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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    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, 2000
                        COMMISSION FILE NUMBER: 001-13243


                       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                               92083
(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


        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 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]

        The aggregate market value of the shares of common stock held by
non-affiliates was approximately $510,663,000 based upon the closing price on
the New York Stock Exchange for such shares of $21.84 on March 16, 2001.

        As of March 16, 2001, the number of shares of the Registrant's common
stock outstanding was 31,390,038.


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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 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


<TABLE>
<CAPTION>
                                     PART I
                                                                            Page
                                                                            ----
<S>                                                                         <C>
ITEM 1.   BUSINESS........................................................    1
ITEM 2.   PROPERTIES......................................................    9
ITEM 3.   LEGAL PROCEEDINGS...............................................   22
ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............   22

                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS..........................................   22
ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA............................   23
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS..........................   24
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......   31
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................   31
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
             ON ACCOUNTING AND FINANCIAL DISCLOSURE.......................   31

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............   32
ITEM 11.  EXECUTIVE COMPENSATION..........................................   32
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT...................................................   32
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................   32

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
             FORM 8-K.....................................................   32

FINANCIAL PAGES   ........................................................  F-1
</TABLE>


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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.

        On November 13, 2000, we acquired Western Properties Trust, a California
real estate investment trust. The transaction was a stock for stock exchange
whereby Western common shares and units were exchanged into newly issued Company
common shares and operating partnership 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 10,754,256 shares of our common stock to holders of Western
common shares and are obligated to issue 911,934 shares of our common stock upon
the exchange of operating partnership units held by limited partners of Pan
Pacific (Kienows), L.P., formerly Western/Kienow, L.P., and Pan Pacific
(Pinecreek), L.P., formerly Western/Pinecreek, L.P.

        As of December 31, 2000, we owned a portfolio comprised of 110 shopping
center properties, of which 106 are located in the Western United States
including 44 in Northern California, 14 in Southern California, 24 in Oregon, 13
in Nevada and 11 in Washington.

        We employed 100 people as of December 31, 2000, including five 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, 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; Chino, California; 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 commencing with our taxable year
ended December 31, 1997. We believe that, commencing with our taxable year ended
December 31, 1997, 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.

BUSINESS STRATEGIES

        Our business strategies involve three fundamental practices:

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

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

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


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GROWTH STRATEGIES

        Our principal growth strategy is to acquire shopping centers that
provide an opportunity to expand in current markets or which allows 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 submarket
                  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 primary regions; (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.

        From the closing of our initial public offering on August 13, 1997
through October 31, 2000, we acquired 39 shopping centers totaling 5,230,374
square feet of retail space for approximately $435,800,000. In November 2000,
through our acquisition of Western, we acquired 50 additional properties
totaling 5,652,044 square feet of retail space for approximately $440,000,000 in
stock and the assumption of Western's debt. All of these 89 properties are
located in our five key markets, and 67 of the shopping centers (75%) are
anchored by grocery stores. We believe that all of these shopping centers are
located in markets with strong demographic characteristics. We intend to add
value to these retail properties through the application of our active, hands-on
management and aggressive leasing strategies. We believe that current market
conditions are generally favorable to acquisitions and, as such, we intend to
continue acquiring properties as our primary growth strategy.

        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 aggressively 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 primary regions.

FINANCING STRATEGIES

        Our financing strategy is 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.


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        During 1998, we completed a secondary offering of 4,348,000 shares of
common stock at $21.125 per share. The net proceeds to us were approximately
$85,913,000. We also obtained an increase to our unsecured credit facility from
$150,000,000 to $200,000,000 and a reduction in the top borrowing rate
thereunder to LIBOR plus 1.375%.

        Also, during 1998, we formed Pan Pacific (Portland), LLC with us as sole
managing member. In the fourth quarter, Pan Pacific (Portland) acquired a
portfolio of six shopping centers located in Oregon. In exchange for four
properties which were contributed to Pan Pacific (Portland), 832,617 units were
issued to certain non-managing members. Distributions are made to the
non-managing members at a rate equal to the dividend distribution paid by us on
a share of our common stock. A non-managing member can seek redemption of their
units after the first anniversary. We may, at our option, redeem the units by
either (i) issuing common stock at the rate of one share for each unit, or (ii)
by paying cash for their units.

        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.

        Also 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
Rancho Las Palmas. We and Pan Pacific (RLP) are co-managing members of Pan
Pacific (Rancho Las Palmas). As part of the acquisition, and in exchange for an
interest in the asset contributed to Pan Pacific (Rancho Las Palmas) by an
individual, 314,587 units were issued to this individual, a non-managing member.
Distributions are made to the 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 their units.

        In December 1999, we entered into a loan modification agreement with the
lender on Chino Town Square. Pursuant to the terms of the modification
agreement, the maturity date was extended to January 2010 and the interest rate
was reduced from 8.00% to 7.72%. This loan previously had a maturity date of
March 2000.

        Also in December 1999, we extended our $200,000,000 Unsecured 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 the credit line 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 additional new financing arrangements including a $300,000,000
Revolving Credit Agreement and a $100,000,000 Term Credit Agreement. The
Revolving Credit Agreement matures in January 2004 and the Term Credit Agreement
matures in November 2001. Our borrowing rate under the Revolving Credit
Agreement is LIBOR plus 1.10% while the borrowing rate under the Term Credit
Agreement is LIBOR plus 1.20%.

        Also in connection with our acquisition of Western, we assumed Western's
obligations including its Unsecured Senior Notes in principal amounts 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.

DISPOSITIONS

        During 1999, we disposed of three non-strategic assets. In June, we sold
a single-tenant property in Hillsboro, Oregon. The net proceeds from the sale
were used to repay indebtedness under our unsecured credit facility. In
December, we sold Rosewood Village, a 50,000 square foot property in Northern
California. The net proceeds were used to acquire the Cable Park property in a
like-kind exchange transaction pursuant to Section 1031 of the Internal Revenue
Code. Also in December, we sold Foothill Center, a 20,000 square foot property
in Southern California.


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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 used to repay
indebtedness under our unsecured credit facility.

        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 exchanger for use in a
like-kind exchange transaction pursuant to Section 1031 of the Internal Revenue
Code.

        We may dispose of certain non-strategic assets over the next eighteen
months. 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.

CERTAIN CAUTIONARY STATEMENTS

        REAL ESTATE INVESTMENT ASSOCIATED RISKS. 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;

                - Our ability to manage and maintain the properties and secure
                  adequate insurance; and

                - Increases in operating costs (including real estate taxes and
                  utilities).

        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.

        OUR POTENTIAL INABILITY 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 6.2% and 44.0% of the
leased gross leasable area, or GLA, of our properties will expire through the
end of 2001 and 2005, 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 we cannot assure you that the budgeted amounts will be sufficient
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.


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        DEPENDENCE ON MARKET CONDITIONS IN THE GEOGRAPHIC REGIONS. We have 44
properties located in Northern California, 14 properties located in Southern
California, 24 properties located in Oregon, 13 properties located in Nevada and
11 properties located in Washington. 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, our performance may be adversely affected.

        POTENTIAL ILLIQUIDITY OF REAL ESTATE. Equity real estate investments are
relatively illiquid. This illiquidity tends to limit our ability to vary 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 affect our ability to sell properties
without adversely affecting returns to holders of common stock.

        COMPETITION WITH OTHER DEVELOPERS AND REAL ESTATE COMPANIES. 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 and to service our debt and make distributions to our
stockholders.

        COST OF COMPLIANCE WITH CHANGES IN LAWS. 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, we cannot assure you that these
requirements will not be changed or that new requirements will not be imposed
that would require significant unanticipated expenditures by us. Any of these
events could adversely affect our cash flow and expected distributions.

        RELIANCE ON CERTAIN TENANTS AND ANCHORS. Our income and funds from
operations could be adversely affected in the event of the bankruptcy or
insolvency, or a downturn in the business, of any anchor store, or if any anchor
tenant does not renew its lease when it expires. If tenant sales at our
properties were to decline, tenants might be unable to pay their rent or other
occupancy costs. In the event of default by a tenant, delays and costs in
enforcing our rights could be experienced. In addition, the closing of one or
more anchor-occupied stores or lease termination by one or more anchor tenants
of a shopping center, whose leases may permit termination, could adversely
impact that property and result in lease terminations or reductions in rent by
other tenants, whose leases may permit termination or rent reduction in those
circumstances. This could adversely affect our ability to re-lease the space
that is vacated. Each of these developments could adversely affect our funds
from operations and our ability to service our debt and make expected
distributions to stockholders.

        LACK OF OPERATING HISTORY WITH RESPECT TO THE RECENT ACQUISITION AND
DEVELOPMENT OF PROPERTIES. At December 31, 2000, we owned and operated 110
properties, consisting of approximately 15.2 million square feet of space.
Fifty-three of our properties were acquired during 2000, primarily through the
acquisition of Western, and 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 cannot assure you that we will succeed with this
integration or effectively manage additional properties. We also cannot assure
you that newly acquired properties will perform as expected.

        INFLUENCE OF CERTAIN AFFILIATES. Stuart Tanz, our Chairman, President
and Chief Executive Officer, through his and his family's ownership interests in
Revenue Properties Company Limited and Revenue Properties Company Limited's
ownership of Revenue Properties (U.S.), Inc., owns or controls approximately 26%
of our total outstanding shares of common stock as of March 16, 2001. In
addition, Revenue Properties (U.S.), Inc. has the right to nominate two of our
directors. Consequently, although the Tanz family will not be able to take
action on our


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behalf without the concurrence of other members of our board of directors, they
may be able to exert substantial influence over our affairs. This influence
might not be consistent with the interest of other stockholders. In addition,
there may be conflicts between the interests of the public stockholders of
Revenue Properties Company Limited and our public stockholders.

        DEPENDENCE ON KEY MANAGEMENT PERSONNEL. Our executive officers have
substantial experience in owning, operating, managing, acquiring and developing
shopping centers. We believe that our success will depend in large part upon
their efforts. If any key management personnel do not remain in our employ, we
could be materially adversely affected.

        DEBT FINANCING AND EXISTING DEBT MATURITIES. 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, 2000, we had outstanding indebtedness of approximately
$626,411,000. 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. At December 31, 2000, we
had approximately $233,911,000 in principal amount of mortgage financing. 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 $55,333,000 on four properties, $52,524,000 on
four other properties, $17,970,000 on three properties and $34,254,000 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 AND VARIABLE-RATE DEBT. Advances under our
Revolving Credit Agreement and our Term 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. Accordingly, we
may in the future engage in other transactions to further limit our exposure to
rising interest rates as appropriate and cost effective.

        TAX LIABILITIES AS A CONSEQUENCE OF FAILURE TO QUALIFY AS A REIT.
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
significantly change the tax laws with respect to qualification as a REIT or the
federal income tax consequences of such qualification.


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        If we fail to qualify as a REIT in any taxable year, we would be subject
to federal income tax (including any applicable alternative minimum tax) on our
taxable income at regular corporate rates. Moreover, unless we were entitled to
relief under certain statutory provisions, we also would be disqualified from
treatment as a REIT for the four taxable years following the year in which we
lost our qualification. This treatment would significantly reduce our net
earnings available for distribution to stockholders because of our additional
tax liability for the years involved. In addition, distributions to stockholders
would no longer be required.

        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 in accordance with expectations. 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, the receipt of which cannot be
assured. While our policies with respect to expansion and renovation activities
are intended to limit some of the risks otherwise associated with such
activities, we will still incur certain risks, including expenditures of funds
on, and devotion of management's time to, projects that may not be completed.

        We 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 in the future expand our business to new
geographic markets. 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.
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. They 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 the contamination.
These laws typically impose clean-up responsibility and liability without regard
to 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


                                       7

<PAGE>   10

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. Those
who arrange for the disposal or treatment of hazardous or toxic substances at a
disposal or treatment facility may also be liable for the costs of removal or
remediation of a release of hazardous or toxic substances 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. Sometimes, 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.

        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 these costs.

        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 from
time-to-time that can result in soil or groundwater contamination. Independent
environmental consultants have conducted or updated Phase I Environmental
Assessments at our properties. 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.

        Phase I Assessments 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 Assessments do not reveal all
environmental liabilities or that there are material environmental liabilities
of which we are unaware. Moreover, we cannot assure you that (i) future laws,
ordinances or regulations will not impose any material environmental liability
or (ii) the current environmental condition of our properties will not 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.

        NO LIMITATION ON AMOUNT OF INDEBTEDNESS WE MAY INCUR. At December 31,
2000, our debt to total market capitalization ratio was approximately 45.1%
(assuming the conversion of all subsidiary LLC and LP units). We currently have
a 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.


                                       8

<PAGE>   11

        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. 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 recently promulgated Treasury Regulations, if these properties
are sold within 10 years of the date we acquired them, we will 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 mergers. 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 this 10 year period, we may be subject to tax on the built-in gain.

ITEM 2. PROPERTIES

GENERAL

        As of December 31, 2000, we operated 110 neighborhood and community
shopping centers containing 15.2 million square feet of which 13.5 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, Nevada and Washington, each of
which we believe has attractive economic and demographic characteristics. The
largest concentration of properties, consisting of 41% of the total gross
leasable area, is located in Northern California. Another 13% of the total gross
leasable area is located in Southern California, 18% in Oregon, 15% in Nevada
and 11% in Washington. In addition, properties consisting of the remaining 2% of
the total gross leasable area are located in New Mexico, Tennessee, Kentucky and
Florida. As of December 31, 2000, 96.5% of our total gross leasable area was
leased by 2,253 tenants.

        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 the
Company's corporate office. We 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, 2000, 61% of the total
leased gross leasable area was leased to national tenants, 19% leased to
regional tenants and 20% 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 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,
2000, anchor tenants leased 59% of the total leased gross leasable area, with
only 53% of anchor-leased gross leasable area (31% of the total leased 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.


                                       9

<PAGE>   12

                                PROPERTY SUMMARY

The following table sets forth certain information for the 110 retail centers as
of December 31, 2000.

<TABLE>
<CAPTION>

                                                               GROSS LEASABLE AREA
                                                               -------------------


                                                YEAR       COMPANY       TENANT                   % LEASED        TOTAL NUMBER
                                             COMPLETED/     OWNED         OWNED        TOTAL        AS OF         OF TENANTS AS
PROPERTY AND LOCATION                         EXPANDED    (SQ. FT.)     (SQ. FT.)    (SQ. FT.)   12/31/00 (4)     OF 12/31/00 (4)
---------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>           <C>          <C>         <C>              <C>
NORTHERN CALIFORNIA
     Anderson Square                            1977         67,480       34,604       102,084        90.4 %           13
            Anderson, CA
     Angels Camp Town Center                    1986         70,323           --        70,323        97.0             13
            Angels Camp, CA
     Blossom Valley Plaza                       1988        111,612           --       111,612        97.7             20
            Turlock, CA
     Brookvale Shopping Center                 1968/        131,239           --       131,239       100.0             19
            Fremont, CA                         1989
     Cable Park                                 1987        160,811           --       160,811        99.0             33
            Sacramento, CA
     Canal Farms                                1987        110,535           --       110,535        95.9             16
            Los Banos, CA
     Centennial Plaza                           1991        132,086      125,584       257,670        98.4             22
            Hanford, CA
     Century Center                             1979        214,772           --       214,772        99.3             34
            Modesto, CA
     Chico Crossroads                          1988/        267,735           --       267,735        99.6             17
            Chico, CA                           1994
     Cobblestone                                1984        122,091           --       122,091        88.7             21
            Redding, CA
     Commonwealth Square                        1987        141,310           --       141,310        98.9             43
            Folsom, CA
     Country Gables Shopping Center             1993        140,184           --       140,184        97.3             33
            Granite Bay, CA
     Creekside Center                           1968         80,911           --        80,911       100.0             18
            Hayward, CA
     Currier Square                             1989        131,472           --       131,472        91.1             14
            Oroville, CA
     Dublin Retail Center                       1980        154,728           --       154,728        89.1              7
             Dublin, CA
     Eastridge Plaza                            1985         81,010           --        81,010        96.9             11
            Porterville, CA
     Elverta Crossing                           1991        119,998           --       119,998        97.0             22
            Sacramento, CA
     Fairmont Shopping Center                   1988        104,281           --       104,281        98.7             28
            Pacifica, CA
     Fashion Faire Shopping Center              1987         95,255           --        95,255       100.0             17
            San Leandro, CA
     Glen Cove Center                           1990         66,000           --        66,000       100.0             11
            Vallejo, CA
     Glenbrook Shopping Center                  1990         63,330           --        63,330        96.5             15
            Sacramento, CA
     Heritage Park Shopping Center              1989        162,999           --       162,999        93.3             31
            Suisun City, CA
     Heritage Place                             1986        119,412        3,500       122,912        95.6             19
            Tulare, CA
     Kmart Center                              1966/        132,630           --       132,630        96.4             15
            Sacramento, CA                      1983
     Laguna 99 Plaza                            1992         89,600      116,200       205,800        98.4             22
            Elk Grove, CA
     Laguna Village                             1996        114,433           --       114,433       100.0             15
            Sacramento, CA
     Lakewood Shopping Center                   1988        107,769           --       107,769       100.0             28
            Windsor, CA
     Lakewood Village                           1992        127,237        3,242       130,479        89.5             29
            Windsor, CA
     Manteca Marketplace                       1972/        172,435           --       172,435       100.0             27
            Manteca, CA                         1988
     Mission Ridge Plaza                        1992         96,657        4,500       101,157        98.8             15
            Manteca, CA
     Monterey Plaza                             1990        183,180       49,500       232,680       100.0             31
            San Jose, CA
     Northridge Plaza                           1990         98,625           --        98,625        86.1             13
            Fair Oaks, CA
     Park Place                                 1987        150,766           --       150,766        91.6             26
            Vallejo, CA
     Pine Creek Shopping Center                 1988        212,832           --       212,832        96.1             35
            Grass Valley, CA
     Plaza 580 Shopping Center                  1993        104,363      192,739       297,102        97.6             27
            Livermore, CA
     Raley's Shopping Center                    1983        135,114           --       135,114        99.0             16
            Yuba City, CA
     Serra Center (5)                           1992         94,669      154,547       249,216       100.0             13
            Colma, CA
     Shops at Lincoln School                    1988         81,443           --        81,443       100.0             18
            Modesto, CA
     Sky Park Plaza                             1985        176,182           --       176,182        95.9             28
            Chico, CA
     Ukiah Crossroads                           1986        110,565           --       110,565        98.9             20
            Ukiah, CA
     Victorian Walk                             1990        102,581           --       102,581        90.0             20
            Fresno, CA
     Wal Mart                                   2000        103,284           --       103,284       100.0              1
            Napa, CA
     Westwood Village Shopping Center          1981/        102,375           --       102,375        91.7             20
            South Redding, CA                   1998
     Yreka Junction                             1984        127,148           --       127,148       100.0             19
             Yreka, CA

                                                        ------------  -----------  ------------ -----------      ----------------

REGION TOTAL/WEIGHTED AVERAGE                             5,473,462      684,416     6,157,878        96.7 %           915
                                                        ------------  -----------  ------------ -----------      ----------------
</TABLE>

<TABLE>
<CAPTION>
                                                                 ANNUALIZED BASE RENT
                                                                 IN PLACE AT 12/31/00 (1)
                                                                 ------------------------


                                                               ANN. BASE
                                             ANN. BASE        RENT/LEASED
PROPERTY AND LOCATION                       RENT ($) (1)        SQ. FT. (3)  MAJOR RETAILERS
-------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>               <C>            <C>
NORTHERN CALIFORNIA
     Anderson Square                             $362,392           $5.94    Safeway Supermarket (2), Rite Aid
            Anderson, CA
     Angels Camp Town Center                      590,963            8.66    Save Mart Supermarket, Rite Aid
            Angels Camp, CA
     Blossom Valley Plaza                       1,192,676           10.94    Raley's Supermarket, Jo-Ann Fabrics & Crafts
            Turlock, CA
     Brookvale Shopping Center                  1,364,605           10.40    Albertson's Supermarket, Long's Drugs,
            Fremont, CA                                                      Bally Fitness
     Cable Park                                 1,321,377            8.30    Albertson's Supermarket, Long's Drugs
            Sacramento, CA
     Canal Farms                                  826,749            7.80    Save Mart Supermarket, Rite Aid
            Los Banos, CA
     Centennial Plaza                           1,307,506           10.06    Wal-Mart (2), Food-4-Less Supermarket
            Hanford, CA
     Century Center                             1,879,408            8.81    Raley's Supermarket, Gottschalks
            Modesto, CA
     Chico Crossroads                           2,049,827            7.69    Food-4-Less Supermarket, HomeBase,
            Chico, CA                                                        Barnes & Noble
     Cobblestone                                  970,953            8.97    Raley's Supermarket
            Redding, CA
     Commonwealth Square                        1,996,757           14.29    Raley's Supermarket
            Folsom, CA
     Country Gables Shopping Center             1,574,288           11.54    Raley's Supermarket
            Granite Bay, CA
     Creekside Center                             841,052           10.39    Albertson's Supermarket, MacFrugal's
            Hayward, CA
     Currier Square                               945,852            7.90    Raley's Supermarket
            Oroville, CA
     Dublin Retail Center                       1,428,729           10.36    Orchard Supply, Marshall's, Ross Stores,
             Dublin, CA                                                      Michael's Arts & Crafts
     Eastridge Plaza                              588,015            7.49    Save Mart Supermarket (6)
            Porterville, CA
     Elverta Crossing                           1,430,892           12.29    Food-4-Less Supermarket, K-Mart (2),
            Sacramento, CA                                                   Factory 2 U
     Fairmont Shopping Center                   1,267,966           12.32    Albertson's Supermarket, Rite Aid
            Pacifica, CA
     Fashion Faire Shopping Center              1,363,230           14.31    Pure Foods Supermarket, Ross Dress for Less,
            San Leandro, CA                                                  Michael's Arts & Crafts
     Glen Cove Center                             866,723           13.13    Safeway Supermarket and Drug
            Vallejo, CA
     Glenbrook Shopping Center                    477,819            7.82    Albertson's Supermarket
            Sacramento, CA
     Heritage Park Shopping Center              1,579,668           10.39    Raley's Supermarket
            Suisun City, CA
     Heritage Place                               991,613            8.68    Save Mart Supermarket, Rite Aid
            Tulare, CA
     Kmart Center                                 449,878            3.52    K-Mart, MacFrugal's
            Sacramento, CA
     Laguna 99 Plaza                            1,451,281           16.46    Safeway Supermarket (7), Wal-Mart (2)
            Elk Grove, CA
     Laguna Village                             1,891,661           16.53    United Artists Theatres, 24 Hour Fitness
            Sacramento, CA
     Lakewood Shopping Center                   1,040,909            9.66    Raley's Supermarket, U.S. Post Office
            Windsor, CA
     Lakewood Village                           1,754,600           15.41    Safeway Supermarket, Long's Drugs
            Windsor, CA
     Manteca Marketplace                        1,845,941           10.71    Save Mart Supermarket, Rite Aid,
            Manteca, CA                                                      Stadium 10 Cinemas, Ben Franklin Crafts
     Mission Ridge Plaza                        1,339,188           14.02    Safeway (7), Wal-Mart (2), Mervyn's (2)
            Manteca, CA
     Monterey Plaza                             2,650,011           14.47    Wal-Mart, Albertson's Supermarket (2), Walgreens
            San Jose, CA
     Northridge Plaza                             705,730            8.31    Raley's Supermarket
            Fair Oaks, CA
     Park Place                                 1,689,968           12.24    Raley's Supermarket, 24 Hour Fitness
            Vallejo, CA
     Pine Creek Shopping Center                 2,220,085           10.85    Raley's Supermarket, JC Penney
            Grass Valley, CA
     Plaza 580 Shopping Center                  1,771,878           17.40    Target (2), Mervyn's (2), Ross Stores
            Livermore, CA
     Raley's Shopping Center                    1,073,251            8.02    Raley's Supermarket, Toys R Us
            Yuba City, CA
     Serra Center (5)                           1,962,329           20.73    Target, Drug Barn, Beverages & More
            Colma, CA
     Shops at Lincoln School                      767,493            9.42    Save Mart Supermarket
            Modesto, CA
     Sky Park Plaza                             1,576,878            9.33    Raley's Supermarket, Ross Stores, Jo-Ann Fabrics
            Chico, CA                                                        & Crafts, Dollar Tree
     Ukiah Crossroads                           1,020,222            9.33    Raley's Supermarket
            Ukiah, CA
     Victorian Walk                               800,833            8.67    Save Mart Supermarket, Rite Aid
            Fresno, CA
     Wal Mart                                     816,156            7.90    Wal-Mart Supercenter
            Napa, CA
     Westwood Village Shopping Center             690,846            7.36    Holiday Supermarket, Rite Aid
            South Redding, CA
     Yreka Junction                             1,072,159            8.43    Raley's Supermarket, JC Penney
             Yreka, CA
                                              -----------       ----------

REGION TOTAL/WEIGHTED AVERAGE                 $55,810,357          $10.55
                                              -----------       ----------
</TABLE>


                                       10
<PAGE>   13

                                PROPERTY SUMMARY
                                   (CONTINUED)


<TABLE>
<CAPTION>

                                                               GROSS LEASABLE AREA
                                                               -------------------


                                                YEAR       COMPANY       TENANT                   % LEASED        TOTAL NUMBER
                                             COMPLETED/     OWNED         OWNED        TOTAL        AS OF         OF TENANTS AS
PROPERTY AND LOCATION                         EXPANDED    (SQ. FT.)     (SQ. FT.)    (SQ. FT.)   12/31/00 (4)     OF 12/31/00 (4)
----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>           <C>          <C>         <C>              <C>
SOUTHERN CALIFORNIA
     Arlington Courtyard                        1991         12,221           --        12,221        71.8 %            3
            Riverside, CA
     Canyon Square Plaza                        1988         96,727           --        96,727        98.9             30
            Santa Clarita, CA
     Chino Town Square                          1987        336,997      188,064       525,061        83.1             50
            Chino, CA
     Encinitas Marketplace                      1981        118,458           --       118,458        99.3             21
            Encinitas, CA
     Granary Square                             1982        136,985           --       136,985        97.7             32
            Valencia, CA
     Laurentian Center                          1988         97,131           --        97,131       100.0             25
            Ontario, CA
     Marina Village                             1996        149,107           --       149,107        94.1             32
            Huntington Beach, CA
     Melrose Village Plaza                      1990        132,674           --       132,674       100.0             32
            Vista, CA
     Palmdale Center                            1975         81,050           --        81,050        96.3             13
            Palmdale, CA
     Rancho Las Palmas                          1980        167,852       10,815       178,667        98.6             41
            Rancho Mirage, CA
     San Dimas Marketplace                      1997        154,020      117,000       271,020       100.0             23
            San Dimas, CA
     Sycamore Plaza                             1976        105,085           --       105,085        96.2             25
            Anaheim CA
     Tustin Heights Shopping Center             1983        131,518           --       131,518       100.0             21
            Tustin, CA
     Vineyard Village East                      1992         45,200           --        45,200       100.0              4
            Ontario, CA
                                                        ------------  -----------  ------------ -----------      ----------------

REGION TOTAL/WEIGHTED AVERAGE                             1,765,025      315,879     2,080,904        95.3 %           352
                                                        ------------  -----------  ------------ -----------      ----------------

WASHINGTON
     Auburn North                              1977/        171,032           --       171,032        99.0 %           24
            Auburn, WA                          1999
     Blaine International Center                1991        127,572           --       127,572        73.2             12
            Blaine, WA
     Canyon Ridge Plaza                         1995         86,909      181,300       268,209       100.0             19
            Kent, WA
     Claremont Village Plaza                   1955/         88,770           --        88,770        96.7             15
            Everett, WA                         1994
     Gateway Shopping Center                                 96,671           --        96,671        90.5             16
            Mill Creek, WA
     Olympia Square                             1988        167,721           --       167,721        98.8             38
            Olympia, WA
     Olympia West Center                       1980/         69,212        3,800        73,012       100.0              6
            Olympia, WA                         1995
     Pacific Commons                            1987        151,233       55,241       206,474       100.0             23
            Spanaway, WA
     Panther Lake                               1989         69,090       44,237       113,327       100.0             21
            Kent, WA
     Sunset Square                              1989        376,023       10,634       386,657        98.9             41
            Bellingham, WA
     Tacoma Central                            1987/        134,868      165,519       300,387       100.0             21
            Tacoma, WA                          1994
                                                        ------------  -----------  ------------ -----------      ----------------

REGION TOTAL/WEIGHTED AVERAGE                             1,539,101      460,731     1,999,832        96.5 %           236
                                                        ------------  -----------  ------------ -----------      ----------------
</TABLE>


<TABLE>
<CAPTION>
                                                                   ANNUALIZED BASE RENT
                                                                   IN PLACE AT 12/31/00 (1)
                                                                   ------------------------


                                                                 ANN. BASE
                                               ANN. BASE        RENT/LEASED
PROPERTY AND LOCATION                         RENT ($) (1)        SQ. FT. (3)  MAJOR RETAILERS
---------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>               <C>            <C>
SOUTHERN CALIFORNIA
     Arlington Courtyard                            $95,191          $10.85    Harvest Christian Bookstore
            Riverside, CA
     Canyon Square Plaza                          1,175,411           12.29    Albertson's Supermarket and Drug
            Santa Clarita, CA
     Chino Town Square                            4,012,264           14.33    Target (2), Wal-Mart, Mervyn's (2),
            Chino, CA                                                          Nordstrom Rack
     Encinitas Marketplace                        1,184,856           10.07    Albertson's Supermarket
            Encinitas, CA
     Granary Square                               1,930,103           14.42    Ralph's Supermarket, Long's Drugs
            Valencia, CA
     Laurentian Center                            1,193,975           12.29    Pep Boys, 24 Hour Fitness, Abbey Carpet
            Ontario, CA
     Marina Village                               1,564,411           11.15    Von's Supermarket, Sav-On Drugs
            Huntington Beach, CA
     Melrose Village Plaza                        1,613,928           12.16    Albertson's Supermarket, Sav-On Drugs
            Vista, CA
     Palmdale Center                                457,161            5.86    Smart & Final, Dollar Tree, Pic 'N' Save
            Palmdale, CA
     Rancho Las Palmas                            2,141,261           12.94    Von's Supermarket, Long's Drugs
            Rancho Mirage, CA
     San Dimas Marketplace                        2,307,002           14.98    Target (2), Office Max, Ross Stores,
            San Dimas, CA                                                      Petco, Trader Joe's Market
     Sycamore Plaza                                 774,267            7.66    Stater Bros. Supermarket, Sav-on Drugs
            Anaheim CA
     Tustin Heights Shopping Center               1,550,125           11.79    Ralph's Supermarket, Long's Drugs,
            Tustin, CA                                                         Michael's Arts & Crafts
     Vineyard Village East                          379,001            8.38    Sears, Dunn Edwards Paints
            Ontario, CA
                                             --------------- ---------------

REGION TOTAL/WEIGHTED AVERAGE                   $20,378,956          $12.12
                                             --------------- ---------------

WASHINGTON
     Auburn North                                $1,301,244           $7.68    Albertson's Supermarket, Rite Aid,
            Auburn, WA                                                         Office Depot, Fashion Bug
     Blaine International Center                    911,516            9.76    Cost Cutter Supermarket, Rite Aid
            Blaine, WA
     Canyon Ridge Plaza                           1,017,974           11.71    Target (2), Top Foods Supermarket (2),
            Kent, WA                                                           Ross Dress For Less
     Claremont Village Plaza                      1,206,469           14.05    QFC Supermarket and Drug
            Everett, WA
     Gateway Shopping Center                      1,520,968           17.39    Safeway Supermarket
            Mill Creek, WA
     Olympia Square                               2,027,315           12.23    Albertson's Supermarket and Drug,
            Olympia, WA                                                        Ross Dress For Less
     Olympia West Center                          1,233,399           17.82    Barnes & Noble, Good Guys, Petco
            Olympia, WA
     Pacific Commons                              1,554,171           10.28    The Marketplace Supermarket, K-Mart (2)
            Spanaway, WA
     Panther Lake                                   861,361           12.47    Albertson's Supermarket (2), Rite Aid
            Kent, WA
     Sunset Square                                3,130,277            8.42    Cost Cutter Supermarket, K-Mart,
            Bellingham, WA                                                     Jo-Ann Fabrics & Crafts, Rite Aid
     Tacoma Central                               2,237,040           16.59    Target (2), Top Food & Drug (2), PetSmart,
            Tacoma, WA                                                         Office Depot, TJ Maxx, Cineplex Odeon
                                             --------------- ---------------

REGION TOTAL/WEIGHTED AVERAGE                   $17,001,734          $11.45
                                             --------------- ---------------
</TABLE>



                                       11
<PAGE>   14

                                PROPERTY SUMMARY
                                   (CONTINUED)


<TABLE>
<CAPTION>

                                                               GROSS LEASABLE AREA
                                                               -------------------


                                                YEAR       COMPANY       TENANT                   % LEASED        TOTAL NUMBER
                                             COMPLETED/     OWNED         OWNED        TOTAL        AS OF         OF TENANTS AS
PROPERTY AND LOCATION                         EXPANDED    (SQ. FT.)     (SQ. FT.)    (SQ. FT.)   12/31/00 (4)     OF 12/31/00 (4)
----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>           <C>          <C>         <C>              <C>
OREGON
     Albany Plaza                              1977/        114,465       30,998       145,463       100.0 %           19
            Albany, OR                          1998
     Bear Creek Plaza                          1977/        183,850           --       183,850       100.0             28
            Medford, OR                         1998
     East Burnside Plaza                        1999         38,363           --        38,363        90.7              5
            Portland, OR
     Foster Square                              1970         33,808           --        33,808       100.0              3
            Portland, OR
     Hermiston Plaza                            1998        150,396           --       150,396        97.7             24
            Hermiston, OR
     Hood River                                1967/        104,162           --       104,162        77.1             10
            Hood River, OR                      1999
     Menlo Park Plaza                           1995        112,755           --       112,755        92.4             16
            Portland, OR
     Milwaukie Marketplace                      1989        185,859       10,323       196,182        93.4             24
            Milwaukie, OR
     NE 33rd                                    1999         22,847           --        22,847       100.0              1
            Portland, OR
     North Lombard                              1994         23,252           --        23,252       100.0              1
            Portland, OR
     Oregon City Shopping Center                1999        247,689           --       247,689        96.7             37
            Oregon City, OR
     Oregon Trail Shopping Center              1977/        208,284           --       208,284        97.1             30
            Gresham, OR                         1999
     Pioneer Plaza                              1988         96,027        4,293       100,320       100.0             23
            Springfield, OR
     Powell Valley Junction                     1990        107,583           --       107,583        95.2              7
            Gresham, OR
     Raleigh Hills Plaza                        1988         39,520           --        39,520       100.0              3
            Portland, OR
     Rockwood Plaza                             2000         92,244           --        92,244        94.7             14
            Gresham, OR
     Sandy Marketplace                          1985        101,438           --       101,438        97.7             19
            Sandy, OR
     SE Milwaukie                               2000         21,400           --        21,400       100.0              1
            Portland, OR
     Shute Park Plaza                           1989         58,560           --        58,560        85.6             19
            Hillsboro, OR
     Southgate Shopping Center                  1986         50,862           --        50,862       100.0             10
            Milwaukie, OR
     St John's Plaza                            1993         58,770           --        58,770        45.7              4
            Portland, OR
     Sunset Mall                                1997        115,635        2,500       118,135       100.0             28
            Portland, OR
     Tacoma Shopping Center                     1999         13,448           --        13,448       100.0              1
            Portland, OR
     Tanasbourne Village                        1990        210,992        1,209       212,201        98.6             40
            Hillsboro, OR
                                                        ------------  -----------  ------------ -----------      ----------------

REGION TOTAL/WEIGHTED AVERAGE                             2,392,209       49,323     2,441,532        94.9 %           367
                                                        ------------  -----------  ------------ -----------      ----------------

NEVADA
     Caughlin Ranch                            1990/        107,688           --       107,688        93.6 %           21
            Reno, NV                            1991
     Cheyenne Commons                           1992        362,758           --       362,758        99.6             46
            Las Vegas, NV
     Dodge Center                               1976         49,258           --        49,258       100.0              4
            Fallon, NV
     Eagle Station                             1982/        114,258       60,000       174,258        95.0             27
            Carson City, NV                     1994
     Elko Junction                             1996/        170,812           --       170,812        98.4             20
            Elko, NV                            1997
     Green Valley Town & Country                1990        130,722           --       130,722        95.4             36
            Henderson, NV
     Mira Loma Shopping Center                  1985         94,361        2,546        96,907       100.0             19
            Reno, NV
     Rainbow Promenade                         1995/        228,279           --       228,279        99.3             25
            Las Vegas, NV                       1997
     Raley's                                    1991         60,114           --        60,114       100.0              1
            Fallon, NV
     Sahara Pavilion North                      1989        333,679           --       333,679        99.3             67
            Las Vegas, NV
     Sahara Pavilion South                      1990        160,682           --       160,682       100.0             26
            Las Vegas, NV
     West Town                                 1978/         65,424           --        65,424       100.0              2
            Winnemucca, NV                      1991
     Winterwood Pavilion                        1990        144,653           --       144,653       100.0             27
            Las Vegas, NV
                                                        ------------  -----------  ------------ -----------      ----------------

REGION TOTAL/WEIGHTED AVERAGE                             2,022,688       62,546     2,085,234        98.7 %           321
                                                        ------------  -----------  ------------ -----------      ----------------
</TABLE>


<TABLE>
<CAPTION>
                                                                  ANNUALIZED BASE RENT
                                                                  IN PLACE AT 12/31/00 (1)
                                                                  ------------------------


                                                                ANN. BASE
                                              ANN. BASE        RENT/LEASED
PROPERTY AND LOCATION                        RENT ($) (1)        SQ. FT. (3)  MAJOR RETAILERS
--------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>            <C>
OREGON
     Albany Plaza                                 $909,423           $7.94    Albertson's Supermarket, Rite Aid,
            Albany, OR                                                        Pic 'N' Save, Dollar Tree, Factory 2 U
     Bear Creek Plaza                            1,395,094            7.59    Bi-Mart Drug, TJ Maxx, Pic 'N' Save,
            Medford, OR                                                       Factory 2 U
     East Burnside Plaza                           569,424           16.36    QFC Supermarket
            Portland, OR
     Foster Square                                 193,045            5.71    Dollar Tree, Phoenix Drugs
            Portland, OR
     Hermiston Plaza                               892,289            6.07    Safeway Supermarket and Drug
            Hermiston, OR                                                     Pic 'N' Save, Dollar Tree
     Hood River                                    448,616            5.59    Rosauer's Supermarket, Hi School Pharmacy
            Hood River, OR
     Menlo Park Plaza                            1,180,630           11.33    Walgreen's, Staples
            Portland, OR
     Milwaukie Marketplace                       1,469,070            8.46    Albertson's Supermarket, Rite Aid,
            Milwaukie, OR                                                     Jo-Ann Fabrics & Crafts
     NE 33rd                                       447,000           19.56    QFC Supermarket
            Portland, OR
     North Lombard                                 429,756           18.48    Walgreen's
            Portland, OR
     Oregon City Shopping Center                 1,787,696            7.46    Emporium, Rite Aid, Fisherman's
            Oregon City, OR                                                   Marine Supply, Michael's Arts & Crafts
     Oregon Trail Shopping Center                2,018,292            9.98    Nature's Supermarket, Office Depot, Big 5 Sporting
            Gresham, OR                                                       Goods, Pic 'N' Save, Michael's Arts & Crafts
     Pioneer Plaza                                 911,903            9.50    Safeway Supermarket & Drug
            Springfield, OR
     Powell Valley Junction                        928,418            9.06    Food-4-Less Supermarket, Cascade Athletic Club
            Gresham, OR
     Raleigh Hills Plaza                           937,092           23.71    New Season's Supermarket, Walgreen's
            Portland, OR
     Rockwood Plaza                                734,182            8.40    Dollar Tree, Vintage Thrift
            Gresham, OR
     Sandy Marketplace                             871,198            8.79    Danielson's Fresh Market, Hi School Pharmacy,
            Sandy, OR                                                         Factory 2 U
     SE Milwaukie                                  350,160           16.36    QFC Supermarket
            Portland, OR
     Shute Park Plaza                              594,816           11.87    Baxter's Auto Parts
            Hillsboro, OR
     Southgate Shopping Center                     622,485           12.24    Office Max
            Milwaukie, OR
     St John's Plaza                               217,836            8.11    Rite Aid
            Portland, OR
     Sunset Mall                                 1,277,767           11.05    Safeway Supermarket & Drug
            Portland, OR
     Tacoma Shopping Center                        349,728           26.01    New Season's Supermarket
            Portland, OR
     Tanasbourne Village                         2,751,366           13.23    Safeway Supermarket, Rite Aid
            Hillsboro, OR
                                             -------------- ---------------

REGION TOTAL/WEIGHTED AVERAGE                  $22,287,286           $9.82
                                             -------------- ---------------

NEVADA
     Caughlin Ranch                             $1,257,092          $12.47    Scolari's Supermarket
            Reno, NV                                                          Ross Dress For Less
     Cheyenne Commons                            4,421,275           12.24    Wal-Mart, 24 Hour Fitness, Marshall's,
            Las Vegas, NV                                                     Ross Dress For Less, Consign & Design
     Dodge Center                                  275,342            5.59    Jerry's
            Fallon, NV
     Eagle Station                               1,056,066            9.73    Raley's Supermarket, Mervyn's (2),
            Carson City, NV                                                   Wal-Mart (2)
     Elko Junction                               1,755,587           10.45    Raley's Supermarket, Builder's Mart
            Elko, NV
     Green Valley Town & Country                 1,883,073           15.10    Albertson's/Sav-On Superstore
            Henderson, NV
     Mira Loma Shopping Center                     931,050            9.87    Scolari's Supermarket, Long's Drugs,
            Reno, NV                                                          Dollar Tree
     Rainbow Promenade                           3,219,353           14.21    United Artists Theatres, Barnes & Noble,
            Las Vegas, NV                                                     Linens 'N Things, Office Max, Cost Plus
     Raley's                                       400,824            6.67    Raley's Supermarket
            Fallon, NV
     Sahara Pavilion North                       4,523,646           13.65    Von's Supermarket, Long's Drugs, TJMaxx,
            Las Vegas, NV                                                     Shepler's, Border's Books, Gold's Gym
     Sahara Pavilion South                       2,346,969           14.61    Sports Authority, Office Max,
            Las Vegas, NV                                                     Michael's Arts & Crafts
     West Town                                     461,500            7.05    Raley's Supermarket
            Winnemucca, NV
     Winterwood Pavilion                         1,414,564            9.78    Von's Supermarket and Drug, Heilig-Meyers
            Las Vegas, NV
                                             -------------- ---------------

REGION TOTAL/WEIGHTED AVERAGE                  $23,946,341          $12.00
                                             -------------- ---------------
</TABLE>




                                       12
<PAGE>   15

                                PROPERTY SUMMARY
                                   (CONTINUED)


<TABLE>
<CAPTION>

                                                               GROSS LEASABLE AREA
                                                               -------------------


                                                YEAR       COMPANY       TENANT                   % LEASED        TOTAL NUMBER
                                             COMPLETED/     OWNED         OWNED        TOTAL        AS OF         OF TENANTS AS
PROPERTY AND LOCATION                         EXPANDED    (SQ. FT.)     (SQ. FT.)    (SQ. FT.)   12/31/00 (4)     OF 12/31/00 (4)
----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>           <C>          <C>         <C>              <C>
OTHER
     Country Club Center                       1988/         57,626       63,000       120,626        95.7 %           19
            Albuquerque, NM                     1998
     Maysville Marketsquare                    1991/        126,507       89,612       216,119       100.0             19
            Maysville, KY                       1993
     Memphis Retail Center                      1990         51,542       40,000        91,542        94.2             12
            Memphis, TN
     Ocoee Plaza                                1990         52,242           --        52,242       100.0             12
            Ocoee, FL
                                                        ------------  -----------  ------------ -----------      ----------------

REGION TOTAL/WEIGHTED AVERAGE                               287,917      192,612       480,529        98.1 %           62
                                                        ------------  -----------  ------------ -----------      ----------------

PORTFOLIO
TOTAL/WEIGHTED AVERAGE                                   13,480,402    1,765,507    15,245,909        96.5 %          2,253
                                                        ------------  -----------  ------------ -----------      ----------------
</TABLE>


<TABLE>
<CAPTION>
                                                                    ANNUALIZED BASE RENT
                                                                    IN PLACE AT 12/31/00 (1)
                                                                    ------------------------


                                                                  ANN. BASE
                                                ANN. BASE        RENT/LEASED
PROPERTY AND LOCATION                          RENT ($) (1)        SQ. FT. (3)  MAJOR RETAILERS
----------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>               <C>            <C>
OTHER
     Country Club Center                            $627,362          $11.38    Furr's Supermarket (2)
            Albuquerque, NM
     Maysville Marketsquare                          913,064            7.22    Wal-Mart (2), Kroger Supermarket,
            Maysville, KY                                                       J.C. Penney
     Memphis Retail Center                           457,441            9.42    Hancock Fabrics, Family Dollar
            Memphis, TN
     Ocoee Plaza                                     371,001            7.10    Food Lion Supermarket, Family Dollar
            Ocoee, FL
                                             ---------------- ---------------

REGION TOTAL/WEIGHTED AVERAGE                     $2,368,868           $8.39
                                             ---------------- ---------------

PORTFOLIO
TOTAL/WEIGHTED AVERAGE                          $141,793,542          $10.90
                                             ---------------- ---------------
</TABLE>



(1)    Annualized base rent for all leases in place at December 31, 2000 is
       calculated as follows: total base rent to be received during the entire
       term of each lease, divided by the term in months of such leases,
       multiplied by 12.
(2)    These retailers own their space and are not tenants of the Company.
(3)    Annualized base rent divided by the owned GLA leased at December 31,
       2000.
(4)    Percent leased and total number of tenants includes month-to-month
       leases.
(5)    The company owns a 30% interest in property. Table reflects 100% of
       property data.
(6)    Tenant is dark.
(7)    Tenant is Pak N Save, a division of Safeway



                                       13
<PAGE>   16

             NATIONAL, REGIONAL AND LOCAL TENANT MIX AS OF 12/31/00


The following table sets forth certain information for the 110 retail centers
owned at December 31, 2000.


<TABLE>
<CAPTION>
                                              NATIONAL  TENANTS (1)          REGIONAL TENANTS (1)             LOCAL TENANTS (1)
                                          ---------------------------      -------------------------      ------------------------
                                                          % OF PROPERTY                  % OF PROPERTY                 % OF PROPERTY
                                         % OF PROPERTY      ANN. BASE    % OF PROPERTY     ANN. BASE     % OF PROPERTY   ANN. BASE
PROPERTY                                  LEASED GLA         RENT (2)      LEASED GLA       RENT (2)      LEASED GLA      RENT (2)
--------                                  ----------         --------      ----------       --------      ----------      --------
<S>                                      <C>              <C>            <C>             <C>             <C>           <C>
NORTHERN CALIFORNIA
    Anderson Square                           71.00%          68.01%           0.00%           0.00%          29.00%          31.99%
    Angels Camp Town Center                   32.93           30.14           50.38           39.98           16.69           29.88
    Blossom Valley Plaza                      29.33           37.86           62.08           49.57            8.59           12.57
    Brookvale Shopping Center                 89.11           79.44              --              --           10.89           20.56
    Cable Park                                84.25           67.42            0.51            1.39           15.24           31.19
    Canal Farms                               49.49           42.95           40.17           38.13           10.34           18.92
    Centennial Plaza                          83.63           70.18            2.56            3.50           13.81           26.32
    Century Center                            14.99           28.16           54.88           23.45           30.15           48.39
    Chico Crossroads                          98.61           97.35              --              --            1.39            2.65
    Cobblestone                               27.27           39.62           62.82           49.70            9.91           10.68
    Commonwealth Square                       21.62           30.61           45.50           24.86           32.88           44.53
    Country Gables Shopping Center            10.51           17.52           44.67           29.61           44.82           52.87
    Creekside Center                          76.80           60.41              --              --           23.20           39.59
    Currier Square                            15.69           19.05           50.46           55.07           33.85           25.88
    Dublin Retail Center                      97.96           96.30              --              --            2.04            3.70
    Eastridge Plaza                           39.56           47.00           50.18           41.87           10.26           11.13
    Elverta Crossing                          80.87           71.45            6.93           10.45           12.20           18.10
    Fairmont Shopping Center                  64.48           44.65           11.82           12.57           23.70           42.78
    Fashion Faire Shopping Center             88.25           80.26              --              --           11.75           19.74
    Glenbrook Center                          70.23           42.02              --              --           29.77           57.98
    Glen Cove Center                          81.39           74.05              --              --           18.61           25.95
    Heritage Park Shopping Center             28.20           34.12           49.79           37.19           22.01           28.69
    Heritage Place                            54.59           53.03           34.48           32.86           10.93           14.11
    Kmart Center                              84.01           55.75              --              --           15.99           44.25
    Laguna 99 Plaza                           73.29           55.92            6.67           11.77           20.04           32.31
    Laguna Village                            81.97           78.96            4.78            5.68           13.25           15.36
    Lakewood Shopping Center                  71.26           60.04            1.21            2.40           27.53           37.56
    Lakewood Village                          77.93           74.09              --              --           22.07           25.91
    Manteca Marketplace                       37.64           36.01           48.86           45.48           13.50           18.51
    Mission Ridge Plaza                       94.55           91.22            2.24            3.50            3.21            5.28
    Monterey Plaza                            88.61           80.53            1.63            2.93            9.76           16.54
    Northridge Plaza                           9.46           20.04           80.47           60.31           10.07           19.65
    Park Place                                27.63           36.04           47.78           33.10           24.59           30.86
    Pine Creek Shopping Center                37.39           35.50           30.85           24.84           31.76           39.66
    Plaza 580 Shopping Center                 65.02           59.99            1.77            2.63           33.21           37.38
    Raley's Shopping Center                   47.20           58.71           49.10           32.96            3.70            8.33
    Serra Center (3)                          35.55           33.00           59.15           61.45            5.30            5.55
    Shops at Lincoln School                   20.17           34.20           53.44           38.00           26.39           27.80
    Sky Park Plaza                            48.73           50.74           39.15           31.68           12.12           17.58
    Ukiah Crossroads                          24.90           34.14           61.52           51.26           13.58           14.60
    Victorian Walk                            41.78           39.46           39.15           30.82           19.07           29.72
    Wal Mart                                 100.00          100.00              --              --              --              --
    Westwood Village Shopping Center          41.92           46.05            1.67            2.22           56.41           51.73
    Yreka Junction                            44.18           50.86           50.50           40.28            5.32            8.86
                                             ------          ------          ------          ------          ------          ------
REGION WEIGHTED AVERAGE                       56.24%          55.12%          26.31%          20.49%          17.45%          24.40%
</TABLE>



                                       14
<PAGE>   17

             NATIONAL, REGIONAL AND LOCAL TENANT MIX AS OF 12/31/00
                                   (continued)


<TABLE>
<CAPTION>
                                              NATIONAL  TENANTS (1)          REGIONAL TENANTS (1)             LOCAL TENANTS (1)
                                          ---------------------------      -------------------------      ------------------------
                                                          % OF PROPERTY                  % OF PROPERTY                 % OF PROPERTY
                                         % OF PROPERTY      ANN. BASE    % OF PROPERTY     ANN. BASE     % OF PROPERTY   ANN. BASE
PROPERTY                                  LEASED GLA         RENT (2)      LEASED GLA       RENT (2)      LEASED GLA      RENT (2)
--------                                  ----------         --------      ----------       --------      ----------      --------
<S>                                      <C>              <C>            <C>             <C>             <C>           <C>
SOUTHERN CALIFORNIA
    Arlington Courtyard                       13.91%          15.62%          58.72%          48.59%          27.37%          35.79%
    Canyon Square Plaza                       54.99           42.22            3.10            5.67           41.91           52.11
    Chino Town Square                         81.76           75.53            7.71           11.15           10.53           13.32
    Encinitas Marketplace                     71.92           61.13              --              --           28.08           38.87
    Granary Square                            57.93           54.15           24.06           12.85           18.01           33.00
    Laurentian  Center                        47.59           47.58           27.18           25.03           25.23           27.39
    Marina Village                            64.87           52.84           15.70           20.62           19.43           26.54
    Melrose Village Plaza                     83.52           76.26            2.06            2.74           14.42           21.00
    Palmdale Center                           88.08           72.38              --              --           11.92           27.62
    Rancho Las Palmas                         47.83           28.19            8.69           13.50           43.48           58.31
    San Dimas Marketplace                     91.64           87.99            2.87            3.97            5.49            8.04
    Sycamore Plaza                            37.86           31.92           37.76           16.37           24.38           51.71
    Tustin Heights Shopping Center            88.88           78.89            0.89            1.53           10.23           19.58
    Vineyard Village East                     86.28           76.02           13.72           23.98              --              --
                                             ------          ------          ------          ------          ------          ------
REGION WEIGHTED AVERAGE                       70.07%          62.32%          10.46%          10.25%          19.46%          27.43%

WASHINGTON
    Auburn North                              81.11%          76.58%          16.39%          17.56%           2.50%           5.86%
    Blaine International Center               91.49           90.85            2.19            2.69            6.32            6.46
    Canyon Ridge Plaza                        91.97           87.63              --              --            8.03           12.37
    Claremont Village Plaza                   74.08           75.31            5.55            6.05           20.37           18.64
    Gateway Shopping Center                   80.27           74.94            1.21            1.41           18.52           23.65
    Olympia Square                            78.59           71.12           15.78           20.98            5.63            7.90
    Olympia West Center                       83.05           87.24            8.48            7.34            8.47            5.42
    Pacific Commons                           43.01           43.45            2.15            2.43           54.84           54.12
    Panther Lake                              59.66           52.32            6.08            5.99           34.26           41.69
    Sunset Square                             64.51           52.83           26.07           32.53            9.42           14.64
    Tacoma Central                            88.78           85.84            7.37            9.24            3.85            4.92
                                             ------          ------          ------          ------          ------          ------
REGION WEIGHTED AVERAGE                       73.28%          70.33%          12.35%          12.94%          14.37%          16.72%

OREGON
    Albany Plaza                              75.31%          68.24%           4.88%           6.46%          19.81%          25.30%
    Bear Creek Plaza                          87.27           80.76            7.36            9.60            5.37            9.64
    East Burnside Plaza                        9.35           16.50           87.85           81.88            2.80            1.62
    Foster Square                                --              --              --              --          100.00          100.00
    Hermiston Plaza                           73.70           47.59            4.32            9.75           21.98           42.66
    Hood River                                 8.31           10.24           12.03           42.39           79.66           47.37
    Menlo Park                                 7.97            9.89              --              --           92.03           90.11
    Milwaukie Marketplace                     87.54           68.71            4.48           13.48            7.98           17.81
    NE 33rd                                      --              --          100.00          100.00              --              --
    North Lombard                            100.00          100.00              --              --              --              --
    Oregon City Shopping Center               67.66           42.86            5.40           14.82           26.94           42.32
    Oregon Trail Shopping Center              59.52           56.04            3.47            6.63           37.01           37.33
    Pioneer Plaza                             69.70           54.58           13.61           23.60           16.69           21.82
    Powell Valley Junction                    65.43           64.15              --              --           34.57           35.85
    Raleigh Hills Plaza                       38.26           35.92              --              --           61.74           64.08
    Rockwood Plaza                            14.02           18.42              --              --           85.98           81.58
    Sandy Marketplace                         38.51           44.74           21.93           16.64           39.56           38.62
    SE Milwaukie                                 --              --          100.00          100.00              --              --
</TABLE>



                                       15
<PAGE>   18

             NATIONAL, REGIONAL AND LOCAL TENANT MIX AS OF 12/31/00
                                   (continued)


<TABLE>
<CAPTION>
                                              NATIONAL  TENANTS (1)          REGIONAL TENANTS (1)             LOCAL TENANTS (1)
                                          ---------------------------      -------------------------      ------------------------
                                                          % OF PROPERTY                  % OF PROPERTY                 % OF PROPERTY
                                         % OF PROPERTY      ANN. BASE    % OF PROPERTY     ANN. BASE     % OF PROPERTY   ANN. BASE
PROPERTY                                  LEASED GLA         RENT (2)      LEASED GLA       RENT (2)      LEASED GLA      RENT (2)
--------                                  ----------         --------      ----------       --------      ----------      --------
<S>                                      <C>              <C>            <C>             <C>             <C>           <C>
    Shute Park Plaza                          16.46           17.61           15.22           18.69           68.32           63.70
    Southgate Shopping Center                 70.63           62.94           10.69           12.38           18.68           24.68
    St. John's Plaza                          81.94           75.70            6.81           10.41           11.25           13.89
    Sunset Mall                               54.04           35.24            6.67           11.77           39.29           52.99
    Tacoma Shopping Center                       --              --              --              --          100.00          100.00
    Tanasbourne Village                       70.40           63.39            7.41            9.46           22.19           27.15
                                             ------          ------          ------          ------          ------          ------
REGION WEIGHTED AVERAGE                       59.40%          48.43%           9.61%          15.02%          30.98%          36.55%

NEVADA
    Caughlin Ranch                             7.45%          11.85%          53.59%          48.12%          38.96%          40.03%
    Cheyenne Commons                          89.03           80.36              --              --           10.97           19.64
    Dodge Center                              44.34           33.13           55.66           66.87              --              --
    Eagle Station                             28.18           40.67           54.36           30.68           17.46           28.65
    Elko Junction                             18.07           25.78           36.32           26.06           45.61           48.16
    Green Valley Town & Country               55.27           43.99            4.44            4.97           40.29           51.04
    Mira Loma Shopping Center                 30.44           30.06           48.15           42.48           21.41           27.46
    Rainbow Promenade                         89.63           83.39            2.87            4.63            7.50           11.98
    Raley's                                      --              --          100.00          100.00              --              --
    Sahara Pavilion North                     69.25           57.92           11.72           11.96           19.03           30.12
    Sahara Pavilion South                     74.14           67.38            7.25            8.79           18.61           23.83
    West Town                                    --              --           96.33           93.93            3.67            6.07
    Winterwood Pavilion                       71.73           64.94           13.20            9.88           15.07           25.18
                                             ------          ------          ------          ------          ------          ------
REGION WEIGHTED AVERAGE                       57.88%          56.44%          23.00%          16.63%          19.12%          26.94%

OTHER AREAS
    Country Club Center                       31.47%          42.47%           0.00%           0.00%          68.53%          57.53%
    Maysville Market Square                   87.38           83.19            6.32            8.12            6.30            8.69
    Memphis Retail Center                     39.55           49.73              --              --           60.45           50.27
    Ocoee Plaza                               66.01           62.60              --              --           33.99           37.40
                                             ------          ------          ------          ------          ------          ------
REGION WEIGHTED AVERAGE                       64.56%          62.91%           2.86%           3.18%          32.58%          33.91%
                                             ------          ------          ------          ------          ------          ------

PORTFOLIO WEIGHTED AVERAGE                    60.99%          57.34%          18.80%          16.31%          20.21%          26.35%
                                             ======          ======          ======          ======          ======          ======
</TABLE>

(1)    The company defines national tenants 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 tenants
       as any tenant that operates in two or more metropolitan areas located
       within the same region; local tenants as any tenant that operates stores
       only within the same metropolitan area as the shopping center.

(2)    Annualized base rent for all leases in place at December 31, 2000 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)    The company owns a 30% interest in the property. Table reflects 100%.



                                       16
<PAGE>   19

                  ANCHOR & NON-ANCHOR TENANT MIX AS OF 12/31/00



The following table sets forth certain information for the 110 retail centers
owned at December 31, 2000.


<TABLE>
<CAPTION>
                                                         ANCHOR TENANTS (1)                         NON-ANCHOR TENANTS (1)
                                                  ------------------------------              -------------------------------
                                                     %               % OF PROPERTY               %               % OF PROPERTY
                                                  OCCUPIED             ANN. BASE              OCCUPIED              ANN. BASE
PROPERTY                                            GLA                   RENT                  GLA                   RENT
                                                  --------             ---------              --------              ---------
<S>                                               <C>                <C>                      <C>                <C>
NORTHERN CALIFORNIA
    Anderson Square                                 36.85%                15.09%                63.15%                84.91%
    Angels Camp Town Center                         79.60                 63.08                 20.40                 36.92
    Blossom Valley Plaza                            57.32                 41.23                 42.68                 58.77
    Brookvale Shopping Center                       73.59                 48.27                 26.41                 51.73
    Cable Park                                      69.84                 36.83                 30.16                 63.17
    Canal Farms                                     65.74                 56.37                 34.26                 43.63
    Centennial Plaza                                68.20                 50.37                 31.80                 49.63
    Century Center                                  65.36                 39.12                 34.64                 60.88
    Chico Crossroads                                85.56                 75.69                 14.44                 24.31
    Cobblestone                                     55.58                 37.69                 44.42                 62.31
    Commonwealth Square                             44.57                 23.79                 55.43                 76.21
    Country Gables Shopping Center                  44.67                 29.61                 55.33                 70.39
    Creekside Center                                67.45                 35.44                 32.55                 64.56
    Currier Square                                  50.46                 55.07                 49.54                 44.93
    Dublin Retail Center                            88.02                 80.50                 11.98                 19.50
    Eastridge Plaza                                 71.88                 59.02                 28.12                 40.98
    Elverta Crossing                                60.10                 39.77                 39.90                 60.23
    Fairmont Shopping Center                        50.77                 25.93                 49.23                 74.07
    Fashion Faire Place                             48.00                 32.85                 52.00                 67.15
    Glen Cove Center                                76.30                 67.38                 23.70                 32.62
    Glenbrook Shopping Center                       58.46                 16.64                 41.54                 83.36
    Heritage Park Shopping Center                   53.61                 40.52                 46.39                 59.48
    Heritage Place                                  58.12                 44.38                 41.88                 55.62
    Kmart Center                                    78.00                 29.08                 22.00                 70.92
    Laguna 99 Plaza                                 67.06                 44.80                 32.94                 55.20
    Laguna Village                                  77.07                 73.13                 22.93                 26.87
    Lakewood Shopping Center                        52.41                 32.59                 47.59                 67.41
    Lakewood Village                                66.92                 57.61                 33.08                 42.39
    Manteca Marketplace                             55.98                 48.68                 44.02                 51.32
    Mission Ridge Plaza                             60.83                 51.70                 39.17                 48.30
    Monterey Plaza                                  55.68                 29.03                 44.32                 70.97
    Northridge Plaza                                71.43                 44.38                 28.57                 55.62
    Park Place                                      60.16                 42.29                 39.84                 57.71
    Pine Creek Shopping Center                      47.92                 32.91                 52.08                 67.09
    Plaza 580 Shopping Center                       23.57                 12.87                 76.43                 87.13
    Raley's Shopping Center                         70.07                 42.29                 29.93                 57.71
    Serra Center (3)                                71.64                 62.12                 28.36                 37.88
    Shops at Lincoln School                         51.72                 36.00                 48.28                 64.00
    Sky Park Plaza                                  65.21                 48.85                 34.79                 51.15
    Ukiah Crossroads                                58.13                 46.23                 41.87                 53.77
    Victorian Walk                                  73.65                 56.79                 26.35                 43.21
    Wal Mart                                       100.00                100.00                  0.00                  0.00
    Westwood Village Shopping Center                53.76                 38.96                 46.24                 61.04
    Yreka Junction                                  65.38                 41.35                 34.62                 58.65
                                                   ------                ------                ------                ------
REGION WEIGHTED AVERAGE                             63.10%                45.28%                36.90%                54.72%
</TABLE>



                                       17
<PAGE>   20

                  ANCHOR & NON-ANCHOR TENANT MIX AS OF 12/31/00
                                   (continued)


<TABLE>
<CAPTION>
                                                         ANCHOR TENANTS (1)                         NON-ANCHOR TENANTS (1)
                                                  ------------------------------              -------------------------------
                                                     %               % OF PROPERTY               %               % OF PROPERTY
                                                  OCCUPIED             ANN. BASE              OCCUPIED              ANN. BASE
PROPERTY                                            GLA                   RENT                  GLA                   RENT
                                                  --------             ---------              --------              ---------
<S>                                               <C>                <C>                      <C>                <C>
SOUTHERN CALIFORNIA
    Arlington Courtyard                              0.00%                 0.00%               100.00%               100.00%
    Canyon Square Plaza                             43.88                 29.67                 56.12                 70.33
    Chino Town Square                               53.09                 45.09                 46.91                 54.91
    Encinitas Marketplace                           46.46                 27.56                 53.54                 72.44
    Granary Square                                  47.47                 19.55                 52.53                 80.45
    Laurentian  Center                              37.70                 32.42                 62.30                 67.58
    Marina Village                                  44.37                 28.32                 55.63                 71.68
    Melrose Village Plaza                           51.99                 36.47                 48.01                 63.53
    Palmdale Center                                 81.38                 56.92                 18.62                 43.08
    Rancho Las Palmas                               33.28                 10.21                 66.72                 89.79
    San Dimas Marketplace                           46.88                 39.09                 53.12                 60.91
    Sycamore Plaza                                  65.99                 26.35                 34.01                 73.65
    Tustin Heights Shopping Center                  62.36                 42.78                 37.64                 57.22
    Vineyard Village East                           57.52                 41.16                 42.48                 58.84
                                                   ------                ------                ------                ------
REGION WEIGHTED AVERAGE                             50.06%                32.94%                49.94%                67.06%

WASHINGTON
    Auburn North                                    66.11%                46.02%                33.89%                53.98%
    Blaine International Center                     80.80                 70.86                 19.20                 29.14
    Canyon Ridge Plaza                              34.62                 20.62                 65.38                 79.38
    Claremont Village Plaza                         46.12                 44.81                 53.88                 55.19
    Gateway Shopping Center                         66.17                 57.84                 33.83                 42.16
    Olympia Square                                  46.35                 32.23                 53.65                 67.77
    Olympia West Center                             56.65                 62.26                 43.35                 37.74
    Pacific Commons                                 50.43                 46.91                 49.57                 53.09
    Panther Lake                                    33.84                 19.66                 66.16                 80.34
    Sunset Square                                   75.88                 57.34                 24.12                 42.66
    Tacoma Central                                  65.36                 61.00                 34.64                 39.00
                                                   ------                ------                ------                ------
REGION WEIGHTED AVERAGE                             60.81%                49.30%                39.19%                50.70%

OREGON
    Albany Plaza                                    43.20%                32.62%                56.80%                67.38%
    Bear Creek Plaza                                68.23                 51.46                 31.77                 48.54
    East Burnside Plaza                             84.82                 76.75                 15.18                 23.25
    Foster Square                                    0.00                  0.00                100.00                100.00
    Hermiston Plaza                                 55.46                 24.72                 44.54                 75.28
    Hood River                                      69.26                 33.77                 30.74                 66.23
    Menlo Park Plaza                                40.44                 52.86                 59.56                 47.14
    Milwaukie Marketplace                           57.79                 32.58                 42.21                 67.42
    NE 33rd                                        100.00                100.00                  0.00                  0.00
    North Lombard                                  100.00                100.00                  0.00                  0.00
    Oregon City Shopping Center                     72.80                 40.48                 27.20                 59.52
    Oregon Trail Shopping Center                    63.76                 50.14                 36.24                 49.86
    Pioneer Plaza                                   48.96                 33.62                 51.04                 66.38
    Powell Valley Junction                          79.72                 65.50                 20.28                 34.50
    Raleigh Hills Plaza                             96.01                 91.99                  3.99                  8.01
    Rockwood Plaza                                  37.22                 26.28                 62.78                 73.72
    Sandy Marketplace                               50.50                 38.98                 49.50                 61.02
    SE Milwaukie                                   100.00                100.00                  0.00                  0.00
</TABLE>



                                       18
<PAGE>   21

                  ANCHOR & NON-ANCHOR TENANT MIX AS OF 12/31/00
                                   (continued)


<TABLE>
<CAPTION>
                                                         ANCHOR TENANTS (1)                         NON-ANCHOR TENANTS (1)
                                                  ------------------------------              -------------------------------
                                                     %               % OF PROPERTY               %               % OF PROPERTY
                                                  OCCUPIED             ANN. BASE              OCCUPIED              ANN. BASE
PROPERTY                                            GLA                   RENT                  GLA                   RENT
                                                  --------             ---------              --------              ---------
<S>                                               <C>                <C>                      <C>                <C>
    Shute Park Plaza                                 0.00                  0.00                100.00                100.00
    Southgate Shopping Center                       58.98                 45.46                 41.02                 54.54
    St. John's Plaza                                58.81                 42.65                 41.19                 57.35
    Sunset Mall                                     41.51                 17.20                 58.49                 82.80
    Tacoma Shopping Center                           0.00                  0.00                100.00                100.00
    Tanasbourne Village                             50.12                 31.08                 49.88                 68.92
                                                   ------                ------                ------                ------
REGION WEIGHTED AVERAGE                             58.18%                44.05%                41.82%                55.95%

NEVADA
    Caughlin Ranch                                  50.11%                43.09%                49.89%                56.91%
    Cheyenne Commons                                64.76                 42.88                 35.24                 57.12
    Dodge Center                                    84.31                 63.10                 15.69                 36.90
    Eagle Station                                   54.36                 30.68                 45.64                 69.32
    Elko Junction                                   64.12                 49.14                 35.88                 50.86
    Green Valley Town & Country                     39.37                 20.05                 60.63                 79.95
    Mira Loma Shopping Center                       54.07                 46.97                 45.93                 53.03
    Rainbow Promenade                               65.62                 56.46                 34.38                 43.54
    Raley's                                        100.00                100.00                  0.00                  0.00
    Sahara Pavilion North                           48.56                 29.12                 51.44                 70.88
    Sahara Pavilion South                           48.55                 28.21                 51.45                 71.79
    West Town                                       96.33                 93.93                  3.67                  6.07
    Winterwood Pavilion                             47.41                 25.73                 52.59                 74.27
                                                   ------                ------                ------                ------
REGION WEIGHTED AVERAGE                             58.65%                40.10%                41.35%                59.90%

OTHER AREAS
    Country Club Center                              0.00%                 0.00%               100.00%               100.00%
    Maysville Market Square                         62.72                 55.05                 37.28                 44.95
    Memphis Retail Center                            0.00                  0.00                100.00                100.00
    Ocoee Plaza                                     47.85                 45.82                 52.15                 54.18
                                                   ------                ------                ------                ------
REGION WEIGHTED AVERAGE                             37.35%                28.82%                62.65%                71.18%
                                                   ------                ------                ------                ------

    PORTFOLIO WEIGHTED AVERAGE                      59.05%                42.64%                40.95%                57.36%
                                                   ======                ======                ======                ======
</TABLE>

(1)    Anchors defined 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 in which tenants are in
       occupancy at December 31, 2000 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)    The company owns a 30% interest on the property. Table reflects 100%.



                                       19
<PAGE>   22

                          MAJOR TENANTS* AS OF 12/31/00


The following table sets forth certain information for the 110 retail centers at
December 31, 2000.


<TABLE>
<CAPTION>
                                                                                    ANNUALIZED BASE RENT IN PLACE AT 12/31/00
                                                                                     ---------------------------------------
                                                     LEASED GLA      % OF TOTAL        TOTAL          ANN. BASE     % OF TOTAL
                                   NUMBER OF       AS OF 12/31/00     LEASED          ANN. BASE      RENT/SQ. FT.    ANN. BASE
TENANT                              LEASES           (SQ. FT.)          GLA          RENT ($)(1)        ($)(2)         RENT
                                 -----------        -----------        ------        -----------        ------        ------
<S>                              <C>               <C>               <C>             <C>             <C>             <C>
Raley's                                   20          1,136,895        8.97 %        $ 7,698,546        $ 6.77        5.57 %
Von's/Safeway/Pak 'N Save                 12            588,634          4.64          4,948,324          8.41          3.58
Wal-Mart                                   4            419,872          3.31          3,652,528          8.70          2.64
Albertson's/Savon                         15            613,289          4.84          3,532,699          5.76          2.55
Rite Aid                                  18            440,443          3.47          2,753,560          6.25          1.99
Blockbuster Video                         19            104,907          0.83          1,788,757         17.05          1.29
Ross Dress for Less                        9            207,821          1.64          1,783,719          8.58          1.29
Hollywood Video                           15             94,684          0.75          1,776,336         18.76          1.28
QFC                                        4            113,960          0.90          1,770,382         15.54          1.28
Save Mart Supermarket                      7            246,714          1.95          1,632,644          6.62          1.18
Office Max                                 5            134,550          1.06          1,499,871         11.15          1.08
24 Hour Fitness                            4            108,305          0.85          1,489,303         13.75          1.08
                                 -----------        -----------        ------        -----------        ------        ------

TOTAL                                    132          4,210,074        33.20 %       $34,326,670        $ 8.15        24.82 %
                                 ===========        ===========        ======        ===========        ======        ======
</TABLE>


*      Tenants which individually account for 1% or more of Annualized base
       rent.

(1)    Annualized base rent for all leases in place at December 31, 2000 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)    Annualized base rent divided by leased area at December 31, 2000.



                                       20
<PAGE>   23

                           LEASE EXPIRATION ANALYSIS*


The following table sets forth certain information for the 110 retail centers
owned at December 31, 2000.

<TABLE>
<CAPTION>
                                                                                        ANNUALIZED BASE RENT IN PLACE AT 12/31/00
                                                                                        ------------------------------------------
                                 LEASE      NUMBER OF     GLA UNDER                      TOTAL ANN.                  ANN. BASE
                               EXPIRATION    LEASES       EXPIRING         % OF         BASE RENT($)    % OF ANN.       RENT
                                  YEAR       EXPIRING   LEASES(SQ.FT.)      GLA             (2)         BASE RENT   ($/SQ. FT.)(3)
                               ----------   ---------   --------------      ---         ------------    ---------   --------------
<S>                            <C>          <C>         <C>               <C>           <C>             <C>         <C>
All Anchor Leases (1)
1 ..........................      2001            4         121,224          1.62            509,383         0.86        4.20
2 ..........................      2002            9         292,299          3.90          1,232,683         2.09        4.22
3 ..........................      2003           15         360,671          4.82          2,561,665         4.34        7.10
4 ..........................      2004            9         403,245          5.39          1,645,541         2.79        4.08
5 ..........................      2005           20         456,325          6.09          3,659,318         6.20        8.02
6 ..........................      2006           18         765,986         10.23          5,873,574         9.96        7.67
7 ..........................      2007            8         197,625          2.64          1,449,215         2.46        7.33
8 ..........................      2008           14         531,496          7.10          3,236,591         5.49        6.09
9 ..........................      2009           11         389,182          5.20          3,338,531         5.66        8.58
10 .........................      2010           14         435,318          5.81          3,736,559         6.34        8.58
11 and after ...............      2011 +         91       3,534,526         47.20         31,735,647        53.81        8.98
                                              ------     -----------      --------      -------------     --------     -------
TOTAL/WEIGHTED AVERAGE                          213       7,487,897        100.00%       $58,978,707       100.00%       $7.88
                                              ======     ===========      ========      =============     ========     =======

ALL NON-ANCHOR LEASES (1)
1 ..........................      2001          324         670,015         12.90          9,218,356        11.62       13.76
2 ..........................      2002          365         778,723         15.00         11,775,046        14.84       15.12
3 ..........................      2003          379         899,006         17.31         13,088,718        16.50       14.56
4 ..........................      2004          288         777,843         14.98         11,275,178        14.21       14.50
5 ..........................      2005          286         817,784         15.75         12,279,678        15.48       15.02
6 ..........................      2006           68         270,274          5.21          3,800,634         4.79       14.06
7 ..........................      2007           42         153,671          2.96          2,675,570         3.37       17.41
8 ..........................      2008           40         176,900          3.41          2,914,860         3.67       16.48
9 ..........................      2009           48         227,841          4.39          3,789,203         4.78       16.63
10 .........................      2010           53         180,239          3.47          3,523,794         4.44       19.55
11 and after ...............      2011 +         57         240,143          4.62          4,997,171         6.30       20.81
                                              ------     -----------      --------      -------------     --------     -------
TOTAL/WEIGHTED AVERAGE                        1,950       5,192,439       100.00%        $79,338,208      100.00%      $15.28
                                              ======     ===========      ========      =============     ========     =======

All Leases
1 ..........................      2001          328         791,239          6.24          9,727,739         7.03       12.29
2 ..........................      2002          374       1,071,022          8.45         13,007,729         9.40       12.15
3 ..........................      2003          394       1,259,677          9.93         15,650,383        11.31       12.42
4 ..........................      2004          297       1,181,088          9.31         12,920,718         9.34       10.94
5 ..........................      2005          306       1,274,109         10.05         15,938,996        11.52       12.51
6 ..........................      2006           86       1,036,260          8.17          9,674,207         6.99        9.34
7 ..........................      2007           50         351,296          2.77          4,124,785         2.98       11.74
8 ..........................      2008           54         708,396          5.59          6,151,451         4.45        8.68
9 ..........................      2009           59         617,023          4.87          7,127,735         5.15       11.55
10 .........................      2010           67         615,557          4.85          7,260,353         5.25       11.79
11 and after ...............      2011 +        148       3,774,669         29.77         36,732,818        26.58        9.73
                                              ------     -----------      --------      -------------     --------     -------
TOTAL/WEIGHTED AVERAGE                        2,163      12,680,336       100.00%       $138,316,914      100.00%      $10.91
                                              ======     ===========      ========      =============     ========     =======
</TABLE>

Note: Number of Leases expiring does not include tenants on a month-to-month
agreement and future tenants, whose combined occupancy totals 327,298 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 December 31, 2000 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 gross leasable area at December 31, 2000.



                                       21
<PAGE>   24

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 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.

        We believe we have meritorious defenses against each of Plaintiff's
claims and we intend to vigorously and effectively defend against them. It
should be noted, however, that the outcome of any litigation is by its nature
unpredictable and we therefore cannot assure you that we will successfully
defend this 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, liability
under 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

        On November 9, 2000, we held a special meeting and our stockholders
voted on and approved our merger with Western with 18,883,801 votes for, 65,953
votes against and 19,694 votes abstaining. Our stockholders also voted on and
approved an amendment to our 2000 Stock Incentive Plan which increased the
number of shares reserved for issuance under this plan. This item passed with
15,102,163 votes for, 3,841,292 votes against and 25,993 votes abstaining.

                                     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 16, 2001 we had approximately 984
stockholders of record and approximately 12,500 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 distributions declared by us.

<TABLE>
<CAPTION>
                                                                    DISTRIBUTIONS
                                              HIGH         LOW        DECLARED
                                             -------      -------   -------------
<S>                                          <C>          <C>         <C>
First Quarter 1999                           $20.250      $17.500      $0.40
Second Quarter 1999                          $20.188      $17.375      $0.40
Third Quarter 1999                           $20.188      $17.063      $0.40
Fourth Quarter 1999                          $18.250      $15.125      $0.40
First Quarter 2000                           $19.125      $16.625      $0.42
Second Quarter 2000                          $20.125      $18.750      $0.42
Third Quarter 2000                           $20.938      $19.000      $0.42
Fourth Quarter 2000  (special dividend)      $22.750      $19.813      $0.28
</TABLE>


                                       22
<PAGE>   25

        In the fourth quarter 2000, we declared and paid a special, two-month
dividend of $0.28 a share to stockholders of record before the merger with
Western was completed. The special dividend addressed the two-month shift in
timing for the payment of our normal quarterly dividend in future periods. All
distributions 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, the Company is
required to make distributions to holders of its shares in an amount at least
equal to 95%, or, for taxable years beginning after December 31, 2000, 90%, of
the Company's "real estate investment trust taxable income," as defined in
Section 857 of the Internal Revenue Code.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

        The following table sets forth selected financial data for the Company
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(1)
                  (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                           YEARS ENDED DECEMBER 31,
                                                        -------------------------------------------------------------
                                                          2000          1999         1998          1997        1996
                                                        --------      --------      -------      -------      -------
<S>                                                     <C>           <C>           <C>          <C>          <C>
STATEMENTS OF INCOME DATA:
Total revenue                                           $120,493      $101,062      $79,253      $46,710      $35,623
Operating and general and administrative                  28,884        25,513       19,765       14,216       12,766
   expenses
Merger related expenses                                    3,204            --           --           --           --
Depreciation and amortization                             20,374        17,476       14,298        8,928        7,693
Interest expense                                          32,112        23,939       18,295       14,057       14,671
Income before extraordinary item                          33,800        32,576       26,634        9,356          449
Net income                                                33,800        32,576       26,634        8,313          449
Per share data:
     Income before extraordinary item--diluted(2)           1.48          1.54         1.35         0.55           --
     Net income--diluted(2)                                 1.48          1.54         1.35         0.49           --
     Distributions declared                                 1.54          1.60         1.52         0.58           --
</TABLE>


<TABLE>
<CAPTION>
                                                                   AS OF DECEMBER 31,
                                          ------------------------------------------------------------------
                                            2000           1999           1998          1997          1996
                                          ----------      --------      --------      --------      --------
<S>                                       <C>             <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
Properties, net                           $1,194,824      $748,061      $667,478      $455,514      $264,017
Total assets                               1,297,690       784,537       705,541       487,220       293,186
Notes payable                                233,911       228,490       144,024       108,316       192,915
Line of credit and term loan payable         267,650       128,800       138,500        62,450            --
Senior notes                                 124,850            --            --            --            --
Advances from related party                       --            --            --            --        32,113
Minority interests                            41,754        23,347        17,318         1,521         1,539
Stockholders' equity                         606,998       381,866       383,088       301,055            --
Owner's equity                                    --            --            --            --        61,808
</TABLE>

(1) The financial data as of the dates and for the periods prior to August 13,
    1997 represents the combined financial data of predecessor entities prior to
    the registrant's initial public offering.

(2) The 1997 data is calculated as if the shares were outstanding for the entire
    year based on the diluted number of shares assumed to be outstanding. There
    were no outstanding shares of common stock in 1996 and therefore the
    information is not relevant or included here.


                                       23
<PAGE>   26

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

CAUTIONARY LANGUAGE

        The discussions in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 which
reflect management's current views with respect to future events and financial
performance. Forward-looking statements are subject to risks and uncertainties.
Factors that could cause actual results to differ materially from expectations
include market valuations of our stock, financial performance and operations of
our shopping centers, real estate conditions, execution of shopping center
development programs, successful completion of renovations, completion of
pending acquisitions, changes in the availability of additional acquisitions,
changes in local or national economic conditions, and other risks detailed from
time to time in reports filed with the Securities and Exchange Commission.

OVERVIEW

        The following discussion should be read in connection with the
consolidated financial statements of Pan Pacific Retail Properties, Inc. and our
subsidiaries, and the notes thereto, appearing elsewhere in this report.

        On November 13, 2000, we acquired Western Properties Trust, a California
real estate investment trust. The transaction was a stock for stock exchange
whereby Western common shares and units were exchanged into newly issued Company
common shares and operating partnership units, based upon a fixed exchange ratio
of 0.62. As a result, we issued 10,754,256 shares of our common stock to holders
of Western common shares and are obligated to issue 911,934 shares of our common
stock upon the exchange of operating partnership units held by limited partners
of Pan Pacific (Kienows), L.P., formerly Western/Kienow, L.P., and Pan Pacific
(Pinecreek), L.P., formerly Western/Pinecreek, L.P. In connection with this
transaction, we assumed $135,000,000 of Western's debt obligations.

        We receive income primarily from rental revenue from shopping center
properties, including recoveries from tenants. Primarily as a result of our
acquisition program, including the acquisition of Western which included
interests in 50 shopping centers, the financial data show increases in total
revenue from period to period.

        We have experienced economies of scale as we have grown our portfolio
from 25 properties in August 1997 to 110 properties at December 31, 2000. For
example, in 2000, 1999 and 1998, we experienced lower overhead costs as a
percentage of total revenue as compared to 1997 and 1996. For the years ended
December 31, 2000, 1999 and 1998, general and administrative expenses, as a
percentage of total revenue were 4.2%, 5.3% and 5.2%, respectively. This
compares favorably with the years ended December 31, 1997 and 1996, where this
same ratio was 8.4% and 9.2%, respectively. Another example of economies of
scale is the reduction in operating expenses on a square foot basis. For
example, during the year ended December 31, 2000, we owned properties comprising
a weighted average gross leasable area of 8,800,000 square feet. Total expenses,
excluding interest, depreciation and amortization and non-recurring merger
related expenses for the year ended December 31, 2000 were $28,884,000 or $3.28
per square foot. During the year ended December 31, 1999, we owned properties
comprising a weighted average gross leasable area of 7,640,000 square feet.
Total expenses, excluding interest and depreciation and amortization for the
year ended December 31, 1999 were $25,513,000 or $3.34 per square foot. During
the year ended December 31, 1998, we owned properties comprising a weighted
average gross leasable area of 6,026,000 square feet. Total expenses, excluding
interest and depreciation and amortization for the year ended December 31, 1998
were $19,765,000 or $3.28 per square foot. These expense rates per square foot
compare favorably with the same calculations for the years ended December 31,
1997 and 1996 where the rates per square foot were $3.97 and $4.38,
respectively. We anticipate there will be continued benefits in the future due
to these economies of scale, particularly in light of our acquisition of
Western.

        We expect that the more significant part of our revenue growth in the
next year or two will come from additional acquisitions, rent increases from
re-leasing and re-tenanting initiatives of the assets acquired in the Western
acquisition and the benefit of the stabilization of other properties acquired
during 2000.


                                       24
<PAGE>   27

RESULTS OF OPERATIONS

        Comparison of the Year Ended December 31, 2000 to the Year Ended
December 31, 1999.

        Total revenue increased by $19,431,000 or 19.2% to $120,493,000 from
$101,062,000 for the year ended December 31, 2000, compared to the year ended
December 31, 1999.

        Rental revenue increased by $14,606,000 or 18.2% to $94,743,000 from
$80,137,000 for the year ended December 31, 2000, compared to the year ended
December 31, 1999. The increase in rental revenue resulted principally from six
property acquisitions in 1999, three property acquisitions in 2000 and the
acquisition of Western in November 2000.

        Recoveries from tenants increased by $3,755,000 or 21.0% to $21,648,000
from $17,893,000 for the year ended December 31, 2000, compared to the year
ended December 31, 1999. This increase resulted primarily from the 1999 and 2000
acquisitions. Recoveries from tenants were 93.2% of property operating expenses
and property taxes for the year ended December 31, 2000 compared to 89.7% of the
same expenses for the same period in 1999.

        Property operating expenses increased by $1,734,000 or 13.8% to
$14,285,000 from $12,551,000 for the year ended December 31, 2000, compared to
the year ended December 31, 1999. The increase in property operating expenses
was primarily attributable to the 1999 and 2000 acquisitions. Property taxes
increased by $1,539,000 or 20.8% to $8,938,000 from $7,399,000 for the year
ended December 31, 2000, compared to the year ended December 31, 1999. The
increase in property taxes was also primarily the result of the 1999 and 2000
acquisitions.

        Depreciation and amortization increased by $2,898,000 or 16.6% to
$20,374,000 from $17,476,000 for the year ended December 31, 2000, compared to
the year ended December 31, 1999. This was primarily due to the 1999 and 2000
acquisitions.

        Interest expense increased by $8,173,000 or 34.1% to $32,112,000 from
$23,939,000 for the year ended December 31, 2000, compared to the year ended
December 31, 1999, primarily as a result of interest expense relating to amounts
drawn on our unsecured credit facility and Term Credit Agreement to finance the
1999 and 2000 acquisitions, interest expense on the fixed-rate mortgage assumed
related to Rancho Las Palmas in the third quarter of 1999 and interest expense
on the fixed-rate mortgage on Lakewood Village which was assumed as part of the
Western acquisition in November 2000. Interest expense also increased as a
result of an increase in the LIBOR component of the borrowing cost on our
unsecured credit facility over the comparable period in 1999.

        General and administrative expenses decreased by $210,000 or 4.0% to
$5,105,000 from $5,315,000 for the year ended December 31, 2000, compared to the
year ended December 31, 1999. This decrease was primarily attributable to
one-time executive severance costs recorded in 1999 and an increase in internal
capitalized leasing costs recorded in 2000, which offset related general and
administrative expenses, offset by annual compensation increases in 2000. As a
percentage of total revenue, general and administrative expenses were 4.2% for
the year ended December 31, 2000 and 5.3% for the year ended December 31, 1999.

        Merger related expenses were incurred during 2000 in connection with the
acquisition of Western. The Company incurred approximately $3,200,000 of these
expenses which are non-recurring.


                                       25
<PAGE>   28

        The following table compares the operating data for the 52 properties
("Same Properties") that were owned and in operation for the entirety of both
years ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                            2000             1999
                                                         -----------      -----------
<S>                                                      <C>              <C>
Revenue:
   Rental                                                $77,434,000      $75,473,000
   Recoveries from tenants                                17,546,000       16,746,000
   Operating income from unconsolidated partnership          324,000          349,000
   Other                                                   2,119,000        1,610,000
                                                         -----------      -----------
                                                         $97,423,000      $94,178,000
Operating expenses:
   Property operating and property taxes                  18,788,000       18,678,000
                                                         -----------      -----------
Operating income                                         $78,635,000      $75,500,000
                                                         ===========      ===========
</TABLE>

        Operating income for the Same Properties for the year ended December 31,
2000 increased over the same period in the prior year by $3,135,000, or 4.2%.
This increase was attributable primarily to increased rental revenue of
$1,961,000 due to increases in rental rates at Creekside Center, Green Valley
Town & Country, Mira Loma Shopping Center, Monterey Plaza, Olympia West Center
and Pioneer Plaza, as well as increases in occupancy at Claremont Village Plaza,
Olympia Square, Oregon Trail Shopping Center, Panther Lake, Sandy Marketplace
and Sunset Square. Recoveries from tenants increased by $800,000, while property
operating and property tax expense only increased by $110,000. The increase in
recoveries from tenants over the increase in related expenses is due to
increases in occupancy during the year and stronger recovery language in our
leases. Other income increased over the prior year by $509,000 due to a
termination fee received at Chino Town Square.

        Comparison of the Year Ended December 31, 1999 to the Year Ended
December 31, 1998.

        Total revenue increased by $21,809,000 or 27.5% to $101,062,000 from
$79,253,000 for the year ended December 31, 1999, compared to the year ended
December 31, 1998.

        Rental revenue increased by $16,924,000 or 26.8% to $80,137,000 from
$63,213,000 for the year ended December 31, 1999, compared to the year ended
December 31, 1998. The increase in rental revenue resulted principally from the
acquisition of San Dimas Marketplace and Bear Creek Plaza in January 1998;
Milwaukie Marketplace, Pioneer Plaza, Powell Valley Junction and Shute Park
Plaza in February 1998; Manteca Marketplace in March 1998; a 24 Hour Fitness
building, Panther Lake Shopping Center and Creekside Center in April 1998;
Westwood Village Shopping Center and Fashion Faire Shopping Center in May 1998;
Pacific Commons Shopping Center in June 1998; Oregon Trail Shopping Center,
Hermiston Plaza and Hood River Center in October 1998; Sandy Marketplace,
Southgate Center, Oregon City Shopping Center, Sunset Mall, Mira Loma Shopping
Center and Glen Cove Center in November 1998; the remaining 50% interest in
Melrose Village Plaza in January 1999; Auburn North Shopping Center in March
1999; Marina Village in April 1999; Canyon Square Plaza and Rancho Las Palmas
Retail Center in September 1999; and The Shops at Lincoln School and Albany
Plaza in October 1999.

        Recoveries from tenants increased by $4,165,000 or 30.3% to $17,893,000
from $13,728,000 for the year ended December 31, 1999, compared to the year
ended December 31, 1998. This increase resulted primarily from our 1998 and 1999
acquisitions. Recoveries from tenants were 89.7% of property operating expenses
and property taxes for the year ended December 31, 1999 compared to 88.3% of the
same expenses for the same period in 1998.

        Property operating expenses increased by $2,738,000 or 27.9% to
$12,551,000 from $9,813,000 for the year ended December 31, 1999, compared to
the year ended December 31, 1998. The increase in property operating expenses
was primarily attributable to our 1998 and 1999 acquisitions. Property taxes
increased by $1,664,000 or 29.0% to $7,399,000 from $5,735,000 for the year
ended December 31, 1999, compared to the year ended December 31, 1998. The
increase in property taxes was also primarily the result of our 1998 and 1999
acquisitions.

        Depreciation and amortization increased by $3,178,000 or 22.2% to
$17,476,000 from $14,298,000 for the year ended December 31, 1999, compared to
the year ended December 31, 1998. This was primarily due to our 1998 and 1999
acquisitions.


                                       26
<PAGE>   29

        Interest expense increased by $5,644,000 or 30.9% to $23,939,000 from
$18,295,000 for the year ended December 31, 1999, compared to the year ended
December 31, 1998, primarily as a result of interest expense relating to amounts
drawn on our unsecured credit facility to finance acquisitions, interest expense
on the fixed-rate mortgage assumed related to Westwood Village Shopping Center
in the second quarter of 1998, interest expense on the fixed-rate mortgages
assumed related to Sunset Mall, Oregon City Shopping Center, Sandy Marketplace
and Southgate Center in the fourth quarter of 1998 and interest expense on the
fixed-rate mortgage assumed related to Rancho Las Palmas Retail Center in the
third quarter of 1999. Interest expense also increased as a result of the
secured financings on Rainbow Promenade, San Dimas Marketplace, Melrose Village
Plaza, Monterey Plaza, Tustin Heights Shopping Center and Tanasbourne Village
completed in June and July 1999. Although the proceeds were used to pay down our
unsecured credit facility, the fixed interest rates on the secured financings
were greater than our variable-rate borrowings under our unsecured credit
facility. These increases were offset by a decrease in interest expense related
to the repayment of debt of approximately $82,000,000 in May 1998 in connection
with our secondary offering of common stock.

        General and administrative expenses increased by $1,206,000 or 29.4% to
$5,315,000 from $4,109,000 for the year ended December 31, 1999, compared to the
year ended December 31, 1998. This increase was primarily attributable to costs
associated with additional staffing necessitated by acquisitions in 1998, annual
compensation increases as well as a one-time accrual for executive severance
cost in 1999. As a percentage of total revenue, general and administrative
expenses were 5.3% for the year ended December 31, 1999 and 5.2% for the year
ended December 31, 1998.

        The following table compares the operating data for the 31 properties
("Same Properties") that were owned and in operation for the entirety of both
years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                             1999             1998
                                                          -----------      -----------
<S>                                                       <C>              <C>
Revenue:
   Rental                                                 $52,331,000      $51,169,000
   Recoveries from tenants                                 11,722,000       11,297,000
   Operating income from unconsolidated partnerships          349,000          303,000
   Other                                                    1,204,000          745,000
                                                          -----------      -----------
                                                          $65,606,000      $63,514,000
Operating expenses:
   Property operating and property taxes                   13,191,000       12,647,000
                                                          -----------      -----------
Operating income                                          $52,415,000      $50,867,000
                                                          ===========      ===========
</TABLE>

        Operating income for the Same Properties for the year ended December 31,
1999 increased over the same period in the prior year by $1,548,000 or 3.0%.
This increase was attributable to increased rental revenue primarily related to
the development of pads at Brookvale Shopping Center, Canyon Ridge Plaza, Sunset
Square and Winterwood Pavilion, and increased occupancy at Laguna Village,
Laurentian Center, Sahara Pavilion North and Winterwood Pavilion. These
increases were offset by a decrease due to a vacancy at Memphis Retail Center.
Other income also increased due to lease settlements recorded at Cheyenne
Commons, Claremont Village Plaza, Green Valley Town & Country, Sahara Pavilion
North and Tacoma Central. Operating expenses for these Same Properties increased
by $544,000 or 4.3% primarily due to increases in common area maintenance costs
at Cheyenne Commons, Rainbow Promenade, Sahara Pavilion South and Winterwood
Pavilion, and increases in bad debt expense at Green Valley Town & Country and
Sahara Pavilion South.

FUNDS FROM OPERATIONS

        The White Paper on Funds from Operations approved by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT") in March 1995 (the "White Paper") defines Funds from Operations as
net income (loss) (computed in accordance with GAAP), excluding gains (or
losses) from debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. We consider Funds from Operations an
appropriate measure of performance of an equity REIT because it is predicated on
cash flow analyses. We compute Funds from Operations in accordance with
standards established by the White Paper. The Company's computation of Funds
from Operations may, however, differ from the methodology for calculating Funds
from Operations utilized by other equity REITs and, therefore, may not be
comparable to these other REITs. Funds from Operations should not be considered
as an alternative to


                                       27

<PAGE>   30

net income (determined in accordance with GAAP) as a measure of our liquidity,
nor is it indicative of funds available to fund our cash needs, including our
ability to make distributions. NAREIT's clarification to the definition of Funds
from Operations, which became effective January 1, 2000, had no impact on our
calculation of Funds from Operations.

        The following table presents our Funds from Operations for the years
ended December 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                         DECEMBER 31,       DECEMBER 31,       DECEMBER 31,
                                            2000               1999                1998
                                         ------------       ------------       ------------
<S>                                      <C>                <C>                <C>
Net income                               $ 33,800,000       $ 32,576,000       $ 26,634,000
Add:
   Depreciation and amortization           20,374,000         17,476,000         14,298,000
   Depreciation of unconsolidated
      partnerships                             21,000              8,000            211,000
   Depreciation of non-real estate
      corporate assets                       (428,000)          (392,000)          (220,000)
   Operating subsidiary minority
      interests                             2,106,000          1,530,000            211,000
   Provision for loss on impairment           250,000                  -                  -
Less:
   Net gain on sale of real estate                  -           (400,000)                 -
                                         ------------       ------------       ------------
Funds from Operations                    $ 56,123,000       $ 50,798,000       $ 41,134,000
                                         ============       ============       ============
Weighted average number of shares
   of common stock outstanding
   (assuming dilution)                     24,000,935         22,122,659         19,662,622
</TABLE>

CASH FLOWS

        Comparison of the Year Ended December 31, 2000 to the Year Ended
December 31, 1999.

        Net cash provided by operating activities increased by $9,125,000 to
$55,865,000 for the year ended December 31, 2000, as compared to $46,740,000 for
the year ended December 31, 1999. The increase was primarily the result of an
increase in operating income due to property acquisitions and an increase in
accounts payable, accrued expenses and other liabilities.

        Net cash used in investing activities decreased by $3,698,000 to
$73,973,000 for the year ended December 31, 2000, compared to $77,671,000 for
the year ended December 31, 1999. The decrease was primarily the result of a
reduction in acquisitions of and additions to operating properties and a
decrease in proceeds from sale of real estate offset by an increase in other
assets and cash expended on the acquisition of Western.

        Net cash provided by financing activities decreased by $10,657,000 to
$18,612,000 for the year ended December 31, 2000, compared to $29,269,000 for
the year ended December 31, 1999. The decrease primarily resulted from an
increase in line of credit payments and a decrease in notes payable proceeds
offset by an increase in line of credit and term loan proceeds.

        Comparison of the Year Ended December 31, 1999 to the Year Ended
December 31, 1998.

        Net cash provided by operating activities increased by $7,377,000 to
$46,740,000 for the year ended December 31, 1999, as compared to $39,363,000 for
the year ended December 31, 1998. The increase was primarily the result of an
increase in operating income due to property acquisitions.

        Net cash used in investing activities decreased by $89,292,000 to
$77,671,000 for the year ended December 31, 1999, compared to $166,963,000 for
the year ended December 31, 1998. The decrease was primarily the result of a
reduction in acquisitions of and additions to operating properties and an
increase in proceeds from sale of real estate offset by an acquisition of
interest in an unconsolidated partnership.


                                       28

<PAGE>   31

        Net cash provided by financing activities decreased by $101,090,000 to
$29,269,000 for the year ended December 31, 1999, compared to $130,359,000 for
the year ended December 31, 1998. The decrease primarily resulted from a
decrease in line of credit proceeds, an increase in line of credit payments, an
increase in notes payable payments, a decrease in the issuance of common stock
and an increase in distributions paid offset by an increase in notes payable
proceeds.

LIQUIDITY AND CAPITAL RESOURCES

        Our total market capitalization at December 31, 2000, was approximately
$1,388,015,000, based on the market closing price of our common stock at
December 31, 2000 of $22.3125 per share (assuming the conversion of 2,059,139
operating subsidiary units) and the debt outstanding of approximately
$626,411,000 (exclusive of accounts payable and accrued expenses). As a result,
our debt to total market capitalization ratio was approximately 45.1% at
December 31, 2000. Our board of directors adopted a policy of limiting our
indebtedness to approximately 50% of our total market capitalization. However,
we may from time to time modify our debt policy in light of current economic or
market conditions including but not limited to the relative costs of debt and
equity capital, market conditions for debt and equity securities and
fluctuations in the market price of its common stock. Accordingly, we may
increase or decrease its debt to market capitalization ratio beyond the limit
described above.

        In connection with our acquisition of Western in November 2000, we
entered into a new financing arrangement including a $300,000,000 Revolving
Credit Agreement and a $100,000,000 Term Credit Agreement. The Revolving Credit
Agreement matures in January 2004 and the Term Credit Agreement matures in
November 2001. At December 31, 2000, we had $132,350,000 available under our
Revolving Credit Agreement and the full amount of the Term Credit Agreement had
been drawn. At our option, amounts borrowed under the Revolving Credit Agreement
bear interest at either LIBOR plus 1.10% or a reference rate. At our option,
amounts borrowed under the Term Credit Agreement bear interest at either LIBOR
plus 1.20% or a reference rate. The weighted average interest rate for
short-term LIBOR contracts under the Revolving Credit Agreement and the Term
Credit Agreement at December 31, 2000 were 7.89% and 7.99%, respectively. We
will continue to use the Revolving Credit Agreement to take advantage of select
acquisition opportunities as well as to provide funds for general corporate
purposes.

        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.

        Also 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
Rancho Las Palmas. As part of the acquisition, and in exchange for an interest
in the asset contributed to Pan Pacific (Rancho Las Palmas) by an individual,
314,587 units in Pan Pacific (Rancho Las Palmas) were issued.

        In the fourth quarter of 1999, we entered into a loan modification
agreement with the lender on Chino Town Square. The loan was set to mature in
March of 2000. Pursuant to the terms of the loan modification agreement the
maturity date was extended to January 2010 and the interest rate was reduced
from 8.00% to 7.72%. At December 31, 2000, 90 of our 110 properties remain
unencumbered.

        Our indebtedness outstanding at December 31, 2000 requires balloon
payments of $100,000,000 in 2001, $230,392,000 in 2004, $7,395,000 in 2005,
$55,520,000 in 2006, $74,644,000 in 2007, $25,000,000 in 2008, $46,355,000 in
2009, $48,191,000 in 2010 and $5,836,000 in 2012. The balloon payment due in the
year 2001 represents the balance drawn on the Term Credit Agreement at December
31, 2000 of $100,000,000. The balloon payments due in the year 2004 include the
balance drawn on the Revolving Credit Agreement at December 31, 2000 of
$167,650,000. With regard to the balloon payments noted above, it is likely that
we will not have sufficient funds on hand to repay these balloon amounts at
maturity. Therefore, we expect to refinance this debt either through additional
debt financings secured by individual properties or groups of properties, by
unsecured private or public debt offerings or by additional equity offerings.


                                       29

<PAGE>   32

        We expect to make distributions from net cash provided by operations.
Operating cash flows in excess of amounts to be used for distributions will be
invested by us primarily in short-term investments such as collateralized
securities of the United States government or its agencies, high-grade
commercial paper and bank deposits or will be used to pay down outstanding
balances on our Revolving Credit Agreement, if any.

        The following table provides historical distribution information for the
three years ended December 31, 2000:

<TABLE>
<CAPTION>
                                                                                                        Distribution
Quarter Ended                  Date Declared               Record Date               Date Paid           Per Share
-------------                  -------------               -----------               ---------          ------------
<S>                          <C>                        <C>                      <C>                       <C>
March 31, 1998               March 17, 1998             March 31, 1998           April 17, 1998            $0.3800
June 30, 1998                June 19, 1998              June 30, 1998            July 17, 1998             $0.3800
September 30, 1998           September 11, 1998         October 5, 1998          October 21, 1998          $0.3800
December 31, 1998            December 8, 1998           December 22, 1998        January 20, 1999          $0.3800
March 31, 1999               February 10, 1999          March 17, 1999           April 16, 1999            $0.4000
June 30, 1999                June 15, 1999              June 28, 1999            July 16, 1999             $0.4000
September 30, 1999           September 9, 1999          September 24, 1999       October 22, 1999          $0.4000
December 31, 1999            December 9, 1999           December 22, 1999        January 21, 2000          $0.4000
March 31, 2000               February 9, 2000           March 17, 2000           April 14, 2000            $0.4200
June 30, 2000                June 13, 2000              June 26, 2000            July 21, 2000             $0.4200
September 30, 2000           September 15, 2000         September 25, 2000       October 20, 2000          $0.4200
December 31, 2000            October 30, 2000           November 3, 2000         November 15, 2000         $0.2800
</TABLE>

        During the fourth quarter of 2000 we distributed a special, two-month
dividend of $0.28 a share. This dividend was in connection with the Western
acquisition, and was paid to our stockholders of record before the merger
transaction was closed to address the two-month shift in timing for the payment
of our normal quarterly dividend in future periods.

        We expect to meet our short-term liquidity requirements generally
through our current working capital and net cash provided by operations. We
believe that our net cash provided by operations will be sufficient to allow us
to make the distributions necessary to enable us to continue to qualify as a
REIT. We also believe that the foregoing sources of liquidity will be sufficient
to fund our short-term liquidity needs for the foreseeable future.

        We expect to meet certain long-term liquidity requirements such as
property acquisition and development, scheduled debt maturities, renovations,
expansions and other non-recurring capital improvements through long-term
secured and unsecured indebtedness, the issuance of additional equity or debt
securities and the use of net proceeds from the disposition of non-strategic
assets. We also expect to use funds available under the Revolving Credit
Facility to finance acquisition and development activities and capital
improvements on an interim basis.

INFLATION

        Substantially all of the leases provide for the recovery of real estate
taxes and operating expenses incurred by us. In addition, many of the leases
provide for fixed base rent increases or indexed escalations (based on the
consumer price index or other measures) and percentage rent. We believe that
inflationary increases in expenses will be substantially offset by expense
reimbursements, contractual rent increases and percentage rent described above.

        The Revolving Credit Agreement and Term Credit Agreement bear interest
at a variable rate, which will be influenced by changes in short-term interest
rates, and will be sensitive to inflation.



                                       30

<PAGE>   33

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
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
instrument at December 31, 2000. We do not enter into derivative or interest
rate transactions for speculative or trading purposes.

        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.

<TABLE>
<CAPTION>
                                                                                                                        Fair
                                   2001        2002       2003       2004        2005      Thereafter     Total       Value(2)
                                 -------      ------     ------     -------     -------    ----------    --------     --------
<S>                              <C>          <C>        <C>        <C>         <C>        <C>           <C>          <C>
Fixed-rate debt (1)              $ 3,925      $4,202     $4,542     $ 67,315    $12,164     $265,195     $357,343     $357,962
Average interest rate               7.61%      7.61%      7.61%        7.77%      7.71%        7.56%        7.61%        7.96%

Variable-rate LIBOR debt (1)     $100,000        --         --      $167,650        --           --      $267,650     $267,650
Average interest rate               7.99%        --         --         7.89%        --           --         7.93%        7.93%
</TABLE>

(1) Principal amounts shown are in thousands.

(2) The fair value of fixed-rate debt and variable-rate LIBOR debt were
    determined based on the current rates offered for fixed-rate debt and
    variable-rate LIBOR debt with similar risks and maturities.

        The table incorporates only those exposures that exist as of December
31, 2000, 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.



                                       31

<PAGE>   34

                                    PART III

        Certain information required by Part III is omitted from this annual
report on Form 10-K in that the Company will file a definitive proxy statement
within 120 days after the end of its fiscal year pursuant to Regulation 14A for
its Annual Meeting of Stockholders to be held in May 2001 (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 are 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.

                                     PART IV

ITEM 14. 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:


<TABLE>
<CAPTION>
                                                                        Page (s)
                                                                        --------
<S>                                                                     <C>
Independent Auditors' Report.......................................       F-1
Consolidated Balance Sheets as of December 31, 2000
   and 1999........................................................       F-2
Consolidated Statements of Income for the years ended
   December 31, 2000, 1999 and 1998................................       F-3
Consolidated Statements of Stockholders' Equity for the years ended
   December 31, 2000, 1999 and 1998................................       F-4
Consolidated Statements of Cash Flows for the years ended
   December 31, 2000, 1999 and 1998................................       F-5
Notes to Consolidated Financial Statements.........................       F-7
</TABLE>

2. Consolidated Financial Statement Schedule:

<TABLE>
<S>                                                                     <C>
Schedule III--Properties and Accumulated Depreciation..............       F-19
</TABLE>


                                       32

<PAGE>   35

<TABLE>
<CAPTION>
Exhibits
Exhibit No.                              Description
-----------    -----------------------------------------------------------------
<S>            <C>
   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 this 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 this
               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 this 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 this 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 this 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)

  10.1         Form of Restricted Stock Agreement between the Company and Mr.
               Stuart A. Tanz (previously filed as Exhibit 10.1 to Pan Pacific
               Retail Properties, Inc.'s filing on Form 10-Q for the quarter
               ended September 30, 1999 and incorporated herein by reference)
</TABLE>



                                       33

<PAGE>   36

<TABLE>
<CAPTION>
Exhibits
Exhibit No.                              Description
-----------    -----------------------------------------------------------------
<S>            <C>
  10.2         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)

  10.3         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)

  10.4         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)

  10.5         Amended and Restated Employment Agreement, dated as of August 14,
               2000, between Pan Pacific Retail Properties, Inc. and Mr. Stuart
               A. Tanz (previously filed as Exhibit 10.5 to Pan Pacific Retail
               Properties, Inc.'s Registration Statement on Form S-4
               (Registration No. 333-45944) and incorporated herein by
               reference)

  10.6         Employment Agreement, dated as of October 11, 1999, between Pan
               Pacific Retail Properties, Inc. and Mr. Joseph B. Tyson
               (previously filed as Exhibit 10.6 to Pan Pacific Retail
               Properties, Inc.'s Registration Statement on Form S-4
               (Registration No. 333- 45944) and incorporated herein by
               reference)

  10.7         Amended and Restated Employment Agreement, dated as of August 14,
               2000, between Pan Pacific Retail Properties, Inc. and Mr. Jeffrey
               S. Stauffer (previously filed as Exhibit 10.7 to Pan Pacific
               Retail Properties, Inc.'s Registration Statement on Form S-4
               (Registration No. 333-45944) and incorporated herein by
               reference)

  10.8         Form of Miscellaneous Rights Agreement (previously filed as
               Exhibit 10.6 to Pan Pacific Retail Properties, Inc.'s
               Registration Statement on Form S-11 (Registration No. 333- 28715)
               and incorporated herein by reference)

  10.9         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)

  10.10        Revolving Credit Agreement, 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, First Union National Bank, as
               Syndication Agent, and U.S. Bank, National Association, as
               Documentation Agent, Dresdner Bank AG, New York and Grand Cayman
               Branches, Guaranty Federal Banks, F.S.B., as Co- Agent and Wells
               Fargo Bank, N.A., as Co-Agent (previously filed as Exhibit 10.9
               to Pan Pacific Retail Properties, Inc.'s Registration Statement
               on Form S-3 (Registration No. 333-51230) and incorporated herein
               by reference)

  10.11        Term Credit Agreement, 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)
</TABLE>



                                       34
<PAGE>   37

<TABLE>
<CAPTION>
Exhibits
Exhibit No.                              Description
-----------    -----------------------------------------------------------------
<S>            <C>
  10.12        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)

  10.13        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)

  10.14        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)

  10.15        Contribution Agreement and Escrow Instructions, dated as of
               August 13, 1999, by and between Pan Pacific Retail Properties,
               Inc. and Ranch 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)

  21.1         Subsidiaries of the Registrant

  23.1         Consent of KPMG LLP
</TABLE>


        (b) Reports on Form 8-K.

               1.    A form 8-K was filed on August 23, 2000 for purposes of
                     reporting that Pan Pacific Retail Properties, Inc. and
                     Western Properties Trust had entered into an Agreement and
                     Plan of Merger.

               2.    A Form 8-K was filed on October 6, 2000 for purposes of
                     reporting information prepared by Pan Pacific Retail
                     Properties, Inc.'s management relating to the proposed
                     merger of WPT, Inc., successor in interest to Western
                     Properties Trust immediately prior to the merger, with and
                     into Pan Pacific Retail Properties, Inc.

               3.    A Form 8-K was filed on November 28, 2000 for purposes of
                     reporting that the proposed merger of WPT, Inc. (successor
                     to Western Properties Trust) with and into Pan Pacific
                     Retail Properties, Inc. was completed on November 13, 2000.

                     In addition, it was reported that in connection with the
                     closing of the merger, Pan Pacific assumed Western
                     Properties Trust's obligations under its unsecured senior
                     notes.

                     Further, certain historical and pro forma financial
                     information was incorporated by reference.

               4.    A Form 8-K was filed on December 21, 2000 for purposes of
                     reporting certain operational and other information about
                     Pan Pacific Retail Properties, Inc. after the closing of
                     the merger with Western Properties Trust. Included in the
                     disclosure was information concerning a shareholder lawsuit
                     which was filed on November 8, 2000. A copy of the
                     complaint was included.


                                       35
<PAGE>   38

                                   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 16, 2001.

          PAN PACIFIC RETAIL PROPERTIES, INC.

By:           /s/ Stuart A. Tanz             By:     /s/ Joseph B. Tyson
    -------------------------------------        -----------------------------
                Stuart A. Tanz                       Joseph B. Tyson, CPA
    President and Chief Executive Officer        Executive Vice President and
                                                   Chief Financial Officer
By:          /s/ Laurie A. Sneve
    -------------------------------------
             Laurie A. Sneve, CPA
        Vice President and Controller

        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.

<TABLE>
<CAPTION>
            SIGNATURE                              TITLE                                DATE
            ---------                              -----                                ----
<S>                                  <C>                                           <C>
       /s/ Stuart A. Tanz            Director, Chairman, Chief Executive           March 16, 2001
--------------------------------     Officer and President
         Stuart A. Tanz


       /s/ Joseph B. Tyson           Executive Vice President, Chief Financial     March 16, 2001
--------------------------------     Officer, Treasurer and Secretary
      Joseph B. Tyson, CPA


       /s/ Laurie A. Sneve           Vice President and Controller                 March 16, 2001
--------------------------------
      Laurie A. Sneve, CPA


      /s/ Paul D. Campbell           Director                                      March 16, 2001
--------------------------------
        Paul D. Campbell


        /s/ Mark J. Riedy            Director                                      March 16, 2001
--------------------------------
          Mark J. Riedy


     /s/ Bernard M. Feldman          Director                                      March 16, 2001
--------------------------------
       Bernard M. Feldman


       /s/ David P. Zimel            Director                                      March 16, 2001
--------------------------------
         David P. Zimel


      /s/ Joseph P. Colmery          Director                                      March 16, 2001
--------------------------------
        Joseph P. Colmery


       /s/ James L. Stell            Director                                      March 16, 2001
--------------------------------
         James L. Stell
</TABLE>


                                       36

<PAGE>   39

                          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, 2000 and
1999, 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,
2000. 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, 2000 and 1999, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2000, 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 9, 2001


                                      F-1

<PAGE>   40

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                               DECEMBER 31,     DECEMBER 31,
ASSETS:                                                                            2000             1999
                                                                               ------------     ------------
<S>                                                                            <C>              <C>
Properties, at cost:
   Land                                                                         $   350,604      $ 209,071
   Buildings and improvements (including related party development and
     acquisition fees of $1,235)                                                    887,353        569,519
   Tenant improvements                                                               30,762         26,496
                                                                                -----------      ---------
                                                                                  1,268,719        805,086
   Less accumulated depreciation and amortization                                   (73,895)       (57,025)
                                                                                -----------      ---------
                                                                                  1,194,824        748,061

Investments in unconsolidated partnerships                                            6,816          1,496
Cash and cash equivalents                                                             1,601          1,097
Restricted cash                                                                         331            592
Accounts receivable (net of allowance for doubtful accounts of
   $1,404 and $608, respectively)                                                     7,107          3,295
Accrued rent receivable (net of allowance for doubtful accounts of
   $1,588 and $1,377, respectively)                                                  14,288         12,391
Notes receivable                                                                     37,944          3,043
Deferred lease commissions (including unamortized related party amounts of
   $2,978 and $2,396, respectively, and net of accumulated
   amortization of $2,415 and $2,281, respectively)                                   4,836          3,943
Prepaid expenses                                                                      9,133          7,987
Other assets                                                                         20,810          2,632
                                                                                ===========      =========
                                                                                $ 1,297,690      $ 784,537
                                                                                ===========      =========

LIABILITIES AND EQUITY:
Notes payable                                                                   $   233,911      $ 228,490
Line of credit and term loan payable                                                267,650        128,800
Senior notes                                                                        124,850             --
Accounts payable, accrued expenses and other liabilities (including related
   party amounts of $663 and $404, respectively)                                     22,527         13,074
Distributions payable (including related party amount of $4,323)                         --          8,960
                                                                                -----------      ---------
                                                                                    648,938        379,324
Minority interests                                                                   41,754         23,347
                                                                                -----------      ---------

Stockholders' equity:
   Common stock par value $.01 per share, 100,000,000 authorized shares,
      32,074,368 and 21,252,512 shares issued and outstanding
      at December 31, 2000 and 1999, respectively                                       321            213
   Paid in capital in excess of par value                                           705,265        481,312
   Accumulated deficit                                                              (98,588)       (99,659)
                                                                                -----------      ---------
                                                                                    606,998        381,866
                                                                                -----------      ---------
                                                                                $ 1,297,690      $ 784,537
                                                                                ===========      =========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-2

<PAGE>   41

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                         FOR THE YEARS ENDED
                                                             DECEMBER 31,
                                                --------------------------------------
                                                  2000           1999           1998
                                                ---------      ---------      --------
<S>                                             <C>            <C>            <C>
REVENUE:
    Base rent                                   $  93,990      $  79,377      $ 62,585
    Percentage rent                                   753            760           628
    Recoveries from tenants                        21,648         17,893        13,728
    Net gain on sale of real estate                    --            400            --
    Income from unconsolidated partnerships           364            341           737
    Other                                           3,738          2,291         1,575
                                                ---------      ---------      --------
                                                  120,493        101,062        79,253
                                                ---------      ---------      --------

EXPENSES:
    Property operating                             14,285         12,551         9,813
    Property taxes                                  8,938          7,399         5,735
    Depreciation and amortization                  20,374         17,476        14,298
    Interest                                       32,112         23,939        18,295
    General and administrative                      5,105          5,315         4,109
    Merger related expenses                         3,204             --            --
    Other                                             556            248           108
                                                ---------      ---------      --------
                                                   84,574         66,928        52,358
                                                ---------      ---------      --------

INCOME BEFORE MINORITY INTERESTS                   35,919         34,134        26,895
    Minority interests                             (2,119)        (1,558)         (261)
                                                ---------      ---------      --------


NET INCOME                                      $  33,800      $  32,576      $ 26,634
                                                =========      =========      ========

Basic earnings per share                        $    1.49      $    1.54      $   1.37
Diluted earnings per share                      $    1.48      $    1.54      $   1.35
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-3

<PAGE>   42

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                             PAID IN
                                                    COMMON STOCK            CAPITAL IN
                                              -----------------------       EXCESS OF      ACCUMULATED
                                                SHARES        AMOUNT        PAR VALUE        DEFICIT           TOTAL
                                              ----------      ------        ----------     -----------       ---------
<S>                                           <C>             <C>           <C>            <C>               <C>
Balance at December 31, 1997                  16,814,012        $168        $395,313        $(94,426)        $ 301,055
Net proceeds from secondary offering           4,348,000          44          85,869              --            85,913
Net income                                            --          --              --          26,634            26,634
Cash distributions paid and declared                  --          --              --         (30,514)          (30,514)
                                              ----------        ----        --------        --------         ---------
Balance at December 31, 1998                  21,162,012         212         481,182         (98,306)          383,088
Restricted stock awards                           90,500           1             130              --               131
Net income                                            --          --              --          32,576            32,576
Cash distributions paid and declared                  --          --              --         (33,929)          (33,929)
                                              ----------        ----        --------        --------         ---------
Balance at December 31, 1999                  21,252,512         213         481,312         (99,659)          381,866
Vesting of restricted stock                           --          --           1,615              --             1,615
Stock issued in acquisition of Western        10,754,256         107         221,027              --           221,134
Stock grant                                        6,000          --             120              --               120
Options exercised                                 61,600           1           1,191              --             1,192
Net income                                            --          --              --          33,800            33,800
Cash distributions paid and declared                  --          --              --         (32,729)          (32,729)
                                              ----------        ----        --------        --------         ---------
Balance at December 31, 2000                  32,074,368        $321        $705,265        $(98,588)        $ 606,998
                                              ==========        ====        ========        ========         =========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-4

<PAGE>   43

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                              FOR THE YEARS ENDED
                                                                                  DECEMBER 31,
                                                                  ---------------------------------------------
                                                                    2000              1999              1998
                                                                  ---------         ---------         ---------
<S>                                                               <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                        $  33,800         $  32,576         $  26,634
Adjustments to reconcile net income to net cash provided
   by operating activities:
     Depreciation and amortization                                   20,374            17,476            14,298
     Amortization of prepaid financing costs                            700               707               697
     Net gain on sale of real estate                                     --              (400)               --
     Income from unconsolidated partnerships                           (364)             (341)             (737)
     Minority interests                                               2,119             1,558               261
     Vesting of restricted stock                                      1,615                --                --
     Stock grant                                                        120                --                --
     Changes in assets and liabilities, net of the
      effects of the acquisition of Western:
        Decrease (increase) in restricted cash                          261               320              (251)
        Increase in accounts receivable                              (2,230)             (337)           (1,332)
        Increase in accrued rent receivable                          (1,897)           (2,748)           (2,023)
        Increase in deferred lease commissions                       (1,757)           (1,785)           (1,039)
        Increase in prepaid expenses                                   (505)             (732)           (1,480)
        Increase in other assets                                     (1,569)             (948)             (609)
        Increase in accounts payable, accrued expenses
          and other liabilities                                       5,198             1,394             4,944
                                                                  ---------         ---------         ---------
          Net cash provided by operating activities                  55,865            46,740            39,363
                                                                  ---------         ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Acquisitions of and additions to operating properties          (49,913)          (81,219)         (169,140)
     Proceeds from sale of real estate                                  198            12,915                --
     Increase (decrease) in construction accounts payable
       and accrued expenses                                             116            (2,573)            1,656
     Distributions from unconsolidated partnerships                     355                84               712
     Acquisition of Western                                         (14,371)               --                --
     Acquisition of interest in unconsolidated partnership               --            (7,163)               --
     Acquisition of minority interests                                 (570)             (204)             (160)
     Increase in other assets                                       (13,339)             (841)               --
     Collections of notes receivable                                  6,224             1,599               113
     Increases in notes receivable                                   (2,673)             (269)             (144)
                                                                  ---------         ---------         ---------
          Net cash used in investing activities                     (73,973)          (77,671)         (166,963)
                                                                  ---------         ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Line of credit and term loan proceeds                          346,260           106,962           177,101
     Line of credit payments                                       (279,910)         (116,662)         (101,051)
     Notes payable proceeds                                              --            91,300                --
     Notes payable payments                                          (4,207)          (14,949)           (2,479)
     Prepaid financing costs                                         (1,267)           (2,719)             (601)
     Refunds from loan escrow                                            --                --                43
     Issuance of common stock                                         1,192                --            85,913
     Distributions paid                                             (43,456)          (34,663)          (28,567)
                                                                  ---------         ---------         ---------
          Net cash provided by financing activities                  18,612            29,269           130,359
                                                                  ---------         ---------         ---------
NET INCREASE/(DECREASE) IN CASH AND CASH                                504            (1,662)            2,759
   EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                        1,097             2,759                --
                                                                  =========         =========         =========
CASH AND CASH EQUIVALENTS AT END OF YEAR                          $   1,601         $   1,097         $   2,759
                                                                  =========         =========         =========
</TABLE>

                                                                     (Continued)

                                      F-5


<PAGE>   44

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                    FOR THE YEARS ENDED
                                                                                        DECEMBER 31,
                                                                           --------------------------------------
                                                                             2000           1999           1998
                                                                           --------        -------        -------
<S>                                                                        <C>             <C>            <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:
     Cash paid for interest (net of amounts capitalized of                 $ 30,699        $22,995        $17,539
        $202, $231 and $286, respectively)

SUPPLEMENTAL DISCLOSURE OF NON-CASH
   INVESTING AND FINANCING ACTIVITIES:
     Transfer from investment in unconsolidated partnerships
        to property                                                        $     --        $15,775        $    --
     Transfer of acquisition deposits from other assets to property        $     --        $    --        $ 1,465
     Notes receivable issued upon sales of property                        $  1,801        $ 1,962        $    --
     Notes payable assumed upon acquisition of
        properties and Western                                             $  9,628        $12,523        $38,187
     Note payable assumed by buyer upon sale of property                   $     --        $ 4,408        $    --
     Foreclosure of a property securing a note receivable                  $     --        $    --        $   601
     Minority interest from acquisition of
        properties and Western                                             $ 18,751        $ 6,134        $15,722
     Distributions payable                                                 $     --        $ 8,960        $ 8,227
     Accrued liability for acquisition of partnership interests            $    126        $    --        $    --
     Assumption of senior notes and line of credit                         $197,350        $    --        $    --
     Stock issued in acquisition of Western                                $221,134        $    --        $    --
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-6

<PAGE>   45

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT 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,
2000, the Company owned a portfolio comprised of 110 properties located
primarily in the Western region of the United States. Commencing with its
taxable year ended December 31, 1997, the Company believes it qualifies as a
REIT under Sections 856 through 860 of the Internal Revenue Code.

        On May 18, 1998, the Company completed a secondary offering of 4,348,000
shares of common stock at $21.125 per share (including 348,000 shares issued as
a result of the partial exercise of the over-allotment option by the
underwriters on June 11, 1998). The aggregate proceeds to the Company, net of
underwriters' discount, advisory fee and offering costs were approximately
$85,913,000.

        In September 1998, the Company formed Pan Pacific (Portland), LLC ("PPP
LLC"), with the Company as the sole managing member. In October and November of
1998, PPP LLC acquired a portfolio of six shopping centers located in Oregon. In
exchange for four properties which were contributed to PPP LLC, 832,617 units
were issued to certain non-managing members. 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 managing member.

        In September 1999, the Company formed Pan Pacific (Rancho Las Palmas),
LLC ("RLP LLC") and Pan Pacific (RLP), Inc. ("RLP, Inc.") in connection with the
acquisition of Rancho Las Palmas Retail Center. The Company and RLP, Inc., a
wholly-owned subsidiary of the Company, are co-managing members of RLP LLC. As
part of the acquisition, and in exchange for an interest in the asset
contributed to RLP LLC by an individual, 314,587 units were issued to a
non-managing member. The non-managing member can seek redemption of the units
beginning on 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 member 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 member in an amount equal to the cumulative distributions
earned by the non-managing member. All remaining net income or loss is allocated
to the managing members.

        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
10,754,256 common shares and 911,934 operating partnership 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 for the
period from November 13, 2000 through December 31, 2000 include Western.


                                      F-7

<PAGE>   46

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT 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 currently convertible into 857,065
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 currently convertible into 54,869 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.

        Unaudited pro forma revenue and expense information for 2000 reflecting
the acquisition of Western is presented in the following table. The amounts
included therein assume that the acquisition had taken place at the beginning of
the year.

<TABLE>
<CAPTION>
                               For the years ended December 31,
                               --------------------------------
                                    2000            1999
                                  --------        --------
                                   (Pro forma, unaudited)
<S>                               <C>             <C>
Total revenue                     $181,497        $166,614
Total expenses                    $120,151        $108,749
Net income                        $ 61,346        $ 57,865
Basic earnings per share          $   1.92        $   1.81
Diluted earnings per share        $   1.89        $   1.81
</TABLE>


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) PRINCIPLES OF CONSOLIDATION

        The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All material intercompany
transactions and balances have been eliminated. At December 31, 2000, the
Company consolidated certain entities the Company controls and recorded a
minority interest for the portions not owned by the Company.

(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.

(c) INCOME RECOGNITION

        Rental revenue is recognized on a straight-line basis over the terms of
the leases, less a general allowance for doubtful accounts relating to accrued
rent receivable for leases which may be terminated before the end of the
contracted term.


                                      F-8

<PAGE>   47


                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (CONTINUED)

(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. 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. Tenant improvements and costs incurred in
obtaining leases are depreciated on a straight-line basis over the lives of the
respective leases.

        Prepaid financing costs are amortized over the lives of the loans and
the related amortization expense is included as a component of interest expense.

(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 exceed 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 95% 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 10,
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 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 geographical areas. At December 31, 2000 and 1999, the
Company had no significant concentration of credit risk.

                                      F-9

<PAGE>   48

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (CONTINUED)

(i) NET INCOME PER SHARE

        Basic earnings per share ("EPS") is computed by dividing earnings
available to common stockholders during the period by the weighted average
number of common shares outstanding during each period. Diluted EPS is computed
by dividing the amount of earnings for the period 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, net of
shares assumed to be repurchased using the treasury stock method.

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

<TABLE>
<CAPTION>
                                                                                   FOR THE YEARS ENDED
                                                                                       DECEMBER 31,
                                                                     -------------------------------------------------
                                                                        2000               1999               1998
                                                                     -----------        -----------        -----------
<S>                                                                  <C>                <C>                <C>
Income available to common stockholders:
   Basic                                                             $    33,800        $    32,576        $    26,634
   Add-back income allocated to dilutive                                     585              1,530                211
     operating partnership and LLC units (minority interests)
                                                                     -----------        -----------        -----------
   Diluted                                                           $    34,385        $    34,106        $    26,845
                                                                     ===========        ===========        ===========

Weighted average shares:
   Basic                                                              22,695,877         21,196,238         19,507,141
   Incremental shares from assumed:
      Exercise of dilutive stock options                                  35,765              8,478             32,404
      Conversion of dilutive operating partnership                       436,677            917,943            123,077
        and LLC units
                                                                     -----------        -----------        -----------
   Diluted                                                            23,168,319         22,122,659         19,662,622
                                                                     ===========        ===========        ===========
</TABLE>


        At December 31, 2000 and 1999, 310,167 and 1,210,067 stock options,
respectively, were excluded from the calculation of diluted weighted-average
shares because they were anti-dilutive. At December 31, 2000, 832,617 LLC units
were excluded from the calculation of diluted weighted-average shares because
they were anti-dilutive.


                                      F-10

<PAGE>   49

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (CONTINUED)

(j) STOCK PLANS

        The Company accounts for its stock plans in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations. As such,
compensation expense is recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. Statement of Financial
Accounting Standards No. 123 ("SFAS No. 123",) "Accounting for Stock-Based
Compensation", 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
continue to apply the provisions of APB Opinion No. 25 and provide the annual
pro forma disclosures required by SFAS No. 123.

(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. Actual results could differ from those
estimates.

3. INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS

        The accompanying consolidated financial statements include investments
in partnerships in which the Company does not own a controlling interest. At
December 31, 2000, the Company owned a 50% general partner interest in North
Coast Health Center and a 30% undivided co-tenant interest in Serra Center. At
December 31, 1999, the Company owned a 50% general partner interest in North
Coast Health Center. These investments are reported using the equity method.


                                      F-11
<PAGE>   50

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


4. NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                                    DECEMBER 31,
                                                                                             ------------------------
                                                                                               2000            1999
                                                                                             --------        --------
<S>                                                                                          <C>             <C>
Notes payable 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                    $ 55,333        $ 56,067

   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          52,524          52,989

   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                        34,254          34,788

   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                     26,331          26,546

   Bank note payable, secured by deeds of trust, bearing interest at 8.73% with
      monthly principal and interest payments of $144, due in February 2007 (a)                16,704          16,933

   Bank note payable, secured by a deed of trust, bearing interest at 8.10% with
      monthly principal and interest payments of $94, due in August 2007                       12,367          12,493

   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                    10,280          10,743

   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                           9,591              --

   Bank note payable, secured by a deed of trust, bearing interest at 7.65% with
      monthly principal and interest payments of $54, due in October 2012 (b)                   7,413           7,495

   Bank note payable, secured by a deed of trust, bearing interest at 7.00% with
      monthly principal and interest payments of $37, due in March 2004                         4,411           4,485

   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                       3,136           4,189
                                                                                             --------        --------
                                                                                              232,344         226,728
   Unamortized note payable premiums                                                            1,567           1,762
                                                                                             --------        --------
                                                                                             $233,911        $228,490
                                                                                             ========        ========
</TABLE>


(a) Excludes unamortized note payable premium of $1,266 and $1,443 at December
    31, 2000 and 1999, respectively.

(b) Excludes unamortized note payable premium of $301 and $319 at December 31,
    2000 and 1999, respectively.


                                      F-12

<PAGE>   51

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


4. NOTES PAYABLE (CONTINUED)

        Principal payments under these notes payable are due as follows:

<TABLE>
<S>                                         <C>
                  2001                      $  3,925
                  2002                         4,202
                  2003                         4,542
                  2004                        17,315
                  2005                        12,164
                  2006 and subsequent        190,196
                                            =========
                                            $232,344
                                            =========
</TABLE>

5. LINE OF CREDIT AND TERM LOAN PAYABLE

        In November 2000, the Company entered into a $300,000,000 Revolving
Credit Agreement which bears interest, at the Company's option, at either LIBOR
plus 1.10% or a reference rate and expires in January 2004. At December 31,
2000, the amount drawn on this line of credit was $167,650,000 and the interest
rate was 7.89%. The credit facility requires a quarterly fee of 0.20% per annum
on the total aggregate commitment. At December 31, 1999, the Company had a
$200,000,000 Unsecured Credit Facility which bore interest, at the Company's
option, at either LIBOR plus 1.15% or a reference rate. The amount drawn on this
line of credit was $128,800,000 and the interest rate was 8.79%. The credit
facility required a quarterly fee of 0.20% per annum on the total aggregate
commitment. The $200,000,000 Unsecured Credit Facility was terminated in 2000.

        In November 2000, the Company also executed a $100,000,000 Term Credit
Agreement which bears interest, at the Company's option, at either LIBOR plus
1.20% or a reference rate and expires in November 2001 with a three month option
to extend at the Company's discretion. At December 31, 2000, the full amount was
drawn on this loan and the interest rate was 7.99%. The Company intends to
replace this loan with medium to long-term fixed-rate financing at maturity.

6. SENIOR NOTES

        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.

7. FINANCIAL INSTRUMENTS

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

(a) CASH AND CASH EQUIVALENTS, RESTRICTED CASH, ACCOUNTS RECEIVABLE, NOTES
    RECEIVABLE OF $22,079,000, ACCOUNTS PAYABLE AND ACCRUED EXPENSES AND OTHER
    LIABILITIES

        The carrying amounts approximate fair values because of the short
maturity of these instruments.

(b) NOTES RECEIVABLE OF $13,406,000

        It was not practicable to estimate the fair value of these notes
receivable due to the uncertainty of the timing of repayment.


                                      F-13

<PAGE>   52

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


7. FINANCIAL INSTRUMENTS (CONTINUED)

(c) NOTES RECEIVABLE OF $2,459,000

        The fair value of these notes receivable approximates the carrying
amount based on market rates for the same or other instruments with similar
risk, security and remaining maturities.

(d) NOTES PAYABLE, LINE OF CREDIT AND TERM LOAN PAYABLE AND SENIOR NOTES PAYABLE

        The fair value of notes payable, line of credit and term loan payable
and senior notes payable approximates the carrying amount based on the current
rates offered for loans with similar risks and maturities.

8. NET GAIN ON SALE OF REAL ESTATE

        The Company recorded a net gain of $400,000 on the sale of three assets
for the year ended December 31, 1999. This consisted of the sale of a
single-tenant property on June 30, 1999 for cash of $4,400,000 recognizing a
gain of $75,000. In addition, the Company sold a shopping center on December 9,
1999 for $7,750,000, representing cash and a note receivable, recognizing a gain
of $988,000. On December 22, 1999 the Company sold a shopping center for
$820,000, representing cash and a note receivable, recognizing a loss of
$663,000.

9. 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 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 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 2000 Plan was
increased to 1,786,695 shares upon approval of the Company's stockholders in
connection with the merger with Western.

(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. In connection with the
acquisition of Western, all issued and outstanding stock options became fully
vested.

        The per share weighted-average fair value of stock options granted
during 2000, 1999 and 1998 were $1.71, $1.64, and $2.48, respectively, on the
dates of grant using the Black-Scholes option-pricing model using the following
weighted-average assumptions:

<TABLE>
<CAPTION>
                                     2000            1999            1998
                                   -------         -------         -------
<S>                                <C>             <C>             <C>
Expected distribution yield           8.30%           8.50%           7.50%
Risk-free interest rate               5.00%           5.00%           5.00%
Expected volatility                  22.88%          23.90%          23.72%
Expected life (years)                  5.9             6.5             5.0
</TABLE>


                                      F-14
<PAGE>   53

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)

9. STOCK PLANS (CONTINUED)

        The Company applies 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. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net income would have been reduced to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                           2000                           1999                         1998
                                 -----------------------        ----------------------       -----------------------
                                    AS            PRO             AS             PRO           AS              PRO
                                 REPORTED        FORMA          REPORTED        FORMA        REPORTED         FORMA
                                 --------        -------        --------       -------       --------        -------
<S>                              <C>             <C>            <C>            <C>            <C>            <C>
Net income                        $33,800        $32,535        $32,576        $31,481        $26,634        $25,676
Diluted earnings per share        $  1.48        $  1.43        $  1.54        $  1.49        $  1.35        $  1.31
</TABLE>

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

        Stock option activity during the periods presented is as follows:

<TABLE>
<CAPTION>
                                      NUMBER OF     WEIGHTED-AVERAGE
                                       OPTIONS       EXERCISE PRICE
                                      ---------     ----------------
<S>                                  <C>            <C>
Balance at December 31, 1997           900,000         $19.5000
         Granted                       337,500         $22.1875
         Exercised                          --         $     --
         Forfeited                     (20,666)        $20.6700
         Expired                        (1,667)        $19.5000
                                     ---------
Balance at December 31, 1998         1,215,167         $20.2265
         Granted                       283,000         $17.6250
         Exercised                          --         $     --
         Forfeited                     (17,000)        $20.0600
         Expired                        (3,333)        $19.5000
                                     ---------
Balance at December 31, 1999         1,477,834         $19.7750
         Granted                       173,000         $18.6250
         Exercised                     (61,600)        $19.3478
         Forfeited                     (15,333)        $19.4743
         Expired                       (10,667)        $20.0192
                                     ---------
Balance at December 31, 2000         1,563,234         $19.6605
                                     =========
</TABLE>

        At December 31, 2000, the weighted-average exercise price and
weighted-average remaining contractual life of outstanding options were $19.661
and 4.1 years, respectively. At December 31, 2000, all of the 1,563,234
outstanding options were exercisable.

(b) RESTRICTED STOCK AND STOCK GRANTS

        During 1999, the Company granted 90,500 shares of restricted stock to
certain officers and key employees pursuant to the 1997 Plan. The restricted
shares vest 20% per year over five years from the date of grant. Compensation
expense, for the portion that vested during 1999 and 2000 prior to the
acquisition of Western, has been recognized in general and administrative
expenses. In connection with the acquisition of Western, the restricted shares
became fully vested and the remaining compensation expense of $1,305,000 has
been recognized in merger related expenses. In November 2000, the Company's
Board of Directors granted a total of 6,000 shares of stock to the independent
directors of the Board. Expense related to this grant has been recognized in
merger related expenses.

        At December 31, 2000, there were 1,746,961 additional shares available
for grant under the 1997 Plan and the 2000 Plan.


                                      F-15
<PAGE>   54

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


10. 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 on "built-in gains" on its
assets at the federal level or in most states in future years. Accordingly, for
the years ended December 31, 2000, 1999 and 1998, 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 of such assets in the ten-year period following conversion.
Such net unrealized gains were approximately $50,000,000 at December 31, 2000,
1999 and 1998. Management believes that the Company will not be required to make
payments of income taxes on built-in gains during the ten-year period ending
December 31, 2007 due to the availability of its net operating loss carryforward
to offset built-in gains which might be recognized, the potential for the
Company to make nontaxable dispositions, if necessary (e.g., like-kind exchanges
of properties) and the intent and ability of the Company to defer asset
dispositions to periods when related gains will not be subject to the built-in
gains income taxes. 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.

11. FUTURE LEASE REVENUE

        Total future minimum lease receipts under noncancellable operating
tenant leases in effect at December 31, 2000 are as follows:

<TABLE>
<S>                                              <C>
                  2001                           $ 133,181
                  2002                             124,533
                  2003                             110,689
                  2004                              96,782
                  2005                              82,479
                  2006 and subsequent              466,820
                                                ===========
                                                $1,014,484
                                                ===========
</TABLE>

12. RELATED PARTY TRANSACTIONS

(a) Distributions on common stock paid to Revenue Properties (U.S.), Inc., an
affiliate of the Company, during 2000 and 1999 were $20,968,000 and $17,077,000,
respectively. At December 31, 2000 and 1999, $0 and $4,323,000, respectively,
were payable as distributions to Revenue Properties (U.S.), Inc.

(b) The Company received $85,000, $150,000 and $270,000 for the years ended
December 31, 2000, 1999 and 1998, respectively, which represent a reimbursement
of costs incurred by the Company in providing financial services to Revenue
Properties (U.S.), Inc. These amounts are included as a reduction of general and
administrative expenses.

(c) The Company has notes receivable at December 31, 2000 of $687,000 and
$116,000 due from executive officers. These notes bear interest at 7.50% and
7.00%, and mature in October 2008 and August 2001, respectively. In addition,
during 2000 notes receivable of $297,000 were issued to executive officers.
These notes bore interest at 7.00% and were forgiven in November 2000 as a
result of the acquisition of Western and were a component of merger related
expenses. The Company had notes receivable at December 31, 1999 of $260,000 due
from executive officers. The notes bore interest at 7.00% and were forgiven in
2000 as a component of annual compensation.


                                      F-16

<PAGE>   55

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (TABULAR
             AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


13. EMPLOYEE BENEFIT PLAN

        The Company implemented an employee benefit plan in March 1997. 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 allows eligible employees
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. This cost is accrued
as incurred. The Company's cost for the years ended December 31, 2000, 1999 and
1998 was approximately $58,000, $23,000 and $17,000, respectively.

14. COMMITMENTS AND CONTINGENCIES

(a) The Company leases certain real estate and office equipment under operating
leases expiring at various dates through 2021. Rental expense was $892,000,
$769,000 and $810,000 for the years ended December 31, 2000, 1999 and 1998,
respectively. Minimum rentals under noncancellable operating leases in effect at
December 31, 2000 were as follows:

<TABLE>
<S>                                              <C>
                  2001                           $  1,702
                  2002                              1,756
                  2003                              1,585
                  2004                              1,649
                  2005                              1,721
                  2006 and subsequent              23,061
                                                 ========
                                                  $31,474
                                                 ========
</TABLE>

(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. Management believes, based in part upon discussions with legal
counsel, that these claims are without merit and intends to vigorously defend
against this action; however, the outcome of any litigation is by its nature
unpredictable and we therefore cannot assure that we will successfully defend
this action.

(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.

15. SEGMENT REPORTING

        The Company predominantly operates in one industry segment, real estate
ownership, management and development. As of December 31, 2000 and 1999, the
Company owned 110 and 58 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 total for 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.


                                      F-17
<PAGE>   56

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
        (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT OPTION AND SHARE DATA)


16. QUARTERLY FINANCIAL DATA (UNAUDITED)

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

<TABLE>
<CAPTION>
                                                               QUARTERS ENDED 2000
                                            -------------------------------------------------------------
                                            DECEMBER 31     SEPTEMBER 30        JUNE 30          MARCH 31
                                            -----------     ------------        -------          --------
<S>                                         <C>             <C>                 <C>              <C>
Revenue                                       $38,021          $28,044          $27,365          $27,063
Expenses and minority interests                29,669           19,320           18,951           18,753
                                              -------          -------          -------          -------
Net income                                    $ 8,352          $ 8,724          $ 8,414          $ 8,310
                                              =======          =======          =======          =======

Basic and diluted earnings per share          $  0.31          $  0.41          $  0.40          $  0.39
</TABLE>


<TABLE>
<CAPTION>
                                                               QUARTERS ENDED 1999
                                            -------------------------------------------------------------
                                            DECEMBER 31     SEPTEMBER 30        JUNE 30          MARCH 31
                                            -----------     ------------        -------          --------
<S>                                         <C>             <C>                 <C>              <C>
Revenue                                       $27,536          $25,365          $24,346          $23,815
Expenses and minority interests                18,897           17,345           16,267           15,977
                                              -------          -------          -------          -------
Net income                                    $ 8,639          $ 8,020          $ 8,079          $ 7,838
                                              =======          =======          =======          =======

Basic and diluted earnings per share          $  0.41          $  0.38          $  0.38          $  0.37
</TABLE>


                                      F-18
<PAGE>   57

                       PAN PACIFIC RETAIL PROPERTIES, INC.
                                  SCHEDULE III
                    PROPERTIES AND ACCUMULATED DEPRECIATION
                               DECEMBER 31, 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          COSTS CAPITALIZED
                                                            SUBSEQUENT TO
                                       INITIAL COSTS         ACQUISITION                TOTAL COSTS
                                     -------------------  ------------------   ------------------------------
                                                                                                                             DATE OF
                                               BUILDINGS                                                                     ACQUIS.
                                                 AND                                    BUILDINGS              ACCUMULATED     (A)
                           ENCUM-              IMPROVE-   IMPROVE-  CARRYING               AND        TOTAL   DEPRECIATION   CONSTR.
DESCRIPTION               BRANCES     LAND     MENTS (2)  MENTS(2)    COSTS     LAND   IMPROVEMENTS (1)(2)(3)    (2)(3)        (C)
-----------               -------    ------    ---------  --------  --------   ------- ------------ --------- ------------  --------
<S>                       <C>        <C>       <C>        <C>       <C>        <C>     <C>          <C>       <C>           <C>
PROPERTIES:

 Albany Plaza
 Albany, OR               $    --    $1,525    $ 4,638    $ 1,190    $   --    $ 1,525    $ 5,828    $ 7,353    $  218       1999(A)

 Anderson Square
 Anderson, CA                  --       796      2,389         --        --        796      2,389      3,185         8       2000(A)

 Angels Camp Town Center
 Angels Camp, CA               --     1,111      3,331         --        --      1,111      3,331      4,442        10       2000(A)

 Arlington Courtyard
 Riverside, CA                 --       401        753         74        --        401        827      1,228       223       1994(A)

 Auburn North
 Auburn, WA                    --     2,275      8,053      1,612        --      2,275      9,665     11,940       460       1999(A)

 Bear Creek Plaza
 Medford, OR                   --     3,275      9,825      1,543        --      3,275     11,368     14,643       814       1998(A)

 Blaine International
   Center
 Blaine, WA                    --     1,888      5,065         --        --      1,888      5,065      6,953        17       2000(A)

 Blossom Valley
 Turlock, CA                   --     2,404      7,214         --        --      2,404      7,214      9,618        24       2000(A)

 Brookvale Center
 Fremont, CA                   --     3,164      9,489      1,014        --      3,164     10,503     13,667       829       1997(A)

 Cable Park
 Orangevale, CA                --     3,043      9,174         18        --      3,043      9,192     12,235       224       1999(A)

 Canal Farms
 Las Brunos, CA                --     1,520      4,557         --        --      1,520      4,557      6,077        15       2000(A)

 Canyon Ridge Plaza
 Kent, WA                      --     2,457         --      8,784        --      2,904      8,337     11,241     1,308       1992(A)
                                                                                                                             1995(C)
 Canyon Square Plaza
 Santa Clarita, CA             --     2,725      8,338         86        --      2,725      8,424     11,149       286       1999(A)

 Caughlin Ranch
 Reno, NV                      --     2,201      6,605         --        --      2,201      6,605      8,806        22       2000(A)

 Centennial Plaza
 Hartford, CA                  --     2,662      7,988         --        --      2,662      7,988     10,650        27       2000(A)

 Century Center
 Modesto, CA                   --     4,608     13,867         --        --      4,608     13,867     18,475        46       2000(A)

 Cheyenne Commons
 Las Vegas, NV                 --     8,540     26,810      2,966        --      8,540     29,776     38,316     4,228       1995(A)

 Chico Crossroads
 Chico, CA                     --     3,600     17,063         24        --      3,600     17,087     20,687     1,652       1997(A)

 Chino Town Square
 Chino, CA                 26,331     8,801     10,297     25,756        --     21,283     23,571     44,854     3,595       1992(A)

 Claremont Village
 Everett, WA                   --     2,320      6,987        231        --      2,320      7,218      9,538       622       1997(A)

 Cobblestone
 Redding, CA                   --     1,801      5,431         --        --      1,801      5,431      7,232        19       2000(A)

 Commonwealth Square
 Folsom, CA                    --     4,266     12,797         --        --      4,266     12,797     17,063        43       2000(A)

 Country Club Center
 Rio Rancho, NM             3,198       566      2,514        901        --        566      3,415      3,981     1,066       1992(A)

 Country Gables
 Granite Bay, CA               --     4,455     10,395         --        --      4,455     10,395     14,850        32       2000(A)

 Creekside Center
 Hayward, CA                   --     1,500      4,500        626        --      1,500      5,126      6,626       334       1998(A)

 Currier Square
 Oroville, CA                  --     1,533      4,598         --        --      1,533      4,598      6,131        15       2000(A)

 Dodge Center
 Fallon, NV                    --       406      1,219         --        --        406      1,219      1,625         4       2000(A)
</TABLE>

                                                                     (Continued)


                                      F-19
<PAGE>   58
                      PAN PACIFIC RETAIL PROPERTIES, INC.
                                  SCHEDULE III
              PROPERTIES AND ACCUMULATED DEPRECIATION (CONTINUED)
                               DECEMBER 31, 2000
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                          COSTS CAPITALIZED
                                                            SUBSEQUENT TO
                                       INITIAL COSTS         ACQUISITION                TOTAL COSTS
                                     -------------------  ------------------   ------------------------------
                                                                                                                             DATE OF
                                               BUILDINGS                                                                     ACQUIS.
                                                 AND                                    BUILDINGS              ACCUMULATED     (A)
                           ENCUM-              IMPROVE-   IMPROVE-  CARRYING               AND        TOTAL   DEPRECIATION   CONSTR.
DESCRIPTION               BRANCES     LAND     MENTS (2)  MENTS(2)    COSTS     LAND   IMPROVEMENTS (1)(2)(3)    (2)(3)        (C)
-----------               -------    ------    ---------  --------  --------   ------- ------------ --------- ------------  --------
<S>                       <C>        <C>       <C>        <C>       <C>        <C>     <C>          <C>       <C>         <C>
PROPERTIES:

 Dublin Retail Center
 Dublin, CA                   --      2,801      8,404         --        --      2,801      8,404     11,205        28       2000(A)

 Eagle Station
 Carson City, NV              --      2,366      7,098         --        --      2,366      7,098      9,464        24       2000(A)

 East Burnside
 Portland, OR                 --      1,525      3,624         --        --      1,525      3,624      5,149        15       2000(A)

 Eastridge Plaza
 Porterville, CA              --      1,128      3,386         --        --      1,128      3,386      4,514        11       2000(A)

 Elko Junction
 Elko, NV                     --      3,156      9,469         --        --      3,156      9,469     12,625        32       2000(A)

 Elverta Crossing
 Sacramento, CA               --      2,969      8,903         --        --      2,969      8,903     11,872        28       2000(A)

 Encinitas Marketplace
 Encinitas, CA                --      3,529      8,385         --        --      3,529      8,385     11,914       149       2000(A)

 Fairmont Shopping
    Center
 Fairmont, CA                 --      3,420      8,003        322        --      3,420      8,325     11,745       812       1997(A)

 Fashion Faire
 San Leandro, CA              --      2,863      8,588        242        --      2,863      8,830     11,693       582       1998(A)

 Foster Square
 Portland, OR                 --        335        780         --        --        335        780      1,115         2       2000(A)

 Glenbrook Center
 Sacramento, CA               --      1,461      3,409         --        --      1,461      3,409      4,870        11       2000(A)

 Glen Cove Center
 Vallejo, CA                  --      1,925      5,775         56        --      1,925      5,831      7,756       321       1998(A)

 Granary Square
 Valencia, CA                 --      5,479     12,940         --        --      5,479     12,940     18,419       108       2000(A)

 Green Valley Town
   & Country
 Henderson, NV                --      4,096     12,333        105        --      4,096     12,438     16,534     1,069       1997(A)

 Heritage Park
 Suison City, CA              --      3,325      9,976         --        --      3,325      9,976     13,301        31       2000(A)

 Heritage Place
 Tulare, CA                   --      2,023      6,071         --        --      2,023      6,071      8,094        20       2000(A)

 Hermiston Plaza
 Hermiston, OR                --      1,931      5,791      1,425        --      1,931      7,216      9,147       394       1998(A)

 Hood River Center
 Hood River, OR               --      1,169      3,507        563        --      1,169      4,070      5,239       224       1998(A)

 Kmart Center
 Sacramento, CA               --      1,089      3,269         --        --      1,089      3,269      4,358        10       2000(A)

 Laguna 99 Plaza
 Elk Grove, CA                --      3,127      9,380         --        --      3,127      9,380     12,507        31       2000(A)

 Laguna Village
 Sacramento, CA               --      3,226         --     15,931     1,644      3,448     17,353     20,801     2,601       1992(A)
                                                                                                                          1996/97(C)
 Lakewood Shopping
    Center
 Lakewood, CA                 --      2,363      7,125         64        --      2,363      7,189      9,552       670       1997(A)

 Lakewood Village
 Windsor, CA               9,591      5,154     12,028         --        --      5,154     12,028     17,182        38       2000(A)

 Laurentian Center
 Ontario, CA               4,411      2,767      6,445       (357)       --      2,767      6,088      8,855       655    1994/96(A)

 Lodi
 Lodi, CA                     --      3,031         --         --        --      3,031         --      3,031        --       2000(A)

 Manteca Marketplace
 Manteca, CA                  --      3,904     11,713        620        --      3,904     12,333     16,237       946       1998(A)

 Marina Village
 Huntington Beach, CA         --      3,586     10,933         36        --      3,586     10,969     14,555       474       1999(A)
</TABLE>

(Continued)


                                      F-20
<PAGE>   59

<TABLE>
<CAPTION>
                                                          COSTS CAPITALIZED
                                                            SUBSEQUENT TO
                                       INITIAL COSTS         ACQUISITION                TOTAL COSTS
                                     -------------------  ------------------   ------------------------------
                                                                                                                             DATE OF
                                               BUILDINGS                                                                     ACQUIS.
                                                 AND                                    BUILDINGS              ACCUMULATED     (A)
                           ENCUM-              IMPROVE-   IMPROVE-  CARRYING               AND        TOTAL   DEPRECIATION   CONSTR.
DESCRIPTION               BRANCES     LAND     MENTS(2)   MENTS(2)    COSTS     LAND   IMPROVEMENTS (1)(2)(3)    (2)(3)        (C)
-----------               -------    ------    ---------  --------  --------   ------- ------------ --------- ------------  --------
<S>                       <C>        <C>       <C>        <C>       <C>        <C>     <C>          <C>       <C>         <C>
PROPERTIES:

  Maysville Marketsquare
  Maysville, KY             5,233     3,454      2,001      3,731        79      3,299      5,966      9,265     1,318       1992(A)
                                                                                                                             1993(C)
  Melrose Village
  Vista, CA                 9,067     5,125     11,621        (11)       --      5,125     11,610     16,735     2,330       1999(A)

  Memphis Retail Center
  Memphis, TN                  --     1,204      3,780        (34)       --      1,204      3,746      4,950       759       1992(A)

  Menlo Park
  Portland, OR                 --     2,946      6,951         --        --      2,946      6,951      9,897        21       2000(A)

  Milwaukie Marketplace
  Milwaukie, OR                --     3,181      9,554        397        --      3,184      9,948     13,132       774       1998(A)

  Mira Loma Shopping
     Center
  Reno, NV                     --     1,925      5,775        274        --      1,925      6,049      7,974       341       1998(A)

  Mission Ridge Plaza
  Manteca, CA                  --     2,777      8,329         --        --      2,777      8,329     11,106        28       2000(A)

  Monterey Plaza
  San Jose, CA             17,199     7,688     18,761        479        --      7,702     19,226     26,928     1,859       1997(A)

  NE 33rd
  Portland, OR                 --     1,106      2,581         --        --      1,106      2,581      3,687         8       2000(A)

  North Hills
  Reno, NV                     --     2,500         --         --        --      2,500         --      2,500        --       2000(A)

  North Lombard
  Portland, OR                 --     1,140      2,790         --        --      1,140      2,790      3,930         9       2000(A)

  Northridge Plaza
  Fair Oaks, CA                --     1,598      4,797         --        --      1,598      4,797      6,395        15       2000(A)

  Ocoee Plaza
  Ocoee, FL                    --       651      2,911         64        --        588      3,038      3,626       675       1992(A)

  Olympia Square
  Olympia, WA              13,761     3,737     11,580      1,006        --      3,737     12,586     16,323     3,510       1992(A)

  Olympia West Center
  Olympia, WA               3,136     2,735      8,295        142        --      2,735      8,437     11,172       719       1997(A)

  Olympic Place
  Walnut Creek, CA             --    13,453         --         --        --     13,453         --     13,453        --       2000(A)

  Oregon City Shopping
     Center
  Oregon City, OR          10,063     4,426     13,272      1,653        --      4,426     14,925     19,351       753       1998(A)

  Oregon Trail
  Gresham, OR                  --     3,593     10,779      3,313        --      3,593     14,092     17,685       824       1998(A)

  Pacific Commons Shopping
     Center
  Spanaway, WA                 --     3,419     10,256         87        --      3,419     10,343     13,762       650       1998(A)

  Palmdale Center
  Palmdale, CA                 --     1,150      3,454        208        --      1,150      3,662      4,812       269       1997(A)

  Panther Lake Shopping
     Center
  Kent, WA                     --     1,950      5,850        269        --      1,950      6,119      8,069       451       1998(A)

  Park Place
  Vallejo, CA                  --     3,875      9,043         --        --      3,875      9,043     12,918        28       2000(A)

  Pine Creek Shopping
     Center
  Grass Valley, CA             --     4,820     14,500         --        --      4,820     14,500     19,320        45       2000(A)

  Pioneer Plaza
  Springfield, OR              --     1,864      5,591        143        --      1,864      5,734      7,598       428       1998(A)

  Plaza 580
  Livermore, CA                --     3,866     11,599         --        --      3,866     11,599     15,465        39       2000(A)

  Powell Valley Junction
  Gresham, OR                  --     1,546      4,639        591        --      1,546      5,230      6,776       377       1998(A)

  Rainbow Promenade
  Las Vegas, NV            19,574     9,390     21,774        261        --      9,381     22,044     31,425     1,819       1997(A)

  Raleigh Hills
  Raleigh Hills, OR            --     1,710      5,131         --        --      1,710      5,131      6,841        17       2000(A)
</TABLE>

                                                                     (Continued)


                                      F-21
<PAGE>   60
                      PAN PACIFIC RETAIL PROPERTIES, INC.
                                  SCHEDULE III
              PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)
                               December 31, 2000
                                 (In thousands)

<TABLE>
<CAPTION>
                                                          COSTS CAPITALIZED
                                                            SUBSEQUENT TO
                                       INITIAL COSTS         ACQUISITION                TOTAL COSTS
                                     -------------------  ------------------   ------------------------------
                                                                                                                             DATE OF
                                               BUILDINGS                                                                     ACQUIS.
                                                 AND                                    BUILDINGS               ACCUMULATED    (A)
                           ENCUM-              IMPROVE-   IMPROVE-  CARRYING               AND        TOTAL    DEPRECIATION  CONSTR.
DESCRIPTION               BRANCES     LAND     MENTS (2)  MENTS(2)    COSTS     LAND   IMPROVEMENTS (1)(2)(3)     (2)(3)       (C)
-----------              --------   --------   ---------  --------  --------- -------- ------------ ---------- ------------ --------
<S>                      <C>        <C>        <C>        <C>       <C>       <C>      <C>          <C>        <C>          <C>
PROPERTIES:

  Raley's
  Fallon, NV                   --        817      2,453        --        --        817       2,453       3,270         8     2000(A)

  Raley's Shopping Center
  Yuba City, CA                --      2,031      6,093        --        --      2,031       6,093       8,124        19     2000(A)

  Rancho Las Palmas
  Rancho Mirage, CA        12,367      5,025     15,235       189        --      5,025      15,424      20,449       493     1999(A)

  Rockwood Plaza
  Gresham, OR                  --      1,136      3,452        --        --      1,136       3,452       4,588        11     2000(A)

  Sahara Pavilion North
  Las Vegas, NV            30,332     11,914     28,560       804        --     11,914      29,364      41,278     6,931     1992(A)

  Sahara Pavilion South
  Las Vegas, NV                --      4,833     12,988     1,679        --      4,833      14,667      19,500     3,792     1992(A)

  San Dimas Market Place
  San Dimas, CA            14,680      5,700     17,100       214        --      5,700      17,314      23,014     1,299     1998(A)

  Sandy Marketplace
  Sandy, OR                 4,672      2,046      6,064       272        --      2,046       6,336       8,382       361     1998(A)

  SE Milwaukie
  Portland, OR                 --        692      2,074        --        --        692       2,074       2,766         7     2000(A)

  Shops at Lincoln School
  Modesto, CA                  --      1,672      5,067         3        --      1,672       5,070       6,742       158     1999(A)

  Shute Park Plaza
  Hillsboro, OR                --        994      2,981       218        --        994       3,199       4,193       252     1998(A)

  Sky Park Plaza
  Chico, CA                    --      3,438     10,315        --        --      3,438      10,315      13,753        34     2000(A)

  Southgate Center
  Milwaukie, OR             3,235      1,424      4,268       497        --      1,424       4,765       6,189       248     1998(A)

  St. John's
  Portland, OR                 --      1,932      1,932        --        --      1,932       1,932       3,864         6     2000(A)

  Sunset Mall
  Portland, OR              7,714      2,996      8,989        97        --      2,982       9,100      12,082       493     1998(A)

  Sunset Square
  Bellingham, WA               --      6,100     18,647     2,346        --      6,100      20,993      27,093     5,447     1992(A)

  Sycamore Plaza
  Anaheim, CA                  --      1,856      5,601        --        --      1,856       5,601       7,457        53     2000(A)

  Tacoma Central
  Tacoma, WA               10,280      5,314     16,288       354        --      5,314      16,642      21,956     1,325     1997(A)

  Tacoma Shopping Center
  Portland, OR                 --        807      1,884        --        --        807       1,884       2,691         6     2000(A)

  Tanasbourne Village
  Hillsboro, OR            18,526      5,573     13,861     1,216        --      5,573      15,077      20,650     3,603     1992(A)

  Tustin Heights
  Tustin, CA               10,541      3,675     10,776       431        --      3,675      11,207      14,882       895     1997(A)

  Ukiah Crossroads
  Ukiah, CA                    --      1,801      5,406        --        --      1,801       5,406       7,207        17     2000(A)

  Victorian Walk
  Fresno, CA                   --      1,615      4,844        --        --      1,615       4,844       6,459        16     2000(A)

  Vineyard Village East
  Ontario, CA                  --        649      2,716       137        --        649       2,853       3,502       544     1994(A)

  Wal Mart
  Napa, CA                     --      9,700         --        --        --      9,700          --       9,700        --     2000(A)

  Washington Mutual
  Monterey, CA                 --        420      1,257        --        --        420       1,257       1,677         4     2000(A)

  West Town
  Winnemucca, NV               --      1,046      3,140        --        --      1,046       3,140       4,186        10     2000(A)
</TABLE>

 (Continued)



                                      F-22
<PAGE>   61
                      PAN PACIFIC RETAIL PROPERTIES, INC.
                                  SCHEDULE III
              PROPERTIES AND ACCUMULATED DEPRECIATION (Continued)
                               December 31, 2000
                                 (In thousands)
<TABLE>
<CAPTION>
                                                          COSTS CAPITALIZED
                                                            SUBSEQUENT TO
                                       INITIAL COSTS         ACQUISITION                TOTAL COSTS
                                     -------------------  ------------------   ------------------------------
                                                                                                                             DATE OF
                                               BUILDINGS                                                                     ACQUIS.
                                                 AND                                    BUILDINGS               ACCUMULATED    (A)
                           ENCUM-              IMPROVE-   IMPROVE-  CARRYING               AND        TOTAL    DEPRECIATION  CONSTR.
DESCRIPTION               BRANCES     LAND     MENTS (2)  MENTS(2)    COSTS     LAND   IMPROVEMENTS (1)(2)(3)     (2)(3)       (C)
-----------              --------   --------   ---------  --------  --------- -------- ------------ ---------- ------------ --------
<S>                      <C>        <C>        <C>        <C>       <C>       <C>      <C>          <C>        <C>          <C>
PROPERTIES:
  Westwood Village
     Shopping Center
  Redding, CA                  --      1,131      3,393       442        --      1,131       3,835       4,966       321     1998(A)
  Winterwood Pavilion
  Las Vegas, NV                --      4,573     13,015     1,730        --      4,573      14,745      19,318     4,026     1992(A)
  Yreka Junction
  Yreka, CA                    --      2,347      7,040        --        --      2,347       7,040       9,387        23     2000(A)
                         --------   --------   --------   -------    ------   --------    --------  ----------  -------
                         $233,911   $337,677   $842,285   $87,034    $1,723   $350,604    $918,115  $1,268,719  $73,895
                         ========   ========   ========   =======    ======   ========    ========  ==========  =======
</TABLE>

                                                                     (Continued)


                                      F-23
<PAGE>   62


                       PAN PACIFIC RETAIL PROPERTIES, INC.
                                  SCHEDULE III
               PROPERTIES AND ACCUMULATED DEPRECIATION (CONTINUED)
                                DECEMBER 31, 2000
                                 (IN THOUSANDS)


NOTES:

(1) The aggregate gross cost of the properties owned by Pan Pacific Retail
    Properties, Inc. for federal income tax purposes, approximated $1,249,531 as
    of December 31, 2000.

(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, 1998 through December 31, 2000:


<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED DECEMBER 31,
 COST OF PROPERTIES                                         2000               1999              1998
                                                         -----------         ---------         ---------
<S>                                                      <C>                 <C>               <C>
 Balance, beginning of year                              $   805,086         $ 709,522         $ 485,590
    Additions (acquisition, improvements, etc.)              467,848           109,613           224,989
    Interest capitalized                                         202               231               286
    Deductions (write-off of tenant
       improvements, cost of real estate sold and
       provision for loss on impairment)                      (4,417)          (14,280)           (1,343)
                                                         -----------         ---------         ---------
 Balance, end of year                                    $ 1,268,719         $ 805,086         $ 709,522
                                                         ===========         =========         =========
</TABLE>


<TABLE>
<CAPTION>
                                                                        FOR THE YEARS ENDED DECEMBER 31,
 ACCUMULATED DEPRECIATION AND AMORTIZATION                           2000             1999             1998
                                                                   --------         --------         --------
<S>                                                                <C>              <C>              <C>
 Balance, beginning of year                                        $ 57,025         $ 42,044         $ 30,076
    Additions (depreciation and amortization
       expense)                                                      19,083           17,782           13,311
    Deductions (write-off of accumulated depreciation
       of tenant improvements and cost of real estate sold)          (2,213)          (2,801)          (1,343)
                                                                   --------         --------         --------
 Balance, end of year                                              $ 73,895         $ 57,025         $ 42,044
                                                                   ========         ========         ========
</TABLE>


                 See accompanying independent auditors' report.


                                      F-24
<PAGE>   63


                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit No.                              Description
-----------    -----------------------------------------------------------------
<S>            <C>
   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 this 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 this
               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 this 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 this 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 this 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)

  10.1         Form of Restricted Stock Agreement between the Company and Mr.
               Stuart A. Tanz (previously filed as Exhibit 10.1 to Pan Pacific
               Retail Properties, Inc.'s filing on Form 10-Q for the quarter
               ended September 30, 1999 and incorporated herein by reference)
</TABLE>

<PAGE>   64

<TABLE>
<CAPTION>
Exhibit No.                              Description
-----------    -----------------------------------------------------------------
<S>            <C>
  10.2         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)

  10.3         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)

  10.4         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)

  10.5         Amended and Restated Employment Agreement, dated as of August 14,
               2000, between Pan Pacific Retail Properties, Inc. and Mr. Stuart
               A. Tanz (previously filed as Exhibit 10.5 to Pan Pacific Retail
               Properties, Inc.'s Registration Statement on Form S-4
               (Registration No. 333-45944) and incorporated herein by
               reference)

  10.6         Employment Agreement, dated as of October 11, 1999, between Pan
               Pacific Retail Properties, Inc. and Mr. Joseph B. Tyson
               (previously filed as Exhibit 10.6 to Pan Pacific Retail
               Properties, Inc.'s Registration Statement on Form S-4
               (Registration No. 333-45944) and incorporated herein by
               reference)

  10.7         Amended and Restated Employment Agreement, dated as of August 14,
               2000, between Pan Pacific Retail Properties, Inc. and Mr. Jeffrey
               S. Stauffer (previously filed as Exhibit 10.7 to Pan Pacific
               Retail Properties, Inc.'s Registration Statement on Form S-4
               (Registration No. 333-45944) and incorporated herein by
               reference)

  10.8         Form of Miscellaneous Rights Agreement (previously filed as
               Exhibit 10.6 to Pan Pacific Retail Properties, Inc.'s
               Registration Statement on Form S-11 (Registration No. 333-28715)
               and incorporated herein by reference)

  10.9         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)

  10.10        Revolving Credit Agreement, 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, First Union National Bank, as
               Syndication Agent, and U.S. Bank, National Association, as
               Documentation Agent, Dresdner Bank AG, New York and Grand Cayman
               Branches, Guaranty Federal Banks, F.S.B., as Co-Agent and Wells
               Fargo Bank, N.A., as Co-Agent (previously filed as Exhibit 10.9
               to Pan Pacific Retail Properties, Inc.'s Registration Statement
               on Form S-3 (Registration No. 333-51230) and incorporated herein
               by reference)

  10.11        Term Credit Agreement, 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)
</TABLE>

<PAGE>   65

<TABLE>
<CAPTION>
Exhibit No.                              Description
-----------    -----------------------------------------------------------------
<S>            <C>
  10.12        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)

  10.13        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)

  10.14        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)

  10.15        Contribution Agreement and Escrow Instructions, dated as of
               August 13, 1999, by and between Pan Pacific Retail Properties,
               Inc. and Ranch 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)

  21.1         Subsidiaries of the Registrant

  23.1         Consent of KPMG LLP
</TABLE>


        (b) Reports on Form 8-K.

               1.    A form 8-K was filed on August 23, 2000 for purposes of
                     reporting that Pan Pacific Retail Properties, Inc. and
                     Western Properties Trust had entered into an Agreement and
                     Plan of Merger.

               2.    A Form 8-K was filed on October 6, 2000 for purposes of
                     reporting information prepared by Pan Pacific Retail
                     Properties, Inc.'s management relating to the proposed
                     merger of WPT, Inc., successor in interest to Western
                     Properties Trust immediately prior to the merger, with and
                     into Pan Pacific Retail Properties, Inc.

               3.    A Form 8-K was filed on November 28, 2000 for purposes of
                     reporting that the proposed merger of WPT, Inc. (successor
                     to Western Properties Trust) with and into Pan Pacific
                     Retail Properties, Inc. was completed on November 13, 2000.

                     In addition, it was reported that in connection with the
                     closing of the merger, Pan Pacific assumed Western
                     Properties Trust's obligations under its unsecured senior
                     notes.

                     Further, certain historical and pro forma financial
                     information was incorporated by reference.

               4.    A Form 8-K was filed on December 21, 2000 for purposes of
                     reporting certain operational and other information about
                     Pan Pacific Retail Properties, Inc. after the closing of
                     the merger with Western Properties Trust. Included in the
                     disclosure was information concerning a shareholder lawsuit
                     which was filed on November 8, 2000. A copy of the
                     complaint was included.