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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 2000
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
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Commission File No. 1-12494
CBL & ASSOCIATES PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 62-1545718
- -------------------------------- -----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
6148 Lee Highway, Suite 300
Chattanooga, Tennessee 37421
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 855-0001
Securities registered pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of Each Class on which Registered
- ------------------------- --------------------------------------
Common Stock, $.01 par New York Stock Exchange
value per share
9% Series A Cumulative
Redeemable Preferred Stock, par New York Stock Exchange
value $.01 per share,
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 approximately $673,090,299 based on the closing price on the
New York Stock Exchange for such stock on March 23, 2001.
As of March 23, 2001, there were 25,247,198 shares of the Registrant's
Common Stock outstanding and 2,875,000 shares of 9% Series A Cumulative
Redeemable Preferred Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates certain information by reference to the Registrant's
definitive proxy statement filed on March 29, 2001 in respect to the Annual
Meeting of Stockholders to be held on May 2, 2001.
1
FORM 10-K
TABLE OF CONTENTS
Item No. Page
PART I
Item 1 Business................................................... 3
Item 2 Properties................................................. 16
Item 3 Legal Proceedings.......................................... 38
Item 4 Submission of Matters to a Vote of Security Holders........ 38
PART II
Item 5 Market for Registrant's Common Equity and Related
Shareholder Matters........................................ 39
Item 6 Selected Financial Data.................................... 40
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 41
Item 7A Quantitative and Qualitative Disclosures about Market Risk. 51
Item 8 Financial Statements and Supplementary Data................ 51
Item 9 Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure........................ 51
PART III
Item 10 Directors and Executive Officers of the Registrant......... 51
Item 11 Executive Compensation..................................... 52
Item 12 Security Ownership of Certain Beneficial Owners
and Management............................................. 52
Item 13 Certain Relationships and Related Transactions............. 52
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K........................................ 52
2
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION OR THE PURPOSE
OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
This Annual Report on Form 10-K contains "forward-looking statements", such
as information relating to the Company's growth strategy, projects targeted for
development or under construction, liquidity and capital resources, and
compliance with environmental laws and regulations. Such statements are subject
to certain risks and uncertainties which could cause actual results to differ
materially, including, but not limited to, those set forth below. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which, unless otherwise expressly indicated, speak only as of December 31, 2000.
The Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events.
PART I
ITEM 1. BUSINESS.
FORMATION OF THE COMPANY
CBL & Associates Properties, Inc. (the "Company") is a self-managed,
self-administered, fully-integrated real estate company which is engaged in the
ownership, operation, marketing, management, leasing, expansion, development,
redevelopment, acquisition and financing of regional malls and community and
neighborhood centers. The Company was incorporated on July 13, 1993 under the
laws of the State of Delaware to acquire an interest in substantially all of the
real estate properties owned by CBL & Associates, Inc. and its affiliates
("CBL") and to provide a public vehicle for the expansion of CBL's shopping
center business.
The Company conducts substantially all of its business through CBL &
Associates Limited Partnership, a Delaware Limited Partnership (the "Operating
Partnership"), in which the Company owns an indirect 68.0% interest and of which
the Company's wholly-owned subsidiary is the sole general partner. To comply
with certain technical requirements of the Internal Revenue Code of 1986, as
amended (the "Code") applicable to Real Estate Investment Trusts' ("REITs"), the
Company's property management and development activities, sales of peripheral
land and maintenance and security operations are carried out through CBL &
Associates Management, Inc. (the "Management Company").
On November 3, 1993, the Company completed the initial public offering (the
"Offering") of 15,400,000 shares of its common stock, par value $.01 per share
(the "Common Stock"). Simultaneously with the completion of the Offering, CBL
transferred to the Operating Partnership substantially all of CBL's interests in
its real estate properties and its management and development operations in
exchange for an interest in the Operating Partnership. CBL also acquired an
additional interest in the Operating Partnership for a cash payment.
The Offering and the application of proceeds therefrom, including the
Operating Partnership's acquisition of certain property interests, and the
contribution by CBL of property interests to the Operating Partnership, are
referred to herein as the "Formation."
In September 1995, the Company completed a follow-on offering of 4,163,500
shares of its Common Stock at $20.625 per share. CBL purchased 150,000 of these
shares.
In January 1997, the Company completed a follow-on offering of 3,000,000
shares of its Common Stock at $26.125 per share. CBL purchased 55,000 of these
shares.
3
In June 1998, the Company completed a public offering of 2,875,000 shares
of 9% Series A Cumulative Redeemable Preferred Stock (the "Series A Preferred
Stock") at a price to the public of $25.00 per share. The net proceeds of $70
million were used to repay variable rate indebtedness incurred in the Company's
development and acquisition programs.
After giving effect to the above transactions, at December 31, 2000 CBL
(including interests held by former executives) held a 25.5% limited partner
interest in the Operating Partnership, the Company held a 68.0% general and
limited partner interest in the Operating Partnership and third parties held a
6.5% limited partner interest. In addition, CBL holds approximately 2.0 million
of the outstanding shares of Common Stock for a total ownership share of 30.9%.
On September 25, 2000, the Company entered into a series of agreements with
Jacobs Realty Investors Limited Partnership and certain of its affiliates and
partners ("Jacobs") pursuant to which the Company agreed to acquire from Jacobs
a portfolio of 21 malls and 2 associated centers for an aggregate consideration
of approximately $1.3 billion. The transaction closed on January 31, 2001.
Additionally, in a separate transaction, the Company acquired the remaining 50%
interest in Madison Square Mall as of January 31, 2001. In connection with these
transactions, the Operating Partnership issued approximately 12.7 million
special common units of the Operating Partnership ("SCUs"), representing in the
aggregate a 25.48% limited partner interest in the Operating Partnership.
Additionally, in connection with these transactions, the Operating Partnership
incurred or assumed an aggregate $ 865.5 million of additional indebtedness.
After giving effect to this transaction, CBL (including interests held by former
executives) held a total 22.9% ownership interest in the Company and the
Operating Partnership, the Company held a 50.8% general and limited partner
interest in the Operating Partnership and Richard E. Jacobs and his affiliates
held a 23.0% limited partner interest in the Operating Partnership.
GENERAL
The Company owns interests in a portfolio of properties, which as of
December 31, 2000 consisted of 30 enclosed regional malls (the "Malls"), 16
associated centers (the "Associated Centers"), each of which is part of a
regional shopping mall complex, and 72 independent community and neighborhood
shopping centers (the "Community Centers"). Except for eleven Malls, three
Associated Centers and four Community Centers which were acquired from third
parties, each of these properties were developed by CBL or the Company.
Additionally, as of December 31, 2000 the Company owned two regional Malls,
one office building, one neighborhood shopping center and one mall expansion
currently under construction (the "Construction Properties"). The Company also
owned as of December 31, 2000 options to acquire certain shopping center
development sites (the "Development Properties").
The Company also owned, as of December 31, 2000, mortgages (the
"Mortgages") on community and neighborhood shopping centers owned by non-CBL
affiliates. The Mortgages were granted in connection with sales by CBL of
certain properties previously developed by CBL. The Company also owns an
interest in a three-story office building in Chattanooga, Tennessee, a portion
of which serves as the Company's headquarters (the "Office Building"). The
Malls, Associated Centers, Community Centers, Construction Properties,
Development Properties, Mortgages and Office Building (but without taking into
account any of the properties acquired in the Jacobs transaction) are
collectively referred to herein as the "Properties" and individually as a
"Property".
As of December 31, 2000 the Company had also entered into standby purchase
agreements with third-party developers for the construction, development and
potential ownership of two community centers in Texas (the "Co-Development
Projects"). The developers have utilized these standby purchase agreements as
additional security for their lenders to fund the construction of the
Co-Development Projects. The standby purchase agreements for each of the
Co-Development Projects require the Company to purchase the related
Co-Development Project upon such Co-Development Project meeting certain
completion requirements and rental levels. In return for its commitment to
purchase a Co-Development Project pursuant to a standby purchase agreement, the
Company receives a fee as well as a participation interest in each
Co-Development Project. The outstanding amount of standby purchase agreements at
December 31, 2000 is $51.4 million.
4
The Company and the Operating Partnership generally own a 100% interest in
the Properties. With two exceptions, where the Company and the Operating
Partnership own less than a 100% interest in a Property, the Operating
Partnership is the sole general partner, managing general partner or managing
member of the property partnership or limited liability company which owns such
Property (each a "Property Partnership"). For one Mall and its Associated
Center, affiliates of the Operating Partnership are non-managing general
partners in the two applicable Property Partnerships.
For a full description of the Properties, see Item 2 -- "Properties."
The Company's executive offices are located at 6148 Lee Highway, Suite 300,
Chattanooga, Tennessee 37421-6511. The telephone number at this address is (423)
855-0001.
MANAGEMENT AND OPERATION OF PROPERTIES
Management Company
The Company is self-managed and self-administered. To comply with certain
technical requirements of the Code, the Company's property management and
development activities, sales of peripheral land and maintenance and security
operations are carried out through the Management Company.
The Operating Partnership holds 100% of the preferred stock and 5% of the
common stock of the Management Company. The remaining 95% of the common stock is
held by Charles Lebovitz, his family and his associates. Substantially all of
CBL's asset management, property management and leasing and development
operations, including CBL's executive, property, financial, legal and
administrative personnel, were transferred to the Management Company as part of
the Formation. The Management Company manages all of the Properties (except for
Governor's Square and Governor's Plaza in Clarksville, Tennessee -- see below)
under a management agreement that may be terminated at any time by the Operating
Partnership upon 30 days written notice. In addition, the Management Company
manages certain properties owned by CBL that were not transferred to the Company
in the Formation as well as certain shopping centers owned by non-CBL
affiliates. Through its ownership of the Management Company's preferred stock,
the Operating Partnership enjoys substantially all of the economic benefits of
the Management Company's business. Requirements set forth in the Management
Company's Amended and Restated Certificate of Incorporation, state that a
majority of the Management Company's board of directors are required to be
independent of CBL. From November 1993 to the current date, the board of
directors of the Management Company has consisted of seven of the members of the
Company's board of directors, including four of the Company's independent
directors.
On-Site Management
The on-site property management functions at the Malls include leasing,
management, data processing, rent collection, project bookkeeping, budgeting,
marketing, and promotion. Each Mall, for itself and its Associated Centers, has
an on-site property manager who oversees the on-site staff and an on-site
marketing director who oversees the marketing program for that Mall. District
managers, most of whom are located at the Company's headquarters, oversee the
leasing and operations at a majority of the Community Centers. The on-site Mall
managers are experienced managers with training in mall management.
5
Virtually all operating activities of the Company are supported by a
computer software system which is designed to provide management with operating
data necessary to make informed business decisions on a timely basis. The
Company has a program of on-going upgrades to hardware and software that support
the accounting and management information system. The Company also maintains a
web site to publish integrated information on the world wide web about the
Company and the properties. These systems were developed to more efficiently
assist management in efforts to market the properties, maintain management
quality, enhance investor relations and communications and enhance tenant
relations while minimizing operating expenses. Retail sales analysis, leasing
information, budget controls, accounts receivable/payable, operating expense
variance reports and income analysis are continually available to management.
Through these systems management also has available information that facilitates
the development and monitoring of budgets and other relevant information.
Management pursues periodic preventative property maintenance programs,
which encompass paving, roofing, HVAC and general improvements to the
Properties' common areas. The on-site property managers oversee all such work in
accordance with approved budgets with the coordination of, and reporting to home
office management.
Governor's Square
Governor's Square and Governor's Plaza were the only Properties in the
Company's portfolio on December 31, 2000 in which the Company was not the sole
general partner or managing general partner. Governor's Square is owned by a
Property Partnership, the managing general partner of which is a non-CBL
affiliate which owns a 47.5% interest in the Mall. The Company is a non-managing
general partner of Governor's Plaza. Although the managing general partner of
this partnership controls the timing of distributions of cash flow, the
Company's approval is required for certain major decisions, including permanent
financing, refinancing and sale of all or substantially all of the partnership's
assets. Property management services, including accounting, auditing,
maintenance, promotional programs, leasing, collection and insurance, are
performed by a property manager affiliated with the non-CBL managing general
partner for which such property manager receives a fee.
EMPLOYEES
The Company, through the Management Company, currently employs
approximately 560 full time and 517 part time persons. None of these employees
is currently represented by any union. The Company does not have any employees
other than its statutory officers.
ENVIRONMENTAL MATTERS
Under various federal, state and local laws, ordinances and regulations, a
current or previous owner or operator of real estate may be liable for the costs
of removal or remediation of petroleum, certain hazardous or toxic substances
on, under or in such real estate. Such laws typically impose such liability
without regard to whether the owner or operator knew of, or was responsible for,
the presence of such substances. The costs of remediation or removal of such
substances may be substantial, and the presence of such substances, or the
failure to promptly remediate such substances, may adversely affect the owner's
or operator's ability to sell such real estate or to borrow using such real
estate as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or
remediation of such substances at the disposal or treatment facility, regardless
of whether such facility is owned or operated by such person. Certain laws also
impose requirements on conditions and activities that may affect the environment
or the impact of the environment on human health. Failure to comply with such
requirements could result in the imposition of monetary penalties (in addition
to the costs to achieve compliance) and potential liabilities to third parties.
Among other things, certain laws require abatement or removal of friable and
certain non-friable asbestos-containing materials ("ACMs") in the event of
demolition or certain renovations or remodeling. Certain laws regarding ACMs
require building owners and lessees, among other things, to notify and train
certain employees working in areas known or presumed to contain ACMs. Certain
laws also impose liability for release of ACMs into the air and third parties
may seek recovery from owners or operators of real properties for personal
injury or property damage associated with ACMs. In connection with its ownership
and operation of the Properties, the Company, the Operating Partnership or the
relevant Property Partnership, as the case may be, may be potentially liable for
such costs or claims.
6
All of the Properties (excluding properties upon which the Company holds an
option to purchase but does not yet own) have been subject to Phase I
environmental assessments or updates of existing Phase I environmental
assessments by independent environmental consultants. Such assessments generally
consisted of a visual inspection of the Properties, review of federal and state
environmental databases and certain information regarding historic uses of the
Property and adjacent areas and the preparation and issuance of written reports.
Some of the Properties contain, or contained, underground storage tanks ("UST"s)
used for storing petroleum products or wastes typically associated with
automobile service or other operations conducted at the Properties. At Parkway
Place in Huntsville Alabama asbestos abatement will occur in portions of the
existing mall during demolition which will be completed by the end of the second
quarter of 2001. Certain Properties contain, or contained, dry-cleaning
establishments utilizing solvents. Where believed to be warranted, samples of
building materials or subsurface investigations were, or, will be undertaken. At
certain Properties, where warranted by the conditions, the Company has developed
and implemented an operations and maintenance program that establishes operating
procedures with respect to ACMs. The costs associated with the development and
implementation for such programs were not material.
Although there can be no assurances that such environmental liability does
not exist, other than Parkway Place none of the environmental assessments have
identified and the Company is not aware of any environmental liability with
respect to the Properties that the Company believes would have a material
adverse effect on the Company's financial condition, results of operations or
cash flows. Nevertheless, it is possible that the environmental assessments
available to the Company do not reveal all potential environmental liabilities,
that subsequent investigations will identify material contamination, that
adverse environmental conditions have arisen subsequent to the performance of
the environmental assessments, or that there are material environmental
liabilities of which management is unaware. Moreover, no assurances can be given
that (i) future laws, ordinances or regulations will not impose any material
environmental liability or (ii) the current environmental condition of the
Properties has not been or will not be affected by tenants and occupants of the
Properties, by the condition of properties in the vicinity of the Properties or
by third parties unrelated to the Company, the Operating Partnership or the
relevant Property Partnership. The existence of any such environmental liability
could have an adverse effect on the Company's results of operations, cash flow
and the funds available to the Company to pay dividends.
The Company has not recorded in its financial statements any material
liability in connection with environmental matters.
GENERAL RISKS OF THE COMPANY'S BUSINESS
General Factors Affecting Investments in Shopping Center Properties and
Effect of Economic and Real Estate Conditions
A shopping center's revenues and value may be adversely affected by a
number of factors, including: the national and regional economic climates; local
real estate conditions (such as an oversupply of retail space); perceptions by
retailers or shoppers of the safety, convenience and attractiveness of the
shopping center; and the willingness and ability of the shopping center's owner
to provide capable management and maintenance services. In addition, other
factors may adversely affect a shopping center's value without affecting its
current revenues, including: changes in governmental regulations, zoning or tax
laws; potential environmental or other legal liabilities; availability of
financing; and changes in interest rate levels. There are numerous shopping
facilities that compete with the Properties in attracting retailers to lease
space. In addition, retailers at the Properties face continued competition from
discount shopping centers, outlet malls, wholesale clubs, direct mail,
telemarketing, television shopping networks and shopping via the Internet.
Competition could adversely affect the Operating Partnership's revenues and
funds available for distribution to partners, which in turn will affect the
Company's revenues and funds available for distribution to stockholders.
7
Geographic Concentration
The Properties are located principally in the southeastern United States in
Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South
Carolina, Tennessee and Virginia. Twenty Malls, fifteen Associated Centers,
fifty-four Community Centers and the Office Building are located in these
states. The Company's results of operations and funds available for distribution
to stockholders therefore will be subject generally to economic conditions in
the southeastern United States. As of December 31, 2000, the Properties located
in the southeastern United States accounted for 65.0% of the Company's total
assets, and provided 65.6% of the Company's total revenues for the year ended
December 31, 2000. After giving effect to the Jacobs transaction the properties
located in the southeastern United States account for 64.6% of the Company's
total assets.
Third Party Interests In Certain Properties
As of December 31, 2000 the Operating Partnership owned partial interests
in seven Malls, five Associated Centers, one Community Center, the Office
Building and two Malls under development. The Operating Partnership or an
affiliate of the Company is the managing general partner of the Property
Partnerships that own such Properties, except for the Governor's Square Mall and
its Associated Center, Governor's Plaza, in which affiliates of the Operating
Partnership are non-managing general partners.
Where the Operating Partnership serves as managing general partner of
Property Partnerships, it may have certain fiduciary responsibilities to the
other partners in those partnerships. In certain cases, the approval or consent
of the other partners is required before the Operating Partnership may sell,
finance, expand or make other significant changes in the operations of such
Properties. To the extent such approvals or consents are required, the Operating
Partnership may experience difficulty in, or may be prevented from implementing
its plans with respect to expansion, development, financing or other similar
transactions with respect to such Properties.
With respect to Governor's Square and Governor's Plaza, the Operating
Partnership does not have day-to-day operational control or control over certain
major decisions, including the timing and amount of distributions, which could
result in decisions by the managing general partner that do not fully reflect
the interests of the Company, including decisions relating to the standards that
the Company is required to satisfy in order to maintain its status as a real
estate investment trust for tax purposes. However decisions relating to sales,
expansions, dispositions of all or substantially all of the assets and
financings, are subject to approval by the Operating Partnership. On January 31,
2001, in the Jacobs transaction the Company acquired a non-managing interest in
Kentucky Oaks Mall. This investment will be subject to similar risks as the
investments in Governor's Square and Governor's Plaza.
Dependence on Significant Properties
Hamilton Place Mall in Chattanooga, Tennessee, Coolsprings Galleria in
Nashville, Tennessee and Burnsville Center in Minneapolis (Burnsville),
Minnesota and accounted for approximately 4.9%, 4.7% and 4.7%, respectively, of
total revenues of the Company for the period ended December 31, 2000. The
Company's financial position and results of operations will therefore be
disproportionately affected by the results experienced at these Properties.
Hamilton Place Mall was renovated in 1999 and the Company has started a
renovation of Burnsville Center in 2001. After giving effect to the Jacobs
transaction, Hanes Mall in Winston-Salem, North Carolina would represent the
largest revenue producing property in the combined portfolio. Hamilton Place,
Coolsprings Galleria and Burnsville Center would then represent the next most
significant revenue producing properties. The Company will begin a renovation of
Hanes Mall in 2001. Generally, a renovation is a pro action step taken to both
preserve and enhance a properties dominant position in its markets.
8
Dependence on Key Tenants
As of December 31, 2000, The Limited Inc. Stores (including Intimate
Brands, Inc.) maintained 121 stores in the Company's properties and in the year
ended December 31, 2000 accounted for approximately 6.5% of total revenues of
the Company. As of December 31, 2000, the Venator Group, Inc. (Champs Sports,
Footlocker, etc.) had 74 stores and in the year ended December 31, 2000,
accounted for 2.5% of the total revenues of the Company. As of December 31,
2000, The Gap, Inc. (The Gap, Gap Kids, Old Navy, etc.) had 36 stores and in the
year ended December 31, 2000, accounted for 2.1% of the total revenues of the
Company. Except for theses top three tenants no other tenant provided more than
2% of total revenues for the year ended December 31, 2000. After giving effect
to the Jacobs Transaction The Limited stores (including Intimate Brands, Inc)
would have 209 stores and would represent 9.0% of the mall store GLA in the
combined portfolio, the Venator Group, Inc. would have 142 stores and would
represent 3.0% of mall store GLA in the combined portfolio and The Gap, Inc.
would have 62 stores and represent 3.5% of mall store GLA. These tenants would
represent approximately the same proportion of total revenues after the
transaction as before. The loss or bankruptcy of any of these or other key
tenants could negatively affect the Company's financial position and results of
operations.
THE COMPANY'S STRATEGY FOR GROWTH
Management believes that per share growth in the Company's Funds from
Operations, as defined below, is one of the key factors in enhancing shareholder
value. Management also believes that Funds from Operations is a widely used
measure of the operating performance of REITs, and its consistent determination
provides a relevant basis for comparison among REITs. It is the objective of the
Company's management to achieve growth in Funds from Operations through the
aggressive management of the Company's existing Properties, the expansion and
renovation of existing Properties, the development of new properties, and select
acquisitions. Funds from Operations can also be affected by external factors,
such as inflation, fluctuations in interest rates or changes in general economic
conditions, which are beyond the control of the Company's management.
"Funds from Operations" is defined by the Company as net income (loss)
before property depreciation, other non-cash items, gains or losses on sales of
real estate assets and gains or losses on investments in marketable securities.
The National Association of Real Estate Investment Trusts ("NAREIT") has
clarified the definition of Funds from Operations to include all operating
results - recurring and non-recurring - except those results defined as
"extraordinary items" under accounting principles generally accepted in the
United States. The Company implemented this clarification in the first quarter
of 2000 and no longer adds back to FFO the development costs charged to net
income. This amount was $127,000 for the year ended December 31, 2000. For
comparative purposes, the Company has recomputed its 1999 FFO to exclude the
add-back of development costs charged to net income of $1,674,000. The cost of
interest rate caps and finance costs on the Company's lines of credit are
amortized and included in interest expense and, therefore, reduces Funds from
Operations. Funds from Operations also includes the Company's share of Funds
from Operations in unconsolidated properties and excludes minority interests'
share of Funds from Operations in consolidated properties. The Company excludes
outparcel sales from its Funds from Operations calculation, even though the
NAREIT definition allows their inclusion. Funds from Operations does not
represent cash flow from operations as defined by generally accepted accounting
principals ("GAAP") and is not necessarily indicative of cash available from
operations to fund all cash flow needs and should not be considered an
alternative to net income (loss) for purposes of evaluating the Company's
operating performance or to cash flows as a measure of liquidity.
The Company classifies its regional malls into two categories - stabilized
malls ("Stabilized Malls") which have completed their initial lease-up and new
malls ("New Malls") which are in their initial lease-up phase or are being
redeveloped. At December 31, 2000, the New Mall category was comprised of
Springdale Mall in Mobile, Alabama which was acquired in September 1997 and
which is currently being redeveloped and retenanted; Bonita Lakes Mall in
Meridian, Mississippi which opened in October 1997; Parkway Place Mall in
Huntsville, Alabama which was acquired in December, 1998 and which is being
redeveloped and Arbor Place in Atlanta (Douglasville), Georgia, which opened in
October 1999.
9
Specifically, the Company has implemented its objective of growing its
Funds from Operations and will continue to do so by:
o Acquiring existing retail properties where cash flow can be enhanced
by improved management, leasing, redevelopment and expansion.
-- On September 25, 2000, the Company agreed to acquire from Jacobs
interests in twenty-one malls and two associated centers. The
transaction closed on January 31, 2001. The total gross leasable
area of the twenty-three properties is 19.2 million square feet,
or an average gross leasable area of 914,000 square feet per
mall. The gross leasable area of Mall Stores is approximately 5.9
million square feet. The malls are located in middle markets
predominantly in the Southeast and the Midwest. Following is
certain information concerning properties acquired from Jacobs:
Year of Sales Percentage
most Recent per Mall Store
Name of Year of Expansion/ Proposed Total GLA Mall Store Square GLA
Mall/Location Opening Renovation Ownership (1) GLA Foot(2) Leased(3) Anchors
- ----------------------------------------------------------------------------------------------------------------------------
Brookfield Square. 1967 1997 100.00% 1,041,000 317,000 $407 91% Boston Store, Sears,
Brookfield, WI JCPenney
Cary Towne Center. 1979 1993 80.00% 953,000 296,000 352 96% Dillard's, Hecht's,
Cary, NC Hudson, Belk,
Cherryvale Mall... 1973 1989 100.00% 714,000 305,000 307 86% Bergner's, Marshall
Rockford, IL Fields, Sears
Citadel Mall...... 1981 2000 100.00% 1,068,000 299,000 254 84% Parisian, Dillard's,
Charleston, SC Belk, Target, Sears
Columbia Mall..... 1977 1997 79.00% 1,113,000 299,000 229 87% Dillard's, JCPenney,
Columbia, SC Rich's, Sears
Eastgate Mall (6). 1980 1995 100.00% 1,099,000 270,000 244 73% JCPenney, Kohl's,
Cincinnati,OH Dillard's, Sears
East Towne Mall... 1971 1997 65.00% 895,000 301,000 279 92% Boston Store, Younkers,
Madison, WI Sears, JCPenney
Fashion Square.... 1972 1993 100.00% 786,000 289,000 293 86% Hudson's, JCPenney,
Saginaw, MI Sears
Fayette Mall...... 1971 1993 100.00% 1,096,000 309,000 492 98% Lazarus, Dillard's,
Lexington, KY JCPenney, Sears
Hanes Mall........ 1975 1990 100.00% 1,556,000 555,000 335 93% Dillard's, Belk, Hecht's,
Winston-Salem, NC Sears, JCPenney
Jefferson Mall.... 1978 1999 100.00% 936,000 276,000 262 90% Lazarus, Dillard's,
Louisville, KY Sears, JCPenney
Kentucky Oaks Mall 1982 1995 50.00% 878,000 278,000 257 98% Dillard's(4), Elder-
Paducah, KY(5), Beerman, JCPenney,
Midland Mall...... 1991 - 100.00% 514,000 197,000 237 88% Elder-Beerman,
Midland, MI JCPenney, Sears,
Target
Northwoods Mall... 1972 1995 100.00% 833,000 314,000 279 87% Dillard's, Belk,
Charleston, SC JCPenney, Sears
10
Old Hickory Mall.. 1967 1994 100.00% 556,000 161,000 308 97% Belk, Goldsmith's,
Jackson, TN Sears, JCPenney
Parkdale Mall..... 1986 1993 100.00% 1,411,000 475,000 250 86% Dillard's(4), JCPenney,
Beaumont,TX Montgomery Ward(5),
Sears
Randolph Mall..... 1982 1989 100.00% 376,000 147,000 232 84% Belk, JCPenney,
Asheboro, NC Roses(5), Sears
Regency Mall...... 1981 1999 100.00% 918,000 268,000 244 80% Boston Store, Younkers,
Racine, WI JCPenney, Sears
Towne Mall........ 1977 - 100.00% 521,000 154,000 310 56% Elder-Beerman,
Franklin, OH Dillard's, Sears
Wausau Center..... 1983 1999 100.00% 429,000 156,000 297 96% Younkers, JCPenney,
Wausau, WI Sears
West Towne Mall(6) 1970 1990 65.00% 1,468,000 263,000 355 90% Boston Store, Sears,
Madison, WI JCPenney
---------- ----------
Total............. 19,161,000 5,929,000
========== =========
- -----------
(1) Includes improved outparcels acquired in the transaction.
(2) Annual sales per square foot for the year ended December 31, 1999.
(3) Occupancy as of December 31, 2000.
(4) Represents two Dillard's stores.
(5) Vacant Anchor Store.
(6) Includes Associated Center.
- On January 31, 2001, the Company acquired the 50%
interest in Madison Square Mall in Huntsville, Alabama
not owned by the Company for total consideration of
603,344 special common units in the Operating
Partnership(SCUs) and the assumption of $23.8 million
of non-recourse mortgage debt.
o Maximizing the cash flow from its existing portfolio of Malls,
Associated Centers and Community Centers, and other retail
complexes through aggressive leasing, management, and
marketing, including:
- an active leasing strategy which seeks to increase
occupancy. At December 31, 2000, the occupancy at the
Stabilized Malls, New Malls, Associated Centers, and
Community Centers was 94.5%, 90.4%, 94.9%, and 97.8%,
respectively, as compared to occupancies of 94.5%,
91.8%, 93.2%, and 97.7%, respectively, at December 31,
1999 (excluding, from both years, Parkway Place which
is under redevelopment);
- expanded merchandising, marketing and promotional
activities, with the goal of enhancing tenant sales and
thereby increasing percentage rents. Mall store sales
per square foot for the year ended December 31, 2000
were relatively the same at the Stabilized Malls
compared with the year ended December 31, 1999;
- increased base rents as tenant leases expire,
renegotiation of leases and negotiation of terminations
of leases of under performing retailers. At December
31, 2000 average base rents per square foot at the
Malls, Associated Centers, and Community Centers was
$21.57, $9.88, and $8.85, respectively, as compared to
average base rents per square foot of $20.68, $9.78,
and $8.32, respectively, at December 31, 1999;
11
- control of operating costs. Occupancy costs as a
percentage of sales at the Stabilized Malls increased
slightly to 11.9% for the year ended December 31, 2000
as compared to 11.5% for the year ended December 31,
1999 (excluding acquisition malls from year of
acquisition).
o Expanding and renovating existing properties to maintain their
competitive position.
- Most of the Malls were designed to allow for expansion
and growth through the addition of new department
stores or other large retail stores as anchors
("Anchors"). Twenty-four of the thirty Malls have
undergone expansion or renovation since their opening,
and all of the non-acquired Malls have been either
built or renovated in the last 10 years. Three of the
Malls had available Anchor pads at December 31, 2000.
Twenty existing Anchors at eleven Malls have expansion
potential at their existing stores. During 2000, the
Company renovated and expanded Asheville Mall in
Asheville, North Carolina and Meridian Mall in Lansing
(Okemos), Michigan and expanded Springdale Mall in
Mobile, Alabama. The Company also began construction of
a food court at Georgia Square Mall in Athens, Georgia.
During 2001, the Company will continue to expand and
re-develop Springdale Mall in Mobile, Alabama and
complete the expansion of Meridian Mall in Lansing
(Okemos), Michigan. The Company will also begin the
renovation of Burnsville Center in
Minneapolis(Burnsville), Minnesota and three malls
acquired in the Jacobs transaction: Hanes Mall in
Winston-Salem North Carolina; Fashion Square Mall in
Saginaw, Michigan and Cary Towne Center in Cary, North
Carolina.
- In the Community Center and Associated Center
portfolios, the Company renovated three Community
Centers, and expanded two Community Centers. In 2001,
the Company plans to expand two Community Centers,
renovate at least two Community Centers and redevelop a
vacant theater location in one Associated Center.
o Developing new retail properties with profitable returns on
capital, leading to growth in the future.
12
- In 2000, the Company opened three Mall expansions, one
Associated Center, two Community Centers and two
Community Center expansions. Summary information
concerning these properties is set forth below.
Summary Information Concerning Properties
Opened During the Year Ended December 31, 2000
Anchor Non-
Name of Center/ Total GLA Anchor Percentage Opening
Location GLA (1) (2) GLA Leased(3) Date Anchors
- ----------------------------- ------------ ------------ ------------ ------------- ------------ -------------------
Mall Expansions
- ----------------
Asheville Mall........... 143,000 58,000 85,000 100% Nov-2000 Belk
Asheville, NC
Meridian Mall............ 85,000 85,000 0 - Nov-2000 Jacobson's
Lansing (Okemos), MI
Springdale Mall.......... 45,000 45,000 0 100% Apr-2000 Carmike
Mobile, AL
Associated Centers
- ------------------
Gunbarrel Pointe......(4) 195,000 126,000 69,000 100% Oct-2000 Goody's,
Chattanooga, TN Target(5),
Kohl's(4)
Community Centers
- -----------------
Coastal Way.............. 177,000 144,000 33,000 99% Aug-2000 Sears
Spring Hill, FL
Chesterfield Crossing.... 406,000 391,000 15,000 97% Oct-2000 Home Depot(5),
Richmond, VA PetsMart,
Wal*Mart(5), Ben
Franklin
Community Center Expansions
- ---------------------------
Sand Lake Expansion...... 38,000 24,000 14,000 89% May-2000 Staples
Orlando, FL
Sutton Plaza............. 28,000 28,000 0 100% Feb-2000 A & P Food Market
A & P Expansion
Mt. Olive, NJ
------------ ------------ ------------
Total Properties Opened. 1,117,000 901,000 216,000
============ ============ ============
( 1) Gross Leasable Area ("GLA") includes total square footage of Anchors (whether owned or leased by the Anchor) and
Mall stores or shops.
( 2) Includes total square footage of Anchors (whether owned or leased by the Anchor)
( 3) Percentage leased and committed for Malls does not include
Anchor GLA. For the Community Centers, Associated Centers and
power centers, percentage leased and committed includes
non-Anchor GLA and leased Anchor GLA.
( 4) An additional 87,000 square feet opened in March 2001 containing Kohl's.
( 5) Owned by Anchor.
- As of December 31, 2000 the Company had two Malls, one
Mall expansion, one Associated Center, one Community
Center expansion, and one Office Building under
construction. These properties will add approximately
1,901,000 square feet to the Company's portfolio at
opening. During 2001 and 2002 the Company expects to
open 1,142,000 and 759,000 square feet, respectively.
13
Summary Information Concerning Construction Properties
As of February 28, 2001
Ownership
by Company Percenage
Anchor Non- and Pre-Leased
Name of Center/ Total GLA Anchor Operating and Projected
Location GLA (1) (2) GLA Partnership Committed(3) Opening Anchors
- ------------------------- ----------- ----------- ----------- ------------- -------------- --------------- ---------------
Malls
- -----
The Lakes Mall 558,000 339,000 219,000 90% 70.0% Aug-2001 Sears (4),
Muskegon, MI Younkers (4),
JCPenney (4)
Parkway Place 631,000 350,000 281,000 50% 41.0% Oct-2002 Dillard's (4),
Huntsville, AL Parisian (4)
Mall Expansion
- ----------
Meridian Mall 93,000 80,000 13,000 100% 0% Apr-2001
Lansing (Okemos), MI
Associated Center
- ------------------
Gunbarrel Pointe 87,000 87,000 0 100% 100.0% Mar-2001 Kohl's(5)
Chattanooga, TN
Community Center
- ----------------
Creekwood Crossing 404,000 347,000 57,000 100% 90.0% Apr-2001 Lowe's(4)(5),
Bradenton, FL KMart(5),
Bealls
Office Building
- ---------------
CBL Center 128,000 72,000 56,000 90% 78.0% Dec-2001 CBL &
Chattanooga, TN Associates
Management
----------- ----------- -----------
Total Construction
Properties 1,901,000 1,275,000 626,000
=========== =========== ===========
( 1).....Includes total square footage of Anchors (whether owned or leased by the Anchor).
( 2).....Includes total square footage of Anchors (whether owned or leased by the Anchor).
( 3).....Percentage leased and committed for Malls does not include Anchor GLA.
For the Community Centers, Associated Centers and power centers,
percentage leased and committed includes non-Anchor GLA and leased
Anchor GLA.
( 4).....Owned by Tenant.
( 5).....The anchor store opened in March 2001.
- In addition to the Construction Properties as of
December 31, 2000, the Company was pursuing the
development of a number of sites which the Company
believed were viable for future development as malls
and community and neighborhood shopping centers.
Regional mall development sites were being pursued in
Georgia, Mississippi and South Carolina and Community
and Associated Center shopping center sites were being
pursued in Florida, Tennessee, Pennsylvania and
Virginia.
- In general, the Company seeks out development
opportunities in middle-market trade areas that it
believes are under-serviced by existing retail
facilities, have demonstrated improving demographic
trends or otherwise afford an opportunity for effective
market penetration and competitive presence.
14
RISKS ASSOCIATED WITH THE COMPANY'S GROWTH STRATEGY
In connection with the implementation of this growth strategy, the Company
and the Operating Partnership will incur various risks including the risk that
development or expansion opportunities explored by the Company and the Operating
Partnership may be abandoned; the risk that construction costs of a project may
exceed original estimates, possibly making the project not profitable; the risk
that the Company and the Operating Partnership may not be able to refinance
construction loans which are generally with full recourse to the Company and the
Operating Partnership; the risk that occupancy rates and rents at a completed
project will not meet projections, and will therefore be insufficient to make
the project profitable; and the need for anchor, mortgage lender and property
partner approvals for certain expansion activities. In the event of an
unsuccessful development project, the Company's and the Operating Partnership's
loss could exceed its investment in the project.
The Company has in the past elected not to proceed with certain development
projects and anticipates that it will do so again from time to time in the
future. If the Company elects not to proceed with a development opportunity, the
development costs associated therewith ordinarily will be charged against income
and Funds From Operations for the then-current period. Any such charge could
have a material adverse effect on the Company's results of operations for the
period in which the charge is taken.
COMPETITION
There are numerous shopping facilities that compete with the Properties in
attracting retailers to lease space. The Malls are generally located in
middle-markets. Management believes that the Malls have strong competitive
positions because they generally are the only or largest enclosed malls within
their respective trade areas. In addition, retailers at the Properties face
continued competition from discount shopping centers, outlet malls, wholesale
clubs, direct mail, telemarketing, television shopping networks and shopping via
the Internet. Competition could adversely affect the Operating Partnership's
revenues and funds available for distributions to partners, which in turn will
affect the Company's revenues and funds available for distribution to
stockholders.
SEASONALITY
The Company's business is somewhat seasonal in nature with tenant sales
achieving the highest levels during the fourth quarter because of the holiday
season. The Malls earn most of their "temporary" rents (rents from short-term
tenants) during the holiday period. Thus, occupancy levels and revenue
production are generally the highest in the fourth quarter of each year. Results
of operations realized in any one quarter may not be indicative of the results
likely to be experienced over the course of the entire year.
QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST
The Company has elected to be taxed as real estate investment trust under
the Code, commencing with its taxable year ended December 31, 1993, and will
seek to maintain such status. As a qualified real estate investment trust, the
Company generally will not be subject to Federal income tax to the extent it
distributes at least 90% of its current year real estate investment trust
taxable income to its shareholders. If the Company fails to qualify as a real
estate investment trust in any taxable year, the Company will be subject to
Federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates.
INSURANCE
The Operating Partnership carries comprehensive liability, fire, extended
coverage and rental loss insurance covering all the Properties, with policy
specifications and insured limits customarily carried for similar properties.
Management believes that the Properties are adequately insured in accordance
with industry standards.
15
ITEM 2. PROPERTIES.
MALLS
Each of the Malls is an enclosed regional shopping complex. Each Mall
generally has at least three Anchors which own or lease their stores and
numerous non-anchor stores with GLA less than 30,000 square feet ("Mall
Stores"), most of which are national or regional retailers, located along
enclosed malls connecting the Anchors. At most of the Malls, additional
freestanding restaurants and retail stores are located on the periphery of the
Mall complex. These freestanding stores are, in most cases, owned by their
occupants. As of December 31, 2000, thirteen of the Mall complexes included one
or more Associated Centers.
The total GLA of the 30 Malls owned on December 31, 2000 was approximately
22.6 million square feet or an average GLA of approximately 754,000 square feet
per Mall. Mall Store GLA was 8,033,000 square feet including leased
free-standing buildings at December 31, 2000. The Company wholly owned all but
seven of such Malls and managed all but one of them.
In the years ended December 31, 1998, 1999 and 2000, Mall revenues
represented approximately 74.9%, 76.9% and 77.3%, respectively, of total
revenues from the Company's Properties.
Occupancy of mall stores in the Stabilized Malls ("Stabilized Mall Stores")
was 94.5% at December 31, 1999, and at December 31, 2000.
In the years ended December 31, 1998, 1999 and 2000, average Stabilized
Mall Store sales per square foot were approximately $272.00, $283.75 and
$283.00, respectively (computed using a monthly weighted average).
Average base rent per square foot at the Mall Stores increased from $20.73
at December 31, 1999 to $21.57 at December 31, 2000.
Occupancy costs as a percentage of sales for tenants in the Stabilized
Malls (excluding acquisition malls from the year of acquisition) were 11.1%,
11.5% and 11.9% for the years ended December 31, 1998, 1999, and 2000,
respectively.
The Malls are generally located in middle-markets. Management believes that
the Malls have strong competitive positions because they generally are the only,
or the dominant enclosed malls within their respective trade areas. Trade areas
have been identified by management based upon a number of sources of
information, including the location of other malls, publicly available
population information, customer surveys, surveys of customer automobile license
plates, as well as ZIP codes and third-party market studies.
The three largest revenue-producing Malls in 2000 were Hamilton Place Mall,
Coolsprings Galleria and Burnsville Center. Hamilton Place is located on a
187-acre site in Chattanooga, Tennessee and represented, as of December 31,
2000, 3.4% of the Properties' total GLA, 3.6% of total Mall Store GLA and 4.9%
of total revenues from the Company's Properties. Coolsprings Galleria is located
on a 150-acre site in Nashville, Tennessee and represented, as of December 31,
2000, 3.4% of the Properties' total GLA, 3.6% of total Mall Store GLA and 4.7%
of total revenues from the Company's Properties. Burnsville Center is located in
the Suburbs of Minneapolis, Minnesota in Burnsville and represented, as of
December 31, 2000, 3.1% of the Properties' total GLA, 3.9% of total Mall Store
GLA and 4.7% of total revenues from the Company's Properties.
Twenty-four of the thirty Malls owned on December 31, 2000 had undergone an
expansion or remodeling since their opening, and all but four of the Malls were
either built, renovated or expanded in the last 10 years one of which, Parkway
Place in Huntsville, Alabama is currently scheduled for
16
demolition and redevelopment. In 2000, the Company renovated and expanded
Asheville Mall in Asheville, North Carolina and Meridian Mall in Lansing,
Michigan. The Company will complete the expansion of Meridian Mall in 2001 and
will begin the renovation of Burnsville Center in Minneapolis (Burnsville),
Minnesota and three malls in the Jacobs transaction: Hanes Mall in
Winston-Salem, North Carolina, Fashion Square in Saginaw, Michigan and Cary
Towne Center in Cary, North Carolina. At December 31, 2000 three of the Malls
have available Anchor pads providing expansion potential totaling approximately
405,700 buildable square feet. At December 31, 2000 twenty existing Anchors at
eleven Malls have aggregate expansion potential at their existing stores of
approximately 473,000 buildable square feet.
The land underlying the Malls owned on December 31, 2000 was owned in fee
simple in all cases, except for Walnut Square, WestGate Mall, St. Clair Square,
Bonita Lakes Mall, Meridian Mall and Stroud Mall which were each subject to
long-term ground leases for all or a portion of their land.
The table on the following page sets forth certain information for each of
the Malls as of December 31, 2000.
17
Percen-
Mall tage
Store Mall Fee
Year of Ownership by Total Sales Store Simple
Year of Most Company and Mall per GLA Anchor or
Opening/ Recent Operating Total Store Square Leased Vacan- Ground
Name of Mall/Location Acquisition Expansion Partnership GLA(1) GLA(2) Foot(3) (4) Anchors cies Lease
- ----------------------- ----------- --------- ------------- -------- ---------- ------- ------ ---------------------- ------ ------
New Malls
- ---------
Arbor Place.........(5) 1999 N/A 100% 1,035,320 386,380 $281 92% Dillard's, Parisian, None Fee
Atlanta(Douglasville),GA Sears, dekor, Old Navy,
Bed , Bath & Beyond
Bonita Lakes Mall...(5) 1997 N/A 100% 641,047 192,620 250 100% Goody's, Dillard's, None Ground
Meridian, MS JCPenney, Sears, McRae's Lease
(6)
Parkway City Mall...(5) 1957/1998 1974 50% 414,540 187,825 199 N/A McRae's, Parisian None Fee
Huntsville, AL
Springdale Mall........ 1960/1997 2000 100% 954,237 319,936 221 82% Dillard's, McRae's, None Fee
Mobile, AL Burlington Coat, Goody's
--------- --------- ---
Total New Mals 3,045,144 1,086,761 88%
========= ========= ===
Stabilized Malls
- ----------------
Asheville Mall......... 1972/1998 2000 100% 816,755 253,420 $313 99% Dillard's, JCPenney, None Fee
Asheville, NC Sears, Belk
Burnsville Center...... 1977/1998 N/A 100% 1,069,887 408,844 312 94% Mervyn's, Dayton's, None Fee
Burnsville, MN JCPenney, Sears
College Square......(5) 1988 1993 100% 459,473 156,604 212 97% JCPenney, Sears, None Fee
Morristown, TN Wal*Mart, Goody's,
Proffitt's
CoolSprings Galleria(5) 1991 1994 100% 1,129,764 374,749 336 100% Hechts, Dillard's, None Fee
Nashville, TN Sears, JCPenney,
Parisian
Foothills Mall......(5) 1983/1996 1997 95% 476,768 180,072 180 92% Sears, JCPenney, None Fee
Maryville, TN Goody's,
Proffitt's I,
Proffitt's II
Frontier Mall.......(5) 1981 1997 100% 523,004 234,003 206 90% Dillard's I, JCPenney, None Fee
Cheyenne, WY Dillard's II, Sears
Georgia Square......(5) 1981 N/A 100% 677,906 256,352 247 97% Belk, JCPenney, None Fee
Athens, GA Macy's, Sears
Governor's Square...(5) 1986 1999 48% 690,437 269,436 241 95% JCPenney, Parks-Belk, None Fee
Clarksville, TN Sears, Dillard's,
Goody's
Hamilton Place......(5) 1987 1998 90% 1,166,776 375,128 356 100% Dillard's, Parisian, None Fee
Chattanooga, TN Proffitt's I,
Proffitt's II, Sears,
JCPenney
Hickory Hollow Mall.... 1978/1998 1991 100% 1,125,946 455,757 248 92% JCPenney, Sears, None Fee
Nashville, TN Dillard's, Hechts
Janesville Mall........ 1973/1998 1998 100% 609,364 161,535 312 84% JCPenney, Kohl's, None Fee
Janesville, WS Boston Store, Sears
Lakeshore Mall......(5) 1992 1999 100% 500,890 153,062 214 91% KMart, Belk-Lindsey, None Fee
Sebring, FL Sears JCPenney, Beall's
(9)
Madison Square......(5) 1984 1985 50% 934,161 301,326 311 98% Dillard's, JCPenney, None Fee
Huntsville, AL McRae's, Parisian, Sears
Meridian Mall.......... 1969/1998 2000 100% 794,461 463,292 332 92% JCPenney, Mervyn's, None Fee
Lansing, MI Dayton Hudson, Ground
Jacobson's Lease
(8)
Oak Hollow Mall.....(5) 1995 N/A 75% 802,239 251,411 221 95% Goody's, JCPenney, None Fee
High Point, NC Belk-Beck, Sears,
Dillard's
18
Percen-
Mall tage
Store Mall Fee
Year of Ownership by Total Sales Store Simple
Year of Most Company and Mall per GLA Anchor or
Opening/ Recent Operating Total Store Square Leased Vacan- Ground
Name of Mall/Location Acquisition Expansion Partnership GLA(1) GLA(2) Foot(3) (4) Anchors cies Lease
- ----------------------- ----------- --------- ------------- -------- ---------- ------- ------ ---------------------- ------ -----
Pemberton Square....(5) 1985 1999 100% 351,920 133,685 160 84% JCPenney, McRae's, None Fee
Vicksburg, MS Dillard's, Goody's
Plaza del Sol Mall..(5) 1979 1996 51% 261,507 105,326 190 99% Beall Bros(10), None Fee
Del Rio, TX JCPenney,
KMart
Post Oak Mall.......(5) 1982 1985 100% 776,347 318,166 266 90% Beall Bros.(9), None Fee
College Station, TX Dillard's, Foley's,
Dillard's, Sears,
JCPenney
Rivergate Mall......... 1971/1998 1998 100% 1,073,970 326,210 308 89% Sears, Dillard's, None Fee
Nashville, TN JCPenney, Hechts
St. Clair Square....... 1974/1996 1993 100% 1,044,502 315,559 366 98% Famous Barr, Sears, None Fee/
Fairview Heights, IL JCPenney, Dillard's Ground
Lease
(10)
Stroud Mall............ 1977/1998 1994 100% 427,194 177,011 285 100% JCPenney, Sears, None Ground
Stroudsburg, PA The Bon-Ton Lease
(11)
Turtle Creek Mall...(5) 1994 1995 100% 846,234 223,140 300 100% JCPenney, Sears, None Fee
Hattiesburg, MS Dillard's, McRae's I,
Goody's, McRae's II
Twin Peaks Mall.....(5) 1985 1997 100% 556,248 242,863 247 95% JCPenney, Dillard's I, None Fee
Longmont, CO Dillard's II, Sears
Walnut Square.......(5) 1980 1992 100% 450,385 223,650 224 96% Belk, JCPenney, None Ground
Dalton, GA Proffitt's, Sears, Lease
Goody's (12)
WestGate Mall.......... 1975/1995 1996 100% 1,100,513 286,044 281 97% Belk-Hudson, JCPenney, None Fee/
Spartanburg, SC Dillard's, Sears, Bed, Ground
Bath & Beyond Lease
(7)
York Galleria.......... 1998/1999 N/A 100% 766,972 229,755 280 88% Boscov's, JCPenney, None Fee
York, PA ---------- ---------- --- --- Sears, The Bon-Ton
Total Stabilized Malls 19,433,623 6,876,400 $283 94%
========== ========== ==== ===
Grand Total All Malls 22,478,767 7,963,161
========== =========
19
( 1) Includes the total square footage of the Anchors (whether owned or
leased by the Anchor) and Mall Stores. Does not include future expansion
areas.
( 2) Does not include Anchors.
( 3) Totals represent weighted averages.
( 4) Includes tenants paying rent for executed leases as of December 31, 2000.
( 5) Developed by the Company.
( 6) Company is the lessee under a ground lease for 82 acres which extends
through June 30, 2035. The average annual base rent is $37,656 increasing
by 6% per year.
(7) The Company is the lessee under several ground leases for approximately
53% of the underlying land. The leases extend through October 31, 2084,
including six ten-year renewal options. Rental amount is $130,000 per year.
In addition to base rent, the landlord receives 20% of the percentage rents
collected. The Company has a right of first refusal to purchase the fee.
(8) The Company is the lessee under several ground leases in effect through
March 2067 with extension options. Fixed rent is $18,700 per year and 3% to
4% of all rents.
(9) Beall Bros. operating in Texas is unrelated to Beall's operating in
Florida.
(10) The Company is the lessee under a ground lease for 20 acres which extends
through January 31, 2073, including 14 five-year renewal options and one
four-year renewal option. Rental amount is $40,000 per year. In addition to
base rent, the landlord receives .25% of Dillard's sales in excess of
$16,200,000.
(11) The Company is the lessee under a ground lease which extends through July
2089. The rental amount is $50,000 with an additional $100,000 paid every
10 years.
(12) The Company is the lessee under several ground leases which extend through
March 14, 2078, including six ten-year renewal options and one eight-year
renewal option. Rental amount is $149,450 per year. In addition to base
rent, the landlord receives 20% of the percentage rents collected. The
Company has a right of first refusal to purchase the fee.
Anchors. Anchors are a critical factor in a Mall's success because the
public's identification with a property typically focuses on its Anchors. Mall
Anchors generally are department stores whose merchandise appeals to a broad
range of shoppers. Although the Malls derive a smaller percentage of their
operating income from Anchor stores than from Mall Stores, strong Anchors play
an important part in generating customer traffic and making the Malls desirable
locations for Mall Store tenants.
Anchors either own their stores together with the land under them,
sometimes with adjacent parking areas, or enter into long-term leases with
respect to their stores at rental rates that are significantly lower than the
rents charged to tenants of Mall Stores. Anchors account for approximately 7.1%
of the total revenues from the Company's Properties. Each Anchor which owns its
own store has entered into a reciprocal easement agreement with the Company
covering, among other things, operating covenants, reciprocal easements,
property operations, initial construction and future expansions.
As of December 31, 2000, the Malls had a total of 135 Anchors and one
vacant Anchor store at Asheville Mall. The following table indicates all Mall
Anchors and sets forth the aggregate number of square feet owned or leased by
Anchors in the Malls as of December 31, 2000.
20
Mall Anchor Summary Information
As of December 31, 2000
GLA GLA Total
Number Owned Leased Occupied
of Anchor by by by
Name Stores Anchor Anchor Anchor (1)
- ----------------------------------------- ----------------- ------------------ ---------------- ------------------
JCPenney............................ 27 1,015,865 1,586,868 2,602,733
Sears............................... 25 1,929,897 1,042,651 2,972,548
Dillard's............................ 21 2,681,459 202,004 2,883,463
Sak's
Proffitt's....................... 10 1,203,750 0 1,203,750
McRae's.......................... 7 511,359 243,000 754,359
Parisian......................... 5 351,756 209,541 561,297
----------------- ------------------ ---------------- ------------------
Subtotal..................... 22 2,066,865 452,541 2,519,406
Belk
Belk............................. 4 0 426,991 426,991
Belk-Lindsey..................... 1 0 61,029 61,029
Belk-Hudson...................... 1 0 156,648 156,648
Parks-Belk....................... 1 0 122,367 122,367
----------------- ------------------ ---------------- ------------------
Subtotal..................... 7 0 767,035 767,035
The May Company
Foley's.......................... 1 103,888 0 103,888
Famous Barr...................... 1 0 236,489 236,489
----------------- ------------------ ---------------- ------------------
Subtotal..................... 2 103,888 236,489 340,377
Goody's.............................. 9 0 292,749 292,749
Montgomery Ward(vacant).............. 1 0 92,484 92,484
Dayton-Hudson........................ 2 323,326 0 323,326
The Bon Ton ......................... 2 131,915 87,024 218,939
Wal*Mart............................. 1 0 112,541 112,541
Kmart................................ 2 0 173,940 173,940
Mervyn's............................. 2 124,919 74,889 199,808
Boscov's............................. 1 150,000 0 150,000
Burlington Coat...................... 1 0 153,345 153,345
Macy's............................... 1 115,623 0 115,623
Boston Store......................... 1 0 96,000 96,000
Kohl's............................... 1 0 88,691 88,691
Dekor................................ 1 0 80,000 80,000
Jacobson's........................... 1 0 83,916 83,916
Bed, Bath & Beyond................... 2 0 73,823 73,823
Old Navy............................. 1 0 37,585 37,585
Beall Bros. (Texas).................. 2 0 61,916 61,916
Beall's (Florida).................... 1 0 45,844 45,844
----------------- ------------------ ---------------- ------------------
Total........................ 136 8,643,757 5,842,335 14,486,092
================= ================== ================ =================
(1)Includes all square footage owned by or leased to such Anchor including tire,
battery and automotive facilities and storage square footage.
MALL STORES. As of December 31, 2000, the Malls had approximately 4,277
Mall Stores. National or regional chains (excluding individually franchised
stores) leased approximately 79.6% of the occupied Mall Store GLA. Although Mall
Stores occupied only 35.5% of total Mall GLA, the Malls derived approximately
88.3% of their revenue from Mall Stores for the year ended December 31, 2000.
Among the companies with the largest representation among Mall Stores are:
The Limited, Inc./Intimate Brands, Inc. stores (The Limited, Limited Too,
Express, Lerner New York, Lane Bryant, Structure, Victoria's Secret, and Bath
and Body Works) and Venator Group, Inc. (Footlocker, Lady Footlocker and Champs
Sports Stores). As of December 31, 2000, The Limited, Inc.'s and Intimate
Brands, Inc.'s 121 stores accounted for 10.3% of total mall leased GLA and 6.7%
of total revenues from the Company's Properties. As of December 31, 2000 Venator
Group, Inc. accounted for 2.9% of total mall leased GLA and 2.5% of total
revenues. No single Mall Store retailer accounted for more than 10.3% of total
leased GLA and no single Mall Store retailer accounted for more than 6.7% of
total revenues from the Company's Properties for the year ended December 31,
2000.
21
The following table sets forth certain information for executed renewal
leases with current tenants or leases of previously occupied space with new
tenants at the Malls during the year ended December 31, 2000.
Prior Lease New Lease Increase Increase
Total Base and Initial Year per New Lease per
Number Square Percentage Rent Base Rent Square Average Square
of leases Feet per Square Foot per Square Foot Foot Base Rent Foot
- --------------- --------------- ------------------ ------------------- ------------- ---------------- -------------
309 688,008 $23.36 $25.05 $1.69 $25.75 $2.39
The following table sets forth the total Mall Store GLA, the total square
footage of leased Mall Store GLA, the percentage of Mall Store GLA leased, the
average base rent per square foot of Mall Store GLA and average Mall Store sales
per square foot as of the end of each of the past five years.
Stabilized Mall Store Summary Information
Total Percentage Average Average Mall
Total Mall Store of Mall Store Base Rent Store Sales
At Mall Store Leased GLA per Square per Square
December 31, GLA GLA Leased (1) Foot (2) Foot (3)
- ---------------------- ---------------- ----------------- ------------------ ----------------- -------------------
1996............. 3,452,997 3,073,190 89.0% $ 19.03 $ 240
1997............. 3,503,490 3,214,176 91.7 18.98 263
1998.............. 7,166,498 6,707,283 93.6 19.82 273
1999.............. 7,429,503 6,956,451 94.5 20.68 284
2000(4)........... 7,558,160 7,110,705 94.5 21.57 283
(1) Mall Store occupancy includes tenants with executed leases who are paying
rent.
(2) Average base rent per square foot is based on Mall Store GLA occupied as of
the last day of the indicated period for the preceding twelve-month period.
(3) Calculated for the preceding twelve-month period.
(4) Excludes Parkway Place GLA which will be renovated.
Lease Expirations. The following table shows the scheduled lease
expirations for Malls Stores only in the Malls owned on December 31, 2000
(assuming that none of the tenants exercise renewal options).
Mall Lease Expiration
Percentage of Total
Represented by
Approximate Expiring Leases
Mall Store ------------------------------
Number of Annualized Base GLA of Base Rent Annualized Leased Mall
Year Ending Leases Rent of Expiring Expiring per Square Base Rent Store GLA
December 31, Expiring Leases (1) Leases Foot
- --------------------- -------------- ----------------- --------------- ------------- ------------- ----------------
2001............. 328 $11,033,751 579,764 $19.03 8.1% 8.4%
2002............. 314 13,372,313 695,278 19.23 9.8 10.1
2003............. 281 13,598,922 696,769 19.52 9.9 10.1
2004............. 311 16,028,501 692,075 23.16 11.7 10.0
2005............. 377 20,809,875 999,520 20.82 15.2 14.5
2006............. 197 9,703,487 484,725 20.02 7.1 7.0
2007............. 205 12,541,485 630,774 19.88 9.2 9.2
2008............. 161 11,208,791 523,183 21.42 8.2 7.6
2009............. 177 11,193,532 447,891 24.99 8.2 6.5
2010............. 147 8,190,658 358,544 22.84 6.0 5.2
(1) Total annualized base rent for all leases executed as of December 31, 2000
includes rent for space that is leased but not yet occupied but excludes (i)
percentage rents, (ii) additional payments by tenants for common area
maintenance, real estate taxes and other expense reimbursements and (iii)
contractual rent escalations and cost of living increases due after December
31, 2000.
Cost of Occupancy. Management believes that in order to maximize the
Company's Funds from Operations, tenants in Mall Stores must be able to operate
profitably. A major factor contributing to tenant profitability is the tenant's
cost of occupancy.
22
The following table summarizes for Stabilized Mall Store tenants the
occupancy costs under their leases as a percentage of total Mall Store sales for
the last three years.
For the Year Ended
December 31, (1)
----------------------------------
1998 1999 2000
---------- ----------- -----------
Mall Store sales (in millions)(2)......... $1,105.5 $1,426.3 $1,487.1
========== =========== ==========
Minimum rents............................. 7.7% 7.8% 7.9%
Percentage rents.......................... 0.3 0.4 0.5
Expense recoveries (3).................... 3.1 3.3 3.5
---------- ----------- -----------
Mall tenant occupancy costs............... 11.1% 11.5% 11.9%
========== =========== ===========
(1) Excludes Malls not owned or open for full reporting period.
(2) Consistent with industry practice, sales are based on reports by
retailers (excluding theaters) leasing Mall Store GLA and occupying
space for the reporting period. Represents 100% of sales for these
Malls. In certain cases, the Company and the Operating Partnership will
own less than 100% interest in these Malls.
(3) Represents real estate tax and common area maintenance charges.
ASSOCIATED CENTERS
The sixteen Associated Centers owned at December 31, 2000 were each part of
a Mall complex and generally had one or two Anchor tenants and various smaller
tenants. Anchor tenants in these centers included such retailers as
Books-A-Million, Target, Toys "R" Us, TJ Maxx, and Goody's, which were category
dominant retailers that benefited from the regional draw of the Malls. The
Associated Centers also generally increase the draw to the total Mall complex.
Total leasable GLA of the sixteen Associated Centers was approximately 2.5
million square feet, including Anchors, or an average of approximately 156,000
square feet per center. As of December 31, 2000, 94.9% of total leasable GLA at
the Associated Centers was occupied. During 2000 the Company opened one
Associated Center in Chattanooga, Tennessee.
In the years ended December 31, 1998, 1999, and 2000, revenues from the
Associated Centers represented approximately 3.9%, 3.7% and 4.1%, respectively,
of total revenues from the Company's Properties.
In the years ended December 31, 1998, 1999 and 2000, average tenant sales
per square foot at the Associated Centers were approximately $172, $184 and
$185, respectively.
Average base rent per square foot at the Associated Centers increased from
$9.78 at December 31, 1999 to $9.88 at December 31, 2000.
Each of the Associated Centers was developed by the Company, except for
WestGate Crossing, Village at Rivergate and Courtyard at Hickory Hollow which
were acquired in August 1997, July 1998 and July 1998, respectively. All of the
land underlying the Associated Centers is owned in fee simple except for Bonita
Crossing.
23
Lease Expirations. The following table shows the scheduled lease
expirations for the Associated Centers owned as on December 31, 2000 (assuming
that none of the tenants exercise renewal options).
Associated Center Lease Expiration
Percentage of Total
Represented by
Approximate Expiring Leases
Mall Store ------------------------------
Number of Annualized Base GLA of Base Rent Annualized Leased Mall
Year Ending Leases Rent of Expiring Expiring per Square Base Rent Store GLA
December 31, Expiring Leases (1) Leases Foot
- --------------------- -------------- ----------------- --------------- ------------- ------------- ----------------
2001........... 17 $442,630 47,467 $9.32 4.1% 4.4%
2002........... 22 960,929 70,339 13.66 8.8 6.4
2003........... 24 1,158,602 128,650 9.01 10.6 11.8
2004........... 25 1,305,010 178,690 7.30 11.9 16.4
2005........... 21 1,825,523 227,783 8.01 16.7 20.9
2006........... 7 473,286 44,453 10.65 4.3 4.1
2007........... 3 96,315 8,476 11.36 0.9 0.8
2008........... 2 224,500 14,000 16.04 2.1 1.3
2009........... 9 1,141,451 75,404 15.14 10.4 6.9
2010........... 4 554,320 59,641 9.29 5.1 5.5
(1) Total annualized base rent for all leases executed as of December 31,
2000 includes 12 months of rent for space that is newly leased but not
yet occupied and base rent on ground leases with no square footage but
excludes (i) percentage rents, (ii) additional payments by tenants for
common area maintenance, real estate taxes and other expense
reimbursements and (iii) contractual rent escalations and cost of
living increases due after December 31, 2000.
24
The following table sets forth certain information for executed renewal
leases with current tenants or leases of previously occupied space with new
tenants at the Associated Centers during the year ended December 31, 2000.
Prior Lease New Lease Increase Increase
Total Base and Initial Year per New Lease per
Number Square Percentage Rent Base Rent Square Average Square
of leases Feet per Square Foot per Square Foot Foot Base Rent Foot
- --------------- --------------- ------------------ ------------------- ------------- ---------------- -------------
16 50,687 $9.88 $11.04 $1.16 $11.09 $1.21
The following table sets forth certain information for each of the
Associated Centers as of December 31, 2000.
Ownership
Year of by Company
Name of Opening/Most and Total Percentage
Associated Recent Operating Total Leasable GLA
Center/Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors
- -------------------------- --------------- ------------- ------------ ----------- ------------ ---------------------
Bonita Crossing...(10) 1997/1999 100% 118,884 118,884 97% Books-A-Million,
Meridian, MS TJ Maxx, Office
Max, The Gap
CoolSprings Crossing.. 1992 100% 353,369 53,286 100% Target(7)
Nashville, TN Service Merchandise,
Toys "R" Us,
Lifeway Books
Courtyard at Hickory
Hollow............... 1979(9) 100% 77,460 77,460 100% Carmike Cinemas,
Nashville, TN Just For Feet
Foothills Plaza....... 1983/1986 100% 191,216(4) 71,216 100% Eckerd(6),
Maryville, TN Carmike Cinemas
Frontier Square....... 1985 100% 161,615 16,615 100% Buttrey Food & Drug,
Cheyenne, WY Target
Georgia Square Plaza.. 1984 100% 15,393 15,393 0%
Athens, GA
Governor's Square Plaza 1985(5) 50% 180,018 57,820 100% Office Max, Premier
Clarksville, TN Medical Group,
Target
Gunbarrel Pointe...... 2000 100% 281,525 155,525 100% Kohl's(11), Target,
Chattanooga, TN Goody's
Hamilton Corner....... 1990 90% 88,298 88,298 99% Michael's, Goody's,
Chattanooga, TN Fresh Market
Hamilton Crossing..... 1987/1994 92% 185,370 92,257 91% Service
Chattanooga, TN Merchandise(7)
Toys "R" Us, TJ Maxx
The Landing........... 1999 100% 163,164 85,507 78% Toys "R" Us,
Atlanta(Douglasville),GA Circuit City,
Michael's
Madison Plaza......... 1984 75% 153,085 98,690 96% Food World, TJ
Huntsville, AL Maxx, Service
Merchandise
Pemberton Plaza....... 1986 100% 77,893 26,947 87% Kroger, Blockbuster
Vicksburg, MS
The Terrace........... 1997 92% 155,987 116,715 100% Barnes & Noble,
Chattanooga, TN Home Place, Old
Navy, Staples,
Circuit City
Village at Rivergate.. 1981(9) 100% 166,366 166,366 100% Target, Just For
Nashville, TN Feet
WestGate Crossing..... 1985/1999(8) 100% 151,489 151,489 100% Goody's, Toys "R"
Spartanburg, SC Us, Old Navy
------------ ----------- ------------
Total Associated Centers 2,521,131 1,392,466 95%
============ =========== ===========
25
(1) Includes the total square footage of the Anchors (whether owned or leased by
the Anchor) and shops. Does not include future expansion areas.
(2) Includes leasable Anchors.
(3) Includes tenants with executed leases at December 31, 2000. Calculation
includes leased Anchors.
(4) Total GLA include, but total leasable GLA and percentage GLA leased
excluding a furniture store of 80,000 square feet owned by others. Carmike
Cinemas is subject to a ground lease (40,000 square feet of GLA).
(5) Originally opened in 1985, and was acquired by the Company in June 1997.
(6) Eckerd has closed its store but is continuing to meet its financial
obligations under its lease and is subleased to Dollar General.
(7) Owned by tenant.
(8) Originally opened in 1985, and was acquired by the Company in August 1997.
(9) Acquired by the Company in July 1998.
(10)The land is ground leased through June 2015 with options to extend through
June 2035. The annual rent is $14,355 increasing by 6% each year.
(11)Opened in March 2001.
COMMUNITY AND POWER CENTERS
In addition to Mall development, the Company's development activities focus
on Community Centers, and power centers. Community Centers pose fewer
development risks than Malls because they have shorter development timetables
and lower up-front costs. Community Centers also afford the Company the
opportunity to meet the needs of retailers for whom a "convenience" type of
location is more appropriate and the needs of customers whose trade areas cannot
support a regional mall. Power centers are larger than other Community Centers,
with several large anchor stores which draw shoppers from a wider geographic
area.
The Company's Community Center developments in the 1980's were generally
anchored by supermarkets, and, in certain cases, by drug stores. Management's
current focus has expanded to include the development of larger centers,
anchored by mass merchandisers and department stores, while continuing the
development of smaller centers anchored by supermarkets and drug stores.
Recently completed Community Centers include centers in Richmond Virginia and
Spring Hill, Florida. Anchors at these new centers include, Home Depot, Sears,
Belk, Goody's and , Wal*Mart. During 2000, the Company sold thirteen Community
Centers for total proceeds of $51 million and totaling 799,000 square feet. The
proceeds were primarily used to retire debt. The Company also sold one Community
Center Jean Ribaut Square in Beaufort, South Carolina in February 2001. The net
proceeds of $5.8 million were placed in escrow in anticipation of a like-kind
exchange of properties under section 1031 of the Code.
Community Centers, other than power centers, range in size from 25,000
square feet to in excess of 286,000 square feet. Anchors in Community Centers
generally lease their store space and occupy 60-85% of a center's GLA. The
number of stores in a Community Center ranges from one to sixteen with an
average of seven stores per center.
The Company's two power centers, which were completed and opened in 1997
and 1998, average 786,000 square feet and have an average of nine major anchor
stores and additional small shop space ranging from 38,000 square feet to
136,000 square feet. The projects include expansion areas for additional major
retailers. These power centers are included in the Community Center
classification in this report.
Total GLA of the 72 Community Centers is approximately 9.1 million square
feet, or an average of approximately 126,000 square feet per center. Excluding
power centers the average is 107,000 square feet per center. As of December 31,
2000, 97.8% of total leasable GLA at the Community Centers was leased.
In the years ended December 31, 1998, 1999 and 2000, revenues from the
Community Centers represented approximately 19.6%, 17.8% and 17.5%,
respectively, of total revenues from the Company's Properties.
Occupancy at the Community Centers increased from 97.7% at December 31,
1999 to 97.8% at December 31, 2000.
Average base rent per square foot at the Community Centers increased from
$8.32 at December 31, 1999, to $8.85 at December 31, 2000.
As of December 31, 2000, Food Lion, a major regional supermarket operator
with headquarters in North Carolina served as an anchor tenant in 27 of the
Company's Community Centers. For the year ended December 31, 2000, Food Lion
accounted for approximately 1.7% of the revenues generated by the Company's
Properties.
26
With the exception of Suburban Plaza, Sutton Plaza, Lions Head Village and
the Market Place at Flower Mound, which were acquired by the Company in March
1995, January 1997, July 1998 and March 2000, respectively, each of the
Community Centers was developed by the Company.
The following table summarizes the percentage of total leasable GLA leased,
average base rent per square foot (excluding percentage rent) and tenant sales
per square foot at the Community Centers for each of the last five years.
Community Center Summary Information
Average
Percentage Base Rent Tenant
Year Ended GLA Per Square Sales Per
December 31, Leased (1) Foot (2) Square Foot (3)
- ----------------------------------------- -------------- ------------- -------------------
1996................................. 97.2% $6.94 $210
1997................................. 97.6% 7.42 221
1998................................. 97.0% 8.22 220
1999................................. 97.7% 8.32 214
2000................................. 97.8% 8.85 213
(1) Percentage leased includes tenants who have executed leases and are paying rent as of the specified date.
(2) Average base rent per square foot is based on GLA occupied as of the last day of the indicated period.
(3) Consistent with industry practice, sales are based on reports by
retailers (excluding theaters) leasing GLA and occupying space for the
12 months ending on the last day of the indicated period.
Lease Expirations. The following table shows the scheduled lease
expirations for the Community Centers owned on December 31, 2000 (assuming that
none of the tenants exercise renewal options).
Community Center Lease Expiration
Percentage of Total
Represented by
Approximate Expiring Leases
Mall Store ------------------------------
Number of Annualized Base GLA of Base Rent Annualized Leased Mall
Year Ending Leases Rent of Expiring Expiring per Square Base Rent Store GLA
December 31, Expiring Leases (1) Leases Foot
- --------------------- -------------- ----------------- --------------- ------------- ------------- ----------------
2001.............. 71 $1,696,086 185,464 $9.15 3.7% 3.4%
2002.............. 129 3,635,937 457,901 7.94 8.0 8.5
2003.............. 125 3,952,969 584,816 6.76 8.7 10.8
2004.............. 96 3,394,916 355,729 9.54 7.4 6.6
2005.............. 82 3,330,741 387,562 8.59 7.3 7.2
2006.............. 23 1,381,458 269,309 5.13 3.0 5.0
2007.............. 19 1,535,460 178,553 8.60 3.4 3.3
2008.............. 21 2,419,904 234,428 10.32 5.3 4.3
2009.............. 21 3,789,875 398,381 9.51 8.3 7.4
2010.............. 20 1,558,331 247,915 6.29 3.4 4.6
(1) Total annualized base rent for all leases executed as of December 31,
2000 includes 12 months of rent for space that is newly leased but not
yet occupied and base rent on ground leases with no square footage but
excludes (i) percentage rents, (ii) additional payments by tenants for
common area maintenance, real estate taxes and other expense
reimbursements and (iii) contractual rent escalations and cost of
living increases for periods after December 31, 2000.
The following table sets forth certain information for executed renewal
leases with current tenants or leases of previously occupied space with new
tenants at the Community Centers during the year ended December 1, 2000.
Prior Lease New Lease
Total Base and Initial Year Increase New Lease Increase
Number Square Percentage Rent