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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
COMMISSION FILE NUMBER: 001-13243
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PAN PACIFIC RETAIL PROPERTIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 33-0752457
(State of Incorporation) (I.R.S. Employer Identification No.)
1631-B SOUTH MELROSE DRIVE, 92083
VISTA, CALIFORNIA (zip code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (760) 727-1002
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
As of May 10, 2001, the number of shares of the Registrant's common stock
outstanding was 31,408,638.
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PAN PACIFIC RETAIL PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31,
2001 2000
----------- ------------
(unaudited)
ASSETS:
Properties, at cost:
Land $ 343,301 $ 350,604
Buildings and improvements (including related party development
and acquisition fees of $1,235) 893,544 887,353
Tenant improvements 31,525 30,762
----------- -----------
1,268,370 1,268,719
Less accumulated depreciation and amortization (79,360) (73,895)
----------- -----------
1,189,010 1,194,824
Investments in unconsolidated partnerships 6,966 6,816
Cash and cash equivalents 717 1,601
Restricted cash 321 331
Accounts receivable (net of allowance for doubtful accounts of
$1,503 and $1,404, respectively) 6,006 7,107
Accrued rent receivable (net of allowance for doubtful accounts of
$1,630 and $1,588, respectively) 14,667 14,288
Notes receivable 44,479 37,944
Deferred lease commissions (including unamortized related party
amounts of $3,021 and $2,978, respectively, and net of accumulated
amortization of $2,711 and $2,415, respectively) 4,893 4,836
Prepaid expenses 8,340 9,133
Other assets 20,515 20,810
----------- -----------
$ 1,295,914 $ 1,297,690
=========== ===========
LIABILITIES AND EQUITY:
Notes payable $ 232,903 $ 233,911
Line of credit and term loan payable 288,400 267,650
Senior notes 124,857 124,850
Accounts payable, accrued expenses and other liabilities (including
related party amounts of $294 and $663, respectively) 20,185 22,527
----------- -----------
666,345 648,938
Minority interests 40,861 41,754
----------- -----------
Stockholders' equity:
Common stock par value $.01 per share, 100,000,000 authorized shares,
31,399,638 and 32,074,368 shares issued and outstanding at
March 31, 2001 and December 31, 2000, respectively 314 321
Paid in capital in excess of par value 686,684 705,265
Accumulated deficit (98,290) (98,588)
----------- -----------
588,708 606,998
----------- -----------
$ 1,295,914 $ 1,297,690
=========== ===========
See accompanying notes to consolidated financial statements.
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PAN PACIFIC RETAIL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
2001 2000
-------- --------
(unaudited)
REVENUE:
Base rent $ 34,524 $ 21,289
Percentage rent 808 127
Recoveries from tenants 7,872 4,966
Income from unconsolidated partnerships 217 71
Other 1,875 610
-------- --------
45,296 27,063
-------- --------
EXPENSES:
Property operating 5,386 3,400
Property taxes 3,443 1,983
Depreciation and amortization 6,868 4,656
Interest 11,696 6,972
General and administrative 2,389 1,212
Other 480 31
-------- --------
30,262 18,254
-------- --------
INCOME BEFORE MINORITY INTERESTS 15,034 8,809
Minority interests (500) (499)
-------- --------
NET INCOME $ 14,534 $ 8,310
======== ========
Basic earnings per share $ 0.46 $ 0.39
Diluted earnings per share $ 0.45 $ 0.39
See accompanying notes to consolidated financial statements.
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PAN PACIFIC RETAIL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
2001 2000
-------- --------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,534 $ 8,310
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,868 4,656
Restricted stock amortization 169 --
Amortization of prepaid financing costs 224 169
Income from unconsolidated partnerships (217) (71)
Minority interests 500 499
Changes in assets and liabilities:
Decrease in restricted cash 10 203
Decrease in accounts receivable 1,101 273
Increase in accrued rent receivable (379) (617)
Increase in deferred lease commissions (354) (326)
Decrease in prepaid expenses 567 699
Increase in other assets (1,712) (43)
Decrease in accounts payable, accrued expenses
and other liabilities (2,226) (43)
-------- --------
Net cash provided by operating activities 19,085 13,709
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of and additions to operating properties (1,565) (5,155)
Proceeds from sales of real estate 1,355 --
Increase (decrease) in construction accounts payable and
accrued expenses (116) 454
Distributions from unconsolidated partnerships 67 74
Acquisition of Western (1,348) --
Increase in other assets -- (6)
Collections of notes receivable 812 302
Increases in notes receivable (4,947) (2)
-------- --------
Net cash used in investing activities (5,742) (4,333)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Line of credit proceeds 38,000 9,100
Line of credit payments (17,250) (9,750)
Notes payable payments (1,001) (838)
Prepaid financing costs -- (25)
Repurchase of common shares (20,850) --
Issuance of common shares 2,082 --
Distributions paid (15,208) (8,960)
-------- --------
Net cash used by financing activities (14,227) (10,473)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (884) (1,097)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,601 1,097
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 717 $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest (net of amounts capitalized of
$307 and $26, respectively) $ 14,243 $ 6,758
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Distributions payable $ -- $ 9,408
Transfer of other assets to property $ 2,486 $ --
Note receivable issued upon sale of property $ 2,400 $ --
See accompanying notes to consolidated financial statements.
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PAN PACIFIC RETAIL PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2001 (UNAUDITED) AND DECEMBER 31, 2000,
AND FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
(TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)
1. MANAGEMENT STATEMENT AND GENERAL
The consolidated financial statements of Pan Pacific Retail Properties,
Inc. (the "Company") were prepared from the books and records of the Company
without audit and in the opinion of management include all adjustments
(consisting of only normal recurring accruals) necessary to present a fair
statement of results for the interim periods presented. Readers of this
quarterly report should refer to the audited consolidated financial statements
of the Company for the year ended December 31, 2000, which are included in the
Company's 2000 Annual Report on Form 10-K, as certain disclosures which would
substantially duplicate those contained in the audited consolidated financial
statements have been omitted from this report.
2. STOCK PLANS
In March 2001 and 2000, the Company granted 424,000 and 173,000 stock
options, respectively, under the 2000 Stock Incentive Plan of Pan Pacific Retail
Properties, Inc. and the 1997 Stock Option and Incentive Plan. In January 2001,
the Company also granted 212,000 shares of restricted stock under these plans.
3. EARNINGS PER SHARE
The following is a reconciliation of the numerator and denominator for the
calculation of basic and diluted earnings per share for the three months ended
March 31, 2001 and 2000:
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------
2001 2000
----------- -----------
Income available to common stockholders:
Basic $ 14,534 $ 8,310
Add-back income allocated to dilutive operating
partnership and LLC units (minority interests) 271 486
----------- -----------
Diluted $ 14,805 $ 8,796
=========== ===========
Weighted average shares:
Basic 31,297,692 21,252,512
Incremental shares from assumed:
Exercise of dilutive stock options 138,557 7,433
Conversion of dilutive operating partnership and
LLC units 1,744,552 1,147,204
----------- -----------
Diluted 33,180,801 22,407,149
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At March 31, 2000, 1,276,834 stock options were excluded from the
calculation of diluted weighted-average shares because they were anti-dilutive.
At March 31, 2001, 314,587 LLC units were excluded from the calculation of
diluted weighted-average shares because they were anti-dilutive.
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PAN PACIFIC RETAIL PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2001 (UNAUDITED) AND DECEMBER 31, 2000,
AND FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
(TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)
4. RELATED PARTY TRANSACTIONS
(a) On January 4, 2001, the Company purchased 1,000,000 shares of its common
stock from Revenue Properties (U.S.), Inc., an affiliate of the Company. The
Company purchased the stock at a price of $20.85 per share and financed the
transaction through a draw under its line of credit.
(b) Distributions on common stock paid to Revenue Properties (U.S.), Inc. were
$3,643,000 and $4,323,000 during the three months ended March 31, 2001 and 2000,
respectively. At March 31, 2001 and 2000, $0 and $4,539,000, respectively, were
payable as distributions to Revenue Properties (U.S.), Inc.
(c) The Company received $25,000 for each of the three months ended March 31,
2001 and 2000, which represents a reimbursement of costs incurred by the Company
in providing financial services to Revenue Properties (U.S.), Inc. These amounts
are included as a reduction of general and administrative expenses.
(d) The Company had notes receivable of $699,000 and $687,000 due from executive
officers at March 31, 2001 and December 31, 2000, respectively. These notes were
part of the acquisition of Western and replaced notes previously held by
officers of Western. These notes bear interest at 7.50% and mature in October
2008. In addition, the Company had notes receivable of $118,000 and $116,000 due
from executive officers at March 31, 2001 and December 31, 2000, respectively.
These notes bear interest at 7.00% and mature in August 2001.
5. COMMITMENTS AND CONTINGENCIES
Various claims and legal proceedings arise in the ordinary course of
business. The ultimate amount of liability from all claims and actions cannot be
determined with certainty, but in the opinion of management, the ultimate
liability from all pending and threatened legal claims will not materially
affect the consolidated financial statements taken as a whole.
6. SUBSEQUENT EVENT
In April 2001, the Company sold $150,000,000 of 7.95% senior notes due
April 2011 priced at 99.225% of the principal amount. Net proceeds from the
offering were used to repay borrowings under its term loan and line of credit.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY LANGUAGE
The discussions in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 which
reflect management's current views with respect to future events and financial
performance. Forward-looking statements are subject to risks and uncertainties.
Factors that could cause actual results to differ materially from expectations
include market valuations of our stock, financial performance and operations of
our shopping centers, real estate conditions, execution of shopping center
development programs, successful completion of renovations, completion of
pending acquisitions, changes in the availability of additional acquisitions,
changes in local or national economic conditions, and other risks detailed from
time to time in reports filed with the Securities and Exchange Commission
including our Annual Report on Form 10-K for the year ended December 31, 2000.
OVERVIEW
The following discussion should be read in connection with our consolidated
financial statements of Pan Pacific Retail Properties, Inc. and subsidiaries,
and the notes thereto, appearing elsewhere in this report.
We receive income primarily from rental revenue from shopping center
properties, including recoveries from tenants, offset by operating and overhead
expenses. Primarily as a result of our acquisition program, including the
acquisition of Western Properties Trust described below, which included
interests in 50 shopping centers, the financial data show increases in total
revenue and total expenses from period to period.
On November 13, 2000, we acquired Western Properties Trust, a California
real estate investment trust. The transaction was a stock for stock exchange
whereby Western common shares and units were exchanged into newly issued common
shares and operating partnership units, based upon a fixed exchange ratio of
0.62. As a result, we issued 10,754,256 shares of our common stock to holders of
Western common shares and are obligated to issue 911,934 shares of our common
stock upon the exchange of operating partnership units held by limited partners
of Pan Pacific (Kienows), L.P., formerly Western/Kienow, L.P., and Pan Pacific
(Pinecreek), L.P., formerly Western/Pinecreek, L.P. In connection with this
transaction, we assumed $135,000,000 of Western's debt obligations.
We expect that the more significant part of our growth in the next year or
two will come from additional acquisitions, rent increases from re-leasing and
re-tenanting initiatives of the assets acquired in the Western acquisition and
the benefit of the stabilization of other properties acquired during 2000.
RESULTS OF OPERATIONS
Comparison of the three months ended March 31, 2001 to the three months
ended March 31, 2000.
Total revenue increased by $18,233,000 or 67.4% to $45,296,000 from
$27,063,000 for the three months ended March 31, 2001, compared to the three
months ended March 31, 2000.
Rental revenue increased by $13,916,000 or 65.0% to $35,332,000 from
$21,416,000 for the three months ended March 31, 2001, compared to the three
months ended March 31, 2000. The increase in rental revenue resulted principally
from three properties acquired in 2000 and the properties acquired as a result
of our acquisition of Western in November 2000.
Recoveries from tenants increased by $2,906,000 or 58.5% to $7,872,000 from
$4,966,000 for the three months ended March 31, 2001, compared to the three
months ended March 31, 2000. The increase resulted principally from three
properties acquired in 2000 and the acquisition of Western in November 2000.
Recoveries from tenants were 89.2% of property operating expenses and property
taxes for the three months ended March 31, 2001 compared to 92.3% of the same
expenses for the same period in 2000.
Property expenses include property operating expenses and property taxes.
Property operating expenses increased by $1,986,000 or 58.4% to $5,386,000 from
$3,400,000 for the three months ended March 31, 2001, compared to the three
months ended March 31, 2000. The increase resulted principally from three
properties acquired in 2000 and the acquisition of Western
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in November 2000. Property taxes increased by $1,460,000 or 73.6% to $3,443,000
from $1,983,000 for the three months ended March 31, 2001, compared to the three
months ended March 31, 2000. The increase in property taxes was also primarily
the result of three properties acquired in 2000 and the acquisition of Western
in November 2000.
Depreciation and amortization increased by $2,212,000 or 47.5% to
$6,868,000 from $4,656,000 for the three months ended March 31, 2001 compared to
the three months ended March 31, 2000. The increase resulted principally from
three properties acquired in 2000 and the acquisition of Western in November
2000.
Interest expense increased by $4,724,000 or 67.8% to $11,696,000 from
$6,972,000 for the three months ended March 31, 2001, compared to the three
months ended March 31, 2000, primarily as a result of the debt obligations
assumed upon the acquisition of Western and interest expense relating to funds
drawn on our Revolving Credit Agreement to finance the three other properties
acquired during 2000. These increases were partially offset by a reduction in
the LIBOR component of our borrowing cost under the Revolving Credit Agreement
and Term Credit Agreement over the comparable period in the prior year.
General and administrative expenses increased by $1,177,000 or 97.1% to
$2,389,000 from $1,212,000 for the three months ended March 31, 2001, compared
to the three months ended March 31, 2000. The increase resulted primarily from
an increase in salaries and benefits and other related expenses resulting from
the acquisition of Western as well as annual compensation increases in the first
quarter of 2001. As a percentage of total revenue, general and administrative
expenses were 5.3% and 4.5% for the three months ended March 31, 2001 and 2000,
respectively.
The following table compares the operating data for the 105 properties
("Same Properties") that were owned and in operation, including those previously
owned by Western, for the entirety of the three months ended March 31, 2001 and
2000:
THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
------- -------
Total revenue $42,534 $40,006
Operating expenses 10,077 8,598
------- -------
Operating income $32,457 $31,408
======= =======
Operating income for the Same Properties for the three months ended March
31, 2001 increased over the same period in the prior year by $1,049,000 or 3.3%.
This increase was primarily due to leasing at certain properties, previously
owned by Western, which were under redevelopment in 2000.
FUNDS FROM OPERATIONS
The White Paper on Funds from Operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts ("NAREIT") in March
1995 (the "White Paper") defines Funds from Operations as net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures. We consider Funds from Operations an appropriate measure of
performance of an equity REIT because it is predicated on cash flow analyses. We
compute Funds from Operations in accordance with standards established by the
White Paper. The Company's computation of Funds from Operations may, however,
differ from the methodology for calculating Funds from Operations utilized by
other equity REITs and, therefore, may not be comparable to these other REITs.
Funds from Operations should not be considered as an alternative to net income
(determined in accordance with GAAP) as a measure of our liquidity, nor is it
indicative of funds available to fund our cash needs, including our ability to
make distributions. NAREIT's clarification to the definition of Funds from
Operations, which became effective January 1, 2000, had no impact on our
calculation of Funds from Operations.
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The following table presents the Company's Funds from Operations (assuming
dilution) for the three months ended March 31, 2001 and the three months ended
March 31, 2000, respectively:
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2001 2000
------------ ------------
Net income $ 14,534,000 $ 8,310,000
Add:
Depreciation and amortization 6,868,000 4,656,000
Depreciation of unconsolidated
partnership 26,000 2,000
Depreciation of non-real estate
corporate assets (114,000) (101,000)
DownREIT minority interests 500,000 486,000
Net loss on sale of real estate 173,000 --
------------ ------------
Funds from Operations $ 21,987,000 $ 13,353,000
============ ============
Weighted average number of shares
of common stock outstanding
(assuming dilution) 33,495,388 22,407,149
CASH FLOWS
Comparison of the three months ended March 31, 2001 to the three months
ended March 31, 2000.
Net cash provided by operating activities increased by $5,376,000 to
$19,085,000 for the three months ended March 31, 2001, as compared to
$13,709,000 for the three months ended March 31, 2000. The increase was
primarily the result of an increase in operating income before depreciation and
amortization due to property acquisitions and the acquisition of Western offset
by an increase in other assets and a decrease in accounts payable, accrued
expenses and other liabilities.
Net cash used in investing activities increased by $1,409,000 to $5,742,000
for the three months ended March 31, 2001, compared to $4,333,000 for the three
months ended March 31, 2000. The increase was primarily the result of an
increase in notes receivable offset by a decrease in acquisitions of and
additions to operating properties over the comparable period in prior year.
Net cash used in financing activities increased by $3,754,000 to
$14,227,000 for the three months ended March 31, 2001, compared to $10,473,000
for the three months ended March 31, 2000. The increase resulted primarily from
the repurchase of shares of common stock, an increase in distributions paid and
an increase in line of credit payments offset by an increase in line of credit
proceeds.
LIQUIDITY AND CAPITAL RESOURCES
Our total market capitalization at March 31, 2001, was approximately
$1,387,272,000, based on the market closing price of our common stock at March
31, 2001 of $22.15 per share (assuming the conversion of 2,059,139 operating
subsidiary units) and debt outstanding of approximately $646,160,000 (exclusive
of accounts payable and accrued expenses). As a result, our debt to total market
capitalization ratio was approximately 46.6% at March 31, 2001. Our total market
capitalization includes the effect of the purchase of 1,000,000 shares of our
common stock we purchased from Revenue Properties (U.S.), Inc. on January 4,
2001. Our board of directors has adopted a policy of limiting our indebtedness
to approximately 50% of our total market capitalization. However, we may from
time to time modify our debt policy in light of current economic or market
conditions including but not limited to the relative costs of debt and equity
capital, market conditions for debt and equity securities and fluctuations in
the market price of our common stock. Accordingly, we may increase or decrease
our debt to market capitalization ratio beyond the limit described above.
In connection with our acquisition of Western in November 2000, we entered
into a new financing arrangement including a $300,000,000 Revolving Credit
Agreement and a $100,000,000 Term Credit Agreement. The Revolving Credit
Agreement
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matures in January 2004 and the Term Credit Agreement matures in November 2001.
At March 31, 2001, we had $111,600,000 available under our Revolving Credit
Agreement and the full amount of the Term Credit Agreement had been drawn. At
our option, amounts borrowed under the Revolving Credit Agreement bear interest
at either LIBOR plus 1.10% or a reference rate. At our option, amounts borrowed
under the Term Credit Agreement bear interest at either LIBOR plus 1.20% or a
reference rate. The weighted average interest rate for short-term LIBOR
contracts under the Revolving Credit Agreement and the Term Credit Agreement at
March 31, 2001 were 6.34% and 6.49%, respectively. We will continue to use the
Revolving Credit Agreement to take advantage of select acquisition opportunities
as well as to provide funds for general corporate purposes.
Our indebtedness outstanding at March 31, 2001 requires balloon payments of
$100,000,000 in 2001, $251,142,000 in 2004, $7,395,000 in 2005, $55,520,000 in
2006, $74,644,000 in 2007, $25,000,000 in 2008, $46,355,000 in 2009, $48,191,000
in 2010 and $5,836,000 in 2012. The balloon payment due in November 2001
represents the balance drawn on the Term Credit Agreement at March 31, 2001 of
$100,000,000. The balloon payments due in the year 2004 include the balance
drawn on the Revolving Credit Agreement at March 31, 2001 of $188,400,000 and
senior unsecured notes of $50,000,000. With regard to the balloon payments noted
above, it is likely that we will not have sufficient funds on hand to repay
these balloon amounts at maturity. Therefore, we expect to refinance this debt
either through additional debt financings secured by individual properties or
groups of properties, by unsecured private or public debt offerings or by
additional equity offerings.
In April 2001, we issued $150,000,000 of 7.95% senior notes due April 15,
2011. The net proceeds were used to repay borrowings under the Revolving Credit
Agreement and the Term Credit Agreement.
We expect to make distributions from net cash provided by operations.
Operating cash flows in excess of amounts to be used for distributions will be
invested by us primarily in short-term investments such as collateralized
securities of the United States government or its agencies, high-grade
commercial paper and bank deposits or will be used to pay down outstanding
balances on our Revolving Credit Agreement, if any.
The following table provides recent historical distribution information:
Distribution
Quarter Ended Date Declared Record Date Date Paid Per Share
------------- ------------- ----------- --------- ------------
March 31, 1999 February 10, 1999 March 17, 1999 April 16, 1999 $0.4000
June 30, 1999 June 15, 1999 June 28, 1999 July 16, 1999 $0.4000
September 30, 1999 September 9, 1999 September 24, 1999 October 22, 1999 $0.4000
December 31, 1999 December 9, 1999 December 22, 1999 January 21, 2000 $0.4000
March 31, 2000 February 9, 2000 March 17, 2000 April 14, 2000 $0.4200
June 30, 2000 June 13, 2000 June 26, 2000 July 21, 2000 $0.4200
September 30, 2000 September 15, 2000 September 25, 2000 October 20, 2000 $0.4200
December 31, 2000 October 30, 2000 November 3, 2000 November 15, 2000 $0.2800
March 31, 2001 January 30, 2001 February 16, 2001 March 15, 2001 $0.4550
During the fourth quarter of 2000 we distributed a special, two-month
dividend of $0.28 a share. This dividend was in connection with the Western
acquisition, and was paid to our stockholders of record before the merger
transaction was closed to address the two-month shift in timing for the payment
of our normal quarterly dividend in future periods.
We expect to meet our short-term liquidity requirements generally through
our current working capital and net cash provided by operations. We believe that
our net cash provided by operations will be sufficient to allow us to make the
distributions necessary to enable us to continue to qualify as a REIT. We also
believe that the foregoing sources of liquidity will be sufficient to fund our
short-term liquidity needs for the foreseeable future.
We expect to meet certain long-term liquidity requirements such as property
acquisition and development, scheduled debt maturities, renovations, expansions
and other non-recurring capital improvements through long-term secured and
unsecured indebtedness, the issuance of additional equity or debt securities and
the use of net proceeds from the disposition of non-strategic assets. We also
expect to use funds available under the Revolving Credit Facility to finance
acquisition and development activities and capital improvements on an interim
basis.
INFLATION
Substantially all of the leases provide for the recovery of real estate
taxes and operating expenses incurred by us. In addition, many of the leases
provide for fixed base rent increases or indexed escalations (based on the
consumer price index or
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other measures) and percentage rent. We believe that inflationary increases in
expenses will be substantially offset by expense reimbursements, contractual
rent increases and percentage rent described above.
The Revolving Credit Agreement and Term Credit Agreement bear interest at a
variable rate, which will be influenced by changes in short-term interest rates,
and will be sensitive to inflation.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risk is the exposure to loss resulting from changes in interest
rates, foreign currency exchange rates, commodity prices and equity prices. The
primary market risk to which we are exposed is interest rate risk, which is
sensitive to many factors, including governmental monetary and tax policies,
domestic and international economic and political considerations and other
factors that are beyond our control.
Interest Rate Risk
As of March 31, 2001, we had $288,400,000 of outstanding floating rate debt
under the Revolving Credit Agreement and Term Credit Agreement. In order to
modify and manage the interest characteristics of outstanding debt and limit the
effects of changes in interest rates on operations, we may use a variety of
financial instruments. We were not a party to any hedging agreements with
respect to our floating rate debt as of March 31, 2001. We do not enter into any
transactions for speculative or trading purposes. We do not believe that our
weighted average interest rate of 7.7% on our fixed rate debt is materially
different from current fair market interest rates for debt instruments with
similar risks and maturities. Additionally, we do not believe that the interest
rate risk represented by our floating rate debt is material as of that date in
relation to total assets of $1,295,914,000 and a market capitalization of
$741,112,000 of our common stock and operating partnership units.
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ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
3.1 Articles of Amendment and Restatement of the Company
(previously filed as Exhibit 3.1 to the Company's
Registration Statement on Form S-11 (Registration No.
333-28715) and incorporated herein by reference)
3.2 Amended and Restated Bylaws of the Company (previously
filed as Exhibit 3.2 to the Company's Registration
Statement on Form S-11 (Registration No. 333-28715) and
incorporated herein by reference)
4.1 Form of Certificate of Common Stock (previously filed as
Exhibit 4.1 to the Company's Registration Statement on
Form S-11 (Registration No. 333-28715) and incorporated
herein by reference)
10.1 Amendment No. 1 to Miscellaneous Rights Agreement dated
as of January 12, 2001 (previously filed as exhibit 10.16
to Pan Pacific Retail Properties, Inc.'s Registration
Statement on Form S-3 (Registration No. 333-59336) and
incorporated herein by reference)
10.2* Form of Restricted Stock Agreement between Stuart A. Tanz
and Pan Pacific Retail Properties, Inc.
* Filed Herewith
(b) Reports on Form 8-K
1. A form 8-K was filed on January 5, 2001 for purposes of
disclosing that Pan Pacific Retail Properties, Inc. had purchased
1,000,000 shares of it's common stock from Revenue Properties
(U.S.), Inc.
2. A form 8-K was filed on April 10, 2001 for purposes of disclosing
that Pan Pacific Retail Properties, Inc. issued $150,000,000 in
principal amount of 7.95% senior notes due April 15, 2011.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on May 10, 2001.
PAN PACIFIC RETAIL PROPERTIES, INC.
By: /s/ Stuart A. Tanz By: /s/ Joseph B. Tyson
------------------------------- -------------------------------
Stuart A. Tanz Joseph B. Tyson, CPA
President and Chief Executive Vice President
Executive Officer and Chief Financial Officer
14
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
3.1 Articles of Amendment and Restatement of the Company
(previously filed as Exhibit 3.1 to the Company's
Registration Statement on Form S-11 (Registration No.
333-28715) and incorporated herein by reference)
3.2 Amended and Restated Bylaws of the Company (previously
filed as Exhibit 3.2 to the Company's Registration
Statement on Form S-11 (Registration No. 333-28715) and
incorporated herein by reference)
4.1 Form of Certificate of Common Stock (previously filed as
Exhibit 4.1 to the Company's Registration Statement on
Form S-11 (Registration No. 333-28715) and incorporated
herein by reference)
10.1 Amendment No. 1 to Miscellaneous Rights Agreement dated
as of January 12, 2001 (previously filed as exhibit 10.16
to Pan Pacific Retail Properties, Inc.'s Registration
Statement on Form S-3 (Registration No. 333-59336) and
incorporated herein by reference)
10.2* Form of Restricted Stock Agreement between Stuart A. Tanz
and Pan Pacific Retail Properties, Inc.
* Filed Herewith