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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934



For the fiscal year ended December 31, 2004



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, Vista, California |  | 92081                               
|(Address of Principal Executive Offices)      |  | (zip code)                          



Registrants
telephone number, including area code: (760) 727-1002

Securities registered pursuant to Section 12(b) of the Act:



|                              |  |                                          
|----------------------------- |  | -----------------------------------------
|Title of Each Class           |  | Name of Each Exchange on Which
Registered
|Common Stock, $0.01 par value |  | New York Stock Exchange                  



Securities
registered pursuant to Section 12(g) of the Act:



None



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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 ̈.



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x



Indicate by check mark whether the Registrant is an
accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ̈.



The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the Registrants most recently completed second fiscal quarter was approximately $2,034,735,000.



As of March 7, 2005, the number of shares of the Registrants common
stock outstanding was 40,623,249.



Pan Pacific Retail
Properties, Inc.s Definitive Proxy Statement for the 2005 annual meeting of stockholders is incorporated by reference into Part III herein.



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DOCUMENTS INCORPORATED BY REFERENCE



Part III of this report on Form 10-K incorporates by reference information from our definitive proxy statement for our 2005
Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of the close of our fiscal year.



PAN PACIFIC RETAIL PROPERTIES, INC.

TABLE OF CONTENTS



|                |  |                                                                                       |  |     
|--------------- |  | ------------------------------------------------------------------------------------- |  | ----
|                |  |                                                                                       |  | Page
|PART I         
|ITEM 1.         |  | BUSINESS                                                                              |  | 1   
|                |  |                                                                                      
|ITEM 2.         |  | PROPERTIES                                                                            |  | 11  
|                |  |                                                                                      
|ITEM 3.         |  | LEGAL PROCEEDINGS                                                                     |  | 28  
|                |  |                                                                                      
|ITEM 4.         |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  | 28  
|               
|PART II        
|                |  |                                                                                      
|ITEM 5.         |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                 |  | 28  
|                |  |                                                                                      
|ITEM 6.         |  | SELECTED CONSOLIDATED FINANCIAL DATA                                                  |  | 29  
|                |  |                                                                                      
|ITEM 7.         |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 30  
|                |  |                                                                                      
|ITEM 7A.        |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 37  
|                |  |                                                                                      
|ITEM 8.         |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 37  
|                |  |                                                                                      
|ITEM 9.         |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  |  | 38  
|                |  |                                                                                      
|ITEM 9A.        |  | CONTROLS AND PROCEDURES                                                               |  | 38  
|               
|PART III       
|                |  |                                                                                      
|ITEM 10.        |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    |  | 39  
|                |  |                                                                                      
|ITEM 11.        |  | EXECUTIVE COMPENSATION                                                                |  | 39  
|                |  |                                                                                      
|ITEM 12.        |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  | 39  
|                |  |                                                                                      
|ITEM 13.        |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  | 39  
|                |  |                                                                                      
|ITEM 14.        |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                |  | 39  
|               
|PART IV        
|                |  |                                                                                      
|ITEM 15.        |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                       |  | 40  
|                | 
|FINANCIAL PAGES |  | F-1                                                                                  



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PART I



|ITEM 1. | BUSINESS
|------- | --------



We are a self-administered and self-managed real estate investment trust, or REIT. Our portfolio consists principally of community and neighborhood
shopping centers predominantly located in five key Western U.S. markets.



At December 31, 2004, 2003 and 2002, our total assets were $1,995,444,000, $1,863,348,000 and $1,424,240,000, respectively. At December 31, 2004, we owned a portfolio comprised of 133 shopping center properties, of
which 127 are located in the Western United States in our five key markets including 43 in Northern California, 38 in Southern California, 20 in Oregon, 14 in Washington and 12 in Nevada. The portfolio includes approximately 21.7 million square feet
of retail space, which was 96.8% leased to a diverse mix of 3,388 tenants.



On January 17, 2003, we acquired Center Trust, Inc., a Maryland corporation. The transaction was a stock for stock exchange including assumption of debt whereby each share of Center Trust common stock was exchanged
for 0.218 newly issued shares of our common stock. As a result, we issued 6,084,499 shares of our common stock to Center Trust stockholders and were obligated to issue up to 284,263 shares of our common stock to limited partners of CT Operating
Partnership, L.P. upon the exchange of operating partnership units held by them. In 2003, 33,964 units were redeemed for cash of $1,246,000. No units were redeemed during 2004.



We employed 139 people as of December 31, 2004, including twelve executive officers and senior personnel, in the areas of
administration, accounting services, property management, maintenance, leasing, acquisitions and business development. Our executive offices are located at 1631-B South Melrose Drive, Vista, California 92081, and our telephone number is (760)
727-1002. In addition to personnel located at our executive offices, we operate regional offices in Las Vegas, Nevada; Kent, Washington; Portland, Oregon; and Sacramento, California. Each of our regional offices is responsible for property
management, maintenance and leasing.



We have elected to be
taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. We believe that we have been organized and have operated in such a manner so as to qualify for taxation as a REIT under the Internal Revenue Code, and
we intend to continue to operate in such a manner, but we cannot assure you that we will continue to operate in such a manner so as to qualify or remain qualified. Even if we qualify for taxation as a REIT, we may be subject to certain federal,
state and local taxes on our revenue and properties.



You can
access free of charge a copy of the periodic and current reports we file with the Securities and Exchange Commission at www.sec.gov. Additionally, our periodic and current reports, such as our Forms 10-K, 10-Q and 8-K as well as all amendments to
those filings, are made available on our website at www.pprp.com as soon as reasonably practicable after these reports are filed with the Securities and Exchange Commission. You can also access on our website our Code for Senior Officers, Policy for
Reporting Complaints and Violations, Corporate Governance Guidelines, Audit Committee Charter, Nominating/Corporate Governance Committee Charter and Compensation Committee Charter.



Business Strategies



Our business strategies involve three fundamental practices:



| |  |  | Owning, operating, acquiring, expanding and developing shopping centers in select markets with strong economic and demographic characteristics in order to establish and maintain a
portfolio of real estate assets with stable income and the potential for long-term growth;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Developing local and regional market expertise through the hands-on participation of senior management in property operations and leasing in order to capitalize on market trends,
retailing trends and acquisition opportunities; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Establishing and maintaining a diversified and complementary tenant mix with an emphasis on tenants that provide day-to-day consumer necessities in order to provide steady rental
revenue.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Growth Strategies



Our principal growth strategy is to acquire shopping centers that provide an opportunity to expand in current markets or which allow us to establish a
presence in targeted markets with favorable economic and demographic characteristics.



| |  |  | We seek to acquire properties that can benefit from our hands-on management, that may require repositioning, redevelopment or renovation, or which can be purchased at attractive
capitalization rates and are consistent in terms of quality and location with our existing portfolio.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We seek to continue to utilize our in-depth market knowledge within our five key markets to pursue our strategy of opportunistic acquisitions of shopping centers for long-term
investment. We believe that significant opportunities continue to exist within these markets to acquire shopping center properties that are consistent with our existing portfolio in terms of quality of construction, positive neighborhood
demographics and location attributes and that provide attractive initial investment yields with potential for growth in cash flow.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We further believe we have certain competitive advantages which enhance our ability to identify and capitalize on acquisition opportunities, including: (i) long-standing
relationships with institutional and other owners of shopping center properties in our five key markets; (ii) fully integrated real estate operations which enable us to respond quickly to acquisition opportunities and to capitalize on the resulting
economies of scale; and (iii) access to capital as a public company.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We also seek to maximize the cash flow from our properties by continuing to enhance the operating performance of each property through our in-house leasing and property management programs.



We pursue:



| |  |  | the leasing of currently available space;
| | - |  | -----------------------------------------



| |  |  | the renewal or releasing of expiring leases at higher rental rates which we believe currently are available based on current market conditions and our recent leasing activity; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | economies of scale in the management and leasing of properties that may be realized by focusing our acquisition activities within our five key markets.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



Financing Strategies



Our financing strategies are to maintain a strong and flexible financial position by maintaining a prudent level of
leverage, maintaining a pool of unencumbered assets and managing our variable interest rate exposure. We intend to finance future acquisitions with the most advantageous source of capital available to us at the time of an acquisition, which may
include the sale of common stock, preferred stock or debt securities through public offerings or private placements, the incurrence of additional indebtedness through secured or unsecured borrowings and the issuance of operating units of a
subsidiary in exchange for contributed property.



We were the
managing member of a joint venture, created for the purpose of developing Olympia Place in Walnut Creek, California. The joint venture entered into a construction loan agreement in December 2001 to borrow up to $25,800,000 to fund the development.
At our option, amounts borrowed under the construction loan bore interest at either LIBOR plus 1.95% or a reference rate. At December 31, 2002 and December 31, 2001, $15,601,000 and $0, respectively, had been drawn on the construction loan. The
construction loan was repaid in full in September 2003. In June 2003, we acquired 100 % of the non-managing members interest in the joint venture resulting in this LLC becoming wholly-owned by us. We subsequently merged the joint venture
entity into Pan Pacific Retail Properties, Inc. At December 31, 2003, the development was essentially complete and was included in our operating properties beginning in the first quarter of 2004.



In June 2002, we issued $55,000,000 in aggregate principal amount of 5.75%
senior notes due June 2007. We sold these notes at 99.458% of the principal amount and used the net proceeds from the offering to repay borrowings



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under our revolving credit facility. In December 2002, we issued $100,000,000 in aggregate principal amount of 6.125% senior notes due January 2013. We sold
these notes at par value and used the net proceeds from the offering to repay borrowings under our revolving credit facility.



We are a general partner of a joint venture, which owns a medical office building in Encinitas, California. During the second quarter of 2002, the joint
venture entered into a loan agreement for $18,000,000, bearing interest at 7%, to purchase the building on the property. At December 31, 2004 and 2003, the balance of the loan was $17,560,000 and $17,735,000, respectively. The loan is secured by the
property and is not guaranteed by us. We account for this joint venture under the equity method. This unconsolidated debt is the only off-balance-sheet financing to which we are a party.



On September 30, 2002, Plaza Escuela Holding Co., LLC completed a financing transaction with an initial funding of
$38,087,000, bearing interest at 6.8%, through which we received a partial payoff of $36,754,000 on our note receivable of $44,349,000 on the Plaza Escuela property in Walnut Creek, California. The remaining balance of our note of $7,595,000 was
converted to a 49% non-managing member interest in Plaza Escuela Holding Co., LLC, the entity that owns the property. In January 2003, we received a return of capital of $3,990,000. In May 2003, we received a return of capital of $800,000. In August
2003, we received a return of capital of $1,000,000. In February 2004, we received a return of capital of $600,000. We received a return of capital for our remaining equity position of $1,205,000 during the second quarter of 2004. We were entitled
to receive 25% of the operating cash flows from the property through November 2008. In the fourth quarter of 2004, we agreed to receive $1,354,000 in exchange for our right to receive these future operating cash flows. Proceeds from the returns of
capital and cash flow participation were used primarily to repay borrowings under our revolving credit facility.



On November 5, 2002, we entered into an Agreement and Plan of Merger with Center Trust, Inc., a Maryland corporation. The transaction, which closed
January 17, 2003, included interests in 27 shopping centers, two regional malls and two single tenant assets. The transaction was a stock for stock exchange, including assumption of $362,257,000 of debt, whereby each share of Center Trust common
stock was exchanged for 0.218 newly issued shares of our common stock. As a result, we issued 6,084,499 shares of our common stock to Center Trust stockholders and 284,263 units were issued to limited partners of CT Operating Partnership, L.P. upon
the exchange of operating partnership units held by them. Distributions are made to the limited partners at a rate equal to the dividend distribution paid by us on a share of our common stock. A limited partner can seek redemption of their units at
any time. We may, at our option, upon receipt of a redemption notice, redeem the units by either (i) issuing common stock at the rate of one share for each unit, or (ii) by paying cash for units based on a ten day average stock price. In 2003,
33,964 units were redeemed for cash of $1,246,000. No units were redeemed during 2004.



In June 2003, we issued $75,000,000 in aggregate principal amount of 4.70% senior notes due June 2013. We sold these notes at 99.755% of the principal amount and used the net proceeds from the offering to repay
borrowings under its line of credit.



During 2003, nine
non-strategic assets were sold, including two regional malls that were acquired as part of the Center Trust acquisition, which generated net cash proceeds of approximately $190,000,000 which were used primarily to repay borrowings under our
revolving credit facility.



In September 2004, we entered into
an amended and restated unsecured $300,000,000 revolving credit facility which bears interest, at our option, at either LIBOR plus 0.65% or a reference rate and expires in March 2007. At December 31, 2004 and 2003, the amount drawn on this line of
credit was $113,000,000 and $48,250,000, respectively, and the interest rate was 3.18% and 1.86%, respectively. The credit facility requires a quarterly fee of 0.20% per annum on the total aggregate commitment. We, at our sole option, may increase
the amount of the commitment up to $400,000,000 and extend the maturity date to March 2008, assuming satisfaction of certain conditions. We believe we are in compliance with all covenants contained in the revolving credit facility agreement.



In February 2004, we repaid $50,000,000 in aggregate principal
amount of 7.88% senior notes on the original maturity date of the notes. We borrowed on our line of credit to fund the repayment.



In May 2004, we issued $50,000,000 in aggregate principal amount of 5.95% senior notes due June 2014. We sold these notes at 99.182% of the principal
amount. In July 2004, we issued an additional $50,000,000 in aggregate principal amount of the 5.95% senior notes due June 2014. We sold these notes at 101.586% of the principal amount. The net proceeds from the offerings were used to repay
borrowings under our line of credit.



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Dispositions



We dispose of non-strategic assets if we can obtain attractive terms on the sale and redeploy the proceeds into acquisitions in our core markets with
growth opportunities.



In December 2000, we disposed of a
single-tenant non-strategic asset located in Santa Cruz, California. The asset was a part of the Western portfolio and was sold for an amount equal to its net book value. We took back a portion of the proceeds as a note receivable secured by a deed
of trust. The balance of the net proceeds, received in cash, was placed with an exchange accommodator and used to acquire a shopping center property in a like-kind exchange transaction pursuant to Section 1031 of the Internal Revenue Code.



During 2001, we disposed of a non-strategic shopping center,
five single tenant assets, a 30% interest we owned in a shopping center and four parcels of land. We took back a portion of the proceeds as a note receivable secured by a deed of trust on the sale of the non-strategic shopping center. The balance of
the net proceeds on this sale, received in cash, was used to repay indebtedness under our revolving credit facility. The net proceeds on the sale of one of the single tenant assets was also received in cash and was used to repay indebtedness under
our revolving credit facility. The net proceeds on the remaining sales were placed with an exchange accommodator and used to acquire other strategic shopping center properties in like-kind exchange transactions pursuant to Section 1031 of the
Internal Revenue Code.



During 2002, we disposed of seven
shopping centers, two single tenant assets and one parcel of land. We took back a portion of the proceeds on these sales in the form of three notes receivable secured by deeds of trust. The balance of the net proceeds on the sales, received in cash,
were placed with an exchange accommodator and used to acquire other strategic shopping center properties in like-kind exchange transactions pursuant to Section 1031 of the Internal Revenue Code.



During 2003, we disposed of two regional malls acquired in the Center Trust
merger, six shopping centers and an office building parcel. We took back a portion of the proceeds on these sales in the form of three notes receivable secured by deeds of trust, two of which were paid off by December 31, 2003. The balance of the
net proceeds on the sales was received in cash. On four of the sales, the cash proceeds were placed with an exchange accommodator and used to acquire other strategic shopping center properties in like-kind exchange transactions pursuant to Section
1031 of the Internal Revenue Code.



During 2004, we disposed of
three shopping centers and a parcel of land. We took back a portion of the proceeds on these sales in the form of one short-term note receivable secured by a deed of trust which was paid off by December 31, 2004. The balance of the net proceeds on
the sales was received in cash. On two of the sales, the cash proceeds were placed with an exchange accommodator and used to acquire another strategic shopping center property in a like-kind exchange transaction pursuant to Section 1031 of the
Internal Revenue Code.



We may dispose of certain non-strategic
assets over the next year. However, if after taking into account the tax consequences of any disposition, including our continued ability to qualify as a REIT, we determine that a disposition would not be in our best interest, we will not dispose of
such asset.



Competition



There are numerous other developers and real estate companies (both public
and private), financial institutions and other investors engaged in the development, acquisition and operation of shopping centers and commercial property which compete with us in our trade areas. This results in competition for both acquisitions of
existing income-producing properties and for tenants to occupy the space that we and our competitors develop, acquire and manage.



We believe that the principal competitive factors in attracting tenants in our market areas are location, price, anchor tenants and maintenance of
properties. We also believe that our competitive advantages include the favorable locations of our properties, our ability to provide a retailer with multiple locations with anchor tenants and the practice of continuous maintenance and renovation of
our properties as is appropriate.



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No single competitor or group of competitors in any of our chosen markets is believed to be dominant in
that market. However, their competition may:



| |  |  | reduce the number of properties available for acquisition or development;
| | - |  | -------------------------------------------------------------------------



| |  |  | increase the cost of properties available for acquisition or development;
| | - |  | -------------------------------------------------------------------------



| |  |  | reduce rents payable to us;
| | - |  | ---------------------------



| |  |  | interfere with our ability to attract and retain tenants; and
| | - |  | -------------------------------------------------------------



| |  |  | lead to increased vacancy rates at our properties.
| | - |  | --------------------------------------------------



Retailers at our properties also face increasing competition from outlet stores, discount shopping clubs, and other forms of marketing of goods, such as
direct mail, internet marketing and telemarketing. This competition could contribute to lease defaults and insolvency of our tenants.



Certain Cautionary Statements



There are Certain Risks Inherent to Investment in Real Estate. Real property investments are subject to varying degrees of risk. The yields
available from equity investments in real estate depend in large part on the amount of income generated and expenses incurred. If our properties do not generate revenue sufficient to meet operating expenses, including debt service, tenant
improvements, leasing commissions and other capital expenditures, we may have to borrow additional amounts to cover fixed costs. This would adversely affect our cash flow and ability to service our debt and make distributions to our stockholders.



Our revenue and the value of our properties may be adversely
affected by a number of factors, including:



| |  |  | the national economic climate;
| | - |  | ------------------------------



| |  |  | the local economic climate;
| | - |  | ---------------------------



| |  |  | local real estate conditions;
| | - |  | -----------------------------



| |  |  | changes in retail expenditures by consumers;
| | - |  | --------------------------------------------



| |  |  | the perceptions of prospective tenants of the attractiveness of the properties;
| | - |  | -------------------------------------------------------------------------------



| |  |  | the success of our anchor tenants;
| | - |  | ----------------------------------



| |  |  | our ability to manage and maintain the properties and secure adequate insurance;
| | - |  | --------------------------------------------------------------------------------



| |  |  | increases in operating costs (including real estate taxes, insurance and utilities); and
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | future acts of terrorism or war or risk of war.
| | - |  | -----------------------------------------------



In addition, real estate values and income from properties are also affected by factors such as applicable laws, including tax laws, interest rate levels
and the availability of financing.



We May be Unable to
Retain Tenants and Relet Space. We will be subject to the risks that, upon expiration or termination, leases may not be renewed, the space may not be relet or the terms of renewal or reletting (including the cost of required renovations) may
be less favorable than current lease terms. Leases covering a total of approximately 6.7% and 56.9% of the leased gross leasable area, or GLA, of our properties will expire through the end of 2005 and 2009, respectively. We budget for renovation and
reletting expenses, which takes into consideration our view of both the current and expected market conditions in the geographic regions in which our properties are located, but budgeted amounts may be insufficient to cover these costs. Our cash
flow and ability to make expected distributions to stockholders could be adversely affected, if:



| |  |  | we are unable to promptly relet or renew leases for all or a substantial portion of this space;
| | - |  | -----------------------------------------------------------------------------------------------



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| |  |  | the rental rates upon renewal or reletting are significantly lower than expected; or
| | - |  | ------------------------------------------------------------------------------------



| |  |  | our budgeted amounts for these purposes prove inadequate.
| | - |  | ---------------------------------------------------------



Changes in the Economic or Other Market Conditions in Certain Geographic Regions Could Adversely Affect Our Results of
Operations. As of December 31, 2004, we have 43 properties with total GLA of 5,761,000 square feet located in Northern California, 38 properties with total GLA of 7,228,000 square feet located in Southern
California, 20 properties with total GLA of 3,324,000 square feet located in Oregon, 14 properties with total GLA of 2,356,000 square feet located in Washington and 12 properties with total GLA of 2,099,000 square feet located in Nevada. To the
extent that general economic or other relevant conditions in these regions decline and result in a decrease in consumer demand in these regions, the results of our operations may be adversely affected.



We May Not be Able to Respond Quickly to Changing Market Conditions Due
to the Illiquidity of Real Estate. Equity real estate investments are relatively illiquid. This illiquidity limits our ability to adjust our portfolio promptly in response to changes in economic or other conditions. In addition, the Internal
Revenue Code limits a REITs ability to sell properties held for fewer than four years, which may limit our ability to sell our properties at optimal times and for the highest price.



Competition with Other Developers and Real Estate Companies Could Materially Affect Our Ability to Generate Net
Income, Service Our Debt and Make Distributions to Our Stockholders. There are numerous commercial developers and real estate companies that compete with us in seeking tenants for properties, properties for acquisition and land for
development. There are numerous shopping facilities that compete with our properties in attracting retailers to lease space. In addition, retailers at our properties face increasing competition from outlet stores, discount shopping clubs, and other
forms of marketing of goods, such as direct mail, internet marketing and telemarketing. This competition may reduce properties available for acquisition or development, reduce percentage rents payable to us and may, through the introduction of
competition, contribute to lease defaults or insolvency of tenants. Thus, competition could materially affect our ability to generate net income, service our debt and make distributions to our stockholders.



Compliance with Changes in Laws May Result in Significant Unexpected
Expenditures. Because increases in income, service or transfer taxes are generally not passed through to tenants under leases, these increases may adversely affect our cash flow and our ability to service our debt and make distributions to
stockholders. Our properties are also subject to various federal, state and local regulatory requirements, such as requirements of the Americans with Disabilities Act of 1990 and state and local fire and life safety requirements. Failure to comply
with these requirements could result in the imposition of fines by governmental authorities or awards of damages to private litigants. In addition, these requirements may not be changed and new requirements may be imposed that would require
significant unanticipated expenditures by us. Any of these events could adversely affect our cash flow and expected distributions.



We Rely on Certain Tenants and Anchors and the Closing of One or More Anchor-Occupied Store Could Adversely Affect that Property, Resulting in Lease
Terminations and Reductions in Rent. Our income and funds from operations could be adversely affected in the event of the bankruptcy or insolvency, or a downturn in the business, of any anchor store, or if any anchor tenant does not renew
its lease when it expires. If tenant sales at our properties were to decline, tenants might be unable to pay their rent or other occupancy costs. In the event of default by a tenant, delays and costs in enforcing our rights could be experienced. In
addition, the closing of one or more anchor-occupied stores or lease termination by one or more anchor tenants of a shopping center, whose leases may permit termination, could adversely impact that property and result in lease terminations or
reductions in rent by other tenants, whose leases may permit termination or rent reduction in those circumstances. This could adversely affect our ability to re-lease the space that is vacated. Each of these developments could adversely affect our
funds from operations and our ability to service our debt and make expected distributions to stockholders. For the year ended December 31, 2004 our annualized base rent attributable to anchor tenants was 39.3% of our total annualized base rent.



There is a Lack of Operating History With Respect to Our
Recent Acquisition and Development of Properties and We May Not Succeed in the Integration or Management of Additional Properties. At December 31, 2004, we owned and operated 133 properties, consisting of approximately 21.7 million square
feet of space. Fifty-three of our properties were acquired during 2000, primarily through the acquisition of Western. These properties, together with



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other individual acquisitions and the 31 properties which we acquired in 2003 in connection with our acquisition of Center Trust, some of which have been
sold, may have characteristics or deficiencies currently unknown to us that affect their value or revenue potential. It is also possible that the operating performance of these properties may decline under our management. As we acquire additional
properties, we will be subject to risks associated with managing new properties, including lease-up and tenant retention. In addition, our ability to manage our growth effectively will require us to successfully integrate our new acquisitions into
our existing management structure. We may not succeed with this integration or effectively manage additional properties. Also, newly acquired properties may not perform as expected.



Our Indebtedness Could Adversely Affect Our Financial Results. We are subject to risks normally associated
with debt financing, including:



| |  |  | the risk that our cash flow will be insufficient to meet required payments of principal and interest;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | the risk that existing indebtedness on our properties (which in all cases will not have been fully amortized at maturity) will not be able to be refinanced; or
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the terms of any refinancing will not be as favorable as the terms of existing indebtedness.
| | - |  | --------------------------------------------------------------------------------------------



At December 31, 2004, we had outstanding indebtedness of approximately $1,011,026,000. Since we anticipate that only a small
portion of the principal of the indebtedness will be repaid prior to maturity, and that we will not have funds on hand sufficient to repay the balance of the indebtedness in full at maturity, it will be necessary for us to refinance the debt either
through additional borrowings or equity or debt offerings. If principal payments due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, we expect that our cash flow will not be sufficient in all years to
pay distributions at expected levels and to repay all of this maturing debt. Also, if prevailing interest rates or other factors at the time of refinancing (such as the reluctance of lenders to make commercial real estate loans) result in higher
interest rates upon refinancing, the interest expense relating to refinanced indebtedness would increase. This could adversely affect our cash flow and our ability to make expected distributions to our stockholders. In addition, if we are unable to
refinance the indebtedness on acceptable terms, we might dispose of properties upon disadvantageous terms, which might result in losses to us and might adversely affect funds available for distribution to stockholders.



Potential Defaults Under Mortgage Financing Could Negatively Impact Our
Financial Success. At December 31, 2004, we had approximately $343,736,000 of mortgage financing and property level bonds. The payment and other obligations under certain of the mortgage financing is secured by cross-collateralized and
cross-defaulted first mortgage liens in the aggregate amount of approximately $51,819,000 on four properties, $50,178,000 on four other properties, $49,400,000 on four other properties, $40,945,000 on three properties, $15,535,000 on three other
properties and $31,689,000 on two properties. If we are unable to meet our obligations under the mortgage financing, the properties securing that debt could be foreclosed upon. This could have a material adverse effect on us and our ability to make
expected distributions and could threaten our continued viability.



Rising Interest Rates on Our Variable-Rate Debt Could Negatively Impact our Financial Success. Advances under our revolving credit agreement bear variable-rate interest, at our option, at either LIBOR plus 0.65% or a reference
rate. At December 31, 2004, the amount drawn under our revolving credit agreement was $113,000,000 and the interest rate was 3.18%. In addition, we may incur other variable-rate indebtedness in the future. Increases in interest rates on that
indebtedness would increase our interest expense, which could adversely affect our cash flow and our ability to service our debt and pay expected distributions to stockholders.



Loss of Our Tax Status as a Real Estate Investment Trust Would Have Significant Adverse Consequence to Us and the
Value of Our Securities. Commencing with our taxable year ended December 31, 1997, we believe that we have qualified as a REIT under the Internal Revenue Code. Qualification as a REIT involves the satisfaction of numerous requirements (some
on an annual and some on a quarterly basis) established under highly technical and complex Internal Revenue Code provisions for which there are only limited judicial and administrative interpretations. These requirements involve the determination of
various facts and circumstances not entirely within our control. Legislation, new regulations, administrative interpretations or court decisions may adversely affect, possibly retroactively, our ability to qualify as a REIT or the federal income tax
consequences of such qualification.



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If we fail to qualify as a REIT in any taxable year, among other things:



| |  |  | we will not be allowed a deduction for distributions to stockholders in computing our taxable income;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | we will be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we will be subject to increased state and local taxes;
| | - |  | ------------------------------------------------------



| |  |  | we will be disqualified from treatment as a real estate investment trust for the four taxable years following the year during which we lost our qualification (unless entitled to
relief under certain statutory provisions);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | distributions to stockholders would be subject to tax as ordinary corporate distributions; and
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | we would not be required to make distributions to stockholders.
| | - |  | ---------------------------------------------------------------



As a result of these factors, our failure to qualify as a real estate investment trust also could impair our ability to expand our business and raise
capital, could substantially reduce the funds available for distribution to our stockholders and could reduce the trading price of our common stock.



We are Subject to Certain Distribution Requirements Which Could Require Us to Borrow on a Short-Term Basis. To maintain our status as a REIT
for federal income tax purposes, we generally are required to distribute to our stockholders at least 90% of our REIT taxable income determined without regard to the dividends paid deduction and by excluding net capital gains each year. We also are
subject to tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income (including net capital gains) each year. In addition, we are subject to a 4% nondeductible excise tax on the amount, if any, by
which certain distributions we pay, with respect to any calendar year, are less than the sum of 85% of our ordinary income for that calendar year, 95% of our capital gain net income for the calendar year, and any amount of that income that was not
distributed in prior years.



We intend to continue to make
distributions to our stockholders to comply with the distribution requirements of the Internal Revenue Code and to reduce exposure to federal income taxes and the nondeductible excise tax. Differences in timing between the receipt of income and the
payment of expenses in arriving at taxable income and the effect of required debt amortization payments could require us to borrow funds to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying
as a REIT.



Acquisition and Development Investments May
Not Perform as Expected. We intend to continue acquiring, developing and redeveloping shopping center properties. Acquisitions of retail properties entail risks that investments will fail to perform as expected. Estimates of development
costs and costs of improvements, to bring an acquired property up to standards established for the market position intended for that property, may prove inaccurate.



We intend to expand or renovate our properties from time to time. Expansion and renovation projects generally require
expenditure of capital as well as various government and other approvals, which we may not receive. While our policies with respect to expansion and renovation activities are intended to limit some of the risks otherwise associated with such
activities, we will still incur certain risks, including expenditures of funds on, and devotion of managements time to, projects that may not be completed. We intend to renovate properties only to the extent necessary to keep the properties in
good working order. These renovations generally involve minor as-needed projects such as painting and landscaping.



We anticipate that future acquisitions, development and renovations will be financed through a combination of advances under our revolving credit
agreement and other forms of secured or unsecured financing. If new developments are financed through construction loans, there is a risk that, upon completion of construction, permanent financing for newly developed properties may not be available
or may be available only on disadvantageous terms.



It is
possible that we will expand our business to new geographic markets in the future. We will not initially possess the same level of familiarity with new markets outside of the geographic areas in which our properties are currently located. This could
adversely affect our ability to acquire, develop, manage or lease properties in any new localities.



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We also intend to develop and construct shopping centers in accordance with our business and growth
strategies. Risks associated with our development and construction activities may include:



| |  |  | abandonment of development opportunities;
| | - |  | -----------------------------------------



| |  |  | construction costs of a property exceeding original estimates, possibly making the property uneconomical;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | financing may not be available on favorable terms for development of a property; and
| | - |  | ------------------------------------------------------------------------------------



| |  |  | construction and lease-up may not be completed on schedule, resulting in increased debt service expense and construction costs.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



In addition, new development activities, regardless of whether they would
ultimately be successful, typically require a substantial portion of managements time and attention. Development activities would also be subject to risks relating to our inability to obtain, or delays in obtaining, all necessary zoning, land
use, building, occupancy, and other required governmental permits and authorizations.



Our Properties May Be Subject to Unknown Environmental Liabilities. We are required to comply with federal, state and local laws, ordinances and regulations regarding health and safety and the protection
of the environment. Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum
product releases at the property. A current or previous owner or operator may also be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by these parties in connection with
any such contamination. These laws typically impose clean-up responsibility and liability without regard to fault or whether the owner knew of or caused the presence of the contaminants. Liability under these laws may still be imposed even when the
contaminants were associated with previous owners or operators and the liability under these laws has been interpreted to be joint and several, unless the harm is divisible and there is a reasonable basis for allocation of responsibility. The costs
of investigation, remediation or removal of these substances may be substantial, and the presence of these substances, or the failure to properly remediate the contamination on the property, may adversely affect the owners ability to sell or
rent the property or to borrow using the property as collateral. The presence of contamination at a property can impair the value of the property even if the contamination is migrating onto the property from an adjoining property.



A current or previous owner or operator who arranges for the disposal or
treatment of hazardous or toxic substances at a disposal or treatment facility may be held liable for the costs of removal or remediation of a release of hazardous or toxic substances at the disposal or treatment facility if a leak or contamination
is discovered at the disposal or treatment facility, whether or not the facility is owned or operated by them. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs incurred in
connection with the contamination. The remedy to remediate contamination may include deed restriction or institutional control which can restrict how the property may be used. Finally, the owner of a site may be subject to common law claims by third
parties based on damages and costs resulting from environmental contamination stemming from the site, including toxic tort claims.



Some federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos containing materials, or ACMs,
when these materials are in poor condition or in the event of construction, remodeling, renovation or demolition of a building. These laws may impose liability for release of ACMs and may allow third parties to seek recovery from owners or operators
of real properties for personal injury associated with ACMs. In connection with our ownership and operation of our properties, we may be potentially liable for ACM related costs.



The presence of hazardous substances on or under a property may adversely affect our ability to sell that property and we
may incur substantial remediation costs. Although our leases generally require our tenants to



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operate in compliance with all applicable federal, state and local laws, ordinance and regulations and to indemnify us
against any environmental liabilities arising from the tenants activities on the property, we could nevertheless be subject to strict liability by virtue of our ownership interest, and there can be no assurance that our tenants would satisfy
their indemnification obligations under the leases. The discovery of environmental liabilities attached to our properties could have a material adverse effect on our results of operations or financial condition or our ability to make distributions
to stockholders.



Shopping centers may have businesses such as
dry cleaners and auto repair or servicing businesses that handle, store and generate small quantities of hazardous wastes. The operation may result in spills or releases that may result in soil or groundwater contamination. Independent environmental
consultants have conducted or updated Phase I Environmental Site Assessments at our properties in conformance with the scope and limitations of the American Society of Testing and Materials Practice E1527, Standard Practice for Environmental Site
Assessments: Phase I Environmental Site Assessment Process. These Phase I Assessments have included, among other things, a visual inspection of our properties and the surrounding area and a review of relevant state, federal and historical documents.
When recommended in the Phase I Assessments, we have conducted Phase II subsurface investigations in conformance with American Society of Testing and Materials Guide E1903, Standard Guide for Environmental Site Assessments: Phase II Environmental
Site Assessment Process. The Phase I and Phase II investigations of our properties have not revealed any environmental liability that we believe would have a material adverse effect on our business, assets or results of operations taken as a whole,
nor are we aware of any material environmental liability. It is still possible that our Phase I and Phase II investigations have not revealed all environmental liabilities or that there are material environmental liabilities of which we are unaware.
Moreover, future laws, ordinances or regulations may impose material environmental liability and the current environmental condition of our properties may be affected by tenants, by the condition of land or operations in the vicinity of our
properties, such as the presence of underground storage tanks, or by third parties unrelated to us. While we believe we are in substantial compliance with applicable federal, state and local laws, ordinances and regulations regarding health and
safety and the protection of the environment, we cannot assure you that environmental matters will not rise in the future at properties where no problem is currently known to us.



No Limitation on Amount of Indebtedness We May Incur Which Could Increase the Risk of Default on Our
Indebtedness. Our total market capitalization at December 31, 2004 was approximately $3,595,909,000, based on the market closing price of our common stock at December 31, 2004 of $62.70 per share (assuming the conversion of 695,782 operating
subsidiary units to common stock) and our debt outstanding of approximately $1,011,026,000 (exclusive of accounts payable and accrued expenses). At December 31, 2004, our debt to total market capitalization ratio was approximately 28.1% (assuming
the conversion of all operating subsidiary units). We currently have a board of directors approved policy of incurring debt only if upon incurrence the debt to total market capitalization ratio would be 50% or less. It should be noted, however, that
our organizational documents do not contain any limitation on the amount of indebtedness we may incur. Accordingly, our board of directors could alter or eliminate this policy. If this policy were changed, we could become more highly leveraged,
resulting in an increase in debt service that could adversely affect our cash flow and, consequently, reduce the amount available for distribution to stockholders. This could also increase the risk of default on our indebtedness.



Certain Types of Losses May Exceed Insurance Coverage. We carry
comprehensive liability, public area liability, fire, earthquake, flood, boiler and machinery, extended coverage and rental loss insurance covering our properties, with policy specifications and insured limits that we believe are adequate and
appropriate under the circumstances. There are, however, certain types of losses that are not generally insured because it is not economically feasible to insure against these losses. If an uninsured loss or a loss exceeding insured limits occurs,
we could lose our capital invested in the property, as well as the anticipated future revenue from the property. In the case of debt which is with recourse to us, we would remain obligated for any mortgage debt or other financial obligations related
to the property. In these circumstances, any loss would adversely affect us.



We May be Subject to Tax Upon Disposition of Properties with Built-In Gain. In connection with our formation in 1997, certain entities taxable as C corporations were merged either into us or
into our subsidiaries which qualified as qualified REIT subsidiaries. Certain of these entities held 13 properties with built-in gain at the time the entities were merged into us or into our subsidiaries. During 2002, Oregon
Real Estate Services, Inc., a C corporation, was merged into us. At the time Oregon Real Estate Services, Inc. was merged into us, it held 10 properties and land with built-in gain. A property has built-in gain if
(i) on the day it was acquired, the former owners tax basis in the property was less than the propertys fair market value, and (ii) it was acquired in a transaction in which our tax basis in the property was determined by reference to
the former owners tax basis in the property. Under the applicable Treasury Regulations, if these properties are sold within 10 years of the date we acquired them, we may be required to pay taxes on the built-in gain that would have been
realized if the merging



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C corporation had liquidated on the day before the date of the merger. Therefore, we may have less flexibility in determining whether or not to
dispose of these properties. If we desire to dispose of these properties at some future date within the 10 year periods, we may be subject to tax on the built-in gain.



Future Acts of Terrorism or War or Risk of War May Have a Negative Impact on Our Business.The
continued threat of terrorism and continued military action and heightened security measures in response to this threat may cause significant disruption to commerce. There can be no assurance that the armed hostilities will not escalate or that
these terrorist attacks, or the United States responses to them, will not lead to further acts of terrorism and civil disturbances, which may further contribute to economic instability. Any civil unrest, additional terrorist activities, or
continued armed conflict and the attendant political instability and societal disruption, may adversely affect our results of operations, financial condition, the ability to raise capital or our future growth.



Ownership of Partnership Interest Could Jeopardize Our Status as a
REIT. We have direct or indirect control of certain partnerships in which we are a partner and intend to continue to operate them in a manner consistent with the requirements for qualification as a real estate investment trust. If a
partnership in which we own an interest takes or expects to take actions which could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in that entity. In addition, it is possible that a partnership
could take an action which could cause us to fail a REIT income or asset test, and that we would not become aware of such action in a time frame which would allow us to dispose of our interest in the partnership or take other corrective action on a
timely basis. In such a case, we could fail to qualify as a REIT.



|ITEM 2. | PROPERTIES
|------- | ----------



General



As of December
31, 2004, we owned and operated 133 neighborhood and community shopping centers containing 21.7 million square feet of which 19.3 million square feet is owned by us with the balance owned by certain retailers. These properties are primarily situated
in five key Western U.S. markets including Northern California, Southern California, Oregon, Washington and Nevada, each of which we believe has attractive economic and demographic characteristics. The largest concentration of properties, consisting
of 33% of our owned gross leasable area, is located in Southern California. Another 27% of our owned gross leasable area is located in Northern California, 16% in Oregon, 11% in Nevada and 10% in Washington. In addition, properties consisting of the
remaining 3% of our owned gross leasable area are located in Arizona, New Mexico, Tennessee and Kentucky. As of December 31, 2004, 96.8% of our total owned gross leasable area was leased by tenants under 3,388 leases.



These properties are regionally managed under active central control by our
executive officers. Property management, leasing, capital expenditures, construction and acquisition decisions are centrally administered at our corporate office. We also employ property managers at each of our regional offices to oversee and direct
the day-to-day operations of these properties, as well as on-site personnel. Property managers communicate daily with our corporate offices to implement our policies and procedures.



As a result of our in-house leasing program, these properties benefit from a diversified merchandising mix. At December 31,
2004, 60% of the total owned and occupied gross leasable area was leased to national tenants, 19% leased to regional tenants and 21% to local tenants. To promote stability and attract non-anchor tenants, we generally enter into long-term leases
(typically 15 to 20 years) with major or anchor tenants, those with 15,000 square feet or more, which usually contain provisions permitting tenants to renew their leases at rates which often include fixed rent increases or consumer price index
adjustments from the prior base rent. At December 31, 2004, anchor tenants leased 57% of the total owned gross leasable area, with 76% of anchor-leased gross leasable area (44% of the total owned gross leasable area) scheduled to expire within the
next 10 years. To take advantage of improving market conditions and changing retail trends, we generally enter into shorter term leases (typically three to five years) with non-anchor tenants. Our leases are generally on a triple-net basis, which
require the tenants to pay their pro rata share of all real property taxes, insurance and property operating expenses.



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The following tables provide information about our properties, our tenants and lease expirations.



Portfolio Geographic Diversification



|                    |  |    |  |                    |  |                             |  |                               |  |                                 |  |                       |  |                            |  |                         |  |                                
|------------------- |  | -- |  | ------------------ |  | --------------------------- |  | ----------------------------- |  | ------------------------------- |  | --------------------- |  | -------------------------- |  | ----------------------- |  | -------------------------------
|Region              |  |    |  | NumberofProperties |  | Total GrossLeasableArea (1) |  | Percentageof PortfolioGLA (%) |  | PercentageLeasedas of12/31/2004 |  | TotalNumberof Tenants |  | AnnualizedBase Rent($) (2) |  | % PortfolioBase Rent(%) |  | AnnualizedBase Rent/Sq. Ft. (3)
|Northern California |  | NC |  | 43                 |  | 5,299,706                   |  | 27.47                         |  | 97.6                            |  | 1,010                 |  | 63,023,617                 |  | 27.09                   |  | 12.19                          
|Southern California |  | SC |  | 38                 |  | 6,283,267                   |  | 32.57                         |  | 97.4                            |  | 1,139                 |  | 86,309,787                 |  | 37.10                   |  | 14.10                          
|Washington          |  | WA |  | 14                 |  | 1,894,797                   |  | 9.82                          |  | 96.6                            |  | 316                   |  | 22,082,171                 |  | 9.49                    |  | 12.06                          
|Oregon              |  | OR |  | 20                 |  | 3,088,316                   |  | 16.01                         |  | 97.3                            |  | 497                   |  | 31,304,099                 |  | 13.46                   |  | 10.42                          
|Nevada              |  | NV |  | 12                 |  | 2,039,067                   |  | 10.57                         |  | 94.2                            |  | 319                   |  | 24,297,316                 |  | 10.44                   |  | 12.65                          
|Arizona             |  | AZ |  | 3                  |  | 453,686                     |  | 2.35                          |  | 95.8                            |  | 63                    |  | 3,937,392                  |  | 1.69                    |  | 9.06                           
|Other               |  | O  |  | 3                  |  | 235,680                     |  | 1.22                          |  | 86.4                            |  | 44                    |  | 1,682,303                  |  | 0.72                    |  | 8.26                           
|Total               |  |    |  | 133                |  | 19,294,519                  |  | 100.00                        |  | 96.8                            |  | 3,388                 |  | 232,636,685                |  | 100.00                  |  | 12.45                          



|(1) | Represents gross leasable area (GLA) owned by the Company. Excludes 2,408,947 square feet owned by certain retailers.
|--- | -----------------------------------------------------------------------------------------------------------------------



|(2) | Annualized base rent for all leases in place at December 31, 2004 is calculated as follows: total base rent to be received during the entire term of each lease, divided by the terms
in months for such leases, multiplied by 12.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Annualized base rent divided by the owned GLA leased at December 31, 2004.
|--- | --------------------------------------------------------------------------



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Property Summary

12/31/2004



|                                              |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                   |  |                                                                                                        
|--------------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- |  | --------------------------------- |  | -------------------------------------------------------------------------------------------------------
|Property and Location                         |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |  | Ann. Base Rent/Leased Sq. Ft. (3) |  | Major Retailers                                                                                        
|NORTHERN CALIFORNIA                           |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                   |  |                                                                                                        
|Angels Camp Town CenterAngels Camp, CA        |  | 1986                      |  | 77,967                  |  | 6,300                  |  | 84,267          |  | 92.5                          |  | 9                              |  | 548,024              |  | 7.60                              |  | Save Mart Supermarket, Rite Aid                                                                        
|Bel Air Village SCElk Grove, CA               |  | 1999                      |  | 89,216                  |  | 0                      |  | 89,216          |  | 100.0                         |  | 19                             |  | 1,633,701            |  | 18.31                             |  | Bel Air Supermarket                                                                                    
|Blossom Valley PlazaTurlock, CA               |  | 1988                      |  | 111,612                 |  | 0                      |  | 111,612         |  | 100.0                         |  | 22                             |  | 1,354,770            |  | 12.14                             |  | Raleys Supermarket                                                                                    
|Brookvale Shopping CenterFremont, CA          |  | 19681989                  |  | 131,541                 |  | 0                      |  | 131,541         |  | 100.0                         |  | 19                             |  | 1,488,690            |  | 11.32                             |  | Albertsons Supermarket, Longs Drugs                                                                  
|Cable ParkSacramento, CA                      |  | 1987                      |  | 160,811                 |  | 0                      |  | 160,811         |  | 99.2                          |  | 33                             |  | 1,494,225            |  | 9.36                              |  | Albertsons Supermarket, Longs Drugs                                                                  
|Canal FarmsLos Banos, CA                      |  | 1987                      |  | 110,535                 |  | 0                      |  | 110,535         |  | 100.0                         |  | 18                             |  | 1,023,485            |  | 9.26                              |  | Save Mart Supermarket, Rite Aid                                                                        
|Century CenterModesto, CA                     |  | 1979                      |  | 214,772                 |  | 0                      |  | 214,772         |  | 100.0                         |  | 37                             |  | 1,944,668            |  | 9.05                              |  | Raleys Supermarket, Gottschalks                                                                       
|Chico CrossroadsChico, CA                     |  | 19881998                  |  | 267,735                 |  | 0                      |  | 267,735         |  | 100.0                         |  | 23                             |  | 2,403,932            |  | 8.98                              |  | FoodMaxx Supermarket, Bed Bath & Beyond, Ashley Home Furniture, Cost Plus, Barnes & Noble, Circuit City
|CobblestoneRedding, CA                        |  | 1984                      |  | 122,091                 |  | 0                      |  | 122,091         |  | 99.5                          |  | 30                             |  | 1,142,785            |  | 9.41                              |  | Raleys Supermarket                                                                                    
|Commonwealth SquareFolsom, CA                 |  | 1987                      |  | 141,310                 |  | 0                      |  | 141,310         |  | 100.0                         |  | 46                             |  | 2,268,489            |  | 16.05                             |  | Raleys Supermarket                                                                                    
|Country Gables Shopping CenterGranite Bay, CA |  | 1988                      |  | 140,184                 |  | 0                      |  | 140,184         |  | 98.1                          |  | 35                             |  | 1,816,729            |  | 13.21                             |  | Raleys Supermarket                                                                                    
|Creekside CenterHayward, CA                   |  | 1968                      |  | 83,041                  |  | 0                      |  | 83,041          |  | 97.4                          |  | 18                             |  | 924,085              |  | 11.42                             |  | 99 Cents Only Stores, Big Lots                                                                         
|Dublin Retail CenterDublin, CA                |  | 1980                      |  | 154,728                 |  | 0                      |  | 154,728         |  | 100.0                         |  | 8                              |  | 1,681,232            |  | 10.87                             |  | Orchard Supply, Marshalls, Ross Dress for Less, Michaels Arts & Crafts                               
|Eastridge PlazaPorterville, CA                |  | 1985                      |  | 81,010                  |  | 0                      |  | 81,010          |  | 96.9                          |  | 13                             |  | 529,409              |  | 6.74                              |  | Save Mart Supermarket (5), Big Lots                                                                    



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Property Summary

12/31/2004



|                                             |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                   |  |                                                                          
|-------------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- |  | --------------------------------- |  | -------------------------------------------------------------------------
|Property and Location                        |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |  | Ann. Base Rent/Leased Sq. Ft. (3) |  | Major Retailers                                                          
|Elverta CrossingSacramento, CA               |  | 1991                      |  | 119,998                 |  | 0                      |  | 119,998         |  | 98.0                          |  | 23                             |  | 1,422,864            |  | 12.10                             |  | FoodMaxx Supermarkets, Goodwill Industries                               
|Fairmont Shopping CenterPacifica, CA         |  | 1988                      |  | 104,281                 |  | 0                      |  | 104,281         |  | 100.0                         |  | 29                             |  | 1,580,941            |  | 15.16                             |  | Albertsons Supermarket, Rite Aid                                        
|Fashion Faire PlaceSan Leandro, CA           |  | 1987                      |  | 95,255                  |  | 0                      |  | 95,255          |  | 97.2                          |  | 18                             |  | 1,528,700            |  | 16.52                             |  | Ross Dress for Less, Pier 1 Imports, Sleep Train, Michaels Arts & Crafts
|Glen Cove CenterVallejo, CA                  |  | 1990                      |  | 66,000                  |  | 0                      |  | 66,000          |  | 100.0                         |  | 12                             |  | 956,741              |  | 14.50                             |  | Safeway Supermarket & Drug                                               
|Glenbrook Shopping CenterSacramento, CA      |  | 19732001                  |  | 69,340                  |  | 0                      |  | 69,340          |  | 99.8                          |  | 19                             |  | 810,357              |  | 11.71                             |  | Big Lots                                                                 
|Heritage Park Shopping CenterSuisun City, CA |  | 1989                      |  | 167,329                 |  | 0                      |  | 167,329         |  | 98.3                          |  | 37                             |  | 1,980,201            |  | 12.04                             |  | Raleys Supermarket                                                      
|Heritage PlaceTulare, CA                     |  | 1986                      |  | 119,412                 |  | 0                      |  | 119,412         |  | 92.4                          |  | 19                             |  | 1,022,525            |  | 9.27                              |  | Save Mart Supermarket, Rite Aid                                          
|Kmart CenterSacramento, CA                   |  | 19661983                  |  | 132,630                 |  | 0                      |  | 132,630         |  | 97.3                          |  | 16                             |  | 749,433              |  | 5.80                              |  | K-Mart, Big Lots                                                         
|Laguna Park VillageElk Grove, CA             |  | 1999                      |  | 34,015                  |  | 0                      |  | 34,015          |  | 93.7                          |  | 14                             |  | 645,517              |  | 20.25                             |  | Big 5 Sporting Goods                                                     
|Laguna VillageSacramento, CA                 |  | 1996                      |  | 120,893                 |  | 0                      |  | 120,893         |  | 97.4                          |  | 20                             |  | 2,135,380            |  | 18.14                             |  | United Artists Theatres, 24 Hour Fitness                                 
|Lakewood Shopping CenterWindsor, CA          |  | 1988                      |  | 107,769                 |  | 0                      |  | 107,769         |  | 100.0                         |  | 30                             |  | 1,196,904            |  | 11.11                             |  | Raleys Supermarket, U.S. Post Office                                    
|Lakewood VillageWindsor, CA                  |  | 1992                      |  | 127,237                 |  | 0                      |  | 127,237         |  | 100.0                         |  | 40                             |  | 2,125,833            |  | 16.71                             |  | Safeway Supermarket, Longs Drugs                                        
|Manteca MarketplaceManteca, CA               |  | 19721988                  |  | 172,435                 |  | 0                      |  | 172,435         |  | 98.1                          |  | 26                             |  | 1,926,840            |  | 11.39                             |  | Save Mart Supermarket, Rite Aid, Stadium 10 Cinemas                      
|Mineral KingVisalia, CA                      |  | 1983                      |  | 39,060                  |  | 76,276                 |  | 115,336         |  | 82.1                          |  | 12                             |  | 467,623              |  | 14.59                             |  | Vons Supermarket (2), Longs Drugs (2)                                    
|Mission Ridge PlazaManteca, CA               |  | 1992                      |  | 96,657                  |  | 99,641                 |  | 196,298         |  | 95.9                          |  | 15                             |  | 1,365,046            |  | 14.73                             |  | Safeway Supermarket (6), Wal-Mart (2), Mervyns (2), Big 5 Sporting Goods



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Property Summary

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|                                           |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                    
|------------------------------------------ |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- | ---------- | --------------------------------- | - | --------------- |  | -------------------------------------------------------------------
|Property and Location                      |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |            | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|Monterey PlazaSan Jose, CA                 |  | 1990                      |  | 183,180                 |  | 49,500                 |  | 232,680         |  | 99.3                          |  | 30                             |  |                      | 2,854,958  |                                   |   | 15.69           |  | Wal-Mart, Albertsons Supermarket (2), Walgreens                   
|Northridge PlazaFair Oaks, CA              |  | 1990                      |  | 98,625                  |  | 0                      |  | 98,625          |  | 99.4                          |  | 22                             |  |                      | 838,036    |                                   |   | 8.55            |  | Raleys Supermarket                                                
|Olympia PlaceWalnut Creek, CA              |  | 2003                      |  | 114,733                 |  | 28,326                 |  | 143,059         |  | 80.1                          |  | 6                              |  |                      | 3,294,193  |                                   |   | 35.83           |  | Century Theatres, Cost Plus, Bombay, Bombay Kids                   
|Park PlaceVallejo, CA                      |  | 1987                      |  | 150,766                 |  | 0                      |  | 150,766         |  | 100.0                         |  | 29                             |  |                      | 1,928,570  |                                   |   | 12.79           |  | Raleys Supermarket, 24 Hour Fitness                               
|Pine Creek Shopping CenterGrass Valley, CA |  | 1988                      |  | 213,035                 |  | 0                      |  | 213,035         |  | 94.9                          |  | 35                             |  |                      | 2,316,979  |                                   |   | 11.47           |  | Raleys Supermarket, JC Penney                                     
|Plaza 580 Shopping CenterLivermore, CA     |  | 1993                      |  | 104,363                 |  | 192,739                |  | 297,102         |  | 100.0                         |  | 29                             |  |                      | 1,991,287  |                                   |   | 19.08           |  | Target (2), Mervyns (2), Ross Dress for Less, Big 5 Sporting Goods
|Rheem ValleyMoraga, CA                     |  | 1990                      |  | 163,975                 |  | 0                      |  | 163,975         |  | 93.7                          |  | 59                             |  |                      | 2,042,020  |                                   |   | 13.29           |  | Longs Drugs, T. J. Maxx                                            
|Shops at BakersfieldBakersfield, CA        |  | 1978                      |  | 14,115                  |  | 0                      |  | 14,115          |  | 92.4                          |  | 7                              |  |                      | 105,450    |                                   |   | 8.09            |  |                                                                    
|Shops at Lincoln SchoolModesto, CA         |  | 1988                      |  | 81,443                  |  | 0                      |  | 81,443          |  | 88.7                          |  | 17                             |  |                      | 737,830    |                                   |   | 10.21           |  | Save Mart Supermarket                                              
|Sky Park PlazaChico, CA                    |  | 1985                      |  | 187,270                 |  | 4,642                  |  | 191,912         |  | 96.9                          |  | 30                             |  |                      | 1,865,666  |                                   |   | 10.28           |  | Raleys Supermarket, Ross Dress for Less, Jo-Ann Fabrics & Crafts  
|Southpointe PlazaSacramento, CA            |  | 1982                      |  | 189,043                 |  | 4,000                  |  | 193,043         |  | 97.9                          |  | 28                             |  |                      | 1,781,225  |                                   |   | 9.62            |  | Seafood City Supermarket, Big 5 Sporting Goods, Discount Variety   
|Ukiah CrossroadsUkiah, CA                  |  | 1986                      |  | 110,565                 |  | 0                      |  | 110,565         |  | 93.2                          |  | 18                             |  |                      | 1,040,150  |                                   |   | 10.10           |  | Raleys Supermarket                                                
|Victorian WalkFresno, CA                   |  | 1990                      |  | 102,581                 |  | 0                      |  | 102,581         |  | 99.0                          |  | 21                             |  |                      | 956,588    |                                   |   | 9.41            |  | Save Mart Supermarket                                              
|Yreka JunctionYreka, CA                    |  | 1984                      |  | 127,148                 |  | 0                      |  | 127,148         |  | 100.0                         |  | 19                             |  |                      | 1,101,535  |                                   |   | 8.66            |  | Raleys Supermarket, JC Penney, Wal-Mart (2)                       
|                                           |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                    
|Region Total/Weighted Average              |  |                           |  | 5,299,706               |  | 461,424                |  | 5,761,130       |  | 97.6                          |  | 1,010                          |  | $                    | 63,023,617 |                                   | $ | 12.19           |  |                                                                    
|                                           |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                    



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Property Summary

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|                                         |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                   |  |                                                                                                  
|---------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- |  | --------------------------------- |  | -------------------------------------------------------------------------------------------------
|Property and Location                    |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |  | Ann. Base Rent/Leased Sq. Ft. (3) |  | Major Retailers                                                                                  
|SOUTHERN CALIFORNIA                      |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                   |  |                                                                                                  
|Anaheim PlazaAnaheim, CA                 |  | 1995                      |  | 345,708                 |  | 146,000                |  | 491,708         |  | 94.2                          |  | 31                             |  | 4,300,373            |  | 13.20                             |  | Gigante Supermarket, Wal-Mart (3), Mervyns, Ross Dress for Less, Smart & Final, Comp USA        
|Bixby Hacienda PlazaHacienda Heights, CA |  | 1986                      |  | 135,012                 |  | 0                      |  | 135,012         |  | 98.8                          |  | 42                             |  | 2,516,325            |  | 18.87                             |  | Albertsons Supermarket                                                                          
|Brookhurst CenterAnaheim, CA             |  | 1982                      |  | 185,247                 |  | 0                      |  | 185,247         |  | 97.9                          |  | 44                             |  | 2,336,873            |  | 12.88                             |  | Ralphs Supermarket, Rite Aid                                                                    
|Canyon Square PlazaSanta Clarita, CA     |  | 1988                      |  | 96,727                  |  | 7,472                  |  | 104,199         |  | 92.7                          |  | 30                             |  | 1,270,709            |  | 14.17                             |  | Albertsons Supermarket & Drug                                                                   
|Chino Town SquareChino, CA               |  | 1987                      |  | 337,687                 |  | 188,064                |  | 525,751         |  | 84.0                          |  | 47                             |  | 4,348,194            |  | 15.32                             |  | Target (2), Mervyns (2), Wal-Mart (5), Ross Dress for Less                                      
|Country Fair Shopping CenterChino, CA    |  | 1992                      |  | 168,264                 |  | 43,440                 |  | 211,704         |  | 100.0                         |  | 27                             |  | 2,414,617            |  | 14.35                             |  | Albertsons Supermarket, Rite Aid, Petsmart                                                      
|Date Palm CenterCathedral City, CA       |  | 1987                      |  | 117,356                 |  | 0                      |  | 117,356         |  | 98.9                          |  | 12                             |  | 2,007,594            |  | 17.29                             |  | Sams Club                                                                                       
|Del Norte PlazaEscondido, CA             |  | 1986                      |  | 231,157                 |  | 0                      |  | 231,157         |  | 99.4                          |  | 50                             |  | 3,460,099            |  | 15.05                             |  | Vons Supermarket, Sav-On Drugs, LA Fitness                                                      
|El Camino NorthOceanside, CA             |  | 19822003                  |  | 367,031                 |  | 126,500                |  | 493,531         |  | 98.7                          |  | 62                             |  | 5,602,202            |  | 15.46                             |  | Barnes & Noble, Michaels Arts & Crafts, Petco (2), Ross Dress for Less, Stein Mart, Mervyns (2)
|Encinitas MarketplaceEncinitas, CA       |  | 1981                      |  | 118,265                 |  | 0                      |  | 118,265         |  | 98.5                          |  | 27                             |  | 1,638,236            |  | 14.06                             |  | Albertsons Supermarket                                                                          
|Fire MountainOceanside, CA               |  | 1987                      |  | 92,378                  |  | 0                      |  | 92,378          |  | 76.3                          |  | 17                             |  | 1,764,625            |  | 25.03                             |  | Trader Joes Market, Aaron Bros., Lamps Plus                                                     
|Foothill MarketplaceRancho Cucamonga, CA |  | 1994                      |  | 286,824                 |  | 0                      |  | 286,824         |  | 98.6                          |  | 37                             |  | 4,262,011            |  | 15.07                             |  | Food 4 Less, Petsmart, Office Depot, Sport Chalet, Circuit City (5)                              
|Fullerton Town CenterFullerton, CA       |  | 1987                      |  | 270,647                 |  | 146,880                |  | 417,527         |  | 99.5                          |  | 32                             |  | 4,516,023            |  | 16.76                             |  | Costco (2), AMC Theatres, Toys R Us, Office Depot                                              
|Gardena Gateway CenterGardena, CA        |  | 1990                      |  | 65,987                  |  | 0                      |  | 65,987          |  | 100.0                         |  | 14                             |  | 1,174,328            |  | 17.80                             |  | 99 Ranch Market, Marukai Stores                                                                  



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Property Summary

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|                                        |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                   |  |                                                                           
|--------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- |  | --------------------------------- |  | --------------------------------------------------------------------------
|Property and Location                   |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |  | Ann. Base Rent/Leased Sq. Ft. (3) |  | Major Retailers                                                           
|Gordon Ranch MarketplaceChino Hills, CA |  | 1991                      |  | 114,574                 |  | 0                      |  | 114,574         |  | 100.0                         |  | 43                             |  | 2,149,260            |  | 18.76                             |  | Ralphs Supermarket                                                       
|Granary SquareValencia, CA              |  | 1982                      |  | 143,333                 |  | 0                      |  | 143,333         |  | 100.0                         |  | 32                             |  | 2,437,100            |  | 17.00                             |  | Ralphs Supermarket, Longs Drugs                                         
|Kenneth HahnLos Angeles, CA             |  | 1987                      |  | 165,195                 |  | 0                      |  | 165,195         |  | 100.0                         |  | 32                             |  | 1,767,680            |  | 10.70                             |  | Food 4 Less Supermarket, Rite Aid, Factory 2 U                            
|La Verne Towne CenterLa Verne, CA       |  | 1986                      |  | 231,376                 |  | 0                      |  | 231,376         |  | 97.1                          |  | 26                             |  | 1,587,424            |  | 7.07                              |  | Vons Supermarket, Target                                                 
|Lakewood PlazaBellflower, CA            |  | 19871989                  |  | 113,511                 |  | 0                      |  | 113,511         |  | 100.0                         |  | 12                             |  | 1,334,395            |  | 11.76                             |  | Stater Bros. Supermarket, Staples                                         
|Larwin Square Shopping CenterTustin, CA |  | 1977                      |  | 210,936                 |  | 0                      |  | 210,936         |  | 95.3                          |  | 57                             |  | 2,772,042            |  | 13.78                             |  | Vons Supermarket, Rite Aid, Jo-Ann Fabrics & Crafts, Big 5 Sporting Goods
|Loma SquareSan Diego, CA                |  | 1980                      |  | 210,704                 |  | 0                      |  | 210,704         |  | 98.7                          |  | 28                             |  | 3,123,210            |  | 15.02                             |  | Henrys Market, Sav-On Drugs, T.J. Maxx, Circuit City                     
|Marina VillageHuntington Beach, CA      |  | 19961998                  |  | 149,107                 |  | 0                      |  | 149,107         |  | 100.0                         |  | 34                             |  | 1,936,414            |  | 12.99                             |  | Vons Supermarket, Sav-On Drugs                                           
|Melrose Village PlazaVista, CA          |  | 1990                      |  | 136,922                 |  | 0                      |  | 136,922         |  | 100.0                         |  | 35                             |  | 1,841,352            |  | 13.45                             |  | Albertsons Supermarket, Sav-On Drugs                                     
|Mountain SquareUpland, CA               |  | 19882002                  |  | 273,167                 |  | 0                      |  | 273,167         |  | 98.6                          |  | 30                             |  | 3,590,939            |  | 13.33                             |  | Pavilions Supermarket (5), Home Depot, Staples                            
|North County PlazaCarlsbad, CA          |  | 1987                      |  | 153,325                 |  | 0                      |  | 153,325         |  | 97.7                          |  | 33                             |  | 2,500,895            |  | 16.69                             |  | Marshalls, Dollar Tree, Tuesday Morning                                  
|Oceanside Town & CountryOceanside, CA   |  | 1971                      |  | 88,414                  |  | 0                      |  | 88,414          |  | 94.4                          |  | 21                             |  | 490,654              |  | 5.88                              |  | Vons Supermarket, Longs Drugs,                                          
|Palmdale CenterPalmdale, CA             |  | 1975                      |  | 81,050                  |  | 0                      |  | 81,050          |  | 100.0                         |  | 14                             |  | 605,927              |  | 7.48                              |  | Smart & Final, Dollar Tree, Big Lots                                      
|Palomar Village SCTemecula, CA          |  | 1991                      |  | 139,130                 |  | 9,015                  |  | 148,145         |  | 100.0                         |  | 36                             |  | 2,035,733            |  | 14.63                             |  | Albertsons Supermarket, Longs Drugs                                     
|Pavilions PlaceHuntington Beach, CA     |  | 19862002                  |  | 208,823                 |  | 100,750                |  | 309,573         |  | 100.0                         |  | 49                             |  | 3,965,100            |  | 18.99                             |  | Pavilions Supermarket, Target (2), Easy Life Furniture                    



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Property Summary

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|                                            |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                        
|------------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- | ---------- | --------------------------------- | - | --------------- |  | -----------------------------------------------------------------------
|Property and Location                       |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |            | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|Rancho Las PalmasRancho Mirage, CA          |  | 19802001                  |  | 165,156                 |  | 10,815                 |  | 175,971         |  | 96.9                          |  | 42                             |  |                      | 2,308,734  |                                   |   | 14.43           |  | Vons Supermarket, Longs Drugs                                        
|Sams Club DowneyDowney, CA                 |  | 1987                      |  | 114,722                 |  | 0                      |  | 114,722         |  | 100.0                         |  | 2                              |  |                      | 860,366    |                                   |   | 7.50            |  | Sams Club (5)                                                         
|San Dimas MarketplaceSan Dimas, CA          |  | 1997                      |  | 154,020                 |  | 117,000                |  | 271,020         |  | 99.0                          |  | 22                             |  |                      | 2,419,942  |                                   |   | 15.87           |  | Trader Joes Market, Target (2), Ross Dress for Less, Office Max, Petco
|Sycamore PlazaAnaheim, CA                   |  | 1976                      |  | 105,085                 |  | 0                      |  | 105,085         |  | 100.0                         |  | 27                             |  |                      | 990,136    |                                   |   | 9.42            |  | Stater Bros. Supermarket, Sav-On Drugs                                 
|Tustin Heights Shopping CenterTustin, CA    |  | 1983                      |  | 138,458                 |  | 0                      |  | 138,458         |  | 100.0                         |  | 22                             |  |                      | 1,935,182  |                                   |   | 13.98           |  | Ralphs Supermarket, Longs Drugs, Michaels Arts & Crafts             
|Vermont-Slauson Shopping CtrLos Angeles, CA |  | 1981                      |  | 169,744                 |  | 0                      |  | 169,744         |  | 100.0                         |  | 18                             |  |                      | 1,282,775  |                                   |   | 7.56            |  | Superior Supermarket, Sav-On Drugs, Kmart                              
|Vineyard VillageOntario, CA                 |  | 1988                      |  | 97,131                  |  | 0                      |  | 97,131          |  | 100.0                         |  | 26                             |  |                      | 1,356,715  |                                   |   | 13.97           |  | Pep Boys, 24 Hour Fitness                                              
|Vineyard Village EastOntario, CA            |  | 1992                      |  | 45,075                  |  | 0                      |  | 45,075          |  | 100.0                         |  | 4                              |  |                      | 433,302    |                                   |   | 9.61            |  | Sears, Dunn Edwards Paints                                             
|Vineyards MarketplaceRancho Cucamonga, CA   |  | 1991                      |  | 56,019                  |  | 49,134                 |  | 105,153         |  | 100.0                         |  | 22                             |  |                      | 972,303    |                                   |   | 17.36           |  | Albertsons Supermarket (2), Sav-On Drugs                              
|                                            |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                        
|Region Total/Weighted Average               |  |                           |  | 6,283,267               |  | 945,070                |  | 7,228,337       |  | 97.4                          |  | 1,139                          |  | $                    | 86,309,787 |                                   | $ | 14.10           |  |                                                                        
|                                            |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                        



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|                                              |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                               
|--------------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- | ---------- | --------------------------------- | - | --------------- |  | ------------------------------------------------------------------------------
|Property and Location                         |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |            | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|WASHINGTON                                    |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                               
|Auburn NorthAuburn, WA                        |  | 19781998                  |  | 171,032                 |  | 0                      |  | 171,032         |  | 99.3                          |  | 24                             |  |                      | 1,439,910  |                                   |   | 8.48            |  | Albertsons Supermarket, Rite Aid, Office Depot, Craft Outlet                 
|Blaine International CenterBlaine, WA         |  | 1991                      |  | 127,572                 |  | 0                      |  | 127,572         |  | 78.7                          |  | 16                             |  |                      | 947,161    |                                   |   | 9.43            |  | Cost Cutter Supermarket, Rite Aid                                             
|Canyon Ridge PlazaKent, WA                    |  | 1996                      |  | 86,909                  |  | 181,300                |  | 268,209         |  | 100.0                         |  | 19                             |  |                      | 1,097,149  |                                   |   | 12.62           |  | Target (2), Top Foods Supermarket (2), Ross Dress for Less                    
|Claremont Village PlazaEverett, WA            |  | 19551996                  |  | 88,770                  |  | 0                      |  | 88,770          |  | 100.0                         |  | 15                             |  |                      | 1,240,166  |                                   |   | 13.97           |  | QFC Supermarket & Drug                                                        
|Frontier Village Shopping CtrLake Stevens, WA |  | 19502002                  |  | 196,083                 |  | 0                      |  | 196,083         |  | 99.3                          |  | 32                             |  |                      | 2,821,516  |                                   |   | 14.50           |  | Safeway Supermarket, Bartell Drugs, GI Joes                                  
|Garrison SquareVancouver, WA                  |  | 19622003                  |  | 69,790                  |  | 0                      |  | 69,790          |  | 100.0                         |  | 16                             |  |                      | 794,829    |                                   |   | 11.39           |  | Wild Oats, Hi School Pharmacy                                                 
|Gateway Shopping CenterMill Creek, WA         |  | 19951998                  |  | 96,671                  |  | 0                      |  | 96,671          |  | 100.0                         |  | 22                             |  |                      | 1,737,975  |                                   |   | 17.98           |  | Safeway Supermarket                                                           
|Olympia SquareOlympia, WA                     |  | 1988                      |  | 168,209                 |  | 0                      |  | 168,209         |  | 96.9                          |  | 37                             |  |                      | 2,117,748  |                                   |   | 12.99           |  | Albertsons Supermarket & Drug, Ross Dress for Less                           
|Olympia West CenterOlympia, WA                |  | 1995                      |  | 69,212                  |  | 3,800                  |  | 73,012          |  | 100.0                         |  | 6                              |  |                      | 1,344,459  |                                   |   | 19.43           |  | Barnes & Noble, Good Guys, Petco                                              
|Pacific CommonsSpanaway, WA                   |  | 19881990                  |  | 151,233                 |  | 55,241                 |  | 206,474         |  | 82.1                          |  | 21                             |  |                      | 1,369,310  |                                   |   | 11.03           |  | The Marketplace Supermarket, K-Mart (2)                                       
|Panther LakeKent, WA                          |  | 19881992                  |  | 69,090                  |  | 44,237                 |  | 113,327         |  | 100.0                         |  | 22                             |  |                      | 909,912    |                                   |   | 13.17           |  | Albertsons Supermarket (2), Rite Aid                                         
|Silverdale Shopping CenterSilverdale, WA      |  | 1990                      |  | 67,287                  |  | 0                      |  | 67,287          |  | 100.0                         |  | 22                             |  |                      | 941,534    |                                   |   | 13.99           |  | Ross Dress for Less                                                           
|Sunset SquareBellingham, WA                   |  | 1989                      |  | 376,023                 |  | 10,634                 |  | 386,657         |  | 99.6                          |  | 42                             |  |                      | 3,219,351  |                                   |   | 8.60            |  | Cost Cutter Supermarket, K-Mart, Jo-Ann Fabrics & Crafts, Rite Aid, Office Max
|Tacoma CentralTacoma, WA                      |  | 19871994                  |  | 156,916                 |  | 165,519                |  | 322,435         |  | 100.0                         |  | 22                             |  |                      | 2,101,152  |                                   |   | 13.39           |  | Target (2), Top Food & Drug (2), Petsmart, Office Depot, TJ Maxx              
|                                              |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                               
|Region Total/Weighted Average                 |  |                           |  | 1,894,797               |  | 460,731                |  | 2,355,528       |  | 96.6                          |  | 316                            |  | $                    | 22,082,171 |                                   | $ | 12.06           |  |                                                                               
|                                              |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                               



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Property Summary

12/31/2004



|                                           |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                   |  |                                                                                                  
|------------------------------------------ |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- |  | --------------------------------- |  | -------------------------------------------------------------------------------------------------
|Property and Location                      |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |  | Ann. Base Rent/Leased Sq. Ft. (3) |  | Major Retailers                                                                                  
|OREGON                                     |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                   |  |                                                                                                  
|Albany PlazaAlbany, OR                     |  | 19772003                  |  | 109,891                 |  | 30,998                 |  | 140,889         |  | 98.1                          |  | 20                             |  | 896,905              |  | 8.32                              |  | Albertsons Supermarket (2), Rite Aid, Big Lots, Dollar Tree                                     
|Bear Creek PlazaMedford, OR                |  | 19771998                  |  | 183,850                 |  | 0                      |  | 183,850         |  | 96.9                          |  | 26                             |  | 1,373,120            |  | 7.71                              |  | Bi-Mart Drug, TJ Maxx, Big Lots, Dollar Tree                                                     
|Canby Square Shopping CenterCanby, OR      |  | 19762002                  |  | 115,701                 |  | 0                      |  | 115,701         |  | 100.0                         |  | 15                             |  | 1,171,728            |  | 10.13                             |  | Safeway Supermarket, Rite Aid                                                                    
|East Burnside PlazaPortland, OR            |  | 1999                      |  | 38,363                  |  | 0                      |  | 38,363          |  | 100.0                         |  | 8                              |  | 618,918              |  | 16.13                             |  | QFC Supermarket                                                                                  
|Gresham Town FairGresham, OR               |  | 1988                      |  | 265,765                 |  | 0                      |  | 265,765         |  | 97.5                          |  | 40                             |  | 2,600,149            |  | 10.03                             |  | Ross Dress for Less, GI Joes, Craft Warehouse                                                   
|Hermiston PlazaHermiston, OR               |  | 19741999                  |  | 150,396                 |  | 0                      |  | 150,396         |  | 95.3                          |  | 22                             |  | 938,115              |  | 6.55                              |  | Safeway Supermarket & Drug, Big Lots, Dollar Tree                                                
|Hood River Shopping CenterHood River, OR   |  | 19702000                  |  | 108,554                 |  | 0                      |  | 108,554         |  | 100.0                         |  | 13                             |  | 974,134              |  | 8.97                              |  | Rosauers Supermarket, Hi School Pharmacy                                                        
|Medford CenterMedford, OR                  |  | 19592004                  |  | 330,568                 |  | 84,746                 |  | 415,314         |  | 98.0                          |  | 44                             |  | 3,410,702            |  | 10.53                             |  | Cinemark Theatres, Sears, Rite Aid (2), Safeway (2), Circuit City, 24 Hour Fitness, Beds for Less
|Menlo Park PlazaPortland, OR               |  | 19572001                  |  | 112,755                 |  | 0                      |  | 112,755         |  | 95.8                          |  | 20                             |  | 1,330,688            |  | 12.32                             |  | Walgreens, Staples                                                                               
|Milwaukie MarketplaceMilwaukie, OR         |  | 1989                      |  | 185,859                 |  | 10,323                 |  | 196,182         |  | 100.0                         |  | 31                             |  | 1,780,248            |  | 9.58                              |  | Albertsons Supermarket, Rite Aid, Jo-Ann Fabrics & Crafts                                       
|Oregon City Shopping CenterOregon City, OR |  | 19611999                  |  | 246,855                 |  | 0                      |  | 246,855         |  | 98.0                          |  | 38                             |  | 2,245,565            |  | 9.28                              |  | Rite Aid, Fishermans Marine Supply, Michaels Arts & Crafts, Coastal Farm and Home              
|Oregon Trail CenterGresham, OR             |  | 19771999                  |  | 208,316                 |  | 0                      |  | 208,316         |  | 99.2                          |  | 31                             |  | 2,188,174            |  | 10.59                             |  | Wild Oats Supermarket, Office Depot, Big 5 Sporting Goods, Big Lots, Michaels Arts & Crafts     
|Pioneer PlazaSpringfield, OR               |  | 1988                      |  | 96,027                  |  | 4,294                  |  | 100,321         |  | 91.8                          |  | 20                             |  | 859,929              |  | 9.75                              |  | Safeway Supermarket & Drug                                                                       
|Powell Valley JunctionGresham, OR          |  | 19901999                  |  | 107,583                 |  | 0                      |  | 107,583         |  | 98.4                          |  | 8                              |  | 952,312              |  | 9.00                              |  | Food 4 Less Supermarket, Cascade Athletic Club                                                   



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Property Summary

12/31/2004



|                                       |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                                       
|-------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- | ---------- | --------------------------------- | - | --------------- |  | --------------------------------------------------------------------------------------
|Property and Location                  |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |            | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|Rockwood PlazaGresham, OR              |  | 19652000                  |  | 92,872                  |  | 0                      |  | 92,872          |  | 100.0                         |  | 16                             |  |                      | 790,328    |                                   |   | 8.51            |  | Dollar Tree, Volunteers of America                                                    
|Sandy MarketplaceSandy, OR             |  | 19851997                  |  | 101,438                 |  | 0                      |  | 101,438         |  | 70.4                          |  | 21                             |  |                      | 788,031    |                                   |   | 11.03           |  | Hi School Pharmacy, Dollar Tree                                                       
|Southgate Shopping CenterMilwaukie, OR |  | 19561999                  |  | 50,862                  |  | 0                      |  | 50,862          |  | 100.0                         |  | 11                             |  |                      | 695,646    |                                   |   | 13.68           |  | Office Max                                                                            
|Sunset EsplanadeHillsboro, OR          |  | 1989                      |  | 256,034                 |  | 101,909                |  | 357,943         |  | 99.5                          |  | 44                             |  |                      | 3,102,095  |                                   |   | 12.18           |  | Safeway Supermarket, Target (2), Petco, Dollar Tree, Jo-Ann Fabrics & Crafts, Rite Aid
|Sunset MallPortland, OR                |  | 19731996                  |  | 115,635                 |  | 2,500                  |  | 118,135         |  | 97.3                          |  | 28                             |  |                      | 1,296,140  |                                   |   | 11.52           |  | Safeway Supermarket & Drug                                                            
|Tanasbourne VillageHillsboro, OR       |  | 1990                      |  | 210,992                 |  | 1,209                  |  | 212,201         |  | 99.6                          |  | 41                             |  |                      | 3,291,169  |                                   |   | 15.66           |  | Safeway Supermarket, Rite Aid, Hillsboro Library                                      
|                                       |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                                       
|Region Total/Weighted Average          |  |                           |  | 3,088,316               |  | 235,979                |  | 3,324,295       |  | 97.3                          |  | 497                            |  | $                    | 31,304,099 |                                   | $ | 10.42           |  |                                                                                       
|                                       |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                                       



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Property Summary

12/31/2004



|                                         |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                                  
|---------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- | ---------- | --------------------------------- | - | --------------- |  | ---------------------------------------------------------------------------------
|Property and Location                    |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |            | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|NEVADA                                   |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                                  
|Caughlin RanchReno, NV                   |  | 19901991                  |  | 113,488                 |  | 0                      |  | 113,488         |  | 96.5                          |  | 28                             |  |                      | 1,527,816  |                                   |   | 13.95           |  | Scolaris Supermarket                                                            
|Cheyenne CommonsLas Vegas, NV            |  | 1992                      |  | 362,758                 |  | 0                      |  | 362,758         |  | 99.6                          |  | 49                             |  |                      | 4,792,476  |                                   |   | 13.26           |  | Wal-Mart, 24 Hour Fitness, Marshalls, Ross Dress for Less                       
|Decatur MeadowsLas Vegas, NV             |  | 1979                      |  | 111,245                 |  | 0                      |  | 111,245         |  | 97.5                          |  | 15                             |  |                      | 1,040,623  |                                   |   | 9.59            |  | Vons Supermarket, Dollar Tree Cort Furniture Rental                             
|Eagle StationCarson City, NV             |  | 19821994                  |  | 114,258                 |  | 60,000                 |  | 174,258         |  | 84.5                          |  | 19                             |  |                      | 886,017    |                                   |   | 9.18            |  | Raleys Supermarket, Mervyns (2)                                                
|Elko Junction Shopping CenterElko, NV    |  | 19961997                  |  | 170,812                 |  | 0                      |  | 170,812         |  | 93.7                          |  | 16                             |  |                      | 1,545,179  |                                   |   | 9.65            |  | Raleys Supermarket, Builders Mart                                              
|Green Valley Town & CountryHenderson, NV |  | 1990                      |  | 130,722                 |  | 0                      |  | 130,722         |  | 86.2                          |  | 34                             |  |                      | 1,650,926  |                                   |   | 14.65           |  | Albertsons/Sav-On Superstore                                                    
|Mira Loma CenterReno, NV                 |  | 1985                      |  | 102,907                 |  | 0                      |  | 102,907         |  | 100.0                         |  | 22                             |  |                      | 1,183,604  |                                   |   | 11.50           |  | Scolaris Supermarket, Longs Drugs, Dollar Tree                                 
|Rainbow PromenadeLas Vegas, NV           |  | 19951997                  |  | 228,279                 |  | 0                      |  | 228,279         |  | 100.0                         |  | 26                             |  |                      | 3,350,700  |                                   |   | 14.68           |  | United Artists Theatres, Barnes & Noble, Linens N Things, Office Max, Cost Plus 
|Sahara Pavilion NorthLas Vegas, NV       |  | 1989                      |  | 333,679                 |  | 0                      |  | 333,679         |  | 91.6                          |  | 62                             |  |                      | 4,339,272  |                                   |   | 14.20           |  | Vons Supermarket, T.J. Maxx, Sheplers, Borders Books, Golds Gym, Floors N More
|Sahara Pavilion SouthLas Vegas, NV       |  | 1990                      |  | 160,842                 |  | 0                      |  | 160,842         |  | 92.5                          |  | 23                             |  |                      | 2,218,775  |                                   |   | 14.91           |  | Sports Authority, Office Max, Michaels Arts & Crafts, Pier One                  
|West TownWinnemucca, NV                  |  | 19781991                  |  | 65,424                  |  | 0                      |  | 65,424          |  | 100.0                         |  | 2                              |  |                      | 463,244    |                                   |   | 7.08            |  | Raleys Supermarket                                                              
|Winterwood PavilionLas Vegas, NV         |  | 1990                      |  | 144,653                 |  | 0                      |  | 144,653         |  | 83.8                          |  | 23                             |  |                      | 1,298,685  |                                   |   | 10.71           |  | Vons Supermarket & Drug, Aaron Rents                                            
|                                         |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                                  
|Region Total/Weighted Average            |  |                           |  | 2,039,067               |  | 60,000                 |  | 2,099,067       |  | 94.2                          |  | 319                            |  | $                    | 24,297,316 |                                   | $ | 12.65           |  |                                                                                  
|                                         |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |            |                                   |   |                 |  |                                                                                  



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Property Summary

12/31/2004



|                                  |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |           |                                   |   |                 |  |                                                               
|--------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- | --------- | --------------------------------- | - | --------------- |  | --------------------------------------------------------------
|Property and Location             |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |           | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|ARIZONA                           |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |           |                                   |   |                 |  |                                                               
|Foothills Park PlacePhoenix, AZ   |  | 1990                      |  | 104,204                 |  | 0                      |  | 104,204         |  | 100.0                         |  | 1                              |  |                      | 681,621   |                                   |   | 6.54            |  | J. C. Penney                                                  
|North Mountain VillagePhoenix, AZ |  | 1985                      |  | 94,379                  |  | 53,131                 |  | 147,510         |  | 98.4                          |  | 25                             |  |                      | 1,015,220 |                                   |   | 10.93           |  | Frys Supermarket (2), T. J. Maxx                             
|Southern Palms CenterTempe, AZ    |  | 1980                      |  | 255,103                 |  | 0                      |  | 255,103         |  | 93.1                          |  | 37                             |  |                      | 2,240,551 |                                   |   | 9.43            |  | Sunflower Supermarket, Staples, American Furniture Liquidators
|                                  |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |           |                                   |   |                 |  |                                                               
|Region Total/Weighted Average     |  |                           |  | 453,686                 |  | 53,131                 |  | 506,817         |  | 95.8                          |  | 63                             |  | $                    | 3,937,392 |                                   | $ | 9.06            |  |                                                               
|                                  |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |           |                                   |   |                 |  |                                                               



23



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Property Summary

12/31/2004



|                                    |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |             |                                   |   |                 |  |                               
|----------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- | ----------- | --------------------------------- | - | --------------- |  | ------------------------------
|Property and Location               |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2004 (4) |  | Total # Tenants 12/31/2004 (4) |  | Annual Base Rent (1) |             | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|OTHER                               |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |             |                                   |   |                 |  |                               
|Country Club CenterAlbuquerque, NM  |  | 19881998                  |  | 57,631                  |  | 63,000                 |  | 120,631         |  | 66.4                          |  | 16                             |  |                      | 442,830     |                                   |   | 11.58           |  | Raleys Supermarket (2)       
|Maysville MarketsquareMaysville, KY |  | 19911993                  |  | 126,507                 |  | 89,612                 |  | 216,119         |  | 97.6                          |  | 18                             |  |                      | 916,885     |                                   |   | 7.42            |  | Kroger Supermarket, JC Penney 
|Memphis Retail CenterMemphis, TN    |  | 1990                      |  | 51,542                  |  | 40,000                 |  | 91,542          |  | 81.4                          |  | 10                             |  |                      | 322,588     |                                   |   | 7.69            |  | Hancock Fabrics, Family Dollar
|                                    |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |             |                                   |   |                 |  |                               
|Region Total/Weighted Average       |  |                           |  | 235,680                 |  | 192,612                |  | 428,292         |  | 86.4                          |  | 44                             |  | $                    | 1,682,303   |                                   | $ | 8.26            |  |                               
|                                    |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |             |                                   |   |                 |  |                               
|Portfolio Total/Weighted Average    |  |                           |  | 19,294,519              |  | 2,408,947              |  | 21,703,466      |  | 96.8                          |  | 3,388                          |  | $                    | 232,636,685 |                                   | $ | 12.45           |  |                               
|                                    |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |             |                                   |   |                 |  |                               



|(1) | Annualized base rent for all leases in place at December 31, 2004 is calculated as follows: total base rent to be received during the entire term of each lease, divided by the terms
in months for such leases, multiplied by 12.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | These retailers own their own space and are not tenants of the company.
|--- | -----------------------------------------------------------------------



|(3) | Annualized base rent divided by the owned GLA leased at December 31, 2004.
|--- | --------------------------------------------------------------------------



|(4) | Percent leased and total number of tenants includes month to month leases.
|--- | --------------------------------------------------------------------------



|(5) | Tenant is dark.
|--- | ---------------



|(6) | Tenant is Pak N Save, a division of Safeway.
|--- | ----------------------------------------------



24



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##### Table of Contents

Tenant Diversification Summary



|               |  |                                   |  |                                    |  |                                        |  |                                                    |  |                         |  |                                             
|-------------- |  | --------------------------------- |  | ---------------------------------- |  | -------------------------------------- |  | -------------------------------------------------- |  | ----------------------- |  | --------------------------------------------
|               |  |                                   |  |                                    |  |                                        |  | Annualized Base Rent in Place at December 31, 2004
|Tenant Type    |  | Total Gross Leased Area (sq. ft.) |  | Number of Tenants as of 12/31/2004 |  | % of Total Leased GLA as of 12/31/2004 |  | Total Annualized Base Rent ($) (3)                 |  | Percentage of Total (%) |  | Annualized Base Rent/ Leased Sq. ft. ($) (4)
|National (1)   |  | 11,221,112                        |  | 1,395                              |  | 60.05                                  |  | 128,595,022                                        |  | 55.28                   |  | 11.46                                       
|Regional (1)   |  | 3,477,335                         |  | 278                                |  | 18.61                                  |  | 35,559,717                                         |  | 15.29                   |  | 10.23                                       
|Local (1)      |  | 3,988,162                         |  | 1,694                              |  | 21.34                                  |  | 68,481,946                                         |  | 29.44                   |  | 17.17                                       
|Total          |  | 18,686,609                        |  | 3,367                              |  | 100.00                                 |  | 232,636,685                                        |  | 100.00                  |  | 12.45                                       
|Anchor (2)     |  | 10,734,447                        |  | 304                                |  | 57.44                                  |  | 91,377,191                                         |  | 39.28                   |  | 8.51                                        
|Non-Anchor (2) |  | 7,952,162                         |  | 3,084                              |  | 42.56                                  |  | 141,259,494                                        |  | 60.72                   |  | 17.76                                       
|Total          |  | 18,686,609                        |  | 3,388                              |  | 100.00                                 |  | 232,636,685                                        |  | 100.00                  |  | 12.45                                       



|(1) | The company defines a national tenant as any tenant that operates in at least four metropolitan areas located in more than one region, (i.e. northwest, northeast, midwest, southwest
or southeast); regional tenant as any tenant that operates in two or more metropolitan areas located within the same region; local tenant as any tenant that operates stores only within the same metropolitan area as the shopping center.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The Company defines anchors as tenants which lease 15,000 square feet or more and non-anchors as tenants which lease less than 15,000 square feet.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Annualized base rent for all leases in place is calculated as follows: total base rent, calculated in accordance with GAAP, to be received during the entire term of each lease,
divided by the terms in months for such leases, multiplied by 12.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Annualized base rent divided by GLA leased.
|--- | -------------------------------------------



25



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##### Table of Contents

Major Tenants as of December 31, 2004



|                            |  |                  |  |                      |  |                      |   |  |                                             |            |                                |   |                           |  |       |  
|--------------------------- |  | ---------------- |  | -------------------- |  | -------------------- | - |  | ------------------------------------------- | ---------- | ------------------------------ | - | ------------------------- |  | ----- | -
|                            |  |                  |  |                      |  |                      |   |  | Annualized Base Rent in Place at Period End |           
|Tenants                     |  | Number of Leases |  | Leased GLA (Sq. Ft.) |  | % of Total Owned GLA |   |  | Total Ann. Base Rent ($) (1)                |            | Ann. Base Rent/Sq. Ft. ($) (2) |   | % of Total Ann. Base Rent | 
|VONS/SAFEWAY/PAKN SAVE     |  | 23               |  | 1,057,449            |  | 5.63                 | % |  |                                             | 8,509,676  |                                |   | 8.05                      |  | 3.64  | %
|RALEYS/BEL AIR             |  | 17               |  | 1,007,761            |  | 5.37                 |   |  |                                             | 7,141,523  |                                |   | 7.09                      |  | 3.05  |  
|WAL-MART/SAMS CLUB         |  | 5                |  | 527,329              |  | 2.81                 |   |  |                                             | 5,514,628  |                                |   | 10.46                     |  | 2.36  |  
|ALBERTSONS/SAV-ON           |  | 19               |  | 742,890              |  | 3.96                 |   |  |                                             | 4,782,768  |                                |   | 6.44                      |  | 2.04  |  
|KROGER/RALPHS/QFC/FOOD4LESS |  | 11               |  | 402,175              |  | 2.14                 |   |  |                                             | 3,835,668  |                                |   | 9.54                      |  | 1.64  |  
|RITE AID                    |  | 22               |  | 546,110              |  | 2.91                 |   |  |                                             | 3,739,499  |                                |   | 6.85                      |  | 1.60  |  
|ROSS DRESS FOR LESS         |  | 13               |  | 351,717              |  | 1.87                 |   |  |                                             | 3,324,150  |                                |   | 9.45                      |  | 1.42  |  
|BLOCKBUSTER VIDEO           |  | 25               |  | 138,618              |  | 0.74                 |   |  |                                             | 2,737,536  |                                |   | 19.75                     |  | 1.17  |  
|SAVE MART/FOODMAXX          |  | 9                |  | 362,747              |  | 1.93                 |   |  |                                             | 2,469,073  |                                |   | 6.81                      |  | 1.06  |  
|HOLLYWOOD VIDEO             |  | 20               |  | 122,078              |  | 0.65                 |   |  |                                             | 2,366,482  |                                |   | 19.38                     |  | 1.01  |  
|                            |  |                  |  |                      |  |                      |   |  |                                             |            |                                |   |                           |  |       |  
|Total:                      |  | 164              |  | 5,258,874            |  | 28.01                | % |  | $                                           | 44,421,003 |                                | $ | 8.45                      |  | 18.99 | %
|                            |  |                  |  |                      |  |                      |   |  |                                             |            |                                |   |                           |  |       |  



|(1) | Annualized base rent for all leases in place at quarter end calculated as follows: total base rent, calculated in accordance with GAAP, to be received during the entire term of each
lease, divided by the terms in months for such leases, multiplied by 12.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Annualized base rent divided by gross leasable area.
|--- | ----------------------------------------------------



26



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##### Table of Contents

Lease Expiration Analysis *



As of 12/31/2004



|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                             
|------------------------- |  | --------------------- |  | ------------------------- |  | ---------------------------------- | - | --------------------- | ----------- |  | ------------------------------------------- | - | ------------------------- | ----- |  | ----------------------------
|                          |  |                       |  |                           |  |                                    |   |                       |             |  | Annualized Base Rent in Place at 12/31/2004
|                          |  | Lease Expiration Year |  | Number of Leases Expiring |  | GLA Under Expiring Leases (Sq.Ft.) |   | % of Total Leased GLA |             |  | Total Ann. Base Rent ($) (2)                |   | % of Total Ann. Base Rent |       |  | Ann. Base Rent ($/Sq.Ft.)(3)
|All Anchor Leases (1)     |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |      
|1                         |  | 2005                  |  | 12                        |  | 272,075                            |   | 1.47                  | %           |  | 2,396,867                                   |   | 1.04                      | %     |  | 8.81                        
|2                         |  | 2006                  |  | 28                        |  | 1,116,076                          |   | 6.04                  | %           |  | 10,174,444                                  |   | 4.40                      | %     |  | 9.12                        
|3                         |  | 2007                  |  | 23                        |  | 743,603                            |   | 4.03                  | %           |  | 4,577,254                                   |   | 1.98                      | %     |  | 6.16                        
|4                         |  | 2008                  |  | 30                        |  | 861,113                            |   | 4.66                  | %           |  | 6,794,558                                   |   | 2.94                      | %     |  | 7.89                        
|5                         |  | 2009                  |  | 38                        |  | 1,498,634                          |   | 8.11                  | %           |  | 11,112,006                                  |   | 4.80                      | %     |  | 7.41                        
|6                         |  | 2010                  |  | 29                        |  | 838,802                            |   | 4.54                  | %           |  | 7,572,125                                   |   | 3.27                      | %     |  | 9.03                        
|7                         |  | 2011                  |  | 16                        |  | 464,893                            |   | 2.52                  | %           |  | 4,152,077                                   |   | 1.79                      | %     |  | 8.93                        
|8                         |  | 2012                  |  | 25                        |  | 893,438                            |   | 4.84                  | %           |  | 8,571,350                                   |   | 3.71                      | %     |  | 9.59                        
|9                         |  | 2013                  |  | 19                        |  | 629,463                            |   | 3.41                  | %           |  | 4,883,818                                   |   | 2.11                      | %     |  | 7.76                        
|10                        |  | 2014                  |  | 19                        |  | 753,855                            |   | 4.08                  | %           |  | 6,151,618                                   |   | 2.66                      | %     |  | 8.16                        
|11                        |  | 2015+                 |  | 63                        |  | 2,616,665                          |   | 14.17                 | %           |  | 25,024,513                                  |   | 10.82                     | %     |  | 9.56                        
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                             
|TOTAL/WEIGHTED AVERAGE    |  | 302                   |  | 10,688,617                |  | 57.86                              | % |                       | 91,410,631  |  | 39.52                                       | % |                           | 8.55 
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                             
|All Non-Anchor Leases (1) |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |      
|1                         |  | 2005                  |  | 450                       |  | 966,098                            |   | 5.23                  | %           |  | 17,748,429                                  |   | 7.67                      | %     |  | 18.37                       
|2                         |  | 2006                  |  | 522                       |  | 1,219,663                          |   | 6.60                  | %           |  | 22,270,386                                  |   | 9.63                      | %     |  | 18.26                       
|3                         |  | 2007                  |  | 601                       |  | 1,398,434                          |   | 7.57                  | %           |  | 24,179,424                                  |   | 10.45                     | %     |  | 17.29                       
|4                         |  | 2008                  |  | 466                       |  | 1,198,920                          |   | 6.49                  | %           |  | 20,708,477                                  |   | 8.95                      | %     |  | 17.27                       
|5                         |  | 2009                  |  | 429                       |  | 1,238,204                          |   | 6.70                  | %           |  | 21,169,770                                  |   | 9.15                      | %     |  | 17.10                       
|6                         |  | 2010                  |  | 153                       |  | 543,684                            |   | 2.94                  | %           |  | 8,939,681                                   |   | 3.86                      | %     |  | 16.44                       
|7                         |  | 2011                  |  | 62                        |  | 221,216                            |   | 1.20                  | %           |  | 4,921,636                                   |   | 2.13                      | %     |  | 22.25                       
|8                         |  | 2012                  |  | 77                        |  | 265,783                            |   | 1.44                  | %           |  | 4,831,863                                   |   | 2.09                      | %     |  | 18.18                       
|9                         |  | 2013                  |  | 80                        |  | 296,492                            |   | 1.61                  | %           |  | 6,574,275                                   |   | 2.84                      | %     |  | 22.17                       
|10                        |  | 2014                  |  | 61                        |  | 224,274                            |   | 1.21                  | %           |  | 4,599,953                                   |   | 1.99                      | %     |  | 20.51                       
|11                        |  | 2015+                 |  | 102                       |  | 211,226                            |   | 1.14                  | %           |  | 3,969,767                                   |   | 1.72                      | %     |  | 18.79                       
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                             
|TOTAL/WEIGHTED AVERAGE    |  | 3,003                 |  | 7,783,994                 |  | 42.14                              | % |                       | 139,913,661 |  | 60.48                                       | % |                           | 17.97
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                             
|All Leases                |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |      
|1                         |  | 2005                  |  | 462                       |  | 1,238,173                          |   | 6.70                  | %           |  | 20,145,296                                  |   | 8.71                      | %     |  | 16.27                       
|2                         |  | 2006                  |  | 550                       |  | 2,335,739                          |   | 12.64                 | %           |  | 32,444,830                                  |   | 14.03                     | %     |  | 13.89                       
|3                         |  | 2007                  |  | 624                       |  | 2,142,037                          |   | 11.60                 | %           |  | 28,756,678                                  |   | 12.43                     | %     |  | 13.42                       
|4                         |  | 2008                  |  | 496                       |  | 2,060,033                          |   | 11.15                 | %           |  | 27,503,035                                  |   | 11.89                     | %     |  | 13.35                       
|5                         |  | 2009                  |  | 467                       |  | 2,736,838                          |   | 14.82                 | %           |  | 32,281,776                                  |   | 13.96                     | %     |  | 11.80                       
|6                         |  | 2010                  |  | 182                       |  | 1,382,486                          |   | 7.48                  | %           |  | 16,511,806                                  |   | 7.14                      | %     |  | 11.94                       
|7                         |  | 2011                  |  | 78                        |  | 686,109                            |   | 3.71                  | %           |  | 9,073,713                                   |   | 3.92                      | %     |  | 13.22                       
|8                         |  | 2012                  |  | 102                       |  | 1,159,221                          |   | 6.28                  | %           |  | 13,403,213                                  |   | 5.79                      | %     |  | 11.56                       
|9                         |  | 2013                  |  | 99                        |  | 925,955                            |   | 5.01                  | %           |  | 11,458,094                                  |   | 4.95                      | %     |  | 12.37                       
|10                        |  | 2014                  |  | 80                        |  | 978,129                            |   | 5.30                  | %           |  | 10,751,571                                  |   | 4.65                      | %     |  | 10.99                       
|11                        |  | 2015+                 |  | 165                       |  | 2,827,891                          |   | 15.31                 | %           |  | 28,994,280                                  |   | 12.53                     | %     |  | 10.25                       
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                             
|TOTAL/WEIGHTED AVERAGE    |  | 3,305                 |  | 18,472,611                |  | 100.00                             | % |                       | 231,324,292 |  | 100.00                                      | % |                           | 12.52
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                             



Note: Number of Leases expiring does
not include tenants on a month-to-month agreement, whose combined occupancy totals 186,018 sq. ft.



|* | Assumes no renewal options are exercised.
|- | -----------------------------------------



|(1) | The company defines anchors as single tenants which lease 15,000 square feet or more, non-anchors defined as tenants which lease less than 15,000 square feet.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Annualized base rent for all leases in place at report date calculated as follows: total base rent, calculated in accordance with GAAP, to be received during the entire term of each
lease, divided by the term in months for such leases, multiplied by 12.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Annualized base rent divided by gross leaseable area as of report date.
|--- | -----------------------------------------------------------------------



27



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##### Table of Contents

|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------



We are a party to legal proceedings that arise in the normal course of business, which matters are generally covered by insurance. The resolution of these
matters cannot be predicted with certainty. However, in the opinion of management, based upon currently available information, any liability resulting from such proceedings, either individually or in the aggregate, will not have a material adverse
effect on our consolidated financial statements taken as a whole.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



During the fourth quarter of 2004, no matters were submitted to a vote of our stockholders.



PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | ---------------------------------------------------------------------



Our common stock began trading on the New York Stock Exchange on August 8, 1997, under the symbol PNP. On
February 24, 2005, we had approximately 1,347 stockholders of record and approximately 23,267 beneficial owners. The following table sets forth, for the periods indicated, the high and low sales prices as reported by the New York Stock Exchange and
the dividends declared by us.



|                    |  |      |       |     |   |                    |  |   |       
|------------------- |  | ---- | ----- | --- | - | ------------------ |  | - | ------
|                    |  | High |       | Low |   | Dividends Declared
|First Quarter 2003  |  | $    | 39.08 |     | $ | 35.30              |  | $ | 0.5000
|Second Quarter 2003 |  | $    | 40.99 |     | $ | 38.55              |  | $ | 0.5100
|Third Quarter 2003  |  | $    | 43.50 |     | $ | 40.15              |  | $ | 0.5100
|Fourth Quarter 2003 |  | $    | 48.43 |     | $ | 42.95              |  | $ | 0.5100
|First Quarter 2004  |  | $    | 52.60 |     | $ | 47.85              |  | $ | 0.5425
|Second Quarter 2004 |  | $    | 53.16 |     | $ | 41.80              |  | $ | 0.5425
|Third Quarter 2004  |  | $    | 54.46 |     | $ | 48.88              |  | $ | 0.5425
|Fourth Quarter 2004 |  | $    | 62.70 |     | $ | 54.81              |  | $ | 0.5425



The fourth quarter
2003 and 2004 dividends on an annualized basis amount to $2.04 and $2.17 per share, respectively. All dividends will be made by us at the discretion of our board of directors and will depend upon our earnings, our financial condition and any other
factors our board of directors deems relevant. In order to qualify for the beneficial tax treatment accorded to REITs under the Internal Revenue Code, we are required to make distributions to holders of our shares in an amount at least equal to 90%
of our real estate investment trust taxable income, as defined in Section 857 of the Internal Revenue Code.



28



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##### Table of Contents

|ITEM 6. | SELECTED CONSOLIDATED FINANCIAL DATA
|------- | ------------------------------------



The following table sets forth our selected financial data on a historical basis. The following data should be read in connection with managements
discussion and analysis of financial condition and results of operations and the consolidated financial statements and notes thereto located elsewhere in this report.



SELECTED CONSOLIDATED FINANCIAL DATA

(In thousands, except share data)



|                                                  |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |          
|------------------------------------------------- |  | ------------------------ | --------- | ------------- | - | ------------- |  | ------------- | --------- | ------------- | - | --------- |  | - | ---------
|                                                  |  | Years Ended December 31,
|                                                  |  | 2004                     |           | 2003          |   | 2002          |  | 2001          |           | 2000         
|                                                  |  |                          |           | (revised) (1) |   | (revised) (1) |  | (revised) (1) |           | (revised) (1)
|STATEMENTS OF INCOME DATA:                        |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |          
|Total revenue                                     |  | $                        | 289,436   |               | $ | 261,586       |  | $             | 186,877   |               | $ | 173,766   |  | $ | 117,585  
|Operating and general and administrative expenses |  |                          | 83,595    |               |   | 73,944        |  |               | 48,546    |               |   | 45,090    |  |   | 28,250   
|Merger related expenses                           |  |                          |          |               |   |              |  |               |          |               |   |          |  |   | 3,204    
|Depreciation and amortization                     |  |                          | 48,501    |               |   | 39,640        |  |               | 29,976    |               |   | 27,773    |  |   | 19,911   
|Interest expense                                  |  |                          | 62,619    |               |   | 58,473        |  |               | 45,926    |               |   | 46,196    |  |   | 32,112   
|Income from continuing operations (2)             |  |                          | 92,382    |               |   | 87,075        |  |               | 60,972    |               |   | 56,315    |  |   | 31,989   
|Discontinued operations                           |  |                          | 9,607     |               |   | 17,361        |  |               | 16,680    |               |   | 7,907     |  |   | 1,811    
|Net income                                        |  |                          | 101,989   |               |   | 104,436       |  |               | 77,652    |               |   | 64,222    |  |   | 33,800   
|Basic earnings per share:                         |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |          
|Income from continuing operations                 |  |                          | 2.30      |               |   | 2.21          |  |               | 1.82      |               |   | 1.77      |  |   | 1.41     
|Discontinued operations                           |  |                          | 0.24      |               |   | 0.44          |  |               | 0.50      |               |   | 0.25      |  |   | 0.08     
|Net income                                        |  |                          | 2.54      |               |   | 2.65          |  |               | 2.32      |               |   | 2.02      |  |   | 1.49     
|Diluted earnings per share:                       |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |          
|Income from continuing operations                 |  |                          | 2.28      |               |   | 2.18          |  |               | 1.81      |               |   | 1.73      |  |   | 1.41     
|Discontinued operations                           |  |                          | 0.24      |               |   | 0.43          |  |               | 0.49      |               |   | 0.24      |  |   | 0.07     
|Net income                                        |  |                          | 2.52      |               |   | 2.61          |  |               | 2.30      |               |   | 1.97      |  |   | 1.48     
|Distributions declared                            |  |                          | 2.17      |               |   | 2.03          |  |               | 1.90      |               |   | 1.82      |  |   | 1.54     
|                                                  | 
|                                                  |  | As of December 31,      
|                                                  |  | 2004                     |           | 2003          |   | 2002          |  | 2001          |           | 2000         
|BALANCE SHEET DATA:                               |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |          
|Properties, net                                   |  | $                        | 1,892,131 |               | $ | 1,773,894     |  | $             | 1,306,033 |               | $ | 1,233,189 |  | $ | 1,194,824
|Total assets                                      |  |                          | 1,995,444 |               |   | 1,863,348     |  |               | 1,424,240 |               |   | 1,339,290 |  |   | 1,297,690
|Notes payable                                     |  |                          | 343,736   |               |   | 345,077       |  |               | 239,541   |               |   | 229,135   |  |   | 233,911  
|Line of credit and term loan payable              |  |                          | 113,000   |               |   | 48,250        |  |               | 66,000    |               |   | 165,300   |  |   | 267,650  
|Senior notes                                      |  |                          | 554,290   |               |   | 503,708       |  |               | 428,677   |               |   | 273,800   |  |   | 124,850  
|Minority interests                                |  |                          | 30,079    |               |   | 32,325        |  |               | 15,804    |               |   | 20,748    |  |   | 41,754   
|Stockholders equity                              |  |                          | 915,134   |               |   | 892,285       |  |               | 648,635   |               |   | 622,458   |  |   | 606,998  



|(1) | Our consolidated statements of income and consolidated statements of cash flows have been revised from those originally reported for the years ended December 31, 2003, 2002, 2001
and 2000 to separately reflect the results of discontinued operations for properties that were sold during the year ended December 31, 2004. The revision had no impact on our consolidated balance sheets or statements of stockholders equity.
The revision had no impact on net income or net income per share of common stock for the years ended December 31, 2003, 2002, 2001 and 2000.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Income from continuing operations includes minority interests and gain on sale of real estate (excluding the amount included in discontinued operations in 2004, 2003 and 2002).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



Revision of Consolidated Statements of Income and Consolidated Statements of Cash Flows



Our consolidated statements of income and consolidated statements of cash
flows have been revised, pursuant to SFAS No. 144, from those originally reported for the years ended December 31, 2003 and 2002 to separately reflect the results of discontinued operations for properties that have since been sold. The revision had
no impact on our consolidated balance sheets or our statements of stockholders equity. The revision had no impact on net income or net income per share of common stock for the years ended December 31, 2003 and 2002. See the discussions of
discontinued operations in the Results of Operations section below.



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, integration of completed
acquisitions, changes in the availability of additional acquisitions, changes in local or national economic conditions, acts of terrorism or war and other risks detailed from time to time in reports filed with the Securities and Exchange Commission.



Critical Accounting Policies



The following discussion and analysis of financial condition and results of
operations are based upon our consolidated financial statements, and the notes thereto, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us
to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions based upon historical experience and various
other factors and circumstances. We believe that our estimates and assumptions are reasonable for our current circumstances; however, actual results may differ from these estimates and assumptions under different future conditions.



We believe that the estimates and assumptions that are most important to the
portrayal of our financial condition and results of operations, in that they require our most subjective judgments, form the basis for the accounting policies deemed to be most critical. These critical accounting policies include our estimates of
useful lives in calculating depreciation expense on our shopping center properties and the ultimate recoverability, or impairment, of each shopping center asset. If actual useful lives are different from our estimates this could result in changes to
the results of our operations. Future adverse changes in market conditions or poor operating results of our shopping center properties could result in losses or an inability to recover the carrying value of the properties that may not be reflected
in the properties current carrying value, thereby possibly requiring an impairment charge in the future.



Overview



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 five shopping centers
during 2004 and the acquisition of Center Trust described below, the financial data shows increases in total revenue and total expenses from period to period.



During the year ended December 31, 2004, four non-strategic assets were sold. The cash proceeds were used toward the purchase of a shopping center
asset and to pay down our revolving credit facility. During the year ended December 31, 2003, nine non-strategic assets were sold. The cash proceeds were used toward the purchase of two shopping center assets and to pay down our revolving credit
facility.



On November 5, 2002, we entered into an Agreement
and Plan of Merger with Center Trust, Inc., a Maryland corporation. The transaction, which closed January 17, 2003, included interests in 27 shopping centers, two regional malls and two single tenant assets. The transaction was a stock for stock
exchange, including assumption of $362,257,000 of debt, whereby each share of Center Trust common stock was exchanged for 0.218 newly issued



30



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##### Table of Contents

shares of our common stock. As a result, we issued 6,084,499 shares of our common stock to Center Trust stockholders and as of December 31, 2004, we may
issue up to 250,298 shares of our common stock to limited partners of CT Operating Partnership, L.P. upon the exchange of operating partnership units held by them.



We expect that the more significant part of our growth in the next year or two will come from additional acquisitions of
properties and rent increases from the lease-up and re-tenanting initiatives of the assets acquired during 2004.



Results of Operations



Comparison of the Year ended December 31, 2004 to the Year ended December 31, 2003



Total revenue increased by $27,850,000, or 10.6%, to $289,436,000 for the year ended December 31, 2004, from $261,586,000
for the year ended December 31, 2003.



Rental revenue, which
includes base rent and percentage rent, increased by $18,576,000, or 9.1%, to $222,371,000 for the year ended December 31, 2004, from $203,795,000 for the year ended December 31, 2003. The increase in rental revenue resulted principally from the
acquisition and lease-up of the Center Trust portfolio, the addition of Olympia Place as an operating property which had been under development in 2003, and was placed into service in January 2004, and the acquisitions of seven other shopping center
assets in 2003 and 2004.



Recoveries from tenants, which
represents reimbursements from tenants for property operating expenses and property taxes, increased by $6,520,000, or 12.6%, to $58,173,000 for the year ended December 31, 2004, from $51,653,000 for the year ended December 31, 2003. This increase
resulted primarily from the acquisition of the Center Trust portfolio, the addition of Olympia Place as an operating property which had been under development in 2003 and the acquisitions of seven other shopping center assets in 2003 and 2004. In
addition, recoveries from tenants increased because recoverable expenses increased. Recoveries from tenants were 86.9% for the year ended December 31, 2004 compared to 85.2% for the year ended December 31, 2003. The increase in recovery percentage
compared to the prior year period reflects the impact of the lease-up and re-leasing of the Center Trust portfolio. We expect that the recovery percentage will continue to increase slightly over time due to additional re-leasing and as occupancy is
increased in the acquired assets.



Other income increased by
$3,118,000 to $8,454,000 for the year ended December 31, 2004, from $5,336,000 for the year ended December 31, 2003. The increase resulted primarily from miscellaneous income related to future cash flow participation in a property that was paid off
in advance as well as income from the reversal of the remaining balance of a general legal accrual that was established at the time of the Center Trust acquisition.



Property operating expenses increased by $3,497,000, or 9.0%, to $42,424,000 for the year ended December 31, 2004, from
$38,927,000 for the year ended December 31, 2003. Property taxes increased by $2,780,000, or 12.8%, to $24,511,000 for the year ended December 31, 2004, from $21,731,000 for the year ended December 31, 2003. The increase in property taxes was
primarily the result of the addition of Olympia Place as an operating property which had been under development in 2003 and the acquisitions of other shopping center assets in 2003 and 2004.



Depreciation and amortization increased by $8,861,000, or 22.4%, to
$48,501,000 for the year ended December 31, 2004, from $39,640,000 for the year ended December 31, 2003. This was primarily due to depreciation on Olympia Place and expansion space at El Camino North which were under development in 2003,
amortization of in-place lease value as well as depreciation on properties acquired in 2004 and 2003.



Interest expense increased by $4,146,000, or 7.1%, to $62,619,000 for the year ended December 31, 2004, from $58,473,000 for the year ended December 31,
2003. The increase was partially the result of the debt we assumed in the Center Trust acquisition as well as amounts we borrowed on our revolving credit facility to repay Center Trusts line of credit and to pay off certain notes payable. The
increase was also a result of additional amounts drawn on our revolving credit facility to finance properties acquired during 2004 and 2003. Interest expense also increased as a result of our issuance of $75,000,000 in aggregate principal amount of
senior notes in June 2003, our issuance of $50,000,000 in aggregate principal amount of senior notes in May 2004 and our issuance of $50,000,000 in aggregate principal amount of senior notes in July 2004. The stated interest rates of 4.70%, 5.95%
and 5.95%, respectively, on the senior notes, and the related amortization of prepaid financing costs, are higher than our cost to borrow funds under our revolving credit facility which was paid down with the net proceeds of the notes offerings. In
addition, our cost to borrow funds under our revolving credit facility has been increasing due to the Federal Reserve raising interest rates. These increases in interest expense were partially offset by a decrease in interest expense resulting from
the payoff of $50,000,000 of 7.88% senior notes in February 2004 with a borrowing on our credit line which had a weighted average interest rate of 3.18% at December 31, 2004.



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General and administrative expenses increased by $427,000, or 3.4%, to $13,027,000 for the year ended
December 31, 2004, from $12,600,000 for the year ended December 31, 2003. This increase resulted primarily from annual compensation increases. As a percentage of total revenue, general and administrative expenses were 4.5% for the year ended
December 31, 2004 as compared to 4.8% for the year ended December 31, 2003.



The impairment loss of $642,000 represents a charge related to a parcel of land in Reno, Nevada, originally acquired in the Western Properties Trust merger transaction, that had been held for potential development. In
the third quarter of 2004, we sold the land parcel for less than the recorded book value which resulted in the impairment loss.



Other expense increased by $2,305,000 to $2,991,000 for the year ended December 31, 2004, from $686,000 for the year ended December 31, 2003. The increase
resulted primarily from a write down of a receivable related to a lawsuit we brought against insurance carriers to recover our legal and settlement expenses incurred in connection with a shareholder suit related to our acquisition of Western
Properties Trust in November 2000. In July 2004, however, the court granted summary judgment in favor of these insurance carriers. In August 2004, we filed a notice of our intent to appeal this judgment. Our opening appellate brief, their opposing
brief, as well as our reply to this opposing brief have been filed. The outcome of litigation is by its nature unpredictable and we therefore cannot give assurance that we will successfully appeal this judgment.



Discontinued operations for the year ended December 31, 2004 of $9,607,000
reflects the operating results of three of four non-strategic assets that were sold during 2004. Included in this amount is gain on sale of $8,245,000. Discontinued operations for the year ended December 31, 2003 of $17,361,000 reflects the
operating results of eight of nine non-strategic assets that were sold during 2003 and three of four non-strategic assets that were sold during 2004. Included in this amount is gain on sale of $10,571,000.



Comparison of the Year Ended December 31, 2003 to the Year Ended December
31, 2002



Total revenue increased by $74,709,000, or
40.0%, to $261,586,000 for the year ended December 31, 2003, from $186,877,000 for the year ended December 31, 2002.



Rental revenue, which includes base rent and percentage rent, increased by $58,494,000, or 40.3%, to $203,795,000 for the year ended December 31, 2003,
from $145,301,000 for the year ended December 31, 2002. The increase in rental revenue resulted principally from the acquisition of the Center Trust portfolio.



Recoveries from tenants, which represents reimbursements from tenants for property operating expenses and property taxes, increased by $16,255,000, or
45.9%, to $51,653,000 for the year ended December 31, 2003, from $35,398,000 for the year ended December 31, 2002. This increase resulted primarily from the acquisition of the Center Trust portfolio. In addition, recoveries from tenants increased
because recoverable expenses increased. Recoveries from tenants were 85.2% for the year ended December 31, 2003 compared to 91.3% for the year ended December 31, 2002. The decrease in recovery percentage compared to the prior year period reflects
the impact of the acquisition of the Center Trust portfolio in that Center Trusts historical recovery rate was lower than our recovery rate. We expect that the recovery percentage will increase over time as occupancy is increased in the
acquired assets.



Other income decreased by $688,000, or 11.4%,
to $5,336,000 for the year ended December 31, 2003, from $6,024,000 for the year ended December 31, 2002. The decrease resulted principally from a reduction of interest income on our Plaza Escuela corporate note receivable which was repaid in the
third quarter of 2002. This decrease was partially offset by interest income recorded on other notes receivable issued during 2003 related to property sales as well as interest on notes receivable we assumed upon the acquisition of the Center Trust
portfolio.



Property operating expenses increased by
$14,766,000, or 61.1%, to $38,927,000 for the year ended December 31, 2003, from $24,161,000 for the year ended December 31, 2002. This increase resulted primarily from our acquisition of the Center Trust portfolio. Property taxes increased by
$7,124,000, or 48.8%, to $21,731,000 for the year ended December 31, 2003, from $14,607,000 for the year ended December 31, 2002. The increase in property taxes was also primarily the result of the acquisition of the Center Trust portfolio.



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Depreciation and amortization increased by $9,664,000, or 32.2%, to $39,640,000 for the year ended
December 31, 2003, from $29,976,000 for the year ended December 31, 2002. This was primarily due to the acquisition of the Center Trust portfolio.



Interest expense increased by $12,547,000, or 27.3%, to $58,473,000 for the year ended December 31, 2003, from $45,926,000 for the year ended December 31,
2002. The increase was primarily the result of the debt we assumed in the Center Trust acquisition as well as amounts we borrowed on our revolving credit facility to repay Center Trusts line of credit and to pay off certain notes payable. The
increase was also a result of additional amounts drawn on our revolving credit facility to finance properties acquired during 2003. Interest expense also increased as a result of our issuance of $55,000,000 in aggregate principal amount of senior
notes in June 2002, our issuance of $100,000,000 in aggregate principal amount of senior notes in December 2002 and our issuance of $75,000,000 in aggregate principal amount of senior notes in June 2003. The stated interest rates of 5.75%, 6.125%
and 4.70% on the senior note issuances, respectively, are higher than our cost to borrow funds under our revolving credit facility which were paid down with the net proceeds of the notes offerings.



General and administrative expenses increased by $3,174,000, or 33.7%, to
$12,600,000 for the year ended December 31, 2003, from $9,426,000 for the year ended December 31, 2002. This increase resulted primarily from increased staffing required as a result of the acquisition of Center Trust, annual compensation increases
during 2003, accrued compensation for bonuses and costs associated with the implementation of new corporate governance initiatives. As a percentage of total revenue, general and administrative expenses were 4.8% for the year ended December 31, 2003
as compared to 5.0% for the year ended December 31, 2002.



Discontinued operations for the year ended December 31, 2003 of $17,361,000 reflects the operating results of eight of the nine non-strategic assets that were sold during the year and three of four non-strategic assets that were sold during
2004 and were owned in 2003. Included in this amount is gain on sale of $10,571,000. Discontinued operations for the year ended December 31, 2002 of $16,680,000 reflects the operating results of nine non-strategic assets that were sold during 2002,
three of the nine non-strategic assets that were sold during the year ended December 31, 2003 and were owned in 2002 and three of four non-strategic assets that were sold during 2004 and were owned in 2002. Included in this amount is gain on sale of
$8,702,000.



Cash Flows



Comparison of the Year ended December 31, 2004 to the Year ended December
31, 2003



Net cash provided by continuing operating
activities increased by $8,397,000 to $134,635,000 for the year ended December 31, 2004, as compared to $126,238,000 for the year ended December 31, 2003. The increase was primarily the result of an increase in cash operating income and a decrease
in discontinued operations offset by an increase in prepaid expenses and a decrease in accounts payable, accrued expenses and other liabilities.



Net cash used in investing activities increased by $267,124,000 to $151,827,000 for the year ended December 31, 2004, as compared to net cash provided by
investing activities of $115,297,000 for the year ended December 31, 2003. The increase was primarily the result of an increase in acquisitions of and additions to properties, an increase in intangibles in connection with acquisitions of properties,
a decrease in proceeds from the sale of real estate and a decrease in the collections of notes receivable offset by a decrease in cash used in the acquisition of Center Trust.



Net cash provided by financing activities increased by $255,598,000 to $11,648,000 for the year ended December 31, 2004, as
compared to net cash used in financing activities of $243,950,000 for the year ended December 31, 2003. The increase primarily resulted from a decrease in notes payable payments, an increase in line of credit proceeds and an increase in issuance of
senior notes offset by an increase in line of credit payments, a repayment of senior notes and an increase in distributions paid.



Comparison of the Year ended December 31, 2003 to the Year ended December 31, 2002



Net cash provided by continuing operating activities increased by $48,115,000 to $126,238,000 for the year ended December
31, 2003, as compared to $78,123,000 for the year ended December 31, 2002. The increase was primarily the result of an increase in net income due to the acquisition of Center Trust, an increase in depreciation and amortization, a decrease in prepaid
expenses and an increase in accounts payable, accrued expenses and other liabilities.



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Net cash provided by investing activities increased by $218,194,000 to $115,297,000 for the year ended
December 31, 2003, as compared to net cash used in investing activities of $102,897,000 for the year ended December 31, 2002. The increase was primarily the result of an increase in proceeds from the sale of real estate, a decrease in acquisitions
of and additions to properties, and a decrease in funds held in escrow pending property acquisitions offset by cash used in the acquisition of Center Trust and a decrease in collections of notes receivable.



Net cash used in financing activities increased by $257,581,000 to
$243,950,000 for the year ended December 31, 2003, as compared to net cash provided by financing activities of $13,631,000 for the year ended December 31, 2002. The increase primarily resulted from a decrease in notes payable proceeds, an increase
in notes payable payments, an increase in line of credit payments, a decrease in the issuance of senior notes, a decrease in issuance of common shares and an increase in distributions paid. These increases were partially offset by an increase in
line of credit proceeds.



Liquidity and Capital Resources



Our total market capitalization at December 31, 2004 was
approximately $3,595,909,000, based on the market closing price of our common stock at December 31, 2004 of $62.70 per share (assuming the conversion of 695,782 operating subsidiary units to common stock) and our debt outstanding of approximately
$1,011,026,000 (exclusive of accounts payable and accrued expenses). As a result, our debt to total market capitalization ratio was approximately 28.1% at December 31, 2004. Our board of directors adopted a policy of limiting our indebtedness to
approximately 50% of our total market capitalization. However, our board of directors 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 September 2004, we entered into an amended and restated $300,000,000
revolving credit facility with a maturity date of March 2007. At December 31, 2004, we had $113,000,000 drawn on our revolving credit facility leaving $187,000,000 available to borrow. At our option, amounts borrowed under our revolving credit
facility bear interest at either LIBOR plus 0.65% or a reference rate. The weighted average interest rate for short-term LIBOR contracts under our revolving credit facility at December 31, 2004 was 3.18%. We will continue to use our revolving credit
facility to take advantage of select acquisition opportunities as well as to provide funds for general corporate purposes. The amended and restated revolving credit facility contains certain financial and other covenants which we believe we are in
compliance with at December 31, 2004.



In June 2003, we issued
$75,000,000 of 4.70% senior notes due June 1, 2013. In May 2004, we issued $50,000,000 of 5.95% senior notes due June 1, 2014. In July 2004, we issued an additional $50,000,000 of the 5.95% senior notes due June 1, 2014. The net proceeds from the
offerings were used to repay borrowings under our revolving credit facility. Consistent with senior notes previously issued by the Company, we are bound by certain financial ratio covenants which we believe we are in compliance with at December 31,
2004.



During 2003, nine non-strategic assets were sold,
including two regional malls that were acquired as part of the Center Trust acquisition. The sales of the regional malls generated net cash proceeds of approximately $190,000,000 which were used primarily to repay borrowings under our revolving
credit facility.



We may in the future enter into derivative
financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate our interest rate risk on a related financial instrument; however, we are not a party to any derivative financial instruments at December 31, 2004.
Further, we do not enter into derivative or interest rate transactions for speculative or trading purposes nor do we enter into energy or commodity contracts.



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 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 be used to pay down outstanding balances on our revolving credit
facility, if any.



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The following table provides recent historical distribution information:



|                   |  |                   |  |                   |  |                    |  |                        |       
|------------------ |  | ----------------- |  | ----------------- |  | ------------------ |  | ---------------------- | ------
|Quarter ended      |  | Date declared     |  | Record date       |  | Date paid          |  | Distribution per share
|March 31, 2002     |  | February 7, 2002  |  | February 22, 2002 |  | March 15, 2002     |  | $                      | 0.4750
|June 30, 2002      |  | May 9, 2002       |  | May 31, 2002      |  | June 14, 2002      |  | $                      | 0.4750
|September 30, 2002 |  | August 15, 2002   |  | August 30, 2002   |  | September 13, 2002 |  | $                      | 0.4750
|December 31, 2002  |  | October 30, 2002  |  | November 29, 2002 |  | December 13, 2002  |  | $                      | 0.4750
|March 31, 2003     |  | January 7, 2003   |  | January 14, 2003  |  | February 14, 2003  |  | $                      | 0.5000
|June 30, 2003      |  | May 12, 2003      |  | May 23, 2003      |  | June 13, 2003      |  | $                      | 0.5100
|September 30, 2003 |  | August 14, 2003   |  | August 29, 2003   |  | September 15, 2003 |  | $                      | 0.5100
|December 31, 2003  |  | November 4, 2003  |  | November 28, 2003 |  | December 15, 2003  |  | $                      | 0.5100
|March 31, 2004     |  | February 5, 2004  |  | February 27, 2004 |  | March 15, 2004     |  | $                      | 0.5425
|June 30, 2004      |  | May 17, 2004      |  | May 28, 2004      |  | June 15, 2004      |  | $                      | 0.5425
|September 30, 2004 |  | August 4, 2004    |  | August 27, 2004   |  | September 15, 2004 |  | $                      | 0.5425
|December 31, 2004  |  | November 11, 2004 |  | November 26, 2004 |  | December 15, 2004  |  | $                      | 0.5425



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 our long-term liquidity requirements such as property acquisitions and developments, 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 our revolving credit facility to finance acquisition and development activities and capital improvements on an interim basis.



Off-Balance Sheet Arrangements



On September 30, 2002, Plaza Escuela Holding Co., LLC completed a financing
transaction with an initial funding of $38,087,000, bearing interest at 6.8%, wherein we received a partial payoff of $36,754,000 on our note receivable of $44,349,000 on the Plaza Escuela property in Walnut Creek, California. The remaining balance
of our note of $7,595,000 was converted to a 49% non-managing member interest in Plaza Escuela Holding Co., LLC, the entity that owns the property. In January 2003, we received a return of capital of $3,990,000. In May 2003, we received a return of
capital of $800,000. In August 2003, we received a return of capital of $1,000,000. In February 2004, we received a return of capital of $600,000. We received a return of capital for our remaining equity position of $1,205,000 during the second
quarter of 2004. We were entitled to receive 25% of the operating cash flows from the property through November 2008. In the fourth quarter of 2004, we agreed to receive $1,354,000 in exchange for our right to receive these future operating cash
flows. Proceeds from the returns of capital and cash flow participation were used primarily to repay borrowings under our revolving credit facility.



We are a 50% general partner of a joint venture that owns North Coast Health Center, a medical office building in Encinitas, California. During the second
quarter of 2002, the joint venture entered into a loan agreement for $18,000,000, bearing interest at 7%, to purchase the building on the property. At December 31, 2004, the balance of the loan was $17,560,000. The loan is secured by the property
and is not guaranteed by us. We account for this joint venture under the equity method. This unconsolidated debt is the only off-balance sheet financing to which we are a party.



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Contractual Obligations and Contingent Liabilities



Our indebtedness outstanding at December 31, 2004, which includes debt
discounts and premiums and excludes interest, representing regularly scheduled principal reductions, balloon payments, scheduled senior note redemptions and amounts due on our revolving credit facility, is as follows:



|     |  |        |            
|---- |  | ------ | -----------
|Year |  | Amount
|2005 |  | $      | 13,428,000 
|2006 |  | $      | 60,936,000 
|2007 |  | $      | 246,710,000
|2008 |  | $      | 29,180,000 
|2009 |  | $      | 114,816,000
|2010 |  | $      | 49,546,000 
|2011 |  | $      | 171,699,000
|2012 |  | $      | 42,709,000 
|2013 |  | $      | 175,000,000
|2014 |  | $      | 100,000,000
|2015 |  | $      | 6,000,000  



Payments due in the
year 2006 include senior note redemptions of $25,000,000. Payments due in the year 2007 include the balance drawn on our revolving credit facility at December 31, 2004 of $113,000,000 and senior note redemptions of $55,000,000. Payments due in 2008,
2010, 2011, 2013 and 2014 include senior note redemptions of $25,000,000, $25,000,000, $150,000,000, $175,000,000, and $100,000,000, respectively. In 2015, property level bonds of $6,000,000 are due. With regard to the payments noted above, it is
likely that we will not have sufficient funds on hand to repay these 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.



We have future obligations relating to construction contracts and leases for real estate and office equipment under operating leases expiring at various dates through 2059. Rental expense was $2,038,000, $1,782,000 and $348,000 for the
years ended December 31, 2004, 2003 and 2002, respectively. Committed amounts under construction contracts due in 2005 totaled approximately $5,034,000. Committed amounts under construction contracts and minimum rentals under noncancellable
operating leases in effect at December 31, 2004 were as follows:



|                    |  |   |           
|------------------- |  | - | ----------
|2005                |  | $ | 6,600,000 
|2006                |  |   | 1,311,000 
|2007                |  |   | 1,308,000 
|2008                |  |   | 1,328,000 
|2009                |  |   | 1,199,000 
|2010 and subsequent |  |   | 19,610,000
|                    |  |   |           
|                    |  | $ | 31,356,000
|                    |  |   |           



Inflation



Substantially all of our leases provide for the recovery of all or a
significant portion of all real estate taxes and operating expenses we incur. In addition, many of the leases provide for fixed base rent increases or indexed escalations (based on the consumer price index or 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.



Our revolving credit facility bears interest at a variable rate, which will be influenced by changes in short-term interest rates, and will be sensitive
to inflation.



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Impact of Accounting Pronouncements Issued but not Adopted by the Company



In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment. This
Statement is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123R supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. SFAS No. 123R requires all
share-based payments to employees, including grants of employee stock options, to be recorded as an expense based on their fair values. The grant-date fair value of employee share options and similar instruments will be estimated using an
option-pricing model adjusted for any unique characteristics of a particular instrument. If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the
modified award over the fair value of the original award immediately before the modification. SFAS No. 123R is effective for the fiscal periods beginning after June 15, 2005. The adoption of this Statement will not have a material effect on the
financial position or results reported by the Company.



In
December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets  An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions. SFAS No. 153 eliminates the exception from fair value measurement for nonmonetary
exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary Transactions, and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 specifies that a
nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS No. 153 is effective for the fiscal periods beginning after June 15, 2005. The Company is
currently evaluating the effect that the adoption of SFAS No. 153 will have on the financial position or results reported by the Company and does not expect it to have a material impact.



|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------



We are exposed to interest rate changes primarily as a result of our credit agreements and long-term debt used to maintain liquidity and fund capital
expenditures and expansion of our real estate investment portfolio and operations. Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To
achieve our objectives, we borrow primarily at fixed rates, although we use our line of credit for short-term borrowing purposes, and could enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to
mitigate our interest rate risk on a related financial instrument. We are not a party to any derivative financial instruments at December 31, 2004. We do not enter into derivative or interest rate transactions for speculative or trading purposes nor
do we enter into energy or commodity contracts. Additionally, we do not believe that the interest rate risk represented by our floating rate debt is material as of December 31, 2004 in relation to total assets of $1,995,444,000 and an equity market
capitalization of $2,584,883,000.



Our interest rate risk is
monitored using a variety of techniques. The table below presents the principal amounts, weighted average interest rates, fair values and other terms required by year of expected maturity to evaluate the expected cash flows and sensitivity to
interest rate changes.



|                       |  |      |        |   |      |   |        |      |  |   |         |   |  |      |        |   |            |   |         |       |  |   |            |   |  |   |         |   |  |   |         |  
|---------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | - |  | ---- | ------ | - | ---------- | - | ------- | ----- |  | - | ---------- | - |  | - | ------- | - |  | - | ------- | -
|                       |  | 2005 |        |   | 2006 |   |        | 2007 |  |   | 2008    |   |  | 2009 |        |   | Thereafter |   |         | Total |  |   | Fair Value |  
|Fixed-rate debt (1)(2) |  | $    | 14,053 |   |      | $ | 62,098 |      |  | $ | 136,854 |   |  | $    | 29,160 |   |            | $ | 125,635 |       |  | $ | 523,224    |   |  | $ | 891,024 |   |  | $ | 894,688 |  
|Average interest rate  |  |      | 7.70   | % |      |   | 7.20   | %    |  |   | 7.24    | % |  |      | 7.22   | % |            |   | 7.44    | %     |  |   | 6.66       | % |  |   | 6.93    | % |  |   | 6.01    | %
|Variable-rate debt (1) |  |      |       |   |      |   |       |      |  | $ | 113,000 |   |  |      |       |   |            |   |        |       |  | $ | 6,000      |   |  | $ | 119,000 |   |  | $ | 119,000 |  
|Average interest rate  |  |      |       |   |      |   |       |      |  |   | 3.18    | % |  |      |       |   |            |   |        |       |  |   | 1.99       | % |  |   | 3.12    | % |  |   | 3.12    | %



|(1) | Principal amounts shown are in thousands.
|--- | -----------------------------------------



|(2) | Excludes unamortized discounts and premium on senior notes, net of unamortized premiums on notes payable, of $(1,002,000).
|--- | --------------------------------------------------------------------------------------------------------------------------



The table incorporates only those exposures that exist as of December 31,
2004, and does not consider those exposures or positions which could arise after that date. Moreover, because firm commitments are not presented in the table above, the information presented therein has limited predictive value. As a result, our
interest rate fluctuations will depend on the exposures that arise during the period and interest rates.



|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------



The financial statements and supplementary data required by Regulation S-X are included in this Annual Report on Form 10-K commencing on page F-1.



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##### Table of Contents

|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------



Not applicable.



ITEM 9A. CONTROLS AND PROCEDURES



Evaluation
of Disclosure Controls and Procedures



We maintain
disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms,
and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, we have investments in certain unconsolidated entities. As we do not control or manage these entities, our disclosure controls and
procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.



As required by Rule 13(a)-15(b) under the Securities Exchange Act of 1934, we carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief
Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective and were operating at a reasonable assurance level.



Internal control over financial reporting refers to the process designed by,
or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:



1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the
assets of the Company;



2) Provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management
and directors of the Company; and



(3) Provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the financial statements.



Managements Report on Internal Control Over Financial Reporting



Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal
control over financial reporting. Management has used the framework set forth in the report entitled Internal ControlIntegrated Framework published by the Committee of Sponsoring Organizations (COSO) of the Treadway
Commission to evaluate the effectiveness of the Companys internal control over financial reporting. Based on our evaluation, management has concluded that the Companys internal control over financial reporting was effective as of
December 31, 2004. KPMG, LLP, our independent registered public accounting firm, has issued an attestation report on managements assessment of the Companys internal control over financial reporting as of December 31, 2004, as stated in
their report which is included herein.



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Limitations of Internal Control



Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives
because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over
financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design safeguards into the process to reduce, though not eliminate, this risk.



Changes in Internal Control



There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date of their evaluation.



PART III



Certain information required by Part III is omitted from this annual report on Form 10-K in that we will file a definitive proxy statement within 120 days after the end of our fiscal year pursuant to Regulation 14A for our Annual Meeting of
Stockholders to be held in April 2005 (the Proxy Statement) and the information included therein is incorporated herein by reference.



|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|-------- | --------------------------------------------------



The information contained in the sections captioned Proposal One; Election of Directors and Compliance with Federal Securities
Laws of the Proxy Statement is incorporated herein by reference.



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------



The information contained in the section captioned Executive Compensation of the Proxy Statement is incorporated herein by reference.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- | --------------------------------------------------------------



The information contained in the section captioned Security Ownership of Certain Beneficial Owners and Management of the Proxy Statement is
incorporated herein by reference.



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------



The information contained in the section captioned Certain Relationships and Related Transactions of the Proxy Statement is incorporated
herein by reference.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------



The information contained in the section captioned Principal Accountant Fees and Services of the Proxy Statement is incorporated herein by
reference.



39



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##### Table of Contents

PART IV



ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



(a) Financial Statements and Schedules



The following consolidated financial information is included as a separate section of this Annual Report on Form 10-K.



| | 1. | Consolidated Financial Statements:
| | -- | ----------------------------------



|                                                                                                     |  |         
|---------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                     |  | Page (s)
|Reports of Independent Registered Public Accounting Firm                                             |  | F-1     
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                         |  | F-4     
|Consolidated Statements of Income for the years ended December 31, 2004, 2003 and 2002               |  | F-5     
|Consolidated Statements of Stockholders Equity for the years ended December 31, 2004, 2003 and 2002 |  | F-6     
|Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002           |  | F-7     
|Notes to Consolidated Financial Statements                                                           |  | F-9     



| | 2. | Consolidated Financial Statement Schedule:
| | -- | ------------------------------------------



|                                                     |  |     
|---------------------------------------------------- |  | ----
|Schedule IIIProperties and Accumulated Depreciation |  | F-28



40



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##### Table of Contents

Exhibits



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|3.1         |  | Articles of Amendment and Restatement of the Company (previously filed as Exhibit 3.1 to Pan Pacific Retail Properties, Inc.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 Pan Pacific Retail Properties, Inc.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 Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-11 (Registration No. 333- 28715) and
incorporated herein by reference).                                                                                                                                                                                          
|            | 
|4.2         |  | Form of Indenture relating to the Senior Notes (previously filed as Exhibit 4.1 to Western Properties Trusts Registration Statement on Form S-3 (Registration No. 333-32721) and
incorporated herein by reference).                                                                                                                                                                                            
|            | 
|4.3         |  | Form of Senior Notes (previously filed as Exhibit 4.1 to Western Properties Trusts Registration Statement on Form S-3 (Registration No. 333-32721) and incorporated herein by
reference).                                                                                                                                                                                                                      
|            | 
|4.4         |  | Form of Supplemental Indenture relating to the 7.1% Senior Notes due 2006 (previously filed as Exhibit 4.5 to Western Properties Trusts Form 8-K dated September 24, 1997, and
incorporated herein by reference).                                                                                                                                                                                              
|            | 
|4.5         |  | Form of Supplemental Indenture relating to the 7.2% Senior Notes due 2008 (previously filed as Exhibit 4.6 to Western Properties Trusts Form 8-K, dated September 24, 1997, and
incorporated herein by reference).                                                                                                                                                                                             
|            | 
|4.6         |  | Form of Supplemental Indenture relating to the 7.3% Senior Notes due 2010 (previously filed as Exhibit 4.7 to Western Properties Trusts Form 8-K, dated September 24, 1997, and
incorporated herein by reference).                                                                                                                                                                                             
|            | 
|4.7         |  | Form of Supplemental Indenture relating to the assumption by Pan Pacific Retail Properties, Inc. of the Indenture relating to the 7.1% Senior Notes due 2006, the 7.2% Senior Notes due 2008
and the 7.3% Senior Notes due 2010 (previously filed as Exhibit 4.7 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-3 (Registration No. 333-51230) and incorporated herein by reference).
|            | 
|4.8         |  | Form of Indenture relating to the Notes (previously filed as Exhibit 4.2 to Pan Pacific Retail Properties, Inc.s Form 8-K, filed on April 10, 2001, and incorporated herein by
reference).                                                                                                                                                                                                                     
|            | 
|4.9         |  | Form of 7.95% Notes due 2011 (previously filed as Exhibit 4.1 to Pan Pacific Retail Properties, Inc.s Form 8-K, filed on April 10, 2001, and incorporated herein by
reference).                                                                                                                                                                                                                                
|            | 
|4.10        |  | Minutes of a meeting of the Pricing Committee held on April 6, 2001 designating the terms of 7.95% Notes due 2011 (previously filed as Exhibit 4.3 to Pan Pacific Retail Properties,
Inc.s Form 8-K, filed on April 10, 2001, and incorporated herein by reference).                                                                                                                                           
|            | 
|4.11        |  | Form of 5.75% Note due 2007 (previously filed as Exhibit 4.1 to Pan Pacific Retail Properties, Inc.s Current Report on Form 8-K, dated June 20, 2002, and incorporated herein by
reference).                                                                                                                                                                                                                   



41



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                        
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                            
|            | 
|4.12        |  | Minutes of a meeting of the Pricing Committee held on June 13, 2002 designating the terms of the 5.75% Notes Due 2007 (previously filed as Exhibit 4.3 of Pan Pacific Retail Properties,
Inc.s Current Report on Form 8-K, dated June 20, 2002, and incorporated herein by reference).
|            | 
|4.13        |  | Form of 6.125% Notes due 2013 (previously filed as Exhibit 4.1 to Pan Pacific Retail Properties, Inc.s Form 8-K, filed on December 16, 2002, and incorporated herein by
reference).                                                                                                   
|            | 
|4.14        |  | Minutes of a meeting of the Pricing Committee held on December 12, 2002 designating the terms of 6.125% Notes due 2013 (previously filed as Exhibit 4.3 to Pan Pacific Retail Properties,
Inc.s Form 8-K, filed on December 16, 2002, and incorporated herein by reference).          
|            | 
|4.15        |  | Form of 4.70% Note due 2013 (previously filed as Exhibit 4.1 to Pan Pacific Retail Properties, Inc.s Form 8-K, filed on May 30, 2003, and incorporated herein by
reference).                                                                                                          
|            | 
|4.16        |  | Minutes of a meeting of the Pricing Committee held on May 28, 2003 designating the terms of the 4.70% Note due 2013 (previously filed as Exhibit 4.3 to Pan Pacific Retail Properties,
Inc.s Form 8-K, filed on May 30, 2003, and incorporated herein by reference).                  
|            | 
|4.17        |  | Form of 5.95% Note due 2014 (previously filed as Exhibit 4.1 to Pan Pacific Retail Properties, Inc.s Form 8-K, filed on May 26, 2004, and incorporated herein by
reference).                                                                                                          
|            | 
|4.18        |  | Minutes of a meeting of the Pricing Committee held on May 21, 2004 designating the terms of the 5.95% Note due 2014 (previously filed as Exhibit 4.3 to Pan Pacific Retail Properties,
Inc.s Form 8-K, filed on May 26, 2004, and incorporated herein by reference).                  
|            | 
|4.19        |  | Form of 5.95% Note due 2014 (previously filed as Exhibit 4.1 to Pan Pacific Retail Properties, Inc.s Form 8-K, filed on July 20, 2004, and incorporated herein by
reference).                                                                                                         
|            | 
|4.20        |  | Minutes of a meeting of the Pricing Committee held on July 14, 2004 designating the terms of the 5.95% Note due 2014 (previously Filed as Exhibit 4.3 to Pan Pacific Retail Properties,
Inc.s Form 8-K, filed on July 20, 2004, and incorporated herein by reference).                



42



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|4.21        |  | Registration Rights Agreement dated as of January 17, 2003 by and among Pan Pacific Retail Properties, Inc. and Myrtle Gronske, the Harry J. Frank, Jr. and Margaret S. Frank Family Trust U/A
5/9/91, Hughes Investments, Visalia MKP, Inc., HI-Loma, HI-NC, Hughes Milliken Associates, CJJ Limited Partnership, Bartfam, Cecile C. Bartman, Trustee under the Will of Bernard Citron, Deceased, Cecile Citron Bartman Trust dated September 26, 2001,
Rebecca Jean Speer Trust U/A/D November 9, 1994, Doreann Speer Gibson Trust U/A/D October 13, 1989, William A. Speer, Jr. Irrevocable Trust U/A/D October 18, 1988 F/B/O Rebecca Speer, William A. Speer, Jr. Irrevocable Trust U/A/D October 18, 1988
F/B/O Linda Speer Fortune, Trust D, created under the Will of W. Arnet Speer aka William A. Speer, deceased, under the preliminary decree of distribution of his estate, entered on December 15, 1978, in Judgment Book 1193, page 428,
Superior Court of the State of California, County of San Diego, Case No. 114411 and Trust A, created under the Will of W. Arnet Speer aka William A. Speer, deceased, under the preliminary decree of distribution of his estate, entered on
December 15, 1978, in Judgment Book 1193, page 428, Superior Court of the State of California, County of San Diego, Case No. 114411 (previously filed as Exhibit 4.18 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-3
(Registration No. 333-103498) and incorporated herein by reference).
|            | 
|4.22        |  | Registration Rights Agreement dated as of January 17, 2003 by and among Pan Pacific Retail Properties, Inc. and Saul Kreshek, Ernest Grossman and Margaret Lewicki (previously filed as Exhibit
4.19 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-3 (Registration No. 333-103498) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.1        |  | The 1997 Stock Option and Incentive Plan of Pan Pacific Retail Properties, Inc. (previously filed as Exhibit 10.1 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form
S-11 (Registration No. 333-28715) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|10.2        |  | The 2000 Stock Incentive Plan of Pan Pacific Retail Properties, Inc. (previously filed as Appendix A to Pan Pacific Retail Properties, Inc.s Proxy Statement for the 2000 Annual Meeting
of Stockholders).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.3        |  | Form of Officers and Directors Indemnification Agreement (previously filed as Exhibit 10.2 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-11 Registration No.
333-28715) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|10.4        |  | Form of Non-Competition Agreement (previously filed as Exhibit 10.7 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-11 (Registration No. 333- 28715) and
incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.5        |  | Members Interest Purchase Agreement, dated as of August 13, 1999, by and among Pan Pacific Retail Properties, Inc., Pan Pacific (RLP), Inc. and Stanley W. Gribble (previously filed as
Exhibit 10.15 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-4 (Registration No. 333-45944) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|10.6        |  | Loan Assumption and Modification Agreement, dated as of September 23, 1999, by and between Pan Pacific Retail Properties, Inc. and La Salle National Bank (previously filed as Exhibit 10.16 to
Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-4 (Registration No. 333-45944) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



43



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                               
|10.7        |  | Operating Agreement of Pan Pacific (Rancho Las Palmas), LLC, dated as of September 23, 1999 (previously filed as Exhibit 10.17 to Pan Pacific Retail Properties, Inc.s Registration
Statement on Form S-4 (Registration No. 333-45944) and incorporated herein by reference).                                                                            
|            | 
|10.8        |  | Contribution Agreement and Escrow Instructions, dated as of August 13, 1999, by and between Pan Pacific Retail Properties, Inc. and Rancho Las Palmas Center Associates (previously filed as
Exhibit 10.18 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-4 (Registration No. 333-45944) and incorporated herein by reference).
|            | 
|10.9        |  | Form of Second Amended and Restated Employment Agreement, dated as of October 29, 2001, between Pan Pacific Retail Properties, Inc. and Mr. Stuart A. Tanz (previously filed as Exhibit 10.11
to Pan Pacific Retail Properties, Inc.s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).             
|            | 
|10.10       |  | Form of Employment Agreement, dated as of October 29, 2001, between Pan Pacific Retail Properties, Inc. and Mr. Joseph B. Tyson (previously filed as Exhibit 10.11 to Pan Pacific Retail
Properties, Inc.s Annual Report on Form 10-K for the year ended December 31 2001 and incorporated herein by reference).                                         
|            | 
|10.11       |  | Form of Second Amended and Restated Employment Agreement, dated as of October 30, 2001, between Pan Pacific Retail Properties, Inc. and Mr. Jeffrey S. Stauffer (previously filed as Exhibit
10.11 to Pan Pacific Retail Properties, Inc.s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).        
|            | 
|10.12       |  | Form of Restricted Stock Agreement between Pan Pacific Retail Properties, Inc. and each of Messrs. Stuart A. Tanz, Jeffrey S. Stauffer and Joseph B. Tyson (previously filed as Exhibit 10.11
to Pan Pacific Retail Properties, Inc.s Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference).             
|            | 
|10.13       |  | Second Amended and Restated Agreement of Limited Partnership of CT Operating Partnership, L.P., dated as of January 17, 2003 (previously filed as Exhibit 10.1 to Pan Pacific Retail
Properties, Inc.s Registration Statement on Form S-3 (Registration No. 333-103498) and incorporated herein by reference).                                           
|            | 
|10.14       |  | Form of Restricted Stock Agreement between Stuart A. Tanz and Pan Pacific Retail Properties, Inc. (previously filed as Exhibit 10.1 to Pan Pacific Retail Properties, Inc.s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2003 and incorporated herein by reference).                                                                
|            | 
|10.15       |  | Form of Restricted Stock Agreement between Joseph B. Tyson and Pan Pacific Retail Properties, Inc. (previously filed as Exhibit 10.2 to Pan Pacific Retail Properties, Inc.s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2003 and incorporated herein by reference).                                                               
|            | 
|10.16       |  | Form of Restricted Stock Agreement between Jeffrey S. Stauffer and Pan Pacific Retail Properties, Inc. (previously filed as Exhibit 10.3 to Pan Pacific Retail Properties, Inc.s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 and incorporated herein by reference).                                                           



44



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|10.17       |  | Second Amended and Restated Revolving Credit Agreement dated as of September 3, 2004 by and among Pan Pacific Retail Properties, Inc., certain subsidiaries of Pan Pacific Retail Properties,
Inc. and Bank of America, N.A., as Administrative Agent, Wells Fargo Bank, National Association and US Bank, National Association as Co-Syndication Agents, Wachovia Bank, National Association as Documentation Agent, AmSouth Bank, PNC Bank, National
Association and Eurohypo AG, New York Branch as Co-Agents and the other lenders as identified therein (previously filed as Exhibit 10.1 to Pan Pacific Retail Properties, Inc.s Form 8-K, filed on September 8, 2004, and incorporated herein by
reference).
|            | 
|12.1*       |  | Statement Regarding Computation of Ratios of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|21.1*       |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|23.1*       |  | Consent of KPMG LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|31.1*       |  | Section 302 Certifications, as filed by the Chief Executive Officer and the Chief Financial Officer, pursuant to SEC Release No. 33-8212, 34-47551.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|32.1*       |  | Section 906 Certifications, as furnished by the Chief Executive Officer and the Chief Financial Officer, pursuant to SEC Release No. 33-8212, 34-47551.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|* | Filed Herewith
|- | --------------



(b) Reports on Form 8-K.



None.



45



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##### Table of Contents

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 March 3, 2005.



|    |  |                                                                          |  |  |  |     |  |                                                                                                                                  
|--- |  | ------------------------------------------------------------------------ |  |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------
|    |  | PAN PACIFIC RETAIL PROPERTIES, INC.                                      |  |  |  |     |  |                                                                                                                                  
|    |  |                                                                          |  | 
|By: |  | /s/    STUART A. TANZ                                                    |  |  |  | By: |  | /s/    JOSEPH B. TYSON                                                                                                           
|    |  | Stuart A. Tanz Director, Chairman, Chief Executive Officer and President |  |  |  |     |  | Joseph B. Tyson, CPA Executive Vice President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)



Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                            |  |          |  |              
|------------------------------------------- |  | -------- |  | -------------
|Signature                                   |  | Title    |  | Date         
|                                            |  |         
|/S/    MARK J. RIEDYMark J. Riedy           |  | Director |  | March 3, 2005
|                                            |  |         
|/S/    BERNARD M. FELDMANBernard M. Feldman |  | Director |  | March 3, 2005
|                                            |  |         
|/S/    DAVID P. ZIMELDavid P. Zimel         |  | Director |  | March 3, 2005
|                                            |  |         
|/S/    JOSEPH P. COLMERYJoseph P. Colmery   |  | Director |  | March 3, 2005



46



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



The Board of Directors

Pan Pacific Retail Properties, Inc.:



We have audited the accompanying consolidated balance sheets of Pan Pacific Retail Properties, Inc. and subsidiaries as of
December 31, 2004 and 2003, and the related consolidated statements of income, stockholders equity, and cash flows for each of the years in the three-year period ended December 31, 2004. In connection with our audits of the consolidated
financial statements, we have also audited the accompanying financial statement schedule III. These consolidated financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to
express an opinion on these consolidated financial statements and financial statement schedule based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Pan Pacific Retail Properties, Inc. and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule III, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.



We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Pan Pacific
Retail Properties, Inc.s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated March 10, 2005 expressed an unqualified opinion on managements assessment of, and the effective operation of, internal control over financial reporting.



KPMG LLP



San Diego, California

March 10, 2005



F-1



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



The Board of Directors

Pan Pacific Retail Properties, Inc.:



We have audited managements assessment, included in the accompanying Managements Report on Internal Control Over Financial Reporting, that Pan Pacific Retail Properties, Inc. maintained effective internal control over financial
reporting as of December 31, 2004, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Pan Pacific Retail Properties, Inc.s
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on managements
assessment and an opinion on the effectiveness of the Companys internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.



A companys
internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the financial statements.



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



In our opinion, managements assessment that Pan Pacific Retail
Properties, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal ControlIntegrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Pan Pacific Retail Properties, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on
criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).



F-2



---

##### Table of Contents

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Pan Pacific Retail Properties, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, stockholders equity, and cash flows for each of the
years in the three-year period ended December 31, 2004, and our report dated March 10, 2005 expressed an unqualified opinion on those consolidated financial statements.



KPMG LLP



San Diego, California

March 10, 2005



F-3



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                                                                                                             |  | December 31,2004 |           |   | December 31, 2003 |  
|ASSETS:                                                                                                                                                                                                      |  |                  |           |   |                   |   |           |  
|Properties, at cost:                                                                                                                                                                                         |  |                  |           |   |                   |   |           |  
|Land                                                                                                                                                                                                         |  | $                | 549,722   |   |                   | $ | 509,887   |  
|Buildings and improvements                                                                                                                                                                                   |  |                  | 1,482,118 |   |                   |   | 1,374,663 |  
|Tenant improvements                                                                                                                                                                                          |  |                  | 60,472    |   |                   |   | 49,793    |  
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|                                                                                                                                                                                                             |  |                  | 2,092,312 |   |                   |   | 1,934,343 |  
|Less accumulated depreciation and amortization                                                                                                                                                               |  |                  | (200,181  | ) |                   |   | (160,449  | )
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|                                                                                                                                                                                                             |  |                  | 1,892,131 |   |                   |   | 1,773,894 |  
|Investments in unconsolidated entities                                                                                                                                                                       |  |                  | 1,387     |   |                   |   | 3,223     |  
|Cash and cash equivalents                                                                                                                                                                                    |  |                  | 2,411     |   |                   |   | 6,453     |  
|Accounts receivable (net of allowance for doubtful accounts of $3,892 and $4,444, respectively)                                                                                                              |  |                  | 11,853    |   |                   |   | 13,478    |  
|Accrued rent receivable (net of allowance for doubtful accounts of $3,306 and $2,735, respectively)                                                                                                          |  |                  | 25,936    |   |                   |   | 22,552    |  
|Notes receivable                                                                                                                                                                                             |  |                  | 7,511     |   |                   |   | 7,844     |  
|Deferred lease commissions (net of accumulated amortization of $7,808 and $5,512, respectively)                                                                                                              |  |                  | 14,188    |   |                   |   | 11,029    |  
|Prepaid expenses                                                                                                                                                                                             |  |                  | 19,835    |   |                   |   | 18,928    |  
|Other assets                                                                                                                                                                                                 |  |                  | 20,192    |   |                   |   | 5,947     |  
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|                                                                                                                                                                                                             |  | $                | 1,995,444 |   |                   | $ | 1,863,348 |  
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY:                                                                                                                                                                        |  |                  |           |   |                   |   |           |  
|Notes payable                                                                                                                                                                                                |  | $                | 343,736   |   |                   | $ | 345,077   |  
|Line of credit payable                                                                                                                                                                                       |  |                  | 113,000   |   |                   |   | 48,250    |  
|Senior notes                                                                                                                                                                                                 |  |                  | 554,290   |   |                   |   | 503,708   |  
|Accounts payable, accrued expenses and other liabilities                                                                                                                                                     |  |                  | 39,205    |   |                   |   | 41,703    |  
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|                                                                                                                                                                                                             |  |                  | 1,050,231 |   |                   |   | 938,738   |  
|Minority interests                                                                                                                                                                                           |  |                  | 30,079    |   |                   |   | 32,325    |  
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|Stockholders equity:                                                                                                                                                                                        |  |                  |           |   |                   |   |           |  
|Preferred stock par value $.01 per share, 30,000,000 authorized shares, no shares issued and outstanding at December 31, 2004 and 2003,
respectively                                                         |  |                  |          |   |                   |   |          |  
|Common stock par value $.01 per share, 100,000,000 authorized shares, 40,530,415 and 40,293,382 shares issued and outstanding, net of
1,190,999 treasury shares, at December 31, 2004 and 2003, respectively |  |                  | 405       |   |                   |   | 403       |  
|Additional paid in capital                                                                                                                                                                                   |  |                  | 959,925   |   |                   |   | 952,973   |  
|Deferred compensation                                                                                                                                                                                        |  |                  | (7,093    | ) |                   |   | (8,781    | )
|Accumulated deficit                                                                                                                                                                                          |  |                  | (38,103   | ) |                   |   | (52,310   | )
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|                                                                                                                                                                                                             |  |                  | 915,134   |   |                   |   | 892,285   |  
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  
|                                                                                                                                                                                                             |  | $                | 1,995,444 |   |                   | $ | 1,863,348 |  
|                                                                                                                                                                                                             |  |                  |           |   |                   |   |           |  



See accompanying notes
to consolidated financial statements.



F-4



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)



|                                                                                        |  |                                  |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                        |  | For the Years Ended December 31, |        
|                                                                                        |  | 2004                             |         |   | 2003 |   |         | 2002 | 
|REVENUE:                                                                                |  |                                  |         |   |      |   |         |      |  |   |         |  
|Base rent                                                                               |  | $                                | 219,565 |   |      | $ | 201,119 |      |  | $ | 143,208 |  
|Percentage rent                                                                         |  |                                  | 2,806   |   |      |   | 2,676   |      |  |   | 2,093   |  
|Recoveries from tenants                                                                 |  |                                  | 58,173  |   |      |   | 51,653  |      |  |   | 35,398  |  
|Income from unconsolidated entities                                                     |  |                                  | 438     |   |      |   | 802     |      |  |   | 154     |  
|Other                                                                                   |  |                                  | 8,454   |   |      |   | 5,336   |      |  |   | 6,024   |  
|                                                                                        |  |                                  |         |   |      |   |         |      |  |   |         |  
|                                                                                        |  |                                  | 289,436 |   |      |   | 261,586 |      |  |   | 186,877 |  
|                                                                                        |  |                                  |         |   |      |   |         |      |  |   |         |  
|EXPENSES:                                                                               |  |                                  |         |   |      |   |         |      |  |   |         |  
|Property operating                                                                      |  |                                  | 42,424  |   |      |   | 38,927  |      |  |   | 24,161  |  
|Property taxes                                                                          |  |                                  | 24,511  |   |      |   | 21,731  |      |  |   | 14,607  |  
|Depreciation and amortization                                                           |  |                                  | 48,501  |   |      |   | 39,640  |      |  |   | 29,976  |  
|Interest                                                                                |  |                                  | 62,619  |   |      |   | 58,473  |      |  |   | 45,926  |  
|General and administrative                                                              |  |                                  | 13,027  |   |      |   | 12,600  |      |  |   | 9,426   |  
|Impairment loss                                                                         |  |                                  | 642     |   |      |   |        |      |  |   |        |  
|Other                                                                                   |  |                                  | 2,991   |   |      |   | 686     |      |  |   | 352     |  
|                                                                                        |  |                                  |         |   |      |   |         |      |  |   |         |  
|                                                                                        |  |                                  | 194,715 |   |      |   | 172,057 |      |  |   | 124,448 |  
|                                                                                        |  |                                  |         |   |      |   |         |      |  |   |         |  
|INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS AND DISCONTINUED OPERATIONS |  |                                  | 94,721  |   |      |   | 89,529  |      |  |   | 62,429  |  
|Minority interests                                                                      |  |                                  | (2,339  | ) |      |   | (2,454  | )    |  |   | (1,457  | )
|                                                                                        |  |                                  |         |   |      |   |         |      |  |   |         |  
|INCOME FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS                        |  |                                  | 92,382  |   |      |   | 87,075  |      |  |   | 60,972  |  
|Discontinued operations                                                                 |  |                                  | 9,607   |   |      |   | 17,361  |      |  |   | 16,680  |  
|                                                                                        |  |                                  |         |   |      |   |         |      |  |   |         |  
|NET INCOME                                                                              |  | $                                | 101,989 |   |      | $ | 104,436 |      |  | $ | 77,652  |  
|                                                                                        |  |                                  |         |   |      |   |         |      |  |   |         |  
|Basic earnings per share:                                                               |  |                                  |         |   |      |   |         |      |  |   |         |  
|Income from continuing operations                                                       |  | $                                | 2.30    |   |      | $ | 2.21    |      |  | $ | 1.82    |  
|Discontinued operations                                                                 |  | $                                | 0.24    |   |      | $ | 0.44    |      |  | $ | 0.50    |  
|Net income                                                                              |  | $                                | 2.54    |   |      | $ | 2.65    |      |  | $ | 2.32    |  
|Diluted earnings per share:                                                             |  |                                  |         |   |      |   |         |      |  |   |         |  
|Income from continuing operations                                                       |  | $                                | 2.28    |   |      | $ | 2.18    |      |  | $ | 1.81    |  
|Discontinued operations                                                                 |  | $                                | 0.24    |   |      | $ | 0.43    |      |  | $ | 0.49    |  
|Net income                                                                              |  | $                                | 2.52    |   |      | $ | 2.61    |      |  | $ | 2.30    |  



See accompanying notes
to consolidated financial statements.



F-5



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands, except share data)



|                                                                  |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |        |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------------- |  | ------------ | - |  | ------------------------ | --- | - | --------------------- | - | ------- | ------------------- |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                                  |  | Common stock |   |  | Additionalpaid incapital |     |   | Deferred compensation |   |         | Accumulated deficit |  |   | Total  |  
|                                                                  |  | Shares       |   |  | Amount                   |     |   |                       |   |        
|Balance at December 31, 2001                                      |  | 32,789,913   |   |  | $                        | 328 |   |                       | $ | 718,525 |                     |  | $ | (3,910 | ) |  | $ | (92,485 | ) |  | $ | 622,458 |  
|Repurchase of common stock                                        |  | (187,999     | ) |  |                          | (2  | ) |                       |   | (5,787  | )                   |  |   |       |   |  |   |        |   |  |   | (5,789  | )
|Redemption of operating subsidiary units                          |  |             |   |  |                          |    |   |                       |   | (1,909  | )                   |  |   |       |   |  |   |        |   |  |   | (1,909  | )
|Issuance and vesting of restricted stock                          |  | 53,900       |   |  |                          | 1   |   |                       |   | 1,665   |                     |  |   | (435   | ) |  |   |        |   |  |   | 1,231   |  
|Stock issued on exercise of options                               |  | 928,372      |   |  |                          | 9   |   |                       |   | 18,575  |                     |  |   |       |   |  |   |        |   |  |   | 18,584  |  
|Net income                                                        |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |       |   |  |   | 77,652  |   |  |   | 77,652  |  
|Cash distributions paid and declared                              |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |       |   |  |   | (63,592 | ) |  |   | (63,592 | )
|                                                                  |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |        |   |  |   |         |   |  |   |         |  
|Balance at December 31, 2002                                      |  | 33,584,186   |   |  |                          | 336 |   |                       |   | 731,069 |                     |  |   | (4,345 | ) |  |   | (78,425 | ) |  |   | 648,635 |  
|Repurchase of common stock                                        |  | (3,000       | ) |  |                          |    |   |                       |   | (112    | )                   |  |   |       |   |  |   |        |   |  |   | (112    | )
|Redemption of operating subsidiary units                          |  |             |   |  |                          |    |   |                       |   | (3,091  | )                   |  |   |       |   |  |   |        |   |  |   | (3,091  | )
|Conversion of operating subsidiary units to common stock          |  | 100,000      |   |  |                          | 1   |   |                       |   | 1,924   |                     |  |   |       |   |  |   |        |   |  |   | 1,925   |  
|Issuance and vesting of restricted stock                          |  | 163,000      |   |  |                          | 2   |   |                       |   | 6,641   |                     |  |   | (4,436 | ) |  |   |        |   |  |   | 2,207   |  
|Stock issued in acquisition of Center Trust                       |  | 6,084,499    |   |  |                          | 61  |   |                       |   | 208,282 |                     |  |   |       |   |  |   |        |   |  |   | 208,343 |  
|Stock issued on exercise of options                               |  | 364,697      |   |  |                          | 3   |   |                       |   | 8,260   |                     |  |   |       |   |  |   |        |   |  |   | 8,263   |  
|Net income                                                        |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |       |   |  |   | 104,436 |   |  |   | 104,436 |  
|Cash distributions paid and declared                              |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |       |   |  |   | (78,321 | ) |  |   | (78,321 | )
|                                                                  |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |        |   |  |   |         |   |  |   |         |  
|Balance at December 31, 2003                                      |  | 40,293,382   |   |  |                          | 403 |   |                       |   | 952,973 |                     |  |   | (8,781 | ) |  |   | (52,310 | ) |  |   | 892,285 |  
|Issuance and vesting of restricted stock, net of forfeited shares |  | 42,272       |   |  |                          |    |   |                       |   | 2,139   |                     |  |   | 1,688  |   |  |   |        |   |  |   | 3,827   |  
|Stock issued on exercise of options                               |  | 194,761      |   |  |                          | 2   |   |                       |   | 4,813   |                     |  |   |       |   |  |   |        |   |  |   | 4,815   |  
|Net income                                                        |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |       |   |  |   | 101,989 |   |  |   | 101,989 |  
|Cash distributions paid and declared                              |  |             |   |  |                          |    |   |                       |   |        |                     |  |   |       |   |  |   | (87,782 | ) |  |   | (87,782 | )
|                                                                  |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |        |   |  |   |         |   |  |   |         |  
|                                                                  |  | 40,530,415   |   |  | $                        | 405 |   |                       | $ | 959,925 |                     |  | $ | (7,093 | ) |  | $ | (38,103 | ) |  | $ | 915,134 |  
|                                                                  |  |              |   |  |                          |     |   |                       |   |         |                     |  |   |        |   |  |   |         |   |  |   |         |  



See accompanying notes
to consolidated financial statements.



F-6



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|------------------------------------------------------------------------------------------------- |  | -------------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                                                  |  | For the Years Ended December 31, |         
|                                                                                                  |  | 2004                             |          |   | 2003 |   |          | 2002 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                             |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net income                                                                                        |  | $                                | 101,989  |   |      | $ | 104,436  |      |  | $ | 77,652   |  
|Adjustments to reconcile net income to net cash provided by operating activities:                 |  |                                  |          |   |      |   |          |      |  |   |          |  
|Depreciation and amortization                                                                     |  |                                  | 48,501   |   |      |   | 39,640   |      |  |   | 29,976   |  
|Bad debt expense                                                                                  |  |                                  | 4,174    |   |      |   | 4,311    |      |  |   | 1,761    |  
|Amortization of prepaid financing costs, premiums and discounts                                   |  |                                  | 1,342    |   |      |   | 1,336    |      |  |   | 1,052    |  
|Income from unconsolidated entities                                                               |  |                                  | (438     | ) |      |   | (802     | )    |  |   | (154     | )
|Discontinued operations                                                                           |  |                                  | (9,607   | ) |      |   | (17,361  | )    |  |   | (16,680  | )
|Minority interests                                                                                |  |                                  | 2,339    |   |      |   | 2,454    |      |  |   | 1,457    |  
|Vesting of restricted stock                                                                       |  |                                  | 3,827    |   |      |   | 2,207    |      |  |   | 1,231    |  
|Changes in assets and liabilities, net of the effects of the acquisition of Center Trust in 2003: |  |                                  |          |   |      |   |          |      |  |   |          |  
|Increase in accounts receivable                                                                   |  |                                  | (1,928   | ) |      |   | (4,365   | )    |  |   | (3,676   | )
|Increase in accrued rent receivable                                                               |  |                                  | (4,005   | ) |      |   | (4,001   | )    |  |   | (2,049   | )
|Increase in non-cash amounts added to notes receivable                                            |  |                                  | (782     | ) |      |   | (1,188   | )    |  |   | (3,202   | )
|Increase in deferred lease commissions                                                            |  |                                  | (6,085   | ) |      |   | (5,687   | )    |  |   | (2,723   | )
|Decrease (increase) in prepaid expenses                                                           |  |                                  | (2,288   | ) |      |   | 2,206    |      |  |   | (1,182   | )
|Increase in other assets                                                                          |  |                                  | (458     | ) |      |   | (623     | )    |  |   | (3,074   | )
|Increase (decrease) in accounts payable, accrued expenses and other liabilities                   |  |                                  | (1,946   | ) |      |   | 3,675    |      |  |   | (2,266   | )
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net cash provided by continuing operating activities                                              |  |                                  | 134,635  |   |      |   | 126,238  |      |  |   | 78,123   |  
|Operating cash from discontinued operations                                                       |  |                                  | 1,502    |   |      |   | 7,584    |      |  |   | 8,998    |  
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net cash provided by operating activities                                                         |  |                                  | 136,137  |   |      |   | 133,822  |      |  |   | 87,121   |  
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                             |  |                                  |          |   |      |   |          |      |  |   |          |  
|Acquisitions of and additions to properties                                                       |  |                                  | (162,799 | ) |      |   | (91,219  | )    |  |   | (132,886 | )
|Funds held in escrow pending property acquisitions                                                |  |                                  |         |   |      |   |         |      |  |   | (39,774  | )
|Proceeds from sale of real estate                                                                 |  |                                  | 28,029   |   |      |   | 189,576  |      |  |   | 46,605   |  
|Intangibles in connection with acquisitions of properties                                         |  |                                  | (18,040  | ) |      |   |         |      |  |   |         |  
|Distributions and equity repayments from unconsolidated entities                                  |  |                                  | 2,274    |   |      |   | 6,629    |      |  |   | 299      |  
|Acquisition of Center Trust                                                                       |  |                                  |         |   |      |   | (8,999   | )    |  |   |         |  
|Redemption of operating subsidiary units                                                          |  |                                  | (2,406   | ) |      |   | (6,786   | )    |  |   | (6,721   | )
|Acquisition of minority interests                                                                 |  |                                  |         |   |      |   | (526     | )    |  |   |         |  
|Collections of notes receivable                                                                   |  |                                  | 1,115    |   |      |   | 26,622   |      |  |   | 39,855   |  
|Increases in notes receivable                                                                     |  |                                  |         |   |      |   |         |      |  |   | (10,275  | )
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net cash (used in) provided by investing activities                                               |  |                                  | (151,827 | ) |      |   | 115,297  |      |  |   | (102,897 | )
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                             |  |                                  |          |   |      |   |          |      |  |   |          |  
|Notes payable proceeds                                                                            |  |                                  |         |   |      |   | 7,171    |      |  |   | 15,601   |  
|Notes payable payments                                                                            |  |                                  | (18,364  | ) |      |   | (235,823 | )    |  |   | (4,981   | )
|Line of credit proceeds                                                                           |  |                                  | 426,200  |   |      |   | 321,975  |      |  |   | 206,250  |  
|Line of credit payments                                                                           |  |                                  | (361,450 | ) |      |   | (339,725 | )    |  |   | (305,550 | )
|Repayment of senior notes                                                                         |  |                                  | (50,000  | ) |      |   |         |      |  |   |         |  
|Issuance of senior notes                                                                          |  |                                  | 100,384  |   |      |   | 74,816   |      |  |   | 154,701  |  
|Repurchase of common stock                                                                        |  |                                  |         |   |      |   | (112     | )    |  |   | (5,789   | )
|Stock issued on exercise of options                                                               |  |                                  | 4,815    |   |      |   | 8,263    |      |  |   | 18,584   |  
|Distributions paid                                                                                |  |                                  | (89,937  | ) |      |   | (80,515  | )    |  |   | (65,185  | )
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net cash provided by (used in) financing activities                                               |  |                                  | 11,648   |   |      |   | (243,950 | )    |  |   | 13,631   |  
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                              |  |                                  | (4,042   | ) |      |   | 5,169    |      |  |   | (2,145   | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                                    |  |                                  | 6,453    |   |      |   | 1,284    |      |  |   | 3,429    |  
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                          |  | $                                | 2,411    |   |      | $ | 6,453    |      |  | $ | 1,284    |  
|                                                                                                  |  |                                  |          |   |      |   |          |      |  |   |          |  



(continued)



F-7



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands)



|                                                                                             |  |                                  |        |      |   |         |  |   |       
|-------------------------------------------------------------------------------------------- |  | -------------------------------- | ------ | ---- | - | ------- |  | - | ------
|                                                                                             |  | For the Years Ended December 31,
|                                                                                             |  | 2004                             |        | 2003 |   | 2002   
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                            |  |                                  |        |      |   |         |  |   |       
|Cash paid for interest (net of amounts capitalized of $566, $4,506 and $1,796, respectively) |  | $                                | 64,006 |      | $ | 59,874  |  | $ | 47,988
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                      |  |                                  |        |      |   |         |  |   |       
|Transfer of note receivable to investment in unconsolidated entity                           |  | $                                |       |      | $ |        |  | $ | 7,595 
|Transfer of other assets to properties                                                       |  | $                                | 3,403  |      | $ | 40,230  |  | $ | 8,588 
|Notes receivable issued upon sales of properties                                             |  | $                                |       |      | $ | 25,125  |  | $ | 2,770 
|Redemption of operating subsidiary units for common stock                                    |  | $                                |       |      | $ | 1,925   |  | $ |      
|Stock issued in acquisition of Center Trust                                                  |  | $                                |       |      | $ | 208,343 |  | $ |      
|Assumption of notes payable, bonds and line of credit in acquisition of Center Trust         |  | $                                |       |      | $ | 362,257 |  | $ |      
|Notes payable assumed upon acquisitions of properties                                        |  | $                                | 17,260 |      | $ | 16,919  |  | $ |      
|Notes receivable from acquisition of Center Trust                                            |  | $                                |       |      | $ | 7,498   |  | $ |      
|Minority interest from acquisition of Center Trust                                           |  | $                                |       |      | $ | 22,362  |  | $ |      
|Assignment of debt on sales of properties                                                    |  | $                                |       |      | $ | 44,765  |  | $ |      
|Excess of cash paid over book value of operating subsidiary units redeemed                   |  | $                                |       |      | $ | 3,091   |  | $ | 1,909 
|Exchange of note receivable for properties                                                   |  | $                                |       |      | $ |        |  | $ | 735   
|Non-cash restricted stock issuance                                                           |  | $                                | 2,342  |      | $ | 6,629   |  | $ | 1,678 



See accompanying notes
to consolidated financial statements.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



1. Organization and basis of presentation



Pan Pacific Retail Properties, Inc. (together with its subsidiaries, the Company) is an equity real estate investment trust (REIT) that owns, leases and manages neighborhood and community
shopping centers. As of December 31, 2004, the Company owned a portfolio comprised of 133 properties located primarily in the Western region of the United States. The Company believes it qualifies as a REIT under Sections 856 through 860 of the
Internal Revenue Code.



In accordance with SFAS No. 144, our
consolidated statements of income and consolidated statements of cash flows have been revised from those originally reported for the years ended December 31, 2003 and 2002 to separately reflect the results of discontinued operations for properties
that were sold during the year ended December 31, 2004. The revision had no impact on our consolidated balance sheets or statements of stockholders equity. The revision had no impact on net income or net income per share of common stock for
the years ended December 31, 2003 or 2002. See Note 3 to the consolidated financial statements.



In 1998 and 1999, the Company formed certain operating subsidiaries to acquire shopping center properties. The Company is the managing member and in
exchange for the properties which were contributed to the operating subsidiaries, units were issued to the non-managing members. These operating subsidiaries were primarily formed for tax planning purposes for the non-managing members who
contributed the properties. A non-managing member can seek redemption of the units after the first anniversary of the date of issuance. The Company, at its option, may redeem the units by either (i) issuing common stock at the rate of one share of
common stock for each unit, or (ii) paying cash to the non-managing member based on the average trading price of its common stock. Distributions are made to the non-managing members at a rate equal to the distribution being paid by the Company on a
share of common stock. Net income or loss is allocated to the non-managing members in an amount equal to the cumulative distributions earned by such members. All remaining net income or loss is allocated to the Company as the managing member. During
2001, 400,000 units were redeemed for common stock. No units were redeemed in 2002. In 2003, 100,000 units were redeemed for common stock and 131,590 units were redeemed for cash of $5,540,000. In 2004, 125,000 units were redeemed for cash of
$5,971,000. The following table summarizes the activity for these operating subsidiaries as of December 31, 2004:



|                                     |  |                       |  |               |  |                  
|------------------------------------ |  | --------------------- |  | ------------- |  | -----------------
|Operating subsidiary                 |  | Unitsoriginallyissued |  | Unitsredeemed |  | Units outstanding
|Pan Pacific (Portland), LLC          |  | 832,617               |  | 756,590       |  | 76,027           
|Pan Pacific (Rancho Las Palmas), LLC |  | 314,587               |  | 0             |  | 314,587          



On November 13, 2000,
the Company acquired Western Properties Trust (Western), a real estate investment trust, at a cost of approximately $440,000,000. The transaction was a stock for stock exchange including assumption of debt whereby Western common shares
and units were exchanged into newly issued Company common shares and units, based upon a price of $20.5625 per share/unit issued and a 0.62 exchange ratio. As a result, the Company issued 10,754,776 common shares and 911,934 operating subsidiary
units to Westerns equity holders.





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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



1. Organization and basis of presentation (continued)



In connection with the acquisition of Western, the Company has an investment
in certain operating partnerships. Pan Pacific (Kienows), L.P. issued units convertible into shares of Company common stock or cash, at the Companys option. Distributions are made to the limited partners at a rate equal to the distribution
being paid by the Company on a share of common stock. Net income or loss is allocated to the limited partners in an amount equal to the cumulative distributions earned by such partners. All remaining net income or loss is allocated to the Company as
general partner. Pan Pacific (Pinecreek), L.P. issued units convertible into shares of Company common stock or cash, at the Companys option. Distributions are made to the limited partners after a 10% preferred return to the Company as general
partner. Net income is allocated to the Company, as general partner, and to the limited partners in amounts equal to the cumulative distributions earned by such partners and thereafter based on their ownership interests. Losses are allocated 99% to
the Company as general partner and 1% to the limited partners. During 2002 the remaining 233,998 units were redeemed for cash of $6,721,000. The following table summarizes the activity for these operating subsidiaries as of December 31, 2004:



|                              |  |                       |  |               |  |                  
|----------------------------- |  | --------------------- |  | ------------- |  | -----------------
|Operating subsidiary          |  | Unitsoriginallyissued |  | Unitsredeemed |  | Units outstanding
|Pan Pacific (Kienows), L.P.   |  | 857,065               |  | 857,065       |  | 0                
|Pan Pacific (Pinecreek), L.P. |  | 54,869                |  | 0             |  | 54,869           



On January 17, 2003,
the Company acquired 100% of the outstanding common shares of Center Trust, Inc. (Center Trust), a real estate investment trust which owned neighborhood and community shopping centers, at a cost of approximately $600,000,000. The
transaction was a merger involving a stock for stock exchange including assumption of debt whereby Center Trust common shares and units were exchanged into newly issued Company common shares and units, based upon a price of $34.24 per share/unit
issued and a 0.218 exchange ratio. As a result, the Company issued 6,084,499 common shares and 284,263 operating subsidiary units to Center Trusts stockholders and limited partners of CT Operating Partnership, L.P., respectively. The Company
accounted for this transaction using the purchase method of accounting; accordingly, the results of Center Trusts operations have been included in the Companys consolidated financial statements since January 17, 2003. There was no
goodwill recorded as part of this acquisition. The difference between the purchase price of the acquisition and the fair value of the land and buildings and improvements on an as if vacant basis building was not a significant amount.



In connection with the acquisition of Center Trust, the Company has a 96%
general partner interest in an operating partnership which is consolidated in the Companys financial statements. CT Operating Partnership, L.P. issued units convertible into shares of Company common stock or cash, at the Companys option.
Distributions are being made to the limited partners at a rate equal to the distribution being paid by the Company on a share of common stock. Net income is allocated to the limited partners in an amount equal to the cumulative distributions earned
by such partners. All remaining net income and all loss is allocated to the Company as general partner. In 2003, 33,964 units were redeemed for cash of $1,246,000. The following table summarizes the activity for this operating subsidiary as of
December 31, 2004:



|                               |  |                        |  |                |  |                  
|------------------------------ |  | ---------------------- |  | -------------- |  | -----------------
|Operating subsidiary           |  | Unitsoriginally issued |  | Units redeemed |  | Units outstanding
|CT Operating Partnership, L.P. |  | 284,263                |  | 33,964         |  | 250,299          



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



1. Organization and basis of presentation (continued)



The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of the Center Trust acquisition.



|                                                         |  |                 |        
|-------------------------------------------------------- |  | --------------- | -------
|                                                         |  | January 17,2003
|Properties                                               |  | $               | 589,407
|Accounts and notes receivable                            |  |                 | 3,521  
|Prepaid expenses and other assets                        |  |                 | 12,551 
|                                                         |  |                 |        
|                                                         |  | $               | 605,479
|                                                         |  |                 |        
|Notes payable                                            |  | $               | 362,257
|Accounts payable, accrued expenses and other liabilities |  |                 | 12,514 
|                                                         |  |                 |        
|                                                         |  |                 | 374,771
|Minority interests                                       |  |                 | 22,362 
|Stockholders equity                                     |  |                 | 208,346
|                                                         |  |                 |        
|                                                         |  | $               | 605,479
|                                                         |  |                 |        



Unaudited pro forma
revenue and expense information of the Company for the years ended December 31, 2003 and 2002 reflecting the acquisition of Center Trust is presented in the following table. The amounts included assume that the acquisition had taken place at the
beginning of each period and exclude the effect of discontinued operations for properties sold during 2004.



|                                                                                        |  |                                  |         |   |      |   |         |  
|--------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                        |  | For the years ended December 31, |        
|                                                                                        |  | 2003                             |         |   | 2002 |  
|                                                                                        |  | (Unaudited pro forma)            |        
|Total revenue                                                                           |  | $                                | 267,069 |   |      | $ | 246,223 |  
|Total expenses                                                                          |  |                                  | 174,552 |   |      |   | 162,801 |  
|                                                                                        |  |                                  |         |   |      |   |         |  
|Income from continuing operations before minority interests and discontinued operations |  |                                  | 92,517  |   |      |   | 83,422  |  
|Minority interests                                                                      |  |                                  | (2,610  | ) |      |   | (2,225  | )
|Discontinued operations                                                                 |  |                                  | 16,176  |   |      |   | 23,805  |  
|                                                                                        |  |                                  |         |   |      |   |         |  
|Net income                                                                              |  | $                                | 106,083 |   |      | $ | 105,002 |  
|                                                                                        |  |                                  |         |   |      |   |         |  
|Basic earnings per share:                                                               |  |                                  |         |   |      |   |         |  
|Income from continuing operations                                                       |  | $                                | 2.28    |   |      | $ | 2.06    |  
|Discontinued operations                                                                 |  | $                                | 0.41    |   |      | $ | 0.60    |  
|Net income                                                                              |  | $                                | 2.69    |   |      | $ | 2.66    |  
|Diluted earnings per share:                                                             |  |                                  |         |   |      |   |         |  
|Income from continuing operations                                                       |  | $                                | 2.25    |   |      | $ | 2.03    |  
|Discontinued operations                                                                 |  | $                                | 0.40    |   |      | $ | 0.58    |  
|Net income                                                                              |  | $                                | 2.65    |   |      | $ | 2.61    |  



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



2. Summary of significant accounting policies and practices



|(a) | Principles of consolidation
|--- | ---------------------------



The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and partnerships and limited liability companies
it controls. All material intercompany transactions and balances have been eliminated. The Company consolidates entities, including variable interest entities, that the Company controls and records a minority interest for the portions not owned by
the Company. Control is determined, where applicable, by the sufficiency of equity invested and the rights of the equity holders, and by the ownership of a majority of the voting interests, with consideration given to the existence of approval or
veto rights granted to the minority shareholder. If the minority shareholder holds substantive participation rights, it overcomes the presumption of control by the majority voting interest holder. In contrast, if the minority shareholder simply
holds protective rights (such as consent rights over certain actions), it does not overcome the presumption of control by the majority voting interest holder. With respect to the partnerships and limited liability companies, the Company determines
control through a consideration of each parties financial interests in profits and losses and the ability to participate in major decisions such as the acquisition, sale or refinancing of principal assets.



|(b) | Cash and cash equivalents
|--- | -------------------------



For purposes of reporting cash flows, highly liquid investments with an original maturity of three months or less are considered cash equivalents.
Restricted cash totaled $414,000 and $510,000 at December 31, 2004 and 2003, respectively.



|(c) | Accounts receivable and income recognition
|--- | ------------------------------------------



Rental revenue is recognized on a straight-line basis over the terms of the leases, less an allowance for doubtful accounts relating to accounts
receivable and accrued rent receivable for amounts deemed uncollectible and for leases which may be terminated before the end of the contracted term. The Company considers tenant specific issues such as financial stability and ability to pay rent
when determining collectibility of accounts receivable and appropriate allowances to record. The Company considers tenant retention in determining an appropriate allowance to record for the accrued rent receivable recorded in recognizing rental
income on a straight-line basis. If an account receivable is determined to be uncollectible it is either reserved or written off as bad debt expense. Percentage rent is recorded at the time tenants meet specified sales thresholds. The Company
receives reimbursement for real estate taxes and certain other operating expenses. Such reimbursements are generally recognized at the time the related expenses are incurred. The value of acquired above and below market leases is amortized to rental
revenue over the life of the related acquired lease. The Company accounts for all property sales in accordance with SFAS No. 66, Accounting for Sales of Real Estate.



Bad debt expense, included in property operating expenses in the Companys financial statements, was $4,146,000,
$4,311,000 and $1,761,000 for the years ended December 31, 2004, 2003 and 2002, respectively.



|(d) | Capitalization of acquisition and development costs
|--- | ---------------------------------------------------



The Company capitalizes certain acquisition and development related costs to the carrying costs of the property acquired or developed. The Company uses
estimates and assumptions of items such as market rents, time required to lease vacant spaces, lease terms for incoming tenants and credit worthiness of tenants in determining the as-if-vacant value, in-place lease value and above and below market
rents value in allocating purchase price to tangible and identified intangible assets upon acquisition of a shopping center asset. These costs are depreciated over the estimated useful lives of the properties commencing at the time the property is
ready for its intended use. The capitalized costs associated with unsuccessful acquisitions are charged to expense when the acquisition is abandoned.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



2. Summary of significant accounting policies and practices (continued)



|(e) | Depreciation and amortization
|--- | -----------------------------



Depreciation on buildings and improvements is provided using a forty-year straight-line basis. Management believes forty years is an appropriate estimated
useful life for buildings and improvements. Tenant improvements and costs incurred in obtaining leases, including leases in place at the time of an acquisition, are amortized on a straight-line basis over the lives of the respective leases.



Prepaid financing costs are amortized over the lives of the
loans and the related amortization expense is included as a component of interest expense. Premiums and discounts on indebtedness are amortized over the life of the related debt using the straight-line method, which approximates the effective
interest method.



|(f) | Impairment of long-lived assets and long-lived assets to be disposed of
|--- | -----------------------------------------------------------------------



The Company reviews long-lived assets and certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows, undiscounted and without
interest, expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less costs to sell.



The Company recorded an impairment loss of $642,000 related to a non-strategic parcel of land for the year ended December 31, 2004. There were no impairment losses recorded for the years ended December 31, 2003 and
2002.



|(g) | Income taxes
|--- | ------------



As of April 16, 1997, the Company elected to be taxed as a REIT pursuant to the Internal Revenue Code, as amended. In general, a corporation that
distributes at least 90% of its REIT taxable income to stockholders in any taxable year and complies with certain other requirements (relating primarily to the nature of its assets and the sources of its revenue) is not subject to federal income
taxation to the extent of the income which it distributes. Management believes that the Company has qualified and intends for it to continue to qualify as a REIT in the future. As discussed more fully in Note 9, management also does not expect that
the Company will pay income taxes on built-in gains on certain of its assets. Based on these considerations, management does not believe that the Company will be liable for income taxes at the federal level or in most of the states in
which it operates in future years.



|(h) | Credit and concentration risk
|--- | -----------------------------



The Company predominantly operates in one industry segment: real estate ownership, management and development. No single tenant accounts for 10% or more
of rental revenue. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and receivables. The Company places its temporary cash investments with financial
institutions which the Company believes are of high credit quality. Concentration of credit risk with respect to receivables is limited due to the large number of tenants comprising the Companys customer base, and their dispersion across many
areas within the Western region of the United States. At December 31, 2004 and 2003, management believes the Company had no significant concentration of credit risk.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



2. Summary of significant accounting policies and practices (continued)



|(i) | Net income per share
|--- | --------------------



Basic earnings per share (EPS) is computed by dividing earnings available to common stockholders during the period by the weighted average
number of common shares outstanding during each period. Diluted EPS is computed by dividing the adjusted amount of earnings available to common stockholders during the period by the weighted average number of shares that would have been outstanding
assuming the issuance of common shares for all dilutive potential common shares outstanding during the reporting period including operating subsidiary units, net of shares assumed to be repurchased using the treasury stock method.



The following is a reconciliation of the numerator and denominator for the
calculation of basic and diluted EPS (all net income is available to common stockholders for the periods presented):



|                                                                   |  |                                  |            |      |   |            |  |   |           
|------------------------------------------------------------------ |  | -------------------------------- | ---------- | ---- | - | ---------- |  | - | ----------
|                                                                   |  | For the years ended December 31,
|                                                                   |  | 2004                             |            | 2003 |   | 2002      
|Income available to common stockholders:                           |  |                                  |            |      |   |            |  |   |           
|Basic                                                              |  | $                                | 101,989    |      | $ | 104,436    |  | $ | 77,652    
|Add-back income allocated to dilutive operating subsidiary units   |  |                                  | 1,513      |      |   | 1,703      |  |   | 1,457     
|                                                                   |  |                                  |            |      |   |            |  |   |           
|Diluted                                                            |  | $                                | 103,502    |      | $ | 106,139    |  | $ | 79,109    
|                                                                   |  |                                  |            |      |   |            |  |   |           
|Weighted average shares:                                           |  |                                  |            |      |   |            |  |   |           
|Basic                                                              |  |                                  | 40,167,029 |      |   | 39,466,034 |  |   | 33,409,469
|Incremental shares from assumed:                                   |  |                                  |            |      |   |            |  |   |           
|Exercise of dilutive stock options and vesting of restricted stock |  |                                  | 233,506    |      |   | 311,228    |  |   | 214,143   
|Conversion of dilutive operating subsidiary units                  |  |                                  | 734,238    |      |   | 929,782    |  |   | 807,501   
|                                                                   |  |                                  |            |      |   |            |  |   |           
|Diluted                                                            |  |                                  | 41,134,773 |      |   | 40,707,044 |  |   | 34,431,113
|                                                                   |  |                                  |            |      |   |            |  |   |           



At December 31, 2004,
2003 and 2002, no stock options were excluded from the calculation of diluted weighted average shares because they were anti-dilutive. At December 31, 2004, 2003 and 2002, no operating subsidiary units were excluded from the calculation of diluted
weighted average shares because they were anti-dilutive.





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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



2. Summary of significant accounting policies and practices (continued)



|(j) | Stock plans
|--- | -----------



The Company accounts for its stock plans in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations. As such, compensation expense is recorded on the date of option grants only if the current market price of the underlying stock exceeds the exercise price.
Compensation expense for restricted stock grants is determined on the grant date based on the market price and is recognized over the vesting period. Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123), permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures for employee stock option grants made as if the fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected
to, for all periods presented, apply the provisions of APB Opinion No. 25 and provide the annual pro forma disclosures required by SFAS No. 123, as amended by Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure (SFAS No. 148). Beginning July 1, 2005, the Company will apply the provisions of SFAS No. 123R, Share-Based Payments. Management believes there will be no impact to the
Companys financial statements from SFAS No. 123R.



The
following table shows the Companys pro forma net income had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123:



|                                                                         |  |      |         |   |      |   |         |      |  |   |        |  
|------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                         |  | 2004 |         |   | 2003 |   |         | 2002 | 
|Net income as reported                                                   |  | $    | 101,989 |   |      | $ | 104,436 |      |  | $ | 77,652 |  
|Add: Stock-based compensation expense included in reported net income    |  |      | 3,827   |   |      |   | 2,207   |      |  |   | 1,231  |  
|Deduct: Total fair value stock based compensation expense for all awards |  |      | (4,110  | ) |      |   | (2,737  | )    |  |   | (1,758 | )
|                                                                         |  |      |         |   |      |   |         |      |  |   |        |  
|Pro forma net income                                                     |  | $    | 101,706 |   |      | $ | 103,906 |      |  | $ | 77,125 |  
|                                                                         |  |      |         |   |      |   |         |      |  |   |        |  
|Basic earnings per share as reported                                     |  | $    | 2.54    |   |      | $ | 2.65    |      |  | $ | 2.32   |  
|Pro forma basic earnings per share                                       |  | $    | 2.53    |   |      | $ | 2.63    |      |  | $ | 2.31   |  
|Diluted earnings per share as reported                                   |  | $    | 2.52    |   |      | $ | 2.61    |      |  | $ | 2.30   |  
|Pro forma diluted earnings per share                                     |  | $    | 2.51    |   |      | $ | 2.59    |      |  | $ | 2.28   |  



Pro forma net income
reflects options granted since adoption of the 1997 Plan and the 2000 Plan.



|(k) | Use of estimates
|--- | ----------------



Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and the reporting of revenue and expenses during the reporting period to prepare these financial statements in conformity with U.S. generally accepted accounting principles.
The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities and reported amounts of revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



2. Summary of significant accounting policies and practices (continued)



Management considers those estimates and assumptions that are most important
to the portrayal of the Companys financial condition and results of operations, in that they require managements most subjective judgments, to form the basis for the accounting policies used by the Company. These estimates and
assumptions of items such as market rents, time required to lease vacant spaces, lease terms for incoming tenants and credit worthiness of tenants in determining the as-if-vacant value, in-place lease value and above and below market rents value in
allocating purchase price to tangible and identified intangible assets upon acquisition of a shopping center asset. Management also applies certain assumptions about incremental leasing costs in determining the appropriate amount of internal leasing
costs to capitalize. These accounting policies also include managements estimates of useful lives in calculating depreciation expense on its shopping center properties and the ultimate recoverability (or impairment) of each shopping center
asset. If the useful lives of buildings and improvements are different from 40 years, it could result in changes to the future results of operations of the Company. Future adverse changes in market conditions or poor operating results of shopping
center properties could result in losses or an inability to recover the carrying value of the properties that may not be reflected in the properties current carrying value, thereby possibly requiring an impairment charge in the future.



|(l) | Reclassifications
|--- | -----------------



Certain reclassifications of 2003 and 2002 amounts have been made in order to conform to 2004 presentation.



3. Discontinued operations



The operating results of three properties sold during the year ended
December 31, 2004 were reported as income from discontinued operations in 2004, and their respective 2003 and 2002 results of operations were reclassified to income from discontinued operations. The operating results of eight properties sold during
the year ended December 31, 2003 were reported as income from discontinued operations in 2003, and their respective 2002 results of operations were reclassified to income from discontinued operations. The operating results of nine properties sold
during the year ended December 31, 2002 were reported as income from discontinued operations in 2002. The following is a summary of our income from discontinued operations for the years ended December 31, 2004, 2003 and 2002:



|                                       |  |                                  |       |      |   |        |  |   |       
|-------------------------------------- |  | -------------------------------- | ----- | ---- | - | ------ |  | - | ------
|                                       |  | For the years ended December 31,
|                                       |  | 2004                             |       | 2003 |   | 2002  
|Revenue                                |  | $                                | 1,977 |      | $ | 12,314 |  | $ | 11,402
|Property operating expenses            |  |                                  | 460   |      |   | 4,801  |  |   | 2,071 
|Depreciation and amortization expenses |  |                                  | 155   |      |   | 723    |  |   | 1,353 
|Gain on sale of real estate            |  |                                  | 8,245 |      |   | 10,571 |  |   | 8,702 
|                                       |  |                                  |       |      |   |        |  |   |       
|Discontinued operations                |  | $                                | 9,607 |      | $ | 17,361 |  | $ | 16,680
|                                       |  |                                  |       |      |   |        |  |   |       



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



4. Investments in unconsolidated entities



The accompanying consolidated financial statements include investments in
entities in which the Company does not own a controlling interest. At December 31, 2004, the Company owned a 50% general partner interest in North Coast Health Center. At December 31, 2003, the Company owned a 12% non-managing member interest in
Plaza Escuela and a 50% general partner interest in North Coast Health Center. At December 31, 2002 the Company owned a 49% non-managing member interest in Plaza Escuela and a 50% interest in North Coast Health Center. These investments are reported
using the equity method. Neither entity has been deemed to be a variable interest entity.



Summarized financial information for the entities is presented below:



|                                                        |  |                  |        |                   |   |       
|------------------------------------------------------- |  | ---------------- | ------ | ----------------- | - | ------
|                                                        |  | December 31,2004 |        | December 31, 2003
|Properties                                              |  | $                | 19,864 |                   | $ | 77,973
|Other assets                                            |  |                  | 574    |                   |   | 2,923 
|                                                        |  |                  |        |                   |   |       
|Total assets                                            |  | $                | 20,438 |                   | $ | 80,896
|                                                        |  |                  |        |                   |   |       
|Notes payable                                           |  | $                | 17,560 |                   | $ | 59,264
|Other liabilities                                       |  |                  | 104    |                   |   | 566   
|Partners capital/members equity:                      |  |                  |        |                   |   |       
|The Companys share                                     |  |                  | 1,387  |                   |   | 3,223 
|Other partners/members                                  |  |                  | 1,387  |                   |   | 17,843
|                                                        |  |                  |        |                   |   |       
|Total liabilities and partners capital/members equity |  | $                | 20,438 |                   | $ | 80,896
|                                                        |  |                  |        |                   |   |       



|                                   |  |                                  |       |      |   |       |  |   |      
|---------------------------------- |  | -------------------------------- | ----- | ---- | - | ----- |  | - | -----
|                                   |  | For the years ended December 31,
|                                   |  | 2004                             |       | 2003 |   | 2002 
|Revenue                            |  | $                                | 3,153 |      | $ | 4,108 |  | $ | 2,785
|Expenses                           |  |                                  | 2,403 |      |   | 2,416 |  |   | 2,477
|                                   |  |                                  |       |      |   |       |  |   |      
|Net income                         |  | $                                | 750   |      | $ | 1,692 |  | $ | 308  
|                                   |  |                                  |       |      |   |       |  |   |      
|The Companys equity in net income |  | $                                | 438   |      | $ | 802   |  | $ | 154  



F-17



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



5. Indebtedness



(a) Notes payable and other



|                                                                                                                                                                                         |  |              |         |      |   |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---- | - | -------
|                                                                                                                                                                                         |  | December 31,
|                                                                                                                                                                                         |  | 2004         |         | 2003
|Notes payable secured by properties consist of the following:                                                                                                                            |  |              |         |      |   |        
|Bank notes payable, cross-collateralized by secured deeds of trust, bearing interest at 7.10% with monthly principal and interest payments of
$391, due in August 2009                   |  | $            | 51,819  |      | $ | 52,794 
|Bank notes payable, cross-collateralized by a secured mortgage and deeds of trust, bearing interest at 8.17% with monthly principal and
interest payments of $404, due in January 2007   |  |              | 50,178  |      |   | 50,830 
|Bank notes payable, cross-collateralized by secured deeds of trust, bearing interest at 7.75% with monthly principal and interest payments of
$373, due in June 2009                     |  |              | 49,400  |      |   | 49,954 
|Bank notes payable, cross-collateralized by secured deeds of trust, bearing interest at 7.13%, 6.76% and 7.10% with monthly principal and
interest payments of $278, due in January 2012 |  |              | 40,945  |      |   | 41,388 
|Bank notes payable, cross-collateralized by secured deeds of trust, bearing interest at 7.21% with monthly principal and interest payments of
$252, due in July 2006                     |  |              | 31,689  |      |   | 32,401 
|Bank note payable, secured by a deed of trust, bearing interest at 7.72% with monthly principal and interest payments of $190, due in January
2010                                       |  |              | 25,198  |      |   | 25,515 
|Bank note payable, secured by a deed of trust, bearing interest at 7.38% with monthly principal and interest payments of $132, due in June
2009                                          |  |              | 16,302  |      |   | 16,664 
|Bank note payable, cross-collateralized by secured deeds of trust, bearing interest at 8.73% with monthly principal and interest payments of
$144, due in February 2007 (a)              |  |              | 15,535  |      |   | 15,863 
|Bank note payable, secured by a deed of trust, bearing interest at 8.10% with monthly principal and interest payments of $94, due in August
2007                                         |  |              | 11,747  |      |   | 11,921 
|Bank note payable, secured by a deed of trust, bearing interest at 7.20% with monthly principal and interest payments of $86, due in September
2011 (b)                                  |  |              | 11,639  |      |   |       
|Bank note payable, secured by a deed of trust, bearing interest at 7.80% with monthly principal and interest payments of $107, due in December
2005                                      |  |              | 8,020   |      |   | 8,652  
|Bank note payable, secured by a deed of trust, bearing interest at 7.65% with monthly principal and interest payments of $54, due in October
2012 (c)                                    |  |              | 7,022   |      |   | 7,131  
|Bank note payable, secured by a deed of trust, bearing interest at 7.68% with monthly principal and interest payments of $51, due in August
2011                                         |  |              | 6,948   |      |   | 7,013  
|Bank note payable, secured by a deed of trust, bearing interest at 8.30% with monthly principal and interest payments of $39, due in October
2009                                        |  |              | 4,985   |      |   | 5,033  
|Bank note payable, secured by a deed of trust, bearing interest at 7.20% with monthly principal and interest payments of $34, due in September
2011 (d)                                  |  |              | 4,597   |      |   |       
|Bank note payable, secured by a deed of trust, bearing interest at 7.61% with monthly principal and interest payments of $80, due in May 2004
and repaid in 2004                         |  |              |        |      |   | 8,833  
|Bank note payable, secured by a deed of trust, bearing interest at 7.00% with monthly principal and interest payments of $32, due in March
2004 and repaid in 2004                       |  |              |        |      |   | 4,159  
|Floating rate tax-exempt certificates of participation  interest only at effective rate of 1.99%; maturing November 2015;
non-recourse                                                  |  |              | 6,000   |      |   | 6,000  
|                                                                                                                                                                                         |  |              |         |      |   |        
|                                                                                                                                                                                         |  |              | 342,024 |      |   | 344,151
|Unamortized note payable premiums                                                                                                                                                        |  |              | 1,712   |      |   | 926    
|                                                                                                                                                                                         |  |              |         |      |   |        
|                                                                                                                                                                                         |  | $            | 343,736 |      | $ | 345,077
|                                                                                                                                                                                         |  |              |         |      |   |        



F-18



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



5. Indebtedness (continued)



|(a) | Excludes unamortized note payable premium of $477 and $688 at December 31, 2004 and 2003, respectively.
|--- | -------------------------------------------------------------------------------------------------------



|(b) | Excludes unamortized note payable premium of $731 and $0 at December 31, 2004 and 2003, respectively.
|--- | -----------------------------------------------------------------------------------------------------



|(c) | Excludes unamortized note payable premium of $215 and $238 at December 31, 2004 and 2003, respectively.
|--- | -------------------------------------------------------------------------------------------------------



|(d) | Excludes unamortized note payable premium of $289 and $0 at December 31, 2004 and 2003, respectively.
|--- | -----------------------------------------------------------------------------------------------------



The net carrying value of properties secured by these notes payable is $492,736,000 and $490,394,000 at December 31, 2004
and 2003, respectively.



Principal payments under notes payable
and other are due as follows:



|                    |  |   |        
|------------------- |  | - | -------
|2005                |  | $ | 13,428 
|2006                |  |   | 35,936 
|2007                |  |   | 78,710 
|2008                |  |   | 4,180  
|2009                |  |   | 114,816
|2010 and subsequent |  |   | 94,954 
|                    |  |   |        
|                    |  | $ | 342,024
|                    |  |   |        



|(b) | Line of credit payable
|--- | ----------------------



In September 2004, the Company entered into an amended and restated unsecured $300,000,000 revolving credit facility which bears interest, at the
Companys option, at either LIBOR plus 0.65% or a reference rate and expires in March 2007. At December 31, 2004 and 2003, the amount drawn on this line of credit was $113,000,000 and $48,250,000, respectively, and the interest rate was 3.18%
and 1.86%, respectively. The credit facility requires a quarterly fee of 0.20% per annum on the total aggregate commitment. The Company at its sole option may increase the amount of the commitment up to $400,000,000 and extend the maturity date to
March 2008, assuming satisfaction of certain conditions. The Company believes it is in compliance with all covenants contained in the revolving credit facility agreement.



|(c) | Senior notes
|--- | ------------



In February 2004, the Company repaid $50,000,000 in aggregate principal amount of 7.88% senior notes on the original maturity date of the notes. The
Company borrowed on its line of credit to fund the repayment.



In May 2004, the Company issued $50,000,000 in aggregate principal amount of 5.95% senior notes due June 2014. The Company sold these notes at 99.182% of the principal amount. In July 2004, the Company issued an additional $50,000,000 in
aggregate principal amount of the 5.95% senior notes due June 2014. The Company sold these notes at 101.586% of the principal amount. The net proceeds from the offerings were used to repay borrowings under its line of credit.



In June 2003, the Company issued $75,000,000 in aggregate principal amount of
4.70% senior notes due June 2013. The Company sold these notes at 99.755% of the principal amount and used the net proceeds from the offering to repay borrowings under its line of credit.



In December 2002, the Company issued $100,000,000 in aggregate principal amount of 6.125% senior notes due January 2013. The
Company sold these notes at par value and used the net proceeds from the offering to repay borrowings under its line of credit. In June 2002, the Company issued $55,000,000 in aggregate principal amount of 5.75% senior notes due June 2007. The
Company sold these notes at 99.458% of the principal amount. The Company used the net proceeds from the offering to repay borrowings under its line of credit.



Unamortized senior note premiums and discounts, net, were $710,000 and $1,292,000 for the years ended December 31, 2004 and 2003, respectively.



F-19



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



6. Financial instruments



The following methods and assumptions were used to estimate fair value of
each class of financial instruments:



|(a) | Cash and cash equivalents, accounts receivable and accounts payable, accrued expenses and other liabilities
|--- | -----------------------------------------------------------------------------------------------------------



The carrying amounts approximate fair values because of the short-term
nature of these instruments.



|(b) | Notes receivable
|--- | ----------------



The carrying amounts of notes receivable with balances of $4,679,000 and $5,060,000 at December 31, 2004 and 2003, respectively, approximate fair values
because of the short-term nature of these instruments.



It was
not practicable to estimate the fair value of a note receivable with a balance of $339,000 and $454,000 at December 31, 2004 and 2003, respectively, due to the uncertainty of the timing of repayment.



The fair value of notes receivable with balances of $2,493,000 at December
31, 2004 and a note receivable with a balance of $2,330,000 at December 31, 2003, approximates the carrying amounts based on market rates for the same or other instruments with similar risk, security and remaining maturities.



|(c) | Notes payable, line of credit and senior notes payable
|--- | ------------------------------------------------------



The fair value of fixed-rate notes payable and senior notes payable is $894,688,000 which approximates the carrying amount based on the current rates
offered for loans with similar risks and maturities.



The fair
value of our variable-rate line of credit approximates the carrying amount based on the current rates offered for loans with similar risks and maturities.



|7. | Sale of real estate
|-- | -------------------



The Company recorded a gain on sale of real estate of $8,245,000 during the year ended December 31, 2004. The gain is included in discontinued operations
and relates to the sale of three shopping centers. The total sales proceeds for these sales of $25,925,000 were received in cash and one short-term note, which was paid off prior to December 31, 2004. The Company also sold a parcel of land during
the year ended December 31, 2004 and recorded an impairment loss of $642,000 related to this sale. The total sale proceeds of $2,104,000 for this land sale were received in cash.



The Company recorded a gain on sale of real estate of $10,571,000 during the year ended December 31, 2003. The gain is
included in discontinued operations and related to the sale of three shopping centers and an office building parcel. The total sales proceeds for these sales of $34,021,000 were received in cash and one short-term note receivable which was paid off
prior to December 31, 2003. The Company also sold another five shopping centers during the year ended December 31, 2003 and recorded no gain or loss on these sales. The total sales proceeds of $210,681,000 were received in cash and two notes
receivable, one which was paid off prior to December 31, 2003.



The Company recorded a gain on sale of real estate of $8,702,000 during the year ended December 31, 2002. The gain is included in discontinued operations and related to the sale of seven shopping centers, two single tenant assets and one
parcel of land. The total sales proceeds of $49,375,000 were received in cash and three notes receivable.



F-20



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



8. Stock plans



In August 1997, the Company established the 1997 Stock Option and Incentive Plan (the 1997 Plan) pursuant to
which the Companys Board of Directors may grant stock, restricted stock awards and stock options to officers, directors and key employees. The 1997 Plan authorizes up to 1,620,000 shares of authorized but unissued common stock. In March 2000,
the Company established the 2000 Stock Incentive Plan (the 2000 Plan) pursuant to which the Companys Board of Directors may grant stock, restricted stock awards and stock options to officers, directors and key employees. The 2000
Plan authorizes up to 489,971 shares of authorized but unissued common stock and was approved by the Companys stockholders. In November 2000, the number of shares available for grant pursuant to the 2000 Plan was increased to 1,786,695 shares
upon approval by the Companys stockholders. During 2003 the number of shares available for grant pursuant to the 2000 Plan was increased by 668,832 shares to 2,455,527 shares upon approval by the Companys stockholders. At December 31,
2004, there were 1,259,970 additional shares available for grant under the 1997 Plan and the 2000 Plan.



|(a) | Stock options
|--- | -------------



Stock options are granted with an exercise price equal to the stocks fair value at the date of grant. The stock options have seven-year terms and
vest 33 1/3% per year over three years from the date of grant, except for the options granted to the independent directors which vest 33 1/3% immediately, with the remainder vesting ratably over two years.



No stock options were granted during 2004 and 2003. The per share weighted
average fair value of stock options granted during 2002 was $3.42, on the date of grant using the Black-Scholes option-pricing model using the following weighted average assumptions:



|                            |  |       |  
|--------------------------- |  | ----- | -
|                            |  | 2002  |  
|Expected distribution yield |  | 5.10  | %
|Risk-free interest rate     |  | 3.00  | %
|Expected volatility         |  | 20.59 | %
|Expected life (years)       |  | 7.0   |  



The Company applied
APB Opinion No. 25 in accounting for the 1997 Plan and 2000 Plan and, accordingly, no compensation cost has been recognized for its stock options in the financial statements.



Stock option activity during the periods presented is as follows:



|                             |  |                   |   |  |                                |        
|---------------------------- |  | ----------------- | - |  | ------------------------------ | -------
|                             |  | Number of Options |   |  | Weighted AverageExercise Price
|Balance at December 31, 2001 |  | 1,400,483         |   |  | $                              | 20.4240
|Granted                      |  | 213,500           |   |  | $                              | 30.4200
|Exercised                    |  | (928,372          | ) |  | $                              | 20.0178
|Forfeited                    |  | (9,332            | ) |  | $                              | 21.5500
|                             |  |                   |   |  |                                |        
|Balance at December 31, 2002 |  | 676,279           |   |  | $                              | 24.1264
|Exercised                    |  | (364,697          | ) |  | $                              | 22.7159
|                             |  |                   |   |  |                                |        
|Balance at December 31, 2003 |  | 311,582           |   |  | $                              | 25.7773
|Expired                      |  | (68               | ) |  | $                              | 19.5000
|Exercised                    |  | (194,761          | ) |  | $                              | 24.6088
|                             |  |                   |   |  |                                |        
|Balance at December 31, 2004 |  | 116,753           |   |  | $                              | 27.7303
|                             |  |                   |   |  |                                |        





F-21



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



8. Stock plans (continued)



At December 31, 2004 three stock option grants had shares outstanding as
follows:



|                                    |  |      |         |      |   |        |  |   |       
|----------------------------------- |  | ---- | ------- | ---- | - | ------ |  | - | ------
|                                    |  | 1998 |         | 2001 |   | 2002  
|Granted options outstanding         |  |      | 2,500   |      |   | 33,084 |  |   | 81,169
|Exercise price                      |  | $    | 22.1875 |      | $ | 21.55  |  | $ | 30.42 
|Remaining contractual life in years |  |      | 0.3     |      |   | 3.3    |  |   | 4.3   
|Options exercisable                 |  |      | 2,500   |      |   | 33,084 |  |   | 9,988 
|Options unexercisable               |  |      |        |      |   |       |  |   | 71,181



|(b) | Restricted stock and stock grants
|--- | ---------------------------------



During 2004, the Company granted 36,250 shares of restricted stock to certain officers and key employees pursuant to the 2000 Plan. The restricted shares
vest over three years from the date of grant. During 2004, the Company granted 8,000 shares of restricted stock to four independent directors of the Board pursuant to the 2000 Plan. The restricted shares vest over three years from the date of grant.
During 2004, the Company granted 1,000 shares of stock and 2,000 shares of restricted stock to one independent director pursuant to the 2000 Plan. The restricted shares vest over two years from the date of grant. Compensation expense for the stock
grant and the portion of restricted stock grants that vested during 2004 of $3,827,000 has been recognized in general and administrative expenses. Compensation expense related to these grants and the grants from 2003, 2002 and 2001 to be recognized
in future periods is $7,093,000 at December 31, 2004.



During
2003, the Company granted 153,000 shares of restricted stock to certain officers and key employees pursuant to the 2000 Plan. The restricted shares vest over five years from the date of grant. During 2003, the Company granted 8,000 shares of
restricted stock to four independent directors of the Board pursuant to the 2000 Plan. The restricted shares vest over three years from the date of grant. During 2003, the Company granted 2,000 shares of restricted stock to one independent director
pursuant to the 2000 Plan. The restricted shares vest over two years from the date of grant. Compensation expense for the portion of restricted stock grants that vested during 2003 of $2,207,000 has been recognized in general and administrative
expenses. Compensation expense related to these grants and the grants from 2002 and 2001 to be recognized in future periods is $8,781,000 at December 31, 2003.



During 2002, the Company granted 52,500 shares of restricted stock to certain officers and key employees pursuant to the 1997 Plan. The restricted
shares vest over seven years from the date of grant. During 2002, the Company granted 2,400 shares of restricted stock to three independent directors of the Board pursuant to the 1997 Plan. The restricted shares vest over three years from the date
of grant. Compensation expense for the portion of restricted stock grants that vested during 2002 of $1,231,000 has been recognized in general and administrative expenses. Compensation expense related to these grants and the grants from 2001 to be
recognized in future periods is $4,345,000 at December 31, 2002.



F-22



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



9. Income taxes



As discussed in Note 2(g), the Company elected to be taxed as a REIT, effective April 16, 1997. Management believes that the
Company qualified and managements intent is to continue to qualify as a REIT and therefore does not expect the Company will be liable for income taxes at the federal level or in most states in future years. Accordingly, for the years ended
December 31, 2004, 2003 and 2002, no provision was recorded for federal or substantially all state income taxes.



In connection with its election to be taxed as a REIT, the Company also elected to be subject to the built-in gain rules. Under these rules,
taxes may be payable at the time and to the extent that the net unrealized gains on the Companys assets at the date of conversion to REIT status are recognized in taxable dispositions in the ten-year period following conversion. Such net
unrealized gains were approximately $72,000,000 at December 31, 2004. Management believes that the Company will not be required to make payments of income taxes on $47,000,000 of built-in gains during the ten-year period ending December 31, 2007, or
on $25,000,000 of built-in gains during the ten-year period ending December 31, 2012. It is the intent of the Company, and the Company has the ability to defer asset dispositions to periods when related gains will not be subject to the built-in
gains income taxes or otherwise to defer the recognition of the built-in gains. However, it may be necessary to recognize a liability for such income taxes in the future if managements plans and intentions with respect to asset dispositions,
or the related tax laws, change.



The following unaudited table
reconciles the Companys book net income to REIT taxable income before dividends paid deduction:



|                                                                           |  |                                  |         |   |            |   |         |            |  |   |         |  
|-------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---------- | - | ------- | ---------- |  | - | ------- | -
|                                                                           |  | For the years ended December 31, |        
|                                                                           |  | 2004Estimate                     |         |   | 2003Actual |   |         | 2002Actual | 
|Book net income                                                            |  | $                                | 101,989 |   |            | $ | 104,436 |            |  | $ | 77,652  |  
|Less: Differences between book and tax net income for REIT subsidiaries    |  |                                  | (4,604  | ) |            |   | (5,076  | )          |  |   | (1,977  | )
|                                                                           |  |                                  |         |   |            |   |         |            |  |   |         |  
|                                                                           |  |                                  | 97,385  |   |            |   | 99,360  |            |  |   | 75,675  |  
|Add: Book depreciation and amortization (a)                                |  |                                  | 48,360  |   |            |   | 29,604  |            |  |   | 28,717  |  
|Less: Tax depreciation and amortization                                    |  |                                  | (39,214 | ) |            |   | (28,227 | )          |  |   | (26,136 | )
|Less: Straight-line rent adjustments                                       |  |                                  | (4,136  | ) |            |   | (1,902  | )          |  |   | (2,193  | )
|Book/tax difference on gains/losses from capital transactions              |  |                                  | (7,599  | ) |            |   | (8,407  | )          |  |   | (8,702  | )
|Stock option expense                                                       |  |                                  | (2,131  | ) |            |   | (5,648  | )          |  |   | (6,886  | )
|Other book/tax differences, net                                            |  |                                  | 5,684   |   |            |   | (1,276  | )          |  |   | 98      |  
|                                                                           |  |                                  |         |   |            |   |         |            |  |   |         |  
|Taxable ordinary income before adjustments                                 |  |                                  | 98,349  |   |            |   | 83,504  |            |  |   | 60,573  |  
|Less: Other adjustments (b)                                                |  |                                  | (6,097  | ) |            |   | (7,253  | )          |  |   |        |  
|                                                                           |  |                                  |         |   |            |   |         |            |  |   |         |  
|REIT taxable income before net operating loss and dividends paid deduction |  | $                                | 92,252  |   |            | $ | 76,251  |            |  | $ | 60,573  |  
|                                                                           |  |                                  |         |   |            |   |         |            |  |   |         |  



|(a) | Includes depreciation of properties in discontinued operations (see Note 3).
|--- | ----------------------------------------------------------------------------



|(b) | Based on other adjustments permitted by the Internal Revenue Code.
|--- | ------------------------------------------------------------------



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



9. Income taxes (continued)



The Company pays distributions quarterly to the stockholders. The following
presents the federal income tax characterization of distributions paid or deemed to be paid to stockholders:



|                          |  |                                  |      |  |        |   |  |      |      |  |        |   |  |   |      |  |        |  
|------------------------- |  | -------------------------------- | ---- |  | ------ | - |  | ---- | ---- |  | ------ | - |  | - | ---- |  | ------ | -
|                          |  | For the years ended December 31, |     
|                          |  | 2004                             |      |  | 2003   |   |  | 2002 |     
|Ordinary income           |  | $                                | 2.15 |  | 99.24  | % |  | $    | 1.31 |  | 64.61  | % |  | $ | 1.90 |  | 100.00 | %
|Return of capital         |  |                                  |     |  |       |   |  |      | 0.62 |  | 30.67  |   |  |   |     |  |       |  
|Capital gain distribution |  |                                  | 0.02 |  | 0.76   |   |  |      | 0.10 |  | 4.72   |   |  |   |     |  |       |  
|                          |  |                                  |      |  |        |   |  |      |      |  |        |   |  |   |      |  |        |  
|                          |  | $                                | 2.17 |  | 100.00 | % |  | $    | 2.03 |  | 100.00 | % |  | $ | 1.90 |  | 100.00 | %
|                          |  |                                  |      |  |        |   |  |      |      |  |        |   |  |   |      |  |        |  



10. Future lease revenue



Total future minimum lease receipts due under
noncancellable operating tenant leases in effect at December 31, 2004 are as follows:



|                    |  |   |          
|------------------- |  | - | ---------
|2005                |  | $ | 221,146  
|2006                |  |   | 197,699  
|2007                |  |   | 168,447  
|2008                |  |   | 139,261  
|2009                |  |   | 111,122  
|2010 and subsequent |  |   | 430,777  
|                    |  |   |          
|                    |  | $ | 1,268,452
|                    |  |   |          



11. Related party transactions



(a)In August 2002, the Company purchased 61,333 shares of its
common stock from executive officers. The Company purchased the stock at fair value at a price of $34.40 per share, which was the closing stock price on the day the transaction was agreed to, and financed the transaction through operating cash flow.
In February 2002, the Company purchased 126,666 shares of its common stock from an executive officer. The Company purchased the stock at fair value at a price of $29.05 per share and financed the transaction through operating cash flow.



(b)The Company had no notes receivable due from executive officers at December 31,
2004 and 2003. However, during 2003, two notes for $165,000 were repaid and one note for $66,000 was forgiven as a component of annual compensation which is included in general and administrative expenses.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



12. Employee benefit plan



All employees of the Company who meet certain minimum age and period of
service requirements are eligible to participate in a Section 401(k) plan as defined by the Internal Revenue Code. The employee benefit plan, sponsored by the Company, allows eligible employees to defer a percentage of compensation on a pre-tax
basis up to a maximum of $13,000, $12,000 and $11,000 in 2004, 2003 and 2002, respectively. Employees over 50 years of age were able to add an additional $3,000, $2,000 and $1,000 in 2004, 2003 and 2002, respectively. The amounts contributed by
employees are immediately vested and non-forfeitable. The Company, at managements discretion, may match employee contributions. The Companys cost for the years ended December 31, 2004, 2003 and 2002 was approximately $98,000, 92,000 and
$77,000, respectively.



13. Commitments and contingencies



(a)The Company has entered into construction contracts and also leases certain real
estate and office equipment under operating leases expiring at various dates through 2059. Rental expense was $2,038,000, $1,782,000 and $348,000 for the years ended December 31, 2004, 2003 and 2002, respectively. Committed amounts under
construction contracts due in 2005 totaled approximately $5,034,000. Committed amounts under construction contracts and minimum rentals under noncancellable operating leases in effect at December 31, 2004 were as follows:



|                    |  |   |           
|------------------- |  | - | ----------
|2005                |  | $ | 6,600,000 
|2006                |  |   | 1,311,000 
|2007                |  |   | 1,308,000 
|2008                |  |   | 1,328,000 
|2009                |  |   | 1,199,000 
|2010 and subsequent |  |   | 19,610,000
|                    |  |   |           
|                    |  | $ | 31,356,000
|                    |  |   |           



(b)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.



(c)The Company acquired a land parcel in Northern California in July of 2004 with the intent to build a retail shopping center. At December 31, 2004, the projected development costs for the project had not yet
been determined.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



14. Financial instruments subject to mandatory redemption



The Company is the general partner in a consolidated limited partnership
which owns a shopping center. The limited partnership has a defined termination date of December 31, 2074. The limited partner is entitled to receive 25% of the liquidation proceeds after debts and creditor obligations of the partnership have been
satisfied. If termination of the partnership occurred on December 31, 2004 the amount payable to the limited partner is estimated to be $2,977,000.



The Company is a general partner in a general partnership and a limited partnership which collectively own a shopping center. The general partnership has
a defined termination date of April 1, 2070. The limited partnership has a defined termination date of December 31, 2069. The other general partner and the limited partner are entitled to receive 66% of the liquidation proceeds after debts and
creditor obligations of the partnerships have been satisfied. If termination of the partnership occurred on December 31, 2004, the amounts payable to the other general partner and the limited partner are estimated to be $9,890,000.



15. Segment reporting



The Company operates in one industry segment  real estate ownership, management and development. As of December 31,
2004 and 2003, the Company owned 133 and 130 community shopping centers, respectively, primarily located in the Western United States (see Note 1). Management reviews operating and financial data for each property separately and independently from
all other properties when making resource allocation decisions and measuring performance. Therefore, the Company defines operating segments as individual properties with no segment representing more than 10% of the net operating income of the
Company. No single tenant accounts for 10% or more of rental revenue and none of the shopping centers are located in a foreign country.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2004, 2003 and 2002

(Tabular amounts are in thousands, except unit, option and share data)



16. Quarterly financial data (unaudited)



The following summarizes the condensed quarterly financial information for
the Company:



|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | ------------------- | ------ | - | ------------ | - | ------ | ------- |  | - | -------- | - |  | - | ------ | -
|                                                                                        |  | Quarters ended 2004 |       
|                                                                                        |  | December 31         |        |   | September 30 |   |        | June 30 |  |   | March 31 |  
|Revenue                                                                                 |  | $                   | 76,796 |   |              | $ | 73,525 |         |  | $ | 70,320   |   |  | $ | 68,795 |  
|Expenses                                                                                |  |                     | 52,206 |   |              |   | 50,307 |         |  |   | 47,079   |   |  |   | 45,123 |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations before minority interests and discontinued operations |  |                     | 24,590 |   |              |   | 23,218 |         |  |   | 23,241   |   |  |   | 23,672 |  
|Minority interests                                                                      |  |                     | (465   | ) |              |   | (592   | )       |  |   | (651     | ) |  |   | (631   | )
|Discontinued operations                                                                 |  |                     |       |   |              |   | 8,400  |         |  |   | 512      |   |  |   | 695    |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Net income                                                                              |  | $                   | 24,125 |   |              | $ | 31,026 |         |  | $ | 23,102   |   |  | $ | 23,736 |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Basic earnings per share:                                                               |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations                                                       |  | $                   | 0.60   |   |              | $ | 0.56   |         |  | $ | 0.56     |   |  | $ | 0.58   |  
|Discontinued operations                                                                 |  | $                   |       |   |              | $ | 0.21   |         |  | $ | 0.02     |   |  | $ | 0.01   |  
|Net income                                                                              |  | $                   | 0.60   |   |              | $ | 0.77   |         |  | $ | 0.58     |   |  | $ | 0.59   |  
|Diluted earnings per share:                                                             |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations                                                       |  | $                   | 0.59   |   |              | $ | 0.56   |         |  | $ | 0.56     |   |  | $ | 0.58   |  
|Discontinued operations                                                                 |  | $                   |       |   |              | $ | 0.20   |         |  | $ | 0.01     |   |  | $ | 0.01   |  
|Net income                                                                              |  | $                   | 0.59   |   |              | $ | 0.76   |         |  | $ | 0.57     |   |  | $ | 0.59   |  



|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | ------------------- | ------ | - | ------------ | - | ------ | ------- |  | - | -------- | - |  | - | ------ | -
|                                                                                        |  | Quarters ended 2003 |       
|                                                                                        |  | December 31         |        |   | September 30 |   |        | June 30 |  |   | March 31 |  
|Revenue                                                                                 |  | $                   | 67,734 |   |              | $ | 67,201 |         |  | $ | 65,413   |   |  | $ | 61,238 |  
|Expenses                                                                                |  |                     | 43,799 |   |              |   | 42,854 |         |  |   | 43,058   |   |  |   | 42,346 |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations before minority interests and discontinued operations |  |                     | 23,935 |   |              |   | 24,347 |         |  |   | 22,355   |   |  |   | 18,892 |  
|Minority interests                                                                      |  |                     | (871   | ) |              |   | (463   | )       |  |   | (260     | ) |  |   | (860   | )
|Discontinued operations                                                                 |  |                     | 3,049  |   |              |   | 642    |         |  |   | 6,087    |   |  |   | 7,583  |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Net income                                                                              |  | $                   | 26,113 |   |              | $ | 24,526 |         |  | $ | 28,182   |   |  | $ | 25,615 |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Basic earnings per share:                                                               |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations                                                       |  | $                   | 0.58   |   |              | $ | 0.60   |         |  | $ | 0.56     |   |  | $ | 0.47   |  
|Discontinued operations                                                                 |  | $                   | 0.07   |   |              | $ | 0.01   |         |  | $ | 0.15     |   |  | $ | 0.19   |  
|Net income                                                                              |  | $                   | 0.65   |   |              | $ | 0.61   |         |  | $ | 0.71     |   |  | $ | 0.66   |  
|Diluted earnings per share:                                                             |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations                                                       |  | $                   | 0.58   |   |              | $ | 0.60   |         |  | $ | 0.54     |   |  | $ | 0.47   |  
|Discontinued operations                                                                 |  | $                   | 0.07   |   |              | $ | 0.01   |         |  | $ | 0.15     |   |  | $ | 0.19   |  
|Net income                                                                              |  | $                   | 0.65   |   |              | $ | 0.61   |         |  | $ | 0.69     |   |  | $ | 0.66   |  



F-27



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION

December 31, 2004

(In thousands)



|                                              |  |              |        |                                |   |                                             |  |             |                 |                                  |       |                                 |      |  |                            |        |                   |   |   |  |   |        |  |   |        |  |   |        |  |   |       |  |          |       
|--------------------------------------------- |  | ------------ | ------ | ------------------------------ | - | ------------------------------------------- |  | ----------- | --------------- | -------------------------------- | ----- | ------------------------------- | ---- |  | -------------------------- | ------ | ----------------- | - | - |  | - | ------ |  | - | ------ |  | - | ------ |  | - | ----- |  | -------- | ------
|Description                                   |  | Encumbrances |        | Initial Costs                  |   | Costs Capitalized Subsequent to Acquisition |  | Total Costs |                 | Accumulated Depreciation (2) (3) |       | Date of Acquis. (A) Constr. (C) |     
|                                              |  | Land         |        | Buildings and Improvements (2) |   | Land Add.                                   |  |             | Improvements(2) |                                  | Other |                                 | Land |  | Buildings and Improvements |        | Total (1) (2) (3) |   |  
|PROPERTIES:                                   |  |              |        |                                |   |                                             |  |             |                 |                                  |       |                                 |      |  |                            |        |                   |   |   |  |   |        |  |   |        |  |   |        |  |   |       |  |          |       
|Albany Plaza Albany, OR                       |  | $            |       |                                | $ | 1,525                                       |  | $           | 4,606           |                                  | $     |                                |      |  | $                          | 1,633  |                   | $ |  |  | $ | 1,525  |  | $ | 6,239  |  | $ | 7,764  |  | $ | 1,189 |  | 1999     | (A)   
|Anaheim Plaza Anaheim, CA                     |  |              |       |                                |   | 12,390                                      |  |             | 37,170          |                                  |       |                                |      |  |                            | 196    |                   |   |  |  |   | 12,390 |  |   | 37,366 |  |   | 49,756 |  |   | 697   |  | 2004     | (A)   
|Angels Camp Town Center Angels Camp, CA       |  |              |       |                                |   | 1,153                                       |  |             | 3,485           |                                  |       |                                |      |  |                            | 76     |                   |   |  |  |   | 1,153  |  |   | 3,561  |  |   | 4,714  |  |   | 382   |  | 2000     | (A)   
|Auburn North Auburn, WA                       |  |              |       |                                |   | 2,275                                       |  |             | 6,876           |                                  |       |                                |      |  |                            | 2,830  |                   |   |  |  |   | 2,275  |  |   | 9,706  |  |   | 11,981 |  |   | 1,944 |  | 1999     | (A)   
|Bear Creek Plaza Medford, OR                  |  |              |       |                                |   | 3,275                                       |  |             | 10,076          |                                  |       |                                |      |  |                            | 1,380  |                   |   |  |  |   | 3,275  |  |   | 11,456 |  |   | 14,731 |  |   | 2,433 |  | 1998     | (A)   
|Bel Air Village Shopping Center Elk Grove, CA |  |              | 12,370 |                                |   | 4,606                                       |  |             | 13,817          |                                  |       |                                |      |  |                            |       |                   |   |  |  |   | 4,606  |  |   | 13,817 |  |   | 18,423 |  |   |      |  | 2004     | (A)   
|Bixby Hacienda Hacienda Heights, CA           |  |              |       |                                |   | 6,859                                       |  |             | 16,012          |                                  |       | 3                               |      |  |                            | 142    |                   |   |  |  |   | 6,862  |  |   | 16,154 |  |   | 23,016 |  |   | 1,146 |  | 2002     | (A)   
|Blaine International Center Blaine, WA        |  |              |       |                                |   | 1,951                                       |  |             | 5,255           |                                  |       |                                |      |  |                            | 75     |                   |   |  |  |   | 1,951  |  |   | 5,330  |  |   | 7,281  |  |   | 587   |  | 2000     | (A)   
|Blossom Valley Turlock, CA                    |  |              |       |                                |   | 2,494                                       |  |             | 7,483           |                                  |       |                                |      |  |                            | 171    |                   |   |  |  |   | 2,494  |  |   | 7,654  |  |   | 10,148 |  |   | 799   |  | 2000     | (A)   
|Brookhurst Anaheim, CA                        |  |              |       |                                |   | 6,152                                       |  |             | 14,359          |                                  |       |                                |      |  |                            | 1,034  |                   |   |  |  |   | 6,152  |  |   | 15,393 |  |   | 21,545 |  |   | 1,293 |  | 2001     | (A)   
|Brookvale Center Fremont, CA                  |  |              |       |                                |   | 3,161                                       |  |             | 9,555           |                                  |       | 18                              |      |  |                            | 963    |                   |   |  |  |   | 3,179  |  |   | 10,518 |  |   | 13,697 |  |   | 2,100 |  | 1997     | (A)   
|Cable Park Orangevale, CA                     |  |              |       |                                |   | 3,043                                       |  |             | 9,192           |                                  |       |                                |      |  |                            | 113    |                   |   |  |  |   | 3,043  |  |   | 9,305  |  |   | 12,348 |  |   | 1,158 |  | 1999     | (A)   
|Canal Farms Las Brunos, CA                    |  |              |       |                                |   | 1,577                                       |  |             | 4,728           |                                  |       |                                |      |  |                            | 54     |                   |   |  |  |   | 1,577  |  |   | 4,782  |  |   | 6,359  |  |   | 524   |  | 2000     | (A)   
|Canby Square Canby, OR                        |  |              |       |                                |   | 2,503                                       |  |             | 7,517           |                                  |       | 33                              |      |  |                            | 1,672  |                   |   |  |  |   | 2,536  |  |   | 9,189  |  |   | 11,725 |  |   | 669   |  | 2001     | (A)   
|Canyon Ridge Plaza Kent, WA                   |  |              |       |                                |   | 2,905                                       |  |             |                |                                  |       | (1                              | )    |  |                            | 8,195  |                   |   |  |  |   | 2,904  |  |   | 8,195  |  |   | 11,099 |  |   | 2,142 |  | 19921995 | (A)(C)
|Canyon Square Plaza Santa Clarita, CA         |  |              |       |                                |   | 2,725                                       |  |             | 8,327           |                                  |       |                                |      |  |                            | 105    |                   |   |  |  |   | 2,725  |  |   | 8,432  |  |   | 11,157 |  |   | 1,177 |  | 1999     | (A)   
|Caughlin Ranch Reno, NV                       |  |              |       |                                |   | 2,284                                       |  |             | 6,853           |                                  |       |                                |      |  |                            | 1,172  |                   |   |  |  |   | 2,284  |  |   | 8,025  |  |   | 10,309 |  |   | 867   |  | 2000     | (A)   
|Century Center Modesto, CA                    |  |              |       |                                |   | 4,780                                       |  |             | 14,337          |                                  |       |                                |      |  |                            | 752    |                   |   |  |  |   | 4,780  |  |   | 15,089 |  |   | 19,869 |  |   | 1,685 |  | 2000     | (A)   
|Cheyenne Commons Las Vegas, NV                |  |              |       |                                |   | 8,540                                       |  |             | 27,937          |                                  |       |                                |      |  |                            | 2,268  |                   |   |  |  |   | 8,540  |  |   | 30,205 |  |   | 38,745 |  |   | 7,708 |  | 1995     | (A)   
|Chico Crossroads Chico, CA                    |  |              |       |                                |   | 3,600                                       |  |             | 17,071          |                                  |       |                                |      |  |                            | 6,949  |                   |   |  |  |   | 3,600  |  |   | 24,020 |  |   | 27,620 |  |   | 3,778 |  | 1997     | (A)   
|Chino Town Square Chino, CA                   |  |              | 25,198 |                                |   | 8,801                                       |  |             | 10,466          |                                  |       | 12,290                          |      |  |                            | 16,133 |                   |   |  |  |   | 21,091 |  |   | 26,599 |  |   | 47,690 |  |   | 7,281 |  | 1992     | (A)   
|Claremont Village Everett, WA                 |  |              |       |                                |   | 2,320                                       |  |             | 7,035           |                                  |       |                                |      |  |                            | 307    |                   |   |  |  |   | 2,320  |  |   | 7,342  |  |   | 9,662  |  |   | 1,468 |  | 1997     | (A)   
|Cobblestone Redding, CA                       |  |              |       |                                |   | 1,869                                       |  |             | 5,609           |                                  |       |                                |      |  |                            | 240    |                   |   |  |  |   | 1,869  |  |   | 5,849  |  |   | 7,718  |  |   | 654   |  | 2000     | (A)   
|Commonwealth Square Folsom, CA                |  |              |       |                                |   | 4,425                                       |  |             | 13,274          |                                  |       |                                |      |  |                            | 233    |                   |   |  |  |   | 4,425  |  |   | 13,507 |  |   | 17,932 |  |   | 1,434 |  | 2000     | (A)   
|Country Club Center Rio Rancho, NM            |  |              | 3,055  |                                |   | 566                                         |  |             | 1,518           |                                  |       |                                |      |  |                            | 1,890  |                   |   |  |  |   | 566    |  |   | 3,408  |  |   | 3,974  |  |   | 1,488 |  | 1992     | (A)   
|Country Fair Shopping Center Chino, CA        |  |              |       |                                |   | 6,113                                       |  |             | 14,263          |                                  |       |                                |      |  |                            | 321    |                   |   |  |  |   | 6,113  |  |   | 14,584 |  |   | 20,697 |  |   | 768   |  | 2003     | (A)   
|Country Gables Granite Bay, CA                |  |              |       |                                |   | 4,622                                       |  |             | 10,806          |                                  |       |                                |      |  |                            | 177    |                   |   |  |  |   | 4,622  |  |   | 10,983 |  |   | 15,605 |  |   | 1,190 |  | 2000     | (A)   
|Creekside Center Hayward, CA                  |  |              |       |                                |   | 1,500                                       |  |             | 4,545           |                                  |       |                                |      |  |                            | 612    |                   |   |  |  |   | 1,500  |  |   | 5,157  |  |   | 6,657  |  |   | 876   |  | 1998     | (A)   



(continued)



F-28



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2004

(In thousands)



|                                                  |  |              |  |                                |  |                                             |  |                  |  |                                  |  |                                 |  |                            |  |                   |  |        |  |       |  |      |    
|------------------------------------------------- |  | ------------ |  | ------------------------------ |  | ------------------------------------------- |  | ---------------- |  | -------------------------------- |  | ------------------------------- |  | -------------------------- |  | ----------------- |  | ------ |  | ----- |  | ---- | ---
|Description                                       |  | Encumbrances |  | Initial Costs                  |  | Costs Capitalized Subsequent to Acquisition |  | Total Costs      |  | Accumulated Depreciation (2) (3) |  | Date of Acquis. (A) Constr. (C) | 
|                                                  |  | Land         |  | Buildings and Improvements (2) |  | Land Add.                                   |  | Improvements (2) |  | Other                            |  | Land                            |  | Buildings and Improvements |  | Total (1) (2) (3) |  |       
|PROPERTIES:                                       |  |              |  |                                |  |                                             |  |                  |  |                                  |  |                                 |  |                            |  |                   |  |        |  |       |  |      |    
|Date Palm Cathedral City, CA                      |  |             |  | 1,750                          |  | 5,241                                       |  |                 |  | 51                               |  |                                |  | 1,750                      |  | 5,292             |  | 7,042  |  | 260   |  | 2003 | (A)
|Decatur Meadows Las Vegas, NV                     |  |             |  | 2,752                          |  | 6,424                                       |  |                 |  | 279                              |  |                                |  | 2,752                      |  | 6,703             |  | 9,455  |  | 599   |  | 2002 | (A)
|Del Norte Plaza Escondido, CA                     |  | 16,302       |  | 9,972                          |  | 23,268                                      |  |                 |  | 182                              |  |                                |  | 9,972                      |  | 23,450            |  | 33,422 |  | 1,048 |  | 2003 | (A)
|Dublin Retail Center Dublin, CA                   |  |             |  | 4,063                          |  | 12,160                                      |  |                 |  | 290                              |  |                                |  | 4,063                      |  | 12,450            |  | 16,513 |  | 1,017 |  | 2000 | (A)
|Eagle Station Carson City, NV                     |  |             |  | 2,455                          |  | 7,363                                       |  |                 |  | 141                              |  |                                |  | 2,455                      |  | 7,504             |  | 9,959  |  | 804   |  | 2000 | (A)
|East Burnside Portland, OR                        |  |             |  | 1,583                          |  | 3,695                                       |  | 21               |  | 211                              |  |                                |  | 1,604                      |  | 3,906             |  | 5,510  |  | 467   |  | 2000 | (A)
|Eastridge Plaza Porterville, CA                   |  |             |  | 1,170                          |  | 3,513                                       |  |                 |  | 34                               |  |                                |  | 1,170                      |  | 3,547             |  | 4,717  |  | 364   |  | 2000 | (A)
|El Camino North Oceanside, CA                     |  |             |  | 15,722                         |  | 36,623                                      |  |                 |  | 12,737                           |  |                                |  | 15,722                     |  | 49,360            |  | 65,082 |  | 2,251 |  | 2003 | (A)
|Elko Junction Elko, NV                            |  |             |  | 3,274                          |  | 9,822                                       |  |                 |  | 44                               |  |                                |  | 3,274                      |  | 9,866             |  | 13,140 |  | 1,038 |  | 2000 | (A)
|Elverta Crossing Sacramento, CA                   |  |             |  | 3,080                          |  | 9,236                                       |  |                 |  | 130                              |  |                                |  | 3,080                      |  | 9,366             |  | 12,446 |  | 1,003 |  | 2000 | (A)
|Emerald Place Dublin, CA                          |  |             |  | 9,003                          |  |                                            |  |                 |  | 479                              |  |                                |  | 9,003                      |  | 479               |  | 9,482  |  |      |  | 2004 | (A)
|Encinitas Marketplace Encinitas, CA               |  |             |  | 3,529                          |  | 8,281                                       |  |                 |  | 701                              |  |                                |  | 3,529                      |  | 8,982             |  | 12,511 |  | 1,353 |  | 2000 | (A)
|Fairmont Shopping Center Fairmont, CA             |  |             |  | 3,420                          |  | 8,023                                       |  |                 |  | 288                              |  |                                |  | 3,420                      |  | 8,311             |  | 11,731 |  | 1,754 |  | 1997 | (A)
|Fashion Faire San Leandro, CA                     |  |             |  | 2,863                          |  | 8,695                                       |  |                 |  | 678                              |  |                                |  | 2,863                      |  | 9,373             |  | 12,236 |  | 1,575 |  | 1998 | (A)
|Fire Mountain Oceanside, CA                       |  | 11,521       |  | 5,155                          |  | 12,029                                      |  |                 |  | 165                              |  |                                |  | 5,155                      |  | 12,194            |  | 17,349 |  | 597   |  | 2003 | (A)
|Foothill Marketplace Rancho Cucamonga, CA         |  |             |  | 9,962                          |  | 29,885                                      |  |                 |  | 19                               |  |                                |  | 9,962                      |  | 29,904            |  | 39,866 |  | 312   |  | 2004 | (A)
|Foothillls Park Place Phoenix, AZ                 |  |             |  | 1,590                          |  | 3,710                                       |  |                 |  |                                 |  |                                |  | 1,590                      |  | 3,710             |  | 5,300  |  | 186   |  | 2003 | (A)
|Frontier Village Shopping Center Lake Stevens, WA |  |             |  | 6,258                          |  | 14,573                                      |  |                 |  | 3,020                            |  |                                |  | 6,258                      |  | 17,593            |  | 23,851 |  | 808   |  | 2003 | (A)
|Fullerton Town Center Fullerton, CA               |  |             |  | 10,192                         |  | 23,617                                      |  |                 |  | 623                              |  |                                |  | 10,192                     |  | 24,240            |  | 34,432 |  | 1,194 |  | 2003 | (A)
|Gardena Gateway Center Gardena, CA                |  | 6,555        |  | 2,778                          |  | 6,471                                       |  |                 |  | 48                               |  |                                |  | 2,778                      |  | 6,519             |  | 9,297  |  | 317   |  | 2003 | (A)
|Garrison Square Vancouver, WA                     |  |             |  | 1,462                          |  | 4,391                                       |  | 44               |  | 1,261                            |  |                                |  | 1,506                      |  | 5,652             |  | 7,158  |  | 406   |  | 2001 | (A)
|Gateway Shopping Center Mill Creek, WA            |  |             |  | 3,938                          |  | 12,032                                      |  |                 |  | 89                               |  |                                |  | 3,938                      |  | 12,121            |  | 16,059 |  | 1,143 |  | 2000 | (A)
|Glen Cove Center Vallejo, CA                      |  |             |  | 1,925                          |  | 5,807                                       |  |                 |  | 26                               |  |                                |  | 1,925                      |  | 5,833             |  | 7,758  |  | 920   |  | 1998 | (A)
|Glenbrook Center Sacramento, CA                   |  |             |  | 1,538                          |  | 3,588                                       |  |                 |  | 1,509                            |  |                                |  | 1,538                      |  | 5,097             |  | 6,635  |  | 624   |  | 2000 | (A)
|Gordon Ranch Chino Hills, CA                      |  |             |  | 5,623                          |  | 13,120                                      |  |                 |  | 348                              |  |                                |  | 5,623                      |  | 13,468            |  | 19,091 |  | 791   |  | 2002 | (A)
|Granary Square Valencia, CA                       |  |             |  | 5,479                          |  | 12,835                                      |  |                 |  | 434                              |  |                                |  | 5,479                      |  | 13,269            |  | 18,748 |  | 1,543 |  | 2000 | (A)
|Green Valley Town & Country Henderson, NV         |  |             |  | 4,096                          |  | 12,343                                      |  |                 |  | 213                              |  |                                |  | 4,096                      |  | 12,556            |  | 16,652 |  | 2,373 |  | 1997 | (A)



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F-29



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2004

(In thousands)



|                                         |  |              |  |                                |  |                                             |  |             |                  |                                  |        |                                 |  |      |  |                            |  |                   |  |        |  |       |  |             |       
|---------------------------------------- |  | ------------ |  | ------------------------------ |  | ------------------------------------------- |  | ----------- | ---------------- | -------------------------------- | ------ | ------------------------------- |  | ---- |  | -------------------------- |  | ----------------- |  | ------ |  | ----- |  | ----------- | ------
|Description                              |  | Encumbrances |  | Initial Costs                  |  | Costs Capitalized Subsequent to Acquisition |  | Total Costs |                  | Accumulated Depreciation (2) (3) |        | Date of Acquis. (A) Constr. (C) | 
|                                         |  | Land         |  | Buildings and Improvements (2) |  | Land Add.                                   |  |             | Improvements (2) |                                  |        | Other                           |  | Land |  | Buildings and Improvements |  | Total (1) (2) (3) |  |       
|PROPERTIES:                              |  |              |  |                                |  |                                             |  |             |                  |                                  |        |                                 |  |      |  |                            |  |                   |  |        |  |       |  |             |       
|Gresham Town Fair Gresham, OR            |  | 15,960       |  | 6,471                          |  | 15,078                                      |  |            |                  |                                  | 199    |                                 |  |     |  | 6,471                      |  | 15,277            |  | 21,748 |  | 751   |  | 2003        | (A)   
|Heritage Park Suison City, CA            |  |             |  | 3,449                          |  | 10,348                                      |  |            |                  |                                  | 1,528  |                                 |  |     |  | 3,449                      |  | 11,876            |  | 15,325 |  | 1,150 |  | 2000        | (A)   
|Heritage Place Tulare, CA                |  |             |  | 2,098                          |  | 6,298                                       |  |            |                  |                                  | 50     |                                 |  |     |  | 2,098                      |  | 6,348             |  | 8,446  |  | 676   |  | 2000        | (A)   
|Hermiston Plaza Hermiston, OR            |  |             |  | 1,930                          |  | 6,145                                       |  |            |                  |                                  | 1,260  |                                 |  |     |  | 1,930                      |  | 7,405             |  | 9,335  |  | 1,365 |  | 1998        | (A)   
|Hood River Center Hood River, OR         |  |             |  | 1,169                          |  | 3,699                                       |  |            |                  |                                  | 3,274  |                                 |  |     |  | 1,169                      |  | 6,973             |  | 8,142  |  | 1,241 |  | 1998        | (A)   
|Kenneth Hahn Plaza Los Angeles, CA       |  | 6,000        |  | 3,115                          |  | 7,267                                       |  |            |                  |                                  | 161    |                                 |  |     |  | 3,115                      |  | 7,428             |  | 10,543 |  | 371   |  | 2003        | (A)   
|Kmart Center Sacramento, CA              |  |             |  | 1,130                          |  | 3,392                                       |  |            |                  |                                  | 171    |                                 |  |     |  | 1,130                      |  | 3,563             |  | 4,693  |  | 453   |  | 2000        | (A)   
|La Verne Towne Center Trust La Verne, CA |  |             |  | 3,477                          |  | 7,980                                       |  |            |                  |                                  | 183    |                                 |  |     |  | 3,477                      |  | 8,163             |  | 11,640 |  | 412   |  | 2003        | (A)   
|Laguna Park Village Elk Grove, CA        |  | 4,886        |  | 2,022                          |  | 6,066                                       |  |            |                  |                                  | 9      |                                 |  |     |  | 2,022                      |  | 6,075             |  | 8,097  |  |      |  | 2004        | (A)   
|Laguna Village Sacramento, CA            |  |             |  | 3,448                          |  | 20                                          |  |            |                  |                                  | 18,377 |                                 |  |     |  | 3,448                      |  | 18,397            |  | 21,845 |  | 4,884 |  | 19921996/97 | (A)(C)
|Lakewood Shopping Center Lakewood, CA    |  |             |  | 2,363                          |  | 7,141                                       |  |            |                  |                                  | 53     |                                 |  |     |  | 2,363                      |  | 7,194             |  | 9,557  |  | 1,379 |  | 1997        | (A)   
|Lakewood Plaza Bellflower, CA            |  |             |  | 2,538                          |  | 5,921                                       |  |            |                  |                                  | 20     |                                 |  |     |  | 2,538                      |  | 5,941             |  | 8,479  |  | 290   |  | 2003        | (A)   
|Lakewood Village Windsor, CA             |  |             |  | 5,347                          |  | 12,476                                      |  |            |                  |                                  | 115    |                                 |  |     |  | 5,347                      |  | 12,591            |  | 17,938 |  | 1,342 |  | 2000        | (A)   
|Larwin Square Tustin, CA                 |  |             |  | 8,617                          |  | 20,104                                      |  | 51          |                  |                                  | 674    |                                 |  |     |  | 8,668                      |  | 20,778            |  | 29,446 |  | 1,095 |  | 2002        | (A)   
|Loma Square San Diego, CA                |  | 17,623       |  | 10,135                         |  | 23,649                                      |  |            |                  |                                  | 90     |                                 |  |     |  | 10,135                     |  | 23,739            |  | 33,874 |  | 1,150 |  | 2003        | (A)   
|Manteca Marketplace Manteca, CA          |  |             |  | 3,904                          |  | 11,908                                      |  |            |                  |                                  | 714    |                                 |  |     |  | 3,904                      |  | 12,622            |  | 16,526 |  | 2,298 |  | 1998        | (A)   
|Marina Village Huntington Beach, CA      |  |             |  | 3,531                          |  | 10,660                                      |  | 15          |                  |                                  | 670    |                                 |  |     |  | 3,546                      |  | 11,330            |  | 14,876 |  | 1,846 |  | 1999        | (A)   
|Maysville Marketsquare Maysville, KY     |  | 4,999        |  | 3,435                          |  | 2,001                                       |  | (386        | )                |                                  | 3,980  |                                 |  |     |  | 3,049                      |  | 5,981             |  | 9,030  |  | 1,856 |  | 19921993    | (A)(C)
|Medford Center Medford, OR               |  |             |  | 8,369                          |  | 19,527                                      |  |            |                  |                                  | 2,905  |                                 |  |     |  | 8,369                      |  | 22,432            |  | 30,801 |  | 986   |  | 2003        | (A)   
|Melrose Village Vista, CA                |  | 8,491        |  | 5,125                          |  | 11,621                                      |  |            |                  |                                  | 175    |                                 |  |     |  | 5,125                      |  | 11,796            |  | 16,921 |  | 3,215 |  | 1999        | (A)   
|Memphis Retail Center Memphis, TN        |  |             |  | 1,204                          |  | 3,784                                       |  |            |                  |                                  | (46    | )                               |  |     |  | 1,204                      |  | 3,738             |  | 4,942  |  | 1,219 |  | 1992        | (A)   
|Menlo Park Portland, OR                  |  |             |  | 3,056                          |  | 7,134                                       |  | 44          |                  |                                  | 1,605  |                                 |  |     |  | 3,100                      |  | 8,739             |  | 11,839 |  | 959   |  | 2000        | (A)   
|Milwaukie Marketplace Milwaukie, OR      |  |             |  | 3,184                          |  | 9,717                                       |  |            |                  |                                  | 633    |                                 |  |     |  | 3,184                      |  | 10,350            |  | 13,534 |  | 2,042 |  | 1998        | (A)   
|Mineral King Plaza Visalia, CA           |  |             |  | 1,506                          |  | 3,505                                       |  |            |                  |                                  | 160    |                                 |  |     |  | 1,506                      |  | 3,665             |  | 5,171  |  | 176   |  | 2003        | (A)   
|Mira Loma Shopping Center Reno, NV       |  |             |  | 1,925                          |  | 5,810                                       |  |            |                  |                                  | 1,416  |                                 |  |     |  | 1,925                      |  | 7,226             |  | 9,151  |  | 1,067 |  | 1998        | (A)   
|Mission Ridge Plaza Manteca, CA          |  |             |  | 2,880                          |  | 8,640                                       |  |            |                  |                                  | 11     |                                 |  |     |  | 2,880                      |  | 8,651             |  | 11,531 |  | 894   |  | 2000        | (A)   
|Monterey Plaza San Jose, CA              |  | 16,107       |  | 7,688                          |  | 18,692                                      |  | 14          |                  |                                  | 432    |                                 |  |     |  | 7,702                      |  | 19,124            |  | 26,826 |  | 3,787 |  | 1997        | (A)   



(continued)



F-30



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2004

(In thousands)



|                                             |  |              |  |                                |  |                                             |  |             |                  |                                  |        |                                 |      |  |                            |  |                 |  |        |  |        |  |      |    
|-------------------------------------------- |  | ------------ |  | ------------------------------ |  | ------------------------------------------- |  | ----------- | ---------------- | -------------------------------- | ------ | ------------------------------- | ---- |  | -------------------------- |  | --------------- |  | ------ |  | ------ |  | ---- | ---
|Description                                  |  | Encumbrances |  | Initial Costs                  |  | Costs Capitalized Subsequent to Acquisition |  | Total Costs |                  | Accumulated Depreciation (2) (3) |        | Date of Acquis. (A) Constr. (C) |     
|                                             |  | Land         |  | Buildings and Improvements (2) |  | Land Add.                                   |  |             | Improvements (2) |                                  | Other  |                                 | Land |  | Buildings and Improvements |  | Total (1)(2)(3) |  |       
|PROPERTIES:                                  |  |              |  |                                |  |                                             |  |             |                  |                                  |        |                                 |      |  |                            |  |                 |  |        |  |        |  |      |    
|Mountain Square Upland, CA                   |  | 23,883       |  | 8,902                          |  | 20,666                                      |  |            |                  |                                  | 294    |                                 |     |  | 8,902                      |  | 20,960          |  | 29,862 |  | 1,009  |  | 2003 | (A)
|North County Plaza Carlsbad, CA              |  |             |  | 5,899                          |  | 13,765                                      |  |            |                  |                                  | 364    |                                 |     |  | 5,899                      |  | 14,129          |  | 20,028 |  | 699    |  | 2003 | (A)
|North Mountain Village Phoenix, AZ           |  | 6,948        |  | 2,058                          |  | 6,173                                       |  |            |                  |                                  | 69     |                                 |     |  | 2,058                      |  | 6,242           |  | 8,300  |  | 326    |  | 2003 | (A)
|Northridge Plaza Fair Oaks, CA               |  |             |  | 1,658                          |  | 4,977                                       |  |            |                  |                                  | 205    |                                 |     |  | 1,658                      |  | 5,182           |  | 6,840  |  | 605    |  | 2000 | (A)
|Oceanside Crossing Oceanside, CA             |  |             |  | 1,667                          |  | 3,890                                       |  |            |                  |                                  | 333    |                                 |     |  | 1,667                      |  | 4,223           |  | 5,890  |  | 209    |  | 2003 | (A)
|Olympia Place Walnut Creek, CA               |  |             |  | 8,559                          |  | 10,041                                      |  | (38         | )                |                                  | 26,920 |                                 |     |  | 8,521                      |  | 36,961          |  | 45,482 |  | 945    |  | 2000 | (A)
|Olympia Square Olympia, WA                   |  | 13,146       |  | 3,737                          |  | 11,580                                      |  |            |                  |                                  | 1,192  |                                 |     |  | 3,737                      |  | 12,772          |  | 16,509 |  | 5,033  |  | 1992 | (A)
|Olympia West Center Olympia, WA              |  |             |  | 2,736                          |  | 8,278                                       |  |            |                  |                                  | 211    |                                 |     |  | 2,736                      |  | 8,489           |  | 11,225 |  | 1,648  |  | 1997 | (A)
|Oregon City Shopping Center Oregon City, OR  |  | 8,967        |  | 4,426                          |  | 13,424                                      |  |            |                  |                                  | 3,417  |                                 |     |  | 4,426                      |  | 16,841          |  | 21,267 |  | 2,484  |  | 1998 | (A)
|Oregon Trail Gresham, OR                     |  |             |  | 3,593                          |  | 11,501                                      |  |            |                  |                                  | 2,834  |                                 |     |  | 3,593                      |  | 14,335          |  | 17,928 |  | 2,648  |  | 1998 | (A)
|Pacific Commons Shopping Center Spanaway, WA |  |             |  | 3,419                          |  | 10,307                                      |  |            |                  |                                  | 113    |                                 |     |  | 3,419                      |  | 10,420          |  | 13,839 |  | 1,737  |  | 1998 | (A)
|Palmdale Center Palmdale, CA                 |  |             |  | 1,150                          |  | 3,509                                       |  |            |                  |                                  | 221    |                                 |     |  | 1,150                      |  | 3,730           |  | 4,880  |  | 796    |  | 1997 | (A)
|Palomar Village Shopping Center Temecula, CA |  |             |  | 6,992                          |  | 20,227                                      |  |            |                  |                                  |       |                                 |     |  | 6,992                      |  | 20,227          |  | 27,219 |  | 22     |  | 2004 | (A)
|Panther Lake Shopping Center Kent, WA        |  |             |  | 1,950                          |  | 5,901                                       |  |            |                  |                                  | 302    |                                 |     |  | 1,950                      |  | 6,203           |  | 8,153  |  | 1,201  |  | 1998 | (A)
|Park Place Vallejo, CA                       |  |             |  | 4,020                          |  | 9,381                                       |  |            |                  |                                  | 98     |                                 |     |  | 4,020                      |  | 9,479           |  | 13,499 |  | 993    |  | 2000 | (A)
|Pavilions Place Westminster, CA              |  |             |  | 12,071                         |  | 28,166                                      |  | 17          |                  |                                  | 333    |                                 |     |  | 12,088                     |  | 28,499          |  | 40,587 |  | 1,143  |  | 2003 | (A)
|Pine Creek Shopping Center Grass Valley, CA  |  |             |  | 5,000                          |  | 15,001                                      |  |            |                  |                                  | 1,189  |                                 |     |  | 5,000                      |  | 16,190          |  | 21,190 |  | 1,674  |  | 2000 | (A)
|Pioneer Plaza Springfield, OR                |  |             |  | 1,864                          |  | 5,707                                       |  |            |                  |                                  | 55     |                                 |     |  | 1,864                      |  | 5,762           |  | 7,626  |  | 996    |  | 1998 | (A)
|Plaza 580 Livermore, CA                      |  |             |  | 4,010                          |  | 12,031                                      |  |            |                  |                                  | 284    |                                 |     |  | 4,010                      |  | 12,315          |  | 16,325 |  | 1,335  |  | 2000 | (A)
|Powell Valley Junction Gresham, OR           |  |             |  | 1,546                          |  | 4,747                                       |  |            |                  |                                  | 1,590  |                                 |     |  | 1,546                      |  | 6,337           |  | 7,883  |  | 995    |  | 1998 | (A)
|Rainbow Promenade Las Vegas, NV              |  | 18,108       |  | 9,381                          |  | 21,933                                      |  | (15         | )                |                                  | 183    |                                 |     |  | 9,366                      |  | 22,116          |  | 31,482 |  | 4,107  |  | 1997 | (A)
|Rancho Las Palmas Rancho Mirage, CA          |  | 11,747       |  | 5,025                          |  | 15,233                                      |  |            |                  |                                  | 1,262  |                                 |     |  | 5,025                      |  | 16,495          |  | 21,520 |  | 2,362  |  | 1999 | (A)
|Rheem Valley Moraga, CA                      |  |             |  | 4,518                          |  | 10,523                                      |  |            |                  |                                  | 683    |                                 |     |  | 4,518                      |  | 11,206          |  | 15,724 |  | 604    |  | 2003 | (A)
|Rockwood Plaza Gresham, OR                   |  |             |  | 1,179                          |  | 3,540                                       |  | 18          |                  |                                  | 1,274  |                                 |     |  | 1,197                      |  | 4,814           |  | 6,011  |  | 786    |  | 2000 | (A)
|Sahara Pavilion North Las Vegas, NV          |  | 28,977       |  | 11,925                         |  | 28,652                                      |  | (10         | )                |                                  | 858    |                                 |     |  | 11,915                     |  | 29,510          |  | 41,425 |  | 10,563 |  | 1992 | (A)
|Sahara Pavilion South Las Vegas, NV          |  |             |  | 4,833                          |  | 12,988                                      |  |            |                  |                                  | 1,953  |                                 |     |  | 4,833                      |  | 14,941          |  | 19,774 |  | 5,591  |  | 1992 | (A)
|San Dimas Market Place San Dimas, CA         |  | 13,581       |  | 5,699                          |  | 17,315                                      |  |            |                  |                                  | 168    |                                 |     |  | 5,699                      |  | 17,483          |  | 23,182 |  | 3,050  |  | 1998 | (A)



(continued)



F-31



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2004

(In thousands)



|                                                                       |  |              |         |                                |   |                                             |  |             |                  |                                  |   |                                 |   |      |   |                            |   |                   |   |       |  |   |         |  |   |           |  |   |           |  |   |         |  |         |    
|---------------------------------------------------------------------- |  | ------------ | ------- | ------------------------------ | - | ------------------------------------------- |  | ----------- | ---------------- | -------------------------------- | - | ------------------------------- | - | ---- | - | -------------------------- | - | ----------------- | - | ----- |  | - | ------- |  | - | --------- |  | - | --------- |  | - | ------- |  | ------- | ---
|Description                                                            |  | Encumbrances |         | Initial Costs                  |   | Costs Capitalized Subsequent to Acquisition |  | Total Costs |                  | Accumulated Depreciation (2) (3) |   | Date of Acquis. (A) Constr. (C) |  
|                                                                       |  | Land         |         | Buildings and Improvements (2) |   | Land Add.                                   |  |             | Improvements (2) |                                  |   | Other                           |   | Land |   | Buildings and Improvements |   | Total (1) (2) (3) |   |      
|PROPERTIES:                                                            |  |              |         |                                |   |                                             |  |             |                  |                                  |   |                                 |   |      |   |                            |   |                   |   |       |  |   |         |  |   |           |  |   |           |  |   |         |  |         |    
|Sandy Marketplace Sandy, OR                                            |  |              | 4,163   |                                |   | 2,047                                       |  |             | 6,132            |                                  |   |                                |   |      |   | 435                        |   |                   |   |      |  |   | 2,047   |  |   | 6,567     |  |   | 8,614     |  |   | 1,148   |  | 1998    | (A)
|Shops at Bakersfield Bakersfield, CA                                   |  |              |        |                                |   | 59                                          |  |             | 178              |                                  |   |                                |   |      |   |                           |   |                   |   |      |  |   | 59      |  |   | 178       |  |   | 237       |  |   | 9       |  | 2003    | (A)
|Shops at Lincoln School Modesto, CA                                    |  |              |        |                                |   | 1,672                                       |  |             | 5,069            |                                  |   |                                |   |      |   | 153                        |   |                   |   |      |  |   | 1,672   |  |   | 5,222     |  |   | 6,894     |  |   | 691     |  | 1999    | (A)
|Silverdale Shopping Center Silverdale, WA                              |  |              | 5,541   |                                |   | 2,048                                       |  |             | 4,652            |                                  |   |                                |   |      |   | 112                        |   |                   |   |      |  |   | 2,048   |  |   | 4,764     |  |   | 6,812     |  |   | 236     |  | 2003    | (A)
|Sky Park Plaza Chico, CA                                               |  |              |        |                                |   | 3,566                                       |  |             | 10,700           |                                  |   |                                |   |      |   | 1,697                      |   |                   |   |      |  |   | 3,566   |  |   | 12,397    |  |   | 15,963    |  |   | 1,138   |  | 2000    | (A)
|Southern Palms Tempe, AZ                                               |  |              |        |                                |   | 3,661                                       |  |             | 10,983           |                                  |   |                                |   |      |   | 1,024                      |   |                   |   |      |  |   | 3,661   |  |   | 12,007    |  |   | 15,668    |  |   | 612     |  | 2003    | (A)
|Southgate Center Milwaukie, OR                                         |  |              | 2,882   |                                |   | 1,423                                       |  |             | 4,319            |                                  |   |                                |   |      |   | 509                        |   |                   |   |      |  |   | 1,423   |  |   | 4,828     |  |   | 6,251     |  |   | 727     |  | 1998    | (A)
|Southpointe Plaza Sacramento, CA                                       |  |              | 9,263   |                                |   | 2,194                                       |  |             | 5,100            |                                  |   |                                |   |      |   | 531                        |   |                   |   |      |  |   | 2,194   |  |   | 5,631     |  |   | 7,825     |  |   | 289     |  | 2003    | (A)
|Sunset Esplanade Hillsboro, OR                                         |  |              |        |                                |   | 8,610                                       |  |             | 20,090           |                                  |   |                                |   |      |   | 66                         |   |                   |   |      |  |   | 8,610   |  |   | 20,156    |  |   | 28,766    |  |   | 1,432   |  | 2002    | (A)
|Sunset Mall Portland, OR                                               |  |              | 7,237   |                                |   | 2,996                                       |  |             | 9,089            |                                  |   | (14                             | ) |      |   | 180                        |   |                   |   |      |  |   | 2,982   |  |   | 9,269     |  |   | 12,251    |  |   | 1,466   |  | 1998    | (A)
|Sunset Square Bellingham, WA                                           |  |              |        |                                |   | 6,100                                       |  |             | 18,647           |                                  |   | (7                              | ) |      |   | 2,614                      |   |                   |   |      |  |   | 6,093   |  |   | 21,261    |  |   | 27,354    |  |   | 7,995   |  | 1992    | (A)
|Sycamore Plaza Anaheim, CA                                             |  |              |        |                                |   | 1,856                                       |  |             | 5,589            |                                  |   |                                |   |      |   | 147                        |   |                   |   |      |  |   | 1,856   |  |   | 5,736     |  |   | 7,592     |  |   | 639     |  | 2000    | (A)
|Tacoma Central Tacoma, WA                                              |  |              | 8,020   |                                |   | 5,314                                       |  |             | 16,219           |                                  |   |                                |   |      |   | 589                        |   |                   |   |      |  |   | 5,314   |  |   | 16,808    |  |   | 22,122    |  |   | 3,135   |  | 1997    | (A)
|Tanasbourne Village Hillsboro, OR                                      |  |              | 17,349  |                                |   | 5,573                                       |  |             | 13,861           |                                  |   |                                |   |      |   | 1,088                      |   |                   |   |      |  |   | 5,573   |  |   | 14,949    |  |   | 20,522    |  |   | 5,047   |  | 1992    | (A)
|Tustin Heights Tustin, CA                                              |  |              | 9,871   |                                |   | 3,675                                       |  |             | 11,089           |                                  |   |                                |   |      |   | 934                        |   |                   |   |      |  |   | 3,675   |  |   | 12,023    |  |   | 15,698    |  |   | 1,993   |  | 1997    | (A)
|Ukiah Crossroads Ukiah, CA                                             |  |              |        |                                |   | 1,869                                       |  |             | 5,609            |                                  |   |                                |   |      |   | 20                         |   |                   |   |      |  |   | 1,869   |  |   | 5,629     |  |   | 7,498     |  |   | 592     |  | 2000    | (A)
|Vermont Slauson Shopping Center Los Angeles, CA                        |  |              |        |                                |   | 5,231                                       |  |             | 12,143           |                                  |   |                                |   |      |   | 17                         |   |                   |   |      |  |   | 5,231   |  |   | 12,160    |  |   | 17,391    |  |   | 557     |  | 2003    | (A)
|Victorian Walk Fresno, CA                                              |  |              |        |                                |   | 1,676                                       |  |             | 5,025            |                                  |   |                                |   |      |   | 386                        |   |                   |   |      |  |   | 1,676   |  |   | 5,411     |  |   | 7,087     |  |   | 687     |  | 2000    | (A)
|Vineyard Village Ontario, CA                                           |  |              |        |                                |   | 2,767                                       |  |             | 6,411            |                                  |   |                                |   |      |   | (371                       | ) |                   |   |      |  |   | 2,767   |  |   | 6,040     |  |   | 8,807     |  |   | 1,406   |  | 1994/96 | (A)
|Vineyard Village East Ontario, CA                                      |  |              |        |                                |   | 648                                         |  |             | 2,720            |                                  |   | 1                               |   |      |   | 317                        |   |                   |   |      |  |   | 649     |  |   | 3,037     |  |   | 3,686     |  |   | 908     |  | 1994    | (A)
|Vineyards Marketplace Rancho Cucamonga, CA                             |  |              | 4,986   |                                |   | 2,072                                       |  |             | 4,835            |                                  |   |                                |   |      |   | 57                         |   |                   |   |      |  |   | 2,072   |  |   | 4,892     |  |   | 6,964     |  |   | 234     |  | 2003    | (A)
|West Town Winnemucca, NV                                               |  |              |        |                                |   | 1,085                                       |  |             | 3,258            |                                  |   |                                |   |      |   | 28                         |   |                   |   |      |  |   | 1,085   |  |   | 3,286     |  |   | 4,371     |  |   | 342     |  | 2000    | (A)
|Winterwood Pavilion Las Vegas, NV                                      |  |              |        |                                |   | 4,573                                       |  |             | 13,015           |                                  |   |                                |   |      |   | 1,464                      |   |                   |   |      |  |   | 4,573   |  |   | 14,479    |  |   | 19,052    |  |   | 5,484   |  | 1992    | (A)
|Yreka Junction Yreka, CA                                               |  |              |        |                                |   | 2,436                                       |  |             | 7,304            |                                  |   |                                |   |      |   | 12                         |   |                   |   |      |  |   | 2,436   |  |   | 7,316     |  |   | 9,752     |  |   | 765     |  | 2000    | (A)
|Pan Pacific Retail Properties redemption of operating subsidiary units |  |              |        |                                |   |                                            |  |             |                 |                                  |   |                                |   |      |   |                           |   |                   |   | 3,565 |  |   |        |  |   |          |  |   | 3,565     |  |   |        |  | 2004    | (A)
|                                                                       |  |              |         |                                |   |                                             |  |             |                  |                                  |   |                                 |   |      |   |                            |   |                   |   |       |  |   |         |  |   |           |  |   |           |  |   |         |  |         |    
|                                                                       |  | $            | 343,736 |                                | $ | 536,730                                     |  | $           | 1,368,993        |                                  | $ | 12,098                          |   |      | $ | 170,926                    |   |                   | $ | 3,565 |  | $ | 548,828 |  | $ | 1,539,919 |  | $ | 2,092,312 |  | $ | 200,181 |  |         |    
|                                                                       |  |              |         |                                |   |                                             |  |             |                  |                                  |   |                                 |   |      |   |                            |   |                   |   |       |  |   |         |  |   |           |  |   |           |  |   |         |  |         |    



(continued)





F-32



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2004

(In thousands)



Notes:



|(1) | The aggregate gross cost of the properties owned by Pan Pacific Retail Properties, Inc. for federal income tax purposes, approximated $1,933,621 as of December 31, 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Net of write-offs of fully depreciated assets.
|--- | ----------------------------------------------



|(3) | The following table reconciles the historical cost and related accumulated depreciation and amortization of Pan Pacific Retail Properties, Inc. from January 1, 2002 through December
31, 2004:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------------------------------------------------------------------ |  | -------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                                             |  | For the years ended December 31, |          
|Cost of properties                                                                                           |  | 2004                             |           |   | 2003 |   |           | 2002 | 
|Balance, beginning of year                                                                                   |  | $                                | 1,934,343 |   |      | $ | 1,431,090 |      |  | $ | 1,331,951 |  
|Additions (acquisition, improvements, etc.)                                                                  |  |                                  | 179,198   |   |      |   | 725,670   |      |  |   | 130,425   |  
|Interest capitalized                                                                                         |  |                                  | 567       |   |      |   | 4,507     |      |  |   | 1,796     |  
|Deductions (write-off of tenant improvements, cost of real estate sold and provision for loss on impairment) |  |                                  | (21,796   | ) |      |   | (226,924  | )    |  |   | (33,082   | )
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|Balance, end of year                                                                                         |  | $                                | 2,092,312 |   |      | $ | 1,934,343 |      |  | $ | 1,431,090 |  
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|                                                                                                             | 
|                                                                                                             |  | For the years ended December 31, |          
|Accumulated depreciation and amortization                                                                    |  | 2004                             |           |   | 2003 |   |           | 2002 | 
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|Balance, beginning of year                                                                                   |  | $                                | 160,449   |   |      | $ | 125,057   |      |  | $ | 98,762    |  
|Additions (depreciation and amortization expense)                                                            |  |                                  | 42,157    |   |      |   | 37,838    |      |  |   | 28,526    |  
|Deductions (write-off of accumulated depreciation of tenant improvements and cost of real estate sold)       |  |                                  | (2,425    | ) |      |   | (2,446    | )    |  |   | (2,231    | )
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|Balance, end of year                                                                                         |  | $                                | 200,181   |   |      | $ | 160,449   |      |  | $ | 125,057   |  
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  



See accompanying report
of independent registered public accounting firm.



F-33