Centro NP 8-K Other Events

Exhibit 99.2

NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
1.CONSOLIDATED FINANCIAL STATEMENTS
Management’s Report on Internal Control Over Financial Reporting	1
Report of Independent Registered Public Accounting Firm	2
Consolidated Balance Sheets December 31, 2005 and December 31, 2004	4
Consolidated Statements of Income and Comprehensive Income for the Years ended December 31, 2005, December 31, 2004 and December 31, 2003	5
Consolidated Statements of Changes in Stockholders’ Equity for the Years ended December 31, 2005, December 31, 2004 and December 31, 2003	6
Consolidated Statements of Cash Flows for the Years ended December 31, 2005, December 31, 2004 and December 31, 2003	7
Notes to Consolidated Financial Statements	8
Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
2.CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
Schedule II - Valuation and Qualifying Accounts	67
Schedule III - Real Estate and Accumulated Depreciation	68
Schedule IV - Mortgage Loans on Real Estate	85

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended).  An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on our evaluation under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2005.

Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

of New Plan Excel Realty Trust, Inc.:

We have completed integrated audits of New Plan Excel Realty Trust, Inc.’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Our opinions, based on our audits, are presented below.

Consolidated Financial Statements and Financial Statement Schedules

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of New Plan Excel Realty Trust, Inc. and its subsidiaries (collectively, the “Company”) at December 31, 2005 and 2004 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 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 15(a)(2) 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 the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit of financial statements 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.

Internal Control Over Financial Reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing on page F-2 of these financial statements, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the COSO.  The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.  Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,

2

accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

New York, New York

March 2, 2006, except with respect to our opinion on the consolidated financial statements insofar as they relate to the effects of the discontinued operations discussed in Notes 5, 14, 20 and 22, which is as of September 11, 2006

3

NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2005 and 2004

(In thousands, except fractions, percentages and par value amounts)

	December 31, 2005			December 31, 2004
ASSETS
Real estate:
Land	$	724,901		$	897,411
Buildings and improvements	2,668,177			3,090,779
Accumulated depreciation and amortization	(376,816		)	(428,427		)
Net real estate	3,016,262			3,559,763
Real estate held for sale	19,244			20,835
Cash and cash equivalents	9,202			7,292
Restricted cash	19,906			22,379
Marketable securities	3,014			3,433
Receivables:
Trade, net of allowance for doubtful accounts of $27,540 and $24,239 as of December 31, 2005 and 2004, respectively	20,751			31,043
Deferred rent, net of allowance of $1,592 and $3,548 as of December 31, 2005 and 2004, respectively	29,314			31,931
Other, net	25,138			18,627
Mortgages and notes receivable	795			8,881
Prepaid expenses and deferred charges	43,346			47,646
Investments in / advances to unconsolidated ventures	95,538			31,888
Intangible assets, net of accumulated amortization of $10,927 and $3,467 as of December 31, 2005 and 2004, respectively	78,046			32,085
Other assets	9,206			15,939
Total assets	$	3,369,762		$	3,831,742
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgages payable, including unamortized premium of $13,871 and $20,400 as of December 31, 2005 and 2004, respectively	$	433,653		$	551,522
Notes payable, net of unamortized discount of $4,822 and $4,723 as of December 31, 2005 and 2004, respectively	968,347			970,563
Credit facilities	215,000			446,000
Capital leases	27,881			28,234
Dividends payable	37,826			47,698
Other liabilities	127,369			105,269
Tenant security deposits	10,641			11,511
Total liabilities	1,820,717			2,160,797
Minority interest in consolidated partnership and joint ventures	57,659			30,784
Commitments and contingencies	—			—
Stockholders’ equity:
Preferred stock, $0.01 par value, 25,000 shares authorized; Series D: 1,500 depositary shares, each representing 1/10 of one share of Series D Cumulative Voting Step-Up Premium Rate Preferred, 150 shares outstanding at December 31, 2005 and 2004; Series E: 8,000 depositary shares, each representing 1/10 of one share of 7.625% Series E Cumulative Redeemable Preferred, 800 shares outstanding as of December 31, 2005 and 2004	10			10
Common stock, $0.01 par value, 250,000 shares authorized; 104,305 and 102,845 shares issued and outstanding as of December 31, 2005 and 2004, respectively	1,042			1,028
Additional paid-in capital	2,036,880			2,005,977
Accumulated other comprehensive loss	(8,074		)	(5,031		)
Accumulated distributions in excess of net income	(538,472		)	(361,823		)
Total stockholders’ equity	1,491,386			1,640,161
Total liabilities and stockholders’ equity	$	3,369,762		$	3,831,742

The accompanying notes are an integral part of the consolidated financial statements.

4

NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Years Ended December 31, 2005, 2004 and 2003

(In thousands, except per share amounts)

	December 31, 2005			December 31, 2004			December 31, 2003
Revenues:
Rental income	$	367,808		$	377,067		$	352,439
Percentage rents	5,862			6,042			6,425
Expense reimbursements	99,793			95,260			95,231
Fee income	10,957			4,797			5,265
Total revenues	484,420			483,166			459,360
Operating expenses:
Operating costs	77,627			81,478			84,096
Real estate taxes	65,818			59,968			56,899
Depreciation and amortization	92,125			88,296			75,121
Provision for doubtful accounts	11,281			8,859			6,867
General and administrative	26,359			17,694			18,225
Total operating expenses	273,210			256,295			241,208
Income before real estate sales, impairment of real estate, minority interest and other income and expenses	211,210			226,871			218,152
Other income and expenses:
Interest, dividend, and other income	4,225			3,523			4,131
Equity in income of unconsolidated ventures	4,045			1,513			3,438
Interest expense	(118,044		)	(106,054		)	(101,006		)
Impairment of real estate	(859		)	(43		)	(3,536		)
Minority interest in income of consolidated partnership and joint ventures	(5,953		)	(853		)	(1,554		)
Income from continuing operations	94,624			124,957			119,625
Discontinued operations:
Income from discontinued operations (Note 5)	24,792			7,766			9,396
Income before gain on sale of real estate	119,416			132,723			129,021
Gain on sale of real estate	186,908			1,217			—
Net income	$	306,324		$	133,940		$	129,021
Preferred dividends	(21,888		)	(21,470		)	(21,170		)
Premium on redemption of preferred stock	—			—			(630		)
Net income available to common stock – basic	284,436			112,470			107,221
Minority interest in income of consolidated partnership	5,070			796			1,555
Net income available to common stock - diluted	$	289,506		$	113,266		$	108,776
Basic earnings per common share:
Income from continuing operations	$	2.51		$	1.03		$	1.00
Discontinued operations	0.24			0.08			0.10
Basic earnings per share	$	2.75		$	1.11		$	1.10
Diluted earnings per common share:
Income from continuing operations	$	2.48		$	1.02		$	0.99
Discontinued operations	0.23			0.08			0.09
Diluted earnings per share	$	2.71		$	1.10		$	1.08
Average shares outstanding – basic	103,393			100,894			97,318
Average shares outstanding – diluted	106,834			103,345			100,269
Dividends per common share (1)	$	4.45		$	1.65		$	1.65
Other comprehensive income:
Net income	$	306,324		$	133,940		$	129,021
Realized/unrealized (loss) gain on available-for-sale securities	(420		)	517			800
Unrealized gains on deferred compensation	39			—			—
Realized (loss) gain on interest hedges	(11,157		)	161			2,578
Unrealized gain (loss) on interest risk hedges, net	8,495			(8,494		)	—
Comprehensive income	$	303,281		$	126,124		$	132,399

(1)  For the year ended December 31, 2005, amount includes a special cash distribution of $3.00 per common share paid on September 27, 2005 (Note 14).

The accompanying notes are an integral part of the consolidated financial statements.

5

NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2005, 2004 and 2003

(In thousands)

	Preferred Stock					Shares of Beneficial Interest/ Common Stock				Additional  Paid-in Capital			Accumulated Other Comprehensive Income			Accumulated Distributions in Excess of Net Income			Total Stockholders’ Equity
	Number		Amount			Number		Amount
Balance at December 31, 2002	780		8			96,916		968		1,825,820			(593		)	(253,354		)	1,572,849
Net income	—		—			—		—		—			—			129,021			129,021
Dividends	—		—			—		—		—			—			(182,006		)	(182,006		)
Exercise of stock options	—		—			743		7		13,557			—			—			13,564
Employee loans	—		—			—		—		5,689			—			—			5,689
Dividend Reinvestment Plan	—		—			259		3		5,898			—			—			5,901
Stock incentive grants	—		—			62		1		56			—			—			57
Option grant	—		—			—		—		1,990			—			—			1,990
Unrealized holding gain on marketable securities	—		—			—		—		—			800			—			800
Unrealized derivative gain on interest rate swap	—		—			—		—		—			2,578			—			2,578
Redemption of Preferred B shares	(630	)	(6		)	—		—		(157,994		)	—			—			(158,000		)
Premium on redemption of Preferred B shares	—		—			—		—		630			—			(630		)	—
Issuance of Preferred E shares	800		8			—		—		193,692			—			—			193,700
Balance at December 31, 2003	950		10			97,980		979		1,889,338			2,785			(306,969		)	1,586,143
Net income	—		—			—		—		—			—			133,940			133,940
Dividends	—		—			—		—		—			—			(188,424		)	(188,424		)
Exercise of stock options	—		—			952		10		19,066			—			—			19,076
Shares repurchased and retired	—		—			(2	)	—		(52		)	—			—			(52		)
Employee loans	—		—			—		—		291			—			—			291
Dividend Reinvestment Plan	—		—			465		5		11,184			—			—			11,189
Stock incentive grants	—		—			65		—		898			—			—			898
Option grant	—		—			—		—		664			—			—			664
Redemption of limited partner units for shares of common stock	—		—			1,385		14		34,598			—			—			34,612
Realized/unrealized holding gain on marketable securities	—		—			—		—		—			517			—			517
Realized gain on interest risk hedges	—		—			—		—		—			161			—			161
Unrealized loss on interest risk hedges	—		—			—		—		—			(8,494		)	—			(8,494		)
Stock offering	—		—			2,000		20		49,620			—			—			49,640
Impact of non-cash adjustments to account for Preferred D dividend “step-up”	—		—			—		—		370			—			(370		)	—
Balance at December 31, 2004	950		10			102,845		1,028		2,005,977			(5,031		)	(361,823		)	1,640,161
Net income	—		—			—		—		—			—			306,324			306,324
Dividends (1)	—		—			—		—		—			—			(482,973		)	(482,973		)
Exercise of stock options	—		—			487		5		8,677			—			—			8,682
Forfeiture of equity award	—		—			(11	)	—		(295		)	—			—			(295		)
Shares repurchased and retired	—		—			(2	)	—		(47		)	—			—			(47		)
Employee loans	—		—			—		—		119			—			—			119
Dividend Reinvestment Plan	—		—			919		9		21,739			—			—			21,748
Stock incentive grants	—		—			67		—		239			—			—			239
Option grant	—		—			—		—		(161		)	—			—			(161		)
Costs associated with redemption of limited partner units for shares of common stock	—		—			—		—		(161		)	—			—			(161		)
Realized/unrealized holding gain on marketable securities	—		—			—		—		—			(420		)	—			(420		)
Unrealized gains on deferred compensation	—		—			—		—		—			39			—			39
Realized gain on interest risk hedges	—		—			—		—		—			(222		)	—			(222		)
Realized loss on interest risk hedges	—		—			—		—		—			(10,935		)	—			(10,935		)
Unrealized losses on interest risk hedges	—		—			—		—		—			8,495			—			8,495
Impact of non-cash adjustments to account for Preferred D dividend “step-up”	—		—			—		—		793			—			—			793
Balance at December 31, 2005	950		$	10		104,305		$	1,042	$	2,036,880		$	(8,074	)	$	(538,472	)	$	1,491,386

(1)Amount includes a special cash distribution of $3.00 per common share paid on September 27, 2005 (Note 14).

The accompanying notes are an integral part of the consolidated financial statements.

6

NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2005, 2004 and 2003

(In thousands)

	Year Ended			Year Ended			Year Ended
	December 31, 2005			December 31, 2004			December 31, 2003
Cash flows from operating activities:
Net income	$	306,324		$	133,940		$	129,021
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	95,137			92,270			78,112
Amortization of net premium/discount on mortgages and notes payable	(7,164		)	(2,923		)	(2,931		)
Amortization of deferred debt and loan acquisition costs	3,895			2,809			1,535
Amortization of stock options	2,372			681			375
Interest on swaps	599			—			—
Gain on sale of real estate and securities, net	(186,907		)	(1,217		)	—
Loss (gain) on sale of discontinued operations	(17,789		)	1,139			(4,018		)
Minority interest in income of partnership	5,954			986			1,555
Impairment of real estate assets	859			131			10,488
Equity in income of unconsolidated ventures	(4,045		)	(2,078		)	(3,438		)
Distributions of income from unconsolidated ventures	3,812			—			—
Changes in operating assets and liabilities, net:
Change in restricted cash	2,472			1,229			29,467
Change in trade receivables	10,302			9,062			(13,908		)
Change in deferred rent receivables	(3,819		)	(7,106		)	(4,281		)
Change in other receivables	(6,513		)	(4,564		)	25,047
Change in other liabilities	16,822			2,155			(19,742		)
Change in tenant security deposits	(906		)	1,347			968
Change in sundry assets and liabilities	961			(5,906		)	(1,030		)
Net cash provided by operating activities	222,366			221,955			227,220
Cash flows from investing activities:
Real estate acquisitions and building improvements	(150,885		)	(120,283		)	(83,696		)
Acquisition, net of cash and restricted cash received	(186,856		)	(186,733		)	(100,236		)
Proceeds from real estate sales, net	1,060,456			48,269			60,361
Advances for mortgage notes receivable, net	—			(8,849		)	(38,565		)
Repayments of mortgage notes receivable	11,800			27,069			1,560
Leasing commissions paid	(11,405		)	(10,671		)	(9,078		)
Cash paid for asset management fee stream	(18,500		)	—			—
Cash paid for property management rights	(22,251		)	—			—
Cash from joint venture consolidation (Note 2)	—			1,171			—
Cash paid for joint venture interest	(5,441		)	(9,748		)	(3,775		)
Proceeds from sale of joint venture interest	11,400			3,870			15,022
Capital contributions to joint ventures	(57,663		)	(7,900		)	(2,831		)
Distributions from joint ventures	5,450			9,511			8,741
Net cash provided by (used in) investing activities	636,105			(254,294		)	(152,497		)
Cash flows from financing activities:
Principal payments of mortgages, notes payable and capital leases	(139,490		)	(79,593		)	(178,654		)
Proceeds from public debt offering	349,044			149,114			163,375
Repayment of public debt	(350,000		)	(75,000		)	(50,796		)
Cash (paid) received for swap agreements	(11,945		)	279			2,220
Proceeds from credit facility borrowing	490,000			496,000			657,000
Repayment of credit facility	(721,000		)	(341,000		)	(596,000		)
Proceeds from mortgages financings	—			—			50,000
Financing fees	(4,172		)	(5,435		)	(3,386		)
Redemption of limited partnership units	—			—			(29		)
Distributions paid to minority partners	(7,514		)	(3,848		)	(2,591		)
Dividends paid	(492,051		)	(186,421		)	(180,816		)
Proceeds from exercise of stock options	8,685			19,087			14,378
Repayment of loans receivable for the purchase of common stock	119			291			5,784
Proceeds from common stock offering	—			49,640			—
Proceeds from preferred stock offering, net	—			—			193,192
Redemption of preferred stock, net	—			—			(157,500		)
Proceeds from dividend reinvestment plan	21,763			11,189			5,900
Net cash (used in) provided by financing activities	(856,561		)	34,303			(77,923		)
Net increase (decrease) in cash and cash equivalents	1,910			1,964			(3,200		)
Cash and cash equivalents at beginning of year	7,292			5,328			8,528
Cash and cash equivalents at end of year	$	9,202		$	7,292		$	5,328
Supplemental Cash Flow Disclosure, including Non-Cash Activities:
Cash paid for interest, net of amounts capitalized	$	125,970		$	114,615		$	109,358
Capitalized interest	8,485			6,433			4,266
State and local taxes paid	70			532			1,626
Municipal bonds and tax incentive financing received in acquisition	—			—			—
Mortgages assumed, net	27,797			69,074			40,516
Partnership units issued in acquisition	29,547			19,989			—
Satisfaction of notes receivable	—			15,091			—

The accompanying notes are an integral part of the consolidated financial statements.

7

NEW PLAN EXCEL REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Description of Business

New Plan Excel Realty Trust, Inc. (together with its subsidiaries and variable interest entities, the “Company”) is operated as a self-administered, self-managed real estate investment trust (“REIT”).  The principal business of the Company is the ownership and management of community and neighborhood shopping centers throughout the United States.

2.Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly owned and majority owned controlled subsidiaries, and any variable interest entities (“VIE”) in which the Company is the primary beneficiary. All material inter-entity transactions have been eliminated.

For acquisitions of an equity interest in an entity, the Company evaluates the entity to determine if the entity is deemed a VIE, and if the Company is deemed to be the primary beneficiary, in accordance with FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities” (“FIN 46(R)”).  Entities that meet one or more of the criteria listed below are consolidated.

·The Company’s equity investment is not sufficient to allow the entity to finance its activities without additional third party financing;

·The Company does not have the direct or indirect ability to make decisions about the entity’s business;

·The Company is not obligated to absorb the expected losses of the entity;

·The Company does not have the right to receive the expected residual returns of the entity; and

·The Company’s voting rights are not proportionate to its economic interests, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.

The Company consolidates the entities that are VIEs and for which the Company is deemed to be the primary beneficiary of the VIE. For entities where the Company is not deemed to be the primary beneficiary or the entity is not deemed a VIE and the Company’s ownership is 50% or less and has the ability to exercise significant influence as well as jointly-controlled partnership interests are accounted for under the equity method, i.e. at cost, increased or decreased by the Company’s share of earnings or losses, less distributions. The Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is if certain triggering events occur that are likely to cause a change in the original determinations.

Net Earnings per Share of Common Stock

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, Earnings per Share (“SFAS No. 128”), the Company presents both basic and diluted earnings per share.  Net earnings per common share (“basic EPS”) is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding for the period.  Net earnings per share of common stock assuming dilution (“diluted EPS”) is computed by giving effect to all dilutive potential shares of common stock that were outstanding during the period.  Dilutive potential shares of common stock consist of the incremental shares of common stock issuable upon (a) the conversion of (i) preferred stock (using the “if converted” method), (ii) ERP limited partnership units, (iii) convertible senior notes, (iv) restricted stock grants

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and (v) contingent compensation awards, and (b) the exercise of in-the-money stock options.

Cash Equivalents

Cash equivalents consist of short-term, highly liquid debt instruments with maturities of three months or less at acquisition.  Items classified as cash equivalents include insured bank certificates of deposit and commercial paper.  At times, cash balances at a limited number of banks may exceed insurable amounts.  The Company believes it mitigates this risk by investing in or through major financial institutions.

Restricted Cash

Restricted cash consists primarily of cash held in escrow accounts for deferred maintenance, capital improvements, environmental expenditures, taxes, insurance, operating expenses and debt service as required by certain loan agreements.  Substantially all restricted cash is invested in money market mutual funds and carried at market value.

Accounts Receivable

Accounts receivable is stated net of allowance for doubtful accounts of $27.5 million and $24.2 million as of December 31, 2005 and 2004, respectively.  The Company makes estimates of the uncollectability of its accounts receivable related to base rents, expense reimbursements and other revenues.  The Company analyzes accounts receivable and historical bad debt levels, customer credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts.  In addition, tenants in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims.

Real Estate

Land, buildings and building and tenant improvements are recorded at cost and stated at cost less accumulated depreciation.  Major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives; ordinary repairs and maintenance are expensed as incurred.  Land, buildings and building and tenant improvements that are under redevelopment, or are being developed, are carried at cost and no depreciation is recorded on these assets.  Additionally, amounts essential to the development of the property, such as pre-construction costs, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development are capitalized.  The Company ceases capitalization when the property is available for occupancy upon substantial completion of tenant improvements, but in any event no later than one year from the completion of major construction activity.

Properties are depreciated using the straight-line method over the estimated useful lives of the assets.  The estimated useful lives are as follows:

Buildings	35 to 40 years
Building Improvements	5 to 40 years
Tenant Improvements	The shorter of the term of the related lease or useful life

Business Combinations

In connection with the Company’s acquisition of properties, purchase costs are allocated to the tangible and intangible assets and liabilities acquired based on their estimated fair values.  The value of the tangible assets, consisting of land, buildings and building and tenant improvements, are determined as if vacant, i.e., at replacement cost.  Intangible assets, including the above-market value of leases and the value of in-place leases, are recorded at their relative fair values.  The belowx-market value of leases is recorded in Other liabilities.

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Above-market, below-market and in-place lease values for owned properties are recorded based on the present value (using an interest rate reflecting the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the leases negotiated and in-place at the time of acquisition and (ii) management’s estimate of fair market lease rates for the property or equivalent property, measured over a period equal to the remaining non-cancelable term of the lease.  The capitalized above-market or below-market lease value is amortized as a reduction of, or increase to, rental income over the remaining non-cancelable term of each lease, plus any renewal periods with fixed rental terms that are considered to be below-market.

The total amount of other intangible assets allocated to in-place lease values and tenant relationship intangible values is based on management’s evaluation of the specific characteristics of each lease and the Company’s overall relationship with each tenant.  Factors considered in the allocation of these values include, but are not limited to, the nature of the existing relationship with the tenant, the tenant’s credit quality, the expectation of lease renewals, the estimated carrying costs of the property during a hypothetical expected lease-up period, current market conditions and costs to execute similar leases.  Management will also consider information obtained about a property in connection with its pre-acquisition due diligence.  Estimated carrying costs include real estate taxes, insurance, other property operating costs and estimates of lost rentals at market rates during the hypothetical expected lease-up periods, based on management’s assessment of specific market conditions.  Management will estimate costs required to execute leases including commissions and legal costs to the extent that such costs are not already incurred with a new lease that has been negotiated in connection with the purchase of a property.  Independent appraisals and/or management’s estimates will be used to determine these values.

The value of in-place leases is amortized to expense over the remaining initial term of each lease.  The value of tenant relationship intangibles is amortized to expense over the initial terms of the leases; however, no amortization period for intangible assets will exceed the remaining depreciable life of the building.

In the event that a tenant terminates its lease, the unamortized portion of each intangible, including market rate adjustments, lease origination costs, in-place values and tenant relationship values, will be charged as an expense.

Long-Lived Assets

On a periodic basis, management assesses whether there are any indicators that the value of its real estate properties may be impaired.  A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property (taking into account the anticipated holding period of the asset) is less than the carrying value of the property.  Such estimate of cash flows considers factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors.  To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the fair value of the property, and reflected as an adjustment to the basis of the property.

When assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets.  If, in management’s opinion, the net sales price of the assets that have been identified for sale is less than the net book value of the assets, a valuation allowance is established.  For investments accounted for under the equity method, a loss is recognized if the loss in value of the investment is other than temporary.

Employee Loans

Prior to 2001, the Company had made loans to officers and employees primarily for the purpose of purchasing the Company’s common stock.  These loans are demand and term notes bearing interest at rates ranging from 5% to 6%.  Interest on such loans is payable quarterly.  Loans made for the purchase of common stock are reported as a deduction from stockholders’ equity.  At December 31, 2005 and 2004, the Company had

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aggregate loans to employees of approximately $0.6 million and $0.8 million, respectively.

Deferred Leasing and Loan Origination Costs

Costs incurred in obtaining tenant leases (including internal leasing costs) are amortized using the straight-line method over the terms of the related leases and included in depreciation and amortization.  Unamortized deferred leasing costs are charged to amortization expense upon early termination of the lease.  Costs incurred in obtaining long-term financing are amortized and charged to interest expense over the terms of the related debt agreements, which approximates the effective interest method.

Internal Leasing Costs

The Company capitalizes internal leasing costs in accordance with SFAS No. 91, Nonrefundable Fees & Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases.  Please refer to the following table for additional information regarding the capitalization of internal leasing costs (dollars in thousands).

Balance at December 31, 2002	$	2,719
Costs capitalized	6,376
Amortization/writeoffs	(1,305		)
Balance at December 31, 2003	7,790
Costs capitalized	6,926
Amortization/writeoffs	(2,445		)
Balance at December 31, 2004	12,271
Costs capitalized	6,260
Amortization/writeoffs (1)	(6,019		)
Balance at December 31, 2005	$	12,512

(1)Includes approximately $2.8 million of internal leasing commissions written off in connection with the portfolio disposition discussed in Note 3.

Investments in / Advances to Unconsolidated Ventures

The Company has direct equity investments in several joint venture projects.  The Company accounts for these investments in unconsolidated ventures using the equity method of accounting, as the Company exercises significant influence over, but does not control, and is not the primary beneficiary of, these entities.  These investments are initially recorded at cost, as “Investments in / advances to unconsolidated ventures”, and subsequently adjusted for equity in earnings and cash contributions and distributions.  Intercompany fees and gains on property transactions are eliminated to the extent of the Company’s ownership interest.

To the extent that the Company contributes assets to a joint venture project, the difference between the Company’s cost basis in the assets and the basis reflected at the joint venture level is amortized over the life of the related asset and included in the Company’s share of equity in income of unconsolidated ventures.

Intangible Assets

The Company’s intangible assets, other than those acquired in business combinations, include property

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management rights and an asset management fee stream.  These assets were initially measured based on their fair values and are being amortized on a straight-line basis over a period of 20 to 40 years.  These assets are stated at cost, net of accumulated amortization.

Derivative / Financial Instruments

The Company accounts for derivative and hedging activities in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS No. 133”) and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities.  These accounting standards require the Company to measure derivatives, including certain derivatives embedded in other contracts, at fair value and to recognize them in the Consolidated Balance Sheets as assets or liabilities, depending on the Company’s rights or obligations under the applicable derivative contract.  For derivatives designated as fair value hedges, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings.  For derivatives designated as cash flow hedges, the effective portions of changes in fair value of the derivative are reported in other comprehensive income (“OCI”) and are subsequently reclassified into earnings when the hedged item affects earnings.  Changes in fair value of derivative instruments not designated as hedging instruments, and ineffective portions of hedges, are recognized in earnings in the current period.

Self-Insured Health Plan

Beginning in May 2003, the Company implemented a self-insured health plan for all of its employees.  In order to limit its exposure, the Company has purchased stop-loss insurance, which will reimburse the Company for individual claims in excess of $0.1 million annually, or aggregate claims in excess of $1.0 million annually.  Self-insurance losses are accrued based on the Company’s estimates of the aggregate liability for uninsured claims incurred using certain actuarial assumptions adhered to in the insurance industry.  The liability for self-insured losses is included in accrued expenses and was approximately $0.7 million at December 31, 2005 and 2004.

Revenue Recognition

Rental revenue is recognized on the straight-line basis, which averages minimum rents over the terms of the leases.  The cumulative difference between lease revenue recognized under this method and contractual lease payment terms is recorded as “deferred rent receivable” on the accompanying Consolidated Balance Sheets.  Certain leases provide for percentage rents based upon the level of sales achieved by the lessee.  These percentage rents are recorded once the required sales levels are achieved.  The leases also typically provide for tenant reimbursement of common area maintenance and other operating expenses.  Rental revenue also includes lease termination fees.  Lease termination fees were approximately $5.4 million, $2.8 million and $3.1 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Income from Discontinued Operations

Income from discontinued operations is computed in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”).  SFAS No. 144 requires, among other things, that the primary assets and liabilities and the results of operations of the Company’s real property that has been sold, or otherwise qualify as “held for sale” (as defined by SFAS No. 144), be classified as discontinued operations and segregated in the Company’s Consolidated Statements of Income and Comprehensive Income and Consolidated Balance Sheets.  Properties classified as real estate held for sale generally represent properties that are under contract for sale and are expected to close within the next twelve months.

Income Taxes

The Company has elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”).  In order to maintain its qualification as a REIT, the Company

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is required to, among other things, distribute at least 90% of its REIT taxable income to its stockholders and meet certain tests regarding the nature of its income and assets.  As a REIT, the Company is not subject to federal income tax with respect to the portion of its income that meets certain criteria and is distributed annually to the stockholders.  Accordingly, no provision for federal income taxes is included in the accompanying consolidated financial statements.  The Company intends to continue to operate in a manner that allows it to continue to meet the requirements for taxation as a REIT.  Many of these requirements, however, are highly technical and complex.  If the Company were to fail to meet these requirements, the Company would be subject to federal income tax.  The Company is subject to certain state and local taxes.  Provision for such taxes has been included in general and administrative expenses in the Company’s Consolidated Statements of Income and Comprehensive Income.

The Company may elect to treat one or more of its subsidiaries as a taxable REIT subsidiary (“TRS”).  In general, a TRS of the Company may perform additional services for tenants of the Company and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the provision to any person, under a franchise, license or otherwise, of rights to any brand name under which any lodging facility or health care facility is operated).  A TRS is subject to corporate federal income tax.  The Company has elected to treat certain of its corporate subsidiaries as TRSs.  At December 31, 2005, the Company’s TRSs had a tax net operating loss (“NOL”) carryforward of approximately $19.3 million, expiring from 2013 to 2020.  In addition, the Company’s TRSs had other net tax assets, most significantly relating to an assets impairment taken in fiscal 2002, for financial accounting purposes that will not be recognized for tax purposes until the property is sold.  The Company’s TRS has ascribed a full valuation allowance to its net deferred tax assets.

Segment Information

The principal business of the Company is the ownership and management of community and neighborhood 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 accounting principles generally accepted in the United States (“GAAP”).  Further, all of the Company’s operations are within the United States and no tenant comprises more than 10% of revenue.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.  Actual results could differ from those estimates.  The most significant assumptions and estimates relate to impairments of real estate, recovery of mortgage notes and trade accounts receivable and depreciable lives.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation.

Recently Issued Accounting Standards

In October 2005, the FASB issued Staff Position No. 13-1, Accounting for Rental Costs Incurred during a Construction Period (“FSP FAS 13-1”).  FSP FAS 13-1 addresses the accounting for rental costs associated with operating leases that are incurred during a construction period.  FSP FAS 13-1 does not distinguish between the right to use a leased asset during a construction period and the right to use that asset after the construction period.  Therefore, rental costs associated with ground or building operating leases that are incurred during a construction period shall be recognized as rental expense, allocated over the lease term in accordance with FASB Statement No. 13, Accounting for Leases, and FASB Technical Bulletin No. 85-3, Accounting for Operating Leases with Scheduled Rent Increases.  FSP FAS 13-1 became effective for the first

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reporting period beginning after December 15, 2005.  Retrospective application in accordance with Statement 154, Accounting Changes and Error Corrections – a replacement of APB Opinion No. 20 and FASB Statement No. 3 (“SFAS No. 154”), is permitted but not required.  The application of FSP FAS 13-1 is not expected to have a material impact on the consolidated financial statements of the Company.

In June 2005, the Emerging Issues Task Force (“EITF”) issued EITF Issue No. 04-05, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“EITF 04-05”).  The scope of EITF 04-05 is limited to limited partnerships or similar entities that are not variable interest entities under FIN 46.  The EITF reached a consensus that the general partners in a limited partnership (or similar entity) are presumed to control the entity regardless of the level of their ownership and, accordingly, may be required to consolidate the entity.  This is a rebuttable presumption that may be overcome if the partnership agreements provide the limited partners with either (a) the substantive ability to dissolve (liquidate) the limited partnership or otherwise remove the general partners without cause or (b) substantive participating rights.  If it is deemed that the limited partners’ rights overcome the presumption of control by a general partner of the limited partnership, the general partner shall account for its investment in the limited partnership using the equity method of accounting.  EITF 04-05 became effective immediately for all arrangements created or modified after June 29, 2005.  For all other arrangements, application of EITF 04-05 is required effective for the first reporting period in fiscal years beginning after December 15, 2005 (effective January 1, 2006 for the Company) using either a cumulative-effect-type adjustment or using a retrospective application.  The adoption of EITF 04-05 is not expected to have a material impact on the consolidated financial statements of the Company.

In May 2005, the FASB issued SFAS No. 154.  SFAS No. 154, which replaces Accounting Principles Board (“APB”) Opinion No. 20, Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for, and reporting of, a change in accounting principle.  SFAS No. 154 applies to all voluntary changes in accounting principle.  SFAS No. 154 also applies to changes required by an accounting pronouncement in the unusual instance where the pronouncement does not include specific transition provisions.   SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, but early adoption is permitted.  The adoption of SFAS No. 154 is not expected to have a material impact on the consolidated financial statements of the Company.

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (“FIN 47”).  FIN 47 requires an entity to recognize a liability for a conditional asset retirement obligation when incurred if the liability can be reasonably estimated.  FIN 47 clarifies that the term “Conditional Asset Retirement Obligation” refers to a legal obligation (pursuant to existing law or contract) to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity.  FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation.  FIN 47 became effective no later than fiscal years ended after December 15, 2005.  The Company adopted FIN 47 as required effective December 31, 2005, and the initial application of FIN 47 did not have a material impact on the consolidated financial statements of the Company.

In December 2004, the FASB issued Statement 123(R), Share-Based Payment (“SFAS No. 123(R)”).  SFAS No. 123(R) amends Statement 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), and APB Opinion No. 25, Accounting for Stock Issued to Employees (“Opinion 25”).  SFAS No. 123(R) also establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods or services.  It requires a public entity to measure the cost of employee services received in exchange for an equity award based on the fair value of the award on the grant date, and to recognize such cost over the period during which the employee is required to provide such service.  SFAS No. 123(R) requires companies to value the share-based compensation based on the classification of the share-based award.  If the share-based award is to be classified as a liability, the award must be re-measured at each balance sheet date until the award is settled.  If the share-based award is to be classified as equity, the value of the share-based award is measured on the date of grant, the award will not be re-measured at each balance sheet date.  SFAS No. 123(R) does not change the accounting guidance for share-based payment transactions with parties other than employees

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provided in SFAS No. 123, as originally issued.  SFAS No. 123(R), as modified on April 14, 2005, became effective as of the first annual reporting period that begins after June 15, 2005, and must be applied using either a modified prospective method or a modified retrospective method.  Under the modified prospective method, awards that are granted, modified or settled after the date of adoption should be measured and accounted for in accordance with the above provisions of SFAS No. 123(R).  Unvested equity classified awards that were granted prior to the effective date of SFAS No. 123(R) should continue to be accounted for in accordance with SFAS No. 123, except that amounts must be recognized in the statement of operations.  Under the modified retrospective method, the previously reported amounts are restated (either to the beginning of the year of adoption or for all periods presented) to reflect SFAS No. 123 amounts in the statement of operations.  The initial adoption of SFAS No. 123(R) did not have a material impact on the consolidated financial statements of the Company.

3.Acquisitions and Dispositions

Acquisitions

In the 2005 fiscal year, the Company acquired eight shopping centers (Brunswick Town Center, Hillcrest Shopping Center, West Ridge Shopping Center, Market Plaza, Surrey Square Mall, Fashion Place Shopping Center, Western Hills Plaza and Southland Shopping Center), a vacant building with 2.5 acres of land immediately adjacent to Midway Crossing (a shopping center owned by the Company), a vacant building immediately adjacent to Victory Square (a shopping center owned by the Company), six land parcels, the remaining 90% interest in Marketplace at Wycliffe, a shopping center in which the Company owned the other 10% interest, and the remaining 90% interest in Mableton Walk, a shopping center in which the Company owned the other 10% interest.  Please refer to the following table for additional details (dollars in millions).

							Purchase Price Components
Property Name	Location	Acquisition  Date	Gross Leasable Area		Purchase  Price		ERP Units		Assumed Debt		Cash
Building at Midway Crossing	Elyria, OH	01/13/05	20,338	(1)	$	1.1	—		—		$	1.1
Brunswick Town Center	Brunswick, OH	01/21/05	122,989		$	16.4	—		—		$	16.4
Hillcrest Shopping Center	Spartanburg, SC	02/16/05	343,914		$	35.5	$	14.5	$	16.8	$	4.2
West Ridge Shopping Center	Westland, MI	03/17/05	163,131		$	16.6	—		$	11.0	$	5.6
Marketplace at Wycliffe (2) (3)	Lake Worth, FL	06/01/05	133,520		$	35.7	—		—		$	35.7
Mableton Walk (2)	Mableton, GA	06/01/05	105,742		—		—		—		—
Market Plaza	Plano, TX	07/13/05	161,453		$	39.6	—		—		$	39.6
Surrey Square Mall	Norwood, OH	08/26/05	190,323		$	10.5	—		—		$	10.5
Five land parcels adjacent to Home Depot Stores	FL, LA, OH	09/07/05	40 acres		$	9.3	—		—		$	9.3
Fashion Place Shopping Center	Columbia, SC	09/14/05	149,493		$	6.8	—		—		$	6.8
Brandt Pike Place	Dayton, OH	09/30/05	11 acres		$	1.6	—		—		$	1.6
Building at Victory Square	Savannah, GA	10/03/05	13,000		$	0.8	—		—		$	0.8
Western Hills Plaza	Cincinnati, OH	11/03/05	430,399		$	45.6			—		$	45.6
Southland Shopping Center	Toledo, OH	12/21/05	291,221		$	14.8	—		—		$	14.8
	Total				$	234.3	$	14.5	$	27.8	$	192.0

(1)Also includes 2.5 acres of land.

(2)Property acquired as a component of a multi-property transaction.  Purchase price and cash listed for Marketplace at Wycliffe represent the combined amounts for the acquisition of 100% interests in Marketplace at Wycliffe and Mableton Walk.

(3)On August 10, 2005, this property was sold as part of the Galileo Transactions (as defined below).

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In the 2004 fiscal year, the Company acquired 11 shopping centers (New Britain Village Square, Elk Grove Town Center, Villa Monaco, Florence Square, Stockbridge Village, Starlite Plaza, Village Center, Annex of Arlington, Marketplace, Silver Pointe, and The Shoppes at Southside), 11 acres of unimproved land known as Unity Plaza, the remaining 50% interest in Clearwater Mall, a shopping center in which the Company owned the other 50% interest, and the remaining 50% interest in The Market at Preston Ridge, a shopping center in which the Company owned the other 50% interest.  Please refer to the following table for additional details (dollars in millions).

						Purchase Price Components
Property Name	Location	Acquisition Date	Gross  Leasable Area	Purchase Price		ERP Units		Assumed Debt			Cash
New Britain Village Square	Chalfont, PA	01/09/04	143,716	$	23.4	$	11.2	$	12.2	(1)	—
Clearwater Mall	Clearwater, FL	01/30/04	285,519	$	30.0	—		—			$	30.0
Elk Grove Town Center	Elk Grove Village, IL	01/30/04	131,849	$	21.0	—		$	14.5		$	6.5
Villa Monaco	Denver, CO	02/19/04	122,213	$	12.0	—		—			$	12.0
Florence Square	Florence, KY	03/17/04	361,251	$	39.5	—		$	15.8		$	23.7
Unity Plaza	East Fishkill, NY	04/28/04	11 acres	$	6.0	—		—			$	6.0
Stockbridge Village	Stockbridge, GA	04/29/04	188,203	$	23.8	—		—			$	23.8
Starlite Plaza	Sylvania, OH	07/22/04	222,450	$	16.8	—		—			$	16.8
Village Center	Smithtown, NY	08/19/04	97,401	$	16.8	—		$	4.4		$	12.4
Annex of Arlington	Arlington Heights, IL	08/26/04	197,328	$	27.2	—		$	17.9		$	9.3
Marketplace	Tulsa, OK	09/01/04	186,851	$	18.0	$	8.8	$	9.2		—
The Market at Preston Ridge	Frisco, TX	09/01/04	50,326	$	5.2	—		—			$	5.2
Silver Pointe	Fenton, MI	11/23/04	86,141	$	10.2	—		$	7.2		$	3.0
The Shoppes at Southside	Jacksonville, FL	12/10/04	109,113	$	25.0	—		—			$	25.0
	Total			$	274.9	$	20.0	$	81.2		$	173.7

(1)Represents the assumption of a mortgage loan previously made by the Company to the seller.

In the 2003 fiscal year, the Company acquired the remaining 50% interest in Vail Ranch II that it did not already own, a portfolio of seven grocery-anchored neighborhood shopping centers (the “Spartan Acquisition”) and three other shopping centers (Panama City Square, Harpers Station and Dickson City Crossing).  Please refer to the following table for additional details (dollars in millions).

						Purchase Price Components
Property Name	Location	Acquisition Date	Gross  Leasable Area	Purchase Price		ERP Units	Assumed Debt		Cash
Spartan Acquisition	Michigan	01/03/03	534,300	$	46.0	—	—		$	46.0
Paradise Pavilion (1)	West Bend, WI	01/03/03	198,419	—		—	—		—
Vail Ranch II	Temecula, CA	02/25/03	105,000	$	10.5	—	$	9.0	$	1.5
Panama City Square	Panama City, FL	06/25/03	289,119	$	18.3	—	$	12.7	$	5.6
Harpers Station	Cincinnati, OH	09/11/03	240,681	$	23.8	—	$	13.0	$	10.8
Dickson City Crossings	Dickson City, PA	09/30/03	301,462	$	28.1	—	$	14.8	$	13.3
	Total			$	126.7	—	$	49.5	$	77.2

(1)  Paradise Pavilion was acquired in connection with the Equity Investment Group portfolio acquisition on December 12, 2002.

Dispositions

Portfolio Disposition

On August 10, 2005, the Company sold an aggregate of 69 community and neighborhood shopping centers (the “Galileo Properties”) to Galileo America LLC for approximately $968.0 million of total consideration, comprised of approximately $928.2 million in cash and approximately $39.8 million of equity in Galileo America LLC (the “Property Transfer”).  The Company has the right to receive up to an additional $12.0 million in cash based upon the performance of the Galileo Properties during the 18-month period

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following the closing of the Property Transfer.

The following related transactions occurred simultaneously with the closing of the Property Transfer, resulting in the Company owning an approximate 5% equity interest in Galileo America LLC, which included (i) the redemption by Galileo America LLC of an existing interest in Galileo America LLC held by an affiliate of CBL & Associates Properties, Inc. (“CBL”) for two properties previously owned by Galileo America LLC, (ii) the purchase by the Company of an asset management fee stream from Galileo America LLC for $18.5 million and (iii) the acquisition by the Company of the property management rights of CBL with respect to Galileo America LLC for $22.0 million (plus an agreement to purchase additional property management rights in 2008 for $7.0 million) (such transactions are referred to collectively with the Property Transfer as the “Galileo Transactions”).

As a result of the Company’s retained 5% ownership interest in Galileo America LLC, as well as the Company’s purchase of the property and asset management rights as part of the Galileo Transactions, the results of operations of the Galileo Properties up to August 10, 2005 were not classified as income from discontinued operations and are included in income from continuing operations.

Other Dispositions

In addition to the Galileo Transactions, during 2005, the Company sold 12 properties, four land parcels, 90% of its ownership interest in The Pines and 90% of its ownership interest in Northshore West for aggregate gross proceeds of approximately $105.6 million.  In connection with the sale of these properties, and in accordance with SFAS No. 144 (Note 2), the Company recorded the results of operations and the related gain/loss on sale as income from discontinued operations (Note 5).  The results of operations from The Pines and Northshore West are not considered to be income from discontinued operations due to the Company’s continued involvement in its operations as a result of the Company’s 10% joint venture interest.

During 2004, the Company sold 14 properties, two outparcels, one land parcel and 90% of its ownership interest in Villa Monaco for aggregate gross proceeds of approximately $57.9 million, including approximately $8.5 million represented by a purchase money note issued in connection with the sale of Factory Merchants Barstow (the purchase money note was repaid in full in early 2005).  In connection with the sale of these properties, and in accordance with SFAS No. 144, the Company recorded the results of operations and the related gain on sale as income from discontinued operations (Note 5).

During 2003, the Company sold 24 properties, six land parcels and 70% of its ownership interest in Arapahoe Crossings, LP for aggregate gross proceeds of approximately $117.1 million.  In connection with the sale of these properties, and in accordance with SFAS No. 144 (Note 2), the Company recorded the results of operations and the related gain on sale as income from discontinued operations (Note 5).  The results of operations from Arapahoe Crossings, LP are not considered to be income from discontinued operations due to the Company’s continued involvement in its operations as a result of the Company’s retained 30% joint venture interest.

4.Real Estate Held for Sale and Impaired Real Estate

As of December 31, 2005, five retail properties and three land parcels were classified as “Real estate held for sale.”  These properties are located in five states and have an aggregate gross leasable area of approximately 0.5 million square feet.  Such properties had an aggregate book value of approximately $19.2 million, net of accumulated depreciation of approximately $3.6 million as of December 31, 2005.  The five retail properties and three land parcels were all under contract for sale as of December 31, 2005 and all sales are expected to close by the third quarter of 2006, but in any event no later than December 31, 2006.  In accordance with SFAS No. 144 (Note 2), the Company has recorded the results of operations and the related impairment of any properties classified as held for sale as income from discontinued operations (Note 5).

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As of December 31, 2004, four retail properties and one land parcel were classified as “Real estate held for sale.”  These properties are located in five states and have an aggregate gross leasable area of approximately 0.4 million square feet.  Such properties had an aggregate book value of approximately $20.8 million, net of accumulated depreciation of approximately $3.2 million as of December 31, 2004.  In accordance with SFAS No. 144 (Note 2), the Company has recorded the results of operations and the related impairment of any properties classified as held for sale as income from discontinued operations (Note 5).

5.Income from Discontinued Operations

The following is a summary of income from discontinued operations for the years ended December 31, 2005, 2004 and 2003 (dollars in thousands):

	Year Ended December 31,
	2005			2004			2003
Total revenue
Other discontinued operations	$	13,354		$	21,893		$	29,427
Real estate held for sale	3,265			3,055			3,403
Total revenue	16,619			24,948			32,830
Operating costs
Other discontinued operations	(3,772		)	(6,562		)	(8,214		)
Real estate held for sale	(522		)	(513		)	(556		)
Real estate taxes
Other discontinued operations	(1,417		)	(2,579		)	(3,587		)
Real estate held for sale	(347		)	(329		)	(424		)
Interest expense
Other discontinued operations	(5		)	(183		)	(862		)
Real estate held for sale	—			—			—
Depreciation and amortization
Other discontinued operations	(2,505		)	(3,496		)	(4,138		)
Real estate held for sale	(507		)	(477		)	(436		)
Provision for doubtful accounts
Other discontinued operations	(487		)	(1,791		)	(2,252		)
Real estate held for sale	(49		)	(16		)	(21		)
General and administrative expenses
Other discontinued operations	(3		)	(9		)	(9		)
Real estate held for sale	—			—			—
Total operating costs	(9,614		)	(15,955		)	(20,499		)
Income from discontinued operations before impairment and gain on sale	7,005			8,993			12,331
Impairment of real estate held for sale	—			(88		)	(6,953		)
Gain (loss) on sale of other discontinued operations (1)	17,787			(1,139		)	4,018
Income from discontinued operations	$	24,792		$	7,766		$	9,396

(1)  For the year ended December 31, 2005, balance includes approximately $4.1 million attributable to the gain on sale of the Company’s ownership interest in BPR West, L.P., a joint venture in which the Company previously held a 50% interest.  Balance also includes approximately $3.4 million attributable to the consolidated gain on sale of Rodney Village, a property formerly owned by Benbrooke Ventures, a joint venture in which the Company previously held a 50% interest.

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6.Marketable Securities

The Company has classified all investments in equity securities as available-for-sale.  All investments are recorded at current market value with an offsetting adjustment to stockholders’ equity (dollars in thousands):

	December 31, 2005		December 31, 2004
Cost basis	$	973	$	973
Unrealized holding gains	2,041		2,460
Fair value	$	3,014	$	3,433

The weighted average method is used to determine realized gain or loss on securities sold.  The fair value of marketable securities is based upon quoted market prices as of December 31, 2005 and 2004.

7.Mortgages and Notes Receivable

The Company had the following mortgages and notes receivable (dollars in thousands):

	December 31, 2005		December 31, 2004
Leasehold mortgages, interest at 10% to 12%, due 2008 to 2010.	$	795	$	903
Promissory Note, interest at 8%, due 2005.	—		7,978
Total	$	795	$	8,881

On September 22, 2004, in connection with the purchase of Factory Merchants Barstow, the purchaser issued a purchase money note to the Company for approximately $8.5 million.  The note bore interest at 8% and was due in March 2005.  This note was repaid in full as of December 31, 2005.

At December 31, 2005 and 2004, approximately $1.1 million and $0.7 million, respectively, of the other receivables on the accompanying consolidated balance sheet represented interest and dividends receivable.

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8.Investments in/Advances to Unconsolidated Ventures

The following table summarizes the Company’s investments in unconsolidated joint ventures as of December 31, 2005 and 2004 (dollars in thousands).   The Company accounts for these investments using the equity method.

				Company
						Investments in/Advances to
						Unconsolidated Ventures
				Percent		December 31,
	City	State	JV Partner	Ownership		2005		2004
Arapahoe Crossings, L.P. (1)	Aurora	CO	Foreign Investor	30	%	$	6,663	$	6,718
BPR Land Partnership, L.P. (2)	Frisco	TX	George Allen/ Milton Schaffer	50	%	$	1,221	$	1,993
BPR Shopping Center, L.P. (1)	Frisco	TX	Foreign Investor/ George Allen/Milton Schaffer	25	%	$	3,615	$	3,683
BPR South, L.P. (2)	Frisco	TX	George Allen/ Milton Schaffer	50	%	$	822	N/A
CA New Plan Acquisition Fund, LLC (3)	Various	Various	Major U.S. Pension Fund	10	%	$	1,409	N/A
CA New Plan Venture Direct Investment Fund, LLC	Various	Various	Major U.S. Pension Fund	10	%	$	849	N/A
CA New Plan Venture Fund, LLC (4)	Various	Various	Major U.S. Pension Fund	10	%	$	3,692	$	6,963
Galileo America LLC	Various	Various	Galileo Shopping America Trust	5	%	$	33,762	N/A
NP/I&G Institutional Retail Company, LLC (4)	Various	Various	JPMorgan Fleming Asset Management	20	%	$	41,447	$	12,531
NPK Redevelopment I, LLC (1) (5)	Various	Various	Kmart Corporation (Sears Holding Corp.)	20	%	$	1,000	N/A
Westgate Mall, LLC (6)	Fairview Park	OH	Transwestern Investment Company/ The Richard E. Jacobs Group	10	%	$	1,058	N/A
		Investments in/Advances to Unconsolidated Ventures				$	95,538	$	31,888

(1)	The Company receives increased participation after a 10% return.
(2)	The Company receives a 10% preferred return on its investment.
(3)	The Company receives increased participation after a 10% IRR.
(4)	The Company receives increased participation after a 12% IRR.
(5)	The Company has committed to contribute an additional $5.0 million to this venture. Percent ownership represents the Company’s ownership interest subsequent to such contribution.
(6)	The Company receives increased participation after a 13% IRR.

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Combined summary unaudited financial information for the Company’s investments in/advances to unconsolidated ventures was as follows (dollars in thousands, except footnotes):

	December 31, 2005		December 31, 2004
Condensed Combined Balance Sheets
Cash and cash equivalents	$	44,554	$	10,848
Receivables	23,981		8,814
Property and equipment, net of accumulated depreciation	2,488,325		501,517
Other assets, net of accumulated amortization	48,145		18,171
Total Assets	$	2,605,005	$	539,350
Long-term debt	$	1,580,749	$	364,719
Accrued interest	4,576		1,700
Other liabilities	166,506		8,047
Total liabilities	1,751,831		374,466
Total partners’ capital	853,174		164,884
Total liabilities and partners’ capital	$	2,605,005	$	539,350
Company’s investments in / advances to unconsolidated ventures	$	95,538	$	31,888

	Year Ended December 31, 2005			Year Ended December 31, 2004			Year Ended December 31, 2003
Condensed Combined Statements of Income
Rental revenues	$	218,688		$	59,515		$	49,004
Operating expenses	(63,163		)	(18,891		)	(13,225		)
Interest expense	(60,318		)	(16,998		)	(10,444		)
Other expenses, net	(63,280		)	(12,118		)	(6,705		)
Gain on sale of real estate, net	17,005			—			—
Net income	$	48,932		$	11,508		$	18,630
Company’s share of net income (1)	$	4,045		$	1,513		$	3,438

(1) Includes preferred returns of $0.9 million as of December 31, 2003.

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The following is a brief summary of the unconsolidated joint venture obligations that the Company had as of December 31, 2005.

·Arapahoe Crossings, L.P.  The Company, together with a U.S. partnership comprised substantially of foreign investors, has an interest in a joint venture which owns Arapahoe Crossings, a community shopping center located in Aurora, Colorado.  Under the terms of this joint venture, the Company has a 30% interest and is responsible for contributing its pro rata share of any capital that might be required by the joint venture; however, the Company does not expect that any significant capital contributions will be required.  The joint venture had loans outstanding of approximately $48.5 million as of December 31, 2005.

·BPR Land Partnership, L.P. The Company has a 50% interest in a joint venture that owns approximately 30.1 acres of undeveloped land in Frisco, Texas.  Under the terms of this joint venture, the Company has agreed to contribute its pro rata share of any capital that might be required by the joint venture; however, the Company does not expect that any significant capital contributions will be required.  The joint venture had no loans outstanding as of December 31, 2005.

·BPR Shopping Center, L.P.  The Company has a 25% interest in a joint venture that owns The Centre at Preston Ridge, a community shopping center located in Frisco, Texas.  Under the terms of this joint venture, the Company has agreed to contribute its pro rata share of any capital that might be required by the joint venture; however, the Company does not expect that any significant capital contributions will be required.  The joint venture had loans outstanding of approximately $68.6 million as of December 31, 2005.

·BPR South, L.P.  The Company has a 50% interest in a joint venture that owns approximately 8.4 acres of undeveloped land in Frisco, Texas.  Under the terms of this joint venture, the Company has agreed to contribute its pro rata share of any capital that might be required by the joint venture; however, the Company does not expect that any significant capital contributions will be required.  The joint venture had no loans outstanding as of December 31, 2005.

·CA New Plan Acquisition Fund, LLC.  The Company has a 10% interest in a joint venture that was created in conjunction with the restructuring of CA New Plan Venture Fund, LLC (see below).  Under the terms of this joint venture, the Company has agreed to contribute its pro rata share of any capital that might be required by the joint venture, up to a maximum amount of $4.2 million, of which approximately $1.4 million had been contributed by the Company as of December 31, 2005.  The Company anticipates contributing the remaining approximately $2.8 million by the end of 2007.  As of December 31, 2005, the joint venture owned three operating retail properties and one retail property under redevelopment.  The joint venture had loans outstanding of approximately $33.4 million as of December 31, 2005.

·CA New Plan Venture Direct Investment Fund, LLC.  The Company has a 10% interest in a joint venture that was created in conjunction with the restructuring of CA New Plan Venture Fund, LLC (see below).  Under the terms of this joint venture, the Company has agreed to contribute its pro rata share of any capital that might be required by the joint venture, up to a maximum amount of $0.4 million.  As of December 31, 2005, the Company had not made any such capital contributions, and does not expect that any additional significant capital contributions will be required.  The joint venture owned seven retail properties as of December 31, 2005.  The joint venture had loans outstanding of approximately $60.8 million as of December 31, 2005.

·CA New Plan Venture Fund, LLC.  During 2005, this joint venture was restructured to create two additional joint ventures, CA New Plan Acquisition Fund, LLC, and CA New Plan Venture Direct Investment Fund, LLC.  As a result of the restructuring, six stabilized assets were

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transferred from CA New Plan Venture Fund, LLC to CA New Plan Venture Direct Investment Fund, LLC, and two assets were sold, resulting in the joint venture owning six operating retail properties and one retail property under redevelopment as of December 31, 2005.  Under the terms of the restructured joint venture, the Company continues to have a 10% interest in the venture, and is responsible for contributing its pro rata share of any capital that might be required by the joint venture, up to a maximum amount of $0.9 million.  As of December 31, 2005, the Company had not made any such capital contributions, and does not expect that any additional significant capital contributions will be required.  The joint venture had loans outstanding of approximately $57.7 million as of December 31, 2005.

·Galileo America LLC.  The Company has a 5% interest in this joint venture, which interest was acquired in conjunction with the Galileo Transactions (Note 3).  Under the terms of this joint venture, the Company is not obligated to contribute any additional capital to the joint venture; however, in the event that additional capital is contributed by the other joint venture partner, the Company has the option to contribute the amount necessary to maintain its 5% ownership interest.  The Company anticipates making additional capital contributions from time to time to maintain its ownership percentage.  As of December 31, 2005, this joint venture was comprised of 126 retail assets, and had loans outstanding of approximately $1.2 billion as of December 31, 2005.

·NP / I&G Institutional Retail Company, LLC.  In November 2003, the Company formed a strategic joint venture with JPMorgan Fleming Asset Management to acquire high-quality institutional grade community and neighborhood shopping centers on a nationwide basis.  The joint venture owned 13 retail properties as of December 31, 2005.  Under the terms of this joint venture, the Company has a 20% interest in the venture and is responsible for contributing its pro rata share of any capital that might be required by the joint venture.  The Company initially agreed to contribute up to a maximum amount of $30.0 million to the joint venture, however, in connection with the acquisition of certain assets, the Company together with ERP, contributed a disproportionate share of capital to the venture, such that the Company’s total capital investment as of December 31, 2005 was $41.4 million.  The Company anticipates the return of its excess contribution, approximately $11.3 million, during the first quarter of 2006.  The joint venture had loans outstanding of approximately $275.6 million as of December 31, 2005.

·NPK Redevelopment I, LLC.  The Company has a joint venture with Kmart Corporation (Sears Holding Corp.) pursuant to which the joint venture will redevelop three Kmart Supercenter properties formerly owned by Kmart.  Under the terms of this joint venture, the Company has agreed to contribute $6.0 million, of which $1.0 million had been contributed by the Company as of December 31, 2005.  After the contribution of the total committed amount, the Company will have a 20% interest in the venture and be responsible for contributing its pro rata share of any additional capital that might be required by the joint venture.  The joint venture had no loans outstanding as of December 31, 2005.

·Westgate Mall, LLC.  The Company, together with Transwestern Investment Company and The Richard E. Jacobs Group, has an interest in a joint venture that was formed for the specific purpose of acquiring and redeveloping Westgate Mall, an enclosed mall located on 55 acres of land in Fairview Park, Ohio.  The joint venture plans to redevelop the mall into a large community shopping center.  Under the terms of this joint venture, the Company has a 10% interest in the venture and is responsible for contributing its pro rata share of any capital that might be required by the joint venture; however, the Company does not expect that any additional significant capital contributions will be required.  The joint venture had loans outstanding of approximately $21.6 million as of December 31, 2005.

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9.Intangible Assets

Intangible assets are comprised of the following (dollars in thousands):

	December 31,  2005		December 31,  2004		Amortization  Period
In-place lease value, legal fees and leasing commissions, net (Note 3)	$	34,454	$	31,723	Life of lease
Above market leases acquired, net (Note 3)	3,498		362		Life of lease
Amounts paid for asset management fee stream, net (Note 3)	18,307		—		40 years
Amounts paid for property management rights, net (Note 3)	21,787		—		20 years
Total	$	78,046	$	32,085

Aggregate amortization expense on these assets for the year ended December 31, 2005 was approximately $0.7 million.  The estimated amortization expense on these assets during the next five fiscal years is as follows (dollars in thousands):

Year
2006	$	6,689
2007	5,510
2008	4,802
2009	4,399
2010	3,885

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10.Debt Obligations

As of December 31, 2005 and 2004, the Company had the following debt obligations under various arrangements with financial institutions (dollars in thousands):

	Maximum		Carrying Value as of						Stated		Scheduled
	Amount Available		December 31, 2005			December 31, 2004			Interest Rates		Maturity Date
CREDIT AGREEMENTS
Revolving Facility	$	350,000	$	65,000		$	296,000		LIBOR + 65 bp	(1)(2)	June 2007
Secured Term Loan	150,000		150,000			150,000			LIBOR + 85 bp	(1)	June 2007
Total Credit Agreements	$	500,000	$	215,000		$	446,000
MORTGAGES PAYABLE
Fixed Rate Mortgages (3)			$	395,486		$	506,367		6.670% - 9.625	%	2006 - 2028
Variable Rate Mortgages			24,296			24,755			Variable (4)		2006- 2011
Total Mortgages			419,782			531,122
Net unamortized premium			13,871			20,400
Total Mortgages, net			$	433,653		$	551,522
NOTES PAYABLE
7.75% unsecured notes			$	—		$	100,000		7.750	%	N/A
7.35% unsecured notes			30,000			30,000			7.350	%	June 2007
5.88% unsecured notes (5)			—			250,000			5.875	%	N/A
7.40% unsecured notes			150,000			150,000			7.400	%	September 2009
4.50% unsecured notes (6)			150,000			150,000			4.500	%	February 2011
5.13% unsecured notes			125,000			—			5.125	%	September 2012
5.50% unsecured notes			50,000			50,000			5.500	%	November 2013
5.30% unsecured notes			100,000			—			5.300	%	January 2015
5.25% unsecured notes			125,000			—			5.250	%	September 2015
3.75% unsecured notes (7)			115,000			115,000			3.750	%	June 2023
7.97% unsecured notes			10,000			10,000			7.970	%	August 2026
7.65% unsecured notes			25,000			25,000			7.650	%	November 2026
7.68% unsecured notes			10,000			10,000			7.680	%	November 2026
7.68% unsecured notes			10,000			10,000			7.680	%	November 2026
6.90% unsecured notes			25,000			25,000			6.900	%	February 2028
6.90% unsecured notes			25,000			25,000			6.900	%	February 2028
7.50% unsecured notes			25,000			25,000			7.500	%	July 2029
Total Notes			975,000			975,000
Net unamortized discount			(4,822		)	(4,723		)
Impact of pay-floating swap agreements			(1,831		)	286
Total Notes, net			$	968,347		$	970,563
CAPITAL LEASES			$	27,881		$	28,234		7.500	%	June 2031
TOTAL DEBT			$	1,644,881		$	1,996,319

(1)	The Company incurs interest using the 30-day LIBOR rate, which was 4.31% as of December 31, 2005. The interest rate on this facility adjusts based on the Company’s credit rating.
(2)	The Company also incurs an annual facility fee of 20 basis points on this facility.
(3)	The Company repaid approximately $100.6 million of fixed rate mortgages with a portion of the proceeds generated from the Galileo Transactions.
(4)	As determined by the applicable loan agreement, the Company incurs interest on these obligations using either the 30-day LIBOR rate, which was 4.31% as of December 31, 2005, plus spreads ranging from 65 to 85 basis points, or the Moody’s A Corporate Bond Index, which was 5.26% as of December 31, 2005, plus spreads ranging from 12.5 to 37.5 basis points.
(5)	The Company repaid these notes in full with the proceeds from the September 2005 debt offering described below.
(6)	The Company has entered into reverse interest rate swap agreements that effectively converted the interest rate on $65.0 million of the notes from a fixed rate to a blended floating rate of 30 basis points over the six-month LIBOR rate.
(7)	Represents the Company’s convertible senior notes, which are redeemable for cash, in whole or in part, any time after June 9, 2008.

The Company’s $350.0 million unsecured revolving credit facility (the “Revolving Facility”) and the Company’s $150.0 million secured term loan (the “Secured Term Loan”) (collectively, the “Credit

25

Agreements”) require that the Company maintain certain financial coverage ratios and other debt covenants.  On July 19, 2005, in anticipation of the closing of the Galileo Transactions, the Company entered into amendments to the Credit Agreements.  The amendments to each of the Credit Agreements were substantially identical.

As part of the amendments:

·The covenants in the Credit Agreements relating to asset sales by the Company were amended to permit the Company to sell or otherwise transfer assets so long as the transfers do not exceed (i) with respect to 2005, 30% of the total book value of all the Company’s property determined as of December 31, 2004, and (ii) with respect to each year thereafter, 25% of the total book value of all the Company’s property determined as of the last day of the preceding year;

·The covenants in the Credit Agreements relating to permitted dividends by the Company were amended to specifically provide that the special dividend distributed to stockholders of the  Company (Note 10) following the Galileo Transactions be permitted under the terms of the Credit Agreements;

·The covenants in the Credit Agreements relating to the Company’s minimum tangible net worth were amended to provide that the Company’s minimum net worth requirement be reduced from $1.278 billion to $1.225 billion (plus 80% of the net proceeds received by the Company from future issuances of capital stock);

·The covenants in the Credit Agreements that set forth the maximum ratio of the Company’s total unsecured debt to unencumbered asset value were amended, increasing the ratio from 55% to 57.5%; and

·The capitalization rates used to calculate the value of the Company’s assets for purposes of certain ratio tests (i.e., in calculating the Company’s operating property value and unencumbered asset value) were decreased from 9.0% to 8.5%.

As of December 31, 2005, these coverage ratios and debt covenants, as amended, included:

·net operating income of unencumbered assets to interest on unsecured debt ratio of at least 2:1

·EBITDA (as defined in the applicable agreement) to fixed charges ratio of at least 1.75:1

·minimum tangible net worth of approximately $1.2 billion

·total debt to total adjusted assets of no more than 57.5%

·total secured debt to total adjusted assets of no more than 40%

·unsecured debt to unencumbered assets value ratio of no more than 57.5%

·book value of ancillary assets to total adjusted assets of no more than 25%

·book value of new construction assets to total adjusted assets of no more than 15%

·Funds from Operations (as defined in the applicable debt agreement) payout ratio no greater than 95%

On September 19, 2005, the Company completed a public offering of $125.0 million aggregate principal amount of senior unsecured, 7-year fixed rate notes with a coupon of 5.125% (the “5.125% Notes”) and $125.0 million aggregate principal amount of senior unsecured, 10-year fixed rate notes with a coupon of 5.25% (the “5.25% Notes”) (collectively, the “September 2005 Debt Offering”).  The 5.125% Notes and the 5.25% Notes are due on September 15, 2012 and 2015, respectively.  The 5.125% Notes were priced at 99.919% of par value to yield 5.139%.  The 5.25% Notes were priced at 99.372% of par value to yield 5.332%.  Net proceeds from the offering were used to redeem all $250.0 million of the Company’s outstanding 5.875% senior unsecured notes that were due June 15, 2007 and were called for redemption on August 4, 2005 at a redemption price of 100% of their principal amount plus any interest accrued up to, but excluding, the

26

redemption date, and the applicable “make-whole” premium of approximately $7.1 million relating to such notes.  Concurrent with the pricing of the September 2005 Debt Offering, the Company settled its three remaining 10-year forward starting interest rate swap agreements with an aggregate of approximately $100.0 million in notional amount for an aggregate cost of approximately $7.6 million.

On April 5, 2005, the Company entered into a $150.0 million unsecured term loan (the “Unsecured Term Loan”).  Net proceeds from the Unsecured Term Loan were used to repay $100.0 million of the Company’s 7.75% medium-term notes that were scheduled to mature on April 6, 2005, as well as to repay a portion of the amount outstanding under the Revolving Facility.  On July 13, 2005, the Company amended the Unsecured Term Loan, increasing the amount that may be borrowed from $150.0 million to $200.0 million, and concurrently increased the amount borrowed from $150.0 million to $200.0 million.  On August 10, 2005, the Company repaid the $200.0 million outstanding under the Unsecured Term Loan with a portion of the proceeds generated from the Galileo Transactions, and as a result no further amounts are available for draw under this loan.

On January 13, 2005, the Company completed a public offering of $100.0 million aggregate principal amount of unsecured, 10-year fixed rate notes with a coupon of 5.30% (the “January 2005 Debt Offering”).  These notes are due on January 15, 2015 and were priced at 99.930% of par value to yield 5.309%.  Net proceeds from the offering were used to repay a portion of the amount outstanding under the Revolving Facility.  Concurrent with the pricing of the January 2005 Debt Offering, the Company settled four of its seven then existing 10-year forward starting interest rate swap agreements with an aggregate of approximately $100.0 million in notional amount for an aggregate cost of approximately $2.5 million.

On February 6, 2004, the Company completed a public offering of $150.0 million aggregate principal amount of unsecured, 7-year fixed rate notes with a coupon of 4.50% (the “2004 Debt Offering”).  These notes are due on February 1, 2011 and were priced at 99.409% of par value to yield 4.6%.  Net proceeds from the offering were used to repay a portion of the borrowings outstanding under the Company’s then existing revolving credit facility.  On January 30, 2004, concurrent with the pricing of the 2004 Debt Offering, the Company entered into reverse interest rate swaps that effectively converted the interest rate on $100.0 million of the notes from a fixed rate to a blended floating rate of 39 basis points over the six-month LIBOR rate.

As of December 31, 2005, future expected/scheduled maturities of outstanding long-term debt and capital lease obligations were as follows (in thousands):

2006	$	30,855
2007	279,553
2008	173,635
2009	163,424
2010	65,099
Thereafter	925,097
Total debt maturities	1,637,663
Net unamortized premiums on mortgages	13,871
Net unamortized discount on notes	(4,822		)
Fair value adjustment on pay-floating swap agreements	(1,831		)
Total debt obligations	$	1,644,881

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11.Other Liabilities

Other liabilities are comprised of the following (in thousands):

	December 31, 2005		December 31, 2004
Property and other taxes payable	$	29,442	$	30,685
Interest payable	19,324		15,596
Accrued professional and personnel costs	18,776		13,202
Accrued construction costs	10,673		10,356
Below market leases, net	10,575		—
Swap contracts	—		8,495
Accounts payable	6,532		6,901
Deferred rent expense and rents received in advance	5,221		4,870
Amounts due seller of property	3,846		2,541
Accrued acquisition / disposition costs	6,804		1,916
Accrued insurance	6,087		996
Other	10,089		9,711
Total	$	127,369	$	105,269

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12.Risk Management and Use of Financial Instruments

Risk Management

In the normal course of its on-going business operations, the Company encounters economic risk.  There are three main components of economic risk: interest rate risk, credit risk and market risk.  The Company is subject to interest rate risk on its interest-bearing liabilities.  Credit risk is the risk of default on the Company’s operations and tenants’ inability or unwillingness to make contractually required payments.  Market risk includes changes in the value of the properties held by the Company due to changes in interest rates or other market factors.

Use of Derivative Financial Instruments

The Company’s use of derivative instruments is primarily limited to the utilization of interest rate agreements or other instruments to manage interest rate risk exposures and not for speculative purposes.  The principal objective of such arrangements is to manage the risks and/or costs associated with the Company’s operating and financial structure, as well as to hedge specific transactions.  The counterparties to these arrangements are major financial institutions with which the Company and its affiliates may also have other financial relationships.  The Company is potentially exposed to credit loss in the event of non-performance by these counterparties.  However, because of their high credit ratings, the Company does not anticipate that any of the counterparties will fail to meet these obligations as they come due.  The Company does not use derivative instruments to hedge credit/market risk.

On January 30, 2004, concurrent with the pricing of the 2004 Debt Offering, the Company entered into three reverse arrears swap agreements, in notional amounts of $50.0 million, $35.0 million and $15.0 million, which effectively converted the interest rate on $100.0 million of the debt from a fixed rate to a blended floating rate of 39 basis points over the six-month LIBOR rate.  On May 19, 2004, the Company settled the $35.0 million reverse arrears swap agreement for an aggregate payment of approximately $1.5 million.  The effect of such payment was deferred and will be amortized into earnings as an increase in effective interest expense over the term of the fixed rate borrowing.  Concurrent with the settlement of the $35.0 million reverse arrears swap agreement, the blended floating interest rate on the remaining two swaps was adjusted downward to 30 basis points over the six-month LIBOR rate.  The remaining two swaps will terminate on February 1, 2011.

During 2004, the Company entered into seven 10-year forward starting interest rate swap agreements for an aggregate of approximately $200.0 million in notional amount.  These derivative instruments were expected to be used to hedge the risk of changes in interest cash outflows on anticipated fixed rate financings by effectively locking the 10-year LIBOR swap rate.  Concurrent with the pricing of the January 2005 Debt Offering, the Company settled four of the seven 10-year forward starting interest rate swap agreements with an aggregate of approximately $100.0 million in notional amount for an aggregate cost of approximately $2.5 million.  The effect of such payment was deferred and will be amortized into earnings as an increase in effective interest expense over the term of the fixed rate borrowing.  Concurrent with the pricing of the September 2005 Debt Offering, the Company settled the remaining three forward starting swaps with an aggregate of approximately $100.0 million in notional amount for an aggregate cost of approximately $7.6 million.  The effect of such payment was deferred and will be amortized into earnings as an increase in the effective interest expense over the term of the fixed rate borrowings.

On August 2, 2005, the Company entered into two forward starting interest rate swap agreements for an aggregate of approximately $148.2 million in notional amount.  These derivative instruments were expected to be used to hedge the risk of changes in interest cash outflows on anticipated fixed rate financings by effectively locking the three-month LIBOR swap rate.  Concurrent with the pricing of the September 2005 Debt Offering, the Company settled both forward starting swaps with an aggregate of approximately $148.2 million for an aggregate cost of approximately $1.9 million.  The effect of such payment was deferred and will be amortized into earnings as an increase in the effective interest expense over the term of the fixed rate borrowings.

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The following table summarizes the terms and fair values of the Company’s derivative financial instruments at December 31, 2005 (dollars in thousands).  The notional amounts at December 31, 2005 provide an indication of the extent of the Company’s involvement in these instruments at that time, but do not represent exposure to credit, interest rate or market risks.

Hedge Product	Hedge Type	Notional Amount		Strike		Maturity	Fair Value
Reverse Arrears Swap	Fair Value	$	50,000	4.380	%	02/01/11	$	(1,266	)
Reverse Arrears Swap	Fair Value	15,000		4.030	%	02/01/11	(565		)
							$	(1,831	)

As of December 31, 2005, the reverse arrears swap debt of approximately $1.8 million was reported as a component of the notes payable to which it was assigned.  As of December 31, 2005, there were approximately $10.2 million in deferred losses, net, represented in OCI, representing the unamortized portion of the settled swaps.

Over time, the unrealized gains and losses held in OCI (Note 17) will be reclassified to earnings in the same period(s) in which the hedged items are recognized in earnings.  Approximately $1.4 million of expense, net, is expected to be amortized over the next 12 months.  The current balance held in OCI is expected to be reclassified to earnings over the lives of the current hedging instruments, or for realized losses on forecasted debt transactions, over the related term of the debt obligation, as applicable.

Concentration of Credit Risk

A concentration of credit risk arises in the Company’s business when a national or regionally-based tenant occupies a substantial amount of space in multiple properties owned by the Company.  In that event, if the tenant suffers a significant downturn in its business, it may become unable to make its contractual rent payments to the Company, exposing the Company to a potential loss in rental revenue that is magnified as a result of the tenant renting space in multiple locations.  The Company regularly monitors its tenant base to assess potential concentrations of credit risk.  Management believes the current credit risk portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk.  No tenant exceeds 5% of the Company’s annual reported rental income.

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13.          Minority Interest in Consolidated Partnership and Joint Ventures

In 1995, ERP, a consolidated entity, was formed to own certain real estate properties.  A wholly owned subsidiary of the Company is the sole general partner of ERP and is entitled to receive 99% of all net income and gains before depreciation, if any, after the limited partners receive their preferred cash and gain allocations.  Properties have been contributed to ERP in exchange for limited partnership units (which may be redeemed at stipulated prices for cash or, at the Company’s option, shares of common stock of the Company at certain exchange rates), cash and the assumption of mortgage indebtedness.  On September 27, 2005, in conjunction with the payment of a special cash distribution to the Company’s common stockholders of $3.00 per common share (see Note 14), certain unitholders received a corresponding special cash distribution of $3.00 per unit, which special cash distributions aggregated approximately $4.4 million.  Unitholders who were not entitled to receive the special cash distribution received an adjustment to their exchange ratio, which adjustment accounts for the payment of the special cash distribution.  After such adjustments, exchange ratios currently range from 1.0 to 1.6.  ERP unit information is summarized as follows:

	Total Units		Company Units		Limited Partner Units
Outstanding at December 31, 2003	5,565,066		3,432,065		2,133,001
Issued	1,150,500		293,294		857,206	(1)
Redeemed	—		1,383,856	(2)	(1,383,856	) (2)
Outstanding at December 31, 2004	6,715,566		5,109,215		1,606,351
Issued	1,167,922	(3)	—		1,167,922	(3)
Redeemed	—		—		—
Outstanding at December 31, 2005	7,883,488		5,109,215		2,774,273

(1)Represents limited partnership units issued in connection with the Company’s acquisitions of (1) New Britain Village Square (487,949 limited partnership units) and (2) Marketplace (369,257 limited partnership units) (Note 3).

(2)Represents the redemption of limited partnership units for shares of common stock of the Company.

(3)Represents limited partnership units issued in connection with the Company’s acquisition of (1) Hillcrest Shopping Center (612,763 limited partnership units) and (2) a partial interest in two properties currently held in NP/I&G Institutional Retail Company, LLC, one of the Company’s joint ventures (555,159 limited partnership units).

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14.          Stockholders’ Equity

Earnings per Share (EPS) 

In accordance with the disclosure requirements of SFAS No. 128 (Note 2), a reconciliation of the numerator and denominator of basic and diluted EPS is provided as follows (in thousands, except per share amounts and amounts in the footnote below):

	Years Ended December 31,
	2005			2004			2003
Basic EPS
Numerator:
Income from continuing operations and gain on sale of real estate	$	281,532		$	126,174		$	119,625
Preferred dividends	(21,888		)	(21,470		)	(21,170		)
Premium on redemption of preferred stock	—			—			(630		)
Net income available to common shares from continuing operations - basic	259,644			104,704			97,825
Net income available to common shares from discontinued operations - basic	24,792			7,766			9,396
Net income available to common shares - basic	$	284,436		$	112,470		$	107,221
Denominator:
Weighted average of common shares outstanding	103,393			100,894			97,318
Earnings per share – continuing operations	$	2.51		$	1.03		$	1.00
Earnings per share – discontinued operations	0.24			0.08			0.10
Basic earnings per common share	$	2.75		$	1.11		$	1.10
Diluted EPS
Numerator:
Income from continuing operations	$	281,532		$	126,174		$	119,625
Preferred dividends	(21,888		)	(21,470		)	(21,170		)
Premium on redemption of preferred stock	—			—			(630		)
Minority interest in consolidated partnership	5,070			796			1,555
Net income available to common shares from continuing operations – diluted	264,714			105,500			99,380
Net income available to common shares from discontinued operations - diluted	24,792			7,766			9,396
Net income available to common shares - diluted	$	289,506		$	113,266		$	108,776
Denominator:
Weighted average of common shares outstanding - basic	103,393			100,894			97,318
Effect of diluted securities:
Excel Realty Partners, L.P. third party units	2,337			1,394			2,178
Common stock options	1,003			1,057			773
Convertible debt	35			—			—
Restricted stock	66			—			—
Weighted average of common shares outstanding – diluted	106,834			103,345			100,269
Earnings per share – continuing operations	$	2.48		$	1.02		$	0.99
Earnings per share – discontinued operations	0.23			0.08			0.09
Diluted earnings per common share	$	2.71		$	1.10		$	1.08

Note - For the years ended December 31, 2004 and 2003 there were approximately 0.6 million and 0.5 million stock options, respectively, that were anti-dilutive.

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Common Stock

To maintain its qualification as a REIT, not more than 50% in value of the outstanding shares of the Company may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any taxable year of the Company (defined to include certain entities), applying certain constructive ownership rules.  To help ensure that the Company will not fail this test, the Company’s Articles of Incorporation provide for, among other things, certain restrictions on the transfer of common stock to prevent further concentration of stock ownership.  Moreover, to evidence compliance with these requirements, the Company must maintain records that disclose the actual ownership of its outstanding common stock and will demand written statements each year from the holders of record of designated percentages of its common stock requesting the disclosure of the beneficial owners of such common stock.

In conjunction with the Galileo Transactions, the Company’s Board of Directors declared a special cash distribution of $3.00 per common share (the “Special Dividend”).  The distribution was paid on September 27, 2005 to common stockholders of record on August 25, 2005, and aggregated approximately $310.4 million.

On August 23, 2004, the Company sold 2,000,000 of its common shares in a public offering (the “Common Stock Offering”).  The net proceeds from the offering were approximately $50.0 million and were used to repay a portion of the borrowings outstanding under the Revolving Facility.

Common Stock Repurchases

In October 1999, the Company commenced a program to repurchase up to $75.0 million of the Company’s outstanding common stock from time to time through periodic open market transactions or through privately negotiated transactions.  Through December 31, 2005, approximately 2,150,000 shares have been repurchased and retired at an average purchase price of $15.30 per share.  No shares were repurchased in 2005, 2004 or 2003.

Preferred Stock

The Company has 8,000,000 Series E depositary shares outstanding, each representing a 1/10 fractional interest of a share of 7.625% Series E Cumulative Redeemable Preferred Stock (the “Preferred E Shares”).

The Company also has 1,500,000 Series D depositary shares outstanding, each representing a 1/10 fractional interest in a share of 7.8% Series D Cumulative Voting Step-Up Premium Rate Preferred Stock (the “Preferred D Shares”), which are redeemable at the option of the Company on or after June 15, 2007 at a liquidation preference of $500 per share.  The Preferred D Shares pay dividends quarterly at the rate of 7.8% of the liquidation preference per annum through September 2012 and at the rate of 9.8% of the liquidation preference per annum thereafter.  Beginning in the third quarter of 2004, in accordance with applicable accounting rules, and as a result of the “step-up” of the dividend to 9.8% of the liquidation preference beginning in 2012, the Company recorded quarterly non-cash increases to the current dividend payable.   For the year ended December 31, 2005, the Company recorded total, non-cash increases of approximately $0.8 million.  The Company expects to continue recognizing additional quarterly non-cash charges through 2012 with respect to the Preferred D Shares in amounts that are not expected to vary materially from the amounts recognized in 2005.

Stock Based Compensation

Stock Options

The Company currently has one active stock option plan pursuant to which stock options have been granted to purchase shares of common stock of the Company to officers, directors, and certain employees of the

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Company.  Previously, options remained outstanding under three terminated stock option plans, and under two option grants made to the Company’s Chief Executive Officer in February 2000.  These prior outstanding option grants are now incorporated under the active stock option plan.  The active plan is the 2003 Stock Incentive Plan, as amended and restated effective July 14, 2005 (the “2003 Plan”), which provides for the grant of stock options, stock grants and certain other types of stock based awards to officers, directors and certain employees of the Company.  The exercise price of stock options granted pursuant to the 2003 Plan is required to be no less than the fair market value of a share of common stock on the date of grant.  The vesting schedule and other terms of stock options granted under the 2003 Plan are determined at the time of grant by the Company’s executive compensation and stock option committee.  As of December 31, 2005, approximately 2.9 million shares were available for stock option grants and 0.8 million shares were available for stock grants or other types of stock based awards other than stock option grants (and to the extent that any such stock grants or other types of stock based awards are issued, then there is a share for share reduction in the number of shares available for stock option grants) under the 2003 Plan.  The stock options outstanding under the 2003 Plan, at December 31, 2005, had exercise prices from $11.35 to $23.85 and a weighted average remaining contractual life of approximately seven years.  The total amount of option shares exercisable under the 2003 Plan, at December 31, 2005, was approximately 1.8 million.

In order to counteract the dilutive effect on the options outstanding resulting from the payment of the Special Dividend, the Company amended its outstanding option grants to adjust both the number of options outstanding and the related exercise prices.  As a result of the amendment, the Company computed an incremental charge representing the change in fair value immediately before and after the modification of the options of approximately $1.1 million.  Approximately $0.7 million of this incremental charge related to options which were fully vested, and was expensed immediately.  The remainder of the incremental charge will be reflected in expense over the remaining service periods of the grants.

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The following tables summarize information concerning outstanding and exercisable options as of December 31, 2005, after giving effect to the amendment described above:

		OPTIONS OUTSTANDING				OPTIONS EXERCISABLE
Exercise Price		Options Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Currently Exercisable	Weighted Average Exercise Price
$	11.35	754,970	4.1 years	$	11.35	754,970	$	11.35
$	12.23	16,942	4.4 years	$	12.23	16,942	$	12.23
$	12.40	63,254	4.7 years	$	12.40	63,254	$	12.40
$	13.71	408,624	5.2 years	$	13.71	218,284	$	13.71
$	15.15	18,071	5.4 years	$	15.15	18,071	$	15.15
$	16.97	510,152	7.2 years	$	16.97	73,194	$	16.97
$	17.41	28,234	6.4 years	$	17.41	28,234	$	17.41
$	17.60	154,141	3.4 years	$	17.60	153,562	$	17.60
$	17.70	774,754	6.3 years	$	17.70	197,549	$	17.70
$	17.77	18,351	3.4 years	$	17.77	18,351	$	17.77
$	17.82	18,952	2.8 years	$	17.82	18,952	$	17.82
$	18.45	39,530	7.4 years	$	18.45	39,530	$	18.45
$	21.08	42,072	8.4 years	$	21.08	42,072	$	21.08
$	22.75	605,974	9.2 years	$	22.75	—	$	22.75
$	23.11	614,578	8.2 years	$	23.11	122,914	$	23.11
$	23.85	44,614	9.4 years	$	23.85	44,614	$	23.85
Total		4,113,213	6.7 years	$	17.59	1,810,493	$	14.69

Stock option activity is summarized as follows:

	Option Shares		Weighted Average Exercise Price Per Share
Outstanding at December 31, 2002	5,179,840		$	18.41
Granted	684,999		$	19.25
Exercised	(742,697	)	$	18.58
Forfeited	(817,544	)	$	19.46
Outstanding at December 31, 2003	4,304,598		$	18.33
Granted	669,750		$	25.97
Exercised	(951,822	)	$	20.98
Forfeited	(217,402	)	$	22.53
Outstanding at December 31, 2004	3,805,124		$	18.85
Granted	596,200		$	25.77
Adjustment to outstanding grants due to payment of Special Dividend	480,387		$	17.53
Exercised	(486,503	)	$	17.85
Forfeited	(281,995	)	$	21.68
Outstanding at December 31, 2005	4,113,213		$	17.59
Options exercisable at December 31, 2005	1,810,493		$	14.69
Options exercisable at December 31, 2004	1,163,867		$	16.82
Options exercisable at December 31, 2003	1,502,520		$	20.12

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In December 2002, FASB issued Statement 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FAS 123 (“SFAS No. 148”).  This statement provides alternative transition methods for a voluntary change to the fair value basis of accounting for stock-based employee compensation.  However, SFAS No. 148 does not permit the use of the original SFAS No. 123 prospective method of transition for changes to fair value based methods made in fiscal years beginning after December 15, 2003.  In addition, SFAS No. 148 requires prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation, a description of the transition method utilized and the effect of the method used on reported results.  The transition and annual disclosure provisions of SFAS No. 148 are to be applied for fiscal years ending after December 15, 2002.  The interim disclosure provisions of SFAS No. 148 are effective for the first interim period beginning after December 15, 2002.  Effective January 1, 2003, the Company adopted the prospective method provisions of SFAS No. 148, which apply the recognition provisions of FAS 123 to all employee stock awards granted, modified or settled after January 1, 2003.  The adoption of SFAS No. 148 did not have a material impact on the consolidated financial statements of the Company.

With respect to the Company’s stock options which were granted prior to 2003, the Company accounted for stock-based compensation using the intrinsic value method prescribed in Opinion 25 and related interpretations.  Under Opinion 25, compensation cost is measured as the excess, if any, of the quoted market price of the Company’s stock at the date of grant over the exercise price of the option granted.  Compensation cost for stock options, if any, is recognized ratably over the vesting period.  The Company’s policy is to grant options with an exercise price equal to the quoted closing market price of the Company’s stock on the business day preceding the grant date.  Accordingly, no compensation cost has been recognized for the years ending December 31, 2004 and 2003 under the Company’s stock option plans for the granting of stock options made prior to December 31, 2002.  Beginning in August 2005, and as a result of the amendments to the stock options discussed above, all previously stock-based compensation previously accounted for under Opinion 25 was revalued under the fair value methods of SFAS No. 123.  Accordingly, this compensation cost was recognized in months subsequent to August 2005.

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SFAS No. 148 disclosure requirements, including the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested stock awards in each period, are presented below (dollars in thousands, except per share amounts):

	Year Ended
	December 31,
	2005			2004			2003
Net income, as reported	$	306,324		$	133,940		$	129,021
Total stock based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(346		)	(1,240		)	(1,963		)
Pro forma net income	$	305,978		$	132,700		$	127,058
Earnings per share:
Basic – as reported	$	2.75		$	1.11		$	1.10
Basic – pro forma	$	2.75		$	1.10		$	1.08
Earnings per share:
Diluted – as reported	$	2.71		$	1.10		$	1.08
Diluted – pro forma	$	2.71		$	1.08		$	1.07

Stock Awards

During the year ended December 31, 2005, the Company granted 59,250 restricted shares of common stock to certain employees.  Of these shares, 29,760 will vest proportionately over five years, commencing on the first anniversary date of the initial grant.  The balance of the restricted shares vest proportionately over the same five year period upon satisfaction of annual performance criteria established each year by the Company’s executive compensation and stock option committee.

During the year ended December 31, 2004, the Company granted 60,150 restricted shares of common stock to certain employees.  Of these shares, 30,075 will vest proportionately over five years, commencing on the first anniversary date of the initial grant.  The balance of the restricted shares vest proportionately over the same five year period upon satisfaction of annual performance criteria established each year by the Company’s executive compensation and stock option committee.

For accounting purposes, the Company measures compensation costs for restricted shares as of the date of the grant and expenses such amounts against earnings, ratably over the respective vesting period.  Such amounts appear on the Company’s Consolidated Statements of Income and Comprehensive Income under “General and administrative.”

During the years ended December 31, 2005 and 2004, the Company also granted 7,047 and 5,310 shares of common stock, respectively, to members of its Board of Directors.  These shares vested immediately upon grant.  For accounting purposes, the Company measured compensation costs for these shares as of the date of grant and expensed such amounts against earnings on the grant date.  Such amounts appear on the Company’s Consolidated Statements of Income and Comprehensive Income under “General and administrative.”

On March 15, 2005, the Company entered into a new employment agreement with Glenn Rufrano, the Company’s Chief Executive Officer.  Pursuant to the terms of the employment agreement, Mr. Rufrano may receive an award of common stock in the event that over either a four or five year performance period either of two specified performance criteria are achieved.  The value of the common stock award will vary based on the level of performance achieved, but the maximum award of common stock that can be achieved is $6.0 million. 

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The compensation expense of approximately $2.2 million associated with this award will be recognized ratably over the service period.

Dividends Paid and Payable (in thousands):

Dividends declared in 2003, paid in 2003	$	136,316
Dividends declared in 2003, paid in 2004	45,696
Dividends declared in 2004, paid in 2004 (1)	140,729
Dividends declared in 2004, paid in 2005 (1)	47,699
Dividends declared in 2005, paid in 2005 (1) (2)	444,353
Dividends declared in 2005, payable in 2006 (1)	37,826

(1)Amount does not include the quarterly non-cash adjustments to account for the Preferred D dividend “step-up” discussed in the Preferred Stock section above.

(2)Amount includes the Special Dividend.

Distributions to shareholders will generally be taxable as ordinary income, although a portion of such dividends may be designated by the Company as capital gain or may constitute a tax-free return of capital.  The Company annually furnishes to each of its shareholders a statement setting forth the distributions paid during the preceding year and their characterization as ordinary income, capital gain or return of capital.  For the year ended December 31, 2005, approximately 27.2%, 71.9% and 0.9% of total distributions were characterized as ordinary income, capital gain and return of capital, respectively.

The Company intends to continue to declare quarterly distributions.  No assurance, however, can be provided as to the amounts or timing of future distributions, as the maintenance of such distributions is subject to various factors, including the discretion of the Company’s Board of Directors, limitation provisions of the Company’s debt instruments, the ability to pay dividends under Maryland law, the availability of cash to make the necessary dividend payments and the effect of REIT distribution requirements.

Dividend Reinvestment Plan

The Company has a Dividend Reinvestment and Share Purchase Plan whereby shareholders may invest cash distributions and make optional cash payments to purchase shares of the Company.  The additional shares currently are issued directly by the Company.

Deferred Compensation Plan

Effective July 1, 2004, the Company adopted a deferred compensation plan.  The purpose of the plan is to provide participants with the opportunity to defer receipt of a portion of their salary, bonus and other specified cash and equity-based compensation.  Eligibility for the plan is determined at the sole discretion of the Company’s Executive Compensation and Stock Option Committee.  The Company has established grantor trusts, also known as Rabbi Trusts, to act as vehicles for accumulating the assets needed to pay the promised benefit.  As of December 31, 2005, the assets under the plan, which are reflected in Prepaid expenses and deferred charges on the Company’s Consolidated Balance Sheets, and the corresponding liabilities under the plan, which are reflected in Other liabilities on the Company’s Consolidated Balance Sheets, were approximately $1.6 million.  Expenses for the years ended December 31, 2005 and 2004 were immaterial.

15.          Fair Value of Financial Instruments

The following fair value disclosure was determined by the Company, using available market information and discounted cash flow analyses as of December 31, 2005 and 2004, respectively.  The discount rate used in calculating fair value is the sum of the current risk free rate and the risk premium on the date of

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acquiring/assuming the instruments/obligations.  Considerable judgment is necessary to interpret market data and to develop the related estimates of fair value.  Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize upon disposition.  The use of different estimation methodologies may have a material effect on the estimated fair value amounts.  The Company believes that the carrying amounts reflected in the Consolidated Balance Sheets at December 31, 2005 and 2004 approximate the fair values for cash and cash equivalents, marketable securities, receivables and other liabilities.

The following are financial instruments for which Company estimates of fair value differ from carrying amounts (in thousands):

	December 31, 2005				December 31, 2004
	Carrying Amounts		Fair Value		Carrying Amounts		Fair Value
Mortgages and notes receivable	$	795	$	845	$	8,881	$	9,187
Mortgages payable	433,653		436,463		551,522		530,917
Notes payable	968,347		998,872		970,563		1,000,776
Credit Agreements	215,000		215,505		446,000		436,384

16.          Commitments and Contingencies

General

The Company is not presently involved in any material litigation arising outside the ordinary course of its business.  However, the Company is involved in routine litigation arising in the ordinary course of business, none of which is believed to be material in light of reserves taken by the Company.  In connection with a specific tenant litigation, and based upon certain rulings occurring during the third quarter of 2005, the Company has increased its previously taken reserve by an additional $2.5 million, for an aggregate reserve of approximately $4.8 million as of December 31, 2005.  Given the increase in the reserve taken by the Company, and the current status of the tenant litigation, the Company believes that any loss in excess of the established reserve would be immaterial.

Funding Commitments

In addition to the joint venture funding commitments described in Note 8 above, the Company also had the following contractual obligations as of December 31, 2005, none of which the Company believes will have a material adverse affect on the Company’s operations:

·      Letters of Credit.     The Company has arranged for the provision of six separate letters of credit in connection with certain property related matters.  If these letters of credit are drawn, the Company will be obligated to reimburse the providing bank for the amount of the draw.  As of December 31, 2005, there was no balance outstanding under any of the letters of credit.  If the letters of credit were fully drawn, the combined maximum amount of exposure would be approximately $4.6 million.

·      Non-Recourse Debt Guarantees.  Under certain Company and joint venture non-recourse mortgage loans, the Company could, under certain circumstances, be responsible for portions of the mortgage indebtedness in connection with certain customary non-recourse carve-out provisions such as environmental conditions, misuse of funds and material misrepresentations.  As of December 31, 2005, the Company had mortgage loans outstanding of approximately $419.8 million and unconsolidated joint ventures in which the Company has a direct or indirect interest had mortgage loans outstanding of approximately $1.7 billion.  In addition, from time to time, the Company will guarantee certain construction and other obligations relative to certain joint venture

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development projects.  The Company does not expect our obligations under such guarantees will be material. 

·      Leasing Commitments.  The Company has entered into leases, as lessee, in connection with ground leases for shopping centers which it operates, an office building which it sublets, and administrative space for the Company.  These leases are accounted for as operating leases.  The minimum annual rental commitments for these leases during the next five fiscal years and thereafter are approximately as follows (dollars in thousands):

Year
2006	$	2,647
2007	3,131
2008	2,798
2009	2,725
2010	2,671
Thereafter	38,929

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, the Company may be considered an owner or operator of real property or may have arranged for the disposal or treatment of hazardous or toxic substances and, therefore, may become liable for the costs of removal or remediation of certain hazardous substances released on or in their property or disposed of by them, as well as certain other potential costs which could relate to hazardous or toxic substances (including governmental fines and injuries to persons and property).  Such liability may be imposed whether or not the Company knew of, or was responsible for, the presence of these hazardous or toxic substances.  As is common with community and neighborhood shopping centers, many of the Company’s properties had or have on-site dry cleaners and/or on-site gasoline facilities.  These operations could potentially result in environmental contamination at the properties.

The Company is aware that soil and groundwater contamination exists at some of its properties. The primary contaminants of concern at these properties include perchloroethylene and trichloroethylene (associated with the operations of on-site dry cleaners) and petroleum hydrocarbons (associated with the operations of on-site gasoline facilities).  The Company is also aware that asbestos-containing materials exist at some of its properties.  While the Company does not expect the environmental conditions at its properties, considered as a whole, to have a material adverse effect on the Company, there can be no assurance that this will be the case.  Further, no assurance can be given that any environmental studies performed have identified or will identify all material environmental conditions, that any prior owner of the properties did not create a material environmental condition not known to the Company or that a material environmental condition does not otherwise exist with respect to any of the Company’s properties.

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17.          Comprehensive Income

Total comprehensive income was $303.3 million, $126.1 million and $132.4 million for the years ended December 31, 2005, 2004 and 2003, respectively.  The primary components of comprehensive income, other than net income, are the adoption and continued application of SFAS No. 133 to the Company’s cash flow hedges and the Company’s mark-to-market on its available-for-sale securities.

As of December 31, 2005 and 2004, accumulated other comprehensive loss reflected in the Company’s stockholders’ equity on the consolidated balance sheets was comprised of the following (in thousands):

	As of December 31,
	2005			2004
Realized/unrealized gains on available-for-sale securities	$	2,040		$	2,460
Unrealized gains on deferred compensation	39			—
Realized gains on interest risk hedges	1,751			1,973
Realized losses on interest risk hedges	(11,904		)	(969		)
Unrealized losses on interest risk hedges	—			(8,495		)
Accumulated other comprehensive loss	$	(8,074	)	$	(5,031	)

18.Future Minimum Annual Base Rents                            

Future minimum annual base rental revenue for the next five years for the commercial real estate owned at December 31, 2005 and subject to non-cancelable operating leases is as follows (in thousands):

Year
2006	$	415,276
2007	363,922
2008	310,799
2009	258,758
2010	209,843
Thereafter	916,987

The above table assumes that all leases which expire are not renewed and tenant renewal options are not exercised, therefore neither renewal rentals nor rentals from replacement tenants are included.  Future minimum annual base rentals do not include contingent rentals, which may be received under certain leases on the basis of percentage of reported tenants’ sales volume, increases in consumer price indices, common area maintenance charges and real estate tax reimbursements.  Contingent rentals for the years ended December 31, 2005, 2004 and 2003 amounted to approximately $109.7 million, $107.7 million and $110.3 million, respectively.

19.Retirement Plan

The Company has a Retirement and 401(k) Savings Plan (the “Savings Plan”) covering officers and employees of the Company.  Participants in the Savings Plan may elect to contribute a portion of their earnings to the Savings Plan and the Company makes a matching contribution to the Savings Plan to a maximum of 3% of the employee’s eligible compensation.  For the years ended December 31, 2005, 2004 and 2003, the Company’s expense for the Savings Plan was approximately $0.6 million, $0.5 million and $0.5 million, respectively.

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20.          Selected Quarterly Financial Data (Unaudited)

Summarized quarterly financial data is as follows (in thousands, except per share amounts):

	Total Revenues (1)		Net Income		Net Income Per Share-Basic		Net Income Per Share-Diluted
Year Ended December 31, 2005:
First quarter	$	127,356	$	38,687	$	0.32	$	0.32
Second quarter	130,407		40,697		0.34		0.33
Third quarter	114,767		196,045		1.84		1.82
Fourth quarter	111,888		30,895		0.24		0.24
Year Ended December 31, 2004:
First quarter	$	120,929	$	37,397	$	0.32	$	0.32
Second quarter	118,492		32,916		0.28		0.27
Third quarter	119,566		29,441		0.24		0.23
Fourth quarter	124,179		34,186		0.28		0.27
Year Ended December 31, 2003:
First quarter	$	115,661	$	35,189	$	0.31	$	0.31
Second quarter	115,405		32,528		0.27		0.27
Third quarter	113,544		31,711		0.27		0.27
Fourth quarter	114,748		29,593		0.25		0.24

(1) Amounts have been adjusted to give effect to the Company’s discontinued operations, in accordance with SFAS No. 144.

21.          Subsequent Events

On February 2, 2006, the Company formed a second strategic joint venture with JPMorgan Fleming Asset Management to acquire high-quality institutional grade community and neighborhood shopping centers on a nationwide basis. The joint venture, which is called NP/I&G Institutional Retail Company II, LLC, has a total equity commitment of $150.0 million based on a 20 percent / 80 percent contribution split between the Company and a fund advised by JPMorgan Fleming Asset Management, respectively.  Under the terms of this joint venture, the Company has agreed to contribute its pro rata share of any capital that might be required by the joint venture, up to a maximum of $30.0 million.  As the managing member, the Company will be responsible for initiating acquisitions, as well as providing property management and leasing services.

22.          Other Events

The Company is revising its historical financial statements in connection with the application of SFAS No. 144 to certain transactions.  During 2006, the Company sold certain properties and classified others as held for sale.  In compliance with SFAS No. 144, the Company has reported revenue, expenses and gain on sale from these properties as income from discontinued operations for each period presented in its quarterly report filed since the date of the sales (including the comparable period of the prior year).  The Company is reclassifying the reported revenue and expenses from these properties as income from discontinued operations in the Company’s previously issued annual financial statements for each of the three years presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

These reclassifications of discontinued operations have no effect on the Company’s reported net income available to common shareholders or funds from operations as reported in prior SEC filings.  Instead, they present the revenues and expenses relating to properties that have been sold or classified as held for sale as a single line item titled “discontinued operations,” rather than presenting the revenues and expenses along with the Company’s other results of operations.  In addition to the financial statements themselves, certain disclosures

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contained in Note 5, Note 14 and Note 20 have been modified to reflect the effects of these reclassifications.

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MANAGMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The following discussion should be read in conjunction with the Consolidated Financial Statements and the accompanying notes thereto.  Historical results and percentage relationships set forth in the Consolidated Statements of Income and Comprehensive Income contained in the Consolidated Financial Statements and accompanying notes, including trends which might appear, should not be taken as indicative of future operations.

On August 10, 2005, we completed the Galileo Transactions.  Due to our continued interest in the Galileo Properties through a retained 5% equity ownership interest in Galileo America, LLC, and our acquisition of certain property and asset management rights as part of the Galileo Transactions, the results of operations of these properties were not classified as discontinued operations for the years ended December 31, 2005, 2004 and 2003.  Accordingly, our results of operations for the years ended December 31, 2005, 2004 and 2003 include the results of operations of the Galileo Properties up to August 10, 2005.

During 2005, we acquired eight shopping centers (Brunswick Town Center, Hillcrest Shopping Center, West Ridge Shopping Center, Market Plaza, Surrey Square Mall, Fashion Place Shopping Center, Western Hills Plaza and Southland Shopping Center), a vacant building with 2.5 acres of land immediately adjacent to Midway Crossing, a shopping center owned by us, a vacant building immediately adjacent to Victory Square, a shopping center owned by us, six land parcels, the remaining 90% interest in Marketplace at Wycliffe, a shopping center in which we owned the other 10% interest, and the remaining 90% interest in Mableton Walk, a shopping center in which we owned the other 10% interest (collectively, the “2005 Acquisitions”).  During 2004, we acquired 11 shopping centers (New Britain Village Square, Elk Grove Town Center, Villa Monaco, Florence Square, Stockbridge Village, Starlite Plaza, Village Center, Annex of Arlington, Marketplace, Silver Pointe, and The Shoppes at Southside), 11 acres of unimproved land known as Unity Plaza, the remaining 50% interest in Clearwater Mall, a shopping center in which we owned the other 50% interest, and the remaining 50% interest in The Market at Preston Ridge, a shopping center in which we owned the other 50% interest (collectively, the “2004 Acquisitions”).  During 2003, we acquired a portfolio of seven grocery-anchored neighborhood shopping centers, three individual shopping centers (Panama City Square, Harpers Station and Dickson City Crossings) and the remaining 50% interest in Vail Ranch II that we did not already own (collectively, the “2003 Acquisitions”).    Accordingly, our results of operations for the years ended December 31, 2005, 2004 and 2003 include the results of operations of the 2005 Acquisitions, the 2004 Acquisitions and the 2003 Acquisitions.

In accordance with the provisions of FIN 46 our consolidated results of operations for the year ended December 31, 2004 include the results of operations of certain of our joint ventures, as applicable (collectively, “FIN 46 Adjustments”), which were previously accounted for under the equity method.

In accordance with the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the results of operations of properties that have been disposed of (by sale, by abandonment, or in a distribution to owners) or classified as held for sale must be classified as discontinued operations and segregated in our Consolidated Statements of Income and Comprehensive Income.  Therefore, results of operations from prior periods have been restated to reflect the current pool of disposed of or held for sale assets.

Results of Operations for the Twelve Months Ended December 31, 2005 and 2004

Revenues:

Total revenues increased $1.3 million, or 0.3%, from $483.2 million in 2004 to $484.5 million in 2005.  Significant changes are discussed below.

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Rental income decreased $9.3 million, or 2%, from $377.1 million in 2004 to $367.8 million in 2005.  The following factors accounted for this variance:

·2005 Acquisitions, which increased rental income by approximately $8.8 million

·2004 Acquisitions, which increased rental income by approximately $10.8 million

·Increases in occupancy and rental rates, which increased rental income by approximately $5.8 million

·Increased lease settlement income, which increased rental income by approximately $2.7 million

·The sale of the Galileo Properties, which decreased rental income by approximately $28.0 million

·Write-offs of straight-line rent balances related to certain tenant move-outs, primarily at our properties under redevelopment, which decreased rental income by approximately $2.4 million

·Decreased specialty rent, which decreased rental income by approximately $0.2 million

·Adjustments for properties previously consolidated under the provisions of FIN 46 that were sold during 2005 and therefore are no longer consolidated, which decreased rental income by approximately $1.3 million

·Increased capitalization with respect to our redevelopment projects, which decreased rental income by approximately $5.3 million

·Decreased cost of living adjustments, which accounted for the balance of the variance

Expense reimbursements increased $4.5 million, or 5%, from $95.3 million in 2004 to $99.8 million in 2005.  The following factors accounted for this variance:

·2005 Acquisitions, which increased expense reimbursements by approximately $1.7 million

·2004 Acquisitions, which increased expense reimbursements by approximately $4.9 million

·A net increase in the amount of reimbursable real estate taxes, which increased expense reimbursements by approximately $4.3 million

·The sale of the Galileo Properties, which decreased expense reimbursements by approximately $4.1 million

·A net decrease in the amount of reimbursable property operating expenses, which decreased expense reimbursements by approximately $1.4 million

·Increased capitalization with respect to our redevelopment projects, which decreased expense reimbursements by approximately $0.7 million

·Adjustments for properties previously consolidated under the provisions of FIN 46 that were sold during 2005 and therefore are no longer consolidated, which accounted for the balance of the variance

Fee income increased $6.2 million, or 129%, from $4.8 million in 2004 to $11.0 million in 2005.  Increases in the following fee revenues, derived from services provided to our joint ventures and other

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managed projects, accounted for this variance:

·Financing fee revenue, which increased fee income by approximately $0.1 million

·Property management fee revenue, which increased fee income by approximately $3.0 million

·Leasing fee revenue, which increased fee income by approximately $1.0 million

·Acquisition fee revenue, which increased fee income by approximately $1.3 million

·Asset management fee revenue, which increased fee income by approximately $0.8 million

Operating Expenses:

Total operating expenses increased $16.9 million, or 7%, from $256.3 million in 2004 to $273.2 million in 2005.  Significant changes are discussed below.

Operating costs decreased $3.9 million, or 5%, from $81.5 million in 2004 to $77.6 million in 2005. The following factors accounted for this variance:

·2005 Acquisitions, which increased operating costs by approximately $1.7 million

·2004 Acquisitions, which increased operating costs by approximately $1.7 million

·Increased payroll and payroll related expenses, attributable to increased personnel levels and increased management fees, as a result of the increased number of properties under management, which increased operating costs by approximately $1.8 million

·Combined increases in maintenance, repairs and utility expenses, which increased operating costs by approximately $1.5 million

·Increased legal fees for tenant related matters, which increased operating costs by approximately $0.3 million

·Increased snow removal costs, which increased operating costs by approximately $0.3 million

·The sale of the Galileo Properties, which decreased operating costs by approximately $5.9 million

·Adjustments for properties previously consolidated under the provisions of FIN 46 that were sold during 2005 and therefore are no longer consolidated, which decreased operating costs by approximately $0.3 million

·Decreased insurance expense attributable to lower premiums under our renewed insurance policy that went into effect in April 2005, which decreased operating costs by approximately $1.5 million

·Increased capitalization with respect to our redevelopment projects, which decreased operating costs by approximately $3.5 million

Real estate taxes increased $5.8 million, or 10%, from $60.0 million in 2004 to $65.8 million in 2005.  The following factors accounted for this variance:

·2005 Acquisitions, which increased real estate taxes by approximately $1.4 million

·2004 Acquisitions, which increased real estate taxes by approximately $4.1 million

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·Property tax rate increases at certain municipalities, combined with higher assessments at certain properties, which increased real estate taxes by approximately $4.5 million

·The sale of the Galileo Properties, which decreased real estate taxes by approximately $3.6 million

·Adjustments for properties previously consolidated under the provisions of FIN 46 that were sold during 2005 and therefore are no longer consolidated, which decreased real estate taxes by approximately $0.1 million

·Increased capitalization with respect to our redevelopment projects, which decreased real estate taxes by approximately $0.5 million

Depreciation and amortization increased $3.8 million, or 4%, from $88.3 million in 2004 to $92.1 million in 2005.   The following factors accounted for this variance:

·2005 Acquisitions, which increased depreciation and amortization by approximately $3.7 million

·2004 Acquisitions, which increased depreciation and amortization by approximately $4.4 million

·Increased depreciation expense attributable to increased tenant improvements, which increased depreciation and amortization by approximately $1.6 million

·Increased depreciation expense on properties previously under redevelopment or classified as held for sale, which increased depreciation and amortization by approximately $0.3 million

·Increased amortization expense attributable to increased deferred leasing commissions, which increased depreciation and amortization by approximately $0.3 million

·Increased amortization expense associated with amounts paid to acquire certain property and asset management rights in conjunction with the Galileo Transactions, which increased depreciation and amortization by approximately $0.6 million

·The sale of the Galileo Properties, which decreased depreciation and amortization by approximately $7.1 million

Provision for doubtful accounts increased $2.4 million, or 27%, from $8.9 million in 2004 to $11.3 million in 2005.  The following factors accounted for this variance:

·2005 Acquisitions, which in the aggregate increased provision for doubtful accounts by approximately $0.1 million

·2004 Acquisitions, which in the aggregate increased provision for doubtful accounts by approximately $0.3 million

·Reserves taken in connection with the sale of the Galileo Properties, which increased provision for doubtful accounts by approximately $2.8 million

·Increased reserves taken for properties under redevelopment, which reserves were capitalized and therefore decreased provision for doubtful accounts by approximately $0.5 million

·Increased recoveries of previously reserved amounts, primarily attributable to aggressive collection efforts, which decreased provision for doubtful accounts by approximately $0.3 million

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General and administrative expenses increased $8.7 million, or 49%, from $17.7 million in 2004 to $26.4 million in 2005.  The following factors accounted for this variance:

·Increased payroll related expenses, attributable to the following factors, which increased general and administrative expenses by approximately $5.0 million:

·Additional stock option expense of approximately $0.7 million attributable to, and recorded as a result of, the stock option revaluation resulting from the payment of the Special Dividend

·Additional stock option expense of approximately $1.0 million taken in accordance with the provisions of SFAS No. 123(R) for stock option grants awarded to certain of our employees and members of our Board of Directors during 2005

·Additional personnel expense of approximately $1.5 million recorded in conjunction with the Galileo Transactions

·Increased personnel levels and wage rates, which increased payroll related expenses by approximately $1.8 million

·Increased rental expense and other office costs associated with our new corporate office location, which lease began in December 2004 and increased general and administrative expenses by approximately $2.2 million

·Increased reserves taken in connection with specific tenant litigations, which increased general and administrative expenses by approximately $2.8 million

·Increased costs incurred from offshore accounting services, partially offset by decreased accounting fees, primarily attributable to lower costs incurred in connection with complying with regulations under Section 404 of the Sarbanes-Oxley Act of 2002 as compared to 2004, which increased general and administrative expenses by approximately $0.8 million

·Increased travel and promotion expenses, which increased general and administrative expenses by approximately $0.1 million

·Decreased state tax expense, attributable to the reversal of reserves previously taken, in light of a recent evaluation of our state and franchise tax exposure, which decreased general and administrative expenses by approximately $1.6 million

·Increased allocation of costs to the properties, primarily attributable to higher regional office costs, which decreased general and administrative expenses by approximately $0.6 million

Other Income and Expenses:

Interest, dividend and other income increased $0.7 million, or 20%, from $3.5 million in 2004 to $4.2 million in 2005.  The following factors accounted for this variance:

·Interest earned on cash balances, primarily on the balance maintained during the period between the closing of the Galileo Transactions on August 10, 2005 and the payment of the Special Dividend on September 27, 2005, which increased interest, dividend and other income by approximately $1.6 million

·FIN 46 Adjustments, which increased interest, dividend and other income by approximately $0.1 million

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·Compensation for an easement received in 2004, but not in 2005, which decreased interest, dividend and other income by approximately $0.1 million

·Decreased mortgage receivable balances, primarily attributable to the repayment of loans outstanding, which accounted for the balance of the variance

Equity in income of unconsolidated ventures increased $2.5 million, or 167%, from $1.5 million in 2004 to $4.0 million in 2005.  The following factors accounted for this variance:

·The Galileo Transactions, which increased equity in income of unconsolidated ventures by approximately $1.1 million

·Increased operating performance of NP/I&G Institutional Retail Company, LLC, primarily attributable to the acquisition of ten properties by the joint venture subsequent to January 1, 2004, which increased equity in income of unconsolidated ventures by approximately $0.7 million

·Improved operating performance of BPR Shopping Center, L.P., which increased income of unconsolidated ventures by approximately $0.5 million

·Improved operating performance of Arapahoe Crossings, L.P., which increased income of unconsolidated ventures by approximately $0.2 million

Interest expense increased $11.9 million, or 11%, from $106.1 million in 2004 to $118.0 million in 2005.  The following factors accounted for this variance:

·An increase in the average balance outstanding under the Revolving Facility, compounded by a higher interest rate on the Revolving Facility, which increased interest expense by approximately $1.3 million

·A higher interest rate on the Secured Term Loan, which increased interest expense by approximately $3.1 million

·The Unsecured Term Loan, which was entered into in the second quarter of 2005 and paid off with a portion of the proceeds from the Galileo Transactions in the third quarter of 2005, which increased interest expense by approximately $2.3 million

·Increased interest expense on our derivative financial instruments that convert fixed rate debt to variable rate debt, which increased interest expense by approximately $2.3 million

·Increased amortization of debt issuance costs, primarily attributable to the early repayment of public debt, which increased interest expense by approximately $0.9 million

·The payment of accrued interest and a “make-whole” premium in connection with our redemption of all $250.0 million of our outstanding 5.875% senior notes due June 15, 2007, which increased interest expense by approximately $7.1 million

·Prepayment penalties incurred in connection with the repayment of the secured mortgage indebtedness discussed below, which increased interest expense by approximately $11.2 million

·A net decrease in the amount of mortgage indebtedness outstanding, attributable to the repayment of approximately $100.6 million of secured mortgage indebtedness with a portion of the proceeds from the Galileo Transactions, as well as the repayment of other mortgage indebtedness upon maturity, partially offset by the assumption of mortgages in connection

49

with the 2005 Acquisitions and 2004 Acquisitions, which decreased interest expense by approximately $5.0 million

·The write-off of premiums associated with the repayment of the secured mortgage indebtedness discussed above, which decreased interest expense by approximately $3.0 million

·The repayment of $75.0 million of 6.875% medium-term notes with a portion of the proceeds from the Unsecured Term Loan, which decreased interest expense by approximately $5.8 million

·A decrease in the balance outstanding under our fixed rate REMIC, attributable to ongoing scheduled payments, which decreased interest expense by approximately $0.2 million

·Increased capitalized interest with respect to our redevelopment projects, due to increased interest rates and increased project spending, which decreased interest expense by approximately $2.1 million

·Decreased financing fees, which accounted for the balance of the variance

Minority interest in income of consolidated partnership and joint ventures increased $5.1 million, from $0.9 million for the year ended December 31, 2004 to $6.0 million for the year ended December 31, 2005.  This increase is primarily attributable to the allocation of a portion of the gain from the sale of the Galileo Properties in connection with the Galileo Transactions to the limited partners of Excel Realty Partners, L.P., a Delaware limited partnership (“ERP”).

Discontinued Operations:

For the year ended December 31, 2005, properties that had been either disposed of (by sale, abandonment, or in a distribution to owner) or classified as held for sale generated approximately $7.0 million and $17.8 million in results of operations and gain on sale, respectively.  For the year ended December 31, 2004, such properties generated approximately $9.0 million, $0.1 million and $1.1 million in results of operations, impairment expense and loss on sale, respectively.  Accordingly, these amounts have been classified as discontinued operations.

Gain on Sale of Real Estate:

Gain on sale of real estate was approximately $186.9 million for the year ended December 31, 2005.  This gain is directly attributable to the sale of the Galileo Properties in connection with the Galileo Transactions.  Gain on sale of real estate was approximately $1.2 million for the year ended December 31, 2004.  This amount represents our previously deferred gain incurred in connection with our sale of 70% of our interest in Arapahoe Crossings, L.P. in 2003.

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Results of Operations for the Twelve Months Ended December 31, 2004 and 2003

Revenues:

Total rental revenues increased $23.9 million, or 5%, from $459.3 million in 2003 to $483.2 million in 2004.  Significant changes are discussed below.

Rental income increased $24.7 million, or 7%, from $352.4 million in 2003 to $377.1 million in 2004.  The following factors accounted for this variance:

·2004 Acquisitions, which increased rental income by approximately $16.9 million

·2003 Acquisitions, which increased rental income by approximately $4.5 million

·FIN 46 Adjustments, which increased rental income by approximately $1.3 million

·Increases in occupancy and rental rates, which increased rental income by approximately $4.3 million

·Decreased cost of living adjustments, which decreased rental income by approximately $0.6 million

·Increased capitalization with respect to our redevelopment projects, which decreased rental income by approximately $1.6 million

·Decreased lease settlement income, which accounted for the balance of the variance

Expense reimbursements remained flat for the year ended December 31, 2004, as compared to the year ended December 31, 2003.    However, the following significant activity occurred, which eliminated any variance between the two periods:

·2004 Acquisitions, which increased expense reimbursements by approximately $3.7 million

·2003 Acquisitions, which increased expense reimbursements by approximately $0.9 million

·FIN 46 Adjustments, which increased expense reimbursements by approximately $0.2 million

·Increased capitalization with respect to our redevelopment projects, which decreased expense reimbursements by approximately $0.2 million

·A net decrease in the amount of reimbursable real estate taxes, which decreased expense reimbursements by approximately $1.5 million

·A net decrease in the amount of reimbursable property operating expenses, which decreased expense reimbursements by approximately $3.1 million

Fee income decreased $0.5 million, or 9%, from $5.3 million in 2003 to $4.8 million in 2004.  The following factors account for this variance:

·Variances in the following fee revenues, derived from services provided to our joint ventures and other managed projects, which, in the aggregate,  increased fee income by approximately $0.9 million:

·Financing fee revenue, which increased by approximately $0.1 million

·Property management fee revenue, which increased by approximately $0.8 million

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·Development fee revenue, which increased by approximately $0.1 million

·Leasing fee revenue, which decreased by approximately $0.1 million

·The payoff of a letter of credit on which we were earning fee income, which decreased fee income by approximately $1.4 million

Operating Expenses:

Total operating expenses increased $15.1 million, or 6%, from $241.2 million in 2003 to $256.3 million in 2004.  Significant changes are discussed below.

Operating costs decreased $2.6 million, or 3%, from $84.1 million in 2003 to $81.5 million in 2004. The following factors accounted for this variance:

·FIN 46 Adjustments, which increased operating costs by approximately $0.3 million

·2004 Acquisitions, which increased operating costs by approximately $2.6 million

·2003 Acquisitions, which increased operating costs by approximately $0.7 million

·Increased payroll and payroll related expenses, attributable to increased personnel levels and increased management fees, which increased operating costs by approximately $0.1 million

·Combined increases in maintenance, repairs and utility expenses, which increased operating costs by approximately $0.5 million

·Decreased insurance expense attributable to lower premiums under our renewed insurance policy that went into effect in April 2004, which decreased operating costs by approximately $3.9 million

·Decreased snow removal costs attributable to unusually harsh winter conditions during 2003, which decreased operating costs by approximately $1.0 million

·Decreased professional fees, which decreased operating costs by approximately $0.5 million

·Increased capitalization with respect to our redevelopment projects, which decreased operating costs by approximately $1.4 million

Real estate taxes increased $3.1 million, or 5%, from $56.9 million in 2003 to $60.0 million in 2004.  The following factors accounted for this variance:

·FIN 46 Adjustments, which increased real estate taxes by approximately $0.1 million

·2004 Acquisitions, which increased real estate taxes by approximately $2.6 million

·2003 Acquisitions, which increased real estate taxes by approximately $0.6 million

·Property tax rate decreases at certain municipalities, combined with lower assessments at certain properties, which accounted for the balance of the variance

Depreciation and amortization increased $13.2 million, or 18%, from $75.1 million in 2003 to $88.3 million in 2004.   The following factors accounted for this variance:

·2004 Acquisitions, which increased depreciation and amortization by approximately $6.2 million

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·2003 Acquisitions, which increased depreciation and amortization by approximately $1.4 million

·Increased amortization expense attributable to increased deferred lease acquisition expenses, which increased depreciation and amortization by approximately $1.9 million

·Increased depreciation expense on properties previously under redevelopment, combined with increased depreciation expense attributable to increased tenant improvements made in 2004, which increased depreciation and amortization by approximately $3.7 million

Provision for doubtful accounts increased $2.0 million, or 29%, from $6.9 million in 2003 to $8.9 million in 2004.  The following factors accounted for this variance:

·2004 Acquisitions, which increased provision for doubtful accounts by approximately $0.1 million

·Increased reserves taken in anticipation of the redevelopment of certain assets and a more conservative approach to overall reserves, partially offset by lower write-offs, which increased provision for doubtful accounts by approximately $1.9 million

General and administrative expenses decreased $0.5 million, or 3%, from $18.2 million in 2003 to $17.7 million in 2004.  The following factors accounted for this variance:

·Increased payroll related expenses attributable to increased personnel, which increased general and administrative expenses by approximately $1.4 million

·Increased professional fees, primarily attributable to costs incurred in connection with complying with regulations under the Sarbanes-Oxley Act of 2002, which increased general and administrative expenses by approximately $0.9 million

·Combined increases in utilities, travel and promotion expenses, which increased general and administrative expenses by approximately $0.5 million

·Decreased legal expenses, resulting primarily from reserves taken for a specific tenant litigation in 2003, which decreased general and administrative expenses by approximately $2.5 million

·Increased cost allocations, which accounted for the balance of the variance

Other Income and Expenses:

Interest, dividend and other income decreased $0.6 million, or 15%, from $4.1 million in 2003 to $3.5 million in 2004.  The following factors accounted for this variance:

·2004 Acquisitions, which increased interest, dividend and other income by approximately $0.4 million

·FIN 46 Adjustments, which decreased interest, dividend and other income by approximately $0.1 million

·The payoff of certain notes receivable, which decreased interest, dividend and other income by approximately $0.5 million

·The payoff of certain employee loans receivable, which decreased interest, dividend and other income by approximately $0.2 million

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·Lower rates of return on certain investments, which accounted for the balance of the variance

Equity in income of unconsolidated ventures decreased $1.9 million, or 56%, from $3.4 million in 2003 to $1.5 million in 2004.  The following factors accounted for this variance:

·FIN 46 Adjustments, which decreased equity in income of unconsolidated ventures  by approximately $0.9 million

·Increased operating performance by the NP/I&G Institutional Retail Company, LLC, primarily attributable to the acquisition of five new properties in 2004, which increased equity in income of unconsolidated ventures by approximately $1.1 million

·A full year of operating performance of Arapahoe Crossings, L.P. , which began operations on September 31, 2003, which increased equity in income of unconsolidated ventures by approximately $0.5 million

·A $0.6 million gain on the sale of Flamingo Falls, a property owned by CA New Plan Venture Fund, LLC, which was recorded in the second quarter of 2003

·A $0.2 million loss on the sale of Fruitland Plaza, a property owned by Benbrooke Ventures, which was recorded in the first quarter of 2004

·Decreased operating performance by the Preston Ridge joint venture, which accounted for the balance of the variance

Interest expense increased $5.1 million, or 5%, from $101.0 million in 2003 to $106.1 million in 2004.  The following factors accounted for this variance:

·A net increase in the amount of public debt outstanding, primarily attributable to the 2004 Debt Offering, our public offering of $100.0 million aggregate principal amount of 3.75% convertible senior notes on May 19, 2003 (‘the Convertible Debt Offering”), and our public offering of $50.0 million of 5.50% medium-term notes on November 20, 2003, partially offset by the repayment of $75.0 million of our 6.875% medium-term notes and $49.0 million of our 7.33% medium-term notes and lower relative rates on our new debt issuances, which increased interest expense by approximately $7.4 million

·Financing fees incurred in connection with the Convertible Debt Offering and the 2004 Debt Offering, which increased interest expense by approximately $0.2 million

·Increased amortization of debt issuance costs, primarily attributable to the write-off of costs associated with our previously existing revolving credit facility and secured term loan, which increased interest expense by approximately $1.1 million

·An increase in the balance outstanding under the Revolving Facility, partially offset by a lower interest rate on the Revolving Facility, which increased interest expense by approximately $0.5 million

·The refinancing of our previously existing senior unsecured term loan at a lower interest rate, which decreased interest expense by approximately $0.3 million

·The repayment of the variable rate REMIC debt, which decreased interest expense by approximately $0.6 million

·Increased capitalization with respect to our redevelopment projects, which decreased interest expense by approximately $2.2 million

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·Swap proceeds received, which decreased interest expense by approximately $1.0 million

Discontinued Operations:

For the year ended December 31, 2004, properties that had been disposed of (either by sale, abandonment, or in a distribution to owner) or classified as held for sale generated approximately $9.0 million, $0.1 million and $1.1 million in results of operations, impairment expense and loss on sale, respectively.  For the year ended December 31, 2003, such properties generated approximately $12.3 million, $7.0 million and $4.0 million in results of operations, impairment expense and gain on sale, respectively.  Accordingly, these amounts have been classified as discontinued operations.

Gain on Sale of Real Estate:

Gain on sale of real estate was approximately $1.2 million for the year ended December 31, 2004.  This amount represents our previously deferred gain incurred in connection with our sale of 70% of our interest in Arapahoe Crossings, L.P. in 2003.

Funds from Operations

Funds from Operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance.  We calculate FFO in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (the “White Paper”).  The White Paper defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

On October 1, 2003, the National Association of Real Estate Investment Trusts (“NAREIT”), based on discussions with the SEC, provided revised guidance regarding the calculation of FFO.  This revised guidance provides that impairments should not be added back to net income in calculating FFO and that original issuance costs associated with preferred stock that has been redeemed should be factored into the calculation of FFO.  Prior to this pronouncement, we had added back impairments in calculating FFO, in accordance with prior NAREIT guidance, and had not factored in original issuance costs of preferred stock that had been redeemed in the calculation of FFO.  We have revised our calculation of FFO in accordance with NAREIT’s revised guidance in the table set forth below.  Prior year amounts reflect the revised guidance.

Given the nature of our business as a real estate owner and operator, we believe that FFO is helpful to investors as a starting point in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance such as gains (or losses) from sales of property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult to compare.  However, it should be noted that there are certain items, such as impairments, that are included within the definition of FFO that do not relate to and are not indicative of our operating performance.  Furthermore, FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our financial performance, is not an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, and is not indicative of funds available to fund our cash needs, including our ability to make distributions.  In addition, our computation of FFO may differ from the methodology utilized by other equity REITs to calculate FFO and, therefore, may not be comparable to such other REITs.

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The following information is provided to reconcile net income, the most comparable GAAP number, to FFO, and to show the items included in our FFO for the past periods indicated (in thousands, except footnotes):

	Year Ended December 31,
	2005			2004			2003
Net income available to common stockholders - diluted	$	289,506		$	113,266		$	108,776
Deduct:
Minority interest in income of consolidated partnership, excluding gain allocation	(714		)	(796		)	(1,555		)
Net income available to common stockholders – basic	288,792			112,470			107,221
Add:
Depreciation and amortization
Continuing operations real estate assets	90,564			86,605			73,539
Discontinued operations real estate assets	3,012			3,973			4,574
Pro rata share of joint venture real estate assets	3,732			1,629			1,016
Deduct:
Gain on sale of real estate (1)	(186,908		)	(1,217		)	—
(Gain) loss on sale of discontinued operations (1)	(11,818		)	5,622			(1,534		)
Pro rata share of joint venture (gain) loss on sale of real estate (1)	(406		)	433			(643		)
Funds from operations – basic	186,968			209,515			184,173
Add:
Minority interest in income of consolidated partnership, excluding gain allocation	714			796			1,555
Funds from operations – diluted	$	187,682		$	210,311		$	185,728	(2)
Net cash provided by operating activities	$	222,366		$	220,726		$	197,752
Net cash provided by (used in) investing activities	636,105			(253,065		)	(123,029		)
Net cash (used in) provided by financing activities	(856,561		)	34,303			(77,923		)

(1)Excludes gain/loss on sale of land.

(2)As noted above, the calculation of FFO has been revised in accordance with revised NAREIT guidance.  FFO for the year ended December 31, 2003 includes a deduction in FFO of approximately $10.5 million relating to impairments (which amounts previously were added back in the calculation of FFO, thereby increasing previously disclosed FFO by such amounts from that set forth above).  FFO for the year ended December 31, 2003 also includes a deduction of approximately $0.6 million relating to the premium on our redemption of preferred stock in May 2003 (which amount previously was not factored in the calculation of FFO, thereby increasing previously disclosed FFO by such amount from that set forth above).

Liquidity and Capital Resources

As of December 31, 2005, we had approximately $12.2 million in available cash, cash equivalents and marketable securities.  As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders on an annual basis.  Therefore, as a general matter, it is unlikely that we will have any substantial cash balances that could be used to meet our liquidity needs.  Instead, these needs must be met from cash generated from operations and external sources of capital.

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As of December 31, 2005, approximately $285.0 million was available for draw under the Revolving Facility.  As of February 28, 2006, taking into account draws under the Revolving Facility subsequent to December 31, 2005, the amount available for draw under the Revolving Facility was approximately $270.0 million.

Galileo Transactions

As previously discussed, the closing of the Galileo Transactions occurred on August 10, 2005.  Net cash proceeds from the Galileo Transactions, after the repayment of secured debt and transaction costs were approximately $780.1 million.  A portion of these proceeds was used to repay certain outstanding unsecured indebtedness, including (i) the entire $200.0 million balance outstanding under the Unsecured Term Loan and (ii) the balance then outstanding under the Revolving Facility.  Approximately $314.8 million of the remaining cash proceeds were paid out to our stockholders in the form of the Special Dividend, which totaled approximately $310.4 million, and to certain limited partners of ERP in the form of a corresponding special cash distribution of $3.00 per unit, which totaled approximately $4.4 million.

The repayment of outstanding indebtedness significantly improved our financial flexibility.  We believe that we will be able to incur additional indebtedness in the future, which will in turn enable us to fund future growth opportunities.  Over the longer term, net proceeds from the Galileo Transactions will be further reinvested in a combination of redevelopments of existing assets, new developments and new acquisition opportunities, as well as the potential repurchase of our outstanding common stock.  In addition, the asset management fee stream and property management rights acquired in the Galileo Transactions will provide a steady stream of cash which may serve as another source of funds to satisfy our short-term and long-term liquidity needs.

Short-Term Liquidity Needs

Our short-term liquidity requirements consist primarily of funds necessary to pay for operating and other expenses directly associated with our portfolio of properties (including regular maintenance items), interest expense and scheduled principal payments on our outstanding debt, capital expenditures incurred to facilitate the leasing of space (e.g., tenant improvements and leasing commissions), capital expenditures incurred in our development and redevelopment projects, and quarterly dividends and distributions that we pay to our common and preferred stockholders and holders of partnership units in ERP.  We believe that cash generated from operations and borrowings under the Revolving Facility will be sufficient to meet our short-term liquidity requirements; however, there are certain factors that may have a material adverse effect on our cash flow from operations.

We derive substantially all of our revenue from tenants under existing leases at our properties. Therefore, our operating cash flow is dependent on the rents that we are able to charge to our tenants, and the ability of these tenants to make their rental payments.  We believe that the nature of the properties in which we typically invest – primarily community and neighborhood shopping centers – provides a more stable revenue flow in uncertain economic times because, even in difficult economic times, consumers still need to purchase basic living essentials such as food and soft goods.  However, general economic downturns, or economic downturns in one or more markets in which we own properties, still may adversely impact the ability of our tenants to make rental payments and our ability to re-lease space on favorable terms as leases expire.  In either of these instances, our cash flow would be adversely affected.

On February 21, 2005, Winn-Dixie Stores filed for bankruptcy protection under Chapter 11 of the federal bankruptcy laws.  As a result of certain lease assignments, rejections and failures to renew, we currently have 10 Winn-Dixie leases (one of which is currently sub-leased) in our portfolio, including five leases at properties held in joint ventures in which we have either a 5% or 10% equity interest.  The 10 non-rejected lease locations are all currently physically occupied and aggregate (including our pro rata share of the joint venture properties) approximately 0.3 million square feet of GLA and represent approximately $1.7 million of ABR, or approximately $6.09 per square foot.  This represents approximately 0.5% of our total ABR.  The five non-

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rejected lease locations within our wholly-owned portfolio aggregate approximately 0.3 million square feet of GLA and represent approximately $1.6 million of ABR, or approximately $6.07 per square foot.  If Winn-Dixie Stores terminates any of these leases, or if they receive substantial rent reductions or deferrals, such events will impact our rental revenues, but we do not believe this impact will be material.  We do not believe that there are any other pending tenant bankruptcies that are likely to materially affect our rental revenues.

We may acquire large portfolios of community and neighborhood shopping centers, either through direct acquisitions or business combinations.  While we believe that the cash generated by any newly-acquired properties will more than offset the operating and interest expenses associated with those properties, it is possible that the properties may not perform as well as expected and as a result, our cash needs may increase.  In addition, there may be other costs incurred as a result of the acquisition of properties, including increased general and administrative costs while we integrate the properties into our operating system.

In some cases, we have invested as a co-venturer or partner in the development or redevelopment of new properties, instead of developing projects directly.  Pursuant to the terms of our joint venture agreements, including one agreement entered into subsequent to December 31, 2005, we have agreed to contribute up to an aggregate of $37.8 million as our pro rata share of capital for property acquisitions and redevelopment costs.  In addition to this amount, we have also agreed to contribute our pro rata share of any additional capital that may be required by our joint ventures, which pro rata share is not expected to be material.  We expect to fund these capital requirements either out of excess cash from operations, or through draws on the Revolving Facility.

During 2005, we completed ­24 redevelopment projects in our consolidated portfolio, the aggregate cost of which, including costs incurred in prior years on these projects, was approximately $75.4 million.  Our current redevelopment pipeline in our consolidated portfolio is comprised of 32 projects, the aggregate cost of which, including costs incurred in prior years on these projects, is expected to be approximately $184.2 million.  In addition, during 2005, we completed ­two outparcel development projects in our consolidated portfolio, the aggregate cost of which, including costs incurred in prior years on these projects, was approximately $2.5 million.  Our current outparcel development pipeline in our consolidated portfolio is comprised of six projects, the aggregate cost of which, including costs incurred in prior years on these projects, is expected to be approximately $11.2 million.  We intend on financing these redevelopment and outparcel development projects through cash from operations or draws on the Revolving Facility.

We also redevelop properties in our joint venture portfolios and during 2005, we completed­ six redevelopment projects, the aggregate cost of which, including costs incurred in prior years on these projects, was approximately $14.2 million.  Our current redevelopment pipeline for such projects is comprised of six projects, the aggregate cost of which, including costs incurred in prior years, is expected to be approximately $81.3 million.  In addition, we also develop outparcels at properties in our joint venture portfolios and our current pipeline for such projects is comprised of two projects, the aggregate cost of which, including costs incurred in prior years on these projects, is expected to be approximately $7.1 million. We intend on financing our redevelopment and outparcel development projects in our joint venture portfolios with a variety of financing vehicles as determined from time to time by the joint venture.

We regularly incur significant expenditures in connection with the re-leasing of our retail space, principally in the form of tenant improvements and leasing commissions.  The amounts of these expenditures can vary significantly, depending on negotiations with tenants and the willingness of tenants to pay higher base rents over the lives of the leases.  We expect to pay for these capital expenditures out of excess cash from operations or, to the extent necessary, through draws on the Revolving Facility.  We believe that a significant portion of these expenditures is recouped in the form of continuing lease payments.

We have established a stock repurchase program under which we may repurchase up to $75.0 million of our outstanding common stock through periodic open market transactions or through privately negotiated transactions.  We did not repurchase any shares of common stock under this program in 2005, 2004 or 2003.  However, we may effect stock repurchases in the future, depending on market conditions.

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We have also established a repurchase program under which we may repurchase up to $125.0 million of our outstanding preferred stock and public debt through periodic open market transactions or through privately negotiated transactions.  As of December 31, 2005, no repurchases had been made under this program.

On September 27, 2005, we used a portion of the proceeds generated from the Galileo Transactions to pay the Special Dividend, as well as to pay a corresponding special cash distribution of $3.00 per unit to certain limited partners of ERP.  Total special cash distributions to stockholders and unitholders aggregated approximately $314.8 million.  In connection with the payment of the Special Dividend, we reduced our quarterly dividend from $0.4125 per share of common stock (or $1.65 per share on an annualized basis) to $0.3125 per share of common stock (or $1.25 per share on an annualized basis), beginning with the dividend payable with respect to the third quarter of 2005, which dividend was paid on October 17, 2005.  The reduction in the quarterly dividend on our common stock will reduce our quarterly cash distribution requirements by approximately $10.3 million.  We also pay regular quarterly dividends on our preferred stock.  The maintenance of these dividends is subject to various factors, including the discretion of our Board of Directors, our ability to pay dividends under Maryland law, the availability of cash to make the necessary dividend payments and the effect of REIT distribution requirements, which require at least 90% of our taxable income be distributed to stockholders.   We also make regular quarterly distributions on ERP units.  In connection with the payment of the special cash distribution to certain limited partners of ERP, we reduced our regular quarterly distributions to these limited partners from $0.4125 per unit (or $1.65 per unit on an annualized basis) to $0.3125 per unit (or $1.25 per unit on an annualized basis), beginning with the distribution payable with respect to the third quarter of 2005, which distribution was paid on October 17, 2005.  The reduction in the quarterly distribution to these limited partners of ERP will reduce our quarterly cash distribution requirements by approximately $0.6 million.

In addition, under the Revolving Facility and the Secured Term Loan, we are restricted from paying common stock dividends that would exceed 95% of our Funds From Operations (as defined in the applicable debt agreement) during any four-quarter period.

Long-Term Liquidity Needs

Our long-term liquidity requirements consist primarily of funds necessary to pay for the principal amount of our long-term debt as it matures, significant non-recurring capital expenditures that need to be made periodically at our properties, redevelopment or development projects that we undertake at our properties and the costs associated with acquisitions of properties that we pursue.  Historically, we have satisfied these requirements principally through the most advantageous source of capital at the time, which has included the incurrence of new debt through borrowings (through public offerings of unsecured debt and private incurrence of secured and unsecured debt), sales of common and preferred stock, capital raised through the disposition of assets, repayment by third parties of notes receivable and joint venture capital transactions.  We believe that these sources of capital will continue to be available in the future to fund our long-term capital needs; however, there are certain factors that may have a material adverse effect on our ability to access these capital sources.

Our ability to incur additional debt is dependent upon a number of factors, including our degree of leverage, the value of our unencumbered assets, our credit rating and borrowing restrictions imposed by existing lenders.  Currently, we have investment grade credit ratings for prospective unsecured debt offerings from three major rating agencies – Standard & Poor’s (BBB), Moody’s Investor Service (Baa2) and Fitch Ratings (BBB+).  A downgrade in outlook or rating by a rating agency can occur at any time if the agency perceives an adverse change in our financial condition, results of operations or ability to service debt.  If such a downgrade occurs, it would increase the interest rate currently payable under our existing credit facilities, it likely would increase the costs associated with obtaining future financing, and it potentially could adversely affect our ability to obtain future financing.

Based on an internal evaluation, the estimated value of our properties is above the outstanding amount of mortgage debt encumbering the properties.  Therefore, at this time, we believe that additional financing could be obtained, either in the form of mortgage debt or additional unsecured borrowings, and without violating the financial covenants contained in our existing debt agreements.

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Our ability to raise funds through sales of common stock and preferred stock is dependent on, among other things, general market conditions for REITs, market perceptions about our company and the current trading price of our stock.  We will continue to analyze which source of capital is most advantageous to us at any particular point in time, but the equity markets may not be consistently available on attractive terms.

We have selectively effected asset sales to generate cash proceeds over the last two years.  During 2005, we generated approximately $1.1 billion in gross proceeds through the sale of the Galileo Properties as part of the Galileo Transactions, as well as the culling of non-core and non-strategic properties and approximately $17.1 million from the disposition of certain properties and land parcels held through joint ventures.  During 2004, we generated an aggregate of approximately $57.9 million in gross proceeds, including approximately $8.5 million represented by a purchase money note issued in connection with the sale of Factory Merchants Barstow (which note was repaid in full in the first quarter of 2005), through the culling of non-core and non-strategic properties and the transfer of one property to a joint venture.  In addition, we generated approximately $4.3 million in gross proceeds from the disposition of certain properties held through joint ventures.   Our ability to generate cash from asset sales is limited by market conditions and certain rules applicable to REITs.  Our ability to sell properties in the future in order to raise cash will necessarily be limited if market conditions make such sales unattractive.

The following table summarizes all of our known contractual cash obligations, excluding interest, to pay third parties as of December 31, 2005 (based on a calendar year, dollars in thousands):

Contractual Cash Obligations	Total		Less than  1 year		1- 3 years		3 - 5 years		More than 5 years
Long-Term Debt (1)	$	1,609,782	$	30,474	$	452,336	$	227,534	$	899,438
Capital Lease Obligations	27,881		381		852		989		25,659
Operating Leases	52,901		2,647		5,929		5,396		38,929
Total	$	1,690,564	$	33,502	$	459,117	$	233,919	$	964,026

(1)Long-term debt includes scheduled amortization and scheduled maturities for mortgage loans, notes payable and credit facilities.

We intend to repay our 2006 contractual cash obligations, which include approximately $18.7 million of maturing mortgages and scheduled amortization, either through draws under the Revolving Facility, with proceeds generated through the sale of assets, or a combination thereof.

The following table summarizes certain terms of our existing credit agreements as of December 31, 2005 (dollars in thousands):

Loan	Amount Available to be Drawn		Amount Drawn as of December 31, 2005		Current Interest Rate (1)	Maturity Date
Revolving Facility	$	350,000	$	65,000	LIBOR plus 65 bp (2)	June 29, 2007
Secured Term Loan	150,000		150,000		LIBOR plus 85 bp	June 29, 2007
Total	$	500,000	$	215,000

(1)           We incur interest using a 30-day LIBOR rate, which was 4.31% at December 31, 2005.

(2)           We also incur an annual facility fee of 20 basis points on this facility.

The Revolving Facility and the Secured Term Loan (collectively, the “Credit Agreements”) require that we maintain certain financial coverage ratios and other debt covenants.  On July 19, 2005, we entered into amendments to the financial coverage ratios and other debt covenants as they pertain to the Credit Agreements.

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The amendments to each of the Credit Agreements were substantially identical.

As part of the amendments:

·The covenants in the Credit Agreements relating to asset sales by us were amended to permit us to sell or otherwise transfer assets so long as the transfers do not exceed (i) with respect to 2005, 30% of the total book value of all of our property determined as of December 31, 2004, and (ii) with respect to each year thereafter, 25% of the total book value of all of our property determined as of last day of the preceding year;

·The covenants in the Credit Agreements relating to permitted dividends by us were amended to specifically provide that the Special Dividend distributed to our stockholders following the Galileo Transactions be permitted under the terms of the Credit Agreements;

·The covenants in the Credit Agreements relating to our minimum tangible net worth were amended to provide that our minimum net worth requirement be reduced from $1.278 billion to $1.225 billion (plus 80% of the net proceeds received by us from future issuances of capital stock);

·The covenants in the Credit Agreements that set forth the maximum ratio of our total unsecured debt to unencumbered asset value were amended to increase the ratio from 55% to 57.5%; and

·The capitalization rates used to calculate the value of our assets for purposes of certain ratio tests (i.e., in calculating our operating property value and unencumbered asset value) were decreased from 9.0% to 8.5%.

As of December 31, 2005, these coverage ratios and debt covenants, as amended, included:

·net operating income of unencumbered assets to interest on unsecured debt ratio of at least 2:1

·EBITDA (as defined in the applicable debt agreement) to fixed charges ratio of at least 1.75:1

·minimum tangible net worth of approximately $1.2 billion

·total debt to total adjusted assets of no more than 57.5%

·total secured debt to total adjusted assets of no more than 40%

·unsecured debt to unencumbered assets value ratio of no more than 57.5%

·book value of ancillary assets to total adjusted assets of no more than 25%

·book value of new construction assets to total adjusted assets of no more than 15%

·Funds from Operations (as defined in the applicable debt agreement) payout ratio no greater than 95%

Under the terms of each of the Revolving Facility and the Secured Term Loan, the respective covenants will be modified to be consistent with any more restrictive covenant contained in any other existing or new senior unsecured credit facility that we enter into.  The Secured Term Loan also contains certain financial covenants relating to the operating performance of certain properties that collateralize the Secured Term Loan.

As of December 31, 2005, we had approximately $1.0 billion of public indebtedness outstanding, excluding the impact of unamortized discounts, under three indentures, having a weighted average interest rate of 5.6%.  These indentures also contain covenants that require us to maintain certain financial coverage ratios.  These covenants are generally less onerous than the covenants contained in our existing Credit Agreements, as described above.

As of December 31, 2005, we were in compliance with all of the financial covenants under our existing Credit Agreements and public indentures, and we believe that we will continue to remain in compliance with

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these covenants.  However, if our properties do not perform as expected, or if unexpected events occur that require us to borrow additional funds, compliance with these covenants may become difficult and may restrict our ability to pursue certain business initiatives.  In addition, these financial covenants may restrict our ability to pursue particular acquisition transactions (for example, acquiring a portfolio of properties that is highly leveraged) and could significantly impact our ability to pursue growth initiatives.

In addition to our existing Credit Agreements and public indebtedness, as of December 31, 2005, we had approximately $419.8 million of mortgage debt outstanding, excluding the impact of unamortized premiums, having a weighted average interest rate of 7.4% per annum.

Off-Balance Sheet Arrangements

We do not believe that we currently have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

However, in a few cases, we have made commitments to provide funds to unconsolidated joint ventures under certain circumstances.  The liabilities associated with these joint ventures do not show up as liabilities on our consolidated financial statements.

The following is a brief summary of the unconsolidated joint venture obligations that we have as of December 31, 2005 in which we expect to make additional capital contributions to the joint venture:

·      CA New Plan Acquisition Fund, LLC.  We have a 10% interest in a joint venture that was created in conjunction with the restructuring of CA New Plan Venture Fund, LLC (see below) for the acquisition, redevelopment and development of real estate assets.  Under the terms of the joint venture, we are responsible for contributing our pro rata share of any capital that might be required by the joint venture, up to a maximum of $4.2 million, of which approximately $1.4 million had been contributed by us as of December 31, 2005.  We anticipate contributing the remaining approximately $2.8 million by the end of 2007.  As of December 31, 2005, the joint venture owned three operating retail properties and one retail property under redevelopment.  The joint venture had loans outstanding of approximately $33.4 million as of December 31, 2005.  As of December 31, 2005, the book value of our investment in CA New Plan Acquisition Fund, LLC was approximately $1.4 million.

·      Galileo America LLC.  We have a 5% interest in this joint venture, which interest was acquired on August 10, 2005 in conjunction with the Galileo Transactions.  Under the terms of this joint venture, we are not obligated to contribute any additional capital to the venture; however, in the event that additional capital is contributed by our joint venture partner, we have the option to contribute the amount necessary to maintain our 5% ownership interest.  We anticipate making additional capital contributions from time to time to maintain our ownership percentage.  As of December 31, 2005, the joint venture was comprised of 126 retail assets, and had loans outstanding of approximately $1.2 billion.  As of December 31, 2005, the book value of our investment in Galileo America LLC was approximately $33.8 million.

·      NP/I&G Institutional Retail Company, LLC.  We have a strategic joint venture with JPMorgan Fleming Asset Management to acquire high-quality institutional grade community and neighborhood shopping centers on a nationwide basis.  The joint venture owned 13 retail properties as of December 31, 2005.  Under the terms of this joint venture, we have a 20% interest in the venture and are responsible for contributing our pro rata share of any capital that might be required by the joint venture.  We originally agreed to contribute up to a maximum amount of $30.0 million to the joint venture, however, in connection with the acquisition of certain assets, we, together with ERP, contributed a disproportionate share of capital to the venture.  As a result of this contribution, the total book value of our investment in NP/I&G Institutional Retail Company,

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LLC as of December 31, 2005 was approximately $41.4 million.  Our excess contribution of approximately $11.3 million was repaid in February 2006.  The joint venture had loans outstanding of approximately $275.6 million as of December 31, 2005.

·      NPK Redevelopment I, LLC.  We have a joint venture with Kmart Corporation (Sears Holding Corp.) pursuant to which the joint venture will redevelop three Kmart Supercenter properties formerly owned by Kmart.  Under the terms of this joint venture, we have agreed to contribute $6.0 million, of which $1.0 million had been contributed by us as of December 31, 2005.  After our contribution of the total committed amount, we will have a 20% interest in the venture and be responsible for contributing our pro rata share of any additional capital that might be required by the joint venture.  The joint venture had no loans outstanding as of December 31, 2005.  As of December 31, 2005, the book value of our investment in NPK Redevelopment I, LLC was approximately $1.0 million.

In addition, the following is a brief summary of the other unconsolidated joint venture obligations that we have as of December 31, 2005.  Although we have agreed to contribute certain amounts of capital that may be required by these joint ventures, as more fully described below, we do not expect that any significant capital contributions to the following joint ventures will be required.

·      Arapahoe Crossings, L.P.  We, together with a U.S. partnership comprised substantially of foreign investors, have an interest in a joint venture which owns Arapahoe Crossings, a community shopping center located in Aurora, Colorado.  Under the terms of this joint venture, we have a 30% interest and we have agreed to contribute our pro rata share of any capital that might be required by the joint venture.  The joint venture had loans outstanding of approximately $48.5 million as of December 31, 2005.  As of December 31, 2005, the book value of our investment in Arapahoe Crossings, L.P. was approximately $6.7 million.

·      BPR Land Partnership, L.P.  We have a 50% interest in a joint venture that owns approximately 30.1 acres of undeveloped land in Frisco, Texas.  Under the terms of this joint venture, we have agreed to contribute our pro rata share of any capital that might be required by the joint venture.   The joint venture had no loans outstanding as of December 31, 2005.  As of December 31, 2005, the book value of our investment in BPR Land Partnership, L.P. was approximately $1.2 million.

·      BPR Shopping Center, L.P.  We have a 25% interest in a joint venture that owns The Centre at Preston Ridge, a community shopping center located in Frisco, Texas.  Under the terms of this joint venture, we have agreed to contribute our pro rata share of any capital that might be required by the joint venture.  The joint venture had loans outstanding of approximately $68.6 million as of December 31, 2005.  As of December 31, 2005, the book value of our investment in BPR Shopping Center, L.P. was approximately $3.6 million.

·      BPR South, L.P.  We have a 50% interest in a joint venture that owns approximately 8.4 acres of undeveloped land in Frisco, Texas.  Under the terms of this joint venture, we have agreed to contribute our pro rata share of any capital that might be required by the joint venture.   The joint venture had no loans outstanding as of December 31, 2005.  As of December 31, 2005, the book value of our investment in BPR South, L.P. was approximately $0.8 million.

·      CA New Plan Venture Direct Investment Fund, LLC.  We have a 10% interest in a joint venture that was created in conjunction with the restructuring of CA New Plan Venture Fund, LLC (see below).  Under the terms of the joint venture, we are responsible for contributing our pro rata share of any capital that might be required by the joint venture, up to a maximum of $0.4 million.  As of December 31, 2005, we had not made any such capital contributions to this venture.  As of December 31, 2005, the joint venture owned seven retail properties and had loans outstanding of

63

pproximately $60.8 million.  As of December 31, 2005, the book value of our investment in CA New Plan Venture Direct Investment Fund, LLC was approximately $0.8 million.

·      CA New Plan Venture Fund, LLC.  During 2005, this joint venture was restructured to create two additional joint ventures, CA New Plan Acquisition Fund, LLC, and CA New Plan Venture Direct Investment Fund, LLC.  As a result of the restructuring, six stabilized assets were transferred from CA New Plan Venture Fund, LLC to CA New Plan Venture Direct Investment Fund, LLC, and two assets were sold, resulting in the joint venture owning six operating retail properties and one retail property under redevelopment as of December 31, 2005.  Under the terms of the restructured joint venture, we continue to have a 10% interest in the venture, and are responsible for contributing our pro rata share of any capital that might be required by the joint venture, up to a maximum amount of $0.9 million.  As of December 31, 2005, we had not made any such capital contributions.  The joint venture had loans outstanding of approximately $57.7 million as of December 31, 2005.  As of December 31, 2005, the book value of our investment in CA New Plan Venture Fund, LLC was approximately $3.7 million.

·      Westgate Mall, LLC.  We, together with Transwestern Investment Company and The Richard E. Jacobs Group, have an interest in a joint venture that was formed for the specific purpose of acquiring and redeveloping Westgate Mall, an enclosed mall located on 55 acres of land in Fairview Park, Ohio.  The joint venture plans to redevelop the mall into a large community shopping center.  Under the terms of this joint venture, we have a 10% interest in the venture and have agreed to contribute our pro rata share of any capital that might be required by the joint venture.  The joint venture had loans outstanding of approximately $21.6 million as of December 31, 2005.   As of December 31, 2005, the book value of our investment in Westgate Mall, LLC was approximately $1.1 million.

Other Funding Obligations

In addition to the joint venture obligations described above, we also had the following contingent contractual obligations as of December 31, 2005, none of which we believe will materially adversely affect us:

·      Letters of Credit.  We have arranged for the provision of six separate letters of credit in connection with certain property related matters.  If these letters of credit are drawn, we will be obligated to reimburse the providing bank for the amount of the draw.  As of December 31, 2005, there was no balance outstanding under any of the letters of credit.  If the letters of credit were fully drawn, the combined maximum amount of exposure would be approximately $4.6 million.

·      Non-Recourse and Other Debt Guarantees.  Under certain of our non-recourse loans and those of our joint ventures, we could, under certain circumstances, be responsible for portions of the mortgage indebtedness in connection with certain customary non-recourse carve out provisions such as environmental conditions, misuse of funds and material misrepresentations.  As of December 31, 2005, we had mortgage loans outstanding of approximately $419.8 million and our unconsolidated joint ventures had mortgage loans outstanding of approximately $1.7 billion.  In addition, from time to time, we will guarantee certain construction and other obligations relative to certain joint venture development projects.  We do not expect our obligations under such guarantees will be material.

·Leasing Commitments.  We have entered into leases, as lessee, in connection with ground leases for shopping centers which we operate, an office building which we sublet, and our administrative office space.  These leases are accounted for as operating leases.  The minimum annual rental commitments for these leases during the next five fiscal years and thereafter are approximately as follows (dollars in thousands):

64

Year
2006	$	2,647
2007	3,131
2008	2,798
2009	2,725
2010	2,671
Thereafter	38,929

As discussed in Item 3 (Legal Proceedings) above, we also have a potential contingent obligation in connection with a specific tenant litigation for which we have reserved approximately $4.8 million as of December 31, 2005.  There can be no assurance as to the final outcome of this litigation and whether it will exceed or fall short of the amount reserved; however, even if our ultimate loss is more than the reserve established, we believe that the amount of the loss in excess of the reserve would be immaterial.

For a discussion of other factors which may adversely affect our liquidity and capital resources, please see the section titled “Risk Factors” in Item 1A of this Annual Report on Form 10-K.

65

Inflation

The majority of our leases contain provisions designed to mitigate the adverse impact of inflation.  Such provisions contain clauses enabling us to receive percentage rents, which generally increase as prices rise but may be adversely impacted by tenant sales decreases, and/or escalation clauses which are typically related to increases in the consumer price index or similar inflation indices.  In addition, we believe that many of our existing lease rates are below current market levels for comparable space and that upon renewal or re-rental such rates may be increased to be consistent with, or get closer to, current market rates.  This belief is based upon an analysis of relevant market conditions, including a comparison of comparable market rental rates, and upon the fact that many of our leases have been in place for a number of years and may not contain escalation clauses sufficient to match the increase in market rental rates over such time.  Most of our leases require the tenant to pay its share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation.  In addition, we periodically evaluate our exposure to interest rate fluctuations, and may enter into interest rate protection agreements which mitigate, but do not eliminate, the effect of changes in interest rates on our floating rate loans.

In the normal course of business, we also face risks that are either non-financial or non-qualitative.  Such risks principally include credit risks and legal risks.

66

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

			Additions		Deductions
	Balance at Beginning of Period		Charged to Bad Debt Expense		Accounts Receivable Written Off		Balance at End of Period
Allowance for doubtful accounts:
Year ended December 31, 2005	$	24,239	$	7,407	$	4,106	$	27,540
Year ended December 31, 2004	$	16,950	$	7,642	$	353	$	24,239
Year ended December 31, 2003	$	15,307	$	2,385	$	742	$	16,950

			Additions			Deductions
	Balance at Beginning of Period		Charged to Expense			Written Off			Balance at End of Period
Reserve for straight-line rents:
Year ended December 31, 2005	$	3,548	$	(635	)	$	(1,321	)	$	1,592
Year ended December 31, 2004	$	5,445	$	(22	)	$	(1,875	)	$	3,548
Year ended December 31, 2003	$	5,130	$	1,093		$	(778	)	$	5,445

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SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2005

COLUMN A	COLUMN B			COLUMN C				COLUMN D		COLUMN E					COLUMN F			COLUMN G		COLUMN H		COLUMN I
								Cost Capitalized		Gross Amount at Which Carried												Life on Which
				Initial Cost to Company				Subsequent to		at the Close of the Period												Depreciated—
						Building &		Acquisition				Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land		Improvements		Improvements		Land		Improvements		Total	Depreciation			Constructed		Acquired		Statement
Retail
Cloverdale Village
Florence, AL				634,152			2,536,606		29,932	634,152			2,566,538	3,200,689		(722,173	)		1986		Oct-94		40 years
Riverview Plaza
Gadsden, AL		(4,320,643	)	2,072,169			8,286,847		91,626	2,072,169			8,378,473	10,450,642		(1,515,754	)		2005		Oct-95		40 years
Grants Mill Station
Irondale, AL				2,888,819			11,555,308		161,432	2,888,819			11,716,740	14,605,559		(2,137,240	)		1991		Jul-98		40 years
Kroger
Muscle Shoals, AL				102,822			396,597			102,822			396,597	499,419		(72,351	)		1982		Aug-93		40 years
Kroger
Muscle Shoals, AL				429,999			1,659,638			429,999			1,659,638	2,089,637		(302,759	)		1982		Aug-93		40 years
Kroger
Scottsboro, AL				369,815			1,427,451			369,815			1,427,451	1,797,266		(260,393	)		1982		Aug-93		40 years
Payton Park
Sylacauga, AL				3,584,697			14,339,021		54,600	3,584,697			14,393,621	17,978,318		(2,626,505	)		1995		Jul-98		40 years
Mad Butcher
Pine Bluff, AR				490,287			1,892,538		43,957	490,287			1,936,496	2,426,783		(349,984	)		1981		Aug-93		40 years
Broadway Mesa
Mesa, AZ				1,147,194			4,588,778		438,053	1,147,194			5,026,830	6,174,025		(984,906	)		1985		Dec-90		40 years
Metro Marketplace
Phoenix, AZ				5,098,702			20,521,995		206,193	5,098,702			20,728,189	25,826,891		(4,064,315	)		2001		Jun-91		40 years
Northmall Centre
Tucson, AZ				4,762,481			12,630,121		158,180	4,762,481			12,788,301	17,550,782		(2,582,226	)		1996		Dec-96		40 years
Bakersfield Plaza
Bakersfield, CA				(28,534	)		27,597,943		198,031	(28,534	)		27,795,974	27,767,441		(4,876,874	)		1990		Jun-97		40 years
Burbank Plaza
Burbank, CA				1,153,334			4,613,209		46,011	1,153,334			4,659,220	5,812,554		(957,141	)		1988		May-89		40 years
Carmen Plaza
Camarillo, CA				1,872,708			7,491,044		786,038	1,872,708			8,277,082	10,149,790		(1,917,187	)		2000		Jun-97		40 years
Cudahy Plaza
Cudahy, CA							10,019,146		165,187				10,184,333	10,184,333		(1,765,342	)		1994		Jun-97		40 years
Arbor Faire
Fresno, CA				4,378,813			17,624,497		517,204	4,378,813			18,141,701	22,520,514		(3,224,731	)		1993		Apr-97		40 years
Broadway Faire
Fresno, CA				2,795,383			11,181,648		20,640	2,795,383			11,202,288	13,997,671		(2,022,362	)		1995		Apr-97		40 years
Briggsmore Plaza
Modesto, CA		(725	)	1,663,885			6,653,828		245,913	1,663,885			6,899,741	8,563,626		(1,303,884	)		1998		Jun-97		40 years
Montebello Plaza
Montebello, CA		(1,791,232	)	5,808,350			23,231,144		283,310	5,808,350			23,514,454	29,322,803		(4,615,934	)		1996		Jun-97		40 years
Metro 580
Pleasanton, CA				5,876,389			23,651,921		2,485,628	5,876,389			26,137,549	32,013,938		(4,450,286	)		2004		Sep-97		40 years
Rose Pavilion
Pleasanton, CA				11,389,328			45,840,252		463,352	11,389,328			46,303,604	57,692,931		(8,538,777	)		2005		Feb-98		40 years
Bristol Plaza
Santa Ana, CA							15,222,022		4,726,406				19,948,428	19,948,428		(2,818,482	)		2003		Jun-97		40 years
Arvada Plaza
Arvada, CO		(2,156,402	)	1,214,994			3,820,483			1,214,994			3,820,483	5,035,478		(289,884	)		1994		Dec-02		40 years

68

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Superior Marketplace
Superior, CO				23,433,974		15,637,888		15,073,329	23,433,974		30,711,217	54,145,191		(1,651,674	)		2004		Jul-02		40 years
Doverama at Rodney
Dover, DE				50,755		311,781			50,755		311,781	362,536		(133,470	)		1959		Jan-69		40 years
Brooksville Square
Brooksville, FL				1,503,243		7,874,334		262,976	1,503,243		8,137,309	9,640,553		(2,098,212	)		2005		Mar-94		40 years
Clearwater Mall
Clearwater, FL				9,524,335		30,919,809			9,524,335		30,919,809	40,444,144		(1,539,452	)		2003		Jan-04		40 years
Coconut Creek
Coconut Creek, FL				16,222,504		9,021,223		28,750	16,222,504		9,049,973	25,272,477		(1,134,833	)		2005		Mar-02		40 years
Northgate S.C.
DeLand, FL		(5,764,174	)	2,957,640		11,830,664		147,061	2,957,640		11,977,725	14,935,365		(2,159,808	)		1993		Jun-93		40 years
Sun Plaza
Ft. Walton Beach, FL		(9,639,446	)	3,356,305		10,571,344		2,820,181	3,356,305		13,391,525	16,747,830		(832,445	)		2004		Dec-02		40 years
Holly Hill Shopping Center
Holly Hill, FL				1,597,073		4,791,219		181,797	1,597,073		4,973,015	6,570,088		(384,865	)		1998		Dec-02		40 years
Regency Park
Jacksonville, FL				3,888,425		15,553,501		1,862,090	3,888,425		17,415,591	21,304,016		(3,563,834	)		2005		Jun-97		40 years
The Shoppes at Southside
Jacksonville, FL				5,040,765		19,591,340		9,914	5,040,765		19,601,254	24,642,020		(572,164	)		2004		Dec-04		40 years
Plaza 66
Kenneth City, FL				1,618,156		4,854,469		9,800	1,618,156		4,864,269	6,482,425		(368,705	)		1995		Dec-02		40 years
Leesburg Square
Leesburg, FL				1,051,639		4,206,554		169,987	1,051,639		4,376,541	5,428,180		(833,227	)		1986		Dec-92		40 years
The Mall at 163rd Street
Miami, FL				5,275,704		4,863,782		145,839	5,275,704		5,009,621	10,285,325		(451,750	)		2005		Dec-98		40 years
Miami Gardens
Miami, FL				5,418,459		22,098,501		114,944	5,418,459		22,213,445	27,631,904		(4,007,205	)		1996		Oct-97		40 years

69

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Freedom Square
Naples, FL				3,340,254		13,361,049		39,778	3,340,254		13,400,827	16,741,080		(2,463,320	)		1995		Oct-97		40 years
Southgate
New Port Richey, FL				4,253,341		3,981,290		6,924,252	4,253,341		10,905,542	15,158,883		(1,129,837	)		2004		Aug-97		40 years
Presidential Plaza
North Lauderdale, FL				1,750,441		3,269,390		306,463	1,750,441		3,575,854	5,326,294		(814,708	)		2005		Apr-97		40 years
Colonial Marketplace
Orlando, FL				3,426,817		3,504,446		1,111,120	3,426,817		4,615,566	8,042,383		(789,571	)		2005		Apr-98		40 years
Silver Hills
Orlando, FL		*		1,487,419		2,176,903			1,487,419		2,176,903	3,664,321		(307,538	)		1985		Mar-02		40 years
23rd Street Station
Panama City, FL				1,849,668		7,398,843		205,413	1,849,668		7,604,256	9,453,924		(1,412,165	)		1995		Jul-98		40 years
Pensacola Square
Pensacola, FL				3,536,164		10,608,491		470,096	3,536,164		11,078,587	14,614,751		(787,447	)		1995		Dec-02		40 years
Seminole Plaza
Seminole, FL				2,033,780		2,204,597		121,098	2,033,780		2,325,695	4,359,475		(725,776	)		1995		Jun-98		40 years
Eagles Park
St. Petersburg, FL				2,804,604		5,527,812		26,591	2,804,604		5,554,403	8,359,007		(630,627	)		1986		Mar-02		40 years
Rutland Plaza
St. Petersburg, FL				1,443,294		5,773,175		1,125,273	1,443,294		6,898,448	8,341,742		(1,561,939	)		2002		Nov-96		40 years
Skyway Plaza
St. Petersburg, FL		(3,652,867	)	1,859,960		5,579,881		70,677	1,859,960		5,650,558	7,510,519		(479,906	)		2002		Dec-02		40 years
Downtown Publix
Stuart, FL				5,431,541		5,906,376		190,182	5,431,541		6,096,557	11,528,098		(742,150	)		2000		Mar-02		40 years
Tarpon Mall
Tarpon Springs, FL				2,628,079		7,884,238		2,441,493	2,628,079		10,325,731	12,953,810		(625,844	)		2003		Dec-02		40 years
Northeast Plaza
Atlanta, GA				5,577,118		16,731,354		4,431,616	5,577,118		21,162,970	26,740,088		(1,377,045	)		2004		Dec-02		40 years
Southgate Plaza
Albany, GA				231,517		970,811		465,330	231,517		1,436,141	1,667,657		(604,731	)		1969		Jul-90		40 years
North Leg Plaza
Augusta, GA				1,070,957		3,310,551		158,054	1,070,957		3,468,605	4,539,561		(259,377	)		1997		Dec-02		40 years
Sweetwater Village
Austell, GA				707,938		2,831,750		139,937	707,938		2,971,687	3,679,624		(821,894	)		1985		Oct-94		40 years
Cedar Plaza
Cedartown, GA				905,977		3,713,207		141,876	905,977		3,855,082	4,761,059		(1,073,767	)		1994		Oct-94		40 years
Covered Bridge
Clayton, GA		(2,637,646	)	937,028		2,811,085		166,235	937,028		2,977,319	3,914,348		(224,763	)		2001		Dec-02		40 years

70

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Southgate Plaza
Cordele, GA				202,682		958,998		256,400	202,682		1,215,398	1,418,080		(459,412	)		1969		Jul-90		40 years
Habersham Crossing
Cornelia, GA		(3,572,052	)	1,644,936		6,580,461		94,303	1,644,936		6,674,763	8,319,699		(1,259,926	)		1990		Mar-96		40 years
Habersham Village
Cornelia, GA				1,301,643		4,340,422		263,991	1,301,643		4,604,413	5,906,057		(2,071,653	)		1985		May-92		40 years
Covington Gallery
Covington, GA				2,494,987		9,979,830		395,926	2,494,987		10,375,756	12,870,742		(1,852,889	)		1991		Dec-93		40 years
Midway Village
Douglasville, GA				1,553,580		2,887,506		151,181	1,553,580		3,038,687	4,592,267		(648,490	)		1989		May-97		40 years
Westgate
Dublin, GA				1,406,062		3,617,277		2,385,427	1,406,062		6,002,705	7,408,767		(1,756,727	)		2004		Jul-90		40 years
Mableton Walk
Mableton, GA				2,136,994		8,925,135		33,827	2,136,994		8,958,962	11,095,957		(212,304	)		1994		Jun-05		40 years
Marshalls at Eastlake
Marietta, GA				1,710,517		2,074,698		73,271	1,710,517		2,147,969	3,858,486		(415,708	)		1982		Oct-98		40 years
New Chastain Corners
Marietta, GA				2,457,446		5,741,641		483,966	2,457,446		6,225,607	8,683,054		(1,350,134	)		2004		Jul-97		40 years
Pavilions at Eastlake
Marietta, GA				2,812,000		11,249,970		429,192	2,812,000		11,679,162	14,491,162		(2,100,797	)		1996		Mar-99		40 years
Village at Southlake
Morrow, GA				1,733,198		3,017,677		59,562	1,733,198		3,077,239	4,810,437		(679,552	)		1983		Apr-98		40 years
Merchants Crossing
Newnan, GA		(5,295,952	)	2,077,145		6,231,434		1,498	2,077,145		6,232,933	8,310,077		(472,709	)		2005		Dec-02		40 years
Creekwood Shopping Center
Rex, GA				1,160,203		3,482,609		137,211	1,160,203		3,619,820	4,780,022		(755,623	)		1990		May-97		40 years
Shops of Riverdale
Riverdale, GA				1,523,058		1,271,713		27,913	1,523,058		1,299,626	2,822,683		(246,705	)		1995		Feb-96		40 years
Eisenhower Square
Savannah, GA				1,029,500		4,117,700		450,171	1,029,500		4,567,871	5,597,371		(1,083,259	)		1997		Jul-97		40 years
Victory Square
Savannah, GA				1,430,701		5,392,846		247,677	1,430,701		5,640,523	7,071,224		(1,859,823	)		2005		Jul-92		40 years
University Commons
Statesboro, GA				1,312,739		5,250,755		15,450	1,312,739		5,266,205	6,578,944		(945,642	)		1994		Jul-96		40 years
Stockbridge Village
Stockbridge, GA				4,331,759		17,800,000		906,677	4,331,759		18,706,677	23,038,436		(1,005,300	)		1991		Apr-04		40 years
Tift-Town
Tifton, GA				271,444		1,325,238		579,076	271,444		1,904,315	2,175,758		(731,522	)		1965		Jul-90		40 years
Westgate
Tifton, GA				156,269		304,704		5,661	156,269		310,365	466,635		(126,610	)		1980		Jul-90		40 years

71

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on which
				Initial Costs to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Kmart
Atlantic, IA				293,138		1,134,513			293,138		1,134,513	1,427,652		(206,801	)		1980		Jan-94		40 years
Haymarket Mall
Des Moines, IA				1,230,252		5,031,799		1,502,471	1,230,252		6,534,270	7,764,521		(2,045,311	)		2002		May-95		40 years
Annex of Arlington
Arlington Heights, IL		(20,434,598	)	8,771,289		21,291,295		142,425	8,771,289		21,433,720	30,205,009		(925,632	)		1999		Aug-04		40 years
Festival Center
Bradley, IL		(2,674,120	)	912,590		2,737,771		11,999	912,590		2,749,770	3,662,360		(209,665	)		2005		Dec-02		40 years
Southfield Plaza
Bridgeview, IL				3,188,496		3,897,167		2,597,774	3,188,496		6,494,941	9,683,437		(4,765,616	)		2005		Dec-96		40 years
Pershing Plaza
Decatur, IL				750,298		2,250,894		10,345	750,298		2,261,239	3,011,537		(171,310	)		1986		Dec-02		40 years
Elk Grove Town Center
Elk Grove Village, IL		(14,500,000	)	8,063,593		11,704,159		1,440	8,063,593		11,705,599	19,769,192		(635,613	)		1998		Jan-04		40 years
Freeport Plaza
Freeport, IL				1,383,601		4,150,804		134,679	1,383,601		4,285,483	5,669,085		(314,100	)		2000		Dec-02		40 years
Westridge Court
Naperville, IL				9,843,696		39,373,783		2,147,994	9,843,696		41,521,777	51,365,473		(9,664,988	)		2002		Jul-97		40 years
Olympia Corners
Olympia Fields, IL		(5,177,358	)	2,010,324		6,030,973		203,894	2,010,324		6,234,867	8,245,191		(509,477	)		1988		Dec-02		40 years
Tinley Park Plaza
Tinley Park, IL				2,607,702		10,430,808		5,622,699	2,607,702		16,053,507	18,661,208		(3,258,692	)		2005		Sep-95		40 years
Columbus Center
Columbus, IN				599,158		1,952,355		6,736,428	599,158		8,688,783	9,287,941		(2,640,983	)		2005		Dec-88		40 years
Elkhart Plaza West
Elkhart, IN				1,864,321		5,592,962		25,078	1,864,321		5,618,040	7,482,361		(407,303	)		1997		Dec-02		40 years
Elkhart Market Centre
Goshen, IN		(12,716,798	)	5,528,742		16,586,227		859,219	5,528,742		17,445,446	22,974,188		(1,212,944	)		1994		Dec-02		40 years
Valley View Plaza
Marion, IN				684,867		2,739,492		84,197	684,867		2,823,689	3,508,556		(529,159	)		1997		Mar-94		40 years
Town Fair
Princeton, IN				1,104,876		3,759,503		134,196	1,104,876		3,893,699	4,998,575		(1,246,649	)		1991		Feb-93		40 years
Knox Plaza
Vincennes, IN				411,877		1,235,631			411,877		1,235,631	1,647,508		(95,661	)		1989		Dec-02		40 years
Wabash Crossing
Wabash, IN				1,599,488		6,470,511		57,496	1,599,488		6,528,008	8,127,495		(1,964,522	)		1988		Dec-93		40 years
Florence Square
Florence, KY		(15,799,942	)	8,208,760		24,459,784		73,769	8,208,760		24,533,553	32,742,313		(1,320,183	)		2000		Mar-04		40 years
Florence Plaza
Florence, KY				2,524,185		7,572,556		373,624	2,524,185		7,946,180	10,470,365		(629,644	)		1985		Dec-02		40 years

72

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on which
				Initial Costs to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Highland Commons
Glasgow, KY		(3,631,941	)	1,500,300		6,862,680		124,738	1,500,300		6,987,418	8,487,719		(1,367,889	)		1992		Mar-93		40 years
J*Town Center
Jeffersontown, KY				1,331,074		4,121,997		578,023	1,331,074		4,700,021	6,031,095		(2,240,647	)		2005		Oct-88		40 years
Mist Lake Plaza
Lexington, KY				4,075,659		16,405,956		264,819	4,075,659		16,670,775	20,746,434		(3,023,519	)		1993		Jul-98		40 years
Eastgate Shopping Center
Louisville, KY				1,945,679		7,792,717		419,489	1,945,679		8,212,206	10,157,885		(3,091,666	)		2002		Nov-93		40 years
Picadilly Square
Louisville, KY				337,670		1,588,409		515,664	337,670		2,104,073	2,441,743		(1,094,344	)		2005		Apr-89		40 years
Towne Square North
Owensboro, KY				2,277,220		6,831,659		243,716	2,277,220		7,075,375	9,352,595		(547,149	)		1988		Dec-02		40 years
Lexington Road Plaza
Versailles, KY		(6,623,494	)	2,856,229		11,425,027		145,926	2,856,229		11,570,953	14,427,182		(2,117,037	)		1994		Apr-94		40 years
Iberia Plaza
New Iberia, LA				1,295,361		3,730,569		221,384	1,295,361		3,951,953	5,247,314		(389,814	)		1992		Mar-02		40 years
Lagniappe Village
New Iberia, LA				3,122,914		12,491,850		357,150	3,122,914		12,849,000	15,971,915		(2,769,502	)		1990		Jul-98		40 years
Points West
Brockton, MA				1,846,851		5,540,554		267,334	1,846,851		5,807,888	7,654,739		(449,759	)		2005		Dec-02		40 years
Holyoke Shopping Center
Holyoke, MA				2,979,803		8,509,322		182,023	2,979,803		8,691,345	11,671,148		(694,999	)		2000		Dec-02		40 years
Liberty Plaza
Randallstown, MD				531,786		5,848,620		767,002	531,786		6,615,622	7,147,407		(2,351,407	)		2005		May-95		40 years
Rising Sun Towne Centre
Rising Sun, MD				1,161,300		4,389,359		157,582	1,161,300		4,546,941	5,708,241		(774,597	)		2005		Jun-99		40 years
Maple Village
Ann Arbor, MI				1,622,732		7,501,205		1,357,844	1,622,732		8,859,050	10,481,782		(3,496,511	)		2000		Oct-94		40 years
Grand Crossing
Brighton, MI				1,709,627		5,128,881		40,721	1,709,627		5,169,602	6,879,229		(393,172	)		2005		Jan-03		40 years
Farmington Crossroads
Farmington, MI				1,092,200		4,368,800		254,771	1,092,200		4,623,571	5,715,771		(1,178,513	)		1986		Dec-95		40 years
Silver Lake
Fenton, MI				2,397,852		7,193,555		15,294	2,397,852		7,208,849	9,606,701		(538,996	)		1996		Jan-03		40 years
Silver Pointe Shopping Center
Fenton, MI		(7,456,994	)	2,200,544		8,228,408		31,700	2,200,544		8,260,108	10,460,652		(264,916	)		1996		Nov-04		40 years
Fremont
Fremont, MI				405,901		1,217,703		11,350	405,901		1,229,053	1,634,954		(93,637	)		1995		Jan-03		40 years
Cascade East
Grand Rapids, MI				1,826,689		5,480,068		104,668	1,826,689		5,584,736	7,411,425		(419,752	)		1983		Jan-03		40 years

73

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Kentwood
Kentwood, MI				1,191,795		3,786,382		89,738	1,191,795		3,876,120	5,067,915		(293,438	)		1987		Jan-03		40 years
Hampton Village Centre
Rochester Hills, MI		(28,751,181	)	7,209,596		34,541,500		4,281,878	7,209,596		38,823,378	46,032,974		(9,259,417	)		2004		Dec-95		40 years
Hall Road Crossing
Shelby Township, MI				2,595,500		10,382,000		1,118,620	2,595,500		11,500,620	14,096,120		(3,156,617	)		1999		Dec-95		40 years
Southfield Shopping Center
Southfield, MI				2,052,995		8,056,980		381,043	2,052,995		8,438,023	10,491,018		(1,723,286	)		2002		Feb-98		40 years
18 Mile & Ryan
Sterling Heights, MI				2,852,408		8,557,223			2,852,408		8,557,223	11,409,630		(640,717	)		1997		Jan-03		40 years
Delco Plaza
Sterling Heights, MI				1,277,504		5,109,367		210,917	1,277,504		5,320,284	6,597,788		(1,219,986	)		1996		Nov-96		40 years
Harvest Place
Stevensville, MI				1,156,967		3,470,900			1,156,967		3,470,900	4,627,867		(259,882	)		1994		Jan-03		40 years
Westland Crossing
Westland, MI				2,046,000		8,184,000		534,809	2,046,000		8,718,809	10,764,809		(1,532,737	)		1999		Nov-99		40 years
West Ridge Shopping Center
Westland, MI		(10,920,973	)	3,377,757		12,747,805			3,377,757		12,747,805	16,125,561		(351,819	)		1989		Mar-05		40 years
University IV
Spring Lake Park, MN		(1,893,672	)	987,865		2,963,594		22,681	987,865		2,986,275	3,974,140		(228,016	)		1988		Dec-02		40 years
Stanly County Plaza
Albemarle, NC				600,418		2,401,671		81,179	600,418		2,482,850	3,083,267		(478,572	)		1988		Mar-94		40 years
Village Marketplace
Asheboro, NC				1,155,652		3,596,618		62,877	1,155,652		3,659,495	4,815,147		(853,191	)		1991		Apr-95		40 years
Macon Plaza
Franklin, NC				832,590		2,497,770		36,530	832,590		2,534,300	3,366,890		(186,793	)		2001		Dec-02		40 years
Foothills Market
Jonesville, NC				644,555		2,578,295		62,199	644,555		2,640,494	3,285,049		(520,722	)		1996		Jun-95		40 years
Chapel Square
Kannapolis, NC		(1,500,509	)	918,460		3,673,918		25,327	918,460		3,699,245	4,617,705		(666,429	)		1992		Dec-94		40 years
Kinston Pointe
Kinston, NC				2,235,052		8,940,354		109,073	2,235,052		9,049,428	11,284,479		(1,891,841	)		2001		Jul-95		40 years
Roxboro Square
Roxboro, NC				1,448,313		5,793,289		6,712,950	1,448,313		12,506,240	13,954,553		(1,106,358	)		2005		Jun-95		40 years
Siler Crossing
Siler City, NC				1,779,566		7,118,100		36,634	1,779,566		7,154,733	8,934,299		(1,312,612	)		1988		Jun-95		40 years
Crossroads Center
Statesville, NC				5,261,636		21,177,392		81,102	5,261,636		21,258,493	26,520,129		(3,913,923	)		1997		Feb-96		40 years
Thomasville Crossing
Thomasville, NC				1,604,339		6,417,145		14,934	1,604,339		6,432,078	8,036,417		(1,159,910	)		1996		Apr-97		40 years

74

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E					COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried												Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period												Depreciated—
					Building &		Acquisition			Building &				Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements			Total	Depreciation			Constructed		Acquired		Statement
Anson Station
Wadesboro, NC				1,844,644		5,118,172		79,954	1,844,644		5,198,125		7,042,769		(1,028,700	)		1988		Aug-95		40 years
Roanoke Landing
Williamston, NC				2,519,288		10,077,339		69,003	2,519,288		10,146,342		12,665,631		(1,843,412	)		1991		Jan-96		40 years
Laurel Square
Brick, NJ				3,222,701		9,283,302		1,399,645	3,222,701		10,682,946		13,905,647		(3,796,858	)		2003		Jul-92		40 years
Hamilton Plaza-Kmart Plaza
Hamilton, NJ				1,124,415		4,513,658		308,798	1,124,415		4,822,457		5,946,871		(1,526,474	)		1972		May-94		40 years
Bennetts Mills Plaza
Jackson, NJ				1,794,122		6,399,888		942,427	1,794,122		7,342,315		9,136,437		(1,958,096	)		2002		Sep-94		40 years
Middletown Plaza
Middletown, NJ				1,204,829		7,871,317		9,466,277	1,204,829		17,337,593		18,542,423		(4,440,785	)		2002		Jan-75		40 years
Tinton Falls Plaza
Tinton Falls, NJ				1,884,325		6,308,392		92,955	1,884,325		6,401,347		8,285,672		(1,366,363	)		2005		Jan-98		40 years
Paseo del Norte
Albuquerque, NM				2,639,471				117,277	2,639,471		117,277		2,756,748		(31,792	)		2004		Mar-02		40 years
Socorro
Socorro, NM		*		953,411		2,926,733			953,411		2,926,733		3,880,143		(280,111	)		1976		Mar-02		40 years
Renaissance Center East
Las Vegas, NV				2,543,856		10,175,427		234,994	2,543,856		10,410,421		12,954,277		(2,672,951	)		2005		Oct-96		40 years
Kietzke Center
Reno, NV				3,069,735		12,279,924		331,106	3,069,735		12,611,030		15,680,765		(2,305,163	)		1986		Jun-97		40 years
Cortlandville
Cortland, NY				237,194		1,440,393		1,210,145	237,194		2,650,538		2,887,731		(1,008,178	)		2003		Aug-87		40 years
Kmart Plaza
De Witt, NY				943,079		3,772,312		476,204	943,079		4,248,515		5,191,594		(1,321,443	)		1970		Aug-93		40 years
D & F Plaza
Dunkirk, NY				730,900		2,158,094		1,455,530	730,900		3,613,624		4,344,524		(2,532,291	)		1967		Jan-86		40 years
Unity Plaza
East Fishkill, NY				6,042,258					6,042,258				6,042,258					2005		Apr-04		40 years
Elmira Plaza
Elmira, NY				110,318		892,015		164,777	110,318		1,056,792		1,167,110		(827,171	)		2001		Feb-89		40 years
Pyramid Mall
Geneva, NY				2,176,731		8,706,926		472,363	2,176,731		9,179,289		11,356,020		(3,253,315	)		2005		Aug-93		40 years
Cayuga Mall
Ithaca, NY				1,368,908		5,597,954		859,181	1,368,908		6,457,135	��	7,826,044		(2,781,851	)		1969		May-89		40 years
Transit Road Plaza
Lockport, NY				424,680		1,698,721		3,884,753	424,680		5,583,473		6,008,153		(856,890	)		2005		Aug-93		40 years
Sunshine Square
Medford, NY		(7,765,734	)	3,525,378		10,576,133			3,525,378		10,576,133		14,101,511		(801,843	)		2005		Dec-02		40 years

75

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Wallkill Plaza
Middletown, NY				2,748,152		9,672,604		3,350,017	2,748,152		13,022,621	15,770,773		(2,490,081	)		2005		Dec-95		40 years
Monroe ShopRite Plaza
Monroe, NY				1,028,189		8,649,212		301,531	1,028,189		8,950,743	9,978,932		(1,862,798	)		1985		Aug-97		40 years
Rockland Plaza
Nanuet, NY				3,904,495		3,056,456		8,487,993	3,904,495		11,544,449	15,448,944		(5,578,952	)		2004		Jan-83		40 years
Westgate Plaza
Oneonta, NY				132,208		1,192,907		385,580	132,208		1,578,487	1,710,695		(986,195	)		1967		Jan-84		40 years
Mohawk Acres
Rome, NY				335,734		1,755,445		1,766,714	335,734		3,522,160	3,857,893		(2,322,721	)		2005		Jan-84		40 years
Price Chopper Plaza
Rome, NY				934,687		3,738,751		178,730	934,687		3,917,480	4,852,167		(1,209,042	)		2005		Aug-93		40 years
Village Center
Smithtown, NY		(4,460,264	)	3,261,344		13,298,551		79,041	3,261,344		13,377,592	16,638,936		(509,810	)		2005		Aug-04		40 years
Ashland Square
Ashland, OH				1,990,823		6,430,270		330,414	1,990,823		6,760,684	8,751,507		(1,354,509	)		1991		Oct-93		40 years
Brunswick Town Center
Brunswick, OH				3,328,056		13,239,968			3,328,056		13,239,968	16,568,023		(331,614	)		2004		Jan-05		40 years
Springbrook Plaza
Canton, OH				2,846,763		8,822,289		189,735	2,846,763		9,012,024	11,858,788		(768,113	)		1989		Dec-02		40 years
Brentwood Plaza
Cincinnati, OH				2,027,969		8,222,875		6,641,163	2,027,969		14,864,038	16,892,007		(2,907,097	)		2004		May-94		40 years
Delhi
Cincinnati, OH				2,300,029		9,218,117		892,817	2,300,029		10,110,934	12,410,963		(2,504,193	)		2002		May-96		40 years
Harpers Station
Cincinnati, OH				7,362,395		15,221,639		57,631	7,362,395		15,279,271	22,641,666		(870,583	)		2000		Sep-03		40 years
Hillcrest Square
Cincinnati, OH				654,870		1,964,609		190,733	654,870		2,155,342	2,810,211		(179,606	)		1996		Dec-02		40 years
Western Hills Plaza
Cincinnati, OH				8,872,480		40,640,367			8,872,480		40,640,367	49,512,847		(228,829	)		1989		Nov-05		40 years
Western Village
Cincinnati, OH				1,321,484		5,300,935		5,359,689	1,321,484		10,660,625	11,982,108		(1,606,064	)		2005		May-94		40 years
Greentree Shopping Center
Columbus, OH		(4,851,730	)	3,379,200		6,860,800		205,508	3,379,200		7,066,308	10,445,508		(1,447,653	)		2005		Jul-98		40 years
Crown Point
Columbus, OH		(6,760,782	)	2,881,681		7,958,319		227,152	2,881,681		8,185,471	11,067,152		(1,696,095	)		1998		Jul-98		40 years
Karl Plaza
Columbus, OH		(3,561,448	)	1,235,044		3,705,132		114,800	1,235,044		3,819,932	5,054,976		(316,033	)		1992		Dec-02		40 years
South Towne Centre
Dayton, OH				4,737,368		9,636,943		818,438	4,737,368		10,455,381	15,192,749		(4,779,157	)		2005		Mar-92		40 years
Heritage Square
Dover, OH				1,749,182		7,011,926		620,655	1,749,182		7,632,581	9,381,763		(2,316,665	)		2004		Aug-93		40 years

76

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition		Building &				Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
The Vineyards
Eastlake, OH		(8,006,125	)	3,016,683		9,050,049		106,112	3,016,683		9,156,160	12,172,843		(707,862	)		1989		Dec-02		40 years
Midway Crossing
Elyria, OH				3,128,504		7,776,800		329,589	3,128,504		8,106,389	11,234,893		(2,192,286	)		2005		Dec-95		40 years
Midway Market Square
Elyria, OH		(16,801,518	)	5,145,249		20,597,920		50,415	5,145,249		20,648,335	25,793,584		(1,588,260	)		2001		Nov-02		40 years
New Boston
New Boston, OH				2,102,371		9,537,101		242,951	2,102,371		9,780,052	11,882,422		(3,240,781	)		2000		Feb-93		40 years
Surrey Square Mall
Norwood, OH				3,184,794		7,841,296			3,184,794		7,841,296	11,026,090		(81,454	)		2005		Aug-05		40 years
Market Place
Piqua, OH				976,763		3,738,164		347,070	976,763		4,085,233	5,061,997		(1,660,197	)		2005		Nov-91		40 years
Starlite Plaza
Sylvania, OH				4,526,286		11,645,866		238,608	4,526,286		11,884,474	16,410,760		(535,475	)		2000		Jul-04		40 years
Alexis Park
Toledo, OH		(4,403,501	)	2,228,272		6,684,816		203,441	2,228,272		6,888,256	9,116,528		(547,594	)		1988		Dec-02		40 years
Southland Shopping Plaza
Toledo, OH				4,113,346		10,193,792			4,113,346		10,193,792	14,307,137					1988		Dec-05		40 years
Marketplace
Tulsa, OK		(10,380,348	)	4,032,079		15,342,219		113,602	4,032,079		15,455,821	19,487,899		(601,566	)		1992		Sep-04		40 years
Bethel Park
Bethel Park, PA				868,039		9,933,094		1,482,279	868,039		11,415,373	12,283,412		(2,689,759	)		2004		May-97		40 years
New Britain Village Square
Chalfont, PA				4,240,303		14,257,218		109,475	4,240,303		14,366,693	18,606,995		(788,475	)		1989		Jan-04		40 years
Harveys
Clearfield, PA				357,218		1,400,990			357,218		1,400,990	1,758,208		(245,610	)		1982		Aug-93		40 years
Laurel Mall
Connellsville, PA				2,072,000		3,116,472		34,142	2,072,000		3,150,614	5,222,614		(498,994	)		1970		May-01		40 years
Dickson City Crossings
Dickson City, PA		(14,059,474	)	4,264,935		22,622,963		41,400	4,264,935		22,664,363	26,929,297		(1,293,094	)		1997		Sep-03		40 years
Dillsburg Shopping Center
Dillsburg, PA				1,986,481		4,665,505		8,249,899	1,986,481		12,915,403	14,901,885		(1,571,873	)		2002		Oct-96		40 years
New Garden
Kennett Square, PA				912,130		3,161,495		763,553	912,130		3,925,048	4,837,178		(1,383,309	)		2001		Jun-97		40 years
Stone Mill Plaza
Lancaster, PA				1,407,975		5,650,901		215,681	1,407,975		5,866,583	7,274,558		(1,816,358	)		1993		Jan-94		40 years
Ivyridge
Philadelphia, PA				1,504,080		6,026,320		942,910	1,504,080		6,969,230	8,473,310		(1,820,716	)		2005		Aug-95		40 years

77

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Roosevelt Mall
Philadelphia, PA				2,537,378		91,798		9,499,843	2,537,378		9,591,641	12,129,018		(7,561,490	)		1988		Jan-64		40 years
Hampton Square
Southampton, PA				772,800		2,907,200		1,017,689	772,800		3,924,889	4,697,689		(619,739	)		2002		Dec-98		40 years
Hunt River Commons
North Kingstown, RI		(7,525,621	)	3,138,736		9,416,208		75,592	3,138,736		9,491,800	12,630,537		(744,307	)		1989		Dec-02		40 years
South Park
Aiken, SC				443,364		1,330,092		89,337	443,364		1,419,429	1,862,793		(161,023	)		1991		Dec-02		40 years
Fashion Place Shopping Center
Columbia, SC				2,826,847		3,420,651			2,826,847		3,420,651	6,247,498		(123,926	)		1990		Sep-05		40 years
Circle Center
Hilton Head, SC				1,533,330		6,133,106		35,920	1,533,330		6,169,026	7,702,356		(1,127,606	)		2000		Mar-94		40 years
Palmetto Crossroads
Hilton Head, SC				473,111		1,892,443		59,308	473,111		1,951,751	2,424,862		(364,221	)		2000		Oct-95		40 years
Lexington Town Square
Lexington, SC		(1,803,611	)	642,813		1,928,439		59,413	642,813		1,987,853	2,630,666		(152,948	)		1995		Dec-02		40 years
Festival Centre
North Charleston, SC				2,427,247		7,281,740		1,850,970	2,427,247		9,132,710	11,559,956		(690,164	)		2004		Dec-02		40 years
Hillcrest Shopping Center
Spartanburg, SC		(18,091,137	)	1,189,916		33,772,153			1,189,916		33,772,153	34,962,069		(818,183	)		2005		Feb-05		40 years
Congress Crossing
Athens, TN				994,734		6,747,013		115,554	994,734		6,862,567	7,857,301		(2,399,197	)		1990		Nov-88		40 years
St. Elmo Central
Chattanooga, TN				1,529,587		6,120,555		55,827	1,529,587		6,176,382	7,705,969		(1,115,755	)		1995		Aug-96		40 years
Saddletree Village
Columbia, TN		(1,450,146	)	685,676		2,900,245		12,678	685,676		2,912,923	3,598,599		(523,012	)		1990		Jun-98		40 years
West Towne Square
Elizabethton, TN				529,103		3,880,088		122,569	529,103		4,002,657	4,531,760		(795,606	)		2005		Jun-98		40 years
Greeneville Commons
Greeneville, TN				1,075,200		7,934,800		680,394	1,075,200		8,615,194	9,690,394		(2,844,002	)		2002		Mar-92		40 years
Hazel Path
Hendersonville, TN				919,231		3,677,158		12,532	919,231		3,689,690	4,608,921		(660,202	)		1989		Nov-95		40 years
Kimball Crossing
Kimball, TN				3,654,333		15,875,659		192,256	3,654,333		16,067,915	19,722,248		(2,923,282	)		1997		Nov-95		40 years
Chapman-Ford Crossing
Knoxville, TN				2,367,047		9,507,577		2,149	2,367,047		9,509,726	11,876,773		(1,699,916	)		2005		Dec-92		40 years
Chapman Square
Knoxville, TN				805,128		2,415,383		520,476	805,128		2,935,858	3,740,986		(187,346	)		2004		Dec-02		40 years
Farrar Place Shopping Center
Manchester, TN				804,963		3,220,060		68,881	804,963		3,288,941	4,093,904		(605,311	)		1989		Dec-95		40 years

78

COLUMN A	COLUMN B		COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
						Cost Capitalized		Gross Amount at Which Carried											Life on Which
			Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
				Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances		Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Georgetown Square
Murfreesboro, TN			1,166,924		4,674,698		796,470	1,166,924		5,471,167	6,638,092		(1,708,362	)		2003		Sep-93		40 years
Apison Crossing
Ooltewah, TN			1,679,125		6,716,542		27,366	1,679,125		6,743,908	8,423,033		(1,203,654	)		1997		Jul-97		40 years
Madison Street Station
Shelbyville, TN			752,499		3,012,444		203,164	752,499		3,215,608	3,968,107		(621,031	)		1999		Oct-95		40 years
Commerce Central
Tullahoma, TN			2,889,948		12,177,046			2,889,948		12,177,046	15,066,994		(2,226,003	)		1995		Aug-96		40 years
Palm Plaza
Aransas, TX		*	343,333		871,639		47,433	343,333		919,072	1,262,405		(265,452	)		1979		Mar-02		40 years
Bardin Place Center
Arlington, TX			6,733,620		27,101,486		261,240	6,733,620		27,362,726	34,096,346		(5,349,837	)		1993		Oct-97		40 years
Baytown Shopping Center
Baytown, TX		*	2,163,096		6,720,138			2,163,096		6,720,138	8,883,234		(643,403	)		1987		Mar-02		40 years
Cedar Bellaire
Bellaire, TX		*	1,663,131		2,397,528		82,298	1,663,131		2,479,826	4,142,956		(238,141	)		1994		Mar-02		40 years
El Camino
Bellaire, TX		*	1,097,545		1,189,980		39,325	1,097,545		1,229,305	2,326,850		(119,039	)		1972		Mar-02		40 years
Rice Bellaire
Bellaire, TX			1,255,793		2,494,516			1,255,793		2,494,516	3,750,309		(247,053	)		2000		Mar-02		40 years
Brenham Four Corners
Brenham, TX		*	964,224		6,170,922		95,499	964,224		6,266,421	7,230,645		(598,222	)		1997		Mar-02		40 years
Bryan Square
Bryan, TX		*	797,369		641,393		20,688	797,369		662,082	1,459,450		(63,699	)		2001		Mar-02		40 years
Townshire
Bryan, TX			3,550,915		3,078,231		103,550	3,550,915		3,181,781	6,732,696		(492,803	)		2002		Mar-02		40 years
Culpepper Plaza
College Station, TX			6,280,572		7,664,913		98,334	6,280,572		7,763,248	14,043,819		(831,455	)		2005		Mar-02		40 years
Rock Prairie Crossing
College Station, TX			2,991,802		5,731,371		1,474,199	2,991,802		7,205,571	10,197,373		(631,392	)		2002		Mar-02		40 years
Carmel Village
Corpus Christi, TX		*	2,159,210		3,805,505		19,350	2,159,210		3,824,855	5,984,065		(386,993	)		1993		Mar-02		40 years
Five Points
Corpus Christi, TX		*	5,429,519		14,979,830		203,977	5,429,519		15,183,807	20,613,326		(1,531,723	)		1993		Mar-02		40 years
Claremont Village
Dallas, TX		*	616,854		2,763,528			616,854		2,763,528	3,380,382		(266,802	)		1976		Mar-02		40 years
Jeff Davis
Dallas, TX		*	2,429,083		1,794,831		383,589	2,429,083		2,178,420	4,607,503		(213,849	)		1975		Mar-02		40 years
Stevens Park Village
Dallas, TX		*	730,884		2,920,054		46,827	730,884		2,966,880	3,697,764		(284,610	)		1974		Mar-02		40 years

79

COLUMN A	COLUMN B		COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
						Cost Capitalized		Gross Amount at Which Carried											Life on Which
			Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
				Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances		Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Webb Royal
Dallas, TX		*	2,938,496		3,569,544		246,155	2,938,496		3,815,699	6,754,195		(430,727	)		1992		Mar-02		40 years
Wynnewood Village
Dallas, TX		*	5,582,452		21,580,198		1,052,148	5,582,452		22,632,347	28,214,799		(2,280,449	)		2005		Mar-02		40 years
Parktown
Deer Park, TX		*	1,242,627		5,060,049		85,920	1,242,627		5,145,969	6,388,596		(675,166	)		1999		Mar-02		40 years
Kenworthy Crossing
El Paso, TX			870,748		4,034,680		56,567	870,748		4,091,247	4,961,995		(492,082	)		2003		Mar-02		40 years
Yarbrough
El Paso, TX			189,126		1,268,368			189,126		1,268,368	1,457,494		(121,393	)		1995		Mar-02		40 years
Friendswood Square
Friendswood, TX			3,259,805		3,316,760		59,581	3,259,805		3,376,342	6,636,147		(377,802	)		2005		Mar-02		40 years
The Market at Preston Ridge
Frisco, TX			3,481,833		5,457,663			3,481,833		5,457,663	8,939,496		(527,284	)		2003		Sep-04		40 years
Forest Hills
Ft. Worth, TX		*	283,275		1,669,157		24,578	283,275		1,693,734	1,977,010		(197,724	)		1968		Mar-02		40 years
Westcliff
Ft. Worth, TX			1,034,333		5,737,121		165,775	1,034,333		5,902,896	6,937,229		(589,640	)		1999		Mar-02		40 years
Village Plaza
Garland, TX		*	2,887,423		3,145,325		713,468	2,887,423		3,858,793	6,746,216		(386,613	)		2002		Mar-02		40 years
North Hills Village
Haltom City, TX		*	682,122		1,125,729		78,391	682,122		1,204,120	1,886,242		(152,773	)		1998		Mar-02		40 years
Highland Village Town Center
Highland Village, TX		*	2,083,370		7,683,343		36,288	2,083,370		7,719,630	9,803,000		(744,493	)		1996		Mar-02		40 years
Antoine Square
Houston, TX			943,829		1,018,109		68,324	943,829		1,086,433	2,030,262		(111,721	)		1974		Mar-02		40 years
Bay Forest
Houston, TX		*	2,168,058		4,668,118		386,534	2,168,058		5,054,652	7,222,711		(475,144	)		2004		Mar-02		40 years
Braes Heights
Houston, TX		*	5,020,312		6,129,135		1,878,302	5,020,312		8,007,436	13,027,748		(781,718	)		2003		Mar-02		40 years
Braes Link
Houston, TX			1,479,647		3,788,135		12,300	1,479,647		3,800,435	5,280,082		(368,431	)		1999		Mar-02		40 years
Braes Oaks
Houston, TX		*	768,989		2,848,537		30,716	768,989		2,879,253	3,648,242		(307,776	)		1992		Mar-02		40 years
Braesgate
Houston, TX			1,295,575		4,534,337			1,295,575		4,534,337	5,829,912		(437,809	)		1997		Mar-02		40 years
Broadway
Houston, TX		*	958,424		1,465,137		24,741	958,424		1,489,878	2,448,302		(206,223	)		1996		Mar-02		40 years
Clear Lake Camino South
Houston, TX		*	4,028,858		3,709,150		3,550,827	4,028,858		7,259,977	11,288,835		(648,507	)		2004		Mar-02		40 years

80

COLUMN A	COLUMN B		COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
						Cost Capitalized		Gross Amount at Which Carried											Life on Which
			Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
				Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances		Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Hearthstone Corners
Houston, TX			5,738,446		10,170,631		195,239	5,738,446		10,365,870	16,104,316		(1,041,604	)		1998		Mar-02		40 years
Huntington Village
Houston, TX		*	2,168,536		5,041,718		152,865	2,168,536		5,194,582	7,363,118		(537,719	)		1987		Mar-02		40 years
Jester Village
Houston, TX			1,684,456		3,234,986		22,792	1,684,456		3,257,778	4,942,234		(339,292	)		1988		Mar-02		40 years
Lazybrook
Houston, TX		*	175,162		648,982		2,463	175,162		651,445	826,607		(70,716	)		1988		Mar-02		40 years
Long Point Square
Houston, TX			1,249,723		2,492,673		16,417	1,249,723		2,509,090	3,758,814		(342,047	)		2002		Mar-02		40 years
Maplewood Mall
Houston, TX		*	1,801,474		2,794,194		1,276,904	1,801,474		4,071,098	5,872,573		(472,582	)		2004		Mar-02		40 years
Merchants Park
Houston, TX			5,733,582		13,355,896		94,269	5,733,582		13,450,165	19,183,747		(1,312,491	)		2005		Mar-02		40 years
North 45 Plaza
Houston, TX		*	2,805,052		3,315,044		7,202	2,805,052		3,322,246	6,127,298		(385,697	)		1975		Mar-02		40 years
Northgate
Houston, TX		*	925,374		2,182,826		14,615	925,374		2,197,441	3,122,815		(209,246	)		1972		Mar-02		40 years
Northshore East
Houston, TX		*	2,412,760		8,483,879		29,000	2,412,760		8,512,879	10,925,639		(889,313	)		2001		Mar-02		40 years
Northtown Plaza
Houston, TX		*	2,919,608		11,751,087		327,908	2,919,608		12,078,995	14,998,603		(1,199,892	)		1990		Mar-02		40 years
Northwood
Houston, TX			2,538,882		5,613,969		76,200	2,538,882		5,690,169	8,229,051		(585,327	)		1972		Mar-02		40 years
Sharpstown Plaza
Houston, TX			840,472		1,446,280		4,590,986	840,472		6,037,266	6,877,738		(234,877	)		2005		Mar-02		40 years
Stella Link
Houston, TX			1,666,691		3,463,577		66,384	1,666,691		3,529,962	5,196,653		(383,469	)		1998		Mar-02		40 years
Tanglewilde
Houston, TX		*	6,184,663		1,209,944		53,314	6,184,663		1,263,258	7,447,921		(155,273	)		1998		Mar-02		40 years
Tidwell Place
Houston, TX		*	294,980		2,914,618		95,238	294,980		3,009,857	3,304,836		(301,331	)		1991		Mar-02		40 years
Westheimer Commons
Houston, TX		*	6,727,343		13,323,246		1,425,435	6,727,343		14,748,681	21,476,024		(1,494,358	)		1995		Mar-02		40 years
Irving West
Irving, TX			933,850		3,735,400		809,505	933,850		4,544,905	5,478,755		(770,973	)		2004		Sep-93		40 years
Washington Square
Kaufman, TX		*	449,155		848,867		55,140	449,155		904,007	1,353,161		(159,992	)		1978		Mar-02		40 years
League City
League City, TX		*	2,029,894		2,489,822		89,550	2,029,894		2,579,372	4,609,266		(248,347	)		1992		Mar-02		40 years

81

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Jefferson Park
Mount Pleasant, TX		*		2,677,336		4,558,193		303,041	2,677,336		4,861,234	7,538,570		(491,745	)		2001		Mar-02		40 years
Crossroads Center
Pasadena, TX				2,828,017		10,345,485		34,039	2,828,017		10,379,524	13,207,541		(1,018,113	)		1997		Mar-02		40 years
Parkview East
Pasadena, TX		*		870,067		733,667		542,099	870,067		1,275,766	2,145,834		(208,081	)		2002		Mar-02		40 years
Parkview West
Pasadena, TX		*		1,208,848		1,547,002		30,288	1,208,848		1,577,290	2,786,138		(187,578	)		2005		Mar-02		40 years
Spencer Square
Pasadena, TX				5,322,348		15,295,234		152,823	5,322,348		15,448,057	20,770,406		(1,653,933	)		1998		Mar-02		40 years
Pearland Plaza
Pearland, TX				3,676,495		7,330,937		23,626	3,676,495		7,354,562	11,031,057		(727,610	)		1995		Mar-02		40 years
Market Plaza
Plano, TX				5,447,953		33,692,681			5,447,953		33,692,681	39,140,634		(463,918	)		2002		Jul-05		40 years
Klein Square
Spring, TX		*		1,279,607		4,111,204		199,564	1,279,607		4,310,767	5,590,374		(449,549	)		1999		Mar-02		40 years
Texas City Bay
Texas City, TX		*		3,849,721		8,358,959		24,302	3,849,721		8,383,261	12,232,982		(803,322	)		2005		Mar-02		40 years
The Centre at Navarro
Victoria, TX				161,606		41,792			161,606		41,792	203,398		(4,000	)		2005		Mar-02		40 years
Pizza Hut
Harrisonburg, VA								427,500			427,500	427,500		(114,957	)		1969		Jul-96		40 years
Hanover Square
Mechanicsville, VA				1,778,701		7,114,805		159,855	1,778,701		7,274,660	9,053,361		(2,462,920	)		1991		Jan-93		40 years
Jefferson Green
Newport News, VA				1,459,646		4,378,937		60,638	1,459,646		4,439,575	5,899,221		(348,520	)		1988		Dec-02		40 years
VA-KY Regional S.C.
Norton, VA				2,795,765		8,931,450		215,929	2,795,765		9,147,379	11,943,143		(1,912,438	)		1996		Dec-92		40 years
Cave Spring Corners
Roanoke, VA				1,064,298		4,257,792		1,642,507	1,064,298		5,900,299	6,964,597		(1,066,446	)		2005		Jun-97		40 years
Lakeside Plaza
Salem, VA				1,370,555		5,355,787		59,486	1,370,555		5,415,273	6,785,829		(899,773	)		1989		Apr-99		40 years
Lake Drive Plaza
Vinton, VA				1,362,155		4,616,848		375,942	1,362,155		4,992,790	6,354,945		(1,316,414	)		2001		Feb-98		40 years
Ridgeview Centre
Wise, VA				2,707,679		4,417,792		2,111,114	2,707,679		6,528,906	9,236,585		(1,748,417	)		2005		Jul-92		40 years
Paradise Pavilion
West Bend, WI				2,896,984		8,885,953		44,721	2,896,984		8,930,674	11,827,659		(697,935	)		2000		Dec-02		40 years
Cheyenne Plaza
Cheyenne, WY		(4,904,465	)	2,184,686		6,554,057		46,157	2,184,686		6,600,214	8,784,900		(541,264	)		1995		Dec-02		40 years

82

COLUMN A	COLUMN B			COLUMN C			COLUMN D		COLUMN E				COLUMN F			COLUMN G		COLUMN H		COLUMN I
							Cost Capitalized		Gross Amount at Which Carried											Life on Which
				Initial Cost to Company			Subsequent to		at the Close of the Period											Depreciated—
					Building &		Acquisition			Building &			Accumulated			Date		Date		Latest Income
Description	Encumbrances			Land	Improvements		Improvements		Land	Improvements		Total	Depreciation			Constructed		Acquired		Statement
Other
San Diego Corporate Office
San Diego, CA								159,209			159,209	159,209		(12,394	)				Mar-05		40 years
Apopka Commons
Apopka, FL				3,079,748					3,079,748			3,079,748							Sep-05		LAND
Orlando Corporate Office
Orlando, FL								274,250			274,250	274,250		(17,360	)		1997		Nov-99		40 years
Nine Mile Square
Pensacola, FL				3,798,030					3,798,030			3,798,030							Sep-05		LAND
Atlanta Corporate Office
Atlanta, GA								91,215			91,215	91,215		(15,972	)				Oct-04		40 years
Denham Springs Plaza
Denham Springs, LA				1,593,030					1,593,030			1,593,030							Sep-05		LAND
Farmington Hills Corporate Office
Farmington, MI								563,441			563,441	563,441		(78,342	)		2003				40 years
North Central Avenue
Hartsdale, NY				20,238					20,238			20,238							Jul-72		LAND
ERT Development Corp.
New York, NY				1,897,664		435,000			1,897,664		435,000	2,332,664		(43,445	)				Jan-95		40 years
New Plan Corporate Headquaters
New York, NY								15,558			15,558	15,558							Dec-04		40 years
Akron Land
Akron, OH				308,030					308,030			308,030							Sep-05		LAND
Brandt Pike Place
Dayton, OH				1,648,178					1,648,178			1,648,178							Sep-05		LAND
Northgate Plaza
Westerville, OH				633,106					633,106			633,106							Sep-05		LAND
Philadelphia Corporate Office
Philadelphia, PA								707,803			707,803	707,803		(44,067	)						40 years
CA New Plan Fixed Rate Partnership
Houston, TX		(147,914,325	)
CA New Plan Management
Houston, TX								76,180			76,180	76,180		(3,326	)						40 years
Houston Corporate Office
Houston, TX								491,894			491,894	491,894		(25,562	)						40 years
Various								286,391,585			286,391,585	286,391,585
		(433,652,947	)	724,900,916		2,173,345,505		494,832,000	724,900,916		2,668,177,504	3,393,078,420		(376,815,998	)

*       Denotes properties securing the Fixed Rate REMIC carried on the corporate entity CA New Plan Fixed Rate Partner.

83

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(in thousands)

		Year Ended December 31, 2005			Year Ended December 31, 2004			Year Ended December 31, 2003
[a]	Reconciliation of total real estate carrying value is as follows:
	Balance at beginning of year	$	3,988,190		$	3,654,622		$	3,565,422
	Acquisitions and improvements	369,769			407,862			219,930
	Impact of FIN 46 consolidation	(8,950		)	8,950			—
	Real estate held for sale	(78,484		)	(13,002		)	(40,978		)
	Impairment of real estate	(859		)	(2,455		)	(4,376		)
	Cost of property sold or transferred to joint ventures	(875,274		)	(65,873		)	(83,995		)
	Write-off of fully depreciated assets	(1,314		)	(1,914		)	(1,381		)
	Balance at end of year	$	3,393,078		$	3,988,190		$	3,654,622
	Total cost for federal tax purposes at end of each year	$	3,059,228		$	3,371,473		$	3,250,091
[b]	Reconciliation of accumulated depreciation as follows:
	Balance at beginning of year	$	428,427		$	360,580		$	295,946
	Depreciation expense	69,097			82,379			75,646
	Impact of FIN 46 consolidation	(420		)	420			—
	Property sold or transferred to joint ventures	(104,514		)	(11,870		)	(4,195		)
	Write-off of fully depreciated assets	(716		)	(1,025		)	(1,381		)
	Real estate held for sale	(15,058		)	(2,057		)	(5,436		)
	Balance at end of year	$	376,816		$	428,427		$	360,580

84

MORTGAGE LOANS ON REAL ESTATE

(in thousands)

SCHEDULE IV

December 31, 2005

COLUMN A	COLUMN B		COLUMN C	COLUMN D	COLUMN E	COLUMN F		COLUMN G
Description	Final Interest Rate		Face Maturity Date	Periodic Payment Terms	Prior Liens	Face Amount of Mortgages		Carrying Amount of Mortgages
Leasehold mortgage, collateralized by a tenant lease in D&F Plaza in Dunkirk, NY	12	%	5/1/2008	Interest and principal payable monthly	—	$	1,000	$	525
Leasehold mortgage, collateralized by a tenant lease in Mohawk Acres in Rome, NY	10	%	5/1/2010	Interest and principal payable monthly	—	450		270
						$	1,450	$	795

Note: Column H is not applicable

85

	Year Ended
	December 31, 2005			December 31, 2004
Balance, beginning of period	$	8,881		$	39,637
Additions during period:
New loans	—			8,478
Reductions during period:
Collection of principal	(8,086		)	(39,234		)
Balance, end of period	$	795		$	8,881

86