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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 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 1-13038
CRESCENT REAL ESTATE EQUITIES COMPANY
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(Exact name of registrant as specified in its charter)
TEXAS 52-1862813
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
777 Main Street, Suite 2100, Fort Worth, Texas 76102
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (817) 321-2100
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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 Shares of Beneficial Interest
par value $0.01 per share New York Stock Exchange
Series A Convertible Cumulative Preferred
Shares of Beneficial Interest par
value $0.01 per share New York Stock Exchange
Series B Cumulative Redeemable Preferred
Shares of Beneficial Interest par
value $0.01 per share New York Stock Exchange
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 twelve (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 ninety (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 [ ]
As of June 30, 2003, the aggregate market value of the 92,350,507 common shares
held by non-affiliates of the registrant was approximately $1.5 billion.
Number of Common Shares outstanding as of March 3, 2004: 99,367,207
Number of Series A Preferred Shares outstanding as of March 3, 2004: 14,200,000
Number of Series B Preferred Shares outstanding as of March 3, 2004: 3,400,000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to be filed with the Securities and Exchange
Commission for Registrant's 2004 Annual Meeting of Shareholders to be held in
June 2004 are incorporated by reference into Part III.
TABLE OF CONTENTS
PAGE
PART I.
Item 1. Business................................................................................ 3
Item 2. Properties.............................................................................. 15
Item 3. Legal Proceedings....................................................................... 24
Item 4. Submission of Matters to a Vote of Security Holders..................................... 24
PART II.
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters................... 25
Item 6. Selected Financial Data................................................................. 27
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................................... 28
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.............................. 66
Item 8. Financial Statements and Supplementary Data............................................. 67
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.................................................................... 200
Item 9A. Controls and Procedures................................................................. 200
PART III.
Item 10. Trust Managers and Executive Officers of the Registrant................................. 201
Item 11. Executive Compensation.................................................................. 201
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.............................................. 201
Item 13. Certain Relationships and Related Transactions.......................................... 201
Item 14. Principal Accountant Fees and Services.................................................. 201
PART IV.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K........................ 202
2
PART I
ITEM 1. BUSINESS
THE COMPANY
Crescent Real Estate Equities Company ("Crescent Equities") operates as
a real estate investment trust for federal income tax purposes (a "REIT") and,
together with its subsidiaries, provides management, leasing and development
services for some of its properties.
The term "Company" includes, unless the context otherwise indicates,
Crescent Equities, a Texas real estate investment trust, and all of its direct
and indirect subsidiaries.
The direct and indirect subsidiaries of Crescent Equities at December
31, 2003, included:
o CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP
The "Operating Partnership."
o CRESCENT REAL ESTATE EQUITIES, LTD.
The "General Partner" of the Operating Partnership.
o SUBSIDIARIES OF THE OPERATING PARTNERSHIP AND THE
GENERAL PARTNER
Crescent Equities conducts all of its business through the Operating
Partnership and its other subsidiaries. The Company is structured to facilitate
and maintain the qualification of Crescent Equities as a REIT.
At December 31, 2003, the assets and operations of the Company were
divided into four investment segments as follows:
o Office Segment;
o Resort/Hotel Segment;
o Residential Development Segment; and
o Temperature-Controlled Logistics Segment.
Within these segments, the Company owned in whole or in part the
following real estate assets (the "Properties") as of December 31, 2003:
o OFFICE SEGMENT consisted of 72 office properties,
(collectively referred to as the "Office Properties"), located
in 27 metropolitan submarkets in seven states, with an
aggregate of approximately 30.0 million net rentable square
feet.
o RESORT/HOTEL SEGMENT consisted of five luxury and destination
fitness resorts and spas with a total of 1,036 rooms/guest
nights and four upscale business-class hotel properties with a
total of 1,771 rooms (collectively referred to as the
"Resort/Hotel Properties").
o RESIDENTIAL DEVELOPMENT SEGMENT consisted of the Company's
ownership of common stock representing interests ranging from
98% to 100% in four residential development corporations
(collectively referred to as the "Residential Development
Corporations"), which in turn, through partnership
arrangements, owned in whole or in part 23 upscale residential
development properties (collectively referred to as the
"Residential Development Properties").
3
o TEMPERATURE-CONTROLLED LOGISTICS SEGMENT consisted of the
Company's 40% interest in Vornado Crescent Portland
Partnership (the "Temperature-Controlled Logistics
Partnership") and a 56% non-controlling interest in the
Vornado Crescent Carthage and KC Quarry, L.L.C. The
Temperature-Controlled Logistics Partnership owns all of the
common stock, representing substantially all of the economic
interest, of AmeriCold Realty Corporation (the
"Temperature-Controlled Logistics Corporation"), a REIT. As of
December 31, 2003, the Temperature-Controlled Logistic
Corporation directly or indirectly owned 87
temperature-controlled logistics properties (collectively
referred to as the "Temperature-Controlled Logistics
Properties") with an aggregate of approximately 440.7 million
cubic feet (17.5 million square feet) of warehouse space. As
of December 31, 2003, Vornado Crescent Carthage and KC Quarry
L.L.C. owned two quarries and the related land. The Company
accounts for its interests in the Temperature-Controlled
Logistics Partnership and in the Vornado Crescent Carthage and
KC Quarry, L.L.C. as unconsolidated equity entities.
See Note 3, "Segment Reporting," included in Item 8, "Financial
Statements and Supplementary Data," for a table showing selected financial
information for each of these investment segments for the years ended December
31, 2003, 2002, and 2001, and total assets, consolidated property level
financing, consolidated other liabilities, and minority interests for each of
these investment segments at December 31, 2003 and 2002.
See Note 1, "Organization and Basis of Presentation," included in Item
8, "Financial Statements and Supplementary Data," for a table that lists the
principal subsidiaries of the Company and the properties owned by such
subsidiaries.
See Note 9, "Investments in Unconsolidated Companies," included in Item
8, "Financial Statements and Supplementary Data," for a table that lists the
Company's ownership in significant unconsolidated joint ventures and investments
as of December 31, 2003, including eight Office Properties and two Residential
Development Corporations. See Note 8, "Temperature-Controlled Logistics,"
included in Item 8, "Financial Statements and Supplementary Data," for
information regarding the Company's ownership interest in the
Temperature-Controlled Logistics Properties.
For purposes of segment reporting as defined in Statement of Financial
Accounting Standards ("SFAS") No. 131, "Disclosures About Segments of an
Enterprise and Related Information," and this Annual Report on Form 10-K, the
Office Properties, the Resort/Hotel Properties, the Residential Development
Properties and the Temperature-Controlled Logistics Properties are considered
four separate reportable segments. However, for purposes of investor
communications, the Company classifies its luxury and destination fitness
resorts and spas and Residential Development Properties as a single group
referred to as the "Resort and Residential Development Sector" due to the
similar characteristics of targeted customers. This group does not contain the
four business-class hotel properties. Instead, for investor communications, the
four business-class hotel properties are classified with the
Temperature-Controlled Logistics Properties as the Company's "Investment
Sector."
BUSINESS OBJECTIVES AND STRATEGIES
BUSINESS OBJECTIVES
The Company's primary business objective is to provide an attractive
return on equity to its shareholders, through its focus on increasing earnings,
cash flow growth and predictability, along with continually strengthening its
balance sheet. The Company also strives to attract and retain the best talent
available and to empower management through the development and implementation
of a cohesive set of operating, investing and financing strategies that will
align their interests with the interests of the Company's shareholders.
4
OPERATING STRATEGIES
The Company seeks to enhance its operating performance by
distinguishing itself as the leader in its core investment segments through
asset quality, customer service and economies of scale with dominant market
share.
The Company's operating strategies include:
o operating the Office Properties as long-term investments;
o providing exceptional customer service;
o increasing occupancies, rental rates and same-store net
operating income;
o emphasizing brand recognition of the Company's premier Class A
Office Properties and luxury and destination fitness resorts
and spas; and
o using the Company's operating platform to provide superior
asset management services to partners and third parties.
INVESTING STRATEGIES
The Company focuses on investment opportunities primarily within the
Office Segment in markets considered "demand-driven," or to have high levels of
in-migration by corporations, affordable housing costs, moderate costs of
living, and other attributes creating an attractive business environment. These
investment opportunities are evaluated in light of the Company's long-term
investment strategy of investing in assets within markets that have significant
potential for long-term growth. Investment opportunities are expected to provide
growth in earnings and cash flow after applying management skills, renovation
and expansion capital and strategic vision.
The Company's investment strategies include:
o capitalizing on strategic acquisition opportunities, including
acquisitions with joint venture capital resources, primarily
within the Company's investment segments;
o continually reviewing opportunities to dispose of assets based
on current and prospective market valuations;
o investing in securities and loans primarily to real estate
companies to maximize returns on excess capital; and
o evaluating future repurchases of the Company's common shares,
considering stock price, cost of capital, alternative
investment options and growth implications.
FINANCING STRATEGIES
The Company employs a disciplined set of financing strategies to fund
its operating and investing activities.
The Company's financing strategies include:
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o funding operating expenses, debt service payments and
distributions to shareholders and unitholders, primarily
through cash flow from operations, and return of capital from
the Residential Development Segment;
o taking advantage of market opportunities to refinance existing
debt to reduce interest cost, where appropriate replace
secured debt with unsecured debt, maintain a conservative debt
maturity schedule and expand the Company's lending group;
o minimizing the Company's exposure to market changes in
interest rates through fixed rate debt and interest rate swaps
as appropriate; and
o utilizing a combination of debt, equity, joint venture capital
and selected asset disposition alternatives to finance
acquisition and development opportunities.
AVAILABLE INFORMATION
The Company's website can be found on the Internet at www.crescent.com.
The Company makes available free of charge on its website its annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports as soon as reasonably practicable after
electronically filed with or furnished to the Securities and Exchange
Commission.
EMPLOYEES
As of March 3, 2004, the Company had approximately 728 employees. None
of these employees are covered by collective bargaining agreements. The Company
considers its employee relations to be good.
TAX STATUS
The Company has elected to be taxed as a REIT under Sections 856
through 860 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"),
and operates in a manner intended to enable it to continue to qualify as a REIT.
As a REIT, the Company generally will not be subject to corporate federal income
tax on net income that it currently distributes to its shareholders, provided
that the Company satisfies certain organizational and operational requirements
including the requirement to distribute at least 90% of its REIT taxable income
to its shareholders each year. If the Company fails to qualify as a REIT 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
tax rates. The Company is subject to certain state and local taxes.
The Company has elected to treat certain of its corporate subsidiaries
as taxable REIT subsidiaries (each, a "TRS"). In general, a TRS of the Company
may perform additional services for tenants of the Company and may engage in any
real estate or non-real estate business (except for the operation or management
of health care facilities or lodging facilities or the provision to any person,
under a franchise, license or otherwise, of rights to any brand name under which
any lodging facility or health care facility is operated). A TRS is subject to
corporate federal income tax.
ENVIRONMENTAL MATTERS
The Company and its Properties are subject to a variety of federal,
state and local environmental, health and safety laws, including:
o Comprehensive Environmental Response, Compensation, and
Liability Act, as amended ("CERCLA");
o Resource Conservation & Recovery Act;
o Clean Water Act;
o Clean Air Act;
o Toxic Substances Control Act; and
o Occupational Safety & Health Act.
The application of these laws to a specific property that the Company
owns will be dependent on a variety of property-specific circumstances,
including the former uses of the property and the building materials used at
each property. Under certain environmental laws, principally CERCLA and
comparable state laws, a current or previous owner or operator of real estate
may be required to investigate and clean up certain hazardous or toxic
substances, asbestos-containing materials, or petroleum product releases at the
property. They may also be held liable to a governmental entity or third parties
for property damage and for investigation and clean up costs such parties incur
in connection with the contamination, whether or not the owner or operator knew
of, or was responsible for, the contamination. In addition, some environmental
laws create a
6
lien on the contaminated site in favor of the government for damages and costs
it incurs in connection with the contamination. The owner or operator of a site
also may be liable under certain environmental laws and common law to third
parties for damages and injuries resulting from environmental contamination
emanating from the site. Such costs or liabilities could exceed the value of the
affected real estate. The presence of contamination or the failure to remediate
contamination may adversely affect the owner's ability to sell or lease real
estate or to borrow using the real estate as collateral.
Compliance by the Company with existing environmental, health and
safety laws has not had a material adverse effect on the Company's financial
condition and results of operations, and management does not believe it will
have such an impact in the future. In addition, the Company has not incurred,
and does not expect to incur any material costs or liabilities due to
environmental contamination at Properties it currently owns or has owned in the
past. However, the Company cannot predict the impact of new or changed laws or
regulations on its current Properties or on properties that it may acquire in
the future. The Company has no current plans for substantial capital
expenditures with respect to compliance with environmental, health and safety
laws.
INDUSTRY SEGMENTS
OFFICE SEGMENT
OWNERSHIP STRUCTURE
As of December 31, 2003, the Company owned or had an interest in 72
Office Properties located in 27 metropolitan submarkets in seven states, with an
aggregate of approximately 30.0 million net rentable square feet. The Company,
as lessor, has retained substantially all of the risks and benefits of ownership
of the Office Properties and accounts for the leases of its 64 consolidated
Office Properties as operating leases. Sixty-three of the Office Properties are
wholly-owned and nine are owned through joint ventures, one of which is
consolidated and eight of which are unconsolidated. Additionally, the Company
provides management and leasing services for the majority of its Office
Properties.
See Item 2, "Properties," for more information about the Company's
Office Properties. See Note 1, "Organization and Basis of Presentation," of Item
8, "Financial Statements and Supplementary Data," for a table that lists the
principal subsidiaries of the Company and the Properties owned by such
subsidiaries. See Note 9, "Investments in Unconsolidated Companies," of Item 8,
"Financial Statements and Supplementary Data," for a table that lists the
Company's ownership in the eight Office Properties in which the Company owned an
interest through unconsolidated joint ventures.
RECENT DEVELOPMENTS
During the year ended December 31, 2003, the Company acquired The
BAC-Colonnade Building ("The Colonnade"), in Miami, Florida; acquired two Office
Properties and two retail parcels within Hughes Center in Las Vegas, Nevada;
entered into a joint venture which acquired an office building, BriarLake Plaza,
in Houston, Texas; disposed of the Las Colinas Plaza retail property in Dallas,
Texas; disposed of four Office Properties held through Woodlands Office Equities
- - '95 Limited Partnership ("WOE"); and disposed of its 52.5% economic interest
in The Woodlands Commercial Properties Company, L.P. ("Woodlands CPC").
Subsequent to December 31, 2003, the Company acquired an additional
five office properties and seven retail parcels within Hughes Center.
See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Recent Developments," for additional
information regarding these transactions.
MARKET INFORMATION
The Office Property portfolio reflects the Company's strategy of
investing in first-class assets ("Class A") within markets that have significant
potential for long-term rental growth. Within its selected submarkets, the
Company has focused
7
on premier locations that management believes are able to attract and retain the
highest quality tenants and command premium rents. Consistent with its long-term
investment strategies, the Company has sought transactions where it was able to
acquire properties that have strong economic returns based on in-place tenancy
and also have a dominant position within the submarket due to quality and/or
location. Accordingly, management's long-term investment strategy not only
demands acceptable current cash flow return on invested capital, but also
considers long-term cash flow growth prospects. The Company applies a
well-defined leasing strategy in order to capture the potential rental growth in
the Company's portfolio of Office Properties from occupancy gains within the
markets and the submarkets in which the Company has invested.
In selecting the Office Properties, the Company analyzed demographic
and economic data to focus on markets expected to benefit from significant
long-term employment growth. The demographic conditions, economic conditions and
trends (population growth and employment growth) favoring the markets in which
the Company has invested are projected to continue to exceed the national
averages, as illustrated in the following table. In addition, the Company
considers these markets "demand-driven" due to high levels of in-migration by
corporations, affordable housing costs, moderate cost of living, and the
presence of centrally located travel hubs, making all areas of the country
easily accessible.
PROJECTED POPULATION GROWTH AND EMPLOYMENT GROWTH FOR ALL COMPANY MARKETS
Population Employment
Growth Growth
Metropolitan Statistical Area 2004-2007 2004-2007
------------------------------- --------- ---------
Albuquerque, NM 6.3% 10.2%
Austin, TX 12.1 17.6
Colorado Springs, CO 6.1 12.2
Dallas, TX 8.3 11.3
Denver, CO 4.9 7.3
Fort Worth, TX 8.5 11.7
Houston, TX 7.3 9.3
Las Vegas, NV 14.7 15.4
Miami, FL 4.0 6.4
Phoenix, AZ 11.6 15.3
San Diego, CA 6.9 9.7
United States 3.5 5.8
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Source: Compiled from information published by Economy.com, Inc.
TEXAS
As of December 2003, Texas' economy and employment were still weak, but
showed stronger performance and more positive direction than a year ago. During
the year ended December 2003, 45,100 jobs were created in Texas for a 0.5%
increase, according to the Texas Workforce Commission. Statistics from the U.S.
Bureau of Labor Statistics show that for the same period, national employment
was down approximately 62,000 jobs. As of December 2003, the Texas unemployment
rate was 5.8%, compared to the December 2002 level of 5.9% and the December 2003
national rate of 5.4%.
DALLAS
The rate of employment decline in Dallas decreased significantly in
2003 compared to 2002. According to the Texas Workforce Commission, at the end
of the year, the Dallas Primary Metropolitan Statistical Area ("PMSA") total
nonfarm employment was down 6,500 jobs, or 0.3%, compared to a decline of 30,900
jobs, or 1.6% in 2002. The unemployment rate was still weak at 6.0% as of
December 2003, but improved compared to the 6.4% rate at December 2002.
In 2003, Dallas' office market continued to soften, although by the end
of 2003, it was showing signs of stabilization. Economic net absorption
(excluding sublet space) totaled approximately negative 4.4 million square feet,
including negative
8
1.0 million square feet in Class A office space, according to CoStar data.
Physical net absorption, including sublet space in 2003, was negative 2.7
million square feet, indicating positive movement in the sublet market. Class A
office physical net absorption, including sublet space, turned positive in
2003 at 130,000 square feet. Completions of new office space totaled only 1.1
million square feet for the entire Dallas market; approximately half of this
space is Class A. Occupancy levels at December 2003 were 75.5% for all office
space and 80.1% for Class A office space.
HOUSTON
According to the Texas Workforce Commission, Houston's employment was
flat to slightly down through most of the year, but ended 2003 with some job
growth, an additional 4,000 jobs, or 0.2%. In 2002, based on December data,
Houston lost 13,300 jobs, or 0.6%. As of December 2003, the Houston unemployment
rate was 5.9%, compared to 5.6% as of December 2002.
In 2003, Houston's office market softened slightly; by the end of 2003,
however, the market appeared close to stabilization. Economic net absorption
(excluding sublet space) totaled approximately negative 1.1 million square feet,
including negative 345,000 square feet in Class A office space, according to
CoStar data. Physical net absorption, including sublet space in 2003, was
negative 1.4 million square feet. Class A office physical net absorption,
including sublet space, was negative 222,000 square feet in 2003. Houston office
completions of new office space totaled 2.1 million square feet, of which 1.7
million square feet is Class A. Occupancy levels at December 2003 were 83.8% for
all office space and 85.5% for Class A office space.
AUSTIN
Austin's economy picked up momentum in 2003. Based on December 2003
data from the Texas Workforce Commission, employment in the metropolitan region
grew by 7,100 jobs, or 1.1%, compared to a decrease of 900 jobs in 2002 (0.1%)
and a decrease of 23,900 jobs in 2001 (3.5%). As of December 2003, Austin's
unemployment rate was 4.5%, compared to 5.0% as of December 2002.
In 2003, Austin's office market remained weak. By the end of 2003,
however, the market was close to stabilization. Economic net absorption
(excluding sublet space) totaled approximately negative 1.6 million square feet,
including negative 742,000 square feet in Class A office space, according to
CoStar data. Physical net absorption, including sublet space, in 2003 was
positive 185,000 square feet, indicating strong absorption of sublet space.
Class A office physical net absorption, including sublet space, was also
positive in 2003 at 791,000 square feet. Office completions of new office space
totaled 775,000 square feet. Occupancy levels at December 2003 were 81.6% for
all office space and 78.8% for Class A office space.
DENVER
In 2003, Denver's economy nearly stabilized after two years of job
losses, based on unemployment figures and month-to-month changes in nonfarm
employment. According to the U.S. Bureau of Labor Statistics, as of December
2003, the unemployment rate was 5.9%, unchanged from the prior year.
2003 was a difficult period for the Denver office market, but there
were some positive signs by the end of the year. Economic net absorption
(excluding sublet space) totaled approximately negative 1.9 million square feet,
but only 95,000 of this was Class A office space, according to CoStar data.
Physical net absorption, including sublet space, in 2003 was negative 1.2
million square feet. Class A office physical net absorption, including sublet
space, turned positive in 2003 at 430,000 square feet. Office completions of new
office space totaled only 883,000 square feet of which 540,000 square feet was
Class A. Occupancy levels at December 2003 were 82.8% for all office space and
82.1% for Class A office space.
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MIAMI
Miami continues to enjoy economic recovery and expansion. According to
the U.S. Bureau of Labor Statistics, the metropolitan region suffered in 2001
and lost 16,600 jobs, or 1.6% based on December data. In 2002, Miami added 7,600
jobs or 0.7% and in 2003 the metro area gained 9,700 jobs, or 0.9%. As of
December 2003, the Miami unemployment rate was 6.1% compared to 7.0% as of
December 2002.
In 2003, the Miami office market still experienced some softness, but
showed positive conditions in the second half of the year. The 36 million square
foot market experienced very slight negative absorption of 60,000 square feet
for the year ended December 2003 but had improved fourth quarter absorption of
329,000 square feet, according to Real Data Information Systems, Inc. data.
Class A office physical net absorption, including sublet space, totaled 31,000
square feet in 2003, and 301,000 square feet in the fourth quarter according to
RealData Information Systems, Inc. Occupancy levels at December 2003 were 82.7%
for all office space and 81.8% for Class A office space.
LAS VEGAS
Las Vegas' economic expansion in 2003 was one of the strongest in the
U.S. and reflected increasing momentum. According to the U.S. Bureau of Labor
Statistics, the metropolitan region added 33,600 jobs, or 4.2% (based on
December 2003 nonfarm employment data from the Nevada Department of Employment,
Training & Rehabilitation). The increase is nearly double that of the prior year
(18,100 jobs, or 2.3%). As of December 2003 the Las Vegas unemployment rate was
4.4%, compared to 5.0% at December 2002, and to the national rate of 5.4%.
In 2003, the Las Vegas office market continued to reflect relatively
healthy market conditions. The 20 million square foot market absorbed 928,000
square feet, according to Grubb & Ellis data. Class A office physical net
absorption totaled 154,000 square feet in 2003. Occupancy levels as of December
2003, were 87.4% for all office space and 89.2% for Class A space.
COMPETITION
The Company's Office Properties, primarily Class A properties located
within the southwest, individually compete against a wide range of property
owners and developers, including property management companies and other REITs,
that offer space in similar classes of office properties (for example, Class A
and Class B properties.) A number of these owners and developers may own more
than one property. The number and type of competing properties in a particular
market or submarket could have a material effect on the Company's ability to
lease space and maintain or increase occupancy or rents in its existing Office
Properties. Management believes, however, that the quality services and
individualized attention that the Company offers its tenants, together with its
active preventive maintenance program and superior building locations within
markets, enhance the Company's ability to attract and retain tenants for its
Office Properties. In addition, as of December 31, 2003, on a weighted average
basis, the Company owned approximately 16% of the Class A office space in the 27
submarkets in which the Company owned Class A office properties, and 25.3% of
the Class B office space in the one submarket in which the Company owned Class B
office properties. Management believes that ownership of a significant
percentage of office space in a particular market reduces property operating
expenses, enhances the Company's ability to attract and retain tenants and
potentially results in increases in Company net income.
DIVERSIFIED TENANT BASE
The Company's top five tenants accounted for approximately 11% of the
Company's total Office Segment rental revenues for the year ended December 31,
2003. The loss of one or more of the Company's major tenants would have a
temporary adverse effect on the Company's financial condition and results of
operations until the Company is able to re-lease the space previously leased to
these tenants. Based on rental revenues from office leases in effect as of
December 31, 2003, no single tenant accounted for more than 5% of the Company's
total Office Segment rental revenues for 2003.
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RESORT/HOTEL SEGMENT
OWNERSHIP STRUCTURE
As of December 31, 2003, the Company owned or had an interest in nine
Resort/Hotel Properties. The Company holds one of the Resort/Hotel Properties,
the Fairmont Sonoma Mission Inn & Spa, through a joint venture arrangement,
pursuant to which the Company owns an 80.1% interest in the limited liability
company that owns the Sonoma Mission Inn & Spa. The remaining Resort/Hotel
Properties are wholly-owned.
Eight of the Resort/Hotel Properties are leased to taxable REIT
subsidiaries that the Company owns or in which it has an interest. The Omni
Austin Hotel is leased to HCD Austin Corporation, an unrelated third party.
Third party operators manage eight of the Resort/Hotel Properties.
Ventana Inn and Spa is managed by Sonoma Management Company, or "Sonoma
Management," an entity in which the Company held a 10% interest until it sold
its interest to the 90% owner in 2003. In addition, five of the Resort/Hotel
Properties that are managed by third party operators are subject to a Master
Asset Management and Administrative Services Agreement with Sonoma Management,
pursuant to which Sonoma Management receives asset management and incentive fees
from the Company.
RECENT DEVELOPMENTS
On November 21, 2003, Manalapan Hotel Partners, L.L.C. ("Manalapan"),
owned 50% by the Company and 50% by WB Palm Beach Investors, L.L.C., sold the
Ritz Carlton Palm Beach Resort/Hotel Property in Palm Beach, Florida. See Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Recent Developments," for additional information regarding this
transaction.
MARKET INFORMATION
Lodging demand is highly dependent upon the global economy and volume
of business travel. Immediately prior to September 11, 2001, the hospitality
industry enjoyed record profits. However, the weak global economy which
continued throughout 2002 and 2003, resulted in weak performance for 2002, and
much of 2003. Leisure travel recovered slightly in 2003, but business travel
remained weak. As a result, market conditions were flat in 2003. National hotel
occupancy in 2003 increased 0.3% over 2002. The average daily room rate declined
1.7%, and revenue per available room (a combination of occupancy and room rates
and the chief measure of hotel market performance) increased just 0.2% over
2002. For the "upper upscale" segment of the market (most comparable to the
Company's portfolio), revenue per available room declined 1.2% in 2003 from the
prior year.
COMPETITION
Most of the Company's upscale business class Resort/Hotel Properties in
Denver, Albuquerque, Austin and Houston are business and convention center
hotels that compete against other business and convention center hotels. The
Company believes that its luxury and destination fitness resorts and spas are
unique properties due to location, which creates barriers for competition to
enter, concept and high replacement cost. However, the luxury and destination
fitness resorts and spas do compete against business-class hotels or
middle-market resorts in their geographic areas, as well as against luxury
resorts nationwide and around the world.
11
RESIDENTIAL DEVELOPMENT SEGMENT
OWNERSHIP STRUCTURE
As of December 31, 2003, the Company owned common stock representing
interests of 98% to 100% in four Residential Development Corporations, which in
turn, through joint ventures or partnership arrangements, owned in whole or in
part 23 Residential Development Properties. The Residential Development
Corporations are responsible for the continued development and the day-to-day
operations of the Residential Development Properties.
RECENT DEVELOPMENTS
On December 31, 2003, the Company disposed of its interest in The
Woodlands Residential Development Property. See Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Recent
Developments," for additional information regarding this transaction.
COMPETITION AND MARKET INFORMATION
The Company's Residential Development Properties compete against a
variety of other housing alternatives in each of their respective areas. These
alternatives include other planned developments, pre-existing single-family
homes, condominiums, townhouses and non-owner occupied housing, such as luxury
apartments. Management believes that Desert Mountain and the properties owned by
CRDI, representing the Company's most significant investments in Residential
Development Properties, contain certain features that provide competitive
advantages to these developments.
Desert Mountain, a luxury residential and recreational private
community in Scottsdale, Arizona, offers six 18-hole Jack Nicklaus signature
golf courses with adjacent clubhouses. Management believes Desert Mountain has
few direct competitors due in part to the superior environmental attributes and
the amenity package that Desert Mountain offers to its members. Sources of
competition come from the resale market of existing lots and homes within Desert
Mountain and from smaller, less developed projects in the area. However,
management believes Desert Mountain's current inventory is superior to the
inventory available on the resale market and in nearby developments, as the
remaining lots are in the best locations within Desert Mountain. In addition to
the quality of the remaining lots, Desert Mountain's amenity package continues
to be unparalleled, and future residential golf development in the Scottsdale
area is limited due to the lack of water available for golf course use.
CRDI invests primarily in mountain resort residential real estate in
Colorado and California, and residential real estate in downtown Denver,
Colorado. Management believes that the Properties owned by CRDI have limited
direct competitors because the projects' locations are unique, land availability
is limited, and development rights are restrictive in most of these locations.
Residential development demand is highly dependent upon the national
economy, mortgage interest rates, and home sales. A slowing economy, which
continued into the first half of 2003, contributed to flat or reduced lot and
acre absorption, and to reduced average sales prices, primarily at Desert
Mountain and at The Woodlands.
12
TEMPERATURE-CONTROLLED LOGISTICS SEGMENT
OWNERSHIP STRUCTURE
As of December 31, 2003, the Company held a 40% interest in the
Temperature-Controlled Logistics Partnership, which owns all of the common
stock, representing substantially all of the economic interest, of the
Temperature-Controlled Logistics Corporation, which directly or indirectly owns
the 87 Temperature-Controlled Logistics Properties, with an aggregate of
approximately 440.7 million cubic feet (17.5 million square feet) of warehouse
space.
The Temperature-Controlled Logistics Corporation leases the
Temperature-Controlled Logistics Properties to AmeriCold Logistics, a limited
liability company owned 60% by Vornado Operating L.P. and 40% by a subsidiary of
Crescent Operating, Inc. ("COPI"). The Company has no economic interest in
AmeriCold Logistics. See Note 23, "COPI," in Item 8, "Financial Statements and
Supplementary Data," for information on the proposed acquisition of COPI's 40%
interest in AmeriCold Logistics by a new entity to be owned by the Company's
shareholders.
AmeriCold Logistics, as sole lessee of the Temperature-Controlled
Logistics Properties, leases the Temperature-Controlled Logistics Properties
from the Temperature-Controlled Logistics Corporation under three triple-net
master leases, as amended. On February 22, 2001, the Temperature-Controlled
Logistics Corporation and AmeriCold Logistics agreed to restructure certain
financial terms of the leases, including a reduction of the rental obligation
for 2001 and 2002, the increase of the Temperature-Controlled Logistics
Corporation's share of capital expenditures for the maintenance of the
properties (effective January 1, 2000), and the extension of the date on which
deferred rent is required to be paid to December 31, 2003. On March 2, 2004, the
Temperature-Controlled Logistics Corporation and AmeriCold Logistics amended the
leases to further extend the deferred rent period to December 31, 2005 from
December 31, 2004. The parties previously extended the deferred rent period to
December 31, 2004 from December 31, 2003, on March 7, 2003. The Company
recognizes rental income from the Temperature-Controlled Logistics Properties
when earned and collected, see Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Unconsolidated Investments," for
additional information.
On February 23, 2004, Alec Covington, President and Chief Executive
Officer of AmeriCold Logistics, resigned effective March 31, 2004, to take an
opportunity in an unrelated industry. A search to identify a successor is
currently underway. Anthony Cossentino, Chief Financial Officer, will oversee
the AmeriCold business and Mike O'Connell, who has been with AmeriCold for over
ten years, has been promoted to be in charge of all operations and, until a
successor is in place, will report to Mr. Cossentino.
VORNADO CRESCENT CARTHAGE AND KC QUARRY, L.L.C.
As of December 31, 2003, the Company held a 56% non-controlling
interest in Vornado Crescent Carthage and KC Quarry, L.L.C. ("VCQ"). The assets
of VCQ include two quarries and the related land.
RECENT DEVELOPMENTS
On February 5, 2004, the Temperature-Controlled Logistics Corporation
completed a $254.4 million mortgage financing with Morgan Stanley Mortgage
Capital Inc., secured by 21 of its owned and seven of its leased
temperature-controlled logistics properties. The loan matures in April 2009,
bears interest at LIBOR plus 295 basis points (with a LIBOR floor of 1.5% with
respect to $54.4 million of the loan) and requires principal payments of $5.0
million annually. The net proceeds to the Temperature-Controlled Logistics
Corporation were approximately $225.0 million, after closing costs, escrow
reserves and the repayment of approximately $12.9 million in existing mortgages.
On February 6, 2004, the Temperature-Controlled Logistics Corporation
distributed cash of approximately $90.0 million to the Company.
BUSINESS AND INDUSTRY INFORMATION
AmeriCold Logistics provides frozen food manufacturers with
refrigerated warehousing and transportation management services. The
Temperature-Controlled Logistics Properties consist of production, distribution
and public facilities. Production facilities differ from distribution facilities
in that they typically serve one or a small number of customers located nearby.
These customers store large quantities of processed or partially processed
products in the facility until they are further processed or shipped to the next
stage of production or distribution. Distribution facilities primarily serve
customers who store a wide variety of finished products to support shipment to
end-users, such as food retailers and food service companies, in a specific
geographic market. Public facilities generally serve the needs of local and
regional
13
customers under short-term agreements. Food manufacturers and processors use
public facilities to store capacity overflow from their production facilities or
warehouses.
AmeriCold Logistics' transportation management services include freight
routing, dispatching, freight rate negotiation, backhaul coordination, freight
bill auditing, network flow management, order consolidation and distribution
channel assessment. AmeriCold Logistics' temperature-controlled logistics
expertise and access to both the frozen food warehouses and distribution
channels enable the customers of AmeriCold Logistics to respond quickly and
efficiently to time-sensitive orders from distributors and retailers.
AmeriCold Logistics' customers consist primarily of national, regional
and local frozen food manufacturers, distributors, retailers and food service
organizations. A breakdown of AmeriCold Logistics' largest customers includes:
PERCENTAGE OF
2003 REVENUE
-------------
H.J. Heinz Company 15%
ConAgra Foods, Inc. 13
Philip Morris USA Inc. (Kraft) 8
Sara Lee Corp. 5
Tyson Foods, Inc. 4
General Mills, Inc. 4
McCain Foods, Inc. 4
Schwan Corp. 4
Nippon Suisan (Gorton's) 2
J.R. Simplot Company 2
Other 39
-----
TOTAL 100%
=====
COMPETITION
AmeriCold Logistics is the largest operator of public refrigerated
warehouse space in North America. As a result, AmeriCold Logistics does not have
any competitors of comparable size. AmeriCold Logistics operates in an
environment in which competition is national, regional and local in nature and
in which the range of service, temperature-controlled logistics facilities,
customer mix, service performance and price are the principal competitive
factors.
14
ITEM 2. PROPERTIES
The Company considers all of its Properties to be in good condition,
well-maintained, suitable and adequate to carry on the Company's business.
OFFICE PROPERTIES
As of December 31, 2003, the Company owned or had an interest in 72
Office Properties, located in 27 metropolitan submarkets in seven states with an
aggregate of approximately 30.0 million net rentable square feet. The Company's
Office Properties are located primarily in the Dallas and Houston, Texas,
metropolitan areas. As of December 31, 2003, the Company's Office Properties in
Dallas and Houston represented an aggregate of approximately 72% of its office
portfolio based on total net rentable square feet (33% for Dallas and 39% for
Houston).
OFFICE PROPERTIES TABLE(1)
The following table shows, as of December 31, 2003, certain information
about the Company's Office Properties. In the table, "CBD" means central
business district.
WEIGHTED
AVERAGE
FULL-SERVICE
NET RENTAL
RENTABLE ECONOMIC RATE PER
NO. OF YEAR AREA OCCUPANCY OCCUPIED
STATE, CITY, PROPERTY PROPERTIES SUBMARKET COMPLETED (SQ. FT.) PERCENTAGE SQ. FT.(2)
- --------------------- ---------- --------- --------- --------- ---------- ------------
STABILIZED PROPERTIES
TEXAS
DALLAS
Bank One Center (3) 1 CBD 1987 1,530,957 81% $ 22.60
The Crescent (4) 2 Uptown/Turtle Creek 1985 1,299,522 91 33.03
Fountain Place 1 CBD 1986 1,200,266 97 21.60
Trammell Crow Center (5) 1 CBD 1984 1,128,331 89 23.78
Stemmons Place 1 Stemmons Freeway 1983 634,381 82 17.56
Spectrum Center (6) 1 Quorum/Bent Tree (7) 1983 598,250 83 23.21
Waterside Commons 1 Las Colinas 1986 458,906 71 17.90
125 E. John Carpenter Freeway 1 Las Colinas 1982 446,031 75 (8) 21.35
The Aberdeen 1 Quorum/Bent Tree (7) 1986 320,629 100 19.43
MacArthur Center I & II 1 Las Colinas 1982/1986 298,161 84 22.23
Stanford Corporate Centre 1 Quorum/Bent Tree (7) 1985 275,372 87 21.83
12404 Park Central (9) 1 LBJ Freeway 1987 239,103 0 0
Palisades Central II 1 Richardson (10) 1985 237,731 83 19.97
3333 Lee Parkway 1 Uptown/Turtle Creek 1983 233,543 43 (8) 22.30
Liberty Plaza I & II (11) 1 Quorum/Bent Tree (7) 1981/1986 218,813 12 18.05
The Addison 1 Quorum/Bent Tree (7) 1981 215,016 99 23.46
Palisades Central I 1 Richardson (10) 1980 180,503 71 19.99
Greenway II 1 Richardson (10) 1985 154,329 100 16.26
Greenway I & IA 2 Richardson (10) 1983 146,704 19 14.47
Addison Tower 1 Quorum/Bent Tree (7) 1987 145,886 82 18.95
5050 Quorum 1 Quorum/Bent Tree (7) 1981 133,799 51 18.85
------- ------------------------- ----------
Subtotal/Weighted Average 23 10,096,233 80% $ 23.09
------- ------------------------- ----------
FORT WORTH
Carter Burgess Plaza 1 CBD 1982 954,895 91% $ 18.32
------- ------------------------- ----------
HOUSTON
Greenway Plaza 10 Greenway Plaza (12) 1969-1982 4,348,052 87% $ 20.67
Houston Center (13) 4 CBD 1974-1983 2,955,146 85 (8) 21.97
Post Oak Central 3 West Loop/Galleria 1974-1981 1,279,759 90 19.77
Five Houston Center (14) 1 CBD 2002 580,875 92 30.77
Five Post Oak Park (15) 1 West Loop/Galleria 1986 567,396 90 20.94
Four Westlake Park (16) 1 Katy Freeway West (17) 1992 561,065 100 22.83
Three Westlake Park (16) 1 Katy Freeway West (17) 1983 414,792 100 23.50
1800 West Loop South (18) 1 West Loop/Galleria 1982 399,777 69 20.06
------- ------------------------- ----------
Subtotal/Weighted Average 22 11,106,862 88% $ 21.69
------- ------------------------- ----------
AUSTIN
Frost Bank Plaza 1 CBD 1984 433,024 78% $ 22.39
301 Congress Avenue (19) 1 CBD 1986 418,338 59 25.50
Bank One Tower (16) 1 CBD 1974 389,503 94 24.34
Austin Centre 1 CBD 1986 343,664 69 22.57
The Avallon 3 Northwest 1993/1997 318,217 100 24.69
Barton Oaks Plaza One 1 Southwest 1986 98,955 94 24.72
------- ------------------------- ----------
Subtotal/Weighted Average 8 2,001,701 80% $ 23.96
------- ------------------------- ----------
15
WEIGHTED
AVERAGE
FULL-SERVICE
NET RENTAL
RENTABLE ECONOMIC RATE PER
NO. OF YEAR AREA OCCUPANCY OCCUPIED
STATE, CITY, PROPERTY PROPERTIES SUBMARKET COMPLETED (SQ. FT.) PERCENTAGE SQ. FT.(2)
- --------------------- ---------- --------- --------- --------- ---------- ------------
COLORADO
DENVER
Johns Manville Plaza 1 CBD 1978 675,400 91% $ 21.93
707 17th Street (20) 1 CBD 1982 550,805 59 (8) 23.05
Ptarmigan Place 1 Cherry Creek 1984 418,630 61 20.34
Regency Plaza One 1 Denver Technology Center 1985 309,862 89 21.67
55 Madison 1 Cherry Creek 1982 137,176 82 20.11
The Citadel 1 Cherry Creek 1987 130,652 95 25.09
44 Cook 1 Cherry Creek 1984 124,174 86 21.35
------- ----------------------- ----------
Subtotal/Weighted Average 7 2,346,699 77% $ 21.93
------- ----------------------- ----------
COLORADO SPRINGS
Briargate Office and
Research Center 1 Colorado Springs 1988 260,046 79% $ 18.55
------- ----------------------- ----------
FLORIDA
MIAMI
Miami Center (21) 1 CBD 1983 782,211 96% $ 29.62
Datran Center 2 South Dade/Kendall 1986/1988 476,412 88 26.18
------- ----------------------- ----------
Subtotal/Weighted Average 3 1,258,623 93% $ 28.39
------- ----------------------- ----------
ARIZONA
PHOENIX
Two Renaissance Square 1 Downtown/CBD 1990 476,373 88% $ 26.08
------- ----------------------- ----------
NEW MEXICO
ALBUQUERQUE
Albuquerque Plaza 1 CBD 1990 366,236 85% $ 19.03
------- ----------------------- ----------
CALIFORNIA
SAN DIEGO
Chancellor Park (22) 1 University Town Centre 1988 195,733 75% (8) $ 29.25
------- ----------------------- ----------
NEVADA
LAS VEGAS
Hughes Center (23) 2 Central East 1986/1999 209,147 88% $ 28.86
------- ----------------------- ----------
STABILIZED TOTAL/WEIGHTED
AVERAGE 70 29,272,548 84% (8) $ 22.63 (24)
======= ======================= ==========
PROPERTIES NOT STABILIZED
TEXAS
HOUSTON
BriarLake Plaza (25)(26) 1 Westchase 2000 502,410 89% $ 26.44
------- ----------
FLORIDA
MIAMI
The BAC - Colonnade
Building (25) 1 Coral Gables 1989 216,115 92% $ 32.88
------- ----------
TOTAL PORTFOLIO 72 29,991,073
======= ==========
- -------------------
(1) Office Property Table data is presented at 100% without giving effect
to the Company's actual ownership percentage in joint ventured
properties.
(2) Calculated in accordance with GAAP based on base rent payable as of
December 31, 2003, giving effect to free rent and scheduled rent
increases and including adjustments for expenses payable by or
reimbursable from customers.
(3) The Company has a 49.5% limited partner interest and a 0.5% general
partner interest in the partnership that owns Bank One Center.
(4) The Crescent Office Towers and The Crescent Atrium are now reflected
together as The Crescent.
(5) The Company owns the principal economic interest in Trammell Crow
Center through its ownership of fee simple title to the Property
(subject to a ground lease and a leasehold estate regarding the
building) and two mortgage notes encumbering the leasehold interests in
the land and building.
(6) In May 2003, the Company, through its subsidiaries, exercised its
option to acquire legal ownership of Spectrum Center in exchange for
the mortgage notes it previously held.
(7) Submarket name changed to Quorum/Bent Tree from Far North Dallas. Name
changed to better reflect the area of the submarket in which the
building is located.
(8) Leases have been executed at certain Office Properties but had not
commenced as of December 31, 2003. If such leases had commenced as of
December 31, 2003, the percent leased for all Office Properties would
have been 86%. Properties whose percent leased exceeds economic
occupancy by 5 percentage points or more are as follows: 125 E. John
Carpenter Freeway - 83%, 3333 Lee Parkway - 51%, Houston Center - 94%,
707 17th Street - 67%, and Chancellor Park - 84%.
(9) 12404 Park Central is currently considered held for sale. A $3.4
million impairment (before minority interest) was recorded in the
fourth quarter of 2003 related to this Property.
(10) Submarket name changed to Richardson from Richardson/Plano. Name
changed to better reflect the area of the submarket in which the
building is located.
16
(11) Liberty Plaza I & II is currently considered held for sale. A $4.3
million impairment (before minority interest) was recorded in the
fourth quarter of 2003 related to this Property.
(12) Submarket name changed to Greenway Plaza from Richmond-Buffalo
Speedway. Name changed to better reflect the area of the submarket in
which the building is located.
(13) Houston Center Shops is now reflected with Houston Center.
(14) Property statistics now include Five Houston Center which was deemed
stabilized in September 2003.
(15) Property statistics now include Five Post Oak Park which was deemed
stabilized in December 2003.
(16) The Company has a 0.1% general partner interest and a 19.9% limited
partner interest in the partnerships that own Four Westlake Park, Three
Westlake Park, and Bank One Tower.
(17) Submarket name changed to Katy Freeway West from Katy Freeway. Name
changed to better reflect the area of the submarket in which the
building is located.
(18) 1800 West Loop South is currently considered held for sale. A $16.4
million impairment (before minority interest) was recorded in 2003
related to this Property.
(19) The Company has a 1% general partner interest and a 49% limited partner
interest in the partnership that owns 301 Congress Avenue.
(20) 707 17th Street was formerly known as MCI Tower.
(21) The Company has a 40% member interest in the limited liability company
that owns Miami Center.
(22) In September 2003, the Company acquired unencumbered fee title to
Chancellor Park, as a result of merging the previously held mortgage
note out of existence.
(23) Hughes Center consists of six wholly-owned office properties and one
joint ventured office property. The Company acquired two wholly-owned
office properties as of December 31, 2003. In February 2004, the
Company acquired (a) the remaining four wholly-owned properties, and
(b) a 67% partnership interest in the joint ventured property. Hughes
Center is collectively considered stabilized, with an average occupancy
of 93% upon acquisition.
(24) The weighted average full-service cash rental rate per square foot
calculated based on base rent payable for Company Office Properties as
of December 31, 2003, without giving effect to free rent and scheduled
rent increases that are taken into consideration under GAAP but
including adjustments for expenses paid by or reimbursed from customers
is $22.57.
(25) Property statistics exclude BriarLake Plaza (which was acquired on
October 8, 2003) and The BAC - Colonnade Building (which was acquired
on August 26, 2003). These office properties will be included in
portfolio statistics once stabilized. Stabilization is deemed to occur
upon the earlier of (a) achieving 93% occupancy or (b) one year
following the date placed in-service or acquisition date.
(26) The Company has a 30% member interest in the limited liability company
that owns BriarLake Plaza.
The following table shows, as of December 31, 2003, the principal
business conducted by the tenants at the Company's Office Properties, based on
information supplied to the Company from the tenants. Based on rental revenues
from office leases in effect as of December 31, 2003, no single tenant accounted
for more than 5% of the Company's total Office Segment rental revenues for 2003.
Percent of
Industry Sector Leased Sq. Ft.
------------------------ --------------
Professional Services (1) 29%
Financial Services (2) 21
Energy(3) 20
Telecommunications 5
Technology 5
Manufacturing 4
Food Service 3
Government 3
Retail 3
Medical 2
Other (4) 5
----------
TOTAL LEASED 100%
==========
----------------------------
(1) Includes legal, accounting, engineering, architectural and advertising
services.
(2) Includes banking, title and insurance and investment services.
(3) Includes oil and gas and utility companies.
(4) Includes construction, real estate and other industries.
17
AGGREGATE LEASE EXPIRATIONS OF OFFICE PROPERTIES
The following tables show schedules of lease expirations for leases in
place as of December 31, 2003, for the Company's total Office Properties and for
Dallas, Houston and Austin, Texas, Denver, Colorado, and Miami, Florida,
individually, for each of the 10 years beginning with 2004.
TOTAL OFFICE PROPERTIES(1)
---------------------------
ANNUAL
FULL-
SERVICE
RENT
SQUARE SQUARE PER
FOOTAGE FOOTAGE SQUARE
OF SIGNED OF ANNUAL PERCENTAGE FOOT OF NUMBER OF
EXPIRING RENEWALS EXPIRING PERCENTAGE FULL-SERVICE OF ANNUAL NET TENANTS
YEAR OF LEASES OF LEASES OF SQUARE RENT UNDER FULL-SERVICE RENTABLE WITH
LEASE (BEFORE EXPIRING (AFTER FOOTAGE EXPIRING RENT AREA EXPIRING
EXPIRATION RENEWALS) LEASES(2) RENEWALS) EXPIRING LEASES(3) EXPIRING EXPIRING(3) LEASES
- ---------- --------- --------- ---------- ---------- ------------- ------------ ----------- ---------
2004 4,932,196(4) (2,337,470) 2,594,726(4)(5) 10.7% $ 56,538,613 10.2% $ 21.79 434
2005 3,023,386 (203,989) 2,819,397(6) 11.6 63,269,246 11.5 22.44 290
2006 2,339,705 6,084 2,345,789 9.6 56,239,858 10.2 23.97 255
2007 2,809,148 223,631 3,032,779 12.5 68,106,358 12.3 22.46 214
2008 1,866,055 (24,961) 1,841,094 7.6 39,904,305 7.2 21.67 200
2009 1,410,503 444,977 1,855,480 7.6 43,167,781 7.8 23.27 111
2010 1,743,833 221,352 1,965,185 8.1 48,544,703 8.8 24.70 65
2011 1,099,717 14,851 1,114,568 4.6 26,169,983 4.7 23.48 42
2012 826,187 - 826,187 3.4 21,213,667 3.8 25.68 25
2013 1,483,138 (51,313) 1,431,825 5.9 31,767,912 5.8 22.19 38
2014 and
thereafter 2,791,107 1,706,838 4,497,945 18.4 97,189,764 17.7 21.61 48
---------- --------- ----------- ---------- ------------- ---------- -------- ---------
24,324,975 - 24,324,975(7) 100.0% $ 552,112,190 100.0% $ 22.70 1,722
========== ========= =========== ========== ============= ========== ======== =========
(1) Lease expiration data is presented at 100% without giving effect to the
Company's actual ownership percentage in joint ventured properties and
excludes non-stabilized Office Properties.
(2) Signed renewals extend the expiration dates of in-place leases to the end
of the renewal term.
(3) Calculated based on base rent payable under leases for net rentable square
feet expiring (after renewals), giving effect to free rent and scheduled
rent increases taken into account under GAAP and including adjustments for
expenses payable by or reimbursable from customers based on current expense
levels.
(4) As of December 31, 2003, leases totaling 3,060,023 square feet (including
renewals of 2,337,470 square feet and new leases of 722,553 square feet)
have been signed and will commence during 2004. These signed leases
represent approximately 62% of gross square footage expiring during 2004.
(5) Expirations by quarter are as follows: Q1: 872,095 square feet Q2: 537,587
square feet Q3: 668,753 square feet Q4: 516,291 square feet.
(6) Expirations by quarter are as follows: Q1: 632,422 square feet Q2: 732,267
square feet Q3: 925,124 square feet Q4: 529,584 square feet.
(7) Reconciliation of Occupied Square Feet to Net Rentable Area:
SQUARE
FEET
------
Occupied Square Footage, per above 24,324,975
Add: Occupied but Non-Revenue Generating Square Footage 256,142
Add: Vacant Square Footage 4,691,431
----------
Total Stabilized Office Portfolio Net Rentable Area 29,272,548
==========
18
DALLAS OFFICE PROPERTIES(1)
---------------------------
ANNUAL
FULL-
SERVICE
RENT
SQUARE SQUARE PER
FOOTAGE FOOTAGE SQUARE
OF SIGNED OF ANNUAL PERCENTAGE FOOT OF NUMBER OF
EXPIRING RENEWALS EXPIRING PERCENTAGE FULL-SERVICE OF ANNUAL NET TENANTS
YEAR OF LEASES OF LEASES OF SQUARE RENT UNDER FULL-SERVICE RENTABLE WITH
LEASE (BEFORE EXPIRING (AFTER FOOTAGE EXPIRING RENT AREA EXPIRING
EXPIRATION RENEWALS) LEASES(2) RENEWALS) EXPIRING LEASES(3) EXPIRING EXPIRING(3) LEASES
- ---------- --------- -------- ---------- ---------- ------------ ------------ ---------- ---------
2004 1,364,220(4) (747,740) 616,480(4)(5) 7.7% $ 14,990,769 8.1% $ 24.32 116
2005 1,245,025 (218,962) 1,026,063(6) 12.8 22,370,762 12.1 21.80 92
2006 721,571 7,207 728,778 9.1 18,256,496 9.9 25.05 59
2007 1,220,425 127,622 1,348,047 16.8 31,640,431 17.1 23.47 63
2008 610,889 (71,619) 539,270 6.7 11,982,352 6.5 22.22 65
2009 506,063 89,891 595,954 7.4 15,077,745 8.2 25.30 23
2010 694,650 104,259 798,909 9.9 20,992,324 11.4 26.28 20
2011 299,082 14,851 313,933 3.9 7,660,297 4.1 24.40 10
2012 195,372 - 195,372 2.4 4,312,294 2.3 22.07 11
2013 294,309 21,897 316,206 3.9 7,418,864 4.0 23.46 11
2014 and
thereafter 878,878 672,594 1,551,472 19.4 30,238,653 16.3 19.49 15
--------- -------- --------- ---------- ----------- ---------- ---------- ---------
8,030,484 - 8,030,484 100.0% $184,940,987 100.0% $ 23.03 485
========= ======== ========= ========== ============ =========== ========== =========
(1) Lease expiration data is presented at 100% without giving effect to the
Company's actual ownership percentage in joint ventured properties and
excludes non-stabilized Office Properties.
(2) Signed renewals extend the expiration dates of in-place leases to the end
of the renewed term.
(3) Calculated based on base rent payable under leases for net rentable square
feet expiring (after renewals), giving effect to free rent and scheduled
rent increases taken into account under GAAP and including adjustments for
expenses payable by or reimbursable from customers based on current expense
levels.
(4) As of December 31, 2003, leases totaling 868,696 square feet (including
renewals of 747,740 square feet and new leases of 120,956 square feet) have
been signed and will commence during 2004. These signed leases represent
approximately 64% of gross square footage expiring during the remainder of
2004.
(5) Expirations by quarter are as follows: Q1: 180,107 square feet Q2 : 71,832
square feet Q3: 209,529 square feet Q4: 155,012 square feet.
(6) Expirations by quarter are as follows: Q1: 184,838 square feet Q2: 138,900
square feet Q3: 555,590 square feet Q4: 146,735 square feet.
HOUSTON OFFICE PROPERTIES(1)
----------------------------
ANNUAL
FULL-
SERVICE
RENT
SQUARE SQUARE PER
FOOTAGE FOOTAGE SQUARE
OF SIGNED OF ANNUAL PERCENTAGE FOOT OF NUMBER OF
EXPIRING RENEWALS EXPIRING PERCENTAGE FULL-SERVICE OF ANNUAL NET TENANTS
YEAR OF LEASES OF LEASES OF SQUARE RENT UNDER FULL-SERVICE RENTABLE WITH
LEASE (BEFORE EXPIRING (AFTER FOOTAGE EXPIRING RENT AREA EXPIRING
EXPIRATION RENEWALS) LEASES(2) RENEWALS) EXPIRING LEASES(3) EXPIRING EXPIRING(3) LEASES
- ---------- --------- --------- --------- ---------- ------------ ------------ ----------- ---------
2004 2,029,730(4) (1,102,168) 927,562(4)(5) 9.6% $ 17,635,186 8.3% $ 19.01 183
2005 626,461 11,265 637,726(6) 6.6 13,816,589 6.4 21.67 105
2006 963,875 (7,146) 956,729 9.9 20,876,916 9.9 21.82 94
2007 1,045,407 112,584 1,157,991 11.9 24,108,643 11.3 20.82 77
2008 808,121 1,847 809,968 8.4 16,032,206 7.6 19.79 67
2009 373,736 278,029 651,765 6.7 13,894,638 6.6 21.32 38
2010 684,713 100,377 785,090 8.1 17,578,412 8.3 22.39 23
2011 581,854 - 581,854 6.0 12,772,528 6.0 21.95 15
2012 458,760 - 458,760 4.7 12,492,421 5.9 27.23 9
2013 458,174 - 458,174 4.7 11,586,741 5.5 25.29 10
2014 and
thereafter 1,661,593 605,212 2,266,805 23.4 50,903,696 24.2 22.46 15
--------- -------- --------- ---------- ------------ ---------- ----------- ---------
9,692,424 - 9,692,424 100.0% $211,697,976 100.0% $ 21.84 636
========= ======== ========= ========== ============ ========== =========== =========
(1) Lease expiration data is presented at 100% without giving effect to the
Company's actual ownership percentage in joint ventured properties and
excludes non-stabilized Office Properties.
(2) Signed renewals extend the expiration dates of in-place leases to the end
of the renewed term.
(3) Calculated based on base rent payable under leases for net rentable square
feet expiring (after renewals), giving effect to free rent or scheduled
rent increases taken into account under GAAP and including adjustments for
expenses payable by or reimbursable from customers based on current expense
levels.
(4) As of December 31, 2003, leases totaling 1,498,485 square feet (including
renewals of 1,102,168 square feet and new leases of 396,317 square feet)
have been signed and will commence during 2004. These signed leases
represent approximately 74% of gross square footage expiring during the
remainder of 2004.
(5) Expirations by quarter are as follows: Q1: 379,277 square feet Q2: 227,142
square feet Q3: 140,531 square feet Q4: 180,612 square feet.
(6) Expirations by quarter are as follows: Q1: 176,171 square feet Q2: 142,240
square feet Q3: 184,778 square feet Q4: 134,537 square feet.
19
AUSTIN OFFICE PROPERTIES(1)
---------------------------
ANNUAL
FULL-
SERVICE
RENT
SQUARE SQUARE PER
FOOTAGE FOOTAGE SQUARE
OF SIGNED OF ANNUAL PERCENTAGE FOOT OF NUMBER OF
EXPIRING RENEWALS EXPIRING PERCENTAGE FULL-SERVICE OF ANNUAL NET TENANTS
YEAR OF LEASES OF LEASES OF SQUARE RENT UNDER FULL-SERVICE RENTABLE WITH
LEASE (BEFORE EXPIRING (AFTER FOOTAGE EXPIRING RENT AREA EXPIRING
EXPIRATION RENEWALS) LEASES(2) RENEWALS) EXPIRING LEASES(3) EXPIRING EXPIRING(3) LEASES
- ---------- --------- -------- --------- ---------- ------------ ---------- ----------- ---------
2004 407,412(4) (12,896) 394,516(4)(5) 25.6% $ 9,060,824 24.5% $ 22.97 39
2005 507,058 (3,820) 503,238(6) 32.6 11,779,019 31.9 23.41 21
2006 201,848 (21,627) 180,221 11.7 5,137,382 13.9 28.51 17
2007 78,935 - 78,935 5.1 1,908,538 5.2 24.18 10
2008 160,069 21,627 181,696 11.8 4,581,926 12.4 25.22 18
2009 84,818 - 84,818 5.5 1,827,830 5.0 21.55 8
2010 42,800 16,716 59,516 3.9 1,155,165 3.1 19.41 9
2011 5,896 - 5,896 0.4 115,838 0.3 19.65 2
2012 - - - - - - - 0
2013 21,887 - 21,887 1.4 607,780 1.6 27.77 2
2014 and
thereafter 33,315 - 33,315 2.0 777,499 2.1 23.34 1
--------- -------- --------- ---------- ------------ ---------- ----------- ---------
1,544,038 - 1,544,038 100.0% $ 36,951,801 100.0% $ 23.93 127
========= ======== ========= ========== ============ ========== =========== =========
(1) Lease expiration data is presented at 100% without giving effect to the
Company's actual ownership percentage in joint ventured properties and
excludes non-stabilized Office Properties.
(2) Signed renewals extend the expiration dates of in-place leases to the end
of the renewed term.
(3) Calculated based on base rent payable under leases for net rentable square
feet expiring (after renewals), giving effect to free rent or scheduled
rent increases taken into account under GAAP and including adjustments for
expenses payable by or reimbursable from customers based on current expense
levels.
(4) As of December 31, 2003, leases totaling 33,854 square feet (including
renewals of 12,896 square feet and new leases of 20,958 square feet) have
been signed and will commence during 2004. These signed leases represent
approximately 8% of gross square footage expiring during the remainder of
2004.
(5) Expirations by quarter are as follows: Q1: 104,525 square feet Q2: 22,931
square feet Q3: 249,986 square feet Q4: 17,074 square feet.
(6) Expirations by quarter are as follows: Q1: 92,036 square feet Q2: 349,844
square feet Q3: 31,140 square feet Q4: 30,218 square feet.
DENVER OFFICE PROPERTIES(1)
---------------------------
ANNUAL
FULL-
SERVICE
RENT
SQUARE SQUARE PER
FOOTAGE FOOTAGE SQUARE
OF SIGNED OF ANNUAL PERCENTAGE FOOT OF NUMBER OF
EXPIRING RENEWALS EXPIRING PERCENTAGE FULL-SERVICE OF ANNUAL NET TENANTS
YEAR OF LEASES OF LEASES OF SQUARE RENT UNDER FULL-SERVICE RENTABLE WITH
LEASE (BEFORE EXPIRING (AFTER FOOTAGE EXPIRING RENT AREA EXPIRING
EXPIRATION RENEWALS) LEASES(2) RENEWALS) EXPIRING LEASES(3) EXPIRING EXPIRING(3) LEASES
- ---------- --------- --------- --------- ---------- ------------ ------------ ----------- ---------
2004 515,382(4) (226,871) 288,511(4)(5) 16.0% $ 6,098,326 15.3% $ 21.14 30
2005 320,476 - 320,476(6) 17.8 7,025,177 17.6 21.92 20
2006 109,314 (2,036) 107,278 6.0 2,667,820 6.7 24.87 20
2007 163,867 4,342 168,209 9.3 3,726,293 9.4 22.15 23
2008 113,599 2,036 115,635 6.4 2,339,573 5.9 20.23 19
2009 199,270 39,488 238,758 13.3 5,330,455 13.4 22.33 17
2010 113,032 - 113,032 6.3 2,937,671 7.4 25.99 5
2011 42,568 - 42,568 2.4 809,568 2.0 19.02 4
2012 75,753 - 75,753 4.2 1,861,533 4.7 24.57 1
2013 146,510 (73,210) 73,300 4.1 1,433,382 3.6 19.56 5
2014 and
thereafter - 256,251 256,251 14.2 5,585,613 14.0 21.80 6
--------- -------- --------- ---------- ------------ ---------- ----------- ---------
1,799,771 - 1,799,771 100.0% $ 39,815,411 100.0% $ 22.12 150
========= ======== ========= ========== ============ ========== =========== =========
(1) Lease expiration data is presented at 100% without giving effect to the
Company's actual ownership percentage in joint ventured properties and
excludes non-stabilized Office Properties.
(2) Signed renewals extend the expiration dates of in-place leases to the end
of the renewed term.
(3) Calculated based on base rent payable under leases for net rentable square
feet expiring (after renewal), giving effect to free rent or scheduled rent
increases taken into account under GAAP and including adjustments for
expenses payable by or reimbursable from customers based on current expense
levels.
(4) As of December 31, 2003, leases totaling 311,164 square feet (including
renewals of 226,871 square feet and new leases of 84,293 square feet) have
been signed and will commence during 2004. These signed leases represent
approximately 60% of gross square footage expiring during the remainder of
2004.
(5) Expirations by quarter are as follows: Q1: 140,412 square feet Q2: 119,499
square feet Q3: 14,238 square feet Q4: 14,362 square feet.
(6) Expirations by quarter are as follows: Q1: 122,740 square feet Q2: 28,390
square feet Q3: 13,956 square feet Q4: 155,390 square feet.
20
MIAMI OFFICE PROPERTIES(1)
-----------------------------
ANNUAL
FULL-
SERVICE
RENT
SQUARE SQUARE PER
FOOTAGE FOOTAGE SQUARE
OF SIGNED OF ANNUAL PERCENTAGE FOOT OF NUMBER OF
EXPIRING RENEWALS EXPIRING PERCENTAGE FULL-SERVICE OF ANNUAL NET TENANTS
YEAR OF LEASES OF LEASES OF SQUARE RENT UNDER FULL-SERVICE RENTABLE WITH
LEASE (BEFORE EXPIRING (AFTER FOOTAGE EXPIRING RENT AREA EXPIRING
EXPIRATION RENEWALS) LEASES(2) RENEWALS) EXPIRING LEASES(3) EXPIRING EXPIRING(3) LEASES
- ---------- --------- -------- --------- ---------- ------------ ---------- ----------- ---------
2004 220,704(4) (76,055) 144,649(4)(5) 12.4% $ 3,632,700 10.6% $ 25.11 32
2005 187,156 (42,969) 144,187(6) 12.4 4,254,659 12.4 29.51 34
2006 127,105 33,083 160,188 13.8 4,661,776 13.6 29.10 36
2007 91,322 (22,277) 69,045 5.9 1,863,388 5.5 26.99 17
2008 62,260 17,751 80,011 6.9 2,422,255 7.1 30.27 14
2009 134,859 30,511 165,370 14.2 4,421,803 12.9 26.74 9
2010 147,954 - 147,954 12.7 4,613,804 13.5 31.18 5
2011 100,381 - 100,381 8.6 3,499,207 10.2 34.86 5
2012 32,359 - 32,359 2.8 1,190,499 3.5 36.79 2
2013 21,765 - 21,765 1.9 747,450 2.2 34.34 2
2014 and
thereafter 37,059 59,956 97,015 8.4 2,886,874 8.5 29.76 5
--------- -------- --------- ---------- ------------ ---------- ----------- ---------
1,162,924 - 1,162,924 100.0% $ 34,194,415 100.0% $ 29.40 161
========= ======== ========= ========== ============ ========== =========== =========
(1) Lease expiration data is presented at 100% without giving effect to the
Company's actual ownership percentage in joint ventured properties and
excludes non-stabilized Office Properties.
(2) Signed renewals extend the expiration dates of in-place leases to the end
of the renewed term.
(3) Calculated based on base rent payable under leases for net rentable square
feet expiring (after renewals), giving effect to free rent or scheduled
rent increases taken into account under GAAP and including adjustments for
expenses payable by or reimbursable from customers based on current expense
levels.
(4) As of December 31, 2003, leases totaling 84,507 square feet (including
renewals of 76,055 square feet and new leases of 8,452 square feet) have
been signed and will commence during 2004. These signed leases represent
approximately 38% of gross square footage expiring during the remainder of
2004.
(5) Expirations by quarter are as follows: Q1: 27,554 square feet Q2: 50,192
square feet Q3: 30,484 square feet Q4: 36,419 square feet.
(6) Expirations by quarter are as follows: Q1: 25,450 square feet Q2: 20,635
square feet Q3 61,644 square feet Q4: 36,458 square feet.
OTHER OFFICE PROPERTIES(1)
---------------------------
ANNUAL
FULL-
SERVICE
RENT
SQUARE SQUARE PER
FOOTAGE FOOTAGE SQUARE
OF SIGNED OF ANNUAL PERCENTAGE FOOT OF NUMBER OF
EXPIRING RENEWALS EXPIRING PERCENTAGE FULL-SERVICE OF ANNUAL NET TENANTS
YEAR OF LEASES OF LEASES OF SQUARE RENT UNDER FULL-SERVICE RENTABLE WITH
LEASE (BEFORE EXPIRING (AFTER FOOTAGE EXPIRING RENT AREA EXPIRING
EXPIRATION RENEWALS) LEASES(2) RENEWALS) EXPIRING LEASES(3) EXPIRING EXPIRING(3) LEASES
- ---------- --------- -------- --------- ---------- ------------ ---------- ----------- ---------
2004 394,748(4) (171,740) 223,008(4)(5) 10.6% $ 5,120,808 11.5% $ 22.96 34
2005 137,210 50,497 187,707(6) 9.0 4,023,040 9.0 21.43 18
2006 215,992 (3,397) 212,595 10.2 4,639,468 10.4 21.82 29
2007 209,192 1,360 210,552 10.1 4,859,065 10.9 23.08 24
2008 111,117 3,397 114,514 5.5 2,545,993 5.7 22.23 17
2009 111,757 7,058 118,815 5.7 2,615,310 5.9 22.01 16
2010 60,684 - 60,684 2.9 1,267,327 2.9 20.88 3
2011 69,936 - 69,936 3.3 1,312,545 3.0 18.77 6
2012 63,943 - 63,943 3.1 1,356,920 3.1 21.22 2
2013 540,493 - 540,493 25.8 9,973,695 22.4 18.45 8
2014 and
thereafter 180,262 112,825 293,087 13.8 6,797,429 15.2 23.19 6
--------- -------- --------- ---------- ------------ ---------- ----------- ---------
2,095,334 - 2,095,334 100.0% $ 44,511,600 100.0% $ 21.24 163
========= ======== ========= ========== ============ ========== =========== =========
(1) Lease expiration data is presented at 100% without giving effect to the
Company's actual ownership percentage in joint ventured properties and
excludes non-stabilized Office Properties. Includes Ft. Worth, Colorado
Springs, Phoenix, Albuquerque, San Diego, and Las Vegas.
(2) Signed renewals extend the expiration dates of in-place leases to the end
of the renewed term.
(3) Calculated based on base rent payable under leases for net rentable square
feet expiring (after renewals), giving effect to free rent or scheduled
rent increases taken into account under GAAP and including adjustments for
expenses payable by or reimbursable from customers based on current expense
levels.
(4) As of December 31, 2003, leases totaling 263,317 square feet (including
renewals of 171,740 square feet and new leases of 91,577 square feet) have
been signed and will commence during 2004. These signed leases represent
approximately 67% of gross square footage expiring during 2004.
(5) Expirations by quarter are as follows: Q1: 40,220 square feet Q2: 45,991
square feet Q3: 23,985 square feet Q4: 112,812 square feet.
(6) Expirations by quarter are as follows: Q1: 31,187 square feet Q2: 52,258
square feet Q3: 78,016 square feet Q4: 26,246 square feet.
21
RESORT/HOTEL PROPERTIES(1)
The following table shows certain information for the years ended
December 31, 2003 and 2002, with respect to the Company's Resort/Hotel
Properties. The information for the Resort/Hotel Properties is based on
available rooms, except for Canyon Ranch-Tucson and Canyon Ranch-Lenox, which
measure their performance based on available guest nights.
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------
REVENUE
AVERAGE AVERAGE PER
OCCUPANCY DAILY AVAILABLE
YEAR RATE RATE ROOM/GUEST NIGHT
COMPLETED/ -------------- --------------- ----------------
RESORT/HOTEL PROPERTY LOCATION RENOVATED ROOMS 2003 2002 2003 2002 2003 2002
- --------------------- -------- --------- ----- ---- ---- ---- ---- ---- ----
UPSCALE BUSINESS CLASS HOTELS:
Denver Marriott City Center Denver, CO 1982/1994 613 73% 75% $ 128 $ 117 $ 93 $ 89
Hyatt Regency Albuquerque Albuquerque, NM 1990 395 72 71 104 106 75 76
Omni Austin Hotel(2) Austin, TX 1986 375 75 70 113 116 84 81
Renaissance Houston Hotel Houston, TX 1975/2000 388 62 63 108 110 67 70
----- --- --- ----- ----- ----- ----
TOTAL/WEIGHTED AVERAGE 1,771 71% 71% $ 115 $ 113 $ 82 $ 80
===== === === ===== ===== ===== ====
LUXURY RESORTS AND SPAS:
Park Hyatt Beaver Creek Resort
and Spa Avon, CO 1989/2001 275 60% 59% $ 278 $ 280 $ 166 $166
Fairmont Sonoma Mission Inn &
Spa(3) Sonoma, CA 1927/1987/1997 228 61 61 245 264 150 162
Ventana Inn & Spa Big Sur, CA 1975/1982/1988 62 75 71 412 393 309 279
----- --- --- ----- ----- ----- ----
TOTAL/WEIGHTED AVERAGE 565 62% 61% $ 282 $ 288 $ 174 $177
===== === === ===== ===== ===== ====
GUEST
DESTINATION FITNESS RESORTS AND NIGHTS
SPAS:
Canyon Ranch-Tucson Tucson, AZ 1980 259 (4)
Canyon Ranch-Lenox Lenox, MA 1989 212 (4)
----- --- --- ----- ----- ----- ----
TOTAL/WEIGHTED AVERAGE 471 76% 77% $ 661 $ 641 $ 475 $471
===== === === ===== ===== ===== ====
LUXURY AND DESTINATION FITNESS
RESORTS COMBINED 68% 69% $ 469 $ 464 $ 311 $310
=== === ===== ===== ===== ====
GRAND TOTAL/WEIGHTED AVERAGE
FOR RESORT/HOTEL PROPERTIES 2,807 70% 70% $ 241 $ 238 $ 166 $164
===== === === ===== ===== ===== ====
- -------------
(1) Resort/Hotel Property Table is presented at 100% without any adjustment
to give effect to the Company's actual ownership in Resort/Hotel
Properties.
(2) The Omni Austin Hotel is leased to HCD Austin Corporation.
(3) The Company has an 80.1% member interest in the limited liability
company that owns Fairmont Sonoma Mission Inn & Spa.
(4) Represents available guest nights, which is the maximum number of
guests the resort can accommodate per night.
22
RESIDENTIAL DEVELOPMENT PROPERTIES
The following table shows certain information as of December 31,
2003, relating to the Residential Development Properties.
TOTAL TOTAL
RESIDENTIAL RESIDENTIAL TOTAL LOTS/UNITS LOTS/UNITS
RESIDENTIAL DEVELOPMENT DEVELOPMENT LOTS/ DEVELOPED CLOSED
DEVELOPMENT PROPERTIES TYPE OF CORPORATION'S UNITS SINCE SINCE
CORPORATION(1) (RDP) RDP(2) LOCATION OWNERSHIP % PLANNED INCEPTION INCEPTION
----------- --------------- ------ -------- ------------- ------- --------- ---------
Desert Mountain Desert Mountain SF Scottsdale, AZ 93.0% 2,436 2,396 2,304
Development ----- ----- -----
Corporation
Crescent Resort Eagle Ranch SF Eagle, CO 60.0% 1,323 651 643
Development, Main Street
Inc. (6) Junction CO Breckenridge, CO 30.0% 36 36 36
Main Street
Station CO Breckenridge, CO 30.0% 82 82 81
Main Street
Station
Vacation Club TS Breckenridge, CO 30.0% 42 42 27
Riverbend SF Charlotte, NC 60.0% 650 335 335
Three Peaks
(Eagle's Nest) SF Silverthorne, CO 30.0% 391 253 191
Park Place at
Riverfront CO Denver, CO 64.0% 70 70 68
Park Tower at
Riverfront CO Denver, CO 64.0% 61 61 60
Promenade Lofts
at Riverfront CO Denver, CO 64.0% 66 66 66
Creekside at
Riverfront CO Denver, CO 64.0% 40 40 26
Delgany Lofts CO Denver, CO 64.0% 44 -- --
Cresta TH Edwards, CO 60.0% 25 25 22
Snow Cloud CO Avon, CO 64.0% 54 54 54
Horizon Pass
Lodge CO Avon, CO 64.0% 31 -- --
Horizon Pass
Townhomes TH Avon, CO 64.0% 9 -- --
One Vendue Range CO Charleston, SC 62.0% 50 50 50
Old Greenwood SF/TS Truckee, CA 71.2% 249 103 76
Tahoe Mountain
Resorts SF/CO/TH/TS Tahoe, CA 57% - 71.2% --(7) --(7) --(7)
----- ----- -----
TOTAL CRESCENT RESORT DEVELOPMENT, INC. 3,223 1,868 1,735
----- ----- -----
Mira Vista Mira Vista SF Fort Worth, TX 100.0% 740 740 724
----- ----- -----
Development
Corp.
Houston Area Falcon Point SF Houston, TX 100.0% 510 491 468
Development Falcon Landing SF Houston, TX 100.0% 623 613 613
Corp. Spring Lakes SF Houston, TX 100.0% 520 416 369
----- ----- -----
TOTAL HOUSTON AREA DEVELOPMENT CORP. 1,653 1,520 1,450
----- ----- -----
TOTAL 8,052 6,524 6,213
===== ===== =====
AVERAGE
RESIDENTIAL CLOSED RANGE OF
RESIDENTIAL DEVELOPMENT SALE PRICE PROPOSED
DEVELOPMENT PROPERTIES TYPE OF PER LOT/ SALE PRICES
CORPORATION(1) (RDP) RDP(2) LOCATION UNIT ($)(3) PER LOT/UNIT ($)(4)
----------- --------------- ------ -------- ----------- ------------------------
Desert Mountain Desert Mountain SF Scottsdale, AZ 538,000 450,000 - 4,000,000 (5)
Development
Corporation
Crescent Resort Eagle Ranch SF Eagle, CO 81,000 50,000 - 150,000
Development, Main Street
Inc. (6) Junction CO Breckenridge, CO 462,000 300,000 - 580,000
Main Street
Station CO Breckenridge, CO 494,000 215,000 - 1,065,000
Main Street
Station
Vacation Club TS Breckenridge, CO 1,188,000 380,000 - 4,600,000
Riverbend SF Charlotte, NC 31,000 25,000 - 38,0