SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 1-12560
JP REALTY, INC.
--------------
(Exact name of registrant as specified in its charter)
MARYLAND 87-0515088
-------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115 (801) 486-3911
--------------------------- --------------
(Address of principal executive offices, (Registrant's telephone number, including area code)
including zip code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No
[X] [ ]
16,338,101 shares of Common Stock were outstanding as of November 9, 2001
JP REALTY, INC.
FORM 10-Q
INDEX
-----
PART I: FINANCIAL INFORMATION
- ------------------------------ PAGE
Item 1. Financial Statements 3
Consolidated Balance Sheet as of September 30, 2001 and December 31, 2000 4
Consolidated Statement of Operations for the Three Months and Nine
Months ended September 30, 2001 and 2000 5
Condensed Consolidated Statement of Cash Flows
for the Nine Months ended September 30, 2001 and 2000 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
PART II: OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
2
Certain matters discussed under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Quantitative and
Qualitative Disclosures About Market Risk" and elsewhere in this Quarterly
Report on Form 10-Q may constitute forward-looking statements for purposes of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and as such may involve known and
unknown risks, uncertainties and assumptions. Actual future performance,
achievements and results of JP Realty, Inc. (the "Company") may differ
materially from those expressed or implied by such forward-looking statements
as a result of such known and unknown risks, uncertainties, assumptions and
other factors. Representative examples of these factors include, without
limitation, general industry and economic conditions, interest rate trends,
cost of capital and capital requirements, availability of real estate
properties, competition from other companies and venues for the
sale/distribution of goods and services, shifts in customer demands, tenant
bankruptcies, governmental and public policy changes and the continued
availability of financing in the amounts and on the terms necessary to support
the future business of the Company. Readers are cautioned that the Company's
actual results could differ materially from those set forth in such forward-
looking statements.
PART I
ITEM 1. FINANCIAL STATEMENTS
- ------------------------------
The information furnished in the accompanying financial statements listed
in the index on page 2 of this Quarterly Report on Form 10-Q reflects only
normal recurring adjustments which are, in the opinion of management, necessary
for a fair presentation of the aforementioned financial statements for the
interim periods.
The aforementioned financial statements should be read in conjunction with
the notes to the financial statements and Management's Discussion and Analysis
of Financial Condition and Results of Operations and the Company's Quarterly
Report on Form 10-Q for the three months ended March 31, 2001, the six months
ended June 30, 2001 and the Company's Annual Report on Form 10-K for the year
ended December 31, 2000, including the financial statements and notes thereto.
3
JP REALTY, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
---------
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------- --------------
ASSETS
Real Estate Assets
Land $ 107,520 $ 106,561
Buildings 803,924 797,793
------------- --------------
911,444 904,354
Less: Accumulated Depreciation (171,546) (154,574)
------------- --------------
Operating Real Estate Assets 739,898 749,780
Real Estate Under Development 12,012 1,927
------------- --------------
Net Real Estate Assets 751,910 751,707
Cash 4,594 2,636
Restricted Cash 7,600 3,820
Accounts Receivable, Net 10,853 12,299
Deferred Charges, Net 8,656 8,275
Other Assets 7,562 7,094
------------- --------------
$ 791,175 $ 785,831
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Borrowings $ 464,150 $ 464,462
Accounts Payable and Accrued Expenses 16,347 13,013
Dividends Payable 11,994 --
Other Liabilities 1,027 816
------------- --------------
493,518 478,291
------------- --------------
Minority Interest
Preferred Unitholders 112,327 112,327
Common Unitholders 26,318 28,426
Consolidated Partnerships 1,054 1,383
------------- --------------
139,699 142,136
------------- --------------
Commitments and Contingencies
STOCKHOLDERS' EQUITY
8.75% Series A Cumulative Redeemable Preferred Stock, $.0001 par
value, liquidation preference $25.00 per share, 510,000 shares
authorized, none issued or outstanding -- --
8.95% Series B Cumulative Redeemable Preferred Stock, $.0001
par value, liquidation preference $25.00 per share, 3,800,000
shares authorized, none issued or outstanding -- --
8.75% Series C Cumulative Redeemable Preferred Stock, $.0001
par value, liquidation preference $25.00 per share, 320,000
shares authorized, none issued or outstanding -- --
Series A Junior Participating Preferred Stock, $.0001 par
value,3,060,000 shares authorized, none issued or outstanding -- --
Common Stock, $.0001 par value, 117,110,000 shares authorized,
16,138,000 shares and 16,019,000 shares issued and outstanding
at September 30, 2001 and December 31, 2000, respectively 2 2
Price Group Stock, $.0001 par value, 200,000 shares authorized,
issued and outstanding -- --
Excess Stock, 75,000,000 shares authorized, none issued or
outstanding -- --
Additional Paid-in Capital 210,636 208,501
Accumulated Dividends in Excess of Net Income (52,680) (43,099)
------------- --------------
157,958 165,404
------------- --------------
$ 791,175 $ 785,831
============= ==============
See accompanying notes to consolidated financial statements.
4
JP REALTY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
REVENUES
Minimum Rents $ 26,637 $ 26,038 $ 77,690 $ 75,525
Percentage and Overage Rents 222 376 1,317 1,128
Recoveries from Tenants 8,115 8,174 24,112 23,367
Interest 117 238 412 554
Other 189 374 773 1,779
------------ ------------ ------------ ------------
35,280 35,200 104,304 102,353
------------ ------------ ------------ ------------
EXPENSES
Operating and Maintenance 6,170 6,484 17,405 17,840
Real Estate Taxes and Insurance 3,764 3,580 11,274 10,883
Advertising and Promotions 163 179 521 537
General and Administrative 1,551 1,699 5,062 4,876
Depreciation 7,150 7,188 21,309 19,734
Amortization of Deferred Financing Costs 379 424 1,122 1,231
Amortization of Deferred Leasing Costs 155 211 550 569
Interest 6,926 7,861 22,362 22,952
------------ ------------ ------------ ------------
26,258 27,626 79,605 78,622
------------ ------------ ------------ ------------
9,022 7,574 24,699 23,731
Minority Interest in (Income) Loss of
Consolidated Partnerships (75) 176 (21) 376
Gain on Sales of Real Estate -- 373 872 2,002
------------ ------------ ------------ ------------
Income Before Minority Interest of the
Operating Partnership Unitholders 8,947 8,123 25,550 26,109
Minority Interest of the Operating
Partnership Preferred Unitholders (2,580) (2,579) (7,739) (7,505)
Minority Interest of the Operating
Partnership Common Unitholders (1,158) (1,010) (3,248) (3,375)
------------ ------------ ------------ ------------
Income Before Extraordinary Item 5,209 4,534 14,563 15,229
Extraordinary Item -- (80) -- (80)
------------ ------------ ------------ ------------
Net Income $ 5,209 $ 4,454 $ 14,563 $ 15,149
============ ============ ============ ============
Basic Earnings Per Share
Income Before Extraordinary Item $ 0.32 $ 0.28 $ 0.89 $ 0.93
Extraordinary Item -- (0.01) -- --
------------ ------------ ------------ ------------
Net Income $ 0.32 $ 0.27 $ 0.89 $ 0.93
============ ============ ============ ============
Diluted Earnings Per Share
Income Before Extraordinary Item $ 0.32 $ 0.28 $ 0.89 $ 0.93
Extraordinary Item -- (0.01) -- --
------------ ------------ ------------ ------------
Net Income $ 0.32 $ 0.27 $ 0.89 $ 0.93
============ ============ ============ ============
Basic Weighted Average Number
of Shares of Common Stock 16,338 16,219 16,273 16,325
Dilutive Effect of Stock Options 87 17 54 9
------------ ------------ ------------ ------------
Diluted Weighted Average Number
of Shares of Common Stock 16,425 16,236 16,327 16,334
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
5
JP REALTY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
For the Nine Months Ended
September 30,
---------------------------------
2001 2000
--------------- ---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 51,248 $ 51,208
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Real Estate Assets, Developed or Acquired,
Net of Accounts Payable (22,006) (33,773)
Proceeds from Sales of Real Estate 1,790 2,289
Increase in Restricted Cash (3,780) (939)
--------------- ---------------
Net Cash Used in Investing Activities (23,996) (32,423)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Borrowings 132,973 145,500
Repayment of Borrowings (133,285) (134,490)
Proceeds from Minority Partners -- 36
Proceeds from Stock Options Exercised 2,135 --
Net Proceeds from Issuance of Preferred Units -- 7,756
Distributions to Preferred Unitholders (5,613) (7,505)
Distributions to Minority Interest of Consolidated
Partnerships (350) (68)
Distributions to Common Unit Holders (3,602) (3,491)
Dividends to Stockholders (16,077) (15,532)
Deferred Financing Costs (1,475) (2,077)
Repurchase of Common Stock -- (10,632)
--------------- ---------------
Net Cash Used in Financing Activities (25,294) (20,503)
--------------- ---------------
Net Increase (Decrease) in Cash 1,958 (1,718)
Cash, Beginning of Period 2,636 7,767
--------------- ---------------
Cash, End of Period $ 4,594 $ 6,049
=============== ===============
See accompanying notes to consolidated financial statements.
6
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1. BUSINESS SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES
JP Realty, Inc. (the "Company") is primarily engaged in the business of
owning, leasing, managing, operating, developing and redeveloping regional
malls, community centers and other commercial properties in Utah, Idaho,
Colorado, Arizona, Nevada, New Mexico and Wyoming, as well as in Oregon,
Washington and California. The tenant base includes primarily national,
regional and local retail companies. Consequently, the Company's credit risk
is concentrated in the retail industry. The Company is the sole general
partner of Price Development Company, Limited Partnership (the "Operating
Partnership"). The Company conducts all of its business operations through,
and holds a controlling interest in, the Operating Partnership.
The accompanying consolidated financial statements include the accounts of
the Company, the Operating Partnership and all controlled affiliates. All
significant intercompany balances and transactions have been eliminated in the
consolidated presentation. The interim financial data for the three months and
nine months ended September 30, 2001 and 2000, is unaudited; however, in the
opinion of the Company, the interim financial data includes all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results for the interim periods. Certain amounts in the
2000 financial statements have been reclassified to conform to the 2001
presentation.
Deferred charges consist principally of financing fees and leasing
commissions paid to third parties. These costs are amortized on a straight-
line basis and are recorded in the consolidated statement of operations in
amortization of deferred financing costs and amortization of deferred leasing
costs, which amounts, for deferred financing costs, approximate those amortized
using the effective interest method, over the terms of the respective
agreements.
2. BORROWINGS
SEPTEMBER 30,
2001
--------------
Credit facility, unsecured; weighted average interest at 5.77% during 2001;
due in 2003 $ 113,500
Notes, unsecured; interest at 7.29%; maturing 2005 to 2008 100,000
Mortgage payable, secured by real estate; interest at 6.68%; due in 2008 81,823
Mortgage payable, secured by real estate; interest at 6.64%; due in 2011 78,534
Construction loan, secured by real estate; interest at 4.19% as of
September 30, 2001, due in 2003 44,085
Loan facility, secured by real estate; interest at 5.08% as of
September 30, 2001; due in 2003 41,600
Other notes payable, secured by real estate; interest ranging from 7.00% to
9.99%; maturing from 2001 to 2095 4,608
--------------
$ 464,150
==============
On January 22, 2001, the Operating Partnership through Boise Mall, LLC,
an indirectly wholly-owned subsidiary, obtained a first mortgage on Boise Towne
Square from The Chase Manhattan Bank in the amount of $79,000 with a ten-year
term. The payment is based on a thirty-year amortization schedule with a
balloon payment of $68,315 on February 10, 2011, bearing interest at a fixed
6.64% per annum. The Operating Partnership used the proceeds to pay off
$61,223 of notes, secured by real estate, with an interest rate of 6.37% and
reduced amounts outstanding under the Operating Partnership's credit facility.
The properties unencumbered by this transaction include Cottonwood Mall in
Holladay, Utah, North Plains Mall in Clovis, New Mexico and Three Rivers Mall
in Kelso, Washington.
On June 28, 2001, Provo Mall Development Company Ltd., a consolidated
partnership of which the Operating Partnership is the general partner,
exercised its right to extend its $50,000 construction loan facility. The
balance outstanding as of September 30, 2001 was $44,085. The extension
is for a two-year period maturing July 1, 2003.
7
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
2. BORROWINGS (CONTINUED)
On July 31, 2001, Spokane Mall Development Company, Ltd. Partnership, a
consolidated partnership of which the Operating Partnership is the general
partner, obtained a new loan facility from a group of banks led by Bank One
Arizona, NA. The new loan facility totals $47,300, of which only $41,600 has
been funded. The balance was used to repay and terminate the maturing $50,000
Spokane Valley Mall construction loan that had a balance outstanding of
$41,600. The new loan facility is for two years, maturing on July 31, 2003,
with an interest rate of LIBOR plus 150 basis points.
3. SCHEDULE OF MATURITIES OF BORROWINGS
The following summarizes the scheduled maturities of borrowings at
September 30, 2001:
YEAR TOTAL
- ---- ------------
2001 $ 1,708
2002 1,910
2003 201,501
2004 2,124
2005 27,287
2006 27,446
Thereafter 202,174
------------
$ 464,150
============
4. MINORITY INTEREST
PREFERRED COMMON CONSOLIDATED
UNITHOLDERS UNITHOLDERS PARTNERSHIPS TOTAL
------------ ----------- ------------ ------------
Minority Interest at December 31, 2000 $ 112,327 $ 28,426 $ 1,383 $ 142,136
Partnership Units Issued -- 47 -- 47
Minority Interest Income 7,739 3,248 21 11,008
Distributions Paid (5,613) (3,602) (350) (9,565)
Distributions Accrued (2,126) (1,801) -- (3,927)
------------ ----------- ------------ ------------
Minority Interest at September 30, 2001 $ 112,327 $ 26,318 $ 1,054 $ 139,699
============ =========== ============ ============
In April 1999, the Operating Partnership issued 510,000 Series A 8.75%
cumulative redeemable preferred units of limited partner interests (the "Series
A Preferred Units") in exchange for a gross contribution of $12,750. Each
Series A Preferred Unit represents a limited partner interest with a
liquidation value of twenty-five dollars per unit. The Operating Partnership
used the proceeds, less applicable transaction costs of $405, for the repayment
of borrowings outstanding under its prior credit facility. The Series A
Preferred Units, which may be redeemed for cash at the option of the Operating
Partnership on or after April 23, 2004, have no stated maturity or mandatory
redemption and are not convertible into any other securities of the
Operating Partnership. The Series A Preferred Units are exchangeable at
the option of the preferred unitholder at a rate of one Series A Preferred Unit
for one share of the Company's Series A 8.75% cumulative redeemable preferred
stock beginning April 23, 2009, or earlier under certain circumstances.
In the event that shares of Series A preferred stock are issued in exchange
for Series A Preferred Units, the Operating Partnership will issue an
equivalent number of Series A Preferred Units to the Company. Any shares
of Series A preferred stock issued in exchange for Series A Preferred
Units will have the same rights,
8
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
4. MINORITY INTEREST (CONTINUED)
terms and conditions with respect to redemption as the Series A Preferred Units
and will not be convertible into any other securities of the Company. The
income allocated and distributions paid to the holder of the Series A Preferred
Units are based upon the rate of 8.75% on $12,750 or $837 for the nine months
ended September 30, 2001 and 2000.
On July 28, 1999, the Operating Partnership issued 3.8 million Series B
8.95% cumulative redeemable preferred units of limited partner interest (the
"Series B Preferred Units") in exchange for a gross contribution of $95,000.
Each Series B Preferred Unit represents a limited partner interest with a
liquidation value of twenty-five dollars per unit. The Operating Partnership
used the proceeds, less applicable transaction costs of $2,774, to repay
$90,000 in borrowings under its prior credit facility and increase operating
cash. The Series B Preferred Units, which may be redeemed for cash at the
option of the Operating Partnership on or after July 28, 2004, have no stated
maturity or mandatory redemption and are not convertible into any other
securities of the Operating Partnership. The Series B Preferred Units are
exchangeable at the option of the preferred unitholder at a rate of one Series
B Preferred Unit for one share of the Company's Series B 8.95% cumulative
redeemable preferred stock beginning July 28, 2009, or earlier under certain
circumstances. In the event that shares of Series B preferred stock are issued
in exchange for Series B Preferred Units, the Operating Partnership will issue
an equivalent number of Series B Preferred Units to the Company. Any shares
of Series B preferred stock issued in exchange for Series B Preferred
Units will have the same rights, terms and conditions with respect to
redemption as the Series B Preferred Units and will not be convertible into any
other securities of the Company. The income allocated to holders of the Series
B Preferred Units are based upon the rate of 8.95% on the $95,000 or $6,377 for
the nine months ended September 30, 2001 and 2000. Distributions are paid on
the last day of the quarter providing that day is a business day. If the
payment day falls on a non-business day, the payment is due on the following
business day, except that payment for the fourth quarter distributions must
be made in December. Since September 30, 2001 was a Sunday, the payment
of $2,126 was made on October 1, 2001. Distributions paid for the nine months
ended September 30, 2001 and 2000 were $4,251 and $6,377, respectively.
On May 1, 2000, the Operating Partnership issued 320,000 Series C 8.75%
cumulative redeemable preferred units of limited partner interest (the "Series
C Preferred Units"), with a liquidation value of twenty-five dollars per unit,
in exchange for a gross contribution of $8,000. The Operating Partnership used
the proceeds, less applicable transaction costs and expenses of $244, for the
repayment of borrowings outstanding under its prior credit facility. The
Series C Preferred Units, which may be redeemed for cash at the option of the
Operating Partnership on or after May 1, 2005, have no stated maturity or
mandatory redemption and are not convertible into any other securities of the
Operating Partnership. The Series C Preferred Units are exchangeable at the
option of the preferred unitholder at a rate of one Series C Preferred Unit for
one share of the Company's Series C 8.75% cumulative redeemable preferred stock
beginning May 1, 2010, or earlier under certain circumstances. In the event
that shares of Series C preferred stock are issued in exchange for Series C
Preferred Units, the Operating Partnership will issue an equivalent number of
Series C Preferred Units to the Company. Any shares of Series C preferred
stock issued in exchange for Series C Preferred Units will have the same
rights, terms and conditions with respect to redemption as the Series C
Preferred Units and will not be convertible into any other securities of the
Company. The income allocated and distributions paid to the holder of the
Series C Preferred Units are based upon the rate of 8.75% on the $8,000 or $525
and $350 for the nine months ended September 30, 2001 and 2000, respectively.
On February 20, 2001, the Operating Partnership issued 2,500 units of
limited partner interest to New Mexico I Partners in connection with its
purchase of land and building at Animas Valley Mall from New Mexico I Partners.
The value of the units issued on February 20, 2001 was $47.
9
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
4. MINORITY INTEREST (CONTINUED)
Net income of the Operating Partnership is allocated first to its
preferred unitholders as described above and then to its common unitholders
based upon their pro rata share of unit ownership. The Operating Partnership's
income allocated to its common unitholders was based upon the weighted average
number of common units outstanding as follows:
FOR THE NINE-MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------------
2001 2000
------------------------------ --------------------------------
UNITS PERCENTAGE UNITS PERCENTAGE
------------- -------------- -------------- ---------------
Units held by General Partner 16,273,000 81.72% 16,325,000 81.78%
Units held by Limited Partners 3,639,000 18.28% 3,636,000 18.22%
------------- -------------- -------------- ---------------
19,912,000 100.00% 19,961,000 100.00%
============= ============== ============== ===============
The consolidated partnerships' minority interests in income or loss are
calculated by multiplying the percentage of each such partnership owned by its
respective minority partners by the total income or loss of such partnership,
unless the cumulative losses exceed the limited partners' investment. Such
excess losses previously attributable to the limited partners will be
recognized by the Company. Future income attributable to the limited partners
will be recognized by the Company to the extent of these losses.
5. STOCKHOLDERS' EQUITY
The following table summarizes changes in stockholders' equity since
December 31, 2000:
ACCUMULATED
ADDITIONAL DIVIDENDS IN
PAID-IN EXCESS OF NET
SHARES* STOCK CAPITAL INCOME TOTAL
------------ ----------- ----------- ------------- ------------
Stockholders' Equity at
December 31, 2000 16,219,000 $ 2 $ 208,501 $ (43,099) $ 165,404
Shares of Common Stock Issued-
Stock Options Exercised 119,000 -- 2,135 -- 2,135
Net Income for the Period -- -- -- 14,563 14,563
Dividends Paid -- -- -- (16,077) (16,077)
Dividends Accrued -- -- -- (8,067) (8,067)
------------ ----------- ----------- ------------- ------------
Stockholders' Equity at September 30,
2001 16,338,000 $ 2 $ 210,636 $ (52,680) $ 157,958
============ =========== =========== ============= ============
- ----------------------------
* Includes 16,138,000 outstanding shares of Common Stock and 200,000
outstanding shares of Price Group Stock
The Company received $2,135 from shares of Common Stock issued as the
result of the exercise of 118,881 stock options. The Company used the
proceeds to buy additional Operating Partnership common units. The Operating
Partnership used the cash to increase operating cash.
6. SEGMENT INFORMATION
In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." The following information presents the
Company's three reportable segments: (1) regional malls, (2) community centers
and (3) commercial properties in conformity with SFAS No. 131.
10
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
6. SEGMENT INFORMATION (CONTINUED)
The accounting policies of the segments are the same as those described in
the "Summary of Significant Accounting Policies" in the Company's Annual Report
on Form 10-K for the year ended December 31, 2000. Segment data includes total
revenues and property net operating income (revenues less operating and
maintenance expense and real estate taxes and insurance expense and advertising
and promotion expense ("Property NOI")). The Company evaluates the performance
of its segments and allocates resources to them based on Property NOI.
The regional mall segment consists of 18 regional malls in eight states
containing approximately 10,430,000 square feet of total gross leasable area
("GLA") and which range in size from approximately 301,000 to 1,172,000 square
feet of total GLA.
The community center segment consists of 25 properties in seven states
containing approximately 3,390,000 square feet of total GLA and one
freestanding retail property containing approximately 2,000 square feet of GLA.
The commercial properties include six mixed-use commercial/business
properties with 38 commercial buildings containing approximately 1,354,000
square feet of GLA which are located primarily in the Salt Lake City, Utah
area.
The table below presents information about the Company's reportable
segments for the nine months ended September 30:
REGIONAL COMMUNITY COMMERCIAL
MALLS CENTERS PROPERTIES OTHER TOTAL
---------- ---------- ---------- ----------- -----------
2001
- ----
Total Revenues $ 83,260 $ 14,875 $ 5,851 $ 318 $ 104,304
Property Operating Expenses (1) (24,440) (3,533) (1,227) -- (29,200)
---------- ---------- ---------- ----------- -----------
Property NOI (2) 58,820 11,342 4,624 318 75,104
Unallocated Expenses (3) -- -- -- (50,405) (50,405)
Unallocated Minority Interest (4) -- -- -- (11,008) (11,008)
Unallocated Other (5) -- -- -- 872 872
Consolidated Net Income -- -- -- -- 14,563
Additions to Real Estate Assets 9,216 11,920 917 -- 22,053
Total Assets (6) 657,874 89,484 29,626 14,191 791,175
2000
- ----
Total Revenues $ 81,663 $ 14,222 $ 5,892 $ 576 $ 102,353
Property Operating Expenses (1) (24,346) (3,609) (1,305) -- (29,260)
---------- ---------- ---------- ----------- -----------
Property NOI (2) 57,317 10,613 4,587 576 73,093
Unallocated Expenses (3) -- -- -- (49,362) (49,362)
Unallocated Minority Interest (4) -- -- -- (10,504) (10,504)
Unallocated Other (5) -- -- -- 1,922 1,922
Consolidated Net Income -- -- -- -- 15,149
Additions to Real Estate Assets 27,330 1,168 630 -- 29,128
Total Assets (6) 654,079 81,347 29,741 18,425 783,592
- ---------------------------
(1) Property operating expenses consist of operating, maintenance, real estate
taxes and insurance, advertising and promotion expenses as listed in the
consolidated statement of operations.
(2) Total revenues minus property operating expenses.
(3) Unallocated expenses consist of general and administrative, depreciation,
amortization of deferred financing costs, amortization of deferred leasing
costs and interest as listed in the consolidated statement of operations.
(4) Unallocated minority interest includes minority interest in income or loss
of consolidated partnerships and minority interest of the Operating
Partnership preferred and common unitholders as listed in the consolidated
statement of operations.
(5) Unallocated other includes gain on sales of real estate as listed in the
consolidated statement of operations.
(6) Unallocated other total assets include cash, corporate offices,
miscellaneous real estate and deferred financing costs.
11
JP REALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
7. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Unitholders of the Operating Partnership elected to convert 125 Operating
Partnership units having a recorded value of $1 into an equal number of shares
of Common Stock during the nine months ended September 30, 2000. There were no
such conversions in the nine months ended September 30, 2001.
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
------------- -------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
The following non-cash transactions occurred:
Dividends accrued for stockholders not paid $ 8,067 $ 7,766
Distributions accrued for common unitholders not paid $ 1,801 $ 1,745
Distributions accrued for preferred unitholders not paid $ 2,126 $ --
On February 20, 2001, the Operating Partnership issued 2,500 units of
limited partner interest to New Mexico I Partners in connection with its
purchase of land and building at Animas Valley Mall from New Mexico I Partners.
The value of the units issued on February 20, 2001 was $47.
8. SUBSEQUENT EVENTS
On October 12, 2001, the Operating Partnership used operating cash to pay
off a loan which was scheduled to mature on November 30, 2001 for $1,243. The
loan had a stated interest rate of 9.38% per annum.
In October 2001, Spokane Mall Development Company, Ltd. Partnership, a
consolidated partnership of which the Operating Partnership is the general
partner, opened Spokane Valley Mall Plaza, a new community center development
in Spokane, Washington. This property is next to the Spokane Valley Mall and
it contains approximately 132,000 square feet of gross leasable area and is
100% occupied.
On November 5, 2001, the Operating Partnership sold Fry's Plaza, a
community center in Glendale, Arizona for approximately $7,450. This property
had approximately 119,000 square feet of gross leasable area.
12
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with the
consolidated financial statements of the Company and the notes thereto
appearing elsewhere herein.
The Company is a fully integrated, self-administered and self-managed
REIT primarily engaged in the ownership, leasing, management, operation,
development, redevelopment and acquisition of retail properties in Utah, Idaho,
Colorado, Arizona, Nevada, New Mexico and Wyoming, as well as in Oregon,
Washington and California. JP Realty, Inc. conducts all of its business
operations through, and holds a controlling interest in, the Operating
Partnership. The Operating Partnership's existing portfolio consists of 50
properties, in three operating segments, including 18 enclosed regional malls,
25 community centers together with one free-standing retail property and six
mixed-use commercial properties.
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2001 TO NINE MONTHS ENDED
SEPTEMBER 30, 2000
REVENUES
Total revenues increased 1.9%, or $1,951,000, for the nine months ended
September 30, 2001. Of the $1,951,000 increase, $1,597,000 was the result of
increased revenues at the regional malls, $653,000 was the result of increased
revenues at the community centers and $41,000 was the result of decreased
revenues at the commercial properties. A decrease of $258,000 was not
allocated to a particular property segment.
MINIMUM RENTS
Minimum rents increased 2.9%, or $2,165,000, for the nine months ended
September 30, 2001. Minimum rents increased by $1,600,000 at the regional
malls primarily due to the September 2000 completion of the expansion at the
NorthTown Mall, the August 2000 addition of Dillard's as an anchor tenant to
the North Plains Mall and overall growth throughout the regional mall
portfolio. Minimum rents increased by $593,000 at the community centers
primarily due to overall growth throughout the community center portfolio and
$265,000 from lease termination settlements. Minimum rents at the commercial
properties decreased by $28,000.
PERCENTAGE AND OVERAGE RENTS
Percentage and overage rents increased 16.8%, or $189,000, for the nine
months ended September 30, 2001. Percentage and overage rents increased by
$194,000 at the regional malls and decreased by $5,000 at the community
centers.
RECOVERIES FROM TENANTS
Recoveries from tenants increased 3.2%, or $745,000, for the nine months
ended September 30, 2001. Recoveries from tenants increased by $702,000 at the
regional malls, $56,000 at the community centers and decreased by $13,000 at
the commercial properties.
INTEREST AND OTHER REVENUES
Interest and other revenues decreased 49.2%, or $1,148,000, for the nine
months ended September 30, 2001. Interest decreased $142,000 and other
revenues decreased $1,006,000. The decrease in other revenues is primarily due
to $729,000 received in 2000 from a local governmental redevelopment agency as
payment for a prior year incentive to build in its community, along with a
decrease in the amount of such incentives for the nine months ended September
30, 2001 compared to the same period of the prior year.
13
EXPENSES
Total expenses increased 1.3%, or $983,000, for the nine months ended
September 30, 2001. Property operating expenses (operating and maintenance;
real estate taxes and insurance; and advertising and promotions) decreased by
$60,000, general and administrative expenses increased by $186,000,
depreciation and amortization increased by $1,447,000 and interest decreased by
$590,000.
PROPERTY OPERATING EXPENSES
Property operating expenses (operating and maintenance; real estate taxes
and insurance; and advertising and promotions) increased by $94,000 at the
regional malls, decreased by $76,000 at the community centers and decreased by
$78,000 at the commercial properties.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased $186,000 for the nine
months ended September 30, 2001. The increase is primarily related to
increased insurance expense related to the Company's health insurance plan
which, in 2000, was lower due to the receipt of certain reinsurance proceeds.
Higher legal and professional costs also contributed to this increase.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased $1,447,000 for the nine months
ended September 30, 2001. This increase is attributable to higher depreciation
expense from newly developed GLA and tenant improvements off set by the effect
of reducing asset lives on tenant improvements. In 2001, the effect of
reducing asset lives on tenant improvements was $895,000 compared to $1,286,000
in 2000.
INTEREST EXPENSE/CAPITALIZED INTEREST
Interest expense decreased $590,000 for the nine months ended September
30, 2001. The decrease in interest expense is the result of lower interest
rates on the Company's variable rate debt. Interest capitalized on projects
under development was $414,000 in 2001 compared to $1,245,000 in 2000.
MINORITY INTEREST IN (INCOME) LOSS OF CONSOLIDATED PARTNERSHIPS
Losses attributable to minority interest decreased $397,000 to $21,000
income in 2001 compared to $376,000 loss in 2000. This is mainly due to a
consolidated partnership where cumulative losses now exceed the limited
partners' investment in such consolidated partnership and such losses
previously attributable to its limited partners are now recognized by the
Company.
GAIN ON SALES OF REAL ESTATE
Gain on sales of real estate decreased $1,130,000 due to a sale of an out
parcel with a gain of $872,000 in 2001 compared to the gain on sales of real
estate of $2,002,000 in 2000.
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2001 TO THREE MONTHS ENDED
SEPTEMBER 30, 2000
REVENUES
Total revenues increased 0.2%, or $80,000, for the three months ended
September 30, 2001. Of the $80,000 increase, $312,000 was the result of
increased revenues at the regional malls, $1,000 was the result of decreased
revenues at the community centers and $52,000 was the result of decreased
revenues at the commercial properties. A decrease of $179,000 was not
allocated to a particular property segment.
14
MINIMUM RENTS
Minimum rents increased 2.3%, or $599,000, for the three months ended
September 30, 2001. Minimum rents increased by $459,000 at the regional malls
primarily due to the September 2000 completion of the expansion at the
NorthTown mall and overall growth throughout the regional mall portfolio.
Minimum rents increased by $144,000 at the community centers. Minimum rents at
the commercial properties decreased by $4,000.
PERCENTAGE AND OVERAGE RENTS
Percentage and overage rents decreased 41.0%, or $154,000, for the three
months ended September 30, 2001. Percentage and overage rents decreased by
$157,000 at the regional malls and increased $3,000 at the community centers.
RECOVERIES FROM TENANTS
Recoveries from tenants decreased 0.7%, or $59,000, for the three months
ended September 30, 2001. Recoveries from tenants deceased by $62,000 at the
regional malls, increased $19,000 at the community centers and decreased by
$16,000 at the commercial properties.
INTEREST AND OTHER REVENUES
Interest and other revenues decreased 50%, or $306,000, for the three
months ended September 30, 2001. Interest decreased $121,000 and other
revenues decreased $185,000. The decrease in other revenues is primarily the
result of a decrease in the amount of revenues due from a local governmental
redevelopment agency for the three months ended September 30, 2001 compared to
the same period in 2000.
EXPENSES
Total expenses decreased 5.0%, or $1,368,000, for the three months ended
September 30, 2001. Property operating expenses (operating and maintenance;
real estate taxes and insurance; and advertising and promotions) decreased by
$146,000 general and administrative expenses decreased by $148,000
depreciation and amortization decreased by $139,000 and interest decreased by
$935,000.
PROPERTY OPERATING EXPENSES
Property operating expenses (operating and maintenance; real estate taxes
and insurance; and advertising and promotions) decreased by $91,000 at the
regional malls, decreased by $11,000 at the community centers and decreased by
$44,000 at the commercial properties.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased $148,000 for the three
months ended September 30, 2001. The decrease is primarily related to
decreased payroll costs and computer services.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased $139,000 for the three months
ended September 30, 2001. This decrease is attributable to higher depreciation
expense from newly developed GLA and tenant improvements, offset by the
difference in the reduction in asset lives on certain tenant improvements in
2001 verses 2000. In 2001, the effect of reducing asset lives on tenant
improvements was $338,000 compared to $1,033,000 in 2000.
15
INTEREST EXPENSE/CAPITALIZED INTEREST
Interest expense decreased $935,000 for the three months ended September
30, 2001. The decrease in interest expense is the result of lower interest
rates on the Company's variable rate debt. Interest capitalized on projects
under development was $215,000 in 2001 compared to $445,000 in 2000.
MINORITY INTEREST IN (INCOME) LOSS OF CONSOLIDATED PARTNERSHIPS
Losses attributable to minority interest decreased $251,000 to $75,000
income in 2001 compared to $176,000 loss in 2000. This is mainly due to a
consolidated partnership where cumulative losses now exceed the limited
partners' investment in such consolidated partnership and such losses
previously attributable to its limited partners are now recognized by the
Company.
GAIN ON SALES OF REAL ESTATE
Gain on sales of real estate decreased $373,000 due to sales of property
in 2000 and no sales in 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal uses of its liquidity and capital resources have
historically been for cash distributions, property acquisitions, property
development, expansion and renovation programs and debt repayment. To maintain
its qualification as a REIT under the Internal Revenue Code of 1986, as amended
(the "Code"), the Company is required to distribute to its stockholders at
least 90% of its "Real Estate Investment Trust Taxable Income," as defined in
the Code. For the quarter ended September 30, 2001, the Company declared a
dividend of $.495 per share payable October 16, 2001 to the stockholders of
record as of October 4, 2001.
The Company's principal source of liquidity is its cash flow from
operations generated from its real estate investments. As of September 30,
2001, the Company's cash and restricted cash amounted to approximately $12.2
million. In addition to its cash and restricted cash, unused capacity under
the Operating Partnership's credit facility at September 30, 2001 totaled $86.5
million.
The Company expects to meet its short-term liquidity requirements,
including distributions, recurring capital expenditures related to maintenance
and improvement of existing properties, through undistributed funds from
operations, cash balances and advances under the Operating Partnership's credit
facility.
The Company's principal long-term liquidity requirements will be the
repayment of principal on its outstanding secured and unsecured indebtedness.
At September 30, 2001, the Company's total outstanding indebtedness was
approximately $464.2 million. Such indebtedness included: (i) the Provo Towne
Centre construction loan of approximately $44.1 million which was due in July
2001 and was extended, at the option of the Company, for an additional two
years; (ii) the Spokane Valley Mall construction loan of $41.6 million which
was due August 1, 2001 and was replaced with a new loan in the same amount
maturing July 31, 2003; (iii) the Operating Partnership's credit facility with
a balance of $113.5 million maturing July 2003; (iv) the $100 million senior
notes with a principal payable of $25 million per year beginning March 2005;
(v) the $81.8 million, 6.68% first mortgage on NorthTown Mall which requires a
balloon payment of approximately $73.0 million in September 2008; and (vi) the
$78.5 million, 6.64% first mortgage on Boise Towne Square which requires a
balloon payment of approximately $68.4 million in February 2011.
Quarterly distributions to the preferred unitholders of approximately
$278,900, $2,125,600 and $175,000 are due to the holders of the Series A,
Series B and Series C Preferred Units, respectively, on the last day of each
March, June, September and December of each year. If the last day of each
payment period falls on a non-business day, payment is due on the immediately
preceding business day for Series A and C and the following business day for
Series B, except that payment for the Series B fourth quarter distributions
must be made in December.
The Company is currently involved in expansion and renovation projects at
several of its properties, which are expected to be financed with the Operating
Partnership's credit facility. The Company is also contemplating additional
development projects and acquisitions as a means to expand its portfolio. The
Company does not expect to generate sufficient funds from
16
operations to meet such long-term needs and intends to finance these costs
primarily through advances under the Operating Partnership's credit facility
together with equity and debt offerings, individual property financing and
selective asset sales. The availability of such financing will influence the
Company's decision to proceed with, and the pace of, its development and
acquisition activities.
On September 2, 1997, the Company and the Operating Partnership filed a
shelf registration statement on Form S-3 with the Securities and Exchange
Commission for the purpose of registering common stock, preferred stock,
depositary shares, common stock warrants, debt securities and guarantees. This
registration statement, when combined with the Company's unused portion of its
previous shelf registration, would allow for up to $400 million of securities
to be offered by the Company and the Operating Partnership. On March 11, 1998,
pursuant to this registration statement, the Operating Partnership issued $100
million of ten-year senior unsecured notes bearing annual interest at a rate of
7.29%. The Operating Partnership had entered into an interest rate protection
agreement in anticipation of issuing these notes and received $270,000 as a
result of terminating this agreement making the effective rate of interest on
these notes 7.26%. Interest payments are due semi-annually on March 11th and
September 11th of each year. Principal payments of $25 million are due annually
beginning March 2005. The proceeds were used to partially repay outstanding
borrowings under the Operating Partnership's prior credit facility. At
September 30, 2001, the Company and the Operating Partnership had an aggregate
of $300 million in registered securities available under its effective shelf
registration statement.
The Company intends to fund its distribution, development, expansion,
renovation, acquisition and debt repayment activities from the Operating
Partnership's credit facility, from other debt and equity financings, including
public financing and from selective asset sales. The Company's ratio of debt-
to-total market capitalization was approximately 45% at September 30, 2001.
Net cash provided by operating activities for the nine months ended
September 30, 2001 was $51,248,000 versus $51,208,000 for the corresponding
period of 2000. Net income adjusted for non-cash items accounted for a
$1,383,000 increase, while changes in operating assets and liabilities
accounted for a $1,343,000 decrease.
Net cash used in investing activities for the nine months ended September
30, 2001 was $23,996,000. It primarily reflects real estate asset investments
of $22,006,000, an increase in restricted cash of $3,780,000 and proceeds from
the sale of real estate of $1,790,000.
Net cash used in financing activities for the nine months ended September
30, 2001 was $25,294,000. Cash was generated from the issuance of Common Stock
upon the exercise of outstanding stock options in the amount of $2,135,000 and
from borrowings of $132,973,000, which were used to repay outstanding
borrowings in the amount of $133,285,000 and for distributions to preferred
unitholders in the amount of $5,613,000 to minority interests in the amount of
$350,000, to common stockholders in the amount of $16,077,000 and to common
unitholders in the amount of $3,602,000 along with the payment of $1,475,000
for deferred financing costs.
The Financial Accounting Standards Board issued SFAS No. 141, BUSINESS
COMBINATIONS ("SFAS 141"). SFAS 141 requires that the purchase method of
accounting be used for all business combinations for which the date of
acquisition is after June 30, 2001. SFAS 141 also establishes specific
criteria for the recognition of intangible assets. The Company does not expect
the adoption of this standard to have a significant impact on its financial
statements.
The Financial Accounting Standards Board issued SFAS No. 142, GOODWILL AND
OTHER INTANGIBLE ASSETS ("SFAS 142"). SFAS 142 primarily addresses the
accounting for goodwill and intangible assets subsequent to their acquisition.
SFAS 142 is effective for fiscal years beginning after December 15, 2001. The
Company does not expect the adoption of this standard to have a significant
impact on its financial statements.
The Financial Accounting Standards Board issued SFAS No. 143, ACCOUNTING
FOR ASSET RETIREMENT OBLIGATIONS ("SFAS 143"). SFAS 143 requires that an
entity shall recognize the fair value of a liability for an asset retirement
obligation in the period in which a reasonable estimate of fair value can be
made. SFAS 143 is effective for fiscal years beginning after June 15, 2002,
with early adoption permitted. The Company does not expect the adoption of
this standard to have a significant impact on its financial statements.
17
The Financial Accounting Standards Board issued SFAS No.144, ACCOUNTING FOR
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS ("SFAS 144"). SFAS 144 supersedes
SFAS 121 and requires that one accounting model be used for long-lived assets
to be disposed of by sale, whether previously held and used or newly acquired,
and broadens the presentation of discontinued operations to include more
disposal transactions. SFAS 144 is effective for fiscal years beginning after
December 15, 2001, with early adoption permitted. The Company does not expect
the adoption of this standard to have a significant impact on its financial
statements.
The statements contained in this Quarterly Report of Form 10-Q that are not
purely historical fact are forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and as such may involve known and
unknown risks, uncertainties and assumptions. Actual future performance,
achievements and results of the Company may differ materially from those
expressed or implied by such forward-looking statements as a result of such
known and unknown risks, uncertainties, assumptions and other factors.
Representative examples of these factors include, without limitation, general
industry and economic conditions, interest rate trends, cost of capital and
capital requirements, availability of real estate properties, competition from
other companies and venues for the sale/distribution of goods and services,
shifts in customer demands, tenant bankruptcies, governmental and public policy
changes and the continued availability of financing in the amounts and on the
terms necessary to support the future business of the Company. Readers are
cautioned that the Company's actual results could differ materially from those
set forth in such forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The Company's exposure to market risk is limited to fluctuations in the
general level of interest rates on its current and future fixed and variable
rate debt obligations. The Company is vulnerable to significant fluctuations
in interest rates on its variable rate debt, on any future repricing or
refinancing of its fixed rate debt and on future debt.
The Company uses long-term and medium-term debt as a source of capital. At
September 30, 2001, the Company had approximately $264,965,000 of outstanding
fixed rate debt, consisting of $100,000,000 in unsecured senior notes and
$164,965,000 in mortgages and notes secured by real estate. The various fixed
rate debt instruments mature starting in the year 2001 through 2095. The
weighted average rate of interest on the fixed rate debt was approximately
6.87% for the period ended September 30, 2001. When debt instruments of this
type mature, the Company typically refinances such debt at the then-existing
market interest rates which may be more or less than the interest rates on the
maturing debt. Changes in general market interest rates will effect the fair
value of the Company's fixed rate debt (i.e. as the interest rates increase the
fair value of the debt decreases and as interest rates decrease the fair value
of the debt increases) but will not have an effect on the interest rate,
interest expense or cash flow of such debt. In addition, the Company may
attempt to reduce interest rate risk associated with a forecasted issuance of
new fixed rate debt by entering into interest rate protection agreements. In
addition to the October 12, 2001 Sears-Eastbay loan pay off of $1,243,000,
$465,000 of scheduled principal amortization payments are due in 2001.
The Operating Partnership's credit facility and existing construction loans
have variable interest rates and any fluctuation in interest rates could
increase or decrease the Company's interest expense. The Operating
Partnership's credit facility borrowings are primarily transacted utilizing a
variable interest rate tied to LIBOR, which as of September 30, 2001 was equal
to LIBOR plus 110 basis points. The interest rate on the construction loan and
loan facility as of September 30, 2001 was equal to LIBOR plus 150 basis points.
The LIBOR rate used is at the Company's option and is based upon the 30, 60
or 90 day LIBOR rate. A change in the LIBOR rate will effect the Company's
interest expense and cash flow. At September 30, 2001, the Company
had approximately $199,185,000 in outstanding variable rate debt. The weighted
average rate of interest on the variable interest rate debt was approximately
5.97% for the period ended September 30, 2001. If the interest rate
for the Company's variable rate debt increased or decreased by 1%, the
Company's subsequent annual interest rate expense on its then outstanding
variable rate debt would increase or decrease, as the case may be, by
approximately $1,992,000.
Due to the uncertainty of fluctuations in interest rates and the specific
actions that might be taken by the Company to mitigate the impact of such
fluctuations and their possible effects, the foregoing sensitivity analysis
assumes no changes in the Company's financial and credit structure.
18
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not aware of any pending or threatened litigation at this
time that will have a material adverse effect on the Company or any of its
properties.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
19
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Amended and Restated Articles of Incorporation the Company (3(a))(1)
3.3 Articles Supplementary of the Company relating to the 8.75% Series A Cumulative Redeemable Preferred
Stock(2)
3.4 Articles Supplementary of the Company relating to the 8.95% Series B Cumulative Redeemable Preferred
Stock(2)
3.5 Articles Supplementary of the Company relating to the election to be subject to Title 3, Subtitle 8
of the Maryland General Corporation Law(3)
3.6 Articles Supplementary of the Company relating to the Series A Junior Preferred Stock(4)
3.7 Amendment to the Bylaws of the Company(3)
3.8 Amended and Restated By-Laws of the Company(3)
3.9 Articles Supplementary of the Company relating to the 8.75% Series C Cumulative Redeemable Preferred
Stock(3)
4.1 Specimen of Common Stock Certificate(4)(1)
10.1 Second Amended and Restated Agreement of Limited Partnership of Price Development Company, Limited
Partnership(2)
10.2 Agreement of Limited Partnership of Price Financing Partnership, L.P. (10(b))(1)
10.3 Employment and Non-Competition Agreement between the Company and John Price (10(d))(1)
10.4 Indemnification Agreement for Directors and Officers (10(f))(1)
10.5 Registration Rights Agreement among the Company and the Limited Partners of Price Development
Company, Limited Partnership (10(g))(1)
10.6 Amendment No. 1 to Registration Rights Agreement, dated August 1, 1995, among the Company and the
Limited Partners of Price Development Company, Limited Partnership(5)
10.7 Exchange Agreement among the Company and the Limited Partners of Price Development Company, Limited
Partnership (10(h))(1)
10.8 1993 Stock Option Plan (10(i))(1)
10.9 Amendment to Ground lease between Price Development Company and Alvin Malstrom as Trustee and C.F.
Malstrom, dated December 31, 1985. (Ground lease for Plaza 9400) (10(j))(1)
10.10 Lease Agreement between The Corporation of the President of the Church of Jesus Christ of Latter Day
Saints and Price-James and Assumptions, dated September 24, 1979. (Ground lease for Anaheim Plaza)
(10(k))(1)
10.11 Indenture of Lease between Ambrose and Zelda Motta and Cordova Village, dated July 26, 1974, and
Amendments and Transfers thereto. (Ground lease for Fort Union Plaza) (10(l))(1)
10.12 Lease Agreement between Advance Management Corporation and Price Rentals, Inc. and dated August 1,
1975 and Amendments thereto. (Ground lease for Price Fremont) (10(m))(1)
10.13 Ground lease between Aldo Rossi and Price Development Company, dated June 1, 1989, and related
documents. (Ground lease for Halsey Crossing) (10(n))(1)
10.14 First Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(2)
10.15 Second Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(2)
10.16 Third Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(6)
10.17 Amended and Restated Rights Agreement between the Company and Investor Services, LLC, as Rights Agent
(7)
10.18 Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(8)
10.19 Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(9)
10.20 Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(10)
- --------------------
(1) Documents were previously filed with the Company's Registration Statement on Form S-11, File No. 33-68844, under the
exhibit numbered in parenthetical, and are incorporated herein by reference.
(2) Documents were previously filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
and are incorporated herein by reference.
(3) Document was previously filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
and is incorporated herein by reference.
(4) Documents were previously filed with the Company's current report on Form 8-K, dated August 13, 1999, and are
incorporated herein by reference.
(5) Documents were previously filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1995
and are incorporated herein by reference.
(6) Document was previously filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1999 and are incorporated herein by reference.
(7) Document was previously filed with the Company's Current Report on Form 8-K dated January 29, 2001 and is
incorporated herein by reference.
(8) Document was previously filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1999 and
is incorporated herein by reference.
(9) Document was previously filed with the Company's Quarterly report on Form 10-Q for the quarter ended March 31, 2000
and is incorporated herein by reference.
(10) Document was previously filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2000 and
is incorporated herein by reference.
(B) CURRENT REPORTS ON FORM 8-K
None
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JP REALTY, INC.
(Registrant)
November 9, 2001 /s/ G. Rex Frazier
- ------------------------------------ ---------------------------------
November 9, 2001 /s/ G. Rex Frazier
(Date) G. Rex Frazier
PRESIDENT, CHIEF OPERATING OFFICER,
AND DIRECTOR
November 9, 2001 /s/ M. Scott Collins
- ------------------------------------ ---------------------------------
November 9, 2001 /s/ M. Scott Collins
(Date) M. Scott Collins
VICE PRESIDENT--CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL & ACCOUNTING OFFICER)
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Amended and Restated Articles of Incorporation the Company (3(a))(1)
3.3 Articles Supplementary of the Company relating to the 8.75% Series A Cumulative Redeemable Preferred
Stock(2)
3.4 Articles Supplementary of the Company relating to the 8.95% Series B Cumulative Redeemable Preferred
Stock(2)
3.5 Articles Supplementary of the Company relating to the election to be subject to Title 3, Subtitle 8
of the Maryland General Corporation Law(3)
3.6 Articles Supplementary of the Company relating to the Series A Junior Preferred Stock(4)
3.7 Amendment to the Bylaws of the Company(3)
3.8 Amended and Restated By-Laws of the Company(3)
3.9 Articles Supplementary of the Company relating to the 8.75% Series C Cumulative Redeemable Preferred
Stock(3)
4.1 Specimen of Common Stock Certificate(4)(1)
10.1 Second Amended and Restated Agreement of Limited Partnership of Price Development Company, Limited
Partnership(2)
10.2 Agreement of Limited Partnership of Price Financing Partnership, L.P. (10(b))(1)
10.3 Employment and Non-Competition Agreement between the Company and John Price (10(d))(1)
10.4 Indemnification Agreement for Directors and Officers (10(f))(1)
10.5 Registration Rights Agreement among the Company and the Limited Partners of Price Development
Company, Limited Partnership (10(g))(1)
10.6 Amendment No. 1 to Registration Rights Agreement, dated August 1, 1995, among the Company and the
Limited Partners of Price Development Company, Limited Partnership(5)
10.7 Exchange Agreement among the Company and the Limited Partners of Price Development Company, Limited
Partnership (10(h))(1)
10.8 1993 Stock Option Plan (10(i))(1)
10.9 Amendment to Ground lease between Price Development Company and Alvin Malstrom as Trustee and C.F.
Malstrom, dated December 31, 1985. (Ground lease for Plaza 9400) (10(j))(1)
10.10 Lease Agreement between The Corporation of the President of the Church of Jesus Christ of Latter Day
Saints and Price-James and Assumptions, dated September 24, 1979. (Ground lease for Anaheim Plaza)
(10(k))(1)
10.11 Indenture of Lease between Ambrose and Zelda Motta and Cordova Village, dated July 26, 1974, and
Amendments and Transfers thereto. (Ground lease for Fort Union Plaza) (10(l))(1)
10.12 Lease Agreement between Advance Management Corporation and Price Rentals, Inc. and dated August 1,
1975 and Amendments thereto. (Ground lease for Price Fremont) (10(m))(1)
10.13 Ground lease between Aldo Rossi and Price Development Company, dated June 1, 1989, and related
documents. (Ground lease for Halsey Crossing) (10(n))(1)
10.14 First Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(2)
10.15 Second Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(2)
10.16 Third Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(6)
10.17 Amended and Restated Rights Agreement between the Company and Investor Services, LLC, as Rights Agent
(7)
10.18 Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(8)
10.19 Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(9)
10.20 Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership(10)
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(1) Documents were previously filed with the Company's Registration Statement on Form S-11, File No. 33-68844, under the
exhibit numbered in parenthetical, and are incorporated herein by reference.
(2) Documents were previously filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
and are incorporated herein by reference.
(3) Document was previously filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
and is incorporated herein by reference.
(4) Documents were previously filed with the Company's current report on Form 8-K, dated August 13, 1999, and are
incorporated herein by reference.
(5) Documents were previously filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1995
and are incorporated herein by reference.
(6) Document was previously filed with the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1999 and are incorporated herein by reference.
(7) Document was previously filed with the Company's Current Report on Form 8-K dated January 29, 2001 and is
incorporated herein by reference.
(8) Document was previously filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1999 and
is incorporated herein by reference.
(9) Document was previously filed with the Company's Quarterly report on Form 10-Q for the quarter ended March 31, 2000
and is incorporated herein by reference.
(10) Document was previously filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2000 and
is incorporated herein by reference.