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¨

No fee required.

¨

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

¨

Fee paid previously with preliminary materials.

x

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

(1)

Amount Previously Paid:    $21,171

(2)

Form, Schedule or Registration Statement no.:    333-101376

(3)

Filing Party:    Pan Pacific Retail Properties, Inc.

(4)

Date Filed:    November 21, 2002

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Q:

Why am I receiving these materials?

A:

Pan Pacific and Center Trust have agreed to the acquisition of Center Trust by Pan Pacific under the terms of a merger agreement that is described in this proxy statement/prospectus. For the merger to occur, the stockholders of Center Trust must approve the merger. Center Trust will hold a special meeting of its stockholders to obtain the necessary stockholder approval. This proxy statement/prospectus contains important information about the merger and the meeting of the stockholders of Center Trust. We are sending you these materials to help you decide whether to approve the merger.

Q:

Why are Pan Pacific and Center Trust proposing to enter into the merger?

A:

The companies believe that the combined company, compared to each company standing alone:

•

will have greater geographic balance and increased tenant diversification;

•

will have greater presence in key geographic markets such as the greater Los Angeles and San Diego metropolitan regions;

•

will realize economies of scale and greater operating and tenant synergies; and

•

will have enhanced financial flexibility.

•

increase funds from operations per share and enhance stockholder value;

•

be able to compete more effectively for shopping center property investments;

•

have greater visibility in the capital markets and greater liquidity in the trading of its public stock; and

•

have greater access to capital in the equity and debt markets.

Q:

What will happen to Center Trust as a result of the merger?

A:

A wholly-owned subsidiary of Pan Pacific will merge with and into Center Trust. As a result of the merger, Center Trust will become a wholly-owned subsidiary of Pan Pacific.

Q:

What will I receive in the merger?

A:

Each Center Trust stockholder will receive 0.218 shares of newly issued Pan Pacific common stock for each share of Center Trust common stock that he or she owns. Pan Pacific common stock is publicly traded on the New York Stock Exchange under the symbol “PNP.”

Q:

What will be the effect on my cash dividend?

A:

Pan Pacific currently plans to continue paying quarterly cash dividends after completion of the merger. Pan Pacific has increased its quarterly dividend each year since its initial public offering in August 1997, from $0.3625 per diluted share for the quarter ended September 30, 1997 to $0.475 per diluted share for the quarter ended September 30, 2002. Taking into account the 0.218 exchange ratio that will be used in the merger, Pan Pacific’s most recently paid dividend represents a 72.6% increase over the $0.06 dividend most recently paid per share of Center Trust common stock (for the quarter ended September 30, 2002). The Pan Pacific board may adjust its per share cash dividend at its discretion.

Q:

Where and when is the special meeting?

A:

The special meeting will take place at the Manhattan Beach Marriott Hotel, located at 1400 Parkview Avenue, Manhattan Beach, California 90266, on January 15, 2003, at 2:00 p.m., Pacific Time.

Q:

What vote is required to approve the merger?

A:

In order to complete the merger, holders of two-thirds of the outstanding shares of Center Trust common stock must affirmatively vote to approve the merger. Prometheus Western Retail, LLC and certain of its affiliates, which collectively owned approximately 56.2% of the shares of Center Trust common stock as of the

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record date, have agreed to vote certain of these shares (which represent approximately 48.1% of the outstanding shares of Center Trust common stock as of the record date) in favor of the merger pursuant to a voting agreement with Pan Pacific. In addition, certain executive officers of Center Trust, who collectively owned approximately 3.9% of the shares of common stock of Center Trust as of the record date, have agreed to vote all of their shares in favor of the merger pursuant to a voting agreement with Pan Pacific. Together, the aggregate number of shares that, under the voting agreements, will be voted in favor of the merger represents approximately 52.0% of the outstanding shares of common stock of Center Trust as of the record date.

Q:

How does Center Trust’s board of directors recommend that I vote?

A:

Center Trust’s board unanimously recommends that Center Trust stockholders vote “FOR” the proposal to approve the merger. For a more complete description of the recommendation of Center Trust’s board, see page 40.

Q:

What do I need to do now?

A:

After you have read this document carefully, please indicate on the enclosed proxy card how you want to vote. Sign and mail the proxy card in the enclosed prepaid return envelope or use the telephone number shown on your proxy card (toll-free in the United States and Canada) as soon as possible. You should indicate your vote now, even if you expect to attend the special meeting and vote in person. Indicating your vote now will not prevent you from later canceling or revoking your proxy and changing your vote at any time before the vote at the special meeting and will ensure that your shares are voted if you later find you cannot attend the special meeting.

Q:

What should I do if my broker holds my shares in “street name”?

A:

Please contact your broker to obtain instructions on how to vote your shares.

Q:

Can my broker vote my shares which are held in “street name”?

A:

Your broker is not able to vote your shares that are held in “street name” for you without your instructions. If you do not provide your broker with instructions on how to vote your shares held in “street name,” your broker will not be permitted to vote your shares on the proposals being presented at the special meeting. Because the merger requires the affirmative vote of the holders of two-thirds of Center Trust’s outstanding shares of common stock, a failure to provide your broker instructions will have the same effect as a vote against the merger. You should therefore be sure to provide your broker with instructions on how to vote your shares.

Q:

What do I do if I want to change my vote?

A.

You may change your vote in four ways:

•

by delivering a written notice to the corporate secretary of Center Trust prior to the special meeting stating that you would like to revoke your proxy;

•

by signing a later-dated proxy card and delivering it to the corporate secretary of Center Trust prior to the special meeting; or

•

giving new proxy instructions by telephone; or

•

by attending the special meeting and voting in person; however, your attendance alone will not revoke your proxy or change your vote.

Q:

Should I send my certificates representing my Center Trust common stock?

A:

No. After we complete the merger, Pan Pacific will send former holders of Center Trust common stock written instructions for exchanging their share certificates.

Q:

When do you expect to complete the merger?

A:

We are working toward completing the merger as quickly as possible. We must first obtain the approval of Center Trust stockholders at the special meeting. We hope to complete the merger in the first quarter of 2003; however, we cannot assure you as to when, or if, the merger will occur.

Q:

Where can I find more information about the companies?

A:

Pan Pacific and Center Trust file reports and other information with the Securities Exchange

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Commission, or SEC. You may read and copy this information at the SEC’s public reference facilities. Please call the SEC at 1-800-732-0330 for information about these facilities. This information is also available at the offices of the New York Stock Exchange, at the Internet site the SEC maintains at www.sec.gov, the Internet site Pan Pacific maintains at www.pprp.com or the Internet site Center Trust maintains at www.centertrust.com. You can also request copies of these documents from us. See “Where You Can Find More Information” on page 106.

Q:

Who can help answer my questions?

A:

If you have more questions about the merger, you can contact:

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•

the proposal to approve the merger; and

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any other matters that are properly brought before the special meeting or any adjournment or postponement of the meeting.

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•

the approval of the merger by the holders of at least two-thirds of the outstanding shares of Center Trust common stock;

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the absence of any law or any injunction that effectively prohibits or restrains the merger;

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the receipt of all material approvals and consents from third parties;

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the receipt of satisfactory legal opinions regarding Pan Pacific’s and Center Trust’s real estate investment trust status for federal income tax purposes and the treatment of the merger as a reorganization for federal income tax purposes; and

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that the average closing price of Pan Pacific common stock on the New York Stock Exchange for the ten trading days prior to closing is not less than $25.00 per share.

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by mutual written consent;

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if the merger has not been completed by April 30, 2003;

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if an order, decree or injunction makes the merger illegal or prohibits the merger; or

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if Center Trust has not received the requisite stockholder approval.

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•

upon a material breach by Center Trust of any covenant or agreement contained in the merger agreement or if any representation or warranty of Center Trust becomes untrue in any material respect (except if such breach is capable of being cured by Center Trust prior to April 30, 2003, and Center Trust is attempting in good faith to cure the breach); or

•

upon the occurrence of any of the following (each of which will obligate Center Trust to pay a $7.5 million break-up fee to Pan Pacific):

(a)

Center Trust receives an acquisition proposal from a third party and, thereafter, Center Trust’s board withdraws or modifies its recommendation of the merger proposal;

(b)

Center Trust receives a public acquisition proposal from a third party and, thereafter, Pan Pacific requests that Center Trust’s board publicly reconfirm its recommendation of the merger proposal to Center Trust stockholders and Center Trust’s board fails to do so within ten business days after receipt of Pan Pacific’s request;

(c)

Center Trust’s board recommends to Center Trust stockholders an alternative acquisition, merger or similar transaction;

(d)

a tender offer or exchange offer for 19.9% or more of the outstanding shares of Center Trust common stock (other than by Center Trust or an affiliate of Center Trust) is commenced, and Center Trust’s board recommends that Center Trust stockholders tender their shares in such tender or exchange offer; or

(e)

Center Trust receives an acquisition proposal from a third party and, thereafter, Center Trust fails to call and hold the special meeting by April 30, 2003.

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(1)

The White Paper on Funds from Operations approved by the Board of Governors of the National Association of Real Estate Investment Trusts in April 2002 (the “White Paper”) defines “Funds from Operations” as net income (loss) (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property, plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Management considers Funds from Operations an appropriate measure of performance of an equity real estate investment trust because it is predicated on cash flow analyses. Pan Pacific computes Funds from Operations in accordance with standards established by the White Paper. Pan Pacific’s computation of Funds from Operations may, however, differ from the methodology for calculating Funds from Operations used by other equity real estate investment trusts and, therefore, may not be comparable to those other real estate investment trusts. Funds from Operations should not be considered as an alternative to net income (determined in accordance with generally accepted accounting principles), as a measure of Pan Pacific’s liquidity, nor is it indicative of funds available to fund Pan Pacific’s cash needs, including its ability to make distributions.

(2)

Ratio of earnings to fixed charges is calculated by dividing earnings by fixed charges. For this purpose, earnings consist of income (loss) before extraordinary items plus fixed charges (including interest costs capitalized). Fixed charges consist of interest expense (including the amortization of deferred financing fees.)

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(1)

Center Trust considers Funds From Operations, or FFO, to be an alternative measure of the performance of an equity REIT since such measure does not recognize depreciation and amortization expenses as operating expenses. FFO is defined, as outlined in the April 2002 White Paper by the National Association of Real Estate Investment Trusts (“NAREIT”), as net income plus depreciation and amortization of real estate, less gains or losses on sales of properties. Additionally, the definition also permits FFO to be adjusted for significant non-recurring items. Funds from operations do not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income or cash flows from operations and should not be considered as an alternative to those indicators in evaluating Center Trust’s operating performance or liquidity. Further, the methodology for computing FFO utilized by Center Trust may differ from that utilized by other equity REITs and, accordingly may not be comparable to such other REITs.

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•

following the merger, the combined company may not achieve expected cost savings and operating efficiencies, such as the elimination of redundant administrative costs and property management costs;

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the diversion of management attention to the integration of the operations of Center Trust could have an adverse effect on the revenues, expenses and operating results of Pan Pacific;

•

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

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Pan Pacific may not effectively integrate Center Trust’s operations.

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market perception of the synergies to be achieved by the merger;

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changes in the business, operations or prospects of Pan Pacific or Center Trust;

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market assessments of the likelihood that the merger will be completed and the timing of the merger; and

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general market and economic conditions.

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•

Pan Pacific will provide exculpation and indemnification for directors and officers of Center Trust, including for actions taken in connection with the merger, which is the same as the exculpation and indemnification provided by Center Trust as of the date of the merger agreement.

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Pan Pacific will indemnify and hold harmless former directors and officers of Center Trust after the merger to the fullest extent permitted by law.

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Pan Pacific has agreed to provide directors’ and officers’ liability insurance for the benefit of those individuals currently covered by Center Trust’s insurance for a period of six years after the merger.

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In connection with the merger, options to purchase an aggregate of 685,625 shares of Center Trust common stock at an average exercise price of $5.51 per share previously awarded to five Center Trust directors and executive officers will vest pursuant to the plans under which they were issued. These five Center Trust directors and executive officers also currently hold vested options to purchase an aggregate of an additional 346,775 shares of Center Trust common stock at an average exercise price of $13.58. These five Center Trust directors and executive officers will receive cash payments in consideration for the cancellation of their options in accordance with a formula that is based on the average closing price of Pan Pacific common stock for the ten days immediately preceding the closing of the merger. Assuming that the average closing price per share of Pan Pacific common stock for the ten trading days immediately preceding the closing of the merger was $35.50 (the closing price of Pan Pacific common stock on December 6, 2002), the aggregate cash payments received by these executive officers from the cancellation of options would be approximately $1.5 million. These executive officers may receive shares of Pan Pacific common stock in lieu of such aggregate cash payments, if necessary to preserve the tax-free status of the merger.

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•

204,192 unvested shares of Center Trust restricted stock previously awarded to Center Trust directors and executive officers will vest immediately prior to the effective time of the merger and will be converted into Pan Pacific common stock in the merger. Of these shares of Center Trust restricted common stock, 54,442 were issued to three independent directors as compensation in lieu of cash in 1999, 2000 and 2001. Using a $7.74 pro forma equivalent value (based upon the closing price of Pan Pacific common stock on December 6, 2002 and the 0.218 exchange ratio), the aggregate value of the unvested Center Trust restricted stock previously awarded to Center Trust directors and executive officers is approximately $1.6 million.

•

Under their respective employment agreements, four executive officers of Center Trust will be entitled to receive estimated cash payments of approximately $2.1 million in the aggregate. These executive officers may receive shares of Pan Pacific common stock in lieu of such aggregate cash payments if necessary to preserve the tax-free status of the merger.

•

Two executive officers have agreed to enter into consulting agreements with Pan Pacific immediately prior to the closing date of the merger to assist Pan Pacific with transition issues following the merger, pursuant to which agreements each of such executive officer will receive no more than $475,000.

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Under the terms of the merger agreement, Center Trust may pay success bonuses to Center Trust's executive officers of up to $1.3 million, in the aggregate. Whether and to what extent such bonuses will be paid will be determined by Center Trust's board, in its sole discretion, immediately prior to the effective time of the merger

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the national economic climate;

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the local economic climate;

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local real estate conditions;

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changes in retail expenditures by consumers;

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the perceptions of prospective tenants of the attractiveness of the properties;

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the combined company’s ability to manage and maintain its properties and secure adequate insurance; and

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

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•

it will not be allowed a deduction for distributions to stockholders in computing its taxable income;

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it will be subject to federal income tax, including any applicable alternative minimum tax, on its taxable income at regular corporate rates;

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it will be subject to increased state and local taxes;

•

it will be disqualified from treatment as a real estate investment trust for the four taxable years following the year during which it loses its qualification (unless entitled to relief under certain statutory provisions);

•

all distributions to stockholders would be subject to tax as ordinary income to the extent of its current and accumulated earnings and profits; and

•

it would not be required to make distributions to stockholders.

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synergies;

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efficiencies;

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potential cost savings;

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revenue enhancements;

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projected future earnings and funds from operations growth;

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successful integration of the businesses of Center Trust and Pan Pacific;

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asset portfolios; and

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the timetable for completion of the merger.

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“Questions and Answers About the Merger”;

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“Summary”;

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“Selected Summary Historical and Selected Unaudited Pro Forma Combined Financial Data”;

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“Risk Factors”;

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“The Companies”;

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“The Merger—Background of the Merger”;

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“The Merger—Pan Pacific’s Reasons for the Merger”;

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“The Merger—Center Trust’s Reasons for the Merger”;

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“Opinion of Financial Advisor to Center Trust”;

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“Material United States Federal Income Tax Considerations”; and

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“Unaudited Pro Forma Condensed Consolidated Financial Statements” attached hereto.

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legislative, regulatory, or other changes in the real estate industry which increase the costs of, or otherwise affect the operations of, Pan Pacific or Center Trust;

•

competition for tenants with respect to new leases and the renewal or rollover of existing leases;

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•

the ability of Pan Pacific’s or Center Trust’s tenants to operate their businesses in a manner sufficient to maintain or increase revenue and to generate sufficient income to make rent payments;

•

changes in national or regional economic conditions, including changes in interest rates and the availability and cost of capital to Pan Pacific or Center Trust;

•

the availability of financing for Pan Pacific’s future acquisitions or for Pan Pacific to refinance a portion of Center Trust’s existing debt;

•

risks associated with shopping centers, such as lower than expected occupancy levels, a downturn in market lease rates for retail shopping center space or higher than expected costs associated with the maintenance and operation of such facilities;

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the ability of Pan Pacific to dispose of non-core properties on favorable terms;

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failure to complete the merger; and

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potential liability under, and changes in, environmental, zoning, tax and other laws.

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

•

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

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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; and

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maintaining a conservative balance sheet and flexible capital structure in order to enhance its ability to access capital and consistently grow its business through all economic conditions.

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analyzing on an on-going basis regional and submarket demographic, economic and retailing trends;

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developing relationships with key industry participants such as retailers, real estate brokers and financial institutions;

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emphasizing tenant satisfaction and retention through its proactive communication with tenants, community-oriented marketing activities and comprehensive maintenance programs;

•

capitalizing on cost reduction and economy of scale opportunities arising from the size and proximity of its properties within each region; and

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maintaining an investment grade rating along with conservative financial ratios and staggered debt maturities.

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(1)

Retailers that own their building.

(2)

Center Trust property.

(3)

Center Trust property owned through a joint venture.

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the number of shares of Center Trust common stock issuable pursuant to the unexercised portion of such option, by

•

the amount, if any, by which

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the exercise price per share of Center Trust common stock subject to such option is exceeded by

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the number obtained by multiplying

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the average closing price per share of Pan Pacific common stock on the New York Stock Exchange for the period of ten trading days immediately preceding the effective time of the merger, by

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0.218.

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•

Opportunity to acquire in a single transaction a significant portfolio of complementary, high-quality shopping centers in Pan Pacific’s core markets.    The Pan Pacific board believes the properties owned by Center Trust provide an attractive strategic fit with Pan Pacific’s portfolio and complement its existing geographic diversification. In addition, Pan Pacific’s senior management believes that Center Trust’s portfolio likely could not be replicated through acquisition of individual assets.

•

Significantly enhances Pan Pacific’s market presence in key Southern California markets.    The acquisition of Center Trust’s portfolio of properties will enhance Pan Pacific’s presence in the greater Los Angeles and San Diego metropolitan regions.

•

Opportunity to generate operating efficiencies.    The Pan Pacific board believes that Pan Pacific will realize operating efficiencies and economies of scale resulting in savings in operating costs and general and administrative expenses aggregating approximately $1.5 million, on an annualized basis, based on the following:

(a)

Pan Pacific will continue to be managed by its current executive officers and senior management team, with no significant additional staffing at the senior corporate level;

(b)

Center Trust properties are predominantly located in Pan Pacific’s existing core markets, which should allow Pan Pacific to manage the Center Trust assets largely by using Pan Pacific’s existing regional offices and infrastructure;

(c)

both companies use similar property management, accounting and reporting procedures, methodologies and systems, which should facilitate an efficient integration of the Center Trust portfolio into Pan Pacific; and

(d)

increasing Pan Pacific’s portfolio size should enhance its ability to generate property operating cost savings and reduction in expenses by spreading costs over a larger number of properties, thereby improving Pan Pacific’s profit margin.

•

Opportunity to capitalize on tenant synergies.    The merger will increase Pan Pacific’s tenant base from approximately 2,500 tenants as of September 30, 2002, to approximately 3,500 tenants, on a pro forma basis. A significant number of the current Center Trust tenants are also existing tenants of Pan Pacific. The Pan Pacific board believes that this should provide opportunities for Pan Pacific to enhance

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certain key relationships. Additionally, these enhanced relationships, together with Pan Pacific’s more diversified geographic representation, should provide for greater multi-lease, multi-market opportunities as tenants seek to expand and relocate operations.

•

Opportunity to increase Pan Pacific’s funds from operations per share.    The Pan Pacific board believes that the merger should increase Pan Pacific’s funds from operations per share projected for the year ending December 31, 2003, as compared to Pan Pacific on a stand-alone basis.

•

Significantly increases Pan Pacific’s share base and market capitalization.    As a result of the merger, Pan Pacific’s outstanding common stock will increase by 17.0% from approximately 34.8 million shares outstanding as of September 30, 2002 to approximately 40.7 million shares, assuming the exchange of all outstanding exchangeable securities of Center Trust subsidiaries. The increase in shares will increase Pan Pacific’s equity market capitalization from approximately $1.2 billion to approximately $1.4 billion (based on a per share price of $34.48, the closing price of Pan Pacific common stock on September 30, 2002, the pro forma number of shares of Pan Pacific common stock outstanding on September 30, 2002, and pro forma indebtedness outstanding as of September 30, 2002). The Pan Pacific board believes the increase in the number of shares of common stock and market capitalization affords several benefits.

•

Extensive Due Diligence.    Pan Pacific’s management, legal counsel, financial advisor and due diligence consultants delivered reports and/or made presentations to Pan Pacific’s board concerning the results of their due diligence investigation of Center Trust. The investigations of management included tours of nearly all of Center Trust’s properties, reviews of Center Trust’s top 200 leases and rent paying tenants which, in the aggregate, account for the majority of Center Trust’s revenue from rent payments, reviews of Center Trust’s environmental studies on its properties and meetings with Center Trust’s management.

•

Terms of the Merger Agreement.    The Pan Pacific board reviewed the principal terms and conditions of the merger agreement, including the representations, warranties and covenants of each party and the conditions to each party’s obligation to complete the merger. The Pan Pacific board considered favorably that the terms of the merger agreement are reasonable and protective of Pan Pacific’s interests. In particular, the Pan Pacific board considered favorably that:

(a)

the conditions to each party’s obligation to complete the merger are typical or likely to be satisfied;

(b)

Center Trust’s ability to solicit, facilitate, discuss or enter into an alternative transaction is restricted in a customary manner; and

(c)

depending on the reasons for a termination of the merger agreement, Center Trust may be obligated to pay Pan Pacific $7.5 million as a break-up fee or $2.5 million as an expense reimbursement.

•

Fixed exchange ratio.    The exchange ratio is fixed and not subject to adjustment. Accordingly, an adverse change in the operations and prospects of Center Trust, general market and economic conditions or other factors which are beyond the control of Pan Pacific may alter the relative value of the companies in a manner adverse to Pan Pacific.

•

Potential failure to achieve benefits of the merger.    The Pan Pacific board considered the risk that the anticipated benefits of the merger to Pan Pacific and its stockholders might not be fully realized as a result of an inability to achieve the anticipated cost savings and reduction in expenses and other potential difficulties in integrating the two companies and their respective operations.

•

Limitations on Pan Pacific’s ability to sell Center Trust assets.    The Pan Pacific board considered the limitations on Pan Pacific’s ability to sell certain of the Center Trust properties resulting from the contractual tax protection rights held by certain limited partners of CT Operating Partnership, L.P.

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Substantial debt encumbering Center Trust assets.    The Pan Pacific board considered the substantial amount of debt encumbering Center Trust’s assets. As of September 30, 2002, Center Trust had an aggregate of $358.7 million in debt, encumbering assets with an aggregate historical book value of $640.2 million.

•

Risk that the merger will not be completed.    The Pan Pacific board considered the risk that the merger would not be completed. In evaluating this risk, the Pan Pacific board considered the particular circumstances under which Center Trust could terminate the merger agreement. The Pan Pacific board also considered the possible adverse effects on the market for Pan Pacific common stock and upon Pan Pacific’s ability to raise capital in both the public and private markets that might result if the merger were announced and not completed.

•

Potential disruption of operations.    The Pan Pacific board considered the risk that the announcement of the merger and the efforts necessary to complete the merger could result in a disruption in the operations of Pan Pacific by, among other things, diverting management and other resources of Pan Pacific from their day-to-day business.

•

Transaction costs.    The Pan Pacific board considered that Pan Pacific and Center Trust were likely to incur transaction costs of approximately $18.5 million in the aggregate, including debt assumption fees, financial advisors, legal, printing and accounting fees, and severance payments in connection with the merger.

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Litigation.    The Pan Pacific board considered the existing litigation Center Trust is a party to and the risk that adverse judgments could lead to meaningful damage awards.

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Geographic and tenant diversification.    Center Trust’s board considered the fact that Pan Pacific has greater geographic and tenant diversification than Center Trust, which could provide the combined company with greater cash flow stability.

•

Larger stockholder base.    Center Trust’s board considered the fact that a combined company would result in a larger, more diverse and more liquid stockholder base for the Center Trust stockholders, including any operating partnership unitholders who receive shares of Pan Pacific common stock in exchange for their units following the merger, and the likelihood that the larger, more diverse stockholder base of the combined company would result in a lower cost of capital for the combined company, enhance liquidity and increase financial flexibility.

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No significant stockholder.    Center Trust’s board considered the fact that the stockholders of Center Trust, a corporation with a stockholder that owns 56.2% of the outstanding shares of its common stock and controls the ability to sell such shares, will be exchanging their shares of Center Trust common stock for shares of common stock of Pan Pacific, a corporation with no significant stockholder, and Center Trust stockholders may have an opportunity to receive a premium for control of Pan Pacific in the future.

•

Historical dividend of Pan Pacific.    Center Trust’s board considered the fact that the holders of Center Trust common stock currently receive a dividend of $0.06 per share per quarter and, based on the exchange ratio in the merger, Pan Pacific’s most recently paid dividend of $0.475 per share represents a 73% increase over Center Trust’s most recently paid dividend.

•

Management.    Center Trust’s board considered the quality of Pan Pacific’s management team, which it viewed as comparable to that of Center Trust.

•

Investment grade rating.    Center Trust’s board considered the fact that Pan Pacific is investment-grade rated by Standard & Poor’s and Moody’s and that Pan Pacific has one of the lowest debt ratios among shopping center REITs.

•

Tax-free nature of transaction.    Center Trust’s board considered the fact that the exchange of shares of Center Trust common stock for shares of Pan Pacific common stock in the merger, will be tax-free to Center Trust stockholders, and that the payment of cash to Center Trust stockholders instead of fractional shares of Pan Pacific common stock will be a taxable transaction to these stockholders.

•

Favorable terms of merger agreement.    Center Trust’s board considered the terms of the merger agreement, including the exchange ratio, which, based on the closing price of Pan Pacific common stock on November 5, 2002, represents a premium of 31.2% over the closing price of Center Trust common stock as of that date.

•

Certainty of Merger Consideration.    Center Trust’s board considered the greater certainty associated with the merger consideration compared to the risks and uncertainties associated with executing Center Trust’s business plan.

•

Conditions to Center Trust’s obligations to complete the merger.    Center Trust’s board considered the fact that under the merger agreement, Center Trust’s obligation to complete the merger was subject to certain conditions, including that the average closing price of Pan Pacific’s common stock for the ten trading days preceding the closing date will not be less than $25.00 per share.

•

Financial performance and prospects.    Center Trust’s board considered the information relating to the financial performance, financial condition, business operations and prospects of Center Trust and Pan Pacific both before and after the merger.

•

Operating efficiencies.    The Center Trust board considered the potential for operating efficiencies, economies of scale and other synergies resulting in the combined company realizing savings in operating costs and general and administrative expenses.

•

Extensive due diligence.    Center Trust’s board considered the due diligence review of Pan Pacific and its assets conducted by Center Trust’s management and its advisors, including tours of significantly all of Pan Pacific’s properties, reviews of Pan Pacific’s property level information, reviews of its accounting practices and systems, and meetings with Pan Pacific’s management.

•

Opinion of financial advisor.    Center Trust’s board considered the opinion, analyses and presentation of Center Trust’s financial advisor, Merrill Lynch, described below under “Opinion of Financial Advisor to Center Trust,” including the oral opinion of Merrill Lynch as to the fairness of the exchange ratio to Center Trust stockholders from a financial point of view (a copy of the written opinion is attached as Annex E to this proxy statement/prospectus).

•

Likelihood of success.    Center Trust’s board considered the likelihood that the transactions contemplated by the merger agreement would be successfully completed.

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Fixed exchange ratio.    Center Trust’s board considered the fact that, because the exchange ratio is fixed, a decline in the trading price of Pan Pacific’s common stock before the merger will reduce the value of the per share and aggregate consideration to be received by Center Trust’s stockholders in the merger.

•

Possibility of slower revenue growth.    Center Trust’s board considered the possibility that, in the short term following the merger, Pan Pacific may experience slower revenue growth than Center Trust might be able to achieve on a stand-alone basis.

•

Uncertainty of anticipated benefits of merger.    Center Trust’s board considered the risk that the anticipated benefits of the merger to Center Trust’s stockholders discussed above may not be realized as a result of possible changes in real estate markets or as a result of potential difficulties in integrating the two companies and their respective operations.

•

Transaction costs.    Center Trust’s board considered the significant cost of completing the merger, including the substantial management time and effort involved and the related disruption to Center Trust’s operations.

•

Lack of flexibility in the event of an alternative proposal.    Center Trust’s board considered the fact that the merger agreement prohibits Center Trust from terminating the merger agreement prior to submitting the merger proposal to a stockholder vote, even upon the receipt by Center Trust of a bona fide unsolicited proposal which Center Trust’s board believes in good faith, following consultation with its financial advisor, to be more favorable to Center Trust’s stockholders, and that, pursuant to the voting agreement with the Prometheus parties and the voting agreement with certain executive officers of Center Trust, holders of 52.0% of the outstanding shares of Center Trust common stock have agreed to vote for the merger proposal with Pan Pacific, which proposal requires the affirmative vote by the holders of two-thirds of the outstanding shares of Center Trust common stock.

•

Break-up fee.    Center Trust’s board considered the fact that the merger agreement requires Center Trust to pay Pan Pacific a break-up fee of $7.5 million or an expense reimbursement of $2.5 million if the merger agreement is terminated under certain circumstances, which might discourage some proposals for the acquisition of Center Trust.

•

Restrictions on operations prior to completion of merger.    Center Trust’s board considered the restrictions the merger agreement places on Center Trust’s ability to operate its business before the merger in a manner that is inconsistent with past practice or outside of the ordinary course of business, including the restrictions on Center Trust’s ability to buy and sell properties and to borrow money.

•

Conditions of Pan Pacific’s obligation to complete the merger.    Center Trust’s board considered the various conditions to Pan Pacific’s obligations to complete the merger and the possibility that the merger would not be completed, including the particular circumstances under which Pan Pacific could terminate the merger agreement, the possible adverse effects on the market for shares of Center Trust common stock and upon Center Trust’s ability to raise capital if the merger were announced and not completed. See “The Merger Agreement — Conditions to Obligations to Complete the Merger.”

•

Potential to achieve a higher valuation over time.    Center Trust’s board considered the possibility of achieving a higher valuation over time through the execution of its business plan.

•

Interest of other parties in the merger.    Center Trust’s board considered the fact that certain members of Center Trust’s board and management may have interests in the merger that are different from, or in addition to, the interests of other Center Trust stockholders. See “Interests of Certain Directors and Executive Officers of Center Trust in the Merger.”

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an effective registration statement under the Securities Act of 1933 covering the resale of those shares;

•

an exemption under paragraph (d) of Rule 145 under the Securities Act of 1933; or

•

any other applicable exemption under the Securities Act of 1933.

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ordering the action to be maintained as a class action and certifying plaintiff as the class representative;

•

declaring that the defendants have breached their fiduciary duties to plaintiff and the class and that the defendants aided and abetted the breaches;

•

enjoining the completion of the merger;

•

rescinding and setting aside the merger in the event that it is consummated;

•

awarding plaintiff and the class compensatory and/or recissionary damages as allowed by law;

•

awarding plaintiff the costs of the action, including attorneys’ and experts’ fees; and

•

granting such other and further relief as the Court may deem just and proper.

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reviewed certain publicly available business and financial information relating to Center Trust and Pan Pacific that it deemed to be relevant;

•

reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of Center Trust and Pan Pacific, furnished to Merrill Lynch by Center Trust and Pan Pacific, respectively;

•

conducted discussions with members of senior management and representatives of Center Trust and of Pan Pacific concerning the matters described in the two clauses directly above, as well as their respective businesses and prospects before and after giving effect to the merger;

•

reviewed the market prices and valuation multiples for the shares of Center Trust common stock and shares of Pan Pacific common stock and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant;

•

reviewed the results of operations of Center Trust and Pan Pacific and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant;

•

compared the proposed financial terms of the merger with the financial terms of certain other transactions that Merrill Lynch deemed to be relevant;

•

participated in certain discussions and negotiations among representatives of Center Trust and Pan Pacific and their financial and legal advisors;

•

reviewed the potential pro forma impact of the merger;

•

reviewed the final forms of the merger agreement, the stockholders voting agreement with the Prometheus parties, the stockholders’ rights agreement, the stockholder voting agreement with certain members of Center Trust management and other related agreements; and

•

reviewed such other financial studies and analyses and took into account such other matters as Merrill Lynch deemed necessary, including its assessment of general economic, market and monetary conditions.

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Developers Diversified Realty Corporation

•

Equity One, Inc

•

Federal Realty Investment Trust

•

Heritage Property Investment Trust, Inc.

•

Kimco Realty Corporation

•

New Plan Excel Realty Trust, Inc.

•

Pan Pacific Retail Properties, Inc.

•

Regency Centers Corporation

•

Weingarten Realty Investors

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IRT Property Company / Equity One, Inc.

•

JDN Realty Corporation / Developers Diversified Realty Corporation

•

Western Properties Trust / Pan Pacific Retail Properties, Inc.

•

Bradley Real Estate, Inc. / Heritage Property Investment Trust, Inc.

•

Price Enterprises, Inc. / Excel Legacy Corporation

•

New Plan Realty Trust / Excel Realty Trust, Inc.

•

The Price REIT, Inc. / Kimco Realty Corporation

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receipt by the Center Trust stockholders of 0.218 shares of Pan Pacific common stock for each share of Center Trust common stock held;

•

completion of the merger on or before December 31, 2002; and

•

the Center Trust regional malls are divested by Pan Pacific concurrently with completion of the merger.

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the number of shares of Center Trust common stock issuable pursuant to the unexercised portion of such option, by

•

the amount, if any, by which

-

the exercise price per share of Center Trust common stock subject to such option is exceeded by

-

the number obtained by multiplying

-

the average closing price per share of Pan Pacific common stock on the New York Stock Exchange for the period of ten trading days immediately preceding the effective time of the merger by

-

0.218.

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(1)

The vesting of options to purchase shares of Center Trust common stock will accelerate in connection with the merger.

(2)

The vesting of options to purchase 1,250 shares of Center Trust common stock will accelerate in connection with the merger. Options to purchase the remaining 1,250 shares of Center Trust common stock have already vested.

•

Mr. Gulland has outstanding options to purchase 142,500 shares of Center Trust common stock at a weighted average exercise price of $15.51 per share;

•

Mr. Stokx has outstanding options to purchase 150,000 shares of Center Trust common stock at a weighted average exercise price of $11.67 per share; and

•

the directors, Messrs. Andrews, Barnum and Riedman, have, in the aggregate, outstanding options to purchase 52,400 shares of Center Trust common stock at a weighted average exercise price of $12.80 per share.

•

the sum of

-

the dollar amount of the payment to which the employee is otherwise entitled, and

-

3% of the dollar amount of the payment to which the employee is otherwise entitled, which represents the estimated brokerage fees and other selling costs and expenses that the employee could reasonably be expected to incur in connection with a sale of his shares of Pan Pacific common stock,

•

divided by the average closing price per share of Pan Pacific common stock on the New York Stock Exchange for the ten trading days immediately prior to the consummation of the merger.

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the number of shares of Center Trust common stock issuable pursuant to the unexercised portion of such option, by

•

the amount, if any, by which

-

the exercise price per share of Center Trust common stock subject to such option is exceeded by

-

the number obtained by multiplying the exchange ratio of 0.218 by the average closing price per share of Pan Pacific common stock on the New York Stock Exchange for the period of ten trading days immediately preceding the effective time of the merger.

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the sum of

-

the dollar amount of the cash payment; and

-

3% of the dollar amount of the cash payment (which represents the estimated brokerage fees and other selling costs and expenses that reasonably could be expected to be incurred by such party if such party decided to sell such shares of Pan Pacific common stock received);

•

divided by the average closing price per share of Pan Pacific common stock on the New York Stock Exchange for the period of ten trading days immediately preceding the effective time of the merger.

•

the organization and qualification of themselves and their subsidiaries;

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the authorization, execution, delivery and enforceability of the merger agreement and related matters;

•

their capital structures;

•

their subsidiaries and their interests and investments in other companies;

•

that the transactions will not result in a violation of their organizational documents or the organizational documents of any of their subsidiaries, contracts to which they are a party, or violate any law, rule or regulation;

•

consents and regulatory approvals necessary to complete the merger;

•

compliance with laws, required licenses and permits;

•

documents and financial statements filed with the SEC and the accuracy of information contained therein;

•

the absence of undisclosed liabilities;

•

the absence of adverse changes or events;

•

litigation;

•

taxes and tax returns;

•

employee benefit plans;

•

properties;

•

contracts;

•

labor relations;

•

environmental matters;

•

brokers’ and finders’ fees;

•

the votes of stockholders required to approve the merger;

•

accounting and tax matters;

•

insurance; and

•

the absence of material adverse effects.

•

the opinion received from financial advisors regarding the merger;

•

the exemption of Pan Pacific and its affiliates from anti-takeover provisions;

•

disclosure of affiliate transactions; and

•

the confidentiality agreement with Pan Pacific regarding negotiations with a third party.

•

the exemption of Lazard Frères Real Estate Investors L.L.C., LF Strategic Realty Investors L.P., Prometheus Western Retail Trust and Prometheus Western Retail, LLC from the limitation on ownership of Pan Pacific common stock set forth in Pan Pacific’s charter to allow these parties to initially own in the aggregate that number of shares of Pan Pacific common stock Prometheus Western Retail, LLC will receive in the merger (such exemption to be subject to downward adjustment to reflect the sale by these parties of the shares of Pan Pacific common stock received by Prometheus Western Retail, LLC in the merger); and

•

no prior stock ownership of Center Trust securities.

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maintain its respective qualification as a “real estate investment trust” under the Internal Revenue Code;

•

coordinate with the other the declaration of any dividends with respect to Pan Pacific common stock and Center Trust common stock and the record payment dates of such dividends;

•

carry on its business in the ordinary course;

•

pay its debts and taxes when due, subject to good faith disputes;

•

pay or perform other material obligations when due;

•

maintain insurance coverage and its books, accounts and records in the usual manner;

•

comply in all material respects with all applicable laws, ordinances and regulations of governmental entities;

•

maintain and keep its properties and equipment in good repair, working order and condition; and

•

use all reasonable efforts to preserve intact its present business organization, keep available the services of its present officers and key employees and preserve its relationships with customers, suppliers, distributors and others with which it has business dealing.

•

adopt or propose any amendment to its organizational documents, except as provided for in the merger agreement;

•

except as provided in the merger agreement, issue or authorize the issuance of additional shares of its capital stock or grant any stock options or make any agreements with respect to any of its shares of capital stock or any of its other securities;

•

amend or waive any terms of any option, warrant or stock option plan of Center Trust or any of its subsidiaries or authorize cash payments for any options granted under any of such plans;

•

adopt or implement any stockholder rights plan;

•

declare, set aside or pay any dividend or other distribution in respect of any of its capital stock other than:

-

for the fourth quarter of 2002, an amount not to exceed $0.06 per share of Center Trust common stock; or

-

for the first quarter of 2003, an amount not to exceed $0.12 per share of Center Trust common stock (in the event the closing of the merger does not occur prior to March 15, 2003);

•

split, combine, subdivide, reclassify, redeem, purchase or otherwise acquire any shares of its capital stock, or any of its other securities;

•

increase the compensation of directors, officers or employees or otherwise increase employee benefits, grants or awards not required by any employee benefit plan other than:

-

as required by law;

-

under any existing collective bargaining agreement or Center Trust employee benefit plan;

-

salary and benefit increases in the ordinary course of business to employees other than officers and employees of Center Trust earning an annual base salary in excess of $100,000;

-

pursuant to the conversion of Center Trust securities as specified in the merger agreement; or

-

as otherwise disclosed by Center Trust;

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sell, dispose of or encumber any material properties or assets of Center Trust or any of its subsidiaries, except as provided in the merger agreement;

•

acquire any real property or other material assets, except as provided in the merger agreement;

•

acquire any non-real property assets in an amount exceeding $1,000,000 in the aggregate;

•

incur, assume or prepay any debt other than under existing agreements or guarantee the obligations of any other person, make any loans or investments in any other person, other than between or with any wholly-owned subsidiaries, or enter into any “keep well” or other agreement to maintain the financial condition of another entity, other than Center Trust or any of its wholly-owned subsidiaries;

•

make, alter or rescind any material tax elections, settle any tax claims or amend any material tax return;

•

pay, discharge or satisfy any claim, liability or obligation other than in the ordinary course of business;

•

other than in the ordinary course of business, waive any rights of substantial value or make any payment of any material liability before it comes due;

•

fail to maintain its existing insurance coverages or property policies with increased coverage limits to adequately insure all property held by Center Trust;

•

change its methods of accounting as in effect on September 30, 2000, unless required by generally accepted accounting principles or the SEC;

•

except as provided in the merger agreement, modify, terminate or assign any rights under any of Center Trust’s material contracts except in the ordinary course of business;

•

take any action that would cause its representations or warranties set forth in the merger agreement not to be true and correct in all material respects;

•

enter into any agreement with any Center Trust affiliate (other than a subsidiary of Center Trust) which involves the transfer of consideration or has a financial impact on Center Trust, other than those agreements existing on the date of the merger agreement or as disclosed to Pan Pacific prior to the date of the merger agreement;

•

take or agree to take or cause to be taken any action that could reasonably be expected to prevent the merger from qualifying as a reorganization as described in Section 368(a) of the Internal Revenue Code;

•

except as provided in the merger agreement, make or commit to make any capital expenditures (other than capital expenditures for the repair or maintenance of capital assets) that exceed $2.5 million in the aggregate, excluding capital expenditures made with funds (a) held in like kind escrows established prior to the execution of the merger agreement in accordance with Section 1031 of the Internal Revenue Code or (b) obtained as proceeds from insurance policies due to the destruction, loss or impairment of capital assets;

•

compromise or settle any litigation or arbitration proceedings involving payments by Center Trust or its subsidiaries in excess of $100,000 per litigation or arbitration, or $500,000 in the aggregate; or

•

enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, publicly recommend, publicly propose or publicly announce an intention to do any of the foregoing, except as expressly permitted in the merger agreement.

•

adopt or propose any amendment to its organizational documents that could reasonably be expected to adversely affect Center Trust stockholders;

•

declare, set aside or pay any dividend or make any other distribution or payment with respect to any shares of Pan Pacific common stock, except the regular quarterly dividend paid by Pan Pacific in an amount not to exceed $0.50 per share of Pan Pacific common stock or a dividend required to be made to maintain Pan Pacific’s status as a real estate investment trust;

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split, combine, subdivide, reclassify or redeem any shares of its capital stock, or any of its other securities, except for certain redemptions and/or transfers as specified in the merger agreement and discussed below;

•

sell, pledge, dispose of, grant or encumber any of the assets of Pan Pacific or any of its subsidiaries, in an aggregate amount in excess of $75.0 million, or acquire any assets consisting of fee interests in real property, other than assets in an aggregate amount not to exceed $75.0 million, or acquire all or substantially all the assets of any company, division or line of business of any entity if the aggregate value of the assets exceeds $75.0 million, or agree to enter into any merger, reorganization or similar transaction in which Pan Pacific stockholders will receive consideration in exchange for their Pan Pacific common stock;

•

enter into any line of business that is not related to the retail shopping center business conducted by Pan Pacific;

•

take or agree to take any action that could reasonably be expected to prevent the merger from qualifying as a reorganization as described in Section 368(a) of the Internal Revenue Code;

•

issue, pledge or sell, or propose or authorize the issuance, pledge or sale of, or grant any options or make any other agreements with respect to any of its shares of stock or any other securities, except as provided in the merger agreement; or

•

enter into any agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing.

•

solicit, encourage or facilitate an “acquisition proposal” (as specifically described below);

•

engage in negotiations or discussions with, or provide any nonpublic information to, any third party regarding an acquisition proposal;

•

enter into any agreement with respect to an acquisition proposal;

•

publicly recommend any acquisition proposal, except as may be required by law; or

•

make or authorize any public statement or recommendation of any acquisition proposal other than the merger.

•

believes in good faith, after consulting with its financial advisor and legal counsel, that the acquisition proposal is reasonably capable of being completed on substantially the terms proposed and would, if consummated, result in a transaction that would be more favorable to Center Trust stockholders than the merger;

•

in the case of recommending another acquisition proposal or withdrawing or modifying its approval of the merger, has reasonably determined in good faith, after consulting with its outside legal counsel, that the failure to take such action would be inconsistent with Center Trust’s board’s legal duties to its stockholders under applicable law; and

•

receives from the third party prior to taking such action a confidentiality agreement with material terms no more favorable to the third party than those contained in the confidentiality agreement between Pan Pacific and Center Trust.

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within five days of Pan Pacific’s receipt of notice of an acquisition proposal that constitutes a superior proposal (as specifically described below), Center Trust, if requested by Pan Pacific, will negotiate in good faith with Pan Pacific to revise the merger agreement so that the acquisition proposal no longer constitutes a superior proposal; and

•

Center Trust may not enter into any agreement implementing an acquisition proposal until the termination of the merger agreement.

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the stockholders of Center Trust shall have approved the merger in the manner required under the Maryland General Corporation Law, the rules of the New York Stock Exchange and the organizational documents of Center Trust;

•

no statute, rule, regulation, order, executive order, decree, ruling or injunction or other order shall be in effect that prohibits the completion of the merger;

•

there shall not be instituted or pending any action by a governmental entity as a result of the merger agreement or any of the transactions contemplated in the merger agreement which would reasonably be expected to have a material adverse effect on either Pan Pacific or Center Trust;

•

the registration statement on Form S-4 of which this proxy statement/prospectus is a part shall have become effective and shall not be the subject of any stop order, and any material blue sky law permit or approval shall have been obtained;

•

all filings required to be made prior to the closing of the merger by either Pan Pacific or Center Trust with any governmental entity shall have been made, except where failure to obtain such consent would not cause a material adverse effect on Pan Pacific or Center Trust and could not be expected to subject the parties to the risk of criminal liability; and

•

the approval shall have been obtained for listing on the New York Stock Exchange of the shares of Pan Pacific common stock to be issued in connection with the merger, subject to official notice of issuance.

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the representations and warranties of Pan Pacific in the merger agreement shall be true and correct in all material respects as of the date of the effective time of the merger except:

-

as contemplated by the merger agreement;

-

those representations and warranties that address matters only as of a particular date, other than the date of the merger agreement, which shall remain true and correct as of such particular date; and

-

to the extent that any failures of such representations and warranties to be true and correct do not result in a material adverse effect on Pan Pacific;

•

Pan Pacific shall have performed, in all material respects, all obligations required to be performed by it under the merger agreement at or prior to the completion of the merger;

•

Center Trust shall have received a certificate, executed on behalf of Pan Pacific by Pan Pacific’s chief executive officer or chief financial officer, as to the truth of Pan Pacific’s representations and warranties and the performance of Pan Pacific’s obligations, as required by the merger agreement;

•

Center Trust shall have received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Center Trust, to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code; provided however, that this condition will not be waived by Center Trust after receipt of Center Trust stockholder approval unless further stockholder approval is obtained with appropriate disclosure;

•

Center Trust shall have received the opinion of Latham & Watkins to the effect that Pan Pacific has qualified to be taxed as a real estate investment trust commencing with its taxable year ended December 31, 1997, Pan Pacific was organized in conformity with the requirements for qualification and taxation as a real estate investment trust under the Internal Revenue Code and that Pan Pacific’s method of operation has enabled it, and its proposed method of operation will enable it, to continue to qualify for taxation as a real estate investment trust under the Internal Revenue Code, provided however, that this condition will not be waived by Center Trust after receipt of the necessary approval of Center Trust stockholders of the merger unless further stockholder approval is obtained after providing the appropriate disclosure; and

•

the average closing price of Pan Pacific common stock on the New York Stock Exchange for the period of ten trading days prior to the closing date of the merger shall not be less than $25.00 per share.

•

the representations and warranties of Center Trust in the merger agreement shall be true and correct in all material respects as of the date of the effective time of the merger except:

-

as contemplated by the merger agreement;

-

those representations and warranties which address matters only as of a particular date, other than the date of the merger agreement, which shall remain true and correct as of such particular date; and

-

to the extent that any failures of such representations and warranties to be true and correct do not result in a material adverse effect on Center Trust;

•

Center Trust shall have performed, in all material respects, all obligations required to be performed by it under the merger agreement on or before the completion of the merger;

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Pan Pacific shall have received a certificate, executed on behalf of Center Trust by Center Trust’s chief executive officer or chief financial officer, as to the truth of Center Trust’s representations and warranties and the performance of Center Trust’s obligations, as required by the merger agreement;

•

all consents and approvals of all persons required for or in connection with or as a result of the execution, delivery and performance of the merger agreement or the consummation of the transactions contemplated by the merger agreement shall have been obtained and shall be in full force and effect, except where failure to obtain such consents and approvals would not cause Center Trust or Pan Pacific a material adverse effect;

•

certain specified material consents shall have been obtained and in full force and effect;

•

the stockholders agreement, dated as of June 1, 1997, by and among Center Trust, Lazard Frères Real Estate Investors L.L.C., LF Strategic Realty Investors L.P. and Prometheus Western Retail, LLC, shall have been terminated;

•

Pan Pacific shall have received an opinion of Latham & Watkins to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code; provided however, that this condition will not be waived by Pan Pacific after receipt of the necessary approval of Center Trust stockholders of the merger unless further stockholder approval is obtained after providing the appropriate disclosure;

•

Pan Pacific shall have received the opinion of Latham & Watkins, to the effect that, commencing with its taxable year ended December 31, 1993, Center Trust was organized in conformity with the requirements for qualification and taxation as a real estate investment trust under the Internal Revenue Code and Center Trust’s method of operation has enabled it to meet, through the completion of the merger, the requirements for qualification and taxation as a real estate investment trust under the Internal Revenue Code; and

•

KPMG LLP and Deloitte & Touche LLP shall have delivered to Pan Pacific a letter customary in scope and substance for letters delivered by independent public accountants in connection with registration statements.

•

by mutual written consent of Pan Pacific and Center Trust;

•

by either Pan Pacific or Center Trust if:

-

the merger has not occurred on or before April 30, 2003, so long as the terminating party did not prevent completion of the merger by failing to fulfill any of its obligations under the merger agreement;

-

any court or other governmental entity has issued an order, decree or ruling which cannot be appealed and which makes the merger illegal or permanently prohibits the completion of the merger;

-

the stockholders of Center Trust do not approve the merger in the manner required by the merger agreement; or

-

there has been a material breach of any representation, warranty, covenant or agreement by the other party which is either not curable by April 30, 2003, or for which a good faith attempt to cure such breach is not being made; or

•

by Pan Pacific if:

-

after receipt by Center Trust of an acquisition proposal, Center Trust’s board withdraws or modifies its recommendation of the merger proposal;

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after receipt by Center Trust of a public acquisition proposal, Center Trust’s board fails to reconfirm its recommendation of the merger within ten business days of a request to do so by Pan Pacific;

-

Center Trust’s board approves or recommends to Center Trust stockholders an alternative transaction (as specifically described below);

-

a tender offer or exchange offer for 19.9% or more of the outstanding shares of Center Trust common stock is commenced and Center Trust’s board recommends that Center Trust stockholders tender their shares in such tender or exchange offer; or

-

after the receipt by Center Trust of an acquisition proposal, Center Trust fails to call and hold the Center Trust stockholders meeting by April 30, 2003.

•

a transaction pursuant to which any third party acquires more than 19.9% of the outstanding shares of Center Trust common stock pursuant to a tender or exchange offer or otherwise;

•

a merger or other business combination involving Center Trust pursuant to which any third party acquires (or the stockholders of the third party acquire) more than 19.9% of the outstanding shares of Center Trust common stock or 19.9% of the equity securities of the entity surviving such merger or business combination; or

•

any other transaction pursuant to which any third party acquires control of assets of Center Trust having a fair market value equal to more than 19.9% of the fair market value of all the assets of Center Trust and its subsidiaries, taken as a whole, immediately prior to such transaction.

•

following a publicly announced proposal for an alternative transaction, Pan Pacific or Center Trust terminates the merger agreement due to a failure to obtain the requisite vote of Center Trust’s stockholders in favor of the merger, and a definitive agreement for an alternative transaction is entered into or the alternative transaction is consummated within 12 months of the termination date; or

•

Pan Pacific terminates the merger agreement because any of the following events occur:

-

after receipt by Center Trust of an acquisition proposal, Center Trust’s board withdraws or modifies its recommendation of the merger proposal;

-

after receipt by Center Trust of a public acquisition proposal, Center Trust’s board fails to reconfirm its recommendation of the merger within ten business days of a request to do so by Pan Pacific;

-

Center Trust’s board approves or recommends to Center Trust stockholders an alternative transaction;

-

a tender offer or exchange offer for 19.9% or more of the outstanding shares of Center Trust common stock is commenced and Center Trust’s board recommends that Center Trust stockholders tender their shares in such tender or exchange offer; or

-

after the receipt by Center Trust of an acquisition proposal, Center Trust fails to call and hold the Center Trust stockholders meeting by April 30, 2003.

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after receipt by Center Trust of an acquisition proposal, the merger agreement is terminated because the requisite vote of Center Trust’s stockholders in favor of the merger has not been obtained; or

•

Pan Pacific terminates the merger agreement because Center Trust has breached a representation, warranty, covenant or agreement that would result in the failure of Center Trust to satisfy one of the conditions of the merger,

•

extend the time for the performance of any of the obligations or other acts of the other party required by the merger agreement;

•

waive any inaccuracies in the representations and warranties of the other party contained in the merger agreement or in any document delivered in connection with the merger agreement; and

•

waive compliance with any of the agreements or conditions of the other party contained in the merger agreement; provided however, that certain agreements or conditions may not be waived without the consent of the Prometheus parties and conditions relating to tax opinions will not be waived by Pan Pacific or Center Trust after receipt of Center Trust stockholder approval unless further stockholder approval is obtained with appropriate disclosure. See “Material Federal United States Income Tax Considerations—Tax Consequences of the Merger.”

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•

in favor of the approval of the terms of the merger agreement, the merger and transactions contemplated by the merger agreement;

•

against any action, proposal, transaction or agreement that would result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of Center Trust contained in the merger agreement or of any stockholder contained in the stockholder voting agreement; and

•

except as otherwise agreed to in writing by Pan Pacific, against the following actions or proposals (other than the merger with Pan Pacific):

-

any acquisition proposal;

-

any change in the persons who constitute Center Trust’s board that is not approved in advance by at least a majority of the persons who were directors of Center Trust on November 5, 2002 (or their successors who were so approved);

-

except as permitted by the merger agreement, any change in the present capitalization of Center Trust or any amendment of the charter or bylaws of Center Trust;

-

any other material change in the corporate structure or business of Center Trust; or

-

any other action or proposal involving Center Trust or any of its subsidiaries that is intended, or could reasonably be expected, to prevent, delay or adversely affect the transactions contemplated by the merger agreement.

•

the mutual consent of Pan Pacific and each of the management stockholders;

•

the completion of the merger; and

•

the date the merger agreement is terminated.

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•

in favor of the approval of the merger;

•

against any action, proposal, transaction or agreement which, to the knowledge of any Prometheus party, is intended to result in a breach in any respect of any covenant, representation or warranty or any other obligation or agreement of Center Trust under the merger agreement or of any Prometheus party contained in the stockholders voting agreement; and

•

except as otherwise agreed to in writing by Pan Pacific, against the following actions or proposals (other than the merger with Pan Pacific):

-

any acquisition proposal;

-

any change in the persons who constitute Center Trust’s board that is not approved in advance by at least a majority of the persons who were directors of Center Trust on November 5, 2002 (or their successors who were so approved);

-

except as permitted by the merger agreement, any change in the present capitalization of Center Trust or any amendment of the charter or bylaws of Center Trust;

-

except as permitted in the merger agreement, any other material change in the corporate structure or business of Center Trust; or

-

any other action or proposal involving Center Trust or any of its subsidiaries, that to the knowledge of the Prometheus parties, is intended, or could reasonably be expected, to prevent, materially delay or materially adversely affect the transactions contemplated by the merger agreement.

•

selling, pledging, assigning or otherwise disposing of any shares of Center Trust common stock, other than a transfer by Prometheus Western Retail, LLC to another Prometheus party that agrees in writing to abide by the obligations of the stockholders voting agreement;

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•

acquiring additional securities of Center Trust, except as described below; or

•

taking any action that would have the effect of preventing, interfering or materially adversely affecting its ability to perform under the stockholder voting agreement.

•

notify Pan Pacific if any acquisition proposal is made to it;

•

notify Pan Pacific of the terms of any proposal that it has received with respect to an acquisition proposal;

•

provide Pan Pacific with a copy of such offer; and

•

inform Pan Pacific of any material changes to the terms of the acquisition proposal.

•

the mutual consent of Pan Pacific and each of the Prometheus parties;

•

the completion of the merger;

•

the date the merger agreement is terminated; and

•

April 30, 2003.

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provide Prometheus Western Retail, LLC or certain affiliated transferees:

-

the right to inspect the books and records of Pan Pacific,

-

a copy of Pan Pacific’s audited financial statements, and

-

a copy of all operating plans, budgets and unaudited financial statements provided to Pan Pacific’s board;

•

make appropriate Pan Pacific officers available for consultation;

•

inform Prometheus Western Retail, LLC in advance of certain significant corporate actions;

•

provide Prometheus Western Retail, LLC or its representative with other consultation rights as are necessary to qualify its ownership of Pan Pacific common stock as a “venture capital investment,” as determined by U.S. Labor Department regulations; and

•

consider in good faith the recommendations of Prometheus Western Retail, LLC or its designated representative on matters for which Pan Pacific has consulted the Prometheus parties, provided that Pan Pacific will retain the ultimate discretionary authority.

•

the first day after the first anniversary of the closing of the merger on which the Prometheus parties and their subsidiaries own less than 1,000,000 shares of Pan Pacific common stock issued in connection with the merger;

•

the third anniversary of the closing of the merger; and

•

the sale of all of the securities included in the shelf registration statement to persons other than subsidiaries of the Prometheus parties or certain other holders that agree to be bound by the stockholders’ rights agreement.

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if prior to the receipt of such request, Pan Pacific had commenced preparations for the filing of a registration statement pertaining to a public offering of Pan Pacific securities; or

•

if Pan Pacific has determined in good faith that an underwritten public offering would materially interfere with a potential contemplated material financing, acquisition, disposition or other similar transaction;

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except as provided below, income or gain of the partnership from operations or, if necessary, sales of properties generally will be allocated first to limited partners on a per partnership unit basis in an amount equal to the distributions they have received per partnership unit, less an amount which approximates the return of capital paid with respect to a share of Pan Pacific common stock for that period;

•

in the event that the partnership redeems the interests of a limited partner, income or gain will be allocated to that limited partner in an amount intended to cause, to the greatest extent possible, that limited partner’s capital account to be equal to zero, taking into account any distributions in the redemption;

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upon the liquidation of the partnership, income or gain will be allocated to the limited partners, to the greatest extent possible, in an amount which would cause each limited partner’s capital account per partnership unit to be equal to the value of a share of Pan Pacific common stock as determined under the partnership agreement, plus any accrued and unpaid distributions per partnership unit with respect to such limited partner; and

•

in each case, any remaining income or gain, and all losses, will be allocated to the general partner.

•

institute any proceeding for bankruptcy on behalf of the partnership;

•

transfer its partnership interest or admit any additional or substitute general partners; or

•

cause the partnership to loan money to the general partner or its affiliates at an interest rate below the prime rate or in an aggregate outstanding principal amount that exceeds $25 million.

•

dissolve the partnership;

•

merge the partnership with another entity; or

•

sell all or substantially all of the assets of the partnership.

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a number of shares of Pan Pacific common stock that is equal to the number of partnership units it has elected to exchange (subject to adjustment for any stock splits, reverse stock splits or payment of stock dividends with respect to the Pan Pacific common stock); or

•

cash in an amount equal to the value of the shares of Pan Pacific common stock it would have otherwise been entitled to receive.

•

distribute to the general partner the property that was initially contributed to the partnership by the limited partner group in redemption of a number of general partnership units that have a value equivalent to the value of the distributed property; and

•

distribute to the members of the limited partner group the membership interests in the limited liability companies in redemption of their limited partnership units, without representation or warranty of any kind.

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•

transfers to the general partner;

•

transfers to an affiliate, another limited partner or to an immediate family member;

•

transfers pursuant to their exchange rights;

•

pledges to a lending institution as security for a loan; and

•

if the limited partner is one of the initial limited partners and is a partnership, a distribution to the partners of such partnership pursuant to a dissolution or liquidation of that limited partner.

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•

giving written notice of such revocation to Center Trust;

•

executing a new proxy card bearing a later date and mailing it in time so that the new proxy card is received before the special meeting;

•

giving new proxy instructions by telephone; or

•

attending and voting in person at the special meeting.

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•

the Internal Revenue Code of 1986, as amended;

•

current, temporary and proposed Treasury Regulations promulgated under the Internal Revenue Code;

•

the legislative history of the Internal Revenue Code;

•

current administrative interpretations and practices of the Internal Revenue Service; and

•

court decisions;

•

insurance companies;

•

tax-exempt organizations;

•

financial institutions or broker-dealers;

•

traders in securities that elect to mark to market;

•

holders owning stock as part of a “straddle,” “hedge” or “conversion transaction;”

•

holders whose functional currency is not the U.S. dollar;

•

holders subject to the alternative minimum tax;

•

“S” corporations;

•

expatriates;

•

REITs or regulated investment companies;

•

holders who own at least 10% of the voting power or value of Center Trust common stock;

•

holders who acquired their Pan Pacific or Center Trust common stock as a result of the exercise of an employee stock option or otherwise as compensation; and

•

holders of Pan Pacific common stock or Center Trust common stock who are neither citizens nor residents of the United States, or that are foreign corporations, foreign partnerships or foreign estates or trusts for U.S. federal income tax purposes.

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•

THE MERGER;

•

THE ACQUISITION, OWNERSHIP AND SALE OR OTHER DISPOSITION OF PAN PACIFIC COMMON STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES;

•

CENTER TRUST’S AND PAN PACIFIC’S ELECTIONS TO BE TAXED AS REAL ESTATE INVESTMENT TRUSTS FOR FEDERAL INCOME TAX PURPOSES; AND

•

POTENTIAL CHANGES IN THE TAX LAWS.

•

Exchange of Center Trust Common Stock for Pan Pacific Common Stock.    Except as discussed below, no gain or loss will be recognized for federal income tax purposes by Center Trust’s stockholders who exchange their Center Trust common stock solely for Pan Pacific common stock in the merger. Each Center Trust stockholder’s aggregate tax basis in the Pan Pacific common stock he or she receives in the merger will be the same as his or her aggregate tax basis in the Center Trust common stock for which it is exchanged, reduced by any tax basis allocable to fractional shares exchanged for cash. In addition, the holding period of the Pan Pacific common stock received by Center Trust stockholders in the merger will include the holding period of the Center Trust common stock for which it is exchanged.

•

Cash Received Instead of Fractional Shares.    The payment of cash to a Center Trust stockholder instead of a fractional share of Pan Pacific common stock generally will result in the recognition of capital gain or loss measured by the difference between the amount of cash received and the portion of the tax basis of the Pan Pacific common stock allocable to that fractional interest. In the case of an individual, capital gain is generally subject to United States federal income tax at (a) a maximum rate of 20% if the individual has held his or her Center Trust common stock for more than one year at the time of the merger, or (b) at ordinary income rates (as a short-term capital gain) if the individual has held his or her Center Trust common stock for one year or less at the time of the merger. The deductibility of capital losses may be limited.

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Tax Consequences to Pan Pacific and Center Trust.    No gain or loss will be recognized by Pan Pacific, MB Acquisition, Inc., or Center Trust as a result of the merger so long as the merger qualifies as a reorganization under the Internal Revenue Code.

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•

Pan Pacific will be required to pay tax at regular corporate rates on any undistributed “real estate investment trust taxable income,” including undistributed net capital gains.

•

Pan Pacific may be required to pay the “alternative minimum tax” on Pan Pacific’s items of tax preference.

•

If Pan Pacific has: (a) net income from the sale or other disposition of “foreclosure property” which is held primarily for sale to customers in the ordinary course of business; or (b) other nonqualifying income from foreclosure property, Pan Pacific will be required to pay tax at the highest corporate rate on this income. Foreclosure property is generally defined as property acquired through foreclosure or after a default on a loan secured by the property or a lease of the property.

•

Pan Pacific will be required to pay a 100% tax on any net income from prohibited transactions. Prohibited transactions are, in general, sales or other taxable dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business.

•

If Pan Pacific fails to satisfy the 75% gross income test or the 95% gross income test discussed below, but nonetheless maintains its qualification as a real estate investment trust because certain other requirements are met, Pan Pacific will be required to pay a tax equal to (a) the greater of (i) the amount by which 75% of Pan Pacific’s gross income exceeds the amount qualifying under the 75% gross income test described below and (ii) the amount by which 90% of Pan Pacific’s gross income exceeds the amount qualifying under the 95% gross income test described below, multiplied by (b) a fraction intended to reflect Pan Pacific’s profitability.

•

Pan Pacific will be required to pay a 4% excise tax to the extent that it fails to distribute during each calendar year at least the sum of (a) 85% of its real estate investment trust ordinary income for the year, (b) 95% of its real estate investment trust capital gain net income for the year, and (c) any undistributed taxable income from prior periods.

•

If Pan Pacific acquires any asset from a corporation which is or has been a C corporation in a transaction in which the basis of the asset in Pan Pacific’s hands is determined by reference to the basis of the asset in the hands of the C corporation, and Pan Pacific subsequently recognizes gain on the disposition of the asset during the ten-year period beginning on the date on which Pan Pacific acquired the asset, then Pan Pacific will be required to pay tax at the highest regular corporate tax rate on this gain to the extent of the excess of (a) the fair market value of the asset over (b) Pan Pacific’s adjusted basis in the asset, in each case determined as of the date on which Pan Pacific acquired the asset. A C corporation is generally defined as a corporation required to pay full corporate-level tax. The results described in this paragraph with respect to the recognition of gain assume that Pan Pacific will make or refrain from making an election under Treasury Regulations under Section 337 of the Internal Revenue Code, depending upon the time of the acquisition.

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•

Pan Pacific will be subject to a 100% tax on any “redetermined rents,” “redetermined deductions” or “excess interest.” In general, redetermined rents are rents from real property that are overstated as a result of services furnished by a “taxable REIT subsidiary” of Pan Pacific’s to any of Pan Pacific’s tenants. See “—Ownership of Interests in Taxable REIT Subsidiaries.” Redetermined deductions and excess interest represent amounts that are deducted by a taxable REIT subsidiary of Pan Pacific’s for amounts paid to Pan Pacific that are in excess of the amounts that would have been deducted based on arm’s length negotiations.

(1)

that is managed by one or more trustees or directors;

(2)

that issues transferable shares or transferable certificates to evidence beneficial ownership;

(3)

that would be taxable as a domestic corporation but for Sections 856 through 860 of the Internal Revenue Code;

(4)

that is not a financial institution or an insurance company within the meaning of the Internal Revenue Code;

(5)

that is beneficially owned by 100 or more persons;

(6)

not more than 50% in value of the outstanding stock of which is owned, actually or constructively, by five or fewer individuals, including specified entities, during the last half of each taxable year; and

(7)

that meets other tests, described below, regarding the nature of its income and assets and the amount of its distributions.

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•

First, each taxable year Pan Pacific must derive directly or indirectly at least 75% of its gross income, excluding gross income from prohibited transactions, from (a) investments relating to real property or mortgages on real property, including “rents from real property” and, in some circumstances, interest, or (b) some types of temporary investments;

•

Second, each taxable year Pan Pacific must derive at least 95% of its gross income, excluding gross income from prohibited transactions, from (a) the real property investments described above, or (b) dividends, interest and gain from the sale or disposition of stock or securities or (c) any combination of the foregoing.

•

The amount of rent must not be based in whole or in part on the income or profits of any person. However, an amount Pan Pacific receives or accrues generally will not be excluded from the term “rents from real property” solely because it is based on a fixed percentage or percentages of receipts or sales;

•

Pan Pacific, or an actual or constructive owner of 10% or more of Pan Pacific’s stock, does not actually or constructively own 10% or more of the interests in the tenant, or, if the tenant is a corporation, 10% or more of the voting power or value of all classes of stock of the tenant. Rents received from such tenant that is a taxable REIT subsidiary, however, will not be excluded from the definition of “rents from real property” if at least 90% of the space at the property to which the rents relate is leased to third parties, and the rents paid by the taxable REIT subsidiary are comparable to rents paid by Pan Pacific’s other tenants for comparable space;

•

Rent attributable to personal property, leased in connection with a lease of real property, is not greater than 15% of the total rent received under the lease. If this requirement is not met, then the portion of the rent attributable to personal property will not qualify as “rents from real property”; and

•

Pan Pacific generally must not operate or manage its property or furnish or render services to its tenants, subject to a 1% de minimis exception, other than through an independent contractor from whom Pan Pacific derives no revenue. Pan Pacific may, however, directly perform services that are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not otherwise considered “rendered to the occupant” of the property. Examples of these services include the provision of light, heat, or other utilities, trash removal and general maintenance of common areas. In addition, Pan Pacific may employ a “taxable REIT subsidiary” which is wholly or partially owned by Pan Pacific, to provide both customary and non-customary services to tenants without causing the rent Pan Pacific receives from those tenants to fail to qualify as “rents from real property.” Any amounts Pan Pacific receives from a taxable REIT subsidiary with respect to the taxable REIT subsidiary’s provision of non-customary services will, however, be nonqualified income under the 75% gross income test and, except to the extent received through the payment of dividends, the 95% REIT gross income test.

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•

Pan Pacific’s failure to meet these tests was due to reasonable cause and not due to willful neglect;

•

Pan Pacific attaches a schedule of the sources of its income to its federal income tax return; and

•

any incorrect information on the schedule was not due to fraud with intent to evade tax.

•

Amounts are received by a real estate investment trust for services customarily furnished or rendered in connection with the rental of real property;

•

Amounts are excluded from the definition of impermissible tenant service income as a result of satisfying the 1% de minimis exception;

•

The taxable REIT subsidiary renders a significant amount of similar services to unrelated parties and the charges for such services are substantially comparable;

•

Rents paid to the real estate investment trust by tenants who are not receiving services from the taxable REIT subsidiary are substantially comparable to the rents paid by the real estate investment trust’s

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tenants leasing comparable space who are receiving such services from the taxable REIT subsidiary and the charge for the services is separately stated; and

•

The taxable REIT subsidiary’s gross income from the service is not less than 150% of the subsidiary’s direct cost in furnishing the service.

•

First, at least 75% of the value of Pan Pacific’s total assets, including assets held by Pan Pacific’s qualified REIT subsidiaries and Pan Pacific’s allocable share of the assets held by the partnerships and limited liability companies in which Pan Pacific owns an interest, must be represented by real estate assets, cash, cash items and government securities. For purposes of this test, real estate assets include stock or debt instruments that are purchased with the proceeds of a stock offering or a public debt offering with a term of at least five years, but only for the one-year period beginning on the date Pan Pacific receives these proceeds;

•

Second, not more than 25% of Pan Pacific’s total assets may be represented by securities, other than those securities included in the 75% asset test;

•

Third, of the investments included in the 25% asset class, the value of any one issuer’s securities may not exceed 5% of the value of Pan Pacific’s total assets, and Pan Pacific may not own more than 10% by vote or value of any one issuer’s outstanding securities. For years prior to 2001, the 10% limit applies only with respect to voting securities of any issuer and not to the value of the securities of any issuer; and

•

Fourth, not more than 20% of the value of Pan Pacific’s total assets may be represented by the securities of one or more taxable REIT subsidiaries. The 10% value limitation and the 20% asset test are part of recently enacted legislation and are effective for taxable years ending after December 31, 2000.

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90% (95% for taxable years beginning before January 1, 2001) of Pan Pacific’s “REIT taxable income”; and

•

90% (95% for taxable years beginning before January 1, 2001) of Pan Pacific’s after tax net income, if any, from foreclosure property; minus

•

the excess of the sum of specified items of Pan Pacific’s noncash income items over 5% of “REIT taxable income” as described below.

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actual annual operating results;

•

asset diversification;

•

distribution levels; and

•

diversity of stock ownership.

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•

a citizen or resident of the United States;

•

a corporation, partnership, or other entity created or organized in or under the laws of the United States or of any state or in the District of Columbia, unless, in the case of a partnership, Treasury Regulations provide otherwise;

•

an estate which is required to pay United States federal income tax regardless of the source of its income; or

•

a trust whose administration is under the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust.

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include its proportionate share of Pan Pacific’s undistributed long-term capital gains in computing its long-term capital gains in its return for its taxable year in which the last day of Pan Pacific’s taxable year falls;

•

be deemed to have paid the capital gains tax imposed on Pan Pacific on the designated amounts included in the U.S. stockholder’s long-term capital gains;

•

receive a credit or refund for the amount of tax deemed paid by it;

•

increase the adjusted basis of its common stock by the difference between the amount of includable gains and the tax deemed to have been paid by it; and

•

in the case of a U.S. stockholder that is a corporation, appropriately adjust its earnings and profits for the retained capital gains as required by Treasury Regulations to be prescribed by the Internal Revenue Service.

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Information Rights.

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Registration Rights.

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Miscellaneous.

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(1)

Reviewed certain publicly available business and financial information relating to the Company and the Acquiror that we deemed to be relevant;

(2)

Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of the Company and the Acquiror, furnished to us by the Company and the Acquiror, respectively;

(3)

Conducted discussions with members of senior management and representatives of the Company and of the Acquiror concerning the matters described in clauses 1 and 2 above, as well as their respective businesses and prospects before and after giving effect to the Merger;

(4)

Reviewed the market prices and valuation multiples for the Company Shares and the Acquiror Shares and compared them with those of certain publicly traded companies that we deemed to be relevant;

(5)

Reviewed the results of operations of the Company and the Acquiror and compared them with those of certain publicly traded companies that we deemed to be relevant;

(6)

Compared the proposed financial terms of the Merger with the financial terms of certain other transactions that we deemed to be relevant;

(7)

Participated in certain discussions and negotiations among representatives of the Company and of the Acquiror and their financial and legal advisors;

(8)

Reviewed the potential pro forma impact of the Merger;

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(9)

Reviewed the final forms of the Agreement, the Stockholder Agreements and the Management Voting Agreement and other related agreements; and

(10)

Reviewed such other financial studies and analyses and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions.