EX-99.1 7 a13-8486_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.

 

The following is unaudited consolidated financial information for our subsidiary, GGP —TRC, L.L.C, (“TRCLLC”),  formerly known as The Rouse Company L.L.C., as of March 31, 2013 and December 31, 2012 and for the three months ended March 31, 2013 and 2012.

 

TRCLLC (also, “we” or “us”) is a Delaware limited liability company, formed on November 9, 2010 through voluntary conversion of The Rouse Company Limited Partnership (“TRCLP”) into a limited liability company. TRCLLC is a subsidiary of General Growth Properties, Inc. (“GGP” or the “Company”), a Delaware corporation, which was organized in July 2010 and is a self-administered and self-managed real estate investment trust, referred to as a “REIT”.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of TRCLLC, its subsidiaries and joint ventures in which it has a controlling interest.  For consolidated joint ventures, the noncontrolling partner’s share of the assets, liabilities and operations of the joint venture (generally computed as the joint venture partner’s ownership percentage) is included in noncontrolling interests in consolidated real estate affiliates as permanent equity of the Company.  All significant intercompany balances and transactions have been eliminated.

 

Reclassifications

 

Certain prior period amounts included on the Consolidated Statements of Operations and Comprehensive Income (Loss) associated with properties we have disposed of or distributed have been reclassified to discontinued operations for all periods presented.

 

Critical Accounting Policies

 

Critical accounting policies are those that are both significant to the overall presentation of TRCLLC’s financial condition and results of operations and require management to make difficult, complex or subjective judgments.  Our critical accounting policies for the fiscal year ended December 31, 2012 have not changed during the three months ended March 31, 2013.

 

MANAGEMENT’S DISCUSSION OF TRCLLC OPERATIONS AND LIQUIDITY

 

The following table summarizes minimum rents for the three months ended March 31, 2013 and 2012:

 

 

 

Three Months Ended March, 31

 

 

 

 

 

 

 

2013

 

2012

 

$ Change

 

% Change

 

 

 

(In thousands)

 

 

 

 

 

Components of Minimum rents:

 

 

 

 

 

 

 

 

 

Base minimum rents

 

$

47,283

 

$

45,810

 

$

1,473

 

3.2

%

Lease termination income

 

1,896

 

75

 

1,821

 

2,428.0

 

Straight-line rent

 

1,766

 

2,231

 

(465

)

(20.8

)

Above- and below-market tenant leases, net

 

(2,087

)

(2,772

)

685

 

(24.7

)

Total Minimum rents

 

$

48,858

 

$

45,344

 

$

3,514

 

7.7

%

 

Base minimum rents increased by $1.5 million primarily due to increased permanent occupancy and positive lease spreads.

 

Lease termination income increased by $1.8 million primarily due to $1.8 in termination fees recorded at two operating properties.

 

Property management and other costs decreased by $10.5 million primarily as a result of the discontinuance of corporate cost allocations from GGP.

 

Depreciation and amortization increased $2.6 million primarily due to write off of land of $2.1 million at one of our operating properties.

 

Interest expense decreased by $23.4 million primarily due to the redemption of corporate unsecured bonds during 2012 resulting in interest savings of $17.1 million.

 

Loss on extinguishment of debt of $3.6 million relates to fees associated with the early redemption of corporate unsecured bonds during the three months ended March 31, 2013.

 

T- 1


 

Equity in income of Unconsolidated Real Estate Affiliates — gain on investment represents the gain recognized as a result of the additional offering at our Brazilian join venture, Aliansce. The offering diluted GGP’s ownership percentage from 27.77% to 27.59% during January 2013 and resulted in a gain of $2.9 million.

 

Discontinued operations for the three months ended March 31, 2013, includes the net income on one operating property that was distributed to GGP during the current quarter.

 

Cash position and liquidity at March 31, 2013

 

TRCLLC’s cash and cash equivalents increased $1.6 million to $2.1million as of March 31, 2013. The cash position of TRCLLC is largely determined at any point in time by the relative short-term demands for cash by TRCLLC and GGP.

 

TRCLLC has publicly-traded unsecured bonds of $608.7 million outstanding as of March 31, 2013 and $700.5 million outstanding as of December 31, 2012. The bonds have covenants, including ratios of secured debt to gross assets and total debt to total gross assets. We are not aware of any instances of non-compliance with such covenants as of March 31, 2013.

 

On April 2, 2013, TRCLLC called for redemption the remaining bonds, $608.7 million of 6.75% unsecured corporate bonds due November 9, 2015.  The bonds were redeemed on May 1, 2013, and the full amount of the 6.75% unsecured corporate bonds were redeemed in cash and required the payment of an early redemption fee of approximately $20.5 million, plus accrued and unpaid interest up to, but excluding, the redemption date.  The early redemption fee will be recognized in earnings during the three months ended June 30, 2013.

 

TRCLLC expects to remain current with respect to its debt obligations and be able to access additional funds as required from GGP.

 

T- 2


 

GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.

 

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

March 31,

 

December 31,

 

 

 

2013

 

2012

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

Investment in real estate:

 

 

 

 

 

Land

 

$

422,233

 

$

463,455

 

Buildings and equipment

 

2,056,990

 

2,269,051

 

Less accumulated depreciation

 

(185,938

)

(188,672

)

Construction in progress

 

7,506

 

14,182

 

Net property and equipment

 

2,300,791

 

2,558,016

 

Investment in and loans to/from Unconsolidated Real Estate Affiliates

 

894,782

 

904,922

 

Net investment in real estate

 

3,195,573

 

3,462,938

 

Cash and cash equivalents

 

2,072

 

434

 

Accounts and notes receivable, net

 

29,540

 

31,138

 

Deferred expenses, net

 

17,828

 

17,064

 

Prepaid expenses and other assets

 

148,821

 

162,764

 

Total assets

 

$

3,393,834

 

$

3,674,338

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Mortgages, notes and loans payable

 

$

2,153,426

 

$

2,061,943

 

Investment in and loans to/from Unconsolidated Real Estate Affiliates

 

15,439

 

—

 

Accounts payable and accrued expenses

 

155,173

 

164,131

 

Total liabilities

 

2,324,038

 

2,226,074

 

 

 

 

 

 

 

Capital:

 

 

 

 

 

Members’ capital

 

3,168,157

 

3,310,504

 

Receivable from General Growth Properties, Inc.

 

(2,018,999

)

(1,776,138

)

Accumulated other comprehensive loss

 

(79,362

)

(86,102

)

Members’ capital attributable to General Growth Properties, Inc.

 

1,069,796

 

1,448,264

 

Noncontrolling interests in Consolidated Real Estate Affiliates

 

—

 

—

 

Total capital

 

1,069,796

 

1,448,264

 

Total liabilities and capital

 

$

3,393,834

 

$

3,674,338

 

 

T- 3


 

GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

 

 

 

Three Months Ended March 31,

 

 

 

2013

 

2012

 

 

 

(In thousands)

 

Revenues:

 

 

 

 

 

Minimum rents

 

$

48,858

 

$

45,344

 

Tenant recoveries

 

23,259

 

22,659

 

Overage rents

 

1,257

 

1,349

 

Other

 

2,731

 

2,607

 

Total revenues

 

76,105

 

71,959

 

Expenses:

 

 

 

 

 

Real estate taxes

 

8,360

 

7,992

 

Property maintenance costs

 

3,069

 

2,689

 

Marketing

 

18

 

623

 

Other property operating costs

 

10,546

 

10,781

 

Provision for doubtful accounts

 

(171

)

226

 

Property management and other costs

 

(421

)

10,071

 

Depreciation and amortization

 

26,872

 

24,242

 

Total expenses

 

48,273

 

56,624

 

Operating income

 

27,832

 

15,335

 

 

 

 

 

 

 

Interest income

 

136

 

179

 

Interest expense

 

(18,237

)

(41,618

)

Loss on extinguishment of debt

 

(3,568

)

—

 

Loss before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests

 

6,163

 

(26,104

)

Benefit from (provision for) income taxes

 

—

 

(25

)

Equity in income of Unconsolidated Real Estate Affiliates

 

6,622

 

6,752

 

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment

 

2,926

 

—

 

Loss from continuing operations

 

15,711

 

(19,377

)

Discontinued operations

 

663

 

10,303

 

Net income (loss)

 

16,374

 

(9,074

)

Allocation to noncontrolling interests

 

—

 

382

 

Net income (loss) attributable to General Growth Properties, Inc.

 

$

16,374

 

$

(8,692

)

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

Net income (loss)

 

$

16,374

 

$

(9,074

)

Other comprehensive income:

 

 

 

 

 

Foreign currency translation

 

6,740

 

13,560

 

Other comprehensive income

 

23,114

 

4,486

 

Comprehensive income allocated to noncontrolling interests

 

—

 

382

 

Comprehensive income, net attributable to General Growth Properties, Inc.

 

$

23,114

 

$

4,868

 

 

T- 4


 

GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.

 

CONSOLIDATED STATEMENTS OF CAPITAL

(UNAUDITED)

 

 

 

Members’
Capital

 

Accumulated
other
comprehensive
loss

 

Receivable from
General Growth
Properties, Inc.

 

Noncontrolling
Interests in
Consolidated
Real Estate
Affiliates

 

Total Capital

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2012

 

6,118,338

 

(48,471

)

(2,778,909

)

20,008

 

3,310,966

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

(8,692

)

—

 

—

 

(382

)

(9,074

)

Other comprehensive loss

 

—

 

13,560

 

—

 

—

 

13,560

 

Advances to General Growth Properties, Inc.

 

—

 

—

 

8,372

 

—

 

8,372

 

Distributions to General Growth Properties, Inc.

 

(226,512

)

—

 

—

 

—

 

(226,512

)

Distributions to noncontrolling interests in Consolidated Real Estate Affiliates

 

—

 

—

 

—

 

(7

)

(7

)

Balance at March 31, 2012

 

5,883,134

 

$

(34,911

)

$

(2,770,537

)

$

19,619

 

$

3,097,305

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2013

 

3,310,504

 

(86,102

)

(1,776,138

)

—

 

1,448,264

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

16,374

 

—

 

—

 

—

 

16,374

 

Other comprehensive loss

 

—

 

6,740

 

—

 

—

 

6,740

 

Advances from General Growth Properties, Inc.

 

—

 

—

 

(245,847

)

—

 

(245,847

)

Distributions to General Growth Properties, Inc.

 

(158,721

)

—

 

2,986

 

—

 

(155,735

)

Balance at March 31, 2013

 

$

3,168,157

 

$

(79,362

)

$

(2,018,999

)

$

—

 

$

1,069,796

 

 

T- 5


 

GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Three Months Ended March 31,

 

 

 

2013

 

2012

 

 

 

(In thousands)

 

Cash Flows from Operating Activities:

 

 

 

 

 

Net income (loss)

 

$

16,374

 

$

(9,074

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

Equity in income of Unconsolidated Real Estate Affiliates

 

(6,622

)

(6,752

)

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment

 

(2,926

)

 

 

Distributions received from Unconsolidated Real Estate Affiliates

 

2,584

 

2,622

 

Provision for doubtful accounts

 

(176

)

672

 

Depreciation

 

27,651

 

50,703

 

Amortization

 

1,234

 

3,055

 

Amortization/write-off of deferred finance costs

 

—

 

11

 

Accretion/write-off of debt market rate adjustments

 

(9,665

)

(6,734

)

Amortization of intangibles other than in-place leases

 

2,631

 

5,531

 

Straight-line rent amortization

 

(1,810

)

(4,766

)

Loss on extinguishment of debt

 

3,568

 

—

 

Net Changes:

 

 

 

 

 

Accounts and notes receivable

 

1,138

 

3,270

 

Prepaid expenses and other assets

 

(5,594

)

3,938

 

Accounts payable and accrued expenses

 

6,773

 

2,827

 

Other, net

 

—

 

(3,257

)

Net cash provided by operating activities

 

35,160

 

42,046

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

Acquisition/development of real estate and property additions/improvements

 

(7,807

)

(11,017

)

Distributions received from Unconsolidated Real Estate Affiliates in excess of income

 

41,720

 

12,981

 

Contributions to Unconsolidated Real Estate Affiliates

 

(2,376

)

(19,330

)

Decrease in restricted cash

 

170

 

534

 

Other, net

 

21

 

29

 

Net cash provided by (used in) investing activities

 

31,728

 

(16,803

)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

Proceeds from refinance/issuance of mortgages, notes and loans payable

 

557,500

 

—

 

Principal payments on mortgages, notes and loans payable

 

(376,903

)

(13,326

)

Prepayment of financing fees

 

—

 

(4,325

)

(Advances to) borrowings from General Growth Properties, Inc.

 

(245,847

)

8,372

 

Distribution to noncontrolling interests

 

—

 

(7

)

Net cash used in financing activities

 

(65,250

)

(9,286

)

 

 

 

 

 

 

Net change in cash and cash equivalents

 

1,638

 

15,957

 

Cash and cash equivalents at beginning of period

 

434

 

442,559

 

Cash and cash equivalents at end of period

 

$

2,072

 

$

458,516

 

 

T- 6


 

GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(UNAUDITED)

 

 

 

Three Months Ended March 31,

 

 

 

2013

 

2012

 

 

 

(In thousands)

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

Interest paid

 

$

37,772

 

$

47,412

 

Interest capitalized

 

103

 

62

 

Accrued capital expenditures included in accounts payable and accrued expenses

 

5,425

 

$

7,029

 

Non-Cash Distribution to GGPLP:

 

 

 

 

 

Assets

 

$

246,864

 

$

398,633

 

Liabilities

 

(91,129

)

(172,121

)

 

T- 7