Hughes Corporation annual report, 1990

T H E H U G H E S C O R P O R A T I O N F U L F I L L I N G T H E P R O M I S E . 1 9 9 0 A N N U A L R E P O R T .. ? T A B L E O F C O N T E N T S F I N A N C I A L H I G H L I G H T S T o O U R S H A R E H O L D E R S I N T R O D U C T I O N T O S U M M E R L I N F U L F I L L I N G T H E P R O M I S E M A N A G E M E N T ' S D I S C U S S I O N A N D A N A L Y S I S M A R K E T S E G M E N T A T I O N : O P E R A T I N G R E V E N U E S C A P I T A L E X P E N D I T U R E S L E A S I N G S T A T U S L A N D H O L D I N G S C O N S O L I D A T E D S T A T E M E N T S O F O P E R A T I O N S C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S R E C O N C I L I A T I O N O F N E T I N C O M E S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S I N D E P E N D E N T A U D I T O R S ' R E P O R T B O A R D O F D I R E C T O R S A N D O F F I C E R S F R O N T C O V E R P H O T O : T H E H U G H E S C O R P O R A T I O N H E A D Q U A R T E R S I N T H E F I R S T I N T E R S T A T E T O W E R , H U G H E S C E N T E R , L A S V E G A S . I, I 989 I I 1990 ;r 31, 1989 ?r 31, 1990 Mr e nded Decernb* 31, 1989 i **t snded DecemUr 3 !, 1 990 M T U T I O N I O E C L A H C D T o O W N E R S : ended DecemUr 31, 1989 'i.-d DecernW$1, HfcG > * K A M I T I A T D C C E M S E * 3 1 . 1990 N E W S ' E Q U I T Y A T D E C C M S C R 3 1 , 1 990 ? ? O S Q U A R E F O O T A G E A T D E C E M B E R 3 1 , 1 M O TM? HUSHCt C O R P O R A T I O N C O N S O L I D A T E S # 124,564 4 q( 0.4^ I <4.271 $ 9<>38c * 16.06; $ 17$ ,43* 4,39" P ? O H > ' I B S ( C O S T S A S I S ) O T M E H Mores O T H T R O W N E R S ' t o M M r r . t e r i N/A $ 17,060 $ 453.9f- 2 t . e \ 68.?% ? ?1% ? O M S I M K O T O T A L T H E H U G H E S C O R P O R A T I O N A N D S U B S I D I A R I E S F I N A N C I A L H I G H L I G H T S D E C E M B E R 3 1 , 1 9 9 0 ( I N T H O U S A N D S , E X C E P T E A R N I N G S P E R S H A R E ) T H E H U G H E S C O R P O R A T I O N C O N S O L I D A T E D M I N O R I T Y 1 N T E R E S T <?> C O M B I N E D T O T A L O P E R A T I N G R E V E N U E S : Year ended December 31, Year ended December 31, 1989 1990 $ 124,564 & 80,076 N/A N/A $ 124,564 $ 80,076 N E T I N C O M E : Year ended December 31, Year ended December 31, , 1989 , 1990 $ 34,894 $ 17,309 $ 30,172 $> 17,050 $ 65,066 $ 34,359 E A R N I N G S P E R S H A R E : Year ended December 31, Year ended December 31, , 1989 , 1990 $ 524.99 $ 260.42 $ 453.95 $ 256.52 $ 978.94 $ 516.94 C A P I T A L E X P E N D I T U R E S : Year ended December 31, Year ended December 31, 1989 1990 $ 74,278 $ 90,385 N/A N/A $ 74,278 $ 90,385 D I S T R I B U T I O N S D E C L A R E D T O O W N E R S : Year ended December 31, 1989 Year ended December 31, 1990 $ 1,745 $ 15,068 $ 3,587 $ 9,932 $ 5,332 $ 25,000 T O T A L A S S E T S A T D E C E M B E R 3 1 , 1 9 9 0 $ 526,693 N/A $ 526,693 O W N E R S ' E Q U I T Y A T D E C E M B E R 3 1 , 1 9 9 0 $ 175,438 $ 130,627 $ 306,065 L E A S E D S Q U A R E F O O T A G E AT D E C E M B E R 3 1 , 1 9 9 0 4,397 N/A 4,397 ? " M I N O R I T Y I N T E R E S T IS THE O W N E R S H I P IN H O W A R D H U G H E S P R O P E R T I E S , L I M I T E D P A R T N E R S H I P H E L D D I R E C T L Y BY THE B E N E F I C I A R I E S OF THE ESTATE OF H O W A R D R. H U G H E S , J R . TH E R E M A I N I N G O W N E R S H I P IN THE P A R T N E R S H I P IS H E L D BY THE B E N E F I C I A R I E S I N D I R E C T LY T H R O U G H THE H U G H E S CO R P O R A T I O N . C O M B I N E D B A L A N C E S H E E T D E C E M B E R 3 1 , 1 9 9 0 ( I N T H O U S A N D S ) 6 . 4 % T o O U R S H A R E H O L D E R S 1990 was another excellent year for the Company. While, as anticipa ted\ net income Ior the year en J eel December 31, 1990 was below last year, $17,309,000 compared with $34,894,000 (or 1989, the difference is directly attrib utable to the sales of investment properties in 1989 totaling $77,047,000 compared with only $12,786,000 in 1990. Revenues from income-producing properties in 1990 improved modestly over 1989 after talcing into accoun t the reduction in revenues attributable to 1989 dispositions, reflecting progress toward our objective to transform certain of our vacant land assets to income-producing properties. Annual income, however, is only one factor in measuring the performance of a real estate company with assets as diverse as ours. Long-term cash flow and value creation and enhancement are also important criteria, and our 1990 results reflect a solid performance in those areas as well. It should be no ted, h owever, that the measurement of value creation on a short-term basis, by its very nature, tends to be imprecise. Alth ough national real estate markets are generally depressed, the markets in which the Company operates, Neva da and Southern California, have ANNUAL I N C O M E , H O W E V E R , IS O N L Y thus far continued to outperform virtually all other markets in the nation. In spite of this, generally weaker economic conditions com-bined with more restrictive bank credit policies to adversely impact the normally robust Las Vegas market during the third and fourth O N E F A C T O R IN M E A S U R I N G T H E P E R F O R M A N C E OF A R E A L E S T A T E C O M P A N Y W I T H A S S E T S A S D I V E R S E A S O U R S . quarters of 1990. Increasing difficulties by our homebuilders in obtain-ing satisfactory financing hampered land sales and resulted in delays in sales of several parcels in the first two villages at Summerlin. Distributions declared to Shareholders from all sources totaled $99,454,000 during 1990. A significant portion of these distributions resulted from extraordinary, one-time transactions from the Estate or related Hughes entities which are not expected to be repeated. Although it is hoped that regularly targeted distributions will continue in 1991, the Company is now deriving its income essentially from its core businesses, making distributions of the magnitude experienced in 1989 and 1990 highly unlikely in the future. There were a number of significant accomplishments during 1990 deserving of special mention in the following paragraphs. The first parcel sales to homebuilders at Summerlin began during the second quarter and totaled $26,221,000 for the year. Other significant activity included the com-pletion and opening of the Summerlin Parkway, the commencement of construction on the PGA Tournament Players Club stadium golf course, the opening of The Hebrew Academy and the completion and opening of the Summerlin Information Center. Del Webb's Sun City at Summerlin continues to enjoy phenomenal success with the sale of approxima tely 1, 900 h omes since its February 1989 opening. One significant issue affecting Summerlin was partially resolved during 1990, but another, equally troubling deterrent to development was presen ted in early 1991. The Desert Tortoise issue was resolved on an interim basis by the issuance of a scien tific permit W E A K E R E C O N O M I C C O N D I T I O N S A N D M O R E R E S T R I C T I V E B A N K C R E D I T P O L I C I E S A D V E R S E L Y I M P A C T E D THE N O R M A L L Y R O B U S T L A S V E G A S M A R K E T I N L A T E 1 9 9 0 . as partial settlement of the lawsuit brought by a number of interested parties, including the Company. As a consequence, development commenced on some 3,300 acres of Summerlin property which had previously been restricted. The release of restrictions on the balance of Summerlin, however, is still dependent on the creation of a permanent conservation plan and approvals of several government agencies. The Company, in cooperation with other interested parties, continues to pursue a long-term solution to this problem. A February 1991 decision by the Las Vegas Valley Water District has raised con-cerns about the availability of water for development in the valley. The Water District, which supplies water to Summerlin and most of the Company's Las Vegas properties, announced the temporary suspension of water commitments to open new land for develop-ment. The full meaning of this action is not yet clear. The Company believes it has binding commitments for water service for the continued development of Hughes Center, Hughes Airport Center and the initial 4,900 acres of Summerlin, including all of the Del Webb property. However, water service to the balance of the Summerlin property will depend on policies to be established by the Water District in coming months. Hughes Airport Center continues to be the leader in industrial development in the Las Vegas area and had a very strong 1990. Approximately 584,000 square feet of buildings were added in 1990, which represents a remarka ble 80% increase in HUGHES A I R P O R T C E N T E R C O N T I N U E S the square footage in the Center. The square footage amounts rep- TO BE T H E L E A D E R I N I N D U S T R I A L resent a combination of buildings built by the Company for investment, DEVELOPMENT IN T H E L A S acquisition of existing buildings and parcel sales to users who built their VEGAS A R E A . C O N S T R U C T I O N Own facilities. Total square feet of buildings existing or substantially I S U N D E R W A Y ON T H E N O R T H P O I N T completed in the Center at year end was 1,314,000. The Center is poised B U I L D I N G AT H O W A R D H U G H E S to tahe advantage of fu ture opportunities as infrastructure is in place C E N T E R , L O S A N G E L E S . to accommodate significant additional development. Construction commenced on a fourth office building in Hughes Center, Las Vegas during the third quarter. Completion o f this new structure in the Summer of 1991 will increase the total square footage of buildings in Hughes Center to 492,000 square feet. The third office building in the Center was completed during 1990 and is now substantially leased. Construction on the 100,000 square foot Northpoint Building at Howard Hughes Center, Los Angeles was started in August and is expected to be completed in the Fall of 1991- Approximately two-thir ds of the building has been pre-leased to INTERACTIVE Systems, a subsidiary of Eastman Kodak. In addition, planning continues on two additional office buildings in response to major tenant interest. Space vacated at mid-year by Wang Laboratories in the 313,000 square foot Wang To wer was again fully leased by year end. Additional infrastructure for future development phases in Ho wa rd Hugh es Center was also completed in 1990. While Mag uire Th omas Partners - Playa Vista continues to make excellent progress on planning and entitlements processing, it is our belief that the process will tahe significantly longer than originally projected by Maguire Th omas Partners. We remain confident about the long-range viability of this property, however, and have been pleased with the performance thus far f Magu ire Thomas Partners as managing partner. In September, another partnership wi th Mag uire Th omas Partners and JMB Realty was formed to purchase a 69-acre parcel known as Area C of Playa Vista, a part ofth e original Playa Vista property. Th e new partnership has negotiated an option to purchase the parcel from the State of California at a variable price dependent upon the da te of exercise. If the acquisition of that parcel is completed, it will be integrated into the overall Playa Vista development. Several hey management changes tooh place in 1990, the most significant of which was William R. Lummis' retirement as Chief Executive Officer and the assumption oftha t post by the Company's President, John L. Goolsby. Mr. Lummis continues to serve as Chairman of the Board of both the Company and Summa Corporation. In another significant move, Mark L. Fine, previously President of American Nevada Corporation, was named President of the Summerlin Division and Senior Vice President of Summa Corporation. Stephen I. Reinstein joined the Company as Senior Vice President with responsibility for Howard Hughes Center, effectively transforming the Center into a full development organization. Robert E. Morrison, Senior Vice President, assumed additional responsibi lity for the development of Hughes Center in Las Vegas. Previously Mr. Morrison handled only industrial development. These management changes and additions ha ve strengthened our already capable management team and placed us in a better position to meet the KEY M A N A G E M E N T C H A N G E S A N D challenges of our competitive environment. ADDITIONS IN 1 9 9 0 H A V E P O S I T I O N E D It is felt that the Company is well positioned to weather the THE C O M P A N Y T O M E E T T H E slowdo wn in activity anticipated as a result of worsening national CHALLENGES OF O U R C O M P E T I T I V E and regional economic conditions and bank liquidity problems. Indeed, ENVIRONMENT. I N S U M M A R Y , I 9 9 0 we are in the enviable position of having a strong balance sheet with W A S A N O T H E R H I G H L Y S U C C E S S F U L good liquidity and an excellent portfolio of well-leased properties. Y E A R F O R T H E C O M P A N Y . Because the nature of our properties requires long-term commitment, an orderly approach to development, significant up-front capi tal investment and, most importantly, patience, the Company will continue to respond appropriately and decisively to economic cycles, while attempting to avoid disruptive overreaction. In summary, 1990 was another highly successful year for the Company. Earnings remained strong and considerable progress was made in all areas of operation. The earnings outlook for 1991 promises to be good, although somewhat below 1990. And while cash flow from extraordinary one-time transactions and investment land sales is expected again to be do wn, the overall outlook for the Company continues to he good. W I L L I A M R. L U M M I S A N D J O H N L. G O O L S B Y F U L F I L L I N G T H E P R O M I S E T H E P R O M I S E The Company conducts its business in the interests of building shareholder wealth and liquidity. For the bene fit of our shareholders and the growing communities we serve, we develop land and commercial properties in response to market opportuni-ties. Our objective is to maintain a dominant position in selected markets through long-term, high-quality, prof-itable real estate investment and development. Our management style is fiscally conservative but opportunistic. We are commit-ted to excellence and we demand the highest ethical standards of ourselves as well as those with whom we do business. S U M M E R L I N . OF ALL THE C O M P A N Y ' S P R O P E R T I E S , IT P E R H A P S H O L D S THE MOST P R O M I S E for the creation of value and the generation of long-term, reliable sources of cash flow. It is our largest single property and the one offering the greatest opportunity. U ^ ? H JG&GL . <0*1 ! t ? g p i XBHHI 3 3 I I N T E R C H A N G E EASY ACCESS TO The communi- THE ty is as unusual SUMMERLIN and distinctive as its lyrical PROVIDES name, the origi-nal family name LAS V E G A S . of H oward Hughes' grand-mother. Acquired hy Ilughes in the early 1950s, the land lay undeveloped and virtually unnoticed for decades. Now, in the 1990s, it is gain-ing the attention it deserves. In an orderly and thoughtful manner, it is rapidly evolving into what some industry experts helieve will he one of the finest master-planned, mixed-use communities in North America. Summerlin contains approximately 22,500 acres. Its sheer size overwhelms. But even more impressive is the strategic value of its location?adjacent to Las Vegas, Nevada, the fastest growing urhan area in the United States. A city said hy Inc. Magazine to have the hest business cli-mate in the nation. A dynamic, exciting, vihrant city with a repu-tation for glitz?and a desire to he-come a closer community of neighborhoods and families. The timing for Summerlin's coming of age could not he better. P L A N N I N G , T H E K E Y I N G R E D I E N T F R O M THE B E G I N - N I N G , M E T I C U L O U S P L A N N I N G G U I D E D E V E R Y STEP OF THE D E V E L O P M E N T process. Summerlin would not be one of those typical, nar-rowly conceived projects that never fulfills its promise. The Company had both the deter-mination and the resources to devote to the development of a comprehensive master plan, one that was several years in the making?and proved well worth the wait. Many of the nation's leading designers, engineers, environmental experts and urban planners were assembled with the task of creating the blueprint for this truly remark-able community. Long before ground was ever broken, they BORHOOD TYPI-FIES HOW THE " V I L L A G E " CON-labored on a mas- THE HILLS NEIGH-ter plan that had to be flexible enough to adjust to changes in CEPT WORKS AT the marketplace SUMMERLIN. while still structured enough to guide virtually every aspect of the community s development. Because Summerlin was to be a community of many uses, it demanded a compre-hensive, thoughtful plan that integrated all elements of a total community. It was, from the beginning, designed to have the broadest possible appeal. After all, it was to become home for people of quite diverse incomes and T H E S O U T H R O U N D A B O U T N E A R T H E I N F O R M A T I O N C E N T E R E X E M P L I F I E S S U M M E R L I N ' S D R A M A T I C S C A L E A N D A R C H I T E C T U R E . interests. It was to have business paries and schools and cultural centers and, most importantly, neighbor-hoods. The scope of the land itself required the planners to think in broader terms than those to which they were accustomed. They found it was no small task to create a plan worthy of the land. But they succeeded in doing just that. T H E D E V E L O P M E N T S T R A T E G Y OUR STRATEGY FOR THE D E V E L O P M E N T OF S U M M E R L I N WAS D E C E P T I V E L Y SIM-P L E . THE COMPANY would fund initial develop-ment costs using cash flow generated by the bulk sale of three major properties?prop-erties that were to become The Lakes, Desert Shores and Sun City?all of which are highly successful com-munities. This approach proved very successful as the Company was able to pro-ceed with development plans while incurring little or no debt. Still another bene-fit of the b ulk sale strategy was the considerable impetus provided by having three successful and popular planned communities within or directly adjacent to Summerlin. The property no longer seemed remote. Now we have moved into the next stage of Summerlin's development?away from bulk land sales to other devel-opers and into the position of master developer. In this capacity, the Company will be in a better position to opti-mize profitability with relatively modest additional capital risk. We will, of course, continue to be opportunistic throughout the development of Summerlin. There will, in all likelihood, be some additional bulk land sales in response to specific market conditions. And, of course, the Company will take full advantage of favorable invest-ment opportunities as they occur during Summerlin's development. Office build-ings, business parks, medical S U M M E R L I N ' S F I R S T PRIVATE buildings and THE MEA shopping cen- SCHOOL ters are but a few of the many such potential SCHOOL. investment opportunities. The Company will continue to be a multi-dimensional developer, involved in some way with all aspects of the community. S U M M E R L I N ' S V I L L A G E S THE V I L L A G E C O N C E P T I S N 'T NEW. OTHER D E V E L O P E R S OF M A S T E R - P L A N N E D communities have created urban villages before, some with considerable success. The village concept lends itself to the creation of old-fash ioned neighborhoods with all components in har-mony. Villages allow for a "people" scale. They provide a place for people to live and raise their families. To many, villages provide the heart of the community that cannot be captured on the drafts-man's blueprint. Summerlin is to be a community of 25 to 30 indi-vidual villages, each with its own distinctive flair and per-sonality, grouped around a major business core, the 1 own Center. Each village x I -f,mI will differ in character and design. Some will be purely residential while others will be commercial. Still others will be mixed-use. But common to all wi 11 be the sense of neighborhood that is the mark of a real community. Because of its immense size, Summerlin enjoys a luxury afforded to few of its com-petitors. A large percentage of land can be specifically set aside for open space and recreation. The master plan provides abundant acreage for recre-ation centers, libraries, churches and synagogues, health centers, fire stations, police stations and arts C O N S T R U C T I O N I S U N D E R W A Y ON THE P G A - T P C S T A D I UM G O L F C O U R S E . and cultural facilities. And since education is the true fab-ric by which a community can be mea-sured, emphasis will be placed on providing a diversity of educational opportunities, ranging from traditional neighborhood public schools all the way to highly selective private schools. A golfer's delight, Summerlin also will be home to the only PGA Tournament Players Club stadium golf course in the region. All in all, Summerlin and its villages will provide new meaning to the overused words, "quality of life." - V T H E S U M M E R L I N P A R K W A Y NOW A C C O M M O D A T E S T R A F F I C B E T W E E N L A S V E G A S A N D T H E 2 2 . S O O - A C R E C O M M U N I T Y . T H E F I R S T P H A S E S O F T H E C O M M U N I T Y S U M M E R L I N WILL ULTIMATELY BE A C O M M U N I T Y OF SOME 6 0 , 0 0 0 HOMES AND 2 0 0 , 0 0 0 R E S I D E N T S . Phase One includes 5,600 acres which have heen an-nexed into the City of Las Vegas. Within Phase One, Del Webh's S un City, the 1,050 -acre community for active adults, is achieving dramatic success. The popu-larity of Sun City and that of the Desert Shores well for the initial villages heing developed hy the Company in Summerlin. The first village to he developed hy the Company, S A L E S HAVE P A N O R A M A IN T H E H I L L S AT S U M M E R L I N . The H i l l s at Summerlin, is BEGUN AT a 1,092-acre village wi th the PGA Tourna-men t Pi ayers Cluh as its focal point. The 2,500 h omes planned for The Hills will include 300 acres of golf course housing and another 340 acres of moderate priced housing close hy. As in all Summerlin villages, The Hills will have a true neighborhood focus wi t h two public schools, worship sites, a park, a private school and convenient retail stores. Some of the finest home-builders in the region have committed to building 11 neighborhoods at The Hills. Additionally, the village will have two exclusive custom home neighborhoods, one of which will be located on the golf course. The Pueblo at Summerlin, the Company's second village, will be 570 acres and will provide an especially well-designed balance of homes for all levels of home-buyer. The focus of The Pueblo will be a 70 -acre lin-ear park which will extend the len gth of the vi llage. B uilders for the 2,500 homes to be included in the community will be selected in 1991 when development is expected to commence. T H E O N G O I N G P R O M I S E W H E N THE O W N E R S OF THE D E S E R T I N N IN LAS V E G A S S O U G H T TO E V I C T H O W A R D H U G H E S from his top floor offices in 1967, he bought the hotel. When it became obvious that the Summerlin property was perceived by many to be too remote, the Company con-structed a new highway inter-change and Summerlin Parkway, a limited access highway leading directly to the community. This was a thoughtful rather than a flam-boyant move. And certainly building the interchange and parkway did much more than just improve access to Summerlin. It also served notice of our commitment to Summerlin's development. As mentioned previously, the Company does not believe the maximum value of the property can be realized if it is treated as a short-term, quick turnaround project. Indeed, such an approach is not considered feasible. Buildout may take from 20 to 30 years. During that buildout, the Company will continue to look at each village as an individual profit center with expenditures linked directly to market con-ditions and consistent with the master plan. Market research will be employed in the primary home market to identify each market segment and the potential absorption of each segment, if there are opportunities to accelerate absorption, they will, of course, be fully exploit-ed as they occur. S U N CITY, A COMMUNITY FOR ACTIVE ADULTS. CONTIN-UES ITS STRONG SUCCESS. The goal is to develop a HOLDS ITS POSI-community that TION AS THE meets the most FASTEST GROW-exacting stan- ING CITY IN THE dards for plan- COUNTRY. ning excellence. At the same time, however, it must meet our own even more stringent standards for an economically feasible development which maximizes the property's ultimate value and produces dependable cash flow. Our efficient, results-oriented development team intends to transform the promise represented by Summerlin today into the rea lity of Summerlin tomorrow. Del Webb's Sun City Summerlin T H E N O R T H P O I N T B U I L D I N G H U G H E S A I R P O R T C E N T E R IS C O N S T R U C T I O N IS E X P E C T E D TO BE P O S I T I O N E D TO T A K E A D V A N T A G E C O M P L E T E D IN F A L L , 1 9 9 1 . O F F U T U R E O P P O R T U N I T I E S . C O N S T R U C T I O N W A S C O M P L E T E D O N A T H I R D O F F I C E B U I L D I N G AT H U G H E S C E N T E R IN 1 9 9 0 . C O N S T R U C T I O N W A S C O M P L E T E D O N T H E L O C K H E E D B U I L D I N G AT H U G H E S A I R P O R T C E N T E R . P L A Y A V I S T A IS A D J A C E N T TO M A R I N A D E L R E V ( A B O V E ) , THE L A R G E S T U . S . B O A T H A R B O R . T H E P R I M A R Y E N T R Y TO P A R K 2 0 0 0 , A 1 2 0 - A C R E , M I X E D - U S E C E N T E R IN L A S V E G A S . C O M P L E T I O N OF A F O U R T H O F F I C E B U I L D I N G AT H U G H E S C E N T E R I S P L A N N E D FOR S U M M E R , 1 9 9 1 . T H E H U G H E S C O R P O R A T I O N A N D S U B S I D I A R I E S M A N A G E M E N T ' S D I S C U S S I O N O F F I N A N C I A L , C O N D I T I O N A N D R E S U L T S O F O P E R A T I O N S A N D A N A L Y S I S C L A S S I F I C A T I O N O F P R O P E R T I E S The consolidated financial statements of The Hugh es Corporation and Subsidiaries (the "Company") include all entities in which it has a majority ownership interest or management control. The Company classifies its properties for reporting' purposes as either income-producing, development or investment. Income-producing properties are improved properties which are held for the production of rent or other income. Development properties are properties which are under development or which management has made plans to develop in the reasonably foreseeable future. Investment properties are all other properties, including properties having an undetermined future usage and surplus properties which are planned for disposition as market conditions permit. D E S C R I P T I O N O F M A J O R H O L D I N G S The Company's major holdings as of December 31, 1990 are as follows (owned 100% unless otherwise indicated): ? F A S H I O N S H O W M A L L ? A regional shopping center located on the Strip in Las Vegas, Nevada. The mall, including its five major tenants, contains 821,000 rentable square feet on 35 acres of land owned by the Company. I he five major tenants own their buildings (532,000 square feet) and lease the underlying land from the Company. An unaffiliated company owns a 2 5% minority interest in and manages the con-solidated partnership that owns the mall building and improve-ments. The partnership entity leases from the Company the land on which the mall building and improvements are located and leases the mall store spaces to retail tenants. two miles north of the Los Angele? International Airport. The Company owns all of the developable acres in the Center, including a completed 16-story office building containing 313,000 rentable square feet. A second office building con-taining 100,000- rentable square feet is under construction. ? H U C. II E S A I R P O RT C E X T E R ? A 380-acre master-planned business and industrial park located immediately south of McC a r ran International Airport in Las Vegas, Nevada. The Company owns all of the developable acres in the Center, except 65 acres sold to third parties.' The Company owns 14 b uildings containing 701,000 rentable square feet. Two additional . buildings are under construction which will contain 141,000 rentable square feet. ? H O W A R D H U G H E S C E X T E R ? A 70-acre project located on the San Diego Freeway I B h u g h e s c e n t e . R ? A 100-acre mixed-use, master-planned business center in Las Ve^as, Nevada. The Company owns all of the developable acres in the Center, except If) acres sold to a third partyv The Company owns three completed office buildings and a restaurant building, with a fourth office building under construction. With completion of the building under construction, which will contain 121,000 rentable square feet, the Company will own 492,000 rentable square feet of commercial space. o ne o f the completed office buildings is the First Interstate lower, a 17-story building containing 259,000 rentable square feet which houses ? the Company's executive offices and is owned by a consolidated partnership which is owned 50% by First Interstate Bank of Nevada. Another of the completed office buildings, which contains 64,000 rentable square feet, is owned by a consolidated partnership which is owned 33% by an unaffiliated company. ? PARK 2 0 0 0 ? - ' A 120-acre mixed-use center in Las Vegas, Nevada in which a consolidated partnership owns 98 acres containing 478,000 rentable square feet. An unaffili-ated individual owns a 40% minority interest in and manages the partnership which owns this property. ? P'LAYA V I S T A ? A 960 -acre mixed-use community in Los Angeles, California which extends generally from the Pacific Ocean to the San Diego Freeway and lies between Marina del Rey and the Los Angeles International Airport. The Company owns a 40% limited partnership interest in Maguire Thomas Partners-Playa Vista ("MT-PV"), an entity that owns 891 acres of this project. Included on the site is a manufac-turing facility containing 1,466,000 rentable square feet leased" to McDonnell Douglas Helicopters and Hughes Aircraft Company. The land and manu-facturing faci lity were contributed to MT-PV by the Company in February 1989- The Company also owns a 40% limited partnership interest in Maguire Thomas Partners-Playa Vista Area C ("MT-AC"), an entity that was formed to purchase the remaining 69 acres ("Area C ") of the project that is not owned bv MT-PV and certain additional land located in the vicinity of Area C. MT-AC has negotiated an option to purchase Area C from the owner, the State of California, at a variable price dependent upon the date of exercise. Unaffiliated companies own the general and remaining limited partnership interests in MT-PV ana MT-AC and also manage fhe partnerships. ? S U M M E R L I N ? * A 22,500-acre mixed-use community in the western portion of Las Vegas, Nevada. The Company owns 20,555 acres in this project. Twenty-eight percent of this acreage is classified as development property, with the remainder being considered investment property. The Company's role in Summerlin is that of master developer, developing parcels and projects to the degree necessary to create and respond to market oppor