General
As of December 31, 2006, we owned or had a majority ownership interest in 111 community and neighborhood shopping centers and retail mixed-used properties comprising approximately 18.8 million square
feet, located primarily in densely populated and affluent communities throughout the Northeast and Mid-Atlantic United States, as well as California. In addition, we own one apartment complex in Maryland. No single property accounted for over 10% of our 2006 total revenue or net income. We believe that our properties are adequately covered by commercial general liability, fire, flood, earthquake, terrorism and business interruption insurance provided by reputable companies, with commercially reasonable exclusions, deductibles and limits.
We operate our business on an asset management model, where small, focused teams are responsible for a portfolio of assets. We have divided our portfolio of properties into two operating regions: the East and West. Each region is operated under the direction of one or more asset managers, with dedicated leasing, property management and financial staff, and operates largely autonomously with respect to day-to-day operating decisions.
Tenant Diversification
As of December 31, 2006, we had approximately 2,300 leases, ranging from sole proprietors to major national retailers. No one tenant or affiliated group of tenants accounted for more than 2.5% of our annualized base rent as of December 31, 2006. As a result of our tenant diversification, we believe our exposure to any recent and future bankruptcy filing in the retail sector has not been and will not be significant.
Geographic Diversification
Our 112 properties (including our one apartment complex) are located in 14 states and the District of Columbia. The following table shows, by region and state within the region, the number of properties, the gross leasable area of commercial space and the percentage of total portfolio gross leasable area of commercial space in each state as of December 31, 2006.
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| Region and State | | Number of Properties | | Gross Leasable Area | | Percentage of Gross Leasable Area | |
| | | | (In square feet) | | | |
| East region | | | | | | | |
| Virginia | | 17 | | 3,348,000 | | 17.8 | % |
| Maryland | | 12 | | 3,033,000 | | 16.1 | % |
| New Jersey | | 10 | | 2,679,000 | | 14.3 | % |
| Pennsylvania(1) | | 11 | | 2,397,000 | | 12.8 | % |
| Massachusetts | | 7 | | 1,577,000 | | 8.4 | % |
| New York | | 7 | | 1,148,000 | | 6.1 | % |
| Illinois | | 4 | | 757,000 | | 4.0 | % |
| Connecticut | | 3 | | 317,000 | | 1.7 | % |
| New Hampshire | | 2 | | 294,000 | | 1.6 | % |
| Michigan | | 1 | | 217,000 | | 1.2 | % |
| District of Columbia | | 2 | | 168,000 | | 0.9 | % |
| North Carolina | | 1 | | 159,000 | | 0.8 | % |
| Maine | | 1 | | 101,000 | | 0.5 | % |
| | | | | | | |
| Total East region | | 78 | | 16,195,000 | | 86.2 | % |
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| West region | | | | | | | |
| California | | 25 | | 2,434,000 | | 12.9 | % |
| Texas | | 9 | | 171,000 | | 0.9 | % |
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| Total West region | | 34 | | 2,605,000 | | 13.8 | % |
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| Total all regions(2) | | 112 | | 18,800,000 | | 100.0 | % |
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| (1) | We also own two participating mortgages totaling approximately $28.3 million secured by multiple buildings in Manayunk, Pennsylvania. |
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| (2) | These 112 properties are operated as 86 real estate projects. |
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Leases, Lease Terms and Lease Expirations
Our leases are classified as operating leases and typically are structured to require the monthly payment of minimum rents in advance, subject to periodic increases during the term of the lease, percentage rents based on the level of sales achieved by tenants, and reimbursement of a majority of on-site operating expenses and real estate taxes. These features in our leases reduce our exposure to higher costs caused by inflation and allow us to participate in improved tenant sales.
Commercial property leases generally range from 3 to 10 years; however, certain leases, primarily with anchor tenants, may be longer. Many of our leases contain tenant options that enable the tenant to extend the term of the lease at expiration at pre-established rental rates that often include fixed rent increases, consumer price index adjustments or other market rate adjustments from the prior base rent. Leases on residential units are generally for a period of one year or less and, in 2006, represented approximately 2.8% of total revenues.
The following table sets forth the schedule of lease expirations for our commercial leases in place as of December 31, 2006 for each of the 10 years beginning with 2007 and after 2016 in the aggregate, in both cases, assuming that none of the tenants exercise future renewal options. Annualized base rents reflect in-place contractual rents as of December 31, 2006.
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| Year of Lease Expiration | | Leased Square Footage Expiring | | Percentage of Leased Square Footage Expiring | | | Annualized Base Rent Represented by Expiring Leases | | | Percentage of Annualized Base Rent Represented by Expiring Leases | |
| 2007 | | 1,219,000 | | 7 | % | | | 23,325,000 | | 6.9 | % |
| 2008 | | 1,910,000 | | 11 | % | | | 30,702,000 | | 9.1 | % |
| 2009 | | 2,270,000 | | 13 | % | | | 40,989,000 | | 12.1 | % |
| 2010 | | 1,586,000 | | 9 | % | | | 32,106,000 | | 9.5 | % |
| 2011 | | 1,761,000 | | 10 | % | | | 42,903,000 | | 12.7 | % |
| 2012 | | 1,734,000 | | 10 | % | | | 29,966,000 | | 8.8 | % |
| 2013 | | 995,000 | | 5 | % | | | 19,772,000 | | 5.8 | % |
| 2014 | | 1,112,000 | | 6 | % | | | 24,893,000 | | 7.3 | % |
| 2015 | | 840,000 | | 5 | % | | | 16,360,000 | | 4.8 | % |
| 2016 | | 922,000 | | 5 | % | | | 19,617,000 | | 5.8 | % |
| Thereafter | | 3,518,000 | | 19 | % | | | 58,220,000 | | 17.2 | % |
| | | | | | | | | | | |
| Total | | 17,867,000 | | 100 | % | | $ | 338,853,000 | | 100.0 | % |
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Retail and Residential Properties
The following table sets forth information concerning all properties in which we owned an equity interest, had a leasehold interest, or controlled and are consolidated as of December 31, 2006. Except as otherwise noted, we are the sole owner of our retail properties. Principal tenants are the largest tenants in the property based on square feet leased or are tenants important to a property’s success due to their ability to attract retail customers.
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| EAST REGION | | Year Completed | | Year Acquired | | Square Feet(1) /Apartment Units | | Percentage Leased(2) | | Principal Tenant(s) |
| 7770 Richmond Highway Alexandria, VA 22036 | | 1974 | | 2006 | | 61,000 | | 100% | | Gold’s Gym |
| Allwood Clifton, NJ 07013(3) | | 1958 | | 1988 | | 50,000 | | 100% | | Stop & Shop |
| Andorra Philadelphia, PA 19128 | | 1953 | | 1988 | | 267,000 | | 100% | | Acme Markets Kohl’s Staples L.A. Fitness |
| Assembly Square/Sturtevant Somerville, MA 02145 | | 2005 | | 2005 | | 554,000 | | 100% | | Bed, Bath & Beyond Christmas Tree Shops Kmart Staples TJ Maxx A.C. Moore Sports Authority |
| Bala Cynwyd Bala Cynwyd, PA 19004 | | 1955 | | 1993 | | 280,000 | | 100% | | Acme Markets Lord & Taylor L.A. Fitness |
| Barracks Road Charlottesville, VA 22905 | | 1958 | | 1985 | | 488,000 | | 100% | | Bed, Bath & Beyond Harris Teeter Kroger Barnes & Noble Old Navy |
| Bath Shopping Center Bath, ME 04530 | | 1978 | | 2006 | | 101,000 | | 96% | | Shaw’s Supermarket CVS |
| Bethesda Row Bethesda, MD 20814(7) | | 1945-1991 2001 | | 1993-2006 | | 477,000 | | 94% | | Barnes & Noble Giant Food Landmark Theater Washington Sports Club |
| Blue Star Watchung, NJ 07060(3) | | 1959 | | 1988 | | 410,000 | | 99% | | Shop Rite Kohl’s Michaels Toys R Us Marshalls |
| Brick Plaza Brick Township, NJ 08723(6) | | 1958 | | 1989 | | 409,000 | | 100% | | A&P Supermarket Barnes & Noble Loews Theatres Sports Authority |
| Bristol Bristol, CT 06010 | | 1959 | | 1995 | | 275,000 | | 97% | | Stop & Shop TJ Maxx |
| Brunswick North Brunswick, NJ 08902(3) | | 1957 | | 1988 | | 303,000 | | 99% | | A&P Supermarket A.J.Wright L.A. Fitness |
| Chelsea Commons I & II Chelsea, MA 02150 | | 1962 | | 2006 | | 179,000 | | 99% | | Sav-A-Lot Home Depot |
Retail and Residential Properties—continued
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| EAST REGION | | Year Completed | | Year Acquired | | Square Feet(1) /Apartment Units | | Percentage Leased(2) | | Principal Tenant(s) |
| Congressional Plaza Rockville, MD 20852(4) | | 1965 | | 1965 | | 338,000 | | 91% | | Buy Buy Baby Whole Foods Container Store |
| Congressional Plaza Residential Rockville, MD 20852(4) | | 2003 | | 1965 | | 146 units | | 96% | | |
| Courthouse Center Rockville, MD 20852(5) | | 1970 | | 1997 | | 38,000 | | 97% | | |
| Clifton Clifton, NJ 07013(3) | | 1959 | | 1988 | | 80,000 | | 100% | | Drug Fair Dollar Express |
| Crossroads Highland Park, IL 60035 | | 1959 | | 1993 | | 173,000 | | 95% | | Comp USA Golfsmith Guitar Center |
| Dedham Dedham, MA 02026 | | 1959 | | 1993 | | 241,000 | | 94% | | Pier 1 Imports Star Market |
| Eastgate Chapel Hill, NC 27514 | | 1963 | | 1986 | | 159,000 | | 90% | | Earth Fare Stein Mart |
| Ellisburg Circle Cherry Hill, NJ 08034 | | 1959 | | 1992 | | 267,000 | | 89% | | Genuardi’s Stein Mart |
| Falls Plaza Falls Church, VA 22046 | | 1962 | | 1967 | | 73,000 | | 100% | | Giant Food |
| Falls Plaza – East Falls Church, VA 22046 | | 1960 | | 1972 | | 71,000 | | 100% | | CVS Staples |
| Feasterville Feasterville, PA 19047 | | 1958 | | 1980 | | 111,000 | | 100% | | Genuardi’s OfficeMax |
| Federal Plaza Rockville, MD 20852 | | 1970 | | 1989 | | 247,000 | | 99% | | Comp USA Ross Dress For Less TJ Maxx |
| Finley Square Downers Grove, IL 60515 | | 1974 | | 1995 | | 315,000 | | 97% | | Bed, Bath & Beyond Sports Authority |
| Flourtown Flourtown, PA 19031 | | 1957 | | 1980 | | 181,000 | | 96% | | Genuardi’s |
| Forest Hills Forest Hills, NY | | 1937-1987 | | 1997 | | 85,000 | | 100% | | Midway Theatre Duane Reade Gap |
| Friendship Center Washington, D.C 20015 | | 1998 | | 2001 | | 119,000 | | 100% | | Maggiano’s Borders Books Linens ‘n Things |
| Fresh Meadows Queens, NY 11365 | | 1949 | | 1997 | | 403,000 | | 95% | | Cineplex Odeon Filene’s Basement Kohl’s Associated Food Stores |
| Gaithersburg Square Gaithersburg, MD 20878 | | 1966 | | 1993 | | 198,000 | | 99% | | Bed, Bath & Beyond Borders Books and Music Ross Dress For Less |
| Garden Market Western Springs, IL 60558 | | 1958 | | 1994 | | 140,000 | | 96% | | Dominick’s Walgreens |
| Governor Plaza Glen Burnie, MD 21961 | | 1963 | | 1985 | | 269,000 | | 100% | | Office Depot Comp USA Bally’s Total Fitness Aldi |
Retail and Residential Properties—continued
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| EAST REGION | | Year Completed | | Year Acquired | | Square Feet(1) /Apartment Units | | Percentage Leased(2) | | Principal Tenant(s) |
| Gratiot Plaza Roseville, MI 48066 | | 1964 | | 1973 | | 217,000 | | 100% | | Bed, Bath & Beyond Best Buy Farmer Jacks DSW |
| Greenwich Avenue Greenwich Avenue, CT | | 1995 | | 1994-1996 | | 42,000 | | 100% | | Saks Fifth Avenue |
| Hamilton Hamilton, NJ 08690(3) | | 1961 | | 1988 | | 190,000 | | 93% | | Shop Rite Stevens Furniture A.C. Moore |
| Hauppauge Hauppauge, NY 11788 | | 1963 | | 1998 | | 133,000 | | 98% | | Shop Rite A.C. Moore |
| Huntington Huntington, NY 11746(3) | | 1962 | | 1988 | | 279,000 | | 100% | | Barnes & Noble Bed, Bath & Beyond Buy Buy Baby Toys R Us |
| Idylwood Plaza Falls Church, VA 22030 | | 1991 | | 1994 | | 73,000 | | 85% | | Whole Foods |
| Key Road Keene, NH 03431 | | 1968 | | 2006 | | 76,000 | | 100% | | Petco |
| Lancaster Lancaster, PA 17601(3) | | 1958 | | 1980 | | 107,000 | | 100% | | Giant Food Michaels |
| Langhorne Square Levittown, PA 19056 | | 1966 | | 1985 | | 216,000 | | 98% | | Marshalls Redner’s Market |
| Laurel Centre Laurel, MD 20707 | | 1956 | | 1986 | | 386,000 | | 98% | | Giant Food Marshalls Toys R Us |
| Lawrence Park Broomall, PA 19008 | | 1972 | | 1980 | | 353,000 | | 100% | | Acme Markets TJ Maxx CHI CVS Home Goods |
| Leesburg Plaza Leesburg, VA 20176(5) | | 1967 | | 1998 | | 236,000 | | 99% | | Giant Food Pier 1 Imports Office Depot Champion Billiards Petsmart |
| Linden Square Wellesley, MA 02481 | | 1960 | | 2006 | | 100,000 | | 95% | | Roche Brothers Supermarket Fitness Club for Women Wellesley Volkswagen, Buick |
| Loehmann’s Plaza Fairfax, VA 22042 | | 1971 | | 1983 | | 250,000 | | 98% | | Bally’s Total Fitness Loehmann’s Dress Shop |
| Melville Mall Huntington, NY 11747(12) | | 1974 | | 2006 | | 248,000 | | 100% | | Waldbaum’s Marshalls Kohl’s |
| Mercer Mall Lawrenceville, NJ 08648(3) | | 1975 | | 2003 | | 501,000 | | 94% | | Raymour & Flanigan Bed, Bath & Beyond DSW TJ Maxx Shop Rite |
Retail and Residential Properties—continued
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| EAST REGION | | Year Completed | | Year Acquired | | Square Feet(1) /Apartment Units | | Percentage Leased(2) | | Principal Tenant(s) |
| Mid-Pike Plaza Rockville, MD 20852(3) | | 1963 | | 1982 | | 309,000 | | 100% | | Bally’s Total Fitness Linens ‘n Things Toys R Us A.C. Moore Filene’s Basement |
| Mount Vernon Plaza Alexandria, VA 22306(5)(6) | | 1972 | | 2003 | | 284,000 | | 94% | | Shoppers Food Warehouse Bed, Bath & Beyond Michaels |
| Northeast Philadelphia, PA 19114 | | 1959 | | 1983 | | 287,000 | | 85% | | Burlington Coat Factory Marshalls |
| North Dartmouth North Dartmouth, MA 02747 | | 2004 | | 2006 | | 183,000 | | 100% | | Stop & Shop Lowe’s Home Center |
| North Lake Commons Lake Zurich, IL 60047 | | 1989 | | 1994 | | 129,000 | | 96% | | Dominick’s |
| Old Keene Mill Springfield, VA 22152 | | 1968 | | 1976 | | 92,000 | | 100% | | Whole Foods |
| Pan Am Fairfax, VA 22031 | | 1979 | | 1993 | | 227,000 | | 100% | | Michaels Micro Center Safeway |
| Pentagon Row Arlington, VA 22202(6) | | 2001-2002 | | 1999 | | 296,000 | | 98% | | Harris Teeter Bed, Bath & Beyond Cost Plus World Market Bally’s Total Fitness DSW |
| Perring Plaza Baltimore, MD 21134 | | 1963 | | 1985 | | 402,000 | | 98% | | Burlington Coat Factory Home Depot Shoppers Food Warehouse Jo-Ann Stores |
| Pike 7 Plaza Vienna, VA 22180(5) | | 1968 | | 1997 | | 164,000 | | 90% | | Staples TJ Maxx |
| Queen Anne Plaza Norwell, MA 02061 | | 1967 | | 1994 | | 149,000 | | 100% | | TJ Maxx Victory Supermarket |
| Quince Orchard Gaithersburg, MD 20877(6) | | 1975 | | 1993 | | 253,000 | | 100% | | Circuit City Magruders Staples |
| Riverside Keene, NH 03431 | | 1966 | | 2006 | | 218,000 | | 100% | | Shaw’s Supermarket Brooks Pharmacy Walmart |
| Rockville Town Square Rockville, MD 20852(13) | | N/A | | N/A | | N/A | | N/A | | |
| Rollingwood Apartments Silver Spring, MD 20910 9 three-story buildings | | 1960 | | 1971 | | 282 units | | 95% | | |
| Rutgers Franklin, N.J. 08873(3) | | 1973 | | 1988 | | 267,000 | | 91% | | Stop & Shop Kmart |
| Sam’s Park & Shop Washington, DC 20008 | | 1930 | | 1995 | | 49,000 | | 100% | | Petco |
| Saugus Plaza Saugus, MA 01906 | | 1976 | | 1996 | | 171,000 | | 100% | | Kmart Stop & Shop |
Retail and Residential Properties—continued
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| EAST REGION | | Year Completed | | Year Acquired | | Square Feet(1) /Apartment Units | | Percentage Leased(2) | | Principal Tenant(s) |
| Shirlington Arlington, VA 22206 | | 1940 | | 1995 | | 214,000 | | 98% | | Carlyle Grand Café Cineplex Odeon |
| South Valley Shopping Center Alexandria, VA 22306(5) | | 1966 | | 2003 | | 221,000 | | 99% | | Home Depot TJ Maxx |
| Tower Shopping Center Springfield, VA 22150 | | 1960 | | 1998 | | 112,000 | | 97% | | Virginia Fine Wine Talbots |
| Town Center of New Britain New Britain, PA 18901 | | 1969 | | 2006 | | 125,000 | | 87% | | Giant Food Rite Aid |
| Troy Parsippany-Troy, NJ 07054 | | 1966 | | 1980 | | 202,000 | | 99% | | Comp USA Pathmark Toys R Us A. C. Moore |
| Tysons Station Falls Church, VA 22043 | | 1954 | | 1978 | | 50,000 | | 100% | | Trader Joes |
| Wildwood Bethesda, MD 20814 | | 1958 | | 1969 | | 85,000 | | 100% | | CVS Balducci’s |
| Willow Grove Willow Grove, PA 19090 | | 1953 | | 1984 | | 215,000 | | 100% | | Barnes & Noble Marshalls Toys R Us |
| The Shops at Willow Lawn Richmond, VA 23230 | | 1957 | | 1983 | | 467,000 | | 89% | | Kroger Old Navy Staples |
| Wynnewood Wynnewood, PA 19096 | | 1948 | | 1996 | | 255,000 | | 98% | | Bed, Bath & Beyond Borders Books Genuardi’s Old Navy |
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| Total East Region—Retail | | | | | | 16,195,000 | | 97% | | |
| Total East Region—Residential | | | | | | 428 units | | 95% | | |
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| WEST REGION | | | | | | | | | | |
| Colorado Blvd Pasadena, CA | | 1922 | | 1996-1998 | | 69,000 | | 100% | | Pottery Barn Banana Republic |
| Crow Canyon Commons San Ramon, CA(3) | | 1980 | | 2005 | | 225,000 | | 96% | | Albertson’s Loehmann’s Rite Aid |
| Escondido Promenade Escondido, CA 92029(8) | | 1987 | | 1996 | | 222,000 | | 98% | | Toys R Us TJ Maxx Cost Plus |
| Fifth Avenue San Diego, CA(11) | | 1888-1995 | | 1996-1997 | | 51,000 | | 82% | | Urban Outfitters |
| Hermosa Avenue Hermosa Beach, CA(10) | | 1922 | | 1997 | | 23,000 | | 78% | | |
| Hollywood Blvd Hollywood, CA(10) | | 1921-1991 | | 1999 | | 149,000 | | 72% | | L.A. Fitness |
| Houston Street San Antonio, TX | | 1890-1935 | | 1998-1999 | | 171,000 | | 72% | | Hotel Valencia |
| King’s Court Los Gatos, CA 95032(5)(6) | | 1960 | | 1998 | | 79,000 | | 100% | | Lunardi’s Supermarket Longs Drug Store |
| Old Town Center Los Gatos, CA 95030 | | 1962 | | 1997 | | 94,000 | | 97% | | Borders Books and Music Gap Kids Banana Republic |
Retail and Residential Properties—continued
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| WEST REGION | | Year Completed | | Year Acquired | | Square Feet(1) /Apartment Units | | Percentage Leased(2) | | Principal Tenant(s) |
| 150 Post Street San Francisco, CA 94108 | | 1965 | | 1997 | | 103,000 | | 92% | | Brooks Brothers |
| Santana Row – Retail San Jose, CA 95128 | | 2002 | | 1997 | | 563,000 | | 97% | | Crate & Barrel Borders Books Container Store Best Buy CineArts Theatre |
| Santana Row – Residential San Jose, CA 95128 | | 2003-2006 | | 1997 | | 295 units | | 95% | | |
| Third Street Promenade Santa Monica, CA(9) | | 1888-1995 | | 1996-2000 | | 211,000 | | 97% | | Abercrombie & Fitch J. Crew Old Navy Banana Republic |
| Westgate Shopping Center San Jose, CA | | 1960-1966 | | 2004 | | 645,000 | | 99% | | Safeway Target Burlington Coat Factory Barnes & Noble Ross |
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| Total West Region—Retail | | | | | | 2,605,000 | | 94% | | |
| Total West Region—Residential | | | | | | 295 units | | 95% | | |
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| Total All Regions—Retail | | | | | | 18,800,000 | | 97% | | |
| Total All Regions—Residential | | | | | | 723 units | | 95% | | |
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| (1) | Represents the physical square footage of the commercial portion of the property, which may differ from the gross leasable square footage used to express percentage leased. Some of our properties include office space which is included in this square footage but is not material in total. |
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| (2) | Retail percentage leased is expressed as a percentage of rentable commercial square feet occupied or subject to a lease under which rent is currently payable and includes square feet covered by leases for stores not yet opened. Residential percentage leased is expressed as a percentage of units occupied or subject to a lease. |
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| (3) | We have a leasehold interest in this property. |
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| (4) | We own a 64.1% membership interest in this property. |
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| (5) | We own this property in a “downREIT” structure. |
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| (6) | All or a portion of this property is subject to a long-term ground lease. |
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| (7) | This property contains nine buildings; six are subject to a leasehold interest, one is subject to a ground lease and two are owned 100% by us. |
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| (8) | We own the controlling interest in this center. |
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| (9) | We own 100% of eight buildings and a 90% general partnership interest in one building. |
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| (10) | We own a 90% general partnership interest in these buildings. |
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| (11) | We own 100% of three buildings and a 90% general partnership interest in one building |
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| (12) | On October 16, 2006, the Trust acquired control of Melville Mall through a 20 year master lease and secondary financing to the owner. The master lease includes a purchase option in 2021 for $5.0 million plus the assumption of the owner’s $25.8 million first mortgage. Because the Trust controls this property and retains substantially all of the economic benefit and risk associated with it, we consolidate this property and its operations. |
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| (13) | We acquired approximately 152,000 square feet of gross leasable area, and we intend to acquire an additional 32,000 square feet of gross leasable area. No square footage has been placed in service. The Grand Opening is scheduled for May 2007. |
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