-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N3hMvrhwAGQXYZgxvE7seZaSlhEccgz0ed1NKYYoJkso7j5Lvm+7BUXFgXPD1LRo p045Z5kjS2hH2ndiwbHPDQ== 0000940180-01-500598.txt : 20020410 0000940180-01-500598.hdr.sgml : 20020410 ACCESSION NUMBER: 0000940180-01-500598 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL GROWTH PROPERTIES INC CENTRAL INDEX KEY: 0000895648 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 421283895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11656 FILM NUMBER: 1783848 BUSINESS ADDRESS: STREET 1: 110 N WACKER DRIVE STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129605000 MAIL ADDRESS: STREET 1: 110 N WACKER DRIVE STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 d10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 Commission file number 1-11656 GENERAL GROWTH PROPERTIES, INC. ------------------------------- (Exact name of registrant as specified in its charter) Delaware 42-1283895 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 110 N. Wacker Dr., Chicago, IL 60606 ------------------------------------ (Address of principal executive offices, Zip Code) (312) 960-5000 -------------- (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- The number of shares of Common Stock, $.10 par value, outstanding on November 9, 2001 was 52,715,307. GENERAL GROWTH PROPERTIES, INC. INDEX PAGE NUMBER ------ Part I FINANCIAL INFORMATION Item 1: Financial Statements Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000......... 3 Consolidated Statements of Operations for the three and nine months ended September 30, 2001 and 2000.......................................... 4 Consolidated Statements of Cash Flows for the nine months ended September 30, 2001 and 2000............................................... 5 Notes to Consolidated Financial Statements............. 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 20 Liquidity and Capital Resources of the Company......... 24 Item 3: Quantitative and Qualitative Disclosures about Market Risk............................................ 30 Part II OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K....................... 31 SIGNATURE...................................................... 32 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2001 AND DECEMBER 31, 2000 (UNAUDITED) (Dollars in thousands, except for per share amounts)
ASSETS ------ September 30, December 31, 2001 2000 ----------- ----------- Investment in real estate: Land $ 667,355 $ 649,160 Buildings and equipment 4,252,909 3,906,114 Less accumulated depreciation (592,014) (488,130) Developments in progress 154,029 135,926 ----------- ----------- Net property and equipment 4,482,279 4,203,070 Investment in Unconsolidated Real Estate Affiliates 743,364 748,266 ----------- ----------- Net investment in real estate 5,225,643 4,951,336 Cash and cash equivalents 32,663 27,229 Tenant accounts receivable, net 84,665 96,157 Deferred expenses, net 104,512 105,534 Investment in and note receivable from General Growth Management, Inc. -- 66,079 Prepaid expenses and other assets 53,231 37,769 ----------- ----------- $ 5,500,714 $ 5,284,104 =========== =========== Liabilities and Stockholders' Equity ------------------------------------ Mortgage notes and other debt payable 3,584,516 $ 3,244,126 Distributions payable 56,364 47,509 Network discontinuance reserve 5,856 -- Accounts payable and accrued expenses 132,793 186,393 ----------- ----------- 3,779,529 3,478,028 Minority interests: Redeemable Preferred Units 175,000 175,000 Common Units 332,607 355,158 ----------- ----------- 507,607 530,158 Commitments and contingencies -- -- Preferred Stock: $ 100 par value; 5,000,000 shares authorized; 345,000 designated as PIERS (Note 1) which are convertible and carry a $ 1,000 liquidation value, 337,500 of which were issued and outstanding at September 30, 2001 and December 31, 2000 337,500 337,500 Stockholders' Equity: Common stock: $.10 par value; 210,000,000 shares authorized; 52,710,766 and 52,281,259 shares issued and outstanding as of September 30, 2001 and December 31, 2000, respectively 5,271 5,228 Additional paid-in capital 1,222,306 1,210,261 Retained earnings (deficit) (330,824) (266,085) Notes receivable-common stock purchase (19,890) (9,449) Accumulated equity in other comprehensive loss of unconsolidated affiliate (785) (1,537) ----------- ----------- Total stockholders' equity 876,078 938,418 ----------- ----------- $ 5,500,714 $ 5,284,104 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 3 of 32 GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (UNAUDITED) (Dollars in thousands, except for per share amounts)
Three Months Ended Nine Months Ended September 30, September 30, 2001 2000 2001 2000 --------- --------- --------- --------- Revenues: Minimum rents $ 114,664 $ 107,960 $ 335,611 $ 315,238 Tenant recoveries 55,391 52,720 165,331 158,371 Overage rents 3,763 8,906 11,431 14,692 Other 3,607 1,888 8,439 7,248 Fee income 18,844 1,812 56,969 5,246 --------- --------- --------- --------- Total revenues 196,269 173,286 577,781 500,795 Expenses: Real estate taxes 13,201 13,191 40,494 38,259 Management fees to affiliate -- (806) -- 3,155 Property operating 52,974 40,976 165,679 118,276 Provision for doubtful accounts 916 1,190 2,900 1,368 General and administrative 1,109 1,699 4,453 4,721 Depreciation and amortization 38,393 32,427 112,878 94,185 Network discontinuance costs 1,000 -- 66,000 -- --------- --------- --------- --------- Total operating expenses 107,593 88,677 392,404 259,964 --------- --------- --------- --------- Operating income 88,676 84,609 185,377 240,831 Interest income 1,064 2,693 3,428 9,539 Interest expense (51,742) (55,550) (154,693) (161,671) Equity in net income (loss) of unconsolidated affiliates 12,439 13,088 35,051 30,568 Gain on sales -- -- -- 44 --------- --------- --------- --------- Income (loss) before extraordinary items, cumulative effect of accounting change and allocation to minority interests 50,437 44,840 69,163 119,311 (Income) loss allocated to minority interests (14,828) (13,477) (21,113) (31,757) --------- --------- --------- --------- Income (loss) before extraordinary items and cumulative effect of accounting change 35,609 31,363 48,050 87,554 Extraordinary items (253) -- (1,264) -- Cumulative effect of accounting change -- -- (3,334) -- --------- --------- --------- --------- Net income (loss) 35,356 31,363 43,452 87,554 Convertible Preferred Stock Dividends (6,117) (6,117) (18,351) (18,351) --------- --------- --------- --------- Net income (loss) available to common stockholders $ 29,239 $ 25,246 $ 25,101 $ 69,203 ========= ========= ========= ========= Earnings (loss) before extraordinary items and cumulative effect of accounting change per share-basic $ 0.56 $ 0.48 $ 0.57 $ 1.33 ========= ========= ========= ========= Earnings (loss) before extraordinary items and cumulative effect of accounting change per share-diluted $ 0.56 $ 0.48 $ 0.57 $ 1.33 ========= ========= ========= ========= Earnings (loss) per share-basic $ 0.56 $ 0.48 $ 0.48 $ 1.33 ========= ========= ========= ========= Earnings (loss) per share-diluted $ 0.56 $ 0.48 $ 0.48 $ 1.33 ========= ========= ========= ========= Distributions declared per share $ 0.65 $ 0.51 $ 1.71 $ 1.53 ========= ========= ========= ========= Net income (loss) $ 35,356 $ 31,363 $ 43,452 $ 87,554 Other comprehensive income (loss): Equity in unrealized income (loss) on available-for-sale securities of unconsolidated affiliate, net of minority interest (388) -- 752 -- --------- --------- --------- --------- Comprehensive income (loss) $ 34,968 $ 31,363 $ 44,204 $ 87,554 ========= ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 4 of 32 GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000 (UNAUDITED) (Dollars in thousands, except for per share amounts)
Nine Months Ended September 30, 2001 2000 --------- --------- Cash flows from operating activities: Net Income $ 43,452 $ 87,554 Adjustments to reconcile net income to net cash provided by operating activities: Minority interests 21,113 31,757 Extraordinary items 1,264 - Cumulative effect of accounting change 3,334 - Equity in net income of unconsolidated affiliates (35,051) (30,568) Provision for doubtful accounts 2,900 1,368 Distributions received from unconsolidated affiliates 35,051 27,235 Depreciation 95,709 84,606 Amortization 17,169 9,579 Gain on sales - (44) Net Changes: Tenant accounts receivable 24,690 7,458 Prepaid expenses and other assets 1,597 (615) Accounts payable-Network and Broadband System Reserve 5,856 - Accounts payable and accrued expenses (61,036) (11,628) --------- --------- Net cash provided by (used in) operating activities 156,048 206,702 --------- --------- Cash flows from investing activities: Acquisition/development of real estate and improvements and additions to properties (312,206) (194,064) Network and Broadband System additions (46,030) - Increase in investments in unconsolidated affiliates (18,830) (78,434) Change in notes receivable from General Growth Management, Inc. - 4,963 Distributions received from unconsolidated affiliates 55,568 27,705 Increase in deferred expenses (24,371) (16,477) --------- --------- Net cash provided by (used in) investing activities (345,869) (256,307) --------- --------- Cash flows from financing activities: Cash distributions paid to common stockholders (83,323) (79,505) Cash distributions paid to minority interests (31,131) (30,288) Cash distributions paid to holders of RPU's (11,747) (2,175) Payment of dividends on PIERS (18,351) (18,351) Proceeds from sale of common stock, net of issuance costs 2,918 4,029 Proceeds from issuance of RPU's, net of issuance costs - 170,625 Proceeds from issuance of mortgage / other notes payable 472,788 297,239 Principal payments on mortgage notes and other debt payable (132,398) (278,464) Increase in deferred expenses (3,501) (3,426) --------- --------- Net cash provided by (used in) financing activities 195,255 59,684 --------- --------- Net change in cash and cash equivalents 5,434 10,079 Cash and cash equivalents at beginning of period 27,229 25,593 --------- --------- Cash and cash equivalents at end of period $ 32,663 $ 35,672 ========= ========= Supplemental disclosure of cash flow information Interest paid $156,739 $171,380 Interest capitalized 14,721 12,941 Non-cash investing and financing activities: Common stock issued in exchange for Operating Partnership Units 575 2,732 Operating Partnership Units issued as consideration for purchase of land - 215 Acquisition of GGMI 66,079 - Notes receivable issued for exercised stock options 10,441 6,550 Acquisition of property in exchange for tenant note receivable 8,207 - Assumption and conversion of notes in conjunction with acquisition of property - 77,657
The accompanying notes are an integral part of these consolidated financial statements. 5 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) NOTE 1 ORGANIZATION Readers of this quarterly report should refer to the Company's audited financial statements for the year ended December 31, 2000 which are included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (Commission File No. 1-11656), as certain footnote disclosures which would substantially duplicate those contained in the 2000 annual audited financial statements have been omitted from this report. Capitalized terms used but not defined in this quarterly report have the same meanings as in the Company's 2000 Annual Report on Form 10-K. General General Growth Properties, Inc., a Delaware corporation ("General Growth"), was formed in 1986 to own and operate regional mall shopping centers. All references to the "Company" in these Notes to Consolidated Financial Statements include General Growth and those entities owned or controlled by General Growth (including the Operating Partnership and the LLC as described below), unless the context indicates otherwise. Proceeds from General Growth's April 15, 1993 initial public offering of common stock (the "Common Stock") were used to acquire a majority interest in GGP Limited Partnership (the "Operating Partnership") which was formed to succeed to substantially all of the interests in regional mall general partnerships owned and controlled by the Company and its original stockholders. The Company conducts substantially all of its business through the Operating Partnership, which commenced operations on April 15, 1993. As of September 30, 2001, the Company owned 100% of fifty-four regional shopping centers (the "Wholly-Owned Centers"); 100% of the common stock of General Growth Management, Inc. ("GGMI"); 50% of the stock of GGP/Homart, Inc. ("GGP/Homart"), 50% of the membership interest in GGP/Homart II L.L.C. ("GGP/Homart II"), 51% of the stock of GGP Ivanhoe, Inc. ("GGP Ivanhoe"), 51% of the stock of GGP Ivanhoe III, Inc. ("GGP Ivanhoe III") and 50% of Quail Springs Mall and Town East Mall (collectively, the "Unconsolidated Real Estate Affiliates"). As of such date, GGP/Homart owned interests in twenty-three shopping centers, GGP/Homart II owned interests in eight shopping centers, GGP Ivanhoe owned 100% of two shopping centers, and GGP Ivanhoe III owned 100% of eight shopping centers. Together, the Wholly-Owned Centers and the centers owned by the Unconsolidated Real Estate Affiliates comprise the "Company Portfolio" or the "Portfolio Centers". Effective January 1, 2000, General Growth established a Dividend Reinvestment and Stock Purchase Plan ("DRSP"). General Growth has reserved for issuance up to 1,000,000 shares of Common Stock for issuance under the DRSP. The DRSP will, in general, allow participants in the plan to make purchases of Common Stock from dividends received or additional cash investments. Although the purchase price of the Common Stock will be determined by the current market price, the purchases will be made without fees or commissions. General Growth will satisfy DRSP Common Stock purchase needs through the issuance of new shares of Common Stock or by repurchases of currently outstanding Common Stock. As of September 30, 2001, an aggregate of 41,815 shares of Common Stock have been issued under the DRSP. During May 2000, the Operating Partnership formed GGPLP L.L.C., a Delaware limited liability company ("the LLC"), by contributing its interest in a portfolio of 44 Wholly-Owned Centers to the LLC in exchange for all of the common units of membership interest in the LLC. On May 25, 2000, a total of 700,000 redeemable preferred units of membership interest in the LLC (the "RPUs") were issued to an institutional investor by the LLC, which yielded approximately $170,625 in net proceeds to the Company. The net proceeds from the sale of the RPUs were used to repay a portion of the Company's unsecured debt. Holders of the RPUs are entitled to receive cumulative preferential cash distributions per RPU (payable quarterly commencing July 15, 2000) at a per annum rate of 8.95% of the $250 liquidation preference thereof (or $5.59375 per quarter) prior to any distributions by the LLC to the Operating Partnership. As of the date of this report, cumulative distributions of $21,753 representing preferential distributions from May 25, 2000 through October 15, 2001 have been paid. Subject to certain limitations, the RPUs may be redeemed in cash by the LLC at any time on or after May 25, 2005 for the liquidation preference amount plus accrued and unpaid distributions and may be exchanged by the holders of the RPUs on or after May 25, 2010 for an equivalent amount of a newly created series of redeemable preferred stock 6 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) of General Growth. Such preferred stock would provide for an equivalent 8.95% annual preferred distribution and would also be redeemable by the Company for cash equal to the liquidation preference amount plus accrued and unpaid distributions. The RPUs have been reflected in the accompanying consolidated financial statements as a component of minority interest at the current total liquidation preference amount of $175,000. As of September 30, 2001, General Growth owned an approximate 73% general partnership interest in the Operating Partnership (excluding its preferred units of partnership interest as discussed below). The remaining approximate 27% minority interest in the Operating Partnership is held by limited partners that include trusts for the benefit of the families of the original stockholders who initially owned and controlled the Company and subsequent contributors of properties to the Company. These minority interests are represented by common units of limited partnership interest in the Operating Partnership (the "Units"). The Units can be redeemed for cash or, at General Growth's election with certain restrictions, for shares of Common Stock on a one-for-one basis. The holders of the Units also share equally with General Growth's common stockholders on a per share basis in any distributions by the Operating Partnership on the basis that one Unit is equivalent to one share of Common Stock. General Growth has issued 13,500,000 depositary shares, each representing 1/40 of a share of 7.25% Preferred Income Equity Redeemable Stock, Series A ("PIERS"), or a total of 337,500 PIERS. The PIERS are reflected in the accompanying consolidated financial statements at their $1,000 per share liquidation or redemption value. In order to enable General Growth to comply with its obligations in respect to the PIERS, General Growth owns preferred units of limited partnership interest in the Operating Partnership (the "Preferred Units") which have rights, preferences and other privileges, including distribution, liquidation, conversion and redemption rights, that mirror those of the PIERS. Accordingly, the Operating Partnership is required to make all required distributions on the Preferred Units prior to any distribution of cash or assets to the holders of the Units. At September 30, 2001, 100% of the Preferred Units (337,500) were owned by General Growth. On January 1, 2001, the Company acquired for nominal consideration 100% of the common stock of GGMI. The results of operations of GGMI have been consolidated in the accompanying consolidated financial statements as of and for the three and nine months ended September 30, 2001. This transaction was accounted for as a purchase. In connection with the acquisition, the GGMI preferred stock owned by the Company was cancelled and approximately $77,500 of the outstanding loans owed by GGMI to the Company were contributed to the capital of GGMI. In addition, the Company and GGMI concurrently terminated the management contracts for the Wholly-Owned Centers as the management activities will be performed directly by the Company. GGMI has continued to manage, lease, and perform various other services for the Unconsolidated Centers and other properties owned by unaffiliated third parties. During 2001, the Company elected that GGMI be treated as a taxable REIT subsidiary (a "TRS") as permitted under the Tax Relief Extension Act of 1999. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and the Operating Partnership consisting of the fifty-four Wholly-Owned Centers (including those owned by the LLC), GGMI and the unconsolidated investments in GGP/Homart, GGP/Homart II, GGP Ivanhoe, GGP Ivanhoe III, Quail Springs Mall and Town East Mall. All significant inter-company balances and transactions have been eliminated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the financial position of the Company as of September 30, 2001 and the results of operations for the three and nine months ended September 30, 2001 and 2000 and cash flows for the nine months ended 7 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) September 30, 2001 and 2000 have been included. The results for the interim periods ended September 30, 2001 and 2000 are not necessarily indicative of the results to be obtained for the full fiscal year. Certain amounts in the 2000 consolidated financial statements have been reclassified to conform to the 2001 presentation with no impact on the net operating results previously reported. Earnings Per Share ("EPS") Basic per share amounts are based on the weighted average of common shares outstanding of 52,458,839 for 2001 and 51,997,286 for 2000. Diluted per share amounts are based on the total number of weighted average common shares and dilutive securities (stock options) outstanding of 52,515,427 for 2001 and 52,027,251 for 2000. However, certain options outstanding were not included in the computation of diluted earnings per share either because the exercise price of the stock options was higher than the average market price of the Common Stock for the applicable periods and therefore the effect would be anti-dilutive or because the conditions which must be satisfied prior to the issuance of any such shares were not achieved during the applicable periods. The effect of the issuance of the PIERS is anti-dilutive with respect to the Company's calculation of diluted earnings per share for the three and nine months ended September 30, 2001 and 2000 and therefore has been excluded. The outstanding Units have also been excluded from the Company's calculation of diluted earnings per share as there would be no net effect on the reported EPS amounts since the minority interests' share of income would also be added back to net income. The following are the reconciliations of the numerators and denominators of the basic and diluted EPS. Earnings per Share
Three Months Ended Nine Months Ended September 30, September 30, 2001 2000 2001 2000 -------- -------- -------- -------- Numerators: Income(loss) before extraordinary items and cumulative effect of accounting change $ 35,609 $ 31,363 $ 48,050 $ 87,554 Dividends on PIERS (6,117) (6,117) (18,351) (18,351) -------- -------- -------- -------- Income (loss) available to common stockholders before extraordinary items and cumulative effect of accounting change - for basic and diluted EPS 29,492 25,246 29,699 69,203 Extraordinary items (253) - (1,264) - Cumulative effect of accounting change - - (3,334) - -------- -------- -------- -------- Net income (loss) available to common stockholders - for basic and diluted EPS $ 29,239 $ 25,246 $ 25,101 $ 69,203 ======== ======== ======== ======== Denominators: Weighted average common shares outstanding (in thousands) - for basic EPS 52,596 52,095 52,459 51,997 Effect of dilutive securities - options 66 39 56 30 -------- -------- -------- -------- Weighted average common shares outstanding (in thousands) - for diluted EPS 52,662 52,134 52,515 52,027 ======== ======== ======== ========
8 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) Notes Receivable - Officers As of September 30, 2001, certain officers of the Company were indebted to the Company in the aggregate amount of $19,890 under promissory notes issued by such officers in connection with their exercise of options to purchase an aggregate of 740,000 shares of the Company's Common Stock, including approximately $10,441 advanced to officers for the purchase of 330,000 shares of Common Stock in 2001. In June 2000, a $1,120 loan was repaid by one of the officers. Also in 2000, the Company forgave approximately $150 of other notes receivable from an officer (previously reflected in prepaid expenses and other assets). The notes, which bear interest at a rate computed as a formula of a market rate, are full recourse to the officers, collateralized by the shares of Common Stock issued upon exercise of such stock options, provide for quarterly payments of interest and are payable to the Company on demand. Revenue Recognition Minimum rent revenues are recognized on a straight-line basis over the terms of the related leases. As of September 30, 2001, approximately $46,300 has been recognized as straight-line rents receivable (representing the current net cumulative rents recognized prior to when billed and collectable as provided by the terms of the leases), all of which is included in prepaid and other assets in the accompanying consolidated financial statements. Overage rents are recognized on an accrual basis once tenant sales revenues exceed contractual tenant lease thresholds. Recoveries from tenants for taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable costs are incurred. The Company provides an allowance for doubtful accounts against the portion of amounts due from tenants which is estimated to be uncollectible. Such allowances are reviewed periodically based upon the recovery experience of the Company. Other income primarily represents financing fees and other ancillary services performed by the Company for the benefit of its Unconsolidated Real Estate Affiliates. Comprehensive Income Comprehensive income is a more inclusive financial reporting methodology that encompasses net income and all other changes in equity except those resulting from investments by and distributions to equity holders. One item included in comprehensive income but not net income is unrealized holding gains or losses on marketable securities classified as available-for-sale. Although General Growth and its consolidated affiliates do not have any material available-for-sale securities, one of its unconsolidated affiliates received common stock of Simon Property Group, Inc. as part of a 1998 transaction. Cumulative net holding losses on such securities through December 31, 2000 were $1,537 and were reflected as accumulated equity in other comprehensive loss of unconsolidated affiliate. During June 2001, such unconsolidated affiliate sold a portion of its total holdings of Simon Property Group Stock at a loss and the cumulative other comprehensive losses for the stock sold were reversed. For the nine months ended September 30, 2001 the Company increased its carrying amount for its investment in such unconsolidated affiliate by $1,033 and reflected ($388) and $752, respectively for the three and nine months ended September 30, 2001, as other comprehensive income (loss), net of minority interest of ($145) and $281 respectively, as its equity in such unconsolidated affiliate's unrealized holding gain (loss) on such remaining securities for such periods. For the three and nine months ended September 30, 2000 there were nominal holding losses on such securities which have not been reflected. Business Segment Information The primary business of General Growth and its consolidated affiliates is owning and operating shopping centers. General Growth evaluates operating results and allocates resources on a property-by-property basis and does not distinguish nor group its consolidated operations on a geographic basis. Accordingly, General Growth has determined it has a single reportable segment for Statement of Financial Accounting Standards No. 131 purposes. Further, all operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues. 9 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) NOTE 2 PROPERTY ACQUISITIONS AND DEVELOPMENTS Acquisitions During September 1999, St. Cloud Funding, L.L.C., a wholly-owned subsidiary of the Operating Partnership ("St. Cloud Funding"), agreed to advance approximately $31,000 to an unaffiliated developer in the form of a second mortgage loan (bearing interest at 15% per annum) collateralized by such developer's ownership interest in Crossroads Center in St. Cloud (Minneapolis), Minnesota. The loan contained provisions which permitted St. Cloud Mall L.L.C., all of the interests of which are owned by the Company ("St. Cloud Mall"), to acquire the property. Pursuant to such provisions, on April 26, 2000, St. Cloud Mall purchased the property at a price equal to approximately $2,000 plus the then outstanding balances of the first mortgage (approximately $46,600) and St. Cloud Funding's second mortgage. During April 2001, GGP-Tucson Mall, L.L.C., a wholly-owned subsidiary of the Operating Partnership ("GGP-Tucson"), agreed to advance $20,000 to an unaffiliated developer in the form of a secured promissory note (bearing interest at 8% per annum) collateralized by such developer's ownership interest in Tucson Mall, a 1.3 million square foot enclosed regional mall in Tucson, Arizona. The promissory note was payable interest only and was due on demand. GGP-Tucson had also entered into an option agreement to purchase Tucson Mall from such developer and its co-tenants in title to the property. On August 15, 2001, the promissory note was repaid in conjunction with GGP-Tucson's completion of its acquisition of Tucson Mall pursuant to the option agreement. The aggregate consideration paid by GGP-Tucson for Tucson Mall was approximately $180,000 (subject to prorations and to certain adjustments and payments to be made by GGP-Tucson). The consideration was paid in the form of cash borrowed under the Operating Partnership's revolving line of credit and an approximately $150,000 short-term acquisition loan which matures in December of 2001 but was anticipated to be refinanced in December 2001 as further discussed in Note 4. The loan bears interest at a rate per annum of LIBOR (2.63% at September 30, 2001) plus 95 basis points. All acquisitions completed through September 30, 2001 were accounted for utilizing the purchase method and accordingly, the results of operations are included in the Company's results of operations from the respective dates of acquisition. Developments During 2000, the Company completed construction of Stonebriar Centre, owned by GGP/Homart II, located in Frisco (Dallas), Texas. Construction had commenced in October of 1999 and Stonebriar Centre opened as scheduled on August 4, 2000. The Company has an ongoing program of renovations and expansions at its properties including significant projects currently under construction at Eden Prairie Mall in Eden Prairie (Minneapolis), Minnesota; The Crossroads in Portage, Michigan; Knollwood Mall in St. Louis Park (Minneapolis), Minnesota; and Southwest Plaza Mall in Littleton (Denver), Colorado. The Company has categorized the cumulative expenditures for such renovations and expansions as developments in progress in the accompanying consolidated financial statements. During 1999, the Company formed a joint venture to develop a regional mall in Westlake (Dallas), Texas. As of September 30, 2001, the Company has invested approximately $15,900 (including land acquisition costs) in the joint venture. In addition, the Company is currently obligated to fund pre-development costs (estimated to be approximately $1,545, most of which have been incurred). Actual development costs have not been determined at this time. The retail site, part of a planned community which is expected to contain a resort hotel, a golf course, luxury homes and corporate offices, is currently planned to contain up to 1.6 million square feet of tenant space including up to six anchor stores and a multi-screen theater. There can be no assurance that development of this site will proceed beyond the pre-development phase. 10 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) The Company also is investigating certain other potential development sites, including a site in Toledo, Ohio (investment, including land acquisition costs, of approximately $15,000 included in developments in progress at September 30, 2001). An additional site under investigation is in West Des Moines, Iowa, (investment, including option cost for land, of approximately $2,100 is included in developments in progress at September 30, 2001). There can be no assurance that development of these or any other of the potential development sites will proceed. NOTE 3 INVESTMENTS IN UNCONSOLIDATED AFFILIATES GGP/Homart The Company holds a 50% interest in GGP/Homart with the remaining ownership interest held by New York State Common Retirement Fund ("NYSCRF"), the Company's co-investor in GGP/Homart II (described below). At September 30, 2001, GGP/Homart owned interests in twenty-three regional shopping malls, four of which were owned jointly with venture partners. GGP/Homart has elected real estate investment trust status for income tax purposes. The Company shares in the profits and losses, cash flows and other matters relating to GGP/Homart in accordance with its 50% ownership percentage. NYSCRF has an exchange right under the GGP/Homart Stockholders Agreement which permits it to convert its ownership interest in GGP/Homart to shares of Common Stock of General Growth. If such exchange right is exercised, the Company may, at its election, alternatively satisfy such exchange in cash. GGP/Homart II In November 1999, the Company, together with NYSCRF, formed GGP/Homart II, a Delaware limited liability company which is owned equally by the Company and NYSCRF. GGP/Homart II owns 100% interests in Stonebriar Centre in Frisco (Dallas), Texas, Altamonte Mall in Altamonte Springs (Orlando), Florida, Natick Mall in Natick (Boston), Massachusetts and Northbrook Court in Northbrook (Chicago), Illinois, which were contributed to the joint venture by the Company; and 100% interests in Alderwood Mall in Lynnwood (Seattle), Washington, Carolina Place in Charlotte, North Carolina, and Montclair Plaza in Los Angeles, California, which were contributed to the joint venture by NYSCRF. Certain of the malls were contributed subject to existing financing in order to balance the net equity values of the malls contributed by each of the venture partners. Also, on March 22, 2001, GGP/Homart II purchased a 100% interest in Willowbrook Mall in Houston, Texas for approximately $145,000. GGP/Homart II financed the acquisition with a new $102,000 10-year mortgage loan bearing interest at 6.93% per annum and approximately $43,000 in financing proceeds from a new mortgage loan collateralized by the Stonebriar Centre. According to the membership agreement between the venture partners, the Company and NYSCRF share in the profits and losses, cash flows and other matters relating to GGP/Homart II in accordance with their respective 50% ownership percentages. GGP Ivanhoe III GGP Ivanhoe III owns 100% interests in Landmark Mall in Alexandria, Virginia; Mayfair Mall and adjacent office buildings in Wauwatosa (Milwaukee), Wisconsin; Meadows Mall in Las Vegas, Nevada; Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in Savannah, Georgia; Park City Center in Lancaster, Pennsylvania; Oak View Mall in Omaha, Nebraska; and Eastridge Shopping Mall in San Jose, California. GGP Ivanhoe III, which has elected to be taxed as a REIT, is owned 51% by the Company and 49% by an affiliate of Ivanhoe Cambridge of Montreal, Quebec, Canada ("Ivanhoe"), which is also the Company's joint venture partner in GGP Ivanhoe (described below). The Company and Ivanhoe share in the profits and losses, cash flows and other matters relating to GGP Ivanhoe III in accordance with their respective ownership percentages except that certain major operating and capital decisions (as defined in the stockholders' agreement) require the approval of both stockholders. Accordingly, the Company is accounting for GGP Ivanhoe III using the equity method. 11 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) GGP Ivanhoe GGP Ivanhoe owns The Oaks Mall in Gainesville, Florida and Westroads Mall in Omaha, Nebraska. The Company owns a 51% ownership interest in GGP Ivanhoe and Ivanhoe owns the remaining 49% ownership interest. The terms of the stockholder's agreement are similar to those of GGP Ivanhoe III. Town East Mall / QuailSprings Mall The Company owns a 50% interest in Town East Mall, located in Mesquite, Texas and a 50% interest in Quail Springs Mall in Oklahoma City, Oklahoma. The Company shares in the profits and losses, cash flows and other matters relating to Town East Mall and Quail Springs Mall in accordance with its ownership percentage. GGMI On January 1, 2001, the Operating Partnership acquired 100% of the common stock of GGMI, as discussed in Note 1, and the operations, net assets and liabilities of GGMI have been fully consolidated into the Company's consolidated financial statements. During 2000, the Operating Partnership held all of the non-voting preferred stock ownership interest in GGMI representing 95% of the equity interest. Certain key current or former employees of the Company held the remaining 5% equity interest through ownership of 100% of the common stock of GGMI, which was entitled to all voting rights in GGMI. Accordingly, the Company utilized the equity method to account for its ownership interest in GGMI in 2000 and prior years. GGMI could not distribute funds to its common stockholders until its available cash flow exceeded all accumulated preferred dividends owed to the preferred stockholder. As no preferred stock dividends had been paid by GGMI, the Company had been allocated 100% of the earnings (loss) and cash flows generated by GGMI since 1996. The Operating Partnership also had advanced funds to GGMI at interest rates ranging from 8% to 14% per annum which were scheduled to mature by 2016. Such loans were capitalized in 2001 as discussed above and in Note 4. Summarized Income Statement Information Of Unconsolidated Real Estate Affiliates The following is summarized income statement information of Unconsolidated Real Estate Affiliates of the Company for the three and nine months ended September 30, 2001 and 2000. GENERAL GROWTH PROPERTIES, INC. UNCONSOLIDATED REAL ESTATE AFFILIATES FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (UNAUDITED) (Dollars in thousands, except for per share amounts)
Three Months Ended Nine Months Ended September September 2001 2000 2001 2000 -------- -------- --------- --------- Total Revenues $161,343 $145,664 $ 476,755 $ 416,030 Operating expenses 67,833 58,036 198,293 172,008 Depreciation and Amortization 30,947 25,919 91,503 77,053 -------- -------- --------- --------- Operating Income 62,563 61,709 186,959 166,969 Interest expense, net (33,272) (36,707) (108,468) (104,785) Equity in net income of unconsolidated real estate affiliates 901 1,424 2,457 4,125 Extraordinary Item 490 - (1,590) - Gain (loss) on property sales (334) 1 (664) 184 Income allocated to minority interest - (83) - (234) -------- -------- --------- --------- Net Income $ 30,348 $ 26,344 $ 78,694 $ 66,259 ======== ======== ========= =========
12 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) NOTE 4 MORTGAGE NOTES AND OTHER DEBT PAYABLE Mortgage notes and other debt payable at September 30, 2001 and December 31, 2000 consisted of the following:
September 30, 2001 December 31, 2000 Fixed-Rate debt: Mortgage notes payable $2,122,417 $1,832,783 Variable-Rate debt: Mortgage notes payable 1,069,599 1,146,343 Credit Facilities and bank loan 392,500 265,000 ---------- ---------- Total Variable-Rate debt 1,462,099 1,411,343 ---------- ---------- Total $3,584,516 $3,244,126 ========== ==========
Fixed Rate Debt Mortgage Notes Payable Mortgage notes and other debt payable consist primarily of fixed rate non-recourse notes collateralized by individual properties or groups of properties. In addition, at September 30, 2001 the Company has approximately $87,500 in notes payable related to the Broadband System equipment and Network activities (see Note 7). Certain mortgage notes payable may be prepaid but are generally subject to a prepayment penalty of a yield-maintenance premium or a percentage of the loan balance. During August 2001, the Company refinanced Bayshore Mall with a long-term fixed rate mortgage loan. The new $34,300 non-recourse mortgage loan provides for monthly payments of principal and interest at a rate of 7.13% per annum and matures in December 2011. In March 2001, the Company obtained a $115,000 non-recourse mortgage loan collateralized by Capital Mall, Greenwood Mall, and Gateway Mall. The new mortgage loan requires monthly payments of principal and interest at a rate of 7.28% per annum and matures in April 2011. In December 2000, the Company obtained an additional $20,000 non-recourse mortgage loan collateralized by the Valley Hills Mall. The new mortgage loan is payable interest only until maturity at a rate of 7.91% per annum and matures in February 2004. Variable Rate Debt Mortgage Notes Payable Variable mortgage notes payable consist primarily of approximately $106,250 of non-recourse financing collateralized by a portfolio of four wholly-owned properties (approximately $56,500 of which was refinanced in October 2001 with the bridge loan described below), $150,000 of new floating rate financing related to the acquisition of the Tucson Mall and approximately $722,203 of collateralized mortgage-backed securities, all as described below. The remaining loans are generally short term in nature and bear interest at a rate per annum equal to LIBOR plus 90 to 185 basis points. Interest rates on LIBOR-based variable rate notes do not adjust daily but rather are adjusted in response to changes in LIBOR rates when LIBOR contracts are renewed, which typically occur at thirty-day intervals. The Company currently expects to retire or refinance such obligations when market conditions are favorable or at maturity. 13 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) Commercial Mortgage-Backed Securities In August 1999, the Company issued $500,000 of non-recourse commercial mortgage-backed securities, collateralized by the Ala Moana Center. The securities (the "Ala Moana CMBS") are comprised of notes which bear interest at rates per annum ranging from LIBOR plus 50 basis points to LIBOR plus 275 basis points (weighted average equal to LIBOR plus 95 basis points), calculated and payable monthly. In conjunction with the issuance of the Ala Moana CMBS, the Company arranged for an interest rate cap agreement, the effect of which limits the maximum interest rate the Company will be required to pay on the securities to 9% per annum. Payments received pursuant to the interest rate cap agreement for the nine months ended September 30, 2001 were approximately $14, which were reflected as a reduction in net interest expense. In September 1999, the Company issued $700,229 of non-recourse commercial mortgage backed securities cross-collateralized and cross-defaulted by a portfolio of nine regional malls and an office complex adjacent to one of the regional malls. The securities (the "GGP-Ivanhoe CMBS") are comprised of notes which bear interest at rates per annum ranging from LIBOR plus 52 basis points to LIBOR plus 325 basis points (weighted average equal to LIBOR plus approximately 109 basis points), calculated and payable monthly. During June 2001, the Company refinanced Northridge Fashion Center, one of the nine malls which had collateralized the GGP-Ivanhoe CMBS. Northridge Fashion Center was removed from the cross-collateralization and cross-default provisions of the GGP-Ivanhoe CMBS the outstanding principal amount of the GGP-Ivanhoe CMBS was reduced by approximately $132,500 with the proceeds of a new mortgage loan. The $140,000 new non-recourse mortgage loan bore interest at LIBOR plus 140 basis points until July, 2001 when it was converted to a fixed rate mortgage loan bearing interest at 7.24% per annum with a scheduled maturity of July 2011. In conjunction with the issuance of the GGP-Ivanhoe CMBS, the Company arranged for an interest rate cap agreement, the effect of which limits the maximum interest rate the Company will be required to pay on the securities to 9.03% per annum. Payments received pursuant to the interest rate cap agreement for the nine months ended September 30, 2001 were approximately $60, which were reflected as a reduction in net interest expense. The GGP-Ivanhoe CMBS was scheduled to be refinanced in November 2001 as described below. The Company is in negotiations with a group of investment banks to place approximately $2,550,000 of non-recourse commercial mortgage pass-through certificates (the "GGP MPTC"). The GGP MPTC, which is currently anticipated to close in early December 2001, is expected to be collateralized by up to 27 malls and one office building, including the remaining eight malls collateralized by the GGP Ivanhoe CMBS. The GGP MPTC is expected to be comprised of both variable rate and fixed rate notes which will provide for monthly payments of principal and interest. The certificates are expected to represent beneficial interests in three loan groups made by borrowers in three groups (GGP/Homart-GGP/Homart II, Wholly-Owned and GGP Ivanhoe III). The three loan groups are expected to be comprised of variable rate notes with a 36 month initial maturity (with two no cost 12-month extension options), variable rate notes with a 51 month initial maturity (with two no cost 18-month extension options) and fixed rate notes with a 5 year maturity. The extension options are expected to be subject to the respective borrowers' obtaining extensions of the interest rate protection agreements which will be obtained in conjunction with the variable notes included in the GGP MPTC. It is anticipated that such interest rate protection agreements would be structured to limit the Company's exposure to interest rate fluctuations in a manner similar to the interest rate cap agreements related to the Ala Moana and GGP-Ivanhoe CMBS. There can be no assurance that this transaction will be consummated within the timeframe indicated or upon these or any other terms. Credit Facilities The Company's $200,000 unsecured revolving credit facility was originally scheduled to mature on July 31, 2000. On June 23, 2000, the Company prepaid all remaining outstanding principal amounts and terminated the credit facility. The credit facility bore interest at a floating rate per annum equal to LIBOR plus 80 to 120 basis points depending upon the Company's leverage ratio. The credit facility was subject to financial performance covenants including debt-to-market capitalization, minimum earnings before interest, taxes, depreciation and amortization ("EBITDA") ratios and minimum equity values. 14 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) As of July 31, 2000 the Company obtained a new unsecured revolving credit facility (the "Revolver") in a maximum aggregate principal amount of $135,000 (cumulatively increased to $185,000 as of September 30, 2001). At September 30, 2001 the outstanding balance of the Revolver was $100,000. The Revolver has a maturity of July 31, 2003 and bears interest at a floating rate per annum equal to LIBOR plus 100 to 190 basis points, depending on the Company's average leverage ratio. The Revolver is subject to financial performance covenants including debt to value and net worth ratios, certain financial ratios and minimum equity values. In January 2001, GGMI borrowed $37,500 under a new revolving line of credit obtained by GGMI and an affiliate, which is guaranteed by General Growth and the Operating Partnership. The interest rate per annum with respect to any borrowings varies from LIBOR plus 100 to 190 basis points depending on the Company's average leverage ratio. This revolving line of credit matures in July 2003. Interim Financing In January 2000, the Company obtained a new $200,000 unsecured short-term bank loan. The Company's initial draw under this loan was $120,000 in January 2000 and the remaining available amounts were fully drawn at July 31, 2000. Loan proceeds were used to fund ongoing redevelopment projects and repay the remaining balance of $83,000 on an interim loan obtained in September 1999. The bank loan bore interest at a rate per annum of LIBOR plus 150 basis points and was refinanced as of July 31, 2000 with the Revolver and the Term Loan described below. As of July 31, 2000, the Company obtained an unsecured bank term loan (the "Term Loan") in a maximum principal amount of $100,000. As of September 30, 2001, the maximum principal amount of the Term Loan had been increased to $255,000 and, as of such date, all amounts available under the Term Loan were fully drawn. Term Loan proceeds were used to fund ongoing redevelopment projects and repay a portion of the remaining balance of the bank loan described in the paragraph immediately above. The Term Loan has a maturity of July 31, 2003 and bears interest at a rate per annum of LIBOR plus 100 to 170 basis points depending on the Company's average leverage ratio. In April 1999, the Company obtained an additional $25,000 bank loan, partially secured by Park Mall in Tucson, Arizona. As of September 30, 2001, the maximum available amounts under the loan had been cumulatively increased to $100,000 of which approximately $72,000 had been borrowed. The loan, which is scheduled to mature November 15, 2002 and is anticipated to be refinanced in December 2001 by the GGP MPTC described above, bears interest at a rate per annum of LIBOR plus 165 basis points. In March 2001, the Company obtained a $65,000 redevelopment loan collateralized by Eden Prairie Mall. The new loan had an initial draw of approximately $19,400, requires monthly payments of interest at a rate of LIBOR plus 190 basis points and matures in April 2004. In October 2001, the Company refinanced the mortgage debt collateralized by Century Plaza, Eagle Ridge Mall and the Knollwood Mall. These properties were part of a floating rate cross-collateralized pool of mortgage notes (obtained in October 1999), originally collateralized by a portfolio of 5 regional malls and 1 office property, which was originally scheduled to mature November 1, 2001. The three malls were refinanced with a $90,000 bridge loan which bears interest at a rate per annum of LIBOR plus 210 basis points and matures on February 1, 2002 subject to one three-month extension option. The bridge loan also provides for a conversion to a term loan maturing on May 1, 2004 under certain conditions including principal pay-downs based on various financial measures. The Knollwood Mall portion ($10,000) and the SouthShore Mall portion ($9,000) of the original $130,000 six property loan was repaid in full from the Company's Revolver in August 2001 and the remaining properties, 110 N. Wacker and West Valley Mall, are anticipated to be refinanced in December 2001 from the GGP MPTC. 15 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) Construction Loan During April 1999, the Company received $30,000 representing the initial loan draw on a $110,000 construction loan facility. The facility was collateralized by and provided financing for the RiverTown Crossings Mall development (including outparcel development) in Grandville (Grand Rapids), Michigan. The construction loan provided for periodic funding as construction and leasing continued and bore interest at a rate per annum of LIBOR plus 150 basis points. As of July 17, 2000 additional loan draws of approximately $80,000 had been made and no further amounts were available under the construction loan facility. Interest was due monthly. The loan had been scheduled to mature on June 30, 2001 and was refinanced on June 28, 2001 with a non-recourse long-term mortgage loan. The new $130,000 non-recourse mortgage loan bears interest at 7.54% per annum and matures on July 1, 2011. Letters of Credit As of September 30, 2001 and December 31, 2000, the Operating Partnership had outstanding letters of credit of approximately $22,600 and $7,700, respectively, primarily in connection with special real estate assessments and insurance requirements. NOTE 5 DISTRIBUTIONS PAYABLE The following is a chart of the previous common and preferred distributions for the Company paid in 2000 and 2001. As described in Note 1, General Growth's preferred stock dividends to its preferred stockholders were in the same amount as the Operating Partnership's distributions to General Growth on the same dates with respect to the Preferred Units held by General Growth.
COMMON DISTRIBUTIONS - --------------------------------------------------------------------------- General Operating Growth Partnership Declaration Amount per Record Payment Stockholders Limited Partners Date Share Date Date Amount Amount ---- ----- ---- ---- ------ ------ 09/20/01 $0.65 10/15/01 10/31/01 $34,262 $12,722 06/23/01 0.53 07/06/01 07/31/01 27,801 10,373 03/21/01 0.53 04/06/01 04/30/01 27,778 10,373 12/12/00 0.53 01/05/01 01/31/01 27,744 10,385 09/19/00 0.51 10/05/00 10/31/00 26,596 10,046 06/14/00 0.51 07/06/00 07/31/00 26,541 10,090 03/22/00 0.51 04/06/00 04/28/00 26,483 10,101 12/13/99 0.51 01/06/00 01/31/00 26,481 10,097 PREFERRED DISTRIBUTIONS ---------------------------------------------- Record Payment Amount per Date Date Share ---- ---- ----- 10/05/01 10/15/01 $0.4531 07/06/01 07/13/01 0.4531 04/06/01 04/16/01 0.4531 01/05/01 01/15/01 0.4531 10/05/00 10/16/00 0.4531 07/06/00 07/14/00 0.4531 04/06/00 04/14/00 0.4531 01/06/00 01/14/00 0.4531
NOTE 6 COMMITMENTS AND CONTINGENCIES In the normal course of business, from time to time, the Company is involved in legal actions relating to the ownership and operations of its properties. In management's opinion, the liabilities if any, that may ultimately result from such legal actions are not expected to have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company. 16 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) The Company periodically enters into contingent agreements for the acquisition of properties. Each acquisition is subject to satisfactory completion of due diligence and, in the case of developments, completion of the project. NOTE 7 NETWORK DISCONTINUANCE COSTS AND OTHER INTERNET INITIATIVES Since early 2000, the Company had been implementing a broadband wiring and routing system that would provide tenants at the Company's properties with the supporting equipment (the "Broadband System") to allow such tenants and mall locations to arrange high-speed cable access to the Internet. As of July 2001, the Broadband System had been installed and was substantially complete and operational. Since early 2000, the Company had also been engaged in Network Services development activities, an effort to create for retailers a suite of broadband applications to support retail tenant operations, on-line sales, and private wide area network services to be delivered by the Broadband System. As of December 31, 2000, the Company had invested approximately $66,000 in the Broadband System and approximately $18,000 in Network Services development activities, all of which was reflected in buildings and equipment in the accompanying consolidated financial statements. The Company discontinued its Network Services development activities on June 29, 2001, as retailer demand for such services had not developed as anticipated. The discontinuance of the Network Services development activities resulted in a non-recurring, pre-tax charge to second quarter 2001 earnings of $65,000. The $65,000 charge was comprised of an approximate $11,800 reduction in the carrying value of equipment that was intended to allow tenants access to the Network Services applications and approximately $53,200 in the write-off of capitalized Network development costs as follows: approximately $17,400 in obligations to various vendors including amounts related to the termination of contracts which provide no future benefit to the Company, approximately $10,600 in private wide area network equipment that is deemed worthless, approximately $25,200 in capitalized network development costs including third-party consultants, internal payroll, supplies and equipment for the design, configuration and installation costs of private wide area network equipment; various costs related to the development of Mallibu.com, a consumer Internet portal; and related consumer-direct e-commerce initiatives. In addition, the Company recognized $1,000 of net incremental discontinuance costs in the third quarter of 2001. This third quarter amount was comprised of approximately $1,366 of incremental discontinuance costs (primarily payroll and severance costs) and approximately $366 of reduction in the Network discontinuance reserve. Such reduction in the Network discontinuance reserve was primarily due to the settlement of obligations to Network Services vendors and consultants at amounts lower than originally contracted for. The following table summarizes the amounts capitalized by the Company and the related charge: Total ----- Balance at December 31, 2000 $84,451 Additions (Cash) 46,030 Additions (Non-cash)* 6,169 Write off of Network Services Activities (66,000) ------- Ending Balance at September 30, 2001** $70,650 ======= ------------- *Reflected in the accompanying consolidated financial statements as approximately $5,856 in Network discontinuance reserve and approximately $313 in Accounts payable. **Before accumulated depreciation of approximately $3,500. 17 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) The Company's investment in the Broadband System, which is comprised primarily of mall equipment and mall wiring, is being retained by the Company. The Company has made a cumulative investment of approximately $70,650 in the Broadband System as of September 30, 2001, which has been reflected in buildings and equipment and investment in Unconsolidated Real Estate Affiliates in the accompanying consolidated financial statements as detailed below. Although no direct revenue is currently being generated from the Broadband System, the Company anticipates that revenues will be recognized in future periods either from the sale of such access or increased rents for the Company's retail spaces. The following represents the Company's net carrying values for the Broadband System:
September 30, 2001 ----------------------------------------------- Investments in Building Unconsolidated Totals and equipment Real Estate Affiliates Mall Wiring and Equipment $37,110 $29,736 $66,845 Tenant Equipment 1,986 1,819 3,805 ------- ------- ------- $39,096 $31,555 $70,650 ======= ======= =======
NOTE 8 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS On June 1, 1999 the FASB issued Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("Statement 133"). FASB Statement No. 138 "Accounting for Derivative Instruments and Hedging Activities-An Amendment of FASB Statement No 133" was issued in June 2000. Statement 133, as amended, is effective for fiscal years beginning after June 15, 2000 as provided by FASB Statement No. 137 issued in July 1999. The Company's only hedging activities are the cash flow hedges represented by its interest rate cap agreements relating to its commercial mortgage-backed securities and certain other property specific first mortgage financing (the "Cap Agreements"). The Cap Agreements place a limit on the effective rate of interest the Company will bear on such floating rate obligations. The Company has concluded that the Cap Agreements are highly effective in achieving its objective of eliminating its exposure to variability in cash flows relating to these floating rate obligations when LIBOR rates exceed the strike rates of the cap agreements. However, Statement 133 also requires that the Company fair value the Cap Agreements as of the end of each reporting period. Interest rates have generally declined since the caps were obtained. The Company adopted Statement 133 on January 1, 2001. In accordance with the transition provisions of Statement 133, the Company recorded at January 1, 2001 a loss to earnings of $3,334 as a cumulative-effect transition adjustment to recognize at fair value the time-value portion of all the interest rate cap agreements that were previously designated as part of a hedging relationship. Included in the $3,334 loss is $704 relating to interest rate cap agreements held by Unconsolidated Real Estate Affiliates. The Company also recorded $112 to other comprehensive income at January 1, 2001 to reflect the then fair value of the intrinsic portion of the interest rate cap agreements. Subsequent changes in the fair value of these agreements are reflected in current earnings and accumulated other comprehensive income. As the remaining time-value portion of the fair value of the Cap Agreements at January 1, 2001 is not significant, any further decreases in the fair value of the Cap Agreements which would be required to be reflected in current earnings are not expected to be material. In July 2001, the FASB issued Statement No. 141, "Business Combinations", ("SFAS 141") and Statement No. 142 "Goodwill and Other Intangible Assets", ("SFAS 142"). SFAS 141 requires the purchase method to be used for business combinations initiated after June 30, 2001. As the Company has never engaged in a pooling 18 of 32 GENERAL GROWTH PROPERTIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except for per share amounts) acquisition transaction and its customary acquisitions are of individual assets or malls rather than operating businesses, the Company does not anticipate that SFAS 141 will have a significant impact on its current or future operations or financial results. SFAS 142 requires that goodwill no longer be amortized to earnings, but instead reviewed for impairment, when the statement is required to be adopted on January 1, 2002. The Company does not believe the impact of the adoption of SFAS 142 will be significant. In August 2001, the FASB issued Statement No. 143 "Accounting for Asset Retirement Obligations", ("SFAS 143"). SFAS 143 addresses the financial accounting and reporting for asset retirement costs and related obligations and is effective for fiscal years beginning after June 15, 2002. The Company does not believe the impact of the adoption of SFAS 143 will be significant. In October 2001, the FASB issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 develops one accounting model (based on the model in SFAS 121) for long-lived assets (including discontinued operations) that are to be disposed of by sale, as well as addresses certain discontinued operations issues. SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001. As the Company does not generally hold its properties for sale and has historically not had significant operations that have been accounted for as "discontinued operations", the Company does not anticipate that SFAS 144 will have a significant impact on its current or future operations or financial results. 19 of 32 GENERAL GROWTH PROPERTIES, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All references to numbered Notes are to specific footnotes to the Consolidated Financial Statements of the Company included in this quarterly report and which descriptions are hereby incorporated herein by reference. The following discussion should be read in conjunction with such Consolidated Financial Statements and related Notes. Forward-Looking Information Certain statements contained in this Quarterly Report on Form 10-Q may include certain forward-looking information statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including (without limitation) statements with respect to anticipated future operating and financial performance, growth and acquisition opportunities and other similar forecasts and statements of expectation. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" and "should" and variations of these words and similar expressions, are intended to identify these forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information or otherwise. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital requirements, availability of real estate properties, competition from other companies and venues for the sale/distribution of goods and services, changes in retail rental rates in the Company's markets, shifts in customer demands, tenant bankruptcies or store closures, changes in vacancy rates at the Company's properties, changes in operating expenses, including employee wages, benefits and training, governmental and public policy changes, changes in applicable laws, rules and regulations (including changes in tax laws), the ability to obtain suitable equity and/or debt financing, and the continued availability of financing in the amounts and on the terms necessary to support the Company's future business. Certain Information about the Company Portfolio As of September 30, 2001, the Company owns 100% of the fifty-four Wholly-Owned Centers, 100% of the stock of GGMI, 50% of the stock of GGP/Homart, 50% of the membership interest in GGP/Homart II, 51% of the stock of GGP Ivanhoe, 51% of the stock of GGP Ivanhoe III and 50% of Quail Springs Mall and Town East Mall. GGP/Homart owns interests in twenty-three shopping centers, GGP/Homart II owns interests in eight shopping centers, GGP Ivanhoe owns interests in two shopping centers, and GGP Ivanhoe III owns interests in eight shopping centers. On September 30, 2001, the Mall Store and Freestanding Store portions of the centers in the Company Portfolio that were not undergoing redevelopment were approximately 88.3% occupied as of such date, compared to 89.0% at the end of last quarter and representing a decrease in occupancy percentage of 1.8% as compared to December 31, 2000. The minor occupancy declines are due to the general economic slowdown as described below in the Company's discussion of Liquidity and Capital Resources. 20 of 32 GENERAL GROWTH PROPERTIES, INC. Total annualized sales averaged $360 per square foot for the Company Portfolio in the nine months ended September 30, 2001. In the nine months ended September 30, 2001, total Mall Store sales for the Company Portfolio increased by 3.3% over the same period in 2000. Comparable Mall Store sales are sales of those tenants that were open the previous 12 months. Therefore, Comparable Mall Store sales in the nine months ended September 30, 2001 are of those tenants that were operating in the nine months ended September 30, 2000. Comparable Mall Store sales in the nine months ended September 30, 2001 were flat compared to the same period in 2000. The Company Portfolio average Mall Store rent per square foot from leases that expire in the remainder of 2001 is $30.22. The Company Portfolio will benefit from increasing rents inasmuch as the average Mall Store rent per square foot on new and renewal leases executed during the nine months ended September 30, 2001 was $33.16, or $2.94 per square foot above the average for expiring leases. The following schedule shows only the scheduled lease expirations over the next five years.
PORTFOLIO CENTERS FIVE YEAR LEASE EXPIRATION SCHEDULE All Expirations Expirations at Share(*) -------------------------------- ------------------------------- Square Square Base Rent Footage Rent/PSF Base Rent Footage Rent/PSF --------- ------- -------- --------- ------- -------- Wholly Owned 2001 $ 7,837,819 276,147 $ 28.38 $ 7,837,819 276,147 $ 28.38 2002 $ 23,282,092 875,995 $ 26.58 $ 23,282,092 875,995 $ 26.58 2003 $ 27,059,796 1,005,678 $ 26.91 $ 27,059,796 1,005,678 $ 26.91 2004 $ 22,893,386 842,969 $ 27.16 $ 22,893,386 842,969 $ 27.16 2005 $ 34,816,460 1,156,561 $ 30.10 $ 34,816,460 1,156,561 $ 30.10 ------------ --------- -------- ------------ --------- -------- Wholly Owned Total $115,889,553 4,157,350 $ 27.88 $115,889,553 4,157,350 $ 27.88 Unconsolidated 2001 $ 15,705,514 502,857 $ 31.23 $ 7,255,401 232,777 $ 31.17 2002 $ 27,558,135 855,225 $ 32.22 $ 13,265,845 412,086 $ 32.19 2003 $ 30,019,254 927,940 $ 32.35 $ 13,152,018 408,284 $ 32.21 2004 $ 34,744,804 1,037,086 $ 33.50 $ 16,398,508 490,950 $ 33.40 2005 $ 26,394,539 824,918 $ 32.00 $ 12,105,897 375,839 $ 32.21 ------------ --------- -------- ------------ --------- -------- Unconsolidated Total $134,422,246 4,148,026 $ 32.41 $ 62,177,669 1,919,936 $ 32.39 Grand Total $250,311,799 8,305,376 $ 30.14 $178,067,222 6,077,286 $ 29.30 ------------ --------- -------- ------------ --------- --------
(*) Expirations at share reflect the Company's direct or indirect ownership interest in a joint venture. Company revenues are primarily derived from fixed minimum rents, overage rents and recoveries of operating expenses from tenants. Inasmuch as the Company's consolidated financial statements reflect the use of the 21 of 32 GENERAL GROWTH PROPERTIES, INC. equity method to account for its investments in GGP/Homart, GGP/Homart II, GGP Ivanhoe, GGP Ivanhoe III, Quail Springs Mall and Town East Mall, the discussion of results of operations of the Company below relates primarily to the revenues and expenses of the Wholly-Owned Centers and GGMI. Results Of Operations of the Company Three Months Ended September 30, 2001 and 2000 On January 1, 2001, the Company acquired all of the outstanding common stock of GGMI and consolidated the results of GGMI's operations as described in Note 3. GGMI's operations did not change significantly in 2001 as a result of the acquisition but fees received from the Wholly-Owned Centers have been eliminated. Comparable fees for the three and nine months of 2000 for joint venture and third-party owned properties were reflected as a component of the Company's equity in the net earnings from GGMI as GGMI was accounted for as an unconsolidated subsidiary during 2000. For purposes of the following discussion of the results of operations, the net effect of the GGMI acquisition will reflect the effect of the consolidation of GGMI's operations due to the acquisition in 2001. During August 2001 the Company purchased a 100% interest in Tucson Mall. This acquisition resulted in minor increases in substantially all categories of consolidated revenues and expenses in the three months ended September 30, 2001 as compared to the three months ended September 30, 2000. Total revenues for the three months ended September 30, 2001 were $196.3 million, which represents an increase of $23.0 million or approximately 13.3% from $173.3 million in the three months ended September 30, 2000. The majority of the increase was from the net effect of the GGMI acquisition. Minimum rent for the three months ended September 30, 2001 increased by $6.7 million or 6.2% from $108.0 million in the comparable period in 2000 to $114.7 million. The majority of such increase in minimum rents was due to higher base rental rates on new and renewal leases signed since the second quarter of 2000 as compared to leases that have expired. In addition, a portion of the increase in minimum rents, and a resulting decrease in overage rents, is attributable to the conversion of overage rent to minimum rent upon releasing of tenant space. Expansion space and specialty leasing increases at the comparable centers (properties owned for the entire time during the three months ended September 30, 2000 and 2001) accounted for a portion of the remaining increase in minimum rents. General declines in economic conditions as discussed below also contributed to the decline in overage rents for 2001 compared to 2000. Fee and Other income increased by $18.8 million or 508.1% from $3.7 million for the three months ended September 30, 2000 to $22.5 million for the three months ended September 30, 2001. The increase was primarily generated by the acquisition of GGMI as described above and in Note 3. Total operating expenses, including depreciation and amortization, increased by approximately $18.9 million or 21.3%, from $88.7 million in the three months ended September 30, 2000 to $107.6 million in the three months ended September 30, 2001. For the three months ended September 30, 2001, property operating expenses increased by $12.0 million or 29.3% from $41.0 million in 2000 to $53.0 million in the third quarter of 2001, substantially all of which was attributable to the net effect of the acquisition of GGMI. The remainder was primarily due to increases in repairs and maintenance and other operating costs at the comparable centers and 1.0 million of net Network discontinuance costs as further described in Note 7. Depreciation and amortization increased by $6.0 million or 18.4% over the same period in 2000. The majority of the increase in depreciation and amortization was generated by the net effect of the acquisition of GGMI. Net interest expense for the three months ended September 30, 2001 was $50.7 million, a decrease of $2.2 million or 4.2% from $52.9 million in the three months ended September 30, 2000. This decrease was primarily due to lower interest rates which was partially offset by the increased interest expense due to the net effect of 22 of 32 GENERAL GROWTH PROPERTIES, INC. the consolidation of the operations of GGMI in 2001 due to the January 1, 2001 acquisition described above and the August 2001 acquisition of Tucson Mall. Equity in net income of unconsolidated affiliates in the three months ended September 30, 2001 decreased by approximately $.7 million to earnings of $12.4 million in 2001, from $13.1 million in the three months ended September 30, 2000. The Company's equity in the earnings of GGP/Homart II resulted in an increase in earnings of approximately $.6 million for the three months ended September 30, 2001 primarily due to increases in the operations of comparable centers, the purchase of Willowbrook Mall in March, 2001 and the opening of Stonebriar Centre in August 2000. The Company's equity in the earnings of GGMI was a gain of approximately $.9 million in 2000, where as in 2001 the operations of GGMI have been included in the consolidated results of operations due to the GGMI acquisition. The extraordinary items in the three months ended September 30, 2001 represent costs and unamortized deferred financing fees related to refinancing of certain mortgage loans by the Unconsolidated Real Estate Affiliates in 2001. Results Of Operations of the Company Nine Months Ended September 30, 2001 and 2000 Total revenues for the nine months ended September 30, 2001 were $577.8 million, which represents an increase of $77.0 million or approximately 15.4% from $500.8 million in the nine months ended September 30, 2000. Substantially all of the increase is from the effect of the GGMI acquisition. Minimum rent for the nine months ended September 30, 2001 increased by $20.4 million or 6.5% from $315.2 million in the comparable period in 2000 to $335.6 million in 2001. The majority of such increase in minimum rents was due to higher base rental rates on new and renewal leases. Expansion space, specialty leasing and occupancy increases at the comparable centers (properties owned for the entire time during the nine months ended September 30, 2000 and 2001) accounted for the remaining increase in minimum rents. Tenant recoveries increased by $6.9 million or 4.4% from $158.4 million for the nine months ended September 30, 2000 to $165.3 million for the nine months ended September 30, 2001. Substantially all of the increase was due to the recovery of substantially all of the increases in property operating expenses as described below that were not attributable to the GGMI acquisition. For the nine months ended September 30, 2001, overage rents decreased to $11.4 million in 2001 from $14.7 million in 2000. The majority of the decline in overage rents in 2001 is due to the conversion of overage rent to minimum rent upon releasing of tenant space and due to general economic conditions as discussed below. Total operating expenses, including depreciation and amortization, increased by approximately $132.4 million or 50.9% from $260.0 million in the nine months ended September 30, 2000 to $392.4 million in the nine months ended September 30, 2001. The majority of the increase in operating expenses for the nine months ended September 30, 2001 is the $66.0 million of Network discontinuance costs as further described in Note 7. For the nine months ended September 30, 2001, property operating expenses increased by $47.4 million or 40.1% from $118.3 million in 2000 to $165.7 million in the nine months ended September 30, 2001, substantially all of which is attributable to the net effect of the acquisition of GGMI. Depreciation and amortization increased by $18.7 million or 19.9% over the same period in 2000. Approximately $11.3 million of the increase in depreciation and amortization was generated at comparable centers. The remaining $7.4 million was due to the net effect of the acquisition of GGMI. Management fees to affiliates were zero in 2001, a reduction of approximately $3.2 million from the same period in 2000 due to the elimination of fees charged by GGMI to the Wholly-Owned Centers. Net interest expense for the nine months ended September 30, 2001 was $151.3 million, a decrease of $0.8 million or 0.5% from $152.1 million in the nine months ended September 30, 2000. Declines in effective interest rates partially offset by increases in consolidated debt amounts incurred in connection with the 23 of 32 GENERAL GROWTH PROPERTIES, INC. acquisition of GGMI and the two operating malls, Crossroads Center in April 2000 and Tucson Mall in August 2001, was responsible for substantially all of such decrease. Equity in net income of unconsolidated affiliates in the nine months ended September 30, 2001 increased by approximately $4.5 million to earnings of $35.1 million in 2001, from $30.6 million in the nine months ended September 30, 2000. The Company's equity in the earnings of GGP/Homart II increased approximately $3.2 million, primarily due to the opening of Stonebriar Center in November, 2000. This overall increase is also due to an increase in earnings of GGP/Homart of approximately $1.2 million due primarily to the Willowbrook acquisition in March 2001, a decrease in interest rates and an increase in the ownership interest of GGP/Homart in Buckland Hills and Lakeland. In addition, the Company's equity in the earnings of GGP/Ivanhoe III increased by approximately $1.4 million due to increased average occupancy and a decrease in interest rates in 2001. These increases were partially offset by the effect of the Company's equity in the earnings of GGMI, which were earnings of approximately $1.0 million in 2000, that has been included in the consolidated results of operations in 2001 due to the GGMI acquisition. Liquidity and Capital Resources of the Company As of September 30, 2001, the Company held approximately $32.7 million of unrestricted cash and cash equivalents. The Company uses operating cash flow as the principal source of internal funding for short-term liquidity and capital needs such as tenant construction allowances and minor improvements made to individual properties that are not recoverable through common area maintenance charges to tenants. The Company continues to explore potential long-term investment alternatives such as acquisitions, new development, expansions and major renovation programs at individual centers. These long-term investments may require external sources of long-term liquidity such as construction loans, mini-permanent loans, long-term project financing, joint venture financing with institutional partners, additional Operating Partnership level or Company level equity investments, unsecured Company level debt or secured loans collateralized by individual shopping centers. In this regard, the Company is in negotiations regarding the placement of approximately $2,550 million of non-recourse commercial mortgage pass-through certificates in early December 2001 which, after repayment of refinanced loans, is expected to provide additional funds for short-term and long-term liquidity and capital needs as described below and in Note 4. In addition, the Company has access to the public equity and debt markets through a currently effective shelf registration statement under which up to $329.2 million in equity or debt securities may be issued from time to time. The Company also has a revolving credit facility and term loans (Note 4) under which approximately $392.5 million had been borrowed as of September 30, 2001 which loans mature on July 31, 2003. The Company currently anticipates it will be able to increase, if necessary, the aggregate principal amounts available to be borrowed under such facilities from an aggregate of $430 million as of the date of this report to $650 million. Finally, GGMI obtained a revolving line of credit in 2001 under which approximately $37.5 million (with an additional $32.5 million available under certain conditions) had been borrowed as of September 30, 2001. At September 30, 2001, the Company had direct and indirect ("pro rata") mortgage and other debt of approximately $4,986,989. The following table reflects the maturity dates of the Company's pro rata debt and the related interest rates: 24 of 32 GENERAL GROWTH PROPERTIES, INC. COMPANY PORTFOLIO DEBT MATURITY AND CURRENT AVERAGE INTEREST RATE SUMMARY AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 (Dollars in Thousands)
Centers Owned by Wholly-Owned Unconsolidated Company Centers Real Estate Affiliates(b) Portfolio Debt ----------------------- ------------------------- ----------------------- Average Maturing Interest Maturing Interest Maturing Interest Year Amount(a) Rate(c) Amount(a) Rate(c) Amount(a) Rate(c) - ---- ---------- -------- ---------- -------- ---------- -------- 2001 $ 289,593 5.83% $ 117,500 5.56% $ 407,093 5.75% 2002 143,585 6.91% 184,244 6.81% 327,829 6.85% 2003 392,500 6.05% 381,659 6.05% 774,159 6.05% 2004 966,501 5.89% 199,974 5.82% 1,166,475 5.88% 2005 27,795 7.89% - 0.00% 27,795 7.89% Subsequent $1,764,542 7.04% 519,096 7.19% 2,283,638 7.08% ---------- ---------- ---------- Total $3,584,516 6.52% $1,402,473 6.50% $4,986,989 6.51% ========== ===== ========== ===== ========== ===== Floating $1,462,099 5.74% $ 571,390 5.60% $2,033,489 5.70% Fixed Rate 2,122,417 7.05% 831,083 7.12% 2,953,500 7.07%
(a) As of September 30, 2001 excluding scheduled principal amortization. (b) Unconsolidated Real Estate Affiliates debt reflects the Company's share of non-recourse debt (based on its respective equity ownership interests in the Unconsolidated Real Estate Affiliates) collateralized by the properties owned by the Unconsolidated Real Estate Affiliates. (c) For floating rate loans, the interest rate reflected is the actual annualized weighted average rate for the floating rate debt outstanding during the nine months ended September 30, 2001. A portion of the debt bearing interest at variable rates is subject to interest rate cap agreements. Reference is made to Note 4 and Item 3 below for additional information regarding the Company's debt and the potential impact on the Company of interest rate fluctuations. The following summarizes certain significant investment and financing transactions currently planned or completed since December 31, 2000: In January 2001, GGMI borrowed $37.5 million under a new revolving line of credit obtained by GGMI and an affiliate, which is guaranteed by General Growth and the Operating Partnership. The interest rate per annum with respect to borrowings under the line of credit varies from LIBOR plus 100 to 190 basis points depending on the Company's average leverage ratio. This revolving line of credit matures in July 2003. During March 2001, an affiliate of GGP/Homart II closed on a new $125 million non-recourse mortgage loan collateralized by Stonebriar Centre. The new loan (the principal balance of which was increased to $135 million in August 2001) bears interest at LIBOR plus 75 basis points per annum and matures October 2003 25 of 32 GENERAL GROWTH PROPERTIES, INC. (assuming all no cost extension options available are exercised). Approximately $80 million of the proceeds was advanced to GGP/Homart at March 31, 2001 to repay other GGP/Homart mortgage debt and the majority of the remainder was utilized to fund the cash portion of the March, 2001 purchase of the Willowbrook Mall in Houston, Texas as discussed in Note 3. The balance of the $145 million purchase price of Willowbrook Mall was financed by a $102 million non-recourse mortgage loan which bears interest at 6.93 % per annum and matures in April 2011. In March 2001, the Company obtained a $65 million redevelopment loan collateralized by Eden Prairie Mall. The new loan had an initial draw of approximately $19.4 million, requires monthly payments of interest at a rate of LIBOR plus 190 basis points and matures in April 2004. In March 2001, the Company obtained a $115 million non-recourse mortgage loan collateralized by Capital Mall, Greenwood Mall, and Gateway Mall. The new mortgage loan bears interest at a rate of 7.28% per annum, requires monthly payments of principal and interest and matures in April 2011. In April 2001, an affiliate of GGP/Homart closed on a new $90 million non-recourse mortgage loan collateralized by Vista Ridge Mall. The new mortgage loan refinanced the approximately $69.5 million allocated to the Vista Ridge Mall portion of GGP/Homart pooled financing. The new mortgage loan bears interest at a rate of 6.87% per annum, requires monthly payments of principal and interest and matures in April 2011. During June 2001, the Company refinanced the $110 million construction loan collateralized by the Rivertown Crossings Mall which was scheduled to mature on June 30, 2001. The new $130 million non-recourse mortgage loan bears interest at 7.54% per annum and matures in July of 2011. During June 2001, the Company refinanced Northridge Fashion Center, one of the nine malls which had collateralized the GGP-Ivanhoe CMBS. The outstanding principal amount of the GGP-Ivanhoe CMBS was reduced by approximately $132.5 million with the proceeds of a new long-term mortgage loan. The new $140 million non-recourse mortgage loan provides for monthly payments of principal and interest at a rate per annum of 5.83% and matures July 1, 2011. In July 2001, an affiliate of GGP/Homart obtained a new $100 million redevelopment loan collateralized by Brass Mill Center and Commons. The new loan bore interest at LIBOR plus 162.5 basis points and was scheduled to mature in July 2003. This loan is anticipated to be refinanced in December 2001 with the GGP MPTC financing described below. In August 2001, the Company acquired the Tucson Mall which was financed primarily by a new $150 million collateralized short-term acquisition loan. The new loan bore interest at LIBOR plus 95 basis points and was scheduled to mature in December 2001. The loan is anticipated to be refinanced in December 2001 with the GGP MPTC financing described below. In August 2001, an affiliate of GGP/Homart II refinanced Northbrook Court. The new fixed-rate $98 million non-recourse loan repaid the $74 million allocated to the Northbrook Court portion of the GGP/Homart II pooled financing. The new loan provides for monthly payments of principal and interest at a rate of 7.15% per annum and is scheduled to mature in September 2011. During August 2001, the Company refinanced Bayshore Mall with a long-term fixed rate mortgage loan. The $34.3 million new non-recourse mortgage loan bears interest at 7.13% per annum and matures in December 2011. 26 of 32 GENERAL GROWTH PROPERTIES, INC. In September 2001, an affiliate of GGP/Homart refinanced the mortgage loan collateralized by Arrowhead Towne Center with two promissory notes, one in the amount of $75 million and the other in the amount of $10 million. The non-recourse notes are identical, other than the amounts, and bear interest at 6.9% per annum and mature in October 2011. In October 2001, the Company refinanced the debt collateralized by the Century Plaza, Eagle Ridge and Knollwood Malls (with a previous outstanding aggregate balance of approximately $66.5 million). The new $90 million bridge loan bears interest at a rate per annum equal to LIBOR plus 210 basis points and matures on February 1, 2002. The bridge loan has one three-month extension option and also provides for conversion to a term loan maturing on May 1, 2004 under certain conditions (see Note 4). In November 2001, an affiliate of GGP/Homart repaid the $35 million mortgage loan collateralized by the Moreno Valley Mall. This repayment was financed by current working capital and is anticipated to be replaced by proceeds of the new GGP MPTC financing described below. The Company is in negotiations with a group of investment banks to place approximately $2,550 million of non-recourse commercial mortgage pass-through certificates through the GGP MPTC financing which is anticipated to close in early December 2001, as more fully described in Note 4. Such new financing (expected to be collateralized by a portfolio of up to 28 properties, including malls that are owned by certain Unconsolidated Real Estate Affiliates) would replace the GGP-Ivanhoe CMBS and certain other individual property mortgages. The financing is expected to provide significant excess proceeds (including amounts allocable to Unconsolidated Real Estate Affiliates) to repay other short-term borrowings, interim financing and provide for additional Company and Unconsolidated Real Estate Affiliate liquidity needs. There can be no assurance that this financing will be completed within the timeframe indicated or upon these or any other terms. As of September 30, 2001, approximately $290 million of the Company's debt was scheduled to mature during the remainder of 2001. As of the date of this report, all such amounts due in 2001 have been paid or refinanced or are anticipated to be refinanced in December 2001. Although final agreements to refinance any loan amounts due in 2002 and subsequent years have not yet been reached, the Company anticipates that all of its debt will be repaid on a timely basis. Other than as described above or in conjunction with possible future acquisitions, there are no current plans to incur additional debt, increase the amounts available under the Revolver or Term Loans or raise equity capital. If additional capital is required, the Company believes that it can increase the amounts available under the Revolver or Term Loans, obtain an interim bank loan, obtain additional mortgage financing on under-leveraged assets, enter into new joint venture partnership arrangements or raise additional debt or equity capital. However, there can be no assurance that the Company can obtain such financing on satisfactory terms. The Company will continue to monitor its capital structure, investigate potential investments or joint venture arrangements and purchase additional properties if they can be acquired and financed on terms that the Company reasonably believes will enhance long-term stockholder value. When property operating cash flow has been increased, the Company anticipates the refinancing of portions of its long-term floating rate debt with pooled or property-specific non-recourse fixed-rate or floating-rate mortgage financing. Net cash provided by operating activities was $156.0 million in the first nine months of 2001, a decrease of $50.7 million from $206.7 million in the same period in 2000, mainly due to lower net income in 2001 (primarily due to the $66 million of Network discontinuance costs as described above and in Note 7) and a decrease in accounts payable at the comparable centers. 27 of 32 GENERAL GROWTH PROPERTIES, INC. Net cash used by investing activities was $345.9 million in the first nine months of 2001 compared to $256.3 million of cash used in the first nine months of 2000. Cash flows from investing activities were impacted by the purchase of the Tucson Mall in August of 2001 and expenditures for the Network and Broadband System in the first nine months of 2001 as compared to the first nine months in 2000 as more further described in Notes 2 and 7. This is partially offset by capital calls for GGP/Homart II during 2000 for the construction of Stonebriar Centre. Financing activities contributed cash of $195.3 million in the first nine months of 2001, compared to a source of cash of $59.7 million in 2000. A major contributing factor to the variance in the cash provided from financing activity is that financing from mortgages and other debt, net of repayments of principal on mortgage debt, had a positive impact of $340.4 million in the first nine months of 2001 versus a positive impact of $18.8 million in the first nine months of 2000. An additional offset to the total variance in cash contributed by financing activities for 2001 as compared to 2000 are the proceeds from the issuance of the RPU's in May of 2000 as discussed in Note 1. The additional financing in 2000 and 2001 was used to fund the acquisitions, developments and redevelopment of real estate discussed above and in Note 2. In order to remain qualified as a real estate investment trust for federal income tax purposes, the Company must distribute 100% of capital gains and at least 90% of its ordinary taxable income to stockholders. The following factors, among others, will affect operating cash flow and, accordingly, influence the decisions of the Board of Directors regarding distributions: (i) scheduled increases in base rents of existing leases; (ii) changes in minimum base rents and/or overage rents attributable to replacement of existing leases with new or renewal leases; (iii) changes in occupancy rates at existing centers and procurement of leases for newly developed centers; and (iv) the Company's share of distributions of operating cash flow generated by the Unconsolidated Real Estate Affiliates, less oversight costs and debt service on additional loans that have been or will be incurred. The Company anticipates that its operating cash flow, and potential new debt or equity from future offerings, new financings or refinancings will provide adequate liquidity to conduct its operations, fund general and administrative expenses, fund operating costs and interest payments and allow distributions to the Company's preferred and common stockholders in accordance with the requirements of the Internal Revenue Code of 1986, as amended, for continued qualification as a real estate investment trust and to avoid any Company level federal income or excise tax. During 2000 and the three and nine months ended September 30, 2001 the retail sector was experiencing declining growth. Economists are predicting a weak 2001 holiday season due to the September 11th attacks, lay-offs, eroding consumer confidence and falling stock prices. Such reversals or reductions in the retail market adversely impacts the Company as demand for leasable space is reduced and minimum rents and rents computed as a percentage of tenant sales decline. In addition, a number of local, regional and national retailers, including tenants of the Company, have voluntarily closed certain of their stores or have filed for bankruptcy protection during the last few years. Most of these retailers reorganized their operations and/or sold stores to stronger operators. Although some leases were terminated pursuant to the lease cancellation rights afforded by the bankruptcy laws, the impact on Company earnings was negligible. Over the last three years, the provision for doubtful accounts has averaged only $3.0 million per year, which represents less than 1% of average annual total revenues of $579.2 million. In addition, the Company to date has generally been successful in finding new uses or tenants for retail locations that are vacated either as a result of voluntary store closing or bankruptcy proceedings. Therefore, the Company does not expect these store closings or bankruptcy reorganizations to have a material impact on its consolidated financial results of operations. To aid in the relief effort for the attacks on September 11th, the Company set up a national program entitled "We Care, America." The program established Red Cross monetary donation and collection sites for the American Red Cross at each of the 145 malls the Company owns or manages. These sites enabled the Company to 28 of 32 GENERAL GROWTH PROPERTIES, INC. help raise more than $1 million for the American Red Cross Liberty Disaster Relief Fund. In addition, large banners and cards were available to everyone to express their condolences to those who were, directly and indirectly, affected by the tragedies in New York City and Washington, D.C. The Internet and electronic retailing are growing at significant rates. Although the amount of retail sales conducted solely via the Internet is expected to rise in the future, the Company believes that traditional retailing and "e-tailing" will converge such that the regional mall will continue to be a vital part of the overall mix of shopping alternatives for the consumer. In order to enhance the value and competitiveness of its properties through technology, the Company has implemented a broadband wiring and routing system that provides tenants at its properties with the supporting equipment to allow tenants and mall locations to arrange high-speed cable access to the Internet. The Broadband System has been installed and is currently operational at substantially all of the Company's properties as more fully discussed in Note 7. The Company has made a cumulative investment of approximately $70.7 million in the Broadband System as of September 30, 2001, which has been reflected in buildings and equipment and investments in Unconsolidated Real Estate Affiliates in the accompanying consolidated financial statements. The Broadband System was one component of a larger strategy designed to allow the Company to respond and to take advantage of opportunities due to recent Internet technological advancements. An additional component of the Broadband System strategy was the Company's Network Services business, an effort to create for retailers a suite of broadband applications to support retail tenant operations, on-line sales, and private wide area network services to be delivered by the Broadband System. The Network Services business was discontinued on June 29, 2001 which resulted in a charge of $65 million in the three months ended June 30, 2001 which represented the Company's entire investment in the Network Services business including a reserve for future discontinuance costs. The Company incurred $1 million of net incremental Network discontinuance costs in the three months ended September 30, 2001 related primarily to payroll and severance costs. Recently Issued Accounting Pronouncements As more fully described in Note 8, the FASB, EITF and the AICPA have issued certain statements, which are effective for the current or subsequent year. The Company does not expect a significant impact on its annual reported operations due to the application of such new statements. 29 of 32 GENERAL GROWTH PROPERTIES, INC. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has not entered into any transactions using derivative commodity instruments. The Company is subject to market risk associated with changes in interest rates. Interest rate exposure is principally limited to the $1,462 million of debt of the Company outstanding at September 30, 2001 that is priced at interest rates that float with the market. However, approximately $722 million of such floating rate consolidated debt is comprised of non-recourse commercial mortgage-backed securities which are subject to interest rate cap agreements, the effect of which is to limit the interest rate the Company would be required to pay on such debt to no more than approximately 9% per annum. Therefore, a 25 basis point movement in the interest rate on the floating rate debt would result in an approximately $3.66 million annualized increase or decrease in consolidated interest expense and cash flows. The remaining debt is fixed rate debt. In addition, the Company is subject to interest rate exposure as a result of the floating rate debt collateralized by the Unconsolidated Real Estate Affiliates. The Company's share (based on the Company's respective equity ownership interests in the Unconsolidated Real Estate Affiliates) of the floating rate debt was approximately $571 million. A similar 25 basis point annualized movement in the interest rate on the floating rate debt of the Unconsolidated Real Estate Affiliates would result in an approximately $1.43 million annualized increase or decrease in the Company's equity in the earnings and cash flows on the Unconsolidated Real Estate Affiliates. The Company has an ongoing program of refinancing its consolidated and unconsolidated floating and fixed rate debt and believes that this program allows it to vary its ratio of fixed to floating rate debt and to stagger its debt maturities to respond to changing market rate conditions. Reference is made to Item 2 above and Note 4 for additional debt information. 30 of 32 GENERAL GROWTH PROPERTIES, INC. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - See Exhibit Index (b), (c) Reports on Form 8-K and proforma information The following reports on Form 8-K have been filed by the Company during the quarter covered by this report: 1. Current Report on Form 8-K dated July 12, 2001 describing under Item 5 the discontinuance of the Company's Network Services development activities. No financial statements were required to be filed with the report. 2. Current Report on Form 8-K dated August 30, 2001 describing under Item 5 the acquisition of Tucson Mall. No financial statements were required to be filed with the report. 31 of 32 GENERAL GROWTH PROPERTIES, INC. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENERAL GROWTH PROPERTIES, INC. (Registrant) Date: November 9, 2001 by: /s/ Bernard Freibaum ---------------------------------------------------- Bernard Freibaum Executive Vice President and Chief Financial Officer (Principal Accounting Officer) 32 of 32 EXHIBIT INDEX 2(a) Purchase and Sale Agreement dated as of May 3, 1999, among D/E Hawaii Joint Venture, GGP Limited Partnership and General Growth Properties, Inc. (17) 2(b) Agreement of Purchase and Sale, dated as of July 27, 1999, among Oak View Mall Corporation, a Delaware corporation, and Oak View Mall, L.L.C., a Delaware limited liability company. (18) 2(c) Agreement of Purchase and Sale, dated as of July 22, 1999 between General Growth Properties, Inc., a Delaware corporation (the "Company"), and RREEF USA Fund-III, a California group trust. (18) 2(d) Operating Agreement, dated November 10, 1999, between GGP Limited Partnership, a Delaware limited partnership, The Comptroller of the State of New York as Trustee of the Common Retirement Fund ("NYSCRF"), and GGP/Homart II L.L.C. a Delaware limited liability company ("GGP/ Homart II"). (18) 2(e) Contribution Agreement dated November 10, 1999, by and between GGP Limited Partnership, a Delaware limited partnership (the "Operating Partnership"), and GGP/Homart II (Altamonte Mall). (19) 2(f) Contribution Agreement dated November 10, 1999, by and between the Operating Partnership and GGP/Homart II (Northbrook Court). (19) 2(g) Contribution Agreement dated November 10, 1999, by and between the Operating Partnership and GGP/Homart II (Natick Trust). (19) 2(h) Contribution Agreement dated November 10, 1999, by and between the Operating Partnership and GGP/Homart II (Stonebriar Centre). (19) 2(i) Contribution Agreement dated November 10, 1999, by and between NYSCRF and GGP/Homart II (Carolina Place). (19) 2(j) Contribution Agreement dated November 10, 1999, by and between NYSCRF and GGP/Homart II (Alderwood Mall). (19) 2(k) Contribution Agreement dated November 10, 1999, by and between NYSCRF and GGP/Homart II (Montclair Plaza). (19) 2(l) Contribution Agreement, dated February 1, 2000, by and between General Growth Companies, Inc. and GGP Limited Partnership. (20) 2(m) Purchase and Sale Agreement dated as of March 15, 2000 by and between Crossroads Shopping Center Trust and St. Cloud Mall L.L.C. (21) 2(n) Purchase Agreement dated May 25, 2000 among General Growth Properties, Inc., GGP Limited Partnership, GGPLP L.L.C. and Goldman Sachs 2000 Exchange Place Fund, L.P. (23) 2(o) Purchase and Sale Agreement dated as of August 7, 2001 by and between Oracle-Wetmore Co. and GGP-Tucson Mall, L.L.C. (26) 2(p) Purchase and Sale Agreement dated as of August 7, 2001 by and between TMall-WN, L.L.C. and GGP-Tucson Mall, L.L.C. (26) 2(q) Purchase and Sale Agreement dated as of August 7, 2001 by and between JCP Realty, Inc. and GGP-Tucson Mall, L.L.C. (26) 3(a) Amended and Restated Certificate of Incorporation of the Company. (2) 3(b) Amendment to Amended and Restated Certificate of Incorporation of the Company.(3) 3(c) Amendment to Amended and Restated Certificate of Incorporation of the Company filed on December 21, 1995.(6) 3(d) Amendment to Amended and Restated Certificate of Incorporation of the Company filed on May 20, 1997.(10) 3(e) Amendment to Second Amendment and Restated Certificate of Incorporation of the Company filed on May 17, 1999. (17) 3(f) Bylaws of the Company.(3) 3(g) Amendment to Bylaws of the Company.(3) 4(a) Redemption Rights Agreement, dated July 13, 1995, by and among GGP Limited Partnership, General Growth Properties, Inc. and the persons listed on the signature pages thereof.(5) 4(b) Redemption Rights Agreement dated December 6, 1996, among GGP Limited Partnership, a Delaware corporation, Forbes/Cohen Properties, a Michigan general partnership, Lakeview Square Associates, a Michigan general partnership, and Jackson Properties, a Michigan general partnership.(1) 4(c) Redemption Rights Agreement, dated June 19, 1997, among GGP Limited Partnership, a Delaware limited partnership, General Growth Properties, Inc., a Delaware corporation, and CA Southlake Investors, Ltd., a Georgia limited partnership.(8) 4(d) Redemption Rights Agreement dated October 23, 1997, among GGPI, GGPLP and Peter Leibowits.(10) 4(e) Form of Indenture.(7) 4(f) Certificate of Designations, Preferences and Rights of 7.25% Preferred Equity Redeemable Stock, Series A.(14) 4(g) Amendment to Certificate of Designations, Preferences and Rights of 7.25% Preferred Income Equity Redeemable Stock, Series A of General Growth Properties, Inc. filed on May 17, 1999.(17) 4(h) Redemption Rights Agreement dated April 2, 1998, among GGP Limited Partnership, General Growth Properties, Inc. and Southwest Properties Venture.(11) 4(i) Indenture and Servicing Agreement dated as of November 25, 1997, among the Issuers named therein, LaSalle National Bank, as Trustee, and Midland Loan Services, L.P., as Servicer (the "Indenture Agreement"). (12) 4(j) Form of Note pursuant to the Indenture Agreement. (12) 4(k) Mortgage, Deed of Trust, Security Agreement, Assignment of Leases and Rents, Fixture Filing and Financing Statement, date and effective as of November 25, 1997, among the Issuers, the Trustee and the Deed Trustees named therein. (12) 4(l) Rights Agreement, dated November 18, 1998, between General Growth Properties, Inc. and Norwest Bank Minnesota, N.A., as Rights Agent (including the Form of Certificate of Designation of Series A Junior Participating Preferred Stock attached thereto as Exhibit A, the Form of Right Certificate attached Preferred Stock attached thereto as Exhibit C). (15) 4(m) Form of Common Stock Certificate. (16) 4(n) First Amendment to Rights Agreement, dated as of November 10,1999, between the Company and Norwest Bank, Minnesota, N.A. (18) 4(o) Letter Agreement concerning Rights Agreement, dated November 10, 1999, between the Operating Partnership and NYSCRF. (18) 4(p) Certificate of Designations, Preferences and Rights of 8.95% Cumulative Redeemable Preferred Stock, Series B. (22) 10(a) Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership. (13) 10(b) Rights Agreement between the Company and the Limited Partners of the Operating Partnership. (4) 10(c) General Growth Properties, Inc. 1993 Stock Incentive Plan, as amended.(9) 10(d) Amendment, dated May 8, 2001, to 1993 Stock Incentive Plan, as amended.(27) 10(e) Form of Amended and Restated Agreement of Partnership for each of the Property Partnerships.(2) 10(f) Form of Indemnification Agreement between the Operating Partnership, Martin Bucksbaum, Matthew Bucksbaum, Mall Investment L.P. and M. Bucksbaum Company.(2) 10(g) Form of Registration Rights Agreement between the Company and the Bucksbaums. (2) 10(h) Form of Registration Rights Agreement between the Company and certain trustees for the IBM Retirement Plan. (2) 10(i) Form of Incidental Registration Rights Agreement between the Company, Equitable, Frank Russell and Wells Fargo.(2) 10(j) Form of Letter Agreements restricting sale of certain shares of Common Stock.(2) 10(k)* Letter Agreement dated October 14, 1993, between the Company and Bernard Freibaum.(4) 10(l)* Form of Option Agreement between the Company and certain Executive Officers.(8) 10(m)* General Growth Properties, Inc. 1998 Incentive Stock Plan.(16) 10(n) Amendment, dated May 9, 2000, to 1998 Stock Incentive Plan.(27) 10(o) Amended and Restated Operating Agreement of GGPLP L.L.C. dated as of May 25, 2000. (22) 10(p) Registration Rights Agreement dated May 25, 2000 between General Growth Properties, Inc. and Goldman Sachs 2000 Exchange Place Fund, L.P. (23) 10(q) Term Loan Agreement, dated as of July 31, 2000, among the Operating Partnership and GGPLP L.L.C. (collectively "Borrower"), Bankers Trust Company ("BT") and Lehman Commercial Paper Inc. ("Lehman"). (24) 10(r) Promissory Note dated July 31, 2000 made by Borrower in favor of BT. (24) 10(s) Promissory Note dated July 31, 2000 made by Borrower in favor of Lehman. (24) 10(t) Joinder Agreement, dated as of September 1, 2000, between Bayerische Hypo-Und Vereinsbank AG, New York Branch ("Hypo") and Borrower. (24) 10(u) Promissory Note dated September 1, 2000 made by Borrower in favor of Hypo. (24) 10(v) Joinder Agreement, dated as of September 22, 2000, between Fleet National Bank ("Fleet") and Borrower. (24) 10(w) Promissory Note dated September 22, 2000 made by Borrower in favor of Fleet. (24) 10(x) First Amendment to Term Loan Agreement, dated as of September 22, 2000, among Borrower and BT, Lehman, Hypo and Fleet. (24) 10(y) Lender Addendum, dated as of October 20, 2000, between Lehman, Borrower and BT. (24) 10(z) Replacement Note dated October 20, 2000 made by Borrower in favor of Lehman. (24) 10(aa) Joinder Agreement, dated as of December 28, 2000, between The Chase Manhattan Bank ("Chase"), Borrower, BT and Lehman. (24) 10(bb) Promissory Note dated December 28, 2000 made by Borrower in favor of Chase. (24) 10(cc) Second Amendment to Term Loan Agreement, dated as of December 28, 2000, among Borrower and BT, Lehman, Fleet and Chase. (24) 10(dd) Third Amendment to Term Loan Agreement, dated as of June 11, 2001, executed by Borrower and BT, Lehman, Hypo, Fleet, Chase and Comerica Bank. 10(ee) Joinder Agreement, dated as of August 1, 2001 between Commerzbank AG, New York and Grand Cayman Branches ("Commerzbank"), Borrower, BT and Lehman. (27) 10(ff) Promissory Note dated August 1, 2001 made by Borrower in favor of Commerzbank. (27) 10(gg) Revolving Credit Agreement, dated as of July 31, 2000, among Borrower, Bank of America, N.A. ("BofA") Dresdner Bank, AG ("Dresdner"), and U.S. Bank National Association ("USB"). (24) 10(hh) Promissory Note dated July 31, 2000 made by Borrower in favor of BofA. (24) 10(ii) Promissory Note dated July 31, 2000 made by Borrower in favor of Dresdner. (24) 10(jj) Promissory Note dated July 31, 2000 made by Borrower in favor of USB. (24) 10(kk) Joinder to Revolving Credit Agreement, dated as of September 1, 2000, among Hypo, Borrower, BofA, Dresdner and USB. (24) 10(ll) Promissory Note dated September 1, 2000 made by Borrower in favor of Hypo. (24) 10(mm) First Amendment to Revolving Credit Agreement, dated as of June 7, 2001, executed by Borrower, BofA, Dresdner, USB and Hypo. 10(nn) Joinder to Revolving Credit Agreement, dated as of August 10, 2001, executed by Commerzbank, as consented to by Borrower, BofA, Dresdner, USB and Hypo. 10(oo) Promissory Note dated August 16, 2001 made by Borrower in favor of Commerzbank. 10(pp) Revolving Credit Agreement, dated as of January 30, 2001, among General Growth Management, Inc. and GGPLP L.L.C. (collectively, "Borrower"), BofA, USB, and LaSalle Bank National Association ("LaSalle"). (25) 10(qq) Promissory Note dated January 30, 2001 made by Borrower in favor of BofA. (25) 10(rr) Promissory Note dated January 30, 2001 made by Borrower in favor of USB. (25) 10(ss) Promissory Note dated January 30, 2001 made by Borrower in favor of LaSalle. (25) 10(tt) First Amendment to Revolving Credit Agreement, dated as of June 7, 2001, executed by Borrower, BofA, USB and LaSalle. - --------------- (*) A compensatory plan or arrangement required to be filed. (1) Previously filed as an exhibit to the Company's Current Report on Form 8-K dated January 3, 1996, incorporated herein by reference. (2) Previously filed as an exhibit to the Company's Registration Statement on Form S-11 (No. 33-56640), incorporated herein by reference. (3) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, incorporated herein by reference. (4) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, incorporated herein by reference. (5) Previously filed as an exhibit to the Company's Current Report on Form 8-K dated July 17, 1996, incorporated herein by reference. (6) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1995, incorporated herein by reference. (7) Previously filed as an exhibit to the Company's Registration Statement on Form S-3 (No. 333-37247) dated October 6, 1997, incorporated herein by reference. (8) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1996, incorporated herein by reference. (9) Previously filed as an exhibit to the Company's Registration Statement on Form S-8 (No. 333-28449) dated June 3, 1997, incorporated herein by reference. (10) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1997, incorporated herein by reference. (11) Previously filed as an exhibit to the Company's current report on Form 8-K dated May 26, 1998, incorporated herein by reference. (12) Previously filed as an exhibit to the Company's current report on Form 8-K/A dated June 2, 1998, incorporated herein by reference. (13) Previously filed as an exhibit to the Company's current report on Form 10-Q dated May 14, 1998, as amended May 21, 1998, incorporated herein by reference. (14) Previously filed as an exhibit to the Company's current report on Form 8-K dated November 7, 1998, incorporated herein by reference. (15) Previously filed as an exhibit to the Company's current report on Form 8-K, dated November 18, 1998, incorporated herein by reference. (16) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, incorporated herein by reference. (17) Previously filed as an exhibit to the Company's Current Report on Form 8-K, dated July 12, 1999, incorporated herein by reference. (18) Previously filed as an exhibit to the Company's Current Report on Form 8-K, dated November 23, 1999, incorporated herein by reference. (19) Previously filed as an exhibit to the Company's Current Report on Form 8-K/A, dated January 11, 2000, incorporated herein by reference. (20) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1999, incorporated herein by reference. (21) Previously filed as an exhibit to the Company's Current Report on Form 8-K, dated May 9, 2000, incorporated herein by reference. (22) Previously filed as an exhibit to the Company's Current Report on Form 8-K, dated June 13, 2000, incorporated herein by reference. (23) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q dated August 9, 2000, incorporated herein by reference. (24) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2000, incorporated herein by reference. (25) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q dated May 10, 2001, incorporated herein by reference. (26) Previously filed as an exhibit to the Company's Current Report on Form 8-K, dated August 30, 2001, incorporated herein by reference. (27) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q dated August 13, 2001, incorporated herein by reference. EX-10.(DD) 3 dex10dd.txt THIRD AMENDMENT TO TERM LOAN AGREEMENT Exhibit 10(dd) THIRD AMENDMENT --------------- THIRD AMENDMENT, dated as of June 11, 2001 (this "Amendment"), to --------- the Term Loan Agreement, dated as of July 31, 2000 (such Loan Agreement, as amended, supplemented or otherwise modified from time to time, the "Loan ---- Agreement"), among GGP LIMITED PARTNERSHIP, a Delaware limited partnership (the - --------- "Partnership"), GGPLP L.L.C., a Delaware limited liability company (together ----------- with the Partnership, the "Borrower"), the institutions from time to time -------- parties to the Loan Agreement as Lenders (the "Lenders"), BANKERS TRUST COMPANY, ------- a New York banking corporation, as a Lender and as administrative agent for the Lenders (in such capacity, the "Administrative Agent") and LEHMAN COMMERCIAL -------------------- PAPER INC., as a Lender and as syndication agent for the Lenders (in such capacity, the "Syndication Agent" and, together with the Administrative Agent, ----------------- the "Co-Agents"). --------- W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower and the Lenders have agreed to amend certain provisions of the Loan Agreement upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other valuable consideration the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. All terms defined in the Loan Agreement shall ----------- have such defined meanings when used herein unless otherwise defined herein. 2. Amendment to Section 10.12(i) (Certain Liens). Section --------------------------------------------- 10.12(i) of the Loan Agreement is hereby amended by deleting such Section in its entirety and substituting in lieu thereof the following new Section 10.12(i): "(i) Certain Liens. None of the Borrower, GGP, Inc. or any of the ------------- Affiliates which are controlled by them, respectively, will encumber with any Lien any stock, partnership interest, joint venture interest, membership interest, beneficial interest or other equity interest in any corporation, partnership, joint venture, limited liability company, trust or other entity that (i) owns any of the respective Property, or (ii) is a direct or indirect shareholder, partner, joint venturer, member, beneficiary or other type of equity holder in any entity described in clause (i) above; provided, however, that the foregoing prohibition shall --------- ------- not apply with respect to any of the encumbrances existing on the date hereof set forth in Schedule 10.12 hereto; and provided further; that the -------------- ---------------- prohibition set forth in this subsection (i) shall not apply as to any such -------------- corporation, partnership, joint venture, limited liability company, trust or other entity which owns Property with respect to which (A) the Loan-to-Value Ratio as to all Secured Indebtedness for borrowed money related to such Property, in the aggregate, after giving effect to such encumbrance, is not greater than sixty-five percent (65%) and (B) the Loan-to-Value ratio as to that portion of such Secured Indebtedness which is secured by such a Lien encumbering any stock, partnership interest, joint venture interest, membership interest, beneficial interest or other equity interest is not greater than fifteen percent (15%); and provided further that the prohibition set forth in -------- ------- this subsection (i) shall not apply as to any such encumbrance granted -------------- to secure Indebtedness related to any Property or asset of such corporation, partnership, joint venture, limited liability company, trust or other entity, if such encumbrance secures a construction loan and the Loan-to-Value Ratio with respect to all Indebtedness relating to the construction in question does not exceed seventy-five percent (75%), or would not exceed such Loan-to-Value Ratio, but for the applicability of unusually onerous stamp, transfer or recording taxes and fees in connection with such encumbrance; and provided further -------- ------- that the prohibition set forth in this subsection (i) shall not apply as to any such encumbrance of equity interests in Minority Holdings in favor of holders(s) of the remaining equity interests in such Minority Holdings to secure obligations under the applicable Organizational Documents of such Minority Holdings.". 3. Representations; No Default. On and as of the date hereof, --------------------------- and after giving effect to this Amendment, (i) the Borrower certifies that no Default or Event of Default has occurred which is continuing, and (ii) the Borrower confirms, reaffirms and restates that the representations and warranties set forth in Article VII of the Loan Agreement and in the other Loan Documents to which it is a party are true and correct in all material respects, provided that the references to the Loan Agreement therein shall be deemed to be - -------- references to this Amendment and to the Loan Agreement as amended by this Amendment. 4. Conditions to Effectiveness. This Amendment shall become --------------------------- effective on and as of the date that: (a) the Administrative Agent shall have received counterparts of this Amendment, duly executed and delivered by a duly authorized officer of the Borrower and the Requisite Lenders; and (b) the Administrative Agent shall have received an executed Acknowledgment and Consent, in the form set forth at the end of this Amendment, from GGP, Inc. 5. Limited Consent and Amendment. Except as expressly amended ----------------------------- herein, the Loan Agreement shall continue to be, and shall remain, in full force and effect. This Amendment shall not be deemed to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Loan Agreement or any other Loan Document or to prejudice any other right or rights which the Co-Agents or the Lenders may now have or may have in the future under or in connection with the Loan Agreement or any of the instruments or agreements referred to therein, as the same may be amended from time to time. 6. Counterparts. This Amendment may be executed by one or more ------------ of the parties hereto in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND ------------- CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written. GGP LIMITED PARTNERSHIP, as Borrower By: GENERAL GROWTH PROPERTIES, INC., its sole general partner By: /s/ Bernard Freibaum ------------------------------------------- Name: Bernard Freibaum Title: Executive Vice President GGPLP L.L.C., as Borrower By: GGP LIMITED PARTNERSHIP, its sole managing member By: GENERAL GROWTH PROPERTIES, INC., its sole general partner By: /s/ Bernard Freibaum ------------------------------------------- Name: Bernard Freibaum Title: Executive Vice President BANKERS TRUST COMPANY, as Administrative Agent and as a Lender By: /s/ Steven P. Lapham ------------------------------------------- Name: Steven P. Lapham Title: Director LEHMAN COMMERCIAL PAPER INC., as Syndication Agent and as a Lender By: /s/ Francis X. Gilhool ------------------------------------------- Name: Francis X. Gilhool Title: Authorized Signatory BAYERISCHE HYPO-UND VEREINSBANK AG, NEW YORK BRANCH, as a Lender By: /s/ Christine Elcik /s/ Meggan W. Walsh -------------------------------------------------- Name: Christine Elcik Meggan W. Walsh Title: Associate Director Managing Director FLEET NATIONAL BANK, as a Lender By: [Executed by Authorized Signatory] -------------------------------------------------- Name: Title: THE CHASE MANHATTAN BANK, as a Lender By: /s/ Charles E. Hoagland -------------------------------------------------- Name: Charles E. Hoagland Title: Vice President COMERICA BANK, as a Lender By: /s/ Scott M. Helmer -------------------------------------------------- Name: Scott M. Helmer Title: Vice President ACKNOWLEDGMENT AND CONSENT The undersigned party to the Guaranty, dated as of July 31, 2000 and as amended, supplemented or otherwise modified from time to time, made by the undersigned in favor of Bankers Trust Company, as Administrative Agent, for the benefit of the Lenders, hereby (a) consents to the transactions contemplated by the foregoing Third Amendment and (b) acknowledges and agrees that the guarantees contained in the Guaranty are, and shall remain, in full force and effect after giving effect to such Amendment and all prior modifications to the Loan Agreement. GENERAL GROWTH PROPERTIES, INC. By: /s/ Bernard Freibaum ------------------------------------ Name: Bernard Freibaum Title: Executive Vice President EX-10.(MM) 4 dex10mm.txt FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT Exhibit 10(mm) FIRST AMENDMENT --------------- FIRST AMENDMENT, dated as of June 7, 2001 (this "Amendment"), to the --------- Revolving Credit Agreement, dated as of July 31, 2000 (such Revolving Credit Agreement, as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among GGP LIMITED PARTNERSHIP, a Delaware limited ---------------- partnership (the "Partnership"), GGPLP L.L.C., a Delaware limited liability ----------- company (together with the Partnership, the "Borrower"), the institutions from -------- time to time parties to the Credit Agreement as Lenders (the "Lenders"), BANK OF ------- AMERICA, N.A., as a Lender and as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), U.S. BANK NATIONAL ASSOCIATION, as a -------------------- Lender and as syndication agent for the Lenders (in such capacity, the "Syndication Agent"), and DRESDNER BANK, AG, New York and Grand Cayman Branches, ----------------- as a Lender and as documentation agent for the Lenders (in such capacity, the "Documentation Agent" and, together with the Administrative Agent and the ------------------- Syndication Agent, the "Co-Arrangers"). ------------ W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower and the Lenders have agreed to amend certain provisions of the Credit Agreement upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other valuable consideration the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. All terms defined in the Credit Agreement shall have ----------- such defined meanings when used herein unless otherwise defined herein. 2. Amendment to Section 10.12(i) (Certain Liens). Section 10.12(i) of --------------------------------------------- the Credit Agreement hereby is deleted and the following is inserted in lieu thereof: 10.12 (i) Certain Liens. Neither the Borrower, GGP, Inc. nor any of ------------- their respective Affiliates controlled by them, respectively, will encumber with any Lien any stock, partnership interest, joint venture interest, membership interest, beneficial interest or other equity interest in any corporation, partnership, joint venture, limited liability company, trust or other entity that (i) owns any of the Property, or (ii) is a direct or indirect shareholder, partner, joint venturer, member, beneficiary or other type of equity holder in any entity described in clause (i) above; provided, however, that the foregoing prohibition shall not apply with -------- ------- respect to any of the encumbrances existing on the date hereof set forth in Schedule 10.12 hereto; and provided further; that the prohibition set forth -------------- ---------------- in this subsection (i) shall not apply as to any such corporation, partnership, joint venture, limited liability company, trust or other entity which owns Property with respect to which (A) the Loan-to-Value Ratio as to all Secured Indebtedness for borrowed money related to such Property, in the aggregate, after giving effect to such encumbrance, is not greater than sixty-five percent (65%) and (B) the Loan-to-Value Ratio as to that portion of such Secured Indebtedness which is secured by such a Lien encumbering any stock, partnership interest, joint venture interest, membership interest, beneficial interest or other equity interest is not greater than fifteen percent (15%); and provided further that the prohibition set forth in this -------- ------- subsection (i) shall not apply as to any such encumbrance granted to secure Indebtedness related to any Property or asset of such corporation, partnership, joint venture, limited liability company, trust or other entity, if such encumbrance secures a construction loan and the Loan-to-Value Ratio with respect to all Secured Indebtedness relating to the construction in question does not exceed seventy-five percent (75%), or would not exceed such Loan-to-Value Ratio, but for the applicability of unusually onerous stamp, transfer or recording taxes and fees in connection with such encumbrance; and provided further that the prohibition set forth -------- ------- in this subsection (i) shall not apply as to any such encumbrance of equity interests in Minority Holdings in favor of holders(s) of the remaining equity interests in such Minority Holdings to secure obligations under the applicable Organizational Documents of such Minority Holdings. 3. Representations; No Default. On and as of the date hereof, and --------------------------- after giving effect to this Amendment, (i) the Borrower certifies that no Default or Event of Default has occurred which is continuing, and (ii) the Borrower confirms, reaffirms and restates that the representations and warranties set forth in Article VII of the Credit Agreement and in the other Loan Documents to which it is a party are true and correct in all material respects, provided that the references to the Credit Agreement therein shall be -------- deemed to be references to this Amendment and to the Credit Agreement as amended by this Amendment. 4. Conditions to Effectiveness. This Amendment shall become effective --------------------------- on and as of the date that: (a) the Administrative Agent shall have received counterparts of this Amendment, duly executed and delivered by a duly authorized officer of the Borrower and the Lenders; and (b) the Administrative Agent shall have received an executed Acknowledgment and Consent, in the form set forth at the end of this Amendment, from GGP, Inc. 5. Limited Consent and Amendment. Except as expressly amended herein, ----------------------------- the Credit Agreement shall continue to be, and shall remain, in full force and effect. This Amendment shall not be deemed to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document or to prejudice any other right or rights which the Co-Arrangers or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein, as the same may be amended from time to time. 6. Counterparts. This Amendment may be executed by one or more of the ------------ parties hereto in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED ------------- AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS. (REMAINDER OF PAGE INTENTIONALLY BLANK) IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written. GGP LIMITED PARTNERSHIP, as Borrower By: GENERAL GROWTH PROPERTIES, INC., its sole general partner By: /s/ Bernard Freibaum ---------------------------------------- Name: Bernard Freibaum Title: Executive Vice President GGPLP L.L.C., as Borrower By: GGP LIMITED PARTNERSHIP, its sole managing member By: GENERAL GROWTH PROPERTIES, INC., its sole general partner By: /s/ Bernard Freibaum ---------------------------------------- Name: Bernard Freibaum Title: Executive Vice President BANK OF AMERICA, N.A., as Administrative Agent and as a Lender By: /s/ Ronald B. Phemister ---------------------------------------- Name: Ronald B. Phemister Title: Principal U.S. BANK NATIONAL ASSOCIATION, as Syndication Agent and as a Lender By: /s/ Gregory S. Pearson ---------------------------------------- Name: Gregory S. Pearson Title: Commercial Banking Officer DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as Documentation Agent and as a Lender By: /s/ Maureen Slentz /s/ Brian Huddlestun -------------------------------------------- Name: Maureen Slentz Brian Huddlestun Title: Director Vice President BAYERISCHE HYPO-UND VEREINSBANK, NEW YORK BRANCH, as a Lender By: /s/ Christine Elcik /s/ Meggan W. Walsh -------------------------------------------- Name: Christine Elcik Meggan W. Walsh Title: Associate Director Managing Director ACKNOWLEDGMENT AND CONSENT The undersigned party to the Guaranty, dated as of July 31, 2000 and as amended, supplemented or otherwise modified from time to time, made by the undersigned in favor of Bank of America, N.A., as Administrative Agent, for the benefit of the Lenders, hereby (a) consents to the transactions contemplated by the foregoing First Amendment and (b) acknowledges and agrees that the guarantees contained in the Guaranty are, and shall remain, in full force and effect after giving effect to such Amendment to the Credit Agreement. GENERAL GROWTH PROPERTIES, INC. By: /s/ Bernard Freibaum ------------------------------- Name: Bernard Freibaum Title: Executive Vice President EX-10.(NN) 5 dex10nn.txt JOINDER TO REVOLVING CREDIT AGREEMENT Exhibit 10(nn) JOINDER TO REVOLVING CREDIT AGREEMENT This JOINDER TO REVOLVING CREDIT AGREEMENT ("Joinder Agreement") is made ----------------- and entered into as of this 16/th/ day of August, 2001 by COMMERZBANK AG, New YORK AND GRAND CAYMAN BRANCHES (the "Joining Lender") for the benefit of the -------------- Borrower, the Co-Arrangers and the Lenders under that certain Revolving Credit Agreement dated as of July 31, 2000 (the "Credit Agreement") among GGP Limited ---------------- Partnership, GGPLP L.L.C., Bank of America, N.A., U.S. Bank National Association, Dresdner Bank AG, New York and Grand Cayman Branches, and the institutions from time to time parties thereto as Lenders. Capitalized terms used and not otherwise defined in this Joinder Agreement shall have the respective meanings ascribed to them in the Credit Agreement. Pursuant to Section 3.2 of the Credit Agreement, the Joining Lender hereby joins in and becomes a party to the Credit Agreement and the other Loan Documents, and assumes all of the obligations of a Lender thereunder, all upon and subject to the terms and conditions set forth in the said Section 3.2, and with the effect as provided therein. In witness of the foregoing, the Joining Lender has executed and delivered this Joinder Agreement to the Borrower, the Co-Arrangers and the Lenders as of the day and year first set forth above. JOINING LENDER: COMMERZBANK AG, NEW YORK AND GRAND CAYMAN - -------------- BRANCHES By: /s/ Douglas P. Traynor /s/ David Buettner ----------------------------------------- Name: Douglas P. Traynor David Buettner ------------------------------------ Title: Senior Vice President Assisant V.P. ------------------------------------ Revolving Credit Commitment: Notice Address, Domestic Lending Office and ------------------------------------------- $25,000,000 Eurodollar Lending Office: ------------------------- Commerzbank AG, New York and Grand Cayman Branches Two World Financial Center New York, New York 10281 Attention: Douglas Traynor Telephone: (212) 266-7569 Facsimile: (212) 266-7565 CONSENT TO JOINDER AND ACKNOWLEDGEMENT Pursuant to and as required by Section 3.1 of the Credit Agreement, the Co-Arrangers and the Borrower hereby consent to, and the undersigned Lenders consent to, the joinder of the Joining Lender pursuant to the foregoing Joinder Agreement, and to the increase in the Maximum Aggregate Commitment Amount resulting therefrom, which Maximum Aggregate Commitment Amount, after giving effect to the foregoing Joinder Agreement, is acknowledged to be $185,000,000. BORROWER: GGPLP L.L.C., a Delaware limited - -------- liability company By: GGP LIMITED PARTNERSHIP, a Delaware limited partnership, its sole managing member By: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, its sole general partner By: /s/ Bernard Freibaum ---------------------------- Name: Bernard Freibaum Title: Executive Vice President GGP LIMITED PARTNERSHIP, a Delaware limited partnership By: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, its sole general partner By: /s/ Bernard Freibaum -------------------------------- Name: Bernard Freibaum Title: Executive Vice President 2 SYNDICATION AGENT AND LENDER: U.S. BANK NATIONAL ASSOCIATION, a - ---------------------------- national banking association By: /s/ John M. Solis --------------------------------- Name: John M. Solis ------------------------------ Title: Vice President ------------------------------ ADMINISTRATIVE AGENT AND LENDER: BANK OF AMERICA, N.A., a national - ------------------------------- banking association By: /s/ Ronald B. Phemister --------------------------------- Name: Ronald B. Phemister ------------------------------ Title: Principal ------------------------------ DOCUMENTATION AGENT AND LENDER: DRESDNER BANK AG, NEW YORK AND GRAND - ------------------------------ CAYMAN BRANCHES By: /s/ Maureen Slentz --------------------------------- Name: Maureen Slentz ------------------------------ Title: Director ------------------------------ By: /s/ Curt Steiner --------------------------------- Name: Curt Steiner ------------------------------ Title: Associate ------------------------------ 3 LENDER: BAYERISCHE Hypo-und - ------ Vereinsbank, NEW YORK BRANCH By: /s/ Meggan W. Walsh --------------------------- Name: Meggan W. Walsh ------------------------ Title: Managing Director ------------------------ By: /s/ Jessica W. Munzel --------------------------- Name: Jessica W. Munzel ------------------------ Title: Associate Director ------------------------ 4 EX-10.(OO) 6 dex10oo.txt PROMISSORY NOTE DATED AUGUST 16, 2001 Exhibit 10(00) PROMISSORY NOTE --------------- $25,000,000 Dated: August 16, 2001 FOR VALUE RECEIVED, the undersigned, GGP LIMITED PARTNERSHIP, a Delaware limited partnership, and GGPLP L.L.C., a Delaware limited liability company (collectively, the "Borrower"), jointly and severally, HEREBY PROMISE TO PAY to the order of CommerzBANK AG, New York and Grand Cayman Branches (the "Lender"), on the Maturity Date, the aggregate principal amount (or so much thereof as is then outstanding) of twenty five MILLION AND NO/100 DOLLARS ($25,000,000), which is the total amount of the Loans made by the Lender to the Borrower pursuant to that certain Credit Agreement dated as of July 31, 2000, by and among the Borrower, the Lender, and the other financial institutions from time to time parties thereto as Lenders and Bank of America, N.A., as Administrative Agent (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms used herein, and not ---------------- otherwise defined herein, shall have the meanings ascribed to such terms in the Credit Agreement. The Borrower further promises to pay interest on the unpaid principal amount of each Loan from the date advanced until such principal amount is paid in full, at such interest rates (which shall not exceed the maximum rate permitted by Illinois law), and at such times, as are specified in the Credit Agreement. All payments of principal and interest in respect of this Promissory Note shall be made to the Administrative Agent in lawful money of the United States of America in same day funds for the account of the Lender in accordance with the terms of the Credit Agreement. Each Loan made by the Lender to the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender on its books and records and, if the Lender so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Lender on a schedule to be attached hereto by the Lender and thereby made a part hereof, or on a continuation of such schedule to be attached to and made a part hereof; provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This Promissory Note is one of the Notes referred to in, is executed and delivered pursuant to, and is entitled to the benefits of, the Credit Agreement, to which Credit Agreement reference is hereby made for a statement of the terms and conditions under which this Promissory Note may be prepaid or the Obligations accelerated or extended. The terms and conditions of the Credit Agreement are hereby incorporated in their entirety herein by reference as though fully set forth herein. Upon the occurrence of certain Events of Default as more particularly described in the Credit Agreement, the unpaid principal amount evidenced by this Promissory Note shall become, and upon the occurrence and during the continuance of certain other Events of Default, such unpaid principal amount may be declared to be, due and payable in the manner, upon the conditions and with the effect provided in the Credit Agreement. Demand, presentment, diligence, protest and notice of nonpayment are hereby waived by the Borrower. THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS. IN WITNESS WHEREOF, the Borrower has caused this Promissory Note to be executed and delivered by its duly authorized officer as of the day and year first above written. GGPLP L.L.C., a Delaware limited liability company By: GGP LIMITED PARTNERSHIP, a Delaware limited partnership, its sole managing member By: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, its sole general partner By: /s/ Bernard Freibaum -------------------------------------- Name: Bernard Freibaum Title: Executive Vice President GGP LIMITED PARTNERSHIP, a Delaware limited partnership By: GENERAL GROWTH PROPERTIES, INC., a Delaware corporation, its sole general partner By: /s/ Bernard Freibaum -------------------------------------- Name: Bernard Freibaum Title: Executive Vice President -2- EX-10.(TT) 7 dex10tt.txt FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT 1 of 5 Exhibit 10(tt) FIRST AMENDMENT --------------- FIRST AMENDMENT, dated as of June 7, 2001 (this "Amendment"), to the --------- Revolving Credit Agreement, dated as of January 30, 2001 (such Revolving Credit Agreement, as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among GENERAL GROWTH MANAGEMENT, INC., a Delaware ---------------- corporation (the "Corporation"), GGPLP L.L.C., a Delaware limited liability ----------- company (together with the Corporation, the "Borrower"), the institutions from -------- time to time parties to the Credit Agreement as Lenders (the "Lenders"), BANK OF ------- AMERICA, N.A., as a Lender and as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), and U.S. BANK NATIONAL ASSOCIATION, as a -------------------- Lender and as syndication agent for the Lenders (in such capacity, the "Syndication Agent" and, together with the Administrative Agent, the ----------------- "Co-Arrangers"). ------------ W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower and the Lenders have agreed to amend certain provisions of the Credit Agreement upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other valuable consideration the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. All terms defined in the Credit Agreement shall have such ----------- defined meanings when used herein unless otherwise defined herein. 2. Amendment to Section 10.13(i) (Certain Liens). Section 10.13(i) of the --------------------------------------------- Credit Agreement hereby is deleted and the following is inserted in lieu thereof: 10.13 (i) Certain Liens. None of the Company, the Partnership or GGP, Inc. ------------- nor any of their respective Affiliates controlled by them, respectively, will encumber with any Lien any stock, partnership interest, joint venture interest, membership interest, beneficial interest or other equity interest in any corporation, partnership, joint venture, limited liability company, trust or other entity that (i) owns any of the Property, or (ii) is a direct or indirect shareholder, partner, joint venturer, member, beneficiary or other type of equity holder in any entity described in clause (i) above; provided, -------- however, that the foregoing prohibition shall not apply with respect to any of ------- the encumbrances existing on the date hereof set forth in Schedule 10.13 -------------- hereto; and provided further; that the prohibition set forth in this ---------------- subsection (i) shall not apply as to any such corporation, partnership, joint venture, limited liability company, trust or other entity which owns Property with respect to which (A) the Loan-to-Value Ratio as to all Secured Indebtedness for borrowed money related to such Property, in the aggregate, after giving effect to such encumbrance, is not greater than sixty-five percent (65%) and (B) the Loan-to-Value Ratio as to that portion of such Secured Indebtedness which is secured by such a Lien encumbering any stock, partnership interest, joint venture interest, membership interest, beneficial interest or other equity interest is not greater than fifteen 2 percent (15%); and provided further that the prohibition set forth in this -------- ------- subsection (i) shall not apply as to any such encumbrance granted to secure Indebtedness related to any Property or asset of such corporation, partnership, joint venture, limited liability company, trust or other entity, if such encumbrance secures a construction loan and the Loan-to-Value Ratio with respect to all Secured Indebtedness relating to the construction in question does not exceed seventy-five percent (75%), or would not exceed such Loan-to-Value Ratio, but for the applicability of unusually onerous stamp, transfer or recording taxes and fees in connection with such encumbrance; and provided further that the prohibition set forth ---------------- in this subsection (i) shall not apply as to any such encumbrance of equity interests in Minority Holdings in favor of holders(s) of the remaining equity interests in such Minority Holdings to secure obligations under the applicable Organizational Documents of such Minority Holdings. 3. Representations; No Default. On and as of the date hereof, and --------------------------- after giving effect to this Amendment, (i) the Borrower certifies that no Default or Event of Default has occurred which is continuing, and (ii) the Borrower confirms, reaffirms and restates that the representations and warranties set forth in Article VII of the Credit Agreement and in the other Loan Documents to which it is a party are true and correct in all material respects, provided that the references to the Credit Agreement therein shall be -------- deemed to be references to this Amendment and to the Credit Agreement as amended by this Amendment. 4. Conditions to Effectiveness. This Amendment shall become effective --------------------------- on and as of the date that: (a) the Administrative Agent shall have received counterparts of this Amendment, duly executed and delivered by a duly authorized officer of the Borrower and the Lenders; and (b) the Administrative Agent shall have received an executed Acknowledgment and Consent, in the form set forth at the end of this Amendment, from GGP, Inc. 5. Limited Consent and Amendment. Except as expressly amended herein, ----------------------------- the Credit Agreement shall continue to be, and shall remain, in full force and effect. This Amendment shall not be deemed to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document or to prejudice any other right or rights which the Co-Arrangers or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein, as the same may be amended from time to time. 6. Counterparts. This Amendment may be executed by one or more of the ------------ parties hereto in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED ------------- AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS. 3 of 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written. GENERAL GROWTH MANAGEMENT, INC., as Borrower By: /s/ Bernard Freibaum ------------------------------------ Name: Bernard Freibaum Title: Executive Vice President GGPLP L.L.C., as Borrower By: GGP LIMITED PARTNERSHIP, its sole managing member By: GENERAL GROWTH PROPERTIES, INC., its sole general partner By: /s/ Bernard Freibaum ------------------------------------ Name: Bernard Freibaum Title: Executive Vice President BANK OF AMERICA, N.A., as Administrative Agent and as a Lender By: /s/ Ronald B. Phemister ------------------------------------ Name: Ronald B. Phemister Title: Principal U.S. BANK NATIONAL ASSOCIATION, as Syndication Agent and as a Lender By: /s/ Gregory S. Pearson ------------------------------------ Name: Gregory S. Pearson Title: Commercial Banking Officer 4 of 5 LASALLE BANK NATIONAL ASSOCIATION, as a Lender By: /s/ John C. Hein ------------------------------- Name: John C. Hein Title: Senior Vice President 5 of 5 ACKNOWLEDGMENT AND CONSENT The undersigned parties to the Guaranty, dated as of January 30, 2001 and as amended, supplemented or otherwise modified from time to time, made by the undersigned in favor of Bank of America, N.A., as Administrative Agent, for the benefit of the Lenders, hereby (a) consent to the transactions contemplated by the foregoing First Amendment and (b) acknowledge and agree that the guarantees contained in the Guaranty are, and shall remain, in full force and effect after giving effect to such Amendment to the Credit Agreement. GENERAL GROWTH PROPERTIES, INC. By: /s/ Bernard Freibaum -------------------------------- Name: Bernard Freibaum Title: Executive Vice President GGP LIMITED PARTNERSHIP By: General Growth Properties, Inc., its sole general partner By: /s/ Bernard Freibaum -------------------------------- Name: Bernard Freibaum Title: Executive Vice President -----END PRIVACY-ENHANCED MESSAGE-----