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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, 1998.
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 incorporation (I.R.S. Employer Identification Number)
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
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 $.01 per share New York Stock Exchange, Inc.
6 3/4% Series A Convertible Cumulative Preferred Shares of
Beneficial Interest par value $.01 per share New York Stock Exchange, Inc.
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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
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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. [ ]
As of March 26, 1999, the aggregate market value of the 118,545,354 common
shares and 8,000,000 preferred shares held by non-affiliates of the registrant
was approximately $2.6 billion, based upon the closing price of $20 13/16 for
common shares and $15 11/16 for preferred shares on the New York Stock Exchange.
Number of Common Shares outstanding as of March 26, 1999: 124,710,139
Number of Preferred Shares outstanding as of March 26, 1999: 8,000,000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to be filed with the Securities and Exchange
Commission for Registrant's 1998 Annual Meeting of Shareholders to be held in
June 1999 are incorporated by reference into Part III.
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TABLE OF CONTENTS
PAGE
PART I.
Item 1. Business.............................................................................. 2
Item 2. Properties............................................................................ 16
Item 3. Legal Proceedings..................................................................... 28
Item 4. Submission of Matters to a Vote of Security Holders................................... 29
PART II.
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters................. 30
Item 6. Selected Financial Data............................................................... 32
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................. 33
Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................ 54
Item 8. Financial Statements and Supplementary Data........................................... 56
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................................................ 90
PART III.
Item 10. Trust Managers and Executive Officers of the Registrant............................... 90
Item 11. Executive Compensation................................................................ 90
Item 12. Security Ownership of Certain Beneficial Owners and Management........................ 90
Item 13. Certain Relationships and Related Transactions........................................ 91
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...................... 91
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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, is a fully integrated real estate company. The
Company, as defined below, provides management, leasing and development services
with respect to certain of its properties. Crescent Equities is a Texas real
estate investment trust, which became the successor to Crescent Real Estate
Equities, Inc., a Maryland corporation, on December 31, 1996, through the merger
of Crescent Real Estate Equities, Inc. with CRE Limited Partner, Inc., a
Delaware corporation, into Crescent Equities.
The term "Company" includes, unless the context otherwise requires, all
of the direct and indirect subsidiaries of Crescent Equities and the predecessor
corporation, Crescent Real Estate Equities, Inc.
The direct and indirect subsidiaries of Crescent Equities include:
o CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP;
Operating Partnership
o CRESCENT REAL ESTATE EQUITIES, LTD.;
Sole General Partner of the Operating Partnership
o SEVEN SINGLE-PURPOSE LIMITED PARTNERSHIPS;
Formed for the purpose of obtaining securitized debt,
substantially all the economic interests owned directly
or indirectly by the Operating Partnership and the
remaining interests owned indirectly by Crescent
Equities through seven separate corporations described
below.
o SEVEN SEPARATE CORPORATIONS.
Wholly owned subsidiaries of the General Partner, each
of which is a general partner of one of the seven
limited partnerships described above.
Crescent Equities conducts all of its business directly through the
Operating Partnership and its other subsidiaries. The Company is structured to
facilitate and maintain its qualification as a REIT. This structure permits
persons contributing properties (or interests therein) to the Company to defer
some or all of the tax liability that they otherwise might have incurred in
connection with the sale of assets to the Company.
See Note 1 of Item 8. Financial Statements and Supplementary Data for a
table that lists the principal subsidiaries of Crescent Equities and the
Properties owned by such subsidiaries.
As of December 31, 1998, the Company's assets and operations were
composed of five major industry segments:
o Office and Retail Segment;
o Hospitality Segment;
o Residential Development Segment;
o Refrigerated Storage Segment; and
o Behavioral Healthcare Segment.
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Within these segments, the Company, through various entities, owned
directly or indirectly the following real estate assets (the "Properties") as of
December 31, 1998:
o OFFICE AND RETAIL SEGMENT includes 89 office properties
(collectively referred to as the "Office Properties") located
primarily in 17 metropolitan submarkets in Texas, with an
aggregate of approximately 31.8 million net rentable square feet
and seven retail properties (collectively referred to as the
"Retail Properties") with an aggregate of approximately 0.8
million net rentable square feet.
o HOSPITALITY SEGMENT includes seven full service hotels with a
total of 2,257 rooms and two destination health and fitness
resorts that can accommodate up to 462 guests daily (collectively
referred to as the "Hotel Properties"). All Hotel Properties,
except the Omni Austin Hotel, are leased to subsidiaries of
Crescent Operating, Inc. ("COI"). As of January 1, 1999, the Omni
Austin Hotel is leased to HCD Austin Corporation, an unrelated
third party.
o RESIDENTIAL DEVELOPMENT SEGMENT includes the Company's ownership
of real estate mortgages and non-voting common stock representing
interests ranging from 40% to 95% in five unconsolidated
residential development corporations (collectively referred to as
the "Residential Development Corporations"), which in turn,
through joint venture or partnership arrangements, own 13
residential development properties (collectively referred to as
the "Residential Development Properties").
o REFRIGERATED STORAGE SEGMENT includes the Company's indirect 38%
interest in three partnerships (collectively referred to as the
"Refrigerated Storage Partnerships"), each of which owns one or
more corporations or limited liability companies (collectively
referred to as the "Refrigerated Storage Corporations") which, as
of December 31, 1998, directly or indirectly owned or operated
approximately 101 refrigerated storage properties (collectively
referred to as the "Refrigerated Storage Properties") with an
aggregate of approximately 530.1 million cubic feet (21.4 million
square feet). The remaining interest in the Refrigerated Storage
Partnerships is owned by Vornado Realty Trust ("Vornado") (60% of
each Refrigerated Storage Partnership) and COI (2% indirect
interest in each Refrigerated Storage Partnership). See "Industry
Segments - Refrigerated Storage Segment - New Ownership Structure"
below for a description of the Company's restructuring of its
investment in the Refrigerated Storage Segment, effective March
12, 1999. As a result of this restructuring, the Company increased
its indirect ownership in the Refrigerated Storage Partnerships to
39.6%, and the Refrigerated Storage Corporations own, but no
longer operate, the Refrigerated Storage Properties.
o BEHAVIORAL HEALTHCARE SEGMENT includes 89 properties in 26 states
(collectively referred to as the "Behavioral Healthcare
Properties") that are leased to Charter Behavioral Health Systems,
LLC ("CBHS"). CBHS was formed to operate the Behavioral Healthcare
Properties and is owned 50% by a subsidiary of Magellan Health
Services, Inc. and 50% by Crescent Operating, Inc.
See Note 3 of Item 8. Financial Statements and Supplementary Data for a
table showing revenues, funds from operations and identifiable assets for each
of these industry Segments for the last three fiscal years.
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BUSINESS OBJECTIVES AND OPERATING STRATEGIES
The Company's business objective is to maximize the total return to its
shareholders through increases in distributions and share price. From the
Company's initial public offering of common shares on May 5, 1994, through March
26, 1999, the total return to shareholders was approximately 122%, with
distributions having increased by approximately 160% and the market price per
common share having increased by approximately 67%.
In response to the challenging market conditions of 1998, management
has renewed its focus on the fundamentals of the Company's business. Management
believes that the earnings growth in both the Office and Retail Segment and the
Hospitality Segment reflects this focus. The Residential Development Segment
also continues to generate sales growth, and the Company continues to reinvest
in new developments within this Segment.
Management believes that, as the Company enters 1999, it is
well-positioned for another year of growth in revenues, driven not only by
revenues generated from leases of existing Office Properties, but also by
revenues from additional investments in existing Properties and businesses.
OPERATING AND FINANCING STRATEGIES
Based on management's assessment of current conditions in the real
estate and financial markets, in 1999 the Company will continue to focus on
growth in revenues from its existing Property portfolio.
The Company seeks to enhance its operating performance and financial
position by:
o applying well-defined leasing strategies in order to capture
the potential rental growth in the Company's portfolio of
Office Properties as occupancy and rental rates increase with
the continued recovery of the markets and submarkets in which
the Company has invested;
o achieving a high tenant retention rate at the Company's Office
Properties through quality service, individualized attention
to its tenants and active preventive maintenance programs;
o empowering management and employing compensation formulas
linked directly with enhanced operating performance of the
Company and its Properties; and
o optimizing the use of various sources of capital including
the refinancing of existing debt and selectively obtaining
additional debt to enhance revenue growth.
INVESTMENT STRATEGIES
The Company intends, in 1999, to focus primarily on operations but will
also continue to assess investment opportunities, consistent with its long-term
investment strategy of acquiring premier assets and assets that have been
undervalued. The Company will continue to employ the corporate, transactional
and financial skills of its management team to assess investment opportunities.
The Company expects that its principal investment focus during 1999 will be on
internal investment opportunities. These internal investment opportunities
include, for example, investments in additional residential development
properties and additional refrigerated storage properties, expansion of existing
Refrigerated Storage Properties, and resort expansions and upgrades in the
Hospitality Segment, such as the construction of additional suites at Sonoma
Mission Inn & Spa and the addition of a spa at the Ventana Country Inn.
Furthermore, the Company will continue to focus, in its assessment of
investment opportunities, on office properties that can be acquired at
significant discounts from replacement cost and that provide both a favorable
current return on invested capital and the opportunity for significant cash flow
growth through future increases in rental rates. In particular, the Company will
focus on office properties which satisfy these criteria and which are located in
the Company's core office markets and submarkets. Consistent with its investment
strategies, the Company also will consider innovative real estate investments
that offer superior returns on its capital investment.
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Finally, the Company is evaluating the possibility of using proceeds from
potential sales of non-core or non-strategic office assets to reinvest in higher
return businesses or assets, with a focus on the Company's core business
segments.
EMPLOYEES
As of December 31, 1998, the Company had more than 500 employees. None
of these employees are covered by collective bargaining agreements.
TAX STATUS
The Company elected under Section 856(c) of the Internal Revenue Code
of 1986, as amended (the "Code"), to be taxed as a REIT under the Code beginning
with its taxable year ended December 31, 1994. As a REIT for federal income tax
purposes, the Company generally is not subject to federal income tax on REIT
taxable income that it distributes to its shareholders. Under the Code, REITs
are subject to numerous organizational and operational requirements, including a
requirement that they distribute at least 95% of their REIT taxable income each
year. The Company will be subject to federal income tax on its REIT taxable
income (including any applicable alternative minimum tax) at regular corporate
rates if it fails to qualify as a REIT for tax purposes in any taxable year. The
Company will also not be permitted to qualify for treatment as a REIT for
federal income tax purposes for four years following the year during which
qualification is lost. Even if the Company qualifies as a REIT for federal
income tax purposes, it may be subject to certain federal, state and local taxes
on its REIT taxable income and property and to federal income and excise tax on
its undistributed REIT taxable income. In addition, certain of its subsidiaries
are subject to federal, state and local income taxes.
ENVIRONMENTAL MATTERS
The Company and its Properties are subject to a variety of federal and
state environmental laws, ordinances and regulations, including:
o Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended;
o Superfund Amendments and Reauthorization Act of 1986;
o Federal Clean Water Act;
o Federal Clean Air Act; and
o Toxic Substances Control 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 the environmental laws listed above, 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 the 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 lien on the contaminated site in
favor of the government for damages and costs it incurs in connection with the
contamination. 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. The owner or operator
of a site may be liable under 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. No
governmental authorities have notified the Company of any non-compliance,
liability or other claims in connection with any of the Company's Properties.
Prior to the Company's acquisition of its Properties, independent environmental
consultants conducted or updated Phase I environmental
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assessments on the Properties and, at some Properties, conducted Phase II soil
and ground water sampling as part of the Phase I assessments to also assess the
potential for environmental contamination at those Properties. None of these
Phase I assessments, updates, or Phase II samplings revealed any materially
adverse environmental conditions. Although management does not anticipate any
material environmental liabilities, there can be no assurances that
environmental liabilities have not developed since such environmental
assessments were prepared, or that future uses or conditions (including, without
limitation, changes in applicable environmental laws and regulations) will not
result in imposition of environmental liability.
INDUSTRY SEGMENTS
OFFICE AND RETAIL SEGMENT
OWNERSHIP STRUCTURE
Crescent Equities is a REIT which, through its direct and indirect
subsidiaries, owns 89 Office Properties located primarily in 17 metropolitan
submarkets in Texas with an aggregate of approximately 31.8 million net rentable
square feet and seven Retail Properties with an aggregate of approximately 0.8
million net rentable square feet. The Company, as a lessor, has retained
substantially all of the risks and benefits of ownership of the Office and
Retail Properties and accounts for its leases as operating leases. Additionally,
the Company provides management and leasing services for the majority of its
Office and Retail Properties.
See Item 2. Properties for more information about the Company's Office
and Retail Properties, and Note 1 of Item 8. Financial Statements and
Supplementary Data for a table that lists the principal subsidiaries of Crescent
Equities and the Properties owned by such subsidiaries.
MARKET INFORMATION
The Office and Retail Properties reflect the Company's strategy of
investing in premier assets within markets that have significant potential for
rental growth. In selecting the Office and Retail Properties, the Company
analyzed demographic and economic data to focus on markets expected to benefit
from significant employment growth as well as corporate relocations. After
identifying and analyzing attractive regional markets, the Company selected
submarkets that it believed would be the major beneficiaries of this projected
growth and that would integrate a premier office environment with quality of
life features such as: affordable residential housing; an environment generally
well-protected from crime; effective transportation systems; a significant
concentration of retailing alternatives; and cultural centers, entertainment
attractions and recreational facilities. Other factors the Company considered in
selecting the submarkets in which its Office and Retail Properties are located
included proximity to major airports and the relative aggressiveness of local
governments in providing tax and other incentives designed to favor business.
Currently, the Company's Office and Retail Properties are located primarily in
Dallas/Fort Worth and Houston, Texas.
Within its selected submarkets, the Company has focused on premier
locations that management believes are able to attract and retain the highest
quality tenants and command premium rents. In addition, several of the
Properties benefit from improvements made by prior owners or developers beyond
what currently could be justified by expected economic returns. Examples of
these improvements, which should not materially increase the future operating
cost of the Properties, are the inclusion of various amenities, the use of
expensive materials and the addition of extensive landscaping. Such premier
locations also tend to be more stable in downward property cycles. Consistent
with its long-term investment strategies, the Company has sought situations
where it was able to acquire properties that have strong economic returns based
on in-place tenancy and 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.
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The Company does not depend on a single or a few major customers within
the Office and Retail Segment, the loss of which would have a material adverse
effect on the Company's financial condition or results of operations. Based on
rental revenues from office and retail leases in effect as of December 31, 1998,
no single tenant accounted for more than 4% of the Company's total Office and
Retail Segment rental revenues.
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 approximate or exceed the national
averages (with the exception of New Orleans, Louisiana), as illustrated in the
following table.
Projected Population Growth and Employment Growth for all Company Markets
Population Employment
Growth Growth
Metropolitan Statistical Area (MSA) 1998-2008 1998-2008
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Dallas/Fort Worth, TX............................... 18.4% 16.3%
Houston, TX......................................... 12.4 11.4
Austin, TX.......................................... 29.2 24.6
Denver, CO.......................................... 16.4 15.2
Colorado Springs, CO................................ 16.2 17.8
New Orleans, LA..................................... 4.0 8.0
Miami, FL........................................... 11.1 12.2
Phoenix, AZ......................................... 23.2 22.2
Washington, DC...................................... 17.2 17.0
Omaha, NE........................................... 11.6 13.7
Albuquerque, NM..................................... 14.7 16.2
San Francisco, CA................................... 14.6 13.8
San Diego, CA....................................... 19.3 18.0
UNITED STATES....................................... 8.5 11.6
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Source: Compiled from information published by Cognetics, Inc.
The Company applies a well-defined leasing strategy in order to capture
the potential rental growth in the Company's portfolio of Office Properties as
occupancy and rental rates increase with the continued recovery of the markets
and the submarkets in which the Company has invested. The Company's strategy has
been and continues to be based in part on identifying and making its investments
in submarkets in which weighted average full-service rental rates (representing
base rent after giving effect to free rent and scheduled rent increases that
would be taken into account under generally accepted accounting principles
("GAAP") and including adjustments for expenses payable by or reimbursed from
tenants) are significantly less than weighted average full-service replacement
cost rental rates (the rate management estimates to be necessary to provide a
return to a developer of a comparable, multi-tenant building sufficient to
justify construction of new buildings) in that submarket. In calculating
replacement cost rental rates, management relies on available third-party data
and its own estimates of construction costs (including materials and labor in a
particular market) and assumes replacement cost rental rates are achieved at a
95% occupancy level. The Company believes that the difference between the two
rates is a useful measure of the additional revenue that the Company may be
able to obtain from a property, because the difference should represent the
amount by which rental rates would be required to increase in order to justify
construction of new properties. For the Company's Office Properties, the
weighted average full-service rental rate as of December 31, 1998 was $19.53 per
square foot, compared to an estimated weighted average full-service replacement
cost rental rate of $28.49 per square foot.
Many of the Company's submarkets have experienced substantial rental
rate growth during the past two years. For example, Class A office rental rates
in Dallas, Houston, Austin and Denver have increased approximately 23%, 49%, 30%
and 21%, respectively, from year-end 1996 to year-end 1998, according to Jamison
Research, Inc. (for Dallas); Baca Landata, Inc., The Woodlands Operating
Company, L.P. and Cushman & Wakefield of Texas, Inc. (for Houston); CB Richard
Ellis (for Austin); and Cushman & Wakefield of Colorado, Inc. (for Denver). The
Company has been successful in renewing or re-leasing office space in these
markets at rental rates significantly above the expiring rental rates.
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COMPETITION
The Company believes that it does not have any direct competition for its Office
Properties considered as a group. 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 types 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 as well as at any newly
acquired 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, on a weighted average basis, the
Company owns 18% of the Class A office space in the 30 submarkets in which the
Company owns Class A office properties, and 9% of the Class B office space in
the five submarkets in which the Company owns Class B office properties.
Management believes that ownership of a significant percentage of office space
in a particular market offers the Company the opportunity to reduce property
operating expenses that the Company and its tenants pay, enhancing the Company's
ability to attract and retain tenants and potentially resulting in increases in
Company net revenues. For example, during 1998, the Company successfully
negotiated bulk contracts for services such as elevator maintenance and parking
garage management, resulting in discounts of up to 15% from service contracts
previously in place. In 1998, the Company also negotiated bulk contracts for
supplies and equipment including contracts for general maintenance supplies and
energy management systems resulting in discounts of up to 40% from contracts for
supplies and equipment previously in place.
1998 COMPLETED ACQUISITIONS
AUSTIN CENTRE. On January 23, 1998, the Company acquired Austin Centre,
a mixed-use property developed in 1986, that includes: a Class A office building
containing approximately 344,000 net rentable square feet; an attached,
five-level, underground parking structure that accommodates 588 cars; the
314-room Omni Austin Hotel Property (see "Hospitality Segment" below); and 61
apartments. The Property is located in the CBD submarket of Austin, Texas, four
blocks from the state capitol building and was purchased for approximately $96.4
million.
POST OAK CENTRAL. On February 13, 1998, the Company acquired Post Oak
Central, a three-building Class A office complex located in the West
Loop/Galleria suburban office submarket of Houston, Texas. Built between 1974
and 1981, the office complex contains approximately 1.3 million net rentable
square feet with three multi-level detached, but connected via covered walkway
or tunnel, above-ground parking structures that accommodate a total of
approximately 4,400 cars. Post Oak Central was purchased for approximately
$155.3 million.
WASHINGTON HARBOUR. On February 25, 1998, the Company acquired
Washington Harbour, a Class A office complex, consisting of a six-story office
building and a seven-story office building (the top three stories of which
comprise 35 luxury condominiums, which were not included in the purchase),
located in the Georgetown submarket of Washington, D.C. Built in 1986, the two
Office Properties contain approximately 536,000 net rentable square feet with a
two-level attached, underground parking structure that accommodates 613 cars.
Washington Harbour was purchased for approximately $161.0 million.
DATRAN CENTER. On May 1, 1998, the Company acquired, subject to a
ground lease, Datran Center, two Class A office buildings, containing
approximately 472,000 net rentable square feet located in the South Dade/Kendall
submarket of Miami, Florida. Construction of One Datran Center was completed in
1986 with an eight-level attached parking garage containing 650 covered spaces
and 26 uncovered spaces. Construction of Two Datran Center was completed in
1988, with a nine-level attached parking garage containing 771 covered spaces
and 65 uncovered spaces. Datran Center was purchased for approximately $70.6
million.
BP PLAZA. On June 30, 1998, the Company acquired BP Plaza, a 20-story
Class A Office Property, and 3.2 acres of adjacent undeveloped land located in
the Katy Freeway submarket of Houston, Texas. Construction of the Office
Property was completed in 1992. BP Plaza contains approximately 561,000 square
feet of net rentable
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area with an attached six-level above-ground parking structure that accommodates
approximately 1,700 cars. BP Plaza and the undeveloped land were purchased for
approximately $83.1 million.
RECENT DEVELOPMENTS
On December 8, 1998, Tower Realty Trust ("Tower"), Reckson Associates
Realty Corporation ("Reckson") and Metropolitan Partners, LLC ("Metropolitan"),
a newly formed limited liability company owned equally by the Company and
Reckson, entered into a revised agreement and plan of merger that superseded the
merger agreement with Tower to which the Company was a party. Pursuant to the
Revised Tower Merger Agreement, Metropolitan has agreed to acquire Tower for a
combination of cash and Reckson exchangeable Class B common shares. The Company,
Reckson and Metropolitan have agreed that the Company's investment in
Metropolitan will be an $85 million preferred member interest. The investment
will have a cash flow preference of 7.5% for a two-year period and may be
redeemed by Metropolitan within the two-year period for $85 million, plus an
amount sufficient to provide a 9.5% internal rate of return to the Company. If
Metropolitan does not redeem the preferred interest within the two-year period,
the Company may convert the interest either into (i) a common equity interest in
Metropolitan or (ii) shares of common stock of Reckson at a conversion price of
$24.61.
In connection with the Revised Tower Merger Agreement, the Company
contributed $10 million of the $85 million required capital contribution to
Metropolitan in December 1998 and agreed to make the additional $75 million
capital contribution to Metropolitan when all of the conditions to the funding
have been met, which is expected to occur in the second quarter of 1999.
HOSPITALITY SEGMENT
OWNERSHIP STRUCTURE
Because of the Company's status as a REIT for federal income tax
purposes, it does not operate the Hotel Properties. The Company has leased all
of the Hotel Properties, except the Omni Austin Hotel, to subsidiaries of COI
pursuant to eight separate leases. As of January 1, 1999, the Omni Austin Hotel
has been leased, under a separate lease, to HCD Austin Corporation, an unrelated
third party. Under the leases, each having a term of 10 years, the Hotel
Property lessees have assumed the rights and obligations of the property owner
under the respective management agreements with the hotel operators, as well as
the obligation to pay all property taxes and other charges against the property.
The Company has agreed to fund all capital expenditures relating to furniture,
fixtures and equipment reserves required under the applicable management
agreements as part of each of the lease agreements for eight of the Hotel
Properties. The only exception is Canyon Ranch-Tucson, in which the Hotel
Property lessee owns all furniture, fixtures and equipment associated with the
property and will fund all related capital expenditures.
Each of the leases provides for the payment by the Hotel Property
lessees of all or a combination of the following:
o base rent, with periodic rent increases if applicable;
o percentage rent based on a percentage of gross hotel receipts or gross
room revenues, as applicable, above a specified amount; and
o a percentage of gross food and beverage revenues above a specified
amount for certain Hotel Properties.
See Item 2. Properties for more information about the Company's Hotel
Properties.
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MARKET INFORMATION
The following information is derived from various industry sources.
Average hotel room rental rates grew 4.4%, 6.2%, and 6.3%, in 1998, 1997, and
1996, respectively. Within the luxury and upscale segment of the industry,
average room rental rates increased approximately 4.0% from 1997 to 1998.
Business and convention travel accounts for approximately two-thirds of
room demand and has risen along with the improving economy and increased
corporate profits. Domestic leisure travel has also increased, especially among
the "baby boomers", who are not only at the prime age for leisure travel but
also have a greater tendency to travel than previous generations. A healthier,
more active senior population is also contributing to the increase in travel.
With the aging of the "baby boomer" generation and the growing interest in
quality of life activities, the resort/spa industry also is experiencing
significant growth in the United States.
The average annual growth rates in REVPAR, from 1994 through 1998, for
the upscale and luxury hotel segments were 4.6% and 6.7%, respectively,
according to Smith Travel Research. This demand comes not only from the business
and convention sector, but also from the leisure traveler who vacations
increasingly at higher-end hotels.
The following table sets forth hotel REVPAR by price segment for the
years 1994 through 1998.
Annual
Average
1998 1997 1996 1995 1994 Growth Rate
--------- ------- ------- -------- --------- --------------
Luxury(1).................. $101.33 $98.33 $92.31 $83.93 $79.15
% Change................ 3.1% 6.5% 10.0% 6.0% 7.8% 6.7%
Upscale(2)................. $61.65 $60.05 $57.42 $54.28 $51.76
% Change................ 2.7% 4.6% 5.8% 4.9% 5.2% 4.6%
Mid-Priced................. $45.45 $44.20 $41.84 $39.70 $37.57
% Change................ 2.8% 5.6% 5.4% 5.7% 5.2% 4.9%
Economy.................... $31.37 $30.45 $29.63 $28.64 $27.27
% Change................ 3.0% 2.8% 3.5% 5.0% 4.2% 3.7%
Budget..................... $26.70 $25.07 $24.40 $23.77 $22.75
% Change................ 6.5% 2.7% 2.7% 4.5% 4.4% 4.2%
- ---------------------------
(1) Includes destination health and fitness resorts, such as the Canyon Ranch
resorts.
(2) Includes full-service and limited-service hotels.
Source: Compiled from information published by Smith Travel Research
COMPETITION
The Company's Hotel Properties in Denver, Albuquerque, Austin and
Houston are convention center hotels that compete against other convention
center hotels, which are owned by different types of owners, including national
hotel chains and local owners. The Company believes, however, that its
destination health and fitness resorts are unique properties that do not have
direct competitors. In addition, the Company believes that each of the remaining
Hotel Properties experiences little to no direct competition due to its high
replacement cost and unique concept or location. The Hotel Properties do
compete, to a limited extent, against business class hotels or middle-market
resorts in their geographic areas, as well as against luxury resorts nationwide
and around the world.
1998 COMPLETED ACQUISITIONS
OMNI AUSTIN HOTEL. On January 23, 1998, the Company acquired Austin
Centre (see "Office and Retail Segment" above), which included the 314-room Omni
Austin Hotel Property. As of January 1, 1999, the Omni
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Austin Hotel is leased to HCD Austin Corporation, an unrelated third party and
COI will provide limited asset management services for the Property.
SONOMA GOLF COURSE. On October 13, 1998, the Company acquired Sonoma
Golf Course, an 18-hole golf course located in Sonoma County, California, for
approximately $15.3 million. The course is near the Sonoma Mission Inn & Spa and
has a 4,000 square foot club house with a banquet facility. The Company
simultaneously entered into a 10-year lease of the property with COI. The
Company believes that the golf course will enhance the amenities provided to the
Sonoma Mission Inn & Spa guests.
RESIDENTIAL DEVELOPMENT SEGMENT
OWNERSHIP STRUCTURE
The Company owns economic interests in five Residential Development
Corporations through the Residential Development Property mortgages and the
non-voting common stock of these Residential Development Corporations. The
Residential Development Corporations in turn, through joint ventures or
partnership arrangements, own interests in 13 Residential Development
Properties. The Residential Development Corporations are responsible for the
continued development and the day-to-day operations of the Residential
Development Properties.
See Item 2. Properties for more information about the Company's
Residential Development Properties.
COMPETITION
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
detached housing, condominiums, townhouses and non-owner occupied housing, such
as luxury apartments. Management believes that The Woodlands Land Company, Inc.
and Desert Mountain Development Corp. ("Desert Mountain"), representing the
Company's most significant investments in Residential Development Properties,
contain certain features that provide competitive advantages to these
developments. For example, The Woodlands, which is an approximately 27,000-acre,
master-planned residential and commercial community north of Houston, Texas, is
unique among developments in the Houston area, because it functions as a
self-contained community. Amenities contained in the development, which are not
contained within other local developments, include a shopping mall, retail
centers, office buildings, a hospital, a community college, places of worship,
60 parks, two man-made lakes and a performing arts pavilion. Desert Mountain, a
luxury residential and recreational community in Scottsdale, Arizona, which also
offers five 18-hole golf courses and tennis courts, does not have any
significant direct competitors due in part to the types of amenities that it
offers. Substantially all of the remaining residential lots for the four
developments that traditionally have competed with Desert Mountain were sold
during 1997. As a result, these developments have become resale communities that
no longer compete with Desert Mountain in any significant respect.
REFRIGERATED STORAGE SEGMENT
ORIGINAL OWNERSHIP STRUCTURE
Prior to the restructuring of its investment in the Refrigerated
Storage Properties in March 1999, the Company, through two subsidiaries (the
"Crescent Subsidiaries"), owned an indirect 38% interest in each of the three
Refrigerated Storage Partnerships. One of the Refrigerated Storage Partnerships
owned Americold Corporation ("Americold"), the second Refrigerated Storage
Partnership owned URS Logistics, Inc. ("URS") and the third Refrigerated Storage
Partnership owned the assets and business operations acquired from Freezer
Services, Inc. ("Freezer Services") and Carmar Group, Inc. ("Carmar Group") (see
"1998 Completed Acquisitions" below). Vornado owned a 60% interest in the
Refrigerated Storage Partnerships and COI owned a 2% indirect interest in the
Refrigerated Storage Partnerships.
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In order to permit the Company to satisfy certain REIT qualification
requirements, the Company (which is not permitted to operate the Refrigerated
Storage Properties because of the status of Crescent Equities as a REIT) owned
its indirect 38% interest in the Refrigerated Storage Partnerships through its
ownership of all of the nonvoting common stock, representing a 95% economic
interest, in each of the Crescent Subsidiaries, and COI owned its 2% indirect
interest in the Refrigerated Storage Partnerships through its ownership of all
of the voting common stock, representing a 5% economic interest, in each of the
Crescent Subsidiaries.
The Refrigerated Storage Partnerships owned or operated, as of
December 31, 1998, approximately 101 Refrigerated Storage Properties, with an
aggregate of approximately 530.1 million cubic feet (21.4 million square feet),
with the operations conducted pursuant to arrangements with national food
suppliers.
See Item 2. Properties for more information about the Company's
Refrigerated Storage Properties.
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1998 INVESTMENTS
In April 1998, two of the Refrigerated Storage Corporations refinanced
$607 million of secured and unsecured debt that had a weighted average interest
rate of approximately 12% with a $550 million non-recourse, ten-year loan with
an interest rate of 6.89% secured by 58 Refrigerated Storage Properties.
On June 1, 1998, the Crescent Subsidiaries and Vornado formed the third
Refrigerated Storage Partnership which acquired, through newly formed
Refrigerated Storage Corporations, nine Refrigerated Storage Properties and the
associated operations from Freezer Services for approximately $134 million. On
July 1, 1998, the third Refrigerated Storage Partnership acquired, through newly
formed Refrigerated Storage Corporations, five Refrigerated Storage Properties
and the associated operations from Carmar Group for approximately $163 million.
The Company's cash investments in connection with these acquisitions were
approximately $36.7 million and $55.9 million, respectively. These additional 14
Refrigerated Storage Properties contain approximately 90 million cubic feet (4.1
million square feet) of refrigerated storage space.
NEW OWNERSHIP STRUCTURE
Effective March 12, 1999, the Company, Vornado, the Refrigerated
Storage Partnerships, the Refrigerated Storage Corporations (including all
affiliated entities that owned any portion of the business operations of the
Refrigerated Storage Properties at that time) and COI restructured their
investment in the Refrigerated Storage Properties (the "Restructuring"). In the
Restructuring, the Refrigerated Storage Corporations (including all affiliated
entities that owned any portion of the business operations of the Refrigerated
Storage Properties) sold their ownership of the business operations to a newly
formed partnership (the "Refrigerated Storage Operating Partnership") owned 60%
by Vornado Operating L.P. and 40% by a newly formed subsidiary of COI, in
consideration of the payment of $48.7 million by the Refrigerated Storage
Operating Partnership. The Refrigerated Storage Operating Partnership, as
lessee, entered into triple-net master leases of the Refrigerated Storage
Properties with certain of the Refrigerated Storage Corporations. Each of the
Refrigerated Storage Properties is subject to one or more of the leases, each of
which has an initial term of 15 years, subject to two, five-year renewal
options. The leases provide for an aggregate annual base rental rate of $123
million for the first through fifth lease years, $126 million for the sixth
through 10th lease years and $130.5 million for the 11th through 15th lease
years, plus percentage rent based on the gross revenues received from customers
at the Refrigerated Storage Properties above a specified amount.
As a result of the Restructuring, the Refrigerated Storage Partnerships
and the Refrigerated Storage Corporations directly or indirectly own the real
estate assets associated with the Refrigerated Storage Properties. The business
operations associated with the Refrigerated Storage Properties are owned by the
Refrigerated Storage Operating Partnership, in which the Company has no
interest.
Under the terms of the existing partnership agreements for each of the
Refrigerated Storage Partnerships, Vornado has the right to make all decisions
relating to the management and operations of the Refrigerated Storage
Partnerships other than certain major decisions that require the approval of
both the Company and Vornado. The partnership agreement for each of the
Refrigerated Storage Partnerships provides for a buy-sell arrangement upon a
failure of the Company and Vornado to agree on any of the specified major
decisions which, until November 1, 2000, can be exercised only by Vornado. Major
decisions include approval of the annual capital and operating budgets for each
of the Refrigerated Storage Partnerships, decisions to deviate from the budgets
by 10% or more and additional capital contributions.
In addition, in connection with the Restructuring and also effective in
March 1999, the Company purchased from COI an additional 4% nonvoting interest
in each of the Crescent Subsidiaries for an aggregate purchase price of $13.2
million. As a result, the Company holds an indirect 39.6% interest in the
Refrigerated Storage Partnerships and COI holds an indirect 0.4% interest in the
Refrigerated Storage Partnerships. The Company also granted COI an option to
require the Company to purchase COI's remaining 1% interest in each of the
Crescent Subsidiaries at such time as the purchase would not, in the opinion of
counsel to the Company, adversely affect the status of Crescent Equities as a
REIT for an aggregate price, payable by the Company, of approximately $3.3
million.
In connection with these transactions, the Company established a new
line of credit in the principal amount of $19.5 million available to COI at an
interest rate of 9% per annum.
INDUSTRY INFORMATION
The Refrigerated Storage Corporations provide frozen food manufacturers
with refrigerated storage and transportation management services. The
Refrigerated Storage Properties consist of production and distribution
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.
Transportation management services offered include freight routing,
dispatching, freight rate negotiation, backhaul coordination, freight bill
auditing, network flow management, order consolidation and distribution channel
assessment. The temperature-controlled logistics expertise of management of the
Refrigerated Storage Corporations and access to both the Refrigerated Storage
Properties and distribution channels enable the customers of the Refrigerated
Storage Corporations to respond quickly and efficiently to time-sensitive orders
from distributors and retailers.
Customers consist primarily of national, regional and local frozen food
manufacturers, distributors, retailers and food service organizations, including
ConAgra, Inc., H.J. Heinz Company, Kraft Foods, Inc. and Tyson Foods, Inc.
COMPETITION
The Refrigerated Storage Corporations are the largest owners and
operators of public refrigerated storage space in the country in terms of public
storage space owned. Including the 1998 acquisitions (see "1998 Investments"
above), the Refrigerated Storage Corporations owned or operated an aggregate of
approximately 30% of total public refrigerated storage space as of December 31,
1998. Among other owners and operators of public refrigerated storage space, no
other owner and operator owned or operated more than 8% of total public
refrigerated storage space as of December 31, 1998. As a result, the Company
believes that the Refrigerated Storage Corporations do not have any competitors
of comparable size. The Refrigerated Storage Corporations operate in an
environment in which competition is national, regional and local in nature and
in which the range of
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service, refrigerated storage facilities, customer mix, service performance and
price are the principal competitive factors. The range of total logistics
services and refrigerated storage locations are major competitive factors
because frozen food manufacturers and distributors incur transportation costs
which typically are significantly greater than refrigerated storage costs. In
addition, in certain locations, customers depend upon pooling shipments, which
involves combining their products with the products of other customers destined
for the same markets. In these cases, the mix of customers at a refrigerated
storage facility can significantly influence the cost of delivering products to
markets. The size of a refrigerated storage facility is important because large
customers prefer to have all of the products needed to serve a given market in a
single location in order to have the flexibility to increase storage in that
single location during seasonal peaks. If there are several refrigerated storage
facilities that satisfy customer mix and size requirements, the Company believes
that customers generally will select a refrigerated storage facility based upon
the types of services available, service performance and price.
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BEHAVIORAL HEALTHCARE SEGMENT
OWNERSHIP STRUCTURE
On June 17, 1997, the Company acquired substantially all of the real
estate assets of the domestic hospital provider business of Magellan Health
Services, Inc. ("Magellan") as previously owned and operated by a wholly owned
subsidiary of Magellan. The transaction involved various components, the
principal component being the acquisition of the Behavioral Healthcare
Properties for approximately $387.2 million.
Because of the Company's REIT status for federal income tax
purposes, the Company does not operate the Behavioral Healthcare Properties. The
Behavioral Healthcare Properties are leased to CBHS and its subsidiaries under a
triple-net lease. CBHS, which is the nation's largest operator of acute-care
psychiatric hospitals and other behavioral care treatment facilities, is a
Delaware limited liability company, formed to operate the Behavioral Healthcare
Properties. CBHS is owned 50% by a subsidiary of Magellan and 50% by COI. The
lease requires the payment of annual minimum rent in the amount of approximately
$43.8 million for the period ending June 16, 1999, increasing in each subsequent
year during the remaining 10-year term at a 5% compounded annual rate. All
maintenance and capital improvement costs are the responsibility of CBHS during
the term of the lease. In addition, the obligation of CBHS, pursuant to a
franchise agreement, to pay an approximately $78.2 million franchise fee to
Magellan and one of its subsidiaries, as franchisor, is subordinated to the
obligation of CBHS to pay annual minimum rent to the Company. The franchisor
does not have the right to terminate the franchise agreement due to any
nonpayment of the franchise fee as a result of the subordination of the
franchise fee to the annual minimum rent. The lease is designed to provide the
Company with a secure, above-average return on its investment as a result of the
priority of annual minimum rent to the franchise fee and the initial amount and
annual escalation in the lease payments. In December 1998, the independent
accountants for CBHS, in connection with their audit of the financial statements
for the year ended September 30, 1998, issued a modified auditors' report
related to the ability of CBHS to continue as a going concern. In October 1998,
CBHS hired a new President and Chief Executive Officer (formerly the Vice
President of Operations for the Southeast Region of Tenet Healthcare), who
announced a set of initiatives to address cost reductions and revenue
enhancements for 1999. CBHS has continued to make timely rent payments to the
Company for the first five months of CBHS's fiscal year.
See Item 2. Properties for more information about the Company's
Behavioral Healthcare Properties.
INDUSTRY INFORMATION
In an era of cost-containment and the reduction of dollars available
for care, behavioral healthcare providers such as CBHS have focused attention on
developing treatment approaches that respond to payors' increasing demands for
shorter stays, lower costs, and expanded access to care. Changes in the mix of
services, the prices of services, and the intensity of service are all part of
this response. These changes have also been bolstered by a rapidly expanding
science base, improved medications management, and the growing availability of
non-hospital treatment settings in more and more communities that help to make
it possible to manage complex and severe illnesses in less intensive treatment
settings. One of the effects that the behavioral healthcare industry is
experiencing is an increasing percentage of non-inpatient care. According to the
National Association of Psychiatric Health Systems 1997 Annual Survey Report,
the most recent available report, nearly one in four admissions in 1996 was to a
service other than inpatient hospitalization, compared to just one in ten
admissions in 1992. Although non-inpatient admissions are increasing rapidly and
inpatient admissions also are increasing, average length of stay and care costs
are decreasing.
Due to these changes in the behavioral healthcare industry, the
position of a hospital or other behavioral care facility such as the Behavioral
Healthcare Facilities relative to its competitors has been affected by its
ability to obtain contracts with HMOs, PPOs and other managed care plans for the
provision of health care services.
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Although such contracts generally provide for discounted services, pre-admission
certification and concurrent length of stay reviews, they also provide a strong
patient referral base. The importance of entering into contracts with HMOs, PPOs
and other managed care companies varies from market to market and depends upon
the market strength of the particular managed care company.
The behavioral healthcare industry in general, and CBHS in particular,
is influenced by the cyclical nature of the business, with a reduced demand for
services during the summer months and around major holidays.
COMPETITION
The Behavioral Healthcare Properties, which are acute-care psychiatric
hospitals and other behavioral care treatment facilities, are located in 26
states within well-populated urban and suburban locations. Most of the
Behavioral Healthcare Properties offer a full continuum of behavioral care in
their service area, including inpatient hospitalization, partial
hospitalization, intensive outpatient services and, in some markets, residential
treatment services. The Behavioral Healthcare Properties provide structured and
intensive treatment programs for mental health, alcohol and drug dependency
disorders in children, adolescents and adults. A significant portion of
admissions is provided by referrals from former patients, local marketplace
advertising, managed care organizations and physicians. The Behavioral
Healthcare Properties work closely with mental health professionals,
non-psychiatric physicians, emergency rooms and community agencies that come in
contact with individuals who may need treatment for mental illness or substance
abuse.
In general, the operation of behavioral healthcare programs is
characterized by intense competition. The Company anticipates that competition
will become more intense as pressure to contain the rising costs of health care
increases, particularly as programs such as those operated by CBHS are perceived
to help contain mental health care costs. Each of the Behavioral Healthcare
Properties competes with other hospitals and behavioral healthcare facilities,
some of which are larger and have greater financial resources than CBHS. Some
competing facilities are owned and operated by governmental agencies, others by
nonprofit organizations supported by endowments and charitable contributions.
The Behavioral Healthcare Properties frequently draw patients from areas outside
their immediate locale and, therefore, the Behavioral Healthcare Properties may,
in certain markets, compete with both local and distant hospitals and other
facilities. In addition, the Behavioral Healthcare Properties compete not only
with other psychiatric hospitals, but also with psychiatric units in general
hospitals. With respect to outpatient services, CBHS competes with private
practicing mental health professionals, publicly funded mental health centers,
and partial hospitalization and other intensive outpatient services programs and
facilities. The competitive position of a particular facility is, to a
significant degree, dependent upon the number and quality of physicians who
practice at the facility and who are members of its medical staff. There can be
no assurance that CBHS will be able to compete effectively with its present or
future competitors, and any such inability could have a material adverse effect
on CBHS' business, financial condition and results of operations.
ITEM 2. PROPERTIES
The Company considers all of its Properties to be in good condition,
well-maintained and suitable and adequate to carry on the Company's business.
OFFICE PROPERTIES
The Company's Office Properties are located primarily in Dallas/Fort
Worth and Houston, Texas. As of March 26, 1999, the Company's Office Properties
in Dallas/Fort Worth and Houston represent an aggregate of approximately 72% of
its office portfolio based on total net rentable square feet (39% for
Dallas/Fort Worth and 33% for Houston).
OFFICE PROPERTIES TABLES
The following table sets forth, as of December 31, 1998, certain
information about the Company's Office Properties. Based on rental revenues from
office and retail leases in effect as of December 31, 1998, no single tenant
accounted for more than 4% of the Company's total Office and Retail Segment
rental revenues for 1998.
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WEIGHTED
AVERAGE
NET FULL-SERVICE
RENTABLE RENTAL RATE
NO. OF YEAR AREA PERCENT PER LEASED
STATE, CITY, PROPERTY PROPERTIES SUBMARKET COMPLETED (SQ. FT.) LEASED SQ. FT. (1)
------------------------- ---------- ------------------ --------- ---------- --------- --------------
TEXAS
DALLAS
Bank One Center(2).............. 1 CBD 1987 1,530,957 75%(5) $ 22.17
The Crescent Office Towers...... 1 Uptown/Turtle Creek 1985 1,204,720 99 29.43
Fountain Place.................. 1 CBD 1986 1,200,266 96 18.52
Trammell Crow Center(3)......... 1 CBD 1984 1,128,331 95 25.38
Stemmons Place.................. 1 Stemmons Freeway 1983 634,381 89 14.28
Spectrum Center(4).............. 1 Far North Dallas 1983 598,250 85 21.93
Waterside Commons............... 1 Las Colinas 1986 458,739 100 18.74
Caltex House.................... 1 Las Colinas 1982 445,993 97 28.46
Reverchon Plaza................. 1 Uptown/Turtle Creek 1985 374,165 95 18.12
The Aberdeen.................... 1 Far North Dallas 1986 320,629 100 18.29
MacArthur Center I & II......... 1 Las Colinas 1982/1986 294,069 98 19.46
Stanford Corporate Centre....... 1 Far North Dallas 1985 265,507 100 17.52
The Amberton.................... 1 Central Expressway 1982 255,052 85 12.08
Concourse Office Park........... 1 LBJ Freeway 1972-1986 244,879 91 14.30
12404 Park Central.............. 1 LBJ Freeway 1987 239,103 100 20.96
Palisades Central II............ 1 Richardson/Plano 1985 237,731 91 19.42
3333 Lee Parkway................ 1 Uptown/Turtle Creek 1983 233,769 98 19.97
Liberty Plaza I & II............ 1 Far North Dallas 1981/1986 218,813 98 15.16
The Addison..................... 1 Far North Dallas 1981 215,016 100 17.65
The Meridian.................... 1 LBJ Freeway 1984 213,915 86(5) 15.82
Palisades Central I............. 1 Richardson/Plano 1980 180,503 94 15.58
Walnut Green.................... 1 Central Expressway 1986 158,669 94 17.59
Greenway II..................... 1 Richardson/Plano 1985 154,329 99 19.86
Addison Tower................... 1 Far North Dallas 1987 145,886 91(5) 14.36
Greenway I & IA................. 2 Richardson/Plano 1983 146,704 100 23.22
5050 Quorum..................... 1 Far North Dallas 1981 133,594 91 16.11
Cedar Springs Plaza............. 1 Uptown/Turtle Creek 1982 110,923 84 17.44
Valley Centre................... 1 Las Colinas 1985 74,861 99 15.63
One Preston Park................ 1 Far North Dallas 1980 40,525 87 16.28
---- ---------- ------- ------------
Subtotal/Weighted Average..... 30 11,460,279 92% $ 20.84
--- ---------- ------- ------------
FORT WORTH
UPR Plaza........................ 1 CBD 1982 954,895 98% $ 16.40
---- ---------- --------- ------------
HOUSTON
Greenway Plaza Office Portfolio.. 10 Richmond-Buffalo 1969-1982 4,286,277 92% $ 16.15
Speedway
Houston Center................... 3 CBD 1974-1983 2,764,418 96 15.54
Post Oak Central................. 3 West Loop/Galleria 1974-1981 1,277,516 94 15.85
The Woodlands Office
Properties(6).................. 12 The Woodlands 1980-1996 810,630 98 15.53
BP Plaza......................... 1 Katy Freeway 1992 561,065 100 18.26
Three Westlake Park(7)........... 1 Katy Freeway 1983 414,251 99 14.18
1800 West Loop South............. 1 West Loop/Galleria 1982 399,777 80 15.88
---- ---------- -------- ------------
Subtotal/Weighted Average..... 31 10,513,934 94% $ 15.93
---- ---------- -------- ------------
AUSTIN
Frost Bank Plaza................. 1 CBD 1984 433,024 84%(5) $ 18.84
301 Congress Avenue(8)........... 1 CBD 1986 418,338 89 21.66
Bank One Tower................... 1 CBD 1974 389,503 96 17.35
Austin Centre.................... 1 CBD 1986 343,665 96 20.09
The Avallon...................... 1 Northwest 1993/1997 232,301 93(5) 19.50
Barton Oaks Plaza One............ 1 Southwest 1986 99,895 100 21.24
---- ---------- -------- ------------
Subtotal/Weighted Average..... 6 1,916,726 92% $ 19.56
---- ---------- -------- ------------
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WEIGHTED
AVERAGE
NET FULL-SERVICE
RENTABLE RENTAL RATE
NO. OF YEAR AREA PERCENT PER LEASED
STATE, CITY, PROPERTY PROPERTIES SUBMARKET COMPLETED (SQ. FT.) LEASED SQ. FT. (1)
------------------------------ ---------- --------------- --------- ---------- ------- -------------
COLORADO
DENVER
MCI Tower......................... 1 CBD 1982 550,807 99% $ 18.10
Ptarmigan Place................... 1 Cherry Creek 1984 418,630 95 16.52
Regency Plaza One................. 1 DTC 1985 309,862 98 21.27
AT&T Building..................... 1 CBD 1982 184,581 80 14.96
The Citadel....................... 1 Cherry Creek 1987 130,652 100 19.94
55 Madison........................ 1 Cherry Creek 1982 137,176 97 15.28
44 Cook........................... 1 Cherry Creek 1984 124,174 87(5) 17.60
-- ---------- ------ ---------
Subtotal/Weighted Average.... 7 1,855,882 95% $ 17.94
-- ---------- ------ ---------
COLORADO SPRINGS
Briargate Office and
Research Center................. 1 Colorado Springs 1988 252,857 100% $ 17.17
-- ---------- ------ ---------
LOUISIANA
NEW ORLEANS
Energy Centre..................... 1 CBD 1984 761,500 78% $ 15.17
1615 Poydras...................... 1 CBD 1984 508,741 79 15.10
-- ---------- ------ ---------
Subtotal/Weighted Average.... 2 1,270,241 78% $ 15.14
-- ---------- ------ ---------
FLORIDA
MIAMI
Miami Center...................... 1 CBD 1983 782,686 81%(5) $ 23.68
Datran Center..................... 2 South Dade/Kendall 1986/1988 472,236 91 21.02
-- ---------- ------ ---------
Subtotal/Weighted Average.... 3 1,254,922 85% $ 22.59
-- ---------- ------ ---------
ARIZONA
PHOENIX
Two Renaissance Square............ 1 Downtown/CBD 1990 476,373 94%(5) $ 23.25
6225 North 24th Street............ 1 Camelback Corridor 1981 86,451 83 21.53
-- ---------- ------ ---------
Subtotal/Weighted Average.... 2 562,824 93% $ 23.01
-- ---------- ------ ---------
WASHINGTON, D.C
WASHINGTON, D.C
Washington Harbour................ 2 Georgetown 1986 536,206 93% $ 35.84
-- ---------- ------ ---------
NEBRASKA
OMAHA
Central Park Plaza................ 1 CBD 1982 409,850 100% $ 15.38
-- ---------- ------ ---------
NEW MEXICO
ALBUQUERQUE
Albuquerque Plaza................. 1 CBD 1990 366,236 95% $ 18.79
-- ---------- ------ ---------
CALIFORNIA
SAN FRANCISCO
160 Spear Street.................. 1 South of Market/CBD 1984 276,420 99% $ 25.42
-- ---------- ------ ---------
SAN DIEGO
Chancellor Park (9)................ 1 UTC 1988 195,733 90% $ 21.48
-- ---------- ------ ---------
TOTAL/WEIGHTED AVERAGE.......... 89 31,827,005 92%(5) $ 18.88(10)
== ========== ====== =========
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(1) Calculated based on base rent payable as of December 31, 1998, without
giving effect to free rent or scheduled rent increases that would be
taken into account under GAAP and including adjustments for expenses
payable by or reimbursable from tenants.
(2) The Company has a 49.5% limited partner interest and a .5% general
partner interest in the partnership that owns Bank One Center.
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(3) 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.
(4) The Company owns the principal economic interest in Spectrum Center
through an interest in Spectrum Mortgage Associates L.P., which owns
both a mortgage note secured by Spectrum Center and the ground
lessor's interest in the land underlying the office building.
(5) Leases have been executed at certain Office Properties but had not
commenced as of December 31, 1998. If such leases had commenced as of
December 31, 1998, the percent leased for Office Properties would have
been 94%. The total percent leased for such Properties would have been
as follows: Bank One Center - 78%; The Meridian - 90%; Addison Tower -
94%; Frost Bank Plaza - 92%; The Avallon - 100%; 44 Cook - 97%; Miami
Center - 86%; and Two Renaissance Square - 98%.
(6) The Company has a 75% limited partner interest and an approximate 10%
indirect general partner interest in the partnership that owns the 12
Office Properties that comprise The Woodlands Office Properties.
(7) The Company owns the principal economic interest in Three Westlake
Park through its ownership of a mortgage note secured by Three
Westlake Park.
(8) The Company has a 1% general partner and a 49% limited partner
interest in the partnership that owns 301 Congress Avenue.
(9) The Company owns Chancellor Park through its ownership of a mortgage
note secured by the building and through its direct and indirect
interests in the partnership which owns the building.
(10) The weighted average full-service rental rate per square foot
calculated based on base rent payable for Company Office Properties as
of December 31, 1998, giving effect to free rent and scheduled rent
increases that would be taken into consideration under GAAP and
including adjustments for expenses payable by or reimbursed from
tenants, is $19.53.
The following table provides information, as of December 31, 1998, for
the Company's Office Properties by state, city, and submarket.
PERCENT
PERCENT LEASED OFFICE
OF AT SUBMARKET
TOTAL TOTAL COMPANY PERCENT
NUMBER OF COMPANY COMPANY OFFICE LEASED/
STATE, CITY, SUBMARKET PROPERTIES NRA(1) NRA(1) PROPERTIES OCCUPIED(2)
---------------------- ---------- ------ ------ ---------- -----------
CLASS A OFFICE PROPERTIES
TEXAS
DALLAS
CBD................................ 3 3,859,554 12% 87%(6) 84%
Uptown/Turtle Creek................ 4 1,923,577 6 97 92
Far North Dallas................... 7 1,897,695 6 94 82
Las Colinas........................ 4 1,273,662 4 98 90
Richardson/Plano................... 5 719,267 2 95 95
Stemmons Freeway................... 1 634,381 2 89 92
LBJ Freeway........................ 2 453,018 1 93(6) 91
-- --------- -- --- ----
Subtotal/Weighted Average........ 26 10,761,154 33% 92% 88%
-- ---------- -- --- ----
FORT WORTH
CBD................................ 1 954,895 3% 98% 89%
-- --------- -- --- ----
HOUSTON
CBD................................ 3 2,764,418 9% 96% 96%
Richmond-Buffalo Speedway 6 2,735,030 9 92 93
West Loop/Galleria................. 4 1,677,293 5 91 95
The Woodlands...................... 7 486,867 2 99 100
Katy Freeway....................... 2 975,316 3 100 98
-- --------- -- --- -----
Subtotal/Weighted Average........ 22 8,638,924 28% 94% 96%
-- --------- -- --- -----
AUSTIN
CBD................................ 4 1,584,530 5% 91%(6) 97%
Northwest.......................... 1 232,301 1 93(6) 94
Southwest.......................... 1 99,895 0 100 98
-- --------- -- --- -----
Subtotal/Weighted Average........ 6 1,916,726 6% 92% 97%
-- --------- -- --- -----
COLORADO
DENVER
Cherry Creek....................... 4 810,632 3% 95%(6) 87%
CBD................................ 2 735,388 2 94 96
DTC................................ 1 309,862 1 98 95
-- --------- -- --- -----
Subtotal/Weighted Average........ 7 1,855,882 6% 95% 95%
-- --------- -- --- -----
COLORADO SPRINGS
Colorado Springs................... 1 252,857 1% 100% 94%
-- --------- -- --- -----
LOUISIANA
NEW ORLEANS
CBD................................ 2 1,270,241 5% 78% 87%
-- --------- -- --- -----
WEIGHTED
AVERAGE
WEIGHTED COMPANY
AVERAGE COMPANY FULL-
COMPANY QUOTED QUOTED SERVICE
SHARE OF MARKET RENTAL RENTAL
OFFICE RENTAL RATE RATE PER RATE PER
SUBMARKET PER SQUARE SQUARE SQUARE
STATE, CITY, SUBMARKET NRA(1)(2) FOOT(2)(3) FOOT(4) FOOT(5)
---------------------- --------- ---------- ------- -------
CLASS A OFFICE PROPERTIES
TEXAS
DALLAS
CBD................................ 21% $ 22.76 $ 25.20 $ 21.94
Uptown/Turtle Creek................ 35 26.56 30.44 25.54
Far North Dallas................... 25 25.34 24.31 18.32
Las Colinas........................ 15 27.04 26.69 22.06
Richardson/Plano................... 18 22.81 23.65 19.38
Stemmons Freeway................... 31 20.97 19.50 14.28
LBJ Freeway........................ 4 24.97 22.67 18.72
-- ------- -------- --------
Subtotal/Weighted Average........ 19% $ 24.39 $ 25.61 $ 21.23
-- ------- -------- --------
FORT WORTH
CBD................................ 24% $ 19.59 $ 18.79 $ 16.40
-- ------- -------- --------
HOUSTON
CBD................................ 11% $ 21.93 $ 21.88 $ 15.54
Richmond-Buffalo Speedway.......... 56 21.08 23.37 16.94
West Loop/Galleria................. 13 21.93 23.91 15.86
The Woodlands...................... 100 15.69 15.69 15.62
Katy Freeway....................... 40 25.00 25.29 16.53
--- ------- -------- --------
Subtotal/Weighted Average........ 19% $ 21.66 $ 22.78 $ 16.15
--- ------- -------- --------
AUSTIN
CBD................................ 44% $ 26.19 $ 26.16 $ 19.45
Northwest.......................... 14 26.15 24.50 19.50
Southwest.......................... 5 26.33 24.00 21.24
--- ------- -------- --------
Subtotal/Weighted Average........ 26% $ 26.19 $ 25.84 $ 19.56
--- ------- -------- --------
COLORADO
DENVER
Cherry Creek....................... 53% $ 20.30 $ 21.16 $ 17.05
CBD................................ 7 22.84 20.75 17.40
DTC................................ 6 23.64 25.00 21.27
--- ------- -------- --------
Subtotal/Weighted Average........ 11% $ 21.86 $ 21.64 $ 17.94
--- ------- -------- --------
COLORADO SPRINGS
Colorado Springs.................... 6% $ 19.29 $ 20.00 $ 17.17
--- ------- -------- --------
LOUISIANA
NEW ORLEANS
CBD................................ 14% $ 16.55 $ 17.00 $ 15.14
--- ------- -------- --------
19
21
PERCENT
PERCENT OF LEASED AT
TOTAL TOTAL COMPANY
NUMBER OF COMPANY COMPANY OFFICE
STATE, CITY, SUBMARKET PROPERTIES NRA(1) NRA(1) PROPERTIES
---------------------- ---------- ------ ------ ----------
FLORIDA
MIAMI
CBD....................................... 1 782,686 2% 81%(6)
South Dade/Kendall........................ 2 472,236 1 91
-- ---------- -- ---
Subtotal/Weighted Average............... 3 1,254,922 3% 85%
-- ---------- -- ---
ARIZONA
PHOENIX
Downtown/CBD.............................. 1 476,373 1% 94%(6)
Camelback Corridor........................ 1 86,451 0 83
-- ---------- -- ---
Subtotal/Weighted Average............... 2 562,824 1% 93%
-- ---------- -- ---
WASHINGTON D.C.
WASHINGTON D.C.
Georgetown................................ 2 536,206 2% 93%
-- ---------- -- ---
NEBRASKA
OMAHA
CBD....................................... 1 409,850 1% 100%
-- ---------- -- ---
NEW MEXICO
ALBUQUERQUE
CBD....................................... 1 366,236 1% 95%
-- ---------- -- ---
CALIFORNIA
SAN FRANCISCO
South of Market/CBD....................... 1 276,420 1% 99%
-- ---------- -- ---
SAN DIEGO
UTC....................................... 1 195,733 1% 90%
-- ---------- -- ---
CLASS A OFFICE PROPERTIES
SUBTOTAL/WEIGHTED
AVERAGE............................... 76 29,252,870 92% 93%
== ========== == ===
CLASS B OFFICE PROPERTIES
TEXAS
DALLAS
Central Expressway........................ 2 413,721 1% 88%
LBJ Freeway............................... 1 244,879 1 91
Far North Dallas.......................... 1 40,525 0 87
-- ---------- --- --
Subtotal/Weighted Average............... 4 699,125 2% 89%
-- ---------- --- --
HOUSTON
Richmond-Buffalo Speedway................. 4 1,551,247 5% 93%
The Woodlands............................. 5 323,763 1 97
-- ---------- --- --
Subtotal/Weighted Average............... 9 1,875,010 6% 94%
-- ---------- --- --
CLASS B OFFICE PROPERTIES
SUBTOTAL/WEIGHTED
AVERAGE............................... 13 2,574,135 8% 92%
== ========== === ==
CLASS A AND CLASS B OFFICE
PROPERTIES TOTAL/WEIGHTED
AVERAGE............................... 89 31,827,005 100% 92%(6)
== ========== === ==
WEIGHTED
AVERAGE
WEIGHTED COMPANY
AVERAGE COMPANY FULL-
OFFICE COMPANY QUOTED QUOTED SERVICE
SUBMARKET SHARE OF MARKET RENTAL RENTAL
PERCENT OFFICE RENTAL RATE RATE PER RATE PER
LEASED/ SUBMARKET PER SQUARE SQUARE SQUARE
STATE, CITY, SUBMARKET OCCUPIED(2) NRA(1)(2) FOOT(2)(3) FOOT(4) FOOT(5)
---------------------- ----------- --------- ---------- ------- -------
FLORIDA
MIAMI
CBD....................................... 90% 23% $ 28.30 $ 28.50 $ 23.68
South Dade/Kendall........................ 94 100 23.19 23.19 21.02
----- --- ------- -------- --------
Subtotal/Weighted Average............... 90% 33% $ 26.38 $ 26.50 $ 22.59
----- --- ------- -------- --------
ARIZONA
PHOENIX
Downtown/CBD.............................. 92% 27% $ 23.38 $ 23.00 $ 23.25
Camelback Corridor........................ 95 2 26.48 22.00 21.53
----- --- ------- -------- --------
Subtotal/Weighted Average............... 94% 11% $ 23.86 $ 22.85 $ 23.01
----- --- ------- -------- --------
WASHINGTON D.C.
WASHINGTON D.C.
Georgetown................................ 97% 100% $ 36.66 $ 36.66 $ 35.84
----- --- ------- -------- --------
NEBRASKA
OMAHA
CBD....................................... 97% 32% $ 18.61 $ 18.50 $ 15.38
----- --- ------- -------- --------
NEW MEXICO
ALBUQUERQUE
CBD....................................... 97% 63% $ 19.30 $ 19.50 $ 18.79
----- --- ------- -------- --------
CALIFORNIA
SAN FRANCISCO
South of Market/CBD....................... 97% 3% $ 45.20 $ 38.00 $ 25.42
----- --- ------- -------- --------
SAN DIEGO
UTC....................................... 87% 6% $ 28.50 $ 27.00 $ 21.48
----- --- ------- -------- --------
CLASS A OFFICE PROPERTIES
SUBTOTAL/WEIGHTED
AVERAGE............................... 92% 18% $ 23.38 $ 24.03 $ 19.24
===== === ======= ======== ========
CLASS B OFFICE PROPERTIES
TEXAS
DALLAS
Central Expressway........................ 82% 11% $ 16.73 $ 18.35 $ 14.37
LBJ Freeway............................... 91 2 19.00 18.25 14.30
Far North Dallas.......................... 88 0 20.61 18.50 16.28
---- --- ------- -------- --------
Subtotal/Weighted Average............... 88% 3% $ 17.75 $ 18.32 $ 14.45
---- --- ------- -------- --------
HOUSTON
Richmond-Buffalo Speedway................. 92% 47% $ 17.82 $ 22.03 $ 14.75
The Woodlands............................. 99 100 15.17 15.17 15.39
---- --- ------- -------- --------
Subtotal/Weighted Average............... 93% 51% $ 17.36 $ 20.85 $ 14.87
---- --- ------- -------- --------
CLASS B OFFICE PROPERTIES
SUBTOTAL/WEIGHTED
AVERAGE............................... 89% 9% $ 17.47 $ 20.16 $ 14.75
==== === ======= ======== ========
CLASS A AND CLASS B OFFICE
PROPERTIES TOTAL/WEIGHTED
AVERAGE............................... 92% 16% $ 22.90 $ 23.72 $ 18.88(7)
==== === ======= ======== ========
- --------------------------------
(1) NRA means net rentable area in square feet.
(2) Market information is for Class A office space under the caption "Class A
Office Properties" and market information is for Class B office space under
the caption "Class B Office Properties." Sources are Jamison Research, Inc.
(for the Dallas CBD, Uptown/Turtle Creek, Far North Dallas, Las Colinas,
Richardson/Plano, Stemmons Freeway, LBJ Freeway and Central Expressway,
Fort Worth CBD and the New Orleans CBD submarkets), Baca Landata, Inc. (for
the Houston Richmond-Buffalo Speedway, CBD and West Loop/Galleria
submarkets), The Woodlands Operating Company, L.P. (for The Woodlands
submarket), Cushman & Wakefield of Texas, Inc. (for the Houston Katy Freeway
submarket), CB Richard Ellis (for CBD, Northwest and Southwest submarkets),
Cushman & Wakefield of Colorado, Inc. (for the Denver Cherry Creek, CBD and
DTC submarkets), Turner Commercial Research (for the Colorado Springs
market), Grubb and Ellis Company (for the Phoenix Downtown/CBD, Camelback
Corridor and San Francisco South of Market/CBD submarkets), Grubb and Ellis
Company and the Company (for the Washington D.C. Georgetown submarket),
Pacific Realty Group, Inc. (for the Omaha CBD submarket), Building
Interests, Inc. (for the Albuquerque CBD submarket), RealData Information
Systems, Inc. (for the Miami CBD and South Dade/Kendall submarkets) and John
Burnham & Co. (for the San Diego UTC submarket).
(3) Represents full-service quoted market rental rates. These rates do not
necessarily represent the amounts at which available space at the Office
Properties will be leased. The weighted average subtotals and total are
based on total net rentable square feet of Company Office Properties in the
submarket.
20
22
(4) For Office Properties, represents weighted average rental rates per square
foot quoted by the Company as of December 31, 1998, based on total net
rentable square feet of Company Office Properties in the submarket,
adjusted, if necessary, based on management estimates, to equivalent
full-service quoted rental rates to facilitate comparison to weighted
average Class A or Class B, as the case may be, quoted submarket rental
rates per square foot. These rates do not necessarily represent the amounts
at which available space at the Company's Office Properties will be leased.
(5) Calculated based on base rent payable for Company Office Properties in the
submarket as of December 31, 1998, without giving effect to free rent or
scheduled rent increases that would be taken into account under GAAP and
including adjustments for expenses payable by or reimbursed from tenants,
divided by total net rentable square feet of Company Office Properties in
the submarket.
(6) Leases have been executed at certain Properties in these submarkets but had
not commenced as of December 31, 1998. If such leases had commenced as of
December 31, 1998, the percent leased for all Office Properties in the
Company's submarkets would have been 94%. The total percent leased at the
Company's Office Properties would have been as follows: Dallas CBD - 89%;
LBJ Freeway - 94%; Austin CBD -- 94%; Austin Northwest -- 100%; Denver
Cherry Creek -- 98%; Miami CBD - 86%; and Phoenix Downtown CBD - 98%.
(7) The weighted average full-service rental rate per square foot calculated
based on base rent payable for Company Office Properties as of December 31,
1998, giving effect to free rent and scheduled rent increases that would be
taken into consideration under GAAP and including adjustments for expenses
payable by or reimbursed from tenants, is $19.53.
The following table sets forth, as of December 31, 1998, the principal
businesses conducted by the tenants at the Company's Office Properties, based on
information supplied to the Company from the tenants.
Percent of
Industry Sector Leased Sq. Ft.
--------------- --------------
Professional Services (1) 25%
Financial Services (2) 20%
Energy(3) 20%
Telecommunications 6%
Technology 6%
Manufacturing 2%
Retail 2%
Medical 3%
Government 2%
Food Service 3%
Other (4) 11%
------------------
Total Leased 100%
- ------------------
(1) Includes legal, accounting, engineering, architectural, and advertising
services.
(2) Includes banking, title and insurance, and investment services.
(3) Of the 20% of energy tenants at the Company's Office Properties, 65% are
located in Houston, 24% are located in Dallas, 6% are located in Denver and
5% are located in New Orleans. Of the 65% of energy tenants located in
Houston (approximately 4 million square feet), 65% (approximately 2.6
million square feet) are obligated under long-term leases (expiring in 2003
or later).
(4) Includes construction, real estate, transportation and other industries.
AGGREGATE LEASE EXPIRATIONS OF OFFICE PROPERTIES
The following tables set forth schedules of lease expirations for
leases in place as of December 31, 1998 at the Company's total Office Properties
and for Dallas and Houston, Texas individually, for each of the ten years
beginning with 1999, assuming that none of the tenants exercise or have
exercised renewal options and excluding an aggregate 2,326,676 square feet of
unleased space and 335,984 square feet of leased space for which the leases have
not yet commenced.
21
23
TOTAL OFFICE PROPERTIES
PERCENTAGE ANNUAL
OF TOTAL FULL-SERVICE
NET RENTABLE ANNUAL RENT PER
AREA PERCENTAGE OF ANNUAL FULL-SERVICE SQUARE
NUMBER OF REPRESENTED LEASED NET FULL-SERVICE RENT FOOT OF NET
TENANTS WITH BY EXPIRING RENTABLE AREA RENT UNDER REPRESENTED RENTABLE
YEAR OF LEASE EXPIRING LEASES REPRESENTED BY EXP