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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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from___________ to___________
Commission File No. 1-12494
CBL & ASSOCIATES PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 62-1545718
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification 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
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Common Stock, $.01 par New York Stock Exchange
value 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 $592,830,352 based on the closing price on
the New York Stock Exchange for such stock on March 20, 1998.
As of March 20, 1998, there were 24,074,329 shares of the Registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates certain information by reference to the Registrant's
definitive proxy statement filed on March 27, 1998 in respect to the Annual
Meeting of Stockholders to be held on April 30, 1998.
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FORM 10-K
TABLE OF CONTENTS
Item No. Page
PART I
Item 1 Business. . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2 Properties. . . . . . . . . . . . . . . . . . . . . . . . 14
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . 35
Item 4 Submission of Matters to a Vote of Security Holders . . . 35
PART II
Item 5 Market for Registrant's Common Equity and Related
Shareholder Matters . . . . . . . . . . . . . . . . . . . 35
Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . 37
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 38
Item 8 Financial Statements and Supplementary Data . . . . . . . 50
Item 9 Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . 50
PART III
Item 10 Directors and Executive Officers of the Registrant . . . 50
Item 11 Executive Compensation . . . . . . . . . . . . . . . . . 50
Item 12 Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . . 50
Item 13 Certain Relationships and Related Transactions . . . . . 50
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . 51
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CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION OR THE PURPOSE
OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements, Certain information contained in
this Annual Report on Form 10-K is forward-looking, such as information
relating to the Company's growth strategy, projects under construction,
liquidity and capital resources, compliance with environmental laws and
regulations, and the year 2000 compliance of the Company's computer systems.
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 speak only as of the date hereof.
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
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. CBL &
Associates Properties, Inc. (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 operates through its two wholly owned subsidiaries, CBL
Holdings I, Inc., a Delaware corporation ("CBL Holdings I"), and CBL
Holdings II, Inc., a Delaware corporation ("CBL Holdings II"). By transfers
dated April 1, 1997, the Company assigned its interests in CBL & Associates
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), to CBL Holdings I and CBL Holdings II, which resulted in CBL
Holdings I becoming the 2.8% sole general partner of the Operating
Partnership and CBL Holdings II becoming a 69% limited partner of the
Operating Partnership. The Company conducts substantially all of its
business through the Operating Partnership. To comply with certain
technical requirements of the Internal Revenue Code of 1986, as amended
(the "Code") applicable to Real Estate Investment Trusts' ("REIT's"), the
Operating Partnership carries out the Company's property management and
development activities through CBL & Associates Management, Inc. (the
"Management Company").
On November 3, 1993, the Company completed initial public offerings,
inside and outside the United States (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
aggregate 35.4% limited partner interest in the Operating Partnership. CBL
also acquired an additional 4.9% limited partner interest in the Operating
Partnership for a cash payment of $24.4 million. Each of the partnership
interests in the Operating Partnership may, at the election of its respective
holder, be exchanged for shares of Common Stock of the Company, subject to
certain limitations imposed by the Code. Following the Offering, the
Company owned a 59.7% general partner interest in the Operating Partnership.
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 December 1993, CBL exercised its right under the Operating
Partnership's partnership agreement to exchange a 4.7% limited partner
interest in the Operating Partnership for 1,221,744 shares of Common Stock.
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In October 1994, the Operating Partnership exercised its option to
acquire from CBL the former Phar-Mor space at Valley Crossing in Hickory,
North Carolina for a value of $3,575,400. The Operating Partnership issued
a .5377% limited partnership interest (190,688 share equivalents) to CBL in
return for the former Phar-Mor space.
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. The net proceeds of $80.7 million were used to
to repay variable rate indebtedness incurred in the Company's development
and acquisition program.
In August 1996, the Company exercised its option to acquire from CBL a
parcel of land for the recently constructed Just for Feet on the periphery
of Hamilton Place Mall in Chattanooga, Tennessee for a value of $780,053. The
Operating Partnership issued a .0798% limited partner interest (34,246 share
equivalents) to CBL in return for the parcel.
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 those shares as part of the offering. The net proceeds of $74.3
million, were used to repay variable rate indebtedness incurred in the
Company's development and acquisition program.
In March 1997, the Company purchased from CBL a parcel of land for
additional parking for the expansion and addition of Dillard's to Twin Peaks
Mall in Longmont, Colorado for a value of $59,994. The Operating Partnership
issued a .0057% limited partner interest (2,424 share equivalents) to CBL
in return for the parcel.
In June 1997, the Company purchased from CBL a 49% general partnership
interest in Governor's Plaza in Clarksville, Tennessee for a value of
$1,512,976. The Operating Partnership issued a .1349% limited partner
interest (65,426 share equivalents) to CBL in return for the partnership
interest.
After giving effect to the above transactions, CBL holds a 28.25%
limited partner interest in the Operating Partnership, and the Company holds
a 71.75% general partner interest in the Operating Partnership. In addition,
CBL holds approximately 1.7 million of the outstanding shares of Common Stock
for a total ownership share of 33.18%.
GENERAL
The Company owns interests in a portfolio of properties, consisting of
22 enclosed regional malls (the "Malls"), 12 associated centers (the
"Associated Centers"), each of which is part of a regional shopping mall
complex, and 81 independent community and neighborhood shopping centers (the
"Community Centers"). Except for five Malls, one Associated Center and two
Community Centers which were acquired from third parties, each of these
properties was developed by CBL or the Company.
Additionally, the Company owns one Mall, one Associated Center,
one power center and two neighborhood shopping centers currently under
construction (the "Construction Properties"). The Company also owns options
to acquire certain shopping center development sites (the "Development
Properties").
The Company also holds 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 are collectively referred to herein as the
"Properties" and individually as a "Property".
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The Company has also entered into standby purchase agreements with
third-party developers for the construction, development and potential
ownership of two community and neighborhood centers in Georgia and 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. In addition to the standby purchase
agreements, the Company has extended secured credit to two of these
developers to cover pre-development costs.
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 Property Partnerships owning those Properties.
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 Operating Partnership
carries out the Company's property management and development activities
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 -- see below)
pursuant to 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. Pursuant to
requirements set forth in the Management Company's Amended and Restated
Certificate of Incorporation, 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 the same individuals as the Company's board of directors, including the
four 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.
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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. During 1994, the Company implemented a new management information
system which included hardware and software. During 1997, the Company
implemented a wide area network enabling instantaneous company-wide e-mail
and enhanced data communications on its accounting system. The accounting
software was also upgraded during 1997 to enhance support and dependability.
In the first quarter of 1998, the Company completed a hardware upgrade to
the accounting system and is developing a web site to publish integrated
information on the world wide web. These systems were developed to more
efficiently assist management in efforts to 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. See Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Year 2000 Issues.
An affiliate of the Management Company also leases certain equipment,
such as furniture, computers and vehicles, to Property Partnerships
for use at the Malls. During a portion of 1997, security, maintenance and
cleaning services at most of the Malls were provided by a company
(ERMC, L.P.) in which certain executive officers of the Company had an
interest. In February 1997, substantially all of the assets of ERMC, L.P.
were sold to a third party MManTec, Inc. ("MManTec") not affiliated with CBL
or any of the Company's executive officers. MManTec continues to operate
security services under the name of ERMC, L.P. and owes a note payable to
ERMC, L.P.
Management pursues periodic preventative 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 cordination of and reporting
to management.
GOVERNOR'S SQUARE
Governor's Square and Governor's Plaza are the only Properties in the
Company's portfolio in which the Company is 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 286 full time and 106 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
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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.
All of the Properties (but not properties for 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 within approximately the last six years. 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 used for storing petroleum products or wastes
typically associated with automobile service or other operations conducted
at the Properties. Certain Properties contain, or contained, dry-cleaning
establishments utilizing solvents. Where believed to be warranted, samplings
of building materials or subsurface investigations were, or, with respect to
one Property, 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, none of the environmental assessments have identified and
the Company is not aware of any environmental liability with respect to the
properties in which the Company or the Operating Partnership has or had
an interest (whether as an owner or operator) 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
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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, most recently, 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.
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. Seventeen Malls, eleven Associated Centers,
sixty-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, 1997,
the Properties located in the southeastern United States accounted for
54.7% of the Company's total assets, and provided 71.3% of the Company's
total revenues for the year ended December 31, 1997.
Third Party Interests In Certain Properties
The Operating Partnership owns partial interests in six Malls, five
Associated Centers, one Community Center and the Office Building. 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
and decisions relating to sales, expansions and financings, 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.
Dependence on Significant Properties
Hamilton Place and Coolsprings Galleria accounted for approximately 8.0%
and 8.0%, respectively, of total
revenues of the Company for the period ended December 31, 1997. The Company's
financial position and results of
operations will therefore be disproportionately affected by the results
experienced at these Properties.
Dependence on Key Tenants
The Limited Inc. stores (including Intimate Brands) maintains 77 Mall
stores and in the year ended December 31, 1997 accounted for approximately
8.0% of total revenues of the Company. Food Lion serves as an anchor tenant
in 37 of the Community Centers and in one Associated Center. In the year
ended December 31, 1997, Food Lion accounted for approximately 4.4% of total
revenues of the Company, Food Lion is a publicly traded North Carolina-
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based operator of supermarkets. The loss or bankruptcy of any of these or
other key tenants could negatively affect the Company's financial position
and results from 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 in accordance with generally accepted accounting
principles ("GAAP") 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 GAAP net income
(loss) before property depreciation, other non-cash items (consisting of the
effect of straight-lining of rents), gains or losses on sales of real estate
and gains or losses on investments in marketable securities. Funds from
Operations also includes the Company's share of Funds from Operations from
unconsolidated affiliates but minority investors' interests are excluded
from Funds from Operations. The Company complies with the National
Association of Real Estate Investment Trust's ("NAREIT") revised definition
of Funds from Operations by not adding back to income from operations
depreciation and amortization of finance costs and non-real estate assets.
The Company continues to exclude outparcel sales and the effect of straight-
line rents from its Funds from Operations calculation, even though the
revised definition allows the inclusion of such items. Funds from
Operations is a non-GAAP statement and does not represent cash flow from
operations as defined by GAAP and is not necessarily indicative of cash
available 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. At year
end the New Mall category was comprised of WestGate Mall in Spartanburg,
South Carolina which was renovated and expanded and reopened
in October 1996; Turtle Creek Mall in Hattiesburg, Mississippi which opened
partially in October 1994 and the remainder in March 1995 ("Phase II"); Oak
Hollow Mall in High Point, North Carolina which opened in August 1995;
Springdale Mall in Mobile, Alabama which was acquired in September 1997 and
which is being redeveloped and retenanted; and Bonita Lakes Mall in Meridian,
Mississippi which opened in October 1997.
Specifically, the Company has implemented its objective of growing its
Funds from Operations and will continue to do so by:
bullet 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, 1997, the occupancy at the
Stabilized Malls, New Malls, Associated Centers, and
Community Centers was 91.7%, 89.2%, 83.3%, and 97.6%,
respectively, as compared to occupancies of 89.0%, 87.7%,
99.6%, and 97.2%, respectively, at December 31, 1996;
- 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, 1997 were
4.7% higher at the Stabilized Malls than for the year
ended December 31, 1996;
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- increased base rents as tenant leases expire,
renegotiation of leases and negotiation of terminations
of leases of under performing retailers. At December 31,
1997 average base rents per square foot at the Malls,
Associated Centers, and Community Centers was $19.33,
$9.43, and $7.42, respectively, as compared to average
base rents per square foot of $19.64, $8.59, and $6.94,
respectively, at December 31, 1996;
- control of operating costs. Occupancy costs as a
percentage of sales at the Stabilized Malls decreased
to 11.2% for the year ended December 31, 1997 as compared
to 11.5% for the year ended December 31, 1996 (excluding
St. Clair Square and Foothills Mall from 1996).
bullet 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"). Seventeen of the
twenty-two Malls have undergone expansion or renovation since
their opening, and all of the Malls have been either built or
renovated in the last 10 years or are in the process of being
renovated. Two of the Malls had available Anchor pads at
December 31, 1997. Eighteen existing Anchors at ten Malls
have expansion potential at their existing stores. During
1997, the Company completed the renovation and expansion of
Foothills Mall in Maryville, Tennessee and the addition of a
Dillard's department store to both Twin Peaks Mall in
Longmont, Colorado and Frontier Mall in Cheyenne, Wyoming.
The Company is presently renovating Hamilton Place Mall in
Chattanooga, Tennessee to be completed in 1998 and plans to
renovate Governor's Square in Clarksville, Tennessee beginning
later in 1998. The Company also plans to expand Lakeshore Mall
in Sebring, Flordia in 1999 by adding a fifth department store.
In the Community Center and Associated Center portfolios, the
Company renovated four Community Centers and expanded one
Community Center and one Associated center in 1997. In 1998,
the Company plans to renovate for seven Community Centers and
expand one Mall, one Associated Center and one Community
Center.
bullet Developing new retail properties with profitable returns on
capital, leading to growth for the future.
-10-
In 1997, the Company opened one Mall, two Associated Centers,
two power centers, and four Community Centers. Summary information
concerning these properties is set forth below.
SUMMARY INFORMATION CONCERNING PROPERTIES
OPENED DURING THE YEAR ENDED DECEMBER 31, 1997
Anchor Non-
Name of Center/ Total GLA Anchor Percentage Opening
Location GLA(1) (2) GLA Leased(3) Date Anchors
________________________ _________ _________ _________ __________ _____________ _________________________
MALLS
Bonita Lakes Mall 631,555 449,447 182,108 86% October 1997 Dillards(4), McRae's(4)
Meridian, MS JCPenney, Sears(4),
Goody's
POWER CENTERS
Springhurst Towne Center 798,736 649,317 149,419 86% July 1997/July Meijer(4), Books-A-Million,
Louisville, KY 1998 Target(4), Kohls', Party
Source, Cinemark, Gap,
Old Navy, TJ Maxx, Kitchen
& Company
Cortlandt Town Center 772,451 575,749 196,702 94% October 1997/ Home Depot(4), HomePlace,
Cortland, NY Sept. 1998 Wal*Mart, Barnes & Noble,
Marshals, A & P, United
Artist, Office Max, PetsMart
ASSOCIATED CENTERS
Bonita Lakes Crossing 110,524 96,811 13,713 29% October 1997 Books-A-Million
Meridian, MS
The Terrace 156,317 156,317 0 100% March 1997/ Circuit City(4), HomePlace,
Chattanooga, TN April 1997 Barns & Noble, Gap Old Navy,
Staples
COMMUNITY CENTERS
Massard Crossing 290,717 260,057 30,660 100% March 1997 Wal*Mart(4), Goody's,
Fort Smith, AR TJ Maxx
Salem Crossing 289,305 251,892 37,413 98% April 1997/ Hannaford Bros., Wal*Mart
Virginia Beach, VA May 1997
Northpark Center 62,500 62,500 0 100% March 1997 Hannaford Bros.
Richmond, VA
Strabridge Market Place 43,570 43,570 0 100% August 1997 Regal Cinemas
Virginia Beach, VA
_________ _________ _________
TOTAL PROPERTIES OPENED 3,155,675 2,545,660 610,015
========= ========= =========
- ---------------------------
(1) Gross Leasable Area ("GLA") includes total square footage of Anchors (whether owned or leased by Anchor)
and Mall stores or shops.
(2) Includes total square footage of Anchors (whether owned or leased by the Anchor).
(3) Percentage leased for malls does not include Anchors GLA. For the Community Centers , Associated Centers,
and power centers, percentage leased includes non-Anchor GLA and leased Anchor GLA.
(4) Owned by Anchor.
-11-
The Company currently has one Mall, one Associated Centers,
one power centers, and two Community Centers under construction.
These properties will add approximately 1,900,000 square feet
to the Company's portfolio at opening and are all scheduled to
open during 1998 or 1999.
SUMMARY INFORMATION CONCERNING CONSTRUCTION PROPERTIES
AS OF MARCH 15, 1998
Ownership
by Company
Anchor Non- and Percentage
Name of Center/ Total GLA Anchor Operating Pre-Leased and Projected
Location GLA(1) (2) GLA Partnership Committed(3) Openings Anchors
- ------------------- ---------- ---------- ---------- ----------- -------------- ----------- ----------------------
MALLS
Arbor Place Mall 1,184,279 744,138 440,141 100% 63% Fall 1999 Dillard's(4), Uptons(4),
Douglasville, GA Sears(4), Regal Cinemas
ASSOCIATED CENTERS
The Landing 163,126 111,976 51,150 100% 0% Fall 1999 Circuit City(4)
Douglasville, GA
POWER CENTERS
Sand Lake Corners 594,223 491,133 103,090 100% 27% April 1999 Lowe's(4), Wal*Mart(4),
Orlando, FL Bealls, PestMart
COMMUNITY CENTERS
Sterling Creek Commons 65,500 55,500 10,000 100% 85% June 1998 Hannaford Bros.
Portsmouth, VA
Fiddler's Run 203,926 170,769 33,157 100% 61% March 1999 Goody's, JCPenney, Belk,
Morganton, NC Food Lion
---------- --------- ---------
TOTAL CONSTRUCTION
PROPERTIES 2,211,054 1,573,516 637,538
========== ========== ==========
(1) Includes total square footage of Anchors (whether owned or leased
by the Anchor) and mall stores or shops after each projects final
phase is complete.
(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 Anchor.
In addition to the Construction Properties, the Company is pursuing
the development of a number of sites which the Company believes are
viable for future development as malls and community and
neighborhood shopping centers. Regional mall development sites are
being pursued in Alabama, Georgia and South Carolina and community
shopping center sites are being pursued in Connecticut, Florida,
Kentucky, Missouri, New York, Tennessee 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.
bullet Acquiring existing retail properties where cash flow can be
enhanced by improved management, leasing, redevelopment and
expansion.
-12-
Management believes that an opportunity for growth exists through
the acquisition of shopping centers that meet the Company's
investment criteria and targeted returns. In general, the Company
seeks to acquire well-located shopping centers in middle-market
geographic areas consistent with management's experience where
management believes significant value can be created through its
development, leasing and management expertise.
In January 1997, the Company purchased Sutton Plaza, a community
center located in Mount Olive, New Jersey for $5.7 million, which
was funded from the Company's credit lines. This
122,000 square foot community center is 100% leased and is
anchored by A&P and Ames. The Company plans to expand the center
during 1998.
In August 1997, the Company acquired Spartan Plaza in Spartanburg,
South Carolina, a 151,000 square foot Associated Center adjacent
to the Company's WestGate Mall. The purchase price
of this property was $4.5 million, which was funded from the
Company's credit lines. It was renamed WestGate Crossing and it
is currently being redeveloped and retenanted.
In September 1997, the Company acquired Springdale Mall in Mobile,
Alabama. The 926,000 square foot mall is anchored by Gayfers,
McRae's, and Montgomery Ward. The purchase price was $26.2 million
which was funded by a $20 million acquisition loan with the
balance funded from the Company's credit lines. This Mall is
being redeveloped, remodeled, retenanted and expanded.
On January 2, 1998, the Company purchased the 823,916 square foot
Asheville Mall in Asheville, North Carolina for $65 million, which
was funded by a $48.9 million acquisition loan with the balance
funded from the Company's credit lines.
On January 30, 1998, the Company purchased the 1,078,568 square foot
Burnsville Center in Burnsville (Minneapolis), Minnesota for $81
million which was funded by a $60.8 million acquisition loan with
the balance funded from the Company's credit lines.
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
aproject 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 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.
-13-
COMPETITION
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 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 95% of its 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.
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. Eight of the Mall complexes include one or more Associated
Centers.
The total GLA of the 22 Malls is approximately 16.1 million square feet
or an average GLA of approximately 733,000 square feet per Mall. Mall store
GLA is 3,503,490 square feet at December 31, 1997. The Stabilized Mall
occupancy was 91.7% at December 31, 1997 (94.6% including
leased Anchor GLA). The Company wholly owns all but six of its Malls and
manages all but one of them.
In the years ended December 31, 1995, 1996 and 1997, Mall revenues
represented approximately 72.5%, 72.8% and 72.9%, respectively, of total
revenues from the Company's Properties.
-14-
Mall stores in the Stabilized Malls ("Stabilized Mall Stores") occupancy
increased from 89.0% at December 31, 1996, to 91.7% at December 31, 1997.
St. Clair Square and Foothills Mall, which were acquired during 1996, were
included in the Stabilized Mall category at December 31, 1996.
In the years ended December 31, 1995, 1996 and 1997, average Stabilized
Mall Store sales per square foot were approximately $237, $240 and $251,
respectively (computed using a monthly weighted average). Average Stabilized
Mall Store sales per square foot increased by 4.7% for the year ended
December 31, 1997 as compared to the year ended December 31, 1996.
Average base rent per square foot at the Mall Stores decreased from
$19.64 at December 31, 1996 to $18.98 at December 31, 1997. Average
base rents decreased in the Mall Stores during 1997 due to the fact that
several higher quality, larger space tenants leased space during the year.
The revenue increases from increases in occupancy have more than made up
for any reduction in revenues from average base rents going forward.
Occupancy costs as a percentage of sales for tenants in the Stabilized
Malls (excluding St. Clair Square and Foothills Mall from 1995 and 1996)
were 12.3%, 11.7% and 11.2% for the years 1995, 1996, and 1997, 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 largest 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 two largest revenue-producing Malls are Hamilton Place and
CoolSprings Galleria. Hamilton Place is located on a 187-acre site in
Chattanooga, Tennessee and represented, as of December 31, 1997, 4.67% of
the Properties' total GLA, 5.48% of total Mall Store GLA and 8.0% of total
revenues from the Company's Properties. CoolSprings Galleria is located on
a 148-acre site in metropolitan Nashville, Tennessee and represented, as of
December 31, 1997, 4.55% of the Properties' total GLA, 5.59% of total Mall
Store GLA and 8.0% of total revenues from the Company's Properties.
Seventeen of the twenty-two Malls have undergone an expansion or
remodeling since their opening, and all but one of the Malls have either
been built or renovated in the last 10 years or are in the process of being
renovated, including the renovation of Hamilton Place and a redevelopment
and expansion of Springdale Mall. The Company plans to renovate Governor's
Square beginning later in 1998 and plans to expand Lakeshore Mall in 1999
by adding a fifth department store. Two of the Malls have
available Anchor pads providing expansion potential totaling approximately
205,700 buildable square feet at December 31, 1997. Eighteen existing
Anchors at ten Malls have aggregate expansion potential at their existing
stores of approximately 473,000 buildable square feet.
With the exception of WestGate Mall, St. Clair Square and Springdale Mall
which were acquired by the Company in March 1995, November, 1996 and
September 1997, respectively, each of the Malls was developed by the Company.
The land underlying the Malls is owned in fee in all cases, except for Walnut
Square, WestGate Mall, St. Clair Square, and Bonita Lakes MAll which are each
subject to long-term ground leases for all or a portion of the land underlying
these Malls.
The table on the following page sets forth certain information for each
of the Malls as of December 31, 1997 and includes Asheville Mall and
Burnsville Center, which were acquired in January 1998.
-15-
Mall
Year Ownership by Total Store Percentage
Most Company and Mall Sales per Mall Store Fee or
Year of Recent Operating Total Store Square GLA Anchor Ground
Name of Mall/Location Opening Expansion Partnership GLA(1) GLA(2) Foot(3) Leased(4) Anchors Vacancies Lease
- --------------------- ------- --------- ------------ --------- --------- --------- ---------- ------------------ --------- -------
NEW MALLS
Bonita Lakes Mall 1997 N/A 100% 631,555 182,108 $ 93(15) 86% Goody's, Dillard's, None Ground
Meridian, MS JCPenney, Sears, Leased
MaRae's (14)
Oak Hollow Mall 1995 N/A 75% 829,194 252,366 223 87% Goody's, JCPenney, None Fee
High Point, NC Belk-Beck, Sears,
Dillard's
Springdale Mall 1960(7) N/A 100% 926,376 325,031 218 84% Gayfers, Montgomery None Fee
Mobile, AL Ward, McRae's
Turtle Creek Mall 1994 1995 100% 846,234 223,140 263 98% JCPenney, Sears, None Fee
Hattiesburg, MS Dillard's, Gayfers,
Goody's, McRae's
WestGate Mall 1975 1996 100% 1,100,575 276,461 272 91% Belk-Hudson, None Fee/
Spartanburg, SC --------- --------- ---- JCPenney, Dillard's, Ground
Sears, Upton's, Lease
JB White (5)
TOTAL NEW MALLS 4,333,934 1,259,106 89%
========= ========= ====
STABILIZED MALLS
Asheville Mall 1972(8) 1994 100% 823,916 260,581 $272 99% Dillard's, Montgomery None Fee
Asheville, NC Ward, JCPenney, Sears,
Belk
Burnsville Center 1977(12) N/A 100% 1,078,568 417,525 281 93% Mervyn's, Dayton's, None Fee
Burnsville, MN JCPenney, Sears
College Square 1988 1993 100% 460,463 157,594 213 86% JCPenney, Sears, None Fee
Morristown, TN Wal*Mart, Goody's,
Proffit's
CoolSpring Galleria 1991 1994 100% 1,130,597 375,582 299 94% Castner-Knott, None Fee
Nashville, TN Dillard's, Sears,
JCPenney, Parisian
Foothills Mall 1983(6) 1997 95% 476,768 180,072 190 89% Sears, JCPenney, None Fee
Maryville, TN Goody's, Proffitt's,
Proffitt's II
Frontier Mall 1981 1983 100% 523,004 202,417 184 85% Dillard's, JCPenney, None Fee
Cheyenne, WY Joslins, Sears
Georgia Square 1981 N/A 100% 680,135 258,581 217 96% Belk, JCPenney, None Fee
Athens, GA Macy's, Sears
Governor's Square 1986 1994 48% 692,320 271,319 225 94% JCPenney, Parks- None Fee
Clarksville, TN Belk, Sears,
Dillard's, Goody's
Hamilton Place 1987 1992 90% 1,159,636 367,988 322 97% Belk, Parisian, None Fee
Chattanooga, TN Proffitt's I,
Proffitt's II,
Sears, JCPenney
Lakeshore Mall 1992 N/A 100% 408,534 153,062 184 79% Kmart, Belk-Lindsey, None Fee
Sebring, FL JCPenney, Beall's (9)
Madison Square 1984 1985 50% 933,845 300,025 301 98% Castner Knott, None Fee
Huntsville, AL JCPenney, McRae's,
Parisian, Sears
Pemberton Square 1985 1990 100% 353,300 135,065 182 92% JCPenney, McRae's, None Fee
Vicksburg, MS Wal*Mart, Goody's
Plaza Del Sol 1979 1990 51% 245,685 89,504 158 97% Beall Bros.(9), None Fee
Del Rio, TX JCPenney, Kmart
Post Oak Mall 1982 1985 100% 776,823 318,642 231 83% Beall Bros.(9), None Fee
College Station, TX Dillard's, Foley's,
Service Merchandise,
Sears, JCPenney
-16-
Mall
Year Ownership by Total Store Percentage
Most Company and Mall Sales per Mall Store Fee or
Year of Recent Operating Total Store Square GLA Anchor Ground
Name of Mall/Location Opening Expansion Partnership GLA(1) GLA(2) Foot(3) Leased(4) Anchors Vacancies Lease
- --------------------- ------- --------- ------------ --------- --------- --------- ---------- ------------------ --------- -------
St. Clair Square 1974(10) N/A 100% 1,044,599 315,656 342 96% Famous Barr, Sears, None Fee/
Fairview Heights, IL JCPenney, Dillard's, Ground
Lease
(11)
Twin Peaks Mall 1985 1987 100% 556,153 245,268 193 87% JCPenney, Dillard's None Fee
Longmont, CO Joslins, Sears
Walnut Square 1980 1992 100% 450,385 171,192 191 96% Belk, JCPenney, None Ground
Dalton, GA ---------- --------- ---- --- Proffitt's, Sears, Lease
Goody's (13)
TOTAL STABILIZED MALLS 11,794,731 4,220,073 $252 92%
========== ========= ==== ===
( 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, 1997.
( 5) 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.
( 6) Originally opened in 1983 and controlling interest acquired by the
Company in December 1996.
( 7) Originally opened in 1960, was acquired by the Company in September 1997,
and is currently under going expansion and renovation.
( 8) Originally opened in 1972, last renovation completed in 1994, and
acquired by the Company in January 1998.
( 9) Beall Bros. operating in Texas is unrelated to Beall's operating in
Florida.
(10) Originally opened in 1974, last renovation completed in 1994, and
acquired by the Company in November, 1996.
(11) 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.
(12) Originally opened in 1977, last renovation completed in 1989, and
acquired by the Company in January 1998.
(13) 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.
(14) The Company is the lessee under a ground rent for 116.4 acres which
extends through June 30, 2035. The average annual base rent is $77,509.
(15) Center opened in fourth quarter of 1997.
-17-
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 which lease their
stores account for approximately 12.0% 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.
The Malls have a total of 103 Anchors. No Anchor Stores at any of the
Malls were vacant as of December 31, 1997. 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 March 15, 1998.
-18-
MALL ANCHOR SUMMARY INFORMATION
GLA GLA TOTAL
NUMBER OWNED LEASED OCCUPIED
OF ANCHOR BY BY BY
NAME STORES ANCHOR ANCHOR ANCHOR (1)
- -------------------- ---------- --------- --------- -----------
JCPenney 21 554,971 1,309,823 1,864,794
Sears 18 1,406,551 651,466 2,058,017
Dillard's 11 1,150,247 252,704 1,402,951
Proffitt's
Proffitt's (2) 6 492,654 0 492,654
McRae's 5 383,559 168,000 551,559
Parisian 3 207,520 133,000 340,520
---------- --------- --------- -----------
Subtotal 14 1,083,733 301,000 1,384,733
Belk
Belk 5 0 555,888 555,888
Belk-Lindsey 1 0 61,029 61,029
Belk-Hudson 1 0 152,890 152,890
Parks-Belk 1 0 122,367 122,367
---------- --------- --------- -----------
Subtotal 7 0 892,174 892,174
Mercantile Stores
Castner Knott 2 326,004 30,000 356,004
J.B. White 1 150,000 0 150,000
Gayfers 2 407,800 0 127,800
Joslins 2 152,914 2,500 155,414
---------- --------- --------- -----------
Subtotal 7 1,036,718 32,500 1,069,218
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 8 0 256,838 256,838
Montgomery Ward 2 0 245,829 245,829
Dayton-Hudson 1 221,326 0 221,326
Wal*Mart 2 0 214,653 214,653
Kmart 2 0 173,940 173,940
Mervyn's 1 124,919 0 124,919
Macy's 1 115,623 0 115,623
Uptons 1 0 69,993 69,993
Beall Bros. (Texas) 2 0 61,916 61,916
Beall's (Florida) 1 0 45,844 45,844
Service Merchandise 1 0 40,804 40,804
---------- --------- --------- -----------
Total 103 5,797,976 4,693,489 10,491,465
========== ========= ========= ===========
(1) Includes all square footage owned by or leased to such Anchor including
tire, battery and automotive facilities and storage square footage.
(2) Proffitt's occupies two Anchor spaces at Foothills Mall and three at
Hamilton Place Mall.
Mall Stores. The Malls have approximately 1,624 Mall Stores. National or
regional chains (excluding individually franchised stores) lease
approximately 82.0% of the occupied Mall Store GLA. Although Mall Stores
occupy only 33.7% of total Mall GLA, for the year ended December 31, 1997,
the Malls derived approximately 87.6% of their revenue from Mall Stores.
Among the companies with the largest representation among Mall Stores are:
The Limited, Inc. stores /Intimate Brands (The Limited, Limited Too, Express,
Lerner New York, Lane Bryant, Structure, Victoria Secret, and Bath and Body
Works) and Woolworth Corporation (Footlocker, Lady Footlocker, Kinney Shoes,
Champs Sports Stores, Afterthoughts Boutique and San Francisco Music Box).
As of December 31, 1997, The Limited's Stores, Inc.'s and
-19-
Intimate Brands' 77 stores accounted for 13.1% of total leased GLA and 8.0%
of total revenues from the Company's Properties. No single Mall Store
retailer accounted for more than 13.1% of total leased GLA and no single Mall
Store retailer accounted for more than 8.0% of total revenues from the
Company's Properties.
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, 1997.
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
- --------- -------- --------------- --------------- --------- ---------- --------
237 473,272 $19.85 $20.77 $0.91 $21.22 $1.37
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)
- ------------- ---------- ---------- ----------- ----------- ------------
1993 2,576,047 2,268,790 88.1% $16.12 $217
1994 2,576,047 2,284,987 88.7 16.55 226
1995 3,003,334 2,697,969 89.8 18.28 237
1996 3,452,997 3,073,190 89.0 19.03 240
1997 3,503,490 3,214,176 91.7 18.98 252
- -------------------
(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.
Lease Expirations. The following table shows the scheduled lease
expirations for the Malls (assuming that none of the tenants exercise
renewal options) for the year ending December 31, 1998 and for the next
nine years for the Mall Stores.
MALL LEASE EXPIRATION
Percentage of Total
Approximate Represented by
Mall Store Expiring Leases
Number of Annualized Base GLA of --------------------------
Leases Rent of Expiring Expiring Annualized Leased Mall
December 31, Expiring Leases (1) Leases Base Rent Store GLA
- -------------- --------- ---------------- ------------- ------------ -----------
1998 233 $6,385,665 359,618 8.00% 8.52%
1999 175 5,925,743 309,889 7.42 7.34
2000 170 6,583,360 389,614 8.25 9.23
2001 129 6,510,819 335,515 8.16 7.95
2002 190 8,433,978 409,572 10.57 9.71
2003 133 6,675,899 341,094 8.36 8.08
2004 129 6,564,279 313,380 8.22 7.43
2005 136 8,319,776 384,254 10.42 9.11
2006 106 5,697,381 288,301 7.14 6.83
2007 137 8,960,179 431,102 11.22 10.22
-20-
(1) Total annualized base rent for all leases executed as of December 31, 1997
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, 1997.
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.
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)
------------------------------
1995 1996 1997
--------- --------- --------
Mall Store sales (in thousands)(2) $526,107 $515,121 $666,506
Minimum rents 8.6% 7.9% 7.7%
Percentage rents 0.5 0.3 0.4
Expense recoveries (3) 3.2 3.3 3.1
--------- --------- --------
Mall tenant occupancy costs 12.3% 11.5% 11.2%
======= ========= =======
(1) Excludes Malls not 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.
At December 31, 1997, the Company had investments in three malls in joint
ventures with third parties, all of which are reflected using the equity
method of accounting. Condensed combined results of operations for the
three unconsolidated affiliates are presented in the following table
(dollars in thousands).
Company's Share
Total for the Year for the Year
Ended Ended
December 31, December 31,
------------------- -------------------
1997 1996 1997 1996
------- -------- -------- --------
Revenues $21,295 $21,014 $10,475 $10,318
Depreciation & Amortization 2,678 2,592 1,311 1,268
Interest Expense 8,044 8,278 3,951 4,061
Other Operating Expenses 6,955 6,389 3,432 3,159
------- -------- -------- --------
Net Income Before Extraordinary Item 3,618 3,755 1,781 1,830
Extraordinary Item 0 1,727 0 820
------- -------- -------- --------
Net Income $3,618 $2,028 $1,781 $1,010
======= ======== ======== ========
-21-
ASSOCIATED CENTERS
The twelve Associated Centers are each part of a Mall complex and
generally have one or two Anchor tenants and various smaller tenants.
Anchor tenants in these centers include such retailers as Books-A-Million,
Target, Toys "R" Us, TJ Maxx, and Service Merchandise which are category
dominant retailers that benefit from the regional draw of the Malls. The
Associated Centers also increase the draw to the total Mall complex.
Total leasable GLA of the twelve Associated Centers is approximately 0.9
million square feet, including Anchors, or an average of approximately 76,000
square feet per center. As of December 31, 1997, 83.3% of total leasable GLA
at the Associated Centers was occupied. This decrease in occupancy is due to
the Company relocating a tenant to a Mall store and the retenanting of
Westgate Crossing.
In the years ended December 31, 1995, 1996, and 1997, revenues from the
Associated Centers represented approximately 3.5%, 3.3% and 3.8%,
respectively, of total revenues from the Company's Properties.
In the years ended December 31, 1995, 1996 and 1997, average tenant
sales per square foot at the Associated Centers were approximately $215,
$207 and $189, respectively.
Average base rent per square foot at the Associated Centers increased
from $8.59 at December 31, 1996 to $9.43 at December 31, 1997.
Each of the Associated Centers was developed by the Company, except for
WestGate Crossing which was acquired in August 1997. All of the land
underlying the Associated Centers is owned in fee.
Lease Expirations. The following table shows for the Associated Centers
(assuming that none of the tenants exercise renewal options) the scheduled
lease expirations for the year ending December 31, 1998 and for the next
nine years.
ASSOCIATED CENTER LEASE EXPIRATION
Percentage of Total
Approximate Represented by
Mall Store Expiring Leases
Number of Annualized Base GLA of --------------------------
Leases Rent of Expiring Expiring Annualized Leased Mall
December 31, Expiring Leases (1) Leases Base Rent Store GLA
- -------------- --------- ---------------- ------------- ------------ -----------
1998 13 $278,698 35,696 4.21% 5.03%
1999 14 335,342 24,120 5.06 3.40
2000 22 808,972 72,653 12.21 10.25
2001 5 389,708 43,516 5.88 6.14
2002 14 647,380 52,229 9.77 7.37
2003 9 408,579 52,394 6.17 7.39
2004 4 556,204 94,060 8.40 13.26
2005 2 336,489 46,428 5.08 6.55
2006 2 288,625 32,720 4.36 4.61
2007 4 596,890 8,476 9.01 1.20
(1) Total annualized base rent for all leases executed as of December 31,
1997 includes 12 months of rent for space that is newly leased but not
yet occupied but excludes (i) percentage rents, (ii) additional
payments by tenants for common area maintenance, real estate taxes and
other expenses reimbursements and (iii) contractual rent escalations
and cost of living increases due after December 31, 1997.
-22-
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, 1997.
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
- --------- -------- --------------- --------------- --------- ---------- --------
33 58,905 $12.61 $13.29 $0.68 $13.47 $0.87
The following table sets forth certain information for each of the
Associated Centers as of December 31, 1997:
Year of Ownership by
Name of Opening/Most Company and Total Percentage
Associated Recent Operating Total Leased GLA
Center/Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors
- ----------------------- ------------ ------------- ------------ ------------ ---------- ----------------------------
Bonita Crossing 1997 100% 110,524 110,524 100% Books-A-Million
Meridian, MS TJ Maxx
CoolSprings Crossing 1992 100% 340,596 40,513 100% Target, Service Merchandise,
Nashville, TN Toys "R" Us, Uptons, Carmike
Cinemas
Foothills Plaza 1983/1988 100% 204,400(4) 124,400(4) 60.9%(4) Food Lion, Eckerd(6), Carmike
Maryville, TN Cinemas
Frontier Square 1985 100% 161,615 16,615 88% Buttrey Food & Drug, Target
Cheyenne, WY
Georgia Square Plaza 1984 100% 15,393 15,393 100%
General Cinema
Athens, GA
Governor's Square Plaza 1985(5) 49% 180,018 57,820 100% Office Max, Premier Medical
Clarkesville, TN Group, Target
Hamilton Corner 1990 90% 88,298 88,298 100% Michael's, Goody's,
Chattanooga, TN Fresh Market
Hamilton Crossing 1987/1994 92% 171,370 78,257 98% Service Merchandise, Toys
Chattanooga, TN "R" Us, TJ Maxx
Madison Plaza 1984(7) 75% 153,085 98,690 100% Food World, TJ Maxx
Huntsville, AL Service Merchandise
Pemberton Plaza 1986 100% 77,998 27,052 78% Kroger
Vicksburg, MS
The Terrace 1997 92% 156,317 117,045 100% Barnes & Novle, HomePlace,
Chattanooga, TN The Gap, Staples,Circuit City
WestGate Crossing 1985(8) 100% 151,489 151,489 43% Circuit City(9), Toys "R" Us
Spartanburg, SC --------- ------- ----
TOTAL ASSOCIATED CENTERS 1,811,103 896,096 83%
========= ======= ====
-23-
(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, 1997.
Calculation includes leased Anchors.
(4) Total GLA includes and Total Leasable GLA and Percentage GLA Leased
exclude a vacant former Hills Department Store (80,000 square feet of
GLA), which is owned by senior management of the Company. The Company
has a ten-year option (with approximately six years remaining) to
acquire this property for a fixed acquisition price of $3,800,000.
Carmike Cinemas is subject to a ground lease (30,000 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.
(7) Center was renovated during 1995.
(8) Originally opened in 1985, and was acquired by the Company in August
1997, and is currently under going expansion and renovations.
(9) Circuit City has closed its store but is continuing to meet its
financial obligations under its lease.
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; Fort Smith, Arkansas, two centers in Virginia Beach,
Virginia, and Richmond, Virginia. Anchors at these new centers include,
Regal Cinema, Wal*Mart, Goody's and Hannaford Bros. The Company sold, in a
tax deffered exchange, one free-standing Lowe's in Joplin, Missouri in
the last quarter of 1997.
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 up to sixteen with
an average of seven stores per center.
The Company's two power centers, which were completed and opened in 1997,
average 785,000 square feet and have a 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 area for additional major
retailers and additional space in second phases some of which are currently
being constructed. These power centers are included in the Community Center's
classification in this report.
Total GLA of the 81 Community Centers is approximately 8.4 million square
feet, or an average of approximately 84,000 square feet per center. As of
December 31, 1997, 97.6% of total leasable GLA at the Community Centers was
leased.
In the years ended December 31, 1995, 1996 and 1997, revenues from the
Community Centers represented approximately 21.2%, 21.4% and 21.2%,
respectively, of total revenues from the Company's Properties.
Occupancy at the Community Centers increased from 97.2% at December 31,
1996 to 97.6% at December 31, 1997.
Average base rent per square foot at the Community Centers increased from
$6.94 at December 31, 1996, to $7.42 at December 31, 1997.
-24-
As of December 31, 1997, Food Lion, a major regional supermarket operator
with headquarters in North Carolina served as an anchor tenant in 37 of the
Company's Community Centers and in one Associated Center. For the year
ended December 31, 1997, Food Lion accounted for approximately 4.4% of the
revenues generated by the Company's Properties.
With the exception of Suburban Plaza and Sutton Plaza, which were acquired
by the Company in March, 1995 and January, 1997 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)
- ------------------- ---------- ---------- --------------
1994 96.5% 6.64 200
1995 96.8% 6.66 202
1996 97.2% 6.94 210
1997 97.6% 7.42 221
(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 (assuming that none of the tenants exercise renewal
options) for the year ending December 31, 1998, and for the next nine years.
COMMUNITY CENTER LEASE EXPIRATION
Percentage of Total
Represented by
Approximate Expiring Leases
Number of Annualized Base GLA of --------------------------
Leases Rent of Expiring Expiring Annualized Leased Mall
December 31, Expiring Leases (1) Leases Base Rent Store GLA
- -------------- --------- ---------------- ------------- ------------ -----------
1998 106 $2,238,662 272,014 5.87% 5.43%
1999 119 2,473,578 333,807 6.49 6.66
2000 83 2,027,918 237,918 5.32 4.75
2001 52 1,549,880 230,329 4.07 4.59
2002 90 3,015,163 407,610 7.91 8.13
2003 33 1,918,070 372,322 5.03 7.43
2004 15 1,111,590 182,755 2.92 3.65
2005 18 1,695,965 213,370 4.45 4.26
2006 10 1,342,598 212,686 3.52 4.24
2007 17 2,346,601 280,714 6.16 5.60
(1) Total annualized base rent for all leases executed as of December 31,
1997 includes 12 months of rent for space that is newly 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 for periods after December 31, 1997.
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 31, 1997.
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
- --------- -------- --------------- --------------- --------- ---------- --------
160 347,126 $7.73 $7.94 $ 0.21 $8.23 $ 0.49
The following table sets forth certain information for each of the
Company's Community Centers at December 31, 1997.
26
Year Ownership
Opening/ by Company
Most and Total Percentage Fee or Number
Name of Recent Operating Total Leasable GLA Anchor Ground of
Community Center Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors Vacancies Lease Stores
- ---------------- ---------------- --------- ----------- -------- -------- ---------- ------------------- --------- ------- ------
Anderson Plaza Greenwood, SC 1983/1994 100% 46,258 46,258 98% Food Lion, Eckerd None Fee 3
Bartow Village Bartow, FL 1990 100% 40,520 40,520 95% Food Lion, Family None Fee 4
Dollar
Beach Crossing Myrtle Beach, SC 1984 100% 45,790 45,790 100% FoodLion(4), 21,000 Fee 6
Revco Drug sq.ft.
Bennington Place Roanoke, VA 1994 100% 42,712 42,712 100% Food Lion None Fee 3
BJ's Plaza Portland, ME 1991 100% 104,233 104,233 100% BJ's Wholesale Club None Ground 1
Lease
(5)
Briarcliff Square Oak Ridge, TN 1989 100% 41,778 41,778 100% Food Lion None Fee 10
Buena Vista Plaza Columbus, GA 1989/1994 100% 151,320 17,500 85% Wal*Mart, Winn Dixie None Fee 7
Bulloch Plaza Statesboro, GA 1986 100% 34,400 34,400 96% Food Lion, Rite Aid None Fee 3
Capital Crossing Raleigh, NC 1995 100% 83,700 83,700 100% Hannaford Bros., None Fee 2
Staples
Cedar Bluff
Crossing Knoxville, TN 1987/1996 100% 53,050 53,050 98% Food Lion None Fee 12
Cedar Plaza Cedar Springs, MI 1988 100% 95,000 50,000 100% Quality Stores None Fee 5
Centerview Plaza China Grove, NC 1986/1994 100% 43,720 43,720 100% Food Lion, Eckerd None Fee 6
Chester Square Richmond, VA 1997 100% 10,000 10,000 100% Hannaford Brothers None Fee 3
Chestnut Hills Murray, KY 1982 100% 68,364 68,364 100% JCPenney None Fee 10
Clark's Pond Portland, ME 1995 100% 134,920 134,920 100% Home Quarters None Fee 1
Warehouse
Colleton Square Walterboro, SC 1986 100% 31,000 31,000 100% Food Lion None Fee 5
Collins Park
Commons Plant City, FL 1989 100% 37,400 37,400 87% Food Lion None Ground 4
Lease
(6)
Conway Plaza Conway, SC 1985 100% 33,000 33,000 96% Food Lion(7) 21,000 Ground 6
sq. ft. Lease
(8)
Cosby Station Douglasville, GA 1994/1995 100% 77,811 77,811 100% Publix None Fee 9
Courtlandt Towne Cortlandt, NY 1997/1998 100% 772,451 639,208 94% Marshalls, Wal*Mart, None Fee 28
Center (Westchester Home Depot, Home
county Place, A & P Food
Store, Steinbach's,
Barnes & Noble,
Office Max, PetsMart
County Park Plaza Scottsboro, AL 1982 100% 47,325 47,325 82% Bi-Lo 28,875 Fee 3
(9)
sq. ft.
Devonshire Place Cary, NC 1996 100% 104,517 104,517 100% Hannaford Bros., None Ground 4
Kinetix, Borders Lease
Books (10)
Dorchester
Crossing Charleston, SC 1985/1997 100% 45,278 45,278 96% Food Lion None Fee 6
East Ridge
Crossing Chattanooga, TN 1988 100% 54,000 54,000 100% Food Lion, Revco None Fee 13
East Towne
Crossing Knoxville, TN 1989/1990 100% 158,751 70,011 97% Home Depot, Regal None Fee 8
Cinemas, Food Lion
58 Crossing Chattanooga, TN 1988 100% 49,984 49,984 100% Food Lion, Revco None Fee 9
Garden City Plaza Garden City, KS 1984/1991 100% 188,446 76,246 95% Wal*Mart(21), JCPenney None Fee 15
Genesis Square Crossville, TN 1990/1996 100% 35,000 35,000 100% Food Lion None Fee 4
Girvin Plaza Jacksonville, FL 1990 100% 56,297 20,375 94% Winn Dixie None Fee 8
Greenport Towne
Centre Hudson, NY 1994 100% 191,622 75,525 100% Wal*Mart, Price- None Fee 3
Chopper
Hampton Plaza Tampa, FL 1990 100% 44,624 44,624 97% Food Lion None Fee 8
-27-
Year Ownership
Opening/ by Company
Most and Total Percentage Fee or Number
Name of Recent Operating Total Leasable GLA Anchor Ground of
Community Center Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors Vacancies Lease Stores
- ---------------- ---------------- --------- ----------- -------- -------- ---------- ------------------- --------- ------- ------
Henderson Square Henderson, NC 1995 100% 268,327 164,329 100% JCPenney, Legget's, None Fee 14
Goody's, Wal*Mart
Hollins
Plantation
Plaza Roanoke, VA 1985 100% 40,640 40,640 100% Food Lion, Revco Drug None Fee 5
Jasper Square Jasper, AL 1986/1990 100% 95,950 50,550 100% Lowe's, Goody's None Fee 7
Jean Ribaut Beaufort, SC 1977/1993 100% 223,497 223,497 100% Belk, Kmart, Bi-Lo None Fee 17
Karns Corner Knoxville, TN 1987/1996 100% 35,000 35,000 100% Food Lion None Fee 4
Keystone Crossing Tampa, FL 1989 100% 40,400 40,400 100% Food Lion None Fee 5
Kingston Overlook Knoxville, TN(20)1996/1997 100% 119,222 119,222 100% Baby Superstore, None Fee/ 3
Home Place, Ground
Michael's Lease
(11)
Lady's Island Beaufort, SC 1983/1993 100% 60,687 60,687 100% Winn Dixie, Eckerd None Fee 9
LaGrange Commons LaGrange, NY 1996 100% 59,799 59,799 90% A & P Food Store None Fee 6
Lakeshore
Crossing Gainesville, GA 1994 100% 8,000 8,000 100% None Fee 5
Longview Crossing Hickory, NC 1988 100% 29,800 29,800 96% Food Lion None Ground 3
Lease(12)
Lunenburg
Crossing Lunenburg, MA 1994 100% 198,115 25,515 92% Wal*Mart,Shop'n Save None Fee 7
Massard Crossing Ft. Smith, AR 1997 100% 290,717 88,410 100% Wal*Mart,TJ Maxx None Fee 14
Goody's
North Creek Plaza Greenwood, SC 1983 100% 28,500 28,500 100% Food Lion None Fee 2
North Haven
Crossing North Haven, CT 1993 100% 104,612 104,612 100% Sports Authority, None Fee 6
Office Max, Barnes &
Noble
Northpark Center Richmond, VA 1997 100% 62,500 62,500 100% Hannaford Brothers, None Fee 3
Lowe's, Wal*Mart
Northridge Plaza Hilton Head, SC 1984/1988 100% 129,570 79,570 99% Winn Dixie, Eckerd None Fee 18
Northwoods Plaza Albemarle, NC 1983/1992 100% 32,705 32,705 100% Food Lion None Fee 2
Oaks Crossing Otsego, MI 1990/1993 100% 144,978 27,280 100% Wal*Mart, Rite Aid None Fee 11
Orange Plaza Roanoke, VA 1983 100% 46,875 46,875 100% Food World (13) 24,900 Fee 9
sq. ft.
Park Village Lakeland, FL 1990 100% 48,570 48,570 89% Food Lion, Family None Fee 8
Dollar
Perimeter Place Chattanooga, TN 1985/1988 100% 156,945 54,525 97% Home Depot, None Fee 16
Fred's Drugs For Less
Rawlinson Place Rock Hill, SC 1987 100% 35,750 35,750 94% Food Lion None Fee 7
Rhett at Remount Charleston, SC 1983/1994 100% 42,628 42,628 100% Food Lion, Eckerd None Fee 3
Salem Crossing Virginia Beach, VA 1997 100% 289,305 92,377 100% Hannaford Brothers None Fee 16
Sattler Square Big Rapids, MI 1989 100% 132,746 94,760 93% Quality Stores, Perry None Fee 14
Drugs
Seacoast Shopping
Center Seabrook, NH 1991 100% 208,690 91,690 97% Wal*Mart None Fee 14
Shaw's Supermarket
Shenandoah
Crossing Roanoke, VA 1988 100% 28,600 28,600 100% Food Lion None Fee 2
Signal Hills
Village Statesville, NC 1987/1989 100% 24,100 24,100 69% (14) None Ground 6
Lease
(15)
Southgate
Crossing Bristol, TN 1985 100% 40,100 40,100 100% Food Lion(4) 25,000 Ground 3
sq. ft. Lease
(16)
-28-
Year Ownership
Opening/ by Company
Most and Total Percentage Fee or Number
Name of Recent Operating Total Leasable GLA Anchor Ground of
Community Center Location Expansion Partnership GLA(1) GLA(2) Leased(3) Anchors Vacancies Lease Stores
- ---------------- ---------------- --------- ----------- -------- -------- ---------- ------------------- --------- ------- ------
Sparta Crossing Sparta, TN 1989 100% 31,400 31,400 100% Food Lion None Fee 2
Springhurst
Towne Center Louisville, KY 1997 100% 798,736 410,736 98% Cinemark, Books None Fee 19
A Million, Kohl's,
Party Source, TJ Maxx,
Old Navy, Target,
Kitchen & Company
Springs Crossing Hickory, NC 1987/1996 100% 42,920 42,920 100% Food Lion, Rite Aid None Ground 4
Lease
(17)
Statesboro Square Statesboro, GA 1986 100% 41,000 41,000 100% Food Lion(7) 25,000 Fee 6
Stone East Plaza Kingsport, TN 1983 100% 45,259 45,259 96% Food Lion(4) None Fee 10
Strawbridge
Market Virginia Beach, VA 1997 100% 43,570 43,570 100% Regal Cinema None Fee 1
Place
Suburban Plaza Knoxville, TN 1995 100% 129,321 129,321 97% Toys "R" Us None Fee 20
Barnes & Noble
Surry Square Elkin, NC 1985 100% 32,900 32,900 96% Food Lion(4), 21,000 Fee 3