EX-99.1 2 a13-17204_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

 

GGP REPORTS SECOND QUARTER 2013 RESULTS

FFO Per Share Increases 18.1%;

Raises Full Year Guidance and Quarterly Dividend

 

Chicago, Illinois, July 29, 2013 – General Growth Properties, Inc. (the “Company”) (NYSE: GGP) today reported results for the three and six months ended June 30, 2013.

 

Financial Results

 

For the Three Months Ended June 30, 2013

Company Funds from Operations (“Company FFO”) per share increased 18.1% to $0.27 per diluted share from $0.23 per diluted share in the prior year period. Company FFO increased 17.0% to $267 million from $228 million in the prior year period.

 

Company Earnings Before Interest, Taxes, Depreciation and Amortization (“Company EBITDA”) increased 5.2% to $503 million from $478 million in the prior year period.

 

Net Operating Income for the mall portfolio (“Mall NOI”) increased 6.7% to $538 million from $504 million in the prior year period; comparable Net Operating Income for the U.S. Regional Mall Portfolio (“Same Store NOI”) increased 6.8% to $514 million from $481 million in the prior year period.

 

Net income attributable to General Growth Properties, Inc., which is impacted primarily by depreciation expense and a gain from change in control of investment properties, was $209 million, or $0.21 per diluted share, as compared to a net loss attributable to General Growth Properties, Inc. of $108 million, or $0.12 loss per diluted share, in the prior year period.

 

For the Six Months Ended June 30, 2013

Company FFO per share increased 15.8% to $0.52 per diluted share from $0.45 per diluted share in the prior year period. Company FFO increased 15.3% to $518 million from $450 million in the prior year period.

 

Company EBITDA increased 5.5% to $999 million from $947 million in the prior year period.

 

Mall NOI increased 6.0% to $1,070 million from $1,009 million in the prior year period; Same Store NOI increased 5.2% to $1,019 million from $969 million in the prior year period.

 

Net income attributable to General Growth Properties, Inc., which is impacted primarily by depreciation expense, a gain from change in control of investment properties and a non-cash accounting adjustment for outstanding warrants, was $198 million, or $0.20 per diluted share, as compared to a net loss attributable to General Growth Properties, Inc. of $306 million, or $0.33 loss per diluted share, in the prior year period.

 

Operational Highlights for the U.S. Regional Mall Portfolio

 

·         Tenant sales increased 5.1% to $560 per square foot on a trailing 12-month basis.

·         Mall leased percentage was 95.9% at quarter end, an increase of 160 basis points from June 30, 2012.

 

1


 

GRAPHIC

 

·         Initial rental rates for executed leases commencing in 2013 on a suite-to-suite basis increased 11.1%, or $6.25 per square foot, to $62.79 per square foot when compared to the rental rate for expiring leases.

 

Financing Activities

 

Property-Level Debt

During the three months ended June 30, 2013, the Company obtained $690 million ($602 million at share) of property-level debt with a weighted-average interest rate of 3.78% and weighted-average term-to-maturity of 9.4 years; the prior loans had a weighted-average interest rate of 5.68% and a remaining term-to-maturity of 1.5 years. The transactions generated approximately $159 million of net proceeds.

 

In addition, the Company obtained a $1.5 billion corporate loan secured by cross-collateralized mortgages on 16 properties with a weighted-average interest rate of LIBOR + 2.50% and a term-to-maturity of 3.0 years (with 2 one-year options); the prior loans secured by 16 properties had a weighted-average interest rate of 3.98% and a remaining term-to-maturity of 3.3 years.  The transaction generated approximately $182 million of net proceeds.

 

Subsequent to June 30, 2013, the Company obtained an additional $690 million ($479 million at share) of property-level financings related to four properties. The new mortgages have a weighted-average interest rate and term of 3.99% and 10.9 years, respectively, as compared to a rate of 4.64% and a remaining term-to-maturity of 3.2 years.  The transactions generated approximately $90 million of net proceeds to the Company.

 

Unsecured Notes

During the three months ended June 30, 2013, the Company redeemed $609 million of its 6.75% unsecured notes due November 9, 2015 on May 1, 2013. In connection with the repayment, the Company incurred $20.5 million of early redemption fees. After repayment of the $609 million, the Company no longer has any outstanding unsecured Rouse notes.

 

Investment Activities

 

Acquisitions

During the three months ended June 30, 2013, the Company acquired an additional 50% interest in Quail Springs Mall, previously held in a joint venture with JCP Realty, Inc. As a result the Company now owns 100% of the mall.

 

Dispositions

During the three months ended June 30, 2013, the Company sold a 49.9% interest in both The Grand Canal Shoppes and The Shoppes at the Palazzo. As a result the Company now owns 50.1% of the combined properties in a newly formed joint venture The Grand Canal Shoppes. Additionally, the Company disposed of a strip center.

 

On July 29, 2013, the Company entered into separate agreements to sell its ownership interests in Aliansce Shopping Centers S.A. (BM&FBOVESPA: ALSC3) to the Canada Pension Plan Investment Board and Rique Empreendimentos e Participações Ltda for approximately $690 million. The transaction is expected to close in the third quarter subject to certain conditions.

 

Development

The Company has redevelopment activities under construction totaling approximately $900 million of capital investment (at share), encompassing 24 properties including Ala Moana, Fashion Show and Glendale Galleria.

 

2


 

GRAPHIC

 

Dividends

 

Today the Company announced that its Board of Directors declared a third quarter common stock dividend of $0.13 per share payable on October 29, 2013, to stockholders of record on October 15, 2013, representing an increase of $0.01 per share from the prior quarter.

 

The Board of Directors also declared a quarterly dividend on its 6.375% series A Cumulative Redeemable Preferred Stock of $0.3984 per share payable on October 1, 2013 to stockholders of record on September 13, 2013.

 

Guidance

 

Company FFO for the year ending December 31, 2013, is expected to be $1.13 to $1.15 per diluted share.

Company FFO for the third quarter 2013 is expected to be $0.26 to $0.28 per diluted share.

 

The following table provides a reconciliation of the range of estimated diluted net income attributable to General Growth Properties, Inc. per share to estimated diluted FFO per share and diluted Company FFO per share.

 

 

 

For the year ending
December 31, 2013

 

For the three months ending
September 30, 2013

 

 

 

Low End

 

High End

 

Low End

 

High End

 

 

 

 

 

 

 

 

 

 

 

Company FFO per diluted share

 

$

1.13

 

$

1.15

 

$

0.26

 

$

0.28

 

Mark-to-market of warrants (1)

 

(0.04

)

(0.04

)

—

 

—

 

Loss on extinguishment of debt (2)

 

(0.04

)

(0.04

)

—

 

—

 

Adjustments (3) 

 

(0.11

)

(0.11

)

(0.04

)

(0.04

)

FFO

 

0.94

 

0.96

 

0.22

 

0.24

 

Depreciation, including share of joint ventures

 

(0.77

)

(0.77

)

(0.19

)

(0.19

)

Gain on sale of investments and other (4)

 

0.22

 

0.22

 

—

 

—

 

Net income attributable to common stockholders

 

0.39

 

0.41

 

0.03

 

0.05

 

Preferred stock dividends

 

0.02

 

0.02

 

—

 

—

 

Net income attributable to General Growth Properties, Inc.

 

$

0.41

 

$

0.43

 

$

0.03

 

$

0.05

 

 

(1)         As a result of the modification to the warrants in Q1 2013, they are classified as permanent equity effective March 28, 2013 and no longer required to be marked-to-market.

(2)         Fees incurred for the retirement of debt.

(3)         Refer to the Supplemental Information package for the nature of adjustments to reconcile FFO to Company FFO. The Supplemental Information package is available in the Investors section of the Company’s website at www.ggp.com.

(4)         Impact of gains from changes in control of investment properties.

 

The guidance estimate reflects management’s view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release and previously disclosed. The guidance also reflects management’s view of capital market conditions. The estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions or capital markets activity. Earnings per share estimates may be subject to fluctuations as a result of several factors, including any gains or losses associated with disposition activity. By definition, FFO and Company FFO do not include real estate-related depreciation and amortization, provisions for impairment, or gains or losses associated with property disposition activities. This guidance is a forward-looking statement and is subject to the risks and other factors described elsewhere in this release.

 

3


 

GRAPHIC

 

Investor Conference Call

 

On Tuesday, July 30, 2013, the Company will host a conference call at 8:00 a.m. CDT (9:00 a.m. EDT). The conference call will be accessible by telephone and through the Internet. Interested parties can access the call by dialing 877.845.1018 (international 707.287.9345). A live webcast of the conference call will be available in listen-only mode in the Investors section at www.ggp.com. Interested parties should access the conference call or website 10 minutes prior to the beginning of the call in order to register.

 

For those unable to listen to the call live, a replay will be available for approximately two weeks after the conference call event. To access the replay, dial 855.859.2056 (international 404.537.3406) conference ID 99216649.

 

Supplemental Information

 

The Company has prepared a supplemental information report available on www.ggp.com in the Investors section. This information also has been furnished with the Securities and Exchange Commission as an exhibit on Form 8-K.

 

Forward-Looking Statements

 

Certain statements made in this press release may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statement are based on reasonable assumption, it can give no assurance that its expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to, the Company’s ability to refinance, extend, restructure or repay near and intermediate term debt, its indebtedness, its ability to raise capital through equity issuances, asset sales or the incurrence of new debt, retail and credit market conditions, impairments, its liquidity demands, retail and economic conditions. The Company discusses these and other risks and uncertainties in its annual and quarterly periodic reports filed with the Securities and Exchange Commission. The Company may update that discussion in its periodic reports, but otherwise takes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

 

General Growth Properties, Inc.

 

General Growth Properties, Inc. is a fully integrated, self-managed and self-administered real estate investment trust focused exclusively on owning, managing, leasing, and redeveloping regional malls throughout the United States. GGP’s portfolio is comprised of 123 regional malls in the United States comprising approximately 128 million square feet of gross leasable area. GGP is headquartered in Chicago, Illinois, and publicly traded on the NYSE under the symbol GGP.

 

Investor Relations Contact:

 

Media Contact:

Kevin Berry

 

David Keating

VP Investor Relations

 

VP Corporate Communications

(312) 960-5529

 

(312) 960-6325

kevin.berry@ggp.com

 

david.keating@ggp.com

 

4


 

GRAPHIC

 

NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES AND DEFINITIONS

 

REAL ESTATE PROPERTY NET OPERATING INCOME (NOI) AND COMPANY NOI

The Company defines NOI as income from property operations after operating expenses have been deducted, but prior to deducting financing, administrative and income tax expenses.  NOI has been reflected on a proportionate basis (at the Company’s ownership share).  Other REITs may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.  Because NOI excludes general and administrative expenses, interest expense, retail investment property impairment or non-recoverable development costs, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests, provision for income taxes, discontinued operations, preferred stock dividends and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs.

 

The Company utilizes Company NOI, which is NOI excluding non-cash and certain non-comparable items such as straight-line rent and intangible asset and liability amortization resulting from acquisition accounting. However, due to the exclusions noted, Company NOI should only be used as an alternative measure of the Company’s financial performance. The Company presents Company NOI, Company EBITDA and Company FFO (as defined below), as the Company believes certain investors and other users of our financial information use them as measures of the Company’s historical operating performance.

 

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) AND COMPANY EBITDA

EBITDA is defined as net income (loss) attributable to common stockholders, adjusted to exclude interest expense net of interest income, warrant adjustment, income tax provision (benefit), discontinued operations, allocations to noncontrolling interests, preferred stock dividends and depreciation and amortization.  EBITDA has been reflected on a proportionate basis.  Company EBITDA comprises EBITDA as defined immediately above and excludes certain non-cash and certain non-recurring items such as our Company NOI adjustments described above, provisions for impairment, strategic initiatives and certain management and administration costs.

 

FUNDS FROM OPERATIONS (“FFO”) AND COMPANY FFO

The Company determines FFO based upon the definition set forth by National Association of Real Estate Investment Trusts (“NAREIT”). The Company determines FFO to be our share of consolidated net income (loss) computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding cumulative effects of accounting changes, excluding gains and losses from the sales of, or any impairment charges related to, previously depreciated operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon our economic ownership interest, and all determined on a consistent basis in accordance with GAAP.  As with our presentation of NOI and EBITDA, FFO has been reflected on a proportionate basis.

 

The Company considers FFO a supplemental measure for equity REITs and a complement to GAAP measures because it facilitates an understanding of the operating performance of the Company’s properties.  FFO does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life.  Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company’s operating performance.  As with our presentation of Company NOI and Company EBITDA, Company FFO excludes from FFO certain items that are non-cash and certain non-comparable items such as our Company NOI adjustments, Company EBITDA adjustments and FFO items such as FFO from discontinued operations from the spin-off of Rouse Properties, Inc., mark-to-market adjustments on debt and gains on the extinguishment of debt, warrant liability adjustment, and interest expense on debt repaid or settled, all as a result of our emergence, acquisition accounting and other capital contribution or restructuring events.

 

RECONCILIATIONS OF NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES

The Company presents EBITDA and FFO as they are financial measures widely used in the REIT industry.  In order to provide a better understanding of the relationship between our non-GAAP Supplemental Financial measures of NOI, Company NOI, EBITDA, Company EBITDA, FFO and Company FFO, reconciliations have been provided as follows: a reconciliation of NOI and Company NOI to GAAP Operating Income (loss); a reconciliation of EBITDA and Company EBITDA to GAAP net income (loss) attributable to General Growth Properties, Inc.; a reconciliation of Company FFO and FFO to GAAP net income (loss) attributable to General Growth Properties, Inc. has been provided.  None of our non-GAAP Supplemental Financial measures represents cash flow from operating activities in accordance with GAAP, none should be considered as an alternative to GAAP net income (loss) attributable to General Growth Properties, Inc. and none are necessarily indicative of cash available to fund cash needs.  In addition, the Company has presented such financial measures on a consolidated and unconsolidated basis (at the Company’s ownership share) as the Company believes that given the significance of the Company’s operations that are owned through investments accounted for on the equity method of accounting, the detail of the operations of the Company’s unconsolidated properties provides important insights into the income and FFO produced by such investments for the Company as a whole.

 

5

 


 

FINANCIAL OVERVIEW

GRAPHIC

 

 

Consolidated Statements of Operations (1)

(In thousands, except per share)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30, 2013

 

June 30, 2012

 

June 30, 2013

 

June 30, 2012

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Minimum rents

 

$

394,047

 

$

382,336

 

$

797,357

 

$

759,921

 

Tenant recoveries

 

178,651

 

176,194

 

366,355

 

351,059

 

Overage rents

 

6,415

 

8,099

 

17,894

 

21,184

 

Management fees and other corporate revenues

 

17,307

 

21,652

 

33,239

 

37,823

 

Other

 

16,809

 

18,174

 

36,077

 

32,971

 

Total revenues

 

613,229

 

606,455

 

1,250,922

 

1,202,958

 

Expenses:

 

 

 

 

 

 

 

 

 

Real estate taxes

 

55,730

 

56,995

 

124,984

 

112,656

 

Property maintenance costs

 

15,425

 

18,692

 

39,246

 

39,216

 

Marketing

 

5,762

 

7,234

 

12,281

 

13,972

 

Other property operating costs

 

87,685

 

92,808

 

176,935

 

179,461

 

Provision for (Recovery from) doubtful accounts

 

766

 

(709

)

2,556

 

1,458

 

Property management and other costs

 

41,568

 

38,698

 

81,923

 

80,238

 

General and administrative

 

13,124

 

11,046

 

24,057

 

21,556

 

Depreciation and amortization

 

191,327

 

188,193

 

386,755

 

394,977

 

Total expenses

 

411,387

 

412,957

 

848,737

 

843,534

 

Operating income

 

201,842

 

193,498

 

402,185

 

359,424

 

Interest income

 

429

 

875

 

1,149

 

1,536

 

Interest expense

 

(193,274

)

(183,311

)

(388,657

)

(394,066

)

Warrant liability adjustment

 

—

 

(146,588

)

(40,546

)

(289,700

)

Gains from changes in control of investment properties

 

219,784

 

18,547

 

219,784

 

18,547

 

Loss on extinguishment of debt

 

(27,159

)

—

 

(36,478

)

—

 

Income (Loss) before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations, noncontrolling interests and preferred stock dividends

 

201,622

 

(116,979

)

157,437

 

(304,259

)

Provision for income taxes

 

(1,382

)

(1,709

)

(1,523

)

(3,104

)

Equity in income of Unconsolidated Real Estate Affiliates

 

13,987

 

11,843

 

27,181

 

17,795

 

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

 

—

 

—

 

3,448

 

—

 

Income (loss) from continuing operations

 

214,227

 

(106,845

)

186,543

 

(289,568

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

(Loss) income from discontinued operations, including gains (losses) on dispositions

 

(304

)

499

 

(7,252

)

(11,023

)

Gain on extinguishment of debt

 

—

 

—

 

25,894

 

—

 

Discontinued operations, net

 

(304

)

499

 

18,642

 

(11,023

)

Net income (loss)

 

213,923

 

(106,346

)

205,185

 

(300,591

)

Allocation to noncontrolling interests

 

(4,548

)

(1,590

)

(7,336

)

(4,957

)

Net income (loss) attributable to GGP

 

209,375

 

(107,936

)

197,849

 

(305,548

)

Preferred stock dividends

 

(3,984

)

—

 

(6,109

)

—

 

Net income (loss) attributable to common stockholders

 

$

205,391

 

$

(107,936

)

$

191,740

 

$

(305,548

)

Basic Income (Loss) Per Share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.22

 

$

(0.12

)

$

0.18

 

$

(0.32

)

Discontinued operations

 

—

 

—

 

0.02

 

(0.01

)

Total basic income (loss) per share

 

$

0.22

 

$

(0.12

)

$

0.20

 

$

(0.33

)

Diluted Income (Loss) Per Share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.21

 

$

(0.12

)

$

0.18

 

$

(0.32

)

Discontinued operations

 

—

 

—

 

0.02

 

(0.01

)

Total diluted income (loss) per share

 

$

0.21

 

$

(0.12

)

$

0.20

 

$

(0.33

)

 

(1) Amounts presented in accordance with GAAP.

 

 


 

FINANCIAL OVERVIEW

GRAPHIC

 

 

Consolidated Balance Sheets (1)

(In thousands)

 

 

 

June 30, 2013

 

December 31, 2012

 

Assets:

 

 

 

 

 

Investment in real estate:

 

 

 

 

 

Land

 

$

4,264,410

 

$

4,278,471

 

Buildings and equipment

 

17,937,639

 

18,806,858

 

Less accumulated depreciation

 

(1,596,485

)

(1,440,301

)

Construction in progress

 

336,388

 

376,529

 

Net property and equipment

 

20,941,952

 

22,021,557

 

Investment in and loans to/from Unconsolidated Real Estate Affiliates

 

2,963,892

 

2,865,871

 

Net investment in real estate

 

23,905,844

 

24,887,428

 

Cash and cash equivalents

 

704,918

 

624,815

 

Accounts and notes receivable, net

 

254,050

 

260,860

 

Deferred expenses, net

 

188,314

 

179,837

 

Prepaid expenses and other assets

 

1,091,310

 

1,329,465

 

Total assets

 

$

26,144,436

 

$

27,282,405

 

Liabilities:

 

 

 

 

 

Mortgages, notes and loans payable

 

$

15,463,928

 

$

15,966,866

 

Investment in and loans to/from Unconsolidated Real Estate Affiliates

 

16,387

 

—

 

Accounts payable and accrued expenses

 

951,849

 

1,212,231

 

Dividend payable

 

119,742

 

103,749

 

Deferred tax liabilities

 

27,064

 

28,174

 

Tax indemnification liability

 

303,586

 

303,750

 

Junior Subordinated Notes

 

206,200

 

206,200

 

Warrant liability

 

—

 

1,488,196

 

Total liabilities

 

17,088,756

 

19,309,166

 

Redeemable noncontrolling interests:

 

 

 

 

 

Preferred

 

136,087

 

136,008

 

Common

 

127,509

 

132,211

 

Total redeemable noncontrolling interests

 

263,596

 

268,219

 

Equity:

 

 

 

 

 

Preferred stock

 

242,042

 

—

 

Stockholders’ equity

 

8,467,096

 

7,621,698

 

Noncontrolling interests in consolidated real estate affiliates

 

82,946

 

83,322

 

Total equity

 

8,792,084

 

7,705,020

 

Total liabilities and equity

 

$

26,144,436

 

$

27,282,405

 

 

(1) Presented in accordance with GAAP.

 


 

PROPORTIONATE FINANCIAL STATEMENTS

GRAPHIC

 

 

Company NOI, EBITDA and FFO

For the Three Months Ended June 30, 2013 and 2012

(In thousands)

 

 

 

 

Three Months Ended June 30, 2013

 

Three Months Ended June 30, 2012

 

 

 

Consolidated
Properties

 

Noncontrolling
Interests

 

Unconsolidated
Properties

 

Proportionate

 

Adjustments

 

Company

 

Consolidated
Properties

 

Noncontrolling
Interests

 

Unconsolidated
Properties

 

Proportionate

 

Adjustments

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum rents

 

$

394,047

 

$

(3,643

)

$

104,799

 

$

495,203

 

$

4,773

 

$

499,976

 

$

382,336

 

$

(2,969

)

$

99,844

 

$

479,211

 

$

5,452

 

$

484,663

 

Tenant recoveries

 

178,651

 

(1,169

)

40,634

 

218,116

 

—

 

218,116

 

176,194

 

(1,036

)

35,521

 

210,679

 

—

 

210,679

 

Overage rents

 

6,415

 

(38

)

2,945

 

9,322

 

—

 

9,322

 

8,099

 

(66

)

2,486

 

10,519

 

—

 

10,519

 

Other revenue

 

16,809

 

(98

)

9,241

 

25,952

 

—

 

25,952

 

17,264

 

(84

)

1,684

 

18,864

 

—

 

18,864

 

Total property revenues

 

595,922

 

(4,948

)

157,619

 

748,593

 

4,773

 

753,366

 

583,893

 

(4,155

)

139,535

 

719,273

 

5,452

 

724,725

 

Property operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

55,730

 

(530

)

12,927

 

68,127

 

(1,578

)

66,549

 

56,995

 

(515

)

11,610

 

68,090

 

(1,578

)

66,512

 

Property maintenance costs

 

15,425

 

(96

)

3,735

 

19,064

 

—

 

19,064

 

18,692

 

(90

)

3,818

 

22,420

 

—

 

22,420

 

Marketing

 

5,762

 

(45

)

1,668

 

7,385

 

—

 

7,385

 

7,234

 

(67

)

1,645

 

8,812

 

—

 

8,812

 

Other property operating costs

 

87,685

 

(557

)

25,881

 

113,009

 

(1,391

)

111,618

 

92,808

 

(521

)

23,653

 

115,940

 

(1,430

)

114,510

 

Provision for (Recovery from) doubtful accounts

 

766

 

(6

)

310

 

1,070

 

—

 

1,070

 

(709

)

5

 

8

 

(696

)

—

 

(696

)

Total property operating expenses

 

165,368

 

(1,234

)

44,521

 

208,655

 

(2,969

)

205,686

 

175,020

 

(1,188

)

40,734

 

214,566

 

(3,008

)

211,558

 

NOI

 

$

430,554

 

$

(3,714

)

$

113,098

 

$

539,938

 

$

7,742

 

$

547,680

 

$

408,873

 

$

(2,967

)

$

98,801

 

$

504,707

 

$

8,460

 

$

513,167

 

Management fees and other corporate revenues

 

17,307

 

—

 

1,764

 

19,071

 

—

 

19,071

 

21,652

 

—

 

2,290

 

23,942

 

—

 

23,942

 

Property management and other costs

 

(41,568

)

153

 

(6,221

)

(47,636

)

(424

)

(48,060

)

(38,698

)

117

 

(5,806

)

(44,387

)

(424

)

(44,811

)

NOI after net property management costs

 

$

406,293

 

$

(3,561

)

$

108,641

 

$

511,373

 

$

7,318

 

$

518,691

 

$

391,827

 

$

(2,850

)

$

95,285

 

$

484,262

 

$

8,036

 

$

492,298

 

General and administrative

 

(13,124

)

—

 

(2,665

)

(15,789

)

—

 

(15,789

)

(11,046

)

—

 

(3,107

)

(14,153

)

—

 

(14,153

)

EBITDA

 

$

393,169

 

$

(3,561

)

$

105,976

 

$

495,584

 

$

7,318

 

$

502,902

 

$

380,781

 

$

(2,850

)

$

92,178

 

$

470,109

 

$

8,036

 

$

478,145

 

Depreciation on non-income producing assets

 

(3,021

)

—

 

—

 

(3,021

)

—

 

(3,021

)

(2,022

)

—

 

—

 

(2,022

)

—

 

(2,022

)

Interest income

 

429

 

—

 

1,578

 

2,007

 

—

 

2,007

 

875

 

(2

)

1,118

 

1,991

 

—

 

1,991

 

Preferred unit distributions

 

(2,336

)

—

 

—

 

(2,336

)

—

 

(2,336

)

(2,336

)

—

 

—

 

(2,336

)

—

 

(2,336

)

Preferred stock dividends

 

(3,984

)

—

 

—

 

(3,984

)

—

 

(3,984

)

—

 

—

 

—

 

—

 

—

 

—

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Default interest

 

—

 

—

 

—

 

—

 

—

 

—

 

(1,144

)

—

 

—

 

(1,144

)

1,144

 

—

 

Mark-to-market adjustments on debt

 

(4,143

)

(93

)

(78

)

(4,314

)

4,314

 

—

 

5,718

 

(105

)

894

 

6,507

 

(6,507

)

—

 

Write-off of mark-to-market adjustments on extinguished debt

 

(4,618

)

—

 

—

 

(4,618

)

4,618

 

—

 

23,884

 

1

 

—

 

23,885

 

(23,885

)

—

 

Debt extinguishment expenses

 

—

 

—

 

—

 

—

 

—

 

—

 

(9

)

—

 

(4

)

(13

)

13

 

—

 

Interest on existing debt

 

(184,513

)

1,123

 

(45,183

)

(228,573

)

—

 

(228,573

)

(211,760

)

926

 

(39,596

)

(250,430

)

—

 

(250,430

)

Warrant liability adjustment

 

—

 

—

 

—

 

—

 

—

 

—

 

(146,588

)

—

 

—

 

(146,588

)

146,588

 

—

 

Loss on extinguishment of debt

 

(27,159

)

—

 

—

 

(27,159

)

27,159

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Provision for income taxes

 

(1,382

)

18

 

(70

)

(1,434

)

881

 

(553

)

(1,709

)

16

 

(111

)

(1,804

)

1,345

 

(459

)

FFO from discontinued operations

 

154

 

—

 

—

 

154

 

62

 

216

 

4,003

 

—

 

—

 

4,003

 

(1,027

)

2,976

 

 

 

162,596

 

(2,513

)

62,223

 

222,306

 

44,352

 

266,658

 

49,693

 

(2,014

)

54,479

 

102,158

 

125,707

 

227,865

 

Equity in FFO of Unconsolidated Properties and Noncontrolling Interests

 

59,710

 

2,513

 

(62,223

)

—

 

—

 

—

 

52,465

 

2,014

 

(54,479

)

—

 

—

 

—

 

FFO

 

$

222,306

 

$

—

 

$

—

 

$

222,306

 

$

—

 

$

266,658

 

$

102,158

 

$

—

 

$

—

 

$

102,158

 

$

—

 

$

227,865

 

 

 


 

PROPORTIONATE FINANCIAL STATEMENTS

GRAPHIC

 

 

Company NOI, EBITDA and FFO

For the Six Months Ended June 30, 2013 and 2012

(In thousands)

 

 

 

 

Six Months Ended June 30, 2013

 

Six Months Ended June 30, 2012

 

 

 

Consolidated
Properties

 

Noncontrolling
Interests

 

Unconsolidated
Properties

 

Proportionate

 

Adjustments

 

Company

 

Consolidated
Properties

 

Noncontrolling
Interests

 

Unconsolidated
Properties

 

Proportionate

 

Adjustments

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum rents

 

$

797,357

 

$

(7,049

)

$

201,489

 

$

991,797

 

$

12,098

 

$

1,003,895

 

$

759,921

 

$

(5,353

)

$

196,387

 

$

950,955

 

$

11,727

 

$

962,682

 

Tenant recoveries

 

366,355

 

(2,354

)

77,455

 

441,456

 

—

 

441,456

 

351,059

 

(2,145

)

72,746

 

421,660

 

—

 

421,660

 

Overage rents

 

17,894

 

(112

)

7,251

 

25,033

 

—

 

25,033

 

21,184

 

(117

)

6,122

 

27,189

 

—

 

27,189

 

Other revenue

 

36,077

 

(192

)

18,282

 

54,167

 

—

 

54,167

 

32,059

 

(162

)

7,264

 

39,161

 

—

 

39,161

 

Total property revenues

 

1,217,683

 

(9,707

)

304,477

 

1,512,453

 

12,098

 

1,524,551

 

1,164,223

 

(7,777

)

282,519

 

1,438,965

 

11,727

 

1,450,692

 

Property operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

124,984

 

(1,053

)

25,479

 

149,410

 

(3,156

)

146,254

 

112,656

 

(1,017

)

23,514

 

135,153

 

(3,156

)

131,997

 

Property maintenance costs

 

39,246

 

(183

)

7,865

 

46,928

 

—

 

46,928

 

39,216

 

(186

)

8,336

 

47,366

 

—

 

47,366

 

Marketing

 

12,281

 

(117

)

3,175

 

15,339

 

—

 

15,339

 

13,972

 

(138

)

3,280

 

17,114

 

—

 

17,114

 

Other property operating costs

 

176,935

 

(1,091

)

51,404

 

227,248

 

(2,770

)

224,478

 

179,461

 

(1,067

)

50,261

 

228,655

 

(2,859

)

225,796

 

Provision for doubtful accounts

 

2,556

 

(48

)

1,235

 

3,743

 

—

 

3,743

 

1,458

 

24

 

265

 

1,747

 

—

 

1,747

 

Total property operating expenses

 

356,002

 

(2,492

)

89,158

 

442,668

 

(5,926

)

436,742

 

346,763

 

(2,384

)

85,656

 

430,035

 

(6,015

)

424,020

 

NOI

 

$

861,681

 

$

(7,215

)

$

215,319

 

$

1,069,785

 

$

18,024

 

$

1,087,809

 

$

817,460

 

$

(5,393

)

$

196,863

 

$

1,008,930

 

$

17,742

 

$

1,026,672

 

Management fees and other corporate revenues

 

33,239

 

—

 

3,650

 

36,889

 

—

 

36,889

 

37,823

 

—

 

3,817

 

41,640

 

—

 

41,640

 

Property management and other costs

 

(81,923

)

305

 

(12,290

)

(93,908

)

(848

)

(94,756

)

(80,238

)

274

 

(12,017

)

(91,981

)

(848

)

(92,829

)

NOI after net property management costs

 

$

812,997

 

$

(6,910

)

$

206,679

 

$

1,012,766

 

$

17,176

 

$

1,029,942

 

$

775,045

 

$

(5,119

)

$

188,663

 

$

958,589

 

$

16,894

 

$

975,483

 

General and administrative

 

(24,057

)

—

 

(6,831

)

(30,888

)

—

 

(30,888

)

(21,556

)

15

 

(6,533

)

(28,074

)

—

 

(28,074

)

EBITDA

 

$

788,940

 

$

(6,910

)

$

199,848

 

$

981,878

 

$

17,176

 

$

999,054

 

$

753,489

 

$

(5,104

)

$

182,130

 

$

930,515

 

$

16,894

 

$

947,409

 

Depreciation on non-income producing assets

 

(6,115

)

—

 

—

 

(6,115

)

—

 

(6,115

)

(3,725

)

—

 

—

 

(3,725

)

—

 

(3,725

)

Interest income

 

1,149

 

(1

)

3,186

 

4,334

 

—

 

4,334

 

1,536

 

(2

)

1,824

 

3,358

 

—

 

3,358

 

Preferred unit distributions

 

(4,671

)

—

 

—

 

(4,671

)

—

 

(4,671

)

(7,769

)

—

 

—

 

(7,769

)

3,098

 

(4,671

)

Preferred stock dividends

 

(6,109

)

—

 

—

 

(6,109

)

—

 

(6,109

)

—

 

—

 

—

 

—

 

—

 

—

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Default interest

 

(1,306

)

—

 

—

 

(1,306

)

1,306

 

—

 

(2,288

)

—

 

(309

)

(2,597

)

2,597

 

—

 

Mark-to-market adjustments on debt

 

(7,981

)

(184

)

82

 

(8,083

)

8,083

 

—

 

9,605

 

(185

)

1,439

 

10,859

 

(10,859

)

—

 

Write-off of mark-to-market adjustments on extinguished debt

 

2,587

 

—

 

—

 

2,587

 

(2,587

)

—

 

22,962

 

1

 

—

 

22,963

 

(22,963

)

—

 

Debt extinguishment expenses

 

—

 

—

 

—

 

—

 

—

 

—

 

(186

)

—

 

(4

)

(190

)

190

 

—

 

Interest on existing debt

 

(381,957

)

2,249

 

(87,446

)

(467,154

)

—

 

(467,154

)

(424,159

)

2,380

 

(78,141

)

(499,920

)

—

 

(499,920

)

Warrant liability adjustment

 

(40,546

)

—

 

—

 

(40,546

)

40,546

 

—

 

(289,700

)

—

 

—

 

(289,700

)

289,700

 

—

 

Loss on extinguishment of debt

 

(36,478

)

—

 

—

 

(36,478

)

36,478

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Provision for income taxes

 

(1,523

)

35

 

(151

)

(1,639

)

541

 

(1,098

)

(3,104

)

32

 

(214

)

(3,286

)

2,185

 

(1,101

)

FFO from discontinued operations

 

24,856

 

—

 

—

 

24,856

 

(24,664

)

192

 

16,064

 

—

 

—

 

16,064

 

(7,830

)

8,234

 

 

 

330,846

 

(4,811

)

115,519

 

441,554

 

76,879

 

518,433

 

72,725

 

(2,878

)

106,725

 

176,572

 

273,012

 

449,584

 

Equity in FFO of Unconsolidated Properties and Noncontrolling Interests

 

110,708

 

4,811

 

(115,519

)

—

 

—

 

—

 

103,847

 

2,878

 

(106,725

)

—

 

—

 

—

 

FFO

 

$

441,554

 

$

—

 

$

—

 

$

441,554

 

$

—

 

$

518,433

 

$

176,572

 

$

—

 

$

—

 

$

176,572

 

$

—

 

$

449,584

 

 


 

PROPORTIONATE FINANCIAL STATEMENTS

GRAPHIC

 

 

Reconciliation of Non-GAAP to GAAP Financial Measures

(In thousands)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30, 2013

 

June 30, 2012

 

June 30, 2013

 

June 30, 2012

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Company NOI to GAAP Operating Income

 

 

 

 

 

 

 

 

 

Company NOI:

 

$

547,680

 

$

513,167

 

$

1,087,809

 

$

1,026,672

 

Adjustments for minimum rents, real estate taxes and other property operating costs

 

(7,742

)

(8,460

)

(18,024

)

(17,742

)

Proportionate NOI

 

539,938

 

504,707

 

1,069,785

 

1,008,930

 

Unconsolidated Properties

 

(113,098

)

(98,801

)

(215,319

)

(196,863

)

Consolidated Properties

 

426,840

 

405,906

 

854,466

 

812,067

 

Management fees and other corporate revenues

 

17,307

 

21,652

 

33,239

 

37,823

 

Property management and other costs

 

(41,568

)

(38,698

)

(81,923

)

(80,238

)

General and administrative

 

(13,124

)

(11,046

)

(24,057

)

(21,556

)

Depreciation and amortization

 

(191,327

)

(188,193

)

(386,755

)

(394,977

)

Noncontrolling interest in operating income of Consolidated Properties and other

 

3,714

 

3,877

 

7,215

 

6,305

 

Operating income

 

$

201,842

 

$

193,498

 

$

402,185

 

$

359,424

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Company EBITDA to GAAP Net Income (Loss) Attributable to GGP

 

 

 

 

 

 

 

 

 

Company EBITDA

 

$

502,902

 

$

478,145

 

$

999,054

 

$

947,409

 

Adjustments for minimum rents, property operating expenses and property management and other costs

 

(7,318

)

(8,036

)

(17,176

)

(16,894

)

Proportionate EBITDA

 

495,584

 

470,109

 

981,878

 

930,515

 

Unconsolidated Properties

 

(105,976

)

(92,178

)

(199,848

)

(182,130

)

Consolidated Properties

 

389,608

 

377,931

 

782,030

 

748,385

 

Depreciation and amortization

 

(191,327

)

(188,193

)

(386,755

)

(394,977

)

Noncontrolling interest in NOI of Consolidated Properties

 

3,714

 

3,877

 

7,215

 

6,305

 

Interest income

 

429

 

875

 

1,149

 

1,536

 

Interest expense

 

(193,274

)

(183,311

)

(388,657

)

(394,066

)

Warrant liability adjustment

 

—

 

(146,588

)

(40,546

)

(289,700

)

Provision for income taxes

 

(1,382

)

(1,709

)

(1,523

)

(3,104

)

Equity in income of Unconsolidated Real Estate Affiliates

 

13,987

 

11,843

 

27,181

 

17,795

 

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

 

—

 

—

 

3,448

 

—

 

Discontinued operations

 

(304

)

499

 

18,642

 

(11,023

)

Gains from changes in control of investment properties

 

219,784

 

18,547

 

219,784

 

18,547

 

Loss on extinguishment of debt

 

(27,159

)

—

 

(36,478

)

—

 

Allocation to noncontrolling interests

 

(4,701

)

(1,707

)

(7,641

)

(5,246

)

Net income (loss) attributable to GGP

 

$

209,375

 

$

(107,936

)

$

197,849

 

$

(305,548

)

 

 

 

 

 

 

 

 

 

 

Reconciliation of Company FFO to GAAP Net Income (Loss) Attributable to GGP

 

 

 

 

 

 

 

 

 

Company FFO

 

$

266,658

 

$

227,865

 

$

518,433

 

$

449,584

 

Adjustments for minimum rents, property operating expenses and property management and other costs, market rate adjustments, debt extinguishment, income taxes and FFO from discontinued operations

 

(44,352

)

(125,707

)

(76,879

)

(273,012

)

Proportionate FFO

 

222,306

 

102,158

 

441,554

 

176,572

 

Depreciation and amortization of capitalized real estate costs

 

(236,745

)

(231,287

)

(475,794

)

(484,814

)

Gains from changes in control of investment properties

 

219,784

 

18,547

 

219,784

 

18,547

 

Preferred stock dividends

 

3,984

 

—

 

6,109

 

—

 

Gains on sales of investment properties

 

(242

)

3,228

 

9,495

 

5,329

 

Noncontrolling interests in depreciation of Consolidated Properties

 

1,788

 

1,973

 

3,557

 

3,729

 

Provision for impairment excluded from FFO of discontinued operations

 

—

 

—

 

(4,975

)

(10,393

)

Redeemable noncontrolling interests

 

(1,483

)

833

 

(1,403

)

2,151

 

Depreciation and amortization of discontinued operations

 

(17

)

(3,388

)

(478

)

(16,669

)

Net income (loss) attributable to GGP

 

$

209,375

 

$

(107,936

)

$

197,849

 

$

(305,548

)

 

 

 

 

 

 

 

 

 

 

Reconciliation of Equity in NOI of Unconsolidated Properties to GAAP Equity in Income of Unconsolidated Real Estate Affiliates

 

 

 

 

 

 

 

 

 

Equity in Unconsolidated Properties:

 

 

 

 

 

 

 

 

 

NOI

 

$

113,098

 

$

98,801

 

$

215,319

 

$

196,863

 

Net property management fees and costs

 

(4,457

)

(3,516

)

(8,640

)

$

(8,200

)

General and administrative and provisions for impairment

 

(2,665

)

(3,107

)

(6,831

)

(6,533

)

EBITDA

 

105,976

 

92,178

 

199,848

 

182,130

 

Net interest expense

 

(43,683

)

(37,588

)

(84,178

)

(75,191

)

Provision for income taxes

 

(70

)

(111

)

(151

)

(214

)

FFO of Unconsolidated Properties

 

62,223

 

54,479

 

115,519

 

106,725

 

Depreciation and amortization of capitalized real estate costs

 

(48,439

)

(45,117

)

(95,155

)

(93,562

)

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

 

—

 

—

 

(3,448

)

—

 

Other, including gain on sales of investment properties

 

203

 

2,481

 

10,265

 

4,632

 

Equity in income of Unconsolidated Real Estate Affiliates

 

$

13,987

 

$

11,843

 

$

27,181

 

$

17,795