SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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, 1999
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)
<TABLE>
<S> <C>
MARYLAND 87-0515088
---------------------- ---------------
(State of incorporation) (I.R.S. Employer
Identification No.)
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115 (801) 486-3911
-------------------------- -------------
(Address of principal executive offices, (Registrant's telephone number, including area code)
including zip code)
<CAPTION)
Securities registered pursuant to Section 12(b) of the Act:
<S> <C>
Name of each exchange
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Common Stock, par value $.0001 per share New York Stock Exchange
</TABLE>
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 [X] No [ ]
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.
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was $287,321,220 as of March 7, 2000. The aggregate
market value has been computed based on a price of $18 per share, the closing
price of the stock on the New York Stock Exchange on March 7, 2000.
Shares Outstanding at March 7, 2000
16,144,865 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 2000 Annual Meeting of
Stockholders scheduled to be held on May 3, 2000 are incorporated by reference
into Part III of this Annual Report on Form 10-K.
<PAGE> 1
Certain matters discussed under the captions "Business and Properties",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", "Quantitative and Qualitative Disclosures About Market Risk" and
elsewhere in this Annual Report on Form 10-K and the information incorporated
by reference herein may constitute forward-looking statements 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., a Maryland Corporation, (together with its subsidiaries,
the "Company"), is a fully integrated, self-administered and self-managed real
estate investment trust ("REIT") primarily engaged in the business of owning,
leasing, managing, operating, developing, redeveloping and acquiring regional
malls, community centers and other commercial and retail properties in Utah,
Idaho, Colorado, Arizona, Nevada, New Mexico and Wyoming (the "Intermountain
Region"), as well as in Oregon, Washington and California (together with the
Intermountain Region, the "Western States"). The Company was formed on
September 8, 1993 to continue and expand the business, commenced in 1957, of
certain companies (the "Predecessor Companies") affiliated with John Price,
Chairman of the Board and Chief Executive Officer of the Company. The Company
conducts all of its business operations through, and as of December 31, 1999
held an 82.2% controlling general partner interest in, Price Development
Company, Limited Partnership, a Maryland limited partnership (the "Operating
Partnership"). As of December 31, 1999, the Company, through the Operating
Partnership, held a portfolio consisting of 51 properties (the "Properties" or
"Property"), including 18 enclosed regional malls, 25 community centers and two
free-standing retail Properties located in ten states and six mixed-use
commercial Properties located primarily in the Salt Lake City, Utah
metropolitan area. Since 1976, the Company and the Predecessor Companies have
been responsible for developing more retail malls in the region covered by
Utah, Idaho, Colorado, Nevada, New Mexico and Wyoming than any other developer
having constructed, developed or redeveloped 12 malls in this region (as well
as four other malls in Arizona, Oregon and Washington).
Based on total gross leasable area (Company-owned leasable area plus any
tenant-owned leasable area within the Company's Properties ("Total GLA")), the
Company owns and operates the largest retail property portfolio in each of the
states of Utah, Idaho and Wyoming, and is one of the leading owners and
operators of retail shopping center properties throughout the Intermountain
Region. As of December 31, 1999, the Company's retail portfolio contained an
aggregate of 13,658,418 square feet of Total GLA and its commercial portfolio
contained an aggregate of 1,353,576 square feet of gross leasable area
(Company-owned leasable area within the Company's Properties ("GLA")). Based
on Total GLA, the Company's retail Properties were approximately 94% leased as
of December 31, 1999 and, based on GLA, its commercial Properties were
approximately 93% leased as of that date. Segment information for the three
years ended December 31, 1999, 1998 and 1997 is included in the financial
statements attached to this Annual Report on Form 10-K on pages F-17 and F-18.
The Company's strategy is to expand its dominant market position in the
Intermountain Region, and to continue to achieve cash flow growth and enhance
the value of the Properties by increasing their rental income and net operating
income over time. The Company expects to achieve rental income and net
operating income growth through re-leasing available space at higher rent
levels and selectively renovating, expanding and redeveloping the Properties.
In order to expand its market position, the Company expects to concentrate its
acquisition and other development activities in the Western States.
On April 23, 1999, the Operating Partnership issued 510,000 Series A
8.75% cumulative redeemable preferred units of limited partner interest
(the "Series A Preferred Units") in a private placement. Each Series A
Preferred Unit has a liquidation value of twenty-five dollars per unit. The
Operating Partnership used the net proceeds of approximately $12.3 million for
the partial repayment of borrowings outstanding under the Operating
Partnership's $200 million unsecured credit facility. The Series A Preferred
Units, which may be redeemed by the Operating Partnership on or after April 23,
2004, have no stated maturity or mandatory redemption and are not convertible
into any other securities of the Operating Partnership. The Series A Preferred
Units are exchangeable at the option of the preferred unitholder at a rate of
one Series A Preferred Unit for one share of the Company's Series A 8.75%
cumulative redeemable preferred stock beginning April 23, 2009 or earlier under
certain circumstances.
<PAGE> 2
On July 28, 1999, the Operating Partnership issued 3,800,000 Series B
8.95% cumulative redeemable preferred units of limited partner interest (the
"Series B Preferred Unit") in a private placement. Each Series B Preferred
Unit has a liquidation value of twenty-five dollars per unit. The Operating
Partnership used the net proceeds of approximately $92 million to repay $90
million in borrowings outstanding under the Operating Partnership's $200
million unsecured credit facility and increase operating cash. The Series B
Preferred Units, which may be redeemed by the Operating Partnership on or after
July 28, 2004, have no stated maturity or mandatory redemption and are not
convertible into any other securities of the Operating Partnership. The Series
B Preferred Units are exchangeable at the option of the preferred unitholder at
a rate of one Series B Preferred Unit for one share of the Company's Series B
8.95% cumulative redeemable preferred stock beginning July 28, 2009 or earlier
under certain circumstances.
In October 1999, the Board of Trustees authorized the Company to
repurchase up to $25,000,000 of the Company's Common Stock through open market
purchases and private transactions. Through March 7, 2000, the Company
had repurchased approximately 1,337,000 shares of Common Stock for a total cost
of approximately $22,758,000.
In August 1999, the Company adopted a stockholders' rights plan declaring
a dividend of one right for each share of the Company's Common Stock
outstanding on or after August 18, 1999. Pursuant to the plan, each right will
entitle holders of the Company's Common Stock to buy one unit (a "Unit") of
Series A Junior Participating Preferred Stock (the "Junior Preferred Stock") at
an exercise price of seventy dollars. Each Unit will have substantially the
same economic and voting rights as one share of Common Stock. The rights will
be exercisable, and will detach from the Common Stock only (A) if a person or
group (i) acquires 15% or more of the outstanding shares of the Company's
Common Stock; (ii) announces a tender or exchange offer that, if consummated,
would result in a person or group beneficially owning 15% or more of the
outstanding shares of the Company's Common Stock; (iii) is declared by the
Board of Directors to be an Adverse Person (as defined in the plan) if such
person or group beneficially owns 10% or more of the outstanding shares of the
Company's Common Stock; or (iv) acquires beneficial ownership of 40% or more of
the outstanding shares of the Company's Common Stock; or (B) upon the
occurrence of certain events involving a consolidation, merger or sale or
transfer of assets or earning power of the Company. Upon the occurrence of
certain triggering events, each right will entitle the holder (other than the
acquiring person or group) to purchase Units (or, in certain circumstances,
Common Stock of the acquiring person or group) with a value of twice the
exercise price of the rights upon payment of the exercise price. In connection
with the plan, 3,060,000 shares of Junior Preferred Stock were reserved for
issuance. The rights are redeemable by the Company under certain circumstances
at $.0001 per right and will expire, unless earlier redeemed, on August 11,
2009.
On July 21, 1999, the Operating Partnership borrowed $33,777,000 from the
$200 million unsecured credit facility to reduce the notes secured by real
estate, bearing interest at a fixed 6.37% per annum, from $95,000,000 to
$61,223,000. This transaction unencumbered four regional mall Properties.
On October 20, 1999, the Company held a grand opening of its newly
developed regional mall in Sierra Vista, Arizona. The Mall at Sierra Vista is
anchored by Dillard's, Sears and Cinemark Theaters and added approximately
335,000 square feet of additional Total GLA to the Company's existing
portfolio.
The Operating Partnership developed Provo Towne Centre, an enclosed
regional mall in Provo, Utah. The mall held its grand opening on October 28,
1998 and added approximately 723,000 square feet of Total GLA as of December
31, 1998. Provo Towne Centre is anchored by Dillard's, JCPenney, Sears and
Cinemark Theaters and includes space for more than 80 mall shops. On November
11, 1999, the mall held a grand opening for its sixteen screen Cinemark Theater
which added approximately 74,000 square feet of additional GLA.
The Operating Partnership, through its consolidated partnership Price
Spokane, Limited Partnership, has initiated the expansion of NorthTown Mall, an
enclosed regional mall in Spokane, Washington. The project will be funded by
the Company's $200 million unsecured credit facility and is expected to be
completed in the third quarter of 2000 which will add approximately 100,000
square feet of additional GLA to the Company's existing portfolio.
Each of the Company's regional malls is the premier and dominant mall
and, in some cases, the only mall within its trade area and is generally
considered to be the financial, economic and social center for a given
geographic area. The trade areas surrounding the Company's malls have a
drawing radius, depending on the mall, ranging from five to over 150 miles.
The malls have attracted as anchor tenants some of the leading national and
regional retail companies such as JCPenney, Nordstrom, Wal-Mart, The Bon
March<e'>, Sears, Dillard's, Mervyn's and ZCMI. The 18 regional malls in the
portfolio contain an aggregate of approximately 10,291,000 square feet of Total
GLA and range in size from approximately 296,000 to 1,171,000 square feet of
Total GLA. The community center portfolio consists of 25 Properties in seven
states containing approximately 3,362,000 square feet of Total GLA. The two
free-standing retail Properties contain a total of approximately 5,000 square
feet of GLA. The commercial portfolio, which includes 38 commercial buildings
containing approximately 1,354,000 square feet of GLA, is primarily located in
the Salt Lake City, Utah area where the Company's headquarters are located.
<PAGE> 3
PROPERTIES
The following tables set forth certain information relating to the
Properties, all of which (except as otherwise indicated) are 100% owned by the
Operating Partnership. The Company believes that all such Properties are
adequately covered by insurance.
<TABLE>
<CAPTION>
RETAIL PROPERTIES
OCCUPANCY AS OF
12/31/99
-------------------
FREE BASED
STANDING TENANT TOTAL TENANT ON BASED TENANT OWNER-
PROPERTY STORES(2) SHOPS(3) ANCHORS GLA(4) GLA(5) OWNED TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE(1) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) GLA GLA SPACE TYPE(6) ANCHORS
- ----------------- -------- ----- --------- --------- --------- ---------- ---------- --------- ----- ------------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REGIONAL MALLS
UTAH
- ----
Cache Valley
Mall Logan RM 30,120 98,132 182,889 311,141 308,641 2,500 94.6% 94.5% 82.8% Fee JCPenney,
ZCMI,
Lamonts,
C-A-L
Ranch
Cottonwood Mall Holladay RM 53,300 322,091 379,508 754,899 754,899 -- 91.0% 91.0% 78.8% Fee/ JCPenney,
(7) GL(8) ZCMI
Provo Towne Provo RM 9,564 231,552 556,145 797,261 456,632 340,629 96.0% 93.1% 86.4% Fee JCPenney,
Centre (7) (9) Dillard's
Cinemark
Theaters,
Sears
Red Cliffs Mall St. RM 17,425 90,926 277,057 385,408 271,137 114,271 98.6% 98.1% 94.2% Fee JCPenney,
George (10) Sears,
ZCMI,
Wal-
Mart
IDAHO
- ------
Boise Towne
Square (7) Boise RM 84,418 392,035 694,463 1,170,916 589,279 581,637 98.6% 97.2% 95.8% Fee/ JCPenney,
(11) GL Dillard's
(12) Sears,
The Bon
March<e'>
Mervyn's
Grand Teton Mall Idaho RM 29,089 172,624 323,925 525,638 520,018 5,620 95.3% 95.2% 85.7% Fee JCPenney,
Falls Sears,
ZCMI,
The Bon
March<e'>
Pine Ridge Mall Pocatello RM 25,818 148,908 437,987 612,713 501,213 111,500 97.5% 96.9% 89.5% Fee/ JCPenney,
(13) GL ZCMI,
(14) The Bon
March<e'>
Sears,
ShopKo
Silver Lake Mall Coeur RM 20,090 97,266 217,493 334,849 327,913 6,936 97.1% 97.1% 90.1% Fee JCPenney,
(7) d'Alene Sears,
Emporium,
Lamonts
WASHINGTON
- -----------
NorthTown Mall Spokane RM -- 412,255 541,209 953,464 711,072 242,392 93.9% 91.8% 85.9% Fee JCPenney,
(7) (15) Sears,
Mervyn's,
The Bon
March<e'>
Emporium
Spokane Valley Spokane RM 78,480 273,776 371,731 723,987 469,290 254,697 93.3% 89.7% 82.3% Fee JCPenney,
Mall (7) (16) Sears,
The Bon
March<e'>
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
RETAIL PROPERTIES (continued)
OCCUPANCY AS OF
12/31/99
-------------------
FREE BASED
STANDING TENANT TOTAL TENANT ON BASED TENANT OWNER-
PROPERTY STORES(2) SHOPS(3) ANCHORS GLA(4) GLA(5) OWNED TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE(1) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) GLA GLA SPACE TYPE(6) ANCHORS
- ----------------- -------- ----- --------- --------- --------- ---------- ---------- --------- ----- ------------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REGIONAL MALLS
(continued)
Three Rivers Mall Kelso RM 246,890 126,687 188,076 561,653 379,772 181,881 95.6% 93.4% 80.3% Fee JCPenney,
(7) (17) Sears,
The Bon
March<e'>
Emporium
Oregon
- ------
Salem Center Salem RM 45,000 167,037 438,000 650,037 212,037 438,000 94.3% 82.5% 77.7% Fee/ JCPenney,
(18) GL Nordstrom
(19) Meier &
Frank,
Mervyn's
WYOMING
- ----------
Eastridge Mall Casper RM 17,500 264,371 289,796 571,667 495,784 75,883 91.7% 90.5% 82.1% Fee JCPenney,
(20) Target,
The Bon
March<e'>
Sears
White Mountain Rock RM 26,025 105,992 208,452 340,469 340,469 -- 78.1% 78.1% 76.5% Fee JCPenney,
Mall Springs Herber-
gers
Wal-Mart
NEW MEXICO
- -----------
Animas Valley Farming- RM 33,000 221,946 271,155 526,101 466,763 59,338 88.9% 87.5% 73.8% Fee JCPenney
Mall ton (21) Sears,
Dillard's
Beall's,
(21)
North Plains
Mall (7) Clovis RM 19,076 81,416 195,431 295,923 292,803 3,120 63.9% 63.6% 86.7% Fee JCPenney,
(22) Sears,
Beall's,
(22)
Mall at Sierra
Vista Sierra
Vista RM -- 103,386 231,918 335,304 138,812 196,492 94.3% 86.2% 81.4% Fee Dillards,
(9) Cinemark
Theaters,
Sears
CALIFORNIA
- -----------
Visalia Mall Visalia RM 8,510 174,229 257,000 439,739 439,739 -- 97.8% 97.8% 94.3% Fee JCPenney,
--------- --------- --------- ---------- ---------- --------- ----- ----- ----- Gotts-
Subtotal chalk's
Regional Malls 744,305 3,484,629 6,062,235 10,291,169 7,676,273 2,614,896 93.5% 91.2% 84.9%
--------- --------- --------- ---------- ---------- --------- ----- ----- -----
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
RETAIL PROPERTIES (continued)
OCCUPANCY AS OF
12/31/99
-------------------
FREE BASED
STANDING TENANT TOTAL TENANT ON BASED TENANT OWNER-
PROPERTY STORES(2) SHOPS(3) ANCHORS GLA(4) GLA(5) OWNED TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE(1) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) GLA GLA SPACE TYPE(6) ANCHORS
- ----------------- -------- ----- --------- --------- --------- ---------- ---------- --------- ----- ------------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMUNITY CENTERS
and FREE-STANDING
RETAIL PROPERTIES
UTAH
- -----
Cottonwood
Square Salt CC -- 35,467 41,612 77,079 77,079 -- 87.2% 87.2% 72.1% Fee/ Albert-
Lake GL sons
City
Fort
Union Plaza Salt CC 32,968 -- -- 32,968 32,968 -- 65.1% 65.1% -- GL None
Lake
City
Gateway Crossing Bountiful CC 35,982 65,853 174,669 276,504 146,466 130,038 82.6% 67.1% 100.0% Fee ShopKo,
(22) (13) TJ Maxx
(22)
Nephi Bank Nephi FR 3,590 -- -- 3,590 3,590 -- 100.0% 100.0% -- Fee None
North Temple Salt CC -- 10,085 72,376 82,461 10,085 72,376 100.0% 100.0% 100.0% Fee Albert-
Shops Lake (23) sons,
City Rite-Aid
Orem Plaza-
Center Street Orem CC 15,491 18,814 62,420 96,725 91,125 5,600 97.0% 96.8% 84.6% Fee Savers,
Showbiz
Pizza
Orem Plaza-
State Street Orem CC 16,595 19,057 59,055 94,707 27,102 67,605 100.0% 100.0% 100.0% Fee Rite-Aid
(24)
Plaza 9400 Sandy CC 34,510 55,445 136,745 226,700 226,700 -- 100.0% 100.0% 100.0% GL Albert-
sons,
Fred Meyer
Red Cliffs
Plaza St. CC 20,023 -- 46,608 66,631 57,304 9,327 100.0% 100.0% -- Fee America's
George Best
Furniture
Warehouse
River Pointe West CC 18,522 56,120 135,707 210,349 56,120 154,229 99.2% 97.1% 97.1% Fee Albert-
Plaza Jordan (25) sons,
ShopKo
Riverside Plaza Provo CC 10,050 11,384 156,454 177,888 174,888 3,000 99.0% 99.0% 84.8% Fee Macey's,
Rite-Aid,
Mac
Frugals
University Orem CC 33,401 38,544 128,091 200,036 199,136 900 97.0% 97.0% 84.7% Fee Burlington
Crossing Coat (26),
Office
Max (27),
CompUSA
IDAHO
- -----
Alameda Plaza Pocatello CC 19,049 27,346 143,946 190,341 190,341 -- 100.0% 100.0% 100.0% Fee Albert-
sons,
Fred Meyer
Baskin Robbins Idaho FR 1,814 -- -- 1,814 1,814 -- 100.0% 100.0% -- Fee None
17th Street Falls
Boise Plaza Boise CC -- -- 108,464 108,464 108,464 -- 100.0% 100.0% -- PI Burlington
(28) Coat (26),
Albertsons
Boise Towne Boise CC 6,000 12,000 91,534 109,534 109,534 -- 100.0% 100.0% -- Fee Circuit
Plaza City,
Linens' n
Things,
Old
Navy
Twin Falls Twin CC -- 37,680 -- 37,680 37,680 -- 100.0% 100.0% -- Fee None(29)
Crossing Falls
Yellowstone Idaho CC 18,419 36,923 166,733 222,075 220,275 1,800 84.6% 84.5% 55.8% PI Albert-
Square Falls (30) sons,
Fred Meyer
(31)
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
RETAIL PROPERTIES (continued)
OCCUPANCY AS OF
12/31/99
-------------------
FREE BASED
STANDING TENANT TOTAL TENANT ON BASED TENANT OWNER-
PROPERTY STORES(2) SHOPS(3) ANCHORS GLA(4) GLA(5) OWNED TOTAL ON SHOP SHIP
PROPERTY LOCATION TYPE(1) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) (SQ.FT.) GLA GLA SPACE TYPE(6) ANCHORS
- ----------------- -------- ----- --------- --------- --------- ---------- ---------- --------- ----- ------ ----- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMUNITY CENTERS
and FREE-STANDING
RETAIL PROPERTIES
OREGON
- ------
Bailey Hills Eugene CC 12,000 11,895 155,000 178,895 11,895 167,000 100.0% 100.0% 100.0% Fee Safeway,
Plaza (32) ShopKo
Division
Crossing Portland CC 2,589 24,091 67,960 94,640 92,051 2,589 95.0% 94.9% 80.5% Fee Thirtfway,
Rite-Aid
Halsey Crossing Gresham CC 7,267 39,342 52,764 99,373 99,373 -- 93.6% 93.6% 83.8% GL Safeway
NEVADA
- -------
Fremont Plaza Las CC 6,542 19,648 77,348 103,538 103,538 -- 100.0% 100.0% 100.0% GL Smith's
Vegas Food &
Drug,
Sav-On
Drug
Plaza 800 Sparks CC 5,985 21,821 139,607 167,413 167,413 -- 100.0% 100.0% 100.0% GL Albert-
sons,
ShopKo
COLORADO
- ---------
Austin Bluffs Colorado CC 9,447 35,859 71,543 116,849 78,902 37,947 100.0% 100.0% 100.0% Fee Albert-
Plaza Springs (33) sons,
Longs
Drug
ARIZONA
- -------
Fry's Shopping Glendale CC 8,564 38,781 71,919 119,264 119,264 -- 100.0% 100.0% 100.0% Fee Fry's
Plaza Foods
Woodlands
Village Flagstaff CC 4,020 43,380 146,898 194,298 91,858 102,440 98.9% 97.7% 95.1% Fee Bashas',
(10) Wal-Mart
CALIFORNIA
- ----------
Anaheim Plaza Anaheim CC 10,000 -- 67,433 77,433 77,433 -- 12.9% 12.9% -- PI
(22) (34) (22)
--------- --------- --------- ---------- ---------- --------- ----- ----- -----
Subtotal
Community
Centers 332,828 659,535 2,374,886 3,367,249 2,612,398 754,851 94.2% 92.5% 92.2%
--------- --------- --------- ---------- ---------- --------- ----- ----- -----
Total Retail
Properties 1,077,133 4,144,164 8,437,121 13,658,418 10,288,671 3,369,747 93.6% 91.6% 86.0%
========= ========= ========= ========== ========== ========= ===== ===== =====
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
RETAIL PROPERTIES (continued)
- --------------------------
<S> <C>
(1) Property type definitions are as follows: Regional Mall--RM, Community
Centers--CC, Free-standing Retail Properties--FR.
(2) Freestanding stores means leasable buildings or other structures located on
a property which are not physically attached to a mall or community center.
(3) Tenant shops means non-anchor retail stores located in a mall or community
center.
(4) Represents Company-owned leasable area and tenant-owned leasable area within
the Properties.
(5) Represents Company-owned leasable area within the Properties.
(6) Ownership type definitions are as follows: Fee, Ground lease-GL and
Partnership Interest-PI.
(7) Secured Property as of December 31, 1999.
(8) The Operating Partnership owns a ground lease on one-half acre.
(9) Tenant-owned space at this Property includes Dillard's and Sears.
(10) Tenant-owned space at this Property includes Wal-Mart.
(11) Tenant-owned space at this Property includes Dillard's, JCPenney, Sears
and Mervyn's.
(12) The Operating Partnership owns a ground lease on two acres.
(13) Tenant owned space at this Property includes ShopKo.
(14) The Operating Partnership owns two ground leases on 7.3 acres and 1.2
acres.
(15) Tenant-owned space at this Property includes Sears and Mervyn's.
(16) Tenant-owned space at this Property includes Sears and The Bon March<e'>
(17) Tenant-owned space at this Property includes Target and Top Foods.
(18) Tenant-owned space at this Property includes JCPenney, Mervyn's,
Nordstrom and Meier & Frank.
(19) The Operating Partnership owns 2.35 acres in fee and also owns seven
ground leases on 1.58 acres.
(20) Tenant-owned space at this Property includes Target.
(21) Tenant-owned space at this Property includes property owned by a third
party that is vacant.
(22) Anchor space is vacant as of December 31, 1999.
(23) Tenant-owned space at this Property includes Albertsons and Rite Aid.
(24) Tenant-owned space at this Property includes Rite Aid.
(25) Tenant-owned space at this Property includes Albertsons and ShopKo.
(26) The Operating Partnership's lease is with Fred Meyer which subleases the
Property space to Burlington Coat.
(27) The Operating Partnership's lease is with Fred Meyer which subleases the
space to Burlington Coat. 33.6% of the space represented by the
Burlington Coat sublease is further subleased to Office Max.
(28) The Operating Partnership's ownership represents a 73.3% partnership
interest in the current fee holder of the Property.
(29) The Operating Partnership's lease subleases the Property to several
other retailers.
(30) The Operating Partnership's ownership represents a 83.5% partnership
interest in the current fee holder of the Property.
(31) Fred Meyer is paying rent but not occupying the space. The lease ends
in November 2002.
(32) Tenant-owned space at this Property includes Safeway and ShopKo.
(33) Tenant-owned space at this Property includes Longs Drugs.
(34) The Operating Partnership's ownership interest represents a 50%
partnership interest in the current ground lease holder of the Property.
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
COMMERCIAL PROPERTIES
OCCUPANCY
PROPERTY GLA BASED ON OWNERSHIP
PROPERTY LOCATION TYPE (1) (SQ. FT.) GLA TYPE
- -------------------------------------- ------------------ ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
UTAH
- ----
Price Business Center-Pioneer Square Salt Lake City BP 497,892 89.9% Fee
Price Business Center-South Main Salt Lake City BP 112,963 94.0% Fee
Price Business Center-Timesquare Salt Lake City BP 289,423 90.3% Fee
Sears-Eastbay Provo CP 48,880 100.0% Fee
Price Business Center-Commerce Park West Valley City BP 393,360 100.0% Fee
IDAHO
- -----
Boise/FSB Plaza Boise CP 11,058 38.6% Fee
--------- -----
1,353,576 93.2%
========= =====
</TABLE>
- ------------------------------
(1) Property type definitions are as follows: Business Park--BP, Commercial
Property--CP.
SIGNIFICANT PROPERTIES
Boise Towne Square contributed approximately 10% of the Company's total
rental revenue (i.e. minimum rents plus percentage rents ("Rental Revenue"))
for the year ended December 31, 1999. Additionally, NorthTown Mall comprised
in excess of 10% of the book value of Company assets and total Rental Revenue
for the year ended December 31, 1999. Certain additional information relating
to these Properties is set forth below.
BOISE TOWNE SQUARE
Boise Towne Square is centrally located in Boise, Idaho adjacent to the
main thoroughfare of the city. Boise Towne Square was opened by the
Predecessor Companies in October of 1988. Boise Towne Square is the dominant
regional mall in its trade area, with several community centers as its major
competition.
The Company completed in August 1998, a 294,804 square foot expansion of
Boise Towne Square. The project added 186,500 square feet of Total GLA for
Dillard's, approximately 44,900 square feet of GLA for the expansion of The Bon
March<e'> and approximately 63,400 square feet of GLA for additional shops.
The Company leases approximately two acres of land which are utilized for
perimeter parking and landscaping from Union Pacific Railroad Company on a
year-to-year basis from December 1 to November 30 at a current rental rate of
$25,000 per year. Boise Towne Square is part of the collateral of the notes
secured by real estate, bearing interest at a fixed 6.37% per annum, and the
Company believes it is adequately insured. Depreciation and amortization are
taken utilizing the straight-line method over a period of 10 - 40 years with a
net book basis of approximately $47,833,000, $44,720,000 and $31,301,000 at
December 31, 1999, 1998 and 1997, respectively. It is the Company's policy to
renovate, expand and upgrade as warranted by market conditions.
As of December 31, 1999, 1998 and 1997, Boise Towne Square was 99%, 98%
and 98% leased, respectively, with an average annual rent from shop tenants per
square foot of $22.77, $22.26 and $19.93 for the years ended on those
respective dates. Three department stores, JCPenney, Dillard's and the Bon
March<e'>, are the only tenants which occupy 10% or more of Total GLA at this
Property. JCPenney and Dillard's own their own land and buildings and are
subject to a Construction, Operation and Reciprocal Easement Agreement that
expires in 2078, while The Bon March<e'>'s lease is for a term of 20 years,
expiring in 2008, with two 20-year extension options.
Boise Towne Square's leases will expire on the following schedule (1):
<TABLE>
<CAPTION>
AVERAGE PERCENTAGE OF GLA
ANNUALIZED REPRESENTED BY EXPIRING LEASES
------------------------------
ANNUALIZED BASE RENT PER ASSUMING NO ASSUMING FULL
NUMBER APPROXIMATE BASE RENT SQ. FT. UNDER EXERCISE OF EXERCISE OF
LEASE EXPIRATION OF LEASES GLA UNDER EXPIRING RENEWAL RENEWAL
YEAR ENDING DECEMBER 31, EXPIRING SQUARE FEET EXPIRING LEASES OPTIONS OPTIONS
- --------------------------- --------- ----------- ----------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
2000 23 42,092 $ 909,038 $ 21.60 7.14% 5.92%
2001 10 23,145 437,824 18.92 3.93% 3.82%
2002 11 17,315 287,968 16.63 2.94% 1.83%
2003 18 29,353 670,747 22.85 4.98% 4.49%
2004 12 39,078 690,975 17.68 6.63% 3.73%
2005 4 12,251 208,843 17.05 2.08% 2.08%
2006 7 19,541 362,979 18.58 3.32% 2.29%
2007 4 9,249 227,900 24.64 1.57% 1.57%
2008 22 214,328 2,089,711 9.75 36.37% 5.72%
2009 and thereafter 41 119,812 2,926,947 24.43 20.33% 16.50%
--------- ----------- -------------- ------------
Total 152 526,164 89.29% 47.95%
========= =========== ============== ============
</TABLE>
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 10
NORTHTOWN MALL
On August 6, 1998, the Company purchased NorthTown Mall, a two-level,
949,880 square foot regional mall, located in Spokane, Washington. NorthTown
Mall is Spokane's largest mall with competition coming from the Company's
Spokane Valley Mall as well as one other mall and several community centers.
As of December 31, 1999 and 1998, the mall was 94% and 91% leased,
respectively, with an average annual rent from shop tenants per square foot of
$29.47 for the year ended December 31, 1999. Two department stores, JCPenney
and Sears, are the only tenants which occupy 10% or more of Total GLA at this
Property. Sears owns its own land and buildings and is subject to a
Construction, Operation and Reciprocal Easement Agreement that expires in 2040,
while JCPenney's lease is for a term of 20 years, expiring in 2011 with six,
five-year extension options.
NorthTown Mall is financed in part by a first mortgage. The balance at
December 31, 1999 and 1998 on the first mortgage was $83,382,000 and
$84,277,000, respectively. Depreciation and amortization are taken utilizing
the straight-line method over a period of 10 - 40 years with a net book basis
of approximately $135,183,000 and $126,126,000, at December 31, 1999 and 1998,
respectively. The Company is currently constructing a 100,000 square feet
expansion at NorthTown Mall, which is expected to be completed in the third
quarter of 2000. It is the Company's policy to renovate, expand and upgrade as
warranted by market conditions.
NorthTown Mall's leases will expire on the following schedule (1):
<TABLE>
<CAPTION>
AVERAGE PERCENTAGE OF GLA
ANNUALIZED REPRESENTED BY EXPIRING LEASES
------------------------------
ANNUALIZED BASE RENT PER ASSUMING NO ASSUMING FULL
NUMBER APPROXIMATE BASE RENT SQ. FT. UNDER EXERCISE OF EXERCISE OF
LEASE EXPIRATION OF LEASES GLA UNDER EXPIRING RENEWAL RENEWAL
YEAR ENDING DECEMBER 31, EXPIRING SQUARE FEET EXPIRING LEASES OPTIONS OPTIONS
- --------------------------- --------- ----------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
2000 10 16,132 $ 395,674 $ 24.53 2.27% 2.27%
2001 22 25,496 819,833 32.16 3.59% 3.48%
2002 27 80,294 1,575,141 19.62 11.29% 10.99%
2003 14 21,006 608,234 28.96 2.95% 2.95%
2004 14 32,339 756,357 23.39 4.55% 4.55%
2005 10 19,956 609,476 30.54 2.81% 2.81%
2006 10 22,283 691,066 31.01 3.13% 3.13%
2007 11 28,246 825,772 29.24 3.97% 3.97%
2008 2 3,957 97,500 24.64 .56% .56%
2009 and thereafter 16 354,930 2,786,740 7.85 49.91% 7.23%
--------- ----------- ----------- ------------- -------------- -------------
Total 136 604,639 85.03% 41.94%
========= =========== ============== =============
</TABLE>
- -------------------------
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 11
THE COMPANY'S LARGEST TENANTS
Large stores (over 20,000 square feet per store) occupy 61.53% of the
Total GLA of the Company's regional malls and community centers. The Company's
largest tenants include JCPenney, Sears, The Bon March<e'>, Dillard's, ZCMI,
Wal-Mart, Mervyn's, Meier & Frank, The Emporium, Gottschalk's, ShopKo,
Albertsons, Fred Meyer and Burlington Coat. No tenant represented more than
4.37% of the Company's total Rental Revenues for the year ended December 31,
1999.
ANCHORS
Regional malls and community centers usually contain one or more large
retail companies known as "anchors." Anchors, which include traditional
department stores, general merchandise stores, large fashion specialty stores,
value oriented specialty stores and discount stores, usually inventory a broad
range of products that appeal to many shoppers. Anchors either own their own
stores (and sufficient parking) or lease their stores from the owner of the
mall or center. Although the rent and other charges paid by anchors are
usually much less (on a per square foot basis) than the rent and other charges
paid by other tenants, their presence typically attracts many shoppers and
enhances the value of a mall or community center.
Anchor tenants in the regional malls include: JCPenney, Sears, The Bon
March<e'>, Dillard's, ZCMI, Mervyn's, Wal-Mart, Meier & Frank, The Emporium,
Gottschalk's, ShopKo, Cinemark Theaters, Lamonts, Target and Nordstrom.
Anchors in the regional malls occupy 58.9% of Total GLA of the regional malls.
The following table summarizes the Total GLA owned and leased as of December
31, 1999 by these anchors:
<TABLE>
<CAPTION>
COMPANY-
COMPANY- OWNED
NUMBER OF OWNED ANCHOR ANCHOR SPACES
ANCHOR SQUARE ANCHOR-OWNED TOTAL GLA PERCENT AS % OF
ANCHOR STORES FEET SQUARE FEET SQUARE FEET TOTAL GLA REVENUE (1)
- -------------------------- ---------- -------------- ---------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
JCPenney 17 1,205,146 243,591 1,448,737 9.65% 4.37%
Sears 13 546,847 611,001 1,157,848 7.71% 2.10%
The Bon March<e'> 7 499,927 120,420 620,347 4.13% 2.94%
Dillard's 4 72,212 493,863 566,075 3.77% *
ZCMI 5 562,754 -- 562,754 3.75% 1.64%
Mervyn's 3 -- 241,560 241,560 1.61% --
Wal-Mart 2 86,944 114,271 201,215 1.34% *
Meier & Frank 1 -- 183,500 183,500 1.22% --
The Emporium 3 153,003 -- 153,003 1.02% *
Gottschalk's 1 150,000 -- 150,000 1.00% *
ShopKo 1 -- 111,500 111,500 .74% --
Cinemark Theaters 2 109,416 -- 109,416 .73% *
Lamonts 2 80,953 -- 80,953 .54% *
Target 1 -- 75,883 75,883 .51% --
Nordstrom 1 -- 72,000 72,000 .48% --
</TABLE>
- --------------------------
* Less than 1%
(1) Revenue defined as minimum rents plus percentage rents
<PAGE> 12
Anchor tenants occupying the greatest amount of Total GLA in the Company's
community centers are ShopKo, Albertsons, Fred Meyer, Burlington Coat, Rite
Aid, Safeway, Wal-Mart and Macey's. Anchors in the community centers occupy
approximately 70.5% of Total GLA of the community centers. The following
table summarizes the Total GLA owned and leased as of December 31, 1999 by
these anchors:
<TABLE>
<CAPTION> COMPANY-
ANCHOR- ANCHOR OWNED
NUMBER COMPANY- OWNED TOTAL GLA PERCENT ANCHOR SPACES
OF ANCHOR OWNED SQUARE SQUARE FEET TOATL AS % OF
ANCHOR STORES SQUARE FEET FEET ANCHOR SPACES GLA REVENUE
- -------------------------------- --------- -------------- ---------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ShopKo 4 104,000 297,140 401,140 2.67% *
Albertsons 9 269,098 82,663 351,761 2.34% *
Fred Meyer 3 309,944 -- 309,944 2.06% *
Burlington Coat (2) 2 174,248 -- 174,248 1.16% *
Rite Aid 4 70,583 52,080 122,663 0.82% *
Safeway 2 52,764 53,000 105,764 0.70% *
Wal-Mart 1 -- 102,440 102,440 0.68% --
Macey's 1 59,350 -- 59,350 0.40% *
</TABLE>
- --------------------------
* Less than 1%.
(1) Revenue defined as minimum rents plus percentage rents.
(2) Sublease from Fred Meyer, Inc.
MAJOR TENANTS
Non-anchor tenants owned by major national retail chains lease a
considerable amount of space in the Company's retail Properties. Such retail
chains include: Venator Group (Footlocker, Lady Footlocker, Kids Footlocker,
Northern Reflections, Afterthoughts, Champs and San Francisco Music Box),
Limited Group (Lane Bryant, Lerner, Limited Express, Victoria's Secret, Bath &
Body Works, Structure and Ambercrombie & Fitch), The Buckle, Eddie Bauer, Zales
Corporation, Gymboree, Lenscrafters, Disney, Fred Meyer Jewelers, Millers
Outpost, Waldenbooks, B. Dalton Bookseller, Barnes & Noble, Gap Stores Inc.
(Gap, Gap Kids, Baby Gap, Gap Body, Old Navy and Banana Republic), General
Mills (Olive Garden and Red Lobster), Deb Shops, Regis, Maurices, Famous
Footwear, Pearle Vision, Radio Shack, Kay-Bee Toys, Claire's Boutique, Schubach
Jewelers, Helzberg, Ben Bridge, Camelot Music, Musicland (Sam Goody, Musicland
and Sun Coast Pictures), Sole Outdoors, Finish Line, Foot Action, Ann Taylor,
Natural Wonders, Hallmark, American Greetings, Contempo Casuals, Payless
Shoesource, Ritz Camera, Motherhood Maternity, GNC, Wet Seal, Brookstone, Vista
Optical and Couch House.
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 such tenant's share of common
area charges, including insurance costs and real estate taxes. Generally, all
of the regional mall leases and certain of the community center leases include
roof and structure repair costs in common area charges. The Company's leases
also generally provide for additional rents based on a percentage of tenant
sales. For the years ended December 31, 1999, 1998 and 1997, such percentage
and overage rents accounted for approximately 4.8%, 5.4%, and 6.1%,
respectively, of total Rental Revenue from the Properties owned by the Company
during such periods.
<PAGE> 13
The following table sets forth information relating to the Rental Revenue
from the Properties for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------
PROPERTY TYPE 1999 1998 1997 1996 1995
- ------------------------------ ------------- -------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
(Dollars in thousands)
Regional Malls $ 79,218 $ 62,673 $ 44,005 $ 36,286 $ 29,299
Community Centers and
Free-Standing Retail Properties 16,999 14,718 13,192 13,591 12,173
Commercial Properties 6,518 6,548 6,323 6,631 5,633
------------- -------------- --------------- --------------- ----------------
Total $ 102,735 $ 83,939 $ 63,520 $ 56,508 $ 47,105
============= ============== =============== =============== ================
</TABLE>
VACANT SPACE
Approximately 961,000 square feet, or 6.4%, of Total GLA was vacant as of
December 31, 1999. Of this vacant space, approximately 673,000 square feet was
in the regional mall portfolio (21.6% of which is anchor and 78.4% of which is
mall shop space), 196,000 square feet was in the community center portfolio and
92,000 square feet was in the commercial portfolio.
The following tables set forth information relating to lease expirations
for retail stores in the regional malls and community centers as well as
commercial property leases in effect as of December 31, 1999, over the ten-year
period commencing January 1, 2000 and thereafter for large stores (over 20,000
square feet) and small stores (20,000 square feet or less) at the retail
Properties and for all leases at the commercial Properties. Unless otherwise
indicated, all information set forth below assumes that none of the tenants
exercise renewal options and excludes leases that had not commenced as of
December 31, 1999.
<PAGE> 14
<TABLE>
<CAPTION>
REGIONAL MALLS
Lease Expirations for
Retail Store Leases (over 20,000 square feet)
AVERAGE
ANNUALIZED ANNUALIZED BASE
BASE RENT PER SQUARE
LEASE EXPIRATION NUMBER OF APPROXIMATE RENT UNDER FOOT UNDER
YEAR ENDING LEASES GLA IN EXPIRING EXPIRING
DECEMBER 31, EXPIRING SQUARE FEET LEASES LEASES (1)
- ----------------------------------- -------------- --------------- ------------- ------------------
<S> <C> <C> <C> <C>
2000 -- -- $ -- $ --
2001 4 212,118 616,346 2.91
2002 4 189,375 817,984 4.32
2003 3 106,613 330,302 3.10
2004 4 328,748 768,601 2.34
2005 1 33,421 111,605 3.34
2006 2 147,560 440,236 2.98
2007 1 50,061 222,992 4.45
2008 4 385,466 1,661,205 4.31
2009 and thereafter 25 2,042,558 10,663,310 5.22
-------------- ---------------
Total 48 3,495,920
============== ===============
</TABLE>
<TABLE>
<CAPTION>
REGIONAL MALLS
Lease Expirations for
Retail Store Leases (20,000 square feet or less)
AVERAGE
ANNUALIZED ANNUALIZED BASE
BASE RENT PER SQUARE
LEASE EXPIRATION NUMBER OF APPROXIMATE RENT UNDER FOOT UNDER
YEAR ENDING LEASES GLA IN EXPIRING EXPIRING
DECEMBER 31, EXPIRING SQUARE FEET LEASES LEASES (1)
- ----------------------------------- -------------- --------------- ------------- ------------------
<S> <C> <C> <C> <C>
2000 148 249,818 $ 4,243,572 $ 16.99
2001 132 247,427 4,002,370 16.18
2002 144 291,890 4,969,568 17.03
2003 106 217,477 3,858,692 17.74
2004 114 277,294 4,843,109 17.47
2005 71 160,806 3,539,309 22.01
2006 65 154,460 3,527,866 22.84
2007 94 218,649 5,193,045 23.75
2008 113 295,855 6,086,232 20.57
2009 and thereafter 186 634,582 12,234,121 19.28
-------------- ---------------
Total 1,173 2,748,258
============== ===============
</TABLE>
- ------------------------
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 15
<TABLE>
<CAPTION>
COMMUNITY CENTERS
Lease Expirations for
Retail Store Leases (over 20,000 square feet)
AVERAGE
ANNUALIZED BASE
ANNUALIZED BASE RENT PER SQUARE
LEASE EXPIRATION NUMBER OF APPROXIMATE RENT UNDER FOOT UNDER
YEAR ENDING LEASES GLA IN EXPIRING EXPIRING
DECEMBER 31, EXPIRING SQUARE FEET LEASES LEASES (1)
- ----------------------------------- -------------- --------------- ------------- ------------------
<S> <C> <C> <C> <C>
2000 1 40,320 $ 162,288 $ 4.03
2001 4 323,260 749,011 2.32
2002 2 133,861 343,645 2.57
2003 6 246,867 751,486 3.04
2004 1 25,525 37,956 1.49
2005 1 43,118 70,246 1.63
2006 1 37,680 122,460 3.25
2007 2 90,960 120,000 1.32
2008 1 41,612 139,761 3.36
2009 and thereafter 14 502,475 3,828,481 7.62
-------------- ---------------
Total 33 1,485,678
============== ===============
</TABLE>
<TABLE>
<CAPTION>
COMMUNITY CENTERS
Lease Expirations for
Retail Store Leases (20,000 square feet or less)
AVERAGE
ANNUALIZED ANNUALIZED BASE
BASE RENT PER SQUARE
LEASE EXPIRATION NUMBER OF APPROXIMATE RENT UNDER FOOT UNDER
YEAR ENDING LEASES GLA IN EXPIRING EXPIRING
DECEMBER 31, EXPIRING SQUARE FEET LEASES LEASES (1)
- ----------------------------------- -------------- --------------- ------------- ------------------
<S> <C> <C> <C> <C>
2000 44 97,753 $ 1,074,260 $ 10.99
2001 55 130,036 1,309,274 10.07
2002 40 111,434 1,016,478 9.12
2003 25 94,923 1,094,947 11.54
2004 34 92,479 1,243,582 13.45
2005 5 21,826 250,308 11.47
2006 8 36,235 464,925 12.83
2007 3 9,363 115,143 12.30
2008 3 7,352 127,727 17.37
2009 and thereafter 14 83,521 1,231,307 14.74
-------------- ---------------
Total 231 684,922
============== ===============
</TABLE>
- --------------------------
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
<PAGE> 16
<TABLE>
<CAPTION>
LEASE EXPIRATIONS FOR
COMMERCIAL PROPERTIES
AVERAGE
ANNUALIZED ANNUALIZED BASE
BASE RENT PER SQUARE
LEASE EXPIRATION NUMBER OF APPROXIMATE RENT UNDER FOOT UNDER
YEAR ENDING LEASES GLA IN EXPIRING EXPIRING
DECEMBER 31, EXPIRING SQUARE FEET LEASES LEASES (1)
- ----------------------------------- -------------- --------------- ------------- ------------------
<S> <C> <C> <C> <C>
2000 15 439,934 $ 2,272,404 $ 5.17
2001 7 56,215 354,027 6.30
2002 9 163,585 1,173,975 7.18
2003 6 171,275 723,061 4.22
2004 11 224,746 1,318,004 5.86
2005 -- -- -- --
2006 -- -- -- --
2007 -- -- -- --
2008 -- -- -- --
2009 and thereafter 1 72,133 375,638 5.21
-------------- ---------------
Total 49 1,127,888
============== ===============
</TABLE>
- ---------------------
(1) Excludes tenants paying percentage rents in lieu of minimum rents.
As leases expire, the Company currently expects to be able to increase
Rental Revenue by re-leasing the underlying space (either to a new tenant or
to an existing tenant) at rental rates that are at or higher than the
existing rates.
OPERATIONS AND MANAGEMENT
The Company performs all property management functions for the
Properties. At December 31, 1999, the Company had 353 full-time employees
devoted exclusively to property management. Each of the regional malls has
on-site management and maintenance personnel as well as a marketing staff to
assist the mall tenants in promoting and advertising their products. Overall
supervision of mall operations, headed by a Director of Enclosed Malls, is
conducted in a centralized fashion in order to take advantage of economies of
scale and to deliver a uniform presentation of all management functions. The
Company's internal property management information system enables it to
quickly determine tenant status, tenant gross sales, insurance, and other
critical information in order to effectively manage the affairs of its real
property portfolio. The data collected regarding percentage sales allows the
Company to predict sales, to retain tenants and enhance mall stability.
The Leasing/Development Department is responsible for maintaining
relationships with tenants that afford the Company opportunities for new
development and expansion. The Company conducts an active program of
leasing, within the common area space of its malls and community centers,
kiosks and other promotional displays on a seasonal basis. In addition to
increased customer traffic, this approach generates additional revenue for
the Company.
The Company's property management efforts will continue to be directed
toward improving the attractiveness and appeal of its retail Properties and
providing a pleasant shopping environment in order to increase overall tenant
sales and rents. The Company strives to meet the needs of its tenants in the
areas of promotion, marketing and ongoing management of its Properties and
seeks to bring together a sufficient critical mass of complementary upscale
and brand-name tenants. As part of its Property management efforts, the
Company monitors tenant mix, store size, sales results and store locations,
and works closely with tenants to improve the overall performance of their
stores. The Company seeks to anticipate trends in the retailing industry and
introduce new retail names and concepts into its retail Properties in
response to these trends. The Company maintains its malls and community
centers to very high standards and believes that the aesthetics, ambiance and
cleanliness of these Properties contribute to repeat visits by customers.
<PAGE> 17
DEVELOPMENTS
Since 1976, the Company and the Predecessor Companies have been
responsible for developing more retail malls in the region covered by Utah,
Idaho, Colorado, Nevada, New Mexico and Wyoming than any other developer,
having constructed, developed or redeveloped 12 malls in this region (as well
as four other malls in Arizona, Oregon and Washington). The Company
maintains the in-house capability to bring a project from concept to
completion. The Leasing/Development Department had a total of 30 full-time
employees at December 31, 1999, including directors of Leasing, Development,
Tenant Coordination and Design/Drafting.
The Operating Partnership developed the Mall at Sierra Vista, an
enclosed regional mall in Sierra Vista, Arizona. The mall held its grand
opening on October 20, 1999 and added approximately 335,000 square feet of
Total GLA to the Company's existing portfolio. The Mall at Sierra Vista is
anchored by Dillard's, Sears and Cinemark Theaters and includes space for
approximately 48 mall shops.
The Operating Partnership developed Provo Towne Centre, an enclosed
regional mall in Provo, Utah. The mall held its grand opening on October 28,
1998 and added approximately 723,000 square feet of Total GLA to the
Company's existing portfolio as of December 31, 1998. Provo Towne Centre is
anchored by Dillard's, JCPenney, Sears and Cinemark Theaters and includes
space for more than 80 mall shops. On November 11, 1999, the mall held a
grand opening for its sixteen screen Cinemark Theater which added
approximately 74,000 square feet of additional GLA.
During 1999, the Operating Partnership developed an additional building
at Halsey Crossing, a community center in Gresham, Oregon, and added
approximately 16,300 square feet of GLA to this community center. During
1999, the Company also added approximately 18,000 square feet of GLA at Boise
Towne Plaza in Boise, Idaho, approximately 12,500 square feet of GLA at
Spokane Valley Mall in Spokane, Washington and approximately 34,200 square
feet of Total GLA for Guesthouse Inn at Three Rivers Mall in Kelso,
Washington.
The Operating Partnership, through its consolidated partnership Price
Spokane, Limited Partnership, has initiated the expansion of NorthTown Mall,
an enclosed regional mall in Spokane, Washington. The project will be funded
by the Company's $200 million unsecured credit facility and is expected to be
completed in the third quarter of 2000 which will add approximately 100,000
square feet of additional GLA. Additionally, the Company is currently
contemplating the expansion and renovation of several other of its Properties
as well as other development and acquisitions.
Further, the Properties contain approximately 108 acres of vacant land
suitable for additional retail expansion projects. Likewise, the Properties
include additional improved land ready for development of approximately
273,100 square feet of free- standing retail space. The Company will seek to
expand these and other Properties in its retail portfolio, as well as newly
acquired properties, depending on tenant demand and market conditions.
THIRD-PARTY PROPERTY MANAGEMENT
The Company provides third-party property management for two office
buildings, one located in Salt Lake City, Utah, and one in Park City, Utah,
five commercial buildings located in Albuquerque, New Mexico, Creve Coeur,
Missouri, Dallas, Texas, Escondido, California, Houston, Texas and Silver
Lake Plaza, a community center, located in Coeur d'Alene, Idaho. In addition
to these arrangements, the Company plans to pursue other property management
opportunities. Because property management facilitates an understanding of a
property's value and potential for cash flow growth, the Company believes
that, in addition to generating property management fees, third-party
property management arrangements can be a source of future acquisitions for
the Company. For example, the Company was the property manager for Eastridge
Mall and Silver Lake Mall prior to their acquisitions by the Company.
EMPLOYEES
The Company had approximately 440 full-time employees and approximately
160 part-time employees at December 31, 1999. The Company believes its
relationship with its employees is very good. None of the Company's
employees are unionized.
<PAGE> 18
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 its development parcels.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to stockholders during the fourth quarter
period covered by this report.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to the
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- ----- --------
<S> <C> <C>
John Price 66 Chairman of the Board of Directors and Chief Executive Officer
G. Rex Frazier 56 President, Chief Operating Officer and Director
Paul K. Mendenhall 52 Vice President--Chief Investment Officer and Secretary
Martin G. Peterson 53 Vice President--Administration
Greg Curtis 49 Vice President--Property Management
David R. Sabey 47 Vice President and General Counsel
M. Scott Collins 44 Vice President--Chief Financial Officer and Treasurer
Terry Bybee 51 Vice President--Construction
Antoinette "Toni" R. Carter 48 Vice President--Marketing
</TABLE>
JOHN PRICE has served as Chairman of the Board of Directors and Chief
Executive Officer since September 1993. Mr. Price formed Fairfax Realty,
Inc. ("Fairfax"), the principal entity through which the business of the
Predecessor Companies was conducted, in 1972 and it's predecessor, John Price
Associates, Inc., a construction company, in 1957. Mr. Price has developed
and built substantial retail and commercial real estate properties during his
42 years in the real estate industry and has been involved in all facets of
real estate development, construction, leasing, management and financing.
Mr. Price is a member of the Board of Directors and the Executive Committee
of Alta Industries-Utah, Inc. (a distributor of ferrous and nonferrous metals
and a manufacturer of roofing, siding, and other structural components). Mr.
Price is also a member of the National Association of Real Estate Investment
Trusts Legislative Advisory Council, a member of the Board of Trustees and
Management Committee of the Salt Lake Organizing Committee for 2002 Winter
Olympic Games, and 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 has served as President, Chief Operating Officer and a
Director since September 1993. Prior to January 1994, Mr. Frazier 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. 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 has served as Vice President-Chief Investment
Officer and Secretary since May 1997, prior to which he served as Vice
President-Finance and Secretary. Prior to January 1994, Mr. Mendenhall
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 a former President and
Director of the Utah Association of Certified Public Accountants (UACPA).
Mr. Mendenhall is a graduate of the University of Utah.
<PAGE> 19
MARTIN G. PETERSON has served as Vice President-Administration since
September 1993, prior to which he served as Vice President-
Administration/Accounting and Treasurer and as Assistant Vice President.
Prior to January 1994, Mr. Peterson served as Vice President-Administration
and Treasurer of Fairfax since 1978. 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 &
Co. Mr. Peterson is a member of the Advisory Board of the Marriott School of
Management at Brigham Young University. Mr. Peterson is a graduate of
Brigham Young University.
GREG CURTIS has served as Vice President-Property Management since
September 1993. Prior to January 1994, Mr. Curtis served as Vice President-
Property 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 real estate since 1977. Mr. Curtis is a graduate of Brigham
Young University.
DAVID R. SABEY has served as Vice President and General Counsel since
September 1993. Prior to January 1994, Mr. Sabey 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 (a retail drug store company). 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.
M. SCOTT COLLINS has served as Vice President-Chief Financial Officer
and Treasurer since May 1997. From November 1992 through May 1997, Mr.
Collins served as Vice President-Finance and Administration, Chief Financial
Officer and Secretary of Park City Group, Inc. (a software development
company). Prior to his employment with Park City Group, Mr. Collins worked
as a senior manager for Price Waterhouse where he was also involved with the
real estate industry. Mr. Collins is a certified public accountant and is a
graduate of Brigham Young University.
TERRY BYBEE has served as Vice President-Construction since January
1999. Mr. Bybee served as Director of Construction, as Project Director and
as Project Manager for the Company and Fairfax from October 1984. Mr. Bybee
has been in the construction industry since 1969 and has been involved in all
facets of construction and real estate development.
TONI R. CARTER was recently named Vice President-Marketing in January
2000. Ms. Carter has served as Director of Corporate Marketing since June
1999. From November 1997 to June 1999, Ms. Carter owned and operated a
marketing and communications firm, Carter & Carter. From 1994 to 1997, Ms.
Carter worked as an account executive for Herridge & Associates, Inc. (a
marketing and advertising agency). Ms. Carter is a 22-year veteran of mall
and retail marketing she holds the Certified Marketing Director (CDM)
designation from the International Council of Shopping Centers (ICSC) and is a
member of the Westminister College Foundation Board. Ms. Carter is a
graduate of the University of Utah.
<PAGE> 20
PART II
ITEM 5. MARKET FOR 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". As of March 7, 2000, the sales price for the Common
Stock on the New York Stock Exchange was $18 per share. As of March 7,
2000, there were 235 stockholders of record, of which 234 were holders
of Common Stock and one was a holder of Price Group Stock.
The following table sets forth, the high and low sales price per share of
the Common Stock and the dividends declared per share for each of the
quarters presented:
<TABLE>
<CAPTION>
SALES PRICE DIVIDENDS
----------------------------- DECLARED
HIGH LOW PER SHARE
------------- ------------- ---------------
<S> <C> <C> <C> <C>
YEAR ENDED 12/31/98
- -------------------
First Quarter $ 26 $ 24 $ .450
Second Quarter 25-1/8 22-1/2 .450
Third Quarter 24-7/16 19-1/8 .450
Fourth Quarter 26-5/8 18-1/2 .465
YEAR ENDED 12/31/99
- -------------------
First Quarter $ 20-13/16 $ 17-7/16 $ .465
Second Quarter 21-5/16 18-1/4 .465
Third Quarter 21-1/16 17-1/8 .465
Fourth Quarter 17-5/16 15-5/16 .480
</TABLE>
During 1999 and 1998, the Company recorded regular quarterly
dividends totaling $32,719,000 and $31,916,000, respectively, or $1.875 and
$1.815 per share of Common Stock, respectively. Of the amounts paid during
1999 and 1998, 23% and 17%, respectively, represented a return of capital.
The Board of Directors has declared a quarterly dividend, payable to
stockholders of record as of April 6, 2000, of $.48 per share which is
an amount equivalent to an annual dividend of $1.92 per share.
Dividends on Price Group Stock are payable by the Company at a rate per
share equal to 80% of the dividends declared on Common Stock. Future
dividends 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, 1999, there were 200,000 shares of Price Group Stock
outstanding. In addition to receiving dividends at a rate equal to 80% of
the dividends 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 of stock held. All of the outstanding
shares of Price Group Stock may be converted at the option of the Company into
an equal number or shares of Common Stock if certain conditions are met.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial and other data for the
Company for the years ended December 31, 1999, 1998, 1997, 1996 and 1995. The
historical financial information for all the periods has been derived from the
audited historical consolidated financial statements.
<PAGE> 21
The following selected financial information should be read in
conjunction with all of the financial statements included elsewhere herein and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
SELECTED FINANCIAL DATA
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $ 133,565 $ 109,069 $ 82,973 $ 72,949 $ 60,950
--------- ---------- ---------- ---------- ----------
Expenses
Operating Expenses before Interest,
Depreciation and Amortization 43,620 36,088 27,434 24,405 20,389
Interest 27,769 20,501 9,066 7,776 6,623
Depreciation and Amortization 25,798 19,543 13,410 11,979 11,528
--------- ---------- ---------- ---------- ----------
Total 97,187 76,132 49,910 44,160 38,540
--------- ---------- ---------- ---------- ----------
36,378 32,937 33,063 28,789 22,410
Minority Interest in Income of
Consolidated Partnerships (349) (277) (273) (269) (320)
Equity in Net Loss of Partnership Interest -- -- -- -- (184)
Gain on Sales of Real Estate -- 1,096 339 94 918
--------- ---------- ---------- ---------- ----------
Income Before Extraordinary Item and
Minority Interest of thee Operating
Partnership Unitholders 36,029 33,756 33,129 28,614 22,824
Minority Interest of the Operating
Partnership Preferred Unitholders (4,429) -- -- -- --
Minority Interest of the Operating
Partnership Common Unitholders (5,452) (5,806) (5,675) (5,244) (4,646)
Extraordinary Item - Loss on Early
Extinguishment of Debt, Net of
Minority Interest of the Operating
Partnership Unitholders (801) -- (133) -- --
--------- ---------- ---------- ---------- ----------
Net Income $ 25,347 $ 27,950 $ 27,321 $ 23,370 $ 18,178
========= ========== ========== ========== ===========
Basic Earnings Per Share (1)
Income Before Extraordinary Item $ 1.49 $ 1.59 $ 1.57 $ 1.46 $ 1.27
Extraordinary Item (0.05) -- (0.01) -- --
--------- ---------- ---------- ---------- -----------
Net Income $ 1.44 $ 1.59 $ 1.56 $ 1.46 $ 1.27
========= ========== ========== ========== ===========
Diluted Earnings Per Share (1)
Income Before Extraordinary Item $ 1.49 $ 1.58 $ 1.56 $ 1.45 $ 1.26
Extraordinary Item (0.05) -- (0.01) -- --
--------- ---------- ---------- ---------- -----------
Net Income $ 1.44 $ 1.58 $ 1.55 $ 1.45 $ 1.26
========= ========== ========== ========== ===========
Distributions Paid Per Share $ 1.875 $ 1.815 $ 1.755 $ 1.695 $ 1.635
========= ========== ========== ========== ===========
</TABLE>
<PAGE> 22
SELECTED FINANCIAL DATA
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Real Estate, before Accumulated Depreciation $ 876,388 $ 815,756 $ 619,371 $ 453,241 $ 388,205
Total Assets 776,226 733,155 545,684 381,360 327,061
Borrowings 438,241 472,990 283,390 162,375 106,406
Minority Interest
Preferred Unitholders 104,571 -- -- -- --
Common Unitholders 30,200 32,267 33,156 32,110 33,859
Consolidated Partnerships 2,006 1,743 1,695 668 727
Stockholders' Equity 183,645 204,946 207,986 172,556 175,754
OTHER DATA
Funds From Operations (2) 53,880 50,397 45,028 39,195 32,139
Net Operating Income 89,945 72,981 55,539 48,544 40,561
</TABLE>
<TABLE>
<CAPTION> NUMBER OF PROPERTIES/TOTAL GLA AT DECEMBER 31,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Number of Properties at Year-End 51 50 48 44 43
============ ============ ============ ============ ============
Total GLA in Square Feet at Year-End
Malls. 10,291,000 9,810,000 7,745,000 5,553,000 5,020,000
Community Centers and Free-Standing Retail Properties 3,367,000 3,191,000 3,164,000 3,091,000 3,091,000
Commercial Properties 1,354,000 1,354,000 1,418,000 1,418,000 1,394,000
------------ ------------ ------------ ------------ ------------
Total 15,012,000 14,355,000 12,327,000 10,062,000 9,505,000
============ ============ ============ ============ ============
</TABLE>
- -------------------------------
(1) Basic earnings per share based on 17,561,000, 17,620,000, 17,471,000,
16,048,000 and 14,345,000 weighted average number of shares of Common
Stock and Price Group Stock outstanding for the years ended December 31,
1999, 1998, 1997, 1996 and 1995, respectively. Diluted earnings per share
based on 17,590,000, 17,723,000, 17,637,000, 16,133,000 and 14,411,000
weighted diluted average number of shares of stock outstanding for years
ended December 31, 1999, 1998, 1997, 1996 and 1995, respectively. The
units of limited partner interest in the Operating Partnership not held by
the Company have not been included in the dilutive earnings per share
calculation since there would be no effect on the per share amount as
amounts allocated to a unit of limited partner interest are the same as
amounts allocated to a share of Common Stock.
(2) 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. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."
<PAGE> 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with "Selected
Financial Data" and the consolidated financial statements of the Company and
the notes thereto appearing elsewhere herein.
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. JP
Realty, Inc. conducts all of its business operations through, and held an 82.2%
controlling general partner interest in the Operating Partnership as of
December 31, 1999. The Company's general partnership interest of the Operating
Partnership was calculated using the outstanding common units and excludes the
preferred units. The Operating Partnership's existing portfolio consists of 51
Properties, in three operating segments, including 18 enclosed regional malls,
25 community centers together with two free-standing retail Properties and six
mixed-use commercial Properties. The Company's financial condition as of
December 31, 1999 and 1998 and results of operations before depreciation for
the years then ended were positively impacted by the October 20, 1999 opening
of the Mall at Sierra Vista, the October 28, 1998 opening of Provo Towne
Centre, the August 6, 1998 acquisition of NorthTown Mall, the December 30, 1997
acquisition of Salem Center, the June 1997 acquisitions of the Silver Lake Mall
and Visalia Mall and the August 13, 1997 opening of the Spokane Valley Mall.
The Operating Partnership's acquisition and development activities added a
combined 4,757,000 square feet of Total GLA to the retail portfolio during
1999, 1998 and 1997.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998
For the year ended December 31, 1999, income before extraordinary item and
minority interest of unitholders in the Operating Partnership increased
$2,273,000 or 7% when compared to the year ended December 31, 1998. The
improvement in operations was primarily attributable to the following factors:
an increase in minimum rents of $18,381,000; an increase in percentage and
overage rents of $415,000; and an increase in recoveries from tenants of
$5,693,000. These increases were offset by an increase in operating expenses
of $7,320,000, an increase in general and administrative expense of $212,000,
an increase in interest expense of $7,268,000 and an increase in depreciation
and amortization of $6,255,000.
For the year ended December 31, 1999, funds from operations increased
$3,483,000 or 7% as compared to 1998, primarily as a result of acquisitions and
developments as discussed herein.
Total revenues for the year ended December 31, 1999 increased $24,496,000 or
22% to $133,565,000 as compared to $109,069,000 in 1998. This increase is
primarily attributable to a $18,381,000 or 23% increase in minimum rents to
$97,829,000 compared to $79,448,000 in 1998. Percentage and overage rents
increased $415,000 or 9% to $4,906,000, as compared to $4,491,000 in 1998.
Additionally, recoveries from tenants increased $5,693,000 or 24% to
$29,471,000 as compared to $23,778,000 in 1998. Recoveries from tenants as a
percentage of operating expenses were 80% in both 1999 and 1998.
The October 1999 opening at the Mall at Sierra Vista, the August 1998
acquisition of NorthTown Mall, the August 1998 expansion of Boise Towne Square,
the October 1998 opening of Provo Towne Centre and the October 1998 addition of
Sears to Red Cliffs Mall and Sears Tire and Battery to Red Cliff Plaza
contributed $12,296,000 to the minimum rent increase, $355,000 to the
percentage and overage rents increase and $3,833,000 of the increase in
recoveries from tenants. Minimum rents increased $1,957,000 from a non-cash
transaction in which a consolidated partnership of the Operating Partnership
received a building in exchange for cancellation of a long-term ground lease.
The remaining $4,128,000 increase in minimum rents was the result of increases
experienced for the balance of the Company's portfolio of Properties.
Revenues recognized from straight-line rents were $1,273,000 in 1999 as
compared to $931,000 in 1998.
Property operating expenses, including operating and maintenance expense, and
real estate taxes and insurance expense increased $4,819,000 or 27% and
$2,501,000 or 21%, respectively, for the year ended December 31, 1999, as
compared to 1998. These increases were attributable mainly to the opening of
the Mall at Sierra Vista, the acquisition of NorthTown Mall, the opening of
Provo Towne Centre and the expansion of Boise Towne Square. These Properties
contributed $3,708,000 to operating and maintenance expense and $1,565,000 to
taxes and insurance.
<PAGE> 24
General and administrative expenses increased $212,000 or 3% to $6,618,000 in
1999 as compared to $6,406,000 in 1998. The increase is primarily related to
increased costs associated with the growth of the Company due to the
acquisition of NorthTown Mall and the openings of developed Properties.
Interest expense increased $7,268,000 or 35% to $27,769,000 in 1999 as
compared to $20,501,000 in 1998. This increase is the result of additional
interest on new borrowings for newly added GLA, the acquisition of NorthTown
Mall and a decrease in capitalized interest due to completed GLA, partially
offset by the reduction of borrowings outstanding, funded by the sale of the
Series A Preferred Units and the Series B Preferred Units by the Operating
Partnership. Interest capitalized on projects under development was $2,404,000
in 1999 as compared to $3,754,000 in 1998.
Depreciation expense increased $6,208,000 or 36% to $23,514,000 as compared
to $17,306,000 in 1998. This increase was primarily due to the acquisition of
NorthTown Mall, changes in asset lives on certain tenant improvements as a
result of early lease terminations and increased GLA.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
For the year ended December 31, 1998, income before extraordinary item and
minority interest of unitholders in the Operating Partnership increased
$627,000 or 2% when compared to the year ended December 31, 1997. The
improvement in operations was primarily attributable to the following factors:
an increase in minimum rents of $19,824,000; an increase in percentage and
overage rents of $595,000; an increase in recoveries from tenants of
$5,579,000; and an increase in other revenues of $240,000. These increases
were offset by an increase in operating expenses of $7,695,000, an increase in
general and administrative expense of $959,000, an increase in interest expense
of $11,435,000 and an increase in depreciation and amortization of $6,133,000.
For the year ended December 31, 1998, funds from operations increased
$5,369,000 or 12% as compared to 1997 primarily as a result of acquisitions and
developments as discussed herein.
Total revenues for the year ended December 31, 1998 increased $26,096,000 or
31% to $109,069,000 as compared to $82,973,000 in 1997. This increase is
primarily attributable to a $19,824,000 or 33% increase in minimum rents to
$79,448,000 in 1998 as compared to $59,624,000 in 1997. Percentage and overage
rents increased $595,000 or 15% to $4,491,000 in 1998 as compared to $3,896,000
in 1997. Additionally, recoveries from tenants increased $5,579,000 or 31% to
$23,778,000 in 1998 as compared to $18,199,000 in 1997 and other income
increased $240,000. Recoveries from tenants as a percentage of operating
expenses were 80% in 1998 as compared to 83% in 1997.
The June 1997 acquisitions of Silver Lake Mall and Visalia Mall, the August
13, 1997 opening of Spokane Valley Mall, the December 30, 1997 acquisition of
Salem Center, the August 6, 1998 acquisition of NorthTown Mall and the October
28, 1998 opening of Provo Towne Centre contributed $15,371,000 to the minimum
rent increase, $887,000 to the percentage and overage rents increase and
$4,971,000 of the increase in recoveries from tenants. The November 1997
opening of Boise Towne Plaza contributed $1,100,000 to the minimum rent
increase and $139,000 to the increase in recoveries from tenants. Commercial
property revenues increased $950,000 to $8,299,000 in 1998 as compared to
$7,349,000 in 1997. The increase in commercial properties revenue was
primarily due to new tenant leases with higher tenant recoveries offset
somewhat by decreased occupancy levels.
Revenues recognized from straight-line rents were $931,000 in 1998 as
compared to $505,000 in 1997.
Property operating expenses, including operating and maintenance expense, and
real estate taxes and insurance expense increased $4,601,000 or 34% and
$3,094,000 or 36%, respectively for the year ended December 31, 1998 as
compared to 1997. These increases were attributable to the acquisitions of
NorthTown Mall, Salem Center, Silver Lake Mall and Visalia Mall and the opening
of Spokane Valley Mall, Boise Towne Plaza and Provo Towne Centre. These
Properties contributed $4,570,000 to operating and maintenance expense and
$2,487,000 to taxes and insurance.
General and administrative expenses increased $959,000 or 18% to $6,406,000
in 1998 as compared to $5,447,000 in 1997. The increase is primarily related
to increased costs associated with the growth of the Company due to the
acquisitions of NorthTown Mall, Salem Center, Silver Lake Mall and Visalia Mall
and the opening of Spokane Valley Mall, Boise Towne Plaza and Provo Towne
Centre.
<PAGE> 25
Interest expense increased $11,435,000 or 126% to $20,501,000 in 1998 as
compared to $9,066,000 in 1997. This increase is the result of additional
interest on new borrowings to acquire NorthTown Mall, Salem Center, Silver Lake
Mall and Visalia Mall and on borrowings related to Spokane Valley Mall and
Provo Towne Centre. Interest capitalized on projects under development was
$3,754,000 in 1998 as compared to $3,509,000 in 1997.
Depreciation expense increased $5,504,000 or 47% to $17,306,000 in 1998 as
compared to $11,802,000 in 1997. This increase was primarily due to the
acquisition of NorthTown Mall, Salem Center, Silver Lake Mall and Visalia Mall,
the opening of the Spokane Valley Mall, Boise Towne Plaza and Provo Towne
Centre and tenant allowances given on existing GLA.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal uses of its liquidity and capital resources have
historically been for dividends, property acquisitions, development,
expansion and renovation programs and debt repayment. To maintain its
qualification as a REIT under the Internal Revenue Code of 1986, as amended
(the "Code"), the Company is required to distribute to its stockholders at
least 95% of its "Real Estate Investment Trust Taxable Income" as defined in
the Code. The Company declared quarterly dividends aggregating $1.875 per
share in 1999. Approximately 23% of the Company's 1999 dividends
represented a return of capital. Future distributions will be determined based
on actual results of operations and cash available for distribution.
The Company's principal source of liquidity is the cash flow from operations
generated from its real estate investments. As of December 31, 1999, the
Company's cash and restricted cash amounted to approximately $10.9 million. In
addition to its cash and restricted cash, unused capacity under its $200
million unsecured credit facility totaled $99.5 million at year end.
The Company generally intends to distribute approximately 70% - 80% of its
funds from operations with the remaining amounts to be held for capital
expenditures and additional growth. The Company expects to meet its other
short-term cash requirements including recurring capital expenditures related
to maintenance and improvements of existing Properties, through undistributed
funds from operations, cash balances and advances under the credit facility.
The Company prepares an annual capital expenditure and maintenance budget for
each Property which includes provisions for all necessary recurring capital
improvements. The Company believes that its undistributed funds from
operations will provide the necessary funding for these requirements. The
Company believes that these funds will be sufficient to cover (i) tenant finish
costs associated with the renewal or replacement of current tenant leases as
existing leases expire and (ii) capital expenditures which will not be
reimbursed by tenants. During 1999, the Company had capital expenditures,
totaling approximately $64,869,000. This amount consists of $56,801,000 in
revenue enhancing construction and development, $4,793,000 in revenue enhancing
tenant allowances, $1,782,000, in non-revenue enhancing tenant allowances and
$658,000 in other non-revenue enhancing capital expenditures. The Company also
paid $835,000 in leasing commissions to outside parties. Of this amount,
$125,000 was considered revenue enhancing and $710,000 was considered non-
revenue enhancing. Exclusive of construction and development, capital
expenditures (both revenue and non-revenue enhancing) for the existing
Properties are budgeted in 2000 to be approximately $7.8 million.
The Company's principal long-term liquidity requirements will be the
repayment of principal on its outstanding secured and unsecured indebtedness.
At December 31, 1999, the Company's total outstanding indebtedness was
approximately $438.2 million. Such indebtedness included: (i) the outstanding
balance on the $200 million unsecured credit facility which equaled
approximately $91 million at December 31, 1999 and is due October 2000; (ii)
the $12.2 million 8.5% note secured by real estate, which requires a balloon
payment of approximately $11.9 million in October 2000; (iii) the $61.2 million
6.37% notes secured by real estate which mature in January 2001; (iv) the Provo
Towne Centre construction loan of approximately $43.8 million which is due in
July 2001; (v) the Spokane Valley Mall construction loan of approximately $41.6
million which is due in August 2001; (vi) the $100 million senior notes
principal payable of $25 million a year beginning March 2005; and (vii) the
$83.4 million 6.68% first mortgage, which requires a balloon payment of
approximately $73.0 million in September 2008.
The Company is also contemplating the expansion and renovation of several of
its existing Properties and additional development projects and acquisitions as
a means to expand its portfolio. The Company does not expect to generate
sufficient funds from operations to meet such long-term needs and intends to
finance these amounts primarily through advances under the $200 million
unsecured credit facility, together with equity and debt offerings and
individual property financings. The availability of such financing will
influence the Company's decision to proceed with, and the pace of its
development and acquisition activities.
<PAGE> 26
On April 23, 1999, the Operating Partnership issued 510,000 Series A
Preferred Units in a private placement. Each Series A Preferred Unit
represents a limited partner interest with a liquidation value of twenty-five
dollars per unit. The Operating Partnership used the net proceeds of
approximately $12.3 million for the partial repayment of borrowings outstanding
under the $200 million unsecured credit facility. On July 28, 1999, the
Operating Partnership also issued 3,800,000 Series B 8.95% Preferred Units in a
private placement. Each Series B Preferred Unit represents a limited
partnership interest with a liquidation value of twenty-five dollars per unit.
The Company used the proceeds of approximately $92 million to repay $90 million
in borrowings outstanding under the $200 million unsecured credit facility and
increase operating cash. Quarterly distributions to the holders of the Series
A and Series B Preferred Units are due on the last day of each March, June,
September and December.
On September 2, 1997, the Company and the Operating Partnership filed a shelf
registration statement on Form S-3 with the Securities and Exchange Commission
for the purpose of registering common stock, preferred stock, depositary
shares, common stock warrants, debt securities and guarantees. This
registration statement, when combined with the Company's unused portion of its
previous shelf registration, allowed for up to an aggregate of $400 million of
securities to be offered by the Company and the Operating Partnership. On
March 11, 1998, the Operating Partnership under this registration statement,
issued $100 million of ten year senior unsecured notes bearing annual interest
at a rate of 7.29%. The Operating Partnership had entered into an interest
rate protection agreement in anticipation of issuing these notes and received
$270,000 as a result of terminating this agreement making the effective rate of
interest on these notes at 7.24%. Interest payments are due semi annually on
March 11 and September 11 of each year. Principal payments of $25 million are
due annually beginning March 2005. The proceeds were used to partially repay
outstanding borrowings under the $200 million unsecured credit facility. At
December 31, 1999, the Company and the Operating Partnership had an aggregate
of $300 million in registered securities available under its effective shelf
registration statement.
The Company intends to fund its stock repurchase, distribution, development,
expansion, renovation, acquisition and debt repayment activities from its $200
million unsecured credit facility as well as other debt and equity financings,
including public financings. The Company's ratio of debt-to-total market
capitalization was approximately 50% as of December 31, 1999.
The Company believes that to facilitate a clear understanding of the
consolidated historical operating results, the Company's 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 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 FFO is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
<S> <C> <C>
1999 1998
---------------- ----------------
(DOLLARS IN THOUSANDS)
Income Before Minority Interest, Gain on Sales
of Real Estate and Extraordinary Item $ 36,378 $ 32,937
Add: Depreciation of Buildings & Improvements 23,395 17,072
Add: Amortization of Deferred Leasing Costs 632 665
Less: Minority Interest of the Operating Partnership
Preferred Unitholders (4,429) --
Less: Minority Interest in Income of Consolidated
Partnerships (349) (277)
Less: Minority Interest in Depreciation (769) --
Less: Income from One-Time, Lease Termination
Settlement, Net of Minority Interest of $979 (978) --
---------------- ----------------
Funds From Operations $ 53,880 $ 50,397
================ ================
</TABLE>
<PAGE> 27
YEAR 2000 ISSUES
In the past, many computer software programs were written using two
digits rather than four to define the applicable year. As a result, date-
sensitive computer software may recognize a date using "00" as the year 1900
rather than the year 2000. This is generally referred to as the Year 2000
("Y2K") issue. If this situation were to occur, the potential exists for
computer system failures or miscalculations by computer programs, which could
disrupt the Company's operations.
The Company developed a comprehensive strategy for updating its systems
for Y2K compliance. The Company's information technology ("IT") systems
include software and hardware purchased from outside vendors, as well as in-
house developed software. The Company is confident that vendor developed
software and hardware has been made Y2K compliant through installing and
compliance testing vendor provided Y2K updates. In-house developed software
has been identified, assessed and tested. As of this report, the Company has
not experienced any significant failures in its IT system as a result of the
date change to the year 2000.
The Company believes that the identification of its non-IT systems which
may be impacted by the Y2K problem, including those relating to property
management (e.g. alarm systems and HVAC systems) has been completed, and that
modifications, validation and implementation are complete. The Company did not
experience any problems in this area when the year changed to 2000 and we do
not anticipate any future problems.
As of December 31, 1999, the Company has spent an aggregate of
approximately $131,000 to address the Y2K issue. Costs included incremental
salary and fringe benefits for personnel, hardware and software costs and
consulting and travel expenses associated with addressing Y2K issues. These
costs were expensed as incurred or, in the case of equipment or software
replacement, were capitalized and depreciated over the expected useful life.
The Company believes additional costs related to the Y2K issues will not be
material.
The pervasiveness of the Y2K issue makes it likely that previously
unidentified issues will require remediation during the normal course of
business. In such a case, the Company anticipates that transactions could be
processed manually while IT and other systems are repaired or updated and that
such interruptions would have a minor effect on the Company's operations.
INFLATION
Inflation has remained relatively low during the past three years and has
had minimal impact on the operating performance of the Properties.
Nonetheless, substantially all of the retail tenants' leases contain provisions
designed to protect the Company from the impact of inflation. Such provisions
include clauses enabling the Company to receive percentage rents based on
tenants' gross sales, which generally increase as prices rise, and/or
escalation clauses, which generally increase rents during the terms of the
leases. In addition, many of the leases are for terms less than ten years,
which may enable the Company to replace existing leases with new leases at
higher base and/or percentage rents if rents of the existing leases are below
then-existing market rates. Substantially all of the leases, other than those
for anchors, require the tenants to pay a proportionate share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation.
However, inflation may have a negative impact on some of the Company's
other operating items. Interest and general and administrative expenses may be
adversely affected by inflation as these specified costs could increase at a
rate higher than rents. Also, for tenant leases with specified rent increases,
inflation may have a negative effect as the specified rent increases in these
leases could be lower than the increase in the inflation rate at any given
time.
OTHER MATTERS
The Company has reviewed all recently issued, but not yet adopted
accounting standards in order to determine their effects, if any, on the
results of operations or financial position of the Company. Based on that
review, the Company believes that none of these pronouncements will have a
significant effect on current or future results of operations or financial
position.
The statements contained in this Annual Report on Form 10-K that are not
purely historical fact are forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements regarding the Company's
expectations, budgets, estimates, contemplations and Y2K compliance. All
forward looking statements included in this document are based on information
available to the Company on the date hereof,
<PAGE> 28
and the Company assumes no obligation to update any such forward looking
statement. it is important to note that the Company's actual results could
differ materially from those in such forward looking statements. Certain
factors that might cause such differences include those relating to changes
in economic climate, local conditions, law and regulations, the relative
illiquidity of real property investments, the potential bankruptcy of
tenants and the development, redevelopment or expansion of Properties and
unexpected developments surrounding the Y2K issues.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market risk is limited to fluctuations in the
general level of interest rates on its current and future fixed and variable
rate debt obligations. Even though its philosophy is to maintain a fairly low
tolerance to interest rate fluctuation risk, the Company is still vulnerable,
however, to significant fluctuations in interest rates on its variable rate
debt, on any future repricing or refinancing of its fixed rate debt and on
future debt.
The Company uses long-term and medium-term debt as a source of capital.
At December 31, 1999, the Company had approximately $261,849,000 in outstanding
fixed rate debt, consisting of $100,000,000 unsecured senior notes and
$161,849,000 in mortgages and notes secured by real estate. The various fixed
rate debt instruments mature starting in the year 2000 through 2095. The
weighted average rate of interest on the fixed rate debt was approximately 7.0%
for the year ended December 31, 1999. When debt instruments of this type
mature, the Company typically refinances such debt at the then-existing market
interest rates which may be more or less than the interest rates on the
maturing debt. In addition, the Company may attempt to reduce interest rate
risk associated with a forecasted issuance of new fixed rate debt by entering
into interest rate protection agreements. The Company has approximately
$12,211,000 in fixed rate debt maturing in 2000.
The Company's credit facility and existing construction loans have
variable interest rates and any fluctuation in interest rates could increase or
decrease the Company's interest expense. At December 31, 1999, the Company had
approximately $176,392,000 in outstanding variable rate debt. The weighted
average rate of interest on the variable interest rate debt was approximately
6.8% for the year ended December 31, 1999. If the interest rate for the
Company's variable rate debt increased or decreased by 1% during 2000, the
Company's interest rate expense on its outstanding variable rate debt would
increase or decrease, as the case may be, by approximately $1,764,000.
Due to the uncertainty of fluctuations in interest rates and the specific
actions that might be taken by the Company to mitigate the impact of such
fluctuations and their possible effects, the foregoing sensitivity analysis
assumes no changes in the Company's financial structure.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data are listed in the Index
to Financial Statements and Financial Statement Schedules appearing on Page F-1
of this Form 10-K.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During the two most recent fiscal years, the 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 the Company's Directors appears under the heading
"Election of Directors" in the Company's proxy statement relating to its 2000
Annual Meeting of Stockholders to be held on May 3, 2000 and is incorporated
herein by reference.
<PAGE> 29
Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 appears under the heading "Compliance with Section 16(a)
of the Exchange Act" in the Company's proxy statement relating to its 2000
Annual Meeting of Stockholders to be held on May 3, 2000 and is incorporated
herein by reference.
Information regarding the Company's Executive Officers appears in Item 4A
of Part I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation appears under the heading
"Executive Compensation" in the Company's proxy statement relating to its 2000
Annual Meeting of Stockholders to be held on May 3, 2000 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 its 2000 Annual Meeting of Stockholders
to be held on May 3, 2000 and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions
appears under the heading "Certain Relationships and Related Transactions" in
the Company's proxy statement relating to its 2000 Annual Meeting of
Stockholders to be held on May 3, 2000 and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Financial Statements Schedules
See Index to Financial Statements and Financial Statement Schedules
appearing on page F-1 of this Form 10-K
(b) Current Reports on Form 8-K
None
(c) Exhibits
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C> <C>
3.1 Amended and Restated Articles of Incorporation the Company (3(a))*
3.2 Amended and Restated Bylaws of the Company (3(b))**
3.3 Articles Supplementary of the Company relating to the 8.75 Series A Cumulative
Redeemable Preferred Stock***
3.4 Articles Supplementary of the Company relating to the 8.95% Series B Cumulative
Redeemable Preferred Stock***
3.5 Articles Supplementary of the Company relating to the election to be subject to
Title 3, Subtitle 8 of the Maryland General Corporation Law****
3.6 Articles Supplementary of the Company relating to the Series A Junior Preferred
Stock****
3.7 Amendment to the Bylaws of the Company****
4.1 Specimen of Common Stock Certificate (4)*
10.1 Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership***
10.2 Agreement of Limited Partnership of Price Financing Partnership, L.P. (10(b))*
10.3 Loan Agreements related to Mortgage Debt and related documents (10(c))*
i) Deed of Trust, Mortgage, Security Agreement and Assignment of Leases and Rents
of Price Financing Partnership, L.P.
ii) Intentionally Omitted
iii) Indenture between Price Capital Corp. and a Trustee
iv) Limited Guarantee Agreement (Guarantee of Collection) for outside investors
v) Limited Guarantee Agreement (Guarantee of Collection) for Price Group Investors
vi) Cash Collateral Account Security, Pledge and Assignment Agreement among Price
Financing Partnership, L.P., Price Capital Corp. and Continental Bank N.A.
vii) Note Issuance Agency Agreement between Price Capital Corp. and Price Financing
Partnership, L.P.
viii) Management and Leasing Agreement among Price Financing Partnership, L.P. and
Price Development Company, Limited Partnership
ix) Assignment of Management and Leasing Agreement of Price Financing Partnership,
L.P.
10.4 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 Ground lease between Price Development Company and Alvin Malstrom
as Trustee and C.F. Malstrom, dated December 31, 1985. (Ground lease 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. (Ground lease 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. (Ground lease 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. (Ground lease for Price
Fremont) (10(m))*
10.14 Ground lease between Aldo Rossi and Price Development Company, dated June 1,
1989, and related documents. (Ground lease for Halsey Crossing) (10(n))*
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C> <C>
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
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
10.16 First Amendment to Second Amended and Restated Agreement of Limited Partnership
of Price Development Company, Limited Partnership***
10.17 Second Amendment to Second Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited Partnership***
10.18 Third Amendment to Second Amended and Restated Agreement of Limited Partnership
of Price Development Company, Limited Partnership******
10.19 Rights Agreement between the Company and ChaseMellon Shareholder Services, LLC,
10.20 Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership
of Price Development Company, Limited Partnership
as Rights Agent
23. Consent of Independent Accountants
27. Financial Data Schedule
- --------------------------
* Documents were previously filed with the Company's Registration Statement on Form S-11,
File No. 33-68844, under the exhibit numbered in parenthetical, and are incorporated herein
by reference.
** Document was previously filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 and is incorporated herein by reference.
*** Documents were previously filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999 and are incorporated herein by reference.
**** Documents were previously filed with the Company's current report on Form 8-K, dated August
13, 1999, 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.
****** Document was previously filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999 and are incorporated herein by reference.
</TABLE>
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<CAPTION>
JP REALTY, INC.
<S> <C> <C>
By: /s/ John Price
----------------------------
John Price
Chairman of the Board of Directors
and Chief Executive Officer
Date: March 16, 2000
</TABLE>
-----------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C> <C>
/s/ John Price
- ----------------------------------- Chairman of the Board of Directors, March 16, 2000
John Price Chief Executive Officer and Director
(Principal Executive Officer)
/s/ G. Rex Frazier
- ----------------------------------- President, Chief Operating Officer March 16, 2000
G. Rex Frazier and Director
/s/ M. Scott Collins
- ----------------------------------- Vice President, Chief Financial March 16, 2000
M. Scott Collins Officer and Treasurer (Principal
Financial and Accounting Officer)
/s/ Warren P. King
- ------------------------------------ Director March 16, 2000
Warren P. King
/s/ Sam W. Souvall
- ------------------------------------ Director March 16, 2000
Sam W. Souvall
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C> <C>
3.1 Amended and Restated Articles of Incorporation the Company (3(a))*
3.2 Amended and Restated Bylaws of the Company (3(b))**
3.3 Articles Supplementary of the Company relating to the 8.75 Series A Cumulative
Redeemable Preferred Stock***
3.4 Articles Supplementary of the Company relating to the 8.95% Series B Cumulative
Redeemable Preferred Stock***
3.5 Articles Supplementary of the Company relating to the election to be subject to
Title 3, Subtitle 8 of the Maryland General Corporation Law****
3.6 Articles Supplementary of the Company relating to the Series A Junior Preferred
Stock****
3.7 Amendment to the Bylaws of the Company****
4.1 Specimen of Common Stock Certificate (4)*
10.1 Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership***
10.2 Agreement of Limited Partnership of Price Financing Partnership, L.P. (10(b))*
10.3 Loan Agreements related to Mortgage Debt and related documents (10(c))*
i) Deed of Trust, Mortgage, Security Agreement and Assignment of Leases and Rents
of Price Financing Partnership, L.P.
ii) Intentionally Omitted
iii) Indenture between Price Capital Corp. and a Trustee
iv) Limited Guarantee Agreement (Guarantee of Collection) for outside investors
v) Limited Guarantee Agreement (Guarantee of Collection) for Price Group Investors
vi) Cash Collateral Account Security, Pledge and Assignment Agreement among Price
Financing Partnership, L.P., Price Capital Corp. and Continental Bank N.A.
vii) Note Issuance Agency Agreement between Price Capital Corp. and Price Financing
Partnership, L.P.
viii) Management and Leasing Agreement among Price Financing Partnership, L.P. and
Price Development Company, Limited Partnership
ix) Assignment of Management and Leasing Agreement of Price Financing Partnership,
L.P.
10.4 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 Ground lease between Price Development Company and Alvin Malstrom
as Trustee and C.F. Malstrom, dated December 31, 1985. (Ground lease 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. (Ground lease 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. (Ground lease 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. (Ground lease for Price
Fremont) (10(m))*
10.14 Ground lease between Aldo Rossi and Price Development Company, dated June 1,
1989, and related documents. (Ground lease for Halsey Crossing) (10(n))*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number DESCRIPTION Number
- ------ ----------- ------
<S> <C> <C> <C>
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
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
10.16 First Amendment to Second Amended and Restated Agreement of Limited Partnership
of Price Development Company, Limited Partnership***
10.17 Second Amendment to Second Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited Partnership***
10.18 Third Amendment to Second Amended and Restated Agreement of Limited Partnership
of Price Development Company, Limited Partnership******
10.19 Rights Agreement between the Company and ChaseMellon Shareholder Services, LLC,
as Rights Agent****
10.20 Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership
of Price Development Company, Limited Partnership
23. Consent of Independent Accountants
27. Financial Data Schedule
- --------------------------
* Documents were previously filed with the Company's Registration Statement on Form S-11,
File No. 33-68844, under the exhibit numbered in parenthetical, and are incorporated herein
by reference.
** Document was previously filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 and is incorporated herein by reference.
*** Documents were previously filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999 and are incorporated herein by reference.
**** Documents were previously filed with the Company's current report on Form 8-K, dated August
13, 1999, 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.
****** Document was previously filed with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999 and are incorporated herein by reference.
</TABLE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
JP REALTY, INC. PAGE
Report of Independent Accountants F-2
Consolidated Balance Sheet as of December 31, 1999 and 1998 F-3
Consolidated Statement of Operations for the years ended
December 31, 1999, 1998 and 1997 F-4
Consolidated Statement of Stockholders' Equity F-5
Consolidated Statement of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 F-6
Notes to Consolidated Financial Statements F-7
Schedule II - Valuation and Qualifying Accounts F-20
Schedule III - Real Estate and Accumulated Depreciation F-21
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of JP Realty, Inc.
In our opinion, the consolidated financial statements and schedules
listed in the accompanying index, present fairly, in all material respects, the
financial position of JP Realty, Inc. and its subsidiaries at December 31, 1999
and 1998, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. 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
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
- ---------------------------------
PricewaterhouseCoopers LLP
Salt Lake City, Utah
February 2, 2000
<PAGE> F-2
JP REALTY, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------------- -------------------
<S> <C> <C>
ASSETS
Real Estate Assets
Land $ 105,959 $ 102,921
Buildings 752,040 684,762
------------------- -------------------
857,999 787,683
Less: Accumulated Depreciation (135,027) (114,136)
------------------- -------------------
Operating Real Estate Assets 722,972 673,547
Real Estate Under Development 18,389 28,073
------------------- -------------------
Net Real Estate Assets 741,361 701,620
Cash 7,767 5,123
Restricted Cash 3,149 3,605
Accounts Receivable, Net 10,368 9,713
Deferred Charges, Net 7,526 8,570
Other Assets 6,055 4,524
------------------- -------------------
$ 776,226 $ 733,155
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings $ 438,241 $ 472,990
Accounts Payable and Accrued Expenses 16,716 20,411
Other Liabilities 847 798
------------------- -------------------
455,804 494,199
------------------- -------------------
Minority Interest
Preferred Unitholders 104,571 --
Common Unitholders 30,200 32,267
Consolidated Partnerships 2,006 1,743
------------------- -------------------
136,777 34,010
------------------- -------------------
Commitments and Contingencies
STOCKHOLDERS' EQUITY
8.75% Series A Cumulative Redeemable
Preferred Stock, $.0001 par value, liquidation preference
$25.00 per share, 510,000 shares authorized, none issued or
outstanding -- --
8.95% Series B Cumulative Redeemable
Preferred Stock, $.0001 par value, liquidation preference
$25.00 per share, 3,800,000 shares authorized, none issued or
outstanding -- --
Series A Junior Participating Preferred Stock, $.0001 per
share, 3,060,000 shares authorized, none issued or outstanding -- --
Common Stock, $.0001 par value, 117,430,000 authorized,
16,626,000 shares (excluding 857,000 shares held in treasury)
and 17,441,000 shares issued and outstanding at
December 31, 1999 and 1998, respectively 2 2
Price Group Stock, $.0001 par value, 200,000 shares authorized,
issued and outstanding -- --
Excess Stock, 75,000,000 shares authorized, none issued or
outstanding -- --
Additional Paid-in Capital 233,498 233,061
Accumulated Distributions in Excess of Net Income (35,489) (28,117)
Less: Treasury Stock, at cost (14,366) --
------------------- ------------------
183,645 204,946
------------------- ------------------
$ 776,226 $ 733,155
=================== ==================
</TABLE>
<PAGE> F-3
JP REALTY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES
Minimum Rents $ 97,829 $ 79,448 $ 59,624
Percentage and Overage Rents 4,906 4,491 3,896
Recoveries from Tenants 29,471 23,778 18,199
Interest 637 404 546
Other 722 948 708
------------ ------------ ------------
133,565 109,069 82,973
------------ ------------ ------------
EXPENSES
Operating and Maintenance 22,142 17,366 12,990
Real Estate Taxes and Insurance 14,141 11,640 8,546
Advertising and Promotions 719 676 451
General and Administrative 6,618 6,406 5,447
Depreciation 23,514 17,306 11,802
Amortization of Deferred Financing Costs 1,652 1,572 969
Amortization of Deferred Leasing Costs 632 665 639
Interest 27,769 20,501 9,066
------------ ------------ ------------
97,187 76,132 49,910
------------ ------------ ------------
36,378 32,937 33,063
Minority Interest in Income of Consolidated Partnerships (349) (277) (273)
Gain on Sales of Real Estate -- 1,096 339
------------ ------------ ------------
Income Before Extraordinary Item and Minority Interest
of the Operating Partnership Unitholders 36,029 33,756 33,129
Minority Interest of the Operating Partnership Preferred Unitholders (4,429) -- --
Minority Interest of the Operating Partnership Common Unitholders (5,452) (5,806) (5,675)
------------ ------------ ------------
Income Before Extraordinary Item 26,148 27,950 27,454
Extraordinary Item - Loss on Early Extinguishment of Debt,
Net of Minority Interest of the Operating Partnership Unitholders (801) -- (133)
------------ ------------ -------------
Net Income $ 25,347 $ 27,950 $ 27,321
============ ============ =============
Basic Earnings Per Share
Income Before Extraordinary Item $ 1.49 $ 1.59 $ 1.57
Extraordinary Item (0.05) -- (0.01)
------------ ------------ -------------
Net Income $ 1.44 $ 1.59 $ 1.56
============ ============ =============
Diluted Earnings Per Share
Income Before Extraordinary Item $ 1.49 $ 1.58 $ 1.56
Extraordinary Item (0.05) -- (0.01)
------------ ------------ -------------
Net Income $ 1.44 $ 1.58 $ 1.55
============ ============ =============
</TABLE>
<PAGE> F-4
JP REALTY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL DISTRIBUTIONS
SHARES OF COMMON PAID-IN IN EXCESS TREASURY
STOCK* STOCK* CAPITAL OF NET INCOME STOCK TOTAL
------------- ---------- ---------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' 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 Common
Units Converted 4,000 -- 40 -- -- 40
Net Income -- -- -- 27,321 -- 27,321
Dividends Paid -- -- -- (30,797) -- (30,797)
------------- ---------- ---------- ------------- --------- -----------
Stockholders' Equity at December 31, 1997 17,590,000 2 232,135 (24,151) -- 207,986
Stock Options Exercised 51,000 -- 923 -- -- 923
Operating Partnership Common
Units Converted -- -- 3 -- -- 3
Net Income -- -- -- 27,950 -- 27,950
Dividends Paid -- -- -- (31,916) -- (31,916)
------------- ---------- ---------- ------------- --------- -----------
Stockholders' Equity at December 31, 1998 17,641,000 2 233,061 (28,117) -- 204,946
Operating Partnership Common
Units Converted 42,000 -- 437 -- -- 437
Net Income -- -- -- 25,347 -- 25,347
Repurchase of Common Stock (857,000) -- -- -- (14,366) (14,366)
Dividends Paid -- -- -- (32,719) -- (32,719)
------------ -------- ---------- ------------ --------- -----------
Stockholders' Equity at December 31, 1999 16,826,000 $ 2 $ 233,498 $ (35,489) $ (14,366) $ 183,645
============ ======== ========== ============ ========= ===========
</TABLE>
- --------------------
* Includes Common Stock and 200,000 outstanding shares of Price Group Stock
<PAGE> F-6
JP REALTY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------------
1999 1998 1997
--------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 25,347 $ 27,950 $ 27,321
Adjustments to Reconcile Net Income to Net Cash Provided
by Operating Activities:
Extraordinary Item, Net of Minority Interest 801 -- 133
Depreciation 23,514 17,306 11,802
Amortization 2,284 2,237 1,608
Minority Interest in Income of Consolidated Partnerships 349 277 273
Minority Interest of the Operating Partnership Preferred Unitholders 4,429 -- --
Minority Interest of the Operating Partnership Common Unitholders 5,452 5,806 5,675
Gain on Sales of Real Estate -- (1,096) (339)
Real Estate Received due to Lease Termination (1,957) -- --
Increase in Accounts Receivable, Net (698) (4,112) (2,261)
Increase in Deferred Charges (926) (927) (1,290)
(Decrease) Increase in Accounts Payable and Accrued Expenses (6,647) 3,739 3,368
Increase in Other Assets (1,793) (1,129) (1,917)
--------------- -------------- --------------
Net Cash Provided by Operating Activities 50,155 50,051 44,373
--------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Real Estate Assets, Developed or Acquired (57,993) (200,022) (137,560)
Proceeds from Sales of Real Estate -- 1,289 469
Decrease (Increase) in Restricted Cash 456 (1,140) (93)
--------------- -------------- --------------
Net Cash Used in Investing Activities (57,537) (199,873) (137,184)
--------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Borrowings 125,842 289,384 219,088
Repayment of Borrowings (160,591) (99,784) (123,320)
Penalty Paid on Early Retirement of Debt (527) -- --
Deferred Financing Costs (771) (2,344) (1,503)
Net Proceeds from Sale of Common Stock
and Stock Options Exercised -- 923 38,865
Proceeds from Issuance of Preferred Units 104,571 -- --
Distributions to Preferred Unitholders (4,429) -- --
Capital Contribution by Minority Partner -- -- 1,000
Distributions to Minority Interest of Consolidated Partnerships (6,984) (6,921) (6,669)
and Common Unitholders
Dividends Paid to Stockholders (32,719) (31,916) (30,797)
Repurchase of Common Stock (14,366) -- --
--------------- -------------- --------------
Net Cash Provided by Financing Activities 10,026 149,342 96,664
--------------- -------------- --------------
Net Increase (Decrease) in Cash 2,644 (480) 3,853
Cash, Beginning of Period 5,123 5,603 1,750
--------------- -------------- --------------
Cash, End of Period $ 7,767 $ 5,123 $ 5,603
=============== =============== ==============
</TABLE>
<PAGE> F-6
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 primarily 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 82.2 and 82.7 percent general
partnership interest in the Operating Partnership at December 31, 1999 and
1998, respectively. The Operating Partnership owns a portfolio of 51
properties (the "Properties") consisting of 18 enclosed regional malls, 25
community centers, two free-standing retail Properties and six mixed-use
commercial Properties located in the Western United States. The tenant base
includes primarily national, regional and local retailers; as such, the
Company's credit risk is concentrated in the retail industry.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
the Company, the Operating Partnership and all controlled affiliates.
The effect of all significant intercompany balances and transactions have
been eliminated in the consolidated presentation. Certain amounts in the 1998
and 1997 financial statements have been reclassified to conform to the 1999
presentation.
The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REAL ESTATE ASSETS
Real estate assets are stated at cost less accumulated depreciation. At each
balance sheet date, the Company reviews recorded book values of real estate
assets for possible impairment based upon expectations of future nondiscounted
cash flows (excluding interest) from each property. There have been no
impairments as of December 31, 1999.
Costs directly related to the acquisition and development of real estate
assets, including overhead costs directly attributable to property development,
are capitalized. Interest and real estate taxes incurred during the
development and construction periods are also capitalized.
Depreciation is computed on a straight-line basis generally over 40 years for
buildings and four to ten years for equipment and fixtures. Tenant
improvements are capitalized and depreciated on a straight-line basis over the
life of the related lease. Expenditures for maintenance and repairs are
charged to operations as incurred. Major replacements and betterments which
improve or extend the life of the asset are capitalized and depreciated over
their estimated useful lives.
REVENUE RECOGNITION
Certain minimum rents are recognized monthly based upon amounts which are
currently due from tenants, when such amounts are not materially different than
recognizing the fixed cash flow over the initial term of the lease using the
straight-line method. All other minimum rents are recognized using the
straight-line method.
<PAGE> F-7
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
On April 1, 1998, the Company stopped accruing revenues for percentage and
overage rents based upon the adoption of Emerging Issues Task Force Issue 98-9.
On January 1, 1999, the Company started accruing these revenues again on a
straight-line basis and continued to do so through December 31, 1999.
Beginning January 1, 2000, the Company will stop accruing revenues for
Percentage and Overage Rents based upon recent accounting guidance issued by
Staff Accounting Bulletin No. 101 "Revenue Recognition". The cumulative
effect of adopting this new guidance will not be material to the first quarter
of 2000.
An allowance for doubtful accounts has been provided against the portion of
tenant accounts receivable which is estimated to be uncollectible. Tenant
accounts receivable in the accompanying consolidated balance sheet are shown
net of allowance for doubtful accounts of $1,217 and $741 as of December 31,
1999 and 1998, respectively.
RESTRICTED CASH
Restricted cash is held under terms of loan agreements to be used for certain
capital expenditures, property tax payments and funds held in reserve by a
trustee for principal and interest.
DEFERRED CHARGES
Deferred charges consist principally of financing fees and leasing
commissions paid to third parties. These costs are amortized on a straight-
line basis, which amounts, for deferred financing fees, approximate those
amortized using the effective interest method, over the terms of the respective
agreements. Deferred charges in the accompanying consolidated balance sheet
are shown net of accumulated amortization of $8,335 and $6,981 as of December
31, 1999 and 1998, 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 stockholders 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 stockholders.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. This statement will be effective for the Company
beginning January 1, 2001. The Company did not hold any derivative instruments
at December 31, 1999.
3. ACQUISITION AND DEVELOPMENTS (GLA AMOUNTS UNAUDITED)
ACQUISITION
On August 6, 1998, the Company, through a consolidated partnership of which
the Operating Partnership owns 99% and is a limited partner and a wholly owned
subsidiary owns 1% and is the general partner, bought NorthTown Mall, located
in Spokane, Washington for $128,000. The acquisition was financed utilizing a
first mortgage of $84,500 and $43,500 of borrowings on the Operating
Partnership's unsecured credit facility. The Operating Partnership issued a
letter of credit to the first mortgage holder in the amount of $9,500 to
guarantee the completion of additional property development work.
<PAGE> F-8
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
3. ACQUISITION AND DEVELOPMENTS (GLA AMOUNTS UNAUDITED) (CONTINUED)
DEVELOPMENTS
The Operating Partnership, through its consolidated partnership Price
Spokane, Limited Partnership, has initiated the expansion of NorthTown Mall, an
enclosed regional mall in Spokane, Washington. The project is expected to be
completed in the third quarter of 2000 and will add approximately 100,000
square feet of gross leasable area (Company-owned leasable area within the
Company's Properties ("GLA")). At December 31, 1999, the Operating Partnership
had expended approximately $10,828 for expansion costs and anticipates
expending an additional $9,408 to complete the project.
The Operating Partnership developed the Mall at Sierra Vista, an enclosed
regional mall in Sierra Vista, Arizona. The mall held its grand opening on
October 20, 1999 and added approximately 335,000 square feet of total gross
leasable area (Company-owned leasable area plus any tenant-owned leasable area
within the Company's Properties ("Total GLA")). At December 31, 1999, the
Operating Partnership had cumulative expenditures of approximately $17,728 for
development costs and had leased approximately 94% of the mall.
The Operating Partnership developed Provo Towne Centre, an enclosed regional
mall in Provo, Utah, through its consolidated partnership Provo Mall
Development Company, LTD. The mall held it's grand opening on October 28, 1998
and added approximately 723,000 square feet of Total GLA as of December 31,
1998. On November 11, 1999, Provo Towne Centre held a grand opening for its
newly developed sixteen-screen Cinemark Theater which added approximately
74,000 square feet of additional GLA. At December 31, 1999, the Operating
Partnership had cumulative expenditures of approximately $76,896 for
development costs and had leased approximately 96% of the mall.
During 1999, the Operating Partnership developed an additional building at
Halsey Crossing, a community center in Gresham, Oregon. During 1999 the
Operating Partnership had expended approximately $790 for development costs and
added approximately 16,300 square feet of GLA to the community center.
In August 1998, the Company completed an expansion at Boise Towne Square in
Boise, Idaho adding 294,804 square feet of Total GLA. Dillard's was added as a
new anchor with approximately 186,500 square feet of Total GLA, The Bon
March<e'> expanded its space by approximately 44,900 square feet of GLA and
approximately 63,400 square feet of additional shop GLA was added.
The Company has added Sears as a fourth anchor tenant at Red Cliffs Mall in
St. George, Utah. The Sears store opened in October 1998 and added
approximately 70,400 square feet of GLA to Red Cliffs Mall and a Sears Tire and
Battery shop added approximately 9,600 square feet of GLA at Red Cliffs Plaza.
The first phase of construction at Boise Towne Plaza in Boise, Idaho opened
in November 1997, adding 76,414 square feet of retail space. The Company added
approximately 15,000 square feet of GLA at Boise Towne Plaza in March 1998.
During 1999, approximately 18,000 square feet of GLA was developed at Boise
Towne Plaza. At December 31, 1999, Total GLA for the plaza was approximately
109,500 square feet.
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. Additional activities included the development of two freestanding
pads during 1999 and two freestanding pads during 1998, which included a Sears
Tire and Battery Shop, a Pier 1 Imports, an Outback Steakhouse and a Red Robin.
The partnership had cumulative expenditures of approximately $65,886 for the
mall. At December 31, 1999, the mall contained approximately 724,000 square
feet of Total GLA and was approximately 93% leased.
<PAGE> F-9
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
4. BORROWINGS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
<S> <C> <C>
1999 1998
-------------- --------------
Notes, unsecured; interest at 7.29%, maturing 2005 to 2008 $ 100,000 $ 100,000
Credit facility, unsecured; weighted average interest at 6.10%
during 1999 and 6.43% during 1998, due in 2000 91,000 100,800
Mortgage payable, secured by real estate; interest at 6.68%, due in 2008 83,382 84,277
Notes, secured by real estate; interest at 6.37%, due in 2001 61,223 95,000
Construction loan, secured by real estate; interest at 7.63% and 7.08% as of
December 31, 1999 and 1998, respectively, due in 2001 43,792 27,550
Construction loan, secured by real estate; interest at 7.69% and 6.81% as of
December 31, 1999 and 1998, respectively, due in 2001 41,600 47,505
Mortgage payable, secured by real estate; interest at 8.5%, due in 2000 12,165 12,510
Other notes payable, secured by real estate; interest ranging from 7.0% to 9.99%,
maturing 2000 to 2095 5,079 5,348
-------------- --------------
$ 438,241 $ 472,990
============== ==============
</TABLE>
CREDIT FACILITY
On October 16, 1997, the Operating Partnership obtained a $150,000 three-
year unsecured credit facility (the "Credit Facility") from a group of banks.
On December 18, 1997, the amount was increased to $200,000. The facility has a
three-year term and bears interest, at the option of the Operating Partnership,
at one, or a combination, of (i) the higher of the federal funds rate plus 50
basis points or the prime rate, or (ii) LIBOR plus a spread of 70 to 130 basis
points. The LIBOR spread is determined by the Operating Partnership's credit
rating and/or leverage ratio. The Credit Facility also includes a competitive
bid option in the amount of $100,000 which will allow the Operating Partnership
to solicit bids for borrowings from the bank group. The facility is used for
general corporate purposes including stock repurchase, development, working
capital, 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, 1999, the Operating Partnership was in
compliance with all these covenants. The Credit Facility is due October 2000,
at which time the Operating Partnership will renew or refinance the loan. The
Operating Partnership paid commitment fees on the Credit Facility totaling $506
and $514 in 1999 and 1998, respectively.
On November 7, 1997, the Operating Partnership borrowed $85,000 from the
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 of $29.
On December 29, 1997, the Operating Partnership borrowed an additional $42,000
to pay for the acquisition of Salem Center and for development activities. On
August 6, 1998, the Operating Partnership borrowed $43,500 from its Credit
Facility as part of the purchase of NorthTown Mall (Note 3). In August 1998,
the Operating Partnership issued a $9,500 letter of credit backed by the Credit
Facility to the NorthTown Mall first mortgage holder to guarantee the
completion of additional property development work. The Company does not
expect any material losses to result from the letter of credit and management
is therefore of the opinion that the fair value of this instrument at December
31, 1999 is zero. During 1999, proceeds from the sale of cumulative redeemable
preferred units of the Operating Partnership were used to pay down the amount
outstanding on the Credit Facility (Note 5). The Operating Partnership
borrowed an additional $57,993 for development activities during 1999. At
December 31, 1999 and 1998, the Credit Facility had a balance of $91,000 and
$100,800, respectively.
NOTES
On March 11, 1998, the Operating Partnership, under its shelf
registration, issued $100,000 of ten-year senior unsecured notes bearing
interest at a fixed 7.29% per annum. The Operating Partnership had entered
into an interest rate protection agreement in anticipation of issuing these
notes and received $270 as a result of terminating this agreement, making the
effective fixed rate of interest on these notes 7.24% per annum. Interest
payments are due semi-annually on March 11 and September 11 of each year.
Principal payments of $25,000 are due annually beginning March 2005. The
proceeds were used to partially repay outstanding borrowings under the Credit
Facility.
<PAGE> F-10
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
4. BORROWINGS (CONTINUED)
NOTES
On January 21, 1994, a subsidiary of the Operating Partnership issued
$95,000 in secured notes bearing interest at a fixed 6.37% per annum. On July
21, 1999, the Operating Partnership borrowed $33,777 from the Credit Facility
to reduce the notes to $61,223. The transaction unencumbered four regional
mall Properties. The write-off of deferred financing costs related to the
reduction of the notes plus direct expenses, including a prepayment penalty,
make up the extraordinary loss of $801, net of minority interest of $184. The
notes require quarterly interest payments and are due on January 21, 2001. The
subsidiary has an option to extend the notes to January 21, 2003.
CONSTRUCTION LOANS
On September 4, 1998, Provo Mall Development Company, LTD., a
consolidated partnership of which the Operating Partnership is the general
partner, entered into a $50,000 construction loan facility. The proceeds
from the construction loan facility have been used to fund the development
and construction of Provo Towne Centre in Provo, Utah. The construction loan
facility, which matures on July 1, 2001, with an optional two-year extension,
is collateralized by Provo Towne Centre and guaranteed by the Operating
Partnership. The loan bears interest at a variable rate indexed to the LIBOR
rate. At December 31, 1999 and 1998, the loan had a balance of $43,792 and
$27,550, respectively.
On July 30, 1996, Spokane Mall Development Company Limited Partnership, a
consolidated partnership of which the Operating Partnership is the general
partner, entered into a $50,000 construction loan facility. The proceeds from
this construction loan facility have been used to fund the development and
construction of the Spokane Valley Mall in Spokane, Washington. The
construction loan facility is collateralized by the Spokane Valley Mall and
guaranteed by the Operating Partnership. On July 30, 1999, the Operating
Partnership borrowed $5,905 from the Credit Facility to reduce the principal
outstanding on the construction loan and exercised the option to extend the
construction loan to August 2001. The fee to extend the loan was $154. The
loan bears interest at a variable interest rate indexed to the LIBOR rate. At
December 31, 1999 and 1998, the loan had a balance of $41,600 and $47,505,
respectively.
MORTGAGES PAYABLE
On August 6, 1998, the Company, through a consolidated partnership,
acquired NorthTown Mall. The partnership obtained a new first mortgage in the
amount of $84,500. The loan has a ten year term, 6.68% fixed rate, and a
thirty-year amortization payoff schedule with a balloon payment of
approximately $73,000. At December 31, 1999 and 1998, the loan had a balance
of $83,382 and $84,277, respectively.
In June 1997, the Operating Partnership assumed a mortgage note of
$24,755 as part of the acquisition of Silver Lake Mall and retired portions of
the debt principally using borrowings under a credit facility. The assumed
debt bears interest at a fixed 8.5% per annum and has a maturity date of
October 1, 2000 when a balloon payment of approximately $11,887 is due. At
December 31, 1999 and 1998, the loan had a balance of $12,165 and $12,510,
respectively.
Schedule of Maturities of Borrowings
<TABLE>
<CAPTION>
The following summarizes the scheduled maturities of borrowings at December 31,
1999:
Total
----------
<S> <C>
Year
2000 $ 104,115
2001 149,200
2002 1,078
2003 1,426
2004 1,187
Thereafter 181,235
----------
$ 438,241
==========
</TABLE>
<PAGE> F-11
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
5. MINORITY INTEREST
<TABLE>
<CAPTION>
PREFERRED COMMON CONSOLIDATED
UNITHOLDERS UNITHOLDERS PARTNERSHIPS TOTAL
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Minority Interest at December 31, 1996 $ -- $ 32,110 $ 668 $ 32,778
Minority Interest Common Units Converted -- (40) -- (40)
Units Issued for Acquisition -- 1,863 -- 1,863
Minority Interest Income -- 5,646 273 5,919
Contributions -- -- 1,000 1,000
Distributions Paid -- (6,423) (246) (6,669)
------------ ----------- ------------ ------------
Minority Interest at December 31, 1997 -- 33,156 1,695 34,851
Minority Interest Common Units Converted -- (3) -- (3)
Minority Interest Income -- 5,806 277 6,083
Distributions Paid -- (6,692) (229) (6,921)
------------ ----------- ------------ ------------
Minority Interest at December 31, 1998 -- 32,267 1,743 34,010
Preferred Units Issued 104,571 -- -- 104,571
Minority Interest Common Units Converted -- (437) -- (437)
Minority Interest Income 4,429 5,268 349 10,046
Distributions Paid (4,429) (6,898) (86) (11,413)
------------ ----------- ------------ ------------
Minority Interest at December 31, 1999 $ 104,571 $ 30,200 $ 2,006 $ 136,777
============ ============ ============ ============
</TABLE>
In April 1999, the Operating Partnership issued 510,000 Series A 8.75%
cumulative redeemable preferred units (the "Series A Preferred Units") in
exchange for a gross contribution of $12,750. Each Series A Preferred Unit
represents a limited partnership interest with a liquidation value of twenty-
five dollars per unit. The Operating Partnership used the proceeds, less
applicable transaction costs of $405, for the repayment of borrowings
outstanding under the Credit Facility. The Series A Preferred Units, which
may be redeemed by the Operating Partnership on or after April 23, 2004, have
no stated maturity or mandatory redemption and are not convertible into any
other securities of the Operating Partnership. The Series A Preferred Units
are exchangeable at the option of the preferred unitholder at a rate of one
Series A Preferred Unit for one share of the Company's Series A 8.75%
cumulative redeemable preferred stock beginning April 23, 2009 or earlier
under certain circumstances.
On July 28, 1999, the Operating Partnership issued 3.8 million Series B
8.95% cumulative redeemable preferred units (the "Series B Preferred Units"),
in exchange for a gross contribution of $95,000. Each Series B Preferred
Unit represents a limited partnership interest with a liquidation value of
twenty-five dollars per unit. The Company used the proceeds, less applicable
transaction costs of $2,774, to repay $90,000 in borrowings under the Credit
Facility and increase operating cash. The Series B Preferred Units, which
may be redeemed by the Operating Partnership on or after July 28, 2004, have
no stated maturity or mandatory redemption and are not convertible into any
other securities of the Operating Partnership. The Series B Preferred Units
are exchangeable at the option of the preferred unitholder at a rate of one
Series B Preferred Unit for one share of the Company's Series B 8.95%
cumulative redeemable preferred stock beginning July 28, 2009 or earlier
under certain circumstances.
The Operating Partnership makes quarterly distributions to the Series A
and Series B Preferred unitholders on the last day of each March, June,
September and December. For the year ending 1999, distributions for the
Series A and Series B Preferred Units were $768 and $3,661, respectively.
<PAGE> F-12
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
6. STOCK
The authorized stock of the Company consists of 200,000,000 shares of
stock, of which 7,370,000 shares are classified as Preferred Stock,
117,430,000 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 of stock 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% 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 October 1999, the Board of Trustees authorized the Company to
repurchase up to $25,000 of the Company's Common Stock through open market
purchases and private transactions. Through December 31, 1999, the Company
had repurchased approximately 857,000 shares of Common Stock for a total cost
of approximately $14,366. As of February 2, 2000, approximately 190,000
additional shares of stock were purchased for $3,170.
7. STOCKHOLDERS' RIGHTS PLAN
In August 1999, the Company adopted a stockholders' rights plan
declaring a dividend of one right for each share of the Company's Common
Stock outstanding on or after August 18, 1999. Pursuant to the plan, each
right will entitle holders of the Company's Common Stock to buy one unit (a
"Unit") of Series A Junior Participating Preferred Stock (the "Junior
Preferred Stock") at an exercise price of seventy dollars. Each Unit will
have substantially the same economic and voting rights as one share of Common
Stock. The rights will be exercisable, and will detach from the Common Stock
only (A) if a person or group (i) acquires 15% or more of the outstanding
shares of the Company's Common Stock; (ii) announces a tender or exchange
offer that, if consummated, would result in a person or group beneficially
owning 15% or more of the outstanding shares of the Company's Common Stock;
(iii) is declared by the Board of Directors to be an Adverse Person (as
defined in the plan) if such person or group beneficially owns 10% or more of
the outstanding shares of the Company's Common Stock' or (iv) acquires
beneficial ownership of 40% or more of the outstanding shares of the
Company's Common Stock; or, (B) upon the occurrence of certain events
involving a consolidation, merger or sale of transfer of assets or earning
power of the Company. Upon the occurrence of certain triggering events, each
right will entitle the holder (other than the acquiring person or group) with
a value of twice the exercisable price of the rights upon payment of the
exercise price. In connection with the rights plan, 3,060,000 shares of
Junior Preferred Stock were reserved for issuance. The new rights are
redeemable by the Company under certain circumstances at $.0001 per right and
will expire, unless earlier redeemed, on August 11, 2009.
8. RENTAL INCOME
Substantially all real estate held for investment is leased to retail
and commercial tenants. These operating leases generally range from 1 to 25
years and provide for minimum monthly rents, and in certain instances
percentage rents based on the tenants' sales, and generally require the
tenants to pay property taxes, insurance and maintenance charges.
All non-cancelable leases, assuming no new or renegotiated leases or
option extensions, in effect at December 31, 1999 provide for the following
minimum future rental income:
<TABLE>
<CAPTION>
<S> <C>
Year Total
- ---- -------------
2000 $ 83,240
2001 76,351
2002 69,296
2003 62,277
2004 55,205
Thereafter 302,358
------------
$ 648,727
============
</TABLE>
<PAGE> F-13
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
9. COMMITMENTS AND CONTINGENCIES
Future minimum rental payments under the terms of all non-cancelable
operating leases under which the Operating Partnership is the lessee,
principally for ground leases, are as follows:
<TABLE>
<CAPTION>
Total
---------------
<S> <C>
Year
- ----
2000 $ 986
2001 998
2002 1,012
2003 968
2004 938
Thereafter 25,453
---------------
$ 30,355
===============
</TABLE>
The Company recorded rental expense of $983, $971 and $550 for 1999, 1998
and 1997, respectively.
The Company is a defendant in certain litigation relating to its business
activities. Management does not believe that the resolution of these matters
will have a materially adverse effect upon the financial position, results of
operations or cash flows of the Company.
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During 1999, Price James, a consolidated partnership of the Operating
Partnership, received a building appraised at $2,000 in exchange for accounts
receivable of $43 and $1,957 for termination of a long-term ground lease, which
amount was recorded in minimum rents.
During 1999, 1998 and 1997, non-cash investing and financing transactions
included an increase in accounts payable of $4,645, $1,693, and $3,861,
respectively, related to building and 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
$2,313, $657 and $406, respectively. In addition, the holders of Operating
Partnership units elected to convert 41,718, 285 and 4,000 Operating
Partnership Common Units, having a recorded value of $437, $3 and $40, into
Common Stock in 1999, 1998 and 1997, respectively.
Interest paid (net of capitalized amounts of $2,404, $3,754 and $3,509 in
1999, 1998 and 1997) aggregated $28,553, $17,763 and $8,276 in 1999, 1998 and
1997, respectively.
Purchase of the remaining 70% interest in Silver Lake Mall, Ltd. in June
1997 was comprised of:
<TABLE>
<CAPTION>
<S> <C>
72,000 Operating Partnership units issued $ 1,863
Book value of 30% equity investment in Silver Lake Mall, Ltd. (1,555)
Debt assumed 24,755
-------------
$ 25,063
=============
</TABLE>
11. RELATED PARTY TRANSACTIONS
The Operating Partnership buys computer services from Alta Computer
Services, Inc. ("Alta"). Alta is majority owned by three directors of the
Company. The Operating Partnership paid $192, $175 and $200 in 1999, 1998 and
1997, respectively, for such services.
<PAGE> F-14
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
11. 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, 1999.
The Company provided third-party management services for certain
properties owned directly or indirectly by the Chairman of the Board of
Directors of the Company as follows: (i) an office building in Salt Lake City,
Utah, the owner of which paid the Company a management fee of $113, $115 and
$105 in 1999, 1998 and 1997, respectively (Fairfax, a company which is wholly-
owned by the Chairman of the Board, is a general partner of the owner of this
building), (ii) a commercial building in Salt Lake City, Utah, the owner of
which paid the Company a management fee of $2 in 1997 (the Chairman of the
Board was the general partner of the owner of this building), and (iii) a
commercial building in Albuquerque, New Mexico, the owner of which paid the
Company a management fee of $6 and $5 in 1999 and 1998, respectively (the
Chairman of the Board is the general partner owner of the building).
12. STOCK INCENTIVE PLAN
On October 26, 1993, the Company adopted the 1993 Stock Option Plan which
authorizes the discretionary grant by the Executive Compensation Committee of
options intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code to key employees of the Company and
the discretionary grant of nonqualified stock options to key employees,
directors and consultants of the Company. The maximum number of shares of
Common Stock subject to option under the Company's Plan is 1,100,000. The
proceeds received by the Company upon exercise of options are contributed to
the Operating Partnership in exchange for the issuance of an equivalent number
of Operating Partnership Units. No stock options may be granted after ten
years from the date of adoption and options must be granted at a price
generally not less than the fair market value of the Company's Common Stock at
the date of grant. These options vest over a period of not more than five
years.
A summary of the Company's 1993 Stock Option Plan activity is set forth below:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES OF EXERCISE SHARES OF EXERCISE SHARES OF EXERCISE
STOCK PRICE STOCK PRICE STOCK PRICE
---------- ----------- ----------- ----------- ----------- ------------
Outstanding at beginning of year 631,000 $ 18.06 553,000 $ 18.07 558,000 $ 17.99
Granted 60,000 18.31 165,000 25.21 7,000 25.38
Exercised -- -- (51,000) 17.92 (12,000) 18.64
Forfeited (4,000) 22.43 (36,000) 22.49 -- --
---------- ----------- ----------- ----------- ----------- ------------
Outstanding at end of year 687,000* $ 19.55 631,000 $ 21.37 553,000 $ 18.07
========== =========== =========== =========== =========== ============
Exercisable at end of year 494,000 $ 18.41 360,000 $ 18.06 277,000 $ 17.87
========== =========== =========== =========== =========== ============
</TABLE>
* The weighted average remaining contractual life of options outstanding as of
December 31, 1999 was 4 years. The range of option prices was $17.50 to
$25.38 per share.
The Company has applied Accounting Principles Board Opinion 25 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, in accordance with the method
required by SFAS No. 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:
<PAGE> F-15
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
12. STOCK INCENTIVE PLAN (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
<S> <C> <C> <C>
1999 1998 1997
--------------- --------------- ---------------
Net income
As reported $ 25,347 $ 27,950 $ 27,321
Proforma $ 25,276 $ 27,838 $ 27,283
Basic net income per share
As reported $ 1.44 $ 1.59 $ 1.56
Proforma $ 1.44 $ 1.58 $ 1.56
Diluted net income per share
As reported $ 1.44 $ 1.58 $ 1.55
Proforma $ 1.44 $ 1.57 $ 1.55
</TABLE>
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes options pricing model using the following
assumptions:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
<S> <C> <C> <C>
1999 1998 1997
--------------- --------------- ---------------
Risk free interest rate 4.79% 5.51% 6.67%
Dividend yield 11.09% 7.14% 7.00%
Expected life 4 years 5 years 9 years
Expected volatility 16.40% 17.00% 16.50%
Weighted average per share fair value of
options granted during the year $ 0.55 $ 2.08 $ 2.53
</TABLE>
13. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) profit sharing plan which permits
participating employees to defer up to a maximum of 15% of their
compensation up to the maximum allowed by the Internal Revenue Code. The
Company matches 50% of the qualified employees' contributions up to a
maximum of $1 per employee each year. Employees working a minimum of 1,000
hours per year who have completed at least one year of service and attained
the age of 21 are qualified to participate in the plan. The employees'
contributions are immediately vested. Additionally, the Company annually
contributes 3% of base salary to the plan for each qualified employee.
Contributions from the Company vest based upon employees' years of service
beginning at 20% per year after one year of service. The Company's
contributions to the plan in 1999, 1998 and 1997 were $333, $279 and $225,
respectively.
14. 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 and accounts payable
at December 31, 1999 and 1998 are reasonable estimates of their fair values
because of the short maturity of these financial instruments.
<PAGE> F-16
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
14. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
Borrowings with an aggregate carrying value of $438,241 and $472,990
have an estimated aggregate fair value of $422,295 and $472,690 at December
31, 1999 and 1998, respectively. Estimated fair value is based on interest
rates currently available to the Company for issuance of borrowings with
similar terms and remaining maturities.
15. EARNINGS PER SHARE
The following table provides a reconciliation of both income before
extraordinary items and the number of common shares of stock used in the
computations of basic earnings per share, which utilizes the weighted
average number of common shares of stock outstanding without regard to
potentially dilutive common shares of stock and diluted earnings per share,
which includes all such shares of stock.
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------
<S> <C> <C> <C>
1999 1998 1997
Income (Numerator) -------------- --------------- ---------------
Before Extraordinary Item $ 26,148 $ 27,950 $ 27,454
============== =============== ===============
Shares of Stock (Denominator)
Basic-average common shares of stock outstanding 17,561,000 17,620,000 17,471,000
Add: Dilutive effect of stock options 29,000 103,000 166,000
-------------- --------------- ---------------
Diluted shares of stock 17,590,000 17,723,000 17,637,000
============== =============== ===============
Per-Share Amounts - Income Before Extraordinary Item
Basic $ 1.49 $ 1.59 $ 1.57
============== =============== ===============
Diluted $ 1.49 $ 1.58 $ 1.56
============== =============== ===============
</TABLE>
The Operating Partnership Units not held by the Company have not been
included in the dilutive earnings per share calculation since there would be
no effect on the per share amount as amounts allocated to an Operating
Partnership Common Unit are the same as the amounts allocated to a share of
Common Stock. Options to purchase 687,000, 631,000 and 553,000 shares of
Common Stock were outstanding at December 31, 1999, 1998 and 1997,
respectively (Note 12), a portion of which has been reflected above using
the treasury stock method.
16. SEGMENT INFORMATION (GLA AMOUNTS UNAUDITED)
In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". The information presents the
Company's three reportable segments - 1) regional malls, 2) community
centers and 3) commercial Properties in conformity with SFAS No. 131.
The accounting policies of the segments are the same as those
described in the "Summary of Significant Accounting Policies." Segment data
includes total revenues and property net operating income (revenues less
operating and maintenance expense, real estate taxes and insurance expense
and advertising and promotions expense ("Property NOI")). The Company
evaluates the performance of its segments and allocates resources to them
based on Property NOI.
The regional mall segment consists of 18 regional malls in eight
states containing approximately 10,291,000 square feet of Total GLA and
which range in size from approximately 296,000 to 1,171,000 square feet of
Total GLA.
The community center segment consists of 25 Properties in seven states
containing approximately 3,362,000 square feet of Total GLA and two
freestanding retail Properties containing approximately 5,000 square feet of
GLA.
<PAGE> F-17
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
16. SEGMENT INFORMATION (GLA AMOUNTS UNAUDITED) (CONTINUED)
The commercial Properties include six mixed-use commercial/business
Properties with 38 commercial buildings containing approximately 1,354,000
square feet of GLA which are located primarily in the Salt Lake City, Utah
area where the Company's headquarters is located.
The table below presents information about the Company's reportable
segments for the years ending December 31:
<TABLE>
<CAPTION>
REGIONAL COMMUNITY COMMERCIAL
MALLS CENTERS PROPERTIES OTHER TOTAL
<S> <C> <C> <C> <C> <C>
1999 ----------- ------------- ------------- ---------- ----------
- ----
Total Revenues $ 104,205 $ 20,297 $ 7,555 $ 1,508 $ 133,565
Property Operating Expenses (1) (30,620) (4,568) (1,814) -- (37,002)
----------- ------------- ------------- ---------- ----------
Property NOI (2) 73,585 15,729 5,741 1,508 96,563
Unallocated Expenses (3) -- -- -- (60,185) (60,185)
Unallocated Minority Interest (4) -- -- -- (10,230) (10,230)
Unallocated Other (5) -- -- -- (801) (801)
Consolidated Net Income -- -- -- -- 25,347
Additions to Real Estate Assets 55,593 6,094 1,133 125 62,945
Total Assets (6) 641,871 84,329 30,837 19,189 776,226
1998
- ----
Total Revenues 82,622 17,849 8,299 299 109,069
Property Operating Expenses (1) (23,895) (4,144) (1,643) -- (29,682)
----------- ------------- ------------- ---------- ----------
Property NOI (2) 58,727 13,705 6,656 299 79,387
Unallocated Expenses (3) -- -- -- (46,450) (46,450)
Unallocated Minority Interest (4) -- -- -- (6,083) (6,083)
Unallocated Other (5) -- -- -- 1,096 1,096
Consolidated Net Income -- -- -- -- 27,950
Additions to Real Estate Assets 190,942 845 597 5,470 197,854
Total Assets (6) 604,937 80,307 30,899 17,012 733,155
1997
- ----
Total Revenues 58,069 16,649 7,349 906 82,973
Property Operating Expenses (1) (16,175) (4,053) (1,759) -- (21,987)
----------- ------------- ------------- ---------- ----------
Property NOI (2) 41,894 12,596 5,590 906 60,986
Unallocated Expenses (3) -- -- -- (27,923) (27,923)
Unallocated Minority Interest (4) -- -- -- (5,948) (5,948)
Unallocated Other (5) -- -- -- 206 206
Consolidated Net Income -- -- -- -- 27,321
Additions to Real Estate Assets 154,331 11,246 907 -- 166,484
Total Assets (6) 423,800 80,274 31,909 9,701 545,684
</TABLE>
- -------------------------------
(1) Property operating expenses consist of operating, maintenance,
real estate taxes, insurance, advertising and promotion expenses
as listed in the consolidated statement of operations.
(2) Total revenues minus property operating expenses.
(3) Unallocated expenses consist of general and administrative,
depreciation, amortization of deferred financing costs,
amortization of deferred leasing costs and interest as listed in
the consolidated statement of operations.
(4) Unallocated minority interest includes minority interest in
income of consolidated partnerships and minority interest of the
Operating Partnership preferred and common unitholders as listed
in the consolidated statement of operations.
(5) Unallocated other includes gain on sales of real estate and
extraordinary loss on extinguishment of debt as listed in the
consolidated statement of operations.
(6) Unallocated other total assets include cash, corporate offices,
miscellaneous real estate and deferred financing costs.
<PAGE> F-18
JP Realty, Inc.
Notes to Consolidated Financial Statements
(Dollars in Thousands, Except Per Share Amounts)
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Financial information for each of the quarters in
1999 and 1998 are as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED 1999
- ---------------
Total Revenues $ 32,989 $ 31,738 $ 32,398 $ 36,440 $ 133,565
Income Before Extraordinary Item
and Minority Interest 8,256 7,144 9,292 11,337 36,029
Net Income 6,837 5,741 5,392 7,377 25,347
Basic Earnings Per Share 0.39 0.33 0.31 0.43 1.44**
Diluted Earnings Per Share 0.39 0.32 0.31 0.43 1.44**
Dividend Declared Per Share 0.465 0.465 0.465 0.480 1.875***
YEAR ENDED 1998
- ---------------
Total Revenues $ 24,503 $ 24,407* $ 27,958* $ 32,201* $ 109,069
Income Before Minority Interest 8,024 8,168 8,000 9,564 33,756
Net Income 6,642 6,761 6,624 7,923 27,950
Basic Earnings Per Share 0.38 0.38 0.38 0.45 1.59**
Diluted Earnings Per Share 0.37 0.38 0.37 0.45 1.58**
Dividend Declared Per Share 0.450 0.450 0.450 0.465 1.815***
</TABLE>
- --------------------------
* 1998 percentage and overage rents have been restated to reflect
the Company's accrual of these revenues on the straight line
basis as allowed by the Emerging Issues Task Force in late 1998.
As a result of the restatement, percentage and overage rents
were adjusted for the second, third and fourth quarters of 1998
by $1,124, $912 and ($2,036), respectively. (Note 2)
** The sum of quarterly earnings per share may differ from yearly
totals due to rounding and the fluctuation of weighted average
shares of stock on a quarterly basis.
*** Of which $.433 and $.308 represents a non-taxable return of
capital for 1999 and 1998, respectively.
18. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited proforma summary
financial information for 1999 and 1998, is presented
as if the 1998 acquisition of NorthTown Mall and the
1999 issuances of Series A and Series B preferred units
had been consummated as of January 1, 1998.
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 133,565 $ 117,384
Income Before Extraordinary Item $ 24,603 $ 24,961
Net Income $ 23,802 $ 24,961
Basic Earnings Per Share
Income Before Extraordinary Item $ 1.40 $ 1.42
Net Income $ 1.36 $ 1.42
Diluted Earnings Per Share
Income Before Extraordinary Item $ 1.40 $ 1.41
Net Income $ 1.35 $ 1.41
</TABLE>
The proforma financial information summarized
above is presented for information purposes only and
may not be indicative of what actual results of
operations would have been had the 1998 acquisition of
NorthTown Mall and the 1999 issuances of Series A and
Series B preferred units been completed as of the
beginning of the periods presented, nor does it purport
to represent the results of operations for future
periods.
<PAGE> F-19
SCHEDULE II
JP REALTY, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(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, 1999
Allowance for uncollectible accounts $ 741 $ 1,479 $ 1,003 $ 1,217
Year ended December 31, 1998
Allowance for uncollectible accounts $ 570 $ 537 $ 366 $ 741
Year ended December 31, 1997
Allowance for uncollectible accounts $ 489 $ 346 $ 265 $ 570
</TABLE>
<PAGE> F-20
SCHEDULE III
JP REALTY, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
INITIAL COSTS CAPITALIZED CARRIED AT CLOSE OF PERIOD DEPREC-
--------------------- SUBSEQUENT ------------------------------ IABLE
RELATED BUILDING & TO BLDG. & ACCUMULATED DATE OF DATE LIVES
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION(1) LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED YEARS
- ----------- ------------ -------- ------------ ------------- -------- ------------ -------- ------------ ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REGIONAL
MALLS
Animas
Valley
Mall,
Farmington,
NM $ -- $ 3,902 $ 24,059 $ 1,730 $ 3,902 $ 25,789 $ 29,691 $ 2,893 -- 1995 40
Boise Towne
Square,
Boise, ID 29,248 9,218 -- 53,633 9,218 53,633 62,851 15,317 1987-88 1985-86 5-40
Cache
Valley
Mall,
Logan, UT -- 909 -- 8,949 909 8,949 9,858 4,758 1975-76 1973-76 10-40
Cottonwood
Mall,
Holladay,
UT 17,884 7,514 20,776 31,820 7,514 52,596 60,110 21,429 1981-87 1980 4-40
Eastridge
Mall,
Casper, WY -- 4,300 19,896 6,332 4,300 26,228 30,528 2,716 -- 1995 40
Grand Teton
Mall, Idaho
Falls, ID -- 5,802 28,614 4,367 7,743 31,040 38,783 2,865 -- 1996 40
Mall at
Sierra
Vista,
Sierra
Vista, AZ -- 1,660 16,068 -- 1,660 16,068 17,728 66 1998-99 1998 40
North
Plains
Mall,
Clovis,
NM 4,928 2,664 -- 13,015 2,664 13,015 15,679 3,990 1984-85 1979-84 10-40
NorthTown
Mall,
Spokane,
WA 83,382 6,902 120,458 11,220 6,902 131,678 138,580 4,263 1997-98 1997 40
Pine Ridge
Mall,
Pocatello,
ID -- 1,883 -- 21,934 1,883 21,934 23,817 8,990 1979-81 1979 10-40
Provo Towne
Centre,
Provo,
UT 46,792 13,829 41,820 21,247 9,360 67,536 76,896 2,249 1997-98 1997 40
Red Cliffs
Mall,
St. George,
UT -- 903 -- 13,846 903 13,846 14,749 3,619 1989-90 1989 3-40
Salem
Center,
Salem, OR -- 1,704 30,504 937 1,704 31,441 33,145 1,586 -- 1997 40
Silver Lake
Mall, Coeur
d'Alene, ID 12,165 4,055 21,379 444 4,055 21,823 25,878 1,435 -- 1997 40
Spokane
Valley
Mall,
Spokane, WA 41,600 6,645 34,341 24,900 6,745 59,141 65,886 4,552 1990-97 1990 40
Three
Rivers
Mall,
Kelso, WA 9,163 1,977 -- 20,680 1,977 20,680 22,657 6,170 1986-87 1984 10-40
Visalia
Mall,
Visalia, CA -- 6,146 31,812 1,323 6,146 33,135 39,281 2,223 -- 1997 40
White
Mountain
Mall, Rock
Springs, WY -- 1,120 -- 15,550 1,120 15,550 16,670 6,642 1977-78 1977 40
COMMUNITY
CENTERS
Alameda
Plaza,
Pocatello,
ID -- 500 -- 3,365 500 3,365 3,865 2,007 1973 1973 40
Anaheim
Plaza,
Anaheim, CA -- -- -- 2,053 -- 2,053 2,053 87 1980-81 1979 40
Austin
Bluffs
Plaza,
Colorado
Springs, CO -- 1,488 -- 1,923 1,488 1,923 3,411 682 1985 1979 3-40
Bailey
Hills
Plaza,
Eugene,
OR -- 157 -- 297 157 297 454 61 1988-89 1988 40
Baskin
Robbins
17th St.,
Idaho
Falls, ID -- 9 67 7 9 74 83 23 -- 1988 40
Boise
Plaza,
Boise, ID -- 322 -- 1,529 322 1,529 1,851 976 1970-71 1970 40
Boise
Towne
Plaza,
Boise, ID -- 3,316 4,243 2,646 3,316 6,889 10,205 535 1996-97 1994 40
Cottonwood
Square,
Salt Lake
City, UT -- 1,926 3,535 43 1,926 3,578 5,504 358 -- 1995 40
Division
Crossing,
Portland,
OR -- 2,429 -- 4,495 2,429 4,495 6,924 1,053 1990-91 1990 20-40
Fort Union
Plaza, Salt
Lake City
UT -- 21 -- 1,623 21 1,623 1,644 698 1979-84 -- 40
Fremont
Plaza, Las
Vegas, NV -- -- -- 2,317 -- 2,317 2,317 1,247 1976-80 -- 40
Fry's
Shopping
Plaza,
Glendale,
AZ -- 353 -- 4,625 1,254 3,724 4,978 1,710 1980-81 1980 40
Gateway
Crossing,
Bountiful,
UT -- 3,644 -- 8,516 3,644 8,516 12,160 1,504 1990-92 1990 40
</TABLE>
<PAGE> F-21
SCHEDULE III
JP REALTY, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
INITIAL COSTS CAPITALIZED CARRIED AT CLOSE OF PERIOD DEPREC-
--------------------- SUBSEQUENT ------------------------------ IABLE
RELATED BUILDING & TO BLDG. & ACCUMULATED DATE OF DATE LIVES
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION(1) LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED YEARS
- ----------- ------------ -------- ------------ ------------- -------- ------------ -------- ------------ ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMUNITY
CENTERS
(CONTINUED)
Halsey
Crossing,
Gresham, OR -- -- -- 3,173 -- 3,173 3,173 655 1989-91 -- 4-40
Nephi Bank,
Nephi, UT -- 17 183 -- 17 183 200 149 -- 1976 --
North
Temple
Shops,
Salt Lake
City, UT -- 60 -- 177 60 177 237 96 1970 1970 40
Orem Plaza
Center Street,
Orem, UT -- 371 330 1,111 344 1,468 1,812 718 1976-87 1973 10-40
Orem Plaza
State Street,
Orem, UT -- 126 -- 697 126 697 823 391 1975 1973 29-40
Plaza 800,
Sparks, NV -- 33 2,969 42 33 3,011 3,044 1,830 1974 -- 40
Plaza 9400,
Sandy, UT -- -- -- 4,570 -- 4,570 4,570 2,181 1976-84 -- 10-40
Red Cliffs
Plaza, St.
George, UT -- -- 2,403 215 -- 2,618 2,618 315 1994-95 1994-95 40
River
Pointe
Plaza,
West Jordan
UT -- 1,130 -- 2,710 1,130 2,710 3,840 855 1987-88 1986-87 5-40
Riverside
Plaza,
Provo, UT -- 427 1,886 4,327 427 6,213 6,640 1,746 1978-81 1977 40
Twin Falls
Crossing,
Twin
Falls, ID -- 125 -- 776 125 776 901 445 1976 1975 40
University
Crossing,
Orem,
UT -- 230 -- 5,027 230 5,027 5,257 1,960 1971-92 1971 40
Woodlands
Village,
Flagstaff,
AZ -- 2,068 5,329 236 2,068 5,565 7,633 752 -- 1994 40
Yellowstone
Square,
Idaho
Falls, ID -- 355 -- 4,527 355 4,527 4,882 2,791 1972-77 1972 40
COMMERCIAL
PROPERTIES
First
Security
Place,
Boise,
ID -- 300 -- 3,253 300 3,253 3,553 1,652 1978-80 1978 10-40
Price
Business
Center -
Commerce
Park,
West Valley
City, UT -- 415 2,109 8,803 1,147 10,180 11,327 1,864 1980 1973-95 40
Price
Business
Center-
Pioneer
Square,
Salt Lake
City, UT -- 658 -- 10,061 651 10,068 10,719 3,559 1974-92 1973 3-40
Price
Business
Center-
South
Main,
Salt Lake
City, UT -- 317 -- 2,127 295 2,149 2,444 1,116 1967-82 1966-81 3-40
Price
Business
Center-
Timesquare,
Salt Lake
City, UT -- 581 -- 9,948 546 9,983 10,529 4,217 1974-80 1972-80 5-40
Sears-
Eastbay,
Provo, UT 1,591 275 -- 2,079 275 2,079 2,354 561 1989-90 1989 40
OTHER REAL
ESTATE
Miscel-
laneous
Real Estate -- 1,164 17 10,415 4,059 7,537 11,596 470 -- 1980-98 40
------------ -------- ------------ ------------ --------- ---------- ---------- -----------
TOTAL $ 246,753 $103,950 $ 412,798 $ 359,640 $ 105,959 $ 770,429 $ 876,388 $ 135,027
============ ======== ============ ============ ========= ========== ========== ===========
</TABLE>
- ---------------------------
(1) Included are development costs subsequent to acquisition or opening
of property.
<PAGE> F-23
JP REALTY, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
(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,
--------------------------------------------------------
1999 1998 1997
--------------- --------------- --------------
<S> <C> <C> <C>
Real Estate Investments
Balance at Beginning of Year $ 815,756 $ 619,371 $ 453,241
Acquisitions -- 128,000 96,615
Improvements 62,945 69,854 69,921
Disposition of Property (2,313) (1,469) (406)
--------------- --------------- ---------------
Balance at End of Year $ 876,388 $ 815,756 $ 619,371
=============== =============== ===============
Accumulated Depreciation
Balance at Beginning of Year $ 114,136 $ 98,404 $ 87,318
Depreciation 23,204 17,072 11,492
Depreciation of Disposed Property (2,313) (1,340) (406)
--------------- --------------- --------------
Balance at End of Year $ 135,027 $ 114,136 $ 98,404
=============== =============== ==============
</TABLE>
<PAGE>
EXHIBIT 10.20
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
The undersigned, being the sole general partner of Price Development
Company, Limited Partnership (the "Partnership"), a limited partnership
formed under the Maryland Revised Uniform Limited Partnership Act and
pursuant to the terms of that certain Second Amended and Restated Agreement
of Limited Partnership, dated July 15, 1999 (the "Partnership Agreement"),
does hereby amend the Partnership Agreement as follows:
1. EXHIBIT OF PARTNERS AND PARTNERSHIP INTERESTS. EXHIBIT A to the
Partnership Agreement is hereby deleted in its entirety and replaced by
EXHIBIT A hereto which identifies, as December 31, 1999, each Partner of
the Partnership, the number of Partnership Units held by such Partner and
such Partner's respective Percentage Interest in the Partnership.
2. RATIFICATION. Except as expressly modified by this Fourth
Amendment, all of the provisions of the Partnership Agreement are affirmed
and ratified and remain in full force and effect.
Capitalized terms used but not defined in this Fourth Amendment shall
have the same meanings that are ascribed to them in the Partnership
Agreement.
Dated: March 10, 2000
-----------------
JP Realty, Inc.,
as General Partner
By: /s/ G. Rex Frazier
-----------------------
Name: G. Rex Frazier
Title: Predisent
<PAGE>
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Partnership Percentage
Name of Partner Units Interest
- ---------------------------------------- --------------------- ----------------------
<S> <C> <C>
GENERAL PARTNER
JP Realty, Inc.
35 Century Park-Way
Salt Lake City, Utah 84115 16,825,665 82.229410%
LIMITED PARTNERS
Boise Mall Investment Company, Ltd. 824,411 4.02901%
Brown, Mike 125 0.00061%
Bybee, Terry 320 0.00156%
Cache Valley Mall Partnership, Ltd. 328,813 1.60696%
Chandler, Harry 100 0.00049%
Clauson, Pat 100 0.00049%
Cloward, Burke 35,460 0.17330%
Cordano, Alan 765 0.00374%
Cordano, James 1,531 0.00748%
Curtis, Greg 24 0.00012%
Curtis, Vardell 125 0.00061%
East Ridge Partnership 100 0.00049%
Enslow, Mike 320 0.00156%
Fairfax Holding, LLC 786,226 3.84240%
Frank, Alan 5,486 0.02681%
Frazier, G. Rex 3,680 0.01798%
Frei, Michael 6,817 0.03332%
Gillette, Jerry 100 0.00049%
Hall Investment Company 10,204 0.04987%
Hansen, Kenneth 5,102 0.02493%
JCP Realty, Inc. 350,460 1.71275%
KFC Advertising 5,487 0.02682%
Kelley, Chad 125 0.00061%
Kelley, Paul 25 0.00012%
King American Hospital, Ltd. 63,424 0.30996%
King Provo, Ltd. 64,872 0.31704%
King, Warren P. 6,244 0.03052%
Mendenhall, Paul K. 214 0.00105%
Mulkey, Tom 100 0.00049%
North Plains Development Company, Ltd. 19,033 0.09302%
North Plains Land Company, Ltd. 1,758 0.00859%
Olson, Carl 1,894 0.00926%
Orton, Byron 125 0.00061%
Peterson, Martin G. 692 0.00338%
Pine Ridge Development Company, Ltd. 77,641 0.37944%
Pine Ridge Land Company, Ltd. 5,176 0.02530%
Price, John 200 0.00098%
Price, Steven 350 0.00171%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Partnership Percentage
Name of Partner Units Interest
- ---------------------------------------- --------------------- ----------------------
<S> <C> <C>
Price 800 Company, Ltd. 156,615 0.76540%
Price Commerce, Ltd. 63,423 0.30996%
Price East Bay, Ltd. 37,157 0.18159%
Price Eugene Bailey Company, Ltd. 17,497 0.08551%
Price Fremont Company, Ltd. 166,315 0.81281%
Price Glendale Company, Ltd. 3,935 0.01923%
Price Orem Investment Company, Ltd. 66,747 0.32620%
Price Plaza 800 Company, Ltd. 12,199 0.05962%
Price Riverside Company, Ltd. 10,983 0.05368%
Price Rock Springs Company, Ltd. 11,100 0.05425%
Price Taywin Company, Ltd. 106,381 0.51990%
Priet, Nettie 100 0.00049%
Red Cliff Mall Investment Company 167,379 0.81801%
Roebbelen Engineering 72,000 0.35187%
Souvall, Sam 23,371 0.11422%
Taycor Ltd. 35,462 0.17331%
Tech Park II Company, Ltd. 4,929 0.02409%
Timothy, Jodi 150 0.00073%
Vise, Phil 160 0.00078%
Watcott, Keith 35,460 0.17330%
Watkins, Gary 5,102 0.02493%
Wilcher, Abe 5,306 0.02593%
Wilcher, Lena 10,000 0.04887%
YSP 16,787 0.08204%
-------------------- ----------------------
Total 20,461,852 100.00000%
-------------------- ----------------------
SSB Tax Advantaged Exchange Fund I, LLC 510,000 100.00000%{1}
-------------------- ----------------------
Belcrest Realty Corporation 2,575,000 73.02632%{2}
Belair Real Estate Corporation 1,255,000 26.97368%{2}
-------------------- ----------------------
3,800,000 100.00000%
-------------------- ----------------------
</TABLE>
- --------------------------
1. Represents all of the Series A Preferred Units issued by the
Partnership.
2. Represents a percentage of the Series B Preferred Units issued
by the Partnership.
<PAGE> EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-3 (No. 33-93752, No. 333-3624, No. 333-
34835, No. 333-34835-01) and Registration Statement Form S-8 (No. 333-
3550) of JP Realty, Inc. of our report dated February 2, 2000, on our
audits of the consolidated financial statements and financial statements
schedules of JP Realty, Inc. as of December 31, 1999 and 1998, and for the
years ended December 31, 1999, 1998 and 1997, which report is included in
this Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers, LLP
- ------------------------------------
PricewaterhouseCoopers, LLP
Salt Lake City, Utah
March 16, 2000
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CATAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JP REALTY,
INC. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<CASH> $7,767 $5,123 0
<SECURITIES> 0 0 0
<RECEIVABLES> 11,585 10,454 0
<ALLOWANCES> (1,217) (741) 0
<INVENTORY> 0<F1> 0<F1> 0
<CURRENT-ASSETS> 0 0 0
<PP&E> 0<F2> 0<F2> 0
<DEPRECIATION> 0<F2> 0<F2> 0
<TOTAL-ASSETS> 776,226 733,155 0
<CURRENT-LIABILITIES> 0<F1> 0<F1> 0
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 2 2 0
<OTHER-SE> 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 776,226 733,155 0
<SALES> 0 0 0
<TOTAL-REVENUES> 133,565 109,069 82,973
<CGS> 0 0 0
<TOTAL-COSTS> 0 0 0
<OTHER-EXPENSES> 69,418<F3> 55,631<F4> 40,844<F5>
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 27,769 20,501 9,066
<INCOME-PRETAX> 0 0 0
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> (801) 0 (133)
<CHANGES> 0 0 0
<NET-INCOME> 25,347 27,950 27,321
<EPS-BASIC> $1.44 $1.59 $1.56
<EPS-DILUTED> $1.44 $1.58 $1.55
<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 reporting.
Amounts are included in Other Assets.
<F3>Amount is comprised of $97,187 of expenses less interest expense of $27,769
reflected elsewhere in this Financial Data Schedule.
<F4>Amount is comprised of $76,132 of expenses less interest expense of $20,501
reflected elsewhere in this Financial Data Schedule.
<F5>Amount is comprised of $49,910 of expenses less interest expense of $9,066
reflected elsewhere in this Financial Data Schedule.
</FN>
</TABLE>
