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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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, 2000
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 1-11690
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-1723097
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
3300 ENTERPRISE PARKWAY, BEACHWOOD, OHIO 44122
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(Address of principal executive offices -- zip code)
(216) 755-5500
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(Registrant's telephone number, including area code)
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, Without Par Value............................ New York Stock Exchange
Depositary Shares Representing Class A Cumulative Redeemable
Preferred Shares.......................................... New York Stock Exchange
Depositary Shares Representing Class B Cumulative Redeemable
Preferred Shares.......................................... New York Stock Exchange
Depositary Shares Representing Class C Cumulative Redeemable
Preferred Shares.......................................... New York Stock Exchange
Depositary Shares Representing Class D Cumulative Redeemable
Preferred Shares.......................................... New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant at March 15, 2001 was $768.1 million.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
54,958,781 common shares outstanding as of March 15, 2001
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DOCUMENTS INCORPORATED BY REFERENCE.
The registrant incorporates by reference in Part III hereof portions of its
definitive Proxy Statement for its 2001 Annual Meeting of Shareholders.
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TABLE OF CONTENTS
REPORT
ITEM NO. PAGE
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PART I
1. Business.................................................... 3
2. Properties.................................................. 9
3. Legal Proceedings........................................... 28
4. Submission of Matters to a Vote of Security Holders......... 28
PART II
5. Market for Registrant's Common Equity and Related
Shareholder Matters....................................... 30
6. Selected Financial Data..................................... 31
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 33
7a. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 49
8. Financial Statements and Supplementary Data................. 50
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 50
PART III
10. Directors and Executive Officers of the Registrant.......... 50
11. Executive Compensation...................................... 50
12. Security Ownership of Certain Beneficial Owners and
Management................................................ 50
13. Certain Relationships and Related Transactions.............. 50
PART IV
14. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K.................................................. 51
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PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Developers Diversified Realty Corporation, an Ohio Corporation (the
"Company" or "DDR"), a self-administered and self-managed real estate investment
trust (a "REIT"), is in the business of acquiring, developing, redeveloping,
owning, leasing and managing shopping centers and business centers. Unless
otherwise provided, references herein to the Company or DDR includes Developers
Diversified Realty Corporation, its wholly owned and majority owned subsidiaries
and its joint ventures.
From January 1, 1998 to March 15, 2001, the Company has acquired 54
shopping center properties, including those owned through joint ventures, five
of which were acquired in 2001, three of which were acquired in 2000, five of
which were acquired in 1999 and 41 of which were acquired in 1998. In January,
2001, the Company sold one property.
The Company's executive offices are located at 3300 Enterprise Parkway,
Beachwood, Ohio 44122, and its telephone number is (216) 755-5500.
SHARE SPLIT
Effective August 3, 1998, the Company effected a two for one share split to
shareholders of record on July 27, 1998 in the form of a stock dividend. All per
share amounts and the number of common shares outstanding reflect this split.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company is in the business of managing, operating, leasing, acquiring,
developing and investing in shopping centers and business centers. See the
consolidated financial statements and notes thereto included in Item 8 of this
Annual Report on Form 10-K for certain information required by Item 1.
NARRATIVE DESCRIPTION OF BUSINESS
Since 1965, the Company and Developers Diversified Group ("DDG"), its
predecessor, have owned and managed approximately 355 shopping centers and
business centers. The Company's portfolio as of March 15, 2001, not including
those properties owned through the Company's minority equity investment,
consisted of 192 shopping centers and one business center (including 54
properties which are owned through joint ventures) and approximately 107
undeveloped acres (of which approximately 6 acres are owned through joint
ventures) (the "Portfolio Properties"). From January 1, 1998 to March 15, 2001,
the Company has acquired 54 shopping centers, including those owned through
joint ventures, containing an aggregate of 11.9 million square feet of gross
leasable area ("GLA") owned by the Company for an aggregate purchase price of
approximately $1.2 billion. During 1998, 1999 and 2000, the Company completed
expansions at 21 of its shopping centers.
As of March 15, 2001, the Company was expanding one shopping center and
expects to commence expansions at additional shopping centers in 2001. The
Company, including its joint ventures, has also substantially completed the
development of 15 shopping centers since December 31, 1997, at an aggregate cost
of approximately $648 million aggregating approximately 4.0 million square feet
of GLA. As of March 15, 2001, the Company and its joint ventures had 14 shopping
centers under development.
The Company's shopping centers were approximately 95.7% leased as of
December 31, 2000. On December 31, 2000, the average annualized base rent per
square foot of Company-owned GLA of the shopping centers was $9.66.
The Company is self-administered and self-managed and, therefore, does not
engage or pay for a REIT advisor. The Company manages all of the Portfolio
Properties. At December 31, 2000, the Company owned and/or managed approximately
60.1 million total square feet of GLA, which included all of the Portfolio
Properties and 70 properties owned by third parties.
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In 2000, the Company and Coventry Real Estate Partners ("Coventry") were
also selected by Burnham Pacific Properties, Inc. ("Burnham") to serve as its
liquidation agent pursuant to Burnham's plan of liquidation. At December 31,
2000, the liquidation portfolio included 47 properties aggregating 5.8 million
square feet. The Company is providing property management services for this
portfolio and is receiving property management, asset management, leasing and
development fees for its services at market rates. Coventry, which is 79% owned
by the Company, is providing asset management services for this portfolio and is
receiving asset management fees at market rates. The appointment of Coventry and
the Company was effective on December 15, 2000 following approval from Burnham's
shareholders.
STRATEGY AND PHILOSOPHY
The Company's investment objective is to increase cash flow and the value
of its portfolio of properties and to seek continued growth through the
selective acquisition, development, redevelopment, renovation and expansion of
income-producing real estate properties, primarily shopping centers. In
addition, the Company may also pursue the disposition of certain real estate
assets and utilize the proceeds to repay debt, repurchase the Company's common
shares, reinvest in other real estate assets and developments and for other
corporate purposes. In pursuing its investment objective, the Company will
continue to seek to acquire and develop high quality, well-located shopping
centers with attractive initial yields and strong prospects for future cash flow
growth and capital appreciation where the Company's financial strength and
management and leasing capabilities can enhance value.
Management believes that opportunities to acquire existing shopping centers
have been and will continue to be available to buyers with access to capital
markets and institutional investors, such as the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The Company's real estate strategy and philosophy is to grow its business
through a combination of leasing, expansion, acquisition and development. The
Company seeks to:
- increase cash flows and property values through strategic leasing,
re-tenanting, renovation and expansion of the Company's portfolio;
- continue to selectively acquire well-located, quality shopping
centers (individually or in portfolio transactions) which have
leases at rental rates below market rates or other cash flow growth
or capital appreciation potential where the Company's financial
strength, relationships with retailers and management capabilities
can enhance value;
- increase cash flows and property values by continuing to take
advantage of attractive financing and refinancing opportunities (see
"Recent Developments -- Financings");
- increase per share cash flows through the strategic disposition of
certain real estate assets and utilizing the proceeds to repay debt,
repurchase of the Company's common shares, invest in other real
estate assets and, or developments and for other corporate purposes;
- selectively develop the Company's undeveloped parcels or new sites
in areas with attractive demographics;
- hold properties for long-term investment and place a strong emphasis
on regular maintenance, periodic renovation and capital
improvements; and
- continue to manage and develop the properties of others to generate
fee income, subject to restrictions imposed by federal income tax
laws, and create opportunities for acquisitions.
As part of its ongoing business, the Company engages in discussions with
public and private real estate entities regarding possible portfolio or asset
acquisitions or business combinations.
In addition, the Company intends to maintain a conservative debt
capitalization ratio. At December 31, 2000, the Company's debt to total market
capitalization ratio, excluding the Company's proportionate share of non-
recourse indebtedness of its unconsolidated joint ventures, was approximately
0.49 to 1.0; and at March 15, 2001,
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this ratio was approximately 0.48 to 1.0. At December 31, 2000, the Company's
capitalization consisted of $1.2 billion of debt (excluding the Company's
proportionate share of joint venture mortgage debt aggregating $322.8 million at
December 31, 2000 as compared to $466.6 million at December 31, 1999), $518.8
million of preferred stock and preferred operating partnership units and $744.6
million of market equity. (Market equity is defined as common shares and
operating partnership units outstanding multiplied by the closing price of
common shares on the New York Stock Exchange at December 31, 2000 of $13.3125).
At December 31, 2000, the Company's total debt consisted of $759.6 million of
fixed-rate debt and $468.0 million of variable rate debt. Fluctuations in the
market price of the Company's common shares may cause this ratio to vary from
time to time.
The strategy, philosophy, investment and financing policies of the Company,
and its policies with respect to certain other activities, including its growth,
debt capitalization, distributions, status as a REIT and operating policies, are
determined by the Board of Directors. Although it has no present intention to do
so, the Board of Directors may amend or revise these policies from time to time
without a vote of the shareholders of the Company.
RECENT DEVELOPMENTS
Financings
In January, 2001, the Company entered into a $100 million, two-year swap
agreement, effectively converting a portion of the variable rate debt on the
Company's unsecured credit facility to a fixed rate of approximately 6.3%.
In 1999 and 2000, the Company's Board of Directors authorized the officers
of the Company to implement and continue a common share repurchase program in
response to what the Company believed was a distinct undervaluation of the
Company's common shares in the public market. Under the terms authorized by the
Company's Board, as amended in November 1999 and 2000, the Company may purchase
in the open market, subject to certain requirements, common shares of the
Company, up to a maximum value of $200 million. The Company may utilize proceeds
from the sale of assets to purchase these shares. It is not the Company's
intention to increase the leverage on its balance sheet to implement this stock
repurchase program.
In accordance with the stock repurchase plan approved by the Company's
Board of Directors, from February 29, 2000 through December 31, 2000, the
Company purchased, in open market transactions, 4,741,700 of its common shares,
at prices ranging from $11.61 to $14.88, for an aggregate purchase price of
approximately $62.9 million. Since the fourth quarter of 1999, the Company has
acquired 6,602,000 shares at prices ranging from $11.61 to $14.88 at an
aggregate cost of $88.7 million. From and including the fourth quarter of 1999
through December 31, 2000, total common shares and OP Units
repurchased/converted aggregated 10.3 million shares and units of which 8.4
million shares and units have been repurchased/converted in 2000.
In December, 2000, the Company amended its $25 million credit facility with
National City Bank. The current stated rate on this facility is LIBOR plus 1.10%
with a maturity of November, 2002.
In December, 2000, the Company refinanced its newly developed Toledo, Ohio
property for $23.0 million. The mortgage bears interest at LIBOR plus 1.20% and
has a maturity date of December, 2002. In addition, the Company obtained a $35.5
million construction loan on its project in Everett, Massachusetts bearing
interest at LIBOR plus 1.85% of which $17.1 million has been drawn at December
31, 2000. Also, the Company transferred its 50% ownership interest in a
development property located in San Antonio, Texas to the Retail Value Fund and
received proceeds of approximately $18.5 in conjunction with this transaction.
In October, 2000, the Company entered into two, two-year interest rate swap
agreements aggregating $100 million, effectively converting a portion of the
variable rate debt on the Company's unsecured line of credit facility to a fixed
rate of approximately 7.6%.
In July, 2000, the Company acquired the minority ownership interest
associated with the 11 Hermes Properties acquired in July, 1998 at an aggregate
cost of approximately $81.9 million. As a result, 3,630,668 OP Units and all
contingently issuable OP Units were purchased and all restrictions and
obligations associated with minority owners' interest were settled.
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In June, 2000, the Company amended its primary unsecured credit facility
with a syndicate of financial institutions for which Bank One, NA serves as
agent. The amended facility increased the availability to $550 million from $375
million and extended the term for an additional two years to May 31, 2003. The
current stated interest rate on the facility is at LIBOR plus 1.10%. The Company
also can competitively bid up to 50% of the facility amount.
In May, 2000, the Company entered into a $100 million bridge loan agreement
with interest at LIBOR plus 1.10% with Bank of America. The proceeds from this
facility were used to repay the $100 million, 7 5/8% unsecured senior notes
which matured on May 15, 2000. The bridge loan matured in November, 2000 and was
repaid with proceeds from the Company's expanded unsecured credit facility and
asset sales.
In May, 2000, the Company issued $105 million, 9.0% perpetual preferred
"down-REIT" operating partnership units to an institutional investor and
received net proceeds of approximately $102.4 million. The units may be
exchanged, under certain circumstances, for Class J, 9.0% cumulative redeemable
perpetual preferred shares.
Property Acquisitions, Developments and Expansions
During 2000, the Company and its joint ventures completed the acquisition
of, or investment in, three shopping centers aggregating 0.7 million square feet
of Company-owned GLA for an aggregate investment of approximately $71.3 million.
In April, 2000, the Company purchased a 199,000 square foot shopping center
in Brentwood, Tennessee for approximately $22.6 million.
In September, 2000, the Company announced its intention to acquire 15 west
coast retail properties for approximately $355 million from Burnham through a
joint venture with Prudential Real Estate Investors ("PREI") and Coventry Real
Estate Partners ("Coventry") in which the Company would own a 20% interest.
Since this original announcement, four of the fifteen properties were eliminated
from the portfolio. Accordingly, the Company, through an equity affiliate and
PREI will acquire 11 properties at an aggregate cost of approximately $266
million. Two of the properties were acquired in December, 2000 in which the
Company's 20% ownership interest aggregated $9.7 million. Five of the properties
were acquired through March 15, 2001 in which the Company's 20% interest
aggregated $11.3 million. The remaining four properties are expected to close in
the first half of 2001. DDR will earn fees for managing, redevelopment and
leasing the properties, all of which are located in western states.
The Company and Coventry were also selected by Burnham to serve as its
liquidation agent pursuant to Burnham's plan of liquidation. The liquidation
portfolio includes 47 properties aggregating 5.8 million square feet. DDR is
providing property management services for this portfolio and is receiving
property management, asset management, leasing and development fees for its
services at market rates. This transaction was completed on December 15, 2000
following approval from Burnham shareholders.
Dispositions
In January, 2001, the Company sold a 190,000 square foot shopping center in
Ahoskie, North Carolina for a purchase price of approximately $8.3 million and
recognized a gain of approximately $1.8 million. Proceeds from this sale were
used to repay amounts outstanding on the Company's Revolving Credit Facility.
During 2000, the Company sold real estate assets or joint venture interests
therein with an aggregate value of approximately $250 million.
In December, 2000, the Company sold to Wal-Mart its occupied space in the
New Bern and Washington, North Carolina shopping centers for an aggregate sales
price of approximately $20.7 million. In addition, the Company sold its 50%
interest in a joint venture property located in Fenton, Missouri for
approximately $14.3 million. An equity affiliate of the Company, DD Development
Company, sold five of the remaining twelve sites formerly occupied by Best
Products for approximately $25.1 million.
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In the third quarter of 2000, the Company sold a 15,000 square foot
shopping center in Florence, Kentucky for a purchase price of approximately $1.7
million and 12,500 square feet of a 62,000 square foot shopping center located
in Las Vegas, Nevada for approximately $2.3 million. In addition, the Company
sold to Wal-Mart its occupied space in the Company's Camden, South Carolina
shopping center for a purchase price of approximately $11.6 million.
In February, 2000, the Company entered into an agreement to sell 60% of its
half interest in the Community Centers Joint Venture to DRA Advisors, Inc. at a
price of approximately $163 million comprised of cash of approximately $66
million and debt assumed of $97 million. In conjunction with this transaction,
the Company recognized a gain of approximately $16.1 million. Subsequent to this
transaction, the Company's ownership in the joint venture is effectively 20%
with funds advised by DRA Advisors, Inc. owning 80%. The Company continues to be
responsible for the day-to-day management of the shopping centers and receive
fees for such services.
In February, 2000, the Company formed a joint venture with DRA Advisors,
Inc. whereby the Company contributed a wholly-owned property in Phoenix, Arizona
valued at approximately $26.7 million and related mortgage debt of $18.0 million
and, in exchange, received a 50% equity ownership interest in the joint venture
and cash proceeds of approximately $4.3 million. In conjunction with this
transaction, the Company recognized a gain of approximately $0.5 million. The
Company continues to manage and operate the center and receives fees for such
services.
In February, 2000, the Company sold a shopping center in Stone Mountain,
Georgia, a suburb of Atlanta, for approximately $1.8 million.
Proceeds from the above sales in 2000 were used to repay amounts
outstanding on the Company's revolving credit facility, repurchase 4.7 million
common shares in open market transactions and to fund the Company's investment
relating to the Burnham acquisition.
Strategic Transactions
In November 2000, the Company and American Industrial Properties REIT
(NYSE: IND) ("AIP") announced that, AIP has entered into: (i) an agreement to
sell 31 properties to client accounts managed by Lend Lease Real Estate
Investments, Inc. for a gross purchase price, including assumed debt, of
approximately $292.2 million; (ii) an agreement to sell an office building to a
third party for a gross purchase price, including assumed debt, of approximately
$55.4 million and (iii) an agreement with a subsidiary of the Company (formed
simultaneously with the sale to Lend Lease) to acquire all of the AIP common
shares not already owned by DDR for $12.47 per share in cash. The Company's
purchase is expected to be funded solely with proceeds from the property sales
described above.
The liquidation payment to common shareholders was originally announced as
$13.74 per share, however, all common shareholders of AIP received a $1.27 per
share dividend in January, 2001, resulting from the sale by AIP of Manhattan
Towers in November, 2000 for $55.4 million. Through its subsidiary, the Company
will survive as AIP's majority shareholder, controlling AIP's 39 remaining
properties. The Company currently holds 46% of AIP's outstanding shares. The
property sales noted in (i) and (ii) above are conditions to the closing of the
transaction with the Company, which is expected to occur in the second quarter
of 2001 following AIP's shareholder approval. The property sale noted in (ii)
occurred in November, 2000. This transaction will provide the Company with
complete control over its investment in AIP for which the Company expects to
realize the full value of its investment through operations and, where
appropriate, an orderly disposition.
In December, 2000, an equity affiliate of the Company terminated its entity
level investment with DDR OliverMcMillan. In settlement of advances to DDR
OliverMcMillan, the Company received two operating properties, one of which is
located in Reno, Nevada and the other located in Oceanside, California; a
development project in Long Beach, California; residual land located in San
Diego, California and notes receivable, secured by real estate transferred to
OliverMcMillan. The aggregate value associated with these assets was
approximately $37 million. The Oceanside, California and Reno, Nevada property
and certain notes
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receivable, aggregating $18 million in total value, were transferred/assigned
from the equity affiliate to the Company in 2000.
Expansions 2000
During 2000, the Company and its joint ventures completed ten expansion
projects at an aggregate cost of $13.6 million. In addition, the Company is
currently expanding/redeveloping one of its shopping centers located in
Fayetteville, Arkansas at an aggregate cost of $1.8 million. The Company also is
planning to commence expansion/redevelopment projects at seven additional
shopping centers located in: Crystal River, Florida; Schaumberg, Illinois;
Highland, Indiana; Wilmington, North Carolina; Lebanon, Ohio; North Charleston,
South Carolina and Taylorsville, Utah.
Development (Wholly Owned) 2000
During 2000, the Company completed Phase II of construction at two shopping
centers located in Ovideo, FL and Toledo, OH. In addition, the Company is
developing projects located in Meridian, ID; Kildeer, IL; Everett, MA;
Princeton, NJ and Riverdale, UT.
Development (Joint Ventures) 2000
The Company has joint venture development agreements for nine additional
shopping center projects with leading regional developers. These nine projects
have an aggregate projected cost of approximately $329 million. All of these
projects have commenced development and are currently scheduled for completion
through 2002. The Company currently holds interests in six of these projects
through the Retail Value Fund. These projects are located in Long Beach, CA;
Plainville, CT; Deer Park, IL; Hagerstown, MD; Round Rock, TX and San Antonio,
TX. The remaining three projects are located in Salisbury, MD (Phase III); Coon
Rapids, MN and St. Louis, MO.
Construction has been substantially completed and the centers are open for
business at the Plainville, CT; Deer Park, IL; Hagerstown, MD; Salisbury, MD and
Round Rock, TX properties.
As of December 31, 2000, $271.2 million of construction costs were funded
relating to the above projects. The remaining net project costs are projected to
be $57.8 million. It is anticipated that the Company's share of these remaining
net costs will result in the Company being reimbursed approximately $20.1
million, net, relating to construction financing proceeds, joint venture partner
contributions and sale of parcels to tenants.
In addition, the Company is in the process of entering into a joint venture
relating to a 280,000 square foot lifestyle center in Littleton, CO. This
project is scheduled for completion in the Spring of 2002. The Company intends
to break ground during 2001 on a shopping center development located in Long
Beach, CA the interest of which is anticipated to be transferred into a new
joint venture with an institutional investor. The Company's additional net
equity funding requirements associated with these two projects are expected to
be nominal as the remaining net costs are expected to be funded through joint
venture equity contributions and construction loans.
RETAIL ENVIRONMENT
During 2000, certain national and regional retailers experienced financial
difficulties and several have filed for protection under bankruptcy laws. No
significant bankruptcies have occurred during the period January 1, 2000 through
March 15, 2001 with regard to the Company's portfolio of tenants.
See Management's Discussion and Analysis of Financial Condition and Results
of Operations included in Item 7 and the Consolidated Financial Statements and
Notes thereto included in Item 8 of this Annual Report on Form 10-K for further
information on certain of the recent developments described above.
COMPETITION
As one of the nation's largest owners and developers of shopping centers,
the Company has established close relationships with a large number of major
national and regional retailers. Management is associated with and actively
participates in many shopping center and REIT industry organizations.
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Notwithstanding these relationships, there are numerous developers and real
estate companies that compete with the Company in seeking properties for
acquisition and tenants who will lease space in these properties.
Many investors believed e-commerce would seriously erode traditional retail
business, particularly "big box" commodity retailers. The Company believes that
these fears are unfounded with the majority of the e-commerce sales occurring in
the travel and computer categories, which account for a small portion of the
Company's tenant base. In addition, the Company believes that the individual
consumer is primarily shopping in discount stores, the majority of the Company's
tenant base, rather than through e-commerce.
EMPLOYEES
As of March 15, 2001, the Company employed 291 full-time individuals,
including executive, administrative and field personnel. The Company considers
its relations with its personnel to be good.
QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST
The Company presently meets the qualification requirements of a REIT under
Sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code").
As a result, the Company generally will not be subject to federal income tax to
the extent it meets certain requirements of the Code.
ITEM 2. PROPERTIES
At December 31, 2000, the Portfolio Properties included 187 shopping
centers and one business center (49 of which are owned through joint ventures).
The shopping centers consist of 175 community shopping centers and 12 enclosed
mini-malls. The Portfolio Properties also include approximately 107 undeveloped
acres primarily located adjacent to certain of the shopping centers. The
shopping centers aggregate approximately 37.6 million square feet of
Company-owned GLA (approximately 50.3 million square feet of total GLA) and are
located in 41 states, principally in the East and Midwest, with significant
concentrations in Ohio, Florida, Missouri, Michigan, Minnesota, North Carolina
and South Carolina.
The Company's shopping centers are designed to attract local area customers
and are typically anchored by one or more discount department stores and often
include a supermarket, drug store, junior department store and/or other major
"category-killer" discount retailers as additional anchors. Most of the shopping
centers are anchored by a Wal-Mart, Kmart or Target, and the majority of centers
are anchored by two or more national or regional tenants. The tenants of the
shopping centers typically offer day-to-day necessities rather than high-priced
luxury items. As one of the nation's largest owners and operators of shopping
centers, the Company has established close relationships with a large number of
major national and regional retailers, many of which occupy space in the
shopping centers.
Shopping centers make up the largest portion of the Company's portfolio,
comprising 34.6 million (92.3%) square feet of Company-owned GLA and enclosed
mini-malls account for 3.0 million (7.7%) square feet of Company-owned GLA. On
December 31, 2000, the average annualized base rent per square foot of Company-
owned GLA of the shopping centers, including those owned through joint ventures,
was $9.66.
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The following table sets forth, as of December 31, 2000, information as to
anchor and/or national retail tenants which individually accounted for at least
1.0% of total annualized base rent of the properties, including those owned
through joint ventures:
% OF SHOPPING CENTER % OF COMPANY-OWNED
BASE RENTAL REVENUES SHOPPING CENTER GLA
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Wal-Mart...................................... 4.2% 7.4%
Kohl's Dept. Store............................ 2.4% 2.8%
Kmart......................................... 2.3% 5.7%
T. J. Maxx/Marshall's......................... 2.2% 2.3%
OfficeMax..................................... 2.1% 1.9%
Homeplace/Waccama............................. 2.0% 1.6%
Barnes & Noble/B. Dalton...................... 1.9% 1.1%
Bed Bath & Beyond............................. 1.7% 1.3%
Best Buy...................................... 1.6% 1.1%
Home Depot.................................... 1.4% 1.4%
Circuit City.................................. 1.4% 1.2%
Lowes Home Centers............................ 1.4% 2.0%
Gap/Old Navy.................................. 1.4% 0.9%
Petsmart...................................... 1.3% 1.0%
Michaels...................................... 1.2% 1.0%
Toys R Us..................................... 1.2% 1.4%
Cinemark Theatre.............................. 1.1% 0.8%
In addition, as of December 31, 2000 unless otherwise indicated, with
respect to the 187 shopping centers:
- 49 of these properties were developed by DDG, 23 were developed by
the Company and the balance were acquired by the Company;
- 92 of these properties are anchored by a Wal-Mart, Kmart or Target
store;
- these properties range in size from 4,000 square feet to
approximately 800,000 square feet of GLA (with 20 properties
exceeding 400,000 square feet of GLA);
- approximately 61.1% of the Company-owned GLA of these properties is
leased to national chains, including subsidiaries, with
approximately 26.0% of the Company-owned GLA leased to regional
chains and approximately 8.6% of the Company-owned GLA leased to
local tenants;
- approximately 95.7% of the aggregate Company-owned GLA of these
properties was occupied as of December 31, 2000 (and, with respect
to the properties owned by the Company at December 31, for each of
the five years beginning with 1996, between 94.8% and 96.5% of
aggregate Company-owned GLA of these properties was occupied) and
- One property is currently being expanded by the Company, and the
Company is pursuing the expansion of additional properties.
10
11
TENANT LEASE EXPIRATIONS AND RENEWALS
The following table shows tenant lease expirations for the next ten years
at the Company's shopping centers, including joint ventures, assuming that none
of the tenants exercise any of their renewal options:
PERCENTAGE OF PERCENTAGE OF
TOTAL LEASED TOTAL BASE
ANNUALIZED AVERAGE BASE SQ. FOOTAGE RENTAL REVENUES
NO. OF APPROXIMATE BASE RENT RENT PER SQ. FOOT REPRESENTED REPRESENTED
EXPIRATION LEASES LEASE AREA IN UNDER EXPIRING UNDER EXPIRING BY EXPIRING BY EXPIRING
YEAR EXPIRING SQUARE FEET LEASES LEASES LEASES LEASES
- --------------------- -------- ------------- -------------- ----------------- ------------- ---------------
2001................. 589 1,816,024 $ 20,034,068 $11.03 4.7% 5.6%
2002................. 534 2,299,792 20,292,350 8.82 5.9 5.7
2003................. 512 2,229,329 22,171,107 9.95 5.8 6.2
2004................. 381 2,119,669 21,543,355 10.16 5.5 6.1
2005................. 368 2,610,836 23,850,617 9.14 6.8 6.7
2006................. 156 1,335,121 14,265,067 10.68 3.5 4.0
2007................. 112 1,415,403 15,643,840 11.05 3.7 4.4
2008................. 105 1,495,888 14,217,432 9.50 3.9 4.0
2009................. 125 2,492,053 24,305,121 9.75 6.4 6.8
2010................. 154 2,559,633 26,814,610 10.48 6.6 7.5
----- ---------- ------------ ------ ---- ----
TOTAL................ 3,036 20,373,748 $203,137,567 $ 9.97 52.8% 57.0%
The rental payments under several of these leases will remain constant
until the expiration of their base terms, regardless of inflationary increases.
There can be no assurance that any of these leases will be renewed or that any
new tenants will be obtained if not renewed.
The Company's 107 undeveloped acres consist primarily of outlots, retail
pads and expansion pads which are primarily located adjacent to certain of the
shopping centers. The Company is pursuing an active marketing program to lease,
develop or sell its undeveloped acres.
11
12
DEVELOPERS DIVERSIFIED REALTY CORPORATION
PROPERTY LIST DECEMBER 31, 2000
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
ALABAMA
1 Birmingham, AL Brook Highland Plaza 35242 SC Fee 1994 1994 100.00%
(Brook) 5291 Hwy 280 South
2 Birmingham, AL Eastwood Festival Center 35210 SC Fee 1989 1995 100.00%
(Eastwood) 7001 Crestwood Blvd
3 Huntsville, AL Enterprise Plaza 35806 SC Fee 1995 1995 100.00%
6140-A University Dr.
ARIZONA
4 Ahwatukee, AZ Foothills Towne Ctr (II) 85044 SC Fee(3) 1996 1997 50.00%
4711 East Ray Road
5 Phoenix, AZ Deer Valley Towne Center 85027 SC Fee(3) 1996 1999 50.00%
(Deer Valley) 2805 West Agua Fria Freeway
6 Phoenix, AZ (Peoria) Arrowhead Crossing 85382 SC Fee(3) 1995 1996 50.00%
7553 West Bell Road
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
1 503,911 $ 3,991,950 $ 7.92 100.0% Winn Dixie Stores (2014),
Rhodes/Marks Fitzgerald (2004),
Goody's (2004), Wal-Mart Stores
(2014), Regal Cinemas, Inc.
(2014), Stein Mart (2011),
Officemax (2011), Michael's
(2009), Books-a-Million (2005),
Emperor's House (not owned)
2 301,067 $ 2,044,676 $ 8.18 83.1% Office Depot (2004), Goody's
(2004), Burlington Coat Factory
(2003), Regal Cinemas, Inc.
(2006), Western Supermarkets
(not owned), Home Depot (not
owned), Barnhills Buffet (not
owned)
3 41,000 $ 483,800 $11.80 100.0% Wal-Mart (not owned)
4 647,916 $ 8,727,022 $13.47 100.0% Bassett Furniture(2010),
Homeplace (2012), Stein Mart
(2011), AMC Theatre (2021),
Barnes & Noble (2012), Babies 'R
Us (2007), Ross Stores, Inc.
(2007), Officemax (2012), Joann,
Etc. (2010), Best Buy (2014), On
the Border (not owned), Exxon
(not owned), Ruby Tuesdays (not
owned), Macaroni Grill (not
owned), Rock Bottom Brewery (not
owned)
5 203,529 $ 2,656,707 $13.59 96.1% Ross Stores (2009), Officemax
(2013), Petsmart (2014),
Michaels (2009), Target (not
owned), AMC Theatres (not
owned), Tony Roma's (not owned),
Claim Jumper (not owned),
7-Eleven (not owned),
Jack-in-a-Box (not owned)
6 346,430 $ 3,911,517 $11.46 98.5% Bassett Furniture(2009), Staples
(2009), Comp USA (2013), Mac
Frugal's (2010), Barnes & Noble
(2011), T.J. Maxx (2005),
Circuit City (2016), Oshman's
Supersports (2017), Linens 'N
Things (2011), Fry's (not
owned), On the Border (not
owned)
12
13
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
ARKANSAS
7 Fayetteville, AR Spring Creek Centre 72703 SC Fee 1997 1997 100.00%
464 E. Joyce Boulevard
8 N. Little Rock, AR McCain Plaza 72117 SC Fee 1991 1994 100.00%
4124 East McCain Boulevard
9 Russellville, AR Valley Park Centre 72801 SC Fee 1992 1994 100.00%
3093 East Main Street
CALIFORNIA
10 City of Industry, CA Plaza At Puente Hills 91748 SC Fee(3) 1987 2001 20.00%
17647-18271 Gale Avenue
11 Fullerton, CA La Mancha 92632 SC Fee(3) 1973 2001 20.00%
North Harbor Blvd.
12 Lancaster, CA Valley Central 93536 SC Fee(3) 1990 2001 20.00%
44400-44650 Valley Central Way
13 Oceanside, CA Ocean Place Cinemas 92054 SC Fee 2000 1* 100.00%
401 Mission Ave
14 San Diego, CA Carmel Mountain Plaza 92128 SC Fee(3) 1993 1995 20.00%
11610 Carmel Mountain Road
15 San Ysidro, CA San Diego Factory Outlet 92173 SC Fee(3) 1988 2000 20.00%
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
7 260,972 $ 1,933,630 $ 9.84 75.3% Old Navy (2005), Bed, Bath &
Beyond (2009), T.J. Maxx (2005),
Goody's (2013), Wal-Mart Super
Center (not owned), Home Depot
(not owned), Ryan's (not owned)
8 294,357 $ 1,853,339 $ 6.62 95.1% K Mart (2016), T.J. Maxx (2001),
Cinemark Theatre-Tandy (2011),
Burlington Coat Factory Whse
(2014)
9 272,245 $ 1,718,373 $ 6.37 99.1% Wal-Mart Stores (2011), Stage
(2005), J.C. Penney (2012)
10 518,938 $ 6,328,977 $13.48 90.5% Wal-Mart/Sam's Club(2036), Toys
'R' Us (2036), Miller's
Outpost/Hub Dist (2008), Office
Depot, Inc.(2012), Home Depot
(2036), Ikea (2007), Circuit
City(2008)
11 103,758 $ 588,384 $ 7.53 75.3% Ralphs Grocery Store(2020)
12 459,529 $ 4,287,959 $ 9.57 97.6% Wal-Mart (2010), Movies 12/
Cinemark(2017), Home Base
(2008), Costco (023)(2050),
Michael's (2004), Marshalls
(2001), Circuit City (2011),
Staples (2003), 99 Cents Only
(not owned), Costco (not owned),
Wal-Mart (not owned), Carl's Jr.
(not owned)
13 67,432 $ 1,089,414 $16.16 100.0% Regal Cinemas(2014)
14 440,140 $ 6,643,042 $15.09 100.0% K Mart (2018), Pacific Theatres
(2013), Sportsmart (2008),
Circuit City (2009), Marshalls
(2009), Michael's (2004), Ross
Dress for Less (2004), Mervyn's
(not owned), Boston Market (not
owned), Texaco (not owned),
Chevy's (not owned)
15 155,468 $ 2,607,661 $17.63 95.2% K-mart (2006), Levi's/Dockers
(2001), Levi's (2001), Calvin
Klein (2008), Guess (2001), Nike
Storage (1997), Mikasa Inc.
(2003), Nike (2004), Mikasa
Storage (2003)
13
14
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
COLORADO
16 Alamosa, CO Alamosa Plaza 81101 SC Fee 1986 2* 100.00%
145 Craft Drive
17 Denver, CO Broadway Market Place 80223 SC Fee(3) 1993 1995 20.00%
(Broadway Market) 505 South Broadway
18 Denver, CO Centennial Promenade 80223 SC Fee 1997 1997 100.00%
(Centennial) 9555 E. County Line Road
19 Trinidad, CO Trinidad Plaza 81082 SC Fee 1986 2* 100.00%
Hwy 239 @ 125 Frontage Road
CONNECTICUT
20 Plainville, CT Connecticut Commons 06062 SC Fee(3) 1999 1* 12.50%
I-84 & Rte 9
21 Waterbury, CT Kmart Plaza 06705 SC GL 1973 2* 100.00%
899 Wolcott Street
FLORIDA
22 Bayonet Point, FL Point Plaza 34667 SC Fee 1985 2* 100.00%
US 19 & Sr 52
23 Brandon, FL Kmart Shopping Center 33511 SC GL 1972 2* 100.00%
1602 Brandon Bl.
24 Cape Coral, FL Del Prado Mall 33904 SC Fee 1985 2* 100.00%
1420 Delprado Blvd.
25 Crystal River, FL Crystal River Plaza 33523 SC Fee 1986 2* 100.00%
420 Sun Coast Hwy
26 Fern Park, FL Fern Park Shopping Center 32720 SC Fee 1970 2* 100.00%
6735 US #17-92 South
27 Jacksonville, FL Jacksonville Regional 32218 SC Fee 1988 1995 100.00%
3000 Dunn Avenue
28 Marianna, FL The Crossroads 32446 SC Fee 1990 2* 100.00%
2814-2822 Highway 71
29 Melbourne, FL Melbourne Shopping Center 32935 SC Fee 1978 2* 100.00%
750-850 Apollo Boulevard
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
16 19,875 $ 172,882 $ 8.70 100.0% Wal-Mart (not owned), City
Market (not owned)
17 387,536 $ 3,853,527 $10.02 99.3% Albertson's (2019), Officemax
(2010), K Mart (2019), Pep Boys
(2014), Wal-Mart/Sam's (2018)
18 418,608 $ 5,883,499 $14.05 100.0% Golfsmith Golf Center (2007),
Soundtrack (2017), Ross Dress
for Less (2008), Officemax
(2013), Michael's (2007),
Homeplace (2017), Toys R Us
(2011), Borders (2017), American
Furniture Superstore (not
owned), R.E.I. (not owned), J.
Alexanders (not owned), Rock
Bottom Brewery (not owned)
19 63,836 $ 107,325 $ 4.71 35.7% Big 'R' (not owned)
20 321,682 $ 3,335,808 $10.37 100.0% Lowe's of Plainville (2019), K
Mart Corporation (2019), A.C.
Moore (2014), Old Navy (2010),
Levitz Furniture (2015), Loew's
Theatre (not owned), Applebee's
(not owned), McDonald's (not
owned), Friendly's (not owned)
21 124,310 $ 417,500 $ 3.36 100.0% K Mart (2003), Jo-ann Stores
(2010)
22 203,760 $ 1,084,280 $ 5.72 93.1% Publix Super Markets (2005),
Beall's (2002), T.J. Maxx
(2010)*
23 161,900 $ 534,865 $ 3.30 100.0% K Mart (2002), Scotty's (not
owned), Checkers (not owned)
24 74,202 $ 561,300 $ 7.56 100.0% Office Max (2012), T.J. Maxx
(2007)
25 147,005 $ 487,743 $ 3.55 93.6% Beall's (2001), Beall's(2006),
Scotty's (2008)
26 16,000 $ 96,712 $ 7.56 80.0%
27 219,073 $ 1,363,855 $ 6.69 93.1% J.C. Penney (2002), Winn Dixie
Stores (2009)
28 63,894 $ 429,173 $ 7.30 92.1% Beall's (2005), Wal-Mart (not
owned)
29 121,913 $ 89,787 $ 4.20 17.6%
14
15
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
30 Naples, FL Carillon Place 33942 SC Fee(3) 1994 1995 20.00%
5010 Airport Road North
31 Ocala, FL Kmart Plaza 32671 SC Fee 1974 2* 100.00%
3711 Silver Springs NE
32 Orlando, FL Westside Crossing 32808 SC Fee 1989 2* 100.00%
(Westside) 5028-5290 West Colonial Drive
33 Ormond Beach, FL Ormond Towne Square 32174 SC Fee 1993 1994 100.00%
1458 West Granada Blvd
34 Oviedo, FL (Dev) Oviedo Park Crossing 32765 SC Fee 1999 1* 100.00%
Rte 417 & Red Bug Lake Road
35 Palm Harbor, FL The Shoppes of Boot Ranch 34685 SC Fee 1990 1995 100.00%
300 East Lakeroad
36 Pensacola, FL Palafox Square 32534 SC Fee 1998 1* 20.00%
8934 Pensacola Blvd
37 Spring Hill, FL Mariner Square 34613 SC Fee 1988 2* 100.00%
13050 Cortez Blvd
38 Tampa, FL (Dale) North Pointe Plaza 33618 SC Fee 1990 2* 100.00%
15001-15233 North Dale Mabry
39 Tampa, FL (Waters) Town N' Country 33634 SC Fee 1990 2* 100.00%
7021-7091 West Waters Avenue
40 Tarpon Springs, FL Tarpon Square 34689 SC Fee 1974 2* 100.00%
41232 U.S. 19, North
41 West Pasco, FL Pasco Square 34653 SC Fee 1986 2* 100.00%
7201 County Road 54
GEORGIA
42 Atlanta, GA (Duluth) Pleasant Hill Plaza 30136 SC Fee 1990 1994 100.00%
1630 Pleasant Hill Road
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
30 267,838 $ 3,011,098 $11.24 100.0% Winn Dixie (2014), Service
Merchandise (2015), Officemax
(2010), T.J. Maxx (2009), Ross
Dress for Less (2005), Circuit
City (2015), Fifth Third Trust
(not owned), First Union
National (not owned), Applebee's
(not owned), First Regal (not
owned)
31 19,280 $ 53,700 $ 3.93 71.0% Kmart (not owned)
32 177,037 $ 1,310,519 $ 7.47 99.1% Publix Super Markets (2009),
Heilig-Meyers (2007), Wal-Mart
(not owned)
33 234,045 $ 1,883,654 $ 8.12 99.1% K Mart (2018), Beall's (2004),
Publix Super Markets (2013)
34 160,879 $ 1,442,347 $ 8.97 100.0% Officemax (2014), Ross Dress for
Less(2010), Michael's (2009),
T.J. Maxx (2010), Linens 'N
Things (2011)
35 52,395 $ 804,752 $15.36 100.0% Target (not owned), Albertson's
(not owned)
36 17,150 $ 209,880 $12.24 100.0% Wal-Mart Super Center (not
owned)
37 196,073 $ 1,321,589 $ 7.18 93.9% Beall's (2006), Publix Super
Markets (2008), Wal-Mart (not
owned)
38 104,473 $ 1,194,669 $11.44 100.0% Publix Super Markets (2010),
Wal-Mart (not owned)
39 134,366 $ 997,783 $ 8.09 91.8% Beall's (2005), Kash 'N Karry-2
Store (2010), Lin's Ho Ho
(2001), Wal-Mart (not owned)
40 198,797 $ 1,224,920 $ 6.16 100.0% K Mart (2009), Big Lots (2002),
Staples Superstore (2013)
41 135,421 $ 1,008,830 $ 7.66 97.3% Sign World (2005), Beall's
(2001), Publix Super Markets
(2006), Beall's (not owned)
42 99,025 $ 1,175,814 $13.83 85.9% Office Depot (2005), Coast
Dental (2004), Salon Etc.(2002),
Wal-Mart(not owned)
15
16
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
43 Atlanta, GA Perimeter Pointe 30136 SC Fee(3) 1995 1995 20.00%
(Perimeter) 1155 Mt. Vernon Highway
44 Marietta, GA Town Center Prado 30066 SC Fee(3) 1995 1995 20.00%
2609 Bells Ferry Road
IDAHO
45 Idaho Falls, ID Country Club Mall 83401 SC Fee 1976 1998 100.00%
(DDRC) 1515 Northgate Mile
46 Meridian, ID (2,3,4) Family Center at Meridian 83642 SC Fee 1999 1* 100.00%
Eagle and Fairview Road
ILLINOIS
47 Deer Park, IL Deer Park, IL 60074 SC Fee(3) 2000 1* 12.38%
20503 N. Rand Rd.
48 Harrisburg, IL Arrowhead Point 62946 SC Fee 1991 1994 100.00%
701 North Commercial
49 Mount Vernon, IL Times Square Mall 62864 MM Fee 1974 2* 100.00%
42nd and Broadway
50 Schaumburg, IL Woodfield Village Green 60173 SC Fee(3) 1993 1995 20.00%
1430 East Golf Road
INDIANA
51 Bedford, IN Town Fair Center 47421 SC Fee 1993 2* 100.00%
1320 James Avenue
52 Connersville, IN Whitewater Trade Center 47331 SC Fee 1991 2* 100.00%
2100 Park Road
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
43 343,115 $ 4,098,124 $14.36 83.2% Stein Mart (2010), Babies R Us,
(2007), Homeplace Superstores
(2011), Office Depot (2012)*,
St. Joseph's Hospital/Atlanta
(2006), Royal Oaks/Eng. Pubs
(2002), United Artists Theatre
(2015), Max & Erma's (not
owned), Chick-fil-a (not owned)
44 318,038 $ 3,780,780 $11.89 100.0% Stein Mart (2007), Homeplace
Superstores (2011), Publix
(2015), Crunch Fitness
International (2011)
45 148,593 $ 813,500 $ 5.60 97.7% Office Max (2011), Gottschalks
Dept. Stores(2001), Fred Meyer
(not owned)
46 269,364 $ 2,340,793 $ 8.69 100.0% Bed Bath & Beyond (2011), Old
Navy (2005), Shopko Stores, Inc.
(2020), Office Depot (2010),
Sportsman's Warehouse (2015),
Arby's (not owned), Carl's Jr.
(not owned), IHOP (not owned),
Syringia Bank (not owned),
Applebee's (not owned)
47 210,106 $ 5,462,958 $26.00 100.0% The Gap (2010)
48 168,424 $ 931,373 $ 5.64 98.0% Wal-Mart Stores (2011),
Mad-pricer Store/Roundy's(2011)
49 268,263 $ 936,908 $ 3.77 92.7% Sears (2013), Country Fair
Market Fresh (2004), J.C. Penney
(2002)
50 501,092 $ 7,239,940 $14.59 99.0% Expo Design Center (2019),
Circuit City (2009), Off
5th(2006), Service Merchandise
(2014), Officemax (2010),
Container Store (2011), Sports
Authority Store (2013),
Marshalls (2009), Nordstrom Rack
(2009), Borders Books (2009),
Costco (not owned), Prairie Rock
(not owned), California Pizza
Kitchen (not owned)
51 223,431 $ 1,329,787 $ 5.95 100.0% K Mart (2008), Goody's (2003),
J.C. Penney (2008), Buehler's
Buy Low (2010)
52 141,791 $ 818,455 $ 5.82 99.2% Cox New Market (2011), Wal-Mart
Stores (2011)
16
17
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
53 Highland, IN Highland Grove Shopping Center 46322 SC Fee 1995 1996 100.00%
Highway 41 & Main Street
IOWA
54 Cedar Rapids, IA Northland Square 52404 SC Fee 1984 1998 100.00%
303-367 Collins Road, NE
55 Ottumwa, IA Quincy Place Mall 52501 MM Fee 1990 2* 100.00%
1110 Quincy Avenue
KANSAS
56 Cherokee North RVM Cherokee LLC 66212 SC Fee(3) 1987 1998 23.75%
Shopping Cen. 8800-8934 W 95th Street
57 Devonshire Village RVM Devonshire LLC 66062 SC Fee(3) 1987 1998 23.75%
Shopping 127th Street & Murlen Road
58 Leawood, KS Town Center Plaza 66209 SC Fee(3) 1990 1998 50.00%
5100 W 119th Street
59 Merriam, KS Merriam Town Center 66202 SC Fee(3) 1998 1* 50.00%
5700 Antioch Road
60 Ten Quivira Parcel RVM Tq Pad LLC 66216 SC Fee(3) 1972 1998 23.75%
63rd St. & Quivira Road
61 Ten Quivira Shopping RVM Ten Quivira LLC 66216 SC Fee(3) 1992 1998 23.75%
Center 63rd Street & Quivira Road
KENTUCKY
62 Hazard, KY Grand Vue Plaza 41701 SC Fee 1978 2* 100.00%
Kentucky Highway 80
MAINE
63 Brunswick, ME Cook's Corners 42071 SC GL 1965 1997 100.00%
172 Bath Road
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
53 295,516 $ 2,769,267 $10.13 92.5% Marshall's (2011), Kohl's
(2016), Circuit City (2016),
Office Max (2012), Target (not
owned), Jewel (not owned),
Borders (not owned)
54 187,068 $ 1,746,537 $ 9.34 100.0% TJ Maxx (2004), Office Max
(2010), Barnes & Noble (2010),
Kohl's (2021), Applebee's (not
owned), Perkins (not owned),
Olive Garden (not owned)
55 194,703 $ 1,443,244 $ 7.63 97.2% Herberger's (2005), J.C. Penney
(2005), Officemax (2015),
Wal-Mart (not owned), Target
(not owned), Aldi Foods (not
owned)
56 52,096 $ 411,071 $ 8.58 92.0% Aldi, Inc(2003)
57 48,900 $ 350,627 $ 7.87 91.1%
58 388,962 $ 7,429,987 $19.94 95.8% Barnes & Noble (2011), Jacobson
(2021), Houlihan's (not owned)
59 344,039 $ 3,803,039 $11.10 99.6% Officemax (2013), Petsmart
(2019), Hen House (2018),
Marshalls (2008), Dick's
Sporting Goods (2016),
Cinemark/Tinseltown (2018), Home
Depot (not owned), Chili's (not
owned), Bob Evans (not owned)
60 12,000 $ 183,790 $15.32 100.0%
61 151,626 $ 843,325 $ 6.20 88.2% Price Chopper Foods(2000)
62 111,492 $ 445,274 $ 4.17 95.9% K Mart (2003)*, Great A & P Tea
(2003)
63 314,620 $ 2,258,836 $ 7.54 95.2% Hoyts Cinemas Brunswik (2010),
Bookland (2004), Dunlap
Co/Porteous Mitchell Br(2001), T
J Maxx (2004), Sears (2002), KFC
(not owned), Friendly's (not
owned)
17
18
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
MARYLAND
64 Hagerstown, MD The Centre At Hagerstown 21740 SC Fee(3) 2000 1* 12.50%
I-81 and Route 40
65 Salisbury, MD The Home Depot Centre 21801 SC Fee 1999 1* 100.00%
E. North Point Drive
MASSACHUSETTS
66 Framingham, MA Shopper's World 01701 SC Fee(3) 1994 1995 20.00%
1 Worcester Road
MICHIGAN
67 Bad Axe, MI Huron Crest Plaza 48413 SC Fee 1991 2* 100.00%
850 North Van Dyke Road
68 Cheboygan, MI Kmart Shopping Plaza 49721 SC Fee 1988 2* 100.00%
1109 East State
69 Detroit, MI Belair Center 48234 SC GL 1989 1998 100.00%
8400 E. Eight Mile Road
70 Gaylord, MI Pine Ridge Square 49735 SC Fee 1991 2* 100.00%
1401 West Main Street
71 Houghton, MI Copper Country Mall 49931 MM Fee 1981 2* 100.00%
Highway M26
72 Howell, MI Grand River Plaza 48843 SC Fee 1991 2* 100.00%
3599 East Grand River
73 Mt. Pleasant, MI Indian Hills Plaza 48858 SC Fee 1990 2* 100.00%
4208 E Blue Grass Road
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
64 285,655 $ 2,919,887 $10.38 98.5% Borders Books & Music (2020),
Marshalls (2010), A.C.
Moore(2015), Office Max (2015),
Bed Bath and Beyond(2011),
Circuit City (2021), Dicks
Sporting Goods (2015), Wal-Mart
(not owned), Home Depot (not
owned), McDonald's (not owned),
KFC (not owned), Pizzeria Uno
(not owned), Wendy's (not
owned), Arby's (not owned), IHOP
(not owned), TGI Friday's (not
owned)
65 119,215 $ 1,465,202 $12.29 100.0% Officemax (2013), Michael's
(2009), Target (not owned), Home
Depot (not owned), Friendly's
(not owned)
66 768,555 $ 12,692,490 $16.51 100.0% General Cinema (2014), Kids R Us
(2020), Toys R Us (2020), Jordon
Marsh/Federated(2020), TJ Maxx
(2010), Sears Homelife (2004),
A.C. Moore (2007), Marshalls
(2011), Bobs (2011), Linens 'N
Things (2011), Sports Authority
(2015), Officemax (2011), Best
Buy (2014), Barnes & Noble
(2011), Bradlee's (2005), DSW
Shoe Warehouse (2007), Olive
Garden (not owned), Metrowest
Bank-ATM (not owned)
67 63,415 $ 542,418 $ 8.55 100.0% Great A & P Tea (2012), Wal-Mart
(not owned)
68 97,594 $ 407,568 $ 4.29 97.4% Carter's Food Center(2004), K
Mart (2005)
69 343,502 $ 2,045,022 $ 8.51 70.0% Builders Square(2014), Kids 'R'
Us, Inc. (2013), Toys 'R' Us,
Inc.(2021), Target (not owned),
McDonald's (not owned)
70 190,482 $ 1,141,782 $ 5.99 100.0% Wal-Mart Stores (2010), Buy
Low/Roundy's (2011)
71 257,866 $ 1,211,682 $ 4.88 96.2% K Mart (2005), J.C. Penney
(2005), Officemax (2014)
72 215,147 $ 1,175,796 $ 5.47 100.0% Wal-Mart Stores (2011), Kroger
(2012)
73 248,963 $ 1,378,596 $ 5.97 92.8% Wal-Mart Stores (2009), Big Lots
(2003), Kroger (2011)
18
19
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
74 Sault St. Marie, MI Cascade Crossings 49783 SC Fee 1993 1994 100.00%
4516 I-75 Business Spur
75 Walker, MI Green Ridge Square 49504 SC Fee 1989 1995 100.00%
3390-B Alpine Ave NW
MINNESOTA
76 Bemidji, MN Paul Bunyan Mall 56601 MM Fee 1977 2* 100.00%
1201 Paul Bunyan Drive
77 Brainerd, MN Westgate Mall 56401 MM Fee 1985 2* 100.00%
1200 Highway 210 West
78 Coon Rapids, MN Riverdale Village 55433 SC Fee(3) 1999 1* 25.00%
12921 Riverdale Drive
79 Eagan, MN Eagan Promenade 55122 SC Fee(3) 1997 1997 50.00%
1299 Promenade Place
80 Hutchinson, MN Hutchinson Mall 55350 MM Fee 1981 2* 100.00%
1060 SR 15
81 Minneapolis, MN Maple Grove Crossing 55369 SC Fee(3) 1995 1996 50.00%
(Maple Grove) Weaver Lake Road & I-94
82 St. Paul, MN Midway Marketplace 55104 SC Fee 1995 1997 100.00%
1450 University Avenue West
83 Worthington, MN Northland Mall 56187 MM Fee 1977 2* 100.00%
1635 Oxford Street
MISSISSIPPI
84 Starkville, MS Starkville Crossing 39759 SC Fee 1990 1994 100.00%
882 Highway 12 West
85 Tupelo, MS Big Oaks Crossing 38801 SC Fee 1992 1994 100.00%
3850 N Gloster St.
MISSOURI
86 Brywood Centre RVM Brywood LLC 64133 SC Fee(3) 1972 1998 23.75%
8600 E. 63rd Street
87 Fenton, MO Fenton Plaza 63206 SC Fee 1970 2* 100.00%
Gravois & Highway 141
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
74 270,761 $ 1,783,726 $ 6.59 100.0% Wal-Mart Stores (2012), J.C.
Penney (2008), Office Max
(2013), Glen's Market(2013)
75 133,981 $ 1,464,441 $10.93 100.0% T.J. Maxx (2005), Office Depot
(2005), Target (not owned),
Media Play (not owned), Toys R
Us (not owned), Circuit City
(not owned)
76 297,586 $ 1,353,609 $ 4.97 91.5% K Mart (2002), Herberger's
(2005), J.C. Penney (2003)
77 260,199 $ 1,827,645 $ 7.33 95.8% K Mart (2004), Herberger's
(2013), Movies 10/Westgate Mall
(2011)
78 167,096 $ 735,964 $ 4.40 100.0% Linens 'N Things(2016),
Kohl's(2020), Jo-ann Stores
(2010), Costco (not owned),
Sears (not owned)
79 278,510 $ 3,266,005 $11.69 99.0% Byerly's(2016), Homeplace
(2017), Barnes & Noble (2012),
Officemax (2013), T J Maxx
(2007), Blockbuster Video (not
owned), TCF Bank (not owned),
Houlihan's (not owned), American
Restaurant (not owned), Don
Pablo's (not owned), Ethan Allen
(not owned)
80 121,001 $ 776,439 $ 7.02 91.4% J.C. Penney (2006), Kmart (not
owned)
81 250,436 $ 2,481,957 $ 9.91 100.0% Kohl's (2016), Barnes & Noble
(2011), Gander Mountain(2011),
Homeplace (2016), Cub Foods (not
owned)
82 324,354 $ 2,602,560 $ 8.02 100.0% K Mart (2022), Cub Foods(2015),
Petsmart (2011), Mervyn's
(2016), Herberger's (not owned)
83 185,658 $ 956,218 $ 5.54 93.0% J.C. Penney (2007), K Mart
(2001), Hy Vee Food Stores
(2011)
84 234,652 $ 1,254,705 $ 5.47 97.8% Wal-Mart Stores (2015), J.C.
Penney (2010), Kroger (2012)
85 348,236 $ 1,913,041 $ 5.53 99.4% Sam's Wholesale Club (2012),
Goody's (2002), Wal-Mart Stores
(2012)
86 208,234 $ 966,890 $ 5.11 90.9% Big Lots (2004)
87 93,548 $ 766,275 $ 9.57 85.6% Advance Auto Parts (not owned)
19
20
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
88 Independence, MO Independence Commons 64057 SC Fee(3) 1995 1995 20.00%
900 East 39th Street
89 Shops of Willow Creek RVM Willow Creek LLC 64114 SC Fee(3) 1973 1998 23.75%
101st Terrace & Wornall Road
90 Springfield, MO Morris Corners 65804 SC GL 1989 1998 100.00%
Morris Corner 1425 East Battlefield
91 St. Louis Plaza At Sunset Hill 63128 SC Fee 1997 1998 100.00%
(Sunset), MO 10980 Sunset Plaza
92 St. Louis, MO Clocktower Place 63033 SC Fee(3) 1998 1998 50.00%
(Clocktower) 11298 W. Florissant Ave
93 St. Louis, MO Keller Plaza 63129 SC Fee 1987 1998 100.00%
Keller Plaza 4500 Lemay Ferry Road
94 St. Louis,MO American Plaza 63139 SC Fee 1998 1998 100.00%
American Plaza 3144 South Kingshighway
95 St. Louis,MO Promenade At Brentwood 63144 SC Fee 1998 1998 100.00%
Brentwood Promenade 1 Brentwood Promenade Court
96 St. Louis,MO Gravois Village 63049 SC Fee 1983 1998 100.00%
Gravois Village 4523 Gravois Village Plaza
97 St. Louis,MO Home Quarters 63123 SC Fee 1992 1998 100.00%
Home Quarters 6303 S. Linbergh Blvd.
98 St. Louis, MO Olympic Oaks Village 63121 SC Fee 1985 1998 100.00%
Olympic Oaks Vil. 12109 Manchester Road
NEVADA
99 Las Vegas, NV Family Center @ Las Vegas 89102 SC Fee 1973 1998 100.00%
(Decatur) 14833 West Charleston Blvd.
NEW HAMPSHIRE
100 Salem, NH (Dev) Salem, NH Shopping Center 03079 SC Fee(3) 1999 1* 11.88%
14 Kelly Road
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
88 382,830 $ 4,150,320 $10.88 99.7% Kohl's Department (2016), Bed,
Bath & Beyond (2012), Marshalls
(2012), Rhodes Furniture,
Inc.(2016), Barnes & Noble
(2011), AMC Theatre(2015),
Chili's (not owned), Smokehouse
(not owned), Fazoli's (not
owned)
89 15,205 $ 247,988 $16.31 100.0%
90 56,033 $ 289,062 $ 5.16 100.0% Toys R Us (2013)
91 422,961 $ 4,618,935 $10.97 99.6% Homeplace (2011), Marshalls of
Sunset Hills (2012), Home Depot
(2023), Petsmart (2011), Borders
(2011), Toys R Us (2013), Comp
USA Computer Super (2013), Ruby
Tuesdays (not owned), Lion's
Choice (not owned), Dobb's Tire
(not owned), Union Planter's
Bank (not owned), Burger King
(not owned), Longhorn Steakhouse
(not owned)
92 211,045 $ 2,033,443 $ 9.75 98.9% TJ Maxx (2002), Office Depot
(2008), Dierberg's Marketplace,
Inc.(2007), Jack-in-a-Box (not
owned), Pasta House (not owned),
Commerce Bank ATM (not owned)
93 52,842 $ 160,046 $ 7.01 43.2% Sam's (not owned), Jack-in-a-Box
(not owned), Jiffy Lube (not
owned)
94 0 $ 46,000 $ 0.00 0.0% National Tire (not owned), Sonic
(not owned)
95 299,584 $ 3,914,797 $13.07 100.0% Target (2023), Bed Bath & Beyond
(2004), Petsmart (2014), Sports
Authority (2013)
96 110,992 $ 617,857 $ 5.67 98.1% K Mart (2008)
97 118,611 $ 0 $ 0.00 0.0%
98 92,372 $ 1,194,585 $13.44 96.2% TJ Maxx (2006)
99 49,555 $ 526,432 $10.62 100.0% Albertson's (not owned)
100 170,270 $ 2,741,370 $16.10 100.0% Comp USA (2014), Linens 'N
Things (2015), MVP Sports
(2019), Michael's (2009), Best
Buy (2020)
20
21
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
NEW JERSEY
101 Eatontown, NJ 90 Highway 36 07724 SC Fee(3) 1981 1999 71.25%
102 Lawrenceville, NJ 4152 Quakerbridge Road 08648 SC Fee(3) 1981 1999 71.25%
103 Princeton, NJ Nassau Park Shopping Center 42071 SC Fee 1995 1997 100.00%
Route 1 & Quaker Bridge Road
104 Princeton, NJ Nassau Park Pavilion 42071 SC Fee 1999 1* 56.55%
(Pavilion) Route 1 and Quaker Bridge Road
NEW MEXICO
105 Los Alamos, NM Mari Mac Village 87533 SC Fee 1978 2* 100.00%
800 Trinity Drive
NORTH CAROLINA
106 Ahoskie, NC Ahoskie Commons 27910 SC Fee 1992 1994 100.00%
1400 East Memorial Drive
107 Durham, NC Oxford Commons 27702 SC Fee 1990 2* 100.00%
3500 Oxford Road
108 Durham, NC New Hope Commons 27707 SC Fee(3) 1995 1995 20.00%
(New Hope Commons) 5428-B New Hope Commons
109 Jacksonville, NC Western Plaza 28540 SC Fee 1989 2* 100.00%
US Hwy 17 & Western Avenue
110 New Bern, NC Rivertowne Square 28561 SC Fee 1989 2* 100.00%
3003 Claredon Blvd
111 Washington, NC Pamlico Plaza 27889 SC Fee 1990 2* 100.00%
536 Pamlico Plaza
112 Waynesville, NC Lakeside Plaza 28721 SC Fee 1990 2* 100.00%
201 Paragon Parkway
113 Wilmington, NC University Centre 28403 SC Fee 1989 2* 100.00%
S. College Rd & New Centre Dr.
NORTH DAKOTA
114 Dickinson, ND Prairie Hills Mall 58601 MM Fee 1978 2* 100.00%
1681 Third Avenue
115 Grand Forks, ND 2500 S Columbia Road 58201 SC Fee(3) 1978 1999 71.25%
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
101 68,196 $ 1,332,111 $19.53 100.0% Bed Bath & Beyond (2015),
Circuit City Super (2020)
102 45,000 $ 425,000 $ 9.44 100.0%
103 202,121 $ 3,365,262 $17.79 93.6% Borders (2011), Best Buy (2012),
Linens 'N Things (2011),
Petsmart (2011), Wal-Mart (not
owned), Sam's (not owned), Home
Depot (not owned), Target (not
owned)
104 167,847 $ 2,386,223 $14.22 100.0% Dick's Clothing (2015),
Michael's (2009), Kohl's
Department Store (2009),
Wegman's Market (not owned)
105 97,970 $ 526,327 $ 6.03 89.1% Furr's Supermarkets (2002),
Furr's Pharmacy (2003)
106 193,457 $ 941,262 $ 4.94 98.6%
107 205,827 $ 1,298,282 $ 6.64 95.1% Food Lion (2010), Lowe's Home
Centers, (2011), Wal-Mart (not
owned)
108 408,292 $ 4,598,552 $11.40 98.8% Wal-Mart (2015), Marshalls Store
(2011), Linens 'N Things (2011),
Best Buy (2011), Officemax
(2010), Barnes Noble Store
(2011), Dick's (not owned)
109 62,996 $ 578,524 $ 9.18 100.0% Officemax (2014), Wal-Mart (not
owned)
110 68,130 $ 560,815 $ 8.23 100.0% Goody's (2007), Wal-Mart (not
owned)
111 93,527 $ 469,610 $ 5.18 97.0% Wal-Mart Stores (2009), Wal-Mart
(not owned)
112 181,894 $ 1,125,362 $ 6.19 100.0% Wal-Mart Stores (2011), Food
Lion (2011)
113 442,110 $ 3,054,050 $ 7.14 96.7% Barnes & Noble (2007), Wal-Mart
Stores (2009), Lowe's Home
Center (2014), Goody's (2005),
Hamrick's (2002), Sam's (not
owned)
114 267,506 $ 1,133,774 $ 4.40 96.4% K Mart (2003), Herberger's
(2005), J.C. Penney (2003)
115 31,812 $ 159,060 $ 5.00 100.0% Office Depot (2010)
21
22
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
OHIO
116 Ashland, OH Kmart Plaza 44805 SC Fee 1977 2* 100.00%
US Route 42
117 Aurora, OH Barrington Town Square 44202 SC Fee 1996 1* 100.00%
70-130 Barrington Town Square
118 Bellefontaine, OH South Main Street Plaza 43311 SC Fee 1995 1998 100.00%
2250 South Main Street
119 Boardman, OH Southland Crossing 44514 SC Fee 1997 1* 100.00%
I-680 & Us Route 224
120 Canton, OH Belden Parke Crossings 44193 SC Fee(3) 1995 1* 50.00%
Dressler Rd.
121 Canton, OH (Phase II) Belden Park Crossings (II) 44720 SC Fee 1997 1* 100.00%
Dressler Road
122 Chillicothe, OH Lowe's Shopping Center 45601 SC GL 1974 2* 100.00%
867 N Bridge Street
123 Cincinnati, OH Glenway Crossing 45238 SC Fee 1990 2* 100.00%
5100 Glencrossing Way
124 Cleveland, OH Kmart Plaza - West 65th 44102 SC Fee 1977 2* 100.00%
(West 65th) 3250 West 65th Street
125 Columbus, OH Dublin Village Center 43017 SC Fee(3) 1987 1998 80.01%
(Dublin Village) 6561-6815 Dublin Center Drive
126 Columbus, OH Easton Market 43230 SC Fee 1998 1998 100.00%
(Easton Market) 3740 Easton Market
127 Columbus, OH Lennox Town Center 43212 SC Fee(3) 1997 1998 50.00%
(Lennox Town Ct) 1647 Olentangy River Road
128 Columbus, OH Sun Center 43017 SC Fee(3) 1995 1998 79.45%
(Sun Center) 3622-3860 Dublin Granville Rd
129 Dayton, OH Washington Park 45458 SC Fee(3) 1990 1998 49.29%
615-799 Lyons Road
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
116 110,656 $ 238,773 $ 2.16 100.0% K Mart (2002), Quality Stores
(2005)
117 65,373 $ 713,124 $12.76 85.5% Heinen's (not owned), Smythe
Cramer (not owned)
118 52,399 $ 432,292 $ 8.25 100.0% Goody's Store (2010), Staples
(2010)
119 506,254 $ 4,147,108 $ 8.19 100.0% Lowe's Companies (2016), Babies
'R' Us (2009), Staples Store
(2012), Dicks Clothing &
Sporting (2027), Wal-Mart Stores
(2017), Petsmart (2013), Giant
Eagle, Inc (2018), Applebee's
(not owned)
120 230,065 $ 2,188,451 $11.60 82.0% Dick's Clothing & Sporting
(2010), Kohl's Department Store
(2016), Target (not owned)
121 225,824 $ 1,996,143 $ 9.06 97.6% Value City Furniture (2011),
Homeplace (2009), Jo-ann Stores
(2008), Petsmart (2013)
122 236,009 $ 1,813,190 $ 7.68 100.0% Lowe's Home Centers (2015),
Kroger (2016), Office Max (2012)
123 235,616 $ 2,297,869 $ 9.95 98.0% Winn Dixie Stores (2010),
Service Mdse (2006)
124 49,420 $ 274,896 $ 5.56 100.0% Great A & P Tea (2002), Kmart
(not owned)
125 327,242 $ 2,583,849 $ 9.64 81.9% AMC Theatre (2007), DSW Shoe
Warehouse(2006), Phar-mor
(2018), Michael's (2004), B.J.'s
Wholesale Club (not owned)
126 509,611 $ 5,872,185 $11.52 100.0% CompUSA, Inc (2013), Staples,
Inc. (2013), Petsmart, Inc.
(2015), Golfsmith Golf Center
(2013), Michael's (2013),
Galyan's (2013), DSW Shoe
Warehouse (2012), Kittle's Home
Furnishings (2012), Bed Bath &
Beyond, Inc. (2014), TJ Maxx
(2008)
127 336,273 $ 3,125,031 $ 9.29 100.0% Target (2016), Barnes & Noble
(2007), Staples (2011), AMC
Theatres Lennox (2021)
128 317,581 $ 3,550,115 $11.24 99.5% Babies R Us (2011), Homeplace
(2010), Rhodes Furniture(2012),
Stein Mart (2007), Big
Bear(2016), Staples (2010)
129 213,798 $ 1,273,673 $ 8.56 69.6% Books a Million(2005), Phar-mor
(2008)
22
23
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
130 Dublin, OH Perimeter Center 43017 SC Fee 1996 1998 100.00%
(Perimeter Center) 6644-6804 Perimeter Loop Road
131 Eastlake, OH Kmart Plaza 44094 SC Fee 1971 2* 100.00%
33752 Vine Street
132 Elyria, OH Hills Shopping Center 44035 SC Fee 1977 2* 100.00%
825 Cleveland
133 Gahanna, OH Rogers Market Retail Center 43230 SC Fee 1995 1998 100.00%
(New Albany-Hoggi) 1370-1399 E. Johnstown Road
134 Grove City, OH Derby Square Shopping Center 43123 SC Fee 1992 1998 100.00%
(Derby Square) 2161-2263 Stringtown Road
135 Hamilton, OH Roundy's 43450 SC Fee 1986 1998 100.00%
(Roundy's) 1371 Main Street
136 Highland Heights, OH Kohls Shopping Center 44143 SC Fee 1995 2* 100.00%
6235 Wilson Mills Road
137 Hillsboro, OH Hillsboro Shopping Center 45133 SC Fee 1979 2* 100.00%
1100 North High Street
138 Huber Hts., OH North Heights Plaza 45424 SC Fee 1990 2* 100.00%
8280 Old Troy Pike
139 Lebanon, OH Countryside Place 45036 SC Fee 1990 2* 100.00%
1879 Deerfield Road
140 Macedonia, OH Macedonia Commons 44193 SC Fee(3) 1994 1994 50.00%
Macedonia Commons Blvd.
141 Macedonia, OH Macedonia Commons (Phase II) 44056 SC Fee 1999 1* 100.00%
(Phase II) 8210 Macedonia Commons
142 N. Olmsted, OH 26520 Lorain Avenue 44070 SC Fee(3) 1978 1999 71.25%
143 Niles, OH 909 Great East Plaza 44446 SC Fee(3) 1980 1999 71.25%
144 North Olmsted, OH Great Northern Plaza North 44070 SC Fee 1958 1997 100.00%
26520 Lorain Avenue
145 Pataskala, OH Village Market/Rite Aid Center 43062 SC Fee 1980 1998 100.00%
78-80 Oak Meadow Drive
146 Pickerington, OH Shoppes At Turnberry 43147 SC Fee 1990 1998 100.00%
1701-1797 Hill Road North
147 S. Dayton, OH 8336 Springboro Pike 45342 SC Fee(3) 1978 1999 71.25%
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
130 137,610 $ 1,469,036 $10.91 97.8% Big Bear(2016)
131 4,000 $ 68,400 $17.10 100.0% Kmart (not owned)
132 150,200 $ 761,970 $ 5.07 100.0% Ames Store (2003), First Nat'l
Supermarket (2010)
133 30,110 $ 465,695 $15.47 100.0%
134 128,050 $ 1,284,796 $10.03 100.0% Big Bear(2012)
135 40,000 $ 230,000 $ 5.75 100.0% Roundy's(2006)
136 247,146 $ 2,563,263 $10.37 100.0% Home Depot (2020), Dick's
Clothing/SP Goods (2016), Kohl's
(2017)
137 58,583 $ 181,422 $ 3.85 80.4% K Mart (2004)*, Bob & Carl's
(not owned)
138 163,741 $ 1,625,220 $ 9.93 100.0% Cub Foods(2011), Wal-Mart (not
owned)
139 26,500 $ 229,515 $ 9.68 89.4% Wal-Mart (not owned), Erb Lumber
(not owned)
140 233,639 $ 2,415,478 $10.34 100.0% First Natl. Supermarkets (2018),
Kohl's (2016), Wal-Mart (not
owned), Ground Round (not
owned), Blockbuster Video (not
owned), Outback Steakhouse (not
owned)
141 169,481 $ 1,601,734 $ 9.45 100.0% Cinemark (2019), Home Depot
(2020)
142 43,835 $ 240,000 $ 5.48 100.0% Babies 'R' Us (2011)
143 23,500 $ 0 $ 0.00 0.0%
144 619,058 $ 6,839,880 $11.70 94.5% Kids R Us (2008), Homeplace
(2017), Petsmart (2003), Home
Depot USA (2019), Jo-ann Stores
(2009), Marc's(2012), Comp USA
Inc. (2007), Best Buy (2010),
Marshalls/TJX Company(2005),
Kronheims Furniture (2009), Tops
Supermarket (not owned)
145 33,270 $ 189,600 $ 5.70 100.0% Cardinal
(Gardners/Lancaster)(2007)
146 59,495 $ 741,360 $14.44 86.3% Superamerica (not owned)
147 33,379 $ 239,250 $ 7.17 100.0% National City Mortgage
Company(2008)
23
24
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
148 Solon, OH Uptown Solon 44139 SC Fee 1998 1* 100.00%
Kruse Drive
149 Stow, OH Stow Community Shopping Center 44224 SC Fee 1997 1* 100.00%
Kent Road
150 Tiffin, OH Tiffin Mall 44883 MM Fee 1980 2* 100.00%
870 West Market Street
151 Toledo, OH Airport Square 43615 SC Fee 1993 1995 100.00%
5245 Airport Highway
152 Toledo, OH (Dev) Springfield Community Center 43615 SC Fee 1999 1* 100.00%
5245 Airport Highway
153 Westlake, OH West Bay Plaza 44145 SC Fee 1974 2* 100.00%
30100 Detroit Road
154 Wilmington, OH South Ridge Shopping Center 45177 SC Fee 1977 2* 100.00%
1025 S South Street
155 Xenia, OH West Park Square 45385 SC Fee 1994 1* 100.00%
1700 West Park Square
156 Zanesville, OH Kmart Plaza 43701 SC Fee 1990 2* 100.00%
3431 N Maple Ave
OREGON
157 Portland, OR Tanasbourne Town Center 97006 SC Fee(3) 1995 1996 50.00%
NW Evergreen Pkwy & NW Ring
Rd.
PENNSYLVANIA
158 E. Norriton, PA Kmart Plaza 19401 SC Fee 1975 2* 100.00%
2700 Dekalb Pike
159 Erie (Peachstreet), Peach Street Square 16509 SC GL 1995 1* 100.00%
PA 1902 Keystone Drive
160 Erie, PA Hills Plaza West 16506 SC GL 1973 2* 100.00%
2301 West 38th Street
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
148 183,288 $ 2,753,932 $15.14 99.3% Mustard Seed Mkt & Cafe(2019),
Bed, Bath and Beyond (2009),
Borders (2018)
149 406,055 $ 2,841,860 $ 7.08 98.9% K Mart (2006), Giant Eagle, Inc.
(2017), Bed Bath and Beyond
(2011), Kohl's (2019), Office
Max (2011), Target (not owned),
Applebee's (not owned)
150 232,152 $ 899,147 $ 4.19 92.3% K Mart (2005), J.C. Penney
(2005), Heilig-Meyers Furniture
(2004)
151 187,674 $ 1,539,551 $ 8.20 100.0% Sears Homelife (2002), Office
Depot (2009), Best Buy (2009),
Pharm The (2004), Michael's
(2004)
152 202,729 $ 2,063,308 $10.18 100.0% Kohl's (2019), Gander Mountain,
L.L.C.(2014), Bed Bath & Beyond
(2010), Old Navy (2005), Babies
R Us (not owned)
153 162,330 $ 942,384 $ 5.81 100.0% Marc's (2004), K Mart (2004)
154 55,130 $ 234,810 $ 4.26 100.0% Super Valu Stores, Inc(2003)
155 104,873 $ 731,076 $ 7.21 96.6% Kroger (2019), Wal-Mart (not
owned), Hollywood Video (not
owned)
156 13,283 $ 145,163 $10.93 100.0% Kmart (not owned), Theater (not
owned)
157 307,769 $ 4,625,793 $15.03 100.0% Barnes & Noble (2011), Office
Depot (2010), Haggan's (2021),
Homeplace (2018), Ross Dress for
Less (2008), Michael's (2009),
Target (not owned), Mervyn's
(not owned), Nordstrom (not
owned), Hollywood Video (not
owned)
158 174,969 $ 1,091,454 $ 6.60 94.6% K Mart (2005), Acme Markets New
Store (2002), Family Toy
Warehouse (2008), Applebee's
(not owned)
159 537,933 $ 4,436,995 $ 8.33 99.1% Lowe's Home Ctr (2015), Media
Play-4 (2011), Kohl's (2016),
Wal-Mart Stores (2015), Cinemark
(2011), Petsmart (2015), Circuit
City Superstore (2020), Home
Depot (not owned), TGI Friday's
(not owned)
160 96,000 $ 254,970 $ 4.81 55.2% West Telemarketing Corp. (2005)
24
25
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
SOUTH CAROLINA
161 Anderson, SC Northtowne Center 29621 SC Fee 1993 1995 100.00%
3812 Liberty Highway
162 Camden, SC Springdale Plaza 29020 SC Fee 1990 2* 100.00%
1671 Springdale Drive
163 Columbia, SC East Forest Plaza 29206 SC Fee 1995 1995 100.00%
5420 Forest Drive
164 Mt. Pleasant, SC Wando Crossing 29465 SC Fee 1992 1995 100.00%
1500 Highway 17 North
165 N. Charleston, SC North Pointe Plaza 29406 SC Fee 1989 2* 100.00%
7400 Rivers Avenue
166 Orangeburg, SC North Road Plaza 29115 SC Fee 1994 1995 100.00%
2795 North Road
167 S. Anderson, SC Crossroads Plaza 29624 SC Fee 1990 1994 100.00%
406 Highway 28 By-pass
168 Simpsonville, SC Fairview Station 29681 SC Fee 1990 1994 100.00%
621 Fairview Road
169 Union, SC West Towne Plaza 29379 SC Fee 1990 2* 100.00%
U.S. Hwy 176 By-Pass #1
SOUTH DAKOTA
170 Rapid City, SD Family Center @ Rapid City 57702 SC Fee 1972 1998 100.00%
740-780 Mountain View Road
171 Watertown, SD Watertown Mall 56401 MM Fee 1977 2* 100.00%
1300 9th Avenue
TENNESSEE
172 Brentwood, TN Cool Springs Pointe 37027 SC Fee 1999 2000 100.00%
(Cool Springs) I-65 and Moore's Lane
TEXAS
173 El Paso, TX 10501 Gateway West 88589 SC Fee(3) 1982 1999 71.25%
174 Ft. Worth, TX Eastchase Market 76112 SC Fee(3) 1995 1996 50.00%
SWC Eastchase Pkwy & I-30
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
161 14,250 $ 145,315 $10.20 100.0% Wal-Mart (not owned), Sam's (not
owned)
162 180,127 $ 990,793 $ 6.40 85.9% Winn Dixie Stores (2011), Belk
(2015), Wal-Mart Super Center
(not owned)
163 46,700 $ 502,650 $10.76 100.0% Wal-Mart Super Center (not
owned), Sam's (not owned)
164 208,060 $ 1,848,268 $ 9.15 97.1% Piggly Wiggly (2012), Office
Depot(2010), T.J. Maxx (2007),
Carolina Pottery (2005),
Wal-Mart (not owned)
165 251,039 $ 1,654,914 $ 7.32 90.1% Wal-Mart Stores (2009), Office
Max (2007), Service Merchandise
(not owned)
166 50,760 $ 475,037 $ 9.36 100.0% Goody's (2008), Wal-Mart (not
owned)
167 163,809 $ 562,104 $ 4.29 80.0% Wal-Mart Stores (2010)*, Ingles
Markets (2011)
168 142,133 $ 748,557 $ 5.62 93.8% Ingles Markets (2011), K Mart
(2015)
169 184,331 $ 1,035,628 $ 5.62 100.0% Wal-Mart Stores (2009), Belk
Stores Services, Inc. (2010),
Winn Dixie Stores (2010)
170 35,544 $ 263,806 $ 7.42 100.0% Safeway (not owned)
171 285,470 $ 1,499,542 $ 5.31 98.9% K Mart (2002), Herberger's
(2004), J.C. Penney (2003), Hy
Vee Supermarket (not owned)
172 200,261 $ 2,427,737 $12.12 100.0% Best Buy (2014), The Sports
Authority(2013), Linens 'N
Things (2014), DSW Shoe
Warehouse(2008), Service
Merchandise Company (2025)
173 35,000 $ 228,637 $ 6.53 100.0% Ross Dress for Less (2010)
174 205,017 $ 2,410,625 $11.82 99.5% Petsmart (2011), MJ Designs
(2011), Ross Dress for Less
(2006), United Artists Theatre
(2012), Target (not owned),
Office Depot (not owned),
Available Pad '4' (Not owned),
Toys R Us (not owned)
25
26
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
175 Roundrock, TX La Frontera 78728 SC Fee(3) 2000 1* 50.00%
Sundance Parkway & Parker Ave.
176 San Antonio, TX La Plaza Del Norte 78216 SC Fee(3) 1996 1997 35.00%
125 Ne Loop 410
UTAH
177 Hermes Building, UT The Hermes Building 84111 BC Fee 1985 1998 100.00%
455 East 500 South Street
178 Logan, UT Family Place @ Logan 84321 SC Fee 1975 1998 100.00%
400 North Street
179 Midvale, UT Family Center At Fort Union 84047 SC Fee 1973 1998 100.00%
900 East Ft Union Blvd
180 Ogden, UT Family Center At Ogden 5-Point 84404 SC Fee 1977 1998 100.00%
21-129 Harrisville Road
181 Orem, UT Family Center At Orem 84058 SC Fee 1991 1998 100.00%
1300 South Street
182 Riverdale, UT Family Center At Riverdale 84405 SC Fee 1995 1998 100.00%
1050 West Riverdale Road
183 Salt Lake City, UT Family Place @ 33rd South 84115 SC Fee 1978 1998 100.00%
(33rd) 3300 South Street
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
175 364,625 $ 4,183,670 $11.47 100.0% Lowe's Home Improvement
Center(2098), Hobby Lobby
(2015), Sam's Club(2098),
Circuit City(2016), Office Depot
(2015), Marshalls (2010), Bed
Bath & Beyond (2011), Old Navy
(2005), Barnes & Noble Books
(2011), Outlot A (not owned),
Sam's (not owned), Lowe's (not
owned), Kohl's (not owned),
Outlot B (not owned), Don
Pablo's (not owned), Outlot C
(not owned), Schlotsky's (not
owned), Red Lobster (not owned),
Logan's (not owned), TGI
Friday's (not owned)
176 310,394 $ 4,199,342 $13.53 100.0% DSW Shoe Warehouse(2007),
Oshman's Sporting Goods (2016),
Best Buy Company (2012),
Homeplace Stores (2011), Ross
Stores, Inc.(2007), PT's (not
owned)
177 53,469 $ 713,355 $16.89 79.0%
178 19,200 $ 204,887 $10.67 100.0% Rite Aid (not owned)
179 664,120 $ 6,704,541 $10.25 98.5% Mervyn's (2005), Babies R Us
(2013), Office Max (2007),
Smith's Food & Drugs(2024),
Media Play (2016), Bed Bath &
Beyond (2014), Ross Dress for
Less (2011), Wal-Mart Stores
(2015)
180 162,316 $ 844,893 $ 5.57 93.4% Harmons (2002)
181 147,976 $ 1,568,768 $10.60 100.0% Kids R Us (2011), Media Play
(2015), Office Depot (2008),
Heart's Desire (2013), R.C.
Willey (not owned), Toys R Us
(not owned)
182 590,313 $ 4,496,546 $ 7.74 98.4% Wal-Mart Stores (2011), Office
Max (2008), Gart Sports (2012),
Sportman's Warehouse(2009),
Media Play(2016), Circuit City
(2016), Target Superstore
(2017), Carl's Jr. (not owned)
183 36,694 $ 260,964 $ 8.18 87.0%
26
27
TYPE OF DDR
ZIP PROPERTY OWNERSHIP YEAR YEAR OWNERSHIP
CENTER/PROPERTY LOCATION CODE (1) INTEREST DEVELOPED ACQUIRED INTEREST
--------------------- ------------------------------ -------- -------- --------- --------- -------- ---------
184 Taylorsville, UT Family Center At Midvalley 84123 SC Fee 1982 1998 100.00%
5600 South Redwood
VERMONT
185 Berlin, VT Berlin Mall 05602 MM Fee 1986 2* 100.00%
282 Berlin Mall Rd., Unit #28
VIRGINIA
186 Fairfax, VA Fairfax Towne Center 22033 SC Fee(3) 1994 1995 20.00%
12210 Fairfax Towne Center
187 Martinsville, VA Liberty Fair Mall 24112 MM Fee(3) 1989 2* 50.00%
240 Commonwealth Boulevard
188 Pulaski, VA Memorial Square 24301 SC Fee 1990 2* 100.00%
1000 Memorial Drive
189 Winchester, VA Apple Blossom Corners 22601 SC Fee 1990 2* 100.00%
2190 S. Pleasant Valley
WASHINGTON
190 Bellingham, WA Meridian Village Shopping Ctr 98226 SC Fee(3) 1979 2000 20.00%
NE Corner G Meridian/Telegraph
WEST VIRGINIA
191 Barboursville, WV Office Max Center 25504 SC GL 1985 1998 100.00%
5-13 Mall Road
AVERAGE
COMPANY BASE
GROSS TOTAL RENT
LEASABLE ANNUALIZED (PER SF) PERCENT
AREA (SF) BASE RENT (2) LEASED ANCHOR TENANTS(LEASE EXPIRATION)
---------- ------------ ----------- ------- --------------------------------
184 771,033 $ 7,450,384 $10.37 93.2% Bentley Square(2012), Media Play
(2015), Office Max (2008),
Circuit City (2016), Petsmart
(2012), Shopko (2014), Future
Shop (2016), Gart Sports (2017),
Plitt Midvalley Cinemas (2017),
Plitt Theaters Expansion (2017),
Bed, Bath & Beyond (2015),
Harmons Superstore (not owned)
185 174,731 $ 1,420,837 $ 8.43 96.4% Wal-Mart Stores (2014), J.C.
Penney (2009)
186 253,941 $ 4,234,843 $16.68 100.0% Safeway (2019), T.J. Maxx
(2009), Tower Records (2009),
Bed, Bath & Beyond (2010),
United Artists (2014)
187 435,708 $ 2,813,037 $ 7.16 90.2% Goody's (2006),
Belk/Leggetts(2009), J.C. Penney
(2009), Sears (2009), Officemax
(2012), Kroger (2017)
188 143,299 $ 892,707 $ 6.31 98.7% Wal-Mart Stores (2011), Food
Lion (2011)
189 230,940 $ 2,118,080 $ 9.22 99.5% Martin's Food Store (2040),
Kohl's (2018), Office Max
(2012), Books-a-Million (2008)
190 208,422 $ 2,004,146 $ 9.84 97.7% Circuit City (2015), Circuit
City (2015), Home Depot Inc.,
(2013), Payless Drug (2004)
191 70,900 $ 287,237 $ 4.05 100.0% Discount Emporium(2006),
Officemax (2006), Value City
(not owned)
38,656,420 $355,392,458 95.7%
========== ============
- ---------------
(1) "SC" indicates a power center or a community shopping center, and "MM"
indicates an enclosed mini-mall. "BC" indicates a business center.
(2) Calculated as total annualized base rentals divided by Company-owned GLA
actually leased as of December 31, 2000.
(3) One of the forty-nine (49) properties owned through joint ventures which
serve as collateral for joint venture mortgage debt aggregating
approximately $979.9 million (of which the Company's proportionate share is
$322.8 million) which is not reflected in the consolidated indebtedness.
* This anchor tenant has closed and sublet the space.
1* Property developed by the Company.
2* Original IPO property.
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28
ITEM 3. LEGAL PROCEEDINGS
Other than routine litigation and administrative proceedings arising in the
ordinary course of business, the Company is not presently involved in any
litigation nor, to its knowledge, is any litigation threatened against the
Company or its properties, which is reasonably likely to have a material adverse
effect on the liquidity or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS
Pursuant to Instruction 3 to Item 401(b) of Regulation S-K, the following
information is reported below.
(a) The executive officers of the Company are as follows:
NAME AGE POSITION AND OFFICE WITH THE COMPANY
---- --- ------------------------------------
Scott A. Wolstein 48 Chairman of the Board of Directors and Chief
Executive Officer
James A. Schoff 55 Vice Chairman, Chief Investment Officer and a
Director
David M. Jacobstein 54 President and Chief Operating Officer and a
Director
Daniel B. Hurwitz 36 Executive Vice President
Joan U. Allgood 48 Senior Vice President and General Counsel
William H. Schafer 43 Senior Vice President and Chief Financial
Officer
Eric Mallory 40 Senior Vice President of Development
Richard Brown 49 Senior Vice President of Asset Management and
Operations
Joseph G. Padanilam 34 Vice President of Investment and Planning
Scott A. Wolstein has been the Chief Executive Officer and a Director of
the Company since its organization in 1992. Mr. Wolstein has been Chairman of
the Board of Directors of the Company since May 1997 and was President of the
Company from its organization until May 1999, when Mr. Jacobstein joined the
Company. Prior to the organization of the Company, Mr. Wolstein was a principal
and executive officer of Developers Diversified Group ("DDG"), the Company's
predecessor. Mr. Wolstein is a graduate of the Wharton School at the University
of Pennsylvania and of the University of Michigan Law School. He is currently a
member of the Board of the National Association of Real Estate Investment Trusts
(NAREIT), the International Council of Shopping Centers, the Real Estate
Roundtable, the Zell-Lurie Wharton Real Estate Center and Cleveland Tomorrow and
serves as the Chairman of the State of Israel Bonds, Cleveland Chapter. Mr.
Wolstein is also a member of the Urban Land Institute and the Pension Real
Estate Association (PREA). He has served as President of the Board of Trustees
of the United Cerebral Palsy Association of Greater Cleveland and as a member of
the Board of the Great Lakes Theater Festival, The Park Synagogue and the
Convention and Visitors Bureau of Greater Cleveland. Mr. Wolstein also serves as
Chairman of the Board of Trust Managers of AIP, a New York Stock Exchange listed
REIT in which the Company has a significant investment, as a representative of
the Company.
James A. Schoff has been the Vice Chairman of the Board of Directors and
Chief Investment Officer of the Company since March 1998. From the organization
of the Company until March 1998, Mr. Schoff served as Executive Vice President
and Chief Operating Officer and Director of the Company. Prior to the
organization of the Company, Mr. Schoff was a principal and executive officer of
DDG. After graduating from Hamilton College and Cornell University Law School,
Mr. Schoff practiced law with the firm of Thompson, Hine and Flory LLP in
Cleveland, Ohio where he specialized in the acquisition and syndication of real
estate properties. Mr. Schoff serves as a member of the Executive Committee and
Board of Trustees of the Western Reserve Historical Society and the National
Committee for Community and Justice. Mr. Schoff also serves as a director of AIP
as a representative of the Company.
28
29
David M. Jacobstein has been the President and Chief Operating Officer of
the Company since May 1999 and Director of the Company since May 2000. From 1986
until the time he joined the Company, Mr. Jacobstein was employed by Wilmorite,
Inc., a Rochester, New York based shopping center developer where most recently
he served as Vice Chairman and Chief Operating Officer. Mr. Jacobstein is a
graduate of Colgate University and George Washington University Law School.
Prior to joining Wilmorite, Mr. Jacobstein practiced law with the firms of
Thompson, Hine & Flory LLP in Cleveland, Ohio and Harris, Beach & Wilcox in
Rochester, New York where he specialized in corporate and securities law.
Daniel B. Hurwitz was appointed Executive Vice President in June 1999. Mr.
Hurwitz most recently served as Senior Vice President and Director of Real
Estate and Development for Reading, Pennsylvania based Boscov's Department
Store, Inc., a privately held department store chain, from 1991 until he joined
the Company. Prior to Boscov's, Mr. Hurwitz served as Development Director for
The Shopco Group, a New York City based developer of regional shopping malls.
Mr. Hurwitz is a graduate of Colgate University, and the Wharton School of
Business Executive Management Program at the University of Pennsylvania. He is a
member of the International Council of Shopping Centers, Urban Land Institute,
and has served as a Board member of the Colgate University Alumni Corporation,
Reading JCC, American Cancer Society (Regional), and the Greater Berk's Food
Bank.
Joan U. Allgood has been a Senior Vice President and General Counsel of the
Company since May 1999, a Vice President and General Counsel of the Company
since its organization as a public company in 1993 and General Counsel of its
predecessor entities since 1987. Mrs. Allgood practiced law with the firm of
Thompson, Hine and Flory LLP from 1983 to 1987, and is a graduate of Denison
University and Case Western Reserve University School of Law.
William H. Schafer has been a Senior Vice President and Chief Financial
Officer of the Company since May 1999, Vice President and Chief Financial
Officer of the Company since its organization as a public company in 1993 and
the Chief Financial Officer of its predecessor entities since April 1992. Mr.
Schafer joined the Cleveland, Ohio office of the Price Waterhouse LLP accounting
firm in 1983 and served there as a Senior Manager from July 1990 until he joined
the organization in 1992. Mr. Schafer graduated from the University of Michigan
with a Bachelor of Arts degree in Business Administration.
Eric Mallory has been the Senior Vice President of Development since May
1999, and Vice President of Development since April 1999. Prior to that Mr.
Mallory was Executive Vice President of PREIT-Rubin, Inc. in Philadelphia,
Pennsylvania since 1993. Mr. Mallory is a graduate of the University of
Pittsburgh and received his MBA from the University of Evansville.
Richard Brown has been the Senior Vice President of Asset Management and
Operation since February 2001 and Vice President of the department since January
2000. Prior to joining the Company, Mr. Brown was Vice President of Asset
Management of PREIT-Rubin, Inc., in Philadelphia, Pennsylvania since 1996 and
Vice President of Retail Asset Management of the Balcor Company, in Chicago,
Illinois since 1987. Mr. Brown is a Canadian chartered accountant and received
his Bachelor of Commerce from Carleton University, in Ottawa, Canada.
Joseph G. Padanilam has been Vice President of Investment and Planning
since July 2000, and Vice President of Tax since October 1998. Prior to that Mr.
Padanilam most recently served as a Senior Manager at PricewaterhouseCoopers
LLP, which he joined in 1990. Mr. Padanilam is a graduate of the University of
Notre Dame and received his MBA from Washington University in St. Louis.
29
30
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The following table shows the high and low sales price of the Company's
common shares on the New York Stock Exchange (the "NYSE") composite tape for the
quarterly periods indicated and the dividends declared per common share with
respect to each such quarter:
2000 HIGH LOW DIVIDENDS
---- ---- --- ---------
First........................................... $13 7/8 $11 $ .36
Second.......................................... 15 7/8 13 1/2 .36
Third........................................... 16 1/4 12 3/4 .36
Fourth.......................................... 13 3/4 11 5/8 .36
-----
$1.44
1999 HIGH LOW DIVIDENDS
---- ---- --- ---------
First........................................... $18 1/2 $13 5/8 $ .35
Second.......................................... 17 1/2 13 7/8 .35
Third........................................... 16 5/8 13 5/16 .35
Fourth.......................................... 14 7/8 12 5/16 .35
-----
$1.40
The approximate number of record holders of the Company's common shares
(its only class of common equity) at March 15, 2001 was 480, and the approximate
number of beneficial owners of such shares was 21,000.
In March 2001, the Company declared its 2001 first quarter dividend to
shareholders of record on March 26, 2001 of $0.37 per share, a 2.8% increase
over the quarterly dividend rate of $0.36 per share in 2000.
The Company intends to continue to declare quarterly dividends on its
common shares. However, no assurances can be made as to the amounts of future
dividends, since such dividends are subject to the Company's cash flow from
operations, earnings, financial condition, capital requirements and such other
factors as the Board of Directors considers relevant. The Company is required by
the Internal Revenue Code of 1986, as amended, to distribute at least 95% of its
REIT taxable income. The amount of cash available for dividends is impacted by
capital expenditures and debt service requirements to the extent that the
Company were to fund such items out of cash flow from operations.
In June 1995, the Company implemented a dividend reinvestment plan under
which shareholders may elect to reinvest their dividends automatically in common
shares. Under the plan, the Company may, from time to time, elect to purchase
common shares in the open market on behalf of participating shareholders or may
issue new common shares to such shareholders.
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31
ITEM 6. SELECTED FINANCIAL DATA
The financial data included in the following table has been derived from
the financial statements for the last five years and includes the information
required by Item 301 of Regulation S-K.
COMPARATIVE SUMMARY OF SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------
2000(1) 1999(1) 1998(1) 1997(1) 1996(1)
-------- -------- -------- -------- --------
OPERATING DATA:
Revenues (primary real estate
rentals).......................... $285,793 $263,933 $228,168 $169,223 $130,905
-------- -------- -------- -------- --------
Expenses:
Rental operation.................. 80,872 69,670 59,498 47,200 35,123
Depreciation & amortization....... 54,201 50,083 42,957 32,227 24,899
Interest.......................... 77,030 68,023 57,196 35,558 29,888
-------- -------- -------- -------- --------
212,103 187,776 159,651 114,985 89,910
-------- -------- -------- -------- --------
Income before equity in net income
from joint ventures, minority
equity investment, minority equity
interests, gain (loss) on
disposition of real estate and
investments and extraordinary
items............................. 73,690 76,157 68,517 54,238 40,995
Equity in net income of joint
ventures.......................... 17,072 18,993 12,461 10,807 8,547
Equity in net income from minority
equity investment................. 6,224 5,720 890 -- --
Minority interests.................. (19,593) (11,809) (3,312) (1,049) --
Gain (loss) on disposition of real
estate and investments............ 23,440 (1,664) 248 3,526 --
-------- -------- -------- -------- --------
Income before extraordinary item.... 100,833 87,397 78,804 67,522 49,542
Extraordinary item (2).............. -- -- (882) -- --
-------- -------- -------- -------- --------
Net income.......................... $100,833 $ 87,397 $ 77,922 $ 67,522 $ 49,542
======== ======== ======== ======== ========
Net income applicable to common
shareholders...................... $ 73,571 $ 60,135 $ 57,969 $ 53,322 $ 35,342
======== ======== ======== ======== ========
Earnings per share data -- Basic:(3)
Income before extraordinary
item.............................. $ 1.31 $ 0.99 $ 1.03 $ 1.03 $ 0.84
Net income........................ $ 1.31 $ 0.99 $ 1.02 $ 1.03 $ 0.84
Weighted average number of common
shares......................... 55,959 60,985 56,949 51,760 42,294
Earnings per share data -- Diluted:(3)
Income before extraordinary
item.............................. $ 1.31 $ 0.95 $ 1.00 $ 1.03 $ 0.84
Net income........................ $ 1.31 $ 0.95 $ 0.98 $ 1.03 $ 0.84
Weighted average number of common
shares......................... 56,176 63,468 58,509 52,124 42,372
Annualized cash dividend............ $ 1.44 $ 1.40 $ 1.31 $ 1.26 $ 1.20
31
32
AT DECEMBER 31,
----------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- --------
BALANCE SHEET DATA:
Real estate (at cost)......... $2,161,810 $2,068,274 $1,896,763 $1,325,742 $991,647
Real estate, net of
accumulated depreciation.... 1,864,563 1,818,362 1,693,666 1,154,005 849,608
Advances to and investments in
joint ventures.............. 239,841 299,176 266,257 136,267 106,796
Total assets.................. 2,332,021 2,320,860 2,126,524 1,391,918 975,126
Total debt.................... 1,227,575 1,152,051 1,000,481 668,521 478,432
Shareholders' equity.......... 783,750 852,345 902,785 669,050 469,336
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
2000(1) 1999(1) 1998(1) 1997(1) 1996(1)
--------- --------- --------- --------- ---------
OTHER DATA:
Cash flow provided from (used
in):
Operating activities.......... $ 146,272 $ 152,930 $ 140,078 $ 94,393 $ 75,820
Investing activities.......... (20,579) (209,708) (538,289) (416,220) (199,670)
Financing activities.......... (127,442) 60,510 400,453 321,832 123,851
Funds from operations (4):
Net income applicable to
common shareholders........ $ 73,571 $ 60,135 $ 57,969 $ 53,322 $ 35,342
Depreciation and amortization
of real estate
investments................ 52,975 49,137 42,408 31,869 24,669
Equity in net income from
joint ventures............. (17,072) (18,993) (12,461) (10,807) (8,547)
Joint ventures' funds from
operations................. 30,512 32,316 20,779 16,077 13,172
Equity in net income from
minority equity
investment................. (6,224) (5,720) (890) -- --
Minority equity investment
funds from operations.... 14,856 12,965 1,493 -- --
Minority interests (OP
Units)................... 4,125 6,541 3,069 10 --
(Gain) loss on disposition of
real estate and
investments................ (23,440) 1,664 (248) (3,526) --
Extraordinary item (2)........ -- -- 882 -- --
--------- --------- --------- --------- ---------
$ 129,303 $ 138,045 $ 113,001 $ 86,945 $ 64,636
========= ========= ========= ========= =========
Weighted average number of
common shares outstanding
(Diluted) (3).............. 59,037 62,309 62,501 55,502 45,952
- ---------------
(1) As described in the consolidated financial statements, the Company acquired
three properties in 2000 (two of which are owned through joint ventures),
five properties in 1999 (two of which are owned through joint ventures), 41
properties in 1998 (five of which are owned through joint ventures), eight
properties in 1997 (one of which is owned through a joint venture) and five
properties in 1996.
(2) In 1998 the extraordinary charge relates primarily to the write-off of
deferred finance costs.
(3) Effective August 3, 1998, the Company executed a two-for-one stock split for
shareholders of record on July 27, 1998. Earnings per share data is
reflected for all years utilizing SFAS 128.
(4) Industry analysts generally consider funds from operations ("FFO") to be an
appropriate measure of the performance of an equity REIT. FFO does not
represent cash generated from operating activities in
32
33
accordance with generally accepted accounting principles and is not
necessarily indicative of cash available to fund cash needs and should not
be considered as an alternative to net income as an indicator of the
Company's operating performance or as an alternative to cash flow as a
measure of liquidity. FFO is defined generally as net income applicable to
common shareholders excluding gains (losses) on sales of real estate and
investments, extraordinary items, adjusting for certain noncash items,
principally real property depreciation, equity income (loss) from its joint
ventures and minority equity investment and adding the Company's
proportionate share of FFO of its unconsolidated joint ventures and minority
equity investment, determined on a consistent basis. Other real estate
companies may calculate FFO in a different manner.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements, the notes thereto and the comparative summary
of selected financial data appearing elsewhere in this report. Historical
results and percentage relationships set forth in the consolidated financial
statements, including trends which might appear, should not be taken as
indicative of future operations. The Company considers portions of this
information to be "forward-looking statements" within the meaning of Section 27A
of the Securities Exchange Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, both as amended, with respect to the Company's
expectations for future periods. Forward-looking statements include, without
limitation, statements related to acquisitions (including any related pro forma
financial information) and other business development activities, future capital
expenditures, financing sources and availability and the effects of
environmental and other regulations. Although the Company believes that the
expectations reflected in those forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
achieved. For this purpose, any statements contained herein that are not
statements of historical fact should be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes", "anticipates", "plans",
"expects", "seeks", "estimates", and similar expressions are intended to
identify forward-looking statements. Readers should exercise caution in
interpreting and relying on forward-looking statements since they involve known
and unknown risks, uncertainties and other factors which are, in some cases,
beyond the Company's control and could materially affect the Company's actual
results, performance or achievements.
Factors that could cause actual results, performance or achievements to
differ materially from those expressed or implied by forward-looking statements
include, but are not limited to, the following:
- The Company is subject to general risks affecting the real estate
industry, including the need to enter into new leases or renew leases on
favorable terms to generate rental revenues;
- The Company is subject to competition for tenants from other owners of
retail properties and its tenants are subject to competition from other
retailers and methods of distribution. The Company is dependent upon the
successful operations and financial condition of its tenants,
particularly certain of its major tenants, and could be adversely
affected by the bankruptcy of those tenants;
- The Company may fail to anticipate the effects on its properties of
changes in consumer buying practices, including sales over the Internet,
and the resulting retailing practices and space needs of its tenants;
- E-commerce may affect the sales volume of the Company's tenants which may
reduce the amount of percentage rental income;
- The Company may fail to identify, acquire, construct or develop
additional properties that produce a desired yield on invested capital,
or may fail to effectively integrate acquisitions of properties or
portfolios of properties;
- Debt and equity financing necessary for the Company to continue to grow
and operate its business may not be available or may not be available on
favorable terms;
- The Company is subject to complex regulations related to its status as a
real estate investment trust ("REIT") and would be adversely affected if
it failed to qualify as a REIT;
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- The Company must make distributions to shareholders to continue to
qualify as a REIT, and if the Company borrows funds to make distributions
then those borrowings may not be available on favorable terms;
- The Company could be adversely affected by changes in the local markets
where its properties are located, as well as by adverse changes in
national economic and market conditions;
- The Company is subject to potential environmental liabilities;
- The Company could be adversely affected by changes in government
regulations, including changes in environmental, zoning, tax and other
regulations; and
- Changes in interest rates could adversely affect the market price for the
Company's common shares, as well as its performance and cash flow.
COMPARISON OF 2000 TO 1999 RESULTS OF OPERATIONS
Revenues from Operations
Total revenues increased $21.9 million, or 8.3%, to $285.8 million for the
year ended December 31, 2000 as compared to $263.9 million in 1999. Base and
percentage rents for 2000 increased $12.4 million, or 6.4%, to $206.2 million as
compared to $193.8 million in 1999. Approximately $3.3 million of the increase
in base and percentage rental income was the result of new leasing, re-tenanting
and expansion of the "Core Portfolio Properties" (for purposes of comparison,
for any particular calendar year, "Core Portfolio Properties" refers to shopping
center properties owned as of January 1, of the prior calendar year), an
increase of 1.8% over 1999 revenues from Core Portfolio Properties. Without the
impact of bankruptcies, primarily associated with Home Quarters, Service
Merchandise, Factory Card Outlet and Just For Feet, actual base and percentage
revenues would have increased approximately $5.2 million, or 3.1%, as compared
to the same period in 1999. The shopping center acquired by the Company in 2000
contributed $1.7 million of additional base and percentage revenue and the nine
shopping centers developed by the Company contributed $8.9 million. These
increases were offset by a $1.5 million decrease due to the sale of five
properties in 1999 and 2000.
At December 31, 2000 and 1999, the aggregate occupancy rate of the
Company's shopping centers stood at 95.7%. The average annualized base rent per
leased square foot, including those properties owned through joint ventures, was
$9.66 at December 31, 2000 as compared to $9.20 at December 31, 1999. During
2000, same store sales, for those tenants required to report sales
(approximately 19.6 million square feet), increased 2.6% to $236 per square
foot. Same store sales for tenants reporting sales in the Company's community
center portfolio, excluding the Company's 12 enclosed mini-malls, was $245 per
square foot.
Recoveries from tenants for the year ended December 31, 2000 increased $6.7
million, to $54.5 million as compared to $47.8 million in 1999. This increase
was directly related to the increase in operating and maintenance expenses and
real estate taxes primarily associated with the 2000 and 1999 shopping center
acquisitions and developments. Recoveries were approximately 90.2% of operating
and maintenance expenses and real estate taxes in 2000 as compared to 92.1% in
1999. The slight decrease is primarily attributed to a lower average occupancy
rate in 2000 compared to 1999 and increases in operating expenses and real
estate taxes at certain shopping centers.
Ancillary and other property related income for the year ended December 31,
2000 increased $0.2 million to $1.9 million as compared to $1.7 million in 1999.
This increase was primarily due to the Company pursuing additional ancillary
income opportunities. It is anticipated that growth in ancillary revenues will
continue in 2001 as additional opportunities are pursued.
Management fee income for the year ended December 31, 2000 increased $1.9
million, to $7.0 million as compared to $5.1 million in 1999. This increase was
primarily associated with the formation of new joint ventures in 1999 and 2000
for which the Company became the property manager. In addition, in the fourth
quarter of 2000, the Company assumed property management responsibilities for
all the real estate assets of Burnham Pacific Properties ("Burnham").
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Development fee income for the year ended December 31, 2000 decreased $1.4
million, to $2.6 million as compared to $4.0 million in 1999. This decrease was
due to a decrease in the development activities performed directly for third
parties.
Interest income for the year ended December 31, 2000, decreased $1.9
million, to $4.3 million as compared to $6.4 million in 1999. This decrease was
primarily associated with the repayment of loans and advances made to certain
joint ventures in 1999 and 2000.
Other income for the year ended December 31, 2000 increased $4.2 million,
to $9.2 million as compared to $5.0 million in 1999. This generally reflects an
increase in lease termination and bankruptcy settlement revenues aggregating
approximately $5.5 million offset by a decrease of approximately $0.7 million
relating to commissions and financing fees earned in 1999 from the Company's
joint ventures and a charge of $0.6 million relating to the write-off of
abandoned development projects in 2000.
Expenses from Operations
Rental operating and maintenance expenses for the year ended December 31,
2000 increased $2.4 million, or 9.6%, to $27.0 million as compared to $24.6
million in 1999. An increase of $1.3 million was attributable to the 10 shopping
centers acquired and developed in 2000 and 1999 and $1.2 million is primarily
attributable to an increase in various maintenance items in the Core Portfolio
Properties. These increases were offset by a decrease of approximately $0.1
million due to the sale of five properties in 1999 and 2000.
Real estate taxes increased $6.2 million, or 22.6%, to $33.4 million for
the year ended December 31, 2000 as compared to $27.2 million in 1999. This
increase was primarily attributable to the growth related to the 10 shopping
centers acquired and developed in 2000 and 1999 which contributed $1.5 million
of the increase and an additional $4.9 million is primarily associated with
recently developed and acquired properties included in the Core Portfolio
Properties which were not fully assessed in 1999. These increases were offset by
a decrease of approximately $0.2 million due to the sale of five properties in
1999 and 2000.
General and administrative expenses increased $2.6 million, or 15.0%, to
$20.4 million for the year ended December 31, 2000 as compared to $17.8 million
in 1999. Total general and administrative expenses were approximately 4.3% and
4.1% of total revenues, including revenues of joint ventures, for the years
ended December 31, 2000 and 1999, respectively, (3.9% in 1999 after excluding a
$0.8 million severance charge).
The increase in general and administrative expenses is attributable to the
growth of the Company primarily related to shopping center acquisitions,
expansions and developments (including those owned through joint ventures), the
addition of several new key executives, employee benefits and the opening of a
west coast office in conjunction with the Company's increased ownership of
assets on the west coast and property management responsibilities retained for
Burnham in the fourth quarter of 2000.
Interest expense, net of amounts capitalized, increased $9.0 million, or
13.2%, to $77.0 million for the year ended December 31, 2000 as compared to
$68.0 million in 1999. The overall increase in interest expense was primarily
related to the acquisition and development of 10 shopping centers during 2000
and 1999 and an increase in interest rates. The weighted average debt
outstanding and related weighted average interest rate during 2000 was $1.2
billion and 7.7%, respectively, as compared to $1.1 billion and 7.2%,
respectively, during 1999. Interest capitalized, in connection with development
and expansion projects, was $18.2 million for the year ended December 31, 2000
as compared to $13.5 million in 1999.
Depreciation increased $4.1 million, or 8.2%, to $54.2 million for the year
ended December 31, 2000 as compared to $50.1 million in 1999. The increase was
primarily attributable to the 10 shopping centers acquired and developed in 2000
and 1999 which contributed $2.5 million of the increase, an additional $1.6
million increase related to the expansions and improvements associated with the
Core Portfolio Properties and approximately $0.3 million related to increased
depreciation expense for personal property primarily associated with the
relocation of the Company's headquarters. These increases are offset by a
decrease of approximately $0.3 million, relating to the sale of five shopping
center properties in 1999 and 2000.
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Other
Equity in net income of joint ventures decreased $1.9 million, or 10.1%, to
$17.1 million in 2000 as compared to $19.0 million in 1999. A decrease of $5.2
million related to the Company's sale of 60% of its half interest in the
Community Centers Joint Venture. In addition, during the fourth quarter of 2000,
an equity affiliate of the Company recognized a gain, net of tax, of
approximately $1.7 million relating to the sale of five former Best Products
locations. This gain was offset by a $1.8 million impairment write-off, net of
tax, of an investment in a technology company. These reductions were offset by
an increase of $2.0 million which is primarily attributable to the joint
ventures formed in 2000 and 1999 and an additional increase of $1.3 million
related to various other joint ventures formed prior to 1999.
Equity in net income of minority equity investment increased $0.5 million,
to $6.2 million for the year ended December 31, 2000, as compared to $5.7
million for the same period in 1999. This increase relates to the Company's
equity investment in American Industrial Properties ("AIP") (NYSE: IND). This
increase is primarily attributable to an increase in operating income from the
office and industrial properties owned by AIP. This increase was impacted by
certain basis differentials which resulted in adjustments to depreciation and
amortization and, more significantly, to adjustments to gain (loss) on sale of
assets. The basis differentials relate to certain adjustments that were made to
the Company's accounts to reflect the fair market value of the assets at the
date of the Company's initial investment in AIP. In addition, the $6.2 million
net income from minority equity investment recorded in 2000 includes a $4.9
million impairment loss on the pending sale of 31 properties to an institutional
investor partially offset by a $3.6 million gain from the sale of an office
building in the fourth quarter of 2000. Accordingly, the Company's equity in net
income for AIP is adjusted, as discussed above, to reflect these basis
differences. As of December 31, 2000, the Company owned approximately 9.7
million shares of AIP which approximates 46.0% of AIP's total outstanding common
shares.
The expense relating to minority interests increased $7.8 million, to $19.6
million for the year ended December 31, 2000 as compared to $11.8 million in
1999. This expense represents the income allocation associated with the priority
distributions relating to minority equity interests. An increase of $10.1
million relates to the Company's issuance of preferred operating partnership
minority units ("Preferred Units") in September 1999 and May 2000. These
Preferred Units may be exchanged, under certain circumstances, into preferred
shares of the Company. In addition, a $0.1 million increase related to minority
interests in shopping centers. This increase was offset by a $2.4 million
decrease due to the Company's purchase of 3.6 million common operating
partnership units ("OP Units") in July 2000, representing a minority partner's
ownership interest in 11 operating properties.
Gain on disposition of real estate and investments aggregated $23.4 million
for the year ended December 31, 2000. In 2000, the Company sold several
properties including shopping centers located in Stone Mountain, Georgia;
Florence, Kentucky; a portion of a shopping center in Las Vegas, Nevada and
Wal-Mart stores in Camden, South Carolina and New Bern and Washington, North
Carolina and its 50% joint venture interest in a recently developed shopping
center in Fenton, Missouri. The aggregate net gain from the aforementioned
transactions was $6.8 million. In addition, the Company sold 60% of its half
interest in a joint venture which owns 10 operating shopping centers for
approximately $163 million, including the assumption of approximately $97
million of debt, and recognized a gain of approximately $16.1 million. In
connection with the formation of a joint venture in February 2000, the Company
sold one property, received cash and a 50% partnership interest and recognized a
gain of approximately $0.5 million. Net proceeds received in conjunction with
the above sales aggregated $133.0 million. The Company utilized approximately
$62.9 million of net sales proceeds to repurchase 4.7 million of the Company's
common shares in open market transactions at an average price of $13.26 per
share from March through June 2000.
The loss on disposition of real estate and investments, aggregating $1.7
million for the year ended December 31, 1999, primarily relates to the sale of a
shopping center and residual land in Pensacola, Florida to a major retailer
which resulted in a $2.2 million loss. In connection with this disposition, the
Company developed a 17,000 square foot shopping center adjacent to the site
sold. In addition, the Company sold four properties at an aggregate gain of
approximately $0.5 million which partially offsets the previously described
loss. Net proceeds received in conjunction with the above sales aggregated $13.9
million.
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Net Income
Net income increased $13.4 million to $100.8 million for the year ended
December 31, 2000 as compared to $87.4 million in 1999. The increase in net
income was primarily attributable to increases in gain on sale of real estate
and investments of $25.1 million, increases in net operating revenues (total
revenues less operating and maintenance expenses, real estate taxes, and general
and administrative expense) aggregating $10.6 million, resulting from new
leasing, re-tenanting and expansion of Core Portfolio Properties and the 10
shopping centers acquired and developed in 2000 and 1999 and an increase in
minority equity investment of $0.5 million. These increases were offset by a
decrease of $1.9 million related to equity in net income from joint ventures and
increases in interest expense, depreciation and amortization, and minority
interest expense of $9.0 million, $4.1 million and $7.8 million, respectively.
COMPARISON OF 1999 TO 1998 RESULTS OF OPERATIONS
Revenues from Operations
Total revenues increased $35.8 million, or 15.7%, to $263.9 million for the
year ended December 31, 1999 as compared to $228.1 million in 1998. Base and
percentage rents for 1999 increased $22.9 million, or 13.4%, to $193.8 million
as compared to $170.9 million in 1998. Approximately $6.6 million of the
increase in base and percentage rental income was the result of new leasing,
re-tenanting and expansion of the Core Portfolio Properties, an increase of 5.8%
over 1998 revenues from Core Portfolio Properties. The 38 shopping centers
acquired by the Company in 1999 and 1998 contributed $28.1 million of additional
revenue and the nine shopping centers developed by the Company contributed $4.6
million. These increases were offset by a decrease of $16.4 million relating to
the transfer of five business centers to AIP in August 1998 and the transfer of
six properties to a joint venture in September 1998.
At December 31, 1999, the aggregate occupancy rate of the Company's
shopping centers was 95.7% as compared to 96.5% at December 31, 1998. The
average annualized base rent per leased square foot, including those properties
owned through joint ventures, was $9.20 at December 31, 1999 as compared to
$8.99 at December 31, 1998. During 1999, same store sales, for those tenants
required to report sales (approximately 18.9 million square feet), increased
3.4% to $235 per square foot.
Recoveries from tenants for the year ended December 31, 1999 increased $4.7
million, to $47.8 million as compared to $43.1 million in 1998. This increase
was directly related to the increase in operating and maintenance expenses and
real estate taxes primarily associated with the 1999 and 1998 shopping center
acquisitions and developments. Recoveries were approximately 92.1% of operating
and maintenance expenses and real estate taxes in 1999 as compared to 92.5% in
1998.
Ancillary and other property related income for the year ended December 31,
1999 increased $0.4 million, to $1.7 million as compared to $1.3 million in 1998
primarily associated with the growth in shopping center acquisitions and
developments.
Management fee income for the year ended December 31, 1999 increased $1.4
million, to $5.1 million as compared to $3.7 million in 1998. This increase was
primarily associated with twelve additional joint ventures formed in 1998 and
1999 for which the Company was engaged as the property manager.
Development fee income for the year ended December 31, 1999 increased $2.3
million, to $4.0 million as compared to $1.7 million in 1998 primarily relating
to an increase in development activities performed directly for third parties in
1999.
Interest income for the year ended December 31, 1999 increased $1.3
million, to $6.4 million as compared to $5.1 million in 1998. This increase was
primarily associated with advances made to certain joint ventures formed in 1998
and 1999.
Other income for the year ended December 31, 1999 increased $2.5 million,
to $5.0 million as compared to $2.5 million in 1998, primarily related to
increases in lease termination fees of approximately $1.8 million and increases
in other income of approximately $0.7 million, comprised of commissions,
financing fees earned from the Company's joint ventures and other miscellaneous
revenue items.
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Expenses from Operations
Rental operating and maintenance expenses for the year ended December 31,
1999 increased $4.6 million, or 22.8%, to $24.6 million as compared to $20.0
million in 1998. An increase of $3.0 million was attributable to the 47 shopping
centers acquired and developed in 1999 and 1998 and $3.1 million related to the
Core Portfolio Properties generally associated with increased snow removal costs
and other maintenance related costs. These increases were offset by a decrease
of $1.5 million relating to the transfer of five business center properties to
AIP in August 1998 and the transfer of six shopping center properties into a
joint venture in September 1998.
Real estate taxes increased $0.7 million, or 2.8%, to $27.2 million for the
year ended December 31, 1999 as compared to $26.5 million in 1998. This increase
was primarily attributable to the growth related to the 47 shopping centers
acquired and developed in 1999 and 1998 which contributed $4.1 million of the
increase and an additional $0.4 million of the increase related primarily to
expansions associated with the Core Portfolio Properties. These increases were
offset by a decrease of $3.8 million relating to the transfer of five business
center properties to AIP in August 1998 and the transfer of six shopping center
properties into a joint venture in September 1998.
General and administrative expenses increased $4.9 million, or 37.6%, to
$17.8 million for the year ended December 31, 1999 as compared to $12.9 million
in 1998. Total general and administrative expenses were approximately 4.1% (3.9%
after excluding a $0.8 million severance charge, described below) and 3.8% of
total revenues, including revenues of joint ventures, for the years ended
December 31, 1999 and 1998, respectively.
The increase in general and administrative expenses is attributable to the
growth of the Company primarily related to shopping center acquisitions,
expansions and developments (including those owned through joint ventures),
relocation of the Company's headquarters to a new office, additional consulting
costs, professional services, the addition of several new key executives and a
severance charge. The increase was offset by adjustments to certain variable
rate executive incentive compensation accruals of approximately $1.3 million.
Interest expense, net of amounts capitalized, increased $10.8 million, or
18.9%, to $68.0 million for the year ended December 31, 1999 as compared to
$57.2 million in 1998. The overall increase in interest expense was primarily
related to the acquisition and development of shopping centers during 1999 and
1998. The weighted average debt outstanding and related weighted average
interest rate during 1999 was $1.1 billion and 7.2%, respectively, as compared
to $911.7 million and 7.4%, respectively, during 1998. Interest capitalized, in
connection with development and expansion projects, was $13.5 million for the
year ended December 31, 1999 as compared to $9.9 million in 1998.
Depreciation and amortization expense increased $7.1 million, or 16.6%, to
$50.1 million for the year ended December 31, 1999 as compared to $43.0 million
in 1998. The increase was primarily attributable to the growth related to the 47
shopping centers acquired and developed in 1999 and 1998 which contributed $8.3
million of the increase, an additional $2.4 million increase related to the
expansions and improvements associated with the Core Portfolio Properties and
approximately $0.4 million related to increased depreciation expense related to
personal property primarily associated with the relocation of the Company's
headquarters. These increases were offset by a decrease of $4.0 million relating
to the transfer of five business center properties to AIP in August 1998 and the
transfer of six shopping center properties into a joint venture in September
1998.
Other
Equity in net income of joint ventures increased $6.5 million, or 52.4%, to
$19.0 million in 1999 as compared to $12.5 million in 1998. An increase of $5.5
million is primarily attributable to the joint ventures formed and/or acquired
during 1998 and 1999 and the remaining $1.0 million increase is primarily due to
the Community Centers Joint Venture and Liberty Fair Joint Venture of $0.9
million and $0.1 million, respectively. The increase in income of $5.5 million
is comprised of $2.9 million relating to the formation of a joint venture in
September 1998 with DRA Advisors whereby the Company contributed six wholly
owned shopping centers, $1.1 million from DD Development Company and $1.0
million through the formation of the Sansone management and development
companies. The Company's joint ventures in Merriam and Leawood, Kansas each
contributed $0.4 million of additional income. These increases are offset by a
$0.3 million decrease due to the
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impact of other joint ventures formed in 1998 to develop shopping center
properties which were in the lease-up phase in 1999.
Equity in net income of minority equity investment increased $4.8 million,
to $5.7 million for the year ended December 31, 1999, as compared to $0.9
million for the same period in 1998. This increase relates to the Company's
equity investment in AIP which began in August 1998. Initially, the Company
owned approximately 16% of the outstanding shares of AIP and as of December 31,
1999, the Company owned approximately 9.7 million shares of AIP which
approximated 46% of AIP's outstanding common shares.
The expense relating to minority interests increased $8.5 million, to $11.8
million for the year ended December 31, 1999 as compared to $3.3 million in
1998. This expense represents the income allocation associated with the priority
distributions relating to minority equity interests. An increase of $5.0 million
relates to the Company's issuance of Preferred Units in September 1999 and
December 1998. These Preferred Units may be exchanged, under certain
circumstances, into preferred shares of the Company. An increase of $3.6 million
relates to the Company's issuance of OP Units as partial consideration for
shopping centers acquired in 1998 and 1999. This increase related to the
Company's purchase of 22 shopping centers in 1998 and 1999 and as consideration,
the related issuance of OP Units which are exchangeable, in certain
circumstances and at the option of the Company, into 4.7 million common shares
of the Company or for cash. These increases were offset by a $0.1 million net
decrease related to minority interests in shopping centers.
The loss on disposition of real estate and investments, aggregating $1.7
million for the year ended December 31, 1999, primarily relates to the sale of a
shopping center and residual land in Pensacola, Florida to a major retailer
which resulted in a $2.2 million loss. In connection with this disposition, the
Company developed a 17,000 square foot shopping center adjacent to the site
sold. In addition, the Company sold four properties at an aggregate gain of
approximately $0.5 million which partially offsets the previously described
loss. Net proceeds received in conjunction with the above sales aggregated $13.9
million.
The extraordinary item, which aggregated $0.9 million for the year ended
December 31, 1998, relates to the write-off of unamortized deferred finance
costs associated with the amended and restated $375 million revolving credit
facility.
Net Income
Net income increased $9.5 million to $87.4 million for the year ended
December 31, 1999 as compared to $77.9 million in 1998. The increase in net
income was primarily attributable to increased net operating revenues (total
revenues less operating and maintenance expenses, real estate taxes, and general
and administrative expense) aggregating $25.6 million, resulting from new
leasing, re-tenanting and expansion of Core Portfolio Properties and the 47
shopping centers acquired and developed in 1999 and 1998. An additional increase
of $11.3 million related to equity in net income from joint ventures and
minority equity investment and an increase of $0.9 million related to the 1998
extraordinary item. These increases were offset by increases in interest
expense, depreciation and amortization, minority interest expense and loss on
disposition of real estate and investments of $10.8 million, $7.1 million, $8.5
million and $1.9 million, respectively.
FUNDS FROM OPERATIONS
Management believes that Funds From Operations ("FFO") provides an
additional indicator of the financial performance of a Real Estate Investment
Trust ("REIT"). FFO is defined generally as net income applicable to common
shareholders excluding gains (or losses) from sales of real estate and
securities and extraordinary items, adjusted for certain non-cash items,
principally real property depreciation, equity income from its joint ventures
and equity income from its minority equity investment and adding the Company's
proportionate share of FFO from its unconsolidated joint ventures and minority
equity investment, determined on a consistent basis. Other real estate companies
may calculate FFO in a different manner.
In 2000, FFO was $129.3 million as compared to $138.0 million in 1999 and
$113.0 million in 1998. The decrease in total FFO in 2000 is principally
attributable to the sale of real estate assets and a joint venture interest in
February, 2000, aggregating approximately $250 million and the issuance of
Preferred Units in
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September 1999 and May 2000. Proceeds were used to repay indebtedness and
repurchase common shares of the Company. Also contributing to the decrease were
higher interest rates and tenant bankruptcies. The net decrease is offset by
increases in revenues from Core Portfolio Properties, acquisitions and
developments.
The Company's calculation of FFO is as follows (in thousands):
YEAR ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
Net income applicable to common shareholders(1)............ $ 73,571 $ 60,135 $ 57,969
Depreciation and amortization of real estate investments... 52,974 49,137 42,408
Equity in net income of joint ventures..................... (17,072) (18,993) (12,461)
Equity in net income of minority equity investment......... (6,224) (5,720) (890)
Joint ventures' FFO(2)..................................... 30,512 32,316 20,779
Minority equity investment FFO............................. 14,856 12,965 1,493
Minority interest (OP Units)............................... 4,126 6,541 3,069
(Gain) loss on disposition of real estate and
investments.............................................. (23,440) 1,664 (248)
Extraordinary items........................................ -- -- 882
-------- -------- --------
$129,303 $138,045 $113,001
======== ======== ========
- ---------------
(1) Includes straight-line rental revenues, which approximated $4.6 million,
$4.1 million and $3.3 million in 2000, 1999 and 1998, respectively,
primarily relating to acquisitions and new developments.
(2) Joint ventures' FFO is summarized as follows (in thousands):
YEAR ENDED DECEMBER 31,
-----------------------------
2000 1999 1998
------- ------- -------
Net income(a)............................................. $41,545 $38,045 $25,070
Depreciation and amortization of real estate
investments............................................. 27,270 22,948 16,009
Loss (gain) on disposition of real estate and other
investments(b).......................................... 86 (344) (314)
------- ------- -------
$68,901 $60,649 $40,765
------- ------- -------
DDRC ownership interests.................................. $30,512 $32,316 $20,779
======= ======= =======
--------------------
(a) Includes straight-line rental revenue of approximately $4.6 million,
$4.2 million and $3.1 million in 2000, 1999 and 1998, respectively. The
Company's proportionate share of straight-line rental revenues was $1.9
million, $2.1 million and $1.5 million in 2000, 1999 and 1998,
respectively.
(b) During the fourth quarter of 2000, an equity affiliate of the Company
recognized a gain, net of tax, of approximately $1.7 million relating
to the sale of five former Best Products locations. This gain was
offset by a $1.8 million write-off, net of tax, of an investment in a
technology company.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow activities are summarized as follow:
YEAR ENDED DECEMBER 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
Cash flow from operating activities...................... $ 146,272 $ 152,930 $ 140,078
Cash flow from investing activities...................... (20,579) (209,708) (538,289)
Cash flow from financing activities...................... (127,442) 60,510 400,453
The Company anticipates that cash flow from operating activities will
continue to provide adequate capital for all interest and principal payments on
outstanding indebtedness, recurring tenant improvements, as well as dividend
payments in accordance with REIT requirements and that cash on hand, borrowings
under its existing revolving credit facilities, as well as other debt and equity
alternatives, including the issuance of OP Units and
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joint venture capital, will provide the necessary capital to achieve continued
growth. The decrease in cash flow from operating activities in 2000 as compared
to 1999 is primarily due to the sale of real estate assets, as discussed above,
a reduction in other liabilities and repurchase of common shares in 1999 and
2000.
The Company satisfied its REIT requirement of distributing at least 95% of
ordinary taxable income with declared common and preferred share dividends of
$107.4 million in 2000 as compared to $112.5 million and $95.1 million in 1999
and 1998, respectively. Accordingly, federal income taxes were not incurred at
the corporate level. The Company's common share dividend payout ratio for the
year approximated 65.2% of its 2000 FFO as compared to 66.5% and 69.6% in 1999
and 1998, respectively.
In December, 1999, the REIT Modernization Act ("RMA") was passed by the
federal government. The RMA, which becomes effective in 2001, allows REITs to
own a taxable REIT subsidiary ("TRS") which can provide certain services to a
REIT's tenants without disqualifying the rents that a REIT receives from those
tenants and also permits the REIT to increase fee related revenues. In addition,
the RMA lowers the distribution requirements for a REIT from 95% to 90% of its
ordinary taxable income. The Company intends to elect TRS status during the
first quarter of 2001 for its existing taxable preferred equity investments.
The Company's Board of Directors approved an increase in the 2001 quarterly
dividend per common share to $0.37 from $0.36 in February 2001. It is
anticipated that the new dividend level will continue to result in a
conservative payout ratio. A low payout ratio enables the Company to retain more
capital which will be utilized towards attractive investment opportunities in
the development, acquisition and expansion of portfolio properties.
ACQUISITIONS, DEVELOPMENTS AND EXPANSIONS
During the three-year period ended December 31, 2000, the Company and its
joint ventures expended $1.8 billion, net, to acquire, develop, expand, improve
and re-tenant its properties as follows (in millions):
2000 1999 1998
-------- ------- ---------
COMPANY:
Acquisitions.............................................. $ 81.1(1) $ 78.3(4) $ 688.4
Completed expansions...................................... 13.6 43.3 11.2
Developments and construction in progress................. 81.2 75.6 121.0
Tenant improvements and building renovations.............. 6.3 6.6 4.4
Furniture and fixtures and equipment...................... 0.4 5.3 2.3
-------- ------- ---------
182.6 209.1 827.3
Less real estate sales and property contributed to joint
ventures............................................... (89.1) (37.6) (328.8)
-------- ------- ---------
Company total........................................ 93.5 171.5 498.5
-------- ------- ---------
JOINT VENTURES:
Acquisitions/Contributions................................ 91.2(2) 96.5(5) 489.3(6)
Completed expansions...................................... 6.2 3.3 --
Developments and construction in progress................. 114.7 169.0 86.7
Tenant improvements and building renovations.............. 1.9 1.5 1.8
Minority equity investment in AIP......................... (2.2) 42.2 95.1
-------- ------- ---------
211.8 312.5 672.9
Less real estate sales............................... (115.9)(1) (26.5)(4) (33.8)
-------- ------- ---------
Joint ventures total................................. 95.9 286.0 639.1
-------- ------- ---------
189.4 457.5 1,137.6
-------- ------- ---------
Less proportionate joint venture share owned by
others............................................ (101.7) (107.9) (265.5)
-------- ------- ---------
Total DDR net additions.............................. $ 87.7(3) $ 349.6 $ 872.1
======== ======= =========
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- ---------------
(1) Includes transfers to the Company in the aggregate amount of $58.5 million
relating to the Nassau Pavilion development project, two former DDR
OliverMcMillan projects and Phase II of the Salisbury, MD development
project. All of which were previously held through joint venture interests.
(2) Includes transfers from the Company to joint ventures in the aggregate
amount of $42.5 million relating to the development project in San Antonio,
TX, a transfer of the Phoenix, AZ property, the outparcel land at Round
Rock, TX, and construction costs for a former DDR OliverMcMillan project.
(3) Does not include the Company's sale of 60% of its half interest in the
Community Center Joint Venture for approximately $163 million, as this
transaction did not affect the change in assets at the joint venture level.
(4) Includes a transfer of the Everett, MD development project to the Company
and Salem, NH to DD Development Company.
(5) Includes a transfer of $20.4 million from the Company relating to the
development project in Coon Rapids, MN and the transfer of the 13 remaining
Best Products sites from the Retail Value Fund, which had an aggregate cost
basis of $43.9 million at December 31, 1999.
(6) Includes transfers/investments aggregating approximately $323.1 million from
the Company and the acquisition of joint venture interests aggregating
$166.2 million.
2000 ACTIVITY
Expansions
In 2000, the Company and its joint ventures completed ten expansion
projects at an aggregate cost of $13.6 million and $6.2 million, for
wholly-owned projects and joint venture projects, respectively. These expansion
projects included:
- A 91,000 square foot expansion/redevelopment, which includes Office
Depot, Carolina Pottery, T.J. Maxx and additional retail at Wando
Crossings in Mt. Pleasant, South Carolina;
- A 30,000 square foot Bed Bath & Beyond redevelopment at the Stow
Community Shopping Center in Stow, Ohio;
- A 30,000 square foot redevelopment for Ross Stores at the Family Center
at Fort Union in Midvale, Utah;
- A 64,000 square foot retail expansion, which included Belk's, Hibbits and
additional retail at the Springdale Plaza in Camden, South Carolina;
- A 25,000 square foot Old Navy expansion at the Spring Creek Centre in
Fayetteville, Arkansas;
- A 60,000 square foot redevelopment for Bassett Direct Furniture and Room
Stores at the Ahwatukee Foothills Towne Center in Phoenix, Arizona; and
- A 51,000 square foot expansion for Dick's Clothing and Sporting Goods and
Hallmark at the Merriam Towne Center in Merriam, Kansas;
In addition, the Company is currently expanding one of its shopping centers
located in Fayetteville, AK at an aggregate cost of $1.8 million and is also
scheduled to commence expansion/redevelopment projects at seven additional
shopping centers located in Lebanon, OH; North Charleston, SC; Wilmington, NC;
Crystal River, FL; Taylorsville, UT; Schaumberg, IL; and Highland, IN.
Acquisitions
In April, 2000, the Company purchased a 199,000 square foot shopping center
in Brentwood, Tennessee for approximately $22.6 million.
In September, 2000, the Company announced it intended to acquire 15 west
coast retail properties for approximately $355 million from Burnham through a
joint venture with Prudential Real Estate Investors ("PREI") and Coventry Real
Estate Partners ("Coventry") in which the Company would own a 20% interest.
Since this original announcement, four of the fifteen properties were eliminated
from the portfolio.
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Accordingly, the Company, through an equity affiliate and PREI will acquire 11
properties at an aggregate cost of approximately $266 million. Two of the
properties were acquired in December, 2000 in which the Company's 20% ownership
interest aggregated $9.7 million. Four of the properties were acquired through
February 21, 2001 in which the Company's 20% interest aggregated $11.2 million.
The remaining five properties are expected to close in the first half of 2001.
DDR will earn fees for managing and leasing the properties, all of which are
located in western states.
The Company and Coventry were also selected by Burnham to serve as its
liquidation agent pursuant to Burnham's plan of liquidation. The liquidation
portfolio includes 47 properties aggregating 5.8 million square feet. DDR is
providing property management services for this portfolio and is receiving
property management, leasing and development fees for its services at market
rates. Coventry, which is 79% owned by the Company, is providing asset
management services for this portfolio and is receiving asset management fees at
market rates. The appointment of Coventry and the Company was effective on
December 15, 2000 following approval from Burnham's shareholders.
Development (Consolidated)
During 2000, the Company completed construction at the following two
shopping centers:
- Phase II of a 186,000 square foot shopping center in Oviedo, Florida,
which included the following tenants: Linens "n Things, T.J. Maxx,
PetsMart and miscellaneous retail shops. Phase I, which is anchored by
OfficeMax, Michael's, Ross Dress for Less and Shoe Carnival, was
completed in 1999.
- Phase II of a 268,000 square foot shopping center in Toledo, Ohio, which
included the following tenants: Old Navy, Shoe Carnival, The Avenue and
miscellaneous retail shops. Phase I, which is anchored by Kohl's, Gander
Mountain, Bed Bath & Beyond and Babies R Us, was completed in 1999.
The other consolidated development projects are as follows:
- A 412,000 square foot shopping center in Meridian, Idaho (a suburb of
Boise), which was substantially completed in 2000 and is anchored by a
Wal-Mart Supercenter (not owned by the Company), Shopko (which opened
during the fourth quarter of 1999), and the following tenants which
opened in 2000: Shepler's, Bed Bath & Beyond, Office Depot, Old Navy, and
Sportman's Warehouse. Ross Dress for Less and additional retail tenants
will open in 2001;
- A 622,000 square foot shopping center in Everett, Massachusetts, which is
scheduled for completion in 2001 and will be anchored by Target and Home
Depot (not owned by the Company), Bed Bath & Beyond, OfficeMax, Old Navy,
and PetsMart;
- A 162,000 square foot shopping center in Kildeer, Illinois, which is
located adjacent to the Company's joint venture shopping center located
in Deer Park, Illinois. The Kildeer project is scheduled for completion
in 2001 and will include the following tenants: Bed Bath & Beyond,
Circuit City, Cost Plus World Market, Old Navy and miscellaneous shops;
- A 480,000 square foot shopping center in Princeton, New Jersey adjacent
to the Company's existing center, which is scheduled for completion in
2001 and includes the following tenants: Kohl's, Wegman's, Michael's,
Target (not owned by the Company), Dick's Clothing and Sporting Goods and
55,000 square feet of additional retail space. This project was
previously reflected as a joint venture property through December 31,
1999;
- The Company intends to break ground during 2001 on a shopping center
development located in Riverdale, Utah;
- The Company has funded approximately $148.1 million of construction costs
associated with the above development projects as of December 31, 2000.
The net projected remaining funding associated with the above projects is
$21.5 million.
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Development (Joint Ventures)
The Company has joint venture development agreements for nine additional
shopping center projects with leading regional developers. These nine projects
have an aggregate projected cost of approximately $329 million. All of these
projects have commenced development and are currently scheduled for completion
through 2002. The Company currently holds an interest in six of these projects
through the Retail Value Fund. These projects are located in Long Beach, CA;
Plainville, CT; Deer Park, IL; Hagerstown, MD; Round Rock, TX and San Antonio,
TX. The remaining three projects are located in Salisbury, MD (Phase III); Coon
Rapids, MN; and St. Louis, MO.
Construction has been substantially completed and the centers are open for
business at the Plainville, CT; Deer Park, IL; Hagerstown, MD; Salisbury, MD and
Round Rock, TX properties.
As of December 31, 2000, $271.2 million of construction costs were funded
relating to the above projects. The remaining net project costs are projected to
be $57.8 million. It is anticipated that the Company's share of these remaining
net costs will result in the Company being reimbursed approximately $20.1
million, net, relating to construction financing proceeds, joint venture partner
contributions and sale of parcels to tenants.
In addition, the Company is in the process of entering into a joint venture
relating to a 280,000 square foot lifestyle center in Littleton, CO. This
project is scheduled for completion in the Spring of 2002. The Company intends
to break ground during 2001 on a shopping center development located in Long
Beach, CA the interest of which is anticipated to be transferred into a new
joint venture with an institutional investor. The Company's additional net
equity funding requirements associated with these two projects are expected to
be nominal as the remaining net costs are expected to be funded through joint
venture equity contributions and construction loans.
Dispositions
During 2000, the Company sold real estate assets or joint venture interests
therein with an aggregate value of approximately $250 million.
In December 2000, the Company sold to Wal-Mart its occupied space in the
New Bern and Washington, North Carolina shopping centers for an aggregate sales
price of approximately $20.7 million. In addition, the Company sold its 50%
interest in a joint venture property located in Fenton, Missouri for
approximately $14.3 million. An equity affiliate of the Company, DD Development
Company, sold five of the remaining twelve sites formerly occupied by Best
Products for approximately $25.1 million.
In the third quarter of 2000, the Company sold a 15,000 square foot
shopping center in Florence, Kentucky for a purchase price of approximately $1.7
million and 12,500 square feet of a 62,000 square foot shopping center located
in Las Vegas, Nevada for approximately $2.3 million. In addition, the Company
sold to Wal-Mart its occupied space in the Company's Camden, South Carolina
shopping center for a purchase price of approximately $11.6 million.
In February, 2000, the Company entered into an agreement to sell 60% of its
half interest in the Community Centers Joint Venture to DRA Advisors, Inc. at a
price of approximately $163 million comprised of cash of approximately $66
million and debt assumed of $97 million. In conjunction with this transaction,
the Company recognized a gain of approximately $16.1 million. Subsequent to this
transaction, the Company's ownership in the joint venture is effectively 20%
with funds advised by DRA Advisors, Inc. owning 80%. The Company continues to be
responsible for the day-to-day management of the shopping centers and receives
fees for such services.
In February, 2000, the Company formed a joint venture with DRA Advisors,
Inc. whereby the Company contributed a wholly-owned property in Phoenix, Arizona
valued at approximately $26.7 million and related mortgage debt of $18.0 million
and, in exchange, received a 50% equity ownership interest in the joint venture
and cash proceeds of approximately $4.3 million. In conjunction with this
transaction, the Company recognized a gain of approximately $0.5 million. The
Company continues to manage and operate the center and receives fees for such
services.
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45
In February, 2000, the Company sold a shopping center in Stone Mountain,
Georgia, a suburb of Atlanta, for approximately $1.8 million.
Proceeds from the above sales in 2000 were used to repay amounts
outstanding on the Company's revolving credit facility, repurchase 4.7 million
common shares in open market transactions and to fund the Company's investment
relating to the Burnham acquisition.
Strategic Transactions
The Company and AIP announced that AIP has entered into: (i) an agreement
to sell 31 properties to client accounts managed by Lend Lease Real Estate
Investments, Inc. for a gross purchase price, including assumed debt, of
approximately $292.2 million; (ii) an agreement to sell an office building to a
third party for a gross purchase price, including assumed debt, of approximately
$55.4 million and (iii) an agreement with a subsidiary of the Company (formed
coincidentally with the sale to Lend Lease) to acquire all of the AIP common
shares not already owned by DDR for $12.47 per share in cash. The Company's
purchase is expected to be funded solely with proceeds from the property sales
described above.
The liquidation payment to common shareholders was originally announced as
$13.74 per share, however, all common shareholders of AIP received a $1.27 per
share dividend in January, 2001, resulting from the sale by AIP of Manhattan
Towers in November, 2000 for $55.4 million. Through its subsidiary, the Company
will survive as AIP's majority shareholder, controlling AIP's 39 remaining
properties. The Company currently holds 46% of AIP's outstanding shares. The
property sales noted in (i) and (ii) above are conditions to the closing of the
transaction with the Company, which is expected to occur in the second quarter
of 2001 following AIP's shareholder approval. The property sale noted in (ii)
occurred in November, 2000. This transaction will provide the Company with
complete control over its investment in AIP for which the Company expects to
realize the full value of its investment through operations and, where
appropriate, an orderly disposition.
In December, 2000, an equity affiliate of the Company terminated its entity
level investment with DDR OliverMcMillan. In settlement of advances to DDR
OliverMcMillan, the Company, through its equity affiliate, received two
operating properties, one of which is located in Reno, Nevada and the other
located in Oceanside, California; a development project in Long Beach,
California; residual land located in San Diego, California and notes receivable,
secured by real estate transferred to OliverMcMillan. The aggregate value
associated with these assets was approximately $37 million. The Oceanside,
California and Reno, Nevada property and certain notes receivable aggregating
$18 million were transferred/assigned from the equity affiliate to the Company
in 2000.
1999 ACTIVITY
In July, 1999, the Company acquired Deer Valley Towne Center, a 198,000
square foot shopping center in Phoenix, Arizona, for an aggregate purchase price
of $25.8 million. The Company transferred this property in February 2000 to a
50% owned joint venture with DRA Advisors. In November, 1999, the Company
acquired, through a 50% owned joint venture, the fourth phase of a shopping
center in Phoenix, Arizona which aggregates 125,000 square feet. The total
purchase price for the fourth phase of this center aggregated approximately
$15.6 million. In April, 1999, the Company acquired a 50% interest in a 206,000
square foot shopping center in St. Louis, Missouri. The joint venture's
aggregate purchase price was $16.6 million and included the assumption of debt
aggregating $13.0 million.
In 1999, the Company acquired 3.8 million additional common shares of AIP
for approximately $57.3 million. At December 31, 1999, the Company's ownership
in AIP approximated 46% of the total outstanding shares of AIP.
In June, 1999, DD Development Company, a Company in which DDR has an equity
ownership interest, acquired PREI's limited partnership interest in a joint
venture, Hendon/DDR/BP, LLC, which owned 15 sites formerly occupied by Best
Products at a cost of approximately $29.7 million. As a result, the Company's
aggregate investment in the joint venture increased to approximately $36
million. In addition, in June, 1999, Hendon/DDR/BP, LLC, entered into a $25
million mortgage, with a financial institution secured by the leased sites. The
net financing proceeds were used to repay advances made by the Company to the
joint venture.
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During 1999, the Company, on a wholly-owned basis and through certain joint
ventures, completed fourteen expansion projects at an aggregate cost of $46.6
million.
During 1999, the Company completed construction of a 185,000 square foot
shopping center in Solon, Ohio; a 200,000 square foot Phase II of its shopping
center in Erie, Pennsylvania; Phase I of the 282,000 square foot shopping center
in Toledo, Ohio; Phase I of the 185,000 square foot shopping center in Oviedo,
Florida and a 170,000 square foot Phase II development in Macedonia, Ohio.
During 1999, the Company through certain joint ventures completed construction
of a 170,278 square foot shopping center in Salem, New Hampshire; Phase I of a
310,475 square foot shopping center in Salisbury, Maryland, which was acquired
by the Company in 1999, and Phase I of a 569,340 square foot shopping center in
Plainville, Connecticut.
1998 ACTIVITY
During 1998, the Company and its joint ventures completed the acquisition
of, or investment in 41 shopping centers aggregating 7.4 million square feet of
Company owned gross leasable area (GLA) for an aggregate investment of
approximately $854.6 million. In December 1998, the Company acquired a 50%
ownership interest in a 0.4 million square foot shopping center in Leawood,
Kansas. The Company's investment aggregated approximately $18 million and was
comprised of an equity investment of approximately $12.3 million and a note
receivable due from the joint venture partner of $5.7 million. In September,
1998, the Company entered into a 50/50 joint venture with DRA Advisors. In
conjunction with this joint venture, the Company contributed properties valued
at approximately $238 million to the joint venture and DRA contributed cash of
approximately $42 million. In addition, the joint venture entered into a $156
million, seven-year mortgage with a coupon interest rate of 6.64%. Net proceeds
aggregating approximately $192 million were distributed to the Company and used
to repay borrowings on the Company's revolving credit facilities. The Company
continues to manage the shopping centers and receive market fees for these
services.
In 1998, the Company, in a joint release with AIP, announced the execution
of a definitive agreement providing for the strategic investment in AIP by the
Company. In July, 1998, the Company, in exchange for five industrial properties
owned by the Company with a net book value of $7.4 million and valued at
approximately $19.5 million, acquired approximately 1.3 million additional newly
issued AIP shares of beneficial interest. As of December 31, 1998, the Company
had purchased 5.9 million of common shares for approximately $91.3 million.
Combined, the Company's acquired shares represented 34.5% of AIP's total
outstanding shares as of December 31, 1998.
During 1998, the Company completed seven expansion projects at an aggregate
cost of $11.2 million. During 1998, the Company substantially completed the
construction of a 445,000 square foot shopping center in Merriam, Kansas which
was being developed through a joint venture with DRA Advisors, Inc. formed in
October 1996, 50% of which is owned by the Company.
In 1998, an equity affiliate of the Company entered into joint venture
development agreements for six additional projects with various developers
throughout the country. In May, 1998, the Company formed DDROM, with
OliverMcMillan, LLC, based in San Diego, California to develop, acquire, operate
and manage urban entertainment and retail projects throughout the United States.
DDROM's initial investments were comprised of six urban entertainment and retail
projects located in Southern California and Reno, Nevada. The Company terminated
its entity level investment with DDR OliverMcMillan in December 2000.
FINANCING ACTIVITIES
The acquisitions, developments, expansions and share repurchases of the
Company were generally financed through cash provided from operating activities,
revolving credit facilities, mortgages assumed, construction loans, unsecured
public debt, common and preferred equity offerings, joint venture capital,
Preferred Units, OP Units and asset sales. Total debt outstanding at December
31, 2000 was $1.2 billion as compared to $1.2 billion and $1.1 billion at
December 31, 1999 and 1998, respectively. In 2000, the Company's debt remained,
relatively constant with the funding of acquisition, development and expansion
activity offset largely by asset sales.
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In December, 2000, the Company amended its $25 million credit facility with
National City Bank. The current stated rate on this facility is LIBOR plus 1.10%
with a maturity of November, 2002.
In December, 2000, the Company refinanced its newly developed Toledo, Ohio
property for $23.0 million. The mortgage bears interest at LIBOR plus 1.20% and
has a maturity date of December, 2002. In addition, the Company obtained a $35.5
million construction loan on its project in Everett, Massachusetts bearing
interest at LIBOR plus 1.85% of which $17.1 million has been drawn at December
31, 2000. Also, the Company transferred its 50% ownership interest in a
development property located in San Antonio, Texas to the Retail Value Fund and
received proceeds of approximately $18.5 in conjunction with this transaction.
In October, 2000, the Company entered into two, two-year interest rate swap
agreements aggregating $100 million, effectively converting a portion of the
variable rate debt on the Company's unsecured line of credit facility to a fixed
rate of approximately 7.6%.
In July, 2000, the Company acquired the minority ownership interest
associated with the 11 Hermes Properties acquired in July, 1998 at an aggregate
cost of approximately $81.9 million. As a result, 3,630,668 OP Units and all
contingently issuable OP Units were purchased and all restrictions and
obligations associated with the 11 operating properties were settled.
In June, 2000, the Company amended its primary unsecured credit facility
with a syndicate of financial institutions for which Bank One, NA serves as
agent. The amended facility increased the borrowing availability to $550 million
from $375 million and extended the term for an additional two years to May 31,
2003. The current stated interest rate on the facility is at LIBOR plus 1.10%.
The Company also can competitively bid up to 50% of the facility amount.
In May, 2000, the Company entered into a $100 million bridge loan agreement
with interest at LIBOR plus 1.10% agreement with Bank of America. The proceeds
from this facility were used to repay the $100 million, 7 5/8% unsecured senior
notes which matured on May 15, 2000. The bridge loan matured in November, 2000
and was repaid with proceeds from the Company's expanded unsecured credit
facility and asset sales.
In May, 2000, the Company issued $105 million, 9.0% perpetual preferred
"down-REIT" operating partnership units to an institutional investor and
received net proceeds of approximately $102.4 million. The Preferred Units may
be exchanged, under certain circumstances, for Class J, 9.0% cumulative
redeemable perpetual preferred shares.
In 1999 and 2000, the Company's Board of Directors authorized the officers
of the Company to implement and continue a common share repurchase program in
response to what the Company believed was a distinct undervaluation of the
Company's common shares in the public market. Under the terms authorized by the
Company's Board, as amended in November 1999 and 2000, the Company may purchase
in the open market, subject to certain requirements, common shares of the
Company, up to a maximum value of $200 million. The Company may utilize proceeds
from the sale of assets to purchase these shares. It is not the Company's
intention to increase the leverage on its balance sheet to implement this stock
repurchase program.
In accordance with the stock repurchase plan approved by the Company's
Board of Directors, from February 29, 2000 through December 31, 2000, the
Company purchased, in open market transactions, 4,741,700 of its common shares,
at prices ranging from $11.61 to $14.88, for an aggregate purchase price of
approximately $62.9 million. Since the fourth quarter of 1999, the Company has
acquired 6,602,000 shares at an aggregate cost of $88.7 million. From the fourth
quarter of 1999 through December 31, 2000, total common shares and OP Units
repurchased/converted aggregated 10.3 million shares and units of which 8.4
million shares and units were repurchased/converted in 2000.
A summary of the aggregate gross proceeds raised through the issuance of
common shares, preferred shares, Preferred Units, warrants, senior unsecured
notes, construction loans and OP Units issued as consideration for the
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purchase of real estate assets aggregating $822.1 million during the three-year
period ended December 31, is as follows (in millions):
2000 1999 1998
------ ----- ------
EQUITY:
Common shares........................... $ -- $ -- $ 80.9
Operating partnership units............. -- 2.7 91.4
Class C preferred shares................ -- -- 100.0
Class D preferred shares................ -- -- 54.0
Preferred partnership units and
warrant.............................. 105.0 75.0 35.0
------ ----- ------
Total Equity.................... 105.0 77.7 361.3
DEBT:
Senior fixed rate notes................. -- -- 200.0
Secured loans........................... 40.1 8.3 29.7
------ ----- ------
$145.1 $86.0 $591.0
====== ===== ======
During the year ended December 31, 2000, the Company also assumed mortgage
debt in conjunction with certain property acquisitions aggregating $47.9
million.
CAPITALIZATION
At December 31, 2000, the Company's capitalization consisted of $1.2
billion of debt (excluding the Company's proportionate share of joint venture
mortgage debt aggregating $322.8 million as compared to $466.6 million in 1999),
$518.8 million of preferred stock and Preferred Units and $744.6 million of
market equity (market equity is defined as common shares outstanding and OP
Units outstanding multiplied by the closing price of the common shares on the
New York Stock Exchange at December 31, 2000 of $13.3125) resulting in a debt to
total market capitalization ratio of .49 to 1.0 as compared to the ratios of .48
to 1.0 and .40 to 1.0 at December 31, 1999 and 1998, respectively. At December
31, 2000, the Company's total debt consisted of $759.6 million of fixed rate
debt, including $100 million of variable rate debt which has been effectively
swapped to a fixed rate of approximately 7.6%, and $468.0 million of variable
rate debt. In addition, in January, 2001, the Company entered into an additional
$100 million interest rate swap which effectively converted $100 million of
variable rate debt to a fixed rate of approximately 6.3%.
It is management's intention that the Company have access to the capital
resources necessary to expand and develop its business. Accordingly, the Company
may seek to obtain funds through additional equity offerings or debt financings
in a manner consistent with its intention to operate with a conservative debt
capitalization policy and maintain its investment grade ratings with Moody's
Investor Services and Standard and Poor's. As of December 31, 2000, the Company
had a shelf registration statement with the Securities and Exchange Commission
under which $750 million of debt securities, preferred shares or common shares
may be issued. In addition, as of December 31, 2000, the Company had $134.5
million available under its $575 million of revolving credit facilities. As of
December 31, 2000, the Company also had 112 operating properties with $213.1
million, or 70.4%, of the total revenue of the Company for the year ended
December 31, 2000 which were unencumbered, thereby providing a potential
collateral base for future borrowings.
INFLATION
Substantially all of the Company's long-term leases contain provisions
designed to mitigate the adverse impact of inflation. Such provisions include
clauses enabling the Company to receive percentage rentals based on tenants'
gross sales, which generally increase as prices rise, and/or escalation clauses,
which generally increase rental rates during the terms of the leases. Such
escalation clauses are often related to increases in the consumer
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price index or similar inflation indices. Most of the Company's leases require
the tenants to pay their share of operating expenses, including common area
maintenance, real estate taxes, insurance and utilities, thereby reducing the
Company's exposure to increases in costs and operating expenses resulting from
inflation. In addition, many of the Company's leases are for terms of less than
ten years, which permits the Company to seek increased rents upon renewal at
market rates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is interest rate risk. At
December 31, 2000 and 1999, approximately 61.9% and 65.2%, respectively, of the
Company's debt (excluding joint venture debt) bore interest at fixed rates with
a weighted average maturity of approximately 7.1 years and 7.3 years,
respectively, and a weighted average interest rate of approximately 7.5% and
7.5%, respectively. The remainder of the Company's debt bears interest at
variable rates with a weighted average maturity of approximately 1.9 years and
1.2 years, respectively, and a weighted average interest rate of approximately
7.8% and 7.4%, respectively, at December 31, 2000 and 1999. As of December 31,
2000 and 1999, the Company's joint ventures' indebtedness aggregated $731.6
million and $721.9 million, respectively, of fixed rate debt, of which the
Company's proportionate share was $268.6 million and $364.4 million,
respectively, and $248.2 million and $203.1 million, respectively, of variable
rate debt, of which the Company's proportionate share was $54.3 million and
$102.2 million, respectively. The Company intends to utilize variable rate
indebtedness available under its revolving credit facilities and construction
loans in order to initially fund future acquisitions, developments and
expansions of shopping centers. Thus, to the extent that the Company incurs
additional variable rate indebtedness, its exposure to increases in interest
rates in an inflationary period would increase. The Company believes, however,
that in no event would increases in interest expense as a result of inflation
significantly impact the Company's distributable cash flow.
At December 31, 2000, the interest rate risk on $100.0 million of such debt
($200 million as of February 21, 2001) has been mitigated through the use of
interest rate swap agreements (the "Swaps") with major financial institutions.
The Company is exposed to credit risk in the event of non-performance by the
counter-parties to the Swaps. The Company believes it mitigates its credit risk
by entering into these Swaps with major financial institutions.
At December 31, 2000 and 1999, the fair value of the Company's fixed rate
debt, including the $100 million which was swapped to a fixed rate, amounted to
a liability of $747.3 million and $729.0 million, respectively (excluding joint
venture debt) compared to its carrying amount of $759.6 million and $751.0
million, respectively. The fair value of the Company's proportionate share of
joint venture fixed rate debt was $267.1 million and $353.3 million,
respectively, compared to its carrying amount of $268.6 million and $364.4
million, respectively. The Company estimates that a 100 basis point decrease in
market interest rates at December 31, 2000 and 1999 would have changed the fair
value of the Company's fixed rate debt to a liability of $783.0 million and
$765.9 million, respectively, and would have changed the fair value of the
Company's proportionate share of joint ventures fixed rate debt to a liability
of $278.2 million and $366.5 million, respectively. The sensitivity to changes
in interest rate of the Company's fixed rate debt was determined utilizing a
valuation model based upon factors that measure the net present value of such
obligations which arise from the hypothetical estimate as discussed above.
The Company intends to continuously monitor and actively manage interest
costs on its variable rate debt portfolio and may enter into swap positions
based on market fluctuations. In addition, the Company believes that it has the
ability to obtain funds through additional equity and/or debt offerings,
including the issuance of medium term notes and joint venture capital.
Accordingly, the cost of obtaining such protection agreements in relation to the
Company's access to capital markets will continue to be evaluated. The Company
has not, and does not plan to, enter into any derivative financial instruments
for trading or speculative purposes. As of December 31, 2000, the Company had no
other material exposure to market risk.
49
50
ECONOMIC CONDITIONS
Historically, real estate has been subject to a wide range of cyclical
economic conditions which affect various real estate markets and geographic
regions with differing intensities and at different times. Adverse changes in
general or local economic conditions could result in the inability of some
existing tenants of the Company to meet their lease obligations and could
otherwise adversely affect the Company's ability to attract or retain tenants.
The Company's shopping centers are typically anchored by one or more discount
department stores (Wal-Mart, Kmart, Target), off price department stores
(Kohl's, T.J. Maxx/Marshalls), home improvement stores (Home Depot, Lowes) and
supermarkets which generally offer day-to-day necessities, rather than high-
priced luxury items. Since these merchants typically perform better in an
economic recession than those who market high priced luxury items, the
percentage rents received by the Company have remained relatively stable. In
addition, the Company seeks to reduce its operating and leasing risks through
ownership of a portfolio of properties with a diverse geographic and tenant
base.
During 2000 and 1999, certain national and regional retailers have
experienced financial difficulties and several have filed for protection under
bankruptcy laws. Although the Company has a number of tenants filing for
protection under bankruptcy laws, the Company has not incurred any significant
financial losses through February 21, 2001 with regard to the Company's
portfolio of tenants.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is included in a separate section at the end of
this report beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item 10 is incorporated by reference to
the information under the headings "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" contained in the Company's Proxy
Statement in connection with its annual meeting of shareholders to be held on
May 17, 2001, and the information under the heading "Executive Officers" in Part
I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to the "Executive Compensation" section of
the Company's Proxy Statement in connection with its annual meeting of
shareholders to be held on May 17, 2001.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to the "Security Ownership of Certain
Beneficial Owners and Management" section of the Company's Proxy Statement in
connection with its annual meeting of shareholders to be held on May 17, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to the "Certain Transactions" section of
the Company's Proxy Statement in connection with its annual meeting of
shareholders to be held on May 17, 2001.
50
51
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENTS SCHEDULES AND
REPORTS ON FORM 8-K
a.) 1. Financial Statements
The following documents are filed as a part of this report:
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 2000 and 1999.
Consolidated Statements of Operations for the three years ended
December 31, 2000.
Consolidated Statements of Shareholders' Equity for the three years
ended December 31, 2000.
Consolidated Statements of Cash Flows for the three years ended
December 31, 2000.
Notes to the Consolidated Financial Statements.
2. Financial Statement Schedules
The following financial statement schedules are filed herewith as part
of this Annual Report on Form 10-K and should be read in conjunction
with the Consolidated Financial Statements of the registrant:
SCHEDULE
II Valuation and Qualifying Accounts Reserves for the three years
ended December 31, 2000
III Real Estate and Accumulated Depreciation at December 31, 2000
Schedules not listed above have been omitted because they are not
applicable or because the information required to be set forth therein
is included in the Consolidated Financial Statements or notes thereto.
b.) There were no Current Reports on Form 8-K filed.
c.) Exhibits
The following exhibits are filed as part of or incorporated by reference
into, this report:
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
2 2.1 Share Purchase Agreement between AIP's Current Report on Form 8-K
the Company and American (Filed with the SEC on August 5,
Industrial Properties REIT 1998, SEC file number 1-9016)
("AIP") 1998, SEC file number
1-9016) dated as of July 30, 1998
2 2.2 Amendment No. 1 to the Share Amendment No. 1 to Schedule 13D
Purchase Agreement between the (Filed with the SEC with respect
Company and AIP dated as of to AIP by the Company on
September 14, 1998 September 17, 1998, SEC file
number 1-9016)
3 3.1 Amended and Restated Articles of Quarterly Report on Form 10-Q
Incorporation of the Company (Filed with the SEC on August 16,
1999)
3 3.2 Code of Regulations of the Quarterly Report on Form 10-Q
Company (Filed with the SEC on August 16,
1999)
51
52
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
4 4.1 Specimen Certificate for Common Form S-11 Registration No.
Shares 33-54930 (Filed with the SEC on
November 23, 1992)
4 4.2 Specimen Certificate for Annual Report on Form 10-K (Filed
Depositary Shares Relating to with the SEC on March 30, 1996)
9.5% Class A Cumulative
Redeemable Preferred Shares
4 4.3 Specimen Certificate for 9.5% Annual Report on Form 10-K (Filed
Class A Cumulative Redeemable with the SEC on March 30, 1996)
Preferred Shares
4 4.4 Specimen Certificate for Annual Report on Form 10-K (Filed
Depositary Shares Relating to with the SEC on March 30, 1996)
9.44% Class B Cumulative
Redeemable Preferred Shares
4 4.5 Specimen Certificate for 9.44% Annual Report on Form 10-K (Filed
Class B Cumulative Redeemable with the SEC on March 30, 1996)
Preferred Shares
4 4.6 Form of Indemnification Agreement Form S-11 Registration No.
33-54930 (Filed with the SEC on
November 23, 1992)
4 4.7 Indenture dated as of May 1, 1994 Annual Report on Form 10-K (Filed
by and between the Company and with the SEC on March 30, 2000)
Chemical Bank, as Trustee
4 4.8 Indenture dated as of May 1, 1994 Annual Report on Form 10-K (Filed
by and between the Company and with the SEC on March 30, 2000)
National City Bank, as Trustee
(the "NCB Indenture")
4 4.9 First Supplement to NCB Indenture Annual Report on Form 10-K (Filed
with the SEC on March 30, 2000)
4 4.10 Shareholder Rights Agreement Quarterly Report on Form 10-Q
dated as of May 26, 1999 between (Filed with the SEC on August 16,
the Company and National City 1999)
Bank
4. 4.11 Specimen Senior Note due May 15, Annual Report on Form 10-K (Filed
2000 with the SEC on March 30, 1996)
4 4.12 Loan Agreement dated as of May Current Report on Form 8-K (Filed
15, 1997, between Community with the SEC on June 18, 1997)
Centers One L.L.C., Community
Centers Two L.L.C., Shoppers
World Community Center, L.P. and
Lehman Brothers Holdings Inc.,
d/b/a/ Lehman Capital, a Division
of Lehman Brothers Holdings, Inc.
52
53
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
4 4.13 Amended and Restated Promissory Current Report on Form 8-K (Filed
Note, dated as of May 15, 1997, with the SEC on June 18, 1997)
between Community Centers Two
L.L.C. and Shoppers World
Community Center L.P. and Lehman
Brothers Holdings Inc., d/b/a/
Lehman Capital, a Division of
Lehman Brothers Holdings, Inc.
4 4.14 Amended and Restated Promissory Current Report on Form 8-K (Filed
Note, dated as of May 15, 1997, with the SEC on June 18, 1997)
between Community Centers One
L.L.C. and Lehman Brothers
Holdings Inc., d/b/a/ Lehman
Capital, a Division, of Lehman
Brothers Holdings, Inc.
4 4.15 Amended and Restated Promissory Current Report on Form 8-K (Filed
Note, dated as of May 15, 1997, with the SEC on June 18, 1997)
between Community Centers One
L.L.C. and Lehman Brothers
Holdings Inc., d/b/a/ Lehman
Capital, a Division of Lehman
Brothers Holdings, Inc.
4 4.16 Second Amended and Restated Current Report on Form 8-K (Filed
Credit Agreement among the with the SEC on March 8, 1999)
Company and The First National
Bank of Chicago and other lenders
named therein
4 4.17 Form of Fixed Rate Senior Medium- Annual Report on Form 10-K (Filed
Term Note with the SEC on March 30, 2000)
4 4.18 Form of Floating Rate Senior Annual Report on Form 10-K (Filed
Medium-Term Note with the SEC on March 30, 2000)
4 4.19 Form of Fixed Rate Subordinated Annual Report on Form 10-K (Filed
Medium-Term Note with the SEC on March 30, 2000)
4 4.20 Form of Floating Rate Annual Report on Form 10-K (Filed
Subordinated Medium-Term Note with the SEC on March 30, 2000)
4 4.21 First Amendment to the Second Annual Report on Form 10-K (Filed
Amended and Restated Credit with the SEC on March 30, 2000)
Agreement among the Company and
The First National Bank of
Chicago and other lenders named
therein
4 4.22 Specimen Certificate for Form 8-A Registration Statement
Depositary Shares Relating to (Filed with the SEC on July 2,
8 3/8% Class C Cumulative 1998)
Redeemable Preferred Shares
4 4.23 Specimen Certificate for 8 3/8% Form 8-A Registration Statement
Class C Cumulative Redeemable (Filed with the SEC on July 2,
Preferred Shares 1998)
53
54
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
4 4.24 Specimen Certificate for Form 8-A Registration Statement
Depositary Shares Relating to (Filed with the SEC on August 18,
8.68% Class D Cumulative 1998)
Redeemable Preferred Shares
4 4.25 Specimen Certificate for 8.68% Form 8-A Registration Statement
Class D Cumulative Redeemable (Filed with the SEC on August 18,
Preferred Shares 1998)
4 4.26 Third Amended and Restated Credit Quarterly Report on Form 10-Q
Agreement dated as of June 27, (Filed with the SEC on August 14,
2000 among the Company and Banc 2000)
One Capital Markets, Inc., and
other lenders named therein
4 4.27 Term Loan Agreement dated as of Quarterly Report on Form 10-Q
May 12, 2000 between the Company (Filed with the SEC on August 14,
and Bank of America, National 2000)
Association
10 10.1 Registration Rights Agreement Form S-11 Registration No.
33-54930 (Filed with the SEC on
November 23, 1992)
10 10.2 Stock Option Plan Form S-8 Registration No.
33-74562 (Filed with the SEC on
January 28, 1994)
10 10.3 Employment Agreement dated as of Quarterly Report on Form 10-Q
April 2, 1999 between the Company (Filed with the SEC on September
and Scott A. Wolstein 30, 1999)
10 10.4 Employment Agreement dated as of Quarterly Report on Form 10-Q
April 2, 1999 between the Company (Filed with the SEC on September
and James A. Schoff 30, 1999)
10 10.5 Limited Partnership Agreement Annual Report on Form 10-K (filed
dated as of November 16, 1995 with the SEC on March 30, 1996)
among DD Community Centers Three,
Inc. and certain other parties
named therein
10 10.6 Amended and Restated Limited Annual Report on Form 10-K (Filed
Liability Company Agreement dated with the SEC on March 30, 1996)
as of November 17, 1995 among DD
Community Centers One, Inc. and
certain other parties named
therein
10 10.7 Amended and Restated Limited Annual Report on From 10-K (Filed
Liability Company Agreement dated with the SEC on March 30, 1996)
as of November 17, 1995 among DD
Community Centers Two, Inc. and
certain other parties named
therein
10 10.8 Limited Liability Company Annual Report on Form 10-K (Filed
Agreement dated as of November with the SEC on March 30, 1996)
17, 1995 among the Company and
certain other parties named
therein
54
55
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
10 10.9 Purchase and Sale Agreement dated Annual Report on Form 10-K (Filed
as of October 16, 1995 among the with the SEC on March 30, 1996)
Company and certain other parties
named therein
10 10.10 Directors' Deferred Compensation Annual Report on Form 10-K (Filed
Plan with the SEC on April 1, 1995)
10 10.11 Amended and Restated Directors' Filed herewith
Deferred Compensation Plan
10 10.12 Elective Deferred Compensation Annual Report on Form 10-K (filed
Plan with the SEC on April 1, 1995)
10 10.13 Developers Diversified Realty Current Report on
Corporation Equity-Based Award Form 8-K (Filed with the SEC on
Plan January 14, 1997)
10 10.14 Restricted Shares Agreement, Current Report on Form 8-K (Filed
dated July 17, 1996, between the with the SEC on June 18, 1997)
Company and Scott A. Wolstein
10 10.15 Performance Units Agreement, Current Report on Form 8-K (Filed
dated July 17, 1996, between the with the SEC on June 18, 1997)
Company and Scott A. Wolstein
10 10.16 Program Agreement for Retail Annual Report on Form 10-K (Filed
Value Investment Program, dated with the SEC on March 31, 1998)
as of February 11, 1998, among
Retail Value Management, Ltd.,
the Company and The Prudential
Insurance Company of America
10 10.17 Share Option Agreement, dated Annual Report on Form 10-K (Filed
April 15, 1997, between the with the SEC on March 31, 1998)
Company and Scott A. Wolstein
10 10.18 Share Option Agreement, dated May Annual Report on Form 10-K (Filed
12, 1997, between the Company and with the SEC on March 31, 1998)
Scott A. Wolstein
10 10.19 Form of Medium-Term Note Annual Report on Form 10-K (Filed
Distribution Agreement with the SEC on March 30, 2000)
10 10.20 Amended and Restated 1998 Form S-8 Registration No.
Developers Diversified Realty 333-76537 (Filed with the SEC on
Corporation Equity-Based Award April 19, 1999)
Plan
10 10.21 Form of Change of Control Quarterly Report on Form 10-Q
Agreement dated as of March 24, (Filed with the SEC on May 17,
1999 between the Company and each 1999)
of Joan U. Allgood, Loren F.
Henry, John R. McGill and William
H. Schafer
10 10.22 Form of Change of Control Quarterly Report on Form 10-Q
Agreement dated as of March 24, (Filed with the SEC on May 17,
1999 between the Company and each 1999)
of Scott A. Wolstein and James A.
Schoff
55
56
EXHIBIT NO.
UNDER REG. FILED HEREWITH OR
S-K FORM 10-K INCORPORATED HEREIN BY
ITEM 601 EXHIBIT NO. DESCRIPTION REFERENCE
- ----------- ----------- --------------------------------- ---------------------------------
10 10.23 Agreement and Release between the Quarterly Report on Form 10-Q
Company and Richard J. Kaplan (Filed with the SEC on May 17,
dated as of March 9, 1999 1999)
10 10.24 Employment Agreement dated as of Quarterly Report on Form 10-Q
April 21, 1999 between the (Filed with the SEC on August 16,
Company and David M. Jacobstein 1999)
10 10.25 Change of Control Agreement as of Quarterly Report on Form 10-Q
May 17, 1999 between the Company (Filed with the SEC on August 16,
and David M. Jacobstein 1999)
10 10.26 Employment Agreement dated as of Quarterly Report on Form 10-Q
April 12, 1999 between the (Filed with the SEC on August 16,
Company and Eric M. Mallory 1999)
10 10.27 Change of Control Agreement dated Quarterly Report on Form 10-Q
as of April 12, 1999 between the (Filed with the SEC on August 16,
Company and Eric M. Mallory 1999)
10 10.28 Employment Agreement dated as of Quarterly Report on Form 10-Q
May 25, 1999 between the Company (Filed with the SEC on August 16,
and Daniel B. Hurwitz 1999)
10 10.29 Change of Control Agreement dated Quarterly Report on Form 10-Q
as of May 25, 1999 between the (Filed with the SEC on August 16,
Company and Daniel B. Hurwitz 1999)
10 10.30 Employment Agreement dated as of Filed herewith
March 1, 2000 between the Company
and Joan U. Allgood
10 10.31 Employment Agreement dated as of Filed herewith
March 1, 2000 between the Company
and William H. Schafer
12 12.1 Computation of Ratio of Earnings Form S-3 Registration No.
to Fixed Charges 333-72519 (Filed with the SEC on
March 2, 1999)
21 21.1 List of Subsidiaries Filed herewith
23 23.1 Consent of PricewaterhouseCoopers Filed herewith
LLP
56
57
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
By: /s/ SCOTT A. WOLSTEIN
---------------------------------------
Scott A. Wolstein, Chairman and
Chief Executive Officer
Date: March 30, 2001
------------------------------------------
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES INDICATED ON THE 30TH DAY OF MARCH, 2001.
/s/ SCOTT A. WOLSTEIN Chairman, Chief Executive Officer and Director
- ------------------------------------------------ (Principal Executive Officer)
Scott A. Wolstein
/s/ JAMES A. SCHOFF Vice Chairman of the Board, Chief Investment
- ------------------------------------------------ Officer
James A. Schoff and Director
/s/ DAVID M. JACOBSTEIN President, Chief Operating Officer and Director
- ------------------------------------------------
David M. Jacobstein
/s/ WILLIAM H. SCHAFER Senior Vice President and Chief Financial Officer
- ------------------------------------------------ (Principal Financial and Accounting Officer)
William H. Schafer
/s/ WILLIAM N. HULETT, III Director
- ------------------------------------------------
William N. Hulett III
/s/ ALBERT T. ADAMS Director
- ------------------------------------------------
Albert T. Adams
Director
- ------------------------------------------------
Dean S. Adler
/s/ BARRY A. SHOLEM Director
- ------------------------------------------------
Barry A. Sholem
/s/ TERRENCE R. AHERN Director
- ------------------------------------------------
Terrence R. Ahern
/s/ ROBERT H. GIDEL Director
- ------------------------------------------------
Robert H. Gidel
57
58
DEVELOPERS DIVERSIFIED REALTY CORPORATION
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Financial Statements:
Report of Independent Accountants...................... F-2
Consolidated Balance Sheets at December 31, 2000 and
1999.................................................. F-3
Consolidated Statements of Operations for the three
years ended December 31, 2000......................... F-4
Consolidated Statements of Shareholders' Equity for the
three years ended December 31, 2000................... F-5
Consolidated Statements of Cash Flows for the three
years ended December 31, 2000......................... F-6
Notes to Consolidated Financial Statements............. F-7
Financial Statement Schedules:
II -- Valuation and Qualifying Accounts and Reserves
for the three years ended December 31, 2000..... F-37
III -- Real Estate and Accumulated Depreciation at
December 31, 2000............................... F-38
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
Financial statements of the Company's unconsolidated joint venture
companies have been omitted because each of the joint venture's proportionate
share of the income from continuing operations is less than 20% of the
respective consolidated amount, and the investment in and advances to each joint
venture is less than 20% of consolidated total assets.
F-1
59
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Developers Diversified Realty Corporation:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 52 present fairly, in all material
respects, the financial position of Developers Diversified Realty Corporation
and its subsidiaries at December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America. In addition, in our opinion, the financial
statement schedules listed in the index appearing under Item 14(a)(2) on page 52
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements. These
financial statements and financial statement schedules are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Cleveland, Ohio
February 21, 2001
F-2
60
DEVELOPERS DIVERSIFIED REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31,
------------------------
2000 1999
---------- ----------
ASSETS
Real estate rental property:
Land...................................................... $ 358,270 $ 342,859
Buildings................................................. 1,579,866 1,542,333
Fixtures and tenant improvements.......................... 40,906 34,176
Land under development.................................... 31,323 53,213
Construction in progress.................................. 151,445 95,693
---------- ----------
2,161,810 2,068,274
Less accumulated depreciation............................. (297,247) (249,912)
---------- ----------
Real estate, net........................................ 1,864,563 1,818,362
Cash and cash equivalents................................... 4,243 5,992
Accounts receivable, net.................................... 44,590 39,262
Notes receivable............................................ 4,824 5,590
Advances to and investments in joint ventures............... 260,927 299,176
Minority equity investment.................................. 135,028 137,234
Deferred charges, net....................................... 5,958 3,916
Other assets................................................ 11,888 11,328
---------- ----------
$2,332,021 $2,320,860
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured indebtedness:
Fixed rate senior notes................................... $ 492,431 $ 592,311
Revolving credit facility................................. 419,500 272,000
---------- ----------
911,931 864,311
---------- ----------
Secured indebtedness:
Revolving credit facility................................. 21,000 18,775
Mortgage and other secured indebtedness................... 294,644 268,965
---------- ----------
315,644 287,740
---------- ----------
Total indebtedness.......................................... 1,227,575 1,152,051
Accounts payable and accrued expenses....................... 53,818 49,860
Dividends payable........................................... 19,757 20,826
Other liabilities........................................... 11,319 29,867
---------- ----------
1,312,469 1,252,604
---------- ----------
Minority equity interests................................... 8,198 8,219
Preferred operating partnership minority interests.......... 207,111 104,736
Operating partnership minority interests.................... 20,493 102,956
---------- ----------
1,548,271 1,468,515
---------- ----------
Commitments and contingencies (Note 14)
Shareholders' equity:
Class A -- 9.5% cumulative redeemable preferred shares,
without par value, $250 liquidation value; 750,000
shares authorized; 421,500 shares issued and
outstanding at December 31, 2000 and 1999.............. 105,375 105,375
Class B -- 9.44% cumulative redeemable preferred shares,
without par value, $250 liquidation value; 750,000
shares authorized; 177,500 shares issued and
outstanding at December 31, 2000 and 1999.............. 44,375 44,375
Class C -- 8.375% cumulative redeemable preferred
shares, without par value, $250 liquidation value;
750,000 shares authorized; 400,000 shares issued and
outstanding at December 31, 2000 and 1999.............. 100,000 100,000
Class D -- 8.68% cumulative redeemable preferred shares,
without par value, $250 liquidation value; 750,000
shares authorized; 216,000 shares issued and
outstanding at December 31, 2000 and 1999.............. 54,000 54,000
Common shares, without par value, $.10 stated value;
100,000,000 shares authorized; 61,481,736 and
61,364,035 shares issued at December 31, 2000 and 1999,
respectively........................................... 6,148 6,136
Paid-in-capital......................................... 676,150 674,735
Accumulated distributions in excess of net income....... (112,357) (105,757)
Less: Unearned compensation -- restricted stock......... (1,239) (674)
Common stock in treasury at cost: 6,601,250 and
1,860,300 shares at December 31, 2000
and 1999, respectively............................. (88,702) (25,845)
---------- ----------
783,750 852,345
---------- ----------
$2,332,021 $2,320,860
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
61
DEVELOPERS DIVERSIFIED REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
Revenues from operations:
Minimum rents............................................ $201,233 $189,613 $168,182
Percentage and overage rents............................. 4,990 4,226 2,746
Recoveries from tenants.................................. 54,524 47,786 43,071
Ancillary income......................................... 1,252 774 697
Other property related income............................ 686 930 567
Management fee income.................................... 6,971 5,148 3,653
Development fee income................................... 2,649 4,065 1,722
Interest................................................. 4,333 6,361 5,056
Other.................................................... 9,155 5,030 2,474
-------- -------- --------
285,793 263,933 228,168
-------- -------- --------
Rental operation expenses:
Operating and maintenance................................ 27,019 24,648 20,070
Real estate taxes........................................ 33,403 27,248 26,510
General and administrative............................... 20,450 17,774 12,918
Interest................................................. 77,030 68,023 57,196
Depreciation and amortization............................ 54,201 50,083 42,957
-------- -------- --------
212,103 187,776 159,651
-------- -------- --------
Income before equity in net income of joint ventures,
minority equity investment, gain (loss) on disposition of
real estate and investments, minority interests and
extraordinary item....................................... 73,690 76,157 68,517
Equity in net income of joint ventures..................... 17,072 18,993 12,461
Equity in net income from minority equity investment....... 6,224 5,720 890
Gain (loss) on disposition of real estate and
investments.............................................. 23,440 (1,664) 248
-------- -------- --------
Income before minority interests and extraordinary item.... 120,426 99,206 82,116
Minority interests:
Minority equity interests................................ (166) (111) (244)
Preferred operating partnership minority interests....... (15,301) (5,157) (186)
Operating partnership minority interests................. (4,126) (6,541) (2,882)
-------- -------- --------
(19,593) (11,809) (3,312)
-------- -------- --------
Income before extraordinary item........................... 100,833 87,397 78,804
Extraordinary item -- extinguishment of debt-deferred
finance costs written-off................................ -- -- (882)
-------- -------- --------
Net income................................................. 100,833 87,397 77,922
-------- -------- --------
Net income applicable to common shareholders............... $ 73,571 $ 60,135 $ 57,969
======== ======== ========
Per share data:
Earnings per common share -- basic:
Income before extraordinary item...................... $ 1.31 $ 0.99 $ 1.03
Extraordinary item.................................... -- -- (0.01)
-------- -------- --------
Net income............................................ $ 1.31 $ 0.99 $ 1.02
======== ======== ========
Earnings per common share -- diluted:
Income before extraordinary item...................... $ 1.31 $ 0.95 $ 1.00
Extraordinary item.................................... -- -- (0.02)
-------- -------- --------
Net income............................................ $ 1.31 $ 0.95 $ 0.98
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
62
DEVELOPERS DIVERSIFIED REALTY CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
COMMON ACCUMULATED UNEARNED
PREFERRED SHARES DISTRIBUTIONS COMPENSATION TREASURY
SHARES ($250 ($.10 STATED PAID-IN IN EXCESS OF RESTRICTED STOCK,
STATED VALUE) VALUE) CAPITAL NET INCOME STOCK AT COST TOTAL
------------- ------------ -------- ------------- ------------ -------- --------
Balance, December 31, 1997(1)....... $149,750 $2,769 $580,509 $ (63,517) $ (461) $ -- $669,050
Issuance of 1,077,994 common
shares(2) for cash related to
exercise of stock options,
employee 401(k) plan, executive
stock purchase plan and dividend
reinvestment plan................. -- 108 15,782 -- -- -- 15,890
Issuance of 3,669,639 common
shares(2) for cash -- underwritten
offerings......................... -- 367 77,404 -- -- -- 77,771
Stated value of shares issued in
connection with a two-for-one
stock split....................... -- 2,861 (2,861) -- -- -- --
Issuance of 616,000 Class C and
Class D preferred shares for cash
-- underwritten offerings......... 154,000 -- (5,720) -- -- -- 148,280
Vesting of restricted stock......... -- -- -- -- 154 -- 154
Conversion of debentures into
236,779 common shares(2).......... -- 24 6,747 -- -- -- 6,771
Issuance of warrant................. -- -- 2,049 -- -- -- 2,049
Net income.......................... -- -- -- 77,922 -- -- 77,922
Dividends declared -- common
shares............................ -- -- -- (75,730) -- -- (75,730)
Dividends declared -- preferred
shares............................ -- -- -- (19,372) -- -- (19,372)
-------- ------ -------- --------- ------- -------- --------
Balance, December 31, 1998.......... 303,750 6,129 673,910 (80,697) (307) -- 902,785
Issuance of 26,256 common shares for
cash related to exercise of stock
options, employee 401(k) plan, and
dividend reinvestment plan........ -- 2 108 -- -- -- 110
Issuance of 47,095 common shares
related to restricted stock
plan.............................. -- 5 646 -- (521) -- 130
Vesting of restricted stock......... -- -- -- -- 154 -- 154
Conversion of OP Units and
debentures into 1,498 common
shares............................ -- -- 71 -- -- -- 71
Purchase of 1,860,300 common
shares............................ -- -- -- -- -- (25,845) (25,845)
Net income.......................... -- -- -- 87,397 -- -- 87,397
Dividends declared -- common
shares............................ -- -- -- (85,195) -- -- (85,195)
Dividends declared -- preferred
shares............................ -- -- -- (27,262) -- -- (27,262)
-------- ------ -------- --------- ------- -------- --------
Balance, December 31, 1999.......... 303,750 6,136 674,735 (105,757) (674) (25,845) 852,345
Issuance of 26,476 common shares for
cash related to exercise of stock
options, employee 401(k) plan and
dividend reinvestment plan........ -- 3 369 -- -- -- 372
Issuance of 91,975 common shares
related to restricted stock
plan.............................. -- 9 1,046 -- (849) 9 215
Vesting of restricted stock......... -- -- -- -- 284 -- 284
Purchases of 4,741,700 common
shares............................ -- -- -- -- -- (62,866) (62,866)
Net income.......................... -- -- -- 100,833 -- -- 100,833
Dividends declared -- common
shares............................ -- -- -- (80,171) -- -- (80,171)
Dividends declared -- preferred
shares............................ -- -- -- (27,262) -- -- (27,262)
-------- ------ -------- --------- ------- -------- --------
Balance, December 31, 2000.......... $303,750 $6,148 $676,150 $(112,357) $(1,239) $(88,702) $783,750
======== ====== ======== ========= ======= ======== ========
- ---------------
(1) Share amounts do not reflect the effect of the July 1998 stock split.
(2) Share amounts reflect issuances both pre and post the July 1998 stock split.
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
63
DEVELOPERS DIVERSIFIED REALTY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
2000 1999 1998
--------- --------- ---------
Cash flow operating activities:
Net income................................................ $ 100,833 $ 87,397 $ 77,922
Adjustments to reconcile net income to net cash flow
provided by operating activities net of contributions to
joint ventures:
Depreciation and amortization......................... 54,201 50,083 42,957
Amortization of deferred finance costs................ 1,882 1,524 1,474
Write-off of deferred finance costs................... -- -- 882
Equity in net income of joint ventures................ (17,072) (18,993) (12,461)
Equity in net income from minority equity
investment......................................... (6,224) (5,720) (890)
Cash distributions from joint ventures................ 18,580 20,277 19,643
Cash distributions from minority equity investment.... 8,498 7,209 442
Preferred operating partnership minority interest
expense............................................ 15,301 5,157 186
Operating partnership minority interest expense....... 4,126 6,541 2,882
(Gain) loss on disposition of real estate and
investments........................................ (23,440) 1,664 (248)
Net change in accounts receivable..................... (2,187) (15,540) (7,743)
Net change in accounts payable and accrued expenses... 707 (165) 11,936
Net change in other operating assets and
liabilities........................................ (8,933) 13,496 3,096
--------- --------- ---------
Total adjustments.................................. 45,439 65,533 62,156
--------- --------- ---------
Net cash flow provided by operating activities..... 146,272 152,930 140,078
--------- --------- ---------
Cash flow from investing activities:
Real estate developed or acquired......................... (88,488) (182,496) (569,566)
Equity contributions to joint ventures.................... (82,584) (134,746) (130,592)
Advances to joint ventures................................ (15,941) (17,184) (17,559)
Acquisition of minority equity interest................... -- -- (16,293)
(Issuance) repayment of notes receivable, net............. (297) 21,427 (44,928)
Proceeds resulting from contribution of properties to
joint ventures and repayments of advances from
affiliates.............................................. 33,765 81,821 233,986
Joint venture distribution from refinancing proceeds...... -- 7,552 --
Proceeds from disposition of real estate and
investments............................................. 132,966 13,918 6,663
--------- --------- ---------
Net cash flow used for investing activities........ (20,579) (209,708) (538,289)
--------- --------- ---------
Cash flow from financing activities:
Proceeds from (repayment of) revolving credit facilities
and temporary bridge loans, net......................... 127,725 158,775 (7,700)
Proceeds from construction loans and other mortgage
debt.................................................... 40,101 60,332 29,732
Principal payments on rental property debt................ (22,293) (45,630) (17,029)
Repayment of senior notes................................. (100,000) -- --
Repayment of convertible debentures....................... -- (40,040) --
Proceeds from issuance of medium term notes, net of
underwriting commissions and $400 of offering
expenses................................................ -- -- 198,012
Payment of deferred finance costs (bank borrowings)....... (3,808) (150) (1,193)
Proceeds from issuance of common shares, net of underwriting
commissions and $400 of offering expenses................. -- -- 77,771
Proceeds from issuance of preferred shares, net of
underwriting commissions and $459 of offering
expenses................................................ -- -- 148,280
Proceeds from issuance of preferred operating partnership
units (and warrant in 1998) net of $450 and $850 of
offering expenses paid in 1999 and 1998, respectively... 102,375 72,675 34,150
Repurchase of operating partnership minority interests.... (82,465) (278) --
Proceeds of issuance of common shares in conjunction with
exercise of stock options, 401(k) plan, dividend
reinvestment plan and restricted stock plan............. 871 394 16,044
Purchase of treasury stock................................ (62,866) (25,845) --
Distributions to preferred and operating partnership
minority interests...................................... (18,580) (8,020) (2,585)
Dividends paid.............................................. (108,502) (111,703) (75,029)
--------- --------- ---------
Net cash (used for) provided by financing
activities......................................... (127,442) 60,510 400,453
--------- --------- ---------
(Decrease) increase in cash and cash equivalents... (1,749) 3,732 2,242
Cash and cash equivalents, beginning of year.............. 5,992 2,260 18
--------- --------- ---------
Cash and cash equivalents, end of year.................... $ 4,243 $ 5,992 $ 2,260
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
64
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Developers Diversified Realty Corporation, related real estate joint
ventures and its minority equity investment (the "Company" or "DDR"), are
engaged in the business of acquiring, expanding, owning, developing, managing
and operating shopping centers, enclosed malls and business centers. The
Company's shopping centers are typically anchored by discount department stores
(Wal-Mart, Kmart, Target), off price department stores (Kohl's, T.J.
Maxx/Marshall's), home improvement stores (Home Depot, Lowes), supermarkets,
book stores, office supply stores, electronic stores and drug stores which
usually offer day-to-day necessities. At December 31, 2000, the Company owned
shopping centers in 41 states. The tenant base includes primarily national and
regional retail chains and local retailers, consequently, the Company's credit
risk is concentrated in the retail industry.
Revenues derived from the Company's two largest tenants, Wal-Mart and
Kmart, aggregated 10.5%, 10.9% and 11.3% of total revenues for the years ended
December 31, 2000, 1999 and 1998, respectively, as follows:
YEAR WAL-MART KMART
---- -------- -----
2000...................................................... 6.8% 3.7%
1999...................................................... 7.6% 3.3%
1998...................................................... 6.6% 4.7%
The total percentage of Company-owned gross leasable area ("GLA")
attributed to Wal-Mart and Kmart was 10.3% and 7.9%, respectively, at December
31, 2000. The Company's ten largest tenants comprised 24.8%, 22.6% and 24.4% of
total revenues for the years ended December 31, 2000, 1999 and 1998,
respectively. Management believes the Company's portfolio is diversified in
terms of location of its shopping centers and its tenant profile. Adverse
changes in general or local economic conditions could result in the inability of
some existing tenants to meet their lease obligations and could otherwise
adversely affect the Company's ability to attract or retain tenants. During 2000
and 1999, certain national and regional retailers experienced financial
difficulties and several filed for protection under bankruptcy laws. Although
the Company has experienced a number of tenants filing for protection under
bankruptcy laws, the Company has not incurred any significant losses through
February 21, 2001 with regard to the Company's portfolio of tenants.
Principles of Consolidation
All majority-owned subsidiaries and affiliates where the Company has
financial and operating control are included in the consolidated financial
statements. All significant intercompany balances and transactions have been
eliminated in consolidation. Investments in real estate joint ventures and
companies for which the Company has the ability to exercise significant
influence over but does not have financial or operating control are accounted
for using the equity method of accounting. Accordingly, the Company's share of
the earnings of these joint ventures and companies is included in consolidated
net income. Other investments included in other assets are accounted for using
the cost method of accounting.
Statement of Cash Flows and Supplemental Disclosure of Non-Cash Investing and
Financing Information
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
F-7
65
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Non-cash investing and financing activities are summarized as follows (in
millions):
FOR THE YEAR ENDED
DECEMBER 31,
------------------------
2000 1999 1998
----- ----- ------
Contribution of net assets to joint ventures....... $ 7.6 $21.2 $ 27.6
Consolidation of the net assets of joint ventures
previously reported on the equity method of
accounting....................................... 21.5 -- --
Minority interests and operating partnership units
issued relating to shopping center
acquisitions..................................... 0.3 2.7 108.5
Acquisition of a minority equity investment........ -- -- 7.4
Mortgages assumed, shopping center acquisitions.... 16.6 18.0 133.9
Other liabilities assumed, shopping center
acquisitions..................................... -- -- 2.8
Accounts payable related to construction in
progress......................................... 0.2 0.2 6.6
Two-for-one stock split............................ -- -- 2.9
Conversion of debentures and related deferred
finance costs.................................... -- -- 6.7
Dividends declared, not paid....................... 19.8 20.8 20.1
Notes receivable exchanged for the purchase of a
shopping center and common shares of the minority
equity investment................................ -- 22.0 --
Common stock received in settlement of bankruptcy
claims........................................... 2.9 -- --
Real estate property assumed in conjunction with
tenant lease termination......................... 0.6 -- --
The foregoing transactions did not provide or use cash and, accordingly,
they are not reflected in the consolidated statements of cash flows.
Real Estate
Real estate assets are stated at cost less accumulated depreciation, which,
in the opinion of management, is not in excess of the individual property's
estimated undiscounted future cash flows, including estimated proceeds from
disposition.
Depreciation and amortization are provided on a straight-line basis over
the estimated useful lives of the assets as follows:
BUILDINGS 18 TO 31 YEARS
--------- --------------
Furniture / Fixtures and Tenant Improvements... Useful lives, which approximate
lease terms, where applicable
Depreciation expense was $54.2 million, $50.1 million and $43.0 million for
the years ended December 31, 2000, 1999 and 1998, respectively. Expenditures for
maintenance and repairs are charged to operations as incurred. Renovations which
improve or extend the life of the asset are capitalized. Included in land at
December 31, 2000, was undeveloped real estate, generally outlots or expansion
pads adjacent to the shopping centers owned by the Company (excluding shopping
centers owned through joint ventures), which aggregated approximately 100 acres.
Construction in progress includes shopping center developments and
significant expansions and redevelopments. The Company capitalizes interest on
funds used for the construction, expansion or redevelopment of
F-8
66
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
shopping centers, including funds advanced to joint ventures with qualifying
development activities. Capitalization of interest ceases when construction
activities are completed and the property is available for occupancy by tenants.
For the years ended December 31, 2000, 1999 and 1998, the Company capitalized
interest of $18.2 million, $13.5 million, and $9.9 million, respectively. In
addition, the Company capitalized certain construction administration costs of
$3.2 million, $2.5 million and $1.8 million in 2000, 1999 and 1998,
respectively.
Deferred Financing Costs
Costs incurred in obtaining long-term financing are included in deferred
charges in the accompanying balance sheets and are amortized over the terms of
the related debt agreements; such amortization is reflected as interest expense
in the consolidated statements of operations.
Revenue Recognition
Minimum rents from tenants are recognized monthly using the straight-line
method. Percentage and overage rents are recognized after a tenant's reported
sales have exceeded the applicable sales breakpoint set forth in the applicable
lease. Revenues associated with tenant reimbursements are recognized in the
period in which the expenses are incurred based upon the tenant lease provision.
Ancillary and other property related income which primarily relates to the
leasing of vacant space to temporary tenants, is recognized in the period
earned. Lease termination fees are included in other income and recognized upon
termination of a tenant's lease, which generally coincides with the final
settlement.
Accounts Receivable
Accounts receivable, other than straight-line rents receivable, are
expected to be collected within one year and are net of estimated unrecoverable
amounts of approximately $2.6 million and $2.1 million at December 31, 2000 and
1999, respectively. At December 31, 2000 and 1999, straight-line rent
receivables, net of a provision for uncollectible amounts, aggregated $12.9
million and $8.3 million, respectively.
Disposition of Real Estate and Real Estate Investments
Disposition of real estate relates to the sale of outlots and land adjacent
to existing shopping centers, shopping center properties and real estate
investments and is generally recognized at closing when the earnings process is
deemed to be complete.
General and Administrative Expenses
General and administrative expenses include internal leasing and legal
salaries and related expenses which are charged to operations as incurred.
Interest and Real Estate Taxes
Interest and real estate taxes incurred during the development and
significant expansion of shopping centers are capitalized and depreciated over
the life of the building. Interest paid during the years ended December 31,
2000, 1999 and 1998, aggregated $93.1 million, $79.4 million and $63.4 million,
respectively.
Intangible Assets
Intangible assets consist primarily of goodwill and property management
contracts and rights to certain development projects obtained through the
acquisitions of real estate management businesses, which are amortized on the
straight-line basis over their estimated useful lives of 15 years. The carrying
value of intangible
F-9
67
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
assets is periodically reviewed by the Company and impairments are recognized
when the expected future operating cash flows derived from such intangible
assets is less than their carrying value.
Investments
Included in other assets are investments accounted for using the cost
method of accounting. Significant estimates were utilized by the Company in the
determination of fair value of the securities. Management periodically evaluates
the carrying amount of such securities to determine if a permanent impairment in
value has occurred. At December 31, 2000, the Company believes all recorded
amounts are fully recoverable.
Derivative Financial Instruments
The Company may from time to time enter into interest rate swap contracts
as hedges against increasing rates on its variable rate debt. The Company does
not utilize these arrangements for trading or speculative purposes. To qualify
for hedge accounting, the contracts must meet defined correlation and
effectiveness criteria, be designated as a hedge and result in cash flows and
financial statement effects which substantially offset those of the position
being hedged. The Company records net amounts received or paid under these
contracts as adjustments to interest expense. In 2000, the Company entered into
two interest rate swap contracts. At December 31, 1999, there were no interest
rate swap contracts or other similar derivative instruments outstanding. See
Note 3 for a description of the Company's funding commitment relating to its
minority equity investment.
Federal Income Taxes
The Company has elected to be taxed as a qualified Real Estate Investment
Trust ("REIT") under the Internal Revenue Code of 1986, as amended. As a REIT,
the Company is entitled to a tax deduction for the amount of dividends paid to
its shareholders, thereby effectively subjecting the distributed net income of
the Company to taxation at the shareholder level only, provided it distributes
at least 95% of its taxable income and meets certain other REIT qualification
requirements. As the Company distributed sufficient taxable income for the years
ended December 31, 2000, 1999 and 1998, no U.S. Federal income or excise taxes
were incurred. The Company is subject to state and local income and franchise
taxes in certain states and municipalities which are reflected in operating and
maintenance expenses.
The tax basis of assets and liabilities exceeds the amounts reported in the
accompanying financial statements by approximately $141 million, $122 million
and $110 million at December 31, 2000, 1999 and 1998, respectively.
Business Segment
The principal business of the Company and its consolidated affiliates is
the ownership, development and operation of retail shopping centers. The Company
does not distinguish or group its operations on a geographical basis for
purposes of measuring performance. Accordingly, the Company believes it has a
single reportable segment for disclosure purposes in accordance with generally
accepted accounting principles. Further, all operations are within the United
States and significant tenant revenues have been previously disclosed.
Comprehensive Income
For the years ended December 31, 2000, 1999 and 1998, the Company had no
items of other comprehensive income requiring additional disclosure.
Treasury Stock
The Company's share repurchases are reflected as treasury stock utilizing
the cost method of accounting and are presented as a reduction to consolidated
shareholders' equity.
F-10
68
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Stock Split
The Company's Board of Directors approved a two-for-one stock split to
shareholders of record on July 27, 1998. On August 3, 1998, each such
shareholder received one common share for each share held. This stock split was
effected in the form of a stock dividend. Accordingly, $2.9 million was
transferred from additional paid in capital to common stock, representing the
stated value of additional shares issued. All share and per share data and
Operating Partnership Units ("OP Units") included in these consolidated
financial statements including all related disclosures have been adjusted to
reflect this split, except as indicated.
New Accounting Standards
In June, 1998, the FASB issued Statement of Financial Accounting Standard
("SFAS") No. 133 -- "Accounting for Derivative Instruments and Hedging
Activities." This statement requires fair value accounting for all derivatives
including recognizing all such instruments on the balance sheet with an
offsetting amount recorded in the income statement or as part of comprehensive
income. The new standard becomes effective for the Company for the year ending
December 31, 2001. SFAS No. 137 deferred the effective date from December 31,
2000. The Company does not expect this pronouncement to have a material impact
on the Company's financial position or cash flows.
In December, 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements," which among other things,
provides guidance on lessors' accounting for contingent rent. This bulletin
clarifies that contingent rental income should be recognized once the factors
that trigger payment actually occur. The adoption of this bulletin did not have
a material impact on the Company's results of operations or financial position.
In March, 2000, the FASB issued Interpretation No. 44 "Accounting for
Certain Transactions Involving Stock Compensation." This interpretation
clarified the application of APB Opinion No. 25, "Accounting for Stock Issued to
Employees" for certain issues. This interpretation became effective for the
Company on July 1, 2000. The adoption of this interpretation did not have a
material impact on the Company's results of operations or financial position.
Reclassification
Certain reclassifications have been made to the 1999 and 1998 financial
statements to conform to the 2000 presentation.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities, the
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses during the year. Actual results could differ from those
estimates.
F-11
69
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
2. ADVANCES TO AND INVESTMENTS IN JOINT VENTURES
Combined condensed financial information of the Company's joint venture
investments and joint venture investments held through an equity affiliate of
the Company are summarized as follows (in thousands):
DECEMBER 31,
--------------------------
COMBINED BALANCE SHEETS 2000 1999
----------------------- ---------- ----------
Land.............................................. $ 301,409 $ 262,485
Buildings......................................... 1,055,704 917,507
Fixtures and tenant improvements.................. 10,412 3,976
Construction in progress.......................... 102,353 187,825
---------- ----------
1,469,878 1,371,793
Accumulated depreciation.......................... (106,964) (82,481)
---------- ----------
Real estate, net.................................. 1,362,914 1,289,312
Other assets...................................... 91,182 77,207
---------- ----------
$1,454,096 $1,366,519
========== ==========
Mortgage debt..................................... $ 942,451 $ 887,650
Amounts payable to DDR............................ 105,527 123,743
Other liabilities................................. 29,154 48,913
---------- ----------
1,077,132 1,060,306
Accumulated equity................................ 376,964 306,213
---------- ----------
$1,454,096 $1,366,519
========== ==========
Company's proportionate share of accumulated
equity.......................................... $ 126,114 $ 153,745
========== ==========
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
COMBINED STATEMENTS OF OPERATIONS 2000 1999 1998
--------------------------------- -------- -------- --------
Revenues from operations................... $193,274 $170,714 $109,752
-------- -------- --------
Rental operation expenses.................. 56,834 51,170 28,045
Depreciation and amortization expense...... 27,270 22,949 16,009
Interest expense........................... 67,539 58,894 40,942
-------- -------- --------
151,643 133,013 84,996
-------- -------- --------
Income before gain on sale of real estate
and investments.......................... 41,631 37,701 24,756
(Loss) gain on sales of real estate and
investments, net of tax.................. (86) 344 314
-------- -------- --------
Net income................................. $ 41,545 $ 38,045 $ 25,070
======== ======== ========
Company's proportionate share of net
income................................... $ 18,769 $ 20,621 $ 12,888
======== ======== ========
The Company has made advances to several partnerships in the form of notes
receivable which accrue interest at rates ranging from LIBOR plus 1.10% to fixed
rate loans of 12%. Maturity dates range from payment on demand to December 2008.
In December 1999, one of the Company's joint ventures refinanced its secured
mortgage and entered into a ten-year fixed rate mortgage for $21.3 million with
interest at 8.46%. Additional
F-12
70
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
proceeds from this refinancing, aggregating $6.4 million, were used to partially
repay a note payable to the Company. Included in the Company's accounts
receivable is approximately $1.2 million and $1.4 million at December 31, 2000
and 1999, respectively, due from affiliates related to construction receivables.
Advances to and investments in joint ventures include the following items
which represent the difference between the Company's investment and its
proportionate share of the joint ventures underlying net assets (in millions):
FOR THE YEAR ENDED
DECEMBER 31,
------------------
2000 1999
------- -------
Basis differential*........................................ $ 45.1 $ 44.1
Deferred development fees, net of portion relating to the
Company's interest....................................... (2.1) (2.6)
Basis differential upon transfer of assets*................ (24.3) (19.9)
Notes receivable from investments.......................... 10.6 --
- ---------------
* Basis differentials occur primarily when the Company has purchased an interest
in existing joint ventures at fair market values which differ from their
proportionate share of the historical net assets of the joint ventures. In
addition, certain acquisition, transactions and other costs, including
capitalized interest, may not be reflected in the net assets at the joint
venture level. Basis differentials upon transfer of assets is primarily
associated with assets previously owned by the Company which have been
transferred into a joint venture at fair value. This amount represents the
aggregate difference between the Company's historical cost basis and the value
reflected at the joint venture level. Certain basis differentials indicated
above are amortized over the life of the related asset and included in the
Company's share of equity in net income of joint ventures.
Service fees earned by the Company through management, leasing, development
and financing activities performed related to the Company's joint ventures, are
as follows (in millions):
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
2000 1999 1998
---- ---- ----
Management fees and leasing commissions................ $6.7 $5.7 $3.2
Development fees....................................... 2.6 1.4 1.7
Interest income........................................ 3.4 4.4 2.4
In February, 2000, the Company entered into an agreement to sell 60% of its
half interest in the Community Centers Joint Venture to DRA Advisors, Inc. at a
price of $163 million comprised of cash of $66 million and debt assumed of
approximately $97 million. In conjunction with this transaction, the Company
recognized a gain of approximately $16.1 million. Subsequent to this
transaction, the Company maintains an effective ownership interest of 20% with
investment funds advised by DRA Advisors, Inc., owning 80%. The Company
continues to be responsible for the day-to-day management of the shopping
centers owned by the joint venture and receives fees for such services.
In February, 2000, the Company formed a joint venture with DRA Advisors,
Inc. whereby the Company contributed a wholly-owned shopping center property in
Phoenix, Arizona valued at approximately $26.7 million and related mortgage debt
of $18.0 million and, in exchange, received a 50% equity ownership interest in
the joint venture and cash proceeds of approximately $4.3 million. In
conjunction with this transaction, the Company recognized a gain of
approximately $0.5 million associated with the sale of its partial interest. The
Company continues to manage and operate the shopping center and receives fees
for such services.
F-13
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In September, 1999, the Company transferred its interest in a shopping
center under development in Coon Rapids, Minnesota, a suburb of Minneapolis, to
a joint venture in which the Company retained a 25% ownership interest. The
Company effectively sold a 75% interest in this project and was reimbursed $2.5
million relating to development costs previously incurred on this project. See
also Transactions with Related Parties (Note 13).
In April, 1999, the Company acquired a 50% interest in a 206,000 square
foot shopping center in St. Louis, Missouri. The joint venture's aggregate
purchase price was approximately $16.6 million. In November 1999, the Company
acquired, through a 50% owned joint venture, the fourth phase of a shopping
center in Phoenix, Arizona which aggregates 125,000 square feet. The joint
venture's aggregate purchase price for the fourth phase of this center was
approximately $15.6 million.
In January, 1999, the Company loaned $49.2 million to a 50% owned joint
venture. The joint venture entered into a corresponding mortgage note payable to
the Company bearing an interest rate of LIBOR plus 2.75%. In addition, the
Company received a loan origination fee for this transaction of $0.4 million
which is included in other revenue in the consolidated statements of operations.
In March, 1999, the joint venture obtained a bridge loan, which was converted
into a permanent mortgage in June, 1999, and used the proceeds to repay the
mortgage note to the Company.
The Company's joint venture agreements generally include provisions whereby
each partner has the right to trigger a purchase or sale of its interest in the
joint ventures (Reciprocal Purchase Rights) or to initiate a purchase or sale of
the properties (Property Purchase Rights) after a certain number of years or if
either party is in default of the joint venture agreements.
In addition, certain of the joint venture agreements include a provision
whereby the Company's joint venture partners may convert all, or a portion of,
their respective interest in such joint ventures into common shares of the
Company. The terms of the conversion are set forth in the governing documents of
such joint ventures. However, if the joint venture partners elect to convert
their respective interest into common shares, the Company will have the option
to pay cash instead of issuing common shares. If the Company agrees to the
issuance of common shares, the agreement provides that the converting joint
venture partner will execute a lock-up arrangement acceptable to the Company.
THE COMPANY'S INVESTMENTS IN THE COMBINED STATEMENTS ABOVE REFLECT THE
FOLLOWING:
Retail Value Fund
In February, 1998, the Company and an equity affiliate of the Company,
entered into an agreement with Prudential Real Estate Investors ("PREI") and
formed the Retail Value Fund (the "Fund"). The Fund's ownership interests in
each of the projects, unless discussed otherwise, are generally structured with
the Company owning a 24.75% limited partnership interest, PREI owning a 74.25%
limited partnership interest and Coventry Real Estate Partners ("Coventry"),
which is 79% owned by an equity affiliate of the Company, owning a 1% general
partnership interest. The Fund invests in retail properties within the United
States that are in need of substantial retenanting and market repositioning and
may also make equity and debt investments in companies owning or managing retail
properties as well as in third party development projects that provide
significant growth opportunities. The retail property investments may include
enclosed malls, neighborhood and community centers or other potential commercial
development and redevelopment opportunities. Since 1998, the Fund has invested
approximately $430 million in real estate assets.
In 1998, the Fund acquired an ownership interest in 33 retail sites
formerly occupied by Best Products. Through June, 1999, the Fund had sold all of
its interest in these sites, 20 of which were sold to various third parties, and
the remaining 13 sites were sold, at an aggregate price of $29.7 million, to DD
Development Company ("DD Dev"), a management service company in which DDR owns a
95% economic ownership interest. The Fund acquired six operating retail shopping
centers in Kansas and Missouri in September, 1999.
F-14
72
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In 1999 and 2000, the Company entered into separate agreements with the Fund to
acquire the Company's 50% joint venture interest relating to the development of
six shopping centers located in Plainville, Connecticut; Deer Park, Illinois;
Hagerstown, Maryland; Salem, New Hampshire; Round Rock, Texas and San Antonio;
Texas. During 2000 and 1999, the Company was reimbursed approximately $33.8
million and $74.3 million, respectively, relating to advances previously made to
these joint ventures, associated with development costs incurred on each of
these projects. With the exception of the San Antonio, Texas project, all of the
projects were substantially completed at December 31, 2000. The Fund has also
commenced the redevelopment of a retail site in Long Beach, California that will
create approximately 446,000 square feet of retail space. In 2000, the Fund
entered into an agreement to acquire 11 properties, located in western states,
at an aggregate cost of approximately $266 million from Burnham Pacific
Properties, Inc. ("Burnham"). Two of the properties were acquired in December,
2000; the Company's 20% ownership interest aggregated $9.7 million. Four of the
properties were acquired through February 21, 2001; the Company's 20% interest
aggregated $11.2 million. The remaining five properties are expected to close in
the first half of 2001. The Company will earn fees for managing and leasing the
properties.
The Company and Coventry were also selected by Burnham to serve as its
liquidation agent pursuant to Burnham's plan of liquidation. The liquidation
portfolio includes 47 properties aggregating 5.8 million square feet. The
Company is providing property management services for this portfolio and is
receiving property management, leasing and development fees for its services at
market rates. The appointment of Coventry and the Company was effective on
December 15, 2000 following approval from Burnham's shareholders.
As discussed above, Coventry generally owns a 1% interest in each of the
Fund's investments and, except for the Fund's investment associated with
properties acquired from Burnham, as discussed above, Coventry generally is also
entitled to receive an annual asset management fee equal to 0.5% of total assets
(except for San Antonio, Texas, where such 0.5% fee is not applicable) plus one
third of all profits, once the limited partners have received a 10% preferred
return and all capital previously advanced. The remaining two thirds of the
profits in excess of the 10% preferred return is split proportionately among the
limited partners. With regard to the Fund's investment associated with the
acquisition of shopping centers from Burnham, Coventry, in addition to its 1%
general partnership interest, will be entitled to receive from the Fund a $1
million acquisition fee once approximately $200 million of assets are acquired
from Burnham for services performed in conjunction with the due diligence and
related closing of the acquisition. In addition, Coventry will receive annual
asset management fees equal to 0.8% of total revenue collected from these assets
plus a minimum of 25% of all amounts in excess of a 10% annual preferred return
to the limited partners which could increase to 35% if returns to the limited
partners exceed 20%. As previously discussed, Coventry is providing liquidation
services for Burnham and will receive asset management fees at market rates in
relation to the liquidation portfolio.
Management Service Companies
The Company owns a 95% economic interest in two management service
companies of which the Company owns 1% of the voting and 100% of the non-voting
common stock. At December 31, 2000, these equity affiliates own: (i) a 20% to
25% joint venture interest in various Fund investments discussed above, (ii) an
83.75% joint venture interest which owns seven retail sites formerly occupied by
Best Products, five of which were fully leased and one is partially leased, and
(iii) certain assets, as discussed below, were received in settlement of
advances made to DDR OliverMcMillan, which include:
- A 100% interest in a retail site under development in Long Beach,
California;
- A 100% interest in residual land in San Diego, California; and
- A $1.1 million note receivable, secured by certain real estate.
See discussion below regarding the Company's termination of its entity
level investment with DDR OliverMcMillan.
F-15
73
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In 2000, the joint venture disposed of six former Best Products sites with
aggregate proceeds of approximately $25.1 million and recognized a gain, net of
tax, of approximately $1.7 million. This gain was offset, in part, by a $1.8
million impairment write-off, net of tax, of an investment in a technology
company.
The Company also owns a 50% equity ownership interest in a management
company and a development company in St. Louis, Missouri. The Company is
entitled to the first $1 million of net operating income through 2003, as
defined in the agreement, on an annual basis.
Shopping Center Joint Ventures
The Company owns an 80% equity ownership interest in two joint ventures
each owning an operating shopping property in Columbus, Ohio of which the
Company does not have financial or operating control.
The Company owns a 50% equity ownership interest in 11 different joint
ventures which, in the aggregate, own 15 operating shopping centers.
The Company also owns a 50% equity ownership interest in two joint
ventures, each of which is developing a shopping center in Jefferson Country,
Missouri and Salisbury, Maryland, respectively.
The Company owns a 35% equity ownership interest in a joint venture which
owns an operating shopping center property in San Antonio, Texas.
The Company owns a 25% ownership interest in a joint venture which owns a
shopping center property under development located in Coon Rapids, Minnesota.
The Company owns an effective 20% equity interest in the Community Centers
Joint Venture which, in the aggregate, owns ten operating shopping center
properties. As described above, prior to February 29, 2000, the Company owned a
50% joint venture interest.
As previously discussed, the Company provides property management, leasing
and development services to each of the joint ventures at market rates.
DDR OliverMcMillan
In December, 2000, the Company through an equity affiliate terminated its
entity level investment with DDR OliverMcMillan. In settlement of advances to
DDR OliverMcMillan, the Company and an equity affiliate of the Company, received
two operating properties, one of which is located in Reno, Nevada and the other
located in Oceanside, California; a development project in Long Beach,
California; residual land located in San Diego, California; and notes
receivable, secured by real estate. The aggregate value associated with these
assets was approximately $37 million of which approximately $18 million is
reflected within the Company's consolidated real estate assets and the remaining
$19 million is reflected within advances to and investments in joint ventures.
The Company believes the aggregate value of these assets received approximates
the advances outstanding at the date of settlement.
3. MINORITY EQUITY INVESTMENT
At December 31, 2000 and 1999, the Company owned 9,656,650 common shares in
American Industrial Properties REIT (NYSE: IND) ("AIP") representing
approximately 46.0% of AIP's total common shares. In 1999, the Company acquired
1,897,844 common shares of AIP at prices ranging from $14.93 to $15.50 per
share.
On November 1, 2000, DDR Transitory Sub, Inc. ("DDR Sub"), a subsidiary of
the Company, and AIP entered into an agreement and plan of merger. Pursuant to
the merger agreement, DDR Sub will be merged with and into AIP and AIP will
become a wholly-owned subsidiary of the Company. In connection with the merger
agreement, AIP also entered into: (i) an agreement to sell 31 properties to
client accounts managed by
F-16
74
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Lend Lease Real Estate Investment, Inc. ("Lend Lease") for a gross purchase
price, including assumed debt, of approximately $292.5 million and (ii) an
agreement to sell an office building to a third party for a gross purchase
price, including assumed debt, of approximately $55.4 million which was sold by
AIP in November 2000. The property sales listed in (i) and (ii) of the
immediately preceding sentence are conditions to the closing of the merger,
which is expected to occur in the second quarter of 2001. Upon closing of the
merger, each of AIP's common shares (other than shares owned in treasury, by the
Company, DDR Sub or dissenting shareholders), will be converted into the right
to receive not less than $12.47 per share subject to certain adjustments. Each
common share of DDR Sub will be converted into one common share of AIP in
connection with the merger, resulting in the Company being the majority
shareholder of AIP. The effect of the aforementioned transactions is that upon
consummation, the Company will (through AIP) own and control AIP's 39 remaining
properties. The closing of these transactions are subject to customary
conditions in addition to the approval of AIP's shareholders.
The Company's investment is accounted for using the equity method of
accounting. The aggregate acquisition price for the shares held by the Company
exceeded the Company's share of the historical underlying net assets of AIP by
approximately $28.6 million which has been assigned principally to real estate
with the remainder to goodwill. The portion attributable to real estate is being
amortized over 40 years and the amount associated with goodwill is being
amortized over 15 years. Accordingly, the Company's equity in net income from
minority equity investment is adjusted to reflect the gain or loss on sale of
real estate and the amortization of amounts resulting from these basis
differences. At December 31, 2000, AIP's share price closed on the NYSE at
$12.25 per share which was adjusted to reflect the $1.27 per share dividend
payable at December 31, 2000. At December 31, 2000, the Company's aggregate
market investment in AIP, including the dividend receivable, was approximately
$130.6 million.
Pursuant to the terms of the original purchase agreement, AIP may, under
certain circumstances and subject to certain limitations, exercise a put right
that would require the Company to purchase additional common or convertible
preferred shares of AIP for a total amount not to exceed $200 million at a price
not to exceed $15.50 and $14.00 per share, respectively. AIP can only exercise
its right to put these additional shares for the purpose of financing property
acquisitions approved by AIP's Board of Trust Managers. This right was scheduled
to expire on November 20, 2000. At November 1, 2000, the date the merger
agreement was signed, $166.6 million remained outstanding pursuant to this put
right. If the merger does not close by May 31, 2001 due to a breach of the
merger agreement by the Company or DDR Sub, AIP will retain its right to cause
the Company to purchase up to $166.6 million in common or convertible preferred
shares from AIP. AIP's right would be extended for a period of time from its
original termination date of November 20, 2000, by the number of days between
June 19, 2000 and the later of (i) the date on which the breach occurs or (ii)
the first date on which a trust manager, not designated by the Company, becomes
aware of the breach.
F-17
75
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Summarized financial information, as reflected on the accounts of AIP is as
follows (in thousands):
DECEMBER 31,
--------------------
2000 1999
-------- --------
Balance sheet:
Land................................................. $150,108 $159,566
Buildings............................................ 453,168 482,620
-------- --------
603,276 642,186
Less accumulated depreciation........................ (55,341) (46,931)
-------- --------
Real estate, net..................................... 547,935 595,255
Other assets......................................... 44,103 25,427
-------- --------
$592,038 $620,682
======== ========
Mortgage debt........................................ $284,924 $334,873
Other liabilities and minority interests............. 41,912 27,321
-------- --------
326,836 362,194
Accumulated equity................................... 265,202 258,488
-------- --------
$592,038 $620,682
======== ========
FOR THE
YEAR ENDED FOR THE PERIOD
DECEMBER 31, JULY 30, 1998 TO
----------------- DECEMBER 31,
2000 1999 1998
------- ------- ----------------
Statement of operations:
Revenues from operations.................. $90,414 $87,617 $ 25,460
------- ------- --------
Rental operation expenses................. 31,357 31,512 10,405
Depreciation and amortization expense..... 13,552 14,535 4,219
Interest expense(1)....................... 25,506 26,562 7,766
Provisions for losses on real estate...... -- -- 10,060
------- ------- --------
70,415 72,609 32,450
------- ------- --------
Income (loss) from operations............. 19,999 15,008 (6,990)
Minority interests........................ (580) (313) 166
Equity in net income of joint ventures.... 120 624 --
(Gain) loss on sales of real estate....... 26,803 (200) --
------- ------- --------
Income (loss) before charge for change in
control and extraordinary item......... 46,342 15,119 (6,824)
Charge for change in control.............. -- -- (5,780)
------- ------- --------
Income (loss) before extraordinary item... 46,342 15,119 (12,604)
Extraordinary item........................ (329) (513) --
------- ------- --------
Net income (loss)...................... $46,013 $14,606 $(12,604)
======= ======= ========
- ---------------
(1) Interest expense includes $0.1 million and $0.7 million in 1999 and 1998,
respectively, paid to the Company on advances made at an interest rate of
10.25%.
For the year ended December 31, 2000, 1999 and for the period from July 30,
1998 to December 31, 1998, the Company recorded equity in net income from
minority equity investment of $6.2 million, $5.7 million and $0.9 million,
respectively. The difference between the Company's share in net income as
reported in the financial statements of AIP is attributable to adjustments
relating to depreciation and amortization and gain (loss) on sales
F-18
76
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
of real estate associated with the $28.6 million basis adjustments discussed
above. In addition, the $6.2 million net income from minority equity investment
recorded in 2000 includes a $4.9 million impairment loss relating to the pending
sale of 31 properties to Lend Lease partially offset by a $3.6 million gain, as
adjusted, from the sale of an office building in the fourth quarter of 2000.
Also, for the period July 30, 1998 to December 31, 1998, the $0.9 million
reported by the Company represents the Company's equity in AIP's $3.2 million of
income before provisions for loss on real estate and change in control charges.
In 1998, the real estate impairment and change in control charges detailed above
are reconciling items between the Company's proportionate share of AIP's
reported results of operations and the amount reflected in the Company's
financial statements as equity in net income from minority equity investment.
These amounts were considered in DDR's allocation of purchase price associated
with its investment in AIP as discussed above.
4. ACQUISITIONS AND PRO FORMA FINANCIAL INFORMATION
During the years ended December 31, 2000, 1999 and 1998, the Company
completed the acquisition of 39 shopping centers, excluding those acquired
through joint ventures as discussed in Note 2, (one in 2000, three in 1999, and
35 in 1998) at a total purchase price of approximately $850 million. These
acquisitions were accounted for using the purchase method of accounting.
Significant acquisitions were as follows:
In 1998, in a single transaction with Continental Real Estate Companies of
Columbus, Ohio, the Company completed the acquisition of 13 shopping centers,
four of which were acquired through joint ventures. The 13 shopping centers
total 2.2 million gross square feet of Company-owned retail space. The aggregate
cost of these centers was $222.3 million of which the Company's share was $184.4
million. The Company's net investment was initially funded through its revolving
credit facilities, cash and liabilities assumed of approximately $92.7 million,
mortgages assumed of approximately $82.9 million (including $54.7 million of
joint venture mortgage debt) and the issuance of OP Units valued at
approximately $8.8 million. In certain circumstances and at the option of the
Company, these units are exchangeable into 438,561 shares of the Company's
common stock of which 385,993 units remain outstanding at December 31, 2000.
In July 1998, the Company acquired from Hermes Associates of Salt Lake
City, Utah, nine shopping centers, one office building and eight additional
expansion, development or redevelopment projects. The nine shopping centers
aggregate 2.4 million square feet of total GLA. The total consideration for this
portfolio was approximately $309 million comprised of $30.6 million of debt
assumed, the issuance of 3.6 million OP Units, valued at $73 million, $194.2
million of cash and $11.2 million of other liabilities assumed, including
contingently issuable OP Units valued at approximately $8.9 million. In July,
2000, the Company acquired all of the OP Units originally issued including
contingently issuable OP Units for approximately $81.9 million.
In July, 1998, the Company also acquired 13 shopping centers aggregating
approximately 1.6 million square feet in the St. Louis, Missouri area, at an
aggregate cost of $152.5 million. Two of these centers were subsequently sold at
an aggregate price of approximately $4.4 million. The Company also acquired a
50% ownership interest in the Sansone Group's management company and development
company. The Company's net investment in this portfolio aggregated $162.6
million comprised of $27.6 million of debt assumed and $135 million of cash.
The operating results of the acquired shopping centers are included in the
results of operations of the Company from the date of purchase, including the
acquisition of properties owned through joint ventures, discussed in Note 2. The
properties owned through joint ventures are included in equity in net income of
joint ventures in the consolidated statements of operations.
The following unaudited supplemental pro forma information is presented to
reflect the effects of the common share offerings, preferred share offerings,
debt offerings and the property acquisitions consummated through December 31,
1999, including the joint venture formations and acquisitions (Note 2), as if
all such transactions had occurred on January 1, 1998 with regard to the 1998
and 1999 acquisitions. Pro forma
F-19
77
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
information is not presented for the year ended December 31, 2000 and 1999, as
the shopping centers acquired in 2000 and 1999 were either under development or
in the lease-up phase and, accordingly, the related operating information for
such centers does not exist prior to acquisition or would not be meaningful. The
pro forma financial information is presented for informational purposes only and
may not be indicative of what actual results of operations would have been had
the acquisitions occurred as indicated nor does it purport to represent the
results of the operations for future periods (in thousands, except per share
data):
FOR THE YEAR ENDED
DECEMBER 31, 1998(a)
(UNAUDITED)
--------------------
Pro forma revenues......................................... $229,678
========
Pro forma income before extraordinary item................. $ 80,994
========
Pro forma net income applicable to common shareholders:.... $ 55,547
========
Pro forma net income applicable to common shareholders:
Basic.................................................... $ 0.97
========
Diluted.................................................. $ 0.93
========
- ---------------
(a) Reflects revenues and expenses of the properties acquired in 1999 and 1998
for the period January 1, 1998 through the effective date of acquisition.
Operating results for the Company's acquired properties located in Columbus
(Easton Market), Ohio; Princeton, New Jersey; Portland, Oregon; St. Louis
(American Plaza) Missouri; St. Louis (Promenade at Brentwood), Missouri;
Florence, Kentucky; Fayetteville, Arkansas; Salisbury, Maryland and Phoenix,
Arizona are not reflected in the 1998 pro forma information prior to their
respective acquisition dates because these shopping centers were either
under development or in the lease-up phase and, accordingly, the related
operating information for such centers either does not exist or would not be
meaningful. In addition, the 1998 pro forma information does not include the
results of shopping center expansions occurring at five of the shopping
centers acquired by the Company.
5. DISPOSITION OF REAL ESTATE AND INVESTMENTS
During 2000, the Company recorded a gain on disposition of real estate and
investments which aggregated $23.4 million. The Company sold several properties
including shopping centers located in Stone Mountain, Georgia; Florence,
Kentucky; a portion of a shopping center in Las Vegas, Nevada and Wal-Mart
stores in Camden, South Carolina and New Bern and Washington, North Carolina and
its 50% joint venture interest in a recently developed shopping center in
Fenton, Missouri. The aggregate net gain from the aforementioned transactions
was $6.8 million. In addition, the Company sold 60% of its half interest in a
joint venture which owns 10 operating shopping centers and recognized a gain of
approximately $16.1 million. In connection with the formation of one joint
venture, the Company sold one property, received cash and a 50% partnership
interest and recognized a gain of approximately $0.5 million for the 50%
interest deemed to be sold. Net proceeds received in conjunction with the above
sales aggregated $133.0 million.
During 1999, the Company recorded a loss on disposition of real estate and
investments aggregating $2.2 million relating to the sale of a shopping center
and residual land in Pensacola, Florida to a major retailer. In connection with
this disposition, the Company developed a 17,000 square foot shopping center
adjacent to the site sold. In addition, the Company sold four properties at an
aggregate gain of approximately $0.5 million which offsets the previously
described loss within the consolidated statements of operations. Net proceeds
received in conjunction with the above sales aggregated $13.9 million. During
1998, the Company sold various outlots adjacent to the Company's shopping
centers and recognized an aggregate gain of $0.2 million and received net
proceeds of $6.7 million.
F-20
78
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
6. NOTES RECEIVABLE
The Company has issued notes receivable, including accrued interest,
aggregating $4.8 million and $5.6 million at December 31, 2000 and 1999,
respectively. The notes are secured by certain rights in future development
projects, partnership interests and personal guaranties. The notes bear interest
ranging from 10.5% to 12.0% with maturity dates ranging from May 2001 to
December 2002.
7. DEFERRED CHARGES
Deferred charges consist of the following (in thousands):
DECEMBER 31,
------------------
2000 1999
------- -------
Deferred financing costs................................. $ 9,561 $ 7,298
Less-accumulated amortization............................ (3,603) (3,382)
------- -------
$ 5,958 $ 3,916
======= =======
The Company incurred deferred finance costs aggregating $3.8 million and
$0.2 million in 2000 and 1999, respectively, primarily relating to the Company's
unsecured revolving credit agreements (Note 8). Amortization of deferred charges
was $1.8 million, $1.5 million and $1.4 million for the years ended December
2000, 1999 and 1998, respectively.
During 1998, the Company wrote off $0.9 million (none in 2000 and 1999) of
unamortized deferred finance costs in conjunction with the amendment and
restructuring of its Unsecured Revolving Credit Facility (Note 8) and the
repayment of certain secured indebtedness.
8. REVOLVING CREDIT FACILITIES
Since May 1995, the Company has maintained an unsecured revolving credit
facility from a syndicate of financial institutions for which Bank One, NA
serves as agent (the "Unsecured Credit Facility"). During 2000, the Company
renegotiated, expanded and extended this facility and increased the available
borrowing capacity to $550 million from $375 million, adjusted the spread over
LIBOR to 1.10%, modified certain covenants and extended the term for an
additional two years to May 31, 2003. The Unsecured Credit Facility includes a
competitive bid option for up to 50% of the facility amount. Borrowings under
this facility bear interest at variable rates based on the prime rate or LIBOR
plus a specified spread (1.10% at December 31, 2000). The spread is dependent on
the Company's long term senior unsecured debt rating from Standard and Poor's
and Moody's Investors Service. The Company is required to comply with certain
covenants relating to total outstanding indebtedness, secured indebtedness, net
worth, maintenance of unencumbered real estate assets, debt service coverage and
fixed charge coverage. The facility also provides for a facility fee of 0.2% on
the entire facility. The Unsecured Credit Facility is used to finance the
acquisition and development of real estate, to provide working capital and for
general corporate purposes. At December 31, 2000 and 1999, total borrowings
under this facility aggregated $419.5 million and $272.0 million, respectively,
with a weighted average interest rate, excluding the effects of the interest
rate swaps in 2000, of 7.8% and 7.3%, respectively.
During the first quarter of 1998, the Company recognized a non-cash
extraordinary charge of approximately $0.9 million ($0.01 per common share),
relating to the write-off of unamortized deferred finance costs associated with
the former revolving credit facility.
In September 1996, the Company entered into a three-year $10 million
unsecured revolving credit facility with National City Bank, (together with the
$550 million Unsecured Credit Facility, the "Revolving Credit Facilities"). In
1999 and 2000, the Company amended this facility to increase the available
borrowings to $25 million, to convert it to a secured revolving credit facility
and to extend the agreement through
F-21
79
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
November 2002. This credit facility is secured by certain partnership
investments. The Company maintains the right to reduce this facility to $20
million and to convert the borrowings to an unsecured revolving credit facility.
Borrowings under this facility bear interest at variable rates based on the
prime rate or LIBOR plus a specified spread (1.10% at December 31, 2000). The
spread is dependent on the Company's long term senior unsecured debt rating from
Standard and Poor's and Moody's Investors Service. The Company is required to
comply with certain covenants relating to total outstanding indebtedness,
secured indebtedness, net worth, maintenance of unencumbered real estate assets,
debt service coverage and fixed charge coverage. The facility also provides for
commitment fees of 0.15% on the unused credit amount. At December 31, 2000 and
1999, total borrowings under this facility aggregated $21.0 million and $18.8
million, respectively, with a weighted average interest rate of 7.5% and 7.3%,
respectively.
Total fees paid by the Company on its Revolving Credit Facilities in 2000,
1999 and 1998, aggregated approximately $0.9 million, $0.6 million and $0.5
million, respectively.
9. FIXED RATE SENIOR NOTES
The following is a summary of the Company's outstanding unsecured fixed
rate senior notes:
DECEMBER 31,
--------------------
2000 1999
-------- --------
Unsecured Fixed Rate Senior Notes(1)................... $417,519 $517,470
Pass-Through Asset Trust Securities(2)................. 74,912 74,841
-------- --------
$492,431 $592,311
======== ========
- ---------------
(1) Two of the senior notes were issued at a discount. One matured and was
repaid in May, 2000. The unamortized discount aggregated $0.2 million at
December 31, 2000 and 1999. The effective interest rates of these notes
range from 6.65% to 7.67% per annum.
(2) In March 1997, the Company issued, through a grantor trust, $75 million of
Pass-Through Asset Trust Securities (PATS), due March 2002, at a discount of
99.53%. These certificates are secured by fifteen-year notes maturing March
2012, issued by the Company to the trust. The trust sold an option which
enables the option holder to re-market the certificates upon maturity in
March 2002. Simultaneously with the sale of the certificates, the trust
purchased the notes from the Company for a premium in the amount of the
option payment. This premium, $1.1 and $1.2 million at December 31, 2000 and
1999, respectively, is being amortized over the fifteen-year life of the
notes and is included in other liabilities in the consolidated balance
sheet. If the option holder does not elect to remarket the certificates,
then they become due and payable in March 2002. Interest is paid
semi-annually in arrears on March 15 and September 15.
The above fixed rate senior notes have maturities ranging from February
2001 to July 2018. Interest rates ranged from approximately 6.58% to 7.5%
(averaging 7.2% at December 31, 2000 and 1999). These notes may not be redeemed
by the Company prior to maturity and will not be subject to any sinking fund
requirements. The fixed rate senior notes were issued pursuant to an indenture
dated May 1, 1994 which contains certain covenants including limitation on
incurrence of debt, maintenance of unencumbered real estate assets and debt
service coverage. Interest is paid semi-annually in arrears on May 15 and
November 15.
10. MORTGAGES PAYABLE AND SCHEDULED PRINCIPAL REPAYMENTS
At December 31, 2000, mortgages payable, collateralized by certain notes
receivable, investments and real estate with a net book value of approximately
$866.7 million and related tenant leases, are generally due in monthly
installments of principal and/or interest and mature at various dates through
2027. Interest rates ranged from approximately 6.0% to 9.75% (averaging 8.3% at
December 31, 2000 and 1999). Variable rate debt obligations, included in
mortgages payable at December 31, 2000 and 1999, totaled approximately $127.5
million
F-22
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
and $110.6 million, respectively. Interest rates on the variable rate debt
averaged 8.2% and 7.3% at December 31, 2000 and 1999, respectively.
As of December 31, 2000, the scheduled principal payments of the Revolving
Credit Facilities, fixed rate senior notes and mortgages payable for the next
five years and thereafter are as follows:
YEAR AMOUNT
---- ----------
2001 $ 157,687
2002 102,994
2003 456,451
2004 71,167
2005 7,366
Thereafter 431,910
----------
$1,227,575
==========
Principal payments in the year 2002 and 2003 include $21.0 million and
$419.5 million, respectively, associated with the maturing of the Revolving
Credit Facilities.
Principal payments in the year 2002 assume that the PATS option holder
(Note 9) will not exercise the option to re-market the certificates and the
trust will therefore put the certificates to the Company to finance the
reacquisition of the PATS at maturity.
11. FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating fair value disclosures of financial instruments:
Cash and cash equivalents, accounts receivable, accounts payable, accruals and
other liabilities
The carrying amounts reported in the balance sheet for these financial
instruments approximated fair value because of their short maturities. The
carrying amount of straight-line rents receivable does not materially differ
from their fair market value.
Notes receivable and advances to affiliates
The fair value is estimated by discounting the current rates at which
similar loans would be made. At December 31, 2000 and 1999, the carrying amounts
reported in the balance sheet approximate fair value.
Debt
The carrying amounts of the Company's borrowings under its Revolving Credit
Facilities approximate fair value because such borrowings are at variable rates.
The fair value of the fixed rate senior notes is based on borrowings with a
similar remaining maturity based on the Company's estimated interest rate spread
over the applicable treasury rate. Fair value of the mortgages payable is
estimated using a discounted cash flow analysis, based on the Company's
incremental borrowing rates for similar types of borrowing arrangements with the
same remaining maturities.
Interest rate swaps
The Company intends to continuously monitor and actively manage interest
costs on its variable rate debt portfolio. The Company may, from time to time,
enter into interest rate hedge agreements to manage interest
F-23
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
costs and risks associated with changing interest rates. In October, 2000, the
Company entered into two interest rate swaps aggregating $100 million. These
swaps effectively convert $100 million of variable rate debt to a fixed rate of
approximately 7.6% through October 2002. The Company is exposed to credit risk
in the event of non-performance by the counter-parties to the swaps.
The fair value of interest rate swaps is based upon the estimated amounts
that the Company would receive or pay to terminate the contract at the reporting
date. Fair value of the swaps is estimated using a binomial pricing model.
Considerable judgment is necessary to develop estimated fair values of
financial instruments. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize on disposition
of the financial instruments.
Financial instruments at December 31, 2000 and 1999, with carrying values
that are different than estimated fair values are summarized as follows (in
thousands):
2000 1999
----------------------------- -----------------------------
CARRYING AMOUNT FAIR VALUE CARRYING AMOUNT FAIR VALUE
--------------- ---------- --------------- ----------
Fixed Rate Senior Notes............... $492,431 $471,448 $592,311 $565,871
Mortgages payable..................... 294,645 301,761 268,965 273,343
-------- -------- -------- --------
787,076 773,209 861,276 839,214
Derivatives -- interest rate swaps.... (55) 1,433 -- --
-------- -------- -------- --------
$787,021 $744,642 $861,276 $839,214
======== ======== ======== ========
12. MINORITY EQUITY INTERESTS, PREFERRED OPERATING PARTNERSHIP MINORITY
INTERESTS, OPERATING PARTNERSHIP MINORITY INTERESTS, PREFERRED SHARES AND
COMMON SHARES
Minority Equity Interests
The Company owns a majority ownership interest in a shopping center and
development parcels in Utah. The minority partners' equity interest in this
partnership is $8.2 million at December 31, 2000 and 1999. Minority equity
interest expense includes approximately $0.2 million, $0.1 million and $0.1
million for the years ended December 31, 2000, 1999, and 1998, respectively,
related to the minority partner's share of net income.
Preferred Operating Partnership Minority Interests
In 1998, the Company issued $35 million of preferred operating partnership
minority interests to a private investment partnership. These securities are a
combination of preferred equity securities and a warrant to purchase
approximately 1.6 million common shares of the Company at a price of $21.625 per
share or 1.4 million Class D cumulative redeemable preferred shares at a price
of $25 per share. The Company recorded $32.9 million as preferred operating
partnership minority interests and $2.1 million to additional paid in capital in
respect of the warrant. The preferred equity securities are structured as 8.5%
cumulative redeemable preferred units of DDRC Great Northern L.P., a wholly
owned, consolidated partnership. The preferred units are redeemable without
restriction by the investment partnership, for cash or common shares at the
option of the Company, and redeemable after five years by DDRC Great Northern
L.P. for cash or common shares at the investment partnership's option. In
addition, if the warrant is exercised, the Company has the right to redeem the
preferred units. Generally, the warrant has a perpetual term, but will expire
upon redemption of the preferred units.
In September, 1999 and May, 2000, the Company completed, through a
consolidated partnership, a $75 million and $105 million private placement of
8.875% and 9.0%, cumulative perpetual preferred "down-REIT" preferred
partnership units, respectively, together with the preferred units discussed
above, ("Preferred Units"), with an institutional investor. The units may be
exchanged, under certain circumstances, for
F-24
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Class K and Class J, 8.875% and 9.0%, respectively, cumulative preferred shares
of the Company. The units may be exchangeable into common shares if the Company
fails to pay dividends for six consecutive quarters. The net proceeds of
approximately $175.1 million were effectively used to repay approximately $25.8
million in mortgage indebtedness and $40.1 million in convertible debentures
which matured on August 15, 1999 and $109.2 million was used to repay variable
rate borrowings under the Company's Revolving Credit Facilities.
The Company reflected $15.3 million, $5.2 million and $0.2 million as a
charge to preferred operating partnership minority interest in the consolidated
statements of operations relating to the accrued return associated with these
Preferred Units at December 31, 2000, 1999 and 1998, respectively.
Operating Partnership Minority Interests
At December 31, 2000 and 1999, the Company had 1,051,310 and 4,702,282 OP
Units outstanding, respectively. During 2000 and 1999 the Company acquired,
through subsidiary partnerships, a majority ownership interest in one shopping
center and additional phases of three shopping centers previously acquired. In
conjunction with these acquisitions, the Company issued 23,326 and 139,276 OP
Units in 2000 and 1999, respectively, which are exchangeable, under certain
circumstances and at the option of the Company, into an equivalent number of the
Company's common shares or for the equivalent amount of cash.
In 2000 and 1999, the Company purchased 3,674,298 and 18,098, respectively,
of OP Units for cash aggregating $82.5 million and $0.3 million, respectively.
These transactions were treated as a purchase of minority interest. The
difference between the recorded amount of the minority interest and the cash
paid was not material. In connection with the Company's purchase of certain
shopping centers during 1998 and the related issuance of approximately 3.6
million of the above mentioned OP Units, the Company provided a guarantee of the
value of the OP Units, which included the aggregate value derived from both the
value of the OP Units and the distributions received pursuant to the terms of
the OP Units. The purchase of these shopping centers were recorded at the
estimated fair value of the guaranteed amount. During 1999, the agreement was
amended to revise certain aspects of the settlement method. Through the date of
the amendment, contingently issuable OP Units were considered in weighted
average shares outstanding for purposes of determining diluted earnings per
share (Note 17).
The OP Unit holders are entitled to receive distributions, per OP Unit,
equal to the per share distributions on the Company's common shares. During
2000, 1999 and 1998, the unit holders received distributions aggregating $4.1
million, $6.5 million and $2.9 million, respectively, which has been reflected
as a charge to operating partnership minority interest in the consolidated
statements of operations.
Preferred Shares
The Class A, B, C and D depository shares represent 1/10 of a share of
their respective preferred class of shares. The Class A and Class B depository
shares are redeemable by the Company at December 31, 2000. The Class C and Class
D depository shares are not redeemable by the Company prior to July 7, 2003 and
August 20, 2003, respectively, except in certain circumstances relating to the
preservation of the Company's status as a REIT.
The Company's authorized preferred shares consist of the following:
- 750,000 Class A Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class B Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class C Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class D Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class E Cumulative Redeemable Preferred Shares, without par value
F-25
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
- 750,000 Class F Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class G Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class H Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class I Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class J Cumulative Redeemable Preferred Shares, without par value
- 750,000 Class K Cumulative Redeemable Preferred Shares, without par value
- 750,000 Non Cumulative preferred shares, without par value
Common Shares
The Board of Directors of the Company approved a two-for-one stock split to
shareholders of record on July 27, 1998. On August 3, 1998, each such
shareholder received one share of common stock for each share of common stock
held. This stock split was effected in the form of a stock dividend.
Accordingly, $2.9 million was transferred from additional paid in capital to
common stock, representing the stated value of additional shares issued.
In April 1998, the Company issued 1,339,278 common shares at $18.8612 per
share and received aggregate net proceeds of approximately $25.2 million. In
December 1998, the Company issued 3,000,000 common shares at $18.5625 per share
and received aggregate net proceeds of approximately $52.6 million. The
aggregate net proceeds of $77.8 million from these two offerings were primarily
used to repay amounts outstanding on the Revolving Credit Facilities and for
general corporate purposes.
Stock Repurchase Program
In 1999 and 2000, the Company's Board of Directors authorized the officers
of the Company to implement a common share repurchase program in response to
what the Company believed was a distinct undervaluation of the Company's common
shares in the public market. At December 31, 2000 and 1999, treasury stock
recorded on the Company's consolidated balance sheet consisted of 6,601,250 and
1,860,300 common shares, respectively, at a cost of $88.7 million and $25.8
million, respectively.
13. TRANSACTIONS WITH RELATED PARTIES
In August, 2000, the Company purchased residual land adjacent to its
shopping center in Aurora, Ohio from a limited partnership owned by the founder
of the Company and former Chairman of Board who is also the father of the
current Chairman of the Board and Chief Executive Officer. The purchase price
was $1.3 million.
In September, 1999, the Company transferred its interest in a shopping
center under development in Coon Rapids, Minnesota, a suburb of Minneapolis, to
a joint venture and simultaneously sold a 75% interest to an entity owned in
part by a director of the Company. The Company retained a 25% interest. The
Company was reimbursed $2.5 million by the joint venture partner relating to
development costs previously incurred on this development. In addition, the
Company received a development fee of approximately $0.5 million in 1999 from
the entity's joint venture partner.
In September, 1998, the Company sold two properties to a principal of one
of the Company's joint venture partners. These properties aggregated
approximately 33,000 square feet and were sold for approximately $4.4 million.
In June, 1998, the Company acquired, from a partnership owned by the former
Chairman of the Board and an Officer of the Company, approximately 18 acres of
land, adjacent to a shopping center owned through one of the Company's joint
ventures, at a purchase price of approximately $4.4 million.
F-26
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
In February, 1998, the Company acquired a shopping center located in Idaho
Falls, Idaho from a limited partnership in which the former Chairman of the
Board, the Chairman of the Board and Chief Executive Officer, and the
Vice-Chairman of the Board owned, in the aggregate, through a separate
partnership, a 1% general partnership interest. The shopping center aggregates
approximately 0.2 million square feet. The initial purchase price of the
property was approximately $6.5 million. In accordance with the purchase
agreement, the Company paid an earnout of $0.6 million upon the leasing of
vacant space in the center in January 1999.
In addition, in 1998 the Company paid to a partnership owned by the former
Chairman of the Board approximately $0.1 million for leasing/sales commissions
associated with leasing or sale of certain shopping center outlots. Also, the
Company paid approximately $0.1 million and $0.7 million in 1999 and 1998,
respectively, to a company owned by the brother-in-law of the Chairman of the
Board and Chief Executive Officer relating to fees and commissions earned from
the Company's acquisition of several shopping centers.
In 1998, the Chairman of the Board and Chief Executive Officer of the
Company received 100,000 stock options in his role as Chairman of AIP's Board of
Trustees. All benefits associated with these options were assigned to the
Company.
In conjunction with the establishment of DDR's equity investment in certain
entities (described in Note 2 as entities in which the Company has a 95%
economic interest at December 31, 2000), the Company's Chairman of the Board and
Chief Executive Officer retained the majority of the voting shares. These
entities were structured in this format in order to meet certain REIT
qualification requirements.
During 1999 and 1998, the Company periodically advanced funds to the
Chairman of the Board and Chief Executive Officer in amounts up to $0.4 million.
The advances, which were made to reduce the outstanding principal balance of,
and to prevent the sale of, common shares in the Company from a margin account
loan, were outstanding for periods ranging from five to forty days with an
interest rate of LIBOR plus the applicable spread based on the Company's rate of
borrowing on the Revolving Credit Facilities. In addition, in 1999 the Company
advanced approximately $0.2 million to certain officers of the Company in
connection with certain relocation costs and related payroll taxes.
In 1998, eleven of the Company's executives, either through the exercise of
previously granted stock options or through the direct purchase of unissued
shares, acquired 974,663 of the Company's common shares. The purchase of such
shares was financed by a five-year personal loan program aggregating
approximately $15 million (at market interest rates) from Bank One, NA. These
loans are guaranteed by the Company. Four of these executives have subsequently
resigned from the Company. The Company has agreed to maintain the guarantee. The
individuals participating in the program are responsible for repayment of these
personal loans and have fully indemnified the Company should the Company's
guarantee be called upon.
The Company entered into a lease for office space owned by one of its
principal shareholders. General and administrative rental expense associated
with this office space, aggregated $0.6 million, $0.7 million, and $0.7 million
for the years ended December 31, 2000, 1999 and 1998, respectively.
The Company continues to have management agreements with various
partnerships and performs certain administrative functions on behalf of entities
owned in part by a related party, in which management fee and leasing fee income
of $0.2 million was earned in 2000, 1999 and 1998. Transactions with the
Company's equity affiliates have been described in Notes 2 and 3.
14. COMMITMENTS AND CONTINGENCIES
The Company is engaged in the operation of shopping centers which are
either owned or, with respect to certain shopping centers, operated under
long-term ground leases which expire at various dates through 2070, with renewal
options. Space in the shopping centers is leased to tenants pursuant to
agreements which provide for terms ranging generally from one to 30 years and,
in some cases, for annual rentals which are subject to upward
F-27
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
adjustments based on operating expense levels, sales volume, or contractual
increases as defined in the lease agreements.
The scheduled future minimum revenues from rental properties under the
terms of all noncancelable tenant leases, assuming no new or renegotiated leases
or option extensions for such premises, for the subsequent five years ending
December 31, are as follows (in thousands):
2001 $ 193,782
2002 183,460
2003 169,270
2004 157,563
2005 144,563
Thereafter 1,017,672
----------
$1,866,310
==========
Scheduled minimum rental payments under the terms of all non-cancelable
operating leases in which the Company is the lessee, principally for office
space and ground leases, for the subsequent five years ending December 31, are
as follows (in thousands):
2001 $ 1,964
2002 1,915
2003 1,910
2004 1,899
2005 2,106
Thereafter 21,088
-------
$30,882
=======
There were no capital leases in which the Company is the lessee at December
31, 2000 or 1999. In conjunction with the development and expansion of various
shopping centers, the Company has entered into agreements for the construction
of the shopping centers aggregating approximately $26.2 million as of December
31, 2000.
As discussed in Note 2, the Company and certain equity affiliates have
entered into several joint ventures with various third party developers. In
conjunction with certain joint venture agreements, the Company and/or its equity
affiliate has agreed to fund the required capital associated with approved
development projects. The Company and/or its equity affiliate is entitled to
receive a priority return on capital advances at rates ranging from 10.5% to
12.0%.
As discussed in Note 13, the Company has provided certain guarantees
relating to officer loans.
F-28
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
15. OTHER INCOME
Other income was comprised of the following (in thousands):
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
Lease termination................................ $8,950 $3,425 $1,621
Financing fees................................... -- 420 21
Sales commissions................................ -- 412 346
Other, net....................................... 205 773 486
------ ------ ------
$9,155 $5,030 $2,474
====== ====== ======
16. BENEFIT PLANS
Stock Option and Other Equity Based Plans
The Company's stock option and equity-based award plans provide for the
grant, to employees of the Company the following: Incentive and non-qualified
stock options to purchase common shares of the Company, rights to receive the
appreciation in value of common shares, awards of common shares subject to
restrictions on transfer, awards of common shares issuable in the future upon
satisfaction of certain conditions and rights to purchase common shares and
other awards based on common shares. Under the terms of the award plans, awards
may be granted with the respect to an aggregate of not more than 7,313,806
common shares. Options may be granted at per share prices not less than fair
market value at the date of grant, and in the case of incentive options, must be
exercisable within ten years thereof (or, with respect to options granted to
certain shareholders, within five years thereof). Options granted under the
plans generally become exercisable in the year after the date of grant as to
one-third of the optioned shares, with the remaining options being exercisable
over the following two-year period.
In 1997, the Board of Directors approved the issuance of 900,000 stock
options to the Company's Chief Executive Officer which vested upon issuance of
the options. In addition, 700,000 of these options were issued outside of a
qualified plan.
In addition to the stock option and equity-based award plans described
above, the Company granted options totaling 975,000 shares to its directors and
certain officers who are not employees of the Company. Such options were granted
at the fair market value on the date of grant. Options with respect to 50,000
shares were exercisable one year from the date of grant, and options with
respect to the remaining 925,000 shares become exercisable one year after the
date of grant as to one third of the 925,000 shares with the remaining options
being exercisable over the following two-year period.
F-29
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following table reflects the stock option activity described above (in
thousands):
NUMBER OF OPTIONS
----------------------------------- WEIGHTED-AVERAGE
EXECUTIVE ----------------------------
EMPLOYEES DIRECTORS OFFICER EXERCISE PRICE FAIR VALUE
--------- --------- --------- -------------- ----------
Balance December 31, 1997........... 3,416 920 700 $16.18
Granted........................... 540 10 -- 19.95 $1.43
Exercised......................... (1,093) -- -- 13.31
Canceled.......................... (72) -- -- 18.44
------ --- --- ------
Balance December 31, 1998........... 2,791 930 700 17.32
Granted........................... 1,083 20 -- 15.42 $1.42
Exercised......................... (13) -- -- 14.48
Canceled.......................... (385) -- -- 19.49
------ --- --- ------
Balance December 31, 1999........... 3,476 950 700 16.75
Granted........................... 696 5 -- 12.19 $1.21
Exercised......................... (11) -- -- 14.27
Canceled.......................... (139) (1) -- 17.08
------ --- --- ------
Balance December 31, 2000........... 4,022 954 700 $16.19
====== === === ======
The following table summarizes the characteristics of the options
outstanding at December 31, 2000 (in thousands):
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------------- ------------------------------
OUTSTANDING WEIGHTED-AVERAGE EXERCISABLE
RANGE OF AS OF REMAINING WEIGHTED-AVERAGE AS OF WEIGHTED-AVERAGE
EXERCISE PRICES 12/31/00 CONTRACTUAL LIFE EXERCISE PRICE 12/31/00 EXERCISE PRICE
- --------------- ----------- ---------------- ---------------- ----------- ----------------
$11.00-$16.50 3,417 6.4 $14.05 2,248 $14.43
$16.50-$24.00 2,259 7.5 $19.42 1,989 $19.70
----- --- ------ ----- ------
5,676 6.8 $16.19 4,237 $16.90
As of December 31, 2000, 1999 and 1998, 4,237, 3,589 and 2,848 options (in
thousands), respectively, were exercisable. The weighted average exercise prices
of these exercisable options were $16.90, $16.69 and $16.36 at December 31,
2000, 1999 and 1998, respectively.
During 1998, the Company's executive committee purchased approximately 0.9
million of the shares exercised (See Note 13).
In 1996 and 2000, the Board of Directors approved a grant of 30,000
Performance Units to the Company's Chief Executive Officer. The 30,000
Performance Units issued in 1996 were converted into 30,000 common shares in
January, 2001 based upon the achievement of certain performance objectives
determined as of December 31, 2000. The shares issued were based upon the
average annual total shareholder's return during the five-year period ending
December 31, 2000. The 30,000 Performance Units granted in 2000 will be
converted to a common share equivalent ranging from 30,000 to 200,000
Performance Units based on the annualized total shareholder's return for the
five-year period ending December 31, 2004. In 1996, 1999 and 2000, the Board of
Directors approved a grant of 50,000, 47,095 and 91,975 restricted shares of
common stock to several executives and outside directors of the Company,
respectively. The restricted stock grants vest in equal annual amounts over a
five-year period and had a weighted average fair value at the date of a grant
ranging from $11.56 to $15.31, which was equal to the market value of the
Company's stock at the date of grant. During 2000 and 1998, approximately $0.5
million and $0.8 million, respectively, was charged to expense associated with
awards under
F-30
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
the equity based award plan relating to restricted stock and Performance Units.
During 1999, the Company reduced its accrual relating to the Performance Unit
award by approximately $1.3 million; expense associated with restricted shares
aggregated $0.3 million in 1999.
The Company applies APB 25, "Accounting for Stock Issued to Employees" in
accounting for its plans. Accordingly, the Company does not recognize
compensation cost for stock options when the option exercise price equals or
exceeds the market value on the date of the grant. The compensation cost which
is required to be charged against income for all of the above mentioned plans
was $1.5 million, $1.8 million and $1.8 million for 2000, 1999 and 1998,
respectively. Had compensation cost for the Company's stock-based compensation
plans been determined based on the fair values of the options granted at the
grant dates, consistent with the method set forth in the SFAS No. 123,
"Accounting for Stock Based Compensation," the Company's net income and earnings
per share would have been as follows (dollars in thousands, except per share
data):
2000 1999 1998
------- ------- -------
Net income applicable to As reported $73,351 $60,135 $57,969
common shareholders Pro forma.. $72,049 $58,370 $56,168
Basic earnings As reported $ 1.31 $ 0.99 $ 1.02
per share Pro forma $ 1.29 $ 0.96 $ 0.99
Diluted earnings As reported $ 1.31 $ 0.95 $ 0.98
per share Pro forma $ 1.29 $ 0.92 $ 0.95
For purposes of the pro forma presentation, the fair value of each option
grant was estimated on the date of grant using the Black-Scholes options pricing
model using the following assumptions:
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
Risk free interest rate or
(range)........................ 5.0%-6.8% 5.6%-6.4% 4.7%-5.8%
Dividend yield (range)........... 10.8%-12.5% 8.5%-10.9% 6.4%-7.5%
Expected life (range)............ 4-10 years 7-10 years 6-10 years
Expected volatility (range)...... 21.7%-26.2% 20.2%-31.8% 13.2%-19.1%
401(k) Plan
The Company has a 401(k) defined contribution plan covering substantially
all of the officers and employees of the Company which permits participants to
defer up to a maximum of 15% of their compensation. The Company will match 25%
of the employee's contribution up to a maximum of 6% of an employee's annual
compensation. The Company may also make additional discretionary contributions.
Employees' contributions are fully vested and the Company's matching
contributions vest 20% per year. Once an employee has been with the Company five
years, all matching contributions are fully vested. The Company's contributions
to the plan for the year ended December 31, 2000, 1999 and 1998 were made by the
issuance of Company stock with a market value of $0.07 million, $0.06 million
and $0.05 million, respectively. Effective December 31, 2000, the Company
elected to fund all future matching contributions with cash. The 401(k) plan is
fully funded at December 31, 2000.
Elective Deferred Compensation Plan
The Company has a non-qualified elective deferred compensation plan for
certain key executives which permits eligible employees to defer up to 25% of
their compensation. The Company will match 25% of an employee's contribution up
to a maximum of 6% of an employee's annual compensation, after deducting
contributions, if any, made in conjunction with the Company's 401(k) plan.
Through March 31, 1998, both the
F-31
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
deferred and matching contributions were made in Company performance units as
well as the gains and losses resulting from the fluctuation in the Company's
quoted share price. In April 1998, the Company elected to amend the investment
elections available to employees such that election of the Company's stock is no
longer permitted. Deferred compensation charged to expense related to an
employee contribution is fully vested and the Company's matching contribution
vests 20% per year. Once an employee has been with the Company five years, all
matching contributions are fully vested. The Company's contribution for the
years ended December 31, 2000, 1999 and 1998 was $0.03 million, $0.02 million
and $0.06 million, respectively. For the year ended December 31, 1998, this
contribution included earnings attributable to the employees' accounts. At
December 31, 2000, 1999 and 1998, deferred compensation under this plan
aggregated approximately $1.1 million, $0.9 million and $0.5 million,
respectively. The plan is fully funded at December 31, 2000.
17. EARNINGS AND DIVIDENDS PER SHARE
Earnings Per Share ("EPS") have been computed pursuant to the provisions of
SFAS No. 128. Further, as discussed in Note 1, in 1998, the Company effected a
stock split in the form of a stock dividend in which each shareholder received
one share of common stock for each share of common stock held. All years
presented reflects this stock split.
The following table provides a reconciliation of both income before
extraordinary item and the number of common shares used in the computations of
"basic" EPS, which utilizes the weighted average of common shares outstanding
without regard to dilutive potential common shares, and "diluted" EPS, which
includes all such shares.
FOR THE YEAR ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
------------------------------------------
2000 1999 1998
------------ ----------- -----------
Income before extraordinary item.......................... $100,833 $87,397 $78,804
Less: Preferred stock dividend............................ (27,262) (27,262) (19,953)
-------- ------- -------
Basic EPS -- Income before extraordinary item applicable
to common shareholders................................. 73,571 60,135 58,851
Effect of dilutive share securities:
Joint Venture Partnerships............................. -- -- (632)
-------- ------- -------
Diluted EPS -- Income before extraordinary item applicable
to common shareholders plus assumed conversions........ $ 73,571 $60,135 $58,219
======== ======= =======
Number of Shares:
Basic -- average shares outstanding....................... 55,959 60,985 56,949
Effect of dilutive securities:
Joint venture partnerships and minority interests...... -- 2,246 1,056
Stock options.......................................... 138 138 499
Performance Units...................................... 30 70 --
Restricted stock....................................... 49 29 5
-------- ------- -------
Diluted -- average shares outstanding..................... 56,176 63,468 58,509
======== ======= =======
Per share amount:
Income before extraordinary item
Basic.................................................. $ 1.31 $ 0.99 $ 1.03
Diluted................................................ $ 1.31 $ 0.95 $ 1.00
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Options to purchase 5,676,477, 5,125,764 and 4,420,981 shares of common
stock were outstanding at December 31, 2000, 1999 and 1998, respectively (Note
16), a portion of which has been reflected above using the treasury stock
method.
The weighted average contingently issuable OP units which were
exchangeable, in certain circumstances into common shares, aggregated 2.2
million and 0.7 million for the years ended December 31, 1999 and 1998,
respectively. The Company settled these contingently issuable OP Units for cash
in 2000 (Note 12).
Restricted shares totaling 101,612, 47,676 and 20,000, respectively, were
not vested at December 31, 2000, 1999 and 1998 and consequently, were not
included in the computation of basic EPS for all years presented (Note 16).
Performance Units issued in 1996, convertible into 30,000 common shares of
the Company, were not included in the computation of diluted EPS for 1998
because the effect was antidilutive (Note 16).
Convertible debentures, which were convertible prior to their August 1999
maturity, into common shares of the Company at a price of $16.6875, were not
included in the computation of diluted EPS for all years prior to maturity
because the effect was antidilutive.
For certain joint ventures where the joint venture partner has the right to
convert its interest in the partnership to common shares of the Company or cash,
at the election of the Company, it is the Company's intent to settle these
conversions, if any, in cash. For the year ended December 31, 1998, significant
estimates were utilized by the Company to determine the number of common shares
assumed to be issued by the Company upon conversion, for purpose of determining
dilution, if any. The joint venture in Merriam, Kansas was the only partnership
conversion included in diluted EPS in 1998 because the impact was dilutive.
The exchange into common stock of the minority interests was not included
in the computation of diluted EPS for all years presented because the effect of
assuming conversion was antidilutive (Note 12).
The redemption of the Preferred Units, including those exercisable through
the exercise of the warrant into common shares, was not included in the
computation of diluted EPS for all years presented because the effect was
antidilutive or they were considered contingently issuable (Note 12).
Dividends declared per share for the years ended December 31, 2000, 1999
and 1998 are summarized as follows:
GROSS ORDINARY CAPITAL GAIN TOTAL
2000 DIVIDENDS DATE PAID INCOME DISTRIBUTIONS DIVIDENDS
-------------- --------- -------------- ------------- ---------
4th quarter 1999* 01/06/00 $0.1900 $0.0800 $0.2700
1st quarter 04/07/00 0.2548 0.1052 0.3600
2nd quarter 07/03/00 0.2548 0.1052 0.3600
3rd quarter 10/02/00 0.2548 0.1052 0.3600
4th quarter** 01/04/01 0.1617 0.0667 0.2284
------- ------- -------
$1.1161 $0.4623 $1.5784
======= ======= =======
F-33
91
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
GROSS ORDINARY CAPITAL GAIN TOTAL
1999 DIVIDENDS DATE PAID INCOME DISTRIBUTIONS DIVIDENDS
-------------- --------- -------------- ------------- ---------
4th quarter 1998 01/04/99 $0.0684 $ -- $0.0684
1st quarter 04/05/99 0.3500 -- 0.3500
2nd quarter 07/02/99 0.3500 -- 0.3500
3rd quarter 10/04/99 0.3500 -- 0.3500
4th quarter 01/06/00 0.0800 -- 0.0800
------- ------- -------
$1.1984 $ -- $1.1984
======= ======= =======
GROSS ORDINARY CAPITAL GAIN TOTAL
1998 DIVIDENDS DATE PAID INCOME DISTRIBUTIONS DIVIDENDS
-------------- --------- -------------- ------------- ---------
1st quarter 03/31/98 $0.3200 $0.0075 $0.3275
2nd quarter 06/30/98 0.3200 0.0075 0.3275
3rd quarter 10/01/98 0.3200 0.0075 0.3275
4th quarter 01/04/99 0.2456 0.0060 0.2516
------- ------- -------
$1.2056 $0.0285 $1.2341
======= ======= =======
- ---------------
* A portion of the fourth quarter 1999 dividend paid on January 6, 2000 was
reported to shareholders in 2000, of which $0.19 per share was reported as
ordinary income and $0.08 per share was reported as capital gain income for
the year ended December 31, 2000.
** A portion of the fourth quarter 2000 dividend paid on January 4, 2001 was
reported to shareholders in 2000, of which $0.1617 per share was reported as
ordinary income and $0.0667 per share was reported as capital gain income for
the year ended December 31, 2000. The remaining portion of the January 4,
2001 dividend payment of $0.1316 per share will be reported to shareholders
in 2001.
18. SUBSEQUENT EVENTS
In January, 2001, the Company entered into a $100 million, two-year swap
agreement, effectively converting a portion of the variable rate debt on the
Company's unsecured credit facility to a fixed rate of approximately 6.3%.
In January, 2001, the Company sold a 190,000 square foot shopping center in
Ahoskie, North Carolina for a purchase price of approximately $8.3 million and
recognized a gain of approximately $1.8 million. Proceeds from this sale were
used to repay amounts outstanding on the Company's Revolving Credit Facility.
Through February 21, 2001, the Company purchased a 20% interest in four
properties, three located in California and one located in Washington, through
the Fund. The Company's net investment in these properties is approximately
$11.2 million.
F-34
92
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
19. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table sets forth the quarterly results of operations for the
years ended December 31, 2000 and 1999 (in thousands, except per share amounts):
FIRST SECOND THIRD FOURTH TOTAL
------- ------- ------- ------- --------
2000:
Revenues from operations................ $68,806 $71,710 $71,363 $73,914 $285,793
Income before equity in net income of
joint ventures, minority equity
investment, gain on disposition of
real estate and investments, minority
interests and extraordinary item...... 18,148 18,947 18,527 18,068 73,690
Income before extraordinary item........ 37,977 18,713 21,025 23,118 100,833
Net income.............................. 37,977 18,713 21,025 23,118 100,833
Net income applicable to common
shareholders.......................... 31,161 11,898 14,209 16,303 73,571
Basic:
Income before extraordinary item per
common share....................... $ 0.53 $ 0.22 $ 0.26 $ 0.30 $ 1.31
Net income per common share........... $ 0.53 $ 0.22 $ 0.26 $ 0.30 $ 1.31
Weighted average number of shares..... 59,034 55,222 54,793 54,802 55,959
Diluted:
Income before extraordinary item per
common share....................... $ 0.51 $ 0.21 $ 0.26 $ 0.30 $ 1.31
Net income per common share........... $ 0.51 $ 0.21 $ 0.26 $ 0.30 $ 1.31
Weighted average number of shares..... 63,815 55,477 55,103 54,879 56,176
1999:
Revenues from operations................ $65,138 $64,314 $66,226 $68,255 $263,933
Income before equity in net income of
joint ventures, minority equity
investment, loss on disposition of
real estate and investments, minority
interests and extraordinary item...... 18,530 19,560 20,066 18,001 76,157
Income before extraordinary item........ 21,868 21,142 22,636 21,751 87,397
Net income.............................. 21,868 21,142 22,636 21,751 87,397
Net income applicable to common
shareholders.......................... 15,053 14,326 15,821 14,935 60,135
Basic:
Income before extraordinary item per
common share....................... $ 0.25 $ 0.23 $ 0.26 $ 0.25 $ 0.99
Net income per common share........... $ 0.25 $ 0.23 $ 0.26 $ 0.25 $ 0.99
Weighted average number of shares..... 61,302 61,311 61,327 60,006 60,985
Diluted:
Income before extraordinary item per
common share....................... $ 0.24 $ 0.22 $ 0.25 $ 0.24 $ 0.95
Net income per common share........... $ 0.24 $ 0.22 $ 0.25 $ 0.24 $ 0.95
Weighted average number of shares..... 64,016 63,992 66,448 62,626 63,468
F-35
93
DEVELOPERS DIVERSIFIED REALTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
20. PRICE RANGE OF COMMON SHARES (UNAUDITED)
The high and low sale prices per share of the Company's common shares, as
reported on the New York Stock Exchange Composite tape, and declared dividends
per share for the quarterly periods indicated were as follows:
2000: HIGH LOW DIVIDENDS
- ----- ---- --- ---------
First..................................... $13 7/8 $11 $ .36
Second.................................... 15 7/8 13 1/2 .36
Third..................................... 16 1/4 12 3/4 .36
Fourth.................................... 13 3/4 11 5/8 .36
1999: HIGH LOW DIVIDENDS
- ----- ---- --- ---------
First..................................... $18 1/2 $13 5/8 $ .35
Second.................................... 17 1/2 13 7/8 .35
Third..................................... 16 5/8 13 5/16 .35
Fourth.................................... 14 7/8 12 5/16 .35
As of March 1, 2001, there were 465 recordholders and approximately 21,000
beneficial owners of the Company's common shares.
F-36
94
SCHEDULE II
DEVELOPERS DIVERSIFIED REALTY CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(IN THOUSANDS)
BALANCE AT BALANCE AT
BEGINNING OF CHARGED END OF
YEAR TO EXPENSE DEDUCTIONS YEAR
------------ ---------- ---------- ----------
Year ended December 31, 2000
Allowance for uncollectible accounts......... $4,651 $2,336 $2,020 $4,967
====== ====== ====== ======
Year ended December 31, 1999
Allowance for uncollectible accounts......... $3,688 $2,923 $1,960 $4,651
====== ====== ====== ======
Year ended December 31, 1998
Allowance for uncollectible accounts......... $3,678 $2,196 $2,186 $3,688
====== ====== ====== ======
F-37
95
SCHEDULE III
DEVELOPERS DIVERSIFIED REALTY CORPORATION
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
(IN THOUSANDS)
INITIAL COST TOTAL COST (A)
----------------------- ------------------------------------
BUILDINGS & BUILDINGS & ACCUMULATED
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL DEPRECIATION
-------- ------------ ------------ -------- ------------ ---------- ------------
Brandon, FL.................. $ 0 $ 4,111 $ 0 $ 0 $ 5,817 $ 5,817 $ 3,943
Stow, OH..................... 1,036 9,028 0 993 22,355 23,347 3,721
Fern Park, FL (Orlando)...... 446 303 97 446 409 855 290
Eastlake, OH................. 40 141 0 40 144 184 130
Highland Hts., OH............ 3,987 7,896 0 3,987 13,627 17,614 2,081
Westlake, OH................. 424 3,803 203 424 6,025 6,449 3,462
Waterbury, CT................ 0 3,048 0 0 3,226 3,226 2,818
Zanesville, OH............... 0 619 0 0 619 619 206
E. Norriton, PA.............. 80 4,698 233 80 8,126 8,206 4,178
Palm Harbor, FL.............. 1,137 4,089 0 1,137 4,166 5,303 797
Tarpon Springs, FL........... 248 7,382 81 248 11,345 11,593 6,743
Bayonet Pt., FL.............. 2,113 8,181 128 2,220 8,405 10,625 4,335
Starkville, MS............... 1,271 8,209 0 1,112 9,648 10,760 1,856
Tupelo, MS................... 2,282 14,979 0 2,282 15,635 17,917 3,055
Jacksonville, FL............. 3,005 9,425 0 3,028 9,487 12,515 1,746
Brunswick, MA................ 3,836 15,459 0 3,836 17,885 21,721 1,914
Oceanside, CA................ 0 10,643 0 0 10,643 10,643 0
Reno, NV..................... 0 366 0 0 366 366 0
Salisbury, MD................ 1,073 6,216 0 1,454 8,607 10,062 295
Atlanta, GA.................. 475 9,374 0 475 9,610 10,086 2,143
Erie, PA..................... 10,880 19,201 0 6,629 40,989 47,618 5,613
Erie, PA..................... 0 2,564 13 0 3,690 3,690 2,384
Chillicothe, OH.............. 43 2,549 2 1,266 11,811 13,077 2,861
Ocala, FL.................... 27 351 25 27 382 409 341
Tampa, FL (Waters)........... 4,105 6,640 324 3,905 7,392 11,298 2,377
Macedonia, OH................ 4,392 10,885 0 4,392 10,992 15,383 560
Winchester, VA............... 618 13,903 0 618 19,531 20,149 3,686
Huber Heights, OH............ 757 14,469 1 757 14,664 15,421 3,476
TOTAL COST,
NET OF DEPRECIABLE DATE OF
ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ ------------ ----------- ---------------
Brandon, FL.................. $ 1,874 $ 0 S/L 30 1972(C)
Stow, OH..................... 19,627 0 S/L 30 1969(C)
Fern Park, FL (Orlando)...... 565 0 S/L 30 1970(C)
Eastlake, OH................. 54 0 S/L 30 1971(C)
Highland Hts., OH............ 15,533 0 S/L 31.5 1995(C)
Westlake, OH................. 2,988 0 S/L 30 1974(C)
Waterbury, CT................ 408 0 S/L 30 1973(C)
Zanesville, OH............... 413 0 S/L 31.5 1990(C)
E. Norriton, PA.............. 4,028 0 S/L 30 1975(C)
Palm Harbor, FL.............. 4,507 0 S/L 31.5 1995(A)
Tarpon Springs, FL........... 4,850 0 S/L 30 1974(C)
Bayonet Pt., FL.............. 6,290 5,327 S/L 30 1985(C)
Starkville, MS............... 8,904 0 S/L 31.5 1994(A)
Tupelo, MS................... 14,862 0 S/L 31.5 1994(A)
Jacksonville, FL............. 10,768 0 S/L 31.5 1995(A)
Brunswick, MA................ 19,807 0 S/L 30 1973(C)
Oceanside, CA................ 10,643 0 S/L 31.5 2000(C)
Reno, NV..................... 366 0 S/L 31.5 2000(C)
Salisbury, MD................ 9,766 0 S/L 31.5 1999(A)
Atlanta, GA.................. 7,942 0 S/L 31.5 1994(A)
Erie, PA..................... 42,005 0 S/L 31.5 1995(C)
Erie, PA..................... 1,306 0 S/L 30 1973(C)
Chillicothe, OH.............. 10,215 0 S/L 30 1974(C)
Ocala, FL.................... 68 0 S/L 30 1974(C)
Tampa, FL (Waters)........... 8,921 0 S/L 31.5 1990(C)
Macedonia, OH................ 14,823 0 S/L 31.5 1998(C)
Winchester, VA............... 16,464 0 S/L 31.5 1993(A)
Huber Heights, OH............ 11,946 0 S/L 31.5 1993(A)
F-38
96
INITIAL COST TOTAL COST (A)
----------------------- ------------------------------------
BUILDINGS & BUILDINGS & ACCUMULATED
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL DEPRECIATION
-------- ------------ ------------ -------- ------------ ---------- ------------
Lebanon, OH.................. 651 911 31 651 1,049 1,700 344
Wilmington, OH............... 157 1,616 51 157 1,752 1,909 1,310
Hillsboro, OH................ 80 1,985 0 80 1,986 2,066 1,423
Canton, OH Phase II.......... 5,672 18,390 0 6,394 18,541 24,934 1,570
Xenia, OH.................... 948 3,938 0 673 6,266 6,939 1,116
Boardman, OH................. 9,025 27,983 0 8,152 28,013 36,165 3,042
Solon, OH.................... 6,220 7,454 0 6,220 20,680 26,900 1,065
Cincinnati, OH............... 2,399 11,238 172 2,399 12,440 14,840 3,024
Bedford, IN.................. 706 8,425 6 1,067 10,016 11,083 2,115
Watertown, SD................ 63 6,443 442 63 8,686 8,749 5,365
Connersville, IN............. 540 6,458 0 540 6,551 7,091 1,484
Ashland, OH.................. 210 2,273 0 143 2,389 2,531 1,844
Pensacola, FL................ 1,805 4,010 273 945 2,735 3,681 150
W. 65th Cleveland, OH........ 90 1,463 15 90 1,542 1,632 1,174
Los Alamos, NM............... 725 3,500 30 725 4,692 5,417 2,006
North Olmsted, OH............ 12,209 45,009 14 12,209 60,717 72,926 6,756
Tampa, FL (Dale)............. 4,269 5,368 205 4,269 6,093 10,361 1,905
Waynesville, NC.............. 432 8,089 131 432 8,247 8,679 2,032
Ahoskie, NC.................. 270 7,776 3 270 7,804 8,073 1,711
Pulaski, VA.................. 528 6,396 2 528 6,405 6,934 1,565
St. Louis, MO (Sunset)....... 10,496 31,531 0 10,743 32,514 43,257 2,583
St. Louis, MO (Sunset)....... 2,294 6,874 0 2,461 7,377 9,839 572
St. Louis, MO (Brentwood).... 10,628 32,053 0 10,018 31,956 41,974 2,614
Cedar Rapids, IA............. 4,219 12,697 0 4,219 13,026 17,245 1,074
St. Louis, MO (Olympic)...... 2,775 8,370 0 2,775 8,461 11,236 680
St. Louis, MO (Gravois)...... 1,336 4,050 0 1,525 4,707 6,232 356
St. Louis, MO (Morris)....... 0 2,048 0 0 2,051 2,051 161
St. Louis, MO (Keller)....... 1,632 4,936 0 1,632 4,942 6,574 394
St. Louis, MO (Southtown).... 6,048 0 0 6,051 0 6,051 0
St. Louis, MO................ 1,405 4,255 0 1,405 4,866 6,271 348
St. Louis, MO (American)..... 244 771 0 514 546 1,060 49
Aurora, OH................... 832 7,560 0 1,688 8,465 10,153 870
Worthington, MN.............. 374 6,404 441 374 7,765 8,139 4,868
Harrisburg, IL............... 550 7,619 0 550 7,896 8,446 1,705
Idaho Falls, ID.............. 1,302 5,703 0 1,418 5,717 7,135 505
TOTAL COST,
NET OF DEPRECIABLE DATE OF
ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ ------------ ----------- ---------------
Lebanon, OH.................. 1,356 0 S/L 31.5 1993(A)
Wilmington, OH............... 599 0 S/L 30 1977(C)
Hillsboro, OH................ 643 0 S/L 30 1979(C)
Canton, OH Phase II.......... 23,365 0 S/L 31.5 1995(A)
Xenia, OH.................... 5,824 0 S/L 31.5 1994(A)
Boardman, OH................. 33,123 0 S/L 31.5 1997(A)
Solon, OH.................... 25,835 0 S/L 31.5 1998(C)
Cincinnati, OH............... 11,816 0 S/L 31.5 1993(A)
Bedford, IN.................. 8,968 0 S/L 31.5 1993(A)
Watertown, SD................ 3,383 0 S/L 30 1977(C)
Connersville, IN............. 5,607 0 S/L 31.5 1993(A)
Ashland, OH.................. 687 0 S/L 30 1977(C)
Pensacola, FL................ 3,530 0 S/L 30 1988(C)
W. 65th Cleveland, OH........ 458 0 S/L 30 1977(C)
Los Alamos, NM............... 3,411 0 S/L 30 1978(C)
North Olmsted, OH............ 66,170 0 S/L 31.5 1997(A)
Tampa, FL (Dale)............. 8,457 0 S/L 31.5 1990(C)
Waynesville, NC.............. 6,647 0 S/L 31.5 1993(A)
Ahoskie, NC.................. 6,363 0 S/L 31.5 1994(A)
Pulaski, VA.................. 5,368 0 S/L 31.5 1993(A)
St. Louis, MO (Sunset)....... 40,674 0 S/L 31.5 1998(A)
St. Louis, MO (Sunset)....... 9,266 0 S/L 31.5 1998(A)
St. Louis, MO (Brentwood).... 39,360 0 S/L 31.5 1998(A)
Cedar Rapids, IA............. 16,171 11,071 S/L 31.5 1998(A)
St. Louis, MO (Olympic)...... 10,556 4,602 S/L 31.5 1998(A)
St. Louis, MO (Gravois)...... 5,875 2,746 S/L 31.5 1998(A)
St. Louis, MO (Morris)....... 1,890 0 S/L 31.5 1998(A)
St. Louis, MO (Keller)....... 6,180 2,478 S/L 31.5 1998(A)
St. Louis, MO (Southtown).... 6,051 0 S/L 31.5 1998(A)
St. Louis, MO................ 5,923 3,321 S/L 31.5 1998(A)
St. Louis, MO (American)..... 1,011 0 S/L 31.5 1998(A)
Aurora, OH................... 9,283 0 S/L 31.5 1995(C)
Worthington, MN.............. 3,270 0 S/L 30 1977(C)
Harrisburg, IL............... 6,741 0 S/L 31.5 1994(A)
Idaho Falls, ID.............. 6,631 0 S/L 31.5 1998(A)
F-39
97
INITIAL COST TOTAL COST (A)
----------------------- ------------------------------------
BUILDINGS & BUILDINGS & ACCUMULATED
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL DEPRECIATION
-------- ------------ ------------ -------- ------------ ---------- ------------
Mt. Vernon, IL............... 1,789 9,399 111 1,789 14,636 16,425 2,673
Fenton, MO................... 414 4,244 476 430 6,679 7,109 3,105
Melbourne, FL................ 0 3,085 117 0 3,207 3,207 2,316
Simpsonville, SC............. 431 6,563 0 431 6,564 6,995 1,459
Camden, SC................... 627 7,519 7 1,016 9,192 10,208 1,904
Union, SC.................... 685 7,629 1 685 7,649 8,334 1,836
N. Charleston, SC............ 911 11,346 1 1,081 14,955 16,036 3,046
S. Anderson, SC.............. 1,366 6,117 13 1,366 6,150 7,516 1,353
Anderson, SC................. 204 940 0 204 940 1,144 172
Orangeburg, SC............... 318 1,693 0 318 3,408 3,726 418
Mt. Pleasant, SC............. 2,584 10,470 0 2,589 10,448 13,037 1,910
Columbia, SC................. 600 3,263 0 600 3,263 3,863 535
Sault Ste. Marie, MI......... 1,826 13,710 0 1,826 15,033 16,859 2,882
Cheboygan, MI................ 127 3,612 0 127 3,775 3,902 821
Grand Rapids, MI............. 1,926 8,039 0 1,926 8,243 10,169 1,332
Detroit, MI.................. 6,738 26,988 27 6,738 27,022 33,760 2,440
Houghton, MI................. 440 7,301 1,821 440 11,269 11,709 6,872
Bad Axe, MI.................. 184 3,647 0 184 4,040 4,224 931
Gaylord, MI.................. 270 8,728 2 270 9,107 9,376 2,130
Howell, MI................... 332 11,938 1 332 12,401 12,733 2,840
Mt. Pleasant, MI............. 767 7,769 20 767 11,491 12,258 2,435
Elyria, OH................... 352 5,693 0 352 5,693 6,045 2,780
Midvalley, UT................ 25,662 56,759 0 25,662 59,602 85,263 4,637
Taylorsville, UT............. 24,327 53,686 0 25,394 56,399 81,793 4,258
Orem, UT..................... 5,428 12,259 0 5,428 12,717 18,145 974
Logan, UT.................... 774 1,651 0 774 1,652 2,426 132
Salt Lake City, UT........... 986 2,132 0 986 2,133 3,120 174
Riverdale, UT................ 15,845 36,479 0 15,845 42,005 57,850 3,040
Bemidji, MN.................. 442 8,229 500 442 9,195 9,637 5,385
The Hermes Building.......... 2,801 5,997 0 2,801 6,257 9,059 482
Ogden, UT.................... 3,620 7,716 0 3,620 7,748 11,368 617
Las Vegas, NV................ 2,142 4,562 0 1,629 3,660 5,288 292
Rapid City, SD............... 758 1,625 0 758 1,745 2,503 143
Cape Coral, FL............... 1,287 2,548 150 1,287 5,257 6,544 1,693
Trindad, CO.................. 411 2,579 198 411 2,742 3,153 1,323
TOTAL COST,
NET OF DEPRECIABLE DATE OF
ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ ------------ ----------- ---------------
Mt. Vernon, IL............... 13,752 0 S/L 31.5 1993(A)
Fenton, MO................... 4,004 0 S/L 30 1983(A)
Melbourne, FL................ 891 0 S/L 30 1978(C)
Simpsonville, SC............. 5,536 0 S/L 31.5 1994(A)
Camden, SC................... 8,304 0 S/L 31.5 1993(A)
Union, SC.................... 6,498 0 S/L 31.5 1993(A)
N. Charleston, SC............ 12,990 0 S/L 31.5 1993(A)
S. Anderson, SC.............. 6,163 0 S/L 31.5 1994(A)
Anderson, SC................. 972 0 S/L 31.5 1995(A)
Orangeburg, SC............... 3,308 0 S/L 31.5 1995(A)
Mt. Pleasant, SC............. 11,127 6,346 S/L 31.5 1995(A)
Columbia, SC................. 3,327 0 S/L 31.5 1995(A)
Sault Ste. Marie, MI......... 13,977 5,716 S/L 31.5 1994(A)
Cheboygan, MI................ 3,081 0 S/L 31.5 1993(A)
Grand Rapids, MI............. 8,837 0 S/L 31.5 1995(A)
Detroit, MI.................. 31,320 13,876 S/L 31.5 1998(A)
Houghton, MI................. 4,836 0 S/L 30 1980(C)
Bad Axe, MI.................. 3,293 0 S/L 31.5 1993(A)
Gaylord, MI.................. 7,246 0 S/L 31.5 1993(A)
Howell, MI................... 9,892 0 S/L 31.5 1993(A)
Mt. Pleasant, MI............. 9,823 0 S/L 31.5 1993(A)
Elyria, OH................... 3,265 0 S/L 30 1977(C)
Midvalley, UT................ 80,626 0 S/L 31.5 1998(A)
Taylorsville, UT............. 77,534 0 S/L 31.5 1998(A)
Orem, UT..................... 17,171 8,067 S/L 31.5 1998(A)
Logan, UT.................... 2,294 911 S/L 31.5 1998(A)
Salt Lake City, UT........... 2,946 0 S/L 31.5 1998(A)
Riverdale, UT................ 54,810 9,814 S/L 31.5 1998(A)
Bemidji, MN.................. 4,252 0 S/L 30 1977(C)
The Hermes Building.......... 8,576 1,420 S/L 31.5 1998(A)
Ogden, UT.................... 10,751 0 S/L 31.5 1998(A)
Las Vegas, NV................ 4,996 0 S/L 31.5 1998(A)
Rapid City, SD............... 2,360 425 S/L 31.5 1998(A)
Cape Coral, FL............... 4,851 0 S/L 30 1985(C)
Trindad, CO.................. 1,830 0 S/L 30 1986(C)
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98
INITIAL COST TOTAL COST (A)
----------------------- ------------------------------------
BUILDINGS & BUILDINGS & ACCUMULATED
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL DEPRECIATION
-------- ------------ ------------ -------- ------------ ---------- ------------
Hazard, KY................... 403 3,271 297 403 3,584 3,986 2,480
Birmingham, AL............... 3,726 13,974 0 3,726 16,300 20,026 2,532
Birmingham, AL............... 10,573 26,002 0 11,434 33,821 45,255 5,797
Huntsville, AL............... 600 3,058 0 600 3,070 3,670 494
Brentwood, TN................ 4,981 17,703 0 4,981 17,703 22,684 383
Jacksonville, NC............. 521 3,999 173 391 6,017 6,408 1,265
Ormond Beach, FL............. 1,048 15,812 4 1,048 16,220 17,269 3,395
Alamosa, CO.................. 161 1,034 211 161 1,224 1,386 677
Wilmington, NC............... 4,785 16,852 1,183 4,287 24,637 28,924 6,932
Berlin, VT................... 859 10,948 24 866 13,768 14,634 5,199
Brainerd, MN................. 703 9,104 272 1,182 13,342 14,524 3,175
Spring Hill, FL.............. 1,084 4,816 266 2,096 8,104 10,200 2,368
Tiffin, OH................... 432 5,908 435 432 6,844 7,277 4,368
Toledo, OH................... 2,491 10,583 0 2,491 10,684 13,175 1,961
Toledo, OH................... 6,202 11,645 0 6,202 11,660 17,861 632
Denver,CO.................... 7,833 35,550 0 7,833 49,699 57,532 4,443
Dickinson, ND................ 57 6,864 355 51 7,713 7,764 5,679
West Pasco, FL............... 1,422 6,552 9 1,358 6,443 7,800 3,049
Marianna, FL................. 1,496 3,500 130 1,496 3,641 5,138 1,206
Hutchinson, MN............... 402 5,510 657 427 6,552 6,979 4,139
New Bern, NC................. 780 8,204 72 441 4,991 5,431 1,389
Highland, IN................. 4,003 20,101 0 4,003 22,943 26,947 3,050
Princeton, NJ (Park)......... 7,121 29,783 0 7,121 30,029 37,150 2,636
Princeton, NJ (Pavillion).... 6,327 22,936 0 6,327 22,936 29,263 1,101
St. Paul, MN................. 4,468 18,084 0 4,470 19,407 23,877 2,192
Russellville, AR............. 624 13,391 0 624 13,494 14,118 2,891
N. Little Rock, AR........... 907 17,160 0 907 17,495 18,402 3,746
Fayetteville, AK............. 2,366 9,503 0 6,677 17,050 23,728 1,371
Ottumwa, IA.................. 338 8,564 103 276 12,590 12,866 3,387
Washington, NC............... 991 3,118 34 878 4,547 5,424 1,240
Ovideo, FL................... 6,010 6,439 0 4,394 10,905 15,298 267
Orlando, FL.................. 4,792 11,674 84 4,792 12,513 17,305 4,737
Durham, NC................... 2,210 11,671 278 2,210 12,706 14,917 4,031
Crystal River, FL............ 1,217 5,796 365 1,219 5,984 7,204 2,890
Bellefontaine, OH............ 998 3,221 0 998 5,500 6,498 385
TOTAL COST,
NET OF DEPRECIABLE DATE OF
ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ ------------ ----------- ---------------
Hazard, KY................... 1,506 0 S/L 30 1978(C)
Birmingham, AL............... 17,495 0 S/L 31.5 1994(A)
Birmingham, AL............... 39,457 0 S/L 31.5 1995(A)
Huntsville, AL............... 3,176 0 S/L 31.5 1995(A)
Brentwood, TN................ 22,301 16,361 S/L 31.5 2000(A)
Jacksonville, NC............. 5,143 0 S/L 31.5 1989(C)
Ormond Beach, FL............. 13,874 0 S/L 31.5 1994(A)
Alamosa, CO.................. 709 0 S/L 30 1986(C)
Wilmington, NC............... 21,992 0 S/L 31.5 1989(C)
Berlin, VT................... 9,436 4,940 S/L 30 1986(C)
Brainerd, MN................. 11,349 585 S/L 31.5 1991(A)
Spring Hill, FL.............. 7,833 5,849 S/L 30 1988(C)
Tiffin, OH................... 2,908 0 S/L 30 1980(C)
Toledo, OH................... 11,214 0 S/L 31.5 1995(A)
Toledo, OH................... 17,230 23,000 S/L 31.5 1997(C)
Denver,CO.................... 53,089 0 S/L 31.5 1997(C)
Dickinson, ND................ 2,086 0 S/L 30 1978(C)
West Pasco, FL............... 4,752 4,784 S/L 30 1986(C)
Marianna, FL................. 3,932 0 S/L 31.5 1990(C)
Hutchinson, MN............... 2,840 4,734 S/L 30 1981(C)
New Bern, NC................. 4,042 0 S/L 31.5 1989(C)
Highland, IN................. 23,896 0 S/L 31.5 1997(A)
Princeton, NJ (Park)......... 34,514 27,220 S/L 31.5 1998(A)
Princeton, NJ (Pavillion).... 28,162 0 S/L 31.5 2000(C)
St. Paul, MN................. 21,685 0 S/L 31.5 1997(A)
Russellville, AR............. 11,227 0 S/L 31.5 1994(A)
N. Little Rock, AR........... 14,656 0 S/L 31.5 1994(A)
Fayetteville, AK............. 22,356 0 S/L 31.5 1997(A)
Ottumwa, IA.................. 9,479 0 S/L 31.5 1990(C)
Washington, NC............... 4,184 0 S/L 31.5 1990(C)
Ovideo, FL................... 15,032 0 S/L 31.5 1997(C)
Orlando, FL.................. 12,568 0 S/L 31.5 1989(C)
Durham, NC................... 10,886 0 S/L 31.5 1990(C)
Crystal River, FL............ 4,314 0 S/L 30 1986(C)
Bellefontaine, OH............ 6,112 2,923 S/L 31.5 1998(A)
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INITIAL COST TOTAL COST (A)
----------------------- ------------------------------------
BUILDINGS & BUILDINGS & ACCUMULATED
LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL DEPRECIATION
-------- ------------ ------------ -------- ------------ ---------- ------------
Dublin, OH................... 3,609 11,546 0 3,609 11,661 15,271 1,025
Grove City, OH............... 2,848 9,132 0 2,848 9,132 11,980 801
Hamilton, OH................. 495 1,618 0 495 1,618 2,113 141
Gahanna, OH.................. 1,029 3,320 0 1,029 3,320 4,349 289
Pataskala, OH................ 514 1,679 0 514 1,679 2,193 146
Pickerington, OH............. 1,896 6,086 0 1,896 6,086 7,982 531
Barboursville, OH............ 431 1,417 2 431 1,419 1,851 124
Colombus, OH................. 11,087 44,494 0 11,866 47,787 59,653 3,582
Portfolio Balance (DDR)...... 11,574 127,923 9,235 30,859 176,636 207,495 2,992
-------- ---------- ------- -------- ---------- ---------- --------
$367,197 $1,487,588 $20,557 $389,593 $1,772,220 $2,161,817 $297,249
======== ========== ======= ======== ========== ========== ========
TOTAL COST,
NET OF DEPRECIABLE DATE OF
ACCUMULATED LIVES CONSTRUCTION(C)
DEPRECIATION ENCUMBRANCES (YEARS)(1) ACQUISITION(A)
------------ ------------ ----------- ---------------
Dublin, OH................... 14,246 10,336 S/L 31.5 1998(A)
Grove City, OH............... 11,179 7,605 S/L 31.5 1998(A)
Hamilton, OH................. 1,972 0 S/L 31.5 1998(A)
Gahanna, OH.................. 4,059 0 S/L 31.5 1998(A)
Pataskala, OH................ 2,047 716 S/L 31.5 1998(A)
Pickerington, OH............. 7,452 5,015 S/L 31.5 1998(A)
Barboursville, OH............ 1,726 0 S/L 31.5 1998(A)
Colombus, OH................. 56,070 0 S/L 31.5 1998(A)
Portfolio Balance (DDR)...... 204,503 74,457
---------- --------
$1,864,563 $264,645
========== ========
- ---------------
(1) S/L refers to straight-line depreciation.
(A) The Aggregate Cost for Federal Income Tax purposes was approximately $2.2
billion at December 31, 2000
The changes in Total Real Estate Assets for the three years ended December
31, 2000 are as follows:
2000 1999 1998
---------- ---------- ----------
Balance, Beginning of Year...................... $2,068,274 $1,896,763 $1,325,743
Acquisitions and Transfers From Joint
Ventures...................................... 81,087 78,318 688,431
Developments, Improvements and Expansions....... 67,707 131,977 58,566
Changes in Land Under Development and
Construction in Progress...................... 33,862 (1,169) 98,277
Sales, Retirements and Transfers to Joint
Ventures...................................... (89,118) (37,615) (274,254)
---------- ---------- ----------
Balance, End of Year............................ $2,161,812 $2,068,274 $1,896,763
========== ========== ==========
The changes in Accumulated Depreciation and Amortization for the three years
ended December 31, 2000 are as follows:
2000 1999 1998
---------- ---------- ----------
BALANCE, BEGINNING OF YEAR...................... $ 249,912 $ 203,097 $ 171,737
DEPRECIATION FOR YEAR........................... 54,201 49,998 42,952
SALES AND RETIREMENTS........................... (6,866) (3,183) (11,592)
---------- ---------- ----------
BALANCE, END OF YEAR............................ $ 297,247 $ 249,912 $ 203,097
========== ========== ==========
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