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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
For the fiscal year ended December 31, 2003
Or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-12494
CBL & ASSOCIATES PROPERTIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 62-1545718
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporate or organization)
2030 Hamilton Place Blvd, Suite 500 37421
Chattanooga, TN (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including area code:(423) 855-0001
- ----------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which registered
-------------------------------------------------------
Title of each Class Name of each exchange on which registered
- ------------------------------------ -----------------------------------------
Common Stock, $0.01 par value New York Stock Exchange
8.75% Series B Cumulative Redeemable
Preferred Stock, $0.01 par value New York Stock Exchange
7.75% Series C Cumulative Redeemable New York Stock Exchange
Preferred Stock, $0.01 par value
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 periods that the
registrant was required to file such report(s)) 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. |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes |X| No |_|
The aggregate market value of the 27,871,087 shares of voting stock held by
non-affiliates of the registrant was $1,198,456,741 based on the closing price
($43.00 per share) on the New York Stock Exchange for such stock on the last
business day of the registrant's most recently completed second fiscal quarter
(June 30, 2003).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement for the annual shareholders
meeting to be held on May 10, 2004, are incorporated by reference into Part III.
1
TABLE OF CONTENTS
Item No. Page
PART I
1 Business 3
2 Properties 10
3 Legal Proceedings 25
4 Submission of Matters to a Vote of Security Holders 25
PART II
5 Market For Registrant's Common
Equity and Related Stockholder Matters 25
6 Selected Financial Data 27
7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 28
7A Quantitative and Qualitative Disclosures about Market Risk 45
8 Financial Statements and Supplementary Data 46
9 Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 46
9A Controls and Procedures 46
PART III
10 Directors and Executive Officers of the Registrant 46
11 Executive Compensation 46
12 Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters 46
13 Certain Relationships and Related Transactions 47
14 Principal Accountant Fees and Services 47
PART IV
15 Exhibits, Financial Statement Schedules and
Reports on Form 8-K 47
Signatures 53
2
CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Certain statements made in this section or elsewhere in this report may be
deemed "forward looking statements" within the meaning of the federal securities
laws. Although the Company believes the expectations reflected in any
forward-looking statements are based on reasonable assumptions, the Company can
give no assurance that these expectations will be attained, and it is possible
that actual results may differ materially from those indicated by these
forward-looking statements due to a variety of risks and uncertainties. Such
risks and uncertainties include, without limitation, general industry, economic
and business conditions, interest rate fluctuations, costs of capital and
capital requirements, availability of real estate properties, inability to
consummate acquisition opportunities, competition from other companies and
retail formats, changes in retail rental rates in the Company's markets, shifts
in customer demands, tenant bankruptcies or store closings, changes in vacancy
rates at the Company's properties, changes in operating expenses, changes in
applicable laws, rules and regulations, the ability to obtain suitable equity
and/or debt financing and the continued availability of financing in the amounts
and on the terms necessary to support the Company's future business. The Company
disclaims any obligation to update or revise any forward-looking statements to
reflect actual results or changes in the factors affecting the forward-looking
information.
Part I.
ITEM 1. BUSINESS
Background
CBL & Associates Properties, Inc. (the "Company") was organized on July 13,
1993, as a Delaware corporation, to acquire substantially all of the real estate
properties owned by CBL & Associates, Inc., and its affiliates ("CBL's
Predecessor"), which was formed by Charles B. Lebovitz in 1978. On November 3,
1993, the Company completed an initial public offering (the "Offering") of
15,400,000 shares of its common stock (the "Common Stock"). Simultaneous with
the completion of the Offering, CBL's Predecessor transferred substantially all
of its interests in its real estate properties to CBL & Associates Limited
Partnership (the "Operating Partnership") in exchange for common units of
limited partnership interest in the Operating Partnership. CBL's Predecessor
also acquired an additional interest in the Operating Partnership for a cash
payment. The interests in the Operating Partnership contain certain conversion
rights that are more fully described in Note 9 to the consolidated financial
statements.
RECENT DEVELOPMENTS
On April 30, 2003, the Company acquired Sunrise Mall and its associated
center, Sunrise Commons, which are located in Brownsville, TX. The total
purchase price of $80.7 million consisted of $40.7 million in cash and the
assumption of $40.0 million of variable-rate debt.
On August 22, 2003, the Company issued 4,600,000 depositary shares in a
public offering, each representing one-tenth of a share of 7.75% Series C
cumulative redeemable preferred stock with a par value of $0.01 per share. The
Series C preferred stock has a liquidation preference of $250.00 per share
($25.00 per depositary share). The net proceeds were used to partially fund the
purchase of the four malls discussed below and for general corporate purposes.
On September 15, 2003, the Company repurchased 460,083 common units in the
Operating Partnership from a former executive of the Company who retired in 1997
for $21.0 million.
3
The Company acquired Cross Creek Mall, River Ridge Mall, Valley View Mall
and Southpark Mall for a total purchase price of $340 million, which consisted
of cash of $170 million and the assumption of $170 million of fixed-rate debt.
These malls were acquired from a common owner and closed as follows: Cross Creek
Mall, located in Fayetteville, NC, on September 10, 2003; River Ridge Mall,
located in Lynchburg, VA, and Valley View Mall, in Roanoke, VA, on October 1,
2003; and Southpark Mall, located in Colonial Heights, VA, on December 15, 2003.
On September 24, 2003, the Company formed Galileo America LLC ("Galileo
America"), a joint venture with Galileo America REIT, the U.S. affiliate of
Australia-based Galileo America Shopping Trust, to invest in power and community
centers throughout the United States. The Company has sold, or will sell, in
three phases, its interests in 51 power and community centers for a total price
of $516.0 million plus a 10% interest in Galileo America.
On October 23, 2003, the parties completed the first phase of the
transaction when the Company sold its interests in 41 community centers to
Galileo America for $393.9 million, which consisted of $250.7 million in cash,
the retirement of $24.9 million of debt on one of the community centers, a note
receivable of $4.8 million, Galileo America's assumption of $93.0 million in
debt and $20.5 million representing the Company's 10% interest in Galileo
America. The Company used the net proceeds to deposit cash in escrow to be used
in like-kind exchanges and to reduce outstanding borrowings under the Company's
credit facilities. The note receivable was paid subsequent to December 31, 2003.
The second phase of the transaction closed in January 2004 when the Company
sold its interests in six community centers to Galileo America for $92.4
million, which consisted of $62.7 million in cash, the retirement of $25.9
million of debt on one of the community centers, the joint venture's assumption
of $2.8 million of debt and closing costs of $1.0 million. The third phase is
scheduled to close in January 2005 and will include five community centers. The
total purchase price for these community centers will be $86.8 million.
Pursuant to a long-term agreement, the Company will be the exclusive
manager for all of the joint venture's properties in the United States, and will
be entitled to management, leasing, acquisition, disposition, asset management
and financing fees.
On November 28, 2003, the Company redeemed the remaining 2,675,000
outstanding shares of its 9.0% Series A cumulative redeemable preferred stock at
its liquidation preference of $25.00 per share plus accrued and unpaid
dividends.
On December 30, 2003, the Company acquired 100% of the interests of Harford
Mall Business Trust, a Maryland business trust that owns Harford Mall in Bel
Air, MD, and its associated center, Harford Annex, for $71.0 million in cash.
THE COMPANY'S BUSINESS
The Company is a self-managed, self-administered, fully integrated real
estate investment trust ("REIT") that is engaged in the development,
acquisition, and operation of regional shopping malls and community centers. The
Company has elected to be taxed as a REIT for federal income tax purposes. As
one of the five largest mall REITs in the United States, the Company owns
interests in properties primarily in middle market communities in the Southeast
and Midwest, as well as in select markets in other regions of the United States.
The Company conducts substantially all of its business through the
Operating Partnership. The Company is the 100% owner of two qualified REIT
subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. CBL Holdings I,
Inc. is the sole general partner of the Operating Partnership. At December 31,
4
2003, CBL Holdings I, Inc. owned a 1.7% general partnership interest and CBL
Holdings II, Inc. owned a 52.9% limited partnership interest in the Operating
Partnership, for a combined interest held by the Company of 54.6%.
As of December 31, 2003, the Company owned:
|X| interests in a portfolio of operating properties including 60 enclosed
regional malls (the "Malls"), 23 associated centers (the "Associated
Centers"), 59 community centers (the "Community Centers") and the
Company's corporate office building (the "Office Building");
|X| interests in two regional malls, one associated center and three
community centers that are currently under construction (the
"Construction Properties"), as well as options to acquire certain
shopping center development sites; and
|X| mortgages (the "Mortgages") on 12 properties that are secured by first
mortgages or wrap-around mortgages on the underlying real estate and
related improvements.
The Malls, Associated Centers, Community Centers, Construction Properties,
Mortgages and Office Building are collectively referred to as the "Properties"
and individually as a "Property."
The Operating Partnership conducts the Company's property management and
development activities through CBL & Associates Management, Inc. (the
"Management Company"). The Operating Partnership holds 100% of the preferred
stock and owns 6% of the common stock of the Management Company. CBL's
Predecessor holds the remaining 94% of the Management Company's common stock.
Through its ownership of the preferred stock, the Operating Partnership receives
substantially all of the cash flow and enjoys substantially all of the economic
benefits of the Management Company's operations.
The Management Company manages all of the Properties except for Governor's
Square and Governor's Plaza in Clarksville, TN and Kentucky Oaks Mall, in
Paducah, KY. A property manager affiliated with the third party managing general
partner performs the property management services for these Properties and
receives a fee for its services. The managing partner of each of these
Properties controls the cash flow distributions, although the Company's approval
is required for certain major decisions.
The Properties derive most of their income from rents received through
operating leases with retail tenants. These operating leases require tenants to
pay minimum rent, which is often subject to scheduled increases throughout the
term of the lease. Certain tenants are required to pay percentage rent if their
sales volumes exceed thresholds specified in their lease agreements.
Additionally, tenant leases generally provide that the Company will be
reimbursed for common area maintenance, real estate taxes, insurance and other
operating expenses incurred in the operation of the Properties.
The following terms used in this annual report on Form 10-K will have
the meanings described below:
|X| GLA - refers to gross leasable area of retail space in square feet,
including anchors and mall tenants
|X| Anchor - refers to a department store or other large retail store
|X| Freestanding - property locations that are not attached to the primary
complex of buildings that comprise the mall shopping center
|X| Outparcel - land used for freestanding developments, such as retail
stores, banks and restaurants, on the periphery of the Properties
5
ENVIRONMENTAL MATTERS
Federal, state and local laws and regulations relating to the protection of
the environment may require a current or previous owner or operator of real
property to investigate and clean up hazardous or toxic substances or petroleum
product releases at the property, without the current owner or operator having
knowledge of the presence of the contaminants. If unidentified environmental
problems arise at one of the Properties, substantial payments may be required to
a governmental entity or third parties for property damage and for investigation
and clean-up costs. Even if more than one person may have been responsible for
the contamination, the Company may be held responsible for all of the clean-up
costs incurred. The liability under environmental laws could adversely affect
the Company's cash flow and ability to service its debt.
All of the Properties have been subject to Phase I environmental
assessments, which are intended to discover information regarding, and to
evaluate the environmental condition of, the surveyed property and surrounding
properties. The Phase I assessments included a historical review, a public
records review, a preliminary physical investigation of the site and surrounding
properties regarding historic uses for the preparation and issuance of written
reports by independent environmental consultants. Some of the Properties
contain, or contained, underground storage tanks for storing petroleum products
or wastes typically associated with automobile service or other operations, as
well as dry-cleaning establishments utilizing solvents. If necessary, the
Company will sample building materials or conduct subsurface investigations. At
certain Properties, the Company has developed and implemented operations and
maintenance programs with operating procedures regarding asbestos-containing
materials. Historically, costs associated with these programs have not been
material.
The Phase I assessments have not revealed any environmental liabilities
that the Company believes will have a material effect on its business, assets or
results of operations, nor is the Company aware of any such liability. It is
possible that the assessments do not reveal all environmental liabilities or
that there are material liabilities of which the Company is unaware. 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 will not be adversely affected by the tenants and
occupants of the Properties, or by the condition of other properties in the
vicinity of the Properties or by third parties unrelated to the Company. The
Company has obtained environmental insurance on all the Properties acquired from
Jacobs and selected others.
GEOGRAPHIC CONCENTRATION
The Company owns interests in 31 Malls, 16 Associated Centers, 24 Community
Centers and one Office Building that are located in the southeastern United
States. These Properties accounted for 57.5% of the Company's total revenues for
the year ended December 31, 2003. Therefore, the Company's results of operations
and funds available for distribution to shareholders are significantly impacted
by economic conditions in the southeastern United States.
The Company owns 15 Malls, 2 Associated Centers and 5 Community Centers
that are located in the Midwestern United States. These Properties accounted for
25.8% of the Company's revenues for the year ended December 31, 2003. The
Company will continue to look for opportunities to geographically diversify its
portfolio in order to minimize dependency on any geographical region; however,
the expansion of the portfolio through both acquisitions and developments are
contingent on many factors including consumer demands, competition and economic
conditions.
SIGNIFICANT PROPERTIES
Revenues at Hanes Mall, Burnsville Center, Coolsprings Galleria and
Meridian Mall accounted for 3.81%, 2.75%, 2.72% and 2.66%, respectively, of the
Company's total revenues for the year ended December 31, 2003. The Company's
financial position and results of operations will be somewhat affected by the
results experienced at these Properties.
6
SIGNIFICANT MARKETS
The top five markets, in terms of revenues, where the Company's Properties
are located were as follows for the year ended December 31, 2003:
Market Percentage Total of Revenues
----------------------- ----------------------------
Nashville, TN 7.63%
Chattanooga, TN 3.83%
Winston-Salem, NC 3.81%
Madison, WI 3.66%
Charleston, SC 3.11%
Top 25 Tenants
The top 25 tenants based on percentage of the Company's total revenues were
as follows for the year ended December 31, 2003:
Annual Percentage
Number of Gross Of Total
Tenant Stores Square Feet Rentals(1) Revenues
---------------------------------------- -------------- ---------------- ------------- -----------
1 Limited Brands, Inc. 184 1,158,135 $ 35,509,859 5.32%
2 The Gap Inc. 82 816,234 17,913,683 2.68%
3 Foot Locker, Inc. 132 485,773 17,865,945 2.68%
4 JC Penney Co. Inc. (1) 57 6,082,620 10,450,734 1.57%
5 Abercrombie & Fitch, Co. 41 298,665 10,122,426 1.52%
6 Signet Group plc 80 120,629 10,109,575 1.51%
7 American Eagle Outfitters,Inc. 52 263,321 9,828,979 1.47%
8 Zale Corporation 105 101,402 8,554,022 1.28%
9 Charming Shoppes, Inc. 49 287,671 8,004,306 1.20%
10 The Regis Corporation 149 172,881 7,833,189 1.17%
11 The Finish Line, Inc. 44 231,983 7,693,800 1.15%
12 Trans World Entertainment 45 226,101 7,588,874 1.14%
13 Luxottica Group, S.P.A. 87 182,998 7,462,168 1.12%
14 Lerner New York, Inc. 30 254,046 7,087,627 1.06%
15 Borders Group Inc. 44 256,875 6,990,907 1.05%
16 Hallmark Cards, Inc. 59 207,446 6,850,095 1.03%
17 The Shoe Show of Rocky Mountain, Inc 45 242,417 6,848,709 1.03%
18 Sun Capital Partners, Inc. (2) 56 209,307 6,737,459 1.01%
19 Sears, Roebuck and Co.(3) 62 7,097,572 6,049,557 0.91%
20 Bain Capital, Inc. (KB Toys) (4) 53 207,317 5,756,257 0.86%
21 Pacific Sunwear of California 50 167,130 5,692,421 0.85%
22 Barnes & Noble Inc. 42 263,369 5,643,549 0.85%
23 The Buckle, Inc. 34 165,308 5,480,279 0.82%
24 Genesco Inc. 68 107,678 5,374,634 0.81%
25 Claire's Stores, Inc. 94 101,909 5,373,056 0.80%
-------------- ---------------- -------------- ----------
1,744 19,708,787 $232,822,111 34.89%
============== ================ ============== ==========
(1) Includes annual base rent and tenant reimbursements based on amounts in
effect at December 31, 2003.
(2) JC Penney owns 25 of these stores.
(3) Sun Capital Partners, Inc. was previously Best Buy Co., Inc. and now also
includes Media Play, The Mattress Firm, Bruegger's Bagels, Nationwide
Mattress & Furniture Warehouse, Wickes Furniture, and One Price Clothing.
(4) Sears owns 42 of these stores.
(5) KB Toys filed Chapter 11 bankruptcy on January 14, 2004 and has announced
the closing of 24 of these stores, which represent $2.7 million in gross
annual rentals.
7
THE COMPANY'S GROWTH STRATEGY
The Company's objective is to achieve growth in funds from operation by
maximizing cash flows through a variety of methods that are discussed below. s
Leasing, Management and Marketing
The Company's objective is to maximize cash flows from its existing
Properties through:
|X| aggressive leasing that seeks crease occupancy,
|X| originating and renewing leas higher base rents per square to in foot,
|X| merchandising, marketing and es at ional activities and
|X| aggressively controlling oper costs and tenant occupancy promot costs.
ating Expansions and Renovations
Expansion of a Property through the addition of department stores, mall
stores and large format retailers can create additional revenu for the Company
as well as protect the Property's competitive position within its market. The
Company did not e complete any expansions during 2003 an has scheduled the
following to be completed during 2004:
Property Location GLA Opening Date
- --------------------------------------- --------------------------- --------------- -------------------
Arbor Place Mall (Rich's-Macy's) Douglasville, GA 140,000 November 2004
East Towne Mall Madison, WI 139,000 November 2004
West Towne Mall Madison, WI 94,000 November 2004
Garden City Plaza Expansion Garden City, KS 26,500 March 2004
Coastal Way Spring Hill, FL 20,500 September 2004
---------------
420,000
===============
Renovations usually include renovating existing facades, uniform signage,
new entrances and floor coverings, updating interior decor, resurfacing parking
lots and improving the lighting of interiors and parking lots. Renovations can
result in attracting new retailers, increased rental rates and occupancy levels
and in maintaining the Property's market dominance. As shown below, the Company
renovated six Properties during 2003 and will renovate three Properties during
2004.
Property Location
- ------------------------ --------------------------
Completed in 2003:
- ------------------
St. Clair Square Fairview Heights, IL
Parkdale Mall Beaumont, TX
Eastgate Mall Cincinnati, OH
Jefferson Mall Louisville, KY
East Towne Mall Madison, WI
West Towne Mall Madison, WI
Scheduled for 2004:
- -------------------
Northwoods Mall North Charleston, SC
Cherryvale Mall Rockford, IL
Panama City Mall Panama City, FL
Development of New Retail Properties
In general, the Company seeks development opportunities in middle-market
trade areas that it believes are under-served by existing retail operations.
8
These middle-markets must also have sufficient demographic trends to provide the
opportunity to effectively maintain a competitive position. The following shows
the new developments opened during 2003 and those currently under construction:
Property Location GLA Opening Date
- -------------------------------------- ------------------------ ------------------ -----------------------
Opened in 2003:
- ---------------
The Shoppes at Hamilton Place Chattanooga, TN 110,000 May 2003
Cobblestone Village St. Augustine, FL 265,000 May 2003
Waterford Commons Waterford, CT 348,000 September 2003
------------------
723,000
==================
Currently under construction:
- -----------------------------
The Shoppes at Panama City Panama City, FL 56,000 February 2004
Coastal Grand (50/50 joint venture) Myrtle Beach, SC 908,000 March 2004
Wilkes-Barre Township Marketplace Wilkes-Barre Township, PA 281,000 March 2004
Charter Oak Marketplace Hartford, CT 312,000 November 2004
Imperial Valley Mall (60/40 joint
venture) El Centro, CA 741,000 May 2005
------------------
2,298,000
==================
The Company's total investment in the Properties that were opened in 2003
was $84.3 million. Cobblestone Village and Waterford Commons were sold to
Galileo America in October 2003 and January 2004, respectively. The developments
that are currently under construction will represent an investment by the
Company of approximately $137.3 million.
Acquisitions
The Company believes there is opportunity for growth through acquisitions
of regional malls and other associated properties. The Company selectively
acquires regional mall properties where it believes it can increase the value of
the property through its development, leasing and management expertise. The
Company acquired the following Properties during 2003:
Property Location GLA Date Acquired
- --------------------------------------- ------------------------ ------------------ -----------------------
Sunrise Mall and Sunrise Commons Brownsville, TX 965,500 April 2003
Cross Creek Mall Fayetteville, NC 1,054,000 September 2003
River Ridge Mall Lynchburg, VA 784,800 October 2003
Valley View Mall Roanoke, VA 787,300 October 2003
Southpark Mall Colonial Heights, VA 626,800 December 2003
Harford Mall and Harford Annex Bel Air, MD 608,000 December 2003
------------------
4,826,400
==================
RISKS ASSOCIATED WITH THE COMPANY'S GROWTH STRATEGY
As with any strategy there are risks involved with the Company's plan for
growth. Risks associated with developments and expansions can include, but are
not limited to: development opportunities pursued may be abandoned; construction
costs may exceed estimates; construction loans with full recourse to the Company
may not be refinanced; proforma objectives, such as occupancy and rental rates,
may not be achieved; and the required approval by an anchor tenant, mortgage
lender or property partner for certain expansion/development activities may not
be obtained. An unsuccessful development project could result in a loss greater
than the Company's investment.
INSURANCE
The Operating Partnership carries a comprehensive blanket policy for
liability, fire and rental loss insurance covering all of the Properties, with
9
specifications and insured limits customarily carried for similar properties.
The Company believes the Properties are adequately insured in accordance with
industry standards.
COMPETITION
The Properties compete with various shopping alternatives attracting
retailers to competing locations. Competition for both the consumer and retailer
includes open-air life-style centers, power center developments, outlet shopping
centers, discount retailers, internet venues, television shopping networks,
direct mail and other retail shopping developments. The extent of the retail
competition varies from market to market. The Company works aggressively to
attract customers through marketing promotions and campaigns.
QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST ("REIT")
The Company intends to continue to be taxed as a REIT under Sections 856
through 860 of the Internal Revenue Code, as amended (the "Code"). The Company
generally will not be subject to federal income tax to the extent it distributes
at least 90% of its REIT ordinary taxable income to its shareholders. Failing to
qualify as a REIT in any taxable year would result in the Company being subject
to federal income tax on its taxable income at regular corporate rates.
FINANCIAL INFORMATION ABOUT SEGMENTS
See Note 12 to the consolidated financial statements for information about
the Company's reportable segments.
EMPLOYEES
The Company does not have any employees other than its statutory officers.
The Management Company currently employees 678 full-time and 407 part-time
employees. None of the Company's or Management Company's employees are
represented by a union.
CORPORATE OFFICES
The principal executive offices are located at CBL Center, 2030 Hamilton
Place Boulevard, Suite 500, Chattanooga, Tennessee, 37421 and the telephone
number is (423) 855-0001.
AVAILABLE INFORMATION
Additional information about the Company can be found on the Company's web
site at www.cblproperties.com. Electronic copies of the Company's Annual Report
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as
well as any amendments to those reports, are available free of charge by
visiting the "investor relations" section of the web site. These reports are
posted as soon as reasonably practical after they are electronically filed with,
or furnished to, the Securities and Exchange Commission. The information on the
web site is not, and should not, be considered to be a part of this Form 10-K.
ITEM 2. PROPERTIES
Refer to Item 7: Management's Discussion and Analysis for additional
information pertaining to the Properties' performance.
10
MALLS
The Company owns a controlling interest in 56 Malls and non-controlling
interests in four Malls. The Company also owns non-controlling interests in two
Malls that are currently under construction. The Malls are primarily located in
middle markets and have strong competitive positions because they are the only,
or dominant, regional mall in their respective trade areas.
The Malls are generally anchored by two or more department stores and a
wide variety of mall stores. Anchor tenants own or lease their stores and
non-anchor stores (20,000 square feet or less) lease their locations. Additional
freestanding stores and restaurants that either own or lease their stores are
typically located along the perimeter of the Malls' parking areas.
The Company classifies its Malls into two categories - Malls that have
completed their initial lease-up ("Stabilized Malls") and Malls that are in
their initial lease-up phase ("Non-Stabilized Malls"). The Non-Stabilized Mall
category currently includes The Lakes Mall in Muskegon, MI, which opened in
August 2001, and Parkway Place in Huntsville, AL, which opened in October 2002.
The land underlying each Mall is owned in fee simple interest, except for
Walnut Square, WestGate Mall, St. Clair Square, Bonita Lakes Mall, Meridian
Mall, Stroud Mall, Wausau Center and Eastgate Mall. Each of these Malls is
subject to long-term ground leases for all or a portion of the land.
The following table sets forth certain information for each of the Malls as
of December 31, 2003.
Mall
Year of Store Percentage
Year of Most Sales per Mall
Opening/ Recent Company's Total Total Mall Square Store GLA
Mall/Location Acquisition Expansion Ownership GLA(1) Store GLA(2) Foot(3) Leased(4) Anchors
- ---------------------------------------------------------------------------------------------------------------------------------
Non-Stabilized Malls:
The Lakes 2001 N/A 90% 548,487 217,247 249 96% JCPenney, Sears,
Muskegon, MI Younkers, Bed Bath &
Beyond
Parkway Place Mall 2002 N/A 45% 630,825 279,984 219 82% Dillard's, Parisian
Huntsville, AL
-------------------------------------------------
Total Non-Stabilized Malls 1,179,312 497,231 $233 88%
-------------------------------------------------
Stabilized Malls:
Arbor Place 1999 2004 100% 1,036,244 378,056 $306 94% Dillard's, JCPenney,
Atlanta(Douglasville),GA Parisian, Sears, Bed
Bath & Beyond,
Borders, Old Navy
Asheville Mall 1972/2000 2000 100% 931,262 310,427 287 99% Belk, Dillard's,
Asheville, NC Dillard's West,
JCPenney, Sears
Bonita Lakes Mall(5) 1997 N/A 100% 633,685 185,258 260 92% Dillard's, Goody's,
Meridian, MS JCPenney, McRae's,
Sears
Brookfield Square 1967/2001 1997 100% 1,030,200 317,350 420 93% Boston Store,
Brookfield, WI JCPenney, Sears
Burnsville Center 1977/1998 N/A 100% 1,086,576 425,533 347 97% JCPenney, Marshall
Burnsville, MN Fields, Mervyn's,
Sears, Old Navy
Cary Towne Center 1979/2001 1993 100% 1,004,210 297,775 317 95% Belk, Dillard's,
Cary, NC Hecht's, JCPenney,
Sears
Cherryvale Mall 1973/2001 1989 100% 689,687 299,607 315 98% Bergner's, Marshall
Rockford, IL Field's, Sears
Citadel Mall 1981/2001 2000 100% 1,067,491 298,010 263 87% Belk, Dillard's,
Charleston, SC Parisian, Sears,
Target
College Square 1988 1993 100% 459,705 153,881 219 92% Belk, Goody's,
Morristown, TN JCPenney, Proffitt's,
Sears
Columbia Place 1977/2001 1997 100% 1,042,404 297,854 255 99% Dillard's, JCPenney,
Columbia, SC Old Navy, Rich's-Macy's,
Sears
11
Mall
Year of Store Percentage
Year of Most Sales per Mall
Opening/ Recent Company's Total Total Mall Square Store GLA
Mall/Location Acquisition Expansion Ownership GLA(1) Store GLA(2) Foot(3) Leased(4) Anchors
- ---------------------------------------------------------------------------------------------------------------------------------
CoolSprings Galleria 1991 1994 100% 1,125,914 371,278 375 97% Dillard's, Hechts,
Nashville, TN JCPenney, Parisian,
Sears
Cross Creek Mall 1975/2003 2000 100% 1,054,034 254,688 465 97% Belk, Hecht's,
Fayetteville, NC JCPenney, Sears
East Towne Mall 1971/2001 2003 100% 701,476 297,649 298 100% Boston Store, Dick's,
Madison, WI JCPenney, Sears,
Steve & Barry's
Eastgate Mall(12) 1980/2001 1995 100% 1,066,654 271,885 268 91% Dillard's, JCPenney,
Cincinnati, OH Kohl's, Sears, Steve
& Barry's
Fashion Square 1972/2001 1993 100% 798,016 285,252 297 96% JCPenney, Marshall
Saginaw, MI Field's, Sears
Fayette Mall 1971/2001 1993 100% 1,074,922 308,524 484 100% Dillard's, JCPenney,
Lexington, KY Lazarus, Sears,
Dawahare's, Dick's
Foothills Mall 1983/1996 1997 95% 478,768 148,669 191 90% Goody's, JCPenney,
Maryville, TN Proffitt's for Women,
Proffitt's for Men
Kids & Home, Sears
Frontier Mall 1981 1997 100% 519,471 205,720 221 96% Dillard's I,
Cheyenne, WY Dillard's II,
JCPenney, Sears, Gart
Sports
Georgia Square 1981 N/A 100% 673,138 251,584 256 97% Belk, JCPenney,
Athens, GA Rich's-Macy's, Sears
Governor's Square 1986 1999 48% 718,786 287,161 268 85% Belk, Dillard's,
Clarksville, TN Goody's, JCPenney,
Sears, Linens N Things
Hamilton Place 1987 1998 90% 1,145,007 368,359 353 100% Dillard's, JCPenney,
Chattanooga, TN Parisian, Proffitt's
for Men Kids & Home,
Proffitt's for Women,
Sears
Hanes Mall 1975/2001 1990 100% 1,494,945 551,140 326 98% Belk, Dillard's,
Wiston-Salem, NC Hecht's, JCPenney,
Sears
Harford Mall 1973/2003 1995 100% 490,458 188,522 344(16) 98% Hecht's, Sears, Old
Bel Air, MD Navy
Hickory Hollow Mall 1978/1998 1991 100% 1,088,280 418,091 253 91% Dillard's, Hechts,
Nashville, TN JCPenney, Sears
Janesville Mall 1973/1998 1998 100% 627,128 173,798 306 99% Boston Store,
Janesville, WS JCPenney, Kohl's,
Sears
Jefferson Mall 1978/2001 1999 100% 923,762 269,434 302 93% Dillard's, JCPenney,
Louisville, KY Lazarus, Sears
Kentucky Oaks Mall 1982/2001 1995 50% 1,013,822 420,568 261 94% Dillard's,
Paducah, NY Elder-Beerman,
Goody's, JCPenney,
Sears, Developers
Diversified(15),
Shopko(14), Toys R
Us, Circuit City,
Hobby Lobby, Linens N
Things, Office Max
Lakeshore Mall 1992 1999 100% 495,972 148,144 255 88% Beall's (8), Belk,
Sebring, FL JCPenney, Kmart, Sears
Madison Square 1984 1985 100% 932,452 299,617 278 94% Dillard's, JCPenney,
Huntsville, AL McRae's, Parisian,
Sears
Meridian Mall(7) 1969/1998 1987 100% 977,085 397,176 268 95% Bed Bath & Beyond,
Lansing, MI JCPenney, Marshall
Field's, Mervyn's,
Younkers, Galyan's,
Schuler Books
Midland Mall 1991/2001 N/A 100% 515,000 197,626 268 81% Elder-Beerman,
Midland, MI JCPenney, Sears,
Target, Barnes & Noble
12
Mall
Year of Store Percentage
Year of Most Sales per Mall
Opening/ Recent Company's Total Total Mall Square Store GLA
Mall/Location Acquisition Expansion Ownership GLA(1) Store GLA(2) Foot(3) Leased(4) Anchors
- ---------------------------------------------------------------------------------------------------------------------------------
Northwoods Mall 1972/2001 1995 100% 833,833 335,497 320 97% Belk, Dillard's,
Charleston, SC JCPenney, Sears,
Books A Million
Oak Hollow Mall 1995 N/A 75% 800,762 249,934 201 95% Belk, Dillard's,
High Point, NC Goody's, JCPenney,
Sears
Old Hickory Mall 1967/2001 1994 100% 544,668 164,573 317 92% Belk, Goldsmith's,
Jackson, TN JCPenney, Sears
Panama City Mall 1976/2002 1984 100% 606,452 249,293 272 91% Dillard's, JCPenney,
Panama City, FL Sears
Parkdale Mall 1986/2001 1993 100% 1,371,870 456,529 257 89% Beall Bros.(8),
Beaumont, TX Dillard's I,
Dillard's II,
Foley's, JCPenney,
Sears, Developers
Diversified(15) ,
Books A Million, ,
Linens N Things
Pemberton Square 1985 1999 100% 351,920 133,685 154 74% Dillard's, JCPenney,
Vicksburg, MS McRae's, Designer,
Inc.
Plaza del Sol Mall 1979 1996 51% 261,586 105,405 189 99% Beall Bros.(8),
Del Rio, TX JCPenney, Bell Furniture
Post Oak Mall 1982 1985 100% 776,898 320,280 263 86% Beall Bros.(8),
College Station, TX Dillard's, Dillard's
South, Foley's,
JCPenney, Sears
Randolph Mall 1982/2001 1989 100% 350,035 148,021 191 84% Belk, Dillard's,
Asheboro, NC JCPenney, Sears
Regency Mall 1981/2001 1999 100% 884,534 269,141 253 87% Boston Store, Boston
Racine, WI Home Store, JCPenney,
Sears, Target
Richland Mall 1980/2002 1996 100% 720,610 241,132 310 97% Beall Bros(8),
Waco, TX Dillard's I,
Dillard's II,
JCPenney, Sears
Rivergate Mall 1971/1998 1998 100% 1,129,035 347,206 290 100% Dillard's, Hecht's,
Nashville, TN JCPenney, Sears,
Linens N Things
River Ridge Mall 1980/2003 2000 100% 784,775 203,208 299 99% Belk, Hecht's,
Lynchburg, VA JCPenney, Sears,
Value City
Southpark Mall 1989/2003 N/A 100% 626,806 223,482 291 99% Hecht's, JCPenney,
Colonial Heights, VA Dillard's, Sears
St. Clair Square(9) 1974/1996 1993 100% 1,047,438 283,364 378 99% Dillard's, Famous
Fairview Heights, IL Barr, JCPenney, Sears
Stroud Mall(10) 1977/1998 1994 100% 424,232 150,309 314 100% JCPenney, Sears, The
Stroudsburg, PA Bon-Ton
Sunrise Mall 1979/2003 2000 100% 739,996 315,095 313 84% Beall Bros.(8),
Brownsville, TX Dillard's, JCPenney,
Sears
Towne Mall 1977/2001 N/A 100% 465,451 155,137 216 96% Dillard's,
Franklin, OH Elder-Beerman, Sears,
Dunham's Sports
Turtle Creek Mall 1994 1995 100% 846,150 223,056 313 95% Dillard's, Goody's,
Hattiesburg, MS JCPenney, McRae's I,
McRae's II, Sears
Twin Peaks Mall 1985 1997 100% 555,919 242,534 218 87% Dillard's I,
Longmont, CO Dillard's II,
JCPenney, Sears
Valley View Mall 1985/2003 1999 100% 787,255 287,720 325 95% Belk, Hecht's,
Roanoke, VA JCPenney, Sears
Walnut Square(11) 1980 1992 100% 449,798 170,605 243 93% Belk, Goody's,
Dalton, GA JCPenney, Proffitt's,
Sears
Wausau Center(13) 1983/2001 1999 100% 429,970 156,770 276 94% JCPenney, Sears,
Wausau, WI Younkers
West Towne Mall 1970/2001 2003 100% 815,856 422,469 402 100% Boston Store,
Madison, WI JCPenney, Sears
13
Mall
Year of Store Percentage
Year of Most Sales per Mall
Opening/ Recent Company's Total Total Mall Square Store GLA
Mall/Location Acquisition Expansion Ownership GLA(1) Store GLA(2) Foot(3) Leased(4) Anchors
- ---------------------------------------------------------------------------------------------------------------------------------
WestGate Mall(6) 1975/1995 1996 100% 1,100,679 267,353 256 99% Belk, Dillard's,
Spartanburg, SC JCPenney, Proffitt's,
Sears, Bed Bath &
Beyond, Dick's
Sporting Goods
Westmoreland Mall 1977/2002 1994 100% 1,017,114 405,023 337 97% JCPenney, Kaufmann's,
Greensboro, PA Kaufmann's Home Store,
Sears, The Bon-Ton,
Old Navy
York Galleria 1998/1999 N/A 100% 770,668 233,451 304 100% Boscov's, JCPenney,
York, PA Sears, The Bon-Ton
-------------------------------------------------
Total Stabilized Malls 46,390,864 15,838,908 $300 94%
-------------------------------------------------
Grand Total All Malls 47,570,176 16,336,139 $298 94%
=================================================
(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) Excludes Anchors.
(3) Totals represent weighted averages.
(4) Includes tenants paying rent for executed leases as of December 31, 2003.
(5) Bonita Lakes - Company is the lessee under a ground lease for 82 acres,
which extends through June 30, 2035, including four five-year renewal
options. The annual base rent at December 31, 2003, is $30,993 increasing
by 6% per year.
(6) Westgate Mall - 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.
(7) Meridian Mall - The Company is the lessee under several ground leases in
effect through March 2067 with extension options. Fixed rent is $18,700 per
year plus 3% to 4% of all rents.
(8) Lakeshore, Parkdale and Sunrise Malls - Beall Bros. operating in Texas is
unrelated to Beall's operating in Florida.
(9) St. Clair Square - 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.
(10) Stroud Mall - The Company is the lessee under a ground lease, which extends
through July 2089. The current rental amount is $50,000 per year with an
additional $100,000 paid every 10 years.
(11) Walnut Square - 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.
(12) Eastgate Mall - Ground rent is $24,000 per year.
(13) Wausau Center - Ground rent is $181,500 per year plus 10% of net taxable
cash flow.
(14) Kentucky Oaks Mall - Shopko is vacant.
(15) Developers Diversified has assumed the former Service Merchandise lease.
(16) Harford Mall's 2003 mall store slaes per square foot were not included in
the computation of 2003 mall store sales for the mall portfolio since
Harford Mall was acquired on Decmeber 30, 2003.
Anchors
Anchors are an important factor in a Mall's successful performance. The
public's identification with a mall property typically focuses on the anchor
tenants. Mall anchors are generally a department store whose merchandise appeals
to a broad range of shoppers and plays a significant role in generating customer
traffic and creating a desirable location for the mall store tenants.
Anchors may own their stores and the land underneath, as well as the
adjacent parking areas, or may enter into long-term leases with respect to their
stores. Approximately 28% of the anchor square footage is leased and the
remaining 72% is owned by the anchor. Rental rates for anchor tenants are
significantly lower than the rents charged to mall store tenants. Anchors
account for 7.7% of the total revenues from the Company's Properties. Each
anchor that owns its store has entered into an operating and reciprocal easement
agreement with the Company covering items such as operating covenants,
reciprocal easements, property operations, initial construction and future
expansion.
14
During 2003, the Company replaced vacant anchor locations with the
following new anchors:
Anchor Property Location
- --------------------------------------------------------------------------------
JC Penney Arbor Place Mall Douglasville, GA
Younkers Meridian Mall Lansing, MI
In addition, the Company added the following junior anchor or
non-traditional anchor boxes to the following mall properties:
Anchor Property Location
- --------------------------------------------------------------------------------
Cinemark Randolph Mall Asheboro, NC
Steve & Barry's East Towne Mall Madison, WI
Steve & Barry's Eastgate Mall Cincinnati, OH
Linens N' Things Parkdale Mall Beaumont, TX
Linens N' Things Rivergate Mall Nashville, TN
Barnes & Noble Midland Mall Midland, TX
As of December 31, 2003, the Malls had a total of 289 anchors including 1
vacant anchor location. The following table lists all mall anchors and the
amount of GLA leased or owned by each Anchor as of December 31, 2003:
Number of
Anchor Stores Leased GLA Owned GLA Total GLA
- ---------------------------- ------------------------------------------------ ----------------
JCPenney 55 2,752,060 3,193,486 5,945,546
Sears 56 1,364,160 5,620,569 6,984,729
Dillard's 42 511,759 4,913,246 5,425,005
Sak's:
Boston Store 4 96,000 460,074 556,074
Proffitts 7 0 643,082 643,082
Parisian 6 132,621 647,633 780,254
McRae's 5 0 511,359 511,359
Younker's 5 194,161 367,556 561,717
Subtotal 27 422,782 2,629,704 3,052,486
Belk 17 624,928 1,547,262 2,172,190
The May Company:
Foley's 2 0 275,155 275,155
Famous Barr 1 236,489 0 236,489
Hecht's 10 272,986 1,149,446 1,422,432
Subtotal 13 509,475 1,424,601 1,934,076
Federated Department
Stores:
Macy's 1 0 115,623 115,623
Lazarus 2 0 427,143 427,143
Rich's 2 119,700 167,174 286,874
Subtotal 5 119,700 709,940 829,640
Goody's 8 270,616 0 270,616
Target, Inc.:
Marshall Field 4 147,632 494,299 641,931
Target 3 0 315,636 315,636
Mervyn's 2 74,889 124,919 199,808
Subtotal 9 222,521 934,854 1,157,375
The Bon Ton 3 87,024 231,715 318,739
Kmart 1 86,479 0 86,479
Boscov's 1 0 150,000 150,000
Kohl's 2 183,591 0 183,591
Bed, Bath & Beyond 4 129,714 0 129,714
Old Navy 5 135,710 0 135,710
Bergner's 1 0 128,330 128,330
Elder-Beerman 3 124,233 117,888 242,121
Hobby Lobby 1 54,875 0 54,875
Service Merchandise 2 63,404 53,000 116,404
Beall Bros. 5 185,147 0 185,147
Beall's (Fla) 1 45,844 0 45,844
Bel Furniture 1 87,461 0 87,461
Designer, Inc. 1 20,269 0 20,269
Dick's Sporting Goods 2 110,036 0 110,036
Borders 1 25,814 0 25,814
Galyan's 1 80,515 0 80,515
Kaufmann's 2 24,370 168,341 192,711
15
Linens N Things 4 115,610 0 115,610
Barnes & Noble 1 24,368 0 24,368
Books A Million 2 44,180 0 44,180
Circuit City 1 20,831 0 20,831
Dawahare's 1 21,652 0 21,652
Dunhams Sports Outfitters 1 21,159 0 21,159
Gart Sports 1 24,750 0 24,750
Office Max 1 23,600 0 23,600
Schuler Books 1 24,116 0 24,116
Steve & Barry's 2 48,197 0 48,197
Toys R Us 1 29,398 0 29,398
Value City 1 97,411 0 97,411
Vacant Anchors:
Shopko 1 0 85,229 85,229
Former Kmart 1 87,461 0 87,461
------------------------------------------------ ----------------
287 8,737,759 21,908,165 30,645,924
================================================ ================
MALL STORES
The Malls have approximately 7,109 mall stores. National and regional
retail chains (excluding local franchises) lease approximately 70.0% of the
occupied mall store GLA. Although mall stores occupy only 34.3% of the total
mall GLA, the Malls received 87.7% of their revenues from mall stores for the
year ended December 31, 2003.
The following table summarizes certain information about the mall stores
for the last three years.
Average Base Average Mall
Total Total Rent Per Store Sales Per
At December 31, GLA(1) GLA Leased(1) Square Foot (2) Square Foot (3)
- ------------------ ----------------- ----------------- ----------------- -----------------
2001 12,607,000 11,537,000 $22.91 $297
2002 13,502,000 12,522,000 23.49 293
2003 14,640,000 13,794,000 25.05 298
(1) Years ended December 31, 2001 and 2002 have been restated to exclude mall stores greater than 20,000 square feet.
(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. The calculation of sales per square foot excludes all stores over 10,000
square feet.
Mall Lease Expirations
The following table summarizes the scheduled lease expirations for mall
stores as of December 31, 2003:
Approximate Expiring Expiring
Mall Store Leases as % Leases as a
Number of GLA of of Total % of Total
Year Ending Leases Annualized Expiring Base Rent Per Annualized Leased Mall
December 31, Expiring Base Rent (1) Leases Square Foot Base Rent Store GLA
- ----------------- -------------- --------------- -------------- --------------- -------------- --------------
2004 787 $34,498,000 1,626,000 $21.22 10.8% 12.4%
2005 234 38,130,000 1,709,000 22.31 12.0% 13.0%
2006 172 39,603,000 1,605,000 24.67 12.4% 12.2%
2007 151 38,018,000 1,599,000 23.78 11.9% 12.2%
2008 563 36,217,000 1,543,000 23.48 11.4% 11.8%
2009 414 26,788,000 1,126,000 23.79 8.4% 8.6%
2010 211 24,497,000 901,000 27.19 7.7% 6.9%
2011 377 28,931,000 1,051,000 27.54 9.1% 8.0%
2012 336 24,069,000 832,000 28.94 7.5% 6.3%
2013 268 20,233,000 827,000 24.47 6.3% 6.3%
(1) Total annualized base rent for all leases executed as of December 31, 2003,
including rent for space that is leased but not occupied.
16
Mall Tenant Occupancy Costs
Occupancy cost is a tenant's total cost of occupying its space, divided by
sales. The following table summarizes tenant occupancy costs as a percentage of
total mall store sales for the last three years:
Year Ended December 31, (1)
---------------------------------------------
2003 2002 2001
-------------- -------------- ---------------
Mall store sales (in millions) (2) $3,199.9 $2,852.8 $2,821.4
============== ============== ===============
Minimum rents 8.5% 8.3% 8.0%
Percentage rents 0.3% 0.4% 0.3%
Tenant reimbursements (3) 3.4% 3.3% 3.0%
-------------- -------------- ---------------
Mall tenant occupancy costs 12.2% 12.0% 11.3%
============== ============== ===============
(1) Excludes Malls not owned or open for full reporting period except for 2001,
which includes results from the Jacobs Malls.
(2) Consistent with industry practice, sales are based on reports by retailers
(excluding theaters) leasing mall store GLA of 10,000 square feet or less.
Represents 100% of sales for the Malls. In certain cases, the Company and
the Operating Partnership own less than a 100% interest in the Malls.
(3) Represents reimbursements for real estate taxes, insurance and common area
maintenance charges.
ASSOCIATED CENTERS
The Company owns a controlling interest in 21 Associated Centers and
non-controlling interests in two Associated Centers. The Company also owns a
controlling interest in one Associated Center that was under construction at
December 31, 2003, and opened in February 2004.
Associated Centers are retail properties that are adjacent to a regional
mall complex and include one or more anchors, or big box retailers, along with
smaller tenants. Anchor tenants typically include tenants such as TJ Maxx,
Target, Toys R Us and Goody's. Associated Centers are managed by the staff at
the Mall it is adjacent to and usually benefit from the customers drawn to the
Mall.
The following table summarizes certain information about the Associated
Centers for the last three years.
Average Base Average Sales
Total Rent Per Square Per Square
At December 31 Total GLA Leasable GLA Foot(1) Foot(2)
- ------------------- ----------------- ----------------- ----------------- -----------------
2001 2,974,495 1,615,373 $9.73 $198
2002 3,563,351 2,162,012 9.87 181
2003 3,999,212 2,472,428 9.90 192
(1) 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.
(2) Calculated for the preceding twelve-month period for those tenants
reporting twelve month's of sales. The calculation of sales per square foot
excludes theaters.
All of the land underlying the Associated Centers is owned in fee simple
except for Bonita Lakes Crossing, which is subject to a long-term ground lease.
17
Associated Centers Lease Expirations
The following table summarizes the scheduled lease expirations for
Associated Center tenants in occupancy as of December 31, 2003.
Expiring
Annualized Approximate Leases as % Expiring
Number of Base Rent of GLA of of Total Leases as a
Year Ending Leases Expiring Expiring Base Rent Per Annualized % of Total
December 31, Expiring Leases (1) Leases Square Foot Base Rent Leased GLA
- ----------------- -------------- --------------- -------------- --------------- -------------- --------------
2004 28 $ 958,000 96,000 $9.97 6.5% 7.1%
2005 41 2,350,000 201,000 11.70 16.0% 14.9%
2006 25 1,136,000 94,000 12.06 7.7% 7.0%
2007 19 930,000 79,000 11.76 6.3% 5.9%
2008 24 1,351,000 134,000 10.06 9.2% 10.0%
2009 12 1,653,000 164,000 10.09 11.2% 12.1%
2010 7 1,003,000 148,000 6.78 6.8% 11.0%
2011 3 842,000 102,000 8.26 5.7% 7.6%
2012 14 2,655,000 188,000 14.14 18.0% 13.9%
2013 8 1,047,000 80,000 13.10 7.1% 5.9%
(1) Total annualized base rent for all leases executed as of December 31, 2003,
including rent for space that is leased but not occupied.
The following table sets forth certain information for each of the
Associated Centers as of December 31, 2003:
Year of
Opening/ Total Percentage
Associated Center/ Most Recent Company's Total Leasable GLA
Location Expansion Ownership GLA(1) GLA(2) Occupied(3) Anchors
- -------------------------------------------------------------------------------------------------------------
Bonita Lakes Crossing(4) 1997/1999 100% 130,150 130,150 92% Books-A-Million,
Meridian, MS Office Max, Old Navy,
Shoe Carnival, TJ
Maxx, Toys 'R' Us
CoolSprings Crossing 1992 100% 373,931 192,370 85% H.H. Gregg(6), Wild
Nashville, TN Oats(6), Lifeway
Christian Store,
Target(6), Toys "R"
Us(6)
Courtyard at Hickory 1979 100% 77,460 77,460 100% Carmike Cinemas, Just
Hollow For Feet(7)
Nashville, TN
Eastgate Crossing 1991 100% 195,112 171,628 98% Borders, Circuit City,
Cincinnati, OH Kids "R" Us, Kroger,
Office Max(6)
Foothills Plaza 1983/1986 100% 191,216 71,216 100% Carmike Cinemas,
Maryville, TN Dollar General,
Foothill's Hardware,
Fowler's Furniture
Frontier Square 1985 100% 161,615 16,615 100% Albertson's(8),
Cheyenne, WY Target(6)
Governor's Square Plaza 1985(5) 50% 187,599 65,401 100% Office Max, Premier
Clarksville, TN Medical Group, Target
Georgia Square Plaza 1984 100% 15,393 15,393 100% Georgia Theatre Company
Athens, GA
Gunbarrel Pointe 2000 100% 281,525 155,525 100% David's Bridal,
Chattanooga, TN Goody's, Kohl's,
Target(6)
Hamilton Corner 1990 90% 88,298 88,298 47% Fresh Market, PetCo
Chattanooga, TN
Hamilton Crossing 1987/1994 92% 185,370 92,257 92% Home Goods(6),
Chattanooga, TN Michaels(6), Parties R
Us, TJ Maxx, Toys "R"
Us(6)
Harford Annex 1973/2003 100% 107,903 107,903 100% Best Buy, Dollar Tree,
Bel Air, MD Gardiner's Furniture,
PetsMart
The Landing 1999 100% 169,523 91,836 90% Circuit City(6),
Atlanta(Douglasville),GA Lifeway, Michael's,
Shoe Carnival, Toys
"R" Us(6)
18
Year of
Opening/ Total Percentage
Associated Center/ Most Recent Company's Total Leasable GLA
Location Expansion Ownership GLA(1) GLA(2) Occupied(3) Anchors
- -------------------------------------------------------------------------------------------------------------
Madison Plaza 1984 100% 153,085 98,690 97% Food World, Party
Huntsville, AL City, TJ Maxx
Parkdale Crossing 2002 100% 80,209 80,209 100% Barnes & Noble,
Beaumont, TX Lifeway Christian
Store, Office Depot,
Petco
Pemberton Plaza 1986 10% 77,893 26,947 75% Blockbuster, Kroger(6)
Vicksburg, MS
Sunrise Commons 1979/2003 100% 226,012 100,567 100% K-Mart, Marshalls, Old
Brownsville, TX Navy, Ross, Staples
Shoppes at Hamilton 2003 92% 109,937 109,937 99% Bed Bath & Beyond,
Place Marshall's, Ross
Chattanooga, TN
The Terrace 1997 92% 156,297 117,025 100% Barnes & Noble,
Chattanooga, TN Circuit City(6),
Linens 'N Things, Old
Navy, Staples
Village at Rivergate 1981/1998 100% 166,366 66,366 29% Chuck E. Cheese,
Nashville, TN Target(6)
Westmoreland Crossing 2002 100% 277,303 277,303 50% Ames(9), Carmike
Greensburg, PA Cinema, Michaels, Shop
N' Save
WestGate Crossing 1985/1999 100% 157,247 157,247 92% Chuck E. Cheese,
Spartanburg, SC Goody's, Old Navy,
Toys "R" Us
West Towne Crossing 1980 100% 429,768 162,085 100% Barnes & Noble, Best
Madison, WI Buy, Kohls(6), Cub
Foods(6), Gander
Mountain, Office
Max(6), Shopko(6)
--------------------------------------
Total Associated Centers 3,999,212 2,472,428 89%
======================================
(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, 2002 and includes
leased anchors.
(4) Bonita Lakes Crossing - The land is ground leased through June 2015 with
options to extend through June 2035. The annual rent at December 31, 2003
was $20,420, increasing by 6% each year.
(5) Governor' Square Plaza - Originally opened in 1985, and was acquired by the
Company in June 1997.
(6) Owned by the tenant.
(7) Courtyard at Hickory Hollow -Just For Feet is closed, but still paying
rent. Just For Feet's parent company, Footstar, Inc., filed for bankruptcy
in March 2004.
(8) The former Albertson's is vacant, owned by others and is being redeveloped.
(9) The former Ames location is vacant.
COMMUNITY CENTERS
The Company owns a controlling interest in 17 Community Centers and
non-controlling interests in two Community Centers. The Company also owns two
Community Centers that are currently under construction.
Community Centers typically have less development risk because of shorter
development periods and lower costs. While Community Centers generally maintain
higher occupancy levels and are more stable, they typically have slower rent
growth because the anchor stores' rents are typically fixed and are for longer
terms.
Community Centers are designed to attract local and regional area customers
and are typically anchored by a combination of supermarkets, or value-priced
stores that attract shoppers to each center's small shops. The tenants at the
Company's Community Centers typically offer necessities, value-oriented and
convenience merchandise.
19
As discussed under Recent Developments, the Company sold its interests in
41 community centers to Galileo America in October 2003 and acquired a 10%
interest in Galileo America.
The following table summarizes certain information about the Community
Centers for the last three years.
Average Base Average Sales
Total Rent Per Square Per Square Foot
At December 31, Total GLA Leasable GLA Foot (1) (2)
- ------------------- ----------------- ----------------- ------------------ -----------------
2001 8,357,207 5,472,017 $9.43 $190
2002 7,580,027 5,123,643 9.72 224
2003 (3) 3,422,000 2,071,840 9.15 122
(1) Average base rent per square foot is based on GLA occupied as of the last
day of the indicated period for the preceding twelve-month period.
(2) Calculated for the preceding twelve-month period for those tenants
reporting twelve months of sales. The calculation of sales per square foot
excludes theaters.
(3) Excludes the community centers sold to Galileo America in October 2003.
The following tables sets forth certain information for each of the
Company's Community Centers at December 31, 2003:
Year of Square
Opening/ Total Percentage Feet of
Most Recent Company's Total Leasable GLA Anchor
Community Center / Location Expansion Ownership GLA(1) GLA(2) Occupied(3) Anchors Vacancies
- -----------------------------------------------------------------------------------------------------------------------------
BJ's Plaza(4) (12) 1991 100% 104,233 104,233 100% BJ's Wholesale Club None
Portland, ME
Cedar Plaza 1988 100% 50,000 50,000 100% Tractor Supply Company None
Cedar Springs, MI
Keystone Crossing 1989 100% 40,400 40,400 100% Food Lion(5), Dollar General 29,000
Tampa, FL
Longview Crossing(6)(11) 2000 100% 40,598 40,598 100% Food Lion None
Hickory, NC
Massard Crossing 2001 10% 300,717 98,410 94% Goody's, TJ Maxx, None
Ft. Smith, AR Wal*Mart(7)
North Creek Plaza 1983 100% 28,500 28,500 26% Food Lion(5) 21,000
Greenwood, SC
Oaks Crossing 1990/1993 100% 119,674 27,450 100% Buck's Variety, Wal*Mart(7) None
Otsego, MI
Sattler Square 1989 100% 132,746 94,760 100% Big Lots, Rite Aid, Tractor 25,000
Big Rapids, MI Supply Company
Springdale Mall (12) 1960/2002 100% 968,962 688,962 88% Barnes & Noble, Best Buy, None
Mobile, AL Burlington Coat Factory,
David's Bridal, Goody's,
Linens N Things, Marquee
Cinemas, McRae's, Old Navy,
Piccadilly, Staples,
Wherehouse Entertainment
Springs Crossing(8) (11) 1987/1996 100% 42,920 42,920 84% Food Lion 6,720
Hickory, NC
Stone East Plaza(11) 1983 100% 45,259 45,259 98% Auto Zone, Dollar General, None
Kingsport, TN Spa World
34th St. Crossing 1989 100% 51,120 51,120 78% Food Lion (9) 35,720
St. Petersburg, FL
Uvalde Plaza 1987/1992 75% 34,000 34,000 100% Beall's, Wal*Mart(7) None
Uvalde, TX
Valley Crossing(11) 1988/1991 100% 186,077 186,077 99% Dollar Tree, Circuit City, None
Hickory, NC Goody's, Office Depot, Rack
Room Shoes, TJ Maxx
The Village at Wexford 1990 100% 72,450 72,450 100% Tractor Supply Company(10) None
Cadillac, MI
20
Year of Square
Opening/ Total Percentage Feet of
Most Recent Company's Total Leasable GLA Anchor
Community Center / Location Expansion Ownership GLA(1) GLA(2) Occupied(3) Anchors Vacancies
- -----------------------------------------------------------------------------------------------------------------------------
Village Square 1990/1993 100% 163,294 27,050 96% Fashion Bug, Wal*Mart(7) None
Houghton Lake, MI
Waterford Commons (11) 2003 100% 353,086 242,297 91% Best Buy, Borders, Dick's None
Waterford, CT Sporting Goods, iParty,
Linens N Things, Michael's,
Pier 1, Raymour & Flanigan
Furniture
Willowbrook Plaza 1999 10% 386,130 292,580 85% American Multi-Cinema, Home None
Houston, TX Depot(7), Linens 'N Things
Willow Springs Plaza(11) 1991/1994 100% 224,753 130,753 97% Home Depot(7), JCPenney None
Nashua, NH Home Store, Jordan's
Warehouse, Office Max, Petco
------------------------------------
Total Community Centers 3,422,079 2,297,819 91.9%
====================================
(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 paying rent on executed leases on December 31, 2002.
Calculation includes leased Anchors.
(4) BJ's Plaza - Ground Lease term extends to 2051 including four 10-year
extensions. Lessee has an option to purchase and a right of first refusal
to purchase the fee.
(5) Tenant has closed its store, but is continuing to meet its financial
obligations under its lease.
(6) Longview Crossing - Ground Lease term extends to 2049 including three
10-year extensions. Lessor receives a share of percentage rents during
initial terms and extensions. Lessee has a right of first refusal to
purchase the fee.
(7) Owned by the tenant.
(8) Springs Crossing - Ground Lease term extends to 2048 including three
10-year extensions. Lessor receives a share of percentage rents during
initial term and extensions. Lessee has a right of first refusal to
purchase the fee.
(9) 34th Street Crossing - Food Lion has closed its store but is continuing to
meet its financial obligations and is sub-leasing the space.
(10) Village at Wexford - Tractor Supply Company has an option to purchase its
56,850 square foot store commencing in 1996 for a price based upon
capitalizing the minimum annual rent at the time of exercise at a rate o
8.33%.
(11) The property was sold in the second phase of the Galileo transaction in
January 2004.
(12) The property is to be sold to Galileo America in January 2005.
Community Centers Lease Expirations
The following table summarizes the scheduled lease expirations for tenants
in occupancy at the Company's 17 community centers at December 31, 2003.
Expiring
Annualized Approximate Leases as % Expiring
Number of Base Rent of GLA of of Total Leases as a
Year Ending Leases Expiring Expiring Base Rent Per Annualized % of Total
December 31, Expiring Leases (1) Leases Square Foot Base Rent Leased GLA
- ----------------- -------------- --------------- -------------- --------------- -------------- --------------
2004 19 $430,000 44,000 $9.77 2.7% 2.2%
2005 19 870,000 92,000 9.46 5.4% 4.5%
2006 12 285,000 75,000 3.8 1.8% 3.7%
2007 19 351,000 59,000 5.95 2.2% 2.9%
2008 10 393,000 78,000 5.04 2.4% 3.8%
2009 3 478,000 60,000 7.97 3.0% 2.9%
2010 1 18,000 2,000 9.00 0.1% 0.1%
2011 0 0 0 0.00 0.0% 0.0%
2012 1 162,000 10,000 16.20 1.0% 0.5%
2013 2 163,000 32,000 5.09 1.0% 1.6%
(1) Total annualized base rent for all leases executed as of December 31, 2003,
including rent for space that is leased but not occupied.
MORTGAGES
The Company owns 12 mortgages that are collateralized by first
mortgages or wrap-around mortgages on the underlying real estate and related
improvements. The mortgages are more fully described on Schedule IV in Part IV
of this report.
21
OFFICE BUILDING
The Company owns a 92% interest in the 128,000 square foot office building
where its corporate headquarters is located. At December 31, 2003, the Company
occupied 60% of the total square footage of the building.
Mortgage Loans Outstanding at December 31, 2003
(in thousands)
Estimated
Balloon Date
Company's Principal Payment Open to
Ownership Interest Balance as of Annual Debt Maturity Due at Prepayment
Collateral Property Share Rate 12/31/03 (1) Service Date Maturity (2)
- --------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED DEBT:
- -----------------
MALLS:
Arbor Place Mall 100% 6.510% $79,570 $6,610 Jul-12 $63,397 Jun-05(4)
Asheville Mall 100% 6.980% 69,541 5,677 Sep-11 61,229 Oct-04
Bonita Lakes Mall 100% 6.820% 27,178 2,503 Oct-09 22,539 Open
Brookfield Square 100% 7.498% 71,742 7,219 May-05 68,980 Jan-04(5)
Burnsville Center 100% 8.000% 70,923 6,900 Oct-10 60,341 Sep-05
Cary Towne Center 100% 6.850% 88,310 7,077 Mar-09 81,961 Apr-05
Cherryvale Mall 100% 7.375% 45,727 4,648 Jul-06 41,980 Open
Citadel Mall 100% 7.390% 31,767 3,174 May-07 28,700 Open
College Square 100% 6.750% 12,301 1,726 Sep-13 -- Open
Columbia Place 100% 5.450% 33,839 2,493 Oct-13 25,512 Sep-06(4)
Coolsprings Galleria 100% 8.290% 60,322 6,636 Oct-10 47,827 Open
Cross Creek Mall 100% 7.400% 64,024 5,401 Apr-12 56,520 Open
East Towne Mall 100% 8.010% 27,791 7,434 Dec-06 25,447 Open
Eastgate Mall 100% 2.625%(3) 41,125 1,080 Feb-04 41,125 Open
Fashion Square Mall 100% 6.510% 60,923 5,061 Jul-12 48,540 Jun-05(4)
Fayette Mall 100% 7.000% 95,470 7,824 Jul-11 84,096 Jul-06
Hamilton Place 90% 7.000% 65,448 6,361 Mar-07 59,505 Open
Hanes Mall 100% 7.310% 111,516 10,726 Jul-08 97,551 Open
Hickory Hollow Mall 100% 6.770% 89,500 7,723 Aug-08 80,847 Open(6)
Janesville Mall 100% 8.375% 14,255 1,857 Apr-16 -- Open
Jefferson Mall 100% 6.510% 44,325 3,682 Jul-12 35,316 Jun-05(4)
Meridian Mall 100% 4.520% 95,479 6,416 Oct-08 84,588 Sep-06(4)
Midland Mall 100% 2.620%(3) 30,000 786 Jun-04 30,000 Open
Northwoods Mall 100% 6.510% 63,461 5,271 Jul-12 50,562 Jun-05(4)
Oak Hollow Mall 75% 7.310% 45,960 4,709 Feb-08 39,567 Open
Old Hickory Mall 100% 6.510% 35,148 2,920 Jul-12 28,004 Jun-05(4)
Panama City Mall 100% 7.300% 40,144 3,373 Aug-11 36,089 Open
Parkdale Mall 100% 5.010% 56,712 4,003 Oct-10 47,408 Sep-06(4)
Randolph Mall 100% 6.500% 15,328 1,272 Jul-12 12,209 Jun-05(4)
Regency Mall 100% 6.510% 34,757 2,887 Jul-12 27,693 Jun-05(4)
Rivergate Mall 100% 6.770% 72,334 6,240 Aug-08 65,479 Open(6)
River Ridge Mall 100% 8.050% 22,336 2,353 Jan-07 20,518 Open
Southpark Mall 100% 7.000% 38,035 3,308 May-12 30,763 Jun-05
St. Clair Square 100% 7.000% 68,892 6,361 Apr-09 58,975 Open
Stroud Mall 100% 8.420% 31,794 2,977 Dec-10 29,385 Open(4)
22
Sunrise Mall 100% 4.900%(7) 40,000 1,960 May-04 40,000 Open(7)
Turtle Creek Mall 100% 7.400% 31,082 2,712 Mar-06 29,522 Open
Valley View Mall - Note 1 100% 8.280% 31,491 2,993 Oct-10 28,075 Oct-05
Valley View Mall - Note 2 100% 9.390% 13,422 1,369 Oct-10 12,420 Oct-05
Walnut Square 100% 10.125%(8) 486 144 Feb-08 -- Open
Wausau Center 100% 6.700% 13,621 1,238 Dec-10 10,725 Open
West Towne Mall 100% 8.010% 42,966 7,434 Dec-06 39,342 Open
Westgate Mall 100% 6.500% 55,063 4,570 Jul-12 43,860 Jun-05(4)
Westmoreland Mall 100% 5.050% 83,703 5,993 Mar-13 63,175 Feb-06(4)
York Galleria 100% 8.340% 50,875 4,727 Dec-10 46,932 Open(4)
ASSOCIATED CENTERS:
Bonita Lakes Crossing 100% 6.820% 8,516 784 Oct-09 7,062 Open
Courtyard at Hickory Hollow 100% 6.770% 4,167 360 Aug-08 3,764 Open(6)
Eastgate Crossing 100% 6.380% 10,394 1,018 Apr-07 9,674 Open(9)
Hamilton Corner 90% 10.125% 2,503 471 Dec-10 -- Open
Parkdale Crossing 100% 5.010% 8,955 632 Oct-10 7,507 Sep-06(4)
The Landing at Arbor Place 100% 6.510% 8,982 746 Jul-12 7,157 Jun-05(4)
Village at Rivergate 100% 6.770% 3,417 295 Aug-08 3,086 Open(6)
Westgate Crossing 100% 8.420% 9,659 907 Jul-10 8,954 Jun-04(4)
COMMUNITY CENTERS:
BJ's Plaza 100% 10.400% 2,578 476 Dec-11 -- Open
Uvalde Plaza 75% 10.625% 446 133 Feb-08 -- Closed
Willow Springs Plaza 100% 9.750% 2,871 934 Aug-07 -- Open
Waterford Commons 100% 2.770%(3) 25,883 717 Jul-04 25,883 Open
OTHER:
CBL Center 92% 6.250% 14,763 1,108 Aug-12 12,662 Jul-05(4)
Secured credit facilities 100% 2.170%(10) 304,000 6,597 (11) 304,000 Open
Unsecured credit facility 100% 2.490%(3) 72,000 1,793 Jan-04 72,000 Open
Fayette Mall Development 100% 2.770%(3) 8,550 237 Dec-04 8,550 Open
Unamortized premiums and other 31,732(12)
----------------
Total consolidated debt 2,738,102
----------------
UNCONSOLIDATED DEBT:
- --------------------
MALLS:
Governor's Square Mall 48% 8.230% 32,461 3,476 Sep-16 14,144 Open
Kentucky Oaks Mall 50% 9.000% 32,263 3,573 Jun-07 29,439 Open
Parkway Place 45% 2.620%(3) 58,470 1,532 Dec-04 58,470 Open(13)
Plaza Del Sol 51% 9.150% 3,959 796 Aug-10 0 Open
23
COMMUNITY CENTERS:
Massard, Pemberton and 10% 7.540% 38,147 3,264 Feb-12 34,230 Open(14)
Willowbrook
Cedar Bluff Crossing 10% 10.625% 745 230 Aug-07 0 Closed
Cortlandt Towne Center 10% 6.900% 48,779 4,539 Aug-08 43,342 Open
Galileo High Leverage Pool 10% 5.330% 77,000 4,104 Nov-08 77,000 Open(14)
(secured by 13 Properties)
Galileo Investment Grade Pool 10% 5.010% 54,000 2,705 Nov-10 54,000 Open(14)
(secured by 14 Properties)
Galileo Subscription Line 10% 2.625%(3) 11,000 289 Nov-06 11,000 Open
(unsecured)
Greenport Towne Center 10% 9.000% 3,636 529 Sep-14 0 Open
Henderson Square 10% 7.500% 5,384 750 Apr-14 0 May-05
Northwoods Plaza 10% 9.750% 984 171 Jun-12 0 Open
Suburban Plaza 10% 7.875% 7,776 870 Jan-04 6,042 Open
CONSTRUCTION PROPERTIES:
Coastal Grand 50% 2.938%(3) 46,384 1,363 May-06 46,384 Open
Imperial Valley Mall 60% 2.840%(3) 418 12 Dec-06 418 Open(15)
Unamortized premiums 8,084(12)
----------------
Total unconsolidated debt $ 429,490
----------------
Total consolidated and unconsolidated debt $ 3,167,592
================
Company's share of total debt (16) $ 2,853,646
================
(1) The amount listed includes 100% of the loan amount even though the Company
may own less than 100% of the property.
(2) Prepayment premium is based on yield maintenance, unless otherwise noted.
(3) The interest rate is floating at various spreads over LIBOR priced at the
rates in effect at December 31, 2003. The note is prepayable at any time
without prepayment penalty.
(4) Loan may be defeased.
(5) This mortgage consists of three notes. All three notes must be prepaid at
the same time and are prepayable with a prepayment premium based on yield
maintenance.
(6) This note consists of an A-Note and a B-Note. The A-Note may be defeased.
The B-Note may be prepaid with a prepayment premium based on yield
maintenance.
(7) The interest rate is floating at 3% over LIBOR, with a minimum rate of
4.90%. The note is prepayable at any time with a prepayment penalty of 5%
of the then outstanding loan balance plus that month's accrued and unpaid
interest.
(8) The loan is secured by a first mortgage lien on the land and improvements
comprising the Goody's anchor store and no other property.
(9) The loan has three five-year options based on a rate reset.
(10) Represents the weighted average interest rate on four secured credit
facilities. The interest rates on the four secured facilities are at
a spread of 1.00% over LIBOR.
(11) The four secured credit facilities mature at various dates from June