SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MARCH 4, 1998
JP REALTY, INC.
____________________________________________________________________________
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 1-12560 87-0515088
____________________________________________________________________________
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
35 CENTURY PARK-WAY, SALT LAKE CITY, UTAH 84115
____________________________________________________________________________
(Address of Principal Executive Offices, Including Zip Code)
Registrant's Telephone Number, Including Area Code (801) 486-3911
N/A
____________________________________________________________________________
(Former Name of Former Address, if Changed Since Last Report)
<PAGE>
ITEMS 5. OTHER EVENTS
On September 2, 1997, JP Realty, Inc. (the "Company") and Price
Development Company, Limited Partnership, a limited partnership subsidiary of
the Company (the "Operating Partnership"), jointly filed a registration
statement on Form S-3 (File Nos. 333-34835 and 333-34835-01) (the "Registration
Statement") relating to $347,062,500 aggregate offering price of securities
with the Securities and Exchange Commission (the "SEC"). Pursuant to the
Registration Statement, the securities registered (i) by the Company consisted
of shares of common stock, par value $.0001 per share (the "Common Stock"),
warrants to purchase Common Stock, shares or fractional shares of preferred
stock, par value $.0001 per share (the "Preferred Stock"), depositary shares
representing Preferred Stock and guarantees relating to non-investment grade
debt securities which may be issued by the Operating Partnership and (ii) by
the Operating Partnership consisted of non-convertible debt securities. On
November 17, 1997, the Registration Statement was declared effective by the
SEC. In connection with the foregoing, the Opinion of Rogers & Wells LLP with
regard to tax matters is attached hereto as Exhibit 8. In addition, the
Company's consolidated financial statements at December 31, 1997 and 1996 and
results of operations and cash flows for each of the three years in the period
ended December 31, 1997 are set forth below.
2
<PAGE>
INDEX TO FINANCIAL STATEMENTS
JP REALTY, INC.
PAGE
----
Report of Independent Accountants F-2
Consolidated Balance Sheet as of December 31, 1997 and 1996 F-3
Consolidated Statement of Operations
for the years ended December 31, 1997, 1996 and 1995 F-4
Consolidated Statement of Shareholders' Equity F-5
Consolidated Statement of Cash Flows
for the years ended December 31, 1997, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7
Schedule II - Valuation and Qualifying Accounts F-18
Schedule III - Real Estate and Accumulated Depreciation F-19
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of JP Realty, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index, present fairly, in all material aspects, the financial
position of JP Realty, Inc. and its subsidiaries at December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Salt Lake City, Utah
February 4, 1998
F-2
<PAGE>
JP REALTY, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
ASSETS
Real Estate Assets
Land........................................ $ 95,523 $ 69,714
Buildings................................... 490,183 353,500
---------- ----------
585,706 423,214
Less: Accumulated Depreciation............... (98,404) (87,318)
---------- ----------
Operating Real Estate Assets................ 487,302 335,896
Real Estate Under Development................. 33,665 30,027
---------- ----------
Net Real Estate Assets..................... 520,967 365,923
Cash.......................................... 5,603 1,750
Restricted Cash............................... 2,465 2,372
Accounts Receivable, Net...................... 5,759 3,498
Deferred Charges, Net......................... 7,536 6,512
Other Assets.................................. 3,354 1,305
---------- ----------
$ 545,684 $ 381,360
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Borrowings.................................... $ 283,390 $ 162,375
Accounts Payable and Accrued Expenses......... 18,840 11,611
Accumulated Losses in Excess of Equity Investment -- 1,555
Other Liabilities............................. 617 485
---------- ----------
302,847 176,026
---------- ----------
Minority Interests............................ 34,851 32,778
---------- ----------
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Common Stock, $.0001 par value, 124,800,000 shares
authorized, 17,390,000 shares and 15,874,000
shares issued and outstanding at December 31,
1997 and 1996, respectively.................. 2 2
Price Group Stock, $.0001 par value, 200,000 shares
authorized, issued and outstanding........... -- --
Excess Stock, 75,000,000 shares authorized..... -- --
Additional Paid-in Capital..................... 232,135 193,229
Accumulated Distributions in Excess of Net Income (24,151) (20,675)
---------- ---------
207,986 172,556
---------- ---------
$ 545,684 $ 381,360
========== =========
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
JP REALTY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
----- ---- ----
REVENUES
Minimum Rents............................. $ 59,624 $ 52,447 $ 43,640
Percentage and Overage Rents.............. 3,896 4,061 3,465
Recoveries from Tenants................... 18,199 15,557 12,252
Interest.................................. 546 549 1,231
Other..................................... 708 335 362
-------- -------- --------
82,973 72,949 60,950
-------- -------- --------
EXPENSES
Operating and Maintenance................. 12,990 11,240 8,288
Real Estate Taxes and Insurance........... 8,546 7,679 6,892
Advertising and Promotions................ 451 426 364
General and Administrative................ 5,447 5,060 4,845
Depreciation.............................. 11,802 10,230 9,610
Amortization of Deferred Financing Costs.. 969 1,085 1,256
Amortization of Deferred Leasing Costs.... 639 664 662
Interest.................................. 9,066 7,776 6,623
-------- -------- --------
49,910 44,160 38,540
-------- -------- --------
33,063 28,789 22,410
Minority Interest in Income of
Consolidated Partnerships................ (273) (269) (320)
Equity in Net Loss of Partnership
Interest................................. -- -- (184)
Gain on Sales of Real Estate.............. 339 94 918
-------- -------- --------
Income Before Extraordinary Item and Minority
Interest of the Operating Partnership
Unitholders............................. 33,129 28,614 22,824
Minority Interest of the Operating........
Partnership Unitholders.................. (5,675) (5,244) (4,646)
-------- -------- --------
Income Before Extraordinary Item.......... 27,454 23,370 18,178
Extraordinary Item - Loss on Extinguishment
of Debt, Net of Minority Interest of
the Operating Partnership Unitholders... (133) -- --
-------- -------- --------
Net
Income.................................... $ 27,321 $ 23,370 $ 18,178
======== ======== ==========
Basic Earnings Per Share:
Income Before Extraordinary Item......... $ 1.57 $ 1.46 $ 1.27
Extraordinary Item....................... (.01) -- --
Net Income............................... $ 1.56 $ 1.46 $ 1.27
Diluted Earnings Per Share:
Income Before Extraordinary Item......... $ 1.56 $ 1.45 $ 1.26
Extraordinary Item....................... $ (.01) $ -- $ --
Net Income............................... $ 1.55 $ 1.45 $ 1.26
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
JP REALTY, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
ACCUMULATED
ADDITIONAL DISTRIBUTIONS
COMMON PAID-IN IN EXCESS OF
SHARES* STOCK CAPITAL NET INCOME TOTAL
------- ------ ---------- ------------- -----
Shareholders' Equity at
December 31, 1994 13,231,000 $ 1 $ 138,795 $ (11,203) $ 127,593
Sale of Common Stock 2,750,000 1 52,887 -- 52,888
Stock Options Exercised 55,000 -- 976 -- 976
Net Income -- -- -- 18,178 18,178
Distributions Paid -- -- -- (23,881) (23,881)
--------- ------ --------- --------- ----------
Shareholders' Equity at
December 31, 1995 16,036,000 2 192,658 (16,906) 175,754
Stock Options Exercised 22,000 -- 407 -- 407
Operating Partnership
Units Converted 16,000 -- 164 -- 164
Net Income -- -- -- 23,370 23,370
Distributions Paid -- -- -- (27,139) (27,139)
--------- ------ --------- --------- ----------
Shareholders' Equity at
December 31, 1996 16,074,000 2 193,229 (20,675) 172,556
Sale of Common Stock 1,500,000 -- 38,632 -- 38,632
Stock Options Exercised 12,000 -- 234 -- 234
Operating Partnership
Units Converted 4,000 -- 40 -- 40
Net Income -- -- -- 27,321 27,321
Distributions Paid -- -- -- (30,797) (30,797)
--------- ------ --------- --------- ----------
Shareholders' Equity at
December 31, 1997 17,590,000 $ 2 $ 232,135 $(24,151) $ 207,986
========== ====== ========= ========= =========
* Includes Common and Price Group Stock
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
JP REALTY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
----------- ---------- --------
Cash Flows from Operating Activities
Net Income................................... $ 27,321 $ 23,370 $ 18,178
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation............................... 11,802 10,230 9,610
Amortization............................... 1,608 1,749 1,918
Minority Interest in Income
of Consolidated Partnerships.............. 273 269 320
Minority Interest of the Operating.........
Partnership Unitholders.................... 5,675 5,244 4,646
Unitholders' Interest in Extraordinary Item (29) -- --
Equity in Net Loss of Partnership Interest. -- -- 184
Gain on Sales of Real Estate............... 339) (94) (918)
Increase in Accounts Receivable............ 2,261) (786) (540)
Increase in Deferred Charges............... (1,128) (387) (1,428)
Increase in Accounts Payable and
Accrued Expenses........................... 3,368 3,774 887
Increase in Other Assets................... (1,917) (295) (138)
-------- -------- -------
Net Cash Provided by Operating Activities.. 44,373 43,074 32,719
-------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Real Estate Assets, Developed or Acquired.... (137,560) (65,323) (69,300)
Proceeds from Sales of Real Estate........... 469 -- 1,281
(Increase) Decrease in Restricted Cash....... (93) 92 636
-------- -------- -------
Net Cash Used in Investing Activities....... (137,184) (65,231) (67,383)
-------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Borrowings..................... 219,088 65,442 47,009
Repayment of Borrowings...................... (123,320) (9,473) (49,344)
Deferred Financing Costs..................... (1,503) -- --
Net Proceeds from Sale of Common Stock....... 38,865 407 53,850
Capital Contribution by Minority Partner..... 1,000 -- --
Distributions to Minority Interests
and Unitholders............................. (6,669) (7,157) (6,295)
Distributions Paid to Shareholders........... (30,797) (27,139) (23,881)
-------- -------- -------
Net Cash Provided by Financing Activities.. 96,664 22,080 21,339
-------- -------- -------
Net Increase (Decrease) in Cash.............. 3,853 (77) (1,325)
Cash, Beginning of Period.................... 1,750 1,827 15,152
-------- -------- -------
Cash, End of Period.......................... $ 5,603 $ 1,750 $ 1,827
-------- -------- -------
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. BUSINESS AND BASIS OF PRESENTATION
BUSINESS
JP Realty, Inc. (the "Company"), a Maryland Corporation, is engaged in
the business of owning, leasing, managing, operating, developing and
redeveloping regional malls, community centers and other commercial properties.
The Company is a real estate investment trust ("REIT") as defined by the
Internal Revenue Code and owns an interest in and conducts its business
activities through Price Development Company, Limited Partnership (the
"Operating Partnership"). The Company owned an 82.7 and 81.7 percent general
partnership interest in the Operating Partnership at December 31, 1997 and
1996, respectively, which owns a portfolio of 48 properties consisting of 15
enclosed regional malls, 25 community centers, two free-standing retail
properties and six mixed-use commercial properties. The tenant base includes
primarily national, regional and local retailers; as such, the Company's credit
risk is concentrated in the retail industry.
BASIS OF PRESENTATION
The accompany consolidated financial statements include the accounts
of the Company, the Operating Partnership and all controlled affiliates.
During 1995, the Operating Partnership used the equity method to
account for a 30 percent limited partnership interest in a partnership
owning a regional mall. Commencing in 1996, the Operating Partnership
discontinued recording its proportionate interest in the losses generated
by this partnership, as it was not required to fund such losses.
During 1997, the Operating Partnership acquired the remaining 70 percent
interest in this partnership.
The effect of all significant intercompany balances and transactions have
been eliminated in the consolidated presentation. Certain amounts in the 1996
and 1995 financial statements have been reclassified to conform with the 1997
presentation.
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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
REAL ESTATE ASSETS
Real estate assets are stated at cost less accumulated depreciation. At
each balance sheet date, the Company reviews book values of real estate assets
for possible impairment based upon expectations of future nondiscounted cash
flows (excluding interest) from each property.
Costs directly related to the acquisition and development of real estate
assets, including overhead costs directly attributable to property development
are capitalized. Interest and real estate taxes incurred during the
development and construction period are capitalized.
Depreciation is computed on a straight-line basis generally over 40 years
for buildings and four to ten years for equipment and fixtures. Tenant
improvements are capitalized and depreciated on a straight-line basis over the
life of the related lease. Expenditures for maintenance and repairs are
charged to operations as incurred. Major replacements and betterments which
improve or extend the life of the asset are capitalized and depreciated over
their estimated useful lives.
F-7
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING (CONTINUED)
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. The Company receives reimbursements
from tenants for certain costs as provided in the lease agreements. These
costs consist of real estate taxes, insurance, common area maintenance and
other recoverable costs. Recoveries from tenants are recognized monthly on an
accrual basis based on estimated amounts.
An allowance for doubtful accounts has been provided against the portion
of tenant accounts receivable which is estimated to be uncollectible. Tenant
accounts receivable in the accompanying balance sheet are shown net of
allowance for doubtful accounts of $570 and $489 as of December 31, 1997 and
1996, respectively.
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.
DEFERRED CHARGES
Deferred charges consists principally of financing fees and leasing
commissions paid to third parties. These costs are amortized on a straight-
line basis over the terms of the respective agreements. Deferred charges in
the accompanying consolidated balance sheet are shown net of accumulated
amortization of $5,857 and $6,064 as of December 31, 1997 and 1996,
respectively.
INCOME TAXES
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. To qualify as a REIT, the Company must distribute annually
to its shareholders at least 95% of its REIT taxable income, as defined in the
Code, 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 shareholders.
As of December 31, 1997, 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 $129,664.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Standards ("SFAS") No. 130 "Reporting Comprehensive
Income". SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income is defined as the change in equity
of a business enterprise during a period from transactions and other event and
circumstances from nonowner sources. The new standard becomes effective for
the Company for the year ending December 31, 1998, and requires comparative
information from earlier years to be restated to conform to the requirements of
this standard. The Company does not expect this pronouncement to materially
impact the presentation or form of its financial statements.
F-8
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING (CONTINUED)
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes standards
for disclosure about operating segments in annual financial statements and
selected information in interim financial reports. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. This statement supersedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise". The new standard becomes
effective for the Company for the year ending December 31, 1998, and requires
that comparative information from earlier years be restated to conform to the
requirements of this standard.
3. ACQUISITIONS AND DEVELOPMENTS
ACQUISITIONS
On December 30, 1997, the Operating Partnership acquired Salem Center, a
mall located in Salem, Oregon for $32,500. The acquisition was financed
utilizing borrowings on its $200,000 unsecured credit facility.
On June 30, 1997, the Operating Partnership acquired Visalia Mall located
in Visalia, California for $38,000. The acquisition was financed principally
from borrowings.
On June 1, 1997, the Operating Partnership acquired the remaining 70%
interest in Silver Lake Mall, Ltd. a Limited Partnership owning Silver Lake
Mall located in Coeur d'Alene, Idaho. Prior to the acquisition, the Operating
Partnership held a 30% interest in the partnership. The acquisition was
financed by issuing 72,000 Operating Partnership Units ("OP Units") and
assuming debt totaling $24,755.
On April 4, 1996, the Operating Partnership acquired Grand Teton Mall
located in Idaho Falls, Idaho for approximately $34,400. The acquisition was
financed utilizing borrowings from a credit facility.
DEVELOPMENTS
The Operating Partnership, through its consolidated partnership Spokane
Mall Development Company Limited Partnership, completed the development of
Spokane Valley Mall located in Spokane, Washington and held a grand opening on
August 13, 1997. The mall contains approximately 689,000 square feet of total
gross leasable area ("Total GLA"). The partnership expended a total of $57,855
for the development. At December 31, 1997, the Operating Partnership had
leased approximately 89% of the mall.
The Operating Partnership has initiated the development of Provo Towne
Centre, an enclosed regional mall in Provo, Utah through its consolidated
partnership Provo Mall Development Company, LTD. The mall will add
approximately 750,000 square feet of Total GLA. At December 31, 1997, the
partnership had expended $30,490 for development costs and anticipates
expending an additional $23,039 to complete the development during 1998.
F-9
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
4. BORROWINGS
DECEMBER 31,
1997 1996
---- ----
Credit Facility, unsecured; weighted average
interest at 6.75 percent during 1997 $ 127,000 $ --
Notes, secured by real estate; interest at 6.37 percent;
due in 2001 95,000 95,000
Construction Loan, secured by real estate; interest at
7.41 percent as of December 31, 1997, due in 1999 43,009 16,943
Mortgage payable, secured by real estate; interest at
8.5 percent, due in 2000 12,827 --
Other notes payable, secured by real estate;
interest ranging from 7.0 to 9.99;
maturing 2000 to 2095 5,554 2,232
Credit Facility, secured by real estate;
interest at 115 basis points over AAA commercial paper -- 44,000
Credit Facility, unsecured; interest at
175 basis points over LIBOR -- 4,200
------- ----------
283,390 $ 162,375
======= ==========
CREDIT FACILITIES
On October 16, 1997, the Operating Partnership obtained a $150,000 three
year unsecured credit facility (the "1997 Credit Facility") from a group of
banks. On December 18, 1997, the amount was increase to $200,000. The
facility has a three year term and bears interest, at the option of the
Operating Partnership, at one, or a combination, of (i) the higher of the
federal funds rate plus 50 basis points or the prime rate, or (ii) LIBOR plus a
spread of 70 to 130 basis points. The LIBOR spread is determined by the
Operating Partnership's credit rating and/or leverage ratio. The 1997 Credit
Facility also includes a competitive bid option in the amount of $100,000 which
will allow the Operating Partnership to solicit bids for borrowings from the
bank group. The facility will be used for general corporate purposes including
development, working capital, equity investments, repayment of amounts
outstanding under its other credit facilities, repayment of indebtedness and/or
amortization payments. The facility contains restrictive covenants including
limitations on the amount of secured and unsecured debt, and requires the
Operating Partnership to maintain certain financial ratios. At December 31,
1997, the Operating Partnership was in compliance with these covenants. For
the year ended December 31, 1997, the Operating Partnership paid commitment
fees totaling $50.
On November 7, 1997, the Operating Partnership borrowed $85,000 from the
1997 Credit Facility and utilized the proceeds to retire and cancel previously
existing credit facilities and to pay for development activities. Deferred
financing costs related to the canceled credit facilities were written-off
resulting in an extraordinary loss of $133, net of minority interest. On
December 29, 1997, the Operating Partnership borrowed an additional $42,000 to
pay for the acquisition of Salem Center (Note 3) and for development
activities. At December 31, 1997, the 1997 Credit Facility had a balance of
$127,000.
On March 8, 1995, the Operating Partnership entered into a $50,000
secured credit facility agreement which provided for a two year commitment with
an option to extend for an additional year (which option was exercised on
January 22, 1997). Borrowings under this agreement were collateralized by
certain real estate assets. The credit facility bore interest at a floating
rate equal to 115 basis points over the established rate of AAA commercial
paper and was guaranteed by the Company. For the year ended December 31, 1997
and 1996, the Operating Partnership paid commitment fees totaling $280 and
$200, respectively. On November 7, 1997, borrowings under this credit facility
were retired and the facility was canceled.
F-10
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
4. BORROWINGS (CONTINUED)
On January 22, 1996, the Operating Partnership entered into a $25,000
unsecured credit facility agreement which provided for a two year commitment
with an option to extend for an additional year (which option was exercised on
January 24, 1997). On October 6, 1997, the limit was raised to $40,000. For
the year ended December 31, 1997 and 1996, the Operating Partnership paid
commitment fees totaling $86 and $67, respectively. On November 7, 1997,
borrowings under this credit facility were retired and the facility was
canceled.
NOTES
On January 21, 1994, a subsidiary of the Operating Partnership issued
$95,000 in secured notes bearing interest at 6.37% per annum. The notes
require quarterly interest payments and a principal payment of $11,875 on
January 21, 2000 with the remaining balance due on January 21, 2001. The
subsidiary has an option to extend the notes to January 21, 2003.
CONSTRUCTION LOAN
On July 30, 1996, Spokane Mall Development Company Limited Partnership, a
consolidated partnership, of which the Operating Partnership is the general
partner, entered into a $50,000 construction facility. The loan bears interest
at a variable interest rate indexed to the LIBOR rate. The proceeds from this
facility have been 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, is secured by the Spokane Valley Mall
and is guaranteed by the Operating Partnership. At December 31, 1997, the loan
had a balance of $43,009.
MORTGAGE PAYABLE
In June 1997, the Operating Partnership assumed a mortgage note of
$24,755 as part of the acquisition of Silver Lake Mall (Note 3) and retired
portions of the debt principally using borrowings under a credit facility. The
assumed debt bears interest at 8.5% per annum and has a maturity date of
October 1, 2000 when a balloon payment of $11,971 is due. At December 31, 1997
the loan had a balance of $12,827.
INTEREST RATE PROTECTION AGREEMENT
In December 1997, the Operating Partnership entered into an interest rate
protection agreement with a notional value of $100,000 and a forward yield of
5.74% based on the 10-year treasury note. This interest rate protection
agreement will be used to hedge the interest rate on an anticipated offering of
unsecured debt. At December 31, 1997, the fair value of this instrument, as
estimated by dealers was $0.
SCHEDULED PRINCIPAL REPAYMENTS
The following summarizes the scheduled maturities of borrowings at
December 31, 1997:
YEAR TOTAL
---- -------
1998...................................................... $ 560
1999...................................................... 43,589
2000...................................................... 151,145
2001...................................................... 84,741
2002...................................................... 41
Thereafter................................................ 3,314
$ 283,390
==========
F-11
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
5. CAPITAL STOCK
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.
On January 28, 1997, the Company sold 1,500,000 shares of common stock in
an underwritten public offering at $27.13 per share. Net proceeds of $38,632
were contributed to the Operating Partnership in exchange for additional
partnership units and were principally used to repay indebtedness incurred by
the Operating Partnership to fund acquisition activities.
On August 7, 1995, the Company sold 2,750,000 shares of common stock in
an underwritten public offering at $20.50 per share. Net proceeds of $52,887
were contributed to the Operating Partnership in exchange for additional
partnership units and were principally used to repay indebtedness incurred by
the Operating Partnership to fund acquisition activities.
6. 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, 1997 provide for the following
minimum future rental income:
YEAR TOTAL
---- --------
1998......................................................... $ 54,604
1999......................................................... 59,103
2000......................................................... 53,420
2001......................................................... 48,026
2002......................................................... 41,316
Thereafter 243,117
-------
$ 499,586
=========
F-12
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
7. COMMITMENTS AND CONTINGENCIES
Future minimum rental payments under the terms of all non-cancelable
operating leases under which the Operating Partnership is the lessee,
principally for ground leases, are as follows:
YEAR TOTAL
---- --------
1998...................................................... $ 971
1999...................................................... 983
2000...................................................... 986
2001...................................................... 998
2002...................................................... 1,011
Thereafter 27,323
--------
$ 32,272
========
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.
8. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During the years ended December 31, 1997 and 1996, non-cash investing and
financing transactions included an increase in accounts payable of $3,861
related to development activities, the assumption of debt related to the
acquisition of Salem Center totaling $494 in December 1997, the assumption of
debt related to the acquisition of Silver Lake Mall totaling $24,755 in June
1997, and the write-off of capitalized tenant allowances of $406 and $159,
respectively. In addition, the holders of Operating Partnership Units elected
to convert 4,000 and 16,000 OP Units, having a recorded value of $40 and $164,
into common stock for the years ended December 31, 1997 and 1996, respectively.
Interest paid (net of capitalized amounts of $3,509, $1,261 and $788, for
the years ended December 31, 1997, 1996 and 1995) aggregated $8,276, $7,707,
and $6,597, for the years ended December 31, 1997, 1996 and 1995, respectively.
Purchase of the remaining 70% interest in Silver Lake Mall, Ltd.:
72,000 Operating Partnership Units issued $ 1,863
Book value of 30% equity investment in Silver Lake Mall, Ltd. (1,555)
Debt assumed 24,755
--------
$ 25,063
========
9. 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 Operating Partnership Units. In
June 1996, the affiliated limited partnership was liquidated and 66,000
Operating Partnership Units were received by the Operating Partnership in such
liquidation. To account for this transaction, the Operating Partnership
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 Operating Partnership's books. This excess
cost is being amortized over 40 years.
The Operating Partnership leases computer services from Alta Computer
Services, Inc. ("Alta"). Alta is majority owned by three directors of the
Company. The Operating Partnership paid $200, $194 and $196 in 1997, 1996 and
1995, respectively, for such services.
F-13
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. RELATED PARTY TRANSACTIONS (CONTINUED)
The Operating Partnership has entered into a management agreement under
which the Operating Partnership performs certain accounting and management
functions on behalf of a company, whose majority owner is the Chairman of the
Board of Directors of the Company. Management fees collected by the Operating
Partnership under this agreement totaled $72 for each of the three years ended
December 31, 1997.
10. STOCK INCENTIVE PLAN
On October 26, 1993, the Company adopted the 1993 Stock Option Plan which
authorizes the discretionary grant by the Executive Compensation Committee, of
options intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code, to key employees of the Company and
the discretionary grant of nonqualified stock options to key employees,
directors and consultants of the Company. The maximum number of shares of
common stock subject to option under the Company's Plan is 1,100,000. 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 Company's stock option plan is set forth below:
<TABLE>
<CAPTION>
1997 1996 1995
------------------- ------------------ -----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
SHARES PRICE SHARES PRICE SHARES PRICE
-------- --------- ------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 558,000 $ 17.99 494,000 $ 17.56 550,000 $ 17.54
Granted 7,000 25.38 107,000 20.02 7,000 19.13
Exercised (12,000) 18.64 (22,000) 17.57 (55,000) 17.50
Forfeited -- -- (21,000) 18.85 ( 8,000) 17.50
-------- --------- ------- -------- --------- --------
Outstanding at end of year 553,000* $ 18.07 558,000 $ 17.99 494,000 $ 17.56
Exercisable at end of year 277,000 $ 17.87 178,000 $ 17.77 96,000 $ 17.83
======== ========== ======= ======== ========= ========
</TABLE>
* The weighted average remaining contractual life of options outstanding as of
December 31, 1997 was 8 years. The range of option prices was $17.50 to
$25.38 per share.
F-14
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
10. STOCK INCENTIVE PLAN (CONTINUED)
The Company has applied Accounting Principals Board Opinion 25 and
selected interpretations in accounting for its plan. Accordingly, no
compensation costs have been recognized. Had compensation costs for the
Company's plan been determined based on the fair value at the grant date for
options granted in 1997, 1996 and 1995, respectively, in accordance with the
method required by SFAS 123, "Accounting for Stock-Based Compensation", the
Company's net income and net income per share would have been reduced to the
proforma amounts as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
---------------------------------
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Net income
As reported $ 27,321 $ 23,370 $ 18,178
Proforma $ 27,283 23,334 18,164
Basic net income per share
As reported $ 1.56 $ 1.46 $ 1.27
Proforma 1.56 1.45 1.27
Diluted net income per share
As reported $ 1.55 $ 1.45 $ 1.26
Proforma 1.55 1.45 1.26
</TABLE>
The fair value of each option grant was estimated on the date of grant
using the Black-Sholes options pricing model using the following assumptions:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31
---------------------------------
1997 1996 1995
--------- --------- --------
<S> <C> <C> <C>
Risk free interest rate 6.76% 5.50% 6.96%
Dividend yield 7.00% 7.00% 7.00%
Expected life 9 years 10 years 10 years
Expected volatility 16.50% 16.00% 20.00%
Weighted average per share
fair value of an option granted during the year $ 2.53 $ 1.47 $ 2.34
</TABLE>
11. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) profit sharing plan which permits participating
employees to defer up to a maximum of 15% of their compensation. The Company
matches 50% of the qualified employees' contributions up to a maximum of $1 per
employee each year. Employees working a minimum of 1,000 hours per year who
have completed at least one year of service and attained the age of 21 are
qualified to participate in the plan. The employees' contributions are
immediately vested. Additionally, the Company annually contributes 3% of base
salary to the plan for each qualified employee. Contributions from the Company
vest at 20% per year. The Company's contributions to the plan for the years
ended December 31, 1997, 1996 and 1995 were $225, $190, and $159, respectively.
F-15
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by
management using available market information. Considerable judgment is
necessary to interpret market data and develop estimated fair value.
Accordingly, the estimates 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.
The carrying value of cash, accounts receivable, accounts payable and
accrued expenses at December 31, 1997 and 1996 are reasonable estimates of
their fair values because of the short maturity of these financial instruments.
Borrowings with an aggregate carrying value of $283,390 and $162,375 have
an estimated aggregate fair value of $283,533 and $158,287 at December 31, 1997
and 1996, respectively. Estimated fair value is based on interest rates
currently available to the Company for issuance of borrowings with similar
terms and remaining maturities.
13. EARNINGS PER SHARE
Earnings per share "EPS" have been computed pursuant to the provisions of
SFAS No. 128, "Earnings Per Share" which became effective after December 15,
1997; all periods prior thereto have been restated to conform with the
provisions of this Statement.
The following table provides a reconciliation of both income before
extraordinary items and the number of common shares used in the computations of
"basic" EPS, which utilizes the weighted average number of common shares
outstanding without regard to potentially dilutive common shares and "diluted"
EPS, which includes all such shares.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Income (Numerator):
Before extraordinary item $ 27,454 $ 23,370 $ 18,178
======== ======== ========
Shares (Denominator):
Basic-average common shares outstanding 17,471 16,048 14,345
Add: Dilutive effect of stock options 166 85 66
-------- ------- -------
Diluted shares 17,637 16,133 14,411
======== ======== ========
Per-Share Amounts - Income before
extraordinary item
Basic $ 1.57 $ 1.46 $ 1.27
======== ======== ========
Diluted $ 1.56 $ 1.45 $ 1.26
======== ======== ========
</TABLE>
Options to purchase 553,000, 558,000 and 494,000 shares of common stock
were outstanding at December 31, 1997, 1996 and 1995, respectively (Note 10),
a portion of which has been reflected above using the treasury stock method.
F-16
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Financial information for each of the quarters in the years ended
December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 31, 1997
Total Revenues........................ $ 18,375 $ 18,617 $ 21,773 $ 24,208 $ 82,973
Income Before Extraordinary Item
and Minority Interest................ 7,484 8,400 8,168 9,077 33,129
Net Income............................ 6,214 6,968 6,760 7,379 27,321
Basic Earnings Per Share.............. .36 .40 .38 .42 1.56
Diluted Earnings Per Share............ .36 .40 .38 .41 1.55
Distributions Declared Per Share...... .435 .435 .435 .45 1.755*
</TABLE>
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 31, 1996
Total Revenues........................ $ 16,942 $ 18,407 $ 18,497 $ 19,103 $ 72,949
Income Before Extraordinary Item
and Minority Interest................ 6,721 7,155 7,023 7,715 28,614
Net Income............................ 5,486 5,840 5,749 6,295 23,370
Basic Earnings Per Share.............. .34 .36 .36 .40 1.46
Diluted Earnings Per Share............ .34 .36 .36 .39 1.45
Distributions Declared Per Share....... .420 .420 .420 .435 1.695*
</TABLE>
* Of which $.194 and $.212 represents a non-taxable return of capital for the
years ended December 31, 1997 and 1996, respectively.
15. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited proforma summary financial information for the
years ended December 31, 1997 and 1996, is presented as if the acquisitions of
Grand Teton Mall, Silver Lake Mall, Visalia Mall, Salem Center and the
additional common stock offering on January 22, 1997, had been consummated as
of January 1, 1997 and January 1, 1996, respectively:
1997 1996
-------- --------
Revenues............................. $ 92,602 $ 88,620
Income Before Extraordinary Item..... 28,104 26,167
Net Income........................... 27,971 26,167
Basic Earnings Per Share:
Income Before Extraordinary Item... 1.60 1.49
Net Income......................... 1.59 1.49
Diluted Earnings Per Share:
Income Before Extraordinary Item... 1.58 1.48
Net Income......................... 1.58 1.48
The proforma financial information summarized above is presented for
information purposes only and may not be indicative of what actual results of
operations would have been had the acquisitions and offering been completed as
of the beginning of the periods presented, nor does it purport to represent the
results of operations for future periods.
F-17
<PAGE>
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SCHEDULE II
JP REALTY, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING CHARGED TO BALANCE AT
OF YEAR EXPENSE DEDUCTIONS END OF YEAR
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Allowance for uncollectible accounts $ 489 $ 346 $ 265 $ 570
Year ended December 31, 1996
Allowance for uncollectible accounts $ 504 $ 340 $ 355 $ 489
Year ended December 31, 1995
Allowance for uncollectible accounts $ 437 $ 258 $ 191 $ 504
</TABLE>
F-18
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
JP REALTY, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
CAPITALIZED GROSS AMOUNT AT WHICH CARRIED DATE DEPREC-
INITIAL COSTS SUBSEQUENT AT CLOSE OF PERIOD OF IABLE
RELATED BUILDING & TO BLDG. & ACCUMULATED CONSTRU- DATE LIVES
ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND IMPROV. TOTAL(1) ACQUIRED CTION ACQUIRED YEARS
DESCRIPTION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MALLS:
Animas Valley
Mall, Farmington, NM $ -- $ 3,902 $ 24,059 $ 28 $ 3,902 $ 24,087 $ 27,989 $ 1,518 -- 1995 40
Boise Towne Square,
Boise, ID 32,475 6,512 -- 37,045 6,512 37,045 43,557 12,455 1987-88 1985-86 5-40
Cache Valley Mall,
Logan, UT 5,781 909 -- 8,419 909 8,419 9,328 4,209 1975-76 1973-75 10-40
Cottonwood Mall,
Salt Lake City, UT 19,857 7,514 20,776 30,851 7,514 51,627 59,141 18,048 1981-87 1980 4-40
Eastridge Mall,
Casper, WY -- 4,300 19,896 3,421 4,300 23,318 27,618 1,321 -- 1995 40
Grand Teton Mall,
Idaho Falls, ID -- 5,802 28,614 92 5,802 28,706 34,508 1,252 -- 1996 40
North Plains Mall,
Clovis, NM 5,472 1,592 -- 10,863 1,592 10,863 12,455 3,409 1984-85 1979-84 10-40
Pine Ridge Mall,
Pocatello, ID 10,019 1,883 -- 21,566 1,883 21,566 23,449 7,916 1979-81 1979 10-40
Red Cliffs Mall,
St. George, UT 6,132 903 -- 12,846 903 12,846 13,749 2,913 1989-90 1989 3-40
Salem Center Mall,
Salem, OR -- 1,704 30,504 -- 1,704 30,504 32,208 -- -- 1997 40
Silver Lake Mall,
Coeur d'Alene, ID 12,827 4,055 21,379 181 4,055 21,560 25,615 293 -- 1997 40
Spokane Valley Mall,
Spokane, WA 43,009 6,645 34,341 16,869 6,645 51,210 57,855 475 1990-97 1990 40
Three Rivers Mall,
Kelso, WA 10,175 1,977 -- 20,380 1,977 20,380 22,357 4,971 1986-87 1984 10-40
Visalia Mall,
Visalia, CA -- 6,146 31,812 834 6,146 32,645 38,791 397 -- 1997 40
White Mountain Mall,
Rock Springs, WY 5,083 1,120 -- 15,789 1,120 15,789 16,909 6,053 1977-78 1977 40
COMMUNITY CENTERS &
FREE-STANDING RETAIL:
Alameda Plaza,
Pocatello, ID -- 500 -- 3,365 500 3,365 3,865 1,837 1973 1973 40
Anaheim Plaza,
Anaheim, CA -- -- -- 54 -- 54 54 30 1980-81 1979 40
Austin Bluffs Plaza,
Colorado Springs, CO -- 1,488 -- 1,943 1,488 1,943 3,431 594 1985 1979 3-40
Bailey Hills Plaza,
Eugene, OR -- 157 -- 317 157 317 474 51 1988-89 1988 40
Bank One, Nephi, UT -- 17 183 -- 17 183 200 140 -- 1976 40
Baskin Robbins 17th St.,
Idaho Falls, ID -- 9 67 7 9 74 83 18 -- 1988 40
Boise Plaza, Boise, ID -- 322 -- 1,382 322 1,382 1,704 900 1970-71 1970 40
Boise Towne Plaza,
Boise, ID -- 3,316 4,243 1,049 3,316 5,292 8,608 15 1996-97 1996-97 40
Cottonwood Square,
Salt Lake City, UT -- 1,926 3,535 -- 1,926 3,535 5,461 177 -- 1995 40
Division Crossing,
Portland, OR -- 2,429 -- 4,483 2,429 4,483 6,912 813 1990-91 1990 20-40
Fort Union Plaza,
Salt Lake City, UT -- 21 -- 1,673 21 1,673 1,694 628 1979-84 -- 40
Fremont Plaza,
Las Vegas, NV -- -- -- 2,254 -- 2,254 2,254 1,132 1976-80 -- 40
Fry's Shopping Plaza,
Glendale, AZ -- 353 -- 4,582 1,254 3,682 4,936 1,544 1980-81 1980 40
Gateway Crossing,
Bountiful, UT -- 3,644 -- 8,480 3,644 8,480 12,124 1,052 1990-92 1990 40
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
JP REALTY, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
CAPITALIZED GROSS AMOUNT AT WHICH CARRIED DATE DEPREC-
INITIAL COSTS SUBSEQUENT AT CLOSE OF PERIOD OF IABLE
RELATED BUILDING & TO BLDG. & ACCUMULATED CONSTRU- DATE LIVES
ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND IMPROV. TOTAL(1) ACQUIRED CTION ACQUIRED YEARS
DESCRIPTION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Halsey Crossing,
Gresham, OR -- -- -- 2,302 -- 2,302 2,302 492 1989-91 -- 4-40
North Temple Shops,
Salt Lake City, UT -- 60 -- 177 60 177 237 83 1970 1970 40
Orem Plaza Center
Street, Orem, UT -- 371 330 1,091 344 1,448 1,792 592 1976-87 1973 10-40
Orem Plaza State
Street, Orem, UT -- 126 -- 687 126 687 813 345 1975 1973 29-40
Plaza 800, Sparks, NV -- 33 2,969 38 33 3,007 3,040 1,665 1974 -- 40
Plaza 9400, Sandy, UT -- -- -- 4,514 -- 4,514 4,514 1,916 1976-84 -- 10-40
Red Cliffs Plaza,
St. George, UT -- -- 2,403 -- -- 2,403 2,403 195 1994-95 1994-95 40
River Pointe Plaza,
West Jordan, UT -- 1,130 -- 2,668 1,130 2,668 3,798 727 1987-88 1986-87 5-40
Riverside Plaza, Provo, UT -- 427 1,886 1,289 427 3,175 3,602 1,461 1978-81 1977 40
Twin Falls Crossing,
Twin Falls, ID -- 125 -- 776 125 776 901 407 1976 1975 40
University Crossing,
Orem, UT -- 230 -- 4,424 230 4,424 4,654 1,681 1971-92 1971 40
Woodlands Village,
Flagstaff, AZ -- 2,068 5,329 228 2,068 5,557 7,625 455 -- 1994 40
Yellowstone Square,
Idaho Falls, ID -- 355 -- 4,552 355 4,552 4,907 2,554 1972-77 1972 40
COMMERCIAL:
First Security Place,
Boise, ID -- 300 -- 3,249 300 3,249 3,549 1,471 1978-80 1978 10-40
Price Business Center-
Commerce Park,
West Valley City, UT -- 415 2,109 8,509 1,147 9,886 11,033 1,349 1980 1973-95 40
Price Business
Center-Pioneer Square,
Salt Lake City, UT -- 658 -- 10,468 658 10,468 11,126 3,311 1974-92 1973 3-40
Price Business
Center-South Main,
Salt Lake City, UT -- 317 -- 2,469 317 2,469 2,786 1,298 1967-82 1966-81 3-40
Price Business Center-
Timesquare,
Salt Lake City, UT -- 581 -- 9,019 581 9,019 9,600 3,544 1974-80 1972-80 5-40
Sears-Eastbay, Provo, UT 1,927 275 -- 2,079 275 2,079 2,354 457 1989-90 1989 40
OTHER REAL ESTATE:
Provo Towne Centre,
Provo, UT 3,000 13,829 16,661 -- 13,829 16,661 30,490 -- 1997(2) 1997 40
Miscellaneous Real Estate -- 3,471 17 7,029 3,471 7,045 10,516 240 -- 1980-95 40
------- ------- ------- -------- ------ ------- ------- -------
TOTAL $ 155,763 $93,917 $251,113 $ 274,341 $95,523 $523,848 $ 619,371 $ 98,404
========= ======= ======== ========= ======= ======== ========= =========
(1) The aggregate cost for Federal Income Tax purposes was approximately $642,645 at December 31, 1997.
(2) Construction in progress as of December 31, 1997.
</TABLE>
F-20
<PAGE>
JP REALTY, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
A summary of activity for real estate investments and accumulated
depreciation is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
----------- --------- --------------
<S> <C> <C> <C>
Real Estate Investments:
Balance at Beginning of Year $ 453,241 $ 388,205 $ 321,242
Acquisitions 96,615 37,055 59,081
Improvements 69,921 28,268 9,903
Disposition of Property (406) (287) (2,021)
----------- --------- --------------
Balance at End of Year $ 619,371 $ 453,241 $ 388,205
=========== ========= ==============
Accumulated Depreciation:
Balance at Beginning of Year $ 87,318 $ 77,462 $ 69,660
Depreciation 11,492 10,015 9,386
Depreciation of Disposed Property (406) (159) (1,584)
----------- --------- --------------
Balance at End of Year $ 98,404 $ 87,318 $ 77,462
=========== ========= ==============
</TABLE>
F-21
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORM FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements - None
(b) Pro Forma Financial Information - None
(c) Exhibits
8 - Opinion of Rogers & Wells re: Tax Matters
23 - Consent of Accountants
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
JP REALTY, INC.
Date: MARCH 4, 1998 By: /S/ M. SCOTT COLLINS
------------- --------------------------------------
M. Scott Collins, Vice-President--Chief
Financial Officer and Treasurer
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
- -----------
8 Opinion of Rogers & Wells re: Tax Matters
23 Consent of Accountants
<PAGE>
Exhibit 8
ROGERS & WELLS
200 Park Avenue
New York, NY 10166
(212) 878-8000
FAX (212) 878-8375
NEW YORK LONDON FRANKFURT
WASHINGTON, D.C. PARIS HONG KONG
November 17, 1997
JP Realty, Inc.
Price Development Company,
Limited Partnership
35 Century Park-Way
Salt Lake City, Utah 84115
Ladies and Gentlemen:
We have acted as counsel to JP Realty, Inc., a Maryland
corporation (the "Company"), and Price Development Company, Limited
Partnership, a Delaware limited partnership (the "Operating Partnership"),
in connection with the Company's and the Operating Partnership's
registration statement on Form S-3 (Registration Numbers 333-34835 and 333-
34835-01)(as the same may be amended or supplemented from time to time, the
"Registration Statement"), including the prospectus included therein at the
time the Registration Statement is declared effective (the "Prospectus"),
filed with the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
In rendering the opinion expressed herein, we have examined and
relied on the following items:
1. The Registration Statement;
2. The Amended and Restated Agreement of Limited Partnership of
the Operating Partnership;
<PAGE>
JP Realty, Inc. 2 November 17, 1997
Price Development Company,
Limited Partnership
3. The Agreement of Limited Partnership of Price Financing
Partnership, L.P. (the "Financing Partnership");
4. The Closing Agreement On Final Determination Covering
Specific Matters between the Company and the Commissioner of Internal
Revenue, dated July 17, 1995 (the "Closing Agreement"); and
5. Such other documents, records and instruments as we have
deemed necessary in order to enable us to render the opinion referred to in
this letter.
In our examination of the foregoing documents, we have assumed, with
your consent, that (i) all documents reviewed by us are original documents,
or true and accurate copies of original documents, and have not been
subsequently amended, (ii) the signatures of each original document are
genuine, (iii) each party who executed the document had proper authority
and capacity, (iv) all representations and statements set forth in such
documents are true and correct, (v) all obligations imposed by any such
documents on the parties thereto have been or will be performed or
satisfied in accordance with their terms and (vi) the Company, the
Operating Partnership and the Financing Partnership at all times have been
and will continue to be organized and operated in accordance with the terms
of such documents. We have further assumed the accuracy of the statements
and descriptions of the Company's, the Operating Partnership's and the
Financing Partnership's intended activities as described in the
Registration Statement and that the Company, the Operating Partnership and
the Financing Partnership have operated and will continue to operate in
accordance with method of operation described in the Registration
Statement.
For purposes of rendering the opinion stated below, we have also
assumed, with your consent, the accuracy of the representations contained
in the Certificate of Representations dated November 17, 1997, provided to
us by the Company, the Operating Partnership and the Financing Partnership.
These representations generally relate to the classification and operation
of the Company as a REIT and the organization and operation of the
Operating Partnership and the Financing Partnership.
<PAGE>
JP Realty, Inc. 3 November 17, 1997
Price Development Company,
Limited Partnership
Based upon and subject to the foregoing, we are of the opinion that:
(1) Commencing with its taxable year ended December 31, 1994, the
Company was organized in conformity with the requirements for qualification
as a REIT under the Code and the proposed method of operation of the
Company, the Operating Partnership and the Financing Partnership, as
described in the Registration Statement and as represented by the Company,
the Operating Partnership and the Financing Partnership, will permit the
Company to continue to so qualify; and
(2) The information in the Registration Statement under the heading
"Federal Income Tax Considerations" has been reviewed by us and, to the
extent such summary involves matters of law, is correct in all material
respects.
The opinion stated above represents our conclusions as to the
application of federal income tax laws existing as of the date of this
letter to the transactions contemplated in the Registration Statement and
we can give no assurance that legislative enactments, administrative
changes or court decisions may not be forthcoming that would modify or
supersede our opinion. Moreover, there can be no assurance that positions
contrary to our opinion will not be taken by the Internal Revenue Service,
or that a court considering the issues would not hold contrary to such
opinion. Further, the opinion set forth above represents our conclusions
based upon the documents, facts and representations referred to above. Any
material amendments to such documents, changes in any significant facts or
inaccuracy of such representations could affect the opinion referred to
herein. Moreover, the Company's qualification and taxation as a REIT
depend upon the Company's ability to meet, through actual annual operating
results, requirements under the Code regarding income, assets,
distributions and diversity of stock ownership. Because the Company's
satisfaction of these requirements will depend on future events, no
assurance can be given that the actual results of the Company's operation
for any one taxable year will satisfy the tests necessary to qualify as or
be taxed as a REIT under the Code. Although we have made such inquiries
and performed such investigations as we have deemed necessary to fulfill
<PAGE>
JP Realty, Inc. 4 November 17, 1997
Price Development Company,
Limited Partnership
our professional responsibilities as counsel, we have not undertaken an
independent investigation of all of the facts relating to the Company's
qualification as a REIT.
This opinion is rendered by us at the request of the Company solely
for your benefit and may not be provided to or relied upon by any person or
entity other than you without our express permission.
We express no opinion as to any federal income tax issue or other
matter except those set forth above.
Very truly yours,
Rogers & Wells
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Form S-3 (No.33-93752,
No. 333-3624, No. 333-34835 and No. 333-34835-01) and Registration
Statement on Form S-8 (No. 333-3550) of JP Realty, Inc. of our report dated
February 4, 1998 appearing on page F-2 of this Form 8-K.
Price Waterhouse LLP
Salt Lake City, Utah
March 3, 1998
