þ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 36-4673192 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification number) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
PAGE | ||||
NUMBER | ||||
Part I FINANCIAL INFORMATION |
||||
Item 1: Financial Statements (Unaudited) |
||||
Condensed Consolidated Balance Sheets
as of September 30, 2011 and December 31, 2010 |
3 | |||
Condensed Consolidated and Combined Statements of Operations and Comprehensive
Income (Loss) for the three and nine months ended September 30, 2011 and 2010 |
4 | |||
Condensed Consolidated and Combined Statements of Equity
for the nine months ended September 30, 2011 and 2010 |
5 | |||
Condensed Consolidated and Combined Statements of Cash Flows
for the nine months ended September 30, 2011 and 2010 |
6 | |||
Notes to Condensed Consolidated and Combined Financial Statements |
7 | |||
Item 2: Managements Discussion and Analysis of
Financial Condition and Results of Operations |
33 | |||
Item 3: Quantitative and Qualitative Disclosures about Market Risk |
48 | |||
Item 4: Controls and Procedures |
48 | |||
Part II OTHER INFORMATION |
||||
Item 1: Legal Proceedings |
49 | |||
Item 1A: Risk Factors |
49 | |||
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds |
49 | |||
Item 3: Defaults Upon Senior Securities |
49 | |||
Item 5: Other Information |
49 | |||
Item 6: Exhibits |
49 | |||
SIGNATURE |
50 | |||
EXHIBIT INDEX |
51 |
- 2 -
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands, except share amounts) | ||||||||
Assets: |
||||||||
Investment in real estate: |
||||||||
Master Planned Community assets |
$ | 1,611,125 | $ | 1,350,648 | ||||
Land |
259,557 | 180,976 | ||||||
Buildings and equipment |
523,871 | 343,006 | ||||||
Less accumulated depreciation |
(94,771 | ) | (83,390 | ) | ||||
Developments in progress |
190,287 | 293,403 | ||||||
Net property and equipment |
2,490,069 | 2,084,643 | ||||||
Investment in Real Estate Affiliates |
61,214 | 149,543 | ||||||
Net investment in real estate |
2,551,283 | 2,234,186 | ||||||
Cash and cash equivalents |
293,363 | 284,682 | ||||||
Accounts receivable, net |
15,555 | 8,154 | ||||||
Municipal Utility District receivables |
110,054 | 28,103 | ||||||
Notes receivable, net |
39,141 | 38,954 | ||||||
Tax indemnity receivable, including interest |
329,668 | 323,525 | ||||||
Deferred expenses, net |
7,899 | 6,619 | ||||||
Prepaid expenses and other assets |
130,013 | 98,484 | ||||||
Total assets |
$ | 3,476,976 | $ | 3,022,707 | ||||
Liabilities: |
||||||||
Mortgages, notes and loans payable |
$ | 708,172 | $ | 318,660 | ||||
Deferred tax liabilities |
72,339 | 78,680 | ||||||
Warrant liabilities |
128,586 | 227,348 | ||||||
Uncertain tax position liability |
146,985 | 140,076 | ||||||
Accounts payable and accrued expenses |
122,079 | 78,836 | ||||||
Total liabilities |
1,178,161 | 843,600 | ||||||
Commitments and Contingencies |
||||||||
Equity: |
||||||||
Preferred stock: $.01 par value; 50,000,000 shares authorized,
none issued |
| | ||||||
Common stock: $.01 par value; 150,000,000 shares authorized, |
| | ||||||
37,942,107 shares issued and outstanding as of September 30,
2011 and |
| | ||||||
37,904,506 shares issued and outstanding as of December 31, 2010 |
379 | 379 | ||||||
Additional paid-in capital |
2,710,536 | 2,708,036 | ||||||
Accumulated deficit |
(412,754 | ) | (528,505 | ) | ||||
Accumulated other comprehensive loss |
(4,399 | ) | (1,627 | ) | ||||
Total stockholders equity |
2,293,762 | 2,178,283 | ||||||
Noncontrolling interests |
5,053 | 824 | ||||||
Total equity |
2,298,815 | 2,179,107 | ||||||
Total liabilities and equity |
$ | 3,476,976 | $ | 3,022,707 | ||||
- 3 -
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Consolidated) | (Combined) | (Consolidated) | (Combined) | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Revenues: |
||||||||||||||||
Master Planned Community land sales |
$ | 33,246 | $ | 7,297 | $ | 74,786 | $ | 14,686 | ||||||||
Builder price participation |
2,145 | 1,148 | 3,263 | 3,343 | ||||||||||||
Minimum rents |
19,403 | 16,349 | 53,098 | 50,349 | ||||||||||||
Tenant recoveries |
5,399 | 4,637 | 14,538 | 13,891 | ||||||||||||
Condominium unit sales |
9,071 | | 19,495 | | ||||||||||||
Resort and conference center revenues |
7,200 | | 7,200 | | ||||||||||||
Other land revenues |
3,886 | 1,589 | 7,382 | 4,112 | ||||||||||||
Other rental and property revenues |
6,540 | 1,440 | 11,051 | 5,500 | ||||||||||||
Total revenues |
86,890 | 32,460 | 190,813 | 91,881 | ||||||||||||
Operating Expenses: |
||||||||||||||||
Master Planned Community cost of sales |
27,035 | 3,751 | 51,909 | 7,001 | ||||||||||||
Master Planned Community operations |
7,398 | 6,306 | 17,611 | 23,653 | ||||||||||||
Rental property real estate taxes |
1,639 | 4,131 | 8,064 | 11,161 | ||||||||||||
Rental property maintenance costs |
2,341 | 1,484 | 5,467 | 4,766 | ||||||||||||
Condominium unit cost of sales |
5,470 | | 13,723 | | ||||||||||||
Resort and conference center operations |
6,352 | | 6,352 | | ||||||||||||
Other property operating costs |
16,964 | 8,994 | 36,028 | 27,195 | ||||||||||||
Provision for doubtful accounts |
275 | 744 | 590 | 1,101 | ||||||||||||
General and administrative |
9,990 | 3,467 | 23,581 | 12,463 | ||||||||||||
Provisions for impairment |
| 92 | | 578 | ||||||||||||
Depreciation and amortization |
7,208 | 4,109 | 13,592 | 12,535 | ||||||||||||
Total operating expenses |
84,672 | 33,078 | 176,917 | 100,453 | ||||||||||||
Operating income (loss) |
2,218 | (618 | ) | 13,896 | (8,572 | ) | ||||||||||
Interest income |
2,341 | 59 | 7,097 | 118 | ||||||||||||
Interest expense |
| (681 | ) | | (1,888 | ) | ||||||||||
Early extinguishment of debt |
(11,305 | ) | | (11,305 | ) | | ||||||||||
Warrant liability gain |
169,897 | | 100,762 | | ||||||||||||
Investment in real estate affiliate
basis adjustment |
(6,053 | ) | | (6,053 | ) | | ||||||||||
Equity in earnings from Real Estate
Affiliates |
166 | 1,222 | 7,787 | 6,394 | ||||||||||||
Income (loss) before taxes and
reorganization items |
157,264 | (18 | ) | 112,184 | (3,948 | ) | ||||||||||
Benefit (provision) for income taxes |
7,760 | 350 | 4,344 | (17,603 | ) | |||||||||||
Reorganization items |
| (16,515 | ) | | (43,129 | ) | ||||||||||
Net income (loss) |
165,024 | (16,183 | ) | 116,528 | (64,680 | ) | ||||||||||
Net income attributable to
noncontrolling interests |
(729 | ) | (47 | ) | (777 | ) | (121 | ) | ||||||||
Net income (loss) attributable to common
stockholders |
$ | 164,295 | $ | (16,230 | ) | $ | 115,751 | $ | (64,801 | ) | ||||||
Basic Income (Loss) Per Share: |
$ | 4.33 | $ | (0.43 | ) | $ | 3.05 | $ | (1.72 | ) | ||||||
Diluted Income (Loss) Per Share: |
$ | (0.14 | ) | $ | (0.43 | ) | $ | 0.38 | $ | (1.72 | ) | |||||
Comprehensive Income (Loss), Net of Tax: |
||||||||||||||||
Net income (loss) |
$ | 165,024 | $ | (16,183 | ) | $ | 116,528 | $ | (64,680 | ) | ||||||
Other comprehensive income (loss): |
||||||||||||||||
Interest rate swap (a) |
(2,024 | ) | | (2,772 | ) | | ||||||||||
Pension plan adjustment |
| 88 | | 188 | ||||||||||||
Other comprehensive income (loss) |
(2,024 | ) | 88 | (2,772 | ) | 188 | ||||||||||
Comprehensive income (loss) |
163,000 | (16,095 | ) | 113,756 | (64,492 | ) | ||||||||||
Comprehensive income attributable to
noncontrolling interests |
(729 | ) | (47 | ) | (777 | ) | (121 | ) | ||||||||
Comprehensive income (loss)
attributable to common stockholders |
$ | 162,271 | $ | (16,142 | ) | $ | 112,979 | $ | (64,613 | ) | ||||||
(a) | Net of deferred tax expense of $1.1 million during both the three and nine months ended September 30, 2011. |
- 4 -
Accumulated | Noncontrolling | |||||||||||||||||||||||||||
Additional | Other | Interests in | ||||||||||||||||||||||||||
Common | Paid-In | Accumulated | GGP | Comprehensive | Consolidated | Total | ||||||||||||||||||||||
(In thousands) | Stock | Capital | Deficit | Equity | Income (Loss) | Ventures | Equity | |||||||||||||||||||||
Balance, January 1, 2010 |
$ | | $ | | $ | | $ | 1,504,364 | $ | (1,744 | ) | $ | 900 | $ | 1,503,520 | |||||||||||||
Net income (loss) |
| | | (64,801 | ) | | 121 | (64,680 | ) | |||||||||||||||||||
Distributions to
noncontrolling interests |
| | | | | (218 | ) | (218 | ) | |||||||||||||||||||
Other comprehensive income |
| | | | 188 | | 188 | |||||||||||||||||||||
Contributions from GGP, net |
| | | 101,294 | | | 101,294 | |||||||||||||||||||||
Balance, September 30, 2010 |
$ | | $ | | $ | | $ | 1,540,857 | $ | (1,556 | ) | $ | 803 | $ | 1,540,104 | |||||||||||||
Balance, January 1, 2011 |
$ | 379 | $ | 2,708,036 | $ | (528,505 | ) | $ | | $ | (1,627 | ) | $ | 824 | $ | 2,179,107 | ||||||||||||
Net income |
| | 115,751 | | | 777 | 116,528 | |||||||||||||||||||||
Adjustment to
noncontrolling interests |
| | | | | 3,452 | 3,452 | |||||||||||||||||||||
Other comprehensive loss |
| | | | (2,772 | ) | | (2,772 | ) | |||||||||||||||||||
Stock plan activity |
| 2,500 | | | | | 2,500 | |||||||||||||||||||||
Balance, September 30, 2011 |
$ | 379 | $ | 2,710,536 | $ | (412,754 | ) | $ | | $ | (4,399 | ) | $ | 5,053 | $ | 2,298,815 | ||||||||||||
- 5 -
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
(Consolidated) | (Combined) | |||||||
(In thousands) | ||||||||
Cash Flows from Operating Activities: |
||||||||
Net income (loss) |
$ | 116,528 | $ | (64,680 | ) | |||
Adjustments to reconcile net income (loss) to cash provided by
(used in) operating activities: |
||||||||
Equity in earnings from Real Estate Affiliates |
(3,727 | ) | (6,394 | ) | ||||
Distributions received from Real Estate Affiliates |
34 | | ||||||
Investment in Real Estate Affiliate basis adjustment |
6,053 | | ||||||
Provision for doubtful accounts |
590 | 1,101 | ||||||
Depreciation |
11,235 | 11,012 | ||||||
Amortization |
2,357 | 1,523 | ||||||
Amortization (accretion) of deferred financing costs and debt
market rate adjustments |
393 | 1,600 | ||||||
Amortization of intangibles other than in-place leases |
(1,205 | ) | 144 | |||||
Straight-line rent amortization |
(1,223 | ) | (574 | ) | ||||
Restricted stock and stock option amortization |
2,500 | | ||||||
Warrant liability adjustment |
(100,762 | ) | | |||||
Provisions for impairment |
| 578 | ||||||
Real estate acquisition and development expenditures |
(65,813 | ) | (39,115 | ) | ||||
Master Planned Community and condominium cost of sales |
65,359 | 7,089 | ||||||
Reorganization items |
| (1,569 | ) | |||||
Net changes*: |
||||||||
Accounts and notes receivable |
(1,822 | ) | 9,383 | |||||
Prepaid expenses and other assets |
(5,754 | ) | 4,132 | |||||
Deferred expenses |
(872 | ) | (1,426 | ) | ||||
Accounts payable and accrued expenses and deferred tax
liabilities |
(46 | ) | 16,529 | |||||
Other, net |
(1,873 | ) | 168 | |||||
Cash provided by (used in) operating activities |
21,952 | (60,499 | ) | |||||
Cash Flows from Investing Activities: |
||||||||
Cash acquired from The Woodlands acquisition, net of cash
consideration |
5,493 | | ||||||
Real estate and property expenditures |
(25,015 | ) | (71,069 | ) | ||||
Reimbursement for infrastructure improvements from municipality |
5,560 | | ||||||
Proceeds from dispositions |
1,130 | | ||||||
Investments in Real Estate Affiliates |
| (10 | ) | |||||
Cash used in investing activities |
(12,832 | ) | (71,079 | ) | ||||
Cash Flows from Financing Activities: |
||||||||
Change in GGP investment, net |
| 137,411 | ||||||
Proceeds from issuance of mortgages, notes and loans payable |
241,644 | | ||||||
Principal payments on mortgages, notes and loans payable |
(241,148 | ) | (4,697 | ) | ||||
Finance costs related to emerged entities |
| (1,311 | ) | |||||
Deferred financing costs |
(2,935 | ) | | |||||
Proceeds from issuance of Warrants |
2,000 | | ||||||
Distributions to noncontrolling interests |
| (218 | ) | |||||
Cash (used in) provided by financing activities |
(439 | ) | 131,185 | |||||
Net change in cash and cash equivalents |
8,681 | (393 | ) | |||||
Cash and cash equivalents at beginning of period |
284,682 | 3,204 | ||||||
Cash and cash equivalents at end of period |
$ | 293,363 | $ | 2,811 | ||||
Supplemental Disclosure of Cash Flow Information: |
||||||||
Interest paid |
$ | 15,272 | $ | 14,831 | ||||
Interest capitalized |
16,687 | 15,443 | ||||||
Reorganization items paid |
| 46,009 | ||||||
Non-Cash Investing and Financing Transactions: |
||||||||
Reduction in investments in Real Estate Affiliates
due to The Woodlands acquisition |
(128,764 | ) | | |||||
Acquisition note related to The Woodlands (See Note 5) |
96,500 | | ||||||
Debt assumed from The Woodlands acquisition (See Note 1) |
296,695 | | ||||||
Prepetition liabilities funded by GGP |
3,323 | | ||||||
Mortgage debt market rate adjustment related to emerged entities |
| 2,382 | ||||||
Other non-cash GGP equity transactions |
| (36,117 | ) |
(*) | As a result of The Woodlands acquisition and consolidation, changes in certain accounts cannot be derived from the balance sheet because these changes are non-cash related (See Note 1). |
- 6 -
- 7 -
| four master planned communities (MPCs); | ||
| twenty-six operating assets; and | ||
| seventeen strategic developments. |
- 8 -
| The fair values of the Master Planned Community assets which consist of residential and commercial land held for development and sale were determined using a discounted cash flow analysis. | ||
| The fair values of the commercial and retail assets acquired, consisting of land and buildings, were determined by valuing each property as if it were vacant, and the as-if-vacant value was then allocated between land and buildings. The as-if-vacant values were derived by estimating the value of each property assuming it was generating stabilized cash flows using market lease, capitalization and discount rates based on recent comparable market transactions, reduced by the estimated lease-up and carrying costs the Company would incur to achieve stabilized cash flow if the property were vacant. The buildings are depreciated over the estimated useful life of 40 years using the straight-line method. | ||
| The values of above-market and below-market in-place leases of The Woodlands operating assets were based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (1) the contractual amounts to be paid pursuant to the in-place leases and (2) managements estimate of current market lease rates, measured over the remaining non-cancelable lease term. We record the fair value of above-market and below-market leases as intangible assets or intangible liabilities, respectively, and amortize them as an adjustment to rental income over the lease term. | ||
| The estimated fair values of in-place leases included an estimate of carrying costs during the expected lease-up periods assuming the building was vacant, the estimated tenant improvement and leasing costs to acquire the leases, and an estimate of the lost net revenue during the lease-up period. | ||
| The fair value of working capital items such as cash, Municipal Utility District receivables, prepaid expenses, accounts payable and accrued expenses was determined based on the carrying value due to the short term nature of such items. | ||
| The debt assumed was primarily variable rate debt and fixed rate debt with short term maturities therefore, the carrying value was assumed to be the fair value. |
Master Planned Community Assets |
$ | 274,638 | ||
Land |
69,758 | |||
Buildings and Equipment |
80,130 | |||
Investments in Real Estate Affiliates |
42,932 | |||
Cash |
25,492 | |||
Accounts receivable |
7,661 | |||
Notes receivable |
3,189 | |||
Municipal Utility District receivables |
61,700 | |||
Other assets |
25,968 | |||
Total assets |
591,468 | |||
Mortgages, notes and loans payable |
(296,695 | ) | ||
Accounts payable and accrued expenses |
(45,995 | ) | ||
Noncontrolling interests |
(3,515 | ) | ||
Total liabilities and noncontrolling interests |
(346,205 | ) | ||
Total identifiable net assets |
$ | 245,263 | ||
- 9 -
Nine Months | Nine Months | |||||||
Ended | Ended | |||||||
September 30, | September 30, | |||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Total Revenues |
$ | 276,240 | $ | 203,734 | ||||
Net income (loss) |
112,393 | (76,524 | ) |
Asset Type | Years | |||
Buildings and improvements |
40-45 | |||
Equipment, tenant improvements and fixtures |
5-10 |
- 10 -
- 11 -
- 12 -
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Basic EPS: |
||||||||||||||||
Numerator: |
||||||||||||||||
Net income (loss) attributable to common
stockholders |
$ | 164,295 | $ | (16,230 | ) | $ | 115,751 | $ | (64,801 | ) | ||||||
Denominator: |
||||||||||||||||
Weighted average number of common shares
outstanding basic |
37,912 | 37,716 | 37,907 | 37,716 | ||||||||||||
Diluted EPS: |
||||||||||||||||
Numerator: |
||||||||||||||||
Net income (loss) attributable to common
stockholders |
$ | 164,295 | $ | (16,230 | ) | $ | 115,751 | $ | (64,801 | ) | ||||||
Warrant liability gain |
(169,897 | ) | | (100,762 | ) | | ||||||||||
Adjusted net income (loss) available to common
stockholders |
$ | (5,602 | ) | $ | (16,230 | ) | $ | 14,989 | $ | (64,801 | ) | |||||
Denominator: |
||||||||||||||||
Weighted average number of common shares
outstanding basic |
37,912 | 37,716 | 37,907 | 37,716 | ||||||||||||
Diluted effect: |
||||||||||||||||
Restricted stock and stock options |
| | 5 | | ||||||||||||
Warrants |
843 | | 1,585 | | ||||||||||||
Weighted average number of common shares
outstanding diluted |
38,755 | 37,716 | 39,497 | 37,716 | ||||||||||||
Anti-dilutive stock options and restricted stock,
not included above |
731 | | 731 | | ||||||||||||
Basic Earnings (Loss) Per Share |
$ | 4.33 | $ | (0.43 | ) | $ | 3.05 | $ | (1.72 | ) | ||||||
Diluted Earnings (Loss) Per Share |
$ | (0.14 | ) | $ | (0.43 | ) | $ | 0.38 | $ | (1.72 | ) |
- 13 -
Three Months Ended | Nine Months Ended | |||||||
Reorganization Items | September 30, 2010 | September 30, 2010 | ||||||
(In thousands) | ||||||||
Gains on liabilities subject to compromise vendors (a) |
$ | (216 | ) | $ | (498 | ) | ||
Gains on liabilities subject to compromise, net mortgage debt (b) |
(2,747 | ) | (2,382 | ) | ||||
Interest income (c) |
(13 | ) | (14 | ) | ||||
U.S. Trustee fees |
142 | 412 | ||||||
Restructuring costs (d) |
19,349 | 45,611 | ||||||
Total reorganization items |
$ | 16,515 | $ | 43,129 | ||||
(a) | This amount includes gains from repudiation, rejection or termination of contracts or guarantee of obligations. Such gains reflect agreements reached with certain critical vendors, which were authorized by the Bankruptcy Court, and for which payments on an installment basis began in July 2009. | |
(b) | Net losses include the fair value adjustments of mortgage debt relating to entities that emerged from bankruptcy. | |
(c) | Interest income primarily reflects amounts earned on cash accumulated as a result of our Chapter 11 cases. | |
(d) | Restructuring costs primarily include professional fees incurred related to the bankruptcy filings, our allocated share of the Key Employee Incentive Plan (KEIP) payment, finance costs incurred by debtors upon emergence from bankruptcy and any associated write-off of unamortized deferred finance costs related to emerged debtors. |
September 30, 2011 | December 31, 2010 | |||||||||||||||||||||||||||||||
Fair Value Measurements Using | Fair Value Measurements Using | |||||||||||||||||||||||||||||||
Quoted | Quoted | |||||||||||||||||||||||||||||||
Prices in | Prices in | |||||||||||||||||||||||||||||||
Active | Signifiicant | Active | Signifiicant | |||||||||||||||||||||||||||||
Markets for | Other | Signifiicant | Markets for | Other | Signifiicant | |||||||||||||||||||||||||||
Identical | Observable | Unobservable | Identical | Observable | Unobservable | |||||||||||||||||||||||||||
Assets | Inputs | Inputs | Assets | Inputs | Inputs | |||||||||||||||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||
Interest rate swap |
$ | 2 | $ | | $ | 2 | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||||||
Warrants |
128,586 | | | 128,586 | 227,348 | | | 227,348 | ||||||||||||||||||||||||
Interest rate swap |
3,561 | | 3,561 | | | | | |
- 14 -
(in thousands) | ||||
Balance as of December 31, 2010 |
$ | 227,348 | ||
Warrant liability gain |
(100,762 | ) | ||
Purchases |
2,000 | |||
Balance as of September 30, 2011 |
$ | 128,586 | ||
September 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
Fixed-rate debt |
$ | 138,219 | $ | 140,069 | $ | 191,037 | $ | 202,897 | ||||||||
Variable-rate debt |
512,609 | 512,609 | (a) | 65,518 | 65,629 | |||||||||||
SID bonds (b) |
57,344 | 57,344 | 62,105 | 62,105 | ||||||||||||
Total |
$ | 708,172 | $ | 710,022 | $ | 318,660 | $ | 330,631 | ||||||||
(a) | As more fully described in Note 5, $172.0 million of variable-rate debt has been swapped to a fixed rate for the term of the related debt. | |
(b) | Due to the uncertain repayment terms of special improvement district SID bonds, the carrying value has been used as an approximation of fair value. |
- 15 -
The following table summarizes our intangible assets and liabilities: |
Accumulated | Net | |||||||||||
Gross Asset | (Amortization) | Carrying | ||||||||||
(Liability) | / Accretion | Amount | ||||||||||
(In thousands) | ||||||||||||
As of September 30, 2011 |
||||||||||||
Tenant leases: |
||||||||||||
In-place value |
$ | 24,037 | $ | (11,150 | ) | $ | 12,887 | |||||
Above-market |
3,185 | (1,816 | ) | 1,369 | ||||||||
Ground leases: |
||||||||||||
Above-market |
(3,545 | ) | 961 | (2,584 | ) | |||||||
Below-market |
23,096 | (2,378 | ) | 20,718 | ||||||||
As of December 31, 2010 |
||||||||||||
Tenant leases: |
||||||||||||
In-place value |
$ | 11,824 | $ | (10,221 | ) | $ | 1,603 | |||||
Above-market |
1,820 | (1,701 | ) | 119 | ||||||||
Below-market |
(77 | ) | 77 | | ||||||||
Ground leases: |
||||||||||||
Above-market |
(3,545 | ) | 638 | (2,907 | ) | |||||||
Below-market |
23,096 | (2,078 | ) | 21,018 |
- 16 -
Share of Earnings | ||||||||||||||||||||||||||||||||
Economic Ownership | Carrying Value | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
September 30, | December 31, | September 30, | December 31, | September 30, | September 30, | |||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
(in percentages) | (in thousands) | |||||||||||||||||||||||||||||||
The Woodlands |
| 52.50 | $ | | $ | 131,090 | $ | | $ | 1,226 | $ | 3,727 | $ | 6,398 | ||||||||||||||||||
Circle T |
50.00 | 50.00 | 9,004 | 9,004 | | (4 | ) | | (4 | ) | ||||||||||||||||||||||
Stewart Title |
50.00 | | 3,714 | | 85 | | 85 | | ||||||||||||||||||||||||
Timbermill Apartments |
50.00 | | 5,161 | | 1 | | 1 | | ||||||||||||||||||||||||
Woodlands Sarofim |
20.00 | | 2,393 | | 30 | | 30 | | ||||||||||||||||||||||||
Millenium Waterway
Apartments |
83.55 | | 21,316 | | 14 | | 14 | | ||||||||||||||||||||||||
Forest View Apartments |
50.00 | | 6,542 | | 1 | | 1 | | ||||||||||||||||||||||||
48,130 | 140,094 | 131 | 1,222 | 3,858 | 6,394 | |||||||||||||||||||||||||||
Cost basis investments (a) |
13,084 | 9,449 | 35 | | 3,929 | | ||||||||||||||||||||||||||
Investment in Real Estate
Affiliates |
$ | 61,214 | $ | 149,543 | $ | 166 | $ | 1,222 | $ | 7,787 | $ | 6,394 |
(a) | Share of Earnings primarily represents dividends received for cost basis investments. |
September 30, | December 31, | |||||||
(In thousands) | 2011 | 2010 | ||||||
Fixed-rate debt: |
||||||||
Fixed-rate debt |
$ | 138,219 | $ | 191,037 | ||||
Variable-rate debt |
512,609 | (a) | 65,518 | |||||
Special Improvement District bonds |
57,344 | 62,105 | ||||||
Total mortgages, notes and loans payable |
$ | 708,172 | $ | 318,660 | ||||
(a) | As more fully described below, $172.0 million of variable-rate debt has been swapped to a fixed rate for the term of the related debt. |
- 17 -
Maximum | Carrying Value | |||||||||||||||
Facility | September 30, | Interest | ||||||||||||||
Property (In thousands) | Amount | 2011 | Rate | Final Maturity | ||||||||||||
Mortgages, notes and loans payable |
||||||||||||||||
110 N. Wacker |
$ | 29,000 | 5.21 | %(a) | November 2019 | |||||||||||
Bridgeland |
||||||||||||||||
Note #1 |
15,295 | 6.50 | % | May 2026 | ||||||||||||
Note #2 |
3,288 | 6.50 | % | December 2017 | ||||||||||||
Note #3 |
2,062 | 6.50 | % | June 2033 | ||||||||||||
Note #4 |
253 | 6.50 | % | December 2021 | ||||||||||||
Bridgeland Total |
20,898 | |||||||||||||||
Special Improvement District bonds |
||||||||||||||||
Summerlin South S108 |
1,424 | 5.95 | % | December 2016 | ||||||||||||
Summerlin South S124 |
436 | 5.95 | % | December 2019 | ||||||||||||
Summerlin South S128 |
898 | 7.30 | % | December 2020 | ||||||||||||
Summerlin South S128C |
6,060 | 6.05 | % | December 2030 | ||||||||||||
Summerlin South S132 |
5,604 | 7.88 | % | December 2020 | ||||||||||||
Summerlin South S151 |
12,772 | 6.00 | % | June 2025 | ||||||||||||
Summerlin West S808 |
1,013 | 5.71 | % | April 2021 | ||||||||||||
Summerlin West S809 |
1,476 | 6.65 | % | April 2023 | ||||||||||||
Summerlin West S810 |
22,771 | 7.13 | % | April 2031 | ||||||||||||
The Shops @ Summerlin Centre S128 |
4,005 | 6.05 | % | December 2030 | ||||||||||||
The Shops @ Summerlin Centre S108 |
885 | 5.95 | % | December 2016 | ||||||||||||
Total Special Improvement District bonds |
57,344 | |||||||||||||||
The Woodlands |
||||||||||||||||
Master credit facility |
$ | 270,000 | 235,000 | 5.00 | %(b) | March 2015 | ||||||||||
Acquisition note |
96,500 | | (c) | December 2011 | ||||||||||||
Resort and Conference Center |
36,100 | 5.50 | %(d) | October 2012 | ||||||||||||
9303 New Trails |
13,142 | 1.37 | % | December 2011 | ||||||||||||
WCA Building |
4,875 | 6.50 | %(e) | November 2011 | ||||||||||||
Weiner Tract |
1,520 | 6.25 | % | January 2013 | ||||||||||||
Land in Montgomery Co. |
683 | 6.00 | % | December 2012 | ||||||||||||
Land in Harris Co. |
393 | 6.00 | % | January 2013 | ||||||||||||
Capital lease obligation |
107 | |||||||||||||||
CVS |
101 | 3.25 | % | upon sale | ||||||||||||
The Woodlands Total |
388,421 | |||||||||||||||
Ward Centers |
$ | 250,000 | 212,509 | 3.46 | %(f) | September 2016 | ||||||||||
$ | 708,172 | |||||||||||||||
(a) | Loan has a stated interest rate of one-month LIBOR + 2.50%. The $29.0 million outstanding principal balance is swapped to a 5.21% fixed rate through maturity. | |
(b) | Loan bears interest at one-month LIBOR + 4.00% and has a 1.00% LIBOR floor. | |
(c) | Acquisition Note has a $97.5 million outstanding principal balance, bears no interest, and is due on December 1, 2011 to our former partner in The Woodlands. The note is secured by The Woodlands partnership interests acquired, and was recorded at a $1.0 million discount to reflect in imputed interest cost during its term. | |
(d) | Loan bears interest at one-month LIBOR + 4.00% and has a 1.00% LIBOR floor. The rate increased by 0.5% on September 23, 2011 and increases by 0.5% every six months thereafter until maturity. | |
(e) | The Company is negotiating a five-year extension with lender. | |
(f) | Loan has a stated interest rate of one-month LIBOR + 2.50%. $143.0 million of the outstanding principal balance is swapped to a 3.81% fixed rate through maturity. |
- 18 -
Long-term debt | ||||
principal payments | ||||
(In thousands) | ||||
4th Quarter 2011 |
$ | 115,109 | ||
2012 |
48,211 | |||
2013 |
27,966 | |||
2014 |
201,391 | |||
2015 |
4,241 | |||
Thereafter |
311,254 | |||
Total |
$ | 708,172 | ||
- 19 -
- 20 -
As of September 30, 2011 | As of December 31, 2010 | |||||||||||||||
Balance Sheet | Balance Sheet | |||||||||||||||
Location | Fair Value | Location | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Interest Rate Swaps |
||||||||||||||||
Assets |
Other Assets | $ | 2 | Other Assets | $ | | ||||||||||
Liabilities |
Other Liabilities | (3,561 | ) | Other Liabilities | | |||||||||||
Total derivatives designated as hedging instruments |
$ | (3,559 | ) | $ | | |||||||||||
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Amount of (Loss) | Amount of (Loss) | |||||||||||||||
Cash Flow Hedges | Recognized in OCI | Recognized in OCI | ||||||||||||||
(in thousands) | ||||||||||||||||
Interest Rate Swaps |
$ | (1,834 | ) | $ | | $ | (2,582 | ) | $ | |
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Amount of Gain or | Amount of Gain or | |||||||||||||||
(Loss) Reclassified | (Loss) Reclassified | |||||||||||||||
from Accumulated | from Accumulated | |||||||||||||||
Cash Flow Hedges | OCI into Income | OCI into Income | ||||||||||||||
(in thousands) | ||||||||||||||||
Interest Rate Swaps |
$ | (205 | ) | $ | | $ | (316 | ) | $ | |
- 21 -
- 22 -
2011 | ||||||||
Weighted | ||||||||
Average | ||||||||
Exercise | ||||||||
Shares | Price | |||||||
HHC Replacement Options outstanding at January 1 |
164,138 | $ | 133.28 | |||||
Exercised (a) |
(19,265 | ) | 40.71 | |||||
Expired |
(91,480 | ) | 139.01 | |||||
HHC Replacement Options outstanding at September 30 (b) |
53,393 | $ | 156.88 | |||||
(a) | All net share settled by GGP. | |
(b) | Weighted average remaining contractual term of 0.4 years. |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Special Improvement District receivable |
$ | 42,017 | $ | 46,250 | ||||
Other receivables |
7,722 | 5,352 | ||||||
Prepaid expenses |
9,582 | 2,859 | ||||||
Below-market ground leases (Note 3) |
20,718 | 21,018 | ||||||
Security and escrow deposits |
6,618 | 6,814 | ||||||
Above-market tenant leases (Note 3) |
1,369 | 119 | ||||||
Uncertain tax position asset |
11,236 | 8,945 | ||||||
In place leases (Note 3) |
12,887 | 1,603 | ||||||
Intangibles |
6,487 | | ||||||
Other |
11,377 | 5,524 | ||||||
$ | 130,013 | $ | 98,484 | |||||
- 23 -
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Construction payable |
$ | 9,735 | $ | 15,531 | ||||
Accounts payable and accrued expenses |
36,280 | 29,745 | ||||||
Membership deposits |
17,807 | | ||||||
Above-market ground leases (Note 3) |
2,584 | 2,907 | ||||||
Deferred gains/income |
5,994 | 5,631 | ||||||
Accrued interest |
3,556 | 1,633 | ||||||
Accrued real estate taxes |
10,086 | 3,953 | ||||||
Tenant and other deposits |
3,482 | 3,555 | ||||||
Insurance reserve |
4,209 | 4,229 | ||||||
Accrued payroll and other employee liabilities |
7,702 | 3,930 | ||||||
Other |
20,644 | 7,722 | ||||||
Total accounts payable and accrued expenses |
$ | 122,079 | $ | 78,836 | ||||
- 24 -
| Master Planned Communities includes the development and sale of land, in large-scale, long-term community development projects in and around Las Vegas, Nevada; Houston, Texas and Columbia, Maryland. In prior periods this segment included certain commercial properties and other ownership interests owned by The Woodlands. For the three and nine months ending September 30, 2011 and the same periods in 2010, we have reclassified the operations of The Woodlands commercial properties and other ownership interests to the Operating Assets segment. Furthermore, for segment reporting, we disclosed The Woodlands historical financial information as if we owned 100% for all periods presented so that operating performance between periods is comparable. | ||
| Operating Assets includes commercial, mixed use and retail properties currently generating revenues, many of which we believe there is an opportunity to redevelop or reposition the asset to increase operating performance. | ||
| Strategic Developments includes all properties held for development and redevelopment, including the current rental property operations (primarily retail and other interests in real estate at such locations) as well as our one residential condominium project located in Natick (Boston), Massachusetts. |
- 25 -
- 26 -
- 27 -
Three Months Ended September 30, 2011 | ||||||||||||
The Woodlands | ||||||||||||
Consolidated | (prior to July 1, | |||||||||||
Properties | 2011 at 100%) | Segment Basis | ||||||||||
(In thousands) | ||||||||||||
Master Planned Communities |
||||||||||||
Land sales |
$ | 33,246 | | $ | 33,246 | |||||||
Builder price participation |
2,145 | | 2,145 | |||||||||
Minimum rents |
| | | |||||||||
Other land revenues |
5,590 | | 5,590 | |||||||||
Other rental and property revenues |
| | | |||||||||
Total revenues |
40,981 | | 40,981 | |||||||||
Cost of sales land |
27,033 | | 27,033 | |||||||||
CSA participation expense |
| | | |||||||||
Land sales operations |
5,374 | | 5,374 | |||||||||
Land sales real estate and business taxes |
2,059 | | 2,059 | |||||||||
Rental property real estate taxes |
| | | |||||||||
Rental property maintenance costs |
| | | |||||||||
Other property operating costs |
1,153 | | 1,153 | |||||||||
Provisions for impairment |
| | | |||||||||
Depreciation and amortization |
23 | | 23 | |||||||||
Interest income |
(2,341 | ) | | (2,341 | ) | |||||||
Interest expense (*) |
(3,013 | ) | | (3,013 | ) | |||||||
Total expenses |
30,288 | | 30,288 | |||||||||
Venture partner share of The Woodlands EBT |
| | | |||||||||
MPC EBT |
10,693 | | 10,693 | |||||||||
Operating Assets |
||||||||||||
Minimum rents |
19,210 | | 19,210 | |||||||||
Tenant recoveries |
5,417 | | 5,417 | |||||||||
Resort and conference center revenue |
7,200 | | 7,200 | |||||||||
Other rental and property revenues |
4,765 | | 4,765 | |||||||||
Total revenues |
36,592 | | 36,592 | |||||||||
Rental property real estate taxes |
3,151 | | 3,151 | |||||||||
Rental property maintenance costs |
2,106 | | 2,106 | |||||||||
Resort and conference center operations |
6,352 | | 6,352 | |||||||||
Other property operating costs |
14,354 | | 14,354 | |||||||||
Provision for doubtful accounts |
305 | | 305 | |||||||||
Provisions for impairment |
| | | |||||||||
Depreciation and amortization |
6,942 | | 6,942 | |||||||||
Interest income |
| | | |||||||||
Interest expense |
2,893 | | 2,893 | |||||||||
Early extinguishment of debt |
11,305 | | 11,305 | |||||||||
Total expenses |
47,408 | | 47,408 | |||||||||
Venture partner share of The Woodlands EBT |
| | | |||||||||
Operating Assets EBT |
(10,816 | ) | | (10,816 | ) | |||||||
Strategic Developments |
||||||||||||
Minimum rents |
209 | | 209 | |||||||||
Tenant recoveries |
11 | | 11 | |||||||||
Condominium unit sales |
9,071 | | 9,071 | |||||||||
Other rental and property revenues |
26 | | 26 | |||||||||
Total revenues |
9,317 | | 9,317 | |||||||||
Condominium unit cost of sales |
5,470 | | 5,470 | |||||||||
Real estate taxes |
(819 | ) | | (819 | ) | |||||||
Rental property maintenance costs |
139 | | 139 | |||||||||
Other property operating costs |
956 | | 956 | |||||||||
Provision for doubtful accounts |
(4 | ) | | (4 | ) | |||||||
Provisions for impairment |
| | | |||||||||
Depreciation and amortization |
59 | | 59 | |||||||||
Interest income |
| | | |||||||||
Interest expense |
149 | | 149 | |||||||||
Total expenses |
5,950 | | 5,950 | |||||||||
Venture partner share of The Woodlands EBT |
| | | |||||||||
Strategic Developments EBT |
3,367 | | 3,367 | |||||||||
EBT |
$ | 3,244 | $ | | $ | 3,244 | ||||||
(*) | Negative interest expense relates to interest costs of debt at our Operating Assets segment which are allocated to the MPC segment assets eligible for interest capitalization. |
- 28 -
Three Months Ended September 30, 2010 | ||||||||||||
The Woodlands | ||||||||||||
Combined | (prior to July 1, | |||||||||||
Properties | 2011 at 100%) | Segment Basis | ||||||||||
(In thousands) | ||||||||||||
Master Planned Communities |
||||||||||||
Land sales |
$ | 7,297 | $ | 18,394 | $ | 25,691 | ||||||
Builder price participation |
1,148 | 1,103 | 2,251 | |||||||||
Minimum rents |
| 21 | 21 | |||||||||
Other land revenues |
1,589 | 2,314 | 3,903 | |||||||||
Other rental and property revenues |
207 | | 207 | |||||||||
Total revenues |
10,241 | 21,832 | 32,073 | |||||||||
Cost of sales land |
3,752 | 10,583 | 14,335 | |||||||||
CSA participation income |
(506 | ) | | (506 | ) | |||||||
Land sales operations |
5,198 | 1,989 | 7,187 | |||||||||
Land sales real estate and business taxes |
1,613 | 1,170 | 2,783 | |||||||||
Rental property real estate taxes |
203 | | 203 | |||||||||
Rental property maintenance costs |
| | | |||||||||
Other property operating costs |
| 705 | 705 | |||||||||
Depreciation and amortization |
11 | 29 | 40 | |||||||||
Interest income |
| (1,034 | ) | (1,034 | ) | |||||||
Interest expense (*) |
(3,390 | ) | 2,139 | (1,251 | ) | |||||||
Total expenses |
6,881 | 15,581 | 22,462 | |||||||||
Venture partner share of The Woodlands EBT |
| (2,969 | ) | (2,969 | ) | |||||||
MPC EBT |
3,360 | 3,282 | 6,642 | |||||||||
Operating Assets |
||||||||||||
Minimum rents |
16,109 | 2,071 | 18,180 | |||||||||
Tenant recoveries |
4,513 | 428 | 4,941 | |||||||||
Resort and conference center revenue |
| 6,496 | 6,496 | |||||||||
Other rental and property revenues |
1,222 | 2,870 | 4,092 | |||||||||
Total revenues |
21,844 | 11,865 | 33,709 | |||||||||
Rental property real estate taxes |
2,558 | 494 | 3,052 | |||||||||
Rental property maintenance costs |
1,291 | 468 | 1,759 | |||||||||
Resort and conference center operations |
| 6,179 | 6,179 | |||||||||
Other property operating costs |
7,321 | 4,969 | 12,290 | |||||||||
Provision for doubtful accounts |
594 | 38 | 632 | |||||||||
Provisions for impairment |
92 | | 92 | |||||||||
Depreciation and amortization |
4,034 | 1,774 | 5,808 | |||||||||
Interest income |
(59 | ) | | (59 | ) | |||||||
Interest expense |
4,058 | 208 | 4,266 | |||||||||
Total expenses |
19,889 | 14,130 | 34,019 | |||||||||
Venture partner share of The Woodlands EBT |
| 1,076 | 1,076 | |||||||||
Operating Assets EBT |
1,955 | (1,189 | ) | 766 | ||||||||
Strategic Developments |
||||||||||||
Minimum rents |
240 | | 240 | |||||||||
Tenant recoveries |
124 | | 124 | |||||||||
Condominium unit sales |
| | | |||||||||
Other rental and property revenues |
11 | | 11 | |||||||||
Total revenues |
375 | | 375 | |||||||||
Condominium unit cost of sales |
| | | |||||||||
Real estate taxes |
1,370 | | 1,370 | |||||||||
Rental property maintenance costs |
193 | | 193 | |||||||||
Other property operating costs |
1,673 | | 1,673 | |||||||||
Provision for doubtful accounts |
150 | | 150 | |||||||||
Provisions for impairment |
| | | |||||||||
Depreciation and amortization |
64 | | 64 | |||||||||
Interest income |
| | | |||||||||
Interest expense |
13 | | 13 | |||||||||
Total expenses |
3,463 | | 3,463 | |||||||||
Venture partner share of The Woodlands EBT |
| | | |||||||||
Strategic Developments EBT |
(3,088 | ) | | (3,088 | ) | |||||||
EBT |
$ | 2,227 | $ | 2,093 | $ | 4,320 | ||||||
* | Negative interest expense relates to interest costs of debt at our Operating Assets segment which are allocated to the MPC segment assets eligible for interest capitalization. |
- 29 -
Nine Months Ended September 30, 2011 | ||||||||||||
The Woodlands | ||||||||||||
Consolidated | (prior to July 1, | |||||||||||
Properties | 2011 at 100%) | Segment Basis | ||||||||||
(In thousands) | ||||||||||||
Master Planned Communities |
||||||||||||
Land sales |
$ | 74,786 | $ | 45,416 | $ | 120,202 | ||||||
Builder price participation |
3,263 | 2,463 | 5,726 | |||||||||
Minimum rents |
| 6 | 6 | |||||||||
Other land revenues |
9,086 | 3,926 | 13,012 | |||||||||
Other rental and property revenues |
| | | |||||||||
Total revenues |
87,135 | 51,811 | 138,946 | |||||||||
Cost of sales land |
51,907 | 23,931 | 75,838 | |||||||||
CSA participation expense |
| | | |||||||||
Land sales operations |
12,539 | 3,032 | 15,571 | |||||||||
Land sales real estate and business taxes |
5,110 | 1,907 | 7,017 | |||||||||
Rental property real estate taxes |
| | | |||||||||
Rental property maintenance costs |
| | | |||||||||
Other property operating costs |
1,270 | 2,356 | 3,626 | |||||||||
Provisions for impairment |
| | | |||||||||
Depreciation and amortization |
42 | 46 | 88 | |||||||||
Interest income |
(6,487 | ) | (2,733 | ) | (9,220 | ) | ||||||
Interest expense (a) |
(8,141 | ) | 5,085 | (3,056 | ) | |||||||
Total expenses |
56,240 | 33,624 | 89,864 | |||||||||
Venture partner share of The Woodlands EBT |
| (8,639 | ) | (8,639 | ) | |||||||
MPC EBT |
30,895 | 9,548 | 40,443 | |||||||||
Operating Assets |
||||||||||||
Minimum rents |
52,456 | 4,791 | 57,247 | |||||||||
Tenant recoveries |
14,421 | 1,158 | 15,579 | |||||||||
Resort and conference center revenue |
7,200 | 19,106 | 26,306 | |||||||||
Other rental and property revenues (b) |
12,101 | 7,220 | 19,321 | |||||||||
Total revenues |
86,178 | 32,275 | 118,453 | |||||||||
Rental property real estate taxes |
8,132 | 972 | 9,104 | |||||||||
Rental property maintenance costs |
4,902 | 712 | 5,614 | |||||||||
Resort and conference center operations |
6,352 | 13,904 | 20,256 | |||||||||
Other property operating costs |
31,174 | 11,140 | 42,314 | |||||||||
Provision for doubtful accounts |
317 | (9 | ) | 308 | ||||||||
Provisions for impairment |
| | | |||||||||
Depreciation and amortization |
13,189 | 3,769 | 16,958 | |||||||||
Interest income |
(610 | ) | | (610 | ) | |||||||
Interest expense |
7,987 | 389 | 8,376 | |||||||||
Early extinguishment of debt |
11,305 | | 11,305 | |||||||||
Total expenses |
82,748 | 30,877 | 113,625 | |||||||||
Venture partner share of The Woodlands EBT |
| (664 | ) | (664 | ) | |||||||
Operating Assets EBT |
3,430 | 734 | 4,164 | |||||||||
Strategic Developments |
||||||||||||
Minimum rents |
658 | | 658 | |||||||||
Tenant recoveries |
146 | | 146 | |||||||||
Condominium unit sales |
19,495 | | 19,495 | |||||||||
Other rental and property revenues |
1,096 | | 1,096 | |||||||||
Total revenues |
21,395 | | 21,395 | |||||||||
Condominium unit cost of sales |
13,723 | | 13,723 | |||||||||
Real estate taxes |
626 | | 626 | |||||||||
Rental property maintenance costs |
471 | | 471 | |||||||||
Other property operating costs |
3,550 | | 3,550 | |||||||||
Provision for doubtful accounts |
(143 | ) | | (143 | ) | |||||||
Provisions for impairment |
| | | |||||||||
Depreciation and amortization |
175 | | 175 | |||||||||
Interest income |
| | | |||||||||
Interest expense |
154 | | 154 | |||||||||
Total expenses |
18,556 | | 18,556 | |||||||||
Venture partner share of The Woodlands EBT |
| | | |||||||||
Strategic Developments EBT |
2,839 | | 2,839 | |||||||||
EBT |
$ | 37,164 | $ | 10,282 | $ | 47,446 | ||||||
(a) | Negative interest expense relates to interest costs of debt at our Operating Assets segment which are allocated to the MPC segment assets eligible for interest capitalization. | |
(b) | Reflects the $3.9 million cash dividends from Summerlin Hospital Medical Center which is a Real Estate Affiliate accounted for using the cost method as described above. |
- 30 -
Nine Months Ended September 30, 2010 | ||||||||||||
The Woodlands | ||||||||||||
Combined | (prior to July 1, | |||||||||||
Properties | 2011 at 100%) | Segment Basis | ||||||||||
(In thousands) | ||||||||||||
Master Planned Communities |
||||||||||||
Land sales |
$ | 14,686 | $ | 64,402 | $ | 79,088 | ||||||
Builder price participation |
3,343 | 2,819 | 6,162 | |||||||||
Minimum rents |
| 19 | 19 | |||||||||
Other land revenues |
4,112 | 5,960 | 10,072 | |||||||||
Other rental and property revenues |
616 | | 616 | |||||||||
Total revenues |
22,757 | 73,200 | 95,957 | |||||||||
Cost of sales land |
7,001 | 36,789 | 43,790 | |||||||||
CSA participation income |
(5,195 | ) | | (5,195 | ) | |||||||
Land sales operations |
18,566 | 4,667 | 23,233 | |||||||||
Land sales real estate and business taxes |
10,282 | 3,594 | 13,876 | |||||||||
Rental property real estate taxes |
604 | | 604 | |||||||||
Rental property maintenance costs |
| | | |||||||||
Other property operating costs |
| 2,907 | 2,907 | |||||||||
Depreciation and amortization |
34 | 84 | 118 | |||||||||
Interest income |
| (2,966 | ) | (2,966 | ) | |||||||
Interest expense (*) |
(11,270 | ) | 6,248 | (5,022 | ) | |||||||
Total expenses |
20,022 | 51,323 | 71,345 | |||||||||
Venture partner share of The Woodlands EBT |
| (10,392 | ) | (10,392 | ) | |||||||
MPC EBT |
2,735 | 11,485 | 14,220 | |||||||||
Operating Assets |
||||||||||||
Minimum rents |
49,571 | 5,788 | 55,359 | |||||||||
Tenant recoveries |
13,575 | 1,129 | 14,704 | |||||||||
Resort and conference center revenue |
| 22,260 | 22,260 | |||||||||
Other rental and property revenues |
4,854 | 9,476 | 14,330 | |||||||||
Total revenues |
68,000 | 38,653 | 106,653 | |||||||||
Rental property real estate taxes |
7,694 | 1,466 | 9,160 | |||||||||
Rental property maintenance costs |
4,216 | 1,344 | 5,560 | |||||||||
Resort and conference center operations |
| 18,347 | 18,347 | |||||||||
Other property operating costs |
22,283 | 14,439 | 36,722 | |||||||||
Provision for doubtful accounts |
983 | 19 | 1,002 | |||||||||
Provisions for impairment |
522 | | 522 | |||||||||
Depreciation and amortization |
12,350 | 5,180 | 17,530 | |||||||||
Interest income |
(118 | ) | | (118 | ) | |||||||
Interest expense |
13,131 | 637 | 13,768 | |||||||||
Total expenses |
61,061 | 41,432 | 102,493 | |||||||||
Venture partner share of The Woodlands EBT |
| 1,320 | 1,320 | |||||||||
Operating Assets EBT |
6,939 | (1,459 | ) | 5,480 | ||||||||
Strategic Developments |
||||||||||||
Minimum rents |
778 | | 778 | |||||||||
Tenant recoveries |
316 | | 316 | |||||||||
Condominium unit sales |
| | | |||||||||
Other rental and property revenues |
30 | | 30 | |||||||||
Total revenues |
1,124 | | 1,124 | |||||||||
Condominium unit cost of sales |
| | | |||||||||
Real estate taxes |
2,863 | | 2,863 | |||||||||
Rental property maintenance costs |
550 | | 550 | |||||||||
Other property operating costs |
4,912 | | 4,912 | |||||||||
Provision for doubtful accounts |
118 | | 118 | |||||||||
Provisions for impairment |
56 | | 56 | |||||||||
Depreciation and amortization |
151 | | 151 | |||||||||
Interest income |
| | | |||||||||
Interest expense |
27 | | 27 | |||||||||
Total expenses |
8,677 | | 8,677 | |||||||||
Venture partner share of The Woodlands EBT |
| | | |||||||||
Strategic Developments EBT |
(7,553 | ) | | (7,553 | ) | |||||||
EBT |
$ | 2,121 | $ | 10,026 | $ | 12,147 | ||||||
* | Negative interest expense relates to interest costs of debt at our Operating Assets segment which are allocated to the MPC segment assets eligible for interest capitalization. |
- 31 -
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Reconciliation of EBT to GAAP-basis
income (loss) from continuing operations |
||||||||||||||||
Real estate property EBT: |
||||||||||||||||
Segment basis |
$ | 3,244 | $ | 4,320 | $ | 47,446 | $ | 12,147 | ||||||||
Real Estate Affiliates |
| (2,093 | ) | (10,282 | ) | (10,026 | ) | |||||||||
Segment EBT |
3,244 | 2,227 | 37,164 | 2,121 | ||||||||||||
General and administrative |
(9,990 | ) | (3,467 | ) | (23,581 | ) | (12,463 | ) | ||||||||
Warrant liability gain |
169,897 | | 100,762 | | ||||||||||||
Benefit (provision) for income taxes |
7,760 | 350 | 4,344 | (17,603 | ) | |||||||||||
Equity in earnings from Real Estate Affiliates |
166 | 1,222 | 3,892 | (a) | 6,394 | |||||||||||
Investment in real estate affiliate basis
adjustment |
(6,053 | ) | | (6,053 | ) | | ||||||||||
Reorganization items |
| (16,515 | ) | | (43,129 | ) | ||||||||||
Income (loss) |
$ | 165,024 | $ | (16,183 | ) | $ | 116,528 | $ | (64,680 | ) | ||||||
(a) | The segment EBT includes a $3.9 million dividend from Summerlin Hospital Medical Center. The dividend is reflected in equity in earnings from Real Estate Affiliates. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Reconciliation of segment basis revenues
to GAAP revenues |
||||||||||||||||
Master Planned Communities Total segment |
$ | 40,981 | $ | 32,073 | $ | 138,946 | $ | 95,957 | ||||||||
Operating Assets Total segment |
36,592 | 33,709 | 118,453 | 106,653 | ||||||||||||
Strategic Developments Total segment |
9,317 | 375 | 21,395 | 1,124 | ||||||||||||
Total segment revenues |
86,890 | 66,157 | 278,794 | 203,734 | ||||||||||||
Less The Woodlands revenue (a) |
| (33,697 | ) | (84,087 | ) | (111,853 | ) | |||||||||
Operating Assets Real Estate |
||||||||||||||||
Affiliates revenues |
| | (3,894 | ) | | |||||||||||
Total revenues GAAP basis |
$ | 86,890 | $ | 32,460 | $ | 190,813 | $ | 91,881 | ||||||||
(a) | For periods prior to July 1, 2011. |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Assets by segment |
||||||||
Master Planned Communities |
$ | 1,820,573 | $ | 1,765,487 | ||||
Operating Assets |
827,253 | 812,646 | ||||||
Strategic Developments |
188,418 | 206,037 | ||||||
Total segment assets |
2,836,244 | 2,784,170 | ||||||
Corporate and other |
640,732 | 730,741 | ||||||
Real Estate Affiliates |
| (492,204 | ) | |||||
Total assets |
$ | 3,476,976 | $ | 3,022,707 | ||||
- 32 -
| Projections of our revenues, net operating income, earnings per share, EBT, capital expenditures, income tax and other contingent liabilities, dividends, leverage, capital structure or other financial items; |
| Forecasts of our future economic performance; and |
| Descriptions of assumptions underlying or relating to any of the foregoing. |
| Capital required for our operations and development opportunities for the properties in our Strategic Developments segment; |
| Expected performance of our Master Planned Communities segment and other current income producing properties; and |
| Future liquidity, development opportunities, development spending and management plans. |
- 33 -
- 34 -
- 35 -
| does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; |
| does not reflect income taxes that we may be required to pay; |
| does not reflect any cash requirements for replacement of depreciated or amortized assets or that these assets have different useful lives; |
| does not reflect limitations on, or costs related to, transferring earnings from our Real Estate Affiliates to us; and |
| may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure. |
- 36 -
Land Sales * | Acres Sold | Number of Lots/Units | Price per acre | Price per lot | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Residential Land
Sales |
||||||||||||||||||||||||||||||||||||||||||||
Maryland Columbia |
Single family detached | $ | 630 | $ | | 0.5 | | 3 | | $ | 1,260 | $ | | $ | 210 | $ | | |||||||||||||||||||||||||||
Maryland Columbia |
Townhomes | 1,697 | | 0.5 | | 12 | | n/a | n/a | 141 | | |||||||||||||||||||||||||||||||||
Bridgeland |
Single family detached | 5,149 | 4,201 | 20.3 | 17.0 | 103 | 87 | 254 | 247 | 50 | 48 | |||||||||||||||||||||||||||||||||
Summerlin |
Single family detached | | | | | | | | | | | |||||||||||||||||||||||||||||||||
Custom lots | | 1,362 | | 1.0 | | 2 | | 1,362 | | 681 | ||||||||||||||||||||||||||||||||||
The Woodlands |
Single family detached | 19,043 | 11,486 | 53.5 | 29.6 | 216 | 105 | 356 | 388 | 88 | 109 | |||||||||||||||||||||||||||||||||
Single family attached | 887 | | 2.3 | | 34 | | 386 | | 26 | | ||||||||||||||||||||||||||||||||||
Subtotal | $ | 27,406 | $ | 17,049 | 77.1 | 47.6 | 368 | 194 | ||||||||||||||||||||||||||||||||||||
Commercial Land Sales |
||||||||||||||||||||||||||||||||||||||||||||
The Woodlands |
Office and other | $ | | $ | 6,905 | | 11.3 | | 611 | |||||||||||||||||||||||||||||||||||
Apartments and assisted living | 1,839 | | 5.3 | | 347 | | ||||||||||||||||||||||||||||||||||||||
Retail | 2,001 | | 5.0 | | 400 | | ||||||||||||||||||||||||||||||||||||||
Subtotal | 3,840 | 6,905 | 10.3 | 11.3 | ||||||||||||||||||||||||||||||||||||||||
Total acreage sales revenue | 31,246 | 23,954 | ||||||||||||||||||||||||||||||||||||||||||
Deferred revenue |
2,000 | 1,709 | ||||||||||||||||||||||||||||||||||||||||||
Special Improvement District revenue | | 28 | ||||||||||||||||||||||||||||||||||||||||||
Total segment land sales revenue | $ | 33,246 | $ | 25,691 | ||||||||||||||||||||||||||||||||||||||||
Less: Real Estate Affiliates land sales revenue | | (18,394 | ) | |||||||||||||||||||||||||||||||||||||||||
Total land sales revenue GAAP basis | $ | 33.246 | $ | 7,297 | ||||||||||||||||||||||||||||||||||||||||
* | Land sales do not include $2.1 million and $2.3 million of builder price participation revenue for the three months ended September 30, 2011 and 2010, respectively. Prior year amount includes The Woodlands at 100%. |
- 37 -
Land Sales * | Acres Sold | Number of Lots/Units | Price per acre | Price per lot | ||||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Residential
Land Sales |
||||||||||||||||||||||||||||||||||||||||||||
Maryland Columbia |
Single family detached | $ | 1,480 | $ | | 1.4 | | 7 | | $ | 1,057 | $ | | $ | 211 | $ | | |||||||||||||||||||||||||||
Maryland Columbia |
Townhomes | 3,311 | | 1.0 | | 24 | | n/a | n/a | 138 | | |||||||||||||||||||||||||||||||||
Bridgeland |
Single family detached | 13,846 | 10,391 | 52.2 | 40.9 | 260 | 209 | 265 | 254 | 53 | 50 | |||||||||||||||||||||||||||||||||
Summerlin |
Single family detached | 25,504 | | 62.4 | | 312 | | 409 | | 82 | | |||||||||||||||||||||||||||||||||
Custom lots | | 1,362 | | 1.0 | | 2 | | 1,362 | | 681 | ||||||||||||||||||||||||||||||||||
The Woodlands |
Single family detached | 53,261 | 48,419 | 149.8 | 140.6 | 610 | 565 | 356 | 344 | 87 | 86 | |||||||||||||||||||||||||||||||||
Single family attached | 887 | 988 | 2.3 | 3.5 | 34 | 52 | 386 | 282 | 26 | 19 | ||||||||||||||||||||||||||||||||||
Subtotal | $ | 98,289 | $ | 61,160 | 269.1 | 186.0 | 1,247 | 828 | ||||||||||||||||||||||||||||||||||||
Commercial Land
Sales |
||||||||||||||||||||||||||||||||||||||||||||
Summerlin |
Not-for-profit | $ | 3,615 | $ | | 16.0 | | 226 | | |||||||||||||||||||||||||||||||||||
The Woodlands |
Office and other | $ | 1,800 | $ | 10,709 | 3.2 | 21.3 | 563 | 503 | |||||||||||||||||||||||||||||||||||
Apartments and assisted living | 1,839 | | 5.3 | | 347 | | ||||||||||||||||||||||||||||||||||||||
Retail | 5,115 | 4,470 | 10.5 | 14.7 | 487 | 304 | ||||||||||||||||||||||||||||||||||||||
Subtotal | 12,369 | 15,179 | 35.0 | 36.0 | ||||||||||||||||||||||||||||||||||||||||
Total acreage sales revenue | 110,658 | 76,339 | ||||||||||||||||||||||||||||||||||||||||||
Deferred revenue |
(769 | ) | 2,818 | |||||||||||||||||||||||||||||||||||||||||
Deferred revenue Woodlands | 6,285 | (97 | ) | |||||||||||||||||||||||||||||||||||||||||
Special Improvement District revenue | 4,028 | 28 | ||||||||||||||||||||||||||||||||||||||||||
Total segment land sales revenue | $ | 120,202 | $ | 79,088 | ||||||||||||||||||||||||||||||||||||||||
Less: Real Estate Affiliates land sales revenue | (45,416 | ) | (64,402 | ) | ||||||||||||||||||||||||||||||||||||||||
Total land sales revenue GAAP basis | $ | 74,786 | $ | 14,686 | ||||||||||||||||||||||||||||||||||||||||
* | Land sales do not include $5.7 million and $6.2 million of builder price participation revenue for the nine months ended September 30, 2011 and 2010, respectively. Such amounts include The Woodlands at 100%. |
- 38 -
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Master Planned Communities (*) |
||||||||||||||||
Land sales |
$ | 33,246 | $ | 25,691 | $ | 120,202 | $ | 79,088 | ||||||||
Other land revenues |
7,735 | 6,154 | 18,738 | 16,234 | ||||||||||||
Other rental and property revenues |
| 228 | 6 | 635 | ||||||||||||
Total revenues |
40,981 | 32,073 | 138,946 | 95,957 | ||||||||||||
Cost of sales land |
27,033 | 14,335 | 75,838 | 43,790 | ||||||||||||
Land sales operations |
7,433 | 9,464 | 22,588 | 31,914 | ||||||||||||
Rental property operations |
1,153 | 908 | 3,626 | 3,511 | ||||||||||||
Provisions for impairments |
| | | | ||||||||||||
Depreciation and amortization |
23 | 40 | 88 | 118 | ||||||||||||
Interest, net |
(5,354 | ) | (2,285 | ) | (12,276 | ) | (7,988 | ) | ||||||||
Total expenses |
30,288 | 22,462 | 89,864 | 71,345 | ||||||||||||
Venture partner share of The |
||||||||||||||||
Woodlands EBT |
| (2,969 | ) | (8,639 | ) | (10,392 | ) | |||||||||
MPC EBT |
$ | 10,693 | $ | 6,642 | $ | 40,443 | $ | 14,220 | ||||||||
(*) | Our master planned communities segment includes revenues and expenses related to The Woodlands (Note 1). For a detailed breakdown of EBT, refer to Note 12. Such amounts include The Woodlands at 100%. |
- 39 -
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
MPC EBT (*) |
$ | 10,693 | $ | 6,642 | $ | 40,443 | $ | 14,220 | ||||||||
Plus: |
||||||||||||||||
Cost of sales land |
27,033 | 14,335 | 75,838 | 43,790 | ||||||||||||
Provisions for impairments |
| | | | ||||||||||||
Depreciation and amortization |
23 | 40 | 88 | 118 | ||||||||||||
Less: |
||||||||||||||||
MPC land/residential development
and acquisitions expenditures |
(27,132 | ) | (16,582 | ) | (71,875 | ) | (45,964 | ) | ||||||||
MPC Net Contribution |
$ | 10,617 | $ | 4,435 | $ | 44,494 | $ | 12,164 | ||||||||
(*) | Our Master Planned Communities segment includes revenues and expenses related to The Woodlands, one of our Real Estate Affiliates until July 1, 2011, at which time The Woodlands became a wholly-owned subsidiary. | |
For a detailed breakdown of EBT, refer to Note 12. |
- 40 -
Net Operating Income (NOI) | Net Operating Income (NOI) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September | |||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Operating Assets |
||||||||||||||||
Retail |
||||||||||||||||
Ward Centers |
$ | 5,630 | $ | 5,565 | $ | 16,449 | $ | 17,219 | ||||||||
South Street Seaport |
1,502 | 787 | 3,150 | 2,952 | ||||||||||||
Rio West Mall |
287 | 444 | 963 | 1,480 | ||||||||||||
Landmark Mall |
83 | 287 | 553 | 1,149 | ||||||||||||
Riverwalk Marketplace |
194 | (117 | ) | 590 | 605 | |||||||||||
Cottonwood Square |
83 | 114 | 299 | 373 | ||||||||||||
Park West |
159 | 87 | 490 | 255 | ||||||||||||
20/25 Waterway Avenue |
377 | 113 | 902 | 457 | ||||||||||||
Waterway Garage Retail |
(8 | ) | | 6 | | |||||||||||
Total Retail |
8,307 | 7,280 | 23,402 | 24,490 | ||||||||||||
Office |
||||||||||||||||
110 N. Wacker |
1,526 | 1,530 | 4,586 | 4,589 | ||||||||||||
Columbia Office Properties |
259 | 660 | 2,033 | 2,133 | ||||||||||||
4 Waterway Square |
425 | 45 | 1,102 | (161 | ) | |||||||||||
9303 New Trails |
299 | 330 | 852 | 831 | ||||||||||||
1400 Woodloch Forest |
239 | 245 | 649 | 756 | ||||||||||||
2201 Lake Woodlands Drive |
83 | 84 | 249 | 239 | ||||||||||||
Total Office |
2,831 | 2,894 | 9,471 | 8,387 | ||||||||||||
The Woodlands Resort and Conference Center |
848 | 317 | 6,051 | 3,913 | ||||||||||||
Total Retail, Office, Resort and Conference Center |
11,986 | 10,491 | 38,924 | 36,790 | ||||||||||||
The Club at Carlton Woods |
(1,420 | ) | (1,512 | ) | (3,932 | ) | (4,161 | ) | ||||||||
The Woodlands Parking Garages |
(469 | ) | (201 | ) | (902 | ) | (578 | ) | ||||||||
The Woodlands Ground leases |
97 | 91 | 310 | 263 | ||||||||||||
Other properties |
(508 | )(a) | 1,073 | 5,453 | (b) | 3,096 | ||||||||||
Total Other |
(2,300 | ) | (549 | ) | 929 | (1,380 | ) | |||||||||
Total Operating Assets NOI |
9,686 | 9,942 | 39,853 | 35,410 | ||||||||||||
Straight-line and market lease amortization rent |
506 | (24 | ) | 1,356 | 466 | |||||||||||
Provisions for impairment |
| (92 | ) | | (522 | ) | ||||||||||
Early extinguishment of debt |
(11,305 | ) | | (11,305 | ) | | ||||||||||
Depreciation and amortization |
(6,942 | ) | (5,808 | ) | (16,958 | ) | (17,530 | ) | ||||||||
Equity in earnings from nonconsolidated affiliates |
132 | (122 | ) | (352 | ) | (14 | ) | |||||||||
Interest, net |
(2,893 | ) | (4,207 | ) | (7,766 | ) | (13,650 | ) | ||||||||
Less: Partners share of Operating Assets EBT |
| 1,076 | (664 | ) | 1,320 | |||||||||||
Operating Assets EBT (100% Owned) |
(10,816 | ) | 765 | 4,164 | 5,480 | |||||||||||
Operating Assets NOI Equity Method Investments |
||||||||||||||||
Millennium Waterway Apartments |
$ | 779 | $ | (175 | ) | $ | 741 | $ | (24 | ) | ||||||
Woodlands Sarofim #1 |
364 | 394 | 1,138 | 1,177 | ||||||||||||
Stewart Title (title company) |
323 | 354 | 667 | 784 | ||||||||||||
Forest View/Timbermill Apartments |
465 | 409 | 1,317 | 1,198 | ||||||||||||
Total NOI equity investees of September 30, 2011 (c) |
1,931 | 982 | 3,863 | 3,135 | ||||||||||||
Adjustments to NOI |
(1,411 | )(d) | (833 | )(d) | (3,748 | )(d) | (2,140 | )(d) | ||||||||
Net Income |
520 | 149 | 115 | 995 | ||||||||||||
Less: JV Partners Share of Net Income |
(388 | ) | (381 | ) | (905 | ) | (1,022 | ) | ||||||||
The Woodlands Share of Net Income |
132 | (232 | ) | (790 | ) | (27 | ) | |||||||||
Equity in earnings from nonconsolidated affiliates |
132 | (122 | ) | (352 | ) | (14 | ) | |||||||||
(adjusted for The Companys ownership of The Woodlands) |
Economic | September 30, 2011 | |||||||||||
Ownership | Debt | Cash | ||||||||||
Millennium Waterway Apartments |
83.55 | % | $ | 47,175 | $ | 1,720 | ||||||
Woodlands Sarofim #1 |
20.00 | % | 7,153 | 665 | ||||||||
Stewart Title (title company) |
50.00 | % | | 236 | ||||||||
Forest View/Timbermill Apartments |
50.00 | % | 5,840 | |
(a) | Includes $0.5 million loss associated with the Golf Courses at Summerlin. | |
(b) | Includes $3.9 million dividends from Summerlin Hospital Medical Center. | |
(c) | Our share of equity investees NOI is $1.1 million and $0.3 million for the three months ended September 30, 2011 and 2010, respectively, and $1.8 million and $1.2 million for the nine months ended September 30, 2011 and 2010, respectively. | |
(d) | Adjustments to NOI include straight-line and market lease amortization, depreciation and amortization and non-real estate taxes. |
- 41 -
- 42 -
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Operating Assets (*) |
||||||||||||||||
Minimum rents |
$ | 19,210 | $ | 18,180 | $ | 57,247 | $ | 55,359 | ||||||||
Resort and conference center revenues |
7,200 | 6,496 | 26,306 | 22,260 | ||||||||||||
Other rental and property revenues |
10,182 | 9,033 | 34,900 | 29,034 | ||||||||||||
Total revenues |
36,592 | 33,709 | 118,453 | 106,653 | ||||||||||||
Rental property real estate taxes |
3,151 | 3,052 | 9,104 | 9,160 | ||||||||||||
Rental property maintenance costs |
2,106 | 1,759 | 5,614 | 5,560 | ||||||||||||
Resort and conference center
operations |
6,352 | 6,179 | 20,256 | 18,347 | ||||||||||||
Other property operating costs |
14,354 | 12,290 | 42,314 | 36,722 | ||||||||||||
Provision for doubtful accounts |
305 | 632 | 308 | 1,002 | ||||||||||||
Provisions for impairment |
| 92 | | 522 | ||||||||||||
Depreciation and amortization |
6,942 | 5,808 | 16,958 | 17,530 | ||||||||||||
Interest, net |
2,893 | 4,207 | 7,766 | 13,650 | ||||||||||||
Early extinguishment on debt |
11,305 | | 11,305 | | ||||||||||||
Total expenses |
47,408 | 34,019 | 113,625 | 102,493 | ||||||||||||
Venture partner share of The Woodlands |
||||||||||||||||
EBT |
| 1,076 | (664 | ) | 1,320 | |||||||||||
Operating Assets EBT |
$ | (10,816 | ) | $ | 766 | $ | 4,164 | $ | 5,480 | |||||||
(*) | For a detailed breakdown of our Operating Assets segment EBT, refer to Note 12. Such amounts include The Woodlands at 100%. |
- 43 -
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Strategic Developments (*) |
||||||||||||||||
Minimum rents |
$ | 209 | $ | 240 | $ | 658 | $ | 778 | ||||||||
Condominium unit sales |
9,071 | | 19,495 | | ||||||||||||
Other rental and property revenues |
37 | 135 | 1,242 | 346 | ||||||||||||
Total revenues |
9,317 | 375 | 21,395 | 1,124 | ||||||||||||
Condominium unit cost of sales |
5,470 | | 13,723 | | ||||||||||||
Rental and other property operations |
272 | 3,386 | 4,504 | 8,443 | ||||||||||||
Provisions for impairment |
| | | 56 | ||||||||||||
Depreciation and amortization |
59 | 64 | 175 | 151 | ||||||||||||
Interest, net |
149 | 13 | 154 | 27 | ||||||||||||
Total expenses |
5,950 | 3,463 | 18,556 | 8,677 | ||||||||||||
Venture partner share of The Woodlands EBT |
| | | | ||||||||||||
Strategic Developments EBT |
$ | 3,367 | $ | (3,088 | ) | $ | 2,839 | $ | (7,553 | ) | ||||||
(*) | For a detailed breakdown of our Strategic Developments segment EBT, refer to Note 12. |
- 44 -
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Minimum rents |
$ | 19,403 | $ | 16,349 | $ | 53,098 | $ | 50,349 | ||||||||
Tenant recoveries |
5,399 | 4,637 | 14,538 | 13,891 | ||||||||||||
Master Planned Community land sales |
33,246 | 7,297 | 74,786 | 14,686 | ||||||||||||
Builder price participation |
2,145 | 1,148 | 3,263 | 3,343 | ||||||||||||
Condominium unit sales |
9,071 | | 19,495 | | ||||||||||||
Resort and conference center revenues |
7,200 | | 7,200 | | ||||||||||||
Other land revenues |
3,886 | 1,589 | 7,382 | 4,112 | ||||||||||||
Other rental and property revenues |
6,540 | 1,440 | 11,051 | 5,500 | ||||||||||||
Master Planned Community cost of sales |
(27,035 | ) | (3,751 | ) | (51,909 | ) | (7,001 | ) | ||||||||
Master Planned Community operations |
(7,398 | ) | (6,306 | ) | (17,611 | ) | (23,653 | ) | ||||||||
Condominium unit cost of sales |
(5,470 | ) | | (13,723 | ) | | ||||||||||
Resort and conference center operations |
(6,352 | ) | | (6,352 | ) | | ||||||||||
Rental property real estate taxes |
(1,639 | ) | (4,131 | ) | (8,064 | ) | (11,161 | ) | ||||||||
Rental property maintenance costs |
(2,341 | ) | (1,484 | ) | (5,467 | ) | (4,766 | ) | ||||||||
Other property operating costs |
(16,964 | ) | (8,994 | ) | (36,028 | ) | (27,195 | ) | ||||||||
Provision for doubtful accounts |
(275 | ) | (744 | ) | (590 | ) | (1,101 | ) | ||||||||
General and administrative |
(9,990 | ) | (3,467 | ) | (23,581 | ) | (12,463 | ) | ||||||||
Provisions for impairment |
| (92 | ) | | (578 | ) | ||||||||||
Depreciation and amortization |
(7,208 | ) | (4,109 | ) | (13,592 | ) | (12,535 | ) | ||||||||
Interest income |
2,341 | 59 | 7,097 | 118 | ||||||||||||
Interest expense |
| (681 | ) | | (1,888 | ) | ||||||||||
Early extinguishment of debt |
(11,305 | ) | | (11,305 | ) | | ||||||||||
Warrant liability gain |
169,897 | | 100,762 | | ||||||||||||
Investment in real estate affiliate basis adjustment |
(6,053 | ) | | (6,053 | ) | | ||||||||||
Benefit (provision) for income taxes |
7,760 | 350 | 4,344 | (17,603 | ) | |||||||||||
Equity in earnings from Real Estate Affiliates |
166 | 1,222 | 7,787 | 6,394 | ||||||||||||
Reorganization items |
| (16,515 | ) | | (43,129 | ) | ||||||||||
Net income (loss) |
$ | 165,024 | $ | (16,183 | ) | $ | 116,528 | $ | (64,680 | ) | ||||||
- 45 -
- 46 -
Master | Non- | Total | ||||||||||||||||||||||
Planned | Operating | Strategic | Segment | Segment | September 30, | |||||||||||||||||||
Segment Basis (a) | Communities | Assets | Developments | Totals | Amounts | 2011 | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Mortgages, notes and |
||||||||||||||||||||||||
loans payable |
$ | 413,424 | (b) | $ | 334,516 | (c) | $ | 4,890 | $ | 752,830 | $ | | $ | 752,830 | ||||||||||
Less: Cash and cash equivalents |
(40,775 | ) | (12,285 | ) (d) | | (53,060 | ) | (241,990 | ) | (295,050 | ) | |||||||||||||
Special Improvement |
||||||||||||||||||||||||
District receivable |
(42,017 | ) | | | (42,017 | ) | | (42,017 | ) | |||||||||||||||
Municiple Utility District |
||||||||||||||||||||||||
receivable |
(110,054 | ) | | | (110,054 | ) | | (110,054 | ) | |||||||||||||||
Net debt |
$ | 220,578 | $ | 322,231 | $ | 4,890 | $ | 547,699 | $ | (241,990 | ) | $ | 305,709 | |||||||||||
(a) | Refer to Note 12 Segments in the Notes to the Condensed Consolidated and Combined Financial Statements. | |
(b) | Includes The Woodlands $97.5 million acquisition note and $235.0 million Master Credit Facility outstanding balance. | |
(c) | Includes our $43.8 million share of debt of our Real Estate Affiliates. | |
(d) | Includes our $1.7 million share of cash and cash equivalents of our Real Estate Affiliates. |
- 47 -
- 48 -
- 49 -
The Howard Hughes Corporation |
||||
Date: November 10, 2011 | By: | /s/ Andrew C. Richardson | ||
Andrew C. Richardson | ||||
Chief Financial Officer |
- 50 -
2.1
|
Partnership Interest Purchase Agreement among TWC Commercial Properties, LLC, TWC Commercial Properties, LP, TWC Operating, LLC, TWC Operating, LP, TWC Land Development, LLC, TWC Land Development, LP and MS TWC, Inc., MS/TWC Joint Venture (incorporated by reference to Exhibit 2.1 to the Companys current report on Form 8-K, filed July 5, 2011) | |
10.1
|
Loan Agreement dated as of September 29, 2011, by and among Victoria Ward Limited along with certain of Victoria Ward, Limiteds subsidiaries, as borrowers, Wells Fargo Bank, National Association, as Administrative Agent and lead lender, CIBC, First Hawaiian Bank, Bank of Hawaii and Central Pacific Bank, as lenders, and Wells Fargo Securities, L.L.C., as sole Lead Arranger and Sole Bookrunner (incorporated by reference to Exhibit 10.1 to the Companys current report on Form 8-K, filed October 4, 2011) | |
31.1
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS
|
XBRL Instance Document. | |
101.SCH
|
XBRL Taxonomy Extension Schema Document. | |
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document. | |
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document. |
- 51 -
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