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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, 2003



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 $1,574,600,000.



As of March 5, 2004, the number of shares of the Registrants common
stock outstanding was 40,355,381.



Pan Pacific Retail
Properties, Inc.s Definitive Proxy Statement for the 2004 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 2004
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                                                                            |  | 12  
|                |  |                                                                                      
|ITEM 3.         |  | LEGAL PROCEEDINGS                                                                     |  | 29  
|                |  |                                                                                      
|ITEM 4.         |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  | 29  
|               
|PART II        
|                |  |                                                                                      
|ITEM 5.         |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                 |  | 29  
|                |  |                                                                                      
|ITEM 6.         |  | SELECTED CONSOLIDATED FINANCIAL DATA                                                  |  | 30  
|                |  |                                                                                      
|ITEM 7.         |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 31  
|                |  |                                                                                      
|ITEM 7A.        |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 40  
|                |  |                                                                                      
|ITEM 8.         |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 40  
|                |  |                                                                                      
|ITEM 9.         |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  |  | 40  
|                |  |                                                                                      
|ITEM 9A.        |  | CONTROLS AND PROCEDURES                                                               |  | 40  
|               
|PART III       
|                |  |                                                                                      
|ITEM 10.        |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    |  | 41  
|                |  |                                                                                      
|ITEM 11.        |  | EXECUTIVE COMPENSATION                                                                |  | 41  
|                |  |                                                                                      
|ITEM 12.        |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  | 41  
|                |  |                                                                                      
|ITEM 13.        |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  | 41  
|                |  |                                                                                      
|ITEM 14.        |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                |  | 41  
|               
|PART IV        
|                |  |                                                                                      
|ITEM 15.        |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                       |  | 42  
|                | 
|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, 2003, 2002 and 2001 our total assets were $1,863,348,000, $1,424,240,000 and $1,339,290,000, respectively. At December 31, 2003, we owned a portfolio comprised of 130 shopping center properties, of
which 124 are located in the Western United States in our five key markets including 40 in Northern California, 37 in Southern California, 21 in Oregon, 14 in Washington and 12 in Nevada. The portfolio includes approximately 20.8 million square feet
of retail space, which was 95.4% leased to a diverse mix of 3,199 tenants.



On November 13, 2000, we acquired Western Properties Trust, a California real estate investment trust. The transaction was a stock for stock exchange whereby Western common shares and units were exchanged for newly
issued shares of our common stock and operating subsidiary units, based upon a fixed exchange ratio of 0.62. In connection with this transaction, we assumed Westerns obligations under its senior notes and the indentures under which they were
issued. As a result, we issued 10,754,776 shares of our common stock to holders of Western common shares and were obligated to issue 911,934 shares of our common stock upon the exchange of operating subsidiary units held by limited partners of Pan
Pacific (Kienows), L.P., formerly Western/Kienow, L.P., and Pan Pacific (Pinecreek), L.P., formerly Western/Pinecreek, L.P.



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.



We employed 135 people as of December 31, 2003, including eleven 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,
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;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | 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.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.



During 1998,
we formed Pan Pacific (Portland), LLC with us as sole managing member. In exchange for four properties which were contributed to Pan Pacific (Portland), 832,617 units were issued to certain non-managing members. 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.



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During 1999, we completed a number of financing transactions. At the end of the second quarter, we closed
a $35,000,000 financing transaction evidenced by notes, bearing interest at 7.2%, due in July 2006 and secured by deeds of trust on two properties, Rainbow Promenade and San Dimas Marketplace. At the beginning of the third quarter, we closed a
second financing transaction for $56,300,000 evidenced by notes, bearing interest at 7.1%, due in August 2009 and secured by deeds of trust on four properties, Melrose Village Plaza, Monterey Plaza, Tustin Heights Shopping Center and Tanasbourne
Village. The proceeds were used to pay down our unsecured credit facility.



In the third quarter of 1999, we formed Pan Pacific (Rancho Las Palmas), LLC and Pan Pacific (RLP), Inc. in connection with the acquisition of the Rancho Las Palmas shopping center. We and Pan Pacific (RLP) are
co-managing members of Pan Pacific (Rancho Las Palmas). As part of this acquisition and in exchange for an interest in the asset contributed to Pan Pacific (Rancho Las Palmas) by an individual, 314,587 non-managing member units were issued to this
individual. Distributions are made to this non-managing member at a rate equal to dividend distributions paid by us on a share of our common stock. The non-managing member can seek redemption of its units after the first anniversary. We, at our
option, may 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. As of December 31, 2003, no units have been redeemed.



In December 1999, we extended our $200,000,000 revolving credit facility for
an additional three years. In October 1999, we received an investment grade credit rating from Standard & Poors. Because of this rating, the borrowing rate on our revolving credit facility was reduced to LIBOR plus 1.15%. In November 2000,
we also received an investment grade credit rating from Moodys Investors Service.



In connection with our acquisition of Western in November 2000, we entered into new financing arrangements including a $300,000,000 revolving credit facility and a $100,000,000 term credit loan. The revolving credit
facility was set to mature in January 2004 and was amended and restated in March 2003 as discussed in more detail below. The term credit loan was repaid in full in July 2001. Our borrowing rate under the revolving credit facility was LIBOR plus
1.10% while the borrowing rate under the term credit loan was LIBOR plus 1.20%.



In connection with our acquisition of Western, we assumed Westerns obligations including its Unsecured Senior Notes in an aggregate principal amount of $50,000,000 bearing interest at 7.875% due 2004,
$25,000,000 bearing interest at 7.10% due 2006, $25,000,000 bearing interest at 7.20% due 2008 and $25,000,000 bearing interest at 7.30% due 2010, and the indentures under which these notes were issued. We also assumed a mortgage note bearing
interest at 7.61% due May 2004 in the principal amount of $9,628,000, secured by a deed of trust on Lakewood Village.



In April 2001, we issued $150,000,000 in aggregate principal amount of 7.95% senior notes due April 2011. We sold these notes at 99.225% of the principal
amount. We used the net proceeds from the offering to pay off our term credit loan and to repay borrowings under our revolving credit facility.



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 will be 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 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, 2003 and
2002, the balance of the loan was $17,735,000 and $17,901,000, respectively. The loan is secured by the property and is not guaranteed by us. We



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account for this joint venture under the equity method. This unconsolidated debt is one of two off-balance-sheet financings 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. Our remaining equity position of $1,805,000 continues to earn a preferred return of 12%. In addition, we are entitled to receive
25% of the operating cash flows from the property through November 2008. Proceeds from the returns of capital and cash flow participation will be used primarily to repay borrowings under our revolving credit facility. At December 31, 2003, the
balance of the Plaza Escuela Holding Co., LLC loan was $41,529,000. 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 one of two off-balance-sheet
financings to which we are a party.



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.



In March 2003, we entered into an amended and restated unsecured $300,000,000 revolving credit facility which bears
interest, at our option, at either LIBOR plus 0.70% or a reference rate. This credit facility expires in March 2006. At December 31, 2003 and 2002, the amount drawn on this line of credit was $48,250,000 and $66,000,000, respectively, and the
interest rate was 1.86% and 2.97%, respectively. The credit facility requires us to pay 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 2007, assuming satisfaction of certain conditions.



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.



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.



During 1999, we disposed of three non-strategic assets. We took back a portion of the proceeds on one sale in the form of a note receivable secured by a
deed of trust. The balance of the net proceeds, as well as the net proceeds from another sale, received in cash, were used to repay indebtedness under our revolving credit facility. The net proceeds from the other sale 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.



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.



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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.



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.



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 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.



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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 6.5% and 51.7% of the leased gross leasable area, or GLA, of our properties will expire through the end of 2004 and 2008, 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;
| | - | -----------------------------------------------------------------------------------------------



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



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



We may not realize all of the anticipated benefits of the merger.The success of our acquisition of Center Trust will depend, in part, on
our ability to realize the anticipated cost savings, operating efficiencies and other synergies from integrating the properties of Center Trust into our portfolio. Our success in realizing these benefits and the timing of this realization depend
upon our ability to integrate the operations of Center Trust with our own in an efficient manner. The integration of two independent companies is a complex, costly and time-consuming process. Unforeseen difficulties in integrating these portfolios
may cause disruption of, or a loss of momentum in, the activities of our business that could affect its ability to achieve expected cost savings, operating efficiencies and other synergies in a manner that could materially harm our financial
performance.



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The difficulties of combining the operations of the companies include, among others:



| |  | following the merger, we may not achieve expected cost savings and operating efficiencies, such as the elimination of redundant administrative costs and property management costs;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the diversion of management attention to the integration of the operations of Center Trust could have an adverse effect on our revenues, expenses and operating results;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the Center Trust portfolio may not perform as well as we anticipate due to various factors, including changes in macro-economic conditions and the demand for retail space in
Southern California and other West Coast markets in which Center Trust has a significant presence; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | we may not effectively integrate Center Trusts operations.
| | - | -----------------------------------------------------------



We cannot guarantee that the integration of Center Trust will result in the realization of the full benefits we had anticipated.



Changes in the Economic or Other Market Conditions in Certain
Geographic Regions Could Adversely Affect Our Results of Operations. As of December 31, 2003, we have 40 properties with total GLA of 5,665,000 square feet located in Northern California, 37 properties with total GLA of 6,322,000 square feet
located in Southern California, 21 properties with total GLA of 3,386,000 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 2,098,000 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



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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, 2003, our annualized base rent attributable to anchor tenants was 39.2% 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, 2003, we owned and operated 130 properties, consisting of approximately 20.8 million square feet of space. Fifty-three of our properties were acquired
during 2000, primarily through the acquisition of Western. These properties, together with 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, 2003, we had outstanding indebtedness of approximately $897,035,000. 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, 2003, we had approximately $345,077,000 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 $52,794,000 on four properties, $50,830,000 on four other properties, $49,954,000 on four other properties, $41,388,000 on three properties, $15,863,000 on three other
properties and $32,401,000 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 interest at a variable-rate. 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.



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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.



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. The Company intends 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.



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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.



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.



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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 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, 2003 was approximately $2,856,125,000, based on the market closing price of our common stock at December 31, 2003 of $47.65 per share (assuming
the conversion of 820,782 operating subsidiary units to common stock) and our debt outstanding of approximately $897,035,000 (exclusive of accounts payable and accrued expenses). At December 31, 2003, our debt to total market capitalization ratio
was approximately 31.4% (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.



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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 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 the potential for 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 armed
conflict, civil unrest or additional terrorist activities, 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, 2003, we owned and operated 130 neighborhood and community shopping centers containing 20.8 million square feet of which 18.4 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 30% of our owned gross leasable area, is located in Southern California. Another 28% of our owned gross leasable area is located in Northern California, 17% in Oregon, 11% in Nevada and 10% in Washington. In addition, properties consisting of the
remaining 4% of our owned gross leasable area are located in Arizona, New Mexico, Tennessee and Kentucky. As of December 31, 2003, 95.4% of our total owned gross leasable area was leased by tenants under 3,199 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,
2003, 61% of the total owned and occupied gross leasable area was leased to national tenants, 18% 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, 2003, anchor tenants leased 57% of the total owned gross leasable area, with 71% of anchor-leased gross leasable area (41% 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.



|                    |  |    |  |                    |  |                              |  |                              |  |                                   |  |                       |  |                             |  |                         |  |                                
|------------------- |  | -- |  | ------------------ |  | ---------------------------- |  | ---------------------------- |  | --------------------------------- |  | --------------------- |  | --------------------------- |  | ----------------------- |  | -------------------------------
|Region              |  |    |  | NumberofProperties |  | Total GrossLeasable Area (1) |  | PercentageofPortfolioGLA (%) |  | PercentageLeased as of 12/31/2003 |  | TotalNumberof Tenants |  | AnnualizedBase Rent ($) (2) |  | % PortfolioBase Rent(%) |  | AnnualizedBase Rent/Sq. Ft. (3)
|Northern California |  | NC |  | 40                 |  | 5,119,496                    |  | 27.79                        |  | 97.67                             |  | 973                   |  | 57,881,102                  |  | 27.16                   |  | 11.58                          
|Southern California |  | SC |  | 37                 |  | 5,530,662                    |  | 30.02                        |  | 96.57                             |  | 1,007                 |  | 73,540,648                  |  | 34.51                   |  | 13.77                          
|Washington          |  | WA |  | 14                 |  | 1,894,797                    |  | 10.29                        |  | 96.96                             |  | 313                   |  | 21,875,426                  |  | 10.27                   |  | 11.91                          
|Oregon              |  | OR |  | 21                 |  | 3,150,200                    |  | 17.10                        |  | 93.96                             |  | 489                   |  | 30,929,610                  |  | 14.52                   |  | 10.45                          
|Nevada              |  | NV |  | 12                 |  | 2,037,867                    |  | 11.06                        |  | 94.92                             |  | 315                   |  | 24,219,665                  |  | 11.37                   |  | 12.52                          
|Arizona             |  | AZ |  | 3                  |  | 453,686                      |  | 2.46                         |  | 64.45                             |  | 58                    |  | 2,935,668                   |  | 1.38                    |  | 10.04                          
|Other               |  | O  |  | 3                  |  | 235,680                      |  | 1.28                         |  | 86.51                             |  | 44                    |  | 1,692,218                   |  | 0.79                    |  | 8.30                           
|Total               |  |    |  | 130                |  | 18,422,388                   |  | 100.00                       |  | 95.37                             |  | 3,199                 |  | 213,074,337                 |  | 100.00                  |  | 12.13                          



|(1) | Represents gross leasable area (GLA) owned by the Company. Excludes 2,340,102 square feet owned by certain retailers.
|--- | -----------------------------------------------------------------------------------------------------------------------



|(2) | Annualized base rent for all leases in place at December 31, 2003 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, 2003.
|--- | --------------------------------------------------------------------------



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Property Summary

12/31/2003



|                                               |  |                           |  |                         |  |                        |  |                 |  |                              |  |                               |  |                     |  |                                  |  |                                                                                 
|---------------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ---------------------------- |  | ----------------------------- |  | ------------------- |  | -------------------------------- |  | --------------------------------------------------------------------------------
|Property and Location                          |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2003(4) |  | Total # Tenants 12/31/2003(4) |  | AnnualBase Rent (1) |  | Ann. Base Rent/Leased Sq. Ft.(3) |  | Major Retailers                                                                 
|NORTHERN CALIFORNIA                            |  |                           |  |                         |  |                        |  |                 |  |                              |  |                               |  |                     |  |                                  |  |                                                                                 
|Angels Camp Town Center Angels Camp, CA        |  | 1986                      |  | 77,967                  |  | 3,000                  |  | 80,967          |  | 96.1                         |  | 11                            |  | 584,727             |  | 7.80                             |  | Save Mart Supermarket, Rite Aid                                                 
|Blossom Valley Plaza Turlock, CA               |  | 1988                      |  | 111,612                 |  | 0                      |  | 111,612         |  | 98.1                         |  | 20                            |  | 1,284,736           |  | 11.73                            |  | Raleys Supermarket, Jo-Ann Fabrics & Crafts                                    
|Brookvale Shopping Center Fremont, CA          |  | 19681989                  |  | 131,242                 |  | 0                      |  | 131,242         |  | 100.0                        |  | 19                            |  | 1,469,768           |  | 11.20                            |  | Albertsons Supermarket, Longs Drugs                                           
|Cable Park Sacramento, CA                      |  | 1987                      |  | 160,811                 |  | 0                      |  | 160,811         |  | 97.9                         |  | 31                            |  | 1,401,275           |  | 8.90                             |  | Albertsons Supermarket, Longs Drugs                                           
|Canal Farms Los Banos, CA                      |  | 1987                      |  | 110,535                 |  | 0                      |  | 110,535         |  | 100.0                        |  | 18                            |  | 1,007,040           |  | 9.11                             |  | Save Mart Supermarket, Rite Aid                                                 
|Century Center Modesto, CA                     |  | 1979                      |  | 214,772                 |  | 0                      |  | 214,772         |  | 100.0                        |  | 36                            |  | 1,892,533           |  | 8.81                             |  | Raleys Supermarket, Gottschalks                                                
|Chico Crossroads Chico, CA                     |  | 19881998                  |  | 267,735                 |  | 0                      |  | 267,735         |  | 92.3                         |  | 21                            |  | 2,625,068           |  | 10.62                            |  | FoodMaxx Supermarket, Bed Bath & Beyond, Cost Plus, Barnes & Noble, Circuit City
|Cobblestone Redding, CA                        |  | 1984                      |  | 122,091                 |  | 0                      |  | 122,091         |  | 95.1                         |  | 28                            |  | 1,059,441           |  | 9.12                             |  | Raleys Supermarket                                                             
|Commonwealth Square Folsom, CA                 |  | 1987                      |  | 141,310                 |  | 0                      |  | 141,310         |  | 96.8                         |  | 42                            |  | 2,109,906           |  | 15.42                            |  | Raleys Supermarket                                                             
|Country Gables Shopping Center Granite Bay, CA |  | 1988                      |  | 140,184                 |  | 0                      |  | 140,184         |  | 98.3                         |  | 35                            |  | 1,761,506           |  | 12.78                            |  | Raleys Supermarket                                                             
|Creekside Center Hayward, CA                   |  | 1968                      |  | 80,911                  |  | 0                      |  | 80,911          |  | 100.0                        |  | 18                            |  | 891,812             |  | 11.02                            |  | Albertsons Supermarket (5), Big Lots                                           
|Dublin Retail Center Dublin, CA                |  | 1980                      |  | 154,728                 |  | 0                      |  | 154,728         |  | 100.0                        |  | 7                             |  | 1,653,782           |  | 10.69                            |  | Orchard Supply, Marshalls, Ross Dress for Less, Michaels Arts & Crafts        
|Eastridge Plaza Porterville, CA                |  | 1985                      |  | 81,010                  |  | 0                      |  | 81,010          |  | 95.2                         |  | 13                            |  | 519,610             |  | 6.73                             |  | Save Mart Supermarket (5), Rite Aid (5)                                         
|Elverta Crossing Sacramento, CA                |  | 1991                      |  | 119,998                 |  | 0                      |  | 119,998         |  | 98.7                         |  | 25                            |  | 1,470,307           |  | 12.42                            |  | FoodMaxx Supermarket, Rite Aid, Factory 2 U                                     
|Fairmont Shopping Center Pacifica, CA          |  | 1988                      |  | 104,281                 |  | 0                      |  | 104,281         |  | 98.5                         |  | 29                            |  | 1,461,724           |  | 14.23                            |  | Albertsons Supermarket, Rite Aid                                               
|Fashion Faire Place San Leandro, CA            |  | 1987                      |  | 95,255                  |  | 0                      |  | 95,255          |  | 95.5                         |  | 17                            |  | 1,465,364           |  | 16.12                            |  | Ross Dress for Less, Michaels Arts & Crafts                                    



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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 12/31/2003(4) |  | Total # Tenants 12/31/2003(4) |  | AnnualBase Rent (1) |  | Ann. Base Rent/Leased Sq. Ft.(3) |  | Major Retailers                                                         
|Glen Cove Center Vallejo, CA                  |  | 1990                      |  | 66,000                  |  | 0                      |  | 66,000          |  | 100.0                        |  | 11                            |  | 936,169             |  | 14.18                            |  | Safeway Supermarket & Drug                                              
|Glenbrook Shopping Center Sacramento, CA      |  | 19732001                  |  | 69,340                  |  | 0                      |  | 69,340          |  | 99.8                         |  | 19                            |  | 798,132             |  | 11.53                            |  | Big Lots                                                                
|Heritage Park Shopping Center Suisun City, CA |  | 1989                      |  | 162,999                 |  | 0                      |  | 162,999         |  | 97.2                         |  | 35                            |  | 1,775,448           |  | 11.20                            |  | Raleys Supermarket                                                     
|Heritage Place Tulare, CA                     |  | 1986                      |  | 119,412                 |  | 0                      |  | 119,412         |  | 98.0                         |  | 21                            |  | 1,080,635           |  | 9.24                             |  | Save Mart Supermarket, Rite Aid                                         
|Kmart Center Sacramento, CA                   |  | 19661983                  |  | 132,630                 |  | 0                      |  | 132,630         |  | 100.0                        |  | 17                            |  | 785,345             |  | 5.92                             |  | K-Mart, Big Lots                                                        
|Laguna 99 Plaza Elk Grove, CA                 |  | 1992                      |  | 89,600                  |  | 116,200                |  | 205,800         |  | 100.0                        |  | 24                            |  | 1,560,993           |  | 17.42                            |  | Safeway Supermarket (6), Wal-Mart (2)                                   
|Laguna Village Sacramento, CA                 |  | 1996                      |  | 121,009                 |  | 0                      |  | 121,009         |  | 97.3                         |  | 19                            |  | 2,124,359           |  | 18.04                            |  | United Artists Theatres, 24 Hour Fitness                                
|Lakewood Shopping Center Windsor, CA          |  | 1988                      |  | 107,769                 |  | 0                      |  | 107,769         |  | 98.7                         |  | 27                            |  | 1,165,015           |  | 10.95                            |  | Raleys Supermarket, U.S. Post Office                                   
|Lakewood Village Windsor, CA                  |  | 1992                      |  | 127,237                 |  | 0                      |  | 127,237         |  | 98.5                         |  | 38                            |  | 2,075,121           |  | 16.56                            |  | Safeway Supermarket, Longs Drugs                                       
|Manteca Marketplace Manteca, CA               |  | 19721988                  |  | 172,435                 |  | 0                      |  | 172,435         |  | 100.0                        |  | 27                            |  | 1,918,557           |  | 11.13                            |  | Save Mart Supermarket, Rite Aid, Stadium 10 Cinemas, Ben Franklin Crafts
|Mineral King Visalia, CA                      |  | 1983                      |  | 39,060                  |  | 76,276                 |  | 115,336         |  | 69.3                         |  | 12                            |  | 428,284             |  | 15.83                            |  | Vons Supermarket (2), Longs Drugs (2)                                   
|Mission Ridge Plaza Manteca, CA               |  | 1992                      |  | 96,657                  |  | 99,641                 |  | 196,298         |  | 95.9                         |  | 15                            |  | 1,347,146           |  | 14.53                            |  | Safeway Supermarket (6), Wal-Mart (2), Mervyns (2), Big 5              
|Monterey Plaza San Jose, CA                   |  | 1990                      |  | 183,180                 |  | 49,500                 |  | 232,680         |  | 100.0                        |  | 31                            |  | 2,865,865           |  | 15.65                            |  | Wal-Mart, Albertsons Supermarket (2), Walgreens                        
|Northridge Plaza Fair Oaks, CA                |  | 1990                      |  | 98,625                  |  | 0                      |  | 98,625          |  | 100.0                        |  | 21                            |  | 845,233             |  | 8.57                             |  | Raleys Supermarket                                                     
|Park Place Vallejo, CA                        |  | 1987                      |  | 150,766                 |  | 0                      |  | 150,766         |  | 100.0                        |  | 29                            |  | 1,910,913           |  | 12.67                            |  | Raleys Supermarket, 24 Hour Fitness                                    
|Pine Creek Shopping Center Grass Valley, CA   |  | 1988                      |  | 213,035                 |  | 0                      |  | 213,035         |  | 98.6                         |  | 36                            |  | 2,368,358           |  | 11.27                            |  | Raleys Supermarket, JC Penney                                          



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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 12/31/2003(4) |  | Total # Tenants 12/31/2003(4) |  | AnnualBase Rent (1) |               | Ann. Base Rent/Leased Sq. Ft.(3) |   | Major Retailers
|Plaza 580 Shopping Center Livermore, CA |  | 1993                      |  | 104,363                 |  | 192,739                |  | 297,102         |  | 96.8                         |  | 27                            |  |                     | 1,870,028     |                                  |   | 18.50           |  | Target (2), Mervyns (2), Ross Dress for Less, Big 5 Sporting Goods
|Rheem Valley Moraga, CA                 |  | 1990                      |  | 163,975                 |  | 0                      |  | 163,975         |  | 94.0                         |  | 60                            |  |                     | 2,057,985     |                                  |   | 13.35           |  | Longs Drugs, T. J. Maxx                                            
|Shops at Lincoln School Modesto, CA     |  | 1988                      |  | 81,443                  |  | 0                      |  | 81,443          |  | 82.1                         |  | 14                            |  |                     | 646,271       |                                  |   | 9.67            |  | Save Mart Supermarket                                              
|Sky Park Plaza Chico, CA                |  | 1985                      |  | 176,182                 |  | 4,642                  |  | 180,824         |  | 100.0                        |  | 30                            |  |                     | 1,830,306     |                                  |   | 10.39           |  | Raleys Supermarket, Ross Dress for Less, Jo-Ann Fabrics & Crafts  
|Southpointe Plaza Sacramento, CA        |  | 1982                      |  | 189,043                 |  | 4,000                  |  | 193,043         |  | 100.0                        |  | 30                            |  |                     | 1,755,979     |                                  |   | 9.29            |  | Seafood City Supermarket, Big 5 Sporting Goods                     
|Ukiah Crossroads Ukiah, CA              |  | 1986                      |  | 110,565                 |  | 0                      |  | 110,565         |  | 96.2                         |  | 20                            |  |                     | 1,058,034     |                                  |   | 9.95            |  | Raleys Supermarket                                                
|Victorian Walk Fresno, CA               |  | 1990                      |  | 102,581                 |  | 0                      |  | 102,581         |  | 98.6                         |  | 21                            |  |                     | 920,422       |                                  |   | 9.10            |  | Save Mart Supermarket                                              
|Yreka Junction Yreka, CA                |  | 1984                      |  | 127,148                 |  | 0                      |  | 127,148         |  | 100.0                        |  | 19                            |  |                     | 1,097,906     |                                  |   | 8.63            |  | Raleys Supermarket, JC Penney                                     
|                                        |  |                           |  |                         |  |                        |  |                 |  |                              |  |                               |  |                     |               |                                  |   |                 |  |                                                                    
|Region Total/Weighted Average           |  |                           |  | 5,119,496               |  | 545,998                |  | 5,665,494       |  | 97.7                         |  | 973                           |  | $                   | 57,881,101.59 |                                  | $ | 11.58           |  |                                                                    
|                                        |  |                           |  |                         |  |                        |  |                 |  |                              |  |                               |  |                     |               |                                  |   |                 |  |                                                                    



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|                                          |  |                         |  |                        |  |                       |  |                 |  |                               |  |                               |  |                      |  |                                  |  |                                                                                                  
|----------------------------------------- |  | ----------------------- |  | ---------------------- |  | --------------------- |  | --------------- |  | ----------------------------- |  | ----------------------------- |  | -------------------- |  | -------------------------------- |  | -------------------------------------------------------------------------------------------------
|Property and Location                     |  | YearCompleted/Renovated |  | CompanyOwned (Sq. Ft.) |  | TenantOwned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2003 (4) |  | Total #Tenants 12/31/2003 (4) |  | Annual Base Rent (1) |  | Ann. BaseRent/Leased Sq. Ft. (3) |  | Major Retailers                                                                                  
|SOUTHERN CALIFORNIA                       |  |                         |  |                        |  |                       |  |                 |  |                               |  |                               |  |                      |  |                                  |  |                                                                                                  
|Arlington Courtyard Riverside, CA         |  | 1991                    |  | 12,221                 |  | 0                     |  | 12,221          |  | 89.0                          |  | 5                             |  | 136,804              |  | 12.58                            |  | True Value Hardware                                                                              
|Bixby Hacienda Plaza Hacienda Heights, CA |  | 1986                    |  | 135,012                |  | 0                     |  | 135,012         |  | 100.0                         |  | 42                            |  | 2,474,380            |  | 18.33                            |  | Albertsons Supermarket                                                                          
|Brookhurst Center Anaheim, CA             |  | 1982                    |  | 184,949                |  | 0                     |  | 184,949         |  | 97.9                          |  | 43                            |  | 2,262,691            |  | 12.49                            |  | Ralphs Supermarket, Rite Aid                                                                    
|Canyon Square Plaza Santa Clarita, CA     |  | 1988                    |  | 96,727                 |  | 7,472                 |  | 104,199         |  | 89.0                          |  | 27                            |  | 1,187,695            |  | 13.79                            |  | Albertsons Supermarket & Drug                                                                   
|Chino Town Square Chino, CA               |  | 1987                    |  | 337,687                |  | 188,064               |  | 525,751         |  | 86.7                          |  | 47                            |  | 4,246,278            |  | 14.51                            |  | Target (2), Mervyns (2), Wal-Mart (5), Ross Dress for Less                                       
|Country Fair Shopping Center Chino, CA    |  | 1992                    |  | 168,264                |  | 43,440                |  | 211,704         |  | 100.0                         |  | 27                            |  | 2,401,643            |  | 14.27                            |  | Albertsons Supermarket, Rite Aid, Petsmart                                                      
|Date Palm Center Cathedral City, CA       |  | 1987                    |  | 117,356                |  | 0                     |  | 117,356         |  | 94.9                          |  | 9                             |  | 1,901,438            |  | 17.07                            |  | Sams Club                                                                                       
|Del Norte Plaza Escondido, CA             |  | 1986                    |  | 231,157                |  | 0                     |  | 231,157         |  | 98.3                          |  | 48                            |  | 3,364,493            |  | 14.81                            |  | Vons Supermarket, Sav-on Drugs, LA Fitness                                                      
|El Camino North Oceanside, CA             |  | 19822003                |  | 366,991                |  | 126,500               |  | 493,491         |  | 97.1                          |  | 61                            |  | 5,471,944            |  | 15.36                            |  | Barnes & Noble, Michaels Arts & Crafts, Petco (2), Ross Dress for Less, Stein Mart, Mervyns (2)
|Encinitas Marketplace Encinitas, CA       |  | 1981                    |  | 118,265                |  | 0                     |  | 118,265         |  | 100.0                         |  | 26                            |  | 1,616,064            |  | 13.66                            |  | Albertsons Supermarket                                                                          
|Fire Mountain Oceanside, CA               |  | 1987                    |  | 92,378                 |  | 0                     |  | 92,378          |  | 100.0                         |  | 20                            |  | 2,190,276            |  | 23.71                            |  | Trader Joes Market, Aaron Bros., Lamps Plus                                                     
|Fullerton Town Center Fullerton, CA       |  | 1987                    |  | 270,647                |  | 146,880               |  | 417,527         |  | 98.1                          |  | 30                            |  | 4,397,724            |  | 16.57                            |  | Costco (2), AMC Theatres, Toys R Us, Office Depot                                              
|Gardena Gateway Center Gardena, CA        |  | 1990                    |  | 65,987                 |  | 0                     |  | 65,987          |  | 98.0                          |  | 12                            |  | 1,130,143            |  | 17.48                            |  | 99 Ranch Market, Marukai Stores                                                                  
|Gordon Ranch Marketplace Chino Hills, CA  |  | 1991                    |  | 114,573                |  | 0                     |  | 114,573         |  | 94.3                          |  | 39                            |  | 1,995,523            |  | 18.46                            |  | Ralphs Supermarket                                                                              
|Granary Square Valencia, CA               |  | 1982                    |  | 143,333                |  | 0                     |  | 143,333         |  | 100.0                         |  | 32                            |  | 2,408,710            |  | 16.80                            |  | Ralphs Supermarket, Longs Drugs                                                                
|Kenneth Hahn Los Angeles, CA              |  | 1987                    |  | 165,195                |  | 0                     |  | 165,195         |  | 99.9                          |  | 31                            |  | 1,697,776            |  | 10.29                            |  | Food 4 Less Supermarket, Rite Aid, Factory 2 U                                                   



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|                                         |  |                         |  |                        |  |                       |  |                 |  |                              |  |                              |  |                      |  |                                 |  |                                                                        
|---------------------------------------- |  | ----------------------- |  | ---------------------- |  | --------------------- |  | --------------- |  | ---------------------------- |  | ---------------------------- |  | -------------------- |  | ------------------------------- |  | -----------------------------------------------------------------------
|Property and Location                    |  | YearCompleted/Renovated |  | CompanyOwned (Sq. Ft.) |  | TenantOwned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of12/31/2003 (4) |  | Total #Tenants12/31/2003 (4) |  | Annual Base Rent (1) |  | Ann. BaseRent/LeasedSq. Ft. (3) |  | Major Retailers                                                        
|La Verne Towne Center La Verne, CA       |  | 1986                    |  | 231,376                |  | 0                     |  | 231,376         |  | 94.1                         |  | 24                           |  | 1,375,670            |  | 6.32                            |  | Vons Supermarket, Target                                              
|Lakewood Plaza Bellflower, CA            |  | 19871989                |  | 113,511                |  | 0                     |  | 113,511         |  | 100.0                        |  | 11                           |  | 1,328,645            |  | 11.70                           |  | Stater Bros. Supermarket, Staples                                      
|Larwin Square Shopping Center Tustin, CA |  | 1977                    |  | 210,936                |  | 0                     |  | 210,936         |  | 97.3                         |  | 58                           |  | 2,749,211            |  | 13.39                           |  | Vons Supermarket, Rite Aid, Jo-Ann Fabrics & Crafts, Big 5            
|Laurentian Center Ontario, CA            |  | 1988                    |  | 97,131                 |  | 0                     |  | 97,131          |  | 88.5                         |  | 22                           |  | 1,167,161            |  | 13.57                           |  | Pep Boys, 24 Hour Fitness                                              
|Loma Square San Diego, CA                |  | 1980                    |  | 210,704                |  | 0                     |  | 210,704         |  | 100.0                        |  | 31                           |  | 3,107,209            |  | 14.75                           |  | Henrys Market, Sav-on Drugs, T.J. Maxx, Circuit City                  
|Marina Village Huntington Beach, CA      |  | 19961998                |  | 149,107                |  | 0                     |  | 149,107         |  | 100.0                        |  | 34                           |  | 1,906,350            |  | 12.79                           |  | Vons Supermarket, Sav-on Drugs                                        
|Melrose Village Plaza Vista, CA          |  | 1990                    |  | 136,922                |  | 0                     |  | 136,922         |  | 98.2                         |  | 34                           |  | 1,795,299            |  | 13.35                           |  | Albertsons Supermarket, Sav-on Drugs                                  
|Mountain Square Upland, CA               |  | 19882002                |  | 273,167                |  | 0                     |  | 273,167         |  | 95.2                         |  | 27                           |  | 3,390,413            |  | 13.04                           |  | Pavilions Supermarket, Home Depot, Staples, Factory 2 U                
|North County Plaza Carlsbad, CA          |  | 1987                    |  | 153,325                |  | 0                     |  | 153,325         |  | 96.5                         |  | 32                           |  | 2,457,113            |  | 16.61                           |  | Marshalls, Dollar Tree                                                
|Oceanside Town & Country Oceanside, CA   |  | 1971                    |  | 88,414                 |  | 0                     |  | 88,414          |  | 83.8                         |  | 17                           |  | 300,965              |  | 4.06                            |  | Vons Supermarket, Longs Drugs, Dollar Tree                           
|Palmdale Center Palmdale, CA             |  | 1975                    |  | 81,050                 |  | 0                     |  | 81,050          |  | 100.0                        |  | 14                           |  | 589,884              |  | 7.28                            |  | Smart & Final, Dollar Tree, Big Lots                                   
|Pavilions Place Huntington Beach, CA     |  | 19862002                |  | 208,823                |  | 100,750               |  | 309,573         |  | 92.0                         |  | 44                           |  | 3,563,260            |  | 18.55                           |  | Pavilions Supermarket, Target (2), Easy Life Furniture                 
|Rancho Las Palmas Rancho Mirage, CA      |  | 19802001                |  | 165,156                |  | 10,815                |  | 175,971         |  | 94.2                         |  | 39                           |  | 2,281,834            |  | 14.66                           |  | Vons Supermarket, Longs Drugs                                        
|Sams Club Downey Downey, CA             |  | 1987                    |  | 114,722                |  | 0                     |  | 114,722         |  | 100.0                        |  | 2                            |  | 860,366              |  | 7.50                            |  | Sams Club (5)                                                         
|San Dimas Marketplace San Dimas, CA      |  | 1997                    |  | 154,020                |  | 117,000               |  | 271,020         |  | 100.0                        |  | 23                           |  | 2,429,905            |  | 15.78                           |  | Trader Joes Market, Target (2), Ross Dress for Less, Office Max, Petco
|Shops at Bakersfield Bakersfield, CA     |  | 1978                    |  | 14,115                 |  | 0                     |  | 14,115          |  | 90.3                         |  | 6                            |  | 93,628               |  | 7.35                            |  |                                                                        



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|                                             |  |                         |  |                        |  |                       |  |                |  |                              |  |                               |  |                      |               |                                 |   |                 |  |                                          
|-------------------------------------------- |  | ----------------------- |  | ---------------------- |  | --------------------- |  | -------------- |  | ---------------------------- |  | ----------------------------- |  | -------------------- | ------------- | ------------------------------- | - | --------------- |  | -----------------------------------------
|Property and Location                        |  | YearCompleted/Renovated |  | CompanyOwned (Sq. Ft.) |  | TenantOwned (Sq. Ft.) |  | Total (Sq.Ft.) |  | % Leased as of12/31/2003 (4) |  | Total # Tenants12/31/2003 (4) |  | Annual Base Rent (1) |               | Ann. BaseRent/LeasedSq. Ft. (3) |   | Major Retailers
|Sycamore Plaza Anaheim, CA                   |  | 1976                    |  | 105,085                |  | 0                     |  | 105,085        |  | 98.4                         |  | 25                            |  |                      | 930,501       |                                 |   | 9.00            |  | Stater Bros. Supermarket, Sav-on Drugs   
|Tustin Heights Shopping Center Tustin, CA    |  | 1983                    |  | 131,518                |  | 0                     |  | 131,518        |  | 100.0                        |  | 21                            |  |                      | 1,799,942     |                                 |   | 13.69           |  | Ralphs Supermarket, Longs Drugs,       
|Vermont-Slauson Shopping Ctr Los Angeles, CA |  | 1981                    |  | 169,744                |  | 0                     |  | 169,744        |  | 100.0                        |  | 18                            |  |                      | 1,271,651     |                                 |   | 7.49            |  | Superior Supermarket, Sav-on Drugs, Kmart
|Vineyard Village Ontario, CA                 |  | 1992                    |  | 45,075                 |  | 0                     |  | 45,075         |  | 100.0                        |  | 4                             |  |                      | 403,405       |                                 |   | 8.95            |  | Sears, Dunn Edwards Paints               
|Vineyards Marketplace Rancho Cucamonga, CA   |  | 1991                    |  | 56,019                 |  | 50,730                |  | 106,749        |  | 100.0                        |  | 22                            |  |                      | 854,657       |                                 |   | 15.26           |  | Albertsons Supermarket (2), Sav-on Drugs
|                                             |  |                         |  |                        |  |                       |  |                |  |                              |  |                               |  |                      |               |                                 |   |                 |  |                                          
|Region Total/Weighted Average                |  |                         |  | 5,530,662              |  | 791,651               |  | 6,322,313      |  | 96.6                         |  | 1,007                         |  | $                    | 73,540,648.20 |                                 | $ | 13.77           |  |                                          
|                                             |  |                         |  |                        |  |                       |  |                |  |                              |  |                               |  |                      |               |                                 |   |                 |  |                                          



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|                                               |  |                           |  |                        |  |                        |  |                 |  |                               |  |                               |  |                      |               |                                 |   |                 |  |                                                                               
|---------------------------------------------- |  | ------------------------- |  | ---------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ----------------------------- |  | -------------------- | ------------- | ------------------------------- | - | --------------- |  | ------------------------------------------------------------------------------
|Property and Location                          |  | Year Completed /Renovated |  | Company Owned(Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2003 (4) |  | Total # Tenants12/31/2003 (4) |  | Annual Base Rent (1) |               | Ann. BaseRent/LeasedSq. Ft. (3) |   | Major Retailers
|WASHINGTON                                     |  |                           |  |                        |  |                        |  |                 |  |                               |  |                               |  |                      |               |                                 |   |                 |  |                                                                               
|Auburn North Auburn, WA                        |  | 19781998                  |  | 171,032                |  | 0                      |  | 171,032         |  | 100.0                         |  | 25                            |  |                      | 1,406,880     |                                 |   | 8.23            |  | Albertsons Supermarket, Rite Aid, Office Depot, Craft Outlet                 
|Blaine International Center Blaine, WA         |  | 1991                      |  | 127,572                |  | 0                      |  | 127,572         |  | 78.7                          |  | 16                            |  |                      | 947,161       |                                 |   | 9.43            |  | Cost Cutter Supermarket, Rite Aid                                             
|Canyon Ridge Plaza Kent, WA                    |  | 1996                      |  | 86,909                 |  | 181,300                |  | 268,209         |  | 100.0                         |  | 19                            |  |                      | 1,082,860     |                                 |   | 12.46           |  | Target (2), Top Foods Supermarket (2), Ross Dress for Less                    
|Claremont Village Plaza Everett, WA            |  | 19551996                  |  | 88,770                 |  | 0                      |  | 88,770          |  | 95.2                          |  | 14                            |  |                      | 1,165,899     |                                 |   | 13.79           |  | QFC Supermarket & Drug                                                        
|Frontier Village Shopping Ctr Lake Stevens, WA |  | 19502002                  |  | 196,083                |  | 0                      |  | 196,083         |  | 98.9                          |  | 31                            |  |                      | 2,796,876     |                                 |   | 14.42           |  | Safeway Supermarket, Bartell Drugs, GI Joes                                  
|Garrison Square Vancouver, WA                  |  | 19622003                  |  | 69,790                 |  | 0                      |  | 69,790          |  | 100.0                         |  | 16                            |  |                      | 788,785       |                                 |   | 11.30           |  | Wild Oats, Hi School Pharmacy                                                 
|Gateway Shopping Center Mill Creek, WA         |  | 19951998                  |  | 96,671                 |  | 0                      |  | 96,671          |  | 100.0                         |  | 22                            |  |                      | 1,760,450     |                                 |   | 18.21           |  | Safeway Supermarket                                                           
|Olympia Square Olympia, WA                     |  | 1988                      |  | 168,209                |  | 0                      |  | 168,209         |  | 96.1                          |  | 35                            |  |                      | 2,062,206     |                                 |   | 12.76           |  | Albertsons Supermarket & Drug, Ross Dress for Less                           
|Olympia West Center Olympia, WA                |  | 1995                      |  | 69,212                 |  | 3,800                  |  | 73,012          |  | 100.0                         |  | 6                             |  |                      | 1,332,573     |                                 |   | 19.25           |  | Barnes & Noble, Good Guys, Petco                                              
|Pacific Commons Spanaway, WA                   |  | 19881990                  |  | 151,233                |  | 55,241                 |  | 206,474         |  | 91.4                          |  | 22                            |  |                      | 1,465,224     |                                 |   | 10.60           |  | The Marketplace Supermarket, K-Mart (2)                                       
|Panther Lake Kent, WA                          |  | 19881992                  |  | 69,090                 |  | 44,237                 |  | 113,327         |  | 100.0                         |  | 22                            |  |                      | 901,583       |                                 |   | 13.05           |  | Albertsons Supermarket (2), Rite Aid                                         
|Silverdale Shopping Center Silverdale, WA      |  | 1990                      |  | 67,287                 |  | 0                      |  | 67,287          |  | 93.5                          |  | 20                            |  |                      | 874,419       |                                 |   | 13.90           |  | Ross Dress for Less                                                           
|Sunset Square Bellingham, WA                   |  | 1989                      |  | 376,023                |  | 10,634                 |  | 386,657         |  | 100.0                         |  | 43                            |  |                      | 3,253,772     |                                 |   | 8.65            |  | Cost Cutter Supermarket, K-Mart, Jo-Ann Fabrics & Crafts, Rite Aid, Office Max
|Tacoma Central Tacoma, WA                      |  | 19871994                  |  | 156,916                |  | 165,519                |  | 322,435         |  | 100.0                         |  | 22                            |  |                      | 2,036,737     |                                 |   | 12.98           |  | Target (2), Top Food & Drug (2), Petsmart, Office Depot, TJ Maxx              
|                                               |  |                           |  |                        |  |                        |  |                 |  |                               |  |                               |  |                      |               |                                 |   |                 |  |                                                                               
|Region Total/Weighted Average                  |  |                           |  | 1,894,797              |  | 460,731                |  | 2,355,528       |  | 97.0                          |  | 313                           |  | $                    | 21,875,425.74 |                                 | $ | 11.91           |  |                                                                               
|                                               |  |                           |  |                        |  |                        |  |                 |  |                               |  |                               |  |                      |               |                                 |   |                 |  |                                                                               



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Property Summary

12/31/2003



|                                            |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                  |  |                                                                                            
|------------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- |  | -------------------------------- |  | -------------------------------------------------------------------------------------------
|Property and Location                       |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2003 (4) |  | Total # Tenants 12/31/2003 (4) |  | Annual Base Rent (1) |  | Ann. BaseRent/Leased Sq. Ft. (3) |  | Major Retailers                                                                            
|OREGON                                      |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |  |                                  |  |                                                                                            
|Albany Plaza Albany, OR                     |  | 19772003                  |  | 109,891                 |  | 30,998                 |  | 140,889         |  | 100.0                         |  | 20                             |  | 912,223              |  | 8.30                             |  | Albertsons Supermarket (2), Rite Aid, Big Lots, Dollar Tree                               
|Bear Creek Plaza Medford, OR                |  | 19771998                  |  | 183,850                 |  | 0                      |  | 183,850         |  | 96.8                          |  | 26                             |  | 1,378,583            |  | 7.75                             |  | Bi-Mart Drug, TJ Maxx, Big Lots, Factory 2 U, Value Village                                
|Canby Square Shopping Center Canby, OR      |  | 19762002                  |  | 115,701                 |  | 0                      |  | 115,701         |  | 100.0                         |  | 14                             |  | 1,140,831            |  | 9.86                             |  | Safeway Supermarket, Rite Aid, Factory 2 U                                                 
|East Burnside Plaza Portland, OR            |  | 1999                      |  | 38,363                  |  | 0                      |  | 38,363          |  | 100.0                         |  | 7                              |  | 618,918              |  | 16.13                            |  | QFC Supermarket                                                                            
|Gresham Town Fair Gresham, OR               |  | 1988                      |  | 265,765                 |  | 0                      |  | 265,765         |  | 94.1                          |  | 36                             |  | 2,406,275            |  | 9.62                             |  | Ross Dress for Less, GI Joes, Craft Warehouse                                             
|Hermiston Plaza Hermiston, OR               |  | 19741999                  |  | 150,396                 |  | 0                      |  | 150,396         |  | 96.1                          |  | 23                             |  | 959,826              |  | 6.64                             |  | Safeway Supermarket & Drug, Big Lots, Dollar Tree                                          
|Hood River Shopping Center Hood River, OR   |  | 19702000                  |  | 108,554                 |  | 0                      |  | 108,554         |  | 100.0                         |  | 12                             |  | 959,172              |  | 8.84                             |  | Rosauers Supermarket, Hi School Pharmacy                                                  
|Medford Center Medford, OR                  |  | 19591998                  |  | 330,568                 |  | 84,746                 |  | 415,314         |  | 84.6                          |  | 41                             |  | 2,978,026            |  | 10.64                            |  | Cinemark Theatres, Sears, Rite Aid (2), Safeway (2), Circuit City, 24 Hour Fitness         
|Menlo Park Plaza Portland, OR               |  | 19572001                  |  | 112,755                 |  | 0                      |  | 112,755         |  | 100.0                         |  | 20                             |  | 1,363,667            |  | 12.09                            |  | Walgreens, Staples                                                                         
|Milwaukie Marketplace Milwaukie, OR         |  | 1989                      |  | 185,859                 |  | 10,323                 |  | 196,182         |  | 100.0                         |  | 29                             |  | 1,752,905            |  | 9.43                             |  | Albertsons Supermarket, Rite Aid, Jo-Ann Fabrics & Crafts, Factory 2 U                    
|Oregon City Shopping Center Oregon City, OR |  | 19611999                  |  | 246,855                 |  | 0                      |  | 246,855         |  | 62.7                          |  | 35                             |  | 1,820,418            |  | 11.76                            |  | Rite Aid, Fishermans Marine Supply, Michaels Arts & Crafts                               
|Oregon Trail Center Gresham, OR             |  | 19771999                  |  | 208,316                 |  | 0                      |  | 208,316         |  | 100.0                         |  | 32                             |  | 2,160,747            |  | 10.37                            |  | Natures Supermarket, Office Depot, Big 5 Sporting Goods, Big Lots, Michaels Arts & Crafts
|Pioneer Plaza Springfield, OR               |  | 1988                      |  | 96,027                  |  | 4,294                  |  | 100,321         |  | 96.2                          |  | 20                             |  | 905,544              |  | 9.81                             |  | Safeway Supermarket & Drug                                                                 
|Powell Valley Junction Gresham, OR          |  | 19901999                  |  | 107,583                 |  | 0                      |  | 107,583         |  | 95.6                          |  | 7                              |  | 923,512              |  | 8.98                             |  | Food 4 Less Supermarket, Cascade Athletic Club                                             
|Powell Villa Portland, OR                   |  | 1997                      |  | 61,884                  |  | 0                      |  | 61,884          |  | 100.0                         |  | 10                             |  | 786,916              |  | 12.72                            |  | Ace Hardware, State of Oregon                                                              
|Rockwood Plaza Gresham, OR                  |  | 19652000                  |  | 92,872                  |  | 0                      |  | 92,872          |  | 100.0                         |  | 16                             |  | 794,648              |  | 8.56                             |  | Dollar Tree, Volunteers of America                                                         



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Property Summary

12/31/20003



|                                        |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |               |                                 |   |                 |  |                                                                                       
|--------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ------------------------------ |  | -------------------- | ------------- | ------------------------------- | - | --------------- |  | --------------------------------------------------------------------------------------
|Property and Location                   |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2003 (4) |  | Total # Tenants 12/31/2003 (4) |  | Annual Base Rent (1) |               | Ann. BaseRent/LeasedSq. Ft. (3) |   | Major Retailers
|Sandy Marketplace Sandy, OR             |  | 19851997                  |  | 101,438                 |  | 0                      |  | 101,438         |  | 100.0                         |  | 21                             |  |                      | 991,029       |                                 |   | 9.77            |  | Danielsons Supermarket, Hi School Pharmacy, Factory 2 U                              
|Southgate Shopping Center Milwaukie, OR |  | 19561999                  |  | 50,862                  |  | 0                      |  | 50,862          |  | 100.0                         |  | 10                             |  |                      | 664,641       |                                 |   | 13.07           |  | Office Max                                                                            
|Sunset Esplanade Hillsboro, OR          |  | 1989                      |  | 256,034                 |  | 101,909                |  | 357,943         |  | 98.8                          |  | 44                             |  |                      | 2,977,334     |                                 |   | 11.77           |  | Safeway Supermarket, Target (2), Petco, Factory 2 U, Jo-Ann Fabrics & Crafts, Rite Aid
|Sunset Mall Portland, OR                |  | 19731996                  |  | 115,635                 |  | 2,500                  |  | 118,135         |  | 94.5                          |  | 26                             |  |                      | 1,223,061     |                                 |   | 11.19           |  | Safeway Supermarket & Drug                                                            
|Tanasbourne Village Hillsboro, OR       |  | 1990                      |  | 210,992                 |  | 1,209                  |  | 212,201         |  | 99.0                          |  | 40                             |  |                      | 3,211,335     |                                 |   | 15.37           |  | Safeway Supermarket, Rite Aid, Hillsboro Library                                      
|                                        |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |               |                                 |   |                 |  |                                                                                       
|Region Total/Weighted Average           |  |                           |  | 3,150,200               |  | 235,979                |  | 3,386,179       |  | 94.0                          |  | 489                            |  | $                    | 30,929,610.15 |                                 | $ | 10.45           |  |                                                                                       
|                                        |  |                           |  |                         |  |                        |  |                 |  |                               |  |                                |  |                      |               |                                 |   |                 |  |                                                                                       



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Property Summary

12/31/2003



|                                          |  |                           |  |                         |  |                        |  |                 |  |                               |  |                               |  |                      |               |                                   |   |                 |  |                                                                                  
|----------------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ----------------------------- |  | -------------------- | ------------- | --------------------------------- | - | --------------- |  | ---------------------------------------------------------------------------------
|Property and Location                     |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2003 (4) |  | Total #Tenants 12/31/2003 (4) |  | Annual Base Rent (1) |               | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|NEVADA                                    |  |                           |  |                         |  |                        |  |                 |  |                               |  |                               |  |                      |               |                                   |   |                 |  |                                                                                  
|Caughlin Ranch Reno, NV                   |  | 19901991                  |  | 113,488                 |  | 0                      |  | 113,488         |  | 95.3                          |  | 27                            |  |                      | 1,506,919     |                                   |   | 13.93           |  | Scolaris Supermarket                                                            
|Cheyenne Commons Las Vegas, NV            |  | 1992                      |  | 362,758                 |  | 0                      |  | 362,758         |  | 99.4                          |  | 47                            |  |                      | 4,709,975     |                                   |   | 13.06           |  | Wal-Mart, 24 Hour Fitness, Marshalls, Ross Dress for Less                       
|Decatur Meadows Las Vegas, NV             |  | 1979                      |  | 111,245                 |  | 0                      |  | 111,245         |  | 97.5                          |  | 15                            |  |                      | 1,020,548     |                                   |   | 9.41            |  | Vons Supermarket, Factory 2 U, Cort Furniture Rental                            
|Eagle Station Carson City, NV             |  | 19821994                  |  | 114,258                 |  | 60,000                 |  | 174,258         |  | 87.4                          |  | 22                            |  |                      | 954,488       |                                   |   | 9.56            |  | Raleys Supermarket, Mervyns (2)                                                
|Elko Junction Shopping Center Elko, NV    |  | 19961997                  |  | 170,812                 |  | 0                      |  | 170,812         |  | 92.6                          |  | 15                            |  |                      | 1,524,403     |                                   |   | 9.64            |  | Raleys Supermarket, Builders Mart                                              
|Green Valley Town & Country Henderson, NV |  | 1990                      |  | 130,722                 |  | 0                      |  | 130,722         |  | 96.4                          |  | 35                            |  |                      | 1,919,072     |                                   |   | 15.23           |  | Albertsons/Sav-On Superstore                                                    
|Mira Loma Center Reno, NV                 |  | 1985                      |  | 101,707                 |  | 0                      |  | 101,707         |  | 98.2                          |  | 20                            |  |                      | 1,117,352     |                                   |   | 11.18           |  | Scolaris Supermarket, Longs Drugs, Dollar Tree                                 
|Rainbow Promenade Las Vegas, NV           |  | 19951997                  |  | 228,279                 |  | 0                      |  | 228,279         |  | 100.0                         |  | 26                            |  |                      | 3,319,312     |                                   |   | 14.54           |  | United Artists Theatres, Barnes & Noble, Linens N Things, Office Max, Cost Plus 
|Sahara Pavilion North Las Vegas, NV       |  | 1989                      |  | 333,679                 |  | 0                      |  | 333,679         |  | 92.6                          |  | 60                            |  |                      | 4,314,045     |                                   |   | 13.96           |  | Vons Supermarket, T.J. Maxx, Sheplers, Borders Books, Golds Gym, Floors N More
|Sahara Pavilion South Las Vegas, NV       |  | 1990                      |  | 160,842                 |  | 0                      |  | 160,842         |  | 89.8                          |  | 23                            |  |                      | 2,050,388     |                                   |   | 14.20           |  | Sports Authority, Office Max, Michaels Arts & Crafts, Pier One                  
|West Town Winnemucca, NV                  |  | 19781991                  |  | 65,424                  |  | 0                      |  | 65,424          |  | 100.0                         |  | 2                             |  |                      | 463,244       |                                   |   | 7.08            |  | Raleys Supermarket                                                              
|Winterwood Pavilion Las Vegas, NV         |  | 1990                      |  | 144,653                 |  | 0                      |  | 144,653         |  | 87.3                          |  | 23                            |  |                      | 1,319,920     |                                   |   | 10.45           |  | Vons Supermarket & Drug, Aaron Rents                                            
|                                          |  |                           |  |                         |  |                        |  |                 |  |                               |  |                               |  |                      |               |                                   |   |                 |  |                                                                                  
|Region Total/Weighted Average             |  |                           |  | 2,037,867               |  | 60,000                 |  | 2,097,867       |  | 94.9                          |  | 315                           |  | $                    | 24,219,664.74 |                                   | $ | 12.52           |  |                                                                                  
|                                          |  |                           |  |                         |  |                        |  |                 |  |                               |  |                               |  |                      |               |                                   |   |                 |  |                                                                                  



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Property Summary

12/31/2003



|                                   |  |                           |  |                         |  |                        |  |                 |  |                               |  |                               |  |                      |              |                                   |   |                 |  |                                                    
|---------------------------------- |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ----------------------------- |  | -------------------- | ------------ | --------------------------------- | - | --------------- |  | ---------------------------------------------------
|Property and Location              |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2003 (4) |  | Total #Tenants 12/31/2003 (4) |  | Annual Base Rent (1) |              | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|ARIZONA                            |  |                           |  |                         |  |                        |  |                 |  |                               |  |                               |  |                      |              |                                   |   |                 |  |                                                    
|Kmart Phoenix Phoenix, AZ          |  | 1990                      |  | 104,204                 |  | 0                      |  | 104,204         |  | 0.0                           |  | 0                             |  |                      | 0            |                                   |   | 0.00            |  |                                                    
|North Mountain Village Phoenix, AZ |  | 1985                      |  | 94,379                  |  | 53,131                 |  | 147,510         |  | 95.1                          |  | 24                            |  |                      | 977,107      |                                   |   | 10.89           |  | Frys Supermarket (2), T. J. Maxx                  
|Southern Palms Center Tempe, AZ    |  | 1980                      |  | 255,103                 |  | 0                      |  | 255,103         |  | 79.4                          |  | 34                            |  |                      | 1,958,561    |                                   |   | 9.66            |  | Newflower Supermarket, Staples, True Value Hardware
|                                   |  |                           |  |                         |  |                        |  |                 |  |                               |  |                               |  |                      |              |                                   |   |                 |  |                                                    
|Region Total/Weighted Average      |  |                           |  | 453,686                 |  | 53,131                 |  | 506,817         |  | 64.5                          |  | 58                            |  | $                    | 2,935,668.21 |                                   | $ | 10.04           |  |                                                    
|                                   |  |                           |  |                         |  |                        |  |                 |  |                               |  |                               |  |                      |              |                                   |   |                 |  |                                                    



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Property Summary

12/31/2003



|                                     |  |                           |  |                         |  |                        |  |                 |  |                               |  |                              |  |                      |                |                                   |   |                 |  |                               
|------------------------------------ |  | ------------------------- |  | ----------------------- |  | ---------------------- |  | --------------- |  | ----------------------------- |  | ---------------------------- |  | -------------------- | -------------- | --------------------------------- | - | --------------- |  | ------------------------------
|Property and Location                |  | Year Completed /Renovated |  | Company Owned (Sq. Ft.) |  | Tenant Owned (Sq. Ft.) |  | Total (Sq. Ft.) |  | % Leased as of 12/31/2003 (4) |  | Total#Tenants 12/31/2003 (4) |  | Annual Base Rent (1) |                | Ann. Base Rent/Leased Sq. Ft. (3) |   | Major Retailers
|OTHER                                |  |                           |  |                         |  |                        |  |                 |  |                               |  |                              |  |                      |                |                                   |   |                 |  |                               
|Country Club Center Albuquerque, NM  |  | 19881998                  |  | 57,631                  |  | 63,000                 |  | 120,631         |  | 50.0                          |  | 13                           |  |                      | 351,883        |                                   |   | 12.21           |  | Raleys Supermarket (2)       
|Maysville Marketsquare Maysville, KY |  | 19911993                  |  | 126,507                 |  | 89,612                 |  | 216,119         |  | 100.0                         |  | 20                           |  |                      | 954,541        |                                   |   | 7.55            |  | Kroger Supermarket, JC Penney 
|Memphis Retail Center Memphis, TN    |  | 1990                      |  | 51,542                  |  | 40,000                 |  | 91,542          |  | 94.2                          |  | 11                           |  |                      | 385,795        |                                   |   | 7.95            |  | Hancock Fabrics, Family Dollar
|                                     |  |                           |  |                         |  |                        |  |                 |  |                               |  |                              |  |                      |                |                                   |   |                 |  |                               
|Region Total/Weighted Average        |  |                           |  | 235,680                 |  | 192,612                |  | 428,292         |  | 86.5                          |  | 44                           |  | $                    | 1,692,218.21   |                                   | $ | 8.30            |  |                               
|                                     |  |                           |  |                         |  |                        |  |                 |  |                               |  |                              |  |                      |                |                                   |   |                 |  |                               
|                                     |  |                           |  |                         |  |                        |  |                 |  |                               |  |                              |  |                      |                |                                   |   |                 |  |                               
|                                     |  |                           |  |                         |  |                        |  |                 |  |                               |  |                              |  |                      |                |                                   |   |                 |  |                               
|Portfolio Total/Weighted Average     |  |                           |  | 18,422,388              |  | 2,340,102              |  | 20,762,490      |  | 95.4                          |  | 3,199                        |  | $                    | 213,074,336.82 |                                   | $ | 12.13           |  |                               
|                                     |  |                           |  |                         |  |                        |  |                 |  |                               |  |                              |  |                      |                |                                   |   |                 |  |                               



|(1) | Annualized base rent for all leases in place at December 31, 2003 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, 2003.
|--- | --------------------------------------------------------------------------



|(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.
|--- | ----------------------------------------------



25



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Tenant Diversification Summary



|               |  |                                   |  |                                  |  |                                    |  |                                                   |  |        |  |      
|-------------- |  | --------------------------------- |  | -------------------------------- |  | ---------------------------------- |  | ------------------------------------------------- |  | ------ |  | -----
|Tenant Type    |  | Total GrossLeasableArea (sq. ft.) |  | Numberof Tenantsas of12/31/2003  |  | % ofTotalLeasedGLA as of12/31/2003 |  | Annualized Base Rent in Place atDecember 31, 2003
|               |  |                                   |  | TotalAnnualizedBase Rent ($) (3) |  | Percentageof Total(%)              |  | AnnualizedBase Rent/LeasedSq. ft. ($)(4)         
|National (1)   |  | 10,742,947                        |  | 1,360                            |  | 61.15                              |  | 120,604,556                                       |  | 56.60  |  | 11.23
|Regional (1)   |  | 3,124,847                         |  | 261                              |  | 17.79                              |  | 30,428,490                                        |  | 14.28  |  | 9.74 
|Local (1)      |  | 3,701,543                         |  | 1,578                            |  | 21.07                              |  | 62,041,292                                        |  | 29.12  |  | 16.76
|               |  |                                   |  |                                  |  |                                   
|Total          |  | 17,569,337                        |  | 3,199                            |  | 100.00                             |  | 213,074,337                                       |  | 100.00 |  | 12.13
|               |  |                                   |  |                                  |  |                                   
|Anchor (2)     |  | 9,981,521                         |  | 286                              |  | 56.81                              |  | 83,518,603                                        |  | 39.20  |  | 8.37 
|Non-Anchor (2) |  | 7,587,816                         |  | 2,913                            |  | 43.19                              |  | 129,555,734                                       |  | 60.80  |  | 17.07
|               |  |                                   |  |                                  |  |                                   
|Total          |  | 17,569,337                        |  | 3,199                            |  | 100.00                             |  | 213,074,337                                       |  | 100.00 |  | 12.13



|(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.
|--- | -------------------------------------------



26



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Major Tenants as of December 31, 2003



|                            |  |                 |  |                                  |                             |                    |                              |  |                                             |            |  |   |       |  |       |  
|--------------------------- |  | --------------- |  | -------------------------------- | --------------------------- | ------------------ | ---------------------------- |  | ------------------------------------------- | ---------- |  | - | ----- |  | ----- | -
|                            |  | Number ofLeases |  | Leased GLAas of12/31/03(Sq. Ft.) |                             | % of TotalOwnedGLA |                              |  | Annualized Base Rent in Place at 12/31/2003 |           
|Tenants                     |  |                 |  |                                  | Total Ann. BaseRent ($) (1) |                    | Ann. BaseRent/Sq. Ft.($) (2) |  | % of TotalAnn. BaseRent                     |           
|VONS/SAFEWAY/PAK N SAVE    |  | 24              |  | 1,116,552                        |                             | 6.33               | %                            |  |                                             | 9,119,902  |  |   | 8.17  |  | 4.26  | %
|RALEYS                     |  | 16              |  | 951,326                          |                             | 5.40               |                              |  |                                             | 6,422,172  |  |   | 6.75  |  | 3.00  |  
|WAL-MART                    |  | 5               |  | 527,329                          |                             | 2.99               |                              |  |                                             | 5,425,180  |  |   | 10.29 |  | 2.53  |  
|ALBERTSONS/SAVON            |  | 19              |  | 722,420                          |                             | 4.10               |                              |  |                                             | 4,532,768  |  |   | 6.27  |  | 2.12  |  
|KROGER/RALPHS/QFC/FOOD4LESS |  | 11              |  | 402,175                          |                             | 2.28               |                              |  |                                             | 3,835,668  |  |   | 9.54  |  | 1.79  |  
|RITE AID                    |  | 22              |  | 546,110                          |                             | 3.10               |                              |  |                                             | 3,661,186  |  |   | 6.70  |  | 1.71  |  
|ROSS DRESS FOR LESS         |  | 12              |  | 324,403                          |                             | 1.84               |                              |  |                                             | 2,858,922  |  |   | 8.81  |  | 1.34  |  
|BLOCKBUSTER VIDEO           |  | 25              |  | 138,618                          |                             | 0.79               |                              |  |                                             | 2,694,509  |  |   | 19.44 |  | 1.26  |  
|SAVE MART                   |  | 9               |  | 362,747                          |                             | 2.06               |                              |  |                                             | 2,469,073  |  |   | 6.81  |  | 1.15  |  
|T.J. MAXX/MARSHALLS        |  | 9               |  | 259,679                          |                             | 1.47               |                              |  |                                             | 2,282,828  |  |   | 8.79  |  | 1.07  |  
|                            |  |                 |  |                                  |                             |                    |                              |  |                                             |            |  |   |       |  |       |  
|Total:                      |  | 152             |  | 5,351,359                        |                             | 30.36              | %                            |  | $                                           | 43,302,208 |  | $ | 8.09  |  | 20.23 | %
|                            |  |                 |  |                                  |                             |                    |                              |  |                                             |            |  |   |       |  |       |  



|(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.
|--- | ----------------------------------------------------



27



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##### Table of Contents

Lease Expiration Analysis *



As of 12/31/2003



|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                              
|------------------------- |  | --------------------- |  | ------------------------- |  | ---------------------------------- | - | --------------------- | ----------- |  | ------------------------------------------- | - | ------------------------- | ----- |  | -----------------------------
|                          |  |                       |  |                           |  |                                    |   |                       |             |  | Annualized Base Rent in Place at 12/31/2003
|                          |  | 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                         |  | 2004                  |  | 5                         |  | 194,049                            |   | 1.12                  | %           |  | 1,112,570                                   |   | 0.53                      | %     |  | 5.73                         
|2                         |  | 2005                  |  | 26                        |  | 604,307                            |   | 3.49                  | %           |  | 5,149,632                                   |   | 2.44                      | %     |  | 8.52                         
|3                         |  | 2006                  |  | 28                        |  | 1,104,680                          |   | 6.37                  | %           |  | 10,082,228                                  |   | 4.77                      | %     |  | 9.13                         
|4                         |  | 2007                  |  | 20                        |  | 608,300                            |   | 3.51                  | %           |  | 3,723,721                                   |   | 1.76                      | %     |  | 6.12                         
|5                         |  | 2008                  |  | 29                        |  | 835,113                            |   | 4.82                  | %           |  | 6,567,388                                   |   | 3.11                      | %     |  | 7.86                         
|6                         |  | 2009                  |  | 27                        |  | 1,088,759                          |   | 6.28                  | %           |  | 8,481,740                                   |   | 4.01                      | %     |  | 7.79                         
|7                         |  | 2010                  |  | 18                        |  | 572,415                            |   | 3.30                  | %           |  | 4,825,246                                   |   | 2.28                      | %     |  | 8.43                         
|8                         |  | 2011                  |  | 17                        |  | 513,996                            |   | 2.96                  | %           |  | 4,529,057                                   |   | 2.14                      | %     |  | 8.81                         
|9                         |  | 2012                  |  | 25                        |  | 893,438                            |   | 5.15                  | %           |  | 8,562,481                                   |   | 4.05                      | %     |  | 9.58                         
|10                        |  | 2013                  |  | 19                        |  | 629,423                            |   | 3.63                  | %           |  | 4,878,267                                   |   | 2.31                      | %     |  | 7.75                         
|11                        |  | 2014+                 |  | 70                        |  | 2,872,791                          |   | 16.57                 | %           |  | 25,074,249                                  |   | 11.86                     | %     |  | 8.73                         
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                              
|TOTAL/WEIGHTED AVERAGE    |  | 284                   |  | 9,917,271                 |  | 57.19                              | % |                       | 82,986,581  |  | 39.24                                       | % |                           | 8.37 
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                              
|All Non-Anchor Leases (1) |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |      
|1                         |  | 2004                  |  | 401                       |  | 929,725                            |   | 5.36                  | %           |  | 14,880,091                                  |   | 7.04                      | %     |  | 16.00                        
|2                         |  | 2005                  |  | 486                       |  | 1,135,050                          |   | 6.55                  | %           |  | 19,614,423                                  |   | 9.28                      | %     |  | 17.28                        
|3                         |  | 2006                  |  | 521                       |  | 1,224,303                          |   | 7.06                  | %           |  | 21,566,628                                  |   | 10.20                     | %     |  | 17.62                        
|4                         |  | 2007                  |  | 474                       |  | 1,160,946                          |   | 6.70                  | %           |  | 19,994,583                                  |   | 9.46                      | %     |  | 17.22                        
|5                         |  | 2008                  |  | 432                       |  | 1,168,996                          |   | 6.74                  | %           |  | 19,512,812                                  |   | 9.23                      | %     |  | 16.69                        
|6                         |  | 2009                  |  | 157                       |  | 558,416                            |   | 3.22                  | %           |  | 9,416,174                                   |   | 4.45                      | %     |  | 16.86                        
|7                         |  | 2010                  |  | 77                        |  | 295,063                            |   | 1.70                  | %           |  | 4,969,188                                   |   | 2.35                      | %     |  | 16.84                        
|8                         |  | 2011                  |  | 50                        |  | 187,057                            |   | 1.08                  | %           |  | 4,132,064                                   |   | 1.95                      | %     |  | 22.09                        
|9                         |  | 2012                  |  | 73                        |  | 252,364                            |   | 1.46                  | %           |  | 4,559,468                                   |   | 2.16                      | %     |  | 18.07                        
|10                        |  | 2013                  |  | 76                        |  | 284,238                            |   | 1.64                  | %           |  | 5,544,604                                   |   | 2.62                      | %     |  | 19.51                        
|11                        |  | 2014+                 |  | 62                        |  | 226,296                            |   | 1.31                  | %           |  | 4,293,837                                   |   | 2.03                      | %     |  | 18.97                        
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                              
|TOTAL/WEIGHTED AVERAGE    |  | 2,809                 |  | 7,422,454                 |  | 42.81                              | % |                       | 128,483,872 |  | 60.76                                       | % |                           | 17.31
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                              
|All Leases                |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |      
|1                         |  | 2004                  |  | 406                       |  | 1,123,774                          |   | 6.48                  | %           |  | 15,992,661                                  |   | 7.56                      | %     |  | 14.23                        
|2                         |  | 2005                  |  | 512                       |  | 1,739,357                          |   | 10.03                 | %           |  | 24,764,056                                  |   | 11.71                     | %     |  | 14.24                        
|3                         |  | 2006                  |  | 549                       |  | 2,328,983                          |   | 13.43                 | %           |  | 31,648,856                                  |   | 14.97                     | %     |  | 13.59                        
|4                         |  | 2007                  |  | 494                       |  | 1,769,246                          |   | 10.20                 | %           |  | 23,718,305                                  |   | 11.22                     | %     |  | 13.41                        
|5                         |  | 2008                  |  | 461                       |  | 2,004,109                          |   | 11.56                 | %           |  | 26,080,200                                  |   | 12.33                     | %     |  | 13.01                        
|6                         |  | 2009                  |  | 184                       |  | 1,647,175                          |   | 9.50                  | %           |  | 17,897,914                                  |   | 8.46                      | %     |  | 10.87                        
|7                         |  | 2010                  |  | 95                        |  | 867,478                            |   | 5.00                  | %           |  | 9,794,434                                   |   | 4.63                      | %     |  | 11.29                        
|8                         |  | 2011                  |  | 67                        |  | 701,053                            |   | 4.04                  | %           |  | 8,661,121                                   |   | 4.10                      | %     |  | 12.35                        
|9                         |  | 2012                  |  | 98                        |  | 1,145,802                          |   | 6.61                  | %           |  | 13,121,950                                  |   | 6.21                      | %     |  | 11.45                        
|10                        |  | 2013                  |  | 95                        |  | 913,661                            |   | 5.27                  | %           |  | 10,422,870                                  |   | 4.93                      | %     |  | 11.41                        
|11                        |  | 2014+                 |  | 132                       |  | 3,099,087                          |   | 17.87                 | %           |  | 29,368,086                                  |   | 13.89                     | %     |  | 9.48                         
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                              
|TOTAL/WEIGHTED AVERAGE    |  | 3,093                 |  | 17,339,725                |  | 100.00                             | % |                       | 211,470,452 |  | 100.00                                      | % |                           | 12.20
|                          |  |                       |  |                           |  |                                    |   |                       |             |  |                                             |   |                           |       |  |                              



Note: Number of Leases expiring does
not include tenants on a month-to-month agreement, whose combined occupancy totals 165,618 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.
|--- | -----------------------------------------------------------------------



28



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##### Table of Contents

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



On November 8, 2000, Bryant M. Bennett, as Trustee of the Bryant M. Bennett and Inga A. Bennett Trust U/A October 25, 1990, known as The Bennett Family
Trust, filed a class action complaint in the Superior Court of the State of California, County of Alameda, on behalf of himself and all others similarly situated, against us; Western, WPT; Bradley N. Blake; L. Gerald Hunt; Dennis D. Ryan; James L.
Stell; Reginald B. Oliver; L. Michael Foley; Joseph P. Colmery; Revenue Properties (U.S.), Inc.; and Stuart A. Tanz.



The allegations of the complaint arise from our November 2000 acquisition of Western. Plaintiffs complaint alleges that the merger terms between us
and Western were unfair and violated the defendants fiduciary obligations to Westerns shareholders. On February 22, 2002, the Court granted Plaintiffs motion to certify a plaintiff class.



On October 25, 2002, the Court dismissed the fraud-based claims, the claims
for breach of fiduciary duty in abuse of control and unjust enrichment, and dismissed in part the claim for breach of fiduciary duty. On or about December 10, 2002, the parties reached a final agreement in principle to resolve the litigation. The
proposed settlement provides for payment by us to the plaintiff class in the amount of $975,000, plus an additional $15,000 related to notice and administration costs. The Court granted final approval of the settlement on May 30, 2003 and dismissed
the action.



In addition, 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 2003, 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 March
5, 2004 we had approximately 1,310 stockholders of record and approximately 21,070 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 2002  |  | $    | 30.87 |     | $ | 28.13              |  | $ | 0.475
|Second Quarter 2002 |  | $    | 34.18 |     | $ | 30.42              |  | $ | 0.475
|Third Quarter 2002  |  | $    | 34.75 |     | $ | 29.80              |  | $ | 0.475
|Fourth Quarter 2002 |  | $    | 36.85 |     | $ | 31.90              |  | $ | 0.475
|First Quarter 2003  |  | $    | 39.08 |     | $ | 35.30              |  | $ | 0.500
|Second Quarter 2003 |  | $    | 40.99 |     | $ | 38.55              |  | $ | 0.510
|Third Quarter 2003  |  | $    | 43.50 |     | $ | 40.15              |  | $ | 0.510
|Fourth Quarter 2003 |  | $    | 48.43 |     | $ | 42.95              |  | $ | 0.510



The fourth quarter
2002 and 2003 dividends on an annualized basis amount to $1.90 and $2.04 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.



29



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##### Table of Contents

In February 2003, we issued 100,000 shares of our common stock to Portland Fixture Limited Partnership in
exchange for non-managing member interests in Pan Pacific (Portland), LLC. Portland Fixture Limited Partnership acquired non-managing member interests in Pan Pacific (Portland), LLC in October 1998 in connection with a contribution of real property
to Pan Pacific (Portland), LLC. Portland Fixture Limited Partnership currently has a right to tender its non-managing member interests to us in exchange for a cash amount as determined in accordance with the Amended and Restated Limited Liability
Company Agreement of Pan Pacific (Portland), LLC. We may, at our sole option, issue an equivalent number of shares of our common stock in lieu of cash.



|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,
|                                                  |  | 2003                     |           | 2002          |   | 2001          |  | 2000          |           | 1999         
|                                                  |  |                          |           | (revised) (1) |   | (revised) (1) |  | (revised) (1) |           | (revised) (1)
|STATEMENTS OF INCOME DATA:                        |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |        
|Total revenue                                     |  | $                        | 264,622   |               | $ | 189,785       |  | $             | 175,986   |               | $ | 117,947   |  | $ | 99,089 
|Operating and general and administrative expenses |  |                          | 74,620    |               |   | 49,189        |  |               | 45,582    |               |   | 28,337    |  |   | 25,155 
|Merger related expenses                           |  |                          |          |               |   |              |  |               |          |               |   | 3,204     |  |   |       
|Depreciation and amortization                     |  |                          | 40,076    |               |   | 30,328        |  |               | 28,058    |               |   | 19,970    |  |   | 17,241 
|Interest expense                                  |  |                          | 58,473    |               |   | 45,926        |  |               | 46,196    |               |   | 32,112    |  |   | 23,644 
|Income from continuing operations (2)             |  |                          | 88,999    |               |   | 62,885        |  |               | 57,758    |               |   | 32,205    |  |   | 31,891 
|Discontinued operations                           |  |                          | 15,437    |               |   | 14,767        |  |               | 6,464     |               |   | 1,595     |  |   | 685    
|Net income                                        |  |                          | 104,436   |               |   | 77,652        |  |               | 64,222    |               |   | 33,800    |  |   | 32,576 
|Basic earnings per share:                         |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |        
|Income from continuing operations                 |  |                          | 2.26      |               |   | 1.88          |  |               | 1.81      |               |   | 1.42      |  |   | 1.51   
|Discontinued operations                           |  |                          | 0.39      |               |   | 0.44          |  |               | 0.21      |               |   | 0.07      |  |   | 0.03   
|Net income                                        |  |                          | 2.65      |               |   | 2.32          |  |               | 2.02      |               |   | 1.49      |  |   | 1.54   
|Diluted earnings per share:                       |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |        
|Income from continuing operations                 |  |                          | 2.23      |               |   | 1.87          |  |               | 1.80      |               |   | 1.42      |  |   | 1.51   
|Discontinued operations                           |  |                          | 0.38      |               |   | 0.43          |  |               | 0.17      |               |   | 0.06      |  |   | 0.03   
|Net income                                        |  |                          | 2.61      |               |   | 2.30          |  |               | 1.97      |               |   | 1.48      |  |   | 1.54   
|Distributions declared                            |  |                          | 2.03      |               |   | 1.90          |  |               | 1.82      |               |   | 1.54      |  |   | 1.60   
|                                                  | 
|                                                  |  | As of December 31,      
|                                                  |  | 2003                     |           | 2002          |   | 2001          |  | 2000          |           | 1999         
|BALANCE SHEET DATA:                               |  |                          |           |               |   |               |  |               |           |               |   |           |  |   |        
|Properties, net                                   |  | $                        | 1,773,894 |               | $ | 1,306,033     |  | $             | 1,233,189 |               | $ | 1,194,824 |  | $ | 748,061
|Total assets                                      |  |                          | 1,863,348 |               |   | 1,424,240     |  |               | 1,339,290 |               |   | 1,297,690 |  |   | 784,537
|Notes payable                                     |  |                          | 345,077   |               |   | 239,541       |  |               | 229,135   |               |   | 233,911   |  |   | 228,490
|Line of credit and term loan payable              |  |                          | 48,250    |               |   | 66,000        |  |               | 165,300   |               |   | 267,650   |  |   | 128,800
|Senior notes                                      |  |                          | 503,708   |               |   | 428,677       |  |               | 273,800   |               |   | 124,850   |  |   |       
|Minority interests                                |  |                          | 32,325    |               |   | 15,804        |  |               | 20,748    |               |   | 41,754    |  |   | 23,347 
|Stockholders equity                              |  |                          | 892,285   |               |   | 648,635       |  |               | 622,458   |               |   | 606,998   |  |   | 381,866



|(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, 2002, 2001, 2000
and 1999 to separately reflect the results of discontinued operations for properties that were sold during the year ended December 31, 2003. 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, 2002, 2001, 2000 and 1999.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



30



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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, 2002 and 2001 to separately reflect the results of discontinued operations for properties that were sold during the year ended
December 31, 2003. The revision had no impact on our consolidated balance sheets. The revision had no impact on net income or net income per share of common stock for the years ended December 31, 2002 and 2001. 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 accounting principles generally accepted in the United States of America. 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 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, 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. During the year ended December 31, 2002, nine non-strategic assets were sold, the proceeds of which were used to purchase
six shopping center assets. During the year ended December 31, 2001, eight non-strategic assets were sold, the proceeds of which were used to purchase four shopping center assets.



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



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$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 as of December 31, 2003 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.



On November 13, 2000, we acquired Western
Properties Trust, a California real estate investment trust. The transaction was a stock for stock exchange whereby Western common shares and units were exchanged for newly issued shares of our common stock and operating subsidiary units, based upon
a fixed exchange ratio of 0.62 of a share of our common stock per Western share or operating subsidiary unit. As a result, we issued 10,754,776 shares of our common stock to holders of Western common shares. We are also currently obligated to issue
54,869 shares of our common stock upon the exchange of operating subsidiary units held by limited partners of Pan Pacific (Pinecreek), L.P., formerly Western/Pinecreek, L.P., or pay a cash amount, at our discretion. In connection with this
transaction, we assumed $135,000,000 of Westerns debt obligations.



We expect that the more significant part of our growth in the next year or two will come from rent increases from the re-leasing and re-tenanting initiatives of the assets acquired in the Center Trust acquisition,
from the stabilization of the two other properties acquired during 2003 as well as from additional acquisitions.



Results of Operations



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



Total revenue increased by $74,837,000, or 39.4%, to $264,622,000 for the year ended December 31, 2003, from $189,785,000
for the year ended December 31, 2002.



Rental revenue, which
includes base rent and percentage rent, increased by $58,544,000, or 39.6%, to $206,238,000 for the year ended December 31, 2003, from $147,694,000 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 $16,745,000, or 46.6%, to $52,641,000 for the year ended December 31, 2003, from $35,896,000 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 85.8% for the year ended December 31, 2003
compared to 91.1% 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 Pan Pacifics recovery rate. We expect that the recovery percentage will increase over time as occupancy is increased in the acquired assets.



Other income decreased by $546,000, or 9.0%, to $5,495,000 for the year ended December 31, 2003, from $6,041,000 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 $14,801,000, or 60.3%, to $39,350,000 for the year ended December 31, 2003, from
$24,549,000 for the year ended December 31, 2002. This increase resulted primarily from our acquisition of the Center Trust portfolio. Property taxes increased by $7,122,000, or 47.9%, to $21,984,000 for the year ended December 31, 2003, from
$14,862,000 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.



Depreciation and amortization increased by $9,748,000, or 32.1%, to $40,076,000 for the year ended December 31, 2003, from $30,328,000 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



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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 $15,437,000
reflects the operating results of eight of the nine non-strategic assets that were sold during the year. Included in this amount is gain on sale of $10,571,000. Discontinued operations for the year ended December 31, 2002 of $14,767,000 reflects the
operating results of three of the nine non-strategic assets that were sold during the year ended December 31, 2003 and were owned in 2002 and nine non-strategic assets that were sold during the second half of 2002. Included in this amount is gain on
sale of $8,702,000.



Comparison of the Year Ended December
31, 2002 to the Year Ended December 31, 2001



Total
revenue increased by $13,799,000, or 7.8%, to $189,785,000 for the year ended December 31, 2002, from $175,986,000 for the year ended December 31, 2001.



Rental revenue, which includes base rent and percentage rent, increased by $11,735,000, or 8.6%, to $147,694,000 for the year ended December 31, 2002,
from $135,959,000 for the year ended December 31, 2001. The increase in rental revenue resulted principally from portfolio occupancy increases and re-leasing and re-tenanting initiatives of six property acquisitions in 2002, four property
acquisitions in 2001 and the properties acquired through the Western transaction in November 2000.



Recoveries from tenants, which represents reimbursements from tenants for property operating expenses and property taxes, increased by $4,580,000, or
14.6%, to $35,896,000 for the year ended December 31, 2002, from $31,316,000 for the year ended December 31, 2001. This increase resulted primarily from portfolio occupancy increases and re-leasing and re-tenanting initiatives of six property
acquisitions in 2002, four property acquisitions in 2001 and the properties acquired through the Western transaction in November 2000. In addition, recoveries from tenants increased because recoverable expenses increased. Recoveries from tenants
were 91.1% for the year ended December 31, 2002 compared to 89.9% for the year ended December 31, 2001.



Other income decreased by $1,833,000, or 23.3%, to $6,041,000 for the year ended December 31, 2002, from $7,874,000 for the year ended December 31, 2001.
The decrease resulted principally from a reduction of interest income on corporate notes receivable as certain notes were repaid in the fourth quarter of 2001 and during 2002 as well as a reduction in management fees which resulted from an increase
in our ownership percentage of certain subsidiary entities. The decrease also resulted from a reduction in lease termination fee income compared to the prior year and an increase in common area maintenance billing adjustments for 2001 that were
credited back to tenants.



Property operating expenses
increased by $2,890,000, or 13.3%, to $24,549,000 for the year ended December 31, 2002, from $21,659,000 for the year ended December 31, 2001. This increase resulted primarily from six property acquisitions in 2002, four property acquisitions in
2001 as well as an increase in insurance costs as a result of added coverage. Property taxes increased by $1,681,000, or 12.8%, to $14,862,000 from $13,181,000 for the year ended December 31, 2002, compared to the year ended December 31, 2001. The
increase in property taxes was primarily the result of property tax re-assessments on the assets acquired in the Western transaction as well as property tax expense for the assets acquired in 2002 and 2001.



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Depreciation and amortization increased by $2,270,000, or 8.1%, to $30,328,000 for the year ended
December 31, 2002, from $28,058,000 for the year ended December 31, 2001. This was primarily due to additional depreciation expense on tenant improvements, building renovations and pad build-out expenditures incurred during 2001 and 2002 as well as
depreciation expense on the assets acquired during 2002 and 2001.



Interest expense decreased by $270,000, or 0.6%, to $45,926,000 for the year ended December 31, 2002, from $46,196,000 for the year ended December 31, 2001. The decrease was primarily the result of a reduction in the LIBOR component of our
borrowing cost under our revolving credit facility over the comparable period in the prior year. This decrease in our borrowing cost was partially offset by an increase in interest expense as a result of additional amounts drawn on our revolving
credit facility to finance properties acquired during 2002 and 2001. Interest expense also increased as a result of our issuance of $150,000,000 in aggregate principal amount of senior notes in April 2001, our issuance of $55,000,000 in aggregate
principal amount of senior notes in June 2002 and our issuance of $100,000,000 in aggregate principal amount of senior notes in December 2002. The stated interest rates of 7.95%, 5.75% and 6.125% on the senior note issuances, respectively, are
higher than our cost to borrow funds under our revolving credit facility and term credit loan which were paid down with the net proceeds of the notes offerings.



General and administrative expenses increased by $258,000, or 2.8%, to $9,426,000 for the year ended December 31, 2002, from $9,168,000 for the year
ended December 31, 2001. This increase resulted primarily from annual compensation increases during 2002. As a percentage of total revenue, general and administrative expenses were 5.0% for the year ended December 31, 2002 as compared to 5.2% for
the year ended December 31, 2001.



Gain on sale of real estate
totaling $4,129,000 in 2001 resulted from the sale of eight non-strategic assets during the year ended December 31, 2001. Gain on sales of non-strategic assets in 2002 are reported under discontinued operations.



Discontinued operations for the years ended December 31, 2002 and 2001 of
$14,767,000 and $6,464,000, respectively, reflect the operating results of the nine non-strategic assets that were sold during the year ended December 31, 2002. Included in the discontinued operations of $14,767,000 for 2002 are gains on sales of
real estate of $8,702,000.



Funds from Operations



The White Paper on Funds from Operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts (NAREIT) in April 2002 (the White Paper) defines Funds from Operations as net income (computed in accordance with accounting principles generally accepted in the
United States of America, GAAP), excluding gains (or losses) on sales of property, plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We believe that Funds from Operations (FFO)
is an important supplemental measure of operating performance for a real estate investment trust. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), the accounting
presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment
trust that uses historical cost accounting for depreciation could be less informative. The term FFO was designed by the real estate investment trust industry to address this issue. We compute Funds from Operations in accordance with standards
established by the White Paper. Our computation of Funds from Operations may, however, differ from the methodology for calculating Funds from Operations used by other equity REITs and, therefore, may not be comparable to these other REITs. FFO does
not represent cash generated from operating activities in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to GAAP net income. FFO, as defined by us, may not be
comparable to similarly entitled items reported by other real estate investment trusts that do not define it exactly as the NAREIT definition.



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The following table presents our Funds from Operations:



|                                                                                  |  |                                  |             |   |      |   |             |      |  |   |            |  
|--------------------------------------------------------------------------------- |  | -------------------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ---------- | -
|                                                                                  |  | For the years ended December 31, |            
|                                                                                  |  | 2003                             |             |   | 2002 |   |             | 2001 | 
|Net income                                                                        |  | $                                | 104,436,000 |   |      | $ | 77,652,000  |      |  | $ | 64,222,000 |  
|Add:                                                                              |  |                                  |             |   |      |   |             |      |  |   |            |  
|Depreciation and amortization                                                     |  |                                  | 40,076,000  |   |      |   | 30,328,000  |      |  |   | 28,058,000 |  
|Depreciation on discontinued operations                                           |  |                                  | 287,000     |   |      |   | 1,002,000   |      |  |   | 1,220,000  |  
|Depreciation on unconsolidated entities                                           |  |                                  | 236,000     |   |      |   | 197,000     |      |  |   | 83,000     |  
|Operating subsidiary minority interests                                           |  |                                  | 1,703,000   |   |      |   | 1,457,000   |      |  |   | 2,521,000  |  
|Less:                                                                             |  |                                  |             |   |      |   |             |      |  |   |            |  
|Net gain on sale of real estate                                                   |  |                                  | (10,571,000 | ) |      |   | (8,702,000  | )    |  |   | (4,129,000 | )
|Depreciation on minority interests                                                |  |                                  | (213,000    | ) |      |   |            |      |  |   |           |  
|Depreciation on non-real estate corporate assets                                  |  |                                  | (441,000    | ) |      |   | (560,000    | )    |  |   | (523,000   | )
|                                                                                  |  |                                  |             |   |      |   |             |      |  |   |            |  
|Funds from Operations                                                             |  | $                                | 135,513,000 |   |      | $ | 101,374,000 |      |  | $ | 91,452,000 |  
|                                                                                  |  |                                  |             |   |      |   |             |      |  |   |            |  
|Weighted average number of shares of common stock outstanding (assuming dilution) |  |                                  | 40,707,044  |   |      |   | 34,431,113  |      |  |   | 33,875,339 |  



Cash Flows



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



Net cash provided by operating activities
increased by $47,775,000 to $128,598,000 for the year ended December 31, 2003, as compared to $80,823,000 for the year ended December 31, 2002. The increase was primarily the result of an increase in operating income due to the acquisition of Center
Trust, a decrease in prepaid expenses and an increase in accounts payable, accrued expenses and other liabilities.



Net cash provided by investing activities increased by $218,507,000 to $115,138,000 for the year ended December 31, 2003, as compared to net cash used in
investing activities of $103,369,000 for the year ended December 31, 2002. The increase was primarily the result of proceeds from the sale of real estate, the receipt of equity repayments from an unconsolidated entity, a decrease in acquisitions of
and additions to properties, a decrease in funds held in escrow pending property acquisitions and a decrease in the issuance of notes receivable 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.



Comparison of the Year Ended December 31, 2002 to the Year Ended December 31, 2001



Net cash provided by operating activities increased by $8,604,000 to $80,823,000 for the year ended December 31, 2002, as compared to $72,219,000 for the
year ended December 31, 2001. The increase was primarily the result of an increase in operating income due to property acquisitions. This increase was partially offset by an increase in income from discontinued operations including the gain on sale
thereon, a decrease in the change in other assets and a decrease in accounts payable, accrued expenses and other liabilities.



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Net cash used in investing activities increased by $56,638,000 to $103,369,000 for the year ended
December 31, 2002, as compared to $46,731,000 for the year ended December 31, 2001. The increase was primarily the result of an increase in acquisitions of and additions to properties, an increase in funds held in escrow pending property
acquisitions and an increase in redemption of operating subsidiary units. These increases were offset by an increase in proceeds from sale of real estate, an increase in collections of notes receivable and a decrease in the issuance of notes
receivable.



Net cash provided by financing activities
increased by $44,648,000 to $13,631,000 for the year ended December 31, 2002, as compared to net cash used in financing activities of $31,017,000 for the year ended December 31, 2001. The increase primarily resulted from an increase in notes payable
proceeds, an increase in line of credit proceeds, an increase in issuance of senior notes, a decrease in repurchase of common shares and an increase in issuance of common shares. These increases were offset by an increase in line of credit payments
and an increase in distributions paid.



Liquidity and Capital
Resources



Our total market capitalization at December 31,
2003 was approximately $2,856,125,000, based on the market closing price of our common stock at December 31, 2003 of $47.65 per share (assuming the conversion of 820,782 operating subsidiary units to common stock) and our debt outstanding of
approximately $897,035,000 (exclusive of accounts payable and accrued expenses). As a result, our debt to total market capitalization ratio was approximately 31.4% at December 31, 2003. 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 March 2003, we entered into a new $300,000,000 revolving
credit facility with a maturity date of March 2006. At December 31, 2003, we had $48,250,000 drawn on our revolving credit facility leaving $251,750,000 available to borrow. At our option, amounts borrowed under our revolving credit facility bear
interest at either LIBOR plus 0.70% or a reference rate. The weighted average interest rate for short-term LIBOR contracts under our revolving credit facility at December 31, 2003 was 1.86%. 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. In September 2003, we drew down $25,923,000 on our revolving credit facility to pay off the mortgage note on the Mineral King property and
the construction loan on the Olympia Place development.



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 June 2002, we issued
$55,000,000 of 5.75% senior notes due June 29, 2007. In December 2002, we issued $100,000,000 of 6.125% senior notes due January 15, 2013. In June 2003, we issued $75,000,000 of 4.70% senior notes due June 1, 2013. The net proceeds from these
offerings were used 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, 2003. 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 have entered into certain related party transactions with executive
officers and affiliates of the Company. Information on these related party transactions can be found in our consolidated financial statements, and the notes thereto, appearing elsewhere in this report.



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, 2001     |  | January 30, 2001  |  | February 16, 2001 |  | March 15, 2001     |  | $                      | 0.455
|June 30, 2001      |  | May 16, 2001      |  | May 25, 2001      |  | June 15, 2001      |  | $                      | 0.455
|September 30, 2001 |  | August 14, 2001   |  | August 31, 2001   |  | September 14, 2001 |  | $                      | 0.455
|December 31, 2001  |  | November 13, 2001 |  | November 30, 2001 |  | December 14, 2001  |  | $                      | 0.455
|March 31, 2002     |  | February 7, 2002  |  | February 22, 2002 |  | March 15, 2002     |  | $                      | 0.475
|June 30, 2002      |  | May 9, 2002       |  | May 31, 2002      |  | June 14, 2002      |  | $                      | 0.475
|September 30, 2002 |  | August 15, 2002   |  | August 30, 2002   |  | September 13, 2002 |  | $                      | 0.475
|December 31, 2002  |  | October 30, 2002  |  | November 29, 2002 |  | December 13, 2002  |  | $                      | 0.475
|March 31, 2003     |  | January 7, 2003   |  | January 14, 2003  |  | February 14, 2003  |  | $                      | 0.500
|June 30, 2003      |  | May 12, 2003      |  | May 23, 2003      |  | June 13, 2003      |  | $                      | 0.510
|September 30, 2003 |  | August 14, 2003   |  | August 29, 2003   |  | September 15, 2003 |  | $                      | 0.510
|December 31, 2003  |  | November 4, 2003  |  | November 28, 2003 |  | December 15, 2003  |  | $                      | 0.510



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. Our remaining equity position of $1,805,000 continues to earn a preferred return of 12%. In addition, we are entitled to receive 25% of the operating cash flows from
the property through November 2008. Proceeds from the returns of capital and cash flow participation were used primarily to repay borrowings under our revolving credit facility. At December 31, 2003, the balance of the Plaza Escuela Holding Co., LLC
loan was $41,529,000. 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 one of two off-balance-sheet financings to which we are a party.



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, 2003, the balance of the loan was $17,735,000. 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 one of two off-balance sheet
financings to which we are a party.



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Contractual Obligations and Contingent Liabilities



All of our indebtedness is disclosed in our consolidated financial
statements, and the notes thereto, appearing elsewhere in this report. Our indebtedness outstanding at December 31, 2003, which includes regularly scheduled principal reductions, balloon payments, scheduled senior note redemptions and amounts due on
our revolving credit facility, is as follows:



|                    |  |        |            
|------------------- |  | ------ | -----------
|Year                |  | Amount
|2004                |  | $      | 68,363,000 
|2005                |  | $      | 13,172,000 
|2006                |  | $      | 108,910,000
|2007                |  | $      | 133,413,000
|2008                |  | $      | 28,864,000 
|2009                |  | $      | 114,473,000
|2010                |  | $      | 49,155,000 
|2011                |  | $      | 157,342,000
|2012                |  | $      | 42,709,000 
|2013 and thereafter |  | $      | 181,000,000



Payments due in the
year 2004 include senior note redemptions of $50,000,000. Payments due in the year 2006 include the balance drawn on our revolving credit facility at December 31, 2003 of $48,250,000 and senior note redemptions of $25,000,000. Payments due in 2007,
2008, 2010, 2011 and 2013 include senior note redemptions of $55,000,000, $25,000,000, $25,000,000, $150,000,000 and $175,000,000, respectively. Payments due in 2013 and thereafter include property level bonds due of $6,000,000. 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 2051. Rental expense was $1,782,000, $348,000 and
$770,000 for the years ended December 31, 2003, 2002 and 2001, respectively. Committed amounts under construction contracts and minimum rentals under noncancellable operating leases in effect at December 31, 2003 were as follows:



|                    |  |   |           
|------------------- |  | - | ----------
|2004                |  | $ | 4,805,000 
|2005                |  |   | 1,268,000 
|2006                |  |   | 1,021,000 
|2007                |  |   | 1,018,000 
|2008                |  |   | 936,000   
|2009 and subsequent |  |   | 10,676,000
|                    |  |   |           
|                    |  | $ | 19,724,000
|                    |  |   |           



Inflation



Substantially all of our leases provide for the recovery of 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.



Impact of Accounting Pronouncements Issued but not Adopted by
the Company



In April 2003, the Financial Accounting
Standards Board (FASB) issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002.
This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments



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embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. The changes in this Statement improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. The adoption of this Interpretation does not have a material effect
on the financial position or results reported by the Company.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics with Both Liabilities and Equity. This Statement establishes standards for the classification and measurement of certain financial
instruments with characteristics of both liabilities and equity. The effective date for certain provisions of SFAS No. 150 has been deferred indefinitely for specified mandatorily redeemable non-controlling interests. The Company has adopted the
disclosure requirements of SFAS No. 150 related to its limited-life partnerships.



In December 2003, the FASB revised SFAS No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits. This revised statement 132 prescribes employers disclosures about pension plans and
other postretirement benefit plans; it does not change the measurement or recognition of those plans. The Statement retains and revised the disclosure requirements contained in the original Statement 132. It also requires additional disclosures
about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other postretirement benefit plans. The Statement generally is effective for fiscal years ending after December 15, 2003. The adoption of
this Interpretation does not have a material effect on the financial position or results reported by the Company.



In December 2003, the FASB issued FIN 46R, Consolidation of Variable Interest Entities (VIEs). This Interpretation addresses the consolidation by
business enterprises of variable interest entities as defined in the Interpretation. FIN 46R replaces FASB Interpretation No. 46, Consolidation of Variable Interest Entities, which was issued in January 2003. The unmodified provisions of the
Interpretation to special-purpose entities must be applied by the end of the first reporting period ending after December 15, 2003. The revised Interpretation must be applied to all entities that are not special-purpose entities by the end of the
first reporting period beginning after December 15, 2003. The adoption of this Interpretation does not have a material effect on the financial position or results reported by the Company.



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 Securities and Exchange Commission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 13a-15(b) under the Securities Exchange Act of 1934, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and 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 the reasonable assurance level.



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.



39



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##### Table of Contents

|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, 2003. 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, 2003 in relation to total assets of $1,863,348,000 and a market
capitalization of $1,959,090,000.



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.



|                       |  |      |        |   |      |   |        |      |  |   |        |   |  |      |         |   |            |   |        |       |  |   |               |   |  |   |         |   |  |   |         |  
|---------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------- | - | ---------- | - | ------ | ----- |  | - | ------------- | - |  | - | ------- | - |  | - | ------- | -
|                       |  | 2004 |        |   | 2005 |   |        | 2006 |  |   | 2007   |   |  | 2008 |         |   | Thereafter |   |        | Total |  |   | Fair Value(3) |  
|Fixed-rate debt (1)(2) |  | $    | 68,471 |   |      | $ | 14,429 |      |  | $ | 62,530 |   |  | $    | 108,060 |   |            | $ | 28,839 |       |  | $ | 560,822       |   |  | $ | 843,151 |   |  | $ | 849,252 |  
|Average interest rate  |  |      | 7.77   | % |      |   | 7.72   | %    |  |   | 7.20   | % |  |      | 7.97    | % |            |   | 7.23   | %     |  |   | 6.94          | % |  |   | 7.20    | % |  |   | 5.37    | %
|Variable-rate debt (1) |  |      |       |   |      |   |       |      |  | $ | 48,250 |   |  |      |        |   |            |   |       |       |  | $ | 6,000         |   |  | $ | 54,250  |   |  | $ | 54,250  |  
|Average interest rate  |  |      |       |   |      |   |       |      |  |   | 1.86   | % |  |      |        |   |            |   |       |       |  |   | 1.11          | % |  |   | 1.78    | % |  |   | 1.78    | %



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



|(2) | Excludes unamortized discounts on senior notes, net of unamortized premiums on notes payable, of $366,000.
|--- | ----------------------------------------------------------------------------------------------------------



|(3) | The fair value of notes payable, line of credit and senior notes payable approximates the carrying amount based on the current rates offered for loans with similar risks and
maturities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The table incorporates only those
exposures that exist as of December 31, 2003, 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.



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



Not applicable.



|ITEM 9A. | 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.



40



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##### Table of Contents

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 the reasonable assurance level.



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 May 2004 (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.



41



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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)
|Independent Auditors Report                                                                         |  | F-1     
|Consolidated Balance Sheets as of December 31, 2003 and 2002                                         |  | F-2     
|Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001               |  | F-3     
|Consolidated Statements of Stockholders Equity for the years ended December 31, 2003, 2002 and 2001 |  | F-4     
|Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001           |  | F-5     
|Notes to Consolidated Financial Statements                                                           |  | F-7     



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



|                                                     |  |     
|---------------------------------------------------- |  | ----
|Schedule IIIProperties and Accumulated Depreciation |  | F-26



42



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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 7.875% Senior Notes due 2004 (previously filed as Exhibit 4.2 to Western Properties Trust Registration Statement on Form S-3 (Registration No. 333-71270) and
incorporated herein by reference).                                                                                                                                                                              
|            | 
|4.9         |  | Form of Supplemental Indenture relating to the assumption by Pan Pacific Retail Properties, Inc. of the Indenture relating to the 7.875% Senior Notes due 2004 (previously filed as Exhibit 4.9
to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-3 (Registration No. 333-51230) and incorporated herein by reference).                                                                 
|            | 
|4.10        |  | 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).                                                                                                                                                                                                                     



43



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|4.11        |  | 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).                                                                                                                                                                                                                                                      
|            | 
|4.12        |  | 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).                                                                                                                                                                 
|            | 
|4.13        |  | 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).                                                                                                                                                                                                                                         
|            | 
|4.14        |  | 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).                                                                                                                                               
|            | 
|4.15        |  | 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).                                                                                                                                                                                                                                                  
|            | 
|4.16        |  | 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).                                                                                                                                                         
|            | 
|4.17        |  | 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).                                                                                                                                                                                                                                                         
|            | 
|4.18        |  | 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).                                                                                                                                                                 
|            | 
|4.19        |  | Stockholders Rights Agreement, dated as of November 5, 2002, by and among Pan Pacific Retail Properties, Inc., Lazard Frères Real Estate Investors L.L.C., LF Strategic Realty
Investors L.P., Prometheus Western Retail Trust and Prometheus Western Retail, LLC (previously filed as Exhibit 4.1 to Pan Pacific Retail Properties, Inc.s Current Report on Form 8-K, dated November 7, 2002 and incorporated herein by
reference).



44



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|4.20        |  | 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).
|            | 
|4.19        |  | 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        |  | Amended and Restated Revolving Credit Agreement dated as of March 31, 2003 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 and the other lenders as identified therein
(previously filed as Exhibit 10.1 to Pan Pacific Retail Properties, Inc.s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



45



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|10.6        |  | Term credit loan, dated as of November 13, 2000, 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 (previously filed as Exhibit 10.10 to Pan Pacific Retail Properties, Inc.s Registration Statement on Form S-3 (Registration No. 333-51230) and incorporated herein by reference).
|            | 
|10.7        |  | 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).                                              
|            | 
|10.8        |  | 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).                                                        
|            | 
|10.9        |  | 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).                                                                                                                      
|            | 
|10.10       |  | 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).                                          
|            | 
|10.11       |  | 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).                                                       
|            | 
|10.12       |  | 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).                                                                                  
|            | 
|10.13       |  | 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).                                                  
|            | 
|10.14       |  | 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).                                                       
|            | 
|10.15       |  | 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).                                                                                     



46



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|            |  |                                                                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                    
|            | 
|10.16       |  | 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).     
|            | 
|10.17       |  | 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).    
|            | 
|10.18       |  | 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).
|            | 
|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.



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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 12, 2004.



|    |  |                                                           |  |  |  |     |  |                                                                                                            
|--- |  | --------------------------------------------------------- |  |  |  | --- |  | -----------------------------------------------------------------------------------------------------------
|    |  | PAN PACIFIC RETAIL PROPERTIES, INC.                       |  |  |  |    
|    |  |                                                           |  | 
|By: |  | /s/    STUART A. TANZ                                     |  |  |  | By: |  | /s/    JOSEPH B. TYSON                                                                                     
|    |  |                                                           |  |  |  |     |  |                                                                                                            
|    |  | Stuart A. Tanz                                            |  |  |  |     |  | Joseph B. Tyson, CPA                                                                                       
|    |  | Director, Chairman, Chief Executive Officer and President |  |  |  |     |  | 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 12, 2004
|                                            |  |         
|/s/    BERNARD M.
FELDMANBernard M.
Feldman |  | Director |  | March 12, 2004
|                                            |  |         
|/s/    DAVID P.
ZIMELDavid P.
Zimel         |  | Director |  | March 12, 2004
|                                            |  |         
|/s/    JOSEPH P.
COLMERYJoseph P.
Colmery   |  | Director |  | March 12, 2004



47



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##### Table of Contents



INDEPENDENT AUDITORS REPORT



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, 2003 and 2002, 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, 2003. In connection with our audits of the consolidated financial statements, we also have
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 auditing standards generally accepted in the United States of America. 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, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of America. 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.



KPMG LLP



San Diego, California

February 5, 2004



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                                                                                                                           |  | December 31, 2003 |           |   | December 31, 2002 |  
|ASSETS:                                                                                                                                                                                                                    |  |                   |           |   |                   |   |           |  
|Properties, at cost:                                                                                                                                                                                                       |  |                   |           |   |                   |   |           |  
|Land                                                                                                                                                                                                                       |  | $                 | 509,887   |   |                   | $ | 371,427   |  
|Buildings and improvements                                                                                                                                                                                                 |  |                   | 1,374,663 |   |                   |   | 1,018,837 |  
|Tenant improvements                                                                                                                                                                                                        |  |                   | 49,793    |   |                   |   | 40,826    |  
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|                                                                                                                                                                                                                           |  |                   | 1,934,343 |   |                   |   | 1,431,090 |  
|Less accumulated depreciation and amortization                                                                                                                                                                             |  |                   | (160,449  | ) |                   |   | (125,057  | )
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|                                                                                                                                                                                                                           |  |                   | 1,773,894 |   |                   |   | 1,306,033 |  
|Investments in unconsolidated entities                                                                                                                                                                                     |  |                   | 3,223     |   |                   |   | 9,050     |  
|Cash and cash equivalents                                                                                                                                                                                                  |  |                   | 6,453     |   |                   |   | 1,284     |  
|Accounts receivable (net of allowance for doubtful accounts of $4,444 and $1,879, respectively)                                                                                                                            |  |                   | 13,478    |   |                   |   | 10,142    |  
|Accrued rent receivable (net of allowance for doubtful accounts of $2,735 and $2,130, respectively)                                                                                                                        |  |                   | 22,552    |   |                   |   | 19,167    |  
|Notes receivable                                                                                                                                                                                                           |  |                   | 7,844     |   |                   |   | 15,891    |  
|Deferred lease commissions (including unamortized related party amounts of $7,386 and $5,189, respectively, and net of accumulated
amortization of $5,512 and $4,087, respectively)                                        |  |                   | 11,029    |   |                   |   | 7,398     |  
|Prepaid expenses                                                                                                                                                                                                           |  |                   | 19,072    |   |                   |   | 10,397    |  
|Other assets                                                                                                                                                                                                               |  |                   | 5,803     |   |                   |   | 44,878    |  
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|                                                                                                                                                                                                                           |  | $                 | 1,863,348 |   |                   | $ | 1,424,240 |  
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY:                                                                                                                                                                                      |  |                   |           |   |                   |   |           |  
|Notes payable and other                                                                                                                                                                                                    |  | $                 | 345,077   |   |                   | $ | 239,541   |  
|Line of credit payable                                                                                                                                                                                                     |  |                   | 48,250    |   |                   |   | 66,000    |  
|Senior notes                                                                                                                                                                                                               |  |                   | 503,708   |   |                   |   | 428,677   |  
|Accounts payable, accrued expenses and other liabilities                                                                                                                                                                   |  |                   | 41,703    |   |                   |   | 25,583    |  
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|                                                                                                                                                                                                                           |  |                   | 938,738   |   |                   |   | 759,801   |  
|Minority interests                                                                                                                                                                                                         |  |                   | 32,325    |   |                   |   | 15,804    |  
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|Stockholders equity:                                                                                                                                                                                                      |  |                   |           |   |                   |   |           |  
|Preferred stock par value $.01 per share, 30,000,000 authorized shares, no shares issued and outstanding at December 31, 2003 and 2002,
respectively                                                                       |  |                   |          |   |                   |   |          |  
|Common stock par value $.01 per share, 100,000,000 authorized shares, 40,293,382 and 33,584,186 shares issued and outstanding, net of
1,190,999 and 1,187,999 treasury shares, at December 31, 2003 and 2002, respectively |  |                   | 403       |   |                   |   | 336       |  
|Paid in capital in excess of par value                                                                                                                                                                                     |  |                   | 952,973   |   |                   |   | 731,069   |  
|Deferred compensation                                                                                                                                                                                                      |  |                   | (8,781    | ) |                   |   | (4,345    | )
|Accumulated deficit                                                                                                                                                                                                        |  |                   | (52,310   | ) |                   |   | (78,425   | )
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|                                                                                                                                                                                                                           |  |                   | 892,285   |   |                   |   | 648,635   |  
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  
|                                                                                                                                                                                                                           |  | $                 | 1,863,348 |   |                   | $ | 1,424,240 |  
|                                                                                                                                                                                                                           |  |                   |           |   |                   |   |           |  



See accompanying notes
to consolidated financial statements.



F-2



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)



|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                     |  | For the Years Ended December 31, |        
|                                                                                                                     |  | 2003                             |         |   | 2002 |   |         | 2001 | 
|REVENUE:                                                                                                             |  |                                  |         |   |      |   |         |      |  |   |         |  
|Base rent                                                                                                            |  | $                                | 203,562 |   |      | $ | 145,600 |      |  | $ | 133,352 |  
|Percentage rent                                                                                                      |  |                                  | 2,676   |   |      |   | 2,094   |      |  |   | 2,607   |  
|Recoveries from tenants                                                                                              |  |                                  | 52,641  |   |      |   | 35,896  |      |  |   | 31,316  |  
|Income from unconsolidated entities                                                                                  |  |                                  | 802     |   |      |   | 154     |      |  |   | 837     |  
|Other                                                                                                                |  |                                  | 4,941   |   |      |   | 6,041   |      |  |   | 7,874   |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|                                                                                                                     |  |                                  | 264,622 |   |      |   | 189,785 |      |  |   | 175,986 |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|EXPENSES:                                                                                                            |  |                                  |         |   |      |   |         |      |  |   |         |  
|Property operating                                                                                                   |  |                                  | 39,350  |   |      |   | 24,549  |      |  |   | 21,659  |  
|Property taxes                                                                                                       |  |                                  | 21,984  |   |      |   | 14,862  |      |  |   | 13,181  |  
|Depreciation and amortization                                                                                        |  |                                  | 40,076  |   |      |   | 30,328  |      |  |   | 28,058  |  
|Interest                                                                                                             |  |                                  | 58,473  |   |      |   | 45,926  |      |  |   | 46,196  |  
|General and administrative                                                                                           |  |                                  | 12,600  |   |      |   | 9,426   |      |  |   | 9,168   |  
|Other                                                                                                                |  |                                  | 686     |   |      |   | 352     |      |  |   | 1,574   |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|                                                                                                                     |  |                                  | 173,169 |   |      |   | 125,443 |      |  |   | 119,836 |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS, GAIN ON SALE OF REAL ESTATE AND DISCONTINUED OPERATIONS |  |                                  | 91,453  |   |      |   | 64,342  |      |  |   | 56,150  |  
|Minority interests                                                                                                   |  |                                  | (2,454  | ) |      |   | (1,457  | )    |  |   | (2,521  | )
|Gain on sale of real estate                                                                                          |  |                                  |        |   |      |   |        |      |  |   | 4,129   |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|INCOME FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS                                                     |  |                                  | 88,999  |   |      |   | 62,885  |      |  |   | 57,758  |  
|Discontinued operations                                                                                              |  |                                  | 15,437  |   |      |   | 14,767  |      |  |   | 6,464   |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|NET INCOME                                                                                                           |  | $                                | 104,436 |   |      | $ | 77,652  |      |  | $ | 64,222  |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Basic earnings per share:                                                                                            |  |                                  |         |   |      |   |         |      |  |   |         |  
|Income from continuing operations                                                                                    |  | $                                | 2.26    |   |      | $ | 1.88    |      |  | $ | 1.81    |  
|Discontinued operations                                                                                              |  | $                                | 0.39    |   |      | $ | 0.44    |      |  | $ | 0.21    |  
|Net income                                                                                                           |  | $                                | 2.65    |   |      | $ | 2.32    |      |  | $ | 2.02    |  
|Diluted earnings per share:                                                                                          |  |                                  |         |   |      |   |         |      |  |   |         |  
|Income from continuing operations                                                                                    |  | $                                | 2.23    |   |      | $ | 1.87    |      |  | $ | 1.80    |  
|Discontinued operations                                                                                              |  | $                                | 0.38    |   |      | $ | 0.43    |      |  | $ | 0.17    |  
|Net income                                                                                                           |  | $                                | 2.61    |   |      | $ | 2.30    |      |  | $ | 1.97    |  



See accompanying notes
to consolidated financial statements.



F-3



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands, except share data)



|                                                         |  |              |   |  |                                        |     |   |                      |   |         |                    |  |   |        |   |  |   |         |   |  |   |         |  
|-------------------------------------------------------- |  | ------------ | - |  | -------------------------------------- | --- | - | -------------------- | - | ------- | ------------------ |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                         |  | Common stock |   |  | Paid in capital in excess of par value |     |   | Deferredcompensation |   |         | Accumulateddeficit |  |   | Total  |  
|                                                         |  | Shares       |   |  | Amount                                 |     |   |                      |   |        
|Balance at December 31, 2000                             |  | 32,074,368   |   |  | $                                      | 321 |   |                      | $ | 705,265 |                    |  | $ |       |   |  | $ | (98,588 | ) |  | $ | 606,998 |  
|Repurchase of common stock                               |  | (1,000,000   | ) |  |                                        | (10 | ) |                      |   | (20,840 | )                  |  |   |       |   |  |   |        |   |  |   | (20,850 | )
|Conversion of operating subsidiary units to common stock |  | 921,322      |   |  |                                        | 9   |   |                      |   | 18,252  |                    |  |   |       |   |  |   |        |   |  |   | 18,261  |  
|Stock issued in acquisition of Western                   |  | 520          |   |  |                                        |    |   |                      |   | 11      |                    |  |   |       |   |  |   |        |   |  |   | 11      |  
|Issuance and vesting of restricted stock                 |  | 217,800      |   |  |                                        | 2   |   |                      |   | 4,830   |                    |  |   | (3,910 | ) |  |   |        |   |  |   | 922     |  
|Stock issued on exercise of options                      |  | 575,903      |   |  |                                        | 6   |   |                      |   | 11,007  |                    |  |   |       |   |  |   |        |   |  |   | 11,013  |  
|Net income                                               |  |             |   |  |                                        |    |   |                      |   |        |                    |  |   |       |   |  |   | 64,222  |   |  |   | 64,222  |  
|Cash distributions paid and declared                     |  |             |   |  |                                        |    |   |                      |   |        |                    |  |   |       |   |  |   | (58,119 | ) |  |   | (58,119 | )
|                                                         |  |              |   |  |                                        |     |   |                      |   |         |                    |  |   |        |   |  |   |         |   |  |   |         |  
|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 | )
|                                                         |  |              |   |  |                                        |     |   |                      |   |         |                    |  |   |        |   |  |   |         |   |  |   |         |  
|                                                         |  | 40,293,382   |   |  | $                                      | 403 |   |                      | $ | 952,973 |                    |  | $ | (8,781 | ) |  | $ | (52,310 | ) |  | $ | 892,285 |  
|                                                         |  |              |   |  |                                        |     |   |                      |   |         |                    |  |   |        |   |  |   |         |   |  |   |         |  



See accompanying notes
to consolidated financial statements.



F-4



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|--------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                                                                      |  | For the Years Ended December 31, |         
|                                                                                                                      |  | 2003                             |          |   | 2002 |   |          | 2001 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                 |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net income                                                                                                            |  | $                                | 104,436  |   |      | $ | 77,652   |      |  | $ | 64,222   |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                     |  |                                  |          |   |      |   |          |      |  |   |          |  
|Depreciation and amortization                                                                                         |  |                                  | 40,076   |   |      |   | 30,763   |      |  |   | 28,493   |  
|Bad debt expense                                                                                                      |  |                                  | 4,311    |   |      |   | 1,761    |      |  |   | 2,049    |  
|Amortization of prepaid financing costs                                                                               |  |                                  | 1,336    |   |      |   | 1,052    |      |  |   | 999      |  
|Gain on sale of real estate                                                                                           |  |                                  |         |   |      |   |         |      |  |   | (4,129   | )
|Income from unconsolidated entities                                                                                   |  |                                  | (802     | ) |      |   | (154     | )    |  |   | (837     | )
|Discontinued operations                                                                                               |  |                                  | (15,437  | ) |      |   | (14,767  | )    |  |   | (6,464   | )
|Minority interests                                                                                                    |  |                                  | 2,454    |   |      |   | 1,457    |      |  |   | 2,521    |  
|Vesting of restricted stock                                                                                           |  |                                  | 2,207    |   |      |   | 1,231    |      |  |   | 922      |  
|Changes in assets and liabilities, net of the effects of the acquisition of Center Trust in 2003 and Western in 2000: |  |                                  |          |   |      |   |          |      |  |   |          |  
|Increase in accounts receivable                                                                                       |  |                                  | (4,365   | ) |      |   | (3,676   | )    |  |   | (2,642   | )
|Increase in accrued rent receivable                                                                                   |  |                                  | (4,001   | ) |      |   | (2,049   | )    |  |   | (3,369   | )
|Increase in accrued interest on notes receivable                                                                      |  |                                  | (1,188   | ) |      |   | (3,202   | )    |  |   | (3,057   | )
|Increase in deferred lease commissions                                                                                |  |                                  | (5,687   | ) |      |   | (2,723   | )    |  |   | (2,735   | )
|Decrease (increase) in prepaid expenses                                                                               |  |                                  | 2,206    |   |      |   | (1,182   | )    |  |   | (358     | )
|Increase in other assets                                                                                              |  |                                  | (623     | ) |      |   | (3,074   | )    |  |   | (9,046   | )
|Increase (decrease) in accounts payable, accrued expenses and other liabilities                                       |  |                                  | 3,675    |   |      |   | (2,266   | )    |  |   | 5,650    |  
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net cash provided by operating activities                                                                             |  |                                  | 128,598  |   |      |   | 80,823   |      |  |   | 72,219   |  
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                 |  |                                  |          |   |      |   |          |      |  |   |          |  
|Acquisitions of and additions to properties                                                                           |  |                                  | (91,378  | ) |      |   | (133,358 | )    |  |   | (63,930  | )
|Funds held in escrow pending property acquisitions                                                                    |  |                                  |         |   |      |   | (39,774  | )    |  |   |         |  
|Proceeds from sale of real estate                                                                                     |  |                                  | 189,576  |   |      |   | 46,605   |      |  |   | 36,423   |  
|Distributions and equity repayments from unconsolidated entities                                                      |  |                                  | 6,629    |   |      |   | 299      |      |  |   | 584      |  
|Acquisition of Western                                                                                                |  |                                  |         |   |      |   |         |      |  |   | (1,952   | )
|Acquisition of Center Trust                                                                                           |  |                                  | (8,999   | ) |      |   |         |      |  |   |         |  
|Redemption of operating subsidiary units                                                                              |  |                                  | (6,786   | ) |      |   | (6,721   | )    |  |   |         |  
|Acquisition of minority interests                                                                                     |  |                                  | (526     | ) |      |   |         |      |  |   | (2,252   | )
|Collections of notes receivable                                                                                       |  |                                  | 26,622   |   |      |   | 39,855   |      |  |   | 3,678    |  
|Increases in notes receivable                                                                                         |  |                                  |         |   |      |   | (10,275  | )    |  |   | (19,282  | )
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net cash provided by (used in) investing activities                                                                   |  |                                  | 115,138  |   |      |   | (103,369 | )    |  |   | (46,731  | )
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                 |  |                                  |          |   |      |   |          |      |  |   |          |  
|Notes payable proceeds                                                                                                |  |                                  | 7,171    |   |      |   | 15,601   |      |  |   |         |  
|Notes payable payments                                                                                                |  |                                  | (235,823 | ) |      |   | (4,981   | )    |  |   | (4,776   | )
|Line of credit proceeds                                                                                               |  |                                  | 321,975  |   |      |   | 206,250  |      |  |   | 168,300  |  
|Line of credit payments                                                                                               |  |                                  | (339,725 | ) |      |   | (305,550 | )    |  |   | (270,650 | )
|Prepaid financing costs                                                                                               |  |                                  |         |   |      |   |         |      |  |   | (1,700   | )
|Issuance of senior notes                                                                                              |  |                                  | 74,816   |   |      |   | 154,701  |      |  |   | 148,837  |  
|Repurchase of common stock                                                                                            |  |                                  | (112     | ) |      |   | (5,789   | )    |  |   | (20,850  | )
|Issuance of common stock                                                                                              |  |                                  | 8,263    |   |      |   | 18,584   |      |  |   | 11,013   |  
|Distributions paid                                                                                                    |  |                                  | (80,515  | ) |      |   | (65,185  | )    |  |   | (61,191  | )
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|Net cash (used in) provided by financing activities                                                                   |  |                                  | (243,950 | ) |      |   | 13,631   |      |  |   | (31,017  | )
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|DECREASE IN CASH AND CASH EQUIVALENTS                                                                                 |  |                                  | (214     | ) |      |   | (8,915   | )    |  |   | (5,529   | )
|Cash from discontinued operations                                                                                     |  |                                  | 5,383    |   |      |   | 6,770    |      |  |   | 7,362    |  
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                  |  |                                  | 5,169    |   |      |   | (2,145   | )    |  |   | 1,833    |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                                                        |  |                                  | 1,284    |   |      |   | 3,429    |      |  |   | 1,596    |  
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                                              |  | $                                | 6,453    |   |      | $ | 1,284    |      |  | $ | 3,429    |  
|                                                                                                                      |  |                                  |          |   |      |   |          |      |  |   |          |  



(continued)



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands)



|                                                                                               |  |                                  |         |      |   |        |  |   |       
|---------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | ---- | - | ------ |  | - | ------
|                                                                                               |  | For the Years Ended December 31,
|                                                                                               |  | 2003                             |         | 2002 |   | 2001  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                              |  |                                  |         |      |   |        |  |   |       
|Cash paid for interest (net of amounts capitalized of $4,506, $1,796 and $1,539, respectively) |  | $                                | 59,874  |      | $ | 47,988 |  | $ | 45,547
|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                                                         |  | $                                | 40,230  |      | $ | 8,588  |  | $ | 20,107
|Transfer of note receivable to property                                                        |  | $                                |        |      | $ |       |  | $ | 11,113
|Notes receivable issued upon sales of properties                                               |  | $                                | 25,125  |      | $ | 2,770  |  | $ | 2,400 
|Conversion of operating subsidiary units to common stock                                       |  | $                                | 1,925   |      | $ | 1,909  |  | $ | 18,261
|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 |      | $ |       |  | $ |      
|Note payable assumed upon acquisition of property                                              |  | $                                | 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   |      | $ |       |  | $ |      
|Exchange of note receivable for properties                                                     |  | $                                |        |      | $ | 735    |  | $ |      



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, 2003, 2002 and 2001

(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, 2003, the Company owned a portfolio comprised of 130 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, 2002 and 2001 to separately reflect the results of discontinued operations for properties that were sold during the year ended December 31, 2003. 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, 2002 or 2001. 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. The following table summarizes the activity for these operating subsidiaries as of December 31, 2003:



|                                     |  |                        |  |                 |  |                  
|------------------------------------ |  | ---------------------- |  | --------------- |  | -----------------
|Operating subsidiary                 |  | Unitsoriginally issued |  | Units converted |  | Units outstanding
|Pan Pacific (Portland), LLC          |  | 832,617                |  | 631,590         |  | 201,027          
|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. The Company accounted for this transaction using the purchase method of accounting; accordingly, the Companys results of operations subsequent to November 13, 2000 include Western.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

(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., formerly Western/Kienow, 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., formerly Western/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. The following table summarizes the activity for these operating subsidiaries as of December 31, 2003:



|                              |  |                        |  |                 |  |                  
|----------------------------- |  | ---------------------- |  | --------------- |  | -----------------
|Operating subsidiary          |  | Unitsoriginally issued |  | Units converted |  | 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. The following table summarizes the activity for this operating subsidiary as of December 31, 2003:



|                               |  |                        |  |                 |  |                  
|------------------------------ |  | ---------------------- |  | --------------- |  | -----------------
|Operating subsidiary           |  | Unitsoriginally issued |  | Units converted |  | 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,
2003, 2002 and 2001

(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 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 for the years ended December 31, 2003, 2002 and 2001 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.



|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                     |  | For the years ended December 31, |        
|                                                                                                                     |  | 2003                             |         |   | 2002 |   |         | 2001 | 
|                                                                                                                     |  | (Unaudited pro forma)            |        
|Total revenue                                                                                                        |  | $                                | 267,069 |   |      | $ | 246,223 |      |  | $ | 232,008 |  
|Total expenses                                                                                                       |  |                                  | 174,552 |   |      |   | 162,801 |      |  |   | 156,419 |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Income from continuing operations before minority interests, gain on sale of real estate and discontinued operations |  |                                  | 92,517  |   |      |   | 83,422  |      |  |   | 75,589  |  
|Minority interests                                                                                                   |  |                                  | (2,610  | ) |      |   | (2,225  | )    |  |   | (3,370  | )
|Gain on sale of real estate                                                                                          |  |                                  |        |   |      |   |        |      |  |   | 4,129   |  
|Discontinued operations                                                                                              |  |                                  | 16,176  |   |      |   | 23,805  |      |  |   | 15,438  |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Net income                                                                                                           |  | $                                | 106,083 |   |      | $ | 105,002 |      |  | $ | 91,786  |  
|                                                                                                                     |  |                                  |         |   |      |   |         |      |  |   |         |  
|Basic earnings per share:                                                                                            |  |                                  |         |   |      |   |         |      |  |   |         |  
|Income from continuing operations                                                                                    |  | $                                | 2.28    |   |      | $ | 2.06    |      |  | $ | 1.83    |  
|Discontinued operations                                                                                              |  | $                                | 0.41    |   |      | $ | 0.60    |      |  | $ | 0.49    |  
|Net income                                                                                                           |  | $                                | 2.69    |   |      | $ | 2.66    |      |  | $ | 2.32    |  
|Diluted earnings per share:                                                                                          |  |                                  |         |   |      |   |         |      |  |   |         |  
|Income from continuing operations                                                                                    |  | $                                | 2.25    |   |      | $ | 2.03    |      |  | $ | 1.82    |  
|Discontinued operations                                                                                              |  | $                                | 0.40    |   |      | $ | 0.58    |      |  | $ | 0.48    |  
|Net income                                                                                                           |  | $                                | 2.65    |   |      | $ | 2.61    |      |  | $ | 2.30    |  



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

(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 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 $510,000 and $223,000 at December 31, 2003 and 2002, 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.



Bad debt expense, included in property operating expenses in the Companys financial statements, was $4,311,000,
$1,761,000 and $2,049,000 for the years ended December 31, 2003, 2002 and 2001, respectively.



|(d) | Capitalization of costs
|--- | -----------------------



The Company capitalizes certain acquisition and development related costs to the carrying costs of the property acquired or developed. These costs are
being 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.



|(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 are depreciated on a straight-line basis over the lives of the respective leases.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



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



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.



|(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, 2003 and 2002, the Company had no significant concentration of credit risk.



|(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.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



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



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,
|                                                                   |  | 2003                             |            | 2002 |   | 2001      
|Income available to common stockholders:                           |  |                                  |            |      |   |            |  |   |           
|Basic                                                              |  | $                                | 104,436    |      | $ | 77,652     |  | $ | 64,222    
|Add-back income allocated to dilutive operating subsidiary units   |  |                                  | 1,703      |      |   | 1,457      |  |   | 1,864     
|                                                                   |  |                                  |            |      |   |            |  |   |           
|Diluted                                                            |  | $                                | 106,139    |      | $ | 79,109     |  | $ | 66,086    
|                                                                   |  |                                  |            |      |   |            |  |   |           
|Weighted average shares:                                           |  |                                  |            |      |   |            |  |   |           
|Basic                                                              |  |                                  | 39,466,034 |      |   | 33,409,469 |  |   | 31,857,903
|Incremental shares from assumed:                                   |  |                                  |            |      |   |            |  |   |           
|Exercise of dilutive stock options and vesting of restricted stock |  |                                  | 311,228    |      |   | 214,143    |  |   | 294,006   
|Conversion of dilutive operating subsidiary units                  |  |                                  | 929,782    |      |   | 807,501    |  |   | 1,408,843 
|                                                                   |  |                                  |            |      |   |            |  |   |           
|Diluted                                                            |  |                                  | 40,707,044 |      |   | 34,431,113 |  |   | 33,560,752
|                                                                   |  |                                  |            |      |   |            |  |   |           



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



|(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).



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



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



As a result of the disclosure requirements in SFAS No. 148, 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:



|                                                                         |  |      |         |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                         |  | 2003 |         |   | 2002 |   |        | 2001 | 
|Net income as reported                                                   |  | $    | 104,436 |   |      | $ | 77,652 |      |  | $ | 64,222 |  
|Add: Stock-based compensation expense included in reported net income    |  |      | 2,207   |   |      |   | 1,231  |      |  |   | 922    |  
|Deduct: Total fair value stock based compensation expense for all awards |  |      | (2,737  | ) |      |   | (1,758 | )    |  |   | (1,349 | )
|                                                                         |  |      |         |   |      |   |        |      |  |   |        |  
|Pro forma net income                                                     |  | $    | 103,906 |   |      | $ | 77,125 |      |  | $ | 63,795 |  
|                                                                         |  |      |         |   |      |   |        |      |  |   |        |  
|Basic earnings per share as reported                                     |  | $    | 2.65    |   |      | $ | 2.32   |      |  | $ | 2.02   |  
|Pro forma basic earnings per share                                       |  | $    | 2.63    |   |      | $ | 2.31   |      |  | $ | 2.00   |  
|Diluted earnings per share as reported                                   |  | $    | 2.61    |   |      | $ | 2.30   |      |  | $ | 1.97   |  
|Pro forma diluted earnings per share                                     |  | $    | 2.59    |   |      | $ | 2.28   |      |  | $ | 1.96   |  



Net income as reported
includes compensation expense relating to our restricted stock plan of $2,207,000, $1,231,000 and $922,000 for the years ended December 31, 2003, 2002 and 2001, respectively. 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 accounting principles generally accepted in the
United States of America. 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.



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 deemed to be most critical to the Company. These
critical accounting policies 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 2002 and 2001 amounts have been made in order to conform to 2003 presentation.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



3. Discontinued operations



In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144). In accordance with SFAS No. 144, we report each individual property as a component for determining 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 and 2001 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, and their respective 2001 results of operations were reclassified to income from discontinued operations. The following is a summary of our income from discontinued operations
for the years ended December 31, 2003, 2002 and 2001:



|                                       |  |                                  |        |      |   |        |  |   |      
|-------------------------------------- |  | -------------------------------- | ------ | ---- | - | ------ |  | - | -----
|                                       |  | For the years ended December 31,
|                                       |  | 2003                             |        | 2002 |   | 2001  
|Revenue                                |  | $                                | 9,278  |      | $ | 8,493  |  | $ | 9,185
|Property operating expenses            |  |                                  | 4,125  |      |   | 1,426  |  |   | 1,501
|Depreciation and amortization expenses |  |                                  | 287    |      |   | 1,002  |  |   | 1,220
|Gain on sale of real estate            |  |                                  | 10,571 |      |   | 8,702  |  |   |     
|                                       |  |                                  |        |      |   |        |  |   |      
|Discontinued operations                |  | $                                | 15,437 |      | $ | 14,767 |  | $ | 6,464
|                                       |  |                                  |        |      |   |        |  |   |      



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

(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, 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% general partner interest in North Coast Health Center. During the second quarter of 2002, North Coast Health Center acquired a building financed through a note payable. During 2001 the Company owned a 50% general
partner interest in North Coast Health Center and a 30% interest in Serra Center. This 30% interest was sold in December 2001. These investments are reported using the equity method.



Summarized financial information for the entities is presented below:



|                                                        |  |                   |        |                   |   |       
|------------------------------------------------------- |  | ----------------- | ------ | ----------------- | - | ------
|                                                        |  | December 31, 2003 |        | December 31, 2002
|Properties                                              |  | $                 | 77,973 |                   | $ | 79,764
|Other assets                                            |  |                   | 2,923  |                   |   | 8,581 
|                                                        |  |                   |        |                   |   |       
|Total assets                                            |  | $                 | 80,896 |                   | $ | 88,345
|                                                        |  |                   |        |                   |   |       
|Notes payable                                           |  | $                 | 59,264 |                   | $ | 59,838
|Other liabilities                                       |  |                   | 566    |                   |   | 2,553 
|Partners capital/members equity:                      |  |                   |        |                   |   |       
|The Companys share                                     |  |                   | 3,223  |                   |   | 9,050 
|Other partners/members                                  |  |                   | 17,843 |                   |   | 16,904
|                                                        |  |                   |        |                   |   |       
|Total liabilities and partners capital/members equity |  | $                 | 80,896 |                   | $ | 88,345
|                                                        |  |                   |        |                   |   |       



|                                   |  |                                  |       |      |   |       |  |   |      
|---------------------------------- |  | -------------------------------- | ----- | ---- | - | ----- |  | - | -----
|                                   |  | For the years ended December 31,
|                                   |  | 2003                             |       | 2002 |   | 2001 
|Revenue                            |  | $                                | 4,108 |      | $ | 2,785 |  | $ | 5,334
|Expenses                           |  |                                  | 2,416 |      |   | 2,477 |  |   | 2,983
|                                   |  |                                  |       |      |   |       |  |   |      
|Net income                         |  | $                                | 1,692 |      | $ | 308   |  | $ | 2,351
|                                   |  |                                  |       |      |   |       |  |   |      
|The Companys equity in net income |  | $                                | 802   |      | $ | 154   |  | $ | 837  



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



5. Indebtedness



(a) Notes payable and other



|                                                                                                                                                                     |  |              |         |      |   |        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---- | - | -------
|                                                                                                                                                                     |  | December 31,
|                                                                                                                                                                     |  | 2003         |         | 2002
|Notes payable secured by properties consist of the following:                                                                                                        |  |              |         |      |   |        
|Bank notes payable, secured by deeds of trust, bearing interest at 7.10% with monthly principal and interest payments of $391, due in August
2009                    |  | $            | 52,794  |      | $ | 53,700 
|Bank notes payable, secured by a mortgage and deeds of trust, bearing interest at 8.17% with monthly principal and interest payments of $404,
due in January 2007    |  |              | 50,830  |      |   | 51,441 
|Bank notes payable, secured by deeds of trust, bearing interest at 7.75% with monthly principal and interest payments of $372, due in June
2009                      |  |              | 49,954  |      |   |       
|Bank notes payable, secured by 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  |  |              | 41,388  |      |   |       
|Bank notes payable, secured by deeds of trust, bearing interest at 7.21% with monthly principal and interest payments of $252, due in July
2006                      |  |              | 32,401  |      |   | 33,064 
|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                   |  |              | 25,515  |      |   | 25,808 
|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                      |  |              | 16,664  |      |   |       
|Bank note payable, secured by deeds of trust, bearing interest at 8.73% with monthly principal and interest payments of $204, due in February
2007 (a)               |  |              | 15,863  |      |   | 16,168 
|Bank note payable, secured by a deed of trust, bearing interest at 8.10% with monthly principal and interest payments of $116, due in August
2007                    |  |              | 11,921  |      |   | 12,082 
|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                  |  |              | 8,652   |      |   | 9,237  
|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                        |  |              | 8,833   |      |   | 9,105  
|Bank note payable, secured by a deed of trust, bearing interest at 7.65% with monthly principal and interest payments of $69, due in October
2012 (b)                |  |              | 7,131   |      |   | 7,233  
|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                     |  |              | 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                    |  |              | 5,033   |      |   |       
|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                      |  |              | 4,159   |      |   | 4,250  
|Bank note payable, secured by a deed of trust, bearing interest at 7.88% with monthly principal and interest payments of $56, due in August
2008 and repaid in 2003  |  |              |        |      |   | 703    
|Bank note payable, secured by a deed of trust, bearing interest at LIBOR plus 1.95% or a reference rate with payments on this construction
loan due in December 2003 |  |              |        |      |   | 15,601 
|Floating rate tax-exempt certificates of participation  interest only at effective rate of 1.11%; maturing November 2015;
non-recourse                              |  |              | 6,000   |      |   |       
|                                                                                                                                                                     |  |              |         |      |   |        
|                                                                                                                                                                     |  |              | 344,151 |      |   | 238,392
|Unamortized note payable premiums                                                                                                                                    |  |              | 926     |      |   | 1,149  
|                                                                                                                                                                     |  |              |         |      |   |        
|                                                                                                                                                                     |  | $            | 345,077 |      | $ | 239,541
|                                                                                                                                                                     |  |              |         |      |   |        



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



5. Indebtedness (continued)



|(a) | Excludes unamortized note payable premium of $688 and $890 at December 31, 2003 and 2002, respectively.
|--- | -------------------------------------------------------------------------------------------------------



|(b) | Excludes unamortized note payable premium of $238 and $259 at December 31, 2003 and 2002, respectively.
|--- | -------------------------------------------------------------------------------------------------------



The net carrying value of properties secured by these notes payable is $490,394,000 and $370,408,000 at December 31, 2003
and 2002, respectively.



Principal payments under these notes
payable are due as follows:



|                    |  |   |        
|------------------- |  | - | -------
|2004                |  |   | 18,363 
|2005                |  |   | 13,172 
|2006                |  |   | 35,660 
|2007                |  |   | 78,413 
|2008                |  |   | 3,864  
|2009 and subsequent |  |   | 194,679
|                    |  |   |        
|                    |  | $ | 344,151
|                    |  |   |        



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



In March 2003, 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 0.70% or a reference rate and expires in March 2006. At December 31, 2003 and 2002, the amount drawn on this line of credit was $48,250,000 and $66,000,000, respectively, and the interest rate was 1.86%
and 2.97%, 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 2007, assuming satisfaction of certain conditions.



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



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.



In April 2001, the Company issued $150,000,000 in aggregate principal amount of 7.95% senior notes due April 2011. The Company sold these notes at 99.225%
of the principal amount. The Company used the net proceeds from the offering to repay borrowings under its term loan and line of credit.



In November 2000, in connection with the acquisition of Western, the Company assumed $49,952,000 of 7.88% senior notes due 2004, $24,977,000 of 7.10%
senior notes due 2006, $24,958,000 of 7.20% senior notes due 2008 and $24,958,000 of 7.30% senior notes due 2010. The senior notes were assumed net of a $155,000 discount which represents the amount of the principal reduction recorded by Western to
achieve the required yield at pricing of the debt. The effective yields approximated fair value at the date of the merger.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

(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 $5,060,000 and $231,000 at December 31, 2003 and 2002, 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 $454,000 and $556,000 at December 31, 2003 and 2002, respectively, due to the uncertainty of the timing of repayment.



The fair value of a note receivable with a balance of $2,330,000 at December
31, 2003 and notes receivable with balances of $15,104,000 at December 31, 2002, 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 notes payable, line of credit and senior notes payable 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 $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.



The Company recorded a gain on sale of real estate of $4,129,000 during the
year ended December 31, 2001. The gain related to the sale of a shopping center, five single tenant assets, a 30% interest in a shopping center (Note 4) and four parcels of land. The total sales proceeds of $38,823,000 were received in cash and a
note receivable.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

(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 grants of stock, restricted stock and options to purchase 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 grants of stock, restricted stock and options to purchase up to 489,971 shares of authorized but unissued common stock. The 2000 Plan was approved by the Companys stockholders at the annual meeting
held in May 2000. 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 in connection with the merger with Western. 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 in connection with the annual meeting held in May 2003. At December 31, 2003, there
were 1,302,174 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 2003. The per share weighted average
fair value of stock options granted during 2002 and 2001 were $3.42 and $2.14, on the dates of grant using the Black-Scholes option-pricing model using the following weighted average assumptions:



|                            |  |       |   |  |       |  
|--------------------------- |  | ----- | - |  | ----- | -
|                            |  | 2002  |   |  | 2001  |  
|Expected distribution yield |  | 5.10  | % |  | 7.80  | %
|Risk-free interest rate     |  | 3.00  | % |  | 5.00  | %
|Expected volatility         |  | 20.59 | % |  | 22.48 | %
|Expected life (years)       |  | 7.0   |   |  | 6.8   |  



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.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



8. Stock plans (continued)



Stock option activity during the periods presented is as follows:



|                             |  |                   |   |  |                                 |        
|---------------------------- |  | ----------------- | - |  | ------------------------------- | -------
|                             |  | Number of Options |   |  | Weighted Average Exercise Price
|Balance at December 31, 2000 |  | 1,563,234         |   |  | $                               | 19.6605
|Granted                      |  | 425,486           |   |  | $                               | 21.5500
|Exercised                    |  | (575,903          | ) |  | $                               | 19.1051
|Forfeited                    |  | (7,000            | ) |  | $                               | 21.5500
|Expired                      |  | (8,000            | ) |  | $                               | 21.8901
|                             |  |                   |   |  |                                 |        
|Balance at December 31, 2001 |  | 1,397,817         |   |  | $                               | 20.4240
|Granted                      |  | 213,500           |   |  | $                               | 30.4200
|Exercised                    |  | (928,372          | ) |  | $                               | 20.0178
|Forfeited                    |  | (9,332            | ) |  | $                               | 21.5500
|                             |  |                   |   |  |                                 |        
|Balance at December 31, 2002 |  | 673,613           |   |  | $                               | 24.1264
|Exercised                    |  | (364,697          | ) |  | $                               | 22.7159
|                             |  |                   |   |  |                                 |        
|Balance at December 31, 2003 |  | 308,916           |   |  | $                               | 25.7773
|                             |  |                   |   |  |                                 |        



At December 31, 2003
five stock option grants had shares outstanding as follows:



|                                    |  |      |       |      |   |         |  |      |        |      |   |         |  |   |        
|----------------------------------- |  | ---- | ----- | ---- | - | ------- |  | ---- | ------ | ---- | - | ------- |  | - | -------
|                                    |  | 1997 |       | 1998 |   | 1999    |  | 2001 |        | 2002
|Granted options outstanding         |  |      | 68    |      |   | 5,500   |  |      | 1,999  |      |   | 152,348 |  |   | 149,001
|Exercise price                      |  | $    | 19.50 |      | $ | 22.1875 |  | $    | 17.625 |      | $ | 21.55   |  | $ | 30.42  
|Remaining contractual life in years |  |      | 0.6   |      |   | 1.3     |  |      | 2.3    |      |   | 4.3     |  |   | 5.3    
|Options exercisable                 |  |      | 68    |      |   | 5,500   |  |      | 1,999  |      |   | 16,319  |  |   | 6,661  
|Options unexercisable               |  |      |      |      |   |        |  |      |       |      |   | 136,029 |  |   | 142,340



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



8. Stock plans (continued)



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



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.



During 2001, the Company granted 212,000 shares of restricted stock to certain officers and key employees pursuant to the
1997 Plan and the 2000 Plan. The restricted shares vest over five years from the date of grant. During 2001, the Company granted 5,000 shares of restricted stock to the independent directors of the Board pursuant to the 1997 Plan. The restricted
shares vest over one year from the date of grant. During 2001, the Company granted 800 shares of restricted stock to an independent director of the Board pursuant to the 1997 Plan. The restricted shares vest 33 1/3% immediately, with the remainder
vesting ratably over two years. Compensation expense for the portion that vested during 2001 of $922,000 has been recognized in general and administrative expenses. Compensation expense related to these grants to be recognized in future periods is
$3,910,000 at December 31, 2001.



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, 2003, 2002 and 2001, 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 $80,000,000, $80,000,000 and $50,000,000 at December 31, 2003, 2002 and 2001, respectively. Management believes that the Company will not be required to make payments of income taxes
on $50,000,000 of built-in gains during the ten-year period ending December 31, 2007, or on $30,000,000 of built-in gains during the ten-year period ending December 31, 2012. It is the intent of the Company 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.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



9. Income taxes (continued)



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, |        
|                                                                        |  | 2003Estimate                     |         |   | 2002Actual |   |         | 2001Actual | 
|Book net income                                                         |  | $                                | 104,436 |   |            | $ | 77,652  |            |  | $ | 64,222  |  
|Less: Differences between book and tax net income for REIT subsidiaries |  |                                  | (3,971  | ) |            |   | (1,977  | )          |  |   | (2,614  | )
|                                                                        |  |                                  |         |   |            |   |         |            |  |   |         |  
|                                                                        |  |                                  | 100,465 |   |            |   | 75,675  |            |  |   | 61,608  |  
|Add: Book depreciation and amortization (a)                             |  |                                  | 39,512  |   |            |   | 28,717  |            |  |   | 25,753  |  
|Less: Tax depreciation and amortization                                 |  |                                  | (41,633 | ) |            |   | (26,136 | )          |  |   | (26,823 | )
|Less: Straight-line rent adjustments                                    |  |                                  | (4,133  | ) |            |   | (2,193  | )          |  |   | (2,628  | )
|Book/tax difference on gains/losses from capital transactions           |  |                                  | (6,875  | ) |            |   | (8,702  | )          |  |   | (2,142  | )
|Stock option expense                                                    |  |                                  | (5,648  | ) |            |   | (6,886  | )          |  |   |        |  
|Other book/tax differences, net                                         |  |                                  | (3,244  | ) |            |   | 98      |            |  |   | 4,858   |  
|                                                                        |  |                                  |         |   |            |   |         |            |  |   |         |  
|Taxable ordinary income before adjustments                              |  |                                  | 78,444  |   |            |   | 60,573  |            |  |   | 60,626  |  
|Less: Other adjustments (b)                                             |  |                                  | (6,333  | ) |            |   |        |            |  |   | (7,478  | )
|                                                                        |  |                                  |         |   |            |   |         |            |  |   |         |  
|REIT taxable income before dividends paid deduction                     |  | $                                | 72,111  |   |            | $ | 60,573  |            |  | $ | 53,148  |  
|                                                                        |  |                                  |         |   |            |   |         |            |  |   |         |  



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



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



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, |     
|                          |  | 2003                             |      |  | 2002   |   |  | 2001 |     
|Ordinary income           |  | $                                | 1.31 |  | 64.61  | % |  | $    | 1.90 |  | 100.00 | % |  | $ | 1.73 |  | 94.94  | %
|Return of capital         |  |                                  | 0.62 |  | 30.67  |   |  |      |     |  |       |   |  |   | 0.09 |  | 5.06   |  
|Capital gain distribution |  |                                  | 0.10 |  | 4.72   |   |  |      |     |  |       |   |  |   |     |  |       |  
|                          |  |                                  |      |  |        |   |  |      |      |  |        |   |  |   |      |  |        |  
|                          |  | $                                | 2.03 |  | 100.00 | % |  | $    | 1.90 |  | 100.00 | % |  | $ | 1.82 |  | 100.00 | %
|                          |  |                                  |      |  |        |   |  |      |      |  |        |   |  |   |      |  |        |  



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



10. Future lease revenue



Total future minimum lease receipts under noncancellable operating tenant leases in effect at December 31, 2003 are as
follows:



|                    |  |   |          
|------------------- |  | - | ---------
|2004                |  | $ | 204,264  
|2005                |  |   | 186,110  
|2006                |  |   | 161,385  
|2007                |  |   | 133,592  
|2008                |  |   | 107,374  
|2009 and subsequent |  |   | 454,957  
|                    |  |   |          
|                    |  | $ | 1,247,682
|                    |  |   |          



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. In January
2001, the Company purchased 1,000,000 shares of its common stock from an affiliate of the Company. The Company purchased the stock at fair value at a price of $20.85 per share and financed the transaction through a draw under its line of credit.



(b)The Company had notes receivable of $0 and $231,000 due from
executive officers at December 31, 2003 and 2002, respectively. These notes bore interest at 7.00% and were due on demand. 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.



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 $12,000 and $11,000 in 2003 and 2002, respectively. Employees over 50 years of age were able to add an additional $2,000 and $1,000 in 2003 and 2002, respectively. Prior to 2002, eligible
employees were allowed to defer up to 15% of their annual compensation. 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, 2003, 2002 and 2001 was approximately $92,000, $77,000 and $64,000, respectively.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



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 2051. Rental expense was $1,782,000, $348,000 and $770,000 for the years ended December 31, 2003, 2002 and 2001, respectively. Committed amounts under construction contracts and minimum rentals under
noncancellable operating leases in effect at December 31, 2003 were as follows:



|                    |  |   |       
|------------------- |  | - | ------
|2004                |  | $ | 4,805 
|2005                |  |   | 1,268 
|2006                |  |   | 1,021 
|2007                |  |   | 1,018 
|2008                |  |   | 936   
|2009 and subsequent |  |   | 10,676
|                    |  |   |       
|                    |  | $ | 19,724
|                    |  |   |       



(b)In connection with the
acquisition of Western, the Company was named in a complaint alleging, among other things, that the merger terms between the Company and Western were unfair and violated fiduciary obligations to Westerns shareholders. The Court dismissed the
fraud-based claims, the claims for breach of fiduciary duty in abuse of control and unjust enrichment, and dismissed in part the claim for breach of fiduciary duty. The parties reached a final agreement to resolve the litigation for a payment by the
Company to the plaintiff class in the amount of $975,000. The Company intends to pursue collection of the settlement amount of $975,000 and the related legal costs of approximately $1,224,000 from its insurance carriers. Although the Company
believes these amounts are covered by its existing coverage, and has reflected the settlement payment and the related legal costs in its financial statements as a receivable, one of the insurance carriers has disputed the claim and although the
Company believes it will be successful in collecting the full amount, it can not be assured of that.



(c)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.



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, 2003, the amount payable to the limited partner is estimated to be $1,341,000.



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, 2003, the amounts payable to the other general partner and the limited partner are estimated to be $9,261,000.



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31,
2003, 2002 and 2001

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



15. Segment reporting



The Company operates in one industry segment - real estate ownership, management and development. As of December 31, 2003
and 2002, the Company owned 130 and 105 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.



16. Quarterly financial data (unaudited)



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



|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | ------------------- | ------ | - | ------------ | - | ------ | ------- |  | - | -------- | - |  | - | ------ | -
|                                                                                        |  | Quarters ended 2003 |       
|                                                                                        |  | December 31         |        |   | September 30 |   |        | June 30 |  |   | March 31 |  
|Revenue                                                                                 |  | $                   | 68,478 |   |              | $ | 67,900 |         |  | $ | 66,186   |   |  | $ | 62,058 |  
|Expenses                                                                                |  |                     | 44,070 |   |              |   | 43,047 |         |  |   | 43,391   |   |  |   | 42,661 |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations before minority interests and discontinued operations |  |                     | 24,408 |   |              |   | 24,853 |         |  |   | 22,795   |   |  |   | 19,397 |  
|Minority interests                                                                      |  |                     | (871   | ) |              |   | (463   | )       |  |   | (260     | ) |  |   | (860   | )
|Discontinued operations                                                                 |  |                     | 2,577  |   |              |   | 135    |         |  |   | 5,647    |   |  |   | 7,078  |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Net income                                                                              |  | $                   | 26,114 |   |              | $ | 24,525 |         |  | $ | 28,182   |   |  | $ | 25,615 |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Basic earnings per share:                                                               |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations                                                       |  | $                   | 0.59   |   |              | $ | 0.61   |         |  | $ | 0.57     |   |  | $ | 0.48   |  
|Discontinued operations                                                                 |  | $                   | 0.06   |   |              | $ |       |         |  | $ | 0.14     |   |  | $ | 0.18   |  
|Net income                                                                              |  | $                   | 0.65   |   |              | $ | 0.61   |         |  | $ | 0.71     |   |  | $ | 0.66   |  
|Diluted earnings per share:                                                             |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations                                                       |  | $                   | 0.59   |   |              | $ | 0.61   |         |  | $ | 0.55     |   |  | $ | 0.48   |  
|Discontinued operations                                                                 |  | $                   | 0.06   |   |              | $ |       |         |  | $ | 0.14     |   |  | $ | 0.18   |  
|Net income                                                                              |  | $                   | 0.65   |   |              | $ | 0.61   |         |  | $ | 0.69     |   |  | $ | 0.66   |  
|                                                                                        | 
|                                                                                        |  | Quarters ended 2002 |       
|                                                                                        |  | December 31         |        |   | September 30 |   |        | June 30 |  |   | March 31 |  
|Revenue                                                                                 |  | $                   | 49,375 |   |              | $ | 48,257 |         |  | $ | 46,869   |   |  | $ | 45,284 |  
|Expenses                                                                                |  |                     | 32,404 |   |              |   | 31,695 |         |  |   | 31,146   |   |  |   | 30,198 |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations before minority interests and discontinued operations |  |                     | 16,971 |   |              |   | 16,562 |         |  |   | 15,723   |   |  |   | 15,086 |  
|Minority interests                                                                      |  |                     | (372   | ) |              |   | (359   | )       |  |   | (368     | ) |  |   | (358   | )
|Discontinued operations                                                                 |  |                     | 7,225  |   |              |   | 4,250  |         |  |   | 1,623    |   |  |   | 1,669  |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Net income                                                                              |  | $                   | 23,824 |   |              | $ | 20,453 |         |  | $ | 16,978   |   |  | $ | 16,397 |  
|                                                                                        |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Basic earnings per share:                                                               |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations                                                       |  | $                   | 0.49   |   |              | $ | 0.48   |         |  | $ | 0.46     |   |  | $ | 0.45   |  
|Discontinued operations                                                                 |  | $                   | 0.22   |   |              | $ | 0.13   |         |  | $ | 0.05     |   |  | $ | 0.05   |  
|Net income                                                                              |  | $                   | 0.71   |   |              | $ | 0.61   |         |  | $ | 0.51     |   |  | $ | 0.50   |  
|Diluted earnings per share:                                                             |  |                     |        |   |              |   |        |         |  |   |          |   |  |   |        |  
|Income from continuing operations                                                       |  | $                   | 0.49   |   |              | $ | 0.48   |         |  | $ | 0.46     |   |  | $ | 0.44   |  
|Discontinued operations                                                                 |  | $                   | 0.21   |   |              | $ | 0.12   |         |  | $ | 0.04     |   |  | $ | 0.05   |  
|Net income                                                                              |  | $                   | 0.70   |   |              | $ | 0.60   |         |  | $ | 0.50     |   |  | $ | 0.49   |  



F-25



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION

December 31, 2003

(In thousands)



|                                        |  |              |        |                               |   |                                             |  |             |                 |                                  |               |                                |      |  |                           |        |                   |   |   |  |   |        |  |   |        |  |   |        |  |   |       |  |          |       
|--------------------------------------- |  | ------------ | ------ | ----------------------------- | - | ------------------------------------------- |  | ----------- | --------------- | -------------------------------- | ------------- | ------------------------------ | ---- |  | ------------------------- | ------ | ----------------- | - | - |  | - | ------ |  | - | ------ |  | - | ------ |  | - | ----- |  | -------- | ------
|Description                             |  | Encumbrances |        | Initial Costs                 |   | Costs Capitalized Subsequent to Acquisition |  | Total Costs |                 | Accumulated Depreciation (2) (3) |               | Date ofAcquis. (A) Constr. (C) |     
|                                        |  | Land         |        | Buildings andImprovements (2) |   | LandAdd.                                    |  |             | Improvements(2) |                                  | CarryingCosts |                                | Land |  | Buildings andImprovements |        | Total (1) (2) (3) |   |  
|PROPERTIES:                             |  |              |        |                               |   |                                             |  |             |                 |                                  |               |                                |      |  |                           |        |                   |   |   |  |   |        |  |   |        |  |   |        |  |   |       |  |          |       
|Albany Plaza Albany, OR                 |  | $            |       |                               | $ | 1,525                                       |  | $           | 4,606           |                                  | $             |                               |      |  | $                         | 1,567  |                   | $ |  |  | $ | 1,525  |  | $ | 6,173  |  | $ | 7,698  |  | $ | 923   |  | 1999     | (A)   
|Angels Camp Town Center Angels Camp, CA |  |              |       |                               |   | 1,153                                       |  |             | 3,485           |                                  |               |                               |      |  |                           | 36     |                   |   |  |  |   | 1,153  |  |   | 3,521  |  |   | 4,674  |  |   | 285   |  | 2000     | (A)   
|Arlington Courtyard Riverside, CA       |  |              |       |                               |   | 401                                         |  |             | 753             |                                  |               |                               |      |  |                           | 117    |                   |   |  |  |   | 401    |  |   | 870    |  |   | 1,271  |  |   | 296   |  | 1994     | (A)   
|Auburn North Auburn, WA                 |  |              |       |                               |   | 2,275                                       |  |             | 6,876           |                                  |               |                               |      |  |                           | 2,800  |                   |   |  |  |   | 2,275  |  |   | 9,676  |  |   | 11,951 |  |   | 1,586 |  | 1999     | (A)   
|Bear Creek Plaza Medford, OR            |  |              |       |                               |   | 3,275                                       |  |             | 10,076          |                                  |               |                               |      |  |                           | 1,325  |                   |   |  |  |   | 3,275  |  |   | 11,401 |  |   | 14,676 |  |   | 2,020 |  | 1998     | (A)   
|Bixby Hacienda Hacienda Heights, CA     |  |              |       |                               |   | 6,859                                       |  |             | 16,012          |                                  |               | 3                              |      |  |                           | 141    |                   |   |  |  |   | 6,862  |  |   | 16,153 |  |   | 23,015 |  |   | 723   |  | 2002     | (A)   
|Blaine International Center Blaine, WA  |  |              |       |                               |   | 1,951                                       |  |             | 5,255           |                                  |               |                               |      |  |                           | 70     |                   |   |  |  |   | 1,951  |  |   | 5,325  |  |   | 7,276  |  |   | 438   |  | 2000     | (A)   
|Blossom Valley Turlock, CA              |  |              |       |                               |   | 2,494                                       |  |             | 7,483           |                                  |               |                               |      |  |                           | 38     |                   |   |  |  |   | 2,494  |  |   | 7,521  |  |   | 10,015 |  |   | 593   |  | 2000     | (A)   
|Brookhurst Anaheim, CA                  |  |              |       |                               |   | 6,152                                       |  |             | 14,359          |                                  |               |                               |      |  |                           | 883    |                   |   |  |  |   | 6,152  |  |   | 15,242 |  |   | 21,394 |  |   | 859   |  | 2001     | (A)   
|Brookvale Center Fremont, CA            |  |              |       |                               |   | 3,161                                       |  |             | 9,555           |                                  |               |                               |      |  |                           | 931    |                   |   |  |  |   | 3,161  |  |   | 10,486 |  |   | 13,647 |  |   | 1,787 |  | 1997     | (A)   
|Cable Park Orangevale, CA               |  |              |       |                               |   | 3,043                                       |  |             | 9,192           |                                  |               |                               |      |  |                           | 37     |                   |   |  |  |   | 3,043  |  |   | 9,229  |  |   | 12,272 |  |   | 910   |  | 1999     | (A)   
|Canal Farms Las Brunos, CA              |  |              |       |                               |   | 1,577                                       |  |             | 4,728           |                                  |               |                               |      |  |                           | 54     |                   |   |  |  |   | 1,577  |  |   | 4,782  |  |   | 6,359  |  |   | 395   |  | 2000     | (A)   
|Canby Square Canby, OR                  |  |              |       |                               |   | 2,503                                       |  |             | 7,517           |                                  |               | 33                             |      |  |                           | 1,672  |                   |   |  |  |   | 2,536  |  |   | 9,189  |  |   | 11,725 |  |   | 402   |  | 2001     | (A)   
|Canyon Ridge Plaza Kent, WA             |  |              |       |                               |   | 2,905                                       |  |             |                |                                  |               | (1                             | )    |  |                           | 8,196  |                   |   |  |  |   | 2,904  |  |   | 8,196  |  |   | 11,100 |  |   | 1,908 |  | 19921995 | (A)(C)
|Canyon Square Plaza Santa Clarita, CA   |  |              |       |                               |   | 2,725                                       |  |             | 8,327           |                                  |               |                               |      |  |                           | 112    |                   |   |  |  |   | 2,725  |  |   | 8,439  |  |   | 11,164 |  |   | 986   |  | 1999     | (A)   
|Caughlin Ranch Reno, NV                 |  |              |       |                               |   | 2,274                                       |  |             | 6,853           |                                  |               | 10                             |      |  |                           | 1,118  |                   |   |  |  |   | 2,284  |  |   | 7,971  |  |   | 10,255 |  |   | 631   |  | 2000     | (A)   
|Century Center Modesto, CA              |  |              |       |                               |   | 4,780                                       |  |             | 14,337          |                                  |               |                               |      |  |                           | 649    |                   |   |  |  |   | 4,780  |  |   | 14,986 |  |   | 19,766 |  |   | 1,243 |  | 2000     | (A)   
|Cheyenne Commons Las Vegas, NV          |  |              |       |                               |   | 8,540                                       |  |             | 27,937          |                                  |               |                               |      |  |                           | 2,307  |                   |   |  |  |   | 8,540  |  |   | 30,244 |  |   | 38,784 |  |   | 6,865 |  | 1995     | (A)   
|Chico Crossroads Chico, CA              |  |              |       |                               |   | 3,600                                       |  |             | 17,071          |                                  |               |                               |      |  |                           | 6,034  |                   |   |  |  |   | 3,600  |  |   | 23,105 |  |   | 26,705 |  |   | 2,982 |  | 1997     | (A)   
|Chino Town Square Chino, CA             |  |              | 25,515 |                               |   | 8,801                                       |  |             | 10,466          |                                  |               | 12,290                         |      |  |                           | 15,777 |                   |   |  |  |   | 21,091 |  |   | 26,243 |  |   | 47,334 |  |   | 6,311 |  | 1992     | (A)   
|Claremont Village Everett, WA           |  |              |       |                               |   | 2,320                                       |  |             | 7,035           |                                  |               |                               |      |  |                           | 229    |                   |   |  |  |   | 2,320  |  |   | 7,264  |  |   | 9,584  |  |   | 1,260 |  | 1997     | (A)   
|Cobblestone Redding, CA                 |  |              |       |                               |   | 1,869                                       |  |             | 5,609           |                                  |               |                               |      |  |                           | 119    |                   |   |  |  |   | 1,869  |  |   | 5,728  |  |   | 7,597  |  |   | 484   |  | 2000     | (A)   
|Commonwealth Square Folsom, CA          |  |              |       |                               |   | 4,425                                       |  |             | 13,274          |                                  |               |                               |      |  |                           | 146    |                   |   |  |  |   | 4,425  |  |   | 13,420 |  |   | 17,845 |  |   | 1,073 |  | 2000     | (A)   
|Country Club Center Rio Rancho, NM      |  |              | 3,095  |                               |   | 566                                         |  |             | 1,518           |                                  |               |                               |      |  |                           | 1,864  |                   |   |  |  |   | 566    |  |   | 3,382  |  |   | 3,948  |  |   | 1,362 |  | 1992     | (A)   
|Country Fair Shopping Center Chino, CA  |  |              |       |                               |   | 6,113                                       |  |             | 14,263          |                                  |               |                               |      |  |                           | 319    |                   |   |  |  |   | 6,113  |  |   | 14,582 |  |   | 20,695 |  |   | 344   |  | 2003     | (A)   
|Country Gables Granite Bay, CA          |  |              |       |                               |   | 4,622                                       |  |             | 10,806          |                                  |               |                               |      |  |                           | 149    |                   |   |  |  |   | 4,622  |  |   | 10,955 |  |   | 15,577 |  |   | 892   |  | 2000     | (A)   
|Creekside Center Hayward, CA            |  |              |       |                               |   | 1,500                                       |  |             | 4,545           |                                  |               |                               |      |  |                           | 606    |                   |   |  |  |   | 1,500  |  |   | 5,151  |  |   | 6,651  |  |   | 731   |  | 1998     | (A)   



(continued)



F-26



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##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2003

(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) |  | Carrying Costs                  |  | Land                            |  | Buildings and Improvements |  | Total (1) (2) (3) |  |       
|PROPERTIES:                                       |  |              |  |                                |  |                                             |  |                  |  |                                 |  |                                 |  |                            |  |                   |  |        |  |       |  |      |    
|Date Palm Cathedral City, CA                      |  |             |  | 2,875                          |  | 8,616                                       |  |                 |  | 22                              |  |                                |  | 2,875                      |  | 8,638             |  | 11,513 |  | 199   |  | 2003 | (A)
|Decatur Meadows Las Vegas, NV                     |  |             |  | 2,752                          |  | 6,424                                       |  |                 |  | 264                             |  |                                |  | 2,752                      |  | 6,688             |  | 9,440  |  | 374   |  | 2002 | (A)
|Del Norte Plaza Escondido, CA                     |  | 16,664       |  | 9,972                          |  | 23,268                                      |  |                 |  | 72                              |  |                                |  | 9,972                      |  | 23,340            |  | 33,312 |  | 440   |  | 2003 | (A)
|Dublin Retail Center Dublin, CA                   |  |             |  | 4,063                          |  | 12,160                                      |  |                 |  | 276                             |  |                                |  | 4,063                      |  | 12,436            |  | 16,499 |  | 687   |  | 2000 | (A)
|Eagle Station Carson City, NV                     |  |             |  | 2,455                          |  | 7,363                                       |  |                 |  | 120                             |  |                                |  | 2,455                      |  | 7,483             |  | 9,938  |  | 607   |  | 2000 | (A)
|East Burnside Portland, OR                        |  |             |  | 1,583                          |  | 3,695                                       |  | 21               |  | 211                             |  |                                |  | 1,604                      |  | 3,906             |  | 5,510  |  | 347   |  | 2000 | (A)
|Eastridge Plaza Porterville, CA                   |  |             |  | 1,170                          |  | 3,513                                       |  |                 |  | 7                               |  |                                |  | 1,170                      |  | 3,520             |  | 4,690  |  | 275   |  | 2000 | (A)
|El Camino North Oceanside, CA                     |  |             |  | 14,822                         |  | 34,523                                      |  |                 |  | 12,605                          |  |                                |  | 14,822                     |  | 47,128            |  | 61,950 |  | 878   |  | 2003 | (A)
|Elko Junction Elko, NV                            |  |             |  | 3,274                          |  | 9,822                                       |  |                 |  | 43                              |  |                                |  | 3,274                      |  | 9,865             |  | 13,139 |  | 784   |  | 2000 | (A)
|Elverta Crossing Sacramento, CA                   |  |             |  | 3,080                          |  | 9,236                                       |  |                 |  | 115                             |  |                                |  | 3,080                      |  | 9,351             |  | 12,431 |  | 758   |  | 2000 | (A)
|Encinitas Marketplace Encinitas, CA               |  |             |  | 3,529                          |  | 8,281                                       |  |                 |  | 672                             |  |                                |  | 3,529                      |  | 8,953             |  | 12,482 |  | 1,018 |  | 2000 | (A)
|Fairmont Shopping Center Fairmont, CA             |  |             |  | 3,420                          |  | 8,023                                       |  |                 |  | 334                             |  |                                |  | 3,420                      |  | 8,357             |  | 11,777 |  | 1,576 |  | 1997 | (A)
|Fashion Faire San Leandro, CA                     |  |             |  | 2,863                          |  | 8,695                                       |  |                 |  | 237                             |  |                                |  | 2,863                      |  | 8,932             |  | 11,795 |  | 1,291 |  | 1998 | (A)
|Fire Mountain Oceanside, CA                       |  | 11,640       |  | 5,155                          |  | 12,029                                      |  |                 |  | 33                              |  |                                |  | 5,155                      |  | 12,062            |  | 17,217 |  | 282   |  | 2003 | (A)
|Frontier Village Shopping Center Lake Stevens, WA |  |             |  | 6,258                          |  | 14,573                                      |  |                 |  | 493                             |  |                                |  | 6,258                      |  | 15,066            |  | 21,324 |  | 356   |  | 2003 | (A)
|Fullerton Town Center Fullerton, CA               |  |             |  | 10,192                         |  | 23,617                                      |  |                 |  | 97                              |  |                                |  | 10,192                     |  | 23,714            |  | 33,906 |  | 549   |  | 2003 | (A)
|Gardena Gateway Center Gardena, CA                |  | 6,629        |  | 2,778                          |  | 6,471                                       |  |                 |  | 46                              |  |                                |  | 2,778                      |  | 6,517             |  | 9,295  |  | 150   |  | 2003 | (A)
|Garrison Square Vancouver, WA                     |  |             |  | 1,462                          |  | 4,391                                       |  | 44               |  | 1,075                           |  |                                |  | 1,506                      |  | 5,466             |  | 6,972  |  | 258   |  | 2001 | (A)
|Gateway Shopping Center Mill Creek, WA            |  |             |  | 3,938                          |  | 12,032                                      |  |                 |  | 76                              |  |                                |  | 3,938                      |  | 12,108            |  | 16,046 |  | 826   |  | 2000 | (A)
|Glen Cove Center Vallejo, CA                      |  |             |  | 1,925                          |  | 5,807                                       |  |                 |  | 26                              |  |                                |  | 1,925                      |  | 5,833             |  | 7,758  |  | 771   |  | 1998 | (A)
|Glenbrook Center Sacramento, CA                   |  |             |  | 1,538                          |  | 3,588                                       |  |                 |  | 1,428                           |  |                                |  | 1,538                      |  | 5,016             |  | 6,554  |  | 417   |  | 2000 | (A)
|Gordon Ranch Chino Hills, CA                      |  |             |  | 5,623                          |  | 13,120                                      |  |                 |  | 150                             |  |                                |  | 5,623                      |  | 13,270            |  | 18,893 |  | 446   |  | 2002 | (A)
|Granary Square Valencia, CA                       |  |             |  | 5,479                          |  | 12,835                                      |  |                 |  | 433                             |  |                                |  | 5,479                      |  | 13,268            |  | 18,747 |  | 1,169 |  | 2000 | (A)
|Green Valley Town & Country Henderson, NV         |  |             |  | 4,096                          |  | 12,343                                      |  |                 |  | 177                             |  |                                |  | 4,096                      |  | 12,520            |  | 16,616 |  | 2,057 |  | 1997 | (A)
|Gresham Town Fair Gresham, OR                     |  | 16,139       |  | 6,471                          |  | 15,078                                      |  |                 |  | 138                             |  |                                |  | 6,471                      |  | 15,216            |  | 21,687 |  | 350   |  | 2003 | (A)
|Heritage Park Suison City, CA                     |  |             |  | 3,449                          |  | 10,348                                      |  |                 |  | 747                             |  |                                |  | 3,449                      |  | 11,095            |  | 14,544 |  | 851   |  | 2000 | (A)
|Heritage Place Tulare, CA                         |  |             |  | 2,098                          |  | 6,298                                       |  |                 |  | 43                              |  |                                |  | 2,098                      |  | 6,341             |  | 8,439  |  | 509   |  | 2000 | (A)



F-27



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2003

(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) |                                  |        | Carrying Costs                  |  | Land |  | Buildings andImprovements |  | Total (1) (2) (3) |  |       
|PROPERTIES:                              |  |              |  |                                |  |                                             |  |             |                  |                                  |        |                                 |  |      |  |                           |  |                   |  |        |  |       |  |             |       
|Hermiston Plaza Hermiston, OR            |  |             |  | 1,930                          |  | 6,145                                       |  |            |                  |                                  | 1,217  |                                 |  |     |  | 1,930                     |  | 7,362             |  | 9,292  |  | 1,111 |  | 1998        | (A)   
|Hood River Center Hood River, OR         |  |             |  | 1,169                          |  | 3,699                                       |  |            |                  |                                  | 3,220  |                                 |  |     |  | 1,169                     |  | 6,919             |  | 8,088  |  | 912   |  | 1998        | (A)   
|Kenneth Hahn Plaza Los Angeles, CA       |  | 6,000        |  | 3,116                          |  | 7,271                                       |  |            |                  |                                  | 144    |                                 |  |     |  | 3,116                     |  | 7,415             |  | 10,531 |  | 173   |  | 2003        | (A)   
|Kmart Phoenix, AZ                        |  |             |  | 1,590                          |  | 3,710                                       |  |            |                  |                                  |       |                                 |  |     |  | 1,590                     |  | 3,710             |  | 5,300  |  | 91    |  | 2003        | (A)   
|Kmart Center Sacramento, CA              |  |             |  | 1,130                          |  | 3,392                                       |  |            |                  |                                  | 171    |                                 |  |     |  | 1,130                     |  | 3,563             |  | 4,693  |  | 335   |  | 2000        | (A)   
|La Verne Towne Center Trust La Verne, CA |  |             |  | 3,477                          |  | 7,980                                       |  |            |                  |                                  | 126    |                                 |  |     |  | 3,477                     |  | 8,106             |  | 11,583 |  | 191   |  | 2003        | (A)   
|Laguna 99 Plaza Elk Grove, CA            |  |             |  | 3,244                          |  | 9,730                                       |  |            |                  |                                  | 15     |                                 |  |     |  | 3,244                     |  | 9,745             |  | 12,989 |  | 765   |  | 2000        | (A)   
|Laguna Village Sacramento, CA            |  |             |  | 3,448                          |  | 20                                          |  |            |                  |                                  | 18,271 |                                 |  |     |  | 3,448                     |  | 18,291            |  | 21,739 |  | 4,206 |  | 19921996/97 | (A)(C)
|Lakewood Shopping Center Lakewood, CA    |  |             |  | 2,363                          |  | 7,141                                       |  |            |                  |                                  | 51     |                                 |  |     |  | 2,363                     |  | 7,192             |  | 9,555  |  | 1,190 |  | 1997        | (A)   
|Lakewood Plaza Bellflower, CA            |  |             |  | 2,538                          |  | 5,921                                       |  |            |                  |                                  |       |                                 |  |     |  | 2,538                     |  | 5,921             |  | 8,459  |  | 136   |  | 2003        | (A)   
|Lakewood Village Windsor, CA             |  | 8,833        |  | 5,347                          |  | 12,476                                      |  |            |                  |                                  | 110    |                                 |  |     |  | 5,347                     |  | 12,586            |  | 17,933 |  | 1,012 |  | 2000        | (A)   
|Larwin Square Tustin, CA                 |  |             |  | 8,617                          |  | 20,104                                      |  |            |                  |                                  | 386    |                                 |  |     |  | 8,617                     |  | 20,490            |  | 29,107 |  | 509   |  | 2002        | (A)   
|Laurentian Center Ontario, CA            |  | 4,159        |  | 2,767                          |  | 6,411                                       |  |            |                  |                                  | (389   | )                               |  |     |  | 2,767                     |  | 6,022             |  | 8,789  |  | 1,212 |  | 1994/96     | (A)   
|Loma Square San Diego, CA                |  | 17,820       |  | 7,764                          |  | 18,116                                      |  |            |                  |                                  | 64     |                                 |  |     |  | 7,764                     |  | 18,180            |  | 25,944 |  | 423   |  | 2003        | (A)   
|Manteca Marketplace Manteca, CA          |  |             |  | 3,904                          |  | 11,908                                      |  | 16          |                  |                                  | 660    |                                 |  |     |  | 3,920                     |  | 12,568            |  | 16,488 |  | 1,910 |  | 1998        | (A)   
|Marina Village Huntington Beach, CA      |  |             |  | 3,531                          |  | 10,660                                      |  | 15          |                  |                                  | 669    |                                 |  |     |  | 3,546                     |  | 11,329            |  | 14,875 |  | 1,489 |  | 1999        | (A)   
|Maysville Marketsquare Maysville, KY     |  | 5,064        |  | 3,435                          |  | 2,001                                       |  | (86         | )                |                                  | 3,988  |                                 |  |     |  | 3,349                     |  | 5,989             |  | 9,338  |  | 1,693 |  | 19921993    | (A)(C)
|Medford Center Medford, OR               |  |             |  | 8,369                          |  | 19,527                                      |  |            |                  |                                  | 276    |                                 |  |     |  | 8,369                     |  | 19,803            |  | 28,172 |  | 449   |  | 2003        | (A)   
|Melrose Village Vista, CA                |  | 8,650        |  | 5,125                          |  | 11,621                                      |  |            |                  |                                  | 174    |                                 |  |     |  | 5,125                     |  | 11,795            |  | 16,920 |  | 2,891 |  | 1999        | (A)   
|Memphis Retail Center Memphis, TN        |  |             |  | 1,204                          |  | 3,784                                       |  |            |                  |                                  | (70    | )                               |  |     |  | 1,204                     |  | 3,714             |  | 4,918  |  | 1,064 |  | 1992        | (A)   
|Menlo Park Portland, OR                  |  |             |  | 3,056                          |  | 7,134                                       |  | 44          |                  |                                  | 1,600  |                                 |  |     |  | 3,100                     |  | 8,734             |  | 11,834 |  | 703   |  | 2000        | (A)   
|Milwaukie Marketplace Milwaukie, OR      |  |             |  | 3,184                          |  | 9,717                                       |  |            |                  |                                  | 544    |                                 |  |     |  | 3,184                     |  | 10,261            |  | 13,445 |  | 1,729 |  | 1998        | (A)   
|Mineral King Plaza Visalia, CA           |  |             |  | 1,506                          |  | 3,505                                       |  |            |                  |                                  | 24     |                                 |  |     |  | 1,506                     |  | 3,529             |  | 5,035  |  | 82    |  | 2003        | (A)   
|Mira Loma Shopping Center Reno, NV       |  |             |  | 1,925                          |  | 5,810                                       |  |            |                  |                                  | 742    |                                 |  |     |  | 1,925                     |  | 6,552             |  | 8,477  |  | 854   |  | 1998        | (A)   
|Mission Ridge Plaza Manteca, CA          |  |             |  | 2,880                          |  | 8,640                                       |  |            |                  |                                  | 6      |                                 |  |     |  | 2,880                     |  | 8,646             |  | 11,526 |  | 676   |  | 2000        | (A)   
|Monterey Plaza San Jose, CA              |  | 16,410       |  | 7,688                          |  | 18,692                                      |  | 14          |                  |                                  | 432    |                                 |  |     |  | 7,702                     |  | 19,124            |  | 26,826 |  | 3,270 |  | 1997        | (A)   
|Mountain Square Upland, CA               |  | 24,151       |  | 8,902                          |  | 20,666                                      |  |            |                  |                                  | 34     |                                 |  |     |  | 8,902                     |  | 20,700            |  | 29,602 |  | 477   |  | 2003        | (A)   



F-28



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2003

(In thousands)



|                                             |  |              |  |                                |  |                                             |  |             |                  |                                 |               |                                |      |  |                            |  |                 |  |        |  |       |  |      |    
|-------------------------------------------- |  | ------------ |  | ------------------------------ |  | ------------------------------------------- |  | ----------- | ---------------- | ------------------------------- | ------------- | ------------------------------ | ---- |  | -------------------------- |  | --------------- |  | ------ |  | ----- |  | ---- | ---
|Description                                  |  | Encumbrances |  | Initial Costs                  |  | Costs Capitalized Subsequent to Acquisition |  | Total Costs |                  | Accumulated Depreciation(2) (3) |               | Date ofAcquis. (A) Constr. (C) |     
|                                             |  | Land         |  | Buildings and Improvements (2) |  | LandAdd.                                    |  |             | Improvements (2) |                                 | CarryingCosts |                                | Land |  | Buildings and Improvements |  | Total (1)(2)(3) |  |       
|PROPERTIES:                                  |  |              |  |                                |  |                                             |  |             |                  |                                 |               |                                |      |  |                            |  |                 |  |        |  |       |  |      |    
|North County Plaza Carlsbad, CA              |  |             |  | 5,899                          |  | 13,765                                      |  |            |                  |                                 | 265           |                                |     |  | 5,899                      |  | 14,030          |  | 19,929 |  | 322   |  | 2003 | (A)
|North Hills Reno, NV                         |  |             |  | 2,500                          |  |                                            |  |            |                  |                                 |              |                                |     |  | 2,500                      |  |                |  | 2,500  |  |      |  | 2000 | (A)
|North Mountain Village Phoenix, AZ           |  | 7,013        |  | 2,058                          |  | 6,173                                       |  |            |                  |                                 | 32            |                                |     |  | 2,058                      |  | 6,205           |  | 8,263  |  | 157   |  | 2003 | (A)
|Northridge Plaza Fair Oaks, CA               |  |             |  | 1,658                          |  | 4,977                                       |  |            |                  |                                 | 204           |                                |     |  | 1,658                      |  | 5,181           |  | 6,839  |  | 444   |  | 2000 | (A)
|Oceanside Crossing Oceanside, CA             |  |             |  | 1,667                          |  | 3,890                                       |  |            |                  |                                 | 136           |                                |     |  | 1,667                      |  | 4,026           |  | 5,693  |  | 90    |  | 2003 | (A)
|Olympia Place Walnut Creek, CA               |  |             |  | 8,559                          |  |                                            |  |            |                  |                                 | 36,605        |                                |     |  | 8,559                      |  | 36,605          |  | 45,164 |  |      |  | 2000 | (A)
|Olympia Square Olympia, WA                   |  | 13,317       |  | 3,737                          |  | 11,580                                      |  |            |                  |                                 | 1,139         |                                |     |  | 3,737                      |  | 12,719          |  | 16,456 |  | 4,686 |  | 1992 | (A)
|Olympia West Center Olympia, WA              |  |             |  | 2,736                          |  | 8,278                                       |  |            |                  |                                 | 161           |                                |     |  | 2,736                      |  | 8,439           |  | 11,175 |  | 1,425 |  | 1997 | (A)
|Oregon City Shopping Center Oregon City, OR  |  | 9,269        |  | 4,426                          |  | 13,424                                      |  |            |                  |                                 | 2,590         |                                |     |  | 4,426                      |  | 16,014          |  | 20,440 |  | 2,004 |  | 1998 | (A)
|Oregon Trail Gresham, OR                     |  |             |  | 3,593                          |  | 11,501                                      |  |            |                  |                                 | 2,826         |                                |     |  | 3,593                      |  | 14,327          |  | 17,920 |  | 2,189 |  | 1998 | (A)
|Pacific Commons Shopping Center Spanaway, WA |  |             |  | 3,419                          |  | 10,307                                      |  |            |                  |                                 | 94            |                                |     |  | 3,419                      |  | 10,401          |  | 13,820 |  | 1,456 |  | 1998 | (A)
|Palmdale Center Palmdale, CA                 |  |             |  | 1,150                          |  | 3,509                                       |  |            |                  |                                 | 221           |                                |     |  | 1,150                      |  | 3,730           |  | 4,880  |  | 661   |  | 1997 | (A)
|Panther Lake Shopping Center Kent, WA        |  |             |  | 1,950                          |  | 5,901                                       |  |            |                  |                                 | 298           |                                |     |  | 1,950                      |  | 6,199           |  | 8,149  |  | 1,015 |  | 1998 | (A)
|Park Place Vallejo, CA                       |  |             |  | 4,020                          |  | 9,381                                       |  |            |                  |                                 | 87            |                                |     |  | 4,020                      |  | 9,468           |  | 13,488 |  | 745   |  | 2000 | (A)
|Pavilions Place Westminster, CA              |  |             |  | 12,071                         |  | 28,166                                      |  | 12          |                  |                                 | 68            |                                |     |  | 12,083                     |  | 28,234          |  | 40,317 |  | 393   |  | 2003 | (A)
|Pine Creek Shopping Center Grass Valley, CA  |  |             |  | 5,000                          |  | 15,001                                      |  |            |                  |                                 | 378           |                                |     |  | 5,000                      |  | 15,379          |  | 20,379 |  | 1,255 |  | 2000 | (A)
|Pioneer Plaza Springfield, OR                |  |             |  | 1,864                          |  | 5,707                                       |  |            |                  |                                 | 11            |                                |     |  | 1,864                      |  | 5,718           |  | 7,582  |  | 853   |  | 1998 | (A)
|Plaza 580 Livermore, CA                      |  |             |  | 4,010                          |  | 12,031                                      |  |            |                  |                                 | 180           |                                |     |  | 4,010                      |  | 12,211          |  | 16,221 |  | 1,012 |  | 2000 | (A)
|Powell Valley Junction Gresham, OR           |  |             |  | 1,546                          |  | 4,747                                       |  |            |                  |                                 | 1,572         |                                |     |  | 1,546                      |  | 6,319           |  | 7,865  |  | 825   |  | 1998 | (A)
|Powell Villa Portland, OR                    |  |             |  | 825                            |  | 2,478                                       |  | 23          |                  |                                 | 285           |                                |     |  | 848                        |  | 2,763           |  | 3,611  |  | 216   |  | 2001 | (A)
|Rainbow Promenade Las Vegas, NV              |  | 18,515       |  | 9,381                          |  | 21,933                                      |  | (15         | )                |                                 | 160           |                                |     |  | 9,366                      |  | 22,093          |  | 31,459 |  | 3,530 |  | 1997 | (A)
|Rancho Las Palmas Rancho Mirage, CA          |  | 11,921       |  | 5,025                          |  | 15,233                                      |  |            |                  |                                 | 950           |                                |     |  | 5,025                      |  | 16,183          |  | 21,208 |  | 1,843 |  | 1999 | (A)
|Rheem Valley Moraga, CA                      |  |             |  | 4,518                          |  | 10,523                                      |  |            |                  |                                 | 458           |                                |     |  | 4,518                      |  | 10,981          |  | 15,499 |  | 282   |  | 2003 | (A)
|Rockwood Plaza Gresham, OR                   |  |             |  | 1,179                          |  | 3,540                                       |  | 18          |                  |                                 | 1,269         |                                |     |  | 1,197                      |  | 4,809           |  | 6,006  |  | 544   |  | 2000 | (A)
|Sahara Pavilion North Las Vegas, NV          |  | 29,354       |  | 11,925                         |  | 28,653                                      |  | (10         | )                |                                 | 953           |                                |     |  | 11,915                     |  | 29,606          |  | 41,521 |  | 9,769 |  | 1992 | (A)
|Sahara Pavilion South Las Vegas, NV          |  |             |  | 4,833                          |  | 12,988                                      |  |            |                  |                                 | 2,021         |                                |     |  | 4,833                      |  | 15,009          |  | 19,842 |  | 5,097 |  | 1992 | (A)
|San Dimas Market Place San Dimas, CA         |  | 13,886       |  | 5,699                          |  | 17,315                                      |  |            |                  |                                 | 6             |                                |     |  | 5,699                      |  | 17,321          |  | 23,020 |  | 2,598 |  | 1998 | (A)



(continued)



F-29



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2003

(In thousands)



|                                                |  |              |         |                               |   |                                             |  |             |                  |                                  |               |                               |      |  |                            |         |                |   |   |  |   |         |  |   |           |  |   |           |  |   |         |  |      |    
|----------------------------------------------- |  | ------------ | ------- | ----------------------------- | - | ------------------------------------------- |  | ----------- | ---------------- | -------------------------------- | ------------- | ----------------------------- | ---- |  | -------------------------- | ------- | -------------- | - | - |  | - | ------- |  | - | --------- |  | - | --------- |  | - | ------- |  | ---- | ---
|Description                                     |  | Encumbrances |         | Initial Costs                 |   | Costs Capitalized Subsequent to Acquisition |  | Total Costs |                  | Accumulated Depreciation (2) (3) |               | Date ofAcquis. (A)Constr. (C) |     
|                                                |  | Land         |         | Buildings andImprovements (2) |   | LandAdd.                                    |  |             | Improvements (2) |                                  | CarryingCosts |                               | Land |  | Buildings and Improvements |         | Total(1)(2)(3) |   |  
|PROPERTIES:                                     |  |              |         |                               |   |                                             |  |             |                  |                                  |               |                               |      |  |                            |         |                |   |   |  |   |         |  |   |           |  |   |           |  |   |         |  |      |    
|Sandy Marketplace Sandy, OR                     |  |              | 4,303   |                               |   | 2,047                                       |  |             | 6,132            |                                  |               |                              |      |  |                            | 432     |                |   |  |  |   | 2,047   |  |   | 6,564     |  |   | 8,611     |  |   | 936     |  | 1998 | (A)
|Shops at Bakersfield Bakersfield, CA            |  |              |        |                               |   | 59                                          |  |             | 178              |                                  |               |                              |      |  |                            |        |                |   |  |  |   | 59      |  |   | 178       |  |   | 237       |  |   | 4       |  | 2003 | (A)
|Shops at Lincoln School Modesto, CA             |  |              |        |                               |   | 1,672                                       |  |             | 5,069            |                                  |               |                              |      |  |                            | 27      |                |   |  |  |   | 1,672   |  |   | 5,096     |  |   | 6,768     |  |   | 548     |  | 1999 | (A)
|Silverdale Shopping Center Silverdale, WA       |  |              | 5,598   |                               |   | 2,048                                       |  |             | 4,652            |                                  |               |                              |      |  |                            | 28      |                |   |  |  |   | 2,048   |  |   | 4,680     |  |   | 6,728     |  |   | 108     |  | 2003 | (A)
|Sky Park Plaza Chico, CA                        |  |              |        |                               |   | 3,566                                       |  |             | 10,700           |                                  |               |                              |      |  |                            | 294     |                |   |  |  |   | 3,566   |  |   | 10,994    |  |   | 14,560    |  |   | 845     |  | 2000 | (A)
|Southern Palms Tempe, AZ                        |  |              |        |                               |   | 3,661                                       |  |             | 10,983           |                                  |               |                              |      |  |                            | 140     |                |   |  |  |   | 3,661   |  |   | 11,123    |  |   | 14,784    |  |   | 278     |  | 2003 | (A)
|Southgate Center Milwaukie, OR                  |  |              | 2,979   |                               |   | 1,423                                       |  |             | 4,319            |                                  |               |                              |      |  |                            | 448     |                |   |  |  |   | 1,423   |  |   | 4,767     |  |   | 6,190     |  |   | 606     |  | 1998 | (A)
|Southpointe Plaza Sacramento, CA                |  |              | 9,366   |                               |   | 2,194                                       |  |             | 5,100            |                                  |               |                              |      |  |                            | 118     |                |   |  |  |   | 2,194   |  |   | 5,218     |  |   | 7,412     |  |   | 123     |  | 2003 | (A)
|Sunset Esplanade Hillsboro, OR                  |  |              |        |                               |   | 8,610                                       |  |             | 20,090           |                                  |               |                              |      |  |                            | 16      |                |   |  |  |   | 8,610   |  |   | 20,106    |  |   | 28,716    |  |   | 923     |  | 2002 | (A)
|Sunset Mall Portland, OR                        |  |              | 7,369   |                               |   | 2,996                                       |  |             | 9,089            |                                  |               | (14                           | )    |  |                            | 124     |                |   |  |  |   | 2,982   |  |   | 9,213     |  |   | 12,195    |  |   | 1,211   |  | 1998 | (A)
|Sunset Square Bellingham, WA                    |  |              |        |                               |   | 6,100                                       |  |             | 18,647           |                                  |               | (7                            | )    |  |                            | 2,532   |                |   |  |  |   | 6,093   |  |   | 21,179    |  |   | 27,272    |  |   | 7,373   |  | 1992 | (A)
|Sycamore Plaza Anaheim, CA                      |  |              |        |                               |   | 1,856                                       |  |             | 5,589            |                                  |               |                              |      |  |                            | 108     |                |   |  |  |   | 1,856   |  |   | 5,697     |  |   | 7,553     |  |   | 483     |  | 2000 | (A)
|Tacoma Central Tacoma, WA                       |  |              | 8,652   |                               |   | 5,314                                       |  |             | 16,219           |                                  |               |                              |      |  |                            | 589     |                |   |  |  |   | 5,314   |  |   | 16,808    |  |   | 22,122    |  |   | 2,677   |  | 1997 | (A)
|Tanasbourne Village Hillsboro, OR               |  |              | 17,676  |                               |   | 5,573                                       |  |             | 13,861           |                                  |               |                              |      |  |                            | 1,145   |                |   |  |  |   | 5,573   |  |   | 15,006    |  |   | 20,579    |  |   | 4,780   |  | 1992 | (A)
|Tustin Heights Tustin, CA                       |  |              | 10,057  |                               |   | 3,675                                       |  |             | 11,089           |                                  |               |                              |      |  |                            | 723     |                |   |  |  |   | 3,675   |  |   | 11,812    |  |   | 15,487    |  |   | 1,699   |  | 1997 | (A)
|Ukiah Crossroads Ukiah, CA                      |  |              |        |                               |   | 1,869                                       |  |             | 5,609            |                                  |               |                              |      |  |                            | 20      |                |   |  |  |   | 1,869   |  |   | 5,629     |  |   | 7,498     |  |   | 447     |  | 2000 | (A)
|Vermont Slauson Shopping Center Los Angeles, CA |  |              |        |                               |   | 5,237                                       |  |             | 12,157           |                                  |               |                              |      |  |                            | 7       |                |   |  |  |   | 5,237   |  |   | 12,164    |  |   | 17,401    |  |   | 252     |  | 2003 | (A)
|Victorian Walk Fresno, CA                       |  |              |        |                               |   | 1,676                                       |  |             | 5,025            |                                  |               |                              |      |  |                            | 324     |                |   |  |  |   | 1,676   |  |   | 5,349     |  |   | 7,025     |  |   | 461     |  | 2000 | (A)
|Vineyard Village East Ontario, CA               |  |              |        |                               |   | 648                                         |  |             | 2,720            |                                  |               | 1                             |      |  |                            | 318     |                |   |  |  |   | 649     |  |   | 3,038     |  |   | 3,687     |  |   | 814     |  | 1994 | (A)
|Vineyards Marketplace Rancho Cucamonga, CA      |  |              | 5,033   |                               |   | 2,072                                       |  |             | 4,835            |                                  |               |                              |      |  |                            |        |                |   |  |  |   | 2,072   |  |   | 4,835     |  |   | 6,907     |  |   | 111     |  | 2003 | (A)
|Walmart/Sams Club Downey, CA                   |  |              |        |                               |   | 900                                         |  |             | 2,100            |                                  |               |                              |      |  |                            |        |                |   |  |  |   | 900     |  |   | 2,100     |  |   | 3,000     |  |   | 48      |  | 2003 | (A)
|West Town Winnemucca, NV                        |  |              |        |                               |   | 1,085                                       |  |             | 3,258            |                                  |               |                              |      |  |                            | 7       |                |   |  |  |   | 1,085   |  |   | 3,265     |  |   | 4,350     |  |   | 256     |  | 2000 | (A)
|Winterwood Pavilion Las Vegas, NV               |  |              |        |                               |   | 4,573                                       |  |             | 13,015           |                                  |               |                              |      |  |                            | 1,765   |                |   |  |  |   | 4,573   |  |   | 14,780    |  |   | 19,353    |  |   | 5,412   |  | 1992 | (A)
|Yreka Junction Yreka, CA                        |  |              |        |                               |   | 2,436                                       |  |             | 7,304            |                                  |               |                              |      |  |                            | 12      |                |   |  |  |   | 2,436   |  |   | 7,316     |  |   | 9,752     |  |   | 576     |  | 2000 | (A)
|                                                |  |              |         |                               |   |                                             |  |             |                  |                                  |               |                               |      |  |                            |         |                |   |   |  |   |         |  |   |           |  |   |           |  |   |         |  |      |    
|                                                |  | $            | 345,077 |                               | $ | 497,476                                     |  | $           | 1,262,609        |                                  | $             | 12,411                        |      |  | $                          | 161,847 |                | $ |  |  | $ | 509,887 |  | $ | 1,424,456 |  | $ | 1,934,343 |  | $ | 160,449 |  |      |    
|                                                |  |              |         |                               |   |                                             |  |             |                  |                                  |               |                               |      |  |                            |         |                |   |   |  |   |         |  |   |           |  |   |           |  |   |         |  |      |    



(continued)



F-30



---

##### Table of Contents

PAN PACIFIC RETAIL PROPERTIES, INC.

SCHEDULE III

PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)

December 31, 2003

(In thousands)



Notes:



|(1) | The aggregate gross cost of the properties owned by Pan Pacific Retail Properties, Inc. for federal income tax purposes, approximated $1,724,827 as of December 31, 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(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, 2001 through December
31, 2003:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------------------------------------------------------------------ |  | -------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                                             |  | For the years ended December 31, |          
|Cost of properties                                                                                           |  | 2003                             |           |   | 2002 |   |           | 2001 | 
|Balance, beginning of year                                                                                   |  | $                                | 1,431,090 |   |      | $ | 1,331,951 |      |  | $ | 1,268,719 |  
|Additions (acquisition, improvements, etc.)                                                                  |  |                                  | 725,670   |   |      |   | 130,425   |      |  |   | 93,180    |  
|Interest capitalized                                                                                         |  |                                  | 4,507     |   |      |   | 1,796     |      |  |   | 1,539     |  
|Deductions (write-off of tenant improvements, cost of real estate sold and provision for loss on impairment) |  |                                  | (226,924  | ) |      |   | (33,082   | )    |  |   | (31,487   | )
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|Balance, end of year                                                                                         |  | $                                | 1,934,343 |   |      | $ | 1,431,090 |      |  | $ | 1,331,951 |  
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|                                                                                                             | 
|                                                                                                             |  | For the years ended December 31, |          
|Accumulated depreciation and amortization                                                                    |  | 2003                             |           |   | 2002 |   |           | 2001 | 
|Balance, beginning of year                                                                                   |  | $                                | 125,057   |   |      | $ | 98,762    |      |  | $ | 73,895    |  
|Additions (depreciation and amortization expense)                                                            |  |                                  | 37,838    |   |      |   | 28,526    |      |  |   | 27,536    |  
|Deductions (write-off of accumulated depreciation of tenant improvements and cost of real estate sold)       |  |                                  | (2,446    | ) |      |   | (2,231    | )    |  |   | (2,669    | )
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  
|Balance, end of year                                                                                         |  | $                                | 160,449   |   |      | $ | 125,057   |      |  | $ | 98,762    |  
|                                                                                                             |  |                                  |           |   |      |   |           |      |  |   |           |  



See accompanying
independent auditors report.



F-31