998 VALUE - 314,000
THEREAFTER - +115.0% OF FCTE
GENERAL & ADMIN. , REFERRED TO AS G&AE
DESCRIBED AS NON-RECOVERABLE GENERAL AND ADMINISTRATIVE EXPENSES
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 590,000
1998 VALUE - 590,000
THEREAFTER - GROWING AT GROWTH RATE EXPG
MISCELLANEOUS , REFERRED TO AS MISE
DESCRIBED AS NON-RECOVERABLE MISCELLANEOUS EXPENSE
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 50,000
1998 VALUE - 50,000
THEREAFTER - GROWING AT GROWTH RATE EXPG
CAM-ANCHORS , REFERRED TO AS CAMP
DESCRIBED AS CAM EXPENSE WITH ADMIN.FEE FOR PRORATA ANCHOR CONTRIBUTION
AN INFORMATIONAL EXPENSE
+115.0% OF CAME
SPECIAL ASSESSMT., REFERRED TO AS RET1
DESCRIBED AS RECOVERABLE PORTION OF TAX EXPENSE ASSOCIATED WITH SPECIAL
ASSESSMENT DISTRICT
AN INFORMATIONAL EXPENSE
1997 VALUE - 0.00
THEREAFTER - CONSTANT
RECOV.TAXES-ANCHOR, REFERRED TO AS RET2
DESCRIBED AS RECOVERABLE TAXES-ANCHOR TENANTS
AN INFORMATIONAL EXPENSE
+100.0% OF TAX+100.0% OF RET1
TOTAL TAXES , REFERRED TO AS RET3
AN INFORMATIONAL EXPENSE
+100.0% OF TAXE +100.0% OF RET1
CAM+AMOR+MGT+15% , REFERRED TO AS CAM1
AN INFORMATIONAL EXPENSE
+115.0% OF CAME+115.0% OF AMOR
+115.0% OF MGTE-100.0% OF CAMA
CAM+AMOR+15 , REFERRED TO AS CAM2
DESCRIBED AS FOOD COURT EXPENSE; WITH MARK UP FOR RECOVERY
AN INFORMATIONAL EXPENSE
+115.0% OF CAME+115.0% OF AMOR
<PAGE>
PAGE 9
- -100.0% OF CAMA
ENERGY RECOVERY , REFERRED TO AS ENGR
DESCRIBED AS GENERAL & ADMINISTRATIVE EXPENSE;
AN INFORMATIONAL EXPENSE
1997 VALUE - 174,160
1998 VALUE - 175,000
THEREAFTER - GROWING AT GROWTH RATE EXPG
WATER/SEWER REC., REFERRED TO AS W/SR
AN INFORMATIONAL EXPENSE
1997 VALUE - 30,000
1998 VALUE - 30,000
THEREAFTER - GROWING AT GROWTH RATE EXPG
WATER/SEWER , REFERRED TO AS W&SE
AN INFORMATIONAL EXPENSE
MARKET RATE W/SR MULTIPLIED BY AREA MEASURE GLOA
VACANCY ALLOWANCE
- ------------------
PERCENTAGE OF POTENTIAL GROSS INCOME
FOR ALL TENANTS SUBJECT TO VACANCY
1997 VALUE - 5.00
THEREAFTER - CONSTANT
MANAGEMENT FEE
- --------------
PERCENTAGE OF MINIMUM AND PERCENTAGE RENTS ONLY
FOR ALL TENANTS
PASSED THROUGH TO TENANTS USING EXPENSE MGTE
1997 VALUE - 5.00
THEREAFTER - CONSTANT
COMMISSION CALCULATIONS
- -----------------------
STANDARD METHOD #1 - PERCENT OF EACH YEAR'S RENT:
STANDARD METHOD #2 - PERCENT OF EACH YEAR'S RENT:
STANDARD METHOD #3 - 0.000% OF TOTAL RENT
STANDARD METHOD #4 - 0.000% OF TOTAL RENT
STANDARD METHOD #5 - 0.000% OF TOTAL RENT
COMMISSION PAYOUTS
- ------------------
STANDARD METHOD #1 - PAID IN SPECIFIED ANNUAL PERCENTAGES:
YEAR 1 - 33.333%
YEAR 2 - 33.333%
YEAR 3 - 33.333%
STANDARD METHOD #2 - PAID IN SPECIFIED ANNUAL PERCENTAGES:
YEAR 1 - 33.333%
YEAR 2 - 33.333%
YEAR 3 - 33.333%
STANDARD METHOD #3 - CASHED OUT
<PAGE>
PAGE 10
STANDARD METHOD #4 - CASHED OUT
STANDARD METHOD #5 - CASHED OUT
ALTERATION CALCULATION
- ----------------------
1997 VALUE - 0.0
THEREAFTER - CONSTANT
ALTERATION PAYOUTS
- ------------------
STANDARD METHOD #1 - CASHED OUT
STANDARD METHOD #2 - CASHED OUT
STANDARD METHOD #3 - CASHED OUT
STANDARD METHOD #4 - CASHED OUT
STANDARD METHOD #5 - CASHED OUT
COMMON AREA MAINTENANCE POOL
- --------------------------
CONTRIBUTION CONTAINED IN EXPENSE CAMA
BASED ON RECOVERIES ASSIGNED TO COST CENTER 2 - CAM-ANCHOR TENANTS
FOR THOSE TENANTS WITH THE FOLLOWING PRIMARY CLASSIFICATION CODE(S):
3 - ANCHORS
CAPITAL EXPENDITURES
- --------------------
STRUCTURAL RESERVE
MARKET RATE RESR MULTIPLIED BY AREA MEASURE TAXA
/1
ZERO
/2
ZERO
PRIMARY CLASSIFICATION CODES
- ----------------------------
1 - MALL SHOPS
2 - FOOD COURT
3 - ANCHORS
4 - KIOSKS
5 - RESTAURANT
SECONDARY CLASSIFICATION CODES
- ------------------------------
1 - XXX
2 - LESS THAN 1200 SF
3 - 1201-2000 SF
4 - 2001-3500 SF
5 - 3501-5000 SF
6 - 5001-7500 SF
7 - GREATER THAN 7500 SF
<PAGE>
PAGE 11
8 - FOOD COURT
9 - ANCHORS
10 - KIOSKS
11 - RESTAURANT
12 - IWERKS
13 - XXX
14 - XXX
15 - XXX
16 - XXX
17 - XXX
18 - XXX
19 - XXX
20 - XXX
21 - XXX
22 - XXX
23 - XXX
24 - XXX
25 - XXX
26 - XXX
27 - XXX
28 - XXX
29 - XXX
30 - XXX
31 - XXX
32 - XXX
COST CENTERS
- ------------
1 - CAM-MALL TENANTS
2 - CAM-ANCHOR TENANTS
3 - TAX-MALL TENANTS
4 - TAX-ANCHOR TENANTS
5 - ENERGY RECOVERY
6 - WATER/SEWER
7 - WATER/SEWER
8 - FOOD COURT CAM
9 - TAX-ANCHOR TENANTS
10 - ENERGY RECOVERY
11 - FOOD CT RECOVERY
SALES VOLUME PROFILE
- --------------------
PERCENT OF RELATIVE
MONTH ANNUAL SALES VOLUME
- ----- ------------ --------
JAN 7.99% 0.96
FEB 7.76% 0.93
MAR 8.68% 1.04
APR 8.73% 1.05
MAY 7.53% 0.90
JUN 7.26% 0.87
JUL 7.20% 0.86
AUG 7.46% 0.90
SEP 9.18% 1.10
OCT 7.48% 0.90
NOV 9.00% 1.08
DEC 11.73% 1.41
----------- --------
TOTAL 100.00% 12.00
GLOBAL RECOVERIES
- -----------------
<PAGE>
PAGE 12
CAM - POOL 1 , REFERRED TO AS 8501
DESCRIBED AS GLOBAL RECOVERY:CAM FOR SPECIALTY SHOPS
ASSIGNED TO COST CENTER 1 - CAM-MALL TENANTS
RECOVERY OF AMOUNTS OR RATES GROWING AT A RATE
YEAR 1 VALUE - 8.50/SF
YEAR 2 VALUE - 8.50/SF
YEAR 3 VALUE - MARKET RATE CAM1
THEREAFTER - GROWING AT GROWTH RATE EXPG
CAP - NONE
CAM - POOL 2 , REFERRED TO AS 8502
DESCRIBED AS GLOBAL RECOVERY:TAXES FOR SPECIALTY SHOPS
ASSIGNED TO COST CENTER 1 - CAM-MALL TENANTS
RECOVERY OF AMOUNTS OR RATES GROWING AT A RATE
YEAR 1 VALUE - 8.50/SF
YEAR 2 VALUE - 8.50/SF
YEAR 3 VALUE - MARKET RATE CAM2
THEREAFTER - GROWING AT GROWTH RATE EXPG
CAP - NONE
TAX-MALL RECOVERY, REFERRED TO AS TAXM
DESCRIBED AS GLOBAL RECOVERY; ENERGY/UTILITIES
ASSIGNED TO COST CENTER 3 - TAX-MALL TENANTS
PRO RATA SHARE RECOVERY OF EXPENSE TAXM
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE GLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
CAM - POOL 1 , REFERRED TO AS 1051
DESCRIBED AS CAM RECOVERY ANCHOR'S PAYING PRO RATA SHARE
ASSIGNED TO COST CENTER 1 - CAM-MALL TENANTS
RECOVERY OF AMOUNTS OR RATES GROWING AT A RATE
YEAR 1 VALUE - 10.50/SF
YEAR 2 VALUE - 10.50/SF
YEAR 3 VALUE - MARKET RATE CAM1
THEREAFTER - GROWING AT GROWTH RATE EXPG
CAP - NONE
CAM - POOL 1 , REFERRED TO AS 1052
DESCRIBED AS GLOBAL RECOVERY; TRASH/RUBBISH
ASSIGNED TO COST CENTER 1 - CAM-MALL TENANTS
RECOVERY OF AMOUNTS OR RATES GROWING AT A RATE
YEAR 1 VALUE - 10.50/SF
YEAR 2 VALUE - 10.50/SF
YEAR 3 VALUE - MARKET RATE CAM1
THEREAFTER - GROWING AT GROWTH RATE EXPG
CAP - NONE
GLB1
DESCRIBED AS GLOBAL RECOVERY; WATER/SEWER
GLOBAL GROUPING
GLOBAL RECOVERY 8501
GLOBAL RECOVERY TAXM
GLOBAL RECOVERY ENGR
GLOBAL RECOVERY W/SR
GLB2
DESCRIBED AS GLOBAL GROUPING; RECOVERABLE EXPENSES (SPECIALTY SHOPS EXCLUSIVE
OF FOOD COURT)
GLOBAL GROUPING
GLOBAL RECOVERY 8502
GLOBAL RECOVERY TAXM
GLOBAL RECOVERY ENGR
GLOBAL RECOVERY W/SR
GLB3
DESCRIBED AS GLOBAL GROUPING OF RECOVERIES; STANDARD FOR FOOD COURT TENANTS
<PAGE>
PAGE 13
GLOBAL GROUPING
GLOBAL RECOVERY 1051
GLOBAL RECOVERY TAXM
GLOBAL RECOVERY ENGR
GLOBAL RECOVERY W/SR
GLB4
DESCRIBED AS GLOBAL RECOVERY; FOOD COURT
GLOBAL GROUPING
GLOBAL RECOVERY 1052
GLOBAL RECOVERY TAXM
GLOBAL RECOVERY ENGR
GLOBAL RECOVERY W/SR
CAM+AMOR+15%, REFERRED TO AS CAMM
DESCRIBED AS GLOBAL GROUPING OF RECOVERIES; NEW STANDARD (LMA 80% BASIS)
ASSIGNED TO COST CENTER 1 - CAM-MALL TENANTS
PRO RATA SHARE RECOVERY OF EXPENSE CAM1
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE GLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
GLBM
DESCRIBED AS GLOBAL RECOVERY; TAX LMA 80% BASIS
GLOBAL GROUPING
GLOBAL RECOVERY CAMM
GLOBAL RECOVERY TAXM
GLOBAL RECOVERY W/SR
GLOBAL RECOVERY ENGR
ENERGY RECOVERY , REFERRED TO AS ENGR
DESCRIBED AS GLOBAL RECOVERY; CAM GLA BASIS
ASSIGNED TO COST CENTER 5 - ENERGY RECOVERY
RECOVERY OF AMOUNTS OR RATES GROWING AT A RATE
YEAR 1 VALUE - MARKET RATE ENGR
THEREAFTER - GROWING AT 0.00%
CAP - NONE
WATER/SEWER , REFERRED TO AS W/SR
DESCRIBED AS ENERGY RECOVERY; CHARGED TO ALL MALL SHOPS AND INTERIOR ANCHORS.
RATE REFLECTS ADDITIONAL RECEIPTS RECEIVED.
ASSIGNED TO COST CENTER 6- WATER/SEWER
PRO RATA SHARE RECOVERY OF EXPENSE W&SE
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE GLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
FCTE RECOVERY , REFERRED TO AS FCTR
ASSIGNED TO COST CENTER 8 - FOOD COURT CAM
PRO RATA SHARE RECOVERY OF EXPENSE FCTR
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE OCCF
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
TENANT PROLOGUE
- ---------------
MINIMUM RENTS:
SPECIFIED AMOUNTS INTERPRETED AS AMOUNTS/SQUARE FOOT/YESR
MARKET RATES INTERPRETED AS AMOUNTS/SQUARE FOOD/YEAR
SALES VOLUMES AND BREAKPOINTS:
SPECIFIED AMOUNTS INTERPRETED AS AMOUNTS/YEAR
MARKET RATES INTERPRETED AS AMOUNTS/SQUARE FOOT/YEAR
<PAGE>
PAGE 14
RENEWAL RENTS ARE COMPOUNDED ANNUALLY
RELETTING DOWNTIME AND EXPENSES ARE NOT CONDITIONAL ON GOING TO MARKET
REFERENCE TENANTS
- -----------------
THERE ARE A TOTAL OF 9 REFERENCE TENANT(S):
- ---------------------------------------------------------------------
# 1 - MKT2
BASE LEASE DATES: 1/1994 TO 12/2003
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOPS
SECONDARY CODE: 2 - LESS THAN 1200 SF
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - 0.00/SF/YR
PERCENTAGE RENT:
INITIAL SALES - 0/YEAR
THEREAFTER - GROWING AT 0.00%
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSIONS: NONE
ALTERATIONS: NONE
SPECULATIVE RENEWALS:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKT2
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
10.00 AFTER MONTH 48
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY GLBM
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYPOUT: CASHED OUT
RENEWAL ALTERATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------------------------
# 2 - SUITE 1 ,MKT2
BASE LEASE DATES: 1/1994 TO 12/2003
<PAGE>
PAGE 15
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOPS
SECONDARY CODE: 2 - LESS THAN 1200 SF
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - 0.00/SF/YR
PERCENTAGE RENT:
INITIAL SALES - 0/YEAR
THEREAFTER - GROWING AT 0.00%
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSION: NONE
ALTERATIONS: NONE
SPECULATIVE RENEWALS:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKT2
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
10.00 AFTER MONTH 48
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY GLBM
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYPOUT: CASHED OUT
RENEWAL ALTERATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------------------------
#3 - MKT3
BASE LEASE DATES: 1/1994 TO 12/2003
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOPS
SECONDARY CODE: 3 - 1201-2000 SF
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - 0.00/SF/YR
PERCENTAGE RENT:
INITIAL SALES - 0/YEAR
THEREAFTER - GROWING AT 0.00%
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
<PAGE>
PAGE 17
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKT4
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
10.00 AFTER MONTH 48
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM LEASE
RENEWAL RECOVERIES: NONE
GLOBAL GROUPING
GLOBAL RECOVERY GLBM
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT: CASHED OUT
RENEWAL ALTERATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------------------------
#5 - MKT5
BASE LEASE DATES: 1/1994 TO 12/2003
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOPS
SECONDARY CODE: 5 - 3501-5000 SF
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - 0.00/SF/YR
PERCENTAGE RENT:
INITIAL SALES - 0/YEAR
THEREAFTER - GROWING AT 0.00%
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSION: NONE
ALTERATIONS: NONE
SPECULATIVE RENEWALS:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKT5
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
10.00 AFTER MONTH 48
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
<PAGE>
PAGE 18
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY GLBM
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT: CASHED OUT
RENEWAL ALTERATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------------------------
#6 - MKT6
BASE LEASE DATES: 1/1994 TO 12/2003
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOPS
SECONDARY CODE: 6 - 5001-7500 SF
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - 0.00/SF/YR
PERCENTAGE RENT:
INITIAL SALES - 0/YEAR
THEREAFTER - GROWING AT 0.00%
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSION: NONE
ALTERATIONS: NONE
SPECULATIVE RENEWAL:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKT6
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
10.00 AFTER MONTH 48
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY GLBM
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT: CASHED OUT
RENEWAL ALTERATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
<PAGE>
- ---------------------------------------------------------------------
#7 - MKT7
BASE LEASE DATES: 1/1994 TO 12/2003
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOPS
SECONDARY CODE: 7 - GREATER THAN 7500 SF
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - 0.00/SF/YR
PERCENTAGE RENT:
INITIAL SALES - 0/YEAR
THEREAFTER - GROWING AT 0.00%
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSION: NONE
ALTERATIONS: NONE
SPECULATIVE RENEWAL:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKT7
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
10.00 AFTER MONTH 48
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY GLBM
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYPOUT: CASHED OUT
RENEWAL ALTERATIONS : MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------------------------
#8 - MKT8
BASE LEASE DATES: 1/1994 TO 12/2006
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOPS
SECONDARY CODE: 8 - FOOD COURT
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - 0.00/SF/YR
<PAGE>
PAGE 20
PERCENTAGE RENT:
INITIAL SALES - 0/YEAR
THEREAFTER - GROWING AT 0.00%
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSIONS: NONE
ALTERATIONS: NONE
SPECULATIVE RENEWALS:
LENGTH VACANT SQ FT MONTHS OF
TERM YEARS.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKTF
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
10.00 AFTER MONTH 48
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY GLBM
GLOBAL GROUPING
GLOBAL RECOVERY FCTR
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT: CASHED OUT
RENEWAL ALTERATIONS : MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------------------------
#9 - MKT9
BASE LEASE DATES: 1/1998 TO 12/2007
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 4 - KIOSKS
SECONDARY CODE: 10 - KIOSKS
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - 0.00/SF/YR
PERCENTAGE RENT:
INITIAL SALES - 0/YEAR
THEREAFTER - GROWING AT 0.00%
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSIONS: NONE
<PAGE>
PAGE 21
ALTERATIONS: NONE
SPECULATIVE RENEWALS:
LENGTH VACANT SQ FT MONTHS OF
TERM YEARS.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 5.00 2 NONE NONE YES NO
2 5.00 2 NONE NONE YES NO
3 5.00 2 NONE NONE YES NO
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKTK
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH /SF/YR STEPS OF
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY GLBM
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT: CASHED OUT
RENEWAL ALTERATIONS : NONE
<PAGE>
PRO-JECT +PLUS LEASE EXPIRATION REPORT
<PAGE>
GRAPEVINE MILLS (4/98)
PROJECT DESIGNATOR: GV98
EXPIRATION REPORT
YEARS 1998 TO 2009, ALL TENANTS,
INCLUDING OPTIONS, INCLUDING RENEWALS,
EXCLUDING BASE LEASES AND PRIOR OPTIONS,
BASE RENTS INCLUDING CPI ADJUSTMENTS,
INCLUDING PERCENTAGE RENTS
7/30/98 @ 13:58
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- --------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
#172-SUITE 623 INITIAL
HEALTH RIDER 1,327 10/1998 28.00 12.52 40.51 33.00
1 FY 99 EXPIRATIONS 1,327 28.00 12.52 40.51 33.00
# 21-SUITE 108 INITIAL
SHERYL'S 5,101 10/1999 24.00 0.44 24.44 19.38
# 25-SUITE 114 INITIAL
TOTES/SUNGLASS 2,878 12/1999 28.09 0.45 28.53 25.21
#146-SUITE 514 INITIAL
AMERICAN OUTPOST 3,251 1/2000 25.00 14.55 39.55 25.21
----- ----- ----- ----- -----
3 FY100 EXPIRATIONS 1,230 25.34 4.53 29.86 22.56
----- ----- ----- ----- -----
4 CUMULATIVE EXPS 12,557 25.62 5.37 30.99 23.67
# 69-SUITE 239 INITIAL
MATERNITY WORKS 1,610 10/2000 24.94 14.56 39.50 34.67
# 96-SUITE 323 INITIAL
DALLAS DANCEWEAR 1,362 10/2000 35.00 14.06 49.07 34.67
#102-SUITE 333 INITIAL
EDWARD SOLOMON 1,460 10/2000 35.00 14.07 49.07 34.67
#118-SUITE 411 INITIAL
BERMUDA GOLD 1,509 10/2000 30.00 14.54 44.54 34.67
#123-SUITE 417 INITIAL
WHEELS AND FITNESS 2,391 10/2000 25.00 14.54 39.54 25.21
# 27-SUITE 117 INITIAL
MIKE BENET FACTORY 2,094 10/2000 30.00 14.06 44.06 25.21
#47-SUITE 205 INITIAL
LIZ CLAIBORNE 2,667 10/2000 23.00 14.55 37.55 25.21
# 22-SUITE 109 INITIAL
GREAT IDEAS 1,110 11/2000 25.01 14.06 39.07 42.02
#116-SUITE 406 INITIAL
BAKERS OUTLET 3,054 1/2001 20.00 14.97 34.97 26.10
#129-SUITE 424 INITIAL
J. RIGGINS 2,915 1/2001 20.00 14.98 34.98 26.10
# 86-SUITE 311 INITIAL
CORNING REVERE 6,605 1/2001 26.47 17.58 44.05 20.66
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ---------------------- ----------- ---------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
#167-SUITE 612 INITIAL
URBAN PLANET 4,264 1/2001 18.00 14.48 32.48 21.75
#171-SUITE 617 INITIAL
KIRKLANDS 5,835 1/2001 19.00 14.48 33.48 20.66
#120-SUITE 413 INITIAL
5-7-9 OUTLET 2,692 1/2001 20.00 14.98 34.98 26.10
----- ----- ----- ----- -----
14 FY101 EXPIRATIONS 39,568 23.54 15.06 38.60 25.49
------ ----- ----- ----- -----
18 CUMULATIVE EXPS 52,125 24.04 12.72 36.77 25.05
#114-SUITE 403 INITIAL
TODAY'S NEWS 1,092 10/2001 30.00 14.98 44.98 43.49
#126-SUITE 420 INITIAL
BABY GUESS 2,408 1/2002 23.00 15.63 38.63 27.01
# 63-SUITE 224 INITIAL
GAP 9,769 1/2002 12.00 9.34 21.34 16.88
# 34-SUITE 126 INITIAL
DALLAS COWBOYS 2,574 2/2002 23.00 17.55 40.55 27.01
#115-SUITE 404 INITIAL
PREMIER CONCEPTS 1,115 5/2002 52.00 14.99 67.00 45.02
5 FY102 EXPIRATIONS 16,958 19.02 12.22 31.24 23.42
23 CUMULATIVE EXPS 69,083 22.81 12.60 35.41 24.65
# 32-SUITE 123 INITIAL
OBZEET IMPORTED 2,944 10/2002 23.00 15.12 38.12 27.01
# 70-SUITE 240 INITIAL
BANISTER SHOES 3,508 10/2002 17.00 17.37 34.37 22.51
# 71-SUITE 241 INITIAL
COASTAL COTTON CO. 1,926 10/2002 28.00 15.12 43.12 37.14
# 72-SUITE 242 INITIAL
CARTERS FOR KIDS 4,540 10/2002 17.00 15.64 32.64 22.51
# 73-SUITE 244 INITIAL
FACTORY SHOES 9,795 10/2002 15.05 15.63 30.69 16.88
# 74-SUITE 246 INITIAL
BAG N' BAGGAGE 5,125 10/2002 19.00 18.33 37.33 21.38
#75-SUITE 248 INITIAL
L'EGGS HANES 5,460 10/2002 17.50 15.64 33.14 21.38
#77-SUITE 252 INITIAL
OSHKOSH B'GOSH 5,005 10/2002 18.00 15.63 33.64 21.38
# 79-SUITE 258 INITIAL
ROCKY MOUNTAIN 844 10/2002 40.00 15.64 55.64 45.02
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- -------------------- ----------- ---------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
# 81-SUITE 301 INITIAL
C.R. JEWELERS 1,470 10/2002 55.00 18.33 73.33 37.14
# 83-SUITE 303 INITIAL
PERFUMANIA 1,199 10/2002 50.21 18.35 68.56 45.02
# 20-SUITE 107 INITIAL
CUTTING EDGE 1,141 10/2002 25.00 15.64 40.64 45.02
# 90-SUITE 316 INITIAL
DRESS BARN 8,715 10/2002 16.00 15.63 31.63 16.88
# 92-SUITE 319 INITIAL
LEE NAILS 977 10/2002 50.00 18.34 68.34 45.02
# 93-SUITE 320 INITIAL
NATURALIZER 2,577 10/2002 23.00 15.64 38.64 27.01
# 95-SUITE 322 INITIAL
QUACKIN UP 1,168 10/2002 30.00 15.64 45.64 45.02
# 35-SUITE 127 INITIAL
BIG DOG SPORTSWEAR 2,530 10/2002 25.00 15.64 40.64 27.01
# 97-SUITE 325 INITIAL
FLAG SHOP 1,023 10/2002 37.50 18.33 55.84 45.02
# 99-SUITE 327 INITIAL
TWO LIPS 1,468 10/2002 25.00 18.33 43.32 37.14
#44-SUITE 200 INITIAL
BRITCHES 5,458 10/2002 21.00 15.64 36.64 21.38
#103-SUITE 334 INITIAL
EARTHBOUND TRADING 3,002 10/2002 27.00 18.33 45.33 27.01
#107-SUITE 339 INITIAL
LIDS 1,309 10/2002 27.00 15.63 42.63 37.14
#108-SUITE 340 INITIAL
T-SHIRTS PLUS 1,313 10/2002 30.00 15.63 45.63 37.14
#111-SUITE 344 INITIAL
COUNTRY CLUTTER 2,238 10/2002 24.00 15.64 39.64 27.01
#112-SUITE 400 INITIAL
WE'RE ENTERTAIN. 5,332 10/2002 18.00 15.64 33.64 21.38
#113-SUITE 401 INITIAL
NATIVES 1,497 10/2002 27.00 15.63 42.63 37.14
# 46-SUITE 204 INITIAL
HAGGAR 2,883 10/2002 18.00 15.63 33.64 27.01
# 49-SUITE 207 INITIAL
LEATHER LOFT 1,650 10/2002 25.00 15.63 40.63 37.14
# 51-SUITE 209 INITIAL
FRAGRANCE OUTLET 1,937 10/2002 49.11 18.34 67.45 37.14
#119-SUITE 412 INITIAL
OPC FASHIONS 4,987 10/2002 17.00 15.12 32.12 22.51
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- -------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
#52-SUITE 210 INITIAL
BROOKS BROTHERS 5,365 10/2002 20.00 15.64 35.64 21.38
#56-SUITE 216 INITIAL
NINE WEST OUTLET 3,759 10/2002 18.00 17.37 35.37 22.51
#124-SUITE 418 INITIAL
JUST SPORTS 3,486 10/2002 32.00 15.64 47.64 27.01
#58-SUITE 218 INITIAL
CACHE 2,725 10/2002 23.25 15.64 38.39 27.01
#62-SUITE 222 INITIAL
DONNA KARAN 5,845 10/2002 24.00 18.34 42.34 21.38
#130-SUITE 425 INITIAL
LETS TALK CELLULAR 1,144 10/2002 37.00 15.63 52.63 45.02
#134-SUITE 429 INITIAL
SAMSONITE COMPANY 3,571 10/2002 23.00 15.64 38.63 22.51
#136-SUITE 431 INITIAL
LENSCRAFTERS 3,579 10/2002 18.00 15.64 33.64 22.51
#143-SUITE 509 INITIAL
VANS OUTLET 2,260 10/2002 26.00 15.63 41.63 27.01
#145-SUITE 513 INITIAL
CASUAL MALE 2,803 10/2002 23.00 15.63 38.63 27.01
#29-SUITE 120 INITIAL
JEWELERS OF L.V. 1,207 10/2002 55.00 18.34 73.34 37.14
#147-SUITE 515 INITIAL
PERFUMANIA PLUS 3,442 10/2002 32.00 15.64 47.64 27.01
#156-SUITE 544 INITIAL
VITAMIN WORLD 1,580 10/2002 33.50 15.64 49.14 37.14
#161-SUITE 602 INITIAL
K.B. TOY WORKS 5,308 10/2002 20.00 15.64 35.64 21.38
#165-SUITE 610 INITIAL
WORLD TRAVELER 4,905 10/2002 25.00 15.64 40.64 22.51
#66-SUITE 228 INITIAL
BOSE 4,134 10/2002 20.00 15.64 35.64 22.51
#168-SUITE 614 INITIAL
CINNAMONSTER 985 10/2002 60.00 18.34 78.34 45.02
#67-SUITE 236 INITIAL
BUGLE BOY 7,093 10/2002 15.00 15.64 30.64 21.38
#68-SUITE 2463 INITIAL
COLOURS & SCENTS 2,463 10/2002 34.00 18.33 52.34 27.01
#176-SUITE K10 INITIAL
ZAP! 292 10/2002 92.10 18.33 110.42 168.81
#91-SUITE 317 INITIAL
WATCHES, ETC 1,138 11/2002 35.00 15.64 50.64 45.02
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ---------------------- ----------- ---------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
#162-SUITE 604 INITIAL
BIBLE FACTORY 3,504 12/2002 24.00 18.33 42.33 23.30
#31-SUITE 122 INITIAL
ALL TIED UP 973 12/2002 48.88 15.64 64.51 46.59
#170-SUITE 616 INITIAL
SUNBEAM AND OSTER 3,291 12/2002 23.00 13.88 36.88 27.96
#125-SUITE 419 INITIAL
ALL THAT JAZZ 3,525 1/2003 16.00 16.03 32.03 23.30
#53-SUITE 212 INITIAL
GUESS? 4,586 1/2003 21.00 18.82 39.83 23.30
#128-SUITE 423 INITIAL
REMINGTON FACTORY 1,255 1/2003 35.00 16.03 51.02 38.44
#151-SUITE 530 INITIAL
WILSONS LEATHER 3,739 1/2003 22.00 16.03 38.03 23.30
#138-SUITE 500 INITIAL
DOCKERS OUTLET 4,382 1/2003 19.00 16.03 35.03 23.30
#141-SUITE 506 INITIAL
LEVIS 5,125 1/2003 21.00 16.03 37.03 22.13
#122-SUITE 416 INITIAL
ANCHOR BLUE CLOTHI 4,553 1/2003 18.00 15.50 33.50 23.30
#48-SUITE 206 INITIAL
ULTRA 1,124 2/2003 55.00 18.82 73.83 46.59
#137-SUITE 432 INITIAL
S.C.R.U.B.S. 3,783 4/2003 24.00 15.36 39.36 23.30
#88-SUITE 313 INITIAL
I LOVE QUILTS 2,066 5/2003 35.00 18.02 53.02 27.96
#26-SUITE 115 INITIAL
ORBIT INTERNATIONA 1,643 5/2003 30.00 18.02 48.02 38.44
#181-SUITE 2 INITIAL
VACANT KIOSK*** 400 6/2003 150.00 18.03 168.03 174.72
----- ------ ----- ------ ------
66 FY103 EXPIRATIONS 204,054 23.52 16.21 39.73 25.84
------- ------ ----- ------ ------
89 CUMULATIVE EXPS 273,137 23.34 15.30 38.64 25.54
#180-SUITE K1 INITIAL
VACANT KIOSK*** 400 11/2003 150.00 18.03 168.03 174.72
#183-SUITE K4 INITIAL
VACANT KIOSK*** 400 12/2003 150.00 17.82 167.82 180.84
#184-SUITE K5 INITIAL
VACANT KIOSK*** 400 3/2004 150.00 18.42 168.42 180.84
#182-SUITE K3 INITIAL
VACANT KIOSK*** 400 5/2004 150.00 18.42 168.42 180.84
------- ------ ----- ------ ------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- --------------------- ----------- ---------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
4FY104 EXPIRATIONS 1,600 150.00 18.17 168.17 179.31
----- ------ ----- ------ ------
93 CUMULATIVE EXPS 274,737 24.08 15.31 39.39 26.44
#153-SUITE 534 INITIAL
WINDSOR OUTLET 6,243 10/2004 23.00 16.54 39.54 22.91
#142-SUITE 507 INITIAL
FLORSHEIM SHOES 2,300 10/2004 27.93 16.54 44.47 28.93
#24-SUITE 113 INITIAL
TEXAS TREASURES 1,232 10/2004 26.00 19.43 45.43 39.78
#100-SUITE 328 INITIAL
JEWELRY BOX OUTLET 1,027 10/2004 63.00 19.43 82.43 48.22
#175-SUITE K9 INITIAL
VACANT KIOSK*** 292 11/2004 150.00 0.00 150.00 180.84
------- ------ ----- ------ ------
5 FY105 EXPIRATIONS 11,094 31.40 16.70 48.10 32.53
------- ------ ----- ------ ------
98 CUMULATIVE EXPS 285,831 24.36 15.37 39.73 26.67
#87-SUITE 312 INITIAL
VACANT IN-LINE*** 9,178 8/2005 18.72 19.09 37.81 18.72
#23-SUITE 111 OPTION 1
STUDIO ONE 1,509 10/2005 40.81 0.00 40.81 41.18
#40-SUITE 136 INITIAL
VACANT IN-LINE*** 2,757 11/2005 22.00 19.09 41.09 29.95
#158-SUITE 548 INITIAL
VACANT IN-LINE*** 5,872 11/2005 21.00 19.09 40.09 23.71
#172-SUITE 623 RENEWAL 1
HEALT RIDER 1,327 12/2005 37.02 19.07 56.09 42.62
#42-SUITE 138 INITIAL
ANN TAYLOR 7,514 1/2006 17.00 19.92 36.92 19.37
#164-SUITE 608 INITIAL
VACINT IN-LINE*** 4,777 2/2006 22.00 19.82 41.82 25.83
#135-SUITE 430 INITIAL
VACANT IN LINE*** 3,783 2/2006 22.00 19.70 41.70 25.83
#104-SUITE 335 INITIAL
VACANT IN-LINE*** 1,392 2/2006 36.00 19.82 55.82 42.62
#45-SUITE 202 INITIAL
VACANT IN-LINE*** 5,700 5/2006 21.00 19.82 40.82 24.54
#43-SUITE 139 INITIAL
VACANT IN-LINE*** 1,036 5/2006 44.00 19.83 63.83 30.99
#55-SUITE 215 INITIAL
VACANT IN-LINE*** 2,135 5/2006 26.50 19.82 46.33 30.99
------- ------- ------ ----- ------ ------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ---------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
12 FY 106
EXPIRATIONS 46,980 22.45 18.89 41.34 25.04
------ ----- ----- ----- -----
110 CUMULATIVE
EXPS 332,811 24.09 15.87 39.96 26.44
#159-SUITE 600 INITIAL
VACANT IN-LINE*** 5,133 8/2006 21.00 19.82 40.82 24.54
#173-SUITE 625 INITIAL
VACANT IN-LINE*** 1,773 8/2006 36.00 19.82 55.82 42.62
#19-SUITE 105 INITIAL
VACANT IN-LINE*** 1,716 10/2006 26.50 19.80 46.31 42.62
#105-SUITE 337 INITIAL
VACANT IN-LINE*** 1,471 10/2006 36.00 19.82 55.82 42.62
#39-SUITE 135 INITIAL
VACANT IN-LINE*** 1,215 11/2006 26.50 19.81 46.31 42.62
#163-SUITE 606 INITIAL
VACANT IN-LINE*** 4,546 11/2006 22.00 19.82 41.82 25.83
#109-SUITE 341 INITIAL
VACANT IN-LINE*** 1,455 11/2006 36.00 19.83 55.83 42.62
#21-SUITE 108 RENEWAL 1
SHERYL'S 5,101 12/2006 26.40 19.81 46.21 25.40
#110-SUITE 342 INITIAL
VACANT IN-LINE*** 1,448 2/2007 36.00 20.74 56.74 44.11
#117-SUITE 408 INITIAL
VACANT IN-LINE*** 4,887 2/2007 22.00 21.10 43.10 26.73
#25-SUITE 114 RENEWAL 1
TOTES/SUNGLASS 2,878 2/2007 35.64 20.74 56.38 32.08
#146-SUITE 514 RENEWAL 1
AMERICAN OUTPOST 3,251 3/2007 27.74 20.74 48.48 32.08
#18-SUITE 104 INITIAL
VACANT IN-LINE*** 2,566 5/2007 26.50 20.74 47.24 32.08
#89-SUITE 315 INITIAL
VACANT IN-LINE*** 1,425 5/2007 36.00 20.74 56.74 44.11
#17-SUITE 101 INITIAL
VACANT IN-LINE*** 1,812 5/2007 26.50 20.74 47.25 44.11
#60-SUITE 220 INITIAL
VACANT IN-LINE*** 3,289 5/2007 26.00 20.74 46.74 32.08
------- ----- ----- ----- -----
16 FY107 EXPIRATIONS 43,966 27.17 20.31 47.48 32.29
------- ----- ----- ----- -----
126 CUMULATIVE
EXPS 376,777 24.45 16.38 40.84 27.13
#154-SUITE 536 INITIAL
WARNER BROTHERS 5,449 10/2007 14.35 0.00 14.35 25.40
#41-SUITE 137 INITIAL
CLAIRE'S BOUTIQUE 1260 10/2007 50.00 21.58 71.58 44.11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- --------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
#157-SUITE 546 INITIAL
ICING 1,580 10/2007 45.74 21.58 67.31 44.11
#127-SUITE 421 INITIAL
GNC 1,308 10/2007 39.00 21.58 60.58 44.11
#160-SUITE 601 INITIAL
SUNGLASS HUT 1,208 10/2007 54.59 18.37 72.95 44.11
#33-SUITE 124 INITIAL
PRETZEL TIME 846 10/2007 56.00 18.37 74.37 53.47
#57-SUITE 217 INITIAL
UNSIA 1,965 10/2007 33.00 18.38 51.38 44.11
#131-SUITE 426 INITIAL
MASTER CUTS 1,080 10/2007 37.00 21.58 58.58 53.47
#94-SUITE 321 INITIAL
BEAUTY EXPRESS 1,122 10/2007 37.01 21.57 58.58 53.47
#169-SUITE 615 INITIAL
SANRIO 1,495 10/2007 38.00 18.37 56.36 44.11
#36-SUITE 128 INITIAL
RACK ROOM 9,742 10/2007 19.00 18.37 37.37 20.05
#78-SUITE 256 INITIAL
SUNGLASS HUT 882 10/2007 65.01 18.38 83.39 53.47
#139-SUITE 501 INITIAL
RITZ CAMERA 1,570 10/2007 27.00 18.37 45.37 44.11
#140-SUITE 505 INITIAL
CAMPUS LIFESTYLES 1,307 10/2007 30.00 21.58 51.58 44.11
#37-SUITE 129 INITAL
SWIM 'N SPORT 2,346 10/2007 24.00 18.37 42.37 32.08
#98-SUITE 326 INITIAL
AUNTIE ANNES 858 10/2007 60.00 18.38 78.38 53.47
#50-SUITE 208 INITIAL
CAR-LENE RESEARCH 972 10/2007 32.00 18.37 50.37 53.47
#101-SUITE 330 INITIAL
CANDY HEADQUARTERS 1,247 10/2007 60.00 21.57 81.57 44.11
#121-SUITE 414 INITIAL
PAYLESS SHOESOURCE 3,833 10/2007 22.20 18.37 40.58 26.73
$84-SUITE 305 INITIAL
GUITARS & CADILLAC 1,477 10/2007 38.00 21.57 59.57 44.11
#148-SUITE 517 INITIAL
GLORIA JEANS 1,476 10/2007 50.00 18.02 68.02 44.11
#150-SUITE 522 INITIAL
STOP N SAVE 1,488 10/2007 40.00 18.37 58.37 44.11
#85-SUITE 309 INITIAL
WILD PAIR 2,561 10/2007 21.52 18.38 39.90 32.08
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- -------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
#30-SUITE 121 INITIAL
ATHLETIC ATTIC 2,996 10/2007 32.00 18.37 50.37 32.08
#65-SUITE 227 INITIAL
VACANT IN-LINE*** 1,875 11/2007 36.00 20.74 56.74 44.11
#61-SUITE 221 INITIAL
MIKASA 15,500 11/2007 16.25 5.11 21.36 20.05
#102-SUITE 333 RENEWAL 1
E|PEDWARD SOLOMON 1,460 12/2007 39.47 20.75 60.22 45.65
#166-SUITE 611 INITIAL
JUST FOR FEET 19,920 12/2007 28.00 21.58 49.58 20.75
#176-SUITE K10 RENEWAL 1
ZAP! 292 12/2007 174.74 20.75 195.49 207.52
#69-SUITE 239 RENEWAL 1
MATERNITY WORKS 1,610 12/2007 39.47 20.74 60.22 45.65
#118-SUITE 411 RENEWAL 1
BERMUDA GOLD 1,509 12/2007 39.48 20.75 60.22 45.65
#27-SUITE 117 RENEWAL 1
MIKE BENET FACTORY 2,094 12/2007 33.00 20.75 53.75 33.20
#47-SUITE 205 RENEWAL 1
LIZ CLAIBORNE 2,667 12/2007 28.71 20.75 49.46 33.20
#54-SUITE 214 INITIAL
ACCENTE 3,766 12/2007 24.00 21.58 45.58 27.67
#96-SUITE 323 RENEWAL 1
DALLAS DANCEWEAR 1,362 12/2007 39.47 20.74 60.21 45.65
#123-SUITE 417 RENEWAL 1
WHEELS AND FITNESS 2,391 12/2007 28.71 20.75 49.46 33.20
#28-SUITE 118 INITIAL
POINT OF VIEW 1,199 1/2008 65.00 19.01 84.01 55.34
#149-SUITE 520 INITIAL
GREAT TRAIN STORE 1,540 1/2008 35.00 19.00 54.00 45.65
#82-SUITE 302 INITIAL
ATHLETE'S FOOT 15,664 1/2008 20.00 19.00 39.00 20.75
#152-SUITE 532 INITIAL
PACIFIC SUNWEAR 3,896 1/2008 23.00 19.00 42.00 27.67
#22-SUITE 109 RENEWAL 1
GREAT IDEAS 1,110 1/2008 47.85 21.66 69.51 55.34
#106-SUITE 338 INITIAL
SPENCER GIFTS 1,742 1/2008 33.00 19.01 52.01 45.65
#133-SUITE 428 INITIAL
SWEET FACTORY 1,042 1/2008 40.00 22.32 62.31 55.34
#144-SUITE 510 INITIAL
FOOT LOCKER 8,518 1/2008 19.00 19.00 38.00 20.75
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ---------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
#64-SUITE 225 INITIAL
SURREY'S OUTLET 2,635 1/2008 24.00 18.37 42.37 33.20
#76-SUITE 250 INITIAL
FOOTQUARTERS 5,500 1/2008 20.00 13.38 33.38 26.29
#59-SUITE 219 INITIAL
BEBE 3,543 2/2008 27.00 19.00 46.00 27.67
#116-SUITE 406 RENEWAL 1
BAKERS OUTLET 3,054 3/2008 28.71 21.67 50.37 33.20
#129-SUITE 424 RENEWAL 1
J. RIGGINS 2,915 3/2008 28.71 21.67 50.37 33.20
#86-SUITE 311 RENEWAL 1
CORNING REVERE 6,605 3/2008 34.32 21.66 55.98 26.29
#171-SUITE 617 RENEWAL 1
KIRKLANDS 5,835 3/2008 22.73 21.67 44.39 26.29
#167-SUITE 612 RENEWAL 1
URBAN PLANET 4,264 3/2008 23.92 21.66 45.59 27.67
#120-SUITE 413 RENEWAL 1
5-7-9 OUTLET 2,692 3/2008 28.71 21.66 50.37 33.20
----- ------ ----- ------ ------
53 FY108 EXPIRATIONS 176,268 27.45 17.95 45.40 29.80
------- ------ ----- ------ ------
179 CUMULATIVE EXPS 553,045 25.41 16.88 42.29 27.98
#181-SUITE 2 RENEWAL 1
VACANT KIOSK*** 400 8/2008 174.72 21.69 196.41 207.52
#114-SUITE 403 RENEWAL 1
TODAY'S NEWS 1,092 12/2008 49.52 21.71 71.23 57.27
#180-SUITE K1 RENEWAL 1
VACANT KIOSK*** 400 1/2009 180.84 21.72 202.56 214.78
#183-SUITE K4 RENEWAL 1
VACANT KIOSK*** 400 2/2009 180.84 21.72 202.56 214.78
#63-SUITE 224 RENEWAL 1
GAP 9,769 3/2009 18.57 21.74 40.31 21.48
#126-SUITE 420 RENEWAL 1
BABY GUESS 2,408 3/2009 29.71 21.74 51.45 34.36
#34-SUITE 126 RENEWAL 1
DALLAS COWBOYS 2,574 4/2009 29.71 21.73 51.45 34.36
#184-SUITE K5 RENEWAL 1
VACANT KIOSK*** 400 5/2009 180.84 21.72 202.56 214.78
------- ------ ----- ------ ------
8 FY109 EXPIRATIONS 17,443 38.43 21.73 60.17 44.96
------- ------ ----- ------ ------
187 CUMULATIVE
EXPS 570,488 25.81 17.03 42.84 28.50
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NATIONAL ANCHOR, SPECIALTY, AND CINEMA LEASE
COMPARABLES
- --------------------------------------------------------------------------------
<PAGE>
DEPARTMENT STORE LEASES
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
PROPERTY/LOCATION/ LEASE TERM/ BLDG AREA
NO. DEVELOPER/OWNER DATE TENANT OPTIONS (SQ/FT)
- ----- ---------------------------- ----------- ------------------ --------------- -----------
<S> <C> <C> <C> <C> <C>
1 Confidential Jun-99 Confidential 20 yrs. 260,000
Top Ten MSA plus options
2 Scottsdale Fashion Square Oct-98 Sears 15 yrs. 235,899
Scottsdale, Arizona
3 Alo Moana Center Fall 1998 Neiman Marcus 20 Yrs. 180,000
Honolulu, Hawaii w/options
4 Boscov's 9/98 Boscov's 20 yrs. 194,498
Beaver Valley Mall
Center Township,
Pennsylvania
5 Marketplace 1997 Liberty House 20 yrs. 50,440
Kona, Hawaii 2 10-yr. opt
6 Coddingtown Mall Nov-97 Gottschalks 20 yrs. 128,346
Santa Rosa, California 1 10-yr opt.
1 5-yr opt.
7 Beaver Valley Mall Nov-97 JCPenney 20 yrs. 125,956
Beaver County,
Pennsylvania
8 Kings Plaza Oct-97 Sears 36 yrs. 289,215
Brooklyn, New York 1 10-yr. opt.
9 Spokane Valley Mall Sep-97 JCPenney 20 yrs. 126,006
Spokane, Washington
(JP Realty)
10 Cottman & Castor Feb-97 JCPenney 15 yrs. 150,000
Shopping Center
Philadelphia, Pennsylvania
11 Minzer Park Nov-96 Jacobsons 25 yrs. 80,000
Boca Raton, Florida +6 5-yr.
opt.
12 Off-Price Super Mall Oct-96 JCPenney Outlet 15 yrs. 105,028
Western United States 3 5-yr. opt.
13 Bell Tower Shops Fall-96 Saks 5th Avenue 20 yrs. 40,000
Fort Myers, Florida 6 5-yr. opt.
(Bell Tower Properties)
<CAPTION>
PERCENTAGE RENT
ANNUAL RENT/ -------------------------------------------- BREAKPOINT ESTIMATED
NO. RENT SQ/FT STEPS % RENT BREAKPOINT PER SQ/FT SALES
- ----- ------------- ----------- ------------------- ---------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $5,070,000 $ 19.50 Flat 1.00% (greater than) $ 65,000,000 $ 276.92 $104,000,000
2 $1,800,000 $ 7.63 Flat 2.50% (greater than) $ 72,000,000 $ 305.22 $ 45,000,000
2.00% $100,000,000
3 $ 900,000 $ 5.00 None 3.00% (greater than) $ 0 $ 0.00 $ 72,000,000
4 $ 800,000 $ 4.11 Flat 2.50% (greater than) $ 36,000,000 $ 185.09 $ 24,312,250
5 $ 977,305 $ 19.38 $21.36/sf yr. 2 N/A $ 12,200,000
$25.33/sf yr. 8
$29.79/sf yr. 11
6 $ 300,000 $ 2.34 $2.57/sf yr. 6 2.50% (greater than) $ 12,000,000 $ 93.50 $ 18,000,000
$2.83/sf yr. 11
$3.11/sf yr. 16
7 $ 755,736 $ 6.00 None 1.50% (greater than) $ 37,786,800 $ 300.00 $ 24,000,000
8 $2,892,150 $ 10.00 $13.00/sf yr. 7 4.00% (greater than) 72,303,750 $ 250.00 $ 80,000,000
$15.00/sf yr. 12 (adjusts
$17.00/sf yr. 17 naturally)
$19.00/sf yr. 22
$21.00/sf yr. 27
$23.00/sf yr. 32
9 $ 661,532 $ 5.25 None 1.50% (greater than) $ 33,076,578 $ 262.50 $ 20,650,000
10 $ 925,500 $ 6.17 $6.67/sf yr. 11 1.00% (greater than) $ 34,000,000 $ 226.67 $ 22,500,000
11 $1,280,000 $ 16.00 Rent reduced 3.00% (greater than) $ 20,000,000 $ 250.00 $ 18,880,000
1st 2 yrs. Incr. 2.00% (greater than) $ 32,000,000
$160,000 In 1.00% (greater than) $ 48,000,000
yrs. 10 & 15
12 $ 580,805 $ 5.53 $6.04/sf yr. 6 1.00% (greater than) $ 27,000,000 $ 257.07 $ 21,005,600
$6.54/sf yr. 11
13 $ 650,000 $ 16.25 $16.00/sf yr. 11 1.50% (greater than) $ 15,000,000 $ 375.00 $ 12,000,000
1.00% (greater than) $ 20,000,000
0.50% $ 25,000,000
<CAPTION>
SALES RENT-SALES ESTIMATED TOTAL RENT-
NO. PER SQ/FT RATIO % RENT SALES COMMENTS
- ----- ----------- ------------ ----------- ------------ -----------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 400.00 4.88% $390,000 5.25% New flagship store to be built on
one of the nations most dynamic
retail CBD locations.
Construction costs are estimated at
$250-$275/sf. First year sales are
appraisers estimate.
2 $ 190.76 4.00% $ 0 4.00% Sears to take over the existing
Dillards as they are vacating their
store for a new 360,000sf unit.
Scottsdale Fashion Square is
Phoenix's upscale fashion oriented
mall with 1.4 million sf.
3 $ 400.00 1.25% ######## 4.25% New Upscale store in 1.5 million sf
regional mall. One of the top retail
destinations on the Island.
4 $ 241.87 1.70% $122,000 3.79% Second generaltion lease in this
900,000 sf regional mall. Tenant
took the former Lazurus store.
Tenant received T.I.'s of $5.5
million ($28.28/sf)
5 $ 241.87 8.01% $122,000 9.01% Top department store in Hawaii in
good resort location.
6 $ 140.25 1.67% $150,000 2.50% Gottschalks to open in former
Macy's. CAM $1.10/sf incr. $0.05/sf
every 5 yrs; P/R taxes. Tenant must
expand to 154,914 sf by yr. 6 (or
sooner if sales (greater than) $18.0M). LL
contribution $2.0-$2.5M.
7 $ 190.54 3.15% $ 0 3.15% JCP to open fall-97. CAM $0.50/sf,
incr. $0.05/sf every 5 yrs. Sales are
estimated by developer/tenant. Bldg
cost $61.92/sf.
8 $ 276.61 3.62% $ 0 3.62% New lease in former Alexander's
space. Sears to take "as is". Pro
rata tax is estimated at $6.00/sf and
CAM at $1.25/sf.
9 $ 163.88 3.20% $ 0 3.20% JCP at proposed mall scheduled to
open fall-97. CAM $0.50/sf. incr.
$0.05/sf every 5 yrs. Sales are
estimated by developer/tenant.
10 $ 150.00 4.11% $ 0 5.90% Former 4-level Woolworth. JCP
took space with 7 mos. free rent
and $1,000,500 ($6.67/sf) in work.
Other anchor is supermarket. In
line shops 95% occupied with avg.
rents of $16-$20/sf. Full P/R taxes
& CAM capped at $0.70/sf.
11 $ 236.00 6.78% $ 0 6.78% New store. Sales based on chain's
Florida average for 1994. Tenant
pays contr. for CAM and own
taxes.
12 $ 200.00 2.77% $ 0 2.77% New value retail ctr. w/1.5m sf in
excellent location; 19 anchors. Pays
contr. for CAM & taxes. Sales at
developer's portfolio anchor avg.
13 $ 300.00 5.42% $ 0 5.42% New store. LL deliver shell+allow =
$105/sf; tenant $6.25/sf for HVAC.
P/R CAM not to exceed $1.00/sf;
P/R taxes. Saks sales projection.
</TABLE>
Page 1
<PAGE>
DEPARTMENT STORE LEASES
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
PROPERTY/LOCATION/ LEASE TERM/ BLDG AREA
NO. DEVELOPER/OWNER DATE TENANT OPTIONS (SQ/FT)
- ----- --------------------------- -------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
14 Coventry Mall Aug-96 JCPenney 15 yrs. 91,719
Chester County,
Pennsylvania
(The Goodman Company)
15 Florida Mall Mid-96 Saks 5th Avenue 20 yrs. 101,430
Orlando, Florida + opt.
16 Southgate Plaza Mid-96 Saks 5th Avenue 20 yrs. 40,000
Sarasota Florida + opt.
17 Majestic Square Jun-96 Saks 5th Avenue 30 yrs. 30,000
Charleston, South 4 10-yr. opt.
Carolina
18 Town Center Plaza Jun-96 Gaylans Trading 15 yrs. 100,000
119th, 117th, Town Center
Leawood, Kansas City,
Kansas
19 Town Center Plaza Mar-96 Jacobsons 25 yrs. 120,000
Leawood, Kansas City, + 3 10-yr.
Kansas opL
20 Crabtree Valley Mall Jan-96 Lord & Taylor 10 yrs. 99,795
Raleigh, North Carolina 14 5-yr. opt.
(CVM Associates)
Survey Low: 30,000
Survey High: 289,215
Survey Mean: 127,417
<CAPTION>
PERCENTAGE RENT
ANNUAL RENT/ ------------------------------------------ BREAKPOINT ESTIMATED
NO. RENT SQ/FT STEPS % RENT BREAKPOINT PER SQ/FT SALES
- ----- ------------- --------- ------------------- -------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
14 $ 550,314 $ 6.00 None 1.50% (greater than) $22,930,000 $250.00 $ 13,757,850
15 $ 2,008,710 $19.80 None 3.00% (greater than) $15,000,000 $147.89 $ 30,000,000
1.50% (greater than) $45,000,000
16 $ 675,000 $16.88 None 1.00% (greater than) $15,000,000 $375.00 $ 15,000,000
0.50% (greater than) $30,000,000
17 $ 600,000 $20.00 None 1.00% (greater than) $0 $ 0.00 $ 12,500,000
18 $ 975,000 $ 9.75 None (greater than) -- $ 22,000,000
19 $ 1,180,000 $ 9.83 Increases 3.00% (greater than) $42,000,000 $350.00 $ 22,800,000
$20,000 every 2.00% (greater than) $60,000,000
year 1st 3 yrs. 1.00% (greater than) $84,000,000
20 $ 299,385 $ 3.00 None 1.00% (greater than) $29,938,500 $300.00 $ 20,956,950
$ 299,385 $ 2.34 1.00% (greater than) $0 $ 0.00 $ 12,000,000
$ 5,070,000 $20.00 4.00% (greater than) $65,000,000 $375.00 $104,000,000
$1,194,0072 $10.42 1.79% (greater than) $27,066,534 $233.60 $ 30,578,133
<CAPTION>
SALES RENT-SALES ESTIMATED TOTAL RENT-
NO. PER SQ/FT RATIO % RENT SALES COMMENTS
- ----- ----------- ------------ ------------- ------------ ---------------------------------------
<S> <C> <C> <C> <C> <C>
14 $150.00 4.00% $ 0 4.00% Anchor addition at mall which was
originally built in 1966. Mall has 4
anchors & totals 818,161sf. JCP
pays CAM contr. Sales estimated.
15 $295.77 6.70% $450,000 8.20% Former Belk-Lindsay. $98.25/sf in
LL Tis; tenant paid $56.53/sf. CAM
$0.50; $0.10 incr. every 5 yrs. P/R
taxes. Saks sales projection.
16 $375.00 4.50% $ 0 4.50% New store. Most Tis performed by
LL. CAM $0.50/sf w/increases;
taxes paid directly. Saks sales
projection.
17 $416.67 4.80% $125,000 5.80% New store. Most TIs performed by
LL. 1% of sales to max of $12 mil.
CAM $0.50/sf yr. 1, P/R thereafter;
taxes direct. Saks sales projection.
18 $220.00 4.43% $ 0 4.43% New Limited Group store at
moderate-upscale open-air center
built in 1996. Tenant pays $0.75/sf
CAM; own taxes. TIs reported at
$50/sf. Sales estimated.
19 $190.00 5.18% $ 0 5.18% New store at mall. Sales based on
projection. Tenant pays contr. for
CAM and own taxes.
20 $210.00 1.43% $ 0 1.43% May Co. taking former 85,761sf
Hecht's store & expanding. Taxes
over base; nominal CAM cont.
Sales projected. Signed 1993.
$140.25 1.25% $ 0 1.43%
$416.67 8.01% ######### 9.01%
$249.46 4.08% $175,950 4.66%
</TABLE>
Page 2
<PAGE>
CINEMA LEASE COMPARABLES
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Lease Leased # Annual
No. Name/Location Start Tenant Term Area (SF) Screens Rent
- ---- ----------------------------- ------ -------------------- -------------- ----------- ------- ----------
1 RICHMOND TOWN CENTER Jun-99 SONY THEATRES 20 yrs. 87,436 16 $2,207,759
691 Richmond Road
Richmond Heights, Ohio
1 AUSTIN POWER CENTER Jan-99 RKO CENTURY WARNER 25 yrs 61,353 -- $1,441,182
Austin Avenue & NYS (Proposed)
Thruway
Yonkers, New York
2 QUAIL SPRINGS MALL Dec-98 AMC THEATRES 20 yrs. 110,000 24 $2,310,000
Memorial Road 4 5-yr. opt
Oklahoma City, OK
3 BALLSTON COMMON Nov-98 REGAL 20 yrs. 67,062 -- $1,005,930
Glebe Road 2 5-yr. opt.
Arligton, VA
4 PACIFIC THEATRES Nov-98 PACIFIC THEATRE 15 yrs. 52,000 10 $ 546,000
Pasadena, California
5 CITY MILLS AT ORANGE Nov-98 AMC THEATERS 20 yrs. 112,298 30 $2,470,556
Metropolitan & City Drives 4 5-yr. opt.
Orange County, CA
6 THE SHOPS AT SUNSET PLACE Fall 1998 AMC THEATERS 25 yrs. 87,954 24 $1,836,534
US Route 1 and Sunset Dirve
South Miami, Florida
7 CONSUMER SQUARE S.C. Jun-98 REGAL CINEMAS 20 yrs. 76,322 18 $1,106,669
Brice Road 3 5-yr. opt.
Columbus, Ohio
8 COLUMBIA PARK CENTER May-98 REGAL CINEMA 20 yrs. 70,000 n/a $1,680,000
Route 3 + 5-yr. opt.
North Bergen, New Jersey
9 PACIFIC THEATRES May-98 Pacific Theatres 15 yrs. 62,000 16 $ 855,600
Los Angeles Metro Area
<CAPTION>
<S> <C> <C> <C> <C> <C>
Rent/ Rent/ Overage
No. Sq/Ft Screen Steps Rent Comments
- -- ------ ----------- -------------------------- ----------- ----------------------------------------------
1 $25.25 $137,984.94 $28.85/SF (11-20) 8% over $9,045,000 Proposed theatre in completely renovated
three-anchor regional center.
Tenant contributes $0.25/SF towards CAM
& pays PRS of taxes
1 $23.49 -- $26.31/sf (6-10) 1% over natural Proposed theatre within 427,256 SF power
$29.3/sf (11-15) breakpoint center expected to be completed by January
$33.00/sf (16-20) 1999. Anchors will include Home Depot
$36.96/sf (21-25) and Costco.
2 $21.00 $ 96.250 $25.15/sf (opt. #1) N/A New theatre constructed at 1.1 plus or minus
$26.15/sf (opt. #2) million square foot center anchored by Sears, JC
$27.15/sf (opt. #3) Penney, Foley's, and Dillards.
$28.15/sf (opt. #4)
3 $15.00 -- $16.00/sf (6-10) N/A New lease for second and third levels of
$17.00/sf (11-15) new 90,000 sf expansion space. Ballston
$18.00/sf (16.20) Common is a four-level urban mall anchored
by Hecht's and JC Penney.
4 $10.50 $ 54,600 N/A 8.0% over natural 15 year lease of a new 10-screen theatre
breakpoint. located within Pasadina. Tenanant received
$80.00 per square foot in tenant allowances.
5 $22.00 $ 82,352 In option periods only 10% over New Mills project under construction to
$23,021,090 open in November 1998. The 812,000 square
Steps every 5 yrs. foot open air center will have an
entertainment theme.
6 $19.74 N/A 21.00 (10-20) N/A Three level, open-air retail/entertainment
oriented center under construction with
late Fall 1998 opening planned. total GLA is
estimated at 500,000 square feet. All leases
have steps but were not disclosed.
7 $14.50 $ 61,482 $15.20 (6-10) 8.0% over natural 20 year lease of new theatre complex within
$15.95 (11-15) breakpoint Consumer Square Shopping Center. First
$16.80 (16-20) option rent ($17.60/sf), second option
($18.50/sf), third option ($19.40/sf).
8 $24.00 n/a $25.50/sf (6-10_ N/A New 325,000 square foot power center
$27.25/sf (11-15) under construction near entrance to Lincoln
$29.00/sf (16-20) Tunnel to open mid-year 1999.
$31.50/sf (21-25)
9 $13.80 $ 53,475 N/A N/A New 16-screen theatre located within the
Los Angeles MSA.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Lease Leased # Annual
No. Name/Location Start Tenant Term Area (SF) Screens Rent
- -- ------------------------------- ------- ------------------- --------------- ----------- - ----- -
10 WESTMINSTER PROMENADE Apr-98 AMC THEATERS 20 yrs. 90,000 24 $2,520,625
10655 Westminster Blvd. +6 5-yr. opt.
Westminster, Colorado
11 CENTENNIAL BUSINESS PARK Apr-98 AMC THEATERS 20 ysr. 90,000 24 $2,413,000
Highlands Rance +6 5-yr. opt
Douglas County, Colorado
12 EDWARDS CINEMA Feb-98 EDWARD'S CINEMA 20 yrs. 60,000 16 $ 855,000
Promenade at Temecula
Temecula, California
13 SHOPPES AT FOREST HILLS Feb-98 REGAL 20 yrs. 102,000 24 $2,888,800
Forest Hills, New York (PROPOSED) +4 5-yr. opt.
14 REGAL CINEMAS Dec-97 REGAL 20 yrs. 65,066 14 $ 992,257
2038 Elmwood Avenue
Buffalo, New York
15 FRANKLIN MILLS Dec-97 GENERAL CINEMA 20 yrs. 61,000 14 $ 950,000
S/E/Q of Woodhaven Road at
Knights Road
Philadelphia, PA
16 OFF-PRICE SUPER-REGIONAL MALL Nov-97 HARKINS THEATER 15 yrs. 95,000 22 $1,116,250
Western United States +3 5-yr. opt.
17 GREENVILLE MALL Nov-97 HOLLYWOOD 20 15 yrs. 80,518 20 $ 925,956
Greenville, SC CINEMAS +3 5-yr. opt.
18 Off-Price Super-Regional Mall Aug-97 DICKINSON THEATER 20 yrs. 56,479 12 $1,034,089
Midwestern United States +2 5-yr. opt
19 BARRYWOODS CROSSING Fall-97 AMC THEATRES 20 yrs. 89,290 n/a $1,473,285
1-29 and Barry Road + opt.
Kansas City, Missouri
SURVEY LOW: 52,000 10 $ 546,000
SURVEY HIGH: 112,298 30 $2,888,800
SURVEY MEAN: 78,789 19 $1,531,475
<CAPTION>
<S> <C> <C> <C> <C> <C>
Rent/ Rent/ Overage
No. Sq/Ft Screen Steps Rent Comments
- -- ------ ----- -- ----------- ----------------------------------------------
10 $28.01 $105,026 10% in year 11 8.0% over natural 24-screen state-of-the-art cinema with
10% in year 16 breakpoint stadium seating. Part of an office/retail and
10% in each opt. entertainment complex.
11 $26.81 $100,542 10% in year 11 8.0% over natural 24-screen state-of-the-art cinema with
10% in yar 16 breakpoint stadium seating. Part of an office/retail and
10% in each opt. entertainment complex
12 $14.25 $ 53,438 N/A 8.0% over natural New cinema to be opened in 1999. The
breakpoint 20-year lease for the 16-screen theatre
included a tenant allowance of $75.00 per
square foot.
13 $28.32 $120,367 $29.12/sf (6-10) 8.0% over Free-standing bldg to include 8,000sf of
$31.12/sf (11-15) $24,073,285 restaurant space. Expected to break ground
$35.28/sf (16-20) (steps every 5 yrs.) in Spring 1997.
14 $15.25 $ 70,875 $16.00/sf (6-10) 8.0% Free-standing cinema within Buffao, New
$17.19/sf (11-15) (steps every 5 yrs) York. Does not include Stadium Seating
$18.50/sf (16-20) concept.
15 $15.57 $ 67,841 $17.13/sf (11-20) N/A Former Sears store demolished for
construction of new Cinema. Franklin Mills
is a 1.4 mil.sf value oreiented mega mall in
Philadelphia, PA. Construction allowance
of $9,250,000.
16 $11.75 $ 50.739 2.0% increase every 9.0% over New value center w/ 1.2m sf in excellent
year of lease $24,800,000 location, 17 acnchor stores. Pays CAM
(steps every year) ($0.75/sf) & tax ($1.75/sf) contributions.
17 $11.50 $ 46,298 Rents steps to 8% over $115 per New freestanding building as an outparcel
$12.25/sf in year 5 square foot to a recently renovated 800,000 square foot
and $13.00/sf in year regional center with four anchor tenants.
10 Property has excellent highway access.
Tenant pays pro rata share of taxes and
contributes $1.00/sf to CAM. Stadium-style
sea.
18 $18.31 $ 86,174 $19.64/sf (6-10) 4.0% over New value retail center w/850,000sf in good
$21.10/sf (11-15) $ 4,500,000 location; 11 anchor stores. Pays tax &
$22.70/sf (16-20) (steps every 5 yrs.) insurance contributions.
19 $16.50 -- $17.50/sf (11-20) 6% over natural Signed lease for free-standing building in
breakpoint new power center currently being developed
in northern Kansas City.
$10.50 $ 46,298
$28.32 $137,985
$18.78 $ 79,163
</TABLE>
<PAGE>
SPECIALTY RETAIL LEASE
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
LEASE
NO. NAME/LOCATION DATE TENANT TERM
- ----- --------------------------------------- ---------- ----------------------- --------------
<S> <C> <C> <C> <C>
1 RICHMOND TOWN SQUARE Jun-95 BARNES & NOBLE 10 yrs.
691 Richmond Road Commence
Richmond Heights, Ohio April-99
2 PROPOSED POWER CENTER Sep-99 T. J. MAXX 15 yrs.
North Side of 20th Ave. College Point Commence 3 5-yr. opt.
Queens, New York Jan-99
3 PROPOSED POWER CENTER Sep-99 CIRCUIT CITY 20 yrs.
North Side of 20th Ave. Commence 4 5-yr. opt.
College Point Jan-99
Queens, New York
4 SOUTH POINT PAVILIONS Mar-99 BED BATH & BEYOND 15 yrs.
South 27th Street Commence 5 5-yr. opt.
Lincoln, Nebraska
5 SOUTH POINT PAVILIONS Mar-99 BARNES & NOBLE 15 yrs.
South 27th Street Commence No option
Lincoln, Nebraska
6 SOUTH POINT PAVILIONS Mar-99 OLD NAVY 10 yrs.
South 27th Street Commence
Lincoln, Nebraska
7 MARKETPLACE AT RIVER PARK Oct-96 LINENS 'N THINGS 15 yrs.
North Blackstone & Alluvial Aves. 3 5-yr. opt.
Fresno, California
8 MARKETPLACE AT RIVER PARK Nov-96 MARSHALL'S 15 yrs.
North Blackstone & Alluvial Aves. 3 5-yr. opt.
Fresno, California
9 MARKETPLACE AT RIVER PARK Feb-98 OLD NAVY CLOTHING CO. 5 yrs.
North Blackstone & Alluvial Aves. 3 5-yr. opt.
Fresno, California
10 MARKETPLACE AT RIVER PARK -- PHASE II Spring BORDER BOOKS 15 yrs.
North Blackstone & Alluvial Aves. 1998 3 5-yr. opt.
Fresno, California
<CAPTION>
LEASED ANNUAL RENT/
NO. AREA (SQ.FT.) RENT SQ/FT STEPS COMMENTS
- ----- --------------- ----------- ----------- -------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C>
1 25,640 $358,960 $ 14.00 $16.00 (4-7) Enclosed regional center which is
$18.00 (8-10) undergoing a complete renovation and
remerchandising. Tenant contributes
$1.50/SF towards CAM & pays PRS of
taxes.
2 32,157 $803,925 $ 25.00 $26.00 (6-10) Proposed power center in Queens to be
$27.00 (11-15) anchored by B. J's. Wholesale, Target
and TJ Maxx. Project is 100% preleased
and is scheduled to open 1/99. Landlord
to deliver turn-key building to TJ Maxx.
3 33,066 $851,450 $ 25.75 $28.33/sf (6-10) Proposed power center in Queens to be
$31.16/sf (11-15) anchored by B. J's Wholesale, Target
$34.27/sf (16-20) and TJ Maxx. Project is 100% preleased
and is scheduled to open 1/99. Circuity
City gets $54.45/sf in work and pays
additional $6.25/sf to anmortize it.
4 35,000 $367,500 $ 10.50 Flat New 400,000 sf power center under
construction. Rent steps in option
period $1.00/sf every 5 years. No
allowance given to tenant.
5 26,000 $364,000 $ 14.00 Flat New 400,000 sf power center under
construction. Tenant got a $30.00/sf
allowance.
6 15,000 $173,500 $ 11.57 Flat New 400,000 sf power center under
construction. No allowance given to
tenant.
7 35,000 $332,500 $ 9.50 $10.75/sf (4-7) New "power" center development in
$12.00/sf (8-10) North Fresno. $16.00 psf TI allowance.
$13.50/sf (11-15) 3% percentage rent.
8 30,500 $289,750 $ 9.50 $10.75/sf (4-7) New "power" center development in
$12.00/sf (8-10) North Fresno. 2% percentage rent.
$13.50/sf (11-15)
9 15,000 $165,000 $ 11.00 Flat New "power" center development in
North Fresno. 2% percentage rent.
10 25,000 $405,000 $ 16.20 10% increase Phase II of the subject development
every 5 years. which is currently under construction.
No percentage rent. LL costs $35 psf.
</TABLE>
Page 1
<PAGE>
SPECIALTY RETAIL LEASE
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
LEASE
NO. NAME/LOCATION DATE TENANT TERM
- ----- ----------------------------- ----------- ------------------ --------------
<S> <C> <C> <C> <C>
11 THE SHOPS AT SUNSET PLACE Late 1998 NIKE 10 yrs.
US Route 1 and Sunset Drive
South Miami, FL
12 THE SHOPS AT SUNSET PLACE Late 1998 VIRGIN MEGASTORE 10 yrs.
US Route 1 and Sunset Drive
South Miami, FL
13 THE SHOPS AT SUNSET PLACE Late 1998 BARNES & NOBLE 10 yrs.
US Route 1 and Sunset Drive
South Miami, FL
14 THE SHOPS AT SUNSET PLACE Late 1998 GAMEWORKS 10 yrs.
US Route 1 and Sunset Drive
South Miami, FL
15 THE SHOPS AT SUNSET PLACE Late 1998 IMAX 10 yrs.
US Route 1 and Sunset Drive
South Miami, FL
16 WILTON MALL Nov-98 DICK'S CLOTHING 15 yrs.
Saratoga, New York
17 WILTON MALL Nov-98 OLD NAVY 5 yrs.
Saratoga, New York 2 5-yr. opt.
18 COLUMBIA PARK CENTER May-98 CIRCUIT CITY 20 yrs.
Route 3 1 5-yr. opt.
North Bergen, New Jersey
<CAPTION>
LEASED ANNUAL RENT/
NO. AREA (SQ.FT.) RENT SQ/FT STEPS COMMENTS
- ----- --------------- ----------- --------- ---------------- -----------------------------------------
<S> <C> <C> <C> <C> <C>
11 30,948 $711,804 $23.00 N/A Three level open air
retail/entertainment
oriented center
under construction
with late Fall
1998 opening
planned. Total GLA
is estimated at
500,000 sf. All
leases have steps
but were not
disclosed.
12 33,361 $910,755 $27.30 N/A Three level open air
retail/entertainment oriented center
under construction with late Fall 1998
opening planned. Total GLA is
estimated at 500,000 sf. All leases have
steps but were not disclosed.
13 31,781 $910,062 $28.69 N/A Three level open air
retail/entertainment oriented center
under construction with late Fall 1998
opening planned. Total GLA is
estimated at 500,000 sf. All leases have
steps but were not disclosed.
14 27,870 $883,187 $31.69 N/A Three level open air
retail/entertainment oriented center
under construction with late Fall 1998
opening planned. Total GLA is
estimated at 500,000 sf. All leases have
steps but were not disclosed.
15 26,893 $475,000 $17.66 N/A Three level open air
retail/entertainment oriented center
under construction with late Fall 1998
opening planned. Total GLA is
estimated at 500,000 sf. All leases have
steps but were not disclosed.
16 50,004 $450,000 $ 9.00 $10.00 (3-5) Proposed lease to take former
$10.50 (6-10) Steinbachs space in this regional mall.
$11.00 (11-15) Terms are for a gross lease with a
$750,000 ($15.00/sf) construction
allowance.
17 15,744 $173,184 $11.00 see comments Proposed lease with sales performance
clause over a guaranteed floor rent of
$11.00/sf. $300,000 allowance with one
third cash and two-thirds free rent.
18 32,762 $904,231 $27.60 $29.60 (6-10) New 325,000 sf power center under
$31.60 (11-15) construction near entrance to Lincoln
$33.60 (16-20) Tunnel to open mid-1999.
$29.95 (21-25)
</TABLE>
Page 2
<PAGE>
SPECIALTY RETAIL LEASE
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
LEASE
NO. NAME/LOCATION DATE TENANT TERM
- ----- -------------------------------------- -------- --------------------- ---------------
<S> <C> <C> <C> <C>
19 COLUMBIA PARK CENTER May-98 STAPLES 10 yrs.
Route 3
North Bergen, New Jersey
20 COLUMBIA PARK CENTER May-98 OLD NAVY 5 yrs.
Route 3
North Bergen, New Jersey
21 PALISADES CENTER 1998 BAD, BATH & BEYOND 10 yrs.
(NEW SUPER-REGIONAL MALL)
I-87 & Route 303
West Nyack, New York
22 PALISADES CENTER 1998 JCP PENNEY 10 yrs.
(NEW SUPER-REGIONAL MALL)
I-87 & Route 303
West Nyack, New York
23 PALISADES CENTER 1998 SPORTS AUTHORITY 10 yrs.
(NEW SUPER-REGIONAL MALL)
I-87 & Route 303
West Nyack, New York
24 PALISADES CENTER 1998 JOANN FABRICS 10 yrs.
(NEW SUPER-REGIONAL MALL)
I-87 & Route 303
West Nyack, New York
25 MEADOWS MARKETPLACE Jan-97 BAD BATH & BEYOND 15 yrs.
Parkway Drive and S. Yosemite Street 3 5-yr. opt.
Douglas County, Colorado
26 CLOVIS MARKETPLACE Oct-97 OFFICE MAX 15 yrs.
Shaw and Sunnyside Avenues 3 5-yr. opt.
Clovis, California
27 5705 N. BLACKSTONE AVENUE Jun-96 OFFICE DEPOT 10 yrs.
North Blackstone and Shaw Aves. 1 10-yr. opt.
Fresno, California
28 NATOMAS MARKETPLACE 1998 ROSS DRESS FOR LESS 10 yrs.
I-80 and Truxel Road 4 5-yr. opt.
Sacramento, California
29 NATOMAS MARKETPLACE 1998 PETSMART 15 yrs.
I-80 and Truxel Road 4 5-yr. opt.
Sacramento, California
30 NATOMAS MARKETPLACE 1998 STAPLES 15 yrs.
I-80 and Truxel Road 3 5-yr. opt.
Sacramento, California
<CAPTION>
LEASED ANNUAL RENT/
NO. AREA (SQ.FT.) RENT SQ/FT STEPS COMMENTS
- ----- --------------- ----------- --------- ------------------------ -----------------------------------------
<S> <C> <C> <C> <C> <C>
19 25,604 $608,095 $23.75 $26.13 (6-10) New 325,000 sf power center under
construction near entrance to Lincoln
Tunnel to open mid-1999.
20 18,175 $531,619 $29.25 $26.13 (6-10) New 325,000 sf power center under
construction near entrance to Lincoln
Tunnel to open mid-1999.
21 46,258 $578,225 $12.50 $13.75 (6-10) CAM-$2.50/SF increasing 5% per year.
Insurance -- $0.25/SF increasing 3% per
year. Taxes -- Pro rata
22 48,033 $695,376 $14.48 $14.98 (6-10) CAM -- $1.00/SF with increase. Taxes
-- Pro rata
23 45,707 $502,777 $11.00 $12.32 (6-10) CAM -- $4.00/SF increasing 3% per
year. Taxes -- Pro rata
24 47,911 $761,776 $15.90 2.5% Annual Increase Taxes -- Pro rata
25 40,000 $380,000 $ 9.50 N/A New power center adjacent Park
Meadows Mall.
26 28,000 $247,800 $ 8.85 N/A Center is anchored by Wal-mart. Space
delivered in "vanilla shell" with no LL
Tls. 2 mos. free rent.
27 38,000 $294,500 $ 7.75 Flat Former Toys 'R Us space leases "as is".
No LL Tls or free rent.
28 28,160 $253,440 $ 9.00 $10.00/sf (6-10) Letter of Intent. Option rents increase
10% each term. 2% percentage rent.
Planned "power" center with visibility
and access from I-80.
29 26,040 $325,500 $12.50 $13.50/sf (6-10) Letter of Intent. Option rents increase
$14.50/sf (11-15) $1.50 psf each term. No percentage rent.
30 24,120 $313,560 $13.00 $14.56/sf (6-10) Lease OFS. Options with CPI incr. at 5
$16.30/sf (11-15) yr. intervals, capped at 15%. No
percentage rent.
</TABLE>
Page 3
<PAGE>
SPECIALTY RETAIL LEASE
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
LEASE
NO. NAME/LOCATION DATE TENANT TERM
- ----- ------------------------------- --------- -------------------- ---------
<S> <C> <C> <C> <C>
31 BARRY WOODS CROSSING Fall'97 OFFICE MAX 15 yrs.
I-29 and Barry Road
Kansas City, Missouri
32 BARRY WOODS CROSSING Fall'97 BED, BATH & BEYOND 15 yrs.
I-29 and Barry Road
Kansas City, Missouri
33 BARRY WOODS CROSSING Fall'97 OLD NAVY 10 yrs.
I-29 and Barry Road
Kansas City, Missouri
34 OFF-PRICE SUPER-REGIONAL MALL Nov-97 SAKS-OFF FIFTH 15 yrs. Western
United States + opt.
35 OFF-PRICE SUPER-REGIONAL MALL Nov-97 LINENS 'N THINGS 10 yrs. Western
United States + opt.
36 OFF-PRICE SUPER-REGIONAL MALL Nov-97 BURLINGTON COAT 15 yrs. Western
United States + opt.
37 OFF-PRICE SUPER-REGIONAL MALL Nov-97 OSHMAN'S SPORTING 15 yrs. Western
United States + opt.
38 OFF-PRICE SUPER-REGIONAL MALL Nov-97 ROSE 10 yrs.
Western United States + opt.
39 OFF-PRICE SUPER-REGIONAL MALL Nov-97 GROUP USA 10 yrs.
Western United States + opt.
40 OFF-PRICE SUPER-REGIONAL MALL Nov-97 OLD NAVY 5 yrs.
Western United States + opt.
SURVEY LOW:
SURVEY HIGH:
SURVEY MEAN:
<CAPTION>
LEASED ANNUAL RENT/
NO. AREA (SQ.FT.) RENT SQ/FT STEPS COMMENTS
- ----- --------------- ----------- --------- ------------------ ----------------------------------------------
<S> <C> <C> <C> <C> <C>
31 23,100 $248,325 $10.75 None Newly developing power center with
good freeway exposure and access.
Lease signed.
32 35,000 $288,750 $ 8.25 $9.10/sf (11-15) Newly developing power center with
good freeway exposure and access.
Lease in negotiation. Overage 5%
against natural breakpoint.
33 16,533 $196,412 $11.88 $12.82/sf (6-10) Newly developing power center with
good freeway exposure and access.
Lease in negotiation. Overage 2%
against natural breakpoint. Tenant has
5-year termination option tied to sales.
34 34,589 $242,123 $ 7.00 None New value retail center w/ excellent
location, demographics. CAM, tax contr.
plus 0.75% of sales (greater than) $17.6 m.
35 40,127 $441,507 $11.00 $12.00/sf (6-10) New value retail center w/ excellent
location, demographics. CAM, tax contr.
plus 3.0% of sales (greater than) $3.3 m.
36 80,359 $401,795 $ 5.00 $5.25/sf (6-10) New value retail center w/ excellent
$5.50/sf (11-15) location, demographics. CAM, tax contr.
plus 1.5% of sales (greater than) $15.1 m.
37 65,952 $352,843 $ 5.35 None New value retail center w/ excellent
location, demographics. CAM, tax
contr.; no % rent clause.
38 29,734 $297,340 $10.00 $11.00/sf (6-10) New value retail center w/ excellent
location, demographics. CAM, tax contr.
plus 2.0% (greater than) natural break.
39 22,548 $253,665 $11.25 None New value retail center w/ excellent
location, demographics. P/R CAM, tax
plus 3.0% (greater than) natural break.
40 14,015 $182,195 $13.00 None New value retail center w/ excellent
location, demographics. P/R CAM, tax
plus 2.0% (greater than) natural break.
14,015 $165,000 $ 5.00
80,359 $910,755 $31.69
32,493 $448,186 $14.60
- -- ------ -------- ------
</TABLE>
Page 4
<PAGE>
==================================
APPRAISER QUALIFICATIONS
==================================
<PAGE>
QUALIFICATIONS
- ------------------------------------------------------------------------------
RICHARD W. LATELLA, MAI
PROFESSIONAL AFFILIATIONS:
Member, Appraisal Institute (MAI Designation #8346) Affiliate Member,
International Council of Shopping Centers, ICSC New York State Certified
General Real Estate Appraiser #46000003892 Pennsylvania State Certified
General Real Estate Appraiser #GA-001053-R State of Maryland Certified
General Real Estate Appraiser #10796 Minnesota Certified General Real
Estate Appraiser #20026517 Commonwealth of Virginia Certified General
Appraiser #4001-003348 State of Michigan Certified General Real Estate
Appraiser #1201005216 New Jersey Real Estate Salesperson (License
#NS-130101-A) Certified Tax Assessor, State of New Jersey Commonwealth of
Massachusetts Certified General Real Estate Appraiser #4287
GENERAL EXPERIENCE:
Senior Director, Retail Valuation Group, Cushman & Wakefield Valuation
Advisory Services, a national full-service real estate organization. While
Mr. Latella's experience has been in appraising a full array of property
types, his principal focus involves appraisal and counseling clients for
major retail properties and specialty centers on a national basis. As
Senior Director, his responsibilities include coordination of the firm's
national Retail Valuation Group consisting of appraisers who specialize in
regional malls, department stores and other major retail property types.
He has personally appraised and consulted on in excess of 500 malls and
specialty centers across the country.
Senior Appraiser, Valuation Counselors, Princeton, New Jersey,
specializing in the appraisal of commercial and industrial real estate,
condemnation analyses and feasibility studies for both corporate and
institutional clients (July 1980-April 1983).
Supervisor, State of New Jersey, Division of Taxation, Local Property and
Public Utility Branch in Trenton, New Jersey, assisting and advising local
municipal and property tax assessors throughout the state (June 1977-July
1980).
Associate, Warren W. Orpen & Associates, Trenton, New Jersey, assisting in
the preparation of residential property appraisals and condemnation
analyses (July 1975-April 1977).
EDUCATION:
Trenton State College, Trenton, New Jersey
Bachelor of Science, Business Administration - 1977
As of the date of this report, Richard W. Latella, MAI, has completed all
of the requirements under the continuing education program of the
Appraisal Institute.
<PAGE>
QUALIFICATIONS OF BRIAN J. BOOTH
- -------------------------------------------------------------------------------
GENERAL EXPERIENCE:
Brian J. Booth joined Cushman & Wakefield Valuation Advisory Services in
1995. With experience with a full array of property types, Mr. Booth is
currently specializing in major national retail properties and specialty
centers. Cushman & Wakefield is a national full service real estate
organization.
Mr. Booth previously worked for two years at C. Spencer Powell &
Associates in Portland, Oregon, where he was an associate appraiser. He
worked on the analysis and valuation of numerous properties including,
office buildings, apartments, industrials, retail centers, vacant land,
and special purpose properties.
ACADEMIC EDUCATION:
Bachelor of Science, 1993
Major: Business-Economics
Willamette University, Salem, Oregon
Study Overseas, Spring 1992
London University, London, England
APPRAISAL EDUCATION:
110 Appraisal Principles (Appraisal Institute)
120 Appraisal Procedures (Appraisal Institute)
310 Income Capitalization (Appraisal Institute)
320 General Applications (Appraisal Institute)
410 Standards of Professional Practice A (Appraisal Institute)
420 Standards of Professional Practice B (Appraisal Institute)
550 Advanced Applications (Appraisal Institute)
PROFESSIONAL AFFILIATION:
Associate Member, Candidate MAI, Appraisal Institute
Young Advisory Council, Appraisal Institute
<PAGE>
QUALIFICATIONS
- ------------------------------------------------------------------------------
BRIAN K. JOHNSON
PROFESSIONAL AFFILIATIONS
State Certified Appraiser - Texas Appraiser Licensing and Certification
Board, Certification No. TX-1326012-G
MAI Candidate, Candidate No. M920980 - Appraisal Institute
Member, Society of Texas A&M Real Estate Professionals
REAL ESTATE EXPERIENCE
January 1992 to Present
Cushman & Wakefield of Texas, Inc.
Associate Director
May 1991 to August 1991
Summer Internship with Urban Property Analysts, Austin, Texas
Appraisal experience includes:
Office Buildings Apartment Complexes
Regional Malls Condominiums
Shopping Centers Office/Warehouses
Hotels - Limited and Full Service Office/Showrooms
Mixed Use Properties Manufacturing Facilities
EDUCATION
Texas A&M University, College Station, Texas
Degree: Bachelor of Science, Agricultural Economics (1989)
Texas A&M University, College Station, Texas
Degree: Master's Degree in Land Economics and Real Estate (1991)
Appraisal Institute Courses:
SPP - Standards of Professional Practice, Parts A & B
<PAGE>
QUALIFICATIONS
- ------------------------------------------------------------------------------
BRIAN K. JOHNSON
Appraisal Institute courses credited through Master's Degree program at
Texas A&M University include the following:
1A1 - Real Estate Appraisal Principles
1A2 - Basic Valuation Procedure
1BA - Capitalization Theory & Techniques, Part A
1BB - Capitalization Theory & Techniques, Part B
2-1 - Case Studies in Real Estate Valuation
<PAGE>
- ------------------------------------------------------------------------------
COMPLETE APPRAISAL
OF REAL PROPERTY
THE MALL OF NEW HAMPSHIRE
1500 South Willow Street
Manchester, Hillsborough County, New Hampshire
- ------------------------------------------------------------------------------
IN A SELF-CONTAINED REPORT
As of February 16, 1998
PREPARED FOR:
MORGAN STANLEY MORTGAGE CAPITAL, INC.
1585 Broadway
New York, New York 10036
PREPARED BY:
CUSHMAN & WAKEFIELD, INC.
Valuation Advisory Services
51 West 52nd Street, 9th Floor
New York, New York 10019-6178
<PAGE>
[CUSHMAN & WAKEFIELD LETTER HEAD]
September 24, 1998
Mr. Marcus Childress
Associate
Morgan Stanley Mortgage Capital, Inc.
1585 Broadway
New York, New York 10036
Re: Restricted Appraisal Report
The Mall of New Hampshire
Manchester, Hillsborough County, New Hampshire
Dear Mr. Childress:
Pursuant to your request, Cushman & Wakefield, Inc. is pleased to
provide our updated market value estimate of the leased fee estate in the above
referenced property.
This is a complete appraisal prepared in accordance with the Uniform
Standards of Professional Practice (USPAP) reported in a restricted format.
Specifically this restricted report is being provided as an update to our
previous appraisal prepared as of February 16, 1998 for Morgan Stanley Mortgage
Capital, Inc.. This prior complete appraisal which was prepared in a
self-contained report format and is incorporated herein by reference. The
appraiser assumes that the reader of our current appraisal has complete access
to the prior report.
For this assignment, we are providing two value estimates: 1) the
current market value "as is" and 2) the Prospective Market Value "at
stabilization" based upon our forecasted absorption of the remaining vacant
space to a stabilized level.
This report has been prepared for Morgan Stanley Mortgage Capital Inc.
The report may be relied upon by (I) Morgan Stanley Mortgage Capital Inc. and
its successors and assigns in determining whether to make a loan evidenced by a
note (the "Property Note") secured by the property; (ii) the report may be
relied upon by any purchaser or assignee of the Property Note in determining to
purchase the Property Note from Morgan Stanley Mortgage Capital Inc. and its
successors and assigns and by any rating agency rating securities secured by,
or representing an interest in, the
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -2- September 24, 1998
Property Note, (iii) the report may be referred to and quoted in and included
with materials offering for sale the Property Note or an interest in the
Property Note; (iv) the report may be relied upon by persons who acquire the
Property Note or an interest in the Property Note, and (v) the report speaks
only as of its date.
The value opinion reported herein is qualified by certain assumptions,
limiting conditions, certifications, and definitions.
PURPOSE OF REPORT
The purpose of this Restricted Appraisal Report is to estimate both the
current and prospective Market Value of the leased fee estate in the referenced
real property. Market value is defined by the Appraisal Institute in The
Dictionary of Real Estate Appraisal, Third Edition (1993) as:
The most probable price which a property should bring in a competitive
and open market under all conditions requisite to a fair sale, the buyer
and seller each acting prudently and knowledgeably, and assuming the
price is not affected by undue stimulus. Implicit in this definition is
the consummation of a sale as of a specified date and the passing of
title from seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised, and acting in
what they consider their best interest;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in United States dollars or in
terms of financial arrangements comparable thereto; and
5. The price represents the normal consideration for the property
sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale (USPAP,
1995 Edition).
PROSPECTIVE VALUE ON REACHING STABILIZED OCCUPANCY
The value of a property as of a point in time when all improvements
have been physically constructed and the property has been leased to its
optimum level of long term occupancy. At such point, all capital outlays for
tenant improvements, leasing commissions, marketing costs, and other carrying
charges are assumed to have been absorbed.
These definitions have been taken into account when arriving at the
estimate of market value reported in this appraisal assignment.
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -3- September 24, 1998
INTENDED USE OF REPORT
This report is intended for the sole purpose of assisting the Client in
determining the subject property's market value in connection with their
underwriting for a proposed mortgage financing.
INTEREST APPRAISED
Leased Fee estate.
DATE OF VALUE AND PROPERTY INSPECTION
For this assignment, we have not re-inspected the property. The
property was originally inspected by Vincent S. Maniscalco, MAI on February 16,
1998. Our current "as is" date of value is September 24, 1998 and prospective
date of value "at stabilization" is July 1, 1999. It is noted that this is a
slight change from our original prospective stabilized date of value of April
1, 1999 due to our current forecasted absorption schedule.
EXTENT OF THE APPRAISAL PROCESS
In the process of preparing this Complete Appraisal, we:
Did not re-inspect the property;
Interviewed representatives of ownership including the on-site
manager and personnel within the management company familiar
with its operational characteristics;
Reviewed leasing policy, concessions, tenant build-out
allowances, and recently negotiated rental rates, as well as
forecasted operating statements and a budget of income and
expenses;
Estimated market rental rates, absorption, and stabilized
income and expenses for the subject based upon available market
data and current market thinking relative to growth in market
rents and market absorption;
Developed a market value estimate of the center via the Sales
Comparison Approach considering current sales trends and
indices;
Prepared a detailed discounted cash flow (DCF) analysis using
Pro-Ject +Plus software for the purpose of discounting a
forecasted net income stream into a present value of the leased
fee estate for the center both "as is" and "at stabilization."
Prepared a Complete Appraisal of the subject property with the
results conveyed in this Restricted Report.
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -4- September 24, 1998
This Restricted Appraisal Report sets forth only the appraiser's
conclusions. Current supporting documentation is retained in the appraiser's
file. The reader is also directed to our prior Self-Contained report which is
incorporated herein by reference.
IDENTIFICATION OF PROPERTY
The subject of this appraisal assignment is The Mall of New Hampshire
located at 1500 South Willow Street in the Village of Manchester, Hillsborough
County, New Hampshire. The property was originally constructed in 1977 with
three anchor stores and 88 in-line shops. In 1996, the mall began an expansion
and renovation projection which included the addition of a fourth anchor tenant
and approximately 105,000 square feet of mall shop space. The property now
contains a total GLA of 789,962+/- square feet, inclusive of 317,784+/- square
feet of mall shop space. The property is anchored by Filene's, JC Penney and
Sears, which each owning their respective stores and as such are not part of
the subject of this appraisal.
At the time of our original appraisal in February 1998, the fourth
anchor, the former Lechmere store was vacant. Although not a part of our
appraisal, we are advised that ownership has executed leases with both Best Buy
and Kitchen Etc. to take the space. To the extent that our valuation had been
conditioned on the re-tenanting of this space by destination retailers, this
assumption remains of valid importance. To that end, we expect that the build
out of this space will occur within a timely manner at a level consistent with
the quality found throughout the mall.
Since our appraisal dated February 16, 1998 certain other changes have
taken place, primarily in the form of tenant changes.
o Blake's Creamery took over vacant space F100 D'Angelo's took over
o vacant space suite # F103 Lyndt Chocolate took over vacant space
o suite # S137 Lechters moved from suite # S149A to larger space
o suite # W141
o Lechters old space suite # S149A is now vacant, however, there are
negotiations with Get-A-Pet but as of this writing nothing has been
o signed.
o Vitamin World has leased vacant space suite # E155 Sarku Japan has
o taken over a vacant food court space suite # F105
o Lechmere's space has been divided between two new junior anchors:
Best Buy and Kitchen Etc.
o Men's Wearhouse has taken over vacant space suite # S163
o McDonald's and Sbarro switched locations.
o Designs by Levi took over Boston Trading Co. space - suite # W125
Other changes since our original appraisal include the completion of
the food court construction and the opening of JC Penney in a 101,388+/- square
foot store. It is noted that we have extended our lease up of the vacant space
by three months to July 1, 1999 and reflected a discount rate of 10.25% for
both the "as is" and "as stabilized" values owing to the little remaining
vacancy. Finally, we have revised our forecast for specialty leasing.
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -5- September 24, 1998
HIGHEST AND BEST USE
Retail use as developed.
CONCLUSIONS OF VALUE
Market Value "As Is" as of September 24, 1998: $145,600,000
Prospective Market Value
"At Stabilization" as of July 1, 1999: $151,500,000
Supporting schedules which are attached include our projected cash
flows and yield matrices as well as a present value analysis of the revenue
stream. Also attached is a summary of our underlying cash flow assumptions and
a current survey of 1998 mall sale transactions.
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -6- September 24, 1998
SPECIAL ASSUMPTIONS AFFECTING VALUATION
1. Throughout this analysis we have relied on information provided
by ownership which we assume to be accurate. Such information
includes but is not limited to construction cost budget and
completion schedule, lease abstracts, rent roll, and budgeted
operating data. Should any information received be subsequently
shown to be erroneous or incorrect, we reserve the right to
amend the value conclusion herein. Our analysis assumes that
tenant improvements are completed in a timely manner using
quality materials particularly as it relates to the former
Lechmere store.
2. We were provided with a phase I environment report prepared by EMG
and dated March 11, 1998. According to the report asbestos
containing materials (ACMs) were identified in the vinyl floor
tiles in the unrenovated tenant suites. The report recommended that
a properly designed operations and maintenance (O &M) program be
implemented. It is an assumption of this report that an O & M
program is implemented and that the cost of remediating the
affected areas is covered within a typical tenant improvement
allowance.
ASSUMPTIONS AND LIMITING CONDITIONS
1. No opinion is intended to be expressed and no responsibility is
assumed for the legal description or for any matters which are
legal in nature or require legal expertise or specialized
knowledge beyond that of a real estate appraiser. Title to the
Property is assumed to be good and marketable and the Property
is assumed to be free and clear of all liens unless otherwise
stated. No survey of the Property has been undertaken.
2. The information contained in the Appraisal or upon which the
Appraisal is based has been gathered from sources the Appraiser
assumes to be reliable and accurate. Some of such information
may have been provided by the owner of the Property. Neither the
Appraiser nor Cushman & Wakefield, Inc. (C&W) shall be
responsible for the accuracy or completeness of such
information, including the correctness of estimates, opinions,
dimensions, sketches, exhibits, and factual matters.
3. The Appraisal is to be used in whole and not in part. No part
of the Appraisal shall be used in conjunction with any other
appraisal. Publication of the Appraisal or any portion thereof
without the prior written consent of C&W is prohibited. Except
as may be otherwise stated in the letter of engagement, the
Appraisal may not be used by any person other than the party to
whom it is addressed or for purposes other than that for which
it was prepared. No part of the Appraisal shall be conveyed to
the public through advertising, or used in any sales or
promotional material without C&W's prior written
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -7- September 24, 1998
consent. Reference to the Appraisal Institute or to the MAI
designation is prohibited.
4. The opinion of value is only as of the date stated in the
Appraisal. Changes since that date in external and market
factors in the Property itself can significantly affect property
value.
5. Except as may be otherwise stated in the letter of engagement,
the Appraiser shall not be required to give testimony in any
court or administrative proceeding relating to the Property or
the Appraisal.
6. The Appraisal assumes (a) responsible ownership and competent
management of the Property; (b) there are no hidden or
unapparent conditions of the Property, subsoil, or structures
that render the Property more or less valuable (no
responsibility is assumed for such conditions or for arranging
for engineering studies that may be required to discover them);
(c) full compliance with all applicable federal, state, and
local zoning and environmental regulations and laws, unless
noncompliance is stated, defined, and considered in the
Appraisal; and (d) all required licenses, certificates of
occupancy, and other governmental consents have been or can be
obtained and renewed for any use on which the value estimate
contained in the Appraisal is based.
7. The physical condition of the improvements considered by the
Appraisal is based on visual inspection by the Appraiser or
other person(s) identified in the Appraisal. C&W assumes no
responsibility for the soundness of structural members nor for
the condition of mechanical equipment, plumbing or electrical
components. Any analysis of proposed structures and/or tenant
spaces herein assumes that completion of the proposed
improvements will be timely and performed in a workmanlike
manner.
8. The forecasts of income and expenses are not predictions of the
future. Rather, they are the Appraiser's best estimates of
current market thinking on future income and expenses. The
appraiser and C&W make no warranty or representation that these
forecasts will materialize. The real estate market is constantly
fluctuating and changing. It is not the Appraiser's task to
predict or in any way warrant the conditions of a future real
estate market; the Appraiser can only reflect what the
investment community, as of the date of the Appraisal, envisages
for the future in terms of renal rates, expenses, supply and
demand.
9. Unless otherwise stated in the Appraisal, the existence of
potentially hazardous or toxic materials which may have been
used in the construction or maintenance of the improvements or
may be located on or about the Property was not considered in
arriving at the opinion of value. These materials (such as
formaldehyde foam insulation,
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -8- September 24, 1998
asbestos insulation and other potentially hazardous materials)
may adversely affect the value of the Property. The Appraiser(s)
are not qualified to detect such substances. C&W recommends that
an environmental expert be employed to determine the impact of
these matters on the opinion of value.
10. Unless otherwise stated in the Appraisal, compliance with the
requirements of the Americans With Disabilities Act of 1990
(ADA) has not been considered in arriving at the opinion of
value. Failure to comply with the requirements of the ADA may
adversely affect the value of the Property. C&W recommends that
an expert in this field be employed.
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -5- September 24, 1998
CERTIFICATION
We certify that, to the best of our knowledge and belief:
1. The report was prepared by Richard W. Latella, MAI and Vincent
Maniscalco, MAI. A current property inspection was not
conducted.
2. The statements of fact contained in this report are true and
correct.
3. The reported analyses, opinions, and conclusions are limited
only by the reported assumptions and limiting conditions, and
are our personal, unbiased professional analyses, opinions, and
conclusions.
4. We have no present or prospective interest in the property that
is the subject of this report, and we have no personal interest
or bias with respect to the parties involved.
5. Our compensation is not contingent upon the reporting of a
predetermined value or direction in value that favors the cause
of the client, the amount of the value estimate, the attainment
of a stipulated result, or the occurrence of a subsequent event.
The appraisal assignment has not been based on a requested
minimum valuation, a specific valuation, or the approval of a
loan.
6. No one provided significant professional assistance to the
persons signing this report.
7. Our analyses, opinions, and conclusions have been developed, and
this report has been prepared, in conformity with the Uniform
Standards of Professional Appraisal Practice of the Appraisal
Foundation and the Code of Professional Ethics and the Standards
of Professional Appraisal Practice of the Appraisal Institute.
8. The use of this report is subject to the requirements of the
Appraisal Institute relating to review by its duly authorized
representatives.
9. As of the date of this report, Richard W. Latella and Vincent S.
Maniscalco have completed all of the requirements of the
continuing education program of the Appraisal Institute.
Richard W. Latella, MAI Vincent S. Maniscaclo, MAI.
Senior Director Director
Retail Valuation Group Retail Valuation Group
<PAGE>
ADDENDA
- -------------------------------------------------------------------------------
PRO-JECT CASH FLOW
VALUATION MATRIX
DISCOUNTED CASH FLOW SUMMARY
CASH FLOW ASSUMPTIONS
1998 MALL SALES CHART
<PAGE>
Mr. Marcus Childress
Morgan Stanley Mortgage Capital, Inc. -13- September 24, 1998
CASH FLOW ASSUMPTIONS
---------------------
- ----------------------------------------------------------------------------
SUMMARY OF CRITICAL ASSUMPTIONS FOR DISCOUNTED CASH FLOW
- ----------------------------------------------------------------------------
SUBJECT PROPERTY The Mall Of New Hampshire
LOCATION Manchester, New Hampshire
- ----------------------------------------------------------------------------
SQUARE FOOTAGE RECONCILIATION
- ----------------------------------------------------------------------------
TOTAL GROSS LEASABLE AREA 789,962+/- SF
ANCHOR TENANT GLA 463,838+/- SF
MALL SHOP GLA 317,784+/- SF
KIOSK GLA 1,890+/- SF
FOOD COURT 7,870+/- SF
TOTAL OWNED GLA 327,544+/- SF
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
MARKET RENT CONCLUSIONS
- ----------------------------------------------------------------------------
MARKET RENT ESTIMATES (1998)
TENANTS 1,000 SQ/FT $70.00/SF
TENANTS 1,001 2,000 SQ/FT $50.00/SF
TENANTS 2,001 3,500 SQ/FT $35.00/SF
TENANTS 3,501 5,000 SQ/FT $30.00/SF
TENANTS 5,001 - 7,500 SQ/FT $27.50/SF
TENANTS 7,501 SQ/FT $25.00/SF
KIOSK $300.00/SF
FOOD COURT $135.00/SF
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
GROWTH RATE ASSUMPTIONS (FY 1999 - 2009)
- ----------------------------------------------------------------------------
RETAIL SALES + 3.5%
MARKET RENT + 3.5%
GENERAL EXPENSE + 3.5%
REAL ESTATE TAX + 4.0%
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
VACANCY & TYPICAL LEASE TERMS
- ----------------------------------------------------------------------------
AVERAGE LEASE TERM 10 Years
RENEWAL PROBABILITY 65.0 %
WEIGHTED AVERAGE DOWNTIME 2 Months
PERMANENT VACANCY None
CREDIT RISK LOSS 5.0%
STABILIZED OCCUPANCY 95.0 %
FORECASTED DATE OF STABILIZATION 7/99
ABSORPTION PERIOD 12 Months
- ----------------------------------------------------------------------------
<PAGE>
CASH FLOW ASSUMPTIONS
- ----------------------------------------------------------------------------
OPERATING EXPENSE DATA
- ----------------------------------------------------------------------------
TENANT IMPROVEMENT ALLOWANCES
NEW TENANTS $ 15.00/SF
RENEWAL TENANTS $ 5.00/SF
LEASING COMMISSIONS
NEW TENANTS $ 2.50/SF
RENEWAL TENANTS $ 1.50/SF
OTHER OPERATING ITEMS
MANAGEMENT FEE (OF MIN.& % RENT) 5.0%
CAPITAL RESERVES (OF OWNED GLA) $ 0.20/SF
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
RATES OF RETURN "AS IS" " STABILIZED"
ANALYSIS ANALYSIS
- ----------------------------------------------------------------------------
CASH FLOW START DATE 9/24/98 7/1/99
GOING-IN CAPITALIZATION RATE 8.00%- 8.50% 8.00%-8.50%
TERMINAL CAPITALIZATION RATE 8.25%-8.75% 8.25%-8.75%
DISCOUNT RATE 10.00%-10.50% 10.00%-10.50%
REVERSIONARY SALES COSTS 2.00% 2.00%
HOLDING PERIOD 10 Years 10 Years
- ----------------------------------------------------------------------------
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
PROPERTY NAME: The Mall of New Hampshire
PROPERTY TYPE: Regional Shopping Center
LOCATION: The Mall of New Hampshire is located in
the southeast quadrant of the
intersection of State Route 28 and
Interstate 293 in Manchester,
Hillsborough County, New Hampshire. This
area is in southern New Hampshire on the
northern periphery of the Boston MSA.
INTEREST APPRAISED: Leased fee estate
DATE(S) OF VALUE
AS IS: February 16, 1998
AS STABILIZED: April 1, 1999
DATE OF INSPECTION: February 16, 1998
MAP BLOCK PARCEL(S): 666-A/3
666-A/3-A
666-2-A
666-2
666-A-7
666-A-6
OWNERSHIP: MNH Mall, LLC
<TABLE>
<CAPTION>
===============================================================
SITE AREA: SITE COMPONENTS SITE AREA
===============================================================
<S> <C>
Anchor Tenants
Filene's: 9.69+/- AC
JC Penney: 5.04+/- AC
Sears: 10.93+/- AC
Former Lechmere: 6.00+/- AC
===============================================================
ANCHOR SITE AREA* 31.66+/- AC
===============================================================
Developer's Parcel: 38.95+/- AC
===============================================================
TOTAL SITE AREA: 70.61+/- AC
===============================================================
* Not owned and not part of this appraisal.
===============================================================
</TABLE>
ZONING: B-2 Business Designation
HIGHEST AND BEST USE
As Though Vacant: Retail use built to its maximum feasible
FAR.
As Improved: Continued retail use as a regional
shopping center.
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
IMPROVEMENTS
Description: Improvements consist of a single-level,
enclosed regional mall containing a
total GLA of 791,013+/-square feet. The
property is anchored by Filene's, Sears,
JC Penney and a vacant former Lechmere.
Each of the anchor stores are under
separate ownership and are not
considered a part of this appraisal.
Therefore owned GLA consists of 327,393
square feet of mall shops, food court
and kiosk space. The property was
constructed in 1977 and renovated and
expanded between 1996 and 1998.
<TABLE>
<CAPTION>
==========================================================
GROSS LEASABLE BUILDING AREA: BUILDING COMPONENTS GROSS LEASABLE AREA
==========================================================
<S> <C>
Anchor Tenants(1)
Filene's: 165,000+/- SF
Sears: 136,464+/- SF
JC Penney : 101,388+/- SF
Former Lechmere: 60,768+/- SF
==========================================================
ANCHOR GLA: 463,620+/- SF
==========================================================
MALL SHOP GLA: 317,748+/- SF
FOOD COURT GLA: 7,755+/- SF
KIOSK GLA: 1,890+/- SF
==========================================================
TOTAL OWNED GLA: 327,393+/- SF
==========================================================
==========================================================
TOTAL GLA: 791,013+/- SF
==========================================================
==========================================================
(1) Each of the anchors owns their respective store and
are thus not included as part of the subject of
this appraisal
==========================================================
</TABLE>
Parking Spaces: 3,800 spaces or 4.8 spaces per 1,000
square feet of GLA.
<TABLE>
<CAPTION>
SUMMARY OF PROPERTY OPERATIONS
================================================================
<S> <C> <C>
OCCUPANCY(1)
1995 90.2%
1996 80.9%
19972 82.8%
================================================================
TOTAL PER SF OF GLA
================================================================
INCOME3
1995 $10,220,443 $45.82
1996 $10,431,201 $46.77
1997 $13,038,846 $41.04
================================================================
OPERATING EXPENSES
1995 $3,918,118 $17.57
1996 $3,217,269 $14.42
1997 $4,058,554 $12.77
================================================================
(1) 1995 and 1996 occupancy based on average for years, 1997
based on December figure as total square footage changed
during the year.
(2) The following tenants occupy space as tenants at will while
their lease obligations are finalized; Footlocker, GNC,
Finish Line, The Limited and Mothertime.
(3) Per square foot figures based upon 223,053 square feet
for 1995 and 1996 and 317,748 square feet for 1997.
===============================================================
</TABLE>
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
====================================================
INCOME APPROACH ASSUMPTIONS
Cash Flow Analysis
====================================================
<TABLE>
<CAPTION>
<S> <C>
Current Overall Occupancy: 92.0% (Based Upon Mall Shop GLA)
Forecasted Stabilized Occupancy *: 95.0% (Based Upon Mall Shop GLA)
* Exclusive of downtime between leases.
Forecasted Date of Stabilization: April 1, 1999
Holding Period: 10 Years (1/1/98 - 12/31/07)
Growth Rate Assumptions (1998-2008)
Sales Growth: 3.0%
Rent Growth: 3.0%
Expense Growth: 3.0%
Tax Growth: 4.0%
Market Rent Assumptions (per SF)
Tenants < 1,000 SF $70.00
Tenants 1,001-2,000 SF $50.00
Tenants 2,001-3,500 SF $35.00
Tenants 3,501-5,000 SF $30.00
Tenants 5,001-7,500 SF $27.50
Tenants > 7,500 SF $25.00
Average Mall Shop Rent $34.29
Tenant Alterations
New Tenants: $15.00/SF
Renewal Tenants: $ 5.00/SF
Leasing Commissions
New Tenants: $ 2.50/SF
Renewal Tenants: $ 1.50/SF
Tenant Renewal Probability: 65.0%
Cost of Sale at Reversion: 2.0%
AS IS INVESTMENT RATES
Going-In Capitalization Rate: 8.00% - 8.50%
Terminal Capitalization Rate: 8.25% - 8.75%
Discount Rate: 10.50% - 11.00%
AS STABILIZED INVESTMENT RATES
Going-In Capitalization Rate: 8.00% - 8.50%
Terminal Capitalization Rate: 8.25% - 8.75%
Discount Rate: 10.00% - 10.50%
</TABLE>
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
====================================================
MARKET VALUE INDICATORS
"As Is" Valuation
====================================================
<TABLE>
<CAPTION>
<S> <C>
Cost Approach: N/A
Sales Comparison Approach: $141,100,000
Income Capitalization Approach $140,500,000
VALUE CONCLUSION: $141,000,000
Resulting Indicators
Value Per Sq/Ft Owned GLA: $430.68 (Per Sq/Ft Owned GLA)
Value Per Sq/Ft Mall Shop GLA: $443.75 (Per Sq/Ft Mall Shop GLA)
Net Operating Income (CY 1998): $11,020,433
Implicit Overall Cap Rate: 7.82%
====================================================
MARKET VALUE INDICATORS
"As Stabilized" Valuation
====================================================
Cost Approach: N/A
Sales Comparison Approach: $145,000,000
Income Capitalization Approach $145,000,000
VALUE CONCLUSION:
Resulting Indicators
Value Per Sq/Ft Owned GLA: $442.89 (Per Sq/Ft Owned GLA)
Value Per Sq/Ft Mall Shop GLA: $456.34 (Per Sq/Ft Mall Shop GLA)
Net Operating Income (CY 1998): $12,266,583
Implicit Overall Cap Rate: 8.46%
Exposure Time Implicit in
Market Value Conclusion: Not to Exceed 12 Months
</TABLE>
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
SPECIAL ASSUMPTIONS AFFECTING VALUATION:
The following special assumptions have been considered within the
assignment at hand. These assumptions are in addition to the assumptions and
limiting conditions which follow at the end of the report.
1. Throughout this analysis we have relied on information provided
by ownership, management, and the Client which we assume to be
accurate. Such information includes but is not limited to lease
abstracts, rent roll and budgeted operating data, and
construction cost budgets for proposed improvements. Should any
information received be subsequently shown to be erroneous or
incorrect, we reserve the right to amend the value conclusion
herein.
2. We have made a visual inspection of the subject property and
local environs in the process of this analysis. Our comments are
limited to those items which were readily observable and
apparent to such an inspection. Comments regarding the
structural integrity of improvements are beyond the scope of our
engagement and are best made by a professional engineer.
3. Our cash flow analysis and valuation has recognized that all
signed leases and pending leases with a high probability of
coming to fruition are signed and implemented according to the
terms provided. Such leases are identified within the body of
this report.
4. The forecasts of income, expenses, and absorption of vacant
space included herein are not predictions of the future. Rather,
they are our best estimates of current market thinking on future
income, expenses, and demand. We make no warranty or
representation that these forecasts will materialize.
5. The property contains one vacant anchor store (60,768 square
feet) which was formerly occupied by Lechmere. In August 1997,
Lechmere declared bankruptcy and closed their store in October
of the same year. Although management has acquired title to the
former Lechmere store, it is not considered part of the subject
of this appraisal. Management is presently in negotiations with
Best Buy for a portion of the Lechmere store and is pursuing
other suitable retailers for the balance. It is an assumption of
this report that the former Lechmere store is re-tenanted with
one or two destination retailers. Although this will not
directly impact the rent generated by the subject mall stores,
it will provide the subject with the necessary draw to maintain
market share.
6. We were provided with a phase I environmental report prepared by
EMG and dated March 11, 1998. According to the report asbestos
containing materials (ACMs) were identified in the vinyl floor
tiles in the unrenovated tenant suites. The report recommended
that a properly designed operations and maintenance (O & M)
program be implemented. It is an assumption of this report that
an O & M program is implemented and that the cost of remediating
the affected areas is covered within a typical tenant
improvement allowance.
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
7. The subject's food court is presently under construction and
will require an additional $1.7 million to complete. As part of
the proposed financing these funds will be placed in an escrow
account. Per the client's request we have not considered the
cost to complete the food court renovation.
8. Please refer to the complete list of assumptions and limiting
conditions included at the end of this report.
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PHOTOGRAPH OF SUBJECT PROPERTY]
Exterior view of Filene's store.
[PHOTOGRAPH OF SUBJECT PROPERTY]
Exterior view of JC Penney store.
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PHOTOGRAPH OF SUBJECT PROPERTY]
Exterior view of Sears store.
[PHOTOGRAPH OF SUBJECT PROPERTY]
Exterior view of former Lechmere store.
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PHOTOGRAPH OF SUBJECT PROPERTY]
Exterior view of mall.
[PHOTOGRAPH OF SUBJECT PROPERTY]
Interior view of typical common court.
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PHOTOGRAPH OF SUBJECT PROPERTY]
Typical anchor mall entrance.
[PHOTOGRAPH OF SUBJECT PROPERTY]
Interior view of Common court (Note: tables are temporary
during, food court renovations).
<PAGE>
AERIAL PHOTOGRAPH
- -------------------------------------------------------------------------------
[AERIAL PHOTO]
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PAGE
INTRODUCTION.................................................................1
Identification of Property..............................................1
Property Ownership and Recent History...................................1
Legal Description.......................................................2
Purpose and Intended Use of the Appraisal...............................2
Date of Value and Property Inspection...................................2
Property Rights Appraised...............................................2
Extent of the Appraisal Process.........................................2
Definitions of Value, Interest Appraised, and Other
Pertinent Terms.......................................................3
Competency Provision....................................................5
DEMOGRAPHIC & ECONOMIC ANALYSIS..............................................7
NEIGHBORHOOD ANALYSIS.......................................................20
RETAIL MARKET ANALYSIS......................................................22
PROPERTY DESCRIPTION........................................................55
Improvement Description................................................57
REAL PROPERTY TAXES AND ASSESSMENTS.........................................63
ZONING......................................................................65
HIGHEST AND BEST USE........................................................66
As Improved............................................................66
As Vacant..............................................................67
VALUATION PROCESS...........................................................69
SALES COMPARISON APPROACH...................................................70
INCOME CAPITALIZATION APPROACH..............................................89
RECONCILIATION AND FINAL VALUE ESTIMATE....................................123
ASSUMPTIONS AND LIMITING CONDITIONS........................................126
CERTIFICATION OF APPRAISAL.................................................128
ADDENDA....................................................................129
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
IDENTIFICATION OF PROPERTY
The subject of this appraisal assignment is The Mall of New Hampshire
located at 1500 South Willow Street in the Village of Manchester, Hillsborough
County, New Hampshire. The property was originally constructed in 1977 with
three anchor stores and 88 in-line shops. In 1996 the mall began an expansion
and renovation project which included the addition of a fourth anchor tenant
and approximately 105,000 square feet of mall shop space. The property now
contains a total GLA of 791,013 square feet, inclusive of 317,748 square feet
of mall shop space. The property is anchored by Filene's, JC Penney and Sears,
which each owning their respective stores and as such are not part of the
subject of this appraisal.
The property also contains one vacant anchor store (60,768 square feet)
which was formerly occupied by Lechmere. In August 1997, Lechmere declared
bankruptcy and closed their store in October of the same year. Although
management has acquired title to the former Lechmere store, it is not
considered part of the subject of this appraisal. Management is presently in
negotiations with Best Buy for a portion of the Lechmere store and is pursuing
other suitable retailers for the balance of the space. It is an assumption of
this report that the former Lechmere store is re-tenanted with one or two
destination retailers. Although this will not directly impact the rent
generated by the subject mall stores, it will provide the subject with the
necessary draw to maintain market share.
The mall is situated on a 70.61-acre site located in the southeast
quadrant of the intersection of State Route 28 and Interstate 293. The property
has a street address of 1500 South Willow Street, Manchester, New Hampshire and
is identified by the City of Manchester's Tax Assessor's office as Parcel #'s
666-A/3, 666-A/3-1, 666-2-A, 666-2, 666-A-7, and 666-A-6.
PROPERTY OWNERSHIP AND RECENT HISTORY
The subject property was constructed in 1977 by State Properties of New
England. The property has been in continuous ownership by State Properties of
New England or its affiliates since this time. In 1996 the mall began an
expansion and renovation which will add a fourth anchor tenant and increase the
size of the center from 468,000 to 791,013 square feet. Details of this
expansion are as follows:
o Filene's purchased a 9.69+/- acre pad site from State Properties
of New England and constructed a new 165,000 square foot store.
o Filene's sold their existing store (60,000 square feet) to State
Properties of New England. This store was incorporated into a
105,000 square foot expansion of the mall shop space.
o Sears expanded their existing store by 36,000 square feet to
136,464 square feet and performed a complete (interior and
exterior) remodel of the store.
o State Properties of New England performed a complete remodel of
the center including upgrading interior mall finishes, a new
dryvit exterior, new parking surface with enhanced ingress and
egress and a new food court. The food court is presently under
construction and is anticipated to be completed by July 1998.
- -------------------------------------------------------------------------------
-1-
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
o JC Penney was added as a fourth anchor store and is scheduled to
open for business in May 1998.
To the best of our knowledge there have been no arms-length transfers
of the subject property within the past three years. According to ownership the
property is not presently under contract or listed for sale.
LEGAL DESCRIPTION
A metes and bounds description of the is presented in the ADDENDA of
this report.
PURPOSE AND INTENDED USE OF THE APPRAISAL
The purpose of this appraisal is to estimate the As Is Market Value of
the Leased Fee Estate in the subject property as of February 16, 1998, the date
of inspection. The function of this appraisal is to provide an independent
valuation analysis to assist our client in analyzing the property as collateral
for a potential mortgage.
DATE OF VALUE AND PROPERTY INSPECTION
Our As Is Market Value date is February 16, 1998. On that date, Vincent
S. Maniscalco inspected the property and its surrounding environs. Richard W.
Latella, MAI has reviewed and approved this report but has not inspected the
property.
PROPERTY RIGHTS APPRAISED
Leased fee estate.
EXTENT OF THE APPRAISAL PROCESS
In the process of preparing this appraisal, we:
o Inspected the subject property, a sampling of interior shops, and
its surrounding environs;
o Interviewed representatives of leasing personnel and the
management company;
o Reviewed leasing policy, concessions, tenant build-out
allowances, and recently negotiated rental rates, as well as
forecasted operating statements and a budget of income and
expenses;
o Conducted market research of occupancy rates, asking rents,
concessions, and operating expenses at competing properties;
o Conducted market inquiries into recent sales of similar retail
centers to ascertain sale prices per square foot, effective gross
income multipliers, and capitalization rates;
o Determined a trade area for the subject and analyzed specific
data for the property as prepared by ENDS;
- -------------------------------------------------------------------------------
-2-
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
o Estimated market rental rates, absorption, and stabilized income
and expenses for the subject based upon available market data and
current market thinking relative to growth in market rents and
market absorption;
o Developed an "as is" market value estimate of the center via the
Sales Comparison Approach;
o Prepared a forecast of income and expenses in connection with
preparing an estimate of stabilized net income for direct
capitalization purposes;
o Prepared a detailed discounted cash flow (DCF) analysis using o
Pro-Ject +plus software for the purpose of discounting a
forecasted net income stream into a present value of the leased
fee estate for the center;
o Reconciled the value indications and concluded a final value
estimate for the subject on an "as is" basis
o For this assignment, a complete appraisal of the subject property
was performed with the results conveyed in this self-contained
report. A complete appraisal involves an estimate of market value
without any departure from the Uniform Standards of Professional
Appraisal Practice maintained by the Appraisal Foundation. A
self-contained report makes a comprehensive presentation of the
data and analyses which serve as the basis of our conclusion of
value for the subject property.
DEFINITIONS OF VALUE, INTEREST APPRAISED, AND OTHER PERTINENT TERMS
The definition of market value taken from the Uniform Standards of
Professional Appraisal Practice of the Appraisal Foundation, is as follows:
The most probable price which a property should bring in a competitive
and open market under all conditions requisite to a fair sale, the
buyer and seller, each acting prudently and knowledgeably, and assuming
the price is not affected by undue stimulus. Implicit in this
definition is the consummation of a sale as of a specified date and the
passing of title from seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised, and acting in
what they consider their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
5. The price represents the normal consideration for the property
sold unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale.
- -------------------------------------------------------------------------------
-3-
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
EXPOSURE TIME
Under Paragraph 3 of the Definition of Market Value, the value estimate
presumes that "A reasonable time is allowed for exposure in the open
market". Exposure time is defined as the estimated length of time the
property interest being appraised would have been offered on the market
prior to the hypothetical consummation of a sale at the market value on
the effective date of the appraisal. Exposure time is presumed to
precede the effective date of the appraisal.
Based on conversations with property owners, brokers and management
firms, we have estimated the appropriate exposure time to be no more than 12
months for the subject property. This assumption is further supported by the
results of a recent survey of institutional investors by the Korpacz Company
which indicated an average anticipated marketing time of 10.6 months for
regional malls.
The following definitions of pertinent terms are taken from the
Dictionary of Real Estate Appraisal, Third Edition (1993), published by the
Appraisal Institute.
LEASED FEE ESTATE
An ownership interest held by a landlord with the rights of use and
occupancy conveyed by lease to others. The rights of the lessor (the
leased fee owner) and the leased fee are specified by contract terms
contained within the lease.
MARKET RENT
The rental income that a property would most probably command on the
open market, indicated by the current rents paid and asked for
comparable space as of the date of appraisal.
CASH EQUIVALENT
A price expressed in terms of cash, as distinguished from a price
expressed totally or partly in terms of the face amounts of notes or
other securities that cannot be sold at their face amounts.
MARKET VALUE AS IS ON APPRAISAL DATE
The value of specific ownership rights to an identified parcel of real
estate as of the effective date of the appraisal; related to what
physically exists and is legally permissible and excludes all
assumptions concerning hypothetical market conditions or possible
rezoning.
These definitions have been taken into account when arriving at the
estimate of market value reported in this appraisal assignment.
- -------------------------------------------------------------------------------
-4-
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
COMPETENCY PROVISION
We are aware of the competency provision of the Uniform Standards of
Professional Appraisal Practice (USPAP). The authors of this report meet these
standards. Vincent S. Maniscalco inspected the property, researched and
analyzed pertinent market information, and wrote the appraisal report. Richard
W. Latella, MAI has reviewed and approved this report but has not inspected the
property. Vincent S. Maniscalco, and Richard W. Latella, MAI have extensive
appraisal experience with retail properties nationally.
It is our opinion that we are fully competent to perform this
appraisal, due to the fact that:
1. We have full knowledge and experience in the nature of this
assignment;
2. All necessary and appropriate steps have been taken in order to
complete the assignment competently; and
3. We do not lack any knowledge or experience that would prohibit
this assignment to be completed in a professional, competent
manner, or where a biased or misleading opinion of value would
be rendered.
- -------------------------------------------------------------------------------
-5-
<PAGE>
[PHOTO OF REGIONAL MAP]
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
INTRODUCTION
The short- and long-term value of real estate is influenced by a
variety of factors and forces which interact within a given region. Regional
analysis serves to identify those forces which affect property value and the
role they play within the region. The four primary forces which influence real
property value include environmental characteristics, governmental forces,
social factors, and economic trends. These forces determine the supply and
demand for real property which, in turn, affect market value.
================================================
A. ENVIRONMENTAL CHARACTERISTICS
================================================
The primary environmental forces which influence the region include
physical location, geography, and infrastructure. These characteristics provide
a basis for the region's stability and describe the area's overall locational
bearing. Both natural and man-made environmental forces influence real property
values and are best understood in relation to the subject property's location.
GENERAL OVERVIEW
The subject property is located in the City of Manchester, Hillsborough
County, New Hampshire. Hillsborough County is located in the south-central
portion of the state, along the Massachusetts's state border. The county is
comprised of 39 municipalities and totals over 876 square miles. The county is
bounded by Rockingham County, New Hampshire to the east, Essex, Middlesex and
Worcester Counties, Massachusetts to the south, Chesire County, New Hampshire
to the west and Merrimack County, New Hampshire to the north.
The City of Manchester is located on the eastern boundary of the County
and serves as the region's economic hub. In fact, Manchester is the largest
city in the state of New Hampshire, representing nearly 10% of the state's
population. The City of Nashua located along the Massachusetts border in
Hillsborough County, is the State's second largest city with over 7% of the
population. The balance of the county is primarily residential or rural in
nature. The topography of Hillsborough County is quite diverse, ranging from
mountainous areas, to rolling hills, to generally level landscapes.
TRANSPORTATION
The Greater Manchester Region is generally well served by an integrated
transportation network. The central portion of the region contains a majority
of the area's transportation links, supported by surrounding interstates,
highways, and local routes.
HIGHWAYS & INTERSTATES
The Manchester Region is well serviced by north-south arterial
linkages. Interstate 93 is the main thoroughfare in the area providing
convenient access to the City of Boston, approximately 1 hours drive to the
south. Approximately 16 miles north of Manchester I-93 intersects with I-89
providing convenient access to the Northern New England region. I-293 is a
by-pass route which circumvents the City of Manchester along its western
periphery. The FE
- -------------------------------------------------------------------------------
-7-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
Everett Turnpike is also a major/north south artery linking Manchester with the
northwestern suburbs of Boston. State Route 3 also provides convenient
north/south transportation through the Greater Manchester Region. East/West
access through the region is less convenient, comprised mainly of State Route
101 and a variety of local and state maintained routes.
AIR TRANSPORTATION
New Hampshire and the Manchester Region demonstrated their commitment
to economic development and international trade with the construction of a new
158,000 square foot terminal at the Manchester Airport (Completed in 1994).
Situated near I-93, I-293 and Routes 101 and 3, the expanded airport is
conveniently located to serve northern New England. Easy access, competitive
airfare and expanded flight schedules make the airport an attractive
alternative to Boston's Logan Airport. In 1997, the airport served more than
1.0 million passengers, posting a double-digit increase over passenger levels
in the previous year. Manchester offers business and leisure air travelers
direct and nonstop jet service to leading U.S. cities. Manchester Airport is
now the third largest cargo airport in New England, behind Logan and Bradley
International Airport in Connecticut. A recently opened full time U.S. Customs
office makes the airport ideal for shipping or receiving international freight
and handling international cargo. New ramp and sorting/distribution facilities
by Federal Express, United Parcel Service (UPS) and Airborne Express have
positioned Manchester Airport as northern New England's air cargo leader.
Manchester Airport is also an active Foreign Trade Zone site.
INFRASTRUCTURE IMPROVEMENTS
Route 101, the east/west corridor linking Manchester to the Seacoast
Region, is being widened to four lanes. Slated for completion in 2003, the
improvement creates broader commercial opportunities by providing better access
to I-95. In addition, The Greater Manchester Chamber of Commerce is actively
promoting the development of a connecting road between the F.E. Everett
Turnpike and 1-93 south of the airport. The connector would provide more
convenient access to Manchester Airport and open up hundreds of acres of
valuable industrial land in Manchester and Londonderry.
OTHER TRANSPORTATION MODES
The Manchester Region is less than an hour's drive to Portsmouth, home
of the Port of New Hampshire, one of the closest U.S. ice free ports to Europe.
The deep-water port recently completed the addition of a 300-foot pier and
barge container facility and plans to add another 700-foot pier to supplement
the 600-foot pier that is already in place. Portsmouth is also the location of
the International Trade Resource Center, a one stop location for state, federal
and private programs servicing New Hampshire companies competing in
international markets. In addition to services offered by the Manchester
Airport and Port of Portsmouth, the Manchester Region is served by major air
and motor freight companies. Manchester is also located on the main line of the
Boston and Maine Railroad, providing rail connections to Boston and Montreal.
Regularly scheduled bus service is available from Manchester to Boston and
other New England cities through Vermont Transit Lines and Concord Trailways.
Registered taxicabs and limousine services also serve Greater Manchester
communities.
- -------------------------------------------------------------------------------
-8-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
================================================
B. GOVERNMENTAL CHARACTERISTICS
================================================
Governmental influences on the region impact property values via
political and legal actions at all levels. The legal climate at a particular
time or in a particular place may overshadow the natural market forces of
supply and demand. Government provides many necessary facilities and services
that affect land use patterns, including public utilities, refuse collection,
transportation networks, zoning codes, and fiscal policies.
GOVERNMENT STRUCTURE
New Hampshire's state legislature is the largest in the nation (only
the Indian and British parliaments are larger than the New Hampshire state
legislature), consisting of a 400-member House of Representatives and a
24-member Senate. Its official name is the General Court of New Hampshire.
Legislators meet annually, earning a salary of $200 per two-year term (the
lowest legislative salary in the nation).
New Hampshire's executive branch consists of a governor and a
five-member executive council; both are elected to office every two years. The
state is divided into five councilor districts with each district electing its
own councilor. New Hampshire has no lieutenant governor.
Local government consists of a county delegation in each of New
Hampshire's 10 counties. County government is secondary in importance, however,
to city and town government. New Hampshire law permits three types of town
government: town meeting/board of selectmen; town council/town manager; or
elected first selectman/board of selectmen/town meeting. The town meeting is a
means of government, not just a meeting: Town officials are elected, issues are
discussed and voted on.
Municipal governments differ from town governments in that a city's
legislative power is vested in its council. A typical city government has a
mayor and council and is subdivided into wards. New Hampshire has 13 cities and
221 towns.
TAX STRUCTURE
The State of New Hampshire does not levy a personal income tax, sales
tax inventory or machinery tax. The State does levy a Business Profit Tax which
is set at 7%. Local property taxes support schools, libraries, water, sewer,
and fire services, and town highways.
BOND RATING
Moody's Bond Record places the State of New Hampshire, Hillsborough
County and the City of Manchester's bond rating as "Aa2" relative to investment
qualities. "Aa" bonds are judged to be of high quality by all standards but
include elements that may present long-term risks which appear somewhat higher
than "Aaa". "Aaa" bonds are judged to be the best quality and carry the
smallest degree of investment risk. "Baa" bonds are medium grade obligations
which are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be
- -------------------------------------------------------------------------------
-9-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
characteristically unreliable over any great length of time. Moody's applies
numerical modifiers 1, 2 & 3 in each generic rating classification from Aa to
Caa. The 1 modifier indicates that the security ranks in the higher end of its
generic rating category, the 2 modifier indicates a mid-range ranking and the 3
modifier indicates that the issue ranks in the lower end of its generic ranking
category.
================================================
C. SOCIAL FORCES
================================================
Real estate values can be influenced to a large degree by social issues
impacting the region, including population trends, income levels, the profile
of workers in the area, and other quality of life issues. The demographic
composition of the population reveals the potential, basic demand for real
estate services.
POPULATION
The population and its geographic distribution are basic determinants
of the need for real estate. Aggregate population growth is distributed among
regions in response to changing economic opportunities, while the demand for
real estate is created by a population's demand for the goods and services to
be produced or distributed within the region. Thus, population and demographic
trends can influence the demand for services provided by property, thereby
affecting property value.
A strong local economy, high quality of life, and a low cost of living,
couple with the urban sprawl generated by the City of Boston resulted in strong
population growth in Hillsborough County during the 1980s. According to
information complied by the US Census Bureau, the population of the County
increased by nearly 60,000 persons during the 1980s or 2.0% per annum. In
comparison the Boston MSA and United States increased in population during this
same time period by 0.6% and 0.9% per annum, respectively. During the 1990s,
State of New Hampshire experienced a comparable increase in population of 1.9%
per year. It should be noted that the increase in population in Hillsborough
County represented over 30% of the total increase in the State.
Equifax National Decision Systems (ENDS) is a national demographic
firm specializing in population and demographic forecasts. ENDS projects
continued population growth through the 1990s with a 1997 estimate of 357,546
or 0.9 percent annual increase over the 1990 census figure. This rate of growth
is less than experienced during the 1980s but exceeds the level projected for
the Boston MSA or the State of New Hampshire. Through 2002 ENDS is projecting
further increases in the population base of 1.2 percent per annum to 379,649. A
complete demographic profile of Hillsborough County as compared with the Boston
MSA, State of New Hampshire and the United States is exhibited in the chart on
the following page.
- -------------------------------------------------------------------------------
-10-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
THE MALL OF NEW HAMPSHIRE
REGIONAL ECONOMIC & DEMOGRAPHIC FACT SHEET
- -----------------------------------------------------------------------------------------------------------------------------------
COMPOUND ANNUAL GROWTH RATE
1997 2002 1980- 1990- 1997-
1980 1990 (EST.) (PROJ.) 1990 1997 2002
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
POPULATION
Hillsborough County, NH 276,608 336,073 357,546 379,649 2.0% 0.9% 1.2%
Boston, MA PMSA 5,336,187 5,685,998 5,823,109 5,993,041 0.6% 0.3% 0.6%
State of New Hampshire 920,610 1,109,252 1,166,989 1,216,575 1.9% 0.7% 0.8%
United States 226,545,856 248,709,872 266,798,176 278,178,912 0.9% 1.0% 0.8%
===================================================================================================================================
HOUSEHOLDS
Hillsborough County, NH 95,820 124,567 138,781 151,086 2.7% 1.6% 1.7%
Boston, MA PMSA 1,880,101 2,111,440 2,247,240 2,330,769 1.2% 0.9% 0.7%
State of New Hampshire 323,493 411,186 453,557 482,873 2.4% 1.4% 1.3%
United States 80,389,688 91,947,408 101,561,672 107,323,152 1.4% 1.4% 1.1%
===================================================================================================================================
AVERAGE HOUSEHOLD INCOME
Hillsborough County, NH $ 21,147 $ 46,478 $ 64,527 $ 81,630 8.2% 4.8% 4.8%
Boston, MA PMSA $ 21,128 $ 46,892 $ 65,329 $ 87,177 8.3% 4.9% 5.9%
State of New Hampshire $ 19,543 $ 42,502 $ 57,735 $ 72,646 8.1% 4.5% 4.7%
United States $ 20,307 $ 38,453 $ 55,449 $ 71,106 6.6% 5.4% 5.1%
===================================================================================================================================
PER CAPITA INCOME
Hillsborough County, NH $ 7,390 $ 17,404 $ 25,453 $ 32,981 8.9% 5.6% 5.3%
Boston, MA PMSA $ 7,548 $ 17,644 $ 25,862 $ 35,055 8.9% 5.6% 6.3%
State of New Hampshire $ 6,966 $ 15,959 $ 23,002 $ 29,476 8.6% 5.4% 5.1%
United States $ 7,298 $ 14,420 $ 21,464 $ 27,980 7.0% 5.8% 5.4%
===================================================================================================================================
AGGREGATE INCOME (MILLIONS)
Hillsborough County, NH $ 2,044 $ 5,849 $ 9,101 $ 12,521 11.1% 6.5% 6.6%
Boston, MA PMSA $ 40,278 $ 100,324 $ 150,597 $ 210,086 9.6% 6.0% 6.9%
State of New Hampshire $ 6,413 $ 17,703 $ 26,843 $ 35,860 10.7% 6.1% 6.0%
United States $1,653,332 $3,586,396 $5,726,556 $7,783,446 8.1% 6.9% 6.3%
===================================================================================================================================
NON-AGRICULTURAL EMPLOYMENT (000'S)(1)
Hillsborough County, NH 157.70 205.37 213.38 228.54 2.7% 0.5% 1.0%
Boston, MA PMSA 2,924.25 3,428.19 3,485.50 3,635.75 1.6% 0.2% 0.6%
State of New Hampshire 471.94 627.94 683.18 754.97 2.9% 1.2% 1.4%
United States 109,023.51 134,393.52 146,073.98 158,852.15 2.1% 1.2% 1.2%
===================================================================================================================================
Source: Equifax National Decision Systems, Woods & Poole Economics, Inc.
(1) Employment projection is as of 2005
===================================================================================================================================
</TABLE>
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
The population of Hillsborough County is maturing. The median age of
the population in Hillsborough County for 1997 was estimated at 34.46 years,
while the average age was 35.20. Approximately 25.73 percent of the population
is between the ages of 35 and 49 years.
HOUSEHOLDS
Household formation is an important component of demographic analysis
which helps to identify changing patterns or shifts within the population. A
household consists of all people occupying a single housing unit, thus
providing significant sociological information about the region. Household
formation also has a significant influence on demand for real estate.
Households, combined with effective purchasing power, provide the basic demand
for housing units and household needs, thereby transforming needs into
effective demand for real estate improvements.
Like the nation as a whole, household formation has occurred at a rate
in excess of population growth within the subject region. According to our
Equifax National Decision Systems Survey, there was an estimated 138,781
households in Hillsborough County as of 1997. This reflects an increase of
approximately 2.7 percent per year from the 1980 household base of 124,567. As
is common with the rest of the country the overall size of the households have
been decreasing. In 1970, for example, the average household size was 3.17
persons while in 1980, this figure decreased to 2.89 persons, (down 8.83
percent).
According to Equifax National Decision Systems, Hillsborough County
gained 14,214 households between 1990 and 1997. Through 2002, Equifax National
Decision Systems projects a 1.7 percent per year increase in the county to
151,086 units.
INCOME
Income levels, either on a per capita, per family, or per household
basis, indicate the economic level of residents within the region and form an
important component of economic analysis. Average income has a direct impact on
the ability of residents to satisfy material desires for goods and services,
directly affecting the demand and price levels of real estate.
The county's residents are slightly more affluent than those of the
state or nation but consistent with that of the MSA as a whole. This was due in
part to the number of residences which commute to higher paying jobs in the
City of Boston as well as the number of high paying jobs in the technical
fields.
According to ENDS, average household income within Hillsborough County
is currently $64,527. Median household income in the county is $50,975, while
per capita income is $25,453. The largest distribution of income is in the
$35,000 to $74,999 range, with approximately 45.21 percent of the households
earning annual incomes within these figures. It should also be noted that
approximately 30.35 percent of the population earn less than $35,000, while
only 12.23 percent earn in excess of $100,000.
- -------------------------------------------------------------------------------
-12-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
EFFECTIVE BUYING INCOME
While income levels in the county are generally affluent, the lower
cost of living in the area further increases the disposable income to
residents. Sales & Marketing Management places median household effective
buying income at $42,769 for Hillsborough County as of 1996, above both the
state and national median household EBI figures of $40,286 and $33,482,
respectively.
================================================
D. ECONOMIC TRENDS
================================================
Economic forces are significant to real property value. The fundamental
relationships between current and anticipated supply and demand and the
economic ability of the population to satisfy its wants, needs, and demands
through purchasing power are tantamount to such an analysis. Some of the
specific market characteristics considered in economic analysis include
employment trends, the economic base of the region, expansion and new
development, and the overall economic health of the region.
EMPLOYMENT CHARACTERISTICS
The City of Manchester was developed around the textile industry and in
particular the Amoskeag Manufacturing Company. In 1831 a group of Boston-based
investors acquired the water rights to the Merrimack River in Manchester and
purchased vast tracts of land along both sides of the river. Amoskeag
Manufacturing then developed a major complex of mills which produced cotton and
woolen textiles as well as steam-powered fire engines, railroad engines and
other products. In the early twentieth century, the Armoskeag Manufacturing
Company was the largest textile producer in the world. At its peak, it had 30
mills in operation with 8 million square feet of floor space and employed over
17,000 workers. The mill thrived until the 1920s, when competition from
southern mills, obsolete technology and the national depression took their
toll. In 1936, following several years of decline, Amoskeag went bankrupt and
the mills were closed. Over the next sixty years the City of Manchester
reestablished its economy through diversification.
Today, the Manchester Region boost a strong, diversified, local
economy. Area enterprises employ more than 93,000 people and job growth
continues to be steady. Greater Manchester is now the major financial, business
services, insurance, communications, and health care center north of Boston. It
is also home to an eclectic blend of high tech companies and manufacturers,
ranging from small start-up software companies to such Internationally
recognized giants as General Electric, Freudenberg-NOK, Osram-Sylvania, and
Velcro USA.
The foundation for Manchester's current economic diversity was laid in
the 1980s when southern New Hampshire captured attention as one of the fastest
growing areas in the nation. The national economic recession from l988-1991
dramatically slowed the region's growth, but the Manchester area led the way
when the economy began to rebound. By 1995, Manchester had replaced all the
jobs that is lost during the recession and per capita income posted the fourth
fastest growth rate in the country.
- -------------------------------------------------------------------------------
-13-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
The economic recovery and continued growth in Greater Manchester has
been fueled by expansions of existing businesses such as Velcro USA and Jac Pac
Foods, as well as start-up enterprises and relocations of existing business
such as Fidelity Investments.
Many new and existing businesses have experienced tremendous growth by
expanding into global markets. Services offered at Manchester's newly expanded
regional airport and at the nearby Port of Portsmouth make the area ideal for
companies exporting to Canada or abroad. In 1996, New Hampshire exports to 150
countries worldwide totaled more than $1.6 billion, an all time high for the
state. Exports are projected to reach new highs in 1997.
The presence of three major telecommunications companies in the
Manchester area and 200 authorized long-distance carriers has made the region
increasingly attractive to companies, such as Fidelity lnvestments, that rely
on state of-the art telecommunications capabilities. Competition within the
industry ensures that businesses within the Manchester Region receive
cost-efficient, top-quality services.
Health care has also become a growth market in the Manchester area,
with more than 8,600 people employed by health care providers, insurers or
affiliated businesses The recent consolidation of Manchester's Elliot and
Catholic Medical Center hospitals under the umbrella of Optima Health, Inc. has
made that enterprise the largest service sector employer in Greater Manchester.
The Lahey-Hitchcock Clinic has just completed a new facility in Manchester, and
HMOs and insurers such as Oxford Health Systems and Blue Cross and Blue Shield
of New Hampshire have all recently relocated all or part of their operations to
the Manchester Region.
The region's recent business growth is partially a reflection of the
appealing lifestyle that southern New Hampshire offers to entrepreneurs,
corporate officers and employees who wish to live and work in an environment
they enjoy. But it is also testimony to the unique blend of attributes that
make the Manchester area and southern New Hampshire ideal for business and
industry.
LABOR FORCE
The population in Hillsborough County provides employers with a well
trained labor force. As illustrated by the following table, over 53 percent of
the population in the county has attended some level of college with 18.08
percent attaining a bachelor's degree and 8.03 percent attaining a graduate
degree. In comparison 50.46 percent of the state and 45.23 percent of the
United State's population has attended some level of college.
- -------------------------------------------------------------------------------
-14-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===============================================================================
EDUCATION LEVEL
POPULATION 25 YEARS +
===============================================================================
HILLSBOROUGH NEW UNITED
COUNTY HAMPSHIRE STATES
===============================================================================
<S> <C> <C> <C>
Elementary (0-8) 7.13% 6.68% 10.39%
Some High School (9-11) 10.68% 11.17% 14.38%
High School Graduate (12) 28.59% 31.69% 29.99%
Some College (13-15) 18.86% 18.03% 18.74%
Associates Degree 8.37% 8.06% 6.16%
Bachelors Degree 18.08% 16.43% 13.11%
Graduate Degree 8.03% 7.94% 7.22%
===============================================================================
Source: Equifax National Decision Systems
</TABLE>
Furthermore, a recent study by the American Electronics Association
revealed that New Hampshire had the highest concentration of high tech workers
per thousand population in the nation. Most of these high tech workers live and
work in the southern part of the state.
The concentration of colleges and universities in the Manchester area
ensures the continued availability of educated, highly skilled employees.
Colleges in Hillsborough County include Daniel Webster in Nashua, Hawthorne in
Antrim, Rivier in Nashua, Hesser, Notre Dame, New Hampshire College, University
of New Hampshire at Manchester, Saint Anselm in Manchester and Magdalen in
Bedford. In addition, southern New Hampshire has ready access to one of the
greatest concentrations of academic institutions in the world in nearby Boston.
STATE AND LOCAL RESOURCES
The state government takes an active role in encouraging business
growth through financing and information programs. The New Hampshire Department
of Resources and Economic Development and its divisions of Economic
Development, Business and Industrial Development, International Commerce and
Travel and Tourism work closely with the private sector and municipal entities
to support prospective and existing New Hampshire businesses.
The Greater Manchester Chamber of Commerce (Regional Economic
Development Initiative) also spearheads a collaborative effort with area towns
to implement an economic development program for the region. This cooperative
program is funded organized and managed exclusively by the private sector to
work in concert with local governments to create and expand jobs in the region.
Many of the communities surrounding Manchester also have independent economic
development programs, aggressively promoting their towns to companies seeking
to relocate or expand. In many cases, towns have streamlined their permit
process and redeveloped zoning ordinances. Towns with especially active
economic development initiatives are: Bedford, Derry, Goffstown, Hooksett,
Londonderry and Merrimack. Derry, Londonderry and Merrimack chambers of
commerce also assist in development and sustainment of their local business
communities.
- -------------------------------------------------------------------------------
-15-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
The City of Manchester provides assistance to businesses interested in
locating or expanding in the area through the Manchester Economic Development
Office (MEDO). The Greater Manchester Chamber of Commerce works in concert with
MEDO and other state, city, education and non-profit organizations to build the
best environment possible for doing business in the Manchester area.
Recognizing the importance of international trade to the state and local
economy, the Chamber joined forces with the state's International Trade
Resource Center to create New Hampshire Protocol Alliance, an organization that
connects New Hampshire companies with business executives around the world.
The private sector and the City of Manchester also joined forces to
create the Intown Management Corporation in the fall of 1995. The corporation
is charged with spearheading the redevelopment of Manchester's central business
district, including the famous Amoskeag Millyard. Some of its recent
initiatives include the redevelopment of Manchester's main thoroughfare, a
facade improvement program, and the creation of a downtown ice skating rink and
concert series. Intown Manchester fostered the creation of For Manchester, a
volunteer effort to assist in the revitalization of the city.
UNEMPLOYMENT RATES
Unemployment rates in Manchester have historically been below state and
national figures. As of November 1997, the unadjusted unemployment rate for
Manchester was 2.6 percent, 120 points below year-end 1996 levels, and 40
points below the state unemployment rate of 3.0 percent. Mirroring national
trends, unemployment peaked between 1991-1993, followed by a declining trend
through 1996.
<TABLE>
<CAPTION>
===============================================================================
Historic Unemployment Rates
===============================================================================
Hillsborough New United
Year County Hampshire States
===============================================================================
<S> <C> <C> <C>
11/97 2.6% 3.0% 4.6%
- -------------------------------------------------------------------------------
1996 3.7% 4.2% 5.4%
- -------------------------------------------------------------------------------
1995 4.0% 4.0% 5.6%
- -------------------------------------------------------------------------------
1994 4.6% 4.6% 6.1%
- -------------------------------------------------------------------------------
1993 6.2% 6.6% 6.9%
- -------------------------------------------------------------------------------
1992 7.5% 7.5% 7.5%
- -------------------------------------------------------------------------------
1991 7.3% 7.2% 6.8%
- -------------------------------------------------------------------------------
1990 5.8% 5.6% 5.6%
===============================================================================
Source: Employment & Earnings; Bureau of Labor Statistics
===============================================================================
</TABLE>
EMPLOYMENT GROWTH PROJECTIONS
Woods & Poole Economics projects moderate-good non-farm employment
growth for Hillsborough County over the next seven years, with an annual rate
of increase forecasted at 1.0 percent per year. This level of growth is less
than the average for the state or nation as a whole which are expected to
increase by 1.4 and 1.2 percent per annum respectively. The Boston MSA,
however, is forecast to increase at a more moderate rate of 0.6 percent per
annum.
- -------------------------------------------------------------------------------
-16-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
RETAIL SALES
Another measure of the economic health of a region is retail sales
patterns. Consumers drive the economy by creating demand for goods and services
and, in turn, generate the need for housing, office space, retail centers, and
warehouse/distribution facilities. It is estimated that consumer spending
accounts for two-thirds of all economic activity in the United Sates today. As
such, retail sales patterns have become an important indicator of the economic
health of a region.
During the 1980s retail sales in Hillsborough County increased by 4.0
percent per annum. In comparison the state of New Hampshire experienced growth
in retail sales of 4.2 percent and the United States as a whole experienced a
1.6 percent increase. Since 1990, total retail sales has been more modest, a
trend experienced in all sectors. Woods & Poole is forecasting slower annual
sales growth of 1.3 percent per year through 2005 which is slightly less than
both state or national averages.
<TABLE>
<CAPTION>
=======================================================================================
RETAIL SALES TRENDS
IN 1992 $
($000'S)
=======================================================================================
HILLSBOROUGH NEW UNITED(1)
YEAR COUNTY HAMPSHIRE STATES
=======================================================================================
<S> <C> <C> <C>
1980 $2,494.07 $8,046.72 $1,636.43
1990 $3,709.49 $12,181.83 $1,926.19
1997 $3,849.23 $12,691.77 $2,160.63
2005 Projection $4,254.82 $14,347.78 $2,413.63
=======================================================================================
CAGR(2) 1980 - 1990 4.0% 4.2% 1.6%
CAGR 1997 - 2005 1.3% 1.5% 1.4%
=======================================================================================
(1) US figures presented in billions
(2) Compound Annual Growth Rate
Source: Woods & Poole Economics
=======================================================================================
</TABLE>
===========================================
E. SUMMARY
===========================================
Manchester and Hillsborough County developed as an industrial community
centered around the textile mills along the Merimack River. Since the closing
of the mills in the late 1930s, the areas economy has diversified and now
produces a wide array of products and services. The area has a significant
employment base in its own right but has also become a bedroom community for
Boston commuters.
Fueled by the lower cost of living, ample employment opportunities and
its proximity to Boston, Hillsborough County experienced rapid population and
household growth during the 1980s. This growth has continued through the first
part of the 1990s and is projected to continue through the remaindered of the
decade, albeit at a more moderate pace. Income levels in the area are strong
outpacing both state and national levels.
- -------------------------------------------------------------------------------
-17-
<PAGE>
DEMOGRAPHIC & ECONOMIC ANALYSIS
- -------------------------------------------------------------------------------
As we foresee continued economic growth, it is our opinion that the
future for the Manchester Region is positive. The short term outlook is for
continued stability and slow growth while the long term prospects for the area
is promising as its economic base continues to diversify and expand. Manchester
should be able to sustain and continue growth in the future while remaining
desirable to the major industries and maintaining a strong labor force.
- -------------------------------------------------------------------------------
-18-
<PAGE>
[GRAPHIC OF NEIGHBORHOOD MAP]
<PAGE>
NEIGHBORHOOD ANALYSIS
- -------------------------------------------------------------------------------
OVERVIEW
A neighborhood is defined as a grouping of complimentary land uses
affected by similar operations of the social, economic, governmental, and
environmental forces that influence property value. As a regional center, the
subject serves a much larger market than its immediate neighborhood.
Essentially, the subject can be defined as one of the principal retail
destination centers for southern New Hampshire. It has good regional
accessibility by virtue of its location along Route 28 and Interstate 293.
Nonetheless, a discussion of the local environs is an important element in a
total analysis of the subject property.
GENERAL
The subject neighborhood is located along a commercial section of South
Willow Street (Route 28) within the City of Manchester, Hillsborough County,
New Hampshire. The Town of Manchester is generally bounded by the Town of
Hooksett to the north, the Towns of Goffstown and Bedford to the west, The town
of Londonderry to the south, and the Town of Auburn to the east. The subject's
neighborhood is approximately 3 miles south of the Manchester CBD and is
characterized by retail commercial uses.
ACCESS/LINKAGE
The subject property is located in the southeast quadrant of the
intersection of Route 28 and Interstate 293. Route 28 also known as South
Willow Street is a heavily traveled commercial thoroughfare which provides
access from the Manchester CBD to the southern communities of Londonderry and
Goff's Falls. Interstate 293 is a beltway which splits-off from Interstate 93
approximately 2 miles east of the subject and circumvents the City of
Manchester along its western periphery. Interstate 93 is the main north/south
artery in the State of New Hampshire providing access from the City of Boston
to its terminus at Interstate 91 in the City of Saint Johnsbury. Together these
arteries provide convenient access from the surrounding communities in southern
New Hampshire as well as the northern suburbs of Boston.
Access to the subject property from I-293 is rather direct and is
provided by Route 28. In the area of the subject property, Route 28 was
recently widened to ten lanes including three turning lanes for the subject
property.
East/West access to the subject property is less convenient as it
primarily relies upon local arteries. The major east/west artery in the area is
State Route 101, located approximately 2 miles north of the subject.
LAND USE PATTERNS
The development of the subject property characterized the neighborhood
as a retail corridor and was the impetus for a variety of ancillary
developments. Directly opposite the subject property is the Kmart Plaza, a
140,000 square foot center anchored by Kmart, Toys R Us, and Filene's Basement.
The property was constructed in 1975 and presents a somewhat tired appearance.
Just south of the subject there are several newer freestanding retailers
including Home Quarters, Lay-Z-Boy, Barnes & Noble and Sears' Homelife. Further
south, as one approaches the Manchester Airport, the area becomes less densely
developed and more office/industrial in nature.
- -------------------------------------------------------------------------------
-20-
<PAGE>
NEIGHBORHOOD ANALYSIS
- -------------------------------------------------------------------------------
Immediately north of Interstate 293 the area continues to be
characterized by dense development featuring nationally recognized retailers
such as Circuit City, Pier One, Sports Authority, Petco, TJ Maxx, Service
Merchandise, Bradlees, Office Max and Home Depot. Further north the area
continues to be developed with retail uses, however, uses in this area are
generally less intensive such as small strip centers which cater primarily to
local merchants.
DEVELOPMENT TRENDS
The subject's neighborhood has been densely developed with retail uses
for numerous years, but witnessed a resurgence in the early 1990s when many big
box users relocated to the area. Due to the densely developed nature of the
area, many of these retailers were forced to either redevelopment existing
under-utilized properties or accept secondary sites with less frontage. The
expansion and renovation of the subject property is the most recent retail
development in the area. Recently, development has focused more on the hotel
segment of the market with the construction of a new Marriott Courtyard and
Best Western as well as the conversion of an existing Days Inn into a Sheraton
Four Points. Given the built-up nature of the subject's neighborhood we do not
anticipate any significant new development. The area south of the subject is
less densely developed but is less convenient to I-293. Given the current
utilizations in this area we anticipate continued development of office and
industrial product and other ancillary uses to the Manchester Airport.
SUMMARY
The subject property benefits from its location at an easily accessible
intersection in the Town of Manchester. From its proximity to residential
developments, to its accessibility from all parts of the region, the subject is
clearly capable of capturing a substantial amount of GAFO expenditure
potential. The subject property was the catalyst for a vast array of
redevelopment along the Route 28 in proximity to its interchange with I-293.
The presence of such notable retailers as Kmart, Home Depot, Circuit City,
Sports Authority and Bradlees helps to establish the subject's neighborhood as
one of the principal retail destinations in the greater Manchester area.
- -------------------------------------------------------------------------------
-21-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
TRADE AREA OVERVIEW
A retail center's trade area contains people who are likely to
patronize that particular retail center. These customers are drawn by a given
class of goods and services from a particular tenant mix. A center's
fundamental drawing power comes from the strength of the major tenants, as well
as the regional and local tenants which complement and support the anchors. A
successful combination of these elements creates a destination for customers
seeking a variety of goods and services while enjoying the comfort and
convenience of an integrated shopping environment.
The subject can best be described as a regional shopping center.
THE REGIONAL CENTER1 PROVIDES FOR GENERAL MERCHANDISE, APPAREL,
FURNITURE, AND HOME FURNISHINGS IN DEPTH AND VARIETY, AS WELL AS A
RANGE OF SERVICES AND RECREATIONAL FACILITIES. IT IS BUILT AROUND ONE
OR TWO FULL-LINE DEPARTMENT STORES OF GENERALLY NOT LESS THAN 100,000
SQUARE FEET. IN THEORY, ITS TYPICAL SIZE FOR DEFINITIVE PURPOSES IS
450,000 SQUARE FEET OF GROSS LEASABLE AREA; IN PRACTICE, IT MAY RANGE
FROM 300,000 TO 1,000,000 SQUARE FEET. THE REGIONAL CENTER IS THE
SECOND LARGEST TYPE OF SHOPPING CENTER. AS SUCH, IT PROVIDES SERVICES
TYPICAL OF A BUSINESS DISTRICT YET NOT AS EXTENSIVE AS THOSE OF THE
SUPER-REGIONAL CENTER.
In order to define and analyze the market potential for The Mall of New
Hampshire, it is important to first establish the boundaries of the trade area
from which the subject will draw its customers. In some cases, defining the
trade area may be complicated by the existence of other retail facilities on
main thoroughfares within trade areas that are not clearly defined or whose
trade areas overlap with that of the subject. The subject's potential trade
area partially overlaps with other retail facilities found throughout certain
defined or established nodes of retail development in Hillsborough County and
its environs. We note that its overall capture rate of area retail expenditure
potential is influenced to some extent by such area malls as Pheasant Lane
Mall, The Mall at Rockingham Park and Steeplegate Mall. There are numerous
other area shopping centers that are found throughout the general area,
however, it is felt that these three most directly impact the subject and
combine to define the limits of its total trade area.
As described in our "Neighborhood Analysis", there are also various
nodes of retail concentration throughout the area including that which is found
along Route 28 near the mall. These consist primarily of strip centers as well
as certain free-standing destination retailers, supermarkets and specialty
stores in the market. While some cross-shopping does occur, these stores act
more as a draw to the area, creating an image for the area as a prime
destination shopping location and generating more retail traffic than would
exist in their absence. Nonetheless, we do recognize and mention these centers
to the extent that they provide a complete understanding of the area's retail
structure.
- -------------
(1) Urban Land Institute: Dollars and Cents of Shopping Centers - 1997.
- -------------------------------------------------------------------------------
-22-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
Once the trade area is defined, the area's demographics and economic
profile can be analyzed. This will provide key insight into the area's dynamics
as it relates to the subject. The sources of economic and demographic data for
the trade area analysis are as follows: Equifax National Decision Systems
(ENDS), Sales and Marketing Management's Survey of Buying Power, The Urban Land
Institute's Dollars and Cents of Shopping Centers (1997), CACI, The Sourcebook
of County Demographics, and The Census of Retail Trade - 1992. The subject's
Total Trade Area, profiled by Equifax National Decision Systems, has been
defined based upon our analysis of the subject's market and competing centers.
We have also relied upon a Shopper Survey provided by management which was
completed in 1996.
SCOPE OF TRADE AREA
Traditionally, a retail center's sales are principally generated from
within its primary trade area, which is typically within reasonably close
geographic proximity to the center itself. Generally, between 55.0 and 65.0
percent of a regional center's sales are generated within its primary trade
area. The secondary trade area generally refers to more outlying areas which
provide less frequent customers to the center. Residents within the secondary
trade area would be more likely to shop closer to home due to time and travel
constraints. Typically, an additional 20.0 to 25.0 percent of a center's sales
will be generated from within the secondary area. For centers which have above
average regional accessibility, this percentage can sometimes be greater. The
tertiary or peripheral trade area refers to more distant areas from which
occasional customers to the mall reside. These residents may be drawn to the
center by a particular service or store which is not found locally. Industry
experience shows that between 10.0 and 15.0 percent of a center's sales are
derived from customers residing outside of the trade area. This potential is
commonly referred to as inflow.
Before the trade area can be defined, it is necessary that we
thoroughly review the retail market and the competitive structure of the
general marketplace, with consideration given as to the subject's position
therein. Subsequent to our discussion of the area's retail structure, a profile
of the department stores which anchor the subject is presented in order to
fully acquaint the reader with its overall market position therein.
RETAIL STRUCTURE
With respect to regional mall competition, the subject appears to be
relatively well positioned. In order to examine the subject property in its
proper context, we must first examine the nature of the area infrastructure as
well as the competition. The Mall of New Hampshire was built in 1977 at the
intersection of State Route 28 and Interstate 293 on the eastern boundary of
Hillsborough County.
State Route 28 is primarily a local route which provides access from
the Manchester CBD to the southern communities of Londonderry and Goff's Falls.
It is a heavily traveled thoroughfare which provides convenient access to the
subject property from the local community.
I-293 is a bypass route which circumvents the City of Manchester along
its western periphery. Approximately 2 miles east of the subject I-293
intersects with I-93, the major north/south artery in the area. Approximately 1
mile west of the subject, I-293 intersects with
- -------------------------------------------------------------------------------
-23-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
FE Everett Turnpike, another major north/south artery. East/west access is
primarily provided by State Route 101, located approximately 2 miles north of
the subject and local arterials. Together these roadways provide the subject
property with convenient access throughout southern New Hampshire and northern
Massachusetts.
From a competitive standpoint, the subject is most proximate to
Pheasant Lane Mall or The Mall at Rockingham Park, each located approximately
20 miles to the south. Steeplegate Mall is approximately 25 miles north of the
subject.
COMPETITION
Including The Mall of New Hampshire, there are four regional malls in
the southern New Hampshire market. The malls include Pheasant Lane, The Mall at
Rockingham Park and Steeplegate Mall. All of the malls offer a traditional mix
of nationally recognized tenants and compete on a mid-level price point. As
such all three malls are considered direct competitors to the subject in terms
of marketing strategy. Each of the centers is 20 to 25 miles in distance from
the subject and as such are considered secondary competitors in terms of
location, as they will generate the majority of their sales from outside of the
subject's primary trade area. Nevertheless these centers establish the
boundaries of the Mall of New Hampshire's primary and secondary trade areas.
The following table along with accompanying map on the FOLLOWING PAGE,
identifies the extent of regional competition for the subject. As shown,
including the subject, there are four regional malls totaling 3.2 million
square feet of space.
<TABLE>
<CAPTION>
===================================================================================================================
COMPETITIVE INVENTORY OF REGIONAL MALL SPACE
===================================================================================================================
APPROXIMATE
YEAR DISTANCE
MALL/RETAIL PROPERTY BUILT/ OWNER/ FROM ANCHORS/ SIZE
RENOV MANAGER SUBJECT MALL SHOPS (SQ FT)
===================================================================================================================
<S> <C> <C> <C> <C> <C>
S THE MALL OF NEW HAMPSHIRE 1977/ MNH, LLC/ n/a Filene's 165,000
Manchester, NH 1998 Wells Park Group Sears 136,464
JC Penney 101,388
Vacant 60,768
Mall Shops 327,393
-------
Total 791,013
- -------------------------------------------------------------------------------------------------------------------
1 PHEASANT LANE 1986/ SR Weiner & Assoc. 20 miles Filene's 150,000
Nashua, NH 1996 & Wells Park Group/ southwest JC Penney 105,000
SR Weiner & Assoc. Macy's 120,000
Sears 165,000
Vacant 115,000
Mall Shops 305,000
-------
Total 960,000
- -------------------------------------------------------------------------------------------------------------------
2 MALL AT ROVKINGHAM PARK 1991 New England Deve./ 20 miles Filene's 139,476
Salem, NH Wells Park Group southeast JC Penney 121,106
Macy's 153,388
Sears 200,627
Mall Shops 382,889
-------
Total 997,486
- -------------------------------------------------------------------------------------------------------------------
3 STEEPLEGATE 1990 General Growth Prop./ 25 miles JC Penney 61,880
Concord, NH General Growth Prop. north Sears 106,731
Steinbach 51,684
Vacant 55,180
Mall Shops 162,655
-------
Total 438,130
===================================================================================================================
</TABLE>
- -------------------------------------------------------------------------------
-24-
<PAGE>
[GRAPHIC OF COMPETITIVE MAP]
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SUBJECT RETAIL CENTER
Name: The Mall of New Hampshire
Location: 1500 South Willow Street
Manchester, New Hampshire
Owner: MNH, LLC
(New England Development)
Year Opened: 1977
Last Renovation/Expansion: 1998
Anchor Tenants:
Filene's 165,000 SF
Sears 136,464 SF
JC Penney 101,388 SF
Vacant (Former Lechmere) 60,768 SF
Total Anchor 463,620 SF
Mall Shop GLA: 327,393 SF
Total GLA: 791,013 SF
Mall Shop Ratio: 41.39%
Number of Mall Shops: 120+/-
Occupancy: 92%
Retail Sales: $350/SF
Land Area: 71 acres
Parking Ratio: 4.8 spaces per 1,000 square feet
Comments:
The Mall of New Hampshire is a single-level, enclosed center which was
constructed in 1977 with three anchor tenants and 88 mall shops. In 1996 the
center began a renovation and expansion program which added a fourth anchor
tenant (JC Penney) and 105,000 square feet of additional mall shop space. In
addition the interior common areas and exterior of the center was complete
renovated. The property is located at the intersection of I-293 and Route 28
and has good regional accessibility. Despite the on-going renovation of the
center, mall shop sales were strong and are expected to increase now that the
renovations are nearing completion. The property features a broad mix of
national tenants.
- -------------------------------------------------------------------------------
-26-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETING RETAIL CENTER 1
Name: Pheasant Lane Mall
Location: Daniel Webster Highway
Nashua, New Hampshire
Distance from Subject: 20 miles southwest
Owner: SR Weiner & Associates
Wells Park Group
Marking Strategy: Traditional
Year Opened: 1986
Last Renovation/Expansion: 1996
Anchor Tenants:
Filene's 150,000 SF
JC Penney 105,000 SF
Macy's 120,000 SF
Sears 165,000 SF
Vacant 115,000 SF
-------
Total Anchor GLA: 655,000 SF
Mall Shop GLA: 305,000 SF
Total GLA: 960,000 SF
Mall Shop Ratio: 31.7%
Number of Mall Shops: 150+/-
Occupancy: 95%
Retail Sales: $375
Land Area: 96 acres
Parking Ratio: 5.7 spaces per 1,000 SF
- -------------------------------------------------------------------------------
-27-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETING RETAIL CENTER 1 (CONT.)
Comments:
Pheasant Lane Mall consists of a two-story enclosed shopping center which was
constructed in 1986 by a joint venture between SR Weiner & Associates and New
England Development. The property is located along Daniel Webster Highway, the
primary regional retail corridor in Greater Nashua. Regional access is rated
average from State Route 3 which is north-south oriented. Traffic congestion is
an increasing problem for this mall with shoppers complaining about Route 3
construction delays and traffic back-ups along Split Brook Road. Retail
development continues around the mall, worsening traffic congestion. The mall
has a broad tenant mix appealing to popular, moderate to better quality
shoppers. In 1996 the center underwent a minor cosmetic renovation which
replaced the common area brick pavers with ceramic tile and upgrading the
pushcarts. Lechmere's was a former anchor tenant at the property but closed
their store after filing for bankruptcy.
- -------------------------------------------------------------------------------
-28-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETING RETAIL CENTER 2
Name: Mall at Rockingham Park
Location: 99 Rockingham Park Boulevard
Salem, New Hampshire
Distance from Subject: 20 miles southeast
Owner: New England Development
Marking Strategy: Traditional
Year Opened: 1991
Last Renovation/Expansion: N/A
Anchor Tenants:
Filene's 139,476 SF
JC Penney 121,106 SF
Macy's 153,388 SF
Sears 200,627 SF
-------
Total Anchor GLA: 614,597 SF
Mall Shop GLA: 382,889 SF
Total GLA: 997,486 SF
Mall Shop Ratio: 38.4%
Number of Mall Shops: 140+/-
Occupancy: 98%
Retail Sales: $350
Land Area: 85 acres
Parking Ratio: 4.54 spaces per 1,000 SF
- -------------------------------------------------------------------------------
-29-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETING RETAIL CENTER 2 (CONT.)
Comments:
The Mall at Rockingham Park consists of a two-level "V-shaped" center which was
constructed in 1991 by New England Development. The property is located off of
exit 1 of I-93 in Salem New Hampshire. The property is considered to have good
overall regional access although east-west access is limited in New Hampshire
in general. The Mall at Rockingham Park is well positioned to capture customers
from a market area which extends into northern Massachusetts, especially given
the lack of sales tax in New Hampshire versus 5 percent in Massachusetts. Since
its construction this property has reduced the subject's market capture to the
south. The recent renovation and expansion of the subject should enable it to
regain some of this lost market share.
Sales performance at the property have consistently trended upward over the
past six years breaking the $300 mark for the first time in 1996. The
renovation and expansion of the subject will undoubtedly impact sales at this
property, however it will continue to benefit from its proximity to
Massachusetts. Its noted that the Filene's store at this property is presently
undergoing an expansion in order to more effectively compete with the new store
at the subject.
- -------------------------------------------------------------------------------
-30-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETING RETAIL CENTER 3
Name: Steeplegate Mall
Location: 270 Loudon Road
Concord, New Hampshire
Distance from Subject: 25 miles north
Owner: General Growth Properties
Marking Strategy: Traditional
Year Opened: 1990
Last Renovation/Expansion: N/A
Anchor Tenants:
JC Penney 61,880 SF
Sears 106,731 SF
Steinbach 51,684 SF
Vacant 55,180 SF
-------
Total Anchor GLA: 275,475 SF
Mall Shop GLA: 162,655 SF
Total GLA: 438,130 SF
Mall Shop Ratio: 37.1%
Number of Mall Shops: 80+/-
Occupancy: 83%
Retail Sales: $260
Land Area: 49 acres
Parking Ratio: 5.09 spaces per 1,000 SF
- -------------------------------------------------------------------------------
-31-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETING RETAIL CENTER 3 (CONT.)
Comments:
Steeplegate Mall is a single-level enclosed center which was constructed in
1990 by General Growth Properties. The property opened as a four anchor center,
however, Sage Allen closed in 1992 and has not been replaced. The property has
had difficulties in leasing and is presently 83% leased. The property is
located at the intersection of Route 106 & Route 9 in Concord, NH approximately
25 miles north of the subject. Access to the property is via I-393, an
east/west spur of I-93. The property does not have any visibility from this
roadway. Two of the anchor tenant stores (Steinbach and Sage Allen) as well as
the overall size of the property appear undersized to effectively compete on a
regional basis. Nevertheless, the property does have a broad array of national
retailers and is convenient to residents of the greater Concord area. As such
this property limits the subject's market capture to the north. The subject's
expansion should enable it to effectively regain some of the market share which
was lost to this property.
- -------------------------------------------------------------------------------
-32-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
On the preceding pages we have provided details of each of the
competing regional centers which impacts the subject property. To recapitulate
this information, the following matrix illustrates how each of property
competes with the subject in terms of price point and location.
=============================
LOCATION
P =============================
R PRIMARY SECONDARY
I ===============================================
C PRIMARY Pheasant Lane
E Mall at Rockingham
Steeplegate Mall
P ===============================================
O
I SECONDARY
N ===============================================
T
As illustrated by the above graphic we believe all three of the
subject's primary competitors share a similar price point strategy but are
located a sufficient distance from the subject to be excluded from its primary
trade area.
NEW/PROPOSED DEVELOPMENT
To the best of our knowledge, there are no proposed properties in the
subject region which would compete directly with the subject.
COMPETITION SUMMARY
The subject property is the dominant center in an trade area which
extends approximately 15 - 20 miles. The subject property faces direct
competition from two regional center to the south. Each of these centers is
located along major north/south arteries and have similar anchor and mall shop
tenancies. As such these properties effectively limit the subject's market
capture from this direction. To the north the subject property faces
competition from Steeplegate Mall. This center was constructed in 1990 but is
significantly smaller than the subject. The property has one anchor tenant
store which has been vacant for more than five years and two anchor tenants
which are considered undersized. In addition the overall size of the property
at under 500,000 square feet is considered too small to effectively compete on
a regional basis. Therefore this property is considered to compete with the
subject only for customers in the northern Hillsborough County market who would
be attracted by its convenient location. The subject property also competes
with the surrounding community centers and big box development. However these
centers also establish the subject's neighborhood as a retail shopping
destination helping to increase the drawing power.
- -------------------------------------------------------------------------------
-33-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
GLA PER CAPITA
The data presented summarizes the extent of existing retail development
inside the subject's potential trade area. According to the International
Council of Shopping Centers, average mall GLA per capita for the United States
and State of New Hampshire is about 5.58+/- and 4.83+/- square feet,
respectively, for shopping centers "Over 400,000" square feet (based on 1996
Population Estimates). The competitive survey revealed three centers of 400,000
square feet or more in Hillsborough county; The Mall of New Hampshire, Pheasant
Lane Mall and Steeplegate Mall. The Mall at Rockingham Park is located in the
neighboring County of Rockingham. Combined these three centers have a total GLA
of 2.189 million square feet. Compared with the Hillsborough County's 1997
population estimate of 357,546, a per capita figure of 6.1+/- square feet is
suggested, a figure which is above these published benchmarks. It is noted,
however, that all three malls are located on the County's borders and
undoubtedly draw from trade areas which extend beyond the county limits.
ANCHOR STORE PROFILES
The subject property is anchored by three anchor tenants which are
relatively familiar to the residents within this region of New Hampshire. The
following discussion presents a brief overview of anchor store parent company
operations, along with credit rating for each organization, where possible.
MAY DEPARTMENT STORES COMPANY
May Department Stores Company is one of the leading department store
operators in the United States with 365 department stores in 8
department store divisions and presence in 30 states and Washington
D.C. The company operates under the names of Lord & Taylor, Foley's,
Robinsons-May, Filene's, Hecht's/Strawbridge's, Kaufmann's, Famous-Barr
and Meier & Frank.
For 1996, The May Company achieved its 22nd consecutive year of record
sales and earnings per share. Sales reportedly increased nearly 11.1
percent, with comp-store sales increasing by 4.3 percent, one of the
best performances among major department store companies in 1996. Total
sales reached $11.5 billion as May opened 28 department stores, 13 of
which were acquired, bringing the company to a year-end total of 365
stores. The 28 stores reportedly added 5.5 million square feet of
selling space. The 13 acquired stores were former Strawbridge's units
in the Greater Philadelphia area, bringing the company's total
Strawbridge's operation to 21 stores (all operated under the Hecht's
division). In addition, the company remodeled 22 stores in 1996
totaling 1.8 million square feet.
- -------------------------------------------------------------------------------
-34-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==================================================================================================================
THE MAY COMPANY
==================================================================================================================
<S> <C> <C> <C> <C>
Year Ended 1993 1994 1995 1996
==================================================================================================================
Net Sales (000) $9,010,000 $9,748,000 $10,484,000 $11,650,000
- ------------------------------------------------------------------------------------------------------------------
No. Stores at Yr.-End 301 314 346 365
- ------------------------------------------------------------------------------------------------------------------
Sales/Store (000) $29,977 $31,080 $30,367 $31,918
- ------------------------------------------------------------------------------------------------------------------
Building Area Sq/Ft (000) 49,380 51,977 57,640 62,116
- ------------------------------------------------------------------------------------------------------------------
Comp.Sales/Selling Sq/Ft $191 $200 $201 $201
- ------------------------------------------------------------------------------------------------------------------
Sales Growth 6.7% 8.2% 7.7% 10.9%
- ------------------------------------------------------------------------------------------------------------------
Comp.Store Sales Growth 5.2% 5.4% 2.5% 4.3%
==================================================================================================================
</TABLE>
Also in 1996, the company spun-off the 4,500+/-unit Payless ShoeSource chain to
shareholders. On May 6, 1996, approximately 40 million shares of common stock
of Payless ShoeSource, Inc. were distributed, allowing May to focus solely on
its department store business. For 1997, May plans to open 13 new stores,
adding some 2.0 million square feet of selling space to their operations. Over
the five year period 1997-2001, May plans to add 100 new stores totaling 15.0
million square feet.
Provided below is a summary of net retail sales, sales per square foot,
building area square footage, and number of stores for the eight department
store operating companies.
- -------------------------------------------------------------------------------
-35-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
================================================================================================================================
MAY DEPARTMENT STORES COMPANY
- --------------------------------------------------------------------------------------------------------------------------------
Building Area
Net Retail Sales Per Square Footage
Sales in Millions Square Foot in Thousands Number of Stores
----------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995 1996 1995
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lord & Taylor $ 1,718 $ 1,574 $241 $233 7,473 7,131 59 57
- --------------------------------------------------------------------------------------------------------------------------------
Foley's 1,801 1,693 180 180 10,603 9,896 55 51
- --------------------------------------------------------------------------------------------------------------------------------
Robinsons-May 1,751 1,562 185 170 9,808 9,568 54 53
- --------------------------------------------------------------------------------------------------------------------------------
Hecht's 2,159 1,650 193 207 12,787 10,455 71 62
- --------------------------------------------------------------------------------------------------------------------------------
Kaufmann's 1,447 1,394 191 201 7,968 7,747 47 46
- --------------------------------------------------------------------------------------------------------------------------------
Filene's 1,364 1,261 232 236 6,255 5,884 40 39
- --------------------------------------------------------------------------------------------------------------------------------
Famous-Barr 1,022 983 201 201 5,454 5,189 31 30
- --------------------------------------------------------------------------------------------------------------------------------
Meier & Frank 388 367 225 213 1,768 1,770 8 8
- --------------------------------------------------------------------------------------------------------------------------------
Total Dept. Stores $11,650 $10,484 $201 $201 62,116 57,640 365 346
================================================================================================================================
Net retail sales represent sales of stores open at the end of 1996.
Sales per square foot is calculated on total revenues and average gross retail square footage. Building area represents gross
retail square footage of stores open at the end of the period presented.
================================================================================================================================
</TABLE>
Composite sales per square foot by reporting year were as follows:
=======================================
TOTAL SALES PER SQUARE FOOT
---------------------------------------
Year Sales
---------------------------------------
1990 $172
---------------------------------------
1993 $191
---------------------------------------
1994 $200
---------------------------------------
1995 $201
---------------------------------------
1996 $201
---------------------------------------
CAGR 1990-96 2.6%
=======================================
From the above we see that total department store sales per square foot
were flat between 1995 and 1996 at $201 per square foot. Comparable or same
store growth was, however, reported to be 4.3 percent, as compared to 2.5
percent (1995) and 5.4 percent (1994). Overall, the most productive chain is
now Lord & Taylor at $241 per square foot. The greatest change was seen in The
Robinson-May division (up 8.8 percent) to $185 per square foot.
Standard & Poor's currently ranks the company "A+"; Moody's ranking is
"A2", while Value Line is "B++".
- -------------------------------------------------------------------------------
-36-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
JC PENNEY
JCPenney is the fourth largest retailer in the United States (after
Wal-Mart, Kmart, and Sears), operates 1,228 JCPenney department stores
throughout all 50 states and Puerto Rico. Additionally, with the
acquisition of The Eckerd Corporation, JCPenney now operates a total of
2,699 drug stores. The $22.1 billion company has changed its historical
image as a discount dime store and has targeted upper-middle-class
consumers by adding brand-name soft goods and dropping hard goods from
the in-store product mix. Today the company's product mix centers on
apparel, shoes, jewelry, and home furnishings. In 1996, retail sales
rose 10.2 percent to $22.653 billion, due mainly to increased drug
store sales resulting from the expansion of the drugstore operations.
Total revenues were up 10.4 percent to $23.6 billion. The chart below
highlights the last five years of company operations.
<TABLE>
<CAPTION>
==============================================================================================
JCPENNEY COMPANY, INC.
FIVE YEAR OPERATING HISTORY
(MILLIONS EXCEPT STORE COUNT)
- ----------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Retail Sales $18,009 $18,983 $20,380 $20,562 $22,653
- ----------------------------------------------------------------------------------------------
Total Revenue 18,515 19,578 21,082 21,419 23,649
- ----------------------------------------------------------------------------------------------
Comp-Store Sales Growth 9.7% 5.3% 6.8% -1.4% 3.4%
- ----------------------------------------------------------------------------------------------
Department Stores (No.) 1,266 1,246 1,233 1,238 1,228
- ----------------------------------------------------------------------------------------------
Gross Selling Space 114.4 113.9 113.0 114.3 117.2
- ----------------------------------------------------------------------------------------------
Sales $15,698 $16,846 $18,048 $17,930 $18,694
- ----------------------------------------------------------------------------------------------
Sales per Gross Square Foot $137 $146 $159 $156 $159
- ----------------------------------------------------------------------------------------------
Catalog Stores 2,048 1,904 1,895 1,899 1,902
- ----------------------------------------------------------------------------------------------
Sales $3,166 $3,514 $3,817 $3,738 $3,772
- ----------------------------------------------------------------------------------------------
Drug Stores 548 506 526 645 2,699
- ----------------------------------------------------------------------------------------------
Gross Selling Space Sales $1,383 $1,413 $1,540 $1,851 $3,147
- ----------------------------------------------------------------------------------------------
Sales per Gross Square Foot $211 $235 $243 $253 $261
- ----------------------------------------------------------------------------------------------
JCPenney Insurance $376 $461 $564 $693 $832
==============================================================================================
</TABLE>
The company currently has approximately 117.2 million square feet of
store space. The company will continue to expand its private brand lines. It's
Home Store concept currently includes 17 locations. The company is planning to
open or relocate an additional 200 to 300 drugstores for each of the next three
years. In addition, the catalog operation continues to do well. Drugstore sales
are expected to reach $10 billion in 1997, with the acquisition of the Eckerd
chain. The company saw a 1.9 percent increase in sales per square foot to $159
for the department stores and a 3.4% increase in comparable store sales. The
company is planning a $1.0 billion capital expenditure program over the next
three years to help bolster store performance. Value Line reports that the
company's financial strength warrants a "B++" rating. Standard & Poor's has
rated the company at "A". Moody's rates JCPenney at "A2".
- -------------------------------------------------------------------------------
-37-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SEARS
Sears, the world's third largest retailer continues to profit from its
remarkable turnaround, cited as one of the most dramatic in business
history. Sears has returned full circle to its retailing roots in 1995
by focusing on certain core operations. The restructuring that the
company completed in 1995 was implemented in 1993 involving the closure
of approximately 113 unprofitable department stores and the elimination
of 50,000 jobs. Sears has also abandoned its once formidable catalog
operation closing it in May 1993. Also in 1993, the company sold 20
percent of Dean Witter/Discover Card to the public raising $900
million, selling the rest to shareholders. It also offered about 20
percent of Allstate, raising $2.4 billion in the nations largest IPO in
1992. In 1995, it spun off the balance of its 80.3 percent stake.
During 1994, the company transferred ownership of Sears Tower and
related mortgages to a trust. At the end of 1995, Sears divested itself
of Homart, its real estate development subsidiary.
The company's current operational structure had the following key
components at year end 1996.
o 813 full line department stores which are principally mall based.
o 149 Sears Home Life furniture stores, 42 of which are located in
department stores.
o 164 off-the-mall Sears Hardware stores in convenient neighborhood
locations. During 1996 the company opened 71 new Sears Hardware
stores.
o 469 Sears Dealer stores that are primarily independently owned
and located in smaller rural markets.
o Sears Tire Group comprised of 770 Sears Auto Centers primarily
located at the mall based department stores, 127 Tire America
stores and 161 NTW stores.
o The Parts Group which is comprised of 339 Western Auto stores,
288 Parts America stores and 864 independently owned and operated
stores in smaller, rural markets.
Consolidated revenues increased 9.3 percent in 1996 to $38,236 million,
up $3.241 billion. Comparable domestic store sales were up 5.8 percent
for the year. Domestic revenues rose $3.22 billion or 10.2 percent
primarily due to strong sales increases in Full-Line, Home and Auto
stores. Full-Line store revenues grew 7.7 percent, up from a 6.3
percent increase in 1995. A summary of domestic operations which
account for approximately 90 percent of the company's total revenue can
be summarized as follows:
- -------------------------------------------------------------------------------
-38-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=========================================================================================
SEARS DOMESTIC OPERATIONS
(MILLIONS EXCEPT FOR NUMBER OF STORES)
- -----------------------------------------------------------------------------------------
1993 1994 1995 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Department Store Revenues $17,344 $18,910 $20,104 $21,657
- -----------------------------------------------------------------------------------------
Off-the-Mall Store Revenues 4,210 4,866 5,361 6,266
- -----------------------------------------------------------------------------------------
Total Retail Store Revenues 21,554 23,776 25,465 27,923
- -----------------------------------------------------------------------------------------
Service and Other Revenues 2,252 2,508 2,708 2,819
- -----------------------------------------------------------------------------------------
Domestic Merchandising Revenues 23,806 26,284 28,173 30,742
- -----------------------------------------------------------------------------------------
Number of Department Store Revenues 799 800 806 821
- -----------------------------------------------------------------------------------------
Number of Off-the-Mall Stores 1,018 1,898 2,264 2,550
- -----------------------------------------------------------------------------------------
Total Retail Stores 1,817 2,698 3,070 3,371
- -----------------------------------------------------------------------------------------
Gross Retail Area 125.3 131.5 137.3 146.2
- -----------------------------------------------------------------------------------------
Retail Selling Area 68.7 75.4 81.4 89.8
- -----------------------------------------------------------------------------------------
Retail Store Revenue/Selling Square Foot $321 $317 $323 $321
- -----------------------------------------------------------------------------------------
Comparable Store Sales Increase 8.9% 8.3% 4.7% 5.8%
- -----------------------------------------------------------------------------------------
Gross Margin N/A 26.3% 25.8% 26.4%
=========================================================================================
</TABLE>
Revenue per selling square foot, a key productivity measure was $321
per square foot for domestic stores in 1996 down from $323 per square
foot at the end of 1995. The company will continue to aggressively
expand and remodel existing productive stores. The company is
approximately 60 percent through a five year, $4 billion capital
expenditure program. Sears plans capital expenditures of $1.5 billion
in 1997 to include remodeling and expansion of 85 existing and opening
15 to 25 new full-line stores, 40 to 50 hardware stores, 5 to 10
furniture stores and 145 to 175 automotive stores. In 1996, 27
full-line stores were opened and 10 closed. The company also expects to
accelerate its opening of off-the-mall formats. Sears expects to have
more than 400 hardware stores by 2000. Their 1996 acquisition of the 65
unit Orchard Supply is an example of their aggressive strategy.
Analysts are forecasting a 6.0 percent growth in revenues and 4.0 to
5.0 percent same store sales increases in 1997. Moody's rates the
company's financial strength an "A2", while Standard & Poor's ranks it
"A-".
ANCHOR TENANT ALIGNMENT
The anchor tenant alignment of the subject property also helps to
further define the potential boundaries of the subject's trade area. The
subject property is anchored by Filene's, Macy's and Sears. JC Penney is
presently under construction and is anticipated to open in Spring 1998. The
subject's anchor tenants described above can be found at the following
competing centers:
===============================================================================
ANCHOR ALIGNMENT
- -------------------------------------------------------------------------------
Filene's Sears JC Penney
- -------------------------------------------------------------------------------
Pheasant Lane x x x
- -------------------------------------------------------------------------------
Mall at Rockingham Park x x x
- -------------------------------------------------------------------------------
Steeplegate Mall x x
===============================================================================
- -------------------------------------------------------------------------------
-39-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
The duplication in anchor tenancy throughout the competition is seen as
limiting the subject's potential trade area as it is unlikely that customers
will travel passed one stores location to frequent a similar store at the
subject property. Both the Pheasant Lane Mall and the Mall at Rockingham Park
have all of the same anchors as the subject plus Macy's. Steeple Gate Mall has
booth Sears and JC Penney but lacks Filene's. It is also noted that Pheasant
Lane, Steeplegate and the subject have vacant anchor tenant stores. The
vacancies at the subject property and Pheasant Lane were caused by the
bankruptcy of Lechmere's and both properties are actively pursuing replacement
tenants. Management is close to a deal with Best Buy for the subject property.
The vacant anchor at Steeplgate was formerly a Sage Allen store but has
remained vacant for over five years. Given the size of the vacant store (55,000
square feet) it is unlikely that a full-line department store could be
attracted the property. The anchor tenants at the subject property will also
compete with a freestanding Macy's store located approximately 2 miles form the
subject at the intersection of Route 3 and I-293.
TRADE AREA DEFINITION
In defining boundaries for the subject's trade area, several factors
have been considered. First, the property's location with respect to
transportation provides the basis for regional access to the area. Second,
regional competition and geographic boundaries help to define the potential
size of the trade area as a measure of distance from the property. Third, the
merchandising mix and anchor alignment provide the basic draw of customers that
are likely to patronize the property.
The Mall of New Hampshire is located in the City of Manchester in
southern New Hampshire. The property has good regional access by virtue of its
location at the intersection of Route 28 and I-293. The subject is surrounded
by a variety of community and big box retailers which is further enhances the
area as a retail shopping destination. The subject property faces significant
competition in the south from both Pheasant Lane and The Mall at Rockingham
Park as well as more limited competition from Steeplgate Mall to the north. To
the east and west competition is relatively limited and as a result the trade
area will be effected more by distance and traveling time.
To summarize, the foundation of our analysis in the delineation of the
subject's trade area may be summarized as follows:
1. Highway accessibility, including area traffic patterns,
geographical constraints, and nodes of residential development;
2. The position and nature of the area's retail structure, including
the location of destination retail centers which compete with the
subject and the strength and composition of the retail infill;
and
3. The size, anchor tenancy, and merchandising composition of the
subject property's tenants.
Ownership has provided us with a Shopper Study for The Mall of New
Hampshire prepared in 1996. We have reviewed the report and we are in
concurrence with its findings relative to our independent analysis of the
competitive retail structure. Provided on the
- -------------------------------------------------------------------------------
-40-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
following page is a summary of the zip codes segregated between primary and
secondary components for the subject.
======================================
ZIP CODE Location
03031 Amherst
03032 Auburn
03034 Canada
03036 Chester
03037 Deerfield
03038 Derry
03044 Fremont
03045 Goffstown
03053 Londonderry
03054 Merrimack
03057 Mont. Vernon
03070 New Boston
03077 Raymond
03101 Manchester
03102 Manchester
03103 Manchester
03104 Manchester
03106 Hooksett
03109 Manchester
03110 Bedford
03229 Contoocock
03234 Epsom
03275 Suncook
03281 Weare
03290 Nottingham
03301 Concord
03303 Boscawen
03304 Bow
03873 Sandown
Primary Trade Area presented in
BOLD & ITALIC
======================================
According to management approximately 53% of the center sales are
generated within the primary trade area with an additional 20% generated by the
secondary trade area. Overall the trade area accounts for 73% of the sales at
the property with the remainder of the sale generated from outlying areas and
transients such as tourist and business travelers.
To add perspective to this analysis of the primary and secondary trade
area data, we have segregated our survey to include data with a comparison to
the Hillsborough County, State of New Hampshire and United States. This
information is shown on the FACING PAGE.
POPULATION
Once the market has been established, the focus of our analysis centers
on the statistical data of the trade area, including population. Equifax
National Decision Systems (ENDS) provides historical, current and forecasted
population estimates for the trade area. Patterns of development density and
migration are reflected in the current levels of population estimates. A
detailed profile of the trade area is included in the ADDENDA of this report.
- -------------------------------------------------------------------------------
-41-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
Between 1990 and 1997, ENDS reports that the population within the
Primary Trade Area increased by 10,784 residents to 169,861, reflecting an 6.78
percent increase. Within the secondary trade area population has increased 8.84
percent to a 1997 level of 204,083.
We see that the population within the primary trade area has historical
experienced similar trends to that of Hillsborough County and is projected to
continue to do so. Population growth in the secondary trade area has surpassed
that of the county and is significantly stronger than that of the State of New
Hampshire or the nation as a whole. Provided on the Following Page is a graphic
representation of the current population distribution. Note that the subject
property is located within one of the more densely populated areas. On the
Second Following Page, the graphic depicts the forecasted increase in
population. As illustrated the majority of the primary trade area is projected
to experience population growth in excess of 5 percent. In exception to this
the Manchester CBD which is projected to have a relatively stable population
base. Within the secondary trade area population growth is more sporadic. The
towns of Weare, Milford, Londonderry, Derry, Sandown and Raymond are projected
to increase in population by over 10 percent, while the towns of Contocook,
Lyndeborough, Mont. Vernon, Nottingham, Epson and Pittsfield are expected to
decline in population. Overall the subject property appears to be well
positioned to benefit from the trade areas increase population base.
- -------------------------------------------------------------------------------
-42-
<PAGE>
[POPULATION DENSITY GRAPHIC - MAP #1]
<PAGE>
[POPULATION GROWTH GRAPHIC - MAP #2]
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
HOUSEHOLDS
A household consists of all the people occupying a single housing unit.
While individual members of a household purchase goods and services, these
purchases actually reflect household needs and decisions. Thus, the household
is a critical unit to be considered when reviewing market data and forming
conclusions about the trade area as it impacts the retail center.
National trends indicate that the number of households are increasing
at a faster rate than the growth of the population. Several noticeable changes
in the way households are being formed have caused the acceleration in this
growth, specifically:
o The population is living longer on average. This results in an
increase of single and two person households.
o The divorce rate increased dramatically during the 1980s, again
resulting in an increase in single person households.
o Many individuals have postponed marriage, also resulting in more
single person households.
According to ENDS, the primary trade area added 7,217 households
between 1990 and 1997, an increase of 12.38 percent to 169,861 units. A similar
trend was experienced in the secondary trade area which increased 14.90 percent
between 1990 and 1997 to 76,934 households. Consistent with the national trend,
the trade area is experiencing household growth at a rate in excess of
population changes. Overall, the total trade area was estimated to contain
144,104 households in 1997. Through 2002, the number of households in the total
trade area is expected to increase by 9.04 percent to 157,138.
A greater number of smaller households with fewer children generally
indicates more disposable income. In 1980, there were 2.87 persons per
household and by 1997, it is estimated to have decreased to 2.60 in the total
trade area.
TRADE AREA INCOME
A significant statistic for retailers is the income potential of a
trade area's population. Income levels, either on a per capita, per family or
household basis, indicate the economic level of the residents of the market
area and form an important component of this total analysis. More directly,
average household income, when combined with the number of households, is a
major determinant of an area's retail sales potential.
Trade area income figures for the subject support the profile of a
market with income levels generally consistent throughout the various trade
area components. According to ENDS, average household income within the primary
trade area in 1997 is approximately $62,091.
- -------------------------------------------------------------------------------
-45-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
A comparison of the trade area's relative ranking is shown on the
following chart.
========================================================
AVERAGE HOUSEHOLD INCOME COMPARISON
========================================================
Area 1997
========================================================
Primary Trade Area $62,091
--------------------------------------------------------
Secondary Trade Area $62,427
--------------------------------------------------------
Total Trade Area $62,271
--------------------------------------------------------
Hillsborough County $64,527
--------------------------------------------------------
State of New Hampshire $55,735
--------------------------------------------------------
United States $55,449
--------------------------------------------------------
Source: Equifax National Decision Systems
========================================================
The distribution of income within the primary trade area, relative to
the United States, can be summarized as follows:
======================================================================
% of Households
======================================================================
Category Primary Market United States
======================================================================
Greater Than $150,000 4.22% 4.5%
----------------------------------------------------------------------
$100,000 - $149,999 6.96% 5.4%
----------------------------------------------------------------------
$ 75,000 - $ 99,999 11.04% 7.6%
----------------------------------------------------------------------
$ 50,000 - $ 74,999 25.07% 19.1%
----------------------------------------------------------------------
$ 35,000 - $ 49,999 18.95% 16.6%
----------------------------------------------------------------------
$ 25,000 - $ 34,999 10.47% 13.3%
----------------------------------------------------------------------
Less Than $ 25,000 23.29% 33.5%
----------------------------------------------------------------------
Source: Equifax National Decision Systems
======================================================================
Provided on the FOLLOWING PAGE is a graphic presentation of the average
household income distribution throughout the trade area. As can be seen, much
of the subject's primary trade area can be described as a solid middle income
market. Lower income areas are located in the Manchester CBD as well as the
northern peripheral of the secondary trade area, while higher income areas are
located to the west in the towns of Bedford and Amherst.
EFFECTIVE BUYING INCOME
Another measure of the ability of a trade area to support retail
business is the area's effective buying income (EBI). This data is not measured
by specific trade area, but rather by both the metropolitan statistical area
(MSA), as well as on a county basis as reported in Sales and Marketing
Management's Survey of Buying Power.
- -------------------------------------------------------------------------------
-46-
<PAGE>
[AVERAGE HOUSEHOLD INCOME GRAPHIC]
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
Effective Buying Income in Hillsborough County was discussed in the
regional analysis section of this report. As presented the median household EBI
in the county was reported to be $42,769 as of year end 1996. This level is
above both state and national averages, which is attributable to the higher
income household located in the Manchester area and the southern portion of the
county. In aggregate EBI within the county was reported at $6.456 million.
RETAIL SALES
Perhaps an even more important measure of area income is the amount
spent on retail expenditures. Retail sales and growth as tracked by Woods &
Poole Economics, Inc. were presented in the Regional Analysis section of this
report. According to Woods & Poole retail sales in Hillsborough County
increased by 4.0 percent per annum from 1980 to 1990. Since 1990, total retail
sales has been more modest at 0.53 percent per year. Woods & Poole is
forecasting stronger annual sales growth of 1.3 percent per year through 2005.
SUBJECT SALES
Although sales trends within the subject's region lend important
insight into such an analysis, it is the subject's sales productivity that is,
perhaps, most significant. Sales--and sales growth--are the driving impetus for
rental rates and rent growth at retail properties and have significant bearing
on the occupancy costs tenants are willing to pay. We were not provided with
comparable tenant sales information for the property.
We have reviewed actual sales reports for the tenants in continuous
occupancy from 1995 through 1997. The survey included 51 tenants totaling
133,258 square feet. In 1995 gross sales from these tenants total $44.7 million
or $338 per square foot. In 1996 sales increased to $45.7 million or $343 per
square foot and further increased to $47.4 million or $358 per square foot in
1997.
============================================================================
YEAR Tenant Sales (000) Per SF % Change
- ----------------------------------------------------------------------------
1995 $44.720 $338 N/A
- ----------------------------------------------------------------------------
1996 $45.692 $343 +2.17%
- ----------------------------------------------------------------------------
1997 $47.381 $358 +3.70%
============================================================================
Despite the on-going construction at the subject property, comparable
store sales have consistently increased over the past three years. The
completion of the center coupled with the addition of a fourth anchor tenant
should result in further increases in sales volume. We have chosen to take a
somewhat conservative posture and have based 1998 sales on a 3.5% increase over
1997 levels. Although this is consistent with the historical increases achieved
by the subject it is considered a conservative assumption when considering the
addition of a fourth anchor tenant and the recent renovation.
INDUSTRY AVERAGE SALES (MALL SHOPS)
The Urban Land Institute's Dollars and Cents of Shopping Centers (1997)
reports national and regional sales averages for regional and
super-regional shopping malls. Nationally, average sales at
super-regional centers is reported at $203.87
- -------------------------------------------------------------------------------
-48-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==================================================================================
MALL SHOP SALES
REGIONAL/SUPER-REGIONAL CENTERS
- ----------------------------------------------------------------------------------
AREA AVERAGE MEDIAN LOWER DECILE UPPER DECILE
==================================================================================
<S> <C> <C> <C> <C>
United States $180.78/ $170.17/ $125.36/ $286.59/
$203.87 $196.36 $148.62 $284.47
- ----------------------------------------------------------------------------------
East $201.11/ $182.81/ $117.31/ $325.52/
$190.46 $188.37 $146.25 $286.15
- ----------------------------------------------------------------------------------
West $222.20/ $197.91/ $157.50/ $349.28/
$205.69 $195.37 $151.60 $274.11
- ----------------------------------------------------------------------------------
South $174.53/ $179.50/ $122.81/ $239.01/
$209.63 $208.45 $141.62 $271.08
- ----------------------------------------------------------------------------------
Midwest $163.05/ $153.88/ $123.70/ $237.74/
$203.20 $196.15 $153.90 $289.85
==================================================================================
Source: Urban Land Institute Dollars and Cents of Shopping Centers (1997)
==================================================================================
</TABLE>
For regional malls in the east, average sales are shown to be $182 per
square foot, with upper and lower deciles of $325 and $117 per square
foot, respectively.
The subject's 1997 mall shop sales performance of $358 per square foot
can be compared to its peers as shown below:
==========================================================
Average Subject Variance
----------------------------------------------------------
United States $180 $358 199%
----------------------------------------------------------
East $182 $358 197%
==========================================================
ANCHOR STORE SALES
The anchor tenants own their respective stores and are not obligated to
report tenant sales figures. The mall manager has had informal discussions with
the store managers for each of the anchors. Based on these discussions sales of
approximately $30 million were estimated for both Sears and Filene's or
approximately $220 and $182 per square foot respectively. It is important to
note that the mall was under construction during 1997 which may have deterred
some customers. Based upon the completion of the center and the addition of a
fourth anchor tenant we would expect an increase in sales performance for the
anchor tenants in the future.
INDUSTRY AVERAGE SALES (DEPARTMENT STORES)
A comparison of the subject's potential department store performance
can also be made to its regional and national peers. The Urban Land Institute
also tracks sales of owned and non-owned department stores by selected
affiliation and region. The data from ULI shows that the mean sales level for
department stores in super-regional malls varies from $132.65 to $179.60 per
square foot with an overall average of $156.35 per square foot. Stores in the
top 10.0 percent of their peers average (unweighted) approximately $243.63,
while the top 2.0
- -------------------------------------------------------------------------------
-49-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
percent average approximately $391.40 per square foot. This
information, based on 1996, is summarized in the following chart.
===============================================================================
DEPARTMENT STORE SALES DATA
- -------------------------------------------------------------------------------
AVERAGE TOP 10% TOP 2%
CATEGORY/REGION SALES PSF SALES PSF SALES PSF
===============================================================================
Super-Regional U.S.
Owned Dept. Stores $153.67 $233.49 $347.00
National Chain $149.59 $230.80 $336.00
Non-Owned Dept. Stores $163.98 $256.83 $447.57
National Chain $163.71 $253.39 $435.01
Eastern Region $132.65 --- ---
Western Region $146.26 --- ---
Midwestern Region $161.33 --- ---
Southern Region $179.60 --- ---
===============================================================================
MEAN - ALL SUPER-REGIONAL CENTERS $156.35 $243.63 $391.40
===============================================================================
Regional Malls U.S.
Owned Dept. Stores $148.15 $256.90 $334.68
National Chain $149.73 $256.73 $339.74
Non-Owned Dept. Stores $181.40 $258.62 $328.07
National Chain $174.44 $244.58 $324.28
Eastern Region $140.01 --- ---
Western Region $181.20 --- ---
Midwestern Region $149.32 --- ---
Southern Region $141.18 --- ---
===============================================================================
MEAN - ALL REGIONAL CENTERS $158.18 $254.21 $331.69
===============================================================================
Source: Urban Land Institute Dollars & Cents of Shopping Centers (1997)
===============================================================================
Data for department stores in regional malls shows that the mean ranges
from $140.01 to $181.40 per square foot with an overall average of
$158.18 per square foot. The unweighted average for the top 10.0
percent and 2.0 percent is approximately $254.21 and $331.69 per square
foot, respectively. Sales at department stores in the east reflect a
mean of about $156 per square foot at super-regional malls and $158 per
square foot at regional malls.
With 1997 sales averaging approximately $199 per square foot
(department stores only), the subject stores are at the upper end of industry
norms for department stores within regional malls.
TRADE AREA EXPENDITURE POTENTIAL
On the basis of detailed population, income, and spending pattern
analysis, estimates of household expenditures for shoppers goods merchandise
have been developed for the trade area. Shoppers goods, or department store
type merchandise (DSTM), comprise the overwhelming bulk of goods and products
carried in regional malls and department stores. Specifically, shoppers goods
expenditure potentials represent the dollar amounts available for the
merchandise that is primarily sold in the following store types:
o General merchandise stores including department and other stores;
- -------------------------------------------------------------------------------
-50-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
o Apparel and accessory stores;
o Furniture and home furnishing stores, and
o Other miscellaneous shoppers goods stores.
These categories are also commonly referred to as GAFO goods.
DSTM or GAFO expenditure potential measures the ability of the market
to purchase department store type goods. This expenditure potential is
typically based upon current average household or per capita income levels in
the market, and the estimated share of that income that has historically been
spent on department store type merchandise.
Retail sales potential of a trade area is determined after estimating
the percent of total aggregate income spent on GAFO goods. The Department of
Commerce tabulates the total GAFO sales by city, county and state every five
years. The last tabulation was completed in 1997, however, at this writing the
results were not in final print. As such, the 1992 data is often cited. Taking
these figures for the pertinent area and dividing them against total aggregate
income yields the percentage of total aggregate income spent on GAFO goods
within an area. For the United States the average is approximately 14.0
percent. For various states, the overall percentage of income devoted to
shopping goods purchases (expenditures) ranges from roughly 11.0 to 15.0
percent. Nationally, it is estimated that 80 to 85 percent of specialty and
in-line tenant regional shopping center sales are of shoppers goods.
MARKET SHARE ANALYSIS
To estimate the subject's primary and total trade area market share,
the amount previously calculated for center sales is divided by the trade area
GAFO potential. The GAFO potential has been estimated to be 14.0 percent of the
total trade area's aggregate income. Sales have been projected utilizing
ownership's 1997 estimated year end and anchor tenant projections. Total center
sales are typically reduced by non-GAFO center sales (i.e. restaurant,
convenience and service establishments) which range from 10.0 to 20 percent
industry-wide. This number has been derived from conversations we had with
market research personnel at some of the nation's largest retail development
companies. Also, as was previously mentioned, it is estimated that between 15.0
and 25.0 percent of trade area sales are due to secondary areas and tertiary
inflow. This too is deducted from total sales to determine "Total GAFO Sales"
from the Primary Trade Area.
These market share calculations can be seen on the chart on the
FOLLOWING PAGE. The model presumes that 47.0 percent of the mall's sales will
be inflow from outside of the primary market, consisting of the secondary trade
area plus tourist expenditures and customers from other regions.
Based upon these assumptions, the current market share of the Primary
and Total Trade Area GAFO potential is calculated to be about 27.98 percent and
12.85 percent, respectively, based on projected 1997 population and household
statistics provided by ENDS. This illustrates the dominance of the subject
property within its primary trade area as well as the effect of the competing
centers on the property's secondary trade area.
- -------------------------------------------------------------------------------
-51-
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
MARKET SHARE ANALYSIS - PRIMARY TRADE AREA GAFO SALES
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc.
==================================================================================================================================
FORCASTED
- ---------------------------------------------
SUBJECT SALES VOLUME AREA (*) 1997 SALES/SF
- --------------------------------------------- ---- ---- --------
<S> <C> <C> <C>
SUBJECT PROPERTY SALES
Anchor Stores
Filene's 165,000 SF $30,000,000 $181.82
Sears 136,464 SF $30,000,000 $219.84
JC Penney 101,388 SF $20,176,212(1) $199.00
Vacant 60,768 SF $12,092,832(1) $199.00
Mall Shop Tenants: 327,393 SF $117,206,694 $358.00
------------------ ------- -- ------------ -------
TOTAL CENTER SALES: 791,013 $209,475,738 $264.82
Includes All
Sales/GLA
-------------------------- --------------------------
PRIMARY TOTAL
TRADE AREA TRADE AREA
- ---------------------------------------------
SUBJECT GAFO SALES
- ---------------------------------------------
Total Subject Sales: $209,475,738 $209,475,738
Less: Non-GAFO Sales (%) at: 10% $11,720,669(2) 10% $11,720,669.40
---------------------------- ----------- --------------
Total Subject GAFO Sales: $221,196,407 $221,196,407
Less: Sales Inflow (%) at: 47% ($103,962,311) 27% ($59,723,030)
-------------------------- -------------- -------------
TOTAL GAFO SALES AT SUBJECT: $117,234,096 $161,473,377
- ---------------------------------------------
TRADE AREA GAFO ANALYSIS
- ---------------------------------------------
TRADE AREA GAFO POTENTIAL
Number of Households (Primary Trade Area): 48,192(3) 144,105
Average Household Income (Primary Trade Area): $62,091(3) $62,271
---------------------------------------------- -------- -------
Primary Trade Area Aggregate Income: $2,992,289,472 $8,973,562,455
GAFO POTENTIAL (%) AT: 14.0% $418,920,526 $1,256,298,744
====================== ===== ============ ===============
- ---------------------------------------------
MARKET SHARE CALCULATION
- ---------------------------------------------
Total Subject GAFO Sales: $117,234,096 $161,473,377
Primary Trade Area GAFO Potential: $418,920,526 $1,256,298,744
MARKET SHARE OF PRIMARY TRADE AREA GAFO POTENTIAL: 27.98% 12.85%
================================================== ====== ======
-------------------------- --------------------------
- ---------------------------------------------
(1) Sales figures based on mall average
(2) Non-GAFO sales based on mall shop sales
(3) Household and Income numbers based upon Equifax National Decision Systems estimates.
Note: This analysis is based upon Current Dollars.
==================================================================================================================================
</TABLE>
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
CONCLUSION
We have analyzed the retail trade history and profile of the Manchester
region in order to make reasonable assumptions as to the forecasted performance
of the subject's trade area. A regional area and locational overview has been
presented which has highlighted important points about the study area, as well
as demographic and economic data specific to the trade area. We have also
included a brief discussion of the competitive retail centers in the market
area. The trade area profile discussed encompasses a zip code based analysis
which was a product of a 1996 shopper survey. Marketing information relating to
these sectors has been presented and analyzed in order to determine patterns of
change and growth. The data is useful in giving quantitative dimensions of the
total trade area, while our comments serve to provide qualitative insight into
this area.
The following bullet points summarize some of our key conclusions with
regard to the subject's trade area and market potential:
o The neighborhood has good vehicular access. The subject enjoys a
visible location, centered in the principal commercial hub for
this quadrant of the MSA.
o The existing trade area structure is largely characterized by
traditional neighborhood centers, as well as community centers
anchored by grocery or discount stores. The property also faces
competition from three strong regional centers, however, these
properties are relatively removed from the property ( in excess
of 20 miles).
o The recent renovation and expansion of the center will help to
maintain the subject as the dominant center in its trade area as
well as recapture some loss market share in its secondary and
tertiary trade areas.
o The subject will benefit from a relatively stable and affluent
local population. Average household income within the primary
trade area is currently estimated at $62,091.
o The center will be well positioned in an area that is forecasted
for continued population and household growth.
Our analysis concludes that the proposed merchandising mix of the
center, the location along two major arterials, and the popularity and
uniqueness of the major tenants, all combine to establish The Mall of New
Hampshire as a viable retail center in its trade area. We believe that, with
competent management, focused marketing, and a responsive maintenance program,
the subject should capture and maintain a strong position in its marketplace.
MARKETABILITY AND MARKETING PERIOD
In this subsection, we consider the potential market appeal,
marketability, and demand for a center like the subject in light of the current
real estate investment market. As discussed in this report, the subject
involves an enclosed single-level retail mall anchored by four
- -------------------------------------------------------------------------------
-53-
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
department stores (one is currently vacant) for a combined GLA of approximately
791,013 million square feet.
We have considered the potential market demand and investor risk in our
analysis and valuation of the subject property through our selection of
investment parameters, growth rates, and various assumptions employed. In our
analysis, we have attempted to reflect current market conditions and investor
criteria. Most of the shopping center properties which have been offered for
sale at a "reasonable" price, have sold within 12 months exposure to the open
market or less. Properties for which seller expectations of value exceed the
market's perception have required more extended marketing periods and have
generally sold below the initial asking price, or have been pulled off the
market. A "reasonable" price is defined as that price which offers a sufficient
return to the investor relative to the demand for and the risk associated with
the property. These returns vary widely in the current market depending on the
particular investment, its occupancy level, the surrounding demographics, and
upside or downside of the income stream.
The subject is characterized as a good-quality, regional mall which
will represents a strong barrier to future competitive development. It contains
the area's typical anchor alignment and sales are consistent with chain
averages. The subject's primary trade area has a current population of
approximately 170,000 people and is projected to experience typical household
growth into the foreseeable future. We believe that if the subject were offered
for sale, it would represent an good investment opportunity for a center with
some upside through the potential to reposition it. Based on the above, it is
our estimate that a market sale of the subject property should be realized
within 12 to 18 months exposure on the market.
- -------------------------------------------------------------------------------
-54-
<PAGE>
[MAP]
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
Site Description
Location: The subject site is located at the
southeast quadrant of Route 28 and
Interstate 293 in the City of
Manchester, Hillsborough County, New
Hampshire.
Shape: Irregular rectangular (reference is made
to the FACING PAGE).
Land Area: 59.47 acres
=========================================
SITE AREA: Site Components Site Area
=========================================
Anchor Tenants
Filene's: 9.69+/- Acre
JC Penney: 5.04+/- Acre
Sears: 10.93+/- Acre
Former Lechmere: 6.00+/- Acre
=========================================
Anchor Site Area(1): 31.66+/- Acre
=========================================
Developer's Parcel: 38.95+/- Acre
=========================================
Total Site Area: 70.61+/- Acre
=========================================
(1) Not owned and not part of this
appraisal
=========================================
Frontage: The subject property has extensive
frontage along the east side of South
Willow Street and Huse Road. The
property also has extensive frontage
along Interstate 293, however, it can
not be access directly from this
thoroughfare.
Topography: The subject site is rolling in nature
but has been graded to provide
relatively level parking areas. The site
is below street grade with South Willow
Street but slopes upward in a
southeasterly direction. The site is
above grade with Interstate 293 and as
such has good visibility from this
thoroughfare.
Ingress/Egress: Access to the property is provided by
two curb cuts located along the east
side of South Willow Street. Both of
these entrances are serviced by signal
lights.
- -------------------------------------------------------------------------------
-55-
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
Access: Regional accessibility to the subject is
considered excellent by virtue of its
location along Interstate 293. I-293
connects with I-93 approximately 2 miles
east of the property providing
convenient access throughout the greater
Manchester area.
Street Improvements: Route 28 is a major artery with adequate
lighting and curbing. In general Route
28 is a four-lane bi-directional
roadway. In the area of the subject it
is a divided thoroughfare and has been
expanded to ten lanes (four southbound
and six northbound) to accommodate
increased traffic demand.
Soil Conditions: We did not receive nor review a soil
report. However, we assume that the
soil's load-bearing capacity is
sufficient to support the existing
structures. We did not observe any
evidence to the contrary during our
physical inspection of the property.
Drainage appears adequate.
Utilities: All municipal utilities are available to
the site, including water, sewer,
electric, and telephone.
Land Use Restrictions: We were not provided with a current
title report for the subject property.
We do not know of any easements,
encroachments, or restrictions that
would adversely affect the site's use.
However, we recommend a current title
search to determine whether any adverse
conditions exist.
Flood Hazard: The subject site lies within Zone C,
areas of minimal flooding (FIRM
Community Panel Number 330169 0020B,
effective February 18, 1981).
Wetlands: We were not given a Wetlands survey. If
a subsequent engineering survey reveals
the presence of regulated Wetlands
areas, we reserve the right to amend
this valuation.
- -------------------------------------------------------------------------------
-56-
<PAGE>
[MAP]
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
Hazardous Substances: No environmental study has been
provided. It is assumed that the
property is not adversely affected by
any hazardous substances.
Please refer to the complete list of
Assumptions and Limiting Conditions
provided at the end of this report.
Comments: Overall, the site size, topography, and
configuration appear functionally
adequate and conducive for a retail
utilization in an suburban setting. The
site is serviced by all public utilities
and curb appeal of the site is good.
IMPROVEMENT DESCRIPTION
The Mall of New Hampshire consist of a 791,013+/-square foot, regional
mall currently anchored by Filene's, JC Penney, and Sears, which each own their
respective stores and as such are not part of the subject of this appraisal.
The property also contains one vacant anchor store (60,768 square feet) which
was formerly occupied by Lechmere. The property was originally constructed in
1977 with three anchor stores and 88 in-line shops. In 1996 the mall began an
expansion and renovation project which included the addition of a fourth anchor
tenant and approximately 105,000 square feet of mall shop space. The property
now contains a total GLA of 791,013 square feet, inclusive of 317,748 square
feet of mall shop space. The reader is referred to the leasing plan presented
FACING THIS PAGE.
We were not provided with building plans or specifications for the
subject mall. The physical description which follows is based on our inspection
on February 16, 1998 and discussions with the General Manager.
GENERAL DATA
Year Built: 1977
Year Renovated/Expanded: 1996-1998
The JC Penney store and the food court
are still under construction with
anticipated openings of May 1998 and
June 1998 respectively.
- -------------------------------------------------------------------------------
-57-
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===================================================
Gross Leasable Building Area: Building Components Gross Leasable Area
===================================================
<S> <C> <C>
Anchor Tenants
Filene's: 165,000+/- SF
Sears: 136,464+/- SF
JC Penney: 101,388+/- SF
Former Lechmere: 60,768+/- SF
===================================================
ANCHOR GLA1: 463,620+/- SF
===================================================
Mall Shop GLA: 317,748+/- SF
Food Court GLA: 7,755+/- SF
Kiosk GLA: 1,890+/- SF
===================================================
TOTAL OWNED GLA: 327,393+/- SF
===================================================
TOTAL GLA: 791,013+/- SF
===================================================
(1) Each of the anchors owns their respective
store and thus are not included as part of
the subject of this appraisal
===================================================
</TABLE>
The gross leasable building areas were
taken from the rent roll and lease
abstract reports. No independent survey
of the subject improve-ments was
conducted.
Gross Building Area (Owned): Not available
CONSTRUCTION DETAIL
Foundations: Reinforced concrete spread footings
Framing: Steel-frame, fireproofed in certain
areas.
Building Height: The majority of the center is one-story
in height. In exception to this is the
JC Penney and Filene's store which are
two-stories.
Floor System: Poured concrete slab on grade
Exterior Walls: Dryvit panels over masonry block and
face brick.
Roof Structure/Roof: The property has a flat roof consisting
of corrugated steel decking over bar
joists. The cover on the original center
is a multi-ply built-up over rigid
insulation. The cover on the expansion
is a EDPM roofing system over rigid
insulation.
- -------------------------------------------------------------------------------
-58-
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
Mechanical Detail
Heating and Air Conditioning: Heating and cooling of the common area
is achieved by 30 roof-top, gas-fired,
package units, thirteen of which were
either replaced or added during the
recent expansion. Department stores and
in-line tenants have individual units
for their demised premises.
Plumbing: A complete sanitary sewer system and
domestic water service serves all
required fixtures of each tenant and is
tapped into municipal water and sewer
distribution lines. Tenants are provided
with plumbing taps and valves off the
main and are generally responsible for
installation of their own plumbing
fixtures. All roof areas are drained to
rain water conductors which are
connected to the site storm water
system. Supply and waste lines are assum
this consists of copper water lines and
cast iron and PVC pipe for waste
removal. Sanitary drainage is collected
and connected to the site drainage
system.
Electric: Service to all tenants is through a
common distribution system. Energy is
metered for in-space use directly by the
local supplier to department stores, and
in-line stores. These tenants pay for
their own electric usage directly. All
electric work is assumed to be in
accordance with National Electric Code.
Life Safety/Security: All areas of the property are provided
with fire protection sprinkler systems.
Tenant areas of the mall are installed
with sprinkler leads directly on the
branch mains. Drops to the finished
ceilings and required supplemental leads
are the tenants' responsibility.
- -------------------------------------------------------------------------------
-59-
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
INTERIOR DETAIL
Layout: The Mall of New Hampshire was originally
constructed as a three anchor "T-shaped"
center. The addition of a fourth anchor
and the expansion of the center has
converted the property into a
"racetrack" design with anchor tenants
at each corner of the property. The food
court is presently being renovated and
expanded along the northeast court of
the center, mid-way between center court
and the former Lechmere store.
Mall concourses are relatively wide
ranging from approximately 30 to 45
feet. This width provides adequate site
lines and space for center court kiosks.
Store frontage typically vary from 20 to
85 feet with 25 to 35 being most
typical. Store depths of 125 to 150 feet
are evidence with most stores exhibiting
typical frontage to depth ratios.
Floor Coverings: Generally marble and ceramic flooring in
the common areas. Tenant spaces are
primarily a mix of carpet, hardwood and
vinyl tile.
Ceilings: Mix of painted sheetrock and 2' x 2'
acoustical tile in lay-in grids.
Wall Finish: Primarily textured and painted
sheetrock.
Lighting: Combination of suspended quartz lighting
fixtures and indirect florescent
lighting fixtures.
Demising Walls: Generally steel frame.
Store Fronts: Combination of flush and pop-out store
fronts.
Tenant Rest Rooms: Generally, each tenant space has a rest
room facility. Rest rooms are handicap
equipped.
Public Toilets: Public rest rooms are located in the
Lechmere court and the central bank of
tenant suites and are also found in the
anchor department stores.
Tenant Areas: Tenant suites are improved in accordance
with individual tenant specifications.
- -------------------------------------------------------------------------------
-60-
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
Asbestos: We are not aware of any asbestos
containing materials (ACMs) in the mall
building improvements.
Americans With Disabilities Act: The Americans With Disabilities Act
(ADA) became effective January 26, 1992.
Notwithstanding any discussion of
possible readily achievable barrier
removal construction items in this
report, we have not made a specific
compliance survey and analysis of this
property to determine whether or not it
is in conformity with the various
detailed requirements of the ADA.
The reader is referred to the complete
list of Assumptions and Limiting
Conditions provided at the end of this
report.
Site Improvements:
Parking: There are a total of 3,800 parking
spaces designated in the parking lots.
This indicates a parking ratio of 4.8
spaces per 1,000 square feet which is
within industry standards.
Landscaping: Minimal
Other: Other site improvements consist of
concrete and asphalt paving, curbing,
yard lighting, retaining walls, all
underground and overhead utilities and
mall signage. Storm water drainage
systems are connected to the site
drainage system.
Comments: Overall the subject improvements were
observed to be in good condition. Our
observations indicate both good quality
materials and workmanship in view of the
center's overall age. Analysis of the
structural integrity of the buildings is
beyond our expertise and best made by a
professional engineer. Our analysis of
the improvements concludes that their
layout and design are, for the most
part, functional and conducive to their
current retail utilization.
- -------------------------------------------------------------------------------
-61-
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
According to Marshall Valuation Service,
the typical life expectancy for regional
mall improvements such as the subject is
50 to 55 years. The subject was
constructed in 1977 and expanded and
renovated in 1996-1998. Based upon the
extensive renovations, we estimate the
effective age of the subject
improvements at 3 to 5 years. Therefore,
the remaining economic life is estimated
at between 50 and 52 years.
Our review of the local environs reveals
that there are no external influences
which negatively impact the value of the
subject property.
Personal Property Included
in Value Estimate: None.
- -------------------------------------------------------------------------------
-62-
<PAGE>
REAL PROPERTY TAXES AND ASSESSMENTS
- -------------------------------------------------------------------------------
OVERVIEW
The subject property is currently assessed by the City of Manchester.
Tax billings for the City are based upon a fiscal year commencing April 1st and
are billed in two equal installments due on July 1st and December 1st . The
following chart presents a summary of the subject's current assessment
information:
=============================================================================
1997 PROPERTY ASSESSMENT
- -----------------------------------------------------------------------------
Account Land Building Total
No. Assessment Assessment Assessment
=============================================================================
666-A/3 $ 1,325,600 $19,148,700 $20,474,300
- -----------------------------------------------------------------------------
666-A/3-A $ 9,206,700 -- $ 9,206,700
- -----------------------------------------------------------------------------
666-2-A $ 79,000 $ 30,200 $ 109,200
- -----------------------------------------------------------------------------
666-2 $ 826,100 $ 159,000 $ 985,100
- -----------------------------------------------------------------------------
666-A/7 $ 4,600 -- $ 4,600
- -----------------------------------------------------------------------------
666-A/6 $ 46,200 -- $ 46,200
- -----------------------------------------------------------------------------
TOTAL: $11,488,200 $19,337,900 $30,826,100
=============================================================================
The above assessment is represents 100% of market value as of April 1,
1991. The assessment implies a current market value of $27,279,734 based upon
the City's equalization rate of 113%. It is important to note that this
assessment is based upon the status of the property as of April 1, 1997 at
which time the expansion was vacant and in shell condition. Discussions with
the City assessor indicated that the property will be reassessed for the 1998
tax year based upon its status as of April 1, 1998. The assessor also indicated
that the equalization rate for 1998 is anticipated to be 109%. Therefore based
upon the value concluded in this report we have projected an assessment for the
subject property of $138,000,000 as calculated below:
$138,000,000 / 1.09 = $126,605,504
Application of the current mill rate of $31.16 per $1,000 of assessed
value results in a projected tax liability of $3,950,000 (rounded) or
approximately $12.07 per square foot of owned GLA. The equalization rate is
based primarily on residential properties in the municipality and may have
little bearing on the relationship between the subject's value and assessment.
This is demonstrated by the 1997 tax assessment. Although the property was not
completed, the April 1997 assessment which implies a market value of $27.3
million appears unrealistically low. In estimating future tax liability for the
subject, management has retained the services of Gouldston and Storrs.
According to Gouldston and Storrs a stabilized assessment of $62,606,700 is
projected for the subject resulting in a 1998 tax liability of $1,940,000.
Given the past assessment of the property this level of taxes appears
reasonable. It should be noted that taxes are fully passed through to the
tenants.
- -------------------------------------------------------------------------------
-63-
<PAGE>
REAL PROPERTY TAXES AND ASSESSMENTS
- -------------------------------------------------------------------------------
HISTORICAL AND PROJECTED TAX INCREASES
Historical mill rates for the Orange tax jurisdiction from 1984 to the
present are exhibited below:
==================================================
Historical Mill Rates
--------------------------------------------------
Tax Mill
Year Rate
==================================================
1994 $28.66
1995 $29.63
1996 $30.84
1997 $30.84
1998 $31.16
==================================================
CAGR
1994-1997 2.11%
==================================================
As illustrated, over this period, the mill rate increased at an annual
compound rate of 2.11%. The rate of increase has varied from year to year
depending on budgetary needs and the amount of new construction added to the
grand list. Over the past several years, municipalities have been forced to cut
back on spending which has enabled increases in real estate taxes to remain at
a minimum. Improving economic conditions will trigger increased development but
municipal spending is also anticipated to increase. Thus it can be assumed that
the annual tax liability on the property level will continue to increase at an
inflationary rate. In fact our discussions with the assessor's office indicated
that a 4% increase in the mill rate was anticipated for tax year 1998. In our
analysis we have projected an annual 4.0% increase in taxes.
- -------------------------------------------------------------------------------
-64-
<PAGE>
ZONING
- -------------------------------------------------------------------------------
The subject property is zoned B-2, Business District by the City of
Manchester. This is a relatively broad commercial district which permits a wide
range of commercial utilizations. Residential uses are not permitted within
this district. Bulk area requirements are as follows:
================================================================================
BULK AREA REQUIREMENTS
================================================================================
Minimum Lot Area: None
- --------------------------------------------------------------------------------
Minimum Lot Width: None
- --------------------------------------------------------------------------------
Minimum Yard Requirements
Minimum Front Yard Setback: None
Minimum Side Yard Setback: None unless the property abuts a
residential district, then the side yard
requirement of the residential district
will apply.
Minimum Rear Yard Setback: 15' unless the property abuts a
residential district, then the side yard
requirement of the residential district
will apply.
- --------------------------------------------------------------------------------
Maximum Building Height: 45 feet or 4-stories
- --------------------------------------------------------------------------------
Maximum Floor Area Ratio (FAR): 1.0
- --------------------------------------------------------------------------------
Minimum Off-Street Parking: 1 space per 200 square feet of ground
floor area and 1 space per 400 square
feet of upper floor area.
================================================================================
We are not experts in the interpretation of complex zoning ordinances
but the property appears to be a conforming use. The determination of
compliance is beyond the scope of a real estate appraisal. However, since the
existing improvements have been approved by the municipality, it is assumed
that they are legally permissible uses.
We know of no deed restrictions, private or public, that further limit
the subject property's use. The research required to determine whether or not
such restrictions exist, however, is beyond the scope of this appraisal
assignment. Deed restrictions are a legal matter and only a title examination
by an attorney or title company can usually uncover such restrictive covenants.
Thus, we recommend a title search to determine if any such restrictions do
exist.
- -------------------------------------------------------------------------------
-65-
<PAGE>
HIGHEST AND BEST USE
- -------------------------------------------------------------------------------
According to the Dictionary of Real Estate Appraisal, Third Edition
(1993), a publication of the Appraisal Institute, the highest and best use is
defined as:
The reasonably probable and legal use of vacant land or an improved
property, which is physically possible, appropriately supported,
financially feasible, and that results in the highest value.
We evaluated the site's highest and best use as currently improved and
as if vacant. In both cases the highest and best use must meet four criteria.
The use must be (1) physically possible, (2) legally permissible, (3)
financially feasible, and (4) maximally productive. However, because the site
is already improved with improvements that generate an important economic
return, the focus of our highest and best use analysis is on the site as
improved.
AS IMPROVED
PHYSICAL FACTORS
The first constraint imposed on the possible use of the site is
dictated by the physical aspects of the parcel itself. As noted in our Property
Description section of the report, the mall site is of sufficient size to
accommodate the existing improvements. It has been graded, paved and has all
necessary utilities available. Furthermore, the soil and topography do not
physically limit its use. The site has good visibility and excellent
accessibility by virtue of the extensive infrastructure system serving it. Its
physical location proximate to a good highway system as well as an interstate
interchange strongly supports its regional accessibility and concurrently, its
use as a destination center. The existing improvements display a single-level,
regional mall whose design and layout is considered to be quite conducive to a
retail utilization. The property was recently renovated and is considered to be
in excellent overall condition.
Finally, compatibility with existing neighboring uses is also an
important consideration. In the case of the subject, the mall has acted as a
catalyst for growth that has transformed the area into the retail hub of the
greater Manchester area. With all of this in mind, we are of the opinion the
current use of the site is physically possible.
LEGAL FACTORS
Legal restrictions, as they apply to the subject property, are private
restrictions and the public restrictions of zoning. As noted, there are no
private restrictions which are known to adversely affect the utilization of the
site, and the property complies with all of the zoning requirements under the
B-2 classification as established by the City of Manchester. Furthermore, we
are not aware of any environmental controls which may impact the property.
Finally, it is recognized that the property has received all permits and has
been in operation as a retail use for a number of years. As such, the existing
leases which are in place dictate a retail use for the property. Thus, retail
utilization of the property is a permissible use.
- -------------------------------------------------------------------------------
-66-
<PAGE>
HIGHEST AND BEST USE
- -------------------------------------------------------------------------------
FINANCIAL FEASIBILITY/MAXIMUM PRODUCTIVITY
After analyzing the physically possible and legally permissible aspects
of the property, the highest and best use must be considered in light of
financial feasibility and maximum productivity. For a potential use to be
seriously considered, it must have the potential to provide a sufficient return
to attract investment capital over alternative forms of investment. A positive
net income or acceptable rate of return would indicate that a use is
financially feasible.
As discussed in the various "Locational" and "Retail Market" sections
of this report, The Mall of New Hampshire is considered to be the principal
shopping destination for a primary trade area of over 160,000 residents. In the
Income Approach to the valuation of the subject property, we have provided a
detailed analysis of the subject's anticipated revenue producing ability as a
shopping center. These projections have relied upon certain market based
assumptions that, in our opinion, closely mirror the subject's position in the
marketplace. Accordingly, we find that the property, under the concept of
continued use, will produce a sufficient income stream to an investor. A
conversion to an alternative use would not be economically justifiable and, as
a result, fail the test of financial feasibility and maximum productivity. In
our opinion, no other use of the site would provide as great a return.
Therefore, we have concluded that the highest and best use of the site as
improved is its continued retail use with future expansion potential.
AS VACANT
PHYSICAL FACTORS
The mall parcel is large enough to accommodate a variety of uses
including office, retail, hotel and residential. The subject's highway and
interstate access greatly enhances its appeal for a use that relies upon the
ability of patrons to be afforded quick and easy access. This is particularly
true for a destination retail property which, by necessity, must attract
consumers from points beyond its immediate neighborhood. As articulated, Route
28 is a principal commercial strip that is characterized by other shopping
centers and freestanding retail buildings. The neighborhood and its immediate
environs are also primarily developed with retail/commercial uses. Accordingly,
we would find that a retail use of the site would be the most compatible with
the environs. Overall, we view the site as being free of any physical limiting
conditions that may restrict its development and as such, a large scale
commercial project would be a potential use for the site as vacant.
LEGAL FACTORS
The second test concerns permitted uses. Legal restrictions, as they
apply to the subject are private restrictions of deed and the public
restrictions of zoning. There do not appear to be any private restrictions
which impact the site. The current zoning district impacting the site permits a
retail use as of right. Based on the site's size and layout, with consideration
given to parking constraints, a retail building of approximately 300,000 to
400,000 square feet of mall shop space would be a permitted use as of right.
Due to the site's location and proximity to other commercial uses, we believe
that a retail use would be a legally conforming and compatible use for the
site.
- -------------------------------------------------------------------------------
-67-
<PAGE>
HIGHEST AND BEST USE
- -------------------------------------------------------------------------------
FINANCIAL FEASIBILITY/MAXIMUM PRODUCTIVITY
After determining those uses which are physically possible and legally
permissible, the remaining uses must be analyzed in light of their financial
feasibility. As indicated in the various locational and "Retail Market
Analysis" sections of this report, the Manchester region is characterized by
macro economic conditions that, while having suffered from the recession of the
early 1990s, is showing signs of recovery. The retail market has also not been
as negatively affected by the over-building and concessions which have plagued
other commercial markets such as office and hotels. In addition, we see no
significant changes in the local demographics which might threaten the economic
viability of the subject site.
The last test of highest and best use is that of maximum productivity.
While this implies a quantitative analysis, it is often most qualitative and
sensitive to community, social, political, and governmental standards. In this
case, the site is located in an area that has developed into the retail hub for
a densely populated suburban area. Existing neighborhood uses further
compliment the site and act as a collective destination which aids in
attracting shoppers. The subject's size and location along Route 28 as well as
its proximity to I-293 with a trade area that includes significant purchasing
power, lead us to the conclusion that the Highest and Best use for the subject
property, as if vacant, would be for a new regional shopping center.
A developer, mindful of the prospective lot coverage yet savvy as to
the market's potential for absorbing new product, would consider the site's
feasible potential. Parking is an overriding constraint that dictates the
ultimate size of a potential development. Accordingly, we believe that the
subject's development potential, as vacant, would be represented by a shopping
center of approximately 300,000 to 400,000 square feet of mall shop space. This
premise assumes that parking would be provided to a level sufficient for the
total project.
- -------------------------------------------------------------------------------
-68-
<PAGE>
VALUATION PROCESS
- -------------------------------------------------------------------------------
Appraisers typically use three approaches in valuing real property: The
Cost Approach, the Sales Comparison Approach, and the Income Capitalization
Approach. The type and age of the property and the quantity and quality of data
effect the applicability in a specific appraisal situation.
COST APPROACH
The Cost Approach renders an estimate of value based upon the price of
obtaining a site and constructing improvements, both with equal desirability
and utility as the subject property. Historically, investors have not
emphasized cost analysis in purchasing investment grade properties such as
community strips or power centers. The estimation of obsolescence for
functional and economic conditions, as well as depreciation on improvements,
makes this approach difficult at best. Furthermore, the Cost Approach fails to
fully consider the value of anchor store commitments to regional malls and the
difficulty of site assemblage for such properties. As such, the Cost Approach
will not be employed in this analysis due to the fact that the marketplace does
not rigidly trade leased shopping centers on a cost/value basis.
SALES COMPARISON APPROACH
The Sales Comparison Approach is based on an estimate of value derived
from the comparison of similar type properties which have recently been sold.
Through an analysis of these sales, efforts are made to discern the actions of
buyers and sellers active in the marketplace, as well as establish relative
unit values upon which to base comparisons with regard to the subject. This
approach has a direct application to the subject property. Furthermore, this
approach has been used to develop investment indices and parameters from which
to judge the reasonableness of our principal approach, the Income
Capitalization Approach.
INCOME CAPITALIZATION APPROACH
By definition, the subject property is considered an income/investment
property. Properties of this type are historically bought and sold on the
ability to produce economic benefits, typically in the form of a yield to the
purchaser on investment capital. Therefore, the analysis of income capabilities
are particularly germane to this property since a prudent and knowledgeable
investor would follow this procedure in analyzing its investment qualities.
Therefore, the Income Capitalization Approach has been emphasized as our
primary methodology for this valuation.
RECONCILIATION
This valuation concludes with a final estimate of the subject's market
value based upon the total analysis as presented herein.
- -------------------------------------------------------------------------------
-69-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
METHODOLOGY
The Sales Comparison Approach provides an estimate of market value by
comparing recent sales of similar properties in the surrounding or competing
area to the subject property. Inherent in this approach is the principle of
substitution, which holds that, when a property is replaceable in the market,
its value tends to be set at the cost of acquiring an equally desirable
substitute property, assuming that no costly delay is encountered in making the
substitution.
By analyzing sales that qualify as arms-length transactions between
willing and knowledgeable buyers and sellers, market value and price trends can
be identified. Comparability in physical, location, and economic
characteristics is an important criterion when comparing sales to the subject
property. The basic steps involved in the application of this approach are as
follows:
1. Research recent, relevant property sales and current offerings
throughout the competitive marketplace;
2. Select and analyze properties considered most similar to the
subject, giving consideration to the time of sale, change in
economic conditions which may have occurred since date of sale,
and other physical, functional, or location factors;
3. Identify sales which include favorable financing and calculate
the cash equivalent price; and
4. Reduce the sale prices to a common unit of comparison, such as
price per square foot of gross leasable area sold;
5. Make appropriate adjustments between the comparable properties
and the property appraised; and
6. Interpret the adjusted sales data and draw a logical value
conclusion.
The most widely-used, market-oriented units of comparison for
properties such as the subject are the sale price per square foot of gross
leasable area (GLA) purchased, and the overall capitalization rate extracted
from the sale. This latter measure will be addressed in the Income
Capitalization Approach which follows this methodology. An analysis of the
inherent sales multiple also lends additional support to the Sales Comparison
Approach.
MARKET OVERVIEW
The typical purchaser of properties of the subject's caliber includes
both foreign and domestic insurance companies, large retail developers, pension
funds, and real estate investment trusts (REITs). The large capital
requirements necessary to participate in this market and the expertise demanded
to successfully operate an investment of this type, both limit the number of
active participants and, at the same time, expand the geographic boundaries of
the marketplace to include the international arena. Due to the relatively small
number of market participants and the moderate amount of quality product
available in the current marketplace, strong demand exists for the nation's
quality retail developments.
- -------------------------------------------------------------------------------
-70-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
Most institutional grade retail properties are existing, seasoned
centers with good inflation protection. These centers offer stability in income
and are strongly positioned to the extent that they are formidable barriers to
new competition. They tend to be characterized as having three to five
department store anchors, most of which are dominant in the market. Mall shop
sales are at least $300 per square foot and the trade area offers good growth
potential in terms of population and income levels. Equally important are
centers which offer good upside potential after face-lifting, renovations, or
expansion. With new construction down substantially, owners have accelerated
their renovation and remerchandising programs. Little competition from
over-building is likely in most mature markets within which these centers are
located. Environmental concerns and "no-growth" mentalities in communities
continue to be serious impediments to new retail developments.
Over the past 18+/- months, we have seen real estate investment return
to favor as an important part of many institutional investors' diversified
portfolios. Banks are aggressively competing for business, trying to regain
market share lost to Wall Street, while the more secure life insurance
companies are also reentering the market. The re-emergence of real estate
investment trusts (REITs) has helped to provide liquidity within the real
estate market, pushing demand for well-tenanted, quality property, particularly
regional malls. Currently, REITs are one of the most active segments of the
industry and are particularly attractive to institutional investors due to
their liquidity. However, overbuilding in the retail industry has resulted in
the highest GLA per capita ever (19 square feet per person). As a consequence,
institutional investors are more selective than ever with their underwriting
criteria. Many investors are even shunning further retail investment at this
time, content that their portfolios have a sufficient weighting in this
segment.
The market for dominant Class A institutional quality malls is tight,
as characterized by the limited amount of good quality product available. It is
the overwhelming consensus that Class A property would trade in the 7.0 to 8.5
percent capitalization rate range, with rates below 7.5 percent likely limited
to the top 15 to 20 malls with sales at least $400 per square foot. Conversely,
there are many second tier and lower quality malls offered on the market at
this time. With limited demand from a much thinner market, cap rates for this
class of malls are felt to be in the much broader 9.5 to 14.0 percent range.
Pessimism about the long term viability of many of these lower quality malls
has been fueled by the recent turmoil in the retail industry.
To better understand where investors stand in today's marketplace, we
have surveyed active participants in the retail investment market. Based upon
our survey, the following points summarize some of the more important "hot
buttons" concerning investors:
1. OCCUPANCY COSTS - This "health ratio" measure is of fundamental
concern today. The typical range for total occupancy
cost-to-sales ratios falls between 10.0 and 15.0 percent. With
operating expenses growing faster than sales in many malls, this
issue has become even more important. As a general rule of thumb,
malls with sales under $250 per square foot generally support
ratios of 10.0 to 12.0 percent; $250 to $300 per square foot
support 12.0 to 13.5 percent; and over $300 per square foot
support 13.5 to 15.0 percent.
- -------------------------------------------------------------------------------
-71-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
Experience and research show that most tenants will resist total
occupancy costs that exceed 15.0 to 18.0 percent of sales.
However, ratios of upwards to 20.0 percent are not uncommon for
some higher margin tenants. This appears to be by far the most
important issue to an investor today. Investors are looking for
long term growth in cash flow and want to realize this growth
through real rent increases. High occupancy costs limit the
amount of upside through lease rollovers.
2. MARKET DOMINANCE - The mall should truly be the dominant mall in
the market, affording it a strong barrier to entry for new
competition. Some respondents feel this is more important than
the size of the trade area itself.
3. STRONG ANCHOR ALIGNMENT - Having at least three department stores
(four are ideal), two of which are dominant in that market. The
importance of the traditional department store as an anchor
tenant has returned to favor after several years of weak
performance and confusion as to the direction of the industry. As
a general rule, most institutional investors would not be
attracted to a two-anchor mall.
4. ENTERTAINMENT - Entertainment has become a critical element at
larger centers as it is designed to increase customer traffic and
extend customer staying time. This loosely defined term covers a
myriad of concepts available ranging from mini-amusement parks,
to multiplex theater and restaurant themes, to interactive
virtual reality applications. The capacity of regional/
super-regional centers to provide a balanced entertainment
experience well serve to distinguish these properties from less
distinctive formats such as power and smaller outlet centers.
5. DENSE MARKETPLACE - Several of the institutional investors favor
markets of 300,000 to 500,000 people or greater within a 5 to 7
mile radius. Population growth in the trade area is also very
important. One advisor likes to see growth 50.0 percent better
than the U.S. average. Another investor cited that they will look
at trade areas of 200,000+/-but that if there is no population
growth forecaster in the market, a 50+/-basis point adjustment to
the cap rate at the minimum is warranted.
6. INCOME LEVELS - Household incomes of $50,000+ which tends to be
limited in many cases to top 50 MSA locations. Real growth with
spreads of 200 to 300 basis points over inflation are ideal.
7. GOOD ACCESS - Interstate access with good visibility and a
location within or proximate to the growth path of the community.
8. TENANT MIX - A complimentary tenant mix is important. Mall shop
ratios of 35+/-percent of total GLA are considered average with
75.0 to 80.0 percent allocated to national tenants. Mall shop
sales of at least $250 per square foot with a demonstrated
positive trend in sales is also considered to be important.
- -------------------------------------------------------------------------------
-72-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
9. PHYSICAL CONDITION - Malls that have good sight lines, an updated
interior appearance and a physical plant in good shape are looked
upon more favorably. While several developers are interested in
turn-around situations, the risk associated with large capital
infusions can add at least 200 to 300 basis points onto a cap
rate.
10. ENVIRONMENTAL ISSUES - The impact of environmental problems
cannot be understated. There are several investors who won't even
look at a deal if there are any potential environmental issues no
matter how seemingly insignificant.
11. OPERATING COVENANTS - Some buyers indicated that they would not
be interested in buying a mall if the anchor store operating
covenants were to expire over the initial holding period. Others
weigh each situation on its own merit. If it is a dominant center
with little likelihood of someone coming into the market with a
new mall, they are not as concerned about the prospects of
loosing a department store. If there is a chance of loosing an
anchor, the cost of keeping them must be weighed against the
benefit. In many of their malls they are finding that traditional
department stores are not always the optimum tenant but that a
category killer or other big box use would be a more logical
choice.
In the following section we will discuss trends which have become
apparent over the past several years involving sales of regional malls.
REGIONAL MALL PROPERTY SALES
Evidence has shown that mall property sales which include anchor stores
have lowered the square foot unit prices for some comparables, and have
affected investor perceptions. In our discussions with major shopping center
owners and investors, we learned that capitalization rates and underwriting
criteria have become more sensitive to the contemporary issues affecting
department store anchors. Traditionally, department stores have been an
integral component of a successful shopping center and, therefore, of similar
investment quality if they were performing satisfactorily.
During the 1980s a number of acquisitions, hostile take-overs and
restructurings occurred in the department store industry which changed the
playing field forever. Weighted down by intolerable debt, combined with a
slumping economy and a shift in shopping patterns, the end of the decade was
marked by a number of bankruptcy filings unsurpassed in the industry's history.
Evidence of further weakening continued into the early 1990s with filings by
such major firms as Carter Hawley Hale, P.A. Bergner & Company, and Macy's. In
early 1994, Woodward & Lothrop announced their bankruptcy involving two
department store divisions that dominate the Philadelphia and Washington D.C.
markets. Most of the stores have since been acquired by the May Department
Stores Company, effectively ending the existence of the 134 year old Wanamaker
name, the nation's oldest department store company. Consolidation during the
mid to latter part of the decade has continued, albeit at a slower pace.
- -------------------------------------------------------------------------------
-73-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
One important trend, however, shows that department stores have been
reporting a return to profitability resulting from increased operating
economies and higher sales volumes. Sears, once marked by many for extinction,
has more recently won the praise of analysts. Federated Department Stores has
also been acclaimed as a text book example on how to successfully emerge from
bankruptcy. They have merged with Macy's and more recently acquired the
Broadway chain to form one of the nation's largest department store companies.
The trend of continued consolidation and vulnerability of the regional chains
continues into 1997.
With all this in mind, investors are looking more closely at the
strength of the anchors when evaluating an acquisition. Most of our survey
respondents were of the opinion that they were indifferent to acquiring a
center that included the anchors versus stores that were independently owned if
they were good performers. However, where an acquisition includes anchor
stores, the resulting cash flow is typically segregated with the income
attributed to anchors (base plus percentage rent) analyzed at a higher cap rate
then that produced by the mall shops.
However, more recent data suggests that investors are becoming more
troubled by the creditworthiness of the mall shops. With an increase in
bankruptcies, store closures and consolidations, we see investors looking more
closely at the strength and vulnerabilities of the in-line shops. As a result,
there has been a marked trend of increasing capitalization rates.
Cushman & Wakefield has extensively tracked regional mall transaction
activity since 1991. We have summarized the most recent (1995 to the present)
transactions on the FOLLOWING PAGES. Historical sales (1991 - 1994) are
presented in the addenda of this report. These sales are inclusive of good
quality Class A or B+/-properties that are dominant in their market. Also
included are weaker properties in second tier cities that have a narrower
investment appeal. As such, the most recent mall sales (1997) presented in this
analysis show a wide variety of prices on a per unit basis, ranging from $21
per square foot up to $594 per square foot of total GLA purchased. When
expressed on the basis of mall shop GLA acquired, the range is more broadly
seen to be $36 to $770 per square foot. Alternatively, the overall
capitalization rates that can be extracted from each transaction range from
7.34 percent to rates in excess of 12.77 percent.
One obvious explanation for the wide unit variation is the inclusion
(or exclusion) of anchor store square footage which has the tendency to distort
unit prices for some comparables. Other sales include only mall shop area where
small space tenants have higher rents and higher retail sales per square foot.
A shopping center sale without anchors, therefore, gains all the benefits of
anchor/small space synergy without the purchase of the anchor square footage.
This drives up unit prices to over $250 per square foot, with most sales over
$300 per square foot of salable area.
- -------------------------------------------------------------------------------
-74-
<PAGE>
REGIONAL MALL SALES
1995 TRANSACTION CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
=====================================================================================================================
SALE SALE YEAR SALE TOTAL SOLD SHOP SHOP
NO. PROPERTY/LOCATION DATE BUILT PRICE GLA GLA GLA RATIO
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
95-1 QUEENS CENTER Dec-95 1973/ $108,000,000 625,659 157,516 157,516 25.2%
Elmhurst, NY 90/95
- ---------------------------------------------------------------------------------------------------------------------
95-2 NATICK MALL Dec-95 1994 $265,000,000 1,160,733 646,733 436,733 37.6%
Natick, MA (redevel.)
- ---------------------------------------------------------------------------------------------------------------------
95-3 RIDGEDALE CENTER Dec-95 1974/ $ 114,500,00 1,040,285 334,937 334,937 32.2%
Minnetonka, MN 82/93
- ---------------------------------------------------------------------------------------------------------------------
95-4 SOUTHLAND MALL Dec-95 1970/ $ 82,500,000 902,000 318,606 318,606 35.3%
Tylor, MI 88/92
- ---------------------------------------------------------------------------------------------------------------------
95-5 SMITH HAVEN MALL Dec-95 1969/ $221,000,000 1,351,913 813,786 505,626 37.4%
Lake Grove, NY 86
- ---------------------------------------------------------------------------------------------------------------------
95-6 CAPITOLA MALL Dec-95 1977/ $ 52,500,000 577,396 577,396 197,396 34.2%
(1) Capitola, CA 88
- ---------------------------------------------------------------------------------------------------------------------
95-7 EASTVIEW MALL Oct-95 1971/ $126,850,000 1,309,488 534,458 534,458 40.8%
(2) Victor, NY 95
- ---------------------------------------------------------------------------------------------------------------------
95-8 CENTRE AT SALISBURY Aug-95 1990 478,000,000 884,825 744,825 278,915 31.5%
Salisbury, MD
- ---------------------------------------------------------------------------------------------------------------------
95-9 COLONIAL PARK MALL Jul-95 1960/ $ 46,500,000 736,177 380,944 242,766 33.0%
Harrisburg, PA 90
- ---------------------------------------------------------------------------------------------------------------------
95-10 PIEDMONT MALL Jul-95 1983/ $ 39,000,000 534,135 409,135 188,409 35.2%
Danville, VA 84
- ---------------------------------------------------------------------------------------------------------------------
95-11 RIVER OAKS CENTER Jul-95 1978/ $ 26,200,000 574,657 493,791 219,099 38.1%
Decatur, AL 89
- ---------------------------------------------------------------------------------------------------------------------
95-12 COLUMBIA MALL Jul-95 1988 $ 27,650,000 351,364 351,364 128,024 36.4%
Bloomsberg, PA
- ---------------------------------------------------------------------------------------------------------------------
95-13 HOT SPRINGS MALL Jun-95 1982 $ 22,775,000 389,914 318,033 156,000 40.0%
Hot Springs, AR
- ---------------------------------------------------------------------------------------------------------------------
95-14 WESTGATE MALL may-95 1960/ $ 43,000,000 649,185 448,268 253,993 39.1%
San Jose, CA 89
- ---------------------------------------------------------------------------------------------------------------------
95-15 SILVER CITY GALLERIA Apr-95 1992 $159,106,000 1,005,595 749,595 349,107 34.7%
East Taunton MA
- ---------------------------------------------------------------------------------------------------------------------
95-16 WESTGATE MALL Apr95 1975 $ 25,300,000 768,000 449,974 272,630 35.5%
Spartanburg, SC
- ---------------------------------------------------------------------------------------------------------------------
95-17 HANOVER MALL Jan-95 1971/ $ 38,000,000 649,130 649,130 298,531 46.0%
Hanover, MA 93
- ---------------------------------------------------------------------------------------------------------------------
95-18 GREENBRIER MALL Jan-95 1981 $ 84,700,000 774,201 594,201 318,595 41.2%
Chesapeake, VA
- ---------------------------------------------------------------------------------------------------------------------
95-19 GALLERIA AT TYLER Jan-95 1970/ $123,750,000 1,044,536 431,640 411,640 39.4%
(3) Riverside, CA 91
=====================================================================================================================
Survey Low: $ 22,775,000 351,364 157,516 128,024 25.2%
Survey High: $265,000,000 1,351,913 813,786 534,458 46.0%
- ---------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: $ 88,649,000 806,800 494,965 294,875 36.5%
=====================================================================================================================
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
=================================================================================================================================
CAPITALIZATION RATES UNIT RATE COMPARISION
--------------------- ------------------------
SALE OCCU- SHOP GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. PANCY SALES/SF NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
95-1 99.0% $686 $10,487,000 $ 66.58 9.71% -- -- $686 $686 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
95-2 99.0% $416 $21,311,000 $ 32.95 8.04% 8.00% 10.75% $410 $607 1.46
- ---------------------------------------------------------------------------------------------------------------------------------
95-3 97.0% $339 $ 8,936,100 $ 26.68 7.80% -- 11.00% $342 $342 1.10
- ---------------------------------------------------------------------------------------------------------------------------------
95-4 93.0% $261 $ 7,143,200 $ 22.42 8.66% -- 11.75% $259 $259 0.99
- ---------------------------------------------------------------------------------------------------------------------------------
95-5 93.0% $425 $17,127,500 $ 21.05 7.75% 8.25% 11.10% $272 $437 1.03
- ---------------------------------------------------------------------------------------------------------------------------------
95-6 92.0% $262 $ 4,987,500 $ 8.64 9.50% -- -- $ 91 $266 1.02
(1)
- ---------------------------------------------------------------------------------------------------------------------------------
95-7 88.0% $290 $ 9,200,000 $ 17.21 7.25% -- 12.00% $237 $237 0.82
(2)
- ---------------------------------------------------------------------------------------------------------------------------------
95-8 89.0% $257 $ 7,020,000 $ 9.43 9.00% -- -- $105 $280 1.09
- ---------------------------------------------------------------------------------------------------------------------------------
95-9 96.0% $275 $ 4,417,500 $ 11.60 9.50% -- -- $122 $192 0.70
- ---------------------------------------------------------------------------------------------------------------------------------
95-10 -- $250 $ 3,600,000 $ 8.80 9.23% -- -- $ 95 $207 0.83
- ---------------------------------------------------------------------------------------------------------------------------------
95-11 -- $200 $ 2,908,200 $ 5.89 11.10% -- -- $ 53 $120 0.60
- ---------------------------------------------------------------------------------------------------------------------------------
95-12 96.0% $165 $ 2,958,500 $ 8.42 10.70% -- -- $ 79 $216 1.31
- ---------------------------------------------------------------------------------------------------------------------------------
95-13 83.0% $240 $ 2,277,500 $ 7.16 10.00% -- -- $ 72 $146 0.61
- ---------------------------------------------------------------------------------------------------------------------------------
95-14 77.9% $191 $ 4,096,457 $ 9.14 9.53% -- -- $ 96 $169 0.89
- ---------------------------------------------------------------------------------------------------------------------------------
95-15 96.0% $290 $13,219,000 $ 17.63 8.31% 8.00% 11.00% $212 $456 1.57
- ---------------------------------------------------------------------------------------------------------------------------------
95-16 85.0% $240 $ 2,403,500 $ 5.34 9.50% -- -- $ 56 $ 93 0.39
- ---------------------------------------------------------------------------------------------------------------------------------
95-17 90.0% $204 $ 3,811,400 $ 5.87 10.03% -- -- $ 59 $127 0.62
- ---------------------------------------------------------------------------------------------------------------------------------
95-18 96.0% $250 $ 6,600,000 $ 11.11 7.79% 8.00% 11.50% $143 $266 1.06
- ---------------------------------------------------------------------------------------------------------------------------------
95-19 86.0% $244 $9,600,000 $ 22.24 7.76% 8.00% 10.50% $287 $301 1.23
(3)
=================================================================================================================================
77.9% $165 $ 2,277,500 $ 5.34 7.25% 8.00% 10.50% $ 52 493 0.39
99.0% $686 $21,311,000 $ 66.58 11.10% 8.25% 12.00% $686 $686 1.57
- ---------------------------------------------------------------------------------------------------------------------------------
91.5% $289 $ 7,479,177 $ 16.74 9.13% 8.05% 11.20% $193 $284 0.96
=================================================================================================================================
</TABLE>
- -------
(1) Cash equivalent price.
(2) Includes 62,770 square foot strip center.
(3) Net of allocation for excess land. Sale includes cinema.
<PAGE>
REGIONAL MALL SALES
1996 TRANSACTION CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
================================================================================================
SALE SALE YEAR GRANTOR/ SALE
NO. PROPERTY/LOCATION DATE BUILT GRANTEE PRICE
================================================================================================
<S> <C> <C> <C> <C> <C>
96-1 OLD ORCHARD SHOPPING Dec-96 1956/ Zell Merrill Lynch RE $266,000,000
CENTER 95 Opport./
Skokie, Illinois Urban Shopping
Centers, Inc.
- ------------------------------------------------------------------------------------------------
96-2 PLAZA & COURT AT KING Dec-96 1962/ King of Prussia $451,000,000
OF PRUSSIA 96 Associates/
Montogomery, PA Lend Lease
- ------------------------------------------------------------------------------------------------
96-3 WESTSHORE MALL Dec-96 1988 Trizec Hahn Centers/ $30,159,000
Holland Township, IL Wilmorite/Ivanhoe
Property Mgt.
- ------------------------------------------------------------------------------------------------
96-4 FORT HENRY MALL Dec-96 1976/ Trizec Han Centers/ $22,817,000
Kingsport, TN 89 Wilmorite/Ivanhoe
Property Mgt.
- ------------------------------------------------------------------------------------------------
96-5 CITICORP PACKAGE Dec-96 1964/ Citicorp Real Estate $125,100,000
1)Buenaventura mall 95 The Macerich Company
Ventura, California 1970
2) Fresno Fashion Fair 1966/
Fresno, California 93
3) Huntington Center
Mall
Huntington,
California
- ------------------------------------------------------------------------------------------------
96-6 FORBES/COHEN PACKAGE Dec-96 1972 Forbes/Cohen $134,000,000
1) Westwood Mall 1983 Properties/
Jackson, michigan 1969/ General Growth
2) Lakeview Square 88 Properties
Battle Creek,
Michigan
3) Lansing Mall
Lansing, Michigan
- ------------------------------------------------------------------------------------------------
96-7 RIMROCK MALL Dec-96 1975 Trizec Hahn Centers/ $43,900,000
Billings, MT The Macerich Company
- ------------------------------------------------------------------------------------------------
96-8 VINTAGE FAIRE MALL Dec-96 1977/ Trizec Hahn Centers/ $74,300,000
Modesto, CA 97 The Macerich Company
- ------------------------------------------------------------------------------------------------
96-9 LA CUMBRE PLAZA Dec-96 1967/ Trizec Hahn Centers/ $22,225,000
(1) Santa Barbara, 89 Taubman Realty Group,
California LP
- ------------------------------------------------------------------------------------------------
96-10 VALLEY FAIR MALL Dec-96 1970/ Safco/ $35,000,000
West Valley City, Utah 86 Excel Realty Trust, Inc.
- ------------------------------------------------------------------------------------------------
96-11 QUALL SPRINGS MALL Nov-96 1981 Equitable Life $47,345,700
(2) Oklahoma City, Assurance Society/
Oklahoma General Growth
Properties, Inc.
- ------------------------------------------------------------------------------------------------
96-12 ST. CLAIR SQUARE Nov-96 1974/ Prudential Property $86,400,000
(2) Fairview Heights, IL 93 Companies/
CBL & Associates
- ------------------------------------------------------------------------------------------------
96-13 SOUTH PARK MALL Nov-96 1970 BAC, Inc. (Belk $153,000,000
Charlotte, North Brothers Prop.)/
Carolina HRE Charlotte, Inc.
- ------------------------------------------------------------------------------------------------
96-14 SOONER MALL Nov-96 1976/ Equitable Life $26,775,000
Norman, Oklahoma 89 Assurance Society/
General Growth
Properties, Inc.
- ------------------------------------------------------------------------------------------------
96-15 PARK MALL Oct-96 1974 Kivel Realty $49,950,000
Tucson, Arizona Investments/
General Growth
Properties, Inc.
- ------------------------------------------------------------------------------------------------
96-16 VALLEY VIEW CENTER Oct-96 1973/ LaSalle Street Fund/ $85,500,000
Dallas, TX 83/96 The Macerich Company
- ------------------------------------------------------------------------------------------------
96-17 THE MALL AT JOHNSON Oct-96 1971/ Johnson City Mall $42,750,000
CITY 1981 Assoc./
Johnson City, Tennessee Glimcher Realty Trust
- ------------------------------------------------------------------------------------------------
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<PAGE>
<CAPTION>
=============================================================================================================================
CAPITALIZATION RATES
----------------------
MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP GOING-IN
NO. GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF OAR
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
96-1 1,800,000 955,752 550,000 30.6% 88.0% $ 350 $21,546,000 $ 22.54 8.10%
- -----------------------------------------------------------------------------------------------------------------------------
96-2 2,606,789 1,187,061 1,024,418 39.3% 99.0% $ 318 $34,952,000 $ 29.44 7.75%
- -----------------------------------------------------------------------------------------------------------------------------
96-3 476,140 393,140 143,034 30.0% 97.0% $ 225 $ 3,250,445 $ 8.27 10.78%
- -----------------------------------------------------------------------------------------------------------------------------
96-4 516,317 516,317 191,997 37.2% 85.0% $ 238 $ 2,764,898 $ 5.36 12.20%
- -----------------------------------------------------------------------------------------------------------------------------
96-5 2,641,616 964,348 829,938 31.4% -- $ 260 $ 13.62 10.50% --
- -----------------------------------------------------------------------------------------------------------------------------
96-6 1,841,236 1,036,827 699,514 38.0% 85.0% $ 233 $14,070,000 $ 13.57 10.50%
- -----------------------------------------------------------------------------------------------------------------------------
96-7 583,112 406,140 267,840 45.9% -- $ 231 44,346,100 $ 10.70 9.90%
- -----------------------------------------------------------------------------------------------------------------------------
96-8 1,052,701 611,352 352,352 33.5% -- $ 263 $ 6,761,300 $ 11.06 9.10%
- -----------------------------------------------------------------------------------------------------------------------------
96-9 476,360 176,360 176,360 37.0% 90.0% $ 387 $ 2,667,000 $ 15.12 12.00%
(1)
- -----------------------------------------------------------------------------------------------------------------------------
96-10 608,000 608,000 265,298 43.6% 85.0% $ 250 $ 4,000,000 $ 6.58 11.43%
- -----------------------------------------------------------------------------------------------------------------------------
96-11 1,016,909 329,056 329,056 32.4% 77.1% $ 215 $ 4,882,760 $ 14.84 10.31%
(2)
- -----------------------------------------------------------------------------------------------------------------------------
96-12 1,044,781 307,791 307,791 29.5% 93.7% $ 330 $ 7,733,000 $ 25.12 8.95%
(2)
- -----------------------------------------------------------------------------------------------------------------------------
96-13 1,142,345 353,003 353,003 30.9% 98.0% $ 400 $10,710,000 $ 30.34 7.00%
- -----------------------------------------------------------------------------------------------------------------------------
96-14 503,891 367,482 198,939 39.5% 80.0% $ 225 $ 2,948,969 $ 8.02 11.01%
- -----------------------------------------------------------------------------------------------------------------------------
96-15 909,000 489,000 390,687 43.0% 85.0% $ 225 $ 4,995,000 $ 10.21 10.00%
- -----------------------------------------------------------------------------------------------------------------------------
96-16 1,567,000 729,481 496,481 31.7% -- $ 228 $ 7,994,250 $ 10.96 9.35%
- -----------------------------------------------------------------------------------------------------------------------------
96-17 557,715 557,715 223,110 40.0% 81.0% $ 236 $ 4,338,750 $ 7.78 10.15%
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<CAPTION>
=====================================================================
UNIT RATE COMPARISION
-----------------------
SALE TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR IRR PURCHASED SHOP GLA MULTIPLE
=====================================================================
<S> <C> <C> <C> <C> <C>
96-1 -- -- $278 $484 1.38
- ---------------------------------------------------------------------
96-2 -- 11.00% $380 $440 1.38
- ---------------------------------------------------------------------
96-3 -- -- $ 77 $211 0.94
- ---------------------------------------------------------------------
96-4 -- -- $ 44 $119 0.50
- ---------------------------------------------------------------------
96-5 -- $130 $151 0.58
- ---------------------------------------------------------------------
96-6 -- -- $129 $192 0.82
- ---------------------------------------------------------------------
96-7 -- -- $108 $164 0.71
- ---------------------------------------------------------------------
96-8 -- -- $122 $211 0.80
- ---------------------------------------------------------------------
96-9 -- -- $126 $126 0.33
(1)
- ---------------------------------------------------------------------
96-10 -- -- $ 58 $132 0.53
- ---------------------------------------------------------------------
96-11 -- -- $144 $144 0.67
(2)
- ---------------------------------------------------------------------
96-12 -- -- $281 $281 0.85
(2)
- ---------------------------------------------------------------------
96-13 -- -- $433 $433 1.08
- ---------------------------------------------------------------------
96-14 11.00% -- $ 73 $135 0.60
- ---------------------------------------------------------------------
96-15 -- $102 $128 0.57
- ---------------------------------------------------------------------
96-16 -- -- $117 $172 0.76
- ---------------------------------------------------------------------
96-17 10.00% 11.50% $ 77 $192 0.81
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
1996
REGIONAL MALL SALES
1996 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
SALE SALE YEAR
NO. PROPERTY/LOCATION DATE BUILT GRANTOR/GRANTEE
======== ============================== ======== ======= ====================================
<S> <C> <C> <C> <C>
96- 18 BRIARCLIFFE MALL Jul-96 1986/ Briarcliffe Mall Ltd. Partnership/
Myrtle Beach, South Carolina 94 Colonial Properties Trust
96- 19 FAIRLANE TOWN CENTER Jul-96 1976 Pacific Telesis Pension Trust/
Dearborn, Michigan Taubman Realty
96- 20 PASEO NUEVO CENTER Jun-96 1990 JMB Realty Corp./
Santa Barbara, California Taubman Realty
96- 21 FASHION SHOW MALL Jun-96 1981/ Howard Hughes Corporation/
Las Vegas, Nevada 93 Rouse Company
96- 22 CHARLOTTESVILLE FASHION SQ. May-96 1980 Leonard Farber, Inc./
Charlottesville, Virginia Shopping Center Associates
96- 23 GRAND TETON MALL Apr-96 1984/ Equitable/
Idaho Falls, Idaho 90 J.P. Realty, Inc.
96- 24 DANBURY FAIR MALL Mar-96 1986/ Danbury Fair Mall Associates/
Danbury, Connecticut 91 Fair Properties Inc. (Private REIT)
96- 25 CHARLESTOWNE MALL Mar-96 1991/ Charwil Associates/
St. Charles, Illinois 93/95 Fox Properties (Private REIT)
96- 26 FASHION SQUARE SHERMAN Mar-96 1962/ Prudential Assurance Comp./
OAKS 90 City Freeholds
Sherman Oaks, California
96- 27 REGENCY SQUARE MALL Feb-96 1967/ N. American Property Unit Tr./
Jacksonville, Florida 93 MEPC PLC
96- 28 VALLEY PLAZA CENTER Feb-96 1967/ N. American Property Unit Tr./
Bakersfield, California 90 MEPC PLC
96- 29 CLEARVIEW MALL Feb-96 1981 Metropolitan Life Insurance/
Butler, Pennsylvania Clearview Mall Associates
Survey Low:
Survey High:
SURVEY MEAN:
------------------------------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MALL MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF
======== ============== ============ ============ ============ ========== ========== ========== ============= ==========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
96- 18 $ 42,200,000 488,426 460,426 235,544 48.2% 95.0% $225 $ 4,384,580 $ 9.52
96- 19 $ 91,500,000 1,519,000 629,000 629,000 41.4% 90.0% $275 $ 7,091,250 $ 11.27
96- 20 $ 37,000,000 434,837 136,841 136,841 31.5% 90.0% $380 $ 4,070,000 $ 29.74
96- 21 $164,400,000 840,000 308,000 308,000 36.7% 93.0% $455 $12,330,000 $ 40.03
96- 22 $ 37,250,000 574,953 410,300 193,800 33.7% 95.0% $275 $ 3,445,600 $ 8.40
96- 23 $ 34,375,000 521,048 521,048 198,958 38.2% 95.7% $234 $ 3,550,000 $ 6.81
96- 24 $254,000,000 1,270,146 499,868 499,868 39.4% 90.0% $400 $17,780,000 $ 35.57
96- 25 $126,344,000 824,900 744,900 315,297 38.2% 85.0% $220 $ 9,500,000 $ 12.75
96- 26 $125,000,000 837,147 365,000 365,000 43.6% 90.0% $300 $10,625,000 $ 29.11
96- 27 $119,200,000 1,341,631 530,000 530,000 39.5% 96.0% $260 $ 9,178,400 $ 17.32
96- 28 $ 91,000,000 1,073,587 381,000 381,000 35.5% 98.0% $250 $ 6,643,000 $ 17.44
96- 29 $ 27,000,000 500,454 359,896 198,684 39.7% 94.0% $206 $ 2,881,100 $ 8.01
$ 22,225,000 434,837 136,841 136,841 29.5% 77.1% $206 $ 2,667,000 $ 5.36
$ 451,000,00 2,641,616 1,187,061 1,024,418 48.2% 99.0% $455 $34,952,000 $ 40.03
$ 98,120,369 1,019,657 528,797 372,131 37.2% 90.2% $279 $ 8,364,652 $ 16.19
------------ --------- --------- --------- ---- ---- ---- ----------- -------
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
---------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
======== =========== ========== =========== =========== ============ =========
<S> <C> <C> <C> <C> <C> <C>
96- 18 10.39% 10.50% 14.00% $ 92 $179 0.80
96- 19 7.75% -- -- $145 $145 0.53
96- 20 11.00% -- -- $270 $270 0.71
96- 21 7.50% -- -- $534 $534 1.17
96- 22 9.25% -- -- $ 91 $192 0.70
96- 23 10.33% -- -- $ 66 $173 0.74
96- 24 7.00% -- 12.00% $508 $508 1.27
96- 25 7.52% -- 12.00% $170 $401 1.82
96- 26 8.50% -- 10.60% $342 $342 1.14
96- 27 7.70% -- -- $225 $225 0.87
96- 28 7.30% -- -- $239 $239 0.96
96- 29 10.67% -- -- $ 75 $136 0.66
7.00% 10.00% 10.60% $ 44 $119 0.33
12.12% 11.00% 14.00% $534 $534 1.82
9.44% 10.50% 11.85% $187 $243 0.85
----- ----- ----- ---- ---- ----
</TABLE>
- ------
(1) Reflects sale of leasehold estate with 32 years remaining on ground
lease.
(2) Adjusted reflect 100% interest.
(3) Actual sales price of $44.5 million adjusted to reflect free rent.
<PAGE>
1997
REGIONAL MALL SALES
1997 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
<TABLE>
<CAPTION>
SALE SALE YEAR
NO. PROPERTY/LOCATION DATE BUILT GRANTOR/GRANTEE
========== ================================ ======== ========= ====================================
<S> <C> <C> <C> <C>
97- 1 THE FALLS SHOPPING CENTER Dec-97 1980/ Heitman Retail Properties/
Miami, Florida 96 Taubman Realty Group
97- 2 NORTHWEST PLAZA S.C. Dec-97 1965/ Paramount Group/
St. Ann, Missouri 89 Westfield America, Inc.
97- 3 THE CITADEL Dec-97 1972/95 Tri State Joint Venture/
Colorado Springs, Colorado The Macerich Company
97- 4 SALEM MALL Dec-97 1980/ The Rouse Company/
(1) Salem, Oregon 87 JP Realty Inc.
97- 5 FASHION MALL Dec-97 1973/ Ameresco for Shell Pension Fund/
(1) Indianapolis, Indiana 93 Simon DeBartolo Group
97- 6 UNIVERSITY MALL Dec-97 1974/96 University Square Partners/
Tampa, Florida Glimcher Realty Trust
97- 7 MOORESTOWN MALL Dec-97 1963/ Heitman/
Moorestown, New Jersey 94 The Rouse Company
97- 8 NORTHWEST MALL Dec-97 1968 The Rouse Company/
(4) Houston, Texas San Mall LLC
97- 9 ALMEDA MALL Dec-97 1968 The Rouse Company/
(4) Houston, Texas San Mall LLC
97- 10 EASTPOINT MALL Dec97 1956/ Eastpoint Mall LP/
Baltimore, Maryland 91 Shopco Advisory Corp.
97- 11 CALPERE PORTFOLIO Dec-97 Calpers/ERE Yarmouth/
1) Metrocenter Mall 1978 Coyote Holdings
Jackson, Mississippi
2) Lehigh Mall 1973/
Columbus, Mississippi 91/94
3) Greenville Mall 1972/
Greenville, Mississippi 86
97- 12 SHELL PENSION PORTFOLIO Nov-97 Shell Pension Fund Entities/
1) Glynn Place Mall n/a Colonial Properties Trust
Burnswick, Georgia
2) Valdosta Mall n/a
Valdosta, Georgia
3) Lakeshore Mall n/a
Gainesville, Georgia
97- 13 AETNA PORTFOLIO Nov-97 Aetna/
1) Mall of Abilene 1979 Enterprise Asset Management
Abilene, Texas
2) Sunset Mall 1979
San Angelo, Texas
97- 14 VALLEY MALL Nov-97 1974/ Equitable Prime Property Fund/
Hagerstown, Maryland 95 Crown American Realty Trust
97- 15 SHOPPING CTR. ASSOC. PORTFOLIO Nov-97 -- Shop. Ctr. Assoc.-JMB Group Trust/
1) Fox Valley Mall Urban Shopping Centers
Aurora, Illinois
2) Hawthorn Center
Vernon Hills, Illinois
97- 16 VALLEY HILLS MALL Oct-97 1978/ Valley Hills LP/
- ------ ------
Hickory, North Carolina 96 General Growth Properties
-------------------------------- ------- ------------------------------------
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MALL MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF
========== =============== ============= ============ ============ ========== ========== ========== ============== ===========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97- 1 $156,000,000 825,000 370,000 310,000 37.6% 98.0% $500 $12,090,000 $ 32.68
97- 2 $111,000,000 1,403,811 836,500 403,811 28.8% 84.0% $275 $11,000,000 $ 13.15
97- 3 $108,000,000 1,094,000 346,000 396,000 36.2% 90.0% $300 $ 8,700,000 $ 25.14
97- 4 $ 32,500,000 646,500 212,500 212,500 32.9% 97.0% $270 $ 3,168,750 $ 14.91
(1)
97- 5 $122,000,000 682,912 682,912 349,222 51.1% 90.0% $360 $10,300,000 $ 15.08
(1)
97- 6 $121,000,000 1,302,752 650,491 412,009 31.6% 81.0% $260 $11,495,000 $ 17.67
97- 7 $ 78,500,000 970,863 764,863 258,000 26.6% 75.0% $260 $ 5,416,500 $ 7.08
97- 8 $ 19,725,000 800,250 292,075 276,475 34.5% 78.0% $200 $ 2,400,000 $ 8.22
(4)
97- 9 $ 19,325,000 806,454 305,979 245,266 30.4% 77.0% $182 $ 2,400,000 $ 7.84
(4)
97- 10 $ 81,000,000 862,313 693,344 241,146 28.0% 88.0% $312 $ 8,006,400 $ 11.55
97- 11 $ 54,000,000 1,897,185 1,024,507 569,138 30.0% 77.0% $238 $ 6,560,000 $ 6.40
97- 12 $ 97,000,000 1,428,401 1,129,120 530,744 37.2% 85.0% $229 $ 9,409,000 $ 8.33
97- 13 $ 43,800,000 1,248,573 742,688 442,285 35.4% 85.0% $106 $ 4,599,000 $ 6.19
97- 14 $ 31,700,000 664,831 541,431 277,083 41.7% 75.0% $265 $ 3,170,000 $ 5.85
97- 15 $265,000,000 2,736,175 1,134,469 1,054,594 38.5% 87.0% $293 $22,000,000 $ 19.39
97- 16 $ 34,600,000 618,152 205,856 205,856 33.3% 89.0% $301 $ 3,287,000 $ 15.97
- ------ ------------ ---------- --------- --------- ---- ---- ---- ----------- -------
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
-------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
========== ========= ========== =========== =========== ============ =========
<S> <C> <C> <C> <C> <C> <C>
97- 1 7.75% -- -- $422 $503 1.01
97- 2 9.91% -- -- $133 $275 1.00
97- 3 8.06% -- -- $312 $273 0.91
97- 4 9.75% -- -- $153 $153 0.57
(1)
97- 5 8.44% -- -- $179 $349 0.97
(1)
97- 6 9.50% -- -- $186 $294 1.13
97- 7 6.90% -- -- $103 $304 1.17
97- 8 12.17% -- -- $ 68 $ 71 0.36
(4)
97- 9 12.42% -- -- $ 63 $ 79 0.43
(4)
97- 10 9.88% 10.00% 12.25% $117 $336 1.08
97- 11 12.15% -- -- $ 53 $ 95 0.40
97- 12 9.70% -- -- $ 86 $183 0.80
97- 13 10.50% -- -- $ 59 $ 99 0.93
97- 14 10.00% -- -- $ 59 $114 0.43
97- 15 8.30% 8.50% 11.25% $234 $251 0.86
97- 16 9.50% -- -- $168 $168 0.56
- ------ ----- ----- ----- ---- ---- ----
</TABLE>
<PAGE>
REGIONAL MALL SALES 1997
1997 TRANSACTION CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- ---------- ------------------------------- -------- ------- -------------------------------------
<S> <C> <C> <C> <C>
97-17 COLONIAL PARK MALL Oct-97 1960/ Catalina Partners LP/
Harrisburg, Pennsylvania 87 Glimcher Realty Trust
97-18 CROSSROADS OF SAN ANTONIO Oct-97 1961/ Crossroads Mall 1996 LP/
San Antonio, Texas 87 Red Oak Realty
97-19 THE OAKS MALL Sep-97 1978/ Prudential Insurance/
Gainesville, Florida 84/95 General Growth Properties
97-20 WESTROADS MALL Sep-97 1968/ Prudential Insurance/
Omaha, Nebraska 95 General Growth/Ivanhoe, Inc.
97-21 REGENCY SQUARE Sep-97 1975/ Prudential Insurance/
Richmond, Virginia 87 Taubman Realty Group
97-22 SPRINGDALE MALL Sep-97 1960/ Cigna/
Mobile, Alabama 88 CBL Associates Properties, Inc.
97-23 STONEWOOD CENTER MALL Aug-97 1958/ Hughes Investments/
(1) Downey, California 90 The MaceRich Company
97-24 SAN FRANCISCO CENTER Aug-97 1988 U.S. Power San Francisco, Inc./
(1) San Francisco, California Urban Shopping Centers
97-25 DADELAND MALL Aug-97 1962/ Equitable Life Assurance/
(2) Miami, Florida 91 Simon DeBartolo Group
97-26 VISALIA MALL Jul-97 1963/ Cigna Investments, Inc./
Visalia, California 95 JP Realty Inc.
97-27 WEST TOWN MALL Jul-97 1972/ Jaguar/RREEF USA Fund II/
(2) Knoxville, Tennessee 96 Simon DeBartolo Group
97-28 MAZZA GALLERIE Jun-97 1977 5300 Wisconsin JV (Prudential)/
Chevy Chase, Maryland City Center Retail Trust (McCaffery)
97-29 DAKOTA SQUARE Jun-97 1980/ Equitable Life Prime Property Fund/
(3) Minot, North Dakota 88 Concordia LLC (O'Connor)
97-30 TRI-COUNTY MALL Jun-97 1960- Equitable Life Prime Property Fund/
(3) Springfield, Cincinnati, Ohio 90 Concordia LLC (O'Connor)
97-31 SOUTHDALE CENTER Jun-97 1956/ Equitable Life Prime Property Fund/
(3) Edina, Minnesota 91 Concordia LLC (O'Connor)
97-32 TOWN EAST MALL Jun-97 1971/ Atlantic Freeholds II/
(2) Dallas, Texas 86 General Growth Properties, Inc.
97-33 EDEN PRAIRIE CENTER Jun-97 1976/ GGP/Homart, Inc./
(2) Eden Prairie, Minnesota 89 General Growth Properties, Inc.
97-34 SILVER LAKE MALL Jun-97 1989 Silver Lake Mall Ltd./
Coeur D'Alene, Idaho JP Realty Inc.
97-35 SOUTHLAKE MALL Jun-97 1976/ Southlake Retail Venture/
Morrow, Georgia 95 General Growth Properties
97-36 WHEATON PLAZA May-97 1960/ Gudelsky Family/
Wheaton, Maryland 92 Westfield America
<CAPTION>
CAPITALIZA
TION
RATES
MALL MALL MALL -----------
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP GOING-IN
NO. SALE PRICE GLA GLA GLA GLA PANCY SALES/SF NOI NOI/SF OAR
- ---------- -------------- ------------ --------- --------- ---------- ---------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97-17 $ 48,000,000 754,178 386,732 223,735 29.7% 94.0% $278 $ 4,800,000 $ 12.41 10.00%
97-18 $ 15,000,000 711,231 711,231 176,109 24.8% 83.0% $137 $ 1,500,000 $ 2.11 10.00%
97-19 $116,000,000 909,120 771,392 351,199 38.6% 96.0% $303 $ 9,520,720 $ 12.34 8.21%
97-20 $ 90,000,000 1,079,246 562,146 382,836 35.5% 94.9% $297 $ 7,798,307 $ 13.87 8.66%
97-21 $123,900,000 825,891 463,002 239,179 29.0% 99.0% $426 $ 9,671,240 $ 20.89 7.81%
97-22 $ 26,050,000 926,386 478,386 190,074 20.5% 96.0% $220 $ 2,900,000 $ 6.06 11.13%
97-23 $ 92,000,000 927,000 927,000 356,253 38.4% 86.0% $259 $ 8,700,000 $ 9.39 9.46%
(1)
97-24 $120,730,000 499,930 499,930 187,930 37.6% 96.0% $523 $ 8,947,952 $ 17.90 7.41%
(1)
97-25 $268,000,000 1,433,552 451,130 346,067 24.3% 92.0% $649 $19,672,000 $ 43.61 7.34%
(2)
97-26 $ 38,000,000 439,500 439,500 174,000 39.6% 95.0% $235 $ 3,800,000 $ 8.65 10.00%
97-27 $140,792,000 1,336,598 764,066 381,707 28.6% 90.0% $350 $13,427,160 $ 17.57 9.54%
(2)
97-28 $ 28,000,000 274,034 274,034 121,081 44.2% -- -- -- -- --
97-29 $ 51,500,000 693,606 566,722 327,088 47.2% -- $216 $ 4,583,500 $ 8.09 8.90%
(3)
97-30 $141,300,000 1,340,803 836,062 439,891 32.8% -- $307 $12,010,500 $ 14.37 8.50%
(3)
97-31 $118,000,000 1,240,888 467,104 467,104 37.6% 95.0% $354 $ 9,558,000 $ 20.46 8.10%
(3)
97-32 $113,000,000 1,236,619 425,574 425,574 34.4% 93.0% $305 $10,000,000 $ 23.50 8.85%
(2)
97-33 $ 19,900,000 864,443 325,843 325,843 37.7% 60.0% $225 $ 1,800,000 $ 5.52 9.05%
(2)
97-34 $ 27,000,000 331,543 331,543 97,165 29.3% 98.0% $225 $ 2,700,000 $ 8.14 10.00%
97-35 $ 67,000,000 1,023,847 284,847 284,847 27.8% 88.0% $280 $ 6,500,000 $ 22.82 9.70%
97-36 $ 51,000,000 1,006,301 827,213 353,020 35.1% -- $332 $ 5,049,000 $ 6.10 9.90%
<CAPTION>
CAPITALIZA
TION RATES UNIT RATE COMPARISON
-----------
SALE TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR IRR PURCHASED SHOP GLA MULTIPLE
- ---------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
97-17 -- -- $124 $215 0.77
97-18 -- -- $ 21 $ 85 0.62
97-19 8.75% 11.75% $150 $330 1.09
97-20 9.25% 12.30% $180 $235 0.79
97-21 8.25% 12.80% $268 $518 1.22
97-22 -- -- $ 54 $137 0.62
97-23 -- -- $ 99 $258 1.00
(1)
97-24 7.40% -- $241 $642 1.23
(1)
97-25 -- -- $594 $770 1.19
(2)
97-26 -- -- $ 86 $218 0.93
97-27 8.50% 11.00% $184 $369 1.05
(2)
97-28 -- -- $102 $231 --
97-29 9.50% 12.00% $ 91 $157 0.73
(3)
97-30 9.00% 11.90% $169 $321 1.05
(3)
97-31 8.50% 11.90% $253 $253 0.71
(3)
97-32 -- -- $266 $266 0.87
(2)
97-33 -- -- $ 61 $ 61 0.27
(2)
97-34 -- -- $ 81 $278 1.24
97-35 -- -- $235 $235 0.84
97-36 -- -- $ 62 $144 0.44
</TABLE>
1
<PAGE>
REGIONAL MALL SALES 1997
1997 TRANSACTION CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- ---------- ----------------------------- -------- ------- -----------------------------------
<S> <C> <C> <C> <C>
97-37 BROOKWOOD VILLAGE MALL May-97 1973/ Berkshire Realty Company/
Birmingham, Alabama 91 Colonial Properties Trust
97-38 TOWNE MALL May-97 1985/ Hellman Retail Properties/
Elizabethtown, Kentucky 90 Towne Mall LLC
97-39 SECURITY SQUARE May-97 1972/ Security Square Associates/
Baltimore, Maryland 86 Mountain Development Corp.
97-40 CENTURY PLAZA May-97 1975/ Century Plaza Company/
Birmingham, Alabama 95 General Growth Properties
97-41 SOMERSET MALL May-97 1981 N/A
Somerset, Kentucky N/A
97-42 MONTEHIEDRA TOWN CENTER Apr-97 1993/ Big Beaver Rio & Kmart Corp./
Rio Piedras, Puerto Rico 94 Vornado Montehiedra Acquisition
97-43 MANHATTAN MALL Apr-97 1989 SZS 33 Associates/
New York, New York Andrew Penson
97-44 DAYTON MALL Mar-97 1969/ Heitman/JMB Advisory/
Dayton, Ohio 84/94 Glimcher Realty Trust
97-45 SOUTH TOWNE CENTER Mar-97 1986/ Zell Merrill Lynch RE Opp./
Sandy, Utah 97 The Macerich Company
97-46 MARKETPLACE SHOPPING CENTER Mar-97 1976/ Champaign Venture/
Champaign, Illinois 1988 General Growth Properties
97-47 TYSONS CORNER CENTER Feb-97 1968/ State of Alaska Pension Fund/
(2) Fairfax, VA 96 Lsd Fee & Part. Leasehold
97-48 PUEBLO MALL Feb-97 1976 The Hahn Company/
Pueblo, Colorado Equities Development Corp.
97-49 SHADY BROOK MALL Jan-97 1980/ Equitable Life Assurance Society/
Columbia, Tennessee 96 GE Investment Corp.
Survey Low:
Survey High:
SURVEY MEAN:
<CAPTION>
CAPITALIZ
ATION
RATES
MALL MALL MALL ---------
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP GOING-IN
NO. SALE PRICE GLA GLA GLA GLA PANCY SALES/SF NOI NOI/SF OAR
- ---------- -------------- ------------ ------------ ------------ ------- ---------- ---------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97-37 $ 34,500,000 699,628 699,628 362,000 51.7% 92.0% $220 $ 3,460,350 $ 4.95 10.03%
97-38 $ 22,100,000 340,564 340,564 149,692 44.0% 68.0% $223 $ 2,400,000 $ 7.05 10.86%
97-39 $ 44,500,000 1,038,033 363,622 266,157 25.6% 78.0% $250 $ 4,904,898 $13.49 11.02%
97-40 $ 32,000,000 727,309 574,943 237,896 32.7% 68.0% $246 $ 3,500,000 $ 6.09 10.94%
97-41 $ 3,865,000 215,140 157,286 105,961 49.3% 87.0% -- $ 493,580 $ 3.14 12.77%
97-42 $ 74,400,000 525,452 525,452 200,050 38.1% 99.0% $340 $ 7,621,000 $14.50 10.24%
97-43 $135,000,000 847,602 847,602 195,728 23.1% 80.0% $350 $12,500,000 $14.75 9.26%
97-44 $ 91,000,000 1,329,514 663,375 484,689 36.5% 80.1% $220 $ 8,645,000 $13.03 9.50%
97-45 $ 98,000,000 1,229,054 1,229,054 450,000 36.6% 83.0% $250 $ 8,400,00 $ 6.83 8.57%
97-46 $ 70,000,000 831,111 831,111 188,302 22.7% 92.0% $275 $ 6,300,000 $ 7.58 9.00%
97-47 $412,000,000 1,874,101 1,874,101 832,473 44.4% 95.0% $455 $30,500,000 $16.27 7.40%
(2)
97-48 $ 22,250,000 579,730 293,396 196,868 34.0% -- $200 $ 2,619,779 $ 8.93 11.77%
97-49 $ 11,050,000 282,272 282,272 107,282 38.0% 94.0% $200 $ 1,289,488 $ 4.57 11.67%
$ 3,865,000 215,140 157,286 97,165 20.5% 60.0% $106 $ 493,580 $ 2.11 6.90%
$412,000,000 2,736,175 1,874,101 1,054,594 51.7% 99.0% $649 $30,500,000 $43.61 12.77%
$ 84,101,776 946,171 600,175 322,733 34.8% 87.0% $287 $ 7,491,128 $12.72 9.59%
<CAPTION>
CAPITALIZA
TION RATES UNIT RATE COMPARISON
----------- ----------------------
SALE TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR IRR PURCHASED SHOP GLA MULTIPLE
- ---------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
97-37 -- -- $ 49 $ 95 0.43
97-38 -- -- $ 65 $148 0.66
97-39 11.00% -- $122 $167 0.67
97-40 -- -- $ 56 $135 0.55
97-41 -- 13.43% $ 25 $ 36 --
97-42 -- -- $142 $372 1.09
97-43 -- -- $159 $690 1.97
97-44 9.25% 12.00% $137 $188 0.85
97-45 -- -- $ 80 $218 0.87
97-46 -- -- $ 84 $372 1.35
97-47 -- 10.50% $220 $495 1.09
(2)
97-48 -- -- $ 76 $113 0.57
97-49 -- -- $ 39 $103 0.51
7.40% 10.50% $ 21 $ 36 0.27
11.00% 13.43% $594 $770 1.97
8.99% 11.92% $142 $253 0.85
</TABLE>
- -------
(1) Leasehold interest.
(2) Partial interest adjusted to reflect 100% interest.
(3) Based on allocated sale price; part of 3-property transaction.
(4) Based on allocated sale price; part of 2-property transaction.
2
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
REGIONAL MALL SALES 1998
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
98- 1 JANESVILLE MALL Sep-98 1973/ Samuels & Associates/
Janesville, WI 1995 CBL & Associates
- -----------------------------------------------------------------------------------------------------------------------------
98- 2 SPRING HILL MALL Sep-98 1980/ TCW Realty Fund/
West Dundee, IL 1992 General Growth Properties
- -----------------------------------------------------------------------------------------------------------------------------
98- 3 COASTLAND CENTER Sep-98 1977/ Coastland Center Joint Venture/
Naples, FL 1996 General Growth Properties
- -----------------------------------------------------------------------------------------------------------------------------
98- 4 PIERRE BOSSIER MALL Sep-98 1982/ BMP Realty Enterprises LLC/
Bossier City, LA 1992 General Growth Properties
- -----------------------------------------------------------------------------------------------------------------------------
98- 5 MERIDIAN MALL Aug-98 1969/ Samuels & Associates/
Lansing, MI 1987 CBL & Associates
- -----------------------------------------------------------------------------------------------------------------------------
98- 6 THE VILLAGE AT CORTE MADERA Aug-98 1985 JMB/CM Village Associates/
Corte Madera, CA The Macerich Company
- -----------------------------------------------------------------------------------------------------------------------------
98- 7 NORTHTOWN MALL Aug-98 1955/ The Sabey Corporation/
Spokane, WA 1993 JP Realty Inc.
- -----------------------------------------------------------------------------------------------------------------------------
98- 8 VILLAGE AT COTE MADERA Aug-98 1985 Trizec Hahn Centers/
Corte Madera, CA The Macerich Company
- -----------------------------------------------------------------------------------------------------------------------------
98- 9 INDEPENDENCE MALL Aug-98 1979 Independence Mall Associates/
(2) Wilmington, NC Westfield Corp.
- -----------------------------------------------------------------------------------------------------------------------------
98- 10 MONTGOMERY MALL Jul-98 1970/ Montgomery Madison Associates/
Montgomery, AL 1988 Glimcher Realty Trust
- -----------------------------------------------------------------------------------------------------------------------------
98- 11 ALTAMONTE MALL Jul-98 1974/ Nashland Associates and HRE Altamonte Inc./
Altamonte Springs, FL 1989 General Growth Properties
- -----------------------------------------------------------------------------------------------------------------------------
98- 12 RIVERGATE MALL Jun-98 1971/ Nashland Associates (O'Connor)/
Goodlettsville, TN 1987 CBL & Associates Properties, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
98- 13 HICKORY HOLLOW MALL Jun-98 1978/ Nashland Associates (O'Connor)/
Antioch, TN 1991 CBL & Associates Properties, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
98- 14 WESTSIDE PAVILLION Jul-98 1985/ Westpal, LLC/
West Los Angeles, CA 1991 The MaceRich Company
- -----------------------------------------------------------------------------------------------------------------------------
98- 15 VILLAGE MALL Jun-98 1975/ Interstate RE Services/
(1) Danville, Ill. 85/90 DRA Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
98- 16 GREENVILLE MALL Jun-98 1978/ Marvest Property Trust/
GREENVILLE, SC 95 DRA Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
98- 17 SOUTH PLAINS MALL Jun-98 South Plains Mall Assoc., LTD/
LUBBOCK, TX The Macerich Co..
- -----------------------------------------------------------------------------------------------------------------------------
98- 18 NORTHOWN MALL Jun-98 1972/ Northtown LLP/
Blaine, MN 86 Glimcher Realty Trust
- -----------------------------------------------------------------------------------------------------------------------------
98- 19 JACKSONVILLE MALL May-98 1981 Beckley-Jacksonville LP/
Jacksonville, NC Crown American Realty Trust
- -----------------------------------------------------------------------------------------------------------------------------
98- 20 CROSSROADS MALL May-98 1981/ Beckley-Jacksonville LP/
Mount Hope, WV 97 Crown American Realty Trust
- -----------------------------------------------------------------------------------------------------------------------------
98- 21 ORLANDO FASHION SQUARE May-98 1973/ Fund A Orlando, Inc./
Orlando, FL 93 Colonial Properties Trust
- -----------------------------------------------------------------------------------------------------------------------------
98- 22 STROUD MALL Apr-98 1978/ ERE Yarmouth/
Stroudsberg, PA 94 CBL & Associates Properties Inc.
- -----------------------------------------------------------------------------------------------------------------------------
98- 23 SOUTHWEST PLAZA Apr-98 1983/ Southwest Property Venture/
Litteton, CO 95 General Growth Properties, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
98- 24 BURNSVILLE CENTER Feb-98 1977/ Corporate Property Investors/
Burnsville, Minnesota 89 CBL & Associates
- -----------------------------------------------------------------------------------------------------------------------------
98- 25 PHIPPS PLAZA Jan-98 1968/ ERE Yarmouth/
Atlanta, Georgia 94 Corporate Property Investors
- -----------------------------------------------------------------------------------------------------------------------------
98- 26 ASHEVILLE MALL Jan-98 1975/ RL Coleman & Co.
Asheville, North Carolina 94 CBL Associates
- -----------------------------------------------------------------------------------------------------------------------------
98- 27 CORDOVA MALL Jan-98 1971/ Robert B. Aikens & Associates LLC/
Pensacola, Florida 87 Simon DeBartolo Group
- -----------------------------------------------------------------------------------------------------------------------------
98- 28 CRESTWOOD PLAZA Jan-98 1957/ Crestwood Plaza S.C. LLC/
St. Louis, Missouri 97 Westfield America
- -----------------------------------------------------------------------------------------------------------------------------
98- 29 SUPER MALL OF THE GREAT N.W. (1) Jan-98 1956/ Hapsmith/Rosche Capital Corp./
Auburn, Washington 91 Glimcher Properties LP
=============================================================================================================================
Survey Low:
Survey High:
- -----------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN:
- -----------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED:
- -----------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR IS OWNED:
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===========================================================================================================================
REGIONAL MALL SALES 1998
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
- ---------------------------------------------------------------------------------------------------------------------------
SALE TOTAL SOLD
NO. PROPERTY/LOCATION SALE PRICE GLA GLA
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
98- 1 JANESVILLE MALL $69,000,000 614,658 614,658
Janesville, WI
- ---------------------------------------------------------------------------------------------------------------------------
98- 2 SPRING HILL MALL $124,000,000 1,075,206 393,626
West Dundee, IL
- ---------------------------------------------------------------------------------------------------------------------------
98- 3 COASTLAND CENTER $114,500,000 925,000 925,000
Naples, FL
- ---------------------------------------------------------------------------------------------------------------------------
98- 4 PIERRE BOSSIER MALL $52,700,000 614,000 614,000
Bossier City, LA
- ---------------------------------------------------------------------------------------------------------------------------
98- 5 MERIDIAN MALL $69,000,000 766,960 766,960
Lansing, MI
- ---------------------------------------------------------------------------------------------------------------------------
98- 6 THE VILLAGE AT CORTE MADERA $119,000,000 428,318 210,318
Corte Madera, CA
- ---------------------------------------------------------------------------------------------------------------------------
98- 7 NORTHTOWN MALL $128,000,000 1,100,000 1,100,000
Spokane, WA
- ---------------------------------------------------------------------------------------------------------------------------
98- 8 VILLAGE AT COTE MADERA $119,000,000 427,976 427,976
Corte Madera, CA
- ---------------------------------------------------------------------------------------------------------------------------
98- 9 INDEPENDENCE MALL $62,333,333 681,244 318,705
(2) Wilmington, NC
- ---------------------------------------------------------------------------------------------------------------------------
98- 10 MONTGOMERY MALL $70,350,000 727,909 614,909
Montgomery, AL
- ---------------------------------------------------------------------------------------------------------------------------
98- 11 ALTAMONTE MALL $169,000,000 1,070,548 550,658
Altamonte Springs, FL
- ---------------------------------------------------------------------------------------------------------------------------
98- 12 RIVERGATE MALL $103,810,000 1,063,493 540,864
Goodlettsville, TN
- ---------------------------------------------------------------------------------------------------------------------------
98- 13 HICKORY HOLLOW MALL $124,412,000 1,095,946 425,757
Antioch, TN
- ---------------------------------------------------------------------------------------------------------------------------
98- 14 WESTSIDE PAVILLION $170,500,000 755,912 535,912
West Los Angeles, CA
- ---------------------------------------------------------------------------------------------------------------------------
98- 15 VILLAGE MALL $23,200,000 477,577 477,577
(1) Danville, Ill.
- ---------------------------------------------------------------------------------------------------------------------------
98- 16 GREENVILLE MALL $36,000,000 789,532 602,532
GREENVILLE, SC
- ---------------------------------------------------------------------------------------------------------------------------
98- 17 SOUTH PLAINS MALL $115,700,000 1,107,000 1,107,000
LUBBOCK, TX
- ---------------------------------------------------------------------------------------------------------------------------
98- 18 NORTHOWN MALL $54,000,000 846,248 459,000
Blaine, MN
- ---------------------------------------------------------------------------------------------------------------------------
98- 19 JACKSONVILLE MALL $38,000,000 384,000 384,000
Jacksonville, NC
- ---------------------------------------------------------------------------------------------------------------------------
98- 20 CROSSROADS MALL $23,000,000 456,000 456,000
Mount Hope, WV
- ---------------------------------------------------------------------------------------------------------------------------
98- 21 ORLANDO FASHION SQUARE $104,000,000 1,070,000 708,568
Orlando, FL
- ---------------------------------------------------------------------------------------------------------------------------
98- 22 STROUD MALL $38,100,000 427,145 427,145
Stroudsberg, PA
- ---------------------------------------------------------------------------------------------------------------------------
98- 23 SOUTHWEST PLAZA $113,000,000 1,292,110 591,245
Litteton, CO
- ---------------------------------------------------------------------------------------------------------------------------
98- 24 BURNSVILLE CENTER $81,000,000 1,078,253 1,078,253
Burnsville, Minnesota
- ---------------------------------------------------------------------------------------------------------------------------
98- 25 PHIPPS PLAZA $188,000,000 823,000 823,000
Atlanta, Georgia
- ---------------------------------------------------------------------------------------------------------------------------
98- 26 ASHEVILLE MALL $65,000,000 1,042,000 489,000
Asheville, North Carolina
- ---------------------------------------------------------------------------------------------------------------------------
98- 27 CORDOVA MALL $85,000,000 874,000 376,368
Pensacola, Florida
- ---------------------------------------------------------------------------------------------------------------------------
98- 28 CRESTWOOD PLAZA $106,400,000 1,021,132 1,021,132
St. Louis, Missouri
- ---------------------------------------------------------------------------------------------------------------------------
98- 29 SUPER MALL OF THE GREAT N.W. (1) $103,000,000 905,791 905,791
Auburn, Washington
===========================================================================================================================
Survey Low: $23,000,000 384,000 210,318
Survey High: $188,000,000 1,292,110 1,107,000
- ---------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: $92,034,667 825,550 618,826
- ---------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED: $109,470,667 799,421 337,481
- ---------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR IS OWNED: $90,022,821 828,565 651,289
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
REGIONAL MALL SALES 1998
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
MALL MALL MALL
SALE SHOP SHOP OCCU- SHOP
NO. PROPERTY/LOCATION GLA RATIO PANCY SALES/SF
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
98- 1 JANESVILLE MALL 192,906 31.4% 83.0% $290
Janesville, WI
- -----------------------------------------------------------------------------------------------------------------------------------
98- 2 SPRING HILL MALL 342,410 31.8% 93.0% $295
West Dundee, IL
- -----------------------------------------------------------------------------------------------------------------------------------
98- 3 COASTLAND CENTER 323,549 35.0% 92.0% $295
Naples, FL
- -----------------------------------------------------------------------------------------------------------------------------------
98- 4 PIERRE BOSSIER MALL 212,000 34.5% 92.0% $280
Bossier City, LA
- -----------------------------------------------------------------------------------------------------------------------------------
98- 5 MERIDIAN MALL 385,791 50.3% 94.0% $277
Lansing, MI
- -----------------------------------------------------------------------------------------------------------------------------------
98- 6 THE VILLAGE AT CORTE MADERA 210,318 49.1% 97.0% $470
Corte Madera, CA
- -----------------------------------------------------------------------------------------------------------------------------------
98- 7 NORTHTOWN MALL 643,000 58.5% 95.0% $315
Spokane, WA
- -----------------------------------------------------------------------------------------------------------------------------------
98- 8 VILLAGE AT COTE MADERA 218,976 51.2% 96.0% $470
Corte Madera, CA
- -----------------------------------------------------------------------------------------------------------------------------------
98- 9 INDEPENDENCE MALL 204,265 30.0% 98.5% $306
(2) Wilmington, NC
- -----------------------------------------------------------------------------------------------------------------------------------
98- 10 MONTGOMERY MALL 257,989 35.4% 96.0% $265
Montgomery, AL
- -----------------------------------------------------------------------------------------------------------------------------------
98- 11 ALTAMONTE MALL 392,000 36.6% 86.0% $325
Altamonte Springs, FL
- -----------------------------------------------------------------------------------------------------------------------------------
98- 12 RIVERGATE MALL 348,324 32.8% 85.0% $271
Goodlettsville, TN
- -----------------------------------------------------------------------------------------------------------------------------------
98- 13 HICKORY HOLLOW MALL 425,757 38.8% 83.4% $278
Antioch, TN
- -----------------------------------------------------------------------------------------------------------------------------------
98- 14 WESTSIDE PAVILLION 354,349 46.9% 83.0% $373
West Los Angeles, CA
- -----------------------------------------------------------------------------------------------------------------------------------
98- 15 VILLAGE MALL 126,088 26.4% 72.0% $144
(1) Danville, Ill.
- -----------------------------------------------------------------------------------------------------------------------------------
98- 16 GREENVILLE MALL 232,025 29.4% 55.0% $219
GREENVILLE, SC
- -----------------------------------------------------------------------------------------------------------------------------------
98- 17 SOUTH PLAINS MALL 365,215 33.0% 92.0% $300
LUBBOCK, TX
- -----------------------------------------------------------------------------------------------------------------------------------
98- 18 NORTHOWN MALL 287,078 33.9% 70.0% $240
Blaine, MN
- -----------------------------------------------------------------------------------------------------------------------------------
98- 19 JACKSONVILLE MALL 167,640 43.7% 98.0% $286
Jacksonville, NC
- -----------------------------------------------------------------------------------------------------------------------------------
98- 20 CROSSROADS MALL 182,400 40.0% 76.0% $220
Mount Hope, WV
- -----------------------------------------------------------------------------------------------------------------------------------
98- 21 ORLANDO FASHION SQUARE 362,425 33.9% N/A $329
Orlando, FL
- -----------------------------------------------------------------------------------------------------------------------------------
98- 22 STROUD MALL 184,145 43.1% 86.0% $294
Stroudsberg, PA
- -----------------------------------------------------------------------------------------------------------------------------------
98- 23 SOUTHWEST PLAZA 438,000 33.9% 83.0% $265
Litteton, CO
- -----------------------------------------------------------------------------------------------------------------------------------
98- 24 BURNSVILLE CENTER 417,030 38.7% 84.0% $284
Burnsville, Minnesota
- -----------------------------------------------------------------------------------------------------------------------------------
98- 25 PHIPPS PLAZA 372,457 45.3% N/A $450
Atlanta, Georgia
- -----------------------------------------------------------------------------------------------------------------------------------
98- 26 ASHEVILLE MALL 440,000 42.2% 98.5% $280
Asheville, North Carolina
- -----------------------------------------------------------------------------------------------------------------------------------
98- 27 CORDOVA MALL 376,368 43.1% 91.0% $300
Pensacola, Florida
- -----------------------------------------------------------------------------------------------------------------------------------
98- 28 CRESTWOOD PLAZA 382,214 37.4% 91.0% $300
St. Louis, Missouri
- -----------------------------------------------------------------------------------------------------------------------------------
98- 29 SUPER MALL OF THE GREAT N.W. (1) 415,319 45.9% 75.0% $185
Auburn, Washington
===================================================================================================================================
Survey Low: 126,088 26.4% 55.0% $144
Survey High: 643,000 58.5% 98.5% $470
- -----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: 319,312 39.0% 86.9% $297
- -----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED: 337,481 43.7% 90.5% $349
- -----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR IS OWNED: 317,215 38.5% 86.4% $291
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================================================
REGIONAL MALL SALES
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION RATES
------------------------
SALE GOING-IN TERMINAL
NO. PROPERTY/LOCATION NOI NOI/SF OAR OAR
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
98- 1 JANESVILLE MALL $6,141,000 $9.99 8.90% --
Janesville, WI
- ----------------------------------------------------------------------------------------------------------------------------------
98- 2 SPRING HILL MALL $9,800,000 $24.90 7.90% --
West Dundee, IL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 3 COASTLAND CENTER $9,600,000 $10.38 8.38% --
Naples, FL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 4 PIERRE BOSSIER MALL $5,000,000 $8.14 9.49% --
Bossier City, LA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 5 MERIDIAN MALL $5,934,000 $7.74 8.60% --
Lansing, MI
- ----------------------------------------------------------------------------------------------------------------------------------
98- 6 THE VILLAGE AT CORTE MADERA $8,092,000 $38.48 6.80% --
Corte Madera, CA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 7 NORTHTOWN MALL $11,520,000 $10.47 9.00% --
Spokane, WA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 8 VILLAGE AT COTE MADERA $8,092,000 $18.91 6.80% --
Corte Madera, CA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 9 INDEPENDENCE MALL $5,051,600 $15.85 8.10% --
(2) Wilmington, NC
- ----------------------------------------------------------------------------------------------------------------------------------
98- 10 MONTGOMERY MALL $5,708,100 $9.28 8.11% --
Montgomery, AL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 11 ALTAMONTE MALL $13,600,000 $24.70 8.05% --
Altamonte Springs, FL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 12 RIVERGATE MALL $8,741,000 $16.16 8.42% 8.42%
Goodlettsville, TN
- ----------------------------------------------------------------------------------------------------------------------------------
98- 13 HICKORY HOLLOW MALL $10,283,980 $24.15 8.27% 8.27%
Antioch, TN
- ----------------------------------------------------------------------------------------------------------------------------------
98- 14 WESTSIDE PAVILLION $14,002,000 $26.13 8.21% 9.00%
West Los Angeles, CA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 15 VILLAGE MALL $2,697,500 $5.65 11.63% --
(1) Danville, Ill.
- ----------------------------------------------------------------------------------------------------------------------------------
98- 16 GREENVILLE MALL $3,558,800 $5.91 9.89% --
GREENVILLE, SC
- ----------------------------------------------------------------------------------------------------------------------------------
98- 17 SOUTH PLAINS MALL $10,065,900 $9.09 8.70% --
LUBBOCK, TX
- ----------------------------------------------------------------------------------------------------------------------------------
98- 18 NORTHOWN MALL $5,400,000 $11.76 10.00% --
Blaine, MN
- ----------------------------------------------------------------------------------------------------------------------------------
98- 19 JACKSONVILLE MALL $3,572,000 $9.30 9.40% --
Jacksonville, NC
- ----------------------------------------------------------------------------------------------------------------------------------
98- 20 CROSSROADS MALL $2,760,000 $6.05 12.00% --
Mount Hope, WV
- ----------------------------------------------------------------------------------------------------------------------------------
98- 21 ORLANDO FASHION SQUARE $9,391,200 $13.25 9.03% --
Orlando, FL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 22 STROUD MALL $3,188,970 $7.47 8.37% --
Stroudsberg, PA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 23 SOUTHWEST PLAZA $10,500,000 $17.76 9.29% --
Litteton, CO
- ----------------------------------------------------------------------------------------------------------------------------------
98- 24 BURNSVILLE CENTER $6,804,000 $6.31 8.40% --
Burnsville, Minnesota
- ----------------------------------------------------------------------------------------------------------------------------------
98- 25 PHIPPS PLAZA $13,912,000 $16.90 7.40% --
Atlanta, Georgia
- ----------------------------------------------------------------------------------------------------------------------------------
98- 26 ASHEVILLE MALL $5,395,000 $11.03 8.30% --
Asheville, North Carolina
- ----------------------------------------------------------------------------------------------------------------------------------
98- 27 CORDOVA MALL $7,560,000 $20.09 9.00% --
Pensacola, Florida
- ----------------------------------------------------------------------------------------------------------------------------------
98- 28 CRESTWOOD PLAZA $9,800,000 $9.60 9.21% --
St. Louis, Missouri
- ----------------------------------------------------------------------------------------------------------------------------------
98- 29 SUPER MALL OF THE GREAT N.W. (1) $12,370,000 $13.66 12.01% --
Auburn, Washington
==================================================================================================================================
Survey Low: $2,697,500 $5.65 6.80% 8.27%
Survey High: $14,002,000 $38.48 12.01% 9.00%
- ----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: $7,880,726 $14.11 8.88% --
- ----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED: $8,645,327 $27.57 8.02% --
- ----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR IS OWNED: $7,792,503 $12.55 8.98% --
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================================================
REGIONAL MALL SALES 1998
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
UNIT RATE COMPARISON
------------------------------
SALE PRICE/GLA PRICE/MALL SALES
NO. PROPERTY/LOCATION IRR PURCHASED SHOP GLA MULTIPLE
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
98- 1 JANESVILLE MALL -- $112 $358 1.23
Janesville, WI
- ----------------------------------------------------------------------------------------------------------------------------------
98- 2 SPRING HILL MALL -- $315 $362 1.23
West Dundee, IL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 3 COASTLAND CENTER -- $124 $354 1.20
Naples, FL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 4 PIERRE BOSSIER MALL -- $86 $249 0.89
Bossier City, LA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 5 MERIDIAN MALL -- $90 $179 0.65
Lansing, MI
- ----------------------------------------------------------------------------------------------------------------------------------
98- 6 THE VILLAGE AT CORTE MADERA -- $566 $566 1.20
Corte Madera, CA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 7 NORTHTOWN MALL -- $116 $199 0.63
Spokane, WA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 8 VILLAGE AT COTE MADERA -- $278 $543 1.16
Corte Madera, CA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 9 INDEPENDENCE MALL -- $196 $305 1.00
(2) Wilmington, NC
- ----------------------------------------------------------------------------------------------------------------------------------
98- 10 MONTGOMERY MALL -- $114 $273 1.03
Montgomery, AL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 11 ALTAMONTE MALL -- $307 $431 1.33
Altamonte Springs, FL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 12 RIVERGATE MALL -- $192 $298 1.10
Goodlettsville, TN
- ----------------------------------------------------------------------------------------------------------------------------------
98- 13 HICKORY HOLLOW MALL -- $292 $292 1.05
Antioch, TN
- ----------------------------------------------------------------------------------------------------------------------------------
98- 14 WESTSIDE PAVILLION 11.00% $318 $481 1.29
West Los Angeles, CA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 15 VILLAGE MALL -- $49 $184 1.28
(1) Danville, Ill.
- ----------------------------------------------------------------------------------------------------------------------------------
98- 16 GREENVILLE MALL -- $60 $155 0.71
GREENVILLE, SC
- ----------------------------------------------------------------------------------------------------------------------------------
98- 17 SOUTH PLAINS MALL -- $105 $317 1.06
LUBBOCK, TX
- ----------------------------------------------------------------------------------------------------------------------------------
98- 18 NORTHOWN MALL -- $118 $188 0.78
Blaine, MN
- ----------------------------------------------------------------------------------------------------------------------------------
98- 19 JACKSONVILLE MALL -- $99 $227 0.79
Jacksonville, NC
- ----------------------------------------------------------------------------------------------------------------------------------
98- 20 CROSSROADS MALL -- $50 -- --
Mount Hope, WV
- ----------------------------------------------------------------------------------------------------------------------------------
98- 21 ORLANDO FASHION SQUARE -- $147 $287 0.87
Orlando, FL
- ----------------------------------------------------------------------------------------------------------------------------------
98- 22 STROUD MALL -- $89 $207 0.70
Stroudsberg, PA
- ----------------------------------------------------------------------------------------------------------------------------------
98- 23 SOUTHWEST PLAZA -- $191 $258 0.97
Litteton, CO
- ----------------------------------------------------------------------------------------------------------------------------------
98- 24 BURNSVILLE CENTER -- $75 $194 0.68
Burnsville, Minnesota
- ----------------------------------------------------------------------------------------------------------------------------------
98- 25 PHIPPS PLAZA -- $228 $505 1.12
Atlanta, Georgia
- ----------------------------------------------------------------------------------------------------------------------------------
98- 26 ASHEVILLE MALL -- $133 $148 0.53
Asheville, North Carolina
- ----------------------------------------------------------------------------------------------------------------------------------
98- 27 CORDOVA MALL -- $226 $226 0.75
Pensacola, Florida
- ----------------------------------------------------------------------------------------------------------------------------------
98- 28 CRESTWOOD PLAZA -- $104 $278 0.93
St. Louis, Missouri
- ----------------------------------------------------------------------------------------------------------------------------------
98- 29 SUPER MALL OF THE GREAT N.W. (1) -- $114 $248 1.34
Auburn, Washington
==================================================================================================================================
Survey Low: 11.00% $49 $148 0.53
Survey High: 11.00% $566 $566 1.34
- ----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: -- $169 $297 0.98
- ----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED: -- $361 $361 1.00
- ----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR IS OWNED: -- $147 $289 0.98
==================================================================================================================================
</TABLE>
- ---------------------------
(1) Year 2 NOI
(2) Sale Price reflects 100% interest for a partial interest sale
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
o The fourteen sales included for 1991 show a mean price per square
foot sold of $282. On the basis of mall shop GLA sold, these
sales present a mean of $357. Sales multiples range from .74 to
1.53 with a mean of 1.17. Capitalization rates range from 5.60 to
7.82 percent with an overall mean of 6.44 percent. The mean
terminal capitalization rate is approximately 100 basis points
higher, or 7.33 percent. Yield rates range between 10.75 and
13.00 percent, with a mean of 11.52 percent for those sales
reporting IRR expectancies.
o In 1992, the eleven transactions display prices ranging from $136
to $511 per square foot of GLA sold, with a mean of $259 per
square foot. For mall shop area sold, the 1992 sales suggest a
mean price of $320 per square foot. Sales multiples range from
.87 to 1.60 with a mean of 1.07. Capitalization rates range
between 6.00 and 7.97 percent with the mean cap rate calculated
at 7.31 percent for 1992. For sales reporting a going-out cap
rate, the mean is shown to be 7.75 percent. Yield rates range
from 10.75 to around 12.00 percent with a mean of 11.56 percent.
o For 1993, a total of sixteen transactions have been tracked.
These sales show an overall average sale price of $242 per square
foot based upon total GLA sold and $363 per square foot based
solely upon mall GLA sold. Sales multiples range from .65 to 1.82
and average 1.15. Capitalization rates continued to rise in 1993,
showing a range between 7.00 and 10.10 percent. The overall mean
has been calculated to be 7.92 percent. For sales reporting
estimated terminal cap rates, the mean is also equal to 7.92
percent. Yield rates for 1993 sales range from 10.75 to 12.50
percent with a mean of 11.53 percent for those sales reporting
IRR expectancies. On balance, the year was notable for the number
of dominant Class A malls which transferred.
o Sales data for 1994 shows fourteen confirmed transactions with an
average unit price per square foot of $197 per square foot of
total GLA sold and $288 per square foot of mall shop GLA. Sales
multiples range from .57 to 1.43 and average .96. The mean
going-in capitalization rate is shown to be 8.37 percent. The
residual capitalization rates average 8.13 percent. Yield rates
range from 10.70 to 11.50 percent and average 11.17 percent.
During 1994, many of the closed transactions involved second and
third tier malls. This accounted for the significant drop in unit
rates and corresponding increase in cap rates. Probably the most
significant sale involved the Riverchase Galleria, a 1.2 million
square foot center in Hoover, Alabama. LaSalle Partners purchased
the mall of behalf of the Pennsylvania Public School Employment
Retirement System for $175.0 million. The reported cap rate was
approximately 7.4 percent.
- -------------------------------------------------------------------------------
-81-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
o Cushman & Wakefield has researched 19 mall transactions for 1995.
With the exception of possibly Natick Mall and Smith Haven Mall,
by and large the quality of malls sold are lower than what has
been shown for prior years. For example, the average transaction
price has been slipping. In 1993, the peak year, the average deal
was nearly $133.8 million. In 1995, it is shown to be $88.6
million which is even skewed upward by Natick and Smith Haven
Malls which had a combined price of $486.0 million. The average
price per square foot of total GLA sold is calculated to be $193
per square foot. The range in values of mall GLA sold are $93 to
$686 with an average of $285 per square foot. The upper end of
the range is formed by Queens Center with mall shop sales of
nearly $700 per square foot. Characteristics of these lesser
quality malls would be higher initial capitalization rates. The
range for these transactions is 7.25 to 11.10 percent with a mean
of 9.13 percent. Most market participants indicated that
continued turmoil in the retail industry will force cap rates to
move higher.
o 1996 saw a return of real estate investors to the regional mall
market. REITs were far and away been the most active buyers. The
increase in activity was a result of a combination of dynamics.
The liquidity of REITs as well as the availability of capital
made acquisitions much easier compared to previous two to three
years. In addition, sellers became much more realistic in there
pricing, recognizing that the long term viability of a regional
mall requires large infusions of capital. The 29 transactions we
tracked for the year range in size from approximately $22.2
million to $451.0 million. The malls sold also run the gamut of
quality ranging from several secondary properties in small
markets to such higher profile properties as Old Orchard Shopping
Center in Chicago and The Plaza and Court at King of Prussia in
Philadelphia. Sale prices per square foot of mall shop GLA range
from $119 to $534 with a mean of $243. REIT's primary focus on
initial return with their underwriting centered on in place
income. As such, capitalization rates ranged from 7.0 percent to
12.1 percent with a mean of 9.44 percent.
o Mall sales activity to date in 1997 now exceeds the number of
sales tracked in 1996. REITs have continued to show their
appetite for acquisitions. Most of the sales which have occurred
in the past 12 months involve "B" grade malls. Exceptions exist
with respect to Regency Square, San Francisco Shopping Center,
Tysons Corner, and most recently The Falls Shopping Center in
Miami, Florida. These properties are viewed as among the nation's
premier retail properties. The 43 transactions we have tracked to
date range in size from $3.9 million to $412.0 million. Unit sale
prices also vary widely from $21 to $594 per square foot of GLA
sold. On the basis of mall shop GLA, the range is from $36 to
$770 per square foot. Overall rates fall between 7.34 percent and
12.77 percent, and average 9.71 percent. Mall shop sales per
square foot range from $106 to $649, with a mean of $287 per
square foot.
- -------------------------------------------------------------------------------
-82-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
While these unit prices implicitly contain both the physical and
economic factors affecting the real estate, the statistics do not explicitly
convey many of the details surrounding a specific property. Thus, this single
index to the valuation of the subject property has limited direct application.
The price per square foot of mall shop GLA acquired yields one common form of
comparison. However, this can be distorted if anchor and/or other major tenants
generate a significant amount of income. The following chart shows this
relationship along with other selected indices.
<TABLE>
<CAPTION>
========================================================================================
REGIONAL & SUPER-REGIONAL MALL SALES
SELECTED AVERAGE INDICES
- ----------------------------------------------------------------------------------------
Price/SF of Total Price/SF of Mall Mean
GLA Shops Range/Overall Sales
Transaction Year Range/Mean** Mean Multiple Mean OAR
========================================================================================
<S> <C> <C> <C> <C>
1991 $156 - $556 $203 - $556 1.17 6.44%
$282 $357
- ----------------------------------------------------------------------------------------
1992 $136 - $511 $226 - $511 1.07 7.31%
$259 $320
- ----------------------------------------------------------------------------------------
1993 $ 73 - $471 $173 - $647 1.15 7.92%
$242 $363
- ----------------------------------------------------------------------------------------
1994 $ 83 - $378 $129 - $502 0.96 8.37%
$197 $288
- ----------------------------------------------------------------------------------------
1995 $ 53 - $686 $ 93 - $686 0.96 9.13%
$193 $284
- ----------------------------------------------------------------------------------------
1996 $ 44 - $534 $119 - $534 0.85 9.44%
$187 $243
- ----------------------------------------------------------------------------------------
1997 (YTD) $ 21 - $594 $ 36 - $770 0.83 9.71%
$137 $250
========================================================================================
* Includes all transactions for particular year
** Based on total GLA acquired
========================================================================================
</TABLE>
The chart above shows that the annual average price per square foot of
total GLA acquired has ranged from $126 to $282 per square foot. A declining
trend has been in evidence as cap rates have risen. As discussed, one of the
factors which may influence the unit rate is whether or not anchor stores are
included in the total GLA which is transferred. Thus, a further refinement can
be made between those malls which have transferred with anchor space and those
which have included only mall GLA. The price per square foot of mall shop GLA
has declined from a high of $363 per square foot in 1993 to $243 per square
foot in 1996. In 1997 the price per square foot increased to $250 per square
foot. This is a reversal of the declining trend in evidence between 1993 and
1996.
- -------------------------------------------------------------------------------
-83-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
ANALYSIS OF SALES
We have presented a summary of several transactions involving regional
and super-regional-sized retail shopping malls from which price trends may be
identified for the extraction of value parameters. These transactions have been
segregated by year of acquisition so as to lend additional perspective on our
analysis. Comparability in both physical and economic characteristics are the
most important criteria for analyzing sales in relation to the subject
property. However, it is also important to recognize the fact that regional
shopping malls are distinct entities by virtue of age and design, visibility
and accessibility, the market segmentation created by anchor stores and tenant
mix, the size and purchasing power of the particular trade area, and competency
of management. Thus, the Sales Comparison Approach, when applied to a property
such as the subject can, at best, only outline the parameters in which the
typical investor operates. The majority of these sales transferred either on an
all cash (100 percent equity) basis or its equivalent utilizing market-based
financing. Where necessary, we have adjusted the purchase price to its cash
equivalent basis for the purpose of comparison.
As suggested, sales which include anchors typically have lower square
foot unit prices. In our discussions with major shopping center owners and
investors, we learned that capitalization rates and underwriting criteria have
become more sensitive to the contemporary issues dealing with the department
store anchors. As such, investors are looking more closely than ever at the
strength of the anchors when evaluating an acquisition.
As the reader shall see, we have attempted to make comparisons of the
transactions to the subject primarily along economic lines. For the most part,
the transactions have involved dominant or strong Class A centers in top 50 MSA
locations which generally have solid, expanding trade areas and good income
profiles. Some of the other transactions are in decidedly inferior second tier
locations with limited growth potential and near term vacancy problems. These
sales tend to reflect lower unit rates and higher capitalization rates.
=============================================
APPLICATION TO SUBJECT PROPERTY
"As Stabilized"
=============================================
Because the subject is theoretically selling only mall shop, we will
focus on those properties which also sold only mall shop GLA. As a basis for
comparison, we will analyze the subject based upon projected first stabilized
year NOI. First year NOI (FY 2000) has been projected to be $37.47 per square
foot, based upon 327,393+/-square feet of owned GLA. Derivation of the
subject's projected net operating income is presented in the Income
Capitalization Approach section of this report as calculated by the Pro-Ject
model. With projected NOI of $37.47 per square foot, the subject falls toward
the low-end of the range exhibited by most of the comparable sales.
Since the income that an asset will produce has direct bearing on the
price that a purchaser is willing to pay, it is obvious that a unit price which
falls at the upper-end of the range indicated by the comparables would be
applicable to the subject. The subject's anticipated net income can be
initially compared to the composite mean of the annual transactions in order to
place the subject in a frame of reference. This is shown on the following
chart.
- -------------------------------------------------------------------------------
-84-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
=============================================================================
COMPARISON TO SALES INCLUDING MALL SHOPS & ANCHORS
=================================================================
Sales Year MEAN NOI SUBJECT FORECAST SUBJECT RATIO
=================================================================
1996 $11.31 $37.47 331.3%
-----------------------------------------------------------------
1997 $12.32 $37.47 304.1%
=================================================================
With first year NOI forecasted at approximately 304 to 331 percent of
the mean of these sales in each year, the unit price which the subject property
would command should be expected to fall within a relative range.
NET INCOME MULTIPLIER METHOD
Many of the comparables were bought on expected income, not gross
leasable area, making unit prices a somewhat subjective reflection of
investment behavior regarding regional malls. In order to quantify the
appropriate adjustments to the indicated per square foot unit values, we have
compared the subject's first year pro forma net operating income to the pro
forma income of the individual sale properties. In our opinion, a buyer's
criteria for the purchase of a retail property is predicated primarily on the
property's income characteristics. Thus, we have identified a relationship
between the net operating income and the sales price of the property.
Typically, a higher net operating income per square foot corresponds to a
higher sales price per square foot. Therefore, this adjustment incorporates
factors such as location, tenant mix, rent levels, operating characteristics,
and building quality.
Provided below, we have extracted the net income multiplier from those
improved sales which we feel are the most comparable to the subject. The
equation for the net income multiplier (NIM), which is the inverse of the
equation for the capitalization rate (OAR), is calculated as follows:
NIM = Sales Price
Net Operating Income
=========================================================
NET INCOME MULTIPLIER CALCULATION
---------------------------------------------------------
= Net Income
Sale No. Price/SF / NOI/SF Multiplier
=========================================================
96-12 $281 $25.12 11.19
96-13 $433 $30.34 14.27
96-21 $534 $40.03 13.34
96-24 $508 $35.57 14.28
96-26 $342 $29.11 11.75
97-31 $253 $20.46 12.37
97-32 $266 $23.50 11.32
=========================================================
Mean $374 $29.16 12.64
=========================================================
- -------------------------------------------------------------------------------
-85-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
Valuation of the subject property utilizing the net income multipliers
(NIMs) from the comparable properties accounts for the disparity of the net
operating incomes ($NOIs) per square foot between the comparables and the
subject. Within this technique, each of the adjusted NIMs are multiplied by the
$NOI per square foot of the subject, which produces an adjusted value
indication for the subject. The net operating income per square foot for the
subject property is calculated as the first year of the holding period, as
detailed in the Income Capitalization Approach section of this report.
=======================================================
ADJUSTED UNIT RATE SUMMARY
-------------------------------------------------------
X =
Net Income Indicated
Sale No. NOI/SF Multiplier Price $/SF
=======================================================
96-12 $34.47 11.19 $385.59
96-13 $34.47 14.27 $491.94
96-21 $34.47 13.34 $459.83
96-24 $34.47 14.28 $492.29
96-26 $34.47 11.75 $404.97
97-31 $34.47 12.37 $426.24
97-32 $34.47 11.32 $390.17
=======================================================
Mean $34.47 12.64 $435.86
=======================================================
From the process above, we see that the indicated net income
multipliers range from 11.19 to 14.28 with a mean of 12.64. The adjusted unit
rates range from $385.59 to $491.94 per square foot of owned GLA with a mean of
$435.86 per square foot.
We recognize that the sale price per square foot of gross leasable
area, including land, implicitly contains both the physical and economic
factors of the value of a shopping center. Such statistics by themselves,
however, do not explicitly convey many of the details surrounding a specific
income producing property like the subject. Nonetheless, the process we have
undertaken here is an attempt to quantify the unit price based upon the
subject's income producing potential.
The subject property performs above regional norms for sales
productivity, and is one of the dominant malls in its region. The property
services a primary trade area with a population of nearly 170,000 persons. The
area has a strong diversified economy and area residents are relatively
affluent in relation to state and national norms. The property was recently
renovated and is considered to be in excellent overall condition. Furthermore
the property benefits from three strong anchor tenants, Filene's, Sears and JC
Penney. The property also has one vacant anchor tenant store. This store was
formerly occupied by Lechmere's which declared bankruptcy and closed their
stores nationally. Management is presently in negotiations with Best Buy for a
portion of this store and is pursuing other suitable retailers for the balance
of the space. Given the strength of the property we do not foresee an extended
lease-up period for this vacant anchor. Our analysis is based on the assumption
that the store is re-tenanted with one or two destination retailers. This will
not impact the income generated by the subject mall stores, but will solidify
the anchor tenant draw at the property.
- -------------------------------------------------------------------------------
-86-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
Considering the characteristics of the subject relative to the above,
we believe that a unit rate range of $440 to $445 per square foot is
appropriate. Applying this unit rate range to 327,393+/-square feet of owned
GLA results in a value of approximately $76.8 million to $80.0 million for the
subject as shown below.
327,393 SF 327,393 SF
x $440.00 x $445.00
------------- -------------
$144,052,920 $145,689,885
ROUNDED VALUE ESTIMATE - MARKET SALES UNIT RATE COMPARISON
$144,000,000 TO $145,700,000
We have considered all of the above relative to the physical and
economic characteristics of the subject. It is difficult to relate the subject
to comparables that are in such widely divergent markets with different cash
flow characteristics. After considering all of the available market data in
conjunction with the characteristics of the subject property, the indices of
investment that generated our value ranges are as follows:
UNIT PRICE PER SQUARE FOOT
Salable Square Feet: 327,393+/- SF
Price Per SF of Salable Area: $440 to $445
Indicated Value Range: $144,000,000 to $145,700,000
The parameters above show a value range of approximately $144.0 to
$145.7 million for the subject property. Based on our total analysis, relative
to the strengths and weaknesses of each methodology, it would appear that the
Sales Comparison Approach indicates a Market Value for the subject within the
more defined range of $145 million as of February 16, 1998.
PROSPECTIVE MARKET VALUE UPON STABILIZATION
SALES COMPARISON APPROACH
ROUNDED TO $145,000,000
=============================
VALUE CONCLUSION
"As Is"
=============================
We can also attempt to apply the Sales Comparison Approach to the
subject on the basis of its "as is" position . A higher level of subjectivity
exists with respect to looking at a property for which a certain amount of
space is vacant. In the case of the subject, an absorption of vacant space is
projected over a 12+/- month period.
- -------------------------------------------------------------------------------
-87-
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
When analyzing the subject on the basis of its first year income, an
investor would be cognizant of the additional risks and costs associated with
bringing the property to stabilization. Typically, consideration must be given
to any costs of lease-up, including tenant improvements, leasing commissions
and any concessions to be given.
As the reader shall see, we have ultimately concluded at a Prospective
Market Value of $145.0 million for the subject property "at stabilization" as
of April 1, 1999. In order to estimate the value of the subject property on an
"as is" valuation premise, we have discounted the future stabilized value
indication of $145.0 million and discounted all appropriate costs and interim
cash flows into a present value in order to estimate the market value of the
subject property "as is ".
Therefore, by deducting all appropriate lease-up costs, plus the
interim income until the subject property reaches stabilization on a present
value basis, the following present value calculation is evidenced:
===============================================================================
VALUATION PREMISE "AS IS"
- -------------------------------------------------------------------------------
Present value of our estimated
Prospective Market Value At Stabilization
of $145,000,000 discounted @ 10.50%
over a 12-month holding period. $131,221,720
- -------------------------------------------------------------------------------
Plus: The present value of interim cash
flows, including all costs, over the
12-month holding period discounted @
10.50% discount rate. $9,885,070
- -------------------------------------------------------------------------------
Total $141,106,790
===============================================================================
SAY $141,100,000
===============================================================================
Based on the above, the "as is" market value is estimated to be
$141,100,000.
- -------------------------------------------------------------------------------
-88-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
INTRODUCTION
The Income Capitalization Approach is based upon the economic principle
that the value of a property capable of producing income is the present worth
of anticipated future net benefits. The net income projected is translated into
a present value indication using the capitalization process. There are various
methods of capitalization that are based on inherent assumptions concerning the
quality, durability and pattern of the income projection. Where the pattern of
income is irregular due to existing leases that will terminate at staggered,
future dates, or to an absorption or stabilization requirement on a newer
development, discounted cash flow analysis is the most accurate.
Discounted Cash Flow Analysis (DCF) is a method of estimating the
present worth of future cash flow expectancies by individually discounting each
anticipated collection at an appropriate discount rate. The indicated market
value by this approach is the accumulation of the present worth of future
projected years' net income (before income taxes and depreciation) and the
present worth of the reversion (the estimated property value at the end of the
projection period). The estimated value of the reversion at the end of the
projection period is based upon capitalization of the next year's projected net
operating income. This is the more appropriate method to use in this
assignment, given the step up in lease rates and the long term tenure of retail
tenants.
A second method of valuation, using the Income Approach, is to directly
capitalize a stabilized net income based on rates extracted from the market or
built up through mortgage equity analysis. This is a valid method of estimating
the market value of the property as of the achievement of stabilized
operations.
DISCOUNTED CASH FLOW ANALYSIS
The Discounted Cash Flow (DCF) produces an estimate of value through an
economic analysis of the subject property in which the net income generated by
the asset is converted into a capital sum at an appropriate rate. First, the
revenues which a fully informed investor can expect the subject to produce over
a specified time horizon are established through an analysis of the current
rent roll, as well as the rental market for similar properties. Second, the
projected expenses incurred in generating these gross revenues are deducted.
Finally, the residual net income is discounted into a capital sum at an
appropriate rate which is then indicative of the subject property's current
value in the marketplace.
In this Income Capitalization Approach to the valuation of the subject,
we have utilized a 10-year holding period for the "AS IS" investment in the
subject property, with the cash flow analysis commencing on April 1, 1998 ("As
Is"). The "As Stabilized" Analysis will also utilized a 10-year holding period
but will commence on April 1, 1999, the date stabilized occupancy is projected
to occur. Although an asset such as the subject has a much longer useful life,
investment analysis becomes more meaningful if limited to a time period
considerably less than the real estate's economic life, but of sufficient
length for an investor. A 10-year holding period for this investment is long
enough to model the asset's performance and benefit from its lease-up, but
short enough to reasonably estimate the expected income and expenses of the
real estate.
- -------------------------------------------------------------------------------
-89-
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
ANNUAL CASH FLOW REPORT ("As Is" Analysis)
The Mall of New Hampshire
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
OPERATING INCOME
- ----------------
MINIMUM RENT
Mall Shop Tenants $ 10,283,150 $ 10,859,692 $ 10,904,187 $ 10,964,464 $ 11,018,656
Food Court Tenants $ 843,229 $ 928,827 $ 928,827 $ 935,502 $ 942,175
Kiosk Tenants $ 140,300 $ 125,321 $ 142,419 $ 152,703 $ 140,362
------------ ------------ ------------ ------------ ------------
SUBTOTAL: $ 11,266,679 $ 11,913,840 $ 11,975,433 $ 12,052,669 $ 12,101,193
RECOVERIES
CAM Recoveries $ 3,755,463 $ 3,841,335 $ 3,916,699 $ 4,015,064 $ 4,125,457
TAX Recoveries $ 2,016,681 $ 2,110,722 $ 2,183,481 $ 2,268,836 $ 2,356,650
------------ ------------ ------------ ------------ ------------
SUBTOTAL: $ 5,772,144 $ 5,952,057 $ 6,100,180 $ 6,283,900 $ 6,482,107
Overage Rent $ 29,196 $ 33,538 $ 36,999 $ 46,975 $ 33,942
GROSS RENTAL INCOME: $ 17,068,019 $ 17,899,435 $ 18,112,612 $ 18,383,544 $ 18,617,242
- ---------------------------- ------------ ------------ ------------ ------------ ------------
Specialty Leasing $ 712,500 $ 715,750 $ 737,223 $ 759,339 $ 782,119
Miscellaneous $ 80,000 $ 82,400 $ 84,872 $ 87,418 $ 90,041
Vacancy/Credit Loss ($ 853,400) ($ 894,971) ($ 905,629) ($ 919,177) ($ 930,862)
- ---------------------------- ------------ ------------ ------------ ------------ ------------
TOTAL INCOME: $ 17,007,119 $ 17,802,614 $ 18,029,078 $ 18,311,124 $ 18,558,540
OPERATING EXPENSES
- ------------------
RECOVERABLE EXPENSES
Common Area Maintenance $ 2,120,085 $ 2,194,288 $ 2,271,088 $ 2,350,576 $ 2,432,846
Real Estate Taxes $ 1,940,000 $ 2,017,600 $ 2,098,304 $ 2,182,236 $ 2,269,526
Management Fee $ 589,225 $ 599,808 $ 603,892 $ 606,313 $ 616,559
------------ ------------ ------------ ------------ ------------
Subtotal-Recoverable: $ 4,649,310 $ 4,811,696 $ 4,973,284 $ 5,139,125 $ 5,318,931
NON-RECOVERABLE
General & Administrative $ 436,775 $ 452,062 $ 467,884 $ 484,260 $ 501,209
Marketing Expense $ 50,000 $ 51,750 $ 53,561 $ 55,436 $ 57,376
Miscellaneous Expenses $ 33,500 $ 34,505 $ 35,540 $ 36,606 $ 37,705
------------ ------------ ------------ ------------ ------------
Subtotal-Nonrecoverable: $ 520,275 $ 538,317 $ 556,985 $ 576,302 $ 596,290
TOTAL OPERATING EXPENSES: $ 5,169,585 $ 5,350,013 $ 5,530,269 $ 5,715,427 $ 5,915,221
Operating Expense Ratio 30.4% 30.1% 30.7%
NET OPERATING INCOME $ 11,837,534 $ 12,452,601 $ 12,498,809 $ 12,595,697 $ 12,643,319
Alterations $ 604,283 $ 75,156 $ 31,146 $ 49,979 $ 149,149
Commissions $ 114,824 $ 16,972 $ 6,779 $ 11,206 $ 33,144
Replacement Reserve $ 65,502 $ 67,794 $ 70,167 $ 72,623 $ 75,165
------------ ------------ ------------
Subtotal: $ 784,609 $ 159,922 $ 108,092 $ 133,808 $ 257,458
NET CASH FLOW $ 11,052,925 $ 12,292,679 $ 12,390,717 $ 12,461,889 $ 12,385,861
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
=============================================================================================================================
ANNUAL CASH FLOW REPORT ("As Is" Analysis)
The Mall of New Hampshire
Cushman & Wakefield, Inc. 2004 2005 2006 2007 2008
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
OPERATING INCOME
- ----------------
MINIMUM RENT
Mall Shop Tenants $ 11,233,296 $ 11,318,025 $ 11,478,636 $ 11,702,473 $ 12,884,726
Food Court Tenants $ 962,659 $ 1,008,141 $ 1,008,141 $ 1,008,141 $ 1,127,704
Kiosk Tenants $ 163,673 $ 160,692 $ 162,319 $ 173,327 $ 177,227
------------ ------------ ------------ ------------ ------------
SUBTOTAL: $ 12,359,628 $ 12,486,858 $ 12,649,096 $ 12,883,941 $ 14,189,657
RECOVERIES
CAM Recoveries $ 4,239,427 $ 4,340,392 $ 4,472,294 $ 4,598,353 $ 4,786,045
TAX Recoveries $ 2,452,256 $ 2,542,529 $ 2,651,349 $ 2,732,074 $ 2,834,915
------------ ------------ ------------ ------------ ------------
SUBTOTAL: $ 6,691,683 $ 6,882,921 $ 7,123,643 $ 7,330,427 $ 7,620,960
Overage Rent $ 36,903 $ 58,096 $ 89,437 $ 110,610 $ 81,352
GROSS RENTAL INCOME: $ 19,088,214 $ 19,427,875 $ 19,862,176 $ 20,324,978 $ 21,891,969
- ---------------------------- ------------ ------------ ------------ ------------ ------------
Specialty Leasing $ 805,583 $ 829,750 $ 854,643 $ 880,282 $ 906,691
Miscellaneous $ 92,742 $ 95,524 $ 98,390 $ 101,342 $ 104,382
Vacancy/Credit Loss ($ 954,409) ($ 971,394) ($ 993,108) ($ 1,016,249) ($ 1,094,596)
- ---------------------------- ------------ ------------ ------------ ------------ ------------
TOTAL INCOME: $ 19,032,130 $ 19,381,755 $ 19,822,101 $ 20,290,353 $ 21,808,446
OPERATING EXPENSES
- ------------------
RECOVERABLE EXPENSES
Common Area Maintenance $ 2,517,996 $ 2,606,126 $ 2,697,340 $ 2,791,747 $ 2,889,458
Real Estate Taxes $ 2,360,307 $ 2,454,719 $ 2,552,908 $ 2,655,024 $ 2,761,225
Management Fee $ 625,392 $ 634,507 $ 646,527 $ 697,595 $ 771,762
------------ ------------ ------------ ------------ ------------
Subtotal-Recoverable: $ 5,503,695 $ 5,695,352 $ 5,896,775 $ 6,144,366 $ 6,422,445
NON-RECOVERABLE
General & Administrative $ 518,752 $ 536,908 $ 555,700 $ 575,149 $ 595,279
Marketing Expense $ 59,384 $ 61,463 $ 63,614 $ 65,840 $ 68,145
Miscellaneous Expenses $ 38,836 $ 40,001 $ 41,201 $ 42,437 $ 43,710
------------ ------------ ------------ ------------ ------------
Subtotal-Nonrecoverable: $ 616,972 $ 638,372 $ 660,515 $ 683,426 $ 707,134
TOTAL OPERATING EXPENSES: $ 6,120,667 $ 6,333,724 $ 6,557,290 $ 6,827,792 $ 7,129,579
Operating Expense Ratio 31.2% 31.9% 32.2% 32.7% 33.1%
NET OPERATING INCOME $ 12,911,463 $ 13,048,031 $ 13,264,811 $ 13,462,561 $ 14,678,867
Alterations $ 89,389 $ 185,910 $ 76,514 $ 702,351 $ 1,286,272
Commissions $ 19,454 $ 40,840 $ 16,653 $ 153,622 $ 280,370
Replacement Reserve $ 77,795 $ 80,518 $ 83,336 $ 86,253 $ 89,272
------------ ------------ ------------ ------------ ------------
Subtotal: $ 186,638 $ 307,268 $ 176,503 $ 942,226 $ 1,655,914
NET CASH FLOW $ 12,724,825 $ 12,740,763 $ 13,088,308 $ 12,520,335 $ 13,022,953
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
ANNUAL CASH FLOW REPORT ("As Is" Analysis)
The Mall of New Hampshire CAGR CAGR
Cushman & Wakefield, Inc. 2009 1999-08 2001-08
===============================================================================
<S> <C> <C> <C>
OPERATING INCOME
- ----------------
MINIMUM RENT
Mall Shop Tenants $ 14,285,520 2.5% 2.4%
Food Court Tenants $ 1,313,505 3.3% 2.8%
Kiosk Tenants $ 190,172 2.6% 3.2%
------------ --- ---
SUBTOTAL: $ 15,789,197 2.6% 2.5%
RECOVERIES
CAM Recoveries $ 5,019,802 2.7% 2.9%
TAX Recoveries $ 2,979,573 3.9% 3.8%
------------ --- ---
SUBTOTAL: $ 7,999,375 3.1% 3.2%
Overage Rent $ 34,116 12.1% 11.9%
GROSS RENTAL INCOME: $ 23,822,688 2.8% 2.7%
- ---------------------------- ------------ --- ---
Specialty Leasing $ 933,891 2.7% 3.0%
Miscellaneous $ 107,513 -- --
Vacancy/Credit Loss ($ 1,191,133) 2.8% 2.7%
- ---------------------------- ------------ --- ---
TOTAL INCOME: $ 23,672,959 2.8% 2.8%
OPERATING EXPENSES
- ------------------
RECOVERABLE EXPENSES
Common Area Maintenance $ 2,990,589 3.5% 3.5%
Real Estate Taxes $ 2,871,674 4.0% 4.0%
Management Fee $ 833,750 3.0% 3.6%
------------ --- ---
Subtotal-Recoverable: $ 6,696,013 3.7% 3.7%
NON-RECOVERABLE
General & Administrative $ 616,114 3.5% 3.5%
Marketing Expense $ 70,530 3.5% 3.5%
Miscellaneous Expenses $ 45,021 3.0% 3.0%
------------ --- ---
Subtotal-Nonrecoverable: $ 731,665 3.5% 3.5%
TOTAL OPERATING EXPENSES: $ 7,427,678 3.6% 3.7%
Operating Expense Ratio 33.7% 32.7% 31.4%
NET OPERATING INCOME $ 16,245,281 2.4% 2.3%
Alterations
Commissions
Replacement Reserve
Subtotal:
NET CASH FLOW 1.8% 0.7%
===============================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
INCOME & EXPENSE GROWTH CHART
The Mall of New Hampshire
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Minimum Rent: $11,266,679 $11,913,840 $11,975,433 $12,052,669 $12,101,193 $12,359,628
Effective Gross Income: $17,007,119 $17,802,614 $18,029,078 $18,311,124 $18,558,540 $19,032,130
Operating Expenses: $520,275 $538,317 $556,985 $576,302 $596,290 $616,972
Net Operating Income: $11,837,534 $12,452,601 $12,498,809 $12,595,697 $12,643,319 $12,911,463
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
INCOME & EXPENSE GROWTH CHART
The Mall of New Hampshire CAGR CAGR
Cushman & Wakefield, Inc. 2005 2006 2007 2008 2009 1999-08 2001-08
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum Rent: $12,486,858 $12,649,096 $12,883,941 $14,189,657 $15,789,197 2.6% 2.5%
Effective Gross Income: $19,381,755 $19,822,101 $20,290,353 $21,808,446 $23,672,959 2.8% 2.8%
Operating Expenses: $638,372 $660,515 $683,426 $707,134 $731,665 3.5% 3.5%
Net Operating Income: $13,048,031 $13,264,811 $13,462,561 $14,678,867 $16,245,281 2.4% 2.3%
</TABLE>
INCOME & EXPENSE GROWTH
[THE NARRATIVE AND/OR TABULAR INFORMATION ABOVE IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
The revenues and expenses which an informed investor may expect to
incur from the subject property will vary, without a doubt, over the holding
period. Major investors active in the market for this type of real estate
establish certain parameters in the computation of these cash flows and
criteria for decision making which this valuation analysis must include if it
is to be truly market-oriented. These current computational parameters are
dependent upon market conditions in the area of the subject property as well as
the market parameters for this type of real estate which we view as being
national in scale.
By forecasting the anticipated income stream and discounting future
value at reversion into a current value, the capitalization process may be
applied to derive a value that an investor would pay to receive that particular
income stream. Typical investors price real estate on their expectations of the
magnitude of these benefits and their judgment of the risks involved. Our
valuation endeavors to reflect the most likely actions of typical buyers and
sellers of property interest similar to the subject.
An analytical real estate computer model that simulates the behavioral
aspects of property and examines the results mathematically is employed for the
discounted cash flow analysis. In this instance, it is the PRO-JECT PLUS+
computer model. Since investors are the basis of the marketplace in which the
subject property will be bought and sold, this type of analysis is particularly
germane to the appraisal problem at hand. On the FACING PAGE is a summary of
the expected annual cash flows from the operation of the subject over the
stated investment holding period ("AS IS"). The reader will note that the pro
forma is presented on a fiscal basis commencing in April of each year. A
separate pro forma for the "As Stabilized" analysis is presented in the addenda
of this report.
A general outline summary of the major steps involved may be listed as
follows:
1. Analysis of the income stream: establishment of an economic
(market) rent for tenant space; projection of future revenues
annually based upon existing and pending leases; probable
renewals at market rentals; and expected vacancy experience;
2. Estimation of a reasonable period of time to achieve stabilized
occupancy of the existing property and make all necessary
improvements for marketability;
3. Analysis of projected escalation recovery income based upon an
analysis of the property's history as well as the experiences of
reasonably similar properties;
4. Derivation of the most probable net operating income and pre-tax
cash flow (net income less reserves, tenant improvements, leasing
commissions and any extraordinary expenses to be generated by the
property) by subtracting all property expenses from the effective
gross income; and
5. Estimation of a reversionary sale price based upon capitalization
of the net operating income (before reserves, tenant improvements
and leasing commissions or other capital items) at the end of the
projection period.
- -------------------------------------------------------------------------------
-90-
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
RECENT LEASING ACTIVITY - MALL SHOP TENANTS BY SIZE
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc.
====================================================================================================================================
LEASE INITIAL INITIAL FINAL FINAL % CHANGE
TENANT CATEGORY LEASE TERM AREA ANNUAL RENT/ ANNUAL RENT/ IN RENT
(BY SIZE/AREA) COMM. (YRS) (SQ/FT) RENT SQ/FT RENT SQ/FT OVER TERM
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. TENANTS < 1,000 SQ/FT
Cinnabon 8/97 10.5 821 $60,000 $73.08 $70,000 $85.26 16.7%
Golden Nails 12/97 5.2 750 $45,000 $60.00 $45,000 $60.00 0.0%
Mothertime 11/97 9.3 1,000 $39,990 $39.99 $45,000 $45.00 12.5%
Select Comfort 8/97 9.5 800 $45,000 $56.25 $45,000 $56.25 0.0%
Suglass Hut Sport 5/97 10.8 735 $54,993 $74.82 $54,993 $74.82 0.0%
Watch Worl 11/97 10.3 699 $40,000 $57.22 $45,000 $64.38 12.5%
Whitehall Co. 2/97 11.0 675 $70,000 $103.70 $70,000 $103.70 0.0%
-------------- ---- ---- --- ------- ------- ------- ------- ----
SUBTOTAL: 7 9.5 5,480 $354,983 $64.78 $374,993 $68.43 5.6%
- ------------------------------------------------------------------------------------------------------------------------------------
2. TENANTS 1,001-2,000 SQ/FT
Aerosoles 4/97 9.8 1,494 $52,290 $35.00 $67,230 $45.00 28.6%
Afterthoughts 5/98 9.8 1,305 $60,000 $45.98 $60,000 $45.98 0.0%
Aldo 7/97 10.6 1,575 $55,000 $34.92 $60,000 $38.10 9.1%
Athlete's Foot 2/97 10.0 1,536 $60,000 $39.06 $60,000 $39.06 0.0%
Blazing T's 8/97 6.5 1,245 $50,000 $40.16 $60,000 $48.19 20.0%
Candy Express 8/97 7.5 1,057 $60,000 $56.76 $60,000 $56.76 0.0%
Easy Spirit 5/97 10.8 1,411 $42,330 $30.00 $45,152 $32.00 6.7%
Electronic's Boutique 5/97 9.8 1,150 $50,000 $43.48 $55,000 $47.83 10.0%
Five-Seven-Nine 11/97 10.3 1,545 $43,260 $28.00 $46,350 $30.00 7.1%
G & G Rave 4/97 10.8 1,993 $59,790 $30.00 $67,742 $33.99 13.3%
Gadzooks 4/98 9.8 1,779 $64,764 $36.40 $71,960 $40.45 11.1%
Garden Botanika 5/97 10.8 1,629 $61,902 $38.00 $68,418 $42.00 10.5%
Great Expectations 5/97 6.8 1,150 $64,998 $56.52 $64,998 $56.52 0.0%
Hot Topic 5/97 10.8 1,250 $56,250 $45.00 $58,125 $46.50 3.3%
The Icing 5/97 9.7 1,373 $53,000 $38.60 $53,000 $38.60 0.0%
News Shop 2/98 10.0 1,150 $70,000 $60.87 $75,000 $65.22 7.1%
Nine West 11/97 10.3 1,313 $39,390 $30.00 $42,000 $31.99 6.6%
Noah's 8/97 9.5 1,477 $62,034 $42.00 $66,465 $45.00 7.1%
Perfumania 4/98 9.8 1,200 $45,000 $37.50 $55,000 $45.83 22.2%
Spencer Gifts 1/98 10.1 1,977 $79,080 $40.00 $79,080 $40.00 0.0%
Track N Trail 6/97 9.7 1,870 $65,450 $35.00 $65,450 $35.00 0.0%
Trade Secret 8/97 10.4 1,245 $50,000 $40.16 $65,451 $52.57 30.9%
Tri Travel 9/97 10.4 1,198 $32,490 $27.12 $37,497 $31.30 15.4%
Yankee Candle 3/97 9.9 1,600 $55,000 $34.38 $75,000 $46.88 36.4%
Zales 2/98 8.0 1,080 $149,990 $138.88 $149,990 $138.88 0.0%
----- ---- ----- -------- ------- -------- ------- ---
SUBTOTAL: 25 9.7 35,602 $1,482,018 $41.63 $1,608,908 $45.19 8.6%
- ------------------------------------------------------------------------------------------------------------------------------------
3. TENANTS 1,400-2,399 SQ/FT
Citizen's Bank 8/97 10.5 2,171 $99,996 $46.06 $99,996 $46.06 0.0%
Drivin' Style 3/98 8.8 2,329 $70,010 $30.06 $74,505 $31.99 6.4%
Footlocker 2/98 10.0 2,692 $100,000 $37.15 $100,000 $37.15 0.0%
GNC Live Well 2/98 10.0 2,760 $120,150 $43.53 $120,150 $43.53 0.0%
Hammet's Leraning World 4/97 7.8 2,696 $72,792 $27.00 $78,157 $28.99 7.4%
Innovation Luggage 9/97 9.4 2,972 $80,244 $27.00 $95,074 $31.99 18.5%
Kids Footlocker 5/98 9.8 2,050 $61,500 $30.00 $71,750 $35.00 16.7%
Lechters 3/98 9.9 2,950 $79,650 $27.00 $94,400 $32.00 18.5%
Pacific Sunwear 6/97 10.7 3,000 $90,000 $30.00 $90,000 $30.00 0.0%
Parade of Shoes 5/98 9.8 3,117 $90,393 $29.00 $90,393 $29.00 0.0%
Radio Shack 7/97 9.6 2,230 $69,977 $31.38 $69,977 $31.38 0.0%
Space Center 6/98 8.7 2,361 $140,000 $59.30 $140,000 $59.30 0.0%
Things Remembered 4/97 9.8 2,250 $78,750 $35.00 $90,000 $40.00 14.3%
World of Science 6/97 10.7 2,562 $76,860 $30.00 $89,670 $35.00 16.7%
---------------- ---- ---- ----- ------- ------ ------- ------ ----
SUBTOTAL: 14 9.7 36,140 $1,230,322 $34.04 $1,304,072 $36.08 6.0%
- ------------------------------------------------------------------------------------------------------------------------------------
4. TENANTS 3,501-5,000 SQ/FT
Bertucci's 11/97 15.3 4,800 $120,000 $25.00 $144,000 $30.00 20.0%
Britches 5/97 9.8 4,501 $112,480 $24.99 $125,983 $27.99 12.0%
Contempo Casuals 5/98 9.8 4,103 $102,575 $25.00 $102,575 $25.00 0.0%
Cookin 2/98 5.0 3,837 $149,988 $39.09 $115,110 $30.00 -23.3%
Eye World 1/97 6.1 4,480 $184,979 $41.29 $184,979 $41.29 0.0%
Hallmark 5/97 10.8 3,780 $129,780 $34.33 $148,320 $39.24 14.3%
Learning Smith 5/98 10.8 3,627 $119,691 $33.00 $119,691 $33.00 0.0%
Lenscrafters 8/97 9.5 3,709 $111,270 $30.00 $111,270 $30.00 0.0%
Paul Harris 4/98 9.8 5,000 $140,000 $28.00 $150,000 $30.00 7.1%
Ruby Tuesday 11/97 12.3 4,992 $124,401 $24.92 $134,385 $26.92 8.0%
------------ ----- ---- ----- -------- ------ -------- ------ ---
SUBTOTAL: 10 9.9 42,829 $1,295,164 $30.24 $1,336,313 $31.20 3.2%
- ------------------------------------------------------------------------------------------------------------------------------------
5. TENANTS 5,000-7,500 SQ/FT
Eddie Bauer 5/97 10.8 6,722 $161,328 $24.00 $161,328 $24.00 0.0%
Eastern Mount. Sports 4/97 9.8 6,945 $208,350 $30.00 $208,350 $30.00 0.0%
Gap/Gap Kids 10/97 12.3 9,913 $327,129 $33.00 $336,943 $33.99 3.0%
Limited Express 10/97 10.3 6,172 $185,160 $30.00 $185,160 $30.00 0.0%
Record Town 5/97 10.8 6,926 $212,975 $30.75 $212,975 $30.75 0.0%
----------- ---- ---- ----- --------- ------- --------- ------- ----
SUBTOTAL: 5 10.8 36,678 $1,094,942 $29.85 $1,104,756 $30.12 0.9%
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
6. TENANTS 7,500 SQ/FT +
Finish Line 9/97 10.4 9,581 $172,458 $18.00 $172,458 $18.00 0.0%
Northern Experience 5/98 9.8 8,000 $200,000 $25.00 $200,000 $25.00 0.0%
Olympia Sports Ctr. 11/97 10.3 15,000 $225,000 $15.00 $225,000 $15.00 0.0%
------------------- ----- ---- ------ --------- ------- --------- ------- ----
SUBTOTAL: 3 10.1 32,581 $597,458 $18.34 $597,458 $18.34 0.0%
====================================================================================================================================
SURVEY TOTAL: 64 8.5 189,310 $6,054,887 $31.98 $6,326,500 $33.42 4.5%
====================================================================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
=============================
DISCOUNTED CASH FLOW
=============================
POTENTIAL GROSS REVENUES
The total potential gross revenues generated by the subject property
are composed of a number of distinct elements: minimum rent determined by lease
agreement; additional overage rent based upon a percentage of retail sales;
reimbursement of certain expenses incurred in the ownership and operation of
the real estate; and other miscellaneous revenues. Minimum base rent represents
a legal contract establishing a return to investors in the real estate, while
the passing-on of certain expenses to tenants serves to maintain this return in
an era of continually rising costs of operation. Additional rent based upon a
percentage of retail sales experienced at the subject serves to preserve the
purchasing power of the residual income to an equity investor over time.
Finally, miscellaneous income adds an additional source of revenue in the
complete operation of the subject property.
MINIMUM RENTAL INCOME
Minimum rent produced by the subject property is derived from that paid
by the various tenant types. The projection utilized in this analysis is based
upon the actual rent roll and our projected leasing schedule in-place as of the
date of appraisal, together with our assumptions as to the absorption of the
vacant space, market rent growth, and renewal/turnover probability. We have
incorporated all executed leases in our analysis. These transactions represent
a reasonable and prudent assumption from an investor's standpoint.
The rental income which an asset such as the subject property will
generate for an investor is analyzed as to its quality, quantity, and
durability. The quality and probable duration of income will affect the amount
of risk which an informed investor may expect over the property's useful life.
Segregation of the income stream along these lines allows us to control the
variables related to the center's forecasted performance with greater accuracy.
Each tenant type lends itself to a specific weighting of these variables as the
risk associated with each varies.
Minimum rents forecasted at the subject property are essentially
derived from various tenant categories, namely specialty tenant revenues
consisting of all in-line shops, outparcel leases, and anchor/major tenant
revenues. In our investigation and analysis of the marketplace, we have
surveyed, and ascertained where possible, rent levels being commanded by
competing centers. However, it should be recognized that large retail shopping
centers are generally considered to be separate entities by virtue of age and
design, accessibility, visibility, tenant mix, and the size and purchasing
power of its trade area. Consequently, the best measure of minimum rental
income is its actual rent roll leasing schedule. As such, our analysis of
recently negotiated leases for tenants at the subject provides important
insight into perceived market rent levels for the property. Inasmuch as a
tenant's ability to pay rent is based upon expected sales achievement, the
level of negotiated rents is directly related to the individual tenant's
perception of their expected performance at the center.
- -------------------------------------------------------------------------------
-91-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
MALL SHOPS
Our analysis of market rent levels for in-line mall shops has resolved
itself to a variety of influencing factors. Although it is typical that larger
tenant spaces are leased at lower per square foot rates and lower percentages,
the type of tenant as well as the variable of location within the mall can
often distort this size/rate relationship. The following chart presents an
analysis of in-line shop rents based upon leases in-place for 1998:
<TABLE>
<CAPTION>
========================================================================================
LEASES IN-PLACE - 1998 MALL SHOP TENANTS
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc.
- ----------------------------------------------------------------------------------------
SUITE SIZE Applicable Pro-Rata Initial Rent Per
Category Sq/Ft Share Market Rent Square Ft.
========================================================================================
<S> <C> <C> <C> <C>
Under 1,000 SF 8,292 SF 2.85% $601,545 $72.55
1,001 - 2,000 SF 49,542 SF 17.00% $2,302,099 $46.47
2,001 - 3,500 SF 48,765 SF 16.73% $1,684,366 $34.54
3,501 - 5,000 SF 66,215 SF 22.72% $2,053,483 $31.01
5,001 - 7,500 SF 69,229 SF 23.76% $1,964,767 $28.38
Over 7,500 SF 49,360 SF 16.94% $1,173,170 $23.77
========================================================================================
Mall Shop Average Rent: 291,403 SF 100.00% $9,779,430 $33.56
========================================================================================
Note: Tenants in place for a partial year have been annualized
</TABLE>
From the chart, we would expect to see a general pattern of an inverse
relationship between suite size and rent. That is, as the suite size increases,
the average unit base rent achieved declines. As can be seen, lease rates
generally have an inverse relationship with suite size and show an overall
average rent of about $33.56 per square foot.
RECENT LEASING ACTIVITY
To better understand in-line rent levels at the property, we have
broken down the analysis into recent leasing activity to calculate current
rental rates. The chart on the FACING PAGE presents an overview of recent
in-line shop leasing for the subject property based upon actual, executed
leases and several leases which are out-for-signature.
As shown, 64 leases have been surveyed, reflecting an overall average
rent of $33.42 per square foot. The highest rent is attained from Group 1
(Tenants < 1,000 SF) with an average of $68.43 per square foot. The averages
generally decline by size category to $18.34 for Group 6 (Tenants > 7,500 SF).
- -------------------------------------------------------------------------------
-92-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
o SHOPS < 1,000 SQ/FT - There have been seven recent leases in this
size category over the past year. Initial lease rates ranged from
$39.99 to $103.70 per square foot with an overall average of
$64.78 per square foot. This average is lower than the "leases
in-place" analysis. Of the seven leases four remained flat over
the term, while the remaining three had steps of 12.5 to 16.7
percent over the term.
o SHOPS 1,001-2,000 SQ/FT - This category of leases has been the
most active over the past year with 25 new deals. Initial lease
rates range from $27.12 to $138.88 per square foot. Further
analysis reveals that most leases were accomplished in the $30.00
to $40.00 per square foot range. The inclusion of the Zales
Jewelry lease at $138.88 per square foot skews the overall
average upward slightly. Omitting this tenant from the analysis
reduces the average to $38.58 per square foot. Overall the recent
leases are slightly below the "leases in place analysis".
Escalation's in base rent are more frequent in this size category
and are more aggressive, increases the base rental in some cases
by over 30%.
o SHOPS 2,001-3,500 SQ/FT - Fourteen leases were included in this
size category. Initial base rents range from $27.00 to $59.30 per
square foot with an overall average of $34.04 per square foot.
This average is generally consistent with our "lease in plan
analysis". Lease terms approximate 10 years and approximately 50%
of the leases included escalation over the term.
o SHOPS 3,501-5,000 SQ/FT - Category 4 shows ten transactions with
an average rental rate of $30.24 per square foot which is
consistent with the results of our leases in-place analysis.
Lease terms of ten years are common with escalations prevalent in
60 percent of the transaction. It is noted that one of the leases
(Cookin) actually has a reduction in rental over the lease term,
a result of the restructuring of the tenant's originally lease.
o SHOPS 5,001-7,500 SQ/FT - This size grouping suggests an average
rental rate of $29.85 per square foot. With the exception of the
Eddie Bauer lease, the rates in this category show little
variance.
o SHOPS > 7,500 SQ/FT - There were three recent leases in this size
category. Lease rates range substantially from $15.00 to $25.00
per square foot with an overall average of $18.34 per square
foot.
These transactions implicitly support the assumption that, typically,
there is an inverse correlation between unit rates and the amount of space
being leased. We recognize that, in practice, there are unit rate gradations
with tenant categories based on such attributes as location within the
center/building, unit frontage and depth, tenant type and credit worthiness,
concessions/tenant allowances, etc. However, as the tenant mix and
configuration may not be fixed over time, it is more appropriate to estimate
what the average base rent levels paid at the property would be for the
different tenant categories.
The subject property recently underwent a complete renovation and
expansion. As part of this redevelopment the majority of the mall shop leases
were restructured. This accounts for
- -------------------------------------------------------------------------------
-93-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
the substantial leasing activity which has occurred over the past twelve months
(189,310 square feet). We would note that from a comparison of leases in-place
with the most recent leasing activity, it is clear that the most recent leases
indicate a slight downward trend in rental achievements. This is probably a
reflection of the fact that the most desirable spaces in the center were leased
first and thus the recent leases reflect less desirable space in terms of
location or configuration. It is important to note that there was not a wide
discrepancy in rental achievements and that our final rental conclusions
represent an average for all space in a particular category.
LEASE TERM AND STEPS
As can be seen from the recent leasing data, lease terms generally
range from 5-10 years, with overall rent steps generally ranging from 0.0-30.0
percent over the term. The average lease term is calculated to be 8.5 years,
with an average overall rent increase of 4.5 percent over the term.
MARKET COMPARISONS - OCCUPANCY COST RATIOS
In further support of developing a forecast for market rent levels, we
have undertaken a comparison of minimum rent to projected sales and total
occupancy costs to sales ratios. Generally, our research and experience with
other regional malls shows that the ratio of minimum rent to sales falls within
the 7.0 to 10.0 percent range in the initial year of the lease, with 7.5
percent to 8.5 percent being most typical. By adding additional costs to the
tenant, such as real estate tax and common area maintenance recoveries, a total
occupancy cost may be derived. Expense recoveries and other tenant charges can
add up to 100 percent of minimum rent and comprise the balance of total tenant
costs.
The typical range for total occupancy cost-to-sales ratios falls
between 11.0 and 15.0 percent. As a general rule, where sales exceed $275 to
$300 per square foot, 14.0 to 15.0 percent would be a reasonable cost of
occupancy. Experience and research show that most tenants will resist total
occupancy costs that exceed 15.0 to 18.0 percent of sales. Obviously, this
comparison will vary from tenant to tenant and property to property.
In higher end markets where tenants are able to generate sales above
industry averages, tenants can generally pay rents which fall toward the upper
end of the ratio range. Moreover, if tenants perceive that their sales will be
increasing at real rates that are in excess of inflation, they will typically
be more inclined to pay higher initial base rents. Obviously, the opposite
would be true for poorer performing centers in that tenants would be squeezed
by the thin margins related to below average sales. With fixed expenses
accounting for a significant portion of the tenants contractual obligation,
there would be little room left for base rent.
In this context, we have provided an occupancy cost analysis for
several regional malls with which we have had direct insight over the past
year. This information is provided on the FOLLOWING PAGE. On average, these
ratio comparisons provide a realistic check against projected market rental
rate assumptions.
- -------------------------------------------------------------------------------
-94-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================
OCCUPANCY COST ANALYSIS/COMPARISON
Cushman & Wakefield, Inc
- -----------------------------------------------------------------------------------
BUDGET YEAR NO.
NO. AREA LOCATION STATE YEAR BULIT STORIES
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
** ULI-Super-Regional Malls US 1996 -- --
** ULI-Regional Malls US 1996 -- --
** ICSC-AllEnclosed Malls US 1995 -- --
** ICSC-Malls (greater than) 1,000,000sf US 1995 -- --
1 San Jose MSA CA 1997 1986 2
2 San Francisco MSA CA 1997 1954/88 2
3 San Franciso MSA CA 1997 1988 8
4 Ontario MSA CA 1997 1996 1
5 Sancramento County MSA CA 1996 1957/81/9 2
6 Riverside County MSA CA 1995 1970/91 1
7 Fairfield County MSA CT 1995 1986/91 2
8 Daytona Beach MSA FL 1996 1974/90/9 1
9 Miami MSA FL 1995 1982 1
10 Gainsville MSA GA 1997 1964/879 1
11 Bloomingdale MSa IL 1995 1981/88/9 2
12 Indianapolis MSA IN 1995 1968/87 1
13 North/Central Kansas KS 1995 1987/90 1
14 Alexandria LA 1996 1973/86 1
15 Monroe MSA LA 1996 1985 1
16 Boston MSA MA 1997 1989 3
17 Boston MSA MA 1997 1989/92 1
18 Bristol County MSA MA 1996 1992/93 2
19 Boston MSA MA 1996 1966/93/9 2
20 Worcester County MSA MA 1996 1971/87 1
21 Baltimore MSA MD 1997 1959/82/9 4
22 Baltimore MSA MD 1997 1956/91 1
23 Westminster MSA MD 1997 1987/94 1
24 Washington-Caltimore MD 1996 1979/93 2
25 Genesee County MSA MI 1995 1980/93 1
26 Minneapolis MSA MN 1995 1962/94 1
27 St Louis MSA MO 1996 1974/94 2
28 Las Vegas MSA NV 1997 1992/97 1
29 Rochester MSA NY 1997 1971/86/9 1
30 Orange County MSA NY 1997 1980 1
31 ChmungCounty MSA NY 1997 1967/81/9 2
32 Syracuse MSA NY 1997 1988/94 1
33 Syracuse MSA BY 1997 1954/97 1
34 Whitr Plains MSA NY 1996 1980/93 4
35 Queens County MSA BY 1996 1973/90/0 4
36 Buffalo MSA NY 1996 1985/89 1
37 Dayton MSA OH 1997 1969/94 2
38 Cincinnati MSA OH 1996 1956/88/9 2
39 Bucks County MSA PA 1995 1968/75 1
40 Johnson City TN 1996 1971/91/9 2
41 Nashville MSA TN 1995 1990 2
42 Amarillo TX 1995 1982/86 1
43 Burlington MSA VT 1995 1979/89/9 1
44 Washington D.C. MSA VA 1996 1968/86/9 2
45 Prince William Cty. MSA VA 1997 1972/88/9 1
46 Norfolk-Chesapeake MSA VA 1997 1981/88/9 2
47 Seattle MSA WA 1995 1979/95 1
Survey Low:
Survey High:
Survey
===================================================================================
<CAPTION>
==================================================================================================
TOTAL SHOP AVG. REC- AVG. RENT- TOTAL
NO. GLA GLA RENT OVERIES SALES SALES COST LOCATION
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
** 1,037,007 351,721 $ 16.54 $ 9.31 $ 203.87 8.1% 12.7% --
** 519,721 243,928 $ 10.44 $ 4.89 $ 180.78 5.8% 8.5% --
** 582,893 261,553 $ 12.05 $ 5.82 $ 176.16 6.8% 10.1% --
** 1,206,874 407,060 $ 20.01 $ 12.57 $ 271.64 7.4% 12.0% --
1 1,139,384 394,496 $ 38.95 $ 20.15 $ 593.00 6.6% 10.0% Suburban
2 854,164 266,413 $ 33.75 $ 22.52 $ 407.00 8.3% 13.8% Urban
3 499,930 183,430 $ 53.60 $ 32.45 $ 540.00 9.9% 15.9% Urban
4 1,536,223 508,942 $ 23.00 $ 13.10 $ 280.00 8.2% 12.9% Suburban
5 1,066,161 410,168 $ 34.40 $ 18.25 $ 400.00 8.6% 13.2% Suburban
6 1,044,536 411,640 $ 22.59 $ 17.00 $ 250.00 9.0% 15.8% Suburban
7 1,270,146 499,888 $ 32.00 $ 17.20 $ 425.00 7.5% 11.6% Suburban
8 1,064,922 246,379 $ 25.42 $ 12.12 $ 300.00 8.5% 12.5% Suburban
9 1,120,827 290,385 $ 29.36 $ 16.55 $ 355.00 8.3% 12.9% Subrban
10 518,422 191,919 $ 16.50 $ 8.06 $ 239.00 6.9% 10.3% Suburban
11 1,292,186 427,609 $ 21.84 $ 10.37 $ 250.00 8.7% 12.9% Suburban
12 1,239,059 260,359 $ 22.43 $ 9.00 $ 235.00 9.5% 13.4% Suburban
13 400,307 185,324 $ 14.97 $ 10.31 $ 212.00 7.1% 11.9% Suburban
14 873,833 292,560 $ 16.00 $ 12.67 $ 216.00 7.4% 13.3% Suburban
15 920,779 338,875 $ 19.62 $ 9.77 $ 271.00 7.2% 10.8% Suburban
16 650,804 329,573 $ 38.88 $ 22.80 $ 403.00 9.6% 15.3% Urban
17 770,575 276,681 $ 19.30 $ 13.19 $ 253.00 7.6% 12.8% Suburban
18 998,436 341,949 $ 21.80 $ 12.16 $ 257.00 8.5% 13.2% Suburban
19 1,155,068 431,068 $ 41.79 $ 13.08 $ 426.00 9.8% 12.9% Suburban
20 445,875 182,372 $ 22.36 $ 14.93 $ 288.00 7.8% 12.9% Suburban
21 952,021 532,892 $ 32.65 $ 14.08 $ 379.00 8.6% 12.3% Suburban
22 862,313 241,146 $ 19.00 $ 14.51 $ 255.00 7.5% 13.1% Suburban
23 525,702 194,271 $ 16.30 $ 14.67 $ 238.00 6.8% 13.0% Suburban
24 661,534 245,112 $ 19.22 $ 19.77 $ 257.00 7.5% 15.2% Suburban
25 451,036 230,625 $ 16.00 $ 9.01 $ 219.00 7.3% 11.4% Suburban
26 982,228 201,561 $ 21.00 $ 22.51 $ 262.00 8.0% 16.6% Suburban
27 442,321 181,608 $ 30.00 $ 13.93 $ 365.00 8.2% 12.0% Suburban
28 475,940 475,940 $ 90.00 $ 27.47 $ 1,250.00 7.2% 9.4% Urban
29 1,122,021 427,019 $ 24.00 $ 11.55 $ 280.00 8.6% 12.7% Suburban
30 465,984 153,331 $ 18.00 $ 14.64 $ 264.00 6.8% 12.4% Suburban
31 910,623 306,188 $ 15.25 $ 9.20 $ 220.00 6.9% 11.1% Suburban
32 789,032 302,979 $ 17.50 $ 13.25 $ 210.00 8.3% 14.6% Suburban
33 1,006,645 403,672 $ 17.00 $ 11.97 $ 200.00 8.5% 14.5% Suburban
34 882,728 326,813 $ 32.65 $ 25.84 $ 344.00 9.5% 17.0% Urban
35 625,659 149,971 $ 54.00 $ 46.37 $ 670.00 8.1% 15.0% Urban
36 753,105 285,771 $ 19.67 $ 14.83 $ 250.00 7.9% 13.8% Suburban
37 1,329,514 446,381 $ 26.20 $ 10.81 $ 286.00 9.2% 12.9% Suburban
38 1,117,491 381,943 $ 35.74 $ 13.67 $ 400.00 8.9% 12.4% Suburban
39 248,309 305,212 $ 19.35 $ 10.00 $ 239.00 8.1% 12.3% Suburban
40 557,715 223,110 $ 17.50 $ 8.71 $ 207.00 8.5% 12.7% Suburban
41 716,462 373,662 $ 15.25 $ 13.30 $ 180.00 8.5% 15.9% Suburban
42 998,508 316,190 $ 18.00 $ 7.53 $ 200.00 9.0% 12.8% Duburban
43 490,424 185,398 $ 23.00 $ 9.51 $ 294.00 7.8% 11.1% Suburban
44 1,446,222 784,575 $ 25.00 $ 12.63 $ 320.00 7.8% 11.8% Suburban
45 716,800 302,900 $ 21.50 $ 14.57 $ 240.00 9.0% 15.0% Suburban
46 770,209 306,890 $ 20.70 $ 12.30 $ 272.00 7.6% 12.1% Suburban
47 1,012,754 311,019 $ 27.35 $ 7.86 $ 325.00 8.4% 10.8% Suburban
348,309 149,971 $ 10.44 $ 4.89 $ 176.16 5.8% 8.5%
1,536,223 784,575 $ 90.00 $ 46.37 $ 1,250.00 9.9% 17.0%
853,185 320,205 $ 25.48 $ 14.56 $ 314.87 8.1% 12.9%
==================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
========================================================================================
AVERAGE MARKET RENT - MALL SHOPS THE MALL OF NEW HAMPSHIRE Cushman &
Wakefield, Inc.
- ----------------------------------------------------------------------------------------
SUITE SIZE APPLICABLE PRO-RATA INITIAL WEIGHTED
CATEGORY SQ/FT SHARE MARKET RENT AVERAGE
========================================================================================
<S> <C> <C> <C> <C>
Under 1,000 SF 12,642 SF 3.98% $70.00 $2.79
1,001 - 2,000 SF 49,542 SF 15.59% $50.00 $7.80
2,001 - 3,500 SF 60,146 SF 18.93% $35.00 $6.63
3,501 - 5,000 SF 70,805 SF 22.28% $30.00 $6.69
5,001 - 7,500 SF 75,253 SF 23.68% $27.50 $6.51
Over 7,500 SF 49,360 SF 15.53% $25.00 $3.88
========================================================================================
MALL SHOP AVERAGE RENT: 317,748 SF 100.00% $34.29
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
=============================================================
OTHER COMPONENTS SQ/FT
=============================================================
<S> <C>
Food Court Tenants 7,755 SF
Kiosk Tenants 1,890 SF
Non-Owned Anchor Tenants 463,620 SF
=============================================================
PROPERTY TOTAL 791,013 SF
=============================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
==============================================================================
IN-LINE RENT COMPARISONS AND CONCLUSIONS
- ------------------------------------------------------------------------------
Leases
Size Category In-Place Recent Leasing C&W Conclusion
- ------------------------------------------------------------------------------
< 1,000 SF $72.55/SF $64.78/SF $70.00/SF
- ------------------------------------------------------------------------------
1,001 - 2,000 SF $46.47/SF $41.63/SF $50.00/SF
- ------------------------------------------------------------------------------
2,001 - 3,500 SF $34.54/SF $34.04/SF $35.00/SF
- ------------------------------------------------------------------------------
3,501 - 5,000 SF $31.01/SF $30.24/SF $30.00/SF
- ------------------------------------------------------------------------------
5,001 - 7,500 SF $28.38/SF $29.85/SF $27.50/SF
- ------------------------------------------------------------------------------
> 7,500 SF $23.77/SF $18.34/SF $25.00/SF
- ------------------------------------------------------------------------------
Average $33.56/SF $31.98/SF $34.29/SF
==============================================================================
As discussed, the average rental rate for all in-place leases as of
this writing is approximately $33.56 per square foot. By comparison, recent
lease transactions show an overall average rental rate of $31.98 per foot.
Looking at a pure rent-to-sales ratio, it would appear that the subject could
support an average rent between $32.00 and $34.00.
After considering all of the above, we have developed a weighted
average rental rate of approximately $34.29 per square foot based upon a
relative weighting of tenant space by size. The average rent is a weighted
average rent for all in-line mall tenants only. This average market rent has
been allocated to space as shown on the FACING PAGE.
It is emphasized that the ascribed rent categories provide a rough
approximation of market rent levels for a particular suite. This methodology is
given more credence when projecting rent levels for vacant space where a
potential tenant is unknown and their sales performance is difficult to
forecast. Also guiding our analysis is the tenant's location in the mall (i.e.
side court vs. center court), its merchandise category and sales history.
OCCUPANCY COST - TEST OF REASONABLENESS
Our weighted average rent can next be tested against total occupancy
costs in the mall based upon the standard recoveries for new mall tenants. A
total built-up occupancy cost can be derived by taking the weighted average
rent and adding projected occupancy costs for tenants in the mall. This total
can then be tested against the average sales for mall tenants. Our total
occupancy cost analysis can be found on the following chart.
- -------------------------------------------------------------------------------
-97-
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
LEASES IN-PLACE - FOOD COURT
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc.
==================================================================================================================================
LEASE INITIAL INITIAL FINAL FINAL % CHANGE
TENANT CATEGORY LEASE TERM AREA ANNUAL RENT/ ANNUAL RENT/ IN RENT
(BY SIZE/AREA) COMM. (YRS) (SQ/FT) RENT SQ/FT RENT SQ/FT OVER TERM
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Au Bon Pain 2/94 10.0 825 $75,999 $92.12 $79,992 $96.96 5.3%
Auntie Anne's 8/93 5.5 418 $48,618 $116.31 $51,050 $122.13 5.0%
Dairy Treats 8/98 9.5 540 $49,999 $92.59 $49,999 $92.59 0.0%
Master Wok 6/98 10.7 750 $120,000 $160.00 $120,000 $160.00 0.0%
McDonald's 6/98 9.7 750 $90,000 $120.00 $90,000 $120.00 0.0%
Mrs. Field's Cookies 2/93 6.0 600 $69,996 $116.66 $69,996 $116.66 0.0%
Sbaro 7/98 10.6 896 $174,998 $195.31 $174,998 $195.31 0.0%
---- ---- --- -------- ------- -------- ------- ---
SUBTOTAL: 7 8.8 4,779 $629,610 $131.75 $636,035 $133.09 1.0%
==================================================================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
===============================================================
Total Occupancy Cost Analysis - CY 1998
---------------------------------------------------------------
Tenant Cost Estimated Expenses/SF
===============================================================
Economic Base Rent
Weighted Average Rent $ 34.29
---------------------------------------------------------------
Occupancy Costs *
Common Area Maintenance (1)(1) $ 12.13
---------------------------------------------------------------
Real Estate Taxes (2)(2) $ 6.71
---------------------------------------------------------------
Total Tenant Costs $ 53.13
---------------------------------------------------------------
Projected Average Sales (1998) $ 370.53
===============================================================
Rent to Sales Ratio 9.25%
---------------------------------------------------------------
Cost of Occupancy Ratio 14.34%
===============================================================
(1) CAM reimbursement is based on leased mall area (LMA).
The calculation is based upon our the standard lease
clause which provides for CAM to be passed through with
a 15.0% administrative fee, less anchor contributions.
The standard denominator is based on leased or occupied
area. A complete discussion of the standard recovery
formula is presented later in this report.
(2) Tax pass-through is based upon leased mall area (LMA)
which is the standard recovery basis for taxes, less
anchor contributions.
===============================================================
Total costs, on average, are shown to be nearly 14.34 percent of
projected average FY 1999 retail sales which we feel is reasonable for a center
of the subject's caliber with relatively strong average sales.
We would note that energy costs have been excluded from this occupancy
cost analysis. Since energy usage varies from tenant to tenant, this cost is
usually not considered in such an analysis. However, where energy is separately
metered by ownership and billed to tenants with a mark-up or profit, we are
inclined to recognize the profit portion as an added cost since it is over an
above what the tenant would typically expect to pay.
In other instances, energy is purchased by ownership at wholesale
prices and sold to tenants at the retail rate. Otherwise, tenant energy costs
are usually considered as another cost of doing business. At the subject
property, we are advised that energy is billed directly by the utility company.
As such, we have excluded it from our analysis.
We have also compared the projected occupancy cost with that
historically achieved by the subject. We have calculated historical occupancy
cost for the center in aggregate from the owner's 1997 profit and loss
statement and have compared this figure with the comparable store sales
achieved in the same year. These calculation are presented in the following
table:
- -------------------------------------------------------------------------------
-98-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
========================================================
YE 1997
YE 1997 PSF
--------------------------------------------------------
Minimum Rent $ 7,939,747 $35.60
Percentage Rent $ 0
------------
Total Rent $ 7,939,747 $35.60
Common Area Maintenance $ 2,982,738 $13.37
Real Estate Taxes $ 815,400 $ 3.66
------
Total Occupancy Costs $11,737,885 $52.62
1997 Comparable Store Sales $358
Rent to Sales Ratio 9.94%
Cost of Occupancy Ratio 14.70%
Note: Based on 223,053 feet of occupied mall store
space (December 1997)
========================================================
As presented, our projections are generally consistent with the
historical experience of the property. A tenant by tenant occupancy cost
analysis is also provided in the addenda of this report.
FOOD COURT TENANTS
For this analysis, we have ascribed an individual unit market rate to
food court tenants. A new food court is under construction at the subject
property. Upon completion the food court will contain 7,755 square feet within
11 units, indicating an average size of 705 square feet per unit which is
consistent with national averages. Food court rent commitments are summarized
on the FACING PAGE. It is noted that leases are generally written for five to
ten-year terms with most leases remaining flat over the term. of the lease.
As can be seen, 7 leases are currently in-place at the subject. The
leases range from $48,618 to $174,998 per year, and average about $90,000 per
unit. On a per square foot basis, rents in the food court range from $92.12 (Au
Bon Pain) to $195.31 (Sabaro). The overall average rent within the food court
is calculated to be $131.75 per square foot.
In addition to actual leasing at the subject, we have looked at a
sampling of recent leasing activity in other mall food courts. The average rent
attainment levels for food courts in various malls for which we have documented
information is presented in the addenda of this report. The chart shows that
the surveyed food courts range in size from 5,502 to 10,337 square feet. The
average attained rent is $78.96 per square foot. When matched against average
food court sales, base rent-to-sales ratios range from 8.4 to 17.5 percent,
with a mean of 12.9 percent.
- -------------------------------------------------------------------------------
-99-
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================================
COMPARABLE FOOD COURT RENTS (AND SALES PRODUCTIVITY)*
CUSHMAN & WAKEFIELD, INC.
- -------------------------------------------------------------------------------------------------------------------------
TOTAL TOTAL
MALL FOOD AVG. AVG. RENT/SALES OCCUPANCY OCCUPANCY
PROPERTY SHOP GLA COURT GLA BASE RENT SALES RATIO COST** COST RATIO
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
The Score - 1995 N/A 8,591 $ 39.77 $472 8.4% $ 65.75 13.9%
All US Enclosed Malls
- -------------------------------------------------------------------------------------------------------------------------
The Score - 1995 N/A 10,337 $ 59.42 $599 10.3% $ 91.86 15.3%
Malls (greater than) 1,000,000 Sq. Ft.
- -------------------------------------------------------------------------------------------------------------------------
Natick Mall 436,700 7,299 $ 136.39 $779 17.5% $ 176.00 22.7%
Natick, MA
- -------------------------------------------------------------------------------------------------------------------------
Galleria at Crystal Run 360,735 8,085 $ 109.13 $667 16.4% $ 147.00 22.0%
Middletown, NY
- -------------------------------------------------------------------------------------------------------------------------
Smith Haven Mall 505,200 6,047 $ 85.67 $815 10.5% $ 157.50 19.3%
Lake Grove, NY
- -------------------------------------------------------------------------------------------------------------------------
Carousel Center 652,700 10,154 $ 134.34 $800 16.8% $ 187.00 23.4%
Syracuse, NY
- -------------------------------------------------------------------------------------------------------------------------
Alderwood Mall 311,000 8,252 $ 73.24 $600 12.2% $ 88.00 14.6%
Lynnwood, WA
- -------------------------------------------------------------------------------------------------------------------------
Towson Town Center 532,892 8,941 $ 105.00 $810 13.0% $ 152.00 18.2%
Towson, Maryland
- -------------------------------------------------------------------------------------------------------------------------
Silver City Galleria 349,107 9,412 $ 106.44 $616 17.3% $ 139.00 22.5%
Taunton, MA
- -------------------------------------------------------------------------------------------------------------------------
Galleria at White Plains 326,800 9,693 $ 67.19 $773 8.9% $ 136.00 17.6%
White Plains, NY
- -------------------------------------------------------------------------------------------------------------------------
Wilton Mall 256,700 7,303 $ 46.33 $515 9.0% $ 75.00 14.5%
Saratoga, NY
- -------------------------------------------------------------------------------------------------------------------------
Manassas Mall 260,360 6,231 $ 46.97 $489 9.6% $ 79.11 16.2%
Manassas, VA
- -------------------------------------------------------------------------------------------------------------------------
University Mall 185,400 5,502 $ 60.10 $489 12.3% $ 69.50 14.0%
South Burlington, VT
- -------------------------------------------------------------------------------------------------------------------------
Mall at Fairfield Commons 327,200 9,080 $ 90.09 $661 13.6% $ 100.50 15.2%
Beavercreek, OH
- -------------------------------------------------------------------------------------------------------------------------
Brandon Town Center 359,600 7,337 $ 65.56 $500 13.1% $ 95.25 19.1%
Brandon, FL
- -------------------------------------------------------------------------------------------------------------------------
Boulevard Mall 260,749 8,945 $ 60.84 $496 12.3% $ 94.04 18.1%
Amherst, NY
=========================================================================================================================
HI: 652,700 10,337 $ 136.39 $815 17.5% $ 187.00 23.4%
LOW: 185,400 5,502 $ 39.77 $472 8.4% $ 65.75 13.9%
MEAN: 366,082 8,201 $ 80.41 $630 12.6% $ 115.84 17.9%
=========================================================================================================================
* All values are reported per square foot unless otherwise noted.
** Inclusive of all operating expenses including food court charges.
=========================================================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
Occupancy costs tend to be much higher for food court tenants compared
to the other in-line shops. In addition to paying all mall charges, food court
tenants are usually assessed an additional charge for operation and maintenance
of the common seating area which typically contains 400 to 600 seats. These
costs typically include housekeeping, supplies, and other expenses associated
with operation of the food court. Industry-wide, these expenses average about
$15.89 per square foot. For centers over 1,000,000 square feet, the average is
$17.85 per square foot. A number of reimbursement structures are common,
including a pro-rata pass-through of the expense; a flat amount per square
foot; a multiple of tenant sales; or some combination of each. Probably the
most common charge is based upon a rate equal to 3.0 percent of a tenant's
sales. As can be seen, total occupancy costs in our survey range from 13.9 to
23.4 percent and average 18.2 percent.
With an average achieved rent of $131.75 per square foot, the subject
falls at the upper end of the range for the comparables presented. Since the
food court at the subject property is being redesigned, historical sales
volumes are not relevant. Based upon a rent-to-sales ratio of 16 percent tenant
sales of $823 per square foot would be required to support the contract rents.
This level of sales is at the upper end of those properties survey but appears
reasonable given the recent renovation of the property and its overall sales
performance.
KIOSK TENANTS
We have also ascribed a separate rental rate for kiosk tenants at the
subject property. As of this writing, the lease plan provides for 3 permanent
kiosks at the property, totaling about 470 square feet, an average of 157
square feet per unit. The leases range from approximately $42,000 (Plumb Gold)
to $52,500 (Instant Jewelry Repair) per year, with an overall average of about
$46,800 per unit per year ($297.88 per square foot). Based upon our experience
with other malls and our analysis of the kiosks in-place, we have utilized an
average market rent of approximately $300.00 per square foot for kiosks at the
subject property.
CONCESSIONS
Developers and owners have a number of methods to induce tenants to
locate at their properties. Included among these concession packages are free
rent, tenant build-out costs, and cash allowances. Concessions are typically
dependent upon local market practice and/or the strength of the particular
property or mall owner/developer.
FREE RENT
Management reports that free rent has been a relative non-issue with
new retail tenants at the subject. It has generally been limited to one
or two months while a tenant completes build-out within their suite. A
review of the most recent leasing confirms this observation. Our
experience with regional malls shows that free rent is generally
limited to new projects in marginal locations without strong anchor
tenants that are having trouble leasing, or older centers that are
losing tenants to new malls in their trade area. Accordingly, we do not
believe that it will be necessary to offer free rent to tenants at the
subject. It is noted that, while we have not ascribed any free rent for
new tenants, we have made allowances for tenant workletter which acts
as a form of inducement to convince tenants to locate at the subject.
- -------------------------------------------------------------------------------
-100-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
TENANT IMPROVEMENTS
A review of the sixteen most recent deals (totaling 44,347 square feet)
indicated that a tenant improvement allowance was included in five of the
transactions. The remaining eleven deals were accomplished with the tenant
paying for all improvements. An allowance ranged from $50,000 (Gadzooks)
to $306,592 (Finish Line). Overall the allowance equaled $20.75 per square
foot of leased area. Discussions with management indicated that this
allowance was above a stabilized level due to the recent expansion of the
center and shell condition of many first generation spaces. Based upon our
experience with other malls, a TI allowance of approximately $8.00 to
$20.00 per square foot can be fairly typical. Generally, allowances vary
lease by lease, depending upon build-out requirements and rental rates
achieved. For this analysis, we have made an allowance of $15.00 per
square foot (1998) for future turnover space where a tenant is projected
to leave their space. It is our experience that the majority of renewal
deals are accomplished on an as is basis with the tenant responsible for
the cost of any retrofitting the space. Therefore we would be inclined to
include a relatively nominal renewal allowance of $1.00 to $2.00 per
square foot. Typical underwriting guidelines for securitized mortgages
require a renewal allowance of $5.00 per square foot, which in our opinion
is rather conservative. In compliance with the guidelines we have included
a $5.00 per square foot renewal allowance but have considered its effect
on value in our yield rate selection. Based upon our 65/35 percent renewal
probability for tenants, the weighted average allowance is $8.50 per
square foot.
ABSORPTION/LEASE-UP
For this analysis, we have identified approximately 26.234 (plus or minus)
square feet of currently vacant mall shop space, equivalent to 8.01 percent
of mall shop area. In forecasting the scheduled absorption of vacant space,
we have considered that the nature of prospective activity remains good. To
this end, management has been working actively with a number of strong
national and regional tenants.
On balance, we believe that it is reasonable to forecast a 12 month
absorption period for the subject. Our schedule reflects that the mall should
absorb the vacant space through April 1999. The absorption of 26,234 (plus or
minus) square feet over a 12-month period is equal to roughly 6,556 (plus or
minus) square feet per quarter or 2,186 (plus or minus) square feet per
month.
Based on these lease-up assumptions, the following chart tracks occupancy
at the subject property through fiscal 2000.
<TABLE>
<CAPTION>
ANNUAL AVERAGE
OCCUPANCY
- -------------------
YEAR OCCUPANCY
- ------ -----------
<S> <C>
1999 93.09%
2000 99.75%
- ------ -----------
</TABLE>
- ------------------------------------------------------------------------------
-101-
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================================
---------------------------------------------------------
LEASE-UP/ABSORPTION PROJECTIONS Applicable GLA
THE MALL OF NEW HAMPSHIRE Shops, Food, Kiosks: 327,393
---------------------------------------------------------
Cushman & Wakefield, Inc.
==============================================================================================================================
SUITE DEMISED PROJECTED RENT PER PROJECTED
NO. DESCRIPTION AREA ANNUAL RENT SQ/FT LEASE DATE
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
S137 Vacant In-Line 1,000 $70,000 $70.00 Apr-99
S139 Vacant In-Line 600 $42,000 $70.00 Apr-99
E151 Vacant In-Line 2,431 $85,085 $35.00 Apr-99
E155 Vacant In-Line 832 $58,240 $70.00 Apr-99
S162 Vacant In-Line 6,024 $165,660 $27.50 Jul-98
E129 Vacant In-Line 532 $37,240 $70.00 Oct-98
E126 Vacant In-Line 664 $46,480 $70.00 Apr-99
W127 Vacant In-Line 4,590 $137,700 $30.00 Oct-98
W124 Vacant In-Line 3,125 $109,375 $35.00 Jan-99
S163 Vacant In-Line 3,460 $121,100 $35.00 Jan-99
F100 Vacant Food Court 468 $63,180 $135.00 Oct-98
F103 Vacant Food Court 928 $125,280 $135.00 Oct-98
F105 Vacant Food Court 855 $115,425 $135.00 Apr-99
F115 Vacant Food Court 725 $97,875 $135.00 Apr-99
==============================================================================================================================
SURVEY TOTAL: 26,234 $1,274,640 $48.59
Vacancy Rate: 8.01%
==============================================================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
RENT GROWTH RATES
Market rent will, over the life of a prescribed holding period, quite
obviously follow an erratic pattern. A review of investor's expectations
regarding income growth shows that projections generally range between 3.0
and 4.0 percent for retail centers. Cushman & Wakefield's Summary 1997 survey
of pension funds, REITs, bank and insurance companies, and institutional
advisors reveals that current income forecasts are utilizing average annual
growth rates between 2.0 and 5.0 percent for Class A Regional Mall
properties. The low and high means are shown to be 3.0 and 3.4 percent,
respectively. For Class B Regional Malls, income growth projections show a
low and high mean of 2.8 percent. The Fourth Quarter 1997 Korpacz Survey
cites an average growth rate of 2.97 percent for Regional Malls.
The tenants' ability to pay rent is closely tied to its increases in
sales. However, rent growth can be more impacted by competition and
management's desire to attract and keep certain tenants that increase the
center's synergy and appeal. Based upon our total analysis, we have
forecasted market rent to grow by 3.5% per annum throughout the projection.
RELEASING ASSUMPTION
Typical underwriting guidelines dedicate a 65:35 rollover:turnover
probability. This retention rate is below that typically associated with a
well performing regional center. Given the subject's recent renovation and
strong sales performance we would be inclined to include a tenant retention
rate of 75 percent. Nevertheless, we have included this assumption based upon
the underwriting guidelines but have considered its effect on value in our
determination of an appropriate yield rate.
Our global market assumptions for tenants may be summarized as shown on
the following chart.
<TABLE>
<CAPTION>
RENEWAL ASSUMPTIONS
- ------------------------------------------------------------------------------------------
LEASE FREE TENANT LEASE
TENANT TYPE TERM RENT STEPS RENT ALTERATIONS COMMISSIONS
================= ========== ================= ======== =============== ===============
<S> <C> <C> <C> <C> <C>
In-Line Shops 10 yrs One 4.5% Step No Yes Yes
- ----------------- ---------- ----------------- -------- --------------- ---------------
Food Court 10 yrs One 4.5% Step No Yes Yes
- ----------------- ---------- ----------------- -------- --------------- ---------------
Kiosks 3 yrs Flat No Yes Yes
================= ========== ================= ======== =============== ===============
</TABLE>
OVERAGE RENT
In addition to minimum base rent, many tenants at the subject property
have contracted to pay a percentage of their gross annual sales over a
pre-established base amount as overage rent. Because of the dynamics of the
economy and marketplace, it is difficult to predict with accuracy what sales
will be on an individual tenant level. As such, we have utilized actual
tenant sales for year-end 1997 and grown sales by our sales growth
assumption. For new tenants, we have assumed that no overage rent will be
achieved.
- ------------------------------------------------------------------------------
-102-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
SALES GROWTH RATES
In the Regional Analysis section of this report we cite that retail
sales in the Hillsborough County region have been increasing at a compound
annual rate of 40 percent per annum during the 1980s, according to Woods &
Poole(2). During the 1990s sales growth has been more modest but is anticipated
to increase at 6.49 percent per annum through 2005. According to both the
Cushman & Wakefield and Korpacz surveys, major investors are looking at a range
of growth rates of 0.0 percent initially, to a high of 5.0 percent in their
computational parameters. Most typically, growth of 3.0-4.0 percent are seen in
these surveys. After considering our analysis, we have forecasted the following
sales growth rates:
============================================
SALES GROWTH RATE FORECAST
--------------------------------------------
PERIOD GROWTH RATE *
============================================
1998 + 3.5%
--------------------------------------------
Thereafter + 3.5%
============================================
* Growth rate over previous year's rent.
In Pro-Ject+, a 3.5% increase in 1998
impacts the following year's growth.
============================================
EXPENSE REIMBURSEMENTS
By lease agreement, tenants at the subject are required to reimburse
the lessor for certain operating expenses. Included among these operating items
are real estate taxes and common area maintenance (including insurance).
Miscellaneous income is essentially derived from specialty leasing for
temporary tenants, Christmas kiosks, sprinkler charges and other miscellaneous
charges.
COMMON AREA MAINTENANCE
Under the standard lease, specialty tenants are required to reimburse
ownership for their pro-rata share of common area costs. A 15.0 percent
fee is added to common area costs to cover administrative expenses. The
standard CAM recovery is calculated on the basis of a tenant's pro-rata
share determined on leased mall area, net of anchor tenants. Most
pro-rata share calculations have a "floor" of 80.0-95.0 percent.
Provided below is a summary of the standard clause that exists for
specialty tenants at the mall.
===================================================================
COMMON AREA MAINTENANCE RECOVERY CALCULATION
===================================================================
CAM Expense: Actual hard cost for year including interest and
depreciation but excluding management
-------------------------------------------------------------------
Add: 15.0% Administrative Fee
-------------------------------------------------------------------
Add: Management Fee
-------------------------------------------------------------------
Less: Contributions from anchor and major tenants
-------------------------------------------------------------------
Equals: Net pro-ratable CAM billable to mall tenants on the
basis of leased mall area (LMA).
===================================================================
- --------------
(2) Woods & Poole figure is based on real growth adjusted for inflation.
- -------------------------------------------------------------------------------
-103-
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
INCOME & EXPENSE ANALYSIS
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc.
=============================================================================================================================
Per Sq/Ft Per Sq/Ft Per Sq/Ft
ACTUAL of GLA ACTUAL of GLA of GLA
1995 1995 1996 1996 1997 1997
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------
OPERATING INCOME
- ---------------------------------
MINIMUM RENT
Base Rent: $ 7,071,210 $ 32.14 $ 7,093,125 $ 32.24 $ 7,939,747 $ 24.25
Percentage Rent: $ (10,110) $ (0.05) $ 22,509 $ 0.10 $ - $ -
Specialty Leasing: $ 661,642 $ 3.01 $ 730,701 $ 3.32 $ 863,647 $ 2.64
------------------------ ------------------------ ------------------------
SUBTOTAL: $ 7,722,742 $ 35.10 $ 7,846,335 $ 35.67 $ 8,803,394 $ 26.89
RECOVERY INCOME
CAM Income: $ 1,704,465 $ 7.75 $ 1,592,828 $ 7.24 $ 2,982,738 $ 9.11
Tax Income: $ 637,658 $ 2.90 $ 701,399 $ 3.19 $ 815,409 $ 2.49
Utility Income: $ - $ - $ 42,712 $ 0.19 $ 54,670 $ 0.17
------------------------ ------------------------ ------------------------
SUBTOTAL: $ 2,342,123 $ 10.65 $ 2,336,939 $ 10.62 $ 3,852,817 $ 11.77
OTHER INCOME
Miscellaneous Income: $ 144,173 $ 0.66 $ 186,570 $ 0.85 $ 282,171 $ 0.86
------------------------ ------------------------ ------------------------
SUBTOTAL: $ 144,173 $ 0.66 $ 186,570 $ 0.85 $ 282,171 $ 0.86
POTENTIAL GROSS INCOME $ 10,209,038 $ 46.40 $ 10,369,844 $ 47.14 $ 12,938,382 $ 39.52
Less Vacancy
------------------------ ------------------------ ------------------------
EFFECTIVE GROSS INCOME $ 10,209,038 $ 46.40 $ 10,369,844 $ 47.14 $ 12,938,382 $ 39.52
- ---------------------------------
OPERATING EXPENSES
- ---------------------------------
CAM - MAINTENANCE
Payroll $ 268,293 $ 1.22 $ 295,864 $ 1.34 $ 308,505 $ 0.94
Cleaning Services $ - $ - $ - $ - $ 250,053 $ 0.76
Contract Services $ 246,592 $ 1.12 $ 275,089 $ 1.25 $ 134,181 $ 0.41
Materials & Supplies $ 27,923 $ 0.13 $ 24,789 $ 0.11 $ 48,460 $ 0.15
Repairs & Maintenance $ 31,286 $ 0.14 $ 19,468 $ 0.09 $ 34,413 $ 0.11
Equipment Rental $ 754 $ 0.00 $ 483 $ 0.00 $ 90,013 $ 0.27
Utilities $ 248,093 $ 1.13 $ 225,158 $ 1.02 $ 354,865 $ 1.08
Office Expense $ 27,641 $ 0.13 $ 30,388 $ 0.14 $ 50,032 $ 0.15
Roof Repairs $ 860 $ 0.00 $ 4,329 $ 0.02 $ 1,697 $ 0.01
Parking Lot Repairs $ 7,479 $ 0.03 $ - $ - $ - $ -
Parking Lot Rental $ - $ - $ - $ - $ 10,395 $ 0.03
Road Repair $ 1,970 $ 0.01 $ 900 $ 0.00 $ - $ -
Other Expenses $ - $ - $ - $ - $ 4,319 $ 0.01
------------------------ ------------------------ ------------------------
Sub-total Maintenance $ 860,891 $ 3.91 $ 876,468 $ 3.98 $ 1,286,933 $ 3.93
CAM - LANDSCAPING
Contract Services $ 32,720 $ 0.15 $ 21,165 $ 0.10 $ 31,389 $ 0.10
Materials & Supplies $ 17,936 $ 0.08 $ 9,105 $ 0.04 $ 11,599 $ 0.04
Repairs & Maintenance $ 1,162 $ 0.01 $ 105 $ 0.00 $ - $ -
------------------------ ------------------------ ------------------------
Sub-total Landscaping $ 51,818 $ 0.24 $ 30,375 $ 0.14 $ 42,988 $ 0.13
CAM - SECURITY EXPENSE
Payroll $ 41,059 $ 0.19 $ 49,586 $ 0.23 $ 64,020 $ 0.20
Contract Services $ 231,798 $ 1.05 $ 234,766 $ 1.07 $ 307,581 $ 0.94
Materials & Supplies $ 6,457 $ 0.03 $ 6,854 $ 0.03 $ 11,394 $ 0.03
Repairs & Maintenance $ 1,992 $ 0.01 $ 4,075 $ 0.02 $ 4,681 $ 0.01
Equipment Rental $ 5,410 $ 0.02 $ 9,149 $ 0.04 $ 9,754 $ 0.03
Telephone $ 416 $ 0.00 $ 279 $ 0.00 $ - $ -
------------------------ ------------------------ ------------------------
Sub-total Security $ 287,132 $ 1.31 $ 304,709 $ 1.39 $ 397,430 $ 1.21
CAM - UNCONTROLLABLE
Snow Removal $ 188,921 $ 0.86 $ 281,098 $ 1.28 $ 347,889 $ 1.06
Insurance $ 58,284 $ 0.26 $ 30,722 $ 0.14 $ 52,619 $ 0.16
Miscellaneous $ 121,956 $ 0.55 $ 40,652 $ 0.18 $ - $ -
------------------------ ------------------------ ------------------------
Sub-total Uncontrollable $ 247,205 $ 1.12 $ 311,820 $ 1.42 $ 400,508 $ 1.22
TOTAL CAM $ 1,447,046 $ 6.58 $ 1,523,372 $ 6.92 $ 2,127,859 $ 6.50
---------
MANAGEMENT FEE $ 279,726 $ 1.27 $ 284,020 $ 1.29 $ 326,428 $ 1.00
--------------
REAL ESTATE TAXES $ 693,531 $ 3.15 $ 780,089 $ 3.55 $ 976,737 $ 2.98
-----------------
<PAGE>
GENERAL & ADMINISTRATIVE
Utilities: $ - $ - $ 9 $ 0.00 $ 937 $ 0.00
Office Expense $ 5,694 $ 0.03 $ 6,158 $ 0.03 $ 4,540 $ 0.01
Specialty Leasing $ 163,276 $ 0.74 $ 178,065 $ 0.81 $ 224,458 $ 0.69
Accounting & Auditing $ 113,281 $ 0.51 $ 126,692 $ 0.58 $ 105,534 $ 0.32
Professional Fees - Legal $ 63,105 $ 0.29 $ 67,117 $ 0.31 $ 132,578 $ 0.40
Professional Fees - Other $ 31,549 $ 0.14 $ 48,390 $ 0.22 $ 22,307 $ 0.07
Insurance $ - $ - $ 85 $ 0.00 $ - $ -
Bad Debt $ 17,671 $ 0.08 $ 76,015 $ 0.35 $ (690)
State Profits Tax $ 65,531 $ 0.30 $ 29,906 $ 0.14 $ 62,112 $ 0.19
Contributions $ - $ - $ - $ - $ 2,500 $ 0.01
------------------------ ------------------------ ------------------------
Sub-total G & A $ 460,107 $ 2.09 $ 532,437 $ 2.42 $ 554,276 $ 1.69
Sales & Promotion $ 50,741 $ 0.23 $ 45,536 $ 0.21 $ 50,004 $ 0.15
Miscellaneous $ 865,011 $ 3.93 $ 11,163 $ 0.05 $ 23,250 $ 0.07
TOTAL - NONRECOVERABLE: $ 1,375,859 $ 6.25 $ 589,136 $ 2.68 $ 627,530 $ 1.92
TOTAL OPERATING EXPENSES $ 3,796,162 $ 17.26 $ 3,176,617 $ 14.44 $ 4,058,554 $ 12.40
Operating Expense Ratio -- 37.2% -- 30.6% -- 31.4%
- ---------------------------------
NET OPERATING INCOME $ 6,412,876 $ 29.15 $ 7,193,227 $ 32.70 $ 8,879,828 $ 27.12
- ---------------------------------
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================
---------------------------------------------
INCOME & EXPENSE ANALYSIS GROSS LEASABLE AREA (1995-1996): 220,000
THE MALL OF NEW HAMPSHIRE GROSS LEASABLE AREA (1997-FY99): 327,393
Cushman & Wakefield, Inc. (MALL SHOPS, KIOSKS, OUTPAD)
---------------------------------------------
==============================================================================================
Per Sq/Ft C&W Per Sq/Ft
BUDGET of GLA FORECAST of GLA
1998 1998 FY1999 FY1999
==============================================================================================
<S> <C> <C> <C> <C>
- ---------------------------------
OPERATING INCOME
- ---------------------------------
MINIMUM RENT
Base Rent: $ 10,746,903 $ 32.83 $ 10,690,699 $ 32.65
Percentage Rent: $ 17,643 $ 0.05 $ 28,114 $ 0.09
Specialty Leasing: $ 458,311 $ 1.40 $ 450,000 $ 1.37
------------------------ -----------------------
SUBTOTAL: $ 11,222,857 $ 34.28 $ 11,168,813 $ 34.11
RECOVERY INCOME
CAM Income: $ 3,949,475 $ 12.06 $ 3,739,622 $ 11.42
Tax Income: $ 2,100,396 $ 6.42 $ 1,987,742 $ 6.07
Utility Income: $ 60,035 $ 0.18 $ 60,000 $ 0.18
------------------------ -----------------------
SUBTOTAL: $ 6,109,906 $ 18.66 $ 5,787,364 $ 17.68
OTHER INCOME
Miscellaneous Income: $ 19,525 $ 0.06 $ 20,000 $ 0.06
------------------------ -----------------------
SUBTOTAL: $ 19,525 $ 0.06 $ 20,000 $ 0.06
POTENTIAL GROSS INCOME $ 17,352,288 $ 53.00 $ 16,976,177 $ 51.85
Less Vacancy $ 822,307 $ 2.51
------------------------ -----------------------
EFFECTIVE GROSS INCOME $ 17,352,288 $ 53.00 $ 16,153,870 $ 49.34
- ---------------------------------
OPERATING EXPENSES
- ---------------------------------
CAM - MAINTENANCE
Payroll $ 287,633 $ 0.88
Cleaning Services $ 297,417 $ 0.91
Contract Services $ 144,388 $ 0.44
Materials & Supplies $ 42,535 $ 0.13
Repairs & Maintenance $ 23,946 $ 0.07
Equipment Rental $ 74,236 $ 0.23
Utilities $ 408,464 $ 1.25
Office Expense $ 44,171 $ 0.13
Roof Repairs $ 17,314 $ 0.05
Parking Lot Repairs $ 13,000 $ 0.04
Parking Lot Rental $ 16,475 $ 0.05
Road Repair $ 1,000 $ 0.00
Other Expenses $ - $ -
------------------------
Sub-total Maintenance $ 1,370,579 $ 4.19
CAM - LANDSCAPING
Contract Services $ 42,400 $ 0.13
Materials & Supplies $ 13,140 $ 0.04
Repairs & Maintenance $ - $ -
------------------------
Sub-total Landscaping $ 55,540 $ 0.17
<PAGE>
CAM - SECURITY EXPENSE
Payroll $ 120,051 $ 0.37
Contract Services $ 282,649 $ 0.86
Materials & Supplies $ 6,210 $ 0.02
Repairs & Maintenance $ 3,185 $ 0.01
Equipment Rental $ 8,735 $ 0.03
Telephone $ - $ -
------------------------
Sub-total Security $ 420,830 $ 1.29
CAM - UNCONTROLLABLE
Snow Removal $ 200,000 $ 0.61
Insurance $ 73,140 $ 0.22
Miscellaneous $ - $ -
------------------------
Sub-total Uncontrollable $ 273,140 $ 0.83
TOTAL CAM $ 2,120,089 $ 6.48 $ 2,120,085 $ 6.48
---------
MANAGEMENT FEE $ 404,628 $ 1.24 $ 553,077 $ 1.69
--------------
REAL ESTATE TAXES $ 1,940,808 $ 5.93 $ 1,940,000 $ 5.93
-----------------
GENERAL & ADMINISTRATIVE
Utilities: $ - $ -
Office Expense $ 1,600 $ 0.00
Specialty Leasing $ 159,651 $ 0.49
Accounting & Auditing $ 95,704 $ 0.29
Professional Fees - Legal $ 106,500 $ 0.33
Professional Fees - Other $ 45,000 $ 0.14
Insurance $ - $ -
Bad Debt $ 210,710
State Profits Tax $ 20,820 $ 0.06
Contributions $ 7,500 $ 0.02
------------------------ -----------------------
Sub-total G & A $ 647,485 $ 1.98 $ 436,775 $ 1.33
Sales & Promotion $ 33,600 $ 0.10 $ 50,000 $ 0.15
Miscellaneous $ - $ - $ 33,500 $ 0.10
TOTAL - NONRECOVERABLE: $ 681,085 $ 2.08 $ 520,275 $ 1.59
TOTAL OPERATING EXPENSES $ 5,146,610 $ 15.72 $ 5,133,437 $ 15.68
Operating Expense Ratio -- 29.7% -- 31.8%
- ---------------------------------
NET OPERATING INCOME $ 12,205,678 $ 37.28 $ 11,020,433 $ 33.66
- ---------------------------------
==============================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
REAL ESTATE TAXES
Tenants are also required pay real estate tax recoveries based upon a
pro-rata share of the expense. The pass-through is generally based upon
pro-rata share of leased mall area, net of anchor and major tenant
contributions. As with CAM recoveries, we have assumed that new leases
written at the property use gross leasable area for tax pass-throughs
as opposed to leased area. This too helps to reduce tenant occupancy
costs.
MISCELLANEOUS INCOME
Along with reimbursement items, the subject also generates other
miscellaneous income. Miscellaneous income is essentially derived from
specialty leasing for temporary tenants, Christmas kiosks, pushcarts, and other
charges.
ALLOWANCE FOR VACANCY AND CREDIT LOSS
The investor of an income producing property is primarily interested in
the cash revenues that an income-producing property is likely to produce
annually over a specified period of time rather than what it could produce if
it were always 100.0 percent occupied with all tenants paying rent in full and
on time. It is normally a prudent practice to expect some income loss, either
in the form of actual vacancy or in the form of turnover, non-payment or slow
payment by tenants. For this analysis, we have considered vacancy and credit
loss under two categories: 1) unforeseen collection loss and vacancy; and 2)
the downtime experienced between tenants as leases rollover.
1. With this in mind, we have first reflected a 5.0 percent
stabilized contingency for both stabilized and unforeseen vacancy
and credit loss at the subject. This vacancy and credit loss
provision is applied to all specialty tenants equally, but
excludes anchor tenants.
2. We have also forecasted that there is a 65.0 percent probability
that an existing tenant will renew their lease. Upon turnover, we
have forecasted that rent loss equivalent to six months (two
months weighted average) would be incurred to account for the
time and/or costs associated with bringing space back on line.
Thus, minimum rent as well as overage rent and certain other
income has been reduced by this forecasted probability.
We have calculated the effect of our vacancy and credit loss
assumptions on specialty in-line shops as shown on the following chart. On
average, the total allowance for vacancy and credit loss over the 10-year "As
Is" cash flow projection period averages 7.04 percent of gross revenues, which
we feel is a reasonable long term projection.
- -------------------------------------------------------------------------------
-104-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
===============================================================================
TOTAL RENT LOSS FORECAST - "AS IS" CASH FLOW ANALYSIS
- -------------------------------------------------------------------------------
Year Physical Vacancy Global Vacancy Total Vacancy *
===============================================================================
1999 6.91% 5.00% 15.48%
- -------------------------------------------------------------------------------
2000 0.25% 5.00% 8.58%
- -------------------------------------------------------------------------------
2001 0.46% 5.00% 7.05%
- -------------------------------------------------------------------------------
2002 0.27% 5.00% 6.15%
- -------------------------------------------------------------------------------
2003 0.98% 5.00% 5.70%
- -------------------------------------------------------------------------------
2004 0.90% 5.00% 4.98%
- -------------------------------------------------------------------------------
2005 0.36% 5.00% 5.32%
- -------------------------------------------------------------------------------
2006 3.18% 5.00% 7.38%
- -------------------------------------------------------------------------------
2007 5.77% 5.00% 7.03%
- -------------------------------------------------------------------------------
2008 1.28% 5.00% 6.40%
- -------------------------------------------------------------------------------
Avg. 2.04% 5.00% 7.04%
===============================================================================
* Includes phased global vacancy provision for unseen vacancy and credit loss
as well as weighted downtime provision of lease turnover.
===============================================================================
OPERATING EXPENSES
Total expenses incurred in the production of income from the subject
property are divided into two categories: reimbursable and non-reimbursable
items. The major expenses which are reimbursable include common area
maintenance, management and real estate taxes. The non-reimbursable expenses
associated with the subject property include certain general and administrative
expenses, as well as miscellaneous expenses, including non-recoverable
maintenance. Other expenses include a reserve for the replacement of
short-lived capital components, alteration costs associated with bringing space
up to occupancy standards, and leasing commissions.
The various expenses incurred in the operation of the subject property
have been estimated from information provided by a number of sources. We have
reviewed the subject's component operating history and budget projection
provided by ownership for 1998. This information is provided on the FACING
PAGE. We have compared this information to published data which are available,
as well as comparable expense information at competing area centers. Finally,
this information has been tempered by our experience with other regional
shopping centers.
EXPENSE GROWTH RATES
Expense growth rates are generally forecasted to be more consistent
with inflationary trends than with competitive market forces. The Summer 1997
Cushman & Wakefield survey of Class A Regional Malls found the low and high
mean from each respondent to be 3.3 and 3.6 percent, respectively. The rates
ranged from 3.0 to 4.0 percent. For Class B centers, the low and high means
were 3.5 percent. The Fourth Quarter 1997 Korpacz survey reports that the range
in expense growth rates for national mall properties runs from 3.0 percent to
4.0 percent with an average of 3.65 percent, down 18 basis points from one year
ago. For this analysis, unless otherwise stated, expenses are forecasted to
grow by 3.5 percent per annum over the remainder of the holding period.
- -------------------------------------------------------------------------------
-105-
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================================
OPERATING EXPENSE STATISTICS
Cushman & Wakefield, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
ULI ULI ULI ULI ULI ULI ULI
--- --- --- --- --- --- ---
Super-Regional Super-Regional Super-Regional Super-Regional Regional Regional Regional
Centers/ Centers/ Centers/ Centers/ Centers/ Centers/ Centers/
U.S. U.S. EAST EAST U.S. U.S. EAST
AVERAGE MEDIAN AVERAGE MEDIAN AVERAGE MEDIAN AVERAGE
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------
PROPERTY PROFILE
- --------------------------
Total GLA: 999,544 1,009,585 935,436 937,742 582,893 579,154 644,794
Total Owned GLA: 563,689 535,272 531,481 483,976 461,822 435,855 512,183
Shop Sales/sf*: $203.09 $198.93 $220.64 $183.81 $176.16 $163.54 $204.96
Anchor Sales/sf: $149.38 $138.66 $152.35 $136.98 $156.30 $152.29 $174.78
- --------------------------
OPERATING INCOME
- --------------------------
Minimum Rent: $16.30 $16.79 $17.14 $18.17 $12.05 $11.33 $13.62
Overage Rent: $1.14 $1.04 $1.40 $1.25 $0.86 $0.76 $0.92
CAM Charges: $4.68 $4.60 $5.01 $4.70 $3.34 $3.23 $4.33
Property Taxes: $1.72 $1.54 $1.79 $1.52 $1.13 $1.08 $1.62
Insurance: $0.11 $0.06 $0.13 $0.14 $0.09 $0.08 $0.13
Utilities: $1.74 $1.84 $2.38 $2.43 $1.55 $1.18 $1.35
Other: $1.15 $0.62 $1.24 $0.53 $0.42 $0.37 $0.28
------ ------ ------ ------ ------ ------ ------ ------
TOTAL INCOME: $27.32 $27.32 $29.08 $28.59 $19.86 $18.98 $23.25
- --------------------------
OPERATING EXPENSES
- --------------------------
Total Maintenance**: $4.50 $4.45 $4.85 $4.67 $3.43 $3.16 $4.11
Real Estate Taxes: $1.86 $1.55 $2.04 $1.51 $1.27 $1.16 $1.75
Insurance: $0.32 $0.28 $0.40 $0.29 $0.26 $0.23 $0.30
Advertising: $0.60 $0.44 $0.83 $0.61 $0.56 $0.48 $0.64
Administrative***: $0.87 $0.74 $0.82 $0.71 $0.93 $0.82 $0.96
Management Fee: $0.63 $0.59 $0.61 $0.55 $0.46 $0.39 $0.53
--------------- ------ ------ ------ ------ ------ ------ ------
TOTAL EXPENSES: $9.25 $8.87 $9.84 $8.47 $7.35 $6.63 $8.89
OER: 33.9% 32.5% 33.8% 29.6% 37.0% 34.9% 38.2%
- --------------------------
NET OPERATING INCOME $17.63 $17.12 $18.72 $17.01 $12.02 $10.85 $14.33
- --------------------------
- --------------------------
* Average sales include all mall shop tenants.
** CAM expenses include repairs & maintenance, utilities, and security.
*** Management fees & bad debt allowances have been deducted from
administrative costs. Management has been shown separately.
Source: Urban Land Institute "Dollars & Cents" (1995); International Council of Shopping Centers "The Score" (1996).
(Because the data are means/medians, detailed amounts do not add to totals).
================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
OPERATING EXPENSE STATISTICS REGIONAL & SUPER-REGIONAL MALLS
Cushman & Wakefield, Inc. East
- ------------------------------------------------------------------------------------------------------------------------------------
ULI ICSC ICSC ICSC ICSC ICSC ICSC
--- ---- ---- ---- ---- ---- ----
Regional Enclosed Malls Enclosed Malls Enclosed Malls Enclosed Malls Enclosed Malls Enclosed Malls
Centers/ U.S. U.S. U.S. U.S. EAST EAST
EAST TOTAL 500,000- 800,000- OVER MEDIAN MEDIAN
MEDIAN SURVEY 799,999SF 999,999SF 1,000,000SF <800,000SF >800,000SF
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------
PROPERTY PROFILE
- --------------------------
Total GLA: 676,000 744,050 617,499 900,813 1,148,133 324,816 988,503
Total Owned GLA: 448,114 441,394 460,399 515,392 575,309 280,740 635,789
Shop Sales/sf*: $183.05 $222.04 $201.55 $259.74 $255.55 $161.96 $251.73
Anchor Sales/sf: $176.70 $159.39 $145.82 $184.98 $171.34 $160.49 $174.86
- --------------------------
OPERATING INCOME
- --------------------------
Minimum Rent: $11.99 $17.60 $15.38 $19.85 $21.60 $16.32 $22.97
Overage Rent: $1.00 -- -- -- -- -- --
CAM Charges: $4.02 $5.73 $5.45 $8.23 $7.24 $4.28 $7.99
Property Taxes: $1.32 $1.84 $1.14 $2.76 $2.82 $1.63 $3.45
Insurance: $0.05 $0.15 $0.17 $0.19 $0.13 $0.13 $0.15
Utilities: $0.65 $0.73 $1.56 $0.78 $1.08 $0.40 $1.05
Other: $0.34 $0.28 $0.22 $0.38 $0.39 $0.10 $0.54
------ ------ ------ ------ ------ ------ ------ -----
TOTAL INCOME: $22.25 $27.60 $26.22 $32.90 $36.05 $21.61 $39.42
- --------------------------
OPERATING EXPENSES
- --------------------------
Total Maintenance**: $3.50 $4.33 $4.65 $5.45 $5.52 $3.27 $6.11
Real Estate Taxes: $1.19 $2.31 $1.82 $3.32 $3.30 $2.37 $3.95
Insurance: $0.26 $0.37 $0.34 $0.42 $0.43 $0.39 $0.43
Advertising: $0.35 $1.18 $1.04 $1.37 $1.81 $0.77 $1.37
Administrative***: $0.80 $1.05 $1.02 $1.21 $1.29 $0.83 $1.51
Management Fee: $0.42 $0.75 $0.65 $0.91 $0.95 $0.51 $1.06
--------------- ------ ------ ------ ------ ------ ------ -----
TOTAL EXPENSES: $7.38 $11.06 $10.50 $12.65 $13.66 $10.09 $15.59
OER: 33.2% 40.1% 40.0% 38.4% 37.9% 46.7% 39.5%
- --------------------------
NET OPERATING INCOME $13.28 $16.26 $14.55 $19.31 $21.19 $14.98 $24.27
- --------------------------
- --------------------------
* Average sales include all mall shop tenants.
** CAM expenses include repairs & maintenance, utilities, and security.
*** Management fees & bad debt allowances have been deducted from
administrative costs. Management has been shown separately.
Source: Urban Land Institute "Dollars & Cents" (1995); International Council of Shopping Centers "The Score" (1996).
(Because the data are means/medians, detailed amounts do not add to totals).
====================================================================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
REIMBURSABLE OPERATING EXPENSES
We have analyzed each item of expense individually and attempted to
project what the typical investor in a property like the subject would
consider reasonable, based upon informed opinion, judgment and experience.
The following is a detailed summary and discussion of the reimbursable
operating expenses incurred in the operation of the subject property during
the initial year of the investment holding period.
COMMON AREA MAINTENANCE -- This expense category includes the annual cost
of miscellaneous building maintenance contracts, recoverable labor and
benefits, security, landscaping, snow removal, cleaning and janitorial,
exterminating, supplies, trash removal, exterior lighting, common area
energy, gas and fuel, equipment rental, and other miscellaneous charges. In
addition, ownership can pass-through a 15.0 percent administrative fee.
Ownership is also able to recover certain capital expense items through
CAM, along with the amortization of roof and parking lot repairs. As
discussed, the standard lease agreement allows management to pass along the
CAM expense to tenants on the basis of occupied area less anchor/major
tenants.
Ownership's CAM pass-through incorporates a number of expense categories at
the subject property. Included among these cost items are administrative,
repairs and maintenance, operating and supplies, salaries, utilities,
insurance, and payroll taxes. For 1997, these costs amounted to $2,127,859
or $6.50 per square foot. This was down from $6.92 per foot in 1996 and
$6.58 in 1995 and reflects the renovation of the center. For 1998,
management has budgeted a CAM expense of about $2,120,000 ($6.48/SF).
The chart on the FACING PAGE presents a summary of comparable CAM expenses
at other regional shopping malls. As can be seen, common area maintenance
costs generally range from roughly $3.70 to $15.26 per square foot, with an
overall mean of approximately $6.88 per foot. Most urban properties show
higher CAM costs. Overall, we believe that CAM expenses at the subject are
reasonable. As such, we have projected a common area maintenance expense of
$2,120,000 for the subject property in FY 1999.
REAL ESTATE TAXES -- As discussed in the Real Estate Tax Section of this
report, the renovation and expansion of the center will trigger a new
assessment for the 1998/1999 tax year. In our analysis we have based future
taxes upon estimates provided by Gouldston and Storrs which coincides with
management's budget.
MANAGEMENT -- Typical management fees for a regional shopping center range
from 3.0 to 5.0 percent depending upon the size of the center, number of
tenants and rental achievements. Given the characteristics of the subject
property coupled with the fact that we are separately accounting for
leasing commission we would be inclined to conclude a management fee at the
lower end of the range or approximately 3.0 to 3.5 percent of minimum and
percentage rent. Typical underwriting guidelines for securitized mortgages
stipulate a management fee of 5 percent which results in a first year
expense of $553,077 or $1.69 per square foot of owned GLA. This expense is
above market levels and results in a higher cost of
- ------------------------------------------------------------------------------
-106-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
expense is above market levels and results in a higher cost of
operation. Nevertheless we have incorporated this assumption into our
analysis and have adjusted our yield rate to reflect the higher
expense.
NON-REIMBURSABLE EXPENSES
Total non-reimbursable expenses at the subject property are projected
from accepted practices and industry standards. Again, we have analyzed each
item of expenditure in an attempt to project what the typical investor in a
property similar to the subject would consider reasonable, based upon actual
operations, informed opinion, and experience. The following is a detailed
summary and discussion of non-reimbursable expenses incurred in the operation
of the subject property for the initial year.
GENERAL & ADMINISTRATIVE COSTS - As with most regional malls, portions
of the expenses passed through with common area maintenance are not
fully recovered. Expenses related to administrative aspects of the mall
include costs particular to its operation, including salaries for
leasing personnel, travel and entertainment, other office-related
expenses, dues and subscriptions, printing and postage, telephone,
professional fees and sales incentives. A provision is also typically
made for professional services (legal and accounting fees and other
professional consulting services). Industry benchmarks suggest that
unrecovered general and administrative costs can run anywhere from
$0.20 to $0.80 per square foot, depending upon how much is recoverable
through CAM. At the subject property general & administrative expenses
have been significantly above this level but also include the cost of
specialty leasing which is often a separate expense item. In our
analysis, we have reflected a FY 1999 general and administrative
expense of $436,775, or $1.33 per square foot of mall shop GLA based on
the historical performance of the center.
MARKETING - These costs include ownership's contribution to the
merchant association which is net of tenant contributions. Over the
past several years, ownership has reflected a net marketing expense of
$45,536 to $50,741. For 1998 management has reduced the marketing
contribution to $33,600. In the initial year of our cash flow analysis,
marketing costs are forecasted to amount to $50,000, or $0.15 per
square foot of mall shop GLA.
MISCELLANEOUS EXPENSES - This category is provided for various
miscellaneous and sundry expenses that ownership typically incurs
without pass-through to tenants. Such items as unrecovered repair
costs, preparation of suites for temporary tenants, certain
non-recurring expenses, expenses associated with maintaining vacant
space, and bad debts in excess of our credit loss provision would be
included here. In 1998, these miscellaneous items are forecasted to
amount to approximately $33,500, or about $0.10 per square foot of mall
shop GLA.
- -------------------------------------------------------------------------------
-107-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
ALTERATIONS -- The principal component of this expense is ownership's
estimated cost to prepare a vacant suite for tenant use. At the expiration
of a lease, we have made a provision for the likely expenditure of some
monies on ownership's part for tenant improvement allowances. In this
regard, we have forecasted a cost of $15.00 per square foot for turnover
space (initial cost growing at expense growth rate) weighted by our
turnover probability of 35.0 percent. We have also given an alteration
allowance of $5.00 for renewal (rollover) retail tenants. The blended rate
based on our 65/35 turnover probability is therefore $8.50 per square foot.
These costs are forecasted to increase at our implied expense growth rate.
It is noted that these parameters are required by most underwriting
criteria but appear conservative in today's market environment.
LEASING COMMISSIONS -- A typical structure for retail leasing commissions
is $3.00 to $4.00 per square foot for new tenants and $1.00 to $2.00 per
square foot for renewal tenants. Weighting the leasing commissions by a
65:35 renewal/turnover probability results in an average leasing commission
charge of $1.85 per square foot which is generally consistent with market
levels.
REPLACEMENT RESERVES --It is customary and prudent to set aside an amount
annually for the replacement of short-lived capital items such as the roof,
parking lot and certain mechanical items. The repairs and maintenance
expense category has historically included some capital items which have
been passed through to the tenants. This appears to be a fairly common
practice among most malls. However, we feel that over a holding period some
repairs or replacements will be needed that will not be passed on to the
tenants. Typical replacement reserves range anywhere from $0.10 to $0.30
per square foot depending upon the age and quality of the center. For
purposes of this report, we have estimated an expense of about $0.20 per
square foot applied to the total owned GLA during the first year ($65,479),
thereafter increasing by our expense growth rate.
FOOD COURT RENOVATIONS -- The subject's food court is presently under
construction and will require an additional $1.7 million to complete. As
part of the proposed financing these funds will be placed in an escrow
account. Per the client's request we have not considered the cost to
complete the food court renovation.
NET INCOME/NET CASH FLOW
The total expenses of the subject property, including alterations,
commissions, capital expenditures, and reserves, are annually deudcted from
total income, thereby leaving a residual net operating income or net cash
flow to the investors in each year of the holding period before debt service.
In the initial year of investment, the net operating income is forecasted to
be equal to approximately $11,020,433 which is equivalent to 68.2 percent of
effective gross income. Deducting other expenses including capital items
results in a net cash flow before debt service of approximately $10,923,003.
- ------------------------------------------------------------------------------
-108-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
===============================================================================
OPERATING SUMMARY
INITIAL YEAR OF INVESTMENT - FISCAL 1999 ("AS IS" ANALYSIS)
- -------------------------------------------------------------------------------
Aggregate Sum Unit Rate * Operating Ratio
- -------------------------------------------------------------------------------
Effective Gross Income $16,153,870 $49.34 100.00%
- -------------------------------------------------------------------------------
Operating Expenses $5,133,437 $15.68 31.78%
- -------------------------------------------------------------------------------
Net Operating Income $11,020,433 $33.66 68.22%
- -------------------------------------------------------------------------------
Other Expenses $97,430 $0.30 0.60%
- -------------------------------------------------------------------------------
Cash Flow $10,923,003 $33.36 67.62%
- -------------------------------------------------------------------------------
* Based on total owned GLA of 327,393+/- square feet.
===============================================================================
The rate of change to both net income and cash flow is important from
an investor's perspective. Our cash flow model has forecasted the following
compound annual growth rates over the holding period FY 1999 through FY 2008 on
a calendar year basis.
=========================================
INCOME GROWTH ("AS IS")
=========================================
Net Operating Income: +2.1%
-----------------------------------------
Net Cash Flow: +1.4%
=========================================
As calculated, growth rates in net operating income and net cash flow
are forecasted to approximate to 2.1 and 1.4 percent per annum. Thus both net
income and net cash flow represents a relatively moderate growth potential to
an investor in the property.
=============================
INVESTMENT PARAMETERS
Discounted Cash Flow
=============================
After projecting the income and expense components of the subject
property, investment parameters must be set in order to forecast property
performance over the holding period. These parameters include the selection of
capitalization rates (both initial and terminal) and application of an
appropriate discount or yield rate, also referred to as the internal rate of
return (IRR).
SELECTION OF CAPITALIZATION RATES
OVERALL CAPITALIZATION RATE
The overall capitalization rate bears a direct relationship between net
operating income generated by the real estate in the initial year of investment
(or initial stabilized year) and the value of the asset in the marketplace.
Overall rates are affected by the existing leasing schedule of the property,
the strength or weakness of the local rental market, the property's position
relative to competing properties, and the risk/return characteristics
associated with competitive investments.
- -------------------------------------------------------------------------------
-109-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
For retail properties, the trend has been for rising capitalization
rates. We feel that much of this has to do with the quality of product that has
been selling. Sellers of better performing dominant Class A malls have been
unwilling to waver on their pricing. Many of the malls sold over the past 18-24
months are found in less desirable, second or third tier locations, or
rep-resent turnaround situations with properties that are poised for expansion
or remerchandising. With fewer buyers for the top performing assets, sales have
been somewhat limited.
===========================================================
OVERALL CAPITALIZATION RATES
REGIONAL MALL SALES
-----------------------------------------------------------
Year Range Mean Point Change
===========================================================
1988 5.00% - 8.00% 6.19% --
-----------------------------------------------------------
1989 4.57% - 7.26% 6.22% + 3
-----------------------------------------------------------
1990 5.06% - 9.11% 6.29% + 7
-----------------------------------------------------------
1991 5.60% - 7.82% 6.44% + 15
-----------------------------------------------------------
1992 6.00% - 7.97% 7.31% + 87
-----------------------------------------------------------
1993 7.00% - 10.10% 7.92% + 61
-----------------------------------------------------------
1994 6.98% - 10.29% 8.37% + 45
-----------------------------------------------------------
1995 7.25% - 11.10% 9.13% + 76
-----------------------------------------------------------
1996 7.00% - 12.00% 9.44% + 31
-----------------------------------------------------------
1997-YTD 7.40% - 12.77% 9.88% + 44
===========================================================
BASIS POINT CHANGE
===========================================================
1988-1997 + 369 BPs
-----------------------------------------------------------
1992-1997 + 257 BPs
===========================================================
The data shows that the average capitalization rate has shown a rising
trend each year. Between 1988 and 1997, the average capitalization rate has
risen 369 basis points. Since 1992, the rise has been 257 basis points. This
change is a reflection of both rising interest rates and increasing first year
returns demanded by investors in light of several fundamental changes which
have occurred in the retail sector.
As noted, much of the buying over the past 18 to 24 months has been
opportunistic acquisitions involving properties selling near or below
replacement cost. Many of these properties have languished due to lack of
management focus or expertise, as well as a limited ability to make the
necessary capital commitments for growth. As these opportunities become harder
to find, we believe that investors will again begin to focus on the stable
returns of the dominant Class A product.
The Cushman & Wakefield's Summer 1997 survey reveals that going-in cap
rates for CLASS A regional shopping centers range between 7.50 and 10.0
percent, with a low average of 8.0 percent and high average of 8.5 percent,
respectively; a spread of 50 basis points. On an overall basis, when Class B
assets and "Value Added" opportunities are added, the low and high means are
8.4 percent and 9.1 percent, respectively. Cushman & Wakefield now surveys
respondents on their criteria for both Class B and " Value Added" malls. As
expected, going-in
- -------------------------------------------------------------------------------
-110-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
capitalization and yield rates range from 100 to 300 basis points above rates
for Class A assets.
Terminal, or going-out rates for CLASS A assets are now averaging 8.5
and 9.0 percent, indicating a spread of 50 basis points over the going-in
rates. Again, on an overall basis, including Class B and "value added"
properties, the respective averages are 8.7 percent and 9.4 percent. Finally,
our current survey also shows that investors have become more cautious in their
underwriting, positioning "retail" lower on their investment rating scales in
terms of preferred investments.
<TABLE>
<CAPTION>
===========================================================================================================
CUSHMAN & WAKEFIELD VALUATION ADVISORY SERVICES
NATIONAL INVESTOR SURVEY - REGIONAL MALLS (%)
- -----------------------------------------------------------------------------------------------------------
Spring 1996 Autumn 1996 Summer 1997 *
Investment ------------------------------------------------------------------------------------------
Parameters Low High Low High Low High
===========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
OAR/Going-In 7.5 - 9.0 7.5 - 9.5 7.0 - 9.0 7.5 - 9.5 7.5 - 10.0 7.8 - 11.0
8.0 8.2 7.9 8.2 8.4 9.1
- -----------------------------------------------------------------------------------------------------------
OAR/Terminal 7.0 - 9.5 7.8 - 11.0 7.0 - 9.5 7.8 - 11.0 8.0 - 10.3 8.0 - 11.0
8.3 8.7 8.2 8.6 8.7 9.4
- -----------------------------------------------------------------------------------------------------------
IRR 10.0 - 15.0 11.0 - 15.0 10.0 - 15.0 11.0 - 15.0 10.0 - 20.0 10.5 - 20.0
11.5 11.8 11.4 11.8 13.4 13.9
===========================================================================================================
* Reflects overall results which includes Class A/B properties as well as value added opportunities.
===========================================================================================================
</TABLE>
Cushman & Wakefield now surveys respondents on their criteria for both
Class B and "Value Added" malls. As expected, going-in capitalization and yield
rates range from 100 to 300 basis points above rates for Class A assets. Our
current survey also shows that investors have become more cautious in their
underwriting, positioning "retail" lower on their investment rating scales in
terms of preferred investments.
The Fourth Quarter 1997 Peter F. Korpacz survey concurs with these
findings, citing that regional malls are near the bottom of investor
preferences, but 1997 is seen by many as a turnaround year. Pricing is lower
then it has been in years. As such, with pricing so low, their investors
foresee some opportunities for select investing. Mall portfolios continue to be
actively traded as this property type is clearly leading the consolidation of
real estate ownership into fewer but substantially larger entities.
Nonetheless, with expense growth surpassing sales increases in many
markets, occupancy cost issues have also become of greater concern. Even in
some malls where sales approach the lofty level of $350+/-per square foot, it
is not uncommon for occupancy costs to limit the opportunity to grow rents.
Thus, with limited upside growth in net income, cap rates are generally above
8.0 percent.
The survey also cites the considerable number of malls coming on the
market as compared with past years. In many cases the sellers are institutional
investors who are liquidating assets in commingled funds or other finite life
vehicles. Although most offerings tend to be Class "B" properties, there
appears to be ample demand for this product and an active transaction market is
developing. While pension funds and other institutional investors
- -------------------------------------------------------------------------------
-111-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
continue to seek only trophy and Class "A" malls, REITs have been active in
acquiring Class "B" centers. Many of the available "B" malls are being marketed
for redevelopment--for example, to be de-malled into power centers. On such a
property, the survey cites seller expectations of cap rates in the
mid-teens--14.0 percent to 15.0 percent--because the buyer takes a substantial
risk in a redevelopment deal.
<TABLE>
<CAPTION>
============================================================================================
NATIONAL REGIONAL MALL MARKET
FOURTH QUARTER 1997
- --------------------------------------------------------------------------------------------
CURRENT LAST
KEY INDICATORS QUARTER QUARTER YEAR AGO
============================================================================================
FREE & CLEAR EQUITY IRR
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RANGE 9.50%-13.00% 9.50%-13.00% 10.00%-14.00%
AVERAGE 11.48% 11.50% 11.69%
- --------------------------------------------------------------------------------------------
CHANGE (Basis Points) - - 2 -21
- --------------------------------------------------------------------------------------------
FREE & CLEAR GOING-IN CAP RATE
- --------------------------------------------------------------------------------------------
RANGE 7.00%-11.00% 7.00%-11.00% 7.00%-11.00%
AVERAGE 8.56% 8.58% 8.57%
- --------------------------------------------------------------------------------------------
CHANGE (Basis Points) - - 2 - 1
- --------------------------------------------------------------------------------------------
RESIDUAL CAP RATE
- --------------------------------------------------------------------------------------------
RANGE 7.50%-11.00% 7.50%-11.00% 7.50%-11.00%
AVERAGE 8.75% 8.78% 8.76%
- --------------------------------------------------------------------------------------------
CHANGE (Basis Points) - - - 1
============================================================================================
Source: Peter Korpacz Associates, Inc. - Real Estate Investor Survey (Fourth Qtr. 1997)
============================================================================================
</TABLE>
As can be seen from the data, the average IRR has decreased by 2 basis
point to 11.48 percent from the previous quarter (21 points below year-ago
levels). It is noted that this measure has been relatively stable over the past
three to six months. The quarter's average initial free and clear equity cap
rate fell only 2 basis points to 8.56 percent from last quarter (and is only 1
point below year-ago levels), while the residual cap rate was virtually
unchanged at 8.75 percent (1 points higher than the prior year). The survey
further cites the following capitalization rate ranges by class of property:
=========================================
CAP RATES BY CLASS
-----------------------------------------
Asset Cap Rate Cap Rate
Class Range Mean
=========================================
A+ 7.00% - 8.50% 7.75%
-----------------------------------------
A 7.00% - 9.00% 8.15%
-----------------------------------------
B+ 8.25% - 11.00% 9.50%
-----------------------------------------
B 8.50% - 11.00% 9.88%
=========================================
Source: Peter Korpacz (Fourth Qtr. 1997)
=========================================
Most retail properties that are considered institutional grade are
existing, seasoned centers with good inflation protection that offer stability
in income and are strongly positioned to the extent that they are formidable
barriers to new competition. Equally important are
- -------------------------------------------------------------------------------
-112-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
centers which offer good upside potential after face-lifting, renovations, or
expansion. With new construction down substantially, owners have accelerated
renovation and re-merchandising programs. Little competition from over building
is likely in most mature markets within which these centers are located.
Environmental concerns and "no-growth" mentalities in communities are now
serious impediments to new retail development.
Finally, investors have recognized that the retail landscape has been
fundamentally altered by consumer lifestyles changes, industry consolidations
and bankruptcies. This trend was strongly in evidence as the economy enters
1997 in view of the wave of retail chains whose troublesome earnings are
forcing major restructures or even liquidations. Trends toward more casual
dress at work and consumers growing pre-occupation with their leisure and home
lives have created the need for refocused leasing efforts to bring those
tenants to the mall that help differentiate them from the competition. As such,
entertainment, a loosely defined concept, is one of the most common directions
malls have taken. A trend toward bringing in larger specialty and category
tenants to the mall is also in evidence. The risk from an owners standpoint is
finding that mix which works the best. Nonetheless, the cumulative effect of
these changes has been a rise in rates as investors find it necessary to adjust
their risk premiums in their underwriting.
Based upon this discussion, we are inclined to group and characterize
regional malls into the general categories following:
- -------------------------------------------------------------------------------
-113-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
===============================================================================
CAP RATE RANGE CATEGORY
===============================================================================
7.0% to 7.5% (A+) Top 15 to 20+/-malls in the country. Excellent
demographics with high sales ($400+/-/SF) and good
upside.
- -------------------------------------------------------------------------------
7.5% to 8.5% (A) Dominant Class A investment grade property, high
sales levels, relatively good health ratios,
excellent demographics (top 50 markets), and
considered to present a significant barrier to entry
within its trade area. Sales tend to be in the $300
to $350 per square foot range.
- -------------------------------------------------------------------------------
8.5% to 11.0% (B+/B) Somewhat broad characterization of investment quality
properties ranging from primary MSAs to second tier
cities. Properties at the higher end of the scale
are probably somewhat vulnerable to new competition
in their market.
- -------------------------------------------------------------------------------
11.0% to 14.0% (B/C) Remaining product which has limited appeal or
significant risk which will attract only a smaller,
select group of investors.
===============================================================================
CONCLUSION - OVERALL CAPITALIZATION RATE
Based upon this analysis, we can develop a going-in capitalization rate
for the subject based upon its tenancy, investment appeal, quality, and
inherent risks. As discussed, the subject performs at or above regional norms
for sales productivity, and is one of the dominant malls in its region. The
property appears to be fairly well positioned in its market, and appears to
face little new competition in the future. To summarize, the following points
present an overview of our analysis of the subject's investment appeal:
The Mall of New Hampshire is situated in a relatively strong trade area
with above average prospects for population and household growth into the
foreseeable future. Furthermore the area is relatively affluent with average
household income levels above both state and nationally averages.
o Anchor and major tenants at the subject property represent a
fairly typical merchandising mix.
o The property has a strong level of average sales which have seen
increasing trends over the past several years.
o Occupancy costs are considered to be approaching the high-side
for tenants in-place, however this is common for malls with
average sales in excess of $300 per square foot.
o Overall, we are inclined to group the subject property into the
"A" category previously discussed, centers which show
capitalization rates in the relatively broad 7.50 to 8.50 percent
range.
- -------------------------------------------------------------------------------
-114-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
o In conjunction with the renovation and expansion of the center,
the majority of the leases at the subject property were
restructured. As a result the property faces minimal lease
expirations over the short term. This provides the property with
a fairly identifiable cash flow, but also limits the upside
potential of the property. In fact net operating income increases
at a rate of 2.1 percent over the holding period and only 1.2
percent subsequent to stabilized occupancy.
Considering these factors, we have looked toward a going-in
capitalization rate between 8.00 and 8.50 percent for the subject property
operating on a "stabilized" basis.
TERMINAL CAPITALIZATION RATE
The residual cash flows generated annually by the subject property
comprise only the first part of the return which an investor will receive. The
second component of this investment return is the pre-tax cash proceeds from
the resale of the property at the end of a projected investment holding period.
Typically, investors will structure a provision in their analyses in the form
of a rate differential over a going-in capitalization rate in projecting a
future disposition price. The view is that the improvement is then older and
the future is harder to visualize; hence a slightly higher rate is warranted
for added risks in forecasting. On average, the Cushman & Wakefield survey
shows a 30 basis point differential, while Korpacz reports 19 basis points.
As discussed, the subject property represents a dominant center in a
strong and growing market. The property was recently renovated and expanded and
as a result is considered to be in excellent overall condition. The property
presently has two strong anchor tenants and a third is scheduled to open in May
1998. The property also has one vacant anchor store which was caused by the
bankruptcy of Lechmeres. Management is presently negotiating with Best Buy for
the majority of this space and a second retailer is being actively pursued. The
property does, however, face competition form three enclosed regional centers
which are each located approximately 20 to 25 miles away. These centers present
a redundancy in anchor tenants and will effectively limit the size of the
subject's trade area. Nevertheless the property has achieved a stabilized
occupancy level and mall shop sales in excess of $350 per square foot.
Therefore, we have added 25 basis points to the terminal capitalization
rate. Thus, the projected terminal capitalization rate will range from 8.50 to
8.75 percent.
SELECTION OF DISCOUNT RATE/INTERNAL RATE OF RETURN
The discounted cash flow analysis makes several assumptions which
reflect typical investor requirements for yield on real property. These
assumptions are difficult to directly extract from any given market sale or by
comparison to other investment vehicles. Instead, investor surveys of major
real estate investment funds and trends in bond yield rates are often cited to
support such analysis.
Yield rates on long term real estate investments range widely between
property types. As cited in Cushman & Wakefield's Summer 1997 survey, investors
in regional malls are currently looking at broad rates of return between 10.00
and 20.00 percent. The average low IRR for CLASS A malls is 11.10 percent,
while the average high is 12.00 percent. The indicated
- -------------------------------------------------------------------------------
-115-
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
MALL STORE LEASE EXPIRATION SCHEDULE
=========================================================================================================
Number Percent
of Expiring of Annual Annual Percent
Tenants Square Square Base Base of Total
Expiring Footage Footage Cummulative Rent Rent/SF Rent Cummulative
=========================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vacant 0 26,234 8.0% 8.0%
1999 12 31,465 9.6% 17.6% $1,088,002 $34.58 10.9% 10.9%
2000 4 8,564 2.6% 20.2% $ 386,197 $45.10 3.9% 14.8%
2001 5 8,589 2.6% 22.9% $ 471,279 $54.87 4.7% 19.6%
2002 5 18,611 5.7% 28.5% $ 726,376 $39.03 7.3% 26.9%
2003 4 8,555 2.6% 31.2% $ 317,267 $37.09 3.2% 30.1%
2004 7 17,191 5.3% 36.4% $ 703,473 $40.92 7.1% 37.2%
2005 4 6,836 2.1% 38.5% $ 375,148 $54.88 3.8% 40.9%
2006 22 58,268 17.8% 56.3% $1,810,261 $31.07 18.2% 59.2%
2007 30 91,369 27.9% 84.2% $2,718,024 $29.75 27.4% 86.5%
2008 2 14,905 4.6% 88.8% $ 451,530 $30.29 4.5% 91.1%
2009 1 4,800 1.5% 90.2% $ 120,000 $25.00 1.2% 92.3%
=========================================================================================================
Total 96 295,387 90.2% 9,167,557 $31.04 92.3%
=========================================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
high averages for CLASS B properties are 13.40 and 13.90 percent, respectively.
Peter F. Korpacz reports an average internal rate of return of 11.48 percent
for the Fourth Quarter 1997, down only 2 basis points from the last quarter.
The yield rate on a long term real estate investment can also be
compared with yield rates offered by alternative financial investments since
real estate must compete in the open market for capital. In developing an
appropriate risk rate for the subject, consideration has been given to a number
of different investment opportunities. The following is a list of rates offered
by other types of securities:
===========================================================
MARKET RATES AND BOND YIELDS (%) March 11, 1998
===========================================================
Reserve Bank Discount Rate 5.52%
-----------------------------------------------------------
Prime Rate (Monthly Average) 8.50%
-----------------------------------------------------------
6-Month Treasury Bills 5.01%
-----------------------------------------------------------
U.S. 10-Year Notes 5.63%
-----------------------------------------------------------
U.S. 30-Year Bonds 5.93%
-----------------------------------------------------------
Corporate Bonds Aaa 6.73%
===========================================================
Source: Federal Reserve Statistical Release, March 12, 1998
===========================================================
This compilation of yield rates from alternative investments reflects
varying degrees of risk as perceived by the market. Therefore, a riskless level
of investment might be seen in a six month treasury bill at 5.01 percent. A
more risky investment, such as corporate bonds, would currently yield a much
higher rate of 6.73 percent. The prime rate is currently 8.50 percent, while
the discount rate is 5.52 percent. Ten year treasury notes are currently
yielding around 5.63 percent, while 30-year bonds are at 5.93 percent.
Real estate investment typically requires a higher rate of return
(yield) and is much influenced by the relative health of financial markets. A
retail center investment tends to incorporate a blend of risk and credit based
on the tenant mix, the anchors that are included (or excluded) in the
transaction, and the assumptions of growth incorporated within the cash flow
analysis. An appropriate discount rate selected for a retail center thus
attempts to consider the underlying credit and security of the income stream,
and includes an appropriate premium for liquidity issues relating to the asset.
There has historically been a consistent relationship between the
spread in rates of return for real estate and the "safe" rate available through
long-term treasuries or high-grade corporate bonds. A wider gap between return
requirements for real estate and alternative investments has been created in
recent years due to illiquidity issues, the absence of third party financing,
and the decline in property values.
Investors have suggested that the regional mall market has become
increasingly "tiered" over the past two years. The country's premier malls are
considered to have the strongest trade areas, excellent anchor alignments, and
significant barriers of entry to future competitive supply. These and other
"dominant" malls will have average mall shop sales above $350 per square foot
and be attractive investment vehicles in the current market.
- -------------------------------------------------------------------------------
-116-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
It is our opinion that the subject would attract strong interest from
institutional investors if offered for sale in the current marketplace.
However, we must further temper our analysis due to the fact that there
remains some risk that the inherent assumptions employed in our model come to
full fruition.
Finally, application of these rate parameters to the subject should entail
some sensitivity to the rate at which leases will be expiring over the
projection period. As previously noted the majority of the leases at the
subject property were restructured in connection with the expansion and
renovation of the center. As such there is little tenant expriations over the
short term. Reference is made to the table on the FACING PAGE. A complete
expiration report is included in the ADDENDA.
We would also note that much of the risk factored into such an analysis is
reflected in the assumptions employed within the cash flow model, including
rent and sales growth, turnover probability, reserves for replacement, and
vacancy provisions. As discussed within the body of this report, several
assumptions appear conservative in relation to the subject property. As such
we believe the overall cash flow projection is on the conservative side and
would thus warrant a lower discount or yield rate.
We have briefly discussed the investment risks associated with the
subject. On balance, it is our opinion that an investor in the subject
property would require an internal rate of return between 10.50 and 11.00
percent for the mall operating on an "as is" basis. Upon stabilization the
risk of leasing up the vacant space and finalizing the renovation of the food
court is reduced. However, the property is operating near a stabilized level
and the cost of completing the renovations are relatively minor in relation
to the over value of the property. Thus we do not believe a significant
adjustment to the yield rate is required.
PRESENT VALUE ANALYSIS
Analysis by the discounted cash flow method is examined over a holding
period that allows the investment to mature, the investor to recognize a
return commensurate with the risk taken, and a recapture of the original
investment. Typical holding periods usually range from 10 to 20 years and are
sufficient for the majority of institutional grade real estate such as the
subject to meet the criteria noted above. In the instance of the subject, we
have analyzed the "As Is" cash flows anticipated over a 10-year period
commencing on April 1, 1998 and the "As Stabilized" cash flows over a 10-year
period commencing April 1, 1999.
A sale or reversion is deemed to occur at the end of the 10th year based
upon capitalization of the following year's net operating income. This is
based upon the premise that a purchaser in the 10th year is buying the
following year's net income. Therefore, our analysis reflects this situation
by capitalizing the first year of the next holding period.
The present value is formulated by discounting the property cash flows at
various yield rates. The yield rate utilized to discount the projected cash
flow and eventual property reversion has been based on an analysis of
anticipated yield rates of investors dealing in similar investments. The
rates reflect acceptable expectations of yield to be achieved by investors
- ------------------------------------------------------------------------------
-117-
<PAGE>
INCOME CAPITALIZATION APPROACH
- ------------------------------------------------------------------------------
investors currently in the marketplace shown in their current investment
criteria and as extracted from comparable property sales.
=============================
Cash Flow Assumptions
=============================
==============================================================================
SUMMARY OF CRITICAL ASSUMPTIONS FOR DISCOUNTED CASH FLOW
==============================================================================
SUBJECT PROPERTY The Mall Of New Hampshire
- ------------------------------------------------------------------------------
LOCATION Manchester, New Hampshire
- ------------------------------------------------------------------------------
SQUARE FOOTAGE RECONCILIATION
- ------------------------------------------------------------------------------
TOTAL GROSS LEASABLE AREA 791,013+/- SF
- ------------------------------------------------------------------------------
ANCHOR TENANT GLA 463,620+/- SF
- ------------------------------------------------------------------------------
MALL SHOP GLA 317,748+/- SF
- ------------------------------------------------------------------------------
KIOSK GLA 1,890+/- SF
- ------------------------------------------------------------------------------
FOOD COURT 7,755+/- SF
- ------------------------------------------------------------------------------
TOTAL OWNED GLA 327,393+/- SF
==============================================================================
==============================================================================
MARKET RENT CONCLUSIONS
- ------------------------------------------------------------------------------
MARKET RENT ESTIMATES (1998)
- ------------------------------------------------------------------------------
TENANTS < 1,000 SQ/FT $70.00/SF
- ------------------------------------------------------------------------------
TENANTS 1,001 - 2,000 SQ/FT $50.00/SF
- ------------------------------------------------------------------------------
TENANTS 2,001 - 3,500 SQ/FT $35.00/SF
- ------------------------------------------------------------------------------
TENANTS 3,501 - 5,000 SQ/FT $30.00/SF
- ------------------------------------------------------------------------------
TENANTS 5,001 - 7,500 SQ/FT $27.50/SF
- ------------------------------------------------------------------------------
TENANTS > 7,501 SQ/FT $25.00/SF
- ------------------------------------------------------------------------------
KIOSK $300.00/SF
- ------------------------------------------------------------------------------
FOOD COURT $135.00/SF
==============================================================================
==============================================================================
GROWTH RATE ASSUMPTIONS
- ------------------------------------------------------------------------------
RETAIL SALES GROWTH RATE
- ------------------------------------------------------------------------------
YEAR: 1998-2008 + 3.5%
- ------------------------------------------------------------------------------
MARKET RENTAL GROWTH RATE
- ------------------------------------------------------------------------------
YEAR: 1998-2008 + 3.5%
- ------------------------------------------------------------------------------
GENERAL EXPENSE GROWTH RATE
- ------------------------------------------------------------------------------
YEAR: 1998-2008 + 3.5%
- ------------------------------------------------------------------------------
REAL ESTATE TAX GROWTH RATE
- ------------------------------------------------------------------------------
YEAR: 1998-2008 + 4.0%
==============================================================================
- ------------------------------------------------------------------------------
-118-
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================
DISCOUNTED CASH FLOW ANALYSIS ("As Is" Analysis)
The Mall of New Hampshire
Cushman & Wakefield, Inc.
- -----------------------------------------------------------------------------------------------------
YEAR NET CASH DISCOUNT FACTOR PRESENT VALUE COMPOSITION ANNUAL CASH
NO. YEAR FLOW 10.25% OF CASH FLOWS OF YIELD ON CASH RETURN
=====================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 1999 $11,052,925 x 0.9070295 = $10,025,329 6.88% 7.59%
2 2000 $12,292,679 x 0.8227025 = $10,113,217 6.94% 8.44%
3 2001 $12,390,717 x 0.7462154 = $9,246,144 6.35% 8.51%
4 2002 $12,461,889 x 0.6768394 = $8,434,697 5.79% 8.56%
5 2003 $12,385,861 x 0.6139133 = $7,603,844 5.22% 8.51%
6 2004 $12,724,825 x 0.5568374 = $7,085,659 4.87% 8.74%
7 2005 $12,740,763 x 0.5050680 = $6,434,951 4.42% 8.75%
8 2006 $13,088,308 x 0.4581115 = $5,995,905 4.12% 8.99%
9 2007 $12,520,335 x 0.4155207 = $5,202,458 3.57% 8.60%
10 2008 $13,022,953 x 0.3768895 = $4,908,214 3.37% 8.94%
- -----------------------------------------------------------------------------------------------------
Total Present Value of Cash Flows: $75,050,418 51.53% 8.56%
Total Average
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Reversion Year NOI/Income / Terminal OAR = Reversion
- -------------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
11 2009 $16,245,281 / 8.50% = $191,120,953
Less: Cost of Sale 2.00% ($3,822,419)
Less: TIs & Commissions $0
----------------------- -----------------
Net Reversion $187,298,534
x Discount Factor 0.3768895
------------------ -----------------
Total Present Value of Reversion $70,590,848 48.47%
Total Present Value of Cash Flows & Reversion: $145,641,265 100.00%
------------------------------------------------------------------------------
ROUNDED VALUE via
DISCOUNTED CASH FLOW: $145,600,000
------------------------------------------------------------------------------
==============================================================================
Owned Net Rentable Area: 327,393
Value Per Square Foot (Owned GLA): $444.73
Owned Mall Shop Area: 317,748
Value Per Square Foot (Shop GLA): $458.22
Year One NOI (12 months): $11,837,534
Implicit Going-In Capitalization Rate: 8.13%
Compound Annual Growth Rate
Concluded Value to Net Reversion Value: 2.84%
Compound Annual Growth Rate
Net Cash Flow: 1.84%
==============================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
===============================================================================
VACANCY & TYPICAL LEASE TERMS
- -------------------------------------------------------------------------------
AVERAGE LEASE TERM 10 Years
- -------------------------------------------------------------------------------
RENEWAL PROBABILITY 65.0 %
- -------------------------------------------------------------------------------
WEIGHTED AVERAGE DOWNTIME 2 Months
- -------------------------------------------------------------------------------
PERMANENT VACANCY None
- -------------------------------------------------------------------------------
CREDIT RISK LOSS 5.0%
- -------------------------------------------------------------------------------
STABILIZED OCCUPANCY 95.0 %
- -------------------------------------------------------------------------------
FORECASTED DATE OF STABILIZATION April 1999
- -------------------------------------------------------------------------------
ABSORPTION PERIOD 12 Months
===============================================================================
===============================================================================
OPERATING EXPENSE DATA
- -------------------------------------------------------------------------------
TENANT IMPROVEMENT ALLOWANCES
- -------------------------------------------------------------------------------
NEW TENANTS $ 15.00/SF
- -------------------------------------------------------------------------------
RENEWAL TENANTS $ 5.00/SF
- -------------------------------------------------------------------------------
LEASING COMMISSIONS
- -------------------------------------------------------------------------------
NEW TENANTS $ 2.50/SF
- -------------------------------------------------------------------------------
RENEWAL TENANTS $ 1.50/SF
- -------------------------------------------------------------------------------
OTHER OPERATING ITEMS
- -------------------------------------------------------------------------------
MANAGEMENT FEE (OF MIN.& % RENT) 5.0%
- -------------------------------------------------------------------------------
CAPITAL RESERVES (OF OWNED GLA) $ 0.20/SF
===============================================================================
===============================================================================
RATES OF RETURN "AS IS" "STABILIZED"
ANALYSIS ANALYSIS
- -------------------------------------------------------------------------------
CASH FLOW START DATE April 1, 1998 April 1, 1999
- -------------------------------------------------------------------------------
GOING-IN CAPITALIZATION RATE 8.00%- 8.50% 8.00%-8.50%
- -------------------------------------------------------------------------------
TERMINAL CAPITALIZATION RATE 8.25%-8.75% 8.25%-8.75%
- -------------------------------------------------------------------------------
DISCOUNT RATE 10.50%-11.00% 10.00%-10.50%
- -------------------------------------------------------------------------------
REVERSIONARY SALES COSTS 2.00% 2.00%
- -------------------------------------------------------------------------------
HOLDING PERIOD 10 Years 10 Years
===============================================================================
- -------------------------------------------------------------------------------
-119-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
=============================
DISCOUNTED CASH FLOW
"As Is" Analysis
=============================
For a property such as the subject, it is our opinion that an investor
would require an all cash discount rate in the range of 10.50 to 11.00 percent
on an "As Is" operating basis. Accordingly, we have discounted the projected
future pre-tax cash flows to be received by an equity investor in the subject
property to a present value so as to yield 10.50 to 11.00 percent at 25 basis
point intervals on equity capital over the holding period. This range of rates
reflects the risks associated with the investment. Discounting these cash flows
over the range of yield and terminal rates now being required by participants
in the market for this type of real estate places additional perspective upon
our analysis. A valuation matrix for the subject appears on the FACING PAGE.
Through such a sensitivity analysis, it can be seen that the present
value of the subject property varies from approximately $136.7 to $141.0
million on an "As Is" basis Giving consideration to all of the characteristics
of the subject previously discussed, we feel that a prudent investor would
require a yield which falls near the middle of the range outlined above for
this property. Accordingly, we believe that based upon all of the assumptions
inherent in our cash flow analysis, an investor would look toward as IRR around
10.50 percent and a terminal rate around 8.50 percent as being most
representative of the subject's value in the market.
In view of the analysis presented here, it becomes our opinion that the
discounted cash flow analysis indicates an As Is Market Value of $140,500,000
for the subject property as of February 1, 1998, our date of analysis. Based on
this analysis, the following investment indices are indicated.
Value Per SF of Owned GLA $424.57
Value Per SF of Mall Shop GLA $437.45
Implicit Going-In Capitalization Rate 7.93%
Average Cash-on-Cash Return 8.61%
The analysis shows that the value is properly allocated with 50.95
percent coming from cash flow and 49.05 percent from the property reversion.
The implicit going-in capitalization rate is 7.93 percent and the average
cash-on-cash return is approximately 8.61 percent over the term.
- -------------------------------------------------------------------------------
-120-
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================
DISCOUNTED CASH FLOW ANALYSIS ("AS STABILIZED" ANALYSIS)
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc.
- ------------------------------------------------------------------------------------------------------------
YEAR NET CASH DISCOUNT FACTOR PRESENT VALUE COMPOSITION ANNUAL CASH
NO. YEAR FLOW 10.25% OF CASH FLOWS OF YIELD ON CASH RETURN
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 2000 $12,237,733 x 0.9070295 = $11,099,985 7.32% 8.08%
2 2001 $12,280,126 x 0.8227025 = $10,102,890 6.67% 8.11%
3 2002 $12,386,575 x 0.7462154 = $9,243,053 6.10% 8.18%
4 2003 $12,312,641 x 0.6768394 = $8,333,680 5.50% 8.13%
5 2004 $12,602,288 x 0.6139133 = $7,736,712 5.11% 8.32%
6 2005 $12,637,584 x 0.5568374 = $7,037,080 4.64% 8.34%
7 2006 $13,028,551 x 0.5050680 = $6,580,304 4.34% 8.60%
8 2007 $12,198,352 x 0.4581115 = $5,588,206 3.69% 8.05%
9 2008 $12,432,338 x 0.4155207 = $5,165,893 3.41% 8.21%
10 2009 $15,006,346 x 0.3768895 = $5,655,734 3.73% 9.91%
- --------------------------------------------------------------------------------------------------------------
TOTAL PRESENT VALUE OF CASH FLOWS: $76,543,535 50.51% 8.39%
Total Average
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Reversion Year NOI/Income / Terminal OAR = Reversion
- -------------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
11 2010 $17,260,268 / 8.50% = $203,061,976
Less: Cost of Sale 2.00% ($4,061,240)
Less: TIs & Commissions $0
----------------------- -------------
Net Reversion $199,000,737
x Discount Factor 0.3768895
------------------ -------------
TOTAL PRESENT VALUE OF REVERSION $75,001,285 49.49%
TOTAL PRESENT VALUE OF CASH FLOWS & REVERSION: $151,544,820 100.00%
------------------------------------------------------------------------------------
ROUNDED VALUE VIA
DISCOUNTED CASH FLOW: $151,500,000
------------------------------------------------------------------------------------
====================================================================================
OWNED NET RENTABLE AREA: 327,393
VALUE PER SQUARE FOOT (OWNED GLA): $462.75
OWNED MALL SHOP AREA: 317,748
VALUE PER SQUARE FOOT (SHOP GLA): $476.79
YEAR ONE NOI (12 MONTHS): $12,430,220
IMPLICIT GOING-IN CAPITALIZATION RATE: 8.20%
COMPOUND ANNUAL GROWTH RATE
CONCLUDED VALUE TO NET REVERSION VALUE: 3.08%
COMPOUND ANNUAL GROWTH RATE
NET CASH FLOW: 2.29%
====================================================================================
</TABLE>
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
=============================
DISCOUNTED CASH FLOW
"At Stabilization"
=============================
As noted, our cash flows "At Stabilization" essentially utilize the
same assumptions as our "As Is" analysis. Our valuation of the subject property
"At Stabilization" has a holding period of 10 years beginning April 1, 1999.
The assumptions remain the same as discussed previously, except for the
discount rate utilized. As discussed, we believe a prudent investor would
utilize a range in discount rates approximately 25 to 50 points lower than the
"As Is" scenario since there would be less risk to account for projected
lease-up and absorption. Accordingly, we have discounted the projected future
pre-tax cash flows to be received by an equity investor in the subject property
to a present value so as to yield 10.00 to 10.75 percent at 25 basis point
intervals on equity capital over the holding period. This range of rates
reflects the risks associated with the investment. Discounting these cash flows
over the range of yield and terminal rates now being required by participants
in the market for this type of real estate places additional perspective upon
our analysis. A prospective valuation matrix for the subject appears on the
FACING PAGE.
Through such a sensitivity analysis, it can be seen that the present
value of the subject property varies from approximately $143.0 to $147.5
million "At Stabilization". Giving consideration to all of the characteristics
of the subject previously discussed, we feel that a prudent investor would
require a yield which falls near the middle of the range outlined above for
this property. Accordingly, we believe that based upon all of the assumptions
inherent in our cash flow analysis, an investor would look toward as IRR around
10.25 percent and a terminal rate around 8.50 percent.
In view of the analysis presented here, it becomes our opinion that the
discounted cash flow analysis indicates a Prospective Market Value At
Stabilization of $145,400,000 for the subject property as of April 1, 1999, the
forecasted date of stabilization, based on conditions prevailing as of April 1,
1999, the date of analysis. Based on these value parameters, the following
investment indices are indicated.
Value Per SF of Owned GLA $444.11
Value Per SF of Mall Shop GLA $457.60
Implicit Going-In Capitalization Rate 8.44%
Average Cash-on-Cash Return 8.56%
The analysis shows that the value is properly allocated with 51.59
percent coming from cash flow and 48.41 percent from the property reversion.
The implicit going-in capitalization rate is 8.44 percent and the average
cash-on-cash return is approximately 8.56 percent over the term.
We note that the computed equity yield is not necessarily the true rate
of return on equity capital. This analysis has been performed on a pre-tax
basis. The tax benefits created by real estate investment will serve to attract
investors to a pre-tax yield which is not the full measure of the return on
capital.
- -------------------------------------------------------------------------------
-121-
<PAGE>
INCOME CAPITALIZATION APPROACH
- -------------------------------------------------------------------------------
==================================================
DIRECT CAPITALIZATION
"At Stabilization"
==================================================
To further support our prospective value conclusion "At Stabilization"
derived via the discounted cash flow, we have also utilized the direct
capitalization method. In direct capitalization, an overall rate is applied to
the net operating income of the subject property. In this case, we will again
consider the indicated overall rates from the comparable sales in the Sales
Comparison Approach, as well as those rates established in our Investor Survey.
In view of our total analysis, we would anticipate that the subject
property would trade at an overall rate of approximately 8.25 to 8.50 percent
applied to first year income. Applying these rates to first stabilized year net
operating income before reserves, alterations, and other expenses for the
subject of $12,266,583 results in a value of approximately $144.3 to $148.7
million. From this range, we would be inclined to conclude at a Prospective
Market Value At Completion of $145,000,000 via Direct Capitalization as of
April 1, 1999, based on conditions prevailing as of February 16, 1998, the date
of analysis. This value is indicative of an overall rate of 8.46 percent.
- -------------------------------------------------------------------------------
-122-
<PAGE>
RECONCILIATION AND FINAL VALUE ESTIMATE
- -------------------------------------------------------------------------------
Reconciliation is the process of deriving a single point value estimate
for the subject property from the indications provided by the approaches at
hand. This process requires the weighing of each approach as they relate to the
appraisal assignment and resolving the differences among the valuation
procedures. In the end, a single estimate of market value is concluded based
upon the appropriateness of each value indication. A summary of the value
indications for the subject is set forth below.
================================================================================
"AS IS" VALUE SUMMARY "AS STABILIZED" SUMMARY
================================================================================
Cost Approach N/A N/A
- --------------------------------------------------------------------------------
Sales Comparison Approach $141,100,000 $145,000,000
- --------------------------------------------------------------------------------
Income Capitalization Approach
Direct Capitalization $140,500,000 $145,000,000
================================================================================
Two approaches to value have been utilized for this analysis. In
general terms, the approaches included provide complimentary results, each
technique supporting the other. "As Is", the range of values runs from $75
million to $78.4 million, a spread of 4.53 percent.
SALES COMPARISON APPROACH
The Sales Comparison Approach has arrived at a value for the subject
property by analyzing historical arms-length transactions, reducing the
gathered information to common units of comparison, adjusting the sale data for
differences with the subject, and interpreting the results to yield a
meaningful value conclusion. The basis of these conclusions was the
cash-on-cash return based on net income and the adjusted price per square foot
of gross leasable area sold.
The process of comparing historical sales data to assess what
purchasers have been paying for similar type properties is weak in estimating
future expectations. Although the unit sale price yields comparable
conclusions, it is not the primary tool by which the investor market for a
property like the subject operates. In addition, no two properties are alike
with respect to quality of construction, location, market segmentation and
income profile. As such, subjective judgment necessarily becomes a part of the
comparative process.
The usefulness of this approach is that it interprets specific investor
parameters established in their analysis and ultimate purchase of a property.
In light of the above, this methodology is best suited as support for the
conclusions of the Income Approach. It provides useful market extracted rates
of return, such as overall rates, to simulate investor behavior in the Income
Capitalization Approach.
INCOME CAPITALIZATION APPROACH
DISCOUNTED CASH FLOW ANALYSIS
The subject property is highly suited to analysis by the discounted
cash flow method (DCF) as it will be bought and sold in investment circles. The
focus on property value in relation to anticipated income is well founded since
the basis for investment is profit in the form of return or yield on invested
capital.
- -------------------------------------------------------------------------------
-123-
<PAGE>
RECONCILIATION AND FINAL VALUE ESTIMATE
- -------------------------------------------------------------------------------
The subject property, as an investment vehicle, is sensitive to all
changes in the economic climate and the economic expectations of investors. The
discounted cash flow analysis may easily reflect changes in the economic
climate of investor expectations by adjusting the variables used to qualify the
model. In the case of the subject property, the DCF can analyze existing
leases, probabilities of future rollovers and turnovers, and reflect the
expectations of overage rents. Essentially, the DCF can model many of the
dynamics of a complex shopping center. Particular emphasis is placed on the
results of the discounted cash flow analysis because of the applicability of
this method in accounting for the specific characteristics of the property, as
well as being the tool used by many purchasers.
CAPITALIZATION
Direct capitalization has its basis in capitalization theory and uses
the premise that the relationship between income and sales price may be
expressed as a rate or its reciprocal, a multiplier. This process selects rates
derived from the marketplace, in much the same fashion as the Sales Comparison
Approach, and applies this to a projected net operating income to derive a sale
price. The weakness here is the idea of using one year of cash flow as the
basis for calculating a sale price.
This is simplistic in its view of expectations and may sometimes be
misleading. If the year chosen for the analysis of the sale price contains an
income steam that is over or understated, this error is compounded by the
capitalization process. Nonetheless, real estate of the subject's caliber is
commonly purchased on a direct capitalization basis. Overall, this methodology
has been given important consideration in our total analysis of the subject
property upon stabilized operations.
CONCLUSIONS
We have briefly discussed the applicability of each of the methods
presented. Because of certain vulnerable characteristics in the Sales
Comparison Approach, it has been used as supporting evidence and as a final
check on the value conclusion indicated by the Income Approach methodologies.
The ranges in value exhibited by the Income Capitalization Approach are
consistent with the leasing profiles. Each indicates complimentary results with
the Sales Comparison Approach, the conclusions being supportive of each method
employed, and neither range being extremely high or low in terms of the other.
- -------------------------------------------------------------------------------
-124-
<PAGE>
RECONCILIATION AND FINAL VALUE ESTIMATE
- -------------------------------------------------------------------------------
MARKET VALUE AS IS
As a result of our analysis, we have formed an opinion that the AS IS
MARKET VALUE of the Leased Fee Estate in the referenced real property, subject
to the assumptions, limiting conditions, certifications, and definitions, as of
February 16, 1998, the date of analysis, was:
ONE HUNDRED FORTY ONE MILLION DOLLARS
$141,000,000
Furthermore, it is our opinion that the market value of the leased fee
estate in the referenced property, upon attainment of stabilized occupancy, as
of April 1, 1999, the forecasted date of stabilized occupancy will be:
ONE HUNDRED FORTY FIVE MILLION DOLLARS
$145,000,000
- -------------------------------------------------------------------------------
-125-
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
- -------------------------------------------------------------------------------
"Appraisal" means the appraisal report and opinion of value stated therein; or
the letter opinion of value, to which these Assumptions and Limiting Conditions
are annexed.
"Property" means the subject of the Appraisal.
"C&W" means Cushman & Wakefield, Inc. or its subsidiary which issued the
Appraisal.
"Appraiser(s)" means the employee(s) of C&W who prepared and signed the
Appraisal.
This appraisal is made subject to the following assumptions and limiting
conditions:
1. No opinion is intended to be expressed and no responsibility is
assumed for the legal description or for any matters which are
legal in nature or require legal expertise or specialized
knowledge beyond that of a real estate appraiser. Title to the
Property is assumed to be good and marketable and the Property is
assumed to be free and clear of all liens unless otherwise
stated. No survey of the Property was undertaken.
2. The information contained in the Appraisal or upon which the
Appraisal is based has been gathered from sources the Appraiser
assumes to be reliable and accurate. Some of such information may
have been provided by the owner of the Property. Neither the
Appraiser nor C&W shall be responsible for the accuracy or
completeness of such information, including the correctness of
estimates, opinions, dimensions, sketches, exhibits and factual
matters.
3. The opinion of value is only as of the date stated in the
Appraisal. Changes since that date in external and market factors
or in the Property itself can significantly affect property
value.
4. The Appraisal is to be used in whole and not in part. No part of
the Appraisal shall be used in conjunction with any other
appraisal. Publication of the Appraisal or any portion thereof
without the prior written consent of C&W is prohibited. Except as
may be otherwise stated in the letter of engagement, the
Appraisal may not be used by any person other than the party to
whom it is addressed or for purposes other than that for which it
was prepared. No part of the Appraisal shall be conveyed to the
public through advertising, or used in any sales or promotional
material without C&W's prior written consent. Reference to the
Appraisal Institute or to the MAI designation is prohibited.
5. Except as may be otherwise stated in the letter of engagement,
the Appraiser shall not be required to give testimony in any
court or administrative proceeding relating to the Property or
the Appraisal.
- -------------------------------------------------------------------------------
-126-
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
- -------------------------------------------------------------------------------
6. The Appraisal assumes (a) responsible ownership and competent
management of the Property; (b) there are no hidden or unapparent
conditions of the Property, subsoil or structures that render the
Property more or less valuable (no responsibility is assumed for
such conditions or for arranging for engineering studies that may
be required to discover them); (c) full compliance with all
applicable federal, state and local zoning and environmental
regulations and laws, unless noncompliance is stated, defined and
considered in the Appraisal; and (d) all required licenses,
certificates of occupancy and other governmental consents have
been or can be obtained and renewed for any use on which the
value estimate contained in the Appraisal is based.
7. The physical condition of the improvements considered by the
Appraisal is based on visual inspection by the Appraiser or other
person identified in the Appraisal. C&W assumes no responsibility
for the soundness of structural members nor for the condition of
mechanical equipment, plumbing or electrical components.
8. The forecasted potential gross income referred to in the
Appraisal may be based on lease summaries provided by the owner
or third parties. The Appraiser assumes no responsibility for the
authenticity or completeness of lease information provided by
others. C&W recommends that legal advice be obtained regarding
the interpretation of lease provisions and the contractual rights
of parties.
9. The forecasts of income and expenses are not predictions of the
future. Rather, they are the Appraiser's best estimates of
current market thinking on future income and expenses. The
Appraiser and C&W make no warranty or representation that these
forecasts will materialize. The real estate market is constantly
fluctuating and changing. It is not the Appraiser's task to
predict or in any way warrant the conditions of a future real
estate market; the Appraiser can only reflect what the investment
community, as of the date of the Appraisal, envisages for the
future in terms of rental rates, expenses, supply and demand.
10. Unless otherwise stated in the Appraisal, the existence of
potentially hazardous or toxic materials which may have been used
in the construction or maintenance of the improvements or may be
located at or about the Property was not considered in arriving
at the opinion of value. These materials (such as formaldehyde
foam insulation, asbestos insulation and other potentially
hazardous materials) may adversely affect the value of the
Property. The Appraisers are not qualified to detect such
substances. C&W recommends that an environmental expert be
employed to determine the impact of these matters on the opinion
of value.
11. Unless otherwise stated in the Appraisal, compliance with the
requirements of the Americans With Disabilities Act of 1990 (ADA)
has not been considered in arriving at the opinion of value.
Failure to comply with the requirements of the ADA may adversely
affect the value of the property. C&W recommends that an expert
in this field be employed.
- -------------------------------------------------------------------------------
-127-
<PAGE>
CERTIFICATION OF APPRAISAL
- -------------------------------------------------------------------------------
We certify that, to the best of our knowledge and belief:
1. Vincent S. Maniscalco inspected the property and prepared the report.
Richard W. Latella, MAI has reviewed and approved the report but did
not inspect the property.
2. The statements of fact contained in this report are true and correct.
3. The reported analyses, opinions, and conclusions are limited only by
the reported assumptions and limiting conditions, and are our personal,
unbiased professional analyses, opinions, and conclusions.
4. We have no present or prospective interest in the property that is the
subject of this report, and we have no personal interest or bias with
respect to the parties involved.
5. Our compensation is not contingent upon the reporting of a
predetermined value or direction in value that favors the cause of the
client, the amount of the value estimate, the attainment of a
stipulated result, or the occurrence of a subsequent event. The
appraisal assignment was not based on a requested minimum valuation, a
specific valuation or the approval of a loan.
6. No one provided significant professional assistance to the persons
signing this report.
7. Our analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice of the Appraisal Foundation and the
Code of Professional Ethics and the Standards of Professional Appraisal
Practice of the Appraisal Institute.
8. The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
9. As of the date of this report, Richard W. Latella, MAI have completed
the requirements of the continuing education program of the Appraisal
Institute.
/s/ Vincent S. Maniscalco
Vincent S. Maniscalco
Director
Retail Valuation Group
/s/ Richard W. Latella
Richard W. Latella, MAI
Senior Director
Retail Valuation Group
- -------------------------------------------------------------------------------
-128-
<PAGE>
ADDENDA
- -------------------------------------------------------------------------------
LEGAL DESCRIPTION
INVESTOR SURVEY
1991 - 1994 MALL SALES
FOOD COURT RENT COMPARABLES
PRO-JECT+ LEASE ABSTRACT REPORT
PRO-JECT+ ASSUMPTIONS REPORT
PRO-JECT+ LEASE EXPIRATION REPORT
TENANT OCCUPANCY COST ANALYSIS
ENDS FULL DATA REPORT
INCOME & EXPENSE GROWTH ANALYSIS - "As Is"
SENSITIVITY ANALYSIS - "As Is"
CASH FLOW PRO FORMA - "As Stabilized"
INCOME & EXPENSE GROWTH ANALYSIS - "As Stabilized"
SENSITIVITY ANALYSIS - "As Stabilized"
RETAIL MARKET OVERVIEW
APPRAISERS' QUALIFICATIONS
- -------------------------------------------------------------------------------
-129-
<PAGE>
EXHIBIT "A"
Part 6
LEGAL DESCRIPTION OF MALL OF NEW HAMPSHIRE
------------------------------------------
SHOPPING CENTER SITE
--------------------
A certain parcel of land situated in the City of Manchester,
Hillsborough Country, New Hampshire, said parcel being shown as Parcels A
through S on a survey and plan entitled "Lot Line Adjument/Consolidation Plan
for Mall of New Hampshire Expansion, South Willow Street, Manchester, New
Hampshire", prepared for New England Development, Scale 1" = 60 dated August,
1996, by Costello, Lomasney & deNapoli, Inc., recorded with the Hillsbrough
Country Registry of Deeds as Plan No. 28254 (the "Plan"), bounds and described
as follows:
Beginning at a point on the Interstate Route 293 limited access
right-of-way line (L.A.R.O.W. line) at its interstate with the easterly street
line of South Willow Street (Route 28), said being the northwesterly corner of
the parcel herein described;
Thence, easterly along said L.A.R.O.W. line on the following courses:
North 81(degree) 38(feet) 31(inches) Ease, a distance of 285.20 feet; along a
curve to the left with a radius of 677.00 feet, a distance of 185.33 feet;
North 65(degree) 57(feet) 27(inches) East, a distance of 229.93 feet; along a
curve to the right with a radius of 11,309.15 feet a distance of 1,308.12 feet
to a point on the westerly street line of Huse Road;
Thence, southerly along said street line on the following courses: South
37(degree) 38(feet) 11(inches) West, a distance of 827.38 feet to point on the
division line between the parcel herein described on the north and land now or
formerly of Bernard H. and Josephine Cowette (Tax 666A, Lot 5) on the south;
Thence, westerly and southerly along said land of Cowette on the
following courses: North 60(degree) 16(feet) 09(inches) West, a distance of
96.71 feet; South 37(degree) 03(feet) 16(inches) West, a distance of 52.85 feet
to a point at the southwest corner of said land of Cowette and on the division
line between said Cowette on the north and land now of formerly of John N.
Ashkar and Ashkar Children's Limited Liability Company (Tax Map 666A, Lots 6
and 7), said parcel leaded by Manchester Mall Realty Trust and assigned to MHN
Mall L.L.C., on the south;
Thence, easterly along said leased parcel on a bearing of South
60(degree) 16(feet) 09(inches) East, a distance of 89.17 feet to a point on
the westerly street line of said Huse Road;
Thence, southerly along said street line along a curve to the left with
a radius of 1,178.00 feet, a distance of 160.64 feet to a point on the division
line between said leased land on the north and land now or formerly of Margaret
St. Pierre and Ruth A Field (Tax Map 666s, Lor 8) on the south;
Thence, westerly and southerly along said land of Pierre and Field,
other land of Pierre and Field (Tax Map 666A, Lot 9), land now or formerly of
Eward A. and Sally I. Welch (Tax Map 666A, Lot 10) and land now or formerly of
Susan E. and Kathleen A. Longchamps (Tax
A-Part 6 - Page 1 of 3
<PAGE>
Map 666A, Lot 11) on the following courses: North 62(degree) 43(feet)
38(inches) West, a distance of 93.51 feet: South 19(degree) 55(feet) 26(inches)
West, a distance of 263.60 feet to a point at the southwesterly corner of said
land of Longchamps;
Thence, easterly along said land of Longchapms on a bearing of South
59(degree) 51(feet) 04 (inches) East, a distance of 76.33 feet to a point on
the westerly street line of said Huse Road;
Thence, southerly along said street line on the following courses: South
19(degree) 57(feet) 00(inches) West, a distance of 424.98 feet; along a curve
to the right with a radius of 1,304.85 feet, a distance of 307.58 feet to a
point on the division line between the parcel herein described on the north and
land now or formerly of Public Service of New Hampshire (Tax Map 666A, Line 9A)
on the south;
Thence, westerly, northerly, westerly, northerly, westerly, and
southerly in that order. along said land of Public Service of New Hampshire on
the following course: North 60(degree 16(feet) 54(inches) West, a distance of
100.00 feet; North 24(degree) 07(feet) 46(inches) East, a distance of 100.48
feet; North 60(degree) 16(feet) 54(inches) West, a distance of 176.36 feet;
along curve to the left with a radius of 35.00 feet, a distance of 55.33 feet;
South 29(degree) 08(feeet) 15(inches) West, a distance of 540.06 feet to a
point on the division line between the parcel herein described on the west, a
land now or formerly of Carefree Associates Limited Partnership (Tax 666, Lot 9)
on the east;
Thence, southerly and westerly along said land of Carefree Associate
Limited Partnership and land now or formerly of Harvey Industries
Manufacturing, Inc. (Tax Map 666, Lot 7) on the following courses: South
29(degree) 08(feet) 15(inches) West, a distance of 31,12 feet; North 76(degree)
18(feet) 14(inches) West, a distance of 212.34 feet to a point at the northwest
corner of said land of Harvey Industries Manufacturing, Inc.;
Thence, southerly and southwesterly along said land of Harvey Industries
on the following courses: South 15(degree 23(feet 42(inches) West, a distance
190.27 feet; South 65(degree) 25(feet) 18(inches) West, a distance of 330.99
feet to a point at the northwest corner of the City Manchester, known as
Merrill Cemetery (Tax Map 666, Lot 2B);
Thence, westerly along said Merrill Cemetery, following a stone wall, on
a bearing of North 83(degree 43(feet 19(inches) West, a distance of 199.63 feet
to a point on the easterly street line of Nutt Road;
Thence, further westerly crossing said Nutt Road on a bearing of North
76(degree 59(feet) 20(inches) West, a distance of 57.75 feet to a point on the
westerly street line of said Nutt Road;
Thence, southerly and westerly along said street line on the following
courses: South 13(degree) 00(feet) 14(inches) West, a distance of 0.83 feet;
South 11(degree 22(feet) 26(inches) West, a distance of 100.88 feet; North
79(degree) 14(feet) 31(inches) West, a distance of 7.27 feet to a point on the
easterly street line of said South Willow Street;
A-Part6 - Page 2 of 3
<PAGE>
Thence, northerly along said street line on a bearing of North
09(degree) 04(feet) 44(inches) West, a distance of 232.90 feet to a point on
the division line between the parcel herein described on the south a land now
or formerly of John N. Ashkar and Ashkar Children's Limited Liability Company
(Tax 666, Lot 1), said parcel being to MNH Mall L.L.C., on the north;
Thence, further northerly, easterly, and northerly, in that order, along
said street line and following the said leased parcel on the following courses:
North 79(degree 24(feet) 22(inches) West, a distance of 295.77 feet; North
79(degree) 24(feet) 22(inches) East, a distance of 35.01 feet along curve to
the right with a radius of 1,045.92 feet, a distance of 467.70 feet to a point
at northwesterly corner of said Ashkar leased parcel;
Thence, further northerly along said street line on the following
courses: along a curve to the right with a radius of 1,045.92 feet, a distance
of 327.36 feet; North 31(degree 57(feet) 34(inches) East, a distance of 200.00
feet; along a curve to the left with radius 1,245.92 feet, a distance of 547.09
feet; North 07(degree) 48(feet) 01(inches) East, a distance of 12.77 feet to
the point or place of beginning.
Being 3,075,962 square feet (70.61 acres) more or less.
<PAGE>
Mon Mar 2, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP 80-02, HH 80-02, INC 80-02)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------
<S> <C>
POP_80: TOTAL 273,122
POP_90: TOTAL 346,578
POP_97: TOTAL (EST.) 373,944
POP_02: TOTAL (PROJ.) 398,925
HH_80: TOTAL 94,924
HH_90: TOTAL 126,908
HH_97: TOTAL (EST.) 144,105
HH_02: TOTAL (PROJ.) 157,139
INC_80: PER CAPITA (EST.) $ 7,257
INC_90: PER CAPITA $ 16,823
INC_97: PER CAPITA (EST.) $ 24,459
INC_02: PER CAPITA (PROJ.) $ 31,301
HH_90_BY INCOME_89: MEDIAN $ 39,951
HH_97_BY INCOME: MEDIAN $ 49,111
HH_02_BY INCOME: MEDIAN $ 57,694
HH_80_BY INCOME_79: AVERAGE $ 20,881
HH_90_BY INCOME_89: AVERAGE $ 45,376
HH_97_BY INCOME: AVERAGE $ 62,271
HH_02_BY INCOME: AVERAGE $ 78,047
1990 MEDIAN HOUSE VALUE $137,608
1997 MEDIAN HOUSE VALUE $156,969
2002 MEDIAN HOUSE VALUE $172,907
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP 80-02, HH 80-02, INC 80-02)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
POPULATION
2002 PROJECTION 398,925
1997 ESTIMATE 373,944
1990 CENSUS 346,578
1980 CENSUS 273,122
GROWTH 1980 - 1990 26.89%
HOUSEHOLDS
2002 PROJECTION 157,139
1997 ESTIMATE 144,105
1990 CENSUS 126,908
1980 CENSUS 94,924
GROWTH 1980 - 1990 33.70%
1997 ESTIMATED POPULATION BY RACE 373,944
WHITE 97.31%
BLACK 0.90%
ASIAN & PACIFIC ISLANDER 1.07%
OTHER RACES 0.71%
1997 ESTIMATED POPULATION 373,944
HISPANIC ORIGIN 1.42%
OCCUPIED UNITS 126,908
OWNER OCCUPIED 65.83%
RENTER OCCUPIED 34.17%
1990 AVERAGE PERSONS PER HH 2.66
1997 EST. HOUSEHOLDS BY INCOME 144,105
$150,000 OR MORE 3.84%
$100,000 TO $149,999 7.24%
$75,000 TO $99,999 10.86%
$50,000 TO $74,999 26.90%
$35,000 TO $49,999 19.45%
$25,000 TO $34,999 10.79%
$15,000 TO $24,999 9.97%
$5,000 TO $15,000 8.58%
UNDER $5,000 2.36%
1997 EST. AVERAGE HOUSEHOLD INCOME $ 62,271
1997 EST. MEDIAN HOUSEHOLD INCOME $ 49,111
1997 EST. PER CAPITA INCOME $ 24,459
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 2
CUSTOM SUMMARY REPORT
(POP 80-02, HH 80-02, INC 80-02)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------
<S> <C>
1997 ESTIMATED POPULATION BY SEX 373,944
MALE 49.59%
FEMALE 50.41%
MARITAL STATUS 268,919
SINGLE MALE 13.62%
SINGLE FEMALE 11.58%
MARRIED 58.71%
PREVIOUSLY MARRIED MALE 5.40%
PREVIOUSLY MARRIED FEMALE 10.69%
HOUSEHOLDS WITH CHILDREN 50,487
MARRIED COUPLE FAMILY 80.45%
OTHER FAMILY-MALE HEAD 4.18%
OTHER FAMILY-FEMALE HEAD 14.13%
NON FAMILY 1.24%
1997 ESTIMATED POPULATION BY AGE 373,944
UNDER 5 YEARS 8.82%
5 TO 9 YEARS 7.03%
10 TO 14 YEARS 6.45%
15 TO 17 YEARS 3.73%
18 TO 20 YEARS 3.62%
21 TO 24 YEARS 4.55%
25 TO 29 YEARS 7.99%
30 TO 34 YEARS 9.21%
35 TO 39 YEARS 10.01%
40 TO 49 YEARS 16.37%
50 TO 59 YEARS 8.72%
60 TO 64 YEARS 3.20%
65 TO 69 YEARS 3.21%
70 TO 74 YEARS 2.26%
75 + YEARS 4.83%
MEDIAN AGE 34.24
AVERAGE AGE 34.75
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 3
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------
DESCRIPTION TOTALS
- -------------------------------------------------
<S> <C>
1997 ESTIMATED FEMALE POP. BY AGE 188,489
UNDER 5 YEARS 8.65%
5 TO 9 YEARS 6.54%
10 TO 14 YEARS 6.19%
15 TO 17 YEARS 3.49%
18 TO 20 YEARS 3.58%
21 TO 24 YEARS 4.73%
25 TO 29 YEARS 7.98%
30 TO 34 YEARS 9.11%
35 TO 39 YEARS 9.91%
40 TO 49 YEARS 15.88%
50 TO 59 YEARS 8.62%
60 TO 64 YEARS 3.25%
65 TO 69 YEARS 3.27%
70 TO 74 YEARS 2.59%
75 + YEARS 6.21%
FEMALE MEDIAN AGE 34.86
FEMALE AVERAGE AGE 35.81
POPULATION BY HOUSEHOLD TYPE 346,578
FAMILY HOUSEHOLDS 84.22%
NON--FAMILY HOUSEHOLDS 13.34%
GROUP QUARTERS 2.44%
HOUSEHOLDS BY TYPE 126,908
SINGLE MALE 9.03%
SINGLE FEMALE 12.44%
MARRIED COUPLE 60.10%
OTHER FAMILY--MALE HEAD 3.05%
OTHER FAMILY--FEMALE HEAD 8.69%
NON FAMILY--MALE HEAD 4.13%
NON FAMILY--FEMALE HEAD 2.55%
POPULATION BY URBAN VS. RURAL 346,535
URBAN 58.64%
RURAL 41.36%
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 4
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------
DESCRIPTION TOTALS
- -------------------------------------------------------------
<S> <C>
FEMALES 16+ WITH CHILDREN 0 -- 17: BASE 136,357
WORKING WITH CHILD 0 -- 5 7.07%
NOT WORKING WITH CHILD 0 -- 5 0.52%
NOT IN LABOR FORCE WITH CHILD 0 -- 5 3.01%
WORKING WITH CHILD 6 -- 17 14.26%
NOT WORKING WITH CHILD 6 -- 17 0.60%
NOT IN LAB. FORCE WITH CHILD 6 -- 17 3.00%
WORKING WITH CHILD 0 -- 5 & 6 -- 18 4.00%
NOT WORKING WITH CHILD 0 -- 5 & 6 -- 18 0.22%
NOT IN LAB. FORCE W/CHILD 0 -- 5 & 6 -- 18 2.33%
WORKING WITH NO CHILDREN 37.94%
NOT WORKING WITH NO CHILDREN 2.35%
NOT IN LAB. FORCE WITH NO CHILD. 24.71%
HH BY AGE BY POVERTY STATUS 127,152
ABOVE POVERTY UNDER AGE 65 79.31%
ABOVE POVERTY AGE 65 + 14.49%
BELOW POVERTY UNDER AGE 65 4.03%
BELOW POVERTY AGE 65 + 2.17%
POPULATION 16+ BY EMPLOYMENT STATUS 264,487
EMPLOYED IN ARMED FORCES 6.53%
EMPLOYED CIVILIANS 69.53%
UNEMPLOYED CIVILIANS 4.44%
NOT IN LABOR FORCE 25.79%
POPULATION 16+ BY OCCUPATION 183,896
EXECUTIVE AND MANAGERIAL 14.58%
PROFESSIONAL SPECIALTY 15.41%
TECHNICAL SUPPORT 4.21%
SALES 12.88%
ADMINISTRATIVE SUPPORT 16.94%
SERVICE: PRIVATE HOUSEHOLD 0.20%
SERVICE: PROTECTIVE 1.35%
SERVICE: OTHER 9.60%
FARMING FORESTRY & FISHING 0.89%
PRECISION PRODUCTION & CRAFT 11.73%
MACHINE OPERATOR 5.93%
TRANS. AND MATERIAL MOVING 3.28%
LABORERS 3.00%
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 5
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
FAMILIES BY NUMBER OF WORKERS 92,059
NO WORKERS 7.46%
ONE WORKER 22.11%
TWO WORKERS 55.04%
THREE + WORKERS 15.39%
HISPANIC POPULATION BY TYPE 346,578
NOT HISPANIC 98.84%
MEXICAN 0.21%
PUERTO RICAN 0.38%
CUBAN 0.05%
OTHER HISPANIC 0.52%
1997 HISPANICS BY RACE: BASE 5,297
WHITE 58.68%
BLACK 6.14%
ASIAN 0.96%
OTHER 34.22%
POPULATION BY TRANSPORTATION TO WORK 181,080
DRIVE ALONE 80.16%
CAR POOL 12.29%
PUBLIC TRANSPORTATION 0.78%
DRIVE MOTORCYCLE 0.10%
WALKED ONLY 3.03%
OTHER MEANS 0.64%
WORKED AT HOME 2.98%
POPULATION BY TRAVEL TIME TO WORK 181,080
UNDER 10 MINUTES / WORK AT HOME 17.89%
10 TO 29 MINUTES 50.93%
30 TO 59 MINUTES 23.97%
60 TO 89 MINUTES 5.74%
90+ MINUTES 1.47%
AVERAGE TRAVEL TIME IN MINUTES 22.60
HOUSEHOLDS BY NO. OF VEHICLES 126,886
NO VEHICLES 6.65%
1 VEHICLE 30.72%
2 VEHICLES 45.12%
3+ VEHICLES 17.51%
ESTIMATED TOTAL VEHICLES 224,588
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 6
CUSTOM SUMMARY REPORT
(POP 80-02, FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- --------------------------------------------------
DESCRIPTION TOTALS
- --------------------------------------------------
<S> <C>
POPULATION 25+ BY EDUCATION LEVEL 221,871
ELEMENTARY (0--8) 6.81%
SOME HIGH SCHOOL (9--11) 10.53%
HIGH SCHOOL GRADUATE (12) 30.23%
SOME COLLEGE (13--15) 18.76%
ASSOCIATES DEGREE ONLY 8.52%
BACHELORS DEGREE ONLY 17.01%
GRADUATE DEGREE 8.13%
POPULATION ENROLLED IN SCHOOL 86,072
PUBLIC PRE- PRIMARY 3.08%
PRIVATE PRE- PRIMARY 5.67%
PUBLIC ELEM/HIGH 59.49%
PRIVATE ELEM/HIGH 6.86%
ENROLLED IN COLLEGE 24.90%
HOUSING UNITS BY OCCUPANCY STATUS 138,196
OCCUPIED 91.83%
VACANT 8.17%
VACANT UNITS 11,288
FOR RENT 50.20%
FOR SALE ONLY 17.80%
SEASONAL 16.60%
OTHER 15.40%
OWNER OCCUPIED PROPERTY VALUES 62,483
UNDER $25,000 0.46%
$25,000 TO $49,999 0.93%
$50,000 TO $74,999 3.25%
$75,000 TO $99,999 13.61%
$100,000 TO $149,999 47.84%
$150,000 TO $199,999 21.18%
$200,000 TO $299,999 10.32%
$300,000 TO $399,999 1.67%
$400,000 TO $499,999 0.41%
$500,000 + 0.35%
MEDIAN PROPERTY VALUE $137,608
TOTAL RENTAL UNITS 41,645
MEDIAN RENT $ 499
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 7
CUSTOM SUMMARY REPORT
(POP FACTS: FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- --------------------------------------------
DESCRIPTION TOTALS
- --------------------------------------------
<S> <C>
PERSONS IN UNIT 126,908
1 PERSON UNITS 21.47%
2 PERSON UNITS 31.99%
3 PERSON UNITS 18.87%
4 PERSON UNITS 17.93%
5 PERSON UNITS 6.96%
6 PERSON UNITS 1.97%
7 + UNITS 0.80%
YEAR ROUND UNITS IN STRUCTURE 138,196
SINGLE UNITS DETACHED 53.56%
SINGLE UNITS ATTACHED 5.39%
DOUBLE UNITS 8.71%
3 TO 9 UNITS 13.86%
10 TO 19 UNITS 4.02%
20 TO 49 UNITS 7.51%
50 + UNITS 1.31%
MOBILE HOME OR TRAILER 4.68%
ALL OTHER 0.95%
SINGLE/MULTIPLE UNIT RATIO 1.66
HOUSING UNITS BY YEAR BUILT 126,886
BUILT 1989 TO MARCH 1990 1.74%
BUILT 1985 TO 1988 16.59%
BUILT 1980 TO 1984 11.55%
BUILT 1970 TO 1979 21.26%
BUILT 1960 TO 1969 11.46%
BUILT 1950 TO 1959 7.94%
BUILT 1940 TO 1949 4.85%
BUILT 1939 OR EARLIER 24.61%
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP 80-02, HH 80-02, INC 80-02)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------
<S> <C>
POP_80: TOTAL 273,122
POP_90: TOTAL 346,578
POP_97: TOTAL (EST.) 373,944
POP_02: TOTAL (PROJ.) 398,925
HH_80: TOTAL 94,924
HH_90: TOTAL 126,908
HH_97: TOTAL (EST.) 144,105
HH_02: TOTAL (PROJ.) 157,139
INC_80: PER CAPITA (EST.) $ 7,257
INC_90: PER CAPITA $ 16,823
INC_97: PER CAPITA (EST.) $ 24,459
INC_02: PER CAPITA (PROJ.) $ 31,301
HH_90_BY INCOME_89: MEDIAN $ 39,951
HH_97_BY INCOME: MEDIAN $ 49,111
HH_02_BY INCOME: MEDIAN $ 57,694
HH_80_BY INCOME_79: AVERAGE $ 20,881
HH_90_BY INCOME_89: AVERAGE $ 45,376
HH_97_BY INCOME: AVERAGE $ 62,271
HH_02_BY INCOME: AVERAGE $ 78,047
1990 MEDIAN HOUSE VALUE $137,608
1997 MEDIAN HOUSE VALUE $156,969
2002 MEDIAN HOUSE VALUE $172,907
</TABLE>
<PAGE>
Mon Mar 2, 1998 Page 1
CUSTOM SUMMARY REPORT
(RETAIL TRADE POTENTIAL REPORT - CURRENT SALES BY STORE TYPE)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6510
PREPARED FOR
CUSHMAN & WAKEFIELD, INC
TOTAL TRADE AREA
MALL OF NEW HAMPSHIRE COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- --------------------------------------------------
DESCRIPTION TOTALS
- --------------------------------------------------
<S> <C>
TOTAL RETAIL SALES $4,708
APPAREL & ACCESSORY STORES $ 232
AUTOMOTIVE DEALERS $1,055
AUTOMOTIVE & HOME SUPPLY STORES $ 38
DRUG & PROPRIETARY STORES $ 153
EATING & DRINKING PLACES $ 353
FOOD STORES $ 846
FURNITURE & HOME FURNISHINGS STORES $ 124
HOME APPLIANCE, RADIO, & T.V. STORES $ 149
GASOLINE SERVICE STATIONS $ 234
GENERAL MERCHANDISE $ 733
DEPARTMENT STORES $ 503
(INCLUDING LEASED DEPTS.)
HARDWARE, LUMBER & GARDEN STORES $ 301
($'S IN MILLIONS)
</TABLE>
<PAGE>
REGIONAL SHOPPING CENTER SALES SUMMARY 1991
1991 TRANSACTIONS CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR TOTAL GLA/ MALL SHOP
NO. PROPERTY NAME DATE BUILT PRICE GLA SOLD GLA
- ------- --------------------------- ------- --------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
91-1 Confidential 12/91 1988/ $ 92,500,000 928,000 360,000
South Central MSA 90 360,000
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-2 Sarasota Square Mall 12/91 1977/ $ 72,000,000 903,000 310,000
Sarasota, Florida 89 310,000
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-3 Confidential 12/91 1971/ $108,923,717 990,941 314,239
New England MSA 83 * 698,977
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-4 Confidential 12/91 1965 $102,559,402 1,024,084 360,000
Top 20 Eastern MSA 450,000
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-5 Eastland Mall 12/91 1975 $ 75,115,000 1,024,425 369,575
Charlotte, North Carolina 369,575
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-6 Alderwood Mall 11/91 1979 $103,750,000 961,700 260,000
Lynnwood, Washington 260,000
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-7 Confidential 11/91 1957 $130,000,000 897,174 329,500
Western MSA esc. * 329,500
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-8 The Oaks 10/91 1978/ $115,000,000 1,084,575 359,000
Thousand Oaks, California 83 * 359,000
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-9 Mayfair Mall 10/91 1958/ $125,000,000 859,000 330,000
Wauwatosa, Wisconsin 86 ** 649,000
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-10 Valley Fair, S.C. 7/91 1986 $197,900,000 1,064,190 356,243
Santa Clara, California * 356,243
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-11 Montclair Plaza 3/91 1968/85 $210,500,000 1,501,500 389,000
Montclair, California 897,900
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-12 Paradise Valley Mall 2/91 1979/ $160,000,000 1,223,567 417,495
Phoenix, Arizona 91 * 557,347 ***
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-13 Mall of Victor Valley 1/91 1986 $102,857,143 579,076 296,501
Victorville, California * 424,678
- ------- --------------------------- ------- --------- -------------- ------------ -----------
91-14 Edison Mall 1/91 1965 $115,000,000 1,013,030 327,833
Ft. Meyers, Florida 463,883
- ------- --------------------------- ------- --------- -------------- ------------ -----------
14 SURVEY AVERAGE/MEAN: $122,221,804 1,003,876 341,385
463,293
- ------- --------------------------- ------- --------- -------------- ------------ -----------
<PAGE>
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------- ------------------------
SALE MALL SHOP MALL SHOP NOI/ GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. RATIO SALES PSF NOI PSF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
91-1 38.8% $ 275 $ 5,735,000 6.20% 7.50% 11.50% $257 $257 0.93
$ 15.93
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-2 34.3% $ 240 $ 5,472,000 7.60% 8.00% 12.00% $232 $232 0.97
$ 17.65
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-3 31.7% $ 300 $ 7,900,000 7.25% 8.00% 11.80% $156 $347 1.16
$ 11.30
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-4 35.2% $ 320 $ 7,425,000 7.24% 7.50% 11.10% $228 $285 0.89
$ 16.50
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-5 36.1% $ 275 $ 5,874,000 7.82% 7.50% 11.73% $203 $203 0.74
$ 15.89
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-6 27.0% $ 310 $ 6,300,000 6.07% 7.00% 11.80% $399 $399 1.29
$ 24.23
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-7 36.7% $ 300 $ 8,000,000 6.15% n/a n/a $395 $395 1.32
est. $ 24.28
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-8 33.1% $ 295 $ 7,000,000 6.09% 7.50% 11.25% $320 $320 1.09
$ 19.50
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-9 38.4% $ 287 $ 8,000,000 6.40% n/a 13.00% $193 $379 1.32
$ 12.33
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-10 33.5% $ 437 $11,478,000 5.80% 6.50% 11.20% $556 $556 1.27
$ 32.22
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-11 25.9% $ 363 $12,000,000 5.70% n/a 11.00% $234 $541 1.49
$ 13.36
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-12 34.1% $ 250 $ 9,936,000 6.21% 6.25% 10.75% $287 $383 1.53
$ 17.83
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-13 51.2% $ 290 $ 5,760,000 5.60% n/a n/a $242 $347 1.20
$ 13.56
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
91-14 32.4% $ 310 $ 6,900,000 6.00% 7.50% 11.10% $248 $351 1.13
$ 14.87
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
14 34.9% $ 304 $ 7,698,571 6.44% 7.33% 11.52% $282 $357 1.17
$ 17.82
- ------- ----------- ----------- --------------- ---------- ---------- ----------- ----------- ------------ ---------
</TABLE>
* Adjusted to reflect 100% interest.
** Alocated Price.
*** As expanded.
<PAGE>
REGIONAL SHOPPING CENTER SALES SUMMARY 1992
1992 TRANSACTIONS CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR TOTAL GLA/ MALL SHOP
NO. PROPERTY NAME DATE BUILT PRICE GLA SOLD GLA
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
92-1 The Avenues 12/92 1990 $124,000,000 987,500 359,645
Jacksonville, Florida * 480,853
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-2 Confidential 12/92 1985 $115,000,000 898,000 330,000
Southern California 330,000
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-3 West Oaks Mall 9/92 1984/ $ 77,500,000 1,018,900 318,900
Houston, Texas 90 * 393,900
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-4 Confidential 7/92 1990/ $140,000,000 951,985 328,423
New England MSA 92 363,985
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-5 Oakview Mall 6/92 1991 $ 73,000,000 732,116 252,900
Omaha, Nebraska 400,900
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-6 Altamonte Mall 6/92 1973/ $112,345,000 1,072,600 392,221
Altamonte Springs, Florida 74 * 552,708
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-7 Monroeville Mall 5/92 1969 $150,000,000 1,302,237 476,928
Monroeville, Pennsylvania 827,173
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-8 Northshore S.C. 5/92 1958 $102,875,000 1,240,000 455,000
Peabody, Massachusetts 755,000
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-9 T.C. at Boca Raton 4/92 1980/ $202,500,000 1,326,400 396,000
Boca Raton, Florida 86 396,000
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-10 University Square Mall 2/92 1974 $ 85,000,000 1,155,940 347,312
Tampa, Florida 528,312
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
92-11 Clackamas Town Ctr. 1/92 1979/ $122,400,000 1,208,824 433,000
Portland, Oregon 81 * 433,000
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
11 SURVEY AVERAGE/MEAN: $118,601,818 1,081,137 371,848
496,530
- ------- ---------------------------- ------- ------- --------------- ------------ -----------
<PAGE>
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------- ------------------------
SALE MALL SHOP MALL SHOP NOI/ GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. RATIO SALES PSF NOI PSF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
92-1 36.4% $ 215 $ 9,734,000 7.85% n/a 11.50% $258 $345 1.60
$ 20.24
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-2 36.7% $ 310 $ 8,337,500 7.25% n/a 11.50- $348 $348 1.12
$ 25.27 12.00%
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-3 3.13% $ 270 $ 5,580,000 7.20% n/a 12.00% $197 $243 0.90
$ 14.17
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-4 34.5% $ 352 $10,710,300 7.65% 8.00% 11.50- $385 $426 1.21
$ 29.43 12.00%
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-5 34.5% $ 275 $ 5,700,000 7.81% n/a 11.25% $182 $289 1.05
est. $ 14.22
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-6 36.6% $ 300 $ 8,950,000 7.97% 8.50% 12.00% $203 $286 0.95
$ 16.19
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-7 36.6% $ 300 $ 11,250,00 7.50% n/a 11.50% $181 $315 1.05
$ 13.60
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-8 36.7% $ 270 $ 6,173,000 6.00% n/a n/a $136 $226 0.84
$ 8.18
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-9 29.9% $ 400 $13,450,000 6.64% 7.00% 10.75% $511 $511 1.28
$ 33.96
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-10 30.0% $ 280 $ 6,375,000 7.50% 7.50% 11.50% $161 $245 0.87
$ 12.07
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
92-11 35.9% $ 302 $ 8,568,000 7.00% n/a 11.60% $283 $283 0.94
$ 19.79
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
11 34.5% $ 298 $ 8,620,709 7.31% 7.75% 11.56% $259 $320 1.07
$ 18.83
- ------- ----------- ----------- ------------- ---------- ---------- -------- ----------- ------------ ---------
</TABLE>
* Adjusted to reflect 100% interest.
<PAGE>
REGIONAL MALL SALES 1993
1993 TRANSACTIONS CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR TOTAL SOLD SHOP SHOP
NO. PROPERTY/LOCATION DATE BUILT SALE PRICE GLA GLA GLA RATIO
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
93-1 THE GALLERIA @ Dec-93 1964/ $125,800,000 1,088,317 401,362 354,396 32.6%
(1) Ft. Lauderdale, Florida 80/83
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-2 KENWOOD TOWNE CTR. Dec-93 1958/ $194,000,000 1,076,337 862,936 424,045 39.4%
Cincinnati, Ohio 88
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-3 WESTGATE MALL Dec-93 1982 $ 71,000,000 895,000 526,000 321,000 35.9%
Amarillo, Texas
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-4 ARDEN FAIR MALL Dec-93 1957/81 $192,400,000 1,065,000 408,700 408,700 38.4%
(2) Sacramento, California 90/93
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-5 FIESTA MALL Dec-93 1979/ $124,000,000 1,036,743 313,187 313,187 30.2%
Mesa, Arizona 89/90
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-6 CORONADO CENTER Sep-93 1964/ $115,000,000 1,140,570 512,284 394,012 34.5%
Albuquerque, New Mexico 84
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-7 MONTGOMERY MALL Sep-93 1970/ $ 44,500,000 726,703 613,703 256,783 35.3%
Montgomery, Alabama 88
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-8 CLACKAMAS TOWN CTR. Jul-93 1979/ $114,827,000 1,206,824 433,000 433,000 35.9%
(2) Portland, Oregon 81/93
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-9 GARDEN STATE PLAZA Jul-93 1957/82 $380,000,000 1,361,000 1,361,000 587,400 43.2%
Paramus, New Jersey 84/92
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-10 STROUD MALL Jul-93 1979/80 $ 43,500,000 449,167 449,167 160,178 35.7%
(3) Stroudsburg, Pennsylvania 88/94
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-11 LAKEWOOD CENTER Jun-93 1975 $172,000,000 1,875,953 596,021 348,645 18.6%
(4) Lakewood, California
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-12 CAROLINA PLACE Jun-93 1991 $116,000,000 1,097,826 598,920 318,528 29.0%
(2) Charlotte, North Carolina
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-13 RIVERCENTER May-93 1988 $100,000,000 1,060,271 922,656 225,000 21.2%
San Antonio, Texas
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-14 THE FLORIDA MALL Mar-93 1986 $163,000,000 1,107,864 506,232 368,018 33.2%
Orlando, Florida
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-15 NORTH RIVERSIDE PARK Jan-93 1975/ $100,000,000 1,097,974 467,813 397,085 36.2%
(2) Riverside, Illinois 89
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
93-16 SARASOTA SQUARE MALL Jan-93 1977/ $ 84,000,000 894,061 313,511 313,511 35.1%
Sarasota, Florida 89
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
Survey Low: $ 43,500,000 449,167 313,187 160,178 18.6%
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
Survey High: $380,000,000 1,875,953 1,361,000 587,400 43.2%
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
SURVEY MEAN: $133,751,688 1,073,726 580,406 351,468 33.4%
- --------- --------------------------- -------- --------- --------------- ----------- ----------- --------- -------
<PAGE>
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------- ------------------------
SALE OCCU- SHOP GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. PANCY SALES/SF NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
93-1 90.0% $384 $ 9,400,000 $23.42 7.47% -- 11.50% $313 $355 0.92
(1)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-2 97.0% $413 $14,800,000 $17.15 7.63% 7.50% 11.00% $225 $457 1.11
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-3 89.0% $230 $ 5,857,500 $11.14 8.25% 8.50% 12.00% $135 $221 0.96
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-4 90.0% $405 $13,468,000 $32.95 7.00% -- -- $471 $471 1.16
(2)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-5 98.4% $341 $ 9,045,200 $28.88 7.29% 7.50% 11.50% $396 $396 1.16
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-6 99.7% $250 $ 8,395,000 $16.39 7.30% 7.25% 10.75% $224 $292 1.17
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-7 86.5% $265 $ 4,493,350 $ 7.32 10.10% -- -- $ 73 $173 0.65
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-8 95.0% $302 $ 8,899,100 $20.55 7.75% 8.00% 11.50% $265 $265 0.88
(2)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-9 98.0% $434 $28,120,000 $20.66 7.40% 8.25% 11.50% $279 $647 1.49
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-10 90.0% $260 $ 4,100,000 $ 9.13 9.43% 9.00% 12.00% $ 97 $272 1.04
(3)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-11 96.4% $300 $14,687,800 $24.64 8.54% -- -- $289 $493 1.64
(4)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-12 75.0% $200 $ 8,248,000 $13.77 7.11% 7.00% 12.00% $194 $364 1.82
(2)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-13 92.0% $350 $ 9,000,000 $ 9.75 9.00% -- 12.50% $108 $444 1.27
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-14 98.0% $447 $12,200,000 $24.10 7.48% -- 11.00% $322 $443 0.99
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-15 92.4% $240 $ 7,750,000 $16.57 7.75% -- 11.10% $214 $252 1.05
(2)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
93-16 95.0% $245 $ 6,012,000 $19.18 7.16% -- -- $268 $268 1.09
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
75.0% $200 $ 4,100,000 $ 7.32 7.00% 7.00% 10.75% $ 73 $172 0.65
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
99.7% $447 $28,120,000 $32.95 10.10% 9.00% 12.50% $471 $647 1.82
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
92.7% $317 $10,279,747 $18.48 7.92% 7.88% 11.63% $242 $363 1.15
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
</TABLE>
- -------
(1) Includes 47,000 square feet of outparcel GLA.
(2) Adjusted to reflect 100% interest.
(3) Price includes $13 million for expansion.
(4) Adjusted to reflect 100% interest; price includes strip center &
outparcels.
<PAGE>
REGIONAL MALL SALES 1994
1994 TRANSACTIONS CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR TOTAL SOLD SHOP SHOP
NO. PROPERTY/LOCATION DATE BUILT SALE PRICE GLA GLA GLA RATIO
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
94-1 INDEPENDENCE CENTER Dec-94 1974/ $ 53,400,000 863,986 392,524 392,524 45.4%
(1) Independence, MO 88
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-2 BILTMORE FASHION PARK Dec-94 1963/ $110,000,000 554,503 372,000 219,000 39.5%
(2) Phoenix, Arizona 92
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-3 CONFIDENTIAL Dec-94 1981/ $ 108,00,000 1,123,580 333,468 333,468 29.7%
Major Southwest MSA 93
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-4 CPI PORTFOLIO Dec-94 $151,500,000 2,110,051 1,142,386 750,436 35.6%
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
(3) 1) Orange Park Mall 1975/
Orange Park, Florida 91
2) University Mall 1974/
Pensacola, Florida 90
3) Broadway Square Mall 1975/
Tyler, Texas 89
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-5 FASHION VALLEY CENTER Nov-94 1969/ $128,500,000 1,370,262 518,900 373,725 27.3%
San Diego, California 81/84
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-6 MALL OF THE AMERICAS Oct-94 1970/ $ 76,200,000 678,000 678,000 225,000 33.2%
Miami, Florida 93+
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-7 CORTE MADERA T.C. Sep-94 1958/ $ 70,500,000 425,572 425,572 237,453 55.8%
(4) Marin County, California 85
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-8 LAYTON HILLS MALL Sep-94 1980/ $ 51,375,000 710,030 620,030 399,001 56.2%
Layton, Utah 91
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-9 NORTH SHORE SQUARE Jul-94 1985 $ 34,150,000 624,000 358,709 178,326 28.6%
Slidell, Louisiana
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-10 CHESTERFIELD T.C. Jun-94 1986/ $ 93,600,000 605,161 605,161 291,744 48.2%
(5) Richmond, Virginia 87/89
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-11 WATERSIDE SHOPS Jun-94 1992 $ 65,500,00 250,000 250,000 173,930 69.6%
Naples, Florida
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-12 CROSSROADS MALL Apr-94 1974 $ 51,500,000 1,114,720 378,704 378,704 34.0%
Oklahoma City, Oklahoma
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-13 RIVERCHASE GALLERIA Feb-94 1986 $175,000,000 1,251,142 462,612 350,504 28.0%
Hoover, Alabama
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
94-14 STRATFORD SQUARE MALL Jan-94 1981/ $ 119,000,00 1,294,682 493,404 493,404 38.1%
Bloomingdale, Illinois 88/91
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
Survey Low: $ 34,150,000 250,000 250,000 173,930 27.3%
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
Survey High: $175,000,000 2,110,051 1,142,386 750,436 69.6%
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
SURVEY MEAN: $ 92,016,071 926,835 502,248 342,659 40.6%
- --------- -------------------------- -------- ------- -------------- ----------- ----------- --------- -------
<PAGE>
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------- ------------------------
SALE OCCU- SHOP GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. PANCY SALES/SF NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
94-1 84.0% $200 $ 4,592,000 $11.70 8.60% -- -- $136 $136 0.68
(1)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-2 97.0% $380 $ 8,600,000 $23.12 7.82% -- -- $296 $502 1.32
(2)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-3 95.0% $300 $ 7,538,400 $22.61 6.98% 7.25% 10.70% $324 $324 1.08
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-4 90.0% $250 $13,350,000 $11.69 8.81% -- -- $133 $202 0.81
(3)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-5 91.0% $325 $ 9,637,500 $18.57 7.50% 8.00% 11.00% $248 $344 1.06
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-6 98.5% $325 $ 6,706,000 $ 9.89 8.80% -- 11.80% $112 $339 1.04
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-7 93.5% $325 $ 5,900,000 $13.86 8.37% 9.00% 11.00% $166 $297 0.91
(4)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-8 94.0% $226 $ 4,730,000 $ 7.63 9.21% -- -- $ 83 $129 0.57
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-9 94.0% $218 $ 3,073,000 $ 8.57 9.00% -- -- $ 95 $192 0.88
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-10 95.0% $290 $ 8,424,000 $13.92 9.00% -- -- $155 $321 1.11
(5)
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-11 99.0% $400 $ 5,043,500 $20.17 7.70% -- -- $262 $377 0.94
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-12 95.0% $189 $ 5,300,000 $14.00 10.29% -- -- $136 $136 0.72
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-13 95.0% $350 $13,295,000 $28.74 7.60% -- 11.50% $378 $499 1.43
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94-14 98.5% $260 $ 8,962,500 $18.16 7.53% 8.25% 11.00% $241 $241 0.93
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
84.0% $189 $ 3,073,000 $ 7.63 6.98% 7.25% 10.70% $ 83 $129 0.57
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
99.0% $400 $13,350,000 $28.74 10.29% 9.00% 11.80% $378 $502 1.43
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
94.3% $288 $ 7,510,850 $15.90 8.37% 8.13% 11.17% $197 $288 0.96
- --------- ------- ---------- ------------- -------- ---------- ---------- ----------- ----------- ------------ ---------
</TABLE>
- -------
(1) Inclusive of $2.4 million held back for deferred maintenance.
(2) Inclusive of partnership units.
(3) Net of allocation to excess land.
(4) Sale includes 75,712 square foot professional building.
(5) Adjusted to reflect 100% interest.
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
COMPARABLE FOOD COURT RENTS (AND SALES PRODUCTIVITY)*
Cushman & Wakefield, Inc.
- ------------------------------------------------------------------------------------------------------------------------
TOTAL TOTAL
MALL FOOD AVG. AVG. RENT/SALES OCCUPANCY OCCUPANCY
PROPERTY SHOP GLA COURT GLA BASE RENT SALES RATIO COST** COST RATIO
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
The Score - 1995 N/A 8,591 $ 39.77 $472 8.4% $ 65.75 13.9%
All US Enclosed Malls
- ------------------------------------------------------------------------------------------------------------------------
The Score - 1995 N/A 10,337 $ 59.42 $599 10.3% $ 91.86 15.3%
Malls (greater than) 1,000,000 Sq. Ft
- ------------------------------------------------------------------------------------------------------------------------
Natick Mall 436,700 7,299 $ 136.39 $779 17.5% $ 176.00 22.7%
Natick, MA
- ------------------------------------------------------------------------------------------------------------------------
Galleria at Crystal Run 360,735 8,085 $ 109.13 $667 16.4% $ 147.00 22.0%
Middletown, NY
- ------------------------------------------------------------------------------------------------------------------------
Smith Haven Mall 505,200 6,047 $ 85.67 $815 10.5% $ 157.50 19.3%
Lake Grove, NY
- ------------------------------------------------------------------------------------------------------------------------
Carousel Center 652,700 10,154 $ 134.34 $800 16.8% $ 187.00 23.4%
Syracuse, NY
- ------------------------------------------------------------------------------------------------------------------------
Alderwood Mall 311,000 8,252 $ 73.24 $600 12.2% $ 88.00 14.6%
Lynnwood, WA
- ------------------------------------------------------------------------------------------------------------------------
Towson Town Center 532,892 8,941 $ 105.00 $810 13.0% $ 152.00 18.2%
Towson, Maryland
- ------------------------------------------------------------------------------------------------------------------------
Silver City Galleria 349,107 9,412 $ 106.44 $616 17.3% $ 139.00 22.5%
Taunton, MA
- ------------------------------------------------------------------------------------------------------------------------
Galleria at White Plains 326,800 9,693 $ 67.19 $773 8.9% $ 136.00 17.6%
White Plains, NY
- ------------------------------------------------------------------------------------------------------------------------
Wilton Mall 256,700 7,303 $ 46.33 $515 9.0% $ 75.00 14.5%
Saratoga NY
- ------------------------------------------------------------------------------------------------------------------------
Manassas Mall 260,360 6,231 $ 46.97 $489 9.6% $ 79.11 16.2%
Manassas, VA
- ------------------------------------------------------------------------------------------------------------------------
University Mall 185,400 5,502 $ 60.10 $489 12.3% $ 69.50 14.0%
South Burlington, VT
- ------------------------------------------------------------------------------------------------------------------------
Mall at Fairfield Commons 327,200 9,080 $ 90.09 $661 13.6% $ 100.50 15.2%
Beavercreek, OH
- ------------------------------------------------------------------------------------------------------------------------
Brandon Town Center 359,600 7,337 $ 65.56 $500 13.1% $ 95.25 19.1%
Brandon, FL
- ------------------------------------------------------------------------------------------------------------------------
Boulevard Mall 260,749 8,945 $ 60,84 $496 12.3% $ 94.04 18.1%
Amherst, NY
- ------------------------------------------------------------------------------------------------------------------------
HI: 652,700 10,337 $ 136.39 $815 17.5% $ 187.00 23.4%
LOW: 185,400 5,502 $ 39.77 $472 8.4% $ 65.75 13.9%
MEAN: 366,082 8,201 $ 80.41 $630 12.6% $ 115.84 17.9%
========================================================================================================================
* All values are reported per square foot unless otherwise noted.
** Inclusive of all operating expenses including food court charges.
========================================================================================================================
</TABLE>
<PAGE>
THE MALL OF NEW HAMPSHIRE - (2/98)
PROJECT DESIGNATOR: 8130
LEASE ABSTRACT REPORT
FOR ALL TENANTS
7/14/98 @ 13:40
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- -------------------- ----------- -------- ------- ------- -------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 1-SUITE E153 1 1,494 4/97 1/07 -- 35.00 52,290
AEROSOLES 2 2/00 40.00 59,760
2/04 45.00 67,230
# 2-SUITE N125 1 1,305 5/98 1/08 -- 45.98 60,004
AFTERTHOUGHTS 2
# 3-SUITE W153 1 1,575 7/97 1/08 -- 34.92 54,999
ALDO 2 2/03 38.09 59,992
# 4-SUITE E121 1 4,524 2/92 1/02 -- 36.28 164,131
AMERICAN EAGLE 4
# 5-SUITE S119 1 1,536 2/97 1/07 -- 39.06 59,996
ATHLETE'S FOOT 2
# 6-SUITE F115 2 825 2/94 1/04 -- 92.12 75,999
AU BON PAIN 8 2/98 94.89 78,284
7/98 96.96 79,992
# 7-SUITE N109 2 418 8/93 1/99 -- 116.31 48,618
AUNTIE ANNE'S 8 2/98 122.13 51,050
# 8-SUITE N133 1 8,038 7/94 1/05 -- 39.00 313,482
B. DALTON 6
# 9-SUITE S147 1 2,000 2/96 1/06 -- 40.00 80,000
B. DALTON SOFTWARE 2 2/98 45.00 90,000
2/99 49.99 99,980
2/00 64.99 129,980
# 10-SUITE E113 1 2,723 6/96 1/07 -- 30.00 81,690
BATH & BODY WORKS 3
# 11-SUITE N121 1 1,547 6/89 1/99 -- 96.96 149,997
BELDEN/SHAW'S JWLS 2
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- -------------------- --------- ----------- ------------------ -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 1-SUITE E153 6.00 UNLIMITED 872 CAM-15% FULL DEDUC ZERO
AEROSOLES 1/00 996 REAL ESTATE TAXES ZERO
1/04 1,121
# 2-SUITE N125 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
AFTERTHOUGHTS REAL ESTATE TAXES ZERO
# 3-SUITE W153 6.00 UNLIMITED 917 CAM-15% FULL DEDUC ZERO
ALDO 1/03 1,000 REAL ESTATE TAXES ZERO
# 4-SUITE E121 6.00 UNLIMITED 2,218 CAM-15% FULL DEDUC ZERO
AMERICAN EAGLE 1/93 2,514 REAL ESTATE TAXES ZERO
1/97 2,736
# 5-SUITE S119 7.00 UNLIMITED 857 CAM-15% FULL DEDUC ZERO
ATHLETE'S FOOT REAL ESTATE TAXES ZERO
# 6-SUITE F115 8.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
AU BON PAIN REAL ESTATE TAXES ZERO
# 7-SUITE N109 8.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
AUNTIE ANNE'S REAL ESTATE TAXES ZERO
# 8-SUITE N133 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
B. DALTON REAL ESTATE TAXES ZERO
# 9-SUITE S147 5.00 UNLIMITED 1,333 CAM-15% FULL DEDUC ZERO
B. DALTON SOFTWARE REAL ESTATE TAXES ZERO
# 10-SUITE E113 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
BATH & BODY WORKS REAL ESTATE TAXES ZERO
# 11-SUITE N121 7.00 UNLIMITED NATURAL CAM-18% FULL DEDUC ZERO
BELDEN/SHAW'S JWLS REAL ESTATE TAXES ZERO
</TABLE>
<PAGE>
PAGE 2
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- -------------------- ----------- -------- ------- ------- -------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 12-SUITE W145 1 4,800 11/97 1/13 -- 25.00 120,000
BERTUCCI'S 4 2/08 30.00 144,000
# 13-SUITE N141 1 1,245 8/97 1/04 -- 40.16 49,999
BLAZING T'S 2 2/00 44.17 54,992
2/02 48.19 59,997
# 14-SUITE S131 1 1,239 2/96 1/05 -- 48.42 59,992
BODY SHOP, THE 2
# 15-SUITE W125 1 8,741 2/93 1/03 -- 30.00 262,230
BOSTON TRADING CO 6
# 16-SUITE E140 1 4,501 5/97 1/07 -- 0.00 0
BRITCHES 4 10/97 24.99 112,480
2/00 26.49 119,231
2/04 27.99 125,983
# 17-SUITE N129 1 3,840 2/89 1/99 -- 29.29 112,474
BROOKSTONE 4
# 18-SUITE N135 1 2,500 9/95 1/06 -- 35.00 87,500
CAMBRIDGE SOUNDWRK 3
# 19-SUITE W111 1 1,057 8/97 1/05 -- 56.76 59,995
CANDY EXPRESS 2
# 20-SUITE S111 1 5,250 1/90 1/99 -- 35.00 183,750
CASUAL CORNER 5
# 21-SUITE N131 1 3,825 11/96 1/07 -- 30.00 114,750
CHILDREN'S PLACE 4
# 22-SUITE E127 1 821 8/97 1/08 -- 73.08 59,999
CINNABON 1 2/01 79.17 64,999
2/04 85.26 69,998
# 23-SUITE E131 1 2,171 8/97 1/08 -- 46.06 99,996
CITIZEN'S BANK 3
# 24-SUITE S123 1 722 2/92 1/98 -- 72.02 51,998
CLAIRE'S BOUTIQUE 1
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- -------------------- --------- ----------- ---------------------- -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 12-SUITE W145 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
BERTUCCI'S REAL ESTATE TAXES ZERO
# 13-SUITE N141 10.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
BLAZING T'S REAL ESTATE TAXES ZERO
# 14-SUITE S131 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
BODY SHOP, THE REAL ESTATE TAXES ZERO
# 15-SUITE W125 -- -- -- CAM-15% FULL DEDUC ZERO
BOSTON TRADING CO REAL ESTATE TAXES ZERO
# 16-SUITE E140 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
BRITCHES REAL ESTATE TAXES ZERO
# 17-SUITE N129 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
BROOKSTONE REAL ESTATE TAXES ZERO
# 18-SUITE N135 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
CAMBRIDGE SOUNDWRK REAL ESTATE TAXES ZERO
# 19-SUITE W111 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
CANDY EXPRESS REAL ESTATE TAXES ZERO
# 20-SUITE S111 4.00 919 NATURAL CAM-15% FULL DEDUC ZERO
CASUAL CORNER 5.50 2,864 REAL ESTATE TAXES ZERO
5.50 UNLIMITED
# 21-SUITE N131 5.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
CHILDREN'S PLACE REAL ESTATE TAXES ZERO
# 22-SUITE E127 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
CINNABON REAL ESTATE TAXES ZERO
# 23-SUITE E131 NATURAL CAM-15% EXT. ONLY ZERO
CITIZEN'S BANK REAL ESTATE TAXES ZERO
# 24-SUITE S123 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
CLAIRE'S BOUTIQUE REAL ESTATE TAXES ZERO
</TABLE>
<PAGE>
PAGE 3
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- -------------------- ----------- ---------- ------- ------- -------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 25-SUITE N117 1 4,103 5/98 1/08 -- 25.00 102,575
CONTEMPO CASUALS 4
# 26-SUITE S101 1 3,837 2/98 1/03 -- 39.09 149,988
COOKIN 4 2/99 30.00 115,110
# 27-SUITE S149 1 3,864 11/89 1/99 -- 27.95 107,999
COUNTY SEAT 4
# 28-SUITE N101 1 5,335 6/93 1/04 -- 23.00 122,705
CVS 5
# 29-SUITE F101 2 540 8/98 1/08 -- 92.59 49,999
DAIRY TREATS 8
# 30-SUITE N123 1 5,246 7/96 1/07 -- 27.00 141,642
DISNEY STORE, THE 5
# 31-SUITE S165 1 2,329 3/98 1/07 -- 30.06 70,010
DRIVN' STYLE 3 2/01 31.99 74,505
# 32-SUITE W150 1 1,411 5/97 1/08 -- 30.00 42,330
EASY SPIRIT 2 2/03 32.00 45,152
# 33-SUITE W147 1 6,722 5/97 1/08 -- 0.00 0
EDDIE BAUER 5 6/97 24.00 161,328
# 34-SUITE N103 1 1,150 5/97 1/07 -- 43.47 49,991
ELECTNC'S BOUTIQUE 2 2/02 47.82 54,993
# 35-SUITE W155 1 6,945 4/97 1/07 -- 0.00 0.00 0
ESTN MTN SPORTS 5 6/97 30.00 208,350
# 36-SUITE S105 1 4,480 1/97 1/03 -- 41.29 184,979
EYE WORLD
# 37-SUITE ANCH 4 165,000 11/96 11/62 -- 0.00 0
# 38-SUITE S159 1 9,581 9/97 1/08 -- 18.00 172,458
FINISH LINE 6
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- -------------------- --------- ----------- ------------------ -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 25-SUITE N117 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
CONTEMPO CASUALS REAL ESTATE TAXES ZERO
# 26-SUITE S101 4.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
COOKIN REAL ESTATE TAXES ZERO
# 27-SUITE S149 6.00 UNLIMITED 2,576 CAM-15% FULL DEDUC ZERO
COUNTY SEAT 5/95 2,576 REAL ESTATE TAXES ZERO
# 28-SUITE N101 3.50 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
CVS REAL ESTATE TAXES ZERO
# 29-SUITE F101 10.00 UNLIMITED NATURAL NONE
DAIRY TREATS
# 30-SUITE N123 4.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
DISNEY STORE, THE REAL ESTATE TAXES ZERO
# 31-SUITE S165 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
DRIVN' STYLE REAL ESTATE TAXES ZERO
# 32-SUITE W150 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
EASY SPIRIT REAL ESTATE TAXES ZERO
# 33-SUITE W147 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
EDDIE BAUER REAL ESTATE TAXES ZERO
# 34-SUITE N103 6.00 UNLIMITED 833 CAM-15% FULL DEDUC ZERO
ELECTNC'S BOUTIQUE 1/02 917 REAL ESTATE TAXES ZERO
# 35-SUITE W155 5.00 UNLIMITED 4,167 CAM-18% FULL DEDUC ZERO
ESTN MTN SPORTS 5/97 4,167 REAL ESTATE TAXES ZERO
# 36-SUITE S105 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
EYE WORLD REAL ESTATE TAXES ZERO
# 37-SUITE ANCH -- -- -- FILENE'S CAM-EXT
# 38-SUITE S159 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
FINISH LINE REAL ESTATE TAXES ZERO
</TABLE>
<PAGE>
PAGE 4
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- -------------------- ----------- -------- ------- ------- -------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 39-SUITE N151 1 1,545 11/97 1/08 -- 28.00 43,260
FIVE-SEVEN-NINE 2 2/03 30.00 46,350
# 40-SUITE W119 1 2,692 2/98 1/08 -- 37.15 100,008
FOOTLOCKER 3
# 41-SUITE N149 1 1,993 4/97 1/08 -- 0.00 0
G&G/RAVE 2 8/97 30.00 59,790
2/01 32.00 63,776
2/05 33.99 67,742
# 42-SUITE S157 1 1,799 4/98 1/08 -- 36.00 64,764
GADZOOKS 2 2/03 40.00 71,960
#43-SUITE S115 1 9,913 10/97 1/10 -- 33.00 327,129
GAP/GAPKIDS 5 2/04 33.99 336,943
# 44-SUITE E139 1 1,629 5/97 1/08 -- 38.00 61,902
GARDEN BOTANIKA 2 2/01 40.00 65,160
2/05 42.00 68,418
# 45-SUITE W117 1 2,670 2/98 1/08 -- 45.00 120,150
GNC LIVE WELL 3
# 46-SUITE W135 1 750 12/97 1/03 -- 60.00 45,000
GOLDEN NAILS 1
# 47-SUITE N105 1 1,150 5/97 1/04 -- 56.52 64,998
GREAT EXPECTATIONS 2
# 48-SUITE S145 1 920 6/95 1/05 -- 54.34 49,993
GRIA JN'S COFFEE 1 2/98 59.78 54,998
2/02 65.21 59,993
# 49-SUITE W101 1 6,329 7/92 1/07 -- 17.38 109,998
GROUND ROUND 5 2/02 20.54 129,998
# 50-SUITE N127 1 1,256 7/95 1/06 -- 36.62 45,995
GYMBOREE 2
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- -------------------- --------- ----------- ------------------ -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 39-SUITE N151 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
FIVE-SEVEN-NINE REAL ESTATE TAXES ZERO
# 40-SUITE W119 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
FOOTLOCKER REAL ESTATE TAXES ZERO
# 41-SUITE N149 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
G&G/RAVE REAL ESTATE TAXES ZERO
# 42-SUITE S157 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
GADZOOKS REAL ESTATE TAXES ZERO
#43-SUITE S115 6.00 UNLIMITED 5,452 CAM-15% FULL DEDUC ZERO
GAP/GAPKIDS 1/04 5,617 REAL ESTATE TAXES ZERO
# 44-SUITE E139 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
GARDEN BOTANIKA REAL ESTATE TAXES ZERO
# 45-SUITE W117 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
GNC LIVE WELL REAL ESTATE TAXES ZERO
# 46-SUITE W135 10.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
GOLDEN NAILS REAL ESTATE TAXES ZERO
# 47-SUITE N105 10.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
GREAT EXPECTATIONS REAL ESTATE TAXES ZERO
# 48-SUITE S145 8.00 UNLIMITED 714 CAM-15% EXT. ONLY ZERO
GRIA JN'S COFFEE 1/98 786 REAL ESTATE TAXES ZERO
1/02 857
# 49-SUITE W101 5.00 UNLIMITED 2,000 CAM-15% FULL DEDUC ZERO
GROUND ROUND 6/92 2,000 REAL ESTATE TAXES ZERO
1/02 2,400
# 50-SUITE N127 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
GYMBOREE REAL ESTAET TAXES ZERO
</TABLE>
<PAGE>
PAGE 5
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- -------------------- ----------- ---------- ------- ------- -------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 51-SUITE E149 1 3,708 5/97 1/08 -- 0.00 0
HALLMARK/JOHN'S 4 10/97 35.00 129,780
# 52-SUITE W115 1 2,696 4/97 1/05 -- 27.00 72,792
HAMMET'S LEARN WLD 3 2/00 28.00 75,488
# 53-SUITE W137 1 1,250 5/97 1/08 -- 45.00 56,250
HOT TOPIC 2 2/03 46.50 58,125
# 54-SUITE W151 1 1,373 5/97 1/07 -- 38.60 52,998
ICING, THE 2
# 55-SUITE N147 1 2,972 9/97 1/07 -- 27.00 80,244
INNOVATION LUGGAGE 3 2/00 28.99 86,158
2/04 31.99 95,074
# 56-SUITE K-2 3 150 5/97 4/00 -- 350.00 52,500
INSTANT JEWEL REPR 9
# 57-SUITE ANCH 4 101,388 1/97 11/62 -- 0.00 0
J.C. PENNEY 10
# 58-SUITE S127 1 803 2/93 1/03 -- 112.07 89,992
KAY JEWELERS 1
# 59-SUITE S103 1 3,772 9/88 1/99 -- 39.76 149,975
KAY-BEE TOYS 4
# 60-SUITE S113 1 2,050 5/98 1/08 -- 30.00 61,500
KIDS FOOTLOCKER 3 1/03 35.00 71,750
# 61-SUITE N115 1 1,430 3/92 1/01 -- 41.95 59,989
LADY FOOTLOCKER 2
# 62-SUITE N119 1 3,627 5/98 1/09 -- 33.00 119,691
LEARNING SMITH 4
# 63-SUITE ANCHOR 4 60,768 10/98 9/18 -- 0.00 0
NEW ANCHOR 10
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- -------------------- --------- ----------- ------------------ -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 51-SUITE E149 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
HALLMARK/JOHN'S REAL ESTATE TAXES ZERO
# 52-SUITE W115 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
HAMMET'S LEARN WLD REAL ESTATE TAXES ZERO
# 53-SUITE W137 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
HOT TOPIC REAL ESTATE TAXES ZERO
# 54-SUITE W151 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
ICING, THE REAL ESTATE TAXES ZERO
# 55-SUITE N147 7.00 UNLIMITED 1,146 CAM-15% FULL DEDUC ZERO
INNOVATION LUGGAGE 1/00 1,231 REAL ESTATE TAXES ZERO
1/04 1,359
# 56-SUITE K-2 10.00 UNLIMITED NATURAL NONE
INSTANT JEWEL REPR
# 57-SUITE ANCH -- -- -- JC PENNY CAM-EXT
J.C. PENNEY JC PENNYCAM-INT
# 58-SUITE S127 7.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
KAY JEWELERS REAL ESTATE TAXES ZERO
# 59-SUITE S103 6.00 UNLIITED NATURAL CAM-15% FULL DEDUC ZERO
KAY-BEE TOYS REAL ESTATE TAXES ZERO
# 60-SUITE S113 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
KIDS FOOTLOCKER REAL ESTATE TAXES ZERO
# 61-SUITE N115 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
LADY FOOTLOCKER REAL ESTATE TAXES ZERO
# 62-SUITE N119 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
LEARNING SMITH REAL ESTATE TAXES ZERO
# 63-SUITE ANCHOR NATURAL NEW CAM-EXT
NEW ANCHOR NEW CAM-INT
</TABLE>
<PAGE>
PAGE 6
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- ------------------- ----------- -------- ------- ------- -------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 64-SUITE S149A 1 2,365 5/88 4/98 -- 30.00 70,950
LECHTERS 3
# 65-SUITE W141 1 2,950 3/98 1/08 -- 27.00 79,650
LECHTERS 3 2/03 32.00 94,400
# 66-SUITE S164 1 3,709 8/97 1/07 -- 30.00 111,270
LENSCRAFTERS 4
# 67-SUITE S141 1 600 3/95 1/02 -- 70.00 42,000
LIDS 1
# 68-SUITE E141 1 6,172 10/97 1/08 -- 30.00 185,160
LIMITED EXPRESS 5
# 69-SUITE W123 1 3,633 2/90 2/99 -- 30.00 108,990
LIMITED, THE 4
# 70-SUITE F113 2 750 6/98 1/09 -- 160.00 120,000
MASTER WOK 8
# 71-SUITE F111 2 750 6/98 1/08 -- 120.00 90,000
MCDONALD'S 8
# 72-SUITE W133 1 1,000 11/97 1/07 - 39.99 39,990
MOTHERTIME 1 2/03 45.00 45,000
# 73-SUITE N111 2 600 2/93 1/99 -- 116.66 69,996
MRS FIELD COOKIES 8
# 74-SUITE E109 1 1,193 6/94 1/99 -- 83.82 99,997
NASER JEWELERS 2
# 75-SUITE N107 1 1,150 2/98 1/08 -- 60.87 70,001
NEWS SHOP 2 2/03 65.22 75,003
# 76-SUITE W149 1 1,313 11/97 1/08 -- 30.00 39,390
NINE WEST 2 2/03 31.99 42,003
# 77-SUITE N145 1 1,477 8/97 1/07 -- 42.00 62,034
NOAH'S 2 2/02 45.00 66,465
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- ------------------- --------- ----------- ------------------ -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 64-SUITE S149A 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
LECHTERS REAL ESTATE TAXES ZERO
# 65-SUITE W141 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
LECHTERS REAL ESTATE TAXES ZERO
# 66-SUITE S164 4.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
LENSCRAFTERS REAL ESTATE TAXES ZERO
# 67-SUITE S141 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
LIDS REAL ESTATE TAXES ZERO
# 68-SUITE E141 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
LIMITED EXPRESS REAL ESTATE TAXES ZERO
# 69-SUITE W123 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
LIMITED, THE REAL ESTATE TAXES ZERO
# 70-SUITE F113 10.00 UNLIMITED NATURAL NONE
MASTER WOK
# 71-SUITE F111 6.00 UNLIMITED NATURAL CAM-15 FULL DEDUC ZERO
MCDONALD'S REAL ESTATE TAXES ZERO
# 72-SUITE W133 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
MOTHERTIME REAL ESTATE TAXES ZERO
# 73-SUITE N111 10.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
MRS FIELD COOKIES REAL ESTATE TAXES ZERO
# 74-SUITE E109 7.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
NASER JEWELERS REAL ESTATE TAXES ZERO
# 75-SUITE N107 -- -- -- CAM-18% FULL DEDUC ZERO
NEWS SHOP REAL ESTATE TAXES ZERO
# 76-SUITE W149 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
NINE WEST REAL ESTATE TAXES ZERO
# 77-SUITE N145 8.00 UNLIMITED 620 CAM-15% FULL DEDUC ZERO
NOAH'S 1/02 665 REAL ESTATE TAXES ZERO
</TABLE>
<PAGE>
PAGE 7
THE MALL OF NEW HAMPSHIRE - (2/98)
PROJECT DESIGNATOR: 8130
LEASE ABSTRACT REPORT
FOR ALL TENANTS
7/14/98 @ 13:40
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- -------------------- ----------- -------- ------- ------- -------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 78-SUITE S121 1 1,232 9/93 1/99 -- 48.70 59,998
NORDIC TRACK 2
# 79-SUITE S167 1 8,000 5/98 1/08 -- 25.00 200,000
NORTHERN EXPERIENC 6
# 80-SUITE N139 1 15,000 11/97 1/08 -- 0.00 0
OLYMPIA SPORT CTR 6 1/98 15.0 225,000
# 81-SUITE E137 1 3,000 6/97 1/08 -- 30.00 90,000
PACIFIC SUNWEAR 3
# 82-SUITE E119 1 3,117 5/98 1/08 -- 29.00 90,393
PARADE OF SHOES 3
# 83-SUITE N137 1 5,000 4/98 1/08 -- 28.00 140,000
PAUL HARRIS 4 1/03 30.00 150,000
# 84-SUITE E133 1 1,200 4/98 1/08 -- 37.50 45,000
PERFUMANIA 2 2/01 41.67 50,004
2/05 45.83 54,996
# 85-SUITE E111 1 2,879 6/90 1/00 -- 43.99 126,647
PETITE SOPHISTICAT 3
# 86-SUITE K-11 3 160 5/97 4/00 -- 286.25 45,800
PIERCING PAGODA 9
# 87-SUITE K-3 3 160 9/97 8/01 -- 262.50 42,000
PLUMB GOLD 9
# 88-SUITE W113 1 2,193 4/96 1/05 -- 37.49 82,216
PRINTS PLUS 3
# 89-SUITE W121 1 2,230 7/97 1/07 -- 31.38 69,977
RADIO SHACK 3
# 90-SUITE S109 1 6,926 5/97 1/08 -- 30.75 212,975
RECORD TOWN 5
# 91-SUITE N113 1 1,100 4/91 1/99 -- 45.45 49,995
RITZ CAMERA 1 HR 2
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- -------------------- --------- ----------- ------------------ -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 78-SUITE S121 5.00 UNLIMITED 1,500 CAM-15% EXT. ONLY ZERO
NORDIC TRACK REAL ESTATE TAXES ZERO
# 79-SUITE S167 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
NORTHERN EXPERIENC REAL ESTATE TAXES ZERO
# 80-SUITE N139 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
OLYMPIA SPORT CTR REAL ESTATE TAXES ZERO
# 81-SUITE E137 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
PACIFIC SUNWEAR REAL ESTATE TAXES ZERO
# 82-SUITE E119 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
PARADE OF SHOES REAL ESTATE TAXES ZERO
# 83-SUITE N137 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
PAUL HARRIS REAL ESTATE TAXES ZERO
# 84-SUITE E133 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
PERFUMANIA REAL ESTATE TAXES ZERO
# 85-SUITE E111 6.00 UNLIMITED 1,919 CAM-15% FULL DEDUC ZERO
PETITE SOPHISTICAT 1/95 2,111 REAL ESTATE TAXES ZERO
# 86-SUITE K-11 10.00 UNLIMITED NATURAL NONE
PIERCING PAGODA
# 87-SUITE K-3 10.00 UNLIMITED NATURAL NONE
PLUMB GOLD
# 88-SUITE W113 6.00 UNLIMITED 1,371 CAM-15% EXT. ONLY ZERO
PRINTS PLUS REAL ESTATE TAXES ZERO
# 89-SUITE W121 3.00 UNLIMITED 1,750 CAM-15% FULL DEDUC ZERO
RADIO SHACK REAL ESTATE TAXES ZERO
# 90-SUITE S109 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
RECORD TOWN REAL ESTATE TAXES ZERO
# 91-SUITE N113 NATURAL CAM-15% FULL DEDUC ZERO
RITZ CAMERA 1 HR REAL ESTATE TAXES ZERO
</TABLE>
<PAGE>
PAGE 8
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- -------------------- ----------- ---------- ------- ------- -------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 92-SUITE W157 1 4,992 11/97 1/10 -- 24.92 124,401
RUBY TUESDAY 4 2/04 26.92 134,385
# 93-SUITE S129 1 1,048 9/94 1/05 -- 57.25 59,998
SAN FRAN MUSIC BOX 2
# 94-SUITE F107 2 896 7/98 1/09 -- 195.31 174,998
SBARO 8
# 95-SUITE ANCHOR 4 136,464 11/96 11/62 -- 0.00 0
SEARS 10
# 96-SUITE E125 1 800 8/97 1/07 -- 56.25 45,000
SELECT COMFORT 1
# 97-SUITE F109 1 2,361 6/98 1/07 -- 59.30 140,007
SPACE CENTER 3
# 98-SUITE E138 1 1,977 1/98 1/08 -- 40.00 79,080
SPENCER GIFTS 2
# 99-SUITE E117 1 1,875 11/90 1/01 -- 82.19 154,106
SUNCOAST MOTION 2 2/98 86.30 161,813
2/99 90.61 169,894
2/00 95.14 178,388
# 100-SUITE S125 1 489 11/96 1/07 -- 122.69 59,995
SUNGLASS HUT 1
# 101-SUITE N155 1 735 5/97 1/08 -- 74.82 54,993
SUNGLASS HUT SPORT 1
# 102-SUITE W139 1 2,250 4/97 1/07 -- 35.00 78,750
THINGS REMEMBERED 3 2/02 40.00 90,000
# 103-SUITE W143 1 1,870 6/97 1/07 -- 35.00 65,450
TRACK N' TRAIL 2
# 104-SUITE N143 1 1,245 8/97 1/08 -- 40.16 49,999
TRADE SECRET 2
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- -------------------- --------- ----------- ----------------- -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 92-SUITE W157 5.50 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
RUBY TUESDAY REAL ESTATE TAXES ZERO
# 93-SUITE S129 7.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
SAN FRAN MUSIC BOX REAL ESTATE TAXES ZERO
# 94-SUITE F107 10.00 UNLIMITED NATURAL NONE
SBARO
# 95-SUITE ANCHOR NATURAL SEARS CAM - EXT
SEARS SEARS CAM - INT.
# 96-SUITE E125 5.00 UNLIMITED 750 CAM-15% FULL DEDUC ZERO
SELECT COMFORT REAL ESTATE TAXES ZERO
# 97-SUITE F109 20.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
SPACE CENTER REAL ESTATE TAXES ZERO
# 98-SUITE E138 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
REAL
ESTATE
SPENCER GIFTS TAXES ZERO
# 99-SUITE E117 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
SUNCOAST MOTION REAL ESTATE TAXES ZERO
# 100-SUITE S125 10.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
SUNGLASS HUT REAL ESTATE TAXES ZERO
# 101-SUITE N155 10.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
SUNGLASS HUT SPORT REAL ESTATE TAXES ZERO
# 102-SUITE W139 8.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
THINGS REMEMBERED REAL ESTATE TAXES ZERO
# 103-SUITE W143 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
TRACK N' TRAIL REAL ESTATE TAXES ZERO
# 104-SUITE N143 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
TRADE SECRET REAL ESTATE TAXES ZERO
</TABLE>
<PAGE>
PAGE 9
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- -------------------- ----------- -------- ------- ------- -------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 105-SUITE E130 1 1,198 9/97 1/08 -- 27.12 32,490
TRI TRAVEL 2 2/99 29.21 34,994
2/02 31.30 37,497
# 106-SUITE E123 1 5,375 2/90 4/00 -- 30.00 161,250
VICTORIA'S SECRET 5
# 107-SUITE N153 1 699 11/97 1/08 -- 57.22 39,997
WATCH WORLD 1 2/03 64.37 44,995
# 108-SUITE E115 1 5,016 2/93 1/99 -- 30.00 150,480
WEATHERVANE 5
# 109-SUITE E157 1 675 2/97 1/08 -- 0.00 0
WHITEHALL CO. JWLS 1 8/97 103.70 69,998
# 110-SUITE S133 1 2,420 2/96 1/07 -- 34.99 84,676
WILSONS SUEDE 3 2/99 40.00 96,800
# 111-SUITE S135 1 2,562 6/97 1/08 -- 30.00 76,860
WORLD OF SCIENCE 3 2/03 35.00 89,670
# 112-SUITE E135 1 1,600 3/97 1/07 -- 34.37 54,992
YANKEE CANDLE CO. 2 2/99 40.62 64,992
2/05 46.87 74,992
# 113-SUITE S143 1 1,080 2/98 1/06 -- 138.88 149,990
ZALES 2
# 114-SUITE S137 1 1,000 4/99 3/09 -- 72.45 72,450
VACANT IN-LINE 1 4/04 73.15 73,150
# 115-SUITE S139 1 600 4/99 3/09 -- 72.45 43,470
VACANT IN-LINE 1 4/04 73.15 43,890
#116-SUITE E155 1 832 4/99 3/09 -- 72.45 60,278
VACANT IN-LINE 1 4/04 73.15 60,861
#117-SUITE E129 1 532 10/98 9/08 -- 70.00 37,240
VACANT IN-LINE 1 10/03 73.15 38,916
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- -------------------- --------- ----------- ------------------ -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 105-SUITE E130 5.00 UNLIMITED NATURAL CAM-18% EXT. ONLY ZERO
TRI TRAVEL REAL ESTATE TAXES ZERO
# 106-SUITE E123 5.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VICTORIA'S SECRET REAL ESTATE TAXES ZERO
# 107-SUITE N153 8.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
WATCH WORLD REAL ESTATE TAXES ZERO
# 108-SUITE E115 7.00 UNLIMITED NATURAL CAM-15% EXT. ONLY ZERO
WEATHERVANE REAL ESTATE TAXES ZERO
# 109-SUITE E157 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
WHITEHALL CO. JWLS REAL ESTATE TAXES ZERO
# 110-SUITE S133 6.00 UNLIMITED 1,412 CAM-15% FULL DEDUC ZERO
WILSONS SUEDE 2/97 1,412 REAL ESTATE TAXES ZERO
1/99 1,613
# 111-SUITE S135 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
WORLD OF SCIENCE REAL ESTATE TAXES ZERO
# 112-SUITE E135 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
YANKEE CANDLE CO. REAL ESTATE TAXES ZERO
# 113-SUITE S143 NATURAL CAM-15% FULL DEDUC ZER0
ZALES REAL ESTATE TAXES ZERO
# 114-SUITE S137 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
# 115-SUITE S139 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
#116-SUITE E155 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
#117-SUITE E129 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
</TABLE>
<PAGE>
PAGE 10
<TABLE>
<CAPTION>
PRIMARY/ ANNUAL
SECONDARY SQUARE LEASE LEASE OPTION MINIMUM MINIMUM
TENANT CODES FEET BEGIN END #/MOS RENT/SF RENT
- ------------------ ----------- ---------- ------- ------- -------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
# 118-SUITE E126 1 664 4/99 3/09 -- 72.45 48,107
VACANT IN-LINE 1 4/04 73.15 48,572
# 119-SUITE E151 1 2,431 4/99 3/09 -- 36.22 88,063
VACANT IN-LINE 3 4/04 36.58 88,926
# 120-SUITE S162 1 6,024 7/98 6/08 -- 27.50 165,660
VACANT IN-LINE 5 7/03 28.74 173,130
# 121-SUITE W127 1 4,590 10/98 9/08 -- 30.00 137,700
VACANT IN-LINE 4 10/03 31.35 143,897
# 122-SUITE W124 1 3,125 1/99 12/08 -- 36.22 113,203
VACANT IN-LINE 3 1/04 36.58 114,313
# 123-SUITE S163 1 3,460 1/99 12/08 -- 36.22 125,338
VACANT IN-LINE 3 1/04 36.58 126,567
# 124-SUITE F100 2 468 10/98 9/08 -- 135.00 63,180
FOOD COURT 8 10/03 141.08 66,025
# 125-SUITE F103 2 928 10/98 9/08 -- 135.00 125,280
FOOD COURT 8 10/03 141.08 130,922
# 126-SUITE F105 2 855 4/99 3/09 -- 139.73 119,465
FOOD COURT 8 4/04 141.08 120,625
# 127-SUITE F115 2 725 4/99 3/09 -- 139.73 101,301
FOOD COURT 8 4/04 141.08 102,283
789,593
=======
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
OVERAGE CEILING BREAKPOINT PRO RATA % OF RENT
TENANT % (000'S) (000'S) RECOVERIES SHARE BASE SUBJ TO CPI
- ------------------ --------- ----------- -------------------- -------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
# 118-SUITE E126 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
# 119-SUITE E151 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
# 120-SUITE S162 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
# 121-SUITE W127 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
# 122-SUITE W124 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
# 123-SUITE S163 6.00 UNLIMITED NATURAL CAM-15% FULL DEDUC ZERO
VACANT IN-LINE REAL ESTATE TAXES ZERO
# 124-SUITE F100 10.00 UNLIMITED NATURAL NONE
FOOD COURT
# 125-SUITE F103 10.00 UNLIMITED NATURAL NONE
FOOD COURT
# 126-SUITE F105 10.00 UNLIMITED NATURAL NONE
FOOD COURT
# 127-SUITE F115 10.00 UNLIMITED NATURAL NONE
FOOD COURT
</TABLE>
<PAGE>
THE MALL OF NEW HAMPSHIRE - (2/98)
PROJECT DESIGNATOR: 8130
PROJECT ASSUPTIONS REPORT
EXCLUDING TENANTS
3/23/98 @ 16:42
BUILDING PROLOGUE
- ----------------
LEASEHOLD ANALYSIS OF THE MALL OF NEW HAMPSHIRE - (2/98) BEGINNING 4-/1997
FOR 20 YEARS ON A FISCAL YEAR BASIS
AREA MEASURES
- -------------
MGLA
DESCRIBED AS GROSS LEASABLE AREA; MALL SHOP TENANTS
1997 VALUE - 317,748
THEREAFTER - CONSTANT
AGLS
DESCRIBED AS GROSS LEASABLE AREA; ACHOR TENANTS
1997 VALUE - 463,620
THEREAFTER - CONSTANT
KGLA
DESCRIBED AS GROSS LEASABLE AREA; KIOSK
1997 VALUE - 1,890
THEREAFTER - CONSTANT
TGLA
DESCRIBED AS TOTAL MALL AREA
+100.0% OF MGLA+100.0% OF AGLA
+100.0% OF KGLA+100.0% OF FGLA
OGLA
DESCRIBED AS GROSS LEASABLE AREA; OWNED MALL AREA
+100.0% OF TGLA-100.0% OF AGLA
FGLA
1997 VALUE - 7,755
THEREAFTER - CONSTANT
MOLA
DESCRIBED AS LEASED OCCUPPIED AREA; MALL SHOPS (CALCULATED USING PRIMARY CODE 1)
1997 VALUE - 170,081
1998 VALUE - 286,052
1999 VALUE - 311,292
<PAGE>
PAGE 2
2000 VALUE - 216,372
2001 VALUE - 317,197
2002 VALUE - 316,894
2003 VALUE - 314,646
2004 VALUE - 316,460
2005 VALUE - 314,883
2006 VALUE - 316,609
2007 VALUE - 307,643
2008 VALUE - 297,052
2009 VALUE - 310,050
2010 VALUE - 313,888
2011 VALUE - 317,197
2012 VALUE - 316,894
2013 VALUE - 313,846
2014 VALUE - 316,460
2015 VALUE - 314,883
2016 VALUE - 316,609
THEREAFTER - CONSTANT
090%
DESCRIBED AS LEASED OCCUPPIED AREA; MALL SHOPS WITH 90% FLOOR
+100% OF MLOA
095%
DESCRIBED AS LEASED OCCUPPIED AREA; MALL SHOPS WITH 95% FLOOR
1997 VALUE - 170,081
1998 VALUE - 286,052
1999 VALUE - 311,292
2000 VALUE - 316,372
2001 VALUE - 317,197
2002 VALUE - 316,894
2003 VALUE - 314,646
2004 VALUE - 316,460
2005 VALUE - 314,883
2006 VALUE - 316,609
2007 VALUE - 307,643
2008 VALUE - 301,861
2009 VALUE - 310,050
2010 VALUE - 313,888
2011 VALUE - 317,197
2012 VALUE - 316,894
2013 VALUE - 313,846
2014 VALUE - 316,460
2015 VALUE - 314,883
2016 VALUE - 316,609
THEREAFTER - CONSTANT
<PAGE>
PAGE 3
GROWTH RATES
- ------------
SALG
DESCRIBED AS GROWTH RATE FACTOR; SALES GORWTH
1997 VALUE - 3.50
THEREAFTER - CONSTANT
RENG
DESCRIBED AS GROWTH RATE FACTOR; MARKET RENT GROWTH
1997 VALUE - 0.00
1998 VALUE - 3.50
THEREAFTER - CONSTANT
EXPG
DESCRIBED AS GROWTH RATE FACTOR; GENERAL EXPENSES GROWTH
1997 VALUE - 0.00
1998 VALUE - 3.50
THEREAFTER - CONSTANT
TAXG
DESCRIBED AS GROWTH RATE FACTOR; TAX EXPENSES GROWTH
1997 VALUE - 0.00
1998 VALUE - 4.00
THEREAFTER - CONSTANT
MISG
DESCRIBED GROWTH RATE FACTOR; MISSCELLANEOUS INCOME GROWTH
1997 VALUE - 0.00
1998 VALUE - 3.50
THEREAFTER - CONSTANT
STD%
1997 VALUE - 6.00
THEREAFTER - CONSTANT
MARKET RATES
- ------------
MKT1
DESCRIBED AS MARKET RENTAL; MALLS SHOP IS LESS THAN 1,000 SF
1997 VALUE - 70.00
THEREAFTER GROWING AT GROWTH RATE RENG
MKT2
DESCRIBED AS MARKET RENTAL; MALL SHOP 1,001-2,000 SF
1997 VALUE - 50.00
<PAGE>
PAGE 4
THEREAFTER - GROWING AT GROWTH RATE RENG
MKT3
DESCRIBED AS MARKET RENTAL; MALL SHOPS 2,001-3,500 SF
1997 VALUE - 35.00
THEREAFTER - GROWING AT GROWTH RATE RENG
MKT4
DESCRIBED AS MARKET RENTAL; MALL SHOPS 2,501-5,500 SF
1997 VALUE - 30.00
THEREAFTER - GROWING AT GROWTH RATE RENG
MKT5
DESCRIBED AS MARKET RENTAL; MALL SHOPS 5,001-7,500 SF
1997 VALUE - 27.50
THEREAFTER - GROWING AT GROWTH RATE RENG
MKT6
DESCRIBED AS MARKET RENTAL; MALL SHOPS GREATER THAN 7.501 SF
1997 VALUE - 25.00
THEREAFTER - GROWING AT GROWTH RATE RENG
KISK
DESCRIBED AS MARKET RENTAL; LIOSKS
1997 VALUE - 300
THEREAFTER - GROWING AT GROWTH RATE RENG
FOOD
DESCRIBED AS MARKET RENTAL RATE; FOOD COURT
1997 VALUE - 135
THEREAFTER - GROWING AT GROWTH RATE RENG
SLAM
DESCRIBED AS AVERAGE SALES; MALL SHOP TENANTS
1997 VALUE - 268
THEREAFTER - GROWING AT GROWTH RATE SALG
SAL2
1997 VALUE - 200
THEREAFTER - GROWING AT GROWTH RATE SALG
ALTN
DESCRIBED AS ALTERATION RATE; NEW TENANTS
1997 VALUE - 15.00
THEREAFTER - GROWING AT GROWTH RATE EXPG
ALTR
DESCRIBED AS ALTERATION RATE; RENEWAL TENANTS
<PAGE>
PAGE 5
1997 VALUE - 5.00
THEREAFTER - GROWING AT GROWTH EXPG
ALTB
DESCRIBED AS ALTERATION RATE; BLENDED RATE BASED ON RENEWAL PROBABILITY
+35.0% OF ALTN +65.0% OF ALTR
COMN
DESCRIBED AS COMMISSION RATEL; NEW TENANTS
1997 VALUE - 2.50
THEREAFTER - GROWING AT GROWTH RATE RENG
COMR
DESCRIBED AAD COMMISSION RATE; RENEWAL RENANTS
1997 VALUE - 1.50
THEREAFTER - GROWING AT GROWTH RATE RENG
COMB
DESCRIBED AS COMMISSION RATE; BLENDED RATE BASED ON RENEWAL PROBABILITY
+35.0% OC DOMN _65.0% OF COMR
RESX
DESCRIBED AS EXPENSES RATE; RESERVES FOR REPLEACNMENT
1997 VALUE - 0.20
1998 VALUE - 0.20
THEREAFTER- GROWING AT GROWTH RATE EXPG
MISSCELLANEOUS INCOMES
- ----------------------
THEMPORARY INCOME
1997 VALUE - 450,000
1998 VALUE - 450,000
1999 VALUE - 163,500
2000 VALUE - 477,405
2001 VALUE - 491,727
2002 VALUE - 506,479
2003 VALUE - 521,673
2004 VALUE - 537,324
2005 VALUE - 553,443
2006 VALUE - 570,047
2007 VALUE - 587,148
2008 VALUE - 604,762
2009 VALUE - 622,905
2010 VALUE - 641,592
2011 VALUE - 660,840
2012 VALUE - 680,665
<PAGE>
PAGE 6
2013 VALUE - 701,085
2014 VALUE - 722,118
2015 VALUE - 743,781
THEREAFTER - 5.00% OF GROSS RENTAL INCOME
MISCELLANEOUS
1997 VALUE - 80,000
1998 VALUE - 80,000
1999 VALUE - 82,400
2000 VALUE - 84,872
2001 VALUE - 87,418
2002 VALUE - 90,041
2003 VALUE - 92,742
2004 VALUE - 95,524
2005 VALUE - 98,390
2006 VALUE - 101,342
2007 VALUE - 104,382
2008 VALUE - 107,513
2009 VALUE - 110,739
2010 VALUE - 114,061
2011 VALUE - 117,483
2012 VALUE - 121,007
2013 VALUE - 124,637
2014 VALUE - 128,377
2015 VALUE - 132,228
EXPENSES
- --------
CAM-COMMON AREA , REFERRED TO AS CAMX
DESCRIBED AS COMMON AREA MAINTENANCE; GENERAL EXPENSES
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 2,120,085
1998 VALUE - 2,120,085
1999 VALUE - 2,194,288
2000 VALUE - 2,271,088
2001 VALUE - 2,350,576
2002 VALUE - 2,432,846
2003 VALUE - 2,517,996
2004 VALUE - 2,606,126
2005 VALUE - 2,697,340
2006 VALUE - 2,791,747
2007 VALUE - 2,889,458
2008 VALUE - 2,990,589
2009 VALUE - 3,095,589
2010 VALUE - 2,203,594
<PAGE>
PAGE 7
2011 VALUE - 3,315,720
2012 VALUE - 3,431,770
2013 VALUE - 3,551,882
2014 VALUE - 3,676,198
2015 VALUE - 3,804,865
THEREAFTER - 5.00% OF GROSS RENTAL INCOME
MANAGEMENT FEE , REFERRED TO AS CMGT
DESCRIBED AS COMMON AREA MAINTENANCE; MANAGEMENT FEE
CHARGED AGAINST NET OPERATING INCOME
+100.0% OF %MIN_100 OF %OVR
CAM - ANCHOR EXT., REFERRED TO AS CANE
DESCRIBED AS COMMON AREA MAINTENANCE; ANCHOR CONTRIBUTION - EXTERIOR
AN INFORMATION EXPENSES
1997 VALUE - %-89063.00
1998 VALUE - %-89063.00
1999 VALUE - %-89063.00
2000 VALUE - %-89063.00
2001 VALUE - %-89063.00
2002 VALUE - %-89063.00
2003 VALUE - %-89063.00
2004 VALUE - %-89063.00
2005 VALUE - %-89063.00
2006 VALUE - %-89063.00
2007 VALUE - %-89063.00
2008 VALUE - %-89063.00
2009 VALUE - %-89063.00
2010 VALUE - %-89063.00
2011 VALUE - %-89063.00
2012 VALUE - %-89063.00
2013 VALUE - %-89063.00
2014 VALUE - %-89063.00
2015 VALUE - %-89063.00
THEREAFTER - 5.00% OF GROSS RENTAL INCOME
CAM - ANCHOR - INT, REFERRED TO AS CANI
DESCRIBED AS COMMON AREA MAINTENANCE ANCHOR CONTRIBUTION - INTERIOR
AN INFORMATION EXPENSES
1997 VALUE - %-19454.00
1998 VALUE - %-19454.00
1999 VALUE - %-19454.00
2000 VALUE - %-19454.00
2001 VALUE - %-19454.00
2002 VALUE - %-19454.00
2003 VALUE - %-19454.00
2004 VALUE - %-19454.00
2005 VALUE - %-19454.00
<PAGE>
PAGE 8
2006 VALUE - %-19454.00
2007 VALUE - %-19454.00
2008 VALUE - %-19454.00
2009 VALUE - %-19454.00
2010 VALUE - %-19454.00
2011 VALUE - %-19454.00
2012 VALUE - %-19454.00
2013 VALUE - %-19454.00
2014 VALUE - %-19454.00
2015 VALUE - %-19454.00
THEREAFTER - 5.00% OF GROSS RENTAL INCOME
CAM - MALL + 15%, REFERRED TO AS CM15
DESCRIBED AS COMMON AREA MAINTENANCE WITH 15% SURCHARGED
AN INFORMATION EXPENSES
+155.0% OF CAMX+100.0% OF CMGT
+155.0% OF DEPR
CAM - MALL +18%, REFERRED TO AS CM18
DESCRIBED AS COMMON AREA MAINTENANCE WITH 18% SURCHARGED
+118.0% OF CAMX+100.0% OF CMGT
+188.0% OF DEPR
CAM - KIOSK/FOOD, REFERRED TO AS CMKF
DESCRIBED AS COMMON AREA MAINTENANCE; FOOD COURT & KISOK CONTRIBUTION
AN INFORMATION EXPENSES
1997 VALUE - %-24122.00
1998 VALUE - %-24122.00
1999 VALUE - %-24122.00
2000 VALUE - %-24122.00
2001 VALUE - %-24122.00
2002 VALUE - %-24122.00
2003 VALUE - %-24122.00
2004 VALUE - %-24122.00
2005 VALUE - %-24122.00
2006 VALUE - %-24122.00
2007 VALUE - %-24122.00
2008 VALUE - %-24122.00
2009 VALUE - %-24122.00
2010 VALUE - %-24122.00
2011 VALUE - %-24122.00
2012 VALUE - %-24122.00
2013 VALUE - %-24122.00
2014 VALUE - %-24122.00
2015 VALUE - %-24122.00
THEREAFTER- 5.00% OF GROSS RENTAL INCOME
<PAGE>
PAGE 9
CAM-15% FULL DEDUC, REFERRED TO AS CAM1
DESCRIBED AS CAM - 15% WITH FULL DEDUCTION AS ANCHOR TENANT CONTRIBUTION
AN INFORMATION EXPENSES
+100.0% OF CM15+100.0% OF CANE
+100.0% OF CAN1+100.0% OF CMKF
CAM-15% EXT. ONLY, REFERRED TO AS CAM2
DESCRIBED AS CAM - 15% WITH EXTERIOR DEDUCTION OF ANCHOR TENANT CONTRIBUTION
AN INFORMATION EXPENSES
+100.0% OF AM15+100.0% OF CANE
+100.0% OF AMKF
CAM-15% NO DUDUCT, REFERRED TO AS CAM3
DESCRIBED AS CAM - 15% WITH NO DEDUCTION OF ANCHOR TENANT CONTRIBUTION
AN INFORMATION EXPENSES
+100.0% OF CM15+100.0% OF CMKF
CAM-18% FULL DEDUC, REFERRED TO AS CAM4
DESCRIBED AS CAM - 18% WITH FULL DEDUCTION OF ANCHOR TENANT CONTRIBUTION
AN INFORMATION EXPENSES
+100.0% OF AM18+100.0% OF CANE
+100.0% OF CANI+100.0% OF AMKF
CAM-18% EXT ONLY, REFERRED TO AS CAM5
DESCRIBED AS CAM - 18 WITH EXTERIOR DEDUCTION OF ANCHOR CONTRIBUTION
AN INFORMATION EXPENSES
+100.0% OF AM18+100.0% OF CANE
+100.0% CMKF
CAM - DEPRECIATION, REFERRED TO AS DEPR
DESCRIBED AS COMMON MAINTENANCE; DEPRECIATION (FOR PASS THRU ONLY)
AN INFORMATION EXPENSES
1997 VALUE - 706,128
1998 VALUE - 600,000
1999 VALUE - 500,000
2000 VALUE - 500,000
2001 VALUE - 500,000
2002 VALUE - 500,000
2003 VALUE - 500,000
2004 VALUE - 500,000
2005 VALUE - 500,000
2006 VALUE - 500,000
2007 VALUE - 500,000
2008 VALUE - 500,000
2009 VALUE - 500,000
2010 VALUE - 500,000
2011 VALUE - 500,000
2012 VALUE - 500,000
<PAGE>
PAGE 10
2013 VALUE - 500,000
2014 VALUE - 500,000
2015 VALUE - 500,000
THEREAFTER - 5.00 OF GROSS RENTAL INCOME
REAL ESTATA TAXES, REFERRED TO AS PTAX
DESCRIBED AS PROPERTY TAXES
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 1,940,000
1998 VALUE - 1,940,000
1999 VALUE - 2,017,600
2000 VALUE - 3,098,304
2001 VALUE - 2,182,236
2002 VALUE - 2,269,526
2003 VALUE - 2,360,307
2004 VALUE - 2,454,719
2005 VALUE - 2,552,908
2006 VALUE - 2,655,024
2007 VALUE - 2,761,225
2008 VALUE - 2,871,674
2009 VALUE - 2,986,541
2010 VALUE - 3,106,003
2011 VALUE - 3,230,243
2012 VALUE - 3,359,453
2013 VALUE - 3,193,831
2014 VALUE - 3,633,584
2015 VALUE - 3,778,927
THEREAFTER - 5.00% OF GROSS RENTAL INCOME
GENERAL & ADMIN, REFERRED TO AS g&a
DESCRIBED AS NON-RECOVERABLE EXPENSES; GENERAL * ADMIN.
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 436,775
1998 VALUE - 436,775
1999 VALUE - 452,062
2000 VALUE - 467,884
2001 VALUE - 484,260
2002 VALUE - 501,209
2003 VALUE - 518,752
2004 VALUE - 536,908
2005 VALUE - 555,700
2006 VALUE - 575,149
2007 VALUE - 595,279
2008 VALUE - 616,114
2009 VALUE - 637,678
2010 VALUE - 659,997
2011 VALUE - 683,097
2012 VALUE - 707,005
<PAGE>
PAGE 11
2013 VALUE - 731,750
2014 VALUE - 757,362
2015 VALUE - 783,869
THEREAFTER - 5.00% OF GROSS RENTAL INCOME
MARKETING & PROMO, REFERRED TO AS MKTG
DESCRIBED AS NON-RECOVERABLE EXPENSES; MARKING FUND
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 50,000
1998 VALUE - 50,000
1999 VALUE - 51,750
2000 VALUE - 53,561
2001 VALUE - 55,436
2002 VALUE - 57,376
2003 VALUE - 59,284
2004 VALUE - 61,463
2005 VALUE - 63,614
2006 VALUE - 65,840
2007 VALUE - 68,840
2008 VALUE - 70,530
2009 VALUE - 72,998
2010 VALUE - 75,533
2011 VALUE - 78,198
2012 VALUE - 80,935
2013 VALUE - 83,767
2014 VALUE - 86,699
2015 VALUE - 89,734
THEREAFTER - 5.00 % OF GROSS RENTAL INCOME
MGT FEE % OF MIN, REFERRED TO AS %MIN
AN INFORMTAION EXPENSES
5.00% OF OVERAGE RENT
MSC-MISCELLANEOUS, REFERRED TO AS MISX
DESCRINBED AS NON-RECOVERABLE EXPENSES; MISSCELLANEOUS
CHARGED AGAINST NET OPERATING INCOME
1997 VALUE - 33,500
1998 VALUE - 33,500
1999 VALUE - 34,505
2000 VALUE - 35,540
2001 VALUE - 36,606
2002 VALUE - 37,705
2003 VALUE - 38,836
2004 VALUE - 40,001
<PAGE>
PAGE 12
2005 VALUE - 41,201
2006 VALUE - 42,437
2007 VALUE - 43,710
2008 VALUE - 45,021
2009 VALUE - 46,372
2010 VALUE - 47,763
2011 VALUE - 49,196
2012 VALUE - 50,672
2013 VALUE - 52,192
2014 VALUE - 53,758
2015 VALUE - 55,370
THEREAFTER - 5.00% OF GROSS RENTAL INCOME
VACANCY ALLOWANCE
- -----------------
PERCENTAGE OF POTENTIAL GROSS INCOME
FOR ALL TENANTS SUBJECT TO VACANCY
1997 VALUE - 5.00
THEREAFTER - CONSTANT
MANAGEMENT FEE
- --------------
NONE
COMMISSION CALCULATIONS
- -----------------------
STANDARD METHOD #1 - 5.000% OF TOTAL RENT
STANDARD METHOD #2 - 2.500% OF TOTAL RENT
STANDARD METHOD #3 - 3.250% OF TOTAL RENT
STANDARD METHOD #4 - 0.000% OF TOTAL RENT
STANDARD METHOD #5 - 0.000% OF TOTAL RENT
COMMISSION PAYOUTS
- ------------------
STANDARD METHOD #1 - CASHED OUT
<PAGE>
PAGE 13
STANDARD METHOD #2 - CASHED OUT
STANDARD METHOD #3 - CASHED OUT
STANDARD METHOD #4 - CASHED OUT
STANDARD METHOD #5 - CASHED OUT
ALTERATION CALCULATION
- ----------------------
NONE
ALTERATION PAYOUTS
- ------------------
STANDARD METHOD #1 - CASHED OUT
STANDARD METHOD #2 - CASHED OUT
STANDARD METHOD #3 - CASHED OUT
STANDARD METHOD #4 - CASHED OUT
STANDARD METHOD #5 - CASHED OUT
COMMON AREA MAINTENANCE POOL
- ----------------------------
NONE
CAPITAL EXPENDITURES
- --------------------
REPL'MENT RESERVE
MARKET RATE RESX MULTIPLIED BY AREA MEASURE OGLA
FOOD COURT CAP.
6/1998 - 1,701,309
PRIMARY CLASSIFICATION CODES
- ----------------------------
<PAGE>
PAGE 14
1 - MALL SHOP TENANTS
2 - FOOD COURT TENANTS
3 - KIOSK TENANTS
4 - ANCHOR TENANTS
5 - THEATRE
6 - MAJOR TENANTS
SECONDARY CLASSIFICATION CODES
- ------------------------------
1 - TENANTS LESS THAN 1000
2 - TENANTS 1001-2000
3 - TENANTS 2001-3500
4 - TENANTS 2501-5000
5 - TENANTS 5001-7500
6 - TENANTS GREATER THAN 7500
7 - NOT USED
8 - FOOD COURT TENANTS
9 - KIOSK TENANTS
10 - ANCHOR TENANTS
11 - NOT USED
12 - NOT USED
COST CENTERS
- ------------
1 - CAM-MALL SHOPS
2 - CAM-ANCHOR EXT.
3 - CAM-ANCHOR INT.
4 - TAX-MALL SHOPS
5 - TAX-ANCHOR CONTR.
6 - W/S-WATER & SEWER
7 - HVC-HVAC INCOME
8 - FCT-FOOD COURT
SALES VOLUME PROFILE
- --------------------
PERCENT OF RELATIVE
MONTH ANNUAL SALES VOLUME
- ----- ------------ --------
JAN 8.33% 1.00
FED 8.33% 1.00
MAR 8.33 1.00
APR 8.33% 1.00
<PAGE>
PAGE 15
MAY 8.33% 1.00
JUN 8.33% 1.00
JUL 8.33% 1.00
AUG 8.33% 1.00
SEP 8.33% 1.00
OCT 8.33% 1.00
NOV 8.33% 1.00
DEC 8.33% 1.00
--------- ----------
TOTALS 100.00% 12.00
GLOBAL RECOVERIES
- -----------------
CAM-15% FULL DEDUC, REFERRED TO AS CAM1
DESCRIBED AS CAM - 15% FULL DEDUCTION OVER LOA (USED FOR MGT'S CODES A, B, H, N)
ASSIGNED TO COST CENTER 1 - CAM-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSES CAM1
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSES
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
CAM-15% EXT. ONLY, REFERRED TO AS CAM2
DESCRIBED AS CAM - 15% EXTERIOR DEDUCT OVER LOA (USED FOR CODES C & J)
ASSIGNED TO COST CENTER 1 - CAM-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSES CAM2
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSES
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
CAM-15% NO DUCT, REFERRED TO AS CAM3
DESCRIBED AS CAM - 15% NO DEDUCT OVER LOA (USED FOR MGT'S CODE F)
ASSIGNED TO COST CENTER 1 - CALL-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSES CAM3
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSES
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
CAM-18% FULL DEDUC, REFERRED TO AS CAM4
DESCRIBED AS CAM - 18% FULL DEDUCT OVER LOA (USED FOR MGT'S CODES D & O)
ASSIGNED TO COST CENTER 1 - CAM-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSES CAM4
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSES
<PAGE>
PAGE 16
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
CA-18% EXT. ONLY, REFERRED TO AS CAM5
DESCRIBED AS CAM - 18% EXTERIOR DEDUCT OVER LOA (USED FOR MGT'S CODES E & P)
ASSIGNED TO COST CENTER 1 - CAM-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE CAM5
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHOUGHT
CAM-15% FULL DEDUC, REFERRED TO AS CAM6
DESCRIBED AS CAM - 15% DULL DEDUCT OVER LOA (USED FOR MGT'S CODES Q & R)
ASSIGNED TO COST CENTER 1 - CAM-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE CAM6
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHOUGHT
CAM-15% FULL DEDUC, REFERRED TO AS CAM 7
DESCRIBED AS CAM - 15% DULL DEDUCT WITH 90% FLOOR (USED FOR MGT'S CODE K)
ASSIGNED TO COST CENTER 1 - CAM-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE CAM1
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE 90%
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHOUGHT
CAM-15% FULL DEDUC, REFERRED TO AS CAM8
DESCRIBED AS CAM -15 % DULL DEDUCT WITH 95% FLOOR (USED FOR MGT'S CODE M)
ASSIGNED TO COST CENTER 1 - CAM-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE CAM1
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE 095%
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHOUGHT
CAM-15% EXT. ONLY, REFERRED TO AS CAM9
DESCRIBED AS CAM - 15% EXTERIOR DEDUCT WITH 90% FLOOR (USED FOR MGT'S CODE L)
ASSIGNED TO COST CENTER 1 - CAM-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE CAM2
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MLOA
CALCULATED ON AN ACCRUAL BASIS WITH A CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHOUGHT
<PAGE>
PAGE 17
REAL ESTATE TAXES, REFERRED TO AS TAX1
ASSIGNED TO COST CENTER 4 - TAX-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE PTAX
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MLOA
CALCULATED ON AN ACCRUAL BASIS WITH CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
REAL ESTATE TAXES, REFERRED TO AS TAX2
ASSIGNED TO COST CENTER 4 - TAX-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE PTAX
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE 090%
CALCULATED ON AN ACCRUAL BASIS WITH CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
REAL ESTATE TAXES, REFERRED TO AS TAX3
ASSIGNED TO COST CENTER 4 - TAX-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE PTAX
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE 095%
CALCULATED ON AN ACCRUAL BASIS WITH CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
REAL ESTATE TAXES, REFERRED TO AS TAX4
ASSIGNED TO COST CENTER 4 - TAX-MALL SHOPS
PRO RATA SHARE RECOVERY OF EXPENSE PTAX
PRO RATED ON TENANT SQUARE FOOTAGE OVER AREA MEASURE MGLA
CALCULATED ON AN ACCRUAL BASIS WITH CALENDAR YEAR EXPENSE
WITH NO CAP
AND A BASE OF ZERO FOR A COMPLETE PASSTHROUGH
STD
GLOBAL GROUPING
GLOBAL RECOVERY CAM1
GLOBAL RECOVERY TAX1
TENANT PROLOGUE
- ---------------
MINIMUM RENTS:
SPECIFIED AMOUNTS INTERPRETED AS AMOUNT/SQUARE FOOT/YEAR
MARKET RATES INTERPRETED AS AMOUNT/SQUARE FOOT/YEAR
SALES VOLUMES AND BREAKPOINTS:
SPECIFIED AMOUNT INTERPRETED AS AMOUNT/YEAR
MARKET RATES INTERPRETED AS AMOUNT/SQUARE FOOT/YEAR
<PAGE>
PAGE 18
RENEWAL RENTS ARE COMPOUNDED ANNUALLY
RELETTING DOWNTIME AND EXPENSES ARE NOT CONDITIONAL ON GOING TO MARKET
REFERENCE TENANTS
- ------------------
THERE ARE A TOTAL OF 8 REFERENCE TENANT(S):
- --------------------------------------------------------
# 1 - MKT1
BASE LEASE DATES : 1/1996 TO 12/2005
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOP TENANTS
SECONDARY CODE: 1 - TENANTS LESS THAN 1000
SUBJECT TO VACANCY ALLOWANCE
MINIMUM RENT:
INITIAL RENT - MARKET RATE MKT1
PERCENTAGE RENT:
INITIAL DALES - MARKET RATE SALM
THEREAFTER - GROWING AT GROWTH RATE SALG
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
STD% OF OVERAGE TO AN UNLIMITED CEILING
RECAPTURES: NONE
RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
COMMISSIONS : NONE
ALTERNATIONS : NONE
SPECULATIVE RENEWALS:
LENGTH VACANT SQ FT MONTHS OF
TERM YEARS.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATION
- ---- ------------ ------ -------- ---------- ----------- ----------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
<PAGE>
PAGE 19
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE MKT1
MULTIPLIED BY 1.000, OR FINAL GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
4.50 AFTER MONTH 60
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALE AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM LEASE
RENEWAL RECOVERY STD
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT: CASHED OUT
RENEWAL ALTERATIONS: MARKET RATE ALTN
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------------
# 2 - MKT2
BASE LEASE DATES: 1/1996 TO 12/2005
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOP TENANTS
SECONDARY CODE: 2 - TENANT 1001-2000
MINIMUM RENT:
INITIAL RENT - MARKET RATE MKT2
PERCENTAGE RENT:
INITIAL SALES - MARKET RATE SALM
THEREAFTER - GROWING AT GROWTH RATE SALG
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
STD% OF OVERAGE TO AN UNLIMITED CEILING
RECAPTURES: NONE
RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
COMMISSION: NONE
<PAGE>
PAGE 20
ALTERNATIONS: NONE
SPECULATIVE RENEWAL:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% FINAL EFFECTIVE RENT, MARKET RATE MKT2
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
4.50 AFTER MONTH 60
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT : CASHED OUT
RENEWAL ALTERNATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- --------------------------------------------------------
# 2 - MKT2
BASE LEASE DATES: 1/1996 TO 12/2005
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOP TENANTS
SECONDARY CODE: 3 - TENANT 2001-3500
MINIMUM RENT:
INITIAL RENT - MARKET RATE MKT3
PERCENTAGE RENT:
INITIAL SALES - MARKET RATE SALM
THEREAFTER - GROWING AT GROWTH RATE SALG
<PAGE>
PAGE 21
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
STD% OF OVERAGE TO AN UNLIMITED CEILING
RECAPTURES: NONE
RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
COMMISSION: NONE
ALTERNATIONS: NONE
SPECULATIVE RENEWAL:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% FINAL EFFECTIVE RENT, MARKET RATE MKT3
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
4.50 AFTER MONTH 60
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT : CASHED OUT
RENEWAL ALTERNATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------
#4 - MKT4
BASE LEASE DATES: 1/1996 TO 12/2005
<PAGE>
PAGE 22
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOP TENANTS
SECONDARY CODE: 4 - TENANT 3501-5000
MINIMUM RENT:
INITIAL RENT - MARKET RATE MKT4
PERCENTAGE RENT:
INITIAL SALES - MARKET RATE SALM
THEREAFTER - GROWING AT GROWTH RATE SALG
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
STD% OF OVERAGE TO AN UNLIMITED CEILING
RECAPTURES: NONE
RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
COMMISSION: NONE
ALTERNATIONS: NONE
SPECULATIVE RENEWAL:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% FINAL EFFECTIVE RENT, MARKET RATE MKT4
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
4.50 AFTER MONTH 60
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
<PAGE>
GLOBAL RECOVERY STD
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT : CASHED OUT
RENEWAL ALTERNATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- ---------------------------------------------------------
# 5 - MKT5
BASE LEASE DATES: 1/1996 TO 12/2005
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOP TENANTS
SECONDARY CODE: 5 - TENANT 5001-7500
MINIMUM RENT:
INITIAL RENT - MARKET RATE MKT5
PERCENTAGE RENT:
INITIAL SALES - MARKET RATE SALM
THEREAFTER - GROWING AT GROWTH RATE SALG
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
STD% OF OVERAGE TO AN UNLIMITED CEILING
RECAPTURES: NONE
RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
COMMISSION: NONE
ALTERNATIONS: NONE
SPECULATIVE RENEWAL:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% FINAL EFFECTIVE RENT, MARKET RATE MKT5
<PAGE>
PAGE 24
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
4.50 AFTER MONTH 60
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT : CASHED OUT
RENEWAL ALTERNATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- -------------------------------------------------------------
# 6 - MKT6
BASE LEASE DATES: 1/1996 TO 12/2005
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - MALL SHOP TENANTS
SECONDARY CODE: 6 - TENANT tENANTS GREATER THAN 7500
MINIMUM RENT:
INITIAL RENT - MARKET RATE MKT6
PERCENTAGE RENT:
INITIAL SALES - MARKET RATE SALM
THEREAFTER - GROWING AT GROWTH RATE SALG
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
STD% OF OVERAGE TO AN UNLIMITED CEILING
RECAPTURES: NONE
RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
COMMISSION: NONE
<PAGE>
PAGE 25
ALTERNATIONS: NONE
SPECULATIVE RENEWAL:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% FINAL EFFECTIVE RENT, MARKET RATE MKT6
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
4.50 AFTER MONTH 60
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
GLOBAL GROUPING
GLOBAL RECOVERY STD
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT : CASHED OUT
RENEWAL ALTERNATIONS: MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
- --------------------------------------------------
# 7 - MKT7
BASE LEASE DATES: 1/1996 TO 12/2005
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 1 - KIOSK TENANTS
SECONDARY CODE: 9 - KIOSK TENANTS
MINIMUM RENT:
INITIAL RENT - MARKET RATE KISK
PERCENTAGE RENT:
INITIAL SALES - MARKET RATE SALM
THEREAFTER - GROWING AT GROWTH RATE SALG
<PAGE>
PAGE 26
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
10.00% OF OVERAGE TO AN UNLIMITED CEILING
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSION: NONE
ALTERNATIONS: NONE
SPECULATIVE RENEWAL:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 3.00 2 NONE NONE YES YES
2 3.00 2 NONE NONE YES YES
3 3.00 2 NONE NONE YES YES
4 3.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% FINAL EFFECTIVE RENT, MARKET RATE KISK
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL PERCENTAGE RENT:
SALES AND OVERAGE PERCENTAGE(S) WILL CONTINUE FROM BASE LEASE
RENEWAL RECOVERIES:
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYOUT : CASHED OUT
RENEWAL ALTERNATIONS: NONE
- ------------------------------------------------
# 8 - FOOD COURT
BASE LEASE DATES: 1/1996 TO 12/2005
TYPE OF TENANT: RETAIL
SQUARE FOOTAGE: 1
PRIMARY CODE: 2 - FOOD COURT TENANTS
SECONDARY 8 - FOOD COURT TENANTS
SUBJECT TO VACANCY ALLOWANCE
<PAGE>
PAGE 27
MINIMUM RENT:
INITIAL RENT - MARKET RATE FOOD
PERCENTAGE RENT:
INITIAL SALES - MARKET RATE SALM
THEREAFTER - GROWING AT GROWTH RATE SALG
WITH A NATURAL BREAKPOINT PLUS MINIMUM RENT
10.00% OF OVERAGE TO AN UNLIMITED CEILING
RECAPTURES: NONE
RECOVERIES: NONE
COMMISSIONS: NONE
ALTERATIONS: NONE
SPECULATIVE RENEWALS:
LENGTH VACANT SQ FT MONTHS OF
TERM YEAR.MONTHS MONTHS INCREASE FREE RENT COMMISSIONS ALTERATIONS
- ---- ----------- ------- -------- --------- ----------- ---------
1 10.00 2 NONE NONE YES YES
2 10.00 2 NONE NONE YES YES
RENEWAL MINIMUM RENT:
100.00% OF HIGHER OF 100.00% OF FINAL EFFECTIVE RENT, MARKET RATE FOOD
MULTIPLIED BY 1.000, OR FINAL RENT GROWING AT 0.00%
FROM DATE OF ESTABLISHMENT
WITH PERCENTAGE STEPS OF
4.50 AFTER MONTH 60
FINAL EFFECTIVE RENT IS LAST MINIMUM PLUS OVERAGE
RENEWAL RECOVERIES: NONE
RENEWAL COMMISSIONS: MARKET RATE COMB
RENEWAL PAYPOUT: CASHED OUT
RENEWAL ALTERATIONS : MARKET RATE ALTB
RENEWAL PAYOUT: CASHED OUT
<PAGE>
THE MALL OF NEW HAMPSHIRE -- (2/98)
PROJECT DESIGNATOR: 8130
EXPIRATION REPORT
YEARS 1999 TO 2009, ALL TENANTS,
INCLUDING OPTIONS, INCLUDING RENEWALS,
EXCLUDING BASE LEASES AND PRIOR OPTIONS,
BASE RENTS INCLUDING CPI ADJUSTMENTS,
INCLUDING PERCENTAGE RENTS
3/23/98 @ 16:47
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ------------------ ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
# 64-SUITE S149A INITIAL
LECHTERS 2,365 4/1998 30.00 19.13 49.13 35.00
# 17-SUITE N129 INITIAL
BROOKSTONE 3,840 1/1999 29.29 17.95 47.24 31.05
# 20-SUITE S111 INITIAL
CASUAL CORNER 5,250 1/1999 35.00 17.95 52.95 28.46
# 7-SUITE N109 INITIAL
AUNITE ANNE'S 418 1/1999 122.12 18.03 140.15 139.73
# 27-SUITE S149 INITIAL
COUNTY SEAT 3,864 1/1999 27.95 17.95 45.90 31.05
# 59-SUITE S103 INITIAL
KAY-BEE TOYS 3,772 1/1999 39.76 17.82 57.58 31.05
# 11-SUITE N121
BELDEN/SHAW'S INITIAL
JWLS 1,547 1/1999 96.96 18.21 115.18 51.75
# 73-SUITE N111
MRS FIELD INITIAL
COOKIES 600 1/1999 116.66 17.94 134.60 139.73
# 74-SUITE E109 INITIAL
NASER JEWLERS 1,193 1/1999 83.82 18.01 101.82 51.75
# 78-SUITE S121 INITIAL
NORDIC TRACK 1,232 1/1999 48.70 18.01 66.71 51.75
# 91-SUITE N113 INITIAL
RITZ CAMERA 1 HR 1,100 1/1999 45.45 17.95 63.39 51.75
#108-SUITE E115 INITIAL
WEATHERVANE 5,016 1/1999 30.00 18.01 48.01 28.46
</TABLE>
<PAGE>
PAGE 2
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ---------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
# 69-SUITE W123 INITIAL
LIMITED, THE 3,633 2/1999 30.00 17.95 47.95 31.05
----- ------ ----- ------ ------
13 FY 99 EXPIRATIONS 33,830 40.37 18.04 58.41 36.91
# 85-SUITE E111 INITIAL
PETITE SOPHISTICAT 2,879 1/2000 43.99 18.20 62.19 37.49
------ ------ ----- ------ ------
1 FY100 EXPIRATIONS 2,879 43.99 18.20 62.19 37.49
------ ------ ----- ------ ------
14 CUMULATIVE EXPS 36,709 40.65 18.06 58.71 36.96
# 56-SUITE K-2 INITIAL
INSTANT JEWEL REPR 150 4/2000 350.00 0.00 350.00 321.37
#106-SUITE E123 INITIAL
VICTORIA'S SECRET 5,375 4/2000 30.00 18.20 48.20 29.46
# 86-SUITE K-11 INITIAL
PIERCING PAGODA 160 4/2000 286.27 0.00 286.27 321.37
# 61-SUITE N115 INITIAL
LADY FOOTLOCKER 1,430 1/2001 41.95 18.72 60.67 55.44
# 99-SUITE E117 INITIAL
SUNCOAST MOTION 1,875 1/200 95.14 18.72 113.86 55.44
------ ------ ----- ------ ------
5 FY101 EXPIRATIONS 8,990 55.39 17.76 73.15 49.07
------ ------ ----- ------ ------
19 CUMULATIVE EXPS 45,699 43.55 18.00 61.55 39.34
# 87-SUITE K-3 INITIAL
PLUMB GOLD 160 8/2001 262.50 0.00 262.50 332.62
# 67-SUITE S141 INITIAL
LIDS 600 1/2002 70.00 19.32 89.32 80.33
</TABLE>
<PAGE>
PAGE 3
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ----------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
# 4-SUITE E121 INITIAL
AMERICAN EAGLE 4,524 1/2002 36.28 19.31 55.59 34.43
----- ------ ----- ------ ------
3 FY102
EXPIRATIONS 5284 46.96 18.73 65.69 48.67
----- ------ ----- ------ ------
22 CUMULATIVE
EXPS 50,983 43.90 18.07 61.98 40.31
# 15-SUITE W125
BOSTON TRADING INITIAL
CO 8,741 1/2003 30.00 20.08 50.08 29.69
# 36-SUITE S105 INITIAL
EYE WORLD 4,480 1/2003 41.29 20.08 61.37 35.63
# 46-SUITE W135 INITIAL
GOLDEN NAILS 750 1/2003 60.00 20.43 80.43 83.14
# 26-SUITE S101 INITIAL
COOKIN 3,837 1/2003 30.00 20.08 50.09 35.63
# 58-SUITE S127 INITIAL
KAY JEWELERS 803 1/2003 147.08 20.14 167.22 83.14
------ ------ ----- ------ ------
5 FY103
EXPIRATIONS 18,611 38.98 20.10 59.08 36.81
------ ------ ----- ------ ------
27 CUMULATIVE
EXPS 69,594 42.59 18.62 61.20 39.37
# 86-SUITE K-11 RENEWAL 1
PIERCING PAGODA 160 6/2003 321.38 0.00 321.38 356.31
# 56-SUITE K-2
INSTANT JEWEL RENEWAL 1
REPR 150 6/2003 350.00 0.00 350.00 356.31
# 47-SUITE N105
GREAT INITIAL
EXPECTATIONS 1,150 1/2004 56.53 20.62 77.14 61.46
# 28-SUITE N101 INITIAL
CVS 5,335 1/2004 23.00 20.65 43.65 33.80
# 6-SUITE F115 INITIAL
AU BON PAIN 825 1/2004 96.96 20.68 117.64 165.95
</TABLE>
<PAGE>
PAGE 4
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ------------------ ----------- ------------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
# 13-SUITE N141 INITIAL
BLAZING T'S 1,245 1/2004 48.19 20.63 68.82 61.66
6 FY104
EXPIRATIONS 8,865 48.69 19.93 68.61 64.85
----- ------ ----- ------ ------
33 CUMULATIVE
EXPS 78,459 43.28 18.76 62.04 42.25
# 87-SUITE K-3 RENEWAL 1
PLUMB GOLD 160 10/2004 332.63 0.00 332.63 368.78
# 19-SUITE W111 INITIAL
CANDY EXPRESS 1,057 1/2005 56.76 21.40 78.16 63.61
# 88-SUITE W113 INITIAL
PRINTS PLUS 2,193 1.2005 37.49 21.47 58.96 44.53
# 8-SUITE N133 INITIAL
B. DALTON 8,038 1/2005 39.00 21.41 60.41 31.81
# 93-SUITE S129
SAN FRAN MUSIC INITIAL
BOX 1,048 1/2005 57.25 21.40 78.65 63.61
# 14-SUITE S131 INITIAL
BODY SHOP, THE 1,239 1/2005 48.42 21.40 69.82 63.61
# 48-SUITE S145 INITIAL
GRIA JN'S COFFEE 920 1/2005 65.20 21.47 86.67 89.06
# 52-SUITE W115
HAMMET'S LEARN INITIAL
WLD 2,696 1/2005 33.00 21.41 54.41 44.53
------ ------ ----- ------ ------
8 FY105
EXPIRATIONS 17,351 44.83 21.22 66.05 47.66
------ ------ ----- ------ ------
41 CUMULATIVE
EXPS 95,810 43.56 19.21 62.77 43.23
# 50-SUITE N127 INITIAL
GYMBOREE 1,256 1/2006 36.62 21.93 58.55 65.84
# 9-SUITE S147
B. DALTON INITIAL
SOFTWARE 2,000 1/2006 64.99 21.93 86.92 65.84
</TABLE>
<PAGE>
PAGE 5
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ------------------ ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
# 18-SUITE N135
CAMBRDIGE INITIAL
SOUNDWRK 2,500 1/2006 35.00 21.93 56.93 46.09
#113-SUITE S143 INITIAL
ZALES 1,080 1/2006 138.88 21.93 160.81 65.84
----- ------ ----- ------ ------
4 FY106
EXPIRATIONS 6,836 60.48 21.93 82.41 58.62
----- ------ ----- ------ ------
45 CUMULATIVE
EXPS 102,646 44.69 19.39 64.08 44.26
# 86-SUITE K-11 RENEWAL 2
PIERCING PAGODA 160 8/2006 356.33 0.00 356.33 395.04
# 56-SUITE K-2
INSTANT JEWEL RENEWAL 2
REPR 150 8/2006 356.32 0.00 356.32 395.04
# 77-SUITE N145 INITIAL
NOAH'S 1,477 1/2007 49.41 23.39 72.80 68.14
# 55-SUITE N147
INNOVATION INITIAL
LUGGAGE 2,972 1/2007 35.34 23.39 58.73 47.70
# 31-SUITE S165 INITIAL
DRIVN'S STYLE 2,329 1/2007 40.40 23.39 63.79 47.70
# 34-SUITE N103
ELECTNC'S INITIAL
BOUTIQUE 1,150 1/2007 47.82 23.38 71.21 68.14
# 35-SUITE W155 INITIAL
ESTN MTN SPORTS 6,945 1/2007 30.00 23.72 53.72 37.48
# 21-SUITE N131 INITIAL
CHILDREN'S PLACE 3,825 1/2007 30.00 23.45 53.46 40.89
# S-SUITE S119 INITIAL
ATHLETE'S FOOT 1,536 1/2007 39.06 23.39 62.45 68.14
# 10-SUITE E113
BATH & BODY INITIAL
WORKS 2,723 1/2007 30.00 23.39 53.39 47.70
# 1-SUITE E153 INITIAL
AEROSOLES 1,494 1/2007 45.00 23.39 68.39 68.14
</TABLE>
<PAGE>
PAGE 6
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
# 89-SUITE W121 INITIAL
RADIO SHACK 2,2230 1/2007 31.38 23.39 54.77 47.70
# 66-SUITE S164 INITIAL
LENSCRAFTERS 3,709 1/2007 30.00 23.39 53.39 40.89
# 49-SUITE W101 INITIAL
GROUND ROUND 6,329 1/2007 20.54 23.39 43.93 37.48
# 96-SUITE E125 INITIAL
SELECT COMFORT 800 1/2007 56.25 23.39 79.64 95.40
# 97-SUITE F109 INITIAL
SPACE CENTER 2,361 1/2007 59.30 23.39 82.69 47.70
# 16-SUITE E140 INITIAL
BRITCHES 4,501 1/2007 27.99 23.39 51.38 40.89
#100-SUITE S125 INITIAL
SUNLGASS HUT 489 1/2007 122.70 23.46 146.16 95.40
#102-SUITE W139
THINGS INITIAL
REMEMBERED 2,250 1/2007 40.40 23.39 63.79 47.70
#103-SUITE W143 INITIAL
TRACK N' TRAIL 1,870 1/2007 35.00 23.39 58.39 68.14
# 72-SUITE W133 INITIAL
MOTHERTIME 1,000 1/2007 45.00 22.93 67.93 95.40
# 30-SUITE N123 INITIAL
DISNEY STORE, THE 5,246 1/2007 27.00 23.45 50.45 37.48
#110-SUITE S133 INITIAL
WILSONS SUEDE 2,420 1/2007 23.10 63.10 47.70
#112-SUITE E135
YANKEE CANDLE INITIAL
CO. 1,600 1/2007 46.87 23.39 70.26 68.14
# 54-SUITE W151 INITIAL
ICING, THE 1,373 1/2007 38.60 23.39 61.98 68.14
------ ------ ----- ------ -----
</TABLE>
<PAGE>
PAGE 7
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ---------------------- ----------- ---------- --------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
25 FY107 EXPIRATIONS 36.42 23.30 39.72 50.33
70 CUMULATIVE EXPS 163,585 41.61 20.85 62.45 46.52
# 87-SUITE K-3 RENEWAL 2
PLUMB GOLD 160 12/2007 381.67 0.00 381.67 423.18
# 53-SUITE W137 INITIAL
HOT TOPIC 1,250 1/2008 46.50 25.40 71.90 70.53
# 79-SUITE S167 INITIAL
NORTHERN EXPERIENC 8,00 1/2008 26.13 25.40 51.54 35.26
# 80-SUITE N139 INITIAL
OLYMPIA SPORT CTR 15,00 1/2008 17.52 25.40 42.92 35.26
# 81-SUITE E137 INITIAL
PACIFIC SUNWEEAR 3,000 1/2008 31.36 25.40 56.76 49.37
# 82-SUITE E119 INITIAL
PARADE OF SHOES 3,117 1/2008 31.36 25.40 56.76 49.37
# 83-SUITE N137 INITIAL
PAUL HARRIS 5,000 1/2008 30.00 25.40 55.40 42.32
# 84-SUITE E133 INITIAL
PERFUMANIA 1,200 1/2008 45.83 25.41 71.24 70.53
# 22-SUITE E127 INITIAL
CINNABON 821 1/2008 85.26 25.40 110.66 98.74
# 23-SUITE E131 INITIAL
CITIZEN'S BANK 2,171 1/2008 46.06 25.47 71.53 49.37
# 38-SUITE S159 INITIAL
FINISH LINE 9,581 1/2008 18.00 25.40 43.40 35.26
# 39-SUITE N151 INITIAL
FIVE-SEVEN-NINE 1,545 1/2008 31.36 25.41 56.77 70.53
# 40-SUITE W119 INITIAL
FOOTLOCKER 2,692 1/2008 37.15 25.40 62.55 49.37
</TABLE>
<PAGE>
PAGE 8
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- -------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
# 41-SUITE N149 INITIAL
G&GRAVE 1,993 1/2008 33.99 25.40 59.39 70.53
# 42-SUITE S157 INITIAL
GADZOOKS 1,799 1/2008 40.00 25.40 65.40 70.53
# 60-SUITE S113 INITIAL
KIDS FOOTLOCKER 2,050 1/2008 35.00 25.40 60.40 49.37
# 44-SUITE E139 INITIAL
GARDEN BOTANIKA 1,629 1/2008 42.00 25.40 67.40 70.53
# 90-SUITE S109 INITIAL
RECORD TOWN 6,926 1/2008 36.59 25.40 61.99 38.79
# 45-SUITE W117 INITIAL
GNC LIVE WELL 2,670 1/2008 45.00 25.40 70.40 49.37
# 65-SUITE W141 INITIAL
LECHTERS 2,950 1/2008 36.59 25.40 61.99 49.37
# 29-SUITE F101 INITIAL
DAIRY TREATS 540 1/2008 92.60 0.00 92.60 190.43
# 3-SUITE W153 INITIAL
ALDO 1,575 1/2008 38.09 25.40 63.49 70.53
# 98-SUITE E138 INITIAL
SPENCER GIFTS 1,977 1/2008 40.00 25.40 65.40 70.53
# 68-SUITE E141 INITIAL
LIMITED EXPRESS 6,172 1/2008 30.00 25.00 55.00 38.79
# 25-SUITE N117 INITIAL
CONTEMPO CASUALS 4,103 1/2008 31.36 25.40 56.76 42.32
#101-SUITE N155 INITIAL
SUNGLASS NUT SPORT 735 1/2008 74.82 25.40 100.23 98.7%
# 71-SUITE F111 INITIAL
MCDONALD'S 750 1/2008 130.43 23.74 154.18 190.43
# 32-SUITE W150 INITIAL
EASY SPIRIT 1,411 1/2008 32.00 25.25 57..25 70.53
</TABLE>
<PAGE>
PAGE 9
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- ---------------------- ----------- ------------ --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
#104-SUITE N143 INITIAL
TRADE SECRET 1,245 1/2008 40.16 25.41 65.57 70.53
#105-SUITE E130 INITIAL
TRI TRAVEL 1,198 1/2008 31.30 25.82 57.13 70.53
# 33-SUITE W147 INITIAL
EDDIE BAUER 6,722 1/2008 24.00 25.40 49.40 38.79
#107-SUITE N153 INITIAL
WATCH WORLD 699 1/2008 64.38 25.46 89.84 98.74
# 51-SUITE E149 INITIAL
HALLMARK/JOHN'S 3,708 1/2008 40.00 25.00 65.00 42.32
#109-SUITE E157 INITIAL
WHITEHALL CO. JWLS 675 1/2008 103.70 25.40 1129.10 98.74
# 75-SUITE N107 INITIAL
NEWS SHOP 1,150 1/2008 65.22 25.75 90.97 70.53
#111-SUITE S135 INITIAL
WORLD OF SCIENCE 2,562 1/2008 35.00 25.40 60.40 49.37
# 76-SUITE W149 INITIAL
NINE WEST 1,313 1/2008 31.99 25.25 57.24 70.53
# 2-SUITE N125 INITIAL
AFTERTHOUGHTS 1,305 1.2008 45.98 25.40 71.37 70.53
# 24-SUITE S123 RENEWAL 1
CLAIRE'S BOUTIQUE 722 3/2008 75.26 25.41 100.67 98.74
----- ------ ----- ------- -----
39 FY108 EXPIRATIONS 112,1166 33.66 25.20 58.87 5025
-------- ------ ----- ------- -----
109 CUMULATIVE
EXPS 275,701 38.38 22.62 61.00 48.03
# 64-SUITE S149A RENEWAL 1
LECHTERS 2,365 6/2008 36.57 25.40 61.97 49.37
#120-SUITE S162 INITIAL
VACANT IN-LINE 6,024 6/2008 31.36 25.40 56.76 38.79
</TABLE>
<PAGE>
PAGE 10
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF RENT/SF
- -------------------- ----------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
#117-SUITE E129 INITIAL
VACANT IN-LINE 532 9/2008 73.15 25.42 98.57 98.74
#121-suite W127 INITIAL
VACANT IN-LINE 4,590 9/2008 31.36 25.40 56.76 42.32
#124-SUITE F100 INITIAL
FOOD COURT 468 9/2008 141.08 0.00 141.08 190.43
#125-SUITE F103 INITIAL
FOOD COURT 928 9/2008 141.08 0.00 141.08 190.43
#122-SUITE W124 INITIAL
VACANT IN-LINE 3,125 12/2008 36.58 25.41 61.99 51.10
#123-SUITE S163 INITIAL
VACANT IN-LINE 3,460 12/2008 36.58 25.40 61.98 51.10
# 70 SUITE F113 INITIAL
MASTER WOK 750 1/2009 160.00 0.00 160.00 197.10
# 94-SUITE F107 INITIAL
SBARO 896 1/2009 195.31 0.00 195.31 197.10
# 62-SUITE N119 INITIAL
LEARNING SMITH 3,627 1/2009 33.00 25.18 58.18 43.80
# 11-SUITE N121 RENEWAL 1
BELDEN/SHAW'S JWLS 1,547 3/2009 101.32 25.19 126.51 73.00
# 59-SUITE S103 RENEWAL 1
KAY-BEE TOYS 3,772 3/2009 41.55 25.18 66.73 43.80
# 7-SUITE N109 RENEWAL 1
AUNTIE ANN'S 418 3/2009 146.01 0.00 146.01 197.10
# 91-SUITE N113 RENEWAL 1
RITZ CAMERA 1 HR 1,100 3/2009 54.08 25.18 79.25 73.00
#114-SUITE S139 INITIAL
VACANT IN-LINE 1,000 3/2009 73.15 25.19 98.34 102.20
#115-SUITE S139 INITIAL
VACANT IN-LINE 600 3/2009 73.16 25.20 98.36 102.20
</TABLE>
<PAGE>
PAGE 11
<TABLE>
<CAPTION>
TERM/ BASE TOTAL MARKET
TENANT SQUARE FT END DATE RENT/SF RECV/SF RENT/SF 7RENT/SF
- ---------------------- ----------- ---------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
#116-SUITE E155 INITIAL
VACANT IN-LINE 832 3/2009 73.15 25.18 98.34 102.20
# 78-SUITE S121 RENEWAL 1
NORDIC TRACK 1,232 3/2009 54.08 25.18 79.26 73.00
#118-SUITE E126 INITIAL
VACANT IN-LINE 664 3/2009 73.16 25.17 98.33 102.20
#119-SUITE E151 INITIAL
VACANT IN-LINE 2,431 3/2009 36.58 25.18 61.76 51.10
# 17-SUITE N129 RENEWAL 1
BROOKSTONE 3,840 3/2009 32.45 25.18 57.63 43.80
# 73-SUITE N111 RENEWAL 1
MRS FIELD COOKIES 600 3/2009 146.02 0.00 146.02 197.10
# 20-SUITE S111 RENEWAL 1
CASUAL CORNER 5,250 3/2009 36.58 25.18 61.76 40.15
# 74-SUITE E109 RENEWAL 1
NASER JEWELERS 1,195 3/2009 87.59 25.19 112.78 73.00
#108-SUITE E115 RENEWAL 1
WEATHERVANE 5,016 3/2009 31.35 25.18 56.53 40.15
# 27-SUITE S149 RENEWAL 1
COUNTY SEAT 3,864 3/2009 32.45 25.18 57.63 43.80
#126-SUITE F105 INITIAL
FOOD COURT 855 3/2009 141.08 0.00 141.09 197.10
#1127-SUITE F115 INITIAL
FOOD COURT 725 3/2009 141.09 0.00 141.09 197.10
----- ------ ----- ------ ------
29 FY109 EXPIRATIONS 61,704 50.90 22.95 73.86 63,54
------ ------ ----- ------ ------
138 CUMULATIVE EXPS 337,405 40.67 22.68 63.35 50.87
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
TENANT BY TENANT OCCUPANCY COST ANALYSIS
- ----------------------------------------------------------------------------------------------------------------
OCCUP.
SQUARE MINIMUM OVERAGE TOTAL COST
TENANT FEET RENT RENT SALES RECOVERIES COST RATIO
================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
AEROSOLES 1,494 $ 35.00 $ -- $ 373.77 $ 18.83 $ 53.83 14.4%
ALDO 1,575 $ 34.92 $ -- $ 373.77 $ 18.83 $ 53.75 14.4%
AMERICAN EAG 4,524 36.28 $ -- $ 367.40 $ 18.83 $ 55.11 15.0%
ATHLETE'S FO 1,536 $ 39.06 $ -- $ 480.78 $ 18.83 $ 57.89 12.0%
AUNTIE ANNE' 418 $ 101.78 $ -- $ 731.95 $ 15.90 $ 117.67 16.1%
B. DALTON 8,038 $ 39.00 $ -- $ 259.51 $ 18.83 $ 57.83 22.3%
B. DALTON SO 2,000 $ 45.83 $ -- $ 561.97 $ 18.83 $ 64.67 11.5%
BATH & BODY 2,723 $ 30.00 $ -- $ 373.77 $ 18.83 $ 48.83 13.1%
BELDEN/SHAW' 1,547 $ 80.80 $ -- $ 901.91 $ 16.08 $ 96.88 10.7%
BERTUCCI'S 4,800 $ 25.00 $ -- $ 373.77 $ 18.83 $ 43.83 11.7%
BLAZING T'S 1,245 $ 40.16 $ -- $ 373.77 $ 18.83 $ 58.99 15.8%
BODY SHOP, T 1,239 $ 48.42 $ -- $ 442.47 $ 18.83 $ 67.25 15.2%
BRITCHES 4,501 $ 24.99 $ -- $ 208.81 $ 18.83 $ 43.82 21.0%
BROOKSTONE 3,840 $ 24.41 $ -- $ 222.54 $ 15.84 $ 40.25 18.1%
CAMBRIDGE SO 2,500 $ 35.00 $ -- $ 495.84 $ 18.83 $ 53.83 10.9%
CANDY EXPRES 1,057 $ 56.76 $ -- $ 266.53 $ 18.83 $ 75.59 28.4%
CASUAL CORNE 5,250 $ 29.17 $ -- $ 94.99 $ 15.84 $ 45.01 47.4%
CHILDREN'S P 3,825 $ 30.00 $ -- $ 373.77 $ 18.90 $ 48.90 13.1%
CINNABON 821 $ 73.08 $ -- $ 373.77 $ 18.83 $ 91.91 24.6%
CITIZEN'S BA 2,171 $ 46.06 $ -- $ 373.77 $ 18.90 $ 64.96 17.4%
CLAIRE'S BOU 722 $ 72.02 $ -- $ 664.77 $ 18.83 $ 90.85 13.7%
COOKIN 3,837 $ 37.57 $ -- $ 667.26 $ 18.83 $ 56.41 8.5%
COUNTY SEAT 3,864 $ 23.29 $ -- $ 142.76 $ 15.84 $ 39.13 27.4%
CVS 5,335 $ 23.00 $ -- $ 313.11 $ 18.36 $ 41.36 13.2%
DISNEY STORE 5,246 $ 27.00 $ -- $ 373.77 $ 18.90 $ 45.90 12.3%
DRIVN'S STYLE 2,329 $ 30.06 $ 0.16 $ 373.77 $ 18.83 $ 49.05 13.1%
EASY SPIRIT 1,411 $ 30.00 $ -- $ 373.77 $ 18.83 $ 48.83 13.1%
EDDIE BAUER 6,722 $ 24.00 $ -- $ 208.81 $ 18.83 $ 42.83 20.5%
ELECTNC'S BO 1,150 $ 43.47 $ -- $ 373.77 $ 18.83 $ 62.30 16.7%
ESTN MTN SPO 6,945 $ 30.00 $ -- $ 373.77 $ 19.11 $ 49.11 13.1%
EYE WORLD 4,480 $ 41.29 $ -- $ 226.19 $ 18.83 $ 60.12 26.6%
FINISH LINE 9,581 $ 18.00 $ -- $ 208.81 $ 18.83 $ 36.83 17.6%
FIVE-SEVEN-N 1,545 $ 28.00 $ -- $ 373.77 $ 18.83 $ 46.83 12.5%
FOOTLOCKER 2,692 $ 37.15 $ -- $ 373.77 $ 18.83 $ 55.98 15.0%
G&G/RAVE 1,993 $ 30.00 $ -- $ 208.81 $ 18.83 $ 48.83 23.4%
GADZOOKS 1,799 $ 36.00 $ -- $ 373.77 $ 18.83 $ 54.83 14.7%
GAP/GAPKIDS 9,913 $ 33.00 $ -- $ 373.77 $ 17.31 $ 50.31 13.5%
GARDEN BOTAN 1,629 $ 38.00 $ -- $ 373.77 $ 18.83 $ 56.83 15.2%
GNC LIVE WEL 2,670 $ 45.00 $ -- $ 187.44 $ 18.83 $ 63.83 34.1%
GOLDEN NAILS 750 $ 60.00 $ -- $ 373.77 $ 19.18 $ 79.18 21.2%
GREAT EXPECT 1,150 $ 56.52 $ -- $ 373.77 $ 18.83 $ 75.35 20.2%
GRIA JN'S CO 920 $ 59.78 $ -- $ 604.78 $ 18.90 $ 78.68 13.0%
GROUND ROUND 6,329 $ 17.38 $ -- $ 259.27 $ 18.83 $ 36.21 14.0%
GYMBOREE 1,256 $ 36.62 $ -- $ 504.52 $ 18.83 $ 55.45 11.0%
HALLMARK/JOH 3,708 $ 35.00 $ -- $ 208.81 $ 18.83 $ 53.83 25.8%
HAMMET'S LEA 2,696 $ 27.00 $ -- $ 373.77 $ 18.83 $ 45.83 12.3%
HOT TOPIC 1,250 $ 45.00 $ -- $ 373.77 $ 18.83 $ 63.83 17.1%
ICING, THE 1,373 $ 38.60 $ -- $ 373.77 $ 18.83 $ 57.43 15.4%
INNOVATION L 2,972 $ 27.00 $ -- $ 373.77 $ 18.83 $ 45.83 12.3%
KAY JEWELERS 803 $ 112.07 $35.01 $ 2,101.16 $ 18.90 $ 165.98 7.9%
KAY-BEE TOYS 3,772 $ 33.13 $ -- $ 311.72 $ 15.32 $ 48.46 15.5%
================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================
TENANT BY TENANT OCCUPANCY COST ANALYSIS
- --------------------------------------------------------------------------------------------------
Occup.
Square Minimum Overage Total Cost
Tenant Feet Rent Rent Sales Recoveries Cost Ratio
==================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
LADY FOOTLOC 1,430 $ 41.95 $ - $401.12 $18.83 $ 60.78 15.2%
LECHTERS 2,950 $ 27.00 $ - $373.77 $18.83 $ 45.83 12.3%
LENSCRAFTERS 3,709 $ 30.00 $ - $373.77 $18.83 $ 48.83 13.1%
LIDS 600 $ 70.00 $ - $628.25 $18.83 $ 88.83 14.1%
LIMITED EXPR 6,172 $ 30.00 $ - $118.61 $18.83 $ 48.83 41.2%
LIMITED, THE 3,633 $ 27.50 $ - $341.81 $17.34 $ 44.84 13.1%
MOTHERTIME 1,000 $ 39.99 $ - $331.04 $17.85 $ 57.84 17.5%
MRS FIELD CO 600 $ 97.22 $ - $338.35 $15.84 $113.06 33.4%
NASER JEWELE 1,193 $ 69.85 $ - $949.46 $15.90 $ 85.75 9.0%
NINE WEST 1,313 $ 30.00 $ - $373.77 $18.83 $ 48.83 13.1%
NOAH'S 1,477 $ 42.00 $ - $373.77 $18.83 $ 60.83 16.3%
NORDIC TRACK 1,232 $ 40.58 $ - $517.28 $15.90 $ 56.48 10.9%
OLYMPIA SPOR 15,000 $ 15.00 $ - $208.81 $18.83 $ 33.83 16.2%
PACIFIC SUNW 3,000 $ 30.00 $ - $373.77 $18.83 $ 48.83 13.1%
PAUL HARRIS 5,000 $ 28.00 $ - $373.77 $18.83 $ 46.83 12.5%
PERFUMANIA 1,200 $ 37.50 $ - $373.77 $18.83 $ 56.33 15.1%
PETITE SOPHI 2,879 $ 43.99 $ - $196.83 $18.83 $ 62.82 31.9%
PRINTS PLUS 2,193 $ 37.49 $ - $373.77 $18.90 $ 56.39 15.1%
RADIO SHACK 2,230 $ 31.38 $ - $373.77 $18.83 $ 50.21 13.4%
RECORD TOWN 6,926 $ 30.75 $ - $373.77 $18.83 $ 49.58 13.3%
RITZ CAMERA 1,100 $ 37.88 $ - $814.05 $15.84 $ 53.72 6.6%
RUBY TUESDAY 4,992 $ 24.92 $ - $373.77 $18.83 $ 43.75 11.7%
SAN FRAN MUS 1,048 $ 57.25 $ - $340.48 $18.83 $ 76.08 22.3%
SELECT COMFO 800 $ 56.25 $ - $373.77 $18.83 $ 75.08 20.1%
SPENCER GIFT 1,977 $ 40.00 $ - $373.77 $18.83 $ 58.83 15.7%
SUNCOAST MOT 1,875 $ 87.02 $ - $521.11 $18.83 $105.85 20.3%
SUNGLASS HUT 489 $122.69 $ - $373.77 $18.90 $141.59 37.9%
SUNGLASS HUT 735 $ 74.82 $ - $373.77 $18.83 $ 93.65 25.1%
THINGS REMEM 2,250 $ 35.00 $ - $373.77 $18.83 $ 53.83 14.4%
TRACK N' TRA 1870 $ 35.00 $ - $373.77 $18.83 $ 53.83 14.4%
TRADE SECRET 1245 $ 40.16 $ - $373.77 $18.83 $ 58.99 15.8%
TRI TRAVEL 1,198 $ 27.47 $ - $373.77 $19.18 $ 46.65 12.5%
VICTORIA'S S 5,375 $ 30.00 $ - $336.67 $18.83 $ 48.83 14.5%
WATCH WORLD 699 $ 57.22 $ - $373.77 $18.90 $ 76.12 20.4%
WEATHERVANE 5,016 $ 25.00 $ - $169.55 $15.90 $ 40.90 24.1%
WHITEHALL CO 675 $103.70 $ - $208.81 $18.83 $122.53 58.7%
WILSONS SUED 2,420 $ 35.83 $ - $392.88 $18.29 $ 54.12 13.8%
WORLD OF SCI 2,562 $ 30.00 $ - $373.77 $18.83 $ 48.83 13.1%
YANKEE CANDL 1,600 $ 35.41 $ - $373.77 $18.83 $ 54.24 14.5%
ZALES 1,080 $138.88 $ - $373.77 $18.83 $157.71 42.2%
==================================================================================================
Note: Projected Average Mall Sales were utilized for tenant without a historical sales performance
==================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
INCOME & EXPENSE GROWTH CHART
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ---- ----
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum Rent: $10,690,699 $12,060,845 $12,071,468 $12,165,448 $12,167,104 $12,396,924 $12,604,310
Effective Gross Income: $16,153,870 $17,621,441 $17,737,508 $18,022,074 $18,202,815 $18,675,617 $19,040,138
Operating Expenses: $520,275 $538,317 $556,985 $576,302 $596,290 $616,972 $638,372
Net Operating Income: $11,020,433 $12,266,583 $12,204,773 $12,302,917 $12,291,278 $12,556,763 $12,706,151
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================================
INCOME & EXPENSE GROWTH CHART
THE MALL OF NEW HAMPSHIRE CAGR CAGR
Cushman & Wakefield, Inc. 2006 2007 2008 2009 1999-08 2001-08
---- ---- ---- ---- ------- -------
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Minimum Rent: $12,811,222 $12,600,899 $13,303,699 $15,841,159 2.5% 1.4%
Effective Gross Income: $19,526,455 $19,403,013 $20,333,813 $23,439,865 2.6% 2.0%
Operating Expenses: $660,515 $683,426 $707,134 $731,665 3.5% 3.5%
Net Operating Income: $12,974,583 $12,629,658 $13,275,724 $16,046,640 2.1% 1.2%
==========================================================================================================
</TABLE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[LINE CHART DEPICTING INCOME AND EXPENSE GROWTH]
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
SENSITIVITY ANALYSIS ("As Is" Analysis)
The Mall of New Hampshire 1 2 3 4 5 6
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Effective Gross Income: $17,007,119 $17,802,614 $18,029,078 $18,311,124 $18,558,540 $19,032,130
Operating Expenses: $520,275 $538,317 $556,985 $576,302 $596,290 $616,972
Net Operating Income: $11,837,534 $12,452,601 $12,498,809 $12,595,697 $12,643,319 $12,911,463
Net Cash Flow: $11,052,925 $12,292,679 $12,390,717 $12,461,889 $12,385,861 $12,724,825
PROPERTY VALUE: $145,600,000
Net Sales Price: $143,571,164 $144,103,916 $145,220,977 $145,770,031 $148,861,573 $150,436,122
Net Cash Flow: $11,052,925 $12,292,679 $12,390,717 $12,461,889 $12,385,861 $12,724,825
- NOI Return: 8.13% 8.55% 8.58% 8.65% 8.68% 8.87%
- Cash-On-Cash Return: 7.59% 8.44% 8.51% 8.56% 8.51% 8.74%
DISCOUNTED INCOME STREAM
Discounted Sales Price: $130,223,278 $118,554,648 $108,366,129 $98,662,895 $91,388,093 $83,768,462
Discounted Cash Flow: $10,025,329 $10,113,217 $9,246,144 $8,434,697 $7,603,844 $7,085,659
Net Present Value: $140,248,607 $138,693,194 $137,750,819 $136,482,282 $136,811,324 $136,277,352
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
SENSITIVITY ANALYSIS ("As Is" Analysis)
The Mall of New Hampshire 7 8 9 10 11 CAGR CAGR
Cushman & Wakefield, Inc. 2005 2006 2007 2008 2009 1999-08 2001-08
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Effective Gross Income: $19,381,755 $19,822,101 $20,290,353 $21,808,446 $23,672,959 2.8% 2.8%
Operating Expenses: $638,372 $660,515 $683,426 $707,134 $731,665 3.5% 3.5%
Net Operating Income: $13,048,031 $13,264,811 $13,462,561 $14,678,867 $16,245,281 2.4% 2.3%
Net Cash Flow: $12,740,763 $13,088,308 $12,520,335 $13,022,953 1.8% 0.7%
PROPERTY VALUE: $187,298,534 2.8%
----------------------
NET SALES PRICE: $152,935,468 $155,215,409 $169,238,702 $187,298,534 AVERAGE RETURNS
NET CASH FLOW: $12,740,763 $13,088,308 $12,520,335 $13,022,953 OVER HOLDING PERIOD
----------------------
- NOI Return: 8.96% 9.11% 9.25% 10.08% NOI 8.9%
- Cash-On-Cash Return: 8.75% 8.99% 8.60% 8.94% Cash 8.6%
DISCOUNTED INCOME STREAM YIELD COMPOSITION
----------------------
Discounted Sales Price: $77,242,804 $71,105,967 $70,322,176 $70,590,848 Reversion 48.5%
Discounted Cash Flow: $6,434,951 $5,995,905 $5,202,458 $4,908,214 Cash Flow 51.5%
--------- -----
Net Present Value: $136,186,645 $136,045,713 $140,464,380 $145,641,265 Total Value 100.0%
----------------------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================================
ASSUMPTIONS & CONCLUSIONS
- -----------------------------------------------------------------------------------------------
VALUE RANGE: LOW HIGH CONCLUSION
DISCOUNT RATE: 10.75% 10.00% 10.25%
TERMINAL CAP RATE: 8.75% 8.00% 8.50%
===============================================================================================
<S> <C> <C> <C>
Value Range/Conclusion: $138,979,882 $152,601,295 $145,600,000
- -----------------------------------------------------------------------------------------------
- Going-In Cap Rate: 8.52% 7.76% 8.13%
- -----------------------------------------------------------------------------------------------
- Price/sf Owned GLA: $424.50 $466.11 $444.73
- -----------------------------------------------------------------------------------------------
- Price/sf Mall Shop GLA: $437.39 $480.26 $458.22
===============================================================================================
</TABLE>
NOI VS. CASH FLOW
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1999 2000 2001 2002 2003
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOI $11,837,534 $12,452,601 $12,498,809 $12,595,697 $12,643,319
Cash Flow $11,052,925 $12,292,679 $12,390,717 $12,461,889 $12,385,861
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
2004 2005 2006 2007 2008
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOI $12,911,463 $13,048,031 $13,264,811 $13,462,561 $14,678,867
Cash Flow $12,724,825 $12,740,763 $13,088,308 $12,520,335 $13,022,953
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================
SALE-YIELD MATRIX
- ----------------------------------------------------------------------------------------------
NET REVERSION TERMINAL DISCOUNT RATE (IRR)
COST OF SALE: CAPITALIZATION ------------------------------------------------------------
2.00% RATE 10.00% 10.25% 10.50% 10.75%
==============================================================================================
<S> <C> <C> <C> <C> <C>
$199,004,692 8.00% $152,601,295 $150,053,193 $147,561,329 $145,124,278
- ----------------------------------------------------------------------------------------------
$192,974,247 8.25% $150,276,297 $147,780,382 $145,339,419 $142,952,017
- ----------------------------------------------------------------------------------------------
$187,298,534 8.50% $148,088,064 $145,641,265 $143,248,209 $140,907,536
- ----------------------------------------------------------------------------------------------
$181,947,147 8.75% $146,024,873 $143,624,384 $141,276,496 $138,979,882
==============================================================================================
</TABLE>
NPV VS. SALES PRICE BY YEAR
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1999 2000 2001 2002 2003
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales Price $143,571,164 $144,103,916 $145,220,977 $145,770,031 $148,861,573
Net Present Value $140,248,607 $138,693,194 $137,750,819 $136,482,282 $136,811,324
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
2004 2005 2006 2007 2008
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales Price $150,436,122 $152,935,468 $155,215,409 $169,238,702 $187,298,534
Net Present Value $136,277,352 $136,186,645 $136,045,713 $140,464,380 $145,641,265
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
ANNUAL CASH FLOW REPORT ("AS STABILIZED" ANALYSIS)
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc. 2000 2001 2002 2003
=============================================================================================================================
<S> <C> <C> <C> <C>
OPERATING INCOME
- -------------------------
MINIMUM RENT
Mall Shop Tenants $10,850,613 $10,893,932 $10,949,618 $10,980,634
Food Court Tenants $928,827 $928,827 $932,999 $940,924
Kiosk Tenants $123,917 $145,919 $146,398 $157,137
--------- --------- --------- ---------
Subtotal: $11,903,357 $11,968,678 $12,029,015 $12,078,695
RECOVERIES
CAM Recoveries $3,841,300 $3,894,740 $3,989,482 $4,089,377
TAX Recoveries $2,103,051 $2,163,553 $2,246,248 $2,330,800
----------- ----------- ----------- -----------
SUBTOTAL: $5,944,351 $6,058,293 $6,235,730 $6,420,177
Overage Rent $32,334 $36,247 $43,791 $40,496
GROSS RENTAL INCOME: $17,880,042 $18,063,218 $18,308,536 $18,539,368
-------------------- ------------ ------------ ------------ ------------
Specialty Leasing $710,500 $731,815 $753,769 $776,383
Miscellaneous $82,400 $84,872 $87,418 $90,041
Vacancy/Credit Loss ($894,002) ($903,159) ($915,426) ($926,967)
------------------- ---------- ---------- ---------- ----------
TOTAL INCOME: $17,778,940 $17,976,746 $18,234,297 $18,478,825
OPERATING EXPENSES
- -------------------------
RECOVERABLE EXPENSES
Common Area Maintenance $2,194,288 $2,271,088 $2,350,576 $2,432,846
Real Estate Taxes $2,017,600 $2,098,304 $2,182,236 $2,269,526
Management Fee $598,515 $601,943 $604,800 $610,746
--------- --------- --------- ---------
Subtotal-Recoverable: $4,810,403 $4,971,335 $5,137,612 $5,313,118
NON-RECOVERABLE
General & Administrative $452,062 $467,884 $484,260 $501,209
Marketing Expense $51,750 $53,561 $55,436 $57,376
Miscellaneous Expenses $34,505 $35,540 $36,606 $37,705
-------- -------- -------- --------
Subtotal-Nonrecoverable: $538,317 $556,985 $576,302 $596,290
TOTAL OPERATING EXPENSES: $5,348,720 $5,528,320 $5,713,914 $5,909,408
Operating Expense Ratio 30.1% 30.8% 31.3% 32.0%
NET OPERATING INCOME $12,430,220 $12,448,426 $12,520,383 $12,569,417
Alterations $105,733 $80,088 $49,979 $149,149
Commissions $18,960 $18,045 $11,206 $32,462
Replacement Reserve $67,794 $70,167 $72,623 $75,165
------------------- -------- -------- -------- --------
Subtotal: $192,487 $168,300 $133,808 $256,776
NET CASH FLOW $12,237,733 $12,280,126 $12,386,575 $12,312,641
=============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================================================
ANNUAL CASH FLOW REPORT ("AS STABILIZED" ANALYSIS)
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc. 2004 2005 2006 2007
==========================================================================================================================
<S> <C> <C> <C> <C>
OPERATING INCOME
- -------------------------
MINIMUM RENT
Mall Shop Tenants $11,185,986 $11,281,232 $11,459,212 $11,471,762
Food Court Tenants $946,584 $1,008,141 $1,008,141 $1,008,141
Kiosk Tenants $145,263 $158,729 $171,524 $161,120
--------- --------- --------- ---------
Subtotal: $12,277,833 $12,448,102 $12,638,877 $12,641,023
RECOVERIES
CAM Recoveries $4,218,140 $4,306,308 $4,447,131 $4,521,450
TAX Recoveries $2,431,989 $2,514,605 $2,628,944 $2,685,576
----------- ----------- ----------- -----------
SUBTOTAL: $6,650,129 $6,820,913 $7,076,075 $7,207,026
Overage Rent $32,823 $52,437 $80,577 $107,530
GROSS RENTAL INCOME: $18,960,785 $19,321,452 $19,795,529 $19,955,579
-------------------- ------------ ------------ ------------ ------------
Specialty Leasing $799,674 $823,664 $848,374 $873,825
Miscellaneous $92,742 $95,524 $98,390 $101,342
Vacancy/Credit Loss ($948,038) ($966,071) ($989,776) ($997,778)
------------------- ---------- ---------- ---------- ----------
TOTAL INCOME: $18,905,163 $19,274,569 $19,752,517 $19,932,968
OPERATING EXPENSES
- -------------------------
RECOVERABLE EXPENSES
Common Area Maintenance $2,517,996 $2,606,126 $2,697,340 $2,791,747
Real Estate Taxes $2,360,307 $2,454,719 $2,552,908 $2,655,024
Management Fee $620,280 $630,500 $636,700 $662,193
--------- --------- --------- ---------
Subtotal-Recoverable: $5,498,583 $5,691,345 $5,886,948 $6,108,964
NON-RECOVERABLE
General & Administrative $518,752 $536,908 $555,700 $575,149
Marketing Expense $59,384 $61,463 $63,614 $65,840
Miscellaneous Expenses $38,836 $40,001 $41,201 $42,437
-------- -------- -------- --------
Subtotal-Nonrecoverable: $616,972 $638,372 $660,515 $683,426
TOTAL OPERATING EXPENSES: $6,115,555 $6,329,717 $6,547,463 $6,792,390
Operating Expense Ratio 32.3% 32.8% 33.1% 34.1%
NET OPERATING INCOME $12,789,608 $12,944,852 $13,205,054 $13,140,578
Alterations $89,389 $185,910 $76,514 $702,351
Commissions $20,136 $40,840 $16,653 $153,622
Replacement Reserve $77,795 $80,518 $83,336 $86,253
------------------- -------- -------- -------- --------
Subtotal: $187,320 $307,268 $176,503 $942,226
NET CASH FLOW $12,602,288 $12,637,584 $13,028,551 $12,198,352
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
ANNUAL CASH FLOW REPORT ("AS STABILIZED" ANALYSIS)
THE MALL OF NEW HAMPSHIRE CAGR CAGR
Cushman & Wakefield, Inc. 2008 2009 2010 2000-09 2000-09
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
OPERATING INCOME
- -------------------------
MINIMUM RENT
Mall Shop Tenants $12,425,042 $14,109,382 $15,162,512 3.0% 3.7%
Food Court Tenants $1,044,579 $1,270,094 $1,514,282 3.5% 4.5%
Kiosk Tenants $175,567 $190,172 $178,795 4.9% 3.8%
--------- --------- --------- ---- ----
Subtotal: $13,645,188 $15,569,648 $16,855,589 3.0% 3.8%
RECOVERIES
CAM Recoveries $4,707,349 $5,012,361 $5,176,815 3.0% 3.3%
TAX Recoveries $2,790,842 $2,973,550 $3,094,689 3.9% 4.1%
----------- ----------- ----------- ---- ----
SUBTOTAL: $7,498,191 $7,985,911 $8,271,504 3.3% 3.6%
Overage Rent $93,977 $44,935 $15,268 3.7% 0.4%
GROSS RENTAL INCOME: $21,237,356 $23,600,494 $25,142,361 3.1% 3.7%
-------------------- ------------ ------------ ------------ ---- ----
Specialty Leasing $900,040 $927,041 $954,853 3.0% 3.0%
Miscellaneous $104,382 $107,513 $110,739 -- --
Vacancy/Credit Loss ($1,061,865) ($1,180,023) ($1,257,117) 3.1% 3.7%
------------------- ------------ ------------ ------------ ---- ----
TOTAL INCOME: $21,179,913 $23,455,025 $24,950,836 3.1% 3.7%
OPERATING EXPENSES
- -------------------------
RECOVERABLE EXPENSES
Common Area Maintenance $2,889,458 $2,990,589 $3,095,260 3.5% 3.5%
Real Estate Taxes $2,761,225 $2,871,674 $2,986,541 4.0% 4.0%
Management Fee $733,844 $812,136 $851,719 3.4% 4.3%
--------- --------- --------- ---- ----
Subtotal-Recoverable: $6,384,527 $6,674,399 $6,933,520 3.7% 3.8%
NON-RECOVERABLE
General & Administrative $595,279 $616,114 $637,678 3.5% 3.5%
Marketing Expense $68,145 $70,530 $72,998 3.5% 3.5%
Miscellaneous Expenses $43,710 $45,021 $46,372 3.0% 3.0%
-------- -------- -------- ---- ----
Subtotal-Nonrecoverable: $707,134 $731,665 $757,048 3.5% 3.5%
TOTAL OPERATING EXPENSES: $7,091,661 $7,406,064 $7,690,568 3.7% 3.8%
Operating Expense Ratio 33.5% 31.6% 30.8%
NET OPERATING INCOME $14,088,252 $16,048,961 $17,260,268 2.9% 3.6%
Alterations $1,286,272 $780,373
Commissions $280,370 $169,846
Replacement Reserve $89,272 $92,396
------------------- -------- -------
Subtotal: $1,655,914 $1,042,615
NET CASH FLOW $12,432,338 $15,006,346 2.3% 2.8%
===================================================================================================================================
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CUSHMAN & WAKEFIELD, INC.
NATIONAL RETAIL OVERVIEW
- --------------------------------------------------------------------------------
RETAIL VALUATION GROUP
Richard W. Latella, MAI
Senior Director
August 4, 1998
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
INTRODUCTION
Shopping centers constitute the major form of retail activity in the
United States today. Approximately 55 percent of all non-automotive retail
sales occur in shopping centers. It is estimated that consumer spending
accounts for about two-thirds of all economic activity in the United States. As
such, retail sales patterns have become an important indicator of the country's
economic health.
The early part of the 1990s was a time of economic stagnation and
uncertainty in the country. The gradual recovery, which began as the nation
crept out of the last recession, has shown some signs of weakness as corporate
downsizing has accelerated. But as the recovery period reaches into its fifth
year and the retail environment remains volatile, speculation regarding the
nation's economic future remains. It is this uncertainty which has shaped
recent consumer spending patterns. We shall first provide a brief overview of
broad economic measures that are important in terms of long range retail sales
forecasting and general investment underwriting. This is followed by a
discussion of retail sales trends along with selected statistics of the
shopping center industry. Also included is a discussion of contemporary
industry trends, valuation issues and a brief overview of the REIT market.
PERSONAL INCOME AND CONSUMER SPENDING
Americans' PERSONAL INCOME (total income from wages, salaries, interest,
rents and all other sources) advanced by four-tenths of a percent in December,
which helped raise income for all of 1997 by 5.8 percent. This was less than
1995 but it far outpaced the 2.5 percent growth in 1994. Data for June 1998
shows that income rose two-tenths of a percent, half of the previous month's
rise due to the GM strike.
<TABLE>
<CAPTION>
- ----------------------------------------
PERSONAL INCOME CONSUMER SPENDING
- -------------------- -----------------
YEAR %CHANGE YEAR %CHANGE
- -------- --------- ------ --------
<S> <C> <C> <C>
1993 4.7 1993 5.8
1994 2.5 1994 5.5
1995 6.1 1995 4.8
1996 5.6 1996 5.0
1997 5.8 1997 5.4
- ----------------------------------------
Source: Commerce Dept.
- ----------------------------------------
</TABLE>
CONSUMER SPENDING is another closely watched indicator of economic
activity. The importance of consumer spending is that it represents two-thirds
of the nation's economic activity. Total consumer spending rose by 5.4 percent
in 1997, in line with the long term trend. Spending rose six-tenths of a
percent in June 1998, after increasing at an annual rate of 6 percent for the
first quarter, the most in six years.
EMPLOYMENT TRENDS
The country's economic situation continues to generate a record number of
new jobs. Correspondingly, the nation's unemployment rate continues to decrease
from its recent peak in 1992. Selected statistics released by the Bureau of
Labor Statistics are summarized as follows:
- --------------------------------------------------------------------------------
1
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
SELECTED EMPLOYMENT STATISTICS
- ------------------------------------------------------------------------------------------
CIVILIAN LABOR FORCE EMPLOYED
- ------------------------------------------- ----------------------------
TOTAL WORKERS TOTAL WORKERS UNEMPLOYMENT
YEAR1 (000) % CHANGE (000) % CHANGE RATE
- ------------- -------------- ---------- --------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
1990 125,840 -- 118,793 -- 5.6
1991 126,346 .4 117,718 -.9 6.8
1992 128,105 1.4 118,492 .7 7.5
1993 129,200 .9 120,259 1.5 6.9
1994 131,056 2.4 123,060 2.3 6.1
1995 132,304 1.0 124,900 1.5 5.6
1996 133,943 1.2 126,708 1.4 5.4
1997 -- -- -- -- 4.9
CAGR
1990-1997 -- +1.05 -- +1.08 --
- ------------------------------------------------------------------------------------------
1 Year ending December 31
- ------------------------------------------------------------------------------------------
Source: Bureau of Labor Statistics U.S. Department of Labor
- ------------------------------------------------------------------------------------------
</TABLE>
During 1996, the labor force increased by 1,639,000 or approximately 1.2
percent. Correspondingly, the level of employment increased by 1,808,000 or
1.4 percent. As such, the year end unemployment rate dropped by two-tenths of a
percent to 5.4 percent. For 1996, monthly job growth averaged 224,000. On
balance, over 10.0 million jobs have been created since the recovery began.
Preliminary data for December 1997 shows that the unemployment rate rose
slightly to 4.7 percent from 4.6 percent following job growth of 370,000. For
the year, 1997's average unemployment rate of 4.9 percent matched the lows set
in 1970 and 1973. A record 64.1 percent of the population held jobs at the end
of the year. U.S. payrolls ended the year at 123.9 million, up by 3.2 million
or 2.6 percent over 1996. For the year job growth averaged nearly 267,000 per
month. For the final quarter, job growth averaged 333,000 per month. Most
analysts are forecasting monthly job growth in the 250,000 to 275,000 range in
early 1998. A Bank of America survey of 18 leading Wall Street economists
forecast unemployment rates of 4.8 and 5.0 percent in 1998 and 1999,
respectively.
In May 1998, the economy created 296,000 jobs. Nationally, the
unemployment rate remained unchanged at 4.3 percent.
HOUSING TRENDS
Housing trends are an important economic measure due to the substantial
economic activity generated when a home changes hands (i.e. spending on repairs
by sellers, redecorating by buyers, fees, commissions and taxes).
For all of 1997, a total of 1.476 million new homes and apartments were
started, barely down one-tenth of a percent from a total of 1.477 million in
1996 which was the fastest pace in eight years.
- --------------------------------------------------------------------------------
2
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Approximately 800,000 new homes were sold in 1997, up 5.7 percent from
756,000 in 1996. It was the highest total since 817,000 in 1978. The median
home price of new homes sold in 1996 was $140,000, up 4.6 percent from 1995.
April 1998 data shows that new home sales rose by 5.2 percent to an annual rate
of 888,000 units, a new record. This followed a revised 3 percent increase in
February. A record low interest rates and warm weather were cited as reasons
for the increase. Builders are currently reporting a 3.8 month inventory of
unsold homes, a record low. The median price of all homes sold in 1997 (new and
existing) rose 6.2 percent over 1996 to $124,800.
Sales of existing single family homes rose 3.1 percent for 1997 to a
record 4.22 million units from 4.09 million in 1996, a previous record. Resales
are an important measure of the housing industry's health as they account for
about 85 percent of all single family sales. Data for May 1998 shows that sales
rose by 1.0 percent to an annual rate of 4.82 million units. The median price
rose to $127,000.
The home ownership rate seems to be rising, after remaining stagnant over
the last decade. For 1996, the share of households that own their homes was
65.4 percent, compared to 64.7 percent for a year earlier. Lower mortgage rates
are cited as a factor.
GROSS DOMESTIC PRODUCT
The Commerce Department reports that the gross domestic product increased
by 3.8 percent in 1997, the largest growth in that measure since an identical
rate in 1988 when the Federal Reserve stimulated the economy to cushion the
impact of the 1987 stock market crash. For the year, Americans produced an
inflation adjusted $7.19 trillion in goods and services. The fourth quarter
1997 growth rate was a brisk 4.3 percent. The annual growth was viewed as
remarkable in view of its coming in the seventh year of an economic expansion
that was also characterized by low inflation. The Fed foresees a moderation of
this trend and expects the U.S. economy will expand at a 2.0 to 2.50 percent
pace during 1998 which is in-line with White House forecasts and a pace which
is viewed as the economy's non-inflationary growth limit.
The following chart cites the annual change in real GDP since 1990.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
REAL GDP
- -----------------------------------------------------------------
YEAR % CHANGE
- ------------------------------------------------------- ---------
<S> <C>
1990 1.2
1991 -.6
1992 2.3
1993 3.1
1994 4.1
1995* 2.0
1996 2.4
1997 3.8
- -----------------------------------------------------------------
* Reflects new chain weighted system of measurement.
Comparable 1994 measure would be 3.5%
- -----------------------------------------------------------------
Source: Bureau of Economic Analysis
- -----------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
First quarter 1998 growth was reported at a robust 5.4 percent versus 3.7
percent in the final three months of 1997. This was a surprisingly powerful
performance and above most analysts' opinions.
WHOLESALE PRICES
Soaring energy prices in December drove wholesale costs to a twelve month
high. For the year, the Producer Price Index (PPI) gained 2.8 percent. However,
excluding energy, the PPI rose just 1.4 percent in all of 1996. In 1995, the
index rose 2.3 percent. For November 1997, wholesale prices fell two-tenths of
a percent. For the twelve months ending November 1997, the index was -1.2
percent. Projections for 1997 show that most economists expect a 2.5 percent
rise and a core increase of 1.5 percent.
CONSUMER PRICES
The Bureau of Labor Statistics has reported that consumer prices rose by
only 1.7 percent in 1997, the lowest rate since 1986 when oil prices fell
sharply.
The following chart tracks the annual change in the CPI since 1990.
<TABLE>
<CAPTION>
CONSUMER PRICE INDEX1
- ---------------------------------
YEAR CPI % CHANGE
- -------- ---------- ---------
<S> <C> <C>
1990 133.8 6.1
1991 137.9 3.0
1992 141.9 2.9
1993 145.8 2.7
1994 149.7 2.7
1995 153.5 2.5
1996 158.6 3.3
1997 162.3 1.7
1 All Urban Workers
Source: Dept. of Labor, Bureau of Labor Statistics
</TABLE>
Over the past eight years, inflation has exceeded 3 percent only two times
(1996 - 3.3 percent and 1990 -6.1 percent). Excluding food and energy, the 77
percent of the index known as the core index, the index rose 2.2 percent during
1997, the lowest annual figure since 1965. The corresponding rate for 1996 was
2.6 percent. Recently, a special advisory panel of prominent economists have
contended that the current method of calculating the Consumer Price Index
overstates inflation by 1.1 percentage points annually. The government is
currently reviewing the far ranging implications a change in procedure may
have.
Based upon year end trends, most notably the economic turmoil in Asia,
some economists have begun debating the possibility of delation. For example,
the price of imported goods dropped by 4.9 percent for all of 1997; the largest
decline since the government began
- --------------------------------------------------------------------------------
-4-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
collecting such data in 1983. The Bank of America survey of 17 leading Wall
Street economists have forecasted inflation for 1998 of 2.2 percent. Data for
June 1998 shows that the inflation index increased at a less than expected
one-tenth of a percent as energy prices fell for the eighth time in nine
months.
OTHER INDICATORS
The government's main economic forecasting guage, the INDEX OF LEADING
ECONOMIC INDICATORS is intended to project economic growth over the next six to
nine months. The Conference Board, an independent business group, reported that
the index was unchanged in December (1997) ending five straight months of
gains. For all of 1997, the index rose at twice its historic pace. The April
1998 rate rose one-tenth of a percent.
The Conference Board also reported that CONSUMER CONFIDENCE rose in June
1998 to 137.6 from 136.3 in May. This was the highest level in three decades.
Consumers attitudes about the economy remain upbeat. Measures of consumer
confidence are watched closely for indications of future consumer spending.
The EMPLOYMENT COST INDEX is a measure of overall compensation including
wages, salaries and benefits. For 1997, the index rose at an annual amount of
3.3 percent, up form 2.9 percent for both 1995 and 1996. Wages and salaries
were up 1.1 percent, the largest increase in seven and one-half years while the
cost of benefits rose nine-tenths of a percent. For the first quarter (1998)
the index was up seven-tenths of a percent.
PRODUCTIVITY is a key element in measuring the standard of living since
increased efficiency allows businesses to increase workers compensation without
having to raise prices. Through the first 70 years of this century, non-farm
productivity rose at an annual rate of 2.2 percent. During the post war period
1947 to 1973, it was 2.8 percent. Between 1973 and 1995, a marked slowdown has
been in evidence with only a 1 percent annual rate and during the period marked
by the start of the current economic expansion in 1991, growth has averaged 1.2
percent. The Labor Department reports that the productivity of American workers
grew by 1.7 percent in 1997. This compares with 1.9 percent in 1996 and
three-tenths of a percent in 1995. Data for the first quarter of 1998 shows
that productivity slipped to an annual rate of 1.1 percent, in part because
employers hired more workers to handle an expanding workload.
CONSUMER CREDIT The Federal Reserve said consumer credit unexpectedly
declined by $4.2 billion to a $1.231 trillion annual rate in November, the
first drop in four years. All major categories of borrowing registered declines
including credit cards, auto loans, and personal loans. Nonetheless, credit
card delinquencies and personal bankruptcies remain near record levels
indicating that consumers may be reaching a point of saturation with respect to
new debt. A record 1.34 million Americans filed for bankruptcy in 1997 despite
growing prosperity for nearly seven years of economic growth. Visa USA reports
that filings were up 19.6 percent nationwide from 1.12 million in 1996.
Borrowing was up 6.9 percent in February 1998 to an annual rate of $1.244
trillion. The biggest component was credit card debt which rose to $3.9
billion.
- --------------------------------------------------------------------------------
-5-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
SAVINGS RATE The U.S. Savings Rate is measured as that portion of
disposable income that goes into bank accounts, investments, and other forms of
savings. Americans are continuing a trend of spending faster than their
after-tax incomes grow. As a result of carrying more debt, consumers decreased
their savings to just 3.8 percent of after-tax income, the lowest rate since
1939. The savings rate was 4.3 percent in 1996. Data through June 1998 shows
that strong spending has pushed the rate to a new low.
NEW CONSTRUCTION activity rose one-tenth of a percent in December to an
annual rate of $611.8 billion. The report showed that spending on residential
construction, which makes up nearly half the total, rose nine-tenths of a
percent. Commercial spending also increased 1.2 percent, while public spending
rose eight-tenths of a percent. For all of 1997, construction spending rose 5.6
percent versus 6.5 percent in 1996. Data through June 1998 shows spending rose
to an annual rate of $644 billion, the second highest on record.
ECONOMIC OUTLOOK
The WEFA Group, an economic consulting company, opines that the current
state of the economy is a "central bankers" dream, with growth headed toward
the Fed's 2.5 percent target, accompanied by stable if not falling inflation.
They project that inflation will track at about 2.5 percent through 1998. Over
the longer term, inflation is expected to average 2.7 percent. This will have a
direct influence on consumption (consumer expenditures).
Potential GDP provides an indication of the expansion of output, real
incomes, real expenditures, and the general standard of living of the
population. WEFA estimates that real U.S. GDP will grow at an average annual
rate of 2.3 percent over the next decade, and slow to about 2.1 percent by
2019.
Consumption expenditures are primarily predicated on the growth of real
permanent income, demographic influences, and changes in relative prices over
the long term. Changes in these key variables explain much of the consumer
spending patterns of the 1970s and mid-1980s, a period during which baby
boomers were reaching the asset acquisition stages of their lives; purchasing
automobiles and other consumer and household durables. Increases in real
disposable income supported this spending spurt with an average annual increase
of 2.9 percent per year over the past twenty years. Real consumption
expenditures increased at an average annual rate of 3.1 percent during the
1970s and by an average of 4.0 percent from 1983 to 1988. WEFA projects that
consumption expenditure growth will slow as a result of slower population
growth and aging. It is also projected that the share of personal consumption
expenditures relative to GDP will decline over the next decade. Consumer
spending as a share of GDP peaked in 1993 at 68.0 percent after averaging about
63.0 percent over much of the post-war period. WEFA estimates that real
consumption expenditure growth will average 2.2 percent per year through 2005
and slows to 2.1 percent thereafter.
RETAIL SALES
During the period 1980 through 1996, total retail sales in the United
States increased at a compound annual rate of 6.1 percent. Data for the period
1990 through 1996 shows that sales growth has slowed to an annual average of
5.0 percent. This information is summarized on the following chart.
- --------------------------------------------------------------------------------
-6-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
TOTAL U.S. RETAIL SALES(1)
- -------------------------------------------------------------------
YEAR AMOUNT (BILLIONS) ANNUAL CHANGE
- ---------------------------- ------------------- --------------
<S> <C> <C>
1980 $ 957,400 N/A
1985 $1,375,027 N/A
1990 $1,844,611 N/A
1991 $1,855,937 .61%
1992 $1,951,589 5.2%
1993 $2,074,499 6.3%
1994 $2,236,966 7.8%
1995 $2,340,817 4.6%
1996 $2,465,835 5.3%
1997(2) $2,569,400 4.2%
===================================================================
Compound Annual Growth Rate
1980-1997 +6.0%
- -------------------------------------------------------------------
CAGR: 1990 - 1997 +4.8%
===================================================================
</TABLE>
- --------
(1) 1985 - 1995 data reflects recent revisions by the U.S. Department of
Commerce: Combined Annual and Revised Monthly Retail Trade.
(2) Preliminary advance estimates.
- -------------------------------------------------------------------------------
Source: Monthly Retail Trade Reports Business Division, Current Business
Reports, Bureau of the Census, U.S. Department of Commerce.
- -------------------------------------------------------------------------------
Retail sales rose seven-tenths of a percent during the month of December
1997. The Census Bureau of the Department of Commerce reports that advance
estimates for U.S. retail sales for 1997 were $2.569 trillion, an increase of
$103.6 billion, or 4.2 percent from 1996. This was below last year's gain and
the worst showing since 1991.
Nationally, retail sales rose one-tenth of a percent in June 1998
following a revised 1.2 percent rise in May.
Provided on the chart below is a summary of overall and same store sales
growth for selected national merchants for the most recent period.
- --------------------------------------------------------------------------------
7
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SAME STORE SALES FOR THE MONTH OF JUNE 1998
- -------------------------------------------------------------
% CHANGE FROM PREVIOUS YEAR
-----------------------------
NAME OF RETAILER OVERALL SAME STORE BASIS
- ----------------------------- --------- -----------------
<S> <C> <C>
Wal-Mart +17.3% +9.0%
Kmart +1.7% +1.5%
Sears, Roebuck & Company +2.1% +.3%
J.C. Penney -2.6% -2.1%
Dayton Hudson Corporation +10.4% +4.6%
May Department Stores +6.1% +4.5%
Federated Department Stores +2.3% +3.4%
The Limited Inc. -- +1.0%
Gap Inc. +36.0% +15.0%
Ann Taylor +19.4% +9.0%
TJX +8.0% +5.0%
Lowe's +21.2% +4.9%
Circuit City +16.0% +6.0%
- --------------------------------------------------------------
</TABLE>
- --------
Source: New York Times/Wall Street Journal
- -------------------------------------------------------------------------------
Retailers reported preplexing results in June sales, following two months
of stellar sales for the entire industry.
The Goldman Sachs same store sales index was up 4.4 percent in June
compared with 4.0 percent last year. Same store sales growth was led by
Wal-Mart (+9.0%), Circuit City (+6.0%), and The Gap (+15.0%). Discounters again
did very well such as TJX, Dollar General and Ross Stores. Department stores
which cater to lower income shoppers also did well such as Kohl's and Target
which paced Dayton Hudson to a 4.6 percent gain.
The International Council of Shopping Centers (ICSC) publishes a MONTHLY
MALL MERCHANDISE INDEX which tracks sales by store type for more than 400
regional shopping centers. The index shows that total sales per square foot
rose by 2.9 percent to $278 per square foot in 1996. This compares to a .5
percent increase for the period 1994-1995. The following chart identifies the
most recent year-end results. The winners were shown to be Apparel and
Accessories (+4.8%) led by Men's Apparel and Shoes, while Furniture and
Furnishings suffered (-2.8%). The Home Improvement category rose an outstanding
100.0 percent to $302 per square foot.
Retailers reported a better than expected increase in January sales,
largely as a result of major post-holiday sales and clearance promotions. Data
for December 1997 shows that consumers were enticed to the stores with strong
promotional markdowns by the nation's retailers. The selling season seemed to
come two days before Christmas and continued for the week following.
- --------------------------------------------------------------------------------
8
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1997 YEAR END PERFORMANCE
NON-ANCHOR TENANT SALES IN U.S. MALLS
- ----------------------------------------------------------------------------------------
STORE TYPE 1997 (SF*) ICSC INDEX % CHANGE FROM YE 1996
- ------------------------------------- ------------ ---------------------------------
<S> <C> <C>
GAFO CATEGORIES:
APPAREL AND ACCESSORIES
Women's Accessories and Specialties $317 4.3%
Women's Ready-To-Wear 195 -2.7%
Men's Apparel 268 -1.9%
Children's Apparel 382 5.2%
Family Apparel 324 2.1%
Women's Shoes 342 .2%
Men's Shoes 399 3.4%
Family Shoes 291 -.3%
Shoes Miscellaneous 303 -3.2%
Apparel and Accessories - Misc. $276 -6.5
- ----------------------------------------------------------------------------------------
SUBTOTAL $265 .8%
- ----------------------------------------------------------------------------------------
FURNITURE AND FURNISHINGS:
Home Furniture & Furnishings $273 -.3%
Home Entertainment & Electronics 329 5.0%
Home Furnishings - Misc. 275 -.8%
- ----------------------------------------------------------------------------------------
SUBTOTAL $307 2.6%
- ----------------------------------------------------------------------------------------
OTHER GAFO:
Jewelry $701 3.8%
Stationery/Cards/Gifts/Novelty 287 1.8%
Books 242 -3.7%
Sporting Goods/Bicycles 240 -2.8%
Other GAFO - Misc. 325 1.2%
- ----------------------------------------------------------------------------------------
SUBTOTAL $356 1.3%
- ----------------------------------------------------------------------------------------
TOTAL GAFO $295 1.3%
- ----------------------------------------------------------------------------------------
NON GAFO CATEGORIES:
FOOD SERVICES
Fast Food $449 2.6%
Restaurants 289 .8%
Food Services - Misc. 416 -7.1%
- ----------------------------------------------------------------------------------------
SUBTOTAL $362 1.7%
- ----------------------------------------------------------------------------------------
OTHER NON-GAFO CATEGORIES:
Specialty Food Stores $375 4.0%
Supermarkets 465 4.4%
Drug/HBA 317 3.3%
Personal Services 299 2.8%
Automotive 121 10.8%
Home Improvement 356 14.9%
Mall Entertainment 76 -2.3%
Other Non-GAFO - Misc. 397 3.2%
- ----------------------------------------------------------------------------------------
SUBTOTAL $230 1.8%
- ----------------------------------------------------------------------------------------
TOTAL NON-GAFO $278 1.7%
- ----------------------------------------------------------------------------------------
OTHER CATEGORIES-MISCELLANEOUS $243 8.7%
- ----------------------------------------------------------------------------------------
Memo: GAFO & Food Service Total $301 1.3%
- ----------------------------------------------------------------------------------------
GRAND TOTAL $291 1.5%
- ----------------------------------------------------------------------------------------
</TABLE>
- --------
* SALES PER SQUARE FOOT DERIVED AS TOTAL NON-ANCHOR MALL SALES DIVIDED BY TOTAL
OCCUPIED SQUARE FOOTAGE.
SOURCE: ICSC - RESEARCH QUARTERLY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
The ICSC has reported the following results:
MALL TENANT SALES
Data through the fourth quarter of 1997 shows that sales per square foot
for non-anchor tenants rose 1.5 percent over the comparable 12 month 1996
period. Year to date GAFO sales were up 1.3 percent led by the Furniture and
Furnishings category.
DEPARTMENT STORE SALES
Sales in U.S. Department Stores increased by 6.4 percent in 1997 according
to the Department of Commerce. The increase was largely fueled by the strong
performance of discount department stores such as Wal-Mart, Kmart and Target.
This compares with an overall increase of 4.6 percent in 1996.
Comparable sales for the latest 12 month period (YE 12/97) are shown
below:
<TABLE>
<CAPTION>
DEPARTMENT STORE TYPE YEAR OVER YEAR CHANGE
========================== ======================
<S> <C>
Discount 5.8%
- -------------------------- ---
National Chains 2.1%
- -------------------------- ---
Conventional/Full Line 4.3%
========================== ===
</TABLE>
FACTORY OUTLET
The ICSC FACTORY OUTLET INDEX increased by 4.0 percent in 1997 to $220 per
square foot from $212 per square foot in 1996. The fourth quarter gain of 2.8
percent was the highest quarterly gain during the year. Data for the fourth
quarter of 1997 shows that sales rose by 3.7 percent. This increase was fueled
by a 11.3 percent sales volume growth and a 7.3 percent square footage
expansion at centers open at least one year.
<TABLE>
<CAPTION>
PERIOD SALES/SF CHANGE
======== ========== =========
<S> <C> <C>
1996 $210 --
- ------ ---- --
1996 $212 1.0%
- ------ ---- ---
1997 $220 4.0%
====== ==== ===
</TABLE>
The ICSC is now reporting comp or same store sales for outlet centers.
From their reporting data base, they report comp store growth of 2.8 percent
for all of 1997.
GAFO AND SHOPPING CENTER INCLINED SALES
In a true understanding of shopping center dynamics, it is important to
focus on both GAFO sales or the broader category of Shopping Center Inclined
Sales. GAFO goods comprise the overwhelming bulk of goods and products carried
in shopping centers and department stores and consist of the following
categories:
- --------------------------------------------------------------------------------
-10-
<PAGE>
o General merchandise stores including department and other stores;
o Apparel and accessory stores;
o Furniture and home furnishing stores; and
o Other miscellaneous shoppers goods stores.
Shopping Center Inclined Sales are somewhat broader and include such
classifications as home improvement and grocery stores. The store types that
comprise shopping centers comprised approximately 53 percent of total retail
sales in 1995. The balance were generated by auto dealers, gas stations, food
service facilities and other miscellaneous establishments.
Total retail sales grew by 4.6 percent in the United States in 1995 to
$2.341 trillion, an increase of $104 billion over 1994. This followed an
increase of 7.8 percent or $162 billion over 1993. Automobile dealers captured
$34 plus or minus billion of total retail sales growth last year, while
Shopping Center Inclined Sales accounted for nearly 50.0 percent of the
increase ($50 billion). GAFO sales increased by $32.5 billion. This group was
led by department stores which posted a $14.4 billion increase in sales. The
following chart summarizes the performance for this most recent comparison
period.
-11-
<PAGE>
<TABLE>
<CAPTION>
RETAIL SALES BY MAJOR STORE TYPE
1994-1995 ($MIL.)
- -----------------------------------------------------------------------------------------------------
PERCENT OF 1994-1995
STORE TYPE 1994 1995 INCOME(1) % CHANGE
- ------------------------------------- --------------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
GAFO:
General Merchandise $ 282,541 $ 296,904 5.1%
Apparel & Accessories 109,603 109,962 .3%
Furniture & Furnishings 119,626 129,923 8.6%
Other GAFO 80,533 88,029 9.3%
- ------------------------------------- ----------- ----------- ---
GAFO SUBTOTAL $ 592,303 $ 624,818 14.4% 5.5%
- ------------------------------------- ----------- ----------- ---- ---
CONVENIENCE STORES:
Grocery $ 376,330 $ 389,134 3.4%
Other Food 21,470 21,378 (.4)%
- ------------------------------------- ----------- ----------- ---
SUBTOTAL $ 397,800 $ 410,512 9.5% 3.2%
Drug 81,538 84,240 2.0% 3.3%
- ------------------------------------- ----------- ----------- ---- ---
CONVENIENCE SUBTOTAL $ 479,338 $ 494,752 3.2%
- ------------------------------------- ----------- ----------- ---
OTHER:
Home Improvement & Building Supplies
Stores $ 122,533 $ 124,626 2.9% 1.7%
SHOPPING CENTER-INCLINED
SUBTOTAL $ 1,194,174 $ 1,244,196 28.8% 4.2%
Automobile Dealers 526,319 560,624 6.5%
Gas Stations 142,193 148,192 4.2%
Eating and Drinking Places 228,351 233,606 2.3%
All Other 145,929* 154,199* 5.7%
- ------------------------------------- ----------- ----------- ---
TOTAL RETAIL SALES $ 2,236,966 $ 2,340,817 4.6%
- ------------------------------------- ----------- ----------- ---
</TABLE>
* ESTIMATED SALES
1 CURRENT POPULATION REPORT, PAGE 60. ESTIMATED AT 96.8 MILLION HOUSEHOLDS @
$44,100 = 4.3 TRILLION.
===============================================================================
SOURCE: U.S. DEPARTMENT OF COMMERCE, BUREAU OF THE CENSUS AND DOUGAL M. CASEY:
VARIOUS ICSC WHITE PAPERS.
- --------------------------------------------------------------------------------
GAFO sales grew by 5.5 percent in 1995 to $624.8 billion. From the above
it can be calculated that GAFO sales accounted for 26.7 percent of total retail
sales and nearly 50.0 percent of all shopping center-inclined sales. GAFO sales
have also risen relative to household income. In 1990 these sales represented
13.9 percent of average household income. By 1994/1995 they rose to 14.4
percent. Projections through 2000 show a continuation of this trend to 14.7
percent. On average, total sales were equal to nearly 55.0 percent of household
income in 1994.
- --------------------------------------------------------------------------------
-12-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
DETERMINANTS OF RETAIL SALES GROWTH AND U.S. RETAIL SALES BY KEY STORE TYPE
<TABLE>
<CAPTION>
1990 1994 2000(P)
---------------- ---------------- ----------------
<S> <C> <C> <C>
DETERMINANTS
Population 248,700,000 260,000,000 276,200,000
Households 91,900,000 95,700,000 103,700,000
Average Household Income $ 37,400 $ 42,600 $ 51,600
Total Census Money Income $3.4 Tril. $4.1 Tril. $5.4 Tril.
- ------------------------------------------------------------------------------------------------
% ALLOCATIONS OF INCOME TO SALES
GAFO Stores 13.9% 14.4% 14.7%
Convenience Stores 12.9% 11.7% 10.7%
Home Improvement Stores 2.8% 3.0% 3.3%
Total Shopping Center-Inclined Stores 29.6% 29.1% 28.8%
Total Retail Stores 54.3% 54.6% 52.8%
- ------------------------------------------------------------------------------------------------
SALES ($BILLION)
GAFO Stores $ 472 $ 592 $ 795
Convenience Stores 439 479 580
Home Improvement Stores 95 123 180
Total Shopping Center-Inclined Stores $ 1,005 $ 1,194 $ 1,555
TOTAL RETAIL SALES $ 1,845 $ 2,237 $ 2,850
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------
Note: Sales and income figures are for the full year; population and household
figures are as of April 1 in each respective year. P=Projected.
Source: U.S. Census of Population, 1990; U.S. Bureau of the Census Current
Population Reports: Consumer Income P6-168, 174, 180, 184 and 188;
Berna Miller with Linda Jacobsen, "Household Futures", American
Demographics, March 1995; Retail Trade sources already cited; and
Dougal M. Casey: ICSC White Paper
GAFO sales have risen at a compound annual rate of approximately 6.8
percent since 1991 based on the following annual change in sales.
<TABLE>
<S> <C>
1990/91 2.9%
1991/92 7.0%
1992/93 6.6%
1993/94 7.0%
1994/95 5.5%
</TABLE>
According to a recent study by the ICSC, GAFO sales are expected to grow
by 5.0 percent per annum through the year 2000, which is well above the 4.1
percent growth for all retail sales. This information is presented in the
following chart.
- --------------------------------------------------------------------------------
13
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
RETAIL SALES FORECASTS IN THE UNITED STATES, BY MAJOR STORE TYPE
<TABLE>
<CAPTION>
1994 2000(P) PERCENT CHANGE
-------------- ------------- -------------------
COMPOUND
STORE TYPE ($ BILLIONS) ($BILLIONS) TOTAL ANNUAL
- ----------------------------------- -------------- ------------- ------- ---------
<S> <C> <C> <C> <C>
GAFO:
General Merchandise $ 283 $ 370 30.7% 4.6%
Apparel & Accessories 110 135 22.7% 3.5%
Furniture/Home Furnishings 120 180 50.0% 7.0%
Other Shoppers Goods 81 110 35.8% 5.2%
- ------------------------------------------------------------------------------------------
GAFO SUBTOTAL $ 592 $ 795 34.3% 5.0%
- ------------------------------------------------------------------------------------------
CONVENIENCE GOODS:
Food Stores $ 398 $ 480 20.6% 3.2%
Drugstores 82 100 22.0% 3.4%
- ------------------------------------------------------------------------------------------
CONVENIENCE SUBTOTAL $ 479 $ 580 21.1% 3.2%
- ------------------------------------------------------------------------------------------
Home Improvement 123 180 46.3% 6.6%
- ------------------------------------------------------------------------------------------
SHOPPING CENTER-INCLINED SUBTOTAL $1,194 $1,555 30.2% 4.5%
- ------------------------------------------------------------------------------------------
All Other 1,043 1,295 24.2% 3.7%
- ------------------------------------------------------------------------------------------
TOTAL $2,237 $2,850 27.4% 4.1%
- ------------------------------------------------------------------------------------------
</TABLE>
- --------
Note: P = Projected. Some figures rounded.
Source: U.S. Department of Commerce, Bureau of the Census and Dougal M. Casey.
Changes in consumer spending patterns has resulted in noticeable trends in
the way malls are merchandised. Apparel still accounts for the majority of all
mall space at 46 percent, however, it has slipped from 48.3 percent in 1990.
The largest percentage decline was in Women's Ready to Wear with a 14.8 percent
drop to 18.4 percent. The table below summarizes these trends.
- --------------------------------------------------------------------------------
14
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
SHARE OF TOTAL MALL SPACE BY MERCHANDISE CATEGORY, 1990-97
<TABLE>
<CAPTION>
MERCHANDISE CATEGORY 1990 1997
- ------------------------------------- ---------- ----------
<S> <C> <C>
Women's Ready to Wear 21.6% 18.4%
Women's Accessories and Specialties 2.7% 3.3%
Men's Apparel 5.3% 3.3%
Children's Apparel 0.7% 1.5%
Family Apparel 7.3% 10.4%
Women's Shoes 2.0% 1.3%
Men's Shoes 0.7% 0.4%
Family/Miscellaneous Shoes 6.8% 7.3%
Apparel and Accessories - Misc. 1.2% 0.2%
APPAREL AND ACCESSORIES TOTAL 48.3% 46.0%
Home Furniture & Furnishings 3.4% 4.0%
Home Entertainment & Electronics 4.2% 5.5%
HOME FURNISHINGS TOTAL 7.6% 9.5%
Stationery/Cards/Gifts/Novelty * 6.2%
Books * 2.5%
Sporting Goods/Bicycles * 2.8%
Jewelry 3.5% 3.4%
Other GAFO - Misc. 15.4% 5.5%
OTHER GAFO TOTAL 18.9% 20.3%
TOTAL GAFO 74.7% 75.9%
Fast Food 4.1% 3.8%
Restaurants 5.3% 4.6%
Food Services - Misc. 0.3% 0.1%
Food Services Total 9.6% 8.5%
Specialty Food Stores ** 1.8%
Supermarkets 0.5% 0.3%
Drug/HBA 2.9% 1.6%
Personal Services 3.7% 4.8%
Automotive 0.1% 0.1%
Home Improvement 0.1% 0.1%
Mall Entertainment 4.9% 5.6%
Other Non-GAFO - Misc. ** 0.5%
OTHER NON-GAFO TOTAL 12.3% 14.9%
Total Non-GAFO 21.9% 23.4%
Other Miscellaneous 3.3% 0.7%
GRAND TOTAL 100.0% 100.0%
</TABLE>
- --------
* Data for Stationery/Cards/Gifts/Novelty, Books, and Sporting
Goods/Bicycles are combined into Other GAFO - Miscellaneous until 1994.
** Not available.
According to the ICSC White Paper: Overstoring - A Look at Retail Space
and Sales Performance; Shopping Center Inclined Sales have grown from $257
billion in 1972 to $1.244 trillion in 1995, a 7.1 percent annual growth rate.
Historical data is shown below.
- --------------------------------------------------------------------------------
15
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
SHOPPING CENTER INCLINED STORE SALES
1972-1995 (BILLIONS)
<TABLE>
<CAPTION>
1972 1980 1990 1995
<S> <C> <C> <C> <C>
Sales $257 $532 $1,000 $1,244
Compound Annual Growth
1972-1995 7.1%
1972-1980 9.5%
1980-1990 6.6%
1990-1995 4.3%
</TABLE>
Source: U.S. Bureau of The Census and ICSC White Paper: Overstoring-A Look at
Retail Space and Sales Performance.
From the above, we see that the most recent annual rate of growth
(1990-1995) in Shopping Center Inclined Sales of 4.3 percent has decreased to
less than half of what it was during the 1970s (9.5 percent). Projections
through December 2000 are for a compound growth rate of 4.5 percent.
Shopping centers have stabilized their share of shopping center inclined
sales. In 1972 this share was estimated at 48 percent. Since the early 1980s,
this share has stabilized in the 72 and to 73 percent range. For example, the
estimated sales total of $894 billion of shopping center sales in 1995 was
equal to 72 percent of total inclined sales.
NON-STORE RETAILING
In 1995, non-store retailing accounted for $69.7 billion, or 3.92 percent
of total non-automotive retail sales. Of this total, $49.7 billion was
attributed to mail/telephone order catalog retailers. The balance is comprised
of coin-operated vending machines, house-to-house canvassing, party plan (i.e.,
tupperware parties) telemarketing and other non-store venues such as home
shopping networks and electronic commerce.
NON-STORE AND TOTAL RETAIL SALES
<TABLE>
<CAPTION>
YEAR TOTAL MAIL ORDER NON-STORE TOTAL NON-AUTO SALES % OF TOTAL
<S> <C> <C> <C> <C>
1985 $15,848 mil. $28,275 mil. $1,071,828 2.64%
1990 $26,577 mil. $45,632 mil. $1,457,006 3.13%
1995 $49,710 mil. $69,667 mil $1,778,915 3.92%
</TABLE>
Source: Department of Commerce
Mail order sales, currently at only 2.8 percent of total retail sales,
continue to grow. Estimates currently place on-line sales at $518.0 million or
1 percent of the mail order tally. Estimates place total on-line sales as
high as $6.6 billion by the year 2000. Since 1990, mail order sales have grown
at an annual rate of 9.9 percent which is double the average growth of
non-automotive retail sales and 1.7 times the average growth of GAFO store
sales. One measure of this growing trend is the November/December ratio of mail
order to GAF store sales. In 1990, the ratio was 5.4 percent. By 1992 it had
grown to 6.9 percent and by 1995 it was 7.6 percent.
- --------------------------------------------------------------------------------
16
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
INDUSTRY TRENDS
According to the NATIONAL RESEARCH BUREAU, there were a total of 42,953
shopping centers in the United States at the end of 1997. During this year, 823
new centers opened, a 1.9 percent increase over 1996 but less than the 895 that
opened in 1996. The greatest growth came in the small center category (less
than 100,000 square feet) where 431 centers were constructed. In terms of GLA
added, new construction in 1997 was up 2.5 percent resulting in an addition
of 128.9 million square feet of GLA from approximately 5.1 billion to 5.23
billion square feet.
CENSUS DATA: HISTORICAL TRENDS
<TABLE>
<CAPTION>
TOTAL
NO. OF TOTAL SALES
YEAR CENTERS GLA (BILLION)
<S> <C> <C> <C>
1987 30,641 3,722,957,095 $ 602,294,426
1988 32,563 3,947,025,194 $ 641,096,793
1989 34,683 4,213,931,734 $ 682,752,628
1990 36,515 4,390,371,537 $ 706,380,618
1991 37,975 4,563,791,215 $ 716,913,157
1992 38,966 4,678,527,428 $ 768,220,248
1993 39,633 4,770,760,559 $ 806,645,004
1994 40,368 4,860,920,056 $ 851,282,088
1995 41,235 4,967,160,331 $ 893,814,776
1996 42,130 5,100,605,534 $ 933,918,275
1997 42,953 5,229,490,942 $ 980,026,364
Compound Annual Growth +3.44% +3.46% +4.99%
<CAPTION>
AVERAGE AVERAGE % CHANGE %INCREASE
GLA PER SALES PER IN SALES NEW IN TOTAL
YEAR CENTER SQ. FT. PER SQ. FT CENTERS CENTERS
<S> <C> <C> <C> <C> <C>
1987 121,502 $ 161.78 2.41% 2,145 7.53%
1988 121,212 $ 162,43 0.40% 1,922 6.27%
1989 121,498 $ 162.02 -0.25% 2,120 6.51%
1990 120,235 $ 160.89 -0.70% 1,832 5.28%
1991 120,179 $ 157.09 -2.37% 1,460 4.00%
1992 120,067 $ 164.20 4.53% 911 2.61%
1993 120,373 $ 169.08 2.97% 667 1.71%
1994 120,415 $ 175.13 3.58% 735 1.85%
1995 120,460 $ 179.94 2.75% 867 2.15%
1996 121,068 $ 183.10 1.75% 895 2.17%
1997 121,749 $ 187.40 2.35% 823 1.95%
Compound Annual Growth N/A +1.48% N/A N/A N/A
</TABLE>
Source: National Research Bureau Shopping Center Database and Statistical Model
From the chart we see that both total GLA and total number of centers have
increased at a compound annual rate of approximately 3.5 percent since 1987.
New construction was up 2.5 percent in 1996, a slight decrease over 1996 but
still well below the peak year 1987 when new construction increased by 7.5
percent. California was by far the most active state with 109 new centers
opening, followed by New Jersey (55), Georgia (49) and New York (42).
- --------------------------------------------------------------------------------
17
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Among the 42,953 centers in 1997, the following breakdown by size is in
evidence.
U.S. SHOPPING CENTER INVENTORY, YE DECEMBER 1997
<TABLE>
<CAPTION>
NUMBER OF CENTERS SQUARE FEET (MILLIONS)
SIZE RANGE (SF) AMOUNT PERCENT AMOUNT PERCENT
<S> <C> <C> <C> <C>
Under 100,000 26,928 62.7% 1,318.1 25.2%
100,001-200,000 10,400 24.2% 1,430.9 27.4%
200,001-400,000 3,595 8.4% 959.5 18.3%
400,001-800,000 1,324 3.0% 736.4 14.1%
800,001-1,000,000 316 .7% 284.8 5.4%
over 1,000,000 390 .9% 499.7 9.6%
TOTAL 42,953 100.0% 5,229.5 100.0%
</TABLE>
Source: National Research Bureau (some numbers slightly rounded).
Empirical data shows that the average GLA per capita is increasing. In
1997, the average for the nation was 19.57. This was up nearly 3.5 square feet
or 21.6 percent from 16.1 in 1988. Among states, Delaware surpassed Florida
and now has the highest GLA per capita with 29.12 square feet. South Dakota has
the lowest at 9.12 square feet. Per capital GLA for regional malls (loosely
defined as all centers in excess of 400,000 square feet) has also been rising
from 5.0 in 1988 to 5.7 in 1997. This information is presented on the following
chart.
GLA PER CAPITA
<TABLE>
<CAPTION>
YEAR ALL CENTERS REGIONAL MALLS*
<S> <C> <C>
1988 16.1 5.0
1989 17.0 5.2
1990 17.7 5.3
1991 18.1 5.3
1992 18.3 5.5
1993 18.5 5.5
1994 18.7 5.4
1995 18.9 5.5
1996 19.2 5.6
1997 19.6 5.7
</TABLE>
Source: International Council of Shopping Center: The Scope of The Shopping
Center Industry and National Research Bureau
* Centers in excess of 400,000 square feet.
While per capital GLA has continued to increase, a key issue is that the
rate of increase has slowed. Per capita space has increased by only slightly
under 2.0 square feet during the period 1990 through 1997. This trend is
manifested in the pace of inventory increases from 165 million square feet per
year between 1972 and 1980, to 143 million square feet per year (1980-1990),
and 120 million square feet per year (1990-1997).
- --------------------------------------------------------------------------------
18
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Construction data also indicates that while the overall pace of shopping
center openings has eased, the pace of large store (50,000 to 200,000 square
feet) construction has more than doubled. During the more recent five year
period, big boxes have accounted for 41 percent of inventory additions.
<TABLE>
<CAPTION>
===============================================================================================
TRENDS IN INVENTORY GROWTH*
1972-1995
- -----------------------------------------------------------------------------------------------
1972-1980 1980-1990 1990-1995
===============================================================================================
<S> <C> <C> <C>
Shopping Center Space Added 164 143 115
Free-Standing Stores 36 34 79
(50,000 - 200,000 SF)
Total 200 177 194
Big Box Allocation of Inventory Growth 18% 19% 41%
* Average Annual Increase (Million Square Feet)
===============================================================================================
Source: NRB and F.W. Dodge
===============================================================================================
</TABLE>
FW Dodge reports that total construction starts increased by 20 percent in
1997 to 11,167 projects. In terms of square footage, the increase was
approximately 7.0 percent as detailed below:
<TABLE>
<CAPTION>
===============================================================================
NATIONWIDE RETAIL CONSTRUCTION STARTS
- -------------------------------------------------------------------------------
1996 1997
STARTS SF (000) STARTS SF (000)
===============================================================================
<S> <C> <C> <C> <C>
Malls 12 14,274 10 9,266
Shopping Centers 1,158 43,259 1,199 38,673
Free-standing Stores 2,981 120,799 3,331 127,962
Restaurants/Convenience 2,817 15,370 2,759 17,592
Other Retail 2,331 29,399 3,868 45,149
Total 9,299 223,101 11,167 238,142
===============================================================================
</TABLE>
The National Research Bureau reports that growth in the power center
component continues to slow. The number of centers reporting to be positioned
as power centers grew by 61 percent between 1994 and 1995. However, this rate
slowed to 31 percent in 1996 and 18 percent in 1997. During 1997, 69 "new"
power centers opened with 63 percent representing actual first time openings
and 37 percent coming from renovation, expansion or repositionings.
In their publication, NRB/Shopping Centers Today 1997 Shopping Center
Census, the National Research Bureau reports that overall retail conditions
were good in 1997. Total shopping center sales increased 4.9 percent to $980.02
billion in 1997, up from $933.81 billion in 1996.
- --------------------------------------------------------------------------------
-19-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=======================================================================================================
SELECTED SHOPPING CENTER STATISTICS
1990-1997
- -------------------------------------------------------------------------------------------------------
COMPOUND
ANNUAL
1990 1995 1996 1997 GROWTH
=======================================================================================================
<S> <C> <C> <C> <C> <C>
Retail Sales in Shopping Centers*$ 706.40 $ 893.81 $ 933.92 $ 980.03 4.8%
Total Leasable Area** 4.39 4.97 5.10 5.23 2.5%
Unit Rate $ 160.89 $ 179.94 $ 183.10 $ 187.40 2.2%
=======================================================================================================
* Billions of Dollars
** Billions of Square Feet
=======================================================================================================
Source: National Research Bureau
=======================================================================================================
</TABLE>
According to the National Research Bureau, total sales in shopping centers
have grown at a compound rate of 5.0 percent since 1987. As described,
aggregate sales were up 4.9 percent nationwide from $933.9 billion (1996) to
$980.0 billion (1997). In 1997, average sales were $187.40 per square foot, up
2.3 percent over 1996 and 2.2 percent (compound growth) over the past several
years. The biggest gain came in the super-regional category (more than 1.0
million square feet) where sales were up 3.6 percent to $214.90 per square
foot. Nonetheless, with compound sales growth lagging the growth in GLA, there
is an indication of overbuilding by this broad measure.
The following chart tracks the change in average sales per square foot by
size category.
<TABLE>
<CAPTION>
=================================================================================================================
SALES TRENDS BY SIZE CATEGORY
1993-1997
- -----------------------------------------------------------------------------------------------------------------
AVERAGE SALES PER SQUARE FOOT
========================================================================
COMPOUND
ANNUAL
CATEGORY 1993 1994 1995 1996 1997 GROWTH
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Less than 100,000 SF $ 193.10 $ 199.70 $ 204.94 $ 209.74 $ 215.90 +2.8%
100,001 to 200,000 SF $ 156.18 $ 161.52 $ 166.00 $ 169.56 $ 173.98 +2.7%
200,001 to 400,000 SF $ 147.57 $ 151.27 $ 153.96 $ 154.07 $ 155.99 +1.4%
400,001 to 800,000 SF $ 157.04 $ 163.43 $ 168.21 $ 170.14 $ 172.39 +2.4%
800,001 to 1,000,000 SF $ 194.06 $ 203.20 $ 210.40 $ 213.93 $ 219.38 +3.1%
More than 1,000,000 SF $ 183.90 $ 193.13 $ 201.05 $ 207.44 $ 214.90 +4.0%
TOTAL $ 169.08 $ 175.13 $ 179.94 $ 183.10 $ 187.40 +2.6%
=================================================================================================================
Source: National Research Bureau
=================================================================================================================
</TABLE>
Per capita retail sales were $3,667 in the United States in 1997, up 4.1
percent over $3,521 in 1996. The highest per capita sales were in Florida
($6,039) while the lowest were found in South Dakota ($1,665).
- --------------------------------------------------------------------------------
-20-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Consumers demand for value and selection have led to an unprecedented
growth of the category killer, superstore and warehouse club concepts. In its
annual industry report, Discount Store News has identified the nation's top 200
merchants. Overall, these merchants posted sales of $336.6 billion, up 7.5
percent over 1995. The chart below highlights the year-to-year performance
along with 1997 projections.
<TABLE>
<CAPTION>
=================================================================================================================
SALES BY SEGMENT (IN BILLIONS $)
- -----------------------------------------------------------------------------------------------------------------
1995 1996 MARKET SHARE % CHANGE 1997 (PROJ.)
<S> <C> <C> <C> <C> <C>
Full-Line Discount Stores(1) $ 150.9 $ 162.3 48% 7.6% $ 178.5
Specialty Discounters(2) 67.5 76.3 23% 13.1% 87.5
Warehouse Clubs 41.1 43.5 13% 5.8% 45.9
Other Discount Mass
Merchants(3) 30.8 31.8 9% 5.0% 33.4
Off-Price Apparel Chains 15.8 16.9 5% 6.2% 17.9
Jewelry/Hard Lines Retailers 6.9 5.9 2% (15.0%) 5.1
Total Market $ 313.0 $ 336.6 100% 7.5% $ 368.5
- -----------------------------------------------------------------------------------------------------------------
(1) Includes full-line discount department stores, supercenters, closeouters and single-price retailers.
(2) Includes home, automotive, crafts, toys, office supplies, book, computer superstores, baby superstores, pet
supplies, consumer electronics and sporting goods specialty stores.
(3) Includes Sears, Ward, QVC, HSN and variety stores.
=================================================================================================================
Source: DSN Research
=================================================================================================================
</TABLE>
As can be seen, the largest segment is comprised of full line discount
stores which was up 7.6 percent to $162.3 billion, or 48 percent of all sales.
Excluding Wal-Mart, by far the industry leader, 75 retailers in the DSN top 200
posted double digit sales gains. The biggest winners were baby superstores
(+47.2%), book superstores (+35.9%), and home furnishing superstores (33.1%).
Among the supercenter categories, Wal-Mart Supercenter's $19.3 billion in
sales, up 67.7 percent over 1995, accounted for more than half of the segment's
$36.2 billion in sales.
The Urban Land Institute, in the 1997 edition of Dollars and Cents of
Shopping Centers, reports that vacancy rates range from a low of 2.0 percent in
neighborhood centers to 14.0 percent for regional malls. Super-regional malls
reported a vacancy rate of 7.0 percent and community centers were 4.0 percent
based upon their latest survey.
MARKET SHIFTS -- CONTEMPORARY TRENDS IN THE RETAIL INDUSTRY
The mid 1990s have continued the trend of profound changes in the retail
industry. Department stores have emerged from the troubles of late 1980s and
early 1990s to be stronger than ever. Continued consolidations in this industry
segment should continue. Specialty retailers continue to experience a shakeout
of weaker, out of favor formats while discounters gain market share. Power
centers, the growth vehicle of the last several years have reached a point of
saturation that has undermined investor's interest in this product. Outlet
centers are still struggling, however, the super-regional mega-center appears
poised to be the hot concept for the next few years.
Some of the important recent developments in the industry can be
summarized as follows:
- -------------------------------------------------------------------------------
-21-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
DEPARTMENT STORES
Consolidation in the department store industry segment continued, albeit
at a slower pace than seen over the last few years.
o SAKS FIFTH AVENUE announced (7/98) it would be acquired by Proffitt's
Inc. for $2.1 billion. Proffitt's, based in Birmingham, Alabama,
operates 230 department stores under the names Proffitt's, McRae's,
Younkers, Parisian, Carson Pirie Scott, Boston Store and Bergners. The
company had 1997 sales of $3.6 billion versus $2.3 billion for Saks.
o DILLARD'S INC. announced (5/98) their intent to acquire Mercantile
Stores Company Inc. for $2.9 billion. Mercantile operates 103
predominantly fashion apparel stores and 16 home fashion stores in 17
states primarily south and midwest.
o LIBERTY HOUSE, a Honolulu based department chain, filed for bankruptcy
in early 1998. The company operates 11 department stores and 25
specialty stores in Hawaii and Guam.
o JC PENNEY announced (1/98) they would close 75 poorly performing
stores and dismiss 4,900 employees or 2 percent of its workforce.
Investors and analysts praised the move.
o VENTURE STORES, which operates 93 discount stores in nine midwestern
states filed Chapter 11 (1/98). However, their interest to shift from a
general merchandise discount format to an expanded assortment of home,
family and leisure merchandise has apparently failed. In May 1998 they
announced they will sell off their remaining 89 units to Kimco. In
August 1997 Kimco structured a sale leaseback with Venture for 49
stores. Kmart is expected to take up to 50 of these remaining
leaseholds from Kimco.
o ROSE'S STORES -- Announced (11/97) their pending acquisition by
Variety Wholesalers. Rose's is a North Carolina based 106 stores junior
department store chain. The privately held Variety Wholesalers operates
500 units in the southeast.
o PROFFITT'S -- Announced (11/97) they will buy CARSON PIRIE SCOTT, a
midwest based retailer with 56 units and $1.1 billion in annual sales.
Proffitt's acquired 38 unit PARISIAN chain for $221 million. Company
now controls 141 stores in 19 states. They have also announced an
agreement to acquire G.R. HERBERGER'S, a 40-unit department store chain
based in St. Cloud, Minnesota for $153 million.
o BARNEYS INC. -- Remains in bankruptcy through the first half of 1998
with no clear plan to emerge.
- --------------------------------------------------------------------------------
22
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o MONTGOMERY WARD & CO. -- With 400 stores in 43 states filed Chapter 11
in July 1997. They have announced the closure of 48 units which are
being acquired by Klaff Realty LP in partnership with the Lubert-Adler
Real Estate Opportunity Fund. Ward's reported a loss of $1.17 billion
in 1997, nearly five times the $237 million it lost in 1996.
o STRAWBRIDGE & CLOTHIER -- 128 year old Philadelphia based institution
sold 13 unit department store division to May Company. Its 27 unit
discount CLOVER division went to Kimco which is putting Kohl's in
several of the units, their initial foray into the East.
o RICH'S -- 26 unit New England based regional chain closes.
o Discounters are being attacked from two sides. Big Box category
killers have rapidly expanded on one side. Alternatively, full service
department stores have become more promotional, closing the price
advantage gap discounters have traditionally enjoyed. For example,
BRADLEES and CALDOR remain in bankruptcy and AMES continues to look for
the right strategy to compete against Wal-Mart, Kmart, Target and now
Kohl's, the latter two of which are aggressively expanding in the
Mid-Atlantic and northeast regions. Bradlees and Caldor expect to
emerge from Chapter 11 in 1998 and there has been some talk of a
merger.
SPECIALTY RETAILERS
Troubles continues for several specialty retailers as the protracted
shake-out continued with several Chapter 11 filings, downsizings, and some
cases, out-right liquidations. Among the more notable:
o STRAUSS DISCOUNT AUTO filed (6/98) Chapter 11 less than one month
after a private investment group bought the chain from Merrill Lynch.
Founded in 1919, the New Jersey based company operates 111 units in the
mid-Atlantic region.
o LECHTERS announced (3/98) that it will close 60 to 70 mall based
stores in 1998 but open 25 new units in strip centers.
o THE LIMITED INC. announced (2/98) that it will close all but one of
its Henri Bendel stores, spin-off Abercrombie & Fitch to shareholders
and close 200 of its underperforming stores in its various apparel
divisions. This is in addition to the 200 stores it began closing in
December. In the largest revamping since 1969, Limited expects to close
about 10 percent of its stores.
o EGGHEAD SOFTWARE announced (1/98) it will close all 80 of its stores
in the first quarter of 1998 and sell its products exclusively over the
internet. Egghead thus becomes the first chain retailer to give up its
store base for cyberspace sales.
- --------------------------------------------------------------------------------
23
<PAGE>
NATIOAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
o YES CLOTHING COMPANY filed for bankruptcy (1/98) under Chapter 11. The
company had recapitalized in 1996 when the designer and co-founder of
Guess Inc., George Marciano, acquired 80 percent of the company.
o WINKLEMAN'S, a division of Petrie Retail, annouonced (1/98) that they
will liquidate the 49 store chain. Petrie has been operating under
Chapter 11 since 10/95 and has been trying to sell the chain for some
time. A letter of intent to purchase with Crowley, Milner & Co. was
recently withdrawn.
o ONE PRICE CLOTHING STORES, announced (1/98) they will close 75
performing stores and eliminate 6 percent of its workforce as part of a
restructuring plan. The company has 688 units in the United States,
Puerto Rico, and U.S. Virgin Islands.
o Cleveland based HOMEPLACE, a 98-unit, privately held chain, filed for
Chapter 11 (1/98) putting their expansion plans on hold until they can
sort out their financial situation.
o THE WIZ INC., the New York area based electronics retailer filed for
bankruptcy (12/97) saying it close 17 of its 50 Nobody Beats The Wiz
stores.
o BERNARD CHAUS INC., the struggling maker of Chaus women's clothing and
Nautica Sportswear, announced (11/97) it would close 20 of its 21
outlet stores.
o HOME EXPRESS will liquidate its 12 remaining housewares and linens
stores by October 1997. The chain, which at one time had 33 units, had
filed Chapter 11 in February 1996.
o LEVITZ FURNITURE INC. filed for Chapter 11 on September 5, 1997. The
company operates 68 showrooms and 61 smaller stores in 26 states. It
will initially close 18 stores.
o KMART will shed BUILDERS SQUARE for $10.0 million to Leonard Green &
Partners who will merge it with HECHINGERS.
o PAYLESS CASHWAYS filed Chapter 11 in July 1997, but emerged on
December 2, 1997.
o WAL-MART announces closure of 7 year old BUD'S chain in July 1997.
o WOOLWORTH announces closure of all remaining (400) variety stores in
July 1997.
o SERVICE MERCHANDISE announces (4/97) it would close 60 of its 400
stores.
o CONSOLIDATED STORES announced (3/97) it is scrapping its ALL FOR ONE
DOLLAR chain (175 units).
o GROSSMANS INC., a home improvement retail chain, filed Chapter 11 in
March 1997.
- --------------------------------------------------------------------------------
24
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o OSHMANS SPORTING GOODS announces closure (2/97) of 50 of its 84
conventional stores to concentrate on its superstore concept.
o LINEN SUPERMARKET (80 units) liquidated in June 1997.
o ROSES AUTO STORES filed Chapter 11 in June 1997 and immediately
closed all 62 stores. It then reopened 6.
o LURIA'S, the 99-year old apparel and hard goods chain filed
Chapter 11 in August 1997 and is closing 11 of its 17 stores. The
chain at one time had 50 locations throughout Florida.
o ALL ABOUT SPORTS filed Chapter 11 in May 1997 and immediately
announced plans to liquidate.
o MCCRORY CORP. is seeking court approval to close 307 of its 461
remaining stores and liquidate. At one time it ran 820 stores in
1992 when it filed for protection.
o LIMITED will close 200 of its 4,500 units during 1997.
o HANDY ANDY - Regional home improvement chain closed remaining 54
stores.
o HERMAN'S liquidated all of its sporting goods stores in the
northeast (5/96).
o BARNEY'S - High profile New York based upscale retailer filed
Chapter 11.
o MERRY-GO-ROUND liquidated and closed its remaining 560 units
including Chess King, Dejaiz and Cignal units.
o JAMESWAY - Regional discount department store chain in the
northeast liquidated.
o INCREDIBLE UNIVERSE - After aggressive foray into this mega store
format (185,000 (plus or minus) square feet), TANDY closes
division down. Tandy will also close the remaining 53 units of
its struggling MCDUFF ELECTRONICS chain and 19 of its 108
COMPUTER CITY units.
o ERNST HOME CENTERS - Board approved liquidation of 53-unit chain.
o KIDS MART - 144-unit childrens' apparel chain rumored to be close
to filed Chapter 11 in January 1997 and liquidated in April 1997.
o SUN TELEVISION AND APPLIANCE is considering closing 9 of its 50
stores citing losses.
o BEST having sold its remaining units to Shottenstein Corp. in
November 1996, the new owner initiated a liquidation of the
former catalog showroom.
o AUTOWORKS (129 units) - Less than one month after filing Chapter
11 in July 1997, Hahn Automotive Warehouse got bankruptcy court
permission to liquidate the inventory of its 83 unit subsidiary.
- -------------------------------------------------------------------------------
-25-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o RICKEL HOME CENTERS - 86 unit home improvement chain filed
Chapter 11 and announced (10/97) they will close its remaining 49
units in New York, New Jersey, Pennsylvania, and Delaware, laying
off 2,000 people.
o HOUSE OF FABRICS filed Chapter 11 and closes 86 of its 361 units.
o DISCOVERY ZONE - Fast expanding childrens' entertainment and
recreation oriented concept filed Chapter 11.
o BEN FRANKLIN - Arts and crafts retailer filed Chapter 11 and
subsequently ordered to liquidate.
o KUPPENHEIMER - Apparel retailer files Chapter 11 and plans to
close half of its 87 units in New Jersey, New York, Pennsylvania,
and Delaware, laying off 2,000 people.
o COUNTY SEAT - 740-unit apparel retailer has filed Chapter 11 and
will close 200 units. THE WET SEAL has made a proposal to acquire
508 of the stores.
o ALL FOR A DOLLAR - 111-unit close-out chain has filed Chapter 11.
SPECIALITY RETAILERS - MERGERS/ACQUISITIONS
Mergers and consolidations among specialty retailers, drug, supermarket
and apparel categories continue. Evidence of changes among the movie business
is also a recognized trend.
o COMPUSA, INC. (6/98) has agreed to buy COMPUTER CITY from Tandy
Corp. for $275 million in cash and notes. CompUSA, the nation's
largest PC chain, operates 160 stores. Computer City has 100
units and had sales of $1.9 billion.
o WOOLWORTH announced (5/98) their intention to acquire THE SPORTS
AUTHORITY for $570 million in stock and the assumption of $179
million in debt. Sports Authority operates 203 stores with annual
revenues of $1.4 billion.
o ROYAL AHOLD N.V. announced (5/98) their intent to acquire Giant
Foods Inc. in a $2.6 billion deal. Giant Foods operates 177 units
in the Mid-Atlantic states and had 1997 revenues of $4.2 billion.
o CLAIRE'S STORES announced (3/98) they will buy Lux Corporation, a
specialty unisex apparel chain for teenagers which operates 56
units under the name Mr. Rags.
o STAPLES agreed (4/09) to acquire Quill Corp., a privately held
office supplies company for $685 million in stock. Quill sells
through mail order catalogs, the Internet, and telemarketing.
o CVS CORP. announced (2/98) they plan to merge with ARBOR DRUGS in
a $1.48 billion stock-swap to create the nation's largest drug
store company with $15 billion in revenues and 4,100 stores in 25
states.
- -------------------------------------------------------------------------------
-26-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o CAMELOT MUSIC emerged from bankruptcy (1/98) with a plan to
become the nation's third largest music retailer with 305 stores
in 34 states and annual revenue in excess of $550 million. It has
proposed an acquisition of the 153 unit THE WALL MUSIC, INC.
o Philadelphia based TODAY'S MAN emerged from 23 months in Chapter
11 (12/97) with 25 stores and plans to expand their presence in
New York, New Jersey, Maryland and Virginia.
o THE WIZ, having filed for bankruptcy protection in 12/97,
announced (1/98) they will be acquired by Cablevision Systems for
approximately $100 million.
o HICKS, MUSE, TATE, AND FURST INC. and KOHLBERG, KRAVIS ROBERTS &
CO., normally rivals, teamed up (1/98) to purchase Regal Cinemas.
In October, KKR acquired ACT III CINEMAS and in November, Hicks,
Muse had planned to acquire United Artists, the nation's third
largest chain for $850.0 million and combine it with the others
but the deal collapsed in late February.
o AUTO ZONE has signed (5/98) a definitive agreement to acquire
Dallas based CHIEF AUTO PARTS which owns 556 units mostly in
California and Texas. The price tag is $280 million including the
assumption of $205 million in debt. In January 1998, Auto Zone
completed its acquisition of Auto Palace (112 units) for $55
million.
o RITZ CAMERA CENTERS has acquired (1/98) Seattle based Kits Camera
Inc., the third largest independent in the country. Ritz's total
store count grows from 670 to 810.
o SONY CORP. AND CINEPLEX ODEON CORP. agreed (10/97) to combine
their theaters in a $1.0 billion transaction that will create a
2,600 screen chain, second in North America to the 2,700 screen
Carmike Cinemas.
o GART SPORTS, a Denver based privately held chain, has agreed to
acquire (10/97) Sportmart Inc., forming the second largest
sporting goods chain with 120 stores in 13 states and sales of
$700 million.
o FRED MEYER, INC., announced (11/97) they will merge with Quality
Food Centers and Ralph's Grocery Company in two separate
transactions that will create a $15.0 billion company with 800
stores in 14 states. In early 1997 they merged with Smiths Food
and Drug creating a 265 unit chain with $7.0 billion in sales.
o CONSOLIDATED STORES, operator of Odd Lots, Big Lots, and Kay Bee
Toys (1,940 units) announced (11/97) they will acquire
MacFrugal's Bargain Close-outs (325 units in 18 states) for
nearly $1.0 billion.
o DISCOUNT AUTO PARTS, a 411 unit Florida based automotive after
market chain, announced (11/97) its merger with Hi-Lo Automotive,
forming a 598 unit company with combined revenues of $700
million.
- -------------------------------------------------------------------------------
-27-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o PETCO has announced (9/97) their intended acquisition of PetCare,
an 81 store privately held chain based in Chicago.
o JITNEY JUNGLE STORES OF AMERICA (105 units) will acquire
Delchamps (118 units).
o CVC DRUG acquired Revco in February 1997 with combined total of
4,000 stores and $10 billion in sales.
o STAPLES proposed merger with OFFICE DEPOT in a $3.4 billion deal
nixed by FTC.
o TOYS R US acquired BABY SUPERSTORE in $407 million deal (2/97).
o MELVILLE sold KAY BEE TOYS to CONSOLIDATED STORES adding to its
Toy Liquidators, Toys Unlimited and Amazing Toys close-out units
for $315 million. Melville has officially changed its name to CVS
Corp.
o SAFEWAY to acquire VON'S in a $1.65 billion deal, creating an
operation with 1,400 stores, 139,000 employees and $22.0 billion
in revenues. They will still trail the industry leader, KROGER,
in size.
o JC PENNEY, parent of THRIFT DRUG, announced they will acquire
FAY'S INC., operator of 272 units, making Thrift the nation's
eight largest chain. Penney's acquisition of ECKERD DRUG has been
cleared by the FTC.
o CVS CORP. sold BOB'S STORES in late 1997 to a group led by Bob's
management and Citicorp Venture Capital Ltd.
o SEARS & ROEBUCK acquired the 61 unit ORCHARD SUPPLY HARDWARE
chain for $415 million.
o WABAN, INC. - to spin off BJ'S WHOLESALE CLUB and change its name
to its other wholesale club division, HomeBase.
o FOOD LION - announced its pending acquisition of KASH N KARRY in
a $341.0 million deal.
o PETSMART - Announced plans to acquire PET CITY HOLDINGS, the
largest pet superstore chain in the UK.
o TJX COMPANIES - announced intent to sell its CHADWICK'S OF BOSTON
catalog to Brylane LP.
o REVCO - completed its tender offer for BIG B drug store chain.
o QUALITY FOOD CENTERS - Bellevue, WA based supermarket chain to
acquire 56-unit HUGHES FAMILY MARKETS for $360 million.
o REITs continued their aggressive acquisition posture during the year
being the most active buyer of product. Between 1994 and 1997, REITs
increased their ownership from 2.5 percent to 6.6 percent of all
shopping centers. Among regional malls, they own 23 percent of all
centers.
- -------------------------------------------------------------------------------
-28-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o Simon DeBartolo has acquired DeBartolo Realty Corp. and derailed the
Wells Park JVJ/J.W. O'Connor REIT merger with the acquisition of Retail
Property Trust. Simon then teamed up with Macerich to acquire 12 malls
from ERE Yarmouth on behalf of IBM in December 1997. In February 1998
they announced a $5.781 billion merger with Corporate Property
Investors.
o Kimco and The Price REIT have merged (6/98) to form one of the
nation's largest shopping center REITs with nearly 51.0 million square
feet in 390 centers in 40 states and a market capitalization of $3.4
billion.
o Trizec Hahn is selling 20 of their top performing malls to Westfield
and The Rouse Co. in a $2.55 billion transaction. The properties
contain 12.5 million square feet.
o Newport Beach, CA based Donahue Schriber has merged with Diversified
Shopping Centers which has created a combinded company with assets of
$500 million.
o Regency Realty has been growing through large acquisitions. On March
7, 1997 it acquired all of the assets of Branch Properties for $232.4
million. On March 11, 1998 it acquired the real estate assets of the
Midland Group consisting of 21 centers and a development pipeline of 11
centers.
o Mark Centers Trust announced (April 16, 1998) a definitive agreement
to merge the company with RD Capital, creating a combined company with
51 retail properties and 5 multi-family apartments in 16 states.
o Kimco Realty Corp. announced (April 27, 1998) that it reached an
agreement with Venture Stores to purchase their leasehold position at
89 locations including 30 properties pursuant to a master lease with
Metropolitan Life.
o Excel Realty Trust and New Plan Realty Trust have agreed to merge (May
1998) in a $1.36 billion stock swap that would create the nation's
largest strip center REIT. The combined company is to be known as New
Plan Excel Realty Trust Inc. and would own 332 properties with a market
capitalization of $3.5 billion.
o Consolidation in the Outlet Industry has been predicted for some time.
After announcing their intent to merge in November 1997, Prime Retail
completed its merger with Horizon Group Inc. in June 1998. As a result
of the deal, Prime has integrated 22 of Horizon's top performing outlet
centers.
o Mergers and acquisitions in the outlet industry are expected to
continue. It is estimated that 130 developers own some 335 outlet
centers; the industry's five REITs collectively own 165, leaving 125
owners with the remaining 170 centers. Value Retail News reports that
over the period 1992 through 1997, twelve buyers have acquired 103
centers from 25 owners (inclusive of Prime's pending first quarter 1998
purchase of 20 centers from Horizon).
- -------------------------------------------------------------------------------
-29-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o Despite trends towards consolidation and downsizing, retailers say
they will continue aggressive expansions over the next four years.
These results were tabulated from Shopping Center World's 16th Annual
Retailer's Expansion Plans Survey. Retailers say they will open 28,000
stores between 1997 and the end of 2000. Among the 148 responding
retailers, 83 percent planned their expansions in shopping centers led
by regional malls.
o Regional Malls 72%
o Power Centers 50%
o Neighborhood Centers 46%
o Community Centers 34%
o Outlet Centers 20%
o Off-Price Centers 17%
37 percent cited the southeastern part of the country as the hottest
growth area.
o According to Value Retail News, seven outlet projects were completed
in 1997 totaling 1.26 million square feet. The average size of the
Phase I projects were 179,714 square feet. For 1998, developers are
planning 25 projects totaling 5.19 million square feet.
o Category Killers and discount retailers have continued to drive the
demand for additional space. However, power centers have continued to
fall out of favor among many institutional investors. Most experts
agree that the country is over-stored. Ultimately, it will lead to
higher vacancy rates and place severe pressure on aging, capital
intensive centers. Many analysts predict that consolidation will occur
soon in other superstores categories such as in the office products and
electronics segments which will result in increased vacancies.
o One of the more interesting mergers in recent history occurred in June
1997 when Lend Lease Corp. acquired Equitable Real Estate Investment
Management (ERE) and merged it with The Yarmouth Group. The combined
ERE Yarmouth has over 100 shopping centers with more than 100 million
square feet under management worldwide.
o Entertainment is clearly the new operational requisite for property
owners and developers who are incorporating some form of entertainment
into their designs. With a myriad of concepts available, ranging from
mini-amusement parks to multiplex theater and restaurant themes, to
interactive high-tech applications, choosing the right formula is a
difficult task. Many of the nation's largest media and entertainment
companies are getting into the retail business in some fashion. AMC
Entertainment has formed a separate subsidiary, Centertainment, Inc.,
to work with developers to create entertainment based retail projects.
- -------------------------------------------------------------------------------
-30-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o Super-regional value-oriented megamalls such as The Mills concept are
expected to be one area of growth over the next several years. This
hybrid concept incorporates the diverse mix of super-regional malls
with the value-oriented aspects of factory outlets, category killers,
off-price merchants and retailer clearance outlets under one roof. In
addition, they add an entertainment component that is designed to
extend the stay of the patron from approximately one to one and
one-half hours in a traditional mall format to three to five hours.
These malls are at least 1.0 million square feet although the Mills
design averages 1.5 million square feet. They can contain between 7 and
20 anchors and have trade areas stretching upwards to 100 miles.
According to Value Retail News, at the end of 1997 there were 13
megamalls open with a total of 16.7 million square feet. Through 2001,
there are an additional 16 megamalls planned totaling 20.3 million
square feet.
INVESTMENT CRITERIA AND INSTITUTIONAL INVESTMENT PERFORMANCE
Investment criteria for mall properties range widely. Many firms and
organizations survey individuals active in this industry segment in order to
gauge their current investment criteria. These criteria can be measured against
traditional units of comparison such as price (or value) per square foot of GLA
and overall capitalization rates.
The price that an investor is willing to pay represents the current or
present value of all the benefits of ownership. Of fundamental importance is
their expectation of increases in cash flow and the appreciation of the
investment. Investors have shown a shift in preference to initial return,
placing probably less emphasis on the discounted cash flow analysis (DCF). A
DCF is defined as a set of procedures in which the quantity, variability,
timing, and duration of periodic income, as well as the quantity and timing of
reversions, are specified and discounted to a present value at a specified
yield rate. Understandably, market thinking has evolved after a few hard years
of reality where optimistic cash flow projections did not materialize. The DCF
is still, in our opinion, a valid valuation technique that when properly
supported, can present a realistic forecast of a property's performance and its
current value in the marketplace.
Equitable Real Estate Investment Management, Inc. reports in their
EMERGING TRENDS IN REAL ESTATE -- 1998 that their respondents give retail
investments generally poor performance forecasts in their latest survey due to
the protracted merchant shakeout which will continue into 1997 and the general
overbuilding which has had a fundamental change on the industry. While
dominant, Class A malls are still considered to be one of the best real estate
investments anywhere, only 34 percent of the respondents recommended buying
malls. This was up from 20 percent in 1997.
- -------------------------------------------------------------------------------
-31-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
The following chart summarizes the results of their current survey.
<TABLE>
<CAPTION>
======================================================================================================
RETAIL PROPERTY RANKINGS AND FORECASTS
- ------------------------------------------------------------------------------------------------------
INVESTMENT POTENTIAL PREDICTED VALUE GAINS
---------------------- 1998 --------------------------------------
PROPERTY TYPE RATING1 RANKING2 RENT CHANGE 1 YR. 5 YRS. 10 YRS.
======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Regional Malls 4.6 7th +0.6% +2.2% +11.9% +22.9%
Power Centers 3.9 8th -0.2% -0.4% 8.5% 17.1%
Community Centers 5.4 5th 1.8% 3.4% 12.7% 23.9%
======================================================================================================
1 Scale of 1 to 10
2 Based on 9 property types
Source: Emerging Trends in Real Estate -- 1998
======================================================================================================
</TABLE>
REGIONAL MALLS
It is felt that price declines in malls as an investment have bottomed out
and are slowly recovering. Thirty-four percent of all respondents recommend
buying up from 20 percent last year. However, interviewees regard malls as more
of a hold than a buy and generally counsel against selling at this time. Malls
now rank 7th overall in investment appeal, 9th in development potential, and
8th in overbuilding risk. Value gains of 2.2 percent are forecasted this year,
their 22.9 percent over ten years does not stack up well against other
investment choices. While dominant malls in strong growth markets continue to
be prime investments, older malls are clearly at risk as they are vulnerable to
new competition and have high maintenance costs which cannot compete with newer
open air centers that operate much more cost effectively.
POWER CENTERS
This ten year old phenomenon has pushed itself into a lowly 3.9 investment
ranking (last) and a high overbuilding risk (second). Anticipated rent and
value changes will be essentially flat (-.2 percent and -.4 percent,
respectively). Long term appreciation lacks any real appeal and interviewees
overwhelmingly recommend selling the centers and show little interest in buying
at this time.
COMMUNITY CENTERS
Emerging Trends cites that with larger retail formats struggling, certain
neighborhood and community centers may be well positioned to excel over the
next few years. Investment and development potential rank 5th and 6th,
respectively. Value gains of 3.4 percent are forecastedfor 1998 along with rent
increases of 1.8 percent (1 year). Over the long term, a 23.9 percent value
gain is forecasted. Centers with "super" grocery stores provide a convenient
alternative for time pressed shoppers which adds to their appeal.
The NCREIF PROPERTY INDEX represents data collected from the Voting
Members of the National Council of Real Estate Investment Fiduciaries. As shown
in the following table, data through the fourth quarter of 1997 shows that the
retail sub-index posted a total return of 8.40 percent for the year versus a
13.74 percent return for the Index Aggregate. The fourth quarter appreciation
return of .83 percent was not enough to offset the negative return for the
year. On
- -------------------------------------------------------------------------------
-32-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
balance, positive trends are in evidence by the fact that restructuring in the
retail industry is better positioning the centers to meet growing consumer
demands influenced by the strong economy and growing consumer confidence.
Retail sales continue to uutpace inflation and there are signs that
construction is slowly subsiding.
<TABLE>
<CAPTION>
========================================================
RETAIL PROPERTY RETURNS
NCREIF INDEX (%)
--------------------------------------------------------
PERIOD INCOME APPRECIATION TOTAL
========================================================
<S> <C> <C> <C>
4th Qtr.1997 2.13 .83 2.96
One Year 8.53 -.12 8.40
Three Years 8.29 -2.41 5.73
Five Years 7.95 -2.21 5.61
Ten Years 7.21 -1.51 5.62
========================================================
Source: Real Estate Performance Report National Council
of Real Estate Investment Fiduciaries
========================================================
</TABLE>
Retail's total return of 8.40 percent for year ending 12/31/97 was
substantially behind the other investment categories including Apartment
(12.75%), Office (17.35%), R&D (26.01%), and Warehouse (13.77%). For the year,
retail property performance was negatively impacted by size with neighborhood
centers posting the best total performance, while regional malls were laggards.
<TABLE>
<CAPTION>
==================================================================
RETAIL SEGMENT PERFORMANCE
------------------------------------------------------------------
CATEGORY INCOME APPRECIATION TOTAL
==================================================================
<S> <C> <C> <C>
Neighborhood N/A N/A 10.54%
Community N/A N/A 9.73%
Regional Malls N/A N/A 9.09%
Super Regional Malls N/A N/A 6.31%
==================================================================
</TABLE>
Private investor underwriting has become more conservative with respect to
vacancy allowances, growth rates (rent, sales) and occupancy cost tolerance
levels. The reduced spread between cash returns and internal rate of returns is
evidence that buyers seek a higher proportion of their expected return from
income rather than from appreciation.
The Cushman & Wakefield Investor Survey also confirms trends that
capitalization rates for most retail categories have risen. Regional malls have
been the most affected. This is partly due to the fact that a large number of
malls are currently available for sale.
The Urban Land Institute, in their 1997 REAL ESTATE FORECAST -- MID YEAR
OUTLOOK, projects very small increases in effective rents through mid-1998 for
both regional malls and strip shopping centers. Even though rent increases will
likely be higher than 1996, they will likely not keep pace with inflation. In
fact, retail garnered the bottom two spots in ULI's ranking
- -------------------------------------------------------------------------------
-33-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
of 10 property types in measuring their expected performance change. The
downward pressure on rents has been attributed to the expansion of big-box
retailers, which has resulted in a changing tenant base that requires a
different type of space then exists in much of the older retail stock.
REAL ESTATE INVESTMENT TRUST MARKET (REITS)
To date, the impact of REITs on the retail investment market has been
significant, although the majority of Initial Property Offerings (IPOs)
involving regional malls, shopping centers, and outlet centers did not enter
the market until the latter part of 1993 and early 1994. It is noted that REITs
have dominated the investment market for apartment properties and have evolved
into a major role for retail properties as well.
Currently, there are in excess of 300 REITs in the United States, more
than three-quarters of which are publicly traded. The advantages provided by
REITs, in comparison to more traditional real estate investment opportunities,
include the diversification of property types and location, increased liquidity
due to shares being traded on major exchanges, and the exemption from corporate
taxes when 95.0 percent of taxable income is distributed.
There are essentially three kinds of REITs which can either be
"open-ended," or Finite-life (FREITs) which have specified liquidation dates,
typically ranging from eight to fifteen years.
o EQUITY REITS center around the ownership of properties where ownership
interests (shareholders) receive the benefit of returns from the
operating income as well as the anticipated appreciation of property
value. Equity REITs typically provide lower yields than other types of
REITs, although this lower yield is theoretically offset by property
appreciation.
o MORTGAGE REITS invest in real estate through loans. The return to
shareholders is related to the interest rate for mortgages placed by
the REIT.
o HYBRID REITS combine the investment strategies of both the equity and
mortgage REITs in order to diversify risk.
The influx of capital into REITs has provided property owners with an
significant alternative marketplace of investment capital and resulted in a
considerably more liquid market for real estate. In 1997 REITs became the
largest equity owner of commercial real estate, surpassing pension funds for
the first time. The total value of U.S. commercial real estate is $3.47
trillion of which $1.99 trillion is non-institutional grade property and $1.48
trillion is institutional grade.
Publicly traded REITs increased their total market capitalization from $56
billion as of December 31, 1991, to $159.18 billion as of April 1998.
- -------------------------------------------------------------------------------
-34-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
REITs continued their impressive growth in 1997 with total activity
(property acquisitions and IPOs totaling $64.6 billion according to research
provided by Alliance Capital and CB Commercial. However, it is noted that the
$65 billion represents only 2 percent of the total value of all U.S. real
estate. Total acquisitions for the year reached $47 billion, including $18
billion in the 4th quarter alone, a 40 percent increase over the previous
record. Office was the most active sector accounting for 38 percent of the
value of all property assets acquired.
RETAIL REITS
As of December 31, 1997, there were a total of 47 REITs specializing
in retail, making up sizable percentage of the securities in the REIT market.
Forty six of these REIT companies are EQUITY REITs. Depending upon the property
type in which they specialize, retail REITs are divided into three categories:
shopping centers, regional malls, and outlet centers. The REIT performance
indices chart, shown as TABLE A, displays a summary performance of the three
composite categories. TABLE B identifies the number of companies and market
capitalization for year end 1996 as well as through the fourth quarter 1997.
===============================================================================
TABLE A - RETAIL REIT PERFORMANCE
12/31/96 12/31/97
Y-T-D TOTAL DIVIDEND Y-T-D DIVIDEND
RETURN YIELD TOTAL RETURN YIELD
===============================================================================
All Retail REITs 39.96% 6.59% 16.99% 6.17%
Strip Centers 32.88% 6.50% 21.44% 5.81%
Regional Malls 44.63% 6.60% 12.69% 6.68%
Outlet Centers 3.78% 9.22% .88% 7.91%
- -------------------------------------------------------------------------------
Source: Realty Stock Review
===============================================================================
- -------------------------------------------------------------------------------
-35-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
===============================================================================
TABLE B MARKET CAPITALIZATION
- ------------------------------------------------------------------------------
12/31/96 12/31/97
--------------------------- ----------------------------
NO. OF MARKET NO. OF MARKET
SECURITIES CAPITALIZATION* SECURITIES CAPITALIZATION
==============================================================================
All Retail REITs 43 $20,190.7 47 $28,730.1
Strip Centers 26 $11,145.8 27 $15,772.2
Regional Malls 10 $7,349.0 12 $10,418.7
Outlet Centers 6 $1,300.2 6 $1,585.3
- ------------------------------------------------------------------------------
* Number reported in thousands.
Source: Realty Stock Review
- ------------------------------------------------------------------------------
As can be seen, the 47 REIT securities at year end 1997 had a market
capitalization of approximately $28.7 billion which was up from $20.2 billion
at year end 1996. Total returns of nearly 17.0 percent lagged the stock market
as a whole and also lagged the 18.9 percent return for all REITs. This is in
contrast to the nearly 40 percent total return in 1996 when retail REITs
outperformed the market. The strip center segment led the way this year with
total returns of 21.4 percent, followed by regional malls 13.7 percent. Outlet
centers, which were posting negative returns through the third quarter,
recovered to a very modest .88 percent return for the year. Accordingly,
dividend yields for this group were 7.91 percent, some 174 basis points above
the composite average return.
While many of the country's best quality malls and shopping centers
have recently been offered in the public market, this heavily capitalized
marketplace has provided sellers with an attractive alternative to the more
traditional market for large retail properties.
REITs have been the most aggressive buyer of centers by virtue of
their need to grow FFO. TABLE C highlights the change in ownership between 1994
and 1997.
=================================================
TABLE C
PERCENTAGE OF U.S. CENTERS
OWNED BY REITS BY CENTER SIZE
-------------------------------------------------
CENTER SIZE (SF) % IN 1994 % IN 1997
=================================================
< 100,000 1.1% 3.9%
-------------------------------------------------
100,001 - 200,000 3.0% 7.9%
-------------------------------------------------
200,001 - 400,000 6.1% 13.8%
-------------------------------------------------
400,001 - 800,000 11.7% 20.3%
-------------------------------------------------
800,001 - 1,000,000 13.9% 30.6%
-------------------------------------------------
> 1,000,000 12.6% 27.8%
-------------------------------------------------
All Centers 2.5% 6.6%
-------------------------------------------------
Source: ICSC Research Quarterly - Fall 1997
=================================================
- -------------------------------------------------------------------------------
-36-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
From the above it is shown that REITs now own 6.6 percent of all
shopping centers. Further analysis shows they own 23 percent of all regional
malls and 6 percent of all strip centers.
OUTLOOK
A review of various data sources reveals the intensity of the
development community's efforts to serve a U.S. retail market that is still
growing, shifting and evolving. It is estimated 25-30 power centers appear to
be capable of opening annually, generating more than 12 million square feet of
new space per year. That activity is fueled by the locational needs of key
power centers tenants, 27 of which indicated in recent year-end reports to
shareholders an appetite for 900 new stores annually, an average of 30 new
stores per firm.
With a per capita GLA figure of 19 square feet, most analysts are in
agreement that the country is already over-stored. As such, new centers will
become feasible through the following demand generators:
o The gradual obsolescence of some existing retail locations
and retail facilities;
o The evolution of the locational needs and format preferences
of various anchor tenants; and
o Rising retail sales generated by increasing population and
household levels.
By the year 2000, total retail sales are projected to rise from $2.237
trillion in 1994 to almost $2.9 trillion; shopping center-inclined sales are
projected to rise by $361 billion, from $1.194 trillion in 1994 to nearly $1.6
trillion in the year 2000. Those increases reflect annual compound growth rates
of 4.1 percent and 4.5 percent, respectively, for the six-year period.
On balance, we conclude that the outlook for the retail industry is
one of cautious optimism. Because of the importance of consumer spending to the
economy, the retail industry is one of the most studied and analyzed segments of
the economy. One obvious benefactor of the aggressive expansion and promotional
pricing which has characterized the industry is the consumer. There will
continue to be an increasing focus on choosing the right format and
merchandising mix to differentiate the product from the competition and meet
the needs of the consumer. Quite obviously, many of the nations' existing
retail developments will find it difficult if not impossible to compete.
Tantamount to the success of these older centers must be a proper merchandising
or repositioning strategy that adequately considers the feasibility of the
capital intensive needs of such an undertaking. Coincident with all of the
change which will continue to influence the industry is a general softening or
investor bullishness. This will lead to a realization that the collective
interaction of the fundamentals of risk and reward now require higher
capitalization rates and long term yield expectations in order to attract
investment capital.
- -------------------------------------------------------------------------------
-37-
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================================
INCOME & EXPENSE GROWTH CHART - AS STABILIZED
THE MALL OF NEW HAMPSHIRE
Cushman & Wakefield, Inc. 2000 2001 2002 2003 2004 2005 2006
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Minimum Rent: $11,903,357 $11,968,678 $12,029,015 $12,078,695 $12,277,833 $12,448,102 $12,638,877
Effective Gross Income: $17,778,940 $17,976,746 $18,234,297 $18,478,825 $18,905,163 $19,274,569 $19,752,517
Operating Expenses: $538,317 $556,985 $576,302 $596,290 $616,972 $638,372 $660,515
Net Operating Income: $12,430,220 $12,448,426 $12,520,383 $12,569,417 $12,789,608 $12,944,852 $13,205,054
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================
INCOME & EXPENSE GROWTH CHART - AS STABILIZED
THE MALL OF NEW HAMPSHIRE CAGR CAGR
Cushman & Wakefield, Inc. 2007 2008 2009 2010 2000-09 2000-09
====================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Minimum Rent: $12,641,023 $13,645,188 $15,569,648 $16,855,589 3.0% 3.8%
Effective Gross Income: $19,932,968 $21,179,913 $23,455,025 $24,950,836 3.1% 3.7%
Operating Expenses: $683,426 $707,134 $731,665 $757,048 3.5% 3.5%
Net Operating Income: $13,140,578 $14,088,252 $16,048,961 $17,260,268 2.9% 3.6%
</TABLE>
INCOME & EXPENSE GROWTH
[THE NARRATIVE AND/OR TABULAR INFORMATION ABOVE IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================================
SENSITIVITY ANALYSIS ("AS STABILIZED" ANALYSIS)
THE MALL OF NEW HAMPSHIRE 1 2 3 4 5 6 7
Cushman & Wakefield, Inc. 2000 2001 2002 2003 2004 2005 2006
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Effective Gross Income: $17,778,940 $17,976,746 $18,234,297 $18,478,825 $18,905,163 $19,274,569 $19,752,517
Operating Expenses: $538,317 $556,985 $576,302 $596,290 $616,972 $638,372 $660,515
Net Operating Income: $12,430,220 $12,448,426 $12,520,383 $12,569,417 $12,789,608 $12,944,852 $13,205,054
Net Cash Flow: $12,237,733 $12,280,126 $12,386,575 $12,312,641 $12,602,288 $12,637,584 $13,028,551
PROPERTY VALUE: $151,500,000
Net Sales Price: $143,523,029 $144,352,651 $144,917,984 $147,456,657 $149,246,529 $152,246,505 $151,503,135
Net Cash Flow: $12,237,733 $12,280,126 $12,386,575 $12,312,641 $12,602,288 $12,637,584 $13,028,551
- NOI Return: 8.20% 8.22% 8.26% 8.30% 8.44% 8.54% 8.72%
- Cash-On-Cash Return: 8.08% 8.11% 8.18% 8.13% 8.32% 8.34% 8.60%
DISCOUNTED INCOME STREAM
Discounted Sales Price: $130,179,618 $118,759,283 $108,140,031 $99,804,470 $91,624,422 $84,776,551 $76,519,378
Discounted Cash Flow: $11,099,985 $10,102,890 $9,243,053 $8,333,680 $7,736,712 $7,037,080 $6,580,304
Net Present Value: $141,279,603 $139,962,158 $138,585,959 $138,584,077 $138,140,741 $138,329,950 $136,653,081
</TABLE>
<TABLE>
<CAPTION>
===============================================================================================================
SENSITIVITY ANALYSIS ("AS STABILIZED" ANALYSIS)
THE MALL OF NEW HAMPSHIRE 8 9 10 11 CAGR CAGR
Cushman & Wakefield, Inc. 2007 2008 2009 2010 2000-09 2000-09
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Effective Gross Income: $19,932,968 $21,179,913 $23,455,025 $24,950,836 3.1% 3.7%
Operating Expenses: $683,426 $707,134 $731,665 $757,048 3.5% 3.5%
Net Operating Income: $13,140,578 $14,088,252 $16,048,961 $17,260,268 2.9% 3.6%
Net Cash Flow: $12,198,352 $12,432,338 $15,006,346 2.3% 2.8%
PROPERTY VALUE: $199,000,737 3.1%
--------------------------
Net Sales Price: $162,429,258 $185,035,080 $199,000,737 AVERAGE RETURNS
Net Cash Flow: $12,198,352 $12,432,338 $15,006,346 OVER HOLDING PERIOD
-------------------
- NOI Return: 8.67% 9.30% 10.59% NOI 8.7%
- Cash-On-Cash Return: 8.05% 8.21% 9.91% Cash 8.4%
DISCOUNTED INCOME STREAM YIELD COMPOSITION
-----------------
Discounted Sales Price: $74,410,715 $76,885,898 $75,001,285 Reversion 49.5%
Discounted Cash Flow: $5,588,206 $5,165,893 $5,655,734 Cash Flow 50.5%
--------- -----
Net Present Value: $140,132,623 $147,773,699 $151,544,820 Total Value 100.0%
--------------------------
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================
ASSUMPTIONS & CONCLUSIONS
- ------------------------------------------------------------------------------------------
VALUE RANGE: LOW HIGH CONCLUSION
DISCOUNT RATE: 10.75% 10.00% 10.25%
TERMINAL CAP RATE: 8.75% 8.00% 8.50%
==========================================================================================
<S> <C> <C> <C>
VALUE RANGE/CONCLUSION: $144,541,655 $158,901,669 $151,500,000
- ------------------------------------------------------------------------------------------
- Going-In Cap Rate: 8.60% 7.82% 8.20%
- ------------------------------------------------------------------------------------------
- Price/sf Owned GLA: $441.49 $485.35 $462.75
- ------------------------------------------------------------------------------------------
- Price/sf Mall Shop GLA: $454.89 $500.09 $476.79
==========================================================================================
</TABLE>
NOI VS. CASH FLOW
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
2000 2001 2002 2003 2004
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOI $12,430,220 $12,448,426 $12,520,383 $12,569,417 $12,789,608
Cash Flow $12,237,733 $12,280,126 $12,386,575 $12,312,641 $12,602,288
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
2005 2006 2007 2008 2009
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOI $12,944,852 $13,205,054 $13,140,578 $14,088,252 $16,048,961
Cash Flow $12,637,584 $13,028,551 $12,198,352 $12,432,338 $15,006,346
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
================================================================================================
SALE-YIELD MATRIX
------------------------------------------------------------------------------------------------
NET REVERSION TERMINAL DISCOUNT RATE (IRR)
COST OF SALE: CAPITALIZATION ----------------------------------------------------------------
2.00% RATE 10.00% 10.25% 10.50% 10.75%
================================================================================================
<S> <C> <C> <C> <C> <C>
$211,438,283 8.00% $158,901,669 $156,232,400 $153,622,328 $151,069,945
------------------------------------------------------------------------------------------------
$205,031,062 8.25% $156,431,408 $153,817,586 $151,261,595 $148,761,964
------------------------------------------------------------------------------------------------
$199,000,737 8.50% $154,106,457 $151,544,820 $149,039,728 $146,589,746
------------------------------------------------------------------------------------------------
$193,315,002 8.75% $151,914,359 $149,401,926 $146,944,825 $144,541,655
================================================================================================
</TABLE>
NPV VS. SALES PRICE BY YEAR
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
2000 2001 2002 2003 2004
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales Price $143,523,029 $144,352,651 $144,917,984 $147,456,657 $149,246,529
Net Present Value $141,279,603 $139,962,158 $138,585,959 $138,584,077 $138,140,741
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
2005 2006 2007 2008 2009
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales Price $152,246,505 $151,503,135 $162,429,258 $185,035,080 $199,000,737
Net Present Value $138,329,950 $136,653,081 $140,132,623 $147,773,699 $151,544,820
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
QUALIFICATIONS
- -------------------------------------------------------------------------------
RICHARD W. LATELLA, MAI
PROFESSIONAL AFFILIATIONS:
Member, Appraisal Institute (MAI Designation #8346)
Affiliate Member, International Council of Shopping Centers, ICSC
New Hampshire State Certified General Real Estate Appraiser #46000003892
Pennsylvania State Certified General Real Estate Appraiser #GA-001053-R
State of Maryland Certified General Real Estate Appraiser #10796
Minnesota Certified General Real Estate Appraiser #20026517
Commonwealth of Virginia Certified General Appraiser #4001-003348
State of Michigan Certified General Real Estate Appraiser #1201005216
New Jersey Real Estate Salesperson (License #NS-130101-A)
Certified Tax Assessor, State of New Jersey
GENERAL EXPERIENCE:
Senior Director, Retail Valuation Group, Cushman & Wakefield Valuation
Advisory Services, a national full-service real estate organization.
While Mr. Latella's experience has been in appraising a full array of
property types, his principal focus appraisal and counseling for major
retail properties and specialty centers on a national basis. As Senior
Director, his responsibilities include coordination of the firm's
national group of appraisers who specialize in regional malls,
department stores and other major retail property types. He has
personally appraised and consulted on in excess of 300 malls and
specialty centers across the country.
Senior Appraiser, Valuation Counselors, Princeton, New Jersey,
specializing in the appraisal of commercial and industrial real estate,
condemnation analyses and feasibility studies for both corporate and
institutional clients (July 1980-April 1983).
Supervisor, State of New Jersey, Division of Taxation, Local Property
and Public Utility Branch in Trenton, New Jersey, assisting and
advising local municipal and property tax assessors throughout the
state (June 1977-July 1980).
Associate, Warren W. Orpen & Associates, Trenton, New Jersey, assisting
in the preparation of residential property appraisals and condemnation
analyses (July 1975-April 1977).
EDUCATION:
Trenton State College, Trenton, New Jersey
Bachelor of Science, Business Administration - 1977
As of the date of this report, Richard W. Latella, MAI, has completed
all of the requirements under the continuing education program of the
Appraisal Institute.
<PAGE>
QUALIFICATIONS OF VINCENT S. MANISCALCO
- -------------------------------------------------------------------------------
PROFESSIONAL AFFILIATIONS:
Associate Member of The Appraisal Institute
Certified General Appraiser - State of Connecticut
(License No. 0000390)
Certified General Appraiser - State of Michigan
(License No. 1201005365)
Certified General Appraiser - State of Maine (License No. CG1261)
REAL ESTATE EXPERIENCE:
CUSHMAN & WAKEFIELD, INC., New York, New York
November 1997- Present
Associate Director involved in appraisal of income producing properties
with a primary focus on major national retail properties including
regional malls, department stores, specialty centers and other formats.
CUSHMAN & WAKEFIELD OF CT, INC., Stamford, CT
April 1988- November 1997
Associate Director involved in appraisal of income producing properties
throughout the northeastern United States. Work scope also includes,
feasibility studies, market surveys and investment analysis.
L. W. ELLWOOD AND COMPANY, Ridgewood, NJ
June 1986 - April 1988
Associate involved with the preparation of appraisals of a wide range
of investment quality income producing properties throughout the
continental United States.
EDUCATION:
UNIVERSITY OF CONNECTICUT
Bachelor of Science, Real Estate and Urban Economics
May 1986
THE APPRAISAL INSTITUTE
Course 1A-1 - Real Estate Appraisal Principles
Course 1A-2 - Basic Valuation Procedures
Course 1B-A - Capitalization Theory & Techniques Part A
Course 1B-B - Capitalization Theory & Techniques Part B
Course 2-1 - Case Studies in Real Estate Valuation
Course 2-2 - Report Writing and Valuation Analysis
Course SPP - Standards of Professional Practice
THE SOCIETY OF REAL ESTATE APPRAISERS
Course 202 - Applied Income Property Valuation
<PAGE>
- ---------------------------------------------------------
COMPLETE APPRAISAL
OF REAL PROPERTY
WESTSIDE PAVILION
10800-10850 Pico Boulevard
Los Angeles, California
- ---------------------------------------------------------
IN A SELF-CONTAINED REPORT
As of July 13, 1998
PREPARED FOR:
MORGAN STANLEY MORTGAGE CAPITAL, INC.
1585 Broadway
New York, New York 10036
Prepared By:
CUSHMAN & WAKEFIELD OF CALIFORNIA, INC.
Valuation Advisory Services
555 S. Flower Street, Suite 4200
Los Angeles, California 90071
<PAGE>
[Cushman & Wakefield of California, Inc. Letterhead]
July 24, 1998
Mr. Marcus Childress
Associate
Morgan Stanley Mortgage Capital, Inc.
1585 Broadway
New York, New York 10036
Re: Complete Appraisal of Real Property
WESTSIDE PAVILION
Los Angeles, California
Mr. Childress:
In fulfillment of our agreement as outlined in the Letter of Engagement,
Cushman & Wakefield of California, Inc. is pleased to transmit our
self-contained appraisal report estimating the market value of the leased fee
estate in the above referenced property. The value opinion reported below is
qualified by certain assumptions, limiting conditions, certifications, and
definitions, which are set forth in the report.
This appraisal report has been prepared in accordance with the Uniform
Standards of Professional Appraisal Practice and Title XI of the Federal
Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA).
The property was inspected by and the report was prepared by Ellen J.
Gunderson, MAI.
This report was prepared for Morgan Stanley Mortgage Capital, Inc.
("MSMC") in connection with financing to be arranged by MSMC. We consent to the
inclusion of any form (whether in paper or digital format, including any
electronic media such as CD-ROM or the internet) of the Prospectus Supplement
relating to MSMC, Commercial Pass-Through Certificates, (which we understand is
a type of "Securitization" defined as an offering of debt securities that, as
applicable, are registered with the Securities Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act") or are privately placed
pursuant to an exemption from the Act, in which the property appraised is part
of a pool of properties owned by various non-affiliated owners collateralizing
such offering) of our appraisal with respect to each property in which C&W has
been engaged, and we consent to the reference to our firm under the caption
"Experts" in such Prospectus Supplement.
<PAGE>
Mr. Marcus Childress
Morgan Stanley Capital Mortgage, Inc.
Page 2
As a result of our analysis, we have formed an opinion that the market
value of the leased fee estate in PHASE I AND PHASE II OF WESTSIDE PAVILION
COMBINED, subject to the assumptions, limiting conditions, certifications, and
definitions, as of July 13, 1998, is:
ONE HUNDRED AND SEVENTY MILLION DOLLARS
$170,000,000
The above value estimate includes both Phases I and II. Phase II was added
in 1991 and is accessed from the third level main mall by pedestrian bridge
over Westwood Boulevard. Phase II has suffered from vacancy problems since it
was built, although in the past occupancy has been better than the current 40.1
percent occupancy of Phase II (excluding temporary tenants). Macerich, the
recent purchaser of the property, reports that their plans will include some
type of redevelopment, although any specific plans have not been made. Any
redevelopment plan is speculative and will be restricted by the City and
neighborhood groups. Macerich representatives have indicated that they are very
hopeful about cooperation from city government and neighborhood groups, as a
viable development is wanted for the site by all involved and it is now clear
that the current development is not well received by customers and prospective
tenants.
We have been asked to provide separate value estimates for Phase I and II,
as only Phase I is included in the collateral for the proposed financing. As
any redevelopment plan is subject to so many approvals outside the control of
the developer, a purchaser of the property would approach Phase II very
conservatively. Any increase in income generated from redevelopment would be
seen as upside potential by a purchaser.
As a result of our analysis, we have formed an opinion that the market
value of the leased fee estate in PHASE I OF WESTSIDE PAVILION, subject to the
assumptions, limiting conditions, certifications, and definitions, as of
July 13, 1998, is:
ONE HUNDRED AND SIXTY MILLION DOLLARS
$160,000,000
As a result of our analysis, we have formed an opinion that the market
value of the leased fee estate in PHASE II OF WESTSIDE PAVILION, subject to the
assumptions, limiting conditions, certifications, and definitions, as of July
13, 1998, is:
TEN MILLION DOLLARS
$10,000,000
<PAGE>
Mr. Marcus Childress
Morgan Stanley Capital Mortgage, Inc.
Page 3
This letter is invalid as an opinion of value if detached from the report,
which contains the text, exhibits, and an Addenda.
Respectfully submitted,
CUSHMAN & WAKEFIELD OF CALIFORNIA, INC.
/s/ Ellen J. Gunderson
- ---------------------------------------
Ellen J. Gunderson, MAI
Director, Valuation Advisory Services
Retail Valuation Group
California Certified Appraiser No. AG025346
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
PROPERTY NAME: Westside Pavilion
LOCATION: South side of Pico Boulevard, east and west
of Westwood Boulevard
10800-10850 Pico Boulevard
Los Angeles, California
ASSESSOR'S PARCEL NUMBER 4255-28-02 through 05, 09, 12 and 13;
4256-01-25 through 27 and 29
INTEREST APPRAISED: Leased Fee
DATE OF VALUE: July 13, 1998
DATE OF INSPECTION: July 13, 1998
OWNERSHIP: Macerich
LAND AREA
Subject Ownership: 9.16 Acres
Separate Ownership: 5.97 Acres
Total Center: 15.13 Acres
ZONING: C2-1VL, City of Los Angeles
HIGHEST AND BEST USE
If Vacant: Regional Mall or other major retail
development
As Improved: Current use
IMPROVEMENTS
Type: Enclosed and open air three-level regional
shopping center
Year Built: 1985; Expanded in 1991 adding 91,978 sq.ft.
in Phase II across Westwood Boulevard.
Type of Construction: Reinforced concrete
Quality/Condition: Good/Good
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
GROSS LEASABLE AREA (SF):
Anchors
Robinson's-May 220,000 SF *
Nordstrom 138,128 SF
Pavilions 43,435 SF
----------
Sub-total 401,563 SF
Main Mall Stores 262,371 SF
Expansion Mall Stores 91,978 SF
----------
Total Center 755,912 SF
* Held under separate ownership; subject ownership portions comprises
535,912 SF
OCCUPANCY: Mall Shops (incl. Phase I & II)
-------------------------------
12//97: 85.2%
7/98: 83.5%
Main Mall Shops (Phase I only)
------------------------------
12/97: 96.3%
7/98: 98.7%
Total Occupancy (owned GLA)
---------------------------
12/97: 90.2%
7/98: 89.1%
PARKING: Approximately 3,334 total spaces in surface
parking and multi-level parking garage (4.4
spaces per 1,000 SF gross leasable area)
VALUE INDICATORS
PHASE I & II PHASE I PHASE II
------------ ------- --------
Sales Comparison Approach: $170,500,000 N/A N/A
Income Approach: $170,000,000 $160,000,000 $10,000,000
Discounted Cash Flow: $166,700,000 $159,400,000 N/A
Direct Capitalization: $174,700,000 $162,600,000 N/A
Development Cost Approach: N/A N/A $8,300,000
FINAL VALUE CONCLUSION: PHASE I & II PHASE I PHASE II
------------ ------- --------
$170,000,000 $160,000,000 $10,000,000
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- ------------------------------------------------------------------------------
SPECIAL ASSUMPTIONS: Please refer to the complete list of
assumptions and limiting conditions included
at the end of this report.
1. We have been asked to provide separate
value estimates for Phase I and II. The
phases are on separate tax parcels, and can
be physically separate as well. However, as
the parking area in Phase II also serves
Phase I, it is a specific assumption of this
appraisal that a reciprocal parking and
easement agreement would be made between the
ownerships of Phase I and II and the parking
and other legal requirements would be
satisfied.
2. Throughout the analysis we have relied on
information provided by the client and the
new owner and management, which we assume to
be accurate. By nature, a mall is a very
fluid property type and many tenants are
typically in some form of transition.
3. The factual tenant information for the
subject mall was provided by the property
owner in the form of a rent roll. We audited
a representative sample of the mall tenant
leases as a check against the data provided.
No significant discrepancies were noted in
the leases audited. We assume that the
leases audited are a representative sampling
of the accuracy of the summary tenant data.
We have no reason to believe otherwise.
However, we make no warranties as to the
accuracy of the tenant data provided.
4. The Americans with Disabilities Act (ADA)
became effective January 26, 1992. We were
provided with excerpts from a 1998 report
prepared by Myers, Houghton & Partners.
These pages are contained in the Addenda.
The report identifies $90,000 in readily
achievable barrier removal items to bring
the property into compliance. This has been
included as a capital deduction in the cash
flow analysis, however, due to the small
amount, it
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
is basically lost in rounding. The reader
should note that we are not qualified to
provide a specific compliance survey and
analysis of the property to determine
whether or not it is in conformity with the
various detailed requirements of ADA, and
have relied upon the information provided
to us. It is possible that a full
compliance survey of the property, together
with a detailed analysis of the
requirements of the ADA could reveal that
the property is not in compliance with one
or more of the requirements of the Act. If
so, this fact could have a negative effect
upon the value of the property.
5. An Environmental Site Assessment report,
prepared by Harding Lawson Associates (HLA)
on June 1, 1998, was provided to us. The
HLA report indicated no evidence of
recognized environmental conditions with
the exception of 1) three of the paint chip
samples exceeded the HUD levels of 5,000
mg/kg and 2) the 1,000 gallon underground
diesel storage tank failed a vacuum test.
The report indicated no recommendations. We
are not aware of any toxic contamination or
hazardous wastes on or about the subject
property. We are not experts, however, in
the detection of hazardous wastes or toxic
contaminants, and our appraisal is based on
the assumption that there are no toxic
contaminants or environmental hazards that
would negatively impact the subject
property's marketability or value.
6. The forecasts of income, expenses and
absorption of vacant space are not
predictions of the future. Rather, they are
our best estimates of the current market
thinking on future income, expenses and
demand. We make no warranty or
representation that these forecasts will
materialize.
7. Please refer to the complete list of
assumptions and limiting conditions
included at the end of this report.
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View looking east along Pico Boulevard (subject on the right)
[PICTURE]
View looking west across Westwood Boulevard toward the west portion of the mall
(1991 expansion)
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View looking southwest towards west end of mall (1991 expansion)
[PICTURE]
Exterior view of Robinson's-May (east end of mall)
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
Rear elevation of mall from the parking structure
[PICTURE]
Interior entrance to Nordstrom
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
Interior entrance to Robinson's-May
[PICTURE]
View from the west end of the expansion area towards
Barnes & Noble and the bridge
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
View inside the expansion area courtyard
[PICTURE]
View looking north along Westwood Boulevard from the bridge
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
Interior view of main mall
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
Interior view
[PICTURE]
Food Court
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
Westside Pavilion Cinemas
[PICTURE]
Entrance to Pavilions (from basement parking garage only)
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
National tenant storefronts
[PICTURE]
National tenant storefronts
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
National tenant storefronts
[PICTURE]
National tenant storefronts
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
INTRODUCTION..............................................................1
Identification of Property.............................................1
Property Ownership and Recent History..................................1
Purpose and Function of the Appraisal..................................1
Scope of the Appraisal.................................................1
Property Rights Appraised..............................................2
Definitions of Value, Interest Appraised, and Other Pertinent Terms....2
Date of Value and Property Inspection..................................2
Legal Description......................................................3
REGIONAL ANALYSIS.........................................................4
RETAIL MARKET ANALYSIS...................................................13
PROPERTY DESCRIPTION.....................................................52
REAL PROPERTY TAXES AND ASSESSMENTS......................................58
ZONING...................................................................59
HIGHEST AND BEST USE.....................................................60
VALUATION PROCESS........................................................62
SALES COMPARISON APPROACH................................................63
INCOME APPROACH..........................................................72
RECONCILIATION AND FINAL VALUE ESTIMATE..................................93
ASSUMPTIONS AND LIMITING CONDITIONS......................................95
CERTIFICATION OF APPRAISAL...............................................97
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
IDENTIFICATION OF PROPERTY
The Westside Pavilion shopping center is an enclosed and open air
regional mall located at the south side of Pico Boulevard, east and west of
Westwood Boulevard, in Los Angeles, California. The center was originally
constructed in 1985, and expanded in 1991. The center is comprised of a
three-level enclosed mall anchored by Robinson's-May, Nordstrom and Pavilions
market. The enclosed regional mall also includes retail stores, in addition to
a three-level open air mall (the expansion portion of the center.) The two
components of the center are connected by a pedestrian bridge which extends
across Westwood Boulevard. The total property comprises a total combined gross
leasable area of 755,912 square feet and covers a total land area of
approximately 15 acres. The portion under subject ownership (excluding
Robinson's-May) totals 535,912 gross leasable square feet on a site containing
9.16 acres.
The Los Angeles County Assessor identifies the subject property as Parcel
Numbers 4255-28, 02 through 05, 09, 12 and 13, and 4256-01-25 through 27
and 29.
PROPERTY OWNERSHIP AND RECENT HISTORY
The property was acquired in July 1998 by Macerich from Westpal, LLC. The
total cash purchase price was $170,500,000, or $318.15 per square foot of GLA
purchased (535,912 sq.ft.). The buyer's analysis was based on estimated net
income for calendar year 1998 at $14,002,000, which indicates a going-in
overall rate of 8.2 percent. Based on year-end comparable mall store sales of
$373 per square foot, this equals a sales multiple of 0.85. The total marketing
period was about two months, with approximately six months total to close the
sale. According to Mr. Chris Hoffman of Eastdil Realty who marketed the
property, Macerich was not the highest bidder, but by a very small margin.
Macerich was selected because of the seller's confidence in the buyer and their
likelihood to close at the escrow price.
According to Assessor's records, Westpal, LLC acquired the property
through a Quitclaim Deed recorded July 18, 1996 (Document No. 1159047.) This
entity was related to the previous owners, Westland Shopping Center, L.P., who
acquired the property (prior to expansion) in 1988 from another related entity,
Westfield (the developer of the original center.)
PURPOSE AND FUNCTION OF THE APPRAISAL
The purpose of this appraisal report is to estimate the market value of
the leased fee estate in the property. The function of this appraisal is to
provide an independent valuation analysis to our client for financing purposes.
SCOPE OF THE APPRAISAL
In the process of preparing this appraisal, we inspected the property,
interviewed a representative of the property ownership and management, reviewed
a detailed rent roll, reviewed lease abstracts and intent to lease documents,
reviewed the operating expense history and budgets, conducted market research
into asking rental rates for comparable space, obtained information regarding
leases recently negotiated, conducted market investigations, ascertained sale
prices of comparable properties, developed a value estimate by direct sales
comparison and prepared a detailed cash flow analysis for the
- -------------------------------------------------------------------------------
1
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
purpose of discounting a forecasted net income stream to a present value
estimate for a leased fee estate.
PROPERTY RIGHTS APPRAISED
Leased fee interest.
DEFINITIONS OF VALUE, INTEREST APPRAISED, AND OTHER PERTINENT TERMS
MARKET VALUE
The Comptroller of the Currency of the United States defines Market
Value as follows:
The most probable price which a property should bring in a competitive
and open market under all conditions requisite to a fair sale, the buyer and
seller each acting prudently and knowledgeably, and assuming the price is
not affected by undue stimulus. Implicit in the definition is the
consummation of a sale as of a specified date and the passing of title from
seller to buyer under conditions whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised and acting in what they
consider their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions
granted by anyone associated with the sale.
LEASED FEE ESTATE
An ownership interest held by a landlord with the right of use and
occupancy conveyed by lease to others; usually consists of the right to
receive rent and the right to repossession at the termination of the
lease.
MARKET VALUE AS IS ON APPRAISAL DATE
Value of the property appraised in the condition observed upon inspection
and as it physically and legally exists without hypothetical conditions,
assumptions, or qualifications on the effective date of appraisal.
DATE OF VALUE AND PROPERTY INSPECTION
The date of value for this appraisal is July 13, 1998, the date of
inspection.
- -------------------------------------------------------------------------------
2
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
LEGAL DESCRIPTION
According to a site survey prepared by Dubron and Associates (dated
September 19, 1991 with revisions) the property is legally described as
follows:
Lots 1 through 7, of Tract No. 13061, as per M.B. 358-24/25; and
lots 7 and 9, of Tract No. 11370, as per M.B. 277-43/44, in the City
of Los Angeles, County of Los Angeles, and State of California.
- -------------------------------------------------------------------------------
3
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[REGIONAL MAP]
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
LOS ANGELES COUNTY OVERVIEW
The subject property is located in the western portion of the City of Los
Angeles, in Los Angeles County, California. Los Angeles County is a densely
populated and extensively developed region that includes one of the most
significant industrial and commercial property markets in California and the
United States. The state and region are currently experiencing substantial
economic growth that is expected to continue to accelerate through the end of
1998. The physical, regional, demographic and economic characteristics of the
region influencing the subject property are briefly described below.
PHYSICAL BOUNDARIES
Los Angeles County is located in the southwestern portion of California,
and is the industrial and commercial center of the Southern California region.
The county lies along approximately 70 miles of the Pacific Coast, extending
for nearly 70 miles from east to west and for 75 miles from north to south. The
county has a total land area of approximately 3,970 square miles. Roughly 50
percent of the county land is comprised of mountainous terrain that is neither
densely populated nor extensively developed. Ventura County borders Los Angeles
County to the northwest, Kern County to the north, San Bernardino County to the
east, Orange County to the south, and the Pacific Ocean to the west. Los
Angeles County has approximately 90 incorporated cities with a total land area
of 1,390 square miles or 35 percent of the total land area within the county.
The remaining 65 percent of the county land area is unincorporated and the
majority of this land area is located north of the San Gabriel Mountains which
run in an east/west direction through the middle of the county. The county's
civic center is located in downtown Los Angeles.
POPULATION
Los Angeles County is the largest county in California in terms of
residential population. Los Angeles County's January 1, 1998 estimated
population of 9,603,300 residents represents 28.9 percent of the statewide
population and 51 percent of the residential population within the six major
counties in Southern California.
The county experienced relatively modest population growth from 1980 to 1997 in
comparison to the other major counties in Southern California as well as the
overall statewide population. From 1990 to 1997, the county's average
population growth slowed to less than one percent per year, as compared to over
one percent per year compounded annually from 1980 to 1990. The relatively
slower pace of population growth in Los Angeles County over the past several
years reflects the more established nature of its residential and commercial
development within the county as well as the downturn in employment from
approximately 1990 to 1994.
The county population is projected to increase by 3.7 percent from 1997
to 2002. This projection lags the projected population growth of 5.5 percent
for the state and most of the other major counties in Southern California. The
pace of population growth in the county is projected to be similar to the rate
of household formations, which reverses the historical trend of an increasing
household size for the countywide population. The most significant population
growth in Southern California is expected to occur in the Inland
- -------------------------------------------------------------------------------
4
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
WESTSIDE PAVILION
REGIONAL ECONOMIC & DEMOGRAPHIC FACT SHEET
========================================================================================================================
COMPOUND ANNUAL GROWTH RATE
1997 2002 1980- 1990- 1997-
1980 1990 (EST.) (PROJ.) 1990 1997 2002
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
POPULATION
Los Angeles County, CA 7,477,507 8,863,164 9,210,790 9,555,105 1.7% 0.6% 0.7%
State of California 23,667,910 29,760,022 32,015,178 33,761,848 2.3% 1.0% 1.1%
United States 226,545,856 248,709,872 266,798,176 278,178,944 0.9% 1.0% 0.8%
- ------------------------------------------------------------------------------------------------------------------------
HOUSEHOLDS
Los Angeles County, CA 2,730,469 2,989,552 3,171,862 3,331,065 0.91% 0.85% 0.98%
State of California 8,629,867 10,381,206 11,505,599 12,239,233 1.86% 1.48% 1.24%
United States 80,389,688 91,947,408 101,517,136 107,281,800 1.35% 1.42% 1.11%
- ------------------------------------------------------------------------------------------------------------------------
AVERAGE HOUSEHOLD INCOME
Los Angeles County, CA $31,909 $47,252 $69,128 $91,916 4.00% 5.59% 5.86%
State of California $31,389 $46,247 $66,166 $85,866 3.95% 5.25% 5.35%
United States $20,307 $38,453 $55,443 $71,098 6.59% 5.37% 5.10%
- ------------------------------------------------------------------------------------------------------------------------
PER CAPITA INCOME
Los Angeles County, CA $11,949 $16,149 $24,190 $32,633 3.06% 5.94% 6.17%
State of California $11,683 $16,409 $24,178 $31,724 3.46% 5.69% 5.58%
United States $7,298 $14,420 $21,272 $27,797 7.05% 5.71% 5.50%
- ------------------------------------------------------------------------------------------------------------------------
AGGREGATE INCOME (MILLIONS)
Los Angeles County, CA $89,349 $143,131 $222,809 $311,812 4.82% 6.53% 6.95%
State of California $276,512 $488,332 $774,063 $1,071,061 5.85% 6.80% 6.71%
United States $1,653,332 $3,586,396 $5,675,331 $7,732,540 8.05% 6.78% 6.38%
- ------------------------------------------------------------------------------------------------------------------------
NON-AGRICULTURAL EMPLOYMENT
(000'S)(1)
Los Angeles County, CA 4,281 5,339 4,933 5,023 2.23% -1.12% 0.36%
State of California 12,209 16,482 16,438 18,006 3.05% -0.04% 1.84%
United States 109,024 134,394 146,074 158,852 2.11% 1.20% 1.69%
- ------------------------------------------------------------------------------------------------------------------------
Source: Equifax National Decision Systems, Woods & Poole Economics, Inc.
(1) Employment projection is as of 2005
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Southern California
DEMOGRAPHIC PROFILE
As of January 1998
- ------------------------------------------------------------------------------------------------------------------------
LOS ANGELES VENTURA SAN BERNARDINO RIVERSIDE ORANGE SAN DIEGO STATE OF
CHARACTERISTIC COUNTY COUNTY COUNTY COUNTY COUNTY COUNTY CALIFORNIA
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
POPULATION
2002 Projections 9,555,104 759,446 1,732,969 1,588,921 2,763,663 2,755,418 33,761,844
1997 Estimate 9,210,790 722,549 1,586,410 1,414,257 2,608,145 2,671,996 32,015,178
1990 Census 8,863,164 669,016 1,418,380 1,170,413 2,410,556 2,498,016 29,760,022
1980 Census 7,477,507 529,174 895,016 663,166 1,932,710 1,861,847 23,667,910
% Increase 1980-1990 18.5% 26.4% 58.5% 76.5% 24.7% 34.2% 25.7%
% Increase 1997-2002 3.7% 5.1% 9.2% 12.4% 6.0% 3.1% 5.5%
HOUSEHOLDS
2002 Projection 3,331,034 256,353 607,682 577,033 974,324 1,042,311 12,239,831
1997 Estimate 3,172,219 240,971 548,796 508,384 908,422 998,552 11,505,981
1990 Census 2,989,552 217,298 464,737 402,067 827,066 887,403 10,381,208
1980 Census 2,730,469 172,781 308,643 242,937 686,267 670,094 8,629,867
% Increase 1980-1990 9.5% 25.8% 50.6% 65.5% 20.5% 32.4% 20.3%
% Increase 1997-2002 5.0% 6.4% 10.7% 13.5% 7.3% 4.4% 6.4%
AVERAGE HOUSEHOLD SIZE
2002 Projection 2.87 2.96 2.85 2.75 2.84 2.64 2.76
1997 Estimate 2.90 3.00 2.89 2.78 2.87 2.68 2.78
1990 Census 2.96 3.08 3.05 2.91 2.91 2.81 2.87
1980 Census 2.74 3.06 2.90 2.73 2.82 2.78 2.74
HOUSEHOLD INCOME
Average $69,128 $79,629 $54,737 $57,407 $85,697 $63,029 $66,164
Median $45,061 $60,241 $41,689 $41,442 $61,751 $44,067 $45,514
Per Capita Income $24,190 $26,970 $19,251 $20,948 $30,106 $24,177 $24,178
HOUSEHOLDS BY INCOME
1997 Estimated Population 3,172,219 240,971 548,796 508,384 908,422 998,552 11,505,981
$150,000 or more 7.6% 7.5% 3.4% 4.5% 9.5% 5.5% 6.3%
$100,000 to $149,999 8.0% 11.7% 5.4% 5.1% 12.7% 6l8% 7.8%
$75,000 to $99,999 10.0% 15.0% 8.6% 8.2% 15.05% 9.4% 10.2%
$50,000 to $74,999 19.6% 26.9% 22.5% 22.0% 24.1% 21.6% 21.0%
$35,000 to $49,999 14.9% 13.9% 18.4% 18.0% 13.3% 17.1% 15.8%
$25,000 to $34,999 11.9% 9.0% 12.5% 13.0% 9.2% 13.1% 11.8%
$15,000 to $24,999 12.0% 7.9% 12.8% 13.3% 8.0% 13.1% 12.1%
$5,000 to $14,999 12.6% 6.9% 13.6% 13.1% 6.5% 11.1% 12.2%
Under $5,000 3.5% 1.3% 2.8% 2.9% 1.7% 2.4% 2.8%
OCCUPIED UNITS 2,989,552 217,298 464,737 402,067 827,066 887,403 10,381,206
Owner Occupied 48.2% 65.5% 63.3% 67.4% 60.1% 53.8% 55.6%
Renter Occupied 51.8% 34.5% 36.7% 32.6% 39.9% 46.2% 44.4%
1990 Avg. Persons per HH 2.91 3.02 2.97 2.85 2.87 2.69 2.79
EDUCATION
Bachelor Degree Only 14.5% 15.1% 9.8% 9.7% 18.7% 16.5% 15.3%
Graduate Degree 7.8% 7.9 5.2% 4.9% 9.1% 8.8% 8.1%
- ------------------------------------------------------------------------------------------------------------------------
Source: Equifax National Decision Systems
</TABLE>
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
Empire counties of Riverside and San Bernardino. This is due in large part to
the relatively lower cost of housing in these areas.
INCOME AND AFFORDABILITY
Los Angeles County's household income and per capita income levels are similar
to the statewide figures and compare favorably to the corresponding figures for
most of the major counties in Southern California. Within the Southern
California region, only Orange County and Ventura County have higher household
and per capita incomes than Los Angeles County.
According to the California Association of Realtors, the January 1998 median
home price was $176,150 in Los Angeles County, a 9.95 percent increase from the
prior year. For California as a whole, the median price was $186,580. Although
Los Angeles County sold more homes than the other counties in Southern
California, the median home price was higher in both Orange County ($241,440)
and Ventura County ($229,300).
RETAIL SALES TRENDS
The Los Angeles-Long Beach metropolitan area, consisting of Los Angeles
County, is the top ranked retail market in the United States according to a
recent survey of buying power by Sales and Marketing Management Magazine. The
Los Angeles-Long Beach area's Buying Power Index was ranked first among the 317
metropolitan areas included in the survey, and was the only California
metropolitan area ranked among the ten strongest retail markets. The Buying
Power Index is a weighted index that converts the survey's three basic elements
of population, effective buying income, and retail sales into a measurement of
a market's "ability to buy". The Los Angeles-Long Beach area was ranked among
the top three metropolitan markets in the country in terms of population (1st),
total effective buying income (3rd), and retail sales (2nd).
The Los Angeles area has been experiencing a gradual increase in retail
sales during recent years, as shown in the following table:
LOS ANGELES COUNTY - TOTAL TAXABLE RETAIL SALES
----------------------------------------------
YEAR $(`000,000'S) % CHANGE
----------------------------------------------
1986 $41,269 ---
1987 $44,239 7.19%
1988 $46,820 5.83%
1989 $50,104 7.01%
1990 $50,922 1.63%
1991 $48,332 -5.11%
1992 $48,450 0.24%
1993 $47,338 -2.30%
1994 $49,786 5.17%
1995 $51,016 2.47%
1996 $53,304 4.46%
1997 $54,982 3.14%
----------------------------------------------
SOURCE: CALIFORNIA RETAIL SURVEY 1998
- -------------------------------------------------------------------------------
5
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
EMPLOYMENT
While the aerospace sector of the economy has continued to consolidate
during the past five years, other areas of the Los Angeles economy, including
the entertainment industry, international trade, and the business services
segments have emerged as major sources of employment and catalysts for growth.
The increasing number of distribution channels for entertainment and
educational programming and the growing demand for interactive media has
created new marketing opportunities for the television, motion picture, and
computer software industries in the greater Los Angeles area.
The Ports of Los Angeles and Long Beach have solidified their position as
the busiest ports in the country in terms of annual cargo volumes. This has
sparked employment gains in trade-related sectors of the economy. Driven by
these and other business sectors, countywide unemployment levels have decreased
significantly from peak levels experienced during the early portion of the
1990's. The following chart illustrates the dramatic improvement in the
California and the Los Angeles County employment levels during the period from
1992 through 1997.
<TABLE>
<CAPTION>
EMPLOYMENT TRENDS
(AVERAGE PER YEAR)
- -------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- -------------------------------------------------------------------------------------------
STATE OF CALIFORNIA
<S> <C> <C> <C> <C> <C> <C>
Labor Force 15,404,255 15,359,518 15,461,830 15,415,475 15,596,139 15,971,800
Employment 13,973,304 13,918,275 14,132,936 14,205,866 14,469,924 14,965,500
Unemployment 1,430,951 1,441,243 1,328,895 1,209,609 1,126,215 1,006,300
Unemployment Rate 9.30% 9.40% 8.60% 7.80% 7.20% 6.3%
- -------------------------------------------------------------------------------------------
LOS ANGELES COUNTY
Labor Force 4,503,804 4,404,104 4,366,207 4,359,656 4,415,428 4,496,700
Employment 4,062,416 3,970,748 3,957,037 4,016,191 4,052,561 4,189,200
Unemployment 441,388 433,356 409,170 343,465 362,867 307,500
Unemployment Rate 9.80% 9.80% 9.40% 7.90% 8.20% 6.8%
- -------------------------------------------------------------------------------------------
</TABLE>
Source: State of California Employment Development Department Labor Market
Information Division
The above chart shows that the state and the county of Los Angeles have
continued to reduce unemployment levels at an impressive pace.
The unemployment rate as of May 1998 for the county was 6.1 percent, down
from 6.8 percent as of the end of 1997. The total number of jobs reached
4,271,100 in May 1998. This represents an increase of 81,900 jobs or 1.9
percent over the last five months.
EMPLOYMENT STATISTICS BY INDUSTRY
Presented on the accompanying pages are the employment statistics by
industry for the state, Southern California, and Los Angeles County. As
indicated, California has experienced positive job growth since 1994 following
losses between 1990 and 1994. The trend was similar in Southern California and
Los Angeles County. The projected growth
- -------------------------------------------------------------------------------
6
<PAGE>
TOTAL EMPLOYMENT STATISTICS
WOODS & POOLE ECONOMICS, INC.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
1970 1980 1990 1994 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LOS ANGELES COUNTY 000's
- ------------------ -----
Farm 7.63 8.40 11.62 8.12 8.05
Agricultural Services, Other 17.31 29.86 27.86 29.19 29.26
Mining 12.51 15.90 13.16 9.17 8.77
Construction 127.92 153.00 214.05 168.01 176.13
Manufacturing 824.30 938.63 894.03 683.12 675.01
Transport, Comm., & Public Util 182.11 214.14 248.46 235.13 241.16
Wholesale Trade 208.38 286.98 339.45 288.89 303.07
Retail Trade 520.99 647.26 789.31 702.52 722.70
Finance, Ins., & R.E. 279.50 382.57 484.31 412.40 418.21
Services 750.49 1,134.26 1,784.03 1,717.53 1,801.57
Federal Civilian Govt. 72.66 74.74 74.62 68.77 69.46
Federal Military Govt. 45.88 29.73 43.02 28.34 27.47
State and Local Govt. 332.57 403.57 454.71 466.23 472.67
- --------------------------------------------------------------------------------------------------
TOTAL 3,382.25 4,319.04 5,378.63 4,817.42 4,953.53
- --------------------------------------------------------------------------------------------------
[RESTUBBED TABLE CONTINUED FROM ABOVE]
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1997 1998 2000 2005 2010 2015 2020
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LOS ANGELES COUNTY 000's
- ------------------ -----
Farm 8.04 8.02 7.97 7.78 7.52 7.19 6.81
Agricultural Services, Other 29.03 28.82 28.45 27.87 27.80 28.26 29.31
Mining 8.73 8.68 8.58 8.38 8.27 8.28 8.43
Construction 177.04 177.34 178.13 181.31 186.60 194.46 205.43
Manufacturing 669.12 663.45 652.75 630.15 614.01 604.84 602.98
Transport, Comm., & Public Util 240.51 239.28 237.04 233.02 231.47 232.67 236.90
Wholesale Trade 303.46 302.98 302.25 301.99 304.58 310.81 321.50
Retail Trade 720.88 716.93 709.89 697.83 694.41 700.49 717.01
Finance, Ins., & R.E. 422.39 425.57 432.13 449.96 470.49 494.46 522.64
Services 1,820.87 1,836.17 1,867.58 1,952.32 2,048.81 2,160.55 2,290.94
Federal Civilian Govt. 70.31 70.18 69.93 69.43 69.13 69.07 69.27
Federal Military Govt. 27.04 27.04 27.04 27.04 27.04 27.04 27.04
State and Local Govt. 473.02 472.09 470.80 471.20 477.26 489.59 508.91
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL 4,970.44 4,976.55 4,992.54 5,058.28 5,167.39 5,327.71 5,547.17
- ----------------------------------------------------------------------------------------------------------------------------
[RESTUBBED TABLE CONTINUED FROM ABOVE]
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CAGR CAGR CAGR CAGR CAGR CAGR CAGR
1970-80 1980-90 1990-94 1994-1996 1996-1997 1997-1998 1998-2000
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LOS ANGELES COUNTY 000's
- ------------------ -----
Farm 0.97% 3.30% -3.52% -0.09% -0.01% -0.02% -0.06%
Agricultural Services, Other 5.60% -0.69% 0.47% 0.02% -0.08% -0.07% -0.13%
Mining 2.43% -1.87% -3.55% -0.45% -0.05% -0.06% -0.12%
Construction 1.81% 3.41% -2.39% 0.47% 0.05% 0.02% 0.04%
Manufacturing 1.31% -0.49% -2.65% -0.12% -0.09% -0.09% -0.16%
Transport, Comm., & Public Util 1.63% 1.50% -0.55% 0.25% -0.03% -0.05% -0.09%
Wholesale Trade 3.25% 1.69% -1.60% 0.48% 0.01% -0.02% -0.02%
Retail Trade 2.19% 2.00% -1.16% 0.28% -0.03% -0.05% -0.10%
Finance, Ins., & R.E. 3.19% 2.39% -1.59% 0.14% 0.10% 0.08% 0.15%
Services 4.22% 4.63% -0.38% 0.48% 0.11% 0.08% 0.17%
Federal Civilian Govt. 0.28% -0.02% -0.81% 0.10% 0.12% -0.02% -0.04%
Federal Military Govt. -4.25% 3.76% -4.09% -0.31% -0.16% 0.00% 0.00%
State and Local Govt. 1.95% 1.20% 0.25% 0.14% 0.01% -0.02% -0.03%
- -----------------------------------------------------------------------------------------------------------------
TOTAL 2.48% 2.22% -1.10% 0.28% 0.03% 0.01% 0.03%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EMPLOYMENT STATISTICS
WOODS & POOLE ECONOMICS, INC.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1970 1980 1990 1994 1996 1997 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SOUTHERN CALIFORNIA
- -------------------
Farm 54.67 59.74 57.15 54.72 54.52 54.52 54.48
Agricultural Services, Other 35.38 72.85 96.42 97.12 99.43 99.88 99.90
Mining 19.88 26.30 23.97 18.72 18.26 18.39 18.41
Construction 203.96 307.58 504.76 390.79 414.38 418.30 424.55
Manufacturing 1,084.77 1,368.62 1,427.21 1,153.89 1,161.48 1,167.58 1,161.92
Transport, Comm., & Public Util 242.71 313.76 395.28 385.73 400.02 402.00 402.80
Wholesale Trade 254.60 384.74 536.98 491.95 526.99 533.07 540.30
Retail Trade 799.39 1,129.65 1,527.56 1,442.85 1,503.20 1,511.78 1,518.44
Finance, Ins., & R.E. 410.49 652.07 870.33 774.11 791.02 797.58 813.78
Services 1,070.88 1,779.42 3,052.84 3,065.82 3,246.67 3,277.53 3,351.81
Federal Civilian Govt. 145.57 157.27 173.87 160.04 162.30 163.60 164.68
Federal Military Govt. 273.47 217.70 236.45 196.62 183.72 177.68 177.25
State and Local Govt. 529.54 713.27 848.48 883.66 900.67 903.86 908.63
TOTAL 5,125.31 7,182.97 9,751.30 9,116.02 9,462.66 9,525.77 9,636.95
STATE OF CALIFORNIA
- -------------------
Farm 255.79 281.33 266.40 267.63 267.70 267.99 268.20
Agricultural Services, Other 94.32 204.78 280.14 308.28 318.62 320.75 322.93
Mining 35.58 54.08 56.66 46.87 46.64 47.30 47.90
Construction 364.55 566.24 914.09 737.84 773.06 782.08 791.87
Manufacturing 1,594.49 2,074.06 2,229.43 1,880.76 1,905.25 1,911.43 1,917.40
Transport, Comm., & Public Util 485.33 592.66 722.07 713.90 736.95 739.88 744.35
Wholesale Trade 418.88 628.53 858.25 793.46 837.36 846.85 857.02
Retail Trade 1,379.88 2,003.31 2,699.65 2,624.65 2,720.45 2,741.57 2,765.36
Finance, Ins., & R.E. 721.78 1,140.09 1,453.15 1,333.92 1,362.60 1,380.92 1,400.75
Services 1,823.07 3,052.06 5,117.46 5,235.17 5,516.85 5,609.81 5,709.29
Federal Civilian Govt. 329.58 335.46 365.24 332.41 315.22 310.97 310.61
Federal Military Govt. 467.88 340.25 365.93 289.46 258.61 243.06 243.06
State and Local Govt. 1,053.79 1,421.96 1,700.31 1,778.24 1,812.80 1,824.17 1,840.09
- --------------------------------------------------------------------------------------------------------------------------
TOTAL 9,024.92 12,694.81 17,028.80 16,342.59 16,872.12 17,026.78 17,218.83
- --------------------------------------------------------------------------------------------------------------------------
Percentage Share
SOUTHERN CALIFORNIA & STATE OF CALIFORNIA
- -----------------------------------------
Farm 21.4% 21.2% 21.5% 20.4% 20.4% 20.3% 20.3%
Agricultural Services, Other 37.5% 35.6% 34.3% 31.5% 31.2% 31.1% 30.9%
Mining 55.9% 48.6% 42.3% 39.9% 39.2% 38.9% 38.4%
Construction 55.9% 54.3% 55.2% 53.0% 53.6% 53.5% 53.6%
Manufacturing 68.0% 66.0% 64.0% 61.4% 61.0% 61.1% 60.6%
Transport, Comm., & Public Util 50.0% 52.9% 54.7% 54.0% 54.3% 54.3% 54.1%
Wholesale Trade 60.8% 61.2% 62.6% 62.0% 62.9% 62.9% 63.0%
Retail Trade 57.9% 56.4% 56.6% 55.0% 55.3% 55.1% 54.9%
Finance, Ins., & R.E. 56.9% 57.2% 59.9% 58.0% 58.1% 57.8% 58.1%
Services 58.7% 58.3% 59.7% 58.6% 58.9% 58.4% 58.7%
Federal Civilian Govt. 44.2% 46.9% 47.6% 48.1% 51.5% 52.6% 53.0%
Federal Military Govt. 58.4% 64.0% 64.6% 67.9% 71.0% 73.1% 72.9%
State and Local Govt. 50.3% 50.2% 49.9% 49.7% 49.7% 49.5% 49.4%
- --------------------------------------------------------------------------------------------------------------------------
TOTAL 56.8% 56.5% 57.3% 55.8% 56.1% 55.9% 56.0%
- --------------------------------------------------------------------------------------------------------------------------
<PAGE>
[RESTUBBED TABLE CONTINUED FROM ABOVE]
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
CAGR CAGR CAGR CAGR CAGR CAGR CAGR
2000 1970-80 1980-90 1990-94 1994-1996 1996-1997 1997-1998 1998-2000
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SOUTHERN CALIFORNIA
- -------------------
Farm 54.35 0.89% -0.44% -0.43% -0.04% 0.00% -0.01% -0.02%
Agricultural Services, Other 100.46 7.49% 2.84% 0.07% 0.24% 0.05% 0.00% 0.06%
Mining 18.52 2.84% -0.92% -2.44% -0.25% 0.07% 0.01% 0.06%
Construction 435.50 4.19% 5.08% -2.53% 0.59% 0.09% 0.15% 0.25%
Manufacturing 1,162.36 2.35% 0.42% -2.10% 0.07% 0.05% -0.05% 0.00%
Transport, Comm., & Public Util 405.86 2.60% 2.34% -0.24% 0.36% 0.05% 0.02% 0.08%
Wholesale Trade 554.44 4.22% 3.39% -0.87% 0.69% 0.11% 0.13% 0.26%
Retail Trade 1,536.05 3.52% 3.06% -0.57% 0.41% 0.06% 0.04% 0.12%
Finance, Ins., & R.E. 838.01 4.74% 2.93% -1.16% 0.22% 0.08% 0.20% 0.29%
Services 3,463.14 5.21% 5.55% 0.04% 0.57% 0.09% 0.22% 0.33%
Federal Civilian Govt. 165.13 0.78% 1.01% -0.83% 0.14% 0.08% 0.07% 0.03%
Federal Military Govt. 177.25 -2.25% 0.83% -1.83% -0.68% -0.33% -0.02% 0.00%
State and Local Govt. 917.94 3.02% 1.75% 0.41% 0.19% 0.04% 0.05% 0.10%
TOTAL 9,829.01 3.43% 3.10% -0.67% 0.37% 0.07% 0.12% 0.20%
STATE OF CALIFORNIA
- -------------------
Farm 268.42 0.96% -0.54% 0.05% 0.00% 0.01% 0.01% 0.01%
Agricultural Services, Other 327.41 8.06% 3.18% 0.96% 0.33% 0.07% 0.07% 0.14%
Mining 49.03 4.28% 0.47% -1.88% -0.05% 0.14% 0.13% 0.23%
Construction 811.75 4.50% 4.91% -2.12% 0.47% 0.12% 0.12% 0.25%
Manufacturing 1,928.77 2.66% 0.72% -1.69% 0.13% 0.03% 0.03% 0.06%
Transport, Comm., & Public Util 753.38 2.02% 1.99% -0.11% 0.32% 0.04% 0.06% 0.12%
Wholesale Trade 877.83 4.14% 3.16% -0.78% 0.54% 0.11% 0.12% 0.24%
Retail Trade 2,813.69 3.80% 3.03% -0.28% 0.36% 0.08% 0.09% 0.17%
Finance, Ins., & R.E. 1,440.74 4.68% 2.46% -0.85% 0.21% 0.13% 0.14% 0.28%
Services 5,911.65 5.29% 5.30% 0.23% 0.53% 0.17% 0.18% 0.35%
Federal Civilian Govt. 309.88 0.18% 0.85% -0.94% -0.53% -0.14% -0.01% -0.02%
Federal Military Govt. 243.06 -3.14% 0.73% -2.32% -1.12% -0.62% 0.00% 0.00%
State and Local Govt. 1,872.38 3.04% 1.80% 0.45% 0.19% 0.06% 0.09% 0.17%
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL 17,607.99 3.47% 2.98% -0.41% 0.32% 0.09% 0.11% 0.22%
- ----------------------------------------------------------------------------------------------------------------------------
Percentage Share
SOUTHERN CALIFORNIA & STATE OF CALIFORNIA
- -----------------------------------------
Farm 20.2% -0.06% 0.10% -0.48% -0.04% -0.01% -0.02% -0.03%
Agricultural Services, Other 30.7% -0.53% -0.33% -0.88% -0.09% -0.02% -0.07% -0.08%
Mining 37.8% -1.38% -1.38% -0.57% -0.20% -0.07% -0.12% -0.17%
Construction 53.6% -0.29% 0.16% -0.42% 0.12% -0.02% 0.02% 0.01%
Manufacturing 60.3% -0.30% -0.30% -0.42% -0.06% 0.02% -0.08% -0.06%
Transport, Comm., & Public Util 53.9% 0.57% 0.34% -0.13% 0.05% 0.01% -0.04% -0.04%
Wholesale Trade 63.2% 0.07% 0.22% -0.09% 0.15% 0.00% 0.02% 0.02%
Retail Trade 54.6% -0.27% 0.03% -0.29% 0.05% -0.02% -0.04% -0.06%
Finance, Ins., & R.E. 58.2% 0.06% 0.46% -0.31% 0.00% -0.05% 0.06% 0.01%
Services 58.6% -0.07% 0.23% -0.18% 0.05% -0.07% 0.05% -0.02%
Federal Civilian Govt. 53.3% 0.60% 0.15% 0.11% 0.67% 0.22% 0.08% 0.05%
Federal Military Govt. 72.9% 0.91% 0.10% 0.50% 0.45% 0.29% -0.02% 0.00%
State and Local Govt. 49.0% -0.02% -0.05% -0.04% 0.00% -0.03% -0.03% -0.07%
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL 55.8% -0.04% 0.12% -0.26% 0.05% -0.02 0.00% -0.03%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
from 1998 to 2000 will be moderate at 0.03 percent in Los Angeles County, 0.20
percent in Southern California and 0.22 percent in California.
Minor job losses are projected to occur in agriculture, mining,
manufacturing, transportation, communications, public utilities, wholesale and
retail trade and government. Gains are projected in construction, finance,
insurance, real estate, and services.
EMPLOYMENT SECTORS
The three major employment sectors in Los Angeles County are 1) services;
2) trade, and 3) manufacturing. These sectors are discussed below.
SERVICES
The services sector reported a civilian workforce of 4,204,900 for the
state of California in April of 1998. This figure increased 4.6 percent from
the April 1997 level of 4,018,200. In Los Angeles County, the services sector
employed 1,304,700 as of April 1998, representing a 3.4 percent increase from
the 1997 level. The services sector includes entertainment, healthcare,
lodging, and personal services.
The entertainment industry has experienced significant growth over the
past few years as a result of both the worldwide demand for television/film
products and the level of employment. The entertainment industry has emerged as
a growing source of high wage employment within the Los Angeles area.
In an effort to meet the growing demand for multi-media products and
services, the local entertainment industry has recently been investing in new
production facilities in Hollywood, West Los Angeles, and the cities of
Glendale and Burbank. Leading companies such as Walt Disney Company, MCA, Sony
Pictures, SKG Dreamworks Company, Warner Brothers and NBC Studios are creating
multi-media divisions which will increase the demand for computer/high
technology-oriented positions in the Los Angeles area. The level of
entertainment employment is expected to increase due to the strong
international demand for film products and the ongoing evolution of the cable
television industry.
The demand for production studio space has become so substantial in
recent years that existing facilities were not sufficient for the film
industry. This industry's expansion was constrained by the limited available
land in the Hollywood/Glendale/Burbank area which has traditionally attracted
entertainment companies. Shamrock Holdings, controlled by Roy Disney, recently
acquired a 22.5-acre site in Manhattan Beach that was formerly owned by TRW.
The site is located on Rosecrans Avenue and will be developed with a new motion
picture studio in four phases. This incursion of the entertainment industry to
the South Bay is expected to bring high-paying employment opportunities to this
area.
Within the services sector is the health services segment. The Los
Angeles area is home to some of the most advanced medical teaching facilities
in the country including Cedars-Sinai Medical Center, the City of Hope, and the
University of Southern California and the University of California at Los
Angeles Schools of Medicine. Reports by industry experts suggest that the Los
Angeles area has an excess of local hospital facilities, which has resulted in
consolidation within the industry and/or the closure of under-performing
- -------------------------------------------------------------------------------
7
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
hospitals. This trend is expected to continue over the next few years.
According to the California State Employment Development Department, health
services employment in Los Angeles County totaled 291,100 jobs as of April
1998, up 13.6 percent from a year ago.
TRADE
The trade sector consists of both wholesale and retail trade. Employment
within this sector has been relatively stable over the past several years, in
both total number employed and in its percentage of employment within the
county.
As discussed previously, Los Angeles County is considered to be a very
attractive retail market on a nationwide basis as it compares favorably to
other metropolitan areas in terms of total population, total effective buying
income, and total retail sales. The retail employment sector experienced an
increase in the number of jobs during the past year, with total employment
increasing in both wholesale and retail. The county's retail trade employment
was 597,900 in April 1998, up 2 percent from 586,300 in April 1997. Wholesale
trade increased its total workforce from 263,000 in April 1997 to 270,000 in
April 1998, an increase of 2.2 percent.
One of the primary catalysts for growth within the trade sector has been
the increased volume of international trade. The value of imports and exports
passing through the Los Angeles Customs District, which includes the Port of
Los Angeles, the Port of Long Beach, and Los Angeles International Airport,
reached $165 billion in 1995. This is an increase of nearly 15 percent from
1994. The Los Angeles Customs District is the largest customs district in the
country in terms of the dollar value of annual two-way trade. Presented below
are the freight volumes for the Los Angeles/Long Beach Ports and Los Angeles
International Airport.
FREIGHT VOLUMES FOR LOS ANGELES AREA PORTS
HISTORICAL 1985-1997 (IN TONS)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
L.A. INT'L.
LONG BEACH HARBOR LOS ANGELES HARBOR AIRPORT
-------------------------------------------------------------------
IMPORT EXPORT IMPORT EXPORT TOTAL
YEAR (000'S) (000'S) (000'S) (000'S) AIRFREIGHT
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1985 39,954 17,055 22,426 23,113 784,064
--------------------------------------------------------------------------
1986 42,011 17,300 34,128 20,820 865,862
--------------------------------------------------------------------------
1987 44,796 18,801 37,373 23,960 1,003,249
--------------------------------------------------------------------------
1988 49,017 19,873 41,010 25,200 1,058,919
--------------------------------------------------------------------------
1989 53,562 21,200 43,097 26,026 1,099,974
--------------------------------------------------------------------------
1990 50,587 21,811 44,151 26,909 1,131,119
--------------------------------------------------------------------------
1991 53,000 23,124 44,596 26,314 1,095,580
--------------------------------------------------------------------------
1992 48,241 23,093 40,931 26,367 1,202,317
--------------------------------------------------------------------------
1993 54,001 25,009 45,137 23,527 1,288,503
--------------------------------------------------------------------------
1994 59,567 27,498 43,439 21,578 1,703,445
--------------------------------------------------------------------------
1995 58,882 32,437 58,762 22,359 1,760,995
--------------------------------------------------------------------------
1996 67,148 32,329 N/A N/A 1,895,754
--------------------------------------------------------------------------
1997 73,369 31,372 N/A N/A 2,064,897
--------------------------------------------------------------------------
SOURCE: LONG BEACH AND LOS ANGELES PORT AUTHORITIES, AND LOS ANGELES
DEPARTMENT OF AIRPORTS
</TABLE>
- -------------------------------------------------------------------------------
8
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
The port operators' focus on technological advancements such as larger
cargo cranes and dockside rail connections have been significant factors behind
the growth in international trade through the Ports of Los Angeles and Long
Beach. The proposed development of Los Angeles County's Alameda Corridor is
another example of the area's commitment to improving port efficiency. The
Alameda Corridor will be a rail service from the ports to downtown Los Angeles
with connections to the vast rail system in Southern California.
MANUFACTURING
Manufacturing has historically provided a strong base for the Los Angeles
area economy. The county maintains its position as the nation's largest
manufacturing center. However, manufacturing employment decreased by 18.8
percent from 1990 to 1995 largely reflecting major cutbacks within the
aerospace/defense industry. Seattle-based Boeing Company's December 1996
acquisition of McDonnell Douglas Corporation, with approximately 10,000
employees in its Long Beach plant, was generally perceived as a positive sign
for employment in Los Angeles County. McDonnell Douglas failed to be awarded a
number of major contracts, while Boeing has been successful in several
significant commercial and defense contracts. Boeing acquired Rockwell
International's aerospace subsidiary, with approximately 14,500 employees in
several plants spread from Canoga Park, in northwestern Los Angeles County, to
Anaheim in central Orange County. With the addition of 27,420 McDonnell Douglas
employees in California and the former Rockwell employees, Boeing had expected
to have approximately 200,000 total employees nationally. However, Boeing's
first quarter results fell below expectation due to competition. In March 1998,
Boeing announced layoffs of approximately 7,000 employees in its Long Beach
plant due to cancellation of the McDonnell Douglas aircraft contracts.
Major defense programs currently in progress in the Los Angeles County
area include the B-2 Bomber (Northrop in Lancaster), the C-17 Transport jet
(McDonnell Douglas in Long Beach), and the F/A18 Fighter aircraft (Northrop in
El Segundo). The county's manufacturing employment has continued to increase
throughout 1997 and 1998. The April 1997 workforce totaled 659,300 and
increased to 680,700 in April 1998. This was an increase of 3.2 percent
according to the Employment Development Department.
One of the more important trends within the manufacturing sector has been
the recent recovery of employment within the "high tech" sector. Hughes
Electronics Corporation and TRW have both achieved significant business gains
in the field of satellite communications that have resulted in increased
employment within the non-defense divisions of these firms. TRW has recently
completed the development and testing phases for a new communications satellite
called Odyssey. This represents the company's first venture into the commercial
satellite business. The project is expected to employ up to 1,000 people at
TRW's Redondo Beach facilities as the company goes into full production over
the next few years.
PUBLIC TRANSPORTATION SYSTEMS
An extensive freeway system, an expanding mass transit system, and
several airport facilities serve the Los Angeles area. The Southern California
freeway network, and
- -------------------------------------------------------------------------------
9
<PAGE>
Non-Residential Construction Activity - Permits Issued & Valuation
New Commercial, Industrial, Other, and Non-residential Alterations & Additions
1990-1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
COUNTY NAME 1990 1991 1992 1993 1994 1995 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LOS ANGELES
Dollar Volume ($1,000S) 3,831,079.4 2,739,595.5 2,135,069.9 2,176,509.5 2,292,921.0 1,993,022.7 2,105,856.8
% Change -- -28.5% 1.9% 1.9% 5.3% -13.1% 5.7%
- ----------------------------------------------------------------------------------------------------------------------------------
VENTURA
Dollar Volume ($1,000S) 234,311.1 178,910.7 154,874.3 179,138.3 157,061.3 187,023.2 186,329.6
% Change -- -23.6% -13.4% 15.7% -12.3% 19.1% -0.4%
- ----------------------------------------------------------------------------------------------------------------------------------
SAN BERNARDINO
Dollar Volume ($1,000S) 695,238.2 560,702.4 290,450.4 302,210.9 368,012.1 411,130.7 397,495.8
% Change -- -19.4% -48.2% 4.0% 21.8% 11.7% -3.3%
- ----------------------------------------------------------------------------------------------------------------------------------
RIVERSIDE
Dollar Volume ($1,000S) 627,363.9 456,336.7 433,448.2 247,483.2 243,470.2 333,724.6 317,540.2
% Change -- -27.3% -5.0% -42.9% -1.6% 37.1% -4.8%
- ----------------------------------------------------------------------------------------------------------------------------------
ORANGE
Dollar Volume ($1,000S) 1,172,651.4 797,468.8 567,121.2 496,729.3 560,556.3 582,712.1 760,810.1
% Change -- -32.0% -28.9% -12.4% 12.8% 4.0% 30.6%
==================================================================================================================================
TOTAL AREA
Dollar Volume ($1,000S) 6,560,644.0 4,733,014.1 3,580,964.0 3,402,071.2 3,622,020.9 3,507,613.3 3,768,032.5
% Change -- -27.9% -24.3% -5.0% 6.5% -3.2% 7.4%
==================================================================================================================================
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Apr. (4 months) 5-YEAR 8-YEAR
1997 1998 AVERAGE+ AVERAGE^
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOS ANGELES
Dollar Volume ($1,000S) 2,237,293.0 938,617.0 2,161,121 2,438,918
% Change 6.2% -- -- --
- -------------------------------------------------------------------------------
VENTURA
Dollar Volume ($1,000S) 200,494.0 65,143.0 182,009 184,768
% Change 7.6% -- -- --
- -------------------------------------------------------------------------------
SAN BERNARDINO
Dollar Volume ($1,000S) 527,367.0 172,578.0 401,243 444,076
% Change 32.7% -- -- --
- -------------------------------------------------------------------------------
RIVERSIDE
Dollar Volume ($1,000S) 516,953.0 1,857,708.0 331,834 397,040
% Change 62.8% -- -- --
- -------------------------------------------------------------------------------
ORANGE
Dollar Volume ($1,000S) 1,079,687.0 344,762.0 696,099 752,217
% Change 41.9% -- -- --
===============================================================================
TOTAL AREA
Dollar Volume ($1,000S) 4,561,794.0 3,378,808.0 3,772,306.4 4,217,019.3
% Change 21.1% -- -- --
===============================================================================
</TABLE>
+ -(5-years) Based on 1993-1997 valuation figures
^ -(8-years) Based on 1990-1990 valuation figures
Source: Construction Industry Research Board
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
specifically the network in the Los Angeles area, is one of the largest systems
in the world. Major north/south freeways in the county include the San Diego
Freeway (I-405), the Golden State Freeway (I-5), the Long Beach Freeway
(I-710), and the San Gabriel River Freeway (I-605). Major east/west freeways in
Los Angeles County include the Pasadena Freeway (I-210), the Ventura Freeway
(SH-101/SH-134), the Santa Monica Freeway (I-10), the Pomona Freeway (SH-60),
and the Artesia Freeway (SH-91).
The Metro System is a multi-modal transit system consisting of freeway
car-pool lanes, buses, light rail lines, and heavy rail lines. At the present
time, seven rail lines are in operation, including three Metro Rail commuter
lines and four Metrolink commuter lines. The Metro Rail lines currently in
operation include the following:
METRO BLUE LINE, extending for 22 miles from downtown Los Angeles to
Long Beach;
METRO RED LINE, extending for approximately 4.4 miles from downtown
Los Angeles to the Westlake/MacArthur Park area; and
METRO GREEN LINE, extending for approximately 20 miles from El Segundo
(near Los Angeles International Airport) eastward to Norwalk in
central Los Angeles County.
The Metrolink system has commuter rail lines in operation from downtown
Los Angeles to: 1) Moorpark in Ventura County (47 miles); 2) Lancaster/Palmdale
in north Los Angeles County (60 miles); 3) San Bernardino (57 miles); 4)
Downtown Riverside (58 miles); and 5) San Diego.
Public bus and train transportation is also available. Bus service is
provided by the Metropolitan Transit Authority and train service is provided by
AMTRAK.
Air transportation is available at several airports in the Los Angeles
area. The Los Angeles International Airport, located in the southwestern
portion of the county, handles domestic and international carriers and is one
of the five busiest airports in the world. Three smaller regional airports also
service the Los Angeles area including: 1) the Burbank-Glendale-Pasadena
Airport in the City of Burbank; 2) the Long Beach Municipal Airport in the City
of Long Beach; and 3) the Van Nuys Airport in the community of Van Nuys in the
West San Fernando Valley.
CONSTRUCTION TRENDS
According to the Construction Industry Research Board (CIRB),
non-residential construction activity (by dollar valuation) for the state of
California was $3.056 billion in April 1998, up 2.4 percent from March and up
14.2 percent from last year. Total construction activity in the state was $11.9
billion for the first four months of this year, an increase of 11.6 percent
compared to the first four months of 1997. For Los Angeles County, the first
four months of this year showed total non-residential construction valuations
of $690.4 million, 22.6 percent of the state's total.
- -------------------------------------------------------------------------------
10
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[NEIGHORHOOD MAP]
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
Presented on the accompanying pages are CIRB's non-residential
construction activity for the various Southern California counties. The permit
activity is from 1990 through the first four months of 1998. For Los Angeles
County, construction activity declined severely in 1991 and 1992 followed by
moderate increases in 1993 and 1994. In 1995, the activity declined 13.1
percent before increasing again in 1996 and 1997. From 1990 to 1997, the
construction activity in the county declined 41.6 percent.
WEST LOS ANGELES
LOCATION OVERVIEW
The subject property is located in the West Los Angeles area of the City
of Los Angeles, an area which comprises one of the more important commercial
and retail centers in the greater Los Angeles region. The West Los Angeles area
is generally bordered by Venice Boulevard to the south, Bundy Drive/Centinella
Avenue to the west, Sunset Boulevard to the north, and La Cienega Boulevard to
the east. West Los Angeles incorporates the relatively affluent residential
cities/communities of Bel Air, Beverly Hills, Brentwood, and West Hollywood, as
well as the important commercial centers of Century City, Santa Monica, and
Westwood Village. The subject area of West Los Angeles is the region bordered
to the north by Olympic Boulevard, to the west by the San Diego Freeway, to the
south by the Santa Monica Freeway, and to the east by Beverly Glen Boulevard.
The subject area is located approximately ten miles west of downtown Los
Angeles, five miles east of the Pacific Ocean at Santa Monica, and seven miles
north of Los Angeles International Airport. The subject area of West Los
Angeles is extensively developed with a mix of residential, commercial, and
retail oriented properties.
WEST LOS ANGELES TRAFFIC MITIGATION
The Department of Transportation (DOT) of the City of Los Angeles
coordinates traffic studies and planning, and released an environmental impact
report (EIR) of a new traffic control plan for West Los Angeles. The new plan
is to replace the current Westwood/West Los Angeles Interim Traffic Control
Ordinance No. 170389 (ICO). The new plan is based on extensive studies of
traffic flows which will require mitigation through different measures
including street improvements, ride sharing, and public transportation plans.
The new traffic control ordinance will include the Century City district, and
is to incorporate a comprehensive plan for traffic circulation throughout the
westside. The ICO currently addresses traffic issues in West Los Angeles,
Westwood, Brentwood, and Pacific Palisades (excludes Century City). The
existing ICO and pending new ordinance assess fees for new development based on
trip generation (Trips under this ordinance are calculated differently from
Trips under the Century City Specific Plan), with revenues to pay for
mitigation measures.
The mitigation measures and the costs for traffic mitigation represent
one of the most significant "hurdles" in the entitlement process for proposed
new developments in the subject's market area. Although a planned development
may conform to existing zoning requirements in terms of use, density, and other
physical characteristics, the existing physical infrastructure, particularly
for vehicular traffic, is not considered sufficient to support major new
projects. Developers of larger-scale projects in this area are almost routinely
required to file Environmental Impact Reports (EIR), which, in addition to many
other factors, must identify negative "significant" traffic impacts from the
proposed project and
- -------------------------------------------------------------------------------
11
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
related projects, and to include measures which will reduce the impacts to an
"insignificant" level.
CONCLUSION
Los Angeles County is the major industrial and commercial center in
Southern California. The region's diversified and highly skilled employment
base has had a significant role in establishing Los Angeles County as the focal
point for industrial and commercial activity in the western United States. The
county has a significant residential population, with household and per capita
income levels comparable or superior to the corresponding figures for the state
of California. Over the past few years, the aerospace/defense industry has
downsized in Los Angeles County while the sectors of entertainment, health
care, and international trade have experienced significant new growth.
After the recessionary conditions of the first portion of this decade,
economic activity in Los Angeles County has improved significantly and is
projected to increase steadily in the foreseeable future. After four
consecutive years of declining prices, the recent increase in home prices in
Los Angeles County is expected to have a favorable impact on business activity
within the county. The current and anticipated expansions by the entertainment,
international trade, and services sectors are projected to increase employment
opportunities within the region. As the economy continues to expand in Los
Angeles County, large scale retail properties like the subject will benefit
from its location within this region.
- -------------------------------------------------------------------------------
12
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
TRADE AREA DEFINED
A retail center's trade area contains people who are likely to purchase
the goods a particular retail center has to offer. These customers are drawn by
a given class of goods and services from a particular tenant mix. A center's
fundamental drawing power comes from the strength of the anchor tenants as well
as the regional and local tenants which complement and support the anchors. A
successful combination of these elements creates a destination for customers
seeking a variety of goods and services while enjoying the comfort and
convenience of an integrated shopping environment.
SCOPE OF THE TRADE AREA
A retail center's sales are traditionally generated from within its
primary trade area, which is typically within reasonably close geographic
proximity to the center. Generally, between 55 and 65 percent of a center's
sales are generated within its primary trade area. The secondary trade area
generally refers to more outlying areas which provide less frequent customers
to the center. Residents within the secondary trade area would be more likely
to shop closer to home due to time and travel constraints. Typically, an
additional 20 to 25 percent of a center's sales will be generated from within
the secondary area. The peripheral trade area refers to more distant areas from
which occasional customers to the shopping center reside. These residents may
be drawn to the center by a particular service or store which is not found
locally such as the subject Nordstrom or Robinson's-May department stores.
Industry experience shows that between 10 and 15 percent of a center's sales
are derived from customers residing outside of the trade area. This potential
is commonly referred to as "in-flow.
In our analysis of the subject we have considered the anchor tenants, the
subject's overall tenant mix, the site and location of the subject center, and
the subject's competitive position in its marketplace.
The primary trade area for an urban regional shopping center of the
subject's size and tenancy usually covers a range from three to ten miles from
the center. Limitations on the extent of the subject's primary and secondary
trade area include the existence of directly competitive regional shopping
centers to the north and east, and the "perceived" physical boundary of the
Santa Monica Mountain range to the north, which provides a physical division
between the San Fernando Valley and West Los Angeles. Although the San Fernando
Valley area is located within roughly a seven- to 10-mile radius of the
subject, the north/south transportation corridors between the Valley and the
West Los Angeles market are more limited and do not provide as direct access as
the east/west corridors within the Valley and the Westside. Although there is
some "crossover" these two areas of Los Angeles are generally considered to
represent separate trade areas.
COMPETITIVE RETAIL SUPPLY
There are several retail centers within the West Los Angeles area retail
market that are considered to compete with the subject property based on the
quality of their anchors, the in-line tenant mix, and the overall shopping
environment. There are 13 regional centers in the area which compete with the
subject property to some degree. These malls are
- -------------------------------------------------------------------------------
13
<PAGE>
RETAIL MARKET ANALYSIS
- ------------------------------------------------------------------------------
summarized in the chart on the accompanying page, and the locations of each
in relation to the subject is shown on the corresponding map.
The subject property, Westside Pavilion, consists of a good quality
regional mall in an excellent westside location. The property competes with
many other retail centers for consumer dollars in the West Los Angeles Area.
The subject property is anchored by Nordstrom and Robinson's-May and provides
a very competitive mix of in-line tenants and amenities for potential patrons
of the center, including a food court, a multi-screen movie theater, and a
Von's Pavilion grocery store. The subject provides an attractive and
convenient shopping environment. The interior design includes distinctive
floor coverings, attractive landscaping in the common areas and the extensive
use of skylights. The west expansion area is three-story open-air
construction wherein most of the current vacant in-line space is located. The
immediate subject area is densely developed with a concentration of
commercial/retail uses, most of which are targeted toward the neighborhood
residents and workday populations. The subject property benefits from good
freeway access to outlying areas by way of the Santa Monica Freeway and the
San Diego Freeway, located about one mile south and west of the subject
respectively.
The subject Nordstrom anchor is not duplicated in any westside mall, with
the next closest Nordstrom located about 11 miles south of the subject at the
South Bay Galleria. The subject's Robinson's-May anchor is duplicated at
Santa Monica Place (5 miles west) and Fox Hills Mall (4 miles south). The
dominant malls in the westside area in terms of sales volumes are Century
City Shopping Center (1.5 miles northeast) and Beverly Center (4 miles
northeast). These two dominant malls somewhat limit the subject's market
penetration to the north and northeast. The trade area to the south,
southwest, and southeast is more extensive, with a primary trade area of at
least five miles.
From a location standpoint, the subject competes most directly with
Century City Shopping Center, Beverly Center, Santa Monica Place and Fox
Hills Mall. From a price point view, the subject competes with the first
three centers named above, plus Sherman Oaks Fashion Square. We have
attempted to illustrate this in the chart below, as requested by the client.
<TABLE>
<CAPTION>
LOCATION
--------------------------------------------------------
PRIMARY SECONDARY
---------------------- --------------------------------
<S> <C> <C> <C>
Century City, Northridge Fashion Center,
PRIMARY Beverly Center, Glendale Galleria,
Santa Monica Place Sherman Oaks Fashion Square,
Galleria at South Bay
PRICE POINT -----------------------------------------------------------------------
Topanga Plaza,
SECONDARY Fox Hills Mall Promenade at Woodland Hills,
Fallbrook
- ---------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------------------------------------
14
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[COMPETITION MAP]
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
COMPETITIVE RETAIL PROPERTIES
WESTSIDE PAVILION
- ------------------------------------------------------------------------------------------------------------------------------------
GLA GLA YEAR MALL REPORTED MILES
PROPERTY NAME/ WITH WITHOUT OPENED/ NUMBER ENCLOSED/ SHOP SALES FROM
LOCATION ANCHORS ANCHORS ANCHORS REN. STORES LEVELS OCCUP. PSF SUBJECT
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Beverly Center Bloomingdale's 900,000 575,000 1982 200 Yes/ 90% $420 4.0 NE
La Cienega & San Vicente Macy's 4
Los Angeles, CA Cineplex Odeon
- ------------------------------------------------------------------------------------------------------------------------------------
2 Beverly Connection General Cinema 254,302 60,207 1988 28 Yes/ 100% $470 4.0 NE
SEC Beverly & Ralph's 2
La Cienega Blvd. Rexall Drugs
Los Angeles, CA The Good Guys
Stroud's
Sport Chalet
- ------------------------------------------------------------------------------------------------------------------------------------
3 Century City Shopping Center AMC Theaters 762,180 320,054 1964/ 142 No/ 99% $540 1.5 NE
Century Park West & Santa Macy's 1987 1
Monica & Constellation Blvds. Gelson's Market
Los Angeles, CA Bloomingdale's
- ------------------------------------------------------------------------------------------------------------------------------------
4 Fallbrook Mall Burlington Coat 1,200,000 651,233 1964 75 Yes/ 88% $200 12.0 NW
West Side of Fallbrook Avenue Factory 1
Between Victory Blvd. & J.C. Penney
Vanowen St. K Mart
Los Angeles (Canoga Park), CA Mervyn's
Target
- ------------------------------------------------------------------------------------------------------------------------------------
5 Fox Hills Mall J.C. Penney 907,921 356,756 1975 144 Yes/ 87% $261 4.0 S
SEC I-405 and Marina Freeway Robinson's-May 3
Culver City, CA Macy's Proposed
4th
- ------------------------------------------------------------------------------------------------------------------------------------
6 Galleria at South Bay Nordstrom 980,722 349,038 1957/ 130 Yes/ 88% $312 11.0 S
SWC Hawthorne Boulevard Robinson's-May 1985 3
and Artesia Boulevard Mervyn's
Redondo Beach, CA General Cinema
- ------------------------------------------------------------------------------------------------------------------------------------
7 Glendale Galleria Macy's 1,390,000 600,725 1976 245 Yes/ 98% $425 10.0 NE
West side of Central Avenue Nordstrom 2
between Broadway and Colorado JC Penney
Street Mervyn's
Glendale, CA Robinson's- May
- ------------------------------------------------------------------------------------------------------------------------------------
8 Northridge Fashion Center Sears 1,501,664 679,921 1971/ 189 Yes/ 80% $304 10.0 NW
West Side of Tampa Avenue Robinson's-May 1995 2
Between Nordhoff & Plummer Macy's
Streets JC Penney
Los Angeles (Northridge), CA Robinson's_May Home
Pacific Theaters
- ------------------------------------------------------------------------------------------------------------------------------------
9 Promenade Mall at Woodland Hills Macy's I 604,780 240,323 1973 91 Yes/ 70% $275 11.0 NW
East Side of Topanga Canyon Blvd. Macy's II 2
Between Oxnard & Erwin Streets AMC Theaters
Los Angeles (Warner
Center/WH), CA
- ------------------------------------------------------------------------------------------------------------------------------------
10 Santa Monica Place Robinson's-May 570,000 300,000 1980/ 162 Yes/ 100% $300 5.0 W
South Side of Broadway at Macy's 1990 3 (minimum)
Third Street
Santa Monica, CA
- ------------------------------------------------------------------------------------------------------------------------------------
11 Sherman Oaks Fashion Square Macy's 857,280 356,745 1963 138 Yes/ 90% $310 7.0 N
South Side of Riverside Drive Bloomingdale's 2
Between Hazeltine and Woodman
Los Angeles (Sherman Oaks), CA
- ------------------------------------------------------------------------------------------------------------------------------------
12 Sherman Oaks Galleria Robinson's-May I 510,000 283,178 1980 92 Yes/ 50% N/A 7.0 N
NWC Sepulveda and Robinson's-May II 3
Ventura Boulevards
Los Angeles (Sherman Oaks), CA
- ------------------------------------------------------------------------------------------------------------------------------------
13 Topanga Plaza Sears 1,033,776 371,864 1964 130 Yes/ 95% $330 12.0 NW
East Side of Topanga Canyon Nordstrom 2
Blvd. Between Victory Blvd. Robinson's-May
& Vanowen St. Montgomery Ward
Los Angeles (Warner
Center/WH), CA
- ------------------------------------------------------------------------------------------------------------------------------------
SUB. Westside Pavilion Nordstrom 755,000 355,000 1985/ 182 Yes/ 90% $373 N/A
W. Pico Blvd. & Westwood Blvd. Robinson's-May 1991 3
Los Angeles, CA Pavilion's
====================================================================================================================================
Totals 12,227,625 5,500,044 1,948 92% $337
(excl. Sherman Oaks Galleria)
====================================================================================================================================
</TABLE>
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #1 THE BEVERLY CENTER
[PICTURE]
LOCATION: Southwest corner of La Cienega Boulevard
and Beverly Boulevard
West Los Angeles, CA
DISTANCE FROM
SUBJECT: 4.0 miles northeast
YEAR OPENED: 1982
TOTAL GLA: 900,000 square feet
ANCHOR/MAJOR TENANTS: Macy's 148,998 SF
Bloomingdales 157,190 SF
Cineplex Odeon N/A
NUMBER OF
SHOPS: 200
PARKING RATIO: 3,000 spaces or 3.34 per 1,000 sf
- -------------------------------------------------------------------------------
15
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SALES PSF: $420
THE BEVERLY CENTER is a 900,000 square foot super-regional mall located
approximately 4.0 miles northeast of the subject, at the southwest corner of La
Cienega Boulevard and Beverly Boulevard in West Los Angeles. La Cienega
Boulevard is a major commercial corridor in the West Los Angeles area, and the
immediately surrounding area contains a significant concentration of
retail/commercial development, including the Beverly Connection specialty
retail center. This mall was completed in 1982 and consists of eight levels.
Levels two through five are dedicated to parking for a total of 3,000 cars.
Specialty, primarily upscale, high-fashion apparel stores are located on levels
six and seven. Level eight consists of a food court and a 15-screen cinema. The
center is anchored by Bloomingdales department store, two Macy's department
stores, and Cineplex Odeon. Additional major tenants include the Hard Rock Cafe
and California Pizza Kitchen on the street level. Beverly Center is reportedly
90 percent leased with approximately 90,000 square feet available. The mall
interior provides an attractive shopping environment with nicely landscaped
common areas, and distinctive floor coverings. The center's in-line tenant mix
is similar if not slightly superior to the subject's in-line tenancy due to the
presence of high end fashion retailers such as Coach, Joan & David, Cacique,
and Bernini Sport. The center has inferior freeway access in comparison to the
subject, as the property is located approximately three miles north of the
Santa Monica Freeway.
- -------------------------------------------------------------------------------
16
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #2 BEVERLY CONNECTION
[PICTURE]
LOCATION: Southeast corner of La Cienega Boulevard
and Beverly Boulevard
West Los Angeles, CA
DISTANCE FROM
SUBJECT: 4.0 miles northeast
YEAR OPENED: 1988
TOTAL GLA: 254,302 square feet
ANCHOR/MAJOR TENANTS: Ralph's 50,000 SF
General Cinema 43,385 SF
The Good Guys! 19,382 SF
Sport Chalet 39,764 SF
Rexall Drugs 20,926 SF
Strouds 20,638 SF
----------
Total 194,095 SF
NUMBER OF
SHOPS: 28
- -------------------------------------------------------------------------------
17
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
PARKING RATIO: 1,500 spaces or 4.75 per 1,000 sf
SALES PSF: $470
BEVERLY CONNECTION is a 254,302 square foot regional shopping center (not a
regional mall) located approximately 4.0 miles northeast of the subject, at the
southeast corner of La Cienega Boulevard and Beverly Boulevard in West Los
Angeles. Beverly Connection is located directly east of Beverly Center Mall
previously discussed. Beverly Connection consists of two components, enclosed
and non-enclosed mall space. There are a total of three buildings at this
center one of which provides two levels of enclosed retail space and the other
buildings are open-air, multi-tenant buildings which have pedestrian bridges
between the two and the center parking structure. The enclosed retail space has
modestly landscaped common areas and provides a less appealing shopping
environment than is offered at the subject property. Beverly Connection
provides a mix of "big box" and specialty retailers, and is anchored by Ralph's
supermarket, General Cinema, Sport Chalet, The Good Guys!, Rexall Drugs, and
Strouds. The center has inferior freeway access in comparison to the subject,
as the property is located approximately three miles north of the Santa Monica
Freeway. Access into the center is poor, and on-site maneuverability is
difficult and confusing due to the high density of this development (approx.
75% site coverage). Despite these factors, the center achieves very high sales
volumes, averaging about $470 per square foot.
The Ralph's supermarket at this center does not benefit from direct exposure to
the adjacent surface streets and is similar to the subject Vons Pavilion. The
center was recently leased to a 100 percent level of occupancy with most rents
in the $30 to $50 per-square-foot range annually. This center provides a very
good quality tenant mix which competes with some of the subject retailers for
the discretionary spending of residents in the West Los Angeles area. However,
overall it provides an inferior shopping environment in comparison to the
subject due to the poor access, high site coverage, and less attractive layout
and design of the improvements.
- -------------------------------------------------------------------------------
18
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #3 CENTURY CITY SHOPPING CENTER
[PICTURE]
LOCATION: Southeast corner of Santa Monica Boulevard
and Century Park West
West Los Angeles, CA
DISTANCE FROM
SUBJECT: 1.5 miles northeast
YEAR OPENED: 1964/1987
TOTAL GLA: 762,180 square feet
ANCHOR/MAJOR TENANTS: Macy's 132,614 SF
Bloomingdale's 222,726 SF
Gelson's Market 37,249 SF
AMC Theaters 49,537 SF
----------
Total Anchors 442,126 SF
NUMBER OF
SHOPS: 142
- -------------------------------------------------------------------------------
19
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
PARKING RATIO: 2,831 spaces or 3.9 per 1,000 sf
SALES PSF: $540
CENTURY CITY SHOPPING CENTER is a 762,180 square foot open-air center which
provides a single level of retail space over a multi-level below grade parking
garage and is located approximately 1.5 miles northeast of the subject, at the
southeast corner of Santa Monica Boulevard and Century Park Avenue in the
Century City area of West Los Angeles. The center is located adjacent to the
mid-rise and high-rise office buildings of the Century City office submarket.
The center is anchored by Macy's, Gelson's Market, a 14-screen AMC Theaters
complex, and a Bloomingdale's department store. The center provides a very
attractive shopping environment with nicely landscaped common areas. The
in-line tenant mix is slightly superior to the subject's in-line tenancy and
has a comparable percentage of national and/or regional tenants. The center
provides one of the more appealing food courts of the regional or
super-regional shopping centers in the Los Angeles area with a very high
quality mix of tenants and a very attractive indoor and outdoor dining
environment. Access into the center is available from three adjacent surface
streets, including Santa Monica Boulevard, Century Park West, and Constellation
Avenue. The center's current sales level of $540 per square foot of in-line
retail space is the highest level currently achieved in the Los Angeles area
regional malls. Only South Coast Plaza in Orange County, with sales approaching
$600 per square foot, is known to have higher sales per square foot than
Century City mall in all of Southern California.
- -------------------------------------------------------------------------------
20
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #4 FALLBROOK MALL
[PICTURE]
LOCATION: West Side of Fallbrook Avenue
Between Victory Blvd. & Vanowen St.
Los Angeles (Canoga Park), CA
DISTANCE FROM
SUBJECT: 12 miles northwest
YEAR OPENED: 1964
TOTAL GLA: 1,200,000 square feet
ANCHOR/MAJOR TENANTS: Burlington Coat Factory 107,267
J.C. Penney 123,763
K Mart 123,651
Mervyn's 78,595
Target 115,491
-------
Total Anchor: 548,767
NUMBER OF
SHOPS: 75
- -------------------------------------------------------------------------------
21
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
PARKING RATIO: 5,640 spaces or 4.7 per 1,000 sf
SALES PSF: $200
FALLBROOK MALL is a 1,200,000 square foot, one-level, enclosed regional mall
and is located approximately 12 miles northwest of the subject, within the
community of Canoga Park. The center was built in 1964 and was renovated in
1994 after it suffered damage due to the 1994 Northridge Earthquake. After the
earthquake, this center has been realigned as an "off price" shopping center.
The center is anchored by K Mart, Target, Mervyn's, J.C. Penny and Burlington
Coat Factory. Junior anchor tenants include a 10-screen General Cinema, Sav-On,
Blockbuster Video, Super Crown, and Ralph's. Most of these tenants have been
added within the last two years. The center includes a two level food court
area along the easterly main mall entrance. The in-line occupancy for the
center is currently reported at 88 percent. Fallbrook Mall competes more on a
community center level, and is in to the subject in terms of in-line tenant
mix, anchor tenants, and the overall quality shopping environment.
- -------------------------------------------------------------------------------
22
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #5 FOX HILLS MALL
[PICTURE]
LOCATION: Southeast corner of the San Diego
Freeway (I-405) and the Marina
Freeway (SH-90)
Culver City, CA
DISTANCE FROM
SUBJECT: 4.0 miles south
YEAR OPENED: 1975
TOTAL GLA: 891,835 square feet
ANCHOR/MAJOR TENANTS: J.C. Penney 211,000 SF
Robinson's-May 147,845 SF
Macy's 192,500 SF
----------
Total 551,345 SF
NUMBER OF
SHOPS: 144
- -------------------------------------------------------------------------------
23
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
PARKING RATIO: 4.9 per 1,000 sf
SALES PSF: $261
FOX HILLS MALL is more of a family oriented mall, located approximately 4.0
miles south of the subject, at the southeast corner of Slauson and Sepulveda,
just east of I-405 at the Marina Freeway in Culver City. The mall contains a
total of 891,835 square feet, including 551,345 square feet of anchor space.
The mall is a three-level enclosed regional center which lacks the attractive
and upscale shopping environment offered by the subject. The common areas are
somewhat plain and dated. The center is anchored by J.C. Penney,
Robinson's-May, and Macy's. The food court is a popular meeting place for local
young residents. J.C. Penney replaced its former tire and battery outparcel
building with a J.C. Penney Home Store about a year ago. This was completed
simultaneously with the renovation of its department store. The mall ownership
has proposed an expansion of the mall, which would include adding a fourth
level 24-screen multi-plex theater. These plans are still in the preliminary
stages. The vacancy rate for the mall's in-line space is approximately 13
percent and mall sales are reported at about $261 per-square foot.
- -------------------------------------------------------------------------------
24
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #6 GALLERIA AT SOUTH BAY
[PICTURE]
LOCATION: Southwest corner of Hawthorne Boulevard and
Artesia Boulevard, Redondo Beach, CA
DISTANCE FROM
SUBJECT: 11.0 miles south
YEAR OPENED: 1957/85
TOTAL GLA: 980,722 square feet
ANCHOR/MAJOR TENANTS: Robinson's-May 334,896 SF
Nordstrom 148,778 SF
General Cinema 64,010 SF
Mervyn's 84,000 SF
----------
Total 631,684 SF
NUMBER OF
SHOPS: 130
PARKING RATIO: 5,814 spaces or 6.32 per 1,000 sf
- -------------------------------------------------------------------------------
25
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SALES PSF: $312
GALLERIA AT SOUTH BAY is located approximately 11.0 miles south of the subject,
at the southwest corner of Hawthorne Boulevard and Artesia Boulevard in Redondo
Beach. The center is located approximately one half mile west of the San Diego
Freeway. The surrounding area is extensively developed with commercial and
retail properties, as Hawthorne Boulevard is one of the premier commercial
corridors in the Los Angeles area and Artesia Boulevard is a well-traveled
traffic artery in the local area. The center is bordered by and has access from
three adjacent surface streets, including Hawthorne Boulevard, Artesia
Boulevard, and Kingsley Avenue. Parking is provided in a multi-level parking
structure and surface level spaces. The 980,722 square foot mall provides three
levels of retail space and is fully enclosed. The mall interior provides a
similar shopping environment in comparison to the subject, with attractive
floor coverings, extensive common area landscaping, and comparable access to
and from the mall parking areas into the center. The center is anchored by
Nordstrom, Robinson's-May, and Mervyn's. The mall just completed an expansion,
which included the addition of a 64,010 square foot 16 screen General Cinema.
The in-line tenant mix is similar to the subject's in terms of quality, and
includes several retailers which are not located at the subject such as Ralph
Lauren/Polo, the Sharper Image, Abercrombie & Fitch, and Eddie Bauer. The
vacancy rate for the in-line space was reported at 12.0 percent, with sales of
about $312 per square foot. Rental rates on recent leases range from $16 to
$57/sf, averaging about $28/sf.
- -------------------------------------------------------------------------------
26
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #7 GLENDALE GALLERIA
[PICTURE]
LOCATION: West Side of Central Avenue Between
Broadway and Colorado Street
Glendale, CA
DISTANCE FROM
SUBJECT: 10 miles northeast
YEAR OPENED: 1976
TOTAL GLA: 1,390,000 square feet
ANCHOR/MAJOR TENANTS: Robinson's-May 173,574
Macy's 189,958
Nordstrom 140,806
J.C. Penney 198,150
Mervyn's 86,787
-------
Total Anchor: 789,275
NUMBER OF
SHOPS: 245
- -------------------------------------------------------------------------------
27
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
PARKING RATIO: 6,255 spaces or 4.5 per 1,000 sf
SALES PSF: $425
GLENDALE GALLERIA is located approximately 10 miles northeast of the subject,
within the community of Glendale. The 1,390,000 square foot mall provides two
levels of retail space and is fully enclosed. This higher successful regional
mall is anchored by Robinson's-May, Macy's, Nordstrom, J.C. Penney and
Mervyn's. The mall also provides a food court which has a very competitive mix
of tenants. The center benefits from its excellent location in the north
central Los Angeles area, and does not compete directly with the subject. The
center is of similar quality and appeal, and the in-line tenant mix is
comparable to the subject's. The occupancy rate was reported at 98 percent,
with current sales of $425 per square foot of mall shop GLA.
- -------------------------------------------------------------------------------
28
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #8 NORTHRIDGE FASHION CENTER
[PICTURE]
LOCATION: West Side of Tampa Avenue Between
Nordhoff & Plummer Streets
Los Angeles (Northridge), CA
DISTANCE FROM
SUBJECT: 10 miles northwest
YEAR OPENED: 1971/1995
TOTAL GLA: 1,501,664 square feet
ANCHOR/MAJOR TENANTS: 2 Robinson's-May 182,500
Macy's 189,650
Sears 267,933
J.C. Penney 181,660
-------
Total 821,743
NUMBER OF
SHOPS: 189
- -------------------------------------------------------------------------------
29
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
PARKING RATIO: 7,752 spaces or 5.2 per 1,000 sf
SALES PSF: $304
NORTHRIDGE FASHION CENTER is located approximately 10 miles northwest of the
subject, on the west side of Tampa Avenue between Nordhoff & Plummer Streets in
the community of Northridge. The 1,501,664 square foot mall provides three
levels of retail space and is fully enclosed. The center is anchored by
Robinson's-May, Robinson's-May Home Store, Macy's, Sears, and J.C. Penny. The
center was nearly destroyed during the 1994 Northridge Earthquake, and has
since been refurbished. The current occupancy is 80 percent and store sales are
reported at $304 per square foot.
The north end of the mall is currently being redeveloped into an entertainment
wing. This will include a 52,000 square foot Pacific Theater, (under
construction) several restaurants and small shops. Management is also in
negotiation with Borders Books and Good Guys. This construction is reflected in
the square footage reported above.
- -------------------------------------------------------------------------------
30
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #9 PROMENADE AT WOODLAND HILLS
[PICTURE]
LOCATION: East side of Topanga Canyon Boulevard
Between Oxnard and Erwin Streets
Los Angeles, CA
DISTANCE FROM
SUBJECT: 11 miles northwest
YEAR OPENED: 1973
TOTAL GLA: 604,780 square feet
ANCHOR/MAJOR TENANTS: Macy's I N/A
Macy's II N/A
AMC 16 Theater N/A
NUMBER OF
SHOPS: 91
PARKING RATIO: 2,963 spaces or 4.9 per 1,000 sf
- -------------------------------------------------------------------------------
31
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SALES PSF: $275
THE PROMENADE AT WOODLAND HILLS is located approximately 11 miles northwest of
the subject, on the east side of Topanga Canyon Boulevard between Oxnard and
Erwin Streets in Los Angeles. The 604,780 square foot mall provides two levels
of retail space and is fully enclosed. The center is anchored by two Macy's
department stores and a AMC 16 Theater. The AMC Theater opened in 1996 on the
Saks site and represents the third anchor for the mall. The Macy's stores were
formerly operated as Bullock's and I. Magnin. The main mall interior was
recently refurbished, and is very high quality and attractive. However, the
anchor draw is very weak, and mall shop sales volume and occupancy has suffered
as a result. Fashion retailers within the center include Ann Taylor, Brooks
Brothers, Express Compagnie, Victoria's Secret, 818 Freight, and Laura Ashley.
The entertainment focus of the AMC Theater is reportedly not a significant draw
to the center. There is a good quality food court located on the second level
of the mall and is referred to as the Promenade Cafes. The food court was
completed and opened in the summer of 1996.
- -------------------------------------------------------------------------------
32
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #10 SANTA MONICA PLACE
[PICTURE]
LOCATION: South side of Broadway at
Third Street
Santa Monica, CA
DISTANCE FROM
SUBJECT: 5.0 miles west
YEAR OPENED: 1980
TOTAL GLA: 570,000 square feet
ANCHOR/MAJOR TENANTS: Robinson's-May N/A
Macy's N/A
NUMBER OF
SHOPS: 162
PARKING RATIO: 2,020 spaces or 3.54 per 1,000 sf
- -------------------------------------------------------------------------------
33
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SALES PSF: $300+
SANTA MONICA PLACE is located approximately 5.0 miles west of the subject, at
the northwest corner of 4th Street and Colorado Boulevard in Santa Monica. The
center is located approximately one quarter mile north of the Santa Monica
Freeway which merges with and becomes Pacific Coast Highway (Highway 1) near
the Pacific Ocean. The surrounding area is extensively developed with
commercial and retail properties. The center is bordered by and has access from
four adjacent surface streets, including 4th Street, Colorado Boulevard,
Broadway Avenue, and 2nd Street. Parking is provided in multi-level parking
garages located at the east and west ends of the mall, and the parking is free
of charge. The 570,000 square foot mall provides three levels of retail space
and is fully enclosed. The mall interior provides a very similar shopping
environment in comparison to the subject, with attractive floor coverings,
common area landscaping, and comparable access to and from the mall parking
areas into the center. The center is anchored by Robinson's-May and Macy's, and
a free-standing Sears department store is located across Colorado Boulevard
from the mall but is not part of the mall property. The mall also provides a
food court which has a very competitive mix of tenants and which captures a
significant volume of business generated by the patrons of the adjacent Third
Street Promenade retail district. The in-line tenant mix is very comparable to
the subject's in-line tenancy, and the shops have similar quality storefronts
and interior buildouts. The occupancy rate is reported at 100 percent. Overall,
the center provides a comparable shopping environment to the subject.
- -------------------------------------------------------------------------------
34
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #11 SHERMAN OAKS FASHION SQUARE
[PICTURE]
LOCATION: South side of Riverside Drive
Between Hazeltine and Woodman
Los Angeles (Sherman Oaks), CA
DISTANCE FROM
SUBJECT: 7.0 miles north
YEAR OPENED: 1963
TOTAL GLA: 857,280 square feet
ANCHOR/MAJOR TENANTS: Bloomingdale's 220,000
Macy's 280,535
NUMBER OF
SHOPS: 138
PARKING RATIO: 5,638 spaces or 5.2 per 1,000 sf
- -------------------------------------------------------------------------------
35
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SALES PSF: $310
SHERMAN OAKS FASHION SQUARE is a two-level enclosed regional mall and is
located at the southeast corner of Riverside Drive and Hazeltine Avenue, in
Sherman Oaks, California. The center was originally constructed in 1963, and
renovated and/or expanded in 1977, 1990, and 1994 (to repair earthquake
damage,) in addition to a $4.5 million refurbishment completed in 1998. The
center is comprised of the enclosed mall stores containing a total gross
leasable area of 356,745 square feet, and two anchor department stores (Macy's
and Bloomingdale's,) totaling 505,535 gross leasable square feet. The total
center comprises a gross leasable area of 857,280 square feet. The mall
interior provides a similar shopping environment in comparison to the subject,
with attractive floor coverings and common area landscaping. This center is
currently about 90 percent occupied with reported sales per square foot of
$310.
- -------------------------------------------------------------------------------
36
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #12 SHERMAN OAKS GALLERIA
[PICTURE]
LOCATION: Northwest Corner of Sepulveda
and Ventura Boulevards
Los Angeles (Sherman Oaks), CA
DISTANCE FROM
SUBJECT: 7.0 miles north
YEAR OPENED: 1980
TOTAL GLA: 510,000 square feet
ANCHOR/MAJOR TENANTS: Robinson's-May I 127,747
Robinson's-May II 99,075
NUMBER OF
SHOPS: 92
PARKING RATIO: 6,018 spaces or 11.8 per 1,000 sf
- -------------------------------------------------------------------------------
37
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SALES PSF: N/A
SHERMAN OAKS GALLERIA is a 510,000 square foot enclosed regional mall located
on the northwest corner of Sepulveda and Ventura Boulevards in the community of
Sherman Oaks near the confluence of the I-405 and 101 Freeways. The center was
originally developed in 1980 and remodeled in 1993. The center is a portion of
a larger mixed-use development including an adjacent garden office building and
office tower. The high traffic levels at this intersection and the monitored
parking structure combine for poor overall access to the mall.
The mall is anchored by two Robinson's-May department stores with three levels
each. In addition to the department store anchors, the mall includes a 5-screen
Pacific Theaters on the third level in addition to a food court. The center is
only about 50 percent occupied. According to the mall management, the new owner
intends to redevelop the regional center. Plans are still in the beginning
stages, however, some buildings will be added and some portions of the existing
structure will be demolished. The preliminary plans include a new theater and
several sit-down restaurants. Portions of the site will be redeveloped to
office use.
- -------------------------------------------------------------------------------
38
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE CENTER #13 TOPANGA PLAZA
[PICTURE]
LOCATION: East side of Topanga Canyon Blvd.
Between Victory Blvd. & Vanowen Street
Los Angeles, CA
DISTANCE FROM
SUBJECT: 12 miles northwest
YEAR OPENED: 1964
TOTAL GLA: 1,033,776 square feet
Robinson's-May 222,886
Sears 157,286
Nordstrom 149,030
Montgomery-Ward 132,710
-------
Total Anchor 661,912
NUMBER OF
SHOPS: 130
- -------------------------------------------------------------------------------
39
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
PARKING RATIO: 5,479 spaces or 5.3 per 1,000 sf
SALES PSF: $330
TOPANGA PLAZA is a two-level super-regional mall located about two blocks north
of the Promenade at Woodland Hills discussed previously. The center is anchored
by four department stores including Nordstrom and a new Sears. The Sears opened
on November 2, 1996. Topanga Plaza is more of a value-oriented family mall
compared to the merchandising/tenant mix of the subject. The vacancy rate was
reported at 5 percent for the in-line space with sales of $390 per square foot.
- -------------------------------------------------------------------------------
40
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
GLA PER CAPITA
The data presented summarizes the extent of existing retail development
inside the subject's potential trade area. According to the International
Council of Shopping Centers, average shopping center GLA per capita for the
United States and State of California is about 19.23+/- and 20.34+/- square
feet, respectively, based upon 1996 Census Data. Figures reported by the
National Research Bureau in the April 1998 edition of Shopping Centers Today
indicate similar results for 1997 year-end, of 19.57 for the U.S. and 20.61 for
the State of California. For shopping centers "Over 400,000" square feet, the
U.S. has a per capita figure of about 5.59+/- square feet and the State of
California has a per capita figure of 6.25.+/- square feet.
Based upon our previous survey of major retail developments, we have
calculated total existing retail inventory of competing malls in the region to
be approximately 12,227,625+/- square feet including the subject.
The 10-mile 1997 population estimate of 2,215,488 indicates a mall GLA per
capita figure of 5.52+/- square feet. This figure is slightly overstated, as it
includes mall GLA outside the 10-mile radius. This figure is below the State
level of 6.25 square feet and the National level of 5.59 square feet for
centers over 400,000 square feet. As discussed, this figure only recognizes
permanent population and disregards tourist and transit traffic moving by the
site.
On balance, we believe that, in light of these industry benchmarks and
observations, it would appear that the population supports the retail supply.
ANCHOR ALIGNMENT
The subject mall is anchored by two department stores including
Robinson's-May and Nordstrom. Provided below is a profile of each department
store.
ROBINSON'S-MAY
May Department Stores Company is one of the leading department store
operators in the United States with 365 department stores in 8 department
store divisions and presence in 30 states and Washington D.C. The company
operates under the names of Lord & Taylor, Foley's, Robinsons-May,
Filene's, Hecht's/Strawbridge's, Kaufmann's, Famous-Barr and Meier &
Frank.
For 1996, The May Company achieved its 22nd consecutive year of record
sales and earnings per share. Sales reportedly increased nearly 11.1
percent, with comp-store sales increasing by 4.3 percent, one of the best
performances among major department store companies in 1996. Total sales
reached $11.5 billion as May opened 28 department stores, 13 of which were
acquired, bringing the company to a year-end total of 365 stores. The 28
stores reportedly added 5.5 million square feet of selling space. The 13
acquired stores were former Strawbridge's units in the Greater
Philadelphia area,
- -------------------------------------------------------------------------------
41
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
bringing the company's total Strawbridge's operation to 21 stores
(all operated under the Hecht's division). In addition, the company
remodeled 22 stores in 1996 totaling 1.8 million square feet.
<TABLE>
<CAPTION>
==========================================================================
THE MAY COMPANY
==========================================================================
YEAR ENDED 1993 1994 1995 1996
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales (000) $9,010,000 $9,748,000 $10,484,000 $11,650,000
--------------------------------------------------------------------------
No. Stores at Yr.-End 301 314 346 365
--------------------------------------------------------------------------
Sales/Store (000) $29,977 $31,080 $30,367 $31,918
--------------------------------------------------------------------------
Building Area Sq/Ft (000) 49,380 51,977 57,640 62,116
--------------------------------------------------------------------------
Comp.Sales/Selling Sq/Ft $191 $200 $201 $201
--------------------------------------------------------------------------
Sales Growth 6.7% 8.2% 7.7% 10.9%
--------------------------------------------------------------------------
Comp.Store Sales Growth 5.2% 5.4% 2.5% 4.3%
--------------------------------------------------------------------------
</TABLE>
Also in 1996, the company spun-off the 4,500+/- unit Payless ShoeSource
chain to shareholders. On May 6, 1996, approximately 40 million shares of
common stock of Payless ShoeSource, Inc. were distributed, allowing May to
focus solely on its department store business. For 1997, May plans to open
13 new stores, adding some 2.0 million square feet of selling space to
their operations. Over the five year period 1997-2001, May plans to add
100 new stores totaling 15.0 million square feet.
Provided below is a summary of net retail sales, sales per square foot,
building area square footage, and number of stores for the eight
department store operating companies.
<TABLE>
<CAPTION>
===========================================================================================
MAY DEPARTMENT STORES COMPANY
===========================================================================================
BUILDING AREA
NET RETAIL SALES PER SQUARE FOOTAGE NUMBER OF
SALES IN MILLIONS SQUARE FOOT IN THOUSANDS STORES
-------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lord & Taylor $ 1,718 $ 1,574 $241 $233 7,473 7,131 59 57
- -------------------------------------------------------------------------------------------
Foley's 1,801 1,693 180 180 10,603 9,896 55 51
- -------------------------------------------------------------------------------------------
Robinsons-May 1,751 1,562 185 170 9,808 9,568 54 53
- -------------------------------------------------------------------------------------------
Hecht's 2,159 1,650 193 207 12,787 10,455 71 62
- -------------------------------------------------------------------------------------------
Kaufmann's 1,447 1,394 191 201 7,968 7,747 47 46
- -------------------------------------------------------------------------------------------
Filene's 1,364 1,261 232 236 6,255 5,884 40 39
- -------------------------------------------------------------------------------------------
Famous-Barr 1,022 983 201 201 5,454 5,189 31 30
- -------------------------------------------------------------------------------------------
Meier & Frank 388 367 225 213 1,768 1,770 8 8
- -------------------------------------------------------------------------------------------
Total Dept.
Stores $11,650 $10,484 $201 $201 62,116 57,640 365 346
- -------------------------------------------------------------------------------------------
Net retail sales represent sales of stores open at the end of 1996.
Sales per square foot is calculated on total revenues and average gross retail square
footage.
Building area represents gross retail square footage of stores open at the end of the
period presented.
===========================================================================================
</TABLE>
- -------------------------------------------------------------------------------
42
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
Composite sales per square foot by reporting year were as follows:
<TABLE>
<CAPTION>
===================================================
TOTAL SALES PER SQUARE FOOT
---------------------------------------------------
YEAR SALES
---------------------------------------------------
<S> <C>
1990 $172
---------------------------------------------------
1993 $191
---------------------------------------------------
1994 $200
---------------------------------------------------
1995 $201
---------------------------------------------------
1996 $201
---------------------------------------------------
CAGR 1990-96 2.6%
---------------------------------------------------
</TABLE>
From the above we see that total department store sales per square foot
were flat between 1995 and 1996 at $201 per square foot. Comparable or
same store growth was, however, reported to be 4.3 percent, as compared to
2.5 percent (1995) and 5.4 percent (1994). Overall, the most productive
chain is now Lord & Taylor at $241 per square foot. The greatest change
was seen in The Robinson's-May division (up 8.8 percent) to $185 per
square foot.
Standard & Poor's currently ranks the company "A+"; Moody's ranking is
"A2", while Value Line is "B++".
NORDSTROM
Nordstrom, Inc. is a medium-to-upscale retailer, operating specialty,
upscale departments stores across the U.S. which primarily sell full lines
of apparel, shoes, and accessories for women, men, and children. As of
January 31, 1997, Nordstrom operated 62 full-line department stores and 20
clearance and off-price stores ("Nordstrom Rack") stores in sixteen
states. The company also operates a mens specialty boutique in New York
under the name Faconnable. The company launched its direct sales division
with its first catalog mailing in January 1994. Total store square footage
equaled 11.75 million, with average sales for company-operated stores
reported to be $377 per square foot, down 1.3 percent but nearly twice
that of the average department store. Company-wide sales for 1996 were
approximately $4.45 billion, equal to $53.65 million per unit. Overall,
total sales grew 8.3 percent from 1995, with same-store sales growing by
.6 percent, reversing a .7 percent decline in 1995. Sales growth from
new-store operations showed increases of 7.0 percent.
- -------------------------------------------------------------------------------
43
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=====================================================================
NORDSTROM, INC.
=====================================================================
YEAR ENDED 1993 1994 1995 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales (000) $3,589,938 $3,894,478 $4,113,517 $4,453,063
---------------------------------------------------------------------
No. Stores at Yr.-End 74 76 78 83
---------------------------------------------------------------------
Sales/Store (000) $48,513 $51,243 $52,737 $53,651
---------------------------------------------------------------------
Selling Sq/Ft (000) 9,282 9,998 10,713 11,754
---------------------------------------------------------------------
Calculated $387 $389 $384 379
Sales/Sq/Ft
---------------------------------------------------------------------
Reported Sales/Sq/Ft $383 $395 $382 377
---------------------------------------------------------------------
Sales Growth 4.9% 8.5% 5.6% 8.3%
---------------------------------------------------------------------
Comp.Store Sales 2.7% 4.4% (0.7%) .6%
Growth
---------------------------------------------------------------------
New Store Sales 2.2% 4.1% 6.3% 7.0%
Growth
---------------------------------------------------------------------
</TABLE>
During 1996 the company opened 5 new stores totaling 1,041,000 square
feet. 1997 plans opening three full line stores in Cleveland, Long Island
and Hartford, and 4 off-price stores with plans for 1998 and beyond
including expansions in both existing as well as several new markets. The
company also plans to open a new flagship store in downtown Seattle.
Standard & Poor's rates Nordstrom "A-"; Moody's ranks the company "A2",
while Value Line rates Nordstrom's financial strength "B++".
TRADE AREA DEMOGRAPHICS
We analyzed the demographic and economic characteristics within 3-, 5-,
and 10-mile radii from the subject property. The 5-mile radius represents the
primary trade area with the 10-mile radius encompassing most of the secondary
trade area for the subject mall considering the subject tenant mix and the
availability of comparable retail tenants in the surrounding area.
POPULATION
Once the market has been established, the focus of our analysis centers on
the statistical data of the trade area, including population. Equifax National
Decision Systems (ENDS) provides historical, current and forecasted population
estimates for the trade area. Patterns of development density and migration are
reflected in the current levels of population estimates.
Between 1990 and 1997, ENDS reports that the population within the trade
area (10-mile radius) increased by 44,776 residents to 2,215,488, reflecting a
growth rate of 0.29 percent per year. Through 2002, the trade area is expected
to experience increased growth to 2,286,462 people, which equals compounded
annual growth of 0.63 percent. This growth rate is slightly lower than the rate
projected for the county at 0.74 percent per year over the next five years and
the state at 1.07 percent.
- -------------------------------------------------------------------------------
44
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
DEMOGRAPHIC STATISTICS
WESTSIDE PAVILION
CUSHMAN & WAKEFIELD, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
3-MILE 5-MILE 10-MILE LOS ANGELES STATE OF UNITED
RADIUS RADIUS RADIUS COUNTY CALIFORNIA STATES
====================================================================================================================================
- -----------------------------------
POPULATION STATISTICS
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
1980 265,756 602,150 1,916,628 7,477,507 23,667,910 226,545,856
1990 289,763 638,916 2,170,712 8,863,164 29,760,022 248,709,872
1997 296,406 649,598 2,215,488 9,210,790 32,015,178 266,798,176
2002 314,782 670,117 2,286,462 9,555,105 33,761,848 278,178,944
COMPOUND ANNUAL CHANGE
1980 - 1990 0.87% 0.59% 1.25% 1.71% 2.32% 0.94%
1990 - 1997 0.32% 0.24% 0.29% 0.55% 1.05% 1.01%
1997 - 2002 1.21% 0.62% 0.63% 0.74% 1.07% 0.84%
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------
HOUSEHOLD STATISTICS
- -----------------------------------
1980 123,997 238,140 823,934 2,730,469 8,629,867 80,389,688
1990 132,131 295,743 852,759 2,989,552 10,381,206 91,947,408
1997 136,517 302,848 867,783 3,171,862 11,505,599 101,517,136
2002 140,654 309,909 885,201 3,331,065 12,239,233 107,281,800
COMPOUND ANNUAL CHANGE
1980 - 1990 0.64% 2.19% 0.34% 0.91% 1.86% 1.35%
1990 - 1997 0.47% 0.34% 0.25% 0.85% 1.48% 1.42%
1997 - 2002 0.60% 0.46% 0.40% 0.98% 1.24% 1.11%
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------
AVERAGE HOUSEHOLD INCOME
- -----------------------------------
1990 $59,702 $60,512 $48,900 $47,252 $46,247 $38,453
1997 $87,671 $86,778 $73,136 $69,128 $66,166 $55,443
2002 $119,934 $118,336 $100,599 $91,916 $85,886 $71,098
COMPOUND ANNUAL CHANGE
1990 - 1997 5.64% 5.29% 5.92% 5.59% 5.25% 5.37%
1997 - 2002 6.47% 6.40% 6.58% 5.86% 5.36% 5.10%
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------
PER CAPITA INCOME STATISTICS
- -----------------------------------
1990 $27,696 $28,374 $19,465 $16,149 $16,409 $14,420
1997 $41,406 $41,145 $28,990 $24,190 $24,178 $21,272
2002 $54,822 $55,821 $39,511 $32,633 $31,724 $27,797
COMPOUND ANNUAL CHANGE
1990 - 1997 5.91% 5.45% 5.86% 5.94% 5.69% 5.71%
1997 - 2002 5.77% 6.29% 6.39% 6.17% 5.58% 5.50%
====================================================================================================================================
SOURCE: Equifax National Decision Systems
====================================================================================================================================
</TABLE>
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[WESTSIDE PAVILION
LOS ANGELES, CALIFORNIA
3, 5 & 10 MILE RADII]
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[WESTSIDE PAVILION
LOS ANGELES, CALIFORNIA
3, 5 & 10 MILE RADII]
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
HOUSEHOLDS
A household consists of all the people occupying a single housing unit.
While individual members of a household purchase goods and services, these
purchases actually reflect household needs and decisions. Thus, the household
is a critical unit to be considered when reviewing market data and forming
conclusions about the trade area as it impacts the retail center.
National trends indicate that the number of households are increasing at a
faster rate than the growth of the population. Several noticeable changes in
the way households are being formed have caused the acceleration in this
growth, specifically:
o The population is living longer on average. This results in an
increase of single and two person households.
o The divorce rate increased dramatically during the 1980s, again
resulting in an increase in single person households.
o Many individuals have postponed marriage, also resulting in more
single person households.
Between 1990 and 1997, ENDS reports that the number of households within
the trade area (10-mile radius) increased by 15,024 to 867,783, reflecting a
growth rate of 0.25 percent per year. Through 2002, the number of households is
expected to grow to 885,201, which equals compounded annual growth of 0.40
percent. This growth rate is much lower than the rate of household formation
projected for the county at 0.98 percent per year over the next five years, and
is reflective of the densely developed and mature nature of the trade area.
The subject is located in an area with a slightly below average number of
persons per household. The average number of persons per household is the same
in the 3 and 5 mile trade areas of 2.10. The average number of people per
household in the 10 miles radius is higher at 2.50. These rates are much lower
than the county at 2.90 and the state at 2.79.
The rate of population growth is projected to exceed the rate of
household formation over the next five years in the trade area, indicating a
reverse trend in the subject's trade area compared to national growth trends.
The nation as a whole is forming a greater number of households that are
smaller in size resulting in a decreasing average household size. This is a
positive trend for retailers, as a larger number of households indicates a
greater need for all types of product, both durable and consumer goods and
services.
TRADE AREA INCOME
A significant statistic for retailers is the income potential of a trade
area's population. Income levels, either on a per capita, per family or
household basis, indicate the economic level of the residents of the market
area and form an important component of this total
- -------------------------------------------------------------------------------
45
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
analysis. More directly, average household income, when combined with the
number of households, is a major determinant of an area's retail sales
potential.
Trade area income figures for the subject support the profile of an above
average income market. According to ENDS, average household income within the
10-mile radius in 1997 is approximately $73,136. Within the closer 5-mile
radius, incomes are higher at an average of $86,778 per household, and higher
still in the 3-mile radius at $87,671. A comparison of the trade area's
relative ranking is shown on the following chart.
===============================================
1997 AVERAGE HOUSEHOLD INCOME COMPARISON
===============================================
AREA INCOME
===============================================
3.0-Mile Radius $87,671
===============================================
5.0-Mile Radius * $86,778
===============================================
10.0-Mile Radius* * $73,136
===============================================
County of Los Angeles $69,128
===============================================
State of California $66,166
===============================================
United States $55,443
===============================================
Source: Equifax National Decision Systems
* Primary Trade Area ** Secondary Trade Area
===============================================
Income ranges in the immediate market area are well above county and state
averages. The distribution of income within the trade area can be summarized as
follows:
================================================
HOUSEHOLDS BY INCOME
================================================
% OF HOUSEHOLDS
========================
5-MILE UNITED
CATEGORY RADIUS STATES
------------------------------------------------
Greater Than $150,000 13.44% 4.49 %
------------------------------------------------
$100,000 - $149,999 8.61% 5.43 %
------------------------------------------------
$ 75,000 - $ 99,999 9.91% 7.58 %
------------------------------------------------
$ 50,000 - $ 74,999 17.85% 19.09 %
------------------------------------------------
$ 35,000 - $ 49,999 13.62% 16.63 %
------------------------------------------------
$ 25,000 - $ 34,999 11.23% 13.29 %
------------------------------------------------
Less Than $ 25,000 25.34% 33.48 %
================================================
Source: Equifax National Decision Systems
================================================
The chart above indicates that the subjects primary trade area exhibits
above average income levels when compared directly to the national averages.
Approximately 31.96 percent of the residents within the subject's primary trade
area have an average household income of $75,000 or greater while 17.5 percent
of the nation's total residents have average household incomes over this
amount.
- -------------------------------------------------------------------------------
46
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SUBJECT SALES VOLUME
The subject's historical sales volume was provided to us by the property
owner, and is illustrated in the chart on the accompanying page. As shown,
sales volume for the total mall was $240,336,000 in 1997 and $238,374,000 in
1996.
The 1997 comparable mall shop sales equal $373 per square foot, slightly
less but approximately equal to the 1996 comparable shop sales of $374 per
square foot. Total mall shop sales, including non-comparable store sales which
sales may not be reflective of a full year's sales volume, equaled $362 in 1997
and $370 in 1996. While sales are down slightly in the mall, this is partly due
to a (minor) retenanting effort on the previous ownership to prepare the mall
for sale. Main mall shop occupancy is up compared to last year, and the
property is well positioned by its location and tenant mix to achieve solid
growth in sales in the future, at least equal to inflation.
Anchor store sales are down slightly for Nordstrom, $535 per square foot
compared to $556 in 1996. This is believed to be reflective of the opening of
Bloomingdale's at Century City Shopping Center in late 1996, which appears to
have taken a small bite out of Nordstrom's sales. Robinson's-May showed an
increase from $214 per square foot in 1996 to $226 per square foot in 1997
(5.6% increase). "Junior" anchors include Pavilions and Barnes & Noble. Both
showed increases in 1997. Pavilions sales increased 4.1 percent to $356 per
square foot. Barnes & Noble's sales increased 11.1 percent to $190 per square
foot.
Both mall shop sales per square foot and department store sales per square
foot are very high compared to national averages, as illustrated in the
following section.
INDUSTRY AVERAGE SALES (MALL SHOPS)
The Urban Land Institute's Dollars and Cents of Shopping Centers (1997)
reports national and regional sales averages for regional and
super-regional shopping malls. Nationally, average sales at super-regional
centers is reported at $203.87 per square foot. For regional malls,
average sales are reported to be $180.78. A comparison of national and
regional figures is shown on the following chart.
- -------------------------------------------------------------------------------
47
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================
SUBJECT SALES VOLUME
Westside Pavilion
=====================================================================================================
ANNUAL 1996 SALES ANNUAL 1997 SALES
SQUARE TOTAL PER SQUARE TOTAL PER
FOOTAGE ($000'S) SQ. FT. FOOTAGE ($000'S) SQ. FT.
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Anchor Store Sales(1)
Nordstrom 138,128 $76,857 $556 138,128 $73,856 $535
Robinson's - May 220,000 $47,127 $214 220,000 $49,782 $226
------- -------- ---- ------- -------- ----
Total Anchor Store 358,128 $123,984 $346 358,128 $123,638 $345
Mini Major Sales(1)
Pavilions 43,435 $14,866 $342 43,435 $15,463 $356
Barnes & Noble Superstore 27,586 $4,712 $171 27,586 $5,234 $190
------- -------- ---- ------- -------- ----
Total Mini-Majors 71,021 $19,578 $276 71,021 $20,697 $291
Mall Store Sales(1)
Comparable Store 199,580 $74,667 $374 199,580 $74,477 $373
Non-Comparable Store 56,396 $20,145 $357(2) 65,714 $21,525 $328(2)
------- -------- ---- ------- -------- ----
Total Mall Store 255,976 $94,812 $370 265,294 $96,001 $362
Gross Sales
Anchors, Mini-Majors and Mall Stores $238,374 $240,336
(1) Based on the December 31, 1997 sales report. Information is based solely
upon sales figures provided by the tenants.
(2) Non-comparable sales per sq. ft. may not be reflective of full years sales
per square foot.
=====================================================================================================
</TABLE>
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
=====================================================================
MALL SHOP SALES
REGIONAL/SUPER-REGIONAL CENTERS
=====================================================================
AREA AVERAGE MEDIAN LOWER DECILE UPPER DECILE
---------------------------------------------------------------------
United $180.78/ $170.17/ $125.36/ $286.59/
States $203.87 $196.36 $148.62 $284.47
---------------------------------------------------------------------
East $201.11/ $182.81/ $117.31/ $325.52/
$190.46 $188.37 $146.25 $286.15
---------------------------------------------------------------------
West $222.20/ $197.91/ $157.50/ $349.28/
$205.69 $195.37 $151.60 $274.11
---------------------------------------------------------------------
South $174.53/ $179.50/ $122.81/ $239.01/
$209.63 $208.45 $141.62 $271.08
---------------------------------------------------------------------
Midwest $163.05/ $153.88/ $123.70/ $237.74/
$203.20 $196.15 $153.90 $289.85
---------------------------------------------------------------------
Source: Urban Land Institute Dollars and Cents of Shopping Centers
(1997)
=====================================================================
For super-regional malls in the west, average sales are shown to be $206
per square foot, while regional malls are $222 per foot. The upper decile
reflects average sales of $349 per square foot for regional malls and $274
per square foot for super-regional malls.
INDUSTRY AVERAGE SALES (DEPARTMENT STORES)
A comparison of the subject's potential department store performance can
also be made to its regional and national peers. The Urban Land Institute
also tracks sales of owned and non-owned department stores by selected
affiliation and region. The data from ULI shows that the mean sales level
for department stores in super-regional malls varies from $132.65 to
$179.60 per square foot with an overall average of $156.35 per square
foot. Stores in the top 10.0 percent of their peers average (unweighted)
approximately $243.63, while the top 2.0 percent average approximately
$391.40 per square foot. This information, based on 1996, is summarized in
the following chart.
- -------------------------------------------------------------------------------
48
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
=======================================================================
DEPARTMENT STORE SALES DATA
=======================================================================
AVERAGE TOP 10% TOP 2%
CATEGORY/REGION SALES PSF SALES PSF SALES PSF
-----------------------------------------------------------------------
Super-Regional U.S.
Owned Dept. Stores $153.67 $233.49 $347.00
National Chain $149.59 $230.80 $336.00
Non-Owned Dept. Stores $163.98 $256.83 $447.57
National Chain $163.71 $253.39 $435.01
Eastern Region $132.65 --- ---
Western Region $146.26 --- ---
Midwestern Region $161.33 --- ---
Southern Region $179.60 --- ---
-----------------------------------------------------------------------
MEAN - ALL SUPER-REGIONAL CENTERS $156.35 $243.63 $391.40
-----------------------------------------------------------------------
Regional Malls U.S.
Owned Dept. Stores $148.15 $256.90 $334.68
National Chain $149.73 $256.73 $339.74
Non-Owned Dept. Stores $181.40 $258.62 $328.07
National Chain $174.44 $244.58 $324.28
Eastern Region $140.01 --- ---
Western Region $181.20 --- ---
Midwestern Region $149.32 --- ---
Southern Region $141.18 --- ---
=======================================================================
MEAN - ALL REGIONAL CENTERS $158.18 $254.21 $331.69
=======================================================================
Source: Urban Land Institute Dollars & Cents of Shopping Centers (1997)
=======================================================================
Data for department stores in regional malls shows that the mean ranges
from $140.01 to $181.40 per square foot with an overall average of $158.18
per square foot. The unweighted average for the top 10.0 percent and 2.0
percent is approximately $254.21 and $331.69 per square foot,
respectively. Sales at department stores in the west reflect a mean of
about $146 per square foot at super-regional malls and $181 per square
foot at regional malls.
SALES VOLUMES AT COMPETING PROPERTIES
In addition to industry averages, we have also surveyed competing malls
within the region to better understand the sales potential for Westside
Pavilion. The Retail Market Analysis presents mall shop retail sales at
competing properties in the region. Sales at the centers range from $200 to
$540 per square foot for mall shop tenants, with an overall mean of $345.58 per
foot for centers reporting sales. The upper-end of the range is generally set
by Century City Shopping Center with sales at $540 per foot. The low-end is set
by Fallbrook Mall which reported sales of $200 per foot.
- -------------------------------------------------------------------------------
49
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
SALES SUMMARY
The following chart presents a summary of the sales analysis presented for
competing properties and industry standards. As shown, the subject's comparable
sales volume is well above the industry averages and at the upper end of the
range indicated for competing properties.
==============================================================
SALES SUMMARY
==============================================================
SOURCE SALES/SF
--------------------------------------------------------------
ULI Mall Shops - Regional Malls $222.00 - $349.00
--------------------------------------------------------------
ULI Mall Shops - Super-Regional Malls $206.00 - $274.00
--------------------------------------------------------------
ULI Dept.Stores - Regional Malls $181.00
--------------------------------------------------------------
ULI Dept.Stores - Super-Regional Malls $146.00
--------------------------------------------------------------
Subject 1997 Mall Shop Sales $362.00
--------------------------------------------------------------
Subject 1997 Comparable Mall Shop Sales $373.00
--------------------------------------------------------------
Competing Properties - Mall Shops $200.00 - $540.00
--------------------------------------------------------------
TRADE AREA EXPENDITURE POTENTIAL
On the basis of detailed population, income, and spending pattern
analysis, estimates of household expenditures for shoppers goods merchandise
have been developed for the trade area. Shoppers goods, or department store
type merchandise (DSTM), comprise the overwhelming bulk of goods and products
carried in regional malls and department stores. Specifically, shoppers goods
expenditure potentials represent the dollar amounts available for the
merchandise that is primarily sold in the following store types:
o General merchandise stores including department and other stores;
o Apparel and accessory stores;
o Furniture and home furnishing stores, and
o Other miscellaneous shoppers goods stores.
These categories are also commonly referred to as GAFO goods.
DSTM or GAFO expenditure potential measures the ability of the market to
purchase department store type goods. This expenditure potential is typically
based upon current average household or per capita income levels in the market,
and the estimated share of that income that has historically been spent on
department store type merchandise.
Retail sales potential of a trade area is determined after estimating the
percent of total aggregate income spent on GAFO goods. The Department of
Commerce tabulates the total GAFO sales by city, county and state every five
years. The last tabulation was completed in 1997, however, at this writing the
results were not in final print. As such, the 1987 data is often cited. Taking
these figures for the pertinent area and dividing them against total aggregate
income yields the percentage of total aggregate income spent on GAFO goods
within an area. For the United States the average is approximately 14.0
- -------------------------------------------------------------------------------
50
<PAGE>
RETAIL MARKET ANALYSIS
- -------------------------------------------------------------------------------
percent. For various states, the overall percentage of income devoted to
shopping goods purchases (expenditures) ranges from roughly 11.5 to 15.0
percent. This analysis relies on the 14.5 percent average.
Based upon 1997 data as provided by ENDS, we have estimated the total
current GAFO Expenditure Potential for the Primary Trade Area, based on the
following calculation:
============================================================================
PRIMARY TRADE AREA (5-MILE RADIUS) EXPENDITURE POTENTIAL
============================================================================
PRIMARY TRADE AREA 1990 1997 2002
- ----------------------------------------------------------------------------
Households 295,743 302,848 309,909
- ----------------------------------------------------------------------------
Average Household Income $60,512 $86,778 $118,336
- ----------------------------------------------------------------------------
Total Income $17,896,000,420 $26,280,543,740 $36,673,391,420
- ----------------------------------------------------------------------------
% GAFO Expenditure x 14.5% x 14.5% x 14.5%
- ----------------------------------------------------------------------------
GAFO Expenditures $2,594,920,061 $3,810,678,842 $5,317,641,756
- ----------------------------------------------------------------------------
Source: Equifax National Decision Systems
===========================================================================
From the above, we see that GAFO expenditures of $3.81 billion and $5.32
billion are estimated for 1997 and 2002, respectively. The subject 1997 sales
of approximately $240,336,000 equal about 6.3 percent of GAFO expenditures in
the 5-mile radius. As such, the subject has a current market share of about 6.3
percent of GAFO expenditures in the 5-mile radius. GAFO expenditures are
expected to grow 39.54 percent over the next five years, for annual compound
growth of 6.89 percent per year.
CONCLUSIONS
The West Los Angeles area commercial sector contains a significant
concentration of retail, commercial, and institutional development which is
geared towards the local and regional populations. The University of California
at Los Angeles, located approximately two miles north of the subject, is an
important source of employment in the subject trade area and a significant
demand generator for retailers in the West Los Angeles area. The local area
benefits from very good access to and from outlying areas in the Los Angeles
region by way of the Southern California freeway system.
The subject property represents a major development within the West Los
Angeles area and, due to the competitive mix of anchor and inline tenants, the
property draws from the local and regional populations. The subject encounters
significant competition from several comparable regional centers for the
discretionary spending of the local and regional populations. The greater West
Los Angeles area has an existing inventory of regional, super-regional, and
specialty retail centers which have captured an important share of retail
spending in the region. The subject provides an appealing shopping environment,
with attractively designed and landscaped common areas, and amenities such as a
food court and a multi-screen movie theater. The subject property's mix of
anchor and in-line tenants is generally similar if not slightly superior to the
tenant mix of the several of the competitive shopping centers in the West Los
Angeles area.
- -------------------------------------------------------------------------------
51
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
SITE DESCRIPTION
Location: South side of Pico Boulevard and north side
of Ayres Avenue, east and west of Westwood
Boulevard. The street address is
10800-10850 Pico Boulevard, Los Angeles,
California
Assessor's Parcel No.: 4255-28-02 through 05, 09, 12 and 13;
4256-01-25 through 27, and 29
Shape:
Irregular
Land Area:
Subject Ownership: 9.16 Acres (399,185+/- square feet)
Separate Ownership: 5.97 Acres (260,053+/- square feet)
---------- ------------------------
Total Center: 15.13 Acres (659,238+/- square feet)
Frontage: Along Pico Boulevard, 364+/- feet west of
Westwood Boulevard and 807+/- feet east of
Westwood Boulevard (not including 332+/-
feet under separate ownership); along
Westwood Boulevard, 302+/- feet along west
side of street and 329+/- along east side
of street; along Ayres Avenue, 424+/- feet
west of Westwood Boulevard and 588+/- feet
east of Westwood Boulevard (not including
600+/- feet under separate ownership); and
along Overland Avenue, 533+/- feet held
under separate ownership.
Topography/Terrain: Generally level at normal elevation above
street grade.
Access: The nearest freeway on/off ramp service is
available at the Pico Boulevard exit of the
San Diego (I-405) Freeway, situated
approximately one-half mile west of the
subject, and at the Overland Avenue exit of
the Santa Monica (I-10) Freeway, situated
approximately one-half mile south of the
subject.
Utilities: All typical utilities are available to the
subject.
Soil Conditions: We did not receive nor review a soil
report. However, we assume that the soil's
load-bearing capacity is sufficient to
support the existing structures. We did not
observe any
- -------------------------------------------------------------------------------
52
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[SITE PLAN]
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[A.L.T.A. SURVEY]
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[SURVEY]
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
evidence to the contrary during our
physical inspection of the property. The
tract's drainage appears to be adequate.
Land Use Restrictions: A title report covering the subject
property was not available for our review.
We are not aware of any restrictions,
easements, encroachments, or other factors,
(other than typical utility, parking and
ingress/egress easements,) that would
adversely affect the utility of the site.
Wetlands: We were not provided with a Wetlands
Survey. If a subsequent engineering survey
reveals the presence of regulated Wetlands
areas, we reserve the right to amend this
valuation.
Seismic Hazard: The subject is not located in a special
study zone as established by the
Alquist-Priolo Geological Hazards Act. (The
property sustained only minor damage to the
five-level parking structure as a result of
the January 1994 Northridge earthquake,
which was subsequently repaired.)
Hazardous Substances: An Environmental Site Assessment report,
prepared by Harding Lawson Associates (HLA)
on June 1, 1998, was provided to us. The
HLA report indicated no evidence of
recognized environmental conditions with
the exception of 1) three of the paint chip
samples exceeded the HUD levels of 5,000
mg/kg and 2) the 1,000 gallon underground
diesel storage tank failed a vacuum test.
The report indicated no recommendations.
We are not aware of any toxic contamination
or hazardous wastes on or about the subject
property. We are not experts, however, in
the detection of hazardous wastes or toxic
contaminants, and our appraisal is based on
the assumption that there are no toxic
contaminants or environmental hazards that
would negatively impact the subject
property's marketability or value.
- -------------------------------------------------------------------------------
53
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================
GROSS LEASEABLE AREA SUMMARY
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- ----------------------------------------------------------------------------------------------------
UNOWNED
OWNED GLA GLA TOTAL
====================================================================================================
<S> <C> <C> <C> <C>
Anchors
Robinson's May 220,000
Nordstrom 138,128
Pavilions 43,435
TOTAL ANCHORS: 181,563 220,000 401,563
Main Mall Stores
Level 1 95,842
Level 2 90,725
Level 3 67,327
Food Court 8,477
-----
TOTAL MAIN MALL STORES 262,371 262,371
Occupied Main Mall 258,845 98.7%
Vacant Main Mall 3,526 1.3%
Expansion Mall Stores
Level 1 (Incl.3 level Barnes & Noble) 47,968
Level 2 19,559
Level 3 24,451
------
TOTAL EXPANSION MALL STORES 91,978 91,978
Occupied Expansion Mall 36,862 40.1%
Vacant Expansion Mall 55,116 59.9%
GRAND TOTALS 535,912 220,000 755,912
Occupied Owned GLA 89.1%
Occupied Main Mall Shops 98.7%
Occupied Expansion Shops 40.1%
Total Development Occupancy 92.2%
====================================================================================================
</TABLE>
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
Comments: The Westside Pavilion shopping center is
comprised of parcels held under both the
subject and separate ownerships, totaling
approximately 15 acres. The total site is
of sufficient size to accommodate the
existing development. The site features
good freeway access and street frontage,
with visibility from a major signalized
commercial intersection (Westwood and Pico
Boulevards.)
IMPROVEMENTS DESCRIPTION
The Westside Pavilion shopping center consists of two components. The
original portion of the center contains a three-level enclosed mall anchored by
Robinson's-May, Nordstrom and Pavilions market situated at the southeast corner
of Pico and Westwood Boulevards. This portion of the center was constructed in
1985 and comprises a gross leasable area of 663,934 square feet, including the
220,000 square foot Robinson's-May department store held under separate
ownership and not part of this appraisal. The second component of Westside
Pavilion (Westside Expansion) is situated at the southwest corner of Pico and
Westwood Boulevards, and consists of a three-level open air center constructed
in 1991 and containing 91,978 gross leasable square feet. The original and
expansion components of Westside Pavilion comprise a total gross leasable area
of 755,912 square feet, and are connected by way of a pedestrian bridge on the
third level extending across Westwood Boulevard.
The following improvement description is based upon our inspection of the
property together with information furnished by the property management. The
building areas are based upon a review of leases and/or rent rolls. Detailed
building plans describing the development were not available for our review.
GENERAL DETAIL
Year Built: 1985; expanded in 1991
Building Area (GLA):
Anchors
Robinson's-May 220,000 SF*
Nordstrom 138,128 SF
Pavilions 43,435 SF
-----------
Sub-total 401,563 SF
- -------------------------------------------------------------------------------
54
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
Original Mall Stores
Level 1 95,842 SF
Level 2 90,725 SF
Level 3 67,327 SF
Food Court 8,477 SF
----------
Sub-total 262,371 SF
Expansion Stores
Level 1 47,968 SF**
Level 2 19,559 SF
Level 3 24,451 SF
---------
Sub-total 91,978 SF
* Held under separate ownership, not considered in this appraisal
** Includes three-level Barnes & Noble
CONSTRUCTION DETAIL
Foundation: Reinforced concrete
Framing: Reinforced concrete
Exterior Walls: Concrete and glass
Roof: Steel frame covered with concrete and
built-up composition material
MECHANICAL DETAIL
Heating and Cooling: The original portion of the center is
served by a climate controlled VAV system
and the expansion portion includes a
condenser water heat pump system.
Plumbing: Each tenant space is connected to sanitary
sewer and domestic water service.
Escalators/Elevators: One set of escalators and an elevator are
situated at the west and east ends of both
the main mall and the expansion mall.
Fire Protection: Fully sprinklered.
INTERIOR DETAIL
Layout: The original portion of Westside Pavilion
comprises three enclosed levels, with
Nordstrom positioned at the west end of the
concourse, and Robinson's-May at the east
- -------------------------------------------------------------------------------
55
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
end. Pavilions market is below grade at the
southeast corner of the center, adjoining
the lower level of the parking garage. The
food court and four-screen theater is
situated on the third level of the center.
The concourse has a width of approximately
30 feet and extends for approximately 570
feet on each level. Mall tenant stores
range in size from approximately 500 square
feet to 28,000 square feet. Typical units
feature a width of from approximately 20
feet to 65 feet, and a typical depth from
45 feet to 110 feet. The mall concourse
features an arched bow truss ceiling with a
solarium. The floors are covered with
decorative ceramic tile pavers.
The expansion portion of the center
consists of a three-level open air mall.
The curved concourse extends from the Pico
Boulevard entry at the northwest section of
the mall to the three-level Barnes & Noble
store situated at the east end of the
center, the third level of which opens to
the connecting enclosed pedestrian bridge.
The access to the main mall from the
expansion mall is from the enclosed bridge
through Nordstrom. Decorative steel framing
accents the open air "roof" of the center,
and the floors are covered with decorative
clay tiles.
INTERIOR DETAIL
Storefronts: Modern aluminum-framed glass storefronts,
with single or double glass door entries.
Facias are painted plaster, accented with
wood, brick or ceramic tile.
Floor Coverings: Vary in accordance with specific tenant
requirements, and include carpeting, vinyl
flooring, hardwood veneer or ceramic tile.
Walls: Painted or papered drywall.
Ceilings: Suspended acoustical tile T-bar ceilings
(typical).
Lighting: Varies in accordance with specific tenant
requirements, and includes fluorescent,
spot, parabolic, incandescent lighting,
etc.
- -------------------------------------------------------------------------------
56
<PAGE>
PROPERTY DESCRIPTION
- -------------------------------------------------------------------------------
Restrooms: The number and type of restrooms vary in
accordance with requirements of individual
tenants. Each tenant space includes at
least one restroom with two fixtures.
Common area restrooms are near the food
court.
SITE IMPROVEMENTS
Onsite Parking: The property contains a total of 3,334
parking spaces (4.4 per 1,000 sf) dispersed
throughout the site. The Robinson's-May
parking structure contains approximately
1,590 spaces, and the expansion mall's
subterranean garage contains 1,029 spaces.
The remaining 715 spaces are spread
throughout the surface lots and the one
subterranean level below the main mall.
Landscaping: The street frontages and the surface
parking area are improved with concrete
planters and are attractively landscaped
with miscellaneous trees, shrubbery and
groundcover. The landscaped areas are fully
irrigated. The interior areas of the center
are also landscaped, and feature decorative
lighting, and outdoor seating.
Comments: Overall, the subject improvements are in
very good condition and the center has good
access from two major freeways.
According to Marshall Valuation Service,
the typical life expectancy for regional
mall improvements such as the subject is 55
years. The subject's actual age ranges from
about 7 years (date of expansion), to about
13 years (original construction date.) We
estimate the overall effective age of the
subject improvements at 8 years. Therefore,
the remaining economic life is estimated at
about 47 years.
Our review of the local environs reveals
that there are no external influences which
negatively impact the value of the subject
property.
- -------------------------------------------------------------------------------
57
<PAGE>
REAL PROPERTY TAXES AND ASSESSMENTS
- -------------------------------------------------------------------------------
The subject property is located within the City and County of Los
Angeles, and is taxed by these governing bodies.
Under the provisions of Article XIIA of the California Tax and Revenue
Code, properties are assessed on their market value as of March 1, 1975, the
base year lien date. This value may be increased by only two percent per year
until the property is sold, undergoes substantial new construction, or the
property's use changes significantly. In such cases, the property may be
reassessed to its market value.
The 1997-1998 fiscal year is the most recent year for which assess
valuation and property tax information is available. The assessed value and
taxes for the property are shown in the chart on the accompanying page. As
shown, the total assessed value for the center is $171,521,369. The total taxes
equal $1,836,130.96, which equals an implied tax rate of 1.0705 percent.
Based on the recent sale of the property at a price of $170,500,000,
similar to the total assessed value, the property's taxes will not change
considerably as a result of the sale. Taxes will then increase at a maximum of
2.0 percent per year under California law until the property is transferred
again, undergoes substantial new construction or significant use changes.
- -------------------------------------------------------------------------------
58
<PAGE>
REAL ESTATE TAX SUMMARY
WESTSIDE PAVILION
1997/1998 ASSESSED VALUES & TAXES
<TABLE>
<CAPTION>
============================================================================================================
LAND IMPROVEMENTS FIXTURES & TOTAL 1997/98
PARCEL VALUE VALUE PERSONAL ASSESSED TOTAL OVERALL TAX
NUMBERS 1997/98 1997/98 PROPERTY VALUE TAXES RATE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4255-028-002 $1,353,197 $9,407,621 $0 $10,760,818 $115,625.53 1.0745%
4255-028-003 $984,087 $8,598,609 $488,134 $10,070,830 $108,238.87 1.0748%
4255-028-004 $711,622 $10,290,181 $0 $11,001,803 $118,182.32 1.0742%
4255-028-005 $1,828,215 $24,816,615 $0 $26,644,830 $286,216.28 1.0742%
4255-028-009 $3,897,182 $32,584,046 $0 $36,481,228 $391,204.63 1.0723%
4255-028-012 $856,067 $5,922,891 $0 $6,778,958 $72,588.17 1.0708%
4255-028-013 $4,387,628 $9,091,430 $0 $13,479,058 $144,267.07 1.0703%
4256-001-025 $5,671,525 $37,794,133 $0 $43,465,658 $462,666.91 1.0644%
4256-001-026 $2,217,592 $10 $0 $2,217,602 $23,681.34 1.0679%
4256-001-027 $3,533,378 $10 $0 $3,533,388 $37,719.10 1.0675%
4256-001-029 $7,087,186 $10 $0 $7,087,196 $75,740.74 1.0687%
---------- --- -- ---------- ---------- -------
TOTAL: $32,527,679 $138,505,556 $488,134 $171,521,369 $1,836,130.96 1.0705%
============================================================================================================
</TABLE>
<PAGE>
ZONING
- -------------------------------------------------------------------------------
The subject property is zoned "C2-1-D" for commercial uses by the City of
Los Angeles. Permitted uses within the C2 zone include banks, hotels, retail
stores and businesses, restaurants, theatres, department stores, and general
offices, as well as those uses permitted within the R3 multiple residential use
zone. The "-1" component of the zoning designation represents a height district
which limits the floor area to 1.5 times the buildable area of the lot. The
"-D" component of the subject zoning designation indicates that additional
development restrictions have been applied to the property. The C2 zoning
designation does not have any yard (front, side, or rear) setback requirements.
Onsite parking is required at a ratio of one space per 1,000 square feet of
floor area exclusive of the floor areas used for automobile parking, basement
storage, or rooms housing mechanical operations equipment.
A permanent building ordinance also applies to the subject property.
Ordinance #164332, enacted as of January 17, 1989, relates to the development
of the expansion portion of the subject property (Westside II), which is
located at the southwest corner of Pico Boulevard and Westwood Boulevard. The
ordinance limits the size of the expansion to a total floor area of 105,000
square feet and the maximum height of the expansion development is limited to
59.5 feet. The ordinance precludes certain uses within the expansion area
including arcades, movie theatres, and dance clubs, and also prevents the
tenancy by a major anchor or department store or discount store. In no event
shall any tenant exceed 20,000 square feet of gross floor area, with the
exception of one tenant, which shall be permitted to occupy up to one-third of
the gross floor area within the expansion area. Restaurant space, other than a
food court, is limited to 12,000 square feet and no single restaurant may be
greater than 6,000 square feet in size. Parking requirements for the expansion
development are 5.5 spaces per 1,000 square feet of gross floor area plus an
additional 456 parking stalls to be utilized for the existing Westside
Pavilion, or a total of 1,000 parking spaces, whichever is greater.
Based on our understanding of the "C2-1-D" zoning ordinance and our
discussions with a representative of the Planning Department for the City of
Los Angeles, the subject development is a legal and conforming use. We know of
no deed restrictions, either private or public, that further limit the subject
property's use. However, we cannot guarantee that no such restrictions exist as
deed restrictions are a legal matter and only a title examination by an
attorney or title company can usually uncover such restrictive covenants.
- -------------------------------------------------------------------------------
59
<PAGE>
HIGHEST AND BEST USE
- -------------------------------------------------------------------------------
According to the Dictionary of Real Estate Appraisal, Second Edition
(1989), a publication of the American Institute of Real Estate Appraisers,
the highest and best use is defined as:
1. The reasonable and probable use that supports the highest present
value of vacant land or improved property, as defined, as of the
date of the appraisal.
2. The reasonably probable and legal use of land or sites as though
vacant, found to be physically possible, appropriately supported,
financially feasible, and that results in the highest present land
value.
3. The most profitable use.
We evaluated the site's highest and best use both as currently improved
and as if vacant. In both cases, the highest and best use must meet four
criteria. The use must be (1) physically possible, (2) legally permissible, (3)
financially feasible, and (4) maximally productive.
The subject site consists of a non-contiguous 9.16 acres of land, which
represents a portion of a larger 15.13-acre property currently improved with a
regional mall. The site is located in a prime westside Los Angeles trade area,
and is situated in a mature, built-out urban area of Los Angeles County. The
site has good commercial exposure and access to and from the surrounding area,
and the immediate environs are consistent with the current commercial use. The
subject property falls under the zoning and planning jurisdiction of the City
of Los Angeles, and is designated for commercial uses. As noted in the previous
zoning discussion, a permanent building ordinance also applies to the property
which restricts the type of tenancies permitted in the expansion component of
the mall development.
The physical characteristics of the subject parcels, including the shape
and the total area, indicate the property is suitable for nearly any type of
project, including commercial office or retail, residential, hotel,
recreational, or mixed-use. Major developments of most any type in this area of
West Los Angeles must meet with strict city approvals, and often encounter
significant resistance from the surrounding community. The political climate
suggests that a comparable development would probably require a substantial
period of time to obtain approvals (assuming the project could be approved).
The current development on the property represents one of the most significant
commercial developments in the neighborhood, and the existence of the two
anchor department store tenants represents a "barrier" to future competitive
development. The two major department store anchors would be difficult to
duplicate, and obtaining anchor commitments, which are necessary for a similar
quality development, is a speculative process at best.
- -------------------------------------------------------------------------------
60
<PAGE>
HIGHEST AND BEST USE
- -------------------------------------------------------------------------------
We have concluded that the highest and best use for the subject property
as if vacant would be to develop a regional mall or a major community-type
shopping center if similar anchor commitments could not be obtained.
Considering the current development and the sales volumes and occupancy level
supported by the trade area, we concluded the existing development represents
the highest and best use for the subject considered as currently improved. The
existing center is consistent with the current zoning and planning requirements
of the city.
- -------------------------------------------------------------------------------
61
<PAGE>
VALUATION PROCESS
- -------------------------------------------------------------------------------
Appraisers typically use three approaches in valuing real property: the
Cost Approach, the Income Approach, and the Sales Comparison Approach. The type
and age of the property and the quantity and quality of data affect the
applicability of each approach in a specific appraisal situation.
Regional malls are not typically purchased based on the Cost Approach. The
principle underlying this approach is the principle of substitution, which
holds that "no prudent person will pay more for a property than the price of a
site and the cost of construction, without undue delay, an equally desirable
and useful property." The subject improvements consist of a regional shopping
center, and the economic feasibility of the development is based primarily on
the department store anchor tenants which serve as the primary draw for the
other major tenants and satellite space. Leases or other agreements with the
anchor department stores are a fundamental component of the property's value,
and replacing these anchors is an extremely speculative, costly, and time
consuming process. The investment market aggressively underwrites quality
regional malls because of the unique nature of the anchor tenant commitments
and the difficulty in replacing the property both in terms of size and anchor
commitments. The existence of the mall represents a major barrier to entry
within a given marketplace. As such, the Cost Approach will not be employed in
this analysis due to the fact that the marketplace does not rigidly trade
leased shopping centers on a cost/value basis. However, a development cost
technique was employed at the end of the Income Approach in our analysis of
Phase II.
The Sales Comparison Approach involves a search for recent sales of
comparable centers and an analysis of the data as it relates to the subject
property. This approach is relevant in establishing appropriate, market-derived
investment parameters that form the basis of the Income Approach. A correlation
of data also provides a range of indicated values for the subject.
In the Income Approach we estimated the subject's capacity to produce
income through an analysis of the defined retail market. Fixed and operating
expenses were determined in order to yield a net annual income. An estimate
value for the subject property was derived through a combination of the
traditional Direct Capitalization method and computerized Discounted Cash Flow
Analysis.
The appraisal process was concluded by a review and reexamination of each
of the approaches to value. Consideration was given to the type and reliability
of the data, and the applicability of each approach. Finally, the approaches
were reconciled to arrive at a final value conclusion.
- -------------------------------------------------------------------------------
62
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
METHODOLOGY
The Sales Comparison Approach provides an estimate of market value by
comparing recent sales of similar properties in the surrounding or competing
area to the subject property. Inherent in this approach is the principle of
substitution, which holds that, when a property is replaceable in the market,
its value tends to be set at the cost of acquiring an equally desirable
substitute property, assuming that no costly delay is encountered in making the
substitution.
By analyzing sales that qualify as arms-length transactions between
willing and knowledgeable buyers and sellers, market value and price trends can
be identified. Comparability in physical, locational, and economic
characteristics is an important criterion when comparing sales to the subject
property. The basic steps involved in the application of this approach are as
follows:
1. Research recent, relevant property sales and current offerings
throughout the competitive marketplace;
2. Select and analyze properties considered most similar to the
subject, giving consideration to the time of sale, change in
economic conditions which may have occurred since date of sale, and
other physical, functional, or locational factors;
3. Identify sales which include favorable financing and calculate the
cash equivalent price; and
4. Reduce the sale prices to a common unit of comparison, such as price
per square foot of gross leasable area sold;
5. Make appropriate adjustments between the comparable properties and
the property appraised; and
6. Interpret the adjusted sales data and draw a logical value
conclusion.
The most widely-used, market-oriented units of comparison for properties
such as the subject are the sale price per square foot of gross leasable area
(GLA) purchased, and the overall capitalization rate extracted from the sale.
This latter measure will be addressed in the Income Capitalization Approach
which follows this methodology. An analysis of the inherent sales multiple also
lends additional support to the Sales Comparison Approach.
REGIONAL MALL PROPERTY SALES
Evidence has shown that mall property sales which include anchor stores
have lowered the square foot unit prices for some comparables, and have
affected investor perceptions. In our discussions with major shopping center
owners and investors, we learned that capitalization rates and underwriting
criteria have become more sensitive to the contemporary issues affecting
department store anchors. Traditionally, department stores have been an
integral component of a successful shopping center and, therefore, of similar
investment quality if they were performing satisfactorily.
- -------------------------------------------------------------------------------
63
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
Consolidation has resulted in dramatic changes in this industry and has
witnessed such dominant chains as Federated, Sears, JC Penney, Macy's, and
Dilliard's continue to grow through acquisition and a return to profitability.
With all this in mind, investors are looking more closely at the strength
of the anchors when evaluating an acquisition. Most of our survey respondents
were of the opinion that they were indifferent to acquiring a center that
included the anchors versus stores that were independently owned if they were
good performers. However, where an acquisition includes anchor stores, the
resulting cash flow is typically segregated with the income attributed to
anchors (base plus percentage rent) analyzed at a higher cap rate then that
produced by the mall shops.
Cushman & Wakefield has extensively tracked regional mall transaction
activity since 1991. We have summarized the most recent (1997/1998)
transactions on the FOLLOWING PAGES. Historical sales (1991 - 1996) are
retained in our files. These sales are inclusive of good quality Class A or
B+/- properties that are dominant in their market. Also includeD are weaker
properties in second tier cities that have a narrower investment appeal. As
such, the most recent mall sales (1997/98) presented in this analysis show a
wide variety of prices on a per unit basis, ranging from $21 per square foot up
to $594 per square foot of total GLA purchased. When expressed on the basis of
mall shop GLA acquired, the range is more broadly seen to be $36 to $770 per
square foot. Alternatively, the overall capitalization rates that can be
extracted from each transaction range from 6.90 percent to 12.77 percent.
One obvious explanation for the wide unit variation is the inclusion (or
exclusion) of anchor store square footage which has the tendency to distort
unit prices for some comparables. Other sales include only mall shop area where
small space tenants have higher rents and higher retail sales per square foot.
A shopping center sale without anchors, therefore, gains all the benefits of
anchor/small space synergy without the purchase of the anchor square footage.
This drives up unit prices to over $250 per square foot, with most sales over
$300 per square foot of salable area.
o The fourteen sales included for 1991 show a mean price per square
foot sold of $282. On the basis of mall shop GLA sold, these sales
present a mean of $357. Sales multiples range from .74 to 1.53 with
a mean of 1.17. Capitalization rates range from 5.60 to 7.82 percent
with an overall mean of 6.44 percent. The mean terminal
capitalization rate is approximately 100 basis points higher, or
7.33 percent. Yield rates range between 10.75 and 13.00 percent,
with a mean of 11.52 percent for those sales reporting IRR
expectancies.
o In 1992, the eleven transactions display prices ranging from $136 to
$511 per square foot of GLA sold, with a mean of $259 per square
foot. For mall shop area sold, the 1992 sales suggest a mean price
of $320 per square foot. Sales multiples range from .87 to 1.60 with
a mean of 1.07. Capitalization rates range between 6.00 and 7.97
percent with the mean cap rate calculated at 7.31 percent for 1992.
For sales reporting a going-
- -------------------------------------------------------------------------------
64
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
out cap rate, the mean is shown to be 7.75 percent. Yield rates
range from 10.75 to around 12.00 percent with a mean of 11.56
percent.
o For 1993, a total of sixteen transactions have been tracked. These
sales show an overall average sale price of $242 per square foot
based upon total GLA sold and $363 per square foot based solely upon
mall GLA sold. Sales multiples range from .65 to 1.82 and average
1.15. Capitalization rates continued to rise in 1993, showing a
range between 7.00 and 10.10 percent. The overall mean has been
calculated to be 7.92 percent. For sales reporting estimated
terminal cap rates, the mean is also equal to 7.92 percent. Yield
rates for 1993 sales range from 10.75 to 12.50 percent with a mean
of 11.53 percent for those sales reporting IRR expectancies. On
balance, the year was notable for the number of dominant Class A
malls which transferred.
o Sales data for 1994 shows fourteen confirmed transactions with an
average unit price per square foot of $197 per square foot of total
GLA sold and $288 per square foot of mall shop GLA. Sales multiples
range from .57 to 1.43 and average .96. The mean going-in
capitalization rate is shown to be 8.37 percent. The residual
capitalization rates average 8.13 percent. Yield rates range from
10.70 to 11.50 percent and average 11.17 percent. During 1994, many
of the closed transactions involved second and third tier malls.
This accounted for the significant drop in unit rates and
corresponding increase in cap rates. Probably the most significant
sale involved the Riverchase Galleria, a 1.2 million square foot
center in Hoover, Alabama. LaSalle Partners purchased the mall of
behalf of the Pennsylvania Public School Employment Retirement
System for $175.0 million. The reported cap rate was approximately
7.4 percent.
o Cushman & Wakefield has researched 19 mall transactions for 1995.
With the exception of possibly Natick Mall and Smith Haven Mall, by
and large the quality of malls sold are lower than what has been
shown for prior years. For example, the average transaction price
has been slipping. In 1993, the peak year, the average deal was
nearly $133.8 million. In 1995, it is shown to be $88.6 million
which is even skewed upward by Natick and Smith Haven Malls which
had a combined price of $486.0 million. The average price per square
foot of total GLA sold is calculated to be $193 per square foot. The
range in values of mall GLA sold are $93 to $686 with an average of
$285 per square foot. The upper end of the range is formed by Queens
Center with mall shop sales of nearly $700 per square foot.
Characteristics of these lesser quality malls would be higher
initial capitalization rates. The range for these transactions is
7.25 to 11.10 percent with a mean of 9.13 percent. Most market
participants indicated that continued turmoil in the retail industry
will force cap rates to move higher.
o 1996 saw a return of real estate investors to the regional mall
market. REITs were far and away been the most active buyers. The
increase in activity was a result of a combination of dynamics. The
liquidity of REITs
- -------------------------------------------------------------------------------
65
<PAGE>
REGIONAL MALL SALES 1998
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR
NO. PROPERTY/LOCATION DATE BUILT
- -------- --------------------------------- -------- -------
<S> <C> <C> <C>
98- 1 BURNSVILLE CENTER Feb-98 1977/
Burnsville, Minnesota 89
98- 2 PHIPPS PLAZA Jan-98 1968/
Atlanta, Georgia 94
98- 3 ASHEVILLE MALL Jan-98 1975/
Asheville, North Carolina 94
98- 4 CORDOVA MALL Jan-98 1971/
Pensacola, Florida 87
98- 5 CRESTWOOD PLAZA Jan-98 1957/
St. Louis, Missouri 97
98- 6 SUPER MALL OF THE GREAT N.W.(1) Jan-98 1956/
Auburn, Washington 91
98- 7 STROUD MALL Apr-98 1978/
Stroudsberg, PA 94
98- 8 SOUTHWEST PLAZA Apr-98 1983/
Littleton, CO 95
98- 9 JACKSONVILLE MALL May-98 1981
Jacksonville, NC
98-10 CROSSROADS MALL May-98 1981/
Mount Hope, WV 97
98-11 ORLANDO FASHION SQUARE May-98 1973/
Orlando, FL 93
98-12 VILLAGE MALL Jun-98 1975/
(1) Danville, Ill. 85/90
98-13 GREENVILLE MALL Jun-98 1978/
Greenville, SC 95
98-14 SOUTH PLAINS MALL Jun-98
Lubbock, TX
98-15 NORTHTOWN MALL Jun-98 1972/
Blaine, MN 86
Survey Low:
Survey High:
SURVEY MEAN:
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE
OWNED:
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR
IS OWNED:
<CAPTION>
MALL MALL MALL
SALE GRANTOR/ TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. GRANTEE SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF
- -------- ------------------------------------- -------------- ----------- ----------- --------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
98- 1 Corporate Property Investors/ $ 81,000,000 1,078,253 1,078,253 417,030 38.7% 84.0% $284
CBL & Associates
98- 2 ERE Yarmouth/ $188,000,000 823,000 823,000 372,457 45.3% N/A N/A
Corporate Property Investors
98- 3 RL Coleman & Co. $ 65,000,000 1,042,000 489,000 440,000 42.2% 98.5% $280
CBL Associates
98- 4 Robert B. Aikens & Associates LLC/ $ 85,000,000 874,000 376,368 376,368 43.1% 91.0% $300
Simon DeBartolo Group
98- 5 Crestwood Plaza S.C. LLC/ $106,400,000 1,021,132 1,021,132 382,214 37.4% 91.0% $300
Westfield America
98- 6 Hapsmith/Rosche Capital Corp./ $103,000,000 905,791 905,791 415,319 45.9% 75.0% $185
Glimcher Properties LP
98- 7 ERE Yarmouth/ $ 38,100,000 427,145 427,145 184,145 43.1% 86.0% $294
CBL & Associates Properties Inc.
98- 8 Southwest Property Venture/ $113,000,000 1,270,110 438,000 438,000 34.5% 83.0% $265
General Growth Properties, Inc.
98- 9 Beckley-Jacksonville LP/ $ 38,000,000 384,000 384,000 167,640 43.7% 98.0% $286
Crown American Realty Trust
98-10 Beckley-Jacksonville LP/ $ 23,000,000 456,000 456,000 182,400 40.0% 76.0% $220
Crown American Realty Trust
98-11 Fund A Orlando, Inc./ $104,000,000 1,070,000 708,568 362,425 33.9% N/A $329
Colonial Properties Trust
98-12 Interstate RE Services/ $ 23,200,000 477,577 477,577 126,088 26.4% 72.0% $144
DRA Advisors, Inc.
98-13 Marvest Property Trust/ $ 36,000,000 789,532 602,532 232,025 29.4% 55.0% $219
DRA Advisors, Inc.
98-14 South Plains Mall Assoc., LTD/ $115,700,000 1,107,000 1,107,000 365,215 33.0% 92.0% $300
The Macerich Co.
98-15 Northtown LLP/Glimcher Realty Trust $ 54,000,000 846,248 459,000 287,078 33.9% 70.0% $240
$ 23,000,000 384,000 376,368 126,088 26.4% 55.0% $144
$188,000,000 1,270,110 1,107,000 440,000 45.9% 98.5% $329
$ 78,226,667 838,119 650,224 316,560 38.0% 82.4% $260
$ 99,000,000 1,072,055 407,184 407,184 38.8% 87.0% $283
$ 75,030,769 802,129 687,615 302,618 37.9% 81.6% $257
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
-------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- -------- ------------- -------- --------- ---------- ---------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
98- 1 $ 6,804,000 $ 6.31 8.40% -- -- $ 75 $194 0.68
98- 2 $13,912,000 $16.90 7.40% -- -- $228 $505 N/A
98- 3 $ 5,395,000 $11.03 8.30% -- -- $133 $148 0.53
98- 4 $ 7,560,000 $20.09 9.00% -- -- $226 $226 0.75
98- 5 $ 9,800,000 $ 9.60 9.21% -- -- $104 $278 0.93
98- 6 $12,370,000 $13.66 12.01% -- -- $114 $248 1.34
98- 7 $ 3,188,970 $ 7.47 8.37% -- -- $ 89 $207 0.70
98- 8 $10,500,000 $23.97 9.29% -- -- $258 $258 0.97
98- 9 $ 3,572,000 $ 9.30 9.40% -- -- $ 99 $227 0.79
98-10 $ 2,760,000 $ 6.05 12.00% -- -- $ 50 -- --
98-11 $ 9,391,200 $13.25 9.03% -- -- $147 $287 0.87
98-12 $ 2,697,500 $ 5.65 11.63% -- -- $ 49 $184 1.28
98-13 $ 3,558,800 $ 5.91 9.89% -- -- $ 60 $155 0.71
98-14 $10,065,900 $ 9.09 8.70% -- -- $105 $317 1.06
98-15 $ 5,400,000 $11.76 10.00% -- -- $118 $188 0.78
$ 2,697,500 $ 5.65 7.40% 0.00% 0.00% $ 49 $148 0.53
$13,912,000 $23.97 12.01% 0.00% 0.00% $258 $505 1.34
$ 7,131,691 $11.34 9.51% -- -- $124 $244 0.88
$ 9,030,000 $22.03 9.15% -- -- $242 $242 0.86
$ 6,839,644 $ 9.69 9.56% -- -- $105 $245 0.88
</TABLE>
<PAGE>
REGIONAL MALL SALES 1997
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- ----------- -------------------------------- -------- -------- -------------------------------------
<S> <C> <C> <C> <C>
97- 1 THE FALLS SHOPPING CENTER Dec-97 1980/ Heitman Retail Properties/
Miami, Florida 96 Taubman Realty Group
97- 2 NORTHWEST PLAZA S.C. Dec-97 1965/ Paramount Group/
ST. ANN, MISSOURI 89 Westfield America, Inc.
97- 3 THE CITADEL Dec-97 1972/ Tri State Joint Venture/
Colorado Springs, Colorado 95 The Macerich Company
97- 4 SALEM MALL Dec-97 1980/ The Rouse Company/
(1) Salem, Oregon 87 JP Realty Inc.
97- 5 FASHION MALL Dec-97 1973/ Ameresco for Shell Pension Fund/
(1) Indianapolis, Indiana 93 Simon DeBartolo Group
97- 6 UNIVERSITY MALL Dec-97 1974/ University Square Partners/
Tampa, Florida 96 Glimcher Realty Trust
97- 7 MOORESTOWN MALL Dec-97 1963/ Heitman/
(5) Moorestown, New Jersey 94 The Rouse Company
97- 8 NORTHWEST MALL Dec-97 1968/ The Rouse Company/
(4) Houston, Texas San Mall LLC
97- 9 ALMEDA MALL Dec-97 1968 The Rouse Company/
(4) Houston, Texas San Mall LLC
97-10 EASTPOINT MALL Dec-97 1956/ Eastpoint Mall LP/
Baltimore, Maryland 91 Shopco Advisory Corp.
97-11 CALPERS PORTFOLIO Dec-97 1978 Calpers/ERE Yarmouth/
1) Metrocenter Mall Coyote Holdings
Jackson, Mississippi
2) Lehigh Mall 1973/
Columbus, Mississippi 91/94
3) Greenville Mall 1972/
Greenville, Mississippi 86
97-12 SHELL PENSION PORTFOLIO Nov-97 Shell Pension Fund Entities/
1) Glynn Place Mall n/a Colonial Properties Trust
Burnswick, Georgia
2) Valdosta Mall n/a
Valdosta, Georgia
3) Lakeshore Mall n/a
Gainesville, Georgia
97-13 AETNA PORTFOLIO Aetna/
Nov-97
1) Mall of Abilene 1979 Enterprise Asset Management
Abilene, Texas
2) Sunset Mall 1979
San Angelo, Texas
97-14 VALLEY MALL Nov-97 1974/ Equitable Prime Property Fund/
Hagerstown, Maryland 95 Crown American Realty Trust
97-15 SHOPPING CTR. ASSOC. PORTFOLIO Nov-97 -- Shop. Ctr. Assoc.-JMB Group Trust/
Urban Shopping Centers
1) Fox Valley Mall
Aurora, Illinois
2) Hawthorn Center
Vermon Hills, Illinois
97-17 VALLEY HILLS MALL Oct-97 1978/ Valley Hills LP/
Hickory, North Carolina 96 General Growth Properties
97-17 COLONIAL PARK MALL Oct-97 1960/ Catalina Partners LP/
Harrisburg, Pennsylvania 87 Glimcher Realty Trust
<CAPTION>
MALL MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF
- ----------- --------------- ------------- ------------ ------------ ------- ---------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97- 1 $156,000,000 825,000 370,000 310,000 37.6% 98.0% $ 500 $12,000,000 $ 32.66
97- 2 $111,000,000 1,403,811 836,500 403,811 28.8% 84.0% $ 275 $11,000,000 $ 13.15
97- 3 $108,000,000 1,094,000 396,000 396,000 36.2% 90.0% $ 300 $ 8,700,000 $ 21.97
97- 4 $ 32,500,000 646,500 212,500 212,500 32.9% 97.0% $ 270 $ 3,168,750 $ 14.91
(1)
97- 5 $122,000,000 682,912 682,912 349,222 51.1% 90.0% $ 360 $10,300,000 $ 15.08
(1)
97- 6 $121,000,000 1,302,752 650.491 412,009 31.6% 81.0% $ 260 $11,495,000 $ 17.67
97- 7 $ 78,500,000 970,863 764,883 258,000 26.6% 75.0% $ 260 $ 7,850,000 $ 10.26
(5)
97- 8 $ 19,725,000 800,250 292,075 276,475 34.5% 74.5% $ 200 $ 2,400,000 $ 8.22
(4)
97- 9 $ 19,325,000 806,454 305,979 245,266 30.4% 77.0% $ 182 $ 2,400,000 $ 7.84
(4)
97-10 $ 81,000,000 862,313 693,344 241,146 28.0% 88.0% $ 312 $ 8,006,400 $ 11.55
97-11 $ 54,000,000 1,897,185 1,024,507 569,138 30.0% 77.0% $ 238 $ 6,560,000 $ 6.40
97-12 $ 97,000,000 1,428,401 1,129,120 530.744 37.2% 85.0% $ 229 $ 9,409,000 $ 8.33
97-13 $ 43,800,000 1,248,573 742,688 442,285 35.4% 85.0% $ 106 $ 4,599,000 $ 6.19
97-14 $ 31,700,000 664,831 541,431 277,083 41.7% 75.0% $ 265 $ 3,170,000 $ 5.85
97-15 $265,000,000 2,736,175 1,134,469 1,054,594 38.5% 87.0% $ 293 $22,000,000 $ 19.39
97-16 $ 34,600,000 618,152 205,856 205,856 33.3% 89.0% $ 301 $ 3,287,000 $ 15.97
97-17 $ 48,000,000 754,178 386,732 223,735 29.7% 94.0% $ 278 $ 4,800,000 $ 12.41
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
-------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ----------- --------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
97- 1 7.75% -- -- $422 $ 503 1.01
97- 2 9.91% -- -- $133 $ 275 1.00
97- 3 8.06% -- -- $273 $ 273 0.91
97- 4 9.75% -- -- $153 $ 153 0.57
(1)
97- 5 8.44% -- -- $179 $ 349 0.97
(1)
97- 6 9.50% -- -- $186 $ 294 1.13
97- 7 10.00% -- -- $103 $ 304 1.17
(5)
97- 8 12.17% -- -- $ 68 $ 71 0.36
(4)
97- 9 12.42% -- -- $ 63 $ 79 0.43
(4)
97-10 9.88% 10.00% 12.25% $117 $ 336 1.08
97-11 12.15% -- -- $ 53 $ 95 0.40
97-12 9.70% -- -- $ 86 $ 183 0.80
97-13 10.50% -- -- $ 59 $ 99 0.93
97-14 10.00% -- -- $ 59 $ 114 0.43
97-15 8.30% 8.50% 11.25% $234 $ 251 0.86
97-16 9.50% -- -- $168 $ 168 0.56
97-17 10.00% -- -- $124 $ 215 0.77
</TABLE>
<PAGE>
REGIONAL MALL SALES 1998
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR
NO. PROPERTY/LOCATION DATE BUILT
- ----------- ------------------------------- -------- -------
<S> <C> <C> <C>
97-18 CROSSROADS OF SAN ANTONIO Oct-97 1961/
San Antonio, Texas 87
97-19 THE OAKS MALL Sep-97 1978/
Gainesville, Florida 84/95
97-20 WESTROADS MALL Sep-97 1968/
Omaha, Nebraska 95
97-21 REGENCY SQUARE Sep-97 1975/
Richmond, Virginia 87
97-22 SPRINGDALE MALL Sep-97 1960/
Mobile, Alabama 88
97-23 STONEWOOD CENTER MALL Aug-97 1958/
(1) Downey, California 90
97-24 SAN FRANCISCO CENTER Aug-97 1988
(1) San Francisco, California
97-25 DADELAND MALL Aug-97 1962/
(2) Miami, Florida 91
97-26 VISALIA MALL Jul-97 1963/
Visalia, California 95
97-27 WEST TOWN MALL Jul-97 1972/
(2) Knoxville, Tennessee 96
97-28 MAZZA GALLERIE Jun-97 1977
Chevy Chase, Maryland
97-29 DAKOTA SQUARE Jun-97 1960/
(3) Minot, North Dakota 88
97-30 TRI-COUNTY MALL Jun-97 1980/
(3) Springfield, Cincinnati, Ohio 90
97-31 SOUTHDALE CENTER Jun-97 1956/
(3) Edina, Minnesota 91
97-32 TOWN EAST MALL Jun-97 1971/
(2) Dallas, Texas 86
97-33 EDEN PRAIRIE CENTER Jun-97 1976/
(2) Eden Prairie, Minnesota 89
97-34 SILVER LAKE MALL Jun-97 1989
Coeur D'Alena, Idaho
97-35 SOUTHLAKE MALL Jun-97 1976/
Morrow, Georgia 95
97-36 WHEATON PLAZA May-97 1960/
(2) Wheaton, Maryland 92
97-37 BROOKWOOD VILLAGE MALL May-97 1973/
Birmingham, Alabama 91
97-38 TOWNE MALL May-97 1985/
Elizabethtown, Kentucky 90
97-39 SECURITY SQUARE May-97 1972/
Baltimore, Maryland 86
<CAPTION>
MALL MALL MALL
SALE GRANTOR/ TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. GRANTEE SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF
- ----------- ------------------------------------- -------------- ------------ --------- --------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
97-18 Crossroads Mall 1996 LP/ $ 15,000,000 711,231 711,231 176,109 24.8% 83.0% $ 137
Red Oak Realty
97-19 Prudential Insurance/ $116,000,000 909,120 771,392 351,199 38.6% 96.0% $ 303
General Growth Properties
97-20 Prudential Insurance/ $ 90,000,000 1,079,246 562,146 382,836 35.5% 94.9% $ 297
General Growth/Ivanhoe, Inc.
97-21 Prudential Insurance/ $123,900,000 825,891 463,002 239,179 29.0% 99.0% $ 426
Taubman Realty Group
97-22 Cigna/ $ 26,050,000 926,386 478,386 190,074 20.5% 96.0% $ 220
CBL Associates Properties, Inc.
97-23 Hughes Investments/ $ 92,000,000 927,000 927,000 356,253 38.4% 86.0% $ 259
(1) The MaceRich Company
97-24 U.S. Power San Francisco, Inc./ $120,730,000 499,930 499,930 187,930 37.6% 96.0% $ 523
(1) Urban Shopping Centers
97-25 Equitable Life Assurance/ $268,000,000 1,433,552 451,130 483,067 24.3% 92.0% $ 649
(2) Simon DeBartolo Group
97-26 Cigna Investments, Inc./ $ 38,000,000 439,500 439,500 174,000 39.6% 95.0% $ 235
JP Reality Inc.
97-27 Jaguar/RREEF USA Found II/ $140,792,000 1,336,598 764,066 381,707 28.6% 90.0% $ 350
(2) Simon DeBartolo Group
97-28 5300 Wisconsin JV (Prudential)/ $ 28,000,000 274,034 274,034 121,081 44.2% -- --
City Center Retail Trust (McCaffery)
97-29 Equitable Life Prime Property Fund/ $ 51,500,000 693,606 566,722 327,088 47.2% -- $ 216
(3) Concordia LLC (O'Connor)
97-30 Equitable Life Prime Property Fund/ $141,300,000 1,340,803 836,082 439,891 32.8% -- $ 307
(3) Concordia LLC (O'Connor)
97-31 Equitable Life Prime Property Fund/ $118,000,000 1,240,888 467,104 467,104 37.6% 95.0% $ 354
(3) Concordia LLC (O'Connor)
97-32 Atlantic Freeholds II/ $113,000,000 1,236,619 425,574 425,574 34.4% 93.0% $ 305
(2) General Growth Properties, Inc.
97-33 GGP/Homart, Inc./ $ 19,900,000 864,443 325,843 325,843 37.7% 60.0% $ 225
(2) General Growth Properties, Inc.
97-34 Silver Lake Mall Ltd./ $ 27,000,000 331,543 331,543 97,165 29.3% 98.0% $ 225
JP Realty Inc.
97-35 Southlake Retail Venture/ $ 67,000,000 1,023,847 284,847 284,847 27.8% 88.0% $ 280
General Growth Properties
97-36 Gudelsky Family/ $ 51,000,000 1,006,301 827,213 353,020 35.1% -- $ 332
(2) Westfield America
97-37 Berkshire Reality Company/ $ 34,500,000 699,628 699,628 362,000 51.7% 92.0% $ 220
97-38 Heitman Retail Properties/ $ 22,100,000 340,564 340,564 149,692 44.0% 68.0% $ 223
Towne Mall LLC
97-39 Security Square Associates/ $ 44,500,000 1,038,033 363,622 266,157 25.6% 78.0% $ 250
Mountain Development Corp.
<CAPTION>
CAPITALIZATION RATES UNIT RATE COMPARISON
-------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ----------- ------------- -------- --------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
97-18 $ 1,500,000 $ 2.11 10.00% -- -- $ 21 $ 85 0.62
97-19 $ 9,520,720 $12.34 8.21% 8.75% 11.75% $150 $330 1.09
97-20 $ 7,798,307 $13.87 8.66% 9.25% 12.30% $160 $235 0.79
97-21 $ 9,671,240 $20.89 7.81% 8.25% 12.80% $268 $518 1.22
97-22 $ 2,900,000 $ 6.06 11.13% -- -- $ 54 $137 0.62
97-23 $ 8,700,000 $ 9.39 9.46% -- -- $ 99 $258 1.09
(1)
97-24 $ 8,947,952 $17.90 7.41% 7.40% -- $241 $642 1.23
(1)
97-25 $19,672,000 $43.61 7.34% -- -- $594 $770 1.19
(2)
97-26 $ 3,800,000 $ 8.65 10.00% -- -- $ 86 $218 0.93
97-27 $13,427,160 $17.57 9.54% 8.50% 11.00% $184 $369 1.05
(2)
97-28 -- -- -- -- -- $102 $231 --
97-29 $ 4,583,500 $ 8.09 8.90% 8.50% 12.00% $ 91 $157 0.73
(3)
97-30 $12,010,500 $14.37 8.50% 9.00% 11.90% $169 $321 1.05
(3)
97-31 $ 9,558,000 $20.46 8.10% 8.50% 11.90% $253 $253 0.71
(3)
97-32 $10,000,000 $23.50 8.85% -- -- $266 $266 0.87
(2)
97-33 $ 1,800,000 $ 5.52 9.05% -- -- $ 61 $ 61 0.27
(2)
97-34 $ 2,700,000 $ 8.14 10.00% -- -- $ 81 $278 1.24
97-35 $ 6,500,000 $22.82 9.70% -- -- $235 $235 0.84
97-36 $ 5,049,000 $ 6.10 9.90% -- -- $ 62 $144 0.44
(2)
97-37 $ 3,460,350 $ 4.95 10.03% -- -- $ 49 $ 95 0.43
97-38 $ 2,400,000 $ 7.05 10.86% -- -- $ 65 $148 0.66
97-39 $ 4,904,898 $13.49 11.02% 11.00% -- $122 $167 0.67
</TABLE>
<PAGE>
REGIONAL MALL SALES 1997
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
<TABLE>
<CAPTION>
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- ----------- ------------------------------ -------- ------- -----------------------------------
<S> <C> <C> <C> <C>
97-40 CENTURY PLAZA May-97 1975/ Century Plaza Company/
Birmingham, Alabama 95 General Growth Properties
97-41 SOMERSET MALL May-97 1981 N/A
Somerset, Kentucky N/A
97-42 PF PROPERTIES PORTFOLIO 4/997 1973/ PF Properties/
79
1) University Mall University Mall and Parkwood Mall
Chapel Hill, North Carolina Properties, LLC
2) Parkwood Mall and Plaza
Wilson, North Carolina
97-43 MONTEHIEDRA TOWN CENTER Apr-97 1993/ Big Beaver Rio & Kmart Corp/
Rio Piedras, Puerto Rico 94 Vornado Montehiedra Acquisition
97-44 MANHATTAN MALL Apr-97 1989 SZS 33 Associates/
New York, New York Andrew Penson
97-45 DAYTON MALL Mar-97 1969/ Heitman/JMB Advisory/
Dayton, Ohio 84/94 Gilmcher Reality Trust
97-46 SOUTH TOWNE CENTER Mar-97 1986/ Zell Merrill Lynch RE Opp./
Sandy, Utah 97 The Macerich Company
97-47 MARKETPLACE SHOPPING CENTER Mar-97 1976/ Champaign Venture/
Champaign, Illinois 1988 General Growth Properties
97-48 TYSONS CORNER CENTER Feb-97 1968/ State of Alaska Pension Fund/
(2) Fairfax, VA 96 Lsd Fee & Part. Leasehold
97-49 PUEBLO MALL Feb-97 1976 The Hahn Company/
Pueblo, Colorado Equities Development Corp.
97-50 SHADY BROOK MALL Jan-97 1980/ Equitable Life Assurance Society/
Columbia, Tennessee 96 GE Investment Corp.
SURVEY LOW:
SURVEY HIGH:
SURVEY MEAN:
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED BY MALL OWNER:
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR IS OWNED BY MALL OWNER:
<CAPTION>
CAPITALIZ-
ATION
RATES
MALL MALL MALL ---------
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP GOING-IN
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF OAR
- ----------- -------------- ------------ ------------ ------------ ------- ---------- ---------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97-40 $ 32,000,000 727,309 574,943 237,896 32.7% 68.0% $246 $ 3,500,000 $ 6.09 10.94%
97-41 $ 3,865,000 215,140 157,286 105,961 49.3% 87.0% -- $ 493,580 $ 3.14 12.77%
97-42 $ 47,400,000 948,842 948,842 401,134 42.3% 80.0% $250 $ 4,347,000 $ 4.58 9.17%
97-43 $ 74,400,000 525,452 525,452 200,050 38.1% 99.0% $340 $ 7,621,000 $14.50 10.24%
97-44 $135,000,000 874,602 847,602 195,728 23.1% 80.0% $350 $12,500,000 $14.75 9.26%
97-45 $ 91,000,000 1,329,514 663,375 484,689 36.5% 80.1% $220 $ 8,645,000 $13.03 9.50%
97-46 $ 98,000,000 1,229,054 1,229,054 450,000 36.6% 83.0% $250 $ 8,400,000 $ 6.83 8.57%
97-47 $ 70,000,000 831,111 831,111 188,302 22.7% 92.0% $275 $ 6,300,000 $ 7.58 9.00%
97-48 $412,000,000 1,874,101 1,874,101 832,473 44.4% 95.0% $455 $30,500,000 $16.27 7.40%
(2)
97-49 $ 22,250,000 579,730 293,396 196,868 34.0% -- $200 $ 2,619,779 $ 8.93 11.77%
97-50 $ 11,050,000 282,272 282,272 107,282 38.0% 94.0% $200 $ 1,289,488 $ 4.57 11.67%
$ 3,865,000 215,140 157,286 97,165 20.5% 60.0% $106 $ 493,580 $ 2.11 7.34%
$412,000,000 2,736,175 1,874,101 1,054,594 51.7% 99.0% $649 $30,500,000 $43.61 12.77%
$ 83,367,740 946,225 608,149 324,301 34.9% 86.8% $286 $ 7,476,625 $12.55 9.65%
$ 70,428,571 960,636 331,103 331,103 34.3% 87.4% $291 $ 6,144,821 $17.88 9.00%
$ 85,474,116 943,879 653,249 323,194 35.0% 86.7% $266 $ 7,698,592 $11.66 9.76%
<CAPTION>
CAPITALIZA
ATION RATES UNIT RATE COMPARISON
-----------
SALE TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR IRR PURCHASED SHOP GLA MULTIPLE
- ----------- ---------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
97-40 -- -- $ 56 $135 0.55
97-41
97-42 10.50% -- $ 50 $118 0.47
97-43 -- -- $142 372 1.09
97-44 -- -- $159 $890 1.97
97-45 9.25% 12.00% $137 $188 0.85
97-46 -- -- $ 80 $216 0.87
97-47 -- -- $ 84 $372 1.35
97-48 -- 10.50% $220 $495 1.09
(2)
97-49 -- -- $ 76 $113 0.57
97-50 -- -- $ 39 $103 0.51
7.40% 10.50% $ 21 $ 36 0.27
11.00% 13.43% $594 $770 1.97
9.11% 11.92% $139 $250 0.84
8.50% 11.90% $201 $201 0.68
9.16% 11.93% $129 $258 0.87
</TABLE>
- ------------------------------------------
(1) Leasehold interest.
(2) Partial interest adjusted to reflect 100% interest.
(3) Based on allocated sale price: part of 3-property transaction.
(4) Based on allocated sale price: part of 2-property transaction.
(5) Based on stabilized net income.
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
as well as the availability of capital made acquisitions much easier
compared to previous two to three years. In addition, sellers became
much more realistic in there pricing, recognizing that the long term
viability of a regional mall requires large infusions of capital.
The 29 transactions we tracked for the year range in size from
approximately $22.2 million to $451.0 million. The malls sold also
run the gamut of quality ranging from several secondary properties
in small markets to such higher profile properties as Old Orchard
Shopping Center in Chicago and The Plaza and Court at King of
Prussia in Philadelphia. Sale prices per square foot of mall shop
GLA range from $119 to $534 with a mean of $243. REIT's primary
focus on initial return with their underwriting centered on in place
income. As such, capitalization rates ranged from 7.0 percent to
12.1 percent with a mean of 9.44 percent.
o Mall sales activity in 1997 exceeded the number of sales tracked in
1996. REITs have continued to show their appetite for acquisitions.
Most of the sales which have occurred in the past 12 months involve
"B" grade malls. Exceptions exist with respect to Regency Square,
San Francisco Shopping Center, Tysons Corner, and most recently The
Falls Shopping Center in Miami, Florida. These properties are viewed
as among the nation's premier retail properties. The 50 transactions
we have tracked to date range in size from $3.9 million to $412.0
million. Unit sale prices also vary widely from $21 to $594 per
square foot of GLA sold. On the basis of mall shop GLA, the range is
from $36 to $770 per square foot. Overall rates fall between 7.34
percent and 12.77 percent, and average 9.65 percent. Mall shop sales
per square foot range from $106 to $649, with a mean of $286 per
square foot.
o Transactions during the first half of 1998 show that the pace of
acquisitions has not subsided. In addition to several portfolio
transactions, we have tracked 15 deals which point towards a further
lowering of cap rates as buyer's get more aggressive with their
pricing. REIT's are showing their persistent need to grow and we see
that the same players continue to compete for product. Cap rates are
expected to drop further into the second half of 1998.
In addition to the above, one of the best indicators of market value for
the subject is the recent purchase of the property by Macerich, which closed in
June 1998. According to representatives from Macerich, the price was
$170,500,000, all cash, for the 535,912 square feet of GLA. This equals $318.15
per square foot. The capitalization rate was 8.2. percent based on 1998
projected income of $14,002,000. The IRR was 11.0 percent and the terminal
capitalization rate was 9.0 percent. Rent, sales and expense growth assumptions
were 4.0 percent per year. Year -end 1998 comparable store sales were projected
to be $395 per square foot. This equals an increase of 5.9 percent over the
1997 amount. The property was marketed by Eastdil Realty Company and sold after
a total marketing/escrow period of about six months.
- -------------------------------------------------------------------------------
66
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
While these unit prices implicitly contain both the physical and economic
factors affecting the real estate, the statistics do not explicitly convey many
of the details surrounding a specific property. Thus, this single index to the
valuation of the subject property has limited direct application. The price per
square foot of mall shop GLA acquired yields one common form of comparison.
However, this can be distorted if anchor and/or other major tenants generate a
significant amount of income. The following chart shows this relationship along
with other selected indices.
==========================================================================
REGIONAL & SUPER-REGIONAL MALL SALES
SELECTED AVERAGE INDICES
==========================================================================
PRICE/SF OF PRICE/SF OF MALL
TRANSACTION TOTAL GLA SHOPS RANGE/OVERALL MEAN SALES MEAN
YEAR RANGE/MEAN** MEAN MULTIPLE OAR
- --------------------------------------------------------------------------
1991 $156 - $556 $203 - $556 1.17 6.44%
$282 $357
- --------------------------------------------------------------------------
1992 $136 - $511 $226 - $511 1.07 7.31%
$259 $320
- --------------------------------------------------------------------------
1993 $ 73 - $471 $173 - $647 1.15 7.92%
$242 $363
- --------------------------------------------------------------------------
1994 $ 83 - $378 $129 - $502 0.96 8.37%
$197 $288
- --------------------------------------------------------------------------
1995 $ 53 - $686 $ 93 - $686 0.96 9.13%
$193 $284
- --------------------------------------------------------------------------
1996 $ 44 - $534 $119 - $534 0.85 9.44%
$187 $243
- --------------------------------------------------------------------------
1997 $ 21 - $594 $ 36 - $770 0.84 9.65%
$142 $253
- --------------------------------------------------------------------------
1998 $ 49 - $258 $ 148 - $505 0.88 9.51%
$124 $244
==========================================================================
* Includes all transactions for particular year
** Based on total GLA acquired
==========================================================================
The table above shows that the annual average price per square foot of
total GLA acquired has ranged from $124 to $282 per square foot. A declining
trend has been in evidence as cap rates have risen. As discussed, one of the
factors which may influence the unit rate is whether anchor stores are included
in the total GLA which is transferred. Thus, a further refinement can be made
between those malls which have transferred with anchor space and those which
have included only mall GLA. The price per square foot of mall shop GLA has
declined from a high of $363 per square foot in 1993 to $243 per square foot in
1996. In 1997 the price per square foot increased to $253 per square foot.
Through the first half of 1998 it is showing $244 per square foot.
- -------------------------------------------------------------------------------
67
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
As the subject is theoretically selling both mall shop GLA and owned
department stores, we will look at the recent sales involving both mall shop
and anchor stores more closely. As a basis for comparison, we will analyze the
subject based upon the first year NOI. First year NOI has been projected to be
$26.85 per square foot based upon 535,912 square feet of owned GLA. Derivation
of the subject's projected net operating income is presented in the Income
Capitalization Approach section of this report. With projected NOI of $26.85
per square foot, the subject falls at the upper end of the range exhibited by
most of the comparable sales.
Since the income that an asset will produce has direct bearing on the
price that a purchaser is willing to pay, it is obvious that a unit price which
falls at the high-end of the range indicated by the comparables would be
applicable to the subject. The subject's anticipated net income can be
initially compared to the composite mean of the annual transactions in order to
place the subject in a frame of reference. This is shown on the following
chart.
====================================================
SUBJECT SUBJECT
SALES YEAR MEAN NOI FORECAST RATIO
====================================================
1991 $14.25 $26.85 188%
----------------------------------------------------
1992 $16.01 $26.85 168%
----------------------------------------------------
1993 $15.51 $26.85 173%
----------------------------------------------------
1994 $15.62 $26.85 172%
----------------------------------------------------
1995 $12.35 $26.85 217%
----------------------------------------------------
1996 $10.70 $26.85 251%
----------------------------------------------------
1997 $11.66 $26.85 230%
----------------------------------------------------
1998 $ 9.69 $26.85 277%
====================================================
* Data for years 1991 through 1996 are retained in
our files.
====================================================
With first year NOI forecasted at approximately 172 to 277 percent of the
mean of these sales in each year, the unit price which the subject property
would command should be expected to fall within a relative range.
NET INCOME MULTIPLIER METHOD
Many of the comparables were bought on expected income, not gross
leasable area, making unit prices a somewhat subjective reflection of
investment behavior regarding regional malls. In order to quantify the
appropriate adjustments to the indicated per square foot unit values, we have
compared the subject's first year pro forma net operating income to the pro
forma income of the individual sale properties. In our opinion, a buyer's
criteria for the purchase of a retail property is predicated primarily on the
property's income characteristics. Thus, we have identified a relationship
between the net operating income and the sales price of the property.
Typically, a higher net operating income per square foot corresponds to a
higher sales price per square foot. Therefore, this adjustment incorporates
factors such as location, tenant mix, rent levels, operating characteristics,
and building quality.
- -------------------------------------------------------------------------------
68
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
Provided below, we have extracted the net income multiplier from those
improved sales which we feel are the most comparable to the subject. We have
selected only those sales occurring in 1998 involving the purchase of both mall
shop and anchor GLA with the most similar incomes per square foot as compared
to the subject. The equation for the net income multiplier (NIM), which is the
inverse of the equation for the capitalization rate (OAR), is calculated as
follows:
NIM = Sales Price
-----------
Net Operating Income
=======================================================
NET INCOME MULTIPLIER CALCULATION
=======================================================
(divided by) = NET INCOME
SALE NO. PRICE/SF NOI/SF MULTIPLIER
=======================================================
98-2 $228 $16.90 13.49
-------------------------------------------------------
98-3 $133 $11.03 12.06
-------------------------------------------------------
98-11 $147 $13.25 11.09
-------------------------------------------------------
98-15 $118 $11.78 10.02
-------------------------------------------------------
MEAN $157 $13.24 11.67
-------------------------------------------------------
Valuation of the subject property utilizing the net income multipliers
(NIMs) from the comparable properties accounts for the disparity of the net
operating incomes (NOIs) per square foot between the comparables and the
subject. Within this technique, each of the adjusted NIMs are multiplied by the
NOI per square foot of the subject, which produces an adjusted value indication
for the subject. The net operating income per square foot for the subject
property is calculated at $26.85 per square foot, as detailed in the Income
Capitalization Approach section of this report.
=======================================================
ADJUSTED UNIT RATE SUMMARY
=======================================================
NET INCOME INDICATED
SALE NO. NOI/SF X MULTIPLIER PRICE = $/SF
=======================================================
98-2 $26.85 13.49 $362
-------------------------------------------------------
98-3 $26.85 12.06 $324
-------------------------------------------------------
98-11 $26.85 11.09 $298
-------------------------------------------------------
98-15 $26.85 10.02 $269
=======================================================
MEAN $26.85 11.67 $313.34
=======================================================
- -------------------------------------------------------------------------------
69
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
From the process above, we see that the indicated net income multipliers
range from 10.02 to 13.49 with a mean of 11.67. The adjusted unit rates range
from about $269 to $362 per square foot of owned GLA with a mean of $313 per
square foot.
Considering the characteristics of the subject, we believe that a unit
rate range slightly above the average, of $315 to $325 per square foot is
appropriate. This is supported by the recent purchase price of the subject at
$318.15 per square foot. Applying this unit rate range to 535,912 square feet
of owned GLA results in a value of approximately $168.8 million to $174.2
million for the subject. Based on the preceding analysis, and giving the most
weight to the recent price paid for the subject of $170,500,000, we have
concluded near the middle of the range at $170,500,000.
ESTIMATED VALUE - NET INCOME MULTIPLIER METHOD
ROUNDED TO $170,500,000
SALES MULTIPLE METHOD
Arguably, it is the mall shop GLA sold and its intrinsic economic profile
that is of principal concern in the investment decision process. A myriad of
factors influence this rate, perhaps none of which is more important than the
sales performance of the mall shop tenants. Accordingly, the abstraction of a
sales multiple from each transaction lends additional perspective to this
analysis.
The sales multiple measure is often used as a relative indicator of the
reasonableness of the acquisition price. As a rule of thumb, investors will
look at a sales multiple of 1.00 as a benchmark, and will look to keep it
within a range of 0.75 to 1.25 times mall shop sales performance unless there
are compelling reasons why a particular property should deviate.
The sales multiple is defined as the sales price per square foot of mall
GLA divided by average mall shop sales per square foot. As this reasonableness
test is predicated upon the economics of the mall shops, technically, any
income (and hence value) attributed to anchors that are acquired with the mall
as tenants should be segregated from the transaction. As an income (or sales)
multiple has an inverse relationship with a capitalization rate, it is
consistent that, if a relatively low capitalization rate is selected for a
property, it follows that a correspondingly above-average sales (or income)
multiple be applied. In most instances, we are not privy to the anchor's
contributions to net income. Therefore, the analysis shown below is limited to
those sales which involved mall shop GLA only.
- -------------------------------------------------------------------------------
70
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
=======================================
SALES MULTIPLE SUMMARY
=======================================
SALES
SALE NO. GOING-IN OAR MULTIPLE
=======================================
98-4 9.0% 0.75
---------------------------------------
98-8 9.3% 0.97
---------------------------------------
97-3 8.1% 0.91
---------------------------------------
97-4 9.8% 0.57
---------------------------------------
97-16 9.5% 0.56
---------------------------------------
97-31 8.1% 0.71
---------------------------------------
97-32 8.9% 0.87
---------------------------------------
97-35 9.7% 0.84
=======================================
MEAN 9.1% 0.77
=======================================
Sale 97-33 was excluded from the above dataset. Sale 97-33 was only 60
percent occupied at the date of sale. As such, the multiple of 0.27 is not very
meaningful.
The comparable mall sales show sales multiples that range from 0.56 to
0.97 with a mean of about 0.77. Excluding the extremes, the range narrows to
generally between 0.75 and 0.95.
Excluding partial year tenants the subject's 1997 sales volume
per-square-foot for reporting tenants equals approximately $315 per square foot
including anchors and $373 excluding anchors. We estimate a sales multiple near
the middle of the typical range at 0.85 (based on the subject's $373
per-square-foot sales volume) is appropriate for the subject. The indicated "As
Is" value by this method is summarized below.
1997 Mall Sales PSF: $373
Transferable GLA: 535,912 SF
Sales Multiple: 0.85
$373 x 0.85 x 535,912 = $169,910,900
Estimated As Is Value -
Sales Multiple Method
Rounded to: $170,000,000
- -------------------------------------------------------------------------------
71
<PAGE>
SALES COMPARISON APPROACH
- -------------------------------------------------------------------------------
SALES COMPARISON APPROACH CONCLUSIONS
The two methods we considered within the Sales Comparison Approach
provided the following indications of value for the subject property:
PRICE PER-SQUARE-FOOT: $170,500,000
SALES MULTIPLE ANALYSIS: $170,000,000
In addition to the preceding analysis, we give substantial weight to the
recent acquisition price for the subject at $170,500,000 which is well
supported by comparable sales data. Therefore, based on the indications
provided by the two methods we considered we conclude that the market value for
the leased fee interest in the subject property (including both Phases I & II)
by the Sales Comparison Approach is $170,500,000.
- -------------------------------------------------------------------------------
72
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
METHODOLOGY
The Income Approach is a method of converting the anticipated economic
benefits of owning property into a value estimate through capitalization. The
principle of "anticipation" underlies this approach in that investors recognize
the relationship between an asset's income and its value. In order to value the
anticipated economic benefits of a particular property, potential income and
expenses must be estimated, and the most appropriate capitalization method must
be selected.
The two most common methods of converting net income into value are
direct capitalization and discounted cash flow (DCF) analysis. In direct
capitalization, net operating income is divided by an overall rate extracted
from market sales to indicate a value. In the discounted cash flow method,
anticipated future net income streams and a reversionary value are discounted
to an estimate of net present value at a chosen yield rate (internal rate of
return).
In our opinion, both the direct capitalization and discounted cash flow
methods are appropriate for the subject. Large, investment grade retail
properties have generally been bought and sold based on the discounted cash
flow analysis. This method allows investors to model the property income and
expense patterns and compare the projected yield to alternative investments.
The discounted cash flow is the best method available for projecting and
analyzing the annual cash flows. However, in recent years, investors have been
shifting their emphasis away from sole reliance on the discounted cash flow
analysis while placing weight on the direct capitalization analysis of existing
net operating income.
In this Income Approach to the valuation of Westside Pavilion, we have
utilized a 10-year holding period for the investment with the cash flow
analysis commencing on July 1, 1998. Although an asset such as the subject has
a much longer useful life, an investment analysis becomes much more meaningful
if limited to a time period considerably less than the real estate's economic
life, but of sufficient length for an investor. A 10-year holding period for
this investment is long enough to model the asset's performance and leasing
strategy, but short enough to reasonably estimate the expected income and
expenses of the real estate.
The revenues and expenses which an informed investor may expect from the
subject property will vary over the holding period. Major investors active in
the market for this type of real estate establish certain parameters in the
computation of these cash flows and criteria for decision making which this
valuation analysis must include if it is to be truly market-oriented. These
current computational parameters are dependent upon market conditions relative
to the subject property type. Cushman & Wakefield regularly survey these market
participants. The results of our most recent Investor Survey are summarized in
the Addenda.
By forecasting the anticipating income stream and future value at
reversion, the discounting process may be applied to derive a value that an
investor would pay to receive that particular income stream. Investors
typically price real estate on their expectations of the magnitude of these
benefits and their judgment of the risks involved. Our valuation
- -------------------------------------------------------------------------------
73
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
methodology endeavors to reflect the most likely actions of typical buyers and
sellers of a property interest similar to the subject.
An analytical real estate computer model that simulates the behavioral
aspects of the property and examines the results mathematically is employed for
the discounted cash flow analysis. In this instance, we used the Pro-Ject +
Plus computer model and Lotus software. Since investors are the basis of the
marketplace in which the subject property will be bought and sold, this type of
analysis is particularly germane to the appraisal assignment at hand. Following
is a detailed discussion of the components which form the basis of this
analysis.
POTENTIAL GROSS REVENUES
The total potential gross revenues generated by a retail mall are
composed of a number of distinct elements: minimum rent determined by lease
agreement, an additional overage rent based upon a percentage of retail sales,
a reimbursement of certain expenses incurred in the ownership and operation of
the real estate, revenue generated from the sale of services and certain
utilities, temporary tenant or other specialized rental income, and other
miscellaneous revenues.
The minimum base rent represents a legal contract establishing a return
to the investors in the real estate, which the passing of certain expenses to
the tenants serves to maintain this return in an era of continually rising
costs of operation. The additional rent based upon a percentage of retail sales
serves to preserve the purchasing power of the residual income to an equity
investor over time. Revenue generated from the sale of other services offsets
the costs associated with providing these services. Finally, temporary tenant
rent and miscellaneous income can add an additional important source of revenue
in the complete operation of the property.
Potential gross income at the subject property is primarily generated as
minimum rent and expense recoveries from existing tenants. Additional revenue
sources include overage rental, and miscellaneous income from storage rents,
specialty income, marketing revenue, and other revenue.
The rental income which an asset such as the subject property will
generate for an investor is analyzed as to its liquidity, quantity, and
durability. The quality and probable duration of income will affect the amount
of risk which an informed investor may expect over the property's useful life.
The segregation of the income stream provides us greater insight into the make
up, or contribution of each revenue source, to the total income stream. Each
revenue source lends itself to a specific weighting of these variables as the
risk associated with each varies. The composition of the subject's mall revenue
stream, and the risk associated with each element, are considered and
incorporated into our analysis. We will discuss each component of the subject's
revenue sources in the following paragraphs.
MINIMUM RENTAL INCOME
The projection utilized in this analysis is based upon the actual rent
roll in place as of June 30, 1998 along with our assumptions relative to market
rent for the vacant spaces. The minimum rents forecasted for the subject
property are derived from the various tenant
- -------------------------------------------------------------------------------
74
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================
GROSS LEASEABLE AREA SUMMARY
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- ----------------------------------------------------------------------------------------------------
UNOWNED
OWNED GLA GLA TOTAL
====================================================================================================
<S> <C> <C> <C> <C>
Anchors
Robinson's May 220,000
Nordstrom 138,128
Pavilions 43,435
TOTAL ANCHORS: 181,563 220,000 401,563
Main Mall Stores
Level 1 95,842
Level 2 90,725
Level 3 67,327
Food Court 8,477
-----
TOTAL MAIN MALL STORES 262,371 262,371
Occupied Main Mall 258,845 98.7%
Vacant Main Mall 3,526 1.3%
Expansion Mall Stores
Level 1 (Incl.3 level Barnes & Noble) 47,968
Level 2 19,559
Level 3 24,451
------
TOTAL EXPANSION MALL STORES 91,978 91,978
Occupied Expansion Mall 36,862 40.1%
Vacant Expansion Mall 55,116 59.9%
GRAND TOTALS 535,912 220,000 755,912
Occupied Owned GLA 89.1%
Occupied Main Mall Shops 98.7%
Occupied Expansion Shops 40.1%
Total Development Occupancy 92.2%
====================================================================================================
</TABLE>
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
categories including main-mall tenants, expansion-mall tenants, and anchor
tenants. Robinson's-May owns its own building and pays only expenses to the
subject landlord related to the continued operation and maintenance of the
parking garage. Nordstrom and Pavilions pay rent according to the terms of
their leases and also make a contribution to the operating expense pool for the
property. The following discussion sets forth the pertinent data covering the
rental income sources for the subject regional mall.
OCCUPANCY
We reviewed a rent roll and lease abstracts detailing the lease terms for
approximately 130 occupied stores with a combined 477,270 square feet or 89.1
percent of the total gross leasable area of 535,912 square feet under subject
ownership. This gross leasable area figure includes 164 mall stores (36 vacant
and 128 occupied), Nordstrom and Pavilions. These figures exclude the 220,000
square foot Robinson's-May store under separate ownership. Including this store
the Westside Pavilion development totals 755,912 square feet. Based on this
gross leasable area figure, the subject is 92.2 percent occupied. The chart on
the ACCOMPANYING PAGE summarizes the total area reconciliation for the subject
mall.
On the following pages is an analysis of the subject's gross income
potential. This analysis includes a discussion of contract rental rates, market
rental rates, gross sales and percentage rental income, recovery income, and
other income sources.
TENANT OVERVIEW
The subject Westside Pavilion consists of two components: 1) an enclosed
three level mall ("main mall"); and 2) a three level open air mall ("expansion
mall") which occupies the southwest corner of Pico and Westwood Boulevards. The
accompanying exhibits provide an overview of the layout of the improvements,
and the leasable areas of the components of the center.
ANCHOR TENANTS
The subject center is anchored by Nordstrom and Robinson's-May Department
stores as well as a Pavilions supermarket. Robinson's-May occupies it own
220,000 square foot building. Nordstrom leases a 138,128 square foot building
per the terms of a 51 year lease. Nordstrom pays an annual base rental of
$221,000 or $1.60 per-square-foot, fixed over the term. Pavilions occupies a
43,435 square foot store located in the parking level below Level One of the
main mall. Pavilions pays an annual base rental of $650,000 or $14.96
per-square-foot, fixed over the term.
MAIN MALL-LEVEL 1
The chart on an accompanying page and corresponding lease plan illustrate
the layout and contract rents of the tenants which occupy the first level of
the main-mall. This section of the enclosed mall is located between the
entrances to the Robinson's-May and Nordstrom department stores. The total
gross leasable area of the first level of the main mall is 95,842 square feet
or 17.9 percent of the total area of 535,912 square feet. This section of the
enclosed mall is currently configured for 46 tenants (including four ATM
spaces) ranging in size from 12 to 9,921 square feet. Store frontages range
from 17 feet to 85 feet and store depths range from 28 to 126 feet.
- -------------------------------------------------------------------------------
75
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================
FIRST FLOOR MAIN MALL CONTRACT RENTS
WESTSIDE PAVILION
======================================================================================================
CURRENT
SUITE TENANT SIZE RENT/SF
- ----- ------ ---- -------
<S> <C> <C> <C> <C>
174 Bare Escentuals 724 $75.00
163 BCBG Shoes 808 $65.00
167 Mrs. Field's Cookies 808 $90.67
147 Carriage Trade 909 $60.00
139 Easy Spirit 945 $60.00
143 Body Shop, The 960 $60.00
187 Optometric Options 980 $102.24
--- -------
1ST FLOOR AVG. < 1,000 SF 6,134 $73.22
- ------------------------------------------------------------------------------------------------------
135 Shoe Lord 1,001 $60.00
155 Perfumania 1,010 $60.00
182 Bisou-Bisou 1,107 $70.00
151 Papyrus 1,111 $50.00
159 Leathermode 1,111 $65.00
171 First Bellissimo 1,288 $58.00
119 Jones New York 1,317 $52.98
175 Planet Punk 1,465 $50.00
179 Lili's Boutique 1,474 $55.00
115 Le Prestige 1,482 $55.00
123 Charles David 1,486 $55.00
189 BCBG 1,826 $57.51
186 Privilege 1,866 $69.81
101 Zales Jewelers 1,966 $52.03
----- ------
1ST FLOOR AVG. 1,001 - 2,000 SF 19,510 $57.69
- ------------------------------------------------------------------------------------------------------
162 Foot Locker 2,003 $48.00
100 Lisa's Beauty Supply 2,021 $30.00
129 Morgan Paris 2,043 $45.00
158 Steve Madden 2,147 $34.58
170 Vencci 2,192 $48.00
154 Bassini 2,384 $45.00
120 Bebe 2,471 $60.00
113 Barami Stuido 2,774 $30.00
136 Jan's Hallmark 2,810 $45.00
----- ------
1ST FLOOR AVG. 2,001 - 3,000 SF 20,845 $42.86
- ------------------------------------------------------------------------------------------------------
199 LensCrafters 3,192 $35.28
193 Sisley 3,255 $31.00
132 Nine West 3,911 $35.17
124 Champs Sports 4,488 $33.00
----- ------
1ST FLOOR AVG. 3,001 TO 5,000 SF 14,846 $33.62
- ------------------------------------------------------------------------------------------------------
116 Guess ? 5,380 $45.00
197 Panda Inn 5,863 $24.00
114 Lechter's 6,119 $33.45
104 Waldenbooks / Waldenkids 6,557 $25.00
146 Limited, The 9,921 $33.00
----- ------
1ST FLOOR AVG. 5,001 - 10,000 SF 33,840 $31.88
======================================================================================================
TOTAL 1ST FLOOR AVG: 95,175 $42.51
======================================================================================================
</TABLE>
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[1ST LEVEL - MAIN MALL MAP]
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
A total of 41 tenants were in occupancy as of June 30, 1998 (including a
kiosk Activate Cellular and two ATM spaces), the date of the most recent rent
roll we reviewed. The shop tenants (excluding ATM's and the kiosk) occupy
95,175 square feet or 99.3 percent of this section of the enclosed mall and
have per-square-foot rental rates which range from $24 to $102.24 annually on a
triple net basis. The average rental rate for the shop tenants on the first
level of the main mall is $42.51 per square foot. Compared to the mall's
comparable store sales of $373 per square foot as of year-end 1997, this equals
a rent-to-sales ratio of 11.4 percent.
There were four vacant spaces on the first level of the main mall as of
June 30, 1998, including two kiosks of 185 and 150 square feet each, and two
ATM spaces of 12 square feet each, for a total of 359 square feet.
MAIN MALL-LEVEL 2
The chart on an accompanying page and corresponding lease plan illustrate
the layout and lease terms of the tenants which occupy the second level of the
main-mall. This section of the enclosed mall is located between the entrances
to the Robinson's-May and Nordstrom department stores between the first and
third levels. The total gross leasable area of the subject's second level of
the main mall equals 90,725 square feet or 16.9 percent of the total area of
535,912 square feet. This section of the enclosed mall is currently configured
for 37 tenants ranging in size from 205 to 10,360 square feet. Store frontages
range from 12 feet to 96 feet and store depths range from 10 to 112 feet.
A total of 37 tenants were in occupancy as of June 30, 1998, or 100
percent of the second floor space (including a 205 square foot kiosk shown in a
different chart). The per-square-foot rental rates range from $18.00 to $195.12
annually on a triple net basis. The upper end of this range corresponds to the
rental rate for Watch Collection, the smallest tenant in this area of the mall
with 205 square feet. Typical per-square-foot rental rates in this section of
the enclosed mall are within the $35 to $45 per-square-foot range and the
average per-square-foot rental rate for the subject's second level of the main
mall equals $38.41. Compared to the mall's comparable store sales of $373 per
square foot as of year-end 1997, this equals a rent-to-sales ratio of 10.3
percent. There were no vacancies on the second level main mall as of June 30,
1998.
MAIN MALL-LEVEL 3 (EXCLUDES FOOD COURT)
The chart on an accompanying page and corresponding lease plan illustrate
the layout and lease terms of the tenants which occupy the third level of the
main-mall. This section of the enclosed mall is located between the entrances
to the Robinson's-May and Nordstrom department stores, and excludes the food
court. The total gross leasable area of the subject's third level of the main
mall is 67,327 square feet (excluding the food court) or 12.6 percent of the
total area of 535,912 square feet. This section of the enclosed mall is
currently configured for 32 tenants ranging in size from 12 to 8,321 square
feet (the lower end is for vacant ATM space and the upper end of the range is
for the cinemas). Store frontages range from 14 feet to 128 feet and store
depths range from 10 to 84 feet.
- -------------------------------------------------------------------------------
76
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================
SECOND FLOOR MAIN MALL CONTRACT RENTS
WESTSIDE PAVILION
====================================================================================================
CURRENT
SUITE TENANT SIZE RENT/SF
- ----- ------ ---- -------
<S> <C> <C> <C> <C>
280 LA Nails 469 $60.00
203 Shoe Care 492 $61.00
229 Sunglass Place 516 $75.00
292 Servis & Taylor 581 $75.00
297 Splendiferous 701 $60.00
296 What A Kick 783 $42.00
--- ------
2ND FLOOR AVG. < 1,000 SF 3,542 $60.81
- ----------------------------------------------------------------------------------------------------
235 Claire's Accessories 1,049 $65.00
276 Carlton Hair 1,057 $68.00
267 Spencer Gifts 1,140 $50.00
288 Cathy Jean 1,152 $50.00
272 Lids 1,189 $45.00
201 See's Candies 1,200 $45.00
231 Speedo Authentic Fitness 1,200 $52.00
225 J.C.C. 1,223 $52.00
215 Regis Hairstylists 1,234 $34.00
285 Things Remembered 1,294 $50.00
219 Ritz Camera 1 Hour Photo 1,318 $44.00
268 Franklin Mint Gallery, The 1,355 $45.00
263 Track 'N Trail 1,782 $40.00
289 Going To The Game 1,841 $40.00
293 Skechers 1,956 $40.00
----- ------
2ND FLOOR AVG. 1,001 - 2,000 SF 19,990 $46.87
- ----------------------------------------------------------------------------------------------------
264 Garden Botanika 2,053 $45.00
207 Field Management Associates 2,308 $23.02
227 Lady Footlocker 2,317 $48.00
251 Kiney Shoes 2,340 $42.00
211 Payless ShoeSource (#5615) 2,347 $18.00
257 Bath & Body Works 2,403 $42.00
221 Suncoast Motion Picture Co. 2,546 $45.32
----- ------
2ND FLOOR AVG. 2,001 - 3,000 SF 16,314 $37.61
- ----------------------------------------------------------------------------------------------------
248 Contempo Casuals 3,628 $38.00
271 Bombay Company, The 3,889 $33.00
241 Structure 4,345 $36.00
----- ------
2ND FLOOR AVG. 3,001 - 5,000 SF 11,862 $35.63
- ----------------------------------------------------------------------------------------------------
200 Lane Bryant 5,683 $22.00
256 Rampage 6,422 $35.00
220 Victoria's Secret 7,574 $31.00
204 Express 8,773 $33.00
232 Gap, The 10,360 $40.00
------ ------
2ND FLOOR AVG. 5,001 & UP 38,812 $33.20
====================================================================================================
TOTAL 2ND FLOOR AVG: 90,520 $38.41
====================================================================================================
</TABLE>
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[2ND LEVEL - MAIN MALL MAP]
<PAGE>
<TABLE>
<CAPTION>
================================================================================================
THIRD FLOOR MAIN MALL CONTRACT RENTS
(EXCLUDING FOOD COURT)
WESTSIDE PAVILION
================================================================================================
CURRENT
SUITE TENANT SIZE RENT/SF
- ----- ------ ---- -------
<S> <C> <C> <C> <C>
309 Tasties 231 $151.52
378 Jewelry Collection 480 $90.00
332 Coffee Merchant, The 751 $75.00
373 Westside One Hour Photo 763 $55.00
384 Raymond Sassoon 792 $50.51
397 Motherhood Maternity 800 $55.00
380 Pretzel Time 829 $55.00
382 Game Keeper, The 901 $45.00
--- ------
3RD FLOOR AVG. < 1,000 SF 5,547 $62.49
- ------------------------------------------------------------------------------------------------
368 Brook Shoes for Kids 1,060 $48.00
325 Sweet Factory 1,108 $55.00
376 Elza 1,147 $55.00
387 Everything But Water 1,278 $51.00
375 Sunglass Hut 1,310 $50.00
353 Electronics Boutique 1,358 $50.00
372 Bon Voyage 1,415 $40.00
321 General Nutrition Center 1,608 $45.00
----- ------
3RD FLOOR AVG. 1,001 - 2,000 SF 10,284 $48.86
- ------------------------------------------------------------------------------------------------
369 Natural Wonders 2,091 $36.00
379 Gymboree 2,177 $45.00
385 Westime 2,432 $45.00
333 Pacific Sunwear 2,514 $45.00
341 Right Start, The 2,629 $40.00
395 Tutto Bimbi 2,988 $30.00
----- ------
3RD FLOOR AVG. 2,001 - 3,000 SF 14,831 $39.82
- ------------------------------------------------------------------------------------------------
354 Limited Tool 3,322 $40.00
349 Kay-Bee Toy & Hobby 3,843 $45.00
346 Banana Republic (Men) 4,237 $36.00
358 Disney Store, The 4,500 $22.00
361 Banana Republic 4,830 $45.00
----- ------
3RD FLOOR AVG. 3,001 - 5,000 SF 20,732 $37.37
- ------------------------------------------------------------------------------------------------
342 Gap Kids 6,421 $45.00
301 Goldwyn Pavilion Cinemas 8,321 $25.00
----- ------
3RD FLOOR AVG. 5,001 - 10,000 SF 14,742 $33.71
================================================================================================
TOTAL 3RD FLOOR AVG: 66,136 $41.00
================================================================================================
</TABLE>
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[3RD LEVEL - MAIN MALL MAP]
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
A total of 29 tenants were in occupancy as of June 30, 1998, including
in-line shops Sprint PCS kiosk, an ATM and Previews (theater preview
advertising space). The in-line shop tenants occupy 66,136 or 98.2 percent of
this section of the enclosed mall and have per-square-foot rental rates which
range from $22.00 to $151.52 annually on a triple net basis. The upper end of
this range corresponds to the rental rate for Tasties, the smallest tenant in
this area of the mall with 231 square feet. The average per-square-foot rental
rate for the third level of the main mall equals $41.00. Compared to the mall's
comparable store sales of $373 per square foot as of year-end 1997, this equals
a rent-to-sales ratio of 11.0 percent.
There were 1,146 square feet of vacant space available for lease on this
level as of June 30, 1998. These vacant space includes one 1,122 square foot
in-line space and two ATM spaces with 12 square feet each.
FOOD COURT-LEVEL 3
The chart on an accompanying page and corresponding lease plan illustrate
the layout and lease terms of the subject's food court tenants. This section of
the enclosed mall is located near the entrance to the cinemas and the
Robinson's-May department store on the third level of the main mall. The total
gross leasable area of the food court equals 8,477 square feet or 1.6 percent
of the total enclosed mall area of 535,912 square feet. This section of the
enclosed mall is currently configured for 14 tenants ranging in size from 144
to 991 square feet. Store frontages range from 9 feet to 43 feet and store
depths range from 17 to 38 feet.
A total of 11 tenants were in occupancy as of June 30, 1998, with three
vacant food court suites. The tenants occupy 6,444 square feet or 76 percent of
this section of the enclosed mall and have per-square-foot rental rates which
range from $80.00 to $173.61 annually on a triple net basis. The upper end of
the range in contract rental rates corresponds to the smallest lease to a food
court kiosk which is only 144 square feet in size. Typical per-square-foot
rental rates in this section of the enclosed mall are in $90 to $100
per-square-foot range and the average per-square-foot rental rate for the court
tenants equals $107.87 per-square-foot. Compared to the year-end 1997
comparable store sales level of $691 per square foot for the food court alone,
this equals a rent-to-sales ratio of 15.6 percent.
SUBJECT EXPANSION MALL
The subject includes a three level expansion component located at the
southwest corner of Pico and Westwood Boulevards. The subject expansion mall is
connected to Nordstrom's third level entrance via a pedestrian bridge which
extends over Westwood Boulevard. The subject expansion component totals 91,978
square feet and is 40.1 percent occupied by six tenants. Several other
temporary tenants are in occupancy and are not shown on the rent roll, as these
tenants are counted as specialty tenant income. The accompanying map and
corresponding contract rent summary specify the layout and occupancy status
(levels one through three). Barnes & Noble is the major tenant within the
subject expansion component and occupies a prime three level corner space
totaling 27,586 square feet. The Barnes & Noble lease is for a 15 year primary
term with a current
- -------------------------------------------------------------------------------
77
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================
FOOD COURT CONTRACT RENTS
WESTSIDE PAVILION
=========================================================================================
CURRENT
SUITE TENANT SIZE RENT/SF
----- ------ ---- -------
<S> <C> <C> <C> <C>
316 Croissants & More 144 $173.61
328 Ice N' Cream 320 $160.00
304 Hot Dog On A Stick 507 $98.62
308 California Steak & Fries 535 $95.00
326 New York Deli 602 $91.36
320 East Wind 603 $85.00
324 California Crisp 603 $90.00
322 Hana Grill 622 $99.00
318 Fajita Flats 700 $80.00
310 Panda Express 817 $134.64
300 Sbarro 991 $131.18
--- -------
FOOD COURT AVG. 6,444 $107.87
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
EXPANSION MALL CONTRACT RENTS
WESTSIDE PAVILION
=========================================================================================
CURRENT
SUITE TENANT SIZE RENT/SF
----- ------ ---- -------
<S> <C> <C> <C> <C>
401 Barnes & Noble 27,586 $30.83
505 Politically Incorrect 516 $30.00
513 Tony Roma's 4,309 $41.00
603 Linear 1,200 $65.00
604 McDonald's 1,152 $51.22
616 Baja Buds Del Norte 2,099 $13.22
----- ------
EXPANSION MALL AVG. 36,862 $32.75
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
ATM & KIOSK CONTRACT RENTS
WESTSIDE PAVILION
=========================================================================================
CURRENT
SUITE TENANT SIZE RENT/SF
----- ------ ---- -------
<S> <C> <C> <C> <C>
6 King ATM 12 $1,250.00
ATM1 ATM 16 $937.50
9016 Previews, Etc. 21 $857.14
330 Sprint PCS 36 $833.33
103 Activate Cellular 100 $700.00
--- -------
ATM AVG: 185 $800.00
KIOSKS:
9001 Colorado Pen 180 $266.67
202 Watch Collection 205 $195.12
--- -------
KIOSK AVG: 385 $228.57
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================
ANCHORS CONTRACT RENT
WESTSIDE PAVILION
=========================================================================================
<S> <C> <C> <C>
Pavilions 43,435 $14.96
Nordstrom 138,128 $1.60
------- -----
ANCHORS AVERAGE: 181,563 $4.80
=========================================================================================
AVERAGE CONTRACT RENT OF ALL SPACE: 477,270 $27.75
AVERAGE CONTRACT RENT W/O ANCHORS: 295,707 $41.84
</TABLE>
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[1ST LEVEL - WEST EXPANSION]
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[2ND LEVEL - WEST EXPANSION]
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[3RD LEVEL - WEST EXPANSION]
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
per-square-foot rental rate of $30.83 annually. The three levels of the subject
expansion mall are analyzed below.
EXPANSION MALL-LEVEL 1 - We have included 100 percent of the three level
Barnes & Noble space within our analysis of level one of the expansion mall.
Based on the figures included on the accompanying rent roll, level one of the
subject expansion mall contains 47,968 square feet. Barnes & Noble is the only
permanent tenant in occupancy on the first floor of the expansion mall, at a
rent of $30.83 per square foot.
EXPANSION MALL-LEVEL 2 - This section of the expansion mall totals 19,559
square feet of gross leasable area and currently has only two tenants
(Politically Incorrect and Tony Roma's). The Tony Roma's lease is scheduled to
extend through April, 2003 and the current contract rental rate equals $41.00
annually. Access to this area of the expansion mall is limited as pedestrians
are required to use either escalators or an elevator. Tony Roma's performs
surprisingly well, exhibiting estimated 1997 sales of $408 per-square-foot or a
rent to sales ratio of 10.0 percent.
EXPANSION MALL-LEVEL 3 - The third level of the expansion mall is
accessible via a pedestrian bridge, which extends from the third level entrance
of Nordstrom over Westwood Boulevard. As a result of the Nordstrom influence,
the third level of the expansion mall performs reasonably well relative to
levels one and two. Tenants on the third level include Linear, McDonalds and
Baja Buds, plus temporary tenants such as The Walking Company. The rents for
these tenants ranges from $13.22 per square foot per year for Baja Buds to
$65.00 per square foot for Linear Hair. McDonald's pays $51.22 per square foot
and attracts considerable customer traffic due to the large outside seating
area.
ATM & KIOSK SPACE
The chart on the accompanying page also illustrates the current contract
rents for the ATMs and kiosks in occupancy at the subject. The five ATMs (and
Previews) have an average rent of $800 per square foot with a range from $700
to $1,250 per square foot. The two kiosks have an average rent of $228.57,
ranging from $195.12 to $266.67 per square foot.
AVERAGE CONTRACT RENT - MAIN MALL
The summary chart on the accompanying page illustrates the average
contract rents for the subject property. The total contract rents for the owned
GLA is summarized in the top chart. The lower chart shows rents for the main
mall shop space only, and is categorized by size.
As shown, the first floor average rent equals $42.51 per square foot, the
second floor average contract rent equals $38.41 per square foot and the third
floor space averages $41.00 per square foot. This corresponds with the
management's comment that the first floor sales are highest, followed by the
third floor tenants, with the second floor coming in last. Including the other
components of the mall, the average contract rent for all space, including
anchors, is $27.75 per square foot, and excluding anchors is $41.84 per square
foot. Compared to the 1997 comparable mall shop sales of $373 per square foot,
this indicates an overall rent-to sales ratio, excluding anchors, of 11.2
percent.
- -------------------------------------------------------------------------------
78
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================
SUMMARY OF CONTRACT RENTS
CATEGORIZED BY FLOOR & SIZE
WESTSIDE PAVILION
==========================================================================================
<S> <C> <C>
1st Floor Avg. < 1,000 SF 6,134 $73.22
1st Floor Avg. 1,001 - 2,000 SF 19,510 $57.69
1st Floor Avg. 2,001 - 3,000 SF 20,845 $42.86
1st Floor Avg. 3,001 to 5,000 SF 14,846 $33.62
1st Floor Avg. 5,001 - 10,000 SF 33,840 $31.88
------ ------
TOTAL 1ST FLOOR AVG: 95,175 $42.51
2nd Floor Avg. < 1,000 SF 3,542 $60.81
2nd Floor Avg. 1,001 - 2,000 SF 19,990 $46.87
2nd Floor Avg. 2,001 - 3,000 SF 16,314 $37.61
2nd Floor Avg. 3,001 - 5,000 SF 11,862 $35.63
2nd Floor Avg. 5,001 & Up 38,812 $33.20
------ ------
TOTAL 2ND FLOOR AVG: 90,520 $38.41
3rd Floor Avg. < 1,000 SF 5,547 $62.49
3rd Floor Avg. 1,001 - 2,000 SF 10,284 $48.86
3rd Floor Avg. 2,001 - 3,000 SF 14,831 $39.82
3rd Floor Avg. 3,001 - 5,000 SF 20,732 $37.37
3rd Floor Avg. 5,001 - 10,000 SF 14,742 $33.71
------ ------
TOTAL 3RD FLOOR AVG: 66,136 $41.00
FOOD COURT AVERAGE 6,444 $107.87
EXPANSION MALL AVG. 36,862 $32.75
ATM AVG: 185 $800.00
KIOSK AVG: 385 $228.57
ANCHORS AVERAGE: 181,563 $4.80
==========================================================================================
AVERAGE CONTRACT RENT OF ALL SPACE: 477,270 $27.75
AVERAGE CONTRACT RENT W/O ANCHORS: 295,707 $41.84
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
==========================================================================================
SUMMARY OF CONTRACT RENTS
CATEGORIZED BY SIZE
WESTSIDE PAVILION
==========================================================================================
<S> <C> <C>
1st Floor Avg. < 1,000 SF 6,134 $73.22
2nd Floor Avg. < 1,000 SF 3,542 $60.81
3rd Floor Avg. < 1,000 SF 5,547 $62.49
----- ------
AVERAGE < 1,000 SF 15,223 $66.42
1st Floor Avg. 1,001 - 2,000 SF 19,510 $57.69
2nd Floor Avg. 1,001 - 2,000 SF 19,990 $46.87
3rd Floor Avg. 1,001 - 2,000 SF 10,284 $48.86
------ ------
AVERAGE 1,001 - 2,000 SF 49,784 $51.52
1st Floor Avg. 2,001 - 3,000 SF 20,845 $42.86
2nd Floor Avg. 2,001 - 3,000 SF 16,314 $37.61
3rd Floor Avg. 2,001 - 3,000 SF 14,831 $39.82
------ ------
AVERAGE 2,001 - 3,000 SF 51,990 $40.35
1st Floor Avg. 3,001 to 5,000 SF 14,846 $33.62
2nd Floor Avg. 3,001 - 5,000 SF 11,862 $35.63
3rd Floor Avg. 3,001 - 5,000 SF 20,732 $37.37
------ ------
AVERAGE 3,001 - 5,000 SF 47,440 $35.76
1st Floor Avg. 5,001 - 10,000 SF 33,840 $31.88
2nd Floor Avg. 5,001 & Up 38,812 $33.20
3rd Floor Avg. 5,001 - 10,000 SF 14,742 $33.71
------ ------
AVERAGE 5,001 SF & UP 87,394 $32.77
==========================================================================================
</TABLE>
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
In the lower chart, the contract rates categorized by size indicate a
fairly consistent trend in rates. As size increases, the contract rent averages
decline. The average rent ranges from $66.42 per square foot for space less
than 1,000 square feet to as low as $32.77 per square foot for the largest
category of 5,001 square feet and over. Within the size groups, the variance
between the average rents on each floor indicate similar trends as in the chart
above.
MARKET RENT
Appropriate market rent estimates for the subject vary according to
location within the center, size of the space, frontage relative to depth, and
to a degree, the of tenancy projected for the lease area. Since the tenant mix
of the mall is important to the overall success of the center and some tenants
can afford to pay higher rents because of the sales volumes and profit margins,
we attempted to consider a cross section of rental rates for various tenant
sizes and locations in estimating market rent.
We estimated appropriate market rental rates for the subject by
reconciling the indications provided by several methods typically considered in
the marketplace: 1) a comparison of comparable leases signed for space in
competitive malls in the southern California market area; 2) an analysis of
recent leasing activity in the subject mall; and 3) an analysis of the
relationship between sales volumes, minimum rents, and total occupancy costs
based on acceptable industry standards. The data and analysis are presented
below:
LEASING ACTIVITY - COMPARABLE REGIONAL MALLS
The chart on the accompanying pages details the terms of the recently
signed leases involving a range in tenant type and sizes in a number of
competitive Southern California regional malls. The leases range two to 20
years in length, with seven to 10 years as the most typical terms. Prior to
other considerations the rental rates typically decrease in direct proportion
to the increase in the size of the space. The weighted average effective rental
rates for the comparable data range from about $19.63 per-square-foot for the
largest size category (10,000 square feet and above) to $93.03 per-square-foot
for the less than 499 square foot size category. Kiosks averaged $223.93 per
square foot in rent.
Most of the comparable leases involved space taken "as is" by the
tenants, with no buildout allowance provided by the landlord. Several of the
larger tenants received fairly substantial tenant improvement allowances,
however, particularly the national tenants which are in high demand. The tenant
allowances for the most desirable tenants often range from $20 to $100
per-square-foot. The top tier Los Angeles County malls (West Los Angeles) do
not typically provided tenant allowances, however.
The contract rental rates for the comparable leases vary considerably in
terms of the rent escalations. The effective rental column included in the
detailed rental chart incorporates rental increases scheduled during the term
of the lease, and the terms range from flat for 10 years, to periodic increases
(typically every two to five years of the term). The leases do not typically
include free rent concessions.
- -------------------------------------------------------------------------------
79
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
RECENT REGIONAL MALL LEASES
SOUTHERN CALIFORNIA
===================================================================================================================================
DATA TENANT NAME RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. KIOSK/ATM AREA(SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Starbucks (Kiosk) 182 Jun-98 May-08 10 $153.85 $9-$14 0.0% $0.00 $164.84
2 Piercing Pagoda (Kiosk) 120 Jul-97 Jun-00 3 $225.00 $9-$14 10.0% $0.00 $225.00
3 Golden Chain Gang (Kiosk) 120 Apr-98 Mar-01 3 $225.00 $9-$14 10.0% $0.00 $225.00
4 Sunglass Hut (Kiosk) 120 Sep-97 Aug-00 3 $225.00 $9-$14 8.0% $0.00 $225.00
5 Kern Schools (Atm) 49 May-97 Apr-00 3 $204.08 $ 0.00 0.0% $0.00 $204.08
6 Wells Fargo Bank (Atm) 100 Sep-97 Aug-02 5 $120.00 $ 0.00 0.0% $0.00 $120.00
7 Piercing Pagoda (Kiosk) 100 May-97 Apr-02 5 $300.00 $12.00 10.0% $0.00 $300.00
8 Plumb Gold (Kiosk) 100 Sep-97 Aug-02 5 $300.00 $12.00 10.0% $0.00 $300.00
9 Bank of America (Atm) 64 Feb-97 Feb-07 10 $300.00 $ 0.00 0.0% $0.00 $325.78
--
955 Effective Rental Minimum $120.00
Effective Rental Maximum $325.78
Weighted Average Rent $223.93
Weighted Average TIA $ 0.00
<CAPTION>
DATA 0 SF-499 SF RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA(SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 Town Center Flowers 463 Feb-97 Jan-00 3 $ 43.20 $18.56 7.0% $ 0.00 $ 43.20
11 Let's Talk Cellular &
Wireless 200 Mar-97 Feb-04 7 $150.00 $12.89 N/a $ 0.00 $169.29
12 Tacone 470 Nov-97 Dec-07 10 $ 90.00 $33.70 N/a $ 0.00 $102.13
13 Juice It Up 417 May-97 Feb-07 10 $ 75.00 $18.25 8.0% $ 0.00 $ 85.17
14 Glendale Federal Bank 248 Aug-97 Jun-02 5 $104.84 Gross 0.0% $ 0.00 $107.87
15 Starbucks Coffee 187 Mar-97 Feb-07 10 $133.69 $18.25 6.0% $ 0.00 $149.91
16 Pretzel Maker 471 Nov-96 Oct-06 10 $ 89.17 $18.25 8.0% $ 0.00 $ 89.17
17 A & W Hot Dogs & More 450 May-95 Jan-06 11 $ 88.89 $85.00 8.0% $33.33 $ 89.00
18 Jewelry Connection 480 Feb-95 Jan-05 10 $ 85.00 Fixed 7.0% $ 0.00 $ 85.00
---
3,386 Effective Rental Minimum $ 43.20
Effective Rental Maximum $169.29
Weighted Average Rent $ 93.03
Weighted Average TIA $ 4.43
<CAPTION>
DATA 500 SF-999 SF RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA(SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19 Shoe Doctor 526 May-95 Feb-05 10 $ 47.91 $ 16.11 8.0% $52.47 $ 47.91
20 Mission Renaissance 850 Oct-95 Sep-05 10 $ 50.00 $ 16.11 6.0% $29.41 $ 50.00
21 Simply Sterling 969 Sep-95 Jul-05 10 $ 65.00 $ 16.11 7.0% $10.32 $ 74.00
22 Sunglass Hut 983 Jul-95 May-05 10 $ 55.00 $ 16.11 8.0% $ 0.00 $ 60.00
23 Select Comfort 725 Jul-95 Jun-02 7 $ 53.00 $ 12.60 6.0% $ 0.00 $ 54.00
24 Authentic Fitness 879 May-95 Apr-05 10 $ 60.00 $ 12.60 6.0% $ 0.00 $ 60.00
25 Walt Disney Gallery 995 Apr-95 May-05 10 $ 20.00 $ 12.60 0.0% $10.05 $ 20.00
26 Watch World 605 Dec-97 Jan-08 10 $ 80.00 $ 13.69 N/A $ 0.00 $ 85.08
27 See's Candies 700 Sep-97 Aug-02 5 $ 72.86 $ 13.71 N/A $ 0.00 $ 76.29
28 Whitehall Jewelers 700 Mar-98 Dec-08 11 $ 85.00 $ 13.55 N/A $ 0.00 $ 90.37
29 Steak Escape 720 Nov-97 Oct-07 10 $ 76.39 $ 28.97 N/A $ 0.00 $ 83.33
30 Fredric H. Rubel Jewelers 820 Sep-97 Aug-07 7 $108.00 $ 13.71 N/A $ 0.00 $112.89
31 Arby's 822 Nov-97 Dec-07 10 $ 79.08 $ 31.25 N/A $ 0.00 $ 82.03
32 California Fresh
Mexican Grill 834 Nov-97 Sep-07 10 $ 55.00 $ 20.85 N/A $ 0.00 $ 57.48
33 Papyrus 920 Apr-98 Mar-01 3 $ 52.17 $ 12.36 N/A $ 0.00 $ 52.17
34 True Friends 952 Apr-98 Jan-08 10 $ 43.00 $ 13.55 N/A $ 0.00 $ 43.00
35 Godiva Choclatier 961 Sep-97 Aug-07 10 $ 70.00 $ 13.41 N/A $ 0.00 $ 72.50
36 Ritz Camera* 994 Dec-97 Dec-07 10 $ 50.00 $ 13.69 N/A $ 0.00 $ 50.00
37 Confidential 540 Dec-95 Nov-02 7 $ 92.59 $11-$12 6.0% $ 0.00 $ 92.59
38 Confidential 651 Nov-95 Oct-02 7 $ 57.43 $14-$16 6.0% $ 0.00 $ 57.43
39 Confidential 800 Jun-95 May-02 7 $125.00 $12-$14 6.0% $ 0.00 $125.00
40 Sartoria's Express 578 Mar-95 Mar-99 4 $ 42.29 $ 18.25 6.0% $ 0.00 $ 42.29
41 Carlson Wagonlit Travel 917 Jan-95 Jan-03 8 $ 40.00 $ 18.25 6.0% $ 0.00 $ 42.00
42 Kevin Jewelers 997 Jan-98 Feb-08 10 $100.00 $ 18.25 6.0% $ 0.00 $105.00
43 Let's Talk Cellular 598 Sep-97 May-04 7 $ 60.00 $ 18.25 5.0% $ 0.00 $ 62.96
44 Jewelry Express 600 Nov-97 Jul-07 10 $ 42.00 $ 18.25 7.0% $10.00 $ 47.13
45 Lids 577 Oct-97 Jul-07 10 $ 0.00 $ 18.25 6.0% $ 0.00 $ 51.56
46 Capt's Seafood Shoppe 692 May-98 Jan-08 10 $ 65.00 $ 18.25 8.0% $ 0.00 $ 70.13
47 Banana Split 700 Jan-98 Dec-07 10 $ 65.00 $ 18.25 8.0% $ 0.00 $ 67.50
48 Custom Images 853 Nov-97 Oct-07 10 $ 40.00 $ 18.25 8.0% $ 0.00 $ 45.00
49 Golden Spoon 603 Oct-97 Sep-04 7 $ 50.00 $ 18.25 8.0% $ 0.00 $ 52.14
50 Stamp Inn 706 May-96 Feb-06 10 $ 35.00 $ 18.25 8.0% $ 0.00 $ 40.00
51 Pretzel Maker 700 Jun-96 Jun-01 5 $ 60.00 $ 18.25 6.0% $ 0.00 $ 62.50
52 Citiwear Jr. Shoe 927 Jul-98 Jun-08 10 $ 20.50 $ 9-$14 6.0% $ 0.00 $ 22.50
53 Claire's 990 Sep-98 Aug-08 10 $ 15.00 $ 9-$14 8.0% $ 0.00 $ 15.00
54 Panda Express 942 Feb-97 Jan-06 9 $ 59.45 $ 9-$14 8.0% $ 0.00 $ 63.58
55 Cindy's Cinnamon Rolls 684 Apr-98 Mar-08 10 $ 43.86 $ 9-$14 8.0% $ 0.00 $ 46.78
56 R & J Cutlery 821 Apr-97 Mar-99 2 $ 24.36 $ 9-$14 7.0% $ 0.00 $ 24.36
57 Frozen Fusion 536 Apr-98 Mar-08 10 $ 35.00 $ 9-$14 6.0% $ 0.00 $ 35.00
58 Aloha BBQ 913 Sep-97 Sep-07 10 $ 65.72 $ 18.55 10.0% $ 0.00 $ 69.01
59 Extra! Extra! 588 Aug-97 Aug-00 3 $ 25.00 $ 18.55 0.0% $ 3.40 $ 25.00
60 Glamour Shots 626 Apr-98 Mar-00 2 $ 60.00 $ 18.56 6.0% $ 0.00 $ 60.00
61 Goin Looney 644 May-97 Apr-02 5 $ 29.81 $ 18.54 7.0% $ 0.00 $ 31.49
62 Lids 829 May-97 May-07 10 $ 48.25 $ 18.56 7.0% $ 0.00 $ 54.28
63 Orange Julius 537 Oct-97 Sep-07 10 $ 60.00 $ 18.57 8.0% $ 0.00 $ 62.50
64 Amore Cosmetics 534 Apr-97 Mar-02 5 $ 44.00 $ 18.54 6.0% $ 0.00 $ 44.00
65 Shoe Express 810 Oct-97 Sep-04 7 $ 25.00 $ 18.56 6.0% $ 0.00 $ 26.14
66 Starbucks Coffee 829 Nov-97 Feb-08 10 $ 36.00 $ 18.56 6.0% $48.25 $ 38.84
67 Nothing But Silver 594 Nov-97 Nov-07 10 $ 58.92 $ 18.57 8.0% $ 0.00 $ 63.13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
RECENT REGIONAL MALL LEASES
SOUTHERN CALIFORNIA
===================================================================================================================================
DATA RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
68 Motherhood Maternity 940 Jun-98 May-01 3 $20.00 $18.56 8.0% $ 0.00 $ 20.00
69 Carl's Jr. 544 Jun-98 May-08 10 $70.00 $18.55 8.0% $ 0.00 $ 75.00
70 Whitehall Co. Jewelry 800 Jan-97 Dec-06 10 $75.00 $12.00 6.0% $ 0.00 $ 75.00
71 Merlo's Cutlery 900 Dec-97 Jan-08 10 $33.50 $12.00 6.0% $ 0.00 $ 38.00
72 San Fransisco Cook 986 Jan-97 Dec-08 12 $33.47 $12.00 8.0% $ 0.00 $ 39.04
73 Thomas Kinkade 722 Nov-97 Jan-06 8 $48.00 $19.00 5.0% $ 0.00 $ 56.33
74 Select Comfort 912 Jul-97 Jun-07 10 $35.00 $19.00 5.0% $ 0.00 $ 39.00
75 Hot Dog on a Stick 507 Jun-95 Jun-03 8 $98.62 $70-80 10.0% $ 2.76 $ 98.62
76 Politically Incorrect 516 Jan-96 Jan-07 11 $30.00 $30-35 6.0% $ 0.00 $ 30.00
77 CA Steak 535 Feb-95 Jan-99 4 $95.00 $70-80 8.0% $ 0.00 $ 95.00
78 Servis & Taylor 581 Jul-95 May-98 3 $75.00 $30-35 6.0% $ 0.00 $ 75.00
79 New York Deli 602 Jun-96 Jan-05 9 $83.06 $70-80 10.0% $ 0.00 $ 91.36
80 Chick a Roo 608 May-96 Jan-05 9 $90.00 $70-80 5.0% $ 0.00 $ 98.37
81 Splendiferous 700 Jun-96 May-01 5 $50.00 $30-35 6.0% $21.43 $ 50.00
82 Bare Escentials 724 May-95 Jan-05 10 $70.00 $30-35 6.0% $ 0.00 $ 70.00
83 Westside 1 Hour Photo 763 Mar-95 May-05 10 $55.00 $30-35 7.0% $ 0.00 $ 55.00
84 What a Kick 783 Apr-95 Jan-00 5 $42.00 $30-35 6.0% $ 0.00 $ 42.00
85 Rayond Sassoons 792 Dec-95 Jan-06 10 $50.51 $30-35 6.0% $ 0.00 $ 53.03
86 Motherhood Maternity 800 May-96 Jan-07 11 $55.00 $30-35 6.0% $12.50 $ 57.27
87 Mrs Fields Cookies 808 Oct-95 May-05 10 $90.67 $30-35 10.0% $ 0.00 $ 90.67
88 Jewels By Kara 945 Aug-95 Jan-04 9 $65.00 $30-35 6.0% $26.46 $ 65.00
89 Crocodile Express 975 Nov-95 Jan-06 10 $56.41 $70-80 6.0% $ 0.00 $ 61.54
---
53,714 Effective Rental Minimum $ 15.00
Effective Rental Maximum $125.00
Weighted Average Rent $ 58.16
Weighted Average TIA $ 3.20
<CAPTION>
DATA 1,000 SF-1,999 SF RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90 Pro Beauty 1 1,000 Jul-95 Jan-97 2 $50.00 $11-$12 10.0% $ 0.00 $ 50.00
91 Gary's Tux 1,000 Jan-96 Sep-05 10 $45.00 $ 16.11 8.0% $50.00 $ 45.00
92 Speedo 1,023 Apr-95 Jan-05 10 $45.00 $ 16.11 6.0% $24.44 $ 46.50
93 Enzo 1,041 Jun-95 May-05 10 $44.96 $ 16.11 7.0% $ 0.00 $ 47.45
94 Nine West 1,137 Jun-95 May-05 10 $45.63 $ 16.11 7.0% $ 0.00 $ 45.65
95 Georgiou 1,400 Oct-95 Oct-05 10 $45.00 $ 16.11 6.0% $ 0.00 $ 48.50
96 Cathy Jean 1,499 Nov-96 Jan-07 10 $40.00 $ 16.11 6.0% $33.36 $ 43.50
97 Vanity Fair 1,502 May-96 Jan-06 10 $42.25 $ 16.11 7.5% $ 0.00 $ 50.05
98 Cleo & Cucci 1,642 Feb-95 Jan-05 10 $30.00 $ 16.11 6.0% $ 0.00 $ 37.50
99 Confidential 1,120 Oct-95 Sep-02 7 $68.00 $12-$14 6.0% $ 0.00 $ 68.00
100 Confidential 1,627 Oct-95 Sep-02 7 $45.00 $12-$14 6.0% $ 0.00 $ 45.00
101 Confidential 1,928 Sep-95 Aug-02 7 $45.00 $11-$12 6.0% $ 0.00 $ 45.00
102 Photomakers 1,503 Aug-97 Jun-02 5 $22.00 $ 19.00 5.0% $26.61 $ 23.20
103 Cathy Jean 1,338 Sep-97 Dec-07 10 $38.00 $ 19.00 7.0% $ 0.00 $ 39.60
104 Fashion Nails 1,281 Jul-98 Mar-03 5 $11.32 $ 19.00 8.0% $ 0.00 $ 12.10
105 Snapz 1,338 May-95 Apr-02 7 $20.00 $ 12.60 6.0% $ 0.00 $ 35.42
106 Taco Mole 1,008 Jun-95 May-05 10 $54.56 $ 12.60 10.0% $ 0.00 $ 57.04
107 Brooks Shoes For Kids 1,025 Dec-97 Jan-08 10 $37.07 $ 13.70 N/A $ 0.00 $ 38.48
108 Gingiss Formalwear 1,025 Nov-97 Aug-07 10 $38.00 $ 13.70 N/A $ 0.00 $ 40.66
109 Gloria Jeans Coffee Beans 1,029 Sep-97 Aug-07 10 $60.00 $ 16.67 N/A $ 0.00 $ 60.00
110 Panda Express 1,101 Sep-97 Aug-07 10 $90.00 $ 37.31 N/A $ 0.00 $100.00
111 Mainplace Optometry 1,120 Sep-97 Aug-07 10 $62.00 $ 13.70 N/A $ 0.00 $ 63.50
112 Elephant Walk 1,241 Apr-98 Jan-08 10 $35.00 $ 13.54 N/A $ 0.00 $ 35.00
113 Nine West 1,249 Nov-97 Nov-07 10 $60.00 $ 13.70 N/A $ 0.00 $ 60.00
114 Gamekeeper 1,260 Nov-97 Oct-07 10 $45.00 $ 13.71 N/A $ 0.00 $ 46.50
115 Hot Topic 1,300 Oct-97 Jan-08 10 $60.00 $ 13.71 N/A $ 0.00 $ 60.00
116 Stephen Florsheim 1,387 Oct-97 Sep-07 10 $46.00 $ 13.69 N/A $ 0.00 $ 48.00
117 Sam & Libby 1,400 Nov-97 Dec-06 9 $55.00 $ 13.70 N/A $ 0.00 $ 57.74
118 American Express Travel 1,406 Sep-97 Aug-02 5 $36.00 $ 11.03 N/A $ 0.00 $ 37.00
119 Jones New York 1,426 Dec-97 Jan-07 9 $50.00 $ 13.71 N/A $ 0.00 $ 54.56
120 Ups N Downs 1,455 Oct-97 Jan-03 5 $40.00 $ 11.03 N/A $ 0.00 $ 40.00
121 Lady Footlocker 1,516 Sep-97 Aug-07 10 $50.00 $ 13.70 N/A $ 0.00 $ 50.00
122 Styling Portraits 1,555 Jan-98 Jan-03 5 $32.91 $ 13.11 N/A $ 0.00 $ 35.24
123 Ben Bridge Jewelers 1,586 Nov-97 Oct-07 10 $59.90 $ 13.69 N/A $ 0.00 $ 63.05
124 Mr. Rags 1,600 Oct-97 Jan-08 10 $43.00 $ 13.70 N/A $ 0.00 $ 43.00
125 Garden Botanika 1,623 Apr-97 Mar-07 10 $60.00 $ 13.71 N/A $ 0.00 $ 62.50
126 Afterthoughts 1,018 Mar-98 Mar-08 10 $32.00 $ 12.00 5.0% $ 0.00 $ 34.00
127 Zales 1,051 Sep-97 Aug-98 1 $44.87 $ 12.00 6.0% $ 0.00 $ 44.87
128 Pro Beauty 1,200 Nov-97 Oct-07 10 $28.00 $ 12.00 7.0% $ 0.00 $ 30.00
129 Image Maker 1,225 Apr-98 Mar-03 5 $36.00 $ 12.00 6.0% $ 0.00 $ 36.00
130 Daniel's Jewelers 1,341 Oct-97 Jan-99 1 $35.00 $ 12.00 6.0% $ 0.00 $ 35.00
131 Big Dog 1,707 Jan-98 Jan-08 10 $28.00 $ 12.00 5.0% $23.43 $ 30.00
132 Journey's 1,731 Jul-97 Jul-07 10 $28.00 $ 12.00 6.0% $28.89 $ 30.00
133 Ruby's Diner 1,346 May-95 Apr-07 12 $55.72 $11-$12 7.0% $ 0.00 $ 56.97
134 Daniel's Jewelers 1,635 Apr-92 Apr-02 10 $39.76 $ 22.17 6.0% $ 0.00 $ 39.76
135 Wicks N Sticks 1,277 Nov-95 Jan-06 10 $35.00 $ 18.25 8.0% $ 0.00 $ 39.00
136 Italy For Men 1,122 Dec-96 Dec-06 10 $50.00 $ 18.25 8.0% $ 0.00 $ 55.04
137 Life Uniform 1,106 Aug-97 Jul-07 10 $26.00 $ 18.25 7.0% $20.00 $ 28.03
138 Best Nails 1,157 Mar-98 Jan-06 8 $43.00 $ 18.25 8.0% $17.29 $ 45.40
139 Photo Makers 1,062 Mar-97 Nov-06 10 $30.00 $ 18.25 0.0% $10.00 $ 35.13
140 Cindy's Shoes 1,517 Jun-96 May-01 5 $35.00 $ 18.25 6.0% $ 0.00 $ 27.00
141 Franklin Quest 1,950 Jun-96 May-01 5 $28.00 $ 18.25 6.0% $18.14 $ 29.60
142 Frederick's of Hollywood 1,312 Mar-98 Feb-00 2 $30.00 $ 9-$14 6.0% $ 0.00 $ 30.00
143 Ritz Camera 1,321 Apr-98 Mar-03 5 $20.00 $ 9-$14 3.5% $ 0.00 $ 20.80
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
RECENT REGIONAL MALL LEASES
SOUTHERN CALIFORNIA
===================================================================================================================================
DATA RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
144 Cool Water Trading Co. 1,006 Jan-98 Jan-99 1 $17.00 $ 9-$14 0.0% $ 0.00 $ 17.00
145 Afterthoughts 1,539 Aug-98 Jul-07 9 $20.00 $ 9-$14 0.0% $ 6.50 $ 21.11
146 Pro Beauty 1,582 Nov-97 Oct-07 10 $25.00 $ 9-$14 7.0% $ 0.00 $ 26.00
147 Vans Shoes 1,901 Oct-97 Sep-02 5 $33.69 $ 9-$14 6.0% $ 0.00 $ 34.51
148 Afterthoughts 1,062 Jun-98 Apr-08 10 $30.00 $ 18.08 7.0% $ 0.00 $ 32.00
149 Don Roberto Jewelers 1,371 Feb-98 Jan-03 5 $38.00 $ 18.56 6.0% $ 0.00 $ 40.00
150 Journeys 1,363 Oct-97 Sep-07 10 $36.63 $ 18.00 7.0% $ 0.00 $ 38.92
151 Premiere Aztlan 1,573 Jul-97 Jun-02 5 $16.00 $ 18.56 8.0% $ 6.36 $ 16.00
152 Vision Center 1,280 Oct-97 Sep-07 10 $46.88 $ 18.55 8.0% $19.53 $ 48.83
153 Let's Talk Cellular 1,133 Aug-97 Aug-02 5 $27.00 $ 18.56 5.0% $ 0.00 $ 28.18
154 Wild Pair 1,447 Aug-98 Jul-03 5 $30.00 $ 19.07 6.0% $ 0.00 $ 30.00
155 Perfumania 1,010 Apr-95 Jan-06 11 $60.00 $30-$35 6.0% $ 0.00 $ 60.00
156 Claires Boutique 1,049 Oct-95 Jan-06 10 $65.00 $30-$35 8.0% $ 0.00 $ 65.00
157 Brooks Children's 1,060 Jun-95 Jan-05 10 $48.00 $30-$35 7.0% $ 0.00 $ 48.00
158 Bisou Bisou 1,107 Oct-95 Jan-01 5 $66.00 $30-$35 6.0% $ 0.00 $ 66.00
159 Papyrus 1,111 Aug-96 Jan-07 10 $49.95 $30-$35 7.0% $ 0.00 $ 49.95
160 Elza Jeweler 1,147 Jan-95 Jan-05 10 $55.00 $30-$35 6.0% $ 0.00 $ 55.00
161 Cathy Jean 1,152 Oct-95 Jan-06 10 $50.00 $30-$35 6.0% $ 0.00 $ 50.00
162 Things Remembered 1,294 May-96 Jan-07 11 $50.00 $30-$35 6.0% $ 0.00 $ 50.00
163 Electronics Boutique 1,358 Feb-96 Jan-06 10 $50.00 $30-$35 6.0% $ 0.00 $ 50.00
164 Le Prestige 1,482 Sep-95 Jan-05 9 $55.00 $30-$35 6.0% $ 0.00 $ 55.00
165 Track N Trail 1,782 May-95 Jan-06 11 $40.00 $30-$35 6.0% $ 0.00 $ 40.00
166 Priveledge 1,866 Aug-95 Jan-06 10 $70.00 $30-$35 6.0% $ 0.00 $ 70.00
167 AU Bon Pain 1,943 Aug-95 Jan-05 9 $45.00 $30-$35 8.0% $ 0.00 $ 45.00
168 Skechers 1,956 Jan-96 Feb-06 10 $40.00 $30-$35 6.0% $ 7.67 $ 40.00
-----
106,343 Effective Rental Minimum $ 12.10
Effective Rental Maximum $100.00
Weighted Average Rent $ 43.23
Weighted Average TIA $ 3.79
<CAPTION>
DATA 2,000 SF-2,999 SF RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
169 Clock Emporium 2,000 Mar-95 Jan-98 3 $15.00 $11-$12 6.0% $ 0.00 $15.00
170 Episodes 2,055 Jan-96 Jan-06 10 $31.51 $ 16.11 10.0% $ 90.55 $31.51
171 Golden Cove Swimwear 2,084 Apr-95 Mar-05 10 $24.00 $ 12.60 6.0% $ 0.00 $26.00
172 Village Gallery 2,879 Apr-95 Mar-03 8 $23.00 $ 12.60 6.0% $ 0.00 $25.00
173 Gymboree 2,136 Feb-98 Jan-08 10 $32.00 $ 13.55 N/A $ 0.00 $32.00
174 Ames 2,950 Sep-97 Jan-08 10 $28.00 $ 13.69 N/A $ 0.00 $36.24
175 Confidential 2,271 Jan-95 Dec-01 7 $35.00 $12-$14 6.0% $ 0.00 $35.00
176 Lenscrafters 2,747 Aug-97 Jul-07 10 $30.00 $ 19.00 4.0% $ 0.00 $31.00
177 Payless Shoes 2,854 Jul-97 Jul-07 10 $21.00 $ 9-$14 6.0% $ 0.00 $22.00
178 Kinney Shoes 2,633 Jul-97 Jun-07 10 $21.00 $ 9-$14 6.0% $ 11.39 $20.95
179 Spencer Gifts 2,643 Feb-98 Jan-05 7 $15.00 $ 9-$14 6.0% $ 0.00 $15.00
180 Bath & Body Works 2,500 Aug-98 Jul-08 10 $ 0.00 Gross 6.0% $100.00 $10.50
181 Lenscrafters 2,915 Nov-97 Oct-07 10 $20.00 $ 18.56 4.0% $ 20.00 $21.50
182 Oak Tree 2,230 Nov-97 Oct-07 10 $25.00 $ 18.56 5.0% $ 56.05 $27.20
183 Radio Shack 2,346 Jan-98 Dec-07 10 $22.00 $ 18.51 3.0% $ 0.00 $23.50
184 Sam Goody's Musicland 2,715 Jan-98 Dec-02 5 $16.00 $ 18.55 6.0% $ 0.00 $16.40
185 Ruby's Diner 2,020 Feb-95 Feb-05 10 $20.00 $ 18.25 6.0% $ 59.41 $22.70
186 Bath & Body Works 2,229 Sep-96 Jan-07 10 $25.00 $ 18.25 5.0% $ 22.43 $25.00
187 Heakin Research 2,018 Dec-97 May-08 11 $16.00 $ 18.25 0.0% $ 14.87 $16.95
188 Noble & Wild Luggage 2,621 Dec-96 Jan-07 10 $20.00 $ 18.25 6.0% $ 10.00 $22.34
189 Ivy's Galleria 2,272 Jun-96 May-06 10 $21.12 $ 18.25 6.0% $ 30.81 $21.12
190 Spencer Gifts 2,002 Feb-97 Jan-07 10 $26.32 $ 12.00 6.0% $ 0.00 $27.66
191 VIP Menswear 2,258 May-97 Apr-04 7 $18.00 $ 12.00 6.0% $ 0.00 $19.14
192 Expressly Portraits 2,259 Nov-97 Dec-07 10 $34.36 $ 12.00 6.0% $ 0.00 $36.25
193 Styles 2,659 Apr-97 Apr-04 7 $15.00 $ 12.00 6.0% $ 19.56 $15.86
194 Lisa's Beauty Supply 2,021 Aug-95 Jan-06 11 $30.00 $ 30-35 8.0% $ 3.96 $34.55
195 Devon Becke 2,093 May-95 Jan-06 11 $45.00 $ 30-35 6.0% $ 0.00 $45.00
196 Gymboree 2,177 Mar-96 Jan-07 11 $45.00 $ 30-35 6.0% $ 16.08 $49.55
197 Bassini 2,384 Oct-95 Jan-06 10 $45.00 $ 30-35 5.0% $ 42.50 $42.50
198 Bath & Body Works 2,403 Aug-95 Oct-05 10 $42.00 $ 30-35 5.0% $ 0.00 $42.00
199 Westime 2,432 Feb-96 Jan-06 10 $40.00 $ 30-35 7.0% $ 0.00 $48.00
200 Pacific Sunwear 2,514 Aug-95 Dec-05 10 $45.00 $ 30-35 6.0% $ 19.89 $45.00
201 Jans Hallmark 2,810 May-95 Jan-05 10 $45.00 $ 30-35 6.0% $ 0.00 $45.00
-----
79,130 Effective Rental Minimum $10.50
Effective Rental Maximum $49.55
Weighted Average Rent $28.60
Weighted Average TIA $15.06
<CAPTION>
DATA 3,000 SF-3,999 SF RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
202 Confidential 3,425 Jun-95 May-02 7 $55.00 $11-$12 6.0% $ 0.00 $55.00
203 Styles 3,465 May-97 Jun-04 7 $15.00 $ 18.25 6.0% $20.00 $16.33
204 Forever 21 3,215 Aug-96 Jun-06 10 $20.00 $ 18.25 6.0% $31.10 $25.67
205 Footlocker 3,808 Oct-98 Sep-08 10 $31.00 $ 18.55 6.0% $ 0.00 $33.00
206 Kay Bee Toy and Hobby 3,291 Oct-97 Jan-08 10 $24.00 $ 18.55 6.0% $ 0.00 $26.70
207 Waldenbooks 3,020 Feb-98 Jan-08 10 $30.00 $ 18.60 6.0% $ 8.28 $32.50
208 Jay Jacobs 3,183 Feb-98 Jan-00 2 $18.00 $ 9-$14 6.0% $ 0.00 $18.00
209 Beauty Rest Mattress
Direct 3,822 Feb-98 Jan-01 3 $16.60 Gross 6.0% $ 0.00 $16.60
210 Sam Goody's Musicland 3,710 Jan-97 Jun-98 1 $14.00 $ 12.00 5.0% $ 0.00 $14.00
211 Footquarters 3,731 Apr-97 Jan-08 11 $18.00 $ 12.00 6.0% $ 0.00 $20.39
212 The Limited 3,227 May-95 Apr-07 12 $28.00 $ 12.60 5.0% $ 0.00 $28.00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
RECENT REGIONAL MALL LEASES
SOUTHERN CALIFORNIA
===================================================================================================================================
DATA RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
213 Kay Bee Toys 3,006 Apr-98 Jan-08 9.8 $26.00 $13.55 N/A $0.00 $30.00
214 Petite Sophisticate* 3,033 Sep-97 Aug-07 10.0 $36.00 $13.70 N/A $0.00 $37.00
215 Pacific Sunwear 3,298 Nov-97 Dec-07 10.2 $36.00 $13.81 N/A $0.00 $36.00
216 Ann Taylor* 3,313 Apr-98 Mar-08 10.0 $36.00 $11.23 N/A $0.00 $36.00
217 The Gap 3,891 Jun-95 May-03 8 $26.00 $12.60 6.0% $0.00 $26.00
-----
54,438 Effective Rental Minimum $14.00
Effective Rental Maximum $55.00
Weighted Average Rent $27.92
Weighted Average TIA $ 3.57
<CAPTION>
DATA 4,000 SF-4,999 SF RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
218 Kenny Rogers Roast 4,100 Jun-95 Jul-14 19 $18.00 $11-$12 3.0% $ 0.00 $21.93
219 BEBE 4,113 Apr-95 Jan-07 12 $35.00 $ 16.11 6.0% $24.12 $40.00
220 Finish Line 4,195 Apr-98 Mar-08 10 $22.00 $ 18.56 6.0% $11.92 $24.00
221 Pacific Sunwear 4,119 Oct-97 Dec-07 10 $20.00 $ 12.00 5.0% $ 0.00 $21.00
222 Foot Locker 4,375 Oct-97 May-07 10 $ 8.50 $ 12.00 5.0% $ 0.00 $22.16
223 Kinney Shoes 4,593 Oct-97 Feb-07 9 $22.00 $ 12.00 6.0% $ 0.00 $23.07
224 Bugle Boy 4,641 Aug-97 Dec-07 10 $18.00 $ 12.00 5.0% $35.00 $19.94
225 Contempo Casuals 4,351 Sep-97 Aug-07 10.0 $26.00 $ 13.70 N/A $ 0.00 $29.60
226 Structure 4,345 Aug-95 Jan-08 12 $36.00 $30-$35 5.0% $ 0.00 $38.00
227 Kids & Lady Footlocker 4,509 Jul-98 Jun-08 10 $22.00 $ 9-$14 6.0% $ 0.00 $22.00
228 Banana Republic 4,830 Nov-95 Jan-05 9 $42.00 $30-$35 6.0% $ 0.00 $44.00
-----
48,171 Effective Rental Minimum $19.94
Effective Rental Maximum $44.00
Weighted Average Rent $27.87
Weighted Average TIA $ 6.47
<CAPTION>
DATA 5,000 SF-9,999 SF RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
229 Aaron Brothers 5,250 Jul-95 Jul-04 9 $18.24 $ 8-$15 4.0% $ 0.00 $18.24
230 Millers Outpost 6,007 Apr-95 Mar-02 7 $25.00 $11-$12 5.0% $ 0.00 $25.00
231 Victoria's Secret 7,500 Jun-95 Jun-07 12 $20.00 $14-$16 5.0% $ 13.50 $21.00
232 Fun Factory 7,008 Aug-95 Jul-05 10 $26.00 $ 12.60 15.0% $ 3.00 $27.90
233 Lenscrafters 5,364 Mar-97 Mar-07 10 $17.00 $ 13.53 N/A $ 0.00 $17.00
234 Lane Bryant 5,969 Dec-97 Jan-00 2 $20.00 $ 11.76 N/A $ 0.00 $20.00
235 Structure 5,292 Jun-96 Jan-07 11 $25.00 $ 16.11 5.0% $ 0.00 $26.50
236 Banana Republic 5,329 Apr-95 Jan-07 12 $28.98 $ 16.11 5.0% $ 18.77 $28.98
237 Millers Outpost 5,000 Jul-95 Jan-03 8 $24.00 $ 16.11 5.0% $ 0.00 $24.88
238 Rampage 6,063 Feb-95 Jan-05 10 $30.00 $ 16.11 5.0% $ 0.00 $30.00
239 The Gap 5,552 May-98 Apr-08 10 $23.00 $ 18.08 5.0% $ 36.02 $25.00
240 Bugle Boy 5,500 Dec-97 Dec-08 11 $21.00 $ 19.00 5.0% $ 35.00 $22.82
241 Pizzeria Uno 5,582 Aug-98 Aug-13 15 $20.00 $ 12.00 6.0% $ 98.53 $28.53
242 Lady/Kids Foot Locker 6,400 Nov-97 Jan-08 10 $19.00 $ 12.00 6.0% $ 0.00 $21.05
243 Charlotte Russe 7,072 Apr-97 Mar-09 12 $21.21 Gross 10.0% $ 42.42 $21.21
244 Windsor Fashions 6,381 May-96 Apr-08 12 $18.00 $ 18.25 6.0% $ 81.18 $20.00
245 Campagnie Express 7,033 May-96 Apr-06 10 $20.00 $ 18.25 5.0% $100.00 $20.00
246 Contempo Casuals 5,150 Nov-97 Jan-08 10 $19.00 $ 18.25 5.0% $ 0.00 $20.02
247 Charlotte Russe 7,429 Jun-96 May-08 12 $15.00 $ 18.25 6.0% $ 30.29 $15.00
248 Champs 5,500 Aug-97 Jul-07 10 $15.00 $ 18.25 0.0% $ 0.00 $16.25
249 Rampage 6,422 Dec-95 Jan-06 10 $35.00 $30-$35 6.0% $ 58.39 $35.00
250 Express Compagnie 8,773 Sep-95 Jan-08 12 $33.00 $30-$35 5.0% $ 0.00 $29.11
-----
135,576 Effective Rental Minimum $15.00
Effective Rental Maximum $35.00
Weighted Average Rent $23.39
Weighted Average TIA $24.24
<CAPTION>
DATA 10,000 SF AND OVER RENTABLE LEASE LEASE LEASE INITIAL ANNUAL NNN % PSF
NO. TENANT NAME AREA (SF) START END TERM RENT (PSF) CHARGES RENT TIA/SF EFFECTIVE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
251 Millers Outpost 11,250 Feb-95 Feb-00 5 $20.00 $8-$12 5.0% $ 0.00 $20.00
252 Super Crown Books 15,240 Jul-95 Jan-13 18 $18.00 $8-$12 3.0% $ 0.00 $24.29
253 Circuit City 34,818 Aug-95 Jan-15 20 $ 9.37 $8-$12 1.3% $ 0.00 $10.84
254 Cal Stores Sporting Goods 15,399 Nov-96 Jan-00 3 $ 9.09 $18.25 0.0% $ 0.00 $10.50
255 The Alley 13,492 Jul-97 Jun-07 10 $17.79 $18.25 6.0% $ 7.41 $17.79
256 Barnes & Noble 27,586 Sep-95 Jan-10 14 $30.81 Fixed 3.0% $18.13 $33.99
------
117,785 Effective Rental Minimum $10.50
Effective Rental Maximum $33.99
Weighted Average Rent $19.63
Weighted Average TIA $ 5.10
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
RECENT LEASING ACTIVITY - MALL SHOP TENANTS BY SIZE
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
LEASE INITIAL INITIAL FINAL FINAL % CHANGE
TENANT CATEGORY FLOOR/ LEASE TERM AREA ANNUAL RENT/ ANNUAL RENT/ TI IN RENT
(BY SIZE/AREA) SUITE COMM. (YRS) (SQ/FT) RENT SQ/FT RENT SQ/FT ALLOW. OVER TERM
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. TENANTS < 1,000 SQ/FT
Easy Spirit 1-139 10/97 10.3 945 $56,700 $60.00 $56,700 $60.00 $0 0.0%
Optometric Options 1-187 2/98 8.0 980 $100,200 $102.24 $112,200 $114.49 $0 12.0%
--- --- --------- -------- --------- -------- -- -----
SUBTOTAL: 2 9.2 1,925 $156,900 $81.51 $168,900 $87.74 7.6%
- -----------------------------------------------------------------------------------------------------------------------------------
2. TENANTS 1,001-2,000 SQ/FT
Planet Funk 1-175 3/98 3.8 1,465 $73,250 $50.00 $73,250 $50.00 $0 0.0%
Lids 2-275 8/98 9.5 1,189 $53,505 $45.00 $55,883 $47.00 $0 4.4%
Regis Hair 2-215 1/98 10.1 1,234 $41,956 $34.00 $43,190 $35.00 $0 2.9%
---- ----- -------- ------- -------- ------- -- ----
SUBTOTAL: 3 7.8 3,888 $168,711 $43.39 $172,323 $44.32 2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
3. TENANTS 2,001-3,000 SQ/FT
Field Management Assoc. 2-207 11/97 8.3 2,308 $53,130 $23.02 $62,362 $27.02 $0 17.4%
Bebe 1-120 9/97 9.3 2,471 $148,260 $60.00 $160,615 $65.00 $0 8.3%
Kinney Shoes 2-251 10/97 10.3 2,340 $98,280 $42.00 $98,280 $42.00 $0 0.0%
Steve Madden 1-158 5/98 9.8 2,147 $74,250 $34.58 $82,500 $38.43 $0 11.1%
Tutto Bimbi 3-395 4/98 4.8 2,988 $89,640 $30.00 $89,640 $30.00 $10,000 0.0%
Payless Shoes 2-211 11/97 10.3 2,347 $42,246 $18.00 $46,940 $20.00 $0 11.1%
---- ----- -------- ------- -------- ------- -- -----
SUBTOTAL: 6 8.8 14,601 $505,806 $34.64 $540,337 $37.01 6.8%
- -----------------------------------------------------------------------------------------------------------------------------------
4. TENANTS 3,001-5,000 SQ/FT
Banana Republic (Men) 3-346 5/97 10.0 4,237 $152,532 $36.00 $169,480 $40.00 $0 11.1%
Disney Store 3-358 8/97 10.5 4,500 $99,000 $22.00 $108,000 $24.00 $300,000 9.1%
Nine West 1-132 5/98 10.8 3,911 $137,556 $35.17 $145,198 $37.13 $0 5.6%
---- ----- --------- ------- --------- ------- -- ----
SUBTOTAL: 3 10.4 12,648 $389,088 $30.76 $422,678 $33.42 8.6%
- -----------------------------------------------------------------------------------------------------------------------------------
5. FOOD COURT
California Crisp 3-324 7/97 9.6 603 $54,270 $90.00 $54,270 $90.00 $0 0.0%
Ice N' Cream 3-328 4/98 8.8 320 $51,200 $160.00 $57,600 $180.00 $0 12.5%
--- --- -------- -------- -------- -------- -- -----
SUBTOTAL: 2 9.2 923 $105,470 $114.27 $111,870 $121.20 6.1%
- -----------------------------------------------------------------------------------------------------------------------------------
6. ATM & KIOSK
Activate Cellular 1-103 6/97 2.7 100 $70,000 $700.00 $70,000 $700.00 $0 0.0%
King ATM 1-006 1/98 5.1 12 $15,000 $1,250.00 $18,000 $1,500.00 $0 20.0%
Previews Etc 3-9016 3/98 1.8 21 $18,000 $857.14 $20,000 $952.38 $0 11.1%
Sprint PCS 3-330 8/97 1.5 36 $30,000 $833.33 $31,200 $866.67 $0 4.0%
Watch Collection 2-202 2/98 10.0 205 $40,000 $195.12 $42,000 $204.88 $0 5.0%
Colorado Pen 1-9001 12/97 5.2 180 $48,000 $266.67 $48,000 $266.67 $0 0.0%
--- --- -------- -------- -------- -------- -- ----
SUBTOTAL: 6 4.4 554 $221,000 $398.92 $229,200 $413.72 3.7%
- -----------------------------------------------------------------------------------------------------------------------------------
SURVEY TOTAL: 22 7.7 34,539 $1,546,975 $44.79 $1,645,308 $47.64 $8.98 6.4%
===================================================================================================================================
* NOTE: THERE WERE NO LEASE COMMISSIONS OR RENT ABATEMENTS GRANTED FOR ANY OF THESE LEASES.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================
AVERAGE MARKET RENT - MALL SHOPS
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- --------------------------------------------------------------------------------------------------------------
SUITE SIZE APPLICABLE PRO-RATA INITIAL WEIGHTED
CATEGORY SQ/FT SHARE MARKET RENT AVERAGE
==============================================================================================================
<S> <C> <C> <C> <C>
Food Court Tenants 8,477 SF 2.39% $90.00 $2.15
Under 1,000 SF 15,223 SF 4.30% $65.00 $2.79
1,001 - 2,000 SF 50,906 SF 14.37% $50.00 $7.18
2,001 - 3,000 SF 51,990 SF 14.67% $40.00 $5.87
3,001 - 5,000 SF 47,440 SF 13.39% $35.00 $4.69
5,001 - Over SF 87,394 SF 24.66% $30.00 $7.40
Expansion Mall Space 91,978 SF 25.96% $30.00 $7.79
Kiosks 720 SF 0.20% $225.00 $0.46
ATMS 221 SF 0.06% $850.00 $0.53
==============================================================================================================
MAIN MALL SHOP AVG. RENT: 354,349 SF 100.00% $38.86
==============================================================================================================
===============================================================
OTHER COMPONENTS SQ/FT
===============================================================
Owned Anchor Tenants 181,563 SF
===============================================================
PROPERTY TOTAL 535,912 SF
===============================================================
</TABLE>
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
Most comparable leases also include percentage rental clauses, with the
tenants required to pay overage rent over a natural breakpoint. The smaller
leases have overage rent clauses typically from 8.0 to 10.0 percent, while most
tenants in the 2,000 to 5,000 square foot size category have overage clauses in
the 6.0 percent range. Tenants over the 5,000 square foot size category have
percentage rent clauses typically in the 3.0 to 6.0 percent range.
RECENT LEASING ACTIVITY - SUBJECT MALL
The exhibit on the accompanying page summarizes the terms of the recent
lease activity, presented by size category. There have been 22 recent leases
since approximately mid-1997, with a total of 34,539 square feet. Lease terms
range from 1.5 to 10.8 years in length, averaging 7.7 years overall. The
initial rental rates have averaged $44.79 per square foot, with effective rates
only slightly higher at $47.64 per square foot on average. This represents an
average increase of 6.4 percent (total) over the term of a lease. Tenant
improvement allowances have been offered in only two of the recent leases,
which average $8.98 per square foot for the 34,539 square feet shown.
Overall, the average lease rate from recent leasing at $44.79 per square
foot is slightly higher, but in-line with the average contract rent for shop
space at $41.84 per square foot. However, the recent leasing includes several
high rent spaces including six ATM/kiosks and two food court suites.
MARKET CONCLUSIONS AND RELEASING ASSUMPTIONS
The market rent conclusions for the subject mall are summarized on the
exhibit on the accompanying page. The conclusions consider the analysis of the
comparable lease data and the recent subject leasing activity. The annual
per-square-foot rental conclusions are typically in-line with current contract
rates. The conclusions of market rent range from a low of $30 per square foot
for the largest size category to as much as $850 per square foot for the ATM
space. In-line shops in the main mall have market rents ranging from $30 to $65
per square foot depending on size, and the food court market rent is $90 per
square foot. These rates are generally in sync with management's current
estimate of market rent for the mall. Our conclusion of market rent equals
$38.86 per square foot on average. This is slightly less than the contract rent
for the same space (owned GLA excluding anchors) of $41.84 per square foot.
Our average market rent indicates a rent to sales ratio of 10.4 percent
when compared to the mall shop sales at $373 per square foot. This ratio is
above industry benchmark, generally 9.0 to 9.5 percent for a mall of this size
and caliber, but this will improve as sales improve. The new owner expects
year-end 1998 sales to equal $395 per square foot, which would yield a
rent-to-sales ratio of 9.8 percent.
We modeled 10-year lease terms as specified in the client's appraisal
guidelines for regional malls. Given the very small increases in rent typically
built into the leases at the subject property (only one to three dollars per
square foot two or three times during the lease term, if at all), we have
included a 5.0 percent increase after three years and another 5.0 percent
increase after seven years for all speculative leases. For a space with a
market rent conclusion of $40 per square foot, this would equal a rent schedule
of $40 per square
- -------------------------------------------------------------------------------
80
<PAGE>
INCOME APPROACH
- ------------------------------------------------------------------------------
foot for years 1 through 3, $42 per square foot for years 4 through 7 and
$44.10 per square foot for years 8 through 10.
We have included a $15 per square foot tenant improvement allowance for
new tenants, $5.00 per square foot for renewals, and a blended tenant
improvement allowance for speculative rollovers of $8.50 per square foot
using a renewal probability of 65 percent. These amounts have been grown at
3.5 percent.
OTHER INCOME SOURCES
Over Rent -- Tenant Sales Assumptions
The majority of the leases include a percentage rent clause whereby the
tenants are responsible to pay percentage rent based on overage clauses
typically ranging from 5.0 to 8.0 percent of gross sales, less the based
minimum rent paid. The available historical data indicates the 1996 overage
rental for the property equaled $87,371, dropping to $33,102 in 1997. The
1998 budgeted overage rent is $56,607. The 1995 amount, which is based on July
to December 1995 figures annualized, indicates overage of $132,726.
We reviewed gross sales reports provided by the mall management covering
the periods of calendar 1996 and 1997, copies of which are contained in the
addenda. We maintain in our files sales reports for 1990 through 1995
obtained from the prior ownership. The comparable mall shop sales trend is
summarized in the following table:
<TABLE>
<CAPTION>
YEAR PSF SALES
- ------ -----------
<S> <C>
1990 $368
1991 $345
1992 $350
1993 $324
1994 $308
1995 $348
1996 $374
1997 $373
</TABLE>
The January 1994 Northridge earthquake caused damage to the subject mall,
and Robinson's-May and the parking structure closed for a period. This factor
considered with the 10 year tenant rollover, poor leasing performance of the
expansion component of the property, and the recession led to flat or
declining sales for a number of tenants during 1993-1994. As illustrated by
the per-square-foot sales figures above, the property has fully recovered
from the drop in sales performance.
Sales Assumptions and Growth Projections
The subject mall has experienced per-square-foot sales volumes near the
upper end of the range exhibited by comparable regional malls in southern
California. The surrounding trade area has favorable economic
characteristics, but the area is mature, and there are no major developments
on the horizon which would suggest either substantial increases or
- ------------------------------------------------------------------------------
81
<PAGE>
INCOME APPROACH
- ------------------------------------------------------------------------------
decreases in sales volume relative to inflation will occur in the foreseeable
future. The new ownership anticipates sales to reach $395 per square foot by
year-end 1998. This suggests an increase of 5.9 percent over the 1997 amount.
In our analysis, we have included sales growth of 4.0 percent per year,
the same as market rent and general expense growth. This projection is
consistent with the growth assumptions modeled by the recent purchaser of the
property, Macerich. This rate of growth is slightly higher than our general
inflation assumption of 3.5 percent, based on the market's perception of
income growth at the subject property. For the 1998 sales entries for each
tenant in Pro-Ject, we modeled sales for the existing subject tenants based
on a 3.5 percent increase over the actual 1997 amount.
Miscellaneous Income
The historical miscellaneous revenues for the subject include:
1) specialty leasing income, 2) storage rent, 3) capital income, 4) Nordstrom
storage rent, 5) other income, and 6) marketing revenue.
1) The specialty leasing component of the subject's miscellaneous income
includes sources from cart rentals, in-line revenue, telephone revenue,
vending revenue, and other specialty leasing. In 1996 specialty leasing
income for the subject equaled $776,775, and $787,319 for 1997. This figure
compares with the 1998 budgeted figure of $702,739. We estimated specialty
leasing revenue for the subject at $700,000 during 1998 and increased this
figure 3.5 percent annually throughout the term of the holding period.
2) The statements we reviewed indicated total receipts for storage rentals
equaled $234,906 in 1996 and totaled $45,075 in 1997. This figure compares
with a 1998 budgeted figure of $57,600. Based on current projections and
agreements in place, we have applied the budget figure of $57,600 for 1998 in
our analysis, grown at 3.5 percent annually throughout the term of the
holding period.
3) Capital revenue at the subject equaled $129,710 in 1996 and $124,302 in
1997. This figure compares with the 1998 budgeted capital revenues of
$126,000. We estimated this income item at $125,000 during 1998 and increased
this figure 3.5 percent annually throughout the term of the holding period.
4) Nordstrom currently leases a significant block of storage space. The
annual rental for this storage space equals $472,500 annually, fixed
throughout the lease term. We have included income source at $472,500
annually with no increase throughout the term of the holding period.
5) Other income at the subject equaled $103,978 in 1996 and $59,607 in
1997. This compares with the budgeted figure for of only $12,000. We have
included this income item in accordance with the budgeted figures or $12,000
during 1998 and increased this figure 3.5 percent annually throughout the
holding period.
- ------------------------------------------------------------------------------
82
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
6) May Company (Robinson's-May) pays a fixed annual contribution towards
CAM of $305,248. This amount has been included in our analysis, and deducted
from the recovery pool before tenant contributions..
Based on the above conclusions of the 1998 miscellaneous income items for
the subject, our estimate of total miscellaneous income is summarized below:
1998 MISCELLANEOUS INCOME ESTIMATE
Specialty Leasing $700,000
Storage Rent 57,600
Capital Income 125,000
Nordstrom Storage 472,500
Other Income 12,000
May Co. 305,248
Total Miscellaneous Income $1,672,348
Expense Recoveries
The lease abstracts we reviewed along with CAM, Tax, and Insurance
reconciliation documentation indicate that most tenants pay operating expense
reimbursements based on a pro-rata share of the applicable gross leasable area
over the occupied area of the center (net of various components of GLA). The
recoverable expenses include CAM-Expenses, Insurance Real Estate Taxes, Food
Court, Electricity, Tenant HVAC, and Water. The costs for Electricity, Tenant
HVAC, and Water are directly attributable to the main mall and are not passed
through to the expansion mall tenants. The costs for Food Court expenses are
related directly to the operation of the subject food court and are not passed
through to any non-food court tenant in the center. Costs for CAM-Expenses,
Real Estate Taxes, and Insurance are billable to most of the subject tenants,
with few exceptions. There are several different methods of expense recovery
for the subject tenants, but nearly all mall leases included an administrative
surcharge ranging from 5.0 to 15.0 percent applied to CAM, Tax, and Insurance
expenses. Specific administration charges for the tenants are itemized in the
accompanying page chart.
A number of the subject tenants make a contribution to the expense pool
based on fixed escalatable expenses. As previously discussed Robinson's-May
pays $305,248 annually toward the expense pool as a reimbursement for parking
garage maintenance and operation. Nordstrom and Tony Roma's pay no CAM, Taxes,
or Insurance. Barnes & Noble, McDonalds, Sprint PCS and Pavilions pay a fixed
contribution of CAM, Taxes, and Insurance to the expense pool. Pro-rata pass
through figures are estimated for the remaining tenants based on varying
calculations. The most common method of calculating a mall tenant's pro-rata
share is based on occupied area of the center net of department stores,
Pavilions, and main mall stores with exterior entrances.
Existing subject tenants were modeled in conformance with the current
recovery formats. Specific administrative surcharge information for each tenant
ranges from 5.0 to 15.0 percent. Future tenants were modeled with 15 percent
administrative surcharges applied to CAM and Insurance Expenses and no
surcharge applied to Real Estate Taxes,
- -------------------------------------------------------------------------------
83
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
ADMINISTRATION CHARGE SUMMARY
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- ----------------------------------------------------------------------------------------------------------------------
ADMINISTRATION CHARGE
SUITE TENANT SIZE CAM INSURANCE TAXES
======================================================================================================================
<S> <C> <C> <C> <C> <C>
----------------------------------------------------
103 Activate Cellular 100 Fixed Fixed Fixed
----------------------------------------------------
ATM1 ATM 16 None None None
----------------------------------------------------
616 Baja Buds Del Norte 2,099 None None 0%
----------------------------------------------------
361 Banana Republic 4,830 15% 0% 0%
----------------------------------------------------
346 Banana Republic (Men) 4,237 15% 15% 0%
----------------------------------------------------
113 Barami Stuido 2,774 15% 0% 0%
----------------------------------------------------
174 Bare Escentuals 724 15% 15% 0%
----------------------------------------------------
401 Barnes & Noble 27,586 Fixed/CPI None None
----------------------------------------------------
154 Bassini 2,384 15% 15% 15%
----------------------------------------------------
257 BATH & BODY WORKS 2,403 15% 0% 0%
----------------------------------------------------
120 BEBE 2,471 15% 0% 0%
----------------------------------------------------
182 Bisou-Bisou 1,107 15% 15% 15%
----------------------------------------------------
143 Body Shop, The 960 15% 0% 0%
----------------------------------------------------
271 Bombay Company, The 3,889 15% 10% 0%
----------------------------------------------------
372 Bon Voyage 1,415 15% 15% 15%
----------------------------------------------------
368 Brooks Shoes for Kids 1,060 15% 5% 5%
----------------------------------------------------
189 BCBG 1,826 15% 15% 15%
----------------------------------------------------
163 BCBG Shoes 808 15% 15% 10%
----------------------------------------------------
324 CALIFORNIA CRISP 603 15% 15% 0%
----------------------------------------------------
308 California Steak & Fries 535 15% 15% 15%
----------------------------------------------------
276 CARLTON HAIR 1,057 15% 15% 0%
----------------------------------------------------
147 Carriage Trade 909 15% 0% 0%
----------------------------------------------------
288 Cathy Jean 1,152 15% 15% 15%
----------------------------------------------------
124 CHAMPS SPORTS 4,488 15% 0% 0%
----------------------------------------------------
123 CHARLES DAVID 1,486 15% 15% 15%
----------------------------------------------------
235 Claire's Accessories 1,049 15% 15% 0%
----------------------------------------------------
332 Coffee Merchant, The 751 15% 15% 15%
----------------------------------------------------
9001 Colorado Pen 180 15% None None
----------------------------------------------------
248 Contempo Casuals 3,628 15% 15% 0%
----------------------------------------------------
316 Croissants & More 144 15% 15% 15%
----------------------------------------------------
358 DISNEY STORE, THE 4,500 15% NONE 0%
----------------------------------------------------
320 East Wind 603 15% 15% 15%
----------------------------------------------------
139 Easy Spirit 945 15% 15% 0%
----------------------------------------------------
353 Electronics Boutique 1,358 15% 15% 0%
----------------------------------------------------
376 Elza 1,147 15% 15% 15%
----------------------------------------------------
387 EVERYTHING BUT WATER 1,278 15% 15% 15%
----------------------------------------------------
204 EXPRESS 8,773 15% 0% 0%
----------------------------------------------------
318 Fajita Flats 700 15% 15% 15%
----------------------------------------------------
207 Field Management Associates 2,308 15% 15% 15%
----------------------------------------------------
171 First Bellissimo 1,288 15% 5% 5%
----------------------------------------------------
162 FOOTLOCKER 2,003 15% 15% 0%
----------------------------------------------------
268 Franklin Mint Gallery, The 1,355 15% 0% 0%
----------------------------------------------------
382 GAME KEEPER, THE 901 15% 15% 15%
----------------------------------------------------
342 GAP KIDS 6,421 15% 0% 0%
----------------------------------------------------
232 GAP, THE 10,360 15% 0% 0%
----------------------------------------------------
264 Garden Botanika 2,053 15% None 0%
----------------------------------------------------
321 General Nutrition Center 1,608 15% 15% 0%
----------------------------------------------------
289 Going To The Game 1,841 15% 10% 15%
----------------------------------------------------
301 GOLDWYN PAVILION CINEMAS 8,321 15% 15% 0%
----------------------------------------------------
116 Guess ? 5,380 15% 15% 0%
----------------------------------------------------
379 GYMBOREE 2,177 15% 0% 0%
----------------------------------------------------
322 Hana Grill 622 15% 15% 15%
----------------------------------------------------
304 Hot Dog On A Stick 507 15% 15% 15%
----------------------------------------------------
328 ICE N' CREAM 320 15% 15% 15%
----------------------------------------------------
225 J.C.C. 1,223 15% 0% 0%
----------------------------------------------------
136 Jan's Hallmark 2,810 15% 15% 15%
----------------------------------------------------
378 Jewelry Collection 480 15% 15% 15%
----------------------------------------------------
119 Jones New York 1,317 15% 0% 0%
----------------------------------------------------
349 KAY-BEE TOY & HOBBY 3,843 15% 0% 0%
----------------------------------------------------
6 King ATM 12 None None None
----------------------------------------------------
251 KINNEY SHOES 2,340 15% 15% 0%
----------------------------------------------------
227 Lady Footlocker 2,317 15% 15% 15%
----------------------------------------------------
200 Lane Bryant 5,683 15% 15% 0%
----------------------------------------------------
115 Le Prestige 1,482 15% 15% 15%
----------------------------------------------------
159 Leathermode 1,111 15% 15% 0%
----------------------------------------------------
114 LECHTER'S 6,119 15% 15% 15%
----------------------------------------------------
199 LensCrafters 3,192 15% 0% 0%
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------
ADMINISTRATION CHARGE
SUITE TENANT SIZE CAM INSURANCE TAXES
======================================================================================================================
----------------------------------------------------
272 Lids 1,189 15% 15% 0%
----------------------------------------------------
179 Lili's Boutique 1,474 15% 15% 15%
----------------------------------------------------
354 LIMITED TOO! 3,322 15% 0% 0%
----------------------------------------------------
146 LIMITED, THE 9,921 15% 0% 0%
----------------------------------------------------
603 Linear 1,200 15% 0% 0%
----------------------------------------------------
100 Lisa's Beauty Supply 2,021 15% 15% 15%
----------------------------------------------------
280 LA Nails 469 15% 15% 15%
----------------------------------------------------
604 McDonald's 1,152 Fixed/Sales Fixed/Sales Fixed/Sales
----------------------------------------------------
129 Morgan Paris 2,043 15% 15% 0%
----------------------------------------------------
397 Motherhood Maternity 800 15% 15% 15%
----------------------------------------------------
167 Mrs. Field's Cookies 808 15% 15% 15%
----------------------------------------------------
369 NATURAL WONDERS 2,091 15% 15% 0%
----------------------------------------------------
326 New York Deli 602 15% 15% 15%
----------------------------------------------------
132 Nine West 3,911 15% 15% 0%
----------------------------------------------------
1 Nordstrom 138,128 None None None
----------------------------------------------------
187 OPTOMETRIC OPTIONS 980 15% 0% 0%
----------------------------------------------------
333 Pacific Sunwear 2,514 15% 0% 0%
----------------------------------------------------
310 Panda Express 817 15% 15% 0%
----------------------------------------------------
197 PANDA INN 5,863 15% 15% 0%
----------------------------------------------------
151 Papyrus 1,111 15% 15% 15%
----------------------------------------------------
50 Pavilions 43,435 Fixed/Step None None
----------------------------------------------------
211 Payless ShoeSource 2,347 15% 15% 15%
----------------------------------------------------
155 Perfumania 1,010 15% 5% 5%
----------------------------------------------------
175 Planet Punk 1,465 15% 15% 10%
----------------------------------------------------
505 Politically Incorrect 516 15% 15% 15%
----------------------------------------------------
380 Pretzel Time 829 15% 0% 0%
----------------------------------------------------
9016 Previews, Etc. 21 None None None
----------------------------------------------------
186 Privilege 1,866 15% 5% 5%
----------------------------------------------------
256 Rampage 6,422 15% 15% 15%
----------------------------------------------------
384 Raymond Sassoon 792 15% 15% 15%
----------------------------------------------------
215 Regis Hairstylists 1,234 15% 15% 15%
----------------------------------------------------
341 Right Start, The 2,629 15% 15% 0%
----------------------------------------------------
219 Ritz Camera 1 Hour Photo 1,318 15% 15% 10%
----------------------------------------------------
300 Sbarro 991 15% 15% 15%
----------------------------------------------------
201 SEE'S CANDIES 1,200 15% 15% 0%
----------------------------------------------------
292 Servis & Taylor 581 15% 15% 15%
----------------------------------------------------
203 Shoe Care 492 15% 15% 15%
----------------------------------------------------
135 Sho+C113e Lord 1,001 15% 10% 10%
----------------------------------------------------
193 SISLEY 3,255 15% 15% 0%
----------------------------------------------------
293 Skechers 1,956 15% 15% 15%
----------------------------------------------------
231 Speedo Authentic Fitness 1,200 15% 15% 10%
----------------------------------------------------
267 SPENCER GIFTS 1,140 15% 15% 0%
----------------------------------------------------
297 Splendiferous 701 15% 15% 0%
----------------------------------------------------
330 Sprint PCS 36 Fixed Fixed Fixed
----------------------------------------------------
158 Steve Madden 2,147 15% 15% None
----------------------------------------------------
241 STRUCTURE 4,345 15% 0% 0%
----------------------------------------------------
221 Suncoast Motion Picture Co. 2,546 15% 0% 0%
----------------------------------------------------
375 Sunglass Hut 1,310 15% 10% 10%
----------------------------------------------------
229 SUNGLASS PLACE 516 15% 10% 10%
----------------------------------------------------
325 Sweet Factory 1,108 15% 10% 10%
----------------------------------------------------
309 TASTIES 231 15% 15% 0%
----------------------------------------------------
285 Things Remembered 1,294 15% 15% 15%
----------------------------------------------------
513 Tony Roma's 4,309 None None None
----------------------------------------------------
263 Track 'N Trail 1,782 15% 0% 0%
----------------------------------------------------
395 Tutto Bimbi 2,988 15% 15% 15%
----------------------------------------------------
170 VENCCI 2,192 15% 15% 15%
----------------------------------------------------
220 VICTORIA'S SECRET 7,574 15% 0% 0%
----------------------------------------------------
104 WALDENBOOKS / WALDENKIDS 6,557 15% 15% 15%
----------------------------------------------------
202 Watch Collection 205 15% 15% 15%
----------------------------------------------------
385 Westime 2,432 15% 15% 15%
----------------------------------------------------
373 Westside One Hour Photo 763 15% 15% 15%
----------------------------------------------------
296 What A Kick 783 15% 0% 0%
----------------------------------------------------
101 Zales Jewelers 1,966 15% 15% 0%
----------------------------------------------------
Key: BOLD = CAM & Insurance over 2GLO
Italics = CAM over 1GLO, Insur over 2GLO All others = CAM &
Insurance over 1GLO
======================================================================================================================
</TABLE>
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
based on the most common pass-through methods currently being utilized at the
property. Pro-rata share estimates for future tenants are calculated based on
the occupied area of the center net of department stores, Pavilions, and main
mall stores with exterior entrances, which is also the most common method
currently being utilized.
OCCUPANCY COSTS
For further analysis of the economic forecast for the subject property, we
have undertaken a comparison of minimum rent to projected sales and total
occupancy costs to sales ratios. Generally, our research and experience with
other regional malls shows that the ratio of minimum rent to sales falls within
the 8.0 to 10.0 percent range in the initial year of the lease. By adding
additional costs to the tenant, such as real estate tax and common area
maintenance recoveries, a total occupancy cost may be derived. Expense
recoveries and other tenant charges can add up to 100 percent of minimum rent
and comprise the balance of total tenant costs.
The typical range for total occupancy cost-to-sales ratios falls between
11.0 and 15.0 percent. As a general rule, where sales exceed $300 per square
foot, 14.0 to 15.0 percent would be a reasonable cost of occupancy. Experience
and research show that most tenants will resist total occupancy costs that
exceed 15.0 to 18.0 percent of sales. Obviously, this comparison will vary from
tenant to tenant and property to property.
In higher end markets where tenants are able to generate sales above
industry averages, such as the subject Westside Pavilion, tenants can generally
pay rents which fall toward the upper end of the ratio range. Moreover, if
tenants perceive that their sales will be increasing at real rates that are in
excess of inflation, they will typically be more inclined to pay higher initial
base rents. This is the case with the subject property, at which sales are
expected to continue to improve. Obviously, the opposite would be true for
poorer performing centers in that tenants would be squeezed by the thin margins
related to below average sales. With fixed expenses accounting for a
significant portion of the tenants contractual obligation, there would be
little room left for base rent.
In this context, we have provided an occupancy cost analysis for several
Southern California regional malls with which we have had direct insight over
the past year. This information is provided on the ACCOMPANYING CHART. On
average, these ratio comparisons provide a realistic check against projected
market rental rate assumptions.
From the seven Southern California malls presented, we see that the ratio
of base rent to sales ranges from 8.6 to 10.8 percent, while the total
occupancy cost ratios vary from 12.2 to 17.0 percent when all recoverable
expenses are included. The surveyed mean for the malls analyzed is 9.4 percent
and 14.9 percent, respectively.
These relative measures can be compared with two well known publications,
The Score (1996) by the International Council of Shopping Centers and Dollars &
Cents of Shopping Centers (1997) by the Urban Land Institute. The most recent
publications indicate base rent-to-sales ratios of approximately 6.0 to 8.0
percent and total occupancy cost ratios of 9.0 and 13.0 percent, respectively.
- -------------------------------------------------------------------------------
84
<PAGE>
<TABLE>
<CAPTION>
==================================================================================
SUMMARY OF SOUTHERN CALIFORNIA REGIONAL MALLS
CUSHMAN & WAKEFIELD, INC.
COMPARABLE COMPARABLE COMPARABLE
MALL 1 MALL 2 MALL 3
- ----------------------------------------------------------------------------------
Robinson's-May,
Nordstrom, Macy's,
Macy's, Bloomingdale's Nordstrom,
Anchors Robinson's-May and Macy's JC Penney
<S> <C> <C> <C>
Total GLA 1,189,217 864,790 1,048,123
Anchor GLA 660,000 500,535 613,460
Mall Shop GLA 529,217 364,255 434,663
% Mall Shop/Total GLA 45% 42% 41%
Developer/Investor Owned GLA 529,217 364,255 434,663
Mall Shop Occupancy 95% 82% 80%
1997 Average Rent $ 30.00 $ 33.00 $ 28.50
CAM Costs/SF Mall Shop GLA $ 9.30 $ 10.72 $ 12.22
1997 Average NNN Charges $ 12.60 $ 16.11 $ 18.25
1997 Sales Per SF $ 350 $ 305 $ 280
Rent to Sales Ratio 8.6% 10.8% 10.2%
Occupancy Cost Ratio 12.2% 16.1% 16.7%
Operating Expenses $ 7,000,000 $ 6,216,568 $ 8,352,208
Expenses/SF Owned GLA $ 13.23 $ 17.07 $ 19.22
Operating Expense Ratio to EGI 37.6% 41.8% 50.4%
Food Court GLA 11,253 6,969 7,202
1997 Food Court Rents $ 85.00 $ 87.65 $ 63.82
Food Court/NNN Charges N/A $ 40.32 $ 31.55
Food Court Sales N/A $ 673.00 $ 609
Food Court Rent/Sales N/A 13.0% 10.5%
Food Court Occupancy Costs N/A 19.0% 15.7%
Percentage Rent $ 162,645 $ 92,506 $ 156,799
Total Revenue $18,600,000 $14,858,092 $16,572,776
% of Revenue 0.87% 0.62% 0.95%
<CAPTION>
COMPARABLE COMPARABLE COMPARABLE COMPARABLE
MALL 4 MALL 5 MALL 6 MALL 7
- ------------------------------------------------------------------------------------------------------
Nordstrom, Sears, Macy's,
Macy's, JC Robinson's-May, JC Penney,
Sears, JC Penney, Sears, Dillards, Mervyn's,
Anchors Penney, Other Robinson's-May JC Penney Robinson's-May
Total GLA 827,571 1,100,295 1,226,293 662,510
Anchor GLA 781,070 704,581 805,428 366,845
Mall Shop GLA 276,554 395,714 420,865 295,665
% Mall Shop/Total GLA 33% 36% 34% 45%
Developer/Investor Owned GLA 276,554 395,714 560,073 295,665
Mall Shop Occupancy 90% 87% 97% 93%
1997 Average Rent $ 14.50 $ 25.43 $ 24.69 $ 28.06
CAM Costs/SF Mall Shop GLA $ 6.23 $ 7.99 $ 10.08 $ 13.45
1997 Average NNN Charges $ 10.00 $ 13.75 $ 12.00 $ 21.41
1997 Sales Per SF $ 166 $ 286 $ 266 $ 291
Rent to Sales Ratio 8.7% 8.9% 9.3% 9.6%
Occupancy Cost Ratio 14.8% 13.7% 13.8% 17.0%
Operating Expenses $2,428,055 $ 5,838,391 $ 5,807,536 $ 7,012,000
Expenses/SF Owned GLA $ 8.78 $ 14.75 $ 10.37 $ 23.72
Operating Expense Ratio to EGI 44.0% 40.4% 35.5% 48.5%
Food Court GLA None 4,575 13,263 8,096
1997 Food Court Rents None $ 82.41 $ 50.83 $ 67.42
Food Court/NNN Charges None $ 36.34 $ 20.60 $ 28.78
Food Court Sales None $ 756 $ 506 $ 481
Food Court Rent/Sales None 10.9% 10.0% 14.0%
Food Court Occupancy Costs None 15.7% 14.1% 20.0%
Percentage Rent $ 5,199 $ 223,209 $ 116,782 $ 348,000
Total Revenue $5,515,656 $14,437,112 $16,370,705 $14,450,000
% of Revenue 0.09% 1.55% 0.71% 2.41%
</TABLE>
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
As presented previously, the average contract rental rate for all
non-anchor suites at the subject property is approximately $41.84 per square
foot. Applying the percentage rent and recovery income from the first fiscal
year of our discounted cash flow analysis, we can calculate the total occupancy
cost for the center.
===============================================================================
WESTSIDE PAVILLION
TOTAL OCCUPANCY COST ANALYSIS - FY 1999
- -------------------------------------------------------------------------------
TENANT COST PER SQ. FT.
===============================================================================
Average Contract Rent without Anchors $ 41.84
Percentage Rent $ 0.19
-------
Total Rent $ 42.03
1997 Comparable Store Sales $373.00
TOTAL RENT AS % OF SALES 11.27%
Common Area Maintenance $ 12.75
Real Estate Taxes $ 5.01
Insurance $ 1.62
Electricity $ 3.24
HVAC $ 1.96
Water/sewer $ 0.07
Food Court $ 0.48
-------
Total Tenant Costs $ 25.12
Rent Plus Tenant Costs $ 67.15
1997 Comparable Store Sales $373.00
COST OF OCCUPANCY RATIO 18.00%
===============================================================================
* Recoveries/sf based on FY 1999 amounts over
354,349 sq. ft. (excl. anchors)
Total costs, on average, are shown to be 18.0 percent of year-end 1997
mall shop sales which is above industry guidelines. However, the mall continues
to maintain high occupancy and achieve healthy rental rates. Tenants have been
willing to burden high occupancy costs at the subject to be at this popular
westside mall. A tenant by tenant occupancy cost summary is contained in the
Addenda. The expectations of increased sales volumes is clear from both the
tenants and management. The new ownership anticipates sales to reach $395 per
square foot for year-end 1998, which would reduce the occupancy cost ratio to
17.0 percent. Given Macerich's vast experience as a an owner of regional malls,
some economies are likely to benefit the subject; reducing the costs to the
tenants. Overall, while the occupancy costs at the subject are high, they are
expected to decline with improving sales and more efficient management of
expenses.
- -------------------------------------------------------------------------------
85
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================
LEASE-UP/ABSORPTION PROJECTIONS Applicable GLA
WESTSIDE PAVILION Owned GLA 535,912
Cushman & Wakefield, Inc.
- -----------------------------------------------------------------------------------------------
SUITE DEMISED PROJECTED RENT PER PROJECTED
NO. DESCRIPTION AREA ANNUAL RENT SQ/FT LEASE DATE
===============================================================================================
<S> <C> <C> <C> <C> <C>
MAIN MALL:
302 Vacant - Food Court 608 $54,720 $90.00 OCT-98
306 Vacant - Food Court 975 $87,750 $90.00 DEC-98
319 Vacant - Food Court 450 $40,500 $90.00 JUN-99
362 Vacant In-Line 1,122 $56,100 $50.00 AUG-98
ATM's 3 @ 12 sf each 36 N/A N/A NOT LEASED
Kiosks Vacant Kiosk 1 185 $41,625 $225.00 OCT-98
Kiosks Vacant Kiosk 2 150 $33,750 $225.00 APR-99
===============================================================================================
SURVEY TOTAL: 3,526 $314,445 $90.10
Vacancy Rate/Owned GLA: 0.66%
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
SUITE DEMISED PROJECTED RENT PER PROJECTED
NO. DESCRIPTION AREA ANNUAL RENT SQ/FT LEASE DATE
===============================================================================================
<S> <C> <C> <C> <C> <C>
EXPANSION
MALL
402 Vacant - Exp. Level 1 1,089 $32,670 $30.00
403 Vacant - Exp. Level 1 1,200 $36,000 $30.00
404 Vacant - Exp. Level 1 1,300 $39,000 $30.00
405 Vacant - Exp. Level 1 1,433 $42,990 $30.00
406 Vacant - Exp. Level 1 1,759 $52,770 $30.00
407 Vacant - Exp. Level 1 1,394 $41,820 $30.00 NOTE
409 Vacant - Exp. Level 1 6,000 $180,000 $30.00
411 Vacant - Exp. Level 1 3,622 $108,660 $30.00 LEASED
413 Vacant - Exp. Level 1 2,585 $77,550 $30.00
501A Vacant - Exp. Level 2 2,028 $60,840 $30.00 IN
507 Vacant - Exp. Level 2 1,100 $33,000 $30.00
508 Vacant - Exp. Level 2 975 $29,250 $30.00 ANALYSIS
510 Vacant - Exp. Level 2 2,098 $62,940 $30.00
512 Vacant - Exp. Level 2 5,000 $150,000 $30.00
514A Vacant - Exp. Level 2 1,400 $42,000 $30.00
514B Vacant - Exp. Level 2 1,135 $34,050 $30.00
515 Vacant - Exp. Level 2 499 $14,970 $30.00
516 Vacant - Exp. Level 2 499 $14,970 $30.00
602 Vacant - Exp. Level 3 969 $29,070 $30.00
605 Vacant - Exp. Level 3 1,000 $30,000 $30.00
606 Vacant - Exp. Level 3 1,000 $30,000 $30.00
607 Vacant - Exp. Level 3 1,000 $30,000 $30.00
609 Vacant - Exp. Level 3 1,300 $39,000 $30.00
610 Vacant - Exp. Level 3 1,757 $52,710 $30.00
611 Vacant - Exp. Level 3 3,545 $106,350 $30.00
612 Vacant - Exp. Level 3 1,650 $49,500 $30.00
613 Vacant - Exp. Level 3 500 $15,000 $30.00
614 Vacant - Exp. Level 3 6,000 $180,000 $30.00
619 Vacant - Exp. Level 3 1,279 $38,370 $30.00
===============================================================================================
SURVEY TOTAL: 55 116 $1,653,480 $30.00
Vacancy Rate/Owned GLA: 10.28%
===============================================================================================
</TABLE>
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
ABSORPTION/LEASE-UP
The chart on the accompanying chart summarizes our lease-up assumptions
of the space that is currently vacant. We have assumed the main mall space to
lease gradually over the next twelve months (last space leasing June 1999)
based on our knowledge of the space and conversations with the leasing
representative. We have not leased the three additional ATM spaces with 36
square feet, given that the subject is already well served by ATMs.
The Expansion mall, Phase II, is only 40.1 percent leased, and has
suffered significant vacancy problems since construction in 1991. The recent
purchaser of the property did not include any new lease-up of this space in
their analysis, as it is generally regarded as a redevelopment opportunity.
Macerich assumed that four of the six tenants would renew (Barnes & Noble,
Politically Incorrect, Tony Roma's and Linear Hair) at their current contract
rents, that Baja Buds would renew at reduced rent and McDonald's would vacate.
In our discussions with the selling broker involved in the transaction, others
involved analyzed this portion of the property very conservatively as well.
Given the lack of success for Phase II, we have held all currently vacant space
in Phase II as vacant throughout the projection period.
VACANCY & COLLECTION LOSS
For the Phase I & Phase II combined cash flow, we have included a global
credit loss of 1.0 percent vacancy and collection loss against all tenant
revenues with the exception of Nordstrom, Pavilions and Barnes & Noble. The
majority of the current vacant space, which is located in Phase II and is held
vacant through the cash flow. Therefore, a 1.0 percent credit loss is adequate.
In the separate analysis of Phase I only, we project stabilized economic
occupancy at about 95 percent. However, the recovery income is calculated over
occupied area and therefore no recovery income would be lost on vacant space.
As Pro-Ject applies the credit loss factor as a deduction against all revenues,
including recovery revenue, a credit loss factor of 3.0 percent is considered
appropriate. Our global collection loss of 3.0 percent is not applied to
Nordstrom or Pavilions and is used in conjunction with lag vacancy of two
months downtime between speculative rollovers.
OPERATING EXPENSES
We estimated the operating expenses for the subject property based on a
review and analysis of the actual operating expenses and discussions with the
subject management. We also examined industry standards as reported by Dollars
and Cents of Shopping Centers and considered actual costs for comparable
shopping centers we have recently appraised in Southern California.
The exhibit on an accompanying page summarizes the subject's operating
history for 1995 (annualized July - December), 1996, 1997 and the 1998 budget.
Our conclusions for the subject's expenses are shown in the final column on the
right, and are for the fiscal year ending June 30, 1999. Future expense
increases are based on 4.0 percent assumed
- -------------------------------------------------------------------------------
86
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
INCOME & EXPENSE ANALYSIS - Westside Pavilion I & II Combined
Cushman & Wakefield, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
July - Dec Per Sq/Ft Per Sq/Ft Per Sq/Ft
Annualized of GLA Actual of GLA Actual of GLA
1995 1995 1996 1996 1997 1997
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
------------------------------------
OPERATING INCOME
------------------------------------
MINIMUM RENT
Base Rent: $11,988,912 $22.37 $12,542,506 $23.40 $13,000,078 $24.26
Percentage Rent: $ 132,726 $ 0.25 $ 87,371 $ 0.16 $ 33,102 $ 0.06
Specialty Leasing: $ 894,608 $ 1.67 $ 776,775 $ 1.45 $ 787,319 $ 1.47
Storage Rent $ 234,752 $ 0.44 $ 234,906 $ 0.44 $ 45,075 $ 0.08
Nordstrom Storage $ 469,200 $ 0.88 $ 469,200 $ 0.88 $ 480,450 $ 0.90
Robinson's May Parking $ -- $ -- $ -- $ -- $ -- $ --
Bad Debt (or Vacancy Loss) $ -- $ -- $ -- $ -- $ (79,163) $(0.15)
----------- ------ ----------- ------ ----------- ------
SUBTOTAL: $13,720,198 $25.60 $14,110,758 $26.33 $14,266,861 $26.62
RECOVERY INCOME
CAM Income: $ 4,409,572 $ 8.23 $ 5,172,374 $ 9.65 $ 4,484,756 $ 8.37
Food Court Income: $ 176,812 $ 0.33 $ 177,711 $ 0.33 $ 254,558 $ 0.47
Property Tax Income: $ 1,796,766 $ 3.35 $ 1,771,151 $ 3.30 $ 1,657,583 $ 3.09
Insurance Income: $ 430,008 $ 0.80 $ 373,896 $ 0.70 $ 357,303 $ 0.67
HVAC Income: $ 599,042 $ 1.12 $ 631,974 $ 1.18 $ 717,714 $ 1.34
Electricity Income $ 1,071,876 $ 2.00 $ 978,487 $ 1.83 $ 1,057,021 $ 1.97
Water/Sewer Income: $ 24,892 $ 0.05 $ 22,173 $ 0.04 $ 21,178 $ 0.04
----------- ------ ----------- ------ ----------- ------
SUBTOTAL: $ 8,508,968 $15.88 $ 9,127,766 $17.03 $ 8,550,113 $15.95
OTHER INCOME
Capital Revenue $ 126,176 $ 0.24 $ 129,710 $ 0.24 $ 124,302 $ 0.23
Marketing $ 50,000 $ 0.09 $ 50,000 $ 0.09 $ -- $ --
Other Income $ 87,034 $ 0.16 $ 103,978 $ 0.19 $ 59,607 $ 0.11
----------- ------ ----------- ------ ----------- ------
SUBTOTAL: $ 263,210 $ 0.49 $ 283,688 $ 0.53 $ 183,909 $ 0.34
TOTAL INCOME: $22,492,376 $41.97 $23,522,212 $43.89 $23,000,883 $42.92
------------------------------------
OPERATING EXPENSES
------------------------------------
CAM
Payroll/Benefits $ -- $ -- $ 919,299 $ 1.72 $ 632,337 $ 1.18
Contract Maintenance $ -- $ -- $ 7,976 $ 0.01 $ 7,976 $ 0.01
Contract Security Services $ -- $ -- $ 766,748 $ 1.43 $ 785,618 $ 1.47
Contract Cleaning Services $ -- $ -- $ 404,836 $ 0.76 $ 373,036 $ 0.70
Contract Landscaping $ -- $ -- $ 34,800 $ 0.06 $ 34,800 $ 0.06
Contract Elevator $ -- $ -- $ 176,047 $ 0.33 $ 169,876 $ 0.32
Pest Control/Trash Removal $ -- $ -- $ 172,553 $ 0.32 $ 190,142 $ 0.35
Repairs & Maintenance $ -- $ -- $ 987,047 $ 1.84 $ 604,061 $ 1.13
Materials & Supplies $ -- $ -- $ 170,563 $ 0.32 $ 109,418 $ 0.20
Equipment Rental/Radios/Tele. $ -- $ -- $ 75,221 $ 0.14 $ 78,214 $ 0.15
Utilities $ -- $ -- $ 776,669 $ 1.45 $ 825,662 $ 1.54
Misc. Office Expense $ -- $ -- $ 86,336 $ 0.16 $ 62,968 $ 0.12
Roof/Skylight Repairs $ -- $ -- $ 11,800 $ 0.02 $ 9,911 $ 0.02
Taxes, Licenses, Fees & Insur. $ -- $ -- $ 181,529 $ 0.34 $ 241,634 $ 0.45
Professional & Legal $ -- $ -- $ 94,818 $ 0.18 $ 70,710 $ 0.13
Depreciation - General $ -- $ -- $ 2,040 $ 0.00 $ 60,453 $ 0.11
----------- ------ ----------- ------ ----------- ------
Sub-total CAM $ 4,024,104 $ 7.51 $ 4,868,282 $ 9.08 $ 4,256,816 $ 7.94
CAM - FOOD COURT
Contract Services $ -- $ -- $ 90,556 $ 0.17 $ 173,041 $ 0.32
Maintenance & Supplies $ -- $ -- $ 7,976 $ 0.01 $ 6,319 $ 0.01
Utilities $ -- $ -- $ 5,691 $ 0.10 $ 52,363 $ 0.10
----------- ------ ----------- ------ ----------- ------
Sub-total Food Court $ 145,778 $ 0.27 $ 154,223 $ 0.29 $ 231,723 $ 0.43
MARKETING
Marketing & Promotional $ -- $ -- $ 612,266 $ 1.14 $ 641,562 $ 1.20
Promotional Charges $ -- $ -- $ (416,735) $(0.78) $ (417,016) $(0.78)
Lease Required Advertising $ -- $ -- $ (3,914) $(0.01) $ (5,200) $(0.01)
Media Fund $ -- $ -- $ (87,561) $(0.16) $ (95,091) $(0.18)
Landlord Contribution Required $ -- $ -- $ (104,056) $(0.19) $ (124,255) $(0.23)
----------- ------ ----------- ------ ----------- ------
Sub-total Marketing $ 156,623 $ 0.29 $ -- $ -- $ (0) $(0.00)
REAL ESTATE TAXES $ 2,273,570 $ 4.24 $ 2,211,969 $ 4.13 $ 1,896,802 $ 3.54
OTHER RECOVERABLE EXPENSES
Insurance $ 519,006 $ 0.97 $ 455,178 $ 0.85 $ 430,407 $ 0.80
Electricity $ 742,846 $ 1.39 $ 850,985 $ 1.59 $ 919,565 $ 1.72
Water/Sewer $ 23,620 $ 0.04 $ 21,965 $ 0.04 $ 21,841 $ 0.04
HVAC $ 371,544 $ 0.69 $ 365,133 $ 0.68 $ 383,359 $ 0.72
Other $ -- $ -- $ -- $ - $ 368 $ 0.00
----------- ------ ----------- ------ ----------- ------
Sub-total Other Recoverable $ 1,657,016 $ 3.09 $ 1,693,261 $ 3.16 $ 1,755,540 $ 3.28
TOTAL RECOVERABLE EXPENSES $ 8,257,091 $15.41 $ 8,927,735 $16.66 $ 8,140,881 $15.19
MANAGEMENT FEE $ -- $ -- $ -- $ -- $ -- $ --
LANDLORD EXPENSES
Landlord Maintenance $ -- $ -- $ 3,812 $ 0.01 $ 43 $ 0.00
Postage, bank charges, misc. $ -- $ -- $ 476 $ 0.00 $ 2,661 $ 0.00
Insurance (legal) $ -- $ -- $ -- $ -- $ -- $ -
Professional Fees - Legal/Audit $ 302,220 $ 0.56 $ 261,249 $ 0.49 $ 100,010 $ 0.19
Professional Fees - Other $ -- $ -- $ -- $ -- $ 9,521 $ 0.02
Landlord Contribution - Marketing $ -- $ -- $ 104,056 $ 0.19 $ 124,255 $ 0.23
Bad Debt $ 327,632 $ 0.61 $ 481,979 $ 0.90 $ -- $ -
Specialty Leasing $ 52,012 $ 0.10 $ 61,798 $ 0.12 $ 37,403 $ 0.07
Other $ 111,458 $ 0.21 $ -- $ -- $ -- $ -
----------- ------ ----------- ------ ----------- ------
Total Landlord Expenses: $ 793,322 $ 1.48 $ 913,370 $ 1.70 $ 273,893 $ 0.51
TOTAL - NONRECOVERABLE: $ 793,322 $ 1.48 $ 913,370 $ 1.70 $ 273,893 $ 0.51
TOTAL OPERATING EXPENSES $ 9,050,413 $16.89 $ 9,841,105 $18.36 $ 8,414,774 $15.70
Operating Expense Ratio -- 40.2% -- 41.8% -- 36.6%
------------------------------------
NET OPERATING INCOME $13,441,963 $25.08 $13,681,107 $25.53 $14,586,109 $27.22
------------------------------------
==================================================================================================================================
<CAPTION>
==============================================================================================================
-----------------------------------------------------------------
Gross Leasable Area: 535,912
(Owned GLA)
-----------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Per Sq/Ft C&W Per Sq/Ft
Budget of GLA Forecast of GLA
1998 1998 FY1999 FY1999
==============================================================================================================
<S> <C> <C> <C> <C>
------------------------------------
OPERATING INCOME
------------------------------------
MINIMUM RENT
Base Rent: $13,275,385 $24.77 $13,420,686 $25.04
Percentage Rent: $ 56,607 $ 0.11 $ 99,952 $ 0.19
Specialty Leasing: $ 702,739 $ 1.31 $ 714,000 $ 1.33
Storage Rent $ 57,600 $ 0.11 $ 58,752 $ 0.11
Nordstrom Storage $ 472,500 $ 0.88 $ 472,500 $ 0.88
Robinson's May Parking $ -- $ -- $ 305,248 $ 0.57
Bad Debt (or Vacancy Loss) $ -- $ -- $ (204,432) $(0.38)
----------- ------ ----------- ------
SUBTOTAL: $14,564,831 $27.18 $14,866,706 $27.74
RECOVERY INCOME
CAM Income: $ 4,658,589 $ 8.69 $ 4,516,316 $ 8.43
Food Court Income: $ 182,084 $ 0.34 $ 169,572 $ 0.32
Property Tax Income: $ 1,683,393 $ 3.14 $ 1,776,696 $ 3.32
Insurance Income: $ 441,075 $ 0.82 $ 573,196 $ 1.07
HVAC Income: $ 701,404 $ 1.31 $ 693,816 $ 1.29
Electricity Income $ 1,084,260 $ 2.02 $ 1,146,592 $ 2.14
Water/Sewer Income: $ 27,262 $ 0.05 $ 25,698 $ 0.05
----------- ------ ----------- ------
SUBTOTAL: $ 8,778,067 $16.38 $ 8,901,886 $16.61
OTHER INCOME
Capital Revenue $ 126,000 $ 0.24 $ 127,500 $ 0.24
Marketing $ -- $ -- $ -- $ --
Other Income $ 12,000 $ 0.02 $ 12,240 $ 0.02
----------- ------ ----------- ------
SUBTOTAL: $ 138,000 $ 0.26 $ 139,740 $ 0.26
TOTAL INCOME: $23,480,898 $43.81 $23,908,332 $44.61
------------------------------------
OPERATING EXPENSES
------------------------------------
CAM
Payroll/Benefits $ 674,427 $ 1.26
Contract Maintenance $ 15,118 $ 0.03
Contract Security Services $ 789,480 $ 1.47
Contract Cleaning Services $ 494,436 $ 0.92
Contract Landscaping $ 36,375 $ 0.07
Contract Elevator $ 162,000 $ 0.30
Pest Control/Trash Removal $ 184,260 $ 0.34
Repairs & Maintenance $ 745,318 $ 1.39
Materials & Supplies $ 109,400 $ 0.20
Equipment Rental/Radios/Tele. $ 103,140 $ 0.19
Utilities $ 822,821 $ 1.54
Misc. Office Expense $ 57,257 $ 0.11
Roof/Skylight Repairs $ 22,000 $ 0.04
Taxes, Licenses, Fees & Insur. $ 178,470 $ 0.33
Professional & Legal $ 38,900 $ 0.07
Depreciation - General $ -- $ --
----------- ------ ----------- ------
Sub-total CAM $ 4,433,402 $ 8.27 $ 4,488,000 $ 8.37
CAM - FOOD COURT
Contract Services $ 94,406 $ 0.18
Maintenance & Supplies $ 13,250 $ 0.02
Utilities $ 57,875 $ 0.11
----------- ------
Sub-total Food Court $ 165,531 $ 0.31 $ 168,300 $ 0.31
MARKETING
Marketing & Promotional $ 616,103 $ 1.15
Promotional Charges $ (414,204) $(0.77)
Lease Required Advertising $ (4,031) $(0.01)
Media Fund $ (96,388) $(0.18)
Landlord Contribution Required $ (101,480) $(0.19)
----------- ------ ----------- ------
Sub-total Marketing $ -- $ -- $ -- $ --
REAL ESTATE TAXES $ 1,931,805 $ 3.60 $ 1,919,000 $ 3.58
OTHER RECOVERABLE EXPENSES
Insurance $ 559,666 $ 1.04 $ 561,000
Electricity $ 968,090 $ 1.81 $ 989,400
Water/Sewer $ 24,784 $ 0.05 $ 25,500
HVAC $ 376,534 $ 0.70 $ 382,500
Other $ -- $ --
----------- ------ ----------- ------
Sub-total Other Recoverable $ 1,929,074 $ 3.60 $ 1,958,400 $ 3.65
TOTAL RECOVERABLE EXPENSES $ 8,459,812 $15.79 $ 8,533,700 $15.92
MANAGEMENT FEE $ 360,000 $ 0.67 $ 680,659 $ 1.27
LANDLORD EXPENSES
Landlord Maintenance $ 4,200 $ 0.01
Postage, bank charges, misc. $ 2,040 $ 0.00
Insurance (legal) $ -- $ --
Professional Fees - Legal/Audit $ 106,048 $ 0.20
Professional Fees - Other $ -- $ --
Landlord Contribution - Marketing $ 106,366 $ 0.20
Bad Debt $ --
Specialty Leasing $ 53,650
Other $ -- $ --
----------- ------ ----------- ------
Total Landlord Expenses: $ 272,304 $ 0.51 $ 280,500 $ 0.52
TOTAL - NONRECOVERABLE: $ 272,304 $ 0.51 $ 280,500 $ 0.52
TOTAL OPERATING EXPENSES $ 9,092,116 $16.97 $ 9,494,859 $17.72
Operating Expense Ratio -- 38.7% -- 39.7%
------------------------------------
NET OPERATING INCOME $14,388,782 $26.85 $14,413,473 $26.90
------------------------------------
=============================================================================================================
</TABLE>
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
annual inflation with the exception of Property Taxes which are escalated at
2.0 percent annually based on Proposition 13.
The subject includes two basic categories of operating expense; 1)
Recoverable expenses, which are passed through to the tenants including CAM
Expenses, Food Court, Water Tenant HVAC, Electricity, Insurance, and Property
Taxes; and, 2) Non-Recoverable Expenses, which are incurred by the landlord and
are not passed through to the tenants.
RECOVERABLE EXPENSES
REAL ESTATE TAXES
Property taxes for the subject were estimated based on our value
conclusion multiplied by the subject's property tax rate (rounded). We
then increased this figure 2.0 percent annually throughout the term of
the holding period in accordance with Proposition 13.
COMMON AREA MAINTENANCE (CAM)
The components of the subject's CAM expenses are as follows: Payroll,
employee benefits, workers compensation, health insurance, uniforms,
travel, meals and entertainment, staff amenities, subscriptions, training
and education, staff employment fees, temporary labor, contracts,
maintenance, A/C repairs, elevator/escalator repairs, plumbing and
drainage repairs, roof repair, supplies, fire/life/and safety systems,
pest control, snow removal, trash removal, wired music, postage, radios,
pagers, beepers, telephones, permits, personal property taxes, fire tax,
sales and use tax, insurance premiums, claims, and legal, electricity,
water, sewer, gas, HVAC, professional fees, legal fees, audit fees,
computer services, machinery/equipment rental, auto and truck leases,
donations, office supplies, and community relations. The major components
of the subject CAM pool include payroll, security, maintenance and
utilities.
The subject's CAM Expenses equaled $4,866,282 in 1996, dropping to
$4,256,816 in 1997. The decrease is due primarily to reduced payroll and
maintenance costs. The 1998 budgeted amount is $4,433,402. We estimated
the subject CAM Expenses at $4,400,000 during 1998 and increased this
figure 4.0 percent annually throughout the remainder of the holding
period.
INSURANCE
Insurance premiums at the subject were $455,178 in 1996 and $430,407 in
1997. The 1998 budget amount is $559,666. We have applied an expense of
$550,000 during 1998 and increased this figure 4.0 percent annually
throughout the remainder of the holding period.
ELECTRICITY
The 1996 actual expense for electricity usage equaled $850,985. The 1997
expense was $919,565. These compare to the 1998 budget cost of $968,090,
which is higher due to increased occupancy in the main mall. We estimate
this cost at $970,000 during 1998 and increased this figure 4.0 percent
annually throughout the remainder of the holding period.
- -------------------------------------------------------------------------------
87
<PAGE>
INCOME APPROACH
- ------------------------------------------------------------------------------
WATER/SEWER
This expense equaled $21,965 during 1996, which is approximately the
same as the 1997 amount of $21,841. The 1998 budget figure is $24,784,
which we have rounded to $25,000 in our analysis. This is grown at 4.0
percent annually throughout the remainder of the holding period.
HAVC
Actual 1996 expenses for this category equaled $365,133, which
compare with a 1997 actual of $383,359. The 1998 budget estimates tenant
HVAC expenses at $376,534. We have included an amount of $375,000 in our
analysis.
FOOD COURT
These expenses are directly related to the on going operation of the
subject food court. Components of the subject's food court expenses
include contracts, maintenance, plumbing and drainage repairs, supplies,
pest control, electricity, water, and HVAC costs. The 1996 actual food
court expenses equaled $154,223, which compare with the 1997 figure of
$213,723. The 1997 expense is high due to extra contract service costs.
The 1998 budget includes food court expenses at $165,531. We estimated
this cost at $165,000 during 1998 and increased this figure 4.0 percent
annually throughout the remainder of the holding period.
NON RECOVERABLE EXPENSES
MANAGEMENT FEES
We have included a management fee of 5 percent of minimum rent and
percentage rent. Management fees will typically range from 3.5 to 5.0
percent on a national basis. Our conclusion at the upper end of the range
takes into consideration the physical composition of the subject property
and the cash flow assumptions herein.
LANDLORD EXPENSES
Components of the non-recoverable landlord expenses at the subject
include specialty leasing expenses, federal express, legal fees, audit
fees, bank charges, landlord marketing contributions, and bad debts. We
considered the bad debt component of this expense within our credit loss
estimate. Net of bad debt this expense equaled $431,391 in 1996 and
$273,893 in 1997. These costs are budgeted at $272,304 in 1998, similar to
the 1997 amount. The 1996 costs are high due to excessive legal and audit
fees. We estimate this cost at $275,000 during 1998 and increased this
figure 4.0 percent annually throughout the remainder of the holding
period.
- ------------------------------------------------------------------------------
88
<PAGE>
INCOME APPROACH
- ------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES
As shown in the cash flow report, the subject's total operating
expenses for Phase I and II equal $9,494,859 in the first year of the
analysis. This equals $17.72 per square foot of owned GLA, and an
operating expense ratio of 39.7 percent. This compares well with the
historical and budgeted operating performance of the subject property. As
a final check against our cash flow projection, we can compare the
subject's projected operating expense ratio with other malls within the
region.
<TABLE>
<CAPTION>
OPERATING EXPENSE RATIOS
REGIONAL MALLS--SOUTHERN CALIFORNIA
===========================================================
OPERATING
OPERATING EXPENSE
EXPENSES TOTAL INCOME RATIO
- ----------------- ------------ -------------- -----------
<S> <C> <C> <C>
Mall Comparable 1 $7,000,000 $18,600,000 37.6%
Mall Comparable 2 $6,216,568 $14,858,092 41.8%
Mall Comparable 3 $8,352,208 $16,572,776 50.4%
Mall Comparable 4 $2,428,055 $ 5,515,656 44.0%
Mall Comparable 5 $5,838,391 $14,437,112 40.4%
Mall Comparable 6 $5,807,536 $16,370,705 35.5%
Mall Comparable 7 $7,012,000 $14,450,000 48.5%
================= ============ ============== ===========
SURVEY AVERAGE: 42.6%
================= ============ ============== ===========
</TABLE>
The survey illustrates that operating expense ratios for the Southern
California regional malls for which we have information ranges from 35.5 to
50.4 percent. The overall average equals 42.6 percent.
Comparatively, our analysis results in a first year operating expense
ratio of 39.7 percent which fluctuates between 39.7 and 42.5 percent over the
projection period. This appears reasonable when compared to the ratios
indicates by the regional malls in our survey.
CAPITAL EXPENDITURES
TENANT IMPROVEMENT ALLOWANCES
Based on activity at similar centers and the cash flow modeling
practice of investors in regional malls nationally, we have included a $15
per square foot tenant improvement allowance for new tenants, $5.00 per
square foot for renewals. This equals a blended tenant improvement
allowance for speculative rollovers of $8.50 per square foot using a
renewal probability of 65 percent.
LEASE COMMISSIONS
The lease commission for new tenants is assumed at $2.50 per square
foot and $1.50 per square foot for renewals. Based on a 65 percent renewal
probability, this equals a blended commission rate of $1.85 per square
foot for speculative rollovers.
- ------------------------------------------------------------------------------
89
<PAGE>
INCOME APPROACH
- ------------------------------------------------------------------------------
RESERVES FOR REPLACEMENT
Investors in this type of property typically make an allowance for
capital reserves to replace short lived items such as electrical or HVAC
systems, and to cover the cost of roof or repair replacement. We have
included reserves at $0.20 per-square-foot of owned gross leasable area in
1998, increased by 4.0 percent annually. This is included as a capital
expense below the net operating income line.
ADA COMPLIANCE
As mentioned in the Executive Summary to this report, we were
provided with excerpts from a 1998 report prepared by Myers, Houghton &
Partners. These pages are contained in the Addenda. The report identifies
$90,000 in readily achievable barrier removal items to bring the property
into compliance. This has been included as a capital deduction in the cash
flow analysis, however, due to the small amount, it is basically lost in
rounding. The reader should note that we are not qualified to provide a
specific compliance survey and analysis of the property to determine
whether or not it is in conformity with the various detailed requirements
of ADA, and have relied upon the information provided to us. It is
possible that a full compliance survey of the property, together with a
detailed analysis of the requirements of the ADA could reveal that the
property is not in compliance with one or more of the requirements of the
Act. If so, this fact could have a negative effect upon the value of the
property.
NET INCOME/NET CASH FLOW
The total expenses of the subject property, including alterations,
commissions, capital expenditures, and reserves, are annually deducted from
total income, thereby leaving a residual net operating income or net cash
flow to the investors in each year of the holding period before debt service.
In the initial year of the analysis, the net operating income is forecasted
to be equal to approximately $14.413 million for Phase I and II combined,
which is equivalent to 60.3 percent of effective gross income. Deducting
other expenses including capital items results in a net cash flow before debt
service of approximately $14,070 million.
- ------------------------------------------------------------------------------
90
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
=====================================================================
OPERATING SUMMARY - PHASE I & II COMBINED
WESTSIDE PAVILION FISCAL YEAR 1999
---------------------------------------------------------------------
Aggregate Sum Unit Rate* Operating Ratio
=====================================================================
Effective Gross
Income $23,908,332 $44.61 100.0%
---------------------------------------------------------------------
Operating Expenses $9,494,859 $17.71 39.7%
---------------------------------------------------------------------
Net Operating Income $14,413,473 $26.90 60.3%
---------------------------------------------------------------------
Other Expenses $342,925 $0.64 1.4%
---------------------------------------------------------------------
Cash Flow $14,070,548 $26.26 58.9%
=====================================================================
* Based on total owned GLA of 535,912+/- square feet.
=====================================================================
In our analysis of Phase I alone, net operating income in the first year
is forecasted to be equal to approximately $13.416 million, which is equivalent
to 63.6 percent of effective gross income. Deducting other expenses including
capital items results in a net cash flow before debt service of approximately
$13.109 million.
=====================================================================
OPERATING SUMMARY - PHASE I ONLY
WESTSIDE PAVILION FISCAL YEAR 1999
---------------------------------------------------------------------
Aggregate Sum Unit Rate* Operating Ratio
=====================================================================
Effective Gross
Income $21,083,182 $47.49 100.0%
---------------------------------------------------------------------
Operating Expenses $7,666,906 $17.27 36.4%
---------------------------------------------------------------------
Net Operating Income $13,416,276 $30.22 63.6%
---------------------------------------------------------------------
Other Expenses $307,533 $0.69 1.4%
---------------------------------------------------------------------
Cash Flow $13,108,721 $29.53 62.2%
=====================================================================
* Based on total owned GLA of 443,934+/- square feet.
=====================================================================
The rate of change to both net income and cash flow is important from an
investor's perspective. Our cash flow models have forecasted the following
compound annual growth rates over the holding period on a fiscal year basis.
- -------------------------------------------------------------------------------
91
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
==============================================
INCOME GROWTH FY 1999 - 2008
PHASE I & II COMBINED
==============================================
Net Operating Income: 2.6%
----------------------------------------------
Net Cash Flow: 2.3%
==============================================
==============================================
INCOME GROWTH FY 1999 - 2008
PHASE I ONLY
==============================================
Net Operating Income: 2.5%
----------------------------------------------
Net Cash Flow: 2.2%
==============================================
Growth rates in net operating income and net cash flow for the combined
Phase I & II analysis are forecasted to approximate to 2.6 and 2.3 percent per
annum, respectively. The growth rates are lower in the Phase I analysis, at 2.5
percent and 2.2 percent due to the higher occupancy and long term nature of the
leases, which provides a slightly more rigid cash flow. These rates are
considered to be typical of a center such as the subject where its income from
mall tenants is a principal revenue source with long-term lease structures that
contain only modest rent bumps. Such income growth has been considered in our
selection of investment parameters as discussed in a following section.
SELECTION OF CAPITALIZATION RATES
OVERALL CAPITALIZATION RATE
The overall capitalization rate bears a direct relationship between net
operating income generated by the real estate in the initial year of investment
(or initial stabilized year) and the value of the asset in the marketplace.
Overall rates are affected by the existing leasing schedule of the property,
the strength or weakness of the local rental market, the property's position
relative to competing properties, and the risk/return characteristics
associated with competitive investments.
For retail properties, the trend has been for rising capitalization
rates. We feel that much of this has to do with the quality of product that has
been selling. Sellers of better performing dominant Class A malls have been
unwilling to waver on their pricing. Many of the malls sold over the past 24
months are found in less desirable, second or third tier locations, or
represent turnaround situations with properties that are poised for expansion
or remerchandising.
- -------------------------------------------------------------------------------
92
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
=========================================================
OVERALL CAPITALIZATION RATES
REGIONAL MALL SALES
---------------------------------------------------------
YEAR RANGE MEAN POINT CHANGE
=========================================================
1988 5.00% - 8.00% 6.19% --
---------------------------------------------------------
1989 4.57% - 7.26 6.22% + 3
---------------------------------------------------------
1990 5.06% - 9.11% 6.29% + 7
---------------------------------------------------------
1991 5.60% - 7.82% 6.44% + 15
---------------------------------------------------------
1992 6.00% - 7.97% 7.31% + 87
---------------------------------------------------------
1993 7.00% - 10.10% 7.92% + 61
---------------------------------------------------------
1994 6.98% - 10.29% 8.37% + 45
---------------------------------------------------------
1995 7.25% - 11.10% 9.13% + 76
---------------------------------------------------------
1996 7.00% - 12.10% 9.44% + 31
---------------------------------------------------------
1997 7.34% - 12.77% 9.65% + 21
---------------------------------------------------------
1998 - YTD 7.40% - 12.01% 9.51% - 14
=========================================================
BASIS POINT
CHANGE
=========================================================
1988-1997 + 346 BPs
---------------------------------------------------------
1992-1997 + 234 BPs
=========================================================
The data shows that the average capitalization rate has shown a rising
trend each year. Between 1988 and 1997, the average capitalization rate has
risen 346 basis points. Since 1992, the rise has been 234 basis points. This
change is a reflection of both rising interest rates and increasing first year
returns demanded by investors in light of several fundamental changes which
have occurred in the retail sector. The increase in investment activity and
competition for product by the REIT's is expected to stabilize the eventually
lower rates, as suggested by the year-to-date 1998 activity.
As noted, much of the buying over the past 18 to 24 months has been
opportunistic acquisitions involving properties selling near or below
replacement cost. Many of these properties have languished due to lack of
management focus or expertise, as well as a limited ability to make the
necessary capital commitments for growth. As these opportunities become harder
to find, we believe that investors will again begin to focus on the stable
returns of the dominant Class A product.
The Cushman & Wakefield's Spring 1998 survey reveals that going-in cap
rates for CLASS A regional shopping centers range between 7.0 and 11.0 percent,
with a low average of 7.4 percent and high average of 8.9 percent,
respectively; a spread of 150 basis points. On an overall basis, when Class B
assets and "Value Added" opportunities are added, the low and high means are
8.0 percent and 9.3 percent, respectively. Cushman & Wakefield now surveys
respondents on their criteria for both Class B and "Value Added" malls. As
expected, going-in capitalization and yield rates range from 100 to 300 basis
points above rates for Class A assets.
Terminal, or going-out rates for CLASS A assets are now averaging 7.9
and 9.3 percent, indicating a spread of 40 to 90 basis points over the going-in
rates. Again, on an overall basis, including Class B and "value added"
properties, the respective averages are
- -------------------------------------------------------------------------------
93
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
8.1 percent and 9.0 percent. Finally, our current survey also shows that
investors have become more cautious in their underwriting, positioning "retail"
lower on their investment rating scales in terms of preferred investments.
<TABLE>
<CAPTION>
=============================================================================================
CUSHMAN & WAKEFIELD VALUATION ADVISORY SERVICES
NATIONAL INVESTOR SURVEY - REGIONAL MALLS (%)
- ---------------------------------------------------------------------------------------------
INVESTMENT AUTUMN 1996 SUMMER 1997 SPRING 1998*
------------------------------------------------------------------------------
PARAMETERS LOW HIGH LOW HIGH LOW HIGH
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
OAR/Going-In 7.0 - 9.0 7.5 - 9.5 7.5 - 10.0 7.8 - 11.0 7.0 - 9.5 7.5 - 12.0
7.9 8.2 8.4 9.1 8.0 9.3
- ---------------------------------------------------------------------------------------------
OAR/Terminal 7.0 - 9.5 7.8 - 11.0 8.0 - 10.3 8.0 - 9.0 7.5 - 9.0 7.9 - 11.5
8.2 8.6 8.7 9.4 8.1 9.0
- ---------------------------------------------------------------------------------------------
IRR 10.0 - 15.0 11.0 - 15.0 10.0 - 20.0 10.5 - 12.8 9.5 - 18.0 10.5 - 18.0
11.4 11.8 13.4 13.9 12.8 13.6
=============================================================================================
* Reflects overall results which includes Class A/B properties as well as value
added opportunities.
=============================================================================================
</TABLE>
The Second Quarter 1998 Peter F. Korpacz survey concurs with these
findings, citing that regional malls are near the bottom of investor
preferences, but 1998 is seen by many as a turnaround year. Mall portfolios are
expected to be actively traded this year. Nonetheless, with expense growth
surpassing sales increases in many markets, occupancy cost issues have also
become of greater concern. Even in some malls where sales approach a benchmark
level of $350+/- per square foot, it is not uncommon for occupancy costs to
limit the opportunity to grow rents.
Thus, with limited upside growth in net income, cap rates are generally
well above 8.0 percent. For "A" and "A+" malls, the survey cites cap rates
ranging from 7.00 to 9.00 percent with an average of 7.63 percent for "A+"
malls. For "A" malls, the mean is 8.04 percent. For "B+" malls, the range is
7.00 to 10.00 percent, averaging 9.06 percent. For "B" malls, the range is 8.25
to 11.00 percent, with an average of 9.78 percent.
- -------------------------------------------------------------------------------
94
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
==========================================================================
NATIONAL REGIONAL MALL MARKET
SECOND QUARTER 1998
--------------------------------------------------------------------------
CURRENT LAST
KEY INDICATORS QUARTER QUARTER YEAR AGO
==========================================================================
FREE & CLEAR EQUITY IRR
--------------------------------------------------------------------------
RANGE 10.00% - 13.00% 9.50% - 13.00% 10.50% - 14.00%
AVERAGE 11.30% 11.50% 11.75%
--------------------------------------------------------------------------
CHANGE (Basis Points) - -20 -45
--------------------------------------------------------------------------
FREE & CLEAR GOING-IN CAP RATE
--------------------------------------------------------------------------
RANGE 7.00% - 11.00% 7.00% - 11.00% 7.00% - 11.00%
AVERAGE 8.45% 8.51% 8.57%
--------------------------------------------------------------------------
CHANGE (Basis Points) - -6 -12
--------------------------------------------------------------------------
RESIDUAL CAP RATE
--------------------------------------------------------------------------
RANGE 7.50% - 11.00% 7.50% - 11.00% 7.50% - 11.00%
AVERAGE 8.76% 8.80% 8.78%
--------------------------------------------------------------------------
CHANGE (Basis Points) - -4 -2
==========================================================================
Source: Peter Korpacz Associates, Inc. - Real Estate Investor Survey
==========================================================================
As can be seen from the above, the average IRR has decreased by 45 basis
points to 11.30 percent from one year ago. The quarter's average initial free
and clear equity cap rate fell 12 basis points to 8.45 percent from a year
earlier, while the residual cap rate has fallen 2 basis points to 8.76 percent.
Based upon this discussion, we are inclined to group and characterize
regional malls into the general categories following:
- -------------------------------------------------------------------------------
95
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
CAP RATE RANGE CATEGORY
-------------- --------
7.0% to 7.5% (A+) Top 15 to 20+/- malls in the country. Excellent
demographics with high sales ($400+/-/SF) and
good upside.
7.5% to 8.5% (A) Dominant Class A investment grade property, high
sales levels, relatively good health ratios,
excellent demographics (top 50 markets), and
considered to present a significant barrier to
entry within its trade area. Sales tend to be in
the $300 to $350 per square foot range. The
subject property is considered to fall at the
upper end of this range in rates, as a Class A-
investment for Phase I and II combined and a
Class A investment for Phase I alone.
8.5% to 11.0% (B+/B-) Somewhat broad characterization of investment
quality properties ranging from primary MSAs to
second tier cities. Properties at the higher end
of the scale are probably somewhat vulnerable to
new competition in their market.
11.0% to 14.0% (B-/C) Remaining product which has limited appeal or
significant risk which will attract only a
smaller, select group of investors.
CONCLUSION - INITIAL CAPITALIZATION RATE
We have considered all of the above relative to the physical and economic
characteristics of the subject property. Clearly, it is difficult to relate the
subject to comparable properties that are in such widely divergent markets with
different cash flow characteristics. Based upon this analysis, we can develop a
going-in capitalization rate for the subject based upon its tenancy, investment
appeal, quality, and inherent risks. On balance, we have looked toward a
going-in capitalization rate between 8.0 and 8.5 percent for the subject for
Phase I and II combined. This is well supported by the recent purchaser's
going-in overall rate of 8.2 percent based on their financial analysis.
Phase I alone is viewed as a superior investment if unsaddled by the
struggling Phase II. We have applied an overall rate at the lower end of the
range at 8.0 percent for Phase I analysis.
- -------------------------------------------------------------------------------
96
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
TERMINAL CAPITALIZATION RATE
The residual cash flows generated annually by the subject property
comprise only the first part of the return which an investor will receive. The
second component of this investment return is the pre-tax cash proceeds from
the resale of the property at the end of a projected investment holding period.
Typically, investors will structure a provision in their analyses in the form
of a rate differential over a going-in capitalization rate in projecting a
future disposition price. The view is that the improvement is then older and
the future is harder to visualize; hence a slightly higher rate is warranted
for added risks in forecasting. On average, the Cushman & Wakefield survey
shows very little differential between going-in rates and terminal rates, while
Korpacz reports a 31 basis point differential.
Therefore, to the range of stabilized overall capitalization rates, we
have added 25 basis points to arrive at a projected terminal capitalization
rate ranging from 8.25 to 8.75 percent for both Phase I & II and the Phase I
analysis. This provision is made for the risk of lease-up and maintaining a
certain level of occupancy in the center, its level of revenue collection, the
prospects of future competition, as well as the uncertainty of maintaining the
forecasted growth rates over such a holding period. In our opinion, this range
of terminal rates would be appropriate for the subject. According to
representatives from Macerich, the terminal overall rate applied in their
financial analysis of the property was 9.0 percent. Given the assumptions made
in our analysis, we believe the reversion year net income in each cash flow to
reflect a fairly safe projection to calculate into reversion value, and
consider a terminal rate of near 8.5 percent as appropriate.
SELECTION OF DISCOUNT RATE
The discounted cash flow analysis makes several assumptions which reflect
typical investor requirements for yield on real property. These assumptions are
difficult to directly extract from any given market sale or by comparison to
other investment vehicles. Instead, investor surveys of major real estate
investment funds and trends in bond yield rates are often cited to support such
analysis.
Yield rates on long term real estate investments range widely between
property types. As cited in Cushman & Wakefield's Spring 1998 survey, investors
in regional malls are currently looking at broad rates of return between 9.5
and 18.0 percent, down slightly from our last two surveys. The average low IRR
for CLASS A malls is 10.7 percent, while the average high is 11.9 percent. The
indicated low and high averages overall are 12.8 and 13.6 percent,
respectively. Peter F. Korpacz reports an average internal rate of return of
11.3 percent for the Second Quarter 1998, down 45 basis points from year-ago
levels.
Finally, application of these rate parameters to the subject should
entail some sensitivity to the rate at which leases will be expiring over the
projection period. Provided on the ACCOMPANYING PAGE is a summary of the
forecasted lease expiration schedule for the subject. A complete expiration
report is included in the Addenda.
From the expiration summary chart, we see that the subject's rollover
exposure is fairly well distributed over the projection period. The year of the
highest rollover is 2001
- -------------------------------------------------------------------------------
97
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
EXPIRATION SUMMARY
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
NO. OF EXPIRING PERCENT CUMMULATIVE ANNUAL ANNUAL PERCENT OF CUMMULATIVE
YEAR TENANTS SQ.FT. OF SQ.FT. PERCENT BASE RENT RENT/SQ.FT. TOTAL RENT PERCENT
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 8 7,939 2.38% 2.38% $428,734 $54.00 3.10% 3.10%
2000 12 14,854 4.46% 6.85% $713,518 $48.04 5.16% 8.26%
2001 12 63,258 19.00% 25.85% $1,726,042 $27.29 12.48% 20.75%
2002 9 15,609 4.69% 30.54% $676,208 $43.32 4.89% 25.64%
2003 10 12,464 3.74% 34.28% $633,667 $50.84 4.58% 30.22%
2004 9 24,285 7.30% 41.58% $986,815 $40.63 7.14% 37.36%
2005 18 38,847 11.67% 53.25% $1,832,597 $47.17 13.26% 50.61%
2006 19 47,858 14.38% 67.63% $2,335,125 $48.79 16.89% 67.50%
2007 15 43,033 12.93% 80.55% $1,875,407 $43.58 13.56% 81.07%
2008 12 32,034 9.62% 90.18% $1,248,544 $38.98 9.03% 90.10%
2009 2 5,111 1.54% 91.71% $340,541 $66.63 2.46% 92.56%
2010 1 27,586 8.29% 100.00% $1,028,406 $37.28 7.44% 100.00%
TOTAL 127 332,878 100.00% 100.00% $13,825,606 $41.53 100.00% 100.00%
=================================================================================================================================
</TABLE>
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
when 19.0 percent of the space has lease expirations. Consideration is given to
the fairly even rollover distribution in our selection of an appropriate risk
rate.
We would also note that much of the risk factored into such an analysis
is reflected in the assumptions employed within the cash flow model, including
rent and sales growth, turnover, reserves for replacement, and vacancy
provisions. With this amount of capital included, the cash flows are considered
to have less risk than if this necessary expense were not addressed.
We have briefly discussed the investment risks associated with the
subject. On balance, it is our opinion that an investor in the subject property
would require an internal rate of return of 11.0 percent. This selection of IRR
is also supported by the financial analysis performed by Macerich in their
recent purchase of the property, in which they modeled an 11.0 percent internal
rate of return. Phase I alone is viewed as a more desirable and less risky
investment opportunity, and would command a lower discount rate. We have
applied a discount rate of 10.5 percent, which is 50 basis points lower than
the discount rate for Phase I & II combined.
DISCOUNTED CASH FLOW ANALYSIS
Analysis by the discounted cash flow method is examined over a holding
period that allows the investment to mature, the investor to recognize a return
commensurate with the risk taken, and a recapture of the original investment.
Typical holding periods usually range from 5 to 20 years and are sufficient for
the majority of institutional grade real estate such as the subject to meet the
criteria noted above. In the instance of the subject, we have analyzed the cash
flows anticipated over a 10-year period commencing on July 1, 1998.
A sale or reversion is deemed to occur at the end of the 10th year (June
30, 2008), based upon capitalization of the following year's net operating
income. This is based upon the premise that a purchaser in the 10th year is
buying the following year's net income. Therefore, our analysis reflects this
situation by capitalizing the first year of the next holding period. Our cash
flows forecasted for the property are presented on the accompanying pages. To
reiterate, the formulation of these cash flows incorporate the following
general assumptions in our computer model:
- -------------------------------------------------------------------------------
98
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
=============================================================================
SUMMARY OF CRITICAL ASSUMPTIONS FOR DISCOUNTED CASH FLOW
=============================================================================
SUBJECT PROPERTY WESTSIDE PAVILION
=============================================================================
SQUARE FOOTAGE RECONCILIATION
=============================================================================
TOTAL GROSS LEASABLE AREA 755,912 SF
-----------------------------------------------------------------------------
UN-OWNED GLA 220,000 SF
-----------------------------------------------------------------------------
OWNED GLA 535,912 SF
-----------------------------------------------------------------------------
PHASE I OWNED GLA 443,934 SF
-----------------------------------------------------------------------------
PHASE II OWNED GLA 91,978 SF
-----------------------------------------------------------------------------
OWNED MALL SHOP GLA 354,349 SF
-----------------------------------------------------------------------------
PHASE 1 MALL SHOP 262,371 SF
-----------------------------------------------------------------------------
PHASE II MALL SHOP 91,978 SF
-----------------------------------------------------------------------------
OWNED ANCHOR GLA 181,563 SF
-----------------------------------------------------------------------------
PHASE 1 ANCHOR GLA 181,563 SF
-----------------------------------------------------------------------------
PHASE II ANCHOR GLA 0 SF
=============================================================================
MARKET RENT/SALES CONCLUSIONS
=============================================================================
MARKET RENT ESTIMATES (1998) $30 to $65/SF - Initial Rates
-----------------------------------------------------------------------------
RENT ADJUSTMENTS 5% in Yrs. 4 and 8
-----------------------------------------------------------------------------
RENTAL BASIS NNN
-----------------------------------------------------------------------------
MARKET RENTAL GROWTH RATE 4.0%
-----------------------------------------------------------------------------
CREDIT RISK LOSS (NON-ANCHOR SPACE) 1.0% for Phase I & II
5.0% for Phase I only
==============================================================================
VACANCY & TYPICAL LEASE TERM
==============================================================================
AVERAGE LEASE TERM 10 Years
-----------------------------------------------------------------------------
RENEWAL PROBABILITY 65.0%
-----------------------------------------------------------------------------
WEIGHTED AVERAGE DOWNTIME 2 Months
-----------------------------------------------------------------------------
STABILIZED PHYSICAL OCCUPANCY 90.0% to 95.0%
-----------------------------------------------------------------------------
ABSORPTION PERIOD 12 Months
=============================================================================
OPERATING EXPENSE DATA
==============================================================================
LEASING COMMISSIONS
-----------------------------------------------------------------------------
NEW TENANTS $2.50/SF
-----------------------------------------------------------------------------
RENEWAL TENANTS $1.50/SF
-----------------------------------------------------------------------------
BLENDED $1.85/SF
-----------------------------------------------------------------------------
TENANT IMPROVEMENT ALLOWANCE
-----------------------------------------------------------------------------
NEW TENANT $15.00/SF
-----------------------------------------------------------------------------
RENEWAL TENANT $5.00/SF
-----------------------------------------------------------------------------
BLENDED $8.50/SF
-----------------------------------------------------------------------------
EXPENSE GROWTH RATE 4.0%/YR
-----------------------------------------------------------------------------
TAX GROWTH RATE 2.0%/YR
-----------------------------------------------------------------------------
MANAGEMENT FEE 5.0% Minimum & % Rents
-----------------------------------------------------------------------------
CAPITAL RESERVES (PSF OF OWNED GLA) $0.20/SF
==============================================================================
- -------------------------------------------------------------------------------
99
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
===========================================================================
RATES OF RETURN
===========================================================================
CASH FLOW START DATE July 1, 1998
---------------------------------------------------------------------------
DISCOUNT RATE 11.0%
---------------------------------------------------------------------------
GOING-IN CAPITALIZATION RATE 8.25%
---------------------------------------------------------------------------
TERMINAL CAPITALIZATION RATE 8.75%
---------------------------------------------------------------------------
REVERSIONARY SALES COSTS 1.0%
---------------------------------------------------------------------------
HOLDING PERIOD 10 Years
===========================================================================
CONCLUSION OF THE DISCOUNTED CASH FLOW ANALYSIS - PHASE I & II
The cash flow report and value matrix summarizing the preceding analysis
are on the following pages. Based on the foregoing discussions, we have
utilized a terminal overall rate of 8.5 percent in conjunction with a discount
rate of 11.0 percent. As shown, our conclusion of the market value by the
discounted cash flow analysis is $166,700,000 rounded. This equals an imputed
going-in capitalization rate of 8.65 percent. The average cash-on-cash rate
over the holding period is equal to 9.1 percent. The reversion accounts for
47.2 percent of the present value, with the remainder attributed to the interim
cash flows.
DIRECT CAPITALIZATION - PHASE I & II
In direct capitalization, an overall rate is applied to the net operating
income of the subject property. In this case, we will again consider the
indicated overall rates from the comparable sales in the Sales Comparison
Approach as well as those rates established in our Investor Survey. As
discussed previously, in view of our total analysis, we would anticipate that
the subject property would trade at an overall rate of 8.25 percent applied to
first year income. Applying this rate to the first year net income of
$14,413,473 results in a value of $174,708,764, or $174,700,000 (rounded) by
the direct capitalization technique.
Net Operating Income: $14,413,473
Overall Rate: 8.25%
------------
Conclusion of Value: $174,708,764
Rounded: $174,700,000
- -------------------------------------------------------------------------------
100
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
SENSITIVITY ANALYSIS (PHASE I & II ANALYSIS)
WESTSIDE PAVILION 1 2 3 4 5 6
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Effective Gross Income: $23,908,332 $24,401,481 $24,903,783 $25,449,491 $26,308,656 $26,908,673
Operating Expenses: $9,494,859 $9,817,219 $10,149,674 $10,501,425 $10,868,481 $11,243,915
Net Operating Income: $14,413,473 $14,584,262 $14,754,109 $14,948,066 $15,440,175 $15,664,758
Net Cash Flow: $14,070,548 $14,366,235 $14,394,805 $14,089,693 $15,204,198 $15,164,771
PROPERTY VALUE: $166,700,000
Net Sales Price: $169,863,757 $171,841,975 $174,101,004 $179,832,626 $182,448,358 $186,356,342
Net Cash Flow: $14,070,548 $14,366,235 $14,394,805 $14,089,693 $15,204,198 $15,164,771
- NOI Return: 8.65% 8.75% 8.85% 8.97% 9.26% 9.40%
- Cash-On-Cash Return: 8.44% 8.62% 8.64% 8.45% 9.12% 9.10%
DISCOUNTED INCOME STREAM
Discounted Sales Price: $153,030,412 $139,470,802 $127,301,154 $118,461,321 $108,274,220 $99,633,711
Discounted Cash Flow: $12,676,169 $11,659,959 $10,525,357 $9,281,317 $9,022,951 $8,107,706
Net Present Value: $165,706,581 $163,806,930 $162,162,639 $162,604,124 $161,439,974 $160,907,170
========================================================================================================================
<CAPTION>
==============================================================================================================================
---------------------
SENSITIVITY ANALYSIS (PHASE I & II ANALYSIS)
WESTSIDE PAVILION 7 8 9 10 11 CAGR CAGR
Cushman & Wakefield, Inc. 2005 2006 2007 2008 2009 1999-08 2001-08
---- ---- ---- ---- ---- ------- -------
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Effective Gross Income: $27,635,547 $28,389,551 $29,821,381 $31,095,233 $32,612,195 3.0% 3.2%
Operating Expenses: $11,635,255 $12,053,229 $12,498,064 $12,962,412 $13,431,925 3.5% 3.6%
Net Operating Income: $16,000,292 $16,336,322 $17,323,317 $18,132,821 $19,180,270 2.6% 3.0%
Net Cash Flow: $15,435,953 $15,450,142 $16,766,091 $17,307,158 2.3% 2.7%
PROPERTY VALUE: $223,393,733 3.3%
---------------------
---------------------
Net Sales Price: $190,270,103 $201,765,692 $211,194,033 $223,393,733 AVERAGE RETURNS
Net Cash Flow: $15,435,953 $15,450,142 $16,766,091 $17,307,158 OVER HOLDING PERIOD
---------------------
- NOI Return: 9.60% 9.80% 10.39% 10.88% NOI 9.5%
- Cash-On-Cash Return: 9.26% 9.27% 10.06% 10.38% Cash 9.1%
DISCOUNTED INCOME STREAM YIELD COMPOSITION
-----------------
Discounted Sales Price: $91,645,196 $87,551,480 $82,560,979 $78,675,805 Reversion 47.2%
Discounted Cash Flow: $7,434,857 $6,704,226 $6,554,280 $6,095,312 Cash Flow 52.8%
--------- -----
Net Present Value: $160,353,512 $162,964,022 $164,527,802 $166,737,941 Total Value 100.0%
---------------------
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
==============================================================================
ASSUMPTIONS & CONCLUSIONS
- ------------------------------------------------------------------------------
VALUE RANGE: LOW HIGH CONCLUSION
DISCOUNT RATE: 11.25% 10.50% 11.00%
TERMINAL CAP RATE: 8.75% 8.00% 8.50%
==============================================================================
<S> <C> <C> <C>
VALUE RANGE/CONCLUSION: $161,842,716 $177,458,586 $166,700,000
- ------------------------------------------------------------------------------
- Going-In Cap Rate: 8.91% 8.12% 8.65%
- ------------------------------------------------------------------------------
- Price/sf Owned GLA: $301.99 $331.13 $311.06
- ------------------------------------------------------------------------------
- Price/sf Mall Shop GLA: $456.73 $500.80 $470.44
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
========================================================================================
SALE-YIELD MATRIX
- ----------------------------------------------------------------------------------------
NET REVERSION TERMINAL DISCOUNT RATE (IRR)
COST OF SALE: CAPITALIZATION ------------------------------------------------------
1.00% RATE 10.50% 10.75% 11.00% 11.25%
========================================================================================
<S> <C> <C> <C> <C> <C>
$237,355,841 8.00% $177,458,586 $174,524,686 $171,655,178 $168,848,439
- ----------------------------------------------------------------------------------------
$230,163,240 8.25% $174,808,480 $171,933,798 $169,122,056 $166,371,668
- ----------------------------------------------------------------------------------------
$223,393,733 8.50% $172,314,263 $169,495,315 $166,737,941 $164,040,590
- ----------------------------------------------------------------------------------------
$217,011,055 8.75% $169,962,573 $167,196,174 $164,490,060 $161,842,716
========================================================================================
</TABLE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[BAR GRAPH SHOWING [BAR GRAPH SHOWING
NOI VS. CASH FLOW] NPV VS. SALES PRICE BY YEAR]
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================
DISCOUNTED CASH FLOW ANALYSIS (PHASE I & II)
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- ------------------------------------------------------------------------------------------------------------
YEAR NET CASH DISCOUNT FACTOR PRESENT VALUE COMPOSITION ANNUAL CASH
NO. YEAR FLOW 11.00% OF CASH FLOWS OF YIELD ON CASH RETURN
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 1999 $14,070,548 x 0.9009009 = $12,676,169 7.60% 8.44%
2 2000 $14,366,235 x 0.8116224 = $11,659,959 6.99% 8.62%
3 2001 $14,394,805 x 0.7311914 = $10,525,357 6.31% 8.64%
4 2002 $14,089,693 x 0.6587310 = $9,281,317 5.57% 8.45%
5 2003 $15,204,198 x 0.5934513 = $9,022,951 5.41% 9.12%
6 2004 $15,164,771 x 0.5346408 = $8,107,706 4.86% 9.10%
7 2005 $15,435,953 x 0.4816584 = $7,434,857 4.46% 9.26%
8 2006 $15,450,142 x 0.4339265 = $6,704,226 4.02% 9.27%
9 2007 $16,766,091 x 0.3909248 = $6,554,280 3.93% 10.06%
10 2008 $17,307,158 x 0.3521845 = $6,095,312 3.66% 10.38%
- ------------------------------------------------------------------------------------------------------------
TOTAL PRESENT VALUE OF CASH FLOWS: $88,062,135 52.81% 9.13%
Total Average
- ------------------------------------------------------------------------------------------------------------
Reversion Year NOI/Income / Terminal OAR = Reversion
- -------------- ---------- ------------ ---------
11 2009 $19,180,270 / 8.50% = $225,650,235
Less: Cost of Sale 1.00% ($2,256,502)
Less: TIs & Commissions $0
----------------------- ------------
Net Reversion $223,393,733
x Discount Factor 0.3521845
----------------- ------------
TOTAL PRESENT VALUE OF REVERSION $78,675,805 47.19%
TOTAL PRESENT VALUE OF CASH FLOWS & REVERSION: $166,737,941 100.00%
------------------------------------------------------
ROUNDED VALUE VIA
DISCOUNTED CASH FLOW: $166,700,000
------------------------------------------------------
======================================================
OWNED NET RENTABLE AREA: 535,912
VALUE PER SQUARE FOOT (OWNED GLA): $311.06
OWNED MALL SHOP AREA: 354,349
VALUE PER SQUARE FOOT (SHOP GLA): $470.44
YEAR ONE NOI (12 MONTHS): $14,413,473
IMPLICIT GOING-IN CAPITALIZATION RATE: 8.65%
COMPOUND ANNUAL GROWTH RATE
CONCLUDED VALUE TO NET REVERSION VALUE: 3.31%
COMPOUND ANNUAL GROWTH RATE
NET CASH FLOW: 2.33%
======================================================
============================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
ANNUAL CASH FLOW REPORT (PHASE I & II ANALYSIS)
WESTSIDE PAVILION
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------
OPERATING INCOME
- -------------------------------------
MINIMUM RENT
All Tenants $13,420,686 $13,595,952 $13,704,895 $13,758,941 $14,132,353 $14,298,150
----------- ----------- ----------- ----------- ----------- -----------
SUBTOTAL: $13,420,686 $13,595,952 $13,704,895 $13,758,941 $14,132,353 $14,298,150
RECOVERIES
CAM Recoveries $4,516,316 $4,674,140 $4,865,827 $5,101,264 $5,338,982 $5,549,041
Tax Recoveries $1,776,696 $1,796,049 $1,823,066 $1,855,186 $1,895,915 $1,919,163
Insurance Recoveries $573,196 $591,614 $614,930 $645,115 $676,949 $704,650
Electricity Recoveries $1,146,592 $1,179,872 $1,226,058 $1,278,258 $1,332,481 $1,373,837
HVAC Recoveries $693,816 $713,953 $741,899 $773,486 $806,298 $831,318
Water Recoveries $25,698 $26,447 $27,475 $28,645 $29,861 $30,790
Food Court Recoveries $169,572 $195,859 $205,178 $217,713 $220,942 $235,476
----------- ----------- ----------- ----------- ----------- -----------
SUBTOTAL: $8,901,886 $9,177,934 $9,504,433 $9,899,667 $10,301,428 $10,644,275
Overage Rent $99,952 $109,783 $142,608 $205,441 $255,392 $309,554
GROSS RENTAL INCOME: $22,422,524 $22,883,669 $23,351,936 $23,864,049 $24,689,173 $25,251,979
------------------- ----------- ----------- ----------- ----------- ----------- -----------
Nordstrom Storage Rent $472,500 $472,500 $472,500 $472,500 $472,500 $472,500
Other Income $12,240 $12,730 $13,239 $13,768 $14,319 $14,892
Storage Rent $58,752 $61,102 $63,546 $66,088 $68,732 $71,481
Specialty Income $714,000 $742,560 $772,262 $803,153 $835,279 $868,690
Capital Income $127,500 $132,600 $137,904 $143,420 $149,157 $155,123
May Company Parking $305,248 $305,248 $305,248 $305,248 $305,248 $305,248
Vacancy/Credit Loss ($204,432) ($208,928) ($212,852) ($218,735) ($225,752) ($231,240)
------------------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCOME: $23,908,332 $24,401,481 $24,903,783 $25,449,491 $26,308,656 $26,908,673
- -------------------------------------
OPERATING EXPENSES
- -------------------------------------
RECOVERABLE EXPENSES
Real Estate Taxes $1,919,000 $1,957,380 $1,996,528 $2,036,458 $2,077,187 $2,118,731
Water/Sewer $25,500 $26,520 $27,581 $28,684 $29,831 $31,025
HVAC $382,500 $397,800 $413,712 $430,261 $447,471 $465,370
Electricity $989,400 $1,028,976 $1,070,135 $1,112,941 $1,157,458 $1,203,757
Insurance $561,000 $583,440 $606,778 $631,049 $656,291 $682,542
CAM Expenses $4,488,000 $4,667,520 $4,854,221 $5,048,390 $5,250,325 $5,460,338
Food Court $168,300 $175,032 $182,033 $189,315 $196,887 $204,763
----------- ----------- ----------- ----------- ----------- -----------
Subtotal-Recoverable: $8,533,700 $8,836,668 $9,150,988 $9,477,098 $9,815,450 $10,166,526
NON-RECOVERABLE
Landlord Expenses $280,500 $291,720 $303,389 $315,524 $328,145 $341,271
Management Fees $680,659 $688,831 $695,297 $708,803 $724,886 $736,118
----------- ----------- ----------- ----------- ----------- -----------
Subtotal-Nonrecoverable: $961,159 $980,551 $998,686 $1,024,327 $1,053,031 $1,077,389
TOTAL OPERATING EXPENSES: $9,494,859 $9,817,219 $10,149,674 $10,501,425 $10,868,481 $11,243,915
Operating Expense Ratio 39.7% 40.2% 40.8% 41.3% 41.3% 41.8%
NET OPERATING INCOME $14,413,473 $14,584,262 $14,754,109 $14,948,066 $15,440,175 $15,664,758
Alterations $121,835 $87,340 $199,400 $603,864 $90,439 $301,981
Commissions $23,908 $19,218 $43,976 $133,944 $20,150 $67,603
ADA Capital $90,000 $0 $0 $0 $0 $0
Replacement Reserve $107,182 $111,469 $115,928 $120,565 $125,388 $130,403
------------------- ----------- ----------- ----------- ----------- ----------- -----------
Subtotal: $342,925 $218,027 $359,304 $858,373 $235,977 $499,987
NET CASH FLOW $14,070,548 $14,366,235 $14,394,805 $14,089,693 $15,204,198 $15,164,771
====================================================================================================================================
<CAPTION>
====================================================================================================================================
ANNUAL CASH FLOW REPORT (PHASE I & II ANALYSIS) -----------------
WESTSIDE PAVILION CAGR CAGR
Cushman & Wakefield, Inc. 2005 2006 2007 2008 2009 1999-08 2001-08
---- ---- ---- ---- ---- ------- -------
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------
OPERATING INCOME
- -------------------------------------
MINIMUM RENT
All Tenants $14,475,569 $14,703,902 $15,334,142 $16,065,111 $16,910,572 2.0% 2.3%
----------- ----------- ----------- ----------- ----------- --- ---
SUBTOTAL: $14,475,569 $14,703,902 $15,334,142 $16,065,111 $16,910,572 2.0% 2.3%
RECOVERIES
CAM Recoveries $5,835,236 $6,111,449 $6,522,661 $6,799,618 $7,154,195 4.7% 4.9%
Tax Recoveries $1,948,880 $1,949,383 $2,002,477 $2,027,566 $2,087,196 1.5% 1.5%
Insurance Recoveries $743,773 $784,800 $847,385 $899,785 $958,267 5.1% 5.6%
Electricity Recoveries $1,434,300 $1,484,085 $1,568,307 $1,616,196 $1,690,325 3.9% 4.0%
HVAC Recoveries $867,910 $898,034 $948,996 $977,977 $1,022,832 3.9% 4.0%
Water Recoveries $32,141 $33,254 $35,151 $36,223 $37,884 3.9% 4.0%
Food Court Recoveries $241,940 $250,519 $259,981 $275,477 $273,280 5.5% 4.3%
----------- ----------- ----------- ----------- ----------- --- ---
SUBTOTAL: $11,104,180 $11,511,524 $12,184,958 $12,632,842 $13,223,979 4.0% 4.1%
Overage Rent $361,446 $439,883 $533,596 $590,840 $633,879 21.8% 22.5%
GROSS RENTAL INCOME: $25,941,195 $26,655,309 $28,052,696 $29,288,793 $30,768,430 3.0% 3.3%
------------------- ----------- ----------- ----------- ----------- ----------- --- ---
Nordstrom Storage Rent $472,500 $472,500 $472,500 $472,500 $472,500 0.0% 0.0%
Other Income $15,488 $16,107 $16,751 $17,421 $18,118 4.0% 4.0%
Storage Rent $74,340 $77,314 $80,406 $83,622 $86,967 4.0% 4.0%
Specialty Income $903,438 $939,575 $977,158 $1,016,245 $1,056,895 4.0% 4.0%
Capital Income $161,328 $167,781 $174,493 $181,472 $188,731 4.0% 4.0%
May Company Parking $305,248 $305,248 $305,248 $305,248 $305,248 0.0% 0.0%
Vacancy/Credit Loss ($237,990) ($244,283) ($257,871) ($270,068) ($284,694) 3.1% 3.5%
------------------- ----------- ----------- ----------- ----------- ----------- --- ---
TOTAL INCOME: $27,635,547 $28,389,551 $29,821,381 $31,095,233 $32,612,195 3.0% 3.2%
- -------------------------------------
OPERATING EXPENSES
- -------------------------------------
RECOVERABLE EXPENSES
Real Estate Taxes $2,161,106 $2,204,328 $2,248,414 $2,293,383 $2,339,250 2.0% 2.0%
Water/Sewer $32,266 $33,556 $34,899 $36,294 $37,746 4.0% 4.0%
HVAC $483,985 $503,344 $523,478 $544,417 $566,194 4.0% 4.0%
Electricity $1,251,907 $1,301,983 $1,354,062 $1,408,225 $1,464,554 4.0% 4.0%
Insurance $709,844 $738,238 $767,767 $798,478 $830,417 4.0% 4.0%
CAM Expenses $5,678,752 $5,905,902 $6,142,138 $6,387,823 $6,643,336 4.0% 4.0%
Food Court $212,953 $221,471 $230,330 $239,543 $249,125 4.0% 4.0%
----------- ----------- ----------- ----------- ----------- --- ---
Subtotal-Recoverable: $10,530,813 $10,908,822 $11,301,088 $11,708,163 $12,130,622 3.6% 3.6%
NON-RECOVERABLE
Landlord Expenses $354,922 $369,119 $383,884 $399,239 $415,209 4.0% 4.0%
Management Fees $749,520 $775,288 $813,092 $855,010 $886,094 2.6% 3.0%
----------- ----------- ----------- ----------- ----------- --- ---
Subtotal-Nonrecoverable: $1,104,442 $1,144,407 $1,196,976 $1,254,249 $1,301,303 3.0% 3.3%
TOTAL OPERATING EXPENSES: $11,635,255 $12,053,229 $12,498,064 $12,962,412 $13,431,925 3.5% 3.6%
Operating Expense Ratio 42.1% 42.5% 41.9% 41.7% 41.2%
NET OPERATING INCOME $16,000,292 $16,336,322 $17,323,317 $18,132,821 $19,180,270 2.6% 3.0%
Alterations $349,941 $607,693 $334,509 $548,107
Commissions $78,779 $137,443 $76,031 $125,003
ADA Capital $0 $0 $0 $0
Replacement Reserve $135,619 $141,044 $146,686 $152,553
------------------- ----------- ----------- ----------- -----------
Subtotal: $564,339 $886,180 $557,226 $825,663
NET CASH FLOW $15,435,953 $15,450,142 $16,766,091 $17,307,158 2.3% 2.7%
-----------------
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
INCOME & EXPENSE GROWTH CHART (PHASE I & II)
WESTSIDE PAVILION
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ---- ----
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum Rent: $13,420,686 $13,595,952 $13,704,895 $13,758,941 $14,132,353 $14,298,150 $14,475,569
Effective Gross Income: $23,908,332 $24,401,481 $24,903,783 $25,449,491 $26,308,656 $26,908,673 $27,635,547
Operating Expenses: $9,494,859 $9,817,219 $10,149,674 $10,501,425 $10,868,481 $11,243,915 $11,635,255
Net Operating Income: $14,413,473 $14,584,262 $14,754,109 $14,948,066 $15,440,175 $15,664,758 $16,000,292
============================================================================================================================
<CAPTION>
=====================================================================================================
INCOME & EXPENSE GROWTH CHART (PHASE I & II) -----------------
WESTSIDE PAVILION CAGR CAGR
Cushman & Wakefield, Inc. 2006 2007 2008 2009 1999-08 2001-08
---- ---- ---- ---- ------- -------
=====================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Minimum Rent: $14,703,902 $15,334,142 $16,065,111 $16,910,572 2.0% 2.3%
Effective Gross Income: $28,389,551 $29,821,381 $31,095,233 $32,612,195 3.0% 3.2%
Operating Expenses: $12,053,229 $12,498,064 $12,962,412 $13,431,925 3.5% 3.6%
Net Operating Income: $16,336,322 $17,323,317 $18,132,821 $19,180,270 2.6% 3.0%
-----------------
=====================================================================================================
</TABLE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[LINE GRAPH SHOWING INCOME AND EXPENSE GROWTH]
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
PHASE I ANALYSIS
DISCOUNTED CASH FLOW ANALYSIS - PHASE I
We have been asked to provide a separate value estimate for Phase I
alone. To accomplish this, we have performed a discounted cash flow analysis
utilizing many of the cash flow assumptions addressed previously. Management
also provided a break-out of the 1998 budget, separated between Phase I and
Phase II. This is illustrated in the chart on the accompanying page.
Miscellaneous income and expense estimates applied in the Phase I analysis that
differ from the previous analysis for Phase I and II combined are based on the
1998 budget and summarized below.
o Specialty Leasing Income - the specialty leasing income attributed to
Phase I is $585,000 (rounded).
o Storage Rent - the storage rent attributed to Phase I is $55,000
(rounded).
o Other Income - the other income attributed to Phase I is $9,600
(rounded).
o CAM Expenses - the CAM expenses attributed to Phase I are $3,550,000
(rounded).
o Real Estate Taxes - the real estate taxes attributed to Phase I are
$1,300,000 (rounded).
o Insurance - the insurance expense attributed to Phase I is $485,000
(rounded).
o Water & Sewer - the water & sewer expense attributed to Phase I is
$19,000 (rounded).
o Landlord Expenses - the non-reimbursable costs to the landlord are
$240,000 (rounded).
The tenants for Phase II were deleted from the cash flow, and the area
measures were adjusted accordingly. As such, we include only the income
associated with Phase I, the expenses associated with Phase I are spread over
just Phase I GLA for reimbursements.
The value matrix on the accompanying page illustrates our conclusion of
value for Phase I. As shown, our conclusion of the market value by the
discounted cash flow analysis for Phase I is $159,400,000, rounded. This equals
an imputed going-in capitalization rate of 8.42 percent. The average
cash-on-cash rate is equal to 8.8 percent. The reversion accounts for 47.7
percent of the present value, with the remainder attributed to the interim cash
flows.
- -------------------------------------------------------------------------------
101
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================================
1998 BUDGET - WESTSIDE PAVILION - PHASE I SEPARATE*
Cushman & Wakefield, Inc.
- -------------------------------------------------------------------------------------------------------------------------
COMBINED Per Sq/Ft WSP-1 Per Sq/Ft
BUDGET of GLA BUDGET of GLA
1998 1998 1998 1998
=========================================================================================================================
- ------------------------------------------ -------------------------------- -----------------------------------
OPERATING INCOME GLA = 535,912 GLA = 443,934
- ------------------------------------------ -------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
MINIMUM RENT
Base Rent: $ 13,275,385 $ 24.77 $ 11,998,458 $27.03
Percentage Rent: $ 56,607 $ 0.11 $ 56,607 $ 0.13
Specialty Leasing: $ 702,739 $ 1.31 $ 583,297 $ 1.31
Storage Rent $ 57,600 $ 0.11 $ 55,200 $ 0.12
Nordstrom Storage $ 472,500 $ 0.88 $ 472,500 $ 1.06
Robinson's May Parking $ - $ - $ - $ -
Bad Debt (or Vacancy Loss) $ - $ - $ - $ -
-------------------------------- -----------------------------------
SUBTOTAL: $ 14,564,831 $ 27.18 $ 13,166,062 $29.66
RECOVERY INCOME
CAM Income: $ 4,658,589 $ 8.69 $ 4,374,527 $ 9.85
Food Court Income: $ 182,084 $ 0.34 $ 182,084 $ 0.41
Property Tax Income: $ 1,683,393 $ 3.14 $ 1,648,343 $ 3.71
Insurance Income: $ 441,075 $ 0.82 $ 431,056 $ 0.97
HVAC Income: $ 701,404 $ 1.31 $ 697,251 $ 1.57
Electricity Income $ 1,084,260 $ 2.02 $ 1,084,260 $ 2.44
Water/Sewer Income: $ 27,262 $ 0.05 $ 20,798 $ 0.05
-------------------------------- -----------------------------------
SUBTOTAL: $ 8,778,067 $ 16.38 $ 8,438,319 $19.01
OTHER INCOME
Capital Revenue $ 126,000 $ 0.24 $ 126,000 $ 0.28
Marketing $ - $ - $ - $ -
Other Income $ 12,000 $ 0.02 $ 9,600 $ 0.02
-------------------------------- -----------------------------------
SUBTOTAL: $ 138,000 $ 0.26 $ 135,600 $ 0.31
TOTAL INCOME: $ 23,480,898 $ 43.81 $ 21,739,981 $48.97
- ------------------------------------------
OPERATING EXPENSES
- ------------------------------------------
CAM
Payroll/Benefits $ 674,427 $ 1.26 $ 620,653 $ 1.40
Contract Maintenance $ 15,118 $ 0.03 $ 15,118 $ 0.03
Contract Security Services $ 789,480 $ 1.47 $ 666,283 $ 1.50
Contract Cleaning Services $ 494,436 $ 0.92 $ 410,382 $ 0.92
Contract Landscaping $ 36,375 $ 0.07 $ 21,825 $ 0.05
Contract Elevator $ 162,000 $ 0.30 $ 113,400 $ 0.26
Pest Control/Trash Removal $ 184,260 $ 0.34 $ 154,517 $ 0.35
Repairs & Maintenance $ 745,318 $ 1.39 $ 619,792 $ 1.40
Materials & Supplies $ 109,400 $ 0.20 $ 90,994 $ 0.20
Equipment Rental/Radios/Tele. $ 103,140 $ 0.19 $ 84,214 $ 0.19
Utilities $ 822,821 $ 1.54 $ 480,937 $ 1.08
Misc. Office Expense $ 57,257 $ 0.11 $ 49,414 $ 0.11
Roof/Skylight Repairs $ 22,000 $ 0.04 $ 22,000 $ 0.05
Taxes, Licenses, Fees & Insur. $ 178,470 $ 0.33 $ 167,108 $ 0.38
Professional & Legal $ 38,900 $ 0.07 $ 34,735 $ 0.08
Depreciation - General $ - $ - $ - $ -
-------------------------------- -----------------------------------
Sub-total CAM $ 4,433,402 $ 8.27 $ 3,551,372 $ 8.00
CAM - FOOD COURT
Contract Services $ 94,406 $ 0.18 $ 94,406 $ 0.21
Maintenance & Supplies $ 13,250 $ 0.02 $ 13,250 $ 0.03
Utilities $ 57,875 $ 0.11 $ 57,875 $ 0.13
-------------------------------- -----------------------------------
Sub-total Food Court $ 165,531 $ 0.31 $ 165,531 $ 0.37
MARKETING
Marketing & Promotional $ 616,103 $ 1.15 $ 616,103 $ 1.39
Promotional Charges $ (414,204) $ (0.77) $ (414,204) $(0.93)
Lease Required Advertising $ (4,031) $ (0.01) $ (4,031) $(0.01)
Media Fund $ (96,388) $ (0.18) $ (96,388) $(0.22)
Landlord Contribution Required $ (101,480) $ (0.19) $ (101,480) $(0.23)
-------------------------------- -----------------------------------
Sub-total Marketing $ - $ - $ - $ -
REAL ESTATE TAXES $ 1,931,805 $ 3.60 $ 1,311,811 $ 2.95
-----------------
OTHER RECOVERABLE EXPENSES
Insurance $ 559,666 $ 1.04 $ 485,436 $ 1.09
Electricity $ 968,090 $ 1.81 $ 968,090 $ 2.18
Water/Sewer $ 24,784 $ 0.05 $ 18,908 $ 0.04
HVAC $ 376,534 $ 0.70 $ 376,534 $ 0.85
Other $ - $ - $ - $ -
-------------------------------- -----------------------------------
Sub-total Other Recoverable $ 1,929,074 $ 3.60 $ 1,848,968 $ 4.16
TOTAL RECOVERABLE EXPENSES $ 8,459,812 $ 15.79 $ 6,877,682 $15.49
--------------------------
MANAGEMENT FEE $ 360,000 $ 0.67 $ - $ -
--------------
LANDLORD EXPENSES
Landlord Maintenance $ 4,200 $ 0.01 $ 3,486 $ 0.01
Postage, bank charges, misc. $ 2,040 $ 0.00 $ 1,650 $ 0.00
Insurance (legal) $ - $ - $ - $ -
Professional Fees - Legal/Audit $ 106,048 $ 0.20 $ 85,506 $ 0.19
Professional Fees - Other $ - $ - $ - $ -
Landlord Contribution - Marketing $ 106,366 $ 0.20 $ 101,480 $ 0.23
Bad Debt $ - $ - $ -
Specialty Leasing $ 53,650 $ 48,742 $ 0.11
Other $ - $ - $ - $ -
-------------------------------- -----------------------------------
Total Landlord Expenses: $ 272,304 $ 0.51 $ 240,864 $ 0.54
TOTAL - NONRECOVERABLE: $ 272,304 $ 0.51 $ 240,864 $ 0.54
TOTAL OPERATING EXPENSES $ 9,092,116 $ 16.97 $ 7,118,546 $16.04
Operating Expense Ratio -- 38.7% -- 32.7%
- ------------------------------------------
NET OPERATING INCOME $ 14,388,782 $ 26.85 $ 14,621,435 $32.94
- ------------------------------------------
=========================================================================================================================
<CAPTION>
==============================================================================================================================
1998 BUDGET - WESTSIDE PAVILION - PHASE I SEPARATE*
Cushman & Wakefield, Inc.
- ------------------------------------------------------------------------------------------------------------------------------
C&W Per Sq/Ft WSP-2 Per Sq/Ft
PHASE I of GLA BUDGET of GLA
FY 1999 FY 1999 1998 1998
==============================================================================================================================
- ------------------------------------------ ----------------------------------- -----------------------------------
OPERATING INCOME GLA = 443,934 GLA = 91,978
- ------------------------------------------ ----------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
MINIMUM RENT
Base Rent: $12,226,029 $ 27.54 $ 1,276,927 $13.88
Percentage Rent: $ 91,933 $ 0.21 $ - $ -
Specialty Leasing: $ 596,700 $ 1.34 $ 119,442 $ 1.30
Storage Rent $ 56,100 $ 0.13 $ 2,400 $ 0.03
Nordstrom Storage $ 472,500 $ 1.06 $ - $ -
Robinson's May Parking $ 305,248 $ - $ - $ -
Bad Debt (or Vacancy Loss) $ (575,263) $ (1.30) $ - $ -
----------------------------------- -----------------------------------
SUBTOTAL: $13,173,247 $ 29.67 $ 1,398,769 $15.21
RECOVERY INCOME
CAM Income: $ 3,813,774 $ 8.59 $ 284,062 $ 3.09
Food Court Income: $ 169,572 $ 0.38 $ - $ -
Property Tax Income: $ 1,388,116 $ 3.13 $ 35,050 $ 0.38
Insurance Income: $ 541,248 $ 1.22 $ 10,019 $ 0.11
HVAC Income: $ 693,816 $ 1.56 $ 4,153 $ 0.05
Electricity Income $ 1,146,592 $ 2.58 $ - $ -
Water/Sewer Income: $ 19,525 $ 0.04 $ 6,464 $ 0.07
----------------------------------- -----------------------------------
SUBTOTAL: $ 7,772,643 $ 17.51 $ 339,748 $ 3.69
OTHER INCOME
Capital Revenue $ 127,500 $ 0.29 $ - $ -
Marketing $ - $ - $ - $ -
Other Income $ 9,792 $ 0.02 $ 2,400 $ 0.03
----------------------------------- -----------------------------------
SUBTOTAL: $ 137,292 $ 0.31 $ 2,400 $ 0.03
TOTAL INCOME: $21,083,182 $ 47.49 $ 1,740,917 $18.93
- ------------------------------------------
OPERATING EXPENSES
- ------------------------------------------
CAM
Payroll/Benefits $ - $ - $ 53,772 $ 0.58
Contract Maintenance $ - $ - $ - $ -
Contract Security Services $ - $ - $ 345,760 $ 3.76
Contract Cleaning Services $ - $ - $ 84,054 $ 0.91
Contract Landscaping $ - $ - $ 14,550 $ 0.16
Contract Elevator $ - $ - $ 48,600 $ 0.53
Pest Control/Trash Removal $ - $ - $ 29,743 $ 0.32
Repairs & Maintenance $ - $ - $ 125,525 $ 1.36
Materials & Supplies $ - $ - $ 18,406 $ 0.20
Equipment Rental/Radios/Tele. $ - $ - $ 18,926 $ 0.21
Utilities $ - $ - $ 341,884 $ 3.72
Misc. Office Expense $ - $ - $ 7,843 $ 0.09
Roof/Skylight Repairs $ - $ - $ - $ -
Taxes, Licenses, Fees & Insur. $ - $ - $ 11,362 $ 0.12
Professional & Legal $ - $ - $ 4,165 $ 0.05
Depreciation - General $ - $ - $ - $ -
----------------------------------- -----------------------------------
Sub-total CAM $ 3,621,000 $ 8.16 $ 1,104,590 $12.01
CAM - FOOD COURT
Contract Services $ - $ - $ - $ -
Maintenance & Supplies $ - $ - $ - $ -
Utilities $ - $ - $ - $ -
----------------------------------- -----------------------------------
Sub-total Food Court $ 168,300 $ 0.38 $ - $ -
MARKETING
Marketing & Promotional $ - $ - $ - $ -
Promotional Charges $ - $ - $ - $ -
Lease Required Advertising $ - $ - $ - $ -
Media Fund $ - $ - $ - $ -
Landlord Contribution Required $ - $ - $ - $ -
----------------------------------- -----------------------------------
Sub-total Marketing $ - $ - $ - $ -
REAL ESTATE TAXES $ 1,313,000 $ 2.96 $ 619,995 $ 6.74
-----------------
OTHER RECOVERABLE EXPENSES
Insurance $ 494,700 $ 1.11 $ 74,230 $ 0.81
Electricity $ 989,400 $ 2.23 $ - $ -
Water/Sewer $ 19,380 $ 0.04 $ 5,876 $ 0.06
HVAC $ 382,500 $ 0.86 $ - $ -
Other $ - $ - $ - $ -
----------------------------------- -----------------------------------
Sub-total Other Recoverable $ 1,885,980 $ 4.25 $ 80,106 $ 0.87
TOTAL RECOVERABLE EXPENSES $ 6,988,280 $ 15.74 $ 1,804,691 $19.62
--------------------------
MANAGEMENT FEE $ 433,826 $ 0.98 $ - $ -
--------------
LANDLORD EXPENSES
Landlord Maintenance $ - $ - $ 714 $ 0.01
Postage, bank charges, misc. $ - $ - $ 390 $ 0.00
Insurance (legal) $ - $ - $ - $ -
Professional Fees - Legal/Audit $ - $ - $ 20,544 $ 0.22
Professional Fees - Other $ - $ - $ - $ -
Landlord Contribution - Marketing $ - $ - $ 4,886 $ 0.05
Bad Debt $ - $ - $ - $ -
Specialty Leasing $ - $ - $ 4,908 $ 0.05
Other $ - $ - $ - $ -
----------------------------------- -----------------------------------
Total Landlord Expenses: $ 244,800 $ 0.55 $ 31,442 $ 0.34
TOTAL - NONRECOVERABLE: $ 244,800 $ 0.55 $ 31,442 $ 0.34
TOTAL OPERATING EXPENSES $ 7,666,906 $ 17.27 $ 1,836,133 $19.96
Operating Expense Ratio -- 36.4% -- 105.5%
- ------------------------------------------
NET OPERATING INCOME $13,416,276 $ 30.22 $ (95,216) $(1.04)
- ------------------------------------------
==============================================================================================================================
* Adding I & II will not equal the combined budget, due to extra security costs loaded onto Phase II, and the non-allocation
of the Mgt fee.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
SENSITIVITY ANALYSIS (PHASE I ONLY)
WESTSIDE PAVILION 1 2 3 4 5 6
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Effective Gross Income: $21,083,182 $21,487,477 $21,879,467 $22,334,232 $23,149,520 $23,668,754
Operating Expenses: $7,666,906 $7,934,001 $8,210,032 $8,503,170 $8,809,331 $9,122,562
Net Operating Income: $13,416,276 $13,553,476 $13,669,435 $13,831,062 $14,340,189 $14,546,192
Net Cash Flow: $13,108,721 $13,335,449 $13,310,131 $12,972,689 $14,118,435 $14,099,405
PROPERTY VALUE: $159,400,000
Net Sales Price: $157,858,132 $159,208,714 $161,091,193 $167,021,025 $169,420,354 $173,069,890
Net Cash Flow: $13,108,721 $13,335,449 $13,310,131 $12,972,689 $14,118,435 $14,099,405
- NOI Return: 8.42% 8.50% 8.58% 8.68% 9.00% 9.13%
- Cash-On-Cash Return: 8.22% 8.37% 8.35% 8.14% 8.86% 8.85%
DISCOUNTED INCOME STREAM
Discounted Sales Price: $142,858,038 $130,389,397 $119,394,676 $112,026,826 $102,838,136 $95,070,953
Discounted Cash Flow: $11,863,096 $10,921,520 $9,864,964 $8,701,235 $8,569,888 $7,745,102
Net Present Value: $154,721,134 $153,174,013 $152,044,256 $153,377,641 $152,758,839 $152,736,758
<CAPTION>
================================================================================================================================
SENSITIVITY ANALYSIS (PHASE I ONLY) -------------------
WESTSIDE PAVILION 7 8 9 10 11 CAGR CAGR
Cushman & Wakefield, Inc. 2005 2006 2007 2008 2009 1999-08 2001-08
---- ---- ---- ---- ---- ------- -------
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Effective Gross Income: $24,307,089 $24,881,826 $26,138,512 $27,269,790 $28,669,515 2.9% 3.2%
Operating Expenses: $9,447,553 $9,792,837 $10,160,215 $10,544,343 $10,936,474 3.6% 3.6%
Net Operating Income: $14,859,536 $15,088,989 $15,978,297 $16,725,447 $17,733,041 2.5% 2.9%
Net Cash Flow: $14,295,197 $14,202,809 $15,428,408 $15,899,784 2.2% 2.6%
PROPERTY VALUE: $206,537,772 2.9%
-------------------
-------------------
Net Sales Price: $175,742,342 $186,100,165 $194,802,265 $206,537,772 AVERAGE RETURNS
Net Cash Flow: $14,295,197 $14,202,809 $15,428,408 $15,899,784 OVER HOLDING PERIOD
-------------------
- NOI Return: 9.32% 9.47% 10.02% 10.49% NOI 9.2%
- Cash-On-Cash Return: 8.97% 8.91% 9.68% 9.97% Cash 8.8%
DISCOUNTED INCOME STREAM YIELD COMPOSITION
-------------------
Discounted Sales Price: $87,365,600 $83,723,723 $79,311,014 $76,098,607 Reversion 47.7%
Discounted Cash Flow: $7,106,474 $6,389,635 $6,281,460 $5,858,257 Cash Flow 52.3%
--------- -----
Net Present Value: $152,137,879 $154,885,637 $156,754,388 $159,400,238 Total Value 100.0%
-------------------
</TABLE>
<TABLE>
<CAPTION>
==================================================================================
ASSUMPTIONS & CONCLUSIONS
- ----------------------------------------------------------------------------------
VALUE RANGE: LOW HIGH CONCLUSION
DISCOUNT RATE: 10.75% 10.00% 10.50%
TERMINAL CAP RATE: 8.75% 8.00% 8.50%
==================================================================================
<S> <C> <C> <C>
VALUE RANGE/CONCLUSION: $154,669,146 $169,764,553 $159,400,000
- ----------------------------------------------------------------------------------
- Going-In Cap Rate: 8.67% 7.90% 8.42%
- ----------------------------------------------------------------------------------
- Price/sf Owned GLA: $348.41 $382.41 $359.06
- ----------------------------------------------------------------------------------
- Price/sf Mall Shop GLA: $589.51 $647.04 $607.54
</TABLE>
<TABLE>
<CAPTION>
=========================================================================================================
SALE-YIELD MATRIX
- ---------------------------------------------------------------------------------------------------------
NET REVERSION TERMINAL DISCOUNT RATE (IRR)
COST OF SALE: CAPITALIZATION -----------------------------------------------------------------
1.00% RATE 10.00% 10.25% 10.50% 10.75%
=========================================================================================================
<S> <C> <C> <C> <C> <C>
$219,446,382 8.00% $169,764,553 $166,929,159 $164,156,401 $161,444,692
- ---------------------------------------------------------------------------------------------------------
$212,796,492 8.25% $167,200,732 $164,422,885 $161,706,257 $159,049,297
- ---------------------------------------------------------------------------------------------------------
$206,537,772 8.50% $164,787,724 $162,064,039 $159,400,238 $156,794,807
- ---------------------------------------------------------------------------------------------------------
$200,636,692 8.75% $162,512,603 $159,839,984 $157,225,992 $154,669,146
</TABLE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[BAR GRAPH SHOWING [BAR GRAPH SHOWING
NOI VS. CASH FLOW] NPV VS. SALES PRICE BY YEAR]
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
DISCOUNTED CASH FLOW ANALYSIS (PHASE I ONLY)
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- ---------------------------------------------------------------------------------------------------------
YEAR NET CASH DISCOUNT FACTOR PRESENT VALUE COMPOSITION ANNUAL CASH
NO. YEAR FLOW 10.50% OF CASH FLOWS OF YIELD ON CASH RETURN
=========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 1999 $13,108,721 x 0.9049774 = $11,863,096 7.44% 8.22%
2 2000 $13,335,449 x 0.8189841 = $10,921,520 6.85% 8.37%
3 2001 $13,310,131 x 0.7411620 = $9,864,964 6.19% 8.35%
4 2002 $12,972,689 x 0.6707349 = $8,701,235 5.46% 8.14%
5 2003 $14,118,435 x 0.6069999 = $8,569,888 5.38% 8.86%
6 2004 $14,099,405 x 0.5493212 = $7,745,102 4.86% 8.85%
7 2005 $14,295,197 x 0.4971232 = $7,106,474 4.46% 8.97%
8 2006 $14,202,809 x 0.4498853 = $6,389,635 4.01% 8.91%
9 2007 $15,428,408 x 0.4071360 = $6,281,460 3.94% 9.68%
10 2008 $15,899,784 x 0.3684489 = $5,858,257 3.68% 9.97%
- ---------------------------------------------------------------------------------------------------------
TOTAL PRESENT VALUE OF CASH FLOWS: $83,301,631 52.26% 8.83%
Total Average
- ---------------------------------------------------------------------------------------------------------
Reversion Year NOI/Income / Terminal OAR = Reversion
- -------------- ---------- ------------ ---------
11 2009 $17,733,041 / 8.50% = $208,624,012
Less: Cost of Sale 1.00% ($2,086,240)
Less: TIs & Commissions $0
----------------------- ------------
Net Reversion $206,537,772
x Discount Factor 0.3684489
----------------- ------------
TOTAL PRESENT VALUE OF REVERSION $76,098,607 47.74%
TOTAL PRESENT VALUE OF CASH FLOWS & REVERSION: $159,400,238 100.00%
---------------------------------------------------
ROUNDED VALUE VIA
DISCOUNTED CASH FLOW: $159,400,000
---------------------------------------------------
===================================================
OWNED NET RENTABLE AREA: 443,934
VALUE PER SQUARE FOOT (OWNED GLA): $359.06
OWNED MALL SHOP AREA: 262,371
VALUE PER SQUARE FOOT (SHOP GLA): $607.54
YEAR ONE NOI (12 MONTHS): $13,416,276
IMPLICIT GOING-IN CAPITALIZATION RATE: 8.42%
COMPOUND ANNUAL GROWTH RATE
CONCLUDED VALUE TO NET REVERSION VALUE: 2.92%
COMPOUND ANNUAL GROWTH RATE
NET CASH FLOW: 2.17%
===================================================
=========================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================================
ANNUAL CASH FLOW REPORT (PHASE I ONLY)
WESTSIDE PAVILION
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------
OPERATING INCOME
- -----------------------------
MINIMUM RENT
All Tenants $12,226,029 $12,362,299 $12,405,771 $12,436,353 $12,846,619 $13,018,242
----------- ----------- ----------- ----------- ----------- -----------
SUBTOTAL: $12,226,029 $12,362,299 $12,405,771 $12,436,353 $12,846,619 $13,018,242
RECOVERIES
CAM Recoveries $3,813,774 $3,938,211 $4,102,283 $4,296,614 $4,489,565 $4,647,752
Tax Recoveries $1,388,116 $1,397,368 $1,420,997 $1,445,827 $1,474,053 $1,487,719
Insurance Recoveries $541,248 $557,289 $579,184 $606,290 $634,041 $656,409
Electricity Recoveries $1,146,592 $1,179,872 $1,226,058 $1,278,258 $1,332,481 $1,373,837
HVAC Recoveries $693,816 $713,953 $741,899 $773,486 $806,298 $831,318
Water Recoveries $19,525 $20,096 $20,884 $21,770 $22,693 $23,404
Food Court Recoveries $169,572 $195,859 $205,178 $217,713 $220,942 $235,476
----------- ----------- ----------- ----------- ----------- -----------
SUBTOTAL: $7,772,643 $8,002,648 $8,296,483 $8,639,958 $8,980,073 $9,255,915
Overage Rent $91,933 $109,783 $142,608 $205,441 $255,392 $304,982
GROSS RENTAL INCOME: $20,090,605 $20,474,730 $20,844,862 $21,281,752 $22,082,084 $22,579,139
-------------------- ----------- ----------- ----------- ----------- ----------- -----------
Nordstrom Storage Rent $472,500 $472,500 $472,500 $472,500 $472,500 $472,500
Other Income $9,792 $10,184 $10,591 $11,015 $11,455 $11,913
Storage Rent $56,100 $58,344 $60,678 $63,105 $65,629 $68,254
Specialty Income $596,700 $620,568 $645,391 $671,206 $698,055 $725,977
Capital Income $127,500 $132,600 $137,904 $143,420 $149,157 $155,123
May Company Parking $305,248 $305,248 $305,248 $305,248 $305,248 $305,248
Vacancy/Credit Loss ($575,263) ($586,697) ($597,707) ($614,014) ($634,608) ($649,400)
------------------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCOME: $21,083,182 $21,487,477 $21,879,467 $22,334,232 $23,149,520 $23,668,754
- -----------------------------
OPERATING EXPENSES
- -----------------------------
RECOVERABLE EXPENSES
Real Estate Taxes $1,313,000 $1,339,260 $1,366,045 $1,393,366 $1,421,233 $1,449,658
Water/Sewer $19,380 $20,155 $20,961 $21,800 $22,672 $23,579
HVAC $382,500 $397,800 $413,712 $430,261 $447,471 $465,370
Electricity $989,400 $1,028,976 $1,070,135 $1,112,941 $1,157,458 $1,203,757
Insurance $494,700 $514,488 $535,068 $556,470 $578,729 $601,878
CAM Expenses $3,621,000 $3,765,840 $3,916,474 $4,073,133 $4,236,058 $4,405,500
Food Court $168,300 $175,032 $182,033 $189,315 $196,887 $204,763
----------- ----------- ----------- ----------- ----------- -----------
Subtotal-Recoverable: $6,988,280 $7,241,551 $7,504,428 $7,777,286 $8,060,508 $8,354,505
NON-RECOVERABLE
Landlord Expenses $244,800 $254,592 $264,776 $275,367 $286,381 $297,837
Management Fees $433,826 $437,858 $440,828 $450,517 $462,442 $470,220
----------- ----------- ----------- ----------- ----------- -----------
Subtotal-Nonrecoverable: $678,626 $692,450 $705,604 $725,884 $748,823 $768,057
TOTAL OPERATING EXPENSES: $7,666,906 $7,934,001 $8,210,032 $8,503,170 $8,809,331 $9,122,562
Operating Expense Ratio 36.4% 36.9% 37.5% 38.1% 38.1% 38.5%
NET OPERATING INCOME $13,416,276 $13,553,476 $13,669,435 $13,831,062 $14,340,189 $14,546,192
Alterations $92,812 $87,340 $199,400 $603,864 $78,809 $258,480
Commissions $17,561 $19,218 $43,976 $133,944 $17,557 $57,904
ADA Capital $90,000 $0 $0 $0 $0 $0
Replacement Reserve $107,182 $111,469 $115,928 $120,565 $125,388 $130,403
------------------- ----------- ----------- ----------- ----------- ----------- -----------
Subtotal: $307,555 $218,027 $359,304 $858,373 $221,754 $446,787
NET CASH FLOW $13,108,721 $13,335,449 $13,310,131 $12,972,689 $14,118,435 $14,099,405
==========================================================================================================================
<CAPTION>
=================================================================================================================================
ANNUAL CASH FLOW REPORT (PHASE I ONLY) ------------------
WESTSIDE PAVILION CAGR CAGR
Cushman & Wakefield, Inc. 2005 2006 2007 2008 2009 1999-08 2001-08
---- ---- ---- ---- ---- ------- -------
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------
OPERATING INCOME
- -----------------------------
MINIMUM RENT
All Tenants $13,195,661 $13,353,856 $13,962,577 $14,688,805 $15,553,544 2.1% 2.4%
----------- ----------- ----------- ----------- ----------- --- ---
SUBTOTAL: $13,195,661 $13,353,856 $13,962,577 $14,688,805 $15,553,544 2.1% 2.4%
RECOVERIES
CAM Recoveries $4,877,160 $5,076,713 $5,396,406 $5,590,920 $5,869,375 4.3% 4.5%
Tax Recoveries $1,514,375 $1,515,853 $1,558,068 $1,576,731 $1,623,727 1.4% 1.5%
Insurance Recoveries $690,870 $723,940 $777,420 $821,048 $872,589 4.7% 5.1%
Electricity Recoveries $1,434,300 $1,484,085 $1,568,307 $1,616,196 $1,690,325 3.9% 4.0%
HVAC Recoveries $867,910 $898,034 $948,996 $977,977 $1,022,832 3.9% 4.0%
Water Recoveries $24,437 $25,278 $26,709 $27,531 $28,790 3.9% 4.0%
Food Court Recoveries $241,940 $250,519 $259,981 $275,477 $273,280 5.5% 4.3%
----------- ----------- ----------- ----------- ----------- --- ---
SUBTOTAL: $9,650,992 $9,974,422 $10,535,887 $10,885,880 $11,380,918 3.8% 4.0%
Overage Rent $350,809 $420,352 $502,721 $548,035 $584,749 21.9% 21.2%
GROSS RENTAL INCOME: $23,197,462 $23,748,630 $25,001,185 $26,122,720 $27,519,211 3.0% 3.3%
-------------------- ----------- ----------- ----------- ----------- ----------- --- ---
Nordstrom Storage Rent $472,500 $472,500 $472,500 $472,500 $472,500 0.0% 0.0%
Other Income $12,390 $12,886 $13,401 $13,937 $14,495 4.0% 4.0%
Storage Rent $70,984 $73,824 $76,777 $79,848 $83,042 4.0% 4.0%
Specialty Income $755,016 $785,217 $816,625 $849,290 $883,262 4.0% 4.0%
Capital Income $161,328 $167,781 $174,493 $181,472 $188,731 4.0% 4.0%
May Company Parking $305,248 $305,248 $305,248 $305,248 $305,248 0.0% 0.0%
Vacancy/Credit Loss ($667,839) ($684,260) ($721,717) ($755,225) ($796,974) 3.1% 3.4%
------------------- ----------- ----------- ----------- ----------- ----------- --- ---
TOTAL INCOME: $24,307,089 $24,881,826 $26,138,512 $27,269,790 $28,669,515 2.9% 3.2%
- -----------------------------
OPERATING EXPENSES
- -----------------------------
RECOVERABLE EXPENSES
Real Estate Taxes $1,478,651 $1,508,224 $1,538,389 $1,569,157 $1,600,540 2.0% 2.0%
Water/Sewer $24,522 $25,503 $26,523 $27,584 $28,687 4.0% 4.0%
HVAC $483,985 $503,344 $523,478 $544,417 $566,194 4.0% 4.0%
Electricity $1,251,907 $1,301,983 $1,354,062 $1,408,225 $1,464,554 4.0% 4.0%
Insurance $625,953 $650,992 $677,031 $704,112 $732,277 4.0% 4.0%
CAM Expenses $4,581,720 $4,764,989 $4,955,589 $5,153,813 $5,359,965 4.0% 4.0%
Food Court $212,953 $221,471 $230,330 $239,543 $249,125 4.0% 4.0%
----------- ----------- ----------- ----------- ----------- --- ---
Subtotal-Recoverable: $8,659,691 $8,976,506 $9,305,402 $9,646,851 $10,001,342 3.6% 3.7%
NON-RECOVERABLE
Landlord Expenses $309,750 $322,140 $335,026 $348,427 $362,364 4.0% 4.0%
Management Fees $478,112 $494,191 $519,787 $549,065 $572,768 2.7% 3.2%
----------- ----------- ----------- ----------- ----------- --- ---
Subtotal-Nonrecoverable: $787,862 $816,331 $854,813 $897,492 $935,132 3.2% 3.5%
TOTAL OPERATING EXPENSES: $9,447,553 $9,792,837 $10,160,215 $10,544,343 $10,936,474 3.6% 3.6%
Operating Expense Ratio 38.9% 39.4% 38.9% 38.7% 38.1%
NET OPERATING INCOME $14,859,536 $15,088,989 $15,978,297 $16,725,447 $17,733,041 2.5% 2.9%
Alterations $349,941 $607,693 $328,531 $548,107
Commissions $78,779 $137,443 $74,672 $125,003
ADA Capital $0 $0 $0 $0
Replacement Reserve $135,619 $141,044 $146,686 $152,553
------------------- ----------- ----------- ----------- -----------
Subtotal: $564,339 $886,180 $549,889 $825,663
NET CASH FLOW $14,295,197 $14,202,809 $15,428,408 $15,899,784 2.2% 2.6%
------------------
=================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================
INCOME & EXPENSE GROWTH CHART (PHASE I ONLY)
WESTSIDE PAVILION
Cushman & Wakefield, Inc. 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Minimum Rent: $12,226,029 $12,362,299 $12,405,771 $12,436,353 $12,846,619 $13,018,242
Effective Gross Income: $21,083,182 $21,487,477 $21,879,467 $22,334,232 $23,149,520 $23,668,754
Operating Expenses: $7,666,906 $7,934,001 $8,210,032 $8,503,170 $8,809,331 $9,122,562
Net Operating Income: $13,416,276 $13,553,476 $13,669,435 $13,831,062 $14,340,189 $14,546,192
=================================================================================================================
<CAPTION>
=====================================================================================================================
INCOME & EXPENSE GROWTH CHART (PHASE I ONLY) ------------------
WESTSIDE PAVILION CAGR CAGR
Cushman & Wakefield, Inc. 2005 2006 2007 2008 2009 1999-08 2001-08
---- ---- ---- ---- ---- ------- -------
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum Rent: $13,195,661 $13,353,856 $13,962,577 $14,688,805 $15,553,544 2.1% 2.4%
Effective Gross Income: $24,307,089 $24,881,826 $26,138,512 $27,269,790 $28,669,515 2.9% 3.2%
Operating Expenses: $9,447,553 $9,792,837 $10,160,215 $10,544,343 $10,936,474 3.6% 3.6%
Net Operating Income: $14,859,536 $15,088,989 $15,978,297 $16,725,447 $17,733,041 2.5% 2.9%
------------------
=====================================================================================================================
</TABLE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
[LINE CHART SHOWING INCOME AND EXPENSE GROWTH]
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
DIRECT CAPITALIZATION - PHASE I
As discussed previously, in view of our total analysis, we would
anticipate that Phase I of the subject property would trade at an overall rate
of near 8.25 percent applied to first year income. Applying this rate to the
first year net income of $13,416,276 results in a value of $162,621,527, or
$162,600,000 (rounded) by the direct capitalization technique.
Net Operating Income: $13,416,276
Overall Rate: 8.25%
------------
Conclusion of Value: $162,621,527
Rounded: $162,600,000
SUMMARY & CONCLUSIONS OF THE INCOME APPROACH
The Income Approach is the most important method of valuation for
regional malls. The results of the preceding analysis are shown as are follows:
Technique Phase I & II Phase I Only
Discounted Cash Flow $166,700,000 $159,400,000
Direct Capitalization $174,700,000 $162,600,000
Conclusion of Income Approach $170,000,000 $160,000,000
PHASE II ANALYSIS
The Income Approach conclusions suggest a residual value of $10,000,000
applicable to the Phase II portion of the subject property. The difference in
first year net income between the Phase I & II analysis and the Phase I only
analysis is $1,380,707. This is much different than the negative net income
figure for Phase II that was reported on the break-out of the 1998 budget. The
1998 budget separation loaded much of the recovery income into Phase 1. Taking
the difference in the two cash flows of a first year net income at $1,380,707
and dividing it by the implied residual value to Phase II indicates an overall
rate of 13.8 percent. This is well above overall rates for well performing well
occupied retail properties, but appears reasonable given the poor occupancy of
Phase II and the risks associated with redevelopment. Our conclusion of the
indicated value of Phase II is $10,000,000 by the Income Approach, based on the
preceding analysis.
We have also analyzed Phase II from a development cost approach
standpoint. Our analysis assumes that Phase II could be sold separately from
Phase I (with a reciprocal parking and easement agreement and all legal
requirements met) and be redeveloped with City and neighborhood group approvals
into a viable project.
First, we must consider the size of the future development. We have
assumed that the subject site will at least achieve its current GLA of 91,978
square feet upon any redevelopment, although it may be configured in a much
different manner or layout.
- -------------------------------------------------------------------------------
102
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
Previously, we estimated the low end of market rent for the subject mall
at $30 per square foot for larger but well located suites. Given the
characteristics and location of the subject site, this would be viewed by a
developer as a fairly safe and achievable minimum rent to apply in this
hypothetical analysis. This rate is below most of the existing tenants rents in
Phase II, but given the risks and uncertainties involved, we have viewed this
portion of the property as being able to achieve $30 per square foot net rents.
This indicates annual income of about $2,759,230. Multiplying this figure by 90
percent, to include a ten percent deduction for vacancy, collection losses,
management and other non-reimbursable expenses, indicates a net income of
$2,500,000 (rounded).
From our discussions with local investment brokers familiar with the
subject property, including the selling broker for the subject, an investor
would likely seek at least a 10 percent return under this scenario. This
indicates a stabilized value for the hypothetical development of $25,000,000.
To arrive at an "as is" value indication, we must consider the timing
involved to achieve this value and development costs. We have considered a
total timeframe of three years, including two years obtaining plans and
approvals and one year for construction. Discounting the $25,000,000 to present
value at a rate of 12.0 percent (higher than the discount rates used in the
Income Approach due to the higher risks associated with redevelopment),
indicates a present value of $17,794,506, rounded to $17,800,000.
From Marshall Valuation Service, a national construction cost
publication, the base cost for community sized retail properties, assuming Good
Class C construction quality is $66.17 per square foot of building area
including sprinklers. The current cost multiplier is 1.0 and the local
multiplier for the City of Los Angeles is 1.14 This indicates an adjusted base
cost of $75.43 per square foot.
Leasing commissions are estimated based on commission rate of six percent
of the income received over the lease term, rent of $30 per square foot and
five year lease terms. The total lease commission cost estimate is $827,802.
This equates to $9.00 per square foot of building area. Real estate taxes
during construction and other miscellaneous costs estimated at 2.0 percent of
base costs of $100.37, or $2.00 per square foot. As the parking garage is
already in place, no additional costs are needed for parking. We have added an
additional $3 per square foot for demolition costs, which should be adequate
for portions of the existing structure. The combined hard and soft costs,
excluding any allowance for developer's profit is therefore $89.43 per square
foot ($75.43 + $9.00 + 2.00 + $3.00).
Developer's profit is a return to the investor based upon his
entrepreneurial skill and abilities. An investor in real property, especially a
developer, foregoes a certain amount of liquidity in development. Their risk is
based upon past experience in the field; forecasts to account for real estate
business cycles and expertise in management and timing. These items are
somewhat speculative and tend to be reflected in a fairly wide profit range
depending upon a combination of these items. Based on interviews with
developers, an expected profit range would be 10 to 15 percent of costs. We
have estimated profit at 15 percent of total construction costs of the
improvements.
- -------------------------------------------------------------------------------
103
<PAGE>
INCOME APPROACH
- -------------------------------------------------------------------------------
Therefore, the total development costs including profit are estimated at
$102.84 per square foot of building area ($89.43 * 115%). This equals
$9,459,018 for the subject's 91,978 square feet, rounded to $9,500,000
Deducting the estimated construction costs from the present value of
$17,800,000 indicates a residual value for the property in its "as is"
condition of $8,300,000. This is the indicated price a purchaser could pay for
the property if they were projecting a similar development scenario. Any income
in the interim is has not included in consideration of landlord expenses and
lost tenants due to the transitional state of the property. This "as is" value
indication equates to $73.27 per square foot of land area (based on a site size
for Phase II of 113,268 square feet according to assessor's maps) and $90.24
per square foot of building area for Phase II.
CONCLUSION OF VALUE - PHASE II
The preceding analysis resulted in value indications ranging from
$8,300,000 to $10,000,000, as follows:
Income Approach (difference between Phase I & II
analysis and Phase I analysis) $10,000,000
Development Cost Approach: $ 8,300,000
The resulting value indication from the Income Approach is derived from
an analysis of the whole property, deducting out the portion attributed to
Phase I. This approach is considered to be the most meaningful of the two
methods, given the very subjective and hypothetical assumptions made in the
development cost approach method. However, given the risks (and required
yields) for redevelopment, the development cost technique at a lower value
indication proves to be supportable. Our conclusion of value for Phase II is
based on the Income Approach at $10,000,000.
- -------------------------------------------------------------------------------
104
<PAGE>
RECONCILIATION AND FINAL VALUE ESTIMATE
- -------------------------------------------------------------------------------
The three approaches we used provided the following indications of value
for the subject property:
Phase I & II Phase I Only Phase II Only
------------ ------------ -------------
Sales Comparison Approach $170,500,000 N/A N/A
Income Approach $170,000,000 $160,000,000 $10,000,000
Discounted Cash Flow $166,700,000 $159,400,000 N/A
Direct Capitalization $174,700,000 $162,600,000 N/A
Development Cost Approach N/A N/A $8,300,000
The Sales Comparison and Income Approaches were the principal methods of
valuation for the subject property, with most consideration give to the Income
Approach. These two methods provided a range in indications for Phase I & II of
$166,700,000 to $174,700,000. The actual recent purchase price of the subject
property was $170,500,000, which is well bracketed by this range. The two
methods in the Income Approach resulted in a range in value indications for
Phase I of $159,400,000 to $162,600,000.
To estimate the value of Phase II, we performed a brief development cost
approach. As any redevelopment of the site is very speculative and within the
control of city and neighborhood group approvals, a more detailed analysis is
not possible. In this method, we estimated the potential value of the property
assuming a feasible and functional design layout, considered a required return
on investment, and deducted the estimated costs of construction. The result
provides an "as is" value indication for Phase II, assuming it were purchased
separate from the mall (and assuming a reciprocal parking and easement
agreement were made and all legal requirements met). The resulting value
indication of $8,300,000 Is lower than the difference in values (approximately
$10,000,000) from the other portions of the property as indicated by the Income
Approach, and reflective of the risks and required yields of redevelopment.
The value range concluded in the Sales Comparison Approach was based on
an analysis of historical and recent sales activity involving conceptually
similar regional mall sales on a national basis, a comparison of the sales on
the basis of income characteristics and sales volumes, and an overview of the
investment market criteria for regional mall investments. It is difficult to
quantify an appropriate per-square-foot conclusion for the subject from an
analysis of the comparable data because the marketplace is national in scope,
and the per-square-foot prices paid for the properties are influenced by a
number of factors that cannot be accurately quantified. These factors include
the quality of the center, location and market-specific factors, the strength
of the anchors and the existing and potential future competitive supply. The
sales prices are also a function of the percentage of mall tenants purchased
relative to the anchor tenant area. Perhaps the most relevant function of this
approach was to provide market evidence and support for the appropriate
investment parameters to be used in the Income Approach.
- -------------------------------------------------------------------------------
105
<PAGE>
RECONCILIATION AND FINAL VALUE ESTIMATE
- -------------------------------------------------------------------------------
The Income Approach included an analysis of the property by discounted
cash flow analysis and direct capitalization. The two methods produced a fairly
narrow range in values and proved to be mutually supporting. The Income
Approach is the primary method of valuation by both buyers and sellers of
regional malls, and is given the most weight in our conclusion of market value.
We placed primary emphasis on the indications of value provided by the
Income Approach, with secondary support for the appropriate investment
parameters provided by the Sales Comparison Approach. As a result of our
analysis, we have formed an opinion that the market value of the leased fee
estate in PHASE I & II OF WESTSIDE PAVILION COMBINED, subject to the
assumptions, limiting conditions, certifications, and definitions, as of July
13, 1998, is:
ONE HUNDRED AND SEVENTY MILLION DOLLARS
$170,000,000
As a result of our analysis, we have formed an opinion that the market
value of the leased fee estate in PHASE I OF WESTSIDE PAVILION, subject to the
assumptions, limiting conditions, certifications, and definitions, as of July
13, 1998, is:
ONE HUNDRED AND SIXTY MILLION DOLLARS
$160,000,000
As a result of our analysis, we have formed an opinion that the market
value of the leased fee estate in PHASE II OF WESTSIDE PAVILION, subject to the
assumptions, limiting conditions, certifications, and definitions, as of July
13, 1998, is:
TEN MILLION DOLLARS
$10,000,000
- -------------------------------------------------------------------------------
106
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
- -------------------------------------------------------------------------------
"Appraisal" means the appraisal report and opinion of value stated therein, or
the letter opinion of value, to which these Assumptions and Limiting Conditions
are annexed.
"Property" means the subject of the Appraisal.
"C&W" means Cushman & Wakefield, Inc. or its subsidiary which issued the
Appraisal.
"Appraiser(s)" means the employee(s) of C&W who prepared and signed the
Appraisal.
The Appraisal has been made subject to the following assumptions and limiting
conditions:
1. No opinion is intended to be expressed and no responsibility is assumed for
the legal description or for any matters which are legal in nature or require
legal expertise or specialized knowledge beyond that of a real estate
appraiser. Title to the Property is assumed to be good and marketable and the
Property is assumed to be free and clear of all liens unless otherwise stated.
No survey of the Property was undertaken.
2. The information contained in the Appraisal or upon which the Appraisal is
based has been gathered from sources the Appraiser assumes to be reliable and
accurate. Some of such information may have been provided by the owner of the
Property. Neither the Appraiser nor C&W shall be responsible for the accuracy
or completeness of such information, including the correctness of estimates,
opinions, dimensions, sketches, exhibits and factual matters.
3. The opinion of value is only as of the date stated in the Appraisal. Changes
since that date in external and market factors or in the Property itself can
significantly affect property value.
4. The Appraisal is to be used in whole and not in part. No part of the
Appraisal shall be used in conjunction with any other appraisal. Publication of
the Appraisal or any portion thereof without the prior written consent of C&W
is prohibited. Except as may be otherwise stated in the letter of engagement,
the Appraisal may not be used by any person other than the party to whom it is
addressed or for purposes other than that for which it was prepared. No part of
the Appraisal shall be conveyed to the public through advertising, or used in
any sales or promotional material without C&W's prior written consent.
Reference to the Appraisal Institute or to the MAI designation is prohibited.
5. Except as may be otherwise stated in the letter of engagement, the Appraiser
shall not be required to give testimony in any court or administrative
proceeding relating to the Property or the Appraisal.
6. The Appraisal assumes (a) responsible ownership and competent management of
the Property; (b) there are no hidden or unapparent conditions of the Property,
subsoil or structures that render the Property more or less valuable (no
responsibility is assumed for such conditions or for arranging for engineering
studies that may be required to discover them); (c) full compliance with all
applicable federal, state and local zoning and environmental regulations and
laws, unless noncompliance is stated, defined and considered in the Appraisal;
and (d) all required licenses, certificates of occupancy and other governmental
consents have been or can
- -------------------------------------------------------------------------------
107
<PAGE>
ASSUMPTIONS AND LIMITING CONDITIONS
- -------------------------------------------------------------------------------
be obtained and renewed for any use on which the value estimates contained in
the Appraisal is based.
7. The physical condition of the improvements considered by the Appraisal is
based on visual inspection by the Appraiser or other person identified in the
Appraisal. C&W assumes no responsibility for the soundness of structural
members nor for the condition of mechanical equipment, plumbing or electrical
components.
8. The forecasted potential gross income referred to in the Appraisal may be
based on lease summaries provided by the owner or third parties. The Appraiser
assumes no responsibility for the authenticity or completeness of lease
information provided by others. C&W recommends that legal advice be obtained
regarding the interpretation of lease provisions and the contractual rights of
parties.
9. The forecasts of income and expenses are not predictions of the future.
Rather, they are the Appraiser's best estimates of current market thinking on
future income and expenses. The Appraiser and C&W make no warranty or
representation that these forecasts will materialize. The real estate market is
constantly fluctuating and changing. It is not the Appraiser's task to predict
or in any way warrant the conditions of a future real estate market; the
Appraiser can only reflect what the investment community, as of the date of
Appraisal, envisages for the future in terms of rental rates, expenses, supply
and demand.
10. Unless otherwise stated in the Appraisal, the existence of potentially
hazardous or toxic materials which may have been used in the construction or
maintenance of the improvements, or may be located at or about the Property,
was not considered in arriving at the opinion of value. These materials (such
as formaldehyde foam insulation, asbestos insulation, and other potentially
hazardous materials) may adversely affect the value of the Property. The
Appraisers are not qualified to detect such substances. C&W recommends that an
environmental expert be employed to determine the impact of these matters on
the opinion of value.
11. Unless otherwise stated in the Appraisal, compliance with the requirements
of the Americans With Disabilities Act of 1990 (ADA) has not been considered in
arriving at the opinion of value. Failure to comply with the requirements of
the ADA may adversely affect the value of the Property. C&W recommends that an
expert in this field be employed.
12. If the Appraisal has been prepared for The Resolution Trust Corporation
("RTC"), it may be distributed to parties requesting a copy in accordance with
RTC policy. However, as to such parties, the Appraisal shall be deemed provided
for informational purposes only and such recipients shall not be entitled to
rely on the Appraisal for any purpose nor shall C&W or the Appraisers have any
liability to such recipients based thereon.
- -------------------------------------------------------------------------------
108
<PAGE>
CERTIFICATION OF APPRAISAL
- -------------------------------------------------------------------------------
I certify that, to the best of my knowledge and belief:
1. Ellen Gunderson, MAI has inspected the property.
2. The statements of fact contained in this report are true and correct.
3. The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are our personal, unbiased
professional analyses, opinions, and conclusions.
4. I have no present or prospective interest in the property that is the
subject of this report, and we have no personal interest or bias with respect
to the parties involved.
5. My compensation is not contingent on an action or event (such as the
approval of a loan) resulting from the analyses, opinions, or conclusions in,
or the use of, this report. The appraisal is not based on a requested minimum
or specific estimated value.
6. My analyses, opinions, and conclusions were developed, and this report has
been prepared, in conformity with the Uniform Standards of Professional
Practice of the Appraisal Foundation.
7. No one provided significant professional assistance to the persons signing
this report.
8. The reported analyses, opinions and conclusions were developed, and this
report has been prepared, in conformity with the requirements of the Code of
Professional Ethics and the Standards of Professional Practice of the Appraisal
Institute.
9. The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
10. As of the date of this report, Ellen Gunderson, MAI has completed the
requirements of the continuing education program of the Appraisal Institute.
/s/ Ellen Gunderson
- ------------------------
Ellen Gunderson, MAI
Director
California Certified Appraiser #AG025346
- -------------------------------------------------------------------------------
109
<PAGE>
ADDENDA
- -------------------------------------------------------------------------------
Various Pro-Ject Reports
Borrower Provided Operating Statements
ADA Report Excerpts
Occupancy Cost Detail
Expiration Schedule
Cushman & Wakefield's National Retail Overview
Cushman & Wakefield's National Investor Survey
Appraiser's Qualifications
- -------------------------------------------------------------------------------
110
<PAGE>
WESTSIDE PAVILION -- PHASE I ONLY
PROJECT DESIGNATOR: WPV1
REVISION: 8/6/98 @ 10:04
ANNUAL CASH FLOW REPORT
BEGINNING 7/1/98 FOR 14 YEARS
8/6/98 @ 10:08
<TABLE>
<CAPTION>
FY1999 FY2000 FY2001 FY2002 FY2003 FY2004
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME
- ---------------------
MINIMUM RENT:
ALL TENANTS 12,226,029 12,362,299 12,405,771 12,436,353 12,846,619 13,018,242
---------- ---------- ---------- ---------- ---------- ----------
TOTAL MINIMUM RENT 12,226,029 12,362,299 12,405,771 12,436,353 12,846,619 13,018,242
RECOVERIES:
CAM RECOVERIES 3,813,774 3,938,211 4,102,283 4,296,614 4,489,565 4,647,752
TAX RECOVERIES 1,388,116 1,397,368 1,430,997 1,445,827 1,474,053 1,487,719
INSURANCE RECOVERIES 541,248 557,289 579,184 606,290 634,041 656,409
ELECTRIC RECOVERIES 1,146,592 1,179,872 1,226,058 1,278,258 1,332,481 1,373,837
HVAC RECOVERIES 693,816 713,953 741,899 773,486 806,298 831,318
WATER RECOVERIES 19,525 20,096 20,884 21,770 22,693 23,404
FOOD COURT RECOVERIES 169,572 195,859 205,178 217,713 220,942 235,476
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RECOVERIES 7,772,643 8,002,648 8,296,483 8,639,958 8,980,073 9,255,915
OVERAGE RENT 91,933 109,783 142,608 205,441 255,392 304,982
SALES VOLUME (000) 177,310 183,654 190,267 195,720 207,488 214,274
---------- ---------- ---------- ---------- ---------- ----------
GROSS RENTAL INCOME 20,090,604 20,474,732 20,844,862 21,281,752 22,082,084 22,579,138
CREDIT LOSS (575,264) (586,698) (597,708) (614,015) (634,609) (649,401)
NORDSTROM STORAGE 472,500 472,500 472,500 472,500 472,500 472,500
OTHER INCOME 9,792 10,184 10,591 11,015 11,455 11,913
STORAGE RENT 56,100 58,344 60,678 63,105 65,629 68,254
SPECIALTY 596,700 620,568 645,391 671,206 698,055 725,977
CAPITAL INCOME 127,500 132,600 137,904 143,420 149,157 155,123
MAY COMPANY PRKG 305,248 305,248 305,248 305,248 305,248 305,248
---------- ----------- ---------- ---------- ---------- -----------
TOTAL INCOME 21,083,180 21,487,478 21,879,464 22,334,232 23,149,520 23,668,756
EXPENSES
- ---------------------
LANDLORD EXPENSES 244,800 254,592 264,776 275,367 286,381 297,837
R.E. TAXES 1,313,000 1,339,260 1,366,045 1,393,366 1,421,233 1,449,658
WATER 19,380 20,155 20,961 21,800 22,672 23,579
TENANT HVAC 382,500 397,800 413,712 430,261 447,471 465,370
ELECTRICITY 989,400 1,028,976 1,070,135 1,112,941 1,157,458 1,203,757
INSURANCE 494,700 514,488 535,068 556,470 578,729 601,878
CAM-EXPENSES 3,621,000 3,765,840 3,916,474 4,073,133 4,236,058 4,405,500
FOOD COURT 168,300 175,032 182,033 189,315 196,887 204,763
MANAGEMENT FEE 433,826 437,858 440,828 450,517 462,442 470,220
---------- ---------- ---------- ---------- ---------- ----------
TOTAL EXPENSES 7,666,906 7,934,001 8,210,032 8,503,170 8,809,331 9,122,562
---------- ---------- ---------- ---------- ---------- ----------
NET OPERATING INCOME 13,416,274 13,553,477 13,669,432 13,831,062 14,340,189 14,546,194
ALTERATIONS 92,812 87,340 199,400 603,864 78,809 288,480
COMMISSIONS 17,561 19,218 43,976 133,944 17,557 57,904
RESERVES 107,182 111,469 115,928 120,565 125,388 130,403
ADA COMPLIANCE 90,000 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- ----------
CASH FLOW 13,108,719 13,335,450 13,310,128 12,972,689 14,118,435 14,099,407
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME
- ---------------------
MINIMUM RENT:
ALL TENANTS 13,195,661 13,353,856 13,962,577 14,688,805 15,553,544 16,026,124 16,422,543 16,872,620
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL MINIMUM RENT 13,195,661 13,353,856 13,962,577 14,688,805 15,553,544 16,026,124 16,422,543 16,872,620
RECOVERIES:
CAM RECOVERIES 4,877,160 5,076,713 5,396,406 5,590,920 5,869,375 6,083,871 6,317,540 6,616,394
TAX RECOVERIES 1,514,375 1,515,853 1,558,069 1,576,731 1,623,727 1,649,608 1,676,071 1,714,552
INSURANCE RECOVERIES 690,870 723,940 777,420 821,048 872,589 902,342 935,011 977,932
ELECTRIC RECOVERIES 1,434,300 1,484,085 1,568,307 1,616,196 1,630,325 1,751,617 1,814,095 1,892,952
HVAC RECOVERIES 867,910 898,034 948,996 977,977 1,022,832 1,059,919 1,097,720 1,145,447
WATER RECOVERIES 24,437 25,278 26,709 27,531 28,790 29,833 30,904 32,240
FOOD COURT RECOVERIES 241,940 250,519 259,981 275,477 273,280 288,627 303,715 322,265
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RECOVERIES 9,650,992 9,974,422 10,535,887 10,885,880 11,380,918 11,765,817 12,175,056 12,701,782
OVERAGE RENT 350,809 420,352 502,721 548,035 584,749 565,205 579,738 593,601
SALES VOLUME (000) 222,113 228,589 241,990 251,300 261,498 271,944 281,603 289,597
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
GROSS RENTAL INCOME 23,197,460 23,748,630 25,001,184 26,122,720 27,519,212 28,357,144 29,177,338 30,168,004
CREDIT LOSS (667,840) (684,261) (721,718) (755,226) (796,975) (821,978) (846,442) (879,327)
NORDSTROM STORAGE 472,500 472,500 472,500 472,500 472,500 472,500 472,500 472,500
OTHER INCOME 12,390 12,886 13,401 13,937 14,495 15,074 15,677 16,304
STORAGE RENT 70,984 73,824 76,777 79,848 83,042 86,363 89,818 93,411
SPECIALTY 755,016 785,217 816,625 849,290 883,262 918,592 955,336 993,549
CAPITAL INCOME 161,328 167,781 174,493 181,472 188,731 196,280 204,132 212,297
MAY COMPANY PRKG 305,248 305,248 305,248 305,248 305,24i 305,248 305,248 305,248
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
24,307,086 24,881,824 26,138,506 27,269,788 28,669,516 29,529,222 30,373,608 31,381,984
EXPENSES
- ---------------------
LANDLORD EXPENSES 309,750 322,140 335,026 348,427 362,364 376,858 391,933 407,610
R.E. TAXES 1,478,651 1,508,224 1,538,389 1,569,157 1,600,540 1,632,551 1,665,202 1,698,506
WATER 24,522 25,503 26,523 27,584 28,687 29,835 31,028 32,269
TENANT HVAC 483,985 503,344 523,478 544,417 566,194 588,841 612,395 636,891
ELECTRICITY 1,251,907 1,301,983 1,354,062 1,408,225 1,464,554 1,523,136 1,584,061 1,647,424
INSURANCE 625,953 650,992 677,031 704,112 732,277 761,568 792,031 823,712
CAM-EXPENSES 4,581,720 4,764,989 4,955,589 5,153,813 5,359,965 5,574,364 5,797,338 6,029,232
FOOD COURT 212,953 221,471 230,330 229,543 249,125 259,090 269,454 280,232
MANAGEMENT FEE 478,112 494,191 519,787 549,065 572,768 587,888 603,199 622,841
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL EXPENSES 9,447,553 9,792,837 10,160,215 10,544,343 10,936,474 11,334,131 11,746,641 12,178,717
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET OPERATING INCOME 14,859,533 15,088,987 15,978,291 16,725,445 17,733,042 18,195,092 18,626,968 19,203,268
ALTERATIONS 349,941 607,693 328,531 548,107 210,226 143,765 282,276 851,808
COMMISSIONS 78,779 137,443 74,672 125,003 48,139 33,147 65,094 198,269
RESERVES 135,619 141,044 146,686 152,553 158,656 165,002 171,602 178,466
ADA COMPLIANCE 0 0 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
CASH FLOW 14,295,194 14,202,807 15,428,402 15,899,782 17,316,020 17,853,266 18,108,996 17,974,726
</TABLE>
<PAGE>
PURCHASE/SALE YIELD TABLE FOR WESTSIDE PAVILION--PHASE I ONLY
REVISION: 8/6/98 @ 10:04
8/6/98 @10:07
Purchase Price (000's)/Cap Going In as a function of IRR
All Cash analysis (Purchased July 1998 Sold June 2008)
Sale Price (000's)/Terminal Cap
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
219,447 212,797 206,538 200,637 195,064 189,792 184,797
IRR 8.00 8.25 8.50 8.75 9.00 9.25 9.50
- ----- ------- ------- ------- ------- ------- ------- -------
10.50 164,156 161,706 159,400 157,226 155,173 153,230 151,390
8.17 8.30 8.42 8.53 8.65 8.76 8.86
10.75 161,445 159,049 156,795 154,669 152,662 150,763 148,963
8.31 8.44 8.56 8.67 8.79 8.90 9.01
11.00 158,793 156,451 154,246 152,168 150,205 148,349 146,590
8.45 8.58 8.70 8.82 8.93 9.04 9.15
11.25 156,198 153,908 151,753 149,721 147,802 145,987 144,267
8.59 8.72 8.84 8.96 9.08 9.19 9.30
11.50 153,661 151,422 149,314 147,327 145,451 143,676 141,994
8.73 8.86 8.99 9.11 9.22 9.34 9.45
11.75 151,178 148,989 146,928 144,985 143,150 141,414 139,770
8.87 9.00 9.13 9.25 9.37 9.47 9.60
</TABLE>
<PAGE>
WESTSIDE PAVILION--PHASE I ONLY
PROJECT DESIGNATOR: WPV1
REVISION: 7/24/98 @12:52
AVERAGE OCCUPANCY REPORT
EXCLUDING DEPT STORE (greater than) 50 TENANTS,
DEPT STORE (greater than) 40 TENANTS
7/25/98 @ 8:34
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002 2003 2004
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 246,170 261,735 262,335 262,335 262,335 262,335 262,335
FEBRUARY 247,355 257,733 253,344 246,841 248,043 255,801 238,050
MARCH 242,927 257,733 253,344 246,841 248,043 255,801 238,050
APRIL 245,915 261,885 262,335 262,335 262,335 262,335 262,335
MAY 257,656 261,885 262,335 262,335 262,335 262,335 262,335
JUNE 257,075 262,319 256,472 258,006 261,018 262,335 262,335
JULY 257,075 262,319 256,472 258,006 261,018 262,335 262,335
AUGUST 259,967 261,713 262,335 262,335 262,335 261,866 262,335
SEPTEMBER 259,967 261,713 262,335 262,335 262,335 261,866 262,335
OCTOBER 260,760 262,335 262,335 262,335 262,335 262,335 262,335
NOVEMBER 260,760 262,335 262,335 262,335 262,335 262,335 262,335
DECEMBER 261,735 262,335 262,335 262,335 262,335 262,335 262,335
------- ------- ------- ------- ------- ------- -------
AVERAGE SF
OCCUPIED-2GLO 254,780 261,337 259,859 259,031 259,734 261,168 258,288
TOTAL SF-2GLA 262,371 262,371 262,371 262,371 262,371 262,371 262,371
------- ------- ------- ------- ------- ------- -------
OCCUPANCY % 97.11 99.61 99.04 98.73 98.99 99.54 98.44
======= ======= ======= ======= ======= ======= =======
<CAPTION>
2005 2006 2007 2008 2009 2010 2011
---------- --------- --------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 262,335 259,821 262,335 262,335 261,360 262,335 262,335
FEBRUARY 236,533 213,919 233,976 230,301 258,424 262,335 262,335
MARCH 236,533 214,477 233,976 230,301 258,424 262,335 262,335
APRIL 255,778 260,379 262,335 262,335 258,183 253,344 246,841
MAY 255,778 262,335 258,098 256,652 260,685 253,344 246,841
JUNE 260,764 262,335 258,098 256,652 260,685 262,335 262,335
JULY 260,764 262,335 252,414 262,335 260,685 262,335 262,335
AUGUST 262,335 262,335 252,414 260,632 262,319 256,472 258,006
SEPTEMBER 262,335 262,335 262,335 260,632 262,319 256,472 258,006
OCTOBER 262,335 262,335 262,335 261,542 261,713 262,335 262,335
NOVEMBER 259,932 262,335 262,335 261,542 261,713 262,335 262,335
DECEMBER 259,932 262,335 262,335 261,360 262,335 262,335 262,335
-------- ------- ------- ------- ------- -------- -------
AVERAGE SF
OCCUPIED-2GLO 256,280 253,940 255,249 255,552 260,529 259,859 259,031
TOTAL SF-2GLA 262,371 262,371 262,371 262,371 262,371 262,371 262,371
-------- ------- ------- ------- ------- -------- -------
OCCUPANCY % 97.68 96.79 97.29 97.40 99.30 99.04 98.73
======== ======= ======= ======= ======= ======== =======
</TABLE>
<PAGE>
PURCHASE/SALE YIELD TABLE FOR WESTSIDE PAVILION--1998
REVISION: 7/24/98 @12:06
7/24/98 @12:06
Purchase Price (000's)/Cap Going In as a function of IRR
All Cash analysis (Purchased July 1998 Sold June 2008)
Sale Price (000's)/Terminal Cap
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
237,356 230,163 223,394 217,011 210,983 205,281 199,879
IRR 8.00 8.25 8.50 8.75 9.00 9.25 9.50
- ----- ------- ------- ------- ------- ------- ------- -------
10.50 177,458 174,808 172,314 169,962 167,741 165,640 163,650
8.12 8.25 8.36 8.48 8.59 8.70 8.81
10.75 174,525 171,494 169,495 167,196 165,025 162,971 161,025
8.26 8.38 8.50 8.62 8.73 8.84 8.95
11.00 171,655 169,122 166,738 164,490 162,367 160,359 158,456
8.40 8.52 8.64 8.76 8.88 8.99 9.10
11.25 168,848 166,372 164,040 161,843 159,767 157,803 155,943
8.54 8.66 8.79 8.91 9.02 9.13 9.24
11.50 166,103 163,681 161,402 159,253 157,223 155,303 153,484
8.68 8.81 8.93 9.05 9.17 9.28 9.39
11.75 163,417 161,049 158,820 156,718 154,734 152,856 151,078
8.82 8.95 9.08 9.20 9.32 9.43 9.54
</TABLE>
<PAGE>
WESTSIDE PAVILION--1998
PROJECT DESIGNATOR: WPAV
REVISION: 7/24/98 @ 12:06
ANNUAL CASH FLOW REPORT
BEGINNING 7/1/98 FOR 15 YEARS
7/24/98 @ 12:07
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FY1999 FY2000 FY2001 FY2002 FY2003 FY2004
INCOME
- --------------------
MINIMUM RENT:
ALL TENANTS 13,420,686 13,595,952 13,704,895 13,758,941 14,132,353 14,298,150
---------- ---------- ---------- ---------- ---------- ----------
TOTAL MINIMUM
RENT 13,420,686 13,595,952 13,704,895 13,758,941 14,132,353 14,298,150
RECOVERIES:
CAM RECOVERIES 4,516,316 4,674,140 4,865,827 5,101,264 5,338,982 5,549,041
TAX RECOVERIES 1,776,696 1,796,049 1,823,066 1,855,186 1,895,915 1,919,163
INSURANCE
RECOVERIES 573,196 591,614 614,930 645,115 676,949 704,650
ELECTRIC
RECOVERIES 1,146,592 1,179,872 1,226,058 1,278,258 1,332,481 1,373,837
HVAC RECOVERIES 693,816 713,953 741,899 773,486 806,298 831,318
WATER RECOVERIES 25,698 26,447 27,475 28,645 29,861 30,790
FOOD COURT
RECOVERIES 169,572 195,859 205,178 217,713 220,942 235,476
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RECOVERIES 8,901,886 9,177,934 9,504,433 9,899,667 10,301,428 10,644,275
OVERAGE RENT 99,952 109,783 142,608 205,441 255,392 309,554
SALES VOLUME (000) 186,467 193,402 200,405 206,264 217,978 225,678
---------- ---------- ---------- ---------- ---------- ----------
GROSS RENTAL
INCOME 22,422,524 22,883,668 23,351,936 23,864,048 24,689,172 25,251,978
CREDIT LOSS (204,433) (208,929) (212,853) (218,736) (225,753) (231,241)
NORDSTROM
STORAGE 472,500 472,500 472,500 472,500 472,500 472,500
OTHER INCOME 12,240 12,730 13,239 13,768 14,319 14,892
STORAGE RENT 58,752 61,102 63,546 66,088 68,732 71,481
SPECIALTY 714,000 742,560 772,262 803,153 835,279 868,690
CAPITAL INCOME 127,500 132,600 137,904 143,420 149,157 155,123
MAY COMPANY PRKG 305,248 305,248 305,248 305,248 305,248 305,248
---------- ---------- ---------- ---------- ---------- ----------
TOTAL INCOME 23,908,332 24,401,480 24,903,784 25,449,488 26,308,656 26,908,672
EXPENSES
- --------------------
LANDLORD
EXPENSES 280,500 291,720 303,389 315,524 328,145 341,271
R.E. TAXES 1,919,000 1,957,380 1,996,528 2,036,458 2,077,187 2,118,731
WATER 25,500 26,520 27,581 28,684 29,831 31,025
TENANT HVAC 382,500 397,800 413,712 430,261 447,471 465,370
ELECTRICITY 989,400 1,028,976 1,070,135 1,112,941 1,157,458 1,203,757
INSURANCE 561,000 583,440 606,778 631,049 656,291 682,542
<S> <C> <C> <C> <C> <C> <C> <C>
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
INCOME
- --------------------
MINIMUM RENT:
ALL TENANTS 14,475,569 14,703,902 15,334,142 16,065,111 16,910,572 17,291,584 17,916,216
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL MINIMUM
RENT 14,475,569 14,703,902 15,334,142 16,065,111 16,910,572 17,291,584 17,916,216
RECOVERIES:
CAM RECOVERIES 5,835,236 6,111,449 6,522,661 6,799,618 7,154,195 7,371,684 7,703,875
TAX RECOVERIES 1,948,880 1,949,383 2,002,477 2,027,566 2,087,196 2,144,207 2,176,571
INSURANCE
RECOVERIES 743,773 784,800 847,385 899,785 958,267 992,676 1,027,573
ELECTRIC
RECOVERIES 1,434,300 1,484,085 1,568,307 1,616,196 1,690,325 1,751,617 1,814,095
HVAC RECOVERIES 867,910 898,034 948,996 977,977 1,022,832 1,059,919 1,097,720
WATER RECOVERIES 32,141 33,254 35,151 36,223 37,884 39,260 40,656
FOOD COURT
RECOVERIES 241,940 250,519 259,981 275,477 273,280 288,627 303,715
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RECOVERIES 11,104,180 11,511,524 12,184,958 12,632,842 13,223,979 13,647,990 14,164,205
OVERAGE RENT 361,446 439,883 533,596 590,840 633,879 607,709 633,077
SALES VOLUME (000) 233,973 240,924 254,775 264,641 275,053 284,929 296,610
---------- ---------- ---------- ---------- ---------- ---------- ----------
GROSS RENTAL
INCOME 25,941,194 26,655,308 28,052,696 29,288,792 30,768,432 31,547,284 32,713,496
CREDIT LOSS (237,991) (244,284) (257,872) (270,069) (284,695) (294,398) (303,040)
NORDSTROM
STORAGE 472,500 472,500 472,500 472,500 472,500 472,500 472,500
OTHER INCOME 15,488 16,107 16,751 17,421 18,118 18,843 19,597
STORAGE RENT 74,340 77,314 80,406 83,622 86,967 90,446 94,064
SPECIALTY 903,438 939,575 977,158 1,016,245 1,056,895 1,099,170 1,143,137
CAPITAL INCOME 161,328 167,781 174,493 181,472 188,731 196,280 204,132
MAY COMPANY PRKG 305,248 305,248 305,248 305,248 305,248 305,248 305,248
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL INCOME 27,635,544 28,389,548 29,821,380 31,095,232 32,612,196 33,435,374 34,649,132
EXPENSES
- --------------------
LANDLORD
EXPENSES 354,922 369,119 383,884 399,239 415,209 431,817 449,090
R.E. TAXES 2,161,106 2,204,328 2,248,414 2,293,383 2,339,250 2,386,035 2,433,756
WATER 32,266 33,556 34,899 36,294 37,746 39,256 40,826
TENANT HVAC 483,985 503,344 523,478 544,417 566,194 588,841 612,395
ELECTRICITY 1,251,907 1,301,983 1,354,062 1,408,225 1,464,554 1,523,136 1,584,061
INSURANCE 709,844 738,238 767,767 798,478 830,417 863,634 898,179
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CAM-EXPENSES 4,448,000 4,667,520 4,854,221 5,048,390 5,250,325 5,460,338
FOOD COURT 168,300 175,032 182,033 189,315 196,887 204,763
MANAGEMENT FEE 680,659 688,831 695,297 708,803 724,886 736,118
------- ------- ------- ------- ------- -------
TOTAL EXPENSES 9,494,859 9,817,219 10,149,674 10,501,425 10,868,481 11,243,915
--------- --------- ---------- ---------- ---------- ----------
NET OPERATING
INCOME 14,413,473 14,584,261 14,754,110 14,948,063 15,440,175 15,664,757
ALTERATIONS 121,835 87,340 199,400 603,864 90,439 301,981
COMMISSIONS 23,908 19,218 43,976 133,944 20,150 67,603
RESERVES 107,182 111,469 115,928 120,565 125,388 130,403
ADA COMPLIANCE 90,000 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- ----------
CASH FLOW 14,070,548 14,366,234 14,394,806 14,089,690 15,204,198 15,164,770
<S> <C> <C> <C> <C> <C> <C> <C>
CAM-EXPENSES 5,678,752 5,905,902 6,142,138 6,387,823 6,643,336 6,909,070 7,185,432
FOOD COURT 212,953 221,471 230,330 239,543 249,125 259,090 269,454
MANAGEMENT FEE 749,520 775,288 813,092 855,010 886,094 911,215 939,352
------- ------- ------- ------- ------- ------- -------
TOTAL EXPENSES 11,635,255 12,053,229 12,498,064 12,962,412 13,431,925 13,912,094 14,412,545
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET OPERATING
INCOME 16,000,289 16,336,319 17,323,316 18,132,820 19,180,272 19,523,280 20,236,588
ALTERATIONS 349,941 607,693 334,509 548,107 251,166 497,992 281,276
COMMISSIONS 78,779 137,443 76,031 125,003 57,535 114,854 65,094
RESERVES 135,619 141,044 146,686 152,553 158,656 165,002 171,602
ADA COMPLIANCE 0 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
CASH FLOW 15,435,950 15,450,139 16,766,090 17,307,156 18,712,916 18,745,432 19,718,616
</TABLE>
<PAGE>
WESTSIDE PAVILION - 1998
PROJECT DESIGNATOR: WPAV
REVISION: 7/18/98 @ 19:44
TENANT REGISTER
7/21/98 @ 12:44
TENANT SQUARE FEET BEGIN DATE END DATE
- -------------------------------------- ----------- ---------- --------
# 1 - SUITE 103 ACTIVATE CELLULAR 100 6/1997 1/2000
# 2 - SUITE 198 ATM 16 4/1996 5/1999
# 3 - SUITE 616 BAJA BUDS DEL NORT 2,099 12/1993 1/1999
# 4 - SUITE 346 BANANA REPUB. (MEN) 4,237 5/1997 4/2007
# 5 - SUITE 361 BANANA REPUBLIC 4,830 11/1995 1/2005
# 6 - SUITE 113 BARAMI STUDIO 2,774 7/1993 1/2004
# 7 - SUITE 174 BARE ESCENTIALS 724 5/1995 1/2005
# 8 - SUITE 401 BARNES & NOBLE 27,586 9/1995 1/2010
# 9 - SUITE 154 BASSINI 2,384 10/1995 1/2006
# 10 - SUITE 257 BATH & BODY WORKS 2,403 8/1995 10/2005
# 11 - SUITE 189 BCBG 1,826 12/1993 1/2001
# 12 - SUITE 163 BCBG SHOES 808 7/1996 1/2005
# 13 - SUITE 120 BEBE 2,471 9/1997 1/2007
# 14 - SUITE 182 BISOU BISOU 1,107 9/1995 1/2001
# 15 - SUITE 143 BODY SHOP SKIN 960 4/1992 1/2000
# 16 - SUITE 271 BOMBAY COMPANY 3,889 11/1992 1/2002
# 17 - SUITE 372 BON VOYAGE 1,415 10/1993 1/2002
# 18 - SUITE 368 BROOKS CHILDREN 1,060 6/1995 1/2005
# 19 - SUITE 324 CA CRISP 603 6/1996 1/2007
# 20 - SUITE 308 CA STEAK & 535 2/1995 1/1999
# 21 - SUITE 276 CARLTON HAIR 1,057 2/1996 1/2001
# 22 - SUITE 147 CARRIAGE TRADE 909 11/1994 1/2004
# 23 - SUITE 288 CATHY JEAN 1,152 10/1995 1/2006
# 24 - SUITE 124 CHAMPS 4,488 8/1991 1/2001
# 25 - SUITE 123 CHARLES DAVID 1,486 9/1990 1/2000
# 26 - SUITE 235 CLAIRES BOUTIQUE 1,049 10/1995 1/2006
# 27 - SUITE 332 COFFEE MERCHANT 751 3/1994 1/2002
# 28 - SUITE 9001 COLORADO PEN 180 12/1997 1/2003
# 29 - SUITE 248 CONTEMPO CASUALS 3,628 5/1985 5/2001
# 30 - SUITE 316 CROSSANTS AND MORE 144 11/1993 1/2000
# 31 - SUITE 358 DISNEY STORE, THE 4,500 8/1997 1/2008
# 32 - SUITE 320 EAST WIND 603 12/1991 1/2000
# 33 - SUITE 139 EASY SPIRIT 945 10/1997 1/2008
# 34 - SUITE 353 ELECTRONICS BOUTIQ 1,358 2/1996 1/2006
# 35 - SUITE 376 ELZA JEWELER 1,147 1/1995 1/2005
# 36 - SUITE 387 EVERYTHING BUT WAT 1,278 3/1989 1/1909
# 37 - SUITE 204 EXPRESS COMPAGNIE 8,773 9/1995 1/2008
# 38 - SUITE 318 FAJITA FLATS 700 9/1993 1/2003
# 39 - SUITE 207 FIELD MGT ASSOCIAT 2,308 11/1997 1/2006
# 40 - SUITE 171 FIRST BELLISSIMO 1,288 5/1993 1/1999
# 41 - SUITE 162 FOOTLOCKER 2,003 8/1991 1/2001
# 42 - SUITE 268 FRANKLIN MINT 1,355 4/1994 1/2004
<PAGE>
WESTSIDE PAVILION - 1998 PAGE 2
TENANT SQUARE FEET BEGIN DATE END DATE
- -------------------------------------- ----------- ---------- --------
# 43 - SUITE 382 GAME KEEPER 901 1/1993 1/1999
# 44 - SUITE 342 GAP KIDS 6,421 9/1993 1/2006
# 45 - SUITE 232 GAP THE 10,360 9/1993 1/2006
# 46 - SUITE 264 GARDEN BOTANIKA 2,053 12/1996 1/2007
# 47 - SUITE 321 GENERAL NUTRITION 1,608 10/1995 1/2006
# 48 - SUITE 289 GOING TO THE GAME 1,841 3/1992 1/2002
# 49 - SUITE 301 GOLDWYN PAVILLION 8,321 5/1985 1/2007
# 50 - SUITE 116 GUESS? 5,380 4/1997 1/2007
# 51 - SUITE 379 GYMBOREE 2,177 3/1996 1/2007
# 52 - SUITE 322 HANA GRILL 622 8/1994 7/1999
# 53 - SUITE 304 HOT DOG ON A STICK 507 6/1995 1/2003
# 54 - SUITE 328 ICE N CREAM 320 11/1988 1/2007
# 55 - SUITE 136 HANS HALLMARK 2,810 5/1995 1/2005
# 56 - SUITE 225 JCC 1,223 10/1994 1/2002
# 57 - SUITE 378 JEWELRY CONNECTION 480 2/1995 1/2005
# 58 - SUITE 119 JONES NEW YORK 1,317 5/1995 5/2002
# 59 - SUITE 349 KAY BEE TOY 3,843 11/1993 1/2004
# 60 - SUITE 006 KING ATM 12 1/1998 1/2003
# 61 - SUITE 251 KINNEY SHOES 2,340 10/1997 1/2008
# 62 - SUITE 280 LA NAILS 469 9/1996 7/2003
# 63 - SUITE 227 LADY FOOTLOCKER 2,317 3/1991 1/2001
# 64 - SUITE 200 LANE BRYANT 5,683 10/1987 2/1998
# 65 - SUITE 115 LE PRESTIGE 1,482 9/1995 1/2005
# 66 - SUITE 159 LEATHERMODE 1,111 8/1991 1/2000
# 67 - SUITE 114 LECTHERS 6,119 9/1992 1/2005
# 68 - SUITE 199 LENSCRAFTERS 3,192 6/1992 1/2002
# 69 - SUITE 272 LIDS 1,189 8/1998 1/2008
# 70 - SUITE 179 LILI'S BOUTIQUE 1,474 3/1997 1/2001
# 71 - SUITE 146 LIMITED THE 9,921 2/1992 6/2007
# 72 - SUITE 354 LIMITED TOO 3,322 9/1994 1/2005
# 73 - SUITE 603 LINEAR 1,200 1/1992 1/1999
# 74 - SUITE 100 LISAS BEAUTY SUPPL 2,021 8/1995 1/2006
# 75 - SUITE 604 MCDONALDS 1,152 11/1992 1/2003
# 76 - SUITE 129 MORGAN DE TOI 2,043 4/1997 1/2008
# 77 - SUITE 397 MOTHERHOOD MATERNI 800 5/1996 1/2007
# 78 - SUITE 167 MRS FIELDS 808 10/1995 5/2005
# 79 - SUITE 369 NATURAL WONDERS 2,091 10/1993 1/2004
# 80 - SUITE 326 NEW YORK DELI 602 6/1996 1/2005
# 81 - SUITE 132 NINE WEST 3,911 5/1998 1/2009
# 82 - SUITE 75 NORDSTROM 138,128 5/1984 5/2005
# 83 - SUITE 187 OPTOMETRIC OPTIONS 980 2/1998 1/2006
# 84 - SUITE 333 PACIFIC SUNWEAR 2,514 8/1995 12/2005
# 85 - SUITE 310 PANDA EXPRESS 817 6/1995 1/2006
# 86 - SUITE 197 PANDA INN 5,863 5/1985 5/2000
# 87 - SUITE 151 PAPYRUS 1,111 8/1996 1/2007
# 88 - SUITE 50 PAVILIONS 43,435 5/1985 12/2001
<PAGE>
WESTSIDE PAVILION - 1998 PAGE 3
TENANT SQUARE FEET BEGIN DATE END DATE
- -------------------------------------- ----------- ---------- --------
# 89 - SUITE 211 PAYLESS SHOES 2,347 12/1997 1/2008
# 90 - SUITE 155 PERFUMANIA 1,010 4/1995 1/2006
# 91 - SUITE 175 PLANET FUNK 1,465 10/1997 1/2002
# 92 - SUITE 505 POLITICALLY INCORR 516 1/1996 1/2007
# 93 - SUITE 380 PRETZEL TIME 829 11/1993 1/2003
# 94 - SUITE 9016 PREVIEWS, ETC 21 3/1998 1/2000
# 95 - SUITE 186 PRIVELEDGE 1,866 8/1995 1/2006
# 96 - SUITE 256 RAMPAGE 6,422 12/1995 1/2006
# 97 - SUITE 384 RAYMOND SASSOONS 792 12/1995 1/2006
# 98 - SUITE 215 REGIS HAIRSTYLES 1,234 3/1998 1/2008
# 99 - SUITE 341 RIGHT START, THE 2,629 12/1996 1/2007
#100 - SUITE 219 RITZ CAMERA 1,318 10/1994 1/2003
#101 - SUITE 300 SBARRO 991 5/1991 1/2001
#102 - SUITE 201 SEES 1,200 6/1997 5/2009
#103 - SUITE 292 SERVIS & TAYLOR 581 7/1995 5/1998
#104 - SUITE 203 SHOE CARE 492 11/1994 1/2000
#105 - SUITE 135 SHOE LORD 1,001 8/1994 1/2004
#106 - SUITE 193 SISLEY 3,255 2/1990 1/2000
#107 - SUITE 293 SKECHERS 1,956 1/1996 2/2006
#108 - SUITE 231 SPEEDO AUTHENTIC 1,200 12/1996 1/2007
#109 - SUITE 267 SPENCER GIFTS 1,140 11/1993 1/2006
#110 - SUITE 297 SPLENDIFEROUS 701 6/1996 5/2001
#111 - SUITE 330 SPRINT PCS 36 8/1997 1/2000
#112 - SUITE 158 STEVE MADDEN 2,147 5/1998 1/2008
#113 - SUITE 241 STRUCTURE 4,345 8/1995 1/2008
#114 - SUITE 375 SUBGLASS HUT 1,310 2/1997 1/2005
#115 - SUITE 221 SUNCOAST MOTION PI 2,546 1/1993 1/2004
#116 - SUITE 229 SUNGLASS PLACE 516 9/1992 1/2002
#117 - SUITE 325 SWEET FACTORY 1,108 10/1994 1/2005
#118 - SUITE 309 TASTIES 231 5/1985 1/2001
#119 - SUITE 285 THINGS REMEMBERED 1,294 5/1996 1/2007
#120 - SUITE 513 TONY ROMAS 4,309 2/1993 4/2003
#121 - SUITE 263 TRACK N TRAIL 1,782 5/1995 1/2006
#122 - SUITE 395 TUTTO BIMBI 2,988 4/1998 1/2003
#123 - SUITE 170 VENCCI 2,192 10/1994 1/2004
#124 - SUITE 220 VICTORIA'S SECRET 7,574 11/1991 1/2004
#125 - SUITE 104 WALDENBOOKS 6,557 12/1994 3/2005
#126 - SUITE 202 WATCH COLLECTION 205 2/1998 1/2008
#127 - SUITE 385 WESTIME 2,432 7/1988 1/2006
#128 - SUITE 373 WESTSIDE ONE HOUR 763 3/1995 5/2005
#129 - SUITE 296 WHAT A KICK 783 4/1995 1/2000
#130 - SUITE 101 ZALES 1,966 4/1997 1/2008
-------
130 TENANTS 477,270
=======
<PAGE>
WESTSIDE PAVILION -- 1998
PROJECT DESIGNATOR: WPAV
REVISION: 7/25/98 @ 8:31
AVERAGE OCCUPANCY REPORT
EXCLUDING DEPT STORE MORE THAN 50 TENANTS,
DEPT STORE MORE THAN 40 TENANTS
7/25/98 @ 8:32
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002 2003 2004
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
JANUARY 283,032 298,597 299,197 299,197 299,297 299,197 299,197
FEBRUARY 284,217 291,296 290,206 283,703 284,905 291,511 274,912
MARCH 279,789 291,296 290,206 283,703 284,905 291,511 274,912
APRIL 282,777 298,747 299,197 299,197 299,197 299,197 299,197
MAY 294,518 298,747 299,197 299,197 299,197 294,888 299,197
JUNE 293,937 299,181 293,334 294,868 297,880 294,888 299,197
JULY 293,937 299,181 293,334 294,868 297,880 299,197 299,197
AUGUST 296,829 298,575 299,197 299,197 299,197 298,728 299,197
SEPTEMBER 296,829 298,575 299,197 299,197 299,197 298,728 299,197
OCTOBER 297,622 299,197 299,197 299,197 299,197 299,197 299,197
NOVEMBER 297,622 299,197 299,197 299,197 299,197 299,197 299,197
DECEMBER 298,597 299,197 299,197 299,197 299,197 299,197 299,197
------- ------- ------- ------- ------- ------- -------
AVERAGE SF OCCUPIED-2GLO 291,642 297,649 296,721 295,893 296,596 297,120 295,150
TOTAL SF-2GLA 354,349 354,349 354,349 354,349 354,349 354,349 354,349
------- ------- ------- ------- ------- ------- -------
OCCUPANCY % 82.30 84.00 83.74 83.50 83.70 83.85 83.29
======= ======= ======= ======= ======= ======= =======
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
2005 2006 2007 2008 2009 2010 2011 2012
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JANUARY 299,197 296,683 299,197 299,197 298,222 299,297 299,197 299,197
FEBRUARY 273,395 250,781 270,322 267,163 295,286 271,611 299,197 299,197
MARCH 273,395 251,339 270,322 267,163 295,286 271,611 299,197 299,197
APRIL 292,640 297,241 299,197 299,197 291,746 290,206 283,703 284,905
MAY 292,640 299,197 294,960 293,514 291,746 290,206 283,703 284,905
JUNE 297,626 299,197 294,960 293,514 297,547 299,197 299,197 299,197
JULY 297,626 299,197 289,276 299,197 297,547 299,197 299,197 299,197
AUGUST 299,197 299,197 289,276 297,494 299,181 293,334 294,868 297,880
SEPTEMBER 299,197 299,197 299,197 297,494 299,181 293,334 294,868 297,880
OCTOBER 299,197 299,197 299,197 298,404 298,575 299,197 299,197 299,197
NOVEMBER 296,794 299,197 299,197 298,404 298,575 299,197 299,197 299,197
DECEMBER 296,794 299,197 299,197 298,222 299,197 299,197 299,197 298,197
------- ------- ------- ------- ------- ------- ------- -------
AVERAGE SF OCCUPIED-2GLO 293,142 290,802 292,025 292,414 296,841 292,124 295,893 296,596
TOTAL SF-2GLA 354,349 354,349 354,349 354,349 354,349 354,349 354,349 354,349
------- ------- ------- ------- ------- ------- ------- -------
OCCUPANCY % 82.73 82.07 82.41 82.52 83.77 82.44 83.50 83.70
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<PAGE>
(10) WESTSIDE PAVILION
CENTER INCOME STATEMENT SUMMARY
FOR THE 12 MONTHS ENDING 31 DEC. 1997
<TABLE>
<CAPTION>
MONTH YEAR TO DATE
---------------------------------------- ------------------------------------------
VARIANCE VARIANCE
ACTUAL BUDGET B(W) ACTUAL BUDGET B(W)
------------- ----------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME
MINIMUM RENT 1,167,865 1,105,610 62,255 13,000,078 12,940,647 59,431
PERCENTAGE RENT (3,645) 700 (4,345) 33,102 88,178 (55,076)
SPECIALTY LEASING 58,710 41,250 17,460 787,319 640,546 146,773
STORAGE RENT 7,400 3,500 3,900 45,075 42,000 3,075
NORDSTROM STORAGE RENT 40,975 39,375 1,600 480,450 461,250 19,200
CAPITAL REVENUE 11,862 10,500 1,362 124,302 126,000 (1,698)
OTHER INCOME 26,285 1,000 25,285 59,607 12,000 47,607
BAD DEBT (10,648) 0 (10,648) (79,163) 0 (79,163)
--------- --------- ------- ---------- ---------- -------
TOTAL MALL NON-RECOVERY 1,298,803 1,201,935 96,869 14,450,771 14,310,621 140,150
--------- --------- ------- ---------- ---------- -------
MALL RECOVERABLE REVENUE
CAM 388,135 357,966 30,169 4,512,714 4,342,303 170,411
CAM ADJUSTMENT 0 0 0 (27,958) 0 (27,958)
FOOD COURT CAM 115,202 13,775 101,427 254,558 162,969 91,589
PROPERTY TAX 142,819 138,872 3,947 1,669,626 1,666,462 3,164
PROPERTY TAX ADJUSTMENT 0 0 0 (12,043) 0 (12,043)
INSURANCE 33,708 40,121 (6,413) 365,432 481,450 (116,018)
INSURANCE ADJUSTMENT 0 0 0 (8,129) 0 (8,129)
HVAC 67,898 53,000 14,898 717,714 636,000 81,714
ELECTRICITY 91,486 88,825 2,661 1,057,021 999,147 57,875
WATER/SEWER 1,845 2,280 (435) 21,178 27,360 (6,182)
--------- --------- ------- ---------- ---------- --------
TOTAL MALL RECOVERY 841,093 694,839 146,254 8,550,113 8,315,690 234,423
--------- --------- ------- ---------- ---------- --------
TOTAL REVENUE 2,139,897 1,896,774 243,123 23,000,884 22,626,311 374,572
--------- --------- ------- ---------- ---------- --------
LANDLORD EXPENSE
LEGAL FEES 18,035 6,250 (11,785) 82,010 75,000 (7,010)
SPECIALITY LEASING 502 3,254 2,752 37,403 55,771 18,368
OTHER (183,782) 11,144 194,926 154,479 151,727 (2,752)
--------- --------- ------- ---------- ---------- --------
TOTAL LANDLORD EXPENSE (165,245) 20,648 185,894 273,892 282,498 8,606
--------- --------- ------- ---------- ---------- --------
RECOVERABLE EXPENSE
PROPERTY TAXES 161,398 157,827 (3,571) 1,896,802 1,893,925 (2,877)
PROFESSIONAL FEES 0 417 417 0 5,000 5,000
INSURANCE PREMIUM 40,399 47,080 6,680 430,407 564,954 134,547
ELECTRICITY 79,790 77,239 (2,551) 919,565 868,823 (50,742)
WATER/SEWER 1,766 1,900 134 21,841 22,800 959
HVAC 28,414 35,477 7,064 383,359 395,842 12,483
FDS 368 0 (368) 368 0 (368)
--------- --------- ------- ---------- ---------- --------
TOTAL RECOVERABLE EXPENSE 312,135 319,939 7,805 3,652,341 3,751,344 99,003
--------- --------- ------- ---------- ---------- --------
CAM 365,296 337,136 (28,161) 4,256,816 4,089,623 (167,194)
FOOD COURT 104,678 12,523 (92,155) 231,723 148,153 (83,570)
--------- --------- ------- ---------- ---------- --------
TOTAL OPERATING EXPENSES 616,864 690,246 73,382 8,414,773 8,271,618 (143,155)
--------- --------- ------- ---------- ---------- --------
NET OPERATING INCOME 1,523,033 1,206,528 316,505 14,586,111 14,354,693 231,417
--------- --------- ------- ---------- ---------- --------
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 31 DEC 1997
<TABLE>
<CAPTION>
CURRENT PERIOD
------------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE
<S> <C> <C> <C>
310 RENTAL REVENUE
3111 MINIMUM RENT 1,167,865.04 1,105,610.00 62,255.04
3115 PERCENTAGE RENT (2,724.48) 699.81 (3,424.29)
3116 UNBILLED PERCENTAGE RENT (921.00) 0.00 (921.00)
3141 STORAGE RENT 7,400.00 3,500.00 3,900.00
3142 NORDSTROM STORAGE RENT 40,975.00 39,375.00 1,600.00
3165 CAPITAL REVENUE 11,862.18 10,500.00 1,362.18
3199 OTHER INCOME (700.01) 1,000.00 (1,700.01)
3241 ALARM/FIRE/SPRINKLER SYSTEMS 26,984.84 0.00 26,984.84
3981 BAD DEBTS (10,648.27) 0.00 (10,648.27)
------------ ------------ ----------
310 RENTAL REVENUE 1,240,093.30 1,160,684.81 79,408.49
315 SPECIALTY LEASING REVENUE
3131 CART/RMU REVENUE (1,540.50) 720.00 (2,260.50)
3133 IN-LINE REVENUE 30,724.54 30,000.00 724.54
3134 DIRECTORY REVENUE 21,040.00 2,750.00 18,290.00
3135 TRADE SHOW REVENUE 0.00 0.00 0.00
3136 TELEPHONE REVENUE 2,810.43 1,800.00 1,010.43
3137 PHOTO REVENUE 0.00 0.00 0.00
3138 VENDING REVENUE 4,183.68 2,000.00 2,183.68
3139 OTHER SPEC LEASING REVENUE 1,492.00 3,980.00 (2,488.00)
------------ ------------ ----------
315 SPECIALTY LEASING REVENUE 58,710.15 41,250.00 17,460.15
320 RECOVERY REVENUE
3211 CAM 418,134.94 380,210.00 37,924.94
3212 UNBILLED CAM (30,000.00) (22,244.01) (7,755.99)
3213 CAM ADJUSTMENT 0.00 0.00 0.00
3221 FOOD COURT CAM 18,202.45 13,775.00 4,427.45
3222 UNBILLED FOOD COURT CAM 97,000.00 0.00 97,000.00
3231 PROPERTY TAX 166,818.79 145,146.00 21,672.79
3232 UNBILLED PROPERTY TAX (24,000.00) (6,273.84) (17,726.16)
3233 PROPERTY TAX ADJUSTMENT 0.00 0.00 0.00
3241 INSURANCE 32,708.18 40,867.10 (8,158.92)
3242 UNBILLED INSURANCE 1,000.00 (746.26) 1,746.26
3243 INSURANCE ADJUSTMENT 0.00 0.00 0.00
3271 ELECTRICITY 91,485.66 88,824.90 2,660.76
3272 UNBILLED ELECTRICITY 0.00 0.00 0.00
3281 HVAC 67,898.32 53,000.00 14,898.32
3287 WATER 1,844.96 2,280.00 (435.04)
------------ ------------ ----------
RECOVERY REVENUE 841,093,30 694,838.89 146,254.41
------------ ------------ ----------
TOTAL REVENUE 2,139,896.75 1,896,773.70 243,123.05
410 LANDLORD EXPENSES
4221 MAINTENANCE - GENERAL (213,757.82) 250.00 214,007.82
<CAPTION>
YEAR TO DATE
---------------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE
<S> <C> <C> <C>
310 RENTAL REVENUE
3111 MINIMUM RENT 13,000,078.15 12,940,647.00 59,431.15
3115 PERCENTAGE RENT 37,984.29 88,178.31 (50,194.02)
3116 UNBILLED PERCENTAGE RENT (4,882.00) 0.00 (4,882.00)
3141 STORAGE RENT 45,074.84 42,000.00 3,074.84
3142 NORDSTROM STORAGE RENT 480,450.00 461,250.00 19,200.00
3165 CAPITAL REVENUE 124,302.47 126,000.00 (1,697.53)
3199 OTHER INCOME 32,622.34 12,000.00 20,622.34
3241 ALARM/FIRE/SPRINKLER SYSTEMS 26,984.84 0.00 26,984.84
3981 BAD DEBTS (79,163.28) 0.00 (79,163.28)
------------- ------------- ----------
310 RENTAL REVENUE 13,663,451.65 13,670,075.31 (6,623.66)
315 SPECIALTY LEASING REVENUE
3131 CART/RMU REVENUE 258,203.53 291,700.00 (33,496.47)
3133 IN-LINE REVENUE 323,258.51 208,000.00 115,258.51
3134 DIRECTORY REVENUE 54,452.40 33,000.00 21,452.40
3135 TRADE SHOW REVENUE 0.00 12,000.00 (12,000.00)
3136 TELEPHONE REVENUE 38,804.71 31,466.00 7,338.71
3137 PHOTO REVENUE 4,700.00 4,700.00 0.00
3138 VENDING REVENUE 41,437.88 24,000.00 17,437.88
3139 OTHER SPEC LEASING REVENUE 66,462.19 35,680.00 30,782.19
------------- ------------- ----------
315 SPECIALTY LEASING REVENUE 787,319.22 640,546.00 146,773.22
320 RECOVERY REVENUE
3211 CAM 4,380,714.03 4,342,303.00 38,411.03
3212 UNBILLED CAM 132,000.00 (0.27) 132,000.27
3213 CAM ADJUSTMENT (27,958.17) 0.00 (27,958.17)
3221 FOOD COURT CAM 238,558.03 162,968.70 75,589.33
3222 UNBILLED FOOD COURT CAM 16,000.00 0.00 16,000.00
3231 PROPERTY TAX 1,716,625.91 1,666,462.00 50,163.91
3232 UNBILLED PROPERTY TAX (47,000.00) 0.01 (47,000.01)
3233 PROPERTY TAX ADJUSTMENT (12,043.10) 0.00 (12,043.10)
3241 INSURANCE 399,431.92 481,449.90 (82,017.98)
3242 UNBILLED INSURANCE (34,000.00) 0.03 (34,000.03)
3243 INSURANCE ADJUSTMENT (8,129.20) 0.00 (8,129.20)
3271 ELECTRICITY 997,021.38 999,146.60 (2,125.22)
3272 UNBILLED ELECTRICITY 60,000.00 0.00 60,000.00
3281 HVAC 717,714.26 636,000.00 81,714.26
3287 WATER 21,177.59 27,360.00 (6,182.41)
------------- ------------- ----------
320 RECOVERY REVENUE 8,550,112.65 8,315,689.97 234,422.68
------------- ------------- ----------
TOTAL REVENUE 23,000,883.52 22,626,311.28 374.572.24
410 LANDLORD EXPENSES
4221 MAINTENANCE - GENERAL 43.12 3,000.00 2,956.88
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 31 DEC 1997
<TABLE>
<CAPTION>
CURRENT PERIOD
----------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE
<S> <C> <C> <C>
410 LANDLORD EXPENSES
4261 FEDERAL EXPRESS/MESSENGERS 226.25 100.00 (126.25)
4211 PROFESSIONAL FEES 0.00 0.00 0.00
4621 LEGAL FEES - GENERAL 18,034.59 6,250.00 (11,784.59)
4631 AUDIT FEES - GENERAL 18,000.00 0.00 (18,000.00)
4632 AUDIT FEES - TENANT AUDITS 0.00 479.17 479.17
4651 BANK CHARGES 10.00 50.00 40.00
4945 LANDLORD CONTR - MARKETING 11,739.40 10,264.73 (1,474.67)
--------- --------- ----------
410 LANDLORD EXPENSES (165,747.58) 17,393.90 183,141.48
415 SPECIALTY LEASING EXPENSES
4111 PAYROLL - GENERAL 0.00 1,740.08 1,740.08
4131 PAYROLL TAXES 0.00 169.65 169.65
4141 EMPLOYEE BENEFITS 0.00 104.40 104.40
4142 HEALTH INSURANCE 0.00 180.20 180.20
4171 TRAVEL 40.82 0.00 (40.82)
4173 MEALS & ENTERTAINMENT 60.06 100.00 39.94
4182 SUBSCRIPTIONS/DUES 0.00 0.00 0.00
4183 TRAINING AND EDUCATION 0.00 0.00 0.00
4221 MAINTENANCE - GENERAL 0.00 430.00 430.00
4231 SUPPLIES - GENERAL 118.96 50.00 (68.96)
4267 TELEPHONES - AUTO/CELLULAR 56.57 70.00 13.43
4611 PROFESSIONAL FEES 127.84 150.00 22.16
4621 LEGAL FEES - GENERAL 0.00 0.00 0.00
4941 ADVERTISING & PROMOTION 0.00 0.00 0.00
5116 POSTERS/SIGNAGE 98.00 260.00 162.00
----------- --------- ----------
415 SPECIALTY LEASING EXPENSES 502.25 3,254.33 2,752.08
420 RECOVERABLE EXPENSES
4241 ALARM/FIRE/SPRINKLER SYSTEMS 367.50 0.00 (367.50)
4321 REAL PROPERTY TAXES 161,398.21 157,827.10 (3,571.11)
4322 PROPERTY TAXES - PROF FEES 0.00 416.67 416.67
4353 INSURANCE PREMIUMS 40,399.42 47,079.50 6,680.08
4361 ELECTRICITY - GENERAL 79,790.03 77,239.01 (2,551.02)
4364 WATER 1,766.08 1,900.00 133.92
4373 TENANT HVAC 28,413.53 35,477.03 7,063.50
----------- ---------- ----------
420 RECOVERABLE EXPENSES 312,134.77 319,939.31 7,804.54
430 COMMON AREA MAINTENANCE
4111 PAYROLL - GENERAL 22,377.19 21,767.76 (609.43)
4112 PAYROLL - MAINTENANCE 13,488.04 12,616.58 (871.46)
4131 PAYROLL TAXES 2,474.25 2,843.57 369.32
4141 EMPLOYEE BENEFITS 2,595.67 2,578.22 (17.45)
4142 HEALTH INSURANCE 3,730.83 4,000.75 269.92
4151 WORKERS COMPENSATION
INSURANCE 725.84 648.83 (77.01)
<CAPTION>
YEAR TO DATE
----------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE
<S> <C> <C> <C>
410 LANDLORD EXPENSES
4261 FEDERAL EXPRESS/MESSENGERS 2,540.88 1,200.00 (1,340.88)
4211 PROFESSIONAL FEES 9,520,75 0.00 (9,520.75)
4621 LEGAL FEES - GENERAL 82,009.71 75,000.00 (7,009.71)
4631 AUDIT FEES - GENERAL 18,000.00 18,000.00 0.00
4632 AUDIT FEES - TENANT AUDITS 0.00 5,750.04 5,750.04
4651 BANK CHARGES 120.00 600.00 480.00
4945 LANDLORD CONTR - MARKETING 124,254.52 123,176.76 (1,077.76)
---------- ---------- ---------
410 LANDLORD EXPENSES 236,488.98 226,726.80 (9,762.18)
415 SPECIALTY LEASING EXPENSES
4111 PAYROLL - GENERAL 23,724.23 24,838.79 1,114.56
4131 PAYROLL TAXES 1,639.38 2,686.86 1,047.48
4141 EMPLOYEE BENEFITS 1,255.10 1,490.28 235.18
4142 HEALTH INSURANCE 1,887.55 2,135.32 247.77
4171 TRAVEL 1,216.62 1,318.75 102.13
4173 MEALS & ENTERTAINMENT 599.25 1,512.50 913.25
4182 SUBSCRIPTIONS/DUES 208.75 205.00 (3.75)
4183 TRAINING AND EDUCATION 315.12 193.75 (121.37)
4221 MAINTENANCE - GENERAL 676.01 10,160.00 9,483.99
4231 SUPPLIES - GENERAL 411.90 2,100.00 1,688.10
4267 TELEPHONES - AUTO/CELLULAR 660.08 840.00 179.92
4611 PROFESSIONAL FEES 2,519.09 1,800.00 (719.09)
4621 LEGAL FEES - GENERAL 0.00 600.00 600.00
4941 ADVERTISING & PROMOTION 0.00 2,400.00 2,400.00
5116 POSTERS/SIGNAGE 2,289.86 3,490.00 1,200.14
---------- ---------- ---------
415 SPECIALTY LEASING EXPENSES 37,402.94 55,771.25 18,368,31
420 RECOVERABLE EXPENSES
4241 ALARM/FIRE/SPRINKLER SYSTEMS 367.50 0.00 (367.50)
4321 REAL PROPERTY TAXES 1,896,802.22 1,893,925.20 (2,877.02)
4322 PROPERTY TAXES - PROF FEES 0.00 5,000.04 5,000.04
4353 INSURANCE PREMIUMS 430,406.71 564,954.00 134,547.29
4361 ELECTRICITY - GENERAL 919,565.14 868,823.08 (50,742.06)
4364 WATER 21,840.68 22,800.00 959.32
4373 TENANT HVAC 383,359.10 395,842.01 12,482.91
------------ ------------ ----------
420 RECOVERABLE EXPENSES 3,652,341.35 3,751,344.33 99,002.98
430 COMMON AREA MAINTENANCE
4111 PAYROLL - GENERAL 289,866.64 295,685.74 5,819.10
4112 PAYROLL - MAINTENANCE 176,232.41 164,015.56 (12,216.85)
4131 PAYROLL TAXES 35,908.31 38,671.13 2,762.82
4141 EMPLOYEE BENEFITS 35,740.66 32,837.53 (2,903.13)
4142 HEALTH INSURANCE 40,314.35 47,400.18 7,085.83
4151 WORKERS COMPENSATION
INSURANCE 6,491.76 7,785.96 1,294.20
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 31 DEC 1997
<TABLE>
<CAPTION>
CURRENT PERIOD YEAR TO DATE
----------------------------------------- ------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
<S> <C> <C> <C> <C> <C> <C>
430 COMMON AREA MAINTENANCE
4162 UNIFORMS - MAINTENANCE 416.37 250.00 (166.37) 3,660.29 3,000.00 (660.29)
4171 TRAVEL 0.00 50.00 50.00 3,304.75 4,600.00 1,295.25
4173 MEALS & ENTERTAINMENT 0.00 150.00 150.00 305.53 1,800.00 1,494.47
4181 STAFF AMENITIES 2,376.97 3,750.00 1,373.03 10,565.61 12,190.00 1,624.39
4182 SUBSCRIPTIONS/DUES 0.00 50.00 50.00 604.23 665.00 60.77
4183 TRAINING AND EDUCATION 0.00 100.00 100.00 1,563.36 2,500.00 936.64
4185 STAFF EMPLOYMENT FEES 0.00 200.00 200.00 6,285.50 2,400.00 (3,885.50)
4191 TEMPORARY LABOR 9,389.20 150.00 (9,239.20) 21,493,49 11,800.00 (9,693.49)
4212 CONTRACTS - MAINTENANCE 0.00 0.00 0.00 7,976.00 7,976.00 0.00
4214 CONTRACTS - SECURITY 82,972.50 63,875.00 (19,097.50) 785,617.50 766,500.00 (19,117.50)
4216 CONTRACTS - CLEANING (6,558.05) 40,025.26 46,583.31 373,035.67 464,155.76 91,120.09
4217 CONTRACTS - LANDSCAPING 1,400.00 1,400.00 0.00 16,800.00 16,800.00 0.00
4218 CONTRACTS - LANDSCAPING - EXT 1,500.00 1,500.00 0.00 18,000.00 18,000.00 0.00
4219 CONTRACTS - ELEV & ESCAL 13,500.00 12,500.00 (1,000.00) 169,876.26 150,000.00 (19,876.26)
4221 MAINTENANCE - GENERAL 20,741.01 14,348.33 (6,392.68) 263,709.41 225,068.96 (38,640.45)
4223 MAINTENANCE - TRUCKS & AUTOS 1,628.00 200.00 (1,428.00) 3,165.06 2,900.00 (265.06)
4 24 MAINTENANCE - PARKING 9,566.63 5,065.29 (4,501.34) 125,049.16 74,672.48 (50,376.68)
4 25 MAINTENANCE - MACH & EQUIP 6,126.67 250.00 (5,876.67) 16,209.41 3,000.00 (13,209.41)
4226 AIR CONDITIONING REPAIRS 13,749.94 4,500.00 (9,249.94) 141,106.22 62,000.00 (79,106.22)
ELEVATOR & ESCAL - REPAIRS 4,420.00 1,500.00 (2,920.00) 20,186.88 18,000.00 (2,186.88)
PLUMBING & DRAINAGE REPAIRS 1,291.01 1,000.00 (291.01) 18,004.88 26,000.00 7,995.12
29 ROOF / SKYLIGHT REP & MAINT 2,400.00 1,300.00 (1,100.00) 9,910.59 15,600.00 5,689.41
4232 SUPPLIES - MAINTENANCE 4,176.15 5,000.00 823.85 70,532.92 67,500.00 (3,032.92)
4237 SUPPLIES - LANDSCAPING 5,394.81 8,250.00 2,855.19 16,417.11 11,000.00 (5,417.11)
39 SUPPLIES - LIGHTING 4,857.76 2,000.00 (2,857.76) 22,468.30 30,000.00 7,531.70
41 ALARM/FIRE/SPRINKLER SYSTEMS 2,157.00 4,000.00 1,843.00 16,629.76 55,000.00 38,370.24
4243 PEST CONTROL 1,452.00 580.00 (872.00) 8,872.00 6,960.00 (1,912.00)
46 TRASH REMOVAL 27,025.00 13,000.00 (14,025.00) 181,269.86 156,000.00 (25,269.86)
48 WIRED MUSIC / PA SYSTEM 0.00 333.00 333.00 1,126.64 3,996.00 2,869.36
4263 POSTAGE 500.00 450.00 (50.00) 3,939.21 5,400.00 1,460.79
4265 RADIOS, PAGERS & BEEPERS 317.71 800.00 482.29 3,674.39 9,600.00 5,925.61
66 TELEPHONES 3,606.10 2,750.00 (856.10) 26,606.80 33,000.00 6,393.20
28 PERSONAL PROPERTY TAXES 0.00 525.00 525.00 5,076.47 6,300.00 1,223.53
4331 PERMITS, LICENSES & FEES 9,716.46 5,820.00 (3,896.46) 50,679.96 51,180.00 500.04
4354 INSURNACE - CLAIMS 1,547.32 7,546.00 5,998.68 97,487.54 90,201.00 (7,286.54)
55 INSURANCE - LEGAL 631.00 2,750.00 2,119.00 88,390.34 33,000.00 (55,390.34)
61 ELECTRICITY - GENERAL 49,226.91 50,138.99 912.08 514,231.90 563,687.87 49,455.97
4362 ELECTRICITY - OUTSIDE 14,287.26 6,934.98 (7,352.28) 91,005.74 78,009.78 (12,995.96)
364 WATER 2,270.61 3,250.80 980.19 33,472.42 38,345.40 4,872.98
365 SEWER 3,444.81 3,973.20 528.39 39,007.40 46,866.60 7,859.20
4371 HVAC 10,146.03 8,209.01 (1,937.02) 147,945.30 92,538.15 (55,407.15)
4611 PROFESSIONAL FEES 909.00 650.00 (259.00) 70,710.29 66,200.00 (4,510.29)
631 AUDIT FEES - GENERAL 0.00 0.00 0.00 0.00 5,000.00 5,000.00
921 COMPUTER SERVICES 3,881.47 3,355.07 (526.40) 45,853.76 41,411.94 (4,441.82)
4931 MACHINERY/EQUIPMENT RENTAL 6,706.23 3,615.00 (3,091.23) 46,806.52 43,380.00 (3,426.52)
4997 OFFICE SUPPLIES 1,430.59 1,250.00 (180.59) 13,174.71 15,000.00 1,825.29
711 DEPR. - GENERAL 1,300.00 5,335.13 4,035.13 60,452.98 64,021.56 3,568.58
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 31 DEC 1997
<TABLE>
<CAPTION>
CURRENT PERIOD
-----------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE
<S> <C> <C> <C>
430 COMMON AREA MAINTENANCE
430 COMMON AREA MAINTENANCE 365,296.29 337,135.77 (28,160.52)
440 FOOD COURT CAM
4216 CONTRACTS - CLEANING 96,961.21 6,515.74 (90,445.47)
4221 MAINTENANCE - GENERAL 0.00 250.00 250.00
4228 PLUMBING & DRAINAGE REPAIRS 0.00 500.00 500.00
4231 SUPPLIES - GENERAL 0.00 0.00 0.00
4243 PEST CONTROL 2,178.00 870.00 (1,308.00)
4361 ELECTRICITY - GENERAL 4,352.65 2,706.99 (1,645.66)
4364 WATER 457.49 756.00 298.51
4365 SEWER 728.50 924.00 195.50
---------- ---------- ----------
440 FOOD COURT CAM 104,677.85 12,522.73 (92,155.12)
490 MARKETING DEPARTMENT
3311 PROMOTIONAL CHARGE (40,290.73) (35,094.00) 5,196.73
3313 LEASE REQUIRED ADVERTISING (225.00) (326.19) (101.19)
3315 MEDIA FUND (8,031.21) (7,178.32) 852.89
333 LANDLORD CONTR - REQUIRED (10,072.69) (8,598.02) 1,474.67
LANDLORD CONTR - NON
REQUIRED (1,666.71) (1,666.71) 0.00
4111 PAYROLL - GENERAL 13,386.76 7,142.55 (6,244.21)
4131 PAYROLL TAXES 683.44 728.97 45.53
4141 EMPLOYEE BENEFITS 249.50 0.00 (249.50)
4142 HEALTH INSURANCE 408.62 807.36 398.74
1 UNIFORMS - GENERAL 0.00 0.00 0.00
4171 TRAVEL 16.38 20.00 3.62
4173 MEALS & ENTERTAINMENT 284.63 200.00 (84.63)
4182 SUBSCRIPTIONS/DUES 2,760.00 500.00 (2,260.00)
4183 TRAINING AND EDUCATION 0.00 0.00 0.00
4191 TEMPORARY LABOR 5,592.01 200.00 (5,392.01)
4611 PROFESSIONAL FEES 7,920.00 0.00 (7,920.00)
4619 AGENCY FEE 10,430.91 6,843.20 (3,587.71)
4931 MACHINERY/EQUIPMENT RENTAL 403.63 200.00 (203.63)
4981 BAD DEBTS 0.00 851.97 851.97
5112 DIRECT MAIL 0.00 300.00 300.00
5113 DIRECTORIES/BROCHURES 2,408.00 0.00 (2,408.00)
5114 MEDIA PRODUCTION 3,917.41 750.00 (3,167.41)
5115 NEWSPAPER/MAGAZINE 36,914.43 6,000.00 (30,914.43)
5116 POSTERS/SIGNAGE 7,264.05 925.00 (6,339.05)
5118 TELEVISION 41,350.85 24,000.00 (17,350.85)
5119 BILLBOARDS 2,500.00 0.00 (2,500.00)
5121 HOLIDAY DECOR 4,685.47 0.00 (4,685.47)
5122 KIDS CLUB 1,300.00 1,666.67 366.67
5123 MALL WALKER PROGRAM 0.00 0.00 0.00
5125 SPECIAL EVENTS 13,782.05 1,500.00 (12,282.05)
5127 WINDOWS 0.00 0.00 0.00
<CAPTION>
YEAR TO DATE
--------------------------------------------------
DESCRIPTION ACTUAL BUDGET VARIANCE
<S> <C> <C> <C>
430 COMMON AREA MAINTENANCE
430 COMMON AREA MAINTENANCE 4,256,816.25 4,089,622.60 (167,193.65)
440 FOOD COURT CAM
4216 CONTRACTS - CLEANING 159,733.48 75,560.24 (84,173.24)
4221 MAINTENANCE - GENERAL 1,224.34 3,000.00 1,775.66
4228 PLUMBING & DRAINAGE REPAIRS 0.00 2,000.00 2,000.00
4231 SUPPLIES - GENERAL 5,094.78 6,900.00 1,805.22
4243 PEST CONTROL 13,308.00 10,440.00 (2,868.00)
4361 ELECTRICITY - GENERAL 34,714.81 30,449.07 (4,265.74)
4364 WATER 7,540.91 8,911.80 1,370.89
4365 SEWER 10,107.08 10,892.20 785.12
------------ ------------ -----------
440 FOOD COURT CAM 231,723.40 148,153.31 (83,570.09)
490 MARKETING DEPARTMENT
3311 PROMOTIONAL CHARGE (417,015.92) (421,128.00) (4,112.08)
3313 LEASE REQUIRED ADVERTISING (5,200.00) (3,914.28) 1,285.72
3315 MEDIA FUND (95,091.09) (86,139.84) 8,951.25
333 LANDLORD CONTR - REQUIRED (104.254.00) (103,176.24) 1,077.76
LANDLORD CONTR - NON
REQUIRED (20,000.52) (20,000.52) 0.00
4111 PAYROLL - GENERAL 107,803.61 97,603.16 (10,200.45)
4131 PAYROLL TAXES 8,535.29 10,171.99 1,636.70
4141 EMPLOYEE BENEFITS 2,385.26 0.00 (2,385.26)
4142 HEALTH INSURANCE 6,794.80 9,566.20 2,771.40
1 UNIFORMS - GENERAL 404.08 0.00 (404.08)
4171 TRAVEL 1,506.38 3,240.00 1,733.62
4173 MEALS & ENTERTAINMENT 686.69 1,900.00 1,213.31
4182 SUBSCRIPTIONS/DUES 9,793.00 5,215.00 (4,578.00)
4183 TRAINING AND EDUCATION 1,254.32 1,550.00 295.68
4191 TEMPORARY LABOR 11,047.76 11,300.00 252.24
4611 PROFESSIONAL FEES 33,331.42 27,500.00 (5,831.42)
4619 AGENCY FEE 75,407.40 81,555.48 6,148.08
4931 MACHINERY/EQUIPMENT RENTAL 5,811.23 6,200.00 388.77
4981 BAD DEBTS 2,014.70 10,223.64 8,208.94
5112 DIRECT MAIL 881.82 5,020.00 4,138.18
5113 DIRECTORIES/BROCHURES 15,920.99 16,000.00 79.01
5114 MEDIA PRODUCTION 13,030.48 9,000.00 (4,030.48)
5115 NEWSPAPER/MAGAZINE 45,212.57 18,000.00 (27,212.57)
5116 POSTERS/SIGNAGE 31,614.06 14,100.00 (17,514.06)
5118 TELEVISION 40,952.68 30,000.00 (10,952.68)
5119 BILLBOARDS 44,182.13 60,000.00 15,817.87
5121 HOLIDAY DECOR 15,934.45 8,000.00 (7,934.45)
5122 KIDS CLUB 17,776.97 20,000.04 2,223.07
5123 MALL WALKER PROGRAM 8.25 0.00 (8.25)
5125 SPECIAL EVENTS 90,839.26 93,116.00 2,276.74
5127 WINDOWS 2,428.13 0.00 (2,428.13)
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 31 DEC 1997
<TABLE>
<CAPTION>
CURRENT PERIOD
------------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE
<S> <C> <C> <C>
490 MARKETING DEPARTMENT
5161 COMMUNITY RELATIONS 6,071.75 2,416.66 (3,655.09)
5163 NEWSLETTERS 0.00 150.00 150.00
5165 PUBLIC RELATIONS - TENANTS 0.00 0.00 0.00
5191 GIFT CERTIFICATES 0.00 0.00 0.00
5192 MARKETING RESEARCH 0.00 0.00 0.00
5193 PHOTOGRAPHY 0.00 0.00 0.00
5194 PROMOTIONAL SUPPLIES 7,416.35 669.75 (6,746.60)
5196 TOURISM 0.00 1,750.00 1,750.00
9999 YEAR-TO-DATE EARNINGS (109,459.90) (4,758.93) 104,700.97
----------- --------- ----------
490 MARKETING DEPARTMENT 0.00 (0.04) (0.04)
----------- --------- ----------
MALL OPERATING EXPENSES 616,863.58 690,246.00 73,382.42
----------- ---------- ----------
NET OPERATING INCOME (NOI) 1,523,033.17 1,206,527.70 316,505.47
------------ ------------ ----------
NOI AFTER MALL INTEREST 1,523,033.17 1,206,527.70 316,505.47
720 MISC. INCOME/EXPENSE
MALL MANAGEMENT FEES 30,000.00 30,000.00 0.00
------------ ------------ ----------
720 MISC. INCOME/EXPENSE 30,000.00 30,000.00 0.00
70 DEPRECIATION & AMORTIZATION
528 AMORT. - TENANT BUYOUTS 551.00 0.00 (551.00)
------------ ------------ ----------
770 DEPRECIATION & AMORTIZATION 551.00 0.00 (551.00)
------------ ------------ ----------
OPERATING/OVERHEAD EXPENSES 0.00 0.00 0.00
------------ ------------ ----------
NON-OPERATING INTEREST 0.00 0.00 0.00
------------ ------------ ----------
NET INC BEFORE TAX & EXT ITEMS 1,492,482.17 1,176,527.70 315,954.47
------------ ------------ ----------
NET INCOME BEFORE EXT ITEMS 1,492,482.17 1,176,527.70 315,954.47
------------ ------------ ----------
NET INCOME (LOSS) 1,492,482.17 1,176,527.70 315,954.47
<CAPTION>
YEAR TO DATE
-------------------------------------------------
DESCRIPTION ACTUAL BUDGET VARIANCE
<S> <C> <C> <C>
490 MARKETING DEPARTMENT
5161 COMMUNITY RELATIONS 11,377.06 28,999.92 17,622.86
5163 NEWSLETTERS 297.01 3,400.00 3,102.99
5165 PUBLIC RELATIONS - TENANTS 36.59 0.00 (36.59)
5191 GIFT CERTIFICATES 403.90 0.00 (403.90)
5192 MARKETING RESEARCH 250.00 0.00 (250.00)
5193 PHOTOGRAPHY 2,252.46 2,000.00 (252.46)
5194 PROMOTIONAL SUPPLIES 15,339.23 24,697.00 9,357.77
5196 TOURISM 26,047.55 36,000.00 9,952.45
9999 YEAR-TO-DATE EARNINGS 0.00 0.00 0.00
--------- --------- ---------
490 MARKETING DEPARTMENT 0.00 (0.45) (0.45)
--------- --------- ---------
MALL OPERATING EXPENSES 8,414,772.92 8,271,617.84 (143,155.08)
------------ ------------ -----------
NET OPERATING INCOME (NOI) 14,586,110.60 14,354,693.44 231,417.16
------------- ------------- -----------
NOI AFTER MALL INTEREST 14,586,110.60 14,354,693.44 231,417.16
720 MISC. INCOME/EXPENSE
MALL MANAGEMENT FEES 360,000.00 360,000.00 0.00
------------- ------------- -----------
720 MISC. INCOME/EXPENSE 360,000.00 360,000.00 0.00
70 DEPRECIATION & AMORTIZATION
528 AMORT. - TENANT BUYOUTS 6,612.00 0.00 (6,612.00)
------------- ------------- -----------
770 DEPRECIATION & AMORTIZATION 6,612.00 0.00 (6,612.00)
------------- ------------- -----------
OPERATING/OVERHEAD EXPENSES 0.00 0.00 0.00
------------- ------------- -----------
NON-OPERATING INTEREST 0.00 0.00 0.00
------------- ------------- -----------
NET INC BEFORE TAX & EXT ITEMS 14,219,498.60 13,994,693.44 224,805.16
------------- ------------- -----------
NET INCOME BEFORE EXT ITEMS 14,219,498.60 13,994,693.44 224,805.16
------------- ------------- -----------
NET INCOME (LOSS) 14,219,498.60 13,994,693.44 224,805.16
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 30 JUN 1996
<TABLE>
<CAPTION>
CURRENT PERIOD
---------------------------------------------------
ACTUAL BUDGET VARIANCE
ACCT DESCRIPTION ----------------- ----------------- ---------------
<S> <C> <C> <C>
310 RENTAL REVENUE
3111 MINIMUM RENT ................. 1,155,232.22 1,173,990.03 (18,757.81)
3115 PERCENTAGE RENT .............. 50,128.69 20,483.48 29,645.21
3116 UNBILLED PERCENTAGE RENT ..... (38,402.00) 0.00 (38,402.00)
3141 STORAGE RENT ................. 19,841.94 20,000.00 (158.06)
3142 NORDSTROM STORAGE RENT ....... 39,100.00 39,100.00 0.00
3165 CAPITAL REVENUE .............. 10,198.82 14,000.00 (3,801.18)
3199 OTHER INCOME ................. 3,985.79 1,000.00 2,985.79
3337 LANDLORD CONTR--PAYBACK ...... 4,166.67 4,166.67 0.00
------------ ------------ ----------
310 RENTAL REVENUE ............... 1,244,252.13 1,272,740.18 (28,488.05)
315 SPECIALTY LEASING REVENUE
3131 CART/RMU REVENUE ............. 25,163.00 16,000.00 9,163.00
3133 IN--LINE REVENUE ............. 15,184.63 8,130.00 7,054.63
3134 DIRECTORY REVENUE ............ 3,600.00 0.00 3,600.00
3135 TRADE SHOW REVENUE ........... 0.00 0.00 0.00
3136 TELEPHONE REVENUE ............ 4,115.96 2,420.00 1,695.96
3137 PHOTO REVENUE ................ 0.00 0.00 0.00
3138 VENDING REVENUE .............. 2,840.10 1,500.00 1,340.10
3139 OTHER SPEC LEASING
REVENUE ...................... 1,338.42 4,050.00 (2,711.58)
------------ ------------ ----------
315 SPECIALTY LEASING REVENUE .... 52,242.11 32,100.00 20,142.11
320 RECOVERY REVENUE
3211 CAM .......................... 341,030.83 384,664.12 (43,633.29)
3212 UNBILLED CAM ................. (15,000.00) 0.00 (15,000.00)
3213 CAM ADJUSTMENT ............... 0.00 0.00 0.00
3221 FOOD COURT CAM ............... 22,598.57 14,270.00 8,328.57
3222 UNBILLED FOOD COURT CAM ...... (12,000.00) 0.00 (12,000.00)
3223 FOOD COURT CAM ADJ ........... 0.00 0.00 0.00
3231 PROPERTY TAX ................. 137,287.48 172,770.01 (35,482.53)
3232 UNBILLED PROPERTY TAX ........ (2,000.00) 0.00 (2,000.00)
3233 PROPERTY TAX ADJUSTMENT ...... 0.00 0.00 0.00
3241 INSURANCE .................... 32,715.22 44,443.04 (11,727.82)
3242 UNBILLED INSURANCE ........... (33,000.00) 0.00 (33,000.00)
4243 INSURANCE ADJUSTMENT ......... 0.00 0.00 0.00
3271 ELECTRICITY .................. 95,917.60 86,580.00 9,337.60
3272 UNBILLED ELECTRICITY ......... (12,000.00) 0.00 (12,000.00)
3281 HVAC ......................... 52,486.82 47,650.00 4,836.82
3287 WATER ........................ 1,273.62 2,190.00 (916.38)
------------ ------------ ----------
320 RECOVERY REVENUE ............. 609,310.14 752,567.17 (143,257.03)
------------ ------------ -----------
TOTAL REVENUE ................ 1,905,804.38 2,057,407.35 (151,602.97)
410 LANDLORD EXPENSES
4221 MAINTENANCE--GENERAL ......... 0.00 0.00 0.00
<CAPTION>
YEAR TO DATE
------------------------------------------------------
ACTUAL BUDGET VARIANCE
ACCT DESCRIPTION ------------------ ------------------ ----------------
<S> <C> <C> <C>
310 RENTAL REVENUE
3111 MINIMUM RENT ................. 12,542,506.28 12,875,763.09 (333,256.81)
3115 PERCENTAGE RENT .............. 114,756.96 127,375.58 (12,618.62)
3116 UNBILLED PERCENTAGE RENT ..... (27,386.05) 0.00 (27,386.05)
3141 STORAGE RENT ................. 234,906.01 240,000.00 (5,093.99)
3142 NORDSTROM STORAGE RENT ....... 469,200.00 469,200.00 0.00
3165 CAPITAL REVENUE .............. 129,709.50 168,000.00 (38,290.50)
3199 OTHER INCOME ................. 103,977.88 12,000.00 91,977.88
3337 LANDLORD CONTR--PAYBACK ...... 50,000.02 50,000.00 0.02
------------- ------------- -----------
310 RENTAL REVENUE ............... 13,617,670.60 13,942,338.67 (324,668.07)
315 SPECIALTY LEASING REVENUE
3131 CART/RMU REVENUE ............. 382,947.35 341,565.00 41,382.35
3133 IN--LINE REVENUE ............. 262,366.06 104,560.00 157,806.06
3134 DIRECTORY REVENUE ............ 21,600.00 0.00 21,600.00
3135 TRADE SHOW REVENUE ........... 6,250.00 7,500.00 (1,250.00)
3136 TELEPHONE REVENUE ............ 35,611.44 34,385.00 1,226.44
3137 PHOTO REVENUE ................ 5,364.20 0.00 5,364.20
3138 VENDING REVENUE .............. 27,404.56 16,700.00 10,704.56
3139 OTHER SPEC LEASING
REVENUE ...................... 35,230.93 58,674.00 (23,443.07)
------------- ------------- -----------
315 SPECIALTY LEASING REVENUE .... 776,774.54 563,384.00 213,390.54
320 RECOVERY REVENUE
3211 CAM .......................... 4,049,525.42 4,181,957.98 (132,432.56)
3212 UNBILLED CAM ................. 1,061,681.53 0.00 1,061,681.53
3213 CAM ADJUSTMENT ............... 61,166.88 0.00 61,166.88
3221 FOOD COURT CAM ............... 227,904.81 187,740.00 40,164.81
3222 UNBILLED FOOD COURT CAM ...... (58,422.00) 0.00 (58,422.00)
3223 FOOD COURT CAM ADJ ........... 8,228.49 0.00 8,228.49
3231 PROPERTY TAX ................. 1,685,515.75 1,867,070.47 (181,554.72)
3232 UNBILLED PROPERTY TAX ........ 238,429.71 0.00 238,429.71
3233 PROPERTY TAX ADJUSTMENT ...... (152,794.69) 0.00 (152,794.69)
3241 INSURANCE .................... 423,429.93 479,398.90 (55,968.97)
3242 UNBILLED INSURANCE ........... 4,153.00 0.00 4,153.00
4243 INSURANCE ADJUSTMENT ......... (53,686.75) 0.00 (53,686.75)
3271 ELECTRICITY .................. 1,125,180.57 1,038,960.00 86,220.57
3272 UNBILLED ELECTRICITY ......... (146,694.00) 0.00 (146,694.00)
3281 HVAC ......................... 631,974.22 571,800.00 60,174.22
3287 WATER ........................ 22,172.51 26,280.00 (4,107.49)
------------- ------------- ------------
320 RECOVERY REVENUE ............. 9,127,765.38 8,353,207.35 774,558.03
------------- ------------- ------------
TOTAL REVENUE ................ 23,522,210.52 22,858,930.02 663,280.50
410 LANDLORD EXPENSES
4221 MAINTENANCE--GENERAL ......... 3,812.00 0.00 (3,812.00)
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 30 JUN 1996
<TABLE>
<CAPTION>
CURRENT PERIOD YEAR TO DATE
------------------------------------------- ------------------------------------------------
ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
ACCT DESCRIPTION -------------- ------------ --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
410 LANDLORD EXPENSES
4261 FEDERAL EXPRESS/
MESSENGERS .................... (48.00) 100.00 148.00 357.00 1,200.00 843.00
4621 LEGAL FEES--GENERAL ........... 9,995.13 12,500.00 2,504.87 259,535.81 150,000.00 (109,535.81)
4632 AUDIT FEES--TENANT AUDITS ..... (875.00) 480.00 1,355.00 1,712.50 5,760.00 4,047.50
4651 BANK CHARGES .................. 20.00 190.00 170.00 119.00 2,280.00 2,161.00
4945 LANDLORD
CONTR--MARKETING .............. 8,435.92 9,910.00 1,474.08 104,056.20 118,920.00 14,863.80
4981 BAD DEBTS ..................... 89,691.50 0.00 (89,691.50) 481,979.20 0.00 (481,979.20)
--------- --------- ---------- ---------- ---------- -----------
410 LANDLORD EXPENSES ............. 107,219.55 23,180.00 (84,039.55) 851,571.71 278,160.00 (573,411.71)
415 SPECIALTY LEASING EXPENSES
4111 PAYROLL--GENERAL .............. 1,027.07 1,630.00 602.93 27,941.52 23,340.00 (4,601.52)
4131 PAYROLL TAXES ................. 418.73 130.00 (288.73) 6,556.15 1,980.00 (4,576.15)
4141 EMPLOYEE BENEFITS ............. 332.52 100.00 (232.52) 4,741.33 1,430.00 (3,311.33)
4142 HEALTH INSURANCE .............. 509.15 150.00 (359.15) 1,019.44 1,800.00 780.56
4171 TRAVEL ........................ 0.00 0.00 0.00 3,192.36 5,730.00 2,537.64
4173 MEALS & ENTERTAINMENT ......... 0.00 100.00 100.00 1,248.62 2,450.00 1,201.38
4182 SUBSCRIPTIONS/DUES ............ 0.00 0.00 0.00 164.00 210.00 46.00
4183 TRAINING AND EDUCATION ........ 0.00 0.00 0.00 451.25 710.00 258.75
4221 MAINTENANCE--GENERAL .......... 0.00 430.00 430.00 4,720.93 9,060.00 4,339.07
4231 SUPPLIES--GENERAL ............. 280.15 380.00 99.85 2,366.80 6,060.00 3,693.20
4267 TELEPHONES--AUTO/
CELLULAR ...................... 0.00 0.00 0.00 677.19 0.00 (677.19)
4611 PROFESSIONAL FEES ............. 500.00 650.00 150.00 4,738.45 15,300.00 10,561.55
4621 LEGAL FEES--GENERAL ........... 0.00 100.00 100.00 208.91 1,200.00 991.09
4941 ADVERTISING & PROMOTION ....... 0.00 0.00 0.00 0.00 3,200.00 3,200.00
5116 POSTERS/SIGNAGE ............... 518.28 260.00 (258.28) 3,770.82 3,760.00 (10.82)
---------- --------- ---------- ---------- ---------- -----------
415 SPECIALTY LEASING EXPENSES..... 3,585.90 3,930.00 344.10 61,797.77 76,230.00 14,432.23
420 RECOVERABLE EXPENSES
4321 REAL PROPERTY TAXES ........... 156,040.03 168,926.00 12,885.97 2,211,968.88 2,027,112.00 (184,856.88)
4353 INSURANCE PREMIUMS ............ 0.00 38,970.00 38,970.00 455,178.44 467,640.00 12,461.56
4361 ELECTRICITY--GENERAL .......... 73,099.29 75,290.00 2,190.71 850,985.41 903,480.00 52,494.59
4364 WATER ......................... 1,649.63 1,900.00 250.37 21,965.28 22,800.00 834.72
4373 TENANT HVAC ................... 33,749.45 36,650.00 2,900.55 365,132.80 439,800.00 74,667.20
---------- ---------- ---------- ------------ ------------ -----------
420 RECOVERABLE EXPENSES .......... 264,538.40 321,736.00 57,197.60 3,905,230.81 3,860,832.00 (44,398.81)
430 COMMON AREA MAINTENANCE
4111 PAYROLL--GENERAL .............. 27,115.26 18,440.00 (8,675.26) 311,365.06 249,280.00 (62,085.06)
4112 PAYROLL--MAINTENANCE .......... 16,259.69 16,470.00 210.31 232,615.50 214,100.00 (18,515.50)
4114 PAYROLL--SECURITY ............. 0.00 39,610.00 39,610.00 0.00 514,920.00 514,920.00
4131 PAYROLL TAXES ................. 2,803.28 6,980.00 4,176.72 72,924.72 92,030.00 19,105.28
4141 EMPLOYEE BENEFITS ............. 3,220.49 3,450.00 229.51 70,714.58 44,970.00 (25,744.58)
4142 HEALTH INSURANCE .............. 3,015.72 8,260.00 5,244.28 80,315.64 98,520.00 18,204.36
4151 WORKERS COMPENSATION
INSURANCE ..................... 0.00 6,590.00 6,590.00 105,817.67 79,080.00 (26,737.67)
4162 UNIFORMS--MAINTENANCE ......... 224.29 260.00 35.71 3,727.31 3,120.00 (607.31)
4164 UNIFORMS--SECURITY ............ 0.00 900.00 900.00 753.29 10,800.00 10,046.71
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 30 JUN 1996
<TABLE>
<CAPTION>
CURRENT PERIOD YEAR TO DATE
------------------------------------------ --------------------------------------------
ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
ACCT DESCRIPTION -------------- ----------- --------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
430 COMMON AREA MAINTENANCE
4171 TRAVEL ............................ 51.00 50.00 (1.00) 2,219.89 5,600.00 3,380.11
4173 MEALS & ENTERTAINMENT ............. 0.00 100.00 100.00 2,255.30 1,200.00 (1,055.30)
4181 STAFF AMENITIES ................... 183.75 600.00 416.25 6,258.56 8,200.00 1,941.44
4182 SUBSCRIPTIONS/DUES ................ 0.00 20.00 20.00 608.95 240.00 (368.95)
4183 TRAINING AND EDUCATION ............ 32.09 100.00 67.91 2,713.69 3,150.00 436.31
4185 STAFF EMPLOYMENT FEES ............. 839.70 200.00 (639.70) 2,039.22 2,400.00 360.78
4191 TEMPORARY LABOR ................... 987.50 4,080.00 3,092.50 24,967.92 48,960.00 23,992.08
4212 CONTRACTS--MAINTENANCE ............ 0.00 2,050.00 2,050.00 7,976.00 9,640.00 1,664.00
4214 CONTRACTS--SECURITY ............... 63,825.00 0.00 (63,825.00) 766,747.50 0.00 (766,747.50)
4216 CONTRACTS--CLEANING ............... 33,346.50 34,930.00 1,583.50 404,836.18 419,160.00 14,323.82
4217 CONTRACTS--LANDSCAPING ............ 1,400.00 1,400.00 0.00 16,800.00 16,800.00 0.00
4218 CONTRACTS--LANDSCAPING--EXT 1,500.00 1,500.00 0.00 18,000.00 18,000.00 0.00
4219 CONTRACTS--ELEV & ESCAL ........... 14,625.18 14,080.00 (545.18) 176,047.34 168,960.00 (7,087.34)
4221 MAINTENANCE--GENERAL .............. 10,995.28 11,520.00 524.72 237,779.15 222,240.00 (15,539.15)
4223 MAINTENANCE--TRUCKS &
AUTOS ............................. 52.27 580.00 527.73 2,403.05 6,960.00 4,556.95
4224 MAINTENANCE--PARKING .............. 1,186.92 1,100.00 (86.92) 567,881.68 13,200.00 (554,681.68)
4225 MAINTENANCE--MACH &
EQUIP ............................. 500.78 500.00 (0.78) 15,358.19 6,000.00 (9,358.19)
4226 AIR CONDITIONING REPAIRS .......... 485.94 1,080.00 594.06 62,135.51 31,720.00 (30,415.51)
4227 ELEVATOR & ESCAL--REPAIRS ......... 481.25 1,000.00 518.75 16,131.05 12,000.00 (4,131.05)
4228 PLUMBING & DRAINAGE
REPAIRS ........................... 484.22 2,000.00 1,515.78 30,552.78 24,000.00 (6,552.78)
4229 ROOF/SKYLIGHT REP & MAINT ......... 0.00 1,000.00 1,000.00 11,800.00 12,000.00 200.00
4232 SUPPLIES--MAINTENANCE ............. 981.98 7,500.00 6,518.02 82,162.33 90,000.00 7,837.67
4234 SUPPLIES--SECURITY ................ 25,000.00 1,000.00 (24,000.00) 55,424.65 73,000.00 17,575.35
4237 SUPPLIES--LANDSCAPING ............. 555.70 400.00 (155.70) 9,762.29 14,800.00 5,037.71
4239 SUPPLIES--LIGHTING ................ 1,335.20 3,000.00 1,664.80 23,214.14 36,000.00 12,785.86
4241 ALARM/FIRE/SPRINKLER
SYSTEMS ........................... 2,470.00 1,200.00 (1,270.00) 54,804.69 15,100.00 (39,704.69)
4243 PEST CONTROL ...................... 0.00 580.00 580.00 6,566.00 6,960.00 394.00
4246 TRASH REMOVAL ..................... 13,845.00 13,450.00 (395.00) 165,986.98 161,400.00 (4,586.98)
4248 WIRED MUSIC/PA SYSTEM ............. 435.82 430.00 (5.82) 5,292.28 5,360.00 67.72
4263 POSTAGE ........................... 0.00 380.00 380.00 3,706.08 4,560.00 853.92
4265 RADIOS, PAGERS & BEEPERS .......... 202.45 750.00 547.55 9,081.49 9,000.00 (81.49)
4266 TELEPHONES ........................ 2,309.48 2,560.00 250.52 33,405.44 30,702.00 (2,685.44)
4328 PERSONAL PROPERTY TAXES ........... 0.00 400.00 400.00 6,337.96 4,800.00 (1,537.96)
4331 PERMITS, LICENSES & FEES .......... 3,715.48 5,750.00 2,034.52 45,712.72 50,600.00 4,887.28
4353 INSURANCE PREMIUMS ................ 2,020.79 0.00 (2,020.79) 4,041.96 0.00 (4,041.96)
4354 INSURANCE--CLAIMS ................. (5,475.52) 10,140.00 15,615.52 73,420.62 121,680.00 48,259.38
4355 INSURANCE--LEGAL .................. 36,289.68 2,830.00 (33,459.68) 52,015.19 33,960.00 (18,055.19)
4361 ELECTRICITY--GENERAL .............. 42,741.21 43,380.00 638.79 546,642.57 520,560.00 (26,082.57)
4362 ELECTRICITY--OUTSIDE .............. 6,248.59 9,030.00 2,781.41 73,494.70 108,360.00 34,865.30
4364 WATER ............................. 5,450.12 6,840.00 1,389.88 78,922.45 82,080.00 3,157.55
4371 HVAC .............................. 5,021.26 7,700.00 2,678.74 77,608.93 92,400.00 14,791.07
4611 PROFESSIONAL FEES ................. 1,010.00 2,890.00 1,880.00 28,909.52 54,680.00 25,770.48
4621 LEGAL FEES--GENERAL ............... 3,025.75 0.00 (3,025.75) 50,907.71 0.00 (50,907.71)
4631 AUDIT FEES--GENERAL ............... 1,250.00 1,250.00 0.00 15,000.00 15,000.00 0.00
4921 COMPUTER SERVICES ................. 3,116.59 3,160.00 43.41 67,246.04 42,920.00 (24,326.04)
4931 MACHINERY/EQUIPMENT
RENTAL ............................ 766.53 780.00 13.47 16,941.28 9,360.00 (7,581.28)
4933 AUTO & TRUCK LEASES ............... 0.00 210.00 210.00 10,501.94 2,520.00 (7,981.94)
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 30 JUN 1996
<TABLE>
<CAPTION>
CURRENT PERIOD
-----------------------------------------------
ACTUAL BUDGET VARIANCE
ACCT DESCRIPTION --------------- --------------- ---------------
<S> <C> <C> <C>
430 COMMON AREA MAINTENANCE
4997 OFFICE SUPPLIES ............. 650.63 1,250.00 599.37
6711 DEPR.--GENERAL .............. 170.00 170.00 0.00
------ -------- ------
430 COMMON AREA MAINTENANCE...... 336,752.85 305,880.00 (30,872.85)
440 FOOD COURT CAM
4211 CONTRACTS--GENERAL .......... 5,428.50 7,150.00 1,721.50
4221 MAINTENANCE--GENERAL ........ 0.00 0.00 0.00
4228 PLUMBING & DRAINAGE
REPAIRS ..................... 0.00 200.00 200.00
4232 SUPPLIES--MAINTENANCE ....... 120.00 300.00 180.00
4236 SUPPLIES--CLEANING .......... 0.00 0.00 0.00
4243 PEST CONTROL ................ 0.00 870.00 870.00
4361 ELECTRICITY--GENERAL ........ 2,624.66 2,780.00 155.34
4364 WATER ....................... 1,657.11 1,670.00 12.89
4371 HVAC ........................ 2,279.61 0.00 (2,279.61)
---------- ---------- ----------
440 FOOD COURT CAM .............. 12,109.88 12,970.00 860.12
490 MARKETING DEPARTMENT
3311 PROMOTIONAL CHARGE .......... (33,743.67) (38,858.03) (5,114.36)
3313 LEASE REQUIRED
ADVERTISING ................. (326.19) 0.00 326.19
3314 CHRISTMAS CATALOG ........... 0.00 0.00 0.00
3315 MEDIA FUND .................. (7,133.42) (11,414.00) (4,280.58)
3331 LANDLORD CONTR--REQUIRED..... (8,435.92) (9,910.00) (1,474.08)
3337 LANDLORD CONTR--PAYBACK ..... 4,166.67 4,166.67 0.00
4111 PAYROLL--GENERAL ............ 5,773.89 6,910.00 1,136.11
4131 PAYROLL TAXES ............... 440.12 780.00 339.88
4141 EMPLOYEE BENEFITS ........... 244.90 380.00 135.10
4142 HEALTH INSURANCE ............ 336.18 320.00 (16.18)
4171 TRAVEL ...................... 0.00 0.00 0.00
4173 MEALS & ENTERTAINMENT ....... 0.00 50.00 50.00
4182 SUBSCRIPTIONS/DUES .......... 16.50 0.00 (16.50)
4183 TRAINING AND EDUCATION ...... 0.00 0.00 0.00
4191 TEMPORARY LABOR ............. 0.00 0.00 0.00
4619 AGENCY FEE .................. 2,395.57 0.00 (2,395.57)
4931 MACHINERY/EQUIPMENT
RENTAL ...................... 0.00 0.00 0.00
4997 OFFICE SUPPLIES ............. 30.50 200.00 169.50
5111 COOP ADVERTISING ............ 0.00 0.00 0.00
5112 DIRECT MAIL ................. 0.00 0.00 0.00
5113 DIRECTORIES/BROCHURES ....... 4,310.79 0.00 (4,310.79)
5114 MEDIA PRODUCTION ............ 0.00 0.00 0.00
5115 NEWSPAPER/MAGAZINE .......... 17.95 0.00 (17.95)
5116 POSTERS/SIGNAGE ............. 2,960.93 500.00 (2,460.93)
5118 TELEVISION .................. 0.00 0.00 0.00
5121 HOLIDAY DECOR ............... 0.00 0.00 0.00
5125 SPECIAL EVENTS .............. 0.00 4,460.00 4,460.00
5127 WINDOWS ..................... 0.00 0.00 0.00
<CAPTION>
YEAR TO DATE
------------------------------------------------
ACTUAL BUDGET VARIANCE
ACCT DESCRIPTION --------------- --------------- ----------------
<S> <C> <C> <C>
430 COMMON AREA MAINTENANCE
4997 OFFICE SUPPLIES ............. 15,383.97 15,000.00 (383.97)
6711 DEPR.--GENERAL .............. 2,040.00 2,040.00 0.00
--------- --------- -------
430 COMMON AREA MAINTENANCE...... 4,868,279.66 3,940,110.00 (928,169.66)
440 FOOD COURT CAM
4211 CONTRACTS--GENERAL .......... 80,827.33 85,800.00 4,972.67
4221 MAINTENANCE--GENERAL ........ 771.24 15,000.00 14,228.76
4228 PLUMBING & DRAINAGE
REPAIRS ..................... 600.00 2,400.00 1,800.00
4232 SUPPLIES--MAINTENANCE ....... 5,240.55 3,600.00 (1,640.55)
4236 SUPPLIES--CLEANING .......... 1,363.95 0.00 (1,363.95)
4243 PEST CONTROL ................ 9,729.00 10,440.00 711.00
4361 ELECTRICITY--GENERAL ........ 32,092.13 33,360.00 1,267.87
4364 WATER ....................... 19,329.24 20,040.00 710.76
4371 HVAC ........................ 4,269.93 0.00 (4,269.93)
------------ ------------ -----------
440 FOOD COURT CAM .............. 154,223.37 170,640.00 16,416.63
490 MARKETING DEPARTMENT
3311 PROMOTIONAL CHARGE .......... (416,734.57) (463,112.00) (46,377.43)
3313 LEASE REQUIRED
ADVERTISING ................. (3,914.28) 0.00 3,914.28
3314 CHRISTMAS CATALOG ........... 1,750.00 (45,500.00) (47,250.00)
3315 MEDIA FUND .................. (87,561.23) (136,968.00) (49,406.77)
3331 LANDLORD CONTR--REQUIRED..... (104,056.20) (118,920.00) (14,863.80)
3337 LANDLORD CONTR--PAYBACK ..... 50,000.02 50,000.00 (0.02)
4111 PAYROLL--GENERAL ............ 75,671.62 93,040.00 17,368.38
4131 PAYROLL TAXES ............... 6,853.02 7,440.00 586.98
4141 EMPLOYEE BENEFITS ........... 10,715.18 3,630.00 (7,085.18)
4142 HEALTH INSURANCE ............ 4,491.11 3,840.00 (651.11)
4171 TRAVEL ...................... 1,106.17 2,900.00 1,793.83
4173 MEALS & ENTERTAINMENT ....... 464.67 1,100.00 635.33
4182 SUBSCRIPTIONS/DUES .......... 7,352.53 4,340.00 (3,012.53)
4183 TRAINING AND EDUCATION ...... 917.58 0.00 (917.58)
4191 TEMPORARY LABOR ............. 4,019.01 11,400.00 7,380.99
4619 AGENCY FEE .................. 43,824.16 0.00 (43,824.16)
4931 MACHINERY/EQUIPMENT
RENTAL ...................... 6,858.39 3,700.00 (3,158.39)
4997 OFFICE SUPPLIES ............. 3,133.19 2,400.00 (733.19)
5111 COOP ADVERTISING ............ 1,210.01 93,440.00 92,229.99
5112 DIRECT MAIL ................. 7,789.93 4,600.00 (3,189.93)
5113 DIRECTORIES/BROCHURES ....... 10,262.53 36,390.00 26,127.47
5114 MEDIA PRODUCTION ............ 2,909.09 63,600.00 60,690.91
5115 NEWSPAPER/MAGAZINE .......... 17,383.35 80,910.00 63,526.65
5116 POSTERS/SIGNAGE ............. 14,580.58 6,900.00 (7,680.58)
5118 TELEVISION .................. 44,808.49 75,000.00 30,191.51
5121 HOLIDAY DECOR ............... 45,527.32 19,000.00 (26,527.32)
5125 SPECIAL EVENTS .............. 92,624.31 94,800.00 2,175.69
5127 WINDOWS ..................... 6,743.13 11,500.00 4,756.87
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 12 MONTHS ENDING 30 JUN 1996
<TABLE>
<CAPTION>
CURRENT PERIOD
------------------------------------------------
ACTUAL BUDGET VARIANCE
ACCT DESCRIPTION --------------- --------------- ----------------
<S> <C> <C> <C>
490 MARKETING DEPARTMENT
5161 COMMUNITY RELATIONS ........... 4,743.42 9,500.00 4,756.58
5163 NEWSLETTERS ................... 1,022.08 0.00 (1,022.08)
5165 PUBLIC RELATIONS--TENANTS ..... 0.00 530.00 530.00
5191 GIFT CERTIFICATES ............. 160.00 500.00 340.00
5193 PHOTOGRAPHY ................... 0.00 0.00 0.00
5194 PROMOTIONAL SUPPLIES .......... 1,919.39 320.00 (1,599.39)
5196 TOURISM ....................... 700.00 0.00 (700.00)
9998 YEAR-TO-DATE
EARNINGS--MKT ................. (11,165.07) 0.00 11,165.07
---------- -------- ---------
490 MARKETING DEPARTMENT .......... (31,565.38) (31,565.36) 0.02
---------- ---------- ---------
MALL OPERATING EXPENSES ....... 692,641.20 636,130.64 (56,510.56)
---------- ---------- ----------
NET OPERATING INCOME (NOI)..... 1,213,163.18 1,421,276.71 (208,113.53)
<CAPTION>
YEAR TO DATE
--------------------------------------------------
ACTUAL BUDGET VARIANCE
ACCT DESCRIPTION --------------- --------------- ------------------
<S> <C> <C> <C>
490 MARKETING DEPARTMENT
5161 COMMUNITY RELATIONS ........... 61,840.69 41,610.00 (20,230.69)
5163 NEWSLETTERS ................... 1,073.93 1,200.00 126.07
5165 PUBLIC RELATIONS--TENANTS ..... 430.94 6,360.00 5,929.06
5191 GIFT CERTIFICATES ............. 6,873.90 6,000.00 (873.90)
5193 PHOTOGRAPHY ................... 3.66 0.00 (3.66)
5194 PROMOTIONAL SUPPLIES .......... 7,749.27 3,840.00 (3,909.27)
5196 TOURISM ....................... 35,235.80 35,560.00 324.20
9998 YEAR-TO-DATE
EARNINGS--MKT ................. 38,062.70 0.00 (38,062.70)
--------- --------- ----------
490 MARKETING DEPARTMENT .......... 0.00 0.00 0.00
--------- --------- ----------
MALL OPERATING EXPENSES ....... 9,841,103.32 8,325,972.00 (1,515,131.32)
------------ ------------ -------------
NET OPERATING INCOME (NOI)..... 13,681,107.20 14,532,958.02 (851,850.82)
</TABLE>
<PAGE>
WESTSIDE PAVILION
CENTER INCOME STATEMENT SUMMARY
FOR THE 6 MONTHS ENDING 31 DECEMBER, 1996
<TABLE>
<CAPTION>
MONTH YEAR TO DATE
-------------------------------------------- ---------------------------------------------
VARIANCE VARIANCE
ACTUAL BUDGET B(W) ACTUAL BUDGET B(W)
----------- -------------- ------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCOME
MINIMUM RENT 1,048,298 1,078,489 (30,191) 6,375,371 6,242,991 132,380
PERCENTAGE RENT 0 700 (700) 26,594 6,096 20,498
SPECIALTY LEASING 47,645 39,625 8,020 527,606 418,220 109,386
STORAGE RENT 3,830 3,500 330 52,416 21,000 31,416
NORDSTROM STORAGE RENT 39,100 37,500 1,600 234,600 225,000 9,600
CAPITAL REVENUE 10,401 10,500 (99) 61,473 63,000 (1,527)
OTHER INCOME 4,022 1,000 3,022 12,788 6,000 6,788
--------- --------- ------- --------- --------- -------
TOTAL MALL NON-RECOVERY 1,153,297 1,171,314 (18,017) 7,290,848 6,982,307 308,541
--------- --------- ------- --------- --------- -------
MALL RECOVERABLE REVENUE
CAM 427,951 348,378 79,573 2,139,737 2,080,387 59,350
CAM ADJUSTMENT 0 0 0 (439) 0 (439)
FOOD COURT CAM 12,449 14,363 (1,914) 78,544 88,902 (10,358)
PROPERTY TAX 120,115 137,501 (17,386) 799,528 825,006 (25,478)
INSURANCE 233,208 37,846 195,362 328,129 227,077 101,051
HVAC 56,301 53,000 3,301 364,917 318,000 46,917
ELECTRICITY 92,571 88,453 4,118 527,964 525,506 2,458
WATER/SEWER 2,036 2,243 (207) 11,632 13,455 (1,823)
--------- --------- ------- --------- --------- -------
TOTAL MALL RECOVERY 944,631 681,783 262,847 4,250,011 4,078,333 171,677
--------- --------- ------- --------- --------- -------
TOTAL REVENUE 2,097,928 1,853,097 244,830 11,540,859 11,060,640 480,218
--------- --------- ------- ---------- ---------- -------
LANDLORD EXPENSE
LEGAL FEES 7,693 12,500 4,807 10,107 75,000 64,893
SPECIALTY LEASING 1,830 3,573 1,743 24,007 36,217 12,210
BAD DEBT 26,811 18,531 (8,280) 58,843 110,606 51,764
OTHER 8,894 9,248 354 63,004 58,360 (4,643)
--------- --------- ------- ---------- ---------- -------
TOTAL LANDLORD EXPENSE 45,228 43,852 (1,376) 155,961 280,184 124,223
--------- --------- ------- ---------- ---------- -------
RECOVERABLE EXPENSE
PROPERTY TAXES 139,013 156,703 17,689 919,491 940,217 20,725
INSURANCE PREMIUM 248,277 39,910 (208,367) 348,748 239,459 (109,289)
ELECTRICITY 80,230 73,711 (6,519) 459,089 437,922 (21,167)
WATER/SEWER 1,401 1,950 549 10,871 11,700 829
HVAC 28,117 32,277 4,160 187,965 191,758 3,794
--------- --------- -------- ---------- ---------- --------
TOTAL RECOVERABLE EXPENSE 497,039 304,551 (192,488) 1,926,164 1,821,056 (105,108)
--------- --------- -------- ---------- ---------- --------
CAM 408,101 333,373 (74,728) 2,038,203 1,990,782 (47,422)
FOOD COURT 10,908 13,057 2,149 71,306 80,820 9,514
MARKETING 0 1,748 1,748 0 0 0
--------- --------- -------- ---------- ---------- --------
TOTAL OPERATING EXPENSES 961,276 696,580 (264,696) 4,191,634 4,172,841 (18,793)
--------- --------- --------- ---------- ---------- --------
NET OPERATING INCOME 1,136,652 1,156,517 (19,865) 7,349,225 6,887,799 461,426
--------- --------- --------- ---------- ---------- --------
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 6 MONTHS ENDING 31 DECEMBER 1996
<TABLE>
<CAPTION>
CURRENT PERIOD YEAR TO DATE
---------------------------------------------------------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
- ------------------------------- -------------- -------------- -------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
310 RENTAL REVENUE
11 MINIMUM RENT 1,048,298.36 1,078,489.00 (30,190.64) 6,375,371.32 6,242,990.83 132,380.49
15 PERCENTAGE RENT 0.00 700.00 (700.00) 599.72 6,095.98 (5,496.26)
3116 UNBILLED PERCENTAGE RENT 0.00 0.00 0.00 25,994.00 0.00 25,994.00
3141 STORAGE RENT 3,830.39 3,500.00 330.39 52,415.91 21,000.00 31,415.91
42 NORDSTROM STORAGE RENT 39,100.00 37,500.00 1,600.00 234,600.00 225,000.00 9,600.00
3165 CAPITAL REVENUE 10,401.28 10,500.00 (98.72) 61,473.01 63,000.00 (1,526.99)
3199 OTHER INCOME 4,021.53 1,000.00 3,021.52 12,787.89 6,000.00 6,787.89
-------------- -------------- -------------- --------------- --------------- -------------
0 RENTAL REVENUE 1,105,651.56 1,131,689.00 (26,037.44) 6,763,241.85 6,564,086.81 199,155.04
315 SPECIALTY LEASING REVENUE
31 CART/RMU REVENUE 19,344.31 720.00 18,624.31 230,495.25 247,400.00 (16,904.75)
33 IN-LINE REVENUE 19,489.61 30.00 (10,510.39) 212,971.07 113,000.00 99,971.07
3134 DIRECTORY REVENUE 1,150.00 30,000.00 (975.00) 8,200.00 11,775.00 (3,575.00)
3135 TRADE SHOW REVENUE 0.00 2,125.00 0.00 3,450.00 3,000.00 450.00
136 TELEPHONE REVENUE 3,512.95 0.00 1,712.95 20,685.14 13,166.00 7,519.14
137 PHOTO REVENUE 0.00 1,800.00 0.00 136.36 0.00 136.36
3138 VENDING REVENUE 3,437.40 0.00 1,437.40 20,579.37 12,000.00 8,579.37
3139 OTHER SPEC LEASING REVENUE 711.20 2,000.00 (2,268.80) 31,089.04 17,879.00 13,210.04
-------------- -------------- -------------- --------------- --------------- -------------
315 SPECIALY LEASING REVENUE 47,645.47 2,980.00 8,020.47 527,606.23 418,220.00 109,386.23
20 RECOVERY REVENUE
211 CAM 338,950.71 344,105.45 (5,154.74) 2,025,736.53 1,974,381.70 51,254.83
3212 UNBILLED CAM 89,000.00 4,272.51 84,727.49 114,000.00 106,005.23 7,994.77
3213 CAM ADJUSTMENT 0.00 0.00 0.00 (439.00) 0.00 (439.00)
221 FOOD COURT CAM 22,448.63 14,362.69 8.085.94 130,543.58 88,902.02 41,641.56
222 UNBILLED FOOD COURT CAM (10,000.00) 0.00 (10.,000.00) (52,000.00) 0.00 (52,000.00)
3231 PROPERTY TAX 139,115.13 137,630.16 1,484.97 833,528.04 789,602.87 43,924.17
3232 UNBILLED PROPERTY TAX (19,000.00) (129.23) (18,870.77) (34,000.00) 35,410.71 (69,401.71)
241 INSURANCE 31,208.19 38,020.85 (6,812.66) 184,128.55 227,968.65 (43,840.10)
3242 UNBILLED INSURANCE 202,000.00 (174.62) 202,174.62 144,000.00 (891.25) 144,891.25
3271 ELECTRICITY 95,570.84 88,453.17 7,117.67 572,963.94 525,506.44 47,457.50
3272 UNBILLED ELECTRICITY (3,000.00) 0.00 (3,000.00) (45,000.00 0.00 (45,000.00)
3281 HVAC 56,301.42 53,000.00 3,301.42 364,916.92 318,000.00 46,916.92
3287 WATER 2,035.82 2,242.50 (206.68) 11,631.94 13,455.00 (1,823.06)
-------------- -------------- -------------- --------------- --------------- -------------
320 RECOVERY REVENUE 944,630.74 681,783.48 262,847.26 4,250,010.50 4,078,333.37 171,677.13
-------------- -------------- -------------- --------------- --------------- -------------
TOTAL REVENUE 2,097,927.77 1,853,097.48 244,830.29 11,540,858.58 11,060,640.18 480,218.40
410 LANDLORD EXPENSES
4221 MAINTENANCE -GENERAL 0.00 250.00 250.00 0.00 1,500.00 1,500.00
4261 FEDERAL EXPRESS/MESSENGERS 138.25 70.00 (68.25) 243.50 420.00 176.50
4355 INSURANCE -LEGAL 0.00 0.00 0.00 (196.00) 0.00 196.00
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 6 MONTHS ENDING 31 DECEMBER 1996
<TABLE>
<CAPTION>
CURRENT PERIOD YEAR TO DATE
----------------------------------------------------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
- ----------------------------------- ------------ ------------ -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
10 LANDLORD EXPENSES
4611 PROFESSIONAL FEES 0.00 0.00 0.00 7,711.93 0.00 (7,711.93)
621 LEGAL FEES -GENERAL 7,692.94 12,500.00 4,807.06 10,107.30 75,000.00 64,892.70
632 AUDIT FEES -TENANT AUDITS 0.00 0.00 0.00 2,587.50 2,875.00 287.50
651 BANK CHARGES 20.00 50.00 30.00 60.00 300.00 240.00
4945 LANDLORD CONTR -MARKETING 8,735.37 8,877.51 142.14 52,596.61 53,265.09 668.48
981 BAD DEBTS 26,810.72 18.530.97 (8,279.75) 58,842.72 110,606.40 51,763.68
------------ ------------ -------------- -------------- -------------- --------------
410 LANDLORD EXPENSES 43,397.28 40,278.48 (3,118.80) 131,953.56 243,966.49 112,012.93
15 SPECIALTY LEASING EXPENSES
111 PAYROLL -GENERAL (1.26) 1,838.59 1,839.85 13,112.81 11,950.82 (2,161.99)
4131 PAYROLL TAXES 0.00 177.98 177.98 1,091.51 1,156.84 65.33
4141 EMPLOYEE BENEFITS 0.07 110.32 110.25 950.59 717.05 (233.54)
142 HEALTH INSURANCE 184.68 161.41 (23.27) 478.71 968.46 489.75
171 TRAVEL 214.18 0.00 (214.18) 373.03 1,000.00 626.97
4173 MEALS & ENTERTAINMENT 10.12 100.00 89.88 119.10 800.00 680.90
182 SUBSCRIPTIONS/DUES 0.00 0.00 0.00 160.00 165.00 5.00
221 MAINTENANCE -GENERAL 40.00 430.00 390.00 2,891.07 9,580.00 6,688.93
4231 SUPPLIES -GENERAL 0.00 75.00 75.00 850.15 2,730.00 1,879.85
4267 TELEPHONES -AUTO/CELLULAR 113.47 70.00 (43.47) 561.91 420.00 (141.91)
611 PROFESSIONAL FEES 1,033.00 350.00 (683.00) 1,150.46 2,100.00 949.54
621 LEGAL FEES -GENERAL 0.00 0.00 0.00 0.00 300.00 300.00
4941 ADVERTISING & PROMOTION 0.00 0.00 0.00 150.00 2,400.00 2,250.00
5116 POSTERS/SIGNAGE 236.00 260.00 24.00 1,118.00 1,929.00 811.00
------------ ------------ -------------- -------------- -------------- --------------
415 SPECIALTY LEASING EXPENSES 1,830.26 3,573.30 1,743.04 24,007.34 36,217.17 12,209.83
420 RECOVERABLE EXPENSES
4321 REAL PROPERTY TAXES 129,013.40 156,702.75 17,689.35 919,491.05 940,216.50 20,725.45
4353 INSURANCE PREMIUMS 248,276.97 39,909.76 (208,367.21) 348,747.97 239,458.59 (109,289.38)
4361 ELECTRICITY -GENERAL 80,229.88 73,710.98 (6,518.90) 459,088.84 437,922.03 (21,166.81)
4364 WATER 533.82 1,950.00 1,416.18 5,088.62 11,700.00 6,611.38
4365 SEWER 867.59 0.00 (867.59) 5,782.29 0.00 (5,782.29)
4373 TENANT HVAC 28,117.35 32,277.08 (4,159.73 187,964.73 191,758.42 3,793.69
------------ ------------ -------------- -------------- -------------- --------------
420 RECOVERABLE EXPENSES 497,039.01 304,550.57 (192,488.44) 1,926,163.50 1,821,055.54 (105,107.96)
430 COMMON AREA MAINTENANCE
4111 PAYROLL -GENERAL 20,981.40 21,629.26 647.86 130,129.32 138,653.50 8,524.18
4112 PAYROLL -MAINTENANCE 15,840.39 15,486.07 (354.32) 100,192.53 100,659.44 466.91
4131 PAYROLL TAXES 1,337.95 3,053.12 715.17 16,773.16 19,845.28 3,072.12
4141 EMPLOYEE BENEFITS 1,437.00 3,454.24 2,017.24 12,922.96 21,630.53 8,707.57
4142 HEALTH INSURANCE 3,057.58 4,240.55 1,182.97 15,643.08 25,289.45 9,646.37
4151 WORKERS COMPENSATION INSURANCE 915.44 1,624.24 708.80 9,036.02 9,745.45 709.43
4161 UNIFORMS -GENERAL 0.00 0.00 0.00 150.80 0.00 (150.80)
4162 UNIFORMS -MAINTENANCE 137.51 260.00 122.49 1,441.36 1,560.00 118.64
4171 TRAVEL 1,807.48 50.00 (1,757.48) 1,911.21 3,300.00 1,388.79
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 6 MONTHS ENDING 31 DECEMBER 1996
<TABLE>
<CAPTION>
CURRENT PERIOD YEAR TO DATE
--------------------------------------------------------------------------------
ACT DESCRIPTION ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
- ---------------------------------- ----------- ----------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
0 COMMON AREA MAINTENANCE 18.55 150.00 131.45 311.17 900.00 588.83
4173 MEALS & ENTERTAINMENT 1,839.69 4,600.00 2,760.31 4,562.09 8,570.00 4,007.91
81 STAFF AMENITIES 0.00 50.00 50.00 410.23 300.00 (110.23)
82 SUBSCRIPTIONS/DUES 0.00 100.00 100.00 100.00 1,250.00 1,150.00
4183 TRAINING AND EDUCATION 0.00 200.00 200.00 0.00 1,200.00 1,200.00
4185 STAFF EMPLOYMENT FEES 5,788.00 0.00 (5,788.00) 13,574.84 10,000.00 (3,574.84)
91 TEMPORARY LABOR 0.00 0.00 0.00 3,988.00 3,988.00 0.00
12 CONTRACTS -MAINTENANCE 63,825.00 63,825.00 0.00 382,950.00 382,950.00 0.00
4214 CONTRACTS -SECURITY 36,854.94 35,000.00 (1,854.94) 209,374.32 210,000.00 625.68
4216 CONTRACTS -CLEANING 1,400.00 1,400.00 0.00 7,200.00 8,400.00 1,200.00
17 CONTRACTS -LANDSCAPING -EXT 1,500.00 1,500.00 0.00 10,200.00 9,000.00 (1,200.00)
4219 CONTRACTS -ELEV & ESCAL 13,625.18 14,500.00 (125.18) 87,751.08 87,000.00 (751.08)
4221 MAINTENANCE -GENERAL 19,306.89 11,603.58 (7,703.31) 110,647.42 90,971.50 (19,675.92)
23 MAINTENANCE -TRUCKS & AUTOS 0.00 300.00 300.00 1,217.85 1,800.00 582.15
24 MAINTENANCE -PARKING 15,067.63 1,186.92 (13,880.71) 65,736.62 7,121.50 (58,615.12)
4225 MAINTENANCE -MACH & EQUIP 426.83 250.00 (176.83) 1,232.39 1,500.00 267.61
26 AIR CONDITIONING REPAIRS 8,776.18 1,500.00 (7,276.18) 40,154.38 13,500.00 (26,654.38)
27 ELEVATOR & ESCAL -REPAIRS 9,863.70 1,500.00 (8,363.70) 15,234.74 9,000.00 (6,234.74)
28 PLUMBINB & DRAINAGE REPAIRS 50.00 1,000.00 950.00 9,799.65 13,000.00 3,220.35
4229 ROOF/SKYLIGHT REP & MAINT 0.00 1,000.00 1,000.00 725.91 6,000.00 5,273.09
232 SUPPLIES -MAINTENANCE 8,169.47 8,000.00 (169.47) 29,585.31 48,000.00 18,414.69
235 SUPPLIES -SECURITY 0.00 0.00 0.00 1,768.37 0.00 (1,768.37)
4237 SUPPLIES -LANDSCAPING 6,299.27 8,250.00 1,950.73 8,449.07 9,500.00 1,050.93
4239 SUPPLIES -LIGHTING 5,622.93 2,300.00 (3,322.93) 11,776.51 13,800.00 2,023.49
241 ALARM/FIRE/SPRINKLER SYSTEMS 5,997.40 500.00 (5,497.40) 9,963.42 11,100.00 1,136.58
243 PEST CONTRL 610.00 580.00 (30.00) 3,710.00 3,480.00 (230.00)
4246 TRASH REMOVAL 14,820.00 13,000.00 (1,820.00) 78,962.47 78,000.00 (962.47)
248 WIRED MUSIC/PA SYSTEM 435.82 300.00 (135.82) 2,614.92 1,800.00 (814.92)
263 POSTAGE 0.00 380.00 380.00 1,000.00 2,280.00 1,280.00
265 RADIOS, PAGERS & BEEPERS 173.40 900.00 726.00 1,515.39 5,400.00 3,884.61
4266 TELEPHONES 357.44 2,750.00 2,392.57 12,972.64 16,500.00 3,527.36
328 PERSONAL PROPERTY TAXES 0.00 300.00 300.00 344.69 1,800.00 1,455.31
331 PERMITS, LICENSES & FEES 0.00 5,620.00 5,620.00 10,770.51 24,240.00 13,469.49
4353 INSURANCE -PREMIUMS 0.00 3,987.57 3,987.57 0.00 23,925.41 23,925.41
4354 INSURANCE -CLAIMS 45,174.00 7,635.17 (37,538.83) 67,323.70 45,811.00 (21,512.70)
355 INSURANCE -LEGAL 16,657.02 2,500.00 (14,157.02) 48,527.34 15,000.00 (33,527.34)
361 ELECTRICITY -GENERAL 39,481.99 46,973.99 7,492.00 250,963.59 281,843.93 30,880.34
4362 ELECTRICITY -OUTSIDE 6,663.54 6,500.81 (162.73) 40,811.84 39,004.88 (1,806.96)
4364 WATER 2,587.80 3,195.45 607.65 22,563.60 19,172.70 (3,390.90)
365 SEWER 4,184.07 3,973.20 (210.87) 24,198.95 24,807.20 608.25
371 HVAC 10,204.43 7,711.51 (2,492.92) 79,423.31 46,269.06 (33,154.25)
4611 PROFESSIONAL FEES 645.00 5,750.00 5,105.00 11,263.21 14,500.00 3,236.79
4621 LEGAL FEES -GENERAL 0.00 2,083.33 2,083.33 16,185.38 12,500.00 (3,685.38)
631 AUDIT FEES -GENERAL 0.00 1,250.00 1,250.00 0.00 7,500.00 7,500.00
921 COMPUTER SERVICES 2,994.19 2,983.83 (10.36) 18,428.14 17,903.00 (525.14)
4931 MACHINERY/EQUIPMENT RENTAL 10,910.34 4,815.00 (6,095.34) 27,210.13 29,490.00 2,279.87
4997 OFFICE SUPPLIES 255.70 1,500.00 1,244.30 4,518.86 9,000.00 4,481.14
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 6 MONTHS ENDING 31 DECEMBER 1996
<TABLE>
<CAPTION>
CURRENT PERIOD YEAR TO DATE
----------------------------------------------------------------------------------------
ACT DESCRIPTION ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
- -------------------------------- ------------- ------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0 COMMON AREA MAINTENANCE
6711 DEPR. -GENERAL 0.00 170.00 170.00 0.00 1,020.00 1,020.00
------------- ------------- ------------- -------------- -------------- -------------
0 COMMON AREA MAINTENANCE 408,101.15 333,372.84 (74,728.31) 2,038,203.48 1,990,781.83 (47,421.65)
440 FOOD COURT CAM
216 CONTRACTS -CLEANING 5,999.64 7,200.00 1,200.36 34,284.42 43,200.00 8,915.58
21 MAINTENANCE -GENERAL 0.00 200.00 200.00 0.00 2,800.00 2,800.00
28 PLUMBING & DRAINAGE REPAIRS 0.00 200.00 200.00 2,873.38 1,200.00 (1,673.38)
4231 SUPPLIES-GENERAL 0.00 200.00 200.00 4,232.78 2,200.00 (2,032.78)
243 PEST CONTRL 915.00 870.00 (45.00) 5,565.00 5,220.00 (345.00)
61 ELECTRICITY -GENERAL 2,832.10 2,706.99 (125.11) 15,258.68 15,720.02 461.34
4364 WATER 429.50 756.00 326.50 4,186.40 4,716.00 529.60
4365 SEWER 731.62 924.00 192.38 4,904.99 5,764.00 859.01
------------- ------------- ------------- -------------- -------------- -------------
0 FOOD COURT CAM 10,907.86 13,056.99 2,149.13 71,305.65 80,820.02 9,514.37
490 MARKETING DEPARTMENT
311 PROMOTIONAL CHARGE (34,941.48) (35,455.96) (514.48) (210,589.08) (212,735.78) (2,146.70)
313 LEASE REQUIRED ADVERTISING (225.00) (326.19) (101.19) (1,451.19) (1,957.14) (505.95)
3315 MEDIA FUND (7,781.28) (7,178.32) 602.96 (46,440.72) (43,069.94) 3,370.78
331 LANDLORD CONTR -REQUIRED (8,735.37) (8,877.51) (142.14) (52,596.61) (53,265.09) (668.48)
111 PAYROLL -GENERAL 7,103.41 6,576.00 (527.41) 35,646.95 42,744.00 7,097.05
131 PAYROLL TAXES 520.24 658.92 138.68 3,113.18 4,282.99 1,169.81
4141 EMPLOYEE BENEFITS 0.00 220.32 220.32 (244.90) 1,432.08 1,676.98
142 HEALTH INSURANCE 608.36 351.33 (257.03) 1,990.94 2,107.97 117.03
171 TRAVEL 572.68 0.00 (572.68) 597.72 1,000.00 402.28
4173 MEALS & ENTERTAINMENT 76.67 50.00 (26.67) 280.62 300.00 19.38
4182 SUBSCRIPTIONS/DUES 494.00 0.00 (494.00) 2,638.00 600.00 (2,038.00)
191 TEMPORARY LABOR 0.00 0.00 0.00 97.50 2,500.00 2,402.50
619 AGENCY FEE 13,063.97 6,884.05 (6,179.92) 30,269.28 41,304.30 11,035.02
4931 MACHINERY/EQUIPMENT RENTAL 0.00 0.00 0.00 1,722.45 5,000.00 3,277.55
4981 BAD DEBTS 0.00 859.21 859.21 0.00 5,155.26 5,155.26
112 DIRECT MAIL 32.00 0.00 (32.00) 544.00 1,600.00 1,056.00
113 DIRECTORIES/BROCHURES 6,504.16 0.00 (6,504.16) 8,102.89 5,779.00 (2,323.89)
5114 MEDIA PRODUCTION 0.00 0.00 0.00 312.02 0.00 (312.02)
115 NEWSPAPER/MAGAZINE 5,557.95 0.00 (5,557.95) 11,216.07 11,020.00 (196.07)
116 POSTERS/SIGNAGE 8,068.13 310.00 (7,758.13) 16,248.84 3,660.00 (12,588.84)
5118 TELEVISION 15,000.00 0.00 (15,00.00) 15,000.00 15,000.00 0.00
5119 BILLBOARDS 38,441.87 0.00 (38,441.87) 38,441.87 0.00 (38,441.87)
5121 HOLIDAY DECOR 24,044.95 26,024.00 1,979.05 52,696.78 58,024.00 5,327.22
5122 KIDS CLUB 1,505.90 1,200.00 (305.90) 5,105.90 7,800.00 2,694.10
5125 SPECIAL EVENTS 10,077.48 4,322.00 (5,755.48) 29,979.81 60,331.00 30,351.19
5161 COMMUNITY RELATIONS 10,130.11 2,000.00 (8,130.11) 26,795.90 8,000.00 (18,795.90)
5163 MEWSLETTERS 0.00 0.00 0.00 290.50 300.00 9.50
5165 PUBLIC RELATIONS -TENANTS 0.00 250.00 250.00 510.28 1,500.00 989.72
5191 GIFT CERTIFICATES 0.00 360.00 360.00 210.00 1,440.00 1,230.00
5193 PHOTOGRAPHY 0.00 0.00 0.00 497.95 0.00 (497.95)
</TABLE>
<PAGE>
INCOME STATEMENT
WESTSIDE PAVILION
FOR THE 6 MONTHS ENDING 31 DECEMBER 1996
<TABLE>
<CAPTION>
CURRENT PERIOD YEAR TO DATE
--------------------------------------------------------------------------------------------
ACCT DESCRIPTION ACTUAL BUDGET VARIANCE ACTUAL BUDGET VARIANCE
- ----------------------------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
0 MARKETING DEPARTMENT
5194 PROMOTIONAL SUPPLIES 2,633.43 1,520.00 (1,113.43) 7,315.61 11,439.00 4,123.39
98 YEAR-TO-DATE EARNINGS -MKT (93,441.24) 0.00 93,441.24 0.00 0.00 0.00
-------------- -------------- -------------- -------------- -------------- --------------
490 MARKETING DEPARTMENT 0.00 1,747.85 1,747.85 0.00 (0.35) (0.35)
-------------- -------------- -------------- -------------- -------------- --------------
MALL OPERATING EXPENSES 961,275.56 696,580.03 (264,695.53) 4,191,633.53 4,172,840.70 (18,792.83)
-------------- -------------- -------------- -------------- -------------- --------------
NET OPERATING INCOME (NOI) 1,136,652.21 1,156,517.45 (19,865.24) 7,349,225.05 6,887,799.48 461,425.57
NOI AFTER MALL INTEREST 1,136,652.21 1,156,517.45 (19,865.24) 7,349,225.05 6,887,799.48 461,425.57
720 MISC. INCOME/EXPENSE
672 MALL MANAGEMENT FEES 30,000.00 0.00 (30,000.00) 180,000.00 0.00 (180,000.00)
-------------- -------------- -------------- -------------- -------------- --------------
720 MISC. INCOME/EXPENSE 30,000.00 0.00 (30,000.00) 180,000.00 0.00 (180,000.00)
70 DEPRECIATION & AMORTIZATION
6528 AMORT. -TENANT BUYOUTS 551.00 0.00 (551.00) 1,102.00 0.00 (1,102.00)
-------------- -------------- -------------- -------------- -------------- --------------
70 DEPRECIATION & AMORTIZATION 551.00 0.00 (551.00) 1,102.00 0.00 (1,102.00)
OPERATING/OVERHEAD EXPENSES 0.00 0.00 0.00 0.00 0.00 0.00
-------------- -------------- -------------- -------------- -------------- --------------
NET INC BEFORE TAX & EXT ITEMS 1,106,101.21 1,156,517.45 (50,416.24) 7,168,123.05 6,887,799.48 280,323.57
10 TAX EXPENSE
0196 INCOME TAX PENALTIES 0.00 0.00 0.00 755.78 0.00 (755.78)
-------------- -------------- -------------- -------------- -------------- --------------
10 TAX EXPENSE 0.00 0.00 0.00 755.78 0.00 (755.78)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCOME BEFORE EXT ITEMS 1,106,101.21 1,156,517.45 (50,416.24) 7,167,367.27 6,887,799.48 279,567.79
-------------- -------------- -------------- -------------- -------------- --------------
NET INCOME (LOSS) 1,106,101.21 1,156,517.45 (50,416.24) 7,167,367.27 6,887,799.48 279,567.79
</TABLE>
<PAGE>
(01) WESTSIDE PAVILLON PRGM: UGLBRO62
CENTER INCOME STATEMENT SUMMARY DATE: 12/27/95
FOR THE 6 MONTHS ENDING 31 DEC 1995 TIME: 21:16:51
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
MONTH YEAR TO DATE
- -------------------------------------------------------------------------------------------------------
VARIANCE VARIANCE
ACUTAL BUDGET B(W) ACTUAL BUDGET B(W)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCOME
MINIMUM RENT 1,016,448 1,159,618 (143,169) 5,994,456 5,936,143 58,313
PERCENTAGE RENT 16,834 20,483 (3,649) 66,363 86,409 (20,046)
SPECIALTY LEASING 52,693 25,605 27,088 447,304 368,804 78,500
STORAGE RENT 22,349 20,000 2,549 117,376 120,000 (2,624)
NORDSTROM STORAGE RENT 39,100 39,100 0 234,600 234,600 0
CAPITAL REVENUE 1,226 14,000 (2,774) 63,088 84,000 (20,912)
MARKETING 4,167 4,167 0 25,000 25,000 0
OTHER INCOME (9,836) 1,000 (10,836) 43,317 6,000 37,517
- -------------------------------------------------------------------------------------------------------
TOTAL MALL NON-RECOVERY 1,153,181 1,283,973 (130,791) 6,991,703 6,860,956 130,747
- -------------------------------------------------------------------------------------------------------
MALL RECOVERABLE
REVENUE
CAM 250,992 377,483 (126,491) 2,132,776 1,922,627 210,148
CAM ADJUSTMENT 0 0 0 72,010 0 72,010
FOOD COURT CAM 9,383 14,270 (4,887) 80,178 102,120 (21,942)
FOOD COURT CAM ADJ. 8,228 0 8,228 8,228 0 8,228
PROPERTY TAX 155,784 169,449 (13,665) 1,045,343 854,307 191,536
PROPERTY TAX ADJUSTMENT 0 0 0 (147,460) 0 (147,460)
INSURANCE 45,105 43,486 1,619 267,288 218,662 48,626
INSURANCE ADJUSTMENT 0 0 0 {52,284) 0 (52,284)
HVAC 54,263 47,650 6,613 299,521 285,900 13,621
ELECTRICITY 109,909 86,580 23,329 535,938 519,480 16,458
WATER/SEWER 1,947 2,190 (243) 12,446 13,140 (694)
- -------------------------------------------------------------------------------------------------------
TOTAL MALL RECOVERY 635,612 741,108 (105,496) 4,254,485 3,916,237 338,249
- -------------------------------------------------------------------------------------------------------
TOTAL REVENUE 1,788,794 2,025,081 (236,287) 11,246,188 10,777,192 468,995
- -------------------------------------------------------------------------------------------------------
LANDLORD EXPENSE
LEGAL FEES 350 12,500 12,150 151,110 75,000 (76,110)
SPECIALTY LEASING 4,316 3,930 (386) 26,006 43,360 17,355
BAD DEBT (3,339) 0 3,339 327,632 0 (327,632)
OTHER 9,754 10,680 926 55,729 64,080 8,351
- -------------------------------------------------------------------------------------------------------
TOTAL LANDLORD EXPENSE 11,082 27,110 16,028 560,477 182,440 (378,037)
- -------------------------------------------------------------------------------------------------------
RECOVERABLE EXPENSE
PROPERTY TAXES 169,330 168,926 (404) 1,136,785 1,013,556 (123,229)
INSURANCE PREMIUM 43,792 38,970 (4,822) 259,503 233,820 (25,683)
ELECTRICITY 20,862 75,290 54,428 371,423 451,740 80,317
WATER/SEWER 1,750 1,900 150 11,810 11,400 (410)
HVAC 18,607 36,650 18,043 185,772 219,900 34,128
- -------------------------------------------------------------------------------------------------------
TOTAL RECOVERABLE EXPENSE 254,342 321,736 67,394 1,965,293 1,930,416 (34,877)
- -------------------------------------------------------------------------------------------------------
CAM 236,793 305,880 69,087 2,012,052 2,031,900 19,848
FOOD COURT 8,530 12,970 4,440 72,889 92,820 19,931
MARKETING 37,555 37,555 0 156,623 156,623 0
- -------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 548,300 705,251 156,950 4,767,333 4,394,199 (373,135)
- -------------------------------------------------------------------------------------------------------
NET OPERATING INCOME 1,240,493 1,319,830 (79,337) 6,478,855 6,382,994 95,861
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
4.0 ADA PROVISIONS
4.1 BACKGROUND
Westside Pavilion was built in two phases. Pavilion One was constructed in
1985 and Pavilion Two was constructed in 1990. In Appendix G of this report,
Pavilion One will be referred to as "PI" and Pavilion Two as "PII".
Pavilion One was built before the passage of the Americans with Disabilities
Act of 1990 (ADA) and consequently there are many areas where accessibility
does not comply with ADA requirements.
Pavilion Two was built after the passage of ADA and is more closely compliant
with its provisions than Pavilion One. Refer to the body of the report for
detailed comments.
Because ADA is a civil rights law and not a building code, the owners of
Westside Pavilion have a continuing obligation to remove barriers when
"readily achievable". To show good faith in the removal of barriers, the
owners should prepare a plan, including a time-table, indicating when
barriers will be removed. Refer to pages 1 and 2 of G-8 Audit Report for
accessibility exceptions.
Refer to APPENDIX G for ADA AND CBC BACKGROUND INFORMATION and AUDIT REPORT.
Refer to G-8 Audit Report page numbers indicated adjacent to each heading
following for ADA and CBC requirements and comments for each design features.
4.2 ACCESSIBLE SITES AND PARKING (REFER TO PAGES 3 THROUGH 15)
None of the vehicular entrances to the Pavilion One garage are 80" high,
rendering all of the parking spaces inside the garage non-compliant. In
addition to restricted headroom, there are many other non-compliant Design
Features. Even though it would be "technically infeasible" to increase
headroom there are other measures that can be taken to provide more
accessibility, the easiest of which would be to revise parking stall striping
and add appropriate signs. Parking spaces with excessive slopes should be
relocated. Additional accessible and van accessible spaces should be added.
Restricted headroom prevents adding van accessible spaces in the Pavilion One
parking structure. They can be easily added to the on-grade parking and in
the Pavilion Two parking structure.
4.3 CURB RAMPS (REFER TO PAGES 16 AND 17)
Curb ramps should be added to sidewalks at Pavilion One on-grade parking to
improve site accessibility.
<PAGE>
4.4 ENTRANCES (REFER TO PAGES 18 THROUGH 20)
Pavilion One entrances have automatic sliding doors and are accessible,
except where there are stairs and no ramp. Because only one accessible route
is required by ADA, it is not necessary to add ramps. Signage should be
provided to direct customers to accessible entrances.
Pavilion One courtyard entrance on Pico Blvd. is level with the city sidewalk
and is accessible.
4.5 ACCESSIBLE INTERIOR ROUTES (REFER TO PAGES 20 THROUGH 24)
Interior mall routes are accessible.
Electrical outlets were installed too low, although it is not likely that any
shoppers would want to use them.
4.6 RAMPS (REFER TO PAGES 24 THROUGH 27)
Ramp slopes are compliant. Handrails in Pavilion One are too large in
diameter and do not extend the required distance beyond the top and bottom of
the ramps.
4.7 STAIRS (REFER TO PAGES 27 THROUGH 33)
Stairs in Pavilion One have many design features that are non-compliant.
Stairs are not considered to be part of an accessible route and therefore do
not have to be modified.
Stairs in Pavilion Two are generally compliant.
4.8 DOORS (REFER TO PAGES 34 THROUGH 40)
Doors without panic devices are wide enough. Doors with panic devices are
non-compliant because they reduce the clear space to less than 32". Most
doors require excessive force to open them and close too fast.
4.9 DRINKING FOUNTAINS (REFER TO PAGES 40 THROUGH 42)
Hi-lo fountains have been installed and are generally compliant, except that
water flow is not high enough and the force to operate some fountains is
excessive.
<PAGE>
4.10 TOILET ROOMS (REFER TO PAGES 43 THROUGH 45)
Some components in all public toilets are compliant and some are not.
4.11 WATER CLOSETS (REFER TO PAGES 46 THROUGH 47)
Toilet paper dispensers are mounted too low and grab bars do not extend far
enough from back wall of stall.
4.12 TOILET STALLS (REFER TO PAGES 46 THROUGH 50)
Most toilet stalls widths are compliant. In Pavilion One, one toilet stall in
the men's public toilet and one toilet stall in the women's toilet are too
narrow to provide 42" clear on the west side.
4.13 URINALS (REFER TO PAGE 50)
Urinals are compliant.
4.14 LAVATORIES AND MIRRORS (REFER TO PAGES 50 THROUGH 52)
Many counter and lavatory heights and clearances are non-compliant. MIrrors
are mounted too high.
4.15 SINKS (REFER TO PAGES 52 AND 53)
The sink in the Community Room is non-compliant.
4.16 GRAB BARS (REFER TO PAGES 53 AND 54)
4.17 ALARMS (SEE PAGES 54 AND 63)
Refer to electrical report.
4.18 SIGNAGE (REFER TO PAGES 57 THROUGH 59)
There is no ADA compliant signage. A sign program should be developed and
compliant signs installed. There are CBC signs at toilet rooms, but they are
mounted at non-compliant heights.
<PAGE>
4.19 TELEPHONES
There are no provisions made for portable text telephones. Older telephones
may not be hearing aid compatible and should be checked. The highest operable
part of most telephones is higher than 54" above the floor.
4.20 PROPERTIES
Owners of public accommodations are urged by the Justice Department to
establish procedures for an ongoing assessment of their compliance with the
ADA's barrier removal requirements to diminish the threat of litigation and
save resources by identifying the most efficient means of providing required
access. The following list of priorities, starting with the easiest and
progressing to the most difficult, are presented as a possible guide when
deciding on the sequence for removing barriers. The final decision on removal
of barriers depends upon many factors and must be made by you after
consultation with your economic and legal advisors.
The "barriers" identified in this evaluation have been categorized into
the following groups:
o Readily Achievable Barrier Removal/Minimum Cost
o Non-Quite Readily Achievable Barrier Removal/Some Cost
o Difficult Barrier Removal/More Costly
o Technically Infeasible Barrier Removal/Equivalent Facilitation
o Non-Compliant But Not Required To Be Retrofitted
4.21 READILY ACHIEVABLE BARRIER REMOVAL/MINIMUM COST
.1 On-grade parking at Pavilion One: Restripe parking spaces, access
aisles, loading zone and valet parking areas. Add signs. Verify that
slopes are compliant.
.2 Add additional accessible parking and van accessible spaces on level
G-1 of Pavilion One.
.3 Remove speed bumps. Replace non-compliant gratings with compliant
gratings.
.4 Provide posts at protruding objects on the walls of Pavilion One.
.5 Add ramp handrails at exterior ramp near Nordstrom.
<PAGE>
.6 Adjust door closers so that they comply with door opening force and
minimum closing time requirements.
.7 Relocate or remove privacy partition at Men on Level G-1 of Pavilion
Two to provide strike side clearance at door.
.8 Increase water spout height at drinking fountains.
.9 Decrease force required to operate drinking fountains.
.10 Decrease force to operate plumbing fixtures.
.11 Relocate toilet tissue dispensers.
.12 Reposition mirrors to comply with height requirements.
.13 Lower thermostat in Community Room.
4.22 NON-QUITE READILY ACHIEVABLE BARRIER REMOVAL/SOME COST
.1 Add curb ramps and sidewalks at Pavilion One on-grade parking area.
.2 Relocate curb ramps at designated on-grade accessible parking spaces
at Pavilion One.
.3 Add detectable warnings at hazardous areas to satisfy State of
California requirements when remodeling is done. Not required by ADA.
.4 Add covered on-grade accessible parking and van spaces at Pavilion
One.
.5 Provide signs that comply with ADA and CBC requirements.
.6 Replace some grab bars with longer grab bars so that front edges are
54" from rear wall of toilet stall.
.7 Relocate counters and lavatories to comply with height and dimensional
requirements.
.8 Relocate sink in Pavilion One Community Room.
.9 Replace wall and base cabinets in Pavilion One Community Room.
.10 Add electrical outlets and shelves for portable text telephones at
bands of 3 or more pay telephones.
<PAGE>
.11 Lower pay telephones so that highest operable parts are no higher than
54" above the floor.
.12 Replace older pay telephones with telephones that have volume controls
and are hearing aid compatible.
.13 Raise electrical outlets in Pavilion One.
.14 Replace non-compliant ramp handrails in Pavilion One with compliant
rails.
.15 Add curb ramp and striped accessible route to Public Toilets on Level
G-1 of Pavilion Two.
4.23 DIFFICULT BARRIER REMOVAL/MORE COSTLY
.1 Replace existing panic devices with devices that project less from
face of door.
.2 Replace warped hollow metal doors and inoperative finish hardware.
.3 Provide ramps and handrails at door to Pavilion One Community Room.
.4 Relocate operating controls on toilets so that they are on the wide
side of the toilet stall.
.5 Remodel loading zone on Pico Blvd. Add curb ramp signs.
.6 Relocate toilets to provide required side clearances.
<PAGE>
4.24 TECHNICAL INFEASIBLE BARRIER REMOVAL/EQUIVALENT FACILITATION
.1 While it is "technically infeasible" to provide 8'-2" clear headroom
in the Pavilion One parking structure, it is possible to provide
"equivalent facilitation" by providing on-grade covered accessible and
van accessible parking at Pavilion One. Roof-top accessible parking
can be provided if the Pavilion Two ramp to the roof is 8'-2" high.
4.25 NON-COMPLIANT BUT NOT REQUIRED TO BE RETROFITTED
.1 Stairs in existing buildings are not considered to be part of an
accessible route and, therefore, do not have to be retrofitted. The
checkered plate treads at the Pavilion Two stairs near the loading
zone should be replaced because they are warped and buckled and pose a
safety hazard.
4.26 COST SUMMARY
A summary of cost discussed in this Section is presented in the table below:
<TABLE>
<CAPTION>
=============================================================================================
TABLE 4A
SUMMARY OF ADA COMPLIANT COST
FOR WESTSIDE PAVILION
=============================================================================================
COST ITEM
- ---------------------------------------------------------------------------
TEXT COST OPINION
REF. ITEM
- ---------------------------------------------------------------------------
<S> <C> <C>
4.21 Readily Achievable Barrier Removal/Minimum Cost $20,000
- ---------------------------------------------------------------------------------------------
4.22 Non-Quite Readily Achievable Barrier Removal/Some Cost $70,000
- ---------------------------------------------------------------------------------------------
4.23 Difficult Barrier Removal/More Costly Not Budgeted
- ---------------------------------------------------------------------------------------------
4.24 Technically Infeasible Barrier Removal/Equivalent Facilitation Not Budgeted
- ---------------------------------------------------------------------------------------------
4.25 Non-Compliant But Not Required To Be Retrofitted Not Budgeted
- ---------------------------------------------------------------------------------------------
TOTAL ADA IMPROVEMENT BUDGET $90,000
=============================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
OCCUPANCY COST DETAIL
WESTSIDE PAVILION
- ----------------------------------------------------------------------------------------------------------------------------------
ONLY TENANTS WITH SALES REPORTED FY 1999
CURRENT PROJECTED RENT TO SALES FY 1999 EXPENSE OCCUPANCY
SUITE TENANT SQ.FT. RENT SALES/SQ.FT. RATIO REIMBURSEMENTS/SF COST
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
616 Baja Buds Del Norte 2,099 $13.22 $138.69 9.5% $5.43 13.4%
361 Banana Republic 4,830 $45.00 $683.94 6.6% $33.67 11.5%
113 Barami Stuido 2,774 $30.00 $393.69 7.6% $33.67 16.2%
174 Bare Escentuals 724 $75.00 $367.23 20.4% $34.00 29.7%
401 Barnes & Noble 27,586 $30.83 $200.30 15.4% $7.76 19.3%
154 Bassini 2,384 $45.00 $183.76 24.5% $34.98 43.5%
257 Bath & Body Works 2,403 $42.00 $397.89 10.6% $30.97 18.3%
182 Bisou-Bisou 1,107 $70.00 $763.97 9.2% $34.98 13.7%
143 Body Shop, The 960 $60.00 $855.29 7.0% $33.67 11.0%
271 Bombay Company, The 3,889 $33.00 $326.43 10.1% $34.32 20.6%
372 Bon Voyage 1,415 $40.00 $424.93 9.4% $74.98 27.1%
368 Brooks Shoes 1,060 $48.00 $602.40 8.0% $34.11 13.6%
189 BCBG 1,826 $57.51 $1,106.32 5.2% $34.98 8.4%
324 California Crisp 603 $90.00 $786.54 11.4% $54.08 18.3%
308 California Steak & Fries 535 $95.00 $585.39 16.2% $47.82 24.4%
276 Carlton Hair 1,057 $68.00 $872.98 7.8% $31.25 11.4%
147 Carriage Trade 909 $60.00 $388.45 15.4% $33.67 24.1%
288 Cathy Jean 1,152 $50.00 $519.08 9.6% $34.98 16.4%
124 Champs Sports 4,488 $33.00 $324.78 10.2% $31.25 19.8%
123 Charles David 1,486 $55.00 $720.56 7.6% $32.23 12.1%
235 Claire's Accessories 1,049 $65.00 $366.20 17.7% $34.00 27.0%
332 Coffee Merchant 751 $75.00 $319.17 23.5% $34.98 34.5%
248 Contempo Casuals 3,628 $38.00 $256.83 14.8% $34.00 28.0%
316 Croissants & More 144 $173.61 $1,104.01 15.7% $57.82 21.0%
358 Disney Store, The 4,500 $22.00 $320.05 6.9% $29.06 16.0%
320 East Wind 603 $85.00 $698.49 12.2% $57.81 20.4%
353 Electronics Boutique 1,358 $50.00 $944.92 5.3% $31.25 8.6%
376 Elza 1,147 $55.00 $369.99 14.9% $34.98 24.3%
387 Everything But Water 1,278 $51.00 $418.38 12.2% $27.26 18.7%
204 Express 8,773 $33.00 $249.03 13.3% $33.67 26.8%
318 Fajita Flats 700 $80.00 $562.45 14.2% $57.81 24.5%
171 First Bellissimo 1,288 $58.00 $401.50 14.4% $28.36 21.5%
162 Foot Locker 2,003 $48.00 $684.74 7.0% $31.25 11.6%
268 Franklin Mint Gallery, The 1,355 $45.00 $177.34 25.4% $33.67 44.4%
382 Game Keeper, The 901 $45.00 $349.55 12.9% $27.26 20.7%
342 Gap Kids 6,421 $45.00 $497.19 9.1% $30.97 15.3%
232 Gap, The 10,360 $40.00 $399.40 10.0% $30.97 17.8%
321 General Nutrition Center 1,608 $45.00 $593.85 7.6% $34.00 13.3%
289 Going To The Game 1,841 $40.00 $206.12 19.4% $34.87 36.3%
301 Goldwyn Pavilion Cinemas 8,321 $25.00 $215.74 11.6% $31.25 26.1%
379 Gymboree 2,177 $45.00 $547.19 8.2% $31.25 13.9%
322 Hana Grill 622 $99.00 $925.55 10.7% $57.81 16.9%
304 Hot Dog On A Stick 507 $98.62 $610.13 16.2% $57.81 25.6%
328 Ice N' Cream 320 $160.00 $1,026.96 15.6% $55.07 20.9%
225 J.C.C. 1,223 $52.00 $184.41 28.2% $33.67 46.5%
136 Jan's Hallmark 2,810 $45.00 $424.04 10.6% $34.98 18.9%
378 Jewelry Connection 480 $90.00 $555.34 16.2% $34.98 22.5%
119 Jones New York 1,317 $52.98 $318.95 16.6% $33.67 27.2%
349 Kay-Bee Toy & Hobby 3,843 $45.00 $468.09 9.6% $30.97 16.2%
251 Kinney Shoes 2,340 $42.00 $224.43 18.7% $31.25 32.6%
227 Lady Footlocker 2,317 $48.00 $396.12 12.1% $34.98 20.9%
200 Lane Bryant 5,683 $22.00 $251.78 8.7% $34.00 22.2%
115 Le Prestige 1,482 $55.00 $493.42 11.1% $34.98 18.2%
159 Leathermode 1,111 $65.00 $387.13 16.8% $34.00 25.6%
114 Lechter's 6,119 $33.45 $262.03 12.8% $32.23 25.1%
199 LensCrafters 3,192 $35.28 $620.23 5.7% $23.92 9.5%
179 Lili's Boutique 1,474 $55.00 $251.04 21.9% $34.98 35.8%
354 Limited Too 3,322 $40.00 $312.67 12.8% $30.97 22.7%
146 Limited, The 9,921 $33.00 $135.53 24.3% $30.97 47.2%
603 Linear 1,200 $65.00 $637.12 10.2% $22.05 13.7%
100 Lisa's Beauty Supply 2,021 $30.00 $324.92 9.2% $34.98 20.0%
604 McDonald's 1,152 $51.22 $461.81 11.1% $7.07 12.6%
129 Morgan Paris 2,043 $45.00 $206.00 21.8% $30.97 36.9%
397 Motherhood Maternity 800 $55.00 $406.60 13.5% $34.98 22.1%
167 Mrs. Field's Cookies 808 $90.67 $509.00 17.8% $34.98 24.7%
369 Natural Wonders 2,091 $36.00 $299.05 12.0% $31.60 22.6%
326 New York Deli 602 $91.36 $553.34 16.5% $57.81 27.0%
132 Nine West 3,911 $35.17 $855.17 4.1% $34.00 8.1%
1 Nordstrom 138,128 $1.60 $545.34 0.3% $0.00 0.3%
187 Optometric Options 980 $102.24 $1,064.41 9.6% $30.97 12.5%
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
ONLY TENANTS WITH SALES REPORTED FY 1999
CURRENT PROJECTED RENT TO SALES FY 1999 EXPENSE OCCUPANCY
SUITE TENANT SQ.FT. RENT SALES/SQ.FT. RATIO REIMBURSEMENTS/SF COST
==================================================================================================================================
333 Pacific Sunwear 2,514 $45.00 $456.79 9.9% $33.67 17.2%
310 Panda Express 817 $134.64 $1,384.43 9.7% $56.49 13.8%
197 Panda Inn 5,863 $24.00 $279.44 8.6% $22.48 16.6%
151 Papyrus 1,111 $50.00 $679.82 7.4% $34.98 12.5%
50 Pavilions 43,435 $14.96 $363.99 4.1% $0.23 4.2%
155 Perfumania 1,010 $60.00 $465.22 12.9% $34.11 20.2%
505 Politically Incorrect 516 $30.00 $360.36 8.3% $27.81 16.0%
380 Pretzel Time 829 $55.00 $330.94 16.6% $33.67 26.8%
186 Privilege 1,866 $69.81 $727.52 9.6% $34.11 14.3%
256 Rampage 6,422 $35.00 $350.79 10.0% $34.98 19.9%
384 Raymond Sassoon 792 $50.51 $348.98 14.5% $34.98 24.5%
219 Ritz Camera 1 Hour Photo 1,318 $44.00 $410.89 10.7% $34.65 19.1%
300 Sbarro 991 $131.18 $683.59 19.2% $57.81 27.6%
201 See's Candies 1,200 $45.00 $811.31 5.5% $31.25 9.4%
292 Servis & Taylor 581 $75.00 $1,431.00 5.2% $31.19 7.4%
203 Shoe Care 492 $61.00 $336.67 18.1% $34.98 28.5%
135 Shoe Lord 1,001 $60.00 $423.66 14.2% $34.54 22.3%
193 Sisley 3,255 $31.00 $463.56 6.7% $23.72 11.8%
293 Skechers 1,956 $40.00 $355.23 11.3% $34.98 21.1%
267 Spencer Gifts 1,140 $50.00 $285.93 17.5% $31.25 28.4%
297 Splendiferous 701 $60.00 $515.52 11.6% $33.66 18.2%
241 Structure 4,345 $36.00 $245.23 14.7% $30.97 27.3%
221 Suncoast Motion Picture Co. 2,546 $45.32 $353.99 12.8% $33.67 22.3%
375 Sunglass Hut 1,310 $50.00 $311.45 16.1% $34.54 27.1%
229 Sunglass Place 516 $75.00 $381.70 19.6% $31.62 27.9%
325 Sweet Factory 1,108 $55.00 $317.11 17.3% $34.55 28.2%
309 Tasties 231 $151.52 $996.75 15.2% $31.25 18.3%
285 Things Remembered 1,294 $50.00 $280.07 17.9% $34.98 30.3%
513 Tony Roma's 4,309 $41.00 $431.20 9.5% $0.00 9.5%
263 Track 'N Trail 1,782 $40.00 $241.03 16.6% $33.67 30.6%
170 Vencci 2,192 $48.00 $467.75 10.3% $32.23 17.2%
220 Victoria's Secret 7,574 $31.00 $340.29 9.1% $31.25 18.3%
104 Waldenbooks / Waldenkids 6,557 $25.00 $231.82 10.8% $32.23 24.7%
202 Watch Collection 205 $195.12 $2,203.71 8.9% $34.98 10.4%
385 Westime 2,432 $45.00 $478.38 9.4% $34.98 16.7%
373 Westside One Hour Photo 763 $55.00 $425.93 12.9% $34.98 21.1%
296 What A Kick 783 $42.00 $393.39 10.7% $33.67 19.2%
==================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
DETAILED EXPIRATION SCHEDULE
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- -------------------------------------------------------------------------------------------------------------------
LEASE ANNUAL
TENANT SQ.FT. EXPIRATION RENT/SF
===================================================================================================================
<S> <C> <C> <C> <C>
1999 Expirations 1 Baja Buds Del Norte 2,099 Jan-99 $20.44
(8 leases) 2 California Steak 535 Jan-99 $94.99
3 Everything But Water 1,278 Jan-99 $51.00
4 First Bellissimo 1,288 Jan-99 $58.00
5 Game Keeper 901 Jan-99 $45.00
6 Hana Grill 622 Jul-99 $99.01
7 Linear 1,200 Jan-99 $65.00
8 ATM 16 May-99 $937.50
-- ------ -------
TOTAL 7,939 $54.00
2000 Expirations 1 Body Shop 960 Jan-00 $60.00
(12 leases) 2 Activate Cellular 100 Jan-00 $699.96
3 Charles David 1,486 Jan-00 $55.00
4 Croissants And More 144 Jan-00 $173.58
5 Leathermode 1,111 Jan-00 $65.00
6 East Wind 603 Jan-00 $85.00
7 Previews, Etc. 21 Jan-00 $952.57
8 Shoe Care 492 Jan-00 $61.00
9 Sisley 3,255 Jan-00 $31.00
10 Sprint PCS 36 Jan-00 $866.67
11 What a Kick 783 Jan-00 $42.01
12 Panda Inn 5,863 May-00 $24.00
----- ------
TOTAL 14,854 $48.04
2001 Expirations 1 BCBG 1,826 Jan-01 $73.20
(12 leases) 2 Footlocker 2,003 Jan-01 $48.00
3 Bisou Bisou 1,107 Jan-01 $74.01
4 Sbarro 991 Jan-01 $131.18
5 Carlton Hair 1,057 Jan-01 $68.00
6 Lady Footlocker 2,317 Jan-01 $48.00
7 Champs 4,488 Jan-01 $33.00
8 Tasties 231 Jan-01 $151.53
9 Lili's Boutique 1,474 Jan-01 $59.97
10 Splendiferous 701 May-01 $60.00
11 Contempo Casuals 3,628 May-01 $38.00
12 Pavilions 43,435 Dec-01 $14.96
------ ------
TOTAL 63,258 $27.29
2002 Expirations 1 Lenscrafters 3,192 Jan-02 $35.57
(9 leases) 2 Going to the Game 1,841 Jan-02 $40.00
3 Bon Boyage 1,415 Jan-02 $40.00
4 JCC 1,223 Jan-02 $54.00
5 Coffee Merchant 751 Jan-02 $75.00
6 Sunglass Place 516 Jan-02 $75.00
7 Planet Funk 1,465 Jan-02 $50.00
8 Bombay Company 3,889 Jan-02 $33.00
9 Jones New York 1,317 May-02 $52.98
----- ------
TOTAL 15,609 $43.32
2003 Expirations 1 Fajita Flats 700 Jan-03 $80.01
(10 leases) 2 Colorado Pen 180 Jan-03 $266.67
3 King ATM 12 Jan-03 $850.00
4 Pretzel Time 829 Jan-03 $60.00
5 Hot Dog On A Stick 507 Jan-03 $98.63
6 Ritz Camera 1,318 Jan-03 $48.00
7 Tutto Bimbi 2,988 Jan-03 $30.00
8 McDonalds 1,152 Jan-03 $53.82
9 Tony Romas 4,309 Apr-03 $41.00
10 LA Nails 469 Jul-03 $60.00
--- ------
TOTAL 12,464 $50.84
2004 Expirations 1 Carriage Trade 909 Jan-04 $60.00
(9 leases) 2 2ture 2,546 Jan-04 $45.32
3 Marami Studio 2,774 Jan-04 $30.00
4 Franklin Mint 1,355 Jan-04 $48.00
5 Shoe Lord 1,001 Jan-04 $65.00
6 Kay Bee Toy 3,843 Jan-04 $45.00
7 Vencci 2,192 Jan-04 $55.00
8 Victoria's Secret 7,574 Jan-04 $31.00
9 Natural Wonders 2,091 Jan-04 $36.00
----- ------
TOTAL 24,285 $40.63
2005 Expirations 1 BCBG Shoes 808 Jan-05 $65.00
(18 leases) 2 New York Deli 602 Jan-05 $99.67
3 Jans Hallmark 2,810 Jan-05 $45.00
4 Sunglass Hut 1,310 Jan-05 $55.00
5 Le Prestige 1,482 Jan-05 $55.00
6 Elza Jewelers 1,147 Jan-05 $55.00
7 Sweet Factory 1,108 Jan-05 $55.00
===================================================================================================================
<PAGE>
===================================================================================================================
DETAILED EXPIRATION SCHEDULE
WESTSIDE PAVILION
Cushman & Wakefield, Inc.
- -------------------------------------------------------------------------------------------------------------------
LEASE ANNUAL
TENANT SQ.FT. EXPIRATION RENT/SF
===================================================================================================================
8 Lecthers 6,119 Jan-05 $44.00
9 Jewelry Connection 480 Jan-05 $95.00
10 Bare Escentials 724 Jan-05 $80.01
11 Limited Too 3,322 Jan-05 $40.00
12 Brooks Children 1,060 Jan-05 $54.41
13 Banana Republic 4,830 Jan-05 $52.94
14 Waldenbooks 6,557 Mar-05 $25.00
15 Westside One Hour 763 May-05 $60.00
16 Mrs. Fields 808 May-05 $90.67
17 Bath & Body Works 2,403 Oct-05 $42.00
18 Pacific Sunwear 2,514 Dec-05 $45.00
------ ------
TOTAL 38,847 $47.17
2006 Expirations 1 Gap, The 10,360 Jan-06 $40.00
(19 leases) 2 Spencer Gifts 1,140 Jan-06 $50.00
3 Panda Express 817 Jan-06 $185.74
4 General Nutrition 1,608 Jan-06 $47.81
5 Field Mgt Associat 2,308 Jan-06 $27.02
6 Perfumania 1,010 Jan-06 $60.00
7 Electronica Boutique 1,358 Jan-06 $76.06
8 Lisas Beauty Supply 2,021 Jan-06 $40.00
9 Claires Boutique 1,049 Jan-06 $65.00
10 Priveledge 1,866 Jan-06 $69.81
11 Track N Trail 1,782 Jan-06 $40.00
12 Rampage 6,422 Jan-06 $35.00
13 Raymond Sassoon 792 Jan-06 $55.00
14 Bassini 2,384 Jan-06 $50.00
15 Cathy Jean 1,152 Jan-06 $50.00
16 Westime 2,432 Jan-06 $55.00
17 Gap Kids 6,421 Jan-06 $45.00
18 Optometric Options 980 Jan-06 $114.49
19 Skechers 1,956 Feb-06 $40.00
------ ------
TOTAL 47,858 $48.79
2007 Expirations 1 Papyrus 1,111 Jan-07 $66.41
(15 leases) 2 Motherhood Maternity 800 Jan-07 $60.00
3 Gymboree 2,177 Jan-07 $55.00
4 Things Remembered 1,294 Jan-07 $50.00
5 Garden Botanika 2,053 Jan-07 $45.00
6 Politically Incorrect 516 Jan-07 $30.16
7 CA Crisp 603 Jan-07 $109.77
8 Speedo Authentic 1,200 Jan-07 $52.00
9 Ice N Cream 320 Jan-07 $180.00
10 Bebe 2,471 Jan-07 $65.00
11 Goldwin Pavilion 8,321 Jan-07 $30.10
12 Guess? 5,380 Jan-07 $45.00
13 Right Start, The 2,629 Jan-07 $40.00
14 Banana Repub. (Men) 4,237 Apr-07 $40.00
15 Limited, The 9,921 Jun-07 $35.00
------ ------
TOTAL 43,033 $43.58
2008 Expirations 1 Morgan De Toi 2,043 Jan-08 $45.00
(12 leases) 2 Kinney Shores 2,340 Jan-08 $42.00
3 Express Compagnie 8,773 Jan-08 $37.00
4 Steve Madden 2,147 Jan-08 $38.43
5 Structure 4,345 Jan-08 $40.00
6 Easy Spirit 945 Jan-05 $60.00
7 Lids 1,189 Jan-08 $47.00
8 Watch Collection 205 Jan-08 $223.40
9 Payless Shoes 2,347 Jan-08 $20.00
10 Disney Store, The 4,500 Jan-08 $24.00
11 Regis Hairstyles 1,234 Jan-08 $35.00
12 Zales 1,966 Jan-08 $61.50
------ ------
TOTAL 32,034 $38.98
2009 Expirations 1 Nine West 3,911 Jan-09 $64.53
(2 leases) 2 See's 1,200 May-09 $73.47
----- ------
TOTAL 5,111 $66.63
2010 Expirations 1 Barnes & Noble 27,586 Jan-10 $37.28
(1 lease) ------ ------
TOTAL 27,586 $37.28
===================================================================================================================
</TABLE>
<PAGE>
============================================================
CUSHMAN & WAKEFIELD, INC.
NATIONAL RETAIL OVERVIEW
============================================================
RETAIL VALUATION GROUP
Richard W. Latella, MAI
Senior Director
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
INTRODUCTION
Shopping centers constitute the major form of retail activity in the
United States today. Approximately 55 percent of all non-automotive retail
sales occur in shopping centers. It is estimated that consumer spending
accounts for about two-thirds of all economic activity in the United States.
As such, retail sales patterns have become an important indicator of the
country's economic health.
The early part of the 1990s was a time of economic stagnation and
uncertainty in the country. The gradual recovery, which began as the nation
crept out of the last recession, has shown some signs of weakness as
corporate downsizing has accelerated. But as the recovery period reaches into
its fifth year and the retail environment remains volatile, speculation
regarding the nation's economic future remains. It is the uncertainty which
has shaped recent consumer spending patterns. We shall first provide a brief
overview of board economic measures that are important in terms of long range
retail sales forecasting and general investment underwriting. This is
followed by a discussion of retail sales trends along with selected
statistics of the shopping center industry. Also included in a discussion of
contemporary industry trends, valuation issues and a brief overview of the
REIT market.
PERSONAL INCOME AND CONSUMER SPENDING
American's personal income (total income from wages, salaries, interest,
rents and all other sources) advanced by eight-tenths of a percent in
December, which helped raise income for all of 1996 by 5.5 percent. This was
less than 1995 but it far outpaced the 2.5 percent growth in 1994.
Additionally, median household income advanced by 1.2% in 1996 to $35,492.
<TABLE>
<CAPTION>
======================================
PERSONAL INCOME CONSUMER SPENDING
--------------------------------------
YEAR % CHANGE YEAR % CHANGE
======================================
<S> <C> <C> <C>
1993 4.7 1993 5.8
--------------------------------------
1994 2.5 1994 5.5
--------------------------------------
1995 6.1 1995 4.8
--------------------------------------
1996 5.5 1996 4.6
--------------------------------------
Source: Commerce Dept.
======================================
</TABLE>
American workers won wage gains in 1996 that were the largest since 1990.
Nationwide, average hourly wages rose by 3.8 percent to $11.98 in 1996, about
five-tenths of a percent above the inflation rate. This compares with 3.2
percent in 1995. Personal income grew five-tenths of a percent in October
1997 following a revised three-tenths of a percent gain in September. This
marked the twelfth straight month of income growth to a seasonally adjusted
$6.97 trillion.
Consumer spending is another closely watched indicator of economic
activity. The importance of consumer spending is that it represents
two-thirds of the nation's economic activity. Total consumer spending rose by
4.6 percent in 1996, slightly off of the 4.8 percent rise in 1995. These
increases followed a significant lowering on unemployment and bolstered
consumer confidence. Personal spending matched income growth rising
five-tenths of a percent in October after a three-tenths of a percent rise in
September.
- -------------------------------------------------------------------------------
-1-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
EMPLOYMENT TRENDS
The country's economic situation continues to generate a record number of
new jobs. Correspondingly, the nation's unemployment rate continues to
decrease from its recent peak in 1992. Selected statistics released by the
bureau of Labor Statistics are summarized as follows:
<TABLE>
<CAPTION>
SELECTED EMPLOYMENT STATISTICS
===================================================================================
CIVILIAN LABOR FORCE EMPLOYED
- ---------------------------------------- ---------------------------
TOTAL WORKERS TOTAL WORKERS UNEMPLOYMENT
YEAR (1) (000) % CHANGE (000) % CHANGE RATE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1990 125,840 -- 118,793 -- 5.6
1991 126,346 .4 117,718 -.9 6.8
1992 128,105 1.4 118,492 .7 7.5
1993 129,200 .9 120,259 1.5 6.9
1994 131,056 2.4 123,060 2.3 6.1
1995 132,304 1.0 124,900 1.5 5.6
1996 133,943 1.2 126,708 1.4 5.4
===================================================================================
CAGR
1990-1996 +1.05 +1.08
- -----------------------------------------------------------------------------------
(1) Year ending December 31
===================================================================================
Source: Bureau of Labor Statistics U.S. Department of Labor
===================================================================================
</TABLE>
During 1996, the labor force increased by 1,639,000 or approximately 1.2
percent. Correspondingly, the level of employment increased by 1,808,000 or
1.4 percent. As such, the year end unemployment rate dropped by two-tenths of
a percent to 5.4 percent. For 1996, monthly job growth averaged 224,000. On
balance, over 10.0 million jobs have been created since the recovery began.
Preliminary data for November 1997 shows that the unemployment rate dropped
to 4.6 percent following job growth of 404,000. The rate is the lowest it has
been in 24 years. The level of new jobs was nearly double what most
economists predicted. Retailers alone added 105,000.
HOUSING TRENDS
Housing trends are an important economic measure due to the substantial
economic activity generated when a home changes hands (i.e. spending on
repairs by sellers, redecorating by buyers, fees, commissions and taxes).
For all of 1996, new single family home sales totaled 756,000, up 13.3
percent from 667,000 in 1995. The yearly sales level was the highest since
1978. The median new home price of new homes sold in 1996 was $140,000, up
4.6 percent from 1995. Through May 1997, it was tracking at $143,000. Sales
of new homes declined by 1.7 percent in October 1997 to an annual rate of
797,000 units. Builders are currently reporting a 4.5 month inventory of
unsold homes.
Sales of existing single family homes rose in October by 2.1 percent to
4.4 million units, setting a record. Gains came primarily in the midwest and
west. The median price jumped by 6.6 percent to $125,600.
- -------------------------------------------------------------------------------
-2-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
New housing starts rose by 8.8 percent for all of 1996 to 1.47 million
units, the most since 1988. Housing starts rose in November by eight-tenths
of a percent to an annual rate of 1.531 million units. The increase was
largely attributed to a strong rise in multi-family construction.
The home ownership rate seems to be rising, after remaining stagnant over
the last decade. For 1996, the share of households that own their homes was
65.4 percent, compared to 64.7 percent for a year earlier. Lower mortgage
rates are cited as a factor.
GROSS DOMESTIC PRODUCT
The report on the gross domestic product (GDP) showed that output for
goods and services expanded at an annual rate of just .9 percent in the
fourth quarter of 1995. Overall, the economy gained 2.0 percent in 1995, the
weakest showing in four years since the 1991 recession. Conversely, the
fourth quarter (1996) GDP grew at a surprisingly robust 3.8 percent. As a
result, the GDP posted a 2.4 percent annual gain for all of 1996, topping the
2.0 percent rise in 1995. First quarter 1996 data shows that the GDP grew at
a stunning 4.9 percent annual pace, well above even the most optimistic
forecasts. Additionally, data for the third quarter shows growth at 3.3
percent, matching the second quarter growth of 3.3 percent. The was due to a
surge in consumer spending which rose at 5.8 percent, its strongest
performance in five and one-half years. Business spending soared 24.1
percent. The Fed foresees a moderation of this trend and expects the U.S.
economy will expand at a 2.0 to 2.50 percent pace during 1997 which is
in-line with White House forecasts and a pace which is viewed as the
economy's non-inflationary growth limit.
The following chart cites the annual change in real GDP since 1990.
<TABLE>
<CAPTION>
=======================================
REAL GDP
YEAR % CHANGE
=======================================
<S> <C>
1990 1.2
1991 -.6
1992 2.3
1993 3.1
1994 4.1
1995* 2.0
1996 2.4
=======================================
* Reflects new chain weighted system of
measurement. Comparable 1994 measure
would be 3.5%
=======================================
Source: Bureau of Economic Analysis
=======================================
</TABLE>
WHOLESALE PRICES
Soaring energy prices in December drove wholesale costs to a twelve month
high. For the year, the Producer Price Index (PPI) gained 2.8 percent.
However, excluding energy, the PPI rose just 1.4 percent in all of 1996. In
1995, the index rose 2.3 percent. For November 1997, wholesale prices fell
two-tenths of a percent. For the twelve months ending November 1997, the
index was -1.2 percent. Projections for 1997 show that most economists expect
a 2.5 percent rise and a core increase of 1.5 percent.
- -------------------------------------------------------------------------------
-3-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
CONSUMER PRICES
The Bureau of Labor Statistics has reported that consumer prices rose by
only 2.5 percent in 1995, the fifth consecutive year in which inflation was
under 3.0 percent. This was the lowest rate in nearly a decade when the
overall rate was 1.1 percent in 1986. All sectors were down substantially in
1995 including the volatile health care segment which recorded inflation of
only 3.9 percent, the lowest rate in 23 years.
The following chart tracks the annual change in the CPI since 1990.
<TABLE>
<CAPTION>
===========================
CONSUMER PRICE INDEX(1)
===========================
YEAR CPI % CHANGE
===========================
<S> <C> <C>
1990 133.8 6.1
---------------------------
1991 137.9 3.0
---------------------------
1992 141.9 2.9
---------------------------
1993 145.8 2.7
---------------------------
1994 149.7 2.7
---------------------------
1995 153.5 2.5
---------------------------
1996 158.6 3.3
===========================
(1) All Urban Workers
===========================
Source: Dept. of Labor,
Bureau of Labor Statistics
===========================
</TABLE>
Data for year-end 1996 shows the consumer prices rose in line with
investor expectations. The index was up three-tenths of a percent in
December, its third consecutive gain at this level. On an annualized basis,
the inflation rate was reported at 3.3 percent for year, the highest rate of
increase since 1990. Since then, inflation has eased every year except for
1994 when it was unchanged. Excluding food and energy, the 77 percent of the
index known as the core index, the underlying inflation rate was 2.6 for the
previous twelve months, the lowest core rate since 1965, with the exception
of an increase of the same size in 1994.
Data for November 1997 shows that the CPI rose only one-tenth of a
percent, while the core rate increased by only one-tenth of a percent.
Consumer prices have risen at less than a 2 percent annual rate for the fist
ten months of the year. For the twelve month period ending in November,
prices have risen by 1.8 percent.
Recently, a special advisory panel of prominent economists have contended
that the current method of calculating the Consumer Price Index overstates
inflation by 1.1 percentage points annually. The government is currently
reviewing the far ranging implications a change in procedure may have.
OTHER INDICATORS
The government's main economic forecasting gauge, the INDEX OF LEADING
ECONOMIC INDICATORS is intended to project economic growth over the next six
to nine months. The Conference Board, an independent business group, reported
that the index rose two-tenths of a percent in October, its sixth consecutive
rise.
The Conference Board also reported that CONSUMER CONFIDENCE soared in
December 1997 to 134.5 from 128.1 in November, near its highest level in
nearly thirty years. This was above the consensus opinion. Accordingly,
consumers attitudes about the economy remain
- -------------------------------------------------------------------------------
-4-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
upbeat. Measures of consumer confidence are watched closely for indications of
future consumer spending.
The EMPLOYMENT COST INDEX is a measure of overall compensation including
wages, salaries and benefits. Despite a tight labor market, American workers
have not won pay and benefit increases large enough to push inflation higher,
at least for the near term. The Labor Department reported that the index rose
by 2.9 percent in 1996, the same as in 1995. For the Second Quarter 1997, the
index rose eight-tenths of a percent. For the 12 months through June 1997 it
was tracking at 2.8 percent.
PRODUCTIVITY is a key element in measuring the standard of living since
increased efficiency allows businesses to increase workers compensation
without having to raise prices. Through the first 70 years of this century,
non-farm productivity rose at an annual rate of 2.2 percent. During the post
war period 1947 to 1973, it was 2.8 percent. Between 1973 and 1995, a marked
slowdown has been in evidence with only a 1 percent annual rate and during
the period marked by the start of the current economic expansion in 1991,
growth has averaged 1.2 percent. The Labor Department reports that the
productivity of American workers grew by 1.3 percent in 1996, the largest
gain since a 3.2 percent advance in 1992. Productivity increased by
three-tenths of a percent in 1995. Revised data through the third quarter of
1997 shows that productivity rose 4.1 percent on an annual basis. This was
the fastest quarterly growth since late 1992.
CONSUMER CREDIT The Federal Reserve said consumer credit rose by $4.3
billion or at a 4.2 percent annual rate in August, following an increase of
5.9 percent in July. Much of the increase was attributed to credit card debt
which rose $5.4 billion. However, borrowing for automobiles declined by 600
million, the first decline since March. Credit card delinquencies and
personal bankruptcies remain near record levels indicating that consumers may
be reaching a point of saturation with respect to new debt. However, a drop
in write-offs was in evidence from the record levels in 1996 which came about
following aggressive marketing campaigns by card issuers.
NEW CONSTRUCTION activity rose one-tenth of a percent in July to an annual
rate of $605.5 billion. The report showed that spending on residential
construction, which makes up nearly half the total, rose nine-tenths of a
percent. Commercial spending also increased 1.2 percent, while public
spending rose eight-tenths of a percent.
ECONOMIC OUTLOOK
The WEFA Group, an economic consulting company, opines that the current
state of the economy is a "central bankers" dream, with growth headed toward
the Fed's 2.5 percent target, accompanied by stable if not falling inflation.
They project that inflation will track at about 2.5 percent through 1998.
Over the longer term, inflation is expected to average 2.7 percent. This will
have a direct influence on consumption (consumer expenditures).
Potential GDP provides an indication of the expansion of output, real
incomes, real expenditures, and the general standard of living of the
population. WEFA estimates that real U.S. GDP will grow at an average annual
rate of 2.3 percent over the next decade, and slow to about 2.1 percent by
2019.
- -------------------------------------------------------------------------------
-5-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Consmption expenditures are primarily predicated on the growth of real
permanent income, demographic influences, and changes in relative prices over
the long term. Changes in these key variables explain much of the consumer
spending patterns of the 1970s and mid-1980s, a period during which baby
boomers were reaching the asset acquisition stages of their lives; purchasing
automobiles and other consumer and household durables. Increases in real
disposable income supported this spending spurt with an average annual
increase of 2.9 percent per year over the past twenty years. Real consumption
expenditures increased at an average annual rate of 3.1 percent during the
1970s and by an average of 4.0 percent from 1983 to 1988. WEFA projects that
consumption expenditure growth will slow as a result of slower population
growth and aging. It is also projected that the share of personal consumption
expenditures relative to GDP will decline over the next decade. Consumer
spending as a share of GDP peaked in 1993 to 68.0 percent after averaging
about 63.0 percent over much of the post-war period. WEFA estimates that real
consumption expenditure growth will average 2.2 percent per year through 2005
and slows to 2.1 percent thereafter.
RETAIL SALES
During the period 1980 through 1996, total retail sales in the United
States increased at a compound annual rate of 6.1 percent. Data for the
period 1990 through 1996 shows that sales growth has slowed to an annual
average of 5.0 percent. This information is summarized on the following
chart.
<TABLE>
<CAPTION>
===================================================
TOTAL U.S. RETAIL SALES (1)
===================================================
AMOUNT ANNUAL
YEAR (BILLIONS) CHANGE
---------------------------------------------------
<S> <C> <C>
1980 $ 957,400 N/A
---------------------------------------------------
1985 $1,375,027 N/A
---------------------------------------------------
1990 $1,844,611 N/A
---------------------------------------------------
1991 $1,855,937 .61%
---------------------------------------------------
1992 $1,951,589 5.2%
---------------------------------------------------
1993 $2,074,499 6.3%
---------------------------------------------------
1994 $2,236,966 7.8%
---------------------------------------------------
1995 $2,340,817 4.6%
---------------------------------------------------
1996(2) $2,465,835 5.3%
---------------------------------------------------
Compound Annual Growth Rate
1980-1996 +6.1%
---------------------------------------------------
CAGR: 1990-1996 +5.0%
===================================================
(1) 1985-1995 data reflects recent revisions by the
U.S. Department of Commerce: Combined Annual
and Revised Monthly Retail Trade.
(2) Preliminary advance estimates.
===================================================
Source: Monthly Retail Trade Reports Business
Division, Current Business Reports, Bureau
of the Census, U.S. Department of Commerce.
===================================================
</TABLE>
The Census Bureau of the Department of Commerce reports that advance
estimates for U.S. retail sales for 1996 were $2.465 trillion, an increase of
$125.0 billion, or 5.3 percent from 1995. For the month of December 1996,
sales were up six-tenths of a percent.
Census Bureau data for September 1997 shows that retail sales were up
three-tenths of a percent from August. This followed a six-tenths of a
percent increase for the previous month.
- -------------------------------------------------------------------------------
-6-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Provided on the chart below is a summary of overall and same store sales
growth for selected national merchants for the most recent period.
<TABLE>
<CAPTION>
==================================================================
SAME STORE SALES FOR THE MONTH OF NOVEMBER 1997
==================================================================
% CHANGE FROM PREVIOUS YEAR
------------------------------------
NAME OF RETAILER OVERALL SAME STORE BASIS
------------------------------------------------------------------
<S> <C> <C>
Wal-Mart +14.0% +6.1%
------------------------------------------------------------------
Kmart +5.4% +1.5%
------------------------------------------------------------------
Sears, Roebuck & Company +.4% -.6%
------------------------------------------------------------------
J.C. Penney -2.1% -3.1%
------------------------------------------------------------------
Dayton Hudson Corporation +8.7% +5.2%
------------------------------------------------------------------
May Department Stores +5.5% +3.7%
------------------------------------------------------------------
Federated Department Stores +.8% +2.0%
------------------------------------------------------------------
The Limited Inc. +7.0% +2.0%
------------------------------------------------------------------
Gap Inc. +29.0% +7.0%
------------------------------------------------------------------
Ann Taylor +1.4% -3.2%
------------------------------------------------------------------
Woolworths -8.3% -9.1%
------------------------------------------------------------------
Lowe's +16.0% +1.0%
==================================================================
Source: New York Times/Wall Street Journal
------------------------------------------------------------------
</TABLE>
Data for November 1997 shows that consumers were mostly interested in
discounted goods. Shoppers have come to expect markdowns and retailers are
responding by being more promotional earlier in the selling season. The
Goldman Sachs index rose 3.5 percent, compared to last year's 2.3 percent
increase. Discounters such as Wal-Mart (+6.1%), Kmart (+1.5%), Kohl's (+6.8%)
as well as traditional department stores such as May Department Stores did
reasonably well. Luxury retailers such as Neiman Marcus (+3.7%) and Saks
(+4.5%) also did well.
Specialty retailers such as Gap reported strong gains but Ann Taylor and
Talbots fell 3.2 and 2.5 percent, respectively.
The International Council of Shopping Centers (ICSC) publishes a MONTHLY
MALL MERCHANDISE INDEX which tracks sales by store type for more than 400
regional shopping centers. The index shows that total sales per square foot
rose by 2.9 percent to $278 per square foot in 1996. This compares to a .5
percent increase for the period 1994-1995. The following chart identifies the
most recent year-end results. The winners were shown to be Apparel and
Accessories (+4.8%) led by Men's Apparel and Shoes, while Furniture and
Furnishings suffered (-2.8%). The Home Improvement category rose an
outstanding 100.0 percent to $302 per square foot.
- -------------------------------------------------------------------------------
-7-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==============================================================
1996 YEAR END PERFORMANCE
NON-ANCHOR TENANT SALES IN U.S. MALLS
==============================================================
ICSC INDEX
% CHANGE
STORE TYPE 1996 (SF*) FROM YE 1995
--------------------------------------------------------------
<S> <C> <C>
GAFO CATEGORIES:
APPAREL AND ACCESSORIES
Women's Accesories and Specialties $301 3.2%
Women's Ready-To-Wear 195 3.3%
Men's Apparel 270 7.0%
Children's Apparel 350 .5%
Family Apparel 314 4.2%
Women's Shoes 325 5.1%
Men's Shoes 383 5.6%
Family Shoes 279 5.3%
Shoes Miscellaneous 343 3.8%
Apparel and Accessories--Misc. $279 2.9%
--------------------------------------------------------------
SUBTOTAL $257 4.8%
--------------------------------------------------------------
FURNITURE AND FURNISHINGS:
Home Furniture & Furnishings $273 1.4%
Home Entertainment & Electronics 303 -4.3%
Home Furnishings--Misc 300 -3.4%
--------------------------------------------------------------
SUBTOTAL $293 -2.8%
--------------------------------------------------------------
OTHER GAFO:
Jewelry $652 4.9%
Stationery/Cards/Gifts/Novelty 275 1.7%
Books 249 -2.1%
Sporting Goods/Bicycles 246 -1.1%
Other GAFO--Misc. 311 4.4%
--------------------------------------------------------------
SUBTOTAL $343 2.2%
--------------------------------------------------------------
TOTAL GAFO $284 3.2%
--------------------------------------------------------------
NONGAFO CATEGORIES:
FOOD SERVICES
Fast Food $414 2.3%
Restaurants 280 1.0%
Food Services--Misc. 352 -.8%
--------------------------------------------------------------
SUBTOTAL $340 1.6%
--------------------------------------------------------------
OTHER NON-GAFO CATEGORIES:
Specialty Food Stores $355 .9%
Supermarkets 433 .8%
Drug/HBA 291 4.7%
Personal Services 283 .7%
Automotive 140 1.2%
Home Improvement 302 100.1%
Mall Entertainment 76 -3.6%
Other Non-GAFO--Misc. 353 4.9%
--------------------------------------------------------------
SUBTOTAL $223 1.5%
--------------------------------------------------------------
TOTAL NON-GAFO $266 1.4%
--------------------------------------------------------------
OTHER CATEGORIES--MISCELLANEOUS $151 4.4%
--------------------------------------------------------------
Memo: GAFO & Food Service Total $290 3.1%
--------------------------------------------------------------
GRAND TOTAL $278 2.9%
--------------------------------------------------------------
* SALES PER SQUARE FOOT DERIVED AS TOTAL NON-ANCHOR MALL SALES
DIVIDED BY TOTAL OCCUPIED SQUARE FOOTAGE
==============================================================
SOURCE: ICSC--RESEARCH QUARTERLY
</TABLE>
The ICSC has reported the following results:
- -------------------------------------------------------------------------------
-8-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
MALL TENANT SALES
Data for the second quarter of 1997 shows that sales per square foot for
non-anchor tenants rose five-tenths of a percent over the comparable second
quarter 1996 period. Year to date GAFO sales were up only .1 percent.
DEPARTMENT STORE SALES
Sales in U.S. Department Stores increased by 4.6 percent in 1996 according
to the Department of Commerce. The increase was largely fueled by the strong
performance of discount department stores such as Wal-Mart, Kmart and Target.
Second quarter 1997 results show that discount department stores are still
the best performing group with a 3.8 percent increase. They also lead in year
over year same store sales with a 7.8 percent increase.
<TABLE>
<CAPTION>
===============================================================================
DEPARTMENT STORE TYPE SECOND QUARTER 1997 YEAR OVER YEAR CHANGE
===============================================================================
<S> <C> <C>
Discount 3.9% 7.8%
- -------------------------------------------------------------------------------
National Chains 2.3% 2.2%
- -------------------------------------------------------------------------------
Conventional/Full Line 3.8% 6.9%
===============================================================================
</TABLE>
FACTORY OUTLET
The ICSC FACTORY OUTLET INDEX increased by 1.3 percent in 1996 to $213 per
square foot from $210 per square foot in 1995. The fourth quarter gain of 2.8
percent was the highest quarterly gain during the year. Data for the second
quarter of 1997 shows that sales rose by 4.2 percent. For the rolling twelve
month period through June 1997, sales rose 2.2 percent to $217 per square
foot.
GAFO AND SHOPPING CENTER INCLINED SALES
In a true understanding of shopping center dynamics, it is important to
focus on both GAFO sales or the broader category of Shopping Center Inclined
Sales. GAFO goods comprise the overwhelming bulk of goods and products
carried in shopping centers and department stores and consist of the
following categories:
o General merchandise stores including department and other stores;
o Apparel and accessory stores;
o Furniture and home furnishing stores; and
o Other miscellaneous shoppers goods stores.
Shopping Center Inclined Sales are somewhat broader and include such
classifications as home improvement and grocery stores. The store types that
comprise shopping centers comprised approximately 53 percent of total retail
sales in 1995. The balance were generated by auto dealers, gas stations, food
service facilities and other miscellaneous establishments.
Total retail sales grew by 4.6 percent in the United States in 1995 to
$2.341 trillion, an increase of $104 billion over 1994. This followed an
increase of 7.8 percent or $162 billion over 1993. Automobile dealers
captured $34 (plus or minus) billion of total retail sales growth last year,
while Shopping Center Inclined Sales accounted for nearly 50.0 percent of the
increase ($50 billion).
- -------------------------------------------------------------------------------
-9-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
GAFO sales increased by $32.5 billion. This group was led by department
stores which posted a $14.4 billion increase in sales. The following chart
summarizes the performance for this most recent comparison period.
<TABLE>
<CAPTION>
================================================================================
RETAIL SALES BY MAJOR STORE TYPE
1994-1995 ($MIL.)
================================================================================
PERCENT OF 1994-1995
STORE TYPE 1994 1995 INCOME(1) % CHANGE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GAFO:
General Merchandise $ 282,541 $ 296,904 5.1%
Apparel & Accessories 109,603 109,962 .3%
Furniture & Furnishings 119,626 129,923 8.6%
Other GAFO 80,533 88,029 9.3%
- -------------------------------------------------------------------------------
GAFO SUBTOTAL $ 592,303 $ 624,818 14.4% 5.5%
CONVENIENCE STORES:
Grocery $ 376,330 $ 389,134 3.4%
Other Food 21,470 21,378 (.4)%
- -------------------------------------------------------------------------------
SUBTOTAL $ 397,800 $ 410,512 9.5% 3.2%
Drug 81,538 84,240 2.0% 3.3%
- -------------------------------------------------------------------------------
CONVENIENCE SUBTOTAL $ 479,338 $ 494,752 3.2%
OTHER:
Home Improvement &
Building Supplies Stores $ 122,533 $ 124,626 2.9% 1.7%
SHOPPING CENTER-INCLINED
SUBTOTAL $ 1,94,174 $1,244,196 28.8% 4.2%
Automobile Dealers 526,319 560,624 6.5%
Gas Stations 142,193 148,192 4.2%
Eating and Drinking Places 228,351 233,606 2.3%
All Other 145,929* 154,199* 5.7%
- -------------------------------------------------------------------------------
TOTAL RETAIL SALES $2,236,966 $2,340,817 4.6%
===============================================================================
* ESTIMATED SALES
- -------------------------------------------------------------------------------
1 Current Population Report, Page 60. Estimated at 96.8 million households @
$44,100 = 4.3 trillion.
===============================================================================
SOURCE: U.S. DEPARTMENT OF COMMERCE, BUREAU OF THE CENSUS AND DOUGAL M. CASEY:
VARIOUS ICSC WHITE PAPERS.
- -------------------------------------------------------------------------------
</TABLE>
GAFO sales grew by 5.5 percent in 1995 to $624.8 billion. From the above
it can be calculated that GAFO sales accounted for 26.7 percent of total
retail sales and nearly 50.0 percent of all shopping center-inclined sales.
GAFO sales have also risen relative to household income. In 1990 these sales
represented 13.9 percent of average household income. By 1994/1995 they rose
to 14.4 percent. Projections through 2000 show a continuation of this trend
to 14.7 percent. On average, total sales were equal to nearly 55.0 percent of
household income in 1994.
- -------------------------------------------------------------------------------
-10-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=================================================================================
DETERMINANTS OF RETAIL SALES GROWTH AND U.S. RETAIL SALES BY KEY STORE TYPE
=================================================================================
1990 1994 2000(P)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
DETERMINANTS
Population 248,700,000 260,000,000 276,200,000
Households 91,900,000 95,700,000 103,700,000
Average Household Income $ 37,400 $ 42,600 $ 51,600
Total Census Money Income $3.4 Tril. $4.1 Tril. $5.4 Tril.
- ---------------------------------------------------------------------------------
% ALLOCATIONS OF INCOME TO SALES
GAFO Stores 13.9% 14.4% 14.7%
Convenience Stores 12.9% 11.7% 10.7%
Home Improvement Stores 2.8% 3.0% 3.3%
Total Shopping Center-Inclined Stores 29.6% 29.1% 28.8%
Total Retail Stores 54.3% 54.6% 52.8%
- ---------------------------------------------------------------------------------
SALES ($BILLION)
GAFO Stores $ 472 $ 592 $ 795
Convenience Stores 439 479 580
Home Improvement Stores 95 123 180
Total Shopping Center-Inclined Stores $ 1,005 $ 1,194 $ 1,555
TOTAL RETAIL SALES $ 1,845 $ 2,237 $ 2,850
=================================================================================
Note: Sales and income figures are for the full year; population and household
figures are as of April 1 in each respective year. P = Projected.
=================================================================================
Source: U.S. Census of Population, 1990; U.S. Bureau of the Census Current
Population Reports:
Consumer Income P6-168, 174, 180, 184 and 188; Berna Miller with Linda
Jacobsen, "Household Futures", American Demographics, March 1995; Retail
Trade sources already cited; and Dougal M. Casey; ICSC White Paper
=================================================================================
</TABLE>
GAFO sales have risen at a compound annual rate of approximately 6.8
percent since 1991 based on the following annual change in sales.
<TABLE>
<CAPTION>
<S> <C>
=====================
1990/91 2.9%
---------------------
1991/92 7.0%
---------------------
1992/93 6.6%
---------------------
1993/94 7.0%
---------------------
1994/95 5.5%
=====================
</TABLE>
According to a recent study by the ICSC, GAFO sales are expected to grow
by 5.0 percent per annum through the year 2000, which is well above the 4.1
percent growth for all retail sales. This information is presented in the
following chart.
- -------------------------------------------------------------------------------
-11-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===========================================================================
RETAIL SALES FORECASTS IN THE UNITED STATES, BY MAJOR STORE TYPE
===========================================================================
1994 2000(P) PERCENT CHANGE
- ---------------------------------------------------------------------------
COMPOUND
STORE TYPE ($ BILLIONS) ($ BILLIONS) TOTAL ANNUAL
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GAFO:
General Merchandise $ 283 $ 370 30.7% 4.6%
Apparel & Accessories 110 135 22.7% 3.5%
Furtniture/Home Furnishings 120 180 50.0% 7.0%
Other Shoppers Goods 81 110 35.8% 5.2%
- ---------------------------------------------------------------------------
GAFO SUBTOTAL $ 592 $ 795 34.3% 5.0%
- ---------------------------------------------------------------------------
CONVENIENCE GOODS:
- ---------------------------------------------------------------------------
Food Stores $ 398 $ 480 20.6% 3.2%
Drugstores 82 100 22.0% 3.4%
- ---------------------------------------------------------------------------
CONVENIENCE SUBTOTAL $ 479 $ 580 21.1% 3.2%
Home Improvement 123 180 46.3% 6.6%
- ---------------------------------------------------------------------------
SHOPPING CENTER-INCLINED $1,194 $1,555 30.2% 4.5%
SUBTOTAL
- ---------------------------------------------------------------------------
All Other 1,043 1,295 24.2% 3.7%
- ---------------------------------------------------------------------------
TOTAL $2,237 $2,850 27.4% 4.1%
- ---------------------------------------------------------------------------
Note: P = Projected. Some figures rounded.
===========================================================================
Source: U.S. Department of Commerce, Bureau of the Census and Dougal M.
Casey.
===========================================================================
</TABLE>
According to the ICSC White Paper: Overstoring -- A Look at Retail Space
and Sales Performance; Shopping Center Inclined Sales have grown from $257
billion in 1972 to $1.244 trillion in 1995, a 7.1 percent annual growth rate.
Historical data is shown below.
<TABLE>
<CAPTION>
=========================================================
SHOPPING CENTER INCLINED STORE SALES
1972-1995 (BILLIONS)
=========================================================
1972 1980 1990 1995
---------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $257 $532 $1,000 $1,244
---------------------------------------------------------
Compound Annual Growth
---------------------------------------------------------
1972-1995 7.1%
---------------------------------------------------------
1972-1980 9.5%
---------------------------------------------------------
1980-1990 6.6%
---------------------------------------------------------
1990-1995 4.3%
=========================================================
Source: U.S. Bureau of The Census and ICSC White Paper:
Overstoring--A Look at Retail Space and Sales
Performance.
=========================================================
</TABLE>
From the above, we see that the most recent annual rate of growth
(1990-1995) in Shopping Center Inclined Sales of 4.3 percent has decreased to
less than half of what it was during the 1970s (9.5 percent). Projections
through December 2000 are for a compound growth rate of 4.5 percent.
Shopping centers have stabilized their share of shopping center inclined
sales. In 1972 this share was estimated at 48 percent. Since the early 1980s,
this share has stabilized in the 72 to 73 percent range. For example, the
estimated sales total of $894 billion of shopping center sales in 1995 was
equal to 72 percent of total inclined sales.
- -------------------------------------------------------------------------------
-12-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
NON-STORE RETAILING
In 1995, non-store retailing accounted for $69.7 billion, or 3.92 percent
of total non-automotive retail sales. Of this total, $49.7 billion was
attributed to mail/telephone order catalog retailers. The balance is
comprised of coin-operated vending machines, house-to-house canvassing, party
plan (i.e. tupperware parties) telemarketing and other non-store venues such
as home stopping networks and electronic commerce.
<TABLE>
<CAPTION>
===========================================================================
NON-STORE AND TOTAL RETAIL SALES
===========================================================================
YEAR TOTAL MAIL ORDER NON-STORE TOTAL NON-AUTO SALES % OF TOTAL
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1985 $15,848 mil. $28,275 mil. $1,071,828 2.64%
- ---------------------------------------------------------------------------
1990 $26,577 mil. $45,632 mil. $1,457,006 3.13%
- ---------------------------------------------------------------------------
1995 $49,710 mil. $69,667 mil. $1,778,915 3.92%
===========================================================================
Source: Department of Commerce
===========================================================================
</TABLE>
Mail order sales, currently at only 2.8 percent of total retail sales,
continue to grow. Estimates currently place on-line sales at $518.0 million
or 1 percent of the mail order tally. Estimates place total on-line sales as
high as $6.6 billion by the year 2000. Since 1990, mail order sales have
grown at an annual rate of 9.9 percent which is double the average growth of
non-automotive retail sales and 1.7 times the average growth of GAFO store
sales. One measure of this growing trend is the November/December ratio of
mail order to GAF store sales. In 1990, the ratio was 5.4 percent. By 1992 it
had grown to 6.9 percent and by 1995 it was 7.6 percent.
INDUSTRY TRENDS
According to the NATIONAL RESEARCH BUREAU, there were a total of 42,130
shopping centers in the United States at the end of 1996. During this year,
895 new centers opened, a 3.2 percent increase over the 867 that opened in
1995. This followed an 18.0 percent increase in 1995. The greatest growth
came in the small center category (less than 100,000 square feet) where 496
centers were constructed. In terms of GLA added, new construction in 1996 was
up 2.7 percent resulting in an addition of 106.2 million square feet of GLA
from approximately 4.97 billion to 5.1 billion square feet. In other
important trends, the development of regional and super-regional malls hit a
five year high in 1996 with the opening of eight centers, twice as many as in
1995. This boosted the nation's total of regionals to 301 and super-regionals
to 380. The small center category (less than 100,000 square feet) was the
only one to experience a decrease in new centers built with 496 centers
versus 551 in 1995. The following chart highlights over the period 1987
through 1995.
- -------------------------------------------------------------------------------
-13-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===================================================================================================================
CENSUS DATA: 10-YEAR TRENDS
===================================================================================================================
TOTAL AVERAGE AVERAGE % CHANGE % INCREASE
NO. OF TOTAL SALES GLA PER SALES PER IN SALES NEW IN TOTAL
YEAR CENTERS GLA (BILLIONS) CENTER SQ. FT. PER SQ. FT. CENTERS CENTERS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1987 30,641 3,722,957,095 $602,294,426 121,502 $161.78 2.41% 2,145 7.53%
- -------------------------------------------------------------------------------------------------------------------
1988 32,563 3,947,025,194 $641,096,793 121,212 $162.43 0.40% 1,922 6.27%
- -------------------------------------------------------------------------------------------------------------------
1989 34,683 4,213,931,734 $682,752,628 121,498 $162.02 -0.25% 2,120 6.51%
- -------------------------------------------------------------------------------------------------------------------
1990 36,515 4,390,371,537 $706,380,618 120,235 $160.89 -0.70% 1,832 5.28%
- -------------------------------------------------------------------------------------------------------------------
1991 37,975 4,563,791,215 $716,913,157 120,179 $157.09 -2.37% 1,460 4.00%
- -------------------------------------------------------------------------------------------------------------------
1992 38,966 4,678,527,428 $768,220,248 120,067 $164.20 4.53% 991 2.61%
- -------------------------------------------------------------------------------------------------------------------
1993 39,633 4,770,760,559 $806,645,004 120,373 $169.08 2.97% 667 1.71%
- -------------------------------------------------------------------------------------------------------------------
1994 40,368 4,860,920,056 $851,282,088 120,415 $175.13 3.58% 735 1.85%
- -------------------------------------------------------------------------------------------------------------------
1995 41,235 4,967,160,331 $893,814,776 120,460 $179.94 2.75% 867 2.15%
- -------------------------------------------------------------------------------------------------------------------
1996 42,130 5,100,605,534 $933,918,275 121,068 $183.10 1.75% 895 2.17%
- -------------------------------------------------------------------------------------------------------------------
Compound
Annual
Growth +3.60% +3.56% +4.99% N/A +1.39% N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------
Source: National Research Bureau Shopping Center Database and Statistical Model
===================================================================================================================
</TABLE>
From the chart we see that both total GLA and total number of centers have
increased at a compound annual rate of approximately 3.6 percent since 1987.
New construction was up 2.7 percent in 1996, a slight increase over 1995 but
still well below the peak year 1987 when new construction increased by 7.5
percent. California was by far the most active state with 176 new centers
opening, followed by New Jersey (59), North Carolina (48) and Texas (47).
Among the 42,130 centers in 1996, the following breakdown by size can be
shown.
===============================================================================
U.S. SHOPPING CENTER INVENTORY, YE DECEMBER 1996
===============================================================================
<TABLE>
<CAPTION>
SQUARE FEET
NUMBER OF CENTERS (MILLIONS)
------------------- -------------------
SIZE RANGE (SF) AMOUNT PERCENT AMOUNT PERCENT
------------------------------------------------------------
<S> <C> <C> <C> <C>
Under 100,000 26,497 62.9% 1,293.3 25.4%
------------------------------------------------------------
100,001 - 200,000 10,186 24.2% 1,399.2 27.4%
------------------------------------------------------------
200,001 - 400,000 3,477 8.3% 925.5 18.1%
------------------------------------------------------------
400,001 - 800,000 1,276 3.0% 711.2 13.9%
------------------------------------------------------------
800,001 - 1,000,000 309 .7% 278.4 5.5%
------------------------------------------------------------
Over 1,000,000 385 .9% 492.9 9.7%
------------------------------------------------------------
TOTAL 42,130 100.0% 5,100.6 100.0%
===============================================================================
Source: National Research Bureau (some numbers slightly rounded).
===============================================================================
</TABLE>
Empirical data shows that the average GLA per capita is increasing. In
1996, the average for the nation was 19.23. This was up 19.4 percent from
16.1 in 1988 and more recently, 18.7 square feet per capita in 1995. Among
states, Florida regained its lead and now has the highest GLA per capita with
28.05 square feet. South Dakota has the lowest at 9.07 square feet. Per
capita GLA for regional malls (defined as all centers in excess of 400,000
square feet) has also been rising from 5.0 in 1988 to 5.6 in 1996. This
information is presented on the following chart.
- -------------------------------------------------------------------------------
-14-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=====================================
GLA PER CAPITA
=====================================
YEAR ALL CENTERS REGIONAL MALLS
=====================================
<S> <C> <C>
1988 16.1 5.0
-------------------------------------
1989 17.0 5.2
-------------------------------------
1990 17.7 5.3
-------------------------------------
1991 18.1 5.3
-------------------------------------
1992 18.3 5.5
-------------------------------------
1993 18.5 5.5
-------------------------------------
1994 18.7 5.4
-------------------------------------
1995 18.9 5.5
-------------------------------------
1996 19.2 5.6
-------------------------------------
Source: International Council of
Shopping Center: The Scope of
The Shopping Center Industry
and National Research Bureau
=====================================
</TABLE>
While per capita GLA has continued to increase, a key issue is that the
rate of increase has slowed. Per capita space has increased by only one and a
half square feet during the period 1990 through 1996. This trend is
manifested in the pace of inventory increases from 165 million square feet
per year between 1972 and 1980, to 143 million square feet per year
(1980-1990), and 118 million square feet per year (1990-1996).
Construction data also indicates that while the overall pace of shopping
center openings has eased, the pace of large store (50,000 to 200,000 square
feet) construction has more than doubled. During the more recent five year
period, big boxes have accounted for 41 percent of inventory additions.
<TABLE>
<CAPTION>
======================================================================
TRENDS IN INVENTORY GROWTH *
1972-1995
======================================================================
1972-1980 1980-1990 1990-1995
----------------------------------------------------------------------
<S> <C> <C> <C>
Shopping Center Space Added 164 143 115
----------------------------------------------------------------------
Free-Standing Stores
(50,000-200,000 SF) 36 34 79
----------------------------------------------------------------------
Total 200 177 194
----------------------------------------------------------------------
Big Box Allocation of Inventory
Growth 18% 19% 41%
----------------------------------------------------------------------
* Average Annual Increase (Million Square Feet)
======================================================================
Source: NRB and F.W. Dodge
======================================================================
</TABLE>
In their publication, NRB/Shopping Centers Today 1996 Shopping Center
Census, the National Research Bureau reports that overall retail conditions
were good in 1996. Total shopping center sales increased 4.5 percent to
$933.92 billion in 1996, up from $893.81 billion in 1995.
- -------------------------------------------------------------------------------
-15-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
========================================================================================================================
SELECTED SHOPPING CENTER STATISTICS
1990-1996
========================================================================================================================
COMPOUND
ANNUAL
1990 1991 1992 1993 1994 1995 1996 GROWTH
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Retail Sales in Shopping Centers * $706.40 $716.90 $768.20 $806.60 $851.30 $893.81 $933.92 4.8%
- ------------------------------------------------------------------------------------------------------------------------
Total Leasable Area ** 4.30 4.56 4.68 4.77 4.86 4.97 5.10 2.5%
- ------------------------------------------------------------------------------------------------------------------------
Unit Rate $160.89 $157.09 $164.20 $169.08 $175.13 $179.94 $183.10 2.2%
- ------------------------------------------------------------------------------------------------------------------------
* Billions of Dollars
** Billions of Square Feet
========================================================================================================================
Source: National Research Bureau
========================================================================================================================
</TABLE>
According to the National Research Bureau, total sales in shopping centers
have grown at a compound rate of 5.0 percent since 1987. As described,
aggregate sales were up 4.5 percent nationwide from $893.8 billion (1995) to
$933.9 billion (1996). In 1996, average sales were $183.10 per square foot,
up nearly 2.7 percent over 1995 and 2.2 percent (compound growth) over the
past several years. The biggest gain came in the super-regional category
(more than 1.0 million square feet) where sales were up 4.10 percent to
$207.44 per square foot. Nonetheless, with compound sales growth lagging the
growth in GLA, there is an indication of overbuilding by this broad measure.
The following chart tracks the change in average sales per square foot by
size category between 1993 and 1995.
<TABLE>
<CAPTION>
===============================================================================
SALES TRENDS BY SIZE CATEGORY
1993-1996
===============================================================================
AVERAGE SALES PER SQUARE FOOT %CHANGE
CATEGORY ----------------------------------------------------
1993 1994 1995 1996 1993-96*
===============================================================================
<S> <C> <C> <C> <C> <C>
Less than 100,000 SF..... $193.10 $199.70 $204.94 $209.74 +2.8%
100,001 to 200,000 SF .. $156.18 $161.52 $166.00 $169.56 +2.8%
200,001 to 400,000 SF ... $147.57 $151.27 $153.96 $154.07 +1.4%
400,001 to 800,000 SF ... $157.04 $163.43 $168.21 $170.14 +2.7%
800,001 to 1,000,000 SF . $194.06 $203.20 $210.40 $213.93 +3.3%
More than 1,000,000 SF .. $183.90 $193.13 $201.05 $207.44 +4.1%
Total $169.08 $175.13 $179.94 $183.10 +2.7%
===============================================================================
* Compound Annual Change
===============================================================================
Source: National Research Bureau
===============================================================================
</TABLE>
Consumers demand for value and selection have led to an unprecedented
growth of the category killer, superstore and warehouse club concepts. In its
annual industry report, Discount Store News has identified the nation's top
200 merchants. Overall, these merchants posted sales of $336.6 billion, up
7.5 percent over 1995. The chart below highlights the year-to-year
performance along with 1997 projections.
- -------------------------------------------------------------------------------
-16-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=============================================================================================
SALES BY SEGMENT (IN BILLIONS $)
=============================================================================================
1995 1996 MARKET SHARE % CHANGE 1997 (PROJ.)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Full-Line Discount Stores (1) $150.9 $162.3 48% 7.6% $178.5
Specialty Discounters (2) 67.5 76.3 23% 13.1% 87.5
Warehouse Clubs 41.1 43.5 13% 5.8% 45.9
Other Discount Mass Merchants (3) 30.8 31.8 9% 5.0% 33.4
Off-Price Apparel Chains 15.8 16.9 5% 6.2% 17.9
Jewelry/Hard Lines Retailers 6.9 5.9 2% (15.0%) 5.1
Total Market $313.0 $336.6 100% 7.5% $368.5
=============================================================================================
(1) Includes full-line discount department stores, supercenters, closeouters and
single-price retailers
(2) Includes home, automotive, crafts, toys, office supplies, book, computer superstores,
baby superstores, pet supplies, consumer electronics and sporting goods specialty
stores.
(3) Includes Sears, Ward, QVC, HSN and variety stores.
=============================================================================================
Source: DSN Research
=============================================================================================
</TABLE>
As can be seen, the largest segment is comprised of full line discount
stores which was up 7.6 percent to $162.3 billion, or 48 percent of all
sales. Excluding Wal-Mart, by far the industry leader, 75 retailers in the
DSN top 200 posted double digit sales gains. The biggest winners were baby
superstores (+47.2%), book superstores (+35.9%), and home furnishing
superstores (33.1%). Among the supercenter categories, Wal-Mart Supercenter's
$19.3 billion in sales, up 67.7 percent over 1995, accounted for more than
half of the segment's $36.2 billion in sales.
The Urban Land Institute, in the 1997 edition of Dollars and Cents of
Shopping Centers, reports that vacancy rates range from a low of 2.0 percent
in neighborhood centers to 14.0 percent for regional malls. Super-regional
malls reported a vacancy rate of 7.0 percent and community centers were 4.0
percent based upon their latest survey.
The ICSC reports that 157 shopping centers were started in the second
quarter of 1997, 12 fewer than in the second quarter of 1996. Total GLA
started amounted to 13.0 million square feet, down nearly one-third over last
year. The overwhelming majority of the starts (146) were in centers less than
200,000 square feet, resulting in a 27 percent drop in average size from
114,000 to 83,000 square feet.
MARKET SHIFTS -- CONTEMPORARY TRENDS IN THE RETAIL INDUSTRY
The mid 1990s have continued the trend of profound changes in the retail
industry. Department stores have emerged from the troubles of late 1980s and
early 1990s to be stronger than ever. Continued consolidations in this
industry segment should continue. Specialty retailers continue to experience
a shakeout of weaker, out of favor formats while discounters gain market
share. Power centers, the growth vehicle of the last several years have
reached a point of saturation that has undermined investor's interest in this
product. Outlet centers are still struggling, however, the super-regional
mega-center appears poised to be the hot concept for the next few years.
Some of the important developments in the industry over the past year can
be summarized as follows:
- -------------------------------------------------------------------------------
-17-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o The 1996 Christmas selling season ended on a down note with sales
finishing below most analysts expectations. For most consumer
electronics and computer retailers, the season was horrible with
December sales down 4.8 percent on average. Best Buy, last year's rising
star, was off 13.0 percent. Apparel sales rose 3.3 percent led in part
by Ann Taylor up 8.8 percent following last year's 2.9 percent decline.
According to the Department of Commerce, on an overall basis, department
stores registered an average increase of 4.6 percent while discounters
had a 7.8 percent rise on average. Conventional department stores rose
1.9 percent. A summary of some year over year comparable store sales
results is shown below.
<TABLE>
<CAPTION>
===============================================
COMPARABLE STORE SALES
(%) CHANGE OVER LAST 12
MONTHS
===============================================
<S> <C>
DISCOUNTERS
Wal-Mart 4.5
Kmart 2.3
Dayton Hudson 2.4
-----------------------------------------------
DEPARTMENT STORES
Sears 6.1
Federated 2.8
JC Penney 2.9
Dillards 2.0
-----------------------------------------------
APPAREL
Limited 2.0
The Gap 5.0
TJX 7.0
-----------------------------------------------
MISCELLANEOUS
Best Buy -4.0
Tandy .4
Woolworth -2.0
Pier 1 12.0
===============================================
Source: Wall Street Journal
===============================================
</TABLE>
o Consolidation in the department store industry segment continued, albeit
at a slower pace than seen over the last few years.
o ROSE'S STORES -- Announced (11/97) their pending acquisition by
Variety Wholesalers. Rose's is a North Carolina based 106 store
junior department store chain. The privately held Variety
Wholesalers operates 500 units in the southeast.
o PROFFITT'S -- Announced (11/97) they will buy CARSON PIRIE SCOTT, a
midwest based retailer with 56 units and $1.1 billion in annual
sales. Proffitt's acquired 38 unit PARISIAN chain for $221 million.
Company now controls 141 stores in 19 states. They have also
announced an agreement to acquire G.R. HERBERGER'S, a 40-unit
department store chain based in St. Cloud, Minnesota for $153
million.
o BARNEYS INC. -- To give up control to Hong Kong based Dickenson
Concepts.
- -------------------------------------------------------------------------------
-18-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o MONTGOMERY WARD & CO. -- With 400 stores in 43 states filed Chapter
11 in July 1997. They have announced the closure of 48 units.
o STRAWBRIDGE & CLOTHIER -- 128 year old Philadelphia based
institution sold 13 unit department store division to May Company.
Its 27 unit discount CLOVER division went to Kimco which is putting
Kohl's in several of the units, their initial foray into the East.
o RICH'S -- 26 unit New England based regional chain closes.
o FEDERATED -- Continues its conversion of Broadway stores in
California to Macy's and Bloomingdales.
o Discounters are being attacked from two sides. Big Box category
killers have rapidly expanded on one side. Alternatively, full
service department stores have become more promotional, closing the
price advantage gap discounters have traditionally enjoyed. For
example, BRADLESS and CALDOR remain in bankruptcy and AMES continues
to struggle looking for the right strategy to compete against
Wal-Mart, Kmart, Target and now Kohl's.
o Troubles continues for several specialty retailers as the protracted
shake-out continued with several Chapter 11 filings, downsizings, and
some cases, outright liquidations. Among the more notable:
o THE WIZ INC., the New York area based electronics retailer filed for
bankruptcy (12/97) saying it will close 17 of its 50 Nobody Beats
The Wiz stores.
o BERNARD CHAUS INC., the struggling maker of Chaus women's clothing
and Nautica Sportswear, announced (11/97) it would close 20 of its
21 outlet stores.
o HOME EXPRESS will liquidate its 12 remaining housewares and linens
stores by October 1997. The chain, which at one time had 33 units,
had filed Chapter 11 in February 1996.
o LEVITZ FURNITURE INC. filed for Chapter 11 on September 5, 1997. The
company operates 68 showrooms and 61 smaller stores in 26 states. It
will initially close 18 stores.
o KMART will shed BUILDERS SQUARE for $10.0 million to Leonard Green &
Partners who will merge it HECHINGERS.
o PAYLESS CASHWAYS filed Chapter 11 in July 1997.
o WAL-MART announces closure of 7 year old BUD'S chain in July 1997.
o WOOLWORTH announces closure of all remaining (400) variety stores in
July 1997.
o SERVICE MERCHANDISE announces (4/97) it would close 60 of its 400
stores.
- -------------------------------------------------------------------------------
-19-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o CONSOLIDATED STORES announced (3/97) it is scrapping its ALL FOR ONE
DOLLAR chain (175 units).
o GROSSMANS INC., a home improvement retail chain, filed Chapter 11 in
March 1997.
o OSHMANS SPORTING GOODS announces closure (2/97) of 50 of its 84
conventional stores to concentrate on its superstore concept.
o LINEN SUPERMARKET (80 units) liquidated in June 1997.
o ROSES AUTO STORES filed Chapter 11 in June 1997 and immediately
closed all 62 stores. It then reopened 6.
o LURIA'S, the 99-year old apparel and hard goods chain filed Chapter
11 in August 1997 and is closing 11 of its 17 stores. The chain at
one time had 50 locations throughout Florida.
o ALL ABOUT SPORTS filed Chapter 11 in May 1997 and immediately
announced plans to liquidate.
o MCCRORY CORP. is seeking court approval to close 307 of its 461
remaining stores and liquidate. At one time it ran 820 stores in
1992 when it filed for protection.
o LIMITED will close 200 of its 4,500 units during 1997.
o HANDY ANDY -- Regional home improvement chain closed remaining 54
stores.
o HERMAN'S liquidated all of its sporting goods stores in the
northeast (5/96).
o TODAY'S MAN -- 35 unit apparel super store chain filed Chapter 11.
o BARNEY'S -- High profile New York based upscale retailer filed
Chapter 11.
o MERRY-GO-ROUND liquidated and closed its remaining 560 units
including Chess King, Dejaiz and Cignal units.
o JAMESWAY -- Regional discount department store chain in the
northeast liquidated.
o INCREDIBLE UNIVERSE -- After aggressive foray into this mega store
format (185,000 (plus or minus) square feet), TANDY closes division
down. Tandy will also close the remaining 53 units of its struggling
MCDUFF ELECTRONICS chain and 19 of its 108 COMPUTER CITY units.
o ERNST HOME CENTERS -- Board approved liquidation of 53-unit chain.
o KIDS MART -- 144-unit childrens apparel chain rumored to be close to
filed Chapter 11 in January 1997 and liquidated in April 1997.
o SUN TELEVISION AND APPLIANCE is considering closing 9 of its 50
stores citing losses.
- -------------------------------------------------------------------------------
-20-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o BEST having sold its remaining units to Shottenstein Corp. in November
1996, the new owner initiated a liquidation of the former catalog
showroom.
o AUTOWORKS (129 units) - Less than one month after filing Chapter 11 in
July 1997, Hahn Automotive Warehouse got bankruptcy court permission to
liquidate the inventory of its 83 unit subsidiary.
o RICKEL HOME CENTERS - 86 unit home improvement chain filed Chapter 11
and announced (10/97) they will close its remaining 49 units in New
York, New Jersey, Pennsylvania, and Delaware, laying off 2,000 people.
o HOUSE OF FABRICS filed Chapter 11 and closes 86 of its 361 units.
o DISCOVERY ZONE - Fast expanding childrens' entertainment and
recreation oriented concept filed Chapter 11.
o BEN FRANKLIN - Arts and crafts retailer filed Chapter 11 and
subsequently ordered to liquidate.
o KUPPENHEIMER - Apparel retailer files Chapter 11 and plans to close
half of its 87 units in New Jersey, New York, Pennsylvania, and
Delaware, laying off 2,000 people.
o COUNTY SEAT - 740-unit apparel retailer has filed Chapter 11 and will
close 200 units. THE WET SEAL has made a proposal to acquire 508 of the
stores.
o ALL FOR A DOLLAR - 111-unit close-out chain has filed Chapter 11.
Mergers and consolidations among specialty retailers, drug, supermarket
and apparel categories continue. Evidence of changes among the movie business
is also a recognized trend.
o UNITED ARTISTS THEATRE GROUP announced (11/97) they will be acquired
by Hicks, Muse, Tate & Furst Inc. for $850.0 million. The company has
340 theaters with 2,174 screens in 26 states.
o ACT III THEATERS announced (10/97) their pending acquisition by
Kohlberg Kravis Roberts & Company for $660 million.
o SONY CORP. AND CINEPLEX ODEON CORP. agreed (10/97) to combine their
theaters in a $1.0 billion transaction that will create a 2,600 screen
chain, second in North America to the 2,700 screen Carmike Cinemas.
o GART SPORTS, a Denver based privately held chain, has agreed to
acquire (10/97) Sportmart Inc, forming the second largest sporting
goods chain with 120 stores in 13 states and sales of $700 million.
o FRED MEYER, INC., announced (11/97) they will merge with Quality Food
Centers and Ralph's Grocery Company in two separate transactions that
will create a $15.0 billion company with 800 stores
- -------------------------------------------------------------------------------
-21-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
in 14 states. In early 1997 they merged with Smiths Food and Drug
creating a 265 unit chain with $7.0 billion in sales.
o CONSOLIDATED STORES, operator of Odd Lots, Big Lots, and Kay Bee Toys
(1,940 units) announced (11/97) they will acquire MacFrugal's Bargain
Close-outs (325 units in 18 states) for nearly $1.0 billion.
o DISCOUNT AUTO PARTS, a 411 unit Florida based automotive after market
chain, announced (11/97) its merger with Hi-Lo Automotive, forming a
598 unit company with combined revenues of $700 million.
o PETCO has announced (9/97) their intended acquisition of PetCare, an
81 store privately held chain based in Chicago.
o JITNEY JUNGLE STORES OF AMERICA (105 units) will acquire Delchamps
(118 units).
o CVS DRUG acquired Revco in February 1997 with combined total of
4,000 stores and $10 billion in sales.
o STAPLES proposed merger with OFFICE DEPOT in a $3.4 billion deal
nixed by FTC.
o TOYS R US acquired BABY SUPERSTORE in $407 million deal (2/97).
o MELVILLE sold KAY BEE TOYS to CONSOLIDATED STORES adding to its Toy
Liquidators, Toys Unlimited and Amazing Toys close-out units for $315
million. Melville has officially changed its name to CVS Corp.
o SAFEWAY to acquire VON'S in a $1.65 billion deal, creating an
operation with 1,400 stores, 139,000 employees and $22.0 billion in
revenues. They will still trail the industry leader, KROGER, in size.
o JC PENNEY, parent of THRIFT DRUG, announced they will acquire FAY'S
INC., operator of 272 units, making Thrift the nation's eight largest
chain. Penney's acquisition of ECKERD DRUG has been cleared by the FTC.
o SEARS & ROEBUCK acquired the 61 unit ORCHARD SUPPLY HARDWARE chain
for $415 million.
o WABAN, INC. - to spin off BJ'S WHOLESALE CLUB and change its name to
its other wholesale club division, HomeBase.
o FOOD LION - announced its pending acquisition of KASH N KARRY in a
$341.0 million deal.
o PETSMART - Announced plans to acquire PET CITY HOLDINGS, the largest
pet superstore chain in the UK.
o TJX COMPANIES - announced intent to sell its CHADWICK'S OF BOSTON
catalog to Brylane LP.
o REVCO - completed its tender offer for Big B drug store chain.
o QUALITY FOOD CENTERS - Bellvue, WA based supermarket chain to acquire
56-unit HUGHES FAMILY MARKETS for $360 million.
- -------------------------------------------------------------------------------
-22-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o REITs ended the year with excellent gains over the thrashing many of
their stock prices took earlier in the year. At year end, the average
REIT was up 40 percent. Outlet center REITs were the notable laggards
with a 3.8 percent gain. The most significant deal in 1996 involved
Simon Property Group's $1.5 billion acquisition of The DeBartolo Realty
Corp. The combined company has a market capitalization of $7.5 billion
and a portfolio of 111 regional malls, 66 strip centers, and several
specialty centers.
o Power center growth has arguably fueled the industry's expansion over
the past few years. With investors having become more pessimistic due
to overbuilding and cannibalization of sales, a new growth vehicle is
emerging, the supercenter. This concept combines the elements of a
neighborhood center, discounter, supermarket, and drug store into one
unit of 150,000 to 200,000 square feet. At the end of 1995 there were
500 plus and minus supercenters. A recent ICSC Survey expects the
market to reach buildout in 2003 with 1,800 stores. Leading chains
include Wal-Mart, Kmart, Target and Meyer.
o Despite trends towards consolidation and downsizing, retailers say
they will continue aggressive expansions over the next four years.
These results were tabulated from Shopping Center World's 16th Annual
Retailer's Expansion Plans Survey. Retailers say they will open 28,000
stores between 1997 and the end of 2000. Among the 148 responding
retailers, 83 percent planned their expansions in shopping centers led
by regional malls.
<TABLE>
<S> <C>
o Regional Malls 72%
o Power Centers 50%
o Neighborhood Centers 46%
o Community Centers 34%
o Outlet Centers 20%
o Off-Price Centers 17%
</TABLE>
37 percent cited the southeastern part of the country as the hottest
growth area.
o As of January 1, 1995 there were 311 outlet centers with 44.4 million
square feet of space. Outlet GLA has grown at a compound annual rate of
18.1 percent since 1989. The five outlet center REITs operated 132
centers as of mid-year 1996. By the year 2000 they expect to operate
nearly 175 units. Overall occupancy in 1995 (1996 not available at this
writing) slipped to 93.3 percent from 95.5 percent in 1994. Concerns of
over-building, tenant bankruptcies, and consolidations have now
negatively impacted this industry as evidenced by the hit the outlet
REIT stocks have taken.
o Consolidation in the Outlet Industry has been predicted for some time.
Prime Retail Inc. announced (11/13/97) they have signed a definitive
agreement to acquire Horizon Group Inc. in a transaction valued at
$906.3 million. As a result of the deal, Prime will own and operate 20
of Horizon's 37 outlet centers.
o Category Killers and disocunt retailers have continued to drive the
demand for additional space. In 1995, new contracts were awarded for
the construction or renovation of 260 million square feet of stores and
shopping centers, up from 173 million square fee in 1991 according to
F.W. Dodge, matching the
- -------------------------------------------------------------------------------
-23-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
highest levels over the past two decades. It is estimated that between
1992 and 1994, approximately 55.0 percent of new retail square footage
was built by big box retailers. In 1994, it is estimated that they
accounted for 80.0 percent of all new stores. Most experts agree that
the country is over-stored. Ultimately, it will lead to higher vacancy
rates and place severe pressure on aging, capital intensive centers.
Many analysts predict that consolidation will occur soon in other
superstores categories such as in the office products segment where
Office Depot and Staples have announced a merger.
o Entertainment is clearly the new operational requisite for property
owners and developers who are incorporating some form of entertainment
into their designs. With a myriad of concepts available, ranging from
mini-amusement parks to multiplex theater and restaurant themes, to
interactive high-tech applications, choosing the right formula is a
difficult task. Many of the nation's largest media and entertainment
companies are getting into the retail business in some fashion. AMC
Entertainment has formed a separate subsidiary, Centertainment, Inc.,
to work with developers to create entertainment based retail projects.
o Super-regional value-oriented mega malls such as The Mills concept are
expected to be one area of growth over the next several years. This
hybrid concept incorporates the diverse mix of super-regional malls
with the value-oriented aspects of factory outlets, category killers,
off-price merchants and retailer clearance outlets under one roof. In
addition, they add an entertainment component that is designed to
extend the stay of the patron from approximately one to one and
one-half hours in a traditional mall format to three to five hours.
These malls are at least 1.0 million square feet althought the Mills
design averages 1.5 million square feet. They can contain between 7 and
20 anchors and have trade areas stretching upwards to 100 miles.
INVESTMENT CRITERIA AND INSTITUTIONAL INVESTMENT PERFORMANCE
Investment criteria for mall properties range widely. Many firms and
organizations survey individuals active in this industry segment in order to
gauge their current investment criteria. These criteria can be measured against
traditional units of comparison such as price (or value) per square foot of GLA
and overall capitalization rates.
The price that an investor is willing to pay represents the current or
present value of all the benefits of ownership. Of fundamental importance is
their expectation of increases in cash flow and the appreciation of the
investment. Investors have shown a shift in preference to initial return,
placing probably less emphasis on the discounted cash flow analysis (DCF). A
DCF is defined as a set of procedures in which the quantity, variability,
timing, and duration of periodic income, as well as the quantity and timing of
reversions, are specified and discounted to a present value at a specified
yield rate. Understandably, market thinking has evolved after a few hard years
of reality where optimistic cash flow projections did not materialize. The DCF
is still, in our opinion, a valid valuation technique that when properly
supported, can present a realistic forecast of a property's performance and its
current value in the marketplace.
Equitable Real Estate Investment Management, Inc. reports in their
EMERGING TRENDS IN REAL ESTATE - 1998 that their respondents give retail
investments generally poor performance
- -------------------------------------------------------------------------------
-24-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
forecasts in their latest survey due to the protracted merchant shakeout which
will continue into 1997 and the general overbuilding which has had a
fundamental change on the industry. While dominant, Class A malls are still
considered to be one of the best real estate investments anywhere, only 34
percent of the respondents recommended buying malls. This was up from 20
percent in 1997.
The following chart summarizes the results of their current survey.
RETAIL PROPERTY RANKINGS AND FORECASTS
<TABLE>
<CAPTION>
INVESTMENT POTENTIAL PREDICTED VALUE GAINS
---------------------- 1998 --------------------------------------
PROPERTY TYPE RATING1 RANKING2 RENT CHANGE 1 YR. 5 YRS. 10 YRS.
- ------------------------ --------- ---------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Regional Malls 4.6 7th +0.6% +2.2% +11.9% +22.9%
Power Centers 3.9 8th -0.2% -0.4% 8.5% 17.1%
Community Centers 5.4 5th 1.8% 3.4% 12.7% 23.9%
</TABLE>
- --------
1 Scale of 1 to 10
2 Based on 9 property types
Source: Emerging Trends in Real Estate - 1998
REGIONAL MALLS
It is felt that price declines in malls as an investment have bottomed out
and are slowly recovering. Thirty-four percent of all respondents recommend
buying up from 20 percent last year. However, interviewees regard malls as more
of a hold than a buy and generally counsel against selling at this time. Malls
now rank 7th overall in investment appeal, 9th in development potential, and
8th in overbuilding risk. Value gains of 2.2 percent are forecasted this year,
their 22.9 percent over ten years does not stack up well against other
investment choices. While dominant malls in strong growth markets continue to
be prime investments, older malls are clearly at risk as they are vulnerable to
new competition and have high maintenance costs which cannot compete with newer
open air centers that operate much more cost effectively.
POWER CENTERS
This ten year old phenomenon has pushed itself into a lowly 3.9 investment
ranking (last) and a high overbuilding risk (second). Anticipated rent and
value changes will be essentially flat (-.2 percent and -.4 percent,
respectively). Long term appreciation lacks any real appeal and interviewees
overwhelmingly recommend selling the centers and show little interest in buying
at this time.
COMMUNITY CENTERS
Emerging Trends cites that with larger retail formats struggling, certain
neighborhood and community centers may be well positioned to excel over the
next few years. Investment and development potential rank 5th and 6th,
respectively. Value gains of 3.4 percent are forecasted for 1998 along with
rent increases of 1.8 percent (1 year). Over the long term, a 23.9 percent
value gain is forecasted. Centers with "super" grocery stores provide a
convenient alternative for time pressed shoppers which adds to their appeal.
The NCREIF PROPERTY INDEX represents data collected from the Voting
Members of the National Council of Real Estate Investment Fiduciaries. As shown
in the following table, data through the second quarter of 1997 shows that the
retail index posted a positive 1.63 percent
- -------------------------------------------------------------------------------
-25-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
total return for that quarter versus 5.08 percent increase in total return for
all of 1996. The 1.63 percent total return for the quarter was more than 100
basis points below the overall NCREIF total property index of 2.66 percent. On
the bright side, the 2.06 percent income return was the highest in 13 years.
However, the negative appreciation return represented the 27th markdown in the
last 28 quarters. On balance, positive trends are in evidence by the fact that
restructuring in the retail industry is better positioning the centers to meet
growing consumer demands influenced by the strong economy and growing consumer
confidence. Retail sales continue to outpace inflation and there are signs that
construction is slowly subsiding.
RETAIL PROPERTY RETURNS
NCREIF INDEX (%)
<TABLE>
<CAPTION>
PERIOD INCOME APPRECIATION TOTAL CHANGE IN CPI*
- ----------------- -------- -------------- --------- ---------------
<S> <C> <C> <C> <C>
2nd Qtr. 1997 2.06 -.43 1.63
One Year 8.30 -3.20 4.90
Three Years 8.11 -2.78 5.16
Five Years 7.74 -3.43 4.11
Ten Years 7.11 -1.19 5.86
</TABLE>
- --------
* Annualized year ending 12/31
Source: Real Estate Performance Report
National Council of Real Estate Investment Fiduciaries
Retail's total return of 4.90 percent for year ending 6/30/97 was
substantially behind the other investment categories including Apartment
(11.20%), Office (13.93%), R&D (22.27%), and Warehouse (12.88%). Among the
different retail categories, neighborhood centers posted the best total
performance, while regional malls were laggards.
RETAIL SEGMENT PERFORMANCE
<TABLE>
<CAPTION>
CATEGORY INCOME APPRECIATION TOTAL
- ------------------------ ---------- -------------- ---------
<S> <C> <C> <C>
Neighborhood 9.05% - .63% 8.70
Community 9.07% - .78% 8.23
Regional Malls 8.05% -4.66% 3.12
Super Regional Malls 7.90% -4.24% 3.40
</TABLE>
From the above, it is clear that value declines were still in evidence
during the first half of 1997.
Private investor underwriting has become more conservative with respect to
vacancy allowances, growth rate (rent, sales) and occupancy cost tolerance
levels. The reduced spread between cash returns and internal rate of returns is
evidence that buyers seek a higher proportion of their expected return from
income rather than from appreciation.
The Cushman & Wakefield Investor Survey also confirms trends that
capitalization rates for most retail categories have risen. Regional malls have
been the most affected. This is partly due to the fact that a large number of
malls are currently available for sale.
- -------------------------------------------------------------------------------
-26-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
The Urban Land Institute, in their 1997 REAL ESTATE FORECAST - MID YEAR
OUTLOOK, projects very small increases in effective rents through mid-1998
for both regional malls and strip shopping centers. Even though rent
increases will likely be higher than 1996, they will likely not keep pace
with inflation. In fact, retail garnered the bottom two spots in ULI's
ranking of 10 property types in measuring their expected performance change.
The downward pressure on rents has been attributed to the expansion of
big-box retailers, which has resulted in a changing tenant base that requires
a different type of space than exists in much of the older retail stock.
REAL ESTATE INVESTMENT TRUST MARKET (REITS)
To date, the impact of REITs on the retail investment market has been
significant, although the majority of Initial Property Offerings (IPOs)
involving regional malls, shopping centers, and outlet centers did not enter
the market until the latter part of 1993 and early 1994. It is noted that
REITs have dominated the investment market for apartment properties and have
evolved into a major role for retail properties as well.
Currently, there are in excess of 300 REITs in the United States, more
than three-quarters of which are publicly traded. The advantage provided by
REITs, in comparison to more traditional real estate investment
opportunities, include the diversification of property types and location,
increased liquidity due to shares being traded on major exchanges, and the
exemption from corporate taxes when 95.0 percent of taxable income is
distributed.
There are essentially three kinds of REITs which can either be
"open-ended", or Finite-life (FREITs) which have specified liquidation dates,
typically ranging from eight to fifteen years.
o EQUITY REITS center around the ownership of properties where
ownership interests (shareholders) receive the benefit of returns
from the operating income as well as the anticipated appreciation of
property value. Equity REITs typically provide lower yields than
other types of REITs, although this lower yield is theoretically
offset by property appreciation.
o MORTGAGE REITS invest in real estate through loans. The return to
shareholders is related to the interest rate for mortgages placed by
the REIT.
o HYBRID REITS combine the investment strategies of both the equity
and mortgage REITs in order to diversify risk.
The influx of capital into REITs has provided property owners with an
significant alternative marketplace of investment capital and resulted in a
considerably more liquid market for real estate. A number of
"non-traditional" REIT buyers, such as utility funds and equity/income funds,
established a major presence in the market during 1993/94.
1995 was not viewed as a great year for REITs relative to the advances
seen in the broader market. Through the end of December, equity REITs posted
nearly a 10 percent total return according to the National Association of
Real Estate Investment Trusts (NAREIT). The best performer among equity REITs
was the office sector with a 38.8 percent total return. This was followed by
self-storage (34.9%), hotels (30.8%), triple-net lease (31.6%), and
industrial/self-storage (27.9%). One equity REIT sector was in the red
- -outlet centers (-2.80%).
- -------------------------------------------------------------------------------
-27-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
RETAIL REITS
As of September 30, 1997, there were a total of 47 REITs specializing in
retail, making up sizable percentage of the securities in the REIT market.
Forty six of these REIT companies are Equity REITs. Depending upon the
property type in which they specialize, retail REITs are divided into three
categories: shopping centers, regional malls, and outlet centers. The REIT
performance indices chart, shown as TABLE A, displays a summary performance
of the three composite categories. TABLE B identifies the number of companies
and market capitalization for year end 1996 as well as through the third
quarter 1997.
===============================================================================
TABLE A - RETAIL REIT PERFORMANCE
===============================================================================
12/31/96 9/30/97
------------------------- --------------------------
Y-T-D TOTAL DIVIDEND Y-T-D DIVIDEND
RETURN YIELD TOTAL RETURN YIELD
===============================================================================
ALL REITS 39.96% 6.59% 13.24% 6.28%
Strip Centers 32.88% 6.50% 15.53% 5.98%
Regional
Malls 44.63% 6.60% 12.21% 6.62%
Outlet
Centers 3.78% 9.22% 5.59% 7.87%
- -------------------------------------------------------------------------------
Source: Realty Stock Review
===============================================================================
===============================================================================
TABLE B - MARKET CAPITALIZATION
===============================================================================
12/31/96 9/30/97
----------------------------- ----------------------------
NO. OF MARKET NO. OF MARKET
SECURITIES CAPITALIZATION* SECURITIES CAPITALIZATION
===============================================================================
ALL REITS 43 $20,190.7 47 $26,889.6
Strip Centers 26 $11,145.8 27 $14,016.0
Regional
Malls 10 $ 7,349.0 12 $10,337.2
Outlet
Centers 6 $ 1,300.2 6 $ 1,694.0
- -------------------------------------------------------------------------------
* Number reported in thousands.
Source: Realty Stock Review
===============================================================================
As can be seen, the 43 REIT securities at year end 1996 had a market
capitalization of approximately $20.2 billion. Total returns of nearly 40.0
percent were well ahead of the stock market as a whole and also exceeded the
35.8 percent return for all REITs. Regional malls did exceptionally well with
nearly a 45 percent return followed by strip centers at approximately 33%.
Outlet centers, which were posting negative returns through the third
quarter, recovered to show a 3.8 percent return for the year. Accordingly,
dividend yields for this group were 9.22 percent, some 266 basis points above
the composite average return.
- -------------------------------------------------------------------------------
-28-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Data through the third quarter of 1997 shows that the 47 REIT securities
have a market cap of $26.9 billion. Year to date returns for strip centers
and regional malls are 6.0 and 6.6 percent respectively. Alternatively,
outlet center REIT's which performed poorly through the first half of 1997,
have turned around to post a 5.6% YTD return.
While many of the country's best quality malls and shopping centers have
recently been offered in the public market, this heavily capitalized
marketplace has provided sellers with an attractive alternative to the more
traditional market for large retail properties.
REITs have been the most aggressive buyer of centers by virtue of their
need to grow FFO. TABLE C highlights the change in ownership between 1994 and
1997.
==================================================
TABLE C
PERCENTAGE OF U.S. CENTERS
OWNED BY REITS BY CENTER SIZE
==================================================
CENTER SIZE (SF) % IN 1994 % IN 1997
--------------------- ------------- -------------
(less than) 100,000 1.1% 3.9%
100,001 - 200,000 3.0% 7.9%
200,001 - 400,000 6.1% 13.8%
400,001 - 800,000 11.7% 20.3%
800,001 - 1,000,000 13.9% 30.6%
(greater than) 1,000,000 12.6% 27.8%
All Centers 2.5% 6.6%
--------------------------------------------------
Source: ICSC Research Quarterly -Fall 1997
==================================================
From the above it is shown that REITs now own 6.6 percent of all shopping
centers. Further analysis shows they own 23 percent of all regional malls and
6 percent of all strip centers.
REGIONAL MALL REITS
The accompanying exhibit TABLE B summarizes the basic characteristics of
nine REITs and one publicly traded real estate operating company (Rouse
Company) comprised exclusively or predominantly of regional mall properties.
Excluding the Rouse Company (ROUS), the IPOs have all been completed since
November 1992. The nine public offerings with available information have a
total of 281 regional or super regional malls with a combined leasable area
of approximately 229 million square feet. This figure represents more than
14.0 percent of the total national supply of this product type.
The ten companies are among the largest and best capitalized domestic real
estate equity securities, and are considerably more liquid than more
traditional real estate related investments.
- -------------------------------------------------------------------------------
-29-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===================================================================================
TABLE B - REGIONAL MALL REIT ANALYSIS
CUSHMAN & WAKEFIELD INC.
CBL GWN GGP JPR
CBL & CROWN GENERAL JP REALTY
REIT PORTFOLIO ASSOC. AMERICAN GROWTH INC.
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMPANY OVERVIEW
No. of Retail Centers ........ 105 25 67 n/a
No. of Regional Malls ........ 16 25 66 10
Mall as % of Portfolio ....... 71% 99% 98% 71%
Avg. Total GLA/Center* ....... 655 545 699 493
MALL OPERATIONS
Reporting Year ............... 1995 1995 1995 1995
Avg. Sales PSF of Mall
Shop GLA .................... $ 232 $ 206 $ 235 $ 208
Avg. Rent on Recent
Leases ...................... $ 17.41 $ 17.96 $ 21.80 $ 21.45
Minimum Rent/Sales Ratio 7.5% 8.7% 9.3% 10.3%
Total Occupancy Cost/Sales
Ratio ....................... 12.3% 11.1% 12,1% 10.2%
Mall Shop Occupancy level 88.2% 82.0% 86.2% 86.5%
SHARE PRICES
IPO Date ..................... 10/27/93 8/9/93 4/8/93 n/a
IPO Price .................... $ 19.50 $ 17.25 $ 22.00 n/a
Current Price (11/29/96) ..... $ 24.50 $ 7.63 $ 27.75 $ 19.50
52 - Week High ............... $ 25.00 $ 8.75 $ 28.38 $ 19.75
52 - Week Low ................ $ 19.50 $ 6.63 $ 18.50 $ 15.13
CAPITALIZATION & YIELDS
Market Capitalization** ...... $ 1,266 $ 842 $ 2,744 $ 661
Annual Dividend .............. $ 1.68 $ 0.80 $ 1.72 $ 1.92
Dividend Yield (11/29/96)..... 6.86% 10.48% 6.20% 9.85%
FFO 1996*** .................. $ 2.03 $ 1.29 $ 1.95 $ 1.83
FFO Yield (11/29/96) ......... 8.29% 16.91% 7.03% 9.38%
===================================================================================
<CAPTION>
=================================================================================================================
SPG URB
MAC MLS RSE SIMON GCO URBAN
THE MACERICH THE MILLS ROUSE PROPERTY TAUBMAN SHOPPING
REIT PORTFOLIO COMPANY CORP. COMPANY GROUP CENTERS CENTERS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY OVERVIEW
No. of Retail Centers ........ 20 18 69 177 19 12
No. of Regional Malls ........ 17 4 38 113 19 8
Mall as % of Portfolio ....... 97% 82% 75% 77% 100% 95%
Avg. Total GLA/Center* ....... 735 1,500 873 759 1,102 1,040
MALL OPERATIONS
Reporting Year ............... 1995 1995 1995 1995 1995 1995
Avg. Sales PSF of Mall
Shop GLA .................... $ 290 $ 297 $ 289 $ 276 $ 352 $ 344
Avg. Rent on Recent
Leases ...................... $ 23.00 $ 25.00 $ 24.90 $ 21.92 $ 41.27 $ 34.64
Minimum Rent/Sales Ratio 7.9% 8.4% 8.6% 7.9% 11.7% 10.1%
Total Occupancy Cost/Sales
Ratio ....................... 11.3% 11.6% 12.2% 11.0% 15.1% 11.4%
Mall Shop Occupancy level 92.2% 90.0% 95.2% 86.4% 88.0% 92.6%
SHARE PRICES
IPO Date ..................... 3/9/94 4/94 1966 12/26/93 11/18/92 10/6/93
IPO Price .................... $ 19.00 $ 23.50 n/a $ 22.25 $ 11.00 $ 23.50
Current Price (11/29/96) ..... $ 23.25 $ 20.75 $ 26.50 $ 27.38 $ 11.63 $ 26.50
52 - Week High ............... $ 24.00 $ 22.50 $ 27.38 $ 27.88 $ 12.50 $ 27.88
52 - Week Low ................ $ 19.00 $ 16.50 $ 18.25 $ 21.13 $ 9.25 $ 20.13
CAPITALIZATION & YIELDS
Market Capitalization** ...... $ 1,328 $ 1,481 $ 3,936 $ 5,900 $ 3,127 $ 1,072
Annual Dividend .............. $ 1.76 $ 1.89 $ 0.88 $ 1.97 $ 0.88 $ 1.98
Dividend Yield (11/29/96)..... 7.57% 9.11% 3.32% 7.20% 7.57% 7.47%
FFO 1996*** .................. $ 1.96 $ 1.96 $ 2.42 $ 2.34 $ 0.98 $ 2.41
FFO Yield (11/29/96) ......... 8.43% 9.45% 9.13% 8.55% 8.43% 9.09%
=================================================================================================================
Source: Salomon Brothers, Realty Stock Review; Annual Reports and Green Street
Advisors, Inc.
* Numbers in thousands (000) includes malls only.
** Numbers in millions.
*** Funds From Operations is defined as net income (loss) before
depreciation, amortization, other non-cash items, extraordinary items,
gains or losses on sales of assets and before minority interests in the
Operating Partnership.
=================================================================================================================
</TABLE>
<PAGE>
SHOPPING CENTER REITs
Shopping center REITs comprise the largest sector of the retail REIT
market accounting for 26 out of the total 43 securities. General
characteristics of seven of the largest shopping center REITs are summarized on
TABLE C. The public equity market capitalization of the seven companies totaled
$6.1 billion as of October 31, 1996. The two largest, Kimco Realty Corp. and
New Plan Realty Trust have a market capitalization equal to approximately 34.4
percent of the group total.
Year-to-date returns have been 16.19 percent for all shopping center REITs
including a 7.36 percent dividend yield.
- -------------------------------------------------------------------------------
-30-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===============================================================================
TABLE C - SHOPPING CENTER REIT ANALYSIS
CUSHMAN & WAKEFIELD INC.
DDR FRT GRT
DEVEL FEDERAL GLIMCHER
REIT PORTFOLIO DIVERSIFIED REALTY INV REALTY
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
COMPANY OVERVIEW
Total Properties .................. 111 53 84
Total Retail Centers .............. 104 53 84
Total Retail GLA* ................. 23,600 11,200 12,300
Avg. Total GLA/Center* ............ 227 211 146
MALL OPERATIONS
Reporting Year .................... -- -- 1994
Total Rental Income ............... -- -- $ 71,101
Average Rent/Square Foot .......... $ 6.04 -- $ 5.78
Total Operating Expenses .......... -- -- $ 45,746
Operating Expenses/Square Foot..... -- -- $ 3.72
Operating Expense Ratio ........... -- -- 64.3%
Total Occupancy Level ............. 96.6% 95.1% 96.3%
SHARE PRICES
IPO Date .......................... 1992 1993 1994
IPO Price ......................... $ 19.50 $ 17.25 $ 14.75
Current Price (12/15/95) .......... $ 29.88 $ 23.38 $ 17.75
52 - Week High .................... $ 32.00 $ 23.75 $ 22.38
52 - Week Low ..................... $ 26.13 $ 19.75 $ 16.63
CAPITALIZATION & YIELDS
Outstanding Shares * .............. 18.96 32.22 24.48
Market Capitalization* ............ $ 567 $ 753 $ 435
Annual Dividend ................... $ 2.40 $ 1.64 $ 1.92
Dividend Yield (12/15/95) ......... 8.03% 7.01% 10.82%
FFO 1995*** ....................... $ 2.65 $ 1.78 $ 2.25
FFO Yield (12/15/95) .............. 8.87% 7.61% 12.68%
===============================================================================
<CAPTION>
=====================================================================================================
JPR KIM NPR VNO WRI
JP KIMCO NEW PLAN VORNADO WEINGARTEN
REIT PORTFOLIO REALTY INC. REALTY CORP REALTY REALTY REALTY
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMPANY OVERVIEW
Total Properties .................. 46 193 123 65 161
Total Retail Centers .............. 40 193 102 56 141
Total Retail GLA* ................. 6,895 26,001 14,500 9,501 13,293
Avg. Total GLA/Center* ............ 172 135 142 170 94
MALL OPERATIONS
Reporting Year .................... -- 1994 -- -- 1994
Total Rental Income ............... -- $ 125,272 -- -- $ 112,233
Average Rent/Square Foot .......... -- $ 4.82 -- -- $ 8.44
Total Operating Expenses .......... -- $ 80,563 -- -- $ 76,771
Operating Expenses/Square Foot..... -- $ 3.10 -- -- $ 5.78
Operating Expense Ratio ........... -- 64.3% -- -- 68.4%
Total Occupancy Level ............. 94.0% 94.7% 95.4% 94.0% 92.0%
SHARE PRICES
IPO Date .......................... 1994 1991 1973 1993 1985
IPO Price ......................... $22.00 $ 19.00 -- $22.25 --
Current Price (12/15/95) .......... $20.63 $ 42.25 $ 21.63 $36.13 $ 36.13
52 - Week High .................... $21.38 $ 42.25 $ 23.00 $38.13 $ 38.13
52 - Week Low ..................... $17.38 $ 35.00 $ 18.75 $32.75 $ 32.75
CAPITALIZATION & YIELDS
Outstanding Shares * .............. 19.72 22.43 53.26 24.20 26.53
Market Capitalization* ............ $ 407 $ 948 $ 1,152 $ 874 $ 959
Annual Dividend ................... $ 1.68 $ 2.16 $ 1.39 $ 2.24 $ 2.40
Dividend Yield (12/15/95) ......... 8.14% 5.11% 6.43% 6.20% 6.64%
FFO 1995*** ....................... $ 1.83 $ 3.15 $ 1.44 $ 2.67 $ 2.80
FFO Yield (12/15/95) .............. 8.87% 7.46% 6.66% 7.39% 7.75%
=====================================================================================================
Source: Salomon Brothers and Realty Stock Review; Annual Reports
* Numbers in thousands (000) includes retail properties only.
** Numbers in millions.
*** Funds From Operations is defined as net income (loss) before
depreciation, amortization, other non-cash items, extraordinary items,
gains or losses on sales of assets and before minority interests in the
Operating Partnership.
=====================================================================================================
</TABLE>
- -------------------------------------------------------------------------------
-31-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- --------------------------------------------------------------------------------
OUTLOOK
A review of various data sources reveals the intensity of the development
community's efforts to serve a U.S. retail market that is still growing,
shifting and evolving. It is estimated 25-30 power centers appear to be capable
of opening annually, generating more than 12 million square feet of new space
per year. That activity is fueled by the locational needs of key power center
tenants, 27 of which indicated in recent year-end reports to shareholders an
appetite for 900 new stores annually, an average of 30 new stores per firm.
With a per capita GLA figure of 19 square feet, most analysts are in
agreement that the country is already over-stored. As such, new centers will
become feasible through the following demand generators:
o The gradual obsolescence of some existing retail locations and retail
facilities;
o The evolution of the locational needs and format preferences of
various anchor tenants; and
o Rising retail sales generated by increasing population and household
levels.
By the year 2000, total retail sales are projected to rise from $2.237
trillion in 1994 to almost $2.9 trillion; shopping center-inclined sales are
projected to rise by $361 billion, from $1.194 trillion in 1994 to nearly $1.6
trillion in the year 2000. Those increases reflect annual compound growth rates
of 4.1 percent and 4.5 percent, respectively, for the six-year period.
On balance, we conclude that the outlook for the retail industry is one of
cautious optimism. Because of the importance of consumer spending to the
economy, the retail industry is one of the most studied and analyzed segments
of the economy. One obvious benefactor of the aggressive expansion and
promotional pricing which has characterized the industry is the consumer. There
will continue to be an increasing focus on choosing the right format and
merchandising mix to differentiate the product from the competition and meet
the needs of the consumer. Quite obviously, many of the nations' existing
retail developments will find it difficult if not impossible to compete.
Tantamount to the success of these older centers must be a proper merchandising
or repositioning strategy that adequately considers the feasibility of the
capital intensive needs of such an undertaking. Coincident with all of the
change which will continue to influence the industry is a general softening of
investor bullishness. This will lead to a realization that the collective
interaction of the fundamentals of risk and reward now require higher
capitalization rates and long term yield expectations in order to attract
investment capital.
- -------------------------------------------------------------------------------
-32-
<PAGE>
SUMMARY OF WEIGHTED AVERAGES
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OFFICE
URBAN/CBD 8.6% 9.0% 9.1% 9.6% 12.7% 13.1%
Class A-Leased Asset 8.4% 9.0% 8.8% 9.4% 11.1% 11.9%
Class B-Leased Asset 9.5% 9.8% 9.7% 9.9% 12.5% 12.6%
Class A-Value Added 7.9% 8.1% 8.7% 9.4% 13.9% 13.9%
Class B-Value Added 8.9% 9.4% 9.8% 10.1% 15.1% 15.2%
SUBURBAN 8.7% 9.2% 9.3% 9.8% 12.5% 12.9%
Class A-Leased Asset 8.5% 9.2% 9.0% 9.6% 11.2% 11.8%
Class B-Leased Asset 9.3% 9.7% 9.7% 9.9% 12.2% 12.5%
Class A-Value Added 8.1% 8.5% 9.3% 9.6% 13.4% 13.7%
Class B-Value Added 8.9% 9.3% 9.8% 10.1% 14.7% 14.7%
INDUSTRIAL
WAREHOUSE/DISTRIBUTION 8.8% 9.2% 9.3% 9.8% 12.0% 12.5%
Class A-Leased Asset 8.6% 9.3% 9.0% 9.6% 10.8% 11.5%
Class B-Leased Asset 9.1% 9.7% 9.6% 9.9% 11.8% 12.2%
Class A-Value Added 8.5% 8.9% 9.2% 9.7% 12.9% 13.4%
Class B-Value Added 9.0% 9.3% 9.9% 10.1% 14.0% 14.3%
BUSINESS PARKS/OTHER
IND'L & MFG 8.4% 8.8% 9.3% 9.8% 12.7% 13.2%
Class A-Leased Asset 9.0% 9.4% 9.3% 9.7% 11.2% 11.4%
Class B-Leased Asset 9.4% 9.6% 9.6% 9.9% 11.8% 11.8%
Class A-Value Added 7.3% 7.8% 9.2% 9.7% 13.3% 14.8%
Class B-Value Added 7.5% 8.0% 9.4% 9.9% 15.5% 16.0%
RETAIL
NEIGHBORHOOD &
COMMUNITY CENTERS 9.3% 9.4% 10.0% 10.4% 12.1% 12.7%
Class A-Leased Asset 8.9% 9.9% 9.3% 10.2% 11.0% 11.8%
Class B-Leased Asset 9.7% 10.1% 10.2% 10.5% 11.8% 12.2%
Class A-Value Added 9.1% 7.4% 9.8% 10.0% 12.7% 13.1%
Class B-Value Added 10.1% 10.3% 11.4% 11.5% 14.4% 14.5%
<CAPTION>
GROWTH RATE
--------------------------------------- TYPICAL PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OFFICE
URBAN/CBD 3.2% 3.8% 2.8% 3.2% 6.4 7.6
Class A-Leased Asset 3.4% 4.1% 3.0% 3.5% 8.1 8.8
Class B-Leased Asset 3.0% 3.7% 2.7% 3.0% 5.3 7.3
Class A-Value Added 3.0% 3.6% 2.7% 3.0% 5.1 6.4
Class B-Value Added 3.4% 3.8% 2.8% 3.2% 5.6 6.8
SUBURBAN 3.0% 3.6% 2.9% 3.2% 7.1 7.8
Class A-Leased Asset 3.1% 3.8% 3.0% 3.4% 8.1 8.7
Class B-Leased Asset 2.8% 3.4% 2.8% 3.1% 7.5 7.5
Class A-Value Added 3.1% 3.6% 2.9% 3.2% 5.3 6.8
Class B-Value Added 3.1% 3.6% 2.9% 3.1% 6.6 7.6
INDUSTRIAL
WAREHOUSE/DISTRIBUTION 2.6% 3.2% 2.8% 3.1% 7.6 8.5
Class A-Leased Asset 2.9% 3.5% 2.9% 3.3% 8.4 8.9
Class B-Leased Asset 2.6% 3.1% 2.8% 3.0% 7.8 8.6
Class A-Value Added 2.4% 3.1% 2.8% 3.1% 6.3 7.9
Class B-Value Added 2.4% 3.1% 2.6% 2.9% 7.0 8.2
BUSINESS PARKS/OTHER
IND'L & MFG 3.3% 3.3% 3.4% 3.4% 6.9 7.8
Class A-Leased Asset 3.3% 3.3% 3.5% 3.5% 7.3 8.8
Class B-Leased Asset 3.3% 3.3% 3.3% 3.3% 7.5 7.5
Class A-Value Added 3.3% 3.3% 3.5% 3.5% 5.7 7.0
Class B-Value Added 3.3% 3.3% 3.3% 3.3% 7.5 7.5
RETAIL
NEIGHBORHOOD &
COMMUNITY CENTERS 2.6% 3.2% 2.9% 3.4% 8.3 9.2
Class A-Leased Asset 2.8% 3.5% 3.1% 3.6% 9.1 9.4
Class B-Leased Asset 2.5% 2.9% 2.7% 3.1% 8.4 9.0
Class A-Value Added 2.7% 3.1% 3.1% 3.4% 7.3 9.2
Class B-Value Added 2.4% 2.9% 2.6% 3.1% 8.0 8.8
</TABLE>
1
<PAGE>
SUMMARY OF WEIGHTED AVERAGES
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
POWER CENTER & "BIG
BOX" 9.0% 9.1% 10.1% 10.2% 13.6% 13.8%
Class A-Leased Asset 9.5% 9.7% 9.9% 10.1% 11.3% 11.6%
Class B-Leased Asset 10.0% 10.0% 10.5% 10.5% 13.0% 13.0%
Class A-Value Added 7.5% 7.5% 10.3% 10.3% 17.0% 17.0%
Class B-Value Added 7.5% 7.5% 10.5% 10.5% 20.0% 20.0%
REGIONAL MALLS 8.0% 9.3% 8.1% 9.0% 12.8% 13.6%
Class A-Leased Asset 7.4% 8.9% 7.9% 9.3% 10.7% 11.9%
Class B-Leased Asset 8.5% 10.5% 8.5% 8.5% 16.0% 16.0%
Class A-Value Added 8.5% 8.5% 8.0% 8.0% 15.0% 15.0%
Class B-Value Added 9.5% 9.5% 9.0% 9.0% 18.0% 18.0%
SPECIALTY RETAIL #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Class A-Leased Asset #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Class B-Leased Asset #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Class A-Value Added #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Class B-Value Added #DIV/0! #DIV/0! #DIV/0! #DIV/0!
RESIDENTIAL
APARTMENTS 8.7% 9.2% 9.1% 9.6% 12.8% 13.5%
Class A-Leased Asset 8.2% 8.9% 8.7% 9.3% 11.0% 11.8%
Class B-Leased Asset 9.1% 9.4% 9.4% 9.9% 13.0% 13.4%
Class A-Value Added 8.9% 9.6% 8.8% 9.5% 16.3% 16.8%
Class B-Value Added 9.5% 10.4% 9.7% 10.5% 20.7% 21.3%
<CAPTION>
GROWTH RATE
--------------------------------------- TYPICAL PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
POWER CENTER & "BIG
BOX" 3.1% 3.1% 3.2% 3.2% 7.1 7.1
Class A-Leased Asset 3.2% 3.2% 3.4% 3.4% 8.8 8.8
Class B-Leased Asset 3.0% 3.0% 3.0% 3.0% 5.0 5.0
Class A-Value Added 3.0% 3.0% 3.0% 3.0% 5.0 5.0
Class B-Value Added 3.0% 3.0% 3.0% 3.0% 5.0 5.0
REGIONAL MALLS 3.3% 3.9% 2.8% 3.1% 6.8 6.8
Class A-Leased Asset 3.3% 4.0% 2.9% 3.3% 8.0 8.3
Class B-Leased Asset 3.5% 4.5% 2.0% 2.5% 4.0 4.0
Class A-Value Added 3.0% 3.0% 3.0% 3.0% 5.0 5.0
Class B-Value Added 3.0% 3.0% 3.0% 3.0% 5.0 5.0
SPECIALTY RETAIL #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Class A-Leased Asset #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Class B-Leased Asset #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Class A-Value Added #DIV/0! #DIV/0!
Class B-Value Added #DIV/0! #DIV/0!
RESIDENTIAL
APARTMENTS 3.1% 3.4% 3.0% 3.3% 7.9 8.9
Class A-Leased Asset 3.0% 3.5% 3.1% 3.5% 9.0 9.4
Class B-Leased Asset 3.0% 3.3% 2.9% 3.3% 8.1 8.9
Class A-Value Added 3.3% 3.3% 3.5% 3.5% 3.3 7.3
Class B-Value Added 3.3% 3.3% 3.3% 3.3% 5.3 7.3
</TABLE>
- -------
"Leased Asset" refers to predominantly "passive" investments involving
substantially leased Properties.
"Value Added" denotes properties which require more active management
involvement due to leasing issues and/or additional capital investment for
physical issues.
2
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION RATES GROWTH RATE TYPICAL
--------------------------------- INTERNAL ----------------------------- PROJECTION
Going-In Terminal RATE OF RETURN Income Expenses PERIOD (YEARS)
Low High Low High Low High Low High Low High Low High
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OFFICE
URBAN/CBD
CLASS A-LEASED ASSET 8.0% 8.0% 9.0% 9.0% 11.0% 11.0% 3.0% 3.0% 3.0% 3.0% 7.0 7.0
- ---------------------------- 9.0% 9.0% 9.5% 9.5% 11.5% 11.5% 3.0% 3.0% 3.0% 3.0% 5.0 5.0
8.0% 8.0% 8.5% 8.5% 11.0% 11.0% 3.0% 3.0% 3.0% 3.0% 10.0 10.0
9.0% 9.0% 8.0% 8.0% 14.0% 14.0% 4.0% 4.0% 4.0% 4.0% 5.0 10.0
7.5% 8.5% 8.0% 9.0% 10.5% 11.5% 4.0% 4.0% 10.0 10.0
7.5% 11.5% 8.3% 11.5% 10.0% 15.0% 3.5% 8.0% 3.0% 5.0% 10.0 10.0
8.0% 9.5% 8.0% 10.5% 10.5% 12.0% 3.0% 4.0% 3.0% 4.0% 10.0 10.0
8.5% 9.0% 9.0% 9.5% 10.5% 11.5% 4.0% 5.0% 2.0% 3.0% 7.0 10.0
9.3% 9.3% 9.5% 9.5% 11.5% 11.5% 4.0% 4.0% 3.5% 3.5% 10.0 10.0
9.0% 9.0% 9.5% 9.5% 11.0% 11.0% 2.0% 3.0% 2.0% 3.0% 10.0 10.0
8.5% 8.5% 9.0% 9.0% 10.5% 10.5% 4.0% 4.0% 3.0% 3.0% 5.0 5.0
9.0% 9.0% 9.3% 98.3% 12.0% 12.0% 1.0% 3.0% 2.0% 2.0% 3.0 4.0
Number of Responses 11 11 11 10 11 11
Mean Average (Low/High) 8.4% 9.0% 8.8% 9.4% 11.1% 11.9% 3.4% 4.1% 3.0% 3.5% 8.1 8.8
Mean Average (Overall,
1998) 8.7% 9.1% 11.5% 3.7% 3.3% 8.5
Mean Average (Overall,
1997) 9.2% 9.4% 11.4% 4.0% 3.7% 8.4
Change from Summer 1997 Down 50 Basis Down 32 Basis Up 8 Basis Down 27 Basis Down 43 Basis Increase 0.1
Pts Pts Pts Pts Pts Yrs
Median Average 8.8% 9.0% 11.0% 3.8% 3.0% 10.0
Mode Average 9.0% 9.5% 11.0% 3.0% 3.0% 10.0
Low within Range 7.5% 8.0% 8.0% 8.0% 10.0% 10.5% 2.0% 3.0% 2.0% 3.0% 5.0 5.0
High within Range 9.3% 11.5% 9.5% 11.5% 14.0% 15.0% 4.0% 8.0% 4.0% 5.0% 10.0 10.0
CLASS B-LEASED ASSET 9.5% 9.5% 10.0% 10.0% 12.5% 12.5% 3.0% 3.0% 3.0% 3.0% 5.0 5.0
- ----------------------------
9.0% 10.0% 8.0% 9.0% 15.0% 15.0% 4.0% 4.0% 4.0% 4.0% 5.0 10.0
9.5% 10.0% 10.0% 10.5% 11.5% 12.0% 4.0% 5.0% 2.0% 3.0% 4.0 10.0
10.5% 10.5% 11.0% 11.0% 12.0% 12.0% 2.0% 3.0% 2.0% 3.0% 10.0 10.0
9.5% 9.5% 9.5% 9.5% 11.0% 11.0% 4.0% 4.0% 3.0% 3.0% 5.0 5.0
9.0% 9.0% 9.5% 9.5% 13.0% 13.0% 1.0% 3.0% 2.0% 2.0% 3.0 4.0
Number of Responses 6 6 6 6 6 6
Mean Average (Low/High) 9.5% 9.8% 9.7% 9.9% 12.5% 12.6% 3.0% 3.7% 2.7% 3.0% 5.3 7.3
Mean Average (Overall,
1998) 9.6% 9.8% 12.5% 3.3% 2.8% 6.3
Mean Average (Overall,
1997) 10.2% 9.9% 12.0% 3.9% 3.7% 7.3
Change from Summer 1997 Down 57 Basis Down 11 Basis Up 54 Basis Down 57 Basis Down 87 Basis Decrease 1.0
Pts Pts Pts Pts Pts Yrs
Median Average 9.5% 9.8% 12.3% 3.5% 3.7% 3.0%
Mode Average 9.5% 9.5% 12.0% 4.0% 3.0% 5.0
Low within Range 9.0% 9.0% 8.0% 9.0% 11.0% 11.0% 1.0% 3.0% 2.0% 2.0% 3.0 4.0
High within Range 10.5% 10.5% 11.0% 11.0% 15.0% 15.0% 4.0% 5.0% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 1 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION RATES GROWTH RATE TYPICAL
--------------------------------- INTERNAL ----------------------------- PROJECTION
Going-In Terminal RATE OF RETURN Income Expenses PERIOD (YEARS)
Low High Low High Low High Low High Low High Low High
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A-VALUE ADDED 6.0% 6.0% 9.5% 9.5% 17.0% 17.0% 3.0% 3.0% 3.0% 3.0% 5.0 5.0
--------------------------
5.0% 5.0% 8.5% 8.5% 12.5% 12.5% 3.0% 3.0% 3.0% 3.0% 5.0 7.0
10.0% 11.0% 9.0% 10.0% 20.0% 20.0% 4.0% 4.0% 4.0% 4.0% 1.0 4.0
8.0% 8.5% 5.0% 9.0% 11.0% 11.3% 4.0% 5.0% 2.0% 3.0% 7.0 10.0
10.0% 10.0% 10.5% 10.5% 11.5% 11.5% 2.0% 3.0% 2.0% 3.0% 10.0 10.0
8.5% 8.5% 9.0% 9.0% 11.0% 11.0% 4.0% 4.0% 3.0% 3.0% 5.0 5.0
8.0% 8.0% 9.3% 9.3% 14.0% 14.0% 1.0% 3.0% 2.0% 2.0% 3.0 4.0
Number of Responses 7 7 7 7 7 7
Mean Average (Low/High) 7.9% 8.1% 8.7% 9.4% 13.9% 13.9% 3.0% 3.6% 2.7% 3.0% 5.1 6.4
Mean Average (Overall, 1998) 8.0% 9.0% 13.9% 3.3% 2.9% 5.8
Mean Average (Overall, 1997) 9.5% 9.6% 12.5% 3.9% 3.8% 7.0
Change from summer 1997 Down 146 Basis Down 56 Basis Up 138 Basis Down 61 Basis Down 94 Basis Decrease 1.2
Pts Pts Pts Pts Pts Yrs
Median Average 8.3% 9.1% 12.5% 3.0% 3.0% 5.0
Mode Average 10.0% 9.0% 11.0% 3.0% 3.0% 5.0
Low within Range 5.0% 5.0% 5.0% 8.5% 11.0% 11.0% 1.0% 3.0% 2.0% 2.0% 1.0 4.0
High within Range 10.0% 11.0% 10.5% 10.5% 20.0% 20.0% 4.0% 5.0% 4.0% 4.0% 10.0 10.0
CLASS B-VALUE ADDED 6.0% 6.0% 10.0% 10.0% 20.0% 20.0% 3.0% 3.0% 3.0% 3.0% 5.0 5.0
--------------------------
10.0% 12.0% 9.0% 10.0% 20.0% 20.0% 4.0% 4.0% 4.0% 4.0% 1.0 4.0
8.5% 9.0% 9.0% 9.5% 11.5% 12.0% 4.0% 5.0% 2.0% 3.0% 7.0 10.0
11.0% 11.0% 11.5% 11.5% 13.0% 13.0% 2.0% 3.0% 2.0% 3.0% 10.0 10.0
9.0% 9.0% 9.5% 9.5% 11.0% 11.0% 4.0% 4.0% 3.0% 3.0% 5.0 5.0
8.0% 8.0% 9.5% 9.5% 15.0% 15.0% 1.0% 3.0% 2.0% 2.0% 3.0 4.0
Number of Responses 5 5 5 5 5 5
Mean Average (Low/High) 8.9% 9.4% 9.8% 10.1% 15.1% 15.2% 3.4% 3.8% 2.8% 3.2% 5.6 6.8
Mean Average (Overall, 1998) 9.2% 10.0% 15.2% 3.6% 3.0% 6.2
Mean Average (Overall, 1997) 10.8% 10.1% 12.6% 3.9% 3.7% 5.8
Change from Summer 1997 Down 165 Basis Down 15 Basis Up 255 Basis Down 30 Basis Down 70 Basis Increase 0.4
Pts Pts Pts Pts Pts Yrs
Median Average 9.0% 9.8% 13.0% 4.0% 3.0% 5.0
Mode Average 9.0% 10.0% 20.0% 4.0% 3.0% 5.0
Low within Range 6.0% 6.0% 9.0% 9.5% 11.0% 11.0% 2.0% 3.0% 2.0% 3.0% 1.0 4.0
High within Range 11.0% 12.0% 11.5% 11.5% 20.0% 20.0% 4.0% 5.0% 4.0% 4.0% 10.0 10.0
- ---------------------------------------------------------------------------------------------------------------------------------
URBAN/CBD OFFICE (OVERALL RESULTS)
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Responses 29 29 29 28 29 30
Mean Average (Low/High) 8.6% 9.0% 9.1% 9.6% 12.7% 13.1% 3.2% 3.8% 2.8% 3.2% 6.4 7.6
Mean Average (Overall, 1998) 8.8% 9.4% 12.9% 3.5% 3.0% 7.0
Mean Average (Overall, 1997) 9.8% 9.7% 12.0% 3.9% 3.7% 7.4
Change from Summer 1997 Down 99 Basis Down 33 Basis Up 91 Basis Down 39 Basis Down 67 Basis Decrease 0.4
Pts Pts Pts Pts Pts Yrs
Median Average 9.0% 9.5% 11.5% 3.8% 3.0% 7.0
Mode Average 9.0% 9.5% 11.0% 4.0% 3.0% 10.0
Low within Range 5.0% 5.0% 5.0% 8.05 10.0% 10.5% 1.0% 3.0% 2.0% 2.0% 1.0 4.0
High within Range 11.0% 12.0% 11.5% 11.5% 20.0% 20.0% 4.0% 8.0% 4.0% 5.0% 10.0 10.0
</TABLE>
Page 2 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION RATES GROWTH RATE TYPICAL
--------------------------------- INTERNAL ----------------------------- PROJECTION
Going-In Terminal RATE OF RETURN Income Expenses PERIOD (YEARS)
Low High Low High Low High Low High Low High Low High
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUBURBAN
CLASS A-LEASED ASSET 9.0% 9.0% 9.5% 9.5% 12.0% 12.0% 3.0% 3.0% 3.0% 3.0% 7.0 7.0
--------------------------
9.0% 9.0% 9.5% 9.5% 11.5% 11.5% 3.0% 3.0% 3.0% 3.0% 5.0 5.0
9.0% 9.0% 9.5% 9.5% 11.5% 12.0% 3.0% 3.0% 3.0% 3.0% 10.0 10.0
9.0% 9.0% 8.0% 8.0% 14.0% 14.0% 4.0% 4.0% 4.0% 4.0% 5.0 10.0
7.5% 9.0% 8.5% 9.5% 10.5% 11.5% 4.0% 4.0% 10.0 10.0
7.5% 11.0% 8.3% 11.5% 10.0% 13.5% 3.5% 8.0% 3.0% 5.0% 10.0 10.0
8.0% 10.0% 9.0% 11.5% 11.0% 12.0% 3.0% 4.0% 3.0% 4.0% 10.0 10.0
8.5% 9.5% 9.0% 10.0% 10.5% 11.5% 3.0% 4.0% 2.0% 3.0% 7.0 10.0
9.3% 9.3% 9.5% 9.5% 11.5% 11.5% 4.0% 4.0% 3.5% 3.5% 10.0 10.0
9.0% 9.0% 9.5% 9.5% 11.0% 11.0% 2.0% 3.0% 2.0% 3.0% 10.0 10.0
8.0% 9.0% 9.0% 10.0% 11.5% 12.0% 4.0% 4.0% 3.5% 3.5% 10.0 10.0
8.5% 8.5% 9.0% 9.0% 10.5% 10.5% 3.5% 3.5% 3.0% 3.0% 5.0 5.0
8.0% 9.0% 8.5% 9.5% 10.0% 11.0% 3.0% 3.0% 10.0 10.0
9.0% 9.0% 9.3% 9.3% 12.0% 12.0% 1.0% 3.0% 2.0% 2.0% 3.0 4.0
8.5% 8.5% 8.5% 8.5% 10.5% 10.5% 3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 15 15 15 13 15 15
Mean Average (Low/High) 8.5% 9.2% 9.0% 9.6% 11.2% 11.8% 3.1% 3.8% 3.0% 3.4% 8.1 8.7
Mean Average (Overall,
1998) 8.9% 9.3% 11.5% 3.5% 3.2% 8.4
Mean Average (Overall,
1997) 9.2% 9.6% 11.4% 3.5% 3.3% 8.1
Change from Summer 1997 Down 35 Basis Down 31 Basis Up 8 Basis Down 2 Basis Down 10 Basis Increase 0.3
Pts Pts Pts Pts Pts Yrs
Median Average 9.0% 9.5% 11.5% 3.5% 3.0% 10.0
Mode Average 9.0% 9.5% 11.5% 3.0% 3.0% 10.0
Low within Range 7.5% 8.5% 8.0% 8.0% 10.0% 10.5% 1.0% 3.0% 2.0% 2.0% 3.0 4.0
High within Range 9.3% 11.0% 9.5% 11.5% 14.0% 14.0% 4.0% 8.0% 4.0% 5.0% 10.0 10.0
</TABLE>
Page 3 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
----------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - LEASED ASSET 9.5% 9.5% 10.0% 10.0% 12.5% 12.5%
10.0% 10.0% 9.0% 9.0% 15.0% 15.0%
9.5% 10.5% 10.5% 11.5% 11.5% 12.0%
10.5% 10.5% 10.8% 10.8% 12.0% 12.0%
8.7% 8.7% 9.5% 9.5% 12.3% 12.3%
8.5% 10.5% 9.0% 10.0% 10.5% 12.0%
9.0% 9.0% 9.5% 9.5% 13.0% 13.0%
9.0% 9.0% 9.0% 9.0% 11.0% 11.0%
Number of Responses 8 8 8
Mean Average (Low/High) 9.3% 9.7% 9.7% 9.9% 12.2% 12.5%
Mean Average (Overall, 1998) 9.5% 9.8% 12.4%
Mean Average (Overall, 1997) 9.6% 10.1% 12.2%
Change from Summer 1997 Down 8 Basis Pts Down 32 Basis Pts Up 15 Basis Pts
Median Average 9.5% 9.5% 12.2%
Mode Average 10.5% 9.0% 12.0%
Low within Range 8.5% 8.7% 9.0% 9.0% 10.5% 11.0%
High within Range 10.5% 10.5% 10.8% 11.5% 15.0% 15.0%
CLASS A - VALUED ADDED 6.0% 6.0% 9.5% 9.5% 17.0% 17.0%
6.0% 6.0% 9.5% 9.5% 12.5% 13.0%
10.0% 12.0% 9.0% 10.0% 20.0% 20.0%
9.0% 10.0% 12.0% 14.0%
8.0% 9.0% 8.5% 9.5% 11.0% 11.5%
10.0% 10.0% 10.5% 10.5% 11.5% 11.5%
9.0% 9.0% 9.5% 9.5% 11.0% 11.0%
8.0% 8.0% 9.3% 9.3% 14.0% 14.0%
8.0% 8.0% 9.0% 9.0% 11.5% 11.5%
Number of Responses 8 9 9
Mean Average (Low/High) 8.1% 8.5% 9.3% 9.6% 13.4% 13.7%
Mean Average (Overall, 1998) 8.3% 9.5% 13.6%
Mean Average (Overall, 1997) 8.9% 9.9% 12.3%
Change from Summer 1997 Down 59 Basis Pts Down 43 Basis Pts Up 126 Basis Pts
Median Average 8.0% 9.5% 12.3%
Mode Average 8.0% 9.5% 11.5%
Low within Range 6.0% 6.0% 8.5% 9.0% 11.0% 11.0%
High within Range 10.0% 12.0% 10.5% 10.5% 20.0% 20.0%
<PAGE>
<CAPTION>
GROWTH RATE
--------------------------------------- TYPICAL PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 4.0% 4.0% 5.0 1.0
3.0% 4.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 10.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
3.0% 3.0% 10.0 10.0
1.0% 3.0% 2.0% 2.0% 3.0 4.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 7 8 8
Mean Average (Low/High) 2.8% 3.4% 2.8% 3.1% 7.5 7.5
Mean Average (Overall, 1998) 3.1% 2.9% 7.5
Mean Average (Overall, 1997) 3.4% 3.3% 8.6
Change from Summer 1997 Down 33 Basis Pts Down 36 Basis Pts Decrease 1.1 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 3.0% 2.0% 2.0% 3.0 1.0
High within Range 4.0% 4.0% 4.0% 4.0% 10.0 10.0
CLASS A - VALUED ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
3.0% 3.0% 3.0% 3.0% 5.0 7.0
4.0% 4.0% 4.0% 4.0% 1.0 4.0
4.0% 4.0% 2.0 6.0
3.0% 4.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 10.0 10.0
3.5% 3.5% 3.0% 3.0% 5.0 5.0
1.0% 3.0% 2.0% 2.0% 3.0 4.0
5.0% 5.0% 3.5% 3.5% 10.0 10.0
Number of Responses 8 9 9
Mean Average (Low/High) 3.1% 3.6% 2.9% 3.2% 5.3 6.8
Mean Average (Overall, 1998) 3.3% 3.1% 6.1
Mean Average (Overall, 1997) 3.4% 3.2% 6.4
Change from Summer 1997 Down 9 Basis Pts Down 14 Basis Pts Decrease 0.3 Yrs
Median Average 3.0% 3.0% 5.0
Mode Average 3.0% 3.0% 5.0
Low within Range 1.0% 3.0% 2.0% 2.0% 1.0 4.0
High within Range 5.0% 5.0% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 4 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - VALUE ADDED 6.0% 6.0% 10.0% 10.0% 20.0% 20.0%
10.0% 12.0% 9.0% 10.0% 20.0% 20.0%
9.0% 10.0% 10.0% 11.0% 11.5% 12.0%
11.0% 11.0% 11.5% 11.5% 13.0% 13.0%
9.8% 9.8% 9.8% 9.8% 11.2% 11.2%
8.0% 8.0% 9.5% 9.5% 15.0% 15.0%
8.5% 8.5% 9.0% 9.0% 12.0% 12.0%
Number of Responses 7 7 7
Mean Average (Low/High) 8.9% 9.3% 9.8% 10.1% 14.7% 14.7%
Mean Average (Overall, 1998) 9.1% 10.0% 14.7%
Mean Average (Overall, 1997) 9.8% 10.5% 12.9%
Change from Summer 1997 Down 69 Basis Pts Down 53 Basis Pts Up 181 Basis Pts
Median Average 9.4% 9.9% 13.0%
Mode Average 6.0% 10.0% 20.0%
Low within Range 6.0% 6.0% 9.0% 9.0% 11.2% 11.2%
High within Range 11.0% 12.0% 11.5% 11.5% 20.0% 20.0%
SUBURBAN OFFICE (OVERALL RESULTS)
Number of Responses 38 39 39
Mean Average (Low/High) 8.7% 9.2% 9.3% 9.8% 12.5% 12.9%
Mean Average (Overall, 1998) 8.9% 9.6% 12.7%
Mean Average (Overall, 1997) 9.3% 9.9% 12.1%
Change from Summer 1997 Down 37 Basis Pts Down 34 Basis Pts Up 62 Basis Pts
Median Average 9.0% 9.5% 12.0%
Mode Average 9.0% 9.5% 12.0%
Low within Range 6.0% 6.0% 8.0% 8.0% 10.0% 10.5%
High within Range 11.0% 12.0% 11.5% 11.5% 20.0% 20.0%
<CAPTION>
GROWTH RATE TYPICAL
--------------------------------- PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- ------ --------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 4.0% 4.0% 1.0 4.0
3.0% 4.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
1.0% 3.0% 2.0% 2.0% 3.0 4.0
5.0% 5.0% 3.5% 3.5% 10.0 10.0
Number of Responses 7 7 7
Mean Average (Low/High) 3.1% 3.6% 2.9% 3.1% 6.6 7.6
Mean Average (Overall, 1998) 3.4% 3.0% 7.1
Mean Average (Overall, 1997) 3.5% 3.3% 6.2
Change from Summer 1997 Down 14 Basis Pts Down 30 Basis Pts Increase 0.9 Yrs
Median Average 3.3% 3.0% 8.5
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 3.0% 2.0% 2.0% 1.0 4.0
High within Range 5.0% 5.0% 4.0% 4.0% 10.0 10.0
SUBURBAN OFFICE (OVERALL RESULTS)
Number of Responses 35 39 39
Mean Average (Low/High) 3.0% 3.6% 2.9% 3.2% 7.1 7.8
Mean Average (Overall, 1998) 3.3% 3.1% 7.4
Mean Average (Overall, 1997) 3.4% 3.3% 7.5
Change from Summer 1997 Down 6 Basis Pts Down 22 Basis Pts Decrease 0.1 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 3.0% 2.0% 2.0% 1.0 1.0
High within Range 5.0% 8.0% 4.0% 5.0% 10.0 10.0
</TABLE>
Page 5 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIAL
WAREHOUSE/DISTRIBUTION
CLASS A - LEASED ASSET 8.0% 8.0% 9.0% 9.0% 11.0% 11.0%
9.0% 9.0% 9.5% 9.5% 11.5% 11.5%
8.0% 9.0% 9.0% 9.5% 10.5% 11.5%
7.8% 10.5% 8.0% 10.5% 8.5% 12.0%
8.0% 10.0% 8.5% 11.5% 10.5% 12.0%
8.5% 9.5% 9.0% 9.5% 10.0% 11.0%
8.0% 9.0% 8.5% 9.5% 11.0% 11.5%
9.3% 9.5% 9.5% 9.5% 11.3% 11.3%
9.0% 9.0% 9.5% 9.5% 11.0% 11.0%
8.8% 9.5% 9.5% 10.0% 11.0% 12.5%
9.3% 9.3% 9.1% 9.1% 10.1% 10.1%
9.5% 9.5% 9.5% 9.5% 13.0% 13.0%
8.5% 8.5% 8.5% 8.5% 10.5% 10.5%
Number of Responses 13 13 13
Mean Average (Low/High) 8.6% 9.3% 9.0% 9.6% 10.8% 11.5%
Mean Average (Overall, 1998) 8.9% 9.3% 11.1%
Mean Average (Overall, 1997) 8.9% 9.6% 11.1%
Change from Summer 1997 Up 2 Basis Pts Down 28 Basis Pts Up 1 Basis Pts
Median Average 9.0% 9.5% 11.0%
Mode Average 9.0% 9.5% 11.0%
Low within Range 7.8% 8.0% 8.0% 8.5% 8.5% 10.1%
High within Range 9.5% 10.5% 9.5% 11.5% 13.0% 13.0%
<CAPTION>
GROWTH RATE TYPICAL
--------------------------------- PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- ------ --------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIAL
WAREHOUSE/DISTRIBUTION
CLASS A - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 7.0 7.0
3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 10.0 10.0
3.5% 6.0% 3.0% 4.0% 10.0 10.0
3.0% 4.0% 3.0% 4.0% 10.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
3.8% 3.8% 3.5% 3.5% 10.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
3.5% 3.5% 3.0% 3.5% 10.0 10.0
1.0% 3.0% 2.0% 2.0% 3.0 4.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 12 13 13
Mean Average (Low/High) 2.9% 3.5% 2.9% 3.3% 8.4 8.9
Mean Average (Overall, 1998) 3.2% 3.1% 8.7
Mean Average (Overall, 1997) 3.2% 3.3% 9.3
Change from Summer 1997 Down 3 Basis Pts Down 20 Basis Pts Decrease 0.6 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 3.0% 2.0% 2.0% 3.0 4.0
High within Range 3.8% 6.0% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 6 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - LEASED ASSET 9.3% 9.3% 9.8% 9.8% 12.5% 12.5%
9.0% 10.0% 9.5% 10.5% 11.0% 12.0%
8.5% 9.5% 9.0% 10.0% 11.5% 12.0%
10.0% 10.0% 10.5% 10.5% 12.0% 12.0%
9.3% 10.0% 10.0% 10.5% 12.0% 14.0%
8.4% 8.4% 9.5% 9.5% 10.4% 10.4%
9.5% 9.5% 9.5% 9.5% 14.0% 14.0%
9.0% 9.0% 9.0% 9.0% 11.0% 11.0%
Number of Responses 8 8 8
Mean Average (Low/High) 9.1% 9.7% 9.6% 9.9% 11.8% 12.2%
Mean Average (Overall, 1998) 9.3% 9.8% 12.0%
Mean Average (Overall, 1997) 9.6% 10.0% 11.5%
Change from Summer 1997 Down 32 Basis Pts Down 25 Basis Pts Up 52 Basis Pts
Median Average 9.3% 9.6% 12.0%
Mode Average 10.0% 9.5% 12.0%
Low within Range 8.4% 8.4% 9.0% 9.0% 10.4% 10.4%
High within Range 10.0% 10.0% 10.5% 10.5% 14.0% 14.0%
CLASS A-VALUE ADDED 6.0% 6.0% 9.5% 9.5% 17.0% 17.0%
9.0% 10.0% 12.0% 14.0%
9.0% 10.0% 9.0% 10.5% 12.0% 13.0%
8.0% 9.0% 8.5% 9.5% 11.0% 11.5%
10.0% 10.0% 10.5% 10.5% 11.5% 11.5%
9.0% 9.0% 9.5% 9.5% 15.0% 15.0%
9.3% 9.3% 8.5% 8.5% 11.5% 11.5%
Number of Responses 6 7 7
Mean Average (Low/High) 8.5% 8.9% 9.2% 9.7% 12.9% 13.4%
Mean Average (Overall, 1998) 8.7% 9.5% 13.1%
Mean Average (Overall, 1997) 9.6% 10.1% 11.9%
Change from Summer 1997 Down 89 Basis Pts Down 64 Basis Pts Up 121 Basis Pts
Median Average 9.0% 9.5% 12.0%
Mode Average 9.0% 9.5% 11.5%
Low within Range 6.0% 6.0% 8.5% 8.5% 11.0% 11.5%
High within Range 10.0% 10.0% 10.5% 10.5% 17.0% 17.0%
<CAPTION>
GROWTH RATE
-------------------------------------- TYPICAL PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - LEASED ASSET 3.0% 3.0% 3.0% 5.0 5.0 5.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
1.0% 3.0% 2.0% 2.0% 3.0 4.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 8 8 8
Mean Average (Low/High) 2.6% 3.1% 2.8% 3.0% 7.8 8.6
Mean Average (Overall, 1998) 2.9% 2.9% 8.2
Mean Average (Overall, 1997) 3.1% 3.1% 9.1
Change from Summer 1997 Down 22 Basis Pts Down 22 Basis Pts Decrease 0.9 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 3.0% 2.0% 2.0% 3.0 4.0
High within Range 3.5% 3.5% 3.5% 3.5% 10.0 10.0
CLASS A-VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 2.0 6.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
1.0% 3.0% 2.0% 2.0% 3.0 4.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 6 7 7
Mean Average (Low/High) 2.4% 3.1% 2.8% 3.1% 6.3 7.9
Mean Average (Overall, 1998) 2.8% 2.9% 7.1
Mean Average (Overall, 1997) 3.2% 3.2% 6.5
Change from Summer 1997 Down 45 Basis Pts Down 27 Basis Pts Increase 0.6 Yrs
Median Average 3.0% 3.0% 7.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 3.0% 2.0% 2.0% 2.0 4.0
High within Range 3.5% 3.5% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 7 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - VALUE ADDED 6.0% 6.0% 9.8% 9.8% 20.0% 20.0%
10.0% 11.0% 10.0% 11.0% 12.5% 14.0%
8.5% 9.0% 9.0% 9.5% 11.5% 12.0%
11.0% 11.0% 12.0% 13.0% 13.0% 13.0%
9.0% 9.0% 9.5% 9.5% 15.0% 15.0%
9.5% 9.5% 9.0% 9.0% 12.0% 12.0%
Number of Responses 6 6 6
Mean Average (Low/High) 9.0% 9.3% 9.9% 10.1% 14.0% 14.3%
Mean Average (Overall, 1998) 9.1% 10.0% 14.2%
Mean Average (Overall, 1997) 9.9% 10.5% 12.2%
Change from Summer 1997 Down 78 Basis Pts Down 50 Basis Pts Up 197 Basis Pts
Median Average 9.3% 9.6% 13.0%
Mode Average 11.0% 9.0% 12.0%
Low within Range 6.0% 6.0% 9.0% 9.0% 11.5% 12.0%
High within Range 11.0% 11.0% 12.0% 12.0% 20.0% 20.0%
WAREHOUSE/DISTRIBUTION (OVERALL RESULTS)
- ------------------------------------------------------------------------------------------
Number of Responses 33 34 34
Mean Average (Low/High) 8.8% 9.2% 9.3% 9.8% 12.0% 12.5%
Mean Average (Overall, 1998) 9.0% 9.6% 12.3%
Mean Average (Overall, 1997) 9.3% 9.9% 11.5%
Change from Summer 1997 Down 29 Basis Pts Down 33 Basis Pts Up 77 Basis Pts
Median Average 9.0% 9.5% 11.8%
Mean Average 9.0% 9.5% 12.0%
Low within Range 6.0% 6.0% 8.0% 8.5% 8.5% 10.1%
High within Range 11.0% 11.0% 12.0% 12.0% 20.0% 20.0%
<CAPTION>
GROWTH RATE TYPICAL
--------------------------------- PROJECTION
INCOME EXPENSES PERIOD(YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- ------ --------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
1.0% 3.0% 2.0% 2.0% 3.0 4.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 6 6 6
Mean Average (Low/High) 2.4% 3.1% 2.6% 2.9% 7.0 8.2
Mean Average (Overall, 1998) 2.8% 2.8% 7.3
Mean Average (Overall, 1997) 3.2% 3.2% 7.0
Change from Summer 1997 Down 45 Basis Pts Down 45 Basis Pts Increase 0.3 Yrs
Median Average 3.0% 3.0% 8.5
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 3.0% 2.0% 2.0% 2.0 4.0
High within Range 3.5% 3.5% 3.5% 3.5% 10.0 10.0
WAREHOUSE/DISTRIBUTION (OVERALL RESULTS)
- ---------------------------------------------------------------------------------
Number of Responses 32 34 34
Mean Average (Low/High) 2.6% 3.2% 2.8% 3.1% 7.6 8.5
Mean Average (Overall, 1998) 2.9% 2.9% 8.0
Mean Average (Overall, 1997) 3.2% 3.2% 8.4
Change from Summer 1997 Down 26 Basis Pts Down 25 Basis Pts Decrease 0.4 Yrs
Median Average 3.0% 3.0% 10.0
Mean Average 3.0% 3.0% 10.0
Low within Range 1.0% 3.0% 2.0% 2.0% 2.0 4.0
High within Range 3.8% 6.0% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 8 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BUSINESS PARKS/OTHER INDUSTRICAL & MANUFACTURING
- ---------------------------------------------------------------------------------------------
CLASS A - LEASED ASSET 9.0% 9.0% 9.5% 9.5% 11.5% 11.5%
8.5% 9.5% 9.0% 10.0% 10.8% 11.8%
9.5% 9.5% 9.8% 9.8% 11.4% 11.4%
9.0% 9.5% 9.0% 9.5% 11.0% 11.0%
Number of Responses 4 4 4
Mean Average (Low/High) 9.0% 9.4% 9.3% 9.7% 11.2% 11.4%
Mean Average (Overall, 1998) 9.2% 9.5% 11.3%
Mean Average (Overall, 1997) 9.4% 10.1% 12.6%
Change from Summer 1997 Down 21 Basis Pts Down 60 Basis Pts Down 131 Basis Pts
Median Average 9.3% 9.5% 11.4%
Mode Average 9.5% 9.5% 11.5%
Low within Range 8.5% 9.0% 9.0% 9.5% 10.8% 11.0%
High within Range 9.5% 9.5% 9.8% 10.0% 11.5% 11.8%
CLASS B - LEASED ASSET 9.3% 9.3% 9.8% 9.8% 12.5% 12.5%
9.5% 10.0% 9.5% 10.0% 11.0% 11.0%
Number of Responses 2 2 2
Mean Average (Low/High) 9.4% 9.6% 9.6% 9.9% 11.8% 11.8%
Mean Average (Overall, 1998) 9.5% 9.8% 11.8%
Mean Average (Overall, 1997) 9.6% 10.2% 12.8%
Change from Summer 1997 Down 10 Basis Pts Down 45 Basis Pts Down 105 Basis Pts
Median Average 9.4% 9.8% 11.8%
Mode Average 9.3% 9.8% 12.5%
Low within Range 9.3% 9.3% 9.5% 9.8% 11.0% 11.0%
High within Range 9.5% 10.0% 9.8% 10.0% 12.5% 12.5%
<CAPTION>
GROWTH RATE TYPICAL
--------------------------------- PROJECTION
INCOME EXPENSES PERIOD(YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- ------ --------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
BUSINESS PARKS/OTHER INDUSTRICAL & MANUFACTURING
- ---------------------------------------------------------------------------------
CLASS A - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 4.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 3 4 4
Mean Average (Low/High) 3.3% 3.3% 3.5% 3.5% 7.3 8.8
Mean Average (Overall, 1998) 3.3% 3.5% 8.0
Mean Average (Overall, 1997) 3.6% 3.6% 8.3
Change from Summer 1997 Down 27 Basis Pts Down 10 Basis Pts Decrease 0.3 Yrs
Median Average 3.5% 3.5% 10.0
Mode Average 3.5% 3.5% 10.0
Low within Range 3.0% 3.0% 3.0% 3.0% 4.0 5.0
High within Range 3.5% 3.5% 4.0% 4.0% 10.0 10.0
CLASS B - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 5.0 5.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 2 2 2
Mean Average (Low/High) 3.3% 3.3% 3.3% 3.3% 7.5 7.5
Mean Average (Overall, 1998) 3.3% 3.3% 7.5
Mean Average (Overall, 1997)
Change from Summer 1997 Down 5 Basis Pts Down 5 Basis Pts Increase 1.2 Yrs
Median Average 3.3% 3.3% 7.5
Mode Average 3.0% 3.0% 5.0
Low within Range 3.0% 3.0% 3.0% 3.0% 5.0 5.0
High within Range 3.5% 3.5% 3.5% 3.5% 10.0 10.0
</TABLE>
Page 9 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A - VALUE ADDED 6.0% 6.0% 9.5% 9.5% 17.0% 17.0%
9.0% 10.0% 12.0% 16.0%
8.5% 9.5% 9.0% 9.5% 11.0% 11.5%
Number of Responses 2 3 3
Mean Average (Low/High) 7.3% 7.8% 9.2% 9.7% 13.3% 14.8%
Mean Average (Overall, 1998) 7.5% 9.4% 14.1%
Mean Average (Overall, 1997) 9.8% 10.5% 12.8%
Change from Summer 1997 Down 230 Basis Pts Down 108 Basis Pts Up 128 Basis Pts
Median Average 7.3% 9.5% 14.0%
Mode Average 6.0% 9.5% 17.0%
Low within Range 6.0% 6.0% 9.0% 9.5% 11.0% 11.5%
High within Range 8.5% 9.5% 9.5% 10.0% 17.0% 17.0%
CLASS B - VALUE ADDED 6.0% 6.0% 9.8% 9.8% 20.0% 20.0%
9.0% 10.0% 9.0% 10.0% 11.0% 12.0%
Number of Responses 2 2 2
Mean Average (Low/High) 7.5% 8.0% 9.4% 9.9% 15.5% 16.0%
Mean Average (Overall, 1998) 7.8% 9.6% 15.8%
Mean Average (Overall, 1997) 9.8% 10.8% 13.4%
Change from Summer 1997 Down 205 Basis Pts Down 118 Basis Pts Up 235 Basis Pts
Median Average 7.5% 9.8% 16.0%
Mode Average 6.0% 9.8% 20.0%
Low within Range 6.0% 6.0% 9.0% 9.8% 11.0% 12.0%
High within Range 9.0% 10.0% 9.8% 10.0% 20.0% 20.0%
- ---------------------------------------------------------------------------------------------
BUSINESS PARKS/OTHER INDUSTRIAL & MANUFACTURING (OVERALL RESULTS)
- ---------------------------------------------------------------------------------------------
Number of Responses 10 11 11
Mean Average (Low/High) 8.4% 8.8% 9.3% 9.8% 12.7% 13.2%
Mean Average (Overall, 1998) 8.6% 9.5% 12.9%
Mean Average (Overall, 1997) 9.6% 10.3% 12.9%
Change from Summer 1997 Down 97 Basis Pts Down 75 Basis Pts Up 5 Basis Pts
Median Average 9.1% 9.5% 11.5%
Mode Average 9.5% 9.5% 11.0%
Low within Range 6.0% 6.0% 9.0% 9.5% 10.8% 11.0%
High within Range 9.5% 10.0% 9.8% 10.0% 20.0% 20.0%
<CAPTION>
GROWTH RATE
--------------------------------------- TYPICAL PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A - VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 2.0 6.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 2 3 3
Mean Average (Low/High) 3.3% 3.3% 3.5% 3.5% 5.7 7.0
Mean Average (Overall, 1998) 3.3% 3.5% 6.3
Mean Average (Overall, 1997) 3.3% 3.3% 4.7
Change from Summer 1997 Down 5 Basis Pts Up 20 Basis Pts Increase 1.6 Yrs
Median Average 3.3% 3.5% 5.5
Mode Average 3.0% 3.0% 5.0
Low within Range 3.0% 3.0% 3.0% 3.0% 2.0 5.0
High within Rage 3.5% 3.5% 4.0% 4.0% 10.0 10.0
CLASS B - VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 2 2 2
Mean Average (Low/High) 3.3% 3.3% 3.3% 3.3 7.5 7.5
Mean Average (Overall, 1998) 3.3% 3.3% 7.5
Mean Average (Overall, 1997) 3.4% 3.4% 4.7
Change from Summer 1997 Down 15 Basis Pts Down 15 Basis Pts Increase 2.8 Yrs
Median Average 3.3% 3.3% 7.5
Mode Average 3.0% 3.0% 5.0
Low within Range 3.0% 3.0% 3.0% 3.0% 5.0 5.0
High within Range 3.5% 3.5% 3.5% 3.5% 10.0 10.0
- -----------------------------------------------------------------------------------------
BUSINESS PARKS/OTHER INDUSTRIAL & MANUFACTURING (OVERALL RESULTS)
- -----------------------------------------------------------------------------------------
Number of Responses 9 11 11
Mean Average (Low/High) 3.3% 3.3% 3.4% 3.4% 6.9 7.8
Mean Average (Overall, 1998) 3.3% 3.4% 7.4
Mean Average (Overall, 1997) 3.4% 3.4% 6.4
Change from Summer 1997 Down 12 Basis Pts Up 1 Basis Pts Increase 1.0 Yrs
Median Average 3.5% 3.5% 8.0
Mode Average 3.5% 3.5% 10.0
Low within Range 3.0% 3.0% 3.0% 3.0% 2.0 5.0
High within Range 3.5% 3.5% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 10 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
RETAIL
- ------------------------------------------------------------------------------------------
NEIGHBORHOOD & COMMUNITY CENTERS
- ------------------------------------------------------------------------------------------
CLASS A - LEASED ASSET 9.8% 9.8% 10.3% 10.3% 12.0% 12.0%
9.5% 9.5% 10.0% 10.0% 11.0% 11.5%
8.5% 9.5% 9.0% 10.0% 10.8% 11.5%
8.0% 13.0% 8.3% 12.0% 10.0% 14.0%
8.0% 10.0% 8.5% 10.5% 10.5% 12.0%
8.5% 9.0% 9.0% 9.5% 11.0% 11.5%
9.8% 10.0% 10.0% 10.3% 11.3% 11.3%
9.5% 9.5% 10.0% 10.5% 11.5% 11.5%
9.0% 9.0% 9.0% 9.0% 10.5% 10.5%
Number of Responses 9 9 9
Mean Average (low/High) 8.9% 9.9% 9.3% 10.2% 11.0% 11.8%
Mean Average (Overall, 1998) 9.4% 9.8% 11.4%
Mean Average (Overall, 1997) 9.3% 9.7% 11.3%
Change from Summer 1997 Up 13 Basis Pts Up 5 Basis Pts Up 5 Basis Pts
Median Average 9.5% 10.0% 11.4%
Mode Average 9.5% 10.0% 11.5%
Low within Range 8.0% 9.0% 8.3% 9.0% 10.0% 10.5%
High within Range 9.8% 13.0% 10.3% 12.0% 12.0% 14.0%
CLASS B - LEASED ASSET 10.0% 10.0% 10.5% 10.5% 13.0% 13.0%
9.5% 10.0% 10.5% 11.0% 11.5% 12.5%
10.5% 10.5% 11.0% 11.0 12.5% 12.5%
9.0% 10.5% 9.5% 10.5% 11.0% 12.0%
9.3% 9.3% 9.3% 9.3% 11.0% 11.0%
Number of Responses 5 5 5
Mean Average (Low/High) 9.7% 10.1% 10.2% 10.5% 11.8% 12.2%
Mean Average (Overall, 1998) 9.9% 10.3% 12.0%
Mean Average (Overall, 1997) 9.6% 10.0% 11.6%
Change from Summer 1997 Up 25 Basis Pts Up 30 Basis Pts Up 40 Basis Pts
Median Average 10.0% 10.5% 12.3%
Mode Average 10.0% 10.5% 12.5%
Low within Range 9.0% 9.3% 9.3% 9.3% 11.0% 11.0%
High within Range 10.5% 10.5% 11.0% 11.0% 13.0% 13.0%
<CAPTION>
GROWTH RATE TYPICAL
----------------------------------- PROJECTION
INCOME EXPENSES PERIOD(YEARS)
LOW HIGH LOW HIGH LOW HIGH
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RETAIL
- -----------------------------------------------------------------------------------
NEIGHBORHOOD & COMMUNITY CENTERS
- -----------------------------------------------------------------------------------
CLASS A - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 5.0 5.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
4.0% 4.0% 10.0 10.0
3.5% 6.0% 3.5% 5.0% 10.0 10.0
3.0% 4.0% 3.0% 4.0% 10.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
1.0% 2.0% 2.0% 3.0% 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 8 9 9
Mean Average (low/High) 2.8% 3.5% 3.1% 3.6% 9.1 9.4
Mean Average (Overall, 1998) 3.2% 3.3% 9.3
Mean Average (Overall, 1997) 3.3% 3.5% 8.1
Change from Summer 1997 Down 14 Basis Pts Down 19 Basis Pts Increase 1.2 Yrs
Median Average 3.0% 3.3% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 2.0% 2.0% 3.0% 5.0 5.0
High within Range 3.5% 6.0% 4.0% 5.0% 10.0 10.0
CLASS B - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 5.0 5.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
1.0% 2.0% 2.0% 3.0% 10.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 5 5 5
Mean Average (Low/High) 2.5% 2.9% 2.7% 3.1% 8.4 9.0
Mean Average (Overall, 1998) 2.7% 2.9% 8.7
Mean Average (Overall, 1997) 3.4% 3.4% 7.6
Change from Summer 1997 Down 70 Basis Pts Down 50 Basis Pts Increase 1.1 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 2.0% 2.0% 3.0% 5.0 5.0
High within Range 3.5% 3.5% 3.5% 3.5% 10.0 10.0
</TABLE>
Page 11 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
CLASS A - VALUE ADDED 7.5% 7.5% 10.3% 10.3% 17.0% 17.0%
9.0% 10.0% 12.0% 14.0%
9.5% 1.0% 10.0% 10.5% 12.5% 13.0%
10.0% 10.0% 10.5% 10.5% 12.0% 12.0%
8.3% 8.3% 9.0% 11.3% 11.3% 4.0%
10.0% 10.0% 10.0% 10.0% 11.5% 11.5%
Number of Responses 5 6 6
Mean Average (Low/High) 9.1% 7.4% 9.8% 10.0% 12.7% 13.1%
Mean Average (Overall, 1998) 8.2% 9.9% 12.9%
Mean Average (Overall, 1997) 9.7% 10.1% 12.0%
Change from Summer 1997 Down 149 Basis Pts Down 18 Basis Pts Up 93 Basis Pts
Median Average 8.9% 10.0% 12.0%
Mode Average 10.0% 10.0% 12.0%
Low within Range 7.5% 1.0% 9.0% 9.0% 11.3% 11.3%
High within Range 10.0% 10.0% 10.5% 10.5% 17.0% 17.0%
CLASS B - VALUE ADDED 7.5% 7.5% 10.5% 10.5% 20.0% 20.0%
10.5% 11.0% 11.5% 12.0% 13.0% 13.5%
12.0% 12.0% 13.0% 13.0% 13.0% 13.0%
10.5% 10.5% 10.5% 10.5% 11.5% 11.5%
Number of Responses 4 4 4
Mean Average (Low/High) 10.1% 10.3% 11.4% 11.5% 14.4% 14.5%
Mean Average (Overall, 1998) 10.2% 11.4% 14.4%
Mean Average (Overall, 1997) 10.0% 10.4% 12.0%
Change from Summer 1997 Up 19 Basis Pts Up 104 Basis Pts Up 244 Basis Pts
Median Average 10.5% 11.0% 13.0%
Mode Average 10.5% 10.5% 13.0%
Low within Range 7.5% 7.5% 10.5% 10.5% 11.5% 11.5%
High within Range 12.0% 12.0% 13.0% 13.0% 20.0% 20.0%
<CAPTION>
GROWTH RATE TYPICAL
------------------------------------ PROJECTION
INCOME EXPENSES PERIOD(YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- ------ --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CLASS A - VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 2.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
1.0% 2.0% 2.0% 3.0% 10.0 10.0
4.0% 4.0% 4.0% 10.0 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 5 6 6
Mean Average (Low/High) 2.7% 3.1% 3.1% 3.4% 7.3 9.2
Mean Average (Overall, 1998) 2.9% 3.3% 8.3
Mean Average (Overall, 1997) 3.6% 3.4% 6.5
Change from Summer 1997 Down 70 Basis Pts Down 15 Basis Pts Increase 1.8 Yrs
Median Average 3.0% 3.3% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 2.0% 2.0% 3.0% 2.0 5.0
High within Range 4.0% 4.0% 4.0% 4.0% 10.0 10.0
CLASS B - VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
- ------------------------------
2.0% 3.0% 2.0% 3.0% 7.0 10.0
1.0% 2.0% 2.0% 3.0% 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 4 4 4
Mean Average (Low/High) 2.4% 2.9% 2.6% 3.1% 8.0 8.8
Mean Average (Overall, 1998) 2.6% 2.9% 8.4
Mean Average (Overall, 1997) 3.9% 3.4% 6.4
Change from Summer 1997 Down 128 Basis Pts Down 53 Basis Pts Increase 2.0 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 2.0% 2.0% 3.0% 5.0 5.0
High within Range 3.5% 3.5% 3.5% 3.5% 10.0 10.0
</TABLE>
Page 12 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
---------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- ---------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
NEIGHBORHOOD & COMMUNITY CENTERS (OVERALL RESULTS)
- -------------------------------------------------------------------------------------------
Number of Responses 23 24 24
Mean Average (Low/High) 9.3% 9.4% 10.0% 10.4% 12.1% 12.7%
Mean Average (Overall, 1998) 9.4% 10.2% 12.4%
Mean Average (Overall, 1997) 9.6% 10.0% 11.7%
Change from Summer 1997 Down 21 Basis Pts Up 19 Basis Pts Up 69 Basis Pts
Median Average 9.5% 10.3% 11.8%
Mode Average 10.0% 10.5% 11.5%
Low within Range 7.5% 1.0% 8.3% 9.0% 10.0% 10.5%
High within Range 12.0% 13.0% 13.0% 13.0% 20.0% 20.0%
- -------------------------------------------------------------------------------------------
POWER CENTER & "BIG BOX"
- -------------------------------------------------------------------------------------------
CLASS A - LEASED ASSET 9.8% 9.8% 10.3% 10.3% 12.0% 12.0%
9.5% 9.5% 10.0% 10.0% 11.5% 12.0%
9.0 9.8% 9.5% 10.0% 10.5% 11.3%
9.8% 9.8% 10.0% 10.0% 11.3% 11.3%
Number of Responses 4 4 4
Mean Average (Low/High) 9.5% 9.7% 9.9% 10.1% 11.3% 11.6%
Mean Average (Overall, 1998) 9.6% 10.0% 11.5%
Mean Average (Overall, 1997) 9.6% 10.0% 11.7%
Change from Summer 1997 Down 1 Basis Pts Up 0 Basis Pts Down 22 Basis Pts
Median Average 9.8% 10.0% 11.4%
Mode Average 9.8% 10.0% 12.0%
Low within Range 9.0% 9.5% 9.5% 10.0% 10.5% 11.3%
High within Range 9.8% 9.8% 10.3% 10.3% 12.0% 12.0%
<CAPTION>
GROWTH RATE TYPICAL
--------------------------------- PROJECTION
INCOME EXPENSES PERIOD(YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- ------ --------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------
NEIGHBORHOOD & COMMUNITY CENTERS (OVERALL RESULTS)
- ---------------------------------------------------------------------------------
Number of Responses 22 24 24
Mean Average (Low/High) 2.6% 3.2% 2.9% 3.4% 8.3 9.2
Mean Average (Overall, 1998) 2.9% 3.1% 8.8
Mean Average (Overall, 1997) 3.5% 3.4% 7.2
Change from Summer 1997 Down 60 Basis Pts Down 26 Basis Pts Increase 1.6 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 1.0% 2.0% 2.0% 3.0% 2.0 5.0
High within Range 4.0% 6.0% 4.0% 5.0% 10.0 10.0
- ---------------------------------------------------------------------------------
POWER CENTER & "BIG BOX"
- ---------------------------------------------------------------------------------
CLASS A - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 5.0 5.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
4.0% 4.0% 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
Number of Responses 3 4 4
Mean Average (Low/High) 3.2% 3.2% 3.4% 3.4% 8.8 8.8
Mean Average (Overall, 1998) 3.2% 3.4% 8.8
Mean Average (Overall, 1997) 3.2% 3.4% 9.5
Change from Summary 1997 Down 3 Basis Pts Down 3 Basis Pts Decrease 0.8 Yrs
Median Average 3.0% 3.3% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 3.0% 3.0% 3.0% 3.0% 5.0 5.0
High within Range 3.5% 3.5% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 13 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
CAPITALIZATION RATES
-----------------------------------------------------------------
GOING-IN TERMINAL
LOW HIGH LOW HIGH
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS B -- LEASED ASSET 10.0% 10.0% 10.5% 10.5%
Number of Responses 1 1
Mean Average (Low/High) 10.0% 10.0% 10.5% 10.5%
Mean Average (Overall, 1998) 10.0% 10.5%
Mean Average (Overall, 1997 9.0% 10.0%
Change from Summer 1997 Up 100 Basis Pts Up 50 Basis Pts
Median Average 10.0% 10.5%
Mode Average 9.8% 10.0%
Low within Range 10.0% 10.0% 10.5% 10.5%
High within Range 10.0% 10.0% 10.5% 10.5%
CLASS A -- VALUE ADDED 7.5% 7.5% 10.3% 10.3%
Number of Responses 1 1
Mean Average (Low/High) 7.5% 7.5% 10.3% 10.3%
Mean Average (Overall, 1998) 7.5% 10.3%
Mean Average (Overall, 1997) 9.8% 10.1%
Change from Summer 1997 Down 230 Basis Pts Up 15 Basis Pts
Median Average 7.5% 10.3%
Mode Average 10.0% 10.5%
Low within Range 7.5% 7.5% 10.3% 10.3%
High within Range 7.5% 7.5% 10.3% 10.3%
CLASS B -- VALUE ADDED 7.5% 7.5% 10.5% 10.5%
Number of Responses 1 1
Mean Average (Low/High) 7.5% 7.5% 10.5% 10.5%
Mean Average (Overall, 1998) 7.5% 10.5%
Mean Average (Overall, 1997) 9.0% 10.5%
Change from Summer 1997 Down 150 Basis Pts Up 0 Basis Pts
Median Average 7.5% 10.5%
Mode Average 7.5% 10.3%
Low within Range 7.5% 7.5% 10.5% 10.5%
High within Range 7.5% 7.5% 10.5% 10.5%
<CAPTION>
INTERNAL GROWTH RATE
RATE OF RETURN -----------------------------------------------------------
INCOME EXPENSES
LOW HIGH LOW HIGH LOW HIGH
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS B -- LEASED ASSET 13.0% 13.0% 3.0% 3.0% 3.0% 3.0%
Number of Responses 1 1 1
Mean Average (Low/High) 13.0% 13.0% 3.0% 3.0% 3.0% 3.0%
Mean Average (Overall, 1998) 13.0% 3.0% 3.0%
Mean Average (Overall, 1997 12.5% 3.0% 3.0%
Change from Summer 1997 Up 50 Basis Pts Up 0 Basis Pts Up 0 Basis Pts
Median Average 13.0% 3.0% 3.0%
Mode Average 12.0% 3.0% 3.0%
Low within Range 13.0% 13.0% 3.0% 3.0% 3.0% 3.0%
High within Range 13.0% 13.0% 3.0% 3.0% 3.0% 3.0%
CLASS A -- VALUE ADDED 17.0% 17.0% 3.0% 3.0% 3.0% 3.0%
Number of Responses 1 1 1
Mean Average (Low/High) 17.0% 17.0% 3.0% 3.0% 3.0% 3.0%
Mean Average (Overall, 1998) 17.0% 3.0% 3.0%
Mean Average (Overall, 1997) 12.5% 3.5% 3.0%
Change from Summer 1997 Up 450 Basis Pts Down 50 Basis Pts Up 0 Basis Pts
Median Average 17.0% 3.0% 3.0%
Mode Average 13.0% 3.0% 3.0%
Low within Range 17.0% 17.0% 3.0% 3.0% 3.0% 3.0%
High within Range 17.0% 17.0% 3.0% 3.0% 3.0% 3.0%
CLASS B -- VALUE ADDED 20.0% 20.0% 3.0% 3.0% 3.0% 3.0%
Number of Responses 1 1 1
Mean Average (Low/High) 20.0% 20.0% 3.0% 3.0% 3.0% 3.0%
Mean Average (Overall, 1998) 20.0% 3.0% 3.0%
Mean Average (Overall, 1997) 12.5% 3.0% 3.0%
Change from Summer 1997 Up 750 Basis Pts Up 0 Basis Pts Up 0 Basis Pts
Median Average 20.0% 3.0% 3.0%
Mode Average 17.0% 3.0% 3.0%
Low within Range 20.0% 20.0% 3.0% 3.0% 3.0% 3.0%
High within Range 20.0% 20.0% 3.0% 3.0% 3.0% 3.0%
<PAGE>
<CAPTION>
TYPICAL PROJECTION
PERIOD (YEARS)
LOW HIGH
-------- --------
<S> <C> <C> <C>
CLASS B -- LEASED ASSET 5.0 5.0
Number of Responses 1
Mean Average (Low/High) 5.0 5.0
Mean Average (Overall, 1998) 5.0
Mean Average (Overall, 1997 4.5
Change from Summer 1997 Increase 0.5 Yrs
Median Average 5.0
Mode Average 10.0
Low within Range 5.0 5.0
High within Range 5.0 5.0
CLASS A -- VALUE ADDED 5.0 5.0
Number of Responses 1
Mean Average (Low/High) 5.0 5.0
Mean Average (Overall, 1998) 5.0
Mean Average (Overall, 1997) 6.3
Change from Summer 1997 Decrease 1.3 Yrs
Median Average 5.0
Mode Average 5.0
Low within Range 5.0 5.0
High within Range 5.0 5.0
CLASS B -- VALUE ADDED 5.0 5.0
Number of Responses 1
Mean Average (Low/High) 5.0 5.0
Mean Average (Overall, 1998) 5.0
Mean Average (Overall, 1997) 4.5
Change from Summer 1997 Increase 0.5 Yrs
Median Average 5.0
Mode Average 5.0
Low within Range 5.0 5.0
High within Range 5.0 5.0
</TABLE>
Page 14 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
------------------------------------------------------------ RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
POWER CENTER & "BIG BOX" (OVERALL RESULTS)
- ---------------------------------------------------------------------------------------------------------------------------
Number of Responses 7 7 7
Mean Average (Low/High) 9.0% 9.1% 10.1% 10.2% 13.6% 13.8%
Mean Average (Overall, 1998) 9.1% 10.2% 13.7%
Mean Average (Overall, 1997) 9.6% 10.0% 11.9%
Change from Summer 1997 Down 55 Basis Pts Up 18 Basis Pts Up 180 Basis Pts
Median Average 9.6% 10.3% 12.0%
Mode Average 9.8% 10.0% 12.0%
Low within Range 7.5% 7.5% 9.5% 10.0% 10.5% 11.3%
High within Range 10.0% 10.0% 10.5% 10.5% 20.0% 20.0%
- -------------------------------- ------- ---- ------- ---- ------- ----
REGIONAL MALLS
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A -- LEASED ASSET 8.0% 8.0% 7.9% 7.9% 13.0% 13.0%
7.5% 7.5% 8.5% 8.5% 10.5% 10.5%
7.0% 8.0% 8.0% 9.0% 10.3% 11.0%
7.0% 11.0% 7.5% 11.5% 9.5% 13.0%
8.0% 10.0%
7.0% 9.0% 7.5% 9.5% 10.0% 12.0%
Number of Responses 6 5 5
Mean Average (Low/High) 7.4% 8.9% 7.9% 9.3% 10.7% 11.9%
Mean Average (Overall, 1998) 8.2% 8.6% 11.3%
Mean Average (Overall, 1997) 8.3% 8.8% 11.5%
Change from Summer 1997 Down 13 Basis Pts Down 23 Basis Pts Down 23 Basis Pts
Median Average 8.0% 8.3% 10.8%
Mode Average 8.0% 7.9% 13.0%
Low within Range 7.0% 7.5% 7.5% 7.9% 9.5% 10.5%
High within Range 8.0% 11.0% 8.5% 11.5% 13.0% 13.0%
CLASS B -- LEASED ASSET 9.0% 9.0% 8.5% 8.5% 16.0% 16.0%
8.0% 12.0%
Number of Responses 2 1 1
Mean Average (Low/High) 8.5% 10.5% 8.5% 8.5% 16.0% 16.0%
Mean Average (Overall, 1998) 9.5% 8.5% 16.0%
Mean Average (Overall, 1997) 9.3% 9.4% 15.0%
Change from Summer 1997 Up 20 Basis Pts Down 90 Basis Pts Up 100 Basis Pts
Median Average 9.0% 8.5% 16.0%
Mode Average 9.0% 8.5% 16.0%
Low within Range 8.0% 9.0% 8.5% 8.5% 16.0% 16.0%
High within Range 9.0% 12.0% 8.5% 8.5% 16.0% 16.0%
CLASS A -- VALUE ADDED 8.5% 8.5% 8.0% 8.0% 15.0% 15.0%
Number of Responses 1 1 1
Mean Average (Low/High) 8.5% 8.5% 8.0% 8.0% 15.0% 15.0%
Mean Average (Overall, 1998) 8.5% 8.0% 15.0%
Mean Average (Overall, 1997) 8.7% 9.0% 15.8%
<CAPTION>
GROWTH RATE TYPICAL PROJECTION
----------------------------------------------- PERIOD (YEARS)
INCOME EXPENSES
LOW HIGH LOW HIGH LOW HIGH
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
POWER CENTER & "BIG BOX" (OVERALL RESULTS)
- --------------------------------------------------------------------------------------------------------
Number of Responses 6 7 7
Mean Average (Low/High) 3.1% 3.1% 3.2% 3.2% 7.1 7.1
Mean Average (Overall, 1998) 3.1% 3.2% 7.1
Mean Average (Overall, 1997) 3.2% 3.2% 7.8
Change from Summer 1997 Down 12 Basis Pts Up 1 Basis Pts Decrease 0.7 Yrs
Median Average 3.0% 3.0% 5.0
Mode Average 3.0% 3.0% 5.0
Low within Range 3.0% 3.0% 3.0% 3.0% 5.0 5.0
High within Range 3.5% 3.5% 4.0% 4.0% 10.0 10.0
- -------------------------------- --- --- --- --- ----- ----
REGIONAL MALLS
- --------------------------------------------------------------------------------------------------------
CLASS A -- LEASED ASSET 3.0% 3.0% 3.0% 3.0% 5.0 5.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
4.0% 4.0% 10.0 10.0
3.5% 4.0% 3.5% 4.0% 10.0 10.0
4.0% 6.0% 1.0% 2.0% 5.0 5.0
3.0% 4.0% 3.0% 4.0% 10.0 10.0
Number of Responses 5 6 6
Mean Average (Low/High) 3.3% 4.0% 2.9% 3.3% 8.0 8.3
Mean Average (Overall, 1998) 3.7% 3.1% 8.3
Mean Average (Overall, 1997) 3.2% 3.4% 8.4
Change from Summer 1997 Up 45 Basis Pts Down 28 Basis Pts Decrease 0.1 Yrs
Median Average 3.3% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 3.0% 3.0% 1.0% 2.0% 5.0 5.0
High within Range 4.0% 6.0% 4.0% 4.0% 10.0 10.0
CLASS B -- LEASED ASSET 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 6.0% 1.0% 2.0% 3.0 3.0
Number of Responses 2 2 2
Mean Average (Low/High) 3.5% 4.5% 2.0% 2.5% 4.0 4.0
Mean Average (Overall, 1998) 4.0% 2.3% 4.0
Mean Average (Overall, 1997) 2.8% 3.5% 4.7
Change from Summer 1997 Up 120 Basis Pts Down 125 Basis Pts Decrease 0.7 Yrs
Median Average 3.5% 2.5% 4.0
Mode Average 3.0% 3.0% 5.0
Low within Range 3.0% 3.0% 1.0% 2.0% 3.0 3.0
High within Range 4.0% 6.0% 3.0% 3.0% 5.0 5.0
CLASS A -- VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
Number of Responses 1 1 1
Mean Average (Low/High) 3.0% 3.0% 3.0% 3.0% 5.0 5.0
Mean Average (Overall, 1998) 3.0% 3.0% 5.0
Mean Average (Overall, 1997) 3.5% 3.4% 6.3
</TABLE>
Page 15 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
----------------------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
------ --------- ------ --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Change from Summer 1997 Down 20 Basis Pts Down 100 Basis Pts Down 80 Basis Pts
Median Average 8.5% 8.0% 15.0%
Mode Average 8.5% 8.0% 15.0%
Low within Range 8.5% 8.5% 8.0% 8.0% 15.0% 15.0%
High within Range 8.5% 8.5% 8.0% 8.0% 15.0% 15.0%
CLASS B -- VALUE ADDED 9.5% 9.5% 9.0% 9.0% 18.0% 18.0%
Number of Responses 1 1 1
Mean Average (Low/High) 9.5% 9.5% 9.0% 9.0% 18.0% 18.0%
Mean Average (Overall, 1998) 9.5% 9.0% 18.0%
Mean Average (Overall, 1997) 9.5% 9.0% 16.5%
Change from Summer 1997 Up 0 Basis Pts Up 0 Basis Pts Up 150 Basis Pts
Median Average 9.5% 9.0% 18.0%
Mode Average 9.5% 9.0% 18.0%
Low within Range 9.5% 9.5% 9.0% 9.0% 18.0% 18.0%
High within Range 9.5% 9.5% 9.0% 9.0% 18.0% 18.0%
- -------------------------------- --- --- --- --- ------- ----
REGIONAL MALLS (OVERALL RESULTS)
- --------------------------------------------------------------------------------------------------------------------
Number of Responses 10 8 8
Mean Average (Low/High) 8.0% 9.3% 8.1% 9.0% 12.8% 13.6%
Mean Average (Overall, 1998) 8.6% 8.5% 13.2%
Mean Average (Overall, 1997) 8.8% 9.0% 13.6%
Change from Summer 1997 Down 20 Basis Pts Down 46 Basis Pts Down 43 Basis Pts
Median Average 8.3% 8.5% 13.0%
Mode Average 8.0% 8.5% 13.0%
Low within Range 7.0% 7.5% 7.5% 7.9% 9.5% 10.5%
High within Range 9.5% 12.0% 9.0% 11.5% 18.0% 18.0%
<CAPTION>
GROWTH RATE TYPICAL PROJECTION
----------------------------------------------- PERIOD (YEARS)
INCOME EXPENSES
LOW HIGH LOW HIGH LOW HIGH
------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Change from Summer 1997 Down 50 Basis Pts Down 40 Basis Pts Decrease 1.3 Yrs
Median Average 3.0% 3.0% 5.0
Mode Average 3.0% 3.0% 5.0
Low within Range 3.0% 3.0% 3.0% 3.0% 5.0 5.0
High within Range 3.0% 3.0% 3.0% 3.0% 5.0 5.0
CLASS B -- VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 5.0
Number of Responses 1 1 1
Mean Average (Low/High) 3.0% 3.0% 3.0% 3.0% 5.0 5.0
Mean Average (Overall, 1998) 3.0% 3.0% 5.0
Mean Average (Overall, 1997) 4.0% 4.0% 4.7
Change from Summer 1997 Down 100 Basis Pts Down 100 Basis Pts Increase 0.3 Yrs
Median Average 3.0% 3.0% 5.0
Mode Average 3.0% 3.0% 5.0
Low within Range 3.0% 3.0% 3.0% 3.0% 5.0 5.0
High within Range 3.0% 3.0% 3.0% 3.0% 5.0 5.0
- -------------------------------- --- --- --- --- ----- ---
REGIONAL MALLS (OVERALL RESULTS)
- --------------------------------------------------------------------------------------------------------
Number of Responses 9 10 10
Mean Average (Low/High) 3.3% 3.9% 2.8% 3.1% 6.8 6.8
Mean Average (Overall, 1998) 3.6% 2.9% 6.8
Mean Average (Overall, 1997) 3.3% 3.5% 6.6
Change from Summer 1997 Up 28 Basis Pts Down 58 Basis Pts Increase 0.2 Yrs
Median Average 3.0% 3.0% 5.0
Mode Average 3.0% 3.0% 5.0
Low within Range 3.0% 3.0% 1.0% 2.0% 3.0 3.0
High within Range 4.0% 6.0% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 16 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
------------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Specialty Retail
- -------------------------------------------------------------------------------------------------
CLASS A - LEASED ASSET
- ------------------------------
Number of Responses 0 0 0
Mean Average (Low/High) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1997) 9.0% 9.5% 11.6%
Change from Summer 1997 #DIV/0! #DIV/0! #DIV/0!
Median Average #NUM! #NUM! #NUM!
Mode Average #N/A #N/A #N/A
Low within Range 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
High within Range 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
CLASS B - LEASED ASSET
- ------------------------------
Number of Responses 0 0 0
Mean Average (Low/High) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1997) 10.0% 10.8% 14.0%
Change from Summer 1997 #DIV/0! #DIV/0! #DIV/0!
Median Average #NUM! #NUM! #NUM!
Mode Average #N/A #N/A #N/A
Low within Range 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
High within Range 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
CLASS A - VALUE ADDED
- ------------------------------
Number of Responses 0 0
Mean Average (Low/High) #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0! #DIV/0!
Mean Average (Overall, 1997) 9.0% 9.0%
Change from Summer 1997 #DIV/0! #DIV/0!
Median Average #NUM! #NUM!
Mode Average #N/A #N/A
Low within Range 0.0% 0.0% 0.0% 0.0%
High within Range 0.0% 0.0% 0.0% 0.0%
<CAPTION>
GROWTH RATE
------------------------------------------- TYPICAL PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
----------- --------- ----------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Specialty Retail
- ------------------------------------------------------------------------------------------------
CLASS A - LEASED ASSET
- ------------------------------
Number of Responses 0 0 0
Mean Average (Low/High) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1997) 3.0% 4.0% 5.7
Change from Summer 1997 #DIV/0! #DIV/0! #DIV/0!
Median Average #NUM! #NUM! #NUM!
Mode Average #N/A #N/A #N/A
Low within Range 0.0% 0.0% 0.0% 0.0% 0.0 0.0
High within Range 0.0% 0.0% 0.0% 0.0% 0.0 0.0
CLASS B - LEASED ASSET
- ------------------------------
Number of Responses 0 0
Mean Average (Low/High) #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0! #DIV/0!
Mean Average (Overall, 1997) 2.0% 7.0
Change from Summer 1997 #DIV/0! #DIV/0!
Median Average #NUM! #NUM!
Mode Average #N/A #N/A
Low within Range 0.0% 0.0% 0.0 0.0
High within Range 0.0% 0.0% 0.0 0.0
CLASS A - VALUE ADDED
- ------------------------------
Number of Responses 0
Mean Average (Low/High) #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0!
Mean Average (Overall, 1997) 9.2
Change from Summer 1997 #DIV/0!
Median Average #NUM!
Mode Average #N/A
Low within Range 0.0 0.0
High within Range 0.0 0.0
</TABLE>
Page 17 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
------------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - VALUE ASSET
- ------------------------------
Number of Responses 0 0
Mean Average (Low/High) #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0! #DIV/0!
Mean Average (Overall, 1997) 9.0% 9.0%
Change from Summer 1997 #DIV/0! #DIV/0!
Median Average #NUM! #NUM!
Mode Average #N/A #N/A
Low within Range 0.0% 0.0% 0.0% 0.0%
High within Range 0.0% 0.0% 0.0% 0.0%
- ------------------------------------------------------------------------------------------------
Specialty Retail (Overall Results)
- ------------------------------------------------------------------------------------------------
Number of Responses 0 0 0
Mean Average (Low/High) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1997) 9.3% 9.7% 12.4%
Change from Summer 1997 #DIV/0! #DIV/0! #DIV/0!
Median Average #NUM! #NUM! #NUM!
Mode Average #N/A #N/A #N/A
Low within Range 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
High within Range 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
<CAPTION>
GROWTH RATE
------------------------------------------- TYPICAL PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
----------- --------- ----------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS B - VALUE ASSET
- ------------------------------
Number of Responses 0
Mean Average (Low/High) #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0!
Mean Average (Overall, 1997) 4.0
Change from Summer 1997 #DIV/0!
Median Average #NUM!
Mode Average No Mode
Low within Range 0.0 0.0
High within Range 0.0 0.0
- ----------------------------------
Specialty Retail (Overall Results)
- ----------------------------------
Number of Responses 0 0 0
Mean Average (Low/High) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1998) #DIV/0! #DIV/0! #DIV/0!
Mean Average (Overall, 1997) 2.7% 4.0% 5.4
Change from Summer 1997 #DIV/0! #DIV/0! #DIV/0!
Median Average #NUM! #NUM! #NUM!
Mode Average #N/A #N/A #N/A
Low within Range 0.0% 0.0% 0.0% 0.0% 0.0 0.0
High within Range 0.0% 0.0% 0.0% 0.0% 0.0 0.0
</TABLE>
Page 18 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
RESIDENTIAL
- ---------------------------------------------------------------------------------------------
APARTMENTS
- ---------------------------------------------------------------------------------------------
CLASS A - LEASED ASSET 8.6% 8.6% 8.9% 8.9% 11.0% 11.0%
- -------------------------------- 9.0% 9.0% 9.5% 9.5% 12.0% 12.0%
9.0% 9.0% 10.0% 10.0% 11.5% 12.0%
8.0% 8.0% 8.0% 8.0% 12.0% 14.0%
8.0% 9.0% 8.5% 9.5% 10.5% 11.5%
7.5% 10.0% 8.0% 10.3% 10.0% 12.5%
7.5% 8.5% 8.0% 9.0% 11.0% 12.0%
7.5% 9.0% 8.0% 10.0% 10.5% 12.0%
8.0% 9.0% 8.5% 9.5% 10.0% 11.0%
8.5% 9.0% 9.0% 9.5% 11.0% 11.5%
8.8% 9.0% 9.3% 9.3% 11.2% 11.2%
8.5% 8.5% 9.0% 9.0% 11.5% 11.5%
8.0% 8.5% 8.5% 9.0% 10.5% 11.0%
8.3% 8.3% 9.0% 9.0% 10.7% 10.7%
8.3% 8.3% 9.0% 9.0% 10.5% 10.5%
Number of Responses 15 15 15
Mean Average (Low/High) 8.2% 8.9% 8.7% 9.3% 11.0% 11.8%
Mean Average (Overall, 1998) 8.5% 9.0% 11.3%
Mean Average (Overall, 1997) 8.7% 9.2% 11.2%
Change from Summer 1997 Down 20Basis Pts Down 19Basis Pts Up 8 Basis Pts
Median Average 8.5% 9.0% 11.1%
Mode Average 9.0% 9.0% 11.0%
Low within Range 7.5% 8.0% 8.0% 8.0% 10.0% 10.5%
High within Range 9.0% 10.0% 10.0% 10.3% 12.0% 14.0%
CLASS B - LEASED ASSET 8.8% 8.8% 9.1% 9.1% 11.3% 11.3%
- -------------------------------- 9.0% 9.0% 9.5% 9.5% 13.0% 13.0%
10.0% 10.0% 10.0% 10.0% 20.0% 20.0%
8.5% 9.5% 9.0% 10.0% 11.5% 12.5%
9.0% 9.5% 9.5% 10.0% 11.0% 12.0%
8.8% 9.5% 8.8% 10.5% 11.5% 12.5%
9.5% 9.5% 10.0% 10.0% 12.5% 12.5%
8.5% 9.0% 9.0% 9.5% 11.0% 11.5%
8.5% 8.5% 9.5% 9.5% 11.5% 11.5%
Number of Responses 9 9 9
Mean Average (Low/High) 9.1% 9.4% 9.4% 9.9% 13.0% 13.4%
Mean Average (Overall, 1998) 9.1% 9.6% 12.8%
Mean Average (Overall, 1997) 9.1% 9.5% 11.9%
Change from Summer 1997 Down 0 Basis Pts Up 8 Basis Pts Up 88 Basis Pts
Median Average 9.0% 9.5% 11.8%
Mode Average 9.5% 9.5% 11.5%
Low within Range 8.5% 8.5% 8.8% 9.1% 11.0% 11.3%
High within Range 10.0% 10.0% 10.0% 10.5% 20.0% 20.0%
<CAPTION>
GROWTH RATE TYPICAL
--------------------------------- PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- ------ --------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
RESIDENTIAL
- ---------------------------------------------------------------------------------
APARTMENTS
- ---------------------------------------------------------------------------------
CLASS A - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 10.0 10.0
- -------------------------------- 3.0% 3.0% 3.0% 3.0% 5.0 5.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
4.0% 4.0% 4.0% 4.0% 5.0 7.0
4.0% 4.0% 10.0 10.0
3.5% 5.0% 3.5% 5.0% 10.0 10.0
3.0% 3.0% 3.0% 4.0% 10.0 10.0
3.0% 4.0% 3.0% 4.0% 10.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
2.0% 3.0% 2.0% 3.0% 7.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
2.0% 3.0% 2.0% 3.0% 10.0 10.0
3.0% 4.0% 3.0% 3.0% 10.0 10.0
3.5% 3.5% 3.5% 3.5% 10.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
Number of Responses 14 15 15
Mean Average (Low/High) 3.0% 3.5% 3.1% 3.5% 9.0 9.4
Mean Average (Overall, 1998) 3.2% 3.3% 9.3
Mean Average (Overall, 1997) 3.3% 3.2% 9.5
Change from Summer 1997 Down 7 Basis Pts Up 8 Basis Pts Decrease 0.2 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 2.0% 3.0% 2.0% 3.0% 5.0 5.0
High within Range 4.0% 5.0% 4.0% 5.0% 10.0 10.0
CLASS B - LEASED ASSET 3.0% 3.0% 3.0% 3.0% 10.0 10.0
- -------------------------------- 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 4.0% 4.0% 5.0 7.0
3.0% 3.0% 3.0% 4.0% 10.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
3.0% 4.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 10.0 10.0
3.0% 4.0% 3.0% 3.0% 10.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
Number of Responses 9 9 9
Mean Average (Low/High) 3.0% 3.3% 2.9% 3.3% 8.1 8.9
Mean Average (Overall, 1998) 3.2% 3.1% 8.8
Mean Average (Overall, 1997) 3.4% 3.1% 9.1
Change from Summer 1997 Down 23 Basis Pts Down 4 Basis Pts Decrease 0.3 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 2.0% 3.0% 2.0% 3.0% 5.0 5.0
High within Range 4.0% 4.0% 4.0% 4.0% 10.0 10.0
</TABLE>
Page 19 of 21
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITALIZATION RATES INTERNAL
--------------------------------------- RATE OF RETURN
GOING-IN TERMINAL
LOW HIGH LOW HIGH LOW HIGH
--------- --------- --------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A - VALUE ADDED 8.8% 8.8% 9.0% 9.0% 11.3% 11.3%
- -------------------------------- 8.0% 8.0% 9.5% 9.5% 17.0% 17.0%
10.0% 12.0% 8.0% 10.0% 25.0% 25.0%
8.5% 9.5% 12.0% 14.0%
9.0% 10.0% 10.0% 10.5% 11.0% 13.0%
8.0% 8.5% 8.5% 9.0% 11.0% 12.0%
9.5% 9.5% 10.0% 10.0% 12.0% 12.0%
8.5% 9.0% 9.0% 9.5% 11.0% 12.0%
Number of Responses 7 8 8
Mean Average (Low/High) 8.9% 9.6% 8.8% 9.5% 16.3% 16.8%
Mean Average (Overall, 1998) 9.1% 9.3% 14.2%
Mean Average (Overall, 1997) 8.9% 9.1% 11.6%
Change from Summer 1997 Up 21 Basis Pts Up 24 Basis Pts Up 256 Basis Pts
Median Average 8.9% 9.5% 12.0%
Mode Average 8.0% 9.0% 12.0%
Low within Range 8.0% 8.0% 8.0% 9.0% 11.0% 11.3%
High within Range 10.0% 12.0% 10.0% 10.5% 25.0% 25.0%
CLASS B - VALUE ADDED 9.0% 9.0% 9.4% 9.4% 11.5% 11.5%
- -------------------------------- 8.0% 8.0% 9.5% 9.5% 20.0% 20.0%
12.0% 14.0% 10.0% 12.0% 30.0% 30.0%
9.0% 10.5% 10.0% 11.0% 12.0% 14.0%
8.5% 9.0% 9.5% 10.0% 11.5% 12.0%
10.5% 10.5% 11.0% 11.0% 13.0% 13.0%
9.0% 9.5% 9.5% 10.0% 11.5% 12.5%
15.0% 15.0%
Number of Responses 7 7 8
Mean Average (Low/High) 9.5% 10.4% 9.7 10.5% 20.7% 21.3%
Mean Average (Overall, 1998) 9.8% 10.1% 16.4%
Mean Average (Overall, 1997) 9.3% 9.4% 12.3%
Change from Summer 1997 Up 45 Basis Pts Up 73 Basis Pts Up 409 Basis Pts
Median Average 9.0% 10.0% 13.5%
Mode Average 9.0% 9.5% 20.0%
Low within Range 8.0% 8.0% 9.4% 9.4% 11.5% 12.0%
High within Rage 12.0% 14.0% 11.0% 12.0% 30.0% 30.0%
- ---------------------------------
APARTMENTS (OVERALL RESULTS)
- -------------------------------------------------------------------------------------------------
Number of Responses 38 39 40
Mean Average (Low/High) 8.7% 9.2% 9.1% 9.6% 12.8% 13.5%
Mean Average (Overall, 1998) 9.0% 9.4% 13.1%
Mean Average (Overall, 1997) 8.9% 9.3% 11.6%
Change from Summer 1997 Up 8 Basis Pts Up 11 Basis Pts Up 153 Basis Pts
Median Average 9.0% 9.5% 12.0%
Mode Average 9.0% 9.5% 12.0%
Low within Range 7.5% 8.0% 8.0% 8.0% 10.0% 10.5%
High within Range 12.0% 14.0% 11.0% 12.0% 30.0% 30.0%
<CAPTION>
GROWTH RATE TYPICAL
--------------------------------- PROJECTION
INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH
--------- ------ --------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
CLASS A - VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 10.0
- -------------------------------- 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 4.0% 4.0% 1.0 4.0
4.0% 4.0% 2.0 10.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
3.0% 4.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 10.0 10.0
4.0% 5.0% 3.0% 3.0% 10.0 10.0
Number of Responses 7 8 8
Mean Average (Low/High) 3.3% 3.3% 3.5% 3.5% 3.3 7.3
Mean Average (Overall, 1998) 3.4% 3.1% 7.4
Mean Average (Overall, 1997) 4.0% 3.1% 8.5
Change from Summer 1997 Down 64 Basis Pts Up 3 Basis Pts Decrease 1.1 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 2.0% 3.0% 2.0% 3.0% 1.0 4.0
High within Range 4.0% 5.0% 4.0% 4.0% 10.0 10.0
CLASS B - VALUE ADDED 3.0% 3.0% 3.0% 3.0% 5.0 10.0
- -------------------------------- 3.0% 3.0% 3.0% 3.0% 5.0 5.0
4.0% 4.0% 4.0% 4.0% 1.0 4.0
3.0% 3.0% 3.0% 3.0% 10.0 10.0
3.0% 4.0% 2.0% 3.0% 7.0 10.0
2.0% 3.0% 2.0% 3.0% 10.0 10.0
4.0% 5.0% 3.0% 3.0% 10.0 10.0
Number of Responses 7 7 7
Mean Average (Low/High) 3.3% 3.3% 3.3% 3.3% 5.3 7.3
Mean Average (Overall, 1998) 3.4% 3.0% 7.6
Mean Average (Overall, 1997) 4.0% 3.1% 8.5
Change from Summer 1997 Down 64 Basis Pts Down 10 Basis Pts Decrease 0.9 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 2.0% 3.0% 2.0% 3.0% 1.0 4.0
High within Range 4.0% 5.0% 4.0% 4.0% 10.0 10.0
- ---------------------------------
APARTMENTS (OVERALL RESULTS)
- -----------------------------------------------------------------------------------
Number of Responses 37 39 39
Mean Average (Low/High) 3.1% 3.4% 3.0% 3.3% 7.9 8.9
Mean Average (Overall, 1998) 3.3% 3.1% 8.5
Mean Average (Overall, 1997) 3.6% 3.2% 9.1
Change from Summer 1997 Down 34 Basis Pts Down 5 Basis Pts Decrease 0.6 Yrs
Median Average 3.0% 3.0% 10.0
Mode Average 3.0% 3.0% 10.0
Low within Range 2.0% 3.0% 2.0% 3.0% 1.0 4.0
High within Range 4.0% 5.0% 4.0% 5.0% 10.0 10.0
</TABLE>
"Leased Asset" refers to predominantly "passive" investments involving
substantially leased Properties.
Spr98inv Page 20 of 21 7/25/98 12:52 PM
<PAGE>
INVESTOR SURVEY
Cushman & Wakefield Valuation Advisory Services
Spring 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION RATES GROWTH RATE TYPICAL
--------------------------------- INTERNAL ----------------------------- PROJECTION
GOING-IN TERMINAL RATE OF RETURN INCOME EXPENSES PERIOD (YEARS)
LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
"Value Added" denotes properties which require more active management involvement
due to leasing issues and/or additional capital investment for physical issues.
</TABLE>
Page 21 of 21
<PAGE>
QUALIFICATIONS OF APPRAISER
- ------------------------------------------------------------------------------
ELLEN J. GUNDERSON, MAI
PROFESSIONAL AFFILIATIONS
Member of the Appraisal Institute (MAI Designation No. 09435)
California Certified General Real Estate Appraiser - (ID# AG025346)
Arizona Certified General Real Estate Appraiser - (ID# 30252)
REAL ESTATE EXPERIENCE
Director, Cushman & Wakefield of California, Inc., Valuation Advisory
Services, Los Angeles, California, October 1996 to present. Performs
valuation services for all property types with an emphasis in large scale
retail developments including regional malls, entertainment/off-price
regional centers, power and community/neighborhood centers. National
account manager for Allegis Realty Investors, LLC, for the semi-annual
valuation of their portfolio assets. Services as one of ten professionals
nationwide with Cushman & Wakefield's Retail Valuation Group.
Vice President, Landauer Associates, Inc., 1995-1996 (Los Angeles,
California). Focused in the valuation of complex, major income producing
properties. Assignments of all property types in numerous states including
California, Arizona, Washington, Utah and Texas. Key assignments included
regional malls, high-rise CBD office buildings, a portfolio of 50 R&D
properties and a rent re-negotiation for a marina on county-owned land.
Real Estate Specialist (GS-11), Headquarters U.S. Army in Europe, 1993-1994
(Heidelberg, Germany). Responsible for the acquisition and disposal of
real estate for the U.S. Government in Germany. Active in all levels of
negotiations for recoupment of residual property value of U.S.
installations being turned over to the German Government due to U.S.
drawdown in Europe. Performed appraisals and rent analysis in Germany
and The Netherlands. Special assignment to Warsaw, Poland to negotiate
housing contracts for U.S. military personnel for NATO's Partnership for
Peace program.
Vice President, Dietrich & Hawkins, Ltd., 1987-1993 (formerly Burke Hansen,
Inc., Arizona). Performed appraisals of every property type throughout
Arizona, California, New Mexico, Indiana and Oklahoma. Specialized in
office properties. Assignments also included factory outlet malls, a
326-000-acre lake-front ranch, foreign trade zones, 4,500 acres of land
outside San Diego; and numerous portfolio assignments including car
dealerships, residential subdivisions, 15 mobile home parks in six states,
and a large portfolio of sand and gravel operations.
EDUCATION
Bachelor of Science in Real Estate
Arizona State University, Tempe, Arizona, 1987.
Appraisal Institute - All courses required for the MAI Designation and
continuing education. Designated since April 1992.
AFFILIATIONS
Member, Southern California Chapter, Appraisal Institute
Member, NNCREW (National Network of Commercial Real Estate Women)
<PAGE>
- ------------------------------------------------------------------------------
COMPLETE MARKET STUDY
OF REAL PROPERTY
NORTHTOWN MALL
4750 North Division Street
NEC North Division Street and Wellesley Avenue
City of Spokane, Spokane County, Washington
- ------------------------------------------------------------------------------
IN A SELF-CONTAINED REPORT
DATE OF ANALYSIS
As of August 1998
Prepared for:
MORGAN STANLEY MORTGAGE CAPITAL, INC.
1585 Broadway, 37th Floor
New York, New York
Prepared by:
CUSHMAN & WAKEFIELD OF WASHINGTON, INC.
Valuation Advisory Services
700 Fifth Avenue, Suite 2700
Seattle, Washington
<PAGE>
[CUSHMAN & WAKEFIELD LETTERHEAD]
August 20, 1998
Mr. Kevin Swartz
Morgan Stanley Mortgage Capital, Inc.
1585 Broadway, 37th Floor
New York, NY 10036
Re: Complete Market Study of Real Property
Northtown Mall Shopping Center
4750 North Division Street
NEC North Division Street and Wellesley Avenue
City of Spokane, Spokane County, Washington
C&W Reference Number 98-33001-9206
Dear Mr. Swartz:
In fulfillment of our agreement as outlined in the Letter of
Engagement, Cushman & Wakefield of Washington, Inc. is pleased to transmit our
Market Study for the above referenced property. For this assignment, we are
providing a Complete Market Study with the results being conveyed in this
Self-Contained Report.
As specified in the Letter of Engagement, the attached report provides
an overview of the subject property's marketplace, including regional,
neighborhood, and retail market analyses. The accompanying report includes a
summary of the data, analyses, and findings of the market study.
In accordance with our agreement, this market study represents a
consulting assignment and does not comprise an appraisal of the property.
Therefore, our report has been prepared in accordance with the Departure
Provision of the Uniform Standards of Professional Appraisal Practice as
promulgated by the Appraisal Foundation.
The subject of this Market Study is Northtown Mall, a 943,130 +/-
square foot super-regional mall at the northwest quadrant of North Division
Street and Wellesley Avenue in Spokane, Washington. The center was originally
constructed in the 1950's as an open air center, subsequently enclosed in the
mid 1980's, and then expanded and renovated in 1992 to 1993. The property
currently includes 403,200+/- square feet of mall shop space and is anchored by
Sears, Mervyn's, JCPenney, Emporium and The Bon Marche. Total owned gross
leasable area is approximately 702,017+/- square feet, with a current mall
tenant occupancy level of about 72 percent. We have seen five different square
footage calculations and have chosen this one provided by the onsite manager.
The ownership is in the process of adding new tenants at the southwest corner
of the mall. This remodel and addition will include space for a 12-screen
theatre, Barnes & Noble, Old Navy, two restaurants and a 955-stall parking
structure. Planned completion is Summer 1999. Total new tenancies are
approximately 115,000 square feet, though it is unclear how much of this will
be additional GLA.
<PAGE>
Mr. Kevin Swartz
Page Two
August 20, 1998
The mall is situated on a 34.43+/- acre site located along North
Division Street, approximately three miles north of downtown Spokane and
Interstate 90. Approximately 25.86+/- acres of the site are under mall
ownership.
This report has been prepared for Morgan Stanley Mortgage Capital, Inc.
("Client"), and it is intended only for the specified use of the Client and its
affiliates. It may not be distributed to or relied upon by other persons or
entities without written permission of Cushman & Wakefield, Inc.
We consent to the inclusion of any form (whether in paper or digital
format, including any electronic media such as CD-ROM or the Internet) of the
Prospectus Supplement relating to Morgan Stanley Mortgage Capital, Inc.,
Commercial Pass-Through Certificates (which we under is a type of
"Securitization" defined as an offering of debt securities that, as applicable,
are registered with the Securities Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Act") or are privately placed pursuant
to an exemption from the Act, in which the property appraised is part of a pool
of properties owned by various non-affiliated owners collateralizing such
offering) of our appraisal with respect to the property listed on the attached
annex, and we consent to the reference to our firm under the caption "Experts"
in such Prospectus Supplement.
The report may be relied upon by Morgan Stanley Mortgage Capital, Inc.
and its successors for any internal analysis and underwriting involving the
subject asset but may not be used for other purposes without written
permission.
Kenneth A. Barnes, MAI inspected the property and prepared the report.
Based upon the total analysis herein, subject to the assumptions,
limiting conditions, certifications, and definitions, as of August 1998, the
subject property currently reflects rent and expense levels consistent with the
market.
Respectfully submitted,
CUSHMAN & WAKEFIELD OF WASHINGTON, INC.
/s/ Kenneth A. Barnes
- ----------------------------
Kenneth A. Barnes, MAI
Director
Valuation Advisory Services
WA State Cert. #BARNEKA40203
KB:bs
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
PROPERTY NAME: Northtown Mall
PROPERTY TYPE: Super-Regional Mall
LOCATION: The subject site is in the northwest
quadrant of North Division Street and
Wellesley Avenue, City of Spokane,
Spokane County, Washington. Spokane is
the largest city in eastern Washington
and comprises the Spokane PMSA. The
property address is 4750 North
Division Street.
TAX ASSESSOR'S I.D. NUMBER: 36323.0008, -.0009, -.0011 to -.0013,
-.0016 to -.0026
DATE OF ANALYSIS: August 1998
DATE OF INSPECTION: August 12, 1998
PROPERTY OWNERSHIP: JP Realty Inc.
PROPERTY MANAGEMENT: JP Realty, Inc.
TOTAL LAND AREA: 25.86+/- acres
LAND-TO-BUILDING RATIO: 1.23:1, excluding garage area
SITE COVERAGE: 41 percent, excluding garage footprint
PARKING/RATIO: 4,088+/-spaces (4.3+/-stalls per 1,000
SF of GLA)
ZONING: B-2, Community Business Zone
IMPROVEMENTS
Description: The subject of this assignment is the
Northtown Mall Shopping Center, an
enclosed, two-level with arcade
943,130+/-square foot super-regional
mall anchored by Sears, JCPenney,
Mervyn's, Emporium and The Bon Marche.
An addition is planned which will add
a 12-screen theatre, two restaurants,
Barnes & Noble and Old Navy, plus a
955-stall parking garage.
Year Built: 1955
Year(s) Renovated/Expanded: 1985+/-, 1992-93
Construction: Structural steel frame with masonry
walls and a rubber membrane roof.
Common areas are generally covered
with ceramic tile flooring and
sheetrock walls. Overall, the property
has an updated, modern appearance.
- -------------------------------------------------------------------------------
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Condition: Good
<S> <C>
=============================================================
GROSS LEASABLE AREA: COMPONENTS GLA ALLOCATION
=============================================================
Anchor Tenants
Sears *: 160,479+/-SF 17.02%
JCPenney: 140,868+/-SF 14.94%
Mervyn's *: 80,634+/-SF 8.55%
Emporium: 68,742+/-SF 7.29%
The Bon Marche: 89,207+/-SF 9.46%
=============================================================
TOTAL ANCHORS: 539,930+/-SF 57.25%
=============================================================
Mall Shop Tenants 403,200+/-SF 42.75%
=============================================================
TOTAL GLA: 943,130+/-SF 100.0%
=============================================================
TOTAL OWNED GLA: 702,017+/-SF --
=============================================================
* Separately owned.
=============================================================
Note: We have seen five different square footage
calculations and have chosen the one provided by the
onsite manager.
CURRENT OCCUPANCY
Overall Occupancy: 88 percent (based upon total GLA)
Mall Shop Occupancy: 72 percent (based upon mall shop GLA) *
CURRENT RENTAL RATES: Generally $18 to $50 per square foot.
* Current rental rates at the mall are consistent
with market rent levels.
CURRENT EXPENSES: Tenants reimburse $10.27 per square foot, CAM plus taxes.
* Current expense rates at the mall are consistent
with market expense levels.
</TABLE>
SPECIAL ASSUMPTIONS AFFECTING MARKET STUDY:
The following special assumptions have been considered for the analysis
at hand and are in addition to our assumptions and limiting conditions
following the report:
o Throughout this analysis we have relied on information provided
by current ownership, management, and the Client which we assume
to be accurate. Such information may include but is not limited
to: site and building area measurements, capital improvement
budgets, tenant sales reports, operating easement agreements,
rent roll, historical operating statements, and budgeted
operating data. Should any information received be subsequently
shown to be erroneous or incorrect, we reserve the right to
amend the analysis herein.
o We have made a visual inspection of the subject property and
local environs in the process of this analysis. Our comments are
limited to those items which were readily observable and
apparent to such an inspection. Comments
- -------------------------------------------------------------------------------
<PAGE>
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
- -------------------------------------------------------------------------------
regarding the structural integrity of improvements are beyond
the scope of our engagement and are best made by a professional
engineer.
o Please refer to the complete list of assumptions and limiting
conditions included at the end of this report.
- -------------------------------------------------------------------------------
<PAGE>
PHOTOGRAPHS OF SUBJECT PROPERTY
- -------------------------------------------------------------------------------
[PICTURE]
Exterior of subject
[PICTURE]
Interior of subject
- -------------------------------------------------------------------------------
<PAGE>
PHOTOGRAPHS OF COMPETITION
- -------------------------------------------------------------------------------
[PICTURE]
Spokane Valley Mall
[PICTURE]
Northpointe Plaza
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
PAGE
INTRODUCTION......................................................... 1
Identification of Property...................................... 1
Property Ownership and Recent History........................... 1
Legal Description............................................... 1
Purpose and Intended Use of the Market Study.................... 1
Date of Market Study and Property Inspection.................... 1
Definitions and Other Pertinent Terms........................... 1
Extent of the Market Study Process.............................. 2
Competency Provision............................................ 2
REGIONAL ANALYSIS.................................................... 4
NEIGHBORHOOD ANALYSIS................................................ 14
COMPETITIVE MARKET ANALYSIS.......................................... 16
Market Overview/Market Supply/Market Demand..................... 17
Competition/Retail Structure.................................... 18
Trade Area Definition/Demographic Trends........................ 25
Market Rent Analysis............................................ 34
Operating Expense Analysis...................................... 38
Investment Market For Regional Malls/Comparable Sales........... 42
Summary/Observations/Marketability Conclusions.................. 59
CONSULTING ASSUMPTIONS AND LIMITING CONDITIONS....................... 63
CERTIFICATION........................................................ 65
ADDENDA
- -------------------------------------------------------------------------------
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
IDENTIFICATION OF PROPERTY
The subject of this market study is the Northtown Mall, a two-level and
partially three-level, enclosed super-regional mall located at the northeast
quadrant of North Division Street and Wellesley Avenue, City of Spokane,
Spokane County, Washington. The property contains approximately 943,130+/-
square feet of total gross leasable area and is currently anchored by Sears,
JCPenney, Mervyn's, Emporium and The Bon Marche. An expansion/remodel is
planned which will add a 12-screen theatre, two restaurants, Barnes & Noble,
Old Navy, and a 955-stall parking garage. At this writing, total owned GLA
(702,017+/- square feet) includes three anchors, mall shop, food court, and
kiosk tenants, with an overall occupancy (including non-owned anchors) of about
88 percent.
The total subject site contains approximately 25.86+/- acres which
includes anchor pad sites, surface parking areas, landscaping, roadways, mall
structures, and other site improvements. The mall site size is 34.43 acres
including the Sears and Mervyn's unowned anchor pads. Spokane is the major city
in eastern Washington.
PROPERTY OWNERSHIP AND RECENT HISTORY
The subject property is currently in title to JP Realty, Inc. who
reportedly purchased the mall in August 1998 for $128 million. The subject was
constructed in the mid 1950's as an open air center. It was enclosed in the mid
1980's. Sabey Corporation purchased the subject in November 1988 for
$25,000,000 including assumption of debt. Subsequently Sabey Corporation, Sears
and Mervyn's executed a series of transactions to move Sears to a new owned
location in the development and allow redevelopment of the site including
Mervyn's purchase of their site. The mall has undergone several tenant changes
and a continued upgrade in its merchandising over the past few years.
There are a number of tenant leases and anchor operating easement
agreements and covenants in-place that provide for a retail use of the
property.
LEGAL DESCRIPTION
We have not been provided with a complete metes and bounds description
of the subject property.
PURPOSE AND INTENDED USE OF THE MARKET STUDY
The purpose of this market study is to provide an independent analysis
of the subject asset and current market conditions as of August 1998. The
function of this market study is to assist the Client with their internal
analysis of the asset.
DATE OF MARKET STUDY AND PROPERTY INSPECTION
Our market study analysis date is August 1998. Kenneth A. Barnes, MAI
inspected the property and its environs on August 12, 1998. All of the
analysis, forecasts, and data contained in this report are based on conditions
prevailing as of August 1998.
DEFINITIONS AND OTHER PERTINENT TERMS
The following definitions of pertinent terms are taken from the
Dictionary of Real Estate Appraisal, Third Edition (1993), published by the
Appraisal Institute.
- -------------------------------------------------------------------------------
-1-
<PAGE>
INTRODUCTION
- -------------------------------------------------------------------------------
MARKET RENT
The rental income that a property would most probably command on the
open market, indicated by the current rents paid and asked for
comparable space as of the date of appraisal.
EXTENT OF THE MARKET STUDY PROCESS
In the process of preparing this appraisal, we:
o Inspected the subject property and its surrounding environs;
o Reviewed leasing policy, concessions, tenant build-out
allowances, and recently negotiated rental rates, as well as
operating statements and a budget of income and expenses;
o Reviewed rent roll, tenant sales, and operating statements for
the property;
o Conducted market research of occupancy rates, asking rents,
concessions, and operating expenses at competing properties;
o Conducted market inquiries into recent sales of similar retail
centers to ascertain sale prices per square foot, capitalization
rates, and other investment parameters;
o Determined a trade area and developed trade area specific data
for the property based upon our analysis of the market area;
o Developed conclusions as to whether current rental rates and
expense levels are consistent with the market;
o Prepared a complete market study of the subject property with
the results conveyed in this self-contained narrative report in
accordance with the Departure Provision of the Uniform Standards
of Professional Appraisal Practice maintained by the Appraisal
Foundation.
COMPETENCY PROVISION
We are aware of the competency provision of the Uniform Standards of
Professional Appraisal Practice (USPAP). The authors of this report meet these
standards. Kenneth A. Barnes, MAI researched and analyzed pertinent market
information, and wrote the market study report. Mr. Barnes has extensive real
estate experience with retail properties nationally.
It is our opinion that we are fully competent to perform this
assignment due to the fact that:
1. We have full knowledge and experience in the nature of this
assignment;
2. All necessary and appropriate steps have been taken in order to
complete the assignment competently; and
3. We do not lack any knowledge or experience that would prohibit
this assignment to be completed in a professional, competent
manner, or where a biased or misleading opinion would be
rendered.
- -------------------------------------------------------------------------------
-2-
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE OMITTED FOR THE PURPOSE OF EDGAR FILING.]
[REGIONAL MAP]
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
INTRODUCTION
The short- and long-term value of real estate is influenced by a
variety of factors and forces that interact within a given region. Regional
analysis serves to identify those forces that affect property value and the
role they play within the region. The four primary forces that influence real
property value include environmental characteristics, governmental forces,
social factors, and economic trends. These forces determine the supply and
demand for real property which, in turn, affect market value.
=================================
A. ENVIRONMENTAL CHARACTERISTICS
=================================
The primary environmental forces, which influence the region, include
physical location, geography, and infrastructure. These characteristics provide
a basis for the region's stability and describe the area's overall locational
bearing. Both natural and man-made environmental forces influence real property
values and are best understood in relation to the subject property's location.
GENERAL OVERVIEW
The subject is located in Spokane, Washington. Spokane is located in
the extreme eastern side of the state in the center of a region covering parts
of four states that is commonly known as the Inland Empire. Spokane, the
largest city in Spokane County, is located in the center of the county and is
also the county seat. Spokane is located 276 miles east of Seattle, 18 miles
west of the Idaho border, and 110 miles south of the Canadian border.
Spokane is situated at the base of the west slope of the Rocky
Mountains at an altitude of 2,000 feet. The Spokane River runs through the
center of the city, and the community is surrounded by wheat farms and ranch
lands to the south and west, and timber and recreational lands to the east and
north. Also considered to be part of Spokane is the Spokane Valley, a
developing, unincorporated area that stretches from the eastern city limits
almost to the Idaho border to the east. Spokane Valley is a growing area of
residential, commercial and industrial uses. The subject is located within
Spokane Valley.
The subject is on the east side of North Division Street, between
Wellesley and Queen Avenues about three miles north of downtown Spokane.
DEVELOPMENT PATTERNS
Due to the general built-up nature of Spokane and the presence of farm
land to the north and south of the area, recent development has spread to the
west, towards the Spokane International Airport and east in the general
direction of Coeur D'Alene, Idaho. This new development has included
industrial, residential, and retail-related properties.
TRANSPORTATION
Spokane is well served by an integrated highway system and
infrastructure. Spokane is the transportation center of the Inland Empire.
Interstate 90, which runs through the center of the MSA, provides a highway
route as far west as Seattle to as far east as Wisconsin.
- -------------------------------------------------------------------------------
-4-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
HIGHWAYS & INTERSTATES
Interstate 90, which traverses the northern United States, is the major
east/west route through Spokane, traveling west from Washington, through
Montana, Wyoming, South Dakota, and into Minnesota and Wisconsin. U.S. Highways
2 and 395 provide access to point's north, and U.S. Highway 195 to points
south. A number of State and local routes serve Spokane, combining to provide
an efficient highway network that serves the metropolitan area.
AIR SERVICE
Spokane International Airport services the MSA, which is located west
of the city. Five major airlines and three smaller regional airlines and six
smaller general aviation facilities serve Spokane International Airport. Felts
Field, on the east side of the city, provides facilities for private aircraft.
OTHER SERVICES
The MSA is also serviced by two major railroads, which offer both
passenger and freight service to all 48 contiguous states. Other nodes of
transportation include 12 regular route motor carriers, as well as intra- and
inter-city bus service.
================================
B. GOVERNMENTAL CHARACTERISTICS
================================
Governmental influences on the region impact property values via
political and legal actions at all levels. The legal climate at a particular
time or in a particular place may overshadow the natural market forces of
supply and demand. Government provides many necessary facilities and services
that affect land use patterns, including public utilities, refuse collection,
transportation networks, zoning codes, and fiscal policies.
TAX STRUCTURE
The State of Washington carries a 6.50 percent general sales tax.
Spokane County carries an additional 1.50 percent sales tax. Property taxes are
levied based upon a millage rate per $1,000 of assessed value. Spokane's real
estate tax rate is reasonable compared to others in Washington and low compared
to similar cities nationally.
SERVICES & UTILITIES
Washington Water Power is the largest public utility in eastern
Washington, supplying electricity and natural gas throughout Spokane and
Spokane County; sewer is provided by the Spokane County Utilities, US West
provides telephone service, and water is provided by the Consolidated
Irrigation District. Rates are reported to be among the lowest in the country.
DEVELOPMENT ISSUES
Spokane has various economic incentives for new business and industry.
Among these incentives are tax credits, job tax credits, financial assistance
grants, phased-in property tax programs, training programs, project financing,
and the area's already low tax burden.
- -------------------------------------------------------------------------------
-5-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
BOND RATING
Moody's Bond Record rates the State of Washington bond rating as 'AA'
relative to investment qualities. 'AA' bonds are judged to be one of the best
quality and carry one of the smallest degrees of investment risk.
Spokane and Spokane County also carry a bond rating of 'AA'.
=================
C. SOCIAL FORCES
=================
Real estate values can be influenced to a large degree by social issues
impacting the region, including population trends, income levels, the profile
of workers in the area, and other quality of life issues. The demographic
composition of the population reveals the potential, basic demand for real
estate services.
POPULATION
The population and its geographic distribution are basic determinants
of the need for real estate. Aggregate population growth is distributed among
regions in response to changing economic opportunities, while the demand for
real estate is created by a population's demand for the goods and services to
be produced or distributed within the region. Thus, population and demographic
trends can influence the demand for services provided by property, thereby
affecting property value.
Population has grown at a relatively healthy pace in Spokane over the
past decade, showing increases of 0.6 percent per year from 1980 to 1990, and
1.8 percent annual growth from 1990 to 1995. By comparison, Washington has
experienced population growth of 2.0 percent per year over the last five years,
while the U.S. reports population growth of about 1.1 percent per year for the
same period. Estimates for 1998 place population at 412,700+/-, an aggregate
increase of 13.9 percent over 1990. Through 2005, population growth is
forecasted to be 0.96 percent per year, lower than the rate of growth projected
for the state as a whole.
HOUSEHOLDS
Household formation is an important component of demographic analysis
that helps to identify changing patterns or shifts within the population. A
household consists of all people occupying a single housing unit, thus
providing significant sociological information about the region. Household
formation also has a significant influence on demand for real estate.
Households, combined with effective purchasing power, provide the basic demand
for housing units and household needs, thereby transforming needs into
effective demand for real estate improvements.
Like the nation as a whole, household formation has occurred at a rate
in excess of population growth within the subject region. This acceleration has
been the result of several trends, namely the fact that the population is
generally living longer, divorce rates have been on the rise, and many younger
professionals are postponing marriage and/or leaving home at an earlier age,
all resulting in increases of one- and two-person households. The total number
of households in Spokane has increased from 129,220+/- in 1980 to 165,109+/- in
1998, a compound annual increase of about 1.4 percent per year. Accordingly,
the number of persons per household within the MSA has decreased from 2.58 in
1980 to 2.5 in 1998.
- -------------------------------------------------------------------------------
-6-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
Projections through 2003 show household growth at 1.5 percent per
year, slightly higher than population growth forecasts.
INCOME
Income levels, either on a per capita, per family, or per household
basis, indicate the economic level of residents within the region and form an
important component of economic analysis. Average income has a direct impact on
the ability of residents to satisfy material desires for goods and services,
directly affecting the demand and price levels of real estate.
Average income levels within the subject region are in-line with state
and national figures. On a per capita basis, Spokane has an average income of
$18,883 for 1998, about 12 percent lower than the state level of $21,467 and
6.2 percent lower than national statistics. Income growth has generally kept
pace with state and national trends, experiencing annual growth of roughly 0.7
percent per year (1980-90); 1.2 percent per year from 1990 to 1995 (adjusted
for inflation). Income projections show per capita income growth of 1.0 percent
per year for Spokane. Equifax is projecting income growth of 4.6 through the
year 2001 while WEFA is projecting a growth rate of 2.3 percent per year
through 2005. The consensus forecast is for growth of 3 percent per year.
The MSA's strong employment growth and expansion of jobs in service
field accounts for the low income levels of the area. Spokane's relatively low
level of per capita income reflects a youthful age structure, as well as an
industry mix that pays lower wages. Because of the low cost of living, however,
the effective disposable income of residents--adjusted for tax payments,
contributions to pension funds, and the cost of new housing--ranks much higher.
Sales & Marketing Management places median household effective buying income at
$31,259 for Spokane as of 1997, lower than the state average of $37,351.
===================
D. ECONOMIC TRENDS
===================
Economic forces are significant to real property value. The fundamental
relationships between current and anticipated supply and demand and the
economic ability of the population to satisfy its wants, needs, and demands
through purchasing power are tantamount to such an analysis. Some of the
specific market characteristics considered in economic analysis include
employment trends, the economic base of the region, expansion and new
development, and the overall economic health of the region.
OVERVIEW
The Spokane metropolitan area is the largest urban area between Seattle
and Minneapolis-St. Paul. Spokane serves a trade area of 12 counties and a
population of over 600,000 people. Its economic support has always been
diversified, but has historically been closely related to the resource-based
industries of timber, mining and agriculture. Due to the degree the Spokane
economy has traditionally been related to these resource-based industries, when
the rest of the state and nation began to recover from the national recession
of the early 1980's, Spokane's economy went flat. Due to fundamental changes in
the regional and national economy, resource-based industries may never again
see the level of productivity they experienced in the past. As it became
obvious that Spokane's economy was not going to
- -------------------------------------------------------------------------------
-7-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
robustly recover from the national recession, the city's collective economic
attitude went flat also.
In response to the stagnant economy in the Spokane area, local business
and community leaders created a non-profit economic development organization,
Momentum, in 1987. Momentum's goal was to diversify Spokane's economy so that
it would be less dependent upon the resource-based industries and would become
more service oriented. Initially, Momentum won support of 650 business
investors who were asked to contribute $5,000 to further Momentum's goals. The
initial investment produced by these business leaders was $5,800,000, which
proved to Momentum's leaders the renewal movement was on the right track.
Between 1987 and the end of 1990, 33 new businesses had moved into the Spokane
market area and 11,500 new jobs had been created.
Noteworthy companies moving into the Spokane market area over the last
few years include Boeing Company, Seafirst Bank Credit Card Services, Pitney
Bowes, Guardian Life Insurance, Hewlett-Packard and Medco Containment Services.
Although several of these firms are still in the initial stages of growth, the
commitment to the still affordable Spokane area could reflect positive economic
benefits beyond those initially forecasted.
Non-manufacturing employment, especially in the service and trade
sectors, continues to grow at the most rapid pace in Spokane County.
Manufacturing employment has held steady for the past ten years. Spokane is a
strong service-oriented community, with nearly 80 percent of the area's jobs
located in the non-manufacturing and non-agricultural sectors. While
non-agricultural employment continues to increase most rapidly in the Spokane
area, there are several manufacturers that have, or will have, a significant
impact on Spokane's economy. Kaiser Aluminum & Chemical Corporation is the
largest manufacturing concern in the Spokane area. This corporation operates
the largest aluminum rolling mill west of the Mississippi, along with a large
aluminum reduction plant. Kaiser is currently upgrading both these plants to
make them more energy efficient and, therefore, more profitable over the
long-term.
While Boeing Company's manufacturing plant in the far west side of the
Spokane metropolitan area (Airway Heights) currently is not near the top of the
list of the region's largest manufacturing employers, Boeing's move into the
Spokane market area produced a significant level of excitement and optimism.
Their 200,000-square foot plant was completed in September 1990 and started
with an initial staff of 325 people. A 108,000-square foot addition to the
plant was completed in June 1993 and the currently employment is approximately
459. Combined with Boeing's dissatisfaction at objections to their expansion
plans in the Puget Sound region, Boeing's commitment to the Spokane area
appears to be long term.
EMPLOYMENT DISTRIBUTION
The largest sectors of non-agricultural employment in the Spokane MSA
include Services, Wholesale/Retail Trade, Government, and Manufacturing.
Services accounts for 31.9 percent of non-farm employment, growing at an annual
rate of about 3.5 percent per year over the last five years. Wholesale/Retail
Trade accounts for 24.6 percent of non-agricultural employment, remaining
fairly stable/unchanged since 1990, but growing by nearly 1.0 percent per annum
since 1980. Government and Manufacturing round out the top sectors of
employment, accounting for approximately 14.8 percent and 9.9 percent of
non-farm employment, respectively.
- -------------------------------------------------------------------------------
-8-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
MAJOR EMPLOYERS
The Top 10 employers in the Spokane area are shown on the following
chart:
===============================================================================
TOP 10 SPOKANE EMPLOYERS
===============================================================================
EMPLOYER PRODUCT/SERVICE NO. EMPLOYEES
===============================================================================
State of Washington Government 6,914
- -------------------------------------------------------------------------------
Fairchild Air Force Base Military Base 5,527
- -------------------------------------------------------------------------------
U.S. Federal Government Government 4,289
- -------------------------------------------------------------------------------
Sacred Heart Hospital Health Care Services 3,887
- -------------------------------------------------------------------------------
School District #81 Education 3,315
- -------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp. Aluminum Products 2,897
- -------------------------------------------------------------------------------
Community Colleges of Spokane Education 2,597
- -------------------------------------------------------------------------------
Eastern Washington University Education 2,355
- -------------------------------------------------------------------------------
City of Spokane Government 2,168
- -------------------------------------------------------------------------------
Spokane County Government 1,642
===============================================================================
Source: Spokane Area Economic Development Council
===============================================================================
As displayed by the chart, government and education are major
contributors to the local economy. Due to the cost and availability of
industrial related land in the area, new companies such as Packet Engines,
Inc., Machine Tech USA, Egghead Software, Sprint Telecommunications Venture,
Yamana Resources, Maviga N.A., GSI Outdoors, Northwest Sign Supply, and Inland
Northwest Metallurgical Services have moved into the area within the last year.
Also, due to an increase in demand, such companies as Hewlett-Packard, Itron,
Inc., and ASC Machine Tools, Inc. have recently expanded their operations.
It is noted that Fairchild Airforce Base is a tier one military
installation that will not experience any reduction in personnel for the next
ten years. By the year 2010, the base will be reevaluated as to its viability.
UNEMPLOYMENT RATES
Unemployment rates in the Spokane MSA have historically been comparable
to state and national figures. As of February 1998, the unadjusted unemployment
rate for Spokane was 5.2 percent, lower than year-ago levels and just above the
state unemployment rate of 5.1 percent. Mirroring national trends, unemployment
peaked in 1993 at 8.4 percent, followed by a declining trend through 1997.
- -------------------------------------------------------------------------------
-9-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
===============================================================================
HISTORIC UNEMPLOYMENT RATES
===============================================================================
YEAR SPOKANE MSA WASHINGTON UNITED STATES
===============================================================================
1998 5.2% 5.1% 5.0%
1997 3.8% 4.1% 4.4%
1997 3.8% 4.1% 4.4%
1996 5.0% 5.8% 5.0%
1995 6.5% 6.9% 5.6%
1994 6.6% 6.4% 6.1%
1993 8.4% 7.5% 6.8%
1992 8.3% 7.5% 7.4%
1991 7.0% 6.3% 6.7%
1990 6.9% 4.9% 5.5%
===============================================================================
Source: Employment & Earnings; Bureau of Labor Statistics
===============================================================================
Although it is too soon to know what the 1998 annual adjusted rates
will be, it appears that unemployment declines have leveled off within the MSA
and taken an uptick for the state as a whole.
EMPLOYMENT GROWTH
Over the past five years, it is clear that employment growth in Spokane
has moderated over the growth experienced between 1980 and 1990. Total non-farm
employment grew at a compound annual rate of 2.0 percent per year from 1980 to
1990, increasing to an annual rate of 2.2 percent from 1990 to 1995.
Manufacturing and Services have led employment growth, followed by
Transportation, Communications and Public Utilities. Farm and Agricultural
Service employment has remained relatively stable, while the Government base
has generally declined.
The WEFA Group projects an increase in non-farm employment growth over
the next five years, with an annual rate of forecasted at 1.6 percent per year.
RETAIL SALES
Another measure of the economic health of a region is retail sales
patterns. Consumers drive the economy by creating demand for goods and services
and, in turn, generate the need for housing, office space, retail centers, and
warehouse/distribution facilities. It is estimated that consumer spending
accounts for two-thirds of all economic activity in the United Sates today. As
such, retail sales patterns have become an important indicator of the economic
health of a region.
Retail sales growth has been relatively strong in Spokane over the past
ten years. Since 1985, total retail sales have grown at a compound annual rate
of 2.9 percent, lower than statewide growth of 3.8 percent. From 1990-97, sales
growth has tracked at 4.1 percent per annum for the MSA, with Washington
showing annual growth of 4.2 percent per year. The years 1993 to 1997 exhibited
a clear increase in sales growth for Spokane of 4.6 percent per annum.
- -------------------------------------------------------------------------------
-10-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
=========================
E. CRITICAL OBSERVATIONS
=========================
The following bullet points summarize some of our general observations
relating to the subject's region:
o The region's economy is relatively diverse. There is no one
sector of employment that truly dominates the economic base.
However, Spokane's dependence on service related businesses
makes it susceptible to national economic trends. Economic
volatility is mitigated to a certain extent by the higher
concentration of government employment.
o LOCATION provides the basis for distribution employment in
Spokane, along with related service sector jobs. Lower costs of
living, a strong labor force, excellent nodes of transportation,
and other quality of life characteristics are necessary
attractions for new companies locating to the region. Location
is an important advantage for firms that serve national markets
and wish to minimize distribution costs.
o EMPLOYMENT growth is forecasted to increase at a compound annual
rate of about 1.6 percent per year until the year 2000.
o POPULATION should continue to increase at an annual rate of 0.96
percent per year.
o INCOME levels are projected to increase at an annual rate of
about 1 percent per year above inflation for the MSA through
2000. RETAIL SALES projections are forecasted to grow by 4.1
percent per year above inflation over the next five years.
o The MSA's demographic profile has many implications for its
consumer and economic base. The high proportion of young people
makes the basic apparel and consumer-electronics markets more
attractive than other areas of the nation.
o The MSA's location and relatively strong income and population
growth have created an emerging retail market, with a young and
diverse population. Its consumer markets are imperiled, however,
by the risk of national economic slowdowns, which weaken demand
for primary distribution activities.
CONCLUSION
The short- and long-term outlook for Spokane and its surrounding region
is for relative stability, with moderate growth in population, and better
growth projected for income levels and retail sales. Employment is projected to
increase. The economy is well-diversified, with a low cost of living, strong
labor force, and excellent transportation system. On balance, we are relatively
optimistic about the short-term outlook of the subject region. Long-term, the
region should see stability and moderate-good growth.
- -------------------------------------------------------------------------------
-11-
<PAGE>
REGIONAL ANALYSIS
- -------------------------------------------------------------------------------
All of the above mentioned factors are considered positive trends for
the real estate market in general, as well as the office real estate market for
properties such as the subject. In summary, the Spokane region is a positive
influence on the subject property and should continue to have such an effect
into the foreseeable future.
- -------------------------------------------------------------------------------
-12-
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE OMITTED FOR THE PURPOSE OF EDGAR FILING.]
[NEIGHBORHOOD MAP]
<PAGE>
NEIGHBORHOOD ANALYSIS
- -------------------------------------------------------------------------------
OVERVIEW
A neighborhood is defined as a grouping of complimentary land uses
affected by similar operations of the social, economic, governmental, and
environmental forces that influence property value. The area most closely
surrounding the subject, whether it contains residential property, or a mixture
of commercial and residential properties, is called a neighborhood.
GENERAL
The subject property is situated on the east side of North Division
Street, also known as US Route 2. US Route 2 is an alternate route to
Interstate 90 from Seattle through the northern plains states. North Division
Street branches off from Interstate 90 in downtown Spokane and travels north
through Spokane until it heads northeast and becomes the Newport Highway. North
Division Street is the major commercial arterial in the neighborhood and has
historically been one of the major commercial areas of Spokane. Northtown Mall
is afforded a highly visible location adjacent to a number of local area
businesses, highway exposure, surrounding residential areas, and peripheral
retail and commercial development. The subject's neighborhood can generally be
defined as being bounded to the north by Magnesium Road to the south by
downtown Spokane, to the east by Market Street, and to the west by the Spokane
River.
TRANSPORTATION/ACCESS/LINKAGE
Primary north/south access to the neighborhood is gained via North
Division Street, also known as US Route 2. North Division Street, a six-lane,
two-direction arterial with right and left turn pockets, interchanges with
Interstate 90 in downtown Spokane, approximately three miles south of the
subject. Primary east/west access is provided by Wellesley Avenue, a generally
two-lane, two-way neighborhood arterial. While access and infrastructure are
considered to be good, local arterials tend to be prone to congestion during
high traffic hours. This has the effect of discouraging certain residents from
coming to the area for shopping. However, superior merchandising at the subject
center, as well as convenient and adequate parking, draw customers and help to
mitigate the negative influences of congestion.
SURROUNDING LAND USE PATTERNS
The subject neighborhood can generally be described as the historic and
primary commercial hub for the Spokane market. North Division Street is
entirely commercially developed, while the surrounding areas are nearly 100
percent residential with supporting community uses such as parks and schools.
Development along North Division Street ranges from car dealerships to offices
to restaurants and a wide variety of retail and service establishments. Most of
the commercial improvements in the area were developed in the 1920s to 1950s,
with more recent construction being significant remodels or redevelopment. As a
result, there is very little collateral development of retail near the subject
mall. The big box retailers present near most new malls is not immediately
present near the subject. Instead, retailers such as Costco, Eagle Hardware,
Office Depot, KMart, Toys R Us, Circuit City, Big 5 Sports and Home Depot have
found their own redevelopment or infill sites elsewhere along North Division
Street.
There is only one other retail development in the neighborhood that is
not strip retail. Franklin Park Mall is a community center built in 1979
containing approximately 286,954+/- square feet, anchored by Montgomery Wards,
Ross, Country Buffet, Rite Aid and Outback
- -------------------------------------------------------------------------------
-14-
<PAGE>
NEIGHBORHOOD ANALYSIS
- -------------------------------------------------------------------------------
Steakhouse. Rental rates range from $12 to $16 per square foot, triple net.
This older center has not maintained its competitiveness due to its anchor and
the trend away from shoppers patronizing older and smaller enclosed malls
without significant market power.
DEVELOPMENT ACTIVITY
To the best of our knowledge, there is no significant development
planned or under construction within the subject neighborhood. A large site
approximately two miles north of the subject along North Division Street is in
the process of being filled and graded. This has been occurring for a number of
years as the site was far below grade. No plans have been announced for
development upon completion. The site could host a big box retailer such as
WalMart, though its current access is somewhat limited due to lack of
signalization at the property.
NEIGHBORHOOD DEMOGRAPHIC TRENDS
Population trends within a 3.0-mile radius of the subject site have
shown very little growth in recent years. Population was stable from 1980 to
1990, with 1998 estimated population showing a 0.4 percent growth annually
since 1990. This slow growth rate is anticipated to continue over the next five
years. The 1998 Equifax NDS population estimate within a 3.0-mile radius of the
subject totals 116,570 people, relatively dense by comparison to other parts of
the region. The number of households within a 3.0-mile radius of the subject
site is currently estimated at 49,953. Household formation is projected to
increase at an annual rate of 0.7 percent per year over the next five years.
Income levels are generally lower than the region as a whole, with average
household income currently estimated at $33,586, slightly lower than $46,358
for Spokane County as a whole. Within a 5.0-mile radius of the site, average
household income is reflected higher at $39,308.
SUMMARY
On balance, the outlook for the subject neighborhood is generally
positive. The local economy is diverse and continues to expand, while local
demographic trends continue to be stable. While level in recent years,
population and household trends are expected to show slow growth into the
foreseeable future. This bodes well for the subject neighborhood inasmuch as it
is positioned to capture a substantial amount of consumer expenditures from
areas within the neighborhood. The subject's location is benefited by good
local and regional accessibility. Overall, we are optimistic about the
subject's neighborhood in terms of near-term growth and relative stability.
Over the long-term, we believe the prospect for net appreciation in real estate
remains moderate-good.
- -------------------------------------------------------------------------------
-15-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
TRADE AREA OVERVIEW
A retail center's trade area contains people who are likely to
patronize that particular development. These customers are drawn by a given
class of goods and services, as well as convenience. In the case of traditional
regional shopping malls, the existence of anchor department stores can have
important influence on customer draw, providing greater exposure and access to
trade area population. In fact, a traditional mall's fundamental drawing power
comes from the strength of its anchor tenants, as well as the national,
regional, and local tenants which compliment and support the anchors. A
successful combination of these elements creates a destination for customers
seeking a variety of goods and services, while enjoying the comfort and
convenience of an integrated shopping environment.
The subject can best be described as a super-regional shopping center:
A SUPER REGIONAL center provides for extensive variety in general
merchandise, apparel, furniture, and home furnishings, as well as a
variety of services and recreational facilities. It is built around
three or more full-line department stores of generally not less than
100,000 square feet each. In theory, the typical size of a super
regional center is about 1,000,000 square feet of gross leasable area.
In practice, the size ranges from about 600,000 to more than 1,500,000
square feet(1).
In order to define and analyze the market potential for the subject
property, it is important to first establish the boundaries of the trade area
from which the subject draws its customers. In some cases, defining the trade
area may be complicated by the existence of other retail facilities on main
thoroughfares within trade areas that are not clearly defined or whose trade
areas overlap with that of the subject.
The subject's potential trade area partially overlaps with other
competing retail centers in the Spokane metropolitan area. The subject's
capture rate of area expenditure potential is also influenced to a lesser
extent by other large community centers, power centers, and big box users
situated throughout the region. Finally, there are several free-standing stores
and discounters in the area that also compete to some degree with the subject.
While some cross-shopping does occur, these stores act more as a draw to the
community, creating an image for the area as a prime shopping district and
generating more retail traffic than would exist in their absence. Nonetheless,
we recognize and mention these stores and centers to the extent that they
provide a complete understanding of the area's retail structure.
Once the trade area is defined, the area's demographics and economic
profile can be analyzed. This provides key insight into the area's dynamics as
it relates to the subject. The sources of economic and demographic data for the
trade area analysis are as follows: Equifax National Decision Systems (ENDS),
Sales and Marketing Management's Survey of Buying Power, The Urban Land
Institute's Dollars & Cents of Shopping Centers, and The Washington State
Department of Revenue Quarterly Business Review. The subject's Effective Trade
Area has been defined based upon our analysis of the subject's market and
competing centers.
- ---------
(1) ULI-The Urban Land Institute, Dollare & Cents of Shopping Centers: 1997,
ULI-The Urban Land Institute, Washington DC, 1997.
- -------------------------------------------------------------------------------
-16-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
SCOPE OF THE TRADE AREA
Traditionally, a retail center's sales are principally generated from
within its primary trade area, which is typically within reasonably close
geographic proximity to the center itself. Generally, between 55 and 65 percent
of a regional center's sales are generated within its primary trade area. The
secondary trade area generally refers to more outlying areas which provide less
frequent customers to the center. Residents within the secondary trade area
would be more likely to shop closer to home due to time and travel constraints.
Typically, an additional 20 to 25 percent of a center's sales will be generated
from within the secondary area. The tertiary or peripheral trade area refers to
more distant areas from which occasional customers to the mall reside. These
residents may be drawn to the center by a particular service or store which is
not found locally. Industry experience shows that between 10 and 15 percent of
a center's sales are derived from customers residing outside of the trade area.
This potential is commonly referred to as inflow. The former owner of the
center commissioned a shopper intercept survey and phone survey of local
residents. This survey found that 51.2 percent of shoppers interviewed at the
property came from the primary trade area (defined in the survey by zip codes).
An additional 24.9 percent of shoppers were drawn from two separately-defined
secondary trade areas. Because of the peculiar geography of zip code defined
trade areas, this defined trade area extends over ten miles to the east and
west of the subject, yet in some cases only three to four miles north and
south. This does not reflect the regional and neighborhood access patterns so
we have placed little weight on the survey, but it is supportive in our
analysis of the trade area.
Before the trade area can be defined, it is necessary that we
thoroughly review the retail market and the competitive structure of the
general marketplace, with consideration given as to the subject's position
therein.
MARKET OVERVIEW/MARKET SUPPLY/MARKET DEMAND
The Spokane retail market is a diverse compilation of strip and
convenience centers, neighborhood, community, and regional shopping centers,
and other retail property types. The market is dominated by older small to
mid-sized neighborhood and community centers and has seen moderate "big-box"
and "category killer" development recently. Due to its tertiary market status,
the metro area has only two true regional malls, with the only competition to
the subject being completed in late 1997.
Retail development in the metropolitan area has been slow but steady
over the last decade. There have been three major developments over this
time-frame. First, the subject Northtown Mall underwent a significant expansion
and remodel, changing from a one-level enclosed mall with three anchors to a
two-level with arcade mall including five anchors. This successfully
repositioned the mall to capture its share of market expenditures.
In 1991 Northpointe Plaza was developed approximately three miles north
of the subject on Newport Highway (continuation of US Route 2 to the
northeast). This 450,000-square foot power center (and collateral development)
includes such retailers as Target, Rite Aid, Safeway, TJ Maxx, Pacific Linen,
Future Shop, Staples, PetsMart, Gart Sports, ShopKo and Pier One, along with 21
smaller pad and in-line retailers.
In August 1997 the Spokane Valley Mall opened, approximately 11 miles
east of the subject along Sullivan Road just north of Interstate 90. This
685,000-square foot regional mall
- -------------------------------------------------------------------------------
-17-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
is anchored by Sears, JC Penney and The Bon Marche and currently has a mall
occupancy of approximately 75 percent, exclusive of anchor space. This property
was developed by JP Realty, the new owners of the subject property. This mall
is targeted at the significant population growth occurring east of Spokane
toward the Idaho border, and will also benefit from both Idaho and Montana
traffic heading west. The mall is targeting the same mid-market demographic as
the subject. Significant collateral development is underway in the Sullivan
Road area, including Circuit City, Barnes & Noble and Gart Sports, with
numerous other big box retailers rumored.
The downtown Spokane market has historically been oriented to
department store shopping, with few other fashion outlets. After the closure of
the Frederick & Nelson chain and the movement of JC Penney to Northtown, only
Nordstrom and The Bon Marche remain. Nordstrom is currently in the process of
building a new store in downtown Spokane, which will move them two blocks west
of their current location. The Robideaux Company has proposed a 400,000 to
500,000 square foot adjacent development (named River Park Square) to contain
mall shops, a multi-screen theatre and restaurants. The plans are uncertain at
this point as to the exact size, tenancy and starting date. This development is
targeted at downtown workers, tourists, and upper end shoppers, to take
advantage of the Nordstrom store.
VACANCY TRENDS
Retail vacancy trends have fluctuated over the past several years for
all property types, but have generally trended up for retail. The following
chart presents a summary of these trends.
<TABLE>
<CAPTION>
===============================================================================================================
RETAIL VACANCY TRENDS - SPOKANE PMSA
===============================================================================================================
PROPERTY TYPE OCT. 1992 APR. 1994 FEB. 1995 FEB. 1995 DEC. 1995
===============================================================================================================
<S> <C> <C> <C> <C> <C>
Total surveyed SF 4,602,405 4,673,085 4,699,952 4,735,567 4,628,948
Vacant SF 173,205 172,708 314,002 390,473 656,859
Vacancy % 3.76% 3.70% 6.68% 8.25% 14.19%
===============================================================================================================
Source: Spring 1998 The Real Estate Report, Spokane Association of Realtors
===============================================================================================================
</TABLE>
As shown, vacancy rates have shown a steady increase over the last six
years. From our inspection of the market, this space appears to be concentrated
in Spokane Valley Mall, at the subject, and at the older community centers that
cannot compete with the newer power centers and repositioned properties such as
the subject.
COMPETITION/RETAIL STRUCTURE
With respect to regional mall competition, the subject is situated in a
market with one highly competitive mall and one competitive power center. The
addition of the Spokane Valley Mall to the east is in direct response to the
nature of population migration patterns. The subject's principal competition is
seen in the Spokane Valley Mall and Northpointe Plaza. There is an additional
mall north of Coeur d'Alene Idaho, but this mall is nearly 30 miles away from
the subject. Peripheral competition does exist with respect to the scattered
big box users within the market which compete, to some degree, for retail
expenditures with the subject. In order to understand and view the subject
property in its proper context, we must first examine the nature of the
competition.
- -------------------------------------------------------------------------------
-18-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
PRIMARY REGIONAL MALL COMPETITION
The chart on the following facing page (with accompanying map)
identifies the regional competition found within the general area of the
subject. As shown, there is only one other regional mall in the PMSA that is
considered directly competitive with the subject. Following is a brief overview
of the directly competitive property.
- -------------------------------------------------------------------------------
-19-
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
DIRECTLY COMPETITIVE PROPERTIES - REGIONAL MALLS & POWER CENTERS OVER 400,000 SF
Cushman & Wakefield, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
GEO. YR. BLT./ NO.
NO. NAME LOCATION CITY STATE SECTOR REN/EXP LEVELS
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
S NORTHTOWN MALL N.Division St. & Wellesley Spokane WA Central 1955/1992 2
- -----------------------------------------------------------------------------------------------------------------------------------
1 Spokane Valley Mall I-90 & Sullivan Road Spokane WA E 1997 2
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
SURVEY LOW: 2
- -----------------------------------------------------------------------------------------------------------------------------------
SURVEY HIGH: 2
- -----------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: 2
- -----------------------------------------------------------------------------------------------------------------------------------
SURVEY TOTAL: 4
===================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
OVERALL OVERALL SHOP
TOTAL VACANT VACANCY OCCU- OCCU- NO. PARKING
NO. NAME GLA GLA RATE PANCY PANCY PARKING RATIO
============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
S NORTHTOWN MALL 943,130 112,500 11.9% 88.1% 72.1% 4,088 4.33
- ------------------------------------------------------------------------------------------------------------
1 Spokane Valley Mall 685,478 71,000 10.4% 89.6% 75.1% 4,077 5.95
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
SURVEY LOW: 685,478 71,000 10.4% 88.1% 72.1% 4.33
- ------------------------------------------------------------------------------------------------------------
SURVEY HIGH: 943,130 112,500 11.9% 89.6% 75.1% 5.95
- ------------------------------------------------------------------------------------------------------------
SURVEY MEAN: 814,304 91,750 11.1% 88.9% 73.6% 5.14
- ------------------------------------------------------------------------------------------------------------
SURVEY TOTAL: 1,628,608 183,500
============================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
MALL SHOP
ANCHOR ANCHOR RENTS PER
NO. NAME ANCHOR TENANTS GLA RATIO SQ/FT
==============================================================================================================================
<S> <C> <C> <C> <C>
S NORTHTOWN MALL Sears, JCPenney, Mervyns, Emporium, Bon Marche 539,930 57.2% $18.00 $50.00
- ------------------------------------------------------------------------------------------------------------------------------
1 Spokane Valley Mall Sears, JCPenney, Bon Marche, Theatre 400,261 58.4% $15.00 $50.00
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------=----------------------------------------------------------------------------==============-----
SURVEY LOW: 57.2% $15.00 $50.00
- ------------------------------------------------------------------------------------------------------------------------------
SURVEY HIGH: 58.4% $18.00 $50.00
- ------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: 57.8% $16.50 $50.00
- ------------------------------------------------------------------------------------------------------------------------------
SURVEY TOTAL:
==============================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------
MALL SHOP QUOTED QUOTED DISTANCE
SALES PER CAM TAXES FROM
NO. NAME SQ/FT PER SF PER SF SUBJECT
================================================================================================
<S> <C> <C> <C> <C>
S NORTHTOWN MALL $245.00 $245.00 $8.35 $1.92 --
- ------------------------------------------------------------------------------------------------
1 Spokane Valley Mall $220.00 $220.00 $8.00 $2.00 11(plus or minus)Miles E
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
SURVEY LOW: $220.00 $220.00 $8.00 $1.92
- ------------------------------------------------------------------------------------------------
SURVEY HIGH: $245.00 $245.00 $8.35 $2.00
- ------------------------------------------------------------------------------------------------
SURVEY MEAN: $232.50 $232.50 $8.18 $1.96
- ------------------------------------------------------------------------------------------------
SURVEY TOTAL:
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
SECONDARY COMPETITIVE PROPERTIES - REGIONAL MALLS & POWER CENTERS OVER 400,000 SF
Cushman & Wakefield, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
GEO. YR. BLT./ NO. TOTAL VACANT
NO. NAME LOCATION CITY STATE SECTOR REN/EXP LEVELS GLA GLA
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Northpointe Plaza US Route 2 Spokane WA N 1991 1 450,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
2 River Park Square Spokane CBD Spokane WA CBD various 3 800,000 E n/a
====================================================================================================================================
SURVEY LOW: 1 450,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
SURVEY HIGH: 3 450,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: 2 450,000 0
- ------------------------------------------------------------------------------------------------------------------------------------
SURVEY TOTAL: 4 450,000 0
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
OVERALL OVERALL SHOP
VACANT OCCU- OCCU- NO. PARKING ANCHOR
NO. NAME RATE PANCY PANCY PARKING RATIO ANCHOR TENANTS GLA
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Northpointe Plaza 0.0% 100.0% 100.0% n/a n/a Target, Rite Aid, Safeway, TJ Maxx, Pacific 330,000
Linen, Futu Shop, Staples, PetsMart
- ------------------------------------------------------------------------------------------------------------------------------------
2 River Park Square n/a n/a n/a n/a n/a Nordstrom, Bon Marche, Burlington Coat n/a
====================================================================================================================================
SURVEY LOW: 0.0% 100.0% 100.0% 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
SURVEY HIGH: 0.0% 100.0% 100.0% 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: 0.0% 100.0% 100.0% #DIV/0l
- ------------------------------------------------------------------------------------------------------------------------------------
SURVEY TOTAL:
====================================================================================================================================
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MALL SHOP MALL SHOP QUOTED QUOTED DISTANCE
ANCHOR RENTS PER SALES PER CAM TAXES FROM
NO. NAME RATIO SQ/FT SQ/FT PER SF PER SF SUBJECT
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Northpointe Plaza 73.3% $12.0 $16.00 $200.0 $250.00 $2.75 $1.50 3 (plus or
minus) Miles N
- -------------------------------------------------------------------------------------------------------------------------
2 River Park Square n/a n/a n/a n/a n/a n/a n/a 3 (plus or
minus) Miles S
=========================================================================================================================
SURVEY LOW: 73.3% $12.00 $16.00 $200.00 $250.00 $2.75 $1.50
- -------------------------------------------------------------------------------------------------------------------------
SURVEY HIGH: 73.3% $12.00 $16.00 $200.00 $250.00 $2.75 $1.50
- -------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: 73.3% $12.00 $16.00 $200.00 $250.00 $2.75 $1.50
- -------------------------------------------------------------------------------------------------------------------------
SURVEY TOTAL:
=========================================================================================================================
- ---------------------------------------
Source: Directory of Major Malls; NRB Shopping Center Directory; C&W Research &
Inpsection
</TABLE>
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE OMITTED FOR THE PURPOSE OF EDGAR FILING.]
[COMPETITIVE LOCATIONS]
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
<TABLE>
SUBJECT CENTER
<S> <C>
Name: Northtown Mall
Location: North Division Street and Wellesley Avenue
Spokane, Spokane County, Washington
Owner: JP Realty, Inc.
Distance from Time from Subject: N/A
Year Opened: 1955
Year(s) Expansion/Renovated: 1985+/-, 1992-9
Total Gross Leasable Area: 943,130+/- square feet
Anchor Tenants: Sears 160,479+/-SF
JCPenney 140,868+/-SF
Mervyn's 80,634+/-SF
Emporium 68,742+/-SF
The Bon Marche 89,207+/-SF
-------------- -----------
Total Anchor GLA 539,930+/-SF
Mall Shop GLA: 403,200+/- square feet
Mall Shop GLA Ratio: 42.8 percent
Rent Analysis: Tenants (less than) 1,000 SF $44 - $48 /SF
Tenants 1,001 - 2,000 SF $25 - $30 /SF
Tenants 2,001 - 3,500 SF $20 - $25 /SF
Tenants 3,501 - 5,000 SF $18 - $22 /SF
Tenants 5,001 - 9,000 SF $18 - $22 /SF
Tenants (greater than) 9,000 SF $14 - $16 /SF
------------------------------- -------------
Center Average $20 - $28 /SF
Average Sales: $267 per square foot - 1997
Mall Shop Vacancy: 22 percent
Land Area: 25.86+/-acres owned, 34.43 acres total
Parking/Ratio: 4,088+/-spaces (4.3+/-per 1,000 SF)
</TABLE>
- -------------------------------------------------------------------------------
-20-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
SUBJECT CENTER (CONT'D.)
COMMENTS
Northtown Mall Center is a 943,130-square foot super-regional mall
anchored by Sears, JC Penney, Mervyn's, Emporium and The Bon Marche. Originally
built in 1955, the property has had several renovations and expansions over the
years, most recently being expanded and renovated in 1992-3. Northtown Mall is
a fully enclosed, two-level mall with arcade level that has a traditional
merchandising mix. Development along North Division Street is predominantly
retail and commercial in nature, although the larger neighborhood is
predominantly residential.
Northtown Mall Shopping Center is located in Spokane, the largest city
in eastern Washington. The center exhibits good accessibility due to its
location along North Division Street, also known as US Route 2. From a
demographic standpoint, the mall's trade area consists primarily of
middle-income residents living in close-in Spokane and the north Spokane
suburbs. The area generally has a high population density.
The ownership is in the execution phase of a remodel and addition to
the southwest corner of the mall. A 12-screen theatre, Barnes & Noble, TGI
Fridays, Pizzeria Uno and Old Navy will take space in this redone area. Total
new tenancy will approximate 115,000 square feet, though it is unclear how much
of this will be new GLA. The owners will also add a 955-stall parking garage at
the southwest corner of the site. This redevelopement will help bolster the
mall's entertainment sector and broaden its shopper reach.
We have seen five different size estimates for the subject property.
The size estimate here is one provided by the onsite manager.
- -------------------------------------------------------------------------------
-21-
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE OMITTED FOR THE PURPOSE OF EDGAR FILING.]
[DIAGRAM OF MAIN LEVEL LEASING PLAN]
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE OMITTED FOR THE PURPOSE OF EDGAR FILING.]
[DIAGRAM OF SECOND LEVEL LEASING PLAN]
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE RETAIL CENTER NO. 1
<TABLE>
<S> <C>
Name: SPOKANE VALLEY MALL
Location: Interstate 90 and Sullivan Road
Spokane County, Washington
Owner: JP Realty, Inc.
Distance from Time from Subject: 11+/- miles East (20-25+/- minute drive time)
Year Opened: 1997
Year(s) Expansion/Renovated: N/A
Total Gross Leasable Area: 685,476+/- square feet
Anchor Tenants: JC Penney 119,705+/- SF
Sears 121,157+/- SF
The Bon Marche 114,399+/- SF
Theatre 45,000+/- SF
Total Anchor GLA 400,261+/- SF
Mall Shop GLA: 285,217+/- square feet
Mall Shop GLA Ratio: 41.6 percent
Rent Analysis: Tenants (less than) 4,000 SF $20 - $25/SF
Tenants (greater than) 5,000 SF $15 - $20/SF
Food Court $40 - $50/SF
Jewelry $30 - $40/SF
------- ------------
Center Average $10 - $50/SF
Average Sales: $220 per square foot - 1998 projected
Mall Shop Vacancy: 25 percent (still in initial leaseup)
Land Area: 64+/- acres
Parking/Ratio: 4,077+/-spaces (5.9+/-per 1,000 SF)
</TABLE>
- -------------------------------------------------------------------------------
-22-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
COMPETITIVE RETAIL CENTER NO. 1 (CONT'D.)
COMMENTS
Spokane Valley Mall is anchored by JC Penney, Sears, The Bon Marche and
a theatre complex and contains 685,478+/- square feet of total GLA. The mall is
situated approximately 11+/- miles east of the subject center on the north side
of Interstate 90 in the Spokane Valley area of unincorporated Spokane County. A
second phase is planned, but will not be commenced until anchor tenants are
acquired and additional phase one leasing is completed. This second phase would
add up to an estimated 275,000 square feet of anchor space, including
expansions of Sears and The Bon Marche, and 67,000 square feet of mall tenant
space.
Mall shop rental rates reportedly range from $15 to $50 per square
foot, with 1998 mall shop sales estimated by management at $220 per square
foot. Common area charges are quoted to be about $10 per square foot, including
taxes and insurance.
The center exhibits good accessibility due to its adjacency to
Interstate 90. From a demographic standpoint, the mall's trade area consists
primarily of middle-income residents living in the Spokane Valley and eastern
and southern suburbs of Spokane. Population density is lower than areas
closer-in to the Spokane core, while median income is higher.
The Spokane Valley Mall has intruded into the Northtown Mall market.
According to Rebecca Whitson, general manager of Northtown Mall, both foot
traffic and sales has declined by 9 to 11 percent since the Spokane Valley Mall
opened, evidence of this competition.
Overall, the Spokane Valley Mall is considered to be the subject's most
directly competitive property. The Spokane Valley Mall clearly provides for a
comparable mix of tenants and merchandising mix as the subject. On balance,
this competitive property provides a barrier to the east and south of the
subject's potential trade area.
- -------------------------------------------------------------------------------
-23-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
SECONDARY COMPETITION
Northpointe Plaza is the major secondary competition for the subject.
Its proximity, less than three miles north along the same arterial, and
value-oriented mix of power retailers draws many of the shoppers who also visit
the subject. The previous ownership commissioned a shopper intercept survey
(prior to completion of the Spokane Valley Mall), which also identified
cross-shopping by location. Northpointe Plaza, and specifically the Target
store, was identified as the primary destination of shoppers if they were not
headed to the subject. The center and immediately adjacent collateral
development contains the following Anchors and major tenants: Target, Rite Aid,
Safeway, TJ Maxx, Pacific Linen, Future Shop, Staples, PetsMart, Gart Sports,
ShopKo and Pier One, plus numerous smaller pad and in-line tenants. Home Depot
has also built their own store just west of, but separate from, the center.
OTHER COMPETITION
Finally, various other nodes of retail development exist throughout the
immediate area that offer varying degrees of competition to the subject. There
are a number of larger strip centers, power centers, freestanding stores, and
big box specialty retailers that, because of their major tenants and
merchandising, do offer themselves as some competition to the subject. However,
these centers are typically anchored by discount stores, big box users,
groceries, and specialty tenants which do not compete directly with the
merchandising found at the subject. While these centers compete to some degree,
they actually help to better understand the retail structure of the area and
provide the necessary infill common to most markets.
Franklin Park Mall is several blocks north of the subject and is
anchored by Montgomery Ward, Rite Aid, Ross and Outback steakhouse. Although
close in proximity, it is not particularly competitive with the subject. The
cross-shopping survey indicated 2.2 percent of the subject shoppers also shop
Franklin Park Mall.
Shopping in downtown Spokane, anchored by Nordstrom, Bon Marche and
River Park Square is also somewhat competitive. When the redevelopment of this
area is complete it will be more competitive with the subject. Currently, 6.2
percent of subject shoppers indicate they also shop River Park Square.
University City Mall is an older center in the Spokane Valley. This
center has lost most of its tenants and is in the process of redevelopment. The
largest announced tenant for the new center is a grocery store, indicating the
property will most likely revert to a neighborhood/community focus. We do not
feel this center will be competitive with the subject.
Silver Lake Mall in Coeur D'Alene, Idaho is about 30 miles east of the
subject. This 300,000 SF enclosed mall is anchored by small JC Penney,
Lamont's, Emporium and Sears units, with an additional 105,000 SF of mall
shops. This property is not particularly competitive with the subject due to
its remote location and lesser selection.
PROPOSED COMPETITION
To the best of our knowledge, there are no proposed or planned shopping
center developments in the subject's region/trade area that would compete
directly with the subject center.
- -------------------------------------------------------------------------------
-24-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
GLA PER CAPITA
The data presented summarizes the extent of existing retail development
inside the subject's potential trade area. According to the International
Council of Shopping Centers, average shopping center GLA per capita for the
United States and State of Washington is about 19.23+/- and 16.97+/- square
feet, respectively, based upon 1996 Census Data. For shopping centers "Over
400,000 Square Feet," the U.S. has a per capita figure of about 5.59+/- square
feet, while Washington is 5.18+/- square feet. The lower figure for Washington
stems largely from the rural nature of the state as a whole. For this reason,
some of the cities within the state tend to have higher per capita figures due
to the fact that many residents travel greater distances to shop when compared
with national benchmarks.
===============================================================================
GLA PER CAPITA COMPARISON
===============================================================================
SIZE CATEGORY STATE OF WASHINGTON UNITED STATES
===============================================================================
All Centers 16.97+/- 19.23+/-
Centers (greater than) 100,000 Sq/Ft 13.46+/- 14.35+/-
Centers (greater than) 400,000 Sq/Ft 5.18+/- 5.59+/-
===============================================================================
Source: National Research Bureau/Shopping Centers; C&W Calculations
===============================================================================
We have received very rough estimates of retail square footage for the
Spokane market. These estimates indicate a per capita square footage of 11.22.
However, given our uncertainty over the data quality it is likely many smaller
centers have been missed in this survey, resulting in this lower than expected
statistic. Based on our own analysis of known centers larger than 400,000
square feet in the Spokane market, this statistic is 7.99 square feet per
capita. University City is included in these figures, even though it is
currently anchorless and mostly vacant. However, it will be redeveloped and
will likely be larger than 400,000 square feet. Excluding University City's
square footage indicates 6.98 per capita. Given the relatively rural nature of
eastern Washington and northern Idaho, and the expectation of rural residents
of driving farther to shop, these statistics are not surprising. However, it
can be a warning sign that Spokane may have enough retailing to serve its
market at the moment. For the foreseeable future, there would not appear to be
a high potential to absorb the impact of new development.
TRADE AREA DEFINITION/DEMOGRAPHIC TRENDS
In defining boundaries for the subject's potential trade area, several
factors have been considered. First, the property's location with respect to
transportation provides the basis for regional access to the area. Second,
local competition and natural geographic boundaries help to define the
potential size of the trade area as a measure of distance from the property.
Third, the merchandising mix and anchor alignment provide the basic draw of
customers that are likely to patronize the property.
Overall, the subject's position within the Spokane market is believed
to provide for good accessibility to residents of the northern, eastern and
central part of the city. North Division Street provides the primary linkage,
while other major local arterials provide additional accessibility. Along with
regional and local accessibility, the subject is also benefited by the
proliferation of big box and category killer-type retailers which provide
additional drawing power to the North Division Street corridor. Finally, the
subject's anchor alignment and merchandising strategy provide for the necessary
customer appeal.
- -------------------------------------------------------------------------------
-25-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
As discussed, the location and accessibility of competing centers has
direct bearing on the formation and make-up of the subject's potential trade
area as well. The subject competes most directly with the new Spokane Valley
Mall, approximately 11 miles east along Interstate 90. The subject also
competes to some degree with Northpointe Plaza, RiverPark Mall, and other
freestanding stores in the area.
It is also important to note that other freestanding "category killers"
represent a strong force in the market's competitive environment. However,
their primary stores (discount department stores, drugs, home improvement
centers, and warehouse clubs) are generally different from those which comprise
the subject property. Certainly there is a place for both in most retail
environments, including the subject region.
Collectively, they balance out the retail infill of the region.
To summarize, the foundation of our analysis in the delineation of the
subject's potential trade area may be summarized as follows:
1. Accessibility, including area traffic patterns, geographical
constraints, and nodes of residential and commercial development;
2. The position and nature of the area's retail structure, including
the location of destination centers and the strength and
composition of the retail infill; and
3. The size, anchor tenancy, and merchandising composition of the
subject property's proposed tenants as compared to existing retail
inventory.
Looking at the subject's competition, the Primary Trade Area would
likely extend about 10+/- miles to the north, 10+/- miles to the west, 5+/-
miles to the south, and roughly 5.0+/- miles to the east. These distances allow
the trade area to partially overlap with the Spokane Valley Mall. Northtown
Mall's Secondary Trade Area could probably span another 5 miles south and east,
and 10 miles north and west, extending from the primary zone boundary.
Based upon these observations, we have developed a Primary Trade Area
for the subject property encompassing about 5+/- miles around the center. The
subject's Secondary Trade Area might span up to 10+/- miles from the site, with
the strongest draw from the north and west. Based on these observations, we
have analyzed a demographic profile for the subject based upon a radius of
approximately 5+/- miles from the property. To add perspective to this
analysis, we have segregated our survey into 3, 5, 7, 10 and 15-mile concentric
circles with a comparison to the City and County of Spokane, the State of
Washington, and the U.S. The full demographic reports are in the Addenda.
We have been provided with a customer intercept survey which delineates
the zip codes of subject shoppers. However, the zip codes in Spokane are not
laid out by neighborhood or accessibility. For example, the geography of the
zip code 99207, which includes the subject property, is a 2- to 8-mile wide
band stretching 15 miles to the east and northeast. Other zip codes identified
in the intercept survey start less than 5 miles from the subject and stretch to
over 20 miles away. As a result, we have placed little weight on the statistics
gathered in this survey, aside from the cross-shopping results and the
indication of shoppers who come from clearly outside the trade area (24 percent
of those surveyed). Given the geography, accessibility and competition in the
market, we believe a 5 and 10-mile radius would reasonably represent the
primary and secondary trade area for the subject.
- -------------------------------------------------------------------------------
-26-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
As discussed, between 55 and 65 percent of a center's sales are
typically generated from within its Primary Trade Area. The Secondary Trade
Area generally refers to more outlying areas which provide a less frequent
group of customers to the center. Residents within the secondary area would be
more likely to shop at centers located closer to their homes due to time and
travel constraints. Typically, an additional 20 to 25 percent of a center's
sales will be generated from within the Secondary Trade Area. The extent of the
secondary trade area can vary depending upon the scope of commercial
development within the outlying areas. The tertiary or Peripheral Trade Area
refers to more distant areas from which occasional customers to the shopping
center reside. The residents of the peripheral areas may be drawn to the center
by a particular store or service which is not provided within their local
areas. Shoppers from the peripheral areas may account for 10 to 15 percent of a
center's sales. In this case, given the shopper intercept survey and rural
nature of eastern Washington, we feel a higher percentage of peripheral trade
is appropriate.
POPULATION
Once the market has been established, the focus of our analysis centers
on the statistical data of the trade area, including population. Equifax
National Decision Systems (ENDS) provides historical, current and forecasted
population estimates for the trade area. Patterns of development density and
migration are reflected in the current levels of population estimates. A
detailed profile of the trade area is included in the Addenda of this report.
Between 1990 and 1998, ENDS reports that the population within the
Primary Trade Area (5.0-mile radius) increased by 11,391 residents to 190,997,
reflecting a 6.3 percent increase or 0.77 percent annual change. As noted in
the regional and neighborhood analyses, this slow growth is attributed to the
trade area's relatively high density and a continuing trend of movement to
outlying areas of the city. Through 2003, the trade area is expected to grow to
197,403 residents (0.66 percent annual growth).
Further analysis shows that the fastest growing quadrant of the trade
area lies to the northwest, west and southeast of the subject site,
particularly outside of the 5- and 7- mile radii of the site. Provided on the
following page is a graphic representation of the aggregate, total population
change forecasted for the subject's trade area through 2003. As shown, the
subject is proximate to some of the region's low-growth areas.
The largest percentage growth will be outside of Spokane County in
Stevens County to the northwest and Idaho to the east. The Idaho growth will
most likely patronize the Spokane Valley Mall, while the growth to the north
and west will benefit the subject. The largest growth in absolute numbers will
be 3 to 5 miles northwest of the subject along the Spokane River, west of the
subject along Interstate 90, and southeast of the subject outside the
southeastern city limits. The southeastern growth will benefit the Spokane
Valley Mall. The western growth will be split between the Spokane Valley Mall
and the subject, but the northwestern growth will accrue entirely to the
subject. To the extent that the subject can capture these sales, management
should clearly focus marketing efforts to these residents.
- -------------------------------------------------------------------------------
-27-
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE OMITTED FOR THE PURPOSE OF EDGAR FILING.]
[POPULATION OF SPOKANE MAP]
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
HOUSEHOLDS
A household consists of all the people occupying a single housing unit.
While individual members of a household purchase goods and services, these
purchases actually reflect household needs and decisions. Thus, the household
is a critical unit to be considered when reviewing market data and forming
conclusions about the trade area as it impacts the retail center.
National trends indicate that the number of households are increasing
at a faster rate than the growth of the population. Several noticeable changes
in the way households are being formed have caused the acceleration in this
growth, specifically:
o The population is living longer on average. This results in an
increase of single and two person households;
o The divorce rate has increased dramatically during the
1980s/90s, again resulting in an increase in single person
households; and
o Many individuals have postponed marriage, also resulting in more
single person households.
- -------------------------------------------------------------------------------
-28-
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE OMITTED FOR THE PURPOSE OF EDGAR FILING.]
[POPULATION GROWTH OF SPOKANE GRAPHIC]
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
According to ENDS, the Primary Trade Area added 6,540 households
between 1990 and 1998, an increase of 8.7 percent to 81,989 units. Consistent
with the national trend, the trade area is experiencing household growth at a
rate in excess of population changes. Between 1998 and 2003 the area is
expected to continue household formation at a pace of 0.9 percent per year. The
faster household growth relative to population growth is consistent with data
for the Spokane area and state as a whole.
Correspondingly, a greater number of smaller households with fewer
children generally indicates more disposable income. In 1980, there were 2.46
persons per household and by 1998, it is estimated to have decreased to 2.33.
Through 2003, the average number of persons per household is forecasted to
decline to 2.30 persons.
TRADE AREA INCOME
A significant statistic for retailers is the income potential of a
trade area's population. Income levels, either on a per capita, per family or
household basis, indicate the economic level of the residents of the market
area and form an important component of this total analysis. More directly,
average household income, when combined with the number of households, is a
major determinant of an area's retail sales potential.
Trade area income figures for the subject support the profile of a
broad middle-income market. According to ENDS, average household income within
the Primary Trade Area in 1998 is approximately $39,308. A comparison of the
trade area's relative ranking is shown on the following chart:
========================================================
AVERAGE HOUSEHOLD INCOME COMPARISON
========================================================
AREA INCOME
========================================================
3.0-Mile Radius * $ 33,586
--------------------------------------------------------
5.0-Mile Radius * $ 39,308
--------------------------------------------------------
10.0-Mile Radius $ 45,229
--------------------------------------------------------
Spokane County $ 46,358
--------------------------------------------------------
State of Washington $ 54,515
--------------------------------------------------------
United States $ 53,198
========================================================
Source: Equifax National Decision Systems
* Primary Trade Area
========================================================
As shown, income ranges in the immediate market area are generally
below both regional and statewide averages.
Provided on the following page is a graphic presentation of the average
household income distribution throughout the Primary Trade Area. As can be
seen, the subject is situated in the midst of the lower to mid-income area of
the city. At the same time one of the more affluent areas of the county starts
less than two miles northwest of the subject. Areas surrounding the subject
site generally reflect 1998 estimated average household income levels of up to
$32,500, with the more affluent areas having income levels between $42,500 and
$101,000.
- -------------------------------------------------------------------------------
-30-
<PAGE>
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE OMITTED FOR THE PURPOSE OF EDGAR FILING.]
[AVERAGE HOUSEHOLD INCOME GRAPHIC]
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
RETAIL SALES
Another important statistic for retailers is the amount of retail sales
expended within a given region. According to Woods & Poole Economics, total
retail sales within the Spokane MSA have been growing at an annual
inflation-adjusted rate of 2.9 percent per year since 1990; higher than growth
experienced between 1980 and 1990. For General Merchandise, retail sales have
been increasing at an annual inflation adjusted rate of 2.8 percent per year,
while Apparel and Accessories have been growing by only 1.5 percent per year.
Looking forward to 2005, W&P is forecasting the region to see compound
annual sales growth of approximately 1.5 percent per year (adjusted for
inflation to 1992 dollars). This is generally neutral for the region, as sales
for the U.S. are forecasted to increase at an inflation-adjusted rate of 1.5
percent per year. General Merchandise sales are projected to increase at an
annual inflation-adjusted rate of approximately 2.1 percent per year for the
region, while Apparel and Accessories sales will grow by 1.5 percent per year.
SUBJECT SALES HISTORY
Although sales trends within the subject's region lend important
insight into such an analysis, it is the subject's sales productivity that is,
perhaps, most significant. Sales--and sales growth--are the driving impetus for
rental rates and rent growth at retail properties and have significant bearing
on the occupancy costs tenants are willing to pay.
While we have not been provided with a complete historical overview of
sales at the subject property, we have been provided with comparable sales
reports for 1995, 1996 and 1997. The following chart presents a summary of
aggregate mall shop sales at the subject property since 1995.
======================================================================
MALL SHOP SALES TRENDS
======================================================================
AGGREGATE SALES % CHANGE
----------------------------------------------------------------------
1995 $ 88,550,100 --
----------------------------------------------------------------------
1996 $ 91,565,200 + 3.40%
----------------------------------------------------------------------
1997 $ 90,231,700 - 1.46%
======================================================================
As shown, aggregate sales had a slight increase in 1996, followed by a
slight decrease in 1997. Management projects a further decrease in 1998 based
on traffic counts and tenant sales reports to date. This decline is based
mostly upon the entrance of the Spokane Valley Mall into the competitive
market. To date, mall management reports that traffic and sales counts appear
to be down by about 9 to 11 percent from 1997.
Mall shop sales have shown relative stability over the past two years.
In 1996, mall management estimated sales to be $248 per square foot. For 1997
this figure moved to $267 per square foot. Overall, these sales figures
indicate that the subject property is a medium to good performing regional
center in its market. A comparison of the sales can also be made to industry
benchmarks below.
- -------------------------------------------------------------------------------
-32-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
Sears and Mervyns at the subject property are separately owned and do
not report sales to ownership. Sales estimates have not been made available for
this writing. The owned anchor tenant stores have reported the following sales:
<TABLE>
<CAPTION>
=============================================================================================================
ANCHOR TENANT SALES ($1,000S)
- -------------------------------------------------------------------------------------------------------------
JC BON
YEAR PENNEY $ / SF MARCHE $ / SF EMPORIUM $ / SF TOTALS
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1995 24,923 176.92 21,538 241.44 6,202 90.22 52,663
1996 22,636 160.69 22,636 253.75 6,148 89.44 51,420
1997 23,904 169.69 21,958 246.15 6,022 87.60 51,884
1998 EST. N/A -- N/A -- N/A -- N/A
=============================================================================================================
</TABLE>
The Bon Marche is clearly succeeding in this market, with JC Penney
also beating national averages. Emporium appears to be struggling in this
market, and likely does not have enough market presence.
INDUSTRY AVERAGE SALES (MALL SHOPS)
The Urban Land Institute's Dollars and Cents of Shopping Centers (1997)
reports national and regional sales averages for regional and super-regional
shopping malls. Nationally, average sales at super-regional centers is reported
at $203.87 per square foot. For regional malls, average sales are reported to
be $180.78. A comparison of national and regional figures is shown on the
following chart.
<TABLE>
<CAPTION>
====================================================================================================
MALL SHOP SALES
REGIONAL/SUPER-REGIONAL CENTERS
====================================================================================================
AREA AVERAGE MEDIAN LOWER DECILE UPPER DECILE
====================================================================================================
<S> <C> <C> <C> <C>
United States $180.78/ $170.17/ $125.36/ $286.59/
$203.87 $196.36 $148.62 $284.47
- ----------------------------------------------------------------------------------------------------
East $201.11/ $182.81/ $117.31/ $325.52/
$190.46 $188.37 $146.25 $286.15
- ----------------------------------------------------------------------------------------------------
West $222.20/ $197.91/ $157.50/ $349.28/
$205.69 $195.37 $151.60 $274.11
- ----------------------------------------------------------------------------------------------------
South $174.53/ $179.50/ $122.81/ $239.01/
$209.63 $208.45 $141.62 $271.08
- ----------------------------------------------------------------------------------------------------
Midwest $163.05/ $153.88/ $123.70/ $237.74/
$203.20 $196.15 $153.90 $289.85
====================================================================================================
Source: Urban Land Institute Dollars and Cents of Shopping Centers (1997)
====================================================================================================
</TABLE>
INDUSTRY AVERAGE SALES (DEPARTMENT STORES)
A comparison of the subject's potential department store performance
can also be made to its regional and national peers. The Urban Land Institute
also tracks sales of owned and non-owned department stores by selected
affiliation and region. The data from ULI shows that the mean sales level for
department stores in super-regional malls varies from $132.65 to $179.60 per
square foot with an overall average of $156.35 per square foot.
- -------------------------------------------------------------------------------
-33-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
Stores in the top 10 percent of their peers average (unweighted)
approximately $243.63, while the top 2 percent average approximately $391.40
per square foot. This information, based on 1996, is summarized in the
following chart:
<TABLE>
<CAPTION>
=====================================================================================================
DEPARTMENT STORE SALES DATA
=====================================================================================================
AVERAGE TOP 10% TOP 2%
CATEGORY/REGION SALES PSF SALES PSF SALES PSF
=====================================================================================================
<S> <C> <C> <C>
Super-Regional U.S.
Owned Dept. Stores $153.67 $233.49 $347.00
National Chain $149.59 $230.80 $336.00
Non-Owned Dept. Stores $163.98 $256.83 $447.57
National Chain $163.71 $253.39 $435.01
Eastern Region $132.65 --- ---
Western Region $146.26 --- ---
Midwestern Region $161.33 --- ---
Southern Region $179.60 --- ---
=====================================================================================================
MEAN - ALL SUPER-REGIONAL CENTERS $156.35 $243.63 $391.40
=====================================================================================================
Regional Malls U.S.
Owned Dept. Stores $148.15 $256.90 $334.68
National Chain $149.73 $256.73 $339.74
Non-Owned Dept. Stores $181.40 $258.62 $328.07
National Chain $174.44 $244.58 $324.28
Eastern Region $140.01 --- ---
Western Region $181.20 --- ---
Midwestern Region $149.32 --- ---
Southern Region $141.18 --- ---
=====================================================================================================
MEAN - ALL REGIONAL CENTERS $158.18 $254.21 $331.69
=====================================================================================================
Source: Urban Land Institute Dollars & Cents of Shopping Centers (1997)
=====================================================================================================
</TABLE>
Data for department stores in regional malls shows that the mean ranges
from $140.01 to $181.40 per square foot with an overall average of $158.18 per
square foot. The unweighted average for the top 10 percent and 2 percent is
approximately $254.21 and $331.69 per square foot, respectively.
MARKET RENT ANALYSIS
Minimum rent produced by the subject property is derived from that paid
by the various tenant types. The rental income which an asset such as the
subject property will generate for an investor is analyzed as to its quality,
quantity, and durability. The quality and probable duration of income will
affect the amount of risk which an informed investor may expect over the
property's useful life. Segregation of the income stream along these lines
allows us to control the variables related to the center's forecasted
performance with greater accuracy. Each tenant type lends itself to a specific
weighting of these variables as the risk associated with each varies.
Minimum rents forecasted at the subject property are essentially
derived from various tenant categories, namely specialty tenant revenues
consisting of all in-line shops, food tenants, anchor/major tenant revenues,
and so forth. In our investigation and analysis of the marketplace, we have
surveyed, and ascertained where possible, rent levels being commanded
- -------------------------------------------------------------------------------
-34-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
by competing centers. However, it should be recognized that large retail
shopping centers are generally considered to be separate entities by virtue of
age and design, accessibility, visibility, tenant mix, and the size and
purchasing power of its trade area. Consequently, the best measure of minimum
rental income is its actual rent roll leasing schedule.
As such, our analysis of recently negotiated leases for tenants at the
subject provides important insight into perceived market rent levels for the
property. Inasmuch as a tenant's ability to pay rent is based upon expected
sales achievement, the level of negotiated rents is directly related to the
individual tenant's perception of their expected performance at the center.
SPECIALTY/IN-LINE SHOPS
Our analysis of market rent levels for in-line shops has resolved
itself to a variety of influencing factors. Although it is typical that larger
tenant spaces are leased at lower per square foot rates and lower percentages,
the type of tenant as well as the variable of location within the mall can
often distort this size/rate relationship. The following chart presents an
analysis of existing in-line shop rents based upon all leases on an annualized
basis for 1998. As presented, the chart includes a category for all leases
in-place, as well as a grouping of the most recently leasing activity.
<TABLE>
<CAPTION>
================================================================================================
IN-LINE RENT COMPARISONS AND CONCLUSIONS
================================================================================================
ALL LEASES RECENT ESTIMATED
SIZE CATEGORY IN-PLACE LEASING MARKET RENT
================================================================================================
<S> <C> <C> <C> <C> <C>
(less than) 1,000 SF $ 47.98 $ 45.43 $44.00 - $48.00
- ------------------------------------------------------------------------------------------------
1,001 - 2,000 SF $ 28.02 $ 29.51 $25.00 - $30.00
- ------------------------------------------------------------------------------------------------
2,001 - 3,500 SF $ 23.36 $ 19.62 $20.00 - $25.00
- ------------------------------------------------------------------------------------------------
3,501 - 5,000 SF $ 20.77 N/A $18.00 - $22.00
- ------------------------------------------------------------------------------------------------
5,001 - 9,000 SF $ 19.18 $ 20.47 $18.00 - $22.00
- ------------------------------------------------------------------------------------------------
(greater than) 9,000 SF $ 15.12 $ N/A $14.00 - $16.00
================================================================================================
AVERAGE $ 23.92 $ 26.96 $20.00 - $28.00
================================================================================================
</TABLE>
As can be seen, lease rates in-place generally have an inverse
relationship with suite size and show an overall average rent of about $23.92
per square foot. To better understand in-line rent levels at the property, we
have broken down the analysis into recent leasing activity to calculate current
rental rates. We do not have any 1998 leases of which we know any details,
though we are aware some leasing activity has taken place, especially with
regards to the theatre and restaurant expansion. There were 6 new leases signed
in 1997 that we are aware of, and 15 new leases signed in 1996. These 21 most
recent leases in 1996 and 1997 indicate an overall average rent of $26.96 per
square foot. The highest rent is attained from Group 1 (Tenants [less than]
1,000 SF) with an average of $47.98 per square foot. The averages generally
decline by size category to $15.12 for Group 6 (Tenants [greater than] 9,000
SF).
- -------------------------------------------------------------------------------
-35-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
These transactions implicitly support the assumption that, typically,
there is an inverse correlation between unit rates and the amount of space
being leased. We recognize that, in practice, there are unit rate gradations
with tenant categories based on such attributes as location within the
center/building, unit frontage and depth, tenant type and credit worthiness,
concessions/tenant allowances, etc. However, as the tenant mix and
configuration may not be fixed over time, it is more appropriate to estimate
what the average base rent levels paid at the property would be for the
different tenant categories.
RENT COMPARABLES
As noted, we have also attempted to extract market-based rent
comparables for comparison with the subject property. Based on our research, we
can compare the subject's general rental rates with those found in the market.
The Spokane Valley Mall leases space under 4,000 square feet in the range of
$20 to $25 per square foot. Larger spaces, those over 5,000 square feet, lease
for $15 to $20 per square foot. Jewelry spaces generally range from $30 to $40
per square foot, with food court spaces carrying the highest rent at $40 to $50
per square foot.
Northpointe Plaza is a different product type, but leases in that
center are generally in the range of $12 to $18 per square foot.
As shown, the subject's rent levels are generally higher than those
found at both Spokane Valley Mall and Northpointe Plaza. We would note,
however, that the subject property is superior to these malls in terms of trade
area dominance, longevity in the market, merchandising depth, and anchor
alignment. As such, we would expect Northtown Mall's rent parameters to fall
above those at these competing centers. We would also again note that regional
malls are generally considered to be separate entities by virtue of age,
design, accessibility, trade area characteristics, and so forth. With this in
mind, the subject's leasing activity is believed to provide a better analysis
of achievable rent than that at the comparables.
MARKET COMPARISONS - OCCUPANCY COST RATIOS
In further support of developing a forecast for market rent levels, we
have undertaken a comparison of minimum rent to projected sales and total
occupancy costs to sales ratios. Generally, our research and experience with
other regional malls shows that the ratio of minimum rent to sales falls within
the 7 to 10 percent range in the initial year of the lease, with 7.5 to 8.5
percent being most typical. By adding additional costs to the tenant, such as
real estate tax and common area maintenance recoveries, a total occupancy cost
may be derived. Expense recoveries and other tenant charges can significantly
increase total tenant costs.
The typical range for total occupancy cost-to-sales ratios falls
between 11 and 15 percent. As a general rule, where sales exceed $250 to $275
per square foot, 14 to 15 percent would be a reasonable cost of occupancy.
Experience and research show that most tenants will resist total occupancy
costs that exceed 15 to 18 percent of sales. Obviously, this comparison will
vary from tenant to tenant and property to property.
In higher end markets where tenants are able to generate sales above
industry averages, tenants can generally pay rents which fall toward the upper
end of the ratio range. Moreover, if tenants perceive that their sales will be
increasing at real rates that are in excess of inflation, they will typically
be more inclined to pay higher initial base rents. Obviously, the opposite
would be true for poorer performing centers in that tenants would be squeezed
by the thin
- -------------------------------------------------------------------------------
-36-
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
OCCUPANCY COST ANALYSIS/COMPARISON
Cushman & Wakefield, Inc.
- -----------------------------------------------------------------------------------------------------------------------------
BUDGET YEAR NO. TOTAL SHOP
NO. AREA LOCATION STATE YEAR BUILT STORIES GLA GLA
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
** ULI-Super-Regional Malls US 1996 -- -- 1,037,007 351,721
- -----------------------------------------------------------------------------------------------------------------------------
** ULI-Regional Malls US 1996 -- -- 519,721 243,928
- -----------------------------------------------------------------------------------------------------------------------------
** ICSC-All Enclosed Malls US 1995 -- -- 582,893 261,553
- -----------------------------------------------------------------------------------------------------------------------------
** ICSC-Malls > 1,000,000sf US 1995 -- -- 1,206,874 407,060
=============================================================================================================================
1 San Jose MSA CA 1997 1986 2 1,139,384 394,496
- -----------------------------------------------------------------------------------------------------------------------------
2 San Francisco MSA CA 1997 1954/88 2 854,164 266,413
- -----------------------------------------------------------------------------------------------------------------------------
3 San Francisco MSA CA 1997 1988 8 499,930 183,430
- -----------------------------------------------------------------------------------------------------------------------------
4 Ontario MSA CA 1997 1996 1 1,536,223 508,942
- -----------------------------------------------------------------------------------------------------------------------------
5 Sacramento County MSA CA 1996 1957/81/94 2 1,066,161 410,168
- -----------------------------------------------------------------------------------------------------------------------------
6 Riverside County MSA CA 1995 1970/91 1 1,044,536 411,640
- -----------------------------------------------------------------------------------------------------------------------------
7 Fairfield County MSA CT 1995 1986/91 2 1,270,146 499,868
- -----------------------------------------------------------------------------------------------------------------------------
8 Daytona Beach MSA FL 1996 1974/90/96 1 1,064,922 246,379
- -----------------------------------------------------------------------------------------------------------------------------
9 Miami MSA FL 1995 1982 1 1,120,827 290,385
- -----------------------------------------------------------------------------------------------------------------------------
10 Gainsville MSA GA 1997 1964/87/96 1 518,422 191,919
- -----------------------------------------------------------------------------------------------------------------------------
11 Bloomingdale MSA IL 1995 1981/88/91 2 1,292,186 427,609
- -----------------------------------------------------------------------------------------------------------------------------
12 Indianapolis MSA IN 1995 1968/87 1 1,239,059 260,359
- -----------------------------------------------------------------------------------------------------------------------------
13 North/Central Kansas KS 1995 1987/90 1 400,307 185,324
- -----------------------------------------------------------------------------------------------------------------------------
14 Alexandria MSA LA 1996 1973/86 1 873,833 292,560
- -----------------------------------------------------------------------------------------------------------------------------
15 Monroe MSA LA 1996 1985 1 920,779 338,875
- -----------------------------------------------------------------------------------------------------------------------------
16 Boston MSA MA 1997 1989 3 650,804 329,573
- -----------------------------------------------------------------------------------------------------------------------------
17 Boston MSA MA 1997 1989/92 1 770,575 276,681
- -----------------------------------------------------------------------------------------------------------------------------
18 Bristol County MSA MA 1996 1992/93 2 998,436 341,948
- -----------------------------------------------------------------------------------------------------------------------------
19 Boston MSA MA 1996 1966/93/94 2 1,155,068 431,068
- -----------------------------------------------------------------------------------------------------------------------------
20 Worcester County MSA MA 1996 1971/87 1 445,875 182,372
- -----------------------------------------------------------------------------------------------------------------------------
21 Baltimore MSA MD 1997 1959/82/92 4 952,021 532,892
- -----------------------------------------------------------------------------------------------------------------------------
22 Baltimore MSA MD 1997 1956/91 1 862,313 241,146
- -----------------------------------------------------------------------------------------------------------------------------
23 Westminster MSA MD 1997 1987/94 1 525,702 194,271
- -----------------------------------------------------------------------------------------------------------------------------
24 Washington-Baltimore MD 1996 1979/93 2 661,534 245,112
- -----------------------------------------------------------------------------------------------------------------------------
25 Genesee County MSA MI 1995 1980/93 1 451,036 230,625
- -----------------------------------------------------------------------------------------------------------------------------
26 Minneapolis MSA MN 1995 1962/94 1 982,228 201,561
- -----------------------------------------------------------------------------------------------------------------------------
27 St. Louis MSA MO 1996 1974/94 2 442,321 181,608
- -----------------------------------------------------------------------------------------------------------------------------
28 Las Vegas MSA NV 1997 1992/97 1 475,940 475,940
- -----------------------------------------------------------------------------------------------------------------------------
29 Rochester MSA NY 1997 1971/86/96 1 1,122,021 427,019
- -----------------------------------------------------------------------------------------------------------------------------
30 Orange County MSA NY 1997 1980 1 465,984 153,331
- -----------------------------------------------------------------------------------------------------------------------------
31 Chemung County MSA NY 1997 1967/81/95 2 910,623 306,188
- -----------------------------------------------------------------------------------------------------------------------------
32 Syracuse MSA NY 1997 1988/94 1 789,032 302,979
- -----------------------------------------------------------------------------------------------------------------------------
33 Syracuse MSA NY 1997 1954/97 1 1,006,645 403,672
- -----------------------------------------------------------------------------------------------------------------------------
34 White Plains MSA NY 1996 1980/93 4 882,728 326,813
- -----------------------------------------------------------------------------------------------------------------------------
35 Queens County MSA NY 1996 1973/90/95 4 625,659 149,971
- -----------------------------------------------------------------------------------------------------------------------------
36 Buffalo MSA NY 1996 1985/89 1 753,105 285,771
- -----------------------------------------------------------------------------------------------------------------------------
37 Dayton MSA OH 1997 1969/94 2 1,329,514 446,381
- -----------------------------------------------------------------------------------------------------------------------------
38 Cincinnati MSA OH 1996 1956/88/94 2 1,117,491 381,943
- -----------------------------------------------------------------------------------------------------------------------------
39 Bucks County MSA PA 1995 1968/75 1 348,309 305,212
- -----------------------------------------------------------------------------------------------------------------------------
40 Johnson City TN 1996 1971/91/96 2 557,715 223,110
- -----------------------------------------------------------------------------------------------------------------------------
41 Nashville MSA TN 1995 1990 2 716,462 373,662
- -----------------------------------------------------------------------------------------------------------------------------
42 Amarillo MSA TX 1995 1982/86 1 889,508 316,190
- -----------------------------------------------------------------------------------------------------------------------------
43 Burlington MSA VT 1995 1979/89/92 1 490,424 185,398
- -----------------------------------------------------------------------------------------------------------------------------
44 Washington D.C. MSA VA 1996 1968/86/91 2 1,446,222 784,575
- -----------------------------------------------------------------------------------------------------------------------------
45 Prince William Cty. MSA VA 1997 1972/88/96 1 716,800 302,900
- -----------------------------------------------------------------------------------------------------------------------------
46 Norfolk-Chesapeake MSA VA 1997 1981/88/97 2 770,209 306,890
- -----------------------------------------------------------------------------------------------------------------------------
47 Seattle MSA WA 1995 1979/95 1 1,012,754 311,019
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
SURVEY LOW: 348,309 149,971
SURVEY HIGH: 1,536,223 784,575
- -----------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: 853,185 320,205
=============================================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------===
AVG. REC- AVG. RENT- TOTAL
NO. AREA LOCATION RENT OVERIES SALES SALES COST LOCATION
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
** ULI-Super-Regional Malls $16.54 $9.31 $203.87 8.1% 12.7% --
- -----------------------------------------------------------------------------------------------------------------------------
** ULI-Regional Malls $10.44 $4.89 $180.78 5.8% 8.5% --
- -----------------------------------------------------------------------------------------------------------------------------
** ICSC-All Enclosed Malls $12.05 $5.82 $176.16 6.8% 10.1% --
- -----------------------------------------------------------------------------------------------------------------------------
** ICSC-Malls > 1,000,000sf $20.01 $12.57 $271.64 7.4% 12.0% --
=============================================================================================================================
1 San Jose MSA $38.95 $20.15 $593.00 6.6% 10.0% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
2 San Francisco MSA $33.75 $22.52 $407.00 8.3% 13.8% Urban
- -----------------------------------------------------------------------------------------------------------------------------
3 San Francisco MSA $53.60 $32.45 $540.00 9.9% 15.9% Urban
- -----------------------------------------------------------------------------------------------------------------------------
4 Ontario MSA $23.00 $13.10 $280.00 8.2% 12.9% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
5 Sacramento County MSA $34.40 $18.25 $400.00 8.6% 13.2% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
6 Riverside County MSA $22.59 $17.00 $250.00 9.0% 15.8% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
7 Fairfield County MSA $32.00 $17.20 $425.00 7.5% 11.6% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
8 Daytona Beach MSA $25.42 $12.12 $300.00 8.5% 12.5% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
9 Miami MSA $29.36 $16.55 $355.00 8.3% 12.9% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
10 Gainsville MSA $16.50 $8.06 $239.00 6.9% 10.3% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
11 Bloomingdale MSA $21.84 $10.37 $250.00 8.7% 12.9% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
12 Indianapolis MSA $22.43 $9.00 $235.00 9.5% 13.4% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
13 North/Central Kansas $14.97 $10.31 $212.00 7.1% 11.9% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
14 Alexandria MSA $16.00 $12.67 $216.00 7.4% 13.3% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
15 Monroe MSA $19.62 $9.77 $271.00 7.2% 10.8% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
16 Boston MSA $38.88 $22.80 $403.00 9.6% 15.3% Urban
- -----------------------------------------------------------------------------------------------------------------------------
17 Boston MSA $19.30 $13.19 $253.00 7.6% 12.8% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
18 Bristol County MSA $21.80 $12.16 $257.00 8.5% 13.2% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
19 Boston MSA $41.79 $13.08 $426.00 9.8% 12.9% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
20 Worcester County MSA $22.36 $14.93 $288.00 7.8% 12.9% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
21 Baltimore MSA $32.65 $14.08 $379.00 8.6% 12.3% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
22 Baltimore MSA $19.00 $14.51 $255.00 7.5% 13.1% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
23 Westminster MSA $16.20 $14.67 $238.00 6.8% 13.0% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
24 Washington-Baltimore $19.22 $19.77 $257.00 7.5% 15.2% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
25 Genesee County MSA $16.00 $9.01 $219.00 7.3% 11.4% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
26 Minneapolis MSA $21.00 $22.51 $262.00 8.0% 16.6% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
27 St. Louis MSA $30.00 $13.93 $365.00 8.2% 12.0% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
28 Las Vegas MSA $90.00 $27.47 $1,250.00 7.2% 9.4% Urban
- -----------------------------------------------------------------------------------------------------------------------------
29 Rochester MSA $24.00 $11.55 $280.00 8.6% 12.7% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
30 Orange County MSA $18.00 $14.64 $264.00 6.8% 12.4% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
31 Chemung County MSA $15.25 $9.20 $220.00 6.9% 11.1% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
32 Syracuse MSA $17.50 $13.25 $210.00 8.3% 14.6% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
33 Syracuse MSA $17.00 $11.97 $200.00 8.5% 14.5% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
34 White Plains MSA $32.65 $25.84 $344.00 9.5% 17.0% Urban
- -----------------------------------------------------------------------------------------------------------------------------
35 Queens County MSA $54.00 $46.37 $670.00 8.1% 15.0% Urban
- -----------------------------------------------------------------------------------------------------------------------------
36 Buffalo MSA $19.67 $14.83 $250.00 7.9% 13.8% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
37 Dayton MSA $26.20 $10.81 $286.00 9.2% 12.9% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
38 Cincinnati MSA $35.74 $13.67 $400.00 8.9% 12.4% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
39 Bucks County MSA $19.35 $10.00 $239.00 8.1% 12.3% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
40 Johnson City $17.50 $8.71 $207.00 8.5% 12.7% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
41 Nashville MSA $15.25 $13.30 $180.00 8.5% 15.9% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
42 Amarillo MSA $18.00 $7.53 $200.00 9.0% 12.8% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
43 Burlington MSA $23.00 $9.51 $294.00 7.8% 11.1% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
44 Washington D.C. MSA $25.00 $12.63 $320.00 7.8% 11.8% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
45 Prince William Cty. MSA $21.50 $14.57 $240.00 9.0% 15.0% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
46 Norfolk-Chesapeake MSA $20.70 $12.30 $272.00 7.6% 12.1% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
47 Seattle MSA $27.35 $7.86 $325.00 8.4% 10.8% Suburban
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
SURVEY LOW: $10.44 $4.89 $176.16 5.8% 8.5%
SURVEY HIGH: $90.00 $46.37 $1,250.00 9.9% 17.0%
- -----------------------------------------------------------------------------------------------------------------------------
SURVEY MEAN: $25.48 $14.56 $314.87 8.1% 12.9%
=============================================================================================================================
</TABLE>
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
margins related to below average sales. With fixed expenses accounting for a
significant portion of the tenant's contractual obligation, there would be
little room left for base rent.
In this context, we have provided an occupancy cost analysis for
several regional malls with which we have had direct insight over the past
year. This information is provided on the facing page. On average, these ratio
comparisons provide a realistic check against projected market rental rate
assumptions.
From this analysis we see that the ratio of base rent-to-sales ranges
from 5.8 to 9.9 percent, while the total occupancy cost ratios vary from 8.5 to
17.0 percent when all recoverable expenses are included. The surveyed mean for
the malls and industry standards analyzed is 8.1 and 12.9 percent,
respectively. Some of the higher ratios are found in older malls situated in
urban areas that have higher operating structures due to less efficient layout
and designs, older physical plants, and higher security costs, which in some
malls can add upwards of $2.00 per square foot to common area maintenance.
The subject property, based upon individual tenant occupancy costs
provided by management, divided by tenant annual sales, experienced occupancy
costs of 12.6 and 12.3 percent, respectively, in 1996 and 1997. These are
reasonable costs for the market and the tenancies in the subject. Management
has separately provided mall sales of $248 and $267 per square foot
respectively for 1996 and 1997 that we are unable to fully audit. It appears
these sales figures are adjusted for occupancy and we do not have adequate data
to check these figures. Assuming 100 percent mall occupancy, which we know to
be too high over these periods, occupancy costs for the subject would be 10.4
and 10.7 percent, respectively, in 1996 and 1997. If the mall shops were less
occupied these figures would increase since the occupancy costs we are
calculating in aggregate would be spread over fewer tenancies. At a 75 to 80
percent mall occupancy level the operating cost figures would converge with our
calculated costs. This indicates the subject is operating well within
reasonable ratios and the tenants will be able to afford to pay their rent and
operating costs. If sales levels drop by 10 percent in 1998, as discussed by
management, the operating cost ratio will increase to approximately 13.5
percent. This ratio is nearing the top of the reasonable range, and we would
expect this sales decline to cause trouble for some of the marginal tenants.
These relative measures can be compared with two well-known
publications, The Score (1996) by the International Council of Shopping Centers
and Dollars & Cents of Shopping Centers (1997) by the Urban Land Institute. The
most recent publications indicate base rent-to-sales ratios of approximately 6
to 8 percent and total occupancy cost ratios of 9 and 13 percent, respectively.
In general, while the rental ranges and ratio of base rent to sales
vary substantially from mall to mall and tenant to tenant, they do provide
general support for the rental ranges and ratio which is projected for the
subject property.
CONCLUSION - MARKET RENT ESTIMATE FOR IN-LINE SHOPS
Comparable in-line mall shop sales at the subject property are
forecasted to be approximately $240 to $250 per square foot. Since CAM and real
estate tax expenses are reported to be in the very low end of the range for a
property of the subject's caliber, we feel that the subject's rent-to-sales
ratio should not exceed 8 to 9 percent. We can test the subject's rent
achievement potential relative to forecasted sales levels. This sensitivity is
shown below:
- -------------------------------------------------------------------------------
-37-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
===================================================
BASE RENT TO IMPLIED RENT AT
SALES RATIO $245.00/SF
===================================================
8.00% $ 19.60
8.25% $ 20.21
8.50% $ 20.83
8.75% $ 21.44
9.00% $ 22.05
===================================================
In the previous discussions, the overall average attained rent for the
subject was calculated to be $23.92 per square foot based upon all leases
in-place. Based upon recent leasing activity, this average is shown to be
$26.96 per square foot, although the recent leasing activity is biased towards
smaller spaces. Looking at a pure rent-to-sales ratio, it would appear that the
subject could support an average rent between $20 and $22 per square foot.
Given this apparent discrepancy we must re-examine the data used for these
analyses. First, there have been very few truly recent leases. Most of the data
used for the recent lease analysis was from 1996, prior to the opening of the
Spokane Valley Mall. Sales levels in 1997 would support rental rates of $22 to
$24 per square foot. Given the drop in traffic and sales in 1998 it is
reasonable to assume a slight drop in achievable rates with no other changes.
The addition of the theatre, restaurants and Barnes & Noble is a very good step
in the right direction to reverse this decline in visitation. With these new
tenants added we believe the decline in sales can be mostly reversed.
After considering all of the above, we have estimated a weighted
average rental rate of approximately $22 to $23 per square foot for the subject
property based upon a relative weighting of tenant space by size. The average
rent is a weighted average rent for all in-line mall tenants only.
OPERATING EXPENSE ANALYSIS
The total expenses incurred in the production of income from the
subject property are divided into two categories: reimbursable and
non-reimbursable items. The major expenses which are reimbursable include real
estate taxes and common area maintenance, including insurance. The
non-reimbursable expenses associated with the subject property include certain
general and administrative expenses, including ownership's contribution to the
merchants association/ marketing fund, miscellaneous expenses, including
non-recoverable maintenance, and a management fee. Other expenses include a
reserve for the replacement of short-lived capital components, alteration costs
associated with bringing space up to occupancy standards, and leasing
commissions.
The various expenses incurred in the operation of the subject property
have been analyzed from information provided by a number of sources, including
current budget projections and actual historical operating data. We have
compared this information to published data which are available, as well as
data from competing centers in the subject's market. Finally, this information
has been tempered by our experience with other regional shopping centers.
For 1998, ownership has budgeted total operating expenses (excluding
tenant improvements) of approximately $3,088,092, or roughly $7.66 per square
foot of mall shop GLA. This compares with $2,939,609 ($7.29 per square foot) in
1997. The 1996 expense was $7.41
- -------------------------------------------------------------------------------
-38-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
per square foot. We have projected operating expenses for the subject in 1998
of $7.70 per square foot, very close to what management has projected. For
comparison Spokane Valley Mall is projecting CAM and tax reimbursement charges
at $10 per square foot.
For 1998 tenant CAM charges are $8.35 per square foot, with taxes
estimated at an additional $1.92 per square foot. This totals $10.27 per square
foot. The 1998 budget estimates an average reimbursement level of $8.06 per
square foot of mall GLA.
Based on the subject's history, the 1998 budget, the expense budget of
the nearest competitor, and our experience with other regional shopping malls,
operating expenses at the subject property appear to be reasonable, operating
at levels that are consistent with the market. Real estate taxes may be raised
slightly based upon a recorded sale price that is higher than the current
assessment. However, this increase will likely be 15 percent or less.
CONCESSIONS
Mall developers and owners have a number of methods to induce tenants
to locate at their properties. Included among these concession packages are
free rent, tenant build-out costs, and cash allowances. Concessions are
typically dependent upon local market practice and/or the strength of the
particular property or mall owner/developer.
FREE RENT
Free rent is an inducement offered by developers to entice a tenant to
locate in their project over a competitor's. This marketing tool has become
popular in the leasing of office space, particularly in view of the
over-building which has occurred in many markets. As a rule, most major retail
developers have been successful in negotiating leases without including free
rent. Our experience with regional malls shows that free rent is generally
limited to new projects in marginal locations without strong anchor tenants
that are having trouble leasing, as well as older centers that are losing
tenants to new malls in their trade area.
Management reports that free rent has been a relative non-issue with
regards to their leasing efforts at Northtown Mall. A review of local market
practice provides support for this in that very few projects have had to offer
free rent. When it has, it has generally been limited to one or two months to
prepare a suite for occupancy. Accordingly, we do not believe that it will be
necessary to offer free rent to retail tenants at the subject.
TENANT IMPROVEMENTS
Much like free rent, tenant improvement allowances have been a relative
non-issue for most projects in the subject's market. A review of recent leasing
indicates that, for the most part, tenants have been willing to provide their
own build-out costs, particularly upon renewal. We are advised that a few of
the larger national tenants have received some form of tenant allowance in
conjunction with their lease, but that it is the exception rather than the
norm. This is not true at some inferior malls where TIs have been necessary
inducements for tenants.
A review of the most recent leasing in the market confirms that a
majority of tenants appear to be willing to take space on a vanilla shell
basis. We are advised, however, that a number of national tenants have received
allowances. Based upon our experience with other malls and projects in the
market, an allowance of anywhere from $7.50 to $20. per square foot
- -------------------------------------------------------------------------------
-39-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
of mall shop GLA appears reasonable. For the higher-end centers it is not
uncommon to see higher levels of TI allowances.
Based upon our analysis of the market, we believe that the subject
center would need to offer an allowance of approximately $10 per square foot
for new tenants, on average, to remain competitive with other centers in the
market. Upon lease expiration, however, a cosmetic remodel may only be needed
as opposed to a complete renovation or reconfiguration of the space.
Furthermore, it is not uncommon for tenants to bear the cost of remodeling
space at their own expense. Also, many existing materials can typically be
recycled.
LEASING COMMISSIONS
A typical structure for leasing commissions is $3 to $4 per square foot
for new tenants and $1 to $2 per square foot for renewal tenants. However,
leasing commissions can also typically be included in the overall management
fee which typically ranges from 3 to 4 percent of minimum and percentage rent,
plus recoveries.
ABSORPTION/LEASE-UP
As of this writing, the subject property has significant vacant space.
Our review of a rent roll dated March 1998 indicates a vacancy of 112,518
square feet, or 28 percent of the mall shop space. The onsite manager also
indicated a vacancy rate of 29 percent during our inspection. However, we are
aware that at least some of this space has been leased. In addition, we
discussed the acquisition of the subject with Mr. Paul Mendenhall of JP Realty.
Mr. Mendenhall indicated that much of the vacant space is leased temporarily
while the mall is reconfigured to handle the new theatre, restaurants and
Barnes & Noble. Mr. Mendenhall indicated a mall shop occupancy of 88 percent,
significantly higher than the 72 percent shown on the rent roll. We believe the
addition of the theatre, restaurants, and Barnes & Noble will expand visitation
and market penetration of the subject. However, we do not believe it will
entirely solve the problem of absorption of subject space. We believe
stabilized occupancy will be achieved when the mall space is approximately 85
percent occupied, and this only after completion of the entertainment addition.
There will be some spaces that may never lease due to exposure and
accessibility problems in the space design. However, once the entertainment
addition is completed we believe the center can be leased to stabilized
occupancy within approximately 24 to 36 months.
RENT GROWTH RATES
According to surveys by both Cushman & Wakefield and Peter F. Korpacz &
Associates, major investors in the acquisition of regional malls are utilizing
growth rates of 0 to 4 percent in their analysis, with about 3 percent being
most typical. In the near-term, the subject might show less than stabilized
rent growth as space leases up. Over the long-term, however, we believe a more
stabilized growth rate of 3.0 to 3.5 percent is reasonable.
- -------------------------------------------------------------------------------
-40-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
RELEASING ASSUMPTION
The typical lease term for new in-line retail leases in centers such as
the subject generally ranges from 5 to 12 years. Market practice dictates that
it is not uncommon to get rent bumps throughout the lease terms either in the
form of fixed dollar amounts or a percentage increase based upon changes in
some index, usually the Consumer Price Index (CPI). Often the CPI clause will
carry a minimum annual increase and be capped at a higher maximum amount.
For new leases in the regional malls, 10-year terms are most typical.
Essentially, the developer will deliver a "vanilla" suite with mechanical
services roughed in and minimal interior finish. This allows the retailer to
finish the suite in accordance with their individual specifications. Because of
the up-front costs incurred by the tenants, they require a 10-year lease term
to adequately amortize these costs. In certain instances, the developer will
offer some contribution to the cost of finishing out a space over and above a
standard allowance.
TENANT RENEWAL PROBABILITY
Upon lease expiration we estimate a 65 to 70 percent probability of
renewal for the subject. This is based primarily on our experience with
regional malls on a national basis, and our feeling the subject will experience
higher than typical turnover over the next several years as the market settles
out after the addition of Spokane Valley Mall to the trade area. Additionally,
while River Park Square will not likely be directly competitive with the
subject, the inevitable dilution of spending power will have an impact on some
of the subject retailers.
OVERAGE RENT
In addition to minimum base rent, most tenants at the subject property
contract to pay a percentage of their gross annual sales over a pre-established
base amount as overage rent. Most leases will have a natural breakpoint
although a number will likely have stipulated breakpoints. The average overage
percentage for small space retail tenants is in a range of 5 to 6 percent, with
food and kiosk tenants generally at 8 to 10 percent. Anchor tenants typically
have the lowest percentage clauses with ranges of 1.5 to 3 percent being
common. Based upon our experience and analysis of the subject, we believe 6
percent of gross sales over a natural breakpoint is a market-oriented level for
mall shop tenants.
- -------------------------------------------------------------------------------
-41-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
VACANCY AND COLLECTION LOSS
The investor of an income producing property is primarily interested in
the cash revenues that an income-producing property is likely to produce
annually over a specified period of time rather than what it could produce if
it were always 100.0 percent occupied with all tenants paying rent in full and
on time. It is normally a prudent practice to expect some income loss, either
in the form of actual vacancy or in the form of turnover, non-payment or slow
payment by tenants. For the subject property, we believe vacancy and credit
loss should be considered under three categories: 1) unforeseen collection loss
and vacancy; 2) the downtime experienced between tenants as leases rollover;
and 3) the potential for permanent structural vacancy. Overall we believe that
a global vacancy and credit loss provision based upon 7 to 8 percent of
effective gross revenues would be reasonable for the subject. This figure
includes vacancy and credit loss from all of the above categories.
INVESTMENT MARKET FOR REGIONAL MALLS/COMPARABLE SALES
MARKET OVERVIEW
The typical purchaser of properties of the subject's caliber includes
both foreign and domestic insurance companies, large retail developers, pension
funds, and real estate investment trusts (REITs). The large capital
requirements necessary to participate in this market and the expertise demanded
to successfully operate an investment of this type, both limit the number of
active participants and, at the same time, expand the geographic boundaries of
the marketplace to include the international arena. Due to the relatively small
number of market participants and the moderate amount of quality product
available in the current marketplace, strong demand exists for the nation's
quality retail developments.
Most institutional grade retail properties are existing, seasoned
centers with good inflation protection. These centers offer stability in income
and are strongly positioned to the extent that they are formidable barriers to
new competition. They tend to be characterized as having three to five
department store anchors, most of which are dominant in the market. Mall shop
sales are at least $300 per square foot and the trade area offers good growth
potential in terms of population and income levels. Equally important are
centers which offer good upside potential after face-lifting, renovations, or
expansion. With new construction down substantially, owners have accelerated
their renovation and remerchandising programs. Little competition from
over-building is likely in most mature markets within which these centers are
located. Environmental concerns and "no-growth" mentalities in communities
continue to be serious impediments to new retail developments.
Over the past 24+/- months, we have seen real estate investment return
to favor as an important part of many institutional investors' diversified
portfolios. Banks are aggressively competing for business, trying to regain
market share lost to Wall Street, while the more secure life insurance
companies are also reentering the market. The re-emergence of real estate
investment trusts (REITs) has helped to provide liquidity within the real
estate market, pushing demand for well-tenanted, quality property, particularly
regional malls.
Currently, REITs are one of the most active segments of the industry
and are particularly attractive to institutional investors due to their
liquidity. However, overbuilding in the retail industry has resulted in the
highest GLA per capita ever (19 square feet per person). As a consequence,
institutional investors are more selective than ever with their underwriting
criteria. Many investors are even shunning further retail investment at this
time, content that their
- -------------------------------------------------------------------------------
-42-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
portfolios have a sufficient weighting in this segment.
The market for dominant Class A institutional quality malls is tight,
as characterized by the limited amount of good quality product available. It is
the overwhelming consensus that Class A property would trade in the 7.0 to 8.5
percent capitalization rate range, with rates below 7.5 percent likely limited
to the top 15 to 20 malls with sales at least $400 per square foot. Conversely,
there are many second tier and lower quality malls offered on the market at
this time. With limited demand from a much thinner market, cap rates for this
class of malls are felt to be in the much broader 9.5 to 14.0 percent range.
Pessimism about the long-term viability of many of these lower quality malls
has been fueled by the recent turmoil in the retail industry.
To better understand where investors stand in today's marketplace, we
have surveyed active participants in the retail investment market. Based upon
our survey, the following points summarize some of the more important "hot
buttons" concerning investors:
1. OCCUPANCY COSTS - This "health ratio" measure is of fundamental
concern today. The typical range for total occupancy
cost-to-sales ratios falls between 10 and 15 percent. With
operating expenses growing faster than sales in many malls, this
issue has become even more important. As a general rule of
thumb, malls with sales under $250 per square foot generally
support ratios of 10 to 12 percent; $250 to $300 per square foot
support 12 to 13.5 percent; and over $300 per square foot
support 13.5 to 15 percent. Experience and research show that
most tenants will resist total occupancy costs that exceed 15 to
18 percent of sales. However, ratios of upwards to 20 percent
are not uncommon for some higher margin tenants. This appears to
be by far the most important issue to an investor today.
Investors are looking for long term growth in cash flow and want
to realize this growth through real rent increases. High
occupancy costs limit the amount of upside through lease
rollovers.
2. MARKET DOMINANCE - The mall should truly be the dominant mall in
the market, affording it a strong barrier to entry for new
competition. Some respondents feel this is more important than
the size of the trade area itself.
3. STRONG ANCHOR ALIGNMENT - Having at least three department
stores (four are ideal), two of which are dominant in that
market. The importance of the traditional department store as an
anchor tenant has returned to favor after several years of weak
performance and confusion as to the direction of the industry.
As a general rule, most institutional investors would not be
attracted to a two-anchor mall.
4. ENTERTAINMENT - Entertainment has become a critical element at
larger centers as it is designed to increase customer traffic
and extend customer staying time. This loosely defined term
covers a myriad of concepts available ranging from
mini-amusement parks, to multiplex theater and restaurant
themes, to interactive virtual reality applications. The
capacity of regional/ super-regional centers to provide a
balanced entertainment experience well serve to distinguish
these properties from less distinctive formats such as power and
smaller outlet centers.
- -------------------------------------------------------------------------------
-43-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
5. DENSE MARKETPLACE - Several of the institutional investors favor
markets of 300,000 to 500,000 people or greater within a five to
seven-mile radius. Population growth in the trade area is also
very important. One advisor likes to see growth 50 percent
better than the U.S. average. Another investor cited that they
will look at trade areas of 200,000+/- but that if there is no
population growth forecasted in the market, a 50+/- basis point
adjustment to the cap rate at the minimum is warranted.
6. INCOME LEVELS - Household incomes of $50,000+, which tends to be
limited in many cases to top 50 MSA locations. Real growth with
spreads of 200 to 300 basis points over inflation are ideal.
7. GOOD ACCESS - Interstate access with good visibility and a
location within or proximate to the growth path of the
community.
8. TENANT MIX - A complimentary tenant mix is important. Mall shop
ratios of 35+/- percent of total GLA are considered average with
75 to 80 percent allocated to national tenants. Mall shop sales
of at least $250 per square foot with a demonstrated positive
trend in sales is also considered to be important.
9. PHYSICAL CONDITION - Malls that have good sight lines, an
updated interior appearance and a physical plant in good shape
are looked upon more favorably. While several developers are
interested in turn-around situations, the risk associated with
large capital infusions can add at least 200 to 300 basis points
onto a capitalization rate.
10. ENVIRONMENTAL ISSUES - The impact of environmental problems
cannot be understated. There are several investors who won't
even look at a deal if there are any potential environmental
issues no matter how seemingly insignificant.
11. OPERATING COVENANTS - Some buyers indicated that they would not
be interested in buying a mall if the anchor store operating
covenants were to expire over the initial holding period. Others
weigh each situation on its own merit. If it is a dominant
center with little likelihood of someone coming into the market
with a new mall, they are not as concerned about the prospects
of loosing a department store. If there is a chance of loosing
an anchor, the cost of keeping them must be weighed against the
benefit. In many of their malls they are finding that
traditional department stores are not always the optimum tenant
but that a category killer or other big box use would be a more
logical choice.
In the following section we will discuss trends which have become
apparent over the past several years involving sales of regional malls.
REGIONAL MALL PROPERTY SALES
Evidence has shown that mall property sales which include anchor stores
have lowered the square foot unit prices for some comparables, and have
affected investor perceptions. In our discussions with major shopping center
owners and investors, we learned that capitalization rates and underwriting
criteria have become more sensitive to the contemporary issues affecting
department store anchors.
- -------------------------------------------------------------------------------
-44-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
Traditionally, department stores have been an integral component of a
successful shopping center and, therefore, of similar investment quality if
they were performing satisfactorily.
During the 1980s a number of acquisitions, hostile take-overs and
restructurings occurred in the department store industry which changed the
playing field forever. Weighted down by intolerable debt, combined with a
slumping economy and a shift in shopping patterns, the end of the decade was
marked by a number of bankruptcy filings unsurpassed in the industry's history.
Evidence of further weakening continued into the early 1990s with filings by
such major firms as Carter Hawley Hale, P.A. Bergner & Company, and Macy's. In
early 1994, Woodward & Lothrop announced their bankruptcy involving two
department store divisions that dominate the Philadelphia and Washington D.C.
markets. Most of the stores have since been acquired by the May Department
Stores Company, effectively ending the existence of the 134 year old Wanamaker
name, the nation's oldest department store company. Consolidation during the
mid to latter part of the decade has continued, albeit at a slower pace.
One important trend, however, shows that department stores have been
reporting a return to profitability resulting from increased operating
economies and higher sales volumes. Sears, once marked by many for extinction,
has more recently won the praise of analysts. Federated Department Stores has
also been acclaimed as a text book example on how to successfully emerge from
bankruptcy. They have merged with Macy's and more recently acquired the
Broadway chain to form one of the nation's largest department store companies.
The trend of continued consolidation and vulnerability of the regional chains
continues into 1997.
With all this in mind, investors are looking more closely at the
strength of the anchors when evaluating an acquisition. Most of our survey
respondents were of the opinion that they were indifferent to acquiring a
center that included the anchors versus stores that were independently owned if
they were good performers. However, where an acquisition includes anchor
stores, the resulting cash flow is typically segregated with the income
attributed to anchors (base plus percentage rent) analyzed at a higher cap rate
then that produced by the mall shops.
However, more recent data suggests that investors are becoming more
troubled by the creditworthiness of the mall shops. With an increase in
bankruptcies, store closures and consolidations, we see investors looking more
closely at the strength and vulnerabilities of the in-line shops. As a result,
there has been a marked trend of increasing capitalization rates.
Cushman & Wakefield has extensively tracked regional mall transaction
activity for several years. Summary data sheets for the more recent period
(1995 to 1998) are displayed on the following pages. Summary information for
prior years (1991 to 1994) are maintained in our files. These sales are
inclusive of good quality Class A or B+/- properties that are dominant in their
market. Also included are weaker properties in second tier cities that have a
narrower investment appeal. As such, the mall sales presented in this analysis
show a wide variety of prices on a per unit basis, ranging from $59 per square
foot up to $686 per square foot of total GLA purchased. When expressed on the
basis of mall shop GLA acquired, the range is more broadly seen to be $93 to
$686 per square foot. Alternatively, the overall capitalization rates that can
be extracted from each transaction range from 5.6 percent to rates in excess of
11 percent.
One obvious explanation for the wide unit variation is the inclusion
(or exclusion) of
- -------------------------------------------------------------------------------
-45-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
anchor store square footage which has the tendency to distort unit prices for
some comparables. Other sales include only mall shop area where small space
tenants have higher rents and higher retail sales per square foot. A shopping
center sale without anchors, therefore, gains all the benefits of anchor/small
space synergy without the purchase of the anchor square footage. This drives up
unit prices to over $250 per square foot, with most sales over $300 per square
foot of salable area. A brief discussion of historical trends in mall
transactions follows:
o Cushman & Wakefield has researched 19 mall transactions for
1995. With the exception of possibly Natick Mall and Smith Haven
Mall, by and large the quality of malls sold are lower than what
has been shown for prior years. For example, the average
transaction price has been slipping. In 1993, the peak year, the
average deal was nearly $133.8 million. In 1995, it is shown to
be $88.6 million which is even skewed upward by Natick and Smith
Haven Malls which had a combined price of $486.0 million. The
average price per square foot of total GLA sold is calculated to
be $193 per square foot. The range in values of mall GLA sold
are $93 to $686 with an average of $285 per square foot. The
upper end of the range is formed by Queens Center with mall shop
sales of nearly $700 per square foot. Characteristics of these
lesser quality malls would be higher initial capitalization
rates. The range for these transactions is 7.25 to 11.10 percent
with a mean of 9.13 percent. Most market participants indicated
that continued turmoil in the retail industry will force cap
rates to move higher.
o 1996 was an active year in terms of transactions. REIT's were
far and away the most active buyers. We believe this increase in
activity is a result of a combination of dynamics. The liquidity
of REIT's as well as the availability of capital has made
acquisitions much easier. In addition, sellers have become much
more realistic in their pricing; recognizing that the long term
viability of a regional mall requires large infusions of
capital. The 29 transactions we have tracked range in size from
approximately $22.2 million to $451.0 million. The malls sold
also run the gamut of quality ranging from several secondary
properties in small markets to such higher profile properties as
Old Orchard Shopping Center in Chicago and South Park Mall in
Charlotte. Sale prices per SF of mall shop GLA range from $119
to $534 with a mean of $242. REIT's primary focus on initial
return with their underwriting centered on in place income. As
such, capitalization rates ranged from 7.0 percent to 12.12
percent with a mean of 9.44 percent.
o 1997 has been the most active year in recent times in terms of
transactions. Like 1996, REIT's have far and away been the most
active buyers. The average transaction price to date was $83.4
million, which is less than average for 1996 ($98.1 million).
The average price per square foot of total GLA sold is
calculated to be $139 per square foot. The range in values of
mall GLA sold are $21 to $594. The upper end of the range is
formed by the Dadeland Mall with mall shop sales of nearly $649
per square foot. The range of capitalization rates for these
transactions is 7.34 to 12.77 percent with a mean of 9.65
percent.
- -------------------------------------------------------------------------------
-46-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
For 1998, we have identified 16 transactions. Similar to
previous years, REIT's have far and away been the most active
buyers. The average transaction price to date is $84.0 million,
which is slightly more than average for 1997 ($83.4 million).
The average price per square foot of total GLA sold is
calculated to be $136 per square foot. The range in values of
mall GLA sold are $49 to $318. The range of capitalization rates
for these transactions is 7.40 to 12.01 percent with a mean of
9.43 percent. The upper end of the range was exhibited by the
sale of the Super Mall of the Great Northwest, which was 75
percent occupied at time of sale.
- -------------------------------------------------------------------------------
-47-
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
REGIONAL MALL SALES 1995
1995 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
====================================================================================================================
SALE SALE YEAR TOTAL SOLD SHOP SHOP
NO. PROPERTY/LOCATION DATE BUILT SALE PRICE GLA GLA GLA RATIO
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
95-1 QUEENS CENTER Dec-95 1973/ $108,000,000 625,659 157,516 157,516 25.2%
Elmhurst, NY 90/95
- --------------------------------------------------------------------------------------------------------------------
95-2 NATICK MALL Dec-95 1994 $265,000,000 1,160,733 646,733 436,733 37.6%
Natick, MA (redevel.)
- --------------------------------------------------------------------------------------------------------------------
95-3 RIDGEDALE CENTER Dec-95 1974/ $114,500,000 1,040,285 334,937 334,937 32.2%
Minnetonka, MN 82/93
- --------------------------------------------------------------------------------------------------------------------
95-4 SOUTHLAND MALL Dec-95 1970/ $ 82,500,000 902,000 318,606 318,606 35.3%
Taylor, MI 88/92
- --------------------------------------------------------------------------------------------------------------------
95-5 SMITH HAVEN MALL Dec-95 1969/ $221,000,000 1,351,913 813,786 505,626 37.4%
Lake Grove, NY 86
- --------------------------------------------------------------------------------------------------------------------
95-6 CAPITOLA MALL Dec-95 1977/ $ 52,500,000 577,396 577,396 197,396 34.2%
(1) Capitola, CA 88
- --------------------------------------------------------------------------------------------------------------------
95-7 EASTVIEW MALL Oct-95 1971/ $126,850,000 1,309,488 534,458 534,458 40.8%
(2) Victor, NY 95
- --------------------------------------------------------------------------------------------------------------------
95-8 CENTRE AT SALISBURY Aug-95 1990 $ 78,000,000 884,825 744,825 278,915 31.5%
Salisbury, MD
- --------------------------------------------------------------------------------------------------------------------
95-9 COLONIAL PARK MALL Jul-95 1960/ $ 46,500,000 736,177 380,944 242,766 33.0%
Harrisburg, PA 90
- --------------------------------------------------------------------------------------------------------------------
95-10 PIEDMONT MALL Jul-95 1983/ $ 39,000,000 534,135 409,135 188,049 35.2%
Danville, VA 84
- --------------------------------------------------------------------------------------------------------------------
95-11 RIVER OAKS CENTER Jul-95 1978/ $ 26,200,000 574,657 493,791 219,099 38.1%
Decatur, AL 89
- --------------------------------------------------------------------------------------------------------------------
95-12 COLUMBIA MALL Jul-95 1988 $ 27,650,000 351,364 351,364 128,024 36.4%
Bloomsberg, PA
- --------------------------------------------------------------------------------------------------------------------
95-13 HOT SPRINGS MALL Jun-95 1982 $ 22,775,000 389,914 318,033 156,000 40.0%
Hog Springs, AR
- --------------------------------------------------------------------------------------------------------------------
95-14 WESTGATE MALL May-95 1960/ $ 43,000,000 649,185 448,268 253,993 39.1%
San Jose, CA 89
- --------------------------------------------------------------------------------------------------------------------
95-15 SILVER CITY GALLERIA Apr-95 1992 $159,106,000 1,005,595 749,595 349,107 34.7%
East Taunton, MA
- --------------------------------------------------------------------------------------------------------------------
95-16 WESTGATE MALL Apr-95 1975 $ 25,300,000 768,000 449,974 272,630 35.5%
Spartanburg, SC
- --------------------------------------------------------------------------------------------------------------------
95-17 HANOVER MALL Jan-95 1971/ $ 38,000,000 649,130 649,130 298,531 46.0%
Hanover, MA 93
- --------------------------------------------------------------------------------------------------------------------
95-18 GREENBRIER MALL Jan-95 1981 $ 84,700,000 774,201 594,201 318,595 41.2%
Chesapeake, VA
- --------------------------------------------------------------------------------------------------------------------
95-19 GALLERIA AT TYLER Jan-95 1970/91 $123,750,000 1,044,536 431,640 411,640 39.4%
(3) Riverside, CA
====================================================================================================================
Survey Low: $ 22,775,000 351,364 157,516 128,024 25.2%
Survey High: $265,000,000 1,351,913 813,786 534,458 46.0%
- --------------------------------------------------------------------------------------------------------------------
Survey Mean: $ 88,649,000 806,800 494,965 294,875 36.5%
====================================================================================================================
<CAPTION>
===============================================================================================================================
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------- ------------------------
SALE OCCU- SHOP GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. PANCY SALES/SF NOI NOI/SF OAR OAR IRR PURCHASED GLA MULTIPLE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
95-1 99.0% $686 $10,487,000 $ 66,58 9.71% -- -- $686 $686 1.00
- -------------------------------------------------------------------------------------------------------------------------------
95-2 99.0% $416 $21,311,000 $ 32.95 8.04% 8.00% 10.75% $410 $607 1.46
- -------------------------------------------------------------------------------------------------------------------------------
95-3 97.0% $339 $ 8,936,100 $ 26.68 7.80% -- 11.00% $342 $342 1.01
- -------------------------------------------------------------------------------------------------------------------------------
95-4 93.0% $261 $ 7,143,200 $ 22.42 8.66% -- 11.75% $259 $259 0.99
- -------------------------------------------------------------------------------------------------------------------------------
95-5 93.0% $425 $17,127,500 $ 21.05 7.75% 8.25% 11.10% $272 $437 1.03
- -------------------------------------------------------------------------------------------------------------------------------
95-6 92.0% $262 $ 4,987,500 $ 8.64 9.50% -- -- $ 91 $266 1.02
(1)
- -------------------------------------------------------------------------------------------------------------------------------
95-7 88.0% $290 $ 9,200,000 $ 17.21 7.25% -- 12.00% $237 $237 0.82
(2)
- -------------------------------------------------------------------------------------------------------------------------------
95-8 89.0% $257 $ 7,020,000 $ 9.43 9.00% -- -- $105 $280 1.09
- -------------------------------------------------------------------------------------------------------------------------------
95-9 96.0% $275 $ 4,417,500 $ 11.60 9.50% -- -- $122 $192 0.70
- -------------------------------------------------------------------------------------------------------------------------------
95-10 -- $250 $ 3,600,000 $ 8.80 9.23% -- -- $ 95 $207 0.83
- -------------------------------------------------------------------------------------------------------------------------------
95-11 -- $200 $ 2,908,200 $ 5.89 11.10% -- -- $ 53 $120 0.60
- -------------------------------------------------------------------------------------------------------------------------------
95-12 96.0% $165 $ 2,958,500 $ 8.42 10.70% -- -- $ 79 $216 1.31
- -------------------------------------------------------------------------------------------------------------------------------
95-13 83.0% $240 $ 2,277,500 $ 7.16 10.00% -- -- $ 72 $146 0.61
- -------------------------------------------------------------------------------------------------------------------------------
95-14 77.9% $191 $ 4,096,457 $ 9.14 9.53% -- -- $ 96 $169 0.89
- -------------------------------------------------------------------------------------------------------------------------------
95-15 96.0% $290 $13,219,000 $ 17.63 8.31% 8.00% 11.00% $212 $456 1.57
- -------------------------------------------------------------------------------------------------------------------------------
95-16 85.0% $240 $ 2,403,500 $ 5.34 9.50% -- -- $ 56 $ 93 0.39
- -------------------------------------------------------------------------------------------------------------------------------
95-17 90.0% $204 $ 3,811,400 $ 5.87 10.03% -- -- $ 59 $127 0.62
- -------------------------------------------------------------------------------------------------------------------------------
95-18 96.0% $250 $ 6,600,000 $ 11.11 7.79% 8.00% 11.50% $143 $266 1.06
- -------------------------------------------------------------------------------------------------------------------------------
95-19 86.0% $244 $ 9,600,000 $ 22.24 7.76% 8.00% 10.50% $287 $301 1.23
(3)
===============================================================================================================================
77.9% $165 $ 2,277,500 $ 5.34 7.25% 8.00% 10.50% $ 53 $ 93 0.39
99.0% $686 $21,311,000 $ 66.58 11.10% 8.25% 12.00% $686 $686 1.57
- -------------------------------------------------------------------------------------------------------------------------------
91.5% $289 $ 7,479,177 $ 16.74 9.13% 8.05% 11.20% $193 $284 0.96
===============================================================================================================================
- --------------
(1) Cash equivalent price.
(2) Includes 62,770 square foot strip center.
(3) Net of allocation for excess land. Sale includes cinema.
===============================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================
REGIONAL MALL SALES 1996
1996 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
=================================================================================================
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96-1 OLD ORCHARD SHOPPING CENTER Dec-96 1956/ Zell Merrill Lynch RE Opport./
Skokie, Illinois 95 Urgan Shopping Centers, Inc.
- -------------------------------------------------------------------------------------------------
96-2 PLAZA & COURT AT KING OF PRUSSIA Dec-96 1962/ King of Prussia Associates/
Montgomery, PA 96 Lend Lease
- -------------------------------------------------------------------------------------------------
96-3 WESTSHORE MALL Dec-96 1988 Trizec Hahn Centers/
Holland Township, IL Wilmorite/Ivanhoe Property Mgt.
- -------------------------------------------------------------------------------------------------
96-4 FORT HENRY MALL Dec-96 1976/ Trizec Hahn Centers/
Kingsport, TN 89 Wilmorite/Ivanhoe Property Mgt.
- -------------------------------------------------------------------------------------------------
96-5 CITICORP PACKAGE Dec-96 1994/ Citicorp Real Estate/
1) Buenaventura Mall 95 The Macerich Company
Ventura, California 1970
2) Fresno Fashion Fair
Fresno, California 1966/
3) Huntington Center Mall 93
Huntington, California
- -------------------------------------------------------------------------------------------------
96-6 FORBES/COHEN PACKAGE Dec-96 Forbes/Cohen Properties/
1) Westwood Mall 1972 General Growth Properties
Jackson, Michigan
2) Lakeview Square 1983
Battle Creek, Michigan
3) Lansing Mall 1969/
Lansing, Michigan 88
- -------------------------------------------------------------------------------------------------
96-7 RIMROCK MALL Dec-96 1975 Trizec Hahn Centers/
Billings, MT The Macerich Company
- -------------------------------------------------------------------------------------------------
96-8 VINTAGE FAIRE MALL Dec-96 1977/ Trizec Hahn Centers/
Modesto, CA 97 The Macerich Company
- -------------------------------------------------------------------------------------------------
96-9 LA CUMBRE PLAZA Dec-96 1967/ Trizec Hahn Centers/
(1) Santa Barbara, California 89 Taubman Realty Group, LP
- -------------------------------------------------------------------------------------------------
96-10 VALLEY FAIR MALL Dec-96 1970/ Safco/
West Valley City, Utah 86 Excel Realty Trust, Inc.
- -------------------------------------------------------------------------------------------------
96-11 QUAIL SPRINGS MALL Nov-96 1981 Equitable Life Assurance Society/
(2) Oklahoma City, Oklahoma General Growth Properties, Inc.
- -------------------------------------------------------------------------------------------------
96-12 ST. CLAIR SQUARE Nov-96 1974/ Prudential Property Companies/
(2) Fairview Heights, IL 93 CBL & Associates
- -------------------------------------------------------------------------------------------------
96-13 SOUTH PARK MALL Nov-96 1970 BAC, Inc. (Belk Brothers Prop.)/
Charlotte, North Carolina HRE Charlotte, Inc.
- -------------------------------------------------------------------------------------------------
96-14 SOONER MALL Nov-96 1976/ Equitable Life Assurance Society/
Norman, Oklahoma 89 General Growth Properties, Inc.
- -------------------------------------------------------------------------------------------------
96-15 PARK MALL Oct-96 1974 Kivel Realty Investments/
Tucson, Arizona General Growth Properties, Inc.
- -------------------------------------------------------------------------------------------------
96-16 VALLEY VIEW CENTER Oct-96 1973/ LaSalle Street Fund/
Dallas, TX 83/96 The Macerich Company
- -------------------------------------------------------------------------------------------------
96-17 THE MALL AT JOHNSON CITY Oct-96 1971/ Johnson City Mall Assoc./
Johnson City, Tennessee 1981 Glimcher Realty Trust
- -------------------------------------------------------------------------------------------------
<CAPTION>
===========================================================================================================================
MALL MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
96-1 $266,000,000 1,800,000 955,752 550,000 30.6% 88.0% $350 $21,546,000 $ 22.54
- ---------------------------------------------------------------------------------------------------------------------------
96-2 $451,000,000 2,606,789 1,187,061 1,024,418 39.3% 99.0% $318 $34,952,000 $ 29.44
- ---------------------------------------------------------------------------------------------------------------------------
96-3 $ 30,159,000 476,140 393,140 143,034 30.0% 97.0% $225 $ 3,250,445 $ 8.27
- ---------------------------------------------------------------------------------------------------------------------------
96-4 $ 22,817,000 516,317 516,317 191,997 37.2% 85.0% $238 $ 2,764,898 $ 5.36
- ---------------------------------------------------------------------------------------------------------------------------
96-5 $125,100,000 2,641,616 964,348 829,938 31.4% -- $260 $13,135,500 $ 13.62
- ---------------------------------------------------------------------------------------------------------------------------
96-6 $134,000,000 1,841,236 1,036,827 699,514 38.0% 85.0% $233 $14,070,000 $ 13.57
- ---------------------------------------------------------------------------------------------------------------------------
96-7 $ 43,900,000 583,112 406,140 267,840 45.9% -- $231 $ 4,346,100 $ 10.70
- ---------------------------------------------------------------------------------------------------------------------------
96-8 $ 74,300,000 1,052,701 611,352 352,352 33.5% -- $263 $ 6,761,300 $ 11.06
- ---------------------------------------------------------------------------------------------------------------------------
96-9 $ 22,225,000 476,360 176,360 176,360 37.0% 90.0% $387 $ 2,667,000 $ 15.12
(1)
- ---------------------------------------------------------------------------------------------------------------------------
96-10 $ 35,000,000 608,000 608,000 265,298 43.6% 85.0% $250 $ 4,000,000 $ 6.58
- ---------------------------------------------------------------------------------------------------------------------------
96-11 $ 47,345,700 1,016,909 329,056 329,056 32.4% 77.1% $215 $ 4,882,760 $ 14.84
(2)
- ---------------------------------------------------------------------------------------------------------------------------
96-12 $ 86,400,000 1,044,781 307,791 307,791 29.5% 93.7% $330 $ 7,733,000 $ 25.12
(2)
- ---------------------------------------------------------------------------------------------------------------------------
96-13 $153,000,000 1,142,345 353,003 353,003 30.9% 98.0% $400 $10,710,000 $ 30.34
- ---------------------------------------------------------------------------------------------------------------------------
96-14 $ 26,775,000 503,891 367,482 198,939 39.5% 80.0% $225 $ 2,948,969 $ 8.02
- ---------------------------------------------------------------------------------------------------------------------------
96-15 $ 49,950,000 909,000 489,000 390,687 43.0% 85.0% $225 $ 4,995,000 $ 10.21
- ---------------------------------------------------------------------------------------------------------------------------
96-16 $ 85,500,000 1,567,000 729,481 496,481 31.7% -- $228 $ 7,994,250 $ 10.96
- ---------------------------------------------------------------------------------------------------------------------------
96-17 $ 42,750,000 557,715 557,715 223,110 40.0% 81.0% $236 $ 4,338,750 $ 7.78
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================================================
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96-1 8.10% -- -- $278 $484 1.38
- ------------------------------------------------------------------------------
96-2 7.75% -- 11.00% $380 $440 1.38
- ------------------------------------------------------------------------------
96-3 10.78% -- -- $ 77 $211 0.94
- ------------------------------------------------------------------------------
96-4 12.12% -- -- $ 44 $119 0.50
- ------------------------------------------------------------------------------
96-5 10.50% -- -- $130 $151 0.58
- ------------------------------------------------------------------------------
96-6 10.50% -- -- $129 $192 0.82
- ------------------------------------------------------------------------------
96-7 9.90% -- -- $108 $164 0.71
- ------------------------------------------------------------------------------
96-8 9.10% -- -- $122 $211 0.80
- ------------------------------------------------------------------------------
96-9 12.00% -- -- $126 $126 0.33
(1)
- ------------------------------------------------------------------------------
96-10 11.43% -- -- $ 58 $132 0.53
- ------------------------------------------------------------------------------
96-11 10.31% -- -- $144 $144 0.67
(2)
- ------------------------------------------------------------------------------
96-12 8.95% -- -- $281 $281 0.85
(2)
- ------------------------------------------------------------------------------
96-13 7.00% -- -- $433 $433 1.08
- ------------------------------------------------------------------------------
96-14 11.01% 11.00% -- $ 73 $135 0.60
- ------------------------------------------------------------------------------
96-15 10.00% -- -- $102 $128 0.57
- ------------------------------------------------------------------------------
96-16 9.35% -- -- $117 $172 0.76
- ------------------------------------------------------------------------------
96-17 10.15% 10.00% 11.50% $ 77 $192 0.81
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================
REGIONAL MALL SALES 1996
1995 TRANSACTION CHART
CUSHMAN & WAKEFIELD, INC.
=============================================================================================
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96-18 BRIARCLIFFE MALL Jul-96 1986/ Briarcliff Mall Ltd. Partnership/
Myrtle Beach, South California 94 Colonial Properties Trust
- ---------------------------------------------------------------------------------------------
96-19 FAIRLANE TOWN CENTER Jul-96 1976 Pacific Telesis Pension Trust/
Dearborn, Michigan Taubman Realty
- ---------------------------------------------------------------------------------------------
96-20 PASEO NUEVO CENTER Jun-96 1990 JMB Realty Corp./
Santa Barbara, California Taubman Realty
- ---------------------------------------------------------------------------------------------
96-21 FASHION SHOW MALL Jun-96 1981/ Howard Hughes Corporation/
Las Vegas, Nevada 93 Rouse Company
- ---------------------------------------------------------------------------------------------
96-22 CHARLOTTESVILLE FASHION SQ. May-96 1980 Leonard Farber, Inc./
Charlottesville, Virginia Shopping Center Associates
- ---------------------------------------------------------------------------------------------
96-23 GRAND TETON MALL Apr-96 1984/ Equitable/
Idaho Falls, Idaho 90 J.P. Reality Inc.
- ---------------------------------------------------------------------------------------------
96-24 DANBURY FAIR MALL Mar-96 1986/ Danbury Fair Mall Associates/
Danbury, Connecticut 91 Fair Properties Inc.
(Private REIT)
- ---------------------------------------------------------------------------------------------
96-25 CHARLESTOWNE MALL Mar-96 1991/ Charwil Associates/
St. Charles, Illinois 93/95 Fox Properties (Private REIT)
- ---------------------------------------------------------------------------------------------
96-26 FASHION SQUARE SHERMAN OAKS Mar-96 1962/ Prudential Assurance Comp./
Sherman Oaks, California 90 City Freeholds
- ---------------------------------------------------------------------------------------------
96-27 REGENCY SQUARE MALL Feb-96 1967/ N. American Property Unit Tr./
Jacksonville, Florida 93 MEPC PLC
- ---------------------------------------------------------------------------------------------
96-28 VALLEY PLAZA CENTER Feb-96 1967/ N. American Property Unit Tr./
Bakersfield, California 90 MEPC PLC
- ---------------------------------------------------------------------------------------------
96-29 CLEARVIEW MALL Feb-96 1981 Metropolitan Life Insurance/
Butler, Pennsylvania Clearview Mall Associates
=============================================================================================
Survey Low:
Survey High:
- ---------------------------------------------------------------------------------------------
SURVEY MEAN:
=============================================================================================
<CAPTION>
===========================================================================================================================
CAPITALIZA
ATION
RATES
MALL MALL MALL ----------
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP GOING-IN
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF OAR
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
96-18 $ 42,200,000 488,426 460,426 235,544 48.2% 95.0% $225 $ 4,384,580 $ 9.52 10.39%
- ---------------------------------------------------------------------------------------------------------------------------
96-19 $ 91,500,000 1,519,000 629,000 629,000 41.4% 90.0% $275 $ 7,091,250 $11.27 7.75%
- ---------------------------------------------------------------------------------------------------------------------------
96-20 $ 37,000,000 434,837 136,841 136,841 31.5% 90.0% $380 $ 4,070,000 $29.74 11.00%
- ---------------------------------------------------------------------------------------------------------------------------
96-21 $164,400,000 840,000 308,000 308,000 36.7% 93.0% $455 $12,330,000 $40.03 7.50%
- ---------------------------------------------------------------------------------------------------------------------------
96-22 $ 37,250,000 574,953 410,300 193,800 33.7% 95.0% $275 $ 3,445,600 $ 8.40 9.25%
- ---------------------------------------------------------------------------------------------------------------------------
96-23 $ 34,375,000 521,048 521,048 198,958 38.2% 95.7% $234 $ 3,550,000 $ 6.81 10.33%
- ---------------------------------------------------------------------------------------------------------------------------
96-24 $254,000,000 1,270,146 499,868 499,868 39.4% 90.0% $400 $17,780,000 $35.57 7.00%
- ---------------------------------------------------------------------------------------------------------------------------
96-25 $126,344,000 824,900 744,900 315,297 38.2% 85.0% $220 $ 9,500,000 $12.75 7.52%
- ---------------------------------------------------------------------------------------------------------------------------
96-26 $125,000,000 837,147 365,000 365,000 43.6% 90.0% $300 $10,625,000 $29.11 8.50%
- ---------------------------------------------------------------------------------------------------------------------------
96-27 $119,200,000 1,341,631 530,000 530,000 39.5% 96.0% $260 $ 9,178,400 $17.32 7.70%
- ---------------------------------------------------------------------------------------------------------------------------
96-28 $ 91,000,000 1,073,587 381,000 381,000 35.5% 98.0% $250 $ 6,643,000 $17.44 7.30%
- ---------------------------------------------------------------------------------------------------------------------------
96-29 $ 27,000,000 500,454 359,896 198,684 39.7% 94.0% $206 $ 2,881,100 $ 8.01 10.67%
===========================================================================================================================
$ 22,225,000 434,837 136,841 136,841 29.5% 77.1% $206 $ 2,667,000 $ 5.36 7.00%
$451,000,000 2,641,616 1,187,061 1,024,418 48.2% 99.0% $455 $34,952,000 $40.03 12.12%
- ---------------------------------------------------------------------------------------------------------------------------
$ 98,120,369 1,019,657 528,797 372,131 37.2% 90.2% $279 $ 8,364,652 $16.19 9.44%
===========================================================================================================================
<CAPTION>
=================================================================
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------
SALE TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR IRR PURCHASED SHOP GLA MULTIPLE
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
96-18 10.50% 14.00% $ 92 $179 0.80
- -----------------------------------------------------------------
96-19 -- -- $145 $145 0.53
- -----------------------------------------------------------------
96-20 -- -- $270 $270 0.71
- -----------------------------------------------------------------
96-21 -- -- $534 $534 1.17
- -----------------------------------------------------------------
96-22 -- -- $ 91 $192 0.70
- -----------------------------------------------------------------
96-23 -- -- $ 66 $173 0.74
- -----------------------------------------------------------------
96-24 -- 12.00% $508 $508 1.27
- -----------------------------------------------------------------
96-25 -- 12.00% $170 $401 1.82
- -----------------------------------------------------------------
96-26 -- 10.60% $342 $342 1.14
- -----------------------------------------------------------------
96-27 -- -- $225 $225 0.87
- -----------------------------------------------------------------
96-28 -- -- $239 $239 0.96
- -----------------------------------------------------------------
96-29 -- -- $ 75 $136 0.66
=================================================================
10.00% 10.60% $ 44 $119 0.33
11.00% 14.00% $534 $534 1.82
- -----------------------------------------------------------------
10.50% 11.85% $187 $243 0.85
=================================================================
(1) Reflects sale of leasehold estate with 32 years remaining
on ground lease.
(2) Adjusted to reflect 100% interest.
(3) Actual sales price of $44.5 million adjusted to reflect
free rent.
=================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================
REGIONAL MALL SALES 1997
1997 TRANSACTION CHART
Cushman & Wakefield, Inc.
=================================================================================================
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
97-1 THE FALLS SHOPPING CENTER Dec-97 1980- Heitman Retail Properties/
Miami, Florida 96 Taubman Realty Group
- -------------------------------------------------------------------------------------------------
97-2 NORTHWEST PLAZA S.C. Dec-97 1965/ Paramount Group/
St. Ann, Missouri 89 Westfield America, Inc.
- -------------------------------------------------------------------------------------------------
97-3 THE CITADEL Dec-97 1972/ Tri State Joint Venture/
Colorado Springs, Colorado 95 The Macerich Company
- -------------------------------------------------------------------------------------------------
97-4 SALEM MALL Dec-97 1980/ The Rouse Company/
(1) Salem, Oregon 87 JP Realty Inc.
- -------------------------------------------------------------------------------------------------
97-5 FASHION MALL Dec-97 1973/ Ameresco for Shell Pension Fund/
(1) Indianapolis, Indiana 93 Simon DeBartolo Group
- -------------------------------------------------------------------------------------------------
97-6 UNIVERSITY MALL Dec-97 1974/ University Square Partners/
Tampa, Florida 96 Glimcher Realty Trust
- -------------------------------------------------------------------------------------------------
97-7 MOORESTOWN MALL Dec-97 1963/ Heitman/
(5) Moorestown, New Jersey 94 The Rouse Company
- -------------------------------------------------------------------------------------------------
97-8 NORTHWEST MALL Dec-97 1968 The Rouse Company/
(4) Houston, Texas San Mall LLC
- -------------------------------------------------------------------------------------------------
97-9 ALMEDA MALL Dec-97 1968 The Rouse Company/
(4) Houston, Texas San Mall LLC
- -------------------------------------------------------------------------------------------------
97-10 EASTPOINT MALL Dec-97 1956/ Eastpoint Mall LP/
Baltimore, Maryland 91 Shopco Advisory Corp.
- -------------------------------------------------------------------------------------------------
97-11 CALPERS PORTFOLIO Dec-97 Calpers/ERE Yarmouth/
1) Metrocenter Mall 1978 Coyote Holdings
Jackson, Mississippi
2) Lehigh Mall 1973/
Columbus, Mississippi 91/94
3) Greenville Mall 1972/
Greenville, Mississippi 86
- -------------------------------------------------------------------------------------------------
97-12 SHELL PENSION PORTFOLIO Nov-97 Shell Pension Fund Entities/
1) Glynn Place Mall n/a Colonial Properties Trust
Burnswick, Georgia
2} Valdosta Mall n/a
Valdosta, Georgia
3) Lakeshore Mall n/a
Gainesville, Georgia
- -------------------------------------------------------------------------------------------------
97-13 AETNA PORTFOLIO Nov-97 Aetna/
1) Mall of Abilene 1979 Enterprise Asset Management
Abilene, Texas
2) Sunset Mall 1979
San Angelo, Texas
- -------------------------------------------------------------------------------------------------
97-14 VALLEY MALL Nov-97 1974/ Equitable Prime Property Fund/
Hagerstown, Maryland 95 Crown American Realty Trust
- -------------------------------------------------------------------------------------------------
97-15 SHOPPING CTR. ASSOC. PORTFOLIO Nov-97 -- Shop. Ctr. Assoc.-JMB Group Trust/
1) Fort Valley Mall Urban Shopping Centers
Aurora, Illinois
2) Hawthorn Center
Vernon Hills, Illinois
- -------------------------------------------------------------------------------------------------
97-16 VALLEY HILLS MALL Oct-97 1978/ Valley Hills LP/
Hickory, North Carolina 98 General Growth Properties
- -------------------------------------------------------------------------------------------------
97-17 COLONIAL PARK MALL Oct-97 1960/ Catalina Partners LP/
Harrisburg, Pennsylvania 87 Glimcher Realty Trust
- -------------------------------------------------------------------------------------------------
<CAPTION>
=============================================================================================================================
NEXT MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97-1 $156,000,000 825,000 370,000 310,000 37.6% 98.0% $500 $12,090,000 $ 32.68
- -----------------------------------------------------------------------------------------------------------------------------
97-2 $111,000,000 1,403,811 836,500 403,811 28.8% 84.0% $275 $ 11,000,00 $ 13.15
- -----------------------------------------------------------------------------------------------------------------------------
97-3 $108,000,000 1,094,000 396,000 396,000 36.2% 90.0% $300 $ 8,700,000 $ 21.97
- -----------------------------------------------------------------------------------------------------------------------------
97-4 $ 32,500,000 646,500 212,500 212,500 32.9% 97.0% $270 $ 3,168,750 $ 14.91
(1)
- -----------------------------------------------------------------------------------------------------------------------------
97-5 $122,000,000 682,912 682,912 349,222 51.1% 90.0% $360 $10,300,000 $ 15.08
(1)
- -----------------------------------------------------------------------------------------------------------------------------
97-6 $121,000,000 1,302,752 650,491 412,009 31.6% 81.0% $260 $11,495,000 $ 17.67
- -----------------------------------------------------------------------------------------------------------------------------
97-7 $ 78,500,000 970,863 764,863 258,000 28.6% 75.0% $260 $ 7,850,000 $ 10.28
(5)
- -----------------------------------------------------------------------------------------------------------------------------
97-8 $ 19,725,000 800,250 292,075 276,475 34.5% 78.0% $200 $ 2,400,000 $ 8.22
(4)
- -----------------------------------------------------------------------------------------------------------------------------
97-9 $ 19,325,000 808,454 305,979 245,266 30.4% 77.0% $182 $ 2,400,000 $ 7.84
(4)
- -----------------------------------------------------------------------------------------------------------------------------
97-10 $ 81,000,000 862,313 693,344 241,146 28.0% 88.0% $312 $ 8,006,400 $ 11.55
- -----------------------------------------------------------------------------------------------------------------------------
97-11 $ 54,000,000 1,897,185 1,024,507 569,138 30.0% 77.0% $238 $ 6,560,000 $ 6.40
- -----------------------------------------------------------------------------------------------------------------------------
97-12 $ 97,000,000 1,428,401 1,129,120 530,744 37.2% 85.0% $229 $ 9,409,000 $ 8.33
- -----------------------------------------------------------------------------------------------------------------------------
97-13 $ 43,800,000 1,248,573 742,688 442,285 35.4% 85.0% $106 $ 4,599,000 $ 6.19
- -----------------------------------------------------------------------------------------------------------------------------
97-14 $ 31,700,000 684,831 541,431 277,083 41.7% 75.0% $265 $ 3,170,000 $ 5.85
- -----------------------------------------------------------------------------------------------------------------------------
97-15 $265,000,000 2,736,175 1,134,469 1,054,594 38.5% 87.0% $293 $22,000,000 $ 19.35
- -----------------------------------------------------------------------------------------------------------------------------
97-16 $ 34,600,000 618,152 205,856 205,856 33.3% 89.0% $301 $ 3,287,000 $ 15.97
- -----------------------------------------------------------------------------------------------------------------------------
97-17 $ 48,000,000 754,178 386,732 223,735 29.7% 94.0% $278 $ 4,800,000 $ 12.41
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================================================
CAPITALIZATION RATES UNIT RATE COMPARISON
-------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
97-1 7.75% -- -- $422 $503 1.01
- ------------------------------------------------------------------------------
97-2 9.91% -- -- $133 $275 1.00
- ------------------------------------------------------------------------------
97-3 8.06% -- -- $273 $273 0.91
- ------------------------------------------------------------------------------
97-4 9.75% -- -- $153 $153 0.57
(1)
- ------------------------------------------------------------------------------
97-5 8.44% -- -- $179 $349 0.97
(1)
- ------------------------------------------------------------------------------
97-6 9.50% -- -- $186 $294 1.13
- ------------------------------------------------------------------------------
97-7 10.00% -- -- $103 $304 1.17
(5)
- ------------------------------------------------------------------------------
97-8 12.17% -- -- $ 68 $ 71 0.36
(4)
- ------------------------------------------------------------------------------
97-9 12.42% -- -- $ 63 $ 79 0.43
(4)
- ------------------------------------------------------------------------------
97-10 9.88% 10.00% 12.25% $117 $336 1.08
- ------------------------------------------------------------------------------
97-11 12.15% -- -- $ 53 $ 95 0.40
- ------------------------------------------------------------------------------
97-12 9.70% -- -- $ 86 $183 0.80
- ------------------------------------------------------------------------------
97-13 10.50% -- -- $ 59 $ 99 0.93
- ------------------------------------------------------------------------------
97-14 10.00% -- -- $ 59 $114 0.43
- ------------------------------------------------------------------------------
97-15 8.30% 8.50% 11.25% $234 $251 0.86
- ------------------------------------------------------------------------------
97-16 9.50% -- -- $168 $168 0.56
- ------------------------------------------------------------------------------
97-17 10.00% -- -- $124 $215 0.77
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================
REGIONAL MALL SALES 1997
1997 TRANSACTION CHART
Cushman & Wakefield, Inc.
==============================================================
SALE SALE YEAR
NO. PROPERTY/LOCATION DATE BUILT
- --------------------------------------------------------------
<S> <C> <C> <C>
97-18 CROSSROADS OF SAN ANTONIO Oct-97 1981-
San Antonio, Texas 87
- --------------------------------------------------------------
97-19 THE OAKS MALL Sep-97 1978/
Gainesville, Florida 84/95
- --------------------------------------------------------------
97-20 WESTROADS MALL Sep-97 1968/
Omaha, Nebraska 95
- --------------------------------------------------------------
97-21 REGENCY SQUARE Sep-97 1975/
Richmond, Virginia 87
- --------------------------------------------------------------
97-22 SPRINGDALE MALL Sep-97 1960/
Mobile, Alabama 88
- --------------------------------------------------------------
97-23 STONEWOOD CENTER MALL Aug-97 1958/
(1) Downey, California 90
- --------------------------------------------------------------
97-24 SAN FRANCISCO CENTER Aug-97 1988
(1) San Francisco, California
- --------------------------------------------------------------
97-25 DADELAND MALL Aug-97 1962/
(2) Miami, Florida 91
- --------------------------------------------------------------
97-26 VISALIA MALL Jul-97 1963/95
Visalia, California
- --------------------------------------------------------------
97-27 WEST TOWN MALL Jul-97 1972/
(2) Knoxville, Tennessee 96
- --------------------------------------------------------------
97-28 MAZZA GALLERIE Jun-97 1977
Chevy Chase, Maryland
- --------------------------------------------------------------
97-29 DAKOTA SQUARE Jun-97 1980/
(3) Minot, North Dakota 88
- --------------------------------------------------------------
97-30 TRI-COUNTY MALL Jun-97 1960/
(3) Springfield, Cincinnati, Ohio 90
- --------------------------------------------------------------
97-31 SOUTHDALE CENTER Jun-97 1956/
(3) Edina, Minnesota 91
- --------------------------------------------------------------
97-32 TOWN EAST MALL Jun-97 1971/
(2) Dallas, Texas 88
- --------------------------------------------------------------
97-33 EDEN PRAIRIE CENTER Jun-97 1976/
(2) Eden Prairie, Minnesota 89
- --------------------------------------------------------------
97-34 SILVER LAKE MALL Jun-97 1989
Coeur D'Alene, Idaho
- --------------------------------------------------------------
97-35 SOUTHLAKE MALL Jun-97 1976/
Morrow, Georgia 95
- --------------------------------------------------------------
97-36 WHEATON PLAZA May-97 1960/
(2) Wheaton, Maryland 92
- --------------------------------------------------------------
97-37 BROOKWOOD VILLAGE MALL May-97 1973/
Birmingham, Alabama 91
- --------------------------------------------------------------
97-38 TOWNE MALL May-97 1985/
Elizabethtown, Kentucky 90
- --------------------------------------------------------------
97-39 SECURITY SQUARE May-97 1972/
Baltimore, Maryland 86
- --------------------------------------------------------------
<CAPTION>
==================================================================================================================================
MALL MALL MALL
SALE GRANTOR/ TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. GRANTEE SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
97-18 Crossroads Mall 1996 LP/ $ 15,000,000 711,231 711,231 176,109 24.8% 83.0% $137
Red Oak Realty
- ----------------------------------------------------------------------------------------------------------------------------------
97-19 Prudential Insurance/ $116,000,000 909,120 771,392 351,199 38.6% 96.0% $303
General Growth Properties
- ----------------------------------------------------------------------------------------------------------------------------------
97-20 Prudential Insurance/ $ 90,000,000 1,079,246 562,146 382,836 35.5% 94.9% $297
General Growth/Ivanhoe, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
97-21 Prudential Insurance/ $123,900,000 825,891 463,002 239,179 29.0% 99.0% $426
Taubman Realty Group
- ----------------------------------------------------------------------------------------------------------------------------------
97-22 Cigna/ $ 26,050,000 926,386 478,386 190,074 20.5% 96.0% $220
CBL Associates Properties, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
97-23 Hughes Investments/ $ 92,000,000 927,000 927,000 356,253 38.4% 86.0% $259
(1) The MaceRich Company
- ----------------------------------------------------------------------------------------------------------------------------------
97-24 U.S. Power San Francisco, Inc./ $120,730,000 499,930 499,930 187,930 37.6% 96.0% $523
(1) Urban Shopping Centers
- ----------------------------------------------------------------------------------------------------------------------------------
97-25 Equitable Life Assurance/ $268,000,000 1,433,552 451,130 348,067 24.3% 92.0% $649
(2) Simon DeBartolo Group
- ----------------------------------------------------------------------------------------------------------------------------------
97-26 Cigna Investments, Inc./ $ 38,000,000 439,500 439,500 174,000 39.6% 95.0% $235
JP Realty Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
97-27 Jaguar/RREEF USA Fund II/ $140,792,000 1,336,598 764,066 381,707 28.6% 90.0% $350
(2) Simon DeBartolo Group
- ----------------------------------------------------------------------------------------------------------------------------------
97-28 5300 Wisconsin JV (Prudential)/ $ 28,000,000 274,034 274,034 121,081 44.2% -- --
City Center Retail Trust (McCaffery)
- ----------------------------------------------------------------------------------------------------------------------------------
97-29 Equitable Life Prime Property Fund/ $ 51,500,000 693,606 566,722 327,088 47.2% -- $216
(3) Concordia LLC (O'Connor)
- ----------------------------------------------------------------------------------------------------------------------------------
97-30 Equitable Life Prime Property Fund/ $141,300,000 1,340,803 836,062 439,891 32.8% -- $307
(3) Concordia LLC (O'Connor)
- ----------------------------------------------------------------------------------------------------------------------------------
97-31 Equitable Life Prime Property Fund/ $118,000,000 1,240,888 467,104 467,104 37.6% 95.0% $354
(3) Concordia LLC (O'Connor)
- ----------------------------------------------------------------------------------------------------------------------------------
97-32 Atlantic Freeholds II/ $113,000,000 1,236,619 425,574 425,574 34.4% 93.0% $305
(2) General Growth Properties, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
97-33 GGP/Homart, Inc./ $ 19,900,000 864,443 325,843 325,843 37.7% 60.0% $225
(2) General Growth Properties, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
97-34 Silver Lake Mall Ltd/ $ 27,000,000 331,543 331,543 97,165 29.3% 98.0% $225
JP Realty Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
97-35 Southlake Retail Venture/ $ 67,000,000 1,023,847 284,847 284,847 27.8% 88.0% $280
General Growth Properties
- ----------------------------------------------------------------------------------------------------------------------------------
97-36 Gudelsky Family/ $ 51,000,000 1,006,301 827,213 353,020 35.1% -- $332
(2) Westfield America
- ----------------------------------------------------------------------------------------------------------------------------------
97-37 Berkshire Realty Company/ $ 34,500,000 699,628 699,628 362,000 51.7% 92.0% $220
Colonial Properties Trust
- ----------------------------------------------------------------------------------------------------------------------------------
97-38 Heitman Retail Properties/ $ 22,100,000 340,564 340,564 149,692 44.0% 68.0% $223
Towne Mall LLC
- ----------------------------------------------------------------------------------------------------------------------------------
97-39 Security Square Associates/ $ 44,500,000 1,038,033 363,622 266,157 25.6% 78.0% $250
Mountain Development Corp.
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==========================================================================================================
CAPITALIZATION RATES UNIT RATE COMPARISON
---------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
97-18 $ 1,500,000 $ 2.11 10.00% -- -- $ 21 $ 85 0.62
- ----------------------------------------------------------------------------------------------------------
97-19 $ 9,520,720 $ 12.34 8.21% 8.75% 11.75% $150 $330 1.09
- ----------------------------------------------------------------------------------------------------------
97-20 $ 7,798,307 $ 13.87 8.66% 9.25% 12.30% $160 $235 0.79
- ----------------------------------------------------------------------------------------------------------
97-21 $ 9,671,240 $ 20,89 7.81% 8.25% 12.80% $268 $518 1.22
- ----------------------------------------------------------------------------------------------------------
97-22 $ 2,900,000 $ 6.06 11.13% -- -- $ 54 $137 0.62
- ----------------------------------------------------------------------------------------------------------
97-23 $ 8,700,000 $ 9.39 9.46% -- -- $ 99 $258 1.00
(1)
- ----------------------------------------------------------------------------------------------------------
97-24 $ 8,947,952 $ 17.90 7.41% 7.40% -- $241 $642 1.23
(1)
- ----------------------------------------------------------------------------------------------------------
97-25 $19,672,000 $ 43.61 7.34% -- -- $594 $770 1.19
(2)
- ----------------------------------------------------------------------------------------------------------
97-26 $ 3,800,000 $ 8.65 10.00% -- -- $ 86 $218 0.93
- ----------------------------------------------------------------------------------------------------------
97-27 $13,427,160 $ 17.57 9.54% 8.50% 11.00% $184 $369 1.05
(2)
- ----------------------------------------------------------------------------------------------------------
97-28 -- -- -- -- -- $102 $231 --
- ----------------------------------------------------------------------------------------------------------
97-29 $ 4,583,500 $ 8.09 8.90% 9.50% 12.00% $ 91 $157 0.73
(3)
- ----------------------------------------------------------------------------------------------------------
97-30 $12,010,500 $ 14.37 8.50% 9.00% 11.90% $169 $321 1.05
(3)
- ----------------------------------------------------------------------------------------------------------
97-31 $ 9,558,000 $ 20.46 8.10% 8.50% 11.90% $253 $253 0.71
(3)
- ----------------------------------------------------------------------------------------------------------
97-32 $10,000,000 $ 23.50 8.85% -- -- $266 $266 0.87
(2)
- ----------------------------------------------------------------------------------------------------------
97-33 $ 1,800,000 $ 5.52 9.05% -- -- $ 61 $ 61 0.27
(2)
- ----------------------------------------------------------------------------------------------------------
97-34 $ 2,700,000 $ 8.14 10.00% -- -- $ 81 $278 1.24
- ----------------------------------------------------------------------------------------------------------
97-35 $ 6,500,000 $ 22.82 9.70% -- -- $235 $235 0.84
- ----------------------------------------------------------------------------------------------------------
97-36 $ 5,049,000 $ 6.10 9.90% -- -- $ 62 $144 0.44
(2)
- ----------------------------------------------------------------------------------------------------------
97-37 $ 3,460,350 $ 4.95 10.03% -- -- $ 49 $ 95 0.43
- ----------------------------------------------------------------------------------------------------------
97-38 $ 2,400,000 $ 7.05 10.86% -- -- $ 65 $148 0.66
- ----------------------------------------------------------------------------------------------------------
97-39 $ 4,904,898 $ 13.49 11.02% 11.00% -- $122 $167 0.67
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
REGIONAL MALL SALES 1997
1997 TRANSACTION CHART
Cushman & Wakefield, Inc.
==============================================================================================
SALE SALE YEAR GRANTOR/
NO. PROPERTY/LOCATION DATE BUILT GRANTEE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
97-40 CENTURY PLAZA May-97 1975/ Century Plaza Company/
Birmingham, Alabama 95 General Growth Properties
- ----------------------------------------------------------------------------------------------
97-41 SOMERSET MALL May-97 1981 N/A
Somerset, Kentucky N/A
- ----------------------------------------------------------------------------------------------
97-42 PF PROPERTIES PORTFOLIO 4/997 1973/ PF Properties/
1) University Mall 79 University Mall and Parkwood Mall
Chapel Hill, North Carolina Properties, LLC
2) Parkwood Mall and Plaza
Wilson, North Carolina
- ----------------------------------------------------------------------------------------------
97-43 MONTEHIEDRA TOWN CENTER Apr-97 1993/ Big Beaver Rio & Kmart Corp./
Rio Piedras, Puerto Rico 94 Vornado Montehiedra Acquisition
- ----------------------------------------------------------------------------------------------
97-44 MANHATTAN MALL Apr-97 1989 SZS 33 Associates/
New York, New York Andrew Penson
- ----------------------------------------------------------------------------------------------
97-45 DAYTON MALL Mar-97 1969/ Heitman/JMB Advisory/
Dayton, Ohio 84/94 Glimcher Realty Trust
- ----------------------------------------------------------------------------------------------
97-46 SOUTH TOWNE CENTER Mar-97 1986/ Zell Merrill Lynch RE Opp./
Sandy, Utah 97 The Macerich Company
- ----------------------------------------------------------------------------------------------
97-47 MARKETPLACE SHOPPING CENTER Mar-97 1976/ Champaign Venture/
Champaign, Illinois 1988 General Growth Properties
- ----------------------------------------------------------------------------------------------
97-48 TYSONS CORNER CENTER Feb-97 1968/ State of Alaska Pension Fund/
(2) Fairfax ,VA 98 Lsd Fee & Part. Leasehold
- ----------------------------------------------------------------------------------------------
97-49 PUEBLO MALL Feb-97 1976 The Hahn Company/
Pueblo, Colorado Equities Development Corp.
- ----------------------------------------------------------------------------------------------
97-50 SHADY BROOK MALL Jan-97 1980/ Equitable Life Assurance Society/
Columbia, Tennessee 98 GE Investment Corp.
Survey Low:
Survey High:
SURVEY MEAN:
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED BY MALL OWNER:
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR IS OWNED BY MALL OWNER:
- ----------------------------------------------------------------------------------------------
<CAPTION>
===========================================================================================================================
NEXT MALL MALL
SALE TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF NOI NOI/SF
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
97-40 $ 32,000,000 727,309 574,943 237,896 32.7% 68.0% $246 $ 3,500,000 $ 6.09
- ---------------------------------------------------------------------------------------------------------------------------
97-41 $ 3,865,000 215,140 157,286 105,961 49.3% 87.0% -- $ 493,580 $ 3.14
- ---------------------------------------------------------------------------------------------------------------------------
97-42 $ 47,400,000 948,842 948,842 401,134 42.3% 80.0% $250 $ 4,347,000 $ 4.58
- ---------------------------------------------------------------------------------------------------------------------------
97-43 $ 74,400,000 525,452 525,452 200,050 38.1% 99.0% $340 $ 7,621,000 $ 14.50
- ---------------------------------------------------------------------------------------------------------------------------
97-44 $135,000,000 847,602 847,602 195,728 23.1% 80.0% $350 $12,500,000 $ 14.75
- ---------------------------------------------------------------------------------------------------------------------------
97-45 $ 91,000,000 1,329,514 663,375 484,689 36.5% 80.1% $220 $ 8,645,000 $ 13.03
- ---------------------------------------------------------------------------------------------------------------------------
97-46 $ 98,000,000 1,229,054 1,229,054 450,000 36.6% 83.0% $250 $ 8,400,000 $ 6.83
- ---------------------------------------------------------------------------------------------------------------------------
97-47 $ 70,000,000 831,111 831,111 188,302 22.7% 92.0% $275 $ 6,300,000 $ 7.58
- ---------------------------------------------------------------------------------------------------------------------------
97-48 $412,000,000 1,874,101 1,874,101 832,473 44.4% 95.0% $455 $30,500,000 $ 16.27
(2)
- ---------------------------------------------------------------------------------------------------------------------------
97-49 $ 22,250,000 579,730 293,396 196,868 34.0% -- $200 $ 2,619,779 $ 8.93
- ---------------------------------------------------------------------------------------------------------------------------
97-50 $ 11,050,000 282,272 282,272 107,282 38.0% 94.0% $200 $ 1,289,488 $ 4.57
- ---------------------------------------------------------------------------------------------------------------------------
$ 3,865,000 215,140 157,286 97,165 20.5% 60.0% $106 $ 493,580 $ 2.11
- ---------------------------------------------------------------------------------------------------------------------------
$412,000,000 2,736,175 1,874,101 1,054,594 51.7% 99.0% $649 $30,500,000 $ 43.61
- ---------------------------------------------------------------------------------------------------------------------------
$ 83,367,740 946,225 608,149 324,301 34.9% 86.6% $288 $ 7,476,625 $ 12.55
- ---------------------------------------------------------------------------------------------------------------------------
$ 70,428,571 960,636 331,103 331,103 34.3% 87.4% $291 $ 6,144,821 $ 17.88
- ---------------------------------------------------------------------------------------------------------------------------
$ 85,474,116 943,879 653,249 323,194 35.0% 86.7% $286 $ 7,698,592 $ 11.66
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================
CAPITALIZATION RATES UNIT RATE COMPARISON
---------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
97-40 10.94% -- -- $ 56 $135 0.55
- ---------------------------------------------------------------------------------
97-41 12.77% -- 13.43% $ 25 $ 36 --
- ---------------------------------------------------------------------------------
97-42 9.17% 10.50% -- $ 50 $118 0.47
- ---------------------------------------------------------------------------------
97-43 10.24% -- -- $142 $372 1.09
- ---------------------------------------------------------------------------------
97-44 9.26% -- -- $159 $690 1.97
- ---------------------------------------------------------------------------------
97-45 9.50% 9.25 12.00% $137 $188 0.85
- ---------------------------------------------------------------------------------
97-46 8.57% -- -- $ 80 $218 0.87
- ---------------------------------------------------------------------------------
97-47 9.00% -- -- $ 84 $372 1.35
- ---------------------------------------------------------------------------------
97-48 7.40% -- 10.50% $220 $495 1.09
(2)
- ---------------------------------------------------------------------------------
97-49 11.77% -- -- $ 76 $113 0.57
- ---------------------------------------------------------------------------------
97-50 11.67% -- -- $ 39 $103 0.51
- ---------------------------------------------------------------------------------
7.34% 7.40% 10.50% $ 21 $ 36 0.27
- ---------------------------------------------------------------------------------
12.77% 11.00% 13.43% $594 $770 1.97
- ---------------------------------------------------------------------------------
9.65% 9.11% 11.59% $139 $250 0.84
- ---------------------------------------------------------------------------------
9.00% 8.50% 11.90% $201 $201 0.68
- ---------------------------------------------------------------------------------
9.76% 9.16% 11.93% $129 $258 0.87
- ---------------------------------------------------------------------------------
</TABLE>
- -------
(1) Leasehold interest.
(2) Partial interest adjusted to reflect 100% interest.
(3) Based on allocated sale price; part of 3-property transaction.
(4) Based on allocated sale price; part of 2-property transaction.
(5) Based on stabilized net income.
<PAGE>
<TABLE>
<CAPTION>
===============================================================
REGIONAL MALL SALES 1998
1998 TRANSACTION CHART
Cushman & Wakefield, Inc.
===============================================================
SALE SALE YEAR
NO. PROPERTY/LOCATION DATE BUILT
- ---------------------------------------------------------------
<S> <C> <C> <C>
98-1 BURNSVILLE CENTER Feb-98 1977/
Burnsville, Minnesota 89
- ---------------------------------------------------------------
98-2 PHIPPS PLAZA Jan-98 1968/
Atlanta, Georgia 94
- ---------------------------------------------------------------
98-3 ASHEVILLE MALL Jan-98 1975/
Asheville, North Carolina 94
- ---------------------------------------------------------------
98-4 CORDOVA MALL Jan-98 1971/
Pensacola, Florida 87
- ---------------------------------------------------------------
98-5 CRESTWOOD PLAZA Jan-98 1957/
St. Louis, Missouri 97
- ---------------------------------------------------------------
98-6 SUPER MALL OF THE GREAT N.W. (1) Jan-98 1956/
Auburn, Washington 91
- ---------------------------------------------------------------
98-7 STROUD MALL Apr-98 1978/
Stroudsberg, PA 94
- ---------------------------------------------------------------
98-8 SOUTHWEST PLAZA Apr-98 1983/
Litteton, CO 95
- ---------------------------------------------------------------
98-9 JACKSONVILLE MALL May-98 1981
Jacksonville, NC
- ---------------------------------------------------------------
98-10 CROSSROADS MALL May-98 1981/
Mount Hope, WV 97
- ---------------------------------------------------------------
98-11 ORLANDO FASHION SQUARE May-98 1973/
Orlando, FL 93
- ---------------------------------------------------------------
98-12 VILLAGE MALL Jun-98 1975/
(1) Danville, Ill. 85/90
- ---------------------------------------------------------------
98-13 GREENVILLE MALL Jun-98 1978/
GREENVILLE, SC 95
- ---------------------------------------------------------------
98-14 SOUTH PLAINS MALL Jun-98
LUBBOCK, TX
- ---------------------------------------------------------------
98-15 NORTHOWN MALL Jun-98 1972/
Blaine, MN 86
- ---------------------------------------------------------------
98-16 WESTSIDE PAVILLION Jul-98 1985/
West Los Angeles, CA 1991
Survey Low:
Survey High:
SURVEY MEAN:
SURVEY MEAN FOR CENTERS WHERE NO ANCHORS ARE OWNED:
SURVEY MEAN FOR CENTERS WHERE AT LEAST ONE ANCHOR
IS OWNED:
- ---------------------------------------------------------------
<CAPTION>
==================================================================================================================================
MALL MALL MALL
SALE GRANTOR/ TOTAL SOLD SHOP SHOP OCCU- SHOP
NO. GRANTEE SALE PRICE GLA GLA GLA RATIO PANCY SALES/SF
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
98-1 Corporate Property Investors/ $ 81,000,000 1,078,253 1,078,253 417,030 38.7% 84.0% $284
CBL & Associates
- ----------------------------------------------------------------------------------------------------------------------------------
98-2 ERE Yarmouth/ $188,000,000 823,000 823,000 372,457 45.3% N/A N/A
Corporate Property Investors
- ----------------------------------------------------------------------------------------------------------------------------------
98-3 RL Coleman & Co. $ 65,000,000 1,042,000 489,000 440,000 42.2% 98.5% $280
CBL Associates
- ----------------------------------------------------------------------------------------------------------------------------------
98-4 Robert B. Aikens & Associates LLC/ $ 85,000,000 874,000 376,368 376,368 43.1% 91.0% $300
Simon DeBartolo Group
- ----------------------------------------------------------------------------------------------------------------------------------
98-5 Crestwood Plaza S.C. LLC/ $106,400,000 1,021,132 1,021,132 382,214 37.4% 91.0% $300
Westfield America
- ----------------------------------------------------------------------------------------------------------------------------------
98-6 Hapsmith/Rosche Capital Corp./ $103,000,000 905,791 905,791 415,319 45.9% 75.0% $185
Glimcher Properties LP
- ----------------------------------------------------------------------------------------------------------------------------------
98-7 ERE Yarmouth/ $ 38,100,000 427,145 427,145 184,145 43.1% 86.0% $294
CBL & Associates Properties Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
98-8 Southwest Property Venture/ $113,000,000 1,270,110 438,000 438,000 34.5% 83.0% $265
General Growth Properties, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
98-9 Beckley-Jacksonville LP/ $ 38,000,000 384,000 384,000 167,640 43.7% 98.0% $286
Crown American Realty Trust
- ----------------------------------------------------------------------------------------------------------------------------------
98-10 Beckley-Jacksonville LP/ $ 23,000,000 456,000 456,000 182,400 40.0% 76.0% $220
Crown American Realty Trust
- ----------------------------------------------------------------------------------------------------------------------------------
98-11 Fund A Orlando, Inc./ $104,000,000 1,070,000 708,568 362,425 33.9% N/A $329
Colonial Properties Trust
- ----------------------------------------------------------------------------------------------------------------------------------
98-12 Interstate RE Services/ $ 23,200,000 477,577 477,577 126,088 26.4% 72.0% $144
(1) DRA Advisors, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
98-13 Marvest Property Trust/ $ 36,000,000 789,532 602,532 232,025 29.4% 55.0% $219
DRA Advisors, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
98-14 South Plains Mall Assoc., LTD/ $115,700,000 1,107,000 1,107,000 365,215 33.0% 92.0% $300
The Macerich Co.
- ----------------------------------------------------------------------------------------------------------------------------------
98-15 Northtown LLP/ $ 54,000,000 846,248 459,000 287,078 33.9% 70.0% $240
Glimcher Realty Trust
- ----------------------------------------------------------------------------------------------------------------------------------
98-16 Westpal, LLC/ $170,500,000 755,912 535,912 354,349 46.9% 83.4% $373
The MaceRich Company
- ----------------------------------------------------------------------------------------------------------------------------------
$ 23,000,000 384,000 376,368 126,088 26.4% 55.0% $144
- ----------------------------------------------------------------------------------------------------------------------------------
$188,000,000 1,270,110 1,107,000 440,000 46.9% 98.5% $373
- ----------------------------------------------------------------------------------------------------------------------------------
$ 83,993,750 832,981 643,080 318,922 38.6% 82.5% $268
- ----------------------------------------------------------------------------------------------------------------------------------
$ 99,000,000 1,072,055 407,184 407,184 38.8% 87.0% $283
- ----------------------------------------------------------------------------------------------------------------------------------
$ 81,850,000 798,828 676,779 306,313 38.5% 81.7% $266
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=========================================================================================================
CAPITALIZATION RATES UNIT RATE COMPARISON
--------------------- ------------------------
SALE GOING-IN TERMINAL PRICE/GLA PRICE/MALL SALES
NO. NOI NOI/SF OAR OAR IRR PURCHASED SHOP GLA MULTIPLE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
98-1 $ 6,804,000 $ 6.31 8.40% -- -- $ 75 $194 0.68
- ---------------------------------------------------------------------------------------------------------
98-2 $13,912,000 $ 16.90 7.40% -- -- $228 $505 N/A
- ---------------------------------------------------------------------------------------------------------
98-3 $ 5,395,000 $ 11.03 8.30% -- -- $133 $148 0.53
- ---------------------------------------------------------------------------------------------------------
98-4 $ 7,560,000 $ 20.09 9.00% -- -- $226 $226 0.75
- ---------------------------------------------------------------------------------------------------------
98-5 $ 9,800,000 $ 9.60 9.21% -- -- $104 $278 0.93
- ---------------------------------------------------------------------------------------------------------
98-6 $12,370,000 $ 13.66 12.01% -- -- $114 $248 1.34
- ---------------------------------------------------------------------------------------------------------
98-7 $ 3,188,970 $ 7.47 8.37% -- -- $ 89 $207 0.70
- ---------------------------------------------------------------------------------------------------------
98-8 $10,500,000 $ 23.97 9.29% -- -- $258 $258 0.97
- ---------------------------------------------------------------------------------------------------------
98-9 $ 3,572,000 $ 9.30 9.40% -- -- $ 99 $227 0.79
- ---------------------------------------------------------------------------------------------------------
98-10 $ 2,760,000 $ 6.05 12.00% -- -- $ 50 -- --
- ---------------------------------------------------------------------------------------------------------
98-11 $ 9,391,200 $ 13.25 9.03% -- -- $147 $287 0.87
- ---------------------------------------------------------------------------------------------------------
98-12 $ 2,697,500 $ 5.65 11.63% -- -- $ 49 $184 1.28
(1)
- ---------------------------------------------------------------------------------------------------------
98-13 $ 3,558,800 $ 5.91 9.89% -- -- $ 60 $155 0.71
- ---------------------------------------------------------------------------------------------------------
98-14 $10,065,900 $ 9.09 8.70% -- -- $105 $317 1.06
- ---------------------------------------------------------------------------------------------------------
98-15 $ 5,400,000 $ 11.76 10.00% -- -- $118 $188 0.78
- ---------------------------------------------------------------------------------------------------------
98-16 $14,002,000 $ 26.13 8.21% 9.00% 11.00% $318 $481 1.29
- ---------------------------------------------------------------------------------------------------------
$ 2,697,500 $ 5.65 7.40% 9.00% 11.00% $ 49 $148 0.53
- ---------------------------------------------------------------------------------------------------------
$14,002,000 $ 26.13 12.01% 9.00% 11.00% $318 $505 1.34
- ---------------------------------------------------------------------------------------------------------
$ 7,561,086 $ 12.26 9.43% -- -- $136 $260 0.91
- ---------------------------------------------------------------------------------------------------------
$ 9,030,000 $ 22.03 9.15% -- -- $242 $242 0.86
- ---------------------------------------------------------------------------------------------------------
$ 7,351,241 $ 10.87 9.47% -- -- $121 $263 0.91
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
While these unit prices implicitly contain both the physical and
economic factors affecting the real estate, the statistics do not explicitly
convey many of the details surrounding a specific property. Thus, this single
index to the valuation of the subject property has limited direct application.
The price per square foot of mall shop GLA acquired yields one common form of
comparison. However, this can be distorted if anchor and/or other major tenants
generate a significant amount of income. Chart A, following, shows this
relationship along with other selected indices.
<TABLE>
<CAPTION>
===========================================================================================================
CHART A *
SELECTED AVERAGE INDICES
===========================================================================================================
TRANSACTION PRICE/SF OF TOTAL GLA PRICE/SF OF MALL SHOPS MEAN SALES MEAN
YEAR RANGE/MEAN** RANGE/OVERALL MEAN MULTIPLE OAR
===========================================================================================================
<S> <C> <C> <C> <C>
1991 $156 - $556 $203 - $556 1.17 6.44%
$282 $357
-----------------------------------------------------------------------------------------------------------
1992 $136 - $511 $226 - $511 1.07 7.31%
$259 $320
-----------------------------------------------------------------------------------------------------------
1993 $ 73 - $471 $173 - $647 1.15 7.92%
$242 $363
-----------------------------------------------------------------------------------------------------------
1994 $ 83 - $378 $129 - $502 0.96 8.37%
$197 $288
-----------------------------------------------------------------------------------------------------------
1995 $ 53 - $686 $ 93 - $686 0.96 9.13%
$193 $284
-----------------------------------------------------------------------------------------------------------
1996 $ 44 - $534 $119 - $534 0.85 9.44%
$187 $242
-----------------------------------------------------------------------------------------------------------
1997 $ 21 - $594 $ 36 - $770 0.84 9.65%
$139 $250
-----------------------------------------------------------------------------------------------------------
1998 $ 49 - $318 $ 148 - $505 0.91 9.43%
$136 $260
===========================================================================================================
* Includes all transactions for particular year
** Based on total GLA acquired
===========================================================================================================
</TABLE>
The chart above shows that the annual average price per square foot of
total GLA acquired has ranged from $110 to $282 per square foot. A declining
trend has been in evidence as cap rates have risen. As discussed, one of the
factors that may influence the unit rate is whether or not anchor stores are
included in the total GLA that is transferred. Thus, a further refinement can
be made between those malls that have transferred with anchor space and those
that have included only mall GLA. The price per square foot of mall shop GLA
has declined from a high of $357 per square foot in 1991 to $260 per square
foot in 1998.
- -------------------------------------------------------------------------------
-55-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
In order to gain a better perspective into this measure, we can isolate
only those sales that involved a transfer of the mall shop GLA. Chart B,
following, makes this distinction. We have displayed only the more recent
transactions (1996-1998).
<TABLE>
<CAPTION>
=================================================================================================================
CHART B
REGIONAL MALL SALES INVOLVING
MALL SHOP SPACE ONLY
=================================================================================================================
1996 1997 1998
=================================================================================================================
SALE UNIT NOI SALE UNIT NOI PER SALE UNIT NOI PER
NO. RATE PER SF NO. RATE SF NO. RATE SF
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
96- 9 $126 $15.12 97- 3 $273 $21.97 98- 4 $226 $20.09
- -----------------------------------------------------------------------------------------------------------------
96-11 $144 $14.84 97- 4 $153 $14.11 97- 8 $258 $23.97
- -----------------------------------------------------------------------------------------------------------------
96-12 $281 $25.12 97- 16 $168 $15.97
- -----------------------------------------------------------------------------------------------------------------
96-13 $433 $30.34 97- 31 $253 $20.46
- -----------------------------------------------------------------------------------------------------------------
96-19 $145 $11.27 97- 35 $280 $22.82
- -----------------------------------------------------------------------------------------------------------------
96-20 $270 $29.74
- -----------------------------------------------------------------------------------------------------------------
96-21 $534 $40.03
- -----------------------------------------------------------------------------------------------------------------
96-24 $508 $35.57
- -----------------------------------------------------------------------------------------------------------------
96-26 $342 $29.11
- -----------------------------------------------------------------------------------------------------------------
96-27 $225 $17.32
- -----------------------------------------------------------------------------------------------------------------
96-28 $239 $17.44
=================================================================================================================
MEAN $295 $24.17 $225 $19.07 $242 $22.03
=================================================================================================================
</TABLE>
From the above we see that the mean unit rate for sales involving mall
shop GLA only has ranged from approximately $126 to $534 per square foot with
yearly averages of $295, $225, and $242 per square foot, respectively for the
most recent three-year period. We recognized that these averages may be skewed
somewhat by the size of the sample.
Alternately, where anchor store GLA has been included in the sale, the
unit rate is shown to range widely from $25 to $380 per square foot of salable
area, indicating a mean of $123 per square foot in 1996, and only $100 per
square foot in 1997. Chart C, following, depicts this data.
- -------------------------------------------------------------------------------
-56-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=================================================================================================================
CHART C
REGIONAL MALL SALES INVOLVING
MALL SHOPS AND ANCHOR GLA
=================================================================================================================
1996 1997 1998
=================================================================================================================
SALE UNIT NOI SALE UNIT NOI SALE UNIT NOI
NO. RATE PER SF NO. RATE PER SF NO. RATE PER SF
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
96- 1 $278 $22.54 97- 1 $422 $32.68 98- 1 $75 $6.31
- -----------------------------------------------------------------------------------------------------------------
96- 2 $380 $29.44 97- 2 $133 $13.15 98- 2 $228 $16.90
- -----------------------------------------------------------------------------------------------------------------
96- 3 $77 $8.17 97- 5 $179 $15.08 98- 3 $133 $11.03
- -----------------------------------------------------------------------------------------------------------------
96- 4 $44 $5.36 97- 6 $186 $17.67 98- 5 $104 $9.60
- -----------------------------------------------------------------------------------------------------------------
96- 5 $130 $13.62 97- 7 $103 $10.26 98- 6 $114 $13.66
- -----------------------------------------------------------------------------------------------------------------
96- 6 $129 $13.57 97- 8 $68 $8.22 98- 7 $89 $7.47
- -----------------------------------------------------------------------------------------------------------------
96- 7 $108 $10.70 97- 9 $63 $7.84 98- 9 $99 $9.30
- -----------------------------------------------------------------------------------------------------------------
96- 8 $122 $11.60 97-10 $117 $11.55 98-10 $50 $6.05
- -----------------------------------------------------------------------------------------------------------------
96-10 $58 $6.58 97-11 $53 $6.40 98-11 $147 $13.25
- -----------------------------------------------------------------------------------------------------------------
96-14 $73 $8.02 97-12 $86 $8.33 98-12 $49 $5.65
- -----------------------------------------------------------------------------------------------------------------
96-15 $102 $10.21 97-13 $59 $6.19 98-13 $60 $5.91
- -----------------------------------------------------------------------------------------------------------------
96-16 $117 $10.96 97-14 $59 $5.85 98-14 $105 $9.09
- -----------------------------------------------------------------------------------------------------------------
96-17 $77 $7.78 97-15 $234 $19.39 98-15 $118 $11.76
- -----------------------------------------------------------------------------------------------------------------
96-22 $91 $8.40 97-18 $21 $2.11 98-16 $318 $26.13
- -----------------------------------------------------------------------------------------------------------------
96-23 $66 $6.81 97-19 $150 $12.34
- -----------------------------------------------------------------------------------------------------------------
96-25 $170 $12.75 97-20 $160 $13.87
- -----------------------------------------------------------------------------------------------------------------
96-29 $75 $8.01 97-21 $268 $20.89
- -----------------------------------------------------------------------------------------------------------------
97-22 $54 $6.06
- -----------------------------------------------------------------------------------------------------------------
97-23 $99 $9.39
- -----------------------------------------------------------------------------------------------------------------
97-24 $241 $17.90
- -----------------------------------------------------------------------------------------------------------------
97-25 $594 $43.61
- -----------------------------------------------------------------------------------------------------------------
97-26 $86 $8.65
- -----------------------------------------------------------------------------------------------------------------
97-27 $184 $17.57
- -----------------------------------------------------------------------------------------------------------------
97-29 $91 $8.09
- -----------------------------------------------------------------------------------------------------------------
97-30 $169 $14.37
- -----------------------------------------------------------------------------------------------------------------
97-34 $81 $8.14
- -----------------------------------------------------------------------------------------------------------------
97-36 $62 $6.10
- -----------------------------------------------------------------------------------------------------------------
97-37 $49 $4.95
- -----------------------------------------------------------------------------------------------------------------
97-38 $65 $7.05
- -----------------------------------------------------------------------------------------------------------------
97-39 $122 $13.49
- -----------------------------------------------------------------------------------------------------------------
97-40 $56 $6.09
- -----------------------------------------------------------------------------------------------------------------
97-41 $25 $3.14
- -----------------------------------------------------------------------------------------------------------------
97-42 $50 $4.58
- -----------------------------------------------------------------------------------------------------------------
97-43 $142 $14.50
- -----------------------------------------------------------------------------------------------------------------
97-44 $159 $14.75
- -----------------------------------------------------------------------------------------------------------------
97-45 $137 $13.03
- -----------------------------------------------------------------------------------------------------------------
97-46 $80 $6.83
- -----------------------------------------------------------------------------------------------------------------
97-47 $84 $7.58
- -----------------------------------------------------------------------------------------------------------------
97-48 $220 $16.27
- -----------------------------------------------------------------------------------------------------------------
97-49 $76 $8.93
- -----------------------------------------------------------------------------------------------------------------
97-50 $39 $4.57
=================================================================================================================
MEAN $123 $11.44 $130 $11.65 $121 $10.87
=================================================================================================================
</TABLE>
- -------------------------------------------------------------------------------
-57-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
ANALYSIS OF SALES
Within Charts B and C, we have presented a summary of several
transactions involving regional and super-regional-sized retail shopping malls
from which price trends may be identified for the extraction of value
parameters. These transactions have been segregated by year of acquisition so
as to lend additional perspective on our analysis. Comparability in both
physical and economic characteristics is the most important criteria for
analyzing sales in relation to the subject property. However, it is also
important to recognize the fact that regional shopping malls are distinct
entities by virtue of age and design, visibility and accessibility, the market
segmentation created by anchor stores and tenant mix, the size and purchasing
power of the particular trade area, and competency of management. Thus, the
Sales Comparison Approach, when applied to a property such as the subject can,
at best, only outline the parameters in which the typical investor operates.
The majority of these sales transferred either on an all cash (100 percent
equity) basis or its equivalent utilizing market-based financing. Where
necessary, we have adjusted the purchase price to its cash equivalent basis for
the purpose of comparison.
As suggested, sales that include anchors typically have lower square
foot unit prices. In our discussions with major shopping center owners and
investors, we learned that capitalization rates and underwriting criteria have
become more sensitive to the contemporary issues dealing with the department
store anchors. As such, investors are looking more closely than ever at the
strength of the anchors when evaluating an acquisition.
As the reader shall see, we have attempted to make comparisons of the
transactions to the subject primarily along economic lines. For the most part,
the transactions have involved dominant or strong Class A centers in top 50 MSA
locations which generally have solid, expanding trade areas and good income
profiles. Some of the other transactions are in decidedly inferior second tier
locations with limited growth potential and near term vacancy problems. These
sales tend to reflect lower unit rates and higher capitalization rates.
- -------------------------------------------------------------------------------
-58-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
=================================
APPLICATION TO SUBJECT PROPERTY
=================================
We have ranked the subject according to the investor "hot buttons"
mentioned previously. A rating of 1 is poor and 5 is good for each category.
<TABLE>
<CAPTION>
=====================================================================================================================
HOT BUTTON SUBJECT RATING REASON
=====================================================================================================================
<S> <C> <C>
Occupancy Costs 3 Subject 1998 ratio expected to be 12.5 to 13.5 percent.
- ---------------------------------------------------------------------------------------------------------------------
Market Dominance 3 Dominant mall but River Park Square seems likely to
happen.
- ---------------------------------------------------------------------------------------------------------------------
Strong Anchor Alignment 4 Bon Marche, JC Penney and Sears all strong in local
market. Mervyn's and Emporium are average to weak.
- ---------------------------------------------------------------------------------------------------------------------
Entertainment 3 Addition of theatres and restaurants will bring subject
up to modern expectations.
- ---------------------------------------------------------------------------------------------------------------------
Dense Marketplace 3 Locally dense population but a smaller overall market
with lower than average projected growth.
- ---------------------------------------------------------------------------------------------------------------------
Income Level 2 Lower than state and national averages.
- ---------------------------------------------------------------------------------------------------------------------
Good Access 3 Centrally located in trade area, though congested at
peak times.
- ---------------------------------------------------------------------------------------------------------------------
Tenant Mix 3 High mall tenant ratio but good selection in the local
market. Will improve with entertainment addition.
- ---------------------------------------------------------------------------------------------------------------------
Physical Condition 4 Better than average due to 1992 renovation/expansion.
- ---------------------------------------------------------------------------------------------------------------------
Environmental Issues 4 No known issues aside from potential asbestos tiles.
- ---------------------------------------------------------------------------------------------------------------------
Operating Covenants 3 Shortest covenant is eight years. Emporium, the weakest
anchor, could go dark in 2006.
- ---------------------------------------------------------------------------------------------------------------------
Overall Ranking 3 Mid-market mall with good anchors in tertiary market.
Strong sales despite low trade area income.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SPOKANE SALES ACTIVITY
Given there is only one other regional mall in Spokane, and it is new,
we will discuss the 1995 sale of Northpointe Plaza and the 1998 sale of the
subject. Northpointe Plaza sold in January 1995 for $92.82 per square foot at a
9.64 percent capitalization rate. This power center sale included all anchors.
The subject sold in August 1998 for $128 million, indicating a capitalization
rate of just under 9 percent and a price per square foot of sold GLA of $183.
SUMMARY/OBSERVATIONS/MARKETABILITY CONCLUSIONS
The retail market nationwide is highly competitive, and retailers
recognizing changes in consumer tastes, spending patterns, and increased
competition are tailoring their merchandising, pricing, and marketing efforts
to meet consumer needs. While specialty stores
- -------------------------------------------------------------------------------
-59-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
continue to attract consumers from traditional anchor stores, major and anchor
tenants are reshaping their image and format.
Locally, the retail market, on an overall basis, is highly competitive
as well. The rapid expansion of discount and off-price big box retail chains
has begun to settle after several years of substantial growth in the market,
increasing competition. The new Spokane Valley Mall has added to the
competitiveness of the market, chasing many of the same shoppers as the subject
and shrinking the subject's penetration into the eastern and southern parts of
Spokane. Although there are not any reliable statistics, current vacancy rates
appear to be higher now than anytime in the last six years, highlighting the
need to remain competitive and innovative to attract shoppers.
We have analyzed the retail trade history and profile of the area in
order to make reasonable assumptions as to the continued performance of the
subject's potential trade area. The Primary Trade Area profile encompasses an
analysis that approximates a 5.0-mile radius emanating from the subject.
Information relating to these sectors has been presented and analyzed in order
to determine patterns of change and growth as they impact the subject. We have
also included a discussion of the competitive retail structure in the market
area. The data is useful in giving quantitative dimensions of the total trade
area, while our comments serve to provide qualitative insight into this market.
A compilation of this data provides the basis for our projections and forecasts
particular to the subject property. The following summarizes our key
conclusions:
o The subject enjoys a highly visible, accessible location within
a stable area of north central Spokane. The Spokane area is
expected to maintain a growth pattern benefiting from a
generally diverse economy and perception that the region has a
good quality of life.
o Regional accessibility to the property is good via North
Division Street which connects downtown Spokane with central and
north Spokane. The neighborhood has good local vehicular access
via local arterials, as well as a substantial amount of
peripheral retail development.
o The existing trade area structure is largely characterized by
older retail properties. There are only two regional malls and
one true power center, though stand-alone big box retailers have
been proliferating.
o Trade area boundaries have been set based upon the location of
existing retail development, conforming with drive time
capabilities and location convenience of the subject site.
o Two of the primary growth paths for the region are to the north
and west. The subject will benefit from this growth. Growth to
the east will also be strong, but the subject will see little
benefit from this growth.
o Population growth has been low within the trade area but is
expected to see annual increases of 0.66 percent per year
through 2003. At present, the subject's Primary Trade Area
includes some 190,997 persons.
o Household formation is projected to increase at a rate of 0.9
percent per annum into the foreseeable future to 85,861 units.
As of this writing, there are approximately 81,989 households
within the trade area.
- -------------------------------------------------------------------------------
-60-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
o The subject benefits from a middle-income population. Per capita
income within the Primary Trade Area is currently estimated at
$17,221. This figure is below both state and county levels.
o Northpointe Plaza is somewhat competitive with the subject, but
its stores also draw additional shoppers to the area.
o The subject is clearly the dominant center within the Spokane
area. With its location, accessibility, anchor alignment,
renovated appearance, and superior merchandising, Northtown Mall
should continue to be the viable retail center for this portion
of the region. The River Park Square development seems likely to
proceed, and this will dilute the subject's market dominance.
o Based upon our review of the economic aspects of the subject
property, Northtown Mall appears to be operating at economic
levels that are consistent with the market at this time.
On balance, it is our opinion that, with competent management,
aggressive marketing, and continued upkeep, the subject will continue to be a
viable entity within the Spokane market and maintain its share of market
expenditure potential. Our outlook for the area continues to be generally
positive, with moderate prospects for growth and moderately appreciating real
estate values.
MARKETABILITY AND MARKETING PERIOD
In this subsection, we consider the potential market appeal,
marketability, and demand for a center like the subject in light of the current
real estate investment market. As discussed in this report, the subject
involves an enclosed retail mall anchored by five relatively strong department
stores for a combined mall GLA of approximately 943,130 square feet.
We have considered the potential market demand and investor risk in our
analysis and valuation of the subject property through our selection of
investment parameters, growth rates, and various assumptions employed. In our
analysis, we have attempted to reflect current market conditions and investor
criteria.
Most of the shopping center properties which have been offered for sale
at a "reasonable" price have sold within 12 months exposure to the open market
or less. Properties for which seller expectations of value exceed the market's
perception have required more extended marketing periods and have generally
sold below the initial asking price, or have been pulled off the market. A
"reasonable" price is defined as that price which offers a sufficient return to
the investor relative to the demand for and the risk associated with the
property. These returns vary widely in the current market depending on the
particular investment, its occupancy level, the surrounding demographics, and
upside or downside of the income stream.
The subject is characterized as an average quality, renovated regional
mall which has historically been the dominant center within the Spokane market
and which represents a relatively strong barrier to future competitive
development in Spokane. The subject's primary trade area has a current
population of approximately 190,000+/- people and is projected to experience
moderate-stable population and household growth into the foreseeable future.
While the trade area is considered stable, lower growth projections should
still provide the necessary impetus for income growth at the property due to
the fact that it will benefit from
- -------------------------------------------------------------------------------
-61-
<PAGE>
COMPETITIVE MARKET ANALYSIS
- -------------------------------------------------------------------------------
future sales and rent growth (albeit at more moderate levels), helping provide
the necessary investor interest in the property.
We believe that if the subject were offered for sale, it would
represent an average investment opportunity for a center.
Based on the above, it is our estimate that a market sale of the
subject property should be realized within 12+/- months exposure on the market.
To back this up, the property recently sold. The package was sent to investors
in May 1998, the property was tied up in approximately July and the transaction
closed in August 1998.
- -------------------------------------------------------------------------------
-62-
<PAGE>
CONSULTING ASSUMPTIONS AND LIMITING CONDITIONS
- -------------------------------------------------------------------------------
"Analysis" means the consulting analysis or study or report to which these
Consulting Assumptions and Limiting Conditions are annexed.
"C&W" means Cushman & Wakefield, Inc. or its subsidiary which issued the
Appraisal.
In addition to the assumptions made in the Analysis, the analysis has been made
subject to the following assumptions and limiting conditions:
1. No opinion is intended to be expressed and no responsibility is assumed
for the legal description or for any matters which are legal in nature
or require legal expertise or specialized knowledge beyond that of a
real estate appraiser/consultant. Title to the Property is assumed to be
good and marketable and the Property is assumed to be free and clear of
all liens unless otherwise stated. No survey of the Property was
undertaken.
2. The information contained in the Analysis or upon which the Analysis is
based has been gathered from sources C&W assumes to be reliable and
accurate. Some of such information may have been provided by the owner
of the Property. C&W shall be responsible for the accuracy or
completeness of such information.
3. The Analysis is only as of the date stated in the Analysis. Changes
since that date in external and market factors or in the Property itself
can significantly affect the conclusion(s) included herein.
4. The Analysis is to be used in whole and not in part. No part of the
Analysis shall be used in conjunction with any other analysis. Except as
may be otherwise stated in the letter of engagement, the Analysis may
not be used by any person other than the party to whom it is addressed
or for purposes other than that for which it was prepared. No part of
the Analysis shall be conveyed to the public through advertising, or
used in any sales or promotional material without C&W's prior written
consent. Reference to the Appraisal Institute or to the MAI designation
is prohibited.
5. The Analysis assumes (a) responsible ownership and competent management
of the Property; (b) there are no hidden or unapparent conditions of the
Property, subsoil or structures that render the Property more or less
valuable (no responsibility is assumed for such conditions or for
arranging for engineering studies that may be required to discover
them); (c) full compliance with all applicable federal, state and local
zoning and environmental regulations and laws, unless noncompliance is
stated, defined and considered in the Analysis; and (d) all required
licenses, certificates of occupancy and other governmental consents have
been or can be obtained and renewed for any use on which the opinion(s)
and conclusion(s) contained in the Analysis are based.
6. Except as may be otherwise stated in the letter of engagement, the C&W
professional shall not be required to give testimony in any court or
administrative proceeding relating to the Property or the Analysis.
7. The physical condition of the improvements considered by the Analysis is
based on visual inspection by the C&W professional or other person
identified in the Analysis. C&W assumes no responsibility for the
soundness of structural members nor for the condition of mechanical
equipment, plumbing or electrical components
- -------------------------------------------------------------------------------
-63-
<PAGE>
CONSULTING ASSUMPTIONS AND LIMITING CONDITIONS
- -------------------------------------------------------------------------------
8. The forecasts of population, household, and income growth, as well as
supply and demand trends included herein are not predictions of the
future. Rather, they are our best estimates of current market thinking
on future demographic trends and supply and demand influences. C&W and
the C&W professional make no warranty or representation that these
forecasts will materialize. The real estate market is constantly
fluctuating and changing.
9. Unless otherwise stated in the Analysis, the existence of potentially
hazardous or toxic materials which may have been used in the
construction or maintenance of the improvements or may be located at or
about the Property was not considered in arriving at the opinions
expressed in this Analysis. These materials (such as formaldehyde foam
insulation, asbestos insulation and other potentially hazardous
materials) may adversely affect the Property. The C&W professionals are
not qualified to detect such substances. C&W recommends that an
environmental expert be employed to determine the impact of these
matters.
10. Unless otherwise stated in the Analysis, compliance with the
requirements of the Americans With Disabilities Act of 1990 (ADA) has
not been considered in arriving at the opinions expressed in the
Analysis. Failure to comply with the requirements of the ADA may
adversely affect the property. C&W recommends that an expert in this
field be employed.
- -------------------------------------------------------------------------------
-64-
<PAGE>
CERTIFICATION
- -------------------------------------------------------------------------------
I certify that, to the best of my knowledge and belief:
1. Kenneth A. Barnes, MAI inspected the property and prepared the report.
2. The statements of fact contained in this report are true and correct.
3. The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are my personal,
unbiased professional analyses, opinions, and conclusions.
4. I have no present or prospective interest in the property that is the
subject of this report, and I have no personal interest or bias with
respect to the parties involved.
5. My compensation is not contingent upon the reporting of a predetermined
conclusion or direction in conclusion that favors the cause of the
client, the amount of the conclusion estimate, the attainment of a
stipulated result, or the occurrence of a subsequent event. The
consulting assignment has not been based on a requested minimum
conclusion, maximum conclusion, or specific conclusion.
6. No one provided significant professional assistance to the person
signing this report.
7. My analyses, opinions, and conclusions have been developed, and this
report has been prepared, in conformity with the Uniform Standards of
Professional Appraisal Practice of the Appraisal Foundation and the Code
of Professional Ethics and the Standards of Professional Appraisal
Practice of the Appraisal Institute. The report is intended to comply
with the reporting requirements for "consulting" assignments.
8. The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
9. As of the date of this report, I, Kenneth A. Barnes, MAI have completed
the requirements of the continuing education program of the Appraisal
Institute.
/s/ Kenneth A. Barnes
----------------------------
Kenneth A. Barnes, MAI
Director
Valuation Advisory Services
WA State Cert. #BARNEKA40203
- -------------------------------------------------------------------------------
-65-
<PAGE>
ADDENDA
- -------------------------------------------------------------------------------
NATIONAL RETAIL OVERVIEW
OPERATING STATEMENTS
RENT ROLL
TENANT SALES REPORTS
ENDS DATA REPORTS
QUALIFICATIONS
<PAGE>
============================================================
CUSHMAN & WAKEFIELD, INC.
NATIONAL RETAIL OVERVIEW
============================================================
RETAIL VALUATION GROUP
Richard W. Latella, MAI
Senior Director
June 23, 1998
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
INTRODUCTION
Shopping centers constitute the major form of retail activity in the
United States today. Approximately 55 percent of all non-automotive retail
sales occur in shopping centers. It is estimated that consumer spending
accounts for about two-thirds of all economic activity in the United States. As
such, retail sales patterns have become an important indicator of the country's
economic health.
The early part of the 1990s was a time of economic stagnation and
uncertainty in the country. The gradual recovery, which began as the nation
crept out of the last recession, has shown some signs of weakness as corporate
downsizing has accelerated. But as the recovery period reaches into its fifth
year and the retail environment remains volatile, speculation regarding the
nation's economic future remains. It is this uncertainty which has shaped
recent consumer spending patterns. We shall first provide a brief overview of
broad economic measures that are important in terms of long range retail sales
forecasting and general investment underwriting. This is followed by a
discussion of retail sales trends along with selected statistics of the
shopping center industry. Also included is a discussion of contemporary
industry trends, valuation issues and a brief overview of the REIT market.
PERSONAL INCOME AND CONSUMER SPENDING
Americans' PERSONAL INCOME (total income from wages, salaries,
interest, rents and all other sources) advanced by four-tenths of a percent in
December, which helped raise income for all of 1997 by 5.8 percent. This was
less than 1995 but it far outpaced the 2.5 percent growth in 1994. Data for
April 1998 shows that income rose four-tenths of a percent, led by a
seven-tenths rise in wages and salaries.
============================================================================
PERSONAL INCOME CONSUMER SPENDING
============================================================================
YEAR % CHANGE YEAR % CHANGE
============================================================================
1993 4.7 1993 5.8
- ----------------------------------------------------------------------------
1994 2.5 1994 5.5
- ----------------------------------------------------------------------------
1995 6.1 1995 4.8
- ----------------------------------------------------------------------------
1996 5.6 1996 5.0
- ----------------------------------------------------------------------------
1997 5.8 1997 5.4
============================================================================
Source: Commerce Dept.
============================================================================
CONSUMER SPENDING is another closely watched indicator of economic
activity. The importance of consumer spending is that it represents two-thirds
of the nation's economic activity. Total consumer spending rose by 5.4 percent
in 1997, in line with the long term trend. Spending rose five-tenths of a
percent in April 1998.
EMPLOYMENT TRENDS
The country's economic situation continues to generate a record number
of new jobs. Correspondingly, the nation's unemployment rate continues to
decrease from its recent peak in 1992. Selected statistics released by the
Bureau of Labor Statistics are summarized as follows:
- -------------------------------------------------------------------------------
-1-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===========================================================================================================
SELECTED EMPLOYMENT STATISTICS
===========================================================================================================
CIVILIAN LABOR FORCE EMPLOYED
=====================================================================================
TOTAL WORKERS TOTAL WORKERS UNEMPLOYMENT
YEAR(1) (000) % CHANGE (000) % CHANGE RATE
===========================================================================================================
<S> <C> <C> <C> <C> <C>
1990 125,840 -- 118,793 -- 5.6
- -----------------------------------------------------------------------------------------------------------
1991 126,346 .4 117,718 -.9 6.8
- -----------------------------------------------------------------------------------------------------------
1992 128,105 1.4 118,492 .7 7.5
- -----------------------------------------------------------------------------------------------------------
1993 129,200 .9 120,259 1.5 6.9
- -----------------------------------------------------------------------------------------------------------
1994 131,056 2.4 123,060 2.3 6.1
- -----------------------------------------------------------------------------------------------------------
1995 132,304 1.0 124,900 1.5 5.6
- -----------------------------------------------------------------------------------------------------------
1996 133,943 1.2 126,708 1.4 5.4
- -----------------------------------------------------------------------------------------------------------
1997 4.9
===========================================================================================================
CAGR
1990-1997 +1.05 +1.08
===========================================================================================================
(1)Year ending December 31
===========================================================================================================
Source: Bureau of Labor Statistics U.S. Department of Labor
===========================================================================================================
</TABLE>
During 1996, the labor force increased by 1,639,000 or approximately
1.2 percent. Correspondingly, the level of employment increased by 1,808,000 or
1.4 percent. As such, the year end unemployment rate dropped by two-tenths of a
percent to 5.4 percent. For 1996, monthly job growth averaged 224,000. On
balance, over 10.0 million jobs have been created since the recovery began.
Preliminary data for December 1997 shows that the unemployment rate rose
slightly to 4.7 percent from 4.6 percent following job growth of 370,000. For
the year, 1997's average unemployment rate of 4.9 percent matched the lows set
in 1970 and 1973. A record 64.1 percent of the population held jobs at the end
of the year. U.S. payrolls ended the year at 123.9 million, up by 3.2 million
or 2.6 percent over 1996. For the year job growth averaged nearly 267,000 per
month. For the final quarter, job growth averaged 333,000 per month. Most
analysts are forecasting monthly job growth in the 250,000 to 275,000 range in
early 1998. A Bank of America survey of 18 leading Wall Street economists
forecast unemployment rates of 4.8 and 5.0 percent in 1998 and 1999,
respectively.
In May 1998, the economy created 296,000 jobs. Nationally, the
unemployment rate remained unchanged at 4.3 percent.
HOUSING TRENDS
Housing trends are an important economic measure due to the substantial
economic activity generated when a home changes hands (i.e. spending on repairs
by sellers, redecorating by buyers, fees, commissions and taxes).
For all of 1997, a total of 1.476 million new homes and apartments were
started, barely down one-tenth of a percent from a total of 1.477 million in
1996 which was the fastest pace in eight years.
- -------------------------------------------------------------------------------
-2-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Approximately 800,000 new homes were sold in 1997, up 5.7 percent from
756,000 in 1996. It was the highest total since 817,000 in 1978. The median
home price of new homes sold in 1996 was $140,000, up 4.6 percent from 1995.
April 1998 data shows that new home sales rose by 5.2 percent to an annual rate
of 888,000 units, a new record. This followed a revised 3 percent increase in
February. A record low interest rates and warm weather were cited as reasons
for the increase. Builders are currently reporting a 3.8 month inventory of
unsold homes, a record low. The median price of all homes sold in 1997 (new and
existing) rose 6.2 percent over 1996 to $124,800.
Sales of existing single family homes rose 3.1 percent for 1997 to a
record 4.22 million units from 4.09 million in 1996, a previous record. Resales
are an important measure of the housing industry's health as they account for
about 85 percent of all single family sales. Data for April 1998 shows that
sales declined by 2.5 percent to an annual rate of 4.77 million units. The
median price rose 5.8 percent to $127,000.
The home ownership rate seems to be rising, after remaining stagnant
over the last decade. For 1996, the share of households that own their homes
was 65.4 percent, compared to 64.7 percent for a year earlier. Lower mortgage
rates are cited as a factor.
GROSS DOMESTIC PRODUCT
The Commerce Department reports that the gross domestic product
increased by 3.8 percent in 1997, the largest growth in that measure since an
identical rate in 1988 when the Federal Reserve stimulated the economy to
cushion the impact of the 1987 stock market crash. For the year, Americans
produced an inflation adjusted $7.19 trillion in goods and services. The fourth
quarter 1997 growth rate was a brisk 4.3 percent. The annual growth was viewed
as remarkable in view of its coming in the seventh year of an economic
expansion that was also characterized by low inflation. The Fed foresees a
moderation of this trend and expects the U.S. economy will expand at a 2.0 to
2.50 percent pace during 1998 which is in-line with White House forecasts and a
pace which is viewed as the economy's non-inflationary growth limit.
The following chart cites the annual change in real GDP since 1990.
======================================================
REAL GDP
======================================================
YEAR % CHANGE
======================================================
1990 1.2
--------------------------- ==========================
1991 - .6
=========================== ==========================
1992 2.3
=========================== ==========================
1993 3.1
=========================== ==========================
1994 4.1
=========================== ==========================
1995* 2.0
=========================== ==========================
1996 2.4
=========================== ==========================
1997 3.8
======================================================
* Reflects new chain weighted system of
measurement. Comparable 1994 measure would
be 3.5%
======================================================
Source: Bureau of Economic Analysis
======================================================
- -------------------------------------------------------------------------------
-3-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
First quarter 1998 growth was reported at a robust 4.8 percent versus
3.7 percent in the final three months of 1997. This was a surprisingly powerful
performance and above most analysts' opinions.
WHOLESALE PRICES
Soaring energy prices in December drove wholesale costs to a twelve
month high. For the year, the Producer Price Index (PPI) gained 2.8 percent.
However, excluding energy, the PPI rose just 1.4 percent in all of 1996. In
1995, the index rose 2.3 percent. For November 1997, wholesale prices fell
two-tenths of a percent. For the twelve months ending November 1997, the index
was -1.2 percent. Projections for 1997 show that most economists expect a 2.5
percent rise and a core increase of 1.5 percent.
CONSUMER PRICES
The Bureau of Labor Statistics has reported that consumer prices rose
by only 1.7 percent in 1997, the lowest rate since 1986 when oil prices fell
sharply.
The following chart tracks the annual change in the CPI since 1990.
===========================================================
CONSUMER PRICE INDEX(1)
===========================================================
YEAR CPI % CHANGE
===========================================================
1990 133.8 6.1
-----------------------------------------------------------
1991 137.9 3.0
-----------------------------------------------------------
1992 141.9 2.9
-----------------------------------------------------------
1993 145.8 2.7
-----------------------------------------------------------
1994 149.7 2.7
-----------------------------------------------------------
1995 153.5 2.5
-----------------------------------------------------------
1996 158.6 3.3
-----------------------------------------------------------
1997 162.3 1.7
===========================================================
(1) All Urban Workers
===========================================================
Source: Dept. of Labor, Bureau of Labor Statistics
===========================================================
Over the past eight years, inflation has exceeded 3 percent only two
times (1996 - 3.3 percent and 1990 - 6.1 percent). Excluding food and energy,
the 77 percent of the index known as the core index, the index rose 2.2 percent
during 1997, the lowest annual figure since 1965. The corresponding rate for
1996 was 2.6 percent. Recently, a special advisory panel of prominent
economists have contended that the current method of calculating the Consumer
Price Index overstates inflation by 1.1 percentage points annually. The
government is currently reviewing the far ranging implications a change in
procedure may have.
Based upon year end trends, most notably the economic turmoil in Asia,
some economists have begun debating the possibility of delation. For example,
the price of imported goods dropped by 4.9 percent for all of 1997; the largest
decline since the government began
- -------------------------------------------------------------------------------
-4-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
collecting such data in 1983. The Bank of America survey of 17 leading Wall
Street economists have forecasted inflation for 1998 of 2.2 percent. Data for
May 1998 shows that the inflation index increased three-tenths of a percent
after running at an annual rate of 1.5 percent since January.
OTHER INDICATORS
The government's main economic forecasting gauge, the INDEX OF LEADING
ECONOMIC INDICATORS is intended to project economic growth over the next six to
nine months. The Conference Board, an independent business group, reported that
the index was unchanged in December (1997) ending five straight months of
gains. For all of 1997, the index rose at twice its historic pace. The April
1998 rate rose one-tenth of a percent.
The Conference Board also reported that CONSUMER CONFIDENCE declined in
May 1998 to 135.2 from 137.2 in April. Nonetheless, consumers attitudes about
the economy remain upbeat. Measures of consumer confidence are watched closely
for indications of future consumer spending.
The EMPLOYMENT COST INDEX is a measure of overall compensation
including wages, salaries and benefits. For 1997, the index rose at an annual
amount of 3.3 percent, up from 2.9 percent for both 1995 and 1996. Wages and
salaries were up 1.1 percent, the largest increase in seven and one-half years
while the cost of benefits rose nine-tenths of a percent. For the first quarter
(1998) the index was up seven-tenths of a percent.
PRODUCTIVITY is a key element in measuring the standard of living since
increased efficiency allows businesses to increase workers compensation without
having to raise prices. Through the first 70 years of this century, non-farm
productivity rose at an annual rate of 2.2 percent. During the post war period
1947 to 1973, it was 2.8 percent. Between 1973 and 1995, a marked slowdown has
been in evidence with only a 1 percent annual rate and during the period marked
by the start of the current economic expansion in 1991, growth has averaged 1.2
percent. The Labor Department reports that the productivity of American workers
grew by 1.7 percent in 1997. This compares with 1.9 percent in 1996 and
three-tenths of a percent in 1995. Data for the first quarter of 1998 shows
that productivity slipped to an annual rate of 1.1 percent, in part because
employers hired more workers to handle an expanding workload.
CONSUMER CREDIT The Federal Reserve said consumer credit unexpectedly
declined by $4.2 billion to a $1.231 trillion annual rate in November, the
first drop in four years. All major categories of borrowing registered declines
including credit cards, auto loans, and personal loans. Nonetheless, credit
card delinquencies and personal bankruptcies remain near record levels
indicating that consumers may be reaching a point of saturation with respect to
new debt. A record 1.34 million Americans filed for bankruptcy in 1997 despite
growing prosperity for nearly seven years of economic growth. Visa USA reports
that filings were up 19.6 percent nationwide from 1.12 million in 1996.
Borrowing was up 6.9 percent in February 1998 to an annual rate of
$1.244 trillion. The biggest component was credit card debt which rose to $3.9
billion.
- -------------------------------------------------------------------------------
-5-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
SAVINGS RATE The U.S. Savings Rate is measured as that portion of
disposable income that goes into bank accounts, investments, and other forms of
savings. Americans are continuing a trend of spending faster than their
after-tax incomes grow. As a result of carrying more debt, consumers decreased
their savings to just 3.8 percent of after-tax income, the lowest rate since
1939. The savings rate was 4.3 percent in 1996.
NEW CONSTRUCTION activity rose one-tenth of a percent in December to an
annual rate of $611.8 billion. The report showed that spending on residential
construction, which makes up nearly half the total, rose nine-tenths of a
percent. Commercial spending also increased 1.2 percent, while public spending
rose eight-tenths of a percent. For all of 1997, construction spending rose 5.6
percent versus 6.5 percent in 1996.
ECONOMIC OUTLOOK
The WEFA Group, an economic consulting company, opines that the current
state of the economy is a "central bankers" dream, with growth headed toward
the Fed's 2.5 percent target, accompanied by stable if not falling inflation.
They project that inflation will track at about 2.5 percent through 1998. Over
the longer term, inflation is expected to average 2.7 percent. This will have a
direct influence on consumption (consumer expenditures).
Potential GDP provides an indication of the expansion of output, real
incomes, real expenditures, and the general standard of living of the
population. WEFA estimates that real U.S. GDP will grow at an average annual
rate of 2.3 percent over the next decade, and slow to about 2.1 percent by
2019.
Consumption expenditures are primarily predicated on the growth of real
permanent income, demographic influences, and changes in relative prices over
the long term. Changes in these key variables explain much of the consumer
spending patterns of the 1970s and mid-1980s, a period during which baby
boomers were reaching the asset acquisition stages of their lives; purchasing
automobiles and other consumer and household durables. Increases in real
disposable income supported this spending spurt with an average annual increase
of 2.9 percent per year over the past twenty years. Real consumption
expenditures increased at an average annual rate of 3.1 percent during the
1970s and by an average of 4.0 percent from 1983 to 1988. WEFA projects that
consumption expenditure growth will slow as a result of slower population
growth and aging. It is also projected that the share of personal consumption
expenditures relative to GDP will decline over the next decade. Consumer
spending as a share of GDP peaked in 1993 at 68.0 percent after averaging about
63.0 percent over much of the post-war period. WEFA estimates that real
consumption expenditure growth will average 2.2 percent per year through 2005
and slows to 2.1 percent thereafter.
RETAIL SALES
During the period 1980 through 1996, total retail sales in the United
States increased at a compound annual rate of 6.1 percent. Data for the period
1990 through 1996 shows that sales growth has slowed to an annual average of
5.0 percent. This information is summarized on the following chart.
- -------------------------------------------------------------------------------
-6-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
===============================================================================
TOTAL U.S. RETAIL SALES(1)
===============================================================================
YEAR AMOUNT (BILLIONS) ANNUAL CHANGE
===============================================================================
1980 $ 957,400 N/A
- -------------------------------------------------------------------------------
1985 $1,375,027 N/A
- -------------------------------------------------------------------------------
1990 $1,844,611 N/A
- -------------------------------------------------------------------------------
1991 $1,855,937 .61%
- -------------------------------------------------------------------------------
1992 $1,951,589 5.2%
- -------------------------------------------------------------------------------
1993 $2,074,499 6.3%
- -------------------------------------------------------------------------------
1994 $2,236,966 7.8%
- -------------------------------------------------------------------------------
1995 $2,340,817 4.6%
- -------------------------------------------------------------------------------
1996 $2,465,835 5.3%
- -------------------------------------------------------------------------------
1997(2) $2,569,400 4.2%
===============================================================================
Compound Annual Growth Rate
1980-1997 +6.0%
===============================================================================
CAGR: 1990 - 1997 +4.8%
===============================================================================
(1) 1985 - 1995 data reflects recent revisions by the U.S. Department
of Commerce: Combined Annual and Revised Monthly Retail Trade.
(2) Preliminary advance estimates.
===============================================================================
Source: Monthly Retail Trade Reports Business Division, Current Business
Reports, Bureau of the Census, U.S. Department of Commerce.
===============================================================================
Retail sales rose seven-tenths of a percent during the month of
December 1997. The Census Bureau of the Department of Commerce reports that
advance estimates for U.S. retail sales for 1997 were $2.569 trillion, an
increase of $103.6 billion, or 4.2 percent from 1996. This was below last
year's gain and the worst showing since 1991.
Nationally, retail sales fell one-tenth of a percent in March 1998
following a revised seven-tenths of a percent rise in February.
Provided on the chart below is a summary of overall and same store
sales growth for selected national merchants for the most recent period.
- -------------------------------------------------------------------------------
-7-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
===============================================================================
SAME STORE SALES FOR THE MONTH OF MAY 1998
=========================================== ===================================
% CHANGE FROM PREVIOUS YEAR
-----------------------------------
NAME OF RETAILER OVERALL SAME STORE BASIS
=========================================== ======================= ===========
Wal-Mart +20.0% +11.0%
- -------------------------------------------------------------------------------
Kmart + 6.9% + 7.3%
- -------------------------------------------------------------------------------
Sears, Roebuck & Company + 7.0% + 5.4%
- -------------------------------------------------------------------------------
J.C. Penney + .1% + .4%
- -------------------------------------------------------------------------------
Dayton Hudson Corporation +11.8% + 6.1%
- -------------------------------------------------------------------------------
May Department Stores + 5.2% + 3.6%
- -------------------------------------------------------------------------------
Federated Department Stores .8 + 1.8%
- -------------------------------------------------------------------------------
The Limited Inc. + 7.0% + 9.0%
- -------------------------------------------------------------------------------
Gap Inc. +47.0% +24.0%
- -------------------------------------------------------------------------------
Ann Taylor +12.0% + 2.8%
- -------------------------------------------------------------------------------
TJX +11.0% + 6.0%
- -------------------------------------------------------------------------------
Lowe's +27.3% +10.3%
- -------------------------------------------------------------------------------
Circuit City +25.0% +12.0%
===============================================================================
Source: New York Times/Wall Street Journal
===============================================================================
Retailers reported a much better than expected increase in May sales,
largely as a result of mild weather and apparently a strong desire for new
spring fashions.
The Goldman Sachs same store sales index was up 7.1 percent in May
compared with 3.8 percent last year. Same store sales growth was led by
Wal-Mart (+11.0%), Kmart (+7.3%), and The Gap (+24.0%). Discounters again did
very well such as TJX, Dollar General and Ross Stores. Department stores which
cater to lower income shoppers also did well such as Kohl's and Target which
paced Dayton Hudson to a 6.1 percent gain.
The International Council of Shopping Centers (ICSC) publishes a
MONTHLY MALL MERCHANDISE INDEX which tracks sales by store type for more than
400 regional shopping centers. The index shows that total sales per square foot
rose by 2.9 percent to $278 per square foot in 1996. This compares to a .5
percent increase for the period 1994-1995. The following chart identifies the
most recent year-end results. The winners were shown to be Apparel and
Accessories (+4.8%) led by Men's Apparel and Shoes, while Furniture and
Furnishings suffered (-2.8%). The Home Improvement category rose an outstanding
100.0 percent to $302 per square foot.
Retailers reported a better than expected increase in January sales,
largely as a result of major post-holiday sales and clearance promotions. Data
for December 1997 shows that consumers were enticed to the stores with strong
promotional markdowns by the nation's retailers. The selling season seemed to
come two days before Christmas and continued for the week following.
- -------------------------------------------------------------------------------
-8-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
===============================================================================
1997 YEAR END PERFORMANCE
NON-ANCHOR TENANT SALES IN U.S. MALLS
===============================================================================
ICSC INDEX % CHANGE
STORE TYPE 1997 (SF*) FROM YE 1996
===============================================================================
GAFO CATEGORIES:
APPAREL AND ACCESSORIES
Women's Accessories and Specialties $317 4.3%
Women's Ready-To-Wear 195 -2.7%
Men's Apparel 268 -1.9%
Children's Apparel 382 5.2%
Family Apparel 324 2.1%
Women's Shoes 342 .2%
Men's Shoes 399 3.4%
Family Shoes 291 - .3%
Shoes Miscellaneous 303 -3.2%
Apparel and Accessories - Misc. $276 -6.5
- -------------------------------------------------------------------------------
SUBTOTAL $265 .8%
- -------------------------------------------------------------------------------
FURNITURE AND FURNISHINGS:
Home Furniture & Furnishings $273 - .3%
Home Entertainment & Electronics 329 5.0%
Home Furnishings - Misc. 275 - .8%
- -------------------------------------------------------------------------------
SUBTOTAL $307 2.6%
- -------------------------------------------------------------------------------
OTHER GAFO:
Jewelry $701 3.8%
Stationery/Cards/Gifts/Novelty 287 1.8%
Books 242 -3.7%
Sporting Goods/Bicycles 240 -2.8%
Other GAFO - Misc. 325 1.2%
- -------------------------------------------------------------------------------
SUBTOTAL $356 1.3%
- -------------------------------------------------------------------------------
TOTAL GAFO $295 1.3%
- -------------------------------------------------------------------------------
NON GAFO CATEGORIES:
FOOD SERVICES
Fast Food $449 2.6%
Restaurants 289 .8%
Food Services - Misc. 416 -7.1%
- -------------------------------------------------------------------------------
SUBTOTAL $362 1.7%
- -------------------------------------------------------------------------------
OTHER NON-GAFO CATEGORIES:
Specialty Food Stores $375 4.0%
Supermarkets 465 4.4%
Drug/HBA 317 3.3%
Personal Services 299 2.8%
Automotive 121 10.8%
Home Improvement 356 14.9%
Mall Entertainment 76 -2.3%
Other Non-GAFO - Misc. 397 3.2%
- -------------------------------------------------------------------------------
SUBTOTAL $230 1.8%
- -------------------------------------------------------------------------------
TOTAL NON-GAFO $278 1.7%
- -------------------------------------------------------------------------------
OTHER CATEGORIES-MISCELLANEOUS $243 8.7%
- -------------------------------------------------------------------------------
Memo: GAFO & Food Service Total $301 1.3%
- -------------------------------------------------------------------------------
GRAND TOTAL $291 1.5%
===============================================================================
* SALES PER SQUARE FOOT DERIVED AS TOTAL NON-ANCHOR MALL SALES DIVIDED BY
TOTAL OCCUPIED SQUARE FOOTAGE.
===============================================================================
SOURCE: ICSC - RESEARCH QUARTERLY
===============================================================================
- -------------------------------------------------------------------------------
-9-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
The ICSC has reported the following results:
MALL TENANT SALES
Data through the fourth quarter of 1997 shows that sales per square
foot for non-anchor tenants rose 1.5 percent over the comparable 12 month 1996
period. Year to date GAFO sales were up 1.3 percent led by the Furniture and
Furnishings category.
DEPARTMENT STORE SALES
Sales in U.S. Department Stores increased by 6.4 percent in 1997
according to the Department of Commerce. The increase was largely fueled by the
strong performance of discount department stores such as Wal-Mart, Kmart and
Target. This compares with an overall increase of 4.6 percent in 1996.
Comparable sales for the latest 12 month period (YE 12/97) are shown
below:
================================================================
DEPARTMENT STORE TYPE YEAR OVER YEAR CHANGE
================================================================
Discount 5.8%
----------------------------------------------------------------
National Chains 2.1%
----------------------------------------------------------------
Conventional/Full Line 4.3%
================================================================
FACTORY OUTLET
The ICSC FACTORY OUTLET INDEX increased by 4.0 percent in 1997 to $220
per square foot from $212 per square foot in 1996. The fourth quarter gain of
2.8 percent was the highest quarterly gain during the year. Data for the fourth
quarter of 1997 shows that sales rose by 3.7 percent. This increase was fueled
by a 11.3 percent sales volume growth and a 7.3 percent square footage
expansion at centers open at least one year.
======================================================
PERIOD SALES/SF CHANGE
======================================================
1995 $210 --
------------------------------------------------------
1996 $212 1.0%
------------------------------------------------------
1997 $220 4.0%
======================================================
The ICSC is now reporting comp or same store sales for outlet centers.
From their reporting data base, they report comp store growth of 2.8 percent
for all of 1997.
GAFO AND SHOPPING CENTER INCLINED SALES
In a true understanding of shopping center dynamics, it is important to
focus on both GAFO sales or the broader category of Shopping Center Inclined
Sales. GAFO goods comprise the overwhelming bulk of goods and products carried
in shopping centers and department stores and consist of the following
categories:
- -------------------------------------------------------------------------------
-10-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o General merchandise stores including department and other stores;
o Apparel and accessory stores;
o Furniture and home furnishing stores; and
o Other miscellaneous shoppers goods stores.
Shopping Center Inclined Sales are somewhat broader and include such
classifications as home improvement and grocery stores. The store types that
comprise shopping centers comprised approximately 53 percent of total retail
sales in 1995. The balance were generated by auto dealers, gas stations, food
service facilities and other miscellaneous establishments.
Total retail sales grew by 4.6 percent in the United States in 1995 to
$2.341 trillion, an increase of $104 billion over 1994. This followed an
increase of 7.8 percent or $162 billion over 1993. Automobile dealers captured
$34+/- billion of total retail sales growth last year, while Shopping Center
Inclined Sales accounted for nearly 50.0 percent of the increase ($50 billion).
GAFO sales increased by $32.5 billion. This group was led by department stores
which posted a $14.4 billion increase in sales. The following chart summarizes
the performance for this most recent comparison period.
- -------------------------------------------------------------------------------
-11-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==================================================================================================================
RETAIL SALES BY MAJOR STORE TYPE
1994-1995 ($MIL.)
==================================================================================================================
PERCENT OF 1994-1995
STORE TYPE 1994 1995 INCOME(1) % CHANGE
==================================================================================================================
<S> <C> <C> <C> <C>
GAFO:
General Merchandise $ 282,541 $ 296,904 5.1%
Apparel & Accessories 109,603 109,962 .3%
Furniture & Furnishings 119,626 129,923 8.6%
Other GAFO 80,533 88,029 9.3%
- ------------------------------------------------------------------------------------------------------------------
GAFO SUBTOTAL $ 592,303 $ 624,818 14.4% 5.5%
- ------------------------------------------------------------------------------------------------------------------
CONVENIENCE STORES:
Grocery $ 376,330 $ 389,134 3.4%
Other Food 21,470 21,378 (.4)%
- ------------------------------------------------------------------------------------------------------------------
SUBTOTAL $ 397,800 $ 410,512 9.5% 3.2%
Drug 81,538 84,240 2.0% 3.3%
- ------------------------------------------------------------------------------------------------------------------
CONVENIENCE SUBTOTAL $ 479,338 $ 494,752 3.2%
- ------------------------------------------------------------------------------------------------------------------
OTHER:
Home Improvement &
Building Supplies Stores $ 122,533 $ 124,626 2.9% 1.7%
SHOPPING CENTER-INCLINED
SUBTOTAL $ 1,194,174 $ 1,244,196 28.8% 4.2%
Automobile Dealers 526,319 560,624 6.5%
Gas Stations 142,193 148,192 4.2%
Eating and Drinking Places 228,351 233,606 2.3%
All Other 145,929* 154,199* 5.7%
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETAIL SALES $2,236,966 $2,340,817 4.6%
==================================================================================================================
* ESTIMATED SALES
==================================================================================================================
==================================================================================================================
(1) CURRENT POPULATION REPORT, PAGE 60. ESTIMATED AT 96.8 MILLION HOUSEHOLDS @ $44,100 = 4.3 TRILLION.
==================================================================================================================
SOURCE: U.S. DEPARTMENT OF COMMERCE, BUREAU OF THE CENSUS AND DOUGAL M. CASEY: VARIOUS ICSC WHITE PAPERS.
==================================================================================================================
</TABLE>
GAFO sales grew by 5.5 percent in 1995 to $624.8 billion. From the
above it can be calculated that GAFO sales accounted for 26.7 percent of total
retail sales and nearly 50.0 percent of all shopping center-inclined sales.
GAFO sales have also risen relative to household income. In 1990 these sales
represented 13.9 percent of average household income. By 1994/1995 they rose to
14.4 percent. Projections through 2000 show a continuation of this trend to
14.7 percent. On average, total sales were equal to nearly 55.0 percent of
household income in 1994.
- -------------------------------------------------------------------------------
-12-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==============================================================================================================
DETERMINANTS OF RETAIL SALES GROWTH AND U.S. RETAIL SALES BY KEY STORE TYPE
==============================================================================================================
1990 1994 2000P
==============================================================================================================
<S> <C> <C> <C>
DETERMINANTS
Population 248,700,000 260,000,000 276,200,000
Households 91,900,000 95,700,000 103,700,000
Average Household Income $37,400 $42,600 $51,600
Total Census Money Income $3.4 Tril. $4.1 Tril. $5.4 Tril.
- --------------------------------------------------------------------------------------------------------------
% ALLOCATIONS OF INCOME TO SALES
GAFO Stores 13.9% 14.4% 14.7%
Convenience Stores 12.9% 11.7% 10.7%
Home Improvement Stores 2.8% 3.0% 3.3%
Total Shopping Center-Inclined Stores 29.6% 29.1% 28.8%
Total Retail Stores 54.3% 54.6% 52.8%
- --------------------------------------------------------------------------------------------------------------
SALES ($BILLION)
GAFO Stores $472 $592 $795
Convenience Stores 439 479 580
Home Improvement Stores 95 123 180
Total Shopping Center-Inclined Stores $1,005 $1,194 $1,555
TOTAL RETAIL SALES $1,845 $2,237 $2,850
==============================================================================================================
Note: Sales and income figures are for the full year; population and household figures are as of April 1
in each respective year. P = Projected.
==============================================================================================================
Source: U.S. Census of Population, 1990; U.S. Bureau of the Census Current Population Reports: Consumer
Income P6-168, 174, 180, 184 and 188; Berna Miller with Linda Jacobsen, "Household Futures",
American Demographics, March 1995; Retail Trade sources already cited; and Dougal M. Casey: ICSC
White Paper
==============================================================================================================
</TABLE>
GAFO sales have risen at a compound annual rate of approximately 6.8
percent since 1991 based on the following annual change in sales.
=============================================
1990/91 2.9%
---------------------------------------------
1991/92 7.0%
---------------------------------------------
1992/93 6.6%
---------------------------------------------
1993/94 7.0%
---------------------------------------------
1994/95 5.5%
=============================================
According to a recent study by the ICSC, GAFO sales are expected to
grow by 5.0 percent per annum through the year 2000, which is well above the
4.1 percent growth for all retail sales. This information is presented in the
following chart.
- -------------------------------------------------------------------------------
-13-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==============================================================================================================
RETAIL SALES FORECASTS IN THE UNITED STATES, BY MAJOR STORE TYPE
==============================================================================================================
1994 2000P PERCENT CHANGE
- --------------------------------------------------------------------------------------------------------------
COMPOUND
STORE TYPE ($ BILLIONS) ($ BILLIONS) TOTAL ANNUAL
==============================================================================================================
<S> <C> <C> <C> <C>
GAFO:
General Merchandise $ 283 $ 370 30.7% 4.6%
Apparel & Accessories 110 135 22.7% 3.5%
Furniture/Home Furnishings 120 180 50.0% 7.0%
Other Shoppers Goods 81 110 35.8% 5.2%
- ---------------------------------------------------------------------------------------------------------
GAFO SUBTOTAL $ 592 $ 795 34.3% 5.0%
- ---------------------------------------------------------------------------------------------------------
CONVENIENCE GOODS:
Food Stores $ 398 $ 480 20.6% 3.2%
Drugstores 82 100 22.0% 3.4%
- ---------------------------------------------------------------------------------------------------------
CONVENIENCE SUBTOTAL $ 479 $ 580 21.1% 3.2%
- ---------------------------------------------------------------------------------------------------------
Home Improvement 123 180 46.3% 6.6%
- ---------------------------------------------------------------------------------------------------------
SHOPPING CENTER-INCLINED SUBTOTAL $1,194 $1,555 30.2% 4.5%
- ---------------------------------------------------------------------------------------------------------
All Other 1,043 1,295 24.2% 3.7%
- ---------------------------------------------------------------------------------------------------------
TOTAL $2,237 $2,850 27.4% 4.1%
==============================================================================================================
Note: P = Projected. Some figures rounded.
==============================================================================================================
Source: U.S. Department of Commerce, Bureau of the Census and Dougal M. Casey.
==============================================================================================================
</TABLE>
Changes in consumer spending patterns has resulted in noticeable trends
in the way malls are merchandised. Apparel still accounts for the majority of
all mall space at 46 percent, however, it has slipped from 48.3 percent in
1990. The largest percentage decline was in Women's Ready to Wear with a 14.8
percent drop to 18.4 percent. The table below summarizes these trends.
- -------------------------------------------------------------------------------
-14-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
===============================================================================
SHARE OF TOTAL MALL SPACE BY MERCHANDISE CATEGORY, 1990-97
===============================================================================
MERCHANDISE CATEGORY 1990 1997
===============================================================================
Women's Ready to Wear 21.6% 18.4%
- -------------------------------------------------------------------------------
Women's Accessories and Specialties 2.7% 3.3%
- -------------------------------------------------------------------------------
Men's Apparel 5.3% 3.3%
- -------------------------------------------------------------------------------
Children's Apparel 0.7% 1.5%
- -------------------------------------------------------------------------------
Family Apparel 7.3% 10.4%
- -------------------------------------------------------------------------------
Women's Shoes 2.0% 1.3%
- -------------------------------------------------------------------------------
Men's Shoes 0.7% 0.4%
- -------------------------------------------------------------------------------
Family/Miscellaneous Shoes 6.8% 7.3%
- -------------------------------------------------------------------------------
Apparel and Accessories - Misc. 1.2% 0.2%
- -------------------------------------------------------------------------------
APPAREL AND ACCESSORIES TOTAL 48.3% 46.0%
- -------------------------------------------------------------------------------
Home Furniture & Furnishings 3.4% 4.0%
- -------------------------------------------------------------------------------
Home Entertainment & Electronics 4.2% 5.5%
- -------------------------------------------------------------------------------
HOME FURNISHINGS TOTAL 7.6% 9.5%
- -------------------------------------------------------------------------------
Stationery/Cards/Gifts/Novelty * 6.2%
- -------------------------------------------------------------------------------
Books * 2.5%
- -------------------------------------------------------------------------------
Sporting Goods/Bicycles * 2.8%
- -------------------------------------------------------------------------------
Jewelry 3.5% 3.4%
- -------------------------------------------------------------------------------
Other GAFO - Misc. 15.4% 5.5%
- -------------------------------------------------------------------------------
OTHER GAFO TOTAL 18.9% 20.3%
- -------------------------------------------------------------------------------
TOTAL GAFO 74.7% 75.9%
- -------------------------------------------------------------------------------
Fast Food 4.1% 3.8%
- -------------------------------------------------------------------------------
Restaurants 5.3% 4.6%
- -------------------------------------------------------------------------------
Food Services - Misc. 0.3% 0.1%
- -------------------------------------------------------------------------------
Food Services Total 9.6% 8.5%
- -------------------------------------------------------------------------------
Specialty Food Stores ** 1.8%
- -------------------------------------------------------------------------------
Supermarkets 0.5% 0.3%
- -------------------------------------------------------------------------------
Drug/HBA 2.9% 1.6%
- -------------------------------------------------------------------------------
Personal Services 3.7% 4.8%
- -------------------------------------------------------------------------------
Automotive 0.1% 0.1%
- -------------------------------------------------------------------------------
Home Improvement 0.1% 0.1%
- -------------------------------------------------------------------------------
Mall Entertainment 4.9% 5.6%
- -------------------------------------------------------------------------------
Other Non-GAFO - Misc. ** 0.5%
- -------------------------------------------------------------------------------
OTHER NON-GAFO TOTAL 12.3% 14.9%
- -------------------------------------------------------------------------------
TOTAL NON-GAFO 21.9% 23.4%
- -------------------------------------------------------------------------------
Other Miscellaneous 3.3% 0.7%
- -------------------------------------------------------------------------------
GRAND TOTAL 100.0% 100.0%
===============================================================================
* Data for Stationery/Cards/Gifts/Novelty, Books, and Sporting
Goods/Bicycles are combined into Other GAFO - Miscellaneous until 1994.
** Not available.
===============================================================================
According to the ICSC White Paper: Overstoring - A Look at Retail Space
and Sales Performance; Shopping Center Inclined Sales have grown from $257
billion in 1972 to $1.244 trillion in 1995, a 7.1 percent annual growth rate.
Historical data is shown below.
- -------------------------------------------------------------------------------
-15-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
===============================================================================
SHOPPING CENTER INCLINED STORE SALES
1972-1995 (BILLIONS)
===============================================================================
1972 1980 1990 1995
===============================================================================
Sales $257 $532 $1,000 $1,244
- -------------------------------------------------------------------------------
Compound Annual Growth
- -------------------------------------------------------------------------------
1972-1995 7.1%
- -------------------------------------------------------------------------------
1972-1980 9.5%
- -------------------------------------------------------------------------------
1980-1990 6.6%
- -------------------------------------------------------------------------------
1990-1995 4.3%
===============================================================================
Source: U.S. Bureau of The Census and ICSC White Paper: Overstoring - A
Look at Retail Space and Sales Performance.
===============================================================================
From the above, we see that the most recent annual rate of growth
(1990-1995) in Shopping Center Inclined Sales of 4.3 percent has decreased to
less than half of what it was during the 1970s (9.5 percent). Projections
through December 2000 are for a compound growth rate of 4.5 percent.
Shopping centers have stabilized their share of shopping center
inclined sales. In 1972 this share was estimated at 48 percent. Since the early
1980s, this share has stabilized in the 72 to 73 percent range. For example,
the estimated sales total of $894 billion of shopping center sales in 1995 was
equal to 72 percent of total inclined sales.
NON-STORE RETAILING
In 1995, non-store retailing accounted for $69.7 billion, or 3.92
percent of total non-automotive retail sales. Of this total, $49.7 billion was
attributed to mail/telephone order catalog retailers. The balance is comprised
of coin-operated vending machines, house-to-house canvassing, party plan (i.e.
tupperware parties) telemarketing and other non-store venues such as home
shopping networks and electronic commerce.
<TABLE>
<CAPTION>
==============================================================================================================
NON-STORE AND TOTAL RETAIL SALES
==============================================================================================================
YEAR TOTAL MAIL ORDER NON-STORE TOTAL NON-AUTO SALES % OF TOTAL
==============================================================================================================
<S> <C> <C> <C> <C>
1985 $15,848 mil. $28,275 mil. $1,071,828 2.64%
- --------------------------------------------------------------------------------------------------------------
1990 $26,577 mil. $45,632 mil. $1,457,006 3.13%
- --------------------------------------------------------------------------------------------------------------
1995 $49,710 mil. $69,667 mil. $1,778,915 3.92%
==============================================================================================================
Source: Department of Commerce
==============================================================================================================
</TABLE>
Mail order sales, currently at only 2.8 percent of total retail sales,
continue to grow. Estimates currently place on-line sales at $518.0 million or
1 percent of the mail order tally. Estimates place total on-line sales as high
as $6.6 billion by the year 2000. Since 1990, mail order sales have grown at an
annual rate of 9.9 percent which is double the average growth of non-automotive
retail sales and 1.7 times the average growth of GAFO store sales. One measure
of this growing trend is the November/December ratio of mail order to GAF store
sales. In 1990, the ratio was 5.4 percent. By 1992 it had grown to 6.9 percent
and by 1995 it was 7.6 percent.
- -------------------------------------------------------------------------------
-16-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
INDUSTRY TRENDS
According to the NATIONAL RESEARCH BUREAU, there were a total of 42,953
shopping centers in the United States at the end of 1997. During this year, 823
new centers opened, a 1.9 percent increase over 1996 but less than the 895 that
opened in 1996. The greatest growth came in the small center category (less
than 100,000 square feet) where 431 centers were constructed. In terms of GLA
added, new construction in 1997 was up 2.5 percent resulting in an addition of
128.9 million square feet of GLA from approximately 5.1 billion to 5.23 billion
square feet.
<TABLE>
<CAPTION>
===============================================================================================================================
CENSUS DATA: HISTORICAL TRENDS
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL AVERAGE AVERAGE % CHANGE % INCREASE
NO. OF TOTAL SALES GLA PER SALES PER IN SALES NEW IN TOTAL
YEAR CENTERS GLA (BILLIONS) CENTER SQ. FT. PER SQ. FT. CENTERS CENTERS
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1987 30,641 3,722,957,095 $602,294,426 121,502 $161.78 2.41% 2,145 7.53%
- -------------------------------------------------------------------------------------------------------------------------------
1988 32,563 3,947,025,194 $641,096,793 121,212 $162.43 0.40% 1,922 6.27%
- -------------------------------------------------------------------------------------------------------------------------------
1989 34,683 4,213,931,734 $682,752,628 121,498 $162.02 -0.25% 2,120 6.51%
- -------------------------------------------------------------------------------------------------------------------------------
1990 36,515 4,390,371,537 $706,380,618 120,235 $160.89 -0.70% 1,832 5.28%
- -------------------------------------------------------------------------------------------------------------------------------
1991 37,975 4,563,791,215 $716,913,157 120,179 $157.09 -2.37% 1,460 4.00%
- -------------------------------------------------------------------------------------------------------------------------------
1992 38,966 4,678,527,428 $768,220,248 120,067 $164.20 4.53% 991 2.61%
- -------------------------------------------------------------------------------------------------------------------------------
1993 39,633 4,770,760,559 $806,645,004 120,373 $169.08 2.97% 667 1.71%
- -------------------------------------------------------------------------------------------------------------------------------
1994 40,368 4,860,920,056 $851,282,088 120,415 $175.13 3.58% 735 1.85%
- -------------------------------------------------------------------------------------------------------------------------------
1995 41,235 4,967,160,331 $893,814,776 120,460 $179.94 2.75% 867 2.15%
- -------------------------------------------------------------------------------------------------------------------------------
1996 42,130 5,100,605,534 $933,918,275 121,068 $183.10 1.75% 895 2.17%
- -------------------------------------------------------------------------------------------------------------------------------
1997 42,953 5,229,490,942 $980,026,364 121,749 $187.40 2.35% 823 1.95%
- -------------------------------------------------------------------------------------------------------------------------------
Compound
Annual
Growth +3.44% +3.46% +4.99% N/A +1.48% N/A N/A N/A
===============================================================================================================================
Source: National Research Bureau Shopping Center Database and Statistical Model
===============================================================================================================================
</TABLE>
From the chart we see that both total GLA and total number of centers
have increased at a compound annual rate of approximately 3.5 percent since
1987. New construction was up 2.5 percent in 1996, a slight decrease over 1996
but still well below the peak year 1987 when new construction increased by 7.5
percent. California was by far the most active state with 109 new centers
opening, followed by New Jersey (55), Georgia (49) and New York (42).
- -------------------------------------------------------------------------------
-17-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Among the 42,953 centers in 1997, the following breakdown by size is in
evidence.
<TABLE>
<CAPTION>
===========================================================================================
U.S. SHOPPING CENTER INVENTORY, YE DECEMBER 1997
===========================================================================================
NUMBER OF CENTERS SQUARE FEET (MILLIONS)
--------------------------------------------------------
SIZE RANGE (SF) AMOUNT PERCENT AMOUNT PERCENT
===========================================================================================
<S> <C> <C> <C> <C>
Under 100,000 26,928 62.7% 1,318.1 25.2%
- -------------------------------------------------------------------------------------------
100,001- 200,000 10,400 24.2% 1,430.9 27.4%
- -------------------------------------------------------------------------------------------
200,001- 400,000 3,595 8.4% 959.5 18.3%
- -------------------------------------------------------------------------------------------
400,001- 800,000 1,324 3.0% 736.4 14.1%
- -------------------------------------------------------------------------------------------
800,001- 1,000,000 316 .7% 284.8 5.4%
- -------------------------------------------------------------------------------------------
Over 1,000,000 390 .9% 499.7 9.6%
- -------------------------------------------------------------------------------------------
TOTAL 42,953 100.0% 5,229.5 100.0%
===========================================================================================
Source: National Research Bureau (some numbers slightly rounded).
===========================================================================================
</TABLE>
Empirical data shows that the average GLA per capita is increasing. In
1997, the average for the nation was 19.57. This was up nearly 3.5 square feet
or 21.6 percent from 16.1 in 1988. Among states, Delaware surpassed Florida and
now has the highest GLA per capita with 29.12 square feet. South Dakota has the
lowest at 9.12 square feet. Per capita GLA for regional malls (loosely defined
as all centers in excess of 400,000 square feet) has also been rising from 5.0
in 1988 to 5.7 in 1997. This information is presented on the following chart.
====================================================================
GLA PER CAPITA
====================================================================
YEAR ALL CENTERS REGIONAL MALLS *
====================================================================
1988 16.1 5.0
--------------------------------------------------------------------
1989 17.0 5.2
--------------------------------------------------------------------
1990 17.7 5.3
--------------------------------------------------------------------
1991 18.1 5.3
--------------------------------------------------------------------
1992 18.3 5.5
--------------------------------------------------------------------
1993 18.5 5.5
--------------------------------------------------------------------
1994 18.7 5.4
--------------------------------------------------------------------
1995 18.9 5.5
--------------------------------------------------------------------
1996 19.2 5.6
--------------------------------------------------------------------
1997 19.6 5.7
====================================================================
Source: International Council of Shopping Center: The Scope of
The Shopping Center Industry and National Research Bureau
====================================================================
* Centers in excess of 400,000 square feet.
====================================================================
While per capita GLA has continued to increase, a key issue is that the
rate of increase has slowed. Per capita space has increased by only slightly
under 2.0 square feet during the period 1990 through 1997. This trend is
manifested in the pace of inventory increases from 165 million square feet per
year between 1972 and 1980, to 143 million square feet per year (1980-1990),
and 120 million square feet per year (1990-1997).
- -------------------------------------------------------------------------------
-18-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Construction data also indicates that while the overall pace of
shopping center openings has eased, the pace of large store (50,000 to 200,000
square feet) construction has more than doubled. During the more recent five
year period, big boxes have accounted for 41 percent of inventory additions.
===============================================================================
TRENDS IN INVENTORY GROWTH *
1972-1995
===============================================================================
1972-1980 1980-1990 1990-1995
- -------------------------------------------------------------------------------
Shopping Center Space Added 164 143 115
- -------------------------------------------------------------------------------
Free-Standing Stores 36 34 79
(50,000 - 200,000 SF)
- -------------------------------------------------------------------------------
Total 200 177 194
- -------------------------------------------------------------------------------
Big Box Allocation of Inventory Growth 18% 19% 41%
===============================================================================
* Average Annual Increase (Million Square Feet)
===============================================================================
Source: NRB and F.W. Dodge
===============================================================================
FW Dodge reports that total construction starts increased by 20 percent
in 1997 to 11,167 projects. In terms of square footage, the increase was
approximately 7.0 percent as detailed below:
===============================================================================
NATIONWIDE RETAIL CONSTRUCTION STARTS
===============================================================================
1996 1997
====================== ======================
STARTS SF (000) STARTS SF (000)
===============================================================================
Malls 12 14,274 10 9,266
- -------------------------------------------------------------------------------
Shopping Centers 1,158 43,259 1,199 38,673
- -------------------------------------------------------------------------------
Free-standing Stores 2,981 120,799 3,331 127,962
- -------------------------------------------------------------------------------
Restaurants/Convenience 2,817 15,370 2,759 17,592
- -------------------------------------------------------------------------------
Other Retail 2,331 29,399 3,868 45,149
- -------------------------------------------------------------------------------
Total 9,299 223,101 11,167 238,642
===============================================================================
The National Research Bureau reports that growth in the power center
component continues to slow. The number of centers reporting to be positioned
as power centers grew by 61 percent between 1994 and 1995. However, this rate
slowed to 31 percent in 1996 and 18 percent in 1997. During 1997, 69 "new"
power centers opened with 63 percent representing actual first time openings
and 37 percent coming from renovation, expansion or repositionings.
In their publication, NRB/Shopping Centers Today 1997 Shopping Center
Census, the National Research Bureau reports that overall retail conditions
were good in 1997. Total shopping center sales increased 4.9 percent to $980.02
billion in 1997, up from $933.81 billion in 1996.
- -------------------------------------------------------------------------------
-19-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
=======================================================================================================
SELECTED SHOPPING CENTER STATISTICS
1990-1997
=======================================================================================================
COMPOUND
ANNUAL
1990 1995 1996 1997 GROWTH
=======================================================================================================
<S> <C> <C> <C> <C> <C>
Retail Sales in Shopping Centers * $706.40 $893.81 $933.92 $980.03 4.8%
- -------------------------------------------------------------------------------------------------------
Total Leasable Area ** 4.39 4.97 5.10 5.23 2.5%
- -------------------------------------------------------------------------------------------------------
Unit Rate $160.89 $179.94 $183.10 $187.40 2.2%
=======================================================================================================
* Billions of Dollars
** Billions of Square Feet
=======================================================================================================
Source: National Research Bureau
=======================================================================================================
</TABLE>
According to the National Research Bureau, total sales in shopping
centers have grown at a compound rate of 5.0 percent since 1987. As described,
aggregate sales were up 4.9 percent nationwide from $933.9 billion (1996) to
$980.0 billion (1997). In 1997, average sales were $187.40 per square foot, up
2.3 percent over 1996 and 2.2 percent (compound growth) over the past several
years. The biggest gain came in the super-regional category (more than 1.0
million square feet) where sales were up 3.6 percent to $214.90 per square
foot. Nonetheless, with compound sales growth lagging the growth in GLA, there
is an indication of overbuilding by this broad measure.
The following chart tracks the change in average sales per square foot
by size category.
<TABLE>
<CAPTION>
================================================================================================================
SALES TRENDS BY SIZE CATEGORY
1993-1997
================================================================================================================
AVERAGE SALES PER SQUARE FOOT
=================================================================================
COMPOUND
ANNUAL
CATEGORY 1993 1994 1995 1996 1997 GROWTH
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Less than 100,000 SF $193.10 $199.70 $204.94 $209.74 $215.90 +2.8%
- ----------------------------------------------------------------------------------------------------------------
100,001 to 200,000 SF $156.18 $161.52 $166.00 $169.56 $173.98 +2.7%
- ----------------------------------------------------------------------------------------------------------------
200,001 to 400,000 SF $147.57 $151.27 $153.96 $154.07 $155.99 +1.4%
- ----------------------------------------------------------------------------------------------------------------
400,001 to 800,000 SF $157.04 $163.43 $168.21 $170.14 $172.39 +2.4%
- ----------------------------------------------------------------------------------------------------------------
800,001 to 1,000,000 SF $194.06 $203.20 $210.40 $213.93 $219.38 +3.1%
- ----------------------------------------------------------------------------------------------------------------
More than 1,000,000 SF $183.90 $193.13 $201.05 $207.44 $214.90 +4.0%
- ----------------------------------------------------------------------------------------------------------------
TOTAL $169.08 $175.13 $179.94 $183.10 $187.40 +2.6%
================================================================================================================
Source: National Research Bureau
================================================================================================================
</TABLE>
Per capita retail sales were $3,667 in the United States in 1997, up
4.1 over $3,521 in 1996. The highest per capita sales were in Florida ($6,039)
while the lowest were found in South Dakota ($1,665).
- -------------------------------------------------------------------------------
-20-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Consumers demand for value and selection have led to an unprecedented
growth of the category killer, superstore and warehouse club concepts. In its
annual industry report, Discount Store News has identified the nation's top 200
merchants. Overall, these merchants posted sales of $336.6 billion, up 7.5
percent over 1995. The chart below highlights the year-to-year performance
along with 1997 projections.
<TABLE>
<CAPTION>
======================================================================================================================
SALES BY SEGMENT (IN BILLIONS $)
======================================================================================================================
1995 1996 MARKET SHARE % CHANGE 1997 (PROJ.)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Full-Line Discount Stores(1) $150.9 $162.3 48% 7.6% $178.5
- ----------------------------------------------------------------------------------------------------------------------
Specialty Discounters(2) 67.5 76.3 23% 13.1% 87.5
- ----------------------------------------------------------------------------------------------------------------------
Warehouse Clubs 41.1 43.5 13% 5.8% 45.9
- ----------------------------------------------------------------------------------------------------------------------
Other Discount Mass Merchants(3) 30.8 31.8 9% 5.0% 33.4
- ----------------------------------------------------------------------------------------------------------------------
Off-Price Apparel Chains 15.8 16.9 5% 6.2% 17.9
- ----------------------------------------------------------------------------------------------------------------------
Jewelry/Hard Lines Retailers 6.9 5.9 2% (15.0%) 5.1
- ----------------------------------------------------------------------------------------------------------------------
Total Market $313.0 $336.6 100% 7.5% $368.5
======================================================================================================================
(1) Includes full-line discount department stores, supercenters, closeouters and single-price retailers
(2) Includes home, automotive, crafts, toys, office supplies, book, computer superstores, baby superstores, pet
supplies, consumer electronics and sporting goods specialty stores.
(3) Includes Sears, Ward, QVC, HSN and variety stores.
======================================================================================================================
Source: DSN Research
======================================================================================================================
</TABLE>
As can be seen, the largest segment is comprised of full line discount
stores which was up 7.6 percent to $162.3 billion, or 48 percent of all sales.
Excluding Wal-Mart, by far the industry leader, 75 retailers in the DSN top 200
posted double digit sales gains. The biggest winners were baby superstores
(+47.2%), book superstores (+35.9%), and home furnishing superstores (33.1%).
Among the supercenter categories, Wal-Mart Supercenter's $19.3 billion in
sales, up 67.7 percent over 1995, accounted for more than half of the segment's
$36.2 billion in sales.
The Urban Land Institute, in the 1997 edition of Dollars and Cents of
Shopping Centers, reports that vacancy rates range from a low of 2.0 percent in
neighborhood centers to 14.0 percent for regional malls. Super-regional malls
reported a vacancy rate of 7.0 percent and community centers were 4.0 percent
based upon their latest survey.
MARKET SHIFTS - CONTEMPORARY TRENDS IN THE RETAIL INDUSTRY
The mid 1990s have continued the trend of profound changes in the
retail industry. Department stores have emerged from the troubles of late 1980s
and early 1990s to be stronger than ever. Continued consolidations in this
industry segment should continue. Specialty retailers continue to experience a
shakeout of weaker, out of favor formats while discounters gain market share.
Power centers, the growth vehicle of the last several years have reached a
point of saturation that has undermined investor's interest in this product.
Outlet centers are still struggling, however, the super-regional mega-center
appears poised to be the hot concept for the next few years.
Some of the important recent developments in the industry can be
summarized as follows:
- -------------------------------------------------------------------------------
-21-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
DEPARTMENT STORES
Consolidation in the department store industry segment continued,
albeit at a slower pace than seen over the last few years.
o DILLARD'S INC. announced (5/98) their intent to acquire
Mercantile Stores Company Inc. for $2.9 billion. Mercantile
operates 103 predominantly fashion apparel stores and 16 home
fashion stores in 17 states primarily south and midwest.
o LIBERTY HOUSE, a Honolulu based department chain, filed for
bankruptcy in early 1998. The company operates 11 department
stores and 25 specialty stores in Hawaii and Guam.
o JC PENNEY announced (1/98) they would close 75 poorly performing
stores and dismiss 4,900 employees or 2 percent of its workforce.
Investors and analysts praised the move.
o VENTURE STORES, which operates 93 discount stores in nine
midwestern states filed Chapter 11 (1/98). However, their
interest to shift from a general merchandise discount format to
an expanded assortment of home, family and leisure merchandise
has apparently failed. In May 1998 they announced they will sell
off their remaining 89 units to Kimco. In August 1997 Kimco
structured a sale leaseback with Venture for 49 stores. Kmart is
expected to take up to 50 of these remaining leaseholds from
Kimco.
o ROSE'S STORES - Announced (11/97) their pending acquisition by
Variety Wholesalers. Rose's is a North Carolina based 106 store
junior department store chain. The privately held Variety
Wholesalers operates 500 units in the southeast.
o PROFFITT'S - Announced (11/97) they will buy CARSON PIRIE SCOTT,
a midwest based retailer with 56 units and $1.1 billion in annual
sales. Proffitt's acquired 38 unit PARISIAN chain for $221
million. Company now controls 141 stores in 19 states. They have
also announced an agreement to acquire G.R. HERBERGER'S, a
40-unit department store chain based in St. Cloud, Minnesota for
$153 million.
o BARNEYS INC. - Remains in bankruptcy through the first half of
1998 with no clear plan to emerge.
o MONTGOMERY WARD & CO. - With 400 stores in 43 states filed
Chapter 11 in July 1997. They have announced the closure of 48
units which are being acquired by Klaff Realty LP in partnership
with the Lubert-Adler Real Estate Opportunity Fund. Ward's
reported a loss of $1.17 billion in 1997, nearly five times the
$237 million it lost in 1996.
o STRAWBRIDGE & CLOTHIER - 128 year old Philadelphia based
institution sold 13 unit department store division to May
Company. Its 27 unit discount CLOVER division went to Kimco which
is putting Kohl's in several of the units, their initial foray
into the East.
- -------------------------------------------------------------------------------
-22-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o RICH'S - 26 unit New England based regional chain closes.
o Discounters are being attacked from two sides. Big Box category
killers have rapidly expanded on one side. Alternatively, full
service department stores have become more promotional, closing
the price advantage gap discounters have traditionally enjoyed.
For example, BRADLEES and CALDOR remain in bankruptcy and AMES
continues to look for the right strategy to compete against
Wal-Mart, Kmart, Target and now Kohl's, the latter two of which
are aggressively expanding in the Mid-Atlantic and northeast
regions. Bradlees and Caldor expect to emerge from Chapter 11 in
1998 and there has been some talk of a merger.
SPECIALTY RETAILERS
Troubles continues for several specialty retailers as the protracted
shake-out continued with several Chapter 11 filings, downsizings, and some
cases, out-right liquidations. Among the more notable:
o LECHTERS announced (3/98) that it will close 60 to 70 mall based
stores in 1998 but open 25 new units in strip centers.
o THE LIMITED INC. announced (2/98) that it will close all but one
of its Henri Bendel stores, spin-off Abercrombie & Fitch to
shareholders and close 200 of its underperforming stores in its
various apparel divisions. This is in addition to the 200 stores
it began closing in December. In the largest revamping since
1969, Limited expects to close about 10 percent of its stores.
o EGGHEAD SOFTWARE announced (1/98) it will close all 80 of its
stores in the first quarter of 1998 and sell its products
exclusively over the internet. Egghead thus becomes the first
chain retailer to give up its store base for cyberspace sales.
o YES CLOTHING COMPANY filed for bankruptcy (1/98) under Chapter
11. The company had recapitalized in 1996 when the designer and
co-founder of Guess Inc., George Marciano, acquired 80 percent of
the company.
o WINKLEMAN'S, a division of Petrie Retail, announced (1/98) that
they will liquidate the 49 store chain. Petrie has been operating
under Chapter 11 since 10/95 and has been trying to sell the
chain for some time. A letter of intent to purchase with Crowley,
Milner & Co. was recently withdrawn.
o ONE PRICE CLOTHING STORES, announced (1/98) they will close 75
performing stores and eliminate 6 percent of its workforce as
part of a restructuring plan. The company has 688 units in the
United States, Puerto Rico, and U.S. Virgin Islands.
- -------------------------------------------------------------------------------
-23-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o Cleveland based HOMEPLACE, a 98-unit, privately held chain, filed
for Chapter 11 (1/98) putting their expansion plans on hold until
they can sort out their financial situation.
o THE WIZ INC., the New York area based electronics retailer filed
for bankruptcy (12/97) saying it will close 17 of its 50 Nobody
Beats The Wiz stores.
o BERNARD CHAUS INC., the struggling maker of Chaus women's
clothing and Nautica Sportswear, announced (11/97) it would close
20 of its 21 outlet stores.
o HOME EXPRESS will liquidate its 12 remaining housewares and
linens stores by October 1997. The chain, which at one time had
33 units, had filed Chapter 11 in February 1996.
o LEVITZ FURNITURE INC. filed for Chapter 11 on September 5, 1997.
The company operates 68 showrooms and 61 smaller stores in 26
states. It will initially close 18 stores.
o KMART will shed BUILDERS SQUARE for $10.0 million to Leonard
Green & Partners who will merge it with HECHINGERS.
o PAYLESS CASHWAYS filed Chapter 11 in July 1997, but emerged on
December 2, 1997.
o WAL-MART announces closure of 7 year old BUD'S chain in July
1997.
o WOOLWORTH announces closure of all remaining (400) variety stores
in July 1997.
o SERVICE MERCHANDISE announces (4/97) it would close 60 of its 400
stores.
o CONSOLIDATED STORES announced (3/97) it is scrapping its ALL FOR
ONE DOLLAR chain (175 units).
o GROSSMANS INC., a home improvement retail chain, filed Chapter 11
in March 1997.
o OSHMANS SPORTING GOODS announces closure (2/97) of 50 of its 84
conventional stores to concentrate on its superstore concept.
o LINEN SUPERMARKET (80 units) liquidated in June 1997.
o ROSES AUTO STORES filed Chapter 11 in June 1997 and immediately
closed all 62 stores. It then reopened 6.
o LURIA'S, the 99-year old apparel and hard goods chain filed
Chapter 11 in August 1997 and is closing 11 of its 17 stores. The
chain at one time had 50 locations throughout Florida.
o ALL ABOUT SPORTS filed Chapter 11 in May 1997 and immediately
announced plans to liquidate.
- -------------------------------------------------------------------------------
-24-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o MCCRORY CORP. is seeking court approval to close 307 of its 461
remaining stores and liquidate. At one time it ran 820 stores in
1992 when it filed for protection.
o LIMITED will close 200 of its 4,500 units during 1997.
o HANDY ANDY - Regional home improvement chain closed remaining 54
stores.
o HERMAN'S liquidated all of its sporting goods stores in the
northeast (5/96).
o BARNEY'S - High profile New York based upscale retailer filed
Chapter 11.
o MERRY-GO-ROUND liquidated and closed its remaining 560 units
including Chess King, Dejaiz and Cignal units.
o JAMESWAY - Regional discount department store chain in the
northeast liquidated.
o INCREDIBLE UNIVERSE - After aggressive foray into this mega store
format (185,000+/- square feet), TANDY closes division down.
Tandy will also close the remaining 53 units of its struggling
MCDUFF ELECTRONICS chain and 19 of its 108 COMPUTER CITY units.
o ERNST HOME CENTERS - Board approved liquidation of 53-unit chain.
o KIDS MART - 144-unit childrens apparel chain rumored to be close
to filed Chapter 11 in January 1997 and liquidated in April
1997..
o SUN TELEVISION AND APPLIANCE is considering closing 9 of its 50
stores citing losses.
o BEST having sold its remaining units to Shottenstein Corp. in
November 1996, the new owner initiated a liquidation of the
former catalog showroom.
o AUTOWORKS (129 units) - Less than one month after filing Chapter
11 in July 1997, Hahn Automotive Warehouse got bankruptcy court
permission to liquidate the inventory of its 83 unit subsidiary.
o RICKEL HOME CENTERS - 86 unit home improvement chain filed
Chapter 11 and announced (10/97) they will close its remaining 49
units in New York, New Jersey, Pennsylvania, and Delaware, laying
off 2,000 people.
o HOUSE OF FABRICS filed Chapter 11 and closes 86 of its 361 units.
o DISCOVERY ZONE - Fast expanding childrens' entertainment and
recreation oriented concept filed Chapter 11.
o BEN FRANKLIN - Arts and crafts retailer filed Chapter 11 and
subsequently ordered to liquidate.
- -------------------------------------------------------------------------------
-25-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o KUPPENHEIMER - Apparel retailer files Chapter 11 and plans to
close half of its 87 units in New Jersey, New York, Pennsylvania,
and Delaware, laying off 2,000 people.
o COUNTY SEAT - 740-unit apparel retailer has filed Chapter 11 and
will close 200 units. THE WET SEAL has made a proposal to acquire
508 of the stores.
o ALL FOR A DOLLAR - 111-unit close-out chain has filed Chapter 11.
SPECIALTY RETAILERS - MERGERS/ACQUISITIONS
Mergers and consolidations among specialty retailers, drug, supermarket
and apparel categories continue. Evidence of changes among the movie business
is also a recognized trend.
o COMPUSA, INC. (6/98) has agreed to buy COMPUTER CITY from Tandy
Corp. for $275 million in cash and notes. CompUSA, the nation's
largest PC chain, operates 160 stores. Computer City has 100
units and had sales of $1.9 billion.
o WOOLWORTH announced (5/98) their intention to acquire THE SPORTS
AUTHORITY for $570 million in stock and the assumption of $179
million in debt. Sports Authority operates 203 stores with annual
revenues of $1.4 billion
o ROYAL AHOLD N.V. announced (5/98) their intent to acquire Giant
Foods Inc. in a $2.6 billion deal. Giant Foods operates 177 units
in the Mid-Atlantic states and had 1997 revenues of $4.2 billion.
o CLAIRE'S STORES announced (3/98) they will buy Lux Corporation, a
specialty unisex apparel chain for teenagers which operates 56
units under the name Mr. Rags.
o STAPLES agreed (4/98) to acquire Quill Corp., a privately held
office supplies company for $685 million in stock. Quill sells
through mail order catalogs, the Internet, and telemarketing.
o CVS CORP. announced (2/98) they plan to merge with ARBOR DRUGS in
a $1.48 billion stock-swap to create the nation's largest drug
store company with $15 billion in revenues and 4,100 stores in 25
states.
o CAMELOT MUSIC emerged from bankruptcy (1/98) with a plan to
become the nation's third largest music retailer with 305 stores
in 34 states and annual revenue in excess of $550 million. It has
proposed an acquisition of the 153 unit THE WALL MUSIC, INC.
o Philadelphia based TODAY'S MAN emerged from 23 months in Chapter
11 (12/97) with 25 stores and plans to expand their presence in
New York, New Jersey, Maryland and Virginia.
o THE WIZ, having filed for bankruptcy protection in 12/97,
announced (1/98) they will be acquired by Cablevision Systems for
approximately $100 million.
- -------------------------------------------------------------------------------
-26-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o HICKS, MUSE, TATE, AND FURST INC. and KOHLBERG, KRAVIS ROBERTS &
CO., normally rivals, teamed up (1/98) to purchase Regal Cinemas.
In October, KKR acquired ACT III CINEMAS and in November, Hicks,
Muse had planned to acquire United Artists, the nation's third
largest chain for $850.0 million and combine it with the others
but the deal collapsed in late February.
o AUTO ZONE has signed (5/98) a definitive agreement to acquire
Dallas based CHIEF AUTO PARTS which owns 556 units mostly in
California and Texas. The price tag is $280 million including the
assumption of $205 million in debt. In January 1998, Auto Zone
completed its acquisition of Auto Palace (112 units) for $55
million.
o RITZ CAMERA CENTERS has acquired (1/98) Seattle based Kits Camera
Inc., the third largest independent in the country. Ritz's total
store count grows from 670 to 810.
o SONY CORP. AND CINEPLEX ODEON CORP. agreed (10/97) to combine
their theaters in a $1.0 billion transaction that will create a
2,600 screen chain, second in North America to the 2,700 screen
Carmike Cinemas.
o GART SPORTS, a Denver based privately held chain, has agreed to
acquire (10/97) Sportmart Inc, forming the second largest
sporting goods chain with 120 stores in 13 states and sales of
$700 million.
o FRED MEYER, INC., announced (11/97/) they will merge with Quality
Food Centers and Ralph's Grocery Company in two separate
transactions that will create a $15.0 billion company with 800
stores in 14 states. In early 1997 they merged with Smiths Food
and Drug creating a 265 unit chain with $7.0 billion in sales.
o CONSOLIDATED STORES, operator of Odd Lots, Big Lots, and Kay Bee
Toys (1,940 units) announced (11/97) they will acquire
MacFrugal's Bargain Close-outs (325 units in 18 states) for
nearly $1.0 billion.
o DISCOUNT AUTO PARTS, a 411 unit Florida based automotive after
market chain, announced (11/97) its merger with Hi-Lo Automotive,
forming a 598 unit company with combined revenues of $700
million.
o PETCO has announced (9/97) their intended acquisition of PetCare,
an 81 store privately held chain based in Chicago.
o JITNEY JUNGLE STORES OF AMERICA (105 units) will acquire
Delchamps (118 units).
o CVS DRUG acquired Revco in February 1997 with combined total of
4,000 stores and $10 billion in sales.
o STAPLES proposed merger with OFFICE DEPOT in a $3.4 billion deal
nixed by FTC.
o TOYS R US acquired BABY SUPERSTORE in $407 million deal (2/97).
- -------------------------------------------------------------------------------
-27-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o MELVILLE sold KAY BEE TOYS to CONSOLIDATED STORES adding to its
Toy Liquidators, Toys Unlimited and Amazing Toys close-out units
for $315 million. Melville has officially changed its name to CVS
Corp.
o SAFEWAY to acquire VON'S in a $1.65 billion deal, creating an
operation with 1,400 stores, 139,000 employees and $22.0 billion
in revenues. They will still trail the industry leader, KROGER,
in size.
o JC PENNEY, parent of THRIFT DRUG, announced they will acquire
FAY'S INC., operator of 272 units, making Thrift the nation's
eight largest chain. Penney's acquisition of ECKERD DRUG has been
cleared by the FTC.
o CVS CORP. sold BOB'S STORES in late 1997 to a group led by Bob's
management and Citicorp Venture Capital Ltd.
o SEARS & ROEBUCK acquired the 61 unit ORCHARD SUPPLY HARDWARE
chain for $415 million.
o WABAN, INC. - to spin off BJ'S WHOLESALE CLUB and change its name
to its other wholesale club division, HomeBase.
o FOOD LION - announced its pending acquisition of KASH N KARRY in
a $341.0 million deal.
o PETSMART - Announced plans to acquire PET CITY HOLDINGS, the
largest pet superstore chain in the UK.
o TJX COMPANIES - announced intent to sell its CHADWICK'S OF BOSTON
catalog to Brylane LP.
o REVCO - completed its tender offer for BIG B drug store chain.
o QUALITY FOOD CENTERS - Bellevue, WA based supermarket chain to
acquire 56-unit HUGHES FAMILY MARKETS for $360 million.
o REITs continued their aggressive acquisition posture during the year
being the most active buyer of product. Between 1994 and 1997, REITs
increased their ownership from 2.5 percent to 6.6 percent of all
shopping centers. Among regional malls, they own 23 percent of all
centers.
o Simon DeBartolo has acquired DeBartolo Realty Corp. and derailed the
Wells Park JVJ/J.W. O'Connor REIT merger with the acquisition of
Retail Property Trust. Simon then teamed up with Macerich to acquire
12 malls from ERE Yarmouth on behalf of IBM in December 1997. In
February 1998 they announced a $5.781 billion merger with Corporate
Property Investors.
o Kimco and The Price REIT have merged (6/98) to form one of the
nation's largest shopping center REITs with nearly 51.0 million square
feet in 390 centers in 40 states and a market capitalization of $3.4
billion.
o Trizec Hahn is selling 20 of their top performing malls to Westfield
and The Rouse Co. in a $2.55 billion transaction. The properties
contain 12.5 million square feet.
- -------------------------------------------------------------------------------
-28-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o Newport Beach, CA based Donahue Schriber has merged with Diversified
Shopping Centers which has created a combined company with assets of
$500 million.
o Regency Realty has been growing through large acquisitions. On March
7, 1997 it acquired all of the assets of Branch Properties for $232.4
million. On March 11, 1998 it acquired the real estate assets of the
Midland Group consisting of 21 centers and a development pipeline of
11 centers.
o Mark Centers Trust announced (April 16, 1998) a definitive agreement
to merge the company with RD Capital, creating a combined company with
51 retail properties and 5 multi-family apartments in 16 states.
o Kimco Realty Corp. announced (April 27, 1998) that it reached an
agreement with Venture Stores to purchase their leasehold position at
89 locations including 30 properties pursuant to a master lease with
Metropolitan Life.
o Excel Realty Trust and New Plan Realty Trust have agreed to merge (May
1998) in a $1.36 billion stock swap that would create the nation's
largest strip center REIT. The combined company is to be known as New
Plan Excel Realty Trust Inc. and would own 332 properties with a
market capitalization of $3.5 billion.
o Consolidation in the Outlet Industry has been predicted for some time.
After announcing their intent to merge in November 1997, Prime Retail
completed its merger with Horizon Group Inc. in June 1998. As a result
of the deal, Prime has integrated 22 of Horizon's top performing
outlet centers.
o Mergers and acquisitions in the outlet industry are expected to
continue. It is estimated that 130 developers own some 335 outlet
centers; the industry's five REITs collectively own 165, leaving 125
owners with the remaining 170 centers. Value Retail News reports that
over the period 1992 through 1997, twelve buyers have acquired 103
centers from 25 owners (inclusive of Prime's pending first quarter
1998 purchase of 20 centers from Horizon).
o Despite trends towards consolidation and downsizing, retailers say
they will continue aggressive expansions over the next four years.
These results were tabulated from Shopping Center World's 16th Annual
Retailer's Expansion Plans Survey. Retailers say they will open 28,000
stores between 1997 and the end of 2000. Among the 148 responding
retailers, 83 percent planned their expansions in shopping centers led
by regional malls.
o Regional Malls 72%
o Power Centers 50%
o Neighborhood Centers 46%
o Community Centers 34%
o Outlet Centers 20%
o Off-Price Centers 17%
37 percent cited the southeastern part of the country as the
hottest growth area.
- -------------------------------------------------------------------------------
-29-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
o According to Value Retail News, seven outlet projects were completed
in 1997 totaling 1.26 million square feet. The average size of the
Phase I projects were 179,714 square feet. For 1998, developers are
planning 25 projects totaling 5.19 million square feet.
o Category Killers and discount retailers have continued to drive the
demand for additional space. However, power centers have continued to
fall out of favor among many institutional investors. Most experts
agree that the country is over-stored. Ultimately, it will lead to
higher vacancy rates and place severe pressure on aging, capital
intensive centers. Many analysts predict that consolidation will occur
soon in other superstores categories such as in the office products
and electronics segments which will result in increased vacancies.
o One of the more interesting mergers in recent history occurred in June
1997 when Lend Lease Corp. acquired Equitable Real Estate Investment
Management (ERE) and merged it with The Yarmouth Group. The combined
ERE Yarmouth has over 100 shopping centers with more than 100 million
square feet under management worldwide.
o Entertainment is clearly the new operational requisite for property
owners and developers who are incorporating some form of entertainment
into their designs. With a myriad of concepts available, ranging from
mini-amusement parks to multiplex theater and restaurant themes, to
interactive high-tech applications, choosing the right formula is a
difficult task. Many of the nation's largest media and entertainment
companies are getting into the retail business in some fashion. AMC
Entertainment has formed a separate subsidiary, Centertainment, Inc.,
to work with developers to create entertainment based retail projects.
o Super-regional value-oriented megamalls such as The Mills concept are
expected to be one area of growth over the next several years. This
hybrid concept incorporates the diverse mix of super-regional malls
with the value-oriented aspects of factory outlets, category killers,
off-price merchants and retailer clearance outlets under one roof. In
addition, they add an entertainment component that is designed to
extend the stay of the patron from approximately one to one and
one-half hours in a traditional mall format to three to five hours.
These malls are at least 1.0 million square feet although the Mills
design averages 1.5 million square feet. They can contain between 7
and 20 anchors and have trade areas stretching upwards to 100 miles.
According to Value Retail News, at the end of 1997 there were 13
megamalls open with a total of 16.7 million square feet. Through 2001,
there are an additional 16 megamalls planned totaling 20.3 million
square feet.
INVESTMENT CRITERIA AND INSTITUTIONAL INVESTMENT PERFORMANCE
Investment criteria for mall properties range widely. Many firms and
organizations survey individuals active in this industry segment in order to
gauge their current investment criteria. These criteria can be measured against
traditional units of comparison such as price (or value) per square foot of GLA
and overall capitalization rates.
- -------------------------------------------------------------------------------
-30-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
The price that an investor is willing to pay represents the current or
present value of all the benefits of ownership. Of fundamental importance is
their expectation of increases in cash flow and the appreciation of the
investment. Investors have shown a shift in preference to initial return,
placing probably less emphasis on the discounted cash flow analysis (DCF). A
DCF is defined as a set of procedures in which the quantity, variability,
timing, and duration of periodic income, as well as the quantity and timing of
reversions, are specified and discounted to a present value at a specified
yield rate. Understandably, market thinking has evolved after a few hard years
of reality where optimistic cash flow projections did not materialize. The DCF
is still, in our opinion, a valid valuation technique that when properly
supported, can present a realistic forecast of a property's performance and its
current value in the marketplace.
Equitable Real Estate Investment Management, Inc. reports in their
EMERGING TRENDS IN REAL ESTATE - 1998 that their respondents give retail
investments generally poor performance forecasts in their latest survey due to
the protracted merchant shakeout which will continue into 1997 and the general
overbuilding which has had a fundamental change on the industry. While
dominant, Class A malls are still considered to be one of the best real estate
investments anywhere, only 34 percent of the respondents recommended buying
malls. This was up from 20 percent in 1997.
The following chart summarizes the results of their current survey.
<TABLE>
<CAPTION>
==============================================================================================================
RETAIL PROPERTY RANKINGS AND FORECASTS
==============================================================================================================
INVESTMENT POTENTIAL PREDICTED VALUE GAINS
=========================== =====================================
PROPERTY TYPE 1998
RATING(1) RANKING(2) RENT CHANGE 1 YR. 5 YRS. 10 YRS.
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Regional Malls 4.6 7th +0.6% +2.2% +11.9% +22.9%
- --------------------------------------------------------------------------------------------------------------
Power Centers 3.9 8th - 0.2% - 0.4% 8.5% 17.1%
- --------------------------------------------------------------------------------------------------------------
Community Centers 5.4 5th 1.8% 3.4% 12.7% 23.9%
==============================================================================================================
(1) Scale of 1 to 10
(2) Based on 9 property types
Source: Emerging Trends in Real Estate - 1998
==============================================================================================================
</TABLE>
REGIONAL MALLS
It is felt that price declines in malls as an investment have bottomed
out and are slowly recovering. Thirty-four percent of all respondents recommend
buying up from 20 percent last year. However, interviewees regard malls as more
of a hold than a buy and generally counsel against selling at this time. Malls
now rank 7th overall in investment appeal, 9th in development potential, and
8th in overbuilding risk. Value gains of 2.2 percent are forecasted this year,
their 22.9 percent over ten years does not stack up well against other
investment choices. While dominant malls in strong growth markets continue to
be prime investments, older malls are clearly at risk as they are vulnerable to
new competition and have high maintenance costs which cannot compete with newer
open air centers that operate much more cost effectively.
- -------------------------------------------------------------------------------
-31-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
POWER CENTERS
This ten year old phenomenon has pushed itself into a lowly 3.9
investment ranking (last) and a high overbuilding risk (second). Anticipated
rent and value changes will be essentially flat (- .2 percent and - .4 percent,
respectively). Long term appreciation lacks any real appeal and interviewees
overwhelmingly recommend selling the centers and show little interest in buying
at this time.
COMMUNITY CENTERS
Emerging Trends cites that with larger retail formats struggling,
certain neighborhood and community centers may be well positioned to excel over
the next few years. Investment and development potential rank 5th and 6th,
respectively. Value gains of 3.4 percent are forecasted for 1998 along with
rent increases of 1.8 percent (1 year). Over the long term, a 23.9 percent
value gain is forecasted. Centers with "super" grocery stores provide a
convenient alternative for time pressed shoppers which adds to their appeal.
The NCREIF PROPERTY INDEX represents data collected from the Voting
Members of the National Council of Real Estate Investment Fiduciaries. As shown
in the following table, data through the fourth quarter of 1997 shows that the
retail sub-index posted a total return of 8.40 percent for the year versus a
13.74 percent return for the Index Aggregate. The fourth quarter appreciation
return of .83 percent was not enough to offset the negative return for the
year. On balance, positive trends are in evidence by the fact that
restructuring in the retail industry is better positioning the centers to meet
growing consumer demands influenced by the strong economy and growing consumer
confidence. Retail sales continue to outpace inflation and there are signs that
construction is slowly subsiding.
<TABLE>
<CAPTION>
==================================================================================
RETAIL PROPERTY RETURNS
NCREIF INDEX (%)
==================================================================================
PERIOD INCOME APPRECIATION TOTAL
==================================================================================
<S> <C> <C> <C>
4th Qtr. 1997 2.13 .83 2.96
- ----------------------------------------------------------------------------------
One Year 8.53 -.12 8.40
- ----------------------------------------------------------------------------------
Three Years 8.29 -2.41 5.73
- ----------------------------------------------------------------------------------
Five Years 7.95 -2.21 5.61
- ----------------------------------------------------------------------------------
Ten Years 7.21 -1.51 5.62
==================================================================================
Source: Real Estate Performance Report
National Council of Real Estate Investment Fiduciaries
==================================================================================
</TABLE>
Retail's total return of 8.40 percent for year ending 12/31/97 was
substantially behind the other investment categories including Apartment
(12.75%), Office (17.35%), R&D (26.01%), and Warehouse (13.77%). For the year,
retail property performance was negatively impacted by size with neighborhood
centers posting the best total performance, while regional malls were laggards.
- -------------------------------------------------------------------------------
-32-
<PAGE>
NATIONAL RETAIL MARKET OVERVIEW
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
===============================================================================
RETAIL SEGMENT PERFORMANCE
===============================================================================
CATEGORY INCOME APPRECIATION TOTAL
===============================================================================
<S> <C> <C> <C>
Neighborhood N/A N/A 10.54%
- -------------------------------------------------------------------------------
Community N/A N/A 9.73%
- -------------------------------------------------------------------------------
Regional Malls N/A N/A 9.09%
- -------------------------------------------------------------------------------
Super Regional Malls N/A N/A 6.31%
===============================================================================
</TABLE>
Private investor underwriting has become more conservative with respect
to vacancy allowances, growth rates (rent, sales) and occupancy cost tolerance
levels. The reduced spread between cash returns and internal rate of returns is
evidence that buyers seek a higher proportion of their expected return from
income rather than from appreciation.
The Cushman & Wakefield Investor Survey also confirms trends that
capitalization rates for most retail categories have risen. Regional malls have
been the most affected. This is partly due to the fact that a large number of
malls are currently available for sale.
The Urban Land Institute, in their 1997 REAL ESTATE FORECAST - MID YEAR
OUTLOOK, projects very small increases in effective rents through mid-1998 for
both regional malls and strip shopping centers. Even though rent increases will
likely be higher than 1996, they will likely not keep pace with inflation. In
fact, retail garnered the bottom two spots in ULI's ranking of 10 property
types in measuring their expected performance change. The downward pressure on
rents has been attributed to the expansion of big-box retailers, which has
resulted in a changing tenant base that requires a different type of space then
exists in much of the older retail stock.
REAL ESTATE INVESTMENT TRUST MARKET (REITS)
To date, the impact of REITs on the retail investment market has been
significant, although the majority of Initial Property Offerings (IPOs)
involving regional malls, shopping centers, and outlet centers did not enter
the market until the latter part of 1993 and early 1994. It is noted that REITs
have dominated the investment market for apartment properties and have evolved
into a major role for retail properties as well.
Currently, there are in excess of 300 REITs in the United States, more
than three-quarters of which are publicly traded. The advantages provided by
REITs, in comparison to more traditional real estate investment opportunities,
include the diversification of property types and location, increased liquidity
due to shares being traded on major exchanges, and the exemption from corporate
taxes when 95.0 percent of taxable income is distributed.
There are essentially three kinds of REITs which can either be
"open-ended", or Finite-life (FREITs) which have specified liquidation dates,
typically ranging from eight to fifteen years.
- -------------------------------------------------------------------------------
-33-
<PAGE>
NORTHTOWN MALL
1998 OPERATING BUDGET
SUMMARY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
DESCRIPTION G/L # JAN FEB MAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME
CAM Reimbursements-Kiosks $ (8,223) $ (3,193) $ (725)
Minimum Rent-Shops 3015-0000 $ (638,614) $ (626,969) $ (632,572)
Minimum Rent-Anchors 3016-0000 $ (132,574) $ (132,574) $ (132,574)
Percentage Rent 3025-0000 $ (345,481) $ (20,229) $ (18,357)
Storage Income 3030-0000 $ (7,729) $ (7,297) $ (6,715)
Parking Ticket Income (Net) 3070-0000 $ (269) $ (269) $ (269)
Phone Commissions 3075-0000 $ (1,782) $ (1,782) $ (1,782)
Late Charges 3080-0000 $ (200) $ (200) $ (200)
Vending/Concession Income 3085-0000 $ (225) $ (225) $ (225)
Miscellaneous Income 3090-0000 $ (1,300) $ (1,300) $ (1,800)
CAM Reimbursements-Shops 6095-0000 $ (169,018) $ (161,584) $ (163,147)
CAM Reimbursements-Majors 6097-0000 $ (55,566) $ (55,566) $ (55,566)
CAM Reimbursements-Food Court 6290-0000 $ (12,744) $ (12,744) $ (12,744)
Tenant Reimbursements-HVAC 6548-0000 $ (24,630) $ (24,630) $ (24,826)
Tenant Reimbursements-Insurance 6576-0000 $ (4,138) $ (4,004) $ (4,032)
Tenant Reimbursements-Real Estate Taxes 6581-0000 $ (48,165) $ (46,455) $ (46,815)
Interest Income 7925-0000 $ 0 $ 0 $ 0
------------ ------------ ------------
TOTAL INCOME $ (1,450,658) $ (1,099,021) $ (1,102,350)
WASTE HANDLING
Salaries/Benefits 6525-0000 $ 4,600 $ 4,594 $ 4,594
Contract Services 6525-0002 $ 9,561 $ 9,561 $ 9,561
Repairs/Maintenance 6525-0004 $ 0 $ 300 $ 100
Other Income 6525-0099 $ (1,500) $ (1,500) $ (1,500)
Tenant Reimbursements 6525-0000 $ (17,690) $ (17,369) $ (17,509)
------------ ------------ ------------
TOTAL WASTE HANDLING $ (5,029) $ (4,414) $ (4,754)
KIOSKS
Rental Income 3040-0000 $ (95,942) $ (62,694) $ (12,500)
Percentage Income 3040-0001 $ (68,513) $ (1,160) $ (2,000)
Other Income 3040-0009 $ 0 $ 0 $ 0
Salaries/Benefits 3041-0000 $ 2,733 $ 2,714 $ 2,714
Temporary Personnel 3041-0001 $ 0 $ 0 $ 0
CAM Reimbursement Expense 3041-0002 $ 8,223 $ 3,193 $ 725
Equipment 3041-0003 $ 50 $ 50 $ 50
Repairs/Maintenance 3041-0004 $ 50 $ 50 $ 50
Advertising 3041-0005 $ 200 $ 0 $ 200
------------ ------------ ------------
TOTAL KIOSKS $ (153,199) $ (57,847) $ (10,761)
T/R HVAC
Salaries/Benefits 6545-0000 $ 5,847 $ 5,818 $ 5,818
Contract Services 6545-0002 $ 0 $ 0 $ 0
Repairs/Maintenance 6545-0004 $ 1,670 $ 2,483 $ 5,861
Electricity 6545-0007 $ 8,300 $ 8,300 $ 8,600
Other Income 6545-0009 $ 0 $ 0 $ 0
Depreciation 6547-0000 $ 5,025 $ 5,025 $ 5,025
------------ ------------ ------------
TOTAL T/R HVAC $ 20,843 $ 21,626 $ 25,304
T/R INSURANCE AND TAXES
Insurance 6575-0000 $ 3,704 $ 3,704 $ 3,704
Real Estate Taxes 6580-0000 $ 46,088 $ 46,088 $ 46,088
CAM EXPENSES
UTILITIES
Purchased Utilities-ICAM-Electricity 6010-0000 $ 14,203 $ 11,638 $ 10,355
Tenant Reimbursements-Electricity 6010-0001 $ (1,113) $ (1,113) $ (1,113)
Purchased Utilities-ICAM-Water 6020-0000 $ 650 $ 650 $ 650
Tenant Reimbursements-Water 6020-0001 $ (490) $ (490) $ (400)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION APR MAY JUN JUL AUG
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME
CAM Reimbursements-Kiosks $ (725) $ (725) $ (725) $ (725) $ (725)
Minimum Rent-Shops $ (634,541) $ (636,873) $ (660,467) $ (657,747) $ (662,642)
Minimum Rent-Anchors $ (132,574) $ (132,574) $ (132,574) $ (132,574) $ (132,574)
Percentage Rent $ (46,982) $ (21,499) $ (21,640) $ (40,819) $ (18,760)
Storage Income $ (7,794) $ (7,322) $ (10,244) $ (8,188) $ (8,395)
Parking Ticket Income (Net) $ (269) $ (269) $ (269) $ (269) $ (269)
Phone Commissions $ (1,782) $ (1,782) $ (1,782) $ (1,782) $ (1,782)
Late Charges $ (200) $ (200) $ (200) $ (200) $ (200)
Vending/Concession Income $ (225) $ (225) $ (225) $ (225) $ (225)
Miscellaneous Income $ (1,300) $ (1,300) $ (1,300) $ (1,300) $ (1,300)
CAM Reimbursements-Shops $ (164,331) $ (166,257) $ (175,152) $ (173,478) $ (176,211)
CAM Reimbursements-Majors $ (55,566) $ (55,566) $ (55,566) $ (55,568) $ (55,566)
CAM Reimbursements-Food Court $ (12,744) $ (12,744) $ (12,744) $ (12,744) $ (12,744)
Tenant Reimbursements-HVAC $ (24,975) $ (25,217) $ (26,336) $ (26,125) $ (26,458)
Tenant Reimbursements-Insurance $ (4,054) $ (4,088) $ (4,248) $ (4,218) $ (4,265)
Tenant Reimbursements-Real Estate Taxes $ (47,087) $ (47,530) $ (49,575) $ (49,190) $ (49,798)
Interest Income $ 0 $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------ ------------
TOTAL INCOME $ (1,135,149) $ (1,114,173) $ (1,153,048) $ (1,165,151) $ (1,151,825)
WASTE HANDLING
Salaries/Benefits $ 4,562 $ 4,554 $ 4,546 $ 4,543 $ 4,543
Contract Services $ 9,561 $ 9,561 $ 8,920 $ 8,920 $ 8,920
Repairs/Maintenance $ 100 $ 0 $ 250 $ 100 $ 0
Other Income $ (1,500) $ (1,500) $ (1,500) $ (1,500) $ (1,500)
Tenant Reimbursements $ (17,612) $ (17,714) $ (18,275) $ (18,070) $ (18,210)
------------ ------------ ------------ ------------ ------------
TOTAL WASTE HANDLING $ (4,889) $ (5,100) $ (6,059) $ (6,007) $ (6,247)
KIOSKS
Rental Income $ (12,500) $ (12,500) $ (12,500) $ (12,500) $ (12,500)
Percentage Income $ (2,000) $ (2,000) $ (2,000) $ (2,000) $ (2,000)
Other Income $ 0 $ 0 $ 0 $ 0 $ 0
Salaries/Benefits $ 2,654 $ 2,646 $ 2,631 $ 2,631 $ 2,631
Temporary Personnel $ 0 $ 0 $ 0 $ 0 $ 0
CAM Reimbursement Expense $ 725 $ 725 $ 725 $ 725 $ 725
Equipment $ 500 $ 50 $ 100 $ 500 $ 50
Repairs/Maintenance $ 50 $ 50 $ 50 $ 50 $ 50
Advertising $ 0 $ 200 $ 0 $ 200 $ 0
------------ ------------ ------------ ------------ ------------
TOTAL KIOSKS $ (10,571) $ (10,829) $ (10,994) $ (10,394) $ (11,044)
T/R HVAC
Salaries/Benefits $ 5,806 $ 5,790 $ 5,681 $ 5,681 $ 5,681
Contract Services $ 0 $ 0 $ 0 $ 0 $ 0
Repairs/Maintenance $ 2,362 $ 1,366 $ 1,374 $ 1,709 $ 1,432
Electricity $ 8,600 $ 14,000 $ 14,000 $ 15,000 $ 13,400
Other Income $ 0 $ 0 $ 0 $ 0 $ 0
Depreciation $ 5,025 $ 5,025 $ 5,025 $ 5,025 $ 5,025
------------ ------------ ------------ ------------ ------------
TOTAL T/R HVAC $ 21,793 $ 26,181 $ 26,080 $ 27,415 $ 25,538
T/R INSURANCE AND TAXES
Insurance $ 3,704 $ 3,704 $ 3,704 $ 3,704 $ 3,704
Real Estate Taxes $ 46,088 $ 46,088 $ 46,088 $ 46,088 $ 46,088
CAM EXPENSES
UTILITIES
Purchased Utilities-ICAM-Electricity $ 9,310 $ 9,690 $ 13,395 $ 12,730 $ 18,810
Tenant Reimbursements-Electricity $ (1,113) $ (1,113) $ (1,113) $ (1,113) $ (1,113)
Purchased Utilities-ICAM-Water $ 650 $ 650 $ 650 $ 650 $ 650
Tenant Reimbursements-Water $ (490) $ (490) $ (490) $ (490) $ (490)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL
DESCRIPTION SEP OCT NOV DEC 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME
CAM Reimbursements-Kiosks $ (725) $ (725) $ (8,550) $ (10,950) $ (36,715)
Minimum Rent-Shops $ (674,441) $ (698,724) $ (702,699) $ (706,173) $ (7,932,462)
Minimum Rent-Anchors $ (132,574) $ (132,574) $ (132,574) $ (132,574) $ (1,590,892)
Percentage Rent $ (66,459) $ (44,854) $ (25,110) $ (51,810) $ (722,000)
Storage Income $ (7,719) $ (9,460) $ (8,755) $ (8,281) $ (97,900)
Parking Ticket Income (Net) $ (269) $ (269) $ (269) $ (269) $ (3,231)
Phone Commissions $ (1,782) $ (1,782) $ (1,782) $ (1,782) $ (21,384)
Late Charges $ (200) $ (200) $ (200) $ (200) $ (2,400)
Vending/Concession Income $ (225) $ (225) $ (225) $ (225) $ (2,704)
Miscellaneous Income $ (1,300) $ (34,300) $ (1,300) $ (1,300) $ (49,100)
CAM Reimbursements-Shops $ (181,340) $ (189,598) $ (189,598) $ (189,598) $ (2,099,224)
CAM Reimbursements-Majors $ (55,566) $ (55,566) $ (55,566) $ (55,566) $ (666,789)
CAM Reimbursements-Food Court $ (12,744) $ (12,744) $ (12,744) $ (12,744) $ (152,930)
Tenant Reimbursements-HVAC $ (27,114) $ (28,152) $ (28,152) $ (28,152) $ (314,767)
Tenant Reimbursements-Insurance $ (4,359) $ (4,508) $ (4,508) $ (4,508) $ (50,930)
Tenant Reimbursements-Real Estate Taxes $ (50,998) $ (52,897) $ (52,897) $ (52,897) $ (594,304)
Interest Income $ 0 $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------ -------------
TOTAL INCOME $ (1,217,816) $ (1,266,579) $ (1,224,930) $ (1,257,030) $ (14,337,732)
WASTE HANDLING
Salaries/Benefits $ 4,543 $ 4,443 $ 4,435 $ 4,821 $ 54,778
Contract Services $ 8,920 $ 8,920 $ 8,920 $ 8,920 $ 110,245
Repairs/Maintenance $ 250 $ 100 $ 100 $ 0 $ 1,300
Other Income $ (1,500) $ (1,500) $ (1,500) $ (1,500) $ (18,000)
Tenant Reimbursements $ (18,478) $ (19,326) $ (19,273) $ (19,273) $ (218,800)
------------ ------------ ------------ ------------ -------------
TOTAL WASTE HANDLING $ (6,265) $ (7,363) $ (7,318) $ (7,032) $ (70,477)
KIOSKS
Rental Income $ (12,500) $ (12,500) $ (169,000) $ (194,000) $ (621,636)
Percentage Income $ (2,000) $ (2,000) $ (2,000) $ (25,000) $ (112,673)
Other Income $ 0 $ 0 $ 0 $ 0 $ 0
Salaries/Benefits $ 2,631 $ 2,525 $ 6,025 $ 2,773 $ 35,307
Temporary Personnel $ 0 $ 0 $ 3,154 $ 3,154 $ 6,308
CAM Reimbursement Expense $ 725 $ 725 $ 8,550 $ 10,950 $ 36,715
Equipment $ 50 $ 100 $ 1,000 $ 0 $ 2,500
Repairs/Maintenance $ 50 $ 50 $ 1,000 $ 0 $ 1,500
Advertising $ 200 $ 500 $ 0 $ 0 $ 1,500
------------ ------------ ------------ ------------ -------------
TOTAL KIOSKS $ (10,844) $ (10,600) $ (151,271) $ (202,123) $ (650,478)
T/R HVAC
Salaries/Benefits $ 5,681 $ 5,660 $ 5,660 $ 6,162 $ 69,284
Contract Services $ 0 $ 0 $ 0 $ 0 $ 0
Repairs/Maintenance $ 1,682 $ 1,128 $ 1,565 $ 1,411 $ 24,043
Electricity $ 12,100 $ 9,000 $ 8,000 $ 8,000 $ 127,300
Other Income $ 0 $ 0 $ 0 $ 0 $ 0
Depreciation $ 5,025 $ 5,025 $ 5,025 $ 5,025 $ 60,305
------------ ------------ ------------ ------------ -------------
TOTAL T/R HVAC $ 24,488 $ 20,813 $ 20,250 $ 20,599 $ 280,932
T/R INSURANCE AND TAXES
Insurance $ 3,704 $ 3,704 $ 3,704 $ 3,704 $ 44,452
Real Estate Taxes $ 46,088 $ 46,088 $ 46,088 $ 46,088 $ 553,062
CAM EXPENSES
UTILITIES
Purchased Utilities-ICAM-Electricity $ 16,435 $ 15,390 $ 9,073 $ 12,540 $ 153,568
Tenant Reimbursements-Electricity $ (1,113) $ (1,113) $ (1,113) $ (1,113) $ (13,356)
Purchased Utilities-ICAM-Water $ 650 $ 650 $ 650 $ 650 $ 7,800
Tenant Reimbursements-Water $ (490) $ (490) $ (490) $ (490) $ (5,874)
</TABLE>
<PAGE>
NORTHTOWN MALL
1998 OPERATING BUDGET
SUMMARY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION G/L # JAN FEB MAR APR MAY JUN
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchased Utilities-OCAM-Electricity 6110-0000 $ 1,730 $ 1,245 $ 1,063 $ 956 $ 988 $ 1,352
Purchased Utilities-OCAM-Water 6120-0000 $ 250 $ 250 $ 250 $ 250 $ 250 $ 250
TOTAL UTILITIES $ 15,230 $ 12,180 $ 10,715 $ 9,563 $ 9,975 $ 14,044
JANITORIAL
Salaries/Benefits 6030-0000 $ 8,789 $ 8,789 $ 8,789 $ 8,772 $ 8,750 $ 8,741
Employment Expense 6030-0001 $ 25 $ 25 $ 25 $ 25 $ 25 $ 25
ICAM-Contract Services 6030-0002 $ 12,991 $ 12,991 $ 12,991 $ 12,991 $ 13,691 $ 12,991
ICAM-Repairs/Maintenance 6030-0004 $ 0 $ 2,600 $ 1,250 $ 2,600 $ 150 $ 950
ICAM-Supplies 6030-0005 $ 8,100 $ 0 $ 0 $ 7,000 $ 600 $ 0
ICAM-Other Income 6030-0009 $ (65) $ (65) $ (65) $ (65) $ (65) $ (65)
OCAM-Contract Services 6130-0002 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Repairs/Maintenance 6130-0004 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Supplies 6130-0005 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Other Income 6130-0009 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-------- -------- -------- -------- -------- --------
TOTAL JANITORIAL $ 29,840 $ 24,340 $ 22,990 $ 31,323 $ 23,151 $ 22,642
LANDSCAPE
Salaries/Benefits 6040-0000 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
ICAM-Contract Services 6040-0002 $ 540 $ 540 $ 540 $ 540 $ 540 $ 540
ICAM-Repairs/Maintenance 6040-0004 $ 0 $ 0 $ 1,500 $ 0 $ 0 $ 0
OCAM-Contract Services 6140-0002 $ 100 $ 100 $ 600 $ 1,100 $ 1,100 $ 1,100
OCAM-Repairs/Maintenance 6140-0004 $ 0 $ 100 $ 900 $ 750 $ 100 $ 1,250
-------- -------- -------- -------- -------- --------
TOTAL LANDSCAPE $ 640 $ 740 $ 3,540 $ 2,390 $ 1,740 $ 2,890
HVAC
ICAM-HVAC-Salaries/Benefits 6045-0000 $ 1,498 $ 1,490 $ 1,490 $ 1,490 $ 1,481 $ 1,450
ICAM-HVAC-Contract Services 6045-0002 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
ICAM-HVAC-Repairs/Maintenance 6045-0004 $ 684 $ 382 $ 1,862 $ 1,322 $ 321 $ 121
ICAM-HVAC-Electricity 6045-0008 $ 2,580 $ 2,498 $ 1,557 $ 1,984 $ 2,411 $ 4,800
ICAM-HVAC-Gas 6045-0009 $ 4,500 $ 3,700 $ 2,900 $ 2,000 $ 1,575 $ 1,475
ICAM-HVAC-Gas Reimbursements 6045-0099 $ (1,407) $ (1,407) $ (1,407) $ (1,407) $ (1,407) $ (1,407)
ICAM-HVAC-Depreciation 6047-0000 $ 2,475 $ 2,475 $ 2,475 $ 2,475 $ 2,475 $ 2,475
-------- -------- -------- -------- -------- --------
TOTAL HVAC $ 10,330 $ 9,137 $ 8,876 $ 7,863 $ 6,856 $ 8,913
MAINTENANCE
ICAM-Salaries/Benefits 6055-0000 $ 9,328 $ 9,294 $ 9,294 $ 9,242 $ 9,179 $ 9,120
Employment Expense 6055-0001 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50
ICAM-Repairs/Maintenance 6055-0004 $ 2,790 $ 1,110 $ 1,260 $ 60 $ 1,260 $ 5,060
ICAM-Temporary Help 6055-0010 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
ICAM-Building Repairs 6055-0015 $ 1,300 $ 3,450 $ 1,000 $ 1,350 $ 1,000 $ 850
ICAM-Plumbing 6055-0025 $ 400 $ 350 $ 2,500 $ 6,650 $ 350 $ 200
ICAM-Elec/Lighting 6055-0035 $ 300 $ 300 $ 1,800 $ 2,300 $ 300 $ 13,300
ICAM-Wired Music 6055-0045 $ 65 $ 65 $ 65 $ 65 $ 65 $ 65
ICAM-Escalator/Elevator 6055-0055 $ 4,550 $ 4,550 $ 4,550 $ 4,550 $ 11,750 $ 5,350
ICAM-Equipment 6055-0065 $ 725 $ 7,125 $ 1,025 $ 225 $ 225 $ 325
ICAM-Roof 6055-0075 $ 0 $ 200 $ 0 $ 200 $ 0 $ 200
ICAM-Signs 6055-0085 $ 300 $ 300 $ 300 $ 300 $ 300 $ 300
ICAM-Waste Handling 6055-0095 $ 779 $ 979 $ 779 $ 779 $ 879 $ 722
ICAM-Other Income 6055-0999 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Salaries/Benefits 6155-0000 $ 7,694 $ 7,682 $ 7,682 $ 7,679 $ 7,604 $ 7,604
OCAM-Repairs/Maintenance 6155-0004 $ 250 $ 1,450 $ 2,250 $ 250 $ 24,250 $ 450
OCAM-Temporary Help 6155-0010 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Building Repairs 6155-0015 $ 200 $ 0 $ 800 $ 2,200 $ 1,500 $ 700
OCAM-Plumbing 6155-0025 $ 0 $ 0 $ 0 $ 500 $ 300 $ 0
OCAM-Elec/Lighting 6155-0035 $ 0 $ 2,700 $ 0 $ 600 $ 0 $ 3,100
OCAM-Escalator/Elevator 6155-0055 $ 230 $ 230 $ 230 $ 230 $ 739 $ 359
OCAM-Equipment 6155-0065 $ 325 $ 200 $ 325 $ 200 $ 325 $ 200
OCAM-Signs 6155-0085 $ 0 $ 300 $ 900 $ 300 $ 0 $ 0
OCAM-Waste Handling 6155-0095 $ 194 $ 194 $ 394 $ 194 $ 194 $ 180
OCAM-Traffic Control 6155-0115 $ 0 $ 0 $ 100 $ 600 $ 0 $ 0
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TOTAL
DESCRIPTION JUL AUG SEP OCT NOV DEC 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchased Utilities-OCAM-Electricity $ 1,237 $ 2,010 $ 1,727 $ 1,515 $ 965 $ 1,265 $ 16,053
Purchased Utilities-OCAM-Water $ 250 $ 250 $ 250 $ 250 $ 250 $ 250 $ 3,000
TOTAL UTILITIES $ 13,264 $ 20,117 $ 17,459 $ 16,202 $ 9,335 $ 13,102 $ 161,190
JANITORIAL
Salaries/Benefits $ 8,736 $ 8,736 $ 8,736 $ 8,736 $ 8,661 $ 9,358 $ 105,591
Employment Expense $ 50 $ 50 $ 50 $ 50 $ 100 $ 100 $ 550
ICAM-Contract Services $ 12,991 $ 12,991 $ 12,991 $ 12,991 $ 19,991 $ 22,341 $ 172,947
ICAM-Repairs/Maintenance $ 250 $ 600 $ 400 $ 100 $ 0 $ 250 $ 9,150
ICAM-Supplies $ 7,000 $ 0 $ 600 $ 12,000 $ 0 $ 0 $ 35,300
ICAM-Other Income $ (65) $ (65) $ (65) $ (65) $ (65) $ (65) $ (780)
OCAM-Contract Services $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Repairs/Maintenance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Supplies $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Other Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
-------- -------- -------- -------- -------- -------- ---------
TOTAL JANITORIAL $ 28,962 $ 22,312 $ 22,712 $ 33,812 $ 28,687 $ 31,985 $ 322,758
LANDSCAPE
Salaries/Benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
ICAM-Contract Services $ 540 $ 540 $ 540 $ 540 $ 540 $ 540 $ 6,480
ICAM-Repairs/Maintenance $ 0 $ 0 $ 1,500 $ 0 $ 0 $ 0 $ 3,000
OCAM-Contract Services $ 1,100 $ 1,100 $ 1,100 $ 1,100 $ 600 $ 100 $ 9,200
OCAM-Repairs/Maintenance $ 100 $ 200 $ 800 $ 0 $ 0 $ 0 $ 4,200
-------- -------- -------- -------- -------- -------- ---------
TOTAL LANDSCAPE $ 1,740 $ 1,840 $ 3,940 $ 1,640 $ 1,140 $ 640 $ 22,880
HVAC
ICAM-HVAC-Salaries/Benefits $ 1,450 $ 1,450 $ 1,450 $ 1,450 $ 1,450 $ 1,580 $ 17,726
ICAM-HVAC-Contract Services $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
ICAM-HVAC-Repairs/Maintenance $ 584 $ 203 $ 488 $ 531 $ 476 $ 349 $ 7,323
ICAM-HVAC-Electricity $ 6,274 $ 6,274 $ 6,482 $ 3,892 $ 2,411 $ 2,580 $ 43,743
ICAM-HVAC-Gas $ 1,380 $ 1,300 $ 1,500 $ 1,900 $ 2,700 $ 3,900 $ 28,830
ICAM-HVAC-Gas Reimbursements $ (1,407) $ (1,407) $ (1,407) $ (1,407) $ (1,407) $ (1,407) $ (16,887)
ICAM-HVAC-Depreciation $ 2,475 $ 2,475 $ 2,475 $ 2,475 $ 2,475 $ 2,475 $ 29,702
-------- -------- -------- -------- -------- -------- ---------
TOTAL HVAC $ 10,755 $ 10,294 $ 10,987 $ 8,840 $ 8,104 $ 9,477 $ 110,437
MAINTENANCE
ICAM-Salaries/Benefits $ 9,120 $ 9,120 $ 9,120 $ 9,052 $ 8,989 $ 9,793 $ 110,652
Employment Expense $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 600
ICAM-Repairs/Maintenance $ 1,260 $ 60 $ 1,260 $ 60 $ 2,760 $ 60 $ 17,000
ICAM-Temporary Help $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
ICAM-Building Repairs $ 1,000 $ 1,350 $ 1,175 $ 975 $ 1,125 $ 975 $ 15,550
ICAM-Plumbing $ 200 $ 350 $ 0 $ 400 $ 350 $ 200 $ 11,950
ICAM-Elec/Lighting $ 300 $ 300 $ 1,800 $ 300 $ 300 $ 300 $ 21,600
ICAM-Wired Music $ 65 $ 65 $ 65 $ 65 $ 65 $ 65 $ 780
ICAM-Escalator/Elevator $ 4,750 $ 4,750 $ 4,750 $ 4,750 $ 4,750 $ 4,750 $ 63,800
ICAM-Equipment $ 225 $ 225 $ 625 $ 225 $ 425 $ 225 $ 11,600
ICAM-Roof $ 0 $ 0 $ 0 $ 200 $ 0 $ 200 $ 1,000
ICAM-Signs $ 300 $ 300 $ 300 $ 300 $ 300 $ 300 $ 3,600
ICAM-Waste Handling $ 722 $ 722 $ 922 $ 722 $ 722 $ 722 $ 9,440
ICAM-Other Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Salaries/Benefits $ 7,604 $ 7,604 $ 7,604 $ 7,604 $ 7,588 $ 8,110 $ 92,069
OCAM-Repairs/Maintenance $ 15,450 $ 250 $ 250 $ 250 $ 250 $ 250 $ 45,600
OCAM-Temporary Help $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Building Repairs $ 1,000 $ 1,000 $ 700 $ 200 $ 200 $ 200 $ 8,700
OCAM-Plumbing $ 0 $ 0 $ 300 $ 0 $ 0 $ 0 $ 1,100
OCAM-Elec/Lighting $ 1,800 $ 0 $ 0 $ 2,400 $ 0 $ 0 $ 10,600
OCAM-Escalator/Elevator $ 239 $ 239 $ 239 $ 239 $ 239 $ 239 $ 3,452
OCAM-Equipment $ 325 $ 200 $ 325 $ 350 $ 325 $ 200 $ 3,300
OCAM-Signs $ 2,700 $ 0 $ 0 $ 600 $ 0 $ 0 $ 4,800
OCAM-Waste Handling $ 380 $ 180 $ 180 $ 180 $ 180 $ 180 $ 2,630
OCAM-Traffic Control $ 11,100 $ 0 $ 500 $ 100 $ 0 $ 0 $ 12,400
</TABLE>
<PAGE>
NORTHTOWN MALL
1998 OPERATING BUDGET
SUMMARY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
DESCRIPTION G/L # JAN FEB MAR APR MAY
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OCAM-Sweep/Clean 6155-0125 $ 1,850 $ 750 $ 750 $ 1,350 $ 750
OCAM-Snow Removal 6155-0135 $10,150 $ 5,150 $ 0 $ 0 $ 0
OCAM-Pave/Patch 6155-0145 $ 0 $ 0 $ 0 $ 1,000 $ 5,000
OCAM-Parking Deck 6155-0155 $ 75 $ 75 $ 1,075 $ 2,075 $ 1,075
OCAM-Other Income 6155-0999 $ 0 $ 0 $ 0 $ 0 $ 0
------- ------- ------- ------- -------
TOTAL MAINTENANCE $41,555 $46,505 $37,130 $42,948 $67,096
SECURITY
ICAM-Salaries/Benefits 6070-0000 $ 5,101 $ 5,101 $ 5,088 $ 5,081 $ 5,081
Employment Expense 6070-0001 $ 90 $ 90 $ 90 $ 90 $ 90
ICAM-Contract Services 6070-0002 $ 5,510 $ 5,335 $ 5,510 $ 5,335 $ 5,510
ICAM-Fire Protection-Repairs/Maintenance 6070-0003 $ 319 $ 259 $ 529 $ 259 $ 259
ICAM-Repairs/Maintenance 6070-0004 $ 600 $ 25 $ 25 $ 25 $ 25
ICAM-Training 6070-0006 $ 30 $ 30 $ 330 $ 30 $ 30
ICAM-Phone 6070-0007 $ 74 $ 74 $ 74 $ 74 $ 74
ICAM-Supplies 6070-0008 $ 45 $ 45 $ 4,845 $ 45 $ 45
ICAM-Access Control 6070-0009 $ 48 $ 48 $ 48 $ 48 $ 48
ICAM-Safety Supplies 6070-0010 $ 220 $ 90 $ 490 $ 490 $ 90
ICAM-Other Income 6070-0099 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Salaries/Benefits 6170-0000 $ 4,174 $ 4,174 $ 4,163 $ 4,157 $ 4,157
OCAM-Contract Services 6170-0002 $ 4,936 $ 4,139 $ 4,916 $ 4,773 $ 4,936
OCAM-Repairs/Maintenance 6170-0004 $ 650 $ 25 $ 25 $ 105 $ 25
OCAM-Training 6170-0006 $ 30 $ 30 $ 330 $ 30 $ 30
OCAM-Phone 6170-0007 $ 1,285 $ 85 $ 85 $ 85 $ 85
OCAM-Supplies 6170-0008 $ 65 $ 65 $ 65 $ 55 $ 55
OCAM-Access Control 6170-0009 $ 12 $ 12 $ 12 $ 12 $ 12
OCAM-Safety Supplies 6170-0010 $ 60 $ 20 $ 120 $ 120 $ 20
OCAM-Fire Protection-Repairs/Maintenance 6170-0030 $ 28 $ 28 $ 28 $ 28 $ 28
OCAM-Fire Protection-Phone 6170-0037 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Other Income 6170-0099 $ 0 $ 0 $ 0 $ 0 $ 0
--------- ------- ------- ------- ------- -------
TOTAL SECURITY $23,277 $19,675 $26,773 $20,841 $20,599
MALL OFFICE
Electricity 6310-0000 $ 317 $ 306 $ 295 $ 257 $ 305
Salaries/Benefits 6320-0000 $15,098 $15,063 $15,044 $14,946 $14,946
Temporary Personnel 6321-0000 $ 0 $ 0 $ 0 $ 0 $ 0
Employee Training 6322-0000 $ 500 $ 650 $ 865 $ 0 $ 0
Employment Expense 6323-0000 $ 0 $ 0 $ 0 $ 0 $ 0
Travel-Air/Lodging 6330-0000 $ 1,200 $ 200 $ 200 $ 950 $ 1,200
Travel-Meals 6331-0000 $ 300 $ 0 $ 0 $ 200 $ 300
Meeting Expense 6335-0000 $ 3,430 $ 30 $ 30 $ 30 $ 30
Phone 6340-0000 $ 1,518 $ 1,540 $ 1,540 $ 1,540 $ 1,540
Repairs/Maintenance 6345-0000 $ 2,000 $ 0 $ 0 $ 0 $ 0
License & Fees 6350-0000 $ 500 $ 0 $ 0 $ 0 $ 0
Dues & Subscriptions 6355-0000 $ 485 $ 475 $ 210 $ 485 $ 85
Office Supplies & Sundries 6360-0000 $ 1,520 $ 570 $ 1,250 $ 1,070 $ 750
Postage 6365-0000 $ 550 $ 50 $ 550 $ 225 $ 550
Equipment-Leased 6369-0000 $ 2,574 $ 1,083 $ 1,083 $ 1,374 $ 1,083
Equipment-Repairs/Maintenance 6370-0000 $ 1,050 $ 350 $ 550 $ 350 $ 550
Other Income 6371-0000 $ (500) $ (500) $ (500) $ (500) $ (500)
Customer Relations 6372-0000 $ 85 $ 85 $ 85 $ 85 $ 85
Office Rent 6380-0000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000
Professional Services 6390-0000 $ 0 $ 0 $ 0 $ 0 $ 0
------- ------- ------- ------- -------
TOTAL MALL OFFICE $32,627 $21,902 $23,202 $23,012 $22,924
CUSTOMER SERVICE
Miscellaneous Income 6375-0000 $ 0 $ 0 $ 0 $ 0 $ 0
Salaries/Benefits 6376-0120 $ 2,705 $ 2,705 $ 2,705 $ 2,705 $ 2,705
Employment Expense 6376-0021 $ 25 $ 25 $ 25 $ 25 $ 25
Repairs/Maintenance 6376-0030 $ 0 $ 0 $ 0 $ 0 $ 0
Supplies 6376-0050 $ 700 $ 0 $ 0 $ 100 $ 0
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION JUN JUL AUG SEP OCT NOV DEC
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OCAM-Sweep/Clean $ 750 $ 2,375 $ 225 $ 325 $ 225 $ 925 $ 225
OCAM-Snow Removal $ 0 $ 0 $ 0 $ 0 $ 650 $ 6,950 $26,350
OCAM-Pave/Patch $ 0 $ 0 $ 0 $ 200 $ 0 $ 0 $ 0
OCAM-Parking Deck $20,075 $ 2,075 $ 1,575 $ 75 $ 1,075 $ 175 $ 75
OCAM-Other Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
------- ------- ------- ------- ------- ------- -------
TOTAL MAINTENANCE $68,960 $63,040 $28,565 $30,765 $30,972 $36,669 $53,470
SECURITY
ICAM-Salaries/Benefits $ 5,070 $ 5,070 $ 5,013 $ 5,013 $ 5,013 $ 5,013 $ 5,429
Employment Expense $ 210 $ 90 $ 90 $ 90 $ 90 $ 90 $ 90
ICAM-Contract Services $ 5,335 $ 5,510 $ 5,510 $ 5,335 $ 5,510 $ 6,712 $10,997
ICAM-Fire Protection-Repairs/Maintenance $ 4,409 $ 259 $ 259 $ 259 $ 259 $ 259 $ 259
ICAM-Repairs/Maintenance $ 25 $ 350 $ 25 $ 25 $ 25 $ 25 $ 25
ICAM-Training $ 780 $ 30 $ 30 $ 30 $ 30 $ 30 $ 30
ICAM-Phone $ 74 $ 74 $ 74 $ 74 $ 74 $ 74 $ 74
ICAM-Supplies $ 45 $ 45 $ 45 $ 45 $ 45 $ 45 $ 45
ICAM-Access Control $ 48 $ 48 $ 48 $ 48 $ 48 $ 48 $ 48
ICAM-Safety Supplies $ 90 $ 90 $ 90 $ 90 $ 220 $ 90 $ 90
ICAM-Other Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Salaries/Benefits $ 4,148 $ 4,148 $ 4,101 $ 4,101 $ 4,101 $ 4,101 $ 4,442
OCAM-Contract Services $ 5,293 $ 5,456 $ 5,456 $ 4,773 $ 4,936 $11,312 $34,607
OCAM-Repairs/Maintenance $ 25 $ 540 $ 25 $ 25 $ 25 $ 625 $ 2,525
OCAM-Training $ 255 $ 30 $ 30 $ 30 $ 30 $ 30 $ 30
OCAM-Phone $ 85 $ 85 $ 85 $ 85 $ 85 $ 85 $ 85
OCAM-Supplies $ 55 $ 55 $ 55 $ 55 $ 65 $ 2,375 $ 1,475
OCAM-Access Control $ 12 $ 12 $ 12 $ 12 $ 12 $ 12 $ 12
OCAM-Safety Supplies $ 20 $ 20 $ 20 $ 20 $ 60 $ 20 $ 20
OCAM-Fire Protection-Repairs/Maintenance $ 478 $ 28 $ 28 $ 28 $ 28 $ 28 $ 28
OCAM-Fire Protection-Phone $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OCAM-Other Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
------- ------- ------- ------- ------- ------- -------
TOTAL SECURITY $26,456 $21,939 $20,996 $20,138 $20,656 $30,974 $60,311
MALL OFFICE
Electricity $ 379 $ 383 $ 451 $ 509 $ 355 $ 427 $ 315
Salaries/Benefits $14,873 $14,873 $14,873 $14,873 $14,644 $14,644 $15,502
Temporary Personnel $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Employee Training $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Employment Expense $ 150 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Travel-Air/Lodging $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200
Travel-Meals $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Meeting Expense $ 30 $ 1,030 $ 30 $ 30 $ 30 $ 30 $ 3,030
Phone $ 1,540 $ 1,540 $ 1,540 $ 2,840 $ 1,540 $ 1,540 $ 1,540
Repairs/Maintenance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
License & Fees $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Dues & Subscriptions $ 210 $ 185 $ 115 $ 112 $ 185 $ 85 $ 85
Office Supplies & Sundries $ 570 $ 1,250 $ 570 $ 750 $ 1,070 $ 750 $ 570
Postage $ 50 $ 550 $ 50 $ 550 $ 50 $ 550 $ 50
Equipment-Leased $ 1,083 $ 1,374 $ 1,083 $ 1,083 $ 1,374 $ 1,083 $ 1,083
Equipment-Repairs/Maintenance $ 350 $ 2,050 $ 350 $ 780 $ 350 $ 550 $ 350
Other Income $ (500) $ (500) $ (500) $ (500) $ (500) $ (500) $ (500)
Customer Relations $ 85 $ 85 $ 85 $ 85 $ 85 $ 85 $ 85
Office Rent $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000
Professional Services $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
------- ------- ------- ------- ------- ------- -------
TOTAL MALL OFFICE $21,020 $25,020 $20,847 $23,312 $21,383 $21,444 $24,310
CUSTOMER SERVICE
Miscellaneous Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Salaries/Benefits $ 2,705 $ 2,695 $ 2,696 $ 2,696 $ 2,696 $ 3,696 $ 5,818
Employment Expense $ 25 $ 25 $ 25 $ 25 $ 25 $ 25 $ 25
Repairs/Maintenance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Supplies $ 0 $ 200 $ 0 $ 0 $ 100 $ 200 $ 0
<CAPTION>
- -------------------------------------------------------
TOTAL
DESCRIPTION 1998
- -------------------------------------------------------
<S> <C>
OCAM-Sweep/Clean $ 10,500
OCAM-Snow Removal $ 49,250
OCAM-Pave/Patch $ 6,200
OCAM-Parking Deck $ 29,500
OCAM-Other Income $ 0
--------
TOTAL MAINTENANCE $547,675
SECURITY
ICAM-Salaries/Benefits $ 61,071
Employment Expense $ 1,200
ICAM-Contract Services $ 72,109
ICAM-Fire Protection-Repairs/Maintenance $ 7,588
ICAM-Repairs/Maintenance $ 1,200
ICAM-Training $ 1,410
ICAM-Phone $ 888
ICAM-Supplies $ 5,340
ICAM-Access Control $ 576
ICAM-Safety Supplies $ 2,140
ICAM-Other Income $ 0
OCAM-Salaries/Benefits $ 49,967
OCAM-Contract Services $ 95,533
OCAM-Repairs/Maintenance $ 4,620
OCAM-Training $ 885
OCAM-Phone $ 2,220
OCAM-Supplies $ 4,440
OCAM-Access Control $ 144
OCAM-Safety Supplies $ 520
OCAM-Fire Protection-Repairs/Maintenance $ 786
OCAM-Fire Protection-Phone $ 0
OCAM-Other Income $ 0
--------
TOTAL SECURITY $312,638
MALL OFFICE
Electricity $ 4,299
Salaries/Benefits $179,380
Temporary Personnel $ 0
Employee Training $ 2,015
Employment Expense $ 150
Travel-Air/Lodging $ 5,150
Travel-Meals $ 800
Meeting Expense $ 7,760
Phone $ 19,758
Repairs/Maintenance $ 2,000
License & Fees $ 500
Dues & Subscriptions $ 2,717
Office Supplies & Sundries $ 10,690
Postage $ 3,775
Equipment-Leased $ 15,360
Equipment-Repairs/Maintenance $ 7,630
Other Income $ (6,000)
Customer Relations $ 1,020
Office Rent $ 24,000
Professional Services $ 0
--------
TOTAL MALL OFFICE $281,004
CUSTOMER SERVICE
Miscellaneous Income $ 0
Salaries/Benefits $ 36,528
Employment Expense $ 300
Repairs/Maintenance $ 0
Supplies $ 1,300
</TABLE>
<PAGE>
NORTHTOWN MALL
1998 OPERATING BUDGET
SUMMARY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
DESCRIPTION G/L # JAN FEB MAR
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equipment 6367-0055 $ 80 $ 185 $ 0
TOTAL CUSTOMER SERVICE $ 3,510 $ 2,915 $ 2,730
INSURANCE & TAXES
ICAM Insurance 6075-0000 $ 2,768 $ 2,768 $ 2,768
ICAM Real Estate Taxes 6080-0000 $ 22,704 $ 22,704 $ 22,704
OCAM Insurance 6175-0000 $ 6,258 $ 6,258 $ 6,258
OCAM Real Estate Taxes 6180-0000 $ 27,258 $ 27,258 $ 27,258
Mail Office Insurance 6352-0000 $ 90 $ 90 $ 90
------------ ---------- ----------
TOTAL INSURANCE & TAXES $ 59,077 $ 59,077 $ 59,077
TOTAL CAM EXPENSES $ 216,087 $ 196,472 $ 195,034
FOOD COURT
Salaries/Benefits 6230-0000 $ 462 $ 462 $ 462
Employment Expense 6230-0001 $ 25 $ 25 $ 25
Contract Services 6230-0002 $ 8,610 $ 8,410 $ 8,410
Supplies/Repairs/Maintenance 6230-0004 $ 1,300 $ 450 $ 1,100
Other Income 6230-0099 $ 0 $ 0 $ 0
Furniture Amortization 6286-0000 $ 725 $ 725 $ 725
------------ ---------- ----------
TOTAL FOOD COURT $ 11,122 $ 10,072 $ 10,722
LANDLORD EXPENSES
JCP EXPENSES
Salaries/Benefits 6455-0000 $ 1,194 $ 1,186 $ 1,186
Real Estate Taxes 6455-0002 $ 10,824 $ 10,824 $ 10,824
Elevator Maintenance 6455-0003 $ 1,383 $ 1,133 $ 1,383
HVAC Maintenance 6455-0004 $ 0 $ 850 $ 1,300
Miscellaneous Repairs 6455-0005 $ 225 $ 100 $ 275
------------ ---------- ----------
TOTAL JCP EXPENSES $ 13,626 $ 14,093 $ 14,968
OTHER EXPENSES
Insurance 6410-0000 $ 597 $ 597 $ 597
Real Estate Taxes 6420-0000 $ 13,385 $ 13,385 $ 13,385
Professional Services 6425-0000 $ 0 $ 0 $ 0
Legal Expense 6430-0000 $ 0 $ 0 $ 0
Leasing Expense 6440-0000 $ 0 $ 0 $ 0
Landlord TI-Salaries/Benefits 6442-0000 $ 946 $ 953 $ 946
Landlord TI 6442-0000 $ 0 $ 250,000 $ 0
Landlord Repairs/Upgrades-Salaries/Benefits 6643-0000 0 $ 0 $ 0
Electricity-Vacant Spaces 6643-0000 $ 353 $ 353 $ 353
Landlord Repairs/Upgrades 6643-0000 $ 0 $ 0 $ 0
Merchant Fund Contributions 6645-0000 $ 6,417 $ 6,417 $ 6,416
Marketing Expense 6450-0000 $ 0 $ 0 $ 0
Bad Debt Expense 6465-0000 $ 0 $ 0 $ 0
Interest 6470-0000 $ 0 $ 0 $ 0
Depreciation 6475-0000 $ 0 $ 0 $ 0
Capital Improvements 6480-0000 $ 0 $ 0 $ 0
TOTAL LANDLORD EXPENSES $ 285,330 $ 35,791 $ 36,665
------------ ---------- ----------
GRAND TOTAL $ (1,025,711) $ (847,529) $ (800,347)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION APR MAY JUN JUL AUG
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equipment $ 0 $ 0 $ 0 $ 0 $ 0
TOTAL CUSTOMER SERVICE $ 2,830 $ 2,730 $ 2,730 $ 2,921 $ 2,721
INSURANCE & TAXES
ICAM Insurance $ 2,768 $ 2,768 $ 2,768 $ 2,768 $ 2,768
ICAM Real Estate Taxes $ 22,704 $ 22,704 $ 22,704 $ 22,704 $ 22,704
OCAM Insurance $ 6,258 $ 6,258 $ 6,258 $ 6,258 $ 6,258
OCAM Real Estate Taxes $ 27,258 $ 27,258 $ 27,258 $ 27,258 $ 27,258
Mail Office Insurance $ 90 $ 90 $ 90 $ 90 $ 90
---------- ---------- ---------- ---------- ----------
TOTAL INSURANCE & TAXES $ 59,077 $ 59,077 $ 59,077 $ 59,077 $ 59,077
TOTAL CAM EXPENSES $ 199,849 $ 214,149 $ 226,734 $ 226,719 $ 186,770
FOOD COURT
Salaries/Benefits $ 460 $ 459 $ 459 $ 459 $ 459
Employment Expense $ 25 $ 25 $ 25 $ 50 $ 50
Contract Services $ 8,610 $ 9,410 $ 8,410 $ 8,610 $ 8,410
Supplies/Repairs/Maintenance $ 1,300 $ 100 $ 100 $ 1,300 $ 600
Other Income $ 0 $ 0 $ 0 $ 0 $ 0
Furniture Amortization $ 725 $ 725 $ 725 $ 725 $ 725
---------- ---------- ---------- ---------- ----------
TOTAL FOOD COURT $ 11,121 $ 10,720 $ 9,720 $ 11,145 $ 10,245
LANDLORD EXPENSES
JCP EXPENSES
Salaries/Benefits $ 1,174 $ 1,165 $ 1,150 $ 1,150 $ 1,150
Real Estate Taxes $ 10,824 $ 10,824 $ 10,824 $ 10,824 $ 10,824
Elevator Maintenance $ 1,133 $ 1,444 $ 1,519 $ 1,444 $ 1,194
HVAC Maintenance $ 100 $ 0 $ 100 $ 0 $ 100
Miscellaneous Repairs $ 100 $ 0 $ 100 $ 0 $ 100
---------- ---------- ---------- ---------- ----------
TOTAL JCP EXPENSES $ 13,331 $ 13,433 $ 13,693 $ 13,418 $ 13,368
OTHER EXPENSES
Insurance $ 597 $ 597 $ 597 $ 597 $ 597
Real Estate Taxes $ 13,385 $ 13,385 $ 13,385 $ 13,385 $ 13,385
Professional Services $ 0 $ 0 $ 0 $ 0 $ 0
Legal Expense $ 0 $ 0 $ 0 $ 0 $ 0
Leasing Expense $ 12,300 $ 0 $ 0 $ 0 $ 0
Landlord TI-Salaries/Benefits $ 934 $ 918 $ 918 $ 918 $ 918
Landlord TI $ 250,000 $ 0 $ 0 $ 250,000 $ 0-
Landlord Repairs/Upgrades-Salaries/Benefits $ 0 $ 0 $ 0 $ 0 $ 0
Electricity-Vacant Spaces $ 353 $ 353 $ 353 $ 353 $ 353
Landlord Repairs/Upgrades $ 0 $ 0 $ 0 $ 0 $ 0
Merchant Fund Contributions $ 6,417 $ 6,417 $ 6,416 $ 6,417 $ 6,417
Marketing Expense $ 0 $ 0 $ 0 $ 0 $ 0
Bad Debt Expense $ 0 $ 0 $ 0 $ 0 $ 0
Interest $ 0 $ 0 $ 0 $ 0 $ 0
Depreciation $ 0 $ 0 $ 0 $ 0 $ 0
Capital Improvements $ 0 $ 0 $ 0 $ 0 $ 0
TOTAL LANDLORD EXPENSES $ 297,317 $ 35,103 $ 35,361 $ 285,087 $ 35,037
---------- ---------- ---------- ---------- ----------
GRAND TOTAL $ (570,736) $ (794,157) $ (822,413) $ (581,393) $ (861,733)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL
DESCRIPTION SEP OCT NOV DEC 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equipment $ 0 $ 0 $ 0 $ 0 $ 265
TOTAL CUSTOMER SERVICE $ 2,721 $ 2,821 $ 3,921 $ 5,843 $ 38,393
INSURANCE & TAXES
ICAM Insurance $ 2,768 $ 2,768 $ 2,768 $ 2,768 $ 33,211
ICAM Real Estate Taxes $ 22,704 $ 22,704 $ 22,704 $ 22,704 $ 272,442
OCAM Insurance $ 6,258 $ 6,258 $ 6,258 $ 6,258 $ 75,098
OCAM Real Estate Taxes $ 27,258 $ 27,258 $ 27,258 $ 27,258 $ 327,096
Mail Office Insurance $ 90 $ 90 $ 90 $ 90 $ 1,074
---------- ---------- ------------ ------------ -------------
TOTAL INSURANCE & TAXES $ 59,077 $ 59,077 $ 59,077 $ 59,077 $ 708,921
TOTAL CAM EXPENSES $ 191,112 $ 195,404 $ 199,351 $ 258,215 $ 2,505,896
FOOD COURT
Salaries/Benefits $ 459 $ 459 $ 452 $ 489 $ 5,541
Employment Expense $ 50 $ 50 $ 100 $ 100 $ 550
Contract Services $ 8,410 $ 8,610 $ 9,910 $ 14,660 $ 110,476
Supplies/Repairs/Maintenance $ 600 $ 1,300 $ 100 $ 100 $ 8,350
Other Income $ 0 $ 0 $ 0 $ 0 $ 0
Furniture Amortization $ 725 $ 725 $ 725 $ 725 $ 8,700
---------- ---------- ------------ ------------ -------------
TOTAL FOOD COURT $ 10,245 $ 11,145 $ 11,287 $ 16,075 $ 133,617
LANDLORD EXPENSES
JCP EXPENSES
Salaries/Benefits $ 1,150 $ 1,129 $ 1,129 $ 1,236 $ 13,997
Real Estate Taxes $ 10,824 $ 10,824 $ 10,824 $ 10,824 $ 129,887
Elevator Maintenance $ 1,444 $ 1,194 $ 1,444 $ 1,194 $ 15,909
HVAC Maintenance $ 0 $ 100 $ 0 $ 100 $ 2,650
Miscellaneous Repairs $ 275 $ 100 $ 0 $ 100 $ 1,375
---------- ---------- ------------ ------------ -------------
TOTAL JCP EXPENSES $ 13,693 $ 13,347 $ 13,397 $ 13,454 $ 163,818
OTHER EXPENSES
Insurance $ 597 $ 597 $ 597 $ 597 $ 7,161
Real Estate Taxes $ 13,385 $ 13,385 $ 13,385 $ 13,385 $ 160,622
Professional Services $ 0 $ 0 $ 0 $ 0 $ 0
Legal Expense $ 0 $ 0 $ 0 $ 0 $ 0
Leasing Expense $ 0 $ 12,300 $ 0 $ 0 $ 24,600
Landlord TI-Salaries/Benefits $ 918 $ 896 $ 896 $ 962 $ 11,141
Landlord TI $ 0 $ 250,000 $ 0 $ 0 $ 1,000,000
Landlord Repairs/Upgrades-Salaries/Benefits $ 0 $ 0 $ 0 $ 0 $ 0
Electricity-Vacant Spaces $ 353 $ 353 $ 353 $ 353 $ 4,236
Landlord Repairs/Upgrades $ 0 $ 0 $ 0 $ 0 $ 0
Merchant Fund Contributions $ 6,416 $ 6,417 $ 6,417 $ 6,416 $ 77,000
Marketing Expense $ 0 $ 0 $ 0 $ 0 $ 0
Bad Debt Expense $ 0 $ 0 $ 0 $ 0 $ 0
Interest $ 0 $ 0 $ 0 $ 0 $ 0
Depreciation $ 0 $ 0 $ 0 $ 0 $ 0
Capital Improvements $ 0 $ 0 $ 0 $ 0 $ 0
TOTAL LANDLORD EXPENSES $ 35,361 $ 297,295 $ 35,045 $ 35,186 $ 1,448,579
---------- ---------- ------------ ------------ -------------
GRAND TOTAL $ (923,926) $ (710,094) $ (1,067,794) $ (1,086,317) $ (10,092,150)
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD
NO MONTH ACTUAL
<S> <C> <C> <C>
INCOME
Rental Income-Shop 3015-0000 $ 500,928 $ 7,173,140
Rental Income-Anchors 3016-0000 132,574 1,590,892
Lease Concessions 3020-0000 (1,250) (85,475)
Percentage Rent 3025-0000 239,507 750,564
Storage Rent 3030,0000 (993) 84,784
Gumball Income, Net of expenses 3050-0000 0 0
Parking Ticket Income 3070-0000 1,120 2,731
Payphone Revenue 3075-0000 1,151 19,373
Late Charge/Initerest Income 3080-0000 (2,360) 24,105
Vending/Concession Income 3085-0000 249 2,053
Prior Year Percentage Rent 3110-0000 25,156 123,345
Prior Year CAM 3120-0000 0 (28,939)
CAM Reimbursements 6095-0000 168,887 2,072,692
Majors CAM Contributions 6097-0000 58,389 657,259
Food Court Reimbursements 6290-0000 11,179 134,145
HVAC Reimbursements 6548-0000 25,908 310,187
Tax Reimbursements 6581-0000 56,031 684,493
Ins Reimbursements 6576-0000 3,926 47,408
Other Income 11,675 50,139
---------- -----------
TOTAL INCOME $1,232,077 $13,612,896
========== ===========
KIOSK INCOME
Rental Income 3040-0000 $ 152,219 $ 675,143
Percentage Rent 3040-0001 16,098 134,356
Other Income 3040-0009 (350) 2,294
Salaries/Benefits 3041-0000 (2,444) (36,310)
Temporary Personnel 3041-0001 (3,034) (5,892)
CAM Reimbursement Expense 3041-0002 (8,416) (40,475)
Equipment 3041-0003 (196) (1,882)
Repairs/Maintenance 3041-0004 (970) (36,543)
Advertising 3041-0005 0 (303)
---------- -----------
TOTAL KIOSKS $ 152,907 $ 690,389
========== ===========
REFUSE HANDLING
Salaries/Benefits 6525-0000 $ (7,563) $ (46,010)
Contract Services 6525-0002 (10,315) (110,491)
Repairs and Maintenance 6525-0004 (44) (343)
<CAPTION>
YTD YTD ANNUAL PRIOR YR
BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C>
INCOME
Rental Income-Shop $ 7,293,994 $ (120,854) -2% $ 7,293,994 $ 7,021,729
Rental Income-Anchors 1,590,888 4 0% 1,590,888 1,590,892
Lease Concessions 0 (85,475) N/A 0 (149,452)
Percentage Rent 452,100 298,464 66% 452,100 613,539
Storage Rent 75,726 9,058 12% 75,726 74,401
Gumball Income, Net of expenses 0 0 N/A 0 0
Parking Ticket Income 0 2,731 N/A 0 (346)
Payphone Revenue 19,200 173 1% 19,200 17,855
Late Charge/Initerest Income 0 24,105 N/A 0 24,824
Vending/Concession Income 1,620 433 27% 1,620 1,523
Prior Year Percentage Rent 0 123,345 N/A 0 12,462
Prior Year CAM 0 (28,939) N/A 0 (8,488)
CAM Reimbursements 2,201,542 (128,850) -6% 2,201,542 1,963,903
Majors CAM Contributions 657,696 (437) -0% 657,696 632,791
Food Court Reimbursements 130,331 3,814 3% 130,331 122,988
HVAC Reimbursements 332,432 (22,245) -7% 332,432 382,138
Tax Reimbursements 699,265 (14,772) -2% 699,265 588,839
Ins Reimbursements 52,233 (4,825) -9% 52,233 36,715
Other Income 0 50,139 N/A 0 8,323
----------- ---------- ----- ----------- -----------
TOTAL INCOME $13,507,027 $ 105,868 1% $13,507,027 $12,934,634
=========== ========== ===== =========== ===========
KIOSK INCOME
Rental Income $ 423,590 $ 251,553 59% $ 423,590 $ 562,177
Percentage Rent 60,405 73,951 122% 60,405 79,028
Other Income 0 2,294 N/A 0 4,370
Salaries/Benefits (29,293) (7,017) -24% (29,293) (55,732)
Temporary Personnel (3,000) (2,892) -96% (3,000) (2,651)
CAM Reimbursement Expense (24,200) (16,275) -67% (24,200) (32,060)
Equipment (45,000) 43,118 96% 0 (3,810)
Repairs/Maintenance (2,000) (34,543) -1727% (2,000) (9,931)
Advertising (100) (203) -203% (100) (111)
----------- ---------- ----- ----------- -----------
TOTAL KIOSKS $ 380,402 $ 309,987 81% $ 425,402 $ 541,279
=========== ========== ===== =========== ===========
REFUSE HANDLING
Salaries/Benefits $ (58,407) $ 12,397 21% $ (58,407) $ (64,419)
Contract Services (109,032) (1,459) -1% (109,032) (114,027)
Repairs and Maintenance (2,300) 1,957 85% (2,300) (2,873)
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD
NO MONTH ACTUAL
<S> <C> <C> <C>
Other Income 6525-0099 0 12,760
Refuse Reimbursements 6526-0000 18,001 212,525
------ -------
Net Refuse $ 79 $ 68,441
========= ==========
T/R HVAC
Salaries/Benefits 6545-0000 $ (4,483) $ (58,375)
Contract Services 6545-0002 0 0
Repairs/Maintenance 6545-0004 (3,123) (23,036)
Electricity 6545-0007 (32,984) (142,270)
Gas 6545-0008 0 0
Other Income 6545-0099 0 0
Depreciation 6547-0000 (4,995) (59,934)
--------- ----------
Net HVAC $ (45,585) $ (283,615)
========= ==========
T/R TAXES AND INSURANCE
Insurance 6575-0000 $ (3,775) $ (45,537)
Real Estate Taxes 6580-0000 (44,464) (593,983)
--------- ----------
Total Taxes and Insurance $ (48,239) $ (639,520)
========= ==========
CAM EXPENSES
UTILITIES
ICAM-Electricity 6010-0000 $ (20,512) $ 144,107
Electricity Reimbursements 6010-0001 (958) (13,485)
ICAM-Water 6020-0000 453 7,485
Water Reimbursements 6020-0001 (490) (5,876)
OCAM-Electricity 6110-0000 1,241 17,410
OCAM-Water 6120-0000 16 2,831
--------- ----------
Total Utilities (20,251) 152,472
========= ==========
JANITORIAL
Salaries/Benefits 6030-0000 5,898 193,560
Employment Expense 6030-0001 319 970
ICAM Contract 6030-0002 12,503 26,511
ICAM Maintenance 6030-0004 2,525 7,895
ICAM Supplies 6030-0005 2,034 37,578
<CAPTION>
YTD YTD ANNUAL PRIOR YR
BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C>
Other Income 12,000 760 6% 12,000 12,098
Refuse Reimbursements 223,148 (10,623) -5% 223,148 200,368
------- ------- --- ------- -------
Net Refuse $ 65,409 $ 3,033 5% $ 65,409 $ 31,147
========== ========= === ========== ==========
T/R HVAC
Salaries/Benefits $ (66,745) $ 8,370 13% $ (66,745) $ (59,360)
Contract Services 0 0 N/A 0 0
Repairs/Maintenance (44,770) 21,734 49% (44,770 (33,091)
Electricity (148,919) 6,649 4% (148,919) (140,693)
Gas 0 0 N/A 0 0
Other Income 0 0 N/A 0 0
Depreciation (59,940) 6 0% (59,940) (59,934)
---------- --------- --- ---------- ----------
Net HVAC $ (320,374) $ 36,759 11% $ (320,374) $ (293,077)
========== ========= === ========== ==========
T/R TAXES AND INSURANCE
Insurance $ (46,769) $ 1,232 3% $ (46,769) $ (38,644)
Real Estate Taxes (763,201) 169,218 22% (863,201) (566,204)
---------- --------- --- ---------- ----------
Total Taxes and Insurance $ (809,970) $ 170,450 21% $ (809,970) $ (604,848)
========== ========= === ========== ==========
CAM EXPENSES
UTILITIES
ICAM-Electricity $ 141,660 $ (2,447) -2% $ 141,660 $ 111,360
Electricity Reimbursements (4,273) 9,213 216% (4,273) (6,166)
ICAM-Water 20,340 12,855 63% 20,340 10,310
Water Reimbursements (6,192) (316) -5% (6,192) (6,042)
OCAM-Electricity 27,260 9,850 36% 27,260 33,823
OCAM-Water 4,404 1,573 36% 4,404 3,234
---------- --------- --- ---------- ----------
Total Utilities 183,199 30,728 17% 183,199 146,518
========== ========= === ========== ==========
JANITORIAL
Salaries/Benefits 214,985 21,425 10% 214,985 209,009
Employment Expense 1,200 230 19% 1,200 1,167
ICAM Contract 17,544 (8,967) -51% 17,544 7,240
ICAM Maintenance 9,900 2,005 20% 9,900 13,186
ICAM Supplies 43,974 6,396 15% 43,974 43,643
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD YTD YTD ANNUAL PRIOR YR
NO MONTH ACTUAL BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ICAM Other Income 6030-0099 (67) (781) 0 781 N/A 0 (458)
OCAM Contract 6130-0002 0 0 0 0 N/A 0 525
OCAM Maintenance 6130-0004 0 71 0 (71) N/A 0 2
OCAM Supplies 6130-0005 0 0 0 0 N/A 0 0
--- ---- - ---- ---- - ----
Total Janitorial 23,213 265,803 287,603 21,800 8% 287,603 274,343
====== ======= ======= ======= ==== ======= =======
LANDSCAPING
Salaries/Benefits 6040-0000 (665) 0 0 (0) N/A 0 1,802
ICAM-Contracts 6040-0002 1,746 7,460 6,480 (980) -15% 6,480 5,946
ICAM-Maintenance 6040-0004 4 1,915 6,000 4,085 68% 6,000 687
OCAM-Contracts 6140-0002 0 7,829 9,180 1,351 15% 9,180 8,421
OCAM-Maintenance 6140-0004 506 2,311 4,200 1,889 45% 4,200 2,390
------ ------- ------- -------- ---- ------- -------
Total Landscaping 1,591 19,514 25,860 6,346 25% 25,860 19,245
====== ======= ======= ======== ==== ======= =======
HVAC EXPENSES
ICAM-HVAC Salaries/Benefits 6045-0000 1,659 18,900 20,145 1,245 6% 20,145 19,933
ICAM-HVAC Contracts 6045-0002 0 0 0 0 N/A 0 0
ICAM-HVAC Maintenance 6045-0004 463 7,207 10,619 3,411 32% 10,619 9,272
ICAM-HVAC Electricity 6045-0008 2,582 38,569 42,835 4,266 10% 42,835 65,984
ICAM-HVAC Gas 6045-0009 3,478 26,571 21,685 (4,886) -23% 21,685 23,056
ICAM-HVAC Gas Reimbursements 6045-0009 (1,407) (16,887) (19,361) (2,474) -13% (19,361) (17,607)
ICAM-HVAC Depreciation 6047-0000 2,453 29,433 29,436 3 0% 29,436 29,433
------ ------- ------- -------- ---- ------- -------
Total HVAC 9,228 103,793 105,358 1,565 1% 105,358 130,071
====== ======= ======= ======== ==== ======= =======
MAINTENANCE
ICAM-Salaries/Benefits 6055-0000 11,301 105,451 108,523 3,073 3% 108,523 107,777
ICAM-Employment Expense 6055-0001 33 563 300 (263) -88% 300 5,239
ICAM-Repairs/Maint 6055-0004 (4,710) 34,706 22,250 47,529
ICAM-Temporary Help 6055-0010 0 0 0 0 N/A 0 0
ICAM-Building Repairs 6055-0015 1,094 7,916 17,550 9,634 55% 17,550 13,083
ICAM-Plumbing 6055-0025 538 2,383 7,600 5,217 69% 7,600 1,962
ICAM-Lighting 6055-0035 1,163 14,107 42,600 28,493 67% 42,600 33,497
ICAM Wired Music 6055-0045 130 264 1,255 991 79% 1,255 2,725
ICAM-Elevators/Escalators 6055-0055 4,032 53,674 55,770 2,096 4% 55,770 52,062
ICAM-Equipment 6055-0065 296 6,426 5,200 (1,226) -24% 5,200 5,700
ICAM-Roof 6055-0075 191 4,547 800 (3,747) -468% 800 254
ICAM-Signs 6055-0085 3,294 7,457 800 (6,657) -832% 800 447
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD YTD YTD ANNUAL PRIOR YR
NO MONTH ACTUAL BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ICAM-Waste Handling 6055-0095 917 9,838 12,912 3,074 24% 12,912 12,185
ICAM-Other Income 6055-0999 (566) (566) 0 566 N/A 0 (49)
OCAM-Salaries/Benefits 6155-0000 4,453 84,489 84,530 40 0% 84,530 70,868
OCAM-Repairs/Maint 6155-0004 110 1,591 3,100 1,509 49% 3,100 2,322
OCAM-Temporary Help 6155-0010 0 0 0 0 N/A 0 0
OCAM-Building Repairs 6155-0015 373 3,863 8,400 4,537 54% 8,400 2,534
OCAM-Plumbing 6155-0025 334 4,602 1,100 (3,502) -318% 1,100 912
OCAM-Lighting 6155-0035 63 6,885 13,780 6,895 50% 13,780 5,674
OCAM-Elevators/Escalators 6155-0055 180 2,730 5,120 2,390 47% 5,120 2,320
OCAM-Equipment 6155-0065 577 2,639 3,600 961 27% 3,600 3,866
OCAM-Signs 6155-0085 82 1,673 3,000 1,327 44% 3,000 1,013
OCAM-Waste Handling 6155-0095 229 2,578 3,384 806 24% 3,384 2,742
OCAM-Traffic Control 6155-0115 0 4,296 4,400 104 2% 4,400 11,825
OCAM-Sweeping 6155-0125 3,182 14,609 15,800 1,191 8% 15,800 11,593
OCAM-Snow Removal 6155-0135 7,330 22,464 34,550 12,086 35% 34,550 125,448
OCAM-Pave/Patch 6155-0145 0 1,704 1,200 (504) -42% 1,200 1,135
OCAM-Parking Deck 6155-0155 48 3,087 15,500 12,413 80% 15,500 2,192
OCAM-Other Income 6155-0999 0 (100) 0 100 N/A 0 0
----- ------ ------ ------ ---- ------ -------
Total Maintenance 34,672 403,875 473,024 69,149 15% 473,024 526,944
====== ======= ======= ====== ==== ======= =======
SECURITY
ICAM Salaries/Benefits 6070-0000 1,786 55,969 49,857 (6,112) -12% 49,857 44,839
Employment Expense 6070-0001 695 2,724 1,200 (1,524) -127% 1,200 251
ICAM-Contracts 6070-0002 29,173 100,028 104,708 4,680 4% 104,708 111,106
ICAM-Fire Protection-Maint 6070-0003 864 3,163 3,804 641 17% 3,804 6,530
ICAM-Maintenance 6070-0004 89 1,641 625 (1,016) -163% 625 (57)
ICAM-Equipment 6070-0005 0 0 0 0 N/A 0 911
ICAM-Training 6070-0006 27 818 660 (158) -24% 660 1,181
ICAM-Phone 6070-0007 53 801 756 (45) -6% 756 791
ICAM-Supplies 6070-0008 39 721 665 (56) -8% 665 4,727
ICAM Access Control 6070-0009 2 708 656 (52) -8% 656 0
ICAM-Safety Supplies 6070-0010 51 2,050 3,275 1,225 37% 3,275 0
ICAM-Fire Protection-Contracts 6070-0032 (792) 5,323 4,500 (823) -18% 4,500 5,168
ICAM-Fire Protection-Phone 6070-0037 0 0 0 0 N/A 0 0
ICAM-Other Income 6070-0099 0 0 0 0 N/A 0 0
OCAM-Salaries/Benefits 6170-0000 2,067 40,728 40,792 64 0% 40,792 37,059
OCAM-Contracts 6170-0002 31,023 96,248 110,863 14,615 13% 110,863 109,502
OCAM-Maintenance 6170-0004 0 3,453 4,545 1,092 24% 4,545 4,774
OCAM-Equipment 6170-0005 0 0 0 0 N/A 0 605
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD YTD YTD ANNUAL PRIOR YR
NO MONTH ACTUAL BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OCAM-Training 6170-0006 0 370 910 540 59% 910 1,213
OCAM-Phone 6170-0007 22 263 756 493 65% 756 267
OCAM-Supplies 6170-0008 2,762 3,875 4,115 240 6% 4,115 6,399
OCAM-Access Control 6170-0009 0 216 324 108 33% 324 0
OCAM-Safety Supplies 6170-0010 0 751 1,100 349 32% 1,100 0
OCAM-Fire Protection-Maint 6170-0030 0 147 336 189 56% 336 953
OCAM-Fire Protection-Contracts 6170-0032 16 680 500 (180) -36% 500 574
OCAM-Fire Protection-Phone 6170-0037 0 0 0 0 N/A 0 0
OCAM-Other Income 6170-0099 0 0 0 0 N/A 0 0
----- ----- ----- ---- --- ----- -----
Total Security 67,876 320,678 334,948 14,270 4% 334,948 336,793
====== ======= ======= ====== === ======= =======
MALL OFFICE EXPENSES
Electricity 6310-0000 297 4,025 6,960 2,935 42% 6,960 7,365
Salaries/Benefits 6320-0000 9,406 123,973 123,430 (544) -0% 123,430 126,106
Salaries/Benefits--Home Office 6320-0001 4,400 53,062 52,800 (262) -0% 52,800 52,800
Temporary Help 6321-0000 0 0 0 0 N/A 0 0
Employee Training 6322-0000 125 2,777 1,915 (862) -45% 1,915 4,158
Employment Expense 6323-0000 0 220 150 (70) -47% 150 140
Travel-Air/Lodging 6330-0000 950 3,920 5,000 1,080 22% 5,000 3,888
Travel--Meals 6331-0000 262 964 700 (264) -38% 700 573
Meetings/Business Meals 6335-0000 84 4,251 4,000 (251) -6% 4000 5,100
Telephone 6340-0000 432 18,027 20,740 2,713 13% 20,740 18,658
Repairs/Maintenance 6345-0000 833 3,106 0 (3,106) N/A 0 533
Licenses/Fees 6350-0000 0 410 500 90 -3% 500 434
Dues and Subscriptions 6355-0000 30 2,813 2,740 (73) -3% 2,740 2,988
Supplies and Sundries 6360-0000 1,817 11,419 10,990 (429) -4% 10,990 10,431
Postgage and Delivery 6365-0000 643 3,247 4,435 1,188 27% 4,435 3,406
Equipment-Leased 6369-0000 1,746 22,030 21,623 (407) -2% 21,623 27,637
Equipment-Maintenance 6370-0000 210 3,234 7,130 3,896 55% 7,130 9,066
Other Income 6371-0000 (500) (6,000) (6,000) 0 0% (6,000) (1,800)
Customer relations 6372-0000 123 790 1,020 230 23% 1,020 1,362
Rent expense 6380-0000 2,000 24,000 24,000 0 0% 24,000 24,000
Professional Services 6390-0000 0 0 0 0 N/A 0 0
------ ------- ------- ------ --- ------- -------
Total Mall Office 22,858 276,267 282,132 5,865 2% 282,132 296,415
====== ======= ======= ====== === ======= =======
CUSTOMER SERVICE
Income 6375-0000 (1,340) (1,340) 0 1,340 N/A 0 (2,251)
Salaries and Benefits 6376-0020 2,209 29,246 37,992 8,747 23% 37,992 31,996
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD YTD
NO MONTH ACTUAL BUDGET
<S> <C> <C> <C> <C>
Employment Expense 6376-0021 175 508 300
Repairs & Maintenance 6376-0030 0 0 0
Supplies 6376-0050 130 812 1,400
Equipment 6376-0055 0 182 180
Total Customer Service 1,174 29,407 39,872
TAXES AND INSURANCE
ICAM Insurance 6075-0000 2,706 32,576 34,148
ICAM Taxes 6080-0000 35,892 291,483 329,778
OCAM Insurance 6175-0000 6,446 77,607 81,635
OCAM Taxes 6180-0000 48,397 349,700 407,335
Mall Office Insurance 6352-0000 63 1,057 1,686
------ ------- -------
Total Taxes and Insurance 93,504 752,423 854,583
------ ------- -------
TOTAL CAM EXPENSES $233,865 $2,324,231 $2,586,579
======== ========== ==========
FOOD COURT EXPENSES
Salaries/Benefits 6230-0000 $ 4,220 $ 111,314 $ 93,460
Employment Expense 6230-0001 0 32 0
Contract Services 6230-0002 7,402 8,442 800
Supplies 6230-0004 793 12,429 10,390
Other Income 0 0 0
Furniture Amortization 6286-0000 725 8,700 8,700
-------- ---------- ----------
Total Food Court Expenses $ 13,140 $ 140,917 $ 113,350
======== ========== ==========
LANDLORD OBLIGATIONS
Insurance 6410-0000 $ 961 $ 11,179 $ 11,736
Real Estate Taxes 6420-0000 65,423 175,542 160,064
Professional Services 6425-0000 0 0 0
ICSC Expenses 6440-0000 0 19,785 0
Landlord TI Costs-Salaries 6442-0000 819 11,435 10,163
Landlord TI Costs 6442-0001 478 23,428 0
Landlord R & M-Salaries 6443-0000 0 44 0
Landlord-Electricity vacant space 6443-0003 176 1,746 4,596
Landlord-R&M 6443-0004 (12) 9,217 0
Landlord-R&M-Other 6443-1,2,9 (8,056) (28,130) 0
<CAPTION>
YTD ANNUAL PRIOR YR
VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C>
Employment Expense (208) -69% 300 181
Repairs & Maintenance 0 N/A 0 (5)
Supplies 588 42% 1,400 432
Equipment (2) -1% 180 175
Total Customer Service 10,465 26% 39,872 30,529
TAXES AND INSURANCE
ICAM Insurance 1,572 5% 34,148 27,005
ICAM Taxes 38,295 12% 329,778 242,012
OCAM Insurance 4,028 5% 81,635 63,143
OCAM Taxes 57,635 14% 407,335 304,944
Mall Office Insurance 629 37% 1,686 1,947
-------- ---- ------- ---------
Total Taxes and Insurance 102,160 12% 834,583 639,031
--------- ---- ------- ---------
TOTAL CAM EXPENSES $262,348 10% $2,586,579 $2,400,310
========= ==== ========== ===========
FOOD COURT EXPENSES
Salaries/Benefits $(17,854) -19% $ 93,460 $ 91,848
Employment Expense (32) N/A 0 85
Contract Services (7,642) -955% 800 1,838
Supplies (2,039) -20% 10,390 10,698
Other Income 0 N/A 0 0
Furniture Amortization 0 0% 8,700 8,700
--------- ---- ---------- -----------
Total Food Court Expenses ($27,567) -24% $ 113,350 $ 113,170
========= ==== ========== ===========
LANDLORD OBLIGATIONS
Insurance $ 557 5% $ 11,736 $ 10,184
Real Estate Taxes (15,478) -10% 160,064 134,600
Professional Services 0 N/A 0 1,425
ICSC Expenses (19,785) N/A 0 8,980
Landlord TI Costs-Salaries (1,272) -13% 10,163 12,291
Landlord TI Costs (23,428) N/A 0 22,881
Landlord R & M-Salaries (44) N/A 0 1,436
Landlord-Electricity vacant space 2,850 62% 4,596 4,595
Landlord-R&M (9,217) N/A 0 5,680
Landlord-R&M-Other 28,130 N/A 0 (5,904)
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD YTD YTD ANNUAL PRIOR YR
NO MONTH ACTUAL BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Marketing Fund Contribution 6445-0000 5,512 76,144 84,612 8,468 10% 84,612 79,168
Subtotal Landlord Obligation 65,301 300,390 271,170 (29,220) -11% 271,170 275,336
JC Penney-Labor 6455-0000 1,051 12,551 12,909 357 3% 12,909 11,889
JC Penney-Real Estate Taxes 6455-0002 26,545 142,236 209,075 66,839 32% 209,075 156,476
JC Penney-Elevator Maint 6455-0003 1,137 15,041 14,905 (136) -1% 14,905 14,465
JC Penney-HVAC Maint 6455-0004 400 3,858 12,398 8,540 69% 12,398 8,398
JC Penney-Misc. 6455-0005 0 384 4,800 4,416 92% 4,800 8,826
Subtotal JC Penney Expense 29,133 174,071 254,086 80,016 31% 254,086 200,034
------ ------- ------- ------- --- ------- -------
Total Landlord Obligation $94,435 $474,461 $525,257 $ 50,796 10% $525,257 $475,390
======= ======== ======== ========= === ======== ========
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD YTD YTD ANNUAL PRIOR YR
NO MONTH ACTUAL BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MARKETING
INCOME
Merchant Dues 3510-0000 $ 22,047 $304,579 $307,560 ($ 2,981) -1% $307,560
Merchant Dues-Kiosks 3511-0000 2,790 13,345 0 13,345 N/A 0
LRA Conributions 3520-0000 31,312 70,517 194,000 {123,483) -64% 194,000
Landlord Contribution 3530-0000 5,512 76,145 76,884 (739) -1% 76,884
Media Fund/Ad Fund 3545-0000 4,775 60,552 61,944 (1,392) -2% 61,944
Other Income 3550-0000 21,988 33,932 69,035 (35,103) -51% 69,035
Previous Year Carryover 37,310
-------- -------- -------- -------- ----
Total Income 88,425 596,379 709,423 (113,044) -16% 709,423
======== ======== ======== ======== ==== ========
EXPENSES
Mall Promotion/Events 6710-0000 25,292 52,482 45,378 (7,104) -16% 45,378
Newspaper Advertising 6715-0000 601 13,446 39,000 25,554 66% 39,000
Newspaper Production 6720-0000 8,000 18,509 9,896 (8,613) -87% 9,896
Magazine Advertising 6725-0000 0 0 0 0 N/A 0
Magazine Production 6730-0000 (428) 0 0 0 N/A 0
TV Advertising 6735-0000 24,445 52,844 69,000 16,156 23% 69,000
TV Production 6740-0000 349 40,765 46,000 5,235 11% 46,000
Radio Advertising 6745-0000 11,570 63,767 22,240 (41,527) -187% 22,240
Radio Production 6750-0000 716 14,904 8,000 (6,904) -86% 8,000
Catalog/Postcards 6755-0000 1,449 1,449 54,000 52,551 97% 54,000
Outdoor 6760-0000 6,484 109,444 37,800 (71,644) -190% 37,800
Special Advertising 6765-0000 (3,250) 22,792 66,422 43,630 66% 66,422
Signs 6770-0000 6,054 11,933 8,000 (3,933) -49% 8,000
Collateral 6775-0000 5,417 22,217 28,360 6,143 22% 28,360
Salaries and Benefits 6780-0000 7,087 84,978 86,127 1,149 1% 86,127
Casual Labor 6785-0000 3,649 12,385 1,300 (11,085) -853% 1,300
Office Expenses 6790-0000 582 7,550 8,800 1,250 14% 8,800
Decor Loan Payments 6795-0000 10,587 10,587 36,000 25,413 71% 36,000
Equipment Purchase 6800-0000 14 924 5,000 4,076 82% 5,000
Equipment Rental 6805-0000 1,154 6,269 1,200 (5,069) -422% 1,200
Printed Directories 6810-0000 375 21,400 26,000 4,600 18% 26,000
Travel/Meetings/Meals 6815-0000 865 6,007 6,000 (7) -0% 6,000
Accounting/Legal 6820-0000 0 0 0 0 N/A 0
Market Research 6825-0000 0 29,956 17,800 (12,156) -68% 17,800
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACCT CURRENT YTD
NO MONTH ACTUAL
<S> <C> <C> <C>
Tourism Development Programs 6830-0000 1,631 27,139
Public/Community Relations 6835-0000 801 4,407
Dues & Subscriptions 6840-0000 448 2,334
Miscellaneous 6845-0000 366 1,399
ASCAP/BMI 6850-0000 0 955
Seasonal Decor 6855-0000 (4,709) 11,872
Merchant Communication/Incentive 6860-0000 386 1,517
Gift Certificate 6865-0000 70 6,965
------ ------
Total Expenses 110,005 661,196
------- -------
NET INCOME-MARKETING $ (21,580) ($ 46,817)
========= ========
<CAPTION>
YTD YTD ANNUAL PRIOR YR
BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C>
Tourism Development Programs 34,250 7,111 21% 34,250
Public/Community Relations 13,020 8,613 66% 13,020
Dues & Subscriptions 3,330 996 30% 3,330
Miscellaneous 1,200 (199) -17% 1,200
ASCAP/BMI 2,700 1,745 65% 2,700
Seasonal Decor 7,500 (4,372) -58% 7,500
Merchant Communication/Incentive 17,400 15,883 91% 17,400
Gift Certificate 7,200 235 3% 7,200
------ ------ ------ ------
Total Expenses 708,923 47,728 7% 708,923
------- ------ ------ -------
NET INCOME-MARKETING $ 500 ($ 65,316) -13072% $ 500
========= ======== ====== =========
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1--Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2--Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3--Sales Category %'s
Comp Only: No E4--Property Sales %'s
E5--Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CURRENT MONTH SALES YEAR-TO-DATE SALES
UNIT OPEN CLOSE %
NO. OCCUPANT NAME DATE GLA DATE CAT% 1996 1995 CHNG 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Department Stores 02
- ---------------------------------------------------------------------------------------------------------------------------------
01 110) Bumpers Fun Cen 1/17/92 30000 100.0 72.3 109.8 -34.2 820.8 1,057.8
Comp Sub-Totals: 30000 72.3 109.8 -34.2 820.8 1,057.8
- ---------------------------------------------------------------------------------------------------------------------------------
Category Totals: 30000 72.3 109.8 -34.2 820.8 1,057.8
================================================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FULL YEAR SALES
UNIT % 1996 % 1996 1995 1996 BKP
NO. CHNG % CAT 1996 1995 CHNG $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Department Stores
- --------------------------------------------------------------------------------------------------------
01 110) -22.4 100.0 820.8 1,057.8 -22.4 27 35 M-S-D 0
Comp Sub-Totals: -22.4 100.0 820.8 1,057.8 -22.4 27 35
- --------------------------------------------------------------------------------------------------------
Category Totals: -22.4 100.0 820.8 1,057.8 -22.4 27 35
========================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1--Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2--Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3--Sales Category %'s
Comp Only: No E4--Property Sales %'s
E5--Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
CURRENT MONTH SALES
UNIT OPEN CLOSE %
NO. OCCUPANT NAME DATE GLA DATE CAT% 1996 1995 CHNG
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Food 04
- -----------------------------------------------------------------------------------------------------------
05 110) Baskin-Robbins 3/04/92 684 6.8 21.9 23.2 -5.3
01 110) Candy 'N Carmel 2/01/85 550 5.5 20.8 22.3 -6.5
03 110) Candy Barrel, T 7/15/92 1022 10.2 22.9 24.8 -7.5
18 110) Cinnabon #84 10/26/91 758 7.5 88.7 99.1 -10.5
23 110) Espress-O 7/18/93 231 2.3 23.5 25.1 -6.6
37 110) Gloria Jean's C 11/29/91 1076 10.7 82.7 105.2 -21.4
29 110) Mrs. Fields Coo 5/23/91 721 7.2 34.2 33.1 3.2
17 110) Orange Julius 3/21/91 1295 12.9 63.2 66.7 -5.2
09 110) Pretzel Time 10/27/92 501 5.0 43.3 46.6 -7.2
10 110) Surf City Squee 6/27/92 420 4.2 26.0 30.1 -13.6
01 110) Sweet Factory 11/18/93 848 8.4 48.0 44.9 6.8
15 110) Thomas Hammer C 12/04/93 1058 10.5 50.0 44.5 12.5
15 110) Tipton's Gourme 10/01/84 700 7.0 76.4 69.0 10.7
Comp Sub-Totals: 9864 601.5 634.5 -5.2
- -----------------------------------------------------------------------------------------------------------
C217A 100) Cold Stone Crea CLOSED 11/29/95 NA 11/02/96 NA 13.9 NA
05 110) Hickory Farms CLOSED 3/01/85 NA 2/15/95 NA NA NA
02 110) LaCrepe 12/03/96 185 1.8 4.1 NA NA
Non Comp Sub-Totals 726 4.1 13.9 -70.8
- -----------------------------------------------------------------------------------------------------------
Sub Category Totals 10049 605.6 648.4 -6.6
===========================================================================================================
Category Totals: 10590 605.6 648.4 -6.6
===========================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE SALES FULL YEAR SALES
UNIT % 1996 % 1996 1995 1996 BKP
NO. 1996 1995 CHNG % CAT 1996 1995 CHNG $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Food
- ------------------------------------------------------------------------------------------------------------------
05 110) 241.9 237.8 1.7 6.4 241.9 237.8 1.7 354 348 0 7
01 110) 173.4 176.7 -1.8 4.6 173.4 176.7 -1.8 315 321 0 7
03 110) 149.8 161.4 -7.2 3.9 149.8 161.4 -7.2 147 158 0 6
18 110) 583.6 589.4 -1.0 15.3 583.6 589.4 -1.0 770 778 0 6
23 110) 163.2 171.2 -4.7 4.3 163.2 171.2 -4.7 706 741 0 8
37 110) 336.8 389.4 -13.5 8.8 336.8 389.4 -13.5 313 362 0 7
29 110) 233.4 207.1 12.7 6.1 233.4 207.1 12.7 324 287 0 8
17 110) 404.7 407.7 -0.7 10.6 404.7 407.7 -0.7 313 315 0 8
09 110) 303.1 312.4 -3.0 8.0 303.1 312.4 -3.0 605 624 0 7
10 110) 239.1 274.3 -12.8 6.3 239.1 274.3 -12.8 569 653 0 10
01 110) 280.1 261.9 6.9 7.4 280.1 261.9 6.9 330 309 0 8
15 110) 270.5 281.3 -3.8 7.1 270.5 281.3 -3.8 256 266 M-S-D 8
15 110) 319.2 309.3 3.2 8.4 319.2 309.3 3.2 456 442 0 8
- ------------------------------------------------------------------------------------------------------------------
Comp
Sub-Totals 3,699.0 3,780.1 -2.1 3,699.0 3,780.1 -2.1 375 383
- ------------------------------------------------------------------------------------------------------------------
C217A 100) 106.6 14.4 641.6 2.8 106.6 14.4 641.6 197 27 NA 8
05 110) NA 15.7 NA NA NA 15.7 NA NA 28 NA 5
02 110) 4.1 NA NA 0.1 4.1 NA NA 22 NA NA NA
Non Comp 110.6 30.0 268.4 110.6 30.0 268.4 152 28
- ------------------------------------------------------------------------------------------------------------------
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------
Sub Category 3,809.6 3,810.1 -0.0 3,809.6 3,810.1 -0.0 360 348
==================================================================================================================
Totals
==================================================================================================================
Category 3,809.6 3,810.1 -0.0 3,809.6 3,810.1 -0.0 360 348
==================================================================================================================
Totals:
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1--Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2--Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3--Sales Category %'s
Comp Only: No E4--Property Sales %'s
E5--Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CURRENT MONTH SALES
UNIT OPEN CLOSE %
NO. OCCUPANT NAME DATE GLA DATE CAT% 1996 1995 CHNG
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restaurant 06
- -----------------------------------------------------------------------------------------------------
105 110) Pickle Barrel 3/01/91 2141 16.7 53.4 58.7 -9.1
Comp Sub-Totals 2141 53.4 58.7 -9.1
- -----------------------------------------------------------------------------------------------------
110 110) Sports Heroes 8/15/96 10684 83.3 190.8 NA NA
Non Comp Sub-Totals 10684 190.8 0.0
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 12825 244.2 58.7 315.6
=====================================================================================================
Category Totals: 12825 244.2 58.7 315.6
=====================================================================================================
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE SALES FULL YEAR SALES
UNIT % 1996 % 1996 1995 1996 BKP
NO. 1996 1995 CHNG % CAT 1996 1995 CHNG $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Restaurant
- -------------------------------------------------------------------------------------------------------------------------
105 110) 409.0 439.2 -6.9 40.5 409.0 439.2 -6.9 191 205 NA NA
Comp Sub-Totals 409.0 439.2 -6.9 409.0 439.2 -6.9 191 205
- -------------------------------------------------------------------------------------------------------------------------
110 110) 600.2 NA NA 59.5 600.2 NA NA 56 NA 0 5
Non Comp Sub-Totals 600.2 0.0 600.2 0.0 56 NA
- -------------------------------------------------------------------------------------------------------------------------
Sub Category Totals 1,009.2 439.2 129.8 1,009.2 439.2 129.8 79 205
=========================================================================================================================
Category Totals: 1,009.2 439.2 129.8 1,009.2 439.2 129.8 79 205
=========================================================================================================================
</TABLE>
<PAGE>
1995
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ACCT CURRENT YTD
NO MONTH ACTUAL
<S> <C> <C> <C>
INCOME
Rental Income - Shops 3015-0000 $ 589,095 $ 7,021,729
Rental Income - Anchors 3016-0000 132,574 1,590,892
Lease Concessions 3020-0000 (12,937) (149,452)
Percentage Rent 3025-0000 26,013 613,539
Storage Rent 3030-0000 1,978 74,401
Gumball Income, Net of Expenses 3050-0000 0 0
Parking Ticket Income 3070-0000 (506) (346)
Payphone Revenue 3075-0000 1,324 17,855
Late Charge/Interest Income 3080-0000 1,914 24,824
Vending/Concession Income 3085-0000 147 1,523
Prior Year Percentage Rent 3110-0000 (5,480) 12,462
Prior Year CAM 3120-0000 0 (8,488)
CAM Reimbursements 6095-0000 170,472 1,963,903
Majors CAM Contributions 6097-0000 56,998 632,791
Food Court Reimbursements 6290-0000 10,235 122,988
HVAC Reimbursements 6548-0000 32,446 382,138
Tax Reimbursements 6581-0000 50,007 588,839
Ins Reimbursements 6576-0000 3,169 36,715
Other Income (200) 8,323
---------- -----------
TOTAL INCOME $1,057,249 $12,934,634
========== ===========
KIOSK INCOME
Rental Income 3040-0000 $ 168,327 $ 562,177
Percentage Rent 3040-0001 2,070 79,028
Other Income 3040-0009 2,870 4,370
Salaries/Benefits 3041-0000 (5,401) (55,732)
Temporary Personnel 3041-0001 (2,651) (2,651)
CAM Reimbursement Expense 3041-0002 (8,520) (32,060)
Equipment 3041-0003 (3,000) (3,810)
Repairs/Maintenance 3041-0004 (5,159) (9,931)
Advertising 3041-0005 0 (111)
---------- -----------
TOTAL KIOSKS $ 148,537 $ 541,279
========== ===========
REFUSE HANDLING
Salaries/Benefits 6525-0000 $ (5,809) $ (64,419)
Contract Services 6525-0002 (13,617) (114,027)
Repairs and Maintenance 6525-0004 (818) (2,873)
Other Income 6525-0099 2,743 12,098
Refuse Reimbursements 6526-0000 17,622 200,368
<CAPTION>
YTD YTD ANNUAL PRIOR YR
BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C>
INCOME
Rental Income - Shops $ 7,149,982 $ (128,253) -2% $ 7,149,982 $ 6,859,871
Rental Income - Anchors 1,590,888 4 0% 1,590,888 1,590,892
Lease Concessions 0 (149,452) N/A 0 (53,320)
Percentage Rent 452,504 161,035 36% 452,504 587,275
Storage Rent 76,600 (2,199) -3% 76,600 57,897
Gumball Income, Net of Expenses 0 0 N/A 0 9,080
Parking Ticket Income 0 (346) N/A 0 3,107
Payphone Revenue 19,800 (1,945) -10% 19,800 20,163
Late Charge/Interest Income 0 24,824 N/A 0 15,554
Vending/Concession Income 1,320 203 15% 1,320 1,266
Prior Year Percentage Rent 0 12,462 N/A 0 (93,125)
Prior Year CAM 0 (8,488) N/A 0 68,123
CAM Reimbursements 2,256,520 (292,617) -13% 2,256,520 1,880,188
Majors CAM Contributions 593,125 39,666 7% 593,125 598,043
Food Court Reimbursements 131,298 (8,310) -6% 131,298 115,168
HVAC Reimbursements 442,100 (59,963) -14% 442,100 366,035
Tax Reimbursements 600,267 (11,428) -2% 600,267 529,455
Ins Reimbursements 38,668 (1,953) -5% 38,668 36,939
Other Income 0 8,323 N/A 0 15,837
----------- ---------- ---- ----------- -----------
TOTAL INCOME $13,353,073 $ (418,439) -3% $13,353,073 $12,608,449
=========== ========== ===== =========== ===========
KIOSK INCOME
Rental Income $ 423,590 $ 138,587 33% $ 423,590 $ 440,451
Percentage Rent 25,000 54,028 216% 25,000 21,778
Other Income 0 4,370 N/A 0 330
Salaries/Benefits (36,031) (19,701) -55% (36,031) (34,920)
Temporary Personnel (3,000) 349 12% (3,000) 0
CAM Reimbursement Expense (22,430) (9,631) -43% (22,430) 0
Equipment 0 (3,810) N/A 0 (3,684)
Repairs/Maintenance (2,000) (7,931) -397% (2,000) (13,080)
Advertising (100) (11) -11% (100) (37)
----------- ---------- ---- ----------- -----------
TOTAL KIOSKS $ 385,030 $ 156,249 41% $ 385,030 $ 410,838
=========== ========== ==== =========== ===========
REFUSE HANDLING
Salaries/Benefits $ (69,502) $ 5,083 7% $ (69,502) $ (15,636)
Contract Services (109,032) (4,995) -5% (109,032) (151,981)
Repairs and Maintenance (2,000) (873) -44% (2,000) (5,282)
Other Income 15,000 (2,902) -19% 15,000 15,264
Refuse Reimbursements 216,820 (16,451) -8% 216,820 196,298
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ACCT CURRENT YTD YTD
NO MONTH ACTUAL BUDGET
<S> <C> <C> <C> <C>
--------- ---------- ----------
Net Refuse $ 121 $ 31,147 $ 51,286
========= ========== ==========
T/R HVAC
Salaries/Benefits 6545-0000 $ (4,275) $ (59,360) $ (52,374)
Contract Services 6545-0002 0 0 0
Repairs/Maintenance 6545-0004 (3,514) (33,091) (75,314)
Electricity 6545-0007 1 (140,693) (196,812)
Gas 6545-0008 0 0 0
Other Income 6545-0099 0 0 0
Depreciation 6547-0000 (4,995) (59,934) (59,934)
--------- ---------- ----------
Net HVAC $ (12,782) $ (293,077) $ (384,435)
========= ========== ==========
T/R TAXES AND INSURANCE
Insurance 6575-0000 $ (1,022) $ (38,644) $ (38,668)
Real Estate Taxes 6580-0000 (15,958) (566,204) (600,267)
Total Taxes and Insurance --------- ---------- ----------
$ (16,981) $ (604,848) $ (638,935)
========= ========== ==========
CAM EXPENSES
UTILITIES
ICAM - Electricity 6010-0000 $ (8,098) $ 111,360 $ 157,790
Electricity Reimbursements 6010-0001 (1,011) (6,166) (2,673)
ICAM - Water 6020-0000 507 10,310 20,350
Water Reimbursements 6020-0001 (490) (6,042) (6,474)
OCAM - Electricity 6110-0000 19,529 33,823 17,038
OCAM - Water 6120-0000 16 3,234 4,189
--------- ---------- ----------
Total Utilities 10,452 146,518 190,220
JANITORIAL
Salaries/Benefits 6030-0000 26,773 209,009 208,042
Employment Expense 6030-0001 0 1,167 3,000
ICAM Contract 6030-0002 (26) 7,240 14,938
ICAM Maintenance 6030-0004 (109) 13,186 2,200
ICAM Supplies 6030-0005 2,607 43,643 51,974
ICAM Other Income 6030-0099 (109) (458) 0
OCAM Contract 6130-0002 0 525 0
OCAM Maintenance 6130-0004 0 2 0
OCAM Supplies 6130-0005 0 0 0
<CAPTION>
YTD ANNUAL PRIOR YR
VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C>
-------- --- ---------- ----------
Net Refuse $(20,139) -39% $ 51,286 $ 38,665
======== === ========== ==========
T/R HVAC
Salaries/Benefits $ (6,986) -13% $ (52,374) $ (26,205)
Contract Services 0 N/A 0 (4,737)
Repairs/Maintenance 42,224 56% (75,314) (34,755)
Electricity 56,119 29% (196,812) (206,135)
Gas 0 N/A 0 0
Other Income 0 N/A 0 0
Depreciation 0 0% (59,934) (59,934)
-------- --- ---------- ----------
Net HVAC $ 91,358 24% $ (384,435) $ (331,766)
======== === ========== ==========
T/R TAXES AND INSURANCE
Insurance $ 24 0% $ (38,668) $ (29,570)
Real Estate Taxes 34,064 6% (600,267) (538,885)
Total Taxes and Insurance
-------- --- ---------- ----------
$ 34,088 5% $ (638,935) $ (568,445)
======== === ========== ==========
CAM EXPENSES
UTILITIES
ICAM - Electricity $ 46,430 29% $ 157,790 $ 150,317
Electricity Reimbursements 3,493 131% (2,673) (12,507)
ICAM - Water 10,040 49% 20,350 17,816
Water Reimbursements (432) -7% (6,474) (5,514)
OCAM - Electricity (16,785) -99% 17,038 16,297
OCAM - Water 955 23% 4,189 3,754
-------- --- ---------- ----------
Total Utilities 43,702 23% 190,220 170,162
JANITORIAL
Salaries/Benefits (967) -0% 208,042 113,124
Employment Expense 1,833 61% 3,000 1,048
ICAM Contract 7,698 52% 14,938 140,303
ICAM Maintenance (10,986) -499% 2,200 48,675
ICAM Supplies 8,331 16% 51,974 0
ICAM Other Income 458 N/A 0 0
OCAM Contract (525) N/A 0 8,747
OCAM Maintenance (2) N/A 0 298
OCAM Supplies 0 N/A 0 0
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ACCT CURRENT YTD
NO MONTH ACTUAL
<S> <C> <C> <C>
------- --------
Total Janitorial 29,135 274,313
LANDSCAPING
Salaries/Benefits 6040-0000 (79) 1,802
ICAM - Contracts 6040-0002 541 5,946
ICAM - Maintenance 6040-0004 155 687
OCAM - Contracts 6140-0002 316 8,421
OCAM - Maintenance 6140-0004 0 2,390
------- --------
Total Landscaping 932 19,245
HVAC EXPENSES
ICAM - HVAC Salaries/Benefits 6045-0000 1,546 19,933
ICAM - HVAC Contracts 6045-0002 0 0
ICAM - HVAC Maintenance 6045-0004 812 7,412
ICAM - HVAC Electricity 6045-0008 10,191 65,984
ICAM - HVAC Gas 6045-0009 4,087 23,056
ICAM - HVAC Gas Reimbursements 6045-0099 (1,407) (17,607)
ICAM - HVAC Depreciation 6047-0000 2,453 29,433
------- --------
Total HVAC 17,682 128,211
MAINTENANCE
ICAM - Salaries/Benefits 6055-0000 10,611 107,777
ICAM - Employment Expense 6055-0001 1,311 5,239
ICAM - Repairs/Maint 6055-0004 12,254 47,529
ICAM - Temporary Help 6055-0010 0 0
ICAM - Building Repairs 6055-0015 8,183 13,083
ICAM - Plumbing 6055-0025 194 1,962
ICAM - Lighting 6055-0035 331 33,497
ICAM - Wired Music 6055-0045 214 2,725
ICAM - Elevators/Escalators 6055-0055 11,797 52,062
ICAM - Equipment 6055-0065 989 5,790
ICAM - Roof 6055-0075 0 254
ICAM - Signs 6055-0085 399 447
ICAM - Waste Handling 6055-0095 1,183 12,185
ICAM - Other Income 6055-0999 (49) (49)
OCAM - Salaries/Benefits 6155-0000 5,322 70,868
OCAM - Repairs/Maint 6155-0004 375 2,322
OCAM - Temporary Help 6155-0010 0 0
OCAM - Building Repairs 6155-0015 37 2,534
<CAPTION>
YTD YTD ANNUAL PRIOR YR
BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C>
------- ----- --- ------- -------
Total Janitorial 280,154 5,841 2% 280,154 312,195
LANDSCAPING
Salaries/Benefits 1,440 (362) -25% 1,440 23
ICAM - Contracts 6,480 535 8% 6,480 6,679
ICAM - Maintenance 2,250 1,563 69% 2,250 1,780
OCAM - Contracts 11,300 2,879 25% 11,300 13,802
OCAM - Maintenance 2,100 (290) -14% 2,100 915
------- ----- --- ------- -------
Total Landscaping 23,570 4,325 18% 23,570 23,199
HVAC EXPENSES
ICAM - HVAC Salaries/Benefits 19,270 (663) -3% 19,270 6,358
ICAM - HVAC Contracts 0 0 N/A 0 0
ICAM - HVAC Maintenance 13,957 6,545 47% 13,957 15,516
ICAM - HVAC Electricity 63,426 (2,558) -4% 63,426 41,713
ICAM - HVAC Gas 30,123 7,067 23% 30,123 26,117
ICAM - HVAC Gas Reimbursements (19,131) (1,524) -8% (19,131) (20,210)
ICAM - HVAC Depreciation 29,433 0 0% 29,433 29,433
------- ----- --- ------- -------
Total HVAC 137,078 8,867 6% 137,078 98,927
MAINTENANCE
ICAM - Salaries/Benefits 88,221 (19,555) -22% 88,221 52,793
ICAM - Employment Expense 300 (4,939) -1646% 300 8,778
ICAM - Repairs/Maint 33,409 (14,119) -42% 33,409 28,496
ICAM - Temporary Help 0 0 N/A 0 0
ICAM - Building Repairs 28,600 15,517 54% 28,600 11,638
ICAM - Plumbing 7,100 5,138 72% 7,100 5,848
ICAM - Lighting 44,000 10,503 24% 44,000 37,421
ICAM - Wired Music 12,690 9,965 79% 12,690 12,595
ICAM - Elevators/Escalators 53,214 1,152 2% 53,214 50,260
ICAM - Equipment 3,400 (2,390) -70% 3,400 5,176
ICAM - Roof 600 346 58% 600 0
ICAM - Signs 500 53 11% 500 296
ICAM - Waste Handling 12,612 427 3% 12,612 14,709
ICAM - Other Income 0 49 N/A 0 (768)
OCAM - Salaries/Benefits 79,352 8,484 11% 79,352 122,423
OCAM - Repairs/Maint 3,480 1,158 33% 3,480 2,820
OCAM - Temporary Help 0 0 N/A 0 0
OCAM - Building Repairs 7,500 4,966 66% 7,500 24,479
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ACCT CURRENT YTD YTD YTD ANNUAL PRIOR YR
NO MONTH ACTUAL BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OCAM - Plumbing 6155-0025 27 912 800 (112) -14% 800 0
OCAM - Lighting 6155-0035 324 5,674 8,720 3,046 35% 8,720 8,226
OCAM - Elevators/Escalators 6155-0055 (3,283) 2,320 5,015 2,695 54% 5,015 6,070
OCAM - Equipment 6155-0065 867 3,866 9,250 5,384 58% 9,250 12,499
OCAM - Signs 6155-0085 286 1,013 4,800 3,787 79% 4,800 4,636
OCAM - Waste Handling 6155-0095 293 2,742 3,344 602 18% 3,344 3,807
OCAM - Traffic Control 6155-0115 3,329 11,825 3,650 (8,175) -224% 3,650 39
OCAM - Sweeping 6155-0125 634 11,593 13,700 2,107 15% 13,700 18,026
OCAM - Snow Removal 6155-0135 61,605 125,448 23,300 (102,148) -438% 23,300 7,158
OCAM - Pave/Patch 6155-0145 865 1,135 1,200 65 5% 1,200 649
OCAM - Parking Deck 6155-0155 81 2,192 11,100 8,908 80% 11,100 10,835
OCAM - Other Income 6155-0999 0 0 0 0 N/A 0 0
------- ------- ------- ------- --- ------- -------
Total Maintenance 118,179 526,944 459,857 (67,087) -15% 459,857 448,910
SECURITY
ICAM Salaries/Benefits 6070-0000 3,710 44,839 48,416 3,578 7% 48,416 37,429
Employment Expense 6070-0001 85 251 1,140 889 78% 1,140 0
ICAM - Contracts 6070-0002 41,075 111,106 101,804 (9,302) -9% 101,804 104,162
ICAM - Fire Protection-Maint 6070-0003 17 6,530 3,830 (2,700) -71% 3,830 2,928
ICAM - Maintenance 6070-0004 (139) (57) 0 57 N/A 0 5,175
ICAM - Equipment 6070-0005 0 911 2,600 1,689 65% 2,600 0
ICAM - Training 6070-0006 (423) 1,181 1,440 259 18% 1,440 0
ICAM - Phone 6070-0007 86 791 624 (167) -27% 624 1,547
ICAM - Supplies 6070-0008 434 4,727 2,576 (2,151) -83% 2,576 0
ICAM - Fire Protection-Contracts 6070-0032 364 5,168 4,464 (704) -16% 4.464 5,015
ICAM - Fire Proctection-Phone 6070-0037 0 0 0 0 N/A 0 0
ICAM - Other Income 6070-0099 0 0 0 0 N/A 0 0
OCAM - Salaries/Benefits 6170-0000 3,035 37,059 39,613 2,555 6% 39,613 37,229
OCAM - Contracts 6170-0002 45,303 109,502 100,068 (9,434) -9% 100,068 91,521
OCAM - Maintenance 6170-0004 776 4,774 3,420 (1,354) -40% 3,420 5,139
OCAM - Equipment 6170-0005 0 605 2,600 1,995 77% 2,600 0
OCAM - Training 6170-0006 (423) 1,213 1,440 227 16% 1,440 0
OCAM - Phone 6170-0007 22 267 360 93 26% 360 1,499
OCAM - Supplies 6170-0008 3,499 6,399 6,214 (185) -3% 6,214 0
OCAM - Fire Protection-Maint 6170-0030 0 953 240 (713) -297% 240 309
OCAM - Fire Protection-Contracts 6170-0032 40 574 496 (78) -16% 496 557
OCAM - Fire Protection-Phone 6170-0037 0 0 0 0 N/A 0 0
OCAM - Other Income 7160-0099 0 0 0 0 N/A 0 0
------- ------- ------- ------- --- ------- -------
Total Security 97,462 336,793 321,345 (15,447) -5% 321,345 292,512
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
1995
ACCT CURRENT YTD YTD YTD ANNUAL PRIOR YR
NO MONTH ACTUAL BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MALL OFFICE EXPENSES
Electricity 6310-0000 (612) 7,365 9,452 2,087 22% 9,452 8,407
Salaries/Benefits 6320-0000 10,444 126,106 173,542 47,418 27% 173,524 134,190
Salaries/Benefits - Home Office 6320-0001 4,400 52,800 52,596 (204) -0% 52,596 0
Temporary Help 6321-0000 0 0 0 0 N/A 0 0
Employee Training 6322-0000 0 4,158 2,550 (1,608) -63% 2,550 3,078
Employment Expense 6323-0000 (993) 140 250 110 44% 250 0
Travel-Air/Lodging 6330-0000 (520) 3,888 8,900 5,012 56% 8,900 9,485
Travel - Meals 6331-0000 (140) 573 800 227 28% 800 940
Meeting/Business Meals 6335-0000 3,005 5,100 4,000 (1,100) -27% 4,000 1,680
Telephone 6340-0000 1,594 18,658 22,272 3,614 16% 22,272 23,179
Repairs/Maintenance 6345-0000 0 0 0 0 N/A 0 880
Licenses/Fees 6350-0000 0 434 700 266 38% 700 594
Dues and Subscriptions 6355-0000 90 2,988 3,220 232 7% 3,220 3,695
Supplies and Sundries 6360-0000 2,232 10,431 11,660 1,229 11% 11,660 11,306
Postage and Delivery 6365-0000 73 3,406 4,300 894 21% 4,300 3,461
Equipment - Leased 6369-0000 4,841 27,637 24,216 (3,421) -14% 24,216 0
Equipment - Maintenance 6370-0000 51 9,066 5,680 (3,386) -60% 5,680 30,143
Other Income 6371-0000 (150) (1,800) 0 1,800 N/A 0 (1,800)
Customer relations 6372-0000 79 1,362 1,300 (62) -5% 1,300 1,040
Rent expense 6380-0000 2,000 24,000 24,000 0 0% 24,000 24,000
Professional Services 6390-0000 0 0 0 0 N/A 0 9,713
------- ------- ------- ------- --- ------- -------
Total Mall Office 26,395 296,312 349,420 53,108 15% 349,420 263,992
CUSTOMER SERVICE
Income 6375-0000 (2,255) (2,251) 0 2,251 N/A 0 (669)
Salaries and Benefits 6376-0020 4,435 31,996 41,121 9,125 22% 41,121 38,480
Employment Expense 6376-0021 25 181 300 119 40% 300 110
Repairs & Maintenance 6376-0030 0 (5) 0 5 N/A 0 (58)
Supplies 6376-0050 213 432 200 (232) -116% 200 3,336
Equipment 6376-0055 2 175 180 5 3% 180 175
------- ------- ------- ------- --- ------- -------
Total Customer Service 2,420 30,529 41,801 11,272 27% 41,801 41,373
TAXES AND INSURANCE
ICAM Insurance 6075-0000 1,238 27,005 26,530 (475) -2% 26,530 20,936
ICAM Taxes 6080-0000 6,821 242,012 256,572 14,560 6% 256,572 244,354
OCAM Insurance 6175-0000 3,981 63,143 59,998 (3,146) -5% 59,998 48,833
OCAM Taxes 6180-0000 8,595 304,944 323,290 18,346 6% 323,290 307,895
Mall Office Insurance 6352-0000 134 1,947 1,578 (369) -23% 1,578 1,950
</TABLE>
<PAGE>
NORTHTOWN MALL
OPERATING STATEMENT
FOR THE PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ACCT CURRENT YTD
NO MONTH ACTUAL
<S> <C> <C> <C>
-------- ----------
Total Taxes and Insurance 20,769 639,051
-------- ----------
TOTAL CAM EXPENSES $323,426 $2,397,917
======== ==========
FOOD COURT EXPENSES
Salaries/Benefits 6230-0000 $ 9,151 $ 91,848
Employment Expense 6230-0001 0 85
Contract Services 6230-0002 108 1,838
Supplies 6230-0004 903 10,698
Other Income 0 0
Furniture Amortization 6286-0000 725 8,700
-------- ----------
Total Food Court Expenses $ 10,888 $ 113,170
======== ==========
LANDLORD OBLIGATIONS
Insurance 6410-0000 $ (216) $ 10,184
Real Estate Taxes 6420-0000 3,794 134,600
Professional Services 6425-0000 0 1,425
ICSC Expenses 6440-0000 0 8,980
Landlord TI Costs - Salaries 6442-0000 780 12,291
Landlord TI Costs 6442-0001 67 22,881
Landlord R & M - Salaries 6443-0000 0 1,436
Landlord - Electricity vacant space 6443-0003 469 4,595
Landlord - R & M 6443-0004 2,469 5,680
Landlord - R & M - Other 6443-1,2,9 2,954 (5,904)
Marketing Fund Contribution 6445-0000 6,687 79,168
Subtotal Landlord Obligation 17,004 275,336
JC Penney - Labor 6455-0000 918 11,889
JC Penney - Real Estate Taxes 6455-0002 38,491 156,476
JC Penney - Elevator Maint 6455-0003 1,507 14,465
JC Penney - HVAC Maint 6455-0004 285 8,398
JC Penney - Misc. 6455-0005 0 8,826
Subtotal JC Penney Expense 41,201 200,054
-------- ----------
Total Landlord Obligation $ 58,205 $ 475,390
======== ==========
<CAPTION>
YTD YTD ANNUAL PRIOR YR
BUDGET VARIANCE BUDGET ACTUAL
<S> <C> <C> <C> <C> <C>
---------- --------- ---- ---------- ----------
Total Taxes and Insurance 667,967 28,917 4% 667,967 623,968
---------- --------- ---- ---------- ----------
TOTAL CAM EXPENSES $2,471,414 $ 73,497 3% $2,471,414 $2,275,238
========== ========= = ========== ==========
FOOD COURT EXPENSES
Salaries/Benefits $ 94,285 $ 2,437 3% $ 94,285 $ 49,824
Employment Expense 900 815 91% 900 0
Contract Services 800 (1,038) -130% 800 53,133
Supplies 9,940 (758) -8% 9,940 5,386
Other Income 0 0 N/A 0 0
Furniture Amortization 8,700 0 0% 8,700 8,700
---------- --------- ---- ---------- ----------
Total Food Court Expenses $ 114,625 $ 1,455 1% $ 114,625 $ 117,043
========== ========= ==== ========== ==========
LANDLORD OBLIGATIONS
Insurance $ 10,745 $ 561 5% $ 10,745 $ 12,029
Real Estate Taxes 118,040 (16,560) -14% 118,040 168,701
Professional Services 0 (1,425) N/A 0 3,208
ICSC Expenses 7,500 (1,480) -20% 7,500 20,530
Landlord TI Costs - Salaries 10,244 (2,047) -20% 10,224 64,437
Landlord TI Costs 605,000 582,119 96% 605,000 0
Landlord R & M - Salaries 0 (1,436) N/A 0 1,024
Landlord - Electricity vacant space 7,635 3,040 40% 7,635 6,660
Landlord - R & M 0 (5,680) N/A 0 0
Landlord - R & M - Other 0 5,904 N/A 0 (8,262)
Marketing Fund Contribution 80,004 836 1% 80,004 74,773
Subtotal Landlord Obligation 839,169 563,832 67% 839,169 343,100
JC Penney - Labor 12,681 792 6% 12,681 13,229
JC Penney - Real Estate Taxes 162,662 6,186 4% 162,662 131,750
JC Penney - Elevator Maint 18,834 4,369 23% 18,834 13,274
JC Penney - HVAC Maint 15,074 6,675 44% 15,074 12,207
JC Penney - Misc. 4,700 (4,126) -88% 4,700 8,445
Subtotal JC Penney Expense 213,950 13,896 6% 213,950 178,904
---------- --------- ---- ---------- ----------
Total Landlord Obligation $1,053,119 $ 577,729 55% $1,053,119 $ 522,004
========== ========= ==== ========== ==========
</TABLE>
<PAGE>
NORTHTOWN MALL
1998 ESTIMATED GROSS LEASABLE AREA
SPACE ID CURRENT TENANT S.F.
- -------- -------------- ----
B101 Mariposa 5,155
B105 The Phone Center 2,057
B107 Vacant 2,040
B109 Vacant 3,871
B114 Vacant 2,245
B115 Weisfields 1,549
B117 Mastercuts 1,052
B119 Rubber Stamp Store 1,229
B121 Washington Photo 1,177
B123 Espresso 231
C101 Candy 'N Carmelcorn 550
C102 LeCrepe 185
C104 Sam Goody 2,272
C110 Heroes 10,684
C121 Vacant 3,100
C123 Vacant 3,600
C125 Gordons 1,450
E101 Piercing Pagoda 160
E102 Vacant 1,408
E103 Hamer's 3,025
E105 Vacant 7,469
E109 Vacant 600
E111 Vacant 600
E114 Kay Bee Toys 3,570
E115 Modern Woman 5,664
E117 Vacant 1,800
E119 Pederson's 5,160
F109 LensCrafters 4,048
F111 Beauty Works 1,750
F114 Mark's Hallmark 2,861
F115 Vacant 3,072
F117 Gap Kids 4,830
F119 The Icing 1,349
F121 Garden Botanika 1,811
F123 Vacant 1,701
F125 Jay Jacobs 4,996
F127 Nordic Track 2,047
F131 B Dalton 4,465
F133 Track 'N Trail 1,836
F135 Zales Jewelers 1,393
<PAGE>
NORTHTOWN MALL
1998 ESTIMATED GROSS LEASABLE AREA
SPACE ID CURRENT TENANT S.F.
- -------- -------------- ----
F137 Gloria Jean's Coffee 1,076
F141 Vacant 3,798
F143 Pacific Sunwear 1,697
F145 Footlocker 2,397
F147 Payless Kids 1,348
F148 Kiddie Kandids 811
F149 Nature's Kingdom 1,233
F151 Street of Dreams 1,689
G101 Crescent Jewelers 1,082
G103 Gymboree 1,331
G105 Kids Footlocker 1,548
G107 Hidden Cottage 1,629
G109 Select Comfort 893
G110 Surf City Squeeze 420
G111 Things Remembered 1,376
G114 Saad's Shoe Repair 576
G115 Kay Jewelers 1,244
G117 Vacant 1,558
G119 Silver Safari 396
G121 Hot Topic 1,124
G122 Vacant 227
G123 Body Shop 846
H105 Baskin Robbins 684
H107 Evergreen 1,047
H108 Vacant 701
H109 Sunglass Hut 603
H113 Eddie Bauer 6,208
H115 Tiptons's 700
H117 Watch Gallery 701
H118 Cinnabon 758
H121 Carimar 861
H123 Champs 5,226
H125 Vacant 2,002
H127 Schlosser's Flowers 722
H129 Mrs. Fields 721
H131 Express Yourself 296
J101 Naturalizer 2,022
J103 Kits Camera 1,491
J105 Pickle Barrel 2,141
J107 Pro Image 2,007
<PAGE>
NORTHTOWN MALL
1998 ESTIMATED GROSS LEASABLE AREA
SPACE ID CURRENT TENANT S.F.
- -------- -------------- ----
J109 Vacant 2,007
J111 Pilgrim's Nutrition 1,792
J114 R. Brown 1,184
J115 Evangel Books 1,257
J117 Orange Julius 1,295
M101 Learning World 3,188
M103 Radio Shack 2,640
M105 Payless 2,819
N101 FootAction 2,139
N103 Candy Barrel 1,022
N105 Wilson's 2,847
N107 Lady Footlocker 1,826
N109 Vacant 139
P101 Ben Bridge 1,503
P103 Rave 2,138
P105 NW Beauty Supply 1,406
P107 Zumiez 2,018
P109 Pretzel Time 501
P111 Vacant 2,288
Q101 Village Shoes 2,007
Q103 Tomlinson Black 1,670
FIRST FLOOR TOTAL 202,938
B201 Limited Express 12,328
B203 Structure 4,332
C201 Victoria's Secret 6,521
C205 Suncoast 2,144
C207 Disney 3,873
C209 Eyemasters 3,730
E201 Vacant 4,921
E202 Vacant 2,316
E203 Vacant 4,805
E207 Vacant 2,640
E209 Motherhood Maternity 1,055
E211 The Avenue 4,019
E217 Maurice's 8,881
E219 Consumer Opinion 2,045
F201 Bombay Company 4,001
F207 Vacant 1,881
F209 Vacant 1,576
<PAGE>
NORTHTOWN MALL
1998 ESTIMATED GROSS LEASABLE AREA
SPACE ID CURRENT TENANT S.F.
- -------- -------------- ----
F211 Swim In 1,063
F212 Seafirst 1,028
F214 GNC 1,114
F215 Lechters 3,067
F217 Northern Reflections 2,478
F219 Kinney Shoes 2,741
F221 Gap 5,865
F229 Lerners 13,331
F241 Lane Bryant 7,246
FC201 Claire's 699
H201 Sweet Factory 848
H203 Vacant 627
H205 Harry Ritchie's 1,160
H207 House of Cutlery 1,004
H209 Vacant 973
H211 Sunglass Hut 741
H213 Homestead Birkenstock 774
H215 Hammer's Coffee 1,058
H217 Candleman 720
H219 Paw Prints 659
H221 Vacant 644
H223 Vacant 639
J203 Vacant 2,870
J204 Franklin Quest 2,249
J205 Vacant 1,638
J207 Vacant 1,607
J209 Musicland 1,583
J211 Inprints 1,426
J214 Software, Etc. 1,106
J215 Vista Optical 1,068
J217 Rizutto's 1,093
M201 Vacant 1,513
M202 HiTek Nails 939
M203 Hallmark 3,139
M205 vacant 2,608
N201 Naturium 1,539
N203 System Seven 1,297
N205 Mr. Rags 1,522
N207 San Francisco Music B 1,479
N209 Fred Meyer Jewelers 1,214
<PAGE>
NORTHTOWN MALL
1998 ESTIMATED GROSS LEASABLE AREA
SPACE ID CURRENT TENANT S.F.
- -------- -------------- ----
N211 It's A Wrap 363
P201 Afterthoughts 824
P203 Cartoon Classics 1,193
P205 Graham's 1,297
P207 Regis 1,221
P209 Footlocker 2,851
P213 Portraits To Go 1,566
Q201 Waldenbooks 2,952
Q203 Spencer's Gifts 1,445
SECOND FLOOR TOTAL 163,149
FC203 Frankfurter 429
FC205 Ivar's 630
FC207 Salad Garden 649
FC209 Schlotzsky's Deli 569
FC211 A&W 633
FC213 Flaming Wok 503
FC215 Sbarro 686
FC217 Juicers 541
FC219 Taco Time 777
FC221 Edo Japan 540
FC223 Arby's 591
FC225 Bruchi's 565
FOOD COURT TOTAL 7,113
G001 Bumpers 30,000
LOWER LEVEL TOTAL 30,000
The Bon 89,207
JCPenney 140,868
Emporium 68,742
Sears 160,479
Mervyn's 80,634
DEPARTMENT STORES TOTAL 539,930
TOTAL GLA 943,130
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
--------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
OOT IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- --------- ---------- ---------- ------------- ------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
48 0.00 0.00 0.00 0.00
00 10/15/93 8/31/11 2200.00 26400.00 2.64 10/01/93 2,200.00
9/01/03 3,333.34
86 8/07/91 8/31/11 56162.70 673952.40 4.78 4/01/92 56,162.70
74 10/17/91 10/31/11 43078.32 517635.84 7.53 10/01/91 43,078.32
1/01/94 58.00
912 3/26/91 0.00 0.00 0.00 0.00
20 7/25/93 1/31/14 33333.33 399999.96 4.48 7/01/93 33,333.33
636 8/01/94 1409.00 16908.00 3.00 9/01/95 1,409.00
Storage unit only.
- --------- ---------- ---------- ------------- ------------- ---------- ----------- ------------
84 136183.35 1634896.20 2.94
845
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
------------------------ -------------------- -------------------- ------------------------
OOT IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- --------- ------------- ---------- --------- ---------- --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
48 4,113.40 0.31 0.00 0.00 0.00 0.00 0.31 4,113.40
00 0.00 0.00 0.00 0.00 0.00 0.00 2.64 2,200.00
86 4,695.60 0.40 0.00 0.00 0.00 0.00 5.18 60,858.30
74 3,208.33 0.56 0.00 0.00 0.00 0.00 8.09 46,344.65
912 5,526.05 0.81 0.00 0.00 0.00 0.00 0.81 5,526.05
20 6,021.47 0.81 0.00 0.00 0.00 0.00 5.29 39,354.80
636 0.00 0.00 0.00 0.00 0.00 0.00 3.00 1,409.00
Storage unit only.
- --------- ------------- ---------- --------- ---------- --------- ---------- ---------- -------------
84 23,564.85 0.51 0.00 0.00 0.00 0.00 3.44 159,806.20
845
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ----- ---------- ---------- ----------- -------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 4/27/95 7/31/07 9450.83 113409.96 22.00 8/01/95 9,450.83
Moved from space G103 8/01/03 10,310.00
57 6/10/96 1/31/98 3771.17 45254.04 22.00 8/01/96 3,771.17
4 3906.88 0.00 0.00 0.00
71 0.00 0.00 0.00 0.00
4 0.00 0.00 0.00 0.00
e 109 - combined on 4/25/95 for Mariposa temp space
49 8/10/94 3/31/05 5478.33 65739.96 42.44 4/01/95 5,478.33
52 6/19/91 2/28/02 1928.67 23144.04 22.00 3/01/96 1,928.67
3/01/99 2,191.67
2 10/25/91 11/30/00 1916.67 23000.04 18.71 12/01/97 1,916.67
77 12/07/94 11/30/99 2157.33 25887.96 21.99 12/01/94 2,157.33
3 6/17/93 6/30/98 1000.00 12480.00 54.03 7/01/96 1,000.00
1/01/93 40.00
11 7/24/91 1/31/02 24990.00 299880.00 28.00 2/01/95 24,990.00
Lease includes Structures B203, 4,332 Sq. Ft 2/01/99 26,378.33
and Bath & Body, B201A, 1,661 Sq. Ft
56 7/24/91 1/31/02 0.00 0.00 0.00 0.00
Part of Limited lease
288 7/24/91 1/31/02 0.00 0.00 0.00 0.00
Part of Limited Lease
5 1/01/94 1191.67 14300.04 26.00 6/01/92 1,191.67
85 10/02/96 12/31/99 1875.00 22500.00 121.62 2/01/98 1,875.00
1/01/99 2,083.33
27 4/03/91 1/31/02 5490.67 65888.04 29.00 7/01/94 5,490.67
7/01/98 6,058.67
84 11574.33 0.00 0.00 0.00
6 0.00 0.00 0.00 0.00
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ------------------------ ---------------------- ---------------------- -------------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ----- ------------- ---------- ----------- ---------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 3,307.79 7.70 824.80 1.92 702.50 1.64 33.26 14,285.92
Moved from space
G103
57 1,431.33 8.35 329.12 1.92 345.70 2.02 34.29 5,877.32
4 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
71 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
e 109 - combion 4/25/ for Mariposa temp space
49 1,077.85 8.35 247.84 1.92 257.90 2.00 54.71 7,061.92
52 732.02 8.35 168.32 1.92 152.40 1.74 34.01 2,981.41
2 855.18 8.35 196.64 1.92 225.90 2.21 31.19 3,194.39
77 819.00 8.35 188.32 1.92 220.70 2.25 34.52 3,385.35
3 160.74 8.35 36.96 1.92 94.89 4.93 69.23 1,332.59
11 10,642.00 11.92 2,665.60 2.99 1853.00 2.08 44.98 40,150.60
Lease includes Structures B203, 4,332 Sq. Ft
and Bath & Body, B201A, 1,661 Sq. Ft
56 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Part of Limit lease
288 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Part of Limit Lease
5 382.71 8.35 88.00 1.92 98.88 2.16 38.43 1,761.26
85 128.73 8.35 29.60 1.92 125.31 8.13 140.02 2,158.64
27 1,580.93 8.35 363.52 1.92 367.20 1.94 41.21 7,802.32
84 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
6 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ----- ---------- ---------- ------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
0.00 0.00 0.00 0.00
46 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00
00 0.00 0.00 0.00 0.00
5 8/24/95 12/31/05 4,833.33 57,999.96 40.00 11/01/95 4,833.33
11/01/98 5,437.50
11/01/02 6,041.67
521 7/24/91 1/31/02 10,324.92 123,899.04 19.00 2/01/95 10,324.92
2/01/99 11,411.75
4 6/30/92 1/31/03 4,466.67 53,600.04 25.00 10/01/95 4,466.67
10/01/99 4,824.00
37 3/18/93 12/31/03 3,873.00 46,476.00 12.00 4/01/93 3,873.00
73 3/17/92 5/31/02 6,216.67 74,600.04 20.00 6/01/95 6,216.67
6/01/99 7,460.00
160 5/17/95 3/31/00 1,666.67 20,000.04 125.00 6/01/95 1,666.67
40 0.00 0.00 0.00 0.00
02 10/25/94 2/28/02 5,041.67 60,500.04 20.00 0.00
469 0.00 0.00 0.00 0.00
77 0.00 0.00 0.00 0.00
992 0.00 0.00 0.00 0.00
570 11/30/94 12/31/04 5,652.50 67,830.00 19.00 12/01/97 5,652.50
NC 1 from space #F115 12/01/01 5,950.00
66 10/14/91 2/29/04 7,552.00 90,624.00 16.00 3/01/98 7,552.00
2/01/01 8,496.00
80 3,416.67 0.00 0.00 0.00
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ----------------------- ----------------------- -------------------- -----------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ----- ------------ ---------- ------------ ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
46 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
5 1,008.96 8.35 232.00 1.92 121.13 1.00 51.27 6,195.42
521 4,051.65 7.46 1,043.36 1.92 839.10 1.54 29.92 16,259.03
4 1,491.87 8.35 343.04 1.92 354.40 1.98 37.25 6,655.98
37 2,491.63 7.72 619.68 1.92 527.30 1.63 23.27 7,511.61
73 2,595.46 8.35 596.80 1.92 513.00 1.65 31.92 9,921.93
160 106.00 7.95 23.60 1.77 165.40 12.41 147.13 1,961.67
40 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
02 0.00 0.00 0.00 0.00 0.00 0.00 20.00 5,041.67
469 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
77 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
992 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
570 2,484.13 8.35 571.20 1.92 497.00 1.67 30.94 9,204.83
NC
66 3,403.12 7.21 906.24 1.92 753.40 1.60 26.73 12,614.76
80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ----- ---------- ---------- ----------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
16 10/01/91 11/30/01 6880.00 82560.00 16.00 12/01/97 6,880.00
921 0.00 0.00 0.00 0.00
31 0.00 0.00 0.00 0.00
80 0.00 0.00 0.00 0.00
640 0.00 0.00 0.00 0.00
05 3/16/94 2/29/04 1934.17 23210.04 22.00 5/01/94 1,934.17
5/01/99 2,197.92
019 7/24/92 1/31/05 6195.96 74351.52 18.50 8/01/96 6,195.96
8/01/00 6,865.79
88 8/23/91 1/31/04 13321.50 159858.00 18.00 12/01/95 13,321.50
12/01/99 16,281.83
045 3/27/95 4/30/01 3026.60 36319.20 17.76 10/01/95 3,026.60
04 7/25/88 10/31/00 7421.35 90039.24 22.24 11/01/92 7,421.35
Note: Premises actually contains 4,893 s.f., but pursuant to 1/01/93 81.92
assignment and Amendment dated 7/19/93, T's MAR and Add'l
Rent will be based on 4,048 s.f.
750 8/03/92 10/31/98 3500.00 42000.00 24.00 11/01/96 3,500.00
880 6/01/89 12/31/01 5245.17 64431.96 22.52 1/01/96 5,245.17
1/01/99 5,722.00
1/01/93 124.16
107 0.00 0.00 0.00 0.00
083 8/30/94 1/31/07 10062.50 120750.00 25.00 12/01/97 10,062.50
12/01/01 11,270.00
349 9/08/97 11/30/07 4384.25 52611.00 39.00 12/01/97 4,384.25
12/01/02 4,946.33
83 8/12/97 11/30/07 5734.83 69681.96 38.48 12/01/97 5,734.83
moved from space #H108 12/01/02 7,093.08
3/01/98 72.00
125 0.00 0.00 0.00 0.00
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ------------------------ ---------------------- ---------------------- -------------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ----- ------------- ---------- ----------- ---------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
16 3,478.70 8.09 825.60 1.92 703.00 1.63 27.64 11,887.30
921 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
31 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
640 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
05 734.10 8.35 168.80 1.92 208.50 2.37 34.64 3,045.57
019 2,796.55 8.35 643.04 1.92 541.90 1.62 30.39 10,177.45
88 5,661.64 7.65 1,420.96 1.92 1075.10 1.45 29.02 21,479.20
045 1,423.21 8.35 327.20 1.92 344.50 2.02 30.05 5,121.51
04 2,816.73 8.35 647.68 1.92 544.80 1.62 34.13 11,512.48
Note: Premises actually contains 4,893 s.f., but pursuant to
assignment and Amendment dated 7/19/93, T's MAR and Add'l
Rent will be based on 4,048 s.f.
750 1,217.71 8.35 280.00 1.92 278.00 1.91 36.18 5,275.71
880 1,990.78 8.35 457.76 1.92 426.10 1.79 34.58 8,243.97
107 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
083 3,360.88 8.35 772.80 1.92 623.00 1.55 36.82 14,819.18
349 938.68 8.35 215.84 1.92 237.90 2.12 51.39 5,776.67
83 1,260.15 8.35 289.76 1.92 284.10 1.88 50.63 7,640.84
mov
from
space
#H108
125 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ----- ---------- ---------- ----------- -------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
72 95-Changed sq ft from 1250 eff 1/1/94
96 2/28/96 2/28/06 9159.33 111411.96 22.30 3/01/97 9,159.33
moved from space #H111 3/01/99 9,992.00
3/01/03 11,657.33
3/01/96 125.00
147 8/12/94 10/31/04 5117.50 61410.00 30.00 9/01/97 5,117.50
9/01/01 5,458.67
65 6/13/94 1/31/06 11162.50 133950.00 30.00 2/01/95 11,162.50
2/01/03 13,395.00
136 9/03/96 10/31/06 3825.00 45900.00 25.00 10/01/96 3,825.00
11/22/95-changed sq ft from 1795 eff 1/1/94 10/01/98 4,590.00
10/01/01 5,355.00
192 9/22/94 12/31/04 5833.33 70359.96 50.51 12/01/94 5,833.33
12/01/99 6,666.67
1/01/97 30.00
178 10/07/91 1/31/02 3586.67 43448.04 40.38 12/01/94 3,586.67
12/01/98 4,035.00
7/01/96 34.00
198 6013.50 0.00 0.00 0.00
69 9/21/92 12/31/02 3959.67 47516.04 28.00 12/01/97 3,959.67
392 3/20/91 11/30/06 4794.00 57528.00 24.00 12/01/94 4,794.00
12/01/01 4,993.75
340 11/15/92 10/31/01 2696.00 32352.00 24.00 9/01/97 2,696.00
313 11/20/91 2/28/02 2703.33 32439.96 40.00 2/01/97 2,703.33
233 9/26/94 3/31/05 2568.75 31914.00 25.88 12/01/96 2,568.75
12/01/99 2,877.00
4/01/95 90.75
588 9/26/94 3/31/05 3518.75 43314.00 25.64 12/01/96 3,518.75
12/01/99 3,941.00
4/01/95 90.75
300 7/27/93 12/31/03 5001.25 60015.00 15.00 8/01/97 5,001.25
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ------------------------ ---------------------- ---------------------- -------------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ----- ------------- ---------- ----------- ---------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
72
96 3,476.38 8.35 799.36 1.92 639.60 1.54 34.11 14,199.67
moved from space #H111
147 1,424.37 8.35 327.52 1.92 344.70 2.02 42.29 7,214.09
65 3,106.90 8.35 714.40 1.92 586.50 1.58 41.85 15,570.30
136 1,277.55 8.35 293.76 1.92 286.60 1.87 37.14 5,682.91
11/22/95-changed sq ft from 1795 eff 1/1/94
192 969.30 8.35 222.88 1.92 242.30 2.09 62.87 7,297.81
178 748.72 8.35 172.16 1.92 134.45 1.50 52.15 4,676.00
198 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
69 1,118.61 7.91 271.52 1.92 272.70 1.93 39.76 5,622.50
392 1,667.91 8.35 383.52 1.92 379.70 1.90 36.17 7,225.13
340 937.98 8.35 215.68 1.92 237.80 2.12 36.39 4,087.46
313 564.32 8.35 129.76 1.92 134.10 1.98 52.25 3,531.51
233 857.96 8.35 197.28 1.92 226.30 2.20 38.36 3,941.04
588 1,175.26 8.35 270.24 1.92 271.90 1.93 37.85 5,326.90
300 2,784.03 8.35 640.16 1.92 540.10 1.62 26.89 8,965.54
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ----- ---------- ---------- ----------- ------------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
2/01/01 10,002.50
881 0.00 0.00 0.00 0.00
67 0.00 0.00 0.00 0.00
106 11/18/94 12/31/04 871.66 10459.92 9.84 12/01/94 871.66
75% area leased up rent increases to $34 sqft 1/01/00 0.00
029 7/22/93 8/31/99 3598.00 43176.00 42.00 9/01/96 3,598.00
111 4/29/93 6/30/03 2785.00 33420.00 30.00 7/01/96 2,785.00
7/01/98 2,970.67
067 10/21/91 1/31/05 5111.67 61340.04 20.00 3/01/96 5,111.67
3/01/00 6,134.00
47 11/11/92 2/28/08 4750.00 57000.00 23.00 3/01/93 4,750.00
741 4/24/92 12/31/07 5000.00 60000.00 21.89 12/01/92 5,000.00
86 5/15/92 8/30/04 12218.75 146625.00 25.00 9/01/96 12,218.75
9/01/00 13,685.00
331 7/24/91 1/31/02 19996.50 242358.00 18.18 2/01/95 19,996.50
2/01/99 21,107.42
2/01/96 200.00
24 7/24/91 1/31/02 11472.83 137673.96 19.00 2/01/95 11,472.83
2/01/99 12,680.50
699 8/23/91 1/31/02 4951.35 59415.00 85.00 8/01/96 4,951.25
42 1882.24 0.00 0.00 0.00
630 7/23/91 11/30/01 3675.00 45120.00 71.62 12/01/96 3,675.00
12/01/96 85.00
12/01/98 90.00
64 1/24/96 3/31/06 2916.66 34999.92 53.93 4/01/96 2,916.66
4/01/01 3,333.33
569 8/02/95 10/31/05 2500.00 31260.00 54.94 1/01/98 2,500.00
11/01/00 3,750.00
9/01/97 105.00
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ----------------------- ----------------------- ---------------------- -----------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ----- ------------ ---------- ------------ ---------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
881 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
67 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
106 739.67 8.35 170.08 1.92 209.30 2.36 22.47 1,990.71
75% area leased up rent increases to $34 sqft
029 715.32 8.35 164.48 1.92 115.85 1.35 53.62 4,593.65
111 775.16 8.35 178.24 1.92 214.40 2.31 42.58 3,952.80
067 2,134.12 8.35 490.72 1.92 446.70 1.75 32.02 8,183.21
47 1,724.28 8.35 396.48 1.92 387.80 1.88 35.15 7,258.56
741 1,907.28 8.35 438.56 1.92 414.10 1.81 33.97 7,759.94
86 3,778.04 7.73 938.40 1.92 781.50 1.60 36.25 17,716.69
331 8,478.15 7.63 2,132.96 1.92 1520.10 1.37 29.10 32,327.71
24 4,522.90 7.49 1,159.36 1.92 911.60 1.51 29.92 18,066.69
699 486.39 8.35 111.84 1.92 61.74 1.06 96.33 5,611.22
42 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
630 1,407.00 26.80 100.80 1.92 515.88 9.83 110.17 5,783.68
64 1,614.39 29.85 103.84 1.92 193.11 3.57 89.27 4,828.00
569 1,415.39 29.85 91.04 1.92 217.11 4.58 91.29 4,328.54
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ------ ---------- ---------- ----------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
6 7/25/91 11/30/01 3956.25 47475.00 75.00 12/01/95 3,956.25
12/01/98 4,220.00
503 2/01/91 11/30/01 3143.75 37725.00 75.00 12/01/94 3,143.75
12/01/98 3,353.33
6 8/30/91 11/30/01 4287.50 52470.00 76.49 12/01/94 4,287.50
12/01/98 4,573.33
12/01/94 85.00
12/01/98 90.00
5 11/05/96 11/30/03 2795.17 33542.04 62.00 12/01/96 2,795.17
12/01/98 2,975.50
777 12/12/91 2/28/02 4056.25 49155.00 63.26 3/01/97 4,056.25
3/01/99 4,326.67
1/01/93 40.00
540 7/29/91 10/31/01 3375.00 40500.00 75.00 11/01/94 3,375.00
11/01/98 3,600.00
5 3/16/94 2/28/10 3693.75 47301.00 80.04 3/01/94 3,693.75
3/01/99 4,678.75
3/01/04 5,910.00
3/01/94 248.00
565 10/25/91 11/30/01 3531.25 42375.00 75.00 12/01/94 3,531.25
12/01/98 3,766.67
100 11/28/94 1/31/02 22916.67 275000.04 9.17 12/01/94 22,916.67
T has exclusive right to use approx 5,017 sf of Common Area, excluding
sewer sump area in G003. T shall maintain the Common Area (incl
restrooms), but not escalator/elevator or replacement or repair of restrooms.
1495 1685.83 0.00 0.00 0.00
1082 10/02/96 1/31/05 4166.67 50000.04 46.21 11/01/96 4,166.67
11/01/98 4,583.33
11/01/00 5,000.00
11/01/02 5,416.67
1331 5/24/95 1/31/06 2666.67 32000.04 24.04 8/01/95 2,666.67
2/01/99 2,916.67
2/01/03 3,166.67
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ------------------------ ---------------------- ---------------------- ------------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ------ ------------- ---------- ----------- ---------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 1,413.71 26.80 101.28 1.92 114.91 2.18 105.90 5,586.15
503 1,251.21 29.85 80.48 1.92 350.29 8.36 115.13 4,825.73
6 1,413.73 24.73 109.76 1.92 523.58 9.16 112.30 6,419.57
5 1,345.74 29.85 86.56 1.92 191.76 4.25 98.02 4,419.23
777 1,932.79 29.85 124.32 1.92 412.71 6.37 101.41 6,566.07
540 1,343.25 29.85 86.40 1.92 315.92 7.02 113.79 5,120.57
5 1,470.12 29.85 94.56 1.92 467.39 9.49 121.30 5,973.82
565 1,405.44 29.85 90.40 1.92 319.06 6.78 113.55 5,346.15
100 1,875.00 0.75 1,565.00 0.63 3437.00 1.37 11.92 29,793.67
T has exclusive right to use approx 5,017 sf of Common Area, excluding
sewer sump area in G003. T shall maintain the Common Area (incl
restrooms), but not escalator/elevator or replacement or repair of restrooms.
1495 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1082 753.59 8.36 173.28 1.92 211.30 2.34 58.83 5,304.84
1331 926.15 8.35 212.96 1.92 236.10 2.13 36.44 4,041.88
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ----- ---------- ---------- ----------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
48 4/09/97 1/31/07 3483.00 41796.00 27.00 1/01/97 3,483.00
12/01/01 3,870.00
29 1/13/95 1/31/98 3258.00 1530.00 0.94 11/01/96 31.50
3/01/98 96.00
93 1/24/96 2/28/06 2500.00 30000.00 33.59 3/01/96 2,500.00
3/01/01 2,916.66
20 7/09/91 6/30/02 1750.00 21990.00 52.36 7/01/95 1,750.00
7/01/98 2,100.00
6/01/96 82.50
76 11/05/91 2/28/02 3669.33 44031.96 32.00 3/01/98 3,669.33
80 4/01/92 6/23/02 575.00 6900.00 0.00 7/01/97 575.00
76 10/01/96 9/30/01 1344.00 16128.00 28.00 10/01/96 1,344.00
10/01/99 1,440.00
44 12/13/93 2/29/04 3317.33 39807.96 32.00 3/01/97 3,317.33
3/01/99 3,524.67
3/01/02 3,732.00
158 3116.00 0.00 0.00 0.00
196 1/11/96 1/31/03 1666.66 20191.92 50.99 2/01/96 1,666.66
2/01/99 2,083.33
11/01/96 16.00
124 4/28/95 1/31/06 2716.33 32595.96 29.00 7/01/95 2,716.33
8/01/99 2,903.67
8/01/02 3,091.00
22 0.00 0.00 0.00 0.00
146 5/30/95 7/31/05 3166.67 38000.04 44.92 7/01/95 3,166.67
8/01/99 3,500.00
8/01/02 3,833.33
584 11/07/91 12/31/01 1795.50 21546.00 31.50 1/01/95 1,795.50
1/01/99 1,938.00
047 9/05/96 1/31/02 2093.75 25125.00 24.00 11/01/97 2,093.75
11/01/98 2,619.17
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ------------------------ ---------------------- ---------------------- ------------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ----- ------------- ---------- ----------- ---------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
48 1,077.15 8.35 247.68 1.92 257.80 2.00 39.27 5,065.63
29 1,133.51 8.35 260.64 1.92 265.90 1.96 13.17 1,787.55
93 621.38 8.35 142.88 1.92 142.30 1.91 45.78 3,406.56
20 292.25 8.35 67.20 1.92 97.25 2.78 65.41 2,289.20
76 957.47 8.35 220.16 1.92 240.60 2.10 44.37 5,087.56
80 0.00 0.00 0.00 0.00 0.00 0.00 0.00 575.00
76 400.80 8.35 92.16 1.92 110.60 2.30 40.57 1,947.56
44 865.62 8.35 199.04 1.92 227.40 2.19 44.46 4,609.39
158 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
196 275.55 8.35 63.36 1.92 92.60 2.81 64.07 2,114.17
124 782.12 8.35 179.84 1.92 215.40 2.30 41.57 3,893.69
22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
146 588.69 8.35 135.36 1.92 137.60 1.95 57.14 4,028.32
584 475.95 8.35 109.44 1.92 237.07 4.16 45.93 2,617.96
047 728.54 8.35 167.52 1.92 207.70 2.38 36.65 3,197.51
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ------- ---------- ---------- ----------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
03 11/30/94 3/31/05 2916.67 35000.04 58.04 4/01/97 2,916.67
4/01/03 3,166.67
40 0.00 0.00 0.00 0.00
08 5/09/96 1/31/07 9829.33 117951.96 19.00 8/01/96 9,829.33
8/01/99 10,864.00
8/01/03 11,898.67
18 0.00 0.00 0.00 0.00
00 11/16/94 9/30/07 2800.00 34500.00 49.29 12/01/94 2,800.00
12/01/99 3,033.33
1/01/93 75.00
02 8/22/95 10/31/00 2500.00 30000.00 42.80 11/01/97 2,500.00
58 8/19/91 10/31/99 2274.00 28617.60 37.75 11/01/96 2,274.00
8/01/97 40.00
1/01/98 70.80
12/01/98 0.00
6 9/04/91 3/31/07 2726.50 32718.00 38.00 4/01/95 2,726.50
4/01/99 2,870.00
4/01/02 3,013.50
26 9/04/91 3/31/07 8333.33 99999.96 19.14 4/01/97 8,333.33
4/01/02 9,166.67
02 0.00 0.00 0.00 0.00
22 9/15/90 4/30/01 790.58 9486.96 13.14 5/01/91 790.58
72 9/10/93 6/30/03 1802.50 22530.00 31.25 7/01/96 1,802.50
7/01/00 1,922.67
10/01/97 75.00
296 995.83 0.00 0.00 0.00
84 10/01/93 1/31/04 2473.33 29679.96 35.00 12/01/93 2,473.33
12/01/98 2,685.33
527 1567.50 0.00 0.00 0.00
16 10/26/90 12/31/01 3207.93 38493.96 33.18 10/01/96 3,207.83
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ---------------------- --------------------- ---------------------- -----------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ------- ----------- ---------- ---------- ---------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
03 419.59 8.35 96.48 1.92 113.30 2.25 70.57 3,546.0
40 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
08 4,319.73 8.35 993.28 1.92 264.60 0.51 29.78 15,406.94
18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
00 487.08 8.35 112.00 1.92 162.00 2.78 62.33 3,636.08
02 487.78 8.35 112.16 1.92 123.10 2.11 55.17 3,223.04
58 527.44 8.35 121.28 1.92 221.80 3.51 51.54 3,255.32
6 599.11 8.35 137.76 1.92 139.10 1.94 50.21 3,602.47
26 3,636.43 8.35 836.16 1.92 709.60 1.63 31.03 13,515.52
02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
22 502.39 8.35 115.52 1.92 154.37 2.57 25.98 1,562.86
72 501.70 8.35 115.36 1.92 204.10 3.40 44.92 2,698.66
296 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
84 590.07 8.35 135.68 1.92 137.80 1.95 47.22 3,336.88
527 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
16 807.17 8.35 185.60 1.92 219.00 2.27 45.72 4,419.60
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ------- ---------- ---------- ----------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
00 1/31/92 5/31/02 3179.33 38151.96 38.00 6/01/96 3,179.33
973 2432.50 0.00 0.00 0.00
74 7/31/91 11/30/01 2593.50 31122.00 42.00 12/01/96 2,593.50
12/01/98 2,778.75
774 2/10/93 3/31/03 2064.00 24768.00 32.00 4/01/95 2,064.00
4/01/98 2,322.00
05 1/01/96 12/31/97 2380.50 28566.00 27.00 2/01/94 2,380.50
720 12/07/92 2/28/03 2160.00 25920.00 36.00 3/01/98 2,160.00
3/01/00 2,280.00
6 5/30/97 7/31/02 1647.50 19770.00 30.00 8/01/97 1,647.50
8/01/99 1,812.25
644 0.00 0.00 0.00 0.00
639 0.00 0.00 0.00 0.00
0 1/11/93 2/28/03 3370.00 40440.00 20.00 2/01/98 3,370.00
3/01/00 4,718.00
491 8/30/94 11/30/04 2563.25 30759.00 20.63 12/01/97 2,563.25
12/01/00 2,811.75
1 11/23/90 4/30/96 4000.00 48000.00 22.42 5/01/96 4,000.00
007 6/20/95 1/31/01 3345.00 40140.00 20.00 2/01/96 3,345.00
2/01/99 3,679.50
0 4014.00 0.00 0.00 0.00
792 1/31/94 2/28/99 3666.67 44000.04 24.55 1/01/94 3,666.67
100 1666.67 0.00 0.00 0.00
1 2/27/96 2/28/01 2933.00 38436.00 32.46 3/01/98 2,933.00
3/01/96 270.00
257 10/25/90 2/28/99 2199.75 26397.00 21.00 1/01/96 2,199.75
12 2/01/91 7/31/01 3777.08 45324.96 35.00 8/01/97 3,777.08
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ---------------------- ---------------------- ---------------------- ------------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ------- ----------- ---------- ----------- ---------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
00 698.62 8.35 160.64 1.92 203.40 2.43 50.70 4,241.99
973 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
74 515.61 8.35 118.56 1.92 127.10 2.06 54.33 3,354.77
774 538.58 8.35 123.84 1.92 130.40 2.02 44.29 2,856.82
05 736.18 8.35 169.28 1.92 228.80 2.60 39.86 3,514.76
720 501.00 8.35 115.20 1.92 125.00 2.18 48.35 2,901.20
6 458.55 8.35 105.44 1.92 118.90 2.17 42.44 2,330.39
644 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
639 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 1,282.29 7.61 323.52 1.92 342.20 2.03 31.56 5,318.01
491 1,037.49 8.35 238.56 1.92 252.10 2.03 32.93 4,091.40
1 0.00 0.00 0.00 0.00 0.00 0.00 22.42 4,000.00
007 1,396.54 8.35 321.12 1.92 340.70 2.04 32.31 5,403.36
0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
792 1,246.93 8.35 286.72 1.92 282.20 1.89 36.71 5,482.52
100 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1 874.66 8.86 201.12 2.04 228.70 2.32 45.68 4,507.48
257 874.66 8.35 201.12 1.92 228.70 2.18 33.45 3,504.23
12 901.10 8.35 207.20 1.92 281.50 2.61 47.88 5,166.88
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ----- ---------- ---------- ----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
70 0.00 0.00 0.00 0.00
49 3/28/95 5/31/00 4123.17 49478.04 22.00 1/01/98 4,123.17
38 0.00 0.00 0.00 0.00
07 0.00 0.00 0.00 0.00
83 4/03/91 1/31/03 3561.75 42741.00 27.00 4/01/95 3,561.75
4/01/99 3,957.50
26 4/16/92 1/31/03 3327.33 43980.00 30.84 7/01/95 3,327.33
7/01/99 3,565.00
2/01/98 337.67
06 1/15/92 1/31/05 2396.33 29235.96 26.43 1/01/96 2,396.33
1/01/00 2,672.83
1/01/03 2,857.17
1/01/93 40.00
68 12/31/91 2/28/02 2848.00 34176.00 32.00 3/01/95 2,848.00
3/01/99 3,026.00
93 7/11/91 11/30/99 2914.67 34976.04 32.00 12/01/96 2,914.67
0 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00
88 5844.67 0.00 0.00 0.00
40 10/07/97 11/30/07 3906.88 46882.56 17.76 1/01/98 3,906.88
ov from space #B107 12/01/00 4,375.00
12/01/04 4,725.00
19 8/27/91 10/31/01 6577.67 78932.04 28.00 11/01/96 6,577.67
11/01/99 7,047.50
13 0.00 0.00 0.00 0.00
39 10/06/95 12/31/00 1666.67 20000.04 21.30 1/01/96 1,666.67
39 9/06/91 1/31/04 6278.00 75336.00 24.00 12/01/95 6,278.00
08 1738.67 0.00 0.00 0.00
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ----------------------- -------------------- -------------------- -----------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ----- ------------ ---------- --------- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
70 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
49 1,564.93 8.35 359.84 1.92 364.90 1.95 34.22 6,412.84
38 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
07 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
83 1,101.50 8.35 253.28 1.92 261.30 1.98 39.25 5,177.83
26 992.26 8.35 228.26 1.92 385.60 3.24 44.36 5,271.02
06 744.70 8.08 176.96 1.92 213.60 2.32 38.75 3,571.59
68 743.15 8.35 170.88 1.92 209.80 2.36 44.63 3,971.83
93 760.55 8.35 174.88 1.92 212.30 2.33 44.60 4,062.40
0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
88 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
40 1,531.25 6.96 420.00 1.91 402.50 1.83 28.46 6,260.63
ov
19 1,961.55 8.35 451.04 1.92 421.90 1.80 40.07 9,412.16
13 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
39 653.39 8.35 150.24 1.92 146.90 1.88 33.45 2,617.20
39 2,116.21 8.09 502.24 1.92 453.90 1.74 35.75 9,350.35
08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- ------- ---------- ---------- ----------- ------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
39 1/29/92 4/30/02 4791.00 57492.00 26.88 5/01/95 4,791.00
5/01/99 5,370.67
22 6/18/92 8/31/98 1873.67 22484.04 22.00 9/01/97 1,873.67
47 2/22/92 4/30/02 6168.50 74022.00 26.00 5/01/95 6,168.50
5/01/99 7,117.50
26 3/20/91 1/31/07 3804.17 45650.04 25.00 2/01/92 3,804.17
2/01/02 3,956.33
39 8/31/92 10/31/00 3591.00 45132.00 29.33 11/01/97 3,591.00
4/01/97 170.00
97 10/11/91 12/31/01 2810.17 33722.04 26.00 1/01/95 2,810.17
1/01/99 3,026.33
22 6/20/91 12/31/02 3044.00 36528.00 24.00 1/01/97 3,044.00
1/01/99 3,297.67
79 11/19/92 3/31/08 3375.00 40500.00 27.38 4/01/93 3,375.00
14 6/16/92 8/31/02 4046.67 48560.04 40.00 9/01/95 4,046.67
9/01/98 4,249.00
63 6/01/95 11/30/98 733.33 8799.96 24.24 1/01/95 733.33
03 2/15/91 1/31/02 5636.25 67635.00 45.00 11/01/97 5,636.25
38 8/23/91 1/31/02 4988.67 59864.04 28.00 11/01/97 4,988.67
06 7/22/91 11/30/01 3397.83 40773.96 29.00 12/01/97 3,397.83
18 8/28/91 3/31/00 4036.00 48432.00 24.00 4/01/96 4,036.00
01 8/04/92 11/30/02 1920.50 23646.00 47.20 12/01/95 1,920.50
12/01/99 2,087.50
1/01/93 50.00
88 0.00 0.00 0.00 0.00
24 3/30/91 8/31/06 2609.33 31311.96 38.00 9/01/94 2,609.33
9/01/98 2,717.33
9/01/01 2,884.00
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ------------------------ ---------------------- ---------------------- ------------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- ------- ------------- ---------- ----------- ---------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
39 1,488.39 8.35 342.24 1.92 353.90 1.99 39.13 6,975.53
22 711.13 8.35 163.52 1.92 205.20 2.41 34.68 2,953.52
47 1,981.04 8.35 455.52 1.92 424.70 1.79 38.06 9,029.76
26 1,270.59 8.35 292.16 1.92 285.60 1.88 37.15 5,652.52
39 1,070.89 8.35 246.24 1.92 256.90 2.00 41.60 5,335.03
97 902.50 8.35 207.52 1.92 136.21 1.26 37.53 4,056.40
22 1,059.06 8.35 243.52 1.92 255.20 2.01 36.28 4,601.78
79 1,029.14 8.35 236.64 1.92 250.90 2.04 39.69 4,891.68
14 844.74 8.35 194.24 1.92 224.40 2.22 52.49 5,310.05
63 252.59 8.35 58.08 1.92 89.30 2.95 37.46 1,133.30
03 1,045.84 8.35 240.48 1.92 253.30 2.02 57.29 7,175.87
38 1,487.69 8.35 342.08 1.92 353.80 1.99 40.26 7,172.24
06 978.34 8.35 224.96 1.92 135.57 1.16 40.43 4,736.70
18 1,404.19 8.35 322.88 1.92 341.80 2.03 36.30 6,104.87
01 348.61 8.35 80.16 1.92 173.10 4.15 61.61 2,572.37
88 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
24 573.37 8.35 131.84 1.92 135.40 1.97 50.24 3,449.94
</TABLE>
<PAGE>
SABEY CORPORATION
Commercial Rent Roll
Report Date From: 3/01/98 To: 3/31/98
<TABLE>
<CAPTION>
TERM PRORATED BASE RENT BASE RENT
OOT --------------------- UNIT INFO BASE RENT RENT PER INCREASE INCREASE
IED FROM TO BASE RENT ANNUAL SQ FT/YR (DATE) (AMOUNT)
- -------- ---------- ---------- ------------- -------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
9 2/21/92 5/31/02 0.00 0.00 0.00 6/01/99 3,081.92
97 11/05/96 11/30/99 2702.08 32424.96 25.00 12/01/97 2,702.08
12/01/98 3,026.33
2 6/19/91 9/30/01 2747.25 32967.00 27.00 10/01/97 2,747.25
51 3/20/91 9/30/06 5597.32 67167.84 23.56 12/01/91 5,597.32
10/01/01 5,809.90
66 11/07/91 12/31/01 3262.50 39150.00 25.00 1/01/96 3,262.50
00 3/29/91 5/31/01 4339.83 53115.96 26.47 6/01/95 4,339.83
6/01/98 4,673.67
2/01/98 86.50
57 12/19/97 1/31/99 2087.50 25050.00 15.00 12/01/97 2,087.50
52 2/14/92 4/30/02 5412.00 64944.00 22.00 5/01/95 5,412.00
5/01/99 5,904.00
44 9/14/93 1/31/04 2890.00 34680.00 24.00 11/01/95 2,890.00
11/01/98 3,130.83
11/01/00 3,371.67
- ------ -------- --------
63 663135.98 7354982.88 23.49
11
518
- ------
46 799319.33 8989879.08 10.33
964
518
<CAPTION>
OPERATING EXPENSE REAL ESTATE TAX CPI EXPENSE GROSS RENTS
OOT ------------------------- ------------------------ ---------------------- ---------------------------
IED MONTH SQ FT/YR MONTH SQ FT/YR MONTH SQ FT/YR SQ FT/YR TOTAL
- -------- -------------- ---------- ------------- ---------- ----------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
9 830.13 8.35 190.88 1.92 222.30 2.24 12.51 1,243.31
97 902.50 8.35 207.52 1.92 232.70 2.15 37.42 4,044.80
2 849.61 8.35 195.36 1.92 189.93 1.87 39.14 3,982.15
51 1,983.82 8.35 456.16 1.92 425.10 1.79 35.62 8,462.40
66 1,089.68 8.35 250.56 1.92 259.60 1.99 37.26 4,862.34
00 1,396.54 8.35 321.12 1.92 340.70 2.04 38.77 6,484.69
57 1,162.07 8.35 267.20 1.92 270.00 1.94 27.21 3,786.77
52 2,054.10 8.35 472.32 1.92 435.20 1.77 34.04 8,373.62
44 1,005.48 8.35 231.20 1.92 247.50 2.06 36.33 4,374.18
- ------
63 201,399.60 5.68 46,044.92 1.30 47489.67 1.34 25.60 907,849.43
11
518
- ------
46 224,964.45 2.75 46,044.92 0.56 47489.67 0.58 13.04 1,067,655.63
964
518
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Food Court / Fast Food 08
- ------------------------------------------------------------------------------------------------------------
Food Court / Fast Food
C211 110) A&W 11/09/91 633 8.9 61.8 73.1 -15.5
C223 110) Arby's 3/18/94 591 8.3 104.5 107.5 -2.9
C225 110) Bruchi's Cheese 11/22/91 565 7.9 59.5 58.3 2.1
C221 110) Edo Japan 11/10/91 540 7.6 69.1 65.6 5.3
C213 110) Flaming Wok 12/18/91 503 7.1 48.8 57.0 -14.3
C203 110) Frankfurter 2/10/92 429 6.0 17.6 19.6 -10.2
C205 110) Ivar's #56 12/09/91 630 8.9 67.6 72.1 -6.3
C215 110) Sbarro #463 11/07/91 686 9.6 60.7 65.7 -7.6
C219 110) Taco Time 2/16/92 777 10.9 102.6 110.5 -7.1
Comp Sub-Totals: 5354 592.2 629.4 -5.9
- ------------------------------------------------------------------------------------------------------------
C217 110) Juicers 12/14/96 541 7.6 17.5 NA NA
C217 110) New York Fries Closed 7/24/92 NA 10/04/95 NA NA NA
C207A 110) Petros' Chili & Closed 9/01/85 NA 1/20/96 NA 17.7 NA
<PAGE>
C207 110) Salad Garden 3/31/96 649 9.1 20.9 NA NA
C209 110) Schlotzsky's Deli 10/18/95 569 8.0 37.3 44.0 -15.3
C209A 110) Sub Shop NW 12/03/93 NA 2/27/95 NA NA NA NA
Non Comp Sub-Totals 1759 75.7 61.7 22.7
- ------------------------------------------------------------------------------------------------------------
Sub Category Totals 7113 667.9 691.1 -3.4
============================================================================================================
Category Totals: 7113 667.9 691.1 -3.4
============================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Food Court / Fast Food
- ------------------------------------------------------------------------------------------------------------------
C211 110) 453.1 511.4 -11.4 9.4 453.1 511.4 -11.4 716 808 0 8
C223 110) 715.0 684.6 4.4 14.8 715.0 684.6 4.4 1210 1158 0 0
C225 110) 393.9 426.7 -7.7 8.1 393.9 426.7 -7.7 697 755 0 8
C221 110) 537.1 488.7 9.9 11.1 537.1 488.7 9.9 995 905 0 8
C213 110) 400.8 379.3 5.7 8.3 400.8 379.3 5.7 797 754 0 10
C203 110) 121.4 121.5 -0.1 2.5 121.4 121.5 -0.1 283 283 0 10
C205 110) 441.0 504.0 -12.5 9.1 441.0 504.0 -12.5 700 800 0 8
C215 110) 486.1 479.3 1.4 10.0 486.1 479.3 1.4 709 699 0 8
C219 110) 788.7 778.7 1.3 16.3 788.7 778.7 1.3 1015 1002 0 8
Comp 4,337.1 4,374.1 -0.8 4,337.1 4,374.1 -0.8 810 817
Sub-Totals:
- ------------------------------------------------------------------------------------------------------------------
C217 110) 17.5 NA NA 0.4 17.5 NA NA 32 NA 0 8
C217 110) NA 84.3 NA NA NA 84.3 NA NA 21 NA 8
C207A 110) 7.5 134.7 -94.4 0.2 7.5 134.7 -94.4 NA 277 NA 6
C207 110) 154.5 NA NA 3.2 154.5 NA NA 238 NA 0 8
C209 110) 323.0 94.9 240.1 6.7 323.0 94.9 240.1 568 167 0 0
C209A 110) NA 12.9 NA NA NA 12.9 NA NA 12 NA 7
Non Comp 502.5 326.8 53.8 502.5 326.8 53.8 286 53
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------
Sub Category
Totals 4,839.7 4,700.9 3.0 4,839.7 4,700.9 3.0 680 409
==================================================================================================================
Category
Totals: 4,839.7 4,700.9 3.0 4,839.7 4,700.9 3.0 680 409
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Wear 10
- -------------------------------------------------------------------------------------------------------------
Women's Wear
241 110) Lane Bryant #65 11/07/91 7246 14.3 148.9 183.7 -18.9
229 110) Lerner New York 11/07/91 13331 26.3 278.2 323.5 -14.0
201 110) Limited Express 11/11/91 10711 21.1 179.8 235.0 -23.5
201 110) Mariposa #82 9/16/95 5155 10.2 82.1 104.6 -21.5
215 110) Modern Woman 2/13/92 5664 11.2 81.9 100.9 -18.9
217 110) Northern Reflec 4/28/93 2478 4.9 191.5 178.6 7.2
203 110) Rave #434 10/11/91 2138 4.2 95.6 86.8 10.2
211 110) Smart Sizes #65 7/31/92 4019 7.9 38.8 58.2 -33.2
Comp Sub-Totals: 50742 1,096.9 1,271.4 -13.7
- -------------------------------------------------------------------------------------------------------------
111A 110) Jay Jacobs #22 CLOSED 4/17/86 NA 2/29/96 NA NA NA
125 110) Jean Nicole #85 CLOSED 4/01/84 NA 1/31/96 NA 102.4 NA
114 110) Savannah #74 CLOSED 10/01/84 NA 4/25/95 NA NA NA
123 110) Size 5-7-9 #45 CLOSED 9/01/84 NA 1/07/96 NA 47.3 NA
Non Comp Sub-Totals 9933 0.0 149.7 -100.0
- -------------------------------------------------------------------------------------------------------------
Sub Category Totals 50742 1,096.9 1,421.2 -22.8
=============================================================================================================
Category Totals: 60675 1,096.9 1,421.2 -22.8
=============================================================================================================
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Wear
- ----------------------------------------------------------------------------------------------------------------------
241 110) 1,269.8 1,317.5 -3.6 15.5 1,269.8 1,317.5 -3.6 175 182 340 5
229 110) 1,889.9 1,804.1 4.8 23.0 1,889.9 1,804.1 4.8 142 135 340 5
201 110) 1,453.3 1,554.0 -6.5 17.7 1,453.3 1,554.0 -6.5 136 145 560 5
201 110) 833.2 991.0 -15.9 10.1 833.2 991.0 -15.9 162 192 0 5
215 110) 791.6 980.2 -19.2 9.6 791.6 980.2 -19.2 140 173 0 4
217 110) 826.5 754.9 9.5 10.1 826.5 754.9 9.5 334 305 0 5
203 110) 711.7 619.1 15.0 8.7 711.7 619.1 15.0 333 290 0 5
211 110) 407.2 435.6 -6.5 5.0 407.2 435.6 -6.5 101 108 0 5
Comp 8,183.2 8,456.4 -3.2 8,183.2 8,456.4 -3.2 161 167
Sub-Totals:
- ----------------------------------------------------------------------------------------------------------------------
111A 110) NA NA NA NA NA NA NA NA NA NA NA
125 110) 26.7 590.5 -95.5 0.3 26.7 590.5 -95.5 5 121 NA 6
114 110) NA 153.0 NA NA NA 153.0 NA NA NA NA 6
123 110) 5.1 261.2 -98.0 0.1 5.1 261.2 -98.0 4 201 NA 6
Non Comp 31.8 1,004.7 -96.8 31.8 1,004.7 -96.8 3 162
Sub-Totals
- ----------------------------------------------------------------------------------------------------------------------
Sub Category
Totals 8,215.0 9,461.1 -13.2 8,215.0 9,461.1 -13.2 135 166
======================================================================================================================
Category
Totals: 8,215.0 9,461.1 -13.2 8,215.0 9,461.1 -13.2 135 166
======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Specialty 11
209 110) Motherhood Mate 4/29/94 1055 12.2 29.1 28.4 2.5
211 110) Swim-In 12/21/94 1063 12.3 13.7 18.7 -26.7
201 110) Victoria's Secr 11/07/91 6521 75.5 447.0 461.8 -3.2
Comp Sub-Totals: 8639 489.8 508.8 -3.7
============================================================================================
Category Totals: 8639 489.8 508.8 -3.7
============================================================================================
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Specialty
- -------------------------------------------------------------------------------------------------------------
209 110) 291.5 214.8 35.7 10.7 291.5 214.8 35.7 276 204 0 6
211 110) 299.4 309.8 -3.4 11.0 299.4 309.8 -3.4 282 291 357 7
201 110) 2,141.0 2,025.8 5.7 78.4 2,141.0 2,025.8 5.7 328 311 340 5
Comp
Sub-Totals 2,731.9 2,550.4 7.1 2,731.9 2,550.4 7.1 316 295
=============================================================================================================
Category
Totals: 2,731.9 2,550.4 7.1 2,731.9 2,550.4 7.1 316 295
=============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Men's Wear 12
- ------------------------------------------------------------------------------------------------------------
103 110) Hamer's 11/09/94 3025 34.2 130.2 119.4 9.0
205 110) Mr. Rags 12/11/91 1522 17.2 102.6 118.6 -13.5
203 110) Structure #115 11/11/91 4288 48.5 131.2 144.8 -9.4
NonComp Sub-Totals: 8835 364.0 382.9 -4.9
- ------------------------------------------------------------------------------------------------------------
111 110) J. Riggings #76 CLOSED 12/13/91 NA 1/16/96 NA 138.1 NA
Sub Category Totals 2288 0.0 138.1 -100.0
- ------------------------------------------------------------------------------------------------------------
Sub Category Totals 8835 364.0 521.0 -30.1
============================================================================================================
Category Totals: 11123 364.0 521.0 -30.1
============================================================================================================
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Men's Wear
- -------------------------------------------------------------------------------------------------------------
103 110) 813.1 733.2 10.9 35.9 813.1 733.2 10.9 269 242 0 6
205 110) 741.8 750.1 -1.1 32.7 741.8 750.1 -1.1 487 493 0 6
203 110) 687.3 693.6 -0.9 30.3 687.3 693.6 -0.9 160 162 0 0
NonComp 2,242.2 2,177.0 3.0 2,242.2 2,177.0 3.0 254 246
- -------------------------------------------------------------------------------------------------------------
Sub-Totals
- -------------------------------------------------------------------------------------------------------------
111 110) 23.7 470.4 -95.0 1.0 23.7 470.4 -95.0 10 206 NA 5
Sub 23.7 470.4 -95.0 23.7 470.4 -95.0 10 206
Category
Totals
- -------------------------------------------------------------------------------------------------------------
Sub Category
Totals 2,265.9 2,647.4 -14.4 2,265.9 2,647.4 -14.4 204 238
=============================================================================================================
Category
Totals: 2,265.9 2,647.4 -14.4 2,265.9 2,647.4 -14.4 204 238
=============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unisex 14
- -----------------------------------------------------------------------------------------------------
141 110) County Seat #66 3/29/92 3798 11.0 59.3 133.1 -55.4
221 110) Gap, The #7502 8/14/92 5865 17.0 532.8 578.6 -7.9
125 110) Jay Jacobs #22 3/04/96 4996 14.4 112.0 97.6 14.7
217 110) Maurices #342/J 11/21/91 8881 25.7 114.8 95.0 20.9
143 110) Pacific Sunwear 11/11/92 1697 4.9 63.4 67.5 -6.0
107 110) Zumiez 3/26/92 2018 5.8 180.4 177.1 1.9
1,205.0 1,267.7 -4.9
Comp Sub-Totals: 27255 1,062.7 1,148.8 -7.5
=====================================================================================================
201 110) Above the Belt NA NA NA NA NA
113 110) Eddie Bauer 7/26/96 6208 17.9 594.7 NA NA
101 110) Harvey's CLOSED 8/01/87 NA 1/31/95 NA NA NA
121 110) Hot Topic #28 6/28/95 1124 3.2 142.3 118.9 19.7
Non Comp Sub-Totals 7332 737.0 118.9 519.8
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 34587 1,799.7 1,267.7 42.0
=====================================================================================================
Category Totals: 34587 1,799.7 1,267.7 42.0
=====================================================================================================
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unisex
- ----------------------------------------------------------------------------------------------------------------
141 110) 659.4 792.5 -16.8 6.9 659.4 792.5 -16.8 174 209 0 5
221 110) 3,497.5 3,138.7 11.4 36.4 3,497.5 3,138.7 11.4 596 535 0 5
125 110) 829.4 755.6 9.8 8.6 829.4 755.6 9.8 166 202 0 6
217 110) 728.0 718.5 1.3 7.6 728.0 718.5 1.3 82 81 0 5
143 110) 473.3 490.5 -3.5 4.9 473.3 490.5 -3.5 279 289 0 5
107 110) 1,184.0 1,073.8 10.3 12.3 1,184.0 1,073.8 10.3 587 532 0 7
8,070.1 7,341.4 +9.9 8,090.1 1,341.4 9.7
Comp
Sub-Totals 7,371.6 6,969.6 5.8 7,371.6 6,969.6 5.8 270 268
================================================================================================================
201 110) NA NA NA NA 0.0 NA NA NA NA NA NA
113 110) 1,548.0 NA NA 16.1 1,548.0 NA NA 249 NA 0 5
101 110) NA NA NA NA NA NA NA NA NA NA 6
121 110) 698.5 371.8 87.9 7.3 698.5 371.8 87.9 621 331 0 6
Non Comp
- ----------------------------------------------------------------------------------------------------------------
Sub-Totals 2,246.5 371.8 504.2 2,246.5 371.8 504.2 306 331
- ----------------------------------------------------------------------------------------------------------------
Sub Category
Totals 9,618.2 7,341.4 31.0 9,618.2 7,341.4 31.0 278 271
================================================================================================================
Category
Totals: 9,618.2 7,341.4 31.0 9,618.2 7,341.4 31.0 278 271
================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Children's Wear 16
- --------------------------------------------------------------------------------------------------
6 Children's Wear
117 110) GapKids #9250 11/18/94 4830 78.4 192.9 189.1 2.0
Comp Sub-Totals: 4830 192.9 189.1 2.0
- --------------------------------------------------------------------------------------------------
103 110) Gymboree #241 7/03/95 1331 21.6 73.2 70.1 4.4
Non Comp Sub-Totals: 1331 73.2 70.1 4.4
- --------------------------------------------------------------------------------------------------
Sub Category Totals 6161 266.1 259.2 2.6
==================================================================================================
Category Totals: 6161 266.1 259.2 2.6
==================================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Children's Wear
- -----------------------------------------------------------------------------------------------------------------------
6
117 110) 1,265.3 1,201.0 5.4 66.9 1,265.3 1,201.0 5.4 262 249 0 5
Comp
Sub-Totals: 1,265.3 1,201.0 5.4 1,265.3 1,201.0 5.4 262 249
- -----------------------------------------------------------------------------------------------------------------------
103 110) 626.9 372.7 68.2 33.1 626.9 372.7 68.2 471 280 0 5
Non Comp 626.9 372.7 68.2 626.9 372.7 68.2 471 280
Sub-Totals:
- -----------------------------------------------------------------------------------------------------------------------
Sub Category
Totals 1,892.3 1,573.7 20.2 1,892.3 1,573.7 20.2 307 255
=======================================================================================================================
Category
Totals: 1,892.3 1,573.7 20.2 1,892.3 1,573.7 20.2 307 255
=======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Apparel 18
- -----------------------------------------------------------------------------------------------------
Specialty Apparel
05 110) R.C. Boot Barn 11/23/91 2608 35.0 69.1 55.5 24.6
05 110) Wilsons The Lea 4/02/92 2847 38.2 236.3 294.2 -19.7
Comp Sub-Totals: 5455 305.4 349.7 -12.7
- -----------------------------------------------------------------------------------------------------
07 110) Pro-Image #240 7/01/95 2007 26.9 130.4 154.6 -15.6
03 110) Specialtees CLOSED 12/06/91 NA 10/31/96 NA 42.2 NA
07 110) Sportscenter No 3/01/91 NA 5/24/95 NA NA NA
CLOSED
Non Comp Sub-Totals 2634 130.4 196.8 -33.7
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 7462 435.8 546.5 -20.3
=====================================================================================================
Category Totals: 8089 435.8 546.5 -20.3
=====================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty
Apparel
- --------------------------------------------------------------------------------------------------------------
05 110) 336.5 265.7 26.6 17.2 336.5 265.7 26.6 129 102 0 6
05 110) 932.1 996.7 -6.5 47.8 932.1 996.7 -6.5 327 350 0 5
Comp
Sub-Totals: 1,268.7 1,262.4 0.5 1,268.7 1,262.4 0.5 233 231
- --------------------------------------------------------------------------------------------------------------
07 110) 537.1 390.2 37.6 27.5 537.1 390.2 37.6 268 194 0 6
03 110) 146.2 211.5 -30.9 7.5 146.2 211.5 -30.9 233 337 NA 6
07 110) NA 70.5 NA NA NA 70.5 NA NA 13 NA 6
Non Comp
Sub-Totals 683.3 672.2 1.7 683.3 672.2 1.7 259 86
- --------------------------------------------------------------------------------------------------------------
Sub
Category
Totals 1,951.9 1,934.6 0.9 1,951.9 1,934.6 0.9 241 145
==============================================================================================================
Category
Totals: 1,951.9 1,934.6 0.9 1,951.9 1,934.6 0.9 241 145
==============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accessories 20
- ---------------------------------------------------------------------------------------------------
Accessories
121 110) After Thoughts 4/11/92 861 19.5 57.8 64.0 -9.6
201 110) After Thoughts 8/30/91 824 18.6 57.5 60.4 -4.8
201 110) Claire's #5839 8/23/91 699 15.8 70.6 69.5 1.6
131 110) Express Yoursel 9/10/92 296 6.7 11.8 17.7 -33.5
119 110) Silver Safari 11/20/92 396 9.0 35.9 21.8 64.9
211 110) Sunglass Hut #1 11/16/91 741 16.8 20.6 16.8 22.5
241.6 291.6 +4.0
Comp Sub-Totals: 3817 254.3 250.2 1.6
- ---------------------------------------------------------------------------------------------------
117 110) 2 Plus 2 CLOSED 10/01/92 NA 3/05/95 NA NA NA
109 110) Sunglass Hut #1 4/01/95 603 13.6 49.1 41.4 18.4
Non Comp Sub-Totals 603 49.1 41.4 18.4
- ---------------------------------------------------------------------------------------------------
Sub Category Totals 4420 303.3 291.6 4.0
===================================================================================================
Category Totals: 4420 303.3 291.6 4.0
===================================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accessories
- ---------------------------------------------------------------------------------------------------------------
121 110) 292.9 298.2 -1.8 15.5 292.9 298.2 -1.8 340 346 0 7
201 110) 304.7 274.2 11.1 16.1 304.7 274.2 11.1 370 333 0 7
201 110) 392.7 352.4 11.4 20.7 392.7 352.4 11.4 562 504 0 7
131 110) 62.2 67.4 -7.8 3.3 62.2 67.4 -7.8 210 228 0 8
119 110) 138.7 131.9 5.2 7.3 138.7 131.9 5.2 350 333 0 8
211 110) 220.3 267.0 -17.5 11.6 220.3 267.0 -17.5 297 360 500 8
1,895.4 1,680.0 +12.8 1,895.4 1,690.8
Comp
Sub-Totals: 1,411.5 1,391.1 1.5 1,411.5 1,391.1 1.5 370 364
- ---------------------------------------------------------------------------------------------------------------
117 110) NA 13.7 NA NA NA 13.7 NA NA 16 NA 5
109 110) 483.9 275.2 75.9 25.5 483.9 275.2 75.9 803 456 0 10
Non Comp 483.9 288.9 67.5 483.9 288.9 67.5 803 197
Sub-Totals
- ---------------------------------------------------------------------------------------------------------------
Sub Category
Totals 1,895.4 1,680.0 12.8 1,895.4 1,680.0 12.8 429 318
===============================================================================================================
Category
Totals: 1,895.4 1,680.0 12.8 1,895.4 1,680.0 12.8 429 318
===============================================================================================================
</TABLE>
3
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shoes 22
- ----------------------------------------------------------------------------------------------------
2 Shoes
145 110) Athletic X-Pres 11/27/91 2397 8.4 103.2 107.0 -3.6
209 110) Foor Locker #84 11/27/91 2851 10.0 144.2 155.4 -7.2
101 110) Footaction, USA 4/09/92 2139 7.5 107.6 101.9 5.5
213 110) Homestead Birke 4/04/93 774 2.7 66.4 82.2 -19.2
219 110) Kinney Shoes #0 12/07/92 2741 9.6 54.7 44.0 24.3
107 110) Lady Foot Locke 2/13/92 1826 6.4 123.0 117.7 4.5
121 110) Leeds #3993 9/01/84 3132 11.0 49.7 43.5 14.4
101 110) Naturalizer Sho 2/28/93 2022 7.1 25.5 31.0 -18.0
147 110) Payless Kids #4 8/02/92 1348 4.7 24.3 28.8 -15.6
105 110) Payless Shoesou 11/03/91 2819 9.9 75.5 79.9 -5.5
217 110) Rizzuto's Wide 11/13/91 1093 3.8 25.1 29.3 -14.4
101 110) Village Shoe Co 7/20/91 2007 7.0 78.2 81.9 -4.5
Comp Sub-Totals: 25149 877.2 902.7 -2.8
- ----------------------------------------------------------------------------------------------------
105 110) Kid's Foot Lock 11/14/96 1548 5.4 58.0 NA NA
107 110) Rizzuto's Comfo 9/01/91 NA 12/315/9 NA 40.2 NA
CLOSED
133 110) Track 'n Trail 9/17/96 1836 6.4 103.1 NA NA
133 110) Wild Pair 9/01/84 NA 7/28/96 NA 41.3 NA
Non Comp Sub-Totals 5220 161.1 81.6 97.5
- ----------------------------------------------------------------------------------------------------
Sub Category Totals 28533 1,038.3 984.2 5.5
====================================================================================================
Category Totals: 30369 1,038.3 984.2 5.5
====================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shoes
- --------------------------------------------------------------------------------------------------------------
2
145 110) 787.9 855.2 -7.9 9.1 787.9 855.2 -7.9 329 357 0 6
209 110) 1,170.1 1,259.3 -7.1 13.4 1,170.1 1,259.3 -7.1 410 442 0 6
101 110) 760.4 671.2 13.3 8.7 760.4 671.2 13.3 355 314 0 5
213 110) 613.6 576.7 6.4 7.1 613.6 576.7 6.4 793 745 0 6
219 110) 461.1 373.5 23.5 5.3 461.1 373.5 23.5 168 136 0 6
107 110) 975.4 951.2 2.5 11.2 975.4 951.2 2.5 534 521 0 6
121 110) 457.8 442.4 3.5 5.3 457.8 442.4 3.5 146 141 0 5
101 110) 489.0 401.2 21.9 5.6 489.0 401.2 21.9 242 198 0 5
147 110) 319.8 291.4 9.7 3.7 319.8 291.4 9.7 237 216 0 6
105 110) 896.9 828.3 8.3 10.3 896.9 828.3 8.3 318 294 0 6
217 110) 420.2 392.0 7.2 4.8 420.2 392.0 7.2 384 359 0 6
101 110) 921.7 878.6 4.9 10.6 921.7 878.6 4.9 459 438 0 5
Comp
Sub-Totals: 8,273.9 7,921.1 4.5 8,273.9 7,921.1 4.5 329 315
- --------------------------------------------------------------------------------------------------------------
105 110) 64.9 NA NA 0.7 64.9 NA NA 42 NA NA NA
107 110) NA 258.1 NA NA NA 258.1 NA NA 246 NA 6
133 110) 226.9 NA NA 2.6 226.9 NA NA 124 NA 0 6
133 110) 135.5 309.9 -56.3 1.6 135.5 309.9 -56.3 74 169 NA 6
Non Comp
Sub-Totals 427.3 567.9 -24.8 427.3 567.9 -24.8 82 197
- --------------------------------------------------------------------------------------------------------------
Sub Category
Totals 8,701.2 8,489.0 2.5 8,701.2 8,489.0 2.5 287 303
==============================================================================================================
Category
Totals: 8,701.2 8,489.0 2.5 8,701.2 8,489.0 2.5 287 303
==============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES % SALES
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Furniture 24
- -------------------------------------------------------------------------------------------------------------------------
Furniture
201 110) Bombay Co./The 9/24/93 4001 100.0 139.4 140.0 -0.4 638.4 604.5
Comp Sub-Totals: 4001 139.4 140.0 -0.4 638.4 604.5
- -------------------------------------------------------------------------------------------------------------------------
105 110) Abodio CLOSED 8/29/93 NA 2/22/96 NA 86.6 NA 162.1
Non Comp Sub-Totals: 7469 0.0 86.6 -100.0 162.1 729.6
- -------------------------------------------------------------------------------------------------------------------------
Sub Category Totals 4001 139.4 226.6 -38.5 800.5 1,334.1
=========================================================================================================================
Category Totals: 11470 139.4 226.6 -38.5 800.5 1,334.1
=========================================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------
FULL YEAR
UNIT % 1996 SALES % 1996 1995 1996 BKP
NO. CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Furniture
- --------------------------------------------------------------------------------------------------
201 110) 5.6 79.7 638.4 604.5 5.6 160 151 0 6
Comp
Sub-Totals: 5.6 638.4 604.5 5.6 160 151
- --------------------------------------------------------------------------------------------------
105 110) 729.6 -77.8 20.3 162.1 729.6 -77.8 22 NA 7
Non Comp
Sub-Totals: -77.8 162.1 729.6 -77.8 22 98 98
- --------------------------------------------------------------------------------------------------
Sub Category
Totals -40.0 800.5 1,334.1 -40.0 70 116
==================================================================================================
Category
Totals: -40.0 800.5 1,334.1 -40.0 70 116
==================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Home Accessories 26
- ------------------------------------------------------------------------------------------------------------------
J109 (110) Deck the Walls 2/08/92 2007 23.9 32.8 43.2 -24.0
J207 (110) House of Cutler 6/01/92 1004 12.0 126.9 128.2 -1.1
J211 (110) Inprints 7/01/92 1426 17.0 68.8 36.7 87.7
F215 (110) Lechters #93 3/01/92 3067 36.5 143.1 139.2 2.8
Comp Sub-Totals: 7504 371.6 347.3 7.0
- ------------------------------------------------------------------------------------------------------------------
H219 (110) Phoenix Gallery CLOSED NA 5/01/93 1/07/96 NA 52.7 NA
G109 (110) Select Comfort 2/16/96 893 10.6 69.4 NA NA
Non Comp Sub-Totals 1552 69.4 52.7 31.5
- -------------------------------------------------------------------------------------------------------------------
Sub Category Totals 8397 440.9 400.1 10.2
===================================================================================================================
Category Totals: 9056 440.9 400.1 10.2
===================================================================================================================
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Home Accessories
- ----------------------------------------------------------------------------------------------------------------------
J109 (110) 217.3 231.5 -6.1 10.4 217.3 231.5 -6.1 108 115 NA NA
J207 (110) 394.2 402.4 -2.0 18.8 394.2 402.4 -2.0 393 401 0 7
J211 (110) 345.5 242.4 42.5 16.5 345.5 242.4 42.5 242 170 0 6
F215 (110) 542.2 551.6 -1.7 25.9 542.2 551.6 -1.7 177 180 0 5
Comp Sub-Totals: 1,499.1 1,428.0 5.0 1,499.1 1,428.0 5.0 200 190
- ----------------------------------------------------------------------------------------------------------------------
H219 (110) 10.7 174.1 -93.9 0.5 10.7 174.1 -93.9 16 264 NA 6
G109 (110) 582.7 NA NA 27.8 582.7 NA NA 653 NA 0 6
Non Comp Sub-Totals 593.4 174.1 240.9 593.4 174.1 240.9 382 264
- ----------------------------------------------------------------------------------------------------------------------
Sub Category Totals 2,092.5 1,602.0 30.6 2,092.5 1,602.0 30.6 231 196
======================================================================================================================
Category Totals: 2,092.5 1,602.0 30.6 2,092.5 1,602.0 30.6 231 196
======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES
NO. NAME DATE GLA DATE CAT% 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Electronics/Appliances 28
- -----------------------------------------------------------------------------------------------------
Electronics/Appliances
03 (110) Kits Cameras 1 11/25/94 1491 12.8 132.2 97.1
09 (110) Malecki Music E 7/31/92 973 8.4 39.4 35.2
09 (110) Musicland #887 3/13/92 1583 13.6 164.6 161.2
107 (110) Radio Shack #37 2/01/87 2040 17.6 328.2 295.8
104 (110) Sam Goody #0851 6/28/91 2272 19.6 233.3 237.2
214 (110) Software Etc. # 4/08/92 1106 9.5 158.9 201.7
205 (110) Suncoast #3258 10/07/92 2144 18.5 229.2 238.7
Comp Sub-Totals: 11609 1,285.9 1,267.0
- -----------------------------------------------------------------------------------------------------
117 (110) Babbages #345 CLOSED 11/17/94 NA 10/28/96 NA 150.4
002 (110) DJ's Sound City CLOSED 1/01/78 NA 6/23/96 NA 69.7
205 (110) Music City Spok CLOSED 3/20/92 NA 6/30/95 NA NA
Non Comp Sub-Totals 3245 0.0 220.1
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 11609 1,285.9 1,487.1
=====================================================================================================
Category Totals: 14854 1,285.9 1,487.1
=====================================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT % SALES % 1996 SALES % 1996 1995 1996 BKP
NO. CHANGE 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electronics/A
- ---------------------------------------------------------------------------------------------------------------------------
01 (110) 36.1 607.8 412.2 47.4 10.0 607.8 412.2 47.4 408 276 0 3
09 (110) 11.9 185.0 176.7 4.7 3.0 185.0 176.7 4.7 190 182 0 6
09 (110) 2.1 759.3 729.1 4.1 12.5 759.3 729.1 4.1 480 461 0 5
107 (110) 11.0 1,359.6 1,141.9 19.1 22.3 1,359.6 1,141.9 19.1 666 560 450 3
104 (110) -1.6 1,120.5 1,066.9 5.0 18.4 1,120.5 1,066.9 5.0 493 470 0 5
214 (110) -21.2 656.6 1,005.7 -34.7 10.8 656.6 1,005.7 -34.7 594 909 0 5
205 (110) -4.0 967.1 993.7 -2.7 15.9 967.1 993.7 -2.7 451 463 0 5
Comp
Sub-Totals: 1.5 5,655.9 5,526.3 2.3 5,655.9 5,526.3 2.3 487 476
- ---------------------------------------------------------------------------------------------------------------------------
117 (110) NA 358.0 613.2 -41.6 5.9 358.0 613.2 -41.6 199 341 NA 5
002 (110) NA 78.4 344.2 -77.2 1.3 78.4 344.2 -77.2 54 238 NA 6
205 (110) NA NA 86.5 NA NA NA 86.5 NA NA 39 NA 4
Non Comp
Sub-Totals -100.0 436.3 1,043.9 -58.2 436.3 1,043.9 -58.2 134 192
- ---------------------------------------------------------------------------------------------------------------------------
Sub Category
Totals -13.5 6,092.2 6,570.1 -7.3 6,092.2 6,570.1 -7.3 410 385
===========================================================================================================================
Category
Totals: -13.5 6,092.2 6,570.1 -7.3 6,092.2 6,570.1 -7.3 410 385
===========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE
NO. NAME DATE GLA DATE CAT%
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hobbies/Sports/Special Interest 30
- ------------------------------------------------------------------------------------------
Hobbies/Sports/Special Interest
--------------------------------------
23 (110) Champs Sports # 3/13/92 5226 37.4
01 (110) Naturium 11/01/92 1539 11.0
27 (110) Nordic Track Fl 8/12/94 2047 14.7
19 (110) Pedersen's 11/21/91 5160 36.9
Comp Sub-Totals: 13972
- ------------------------------------------------------------------------------------------
05 (110) Forum, The Closed 10/01/91 NA 2/06/95
Non Comp Sub-Totals 0
- ------------------------------------------------------------------------------------------
Sub Category Totals 13972
- ------------------------------------------------------------------------------------------
Category Totals: 13972
==========================================================================================
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT CURRENT MONTH SALES % SALES % 1996 SALES
NO. 1996 1995 CHANGE 1996 1995 CHANGE %CAT 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hobbies/Sports/Special Interest
- ----------------------------------------------------------------------------------------------------------------------------
23 (110) 311.7 351.5 -11.3 1,740.1 1,712.0 1.8 38.8 1,740.1
01 (110) 168.4 151.4 11.2 423.7 394. 7.5 9.4 423.7
27 (110) 118.7 146.8 -19.1 936.8 1,171.9 -20.1 20.9 936.8
19 (110) 270.2 341.0 -20.8 1,386.6 1,494.9 -7.2 30.9 1,386.6
Comp Sub-Totals: 869.0 990.7 -12.3 4,487.2 4,772.9 -6.0 4,487.2
- ----------------------------------------------------------------------------------------------------------------------------
05 (110) NA NA NA NA 5.9 NA NA NA
Non Comp Sub-Totals 0.0 0.0 0.0 5.9 -100.0 0.0
- ----------------------------------------------------------------------------------------------------------------------------
Sub Category Totals 869.0 990.7 -12.3 4,487.2 4,778.8 -6.1 4,487.2
- ----------------------------------------------------------------------------------------------------------------------------
Category Totals: 869.0 990.7 -12.3 4,487.2 4,778.8 -6.1 4,487.2
============================================================================================================================
<CAPTION>
- ----------------------------------------------------------------------------------
FULL YEAR
UNIT SALES 1996 BKP
NO. 1995 CHANGE $/SF $/SF BKP/SF %
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hobbies/Sports/Special Interest
- ----------------------------------------------------------------------------------
23 (110) 1,712.0 1.6 333 328 0 5
01 (110) 394.0 7.5 275 256 0 7
27 (110) 1,171.9 -20.1 458 573 0 4
19 (110) 1,494.9 -7.2 269 290 0 4
Comp Sub-Totals: 4,772.9 -6.0 321 342
- ----------------------------------------------------------------------------------
05 (110) 5.9 NA NA 7 NA 6
Non Comp Sub-Totals 5.9 -100.0 NA 7
- ----------------------------------------------------------------------------------
Sub Category Totals 4,778.8 -6.1 321 323
- ----------------------------------------------------------------------------------
Category Totals: 4,778.8 -6.1 321 323
==================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gifts, Stationery & Luggage 32
- -----------------------------------------------------------------------------------------------------------
Gifts, Stationery & Luggage
117 (110) Candleman 2/26/93 720 2.5 154.6 141.3 9.4
117 (110) Card Farm 8/01/91 1558 5.3 50.7 60.4 -16.1
103 (110) Cartoon Classic 5/30/92 1193 4.1 95.3 109.5 -13.0
107 (110) Disney Store #4 4/27/93 3873 13.3 316.2 281.6 12.3
107 (110) Hidden Cottage 1/14/95 1629 5.6 139.1 118.9 16.9
114 (110) Mark's Hallmark 6/01/89 2861 9.8 208.3 201.8 3.2
103 (110) Mark's Hallmark 11/21/91 3139 10.7 201.2 201.2 0.0
149 (110) Nature's Kingdo 11/15/94 1233 4.2 73.0 68.4 6.7
114 (110) R. Brown Gifts a 5/06/91 1184 4.1 92.4 103.7 -10.9
119 (110) Rubber Stamp St 11/08/94 1229 4.2 60.7 55.0 10.4
207 (110) San Francisco M 4/02/93 1479 5.1 138.0 141.3 -2.3
203 (110) Spencer's Gifts 10/30/93 1445 4.9 180.3 168.8 6.8
151 (110) Street of Dreams 11/15/94 1689 5.8 103.4 120.6 -14.2
11 (110) Things Remember 3/08/92 1376 4.7 52.2 64.9 -19.5
Comp Sub-Totals: 24608 1,865.3 1,837.3 1.5
- -----------------------------------------------------------------------------------------------------------
07 (110) Evergreen 11/17/96 1047 3.6 41.4 NA NA
04 (110) Franklin Quest 6/02/95 2249 7.7 59.3 50.9 16.6
09 (110) Gosling Closed 11/16/ 91 NA 3/23/95 NA NA NA
05 (110) Graham Office S 11/30/96 1297 4.4 24.3 NA NA
14 (110) Hidden Cottage Closed 11/05/92 NA 1/14/95 NA NA NA
21 (110) J.K. Gill, Divn Closed 6/07/84 NA 2/12/95 NA NA NA
19 (110) Made in Washing 11/01/91 NA 7/28/96 NA 55.0 NA
Closed
Non Comp Sub-Totals 5193 125.0 105.9 18.0
- -----------------------------------------------------------------------------------------------------------
Sub Category Totals 25201 1,990.3 1,943.2 2.4
===========================================================================================================
Category Totals: 29801 1,990.3 1,943.2 2.4
===========================================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gifts, Stationery & Luggage
- ---------------------------------------------------------------------------------------------------------------
117 (110) 470.1 451.3 4.2 6.0 470.1 451.3 4.2 653 627 0 7
117 (110) 257.9 269.0 -4.1 3.3 257.9 269.0 -4.1 166 173 0 6
103 (110) 416.4 434.9 -4.3 5.3 416.4 434.9 -4.3 349 365 0 7
107 (110) 1,452.2 1,376.2 5.5 18.6 1,452.2 1,376.2 5.5 375 355 0 4
107 (110) 460.9 450.5 2.3 5.9 460.9 450.5 2.3 283 277 0 6
114 (110) 769.9 739.0 4.2 9.8 769.9 739.0 4.2 269 258 0 7
103 (110) 747.0 710.2 5.2 9.5 747.0 710.2 5.2 238 226 0 7
149 (110) 234.5 237.2 -1.1 3.0 234.5 237.2 -1.1 190 192 0 6
114 (110) 313.7 389.1 -19.6 4.0 312.7 389.1 -19.6 264 329 0 7
119 (110) 424.5 323.1 31.4 5.4 424.5 323.1 31.4 345 263 0 6
207 (110) 413.6 420.6 -1.7 5.3 413.6 420.6 -1.7 280 284 0 6
203 (110) 598.4 538.4 11.1 7.6 598.4 538.4 11.1 414 373 0 6
151 (110) 421.3 447.3 -5.8 5.4 423.3 447.3 -5.8 249 265 0 6
11 (110) 308.4 307.4 0.3 3.9 308.4 307.4 0.3 224 223 0 7
Comp 7.287.7 7,094.0 2.7 7,287.7 7,094.0 2.7 296 288
Sub-Totals:
- ---------------------------------------------------------------------------------------------------------------
07 (110) 47.4 NA NA 0.6 47.4 NA NA 45 NA 0 8
04 (110) 368.7 198.3 85.9 4.7 368.7 198.3 85.9 164 88 0 5
09 (110) NA 7.6 NA NA NA 7.6 NA NA 6 NA 7
05 (110) 25.3 NA NA 0.3 25.3 NA NA 19 NA 0 0
14 (110) NA NA NA NA NA NA NA NA NA NA 6
21 (110) NA 232.9 NA NA NA 232.9 NA NA 161 NA 6
19 (110) 98.6 211.0 -53.3 1.3 98.6 211.0 -53.3 164 352 NA 6
Non Comp 539.9 649.8 -16.9 539.9 649.8 -16.9 104 119
Sub-Totals
- ---------------------------------------------------------------------------------------------------------------
Sub Category 7,827.6 7,743.8 1.1 7,827.6 7,743.8 1.1 263 257
Totals
===============================================================================================================
Category 7,827.6 7,743.8 1.1 7,827.6 7,743.8 1.1 263 257
Totals:
===============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Books 34
- -----------------------------------------------------------------------------------------------------
Books
31 (110) B. Dalton #284 6/16/94 4465 51.5 293.8 298.7 -1.6
115 (110) Evangel Book Ce 7/01/91 1257 14.5 76.5 88.9 -14.0
101 (110) Waldenbooks, St 4/23/92 2952 34.0 242.2 220.4 9.9
Comp Sub-Totals: 8674 612.6 608.0 0.8
=====================================================================================================
Category Totals: 8674 612.6 608.0 0.8
=====================================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Books
- ---------------------------------------------------------------------------------------------------------------------------
31 (110) 1,259.8 1,239.1 1.7 48.9 1,259.8 1,239.1 1.7 282 278 0 5
115 (110) 340.6 377.6 -9.8 13.2 340.6 377.6 -9.8 271 319 0 7
101 (110) 976.3 923.4 5.7 37.9 976.3 923.4 5.7 331 313 0 5
Comp Sub-Totals: 2,576.7 2,540.1 1.4 2,576.7 2,540.1 1.4 297 295
===========================================================================================================================
Category Totals: 2,576.7 2,540.1 1.4 2,576.7 2,540.1 1.4 297 295
===========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ----------- ----------------- ----------- ------- --------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jewelry 35
- ---------------------------------------------------------------------------------------------------
Jewelry
- ---------------------------------------------------------------------------------------------------
C201 110) Ben Bridge Jewe 10/10/91 1503 13.1 382.1 321.0 19.0
C209 110) Fred Meyer Jewe 8/15/92 1214 10.6 154.7 118.7 30.3
C205 110) Harry Ritchie J 10/10/91 1160 10.1 232.0 226.3 2.5
C215 110) Kay Jewelers #5 3/08/94 1244 10.9 223.6 228.9 -2.3
C215 110) Weisfield Jewel 11/08/84 1549 13.5 210.3 297.2 -29.2
C235 110) Zales Jewelers 11/17/94 1393 12.2 296.9 291.7 1.8
Comp Sub-Totals: 8063 1,499.5 1,483.7 1.1
- ---------------------------------------------------------------------------------------------------
C201 110) Crescent Jewele 11/23/96 1082 9.4 133.7 NA NA
C201 110) Dodson's 8/01/91 NA 5/06/96 NA 87.7 NA
C225 110) Gordon's Jewelr 10/16/95 1450 12.7 151.7 104.5 45.1
C201 110) Piercing Pagoda 5/20/95 160 1.4 42.1 49.1 -14.3
C217 110) Watch Gallery 10/27/95 701 6.1 70.2 65.1 7.9
Non Comp Sub-Totals 4475 397.8 306.5 29.8
- ---------------------------------------------------------------------------------------------------
Sub Category Totals 11456 1,897.3 1,790.2 6.0
===================================================================================================
Category Totals: 12538 1,897.3 1,790.2 6.0
===================================================================================================
<CAPTION>
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------- ------------ ------------ -------- --------- ------------ ------------ -------- ------ ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jewelry
- ----------------------------------------------------------------------------------------------------------------------
C201 110) 1,348.6 1,246.5 8.2 16.7 1,348.6 1,246.5 8.2 897 829 0 5
C209 110) 665.8 643.2 3.5 8.3 665.8 643.2 3.5 548 530 0 5
C205 110) 999.6 1,000.0 -0.0 12.4 999.6 1,000.0 -0.0 862 862 0 6
C215 110) 903.4 1,076.7 -16.1 11.2 903.4 1,076.7 -16.1 726 866 0 6
C215 110) 1,161.9 1,058.6 9.8 14.4 1,161.9 1,058.6 9.8 750 683 0 6
C235 110) 1,350.0 1,352.0 -0.1 16.7 1,350.0 1,352.0 -0.1 969 971 0 6
Comp 6,429.3 6,377.0 0.8 6,429.3 6,477.0 0.8 797 791
Sub-Totals:
- ----------------------------------------------------------------------------------------------------------------------
C201 110) 157.8 NA NA 2.0 157.8 NA NA 146 NA NA NA
C201 110) 224.7 413.2 -45.6 2.8 224.7 413.2 -45.6 208 382 NA 6
C225 110) 705.8 160.5 339.6 8.7 705.8 160.5 339.6 487 111 0 6
C201 110) 199.2 145.3 37.1 2.5 119.2 145.3 37.1 1245 908 0 10
C217 110) 350.9 90.4 288.1 4.3 350.9 90.4 288.1 501 129 0 8
Non Comp 1,638.4 809.4 102.4 1,638.4 809.4 102.4 366 239
Sub-Totals
- ----------------------------------------------------------------------------------------------------------------------
Sub 8,067.7 7,186.4 12.3 8,067.7 7,186.4 12.3 643 627
Category Totals
======================================================================================================================
Category 8,067.7 7,186.4 12.3 8,067.7 7,186.4 12.3 643 627
Totals:
======================================================================================================================
</TABLE>
1
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ------------------- -------------------- ---------- ------- ------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cosmetics/Perfumes 36
- -----------------------------------------------------------------------------------------------------------
5 Cosmetics/Perfumes
- -----------------------------------------------------------------------------------------------------------
C201A 110) Bath & Body Wor 11/11/91 1661 51.8 232.7 203.6 14.3
C108 110) Garden Botanika 9/30/92 701 21.9 137.6 133.1 3.3
Comp Sub-Totals: 2362 370.2 336.8 9.9
- -----------------------------------------------------------------------------------------------------------
C123 110) Body Shop #3705 6/28/95 846 26.4 118.1 105.3 12.2
Non Comp Sub-Totals 846 118.1 105.3 12.2
- -----------------------------------------------------------------------------------------------------------
Sub Category Totals 3208 488.4 442.0 10.5
===========================================================================================================
Category Totals: 3208 488.4 442.0 10.5
===========================================================================================================
<CAPTION>
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ------------------- ---------- ---------- -------- --------- ---------- ---------- -------- ------ ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cosmetics/Perfumes
- ----------------------------------------------------------------------------------------------------------------------
5
- ----------------------------------------------------------------------------------------------------------------------
C201A 110) 845.3 750.5 12.6 41.3 845.3 750.5 12.6 509 452 0 0
C108 110) 630.7 602.4 4.7 30.8 630.7 602.4 4.7 900 859 0 7
Comp Sub-Totals: 1,475.9 1,352.9 9.1 1,475.9 1,352.9 9.1 625 573
- ----------------------------------------------------------------------------------------------------------------------
C123 110) 570.6 320.1 78.2 27.9 570.6 320.1 78.2 674 378 0 5
Non Comp Sub-Totals 570.6 320.1 78.2 570.6 320.1 78.2 674 378
- ----------------------------------------------------------------------------------------------------------------------
Non Comp Sub Totals 2,046.6 1,673.1 22.3 2,046.6 1,673.1 22.3 638 522
======================================================================================================================
Category Totals: 2,046.6 1,673.1 22.3 2,046.6 1,673.1 22.3 638 522
======================================================================================================================
</TABLE>
2
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ----------- ----------------- ---------- ------- ------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hair Care
- -----------------------------------------------------------------------------------------------
Hair Care 37
- -----------------------------------------------------------------------------------------------
C111 110) Beauty Works 10/22/92 1750 26.0 71.3 63.2 12.9
C117 110) Mastercuts #478 2/12/92 1052 15.6 29.9 31.7 -5.7
C105 110) N.W. Beauty Sup 11/25/91 1406 20.9 86.7 91.7 -5.5
C207 110) Regis Hairstyli 9/15/91 1221 18.2 53.2 45.5 16.8
C203 110) System Seven #4 12/17/91 1297 19.3 14.6 21.5 -32.0
Comp Sub-Totals: 6726 255.7 253.6 0.8
==============================================================================================
Category Totals 6726 255.7 253.6 0.8
==============================================================================================
<CAPTION>
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------- ---------- ---------- -------- --------- ---------- ---------- -------- ------ ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hair Care
- --------------------------------------------------------------------------------------------------------------
C111 110) 636.3 551.4 15.4 24.8 636.3 551.4 15.4 364 315 0 6
C117 110) 336.9 343.3 -1.9 13.1 336.9 343.3 -1.9 320 326 0 6
C105 110) 857.9 842.6 1.8 33.5 857.9 842.6 1.8 610 599 0 7
C207 110) 568.6 475.4 19.6 22.2 568.6 475.4 19.6 466 389 0 6
C203 110) 162.9 211.0 -22.8 6.4 162.9 211.0 -22.8 126 163 0 6
Comp 2,562.4 2,423.8 5.7 2,562.4 2,423.8 5.7 381 360
Sub-Totals:
==============================================================================================================
Category 2,562.4 2,423.8 5.7 2,562.4 2,423.8 5.7 381 360
Totals
==============================================================================================================
</TABLE>
3
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ----------- --------------------- ---------- ------- --------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other Retail
- -----------------------------------------------------------------------------------------------------
8 Other Retail 38
- -----------------------------------------------------------------------------------------------------
C214 110) General Nutriti 6/04/93 1114 9.0 48.3 42.1 14.7
C114 110) Kay Bee Toys #8 1/17/95 3570 28.7 378.5 379.4 -0.2
C101 110) Learning World 1/29/92 3188 25.6 80.7 107.3 -24.8
C111 110) Pilgrims Nutrit 5/06/91 1792 14.4 53.1 56.2 -5.6
C127 110) Schlosser's Flo 5/01/91 722 5.8 12.3 12.0 2.4
Comp Sub-Totals 10386 572.8 597.0 -4.1
- ------------------------------------------------------------------------------------------------------
C105 110) AT & T Phone Center
CLOSED 8/01/88 NA 4/15/96 NA NA NA
C201 110) Bag & Bauble CLOSED 7/26/93 NA 3/18/95 NA NA NA
C115 110) Kay Bee Toys #8
CLOSED 10/20/84 NA 1/17/95 NA NA NA
C105 110) Phone Center, T 7/08/96 2057 16.5 96.1 NA NA
Non Comp Sub-Totals 4114 96.1 0.0
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 12443 668.9 597.0 12.0
=====================================================================================================
Category Totals 14500 668.9 597.0 12.0
=====================================================================================================
<CAPTION>
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------- ---------- ---------- ----------- --------- ---------- ---------- ----------- ------ ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Other
- --------------------------------------------------------------------------------------------------------------------
Retail
- --------------------------------------------------------------------------------------------------------------------
8
- --------------------------------------------------------------------------------------------------------------------
C214 110) 518.1 421.7 22.9 16.2 518.1 421.7 22.9 465 379 0 6
C114 110) 1,107.9 997.8 11.0 34.5 1,107.9 997.8 11.0 310 279 0 5
C101 110) 594.9 741.5 -19.8 18.5 594.9 741.5 -19.8 187 233 0 5
C111 110) 579.6 591.0 -1.9 18.1 579.6 591.0 -1.9 323 330 0 7
C127 110) 115.8 114.6 1.0 3.6 115.8 114.6 1.0 160 159 0 3
Comp 2,916.4 2,866.7 1.7 2,916.4 2,866.7 1.7 281 276
Sub-Totals
- --------------------------------------------------------------------------------------------------------------------
C105 110) NA NA NA NA NA NA NA NA NA NA NA
C201 110) NA 12.3 NA NA NA 12.3 NA NA 8 NA 6
C115 110)
NA NA NA NA NA NA NA NA NA NA 6
C105 110) 291.4 NA NA 9.1 291.4 NA NA 142 NA 486 6
Non Comp 291.4 12.3 2,265.3 291.3 12.3 2,265.3 71 8
Sub-Totals
- --------------------------------------------------------------------------------------------------------------------
Sub 3,207.7 2,879.0 11.4 3,207.7 2,879.0 11.4 221 243
Category Total
====================================================================================================================
Category 3,207.7 2,879.0 11.4 3,207.7 2,879.0 11.4 221 243
Totals
====================================================================================================================
</TABLE>
4
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ----------- ----------------- ---------- ------- ------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Optical
- --------------------------------------------------------------------------------------------------
9 Optical 39
- --------------------------------------------------------------------------------------------------
C209 110) Eye Masters #13 5/08/92 3730 42.2 57.9 80.4 -27.9
C109 110) Lens Lab #005 11/01/88 4048 45.8 72.1 104.1 -30.7
C215 110) Vista Optical # 3/04/92 1068 12.1 38.1 49.1 -22.5
Comp Sub-Totals 8846 168.2 233.6 -28.0
==================================================================================================
Category Totals 8846 168.2 233.6 -28.0
==================================================================================================
<CAPTION>
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ------ ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Optical
- ------------------------------------------------------------------------------------------------------------------
9
- ------------------------------------------------------------------------------------------------------------------
C209 110) 972.7 953.3 2.0 34.1 972.7 953.3 2.0 261 256 0 5
C109 110) 1,169.7 1,395.6 -16.2 41.0 1,169.7 1,395.6 -16.2 289 345 0 4
C215 110) 709.6 634.2 11.9 24.9 709.6 634.2 11.9 664 594 0 7
Comp 2,852.0 2,983.2 -4.4 2,852.0 2,983.2 -4.4 322 337
Sub-Totals
==================================================================================================================
Category 2,852.0 2,983.2 -4.4 2,852.0 2,983.2 -4.4 322 337
Totals
==================================================================================================================
</TABLE>
5
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Personal Services 40
- ----------------------------------------------------------------------------------------------------
0 Personal Services
148 110) Kiddie Kandids 2/26/92 811 14.9 50.7 48.6 4.4
213 110) Portraits To Go 12/31/91 1566 28.8 28.8 34.7 -17.1
114 110) Saad Shoe Repai 9/03/91 576 10.6 15.2 17.2 -11.4
121 110) Washington One 12/01/84 1177 21.7 20.0 26.4 -24.2
Comp Sub-Totals: 4130 114.7 126.9 -9.6
- ----------------------------------------------------------------------------------------------------
202 110) Hi-Tek Nails 12/22/95 939 17.3 20.7 1.5 1306.1
211 110) It's A Wrap! 6/01/95 363 6.7 19.8 28.5 -30.6
Non Comp Sub-Totals 1302 40.4 30.0 34.9
- ----------------------------------------------------------------------------------------------------
Sub Category Totals 5432 155.1 156.9 -1.1
====================================================================================================
Category Totals: 5432 155.1 156.9 -1.1
====================================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Personal Services
- -----------------------------------------------------------------------------------------------------------------------
0
148 110) 312.1 321.6 -2.9 26.0 312.1 321.6 -2.9 385 397 0 7
213 110) 278.4 335.4 -17.0 23.2 278.4 335.4 -17.0 178 214 0 6
114 110) 185.6 194.5 -4.6 15.5 185.6 194.5 -4.6 322 338 0 8
121 110) 185.9 237.2 -21.6 15.5 185.9 237.2 -21.6 158 202 0 6
Comp
Sub-Totals: 962.0 1,088.7 -11.6 962.0 1,088.7 -11.6 233 264
- -----------------------------------------------------------------------------------------------------------------------
202 110) 183.6 1.5 12392. 15.3 183.6 1.5 12392. 196 NA 0 8
211 110) 55.4 60.0 -7.7 4.6 55.4 60.0 -7.7 153 165 242 10
Non Comp
Sub-Totals 239.0 61.5 288.6 239.0 61.5 288.6 184 169
- -----------------------------------------------------------------------------------------------------------------------
Sub Category
Totals 1,201.0 1,150.2 4.4 1,201.0 1,150.2 4.4 221 256
=======================================================================================================================
Category
Totals: 1,201.0 1,150.2 4.4 1,201.0 1,150.2 4.4 221 256
=======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '96
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
CURRENT MONTH
UNIT OCCUPANT OPEN CLOSE SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offices 46
- --------------------------------------------------------------------------------------------------
5 Offices
219 110) Consumer Opinion 9/28/95 2045 100.0 NA NA NA
103 110) Consumer Opinion
CLOSED 10/01/95 NA 1/29/95 NA NA NA
Non Comp Sub-Totals 2045 0.0 0.0
==================================================================================================
Category Totals: 2045 0.0 0.0
==================================================================================================
<CAPTION>
- ----------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Offices
- ----------------------------------------------------------------------------------------------------
5
219 110) NA NA NA NA 0.0 NA NA 0 NA NA NA
103 110) NA NA NA NA NA NA NA NA NA NA NA
Non Comp
Sub-Totals 0.0 0.0 0.0 0.0 0 0
====================================================================================================
Category
Totals: 0.0 0.0 (0.0 0.0 -0 0
====================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kiosks 48
- -----------------------------------------------------------------------------------------------------
Kiosks
4 110) Sportz Heros Me 11/254/9 NA 1/01/95 NA NA NA
CLOSED
Non Comp Sub-Totals 0 0.0 0.0
- -----------------------------------------------------------------------------------------------------
Category Totals: 0 0.0 0.0
=====================================================================================================
GRAND TOTAL 368511 16,355.6 16,437.4 -0.5
=====================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Kiosks
- ------------------------------------------------------------------------------------------------------------------
4 110) NA NA NA NA NA NA NA NA NA NA 6
Non Comp
Sub-Totals 0.0 0.0 0.0 0.0 NA 0
- ------------------------------------------------------------------------------------------------------------------
Category
Totals: 0.0 0.0 (0.0 0.0 -1 0
==================================================================================================================
GRAND
TOTAL 91,565.2 88,550.1 3.4 91,565.2 88,550.1 3.4 248 255
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Department Stores 02
- -----------------------------------------------------------------------------------------------------
02 Department Stores
001 110) Bumpers Fun Cen 1/17/92 30000 100.0 64.5 72.3 -10.8
Comp Sub-Totals: 30000 64.5 72.3 -10.8
- -----------------------------------------------------------------------------------------------------
Category Totals: 30000 64.5 72.3 -10.8
=====================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1996 SALES % 1996 1995 1996 BKP
NO. 1996 1995 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Department Stores
- --------------------------------------------------------------------------------------------------------------------
02
001 110) 710.5 822.4 -13.6 100.0 710.5 822.4 -13.6 24 27 M-S-D
Comp
Sub-Totals: 710.5 822.4 -13.6 710.5 822.4 -13.6 24 27
- --------------------------------------------------------------------------------------------------------------------
Category
Totals: 710.5 822.4 -13.6 710.5 822.4 -13.6 24 27
====================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=====================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1996 1995 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Food 04
- -----------------------------------------------------------------------------------------------------
4 Specialty Food
105 110) Baskin-Robbins 3/04/92 684 6.8 22.0 21.9 0.4
101 110) Candy 'N Carmel 2/01/85 550 5.5 18.6 20.8 -10.4
103 110) Candy Barrel, T 7/15/92 1022 10.2 17.9 22.9 -21.8
118 110) Cinnabon #84 10/26/91 758 7.5 83.6 88.7 -5.7
123 110) Espress-o 7/18/93 231 2.3 22.6 23.5 -3.6
137 110) Gloria Jean's C 11/29/91 1076 10.7 65.7 82.7 -20.5
129 110) Mrs. Fields Coo 5/23/91 721 7.2 26.4 34.2 -22.6
117 110) Orange Julius 3/21/91 1295 12.9 60.0 63.2 -5.0
109 110) Pretzel Time 10/27/92 501 5.0 38.6 43.3 -10.7
110 110) Surf City Squee 6/27/92 420 4.2 27.1 26.0 4.3
101 110) Sweet Factory # 11/18/93 848 8.4 40.6 48.0 -15.3
115 110) Thomas Hammer C 12/04/93 1058 10.5 45.3 44.3 2.1
115 110) Tipton's Gourme 10/01/84 700 7.0 66.9 76.4 -12.5
Comp Sub-Totals: 9864 535.5 595.8 -10.1
- -----------------------------------------------------------------------------------------------------
217A 110) Cold Stone Crea 11/29/95 NA 11/02/96 NA NA NA
CLOSED
02 110) LaCrepe 12/03/96 185 1.8 8.3 4.1 104.2
Non-Comp Sub-Totals 185 8.3 4.1 104.2
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 10049 543.8 599.8 -9.3
=====================================================================================================
Category Totals: 10049 543.8 599.8 -9.3
=====================================================================================================
<CAPTION>
==================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Food
- ------------------------------------------------------------------------------------------------------------------
4
105 110) 243.3 241.9 0.6 6.7 243.3 241.9 0.6 356 354 0
101 110) 164.8 173.4 -5.0 4.5 164.8 173.4 -5.0 300 315 0
103 110) 136.1 149.8 -9.1 3.7 136.1 149.8 -9.1 133 147 0
118 110) 527.2 583.6 -9.7 14.5 527.2 583.6 -9.7 696 770 0
123 110) 154.6 163.2 -5.3 4.2 154.6 163.2 -5.3 669 706 0
137 110) 286.0 336.8 -15.1 7.8 286.0 336.8 -15.1 266 313 0
129 110) 227.0 233.4 -2.8 6.2 227.0 233.4 -2.8 315 324 0
117 110) 410.6 404.7 1.4 11.3 410.6 404.7 1.4 317 313 0
109 110) 320.9 303.1 5.9 8.8 320.9 303.1 5.9 640 605 0
110 110) 235.5 240.3 -2.0 6.5 235.5 240.3 -2.0 561 572 0
101 110) 275.1 280.5 -1.9 7.5 275.1 280.5 -1.9 324 331 0
115 110) 279.9 233.8 19.7 7.7 279.9 233.8 19.7 265 221 M-S-D
115 110) 328.0 319.1 2.8 9.0 328.0 319.1 2.8 469 456 0
Comp
Sub-Totals: 3,588.9 3,663.9 -2.0 3,588.9 3,663.9 -2.0 364 371
- ------------------------------------------------------------------------------------------------------------------
217A 110) NA 106.6 NA NA NA 106.6 NA NA 119 NA
02 110) 56.1 4.1 1281.2 1.5 56.1 4.1 1281.2 303 NA 0
Non-Comp
Sub-Totals 56.1 110.6 -49.2 56.1 110.6 -49.2 303 124
- ------------------------------------------------------------------------------------------------------------------
Sub Category
Totals 3,645.0 3,774.5 -3.4 3,645.0 3,774.5 -3.4 363 351
==================================================================================================================
Category
Totals: 3,645.0 3,774.5 -3.4 3,645.0 3,774.5 -3.4 363 351
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restaurant
- -------------------------------------------------------------------------------------------------
Restaurant 06
C105 110) Pickle Barrel 3/01/91 2141 16.7 49.4 53.4 -7.5
Comp Sub-Totals 2141 49.4 53.4 -7.5
- -------------------------------------------------------------------------------------------------
C110 110) Sports Heroes o 8/15/96 10684 12/28/97 83.3 126.8 190.8 -33.5
Non Comp Sub-Totals 10684 126.8 190.8 -33.5
- -------------------------------------------------------------------------------------------------
Sub Category Totals 12825 176.1 244.2 -27.9
=================================================================================================
Category Totals: 12825 176.1 244.2 -27.9
=================================================================================================
<CAPTION>
==============================================================================================================
UNIT YEAR-TO-DATE SALES % 1997 FULL YEAR SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1997 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Restaurant
- --------------------------------------------------------------------------------------------------------------
C105 110) 380.9 409.0 -6.9 27.9 380.9 409.0 -6.9 178 191 NA
Comp 380.9 409.0 -6.9 380.9 409.0 -6.9 178 191
Sub-Totals
- --------------------------------------------------------------------------------------------------------------
C110 110) 983.9 600.2 63.9 72.1 983.9 600.2 63.9 92 56 0
Non Comp
Sub-Totals 983.9 600.2 63.9 983.9 600.2 63.9 92 56
- --------------------------------------------------------------------------------------------------------------
Sub
Category
Totals 1,364.8 1,009.2 35.2 1,364.8 1,009.2 35.2 106 79
==============================================================================================================
Category
Totals: 1,364.8 1,009.2 35.2 1,364.8 1,009.2 35.2 106 79
==============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Food Court/Fast Food
- ------------------------------------------------------------------------------------------------------
Food Court/Fast Food 08
C211 110) A&W 11/09/91 633 8.9 58.6 61.8 -5.2
C223 110) Arby's 3/18/94 591 8.3 120.9 104.5 15.7
C225 110) Bruchi's Cheese 11/22/91 565 7.9 50.2 59.5 -15.6
C221 110) Edo Japan 11/10/91 540 7.6 61.4 69.1 -11.1
C213 110) Flaming Wok 12/18/91 503 7.1 47.9 48.8 -1.8
C203 110) Frankfurter 12/10/92 429 6.0 16.6 17.6 -5.9
C205 110) Ivar's #56 12/09/91 630 8.9 57.5 67.6 -14.9
C215 110) Sbarro #463 11/07/91 686 9.6 56.4 60.7 -7.1
C209 110) Schlotzsky's De 10/18/95 569 8.0 31.3 37.3 -16.1
C219 110) Taco Time 2/16/92 777 10.9 96.5 102.6 -6.0
Comp Sub-Totals 5923 597.2 629.5 -5.1
- ------------------------------------------------------------------------------------------------------
C217 110) Juicers Smoothi 12/14/96 541 7.6 30.8 17.6 75.4
C207A 110) Petro Chili & CLOSED 9/01/85 NA 1/20/96 NA NA NA
C207 110) Salad Garden 3/31/96 649 9.1 24.8 20.9 19.0
Non Comp Sub-Totals 1190 55.6 38.4 44.8
- ------------------------------------------------------------------------------------------------------
Sub Category Totals 7113 652.8 667.9 -2.3
======================================================================================================
Category Totals: 7113 652.8 667.9 -2.3
======================================================================================================
<CAPTION>
==================================================================================================================
UNIT YEAR-TO-DATE SALES % 1997 FULL YEAR SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Food Court/Fast Food
- ------------------------------------------------------------------------------------------------------------------
C211 110) 439.2 454.7 -3.4 9.0 439.2 454.7 -3.4 694 718 0
C223 110) 772.6 715.0 8.1 15.9 772.6 715.0 8.1 1307 1210 0
C225 110) 362.4 389.6 -7.0 7.4 362.4 389.6 -7.0 641 690 0
C221 110) 493.9 537.1 -8.0 10.2 493.9 537.1 -8.0 915 995 0
C213 110) 387.7 400.9 -3.3 8.0 387.7 400.9 -3.3 771 797 0
C203 110) 110.2 121.5 -9.3 2.3 110.2 121.5 -9.3 257 283 0
C205 110) 383.4 441.0 -13.1 7.9 383.4 441.0 -13.1 609 700 0
C215 110) 461.2 486.1 -5.1 9.5 461.2 486.1 -5.1 672 709 0
C209 110) 254.2 323.0 -21.3 5.2 254.2 323.0 -21.3 447 568 0
C219 110) 759.3 788.7 -3.7 15.6 759.3 788.7 -3.7 977 1015 0
Comp 4,424.1 4,657.6 -5.0 4,424.1 4,657.6 -5.0 747 786 0
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------
C217 110) 244.2 17.6 1290.1 5.0 244.2 17.6 1290.1 451 NA 0
C207A 110) NA 7.5 NA NA NA 7.5 NA NA NA NA
C207 110) 197.4 154.4 27.8 4.1 197.4 154.4 27.8 304 238 0
Non Comp 441.5 179.5 145.9 441.5 179.5 145.9 371 277
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------
Sub Category 4,865.6 4,837.2 0.6 4,865.6 4,837.2 0.6 684 736
Totals
==================================================================================================================
Category 4,865.6 4,827.2 0.6 4,865.6 4,837.2 0.6 684 736
Totals:
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=============================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Wear
- -------------------------------------------------------------------------------------------------------------
Women's Wear 10
C111 110) Lane Bryant #65 11/07/91 7246 14.3 121.2 148.9 -18.6
C129 110) Lerner New York 11/07/91 13331 26.3 252.7 278.2 -9.1
C101 110) Limited Express 11/11/91 10711 21.1 175.5 179.8 -2.4
C201 110) Mariposa #82 9/16/95 5155 10.2 77.0 82.1 -6.2
C215 110) Modern Woman 2/13/92 5664 11.2 62.8 81.9 -23.3
C217 110) Northern Reflec 4/28/93 2478 4.9 142.9 191.5 -25.4
C203 110) Rave #434 10/11/91 2138 4.2 108.1 95.6 13.0
C211 110) Smart Sizes #65 7/31/92 4019 7.9 47.3 38.8 21.7
Comp Sub-Totals: 50742 987.6 1,096.9 -10.0
- -------------------------------------------------------------------------------------------------------------
C211A 110) Jay Jacobs #22 4/17/86 NA 2/29/96 NA NA NA
C225 110) Jean Nicole #85 CLOSED 4/01/84 NA 1/31/96 NA NA NA
C223 110) Size 5-7-9 #45 CLOSED 9/01/84 NA 1/07/96 NA NA NA
No Comp Sub-Totals 0 0.0 0.0
- -------------------------------------------------------------------------------------------------------------
Sub Category Totals 50742 987.6 1,096.9 -10.0
=============================================================================================================
Category Totals: 50742 987.6 1,096.9 -10.0
=============================================================================================================
<CAPTION>
===========================================================================================================================
UNIT YEAR-TO-DATE SALES % 1997 FULL YEAR SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Wear
- ---------------------------------------------------------------------------------------------------------------------------
C111 110) 1,065.7 1,269.8 -16.1 14.8 1,065.7 1,269.8 -16.1 147 175 340
C129 110) 1,579.7 1,889.9 -16.4 22.0 1,579.7 1,889.9 -16.4 119 142 340
C101 110) 1,178.2 1,453.3 -18.9 16.4 1,178.2 1,453.3 -18.9 110 136 560
C201 110) 787.8 833.2 -5.4 11.0 787.8 833.2 -5.4 153 162 0
C215 110) 634.6 791.6 -19.8 8..8 634.6 791.6 -19.8 112 140 0
C217 110) 774.1 826.5 -6.3 10.8 774.1 826.5 -6.3 312 334 0
C203 110) 756.7 711.7 6.3 10.5 756.7 711.7 6.3 354 333 0
C211 110) 413.7 407.2 1.6 5.8 413.7 407.2 1.6 103 101 0
Comp 7,190.5 8,183.2 -12.1 7,190.5 8,183.2 -12.1 142 161
Sub-Totals:
- ---------------------------------------------------------------------------------------------------------------------------
C211A 110) NA NA NA NA NA NA NA NA NA NA NA
C225 110) NA 26.7 NA NA NA 26.7 NA NA 5 NA
C223 110) NA 5.1 NA NA NA 5.1 NA NA 1 NA
No Comp 0.0 31.8 -100.0 0.0 31.8 -100.0 NA 3
Sub-Totals
- ---------------------------------------------------------------------------------------------------------------------------
Sub Category 7,190.5 8,215.0 -12.5 7,190.5 8,215.0 -12.5 142 135
Totals
===========================================================================================================================
Category 7,190.5 8,215.0 -12.5 7,190.5 8,215.0 -12.5 142 135
Totals:
===========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Specialty
- -------------------------------------------------------------------------------------------------
Women's Specialty 11
C109 110) Motherhood Mate 4/29/94 1055 12.2 30.4 29.1 4.7
C111 110) Swim-In 12/21/94 1063 12.3 20.4 13.7 48.9
C101 110) Victoria's Secr 11/07/91 6521 75.5 440.8 447.0 -1.4
Comp Sub-Totals: 8639 491.6 489.8 0.4
- -------------------------------------------------------------------------------------------------
Category Totals: 8639 491.6 489.8 0.4
=================================================================================================
<CAPTION>
==============================================================================================================
UNIT YEAR-TO-DATE SALES % 1997 FULL YEAR SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Specialty
- --------------------------------------------------------------------------------------------------------------
C109 110) 303.6 291.5 4.1 10.8 303.6 291.5 4.1 288 276 0
C111 110) 313.3 299.4 4.7 11.1 313.3 299.4 4.7 295 282 357
C101 110) 2,197.7 2,141.0 2.6 78.1 2,197.7 2,141.0 2.6 337 328 340
Comp 2,814.6 2,731.9 3.0 2,814.6 2,731.9 3.0 326 316
Sub-Totals:
- --------------------------------------------------------------------------------------------------------------
Category 2,814.6 2,731.9 3.0 2,814.6 2,731.9 3.0 326 316
Totals:
==============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
==========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Men's Wear
- ----------------------------------------------------------------------------------------------------------
Men's Wear 12
C103 110) Hamer's 11/09/94 3025 34.2 132.3 130.2 1.6
C105 110) Mr. Rage 12/11/91 1522 17.2 88.2 102.6 -14.0
C203 110) Structure #115 11/11/91 4288 48.5 125.5 131.2 -4.3
Comp Sub-Totals: 8835 346.1 364.0 -4.9
- ----------------------------------------------------------------------------------------------------------
C211 110) J. Riggings #76 CLOSED 12/13/91 NA 1/16/91 NA NA NA
Non Comp Sub-Totals 0 0.0 0.0
- ----------------------------------------------------------------------------------------------------------
Sub Category Totals 8835 346.1 364.0 -4.9
==========================================================================================================
Category Totals: 8835 346.1 364.0 -4.9
==========================================================================================================
<CAPTION>
======================================================================================================================
UNIT YEAR-TO-DATE SALES % 1997 FULL YEAR SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Men's Wear
- ----------------------------------------------------------------------------------------------------------------------
C103 110) 870.2 813.1 7.0 39.1 870.2 870.2 813.1 7.0 288 269 0
C105 110) 716.6 741.8 -3.4 32.2 716.6 716.6 741.8 -3.4 471 487 0
C203 110) 636.0 687.3 -7.5 28.6 636.0 636.0 687.3 -7.5 148 160 0
Comp 2,222.8 2,242.2 -0.9 2,222.8 2,222.8 2,242.2 -0.9 252 254
Sub-Totals:
- ----------------------------------------------------------------------------------------------------------------------
C211 110) NA 23.7 NA NA NA NA 23.7 NA NA 12 NA
Non Comp 0.0 23.7 -100.0 0.0 0.0 23.7 -100.0 NA 12
Sub-Totals
- ----------------------------------------------------------------------------------------------------------------------
Sub 2,222.8 2,265.9 -1.9 2,222.8 2,265.9 2,265.9 -1.9 252 209
Category
Totals
======================================================================================================================
Category 2,222.8 2,265.9 -1.9 2,222.8 2,265.9 2,265.9 -1.9 252 209
Totals:
======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110- 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unisex 14
- ---------------------------------------------------------------------------------------------------------
Unisex
21 110) Gap, The #7502 8/14/92 5865 19.0 600.2 532.8 12.7
21 110) Hot Topic #28 6/28/95 1124 3.7 130.9 142.4 -8.1
25 110) Jay Jacobs #22 3/04/96 4996 16.2 135.5 112.0 21.0
17 110) Maurices #342/J 11/21/91 8881 28.8 90.6 114.8 -21.1
43 110) Pacific Sunwear 11/11/92 1697 5.5 72.2 63.4 13.8
07 110) Zumiez 3/26/92 2018 6.6 171.1 180.4 -5.2
Comp Sub-Totals: 24581 1,200.5 1,145.7 4.8
- ---------------------------------------------------------------------------------------------------------
01 110) Above the Belt NA NA NA NA NA NA
41 110) County Seat #66 Closed 3/29/92 NA 12/30/96 59.3 59.3 NA
13 110) Eddie Bauer 7/26/96 6208 20.2 416.5 594.7 -30.0
Non Comp Sub-Totals: 6208 416.5 654.0 -36.3
- ---------------------------------------------------------------------------------------------------------
Sub Category Totals 30789 1,616.9 1,799.7 -10.2
=========================================================================================================
Category Totals: 30789 1,616.9 1,799.7 -10.2
=========================================================================================================
<CAPTION>
====================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unisex
- --------------------------------------------------------------------------------------------------------------------
21 110) 3,676.5 3,497.5 5.1 36.1 3,676.5 3,497.5 5.1 627 596 0
21 110) 732.3 698.4 4.8 7.2 732.3 698.4 4.8 652 621 0
25 110) 917.4 829.4 10.6 9.0 917.4 829.4 10.6 184 166 0
17 110) 736.1 728.0 1.1 7.2 736.1 728.0 1.1 83 82 0
43 110) 576.4 473.3 21.8 5.7 576.4 473.3 21.8 340 279 0
07 110) 1,222.6 1,184.0 3.3 12.0 1,222.6 1,184.0 3.3 606 587 0
Comp 7,861.2 7,410.6 6.1 7,861.2 7,410.6 6.1 320 301
Sub-Total
- --------------------------------------------------------------------------------------------------------------------
01 110) NA NA NA NA 0.0 NA NA NA NA NA
41 110) NA 674.0 NA NA NA 674.0 NA NA 177 NA
13 110) 2,331.4 1,548.0 50.6 22.9 2,331.4 1,548.0 50.6 376 249 0
Non Comp 2,331.4 2,222.0 4.9 2,331.4 2,222.0 4.9 376 222
Sub-Total
- --------------------------------------------------------------------------------------------------------------------
Sub 10,192.6 9,632,6 5.8 10,192.6 9,632.6 5.8 331 279
Category
Totals
====================================================================================================================
Category 10,192.6 9,632.6 5.8 10,192.6 9,632.6 5.8 331 279
Totals:
====================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110- 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
===================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Children's Wear 16
- ---------------------------------------------------------------------------------------------------
Children's Wear
07 110) GapKids #9250 11/18/94 4830 78.4 207.0 192.9 7.3
03 110) Gymboree #241 7/03/95 3331 21.6 78.4 73.2 7.1
Comp Sub-Totals 6161 285.3 266.1 7.2
===================================================================================================
Category Totals 6161 285.3 266.1 7.2
===================================================================================================
<CAPTION>
==========================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- ---------------
07 110) 1,396.2 1,265.3 10.3 67.0 1,396.2 1,265.3 10.3 289 262 0
03 110) 686.4 645.5 6.3 33.0 686.4 645.5 6.3 516 485 0
Comp Sub-Totals 2,082.5 1,910.8 9.0 2,082.5 1,910.8 9.0 338 310
==========================================================================================================================
Category Totals 2,082.5 1,910.8 9.0 2,082.5 1,910.8 9.0 338 310
==========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110- 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=====================================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Apparel 18
- ---------------------------------------------------------------------------------------------------------------------
Specialty Apparel
07 110) Pro-Image #240 7/01/95 2007 41.3 120.6 130.4 -7.6
05 110) Wilsons The Lea 4/02/92 2847 58.7 218.7 236.3 -7.4
Comp Sub-Totals: 4854 339.2 366.7 -7.5
- ---------------------------------------------------------------------------------------------------------------------
05 110) R.C. Boot Barn Closed 11/23/91 NA 8/18/97 NA 69.1 NA
03 110) Specialtees Closed 12/06/91 NA 10/31/96 NA NA NA
Non Comp Sub-Totals: 2608 0.0 69.1 -100.0
- ---------------------------------------------------------------------------------------------------------------------
Sub Category Totals 4854 339.2 435.8 -22.2
=====================================================================================================================
Category Totals: 7462 339.2 435.8 -22.2
=====================================================================================================================
<CAPTION>
=======================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Apparel
- -----------------------------------------------------------------------------------------------------------------------
07 110) 532.8 537.1 -0.8 35.0 532.8 537.1 -0.8 265 268 0
05 110) 812.7 932.1 -12.8 53.4 812.7 932.1 -12.8 285 327 0
Comp Sub-Totals: 1,345.5 1,469.2 -8.4 1,345.5 1,469.2 -8.4 277 303
- -----------------------------------------------------------------------------------------------------------------------
05 110) 176.7 330.7 -46.6 11.6 176.7 330.7 -46.6 68 127 NA
03 110) NA 146.2 NA NA NA 146.2 NA NA 51 NA
Non Comp Sub-Totals: 176.7 476.9 -62.9 176.7 476.9 -62.9 68 87
- -----------------------------------------------------------------------------------------------------------------------
Sub Category Totals 1,522.2 1,946.1 -21.8 1,522.2 1,946.1 -21.8 204 189
=======================================================================================================================
Category Totals: 1,522.2 1,946.1 -21.8 1,522.2 1,946.1 -21.8 204 189
=======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110- 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
==============================================================================================================================
YEAR-TO-
DATE
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES % SALES
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accesories 20
- ------------------------------------------------------------------------------------------------------------------------------
Accessories
121 110) After Thoughts 4/11/92 861 15.7 52.7 57.8 -8.8 318.3
201 110) After Thoughts 8/30/91 824 15.1 55.7 57.5 -3.2 322.2
201 110) Claire's #5839 8/23/91 699 12.8 66.8 70.6 -5.3 407.8
119 110) Silver Safari 11/20/92 396 7.2 34.5 35.9 -4.0 142.6
109 110) Sunglass Hut #1 4/01/95 603 11.0 33.5 49.1 -31.6 407.3
211 110) Sunglass Hut #1 11/16/91 741 13.5 17.1 20.6 -17.0 235.3
Comp Sub-Totals: 4124 260.4 291.5 -10.7 1,833.5
- ------------------------------------------------------------------------------------------------------------------------------
131 110) Express Yourself Closed 9/10/92 NA 1/20/97 NA 11.8 NA NA
119 110) Icing, The #342 10/31/97 1349 24.6 47.7 NA NA 71.3
Non Comp Sub-Totals: 1645 47.7 11.8 305.2 71.3
- ------------------------------------------------------------------------------------------------------------------------------
Sub Category Totals 5473 308.1 303.3 1.6 1,904.8
==============================================================================================================================
Category Totals: 5769 308.1 303.3 1.6 1,904.8
==============================================================================================================================
<CAPTION>
============================================================================================================
YEAR-TO-DA
ATE FULL YEAR
UNIT SALES SALES % 1997 1996 1997 BKP
NO. 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accesories
- ------------------------------------------------------------------------------------------------------------
121 110) 292.8 8.7 16.7 318.3 292.8 8.7 370 340 0
201 110) 304.7 5.8 16.9 322.2 304.7 5.8 391 370 0
201 110) 392.7 3.9 21.4 407.8 392.7 3.9 583 562 0
119 110) 138.7 2.8 7.5 142.6 138.7 2.8 360 350 0
109 110) 483.9 -15.0 21.4 407.3 483.9 -15.8 675 803 0
211 110) 220.3 6.8 12.4 235.3 220.3 6.8 318 297 500
Comp Sub-Totals: 1,833.2 0.0 1,833.5 1,833.2 0.0 445 445
- ------------------------------------------------------------------------------------------------------------
131 110) 62.2 NA NA NA 62.2 NA NA 210 NA
119 110) NA NA 3.7 71.3 NA NA 53 NA 0
Non Comp Sub-Totals: 62.2 14.7 71.3 62.2 14.7 43 210
- ------------------------------------------------------------------------------------------------------------
Sub Category Totals 1,895.4 0.5 1,904.8 1,895.4 0.5 330 429
============================================================================================================
Category Totals: 1,895.4 0.5 1,904.8 1,895.4 0.5 330 429
============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110- 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
========================================================================================================
CURRENT MONTH
UNIT OCCUPANT OPEN CLOSE SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shoes 22
- --------------------------------------------------------------------------------------------------------
Shoes
15 110) Foot Locker #10 11/27/91 2397 9.4 90.2 103.2 -12.6
90 110) Foot Locker #84 11/27/91 2851 11.2 101.1 144.2 -29.9
01 110) Footaction, USA 4/09/92 2139 8.4 70.4 108.4 -34.7
13 110) Homestead Birke 4/04/93 774 3.0 83.3 66.4 25.3
19 110) Kinney Shoes #0 12/07/92 2741 10.8 41.4 54.7 -24.3
37 110) Lady Foot Locker 2/13/92 1826 7.2 95.5 123.0 -22.4
01 110) Naturalizer Sho 2/28/93 2022 8.0 36.5 25.5 43.5
17 100) Payless Kids #4 8/02/92 1348 5.3 29.0 24.3 19.2
05 110) Payless Shoesou 11/03/91 2819 11.1 81.4 75.5 7.9
17 110) Rizzuto's Wide 11/13/91 1093 4.3 35.0 25.1 39.4
01 110) Village Shoe Co 7/20/91 2007 7.9 72.9 78.2 -6.7
Comp Sub-Totals: 22017 737.1 828.4 -11.0
- --------------------------------------------------------------------------------------------------------
05 110) Kid's Foot Lock 11/14/96 1548 6.1 43.2 58.0 -25.5
21 110) Leeds #3993 Closed 9/01/84 NA 8/24/97 NA 49.7 NA
33 110) Track 'n Trail 9/17/96 1836 7.2 86.1 103.1 -16.5
33 110) Wild Pair #5993 Closed 9/01/84 NA 7/26/96 NA NA NA
Non Comp Sub-Totals 6516 129.3 210.8 -38.6
- --------------------------------------------------------------------------------------------------------
Sub Category Totals 25401 866.4 1,039.2 -16.6
========================================================================================================
Category Totals: 28533 866.4 1,039.2 -16.6
========================================================================================================
<CAPTION>
===============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shoes
- ---------------------------------------------------------------------------------------------------------------
15 110) 786.8 787.9 -0.1 8.9 786.9 787.9 -0.1 328 329 0
90 110) 972.2 1,170.1 -16.9 11.0 972.2 1,170.1 -16.9 341 410 0
01 110) 693.1 761.2 -8.9 7.9 693.3 761.2 -8.9 324 356 0
13 110) 661.1 613.6 7.8 7.5 661.1 613.6 7.8 854 793 0
19 110) 432.4 461.1 -6.2 4.9 432.4 461.1 -6.2 158 168 0
37 110) 868.7 975.4 -10.9 9.9 868.7 975.4 -10.9 476 534 0
01 110) 482.7 489.0 -1.3 5.5 482.7 489.0 -1.3 239 242 0
17 100) 318.2 314.2 1.3 3.6 318.2 314.2 1.3 236 233 0
05 110) 921.7 896.9 2.8 10.5 921.7 896.9 2.8 327 318 0
17 110) 433.5 420.2 3.2 4.9 433.5 420.2 3.2 397 384 0
01 110) 958.6 921.7 4.0 10.9 958.8 921.7 4.0 478 459 0
Comp 7,529.3 7,811.3 -3.6 7,529.3 7,811.3 -3.6 342 355
Sub-Total
- ---------------------------------------------------------------------------------------------------------------
05 110) 372.3 64.9 473.4 4.2 372.3 64.9 473.4 241 42 0
21 110) 336.5 457.8 -26.5 3.8 336.5 457.8 -26.5 107 146 NA
33 110) 580.7 226.9 156.0 6.6 580.7 226.9 156.0 316 124 0
33 110) NA 135.5 NA NA NA 135.5 NA NA NA NA
Non Comp 1,289.5 885.1 45.7 1,289.5 885.1 45.7 198 136
Sub-Total
- ---------------------------------------------------------------------------------------------------------------
Sub 8,819.9 8,696.4 1.4 8,818.9 8,696.4 1.4 309 305
Category
Totals
===============================================================================================================
Category 8,818.9 8,696.4 1.4 8,818.9 8,696.4 1.4 309 305
Totals:
===============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
==================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Furniture 24
- --------------------------------------------------------------------------------------------------
Furniture
01 110) Bombay Co./The 9/24/93 4001 100.0 120.0 139.4 -13.9
Comp Sub-Totals: 4001 120.0 139.4 -13.9
- --------------------------------------------------------------------------------------------------
05 110) Abodio Closed 8/29/93 NA 2/22/96 NA NA NA
Non Comp Sub-Totals 0 0.0 0.0
Sub Category Totals 4001 120.0 139.4 -13.9
==================================================================================================
Category Totals: 4001 120.0 120.0 139.4 -13.9
==================================================================================================
<CAPTION>
==================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Furniture
- ------------------------------------------------------------------------------------------------------------------
01 110) 611.8 638.4 -4.2 100.00 611.8 638.4 -4.2 153 160 0
Comp
Sub-Total 611.8 638.4 -4.2 611.8 638.4 -4.2 153 160
- ------------------------------------------------------------------------------------------------------------------
05 110) NA 162.1 NA NA NA 162.1 NA NA 41 NA
Non Comp
Sub-Total 0.0 162.1 -100.0 0.0 162.1 -100.0 NA 41 NA
- ------------------------------------------------------------------------------------------------------------------
Sub
Category
Totals 611.8 800.5 -23.6 611.8 800.5 -23.6 153 100
==================================================================================================================
Category
Totals: 611.8 800.5 -23.6 611.8 800.5 -23.6 153 100
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
==========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Home Accessories 26
- ----------------------------------------------------------------------------------------------------------
Home Accessories
107 100) House of Cutler 6/01/92 1004 15.7 104.9 126.9 -17.3
211 100) Inprints 7/01/92 1426 22.3 81.9 68.8 19.0
215 110) Lechters #93 3/01/92 3067 48.0 131.3 143.1 -8.2
Comp Sub-Totals: 5497 318.1 338.8 -6.1
- ----------------------------------------------------------------------------------------------------------
109 110) Deck the Walls Closed 2/08/92 NA 6/15/97 NA 32.8 NA
219 100) Phoenix Gallery Closed 5/01/93 NA 1/07/96 NA NA NA
109 110) Select Comfort 2/16/96 893 14.0 87.2 69.4 25.7
Non Comp Sub-Totals 2900 87.2 102.2 -14.7
- ----------------------------------------------------------------------------------------------------------
Sub Category Totals 6390 405.3 440.9 -8.1
==========================================================================================================
Category Totals: 8397 405.3 440.9 -8.1
==========================================================================================================
<CAPTION>
=============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Home Accessories
- -------------------------------------------------------------------------------------------------------------
Home Accessories
107 100) 369.7 393.2 -6.0 16.4 369.7 393.2 -6.0 368 392 0
211 100) 479.1 349.8 37.0 21.2 479.1 349.8 37.0 336 245 0
215 110) 520.8 542.0 -3.9 23.1 520.8 542.0 -3.9 170 177 0
Comp
Sub-Totals 1,369.6 1,285.0 6.6 1,369.6 1,285.0 6.6 249 234
- -------------------------------------------------------------------------------------------------------------
109 110) 89.5 217.3 -58.8 4.0 89.5 217.3 -58.8 45 108 NA
219 100) NA 10.7 NA NA NA 10.7 NA NA 3 NA
109 110) 799.0 579.8 37.8 35.4 799.0 579.8 37.8 895 649 0
Non Comp
Sub-Totals 888.5 807.8 10.0 888.5 807.8 10.0 306 119
- -------------------------------------------------------------------------------------------------------------
Sub
Category
Totals 2,258.0 2,092.8 7.9 2,258.0 2,092.8 7.9 269 171
=============================================================================================================
Category
Totals: 2,258.0 2,092.8 7.9 2,258.0 2,092.8 7.9 269 171
=============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
===========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Electronics/Appliances 28
- -----------------------------------------------------------------------------------------------------------
Electronics/Appliances
03 110) Kits Cameras 1 11/25/94 1491 13.3 108.3 132.2 -18.1
09 110) Musicland #887 3/13/92 1583 14.1 162.2 164.6 -1.5
03 110) Radio Shack #37 12/05/97 2640 23.5 215.7 328.2 -34.3
04 110) Sam Goody #0851 6/28/91 2272 20.2 246.5 233.3 5.7
14 110) Software Etc. # 4/08/92 1106 9.8 148.6 158.9 -6.5
05 110) Suncoast #3258 10/07/92 2144 19.1 195.2 229.2 -14.8
Comp Sub-Totals: 11236 1,076.5 1,246.4 -13.6
- -----------------------------------------------------------------------------------------------------------
17 110) Baggages #345 Closed 11/17/94 NA 10/28/96 NA NA NA
02 110) DJ's Sound City Closed 1/01/78 NA 6/23/96 NA NA NA
09 110) Malecki Music E Closed 7/31/92 NA 7/31/97 NA 39.4 NA
Non Comp Sub-Totals 973 0.0 39.4 -100.0
- -----------------------------------------------------------------------------------------------------------
Sub Category Totals 11236 1,076.5 1,285.8 -16.3
===========================================================================================================
Category Totals: 12209 1,076.5 1,285.8 -16.3
===========================================================================================================
<CAPTION>
============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electronics/Appliances
- ------------------------------------------------------------------------------------------------------------
Electronics/Appliances
03 110) 611.3 611.6 -0.0 12.0 611.3 611.6 -0.0 410 410 0
09 110) 763.3 758.0 0.7 14.9 763.3 758.0 0.7 482 479 0
03 110) 880.9 1,359.6 -35.2 17.2 880.9 1,359.6 -35.2 334 666 NA 1
04 110) 1,169.4 1,118.6 4.5 22.9 1,169.4 1,118.6 4.5 515 492 0
14 110) 683.7 665.4 2.7 13.4 683.7 665.4 2.7 618 602 0
05 110) 910.6 966.1 -5.7 17.8 910.6 966.1 -5.7 425 451 0
Comp
Sub-Total 5,019.2 5,479.2 -8.4 5,019.2 5,479.2 -8.4 447 515
- ------------------------------------------------------------------------------------------------------------
17 110) NA 358.0 NA NA NA 358.0 NA NA 118 NA
02 110) NA 78.4 NA NA NA 78.4 NA NA 10 NA 1
09 110) 91.6 184.5 -50.3 1.8 91.6 184.5 -50.3 94 190 NA
Non Comp
Sub-Total 91.6 620.9 -85.2 91.6 620.9 -85.2 94 54
- ------------------------------------------------------------------------------------------------------------
Sub
Category
Totals 5,110.8 6,100.0 -16.2 5,110.8 6,100.0 -16.2 419 276
============================================================================================================
Category
Totals: 5,110.8 6,100.0 -16.2 5,110.8 6,100.0 -16.2 419 276
============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
==================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hobbies/Sports/Special Interest 30
- --------------------------------------------------------------------------------------------------
Hobbies/Sports/Special Interest
123 110) Champs Sports # 3/13/92 5226 37.4 234.8 311.7 -24.7
201 110) Naturium 11/01/92 1539 11.0 146.3 168.4 -13.1
127 110) Nordic Track Fi 8/12/94 2047 14.7 86.2 118.7 -27.4
119 110) Pedersen's 11/21/91 5160 36.9 200.8 270.2 -25.7
Comp Sub-Totals: 13972 668.2 869.0 -23.1
==================================================================================================
Category Totals: 13972 668.2 869.0 -23.1
==================================================================================================
<CAPTION>
=========================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hobbies/Sports/Special Interest
- -------------------------------------------------------------------------------------------------------------------------
Hobbies/Sports/Special Interest
123 110) 1,454.2 1,740.1 -16.4 37.7 1,454.2 1,740.1 -16.4 278 333 0
201 110) 423.2 423.7 -0.1 11.0 423.2 423.7 -0.1 275 275 0
127 110) 824.4 936.8 -12.0 21.4 824.4 936.8 -12.0 403 458 0
119 110) 1,158.1 1,386.6 -16.5 30.0 1,158.1 1,386.6 -16.5 224 269 0
Comp
Sub-Totals 3,859.8 4,487.2 -14.0 3,859.8 4,487.2 -14.0 276 321
=========================================================================================================================
Category
Totals: 3,859.8 4,487.2 -14.0 3,859.8 4,487.2 -14.0 276 321
=========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
==========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gifts, Stationery & Luggage 32
- ----------------------------------------------------------------------------------------------------------
Gifts, Stationery & Luggage
217 110) Candleman 2/26/93 720 2.5 136.9 154.6 -11.5
203 110) Cartoon Classic 5/30/92 1193 4.2 72.9 95.3 -23.5
207 110) Disney Store #4 4/27/93 3873 13.7 306.4 316.2 -3.1
204 110) Franklin Covey 6/02/95 2249 7.9 62.0 59.3 4.4
107 110) Hidden Cottage 1/14/95 1629 5.8 134.5 139.1 -3.3
114 110) Mark's Hallmark 6/01/89 2861 10.1 205.8 208.3 -1.2
203 110) Mark's Hallmark 11/21/91 3139 11.1 200.5 201.2 -0.3
149 110) Nature's Kingdom 11/15/94 1233 4.4 47.7 73.0 -34.6
14 110) R. Brown Gifts a 5/06/91 1184 4.2 86.8 92.4 -6.1
19 110) Rubber Stamp St 11/08/94 1229 4.3 68.2 60.1 13.5
07 110) San Francisco M 4/02/93 1479 5.2 137.4 138.0 -0.4
03 110) Spencer's Gifts 10/30/93 1445 5.1 172.4 180.3 -4.4
51 110) Street of Dream 11/15/94 1689 6.0 62.5 103.4 -39.6
111 110) Things Remember 3/08/92 1376 4.9 49.4 52.2 -5.4
Comp Sub-Totals: 25299 1,743.2 1,873.4 -6.9
- ----------------------------------------------------------------------------------------------------------
117 110) Card Farm Closed 8/01/91 NA 5/31/97 NA 50.7 NA
107 110) Evergreen 11/17/96 1047 3.7 71.4 41.4 72.6
205 110) Graham Office S 11/29/96 1297 4.6 27.6 24.3 13.6
119 110) Made in Washing Closed 11/01/91 NA 7/28/96 NA NA NA
219 110) Paw Prints 8/11/97 659 2.3 40.8 NA NA
Non Comp Sub-Totals 4561 139.8 116.3 20.2
- ----------------------------------------------------------------------------------------------------------
Sub Category Totals 28302 1,883.0 1,989.7 -5.4
==========================================================================================================
Category Totals: 29860 1,883.0 1,989.7 -5.4
==========================================================================================================
<CAPTION>
============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gifts, Stationery & Luggage
- ------------------------------------------------------------------------------------------------------------
Gifts, Stationery & Luggage
217 110) 449.1 470.1 -4.5 5.6 449.1 470.1 -4.5 624 653 0
203 110) 346.5 417.1 -16.9 4.3 346.5 417.1 -16.9 290 350 0
207 110) 1,428.1 1,452.2 -1.7 17.8 1,428.1 1,452.2 -1.7 369 375 0
204 110) 413.2 368.7 12.1 5.2 413.2 368.7 12.1 184 164 0
107 110) 504.6 460.9 9.5 6.3 504.6 460.9 9.5 310 283 0
114 110) 830.0 769.9 7.8 10.4 830.0 769.9 7.8 290 269 0
203 110) 798.2 747.0 6.9 10.0 798.2 747.0 6.9 254 238 0
149 110) 210.2 234.5 -10.4 2.6 210.2 234.5 -10.4 171 190 0
14 110) 291.7 312.7 -6.7 3.6 291.7 312.7 -6.7 246 264 0
19 110) 559.4 423.5 32.1 7.0 559.4 423.5 32.1 455 345 0
07 110) 411.3 413.6 -0.6 5.1 411.3 413.6 -0.6 278 280 0
03 110) 651.0 598.4 8.8 8.1 651.0 598.4 8.8 451 414 0
51 110) 325.4 421.3 -22.8 4.1 325.4 421.3 -22.8 193 249 0
111 110) 293.1 308.2 -4.9 3.7 293.1 308.2 -4.9 213 224 0
Comp
Sub-Totals 7,511.8 7,398.1 1.5 7,511.8 7,398.1 1.5 297 292
- ------------------------------------------------------------------------------------------------------------
117 110) 68.9 257.9 -73.3 0.9 68.9 257.9 -73.3 44 166 NA
107 110) 240.9 47.4 408.6 3.0 240.9 47.4 408.6 230 45 0
205 110) 106.2 25.3 320.5 1.3 106.2 25.3 320.5 82 190 0
119 110) NA 98.6 NA NA NA 98.6 NA NA NA NA
219 110) 80.4 NA NA 1.0 80.4 NA NA 122 NA 0
Non Comp
Sub-Totals 496.4 429.1 15.7 496.4 429.1 15.7 109 110
- ------------------------------------------------------------------------------------------------------------
Sub
Category
Totals 8,008.2 7,827.2 2.3 8,008.2 7,827.2 2.3 268 268
============================================================================================================
Category
Totals: 8,008.2 7,827.2 2.3 8,008.2 7,827.2 2.3 268 268
============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Books 34
- -------------------------------------------------------------------------------------------------
Books
131 110) B. Dalton #284 6/16/94 4465 51.5 300.6 293.8 2.3
115 110) Evangel Book Ce 7/01/91 1257 14.5 74.5 76.5 -2.6
201 110) Waldenbooks, St 4/23/92 2952 34.0 209.7 242.2 -13.4
Comp Sub-Totals: 8674 584.8 612.6 -4.5
=================================================================================================
Category Totals: 8674 584.8 612.6 -4.5
=================================================================================================
<CAPTION>
=======================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Books
- -----------------------------------------------------------------------------------------------------------------------
131 110) 1,323.7 1,259.8 5.1 51.1 1,323.7 1,259.8 5.1 296 282 0
115 110) 368.4 340.6 8.2 14.2 368.4 340.6 8.2 293 271 0
201 110) 899.4 976.3 -7.9 34.7 899.4 976.3 -7.9 305 331 0
Comp
Sub-Totals: 2,591.4 2,576.7 0.6 2,591.4 2,576.7 0.6 299 297
=======================================================================================================================
Category
Totals: 2,591.4 2,576.7 0.6 2,591.4 2,576.7 0.6 299 297
=======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jewelry 35
- ------------------------------------------------------------------------------------------------------
5 Jewelry
101 110) Ben Bridge Jewe 10/10/91 1503 13.1 325.7 382.1 -14.7
209 110) Fred Meyer Jewe 8/15/92 1214 10.6 153.8 144.1 6.7
125 110) Gordon's Jewelr 10/16/95 1450 12.7 81.9 151.7 -46.0
205 110) Harry Ritchie J 10/10/91 1160 10.1 161.7 232.0 -30.3
115 110) Kay Jewelers #5 3/08/94 1244 10.9 235.5 223.6 5.3
101 110) Piercing Pagoda 5/20/95 160 1.4 47.3 42.1 12.4
117 110) Watch World 10/27/95 701 6.1 76.0 64.0 18.7
115 110) Weisfield Jewel 11/08/84 1549 13.5 212.5 202.9 4.7
135 110) Zales Jewelers 11/17/94 1393 12.2 314.0 296.9 5.7
Comp Sub-Totals: 10374 1,608.4 1,739.3 -7.5
- ------------------------------------------------------------------------------------------------------
101 110) Crescent Jewele 11/23/96 1082 9.4 98.2 133.7 -26.5
101 110) Dodson's CLOSED 8/01/91 NA 5/06/96 NA NA NA
Non Comp Sub-Totals 1082 98.2 133.7 -26.5
- ------------------------------------------------------------------------------------------------------
Sub Category Totals 11456 1,706.6 1,873.1 -8.9
======================================================================================================
Category Totals: 11456 1,706.6 1,873.1 -8.9
======================================================================================================
<CAPTION>
=======================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jewelry
- -----------------------------------------------------------------------------------------------------------------------
5
101 110) 1,511.9 1,348.6 12.1 17.9 1,511.9 1,348.6 12.1 1006 897 0
209 110) 672.6 655.3 2.6 7.9 672.6 655.3 2.6 554 540 0
125 110) 638.7 705.8 -9.5 7.5 638.7 705.8 -9.5 441 487 0
205 110) 802.0 999.6 -19.8 9.5 802.0 999.6 -19.8 691 862 0
115 110) 1,080.0 903.4 19.5 12.8 1,080.0 903.4 19.5 868 726 0
101 110) 223.4 199.2 12.1 2.6 223.4 199.2 12.1 1396 1245 0
117 110) 407.1 340.4 19.6 4.8 407.1 340.4 19.6 581 486 0
115 110) 992.2 1,154.4 -14.1 11.7 992.2 1,154.4 -14.1 641 745 0
135 110) 1,453.6 1,350.0 7.7 17.2 1,453.6 1,350.0 7.7 1043 969 0
Comp
Sub-Totals: 7,781.4 7,656.7 1.6 7,781.4 7,656.7 1.6 750 738
- -----------------------------------------------------------------------------------------------------------------------
101 110) 684.1 157.8 333.5 8.1 684.1 157.8 333.5 632 146 0
101 110) NA 224.7 NA NA NA 224.7 NA NA 76 NA
Non Comp
Sub-Totals 684.1 382.5 78.8 684.1 382.5 78.8 632 95
- -----------------------------------------------------------------------------------------------------------------------
Sub Category
Totals 8,465.5 8,039.2 5.3 8,465.5 8,039.2 5.3 739 558
=======================================================================================================================
Category
Totals: 8,465.5 8,039.2 5.3 8,465.5 8,039.2 5.3 739 558
=======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cosmetics/Perfumes 36
- ------------------------------------------------------------------------------------------------------
6 Cosmetics/Perfumes
201A 110) Bath & Body Wor 11/11/91 1661 38.5 207.1 232.7 -11.0
123 110) Body Shop #3705 6/28/95 846 19.6 114.0 118.1 -3.5
121 110) Garden Botanika 11/12/97 1811 41.9 153.8 137.6 11.8
Comp Sub-Totals: 4318 474.9 488.4 -2.8
======================================================================================================
Category Totals: 4318 474.9 488.4 -2.8
======================================================================================================
<CAPTION>
==============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cosmetics/Perfumes
- --------------------------------------------------------------------------------------------------------------
6
201A 110) 889.8 845.3 5.3 42.6 889.8 845.3 5.3 536 509 0
123 110) 561.8 569.8 -1.4 26.9 561.8 569.8 -1.4 664 674 0
121 110) 638.6 630.7 1.3 30.6 638.6 630.7 1.3 353 900 0
Comp
Sub-Totals: 2,090.1 2,045.7 2.2 2,090.1 2,045.7 2.2 484 638
==============================================================================================================
Category
Totals: 2,090.1 2,045.7 2.2 2,090.1 2,045.7 2.2 484 638
==============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
===============================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hair Care 37
- -----------------------------------------------------------------------------------------------
Hair Care
11 110) Beauty Works 10/22/92 1750 26.0 68.9 71.3 -3.3
17 110) Mastercuts #478 2/12/92 1052 15.6 30.9 29.9 3.4
105 110) N.W. Beauty Sup 11/25/91 1406 20.9 80.1 86.7 -7.6
207 110) Regis Hairstyli 9/15/91 1221 18.2 49.8 53.2 -6.4
203 110) System Seven #4 12/17/91 1297 19.3 18.3 14.6 25.3
Comp Sub-Totals: 6726 248.0 255.7 -3.0
===============================================================================================
Category Totals: 6726 248.0 255.7 -3.0
===============================================================================================
<CAPTION>
==============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hair Care
- --------------------------------------------------------------------------------------------------------------
11 110) 708.4 636.3 11.3 25.8 708.4 636.3 11.3 405 364 0
17 110) 364.7 336.9 8.2 13.3 364.7 336.9 8.2 347 320 0
105 110) 866.3 857.9 1.0 31.6 866.3 857.9 1.0 616 610 0
207 110) 617.7 569.8 8.4 22.5 617.7 56.9.8 8.4 506 467 0
203 110) 186.8 162.4 15.1 6.8 186.8 162.4 15.1 144 125 0
Comp
Sub-Totals: 2,743.9 2,563.2 7.0 2,743.9 2,563.2 7.0 408 381
==============================================================================================================
Category
Totals: 2,743.9 2,563.2 7.0 2,743.9 2,563.2 7.0 408 381
==============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other Retail 38
- --------------------------------------------------------------------------------------------------------
8 Other Retail
214 110) General Nutriti 6/04/93 1114 12.0 47.0 48.3 -2.6
114 110) Kay Bee Toys #8 1/17/95 3570 38.6 354.4 378.5 -6.4
111 110) Pilgrim Nutrit 5/06/91 1792 19.4 51.1 53.1 -3.7
127 110) Schlosser's Flo 5/01/91 722 7.8 12.5 12.3 1.6
Comp Sub-Totals: 7198 465.0 492.2 -5.5
- --------------------------------------------------------------------------------------------------------
105 110) AT & T Phone Ce CLOSED 8/01/88 NA 4/15/96 NA NA NA
101 110) Learning World CLOSED 1/29/92 NA 6/25/97 NA 80.7 NA
105 110) Phone Center, T 7/08/96 2057 22.2 72.9 96.1 -24.1
Non Comp Sub-Totals 5245 72.9 176.7 -58.7
- --------------------------------------------------------------------------------------------------------
Sub Category Totals 9255 538.0 668.9 -19.6
========================================================================================================
Category Totals: 12443 538.0 668.9 -19.6
========================================================================================================
<CAPTION>
===============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Other Retail
- ---------------------------------------------------------------------------------------------------------------
8
214 110) 543.4 522.5 4.0 17.4 543.4 522.5 4.0 488 469 0
114 110) 1,146.6 1,107.9 3.5 36.7 1,146.6 1,107.9 3.5 321 310 0
111 110) 588.7 579.6 1.6 18.9 588.7 579.6 1.6 329 323 0
127 110) 110.7 115.7 -4.4 3.5 110.7 115.7 -4.4 153 160 0
Comp
Sub-Totals: 2,389.3 2,325.7 2.7 2,389.3 2,325.7 2.7 332 323
- ---------------------------------------------------------------------------------------------------------------
105 110) NA NA NA NA NA NA NA NA NA NA
101 110) 162.6 594.9 -72.7 5.2 162.6 594.9 -72.7 51 187 NA
105 110) 570.9 323.7 76.4 18.3 570.9 323.7 76.4 278 157 486
Non Comp
Sub-Totals 733.5 918.6 -20.1 733.5 918.6 -20.1 140 175
- ---------------------------------------------------------------------------------------------------------------
Sub Category
Totals 3,122.8 3,244.3 -3.7 3,122.8 3,244.3 -3.7 251 261
===============================================================================================================
Category
Totals: 3,122.8 3,244.3 -3.7 3,122.8 3,244.3 -3.7 251 261
===============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
===============================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Optical 39
- -----------------------------------------------------------------------------------------------
Optical
C109 110) Eye Masters #13 5/08/92 3730 42.2 61.6 57.9 6.3
C119 110) LensCrafters, I 11/01/88 4048 45.8 114.8 72.1 59.1
C115 110) Vista Optical # 3/04/92 1068 12.1 43.4 38.1 14.1
Comp Sub-Totals: 8846 219.9 168.2 30.8
===============================================================================================
Category Totals: 8846 219.9 168.2 30.8
===============================================================================================
<CAPTION>
==================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Optical
- ------------------------------------------------------------------------------------------------------------------
C109 110) 843.5 972.7 -13.3 29.8 843.5 972.7 -13.3 226 261 0
C119 110) 1,227.7 1,163.2 5.5 43.4 1,227.7 1,163.2 5.5 303 287 0
C115 110) 758.0 709.5 6.8 26.8 758.0 709.5 6.8 710 664 0
Comp 2,829.2 2,845.4 -0.6 2,829.2 2,845.4 -0.6 320 322
Sub-Totals:
==================================================================================================================
Category 2,829.2 2,845.4 -0.6 2,829.2 2,845.4 -0.6 320 322
Totals:
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Personal Services 40
- -------------------------------------------------------------------------------------------------
Personal Services
C202 110) Hi-Tek Nails 12/22/95 939 17.3 20.4 20.7 -1.3
C211 110) It's a Wrap! 6/01/95 363 6.7 13.4 19.8 -32.2
C148 110) Kiddie Kandida 2/26/92 811 14.9 45.0 50.7 -11.2
C213 110) Portraits To Go 12/31/91 1566 28.8 26.8 28.8 -6.8
C114 110) Saad Shoe Repai 9/03/91 576 10.6 16.1 15.2 6.3
C121 110) Washington One 12/01/84 1177 21.7 23.8 20.6 15.7
Comp Sub-Totals: 5432 145.6 155.7 -6.5
=================================================================================================
Category Totals 5432 145.6 155.7 -6.5
=================================================================================================
<CAPTION>
==============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Personal Services
- --------------------------------------------------------------------------------------------------------------
C202 110) 225.1 183.6 22.6 18.7 225.1 183.6 22.6 240 196 0
C211 110) 47.2 55.4 -14.8 3.9 47.2 55.4 -14.8 130 153 242
C148 110) 339.2 372.3 -8.8 28.2 339.6 372.3 -8.8 419 459 0
C213 110) 208.4 278.4 -25.2 17.3 208.4 278.4 -25.2 133 178 0
C114 110) 188.7 183.4 2.9 15.7 188.7 183.4 2.9 328 318 0
C121 110) 196.4 184.9 6.2 16.3 196.4 184.9 6.2 167 17 0
Comp 1,205.4 1,258.0 -4.2 1,205. 1,258.0 -4.2 222 232
Sub-Totals:
==============================================================================================================
Category 1,205.4 1,258.0 -4.2 1,205.4 1,258.0 -4.2 222 232
Totals
==============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
===========================================================================================
CURRENT MONTH
UNIT OCCUPANT OPEN CLOSE SALES
NO. NAME DATE GLA DATE CAT% 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Financial 44
- -------------------------------------------------------------------------------------------
Financial
C113 110) Century 21 Home CLOSED 2/20/96 NA NA NA
C212 110) SeaFirst Bank W 9/29/93 1028 38.1 NA NA
C112 110) Seafirst Cash M NA NA NA NA
C103 110) Tomlinson Black 12/19/92 1670 61.9 NA NA
Non Comp Sub-Totals 2698 0.0 0.0
===========================================================================================
Category Totals: 2698 0.0 0.0
===========================================================================================
<CAPTION>
============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT % SALES % 1997 SALES % 1997 1996 1997 BKP
NO. CHANGE 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Financial
- ------------------------------------------------------------------------------------------------------------
C113 110) NA NA NA NA NA NA NA NA NA NA NA
C212 110) NA NA NA NA NA 0.0 NA NA 0 NA NA
C112 110) NA NA NA NA NA 0.0 NA NA NA NA NA
C103 110) NA NA NA NA NA 0.0 NA NA 0 NA NA
Non Comp 0.0 0.0 0.0 0.0 0 0
Sub-Totals
============================================================================================================
Category 0.0 0.0 (0.0 0.0 -0 0
Totals:
============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offices 46
- -------------------------------------------------------------------------------------------------------
Offices
E219 110) Consumer Opinio 9/28/95 2045 100.0 NA NA NA
Non Comp Sub-Totals 2045 0.0 0.0
- -------------------------------------------------------------------------------------------------------
Category Totals: 2045 0.0 0.0
=======================================================================================================
GRAND TOTAL 337994 14,749.5 16,326.4 -9.7
=======================================================================================================
Bumpers 64.5 72.3
Total 14,685.0 16,254.10 -9.7
<CAPTION>
===================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Offices
- -------------------------------------------------------------------------------------------------------------------
E219 110) NA NA NA NA 0.0 NA NA 0 NA NA
Non Comp 0.0 0.0 0.0 0.0 0 0
Sub-Totals
- -------------------------------------------------------------------------------------------------------------------
Category 0.0 0.0 0.0 0.0 0 0
Totals:
===================================================================================================================
GRAND TOTAL 90,231.7 91,617.5 -1.5 90,231.6 91,617.5 -1.5 267 248
===================================================================================================================
Bumpers 710.5 822.4 291
Total 89,521.2 90,775.10 -1.4
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offices 46
- -------------------------------------------------------------------------------------------------------
Offices
E219 110) Consumer Opinio 9/28/95 2045 100.0 NA NA NA
Non Comp Sub-Totals 2045 0.0 0.0
- -------------------------------------------------------------------------------------------------------
Category Totals: 2045 0.0 0.0
=======================================================================================================
GRAND TOTAL 337994 14,749.5 16,326.4 -9.7
=======================================================================================================
Bumpers -64.5 -72.3
New Total 14,685.00 16,254.10 -9.7
<CAPTION>
===================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Offices
- -------------------------------------------------------------------------------------------------------------------
E219 110) NA NA NA NA 0.0 NA NA 0 NA NA
Non Comp 0.0 0.0 0.0 0.0 0 0
- -------------------------------------------------------------------------------------------------------------------
Sub-Totals
- -------------------------------------------------------------------------------------------------------------------
Category 0.0 0.0 0.0 0.0 0 0
Totals:
===================================================================================================================
GRAND TOTAL 90,231.7 91,617.5 -1.5 90,231.6 91,617.5 -1.5 267 248
===================================================================================================================
Bumpers -710.5 -822.4 -710.5 -822.4
New Total 89,521.2 90,795.1 -1.4 89,521.20 90,795.10 -1.4
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF DECEMBER '97
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1997 1996 CHANGE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Department Stores 02
- -------------------------------------------------------------------------------------------------------
Department Stores
C001 110) Bumpers Fun Center 1/17/92 30000 100.0 54.8 74.2 -26.2
Comp Sub-Totals: 30000 54.8 74.2 -26.2
=======================================================================================================
Category Totals: 30000 54.8 74.2 -26.2
=======================================================================================================
<CAPTION>
====================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1997 SALES % 1997 1996 1997 BKP
NO. 1997 1996 CHANGE %CAT 1997 1996 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Department
Stores
- --------------------------------------------------------------------------------------------------------------------
C001 110) 345.3 431.7 -20.0 100.0 678.0E2 820.5 -17.4 23 27 M-S-D 0
Comp 345.3 431.7 -20.0 678.0 820.5 -17.4 23 27
- --------------------------------------------------------------------------------------------------------------------
Sub-Totals:
=======================================================================================================
Category 345.3 431.7 -20.0 678.0 820.5 -17.4 23 27
Totals:
=======================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=====================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Food 04
- -----------------------------------------------------------------------------------------------------
Specialty Food
C105 110) Baskin-Robbins 3/04/92 684 6.7 19.7 21.8 -10.0
C101 110) Candy 'N Carmel 2/01/85 550 5.4 11.0 12.2 -9.7
C103 110) Candy Barrel, Th 7/15/92 1022 10.1 9.3 12.1 -23.3
C118 110) Cinnabon #84 10/26/91 758 7.5 38.4 46.0 -16.4
C123 110) Espress-O 7/18/93 231 2.3 11.1 12.1 -8.2
C137 110) Gloria Jean's C 11/29/91 1076 10.6 12.0 17.0 -29.3
C129 110) Mrs. Fields Coo 5/23/91 721 7.1 13.0 17.6 -26.1
C117 110) Orange Julius 3/21/91 1295 12.7 25.3 30.4 -16.7
C109 110) Pretzel Time #3 10/27/92 501 4.9 22.5 29.3 -23.1
C110 110) Surf City Squee 6/27/92 420 4.1 18.3 19.7 -7.3
C201 110) Sweet Factory 11/18/93 848 8.3 20.0 26.5 -24.4
C215 110) Thomas Hammer C 12/04/93 1058 10.4 18.2 20.9 -12.7
C115 110) Tipton's Gourme 10/01/84 700 6.9 22.1 25.7 -14.1
Comp Sub-Totals: 9864 241.0 291.3 -17.3
- -----------------------------------------------------------------------------------------------------
C131 110) Candy 'n Carmel 296 2.9 NA NA NA
C102A 110) LaCrepe 12/03/96 NA 4/30/98 NA 4.7 NA
Non Comp Sub-Totals 481 0.0 4.7 -100.0
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 10160 241.0 296.0 -18.6
=====================================================================================================
Category Totals 10345 241.0 296.0 -18.6
=====================================================================================================
<CAPTION>
==================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1996 1995 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty
Food
- ------------------------------------------------------------------------------------------------------------------
C105 110) 107.0 122.6 -12.7 7.4 223.0E2 243.3 -8.4 326 356 0 7
C101 110) 72.5 79.2 -8.4 5.0 152.3E2 164.8 -7.6 277 300 0 7
C103 110) 47.5 65.1 -27.0 3.3 113.8E2 136.1 -16.4 111 133 0 10
C118 110) 206.0 246.3 -16.4 14.2 440.0E2 527.2 -16.5 580 696 0 6
C123 110) 70.0 71.3 -1.8 4.8 159.9E2 154.6 3.4 692 669 0 8
C137 110) 86.7 116.1 -25.3 6.0 220.5E2 286.0 -22.9 205 266 0 7
C129 110) 88.1 111.6 -21.0 6.1 196.7E2 227.0 -13.3 273 315 0 8
C117 110) 156.6 189.3 -17.3 10.8 378.0E2 410.6 -7.9 292 317 0 8
C109 110) 136.2 147.3 -7.6 9.4 298.8E2 319.7 -6.5 596 638 0 7
C110 110) 108.5 115.8 -6.3 7.5 227.0E2 235.5 -3.6 541 561 0 10
C201 110) 109.0 137.9 -20.9 7.5 235.3E2 275.1 -14.5 277 324 0 8
C215 110) 121.7 121.8 -0.1 8.4 303.5E2 278.9 8.8 287 264 M-S-D 8
C115 110) 125.6 150.9 -16.8 8.6 313.5E2 327.8 -4.4 448 468 0 8
Comp 1,435.4 1,675.2 -14.3 3,262.2 3,586.3 -9.0 331 364
Sub-Totals:
- ------------------------------------------------------------------------------------------------------------------
C131 110) NA NA NA NA 0.0 NA NA 0 NA NA NA
C102A 110) 17.1 23.8 -28.4 1.2 17.1 56.1 -69.6 92 303 NA 10
Non Comp 17.1 23.8 -28.4 17.1 56.1 -69.6 35 303
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------
Sub Category 1,452.5 1,699.0 -14.5 3,279.3 3,642.5 -10.0 317 362
Totals
==================================================================================================================
Category 1,452.5 1,699.0 -14.5 3,279.3 3,642.5 -10.0 317 362
Totals
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203
Primary Sort: Sales Cat
Secondary Sort: Sales Cat
Comp Only: No
E1 - Estimated Sales From Sales Entry
E2 - Occupant Historical Sales %'s
E3 - Sales Category %'s
E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
===================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restaurant 06
- ---------------------------------------------------------------------------------------------------
Restaurant
C105 110) Pickle Barrel 3/01/91 2141 25.8 27.5 28.3 -2.7
Comp Sub-Totals: 2141 27.5 28.3 -2.7
- ---------------------------------------------------------------------------------------------------
C112 110) Pizzeria Uno 6152 74.2 NA NA NA
C110 110) Sports Heroes o 8/15/96 12/28/97 NA 63.3 NA
CLOSED
Non Comp Sub-Totals 6152 0.0 63.3 -100.0
- ---------------------------------------------------------------------------------------------------
Sub Category Totals 8293 27.5 91.6 -69.9
===================================================================================================
Category Totals: 8293 27.5 91.6 -69.9
===================================================================================================
<CAPTION>
========================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Restaurant
- ------------------------------------------------------------------------------------------------------------------------
C105 110) 183.2 179.3 2.2 100.0 399.2E2 380.9 4.8 186 178 NA NA
Comp 183.2 179.3 2.2 399.2 380.9 4.8 186 178
- ------------------------------------------------------------------------------------------------------------------------
Sub-Totals:
- ------------------------------------------------------------------------------------------------------------------------
C112 110) NANA NA NA 0.0 NA NA0 NA NA NA
C110 110) NA526.2 NA NA NA 983.9 NA NA 92 NA 5
Non Comp 0.0526.2 -100.0 0.0 983.9 -100.00 92
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------------
Sub 183.2 705.5 -74.0 399.2 1,364.8 -70.8 48 106
Category
Totals
========================================================================================================================
Category 183.2 705.5 -74.0 399.2 1,364.8 -70.8 48 106
Totals:
========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Food Court/Fast Food 08
- -------------------------------------------------------------------------------------------------------
Food Court/Fast Food
C211 110) A & W 11/09/91 633 8.9 31.4 31.0 1.3
C223 110) Arby's 3/18/94 591 8.3 55.7 62.2 -10.5
C225 110) Bruchi's Cheese 11/22/91 565 7.9 24.4 27.0 -9.7
C221 110) Edo Japan 11/10/91 540 7.6 31.7 37.8 -16.2
C213 110) Flaming Wok 12/18/91 503 7.1 30.0 30.6 -1.9
C205 110) Ivar's #56 12/09/91 630 8.9 31.4 32.5 -3.5
C217 110) Juicers Smoothi 12/14/96 541 7.6 18.4 20.4 -10.1
C207 110) Salad Garden 3/31/96 649 9.1 16.0 15.1 5.7
C215 110) Sbarro #463 11/07/91 686 9.6 30.4 39.1 -22.4
C209 110) Schlotzsky's De 10/18/95 569 8.0 18.5 19.5 -5.0
C219 110) Taco Time 2/16/92 777 10.9 50.0 60.0 -16.6
Comp Sub-Totals 6684 337.7 375.1 -10.0
- -------------------------------------------------------------------------------------------------------
C203 110) Frankfurter CLOSED 2/10/92 NA 1/04/98 NA 7.8 NA
C203 110) Pronto-Pups 429 6.0 NA NA NA
Non Comp Sub-Totals 858 0.0 7.8 -100.0
- -------------------------------------------------------------------------------------------------------
Sub Category Totals 7113 337.7 382.9 -11.8
=======================================================================================================
Category Totals: 7542 337.7 382.9 -11.8
=======================================================================================================
<CAPTION>
==============================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Food Court/Fast Food
- --------------------------------------------------------------------------------------------------------------
C211 110) 195.6 200.9 -2.7 9.4 438.8E2 440.3 -0.3 693 696 0 8
C223 110) 375.2 320.6 17.0 18.0 846.2E2 772.6 9.5 1432 1307 0 0
C225 110) 149.0 170.1 -12.4 7.2 345.3E2 362.4 -4.7 611 641 0 8
C221 110) 205.0 234.5 -12.6 9.8 471.0E2 493.9 -4.6 872 915 0 8
C213 110) 169.7 179.3 -5.3 8.2 380.8E2 388.1 -1.9 757 772 0 10
C205 110) 170.0 177.4 -4.2 8.2 382.2E2 383.4 -0.3 607 609 0 8
C217 110) 117.0 121.1 -3.4 5.6 117.0 244.2 -52.1 216 451 0 8
C207 110) 99.1 88.8 11.5 4.8 99.1 197.4 -49.8 153 304 0 8
C215 110) 172.8 209.2 -17.4 8.3 402.8E2 461.2 -12.7 587 672 0 8
C209 110) 111.6 121.3 -8.0 5.4 230.0E2 254.2 -9.5 404 447 0 9
C219 110) 315.5 350.4 -9.9 15.2 698.7E2 759.3 -8.0 899 977 0 8
Comp 2,080.5 2,173.6 -4.3 4,411.9 4,756.9 -7.3 660 712
Sub-Totals
- --------------------------------------------------------------------------------------------------------------
C203 110) 1.4 50.5 -97.2 0.1 1.4 110.2 -98.7 3 257 NA 10
C203 110) NA NA NA NA 0.0 NA NA 0 NA NA NA
Non Comp 1.4 50.5 -97.2 1.4 110.2 -98.7 2 257
Sub-Totals
- --------------------------------------------------------------------------------------------------------------
Sub 2,081.8 2,224.1 -6.4 4,413.3 4,867.1 -9.3 585 684
Category
Totals
==============================================================================================================
Category 2,081.8 2,224.1 -6.4 4,413.3 4,867.1 -9.3 585 684
Totals:
==============================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Wear 10
- ------------------------------------------------------------------------------------------------
Women's Wear
C241 110) Lane Bryant #65 11/07/91 7246 14.3 99.1 102.6 -3.4
C229 110) Lerner New York 11/07/91 13331 26.3 135.4 144.0 -6.0
C201 110) Limited Express 11/11/91 10711 21.1 93.6 104.3 -10.3
C201 110) Mariposa #82 9/16/95 5155 10.2 38.5 64.6 -40.3
C215 110) Modern Woman # 2/13/92 5664 11.2 51.0 60.7 -15.9
C217 110) Northern Reflec 4/28/93 2478 4.9 34.0 58.3 -41.7
C203 110) Rave #434 10/11/91 2138 4.2 68.8 68.1 1.0
C211 110) Smart Sizes #65 7/31/92 4019 7.9 45.5 40.7 11.9
Comp Sub-Totals: 50742 565.9 643.2 -12.0
================================================================================================
Category Totals: 50742 565.9 643.2 -12.0
================================================================================================
<CAPTION>
=====================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Wear
- ---------------------------------------------------------------------------------------------------------------------
C241 110) 461.2 524.9 -12.1 15.4 966.0E2 1,065.7 -9.4 133 147 340 5
C229 110) 639.5 706.1 -9.4 21.3 1,428.2E2 1,579.7 -9.6 107 119 340 5
C201 110) 505.7 488.9 3.5 16.8 1,107.1E2 1,178.2 -6.0 103 110 560 5
C201 110) 345.9 423.5 -18.3 11.5 735.8E2 909.0 -19.1 143 177 0 5
C215 110) 286.3 319.9 -10.5 9.5 563.0E2 634.6 -11.3 99 112 0 5
C217 110) 225.6 330.2 -31.7 7.5 640.0E2 774.1 -17.3 258 312 0 5
C203 110) 313.0 323.0 -3.1 10.4 759.8E2 756.7 0.4 355 354 0 5
C211 110) 224.6 193.2 16.2 7.5 448.0E2 413.7 8.3 111 103 0 5
Comp 3,001.8 3,309.6 -9.3 6,648.0 7,312.6 -9.1 131 144
Sub-Totals:
=====================================================================================================================
Category 3,001.8 3,309.6 -9.3 6,648.0 7,312.6 -9.1 131 144
Totals:
=====================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Specialty 11
- -------------------------------------------------------------------------------------------------
Women's Specialty
C209 110) Motherhood Mate 4/29/94 1055 12.2 26.5 23.5 12.7
C211 110) Swim-In 12/21/94 1063 12.3 45.0 40.2 11.8
C201 110) Victoria's Secr 11/07/91 6521 75.5 195.4 225.8 -13.5
Comp Sub-Totals: 8639 267.0 289.6 -7.8
=================================================================================================
Category Totals: 8639 267.0 289.6 -7.8
=================================================================================================
<CAPTION>
=================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Women's Specialty
- -----------------------------------------------------------------------------------------------------------------
C209 110) 146.6 156.1 -6.1 12.0 319.8E2 303.6 5.4 303 288 0 6
C211 110) 178.7 176.0 1.5 14.6 310.6E2 313.3 -0.9 292 295 357 7
C201 110) 899.8 984.1 -8.6 73.4 2,157.0E2 2,197.7 -1.9 331 337 340 5
Comp 1,225.1 1,316.3 -6.9 2,787.4 2,814.6 -1.0 323 326
Sub-Totals:
=================================================================================================================
Category 1,225.1 1,316.3 -6.9 2,787.4 2,814.6 -1.0 323 326
Totals:
=================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Men's Wear 12
- ------------------------------------------------------------------------------------------------
Men's Wear
03 110) Hamer's 11/09/94 3025 34.2 48.0 60.3 -20.4
05 110) Mr. Rags #2120 12/11/91 1522 17.2 62.5 53.6 16.6
03 110) Structure #115 11/11/91 4288 48.5 51.4 60.1 -14.5
Comp Sub-Totals: 8835 161.8 173.9 -7.0
================================================================================================
Category Totals: 8835 161.8 173.9 -7.0
================================================================================================
<CAPTION>
==================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Men's Wear
- ------------------------------------------------------------------------------------------------------------------
03 110) 346.2 407.7 -15.1 38.8 842.7E2 870.2 -3.2 279 288 0 6
05 110) 284.3 314.8 -9.7 31.9 793.9E2 716.6 10.8 522 471 0 6
03 110) 261.9 292.9 -10.6 29.3 611.0E2 636.0 -3.9 142 148 0 0
Comp 892.4 1,015.4 -12.1 2,247.6 2,222.8 1.1 254 252
Sub-Totals:
==================================================================================================================
Category 892.4 1,015.4 -12.1 2,247.6 2,222.8 1.1 254 252
Totals:
==================================================================================================================
</TABLE>
1
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
====================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inisex 14
- ----------------------------------------------------------------------------------------------------
Unisex
113 110) Eddie Bauer 7/26/96 6208 20.2 152.9 231.3 -28.3
221 110) Gap, The #7502 8/14/92 5865 19.0 372.9 274.5 35.9
121 110) Hot Topic #28 6/28/95 1124 3.7 52.9 66.5 -20.5
125 110) Jay Jacobs #22 3/04/96 4996 16.2 75.3 67.9 10.9
217 110) Maurices #342/J 11/21/91 8881 28.8 52.6 57.0 -7.7
143 110) Pacific Sunwear 11/11/92 1697 5.5 53.1 46.3 14.8
107 110) Zumiez 3/26/92 2018 6.6 70.7 72.5 -2.5
Comp Sub-Totals: 30789 830.5 798.0 4.1
- ----------------------------------------------------------------------------------------------------
201 110) Above the Belt NA NA NA NA NA
Non Comp Sub-Totals 0 0.0 0.0
- ----------------------------------------------------------------------------------------------------
Sub Category Totals 30789 830.5 798.0 4.1
====================================================================================================
Category Totals: 30789 830.5 798.0 4.1
====================================================================================================
<CAPTION>
=======================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inisex
- -----------------------------------------------------------------------------------------------------------------------
113 110) 670.7 944.2 -29.0 16.1 670.7 2,331.4 -71.2 108 376 0 5
221 110) 1,850.2 1,428.8 29.5 44.5 4,302.6E2 3,676.5 17.0 734 627 0 5
121 110) 255.4 325.8 -21.6 6.1 697.3E2 746.2 -6.6 620 664 0 6
125 110) 419.0 390.8 7.2 10.1 985.2E2 917.4 7.4 197 184 0 6
217 110) 317.8 357.7 -11.1 7.6 812.9E2 736.1 10.4 92 83 0 5
143 110) 258.2 203.8 26.7 6.2 752.0E2 576.4 30.5 443 340 0 5
107 110) 388.9 423.4 -8.1 9.3 1,094.0E2 1,222.6 -10.5 542 606 0 7
Comp 4,160.2 4,074.6 2.1 9,314.7 10,206.5 -8.7 303 331
Sub-Totals:
- -----------------------------------------------------------------------------------------------------------------------
201 110) NA NA NA NA 0.0 NA NA NA NA NA NA
Non Comp 0.0 0.0 0.0 0.0 NA NA
Sub-Totals
- -----------------------------------------------------------------------------------------------------------------------
Sub Category 4,160.2 4,074.6 2.1 9,314.7 10,206.5 -8.7 303 331
Totals
=======================================================================================================================
Category 4,160.2 4,074.6 2.1 9,314.7 10,206.5 -8.7 303 331
Totals:
=======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Children's Wear 16
- ------------------------------------------------------------------------------------------------
Children's Wear
17 110) GapKids #9250 11/18/94 4830 78.4 101.2 92.6 9.2
03 110) Gymboree #241 7/03/95 1331 21.6 75.7 52.0 45.4
Comp Sub-Totals: 6161 176.9 144.7 22.3
================================================================================================
Category Totals: 6161 176.9 144.7 22.3
================================================================================================
<CAPTION>
===================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Children's Wear
- -------------------------------------------------------------------------------------------------------------------
17 110) 606.7 573.4 5.8 65.4 1,432.3E2 1,396.2 2.6 297 289 0 5
03 110) 320.5 301.8 6.2 34.6 749.4E2 698.8 7.2 563 525 0 5
Comp 927.2 875.2 5.9 2,181.6 2,094.9 4.1 354 340
Sub-Totals:
===================================================================================================================
Category 927.2 875.2 5.9 2,181.6 2,094.9 4.1 354 340
Totals:
===================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty Apparel 18
- ------------------------------------------------------------------------------------------------------
Specialty Apparel
207 110) Pro-Image 7/01/95 2007 41.3 25.4 40.2 -36.9
205 110) Wilsons The Lea 4/02/92 2847 58.7 39.0 31.8 22.3
Comp Sub-Totals: 4854 64.3 72.1 -10.7
- ------------------------------------------------------------------------------------------------------
205 110) R.C. Boot Barn 11/23/91 NA 8/18/97 NA 23.1 NA
CLOSED
Non Comp Sub-Totals 0 0.0 23.1 -100.0
- ------------------------------------------------------------------------------------------------------
Sub Category Totals 4854 64.3 95.2 -32.4
======================================================================================================
Category Totals: 4854 64.3 95.2 -32.4
======================================================================================================
<CAPTION>
=====================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty
Apparel
- ---------------------------------------------------------------------------------------------------------------------
207 110) 142.6 202.0 -29.4 31.7 373.7E2 532.8 -29.9 186 265 0 6
205 110) 307.7 262.6 17.2 68.3 883.2E2 810.9 8.9 310 285 0 5
Comp 450.2 464.6 -3.1 1,256.9 1,343.7 -6.5 259 277
Sub-Totals:
- ---------------------------------------------------------------------------------------------------------------------
205 110) NA 153.2 NA NA NA 176.7 NA NA 68 NA 6
Non Comp 0.0 153.2 -100.0 0.0 176.7 -100.0 NA 68
Sub-Totals
- ---------------------------------------------------------------------------------------------------------------------
Sub Category 450.2 617.8 -27.1 1,256.9 1,520.4 -17.3 259 204
Totals
=====================================================================================================================
Category 450.2 617.8 -27.1 1,256.9 1,520.4 -17.3 259 204
Totals:
=====================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=====================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accessories 20
- -----------------------------------------------------------------------------------------------------
Accessories
121 110) After Thoughts 4/11/92 861 15.7 24.1 31.2 -22.9
201 110) After Thoughts 8/30/91 824 15.1 26.3 30.1 -12.9
201 110) Claire's #5839 8/23/91 699 12.8 34.6 35.6 -2.6
119 110) Silver Safari 11/20/92 396 7.2 8.3 9.8 -15.7
109 110) Sunglass Hut #1 4/01/95 603 11.0 45.4 47.8 -5.0
211 100) Sunglass Hut #1 11/16/91 741 13.5 27.4 31.0 -11.8
Comp Sub-Totals: 4124 166.0 185.6 -10.5
- -----------------------------------------------------------------------------------------------------
31 110) Express Yourself 9/10/92 NA 1/20/97 NA NA NA
CLOSED
19 110) Icing, The #342 10/31/97 1349 24.6 16.0 NA NA
Non Comp Sub-Totals 1349 16.0 0.0
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 5473 182.1 185.6 -1.9
=====================================================================================================
Category Totals: 5473 182.1 185.6 -1.9
=====================================================================================================
<CAPTION>
===================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accessories
- -------------------------------------------------------------------------------------------------------------------
121 110) 130.6 148.0 -11.8 15.3 309.4E2 318.3 -2.8 359 370 0 7
201 110) 134.5 146.1 -7.9 15.7 322.4E2 322.2 0.1 391 391 0 7
201 110) 165.6 188.5 -12.2 19.4 304.5E2 407.8 -5.7 550 583 0 7
119 110) 46.8 60.0 -21.9 5.5 123.6E2 142.4 -13.2 312 360 0 8
109 110) 184.9 223.1 -17.1 21.6 354.7E2 407.3 -12.9 588 675 0 10
211 100) 106.3 133.1 -20.1 12.4 230.9E2 235.3 -1.9 312 318 500 8
Comp 768.7 898.7 -14.5 1,725.4 1,833.3 -5.9 418 445
Sub-Totals:
- -------------------------------------------------------------------------------------------------------------------
31 110) NA NA NA NA NA NA NA NA NA NA 8
19 110) 86.4 NA NA 10.1 86.4 71.3 21.1 64 53 0 7
Non Comp 86.4 0.0 86.4 71.3 21.1 64 53
Sub-Totals
- -------------------------------------------------------------------------------------------------------------------
Sub Category 855.1 898.7 -4.8 1,811.9 1,904.6 -4.9 331 348
Totals
===================================================================================================================
Category 855.1 898.7 -4.8 1,811.9 1,904.6 -4.9 331 348
Totals:
===================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=====================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shoes 22
- -----------------------------------------------------------------------------------------------------
Shoes
09 110) Foot Locker #08 11/27/91 2851 11.2 61.5 94.5 -34.9
45 110) Foot Locker #10 11/27/91 2397 9.4 54.5 78.7 -30.7
01 110) Footaction, USA 4/09/92 2139 8.4 39.0 70.1 -44.4
13 110) Homestead Birke 4/04/93 774 3.0 63.1 79.8 -21.0
05 110) Kid's Foot Lock 11/14/96 1548 6.1 23.5 33.3 -29.5
19 110) Kinney Shoes #0 12/07/92 2741 10.8 30.7 44.0 -30.2
07 110) Lady Foot Locke 2/13/92 1826 7.2 51.9 70.0 -25.8
01 110) Naturalizer Sho 2/28/93 2022 8.0 42.1 33.6 25.2
47 110) Payless Kids #4 8/02/92 1348 5.3 20.4 22.7 -10.2
05 110) Payless Shoesou 11/03/91 2819 11.1 77.4 82.1 -5.8
17 110) Rizzuto's Wide 11/13/91 1093 4.3 36.6 35.3 3.9
33 110) Track `n Trail 9/17/96 1836 7.2 51.0 55.9 -8.9
01 110) Village Shoes 7/20/91 2007 7.9 75.5 80.1 -5.7
Comp Sub-Totals: 25401 627.3 780.2 -19.6
- -----------------------------------------------------------------------------------------------------
21 110) Leeds #3993 Closed 9/01/84 NA 8/24/97 NA 49.1 NA
Non Comp Sub-Totals 0 0.0 49.1 -100.0
- -----------------------------------------------------------------------------------------------------
Sub Category Totals 25401 627.3 829.3 -24.4
=====================================================================================================
Category Totals: 25401 627.3 829.3 -24.4
=====================================================================================================
<CAPTION>
================================================================================================================
UNIT YEAR-TO-DATE SALES % 1996 FULL YEAR SALES % 1996 1995 1996 BKP
NO. 1998 1997 CHANGE %CAT 1996 1995 CHANGE $/SF $/SF BKP/SF %
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shoes
- ----------------------------------------------------------------------------------------------------------------
09 110) 298.8 490.9 -39.1 8.7 679.2E2 972.2 -30.1 238 341 0 6
45 110) 282.5 376.5 -25.0 8.2 649.7E2 786.8 -17.4 271 328 0 6
01 110) 203.3 344.1 -40.9 5.9 476.1E2 698.1 -31.8 223 326 0 5
13 110) 313.0 378.9 -17.4 9.1 665.7E2 760.3 -12.4 860 982 0 6
05 110) 145.3 181.7 -20.1 4.2 145.3 372.3 -61.0 94 241 0 6
19 110) 174.0 204.2 -14.8 5.1 425.3E2 432.4 -1.6 155 158 0 6
07 110) 315.4 458.1 -31.1 9.2 691.6E2 868.7 -20.4 379 476 0 6
01 110) 225.6 229.7 -1.8 6.6 435.2E2 482.7 -9.8 215 239 0 5
47 110) 145.1 148.2 -2.1 4.2 336.3E2 318.1 5.7 250 236 0 6
05 110) 447.9 455.7 -1.7 13.1 964.4E2 927.5 4.0 342 329 0 6
17 110) 200.9 197.9 1.5 5.9 431.5E2 432.7 -0.3 395 396 0 6
33 110) 241.2 236.7 1.9 7.0 241.2 580.7 -58.5 131 316 0 6
01 110) 439.2 454.4 -3.3 12.8 971.4E2 958.8 1.3 484 478 0 5
Comp 3,432.2 4,157.0 -17.4 7,113.0 8,591.2 -17.2 280 338
Sub-Total
- ----------------------------------------------------------------------------------------------------------------
21 110) NA 254.4 NA NA NA 336.5 NA NA 107 NA 5
Non Comp 0.0 254.4 -100.0 0.0 336.5 -100.0 NA 107
Sub-Total
- ----------------------------------------------------------------------------------------------------------------
Sub 3,432.2 4,411.3 -22.2 7,113.0 8,927.7 -20.3 280 313
Category
Totals
================================================================================================================
Category 3,432.2 4,411.3 -22.2 7,113.0 8,927.7 -20.3 280 313
Totals:
================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
====================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Furniture 24
- ----------------------------------------------------------------------------------------------------
Furniture
01 110) Bombay Co./The 9/24/93 4001 100.0 67.9 49.2 37.9
Comp Sub-Totals: 4001 67.9 49.2 37.9
====================================================================================================
Category Totals: 4001 67.9 49.2 37.9
====================================================================================================
<CAPTION>
======================================================================================================================
UNIT YEAR-TO-DATE SALES % 1998 FULL YEAR SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Furniture
- ----------------------------------------------------------------------------------------------------------------------
Furniture
01 110) 269.6 265.7 1.5 100.0 690.7E2 611.8 12.9 173 153 0 6
Comp Sub-Totals: 269.6 265.7 1.5 690.7 611.8 12.9 173 153
======================================================================================================================
Category Totals: 269.6 265.7 1.5 690.7 611.8 12.9 173 153
======================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Home Accessories 26
- --------------------------------------------------------------------------------------------------------
Home Accessories
207 110) House of Cutler 6/01/92 1004 15.7 22.1 30.8 -28.0
211 110) Inprints 7/01/92 1426 22.3 41.2 43.2 -4.5
215 110) Lechters #93 3/01/92 3067 48.0 35.1 41.0 -14.3
109 100) Select Comfort 2/16/96 893 14.0 77.0 122.0 -36.9
Comp Sub-Totals: 6390 175.4 236.9 -26.0
- --------------------------------------------------------------------------------------------------------
109 110) Deck the Walls CLOSED 2/08/92 NA 6/15/97 NA NA NA
Non Comp Sub-Totals 0 0.0 0.0
- --------------------------------------------------------------------------------------------------------
Sub Category Totals 6390 175.4 236.9 -26.0
========================================================================================================
Category Totals: 6390 175.4 236.9 -26.0
========================================================================================================
<CAPTION>
==================================================================================================================
UNIT YEAR-TO-DATE SALES % 1998 FULL YEAR SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Home Accessories
- ------------------------------------------------------------------------------------------------------------------
Home Accessories
207 110) 105.8 141.7 -25.4 11.5 315.3E2 375.3 -16.0 314 374 0 7
211 110) 206.4 194.0 6.4 22.5 645.4E2 477.5 35.2 453 335 0 6
215 110) 182.0 204.3 -10.9 19.8 502.6E2 520.9 -3.5 164 170 0 5
109 100) 423.7 399.1 6.2 46.2 423.7 847.4 -50.0 475 949 0 6
Comp 918.0 939.2 -2.3 1,887.0 2,221.1 -15.0 295 348
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------
109 110) NA 89.5 NA NA NA 89.5 NA NA 66 NA NA
Non Comp 0.0 89.5 -100.0 0.0 89.5 -100.0 NA 66
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------
Sub 918.0 1,028.6 -10.8 1,887.0 2,310.6 -18.3 295 299
Category
Totals
==================================================================================================================
Category 918.0 1,028.6 -10.8 1,887.0 2,310.6 -18.3 295 299
Totals:
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
======================================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Electronics/Appliances 28
- ----------------------------------------------------------------------------------------------------------------------
Eletronics/Appliances
03 110) Kits Cameras 1 11/25/94 1491 13.3 51.1 57.0 -10.4
09 110) Musicland #887 3/13/92 1583 14.1 48.2 55.3 -12.7
03 110) Radio Shack #37 12/05/97 2625 23.4 53.9 60.6 -11.0
04 110) Sam Goody #0851 6/28/91 2272 20.2 77.1 80.8 -4.4
14 110) Software Etc.# 4/08/92 1106 9.9 56.4 51.1 10.3
05 110) Suncoast #3258 10/07/92 2144 19.1 44.7 55.9 -20.0
Comp Sub-Totals: 11221 331.5 360.5 -8.1
- ----------------------------------------------------------------------------------------------------------------------
09 110) Malecki Music E Closed 7/31/92 NA 7/31/97 NA 13.6 NA
Non Comp Sub-Totals 0 0.0 13.6 -100.0
- ----------------------------------------------------------------------------------------------------------------------
Sub Category Totals 11221 331.5 374.1 -11.4
======================================================================================================================
Category Totals: 11221 331.5 374.1 -11.4
======================================================================================================================
<CAPTION>
================================================================================================================================
UNIT YEAR-TO-DATE SALES % 1998 FULL YEAR SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electronics/Appliances
- --------------------------------------------------------------------------------------------------------------------------------
03 110) 218.6 289.9 -24.6 11.3 548.8E2 612.3 -10.4 368 411 0 3
09 110) 300.2 311.9 -3.8 15.5 765.6E2 763.3 0.3 484 482 0 5
03 110) 328.8 362.6 -9.3 17.0 866.6E2 880.9 -1.6 330 432 0 3
04 110) 473.7 472.2 0.3 24.5 1,184,5E2 1,169.4 1.3 521 515 0 5
14 110) 291.9 289.3 0.9 15.1 625.8E2 683.7 -8.5 566 618 0 5
05 110) 320.4 387.1 -17.2 16.6 801.9E2 910.6 -11.9 374 425 0 5
Comp Sub-Totals: 1,933.6 2,113.0 -8.5 4,793.1 5,020.1 -4.5 427 472
- --------------------------------------------------------------------------------------------------------------------------------
09 110) NA 81.7 NA NA NA 91.6 NA NA 94 NA 6
Non Comp Sub-Totals 0.0 81.7 -100.0 0.0 91.6 -100.0 NA 94
- --------------------------------------------------------------------------------------------------------------------------------
Sub Category Totals 1,933.6 2,194.7 -11.9 4,793.1 5,111.8 -6.2 427 440
================================================================================================================================
Category Totals: 1,933.6 2,194.7 -11.9 4,793.1 5,111.8 -6.2 427 440
================================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
====================================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hobbies/Sports/Special Interst 30
- --------------------------------------------------------------------------------------------------------------------
Hobbies/Sports/Special Interst
23 110) Champs Sports # 3/13/92 5226 42.0 94.2 129.9 -27.4
27 110) Nordic Track Fi 8/12/94 2047 16.5 13.2 31.9 -58.6
19 110) Pedersen's 11/21/91 5160 41.5 43.1 77.1 -44.1
Comp Sub-Totals: 12433 150.5 238.9 -37.0
====================================================================================================================
Category Totals: 12433 150.5 238.9 -37.0
====================================================================================================================
<CAPTION>
=============================================================================================================================
UNIT YEAR-TO-DATE SALES % 1998 FULL YEAR SALES % 1998 1997
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hobbies/Sports/Special Interst
- -----------------------------------------------------------------------------------------------------------------------------
23 110) 508.6 656.7 -22.5 45.8 1,222,8E2 1,454.2 -15.9 234 278
27 110) 289.2 491.6 -41.2 26.0 522.3E2 824.4 -36.6 255 403
19 110) 313.3 451.5 -30.6 28.2 794.2E2 1,169.5 -32.1 154 227
Comp Sub-Totals: 1,111.1 1,599.7 -30.5 2,539.3 3,448.0 -26.4 204 277
=============================================================================================================================
Category Totals: 1,111.1 1,599.7 -30.5 2,539.3 3,448.0 -26.4 204 277
=============================================================================================================================
<CAPTION>
===========================================
UNIT 1998 BKP
NO. BKP/SF %
- -------------------------------------------
<S> <C> <C>
Hobbies/Sports/Special Interst
- -------------------------------------------
23 110) 0 5
27 110) 0 4
19 110) 0 4
Comp Sub-Totals:
===========================================
Category Totals:
===========================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
====================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gifts, Stationery & Luggage 32
- ----------------------------------------------------------------------------------------------------
Gifts, Stationery & Luggage
17 110) Candleman 2/26/93 720 2.4 20.2 25.6 -21.0
03 110) Cartoon Classic 5/30/92 1193 4.0 17.5 25.0 -30.0
07 110) Disney Store #14 4/27/93 3873 12.9 84.4 104.8 -19.4
07 110) Evergreen #182 11/17/96 1047 3.5 13.8 19.9 -30.3
04 110) FranklinCovey, 6/02/95 2249 7.5 29.5 29.9 -1.2
05 110) Graham Office S 11/29/96 1297 4.3 4.7 7.7 -39.1
07 110) Hidden Cottage 1/14/95 1629 5.4 24.6 31.8 -22.7
14 110) Mark's Hallmark 6/01/89 2861 9.6 66.8 58.3 14.5
03 110) Mark's Hallmark 11/21/91 3139 10.5 64.5 59.2 9.1
49 110) Nature's Kindo 11/15/94 1233 4.1 8.6 16.4 -47.5
01 110) Naturium 11/01/92 1539 5.1 19.5 29.3 -33.4
14 110) R. Brown Gifts a 5/06/91 1257 4.2 17.9 15.9 12.5
19 110) Rubber Stamp St 11/08/94 1229 4.1 32.6 39.2 -16.8
07 110) San Francisco M 4/02/93 1479 4.9 23.6 24.4 -3.5
03 110) Spencer's Gifts 10/30/93 1445 4.8 43.4 53.2 -18.4
51 110) Street of Dream 11/15/94 1689 5.6 30.6 20.6 48.9
11 110) Things Remember 3/08/92 1376 4.6 27.5 32.9 -16.4
Comp Sub-Totals: 29255 529.9 594.1 -10.8
- ----------------------------------------------------------------------------------------------------
17 110) Card Farm Closed 8/01/91 NA 5/31/97 NA NA NA
19 110) Paw Prints 8/11/97 659 2.2 10.0 NA NA
Non Comp Sub-Totals 659 10.0 0.0
- ----------------------------------------------------------------------------------------------------
Sub Category Totals 29914 539.9 594.1 -9.1
====================================================================================================
Category Totals: 29914 539.9 594.1 -9.1
====================================================================================================
<CAPTION>
==================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gifts, Stationery & Luggage
- ------------------------------------------------------------------------------------------------------------------
17 110) 134.7 172.4 -21.9 4.5 405.4E2 449.1 -9.7 563 624 0 7
03 110) 113.8 148.4 -23.3 3.8 288.4E2 346.5 -16.8 242 290 0 7
07 110) 481.7 496.8 -3.0 16.0 1,312.2E2 1,428.1 -8.1 339 369 0 4
07 110) 52.3 72.1 -27.4 1.7 52.3 242.5 -78.4 50 232 0 8
04 110) 188.5 185.1 1.8 6.3 445.6E2 413.2 7.8 198 184 0 5
05 110) 28.0 45.1 -38.0 0.9 28.0 106.2 -73.7 22 82 0 8
07 110) 191.4 195.8 -2.3 6.4 544.4E2 519.8 4.7 334 319 0 6
14 110) 345.6 327.2 5.6 11.5 917.1E2 830.0 10.5 321 290 0 7
03 110) 327.1 312.5 4.7 10.9 856.9E2 798.3 7.3 273 254 0 7
49 110) 41.9 93.0 -55.0 1.4 131.2E2 210.2 -37.6 106 171 0 6
01 110) 100.3 137.6 -27.2 3.3 385.6E2 423.2 -8.9 251 275 0 7
14 110) 114.4 97.1 17.9 3.8 356.0E2 291.7 22.1 283 246 0 7
19 110) 222.5 254.1 -12.5 7.4 523.0E2 559.4 -6.5 426 455 0 6
07 110) 143.7 150.7 -4.7 4.8 397.9E2 415.2 -4.2 269 281 0 6
03 110) 211.9 240.3 -11.8 7.0 644.0E2 651.0 -1.1 446 451 0 6
51 110) 129.6 148.2 -12.5 4.3 321.7E2 325.4 -1.1 190 193 0 6
11 110) 121.5 146.7 -17.2 4.0 256.8E2 293.0 -12.4 187 213 0 7
Comp 2,948.8 3,223.1 -8.5 7,866.6 8,302.9 -5.3 269 285
Sub-Totals:
- ------------------------------------------------------------------------------------------------------------------
17 110) NA 68.9 NA NA NA 68.9 NA NA 58 NA NA
19 110) 57.8 NA NA 1.9 57.8 80.4 -28.1 88 122 0 7
Non Comp 57.8 68.9 -16.1 57.8 149.3 -61.3 88 81
Sub-Totals
- ------------------------------------------------------------------------------------------------------------------
Sub 3,006.6 3,292.0 -8.7 7,924.4 8,452.2 -6.2 265 272
Category
Totals
==================================================================================================================
Category 3,006.6 3,292.0 -8.7 7,924.4 8,452.2 -6.2 265 272
Totals:
==================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
=====================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Books 34
- -----------------------------------------------------------------------------------------------------
Books
31 110) B. Dalton #284 6/16/94 4465 51.5 100.2 107.8 -7.0
15 110) Evangel Book Ce 7/01/91 1257 14.5 21.9 27.5 -20.3
01 110) Waldenbooks, St 4/23/92 2952 34.0 53.2 60.8 -12.4
Comp Sub-Totals: 8674 175.4 196.1 -10.5
=====================================================================================================
Category Totals: 8674 175.4 196.1 -10.5
=====================================================================================================
<CAPTION>
==========================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Books
- --------------------------------------------------------------------------------------------------------------------------
31 110) 508.4 568.8 -10.6 53.2 1,211.3E2 1,323.7 -8.5 271 296 0 5
15 110) 116.2 157.3 -26.1 12.2 284.8E2 363.5 -21.7 227 289 0 7
01 110) 330.4 375.1 -11.9 34.0 794,4E2 899.4 -11.7 269 305 0 5
Comp Sub-Totals: 955.0 1,101.2 -13.3 2,290.6 2,586.5 -11.4 264 298
==========================================================================================================================
Category Totals: 955.0 1,101.2 -13.3 2,290.6 2,586.5 -11.4 264 298
==========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jewelry 35
- ------------------------------------------------------------------------------------------------------
Jewelry
01 110) Ben Bridge Jewe 10/10/91 1503 13.1 113.5 173.1 -34.4 532.4
01 110) Crescent Jewele 11/23/96 1083 9.5 36.0 58.5 -38.5 149.9
09 110) Fred Meyer Jewe 8/15/92 1214 10.6 38.5 51.6 -25.4 239.1
25 110) Gordon's Jewelr 10/16/95 1450 12.7 42.4 30.4 39.2 195.9
05 110) Harry Ritchie J 10/10/91 1160 10.1 46.1 56.9 -19.1 339.1
15 110) Kay Jewelers #5 3/08/94 1244 10.9 74.1 87.2 -15.1 472.8
01 1100 Piercing Pagoda 5/20/95 160 1.4 15.0 18.7 -19.8 92.8
17 110) Watch World 10/27/95 701 6.1 33.6 31.1 8.0 172.4
15 110 Weisfield Jewel 11/08/84 1549 13.5 86.7 55.2 57.0 478.4
35 110 Zales Jewelers 11/17/94 1393 12.2 88.2 105.4 -16.2 554.5
Comp Sub-Totals: 11457 574.0 668.1 -14.1 3,227.2
======================================================================================================
Category Totals: 11457 574.0 668.1 -14.1 3,227.2
======================================================================================================
<CAPTION>
====================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jewelry
- --------------------------------------------------------------------------------------------------------------------
01 110) 656.6 -18.9 16.5 1,319.8E2 1,511.9 -12.7 878 1006 0 5
01 110) 337.0 -55.5 4.6 149.9 684.1 -78.1 138 632 0 6
09 110) 316.3 -24.4 7.4 558.4E2 707.8 -21.1 460 583 0 5
25 110) 328.5 -40.4 6.1 549.0E2 638.7 -14.0 379 441 0 6
05 110) 330.3 2.6 10.5 854.7E2 802.0 6.6 737 691 0 6
15 110) 472.1 0.1 14.7 1,015.6E2 1,086.2 -6.5 816 873 0 6
01 1100 91.3 1.6 2.9 218.8E2 223.4 -2.0 1367 1396 0 10
17 110) 169.9 1.4 5.3 443.5E2 406.8 9.0 633 580 0 8
15 110 400.8 19.4 14.0 1,006.2E2 992.2 1.4 650 641 0 0
35 110 585.3 -5.3 17.2 1,577.3E2 1,453.6 8.5 1132 1043 0 6
Comp 3,688.2 -12.5 7,693.1 8,506.7 -9.6 671 743
Sub-Totals:
====================================================================================================================
Category 3,688.2 -12.5 7,693.1 8,506.7 -9.6 671 743
Totals:
====================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cosmetics/Perfumes 36
- --------------------------------------------------------------------------------------------------------
Cosmetics/Perfumes
01A 110) Bath & Body Wor 11/11/91 1661 38.5 62.8 79.6 -21.1
03 110) Body Shop #3705 6/28/95 846 19.6 31.0 34.6 -10.5
11 110) Garden Botanika 11/12/97 1811 41.9 46.7 52.5 -11.1
Comp Sub-Totals: 4318 140.5 166.8 -15.7
========================================================================================================
Category Totals: 4318 140.5 166.8 -15.7
========================================================================================================
<CAPTION>
=========================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cosmetics/Perfumes
- -------------------------------------------------------------------------------------------------------------------------
01A 110) 311.9 384.7 -18.9 39.5 809,7E2 889.8 -9.0 487 536 0 0
03 110) 208.4 245.7 -15.2 26.4 503,3E2 651.8 -10.4 595 664 0 5
11 110) 270.1 285.4 -5.4 34.2 610.5E2 638.6 -4.4 337 911 0 6
Comp Sub-Totals: 790.4 915.8 -13.7 1,923.4 2,090.1 -8.0 445 652
=========================================================================================================================
Category Totals: 790.4 915.8 -13.7 1,923.4 2,090.1 -8.0 445 652
=========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hair Care 37
- ------------------------------------------------------------------------------------------------
Hair Care
11 110) Beauty Works 10/22/92 1750 26.0 47.3 60.9 -22.4
17 110) Mastercust #478 2/12/92 1052 15.6 31.4 31.0 1.5
05 110) N.W. Beauty Sup 11/25/91 1406 20.9 57.8 68.3 -15.4
07 110) Regis Hairstyli 9/15/91 1221 18.2 47.0 50.3 -6.6
03 110) System Seven #4 12/17/91 1297 19.3 12.6 14.7 -14.1
Comp Sub-Totals: 6726 196.2 225.2 -12.9
================================================================================================
Category Totals: 6726 196.2 225.2 -12.9
================================================================================================
<CAPTION>
====================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hair Care
- --------------------------------------------------------------------------------------------------------------------
11 110) 283.6 355.2 -20.2 23.4 597.3E2 708.4 -15.7 341 405 0 6
17 110) 183.7 182.3 0.8 15.2 375.9E2 364.7 3.1 357 347 0 6
05 110) 358.6 429.1 -16.4 29.6 754.5E2 866.3 -12.9 537 616 0 7
07 110) 289.7 318.3 -9.0 23.9 615.7E2 617.7 -0.3 504 506 0 6
03 110) 96.5 89.0 8.5 8.0 190.4E2 186.8 1.9 147 144 0 6
Comp 1,212.2 1,373.8 -11.8 2,533.8 2,743.9 -7.7 377 408
Sub-Totals:
====================================================================================================================
Category 1,212.2 1,373.8 -11.8 2,533.8 2,743.9 -7.7 377 406
Totals:
====================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
===================================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other Retail 38
- -------------------------------------------------------------------------------------------------------------------
Other Retail
14 110) General Nutriti 6/04/93 11114 15.5 47.1 45.8 2.8
14 110) Kay Bee Toys #8 1/17/95 3570 49.6 45.0 55.7 -19.2
11 110) Pilgrims Nutrit 5/06/91 1792 24.9 42.4 42.9 -1.1
27 110) Schlosser's Flo 5/01/91 722 10.0 6.2 7.7 -19.8
Comp Sub-Totals: 7198 140.7 152.1 -7.5
- -------------------------------------------------------------------------------------------------------------------
01 110) Learning World Closed 1/29/92 NA 6/25/97 NA NA NA
05A 110) Phone Center, T Closed 7/08/96 NA 4/30/98 NA 47.2 NA
Non Comp Sub-Totals 2057 0.0 47.2 -100.0
- -------------------------------------------------------------------------------------------------------------------
Sub Category Totals 7198 140.7 199.4 -29.4
===================================================================================================================
Category Totals: 9255 140.7 199.4 -29.4
===================================================================================================================
<CAPTION>
==========================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Other Retail
- --------------------------------------------------------------------------------------------------------------------------
14 110) 277.4 280.6 -1.1 26.8 540.3E2 543.4 -0.6 485 488 0 6
14 110) 314.0 385.6 -18.6 30.4 1,093.4E2 1,146.6 -4.6 306 321 0 5
11 110) 264.6 299.3 -11.6 25.6 540.7E2 588.7 -8.2 302 329 0 7
27 110) 57.1 57.2 -0.2 55 107.7E2 110.6 -2.7 149 153 0 3
Comp Sub-Totals: 913.2 1,022.7 -10.7 2,282.1 2,389.2 -4.5 317 332
- --------------------------------------------------------------------------------------------------------------------------
01 110) NA 162.6 NA NA NA 162.6 NA NA 334 NA 5
05A 110) 121.4 307.3 -60.5 11.7 121.4 570.9 -78.7 59 278 NA 6
Non Comp Sub-Totals 121.4 470.0 -74.2 121.4 733.5 -83.4 59 288
- --------------------------------------------------------------------------------------------------------------------------
Sub Category Totals 1,034.6 1,492.7 -30.7 2,403.5 3,122.7 -23.0 260 321
==========================================================================================================================
Category Totals: 1,034.6 1,492.7 -30.7 2,403.5 3,122.7 -23.0 260 321
==========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
======================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Optical 39
- ------------------------------------------------------------------------------------------------------
Optical
09 110) Eye Masters #13 5/08/92 3730 42.2 65.2 80.2 -18.7
09 110) LensCrafters, I 11/01/88 4048 45.8 107.3 109.9 -2.4
15 110) Vista Optical # 3/04/92 1068 12.1 58.0 74.3 -21.9
Comp Sub-Totals: 8846 230.5 264.4 -12.8
- ------------------------------------------------------------------------------------------------------
Category Totals: 8846 230.5 264.4 -12.8
======================================================================================================
<CAPTION>
==========================================================================================================================
YEAR-TO-DATE
UNIT SALES % 1998 FULL YEAR SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Optical
- --------------------------------------------------------------------------------------------------------------------------
09 110) 332.2 490.1 -32.2 25.9 618.0E2 843.5 -26.7 166 226 0 5
09 110) 501.5 569.9 2.0 45.3 1,095.1E2 1,227.7 -10.8 271 303 0 4
15 110) 369.1 406.7 -9.3 28.8 682.3E2 758.0 -10.0 639 710 0 7
Comp Sub-Totals: 1,282.7 1,466.7 -12.5 2,395.1 2,829.1 -15.3 271 320
- --------------------------------------------------------------------------------------------------------------------------
Category Totals: 1,282.7 1,466.7 -12.5 2,395.3 2,829.1 -15.3 271 320
==========================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
==================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Personal Services 40
- --------------------------------------------------------------------------------------------------
Personal Services
02 110) Hi-Tek Nails 12/22/95 939 17.3 15.9 20.7 -23.5
11 110) It's A Wrap! 6/01/95 363 6.7 2.1 3.4 -37.9
48 110) Kiddie Kandids 2/26/92 811 14.9 23.3 32.7 -28.8
13 110) Portraits To Go 12/31/91 1566 28.8 12.1 15.9 -23.9
14 110) Saad Shoe Repair 9/03/91 576 10.6 14.4 13.8 4.0
21 110) Washington One 12/01/84 1177 21.7 18.4 18.8 -2.5
Comp Sub-Totals: 5432 86.1 105.4 -18.3
- --------------------------------------------------------------------------------------------------
Category Totals: 5432 86.1 105.4 -18.3
==================================================================================================
<CAPTION>
=================================================================================================================
UNIT YEAR-TO-DATE SALES % 1998 FULL YEAR SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Personal Services
- -----------------------------------------------------------------------------------------------------------------
02 110) 94.4 115.5 -18.3 18.3 241.3E2 227.1 6.3 257 242 0 8
11 110) 12.5 19.0 -34.0 2.4 37.0E2 47.2 -21.6 102 130 242 10
48 110) 149.1 173.8 -14.3 28.9 362.9E2 384.9 -5.7 448 475 0 7
13 110) 74.1 106.2 -30.2 14.4 154.7E2 208.4 -25.8 99 133 0 6
14 110) 90.4 91.6 -1.3 17.5 189.1E2 188.7 0.3 329 328 0 8
21 110) 95.1 90.8 4.7 18.4 199.5E2 196.4 1.6 170 167 0 6
Comp 515.6 597.0 -13.6 1,184.8 1,252.7 -5.4 218 231
Sub-Totals:
- -----------------------------------------------------------------------------------------------------------------
Category 515.6 597.0 -13.6 1,184.8 1,252.7 -5.4 218 231
Totals:
=================================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
========================================================================================================
CURRENT MONTH
UNIT OCCUPANT OPEN CLOSE SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Financial 44
- --------------------------------------------------------------------------------------------------------
Financial
12 110) SeaFirst Bank W 9/29/93 1028 38.1 NA NA NA
12 110) SeaFirst Cash M NA 6/24/92 NA NA NA NA NA
03 110) Tomlinson Black 12/19/92 1670 61.9 NA NA NA
Non Comp Sub-Totals 2698 0.0 0.0
- --------------------------------------------------------------------------------------------------------
Category Totals: 2698 0.0 0.0
========================================================================================================
<CAPTION>
===========================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Financial
- -----------------------------------------------------------------------------------------------------------
12 110) NA NA NA NA 0.0 NA NA 0 NA NA NA
12 110) NA NA NA NA 0.0 NA NA NA NA NA NA
03 110) NA NA NA NA 0.0 NA NA 0 NA NA NA
Non Comp Sub-Totals 0.0 0.0 0.0 0.0 0 0
- -----------------------------------------------------------------------------------------------------------
Category Totals: 0.0 0.0 0.0 0.0 0 0
===========================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
======================================================================================================
CURRENT MONTH
UNIT OCCUPANT OPEN CLOSE SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offices 46
- ------------------------------------------------------------------------------------------------------
Offices
19 110) Consumer Opinion 9/28/95 2045 100.0 NA NA NA
Non Comp Sub-Totals 2045 0.0 0.0
- ------------------------------------------------------------------------------------------------------
Category Totals: 2045 0.0 0.0
======================================================================================================
<CAPTION>
===========================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Offices
- -----------------------------------------------------------------------------------------------------------
19 110) NA NA NA NA 0.0 NA NA 0 NA NA NA
Non Comp Sub-Totals 0.0 0.0 0.0 0.0 0 0
- -----------------------------------------------------------------------------------------------------------
Category Totals: 0.0 0.0 0.0 0.0 0 0
===========================================================================================================
</TABLE>
<PAGE>
SABEY CORPORATION
MONTHLY MANAGEMENT SALES REPORT
AS OF JUNE '98
(ALL SALES ARE ROUNDED TO 1000'S)
Select By: Unit Ref 110-B101 110-Q203 E1 - Estimated Sales From Sales Entry
Primary Sort: Sales Cat E2 - Occupant Historical Sales %'s
Secondary Sort: Sales Cat E3 - Sales Category %'s
Comp Only: No E4 - Property Sales %'s
E5 - Estimated Annual Sales Growth %
<TABLE>
<CAPTION>
========================================================================================================
UNIT OCCUPANT OPEN CLOSE CURRENT MONTH SALES %
NO. NAME DATE GLA DATE CAT% 1998 1997 CHANGE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Category Undefined
- --------------------------------------------------------------------------------------------------------
Category Undefined
01A 110) Naturalizer Sho NA NA NA NA NA
Non Comp Sub-Totals 0 0.0 0.0
- --------------------------------------------------------------------------------------------------------
Category Totals: 0 0.0 0.0
========================================================================================================
GRAND TOTAL 320484 6,345.2 7,323.0 -13.4
========================================================================================================
<CAPTION>
===============================================================================================================================
YEAR-TO-DATE FULL YEAR
UNIT SALES % 1998 SALES % 1998 1997 1998 BKP
NO. 1998 1997 CHANGE %CAT 1998 1997 CHANGE $/SF $/SF BKP/SF %
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Category Undefined
- -------------------------------------------------------------------------------------------------------------------------------
01A 110) NA NA NA NA 0.0 NA NA NA NA NA NA
Non Comp Sub-Totals 0.0 0.0 0.0 0.0 NA NA
- -------------------------------------------------------------------------------------------------------------------------------
Category Totals: 0.0 0.0 0.0 0.0 0 0
===============================================================================================================================
GRAND TOTAL 35,263.7 40,595.4 -13.1 80,383.8 90,765.0 -11.4 251 277
===============================================================================================================================
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(RETAIL TRADE POTENTIAL REPORT - CURRENT YEAR SALES BY STORE TYPE)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
Cushman & Wakefield
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
- -------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- -------------------------------------------------------------------------------
TOTAL RETAIL SALES $1,381 $2,279 $2,947
APPAREL & ACCESSORY STORES $63 $104 $136
AUTOMOTIVE DEALERS $330 $544 $703
AUTOMOTIVE & HOME SUPPLY STORES $21 $35 $45
DRUG & PROPRIETARY STORES $36 $60 $78
EATING & DRINKING PLACES $128 $212 $274
FOOD STORES $231 $380 $491
FURNITURE & HOME FURNISHINGS STORES $42 $70 $91
HOME APPLIANCE, RADIO, & T.V. STORES $37 $61 $80
GASOLINE SERVICE STATIONS $73 $120 $155
GENERAL MERCHANDISE $205 $339 $438
DEPARTMENT STORES $146 $241 $311
(INCLUDING LEASED DEPTS.)
HARDWARE, LUMBER & GARDEN STORES $101 $166 $215
($'S IN MILLIONS)
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(RETAIL TRADE POTENTIAL REPORT - CURRENT YEAR SALES BY STORE TYPE)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
Cushman & Wakefield
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
- -------------------------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- -------------------------------------------------------------------------------
TOTAL RETAIL SALES $3,725 $4,240
APPAREL & ACCESSORY STORES $172 $196
AUTOMOTIVE DEALERS $888 $1,012
AUTOMOTIVE & HOME SUPPLY STORES $56 $64
DRUG & PROPRIETARY STORES $99 $113
EATING & DRINKING PLACES $347 $395
FOOD STORES $621 $708
FURNITURE & HOME FURNISHINGS STORES $116 $132
HOME APPLIANCE, RADIO, & T.V. STORES $101 $116
GASOLINE SERVICE STATIONS $195 $222
GENERAL MERCHANDISE $553 $627
DEPARTMENT STORES $393 $446
(INCLUDING LEASED DEPTS.)
HARDWARE, LUMBER & GARDEN STORES $271 $309
($'S IN MILLIONS)
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION
2003 PROJECTION 119,031 197,403 259,392
1998 ESTIMATE 116,570 190,997 248,604
1990 CENSUS 112,762 179,606 228,446
1980 CENSUS 112,752 176,286 221,761
GROWTH 1980 -1990 0.01% 1.88% 3.01%
HOUSEHOLDS
2003 PROJECTION 51,808 85,861 111,731
1998 ESTIMATE 49,953 81,989 105,694
1990 CENSUS 47,027 75,449 95,067
1980 CENSUS 45,384 71,685 89,033
GROWTH 1980-1990 3.62% 5.25% 6.78%
1998 ESTIMATED POPULATION BY RACE 116,570 190,997 248,604
WHITE 92.18% 91.94% 92.77%
BLACK 1.75% 2.24% 1.94%
ASIAN & PACIFIC ISLANDER 2.62% 2.68% 2.52%
OTHER RACES 3.46% 3.13% 2.77%
1998 ESTIMATED POPULATION 116,570 190,997 248,604
HISPANIC ORIGIN 3.28% 3.19% 3.00%
OCCUPIED UNITS 47,027 75,449 95,067
OWNER OCCUPIED 58.33% 57.34% 60.37%
RENTER OCCUPIED 41.67% 42.66% 39.63%
1990 AVERAGE PERSONS PER HH 2.33 2.30 2.34
1998 EST. HOUSEHOLDS BY INCOME 49,953 81,989 105,694
$150,000 OR MORE 0.49% 1.41% 2.05%
$100,000 TO $149,999 1.60% 3.02% 3.74%
$ 75,000 TO $ 99,999 3.58% 5.43% 6.33%
$ 50,000 TO $ 74,999 13.81% 15.52% 16.63%
$ 35,000 TO $ 49,999 16.88% 15.88% 16.05%
$ 25,000 TO $ 34,999 16.06% 14.28% 13.94%
$ 15,000 TO $ 24,999 19.88% 18.67% 17.79%
$ 5,000 TO $ 15,000 22.73% 21.12% 19.27%
UNDER $ 5,000 4.96% 4.68% 4.19%
1998 EST. AVERAGE HOUSEHOLD INCOME $33,586 $39,308 $42,938
1998 EST. MEDIAN HOUSEHOLD INCOME $26,513 $28,877 $31,277
1998 EST. PER CAPITA INCOME $14,729 $17,221 $18,567
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 ESTIMATED POPULATION BY SEX 116,570 190,997 248,604
MALE 47.78% 47.89% 48.01%
FEMALE 52.22% 52.11% 51.99%
MARITAL STATUS 88,729 142,275 180,384
SINGLE MALE 14.85% 14.67% 13.95%
SINGLE FEMALE 11.97% 12.27% 11.60%
MARRIED 48.01% 48.80% 51.25%
PREVIOUSLY MARRIED MALE 7.86% 7.77% 7.41%
PREVIOUSLY MARRIED FEMALE 17.32% 16.48% 15.80%
HOUSEHOLDS WITH CHILDREN 14,850 23,273 30,087
MARRIED COUPLE FAMILY 59.21% 62.49% 65.39%
OTHER FAMILY-MALE HEAD 6.58% 6.03% 5.59%
OTHER FAMILY-FEMALE HEAD 32.04% 29.45% 27.11%
NON FAMILY 2.18% 2.03% 1.92%
1998 ESTIMATED POPULATION BY AGE 116,570 190,997 248,604
UNDER 5 YEARS 7.53% 7.09% 7.00%
5 TO 9 YEARS 7.89% 7.54% 7.49%
10 TO 14 YEARS 6.83% 6.80% 6.89%
15 TO 17 YEARS 3.70% 3.73% 3.85%
18 TO 20 YEARS 4.43% 4.34% 4.14%
21 TO 24 YEARS 4.92% 4.85% 4.73%
25 TO 29 YEARS 6.88% 6.88% 6.74%
30 TO 34 YEARS 8.17% 7.65% 7.29%
35 TO 39 YEARS 8.60% 8.30% 8.12%
40 TO 49 YEARS 13.55% 14.40% 14.87%
50 TO 59 YEARS 8.64% 9.52% 10.02%
60 TO 64 YEARS 3.38% 3.50% 3.61%
65 TO 69 YEARS 3.49% 3.52% 3.58%
70 TO 74 YEARS 3.58% 3.50% 3.56%
75 + YEARS 8.41% 8.40% 8.12%
MEDIAN AGE 34.78 35.69 36.15
AVERAGE AGE 36.67 37.23 37.37
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 3
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 ESTIMATED FEMALE POP. BY AGE 60,867 99,524 129,253
UNDER 5 YEARS 7.14% 6.71% 6.63%
5 TO 9 YEARS 6.45% 7.07% 7.01%
10 TO 14 YEARS 6.45% 6.33% 6.45%
15 TO 17 YEARS 3.43% 3.50% 3.59%
18 TO 20 YEARS 4.26% 4.24% 4.02%
21 TO 24 YEARS 4.53% 4.53% 4.45%
25 TO 29 YEARS 6.67% 6.69% 6.53%
30 TO 34 YEARS 7.88% 7.36% 7.07%
35 TO 39 YEARS 8.25% 8.07% 7.97%
40 TO 49 YEARS 13.14% 14.02% 14.61%
50 TO 59 YEARS 8.80% 9.44% 9.92%
60 TO 64 YEARS 3.64% 3.68% 3.76%
65 TO 69 YEARS 3.79% 3.72% 3.77%
70 TO 74 YEARS 3.97% 3.88% 3.96%
75 + YEARS 10.72% 10.75% 10.26%
FEMALE MEDIAN AGE 36.40 37.20 37.67
FEMALE AVERAGE AGE 38.63 39.07 39.11
POPULATION BY HOUSEHOLD TYPE 112,762 179,606 228,446
FAMILY HOUSEHOLDS 76.64% 75.86% 77.67%
NON-FAMILY HOUSEHOLDS 20.44% 20.86% 19.60%
GROUP QUARTERS 2.92% 3.29% 2.73%
HOUSEHOLDS BY TYPE 47,027 75,449 95,067
SINGLE MALE 12.63% 13.76% 13.00%
SINGLE FEMALE 19.46% 19.55% 18.78%
MARRIED COUPLE 43.45% 44.12% 46.82%
OTHER FAMILY-MALE HEAD 3.35% 3.09% 2.98%
OTHER FAMILY-FEMALE HEAD 13.86% 12.38% 11.75%
NON FAMILY-MALE HEAD 4.16% 4.11% 3.89%
NON FAMILY-FEMALE HEAD 3.08% 2.99% 2.78%
POPULATION BY URBAN VS. RURAL 112,741 179,604 228,580
URBAN 99.82% 98.80% 96.95%
RURAL 0.18% 1.20% 3.05%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 4
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
FEMALES 16+ WITH CHILDREN 0-17: BAS 46,481 74,628 94,264
WORKING WITH CHILD 0-5 4.78% 4.63% 4.66%
NOT WORKING WITH CHILD 0-5 0.41% 0.45% 0.46%
NOT IN LABOR FORCE WITH CHILD 0-5 3.61% 3.46% 3.37%
WORKING WITH CHILD 6-17 9.60% 9.73% 10.31%
NOT WORKING WITH CHILD 6-17 0.79% 0.72% 0.72%
NOT IN LAB. FORCE WITH CHILD 6-17 3.40% 3.55% 3.64%
WORKING WITH CHILD 0-5 & 6-18 2.86% 2.90% 3.10%
NOT WORKING WITH CHILD 0-5 & 6-18 0.32% 0.26% 0.26%
NOT IN LAB. FORCE W/CHILD 0-5 & 6-18 3.12% 2.80% 2.79%
WORKING WITH NO CHILDREN 30.63% 31.20% 31.20%
NOT WORKING WITH NO CHILDREN 2.39% 2.52% 2.40%
NOT IN LAB. FORCE WITH NO CHILD. 38.09% 37.79% 37.11%
HH BY AGE BY POVERTY STATUS 47,085 75,516 95,299
ABOVE POVERTY UNDER AGE 65 58.67% 60.40% 62.32%
ABOVE POVERTY AGE 65 + 23.16% 22.02% 21.93%
BELOW POVERTY UNDER AGE 65 14.51% 14.10% 12.53%
BELOW POVERTY AGE 65 + 3.66% 3.48% 3.22%
POPULATION 16+ BY EMPLOYMENT STATUS 87,608 140,414 177,997
EMPLOYED IN ARMED FORCES 0.51% 0.71% 0.73%
EMPLOYED CIVILIANS 53.15% 54.18% 55.43%
UNEMPLOYED CIVILIANS 5.17% 4.99% 4.79%
NOT IN LABOR FORCE 41.17% 40.12% 39.04%
POPULATION 16+ BY OCCUPATION 46,562 76,081 98,666
EXECUTIVE AND MANAGERIAL 9.30% 10.72% 11.48%
PROFESSIONAL SPECIALTY 11.54% 15.13% 15.70%
TECHNICAL SUPPORT 3.79% 3.90% 3.95%
SALES 13.15% 13.39% 13.72%
ADMINISTRATIVE SUPPORT 17.05% 16.09% 15.93%
SERVICE: PRIVATE HOUSEHOLD 0.36% 0.33% 0.32%
SERVICE: PROTECTIVE 1.97% 1.81% 1.67%
SERVICE: OTHER 16.47% 15.50% 14.49%
FARMING FORESTRY & FISHING 0.87% 1.02% 1.00%
PRECISION PRODUCTION & CRAFT 10.71% 9.31% 9.29%
MACHINE OPERATOR 5.62% 4.79% 4.73%
TRANS. AND MATERIAL MOVING 4.73% 4.29% 4.15%
LABORERS 4.45% 3.73% 3.57%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 5
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
FAMILIES BY NUMBER OF WORKERS 28,756 45,429 59,276
NO WORKERS 19.49% 18.02% 17.24%
ONE WORKER 32.12% 30.80% 30.02%
TWO WORKERS 39.96% 42.33% 43.66%
THREE + WORKERS 8.43% 8.85% 9.09%
HISPANIC POPULATION BY TYPE 112,762 179,606 228,446
NOT HISPANIC 97.83% 97.89% 98.01%
MEXICAN 1.36% 1.29% 1.21%
PUERTO RICAN 0.12% 0.12% 0.12%
CUBAN 0.03% 0.04% 0.04%
OTHER HISPANIC 0.65% 0.65% 0.62%
1998 HISPANICS BY RACE: BASE 3,821 6,092 7,451
WHITE 61.18% 60.65% 61.37%
BLACK 2.22% 2.76% 2.50%
ASIAN 2.90% 3.49% 3.79%
OTHER 33.70% 33.10% 32.34%
POPULATION BY TRANSPORTATION TO
WORK 46,106 75,638 98,122
DRIVE ALONE 76.37% 75.86% 77.03%
CAR POOL 11.46% 11.21% 10.86%
PUBLIC TRANSPORTATION 4.04% 4.14% 3.72%
DRIVE MOTORCYCLE 0.25% 0.23% 0.20%
WALKED ONLY 4.22% 4.50% 3.98%
OTHER MEANS 1.31% 1.29% 1.20%
WORKED AT HOME 2.37% 2.68% 3.01%
POPULATION BY TRAVEL TIME TO WORK 46,106 75,638 98,122
UNDER 10 MINUTES / WORK AT HOME 17.39% 18.97% 18.60%
10 TO 29 MINUTES 67.25% 65.53% 66.13%
30 TO 59 MINUTES 13.15% 13.42% 13.23%
60 TO 89 MINUTES 1.49% 1.39% 1.31%
90+ MINUTES 0.72% 0.68% 0.72%
AVERAGE TRAVEL TIME IN MINUTES 17.39 17.18 17.15
HOUSEHOLDS BY NO. OF VEHICLES 47,032 75,467 95,072
NO VEHICLES 13.13% 13.73% 12.12%
1 VEHICLE 38.60% 37.44% 36.02%
2 VEHICLE 33.34% 33.78% 35.38%
3+ VEHICLES 14.93% 15.05% 16.48%
ESTIMATED TOTAL VEHICLES 71,986 115,590 151,656
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 6
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION 25+ BY EDUCATION LEVEL 71,852 115,639 148,057
ELEMENTARY (0-8) 6.61% 5.97% 5.49%
SOME HIGH SCHOOL (9-11) 12.87% 11.34% 10.77%
HIGH SCHOOL GRADUATE (12) 31.38% 28.43% 27.65%
SOME COLLEGE (13-15) 25.06% 25.13% 25.38%
ASSOCIATES DEGREE ONLY 10.13% 9.74% 9.71%
BACHELORS DEGREE ONLY 10.03% 12.99% 14.14%
GRADUATE DEGREE 3.91% 6.40% 6.87%
POPULATION ENROLLED IN SCHOOL 29,297 47,421 60,345
PUBLIC PRE- PRIMARY 4.48% 3.93% 3.91%
PRIVATE PRE- PRIMARY 1.92% 2.27% 2.56%
PUBLIC ELEM/HIGH 54.90% 53.78% 54.91%
PRIVATE ELEM/HIGH 4.66% 5.11% 5.45%
ENROLLED IN COLLEGE 34.05% 34.91% 33.17%
HOUSING UNITS BY OCCUPANCY STATUS 49,745 80,229 100,604
OCCUPIED 94.54% 94.04% 94.50%
VACANT 5.46% 5.96% 5.50%
VACANT UNITS 2,718 4,780 5,537
FOR RENT 41.68% 43.47% 42.12%
FOR SALE ONLY 18.71% 16.64% 17.22%
SEASONAL 2.75% 3.29% 3.73%
OTHER 36.87% 36.59% 36.93%
OWNER OCCUPIED PROPERTY VALUES 24,371 37,653 49,652
UNDER $25,000 5.04% 4.56% 3.87%
$25,000 TO $49,999 54.04% 43.72% 38.99%
$50,000 TO $74,999 32.74% 31.82% 32.33%
$75,000 TO $99,999 6.45% 12.49% 14.32%
$100,000 TO $149,999 1.30% 4.88% 6.80%
$150,000 TO $199,999 0.26% 1.41% 2.16%
$200,000 TO $299,999 0.13% 0.80% 1.11%
$300,000 TO $399,999 0.04% 0.21% 0.27%
$400,000 TO $499,999 0.01% 0.05% 0.08%
$500,000 + 0.00% 0.06% .08%
MEDIAN PROPERTY VALUE $45,797 $51,355 $55,520
TOTAL RENTAL UNITS 18,898 31,077 36,258
MEDIAN RENT $ 288 $ 281 $ 287
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 7
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
PERSONS IN UNIT 47,027 75,449 95,067
1 PERSON UNITS 32.09% 33.32% 31.78%
2 PERSON UNITS 33.68% 33.28% 33.75%
3 PERSON UNITS 15.40% 14.73% 14.99%
4 PERSON UNITS 11.33% 11.30% 11.97%
5 PERSON UNITS 4.85% 4.80% 4.97%
6 PERSON UNITS 1.69% 1.65% 1.65%
7 + UNITS 0.97% 0.92% 0.90%
YEAR ROUND UNITS IN STRUCTURE 49,745 80,229 100,604
SINGLE UNITS DETACHED 70.58% 65.99% 67.94%
SINGLE UNITS ATTACHED 1.63% 1.60% 1.77%
DOUBLE UNITS 5.38% 4.78% 4.34%
3 TO 9 UNITS 7.97% 9.72% 8.89%
10 TO 19 UNITS 3.81% 4.85% 4.66%
20 TO 49 UNITS 3.33% 5.61% 4.94%
50 + UNITS 4.55% 4.36% 3.73%
MOBILE HOME OR TRAILER 2.10% 2.38% 3.05%
ALL OTHER 0.66% 0.71% 0.69%
SINGLE/MULTIPLE UNIT RATIO 2.88 2.31 2.62
HOUSING UNITS BY YEAR BUILT 47,032 75,467 95,072
BUILT 1989 TO MARCH 1990 0.27% 0.66% 0.81%
BUILT 1985 TO 1988 2.41% 3.60% 4.24%
BUILT 1980 TO 1984 4.90% 5.11% 5.78%
BUILT 1970 TO 1979 15.74% 17.32% 19.24%
BUILT 1960 TO 1969 9.50% 9.43% 9.79%
BUILT 1950 TO 1959 23.74% 19.75% 20.29%
BUILT 1940 TO 1949 15.27% 13.35% 13.07%
BUILT 1939 OR EARLIER 28.17% 30.77% 26.78%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- ----------------------------------------------------------------------
<S> <C> <C>
POPULATION
2003 PROJECTION 339,096 398,658
1998 ESTIMATE 321,533 375,576
1990 CENSUS 287,699 330,555
1980 CENSUS 276,605 313,291
GROWTH 1980 - 1990 4.01% 5.51%
HOUSEHOLDS
2003 PROJECTION 142,421 163,338
1998 ESTIMATE 133,341 151,985
1990 CENSUS 116,864 131,166
1980 CENSUS 107,735 119,224
GROWTH 1980 - 1990 8.47% 10.02%
1998 ESTIMATED POPULATION BY RACE 321,533 375,576
WHITE 93.31% 93.52%
BLACK 1.74% 1.69%
ASIAN & PACIFIC ISLANDER 2.40% 2.32%
OTHER RACES 2.55% 2.47%
1998 ESTIMATED POPULATION 321,533 375,576
HISPANIC ORIGIN 2.87% 2.87%
OCCUPIED UNITS 116,864 131,166
OWNER OCCUPIED 61.92% 63.35%
RENTER OCCUPIED 38.08% 36.65%
1990 AVERAGE PERSONS PER HH 2.40 2.46
1998 EST. HOUSEHOLDS BY INCOME 133,341 151,985
$150,000 OR MORE 2.30% 2.33%
$100,000 TO $149,999 4.06% 4.18%
$75,000 TO $99,999 7.01% 7.35%
$50,000 TO $74,999 17.69% 18.35%
$35,000 TO $49,999 16.54% 16.93%
$25,000 TO $34,999 13.70% 13.86%
$15,000 TO $24,999 17.07% 16.57%
$5,000 TO $15,000 17.74% 16.75%
UNDER $5,000 3.90% 3.69%
1998 EST. AVERAGE HOUSEHOLD INCOME $45,229 $46,321
1998 EST. MEDIAN HOUSEHOLD INCOME $33,246 $34,372
1998 EST. PER CAPITA INCOME $19,055 $19,064
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- -------------------------------------------------------------------
<S> <C> <C>
1998 ESTIMATED POPULATION BY SEX 321,533 375,576
MALE 48.17% 48.45%
FEMALE 51.83% 51.55%
MARITAL STATUS 225,219 256,697
SINGLE MALE 13.41% 13.26%
SINGLE FEMALE 11.14% 10.76%
MARRIED 53.47% 55.06%
PREVIOUSLY MARRIED MALE 7.04% 6.79%
PREVIOUSLY MARRIED FEMALE 14.93% 14.13%
HOUSEHOLDS WITH CHILDREN 39,074 45,849
MARRIED COUPLE FAMILY 67.99% 70.20%
OTHER FAMILY-MALE HEAD 5.27% 5.06%
OTHER FAMILY-FEMALE HEAD 24.93% 23.04%
NON FAMILY 1.80% 1.70%
1998 ESTIMATED POPULATION BY AGE 321,533 375,576
UNDER 5 YEARS 7.06% 7.15%
5 TO 9 YEARS 7.54% 7.62%
10 TO 14 YEARS 7.13% 7.32%
15 TO 17 YEARS 4.03% 4.15%
18 TO 20 YEARS 4.12% 4.15%
21 TO 24 YEARS 4.77% 4.86%
25 TO 29 YEARS 6.70% 6.72%
30 TO 34 YEARS 7.06% 6.86%
35 TO 39 YEARS 8.03% 7.98%
40 TO 49 YEARS 15.17% 15.33%
50 TO 59 YEARS 10.38% 10.54%
60 TO 64 YEARS 3.64% 3.62%
65 TO 69 YEARS 3.53% 3.46%
70 TO 74 YEARS 3.40% 3.27%
75 + YEARS 7.45% 6.99%
MEDIAN AGE 35.99 35.74
AVERAGE AGE 36.96 36.58
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 3
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- -------------------------------------------------------------------
<S> <C> <C>
1998 ESTIMATED FEMALE POP. BY AGE 166,648 193,605
UNDER 5 YEARS 6.69% 6.82%
5 TO 9 YEARS 7.09% 7.19%
10 TO 14 YEARS 6.69% 6.90%
15 TO 17 YEARS 3.77% 3.90%
18 TO 20 YEARS 4.00% 3.98%
21 TO 24 YEARS 4.51% 4.53%
25 TO 29 YEARS 6.52% 6.52%
30 TO 34 YEARS 6.90% 6.76%
35 TO 39 YEARS 8.00% 8.04%
40 TO 49 YEARS 14.99% 15.20%
50 TO 59 YEARS 10.31% 10.46%
60 TO 64 YEARS 3.73% 3.70%
65 TO 69 YEARS 3.68% 3.59%
70 TO 74 YEARS 3.78% 3.64%
75 + YEARS 9.35% 8.75%
FEMALE MEDIAN AGE 37.39 37.11
FEMALE AVERAGE AGE 38.54 38.08
POPULATION BY HOUSEHOLD TYPE 287,699 330,555
FAMILY HOUSEHOLDS 79.67% 80.97%
NON-FAMILY HOUSEHOLDS 17.93% 16.59%
GROUP QUARTERS 2.40% 2.44%
HOUSEHOLDS BY TYPE 116,864 131,166
SINGLE MALE 12.20% 11.64%
SINGLE FEMALE 17.49% 16.45%
MARRIED COUPLE 49.71% 52.06%
OTHER FAMILY-MALE HEAD 2.95% 2.94%
OTHER FAMILY-FEMALE HEAD 11.36% 10.95%
NON FAMILY-MALE HEAD 3.73% 3.56%
NON FAMILY-FEMALE HEAD 2.57% 2.41%
POPULATION BY URBAN VS. RURAL 287,723 330,523
URBAN 92.45% 86.91%
RURAL 7.55% 13.09%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 4
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- --------------------------------------------------------------------------
<S> <C> <C>
FEMALES 16+ WITH CHILDREN 0 - 17: BASE 117,289 132,416
WORKING WITH CHILD 0 - 5 4.81% 4.94%
NOT WORKING WITH CHILD 0 - 5 0.44% 0.45%
NOT IN LABOR FORCE WITH CHILD 0 - 5 3.42% 3.56%
WORKING WITH CHILD 6 - 17 11.22% 11.76%
NOT WORKING WITH CHILD 6 - 17 0.74% 0.75%
NOT IN LAB. FORCE WITH CHILD 6 - 17 3.79% 4.03%
WORKING WITH CHILD 0-5 & 6-18 3.31% 3.48%
NOT WORKING WITH CHILD 0-5 & 6-18 0.25% 0.25%
NOT IN LAB. FORCE W/CHILD 0-5 & 6-18 2.85% 2.99%
WORKING WITH NO CHILDREN 31.20% 30.82%
NOT WORKING WITH NO CHILDREN 2.35% 2.30%
NOT IN LAB. FORCE WITH NO CHILD. 35.61% 34.67%
HH BY AGE BY POVERTY STATUS 117,157 131,427
ABOVE POVERTY UNDER AGE 65 64.77% 66.28%
ABOVE POVERTY AGE 65 + 20.77% 19.88%
BELOW POVERTY UNDER AGE 65 11.53% 11.06%
BELOW POVERTY AGE 65 + 2.92% 2.79%
POPULATION 16+ BY EMPLOYMENT STATUS 221,993 252,620
EMPLOYED IN ARMED FORCES 0.91% 1.64%
EMPLOYED CIVILIANS 56.84% 57.04%
UNEMPLOYED CIVILIANS 4.59% 4.51%
NOT IN LABOR FORCE 37.66% 36.81%
POPULATION 16+ BY OCCUPATION 126,173 144,092
EXECUTIVE AND MANAGERIAL 11.89% 11.77%
PROFESSIONAL SPECIALTY 15.58% 15.34%
TECHNICAL SUPPORT 3.97% 3.97%
SALES 13.84% 13.80%
ADMINISTRATIVE SUPPORT 15.81% 15.83%
SERVICE: PRIVATE HOUSEHOLD 0.31% 0.31%
SERVICE: PROTECTIVE 1.52% 1.54%
SERVICE: OTHER 13.92% 13.56%
FARMING FORESTRY & FISHING 1.06% 1.24%
PRECISION PRODUCTION & CRAFT 9.47% 9.77%
MACHINE OPERATOR 4.78% 4.87%
TRANS. AND MATERIAL MOVING 4.20% 4.23%
LABORERS 3.67% 3.75%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 5
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- ----------------------------------------------------------------------
<S> <C> <C>
FAMILIES BY NUMBER OF WORKERS 75,629 87,391
NO WORKERS 15.94% 15.12%
ONE WORKER 29.57% 29.29%
TWO WORKERS 44.84% 45.54%
THREE + WORKERS 9.65% 10.05%
HISPANIC POPULATION BY TYPE 287,699 330,555
NOT HISPANIC 98.08% 98.07%
MEXICAN 1.17% 1.18%
PUERTO RICAN 0.12% 0.13%
CUBAN 0.03% 0.03%
OTHER HISPANIC 0.60% 0.60%
1998 HISPANICS BY RACE: BASE 9,243 10,772
WHITE 62.06% 61.51%
BLACK 2.16% 1.99%
ASIAN 3.50% 3.56%
OTHER 32.38% 32.94%
POPULATION BY TRANSPORTATION TO WORK 125,871 145,465
DRIVE ALONE 78.37% 78.55%
CAR POOL 10.66% 10.77%
PUBLIC TRANSPORTATION 3.23% 2.95%
DRIVE MOTORCYCLE 0.20% 0.22%
WALKED ONLY 3.41% 3.27%
OTHER MEANS 1.09% 1.07%
WORKED AT HOME 3.03% 3.17%
POPULATION BY TRAVEL TIME TO WORK 125,871 145,465
UNDER 10 MINUTES / WORK AT HOME 18.06% 18.35%
10 TO 29 MINUTES 66.05% 64.28%
30 TO 59 MINUTES 13.84% 15.29%
60 TO 89 MINUTES 1.29% 1.30%
90+ MINUTES 0.76% 0.78%
AVERAGE TRAVEL TIME IN MINUTES 17.49 17.84
HOUSEHOLDS BY NO. OF VEHICLES 116,870 131,113
NO VEHICLES 10.63% 9.83%
1 VEHICLE 34.37% 32.94%
2 VEHICLES 36.91% 37.58%
3+ VEHICLES 18.10% 19.65%
ESTIMATED TOTAL VEHICLES 194,111 224,186
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 6
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- --------------------------------------------------------------------
<S> <C> <C>
POPULATION 25+ BY EDUCATION LEVEL 184,966 210,409
ELEMENTARY (0-8) 5.05% 4.89%
SOME HIGH SCHOOL (9-11) 10.42% 10.33%
HIGH SCHOOL GRADUATE (12) 27.70% 27.98%
SOME COLLEGE (13-15) 25.70% 25.93%
ASSOCIATES DEGREE ONLY 10.02% 10.14%
BACHELORS DEGREE ONLY 14.28% 14.11%
FGRADUATE DEGREE 6.82% 6.63%
POPULATION ENROLLED IN SCHOOL 76,947 89,487
PUBLIC PRE-PRIMARY 4.02% 4.12%
PRIVATE PRE-PRIMARY 2.50% 2.51%
PUBLIC ELEM/HIGH 57.01% 58.54%
PRIVATE ELEM/HIGH 5.42% 5.24%
ENROLLED IN COLLEGE 31.06% 29.58%
HOUSING UNITS BY OCCUPANCY STATUS 123,332 138,627
OCCUPIED 94.76% 94.62%
VACANT 5.24% 5.38%
VACANT UNITS 6,468 7,461
FOR RENT 42.85% 39.51%
FOR SALE ONLY 17.10% 16.43%
SEASONAL 4.05% 7.41%
OTHER 36.00% 36.65%
OWNER OCCUPIED PROPERTY VALUES 61,335 67,527
UNDER $25,000 3.29% 3.13%
$25,000 TO $49,999 34.53% 32.73%
$50,000 TO $74,999 34.76% 35.11%
$75,000 TO $99,999 16.09% 16.95%
$100,000 TO $149,999 7.49% 8.07%
$150,000 TO $199,999 2.22% 2.36%
$200,000 TO $299,999 1.17% 1.21%
$300,000 TO $$399,999 0.28% 0.28%
$400,000 TO $499,999 0.08% 0.07%
$500,000 + 0.08% 0.08%
MEDIAN PROPERTY VALUE $58,758 $60,062
TOTAL RENTAL UNITS 42,572 44,998
MEDIAN RENT $ 292 $ 294
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 7
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- ----------------------------------------------------------------
<S> <C> <C>
PERSONS IN UNIT 116,864 131,166
1 PERSON UNITS 29.68% 28.08%
2 PERSON UNITS 33.81% 33.65%
3 PERSON UNITS 15.41% 15.77%
4 PERSON UNITS 12.99% 13.83%
5 PERSON UNITS 5.39% 5.76%
6 PERSON UNITS 1.77% 1.90%
7 + UNITS 0.94% 1.00%
YEAR ROUND UNITS IN STRUCTURE 123,332 138,627
SINGLE UNITS DETACHED 67.68% 67.34%
SINGLE UNITS ATTACHED 2.30% 2.81%
DOUBLE UNITS 4.34% 4.08%
3 TO 9 UNITS 8.16% 7.34%
10 TO 19 UNITS 4.60% 4.18%
20 TO 49 UNITS 4.61% 4.20%
50 + UNITS 3.52% 3.30%
MOBILE HOME OR TRAILER 4.07% 5.98%
ALL OTHER 0.72% 0.76%
SINGLE/MULTIPLE UNIT RATIO 2.77 3.04
HOUSING UNITS BY YEAR BUILT 116,870 131,113
BUILT 1989 TO MARCH 1990 0.98% 1.04%
BUILT 1985 TO 1988 4.86% 5.19%
BUILT 1980 TO 1984 6.63% 7.47%
BUILT 1970 TO 1979 22.81% 24.89%
BUILT 1960 TO 1969 10.62% 10.60%
BUILT 1950 TO 1959 19.68% 18.68%
BUILT 1940 TO 1949 11.71% 11.08%
BUILT 1939 OR EARLIER 22.72% 21.04%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(1990 INCOME ('89))
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
3.00 MILE 5.00 MILE 7.00 MILE
DESCRIPTION RADIUS RADIUS RADIUS
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
1990 Total Households 7 75,449 95,067
% INCOME CATEGORIES
HH_90_BY INCOME_89: %_0-5K 4% 7.98% 7.15%
HH_90_BY INCOME_89: %_5-15K 7% 26.45% 24.72%
HH_90_BY INCOME_89: %_15-25K 4% 21.23% 20.68%
HH_90_BY INCOME_89: %_25-35K 2% 16.35% 16.46%
HH_90_BY INCOME_89: %_35-50K 6% 15.19% 16.01%
HH_90_BY INCOME_89: %_50-75K 1% 8.90% 10.01%
HH_90_BY INCOME_89: %_75-100K 7% 2.34% 2.78%
HH_90_BY INCOME_89: %_100-150K 0.47% 1.03% 1.47%
HH_90_BY INCOME_89: %_150K+ 0.22% 0.53% 0.72%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(1990 INCOME ('89))
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- --------------------------------------------------------------
10.00 MILE 15.00 MILE
DESCRIPTION RADIUS RADIUS
- --------------------------------------------------------------
<S> <C> <C>
1990 Total Households 116,864 131,166
% INCOME CATEGORIES
HH_90_BY INCOME_89: %_0-5K 6.59% 6.24%
HH_90_BY INCOME_89: %_5-15K 23.13% 22.15%
HH_90_BY INCOME_89: %_15-25K 20.22% 20.20%
HH_90_BY INCOME_89: %_25-35K 16.68% 16.91%
HH_90_BY INCOME_89: %_35-50K 16.97% 17.41%
HH_90_BY INCOME_89: %_50-75K 11.07% 11.63%
HH_90_BY INCOME_89: %_75-100K 2.97% 3.03%
HH_90_BY INCOME_89: %_100-150K 1.55% 1.58%
HH_90_BY INCOME_89: %_150K+ 0.83% 0.84%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
3.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -----------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 112,762 116,570 119,031
NON-HISPANIC WHITE 92.33% 90.17% 88.83%
NON-HISPANIC BLACK 1.36% 1.67% 1.87%
NON-HISPANIC ASIAN & P.I. 1.86% 2.52% 2.95%
NON-HISPANIC A.I. & OTHER 2.28% 2.35% 2.38%
HISPANIC ORIGIN POPULATION 2.17% 3.28% 3.97%
HOUSEHOLDS BY INCOME 47.085 49,953 51,808
$150,000 OR MORE 0.22% 0.49% 0.98%
$100,000 TO $149,999 0.47% 1.60% 2.72%
$75,000 TO $99,999 1.47% 3.58% 5.41%
$50,000 TO $74,999 6.91% 13.81% 15.58%
$35,000 TO $49,999 14.76% 16.88% 16.37%
$25,000 TO $34,999 17.52% 16.06% 15.08%
$15,000 TO $24,999 23.24% 19.88% 19.69%
$5,000 TO $14,999 27.37% 22.73% 20.59%
UNDER $5,000 8.04% 4.96% 3.59%
AVERAGE INCOME $ 25,035 $ 33,586 $ 39,310
MEDIAN INCOME $ 21,277 $ 26,513 $ 29,067
POPULATION BY SEX 112,762 116,570 119,031
MALE 47.71% 47.78% 47.97%
FEMALE 52.29% 52.22% 52.03%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ------------------------------------------------------------
3.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- ------------------- ----------- ---------- -----------
<S> <C> <C> <C>
PUPULATION BY AGE 112,762 116,570 119,031
UNDER 5 YEARS 7.76% 7.53% 7.28%
5 to 9 YEARS 7.30% 7.89% 7.59%
10 TO 14 YEARS 6.26% 6.83% 7.36%
15 TO 17 YEARS 3.45% 3.70% 3.96%
18 TO 20 YEARS 5.22% 4.43% 4.37%
21 YEARS 1.76% 1.39% 1.28%
22 TO 24 YEARS 4.89% 3.54% 3.74%
25 TO 29 YEARS 8.99% 6.88% 5.94%
30 TO 34 YEARS 8.59% 8.17% 6.78%
35 TO 39 YEARS 7.47% 8.60% 7.97%
40 TO 44 YEARS 5.88% 7.38% 8.25%
45 TO 49 YEARS 4.39% 6.17% 7.08%
50 TO 54 YEARS 3.86% 4.90% 5.91%
55 TO 59 YEARS 3.82% 3.75% 4.65%
60 TO 64 YEARS 4.28% 3.38% 3.55%
65 TO 69 YEARS 4.64% 3.49% 3.02%
70 TO 74 YEARS 4.08% 3.58% 3.06%
75 TO 84 YEARS 5.56% 5.88% 5.48%
85 + YEARS 1.81% 2.53% 2.73%
MEDIAN AGE 32.55 34.78 36.07
AVERAGE AGE 36.30 36.67 36.97
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 3
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
5.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -----------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 179,606 190,997 197,403
NON-HISPANIC WHITE 92.07% 90.01% 88.69%
NON-HISPANIC BLACK 1.83% 2.15% 2.37%
NON-HISPANIC ASIAN & P.I. 1.93% 2.57% 2.99%
NON-HISPANIC A.I. & OTHER 2.07% 2.08% 2.08%
HISPANIC ORIGIN POPULATION 2.11% 3.19% 3.87%
HOUSEHOLDS BY INCOME 75,516 81,989 85,861
$150,000 OR MORE 0.53% 1.41% 2.71%
$100,000 TO $149,999 1.03% 3.02% 4.75%
$75,000 TO $99,999 2.34% 5.43% 7.57%
$50,000 TO $74,999 8.90% 15.52% 16.19%
$35,000 TO $49,999 15.19% 15.88% 14.76%
$25,000 TO $34,999 16.35% 14.28% 13.73%
$15,000 TO $24,999 21.23% 18.67% 18.36%
$5,000 TO $14,999 26.45% 21.12% 18.65%
UNDER $5,000 7.98% 4.68% 3.28%
AVERAGE INCOME $ 27,953 $ 39,308 $ 47,436
MEDIAN INCOME $ 22,333 $ 28,877 $ 32,070
POPULATION BY SEX 179,606 190,997 197,403
MALE 47.81% 48.90% 48.04%
FEMALE 52.19% 52.11% 51.96%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 4
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ------------------------------------------------------------
5.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- ------------------------------------------------------------
<S> <C> <C> <C>
PUPULATION BY AGE 179,606 190,997 197,403
UNDER 5 YEARS 7.36% 7.09% 6.83%
5 to 9 YEARS 7.10% 7.54% 7.18%
10 TO 14 YEARS 6.32% 6.80% 7.15%
15 TO 17 YEARS 3.54% 3.73% 3.97%
18 TO 20 YEARS 5.10% 4.34% 4.30%
21 YEARS 1.72% 1.33% 1.24%
22 TO 24 YEARS 4.66% 3.51% 3.69%
25 TO 29 YEARS 8.55% 6.88% 5.91%
30 TO 34 YEARS 8.53% 7.65% 6.77%
35 TO 39 YEARS 7.85% 8.30% 7.47%
40 TO 44 YEARS 6.59% 7.68% 8.00%
45 TO 49 YEARS 4.87% 6.72% 7.41%
50 TO 54 YEARS 3.93% 5.46% 6.47%
55 TO 59 YEARS 3.86% 4.06% 5.21%
60 TO 64 YEARS 4.16% 3.50% 3.85%
65 TO 69 YEARS 4.47% 3.52% 3.20%
70 TO 74 YEARS 3.90% 3.50% 3.10%
75 TO 84 YEARS 5.51% 5.80% 5.49%
85 + YEARS 1.96% 2.60% 2.76%
MEDIAN AGE 33.31 35.69 36.98
AVERAGE AGE 36.58 37.23 37.72
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 5
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
7.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -----------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 228,446 248,604 259,302
NON-HISPANIC WHITE 92.78% 90.93% 89.73%
NON-HISPANIC BLACK 1.60% 1.86% 2.04%
NON-HISPANIC ASIAN & P.I. 1.82% 2.41% 2.80%
NON-HISPANIC A.I. & OTHER 1.81% 1.80% 1.80%
HISPANIC ORIGIN POPULATION 1.99% 3.00% 3.64%
HOUSEHOLDS BY INCOME 95,299 105,694 111,731
$150,000 OR MORE 0.72% 2.05% 3.85%
$100,000 TO $149,999 1.47% 3.74% 5.72%
$75,000 TO $99,999 2.78% 6.33% 8.52%
$50,000 TO $74,999 10.01% 16.63% 16.96%
$35,000 TO $49,999 16.01% 16.05% 14.59%
$25,000 TO $34,999 16.46% 13.94% 13.35%
$15,000 TO $24,999 20.68% 17.79% 17.16%
$5,000 TO $14,999 24.72% 19.27% 16.92%
UNDER $5,000 7.15% 4.19% 2.95%
AVERAGE INCOME $ 30,079 $ 42,938 $ 52,448
MEDIAN INCOME $ 23,764 $ 31,277 $ 34,720
POPULATION BY SEX 228,446 248,604 259,392
MALE 47.95% 48.01% 48.11%
FEMALE 52.05% 51.99% 51.89%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 6
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ------------------------------------------------------------
7.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- ------------------------------------------------------------
<S> <C> <C> <C>
PUPULATION BY AGE 228,446 248,604 259,392
UNDER 5 YEARS 7.28% 7.00% 6.73%
5 to 9 YEARS 7.23% 7.49% 7.11%
10 TO 14 YEARS 6.53% 6.89% 7.15%
15 TO 17 YEARS 3.68% 3.85% 4.04%
18 TO 20 YEARS 4.76% 4.14% 4.17%
21 YEARS 1.57% 1.26% 1.21%
22 TO 24 YEARS 4.35% 3.47% 3.66%
25 TO 29 YEARS 8.21% 6.74% 5.87%
30 TO 34 YEARS 8.51% 7.29% 6.63%
35 TO 39 YEARS 8.06% 8.12% 7.14%
40 TO 44 YEARS 6.94% 7.87% 7.87%
45 TO 49 YEARS 5.13% 7.00% 7.61%
50 TO 54 YEARS 4.08% 5.74% 6.73%
55 TO 59 YEARS 3.96% 4.28% 5.48%
60 TO 64 YEARS 4.21% 3.61% 4.05%
65 TO 69 YEARS 4.53% 3.58% 3.31%
70 TO 74 YEARS 3.87% 3.56% 3.15%
75 TO 84 YEARS 5.34% 5.75% 5.51%
85 + YEARS 1.78% 2.38% 2.58%
MEDIAN AGE 33.76 36.15 37.40
AVERAGE AGE 36.59 37.37 37.93
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
POP-FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
10.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -----------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 287,699 321,533 339,096
NON-HISPANIC WHITE 93.26% 91.53% 90.41%
NON-HISPANIC BLACK 1.45% 1.68% 1.84%
NON-HISPANIC ASIAN & P.I. 1.73% 2.30% 2.67%
NON-HISPANIC A.I. & OTHER 1.64% 1.62% 1.61%
HISPANIC ORIGIN POPULATION 1.92% 2.87% 3.47%
HOUSEHOLDS BY INCOME 117,157 133,341 142,421
$150,000 OR MORE 0.83% 2.30% 4.35%
$100,000 TO $149,999 1.55% 4.06% 6.31%
$75,000 TO $99,999 2.97% 7.01% 9.27%
$50,000 TO $74,999 11.07% 17.69% 17.84%
$35,000 TO $49,999 16.97% 16.54% 14.72%
$25,000 TO $34,999 16.68% 13.70% 12.96%
$15,000 TO $24,999 20.22% 17.07% 16.31%
$5,000 TO $14,999 23.13% 17.74% 15.46%
UNDER $5,000 6.59% 3.90% 2.77%
AVERAGE INCOME $ 31,446 $ 45,229 $ 55,585
MEDIAN INCOME $ 25,038 $ 33,246 $ 37,537
POPULATION BY SEX 287,699 321,533 339,096
MALE 48.13% 48.17% 48.23%
FEMALE 51.87% 51.83% 51.77%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
POP-FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ------------------------------------------------------------
10.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- ------------------------------------------------------------
<S> <C> <C> <C>
PUPULATION BY AGE 287,699 321,533 339,096
UNDER 5 YEARS 7.35% 7.06% 6.78%
5 to 9 YEARS 7.49% 7.54% 7.14%
10 TO 14 YEARS 6.88% 7.13% 7.24%
15 TO 17 YEARS 3.87% 4.03% 4.16%
18 TO 20 YEARS 4.62% 4.12% 4.22%
21 YEARS 1.50% 1.25% 1.25%
22 TO 24 YEARS 4.18% 3.52% 3.73%
25 TO 29 YEARS 8.04% 6.70% 5.91%
30 TO 34 YEARS 8.51% 7.06% 6.55%
35 TO 39 YEARS 8.19% 8.03% 6.93%
40 TO 44 YEARS 7.25% 8.01% 7.79%
45 TO 49 YEARS 5.34% 7.16% 7.72%
50 TO 54 YEARS 4.23% 5.96% 6.87%
55 TO 59 YEARS 4.02% 4.42% 5.66%
60 TO 64 YEARS 4.11% 3.64% 4.15%
65 TO 69 YEARS 4.32% 3.53% 3.32%
70 TO 74 YEARS 3.65% 3.40% 3.09%
75 TO 84 YEARS 4.87% 5.33% 5.15%
85 + YEARS 1.59% 2.12% 2.32%
MEDIAN AGE 33.57 35.99 37.17
AVERAGE AGE 36.06 36.96 37.61
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 3
POP-FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
15.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -----------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 330,555 375,576 398,658
NON-HISPANIC WHITE 93.40% 91.75% 90.70%
NON-HISPANIC BLACK 1.42% 1.63% 1.77%
NON-HISPANIC ASIAN & P.I. 1.70% 2.22% 2.57%
NON-HISPANIC A.I. & OTHER 1.54% 1.52% 1.51%
HISPANIC ORIGIN POPULATION 1.93% 2.87% 3.45%
HOUSEHOLDS BY INCOME 131,427 151,985 163,338
$150,000 OR MORE 0.84% 2.33% 4.39%
$100,000 TO $149,999 1.58% 4.18% 6.57%
$75,000 TO $99,999 3.03% 7.35% 9.68%
$50,000 TO $74,999 11.63% 18.35% 18.63%
$35,000 TO $49,999 17.41% 16.93% 15.05%
$25,000 TO $34,999 16.91% 13.86% 12.93%
$15,000 TO $24,999 20.20% 16.57% 15.54%
$5,000 TO $14,999 22.15% 16.75% 14.57%
UNDER $5,000 6.24% 3.69% 2.64%
AVERAGE INCOME $ 32,113 $ 46,321 $ 57,076
MEDIAN INCOME $ 25,829 $ 34,372 $ 39,303
POPULATION BY SEX 330,555 375,576 398,658
MALE 48.46% 48.45% 48.49%
FEMALE 51.54% 51.55% 51.51%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 4
POP-FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
N. Division St. & Wellesley Ave.
Spokane, Washington COORD: 47:42.05 117:24.61
<TABLE>
<CAPTION>
- ------------------------------------------------------------
15.00 MILE RADIUS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- ------------------------------------------------------------
<S> <C> <C> <C>
PUPULATION BY AGE 330,555 375,576 398,658
UNDER 5 YEARS 7.48% 7.15% 6.85%
5 to 9 YEARS 7.71% 7.62% 7.20%
10 TO 14 YEARS 7.15% 7.32% 7.34%
15 TO 17 YEARS 4.00% 4.15% 4.24%
18 TO 20 YEARS 4.55% 4.15% 4.29%
21 YEARS 1.46% 1.26% 1.28%
22 TO 24 YEARS 4.10% 3.60% 3.81%
25 TO 29 YEARS 8.05% 6.72% 5.97%
30 TO 34 YEARS 8.51% 6.86% 6.49%
35 TO 39 YEARS 8.31% 7.98% 6.75%
40 TO 44 YEARS 7.36% 8.05% 7.73%
45 TO 49 YEARS 5.44% 7.28% 7.77%
50 TO 54 YEARS 4.26% 6.06% 6.99%
55 TO 59 YEARS 3.99% 4.48% 5.74%
60 TO 64 YEARS 4.01% 3.62% 4.18%
65 TO 69 YEARS 4.13% 3.46% 3.29%
70 TO 74 YEARS 3.46% 3.27% 3.02%
75 TO 84 YEARS 4.55% 5.02% 4.89%
85 + YEARS 1.48% 1.96% 2.17%
MEDIAN AGE 33.23 35.75 36.87
AVERAGE AGE 35.55 36.58 37.32
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
POPULATION
2003 PROJECTION 191,709
1998 ESTIMATE 186,376
1990 CENSUS 177,196
1980 CENSUS 172,559
GROWTH 1980 -- 1990 2.69%
HOUSEHOLDS
2003 PROJECTION 84,128
1998 ESTIMATE 80,736
1990 CENSUS 75,147
1980 CENSUS 71,356
GROWTH 1980 -- 1990 5.31%
1998 ESTIMATED POPULATION BY RACE 186,376
WHITE 91.81%
BLACK 2.30%
ASIAN & PACIFIC ISLANDER 2.81%
OTHER RACES 3.08%
1998 ESTIMATED POPULATION 186,376
HISPANIC ORIGIN 3.11%
OCCUPIED UNITS 75,147
OWNER OCCUPIED 57.23%
RENTER OCCUPIED 42.77%
1990 AVERAGE PERSONS PER HH 2.29
1998 EST. HOUSEHOLDS BY INCOME 80,736
$15,000 OR MORE 1.98%
$100,000 TO $149,999 3.31%
$75,000 TO $99,999 5.32%
$50,000 TO $74,999 15.52%
$35,000 TO $49,999 15.96%
$25,000 TO $34,999 14.10%
$15,000 TO $24,999 18.35%
$5,000 TO $15,000 20.75%
UNDER $5,000 4.71%
1998 EST. AVERAGE HOUSEHOLD INCOME $ 40,824
1998 EST. MEDIAN HOUSEHOLD INCOME $ 29,391
1998 EST. PER CAPITA INCOME $ 18,017
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------
<S> <C>
1998 ESTIMATED POPULATION BY SEX 186,376
MALE 47.82%
FEMALE 52.18%
MARITAL STATUS 140,041
SINGLE MALE 14.43%
SINGLE FEMALE 11.97%
MARRIED 48.95%
PREVIOUSLY MARRIED MALE 7.77%
PREVIOUSLY MARRIED FEMALE 16.88%
HOUSEHOLDS WITH CHILDREN 23,082
MARRIED COUPLE FAMILY 62.51%
OTHER FAMILY-MALE HEAD 5.92%
OTHER FAMILY-FEMALE HEAD 29.55%
NON FAMILY 2.02%
1998 ESTIMATED POPULATION BY AGE 186,376
UNDER 5 YEARS 7.27%
5 TO 9 YEARS 7.72%
10 TO 14 YEARS 6.84%
15 TO 17 YEARS 3.67%
18 TO 20 YEARS 4.01%
21 TO 24 YEARS 4.71%
25 TO 29 YEARS 6.77%
30 TO 34 YEARS 7.74%
35 TO 39 YEARS 8.49%
40 TO 49 YEARS 14.63%
50 TO 59 YEARS 9.25%
60 TO 64 YEARS 3.32%
65 TO 69 YEARS 3.43%
70 TO 74 YEARS 3.50%
75 + YEARS 8.64%
MEDIAN AGE 35.75
AVERAGE AGE 37.20
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 3
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------
DESCRIPTION TOTALS
- -------------------------------------------------
<S> <C>
1998 ESTIMATED FEMALE POP. BY AGE 97,253
UNDER 5 YEARS 6.86%
5 TO 9 YEARS 7.21%
10 TO 14 YEARS 6.37%
15 TO 17 YEARS 3.39%
18 TO 20 YEARS 3.88%
21 TO 24 YEARS 4.42%
25 TO 29 YEARS 6.56%
30 TO 34 YEARS 7.47%
35 TO 39 YEARS 8.25%
40 TO 49 YEARS 14.26%
50 TO 59 YEARS 9.16%
60 TO 64 YEARS 3.49%
65 TO 69 YEARS 3.66%
70 TO 74 YEARS 3.94%
75 + YEARS 11.09%
FEMALE MEDIAN AGE 37.33
FEMALE AVERAGE AGE 39.15
POPULATION BY HOUSEHOLD TYPE 177,196
FAMILY HOUSEHOLDS 75.82%
NON-FAMILY HOUSEHOLDS 21.25%
GROUP QUARTERS 2.93%
HOUSEHOLDS BY TYPE 75,147
SINGLE MALE 13.76%
SINGLE FEMALE 20.04%
MARRIED COUPLE 43.76%
OTHER FAMILY-MALE HEAD 3.02%
OTHER FAMILY-FEMALE HEAD 12.35%
NON FAMILY-MALE HEAD 4.10%
NON FAMILY-FEMALE HEAD 2.98%
POPULATION BY URBAN VS. RURAL 177,196
URBAN 100.00%
RURAL 0.00%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 4
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- --------------------------------------------------------
DESCRIPTION TOTALS
- --------------------------------------------------------
<S> <C>
FEMALES 16+ WITH CHILDREN 0-17 BASE 73,749
WORKING WITH CHILD 0 -- 5 4.77%
NOT WORKING WITH CHILD 0 -- 5 0.47%
NOT IN LABOR FORCE WITH CHILD 0 -- 5 3.52%
WORKING WITH CHILD 6 -- 17 9.68%
NOT WORKING WITH CHILD 6 -- 17 0.73%
NOT IN LAB. FORCE WITH CHILD 6 -- 17 3.50%
WORKING WITH CHILD 0 --5 & 6 -- 18 3.01%
NOT WORKING WITH CHILD 0-5 & 6 -- 18 0.22%
NOT IN LAB. FORCE W/CHILD 0-5 & 6 -- 18 2.83%
WORKING WITH NO CHILDREN 31.08%
NOT WORKING WITH NO CHILDREN 2.50%
NOT IN LAB. FORCE WITH NO CHILD. 37.68%
HH BY AGE BY POVERTY STATUS 75,252
ABOVE POVERTY UNDER AGE 65 60.17%
ABOVE POVERTY AGE 65 + 22.46%
BELOW POVERTY UNDER AGE 65 13.87%
BELOW POVERTY AGE 65 + 3.49%
POPULATION 16+ BY EMPLOYMENT STATUS 138,386
EMPLOYED IN ARMED FORCES 0.78%
EMPLOYED CIVILIANS 54.28%
UNEMPLOYED CIVILIANS 4.87%
NOT IN LABOR FORCE 40.07%
POPULATION 16+ BY OCCUPATION 75,112
EXECUTIVE AND MANAGERIAL 10.91%
PROFESSIONAL SPECIALTY 16.04%
TECHNICAL SUPPORT 3.99%
SALES 13.57%
ADMINISTRATIVE SUPPORT 16.08%
SERVICE: PRIVATE HOUSEHOLD 0.32%
SERVICE: PROTECTIVE 1.72%
SERVICE: OTHER 15.11%
FARMING FORESTRY & FISHING 0.97%
PRECISION PRODUCTION & CRAFT 8.88%
MACHINE OPERATOR 4.68%
TRANS. AND MATERIAL MOVING 4.05%
LABORERS 3.69%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 5
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------
DESCRIPTION TOTALS
- -------------------------------------------------
<S> <C>
FAMILIES BY NUMBER OF WORKERS 44,976
NO WORKERS 18.29%
ONE WORKER 30.49%
TWO WORKERS 42.54%
THREE + WORKERS 8.68%
HISPANIC POPULATION BY TYPE 177,196
NOT HISPANIC 97.92%
MEXICAN 1.25%
PUERTO RICAN 0.13%
CUBAN 0.04%
OTHER HISPANIC 0.65%
1998 HISPANICS BY RACE: BASE 5,802
WHITE 59.79%
BLACK 2.79%
ASIAN 3.84%
OTHER 33.57%
POPULATION BY TRANSACTION TO WORK 74,810
DRIVE ALONE 75.52%
CAR POOL 11.38%
PUBLIC TRANSPORTATION 4.31%
DRIVE MOTORCYCLE 0.21%
WALKED ONLY 4.28%
OTHER MEANS 1.30%
WORKED AT HOME 3.00%
POPULATION BY TRAVEL TIME TO WORK 74,810
UNDER 10 MINUTES / WORK AT HOME 19.07%
10 TO 29 MINUTES 65.73%
30 TO 59 MINUTES 12.96%
60 TO 89 MINUTES 1.49%
90+ MINUTES 0.74%
AVERAGE TRAVEL TIME IN MINUTES 17.05
HOUSEHOLDS BY NO. OF VEHICLES 75,147
NO VEHICLES 13.90%
1 VEHICLE 38.00%
2 VEHICLES 33.83%
3+ VEHICLES 14.27%
ESTIMATED TOTAL VEHICLES 113,720
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 6
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
POPULATION 25+ BY EDUCATION LEVEL 114,872
ELEMENTARY (0-8) 5.74%
SOME HIGH SCHOOL (9-11) 11.05%
HIGH SCHOOL GRADUATE (12) 27.32%
SOME COLLEGE (13-15) 25.10%
ASSOCIATES DEGREE ONLY 9.76%
BACHELORS DEGREE ONLY 14.19%
GRADUATE DEGREE 6.84%
POPULATION ENROLLED IN SCHOOL 45,842
PUBLIC PRE-PRIMARY 3.93%
PRIVATE PRE-PRIMARY 2.46%
PUBLIC ELEM/HIGH 53.89%
PRIVATE ELEM/HIGH 5.65%
ENROLLED IN COLLEGE 34.08%
HOUSING UNITS BY OCCUPANCY STATUS 79,875
OCCUPLIED 94.08%
VACANT 5.92%
VACANT UNITS 4,728
FOR RENT 43.36%
FOR SALE ONLY 17.13%
SEASONAL 2.83%
OTHER 36.68%
OWNER OCCUPIED PROPERTY VALUES 38,257
UNDER $25,000 4.40%
$25,000 TO $49,999 43.74%
$50,000 TO $74,999 31.32%
$75,000 TO $99,999 11.74%
$100,000 TO $149,999 5.60%
$150,000 TO $199,999 1.79%
$200,000 TO $299,999 0.97%
$300,000 TO $399,999 0.27%
$4000,000 TO $499,999 0.09%
$500,000+ 0.07%
MEDIAN PROPERTY VALUE $ 51,481
TOTAL RENTAL UNITS 31,085
MEDIAN RENT $ 278
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 7
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- --------------------------------------------
DESCRIPTION TOTALS
- --------------------------------------------
<S> <C>
PERSONS IN UNIT 75,147
1 PERSON UNITS 33.80%
2 PERSON UNITS 33.18%
3 PERSON UNITS 14.58%
4 PERSON UNITS 11.26%
5 PERSON UNITS 4.66%
6 PERSON UNITS 1.60%
7 + UNITS 0.91%
YEAR ROUND UNITS IN STRUCTURE 79,875
SINGLE UNITS DETACHED 67.19%
SINGLE UNITS ATTACHED 1.46%
DOUBLE UNITS 4.71%
3 TO 9 UNITS 10.14%
10 TO 19 UNITS 4.76%
20 TO 49 UNITS 5.12%
50 + UNITS 4.55%
MOBILE HOME OR TRAILER 1.39%
ALL OTHER 0.67%
SINGLE/MULTIPLE UNIT RATIO 2.34
HOUSING UNITS BY YEAR BUILT 75,147
BUILT 1989 TO MARCH 1990 0.75%
BUILT 1985 TO 1988 3.69%
BUILT 1980 TO 1984 5.40%
BUILT 1970 TO 1979 16.49%
BUILT 1960 TO 1969 8.13%
BUILT 1950 TO 1959 20.11%
BUILT 1940 TO 1949 13.86%
BUILT 1939 OR EARLIER 31.57%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(1990 INCOME ('89))
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ---------------------------------------------
DESCRIPTION TOTALS
- ---------------------------------------------
<S> <C>
1990 Total Households 75,147
% INCOME CATEGORIES
HH_90_BY INCOME_89: %_0-5K 8.05%
HH_90_BY INCOME_89: %_5-15K 26.28%
HH_90_BY INCOME_89: %_15-25K 21.01%
HH_90_BY INCOME_89: %_25-35K 16.29%
HH_90_BY INCOME_89: %_35-50K 15.05%
HH_90_BY INCOME_89: %_50-75K 8.68%
HH_90_BY INCOME_89: %_75-100K 2.44%
HH_90_BY INCOME_89: %_100-150K 1.47%
HH_90_BY INCOME_89: %_150K+ 0.71%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
TOTALS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -----------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 177,196 186,376 191,709
NON-HISPANIC WHITE 92.03% 89.95% 88.63%
NON-HISPANIC BLACK 1.87% 2.22% 2.44%
NON-HISPANIC ASIAN & P.I. 2.01% 2.69% 3.14%
NON-HISPANIC A.I. & OTHER 2.01% 2.03% 2.03%
HISPANIC ORIGIN POPULATION 2.08% 3.11% 3.76%
HOUSEHOLDS BY INCOME 75,252 80,736 84,128
$150,000 OR MORE 0.71% 1.98% 3.50%
$100,000 TO $149,999 1.47% 3.31% 4.82%
$75,000 TO $99,999 2.44% 5.32% 7.69%
$50,000 TO $74,999 8.68% 15.52% 16.21%
$35,000 TO $49,999 15.05% 15.96% 14.74%
$25,000 TO $34,999 16.29% 14.10% 13.22%
$15,000 TO $24,999 21.01% 18.35% 18.13%
$5,000 TO $14,999 26.28% 20.75% 18.37%
UNDER $5,000 8.05% 4.71% 3.32%
AVERAGE INCOME $ 28,713 $ 40,824 $ 49,488
MEDIAN INCOME $ 22,454 $ 29,391 $ 32,704
POPULATION BY SEX 177,196 186,376 191,709
MALE 47.73% 47.82% 47.97%
FEMALE 52.27% 52.18% 52.03%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------------------
TOTALS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- ------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY AGE 177,196 186,376 191,709
UNDER 5 YEARS 7.54% 7.27% 6.99%
5 to 9 YEARS 7.19% 7.72% 7.34%
10 TO 14 YEARS 6.24% 6.84% 7.30%
15 TO 17 YEARS 3.45% 3.67% 3.95%
18 TO 20 YEARS 4.70% 4.01% 4.01%
21 YEARS 1.63% 1.26% 1.18%
22 TO 24 YEARS 4.64% 3.45% 3.62%
25 TO 29 YEARS 8.70% 6.77% 5.85%
30 TO 34 YEARS 8.78% 7.74% 6.67%
35 TO 39 YEARS 8.04% 8.49% 7.57%
40 TO 44 YEARS 6.58% 7.88% 8.18%
45 TO 49 YEARS 4.70% 6.74% 7.57%
50 TO 54 YEARS 3.77% 5.33% 6.44%
55 TO 59 YEARS 3.72% 3.91% 5.09%
60 TO 64 YEARS 4.08% 3.32% 3.71%
65 TO 69 YEARS 4.55% 3.43% 3.06%
70 TO 74 YEARS 4.00% 3.50% 3.01%
75 TO 84 YEARS 5.70% 5.98% 5.60%
85 + YEARS 2.00% 2.66% 2.86%
MEDIAN AGE 33.37 35.75 37.04
AVERAGE AGE 36.76 37.20 37.65
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(RETAIL TRADE POTENTIAL REPORT - CURRENT YEAR SALES BY STORE TYPE)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
City of Spokane
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------------
<S> <C>
TOTAL RETAIL SALES $2,249
APPAREL & ACCESSORY STORES $ 103
AUTOMOTIVE DEALERS $ 537
AUTOMOTIVE & HOME SUPPLY STORES $ 34
DRUG & PROPRIETARY STORES $ 59
EATING & DRINKING PLACES $ 209
FOOD STORES $ 375
FURNITURE & HOME FURNISHINGS STORES $ 69
HOME APPLIANCE, RADIO, & T.V. STORES $ 61
GASOLINE SERVICE STATIONS $ 118
GENERAL MERCHANDISE $ 334
DEPARTMENT STORES (INCLUDING LEASED DEPTS.) $ 237
HARDWARE, LUMBER & GARDEN STORES $ 164
($'S IN MILLIONS)
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
POPULATION
2003 PROJECTION 438,833
1998 ESTIMATE 412,671
1990 CENSUS 361,364
1980 CENSUS 341,835
GROWTH 1980 - 1990 5.71%
HOUSEHOLDS
2003 PROJECTION 177,839
1998 ESTIMATE 165,109
1990 CENSUS 141,619
1980 CENSUS 128,403
GROWTH 1980 - 1990 10.29%
1998 ESTIMATED POPULATION BY RACE 412,671
WHITE 93.58%
BLACK 1.62%
ASIAN & PACIFIC ISLANDER 2.37%
OTHER RACES 2.43%
1998 ESTIMATED POPULATION 412,671
HISPANIC ORIGIN 2.86%
OCCUPIED UNITS 141,619
OWNER OCCUPIED 63.72%
RENTER OCCUPIED 36.28%
1990 AVERAGE PERSONS PER HH 2.47
1998 EST. HOUSEHOLDS BY INCOME 165,109
$150,000 OR MORE 2.33%
$100,000 TO $149,999 4.17%
$75,000 TO $99,999 7.28%
$50,000 TO $74,999 18.49%
$35,000 TO $49,999 17.04%
$25,000 TO $34,999 13.89%
$15,000 TO $24,999 16.47%
$5,000 TO $15,000 16.63%
UNDER $5,000 3.71%
1998 EST. AVERAGE HOUSEHOLD INCOME $ 46,358
1998 EST. MEDIAN HOUSEHOLD INCOME $ 34,487
1998 EST. PER CAPITA INCOME $ 18,883
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------
<S> <C>
1998 ESTIMATED POPULATION BY SEX 412,671
MALE 48.62%
FEMALE 51.38%
MARITAL STATUS 280,728
SINGLE MALE 13.64%
SINGLE FEMALE 11.02%
MARRIED 54.99%
PREVIOUSLY MARRIED MALE 6.64%
PREVIOUSLY MARRIED FEMALE 13.71%
HOUSEHOLDS WITH CHILDREN 49,877
MARRIED COUPLE FAMILY 70.63%
OTHER FAMILY-MALE HEAD 5.05%
OTHER FAMILY-FEMALE HEAD 22.66%
NON FAMILY 1.66%
1998 ESTIMATED POPULATION BY AGE 412,671%
UNDER 5 YEARS 7.09%
5 TO 9 YEARS 7.57%
10 TO 14 YEARS 7.26%
15 TO 17 YEARS 4.18%
18 TO 20 YEARS 4.40%
21 TO 24 YEARS 5.09%
25 TO 29 YEARS 6.74%
30 TO 34 YEARS 6.81%
35 TO 39 YEARS 7.88%
40 TO 49 YEARS 15.27%
50 TO 59 YEARS 10.60%
60 TO 64 YEARS 3.65%
65 TO 69 YEARS 3.43%
70 TO 74 YEARS 3.23%
75 + YEARS 6.81%
MEDIAN AGE 35.55
AVERAGE AGE 36.46
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 3
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------
<S> <C>
1998 ESTIMATED FEMALE POP. BY AGE 212,032
UNDER 5 YEARS 6.78%
5 TO 9 YEARS 7.18%
10 TO 14 YEARS 6.85%
15 TO 17 YEARS 3.95%
18 TO 20 YEARS 4.24%
21 TO 24 YEARS 4.72%
25 TO 29 YEARS 6.51%
30 TO 34 YEARS 6.69%
35 TO 39 YEARS 7.95%
40 TO 49 YEARS 15.19%
50 TO 59 YEARS 10.55%
60 TO 64 YEARS 3.72%
65 TO 69 YEARS 3.55%
70 TO 74 YEARS 3.60%
75 + YEARS 8.51%
FEMALE MEDIAN AGE 36.93
FEMALE AVERAGE AGE 37.91
POPULATION BY HOUSEHOLD TYPE 361,364
FAMILY HOUSEHOLDS 80.68%
NON-FAMILY HOUSEHOLDS 16.30%
GROUP QUARTERS 3.02%
HOUSEHOLDS BY TYPE 141,619
SINGLE MALE 11.50%
SINGLE FEMALE 16.04%
MARRIED COUPLE 52.61%
OTHER FAMILY-MALE HEAD 2.92%
OTHER FAMILY-FEMALE HEAD 10.83%
NON FAMILY-MALE HEAD 3.62%
NON FAMILY-FEMALE HEAD 2.47%
POPULATION BY URBAN VS. RURAL 361,364
URBAN 83.29%
RURAL 16.71%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 4
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -----------------------------------------------------------
DESCRIPTION TOTALS
- -----------------------------------------------------------
<S> <C>
FEMALES 16+ WITH CHILDREN 0-17: BASE 144,339
WORKING WITH CHILD 0 -- 5 4.79%
NOT WORKING WITH CHILD 0 -- 5 0.43%
NOT IN LABOR FORCE WITH CHILD 0 -- 5 3.46%
WORKING WITH CHILD 6 -- 17 11.90%
NOT WORKING WITH CHILD 6 -- 17 0.76%
NOT IN LAB. FORCE WITH CHILD 6 -- 17 4.00%
WORKING WITH CHILD 0 -- 5 & 6 -- 18 3.45%
NOT WORKING WITH CHILD 0 -- 5 & 6 -- 18 0.24%
NOT IN LAB. FORCE W/CHILD 0 -- 5 & 6 -- 18 3.01%
WORKING WITH NO CHILDREN 30.82%
NOT WORKING WITH NO CHILDREN 2.31%
NOT IN LAB. FORCE WITH NO CHILD. 34.83%
HH BY AGE BY POVERTY STATUS 141,859
ABOVE POVERTY UNDER AGE 65 66.44%
ABOVE POVERTY AGE 65 + 19.55%
BELOW POVERTY UNDER AGE 65 11.29%
BELOW POVERTY AGE 65 + 2.72%
POPULATION 16+ BY EMPLOYMENT STATUS 276,186
EMPLOYED IN ARMED FORCES 1.55%
EMPLOYED CIVILIANS 56.90%
UNEMPLOYED CIVILIANS 4.46%
NOT IN LABOR FORCE 37.09%
POPULATION 16+ BY OCCUPATION 157,142
EXECUTIVE AND MANAGERIAL 11.58%
PROFESSIONAL SPECIALTY 15.43%
TECHNICAL SUPPORT 3.90%
SALES 13.43%
ADMINISTRATIVE SUPPORT 15.82%
SERVICE: PRIVATE HOUSEHOLD 0.32%
SERVICE: PROTECTIVE 1.53%
SERVICE: OTHER 13.60%
FARMING FORESTRY & FISHING 1.63%
PRECISION PRODUCTION & CRAFT 9.90%
MACHINE OPERATOR 4.92%
TRANS. AND MATERIAL MOVING 4.23%
LABORERS 3.70%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 5
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
FAMILIES BY NUMBER OF WORKERS 94,956
NO WORKERS 14.90%
ONE WORKER 29.34%
TWO WORKERS 45.57%
THREE + WORKERS 10.19%
HISPANIC POPULATION BY TYPE 361,364
NOT HISPANIC 98.06%
MEXICAN 1.17%
PUERTO RICAN 0.12%
CUBAN 0.03%
OTHER HISPANIC 0.61%
1998 HISPANICS BY RACE: BASE 11,821
WHITE 61.85%
BLACK 1.87%
ASIAN 3.43%
OTHER 32.86%
POPULATION BY TRANSPORTATION TO WORK 158,203
DRIVE ALONE 77.83%
CAR POOL 10.96%
PUBLIC TRANSPORTATION 2.78%
DRIVE MOTORCYCLE 0.21%
WALKED ONLY 3.78%
OTHER MEANS 1.07%
WORKED AT HOME 3.37%
POPULATION BY TRAVEL TIME TO WORK 158,203
UNDER 10 MINUTES / WORK AT HOME 19.15%
10 TO 29 MINUTES 62.58%
30 TO 59 MINUTES 16.08%
60 TO 89 MINUTES 1.43%
90+ MINUTES 0.76%
AVERAGE TRAVEL TIME IN MINUTES 17.97
HOUSEHOLDS BY NO. OF VEHICLES 141,619
NO VEHICLES 9.40%
1 VEHICLE 32.58%
2 VEHICLES 37.63%
3+ VEHICLES 20.39%
ESTIMATED TOTAL VEHICLES 245,124
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 6
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
POPULATION 25+ BY EDUCATION LEVEL 228,353
ELEMENTARY (0-8) 5.22%
SOME HIGH SCHOOL (9-11) 10.36%
HIGH SCHOOL GRADUATE (12) 27.88%
SOME COLLEGE (13-15) 25.84%
ASSOCIATES DEGREE ONLY 10.07%
BACHELORS DEGREE ONLY 14.02%
GRADUATE DEGREE 6.60%
POPULATION ENROLLED IN SCHOOL 100,683
PUBLIC PRE-PRIMARY 4.05%
PRIVATE PRE-PRIMARY 2.43%
PUBLIC ELEM/HIGH 57.40%
PRIVATE ELEM/HIGH 5.01%
ENROLLED IN COLLEGE 31.11%
HOUSING UNITS BY OCCUPANCY STATUS 150,105
OCCUPLIED 94.35%
VACANT 5.65%
VACANT UNITS 8,486
FOR RENT 36.38%
FOR SALE ONLY 15.73%
SEASONAL 11.77%
OTHER 36.12%
OWNER OCCUPIED PROPERTY VALUES 71,159
UNDER $25,000 3.19%
$25,000 TO $49,999 32.50%
$50,000 TO $74,999 35.06%
$75,000 TO $99,999 17.01%
$100,000 TO $149,999 8.21%
$150,000 TO $199,999 2.36%
$200,000 TO $299,999 1.23%
$300,000 TO $399,999 0.29%
$400,000 TO $499,999 0.07%
$ 500,000+ 0.08%
MEDIAN PROPERTY VALUE $60,208
TOTAL RENTAL UNITS 47,846
MEDIAN RENT $ 288
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 7
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ---------------------------------------------
DESCRIPTION TOTALS
- ---------------------------------------------
<S> <C>
PERSONS IN UNIT 141,619
1 PERSON UNITS 27.54%
2 PERSON UNITS 33.81%
3 PERSON UNITS 15.82%
4 PERSON UNITS 14.00%
5 PERSON UNITS 5.84%
6 PERSON UNITS 1.94%
7 + UNITS 1.05%
YEAR ROUND UNITS IN STRUCTURE 150,105
SINGLE UNITS DETACHED 66.76%
SINGLE UNITS ATTACHED 2.71%
DOUBLE UNITS 4.03%
3 TO 9 UNITS 7.18%
10 TO 19 UNITS 4.17%
20 TO 49 UNITS 4.08%
50 + UNITS 3.14%
MOBILE HOME OR TRAILER 7.13%
ALL OTHER 0.81%
SINGLE/MULTIPLE UNIT RATIO 3.07
HOUSING UNITS BY YEAR BUILT 141,619
BUILT 1989 TO MARCH 1990 1.02%
BUILT 1985 TO 1988 5.36%
BUILT 1980 TO 1984 7.73%
BUILT 1970 TO 1979 25.71%
BUILT 1960 TO 1969 10.92%
BUILT 1950 TO 1959 17.90%
BUILT 1940 TO 1949 10.77%
BUILT 1939 OR EARLIER 20.59%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(1990 INCOME ('89))
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ---------------------------------------------
DESCRIPTION TOTALS
- ---------------------------------------------
<S> <C>
1990 Total Households 141,619
% INCOME CATEGORIES
HH_90_BY INCOME_89: %_0-5K 6.27%
HH_90_BY INCOME_89: %_5-15K 22.08%
HH_90_BY INCOME_89: %_15-25K 20.14%
HH_90_BY INCOME_89: %_25-35K 17.02%
HH_90_BY INCOME_89: %_35-50K 17.50%
HH_90_BY INCOME_89: %_50-75K 11.55%
HH_90_BY INCOME_89: %_75-100K 3.03%
HH_90_BY INCOME_89: %_100-150K 1.57%
HH_90_BY INCOME_89: %_150K+ 0.83%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
TOTALS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -------------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 361,364 412,671 438,833
NON-HISPANIC WHITE 93.41% 91.81% 90.77%
NON-HISPANIC BLACK 1.38% 1.57% 1.70%
NON-HISPANIC ASIAN & P.I. 1.76% 2.27% 2.60%
NON-HISPANIC A.I. & OTHER 1.52% 1.49% 1.48%
HISPANIC ORIGIN POPULATION 1.94% 2.86% 3.45%
HOUSEHOLDS BY INCOME 141,859 165,109 177,839
$150,000 OR MORE 0.83% 2.33% 4.39%
$100,000 TO $149,999 1.57% 4.17% 6.52%
$75,000 TO $99,999 3.03% 7.28% 9.74%
$50,000 TO $74,999 11.55% 18.49% 18.85%
$35,000 TO $49,999 17.50% 17.04% 15.14%
$25,000 TO $34,999 17.02% 13.89% 12.75%
$15,000 TO $24,999 20.14% 16.47% 15.56%
$5,000 TO $14,999 22.08% 16.63% 14.40%
UNDER $5,000 6.27% 3.71% 2.66%
AVERAGE INCOME $ 32,084 $ 46,358 $ 57,193
MEDIAN INCOME $ 25,887 $ 34,497 $ 39,592
POPULATION BY SEX 361,364 412,671 438,833
MALE 48.64% 48.62% 48.64%
FEMALE 51.36% 51.38% 51.36%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------------------
TOTALS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- ------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY AGE 361,364 412,671 438,833
UNDER 5 YEARS 7.40% 7.09% 6.80%
5 TO 9 YEARS 7.72% 7.57% 7.15%
10 TO 14 YEARS 7.20% 7.26% 7.25%
15 TO 17 YEARS 4.05% 4.18% 4.24%
18 TO 20 YEARS 4.81% 4.40% 4.52%
21 YEARS 1.56% 1.34% 1.37%
22 TO 24 YEARS 4.20% 3.75% 3.94%
25 TO 29 YEARS 7.96% 6.74% 6.05%
30 TO 34 YEARS 8.45% 6.81% 6.50%
35 TO 39 YEARS 8.27% 7.88% 6.67%
40 TO 44 YEARS 7.35% 7.99% 7.62%
45 TO 49 YEARS 5.48% 7.28% 7.71%
50 TO 54 YEARS 4.31% 6.09% 6.99%
55 TO 59 YEARS 3.99% 4.51% 5.76%
60 TO 64 YEARS 3.96% 3.65% 4.20%
65 TO 69 YEARS 4.04% 3.43% 3.31%
70 TO 74 YEARS 3.39% 3.23% 3.00%
75 TO 84 YEARS 4.41% 4.91% 4.80%
85 + YEARS 1.43% 1.90% 2.11%
MEDIAN AGE 33.02 35.55 36.63
AVERAGE AGE 35.35 36.46 37.22
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(RETAIL TRADE POTENTIAL REPORT - CURRENT YEAR SALES BY STORE TYPE)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
Spokane County
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------------------
<S> <C>
TOTAL RETAIL SALES $4,621
APPAREL & ACCESSORY STORES $ 214
AUTOMOTIVE DEALERS $1,102
AUTOMOTIVE & HOME SUPPLY STORES $ 70
DRUG & PROPRIETARY STORES $ 123
EATING & DRINKING PLACES $ 432
FOOD STORES $ 770
FURNITURE & HOME FURNISHINGS STORES $ 144
HOME APPLIANCE, RADIO, & T.V. STORES $ 126
GASOLINE SERVICE STATIONS $ 242
GENERAL MERCHANDISE $ 687
DEPARTMENT STORES (INCLUDING LEASED DEPTS.) $ 488
HARDWARE, LUMBER & GARDEN STORES $ 337
($'S IN MILLIONS)
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
POPULATION
2003 PROJECTION 6,114,592
1998 ESTIMATE 5,675,740
1990 CENSUS 4,866,692
1980 CENSUS 4,132,158
GROWTH 1980 -- 1990 17,78%
HOUSEHOLDS
2003 PROJECTION 2,394,833
1998 ESTIMATE 2,205,266
1990 CENSUS 1,872,431
1980 CENSUS 1,540,511
GROWTH 1980-1990 21.55%
1998 ESTIMATED POPULATION BY RACE 5,675,740
WHITE 86.22%
BLACK 3.38%
ASIAN & PACIFIC ISLANDER 5.51%
OTHER RACES 4.90%
1998 ESTIMATED POPULATION 5,675,740
HISPANIC ORIGIN 6.23%
OCCUPIED UNITS 1,872,431
OWNER OCCUPIED 62.57%
RENTER OCCUPIED 37.43%
1990 AVERAGE PERSONS PER HH 2.53
1996 EST. HOUSEHOLDS BY INCOME 2,205,266
$150,000 OR MORE 3.59%
$100,000 TO $149,999 6.41%
$75,000 TO $99,999 9.88%
$50,000 TO $74,999 20.89%
$35,000 TO $49,999 17.06%
$25,000 TO $34,999 13.02%
$15,000 TO $24,999 13.66%
$5,000 TO $15,000 12.64%
UNDER $5,000 2.85%
1998 EST. AVERAGE HOUSEHOLD INCOME $ 54,515
1998 EST. MEDIAN HOUSEHOLD INCOME $ 41,883
1998 EST. PER CAPITA INCOME $ 21,467
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------
DESCRIPTION TOTALS
- -------------------------------------------------
<S> <C>
1998 ESTIMATED POPULATION BY SEX 5,675,740
MALE 49,47%
FEMALE 50.53%
MARITAL STATUS 3,791,157
SINGLE MALE 14.24%
SINGLE FEMALE 10.61%
MARRIED 56.83%
PREVIOUSLY MARRIED MALE 6.44%
PREVIOUSLY MARRIED FEMALE 12.08%
HOUSEHOLDS WITH CHILDREN 664,342
MARRIED COUPLE FAMILY 74.08%
OTHER FAMILY -- MALE HEAD 5.44%
OTHER FAMILY -- FEMALE HEAD 18.89%
NON FAMILY 1.59%
1998 ESTIMATED POPULATION BY AGE 5,675,740
UNDER 5 YEARS 7.21%
5 TO 9 YEARS 7.54%
10 TO 14 YEARS 7.17%
15 TO 17 YEARS 4.05%
18 TO 20 YEARS 3.85%
21 TO 24 YEARS 4.87%
25 TO 29 YEARS 6.97%
30 TO 34 YEARS 7.26%
35 TO 39 YEARS 8.43%
40 TO 49 YEARS 15.78%
50 TO 59 YEARS 10.65%
60 TO 64 YEARS 3.71%
65 TO 69 YEARS 3.40%
70 TO 74 YEARS 3.16%
75+ YEARS 5.95%
MEDIAN AGE 35.64
AVERAGE AGE 36.18
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 3
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- --------------------------------------------------
DESCRIPTION TOTALS
- --------------------------------------------------
<S> <C>
1998 ESTIMATED FEMALE POP. BY AGE 2,868,078
UNDER 5 YEARS 7.02%
5 TO 9 YEARS 7.31%
10 TO 14 YEARS 6.92%
15 TO 17 YEARS 3.90%
18 TO 20 YEARS 3.69%
21 TO 24 YEARS 4.57%
25 TO 29 YEARS 6.67%
30 TO 34 YEARS 7.10%
35 To 39 YEARS 8.41%
40 TO 49 YEARS 15.67%
50 TO 59 YEARS 10.66%
60 TO 64 YEARS 3.74%
65 TO 69 YEARS 3.51%
70 TO 74 YEARS 3.45%
75+ YEARS 7.38%
FEMALE MEDIAN AGE 36.67
FEMALE AVERAGE AGE 37.33
POPULATION BY HOUSEHOLD TYPE 4,866,692
FAMILY HOUSEHOLDS 81.51%
NON-FAMILY HOUSEHOLDS 16.01%
GROUP QUARTERS 2.48%
HOUSEHOLDS BY TYPE 1,872,431
SINGLE MALE 11.32%
SINGLE FEMALE 14.12%
MARRIED COUPLE 54.97%
OTHER FAMILY -- MALE HEAD 3.21%
OTHER FAMILY -- FEMALE HEAD 9.37%
NON FAMILY -- MALE HEAD 4.30%
NON FAMILY -- FEMALE HEAD 2.70%
POPULATION BY URBAN VS. RURAL 4,866,692
URBAN 76,38%
RURAL 23.62%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 4
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
FEMALES 16+ WITH CHILDREN 0-17: BASE 1,900,954
WORKING WITH CHILD 0-5 4.84%
NOT WORKING WITH CHILD 0-5 0.41%
NOT IN LABOR FORCE WITH CHILD 0-5 3.75%
WORKING WITH CHILD 6-17 11.97%
NOT WORKING WITH CHILD 6-17 0.61%
NOT IN LAB. FORCE WITH CHILD 6-17 3.96%
WORKING WITH CHILD 0-5 & 6-18 3.58%
NOT WORKING WITH CHILD 0-5 & 6-18 0.26%
NOT IN LAB. FORCE W/CHILD 0-5 & 6-18 3.10%
WORKING WITH NO CHILDREN 34.14%
NOT WORKING WITH NO CHILDREN 2.05%
NOT IN LAB. FORCE WITH NO CHILD. 31.33%
HH BY AGE BY POVERTY STATUS 1,875,508
ABOVE POVERTY UNDER AGE 65 71.75%
ABOVE POVERTY AGE 65+ 17.68%
BELOW POVERTY UNDER AGE 65 8.39%
BELOW POVERTY AGE 65+ 2.18%
POPULATION 16+ BY EMPLOYMENT STATUS 3,730,985
EMPLOYED IN ARMED FORCES 1.44%
EMPLOYED CIVILIANS 61.48%
UNEMPLOYED CIVILIANS 3.73%
NOT IN LABOR FORCE 33.34%
POPULATION 16+ BY OCCUPATION 2,293,961
EXECUTIVE AND MANAGERIAL 12.64%
PROFESSIONAL SPECIALTY 15.07%
TECHNICAL SUPPORT 3.99%
SALES 11.86%
ADMINISTRATIVE SUPPORT 15.46%
SERVICE: PRIVATE HOUSEHOLD 0.34%
SERVICE: PROTECTIVE 1.44%
SERVICE: OTHER 11.04%
FARMING FORESTRY & FISHING 3.39%
PRECISION PRODUCTION & CRAFT 11.58%
MACHINE OPERATOR 5.23%
TRANS. AND MATERIAL MOVING 4.20%
LABORERS 3.76%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 5
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
FAMILIES BY NUMBER OF WORKERS 1,276,227
NO WORKERS 12.92%
ONE WORKER 28.10%
TWO WORKERS 47.60%
THREE + WORKERS 11.38%
HISPANIC POPULATION BY TYPE 4,866,692
NOT HISPANIC 95.9%
MEXICAN 3.20%
PUERTO RICAN 0.19%
CUBAN 0.05%
OTHER HISPANIC 0.97%
1998 HISPANIC BY RACE: BASE 353,459
WHITE 41.39%
BLACK 1.75%
ASIAN 3.84%
OTHER 53.01%
POPULATION BY TRANSPORTATION TO WORK 2,302,666
DRIVE ALONE 73.87%
CAR POOL 12.26%
PUBLIC TRANSPORTATION 4.53%
DRIVE MOTORCYCLE 0.35%
WALKED ONLY 3.97%
OTHER MEANS 1.27%
WORKED AT HOME 3.75%
POPULATION BY TRAVEL TIME TO WORK 2,302,666
UNDER 10 MINUTES / WORK AT HOME 19.35%
10 TO 29 MINUTES 52.14%
30 TO 59 MINUTES 23.57%
60 TO 89 MINUTES 3.59%
90+ MINUTES 1.35%
AVERAGE TRAVEL TIME IN MINUTES 21.21
HOUSEHOLDS BY NO. OF VEHICLES 1,872,431
NO VEHICLES 7.51%
1 VEHICLE 31.11%
2 VEHICLES 39.04%
3+ VEHICLES 22.34%
ESTIMATED TOTAL VEHICLES 3,383,029
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 6
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------------
<S> <C>
POPULATION 25+ BY EDUCATION LEVEL 3,126,390
ELEMENTARY (0-8) 5.48%
SOME HIGH SCHOOL (9-11) 10.70%
HIGH SCHOOL GRADUATE (12) 27.93%
SOME COLLEGE (13-15) 25.01%
ASSOCIATES DEGREE ONLY 7.95%
BACHELORS DEGREE ONLY 15.89%
GRADUATE DEGREE 7.04%
POPULATION ENROLLED IN SCHOOL 1,252,312
PUBLIC PRE -- PRIMARY 4.88%
PRIVATE PRE -- PRIMARY 3.28%
PUBLIC ELEM/HIGH 60.20%
PRIVATE ELEM/HIGH 4.73%
ENROLLLED IN COLLEGE 26.92%
HOUSING UNITS BY OCCUPANCY STATUS 2,032,378
OCCUPIED 92.13%
VACANT 7.87%
VACANT UNITS 159,947
FOR RENT 27.09%
FOR SALE ONLY 9.66%
SEASONAL 34.91%
OTHER 28.34%
OWNER OCCUPIED PROPERTY VALUES 896,436
UNDER $25,000 1.87%
$25,000 TO $49,999 11.95%
$50,000 TO $74,999 21.51%
$75,000 TO $99,999 19.91%
$100,000 TO $149,999 21.50%
$150,000 TO $199,999 11.27%
$200,000 TO $299,999 7.56%
$300,000 TO $399,999 2.29%
$400,000 TO $499,999 0.93%
$500,000 + 1.19%
MEDIAN PROPERTY VALUE $ 93,412
TOTAL RENTAL UNITS 655,701
MEDIAN RENT $ 383
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 7
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ----------------------------------------------
DESCRIPTION TOTALS
- ----------------------------------------------
<S> <C>
PERSONS IN UNIT 1,872,431
1 PERSON UNITS 25.44%
2 PERSON UNITS 34.43%
3 PERSON UNITS 16.31%
4 PERSON UNITS 14.43%
5 PERSON UNITS 6.01%
6 PERSON UNITS 2.11%
7 + UNITS 1.27%
YEAR ROUND UNITS IN STRUCTURE 2,032,378
SINGLE UNITS DETACHED 62.62%
SINGLE UNITS ATTACHED 2.37%
DOUBLE UNITS 3.03%
3 TO 9 UNITS 8.27%
10 TO 19 UNITS 5.83%
20 TO 49 UNITS 4.93%
50 + UNITS 2.75%
MOBILE HOME OR TRAILER 9.23%
ALL OTHER 0.97%
SINGLE/MULTIPLE UNIT RATIO 2.62
HOUSING UNITS BY YEAR BUILT 1,872,431
BUILT 1989 TO MARCH 1990 2.78%
BUILT 1985 TO 1988 9.14%
BUILT 1980 TO 1984 10.58%
BUILT 1970 TO 1979 24.65%
BUILT 1960 TO 1969 15.68%
BUILT 1950 TO 1959 12.46%
BUILT 1940 TO 1949 9.07%
BUILT 1939 OR EARLIER 15.65%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(1990 INCOME ('89))
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------
<S> <C>
1990 Total Households 1,872,431
% INCOME CATEGORIES
HH_90_BY INCOME_89: %_0-5K 4.54%
HH_90_BY INCOME_89: %_5-15K 16.84%
HH_90_BY INCOME_89: %_15-25K 17.87%
HH_90_BY INCOME_89: %_25-35K 16.85%
HH_90_BY INCOME_89: %_35-50K 19.59%
HH_90_BY INCOME_89: %_50-75K 15.83%
HH_90_BY INCOME_89: %_75-100K 4.81%
HH_90_BY INCOME_89: %_100-150K 2.38%
HH_90_BY INCOME_89: %_150K+ 1.27%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
POP-FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TOTALS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 4,866,692 5,675,740 6,114,592
NON-HISPANIC WHITE 86.75% 83.64% 81.67%
NON-HISPANIC BLACK 3.00% 3.27% 3.47%
NON-HISPANIC ASIAN & P.I. 4.18% 5.27% 5.96%
NON-HISPANIC A.I. & OTHER 1.66% 1.60% 1.55%
HISPANIC ORIGIN POPULATION 4.41% 6.23% 7.34%
HOUSEHOLDS BY INCOME 1,875,508 2,205,266 2,394,833
$150,000 OR MORE 1.27% 3.59% 7.00%
$100,000 TO $149,999 2.38% 6.41% 9.15%
$75,000 TO $99,999 4.81% 9.88% 11.83%
$50,000 TO $74,999 15.83% 20.89% 19.91%
$35,000 TO $49,999 19.59% 17.06% 14.67%
$25,000 TO $34,999 16.85% 13.02% 11.39%
$15,000 TO $24,999 17.87% 13.66% 12.62%
$5,000 TO $14,999 16.84% 12.64% 11.28%
UNDER $5,000 4.54% 2.85% 2.15%
AVERAGE INCOME $ 38,157 $ 54,515 $ 66,808
MEDIAN INCOME $ 31,376 $ 41,883 $ 47,839
POPULATION BY SEX 4,866,692 5,675,740 6,114,592
MALE 49,60% 49.47% 49.40%
FEMALE 50.40% 50.53% 50.60%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
POP-FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
TOTALS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY AGE 4,866,692 5,675,740 6,114,592
UNDER 5 YEARS 7.54% 7.21% 6.92%
5 to 9 YEARS 7.63% 7.54% 7.11%
10 TO 14 YEARS 6.94% 7.17% 7.21%
15 TO 17 YEARS 3.82% 4.05% 4.15%
18 TO 20 YEARS 4.33% 3.85% 4.08%
21 YEARS 1.46% 1.24% 1.31%
22 TO 24 YEARS 4.25% 3.63% 3.78%
25 TO 29 YEARS 8.46% 6.97% 5.85%
30 TO 34 YEARS 9.11% 7.26% 7.08%
35 TO 39 YEARS 8.79% 8.43% 7.11%
40 TO 44 YEARS 7.73% 8.41% 8.01%
45 TO 49 YEARS 5.85% 7.37% 7.88%
50 TO 54 YEARS 4.46% 6.03% 6.89%
55 TO 59 YEARS 3.94% 4.62% 5.66%
60 TO 64 YEARS 3.89% 3.71% 4.31%
65 TO 69 YEARS 3.84% 3.40% 3.41%
70 TO 74 YEARS 3.07% 3.16% 2.97%
75 TO 84 YEARS 3.76% 4.36% 4.49%
85 + YEARS 1.16% 1.58% 1.79%
MEDIAN AGE 33.06 35.64 36.77
AVERAGE AGE 34.92 36.18 37.06
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(RETAIL TRADE POTENTIAL REPORT--CURRENT YEAR SALES BY STORE TYPE)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
State of
Washington COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -----------------------------------------------------------
DESCRIPTION TOTALS
- -----------------------------------------------------------
<S> <C>
TOTAL RETAIL SALES $58,627
APPAREL & ACCESSORY STORES $ 2,535
AUTOMOTIVE DEALERS $12,106
AUTOMOTIVE & HOME SUPPLY STORES $ 1,016
DRUG & PROPRIETARY STORES $ 2,169
EATING & DRINKING PLACES $ 5,962
FOOD STORES $10,200
FURNITURE & HOME FURNISHINGS STORES $ 1,730
HOME APPLIANCE, RADIO, & T.V. STORES $ 1,775
GASOLINE SERVICE STATIONS $ 3,224
GENERAL MERCHANDISE $ 7,917
DEPARTMENT STORES (INCLUDING LEASED DEPTS.) $ 5,776
HARDWARE, LUMBER & GARDEN STORES $ 4,057
($'S IN MILLIONS)
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------------
<S> <C>
POPULATION
2003 PROJECTION 280,885,056
1998 ESTIMATE 269,412,832
1990 CENSUS 248,709,872
1980 CENSUS 226,545,856
GROWTH 1980 -- 1990 9.78%
HOUSEHOLDS
2003 PROJECTION 105,888,880
1998 ESTIMATE 100,657,536
1990 CENSUS 91,947,408
1980 CENSUS 80,389,688
GROWTH 1980 -- 1990 14.38%
1998 ESTIMATED POPULATION BY RACE 269,412,832
WHITE 78.20%
BLACK 12.44%
ASIAN & PACIFIC ISLANDER 3.69%
OTHER RACES 5.66%
1998 ESTIMATED POPULATION 269,412,832
HISPANIC ORIGIN 11.15%
OCCUPIED UNITS 91,947,408
OWNER OCCUPIED 64.19%
RENTER OCCUPIED 35.81%
1990 AVERAGE PERSONS PER HH 2.63
1998 EST. HOUSEHOLDS BY INCOME 100,657,536
$150,000 OR MORE 3.89%
$100,000 TO $149,999 5.93%
$75,000 TO $99,999 8.95%
$50,000 TO $74,999 18.99%
$35,000 TO $49,999 16.29%
$25,000 TO $34,999 12.97%
$15,000 TO $24,999 14.38%
$5,000 TO $15,000 14.60%
UNDER $5,000 4.00%
1998 EST. AVERAGE HOUSEHOLD INCOME $ 53,198
1998 EST. MEDIAN HOUSEHOLD INCOME $ 38,724
1998 EST. PER CAPITA INCOME $ 20,124
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- --------------------------------------------------
DESCRIPTION TOTALS
- --------------------------------------------------
<S> <C>
1998 ESTIMATED POPULATION BY SEX 269,412,840
MALE 48.77%
FEMALE 51.23%
MARITAL STATUS 195,142,016
SINGLE MALE 14.76%
SINGLE FEMALE 12.17%
MARRIED 54.79%
PREVIOUSLY MARRIED MALE 5.76%
PREVIOUSLY MARRIED FEMALE 12.52%
HOUSEHOLDS WITH CHILDREN 33,587,136
MARRIED COUPLE FAMILY 73.35%
OTHER FAMILY-MALE HEAD 4.82%
OTHER FAMILY-FEMALE HEAD 20.80%
NON FAMILY 1.03%
1998 ESTIMATED POPULATION BY AGE 269,412,840
UNDER 5 YEARS 7.14%
5 TO 9 YEARS 7.31%
10 TO 14 YEARS 7.03%
15 TO 17 YEARS 4.10%
18 TO 20 YEARS 4.10%
21 TO 24 YEARS 5.09%
25 TO 29 YEARS 7.25%
30 TO 34 YEARS 7.29%
35 TO 39 YEARS 8.06%
40 TO 49 YEARS 14.94%
50 TO 59 YEARS 10.43%
60 TO 64 YEARS 3.93%
65 TO 69 YEARS 3.70%
70 TO 74 YEARS 3.41%
75 + YEARS 6.23%
MEDIAN AGE 35.43
AVERAGE AGE 36.47
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 3
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ---------------------------------------------------
DESCRIPTION TOTALS
- ---------------------------------------------------
<S> <C>
1998 ESTIMATED FEMALE POP. BY AGE 138,018,480
UNDER 5 YEARS 6.86%
5 TO 9 YEARS 7.01%
10 TO 14 YEARS 6.70%
15 TO 17 YEARS 3.89%
18 TO 20 YEARS 3.91%
21 TO 24 YEARS 4.79%
25 TO 29 YEARS 6.85%
30 TO 34 YEARS 7.09%
35 TO 39 YEARS 7.98%
40 TO 49 YEARS 14.87%
50 TO 59 YEARS 10.50%
60 TO 64 YEARS 4.05%
65 TO 69 YEARS 3.91%
70 TO 74 YEARS 3.76%
75 + YEARS 7.83%
FEMALE MEDIAN AGE 36.82
FEMALE AVERAGE AGE 37.89
POPULATION BY HOUSEHOLD TYPE 248,709,872
FAMILY HOUSEHOLDS 83.67%
NON-FAMILY HOUSEHOLDS 13.63%
GROUP QUARTERS 2.69%
HOUSE BY TYPE 91,947,400
SINGLE MALE 10.01%
SINGLE FEMALE 14.54%
MARRIED COUPLE 55.15%
OTHER FAMILY-MALE HEAD 3.42%
OTHER FAMILY-FEMALE HEAD 11.60%
NON FAMILY-MALE HEAD 3.19%
NON FAMILY-FEMALE HEAD 2.08%
POPULATION BY URBAN VS. RURAL 248,709,904
URBAN 75.21%
RURAL 24.79%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 4
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -----------------------------------------------------------
DESCRIPTION TOTALS
- -----------------------------------------------------------
<S> <C>
FEMALES 16 + WITH CHILDREN 0 - 17 BASE 99,803,376
WORKING WITH CHILD 0 - 5 4.77%
NOT WORKING WITH CHILD 0 - 5 0.46%
NOT IN LABOR FORCE WITH CHILD 0 - 5 3.31%
WORKING WITH CHILD 6 - 17 11.71%
NOT WORKING WITH CHILD 6 - 17 0.69%
NOT IN LAB. FORCE WITH CHILD 6 - 17 4.13%
WORKING WITH CHILD 0 - 5 & 6 - 18 3.56%
NOT WORKING WITH CHILD 0 - 5 & 6 - 18 0.33%
NOT IN LAB. FORCE W/CHILD 0 - 5 & 6 - 18 2.84%
WORKING WITH NO CHILDREN 33.23%
NOT WORKING WITH NO CHILDREN 2.04%
NOT IN LAB. FORCE WITH NO CHILD. 32.93%
HH BY AGE BY POVERTY STATUS 91,993,616
ABOVE POVERTY UNDER AGE 65 68.78%
ABOVE POVERTY AGE 65 + 18.50%
BELOW POVERTY UNDER AGE 65 9.38%
BELOW POVERTY AGE 65 + 3.33%
POPULATION 16 + BY EMPLOYMENT STATUS 191,829,296
EMPLOYED IN ARMED FORCES 0.89%
EMPLOYED CIVILIANS 60.30%
UNEMPLOYED CIVILIANS 4.06%
NOT IN LABOR FORCE 34.74%
POPULATION 16 + BY OCCUPATION 115,681,224
EXECUTIVE AND MANAGERIAL 12.30%
PROFESSIONAL SPECIALTY 14.10%
TECHNICAL SUPPORT 3.68%
SALES 11.79%
ADMINISTRATIVE SUPPORT 16.27%
SERVICE: PRIVATE HOUSEHOLD 0.45%
SERVICE: PROTECTIVE 1.72%
SERVICE: OTHER 11.05%
FARMING FORESTRY & FISHING 2.45%
PRECISION PRODUCTION & CRAFT 11.32%
MACHINE OPERATOR 6.83%
TRANS. AND MATERIAL MOVING 4.09%
LABORERS 3.94%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 5
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------------
<S> <C>
FAMILIES BY NUMBER OF WORKERS 65,049,452
NO WORKERS 13.03%
ONE WORKER 28.04%
TWO WORKERS 45.56%
THREE + WORKERS 13.36%
HISPANIC POPULATION BY TYPE 248,709,872
NOT HISPANIC 91.01%
MEXICAN 5.43%
PUERTO RICAN 1.10%
CUBAN 0.42%
OTHER HISPANIC 2.05%
1998 HISPANICS BY RACE: BASE 30,050,648
WHITE 52.06%
BLACK 3.23%
ASIAN 1.58%
OTHER 43.12%
POPULATION BY TRANSPORTATION TO WORK 115,070,296
DRIVE ALONE 73.19%
CAR POOL 13.36%
PUBLIC TRANSPORTATION 5.27%
DRIVE MOTORCYCLE 0.21%
WALKED ONLY 3.90%
OTHER MEANS 1.11%
WORKED AT HOME 2.96%
POPULATION BY TRAVEL TIME TO WORK 115,070,296
UNDER 10 MINUTES / WORK AT HOME 18.83%
10 TO 29 MINUTES 51.64%
30 TO 59 MINUTES 23.68%
60 TO 89 MINUTES 4.33%
90 + MINUTES 1.53%
AVERAGE TRAVEL TIME IN MINUTES 21.72
HOUSEHOLDS BY NO. OF VEHICLES 91,947,448
NO VEHICLES 11.53%
1 VEHICLE 33.76%
2 VEHICLES 37.37%
3 + VEHICLES 17.34%
ESTIMATED TOTAL VEHICLES 150,785,974
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 6
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -----------------------------------------------------
DESCRIPTION TOTALS
- -----------------------------------------------------
<S> <C>
POPULATION 25 + BY EDUCATION LEVEL 158,868,480
ELEMENTARY (0 - 8) 10.39%
SOME HIGH SCHOOL (9 - 11) 14.38%
HIGH SCHOOL GRADUATE (12) 29.99%
SOME COLLEGE (13 - 15) 18.74%
ASSOCIATES DEGREE ONLY 6.16%
BACHELORS DEGREE ONLY 13.11%
GRADUATE DEGREE 7.22%
POPULATION ENROLLED IN SCHOOL 64,987,136
PUBLIC PRE-PRIMARY 4.12%
PRIVATE PRE-PRIMARY 2.81%
PUBLIC ELEM/HIGH 59.06%
PRIVATE ELEM/HIGH 6.44%
ENROLLED IN COLLEGE 27.57%
HOUSING UNITS BY OCCUPANCY STATUS 102,263,680
OCCUPLIED 89.91%
VACANT 10.09%
VACANT UNITS 10,316,268
FOR RENT 29.53%
FOR SALE ONLY 12.22%
SEASONAL 29.87%
OTHER 28.38%
OWNER OCCUPIED PROPERTY VALUES 44,918,008
UNDER $25,000 6.58%
$25,000 TO $49,999 18.80%
$50,000 TO $74,999 22.04%
$75,000 TO $99,999 15.71%
$100,000 TO $149,999 15.08%
$150,000 TO $199,999 8.94%
$200,000 TO $299,999 7.52%
$300,000 TO $399,999 2.69%
$400,000 TO $499,999 1.12%
$500,000 + 1.52%
MEDIAN PROPERTY VALUE $ 79,098
TOTAL RENTAL UNITS 30,490,540
MEDIAN RENT $ 374
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 7
CUSTOM SUMMARY REPORT
(POP FACTS: FULL DATA REPORT)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -----------------------------------------------
DESCRIPTION TOTALS
- -----------------------------------------------
<S> <C>
PERSONS IN UNIT 91,947,416
1 PERSON UNITS 24.56%
2 PERSON UNITS 32.03%
3 PERSON UNITS 17.37%
4 PERSON UNITS 15.07%
5 PERSON UNITS 6.73%
6 PERSON UNITS 2.50%
7 + UNITS 1.73%
YEAR ROUND UNITS IN STRUCTURE 102,263,672
SINGLE UNITS DETACHED 59.05%
SINGLE UNITS ATTACHED 5.26%
DOUBLE UNITS 4.84%
3 TO 9 UNITS 9.65%
10 TO 19 UNITS 4.80%
20 TO 49 UNITS 3.78%
50 + UNITS 4.30%
MOBILE HOME OR TRAILER 7.24%
ALL OTHER 1.10%
SINGLE/MULTIPLE UNIT RATIO 2.35
HOUSING UNITS BY YEAR BUILT 91,947,448
BUILT 1989 TO MARCH 1990 1.84%
BUILT 1985 TO 1988 8.64%
BUILT 1980 TO 1984 9.50%
BUILT 1970 TO 1979 21.69%
BUILT 1960 TO 1969 16.41%
BUILT 1950 TO 1959 14.96%
BUILT 1940 TO 1949 8.62%
BUILT 1939 OR EARLIER 18.33%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(1990 INCOME ('89))
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------
DESCRIPTION TOTALS
- -------------------------------------------------
<S> <C>
1990 Total Households 91,947,408
% INCOME CATEGORIES
HH_90_BY INCOME_89: %_0-5K 6.18%
HH_90_BY INCOME_89: %_5-15K 18.11%
HH_90_BY INCOME_89: %_15-25K 17.53%
HH_90_BY INCOME_89: %_25-35K 15.84%
HH_90_BY INCOME_89: %_35-50K 17.86%
HH_90_BY INCOME_89: %_50-75K 14.98%
HH_90_BY INCOME_89: %_75-100K 5.11%
HH_90_BY INCOME_89: %_100-150K 2.82%
HH_90_BY INCOME_89: %_150K + 1.57%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
TOTALS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY RACE 248,709,856 269,412,832 280,885,056
NON-HISPANIC WHITE 75.64% 72.39% 70.31%
NON-HISPANIC BLACK 11.75% 12.08% 12.32%
NON-HISPANIC ASIAN & P.I. 2.80% 3.52% 3.98%
NON-HISPANIC A.I. & OTHER 0.82% 0.85% 0.85%
HISPANIC ORIGIN POPULATION 8.99% 11.15% 12.53%
HOUSEHOLDS BY INCOME 91,993,616 100,657,536 105,888,880
$150,000 OR MORE 1.57% 3.89% 6.62%
$100,000 TO $149,999 2.82% 5.93% 8.07%
$ 75,000 TO $ 99,999 5.11% 8.95% 10.41%
$ 50,000 TO $ 74,999 14.98% 18.99% 18.21%
$ 35,000 TO $ 49,999 17.86% 16.29% 14.54%
$ 25,000 TO $ 34,999 15.84% 12.97% 11.72%
$ 15,000 TO $ 24,999 17.53% 14.38% 13.82%
$ 5,000 TO $ 14,999 18.11% 14.60% 13.52%
UNDER $5,000 6.18% 4.00% 3.08%
AVERAGE INCOME $ 38,453 $ 53,198 $ 64,005
MEDIAN INCOME $ 30,163 $ 38,724 $ 43,110
POPULATION BY SEX 248,710,056 269,412,840 280,885,056
MALE 48.75% 48.77% 48.79%
FEMALE 51.25% 51.23% 51.21%
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 2
POP FACTS: DEMOGRAPHIC TREND REPORT
CENSUS '90, UPDATES & PROJECTIONS
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
TOTALS
1990 1998 2003
DESCRIPTION CENSUS ESTIMATE PROJECTION
- -------------------------------------------------------------------------
<S> <C> <C> <C>
POPULATION BY AGE 248,710,056 269,412,840 280,885,056
UNDER 5 YEARS 7.38% 7.14% 6.85%
5 TO 9 YEARS 7.28% 7.31% 6.94%
10 TO 14 YEARS 6.88% 7.03% 7.15%
15 TO 17 YEARS 4.04% 4.10% 4.16%
18 TO 20 YEARS 4.72% 4.10% 4.20%
21 YEARS 1.53% 1.28% 1.32%
22 TO 24 YEARS 4.50% 3.80% 3.93%
25 TO 29 YEARS 8.57% 7.25% 6.11%
30 TO 34 YEARS 8.79% 7.29% 7.10%
35 TO 39 YEARS 8.03% 8.06% 7.00%
40 TO 44 YEARS 7.08% 7.93% 7.72%
45 TO 49 YEARS 5.58% 7.01% 7.57%
50 TO 54 YEARS 4.56% 5.82% 6.66%
55 TO 59 YEARS 4.23% 4.62% 5.48%
60 TO 64 YEARS 4.27% 3.93% 4.33%
65 TO 69 YEARS 4.07% 3.70% 3.61%
70 TO 74 YEARS 3.21% 3.41% 3.23%
75 TO 84 YEARS 4.04% 4.56% 4.77%
85 + YEARS 1.24% 1.67% 1.86%
MEDIAN AGE 32.90 35.43 36.59
AVERAGE AGE 35.33 36.47 37.27
</TABLE>
<PAGE>
Mon Aug 17, 1998 Page 1
CUSTOM SUMMARY REPORT
(RETAIL TRADE POTENTIAL REPORT - CURRENT YEAR SALES BY STORE TYPE)
BY EQUIFAX NATIONAL DECISION SYSTEMS 800-866-6511
PREPARED FOR
CUSHMAN & WAKEFIELD
United States
of America COORD: 00:00.00 00:00.00
<TABLE>
<CAPTION>
- ------------------------------------------------------------
DESCRIPTION TOTALS
- ------------------------------------------------------------
<S> <C>
TOTAL RETAIL SALES $2,621,172
APPAREL & ACCESSORY STORES $ 120,856
AUTOMOTIVE DEALERS $ 587,946
AUTOMOTIVE & HOME SUPPLY STORES $ 35,939
DRUG & PROPRIETARY STORES $ 104,149
EATING & DRINKING PLACES $ 253,084
FOOD STORES $ 438,978
FURNITURE & HOME FURNISHINGS STORES $ 75,114
HOME APPLIANCE, RADIO, & T.V. STORES $ 71,871
GASOLINE SERVICE STATIONS $ 155,611
GENERAL MERCHANDISE $ 342,021
DEPARTMENT STORES (INCLUDING LEASED DEPTS.) $ 275,389
HARDWARE, LUMBER & GARDEN STORES $ 149,884
($'S IN MILLIONS)
</TABLE>
<PAGE>
QUALIFICATIONS
- -------------------------------------------------------------------------------
KENNETH A. BARNES, MAI
PROFESSIONAL AFFILIATIONS:
Member of the Appraisal Institute (MAI Designation No. 8294)
Washington State Certified General Appraiser (#BARNEKA40203)
REAL ESTATE EXPERIENCE:
Director, Cushman & Wakefield of Washington, Inc., Valuation Advisory
Services, a full service real estate organization specializing in appraisal
and consultation. 1989 to present.
Assistant Director of Appraisal, Great Lakes Real Estate Corporation,
Glenview, Illinois. 1988 to 1989.
Self Employed Appraiser, Chicago, Illinois. 1987 to 1988.
Appraiser, Real Estate Research Corporation, Chicago, Illinois. 1985 to 1987.
Staff Appraiser, Moore & Shryock, Columbia, Missouri. 1984 to 1985.
Properties Appraised Include Office Buildings, Industrial, Condominiums,
Apartments, Retail Centers, Mixed Use Developments, Restaurants, Residential
Subdivisions, Vacant Land and Joint Venture Interests.
Purpose of Appraisals - Sale, Financing, Acquisition, Portfolio Analysis,
Syndication, Securities Filings, Merger and Acquisition.
Types of Consulting Projects - Feasibility and Market Studies for
Development and Renovation of Shopping Centers, Hotels, Apartments,
Acquisition Analysis of Vacant Land, Office Buildings.
EDUCATION:
Bachelor of Science (Biochemistry), 1982
University of Missouri, Columbia
Master of Business Administration (Finance), 1988
University of Chicago
<PAGE>
QUALIFICATIONS
- -------------------------------------------------------------------------------
KENNETH A. BARNES, MAI
PUBLICATIONS AND AWARDS:
"Rental Concessions and Value" The Appraisal Journal, April 1986. 1985
Manuscript Competition Winner.
"Discounting Equity Cash Flow Subject to Conventional and Participating
Debt" The Appraisal Journal, April 1987.
"Real Estate Investment Survey: First Quarter 1987" Real Estate Report,
First Quarter 1987.
With Janet Nutting, "Proforma Pitfalls: Interpreting Financial Projections
in Today's Uncertain Market" Real Estate Report, First Quarter 1987.
"Real Rates: Judging Discount Rates and Inflation Hedges" The Appraisal
Journal, January 1990.
