SPOKANE -- It's not a monopoly, but for JP Realty Inc., it's the next best thing.
With 2 million square feet at the NorthTown, Spokane Valley and Silver Lake Malls, JP Realty is the largest retail landlord in Spokane and Coeur d'Alene.That gives the company founded by Salt Lake City millionaire John Price significant muscle for marketing its properties and negotiating leases.
"If you want to be in a mall in Spokane, you have to deal with Price," said John Morrow of Situs Realty, a Spokane-based mall developer. "You don't have any options."
That's the way JP Realty likes it.
The 41-year-old company has grown into one of the largest mall owners in the West by being the biggest fish in many small ponds.
JP Realty owns malls in 17 Western cities and often is the dominant retailer. In towns like Casper, Wyo., Farmington, N.M., and Boise, mall shoppers have little choice but to patronize JP Realty properties.
"Whatever the size of the market, we like to be the largest in the market," said company President G. Rex Frazier, who has worked with Price since the early 1970s. "There's an efficiency there that's best for us, for the tenants and for the shoppers."
When a JP Realty mall controls most of a town's shopping options, it means other retailers want to be near the mall. That increases mall traffic, allowing JP Realty to raise rents and generate revenue.
"When you have the dominant retail position, everything clusters around you," said Frazier.
That approach has paid off, allowing JP Realty to increase revenues every year, from $47 million when the company went public in 1993 to $109 million in 1998.
Shareholder dividends have also increased steadily, from $1.53 a share in 1994 to $1.82 last year.
At the same time, the company has rapidly expanded its holdings, growing from 7.7 million square feet in 1993 to 14.4 million today.
In 1998 alone, JP Realty opened the 723,000-square-foot Provo Towne Center, bought Spokane's NorthTown Mall and the Salem (Ore.) Center, expanded the Boise Town Center and the Red Cliffs Mall in St. George and began construction on The Mall at Sierra Vista (Ariz.).
With the malls, JP Realty also owns 27 strip centers and shops with 3 million square feet and 1.3 million square feet of office space.
Despite growth and profitability, JP Realty has not had great results on Wall Street the past 18 months.
The steady decline in its stock price, from a 52-week high of $24.68 last July to $17.43 in February, has mirrored the performance of Real Estate Investment Trusts (REITs) as a whole. And like the rest of the sector, JP Realty has bounced back in recent weeks.
But the stock's slow descent has raised questions from analysts, who are concerned that the company may not be effectively marketing itself to future investors.
Relatively small compared with some REIT mall developers -- the largest, the Simon Property Group, owns 136 million square feet -- and based in Salt Lake City, JP Realty does little to attract attention, said Marsha Camp, a retail REIT analyst at AG Edwards in St. Louis.
"They have fallen off the radar screens of institutional investors," said Camp. "JP is not good about getting their word out. They're shy about talking to investors."
Frazier, however, said the company works diligently to sell Wall Street on the advantages of being the only major mall developer in the rapidly growing Intermountain West.
Founded by Price in 1957 as a general contracting firm, JP Realty gradually evolved into shopping center development. Price built his first mall in 1976, and has expanded steadily ever since.
In 1993, facing a lack of available credit, JP Realty, like many large developers, went public as a REIT.
The credit crunch was initiated by the crisis among savings and loans, traditionally big real estate lenders, and compounded by the recession of the early 1990s, said Price.
"We made a conscious decision that if we were going to survive, there wasn't a choice but to go for the REIT format," Price said.
That has been a mixed blessing, Price said. Being public has given JP Realty much better access to capital, but it also created the demands of shareholder expectations.
"You have to perform, and that's the difference," he said. "You have to perform quarterly, and that's tough to do with real estate. It's a very tough reporting process to talk about projects under way and the things that you are doing and create the earnings you're supposed to have."