<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A No. 2
(AMENDMENT NO. 2
TO FORM 10-K)
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
For the transition period from ________ to _________
Commission file number 1-12560
JP REALTY, INC.
---------------
(Exact name of Registrant as specified in its charter)
MARYLAND 87-0515088
- ------------------------------------------------------------------
(State of organization) (I.R.S. Employer
Identification No.)
35 Century Park-Way
SALT LAKE CITY, UTAH
84115
- ------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(801) 486-3911
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
- -----------------------------------------------------------------
Common Stock, par value $.0001 per share
Name of each exchangeon which registered New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No
/X/ / /
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of the voting stock held by non-
affiliates of the Registrant was $464,995,335 as of March 21, 1997.
The aggregate market value has been computed based on a price of
$26-7/8 per share, the closing price of the stock on the New
York Stock Exchange on March 21, 1997.
Shares Outstanding at March 21, 1997
17,384,317 Shares of Common Stock, par value $.0001 per share.
200,000 Shares of Price Group Stock, par value $.0001 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's proxy statement for the 1997
Annual Meeting of Stockholders to be held on April 30, 1997 are
incorporated by reference into Part III of this Annual Report on
Form 10-K/A No. 2.
<PAGE> 2
Certain matters discussed under the captions "Business and
Properties" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Annual
Report of Form 10-K/A No. 2 and the information incorporated by
reference herein may constitute forward-looking statements for
purposes of Section 21E of the Securities Exchange Act of 1934,
as amended, and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance and achievements of JP Realty, Inc. to be materially
different from future results, performance or achievements expressed
or implied by such forward-looking statements.
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
GENERAL
JP Realty, Inc. (together with its subsidiaries, the
"Company") is a fully integrated, self-administered and self-
managed real estate investment trust ("REIT") primarily engaged in
the ownership, leasing, management, operation, development,
redevelopment and acquisition of retail properties in Utah, Idaho,
Colorado, Arizona, Nevada, New Mexico and Wyoming (the
"Intermountain Region"), as well as in Oregon, Washington and
California. The Company was formed on September 8, 1993 to
continue and expand the business, commenced in 1957, of certain
companies (the "Predecessor Companies") affiliated with John Price,
Chairman of the Board and Chief Executive Officer of the Company.
Based on total gross leasable area (Company-owned and tenant-owned
leasable area within the Company's properties collectively referred
to herein as "Total GLA"), the Company owns and operates the
largest retail property portfolio in the states of Utah, Idaho and
Wyoming, and one of the largest in the entire Intermountain Region.
Since 1976, the Company and the Predecessor Companies have been
responsible for developing more retail malls in the Intermountain
Region than any other developer, having constructed, developed or
redeveloped 11 malls in the region (as well as two other malls in
Oregon and Washington).
The Company's existing portfolio consists of 44 properties
(the "Properties"), including 11 enclosed regional malls, 24
community centers and three free-standing retail properties located
in ten states and six commercial properties located primarily in
the Salt Lake City, Utah metropolitan area. The Company is
currently developing an additional regional mall in Spokane,
Washington and is planning the development of another regional mall
in Provo, Utah. The majority of the Properties were developed or
redeveloped by the Predecessor Companies. The Properties or
interests therein are owned and controlled by the Company through
its 82% general partner interest in Price Development Company,
Limited Partnership ("PDC").
The Company's retail portfolio contains an aggregate of
approximately 8,644,000 square feet of Total GLA, while the
Company's commercial portfolio contains approximately 1,418,000
square feet of GLA. At December 31, 1996, approximately 13,000
square feet of GLA at one property in the Company's retail
portfolio was leased to a Tenant which was no longer occupying
the space. For the year ended December 31, 1996, the
retail properties and the commercial properties contributed
approximately 89% and 11%, respectively, to the Company's
consolidated net operating income (I.E., revenues less property
operating expenses, before interest expenses and depreciation).
The Company's strategy is to extend its dominant market
position in the Intermountain Region and to achieve cash flow
growth and enhance the value of its real property portfolio by
increasing its rental and net operating income over time. In order
to extend its dominant market position, the Company expects to
continue to concentrate its acquisition and other development
activities in the Intermountain Region.
In January, 1994, the Company completed a series of
transactions intended to allow it to reorganize and continue the
business of the Predecessor Companies through PDC. As part of
these transactions, the Company issued 13,029,500 shares of Common
Stock in a public offering (the "Offering"), issued 200,000 shares
of Price Group Stock to Fairfax Realty, Inc. ("Fairfax"), a company
controlled by John Price, and incurred $95 million in fixed rate
mortgage debt (the "Mortgage Debt") together with $9 million in
additional mortgage debt (the "Additional Mortgage Debt"). Net
proceeds of the sale of Common Stock were used by the Company to
purchase its general partner interest in PDC, which in turn
utilized such proceeds, together with the net proceeds from the
Mortgage Debt and the Additional Mortgage Debt, to (i) retire
substantially all of the then existing mortgage debt encumbering 38
of the Properties and other borrowings relating to such Properties,
(ii) purchase the equity interests held by two partners in
Cottonwood Mall and (iii) invest an additional $4 million in the
development project for the regional mall to be developed in
Spokane, Washington.
In August, 1995, the Company completed a public offering (the
"Additional Offering") raising approximately $56.4 million in gross
proceeds through the sale of 2,750,000 shares of Common Stock. The
Company used the net proceeds raised in the Additional Offering to
purchase additional general partner interest in PDC. PDC utilized
$47 million of these funds to repay borrowings under a credit
facility, which borrowings were incurred to fund the June 1995
acquisition of the Eastridge Mall and the Animas Valley Mall.
In January, 1997, the Company completed an additional public
offering raising approximately $40.7 million in gross proceeds
through the sale of 1,500,000 shares of Common Stock. The Company
utilized $38.6 million of these funds to repay borrowings under the
Credit Facilities.
<PAGE> 3
During March, 1995, the Company obtained a $50 million credit
facility (the "1995 Credit Facility") to fund working capital and
property acquisition, expansion and development activities. In
January, 1996, the Company obtained a $25 million unsecured credit
facility (the "1996 Credit Facility", together with the 1995 Credit
Facility, the "Credit Facilities") which is available for the same
purpose as the 1995 Credit Facility.
In general, the Company's regional malls contain at least two
major department store "anchors" and a wide variety of smaller mall
shops and kiosks located along enclosed malls connecting the
anchors. These Properties contain an aggregate of approximately
5,553,000 square feet of Total GLA, range in size from 296,000 to
over 878,000 square feet of Total GLA and have between 50 and 200
total stores. Community centers tend to be smaller than malls and
generally range in size from 75,000 to over 250,000 square feet of
Total GLA and have between five and 25 total stores. Community
centers generally service neighborhoods and focus more upon
immediate necessities in merchandise, such as in drug, grocery,
discount and home improvement stores.
Each of the Company's regional malls is the premier and
dominant mall, and in some cases, the only mall within its trade
area, and is generally considered to be the financial, economic and
social center for a given geographic area. The trade areas
surrounding the Company's malls have a drawing radius, depending on
the mall, ranging from five to over 150 miles. The malls have
attracted some of the leading national and regional retail
companies as anchor tenants such as JCPenney, ZCMI, Wal-Mart, The
Bon Marche, Sears, Dillard's and Mervyn's. The community center
portfolio consists of 24 Properties in seven states containing over
3,084,000 square feet of Total GLA. The three free-standing retail
Properties contain a total of approximately 7,000 square feet of
Total GLA. The Company's commercial portfolio is primarily located
in the Salt Lake City, Utah area where the Company's principal
executive offices are located. Included in this portfolio are 40
commercial buildings containing approximately 1,418,000 square feet
of Total GLA.
<PAGE> 4
PROPERTIES
The following tables set forth certain information relating to the Properties,
all of which (except as otherwise indicated) are 100% owned by PDC. The
Company believes that all such Properties are adequately covered by insurance.
RETAIL PROPERTIES
<TABLE>
<CAPTION>
OCCUPANCY AS OF
12/31/96
---------------------
FREE BASED
STANDINGTENANT TOTAL TENANT ON BASED TENANT OWNER-
PROPERTY STORES SHOPS ANCHORS GLA GLA OWNED TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE (SQ.FT)(SQ.FT.) (SQ.FT) (SQ.FT) (SQ.FT) (SQ.FT) GLA GLA SPACE TYPE ANCHORS
(1) (2) (3) (4) (5)
- -------- -------- ------ ------- -------- -------- -------- ------- ------- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UTAH
- ----
Arctic West
Circle- Valley
Granger City FR 2,184 0 0 2,184 2,184 0 100.0% 100.0% 0.0% Fee None
Bank One Nephi FR 3,590 0 0 3,590 3,590 0 100.0% 100.0% 0.0% Fee None
Cache
Valley
Mall Logan RM 29,540 97,756 182,889 310,185 307,685 2,500 91.8% 91.7% 74.0% Fee JCPenney,
ZCMI, Lamonts
Cottonwood
Mall Salt Lake RM 53,300 321,904 379,508 754,712 754,712 0 94.3% 94.3% 86.6% Fee JCPenney,
City ZCMI
Cottonwood Salt Lake
Square City CC 0 35,445 41,612 77,057 77,057 0 100.0% 100.0% 100.0% Fee/ Albertsons
GLA
Fort Union Salt Lake
Plaza City CC 29,998 0 0 29,998 29,998 0 100.0% 100.0% 0.0% GL None
Gateway
Crossing Bountiful CC 35,620 65,957 174,047 275,624 145,664 129,960 100.0% 100.0% 100.0% Fee Ernst Home
(6) Center(7),
TJ Maxx
North
Temple Salt Lake
Shops City CC 0 10,085 0 10,085 10,085 0 100.0% 100.0% 100.0% Fee
Orem
Plaza- Orem CC 15,491 18,814 62,420 96,725 91,125 5,600 100.0% 100.0% 100.0% Fee Savers,
Center St. Showbiz Pizza
Orem Plaza Orem CC 8,045 19,057 0 27,102 27,102 0 97.0% 97.0% 95.8% Fee
State St.
Plaza 9400 Sandy CC 34,510 55,407 136,745 226,662 226,662 0 96.7% 96.7% 86.5% GL Albertsons,
Fred Meyer,
Pep Boys
Red Cliffs St.
Mall George RM 12,500 90,868 203,338 306,706 192,435 114,271 97.4% 95.8% 91.1% Fee JCPenney,
(8) ZCMI
Red Cliffs
Plaza St George CC 9,327 0 46,626 55,953 46,626 9,327 100.0% 100.0% 0.0% Fee Ernst Home
Center(9)
River Pointe West
Plaza Jordan CC 18,522 56,120 135,707 210,349 56,120 154,229 98.6% 94.6% 94.6% Fee
(10)
</TABLE>
<PAGE> 5
RETAIL PROPERTIES - CONTINUED
<TABLE>
<CAPTION>
OCCUPANCY AS OF
12/31/96
---------------------
FREE BASED
STANDINGTENANT TOTAL TENANT ON BASED TENANT OWNER-
PROPERTY STORES SHOPS ANCHORS GLA GLA OWNED TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE (SQ.FT)(SQ.FT.) (SQ.FT) (SQ.FT) (SQ.FT) (SQ.FT) GLA GLA SPACE TYPE ANCHORS
(1) (2) (3) (4) (5)
- -------- -------- ------ ------- ------ ------- ------ ------- ------- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Riverside
Plaza Provo CC 10,050 11,363 156,454 177,867 174,867 3,000 100.0% 100.0% 100.0% Fee Best
Products(11),
Payless Drug,
McFrugals,
MiniWorld
University
Crossing Orem CC 33,401 26,862 139,780 200,043 199,143 900 99.4% 99.4% 95.2% Fee Burlington
Coat (12),
Office Max(13)
IDAHO
- -----
Alameda
Plaza Pocatello CC 19,049 27,276 143,946 190,271 190,271 0 100.0% 100.0% 100.0% Fee Albertsons,
Fred Meyer
Boise Towne
Square Boise RM 84,418 341,968 452,037 878,423 483,286 395,137 99.4% 98.9% 98.4% Fee/ The Bon
(14) GL Marche
Boise Plaza Boise CC 0 0 108,464 108,464 108,464 0 100.0% 100.0% 0.0% Prt- Burlington
shp Coat(12),
Int Albertsons
(16)
Grand Teton Idaho
Mall Falls RM 29,089 172,073 323,925 525,087 519,467 5,620 96.0% 96.0% 87.8% Fee Sears
Sears, ZCMI,
The Bon Marche
Twin Falls Twin
Crossing Falls CC 0 37,680 0 37,680 37,680 0 100.0% 100.0% 0.0% Fee None (17)
Baskin
Robbins Idaho
17th Street Falls FR 1,761 0 0 1,761 1,761 0 100.0% 100.0% 0.0% Fee None
Pine Ridge
Mall Pocatello RM 25,818 148,718 360,117 534,653 423,153 111,500 95.5% 94.3% 83.7% Fee/ JCPenney, ZCMI,
GL The Bon Marche,
(18) ShopKo(12)
Yellowstone Idaho
Square Falls CC 16,865 38,950 166,733 222,548 220,748 1,800 90.3% 90.2% 74.9% Prt- Albertsons,
shp Fred Meyer
Int
(19)
WASHINGTON
- ----------
Three
Rivers
Mall Kelso RM 199,623 126,674 188,076 514,373 345,566 168,807 94.4% 91.7% 77.3% Fee JCPenney, Sears,
(20) The Bon Marche,
Emporium,
OREGON
- ------
Bailey Hills
Plaza Eugene CC 12,000 11,895 155,000 178,895 11,895 167,000 99.2% 87.3% 87.3% Fee
(21)
</TABLE>
<PAGE> 6
RETAIL PROPERTIES - CONTINUED
<TABLE>
<CAPTION>
OCCUPANCY AS OF
12/31/96
---------------------
FREE BASED
STANDINGTENANT TOTAL TENANT ON BASED TENANT OWNER-
PROPERTY STORES SHOPS ANCHORS GLA GLA OWNED TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE (SQ.FT)(SQ.FT.) (SQ.FT) (SQ.FT) (SQ.FT) (SQ.FT) GLA GLA SPACE TYPE ANCHORS
(1) (2) (3) (4) (5)
- -------- -------- ------ ------ -------- --------- -------- -------- -------- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Division
Crossing Portland CC 2,589 24,091 67,960 94,640 92,051 2,589 93.7% 93.5% 75.3% Fee United Grocers,
Payless Drug
Halsey
Crossing Gresham CC 9,000 23,071 52,764 84,835 84,835 0 100.0% 100.0% 100.0% GL Safeway
WYOMING
- -------
Eastridge
Mall Casper RM 17,500 264,262 289,796 571,558 495,675 75,883 91.3% 90.0% 84.2% Fee Sears,
(22) JCPenney,
The Bon Marche
White
Mountain Rock
Mall Springs RM 26,025 105,962 208,452 340,439 340,439 0 76.7% 76.7% 76.2% Fee JCPenney,
Herbergers,
Wal-Mart
NEW MEXICO
- ----------
Animas
Valley Farming-
Mall ton RM 27,500 221,978 271,155 520,633 461,295 59,338 91.7% 90.6% 80.4% Fee JCPenney, Sears,
(23) Dillard's, Beall's
North
Plains
Mall Clovis RM 19,076 81,453 195,431 295,960 200,103 95,857 96.0% 94.0% 85.3% Fee JCPenney, Sears,
(8) Beall's,
NEVADA
- ------
Fremont
Plaza Las Vegas CC 6,542 19,643 77,348 103,533 103,533 0 98.6% 98.6% 92.4% GL Smith's Food&Drug
Sav-On Drug
Plaza 800 Reno CC 5,985 21,886 139,607 167,478 167,478 0 95.7% 95.7% 82.5% GL Albertsons,
ShopKo
COLORADO
- --------
Austin
Bluffs Colorado
Plaza Springs CC 9,447 35,859 71,543 116,849 78,902 37,947 100.0% 100.0% 100.0% Fee Albertsons
(24)
</TABLE>
<PAGE> 7
RETAIL PROPERTIES - CONTINUED
<TABLE>
<CAPTION>
OCCUPANCY AS OF
12/31/96
---------------------
FREE BASED
STANDINGTENANT TOTAL TENANT ON BASED TENANT OWNER-
PROPERTY STORES SHOPS ANCHORS GLA GLA OWNED TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE (SQ.FT)(SQ.FT.) (SQ.FT) (SQ.FT) (SQ.FT) (SQ.FT) GLA GLA SPACE TYPE ANCHORS
(1) (2) (3) (4) (5)
- -------- -------- ------ ------- ------ ------- ------ ------- ------- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ARIZONA
- -------
Fry's
Shopping
Plaza Glendale CC 8,564 38,781 71,919 119,264 119,264 0 94.8% 94.8% 91.6% Fee Fry's, Two
Dollar Fabric
Woodlands
Village Flagstaff CC 4,020 43,380 146,898 194,298 91,858 102,440 100.0% 100.0% 100.0% Fee Bashas'
(8)
CALIFORNIA
- ----------
Prt-
shp
Anaheim Int Best
Plaza Anaheim CC 10,000 0 67,433 77,433 77,433 0 100.0% 100.0% 0.0% (25) Products(11)
------- --------- --------- --------- --------- --------- ----- ----- -----
830,949 2,595,238 5,217,730 8,643,917 7,000,212 1,643,705 95.41% 94.33% 87.61%
======= ========= ========= ========= ========= ========= ===== ===== =====
</TABLE>
- ----------------------------------
(1) Property type definitions are as follows: Regional Mall-RM,
Community Centers--CC, Free-Standing Retail Properties-FR.
(2) Free standing stores means leasable buildings or other structures
located on a Property which are not physically attached to a mall
or community center.
(3) Tenant shops means non-anchor retail stores located in a
mall or community center.
(4) Represents PDC-owned leasable area and tenant-owned leasable area
within the Properties.
(5) Represents PDC-owned leasable area within the Properties.
(6) Tenant owned space at this property includes Shopko, an anchor
tenant.
(7) Ernst Home Center has filed for protection under the United States
Bankruptcy Code ("Bankruptcy Code") but continues to be responsible
for lease payments and at December 31, 1996 was still paying rent
pursuant to the terms of the lease and the Bankruptcy Code.
(8) Tenant owned space at this property includes Wal-Mart, an anchor
tenant.
(9) Ernst Home Center has filed for protection under the Bankruptcy
Code. The trustee in bankruptcy has rejected the terms of the
lease and the Company is currently in the Process of releasing
the space. See "The Company's Largest Tenants."
(10) Tenant owned space at this property includes Albertsons and Shopko,
anchor tenants.
(11) Best Products has filed for protection under the Bankruptcy Code
but continues to be responsible for lease payments and at
December 31, 1996 was still paying rent pursuant to
the terms of the lease and the Bankruptcy Code.
(12) PDC's lease is with Fred Meyer which subleases the property to the
anchor tenant.
(13) PDC's lease is with Smith's Food & Drug which subleases the
property to the anchor tenant.
(14) Tenant owned space at this property includes JcPenney, Sears and
Mervyn's, anchor tenants.
(15) PDC owns a ground lease on two acres.
(16) PDC's ownership represents a 73.3% partnership interest in the
current fee holder of the Property.
(17) PDC's leasee subleases the Property to several other retailers.
(18) PDC owns two ground leases on 7.3 acres and 1.2 acres.
(19) PDC's ownership represents a 83.5% partnership interest in the
(20) Tenant owned space at this property includes Target and Top Foods,
anchor tenants.
(21) Tenant owned space at this property includes Safeway and Shopko,
anchor tenants.
(22) Tenant owned space at this property includes Target, an anchor
tenant.
(23) Tenant owned space at this property includes Best Products
(see Note 11 above) an anchor tenant.
(24) Tenant owned space at this property includes Longs Drug an anchor
tenant.
(25) PDC's ownership interest represents a 50% partnership interest in
the current ground lease holder of the Property.
<PAGE> 8
COMMERCIAL PROPERTIES
<TABLE>
<CAPTION>
OCCUPANCY
PROPERTY GLA BASED ON OWNERSHIP
PROPERTY LOCATION TYPE(1) (SQ.FT) GLA TYPE
- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
UTAH
- ----
Price Business
Center-Pioneer Salt Lake
Square City BP 530,689 97.44% Fee
Price Business
Center-South Salt Lake
Main City BP 144,554 92.10% Fee
Price Business
Center - Salt Lake
Timesquare City BP 289,423 99.01% Fee
Sears-Eastbay Provo CP 48,880 100.00% Fee
Price Business
Center West Valley
Commerce Park City BP 393,069 100.0% Fee
IDAHO
- -----
Boise/FSB Plaza Boise CP 11,058 100.00% Fee
--------- -------
1,417,673 98.04%
</TABLE> ========= =======
____________________
(1) Property type definitions are as follows: Business Park--BP,
Commercial Property--CP.
SIGNIFICANT PROPERTIES
Two of the Properties in the Company's portfolio, Boise Towne
Square and Cottonwood Mall, individually comprised in excess of 10%
of the Company's assets for the year ended December 31, 1996.
Boise Towne Square also contributed in excess of 10% of the
Company's total aggregate gross revenue for the year ended December
31, 1996. Certain additional information relating to these
Properties is set forth below:
BOISE TOWNE SQUARE
Boise Towne Square is centrally located in Boise, Idaho
adjacent to the main thoroughfare of the city. Boise Towne Square
was opened by the Predecessor Companies in October of 1988. Boise
Towne Square is the dominant regional mall in its trade area, with
several community centers as its major competition. The real
estate tax rate on the improvements for the year ended December 31,
1996 was 1.9%, amounting to a total tax of $727,000 for the year.
The Company leases approximately two acres which are utilized
for perimeter parking and landscaping from Union Pacific Railroad
Company on a year-to-year basis at a current rental rate of $21,000
per year. The current lease with Union Pacific Railroad
automatically renews each year on December 1 unless either party
notifies the other of termination. Boise Towne Square is part of the
collateral securing the Mortgage Debt and the Company believes it is
adequately insured. Depreciation is taken utilizing a straight line
method over 40 years with a net book basis of approximately
$32,543,000, $33,687,000, and $35,138,000 at December 31, 1996, 1995
and 1994 respectively. It is the Company's policy to renovate, expand
and upgrade as warranted by market conditions.
<PAGE> 9
As of December 31, 1996, 1995 and 1994, Boise Towne Square was
99%, 98% and 98% occupied, respectively, with an average annual
rent per square foot of $14.80, $14.65 and $13.66 for the years
ended on those respective dates. Its major tenants occupying 10%
or more of Total GLA are all department stores and include
JCPenney, Sears, The Bon Marche and Mervyn's. JCPenney, Sears and
Mervyn's own their own land and buildings and are subject to a
Construction, Operation and Reciprocal Easement Agreement that
expires in 2078, while The Bon Marche's lease is for a term of 20
years, expiring in 2008, with two 20-year extension options. Boise
Towne Square's leases will expire on the following schedule:
<TABLE>
<CAPTION>
AVERAGE PERCENTAGE OF GLA
ANNUALIZED ANNUALIZED BASE REPRESENTED BY EXPIRING LEASES
BASE RENT PER SQUARE -----------------------------------
EXPIRATION NUMBER APPROXIMATE RENT UNDER FOOT UNDER ASSUMING NO ASSUMING FULL
YEAR ENDING OF LEASES GLA EXPIRING EXPIRING EXERCISE OF EXERCISE OF
DECEMBER 31, EXPIRING SQUARE FEET LEASES LEASES(1) RENEWAL OPTIONS RENEWAL OPTIONS
- ------------- --------- ------------ --------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997. . . . . . . . . 10 12,673 $ 185,572 $ 14.64 2.62% 1.27%
1998. . . . . . . . . 48 61,539 1,329,634 21.61 12.73 9.73
1999. . . . . . . . . 31 83,371 1,430,202 17.15 17.25 9.48
2000. . . . . . . . . 27 57,134 1,097,904 19.22 11.82 8.91
2001. . . . . . . . . 13 42,998 744,650 18.02 8.90 8.76
2002. . . . . . . . . 5 12,055 172,445 14.30 2.49 1.14
2003. . . . . . . . . 13 24,679 543,983 22.04 5.11 5.11
2004. . . . . . . . . 4 11,763 223,350 18.99 2.43 2.43
2005. . . . . . . . . 1 3,710 68,635 18.50 0.77 0.77
2006. . . . . . . . . 3 8,658 141,925 16.39 1.79 0.55
2007 and thereafter . 7 145,962 1,095,503 7.51 30.30 0.96
---- ------- ------- --------
Total. . . . . . . 162 464,542 96.21% 49.11%
==== ======= ======= ========
</TABLE>
- --------------------
(1) Excludes tenants paying percentage rents in lieu of minimum
rents.
COTTONWOOD MALL
Cottonwood Mall is the retail hub for an upper income area of
Salt Lake City, Utah. Cottonwood Mall, opened in 1961, was Utah's
first enclosed mall. It was significantly renovated in 1983
following its purchase by the Predecessor Companies. The real
estate tax rate on the improvements for the year ended December 31,
1996 was 1.3%, amounting to a total tax of $708,000 for the year.
Cottonwood Mall faces competition from two other nearby regional
malls.
Cottonwood Mall is part of the collateral securing the
Mortgage Debt and the Company believes it is adequately insured.
Depreciation is taken utilizing a straight line method over 40
years with a net book basis of approximately $42,452,000,
$43,814,000, and $45,490,000 at December 31, 1996, 1995 and 1994
respectively. It is the Company's policy to renovate, expand and
upgrade as warranted by market conditions.
As of December 31, 1996, 1995 and 1994, Cottonwood Mall was
94%, 94% and 91% occupied, respectively, with an average annual
rent per square foot of $7.35, $7.64 and $7.29 for the years ended
on those respective dates. Its major tenants occupying 10% or more
of Total GLA are JCPenney and ZCMI. JCPenney has exercised its
first five year option to extend, which option expires in 1999, and
has three additional five-year extension options. ZCMI has
exercised its first 20 year option to extend which option expires
in 2012, and has two additional 20-year extension options.
Cottonwood Mall's leases will expire on the following schedule:
<PAGE> 10
<TABLE>
<CAPTION>
AVERAGE PERCENTAGE OF GLA
ANNUALIZED ANNUALIZED BASE REPRESENTED BY EXPIRING LEASES
BASE RENT PER SQUARE -----------------------------------
EXPIRATION NUMBER APPROXIMATE RENT UNDER FOOT UNDER ASSUMING NO ASSUMING FULL
YEAR ENDING OF LEASES GLA EXPIRING EXPIRING EXERCISE OF EXERCISE OF
DECEMBER 31, EXPIRING SQUARE FEET LEASES LEASES(1) RENEWAL OPTIONS RENEWAL OPTIONS
- ------------- --------- ------------ --------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997. . . . . . . . 21 49,446 $ 593,676 $ 12.01 6.55% 3.51%
1998. . . . . . . . 18 50,603 466,666 9.22 6.70 2.89
1999. . . . . . . . 11 173,766 430,431 2.48 23.02 1.04
2000. . . . . . . . 12 27,676 484,744 17.51 3.67 3.67
2001. . . . . . . . 11 30,829 430,736 13.97 4.08 3.30
2002. . . . . . . . 4 9,863 145,124 14.71 1.31 1.31
2003. . . . . . . . 9 18,206 377,562 20.74 2.41 2.26
2004. . . . . . . . 9 19,655 433,807 22.07 2.60 1.60
2005. . . . . . . . 7 31,211 583,710 18.70 4.14 4.14
2006. . . . . . . . 9 34,670 490,907 14.16 4.59 4.02
2007 and thereafter 9 260,324 1,242,990 4.77 34.49 3.25
---- -------- ------- -------
Total 120 706,249 93.56% 30.99%
==== ======== ======= =======
</TABLE>
- ------------------------
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 11
THE COMPANY'S LARGEST TENANTS
The Company's largest tenants include JCPenney, ZCMI, Wal-
Mart, The Bon Marche, Sears, ShopKo Stores, Albertson's and Fred
Meyer. No tenant represented more than 10% of the Company's rental
revenues (i.e., minimum plus percentage rents) for the year ended
December 31, 1996.
ANCHORS
Malls and community centers usually contain one or more large
retail companies known as "anchors." Anchors, which include
traditional department stores, general merchandise stores, large
fashion specialty stores, value oriented specialty stores and
discount stores, usually inventory a broad range of products that
appeal to many shoppers. Anchors either own their own stores (and
sufficient parking) or lease their stores from the Company.
Although the rent and other charges paid by anchors is usually much
less (on a per square foot basis) than the rent paid by other
tenants, their presence typically attracts many shoppers and
enhances the value of a mall or community center.
As of December 31, 1996, anchors occupied approximately
3,055,000 and 2,201,000 square feet of Total GLA in the malls and
community centers, respectively.
The following table summarizes the Total GLA owned and leased
as of December 31, 1996, by the largest major anchors in the malls:
<TABLE>
<CAPTION>
ANCHOR COMPANY-OWNED
NUMBER OF COMPANY-OWNED ANCHOR-OWNED TOTAL GLA PERCENT ANCHORS AS
ANCHOR ANCHOR STORES SQUARE FEET SQUARE FEET SQUARE FEET TOTAL GLA % OF REVENUE(3)
------ ------------- ------------- ------------ ----------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
JCPenney . . . . . . . 11 627,659 141,091 768,750 7.64% 3.17%
ZCMI . . . . . . . . . 5 562,754 0 562,754 5.59 2.87
Wal-Mart . . . . . . . 3 86,944 210,128 297,072 2.95 *
The Bon Marche . . . . 5 354,794 0 354,794 3.53 3.57
Sears. . . . . . . . . 6 317,215 106,623 423,838 4.21 2.69
ShopKo Stores. . . . . 1 0 111,500 111,500 1.11 0.00
Mervyn's . . . . . . . 1 0 79,648 79,648 0.79 0.00
Target Stores. . . . . 1 0 75,883 75,883 0.75 0.00
Dillard's. . . . . . . 1 72,212 0 72,212 0.72 *
</TABLE>
<PAGE> 12
Anchors in the community centers occupy approximately 71.4% of
Total GLA of the community centers. The following table summarizes
the Total GLA owned and leased by the largest of these anchors:
<TABLE>
<CAPTION>
ANCHOR COMPANY-OWNED
NUMBER OF COMPANY-OWNED ANCHOR-OWNED TOTAL GLA PERCENT ANCHORS AS
ANCHOR ANCHOR STORES SQUARE FEET SQUARE FEET SQUARE FEET TOTAL GLA % OF REVENUE(3)
------ ------------- ------------- ------------ ----------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ShopKo Stores,
Inc./ShopKo. . . . . 4 104,000 297,140 401,140 3.99% *
Fred Meyer Inc.
/Fred Meyer. . . . . 3 309,944 0 309,944 3.08 1.53%
Albertsons Inc.
/Albertson's . . . . 8 269,098 41,407 310,505 3.09 1.23
Burlington Coat (2). 2 174,248 0 174,248 1.73 *
Best Products
Company Inc.
/Best Products(3). . 2 126,783 0 126,783 1.26 *
Ernst Home Center
Inc./Ernst Home
Centers(4) . . . . . 2 94,783 0 94,783 0.94 1.43
Safeway Stores Inc.
/Safeway . . . . . . 2 52,764 53,000 105,764 1.05 *
Wal-Mart . . . . . . 1 0 102,440 102,440 1.02 0.00
PayLess Drug . . . . 2 70,583 0 70,583 0.70 *
</TABLE>
_________________
(1) Revenue defined as minimum rents plus percentage rents.
(2) Sublease from Fred Meyer.
(3) Best Products has filed for protection under the Bankruptcy
Code but continues to be responsible for lease payments
pursuant to the terms of the lease and the Bankruptcy Code.
(4) Ernst Home Center has filed for protection under the
Bankruptcy Code but continues to be responsible for lease
payment pursuant to the terms of the Gateway Crossing and
Cache Valley Mall leases and the Bankruptcy Code. The
Ernst Home Center lease for space at the Red Cliffs Plaza
has been rejected and the Company is currently in
the process of releasing the space.
* Less than 1%.
<PAGE> 13
MAJOR TENANTS
Nonanchor tenants owned by major national retail chains lease
a considerable amount of space in the Company's retail properties.
Such retail chains include Amcena Corporation (Maurice's), Brown
Group (Naturalizer Shoes), Claire's (Claire's Boutique), Edison
Brothers (Bakers Shoes, Jeans West, J. Riggings, 5-7-9),
Waldenbooks Books, Inc., The Limited (Lane Bryant, Lerner, Limited,
Express, Victoria's Secret, Bath & Body Structure), May Department
Stores (PayLess ShoeSource), Kay-Bee Toys, Wilson's Suede &
Leather, Musicland Land Group (Musicland, Sam Goody, Suncoast
Pictures), Tandy Corporation (Radio Shack), Woolworth Corporation,
(Northern Reflections, Afterthoughts, Athletic X-press, Foot
Locker, Kinney Shoes, Lady Footlocker, San Francisco Music Box
Company), B. Dalton (B. Dalton Bookseller, Barnes & Noble),
Charming Shoppes, Inc. (Fashion Bug), Deb Shops, Regis Corporation,
Jay Jacobs, County Seat, General Mills (Olive Garden, Red Lobster),
Gap Stores, Inc.(Gap, GapKids), The Buckle, Eddie Bauer, Zales
Corporation, Gymboree, Fred Meyer, Millers Outpost, Pearle Vision
and Pendleton.
LEASES
Most of the Company's leases are long-term leases that contain
fixed base rents and step-ups in rent typically occurring every
three to five years. These leases generally pass through to the
tenant the tenant's share of common area charges, including
insurance costs and real estate taxes. Generally, all of the
regional mall leases and certain of the community center leases
include roof and structure repair costs in common area charges.
The Company's leases also generally provide for additional rents
based on a percentage of tenant sales. Such percentage rents
accounted for approximately 7.2% of total rental income from the
Properties for the year ended December 31, 1996.
The following table sets forth information relating to the
rental revenue from the Properties for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
PROPERTY TYPE 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Regional Malls. . . . . . . . . . $ 36,286 $ 29,299 $ 24,860 $ 22,882 $ 22,026
Community Centers and
Free-Standing Retail Properties . 13,591 12,173 10,658 9,453 8,208
Commercial Properties . . . . . . 6,631 5,633 4,929 4,646 4,229
</TABLE>
VACANT SPACE
Approximately 425,000 square feet of the Company-owned GLA was
vacant as of December 31, 1996. Of this vacant space, 340,000
square feet was in the mall portfolio (18% of which is anchor and
82% of which is mall shop space), 57,000 square feet was in the
community center portfolio and 28,000 square feet was in the
commercial portfolio.
The following tables set forth information relating to lease
expirations for retail store and commercial property leases in
effect as of December 31, 1996 over the ten-year period commencing
January 1, 1997 and thereafter for large stores (over 20,000 square
feet) and small stores (20,000 square feet and less) at the retail
properties and for all leases at the commercial properties. Unless
otherwise indicated, all information set forth below (i) assumes
that none of the tenants exercise renewal options and (ii) excludes
leases that had not commenced as of December 31, 1996.
<PAGE> 14
RETAIL STORE LEASES (OVER 20,000 SQUARE FEET)
<TABLE>
<CAPTION>
Average
Annualized Base
Lease Expiration Number of Approximate Annualized Base Rent Per Square
Year Ending Leases GLA in Rent Under Foot Under
December 31, Expiring Square Feet Expiring Leases Expiring Leases(1)
------------ -------- ----------- --------------- ------------------
<S> <C> <C> <C> <C>
1997. . . . . . . . . 1 30,000 $ 32,400 $ 1.08
1998. . . . . . . . . 9 353,941 879,919 2.49
1999. . . . . . . . . 3 239,140 443,487 1.85
2000. . . . . . . . . 4 178,395 510,534 2.86
2001. . . . . . . . . 10 628,358 1,493,436 2.38
2002. . . . . . . . . 3 122,647 539,590 4.40
2003. . . . . . . . . 1 28,000 67,200 2.40
2004. . . . . . . . . 4 255,669 725,957 2.84
2005. . . . . . . . . 2 93,761 316,761 3.38
2006 and thereafter . 34 2,142,053 8,061,897 3.76
--- ---------
Total . . . . . . . . 71 4,071,964
=== =========
</TABLE>
RETAIL STORE LEASES (20,000 SQUARE FEET OR LESS)
<TABLE>
<CAPTION>
Average
Annualized Base
Lease Expiration Number of Approximate Annualized Base Rent Per Square
Year Ending Leases GLA in Rent Under Foot Under
December 31, Expiring Square Feet Expiring Leases Expiring Leases(1)
------------ -------- ----------- --------------- ------------------
<S> <C> <C> <C> <C>
1997. . . . . . . . . 178 369,226 $ 3,808,654 $ 10.32
1998. . . . . . . . . 171 295,911 3,882,245 13.12
1999. . . . . . . . . 138 329,914 4,131,342 12.52
2000. . . . . . . . . 124 244,586 3,824,580 15.64
2001. . . . . . . . . 97 224,459 3,128,810 13.94
2002. . . . . . . . . 55 182,693 2,200,818 12.05
2003. . . . . . . . . 55 184,402 2,425,781 13.15
2004. . . . . . . . . 43 130,316 2,024,616 15.54
2005. . . . . . . . . 40 126,126 2,072,618 16.43
2006 and thereafter . 94 339,896 5,092,814 14.98
---- ---------
Total . . . . . . . . 995 2,427,529
==== =========
</TABLE>
COMMERCIAL PROPERTIES
<TABLE>
<CAPTION>
Average
Annualized Base
Lease Expiration Number of Approximate Annualized Base Rent Per Square
Year Ending Leases GLA in Rent Under Foot Under
December 31, Expiring Square Feet Expiring Leases Expiring Leases(1)
------------ -------- ----------- --------------- ------------------
<S> <C> <C> <C> <C>
1997. . . . . . . . . 22 278,274 $ 1,651,028 $ 5.93
1998. . . . . . . . . 10 285,839 1,187,247 4.15
1999. . . . . . . . . 14 220,188 1,171,527 5.32
2000. . . . . . . . . 8 394,055 1,866,069 4.68
2001. . . . . . . . . 2 31,590 155,064 4.91
2002. . . . . . . . . 4 87,067 524,290 6.02
2003. . . . . . . . . 1 20,988 275,572 13.13
2004. . . . . . . . . 2 28,621 146,464 5.12
2005. . . . . . . . . 0 0 0 0
2006 and thereafter . 0 0 0 0
--- ---------
Total . . . . . . . . 63 1,346,622
=== =========
</TABLE>
_______________
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 15
OPERATIONS AND MANAGEMENT
The Company performs all property management functions for the
Properties. The Company has 171 full-time employees devoted
exclusively to property management. Each of the regional malls has
on-site management and maintenance personnel as well as a marketing
staff to assist the mall tenants in promoting and advertising their
products. Overall supervision of mall operations, headed by a
Director of Enclosed Malls and a Director of Marketing, is
conducted in a centralized fashion in order to take advantage of
economies of scale and to deliver a uniform presentation of all
management functions. The Company's internal property management
information system enables it to quickly determine tenant status,
tenant gross sales, insurance, and other critical information in
order to effectively manage the affairs of its real property
portfolio. The data collected regarding percentage sales allows
the Company to predict sales, to retain tenants and enhance mall
stability.
The Leasing/Development Department is responsible for
maintaining relationships with tenants that afford the Company
opportunities for new development and expansion. The Company
conducts an active program of leasing, within the common area space
of its malls and community centers, kiosks and other promotional
displays on a seasonal basis. In addition to increased customer
traffic, this approach generates additional revenue for the Company
and offers an opportunity for entrepreneurial individuals
interested in opening stores on a more permanent basis within one
of the Company's Properties.
The Company's property management efforts will continue to be
directed toward improving the attractiveness and appeal of its
retail properties and a pleasant shopping environment in order to
increase overall tenant sales and rents. The Company strives to
meet the needs of its tenants in the areas of promotion, marketing
and ongoing management of its properties and seeks to bring
together a sufficient critical mass of complementary upscale and
brand-name tenants. As part of its property management efforts,
the Company monitors tenant mix, store size, sales results and
store locations, and works closely with tenants to improve the
overall performance of their stores. The Company seeks to
anticipate trends in the retailing industry and introduce new
retail names and concepts into its retail properties in response to
these trends. The Company maintains its malls and community
centers to very high standards and believes that the aesthetics,
ambiance and cleanliness of these Properties contribute to repeat
visits by customers.
ACQUISITION PROGRAM
The Company is currently seeking to acquire additional retail
properties, particularly malls and community centers that (i) have
leases at rental rates below market, (ii) have potential for rental
and/or occupancy increases, (iii) offer cash flow growth or capital
appreciation potential where the Company's financial strength,
relationships with retail companies or expansion or redevelopment
capabilities can enhance value and/or (iv) provide anticipated
total returns that will increase the Company's distributions per
share of Common Stock.
On April 4, 1996, the Company acquired Grand Teton Mall
located in Idaho Falls, Idaho for $34.4 million. Major tenants
include JCPenney, Sears, The Bon Marche and ZCMI. The Property
contains approximately 525,000 square feet to Total GLA.
DEVELOPMENT
The Company currently has 16 full-time employees devoted to
property development, redevelopment and leasing and maintains the
in-house capability to bring a project from concept to completion.
The Leasing/Development Department has directors of Leasing,
Development, Tenant Coordination and Design/Drafting.
In 1996, the Company constructed a 25,000 square foot office
building at Price Business Center - Timesquare in Salt Lake City,
Utah, increasing the park's Total GLA to 289,000 square feet. The
new building completes the master plan for the park which is 99%
occupied.
The Company is currently developing a 750,000 square foot
regional mall in Spokane, Washington. Completion of the first
phase of this mall is expected to occur in 1997. Additionally, the
Company is developing a 113,000 square foot shopping center
adjacent to its Boise Towne Square. The Company expects the new
center to be completed in the fall of 1997.
The Company began work on an 80,000 square foot addition to
the Pine Ridge Mall located in Pocatello, Idaho. Sears will become
the fifth anchor in this mall. The development is expected to be
completed in the fall of 1997.
<PAGE> 16
The Company is currently planning the development of an
enclosed regional mall in Provo, Utah. Additionally, the expansion
and renovation of several existing properties as well as other
developments and acquisitions are being contemplated by the Company
as a means of expanding its portfolio.
Included as part of the Company's retail properties is vacant
land suitable for additional development and expansion projects.
The Company will seek to expand these and other properties in its
retail portfolio depending on tenant demands and market conditions.
THIRD PARTY PROPERTY MANAGEMENT
The Company provides third-party property management for one
office building and two commercial buildings, all located in the
greater Salt Lake City, Utah metropolitan area, and for Silver Lake
Mall and Silver Lake Plaza located in Coeur D' Alene, Idaho. In
addition to these arrangements, the Company plans to pursue other
property management opportunities. The Company believes that, in
addition to generating property management fees, third party
property management arrangements can be a source of future
acquisitions for the Company. Property management facilitates an
understanding of a property's value and potential for cash flow
growth.
EMPLOYEES
The Company has over 370 employees. The Company believes its
relationship with its employees is very good. None of the
Company's employees are unionized.
ITEM 3. LEGAL PROCEEDINGS
The Company is not aware of any pending or threatened
litigation at this time that will have a materially adverse effect
on the Company or any of the Properties or it's development
parcels.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to stockholders during the fourth
quarter of the period covered by this report.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANTS
The following is a list of executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John Price 63 Chairman of the Board of
Directors and Chief Executive
Officer
G. Rex Frazier 53 President and Chief Operating
Officer and Director
Paul K. Mendenhall 49 Vice President--Finance and
Secretary
Martin G. Peterson 50 Vice President--Administration
Thomas L. Mulkey 44 Vice President--
Leasing/Development
Greg Curtis 46 Vice President--Management
David R. Sabey 44 Vice President and General
Counsel
</TABLE>
<PAGE> 17
John Price was appointed to serve in his current capacity in
September, 1993. Mr. Price formed Fairfax in 1972, and its
predecessor, John Price Associates, Inc., a construction company,
in 1957. Mr. Price has developed and built substantial retail and
commercial real estate in his 39 years of real estate activity and
has been involved in all facets of real estate development,
construction, leasing, management and financing. He is a director
and on the Executive Committee of Alta Industries - Utah, Inc..
Mr. Price is also a trustee of the University of Utah and is a
member of the Advisory Board of the First Security Bank of Utah,
N.A. Mr. Price is a graduate of the University of Utah.
G. Rex Frazier was appointed to serve in his current capacity
in September, 1993. Mr. Frazier has served as President and Chief
Operating Officer of Fairfax since 1986, prior to which he had
served as Executive Vice President, Vice President--Finance and
Director of Finance. He became a director of the Company in 1993.
Mr. Frazier has been involved in the real estate industry since
1976. He is a certified public accountant and prior to joining
Fairfax, worked as an audit supervisor with Touche Ross & Company.
Mr. Frazier is a graduate of the University of Utah.
Paul K. Mendenhall was appointed to serve in his current
capacity in September, 1993. Mr. Mendenhall has served as Vice
President--Finance and Secretary of Fairfax since 1986, prior to
which he served as Director of Finance and as Financial Analyst.
Mr. Mendenhall has been involved in the real estate industry since
1977. He is a certified public accountant and, prior to joining
Fairfax, worked as a Senior Auditor for Touche Ross & Company. Mr.
Mendenhall is an elected member at large of the American Institute
of Certified Public Accountants (AICPA) governing council. Mr.
Mendenhall is a graduate of the University of Utah.
Martin G. Peterson was appointed to serve in his current
capacity in September, 1993. Mr. Peterson currently serves as Vice
President--Administration, prior to which he served as Vice
President Administration/Accounting and Treasurer of Fairfax since
1978, and Assistant Vice President. Mr. Peterson has been involved
in the real estate industry since 1975. He is a certified public
accountant and, prior to joining Fairfax, worked as a Senior
Auditor for Price Waterhouse. Mr. Peterson is a graduate of
Brigham Young University.
Thomas L. Mulkey was appointed to serve in his current
capacity in September, 1993. Mr. Mulkey has served as the Vice
President--Leasing/Development of Fairfax since 1987, prior to
which he had overseen the development of many of the Properties.
Mr. Mulkey has been involved in the real estate industry since
1974. Prior to joining Fairfax, Mr. Mulkey was a project manager
for the May Stores Centers, Inc. Mr. Mulkey is a graduate of the
University of Missouri.
Greg Curtis was appointed to serve in his current capacity in
September, 1993. Mr. Curtis has served as Vice President--
Management of Fairfax since 1982, prior to which he served as
Director of Enclosed Malls and as a Mall Manager. Mr. Curtis has
been involved in the real estate industry since 1977. Mr. Curtis
is a graduate of Brigham Young University.
David R. Sabey was appointed to serve in his current capacity
in September, 1993. Mr. Sabey has served as Vice President and
General Counsel of Fairfax since 1990. Prior to joining Fairfax,
Mr. Sabey worked as Assistant General Counsel for the Longs Drug
Stores Corporation. Mr. Sabey has been in the retail and real
estate industry since 1983. Mr. Sabey is a graduate of McGeorge
School of Law and the University of Utah.
<PAGE> 18
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the New York Stock
Exchange under the symbol "JPR." Prior to the Offering of the
Common Stock on January 14, 1994, there was no public market for
the Common Stock. As of March 21, 1997, the last reported sales
price for the Common Stock on the New York Stock Exchange was
$26-7/8 per share. As of March 21, 1997, there were 204
stockholders of record, of which 203 were holders of Common
Stock and one was a holder of Price Group Stock, par value
$.0001 per share.
The following table sets forth, the high and low closing sales
price per share of the Common Stock and the distributions paid per
share for each of the quarters presented:
<TABLE>
<CAPTION>
Sales Price
------------------- Distributions
High Low Per Share
---- --- ---------
<S> <C> <C> <C>
Year Ended 12/31/95
First Quarter $21 $19-3/8 $.405
Second Quarter 21-7/8 17-3/8 .405
Third Quarter 21-3/8 19-1/2 .405
Fourth Quarter 22-3/8 19-1/2 .420
Year Ended 12/31/96
First Quarter $21-7/8 $18-3/4 $.420
Second Quarter 21-1/2 19 .420
Third Quarter 22-7/8 20-3/4 .420
Fourth Quarter 27-1/4 21-3/4 .435
</TABLE>
During 1996 and 1995, the Company recorded regular quarterly
distributions, totaling $27,139,000 and $23,881,000, respectively,
or $1.695 and $1.635 per share of Common Stock, respectively. Of
the amounts paid during 1996 and 1995, 13% and 18%, respectively,
represented a return of capital. The Board of Directors has
declared a quarterly distribution, payable to stockholders of
record as of April 4, 1997, of $.435 which is an amount equivalent
to an annual distribution of $1.74 per share. Distributions on
Price Group Stock are payable by the Company at a rate per share
equal to 80% of the distributions declared on Common Stock. Future
distributions will be determined by the Board of Directors and will
be dependent upon cash available for distribution, financial
position and cash requirements of the Company.
At December 31, 1996, there were 200,000 shares of Price Group
Stock outstanding. In addition to receiving distributions at a rate
equal to 80% of the distributions paid on the Common Stock, the shares
of Price Group Stock have the right, voting as a separate class from
the Common Stock, to elect two of the seven directors of the Company.
Each holder of Price Group Stock is entitled to one vote for each share
held. All of the outstanding shares of Price Group Stock may be
converted at the option of the Company into an equal number of shares
of Common Stock if certain conditions are met.
ITEM 6. SELECTED FINANCIAL AND OTHER DATA
The following table sets forth selected financial and other
data for the Company for the years ended December 31, 1996, 1995,
and for the period January 21, 1994 through December 31, 1994 and
for the Predecessor Companies for the period January 1, 1994
through January 20, 1994 and the years ended 1993 and 1992. The
historical financial information for all the periods have been
derived from the historical consolidated and combined financial
statements audited by Price Waterhouse LLP, independent
accountants.
The following selected financial information should be read in
conjunction with all of the financial statements included elsewhere
herein and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<PAGE> 19
SELECTED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR
COMPANY COMPANIES COMPANIES
COMPANY COMPANY HISTORICAL HISTORICAL HISTORICAL
HISTORICAL HISTORICAL JANUARY 21, JANUARY 1, YEAR
YEAR ENDED YEAR ENDED 1994 TO 1994 TO ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, JANUARY 20, DECEMBER 31,
-----------------
1996 1995 1994 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ 72,949 $ 60,950 $ 50,071 $ 2,578 $ 47,728 $ 45,610
--------- --------- --------- --------- --------- ---------
EXPENSES
Operating Expenses
before Interest,
Depreciation and
Amortization 24,405 20,389 17,090 893 17,226 17,012
Interest 7,776 6,623 5,873 826 18,482 18,852
Depreciation and
Amortization 11,979 11,528 8,734 430 8,530 7,882
--------- --------- --------- ----- -------- --------
Total 44,160 38,540 31,697 2,149 44,238 43,746
--------- --------- --------- ----- -------- --------
28,789 22,410 18,374 429 3,490 1,864
Minority Interests in
Income of Consolidated
Partnerships (269) (320) (221) 0 (251) (254)
Equity in Net Loss of
Partnership Interest 0 (184) (82) 7 (238) (238)
Gain (Loss) of Sales
of Real Estate 94 918 0 0 607 531
--------- --------- --------- --------- --------- ---------
Income Before
Extraordinary Item
and Minority Interest
of PDC Unitholders 28,614 22,824 18,071 436 3,608 1,903
Minority Interest of
PDC Unitholders (5,244) (4,646) (3,943) 0 0 0
Extraordinary Item:
Loss on Extinguishment
of Debt, Net of Minority
Interest of PDC
Unitholders 0 0 (5,215) 0 0 0
-------- --------- -------- --------- --------- ---------
Net Income (Loss) $ 23,370 $ 18,178 $ 8,913 $ 436 $ 3,608 $ 1,903
======== ========= ======== ========= ========= =========
Net Income per Share
of Common Stock (2) $ 1.46 $ 1.27 $ .67
======== ========= ========
</TABLE>
<PAGE> 20
SELECTED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR
COMPANY COMPANIES COMPANIES
COMPANY COMPANY HISTORICAL HISTORICAL HISTORICAL
HISTORICAL HISTORICAL JANUARY 21, JANUARY 1, YEAR
YEAR ENDED YEAR ENDED 1994 TO 1994 TO ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, JANUARY 20, DECEMBER 31,
-----------------
1996 1995 1994 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Real Estate,
before Accumulated
Depreciation $ 453,241 $ 388,205 $ 321,242 N/A $ 286,719 $ 280,911
Total Assets 381,360 327,061 281,696 N/A 236,482 237,867
Total Debt 162,375 106,406 108,741 N/A 235,799 232,195
Shareholders' Equity
(Deficit) 172,556 175,754 127,593 N/A (6,951) (1,721)
OTHER DATA
Funds From
Operations (3) 39,098 32,139 26,083 859 10,792 8,879
Net Operating Income 48,544 40,561 32,981 1,685 30,502 28,598
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF PROPERTIES/TOTAL GLA
DECEMBER 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Number of
Properties
at Year End 44 43 40 38 38
========= ========= ========= ========= =========
Total GLA in square
feet at Year End:
Malls 5,553,000 5,020,000 3,898,000 3,855,000 3,849,000
Community Centers
and Free-Standing
Retail Properties 3,091,000 3,091,000 2,997,000 2,742,000 2,720,000
Commercial
Properties 1,418,000 1,394,000 1,113,000 1,113,000 1,108,000
--------- --------- --------- --------- ---------
Total 10,062,000 9,505,000 8,008,000 7,710,000 7,677,000
========== ========= ========= ========= =========
</TABLE>
_______________
(1) The Company closed its initial public offering on
January 21, 1994. See Note 2 of Notes to the
Financial Statements.
(2) Based on 16,048,000, 14,345,000 and 13,231,000
weighted average number of shares of Common Stock and
Price Group Stock outstanding for the years ended
December 31, 1996, 1995 and 1994, respectively.
(3) Funds from operations ("FFO") is defined by the
National Association of Real Estate Investment Trusts
("NAREIT") as "net income (computed in accordance with
generally accepted accounting principles), excluding
gains (or losses) from debt restructuring and sales
of property, plus depreciation and amortization and
after adjustments for unconsolidated partnerships and
joint ventures." In March 1995, NAREIT issued the
White Paper which discussed NAREIT's views of certain
interpretive issues under the definition of FFO.
Effective January 1, 1996, the Company modified its
calculation of FFO in accordance with the interpretive
positions set forth by NAREIT in the White Paper. For
reporting periods ending December 31, 1995, and prior,
the Company added back depreciation on non
-rental property and the amortization of deferred
financing costs to income from operations before
equity in net income of partnership investment and
minority interest in income of consolidated
partnerships. For reporting periods beginning January
1, 1996, depreciation of non-rental property and the
amortization of deferred financing costs, are not
added back to income from operations before equity in
net income of partnership investment and minority
interest in income of consolidated partnerships
arriving at funds from operations. Funds from
operations for periods ending December 31, 1995, and
prior, have been retroactively restated to be
comparable with the method of calculating 1996 funds
from operations. While the Company believes that FFO
is the most relevant and widely used measure of its
operating performance, it does not represent cash
generated for operating activities in accordance with
generally accepted accounting principles and is not
indicative of cash available to fund cash needs.
Further, the Company's presentation of FFO may not be
comparable to other similarly titled measures used by
other equity REITs. See "Management's Discussion and
Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
<PAGE> 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with
"Selected Financial and Other Data" and the Consolidated and
Combined Financial Statements of the Company and of the Predecessor
Companies and the Notes thereto appearing elsewhere herein.
The Company completed its initial public offering on January 21,
1994, and conducts all of its business operations through, and
holds an 82% controlling general partner interest in, Price
Development Company, Limited Partnership ("PDC") as of December 31,
1996.
The Company is a fully integrated, self-administered and self-
managed REIT primarily engaged in the ownership, leasing,
management, operation, development, redevelopment and acquisition
of retail properties in the Intermountain Region, as well as in
Oregon, Washington and California. The Company's existing
portfolio consists of 44 properties, including 11 enclosed regional
malls, 24 community centers, three freestanding retail properties
and six mixed-use commercial properties ("Properties"). The
Company's financial condition and results of operations were
positively impacted by the Company's 1996 acquisition of the Grand
Teton Mall, the 1995 acquisition of two regional malls, Eastridge
Mall and Animas Valley Mall, and one community center, Cottonwood
Square. The Company's acquisition and development activities added
a combined 1,803,000 square feet of GLA to the retail portfolio and
302,000 square feet of GLA to the commercial portfolio during 1995
and 1996.
The Company completed an additional public offering in August 1995,
raising approximately $56.4 million in gross proceeds through the
sale of 2,750,000 shares of its Common Stock. An additional public
offering was completed in January 1997, raising approximately $40.7
million in gross proceeds through the sale of 1,500,000 shares of
Common Stock.
During 1995, the Company obtained a $50 million credit facility
(the "1995 Credit Facility") to fund working capital and property
acquisition, expansion and development activities. On January 22,
1996, the Company obtained an additional $25 million credit
facility (the "1996 Credit Facility," together with the 1995 Credit
Facility, the "Credit Facilities") which is available for the same
purposes as the 1995 Credit Facility.
RESULTS OF OPERATIONS
The financial statement results presented for the period January
21, 1994 through December 31, 1994 reflect a 345 day period and are
not indicative of the Company's performance on an annual basis.
Similarly, the results presented for the Predecessor Companies for
the period January 1, 1994 through January 20, 1994 reflect only 20
days of operations. Therefore, the results of operations for 1994
will be presented on a combined basis to compare it to the full
year ended December 31, 1995. The Company believes presentation in
this manner provides a more meaningful discussion of year-to-year
results.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED
DECEMBER 31, 1995
For the year ended December 31, 1996, income before minority
interest of PDC Unitholders increased $5,790,000 or 25% when
compared to the year ended December 31, 1995. The improvement in
operations was primarily attributable to the following factors: an
increase in minimum rents of $8,807,000; an increase in percentage
and overage rents of $596,000; and an increase in recoveries from
tenants of $3,305,000. These increases were offset by a decrease
in interest and other income of $709,000; an increase in operating
expenses of $3,801,000; an increase in general and administrative
expense of $215,000; and an increase in interest expense of
$1,153,000. These were also offset by an increase in depreciation
and amortization of $451,000.
<PAGE> 22
Funds from operations increased $6,959,000 or 22% primarily as a
result of acquisitions, minimum rent increases and percentage and
overage rent increases as discussed herein.
Total revenues for the year ended December 31, 1996 increased
$11,999,000 or 20% to $72,949,000 as compared to $60,950,000 in
1995. This increase is primarily attributable to an $8,807,000 or
20% increase in minimum rents to $52,447,000 as compared to
$43,640,000 in 1995. Additionally, percentage and overage rents
increased $596,000 or 17% to $4,061,000 as compared to $3,465,000
in 1995.
The April 1996 acquisition of the Grand Teton Mall, the June 1995
acquisitions of the Eastridge Mall and the Animas Valley Mall and
the December 1995 acquisition of Cottonwood Square contributed a
combined $6,915,000 to the minimum rent increase and $459,000 to
the percentage and overage rent increase in 1996.
Recoveries from tenants increased $3,305,000 or 27% to $15,557,000
as compared to $12,252,000 in 1995. Property operating expenses,
including operating and maintenance and real estate taxes and
insurance increased $3,014,000 or 35% and $787,000 or 11%,
respectively. These increases are mainly due to the 1995 and 1996
property acquisitions. Recoveries from tenants as a percentage of
property operating expenses were 80% in 1996, compared to 79% in
1995.
Interest expense increase $1,153,000 or 17% to $7,776,000 as
compared to $6,623,000 in 1995. This increase resulted from
additional borrowings used to acquire the Grand Teton Mall in April
1996.
Depreciation increased $620,000 or 6% to $10,230,000 as compared to
$9,610,000 in 1995. This increase is primarily due to the 1995 and
1996 property acquisitions and the development of additional GLA at
the Properties.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 (HISTORICAL) TO THE
COMBINED YEAR ENDED DECEMBER 31, 1994 (HISTORICAL)
For the year ended December 31, 1995, income before extraordinary
item and minority interest of PDC Unitholders increased by
$4,317,000 or 23% when compared to the year ended December 31,
1994. The improvement in operations was primarily attributable to
the following factors: an increase in minimum rents of $5,949,000;
an increase in percentage and overage rents of $709,000; an
increase in recoveries from tenants of $1,854,000; a decrease in
interest income of $168,000; an increase in operating and
maintenance expenses of $2,406,000; and a decrease in interest
expense of $76,000. These amounts were offset by an increase in
depreciation and amortization of $2,364,000.
Funds from operations increased $5,872,000 or 21% primarily as a
result of minimum rent increases and percentage and overage rent
increases as discussed herein.
Minimum rents increased in 1995 by $5,949,000 or 16%. The increase
was primarily attributable to leasing of existing vacant spaces,
higher minimum rents on lease renewals and the acquisition of the
Woodlands Village Shopping Center on October 19, 1994, and
Eastridge Mall and Animas Valley Mall on June 30, 1995, which
acquisitions contributed minimum rents of $3,996,000.
Percentage and overage rents increased in 1995 by $709,000 or 26%.
The increase was primarily attributable to increased sales by
tenants paying percentage rents and additional percentage rents
paid by tenants of Eastridge Mall and Animas Valley Mall.
Recoveries from tenants increased in 1995 by $1,854,000 or 18%
while operating and maintenance expenses in 1995 increased by
$2,406,000 or 13%. Property operating expenses that are incurred
by the Company are generally passed through to the tenants of each
Property in the form of common area charges.
Interest expense decreased in 1995 by $76,000 or 1%. This decrease
was primarily attributable to the retirement of debt during 1995
with proceeds from the August 1995 additional public offering and
other existing cash balances.
Depreciation and amortization expense increased in 1995 by
$2,364,000 or 26% due primarily to the amortization of capitalized
costs associated with the 1995 Credit Facility, additional
depreciation related to the acquisition of Eastridge Mall and
Animas Valley Mall and the write-off of capitalized tenant
allowances for vacating tenants.
<PAGE> 23
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal uses of its liquidity and capital resources
have historically been for distributions, property development,
expansion and renovation programs and debt repayment. To maintain
its qualification as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"), the Company is required to
distribute to its shareholders at least 95% of its "Real Estate
Investment Trust Taxable Income" as defined in the Code. The
Company declared quarterly distributions aggregating $1.695 per
share in 1996. Approximately 12.5% of the distributions
represented a return of capital. Future distributions will be
determined based on actual results of operations and cash available
for distribution.
The Company's principal source of liquidity is its cash flow from
operations generated from its real estate investments. As of
December 31, 1996, the Company's cash and restricted cash amounted
to approximately $4.1 million. In addition to its cash and
restricted cash, unused capacity under its Credit Facilities
totaled $26.8 million at year end. On January 28, 1997, the
Company completed an additional public offering of 1,500,000 shares
of Common Stock, raising approximately $40.7 million in gross
proceeds. The net proceeds of approximately $38.8 million will be
used to pay costs of the offering and to reduce outstanding
borrowings under the Credit Facilities by approximately $38.6
million. After the use of the proceeds from the January public
offering, the Company will have an unused borrowing capacity under
its Credit Facilities of approximately $65.4 million.
The Company intends to distribute approximately 80% to 85% of its
funds from operations with the remaining 20% to 15% to be held for
capital expenditures and additional growth. The Company expects to
meet its other short-term cash requirements, through undistributed
funds from operations, cash balances and advances under the Credit
Facilities.
The Company prepares an annual capital expenditure budget for each
Property which includes provisions for all necessary recurring
capital improvements. The Company believes that its annual
operating reserve for maintenance and recurring capital
improvements and reimbursements from tenants will provide the
necessary funding for these requirements. The Company believes
that these funds will be sufficient to cover (i) tenant finish
costs associated with the renewal or replacement of current tenant
leases as existing leases expire and (ii) capital expenditures
which will not be reimbursed by tenants. During 1996, the Company
had capital expenditures, excluding acquisitions, totaling
approximately $4,282,000. This amount consists of $1,298,000 in
revenue enhancing construction and development, $856,000 in revenue
enhancing tenant allowance, $836,000 in non-revenue enhancing
tenant allowances and $1,292,000 in other non-revenue enhancing
capital expenditures. The Company also had $427,000 in leasing
commissions paid to outside parties. Of this amount, $343,000 was
considered revenue enhancing and $84,000 was considered non-revenue
enhancing. In addition, during 1996, the Company purchased the fee
simple interest in the land underlying Fry's Shopping Plaza in
Glendale, Arizona for $900,000. Exclusive of construction and
development, capital expenditures (both revenue and non-revenue
enhancing) for the existing Properties are budgeted in 1997 to be
approximately $4,200,000. In addition, the Company anticipates
spending approximately $2,700,000 for renovation of the Eastridge
Mall in Casper, Wyoming and $1,200,000 for certain revenue
enhancing improvements at University Crossing in Orem, Utah.
The Company's principal long-term liquidity requirements will be
the repayment of principal on the $95 million mortgage debt, which
matures in 2001 and which may require principal payments in an
amount necessary to reduce the debt to $83.1 million as of January
21, 2000, and to retire outstanding balances under the Credit
Facilities.
In July of 1996, the Company obtained a $50.0 million construction
loan from a major institutional lender to facilitate the
construction of the first phase of the Spokane Valley Mall in
Spokane, Washington. The loan is for a term of three years with an
option, under certain conditions, to extend the loan for an
additional two years. An additional long-term liquidity
requirement will be the refinancing or repayment of this loan when
it matures in 1999 or at the extended maturity date.
The Company is also planning the development of an enclosed
regional mall in Provo, Utah. The Provo project will also
represent a future long-term liquidity need for the Company. The
Company expects to fund this project through advances under its
Credit Facilities in combination with construction financing. The
availability of financing and the status of other projects will
influence the Company's decision to proceed with, and the pace of,
the proposed Provo development.
The Company is also contemplating the expansion and renovation of
several of its existing properties and additional development
projects and acquisitions as a means to expand its portfolio. The
Company does not expect to generate sufficient funds from
operations to meet its long-term liquidity needs and intends to
finance these costs primarily through advances under the Credit
Facilities, together with future equity and debt offerings and
individual property financings.
<PAGE> 24
The Company intends to incur additional borrowings in the future in
a manner consistent with its policy of maintaining a ratio of debt-
to-total market capitalization of less than 50%. The Company's
ratio of debt to total market capitalization was approximately 24%
at December 31, 1996.
The Company believes that to facilitate a clear understanding of
the consolidated historical operating results of the Company and
Predecessor Companies, net income should be examined in conjunction
with funds from operations. The Company considers funds from
operations to be an appropriate measure of the performance of an
equity REIT. Funds from operations ("FFO") is defined by the
National Association of Real Estate Investment Trusts ("NAREIT") as
"net income (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and
amortization and after adjustments for unconsolidated partnerships
and joint ventures." While the Company believes that FFO is the
most relevant and widely used measure of its operating performance,
it does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not
indicative of cash available to fund cash needs. FFO should not be
considered as an alternative to net income as an indication of the
Company's operating performance or as an alternative to cash flow
as a measure of liquidity. The Company's presentation of FFO,
however, may not be comparable to other similarly titled measures
used by other equity REITs.
The Company's calculation of funds from operations is as follows:
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Company Company
Historical Historical
Year Ended Year Ended
December 31, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Income from Operations
before Equity in Net
Income of Partnership
Investment and
Minority Interests in
Income of Consolidated
Partnerships $ 28,789 $ 22,410
Add: Depreciation
Buildings &
Improvements 10,011 9,387
Add: Depreciation
Property, Furniture
& Equipment 219 223
Add: Amortization of
Deferred Financing
Costs 1,085 1,256
Add: Amortization of
Deferred Leasing
Costs 664 662
Less: Minority Interests
in Income of
Consolidated
Partnerships (269) (320)
Less: Straight-Line Rent
Accrual (97) 0
----------- -----------
Total 40,402 33,618
Current Calculation(1)
Less: Depreciation
Property, Furniture
& Equipment (219) (223)
Less: Amortization of
Deferred Financing
Costs (1,085) (1,256)
----------- -----------
Funds From Operations $ 39,098 $ 32,139
=========== ===========
</TABLE>
1) In March 1995, NAREIT issued the White Paper which
discussed NAREIT's views on certain interpretive issues
under the definition of FFO. Effective January 1, 1996,
the Company modified its calculation of FFO in accordance
with the interpretive positions set forth by NAREIT in the
White Paper. For reporting periods ending December 31,
1995, and prior, the Company added back depreciation on
property, furniture and equipment and the amortization of
deferred financing costs to income from operations before
equity in net income of partnership investment and minority
interest in income of consolidated partnerships. For
reporting periods beginning January 1, 1996, depreciation
of property, furniture and equipment and the amortization
of deferred financing costs, are not added back to income
from operations before equity in net income of partnership
investment and minority interest in income of consolidated
partnerships arriving at funds from operations. Funds from
operations for periods ending December 31, 1995, and prior,
have been retroactively restated to be comparable with the
method of calculating 1996 funds from operations.
<PAGE> 25
INFLATION
Inflation has remained relatively low during the past three years
and has had minimal impact on the operating performance of the
Properties. Nonetheless, substantially all of the retail tenants'
leases contain provisions designed to protect the Company from the
impact of inflation. Such provisions include clauses enabling the
Company to receive percentage rents based on tenants' gross sales,
which generally increase as prices rise, and/or escalation clauses,
which generally increase rents during the terms of the leases. In
addition, many of the leases are for terms less than ten years,
which may enable the Company to replace existing leases with new
leases at higher base and/or percentage rentals if rents of the
existing leases are below then-existing market rates.
Substantially all of the leases, other than those for anchors,
require the tenants to pay a proportionate share of operating
expenses, including common area maintenance, real estate taxes and
insurance, thereby reducing the Company's exposure to increases in
costs and operating expenses resulting from inflation.
However, inflation may have a negative impact on some of the
Company's other operating items. Interest and general and
administrative expenses may be adversely affected by inflation as
these specified costs could increase at a rate higher than rents.
Also, for tenant leases with specified rent increases, inflation
may have a negative effect as the specified rent increases in these
leases could be lower than the increase in the inflation rate at
any given time.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are listed in
the Index to Financial Statements and Financial Statement Schedules
appearing on Page F-1 of this Form 10-K/A No. 2.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING DISCLOSURES
During the two most recent fiscal years, the Company has not
experienced any changes in or disagreements with its independent
auditors.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding Directors appears under the heading
"Election of Directors" in the Company's proxy statement relating
to the Company's 1997 Annual Meeting of Stockholders to be held on
April 30, 1997, and is incorporated herein by reference.
Information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934 appears under the heading "Section
16(a) Beneficial Ownership Reporting Compliance" in the Company's
proxy statement relating to the Company's 1997 Annual Meeting of
Stockholders to be held on April 30, 1997, and is incorporated
herein by reference.
Information regarding Executive Officers appears at Item 4A of
Part I of this Form 10-K/A No. 2.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation appears under the
heading "Executive Compensation" in the Company's proxy statement
relating to the Company's 1997 Annual Meeting of Stockholders to be
held on April 30, 1997, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table of beneficial ownership of the Company appears under
the heading "Security Ownership of Certain Beneficial Owners and
Management" in the Company's proxy statement relating to the
Company's 1997 Annual Meeting of Stockholders to be held on April
30, 1997, and is incorporated herein by reference.
<PAGE> 26
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FORMATION TRANSACTIONS
The Company commenced operations in January 1994 upon completion of a
series of transactions intended to allow it to reorganize and continue the
business of the Predecessor Companies, which were affiliated with John Price,
Chairman of the Board of Directors and Chief Executive Officer of the Company.
Under the reorganization, certain properties (or interest therein) were
transferred to PDC. Immediately prior to the closing of the initial public
offering of the Company (the "IPO"), certain Predecessor Companies owed
approximately $30.8 million to Fairfax, a company which is wholly owned by John
Price and is the company through which the principal operations of the
Predecessor Companies were conducted. Fairfax borrowed funds from third-party
lenders in order to provide loans to these Predecessor Companies during the
development and lease-up periods of certain properties. Upon closing of the
IPO, PDC repaid (out of proceeds from the IPO) that amount of principal plus
accrued interest that Fairfax owed to third-party lenders as of such date. The
remaining debt was contributed by Fairfax to (i) the Company in exchange for
200,000 shares of Price Group Stock and (ii) PDC in exchange for 250,400 PDC
Units.
MANAGEMENT CONTRACTS
The Company provides third-party management services for certain
properties owned directly or indirectly by John Price as follows: (1) an
office building in Salt Lake City, Utah, the owner of which paid the Company a
management fee of $114,000 in 1996 (Fairfax is a general partner of the owner
of this building); (ii) a commercial building in Layton, Utah, the owner of
which paid the Company a management fee of $21,000 in 1996; and (iii) a
commercial building in Salt Lake City, Utah, the owner of which paid the
Company a management fee of $3,000 in 1996 (John Price is the general partner
of the owner of this building).
MANAGEMENT AGREEMENT
Pursuant to a management agreement between the Company and Fairfax, the
Company provides certain management and accounting services to Fairfax. In
consideration for such services, the Company was paid a management fee by
Fairfax of approximately $72,000, $72,000 and $68,000 in 1996, 1995 and 1994,
respectively.
COMPUTER SERVICES
The Company receives computer services from Alta Computer Services, Inc.
("Alta"), which is majority owned by John Price (Chairman of the Board of
Directors and Chief Executive Officer of the Company), Warren P. King
(director of the Company) and Sam W. Souvall (director of the Company).
In consideration for such services, the Company paid Alta a service fee of
$194,000, $196,000 and $208,000 in 1996, 1995 and 1994, respectively.
RECEIPT OF EQUITY INTERESTS BY MANAGEMENT
Of the PDC Units issued in the formation of the Company, 2,964,385 PDC
Units (having a value of $51.8 million based on the price of the shares of
Common Stock in the IPO) were allocated directly or indirectly to certain
executive officers and directors of the Company, including entities they
control and trusts established for members of their immediate families, as
follows: John Price (2,746,184 PDC Units): G. Rex Frazier (31,831 PDC Units);
Paul K. Mendenhall (7,112 PDC Units); Martin G. Peterson (20,134 PDC Units):
Thomas L. Mulkey (3,291 PDC Units); Greg Curtis (2,975 PDC Units); David R.
Sabey (1,595 PDC Units); Warren P. King (126,297 PDC Units); and Sam W.
Souvall (23,371 PDC Units).
BOISE TOWN SQUARE SETTLEMENT
On March 17, 1997, a settlement agreement was entered into by the Company,
Boise Mall Development Company, Ltd., a Utah partnership which is beneficially
owned by, among others, John Price (Chairman of the Board of Directors and
Chief Executive Officer of the Company), G. Rex Frazier (President and Chief
Operating Officer and director of the Company), Paul K. Mendenhall (Vice
President--Finance and Secretary of the Company), Martin G. Peterson (Vice
President--Administration of the Company), Greg Curtis (Vice President--
Management of the Company), Warren P. King (director of the Company), Fairfax
and JPET II Company, Ltd. (a limited partnership in which Mr. Price is the
sole general partner ("JPET")) and which contributed Boise Towne Square to the
Company ("BMDC"), and the successor to the company that owned a certain parcel
adjacent to Boise Town Square (the "Prior Owner"), which parcel is believed
to be the source of an environmental contaminant that has been found to
effect Boise Towne Square as well as certain other adjacent parcels. The
settlement agreement, which was approved by the unanimous vote of the
independent directors of the Board of Directors of the Company, memorializes
the final settlement of all claims that the Company and BMDC have against the
Prior Owner relating to the environmental condition existing at Boise Town
Square. In connection with the settlement agreement, BMDC, which retained
all claims of an environmental nature with respect to Boise Towne Square
that it held on the date of the contribution of such property to the Company,
will receive a cash payment totaling $4.5 million for its prior damages. In
addition, the Company will receive a cash payment of $1.1 million which is
intended to defray, based on independent studies of the condition, the
additional costs that may be incurred by the Company in any future expansion
of Boise Town Square as a result of such environmental condition and to
reimburse the Company for certain sums escrowed at the time of, and in
connection with, its formation and the closing of the IPO. In addition, the
Company has received from the Prior Owner a broad indemnification relating
to such environmental condition as well as a covenant to complete the ongoing
remediation of such environmental condition.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) (1) and (2) Financial Statements and Financial Statements
Schedules
See Index to Financial Statements and Financial Statement
Schedules appearing on page F-1 of this Form 10-K/A No. 2
(b) Reports on Form 8-K
None
(c) Exhibits
<PAGE> 27
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Amended and Restated Articles of Incorporation the
Company (3(a))*
3.2 Amended and Restated Bylaws of the Company (3(b))*
4.1 Specimen of Common Stock Certificate (4)*
10.1 Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited
Partnership (10(a))*
10.2 Agreement of Limited Partnership of Price Financing
Partnership, L.P. (10(b))*
10.3 Loan Agreements related to Mortgage Debt and
related documents (10(c))*
i) Deed of Trust, Mortgage, Security
Agreement and Assignment of Leases and
Rents of Price Financing Partnership, L.P.
ii) Intentionally Omitted
iii) Indenture between Price Capital Corp. and
a Trustee
iv) Limited Guarantee Agreement (Guarantee of
Collection) for outside investors
v) Limited Guarantee Agreement (Guarantee of
Collection) for Price Group Investors
vi) Cash Collateral Account Security, Pledge
and Assignment Agreement among Price Financing
Partnership, L.P., Price Capital Corp.
and Continental Bank N.A.
vii) Note Issuance Agency Agreement between
Price Capital Corp. and Price Financing
Partnership, L.P.
viii) Management and Leasing Agreement among
Price Financing Partnership, L.P.and Price
Development Company, Limited Partnership
ix) Assignment of Management and Leasing Agreement
of Price Financing Partnership, L.P.
10.4 Employment and Non-Competition Agreement between the
Company and John Price (10(d))*
10.5 Indemnification Agreement for Directors and Officers
(10(f))*
10.6 Registration Rights Agreement among the Company and the
Limited Partners of Price Development Company, Limited
Partnership (10(g))*
10.7 Amendment No. 1 to Registration Rights Agreement, dated
August 1, 1995, among the Company and the Limited
Partners of Price Development Company, Limited
Partnership**
10.8 Exchange Agreement among the Company and the Limited
Partners of Price Development Company, Limited
Partnership (10(h))*
10.9 1993 Stock Option Plan (10(i))*
10.10 Amendment to Groundlease between Price Development
Company and Alvin Malstrom as Trustee and C.F.
Malstrom, dated December 31, 1985. (Groundlease for
Plaza 9400) (10(j))*
10.11 Lease Agreement between The Corporation of the
President of the Church of Jesus Christ of Latter Day
Saints and Price-James and Assumptions, dated September
24, 1979. (Groundlease for Anaheim Plaza) (10(k))*
10.12 Indenture of Lease between Ambrose and Zelda Motta and
Cordova Village, dated July 26, 1974, and Amendments
and Transfers thereto. (Groundlease for Fort Union
Plaza) (10(l))*
10.13 Lease Agreement between Advance Management Corporation
and Price Rentals, Inc. and dated August 1, 1975 and
Amendments thereto. (Groundlease for Price Fremont)
(10(m))*
- -------------------
*Documents were previously filed with the Registration Statement on
Form S-11, File No. 33-68844, under the exhibit numbered in
parentheticals, and are incorporated herein by reference.
**Documents were previously filed with the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and are
incorporated herein by reference.
<PAGE> 28
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.14 Groundlease between Aldo Rossi and Price Development
Company, dated June 1, 1989, and related documents.
(Groundlease for Halsey Crossing) (10(n))*
10.15 Loan Agreements related to 1995 Credit Facility**
i) Credit Agreement, dated March 8, 1995,
between Price Development Company, Limited
Partnership and Lexington Mortgage Company
as
ii) Note dated March 8, 1995
iii) Guaranty of Payment dated March 8, 1995
between the Company and Lexington Mortgage
Company
iv) Cash Collateral Account Security, Pledge and
Assignment Agreement dated March 8, 1995
between Price Development Company, Limited
Partnership, Bank One, Utah, N.A. and
Lexington Mortgage Company
v) Amended and Restated Credit Agreement dated
June 29, 1995 between Price Development
Company, Limited Partnership, Merrill Lynch
Mortgage Capital, Inc. and Capital Market
Assurance Corporation
vi) Amendment to Cash collateral Account,
Security, Pledge and Assignment Agreement
dated June 29, 1995
vii) Reaffirmation of Guaranty dated June 29, 1995
23 Consent of Independent Accountants
- ------------------------
*Documents were previously filed with the Registration Statement on
Form S-11, File No. 33-68844, under the exhibit numbered in
parentheticals, and are incorporated herein by reference.
**Documents were previously filed with the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and are
incorporated herein by reference.
<PAGE> 29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
JP REALTY, INC.
By: /s/ G. Rex Frazier
__________________________________
G. Rex Frazier
President, Chief Operating
Officer & Director
Date: November 14, 1997
---------------------------------
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Name Title Date
--- ----- ----
/s/ G. Rex Frazier President, Chief November 14, 1997
- ----------------------- Operating Officer &
G. Rex Frazier Director
/s/ M. Scott Collins Vice President--Chief November 14, 1997
- ----------------------- Financing Officer &
M. Scott Collins Treasurer (Principal
Financial & Accounting
Officer)
/s/ Warren P. King Director November 14, 1997
- ----------------------
Warren P. King
/s/ Sam W. Souvall Director November 14, 1997
- ---------------------
Sam W. Souvall
/s/ James A. Anderson Director November 14, 1997
- ----------------------
James A. Anderson
<PAGE> 30
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
3.1 Amended and Restated Articles of Incorporation the
Company (3(a))*
3.2 Amended and Restated Bylaws of the Company (3(b))*
4.1 Specimen of Common Stock Certificate (4)*
10.1 Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited
Partnership (10(a))*
10.2 Agreement of Limited Partnership of Price Financing
Partnership, L.P. (10(b))*
10.3 Loan Agreements related to Mortgage Debt and
related documents (10(c))*
i) Deed of Trust, Mortgage, Security
Agreement and Assignment of Leases and
Rents of Price Financing Partnership, L.P.
ii) Intentionally Omitted
iii) Indenture between Price Capital Corp. and
a Trustee
iv) Limited Guarantee Agreement (Guarantee of
Collection) for outside investors
v) Limited Guarantee Agreement (Guarantee of
Collection) for Price Group Investors
vi) Cash Collateral Account Security, Pledge
and Assignment Agreement among Price Financing
Partnership, L.P., Price Capital Corp.
and Continental Bank N.A.
vii) Note Issuance Agency Agreement between
Price Capital Corp. and Price Financing
Partnership, L.P.
viii) Management and Leasing Agreement among
Price Financing Partnership, L.P.and Price
Development Company, Limited Partnership
ix) Assignment of Management and Leasing Agreement
of Price Financing Partnership, L.P.
10.4 Employment and Non-Competition Agreement between the
Company and John Price (10(d))*
10.5 Indemnification Agreement for Directors and Officers
(10(f))*
10.6 Registration Rights Agreement among the Company and the
Limited Partners of Price Development Company, Limited
Partnership (10(g))*
10.7 Amendment No. 1 to Registration Rights Agreement, dated
August 1, 1995, among the Company and the Limited
Partners of Price Development Company, Limited
Partnership**
10.8 Exchange Agreement among the Company and the Limited
Partners of Price Development Company, Limited
Partnership (10(h))*
10.9 1993 Stock Option Plan (10(i))*
10.10 Amendment to Groundlease between Price Development
Company and Alvin Malstrom as Trustee and C.F.
Malstrom, dated December 31, 1985. (Groundlease for
Plaza 9400) (10(j))*
10.11 Lease Agreement between The Corporation of the
President of the Church of Jesus Christ of Latter Day
Saints and Price-James and Assumptions, dated September
24, 1979. (Groundlease for Anaheim Plaza) (10(k))*
10.12 Indenture of Lease between Ambrose and Zelda Motta and
Cordova Village, dated July 26, 1974, and Amendments
and Transfers thereto. (Groundlease for Fort Union
Plaza) (10(l))*
10.13 Lease Agreement between Advance Management Corporation
and Price Rentals, Inc. and dated August 1, 1975 and
Amendments thereto. (Groundlease for Price Fremont)
(10(m))*
- -------------------
*Documents were previously filed with the Registration Statement on
Form S-11, File No. 33-68844, under the exhibit numbered in
parentheticals, and are incorporated herein by reference.
**Documents were previously filed with the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and are
incorporated herein by reference.
<PAGE> 31
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
10.14 Groundlease between Aldo Rossi and Price Development
Company, dated June 1, 1989, and related documents.
(Groundlease for Halsey Crossing) (10(n))*
10.15 Loan Agreements related to 1995 Credit Facility**
i) Credit Agreement, dated March 8, 1995,
between Price Development Company, Limited
Partnership and Lexington Mortgage Company
as
ii) Note dated March 8, 1995
iii) Guaranty of Payment dated March 8, 1995
between the Company and Lexington Mortgage
Company
iv) Cash Collateral Account Security, Pledge and
Assignment Agreement dated March 8, 1995
between Price Development Company, Limited
Partnership, Bank One, Utah, N.A. and
Lexington Mortgage Company
v) Amended and Restated Credit Agreement dated
June 29, 1995 between Price Development
Company, Limited Partnership, Merrill Lynch
Mortgage Capital, Inc. and Capital Market
Assurance Corporation
vi) Amendment to Cash collateral Account,
Security, Pledge and Assignment Agreement
dated June 29, 1995
vii) Reaffirmation of Guaranty dated
June 29, 1995
23 Consent of Independent Accountants
- ------------------------
*Documents were previously filed with the Registration Statement on
Form S-11, File No. 33-68844, under the exhibit numbered in
parentheticals, and are incorporated herein by reference.
**Documents were previously filed with the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and are
incorporated herein by reference.
<PAGE> 32
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statements on Form
S-3 (No. 33-93752 and No. 333-3624, No. 333-34835 and No.
333-34835-01) and the Registration Statement of Form S-8 (No.333-3550)
of JP Realty, Inc. of our further report dated January 29, 1997 appearing on
page F-2 of this Form 10-K and as amended on November 14, 1997.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Salt Lake City, Utah
November 14, 1997
<PAGE> F-1
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JP REALTY, INC., AND THE PREDECESSOR COMPANIES
<S> <S>
Report of Independent Accountants. . . . . . . . . . . . . . F-2
Consolidated Balance Sheet of JP
Realty, Inc.as of December 31, 1996
and 1995. . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statement of Operations of
JP Realty, Inc. for the years ended
December 31, 1996, 1995 and for
the Period January 21, 1994 through
December 31, 1994 and Combined Statements
of Operations of the Predecessor
Companies for the Period January 1, 1994
through January 20, 1994. . . . . . . . . . . . . . . . . . F-4
Consolidated Statement of Shareholders' Equity
of JP Realty, Inc. and Combined Statement
of Partners' and Owners' Equity of the
Predecessor Companies for the Years Ended
December 31, 1996, 1995 and 1994. . . . . . . . . . . . . . F-5
Consolidated Statement of Cash Flows of JP
Realty, Inc. for the years ended December
31, 1996, 1995, and for the Period January
21, 1994 through December 31, 1994 and
Combined Statements of Cash Flows of the
Predecessor Companies for the Period January
1, 1994 through January 20, 1994. . . . . . . . . . . . . . F-6
Notes to Financial statements. . . . . . . . . . . . . . . . F-7
Schedule II - Valuation and Qualifying Accounts. . . . . . . F-19
Schedule III - Real Estate and Accumulated
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . F-20
</TABLE>
<PAGE> F-2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of JP Realty, Inc.
In our opinion, the consolidated financial statements of JP
Realty, Inc. and its subsidiaries and the combined financial
statements of the Predecessor Companies listed in the accompanying
index, present fairly, in all material aspects, (i) the financial
position of JP Realty, Inc. and its subsidiaries at December 31,
1996 and 1995 and the results of their operations and their cash
flows for the years then ended and the period January 21, 1994
through December 31, 1994, and (ii) the results of operations and
cash flows of the Predecessor Companies for the period January 1,
1994 through January 20, 1994, all in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the management of JP Realty, Inc. and the
Predecessor Companies; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Salt Lake City, Utah
January 29, 1997
<PAGE> F-3
JP REALTY, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
----------- ------------
<S> <C> <C>
ASSETS
Real Estate Assets
Land . . . . . . . . . . . . . . $ 69,714 $ 63,754
Buildings. . . . . . . . . . . . 353,500 320,757
---------- -----------
423,214 384,511
Less: Accumulated Depreciation. . (87,318) (77,462)
---------- -----------
Operating Real Estate Assets . . 335,896 307,049
Real Estate Under Development. . . 30,027 3,694
---------- -----------
Net Real Estate Assets. . . . . 365,923 310,743
Cash . . . . . . . . . . . . . . . 1,750 1,827
Restricted Cash. . . . . . . . . . 2,372 2,464
Accounts and Notes Receivable, Net 4,081 3,295
Deferred Charges, Net. . . . . . . 6,512 7,874
Other Assets . . . . . . . . . . . 722 858
---------- -----------
$ 381,360 $ 327,061
========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Borrowings . . . . . . . . . . . . $ 162,375 $ 106,406
Accounts Payable and Accrued
Expenses. . . . . . . . . . . . . 11,611 7,837
Accumulated Losses in Excess
of Equity Investment. . . . . . . 1,555 1,555
Other Liabilities. . . . . . . . . 485 923
---------- -----------
176,026 116,721
---------- -----------
Minority Interests . . . . . . . . 32,778 34,586
---------- -----------
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Common Stock, $.0001 par value,
124,800,000 shares authorized,
15,874,000 shares and
15,836,000 shares issued and
outstanding at December 31,
1996 and 1995, respectively. . . . 2 2
Price Group Stock, $.0001 par
value, 200,000 shares authorized,
issued and outstanding . . . . . . 0 0
Excess Stock, 75,000,000 shares
authorized . . . . . . . . . . . . 0 0
Additional Paid-in Capital. . . . . 193,229 192,658
Accumulated Distributions in
Excess of Net Income . . . . . . . (20,675) (16,906)
---------- -----------
172,556 175,754
---------- -----------
$ 381,360 $ 327,061
========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> F-4
JP REALTY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JP REALTY, INC. PREDECESSOR
------------------------------------------------ COMPANIES
FOR THE PERIOD FOR THE PERIOD
FOR THE FOR THE JANUARY 21, JANUARY 1,
YEAR ENDED YEAR ENDED 1994 TO 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, JANUARY 20,
1996 1995 1994 1994
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
REVENUES
Minimum Rents. . . . . . $ 52,447 $ 43,640 $ 35,775 $ 1,916
Percentage and Overage
Rents . . . . . . . . . 4,061 3,465 2,632 124
Recoveries from Tenants. 15,557 12,252 9,903 495
Interest . . . . . . . . 549 1,231 1,387 12
Other. . . . . . . . . . 335 362 374 31
------------ ------------ ----------- -----------
72,949 60,950 50,071 2,578
------------ ------------ ----------- ------------
EXPENSES
Operating and Maintenance 11,240 8,288 6,874 359
Real Estate Taxes and
Insurance . . . . . . . 7,679 6,892 6,116 260
Advertising and
Promotions. . . . . . . 426 364 299 0
General and
Administrative. . . . . 5,060 4,845 3,801 274
Depreciation . . . . . . 10,230 9,610 7,588 367
Amortization of Deferred
Financing Costs . . . . 1,085 1,256 538 13
Amortization of Deferred
Leasing Costs . . . . . 664 662 608 50
Interest
Banks and Other
Financial Institutions. 7,776 6,623 5,873 735
Affiliates. . . . . . . 0 0 0 91
------------ ------------ ----------- ------------
44,160 38,540 31,697 2,149
------------ ------------ ----------- ------------
28,789 22,410 18,374 429
Minority Interest in
Income of Consolidated
Partnerships. . . . . . (269) (320) (221) 0
Equity in Net Income
(Loss) of Partnership
Interest. . . . . . . . 0 (184) (82) 7
Gain on Sales of
Real Estate . . . . . . 94 918 0 0
------------ ------------ ----------- ------------
Income Before
Extraordinary Item and
Minority Interest
of PDC Unitholders. . . 28,614 22,824 18,071 436
Minority Interest of PDC
Unitholders . . . . . . (5,244) (4,646) (3,943) --
------------ ------------ ----------- ------------
Income Before
Extraordinary Item. . . 23,370 18,178 14,128 436
Extraordinary Item
Loss on Extinguishment
of Debt, Net of
Minority Interest of
PDC Unitholders . . . . 0 0 (5,215) 0
------------ ------------ ----------- ------------
Net Income . . . . . . . $ 23,370 $ 18,178 $ 8,913 $ 436
============ ============ =========== ============
Earnings Per Share
Income Before
Extraordinary
Item. . . . . . . . . $ 1.46 $ 1.27 $ 1.07
Extraordinary Item . . 0 0 (.40)
------------ ----------- -----------
Net Income . . . . . . $ 1.46 $ 1.27 $ .67
============ =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE> F-5
JP REALTY, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL DISTRIBUTIONS IN ACCUMULATED
COMMON PAID-IN EXCESS OF EARNINGS
SHARES* STOCK CAPITAL NET INCOME (DEFICIT) TOTAL
----------- ------- ---------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
PREDECESSOR
Partners' and Owners' Deficit,
December 31, 1993. . . . . . . . . 0 $ 0 $ 0 $ 0 $ (6,951) $ (6,951)
Net Income for the Period January 1,
1994 to January 20, 1994 . . . . . 0 0 0 0 436 436
Capital Distributions for the Period
January 1, 1994 to January 20, 1994 0 0 0 0 (792) (792)
-------- --- ---------- ---------- ----------- ---------
Partners' and Owners' Deficit
January 20, 1994 . . . . . . . . . 0 0 0 0 (7,307) (7,307)
JP REALTY, INC.
Net proceeds from initial Public
Offering . . . . . . . . . . . . . 13,031,000 1 206,197 0 0 206,198
Cottonwood Mall Joint Venture
Preferential Distribution
($38,308) Over Net Book Value
of This Interest ($10,256) . . . . 0 0 (28,052) 0 0 (28,052)
Exchange of Debt Due to Fairfax
Realty, Inc. for 200,000
Shares of Price Group Stock
and PDC Units . . . . . . . . . . 200,000 0 5,664 0 0 5,664
Exchange of Borrowings by Various
Partners for PDC Units. . . . . . 0 0 1,174 0 0 1,174
Distribution of Property for Buyout
of Minority Interest Holders. . . 0 0 (202) 0 0 (202)
Minority Interest of PDC
Unitholders . . . . . . . . . . . 0 0 (38,679) 0 0 (38,679)
Reclassification of Predecessor
Accumulated Deficit in Connection
with Formation Transactions . . . 0 0 (7,307) 0 7,307 0
Net Income for the Period January
21, 1994 to December 31, 1994 . . 0 0 0 8,913 0 8,913
Distributions Paid . . . . . . . . 0 0 0 (20,116) 0 (20,116)
--------- ---- ----------- ---------- ----------- ---------
Shareholders' Equity at December
31, 1994. . . . . . . . . . . . . 13,231,000 1 138,795 (11,203) 0 127,593
Sale of Common Stock . . . . . . . 2,750,000 1 52,887 0 0 52,888
Stock Options Exercised. . . . . . 55,000 0 976 0 0 976
Net Income . . . . . . . . . . . . 0 0 0 18,178 0 18,178
Distributions Paid . . . . . . . . 0 0 0 (23,881) 0 (23,881)
---------- ---- ----------- ---------- ---------- ---------
Shareholders' Equity at December
31, 1995. . . . . . . . . . . . . 16,036,000 2 192,658 (16,906) 0 175,754
Stock Options Exercised. . . . . . 22,000 0 407 0 0 407
PDC Units Converted. . . . . . . . 16,000 0 164 0 0 164
Net Income . . . . . . . . . . . . 0 0 0 23,370 0 23,370
Distributions Paid . . . . . . . . 0 0 0 (27,139) 0 (27,139)
--------- ---- ----------- ---------- ---------- ---------
Shareholders' Equity at
December 31, 1996 . . . . . . . . 16,074,000 $ 2 $ 193,229 $ (20,675) $ 0 $ 172,556
========== ==== =========== ========== ========== =========
</TABLE>
* Includes Common and Price Group Stock
See accompanying notes to financial statements.
<PAGE> F-6
JP REALTY, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JP REALTY, INC. PREDECESSOR
------------------------------------------------ COMPANIES
FOR THE PERIOD FOR THE PERIOD
FOR THE FOR THE JANUARY 21, JANUARY 1,
YEAR ENDED YEAR ENDED 1994 TO 1994 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, JANUARY 20,
1996 1995 1994 1994
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
Cash Flows from
Operating Activities
Net Income . . . . . . . $ 23,370 $ 18,178 $ 8,913 $ 436
Adjustments to Reconcile
Net Income to Net Cash
Provided
by Operating Activities:
Depreciation . . . . . . 10,230 9,610 7,588 367
Amortization . . . . . . 1,749 1,918 1,146 63
General and
Administrative
Allocation . . . . . . . 0 0 0 59
Minority Interest in
Income of Consolidated
Partnerships. . . . . . 269 320 221 0
Minority Interest of
PDC Unitholders . . . . 5,244 4,646 3,943 0
Unitholders' Interest in
Extraordinary Item . . . 0 0 (1,455) 0
Equity in Net Loss
(Income) of Partnership
Interest . . . . . . . . 0 184 82 (7)
Gain on Sales of Real
Estate. . . . . . . . . . (94) (918) 0 0
Increase in Accounts and
Notes Receivable. . . . . (786) (540) (1,726) (113)
(Increase) Decrease in
Deferred Charges. . . . . (387) (1,428) 640 (10)
Increase (Decrease) in
Accounts Payable and
Accrued Expenses. . . . . 3,774 887 1,324 (758)
(Increase) Decrease in
Other . . . . . . . . . . (295) (138) 164 1,056
----------- ------------ ---------- ---------
Net Cash Provided by
Operating Activities. . . . 43,074 32,719 20,840 1,093
----------- ------------ ---------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES
Real Estate Assets,
Developed or Acquired . . . (65,323) (69,300) (16,514) 0
Proceeds from Sales of
Real Estate . . . . . . . . 0 1,281 0 0
Decrease in Restricted Cash. 92 636 855 0
----------- ------------ ---------- ---------
Net Cash Used in
Investing Activities . . (65,231) (67,383) (15,659) 0
----------- ------------ ---------- ---------
CASH FLOWS FROM
FINANCAING ACTIVITIES
Proceeds from Borrowings . . 65,442 47,009 104,021 249
Repayment of Borrowings. . . (9,473) (49,344) (203,231) 0
Deferred Financing Costs . . 0 0 (4,162) 0
Net Proceeds from Sale of
Common Stock. . . . . . . . 407 53,850 206,198 0
Distributions to Minority
Interests and Unitholders . (7,157) (6,295) (5,806) ( 792)
Distributions Paid to
Shareholders. . . . . . . . (27,139) (23,881) (20,116) 0
Decrease in Due to
Affiliates. . . . . . . . . 0 0 (23,005) (2,218)
Buyout Joint Venture
Partner . . . . . . . . . . 0 0 (44,376) 0
----------- ------------ ---------- ---------
Net Cash Provided by
(Used in) Financing
Activities . . . . . . . 22,080 21,339 9,523 (2,761)
----------- ------------ ---------- ---------
Net Increase (Decrease) in
Cash (77) (13,325) 14,704 (1,668)
Cash, Beginning of Period. . 1,827 15,152 448 2,116
----------- ------------ ---------- ---------
Cash, End of Period. . . . . $ 1,750 $ 1,827 $ 15,152 $ 448
=========== ============ ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> F-7
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
JP Realty, Inc. (the "Company") is primarily engaged in the
business of owning, leasing, managing, operating, developing and
redeveloping malls, community centers and other commercial
properties. The tenant base includes primarily national retail
chains and local retail companies. Consequently, the Company's
credit risk is concentrated in the retail industry.
The Predecessor Companies are not a single legal entity but
rather a combination of the real estate properties of a number of
affiliated partnerships, joint ventures and certain properties
carved-out of an S-Corporation having varying ownership interests
in common. Fairfax Realty, Inc. (formerly known as Price
Development Company) is an S-Corporation and the former general
partner and majority owner of most of the properties included in
the combined financial statements of the Predecessor Companies.
PRINCIPLES OF CONSOLIDATION AND COMBINATION
The accompanying consolidated financial statements include the
accounts of the Company and its affiliated partnerships and
subsidiaries.
The accompanying combined financial statements of the
Predecessor Companies include the results of operations from the
real estate properties, equity interests in two limited
partnerships, certain property, furniture and equipment, and
certain liabilities, including the mortgage debt encumbering the
real estate relating to the properties. They have been presented
on a combined basis because of the common ownership and management
and because of the business combination on January 21, 1994 with
the Company.
All significant intercompany accounts and transactions have
been eliminated in the consolidation and in the combination.
The Company's and the Predecessor Companies' 30 percent
limited partnership interest in Silver Lake Mall is accounted for
using the equity method. Commencing in 1996, the Company
discontinued recording its proportionate interest in the loss
generated by this partnership as the Company is not required to
fund such losses.
REVENUE RECOGNITION
Certain minimum rents are recognized monthly based upon
amounts which are currently due from tenants, when such amounts are
not materially different than recognizing the fixed cash flow over
the initial term of the lease using the straight-line method. All
other minimum rents are recognized using the straight-line method.
Percentage rents are recognized monthly on an accrual basis based
on estimated annual amounts.
REAL ESTATE ASSETS
Real estate assets are stated at cost less accumulated
depreciation. At each balance sheet date, the Company reviews for
possible impairment to the recorded book values of real estate
assets based upon expectations of future nondiscounted cash flows
(excluding interest) from each property.
Depreciation is computed on a straight-line basis generally
over 40 years for buildings and four to ten years for equipment and
fixtures. Tenant improvements are capitalized and depreciated on
a straight-line basis over the life of the related lease.
Expenditures for maintenance and repairs are charged to operations
as incurred. Major replacements and betterments which improve or
extend the life of the asset are capitalized and depreciated over
their estimated useful lives.
<PAGE> F-8
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
INCOME TAXES
Prior to the initial public offering in 1994, the entities
included in the combined financial statements were either limited
partnerships or S Corporations and were not subject to federal and
state income taxes. Accordingly, no recognition has been given to
income taxes in the accompanying financial statements of the
Predecessor Companies since the income or loss of the entities was
included in the tax returns of the individual owners. The tax
returns of the entities are subject to examination by federal and
state taxing authorities. If such examinations result in
adjustments to distributive shares of taxable income or loss, the
tax liability of the owners would be adjusted accordingly.
The Company has elected to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"), commencing
with the taxable year ended December 31, 1994. In order for the
Company to qualify as a REIT, it must distribute annually at least
95% of its REIT taxable income, as defined in the Code, to its
shareholders and satisfy certain other requirements. As a result,
the Company generally will not be subject to federal income
taxation at the corporate level on the income it distributes to the
shareholders.
As of December 31, 1996, the net assets as reported in the
Company's consolidated Financial Statements exceeded the net basis
for federal income tax purposes, taking into account the special
allocation of gain to the partners contributing property to the
Operating Partnership, by approximately $11,154.
RESTRICTED CASH
Restricted cash reflects cash restricted under terms of a loan
agreement to be used for certain capital expenditures and funds
held in reserve by a trustee for interest payments on borrowings.
INTEREST AND REAL ESTATE TAXES
Interest and real estate taxes incurred during the
construction period are capitalized and depreciated over the lives
of the constructed assets.
DEFERRED CHARGES
Third party costs incurred in obtaining long-term financing
and initial tenant leases are included in deferred charges in the
accompanying consolidated balance sheet and are amortized on a
straight-line basis over the terms of the related debt and lease
agreements, as applicable.
EXTRAORDINARY ITEM
The extraordinary item recognized in the period January 21,
1994 to December 31, 1994 resulted from mortgage prepayment
penalties ($5,874) and the write-off of deferred financing costs
($796) on the mortgage debt satisfied. The extraordinary item is
net of the minority interest ($1,455) of PDC Unitholders calculated
on units and shares outstanding at January 21, 1994.
PER SHARE DATA
Earnings per share for income before extraordinary item,
extraordinary item and net income was computed for each period by
dividing the respective amounts by the weighted average number of
common shares outstanding. The weighted average number of shares
outstanding utilized in the calculations was 16,048,000, 14,345,000
and 13,231,000 for the years ended December 31, 1996, 1995 and the
period January 21, 1994 to December 31, 1994, respectively.
Earnings per share data for Predecessor Companies is not relevant
since Predecessor Companies is a presentation of the combined
operations of partnerships.
<PAGE> F-9
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
USE OF ESTIMATES
The preparation of these financial statements in conformity
with generally accepted accounting principles required management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENT
In October 1995, the Financial Accounting Standards Board
issued SFAS 123 "Accounting for Stock-based Compensation." The
statement allows an entity to elect either the fair value based
method of accounting for employee stock options or the intrinsic
value based method prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees." The new pronouncement was adopted
beginning January 1, 1996. The Company has elected to continue
valuing stock-based compensation under the intrinsic value based
method but has included proforma disclosure in Note 11 showing the
impact on net income and earnings per share had the fair value
based method prescribed by SFAS 123 been utilized for financial
reporting.
RECLASSIFICATION
Certain amounts in the 1994 and 1995 financial statements have
been reclassified to conform to the 1996 presentation.
2. FORMATION OF JP REALTY, INC. AND INITIAL PUBLIC OFFERING
The Company was incorporated on September 8, 1993, under the
General Corporation Law of Maryland. The authorized capital stock
of the Company consists of 200,000,000 shares of capital stock, of
which 124,800,000 shares are classified as Common Stock, 200,000
shares are classified as Price Group Stock, and 75,000,000 shares
are classified as Excess Stock. Each holder of Common and Price
Group Stock shall be entitled to one vote for each share held.
Shares of Price Group Stock shall have the right, voting as a
separate class, to elect two directors of the Company. Cash
dividends for shares of Price Group Stock shall be equal to 80
percent of the amount payable on each share of Common Stock. All of
the outstanding shares of Price Group Stock may be converted at the
option of the Company into an equal number of shares of Common
Stock if certain requirements are met.
In January 1994, the Company sold a total of 13,031,000 shares
of Common Stock in an initial public offering (the "Offering"), and
received net proceeds of $206,197. Concurrent with the Offering,
the partners and owners of the Predecessor Companies contributed
their properties to Price Development Company, Limited Partnership
(the "Operating Partnership"), in exchange for limited partnership
interests in the Operating Partnership ("PDC Units") which became
exchangeable after one year from the date of the Company's
Offering, at the option of the holders of such interests, for
Common Stock of the Company, subject to the right of the Company to
purchase for cash interests presented for exchange in an amount
equal to the market value of such shares of Common Stock. Proceeds
from the Offering were used to acquire a 78.18 percent controlling
interest in the Operating Partnership. The Company became the sole
general partner and the majority owner of the Operating
Partnership.
Concurrent with the closing of the Offering, a financing affiliate
of the Operating Partnership incurred Mortgage Debt of $95,000
through a private placement and the Operating Partnership incurred
an additional mortgage loan of $9,000.
<PAGE> F-10
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE DATA)
The above proceeds were used as follows:
<TABLE>
<S> <S>
Repayment of borrowings
(net of escrow funds $1,851) $199,179
Repayment of due to affiliates 23,005
Cash distribution to Joint Venture partners of
Cottonwood Mall (75%) 44,376
Repayment of accrued interest 886
Deferred financing costs 3,962
Borrowing prepayment penalties 5,891
--------
$277,299
=========
</TABLE>
The remainder of the proceeds were held as cash on hand for
operations and future acquisitions of real estate.
3. ADDITIONAL OFFERING AND ACQUISITIONS
On April 4, 1996, the Company acquired the Grand Teton Mall
located in Idaho Falls, Idaho for approximately $34,400. The
acquisition was financed utilizing borrowings on a $50,000 line of
credit.
On August 7, 1995, the Company sold 2,750,000 shares of
Common Stock in an underwritten public offering (the "Additional
Offering") at $20.50 per share. Net proceeds to the Company were
$52,887. The Company used the net proceeds to acquire additional
PDC units thereby increasing its ownership in the Operating
Partnership. The Operating Partnership utilized $47,000 to repay
borrowings under a credit facility, which borrowings were incurred
for the June 30, 1995 acquisition of the Eastridge Mall located in
Casper, Wyoming and the Animas Valley Mall located in Farmington,
New Mexico. The remaining proceeds were used for general business
purposes.
4. ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable in the consolidated balance
sheet are expected to be collected within one year and are net of
estimated unrecoverable amounts of approximately $489 and $504 at
December 31, 1996 and 1995, respectively.
5. DEFERRED CHARGES
Deferred charges consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
Financing costs. . . . . . . . . . $ 4,695 $ 5,043
Leasing costs. . . . . . . . . . . 7,881 8,505
-------- --------
12,576 13,548
Less accumulated amortization (6,064) (5,674)
--------- --------
$ 6,512 $ 7,874
========= =========
</TABLE>
<PAGE> F-11
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
6. BORROWINGS
Borrowings consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1996 1995
--------- ---------
<S> <C> <C>
Notes, secured by real estate;
interest at 6.37 percent;
interest only is payable
quarterly through January 21,
2001 at which time the principal
balance is due. . . . . . . . . . . $ 95,000 $ 95,000
Credit Facility; secured by real
estate; interest at 115 basis points
over AAA commercial paper. . . . . . 44,000 0
Construction Loan; secured by
real estate. . . . . . . . . . . . . 16,943 0
Credit Facility; unsecured; interest
at 175 basis points over LIBOR 4,200 0
Mortgage payable, secured by real
estate; interest at 9.38 percent;
due in 2001. . . . . . . . . . . . . 2,072 2,205
Note payable; interest at 7.8
percent; due in 2000 . . . . . . . . 160 201
Note payable, secured by real estate;
interest at LIBOR plus 200 basis
points (maximum interest rate of
6.5 percent); due January 21, 1996 . 0 9,000
--------- ---------
$ 162,375 $ 106,406
========= =========
</TABLE>
On March 8, 1995, the Operating Partnership entered into a
$50,000 credit facility agreement which provides for a two year
commitment ending in March 1997 with an option to extend for an
additional year. Borrowings under this agreement are
collateralized by approximately $79,000 of the Company's assets at
net book value. The credit facility bears interest at a floating
rate equal to 115 basis points over the established rate of AAA
commercial paper and is guaranteed by the Company. The facility
also provides for commitment fees equal to .25% on the unused line
of credit amount. For the year ended December 31, 1996 and 1995,
the Company paid commitment fees totaling $200 and $90,
respectively. At December 31, 1996, there was $44,000 advanced
under this credit facility.
On January 22, 1996, the Operating Partnership entered into
a $25,000 unsecured credit facility agreement. This credit
facility bears interest at a floating rate equal to 175 basis
points over LIBOR, and provides a two-year credit line with
provision for a one-year extension. The facility also provides for
commitment fees equal to .375% on the unused credit amount. For
the year ended December 31, 1996, the Company paid commitment fees
totaling $67. At December 31, 1996 there was $4,200 advanced under
this credit facility.
On July 30, 1996, Spokane Mall Development Company, a
consolidated partnership, of which the Operating Partnership is the
General Partner, entered into a $50,000 construction facility. The
construction facility will be used to fund the development and
construction of the Spokane Valley Mall in Spokane, Washington.
The construction loan has a three year term with an optional two
year extension and is secured by the Spokane Valley Mall and
guaranteed by the Operating Partnership. As of December 31, 1996,
borrowings on the loan were $16,943.
The following summarizes the scheduled maturities of
borrowings at December 31, 1996:
YEAR TOTAL
---- -----------
1997 . . . . . . . . . . . . . . . . . . . $ 44,183
1998 . . . . . . . . . . . . . . . . . . . 4,399
1999 . . . . . . . . . . . . . . . . . . . 17,145
2000 . . . . . . . . . . . . . . . . . . . 69
2001 . . . . . . . . . . . . . . . . . . . 96,579
----------
$ 162,375
==========
<PAGE> F-12
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
7. RENTAL INCOME
Substantially all real estate held for investment is leased to
retail and commercial tenants under arrangements which generally
require the tenants to pay property taxes, insurance and
maintenance charges. These operating leases generally range from
1 to 25 years and provide for minimum monthly rents and in certain
instances percentage rents based on the tenants' sales.
All non-cancelable leases, assuming no new or renegotiated
leases or option extensions, in effect at December 31, 1996 provide
for the following minimum future rental income:
YEAR TOTAL
---- -----------
1997 . . . . . . . . . . . . . . . . . . $ 47,787
1998 . . . . . . . . . . . . . . . . . . 42,773
1999 . . . . . . . . . . . . . . . . . . 37,030
2000 . . . . . . . . . . . . . . . . . . 32,397
2001 . . . . . . . . . . . . . . . . . . 26,235
Thereafter . . . . . . . . . . . . . . . 143,006
-----------
$ 329,228
===========
8. COMMITMENTS AND CONTINGENCIES
Future minimum rental payments under the terms of all non-
cancelable operating leases under which the Company is the lessee,
principally for ground leases, are as follows:
YEAR TOTAL
---- -----------
1997 . . . . . . . . . . . . . . . . . . . $ 550
1998 . . . . . . . . . . . . . . . . . . . 544
1999 . . . . . . . . . . . . . . . . . . . 541
2000 . . . . . . . . . . . . . . . . . . . 541
2001 . . . . . . . . . . . . . . . . . . . 538
Thereafter . . . . . . . . . . . . . . . . 20,038
-----------
$ 22,752
===========
The Company is a defendant in certain litigation relating to
its business activities. Management does not believe that the
resolution of these matters will have a materially adverse effect
upon the Company.
<PAGE> F-13
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
9. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During the years ended December 31, 1996 and 1995, non-cash
investing and financing transactions included the write-off of
capitalized tenant allowances of $159 and $1,281, respectively.
Also, during 1996, the holders of limited partnership units elected
to convert 16,000 units having a recorded value of $164 into common
shares.
For the period January 21, 1994 to December 31, 1994, the
following non-cash investing and financing transactions occurred:
<TABLE>
<S> <S>
Step up in Real Estate Assets for Cottonwood Mall
Equity Buyout . . . . . . . . . . . . . . . . . . . $ 16,324
Exchange of Debt due to Fairfax for 200,000 Shares
of Price Group Stock and PDC Units. . . . . . . . . 5,664
Exchange of Borrowings by Various Partners for PDC
Units . . . . . . . . . . . . . . . . . . . . . . . 1,174
Restricted Cash Used to Pay Off Debt. . . . . . . . . 1,851
Reclassification of Owners'/Shareholders' Deficit
to Additional Paid-in Capital . . . . . . . . . . . 7,307
Issuance of Note Payable in connection with
Land Purchase . . . . . . . . . . . . . . . . . . . 2,113
Buildings and Improvements Reclassified to Property,
Furniture and Fixtures. . . . . . . . . . . . . . . 181
Distribution of Property for Buyout of Minority
Interest Holders. . . . . . . . . . . . . . . . . . 202
</TABLE>
Interest paid (net of capitalized amounts of $1,261, $788,
$656 and $0 for the year ended December 31, 1996, 1995 and for the
periods January 21, 1994 to December 31, 1994 and January 1, 1994
to January 20, 1994, respectively) aggregated $7,707, $6,597,
$6,566 and $0 for the year ended December 31, 1996 and 1995 and for
the periods January 21, 1994 to December 31, 1994 and January 1,
1994 to January 20, 1994, respectively.
10. RELATED PARTY TRANSACTIONS
On January 2, 1996, the Operating Partnership purchased an
interest in an affiliated limited partnership for $1,200. The
affiliated limited partnership's only asset was its ownership in
PDC Units. In June 1996, the affiliated limited partnership was
liquidated and 66,000 PDC Units were received by the Operating
Partnership in such liquidation. To account for this transaction,
the Company recorded a reduction in minority interest liability for
the book value of the acquired partner's interest of $705, and
recognized the excess cost over book value of $495 as an asset on
the Company's books. This excess cost is being amortized over 40
years.
The Company and Predecessor Companies lease computer services
from Alta Computer Services, Inc. ("Alta"). Alta is majority owned
by three directors of the Company. The Company and Predecessor
Companies paid $194, $196 and $208 in 1996, 1995 and 1994,
respectively, for such services.
The Company has entered into a management agreement under
which the Company performs certain accounting and management
functions on behalf of Fairfax Realty, Inc., whose majority owner
is the Chairman of the Board of Directors of the Company.
Management fees collected by the Company under this agreement
aggregated $72, $72 and $68 in 1996, 1995 and 1994, respectively.
<PAGE> F-14
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
11. STOCK OPTION PLAN
On October 26, 1993, the Company adopted a plan (the "1993
Stock Option Plan") which authorizes the discretionary grant by the
Executive Compensation Committee, of options intended to qualify as
"incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code, to key employees of the Company and the
discretionary grant of nonqualified stock options to key employees,
directors and consultants of the Company. The maximum number of
shares of common stock subject to option under the 1993 Stock
Option Plan is 1,100,000. No stock options may be granted after
ten years from the date of adoption and options must be granted at
a price generally not less than the fair market value of the
Company's common stock at the date of grant. These options vest
over a period of one to five years.
A summary of the 1993 Stock Option Plan activity is set forth
below:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
--------- -------------
<S> <C> <C>
Outstanding at
December 31, 1993 0 0
Granted 550,000 $ 17.50-20.38
Exercised 0 0
Forfeited 0 0
--------- ------------
Outstanding at
December 31, 1994 550,000 17.50
Granted 7,000 19.13
Exercised (55,000) 17.50
Forfeited (8,000) 17.50
--------- -------------
Outstanding at
December 31, 1995 494,000 17.50-20.38
Granted 107,000 20.00-20.25
Exercised (22,000) 17.50-19.13
Forfeited (21,000) 17.50-20.00
--------- -------------
Outstanding at
December 31, 1996 558,000 $ 17.50-20.38
========= =============
</TABLE>
At December 31, 1996, 178,000 options are fully vested and
exercisable.
The fair value of options granted during 1996 and 1995
utilizing the valuation method prescribed by SFAS 123 (Note 1) are
$43 and $16, respectively. Had the company recorded the options at
their fair value, net income and earnings per share for the years
ended December 31, 1996 and 1995 would have been as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
1996 1995
------------ ------------
<S> <C> <C>
Net Income $ 23,334 $ 18,164
============ ============
Earnings
Per share $ 1.45 $ 1.27
============ ============
</TABLE>
<PAGE> F-15
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
12. EMPLOYEE BENEFIT PLANS
401(K) PLAN
During 1994, the Company adopted a 401(k) defined
contribution plan covering substantially all of the officers and
employees of the Company and subsidiaries which permits
participants to defer up to a maximum of 15% of their compensation.
The Company will match 50% of the employee's contribution up to a
maximum of $1 per year. Employees who have completed at least one
year of service, working full-time, and have attained the age of 21
are eligible to participate in the plan. The employees'
contributions, together with contributions from the Company are
immediately vested. The Company's contribution to the plan for the
years ended December 31, 1996, 1995 and 1994 were $40, $40 and $22,
respectively. The 401(k) plan is fully funded at December 31,
1996.
RETIREMENT PLAN
During 1995, the Company adopted a retirement plan covering
substantially all of the officers and employees of the Company and
subsidiaries, wherein the Company contributes 3% of the
participant's base compensation. Employees working a minimum of
1,000 hours per year and who have attained the age of 21 are
eligible to participate in the plan. The Company's contribution
vests 20% per year. Once an employee has been with the Company
five years, all contributions are fully vested. Years of service
include service with Predecessor Companies. The Company's
contribution to the plan for the years ended December 31, 1996 and
1995 were $150 and $119, respectively. The retirement plan is
fully funded at December 31, 1996.
13. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were
determined by management using available market information.
Considerable judgment is necessary to interpret market data and
develop estimated fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the Company
could realize on disposition of the financial instruments. The use
of different market assumptions and/or estimation methodologies may
have a material effect on the estimated fair value amounts.
Accounts and notes receivable, accounts payable, accrued
expenses and due to affiliates at December 31, 1996 and 1995 are
carried at amounts which reasonably approximate their fair values.
Borrowings with an aggregate carrying value of $162,375 and
$106,406 have an estimated aggregate fair value of $158,287 and
$105,362 at December 31, 1996 and 1995, respectively. Estimated
fair value is based on interest rates currently available to the
Company for issuance of borrowings with similar terms and remaining
maturities.
14. DISTRIBUTIONS PER SHARE
Distributions paid per share for the year ended December 31,
1996 and 1995, are summarized as follows:
<TABLE>
<CAPTION>
1996 Date Total
Distributions Paid Distributions
------------- ---- -------------
<S> <C> <C>
1st Quarter 4/23/96 $ .420
2nd Quarter 7/23/96 .420
3rd Quarter 10/22/96 .420
4th Quarter 12/30/96 .435
---------
$ 1.695
</TABLE>
<TABLE>
<CAPTION>
1995 Date Total
Distributions Paid Distributions
------------- ---- -------------
<S> <C> <C>
1st Quarter 4/18/95 $ .405
2nd Quarter 7/18/95 .405
3rd Quarter 10/24/95 .405
4th Quarter 12/28/95 .420
--------
$ 1.635
</TABLE>
<PAGE> F-16
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Financial information for each of the quarters in the year
ended December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
First Second Third Fourth
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
1996:
Revenues. . . . . . . . . $ 16,942 $ 18,407 $ 18,497 $ 19,103
Income Before Minority
Interest, Equity in
Net Loss of Partnership
Investment and Gain on
Sale of Real Estate. . . 6,693 7,234 7,088 7,774
Net Income. . . . . . . . 5,486 5,840 5,749 6,295
Net Income per Share. . . .34 .36 .36 .40
1995:
Revenues. . . . . . . . . $ 13,568 $ 13,905 $ 15,620 $ 17,857
Income Before Minority
Interest, Equity in
Net Loss of Partnership
Investment and Gain on
Sale of Real Estate . . 5,193 5,102 5,765 6,350
Net Income. . . . . . . . 3,980 3,904 4,528 5,766
Net Income per Share .30 .30 .31 .36
</TABLE>
<PAGE>F-17
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
16. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
On April 4, 1996, the Company acquired the Grand Teton Mall
located in Idaho Falls, Idaho. On June 30, 1995, the Company
acquired the Eastridge Mall located in Casper, Wyoming and the
Animas Valley Mall located in Farmington, New Mexico. On August 7,
1995, the Company sold 2,750,000 shares of common stock in an
underwritten public offering at an offering price of $20.50 per
share. The unaudited pro forma financial information for the year
ended December 31, 1996, is presented as if the acquisition of the
Grand Teton Mall had occurred on January 1, 1996. The unaudited
pro forma financial information for the year ended December 31,
1995 is presented as if the acquisition of the Eastridge Mall and
Animas Valley Mall, the August 7, 1995 public offering of common
stock and the acquisition of the Grand Teton Mall had occurred on
January 1, 1995.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996 FOR THE YEAR ENDED DECEMBER 31, 1995
--------------------------------------- -----------------------------------------
Pro Forma Company Pro Forma Company
JP Realty, Inc. Adjust- Pro Forma JP Realty, Inc. Adjust- Pro Forma
Historical ments (A) Consolidated Historical ments (D) Consolidated
---------- ---------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum Rents $ 52,447 $ 866 $ 53,313 $ 43,640 $ 6,355 $ 49,995
Percentage and
Overage Rents 4,061 46 4,107 3,465 567 4,032
Recoveries from Tenants 15,557 239 15,796 12,252 2,859 15,111
Interest and Other Income 884 0 884 1,593 15 1,608
---------- --------- ----------- --------- --------- -----------
72,949 1,151 74,100 60,950 9,796 70,746
---------- --------- ----------- --------- --------- -----------
Expenses:
Operating Expenses Before
Interest, Depreciation
and Amortization 24,405 339 24,744 20,389 2,923 23,312
Interest 7,776 593(B) 8,369 6,623 1,990(E) 8,613
Depreciation and
Amortization 11,979 179 12,158 11,528 1,517 13,045
---------- --------- ---------- --------- ---------- -----------
44,160 1,111 45,271 38,540 6,430 44,970
---------- --------- ---------- --------- ---------- -----------
28,789 40 28,829 22,410 3,366 25,776
Minority Interest in
Income of Consolidated
Partnerships (269) 0 (269) (320) 0 (320)
Equity in Net Income
(Loss) of Partnership
Investment 0 0 0 (184) 0 (184)
Gain on Sale of
Real Estate 94 0 94 918 0 918
---------- --------- ---------- --------- ---------- -----------
Income Before Minority
Interest of PDC
Unitholders $ 28,614 $ 40 $ 28,654 $ 22,824 $ 3,366 $ 26,190
Minority Interests of
PDC Unitholders in
Consolidated Operating
Partnerships (5,244) (14) (5,258) (4,646) (257)(C) (4,903)
---------- --------- ---------- --------- ---------- ----------
Net Income $ 23,370 $ 26 $ 23,396 $ 18,178 $ 3,109 $ 21,287
========== ========= ========== ========= ========== ==========
Net Income Per Share $ 1.46 $ 1.33
Pro Forma Common
Shares Outstanding 16,048,000 15,995,000
========== ==========
</TABLE>
(A) Reflects revenues and expenses of the property acquired on
April 4, 1996 as if acquired on January 1, 1996.
(B) Adjusts interest expense to reflect debt related to the
acquisition of the property on April 4, 1996 as if the
borrowings had occurred on January 1, 1996.
(C) Minority interest calculations reflects the issuance of
Secondary Offering shares of 2,750,000 as if consummated on
January 1, 1995.
(D) Reflects the revenues and expenses of the properties
acquired on April 4, 1996 and June 30, 1995, and the effects
of the Secondary Offering as if these transactions had
occurred on January 1, 1995.
(E) Reflects the reduction of interest costs associated with the
repayment of borrowings with proceeds from the Offering on
the properties acquired on June 30, 1995 and an increase in
interest cost associated with the purchase of the property
acquired April 4, 1996 as if the purchase and related
borrowings occurred on January 1, 1995.
<PAGE> F-18
JP REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
17. SUBSEQUENT EVENTS (UNAUDITED)
On January 22, 1997, the Company sold 1,500,000 shares of
common stock in an underwritten public offering at $27.13 per
share. Net proceeds to the Company were $38,800 and were used to
acquire additional PDC Units, thereby increasing its ownership in
the Operating Partnership. The Operating Partnership used the
proceeds to repay borrowings under the $50,000 credit facility.
On January 22, 1997, the Company extended the $50,000 credit
facility for one additional year to March 7, 1998.
On January 24, 1997, the Company extended the $25,000 credit
facility for one additional year to January 21, 1999.
<PAGE> F-19
JP REALTY, INC. AND THE PREDECESSOR COMPANIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Balance at Charged to Balance at
beginning of year Expense Deductions end of year
----------------- ------- ---------- -----------
<S> <C> <C> <C> <C>
Year ended
December 31,
1996
Allowance
for uncollectible
accounts $ 504 $ 340 $ 355 $ 489
Year ended
December 31,
1995
Allowance
for uncollectible
accounts 437 258 191 504
Year ended
December 31,
1994
Allowance
for uncollectible
accounts 564 212 339 437
<PAGE> F20
</TABLE>
<TABLE>
<CAPTION>
JP REALTY, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
GROSS AMOUNT AT
WHICH CARRIED
INITIAL COSTS CAPITALIZED AT CLOSE OF PERIOD
------------- SUBSEQUENT -------------------
RELATED BUILDING & TO BLDG. & ACCUMULATED DATE OF DATE DEPRECIABLE
ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND IMPROV. TOTAL(1) DEPRECIATION CONSTRUCTION ACQUIRED LIVES-YEARS
------------ ---- ------------ ----------- ---- ------- -------- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
- -----------
MALLS:
Animas Valley
Farmgtn., NM $ 15,098 $ 3,902 $ 24,059 $ 20 $ 3,902 $ 24,079 $ 27,981 $ 908 -- 1995 40
Boise Towne
Square,
Boise, ID 32,475 6,512 0 37,347 6,512 37,347 43,859 11,316 1987-88 1985-86 5-40
Cache Valley
Mall, Logan,
UT 5,781 909 0 8,382 909 8,382 9,291 4,029 1975-76 1973-75 10-40
Cottonwood Mall
Salt Lake
City, UT 19,857 7,514 20,776 30,544 7,514 51,320 58,834 16,382 1981-87 1980 4-40
Eastridge Mall
Casper, WY 13,237 4,300 19,896 315 4,300 20,211 24,511 774 -- 1995 40
Grand Teton
Mall, Idaho
Falls, ID 0 5,802 28,614 0 5,802 28,614 34,416 531 -- 1996 40
No. Plains Mall
Clovis, NM 5,472 1,592 0 10,784 1,592 10,784 12,376 3,121 1984-85 1979-84 10-40
Pine Ridge Mall
Pocatello, ID 10,019 1,883 0 21,468 1,883 21,468 23,351 7,352 1979-81 1979 10-40
Red Cliffs
Mall,
St. George, UT 6,299 903 0 12,586 903 12,586 13,489 2,493 1989-90 1989 3-40
Three Rivers
Mall, Kelso, WA 10,174 1,977 0 20,088 1,977 20,088 22,065 4,416 1986-87 1984 10-40
White Mountain
Mall, Rock
Springs, WY 5,083 1,120 0 15,640 1,120 15,640 16,760 5,553 1977-78 1977 40
COMMUNITY CNTRS.
& FREE-STANDING
RETAIL:
Alameda Plaza,
Pocatello, ID 1,178 500 0 3,365 500 3,365 3,865 1,752 1973 1973 40
Anaheim Plaza,
Anaheim, CA 0 0 0 54 0 54 54 27 1980-81 1979 40
Arctic Circle
Granger,
West Valley
City, UT 0 48 0 50 48 50 98 30 1973 1971 40
Austin Bluffs
Plaza, Colorado
Springs, CO 0 1,488 0 1,943 1,488 1,943 3,431 537 1985 1979 3-40
Bailey Hills
Plaza, Eugene,
OR 0 157 0 317 157 317 474 39 1988-89 1988 40
Bank One,
Nephi, UT 0 17 183 0 17 183 200 135 -- 1976 40
Baskin Robbins
17th St., Idaho
Falls, ID 0 8 66 8 8 74 82 16 -- 1988 40
Boise Plaza,
Boise, ID 0 322 0 1,382 322 1,382 1,704 866 1970-71 1970 40
Cottonwood Sq.,
Salt Lake
City, UT 0 1,926 3,535 0 1,926 3,535 5,461 88 -- 1995 40
Division
Crossing,
Portland, OR 3,468 2,429 0 4,484 2,429 4,484 6,913 694 1990-91 1990 20-40
Twin Falls
Crossing, Twin
Falls, ID 0 125 0 776 125 776 901 387 1976 1975 40
Fort Union
Plaza, Salt
Lake City, UT 0 21 0 1,668 21 1,668 1,689 586 1979-84 -- 40
Fremont Plaza,
Las Vegas, NV 0 0 0 2,254 0 2,254 2,254 1,075 1976-80 -- 40
Frys Shopping
Plaza,
Glendale, AZ 1,950 353 0 4,579 1,253 3,679 4,932 1,437 1980-81 1980 40
Gateway
Crossing,
Bountiful, UT 0 3,644 0 8,480 3,644 8,480 12,124 827 1990-92 1990 40
Halsey
Crossing,
Gresham, OR 0 0 0 2,302 0 2,302 2,302 416 1989-91 -- 4-40
North Temple
Shops, Salt
Lake City, UT 0 60 0 177 60 177 237 76 1970 1970 40
</TABLE>
(CONTINUED)
<PAGE> F21
<TABLE>
<CAPTION>
JP REALTY, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
GROSS AMOUNT AT
WHICH CARRIED
INITIAL COSTS CAPITALIZED AT CLOSE OF PERIOD
------------- SUBSEQUENT -------------------
RELATED BUILDING & TO BLDG. & ACCUMULATED DATE OF DATE DEPRECIABLE
ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND IMPROV. TOTAL(1) DEPRECIATION CONSTRUCTION ACQUIRED LIVES-YEARS
------------ ---- ------------ ----------- ---- ------- -------- ------------ ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DESCRIPTION
-----------
C>
Orem Plaza
Center St.,
Orem, UT 0 $ 371 $ 330 $ 1,091 $ 344 $ 1,448 $ 1,792 $ 531 1976-87 1973 10-40
Orem Plaza State
St., Orem, UT 0 126 0 627 126 627 753 326 1975 1973 29-40
Plaza 800,
Reno, NV 0 33 2,969 8 33 2,977 3,010 1,592 1974 -- 40
Plaza 9400,
Sandy, UT $ 1,517 0 0 4,555 0 4,555 4,555 1,835 1976-84 -- 10-40
Red Cliffs
Plaza, St.
George, UT 0 0 2,403 0 0 2,403 2,403 135 1994-95 1994-95 40
River Pointe
Plaza, West
Jordan, UT 1,762 1,130 0 2,670 1,130 2,670 3,800 640 1987-88 1986-87 5-40
Riverside
Plaza,
Provo, UT 0 427 1,886 1,206 427 3,092 3,519 1,379 1978-81 1977 40
University
Crossing,
Orem, UT 1,710 230 0 4,411 230 4,411 4,641 1,575 1971-92 1971 40
Woodlands
Village,
Flagstaff, AZ 4,080 2,068 5,329 228 2,068 5,557 7,625 308 -- 1994 40
Yellowstone
Square,
Idaho Falls, ID 0 355 0 4,552 355 4,552 4,907 2,422 1972-77 1972 40
COMMERCIAL:
First Security
Place,
Boise, ID 0 301 0 3,248 300 3,249 3,549 1,388 1978-80 1978 10-40
Price Business
Center-
Pioneer Square,
Salt Lake
City, UT 0 658 0 10,165 658 10,165 10,823 3,006 1974-92 1973 3-40
Price Business
Center - South
Main, Salt Lake
City, UT 0 317 0 2,640 317 2,640 2,957 1,302 1967-82 1966-81 3-40
Price Business
Center -
Timesquare, Salt
Lake City, UT 0 581 0 8,723 581 8,723 9,304 3,275 1974-80 1972-80 5-40
Sears-Eastbay,
Provo, UT 2,072 275 0 2,097 275 2,097 2,372 423 1989-90 1989 40
Price Business
Center -
Commerce Park,
West Valley
City, UT 0 415 2,109 8,153 1,147 9,530 10,677 1,109 1980 1973-95 40
OTHER REAL ESTATE:
Spokane Valley
Center,
Spokane, WA 16,943 6,708 0 28,054 6,708 28,054 34,762 0 1990-96(2)1990 40
Misc.
Real Estate 0 6,601 67 1,470 6,603 1,535 8,138 209 -- 1980-95 40
-------- ------- -------- -------- ------- -------- -------- -------
TOTAL $158,175 $68,108 $112,222 $272,911 $69,714 $383,527 $453,241 $87,318
======== ======= ======== ======== ======= ======== ======== =======
</TABLE>
- -------------------------
(1) The aggregate cost for Federal Income Tax purposes was approximately
$459,179 at December 31, 1996.
(2) Construction in progress as of December 31, 1996.
(CONTINUED)
<PAGE> F-22
JP REALTY, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
(Dollars in thousands)
A summary of activity for real estate investments and accumulated
depreciation is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Real Estate Investments:
Balance at Beginning
of Year . . . . . . . . . $ 388,205 $ 321,242 $ 286,719
Acquisitions. . . . . . . 37,055 59,081 7,723
Improvements. . . . . . . 28,268 9,903 27,459
Disposition of Property . (287) (2,021) (659)
-------- ---------- ----------
Balance at End of Year . . $ 453,241 $ 388,205 $ 321,242
========== ========== ==========
Accumulated Depreciation:
Balance at Beginning
of Year . . . . . . . . . $ 77,462 $ 69,660 $ 62,105
Depreciation. . . . . . . 10,015 9,386 7,768
Depreciation of Disposed
Property . . . . . . . . (159) (1,584) (213)
---------- ---------- ----------
Balance at End of Year . . $ 87,318 $ 77,462 $ 69,660
========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JP
REALTY, INC. FORM 10-K/A FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> $1,750
<SECURITIES> 0
<RECEIVABLES> 4,570
<ALLOWANCES> (489)
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 0
<PP&E> 0<F2>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 381,360
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 381,360
<SALES> 0
<TOTAL-REVENUES> 72,949
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 36,384<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,776
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $23,370
<EPS-PRIMARY> $1.46
<EPS-DILUTED> 0
<FN>
<F1>The financial statements reflect an unclassified balance sheet due to the
nature of the Company's industry - Real Estate Investment Trust.
<F2>The Company utilizes a condensed balance sheet format for 10-K/A reporting.
Amounts are included in Other Assets.
<F3>Amount is comprised of $44,160 of expenses less interest expense of $7,776
reflected elsewhere in this Financial Data Schedule.
</FN>
</TABLE>
