-----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, Im80QyN1NAfIZB+nLzIq9c0w96cpFEPYzn+M4PvAgdyPnDOLCuB93QcSl27SdHOW UDQqZ3ZoIG3xt/Mv8Oj+8w== 0000950124-98-006081.txt : 19981106 0000950124-98-006081.hdr.sgml : 19981106 ACCESSION NUMBER: 0000950124-98-006081 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980915 ITEM INFORMATION: FILED AS OF DATE: 19981105 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: 8-K/A SEC ACT: SEC FILE NUMBER: 001-11656 FILM NUMBER: 98738650 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 8-K/A 1 FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Current Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934 Date of Report (Date of Earliest Event Reported) September 15, 1998 General Growth Properties, Inc. (Exact name of registrant as specified in its charter) Delaware 1-11656 42-1283895 -------- ------- ---------- (State or other (Commission File (I.R.S. Employer jurisdiction of Number) Identification Number) incorporation) 110 N. Wacker Drive, Chicago, Illinois 60606 (Address of principal executive offices) (Zip Code) (312) 960-5000 (Registrant's telephone number, including area code) N/A (Former name or former address, if changed since last report.) 2 ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN. The registrant hereby amends its Current Report on Form 8-K dated September 30, 1998 as follows: Item 7. FINANCIAL STATEMENTS AND EXHIBITS. Listed below are the financial statements, proforma financial information and exhibits filed as a part of this report: (a) Financial Statements of Businesses acquired. The financial statements of Spring Hill Mall as listed in the accompanying Index to Financial Statements and Proforma Financial Information are filed as part of this Current Report on Form 8-K/A. (b) Proforma Financial Information. The proforma financial information of General Growth Properties, Inc. (the "Company") listed in the accompanying Index to Financial Statements and Proforma Financial Information is filed as part of this Current Report on Form 8-K/A. (c) Exhibits. See Exhibit Index attached hereto and incorporated herein by reference. 2 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENERAL GROWTH PROPERTIES, INC. By: /s/ Bernard Freibaum ______________________________ Bernard Freibaum Executive Vice President and Chief Financial Officer Date: November 4, 1998 3 4 EXHIBIT INDEX Exhibit Page Number Name Number - -------- ---- ------ 2. Purchase and Sale Agreement and Joint Escrow Instructions dated as of August 21, 1998 by and between Spring Hill Mall Partnership (seller) and Spring Hill Mall L.L.C.., (purchaser).* 23. Consent of Independent Accountants. * Previously filed by the Company in its Current Report on Form 8-K dated September 30, 1998. 4 5 INDEX TO FINANCIAL STATEMENTS AND PROFORMA FINANCIAL INFORMATION The following financial information is presented in accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Accordingly, such historical information has been audited only for the property's most recent fiscal year as the transactions relating to the acquisition of the property (as described in the registrant's Current Report on Form 8-K dated September 30, 1998) are not with related parties and the registrant, after reasonable inquiry, is not aware of any material factors related to the property not otherwise disclosed that would cause the reported financial information to not be necessarily indicative of future operating results. In addition, as the property will be indirectly owned by an entity that has elected to be treated as a REIT for Federal income tax purposes, a presentation of estimated taxable operating results is not applicable. SPRING HILL MALL Independent Auditors' Report..........................................F-2 Statements of Revenues and Certain Expenses for the Year Ended December 31, 1997 and for the Six Months Ended June 30,1998 (Unaudited).............................F-3 Notes to Statements of Revenues and Certain Expenses..................F-4 GENERAL GROWTH PROPERTIES, INC. Proforma Condensed Consolidated Statement of Operations for the Year Ended December 31,1997 (Unaudited).......................F-6 Notes to Proforma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1997 (Unaudited)...........F-7 Proforma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 1998 (Unaudited).......................F-11 Notes to Proforma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 1998 (Unaudited)........F-12 Proforma Condensed Consolidated Balance Sheet as of June 30, 1998 (Unaudited)............................................F-15 Notes to Proforma Condensed Consolidated Balance Sheet as of June 30, 1998 (Unaudited)............................................F-16 F-1 6 INDEPENDENT AUDITORS' REPORT To the Board of Directors of General Growth Properties, Inc.: We have audited the accompanying statement of revenues and certain expenses of Spring Hill Mall for the year ended December 31, 1997. This statement is the responsibility of General Growth Properties, Inc.'s management. Our responsibility is to express an opinion on this statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, as described in note 1 to the statements of revenue and certain expenses. It not intended to be a complete presentation of Spring Hill Mall's revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenue and certain expenses, as described in note 1, of Spring Hill Mall for the year ended December 31, 1997, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Los Angeles, California October 22, 1998 F-2 7 SPRING HILL MALL STATEMENTS OF REVENUE AND CERTAIN EXPENSES (Note 1)
For the Period January 1, 1998 Through June 30, 1998 Year Ended (Unaudited) December 31, 1997 ------------------ ----------------- (Dollars in thousands) Revenue: Minimum rent $ 4,488 $ 9,046 Contingent rent 364 270 Tenant reimbursements 1,734 3,388 Other 10 22 ----------- --------- 6,596 12,726 ----------- --------- Certain Expenses: Building Repairs and Maintenance 263 436 Utilities 151 304 Common Area Repairs and Maintenance 454 1,133 General and Administration 213 482 Legal Fees, Insurance and Miscellaneous 27 90 ----------- --------- Total expenses 1,108 2,445 ----------- --------- Revenue in excess of Certain Expenses $ 5,488 10,281 =========== =========
See accompanying notes to statements of revenue and certain expenses. F-3 8 SPRING HILL MALL NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES PERIOD FROM JANUARY 1, 1998 THROUGH JUNE 30,1998 (UNAUDITED) AND YEAR ENDED DECEMBER 31,1997 (Dollars in Thousands) 1. BASIS OF PRESENTATION The accompanying statements of revenue and certain expenses relate to the operations of the regional shopping mall known as Spring Hill Mall (the "Property") located in West Dundee (Chicago), Illinois. On September 15, 1998, General Growth Properties, Inc. purchased the Property from TCW Realty Fund V. The accompanying statements of revenue and certain expenses have been prepared for the purpose of complying with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired and, accordingly, are not representative of the actual results of operations of the Property for the period January 1, 1998 through June 30, 1998 and the year ended December 31, 1997 due to the exclusion of the following items, which my not be comparable to the proposed future operations of the Property: - Management fees - Property and other taxes - Depreciation and amortization - Other items not directly related to the proposed future operations of the Property Property taxes are expected to significantly increase in connection with the reassessment of the Property by the taxing authority as a result of the change in ownership of the Property and, therefore, property taxes are excluded from certain expenses in the accompanying statement of revenues and certain expenses. Tenant reimbursement revenues related to property taxes are included in the accompanying statement of revenues and certain expenses and the amount of increase in such reimbursements that may result from increased property taxes have not been determined. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES (a) Revenue Recognition Minimum rental income is recognized using the accrual method based on contractual amounts provided for in the lease agreements which approximates the straight-line method. Contingent rents, which are based on the operating results of certain tenants, are accrued as earned. Tenant reimbursements, which consist of reimbursements from tenants for certain operating expenses are accrued as such operating expenses are incurred. F-4 9 (b) Expenses Expenses are charged to operations as incurred. (c) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates. (d) Unaudited Interim Statement of Revenue and Certain Expenses The statement of revenue and certain expenses for the six-month period ended June 30, 1998 is unaudited. In management's opinion, such financial statement reflects all adjustments of a normal recurring nature, necessary for a fair presentation of revenue and certain expenses for the interim period. All such adjustments are of a normal, recurring nature. 3. LEASES Shopping mall space is leased to tenants under various operating leases with terms ranging primarily from two to ten years. Future minimum rents to be received under leases in effect at December 31, 1997, are as follows: Years Ending December 31: ------------ 1998 $ 8,443 1999 7,832 2000 7,505 2001 6,462 2002 5,963 Thereafter 14,949 -------- $ 51,154 ======== F-5 10
GENERAL GROWTH PROPERTIES, INC. PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED) Historical 1998 Fiscal General Growth Fiscal Proforma Acquisitions 1997 Properties, 1997 Proforma Fiscal Previously Proforma Proforma Inc.(1) Acquisitions Adjustments 1997 (1) Reported (2) Adjustments (2) As Reported (2) -------------- ------------ ----------- -------- ------------- ---------------- --------------- Total revenues $ 291,147 $ 14,427 $ -- $ 305,574 $ 144,084 $ -- $ 449,658 Expenses: Property operating 106,369 5,818 -- 112,187 57,443 -- 169,630 Management fees 3,308 252 (46) 3,514 1,001 99 (a) 4,614 Depreciation and amortization 48,509 -- 2,077 50,586 -- 29,331 (b) 79,917 ---------- -------- --------- --------- --------- ----------- ----------- Total Expenses 158,186 6,070 2,031 166,287 58,444 29,430 254,161 ---------- -------- --------- --------- --------- ----------- ----------- Operating Income 132,961 8,357 (2,031) 139,287 85,640 (29,430) 195,497 Interest expense, net (70,252) -- (8,459) (78,711) -- (60,110) (c) (138,821) Equity in net income/(loss) unconsolidated affiliates: GGP/Homart, Inc. 16,506 -- -- 16,506 -- -- 16,506 Property Joint Ventures 3,032 391 -- 3,423 927 -- 4,350 General Growth Management, Inc. (194) -- -- (194) 3,405 -- 3,211 --------- -------- --------- --------- -------- ---------- ---------- Income before minority interest 82,053 8,748 (10,490) 80,311 89,972 (89,540) 80,743 Minority interest in Operating Partnership (29,398) -- 37 (29,361) -- 6,099 (d) (23,262) --------- -------- --------- --------- -------- ---------- ---------- Net income 52,655 8,748 (10,453) 50,950 89,972 (83,441) 57,481 Convertible preferred stock dividends(3) -- -- -- -- -- (24,469) (24,469) --------- -------- --------- --------- --------- ---------- ---------- Net income available to common stockholders $ 52,655 $ 8,748 $ (10,453) $ 50,950 $ 89,972 $ (107,910) $ 33,012 ========= ======== ========= ========= ========= ========== ========== Weighted average shares outstanding - basic 32,622,665 Weighted average shares outstanding - diluted 32,839,637 Preferred Stock Dividends 24,469 24,469 Dilutive Common Shares-W/A 216,972 216,972 Earnings per share - basic $ 1.01 Earnings per share - diluted $ 1.01
Pierre Bossier Proforma Mall Fiscal 1997 Spring Hill Acquisition Proforma for Current Acquisition (Unaudited) Adjustments 8-K/A ----------- -------------- ----------- ----------- Total revenues Expenses: $ 12,726 $ 6,706 $ -- $ 469,090 Property operating Management fees 2,445 2,067 -- 174,142 Depreciation and -- -- 200 (a) 4,814 amortization -- -- 3,979 (b) 83,896 Total Expenses --------- -------- --------- ---------- 2,445 2,067 4,179 262,852 Operating Income --------- -------- --------- ---------- Interest expense, net 10,281 4,639 (4,179) 206,238 -- -- (11,702) (c) (150,523) Equity in net income/(loss) unconsolidated affiliates: -- -- -- 16,506 GGP/Homart, Inc. -- -- -- 4,350 Property Joint Ventures General Growth -- -- -- 3,211 Management, Inc. --------- -------- --------- ---------- Income before 10,281 4,639 (15,881) 79,782 minority interest Minority interest in -- -- 398 (d) (22,864) Operating Partnership --------- -------- --------- ---------- 10,281 4,639 (15,483) 56,918 Net income Convertible preferred -- -- -- (24,469) stock dividends(3) --------- -------- --------- ---------- Net income available $ 10,281 $ 4,639 $ (15,483) $ 32,449 to common stockholders ========= ======== ========= ========== Weighted average shares 32,622,665 outstanding - basic Weighted average shares 32,839,637 outstanding - diluted 24,469 Preferred Stock Dividends Dilutive Common Shares-W/A 216,972 Earnings per share - basic $.99 Earnings per share - diluted $.99
(1) Amounts are from the statements included in the Company's Form 10-K for the year ended December 31, 1997. (2) Amounts are from the statements included in the Company's Form 8-K/A dated September 29, 1998. (3) Proforma earnings have been reduced by proforma dividends on the 7.25% Convertible Preferred Stock. F-6 11 GENERAL GROWTH PROPERTIES, INC. NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS) NOTE 1 PROFORMA BASIS OF PRESENTATION This unaudited proforma condensed consolidated statement of operations is presented as if (i) the sale of CenterMark Properties, Inc. ("CenterMark") and the acquisitions made in 1997 (Market Place Mall, Century Plaza Shopping Center, Town East Mall, Southlake Mall, Eden Prairie Mall, GGP/Ivanhoe Portfolio Malls and Valley Hills Mall), (ii) the acquisitions made prior to July 16, 1998 (Southwest Plaza, Northbrook Court, Altamonte Mall, the MEPC Portfolio and the USPPI Portfolio - all as previously reported in the Company's Form 8-K/A dated September 29, 1998) and the acquisitions made from July 16, 1998 through September 15, 1998 (Pierre Bossier Mall and Spring Hill Mall) and (iii) the Company's use of the net proceeds of the June 4, 1998 public offering of depositary shares of 7.25% Preferred Income Equity Redeemable Stock (the "Offering" or "Convertible Preferred Stock") to fund the acquisitions and for other working capital purposes, had all occurred on January 1, 1997. In management's opinion, all adjustments necessary to reflect these transactions have been included. Such proforma statement of operations is based upon the historical information of General Growth Properties, Inc. excluding the non-recurring gain on sale of a portion of CenterMark stock and extraordinary item and the historical information of each of the above-mentioned entities for the year ended December 31, 1997. The MEPC Portfolio information reflects the results of operations for the fiscal year ended September 30, 1997. This unaudited proforma statement of operations is not necessarily indicative of what actual results of General Growth Properties, Inc. would have been assuming such transactions had been completed as of January 1, 1997 nor does it purport to represent the results of operations for future periods. NOTE 2 ACQUISITIONS/DISPOSITIONS On June 28, 1996, Westfield U.S. Investments, Pty. Limited exercised its option to acquire the remaining 30% of the outstanding CenterMark stock from General Growth Properties, Inc. (the "Company") in two transactions. The first payment in the amount of $87,000 was received on July 1, 1996, and the second payment in the amount of $130,500 was received on January 2, 1997. As described above, the gain on this transaction has been excluded from the continuing operations of the Company and its pro forma operations for the year ended December 31, 1997. On March 31, 1997, the Company acquired a 100% interest in Market Place Mall for a cash purchase price of approximately $70,000 which was funded by an unsecured short-term facility. Market Place Mall is located in Champaign, Illinois. During the second quarter of 1997, the Company also acquired a 100% ownership interest in three properties, Century Plaza Shopping Center, Southlake Mall, Eden Prairie Mall and a 50% interest in Town East Mall. F-7 12 Century Plaza Shopping Center located in Birmingham, Alabama was acquired on May 1, 1997 for $31,800 in cash. Southlake Mall was acquired on June 19, 1997, for a purchase price of $67,000. The purchase price consisted of $45,100 of mortgage debt assumption, $11,500 (353,537 units) of newly issued Operating Partnership Units, and $10,400 in cash. Southlake Mall is located in Atlanta, Georgia. The aggregate consideration paid for Eden Prairie Center located in Minneapolis, Minnesota was $19,900. It included the assumption of a $16,800 mortgage, the payment of $1,100 in cash and the assumption of $2,000 in short-term liabilities. On June 11, 1997, the Company acquired a 50% interest in Town East Mall, located in Mesquite, Texas for $56,500. The consideration included approximately $27,500 in cash, the assumption of approximately $27,900 of mortgage indebtedness and the assumption of $1,100 in net current liabilities. On September 17, 1997, GGP/Ivanhoe, Inc. ("GGP/Ivanhoe") acquired the Oaks Mall in Gainesville, Florida and Westroads Mall in Omaha, Nebraska. The purchase price for the two properties was approximately $206,000 of which $125,000 was financed through property level indebtedness. The Company owns 51% of the ownership interest in GGP/Ivanhoe. Ivanhoe, Inc. of Montreal, Quebec, Canada owns the remaining 49% ownership interest in GGP/Ivanhoe. On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook, Illinois, respectively. The aggregate purchase price for Southwest Plaza and Northbrook Court was approximately $261,000. On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC") through the purchase of the stock of the three U.S. subsidiaries of MEPC that directly or indirectly own the MEPC Portfolio. The Company acquired the MEPC Portfolio for approximately $871,000 (less certain adjustments), approximately $830,000 of which was borrowed. After repayment of approximately $217,000 of such acquisition financing from the Offering, the MEPC Portfolio is currently secured by a 6.7% one year $550,000 loan and an approximately $63,000 one year floating rate loan bearing interest at LIBOR plus 90 basis points. The MEPC Portfolio consists of 100% ownership of eight enclosed mall shopping centers; the Apache Mall in Rochester, Minnesota, the Boulevard Mall in Las Vegas, Nevada, the Cumberland Mall in Atlanta, Georgia, the McCreless Mall in San Antonio, Texas, the Northridge Fashion Center in Northridge (Los Angeles), California, the Regency Square Mall in Jacksonville, Florida, the Riverlands Shopping Center in LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield, California. On May 14, 1998, the Company entered into a definitive merger agreement to acquire U.S. Prime Property, Inc. ("USPPI"), a private REIT. On July 23, 1998, effective as of June 30, 1998, the Company acquired through a merger, USPPI. The Company also reached agreement with a joint venture partner pursuant to which the joint venture partner acquired 49% of the common stock acquired pursuant to the merger agreement and the Company retained the remainder of the common stock. The newly merged entity ("GGP Ivanhoe F-8 13 II") will continue to operate as a private REIT and will be accounted for by the Company on the equity method. The aggregate consideration paid pursuant to the merger agreement was approximately $625,000 (less certain adjustments, including a credit of approximately $64,000 for outstanding mortgage indebtedness and accrued interest thereon). GGP Ivanhoe II obtained a $392,000 interim loan bearing interest at LIBOR plus 90 basis points and due July 1, 1999, and the balance of the consideration paid was represented by equity from the Company and the venture partner in proportion to their respective stock ownership. Pursuant to the purchase and venture agreements, the Company was obligated to contribute approximately $91,290 to GGP Ivanhoe II of which approximately $18,800 was contributed on June 30, 1998 and the remaining approximately $72,490 (less certain interest and other credits) was contributed in mid-July, 1998. The Company's capital contributions were funded primarily from its line of credit facility. GGP Ivanhoe II owns: the Landmark Mall in Alexandria, Virginia; the Mayfair Mall and adjacent office buildings in Wauwatosa, Wisconsin; the Meadows Mall in Las Vegas, Nevada; the Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in Savannah, Georgia; and the Park City Center in Lancaster, Pennsylvania. On July 21, 1998, the Company acquired a 100% ownership interest in the Altamonte Mall in Altamonte Springs (Orlando), Florida. The purchase price consisted of approximately $141,000 (3,683,143 units) of newly issued units of limited partnership of GGP Limited Partnership, an affiliate of the Company and approximately $28,000 in cash funded from the Company's credit facility. On September 3, 1998, the Company acquired a 100% ownership interest in the Pierre Bossier Mall in Bossier City (Shreveport), Louisiana. The aggregate consideration paid for the Pierre Bossier Mall was approximately $52,700 (subject to prorations and certain adjustments) which was paid in the form of approximately $10,000 in cash (funded from the Company's line of credit), a new mortgage loan (obtained from an independent third party) of approximately $42,000 and the assumption of approximately $700 of existing debt. The Company had previously loaned the sellers approximately $50,000 and received an option to buy the property. In conjunction with the closing of the sale, the loan was fully repaid. On September 15, 1998, the Company purchased 100% of the Spring Hill Mall in West Dundee (Chicago), Illinois. The aggregate consideration paid by the Operating Company for the Spring Hill Mall was approximately $124,000 consisting of approximately $32,000 in cash (through the Company's line of credit and a new 10-year fixed-rate $92,000 mortgage with an independent third party lender. The new mortgage bears interest at 6.60% per annum and provides for monthly payments of principal and interest of approximately $588. F-9 14 NOTE 3 PROFORMA ADJUSTMENTS (a) Management Fees The management fee adjustment represents the difference in management costs charged and/or allocated to the properties by the previous owners and the new rates charged by General Growth Management, Inc. ("GGMI"), an affiliate of the Company. (b) Depreciation and Amortization Depreciation and amortization is adjusted to include additional amounts related to the periods from January 1, 1997 to the dates of acquisition for the 1997 acquisitions and for the entire year of 1997 for the acquisitions made in 1998. (c) Interest Expense Interest expense increased due to a combination of debt assumption and increased borrowings. In connection with the acquisitions described above, the Company assumed approximately $127,000 of mortgage debt bearing interest at the weighted average rate of 8.50%. The Company also issued approximately $1,028,000 of secured and unsecured borrowings to fund the cash portion of the acquisitions. The proforma interest expense on new borrowings was calculated using an interest rate of 6.65% for acquisitions prior to June 30, 1998 and 6.61% for the Altamonte Mall, Pierre Bossier Mall and Spring Hill Mall acquisitions. (d) Minority Interest The proforma income statement has been adjusted to reflect the allocation of earnings to the minority interest. F-10 15 GENERAL GROWTH PROPERTIES, INC. PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
Historical 1998 Pierre Bossier General Growth Acquisitions June 30 Mall Properties, Previously Proforma Proforma Spring Hill Acquisition Inc.(1) Reported Adjustments As Reported (2) Acquisition (Unaudited) ------ -------- ----------- --------------- ----------- ----------- Total revenues $169,065 $59,569 $ -- $ 228,634 $ 6,596 $ 3,669 Expenses: Property operating 57,830 23,405 -- 81,235 1,108 1,087 Management fees 1,860 330 113 (a) 2,303 -- -- Depreciation & amortization 29,099 -- 11,885 (b) 40,984 -- -- -------- ------- --------- ---------- -------- ----------- Total Expenses 88,789 23,735 11,998 124,522 1,108 1,087 -------- ------- --------- ---------- -------- ----------- Operating Income 80,276 35,834 (11,998) 104,112 5,488 2,582 Interest expense, net (40,971) -- (23,878) (c) (64,849) -- -- Equity in unconsolidated affiliates: GGP/Homart, Inc. 8,336 -- -- 8,336 -- -- Property Joint Ventures 1,634 (69) -- 1,565 -- -- General Growth Management, Inc. (9,260) 1,697 -- (7,563) -- -- -------- ------- -------- ---------- -------- ----------- Income before minority interest 40,015 37,462 (35,876) 41,601 5,488 2,582 Minority interest in Operating Partnership (13,419) -- 1,976 (d) (11,443) -- -- -------- ------- --------- ---------- -------- ----------- Net income 26,596 37,462 (33,900) 30,158 5,488 2,582 Convertible preferred stock dividends(3) (1,199) -- (11,035) (12,234) -- -- -------- ------- --------- ---------- -------- ----------- Net income available to common stockholders $ 25,397 $37,462 $(44,935) $ 17,924 $ 5,488 $ 2,582 ======== ======= ========= ========== ======== =========== Weighted average shares outstanding - basic 35,783,276 Weighted average shares outstanding - diluted 35,996,404 Preferred Stock Dividends 1,199 11,035 12,234 Dilutive Common Shares-W/A 213,128 Earnings per share-basic $ 0.50 Earnings per share-diluted $ 0.50 Total Proforma Proforma Adjustments Combined ----------- -------- Total revenues $ -- $ 238,899 Expenses: Property operating -- 83,430 Management fees 100 (a) 2,403 Depreciation & amortization 1,989 (b) 42,973 Total Expenses -------- --------- 2,089 128,806 -------- --------- Operating Income Interest expense, net (2,089) 110,093 (5,851) (c) (70,700) Equity in unconsolidated affiliates: GGP/Homart, Inc. Property Joint Ventures -- 8,336 General Growth -- 1,565 Management, Inc. -- (7,563) Income before -------- --------- minority interest Minority interest in (7,940) 41,731 Operating Partnership (51) (d) (11,494) Net income -------- --------- Convertible preferred (7,991) 30,237 stock dividends(3) -- (12,234) Net income available -------- --------- to common stockholders $ (7,991) $ 18,003 ======== ========= Weighted average shares outstanding - basic Weighted average shares 35,783,276 outstanding - diluted 35,996,404 Preferred Stock Dividends Dilutive Common Shares-W/A 12,234 213,128 Earnings per share-basic $ 0.50 Earnings per share-diluted $ 0.50
(1) Amounts are from the statements included in the Company's Form 10-Q for the quarter ended June 30, 1998. (2) Amounts are from the statements included in the Company's Form 8-K/A dated September 29, 1998. (3) Proforma earnings have been reduced by proforma dividends on the 7.25% Convertible Preferred Stock. F-11 16 GENERAL GROWTH PROPERTIES, INC. NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS) NOTE 1 PROFORMA BASIS OF PRESENTATION This unaudited proforma condensed consolidated statement of operations is presented as if (i) the acquisitions made prior to July 16, 1998 (Southwest Plaza, Northbrook Court, Altamonte Mall, the MEPC Portfolio and the USPPI Portfolio - all as previously reported in the Company's Form 8-K/A dated October 1, 1998) and the acquisitions made from July 16, 1998 through September 15, 1998 (Pierre Bossier Mall and Spring Hill Mall) and (ii) the Company's use of the net proceeds of the June 4, 1998 public offering of depositary shares of 7.25% Preferred Income Equity Redeemable Stock (the "Offering" or "Convertible Preferred Stock") to fund the acquisitions and for other working capital purposes, had all occurred on January 1, 1998. In management's opinion, all adjustments necessary to reflect these transactions have been included. Such proforma statement of operations is based upon the historical information of General Growth Properties, Inc. and the historical information of each of the above-mentioned entities for the six months ended June 30, 1998. This unaudited proforma statement of operations is not necessarily indicative of what actual results of General Growth Properties, Inc. would have been assuming such transactions had been completed as of January 1, 1998 nor does it purport to represent the results of operations for future periods. NOTE 2 ACQUISITIONS On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook, Illinois, respectively. The aggregate purchase price for Southwest Plaza and Northbrook Court was approximately $261,000. On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC") through the purchase of the stock of the three U.S. subsidiaries of MEPC that directly or indirectly own the MEPC Portfolio. The Company acquired the MEPC Portfolio for approximately $871,000 (less certain adjustments), approximately $830,000 of which was borrowed. After repayment of approximately $217,000 of such acquisition financing from the Offering, the MEPC Portfolio is currently secured by a 6.7% one year $550,000 loan and an approximately $63,000 one year floating rate loan bearing interest at LIBOR plus 90 basis points. The MEPC Portfolio consists of 100% ownership of eight enclosed mall shopping centers; the Apache Mall in Rochester, Minnesota, the Boulevard Mall in Las Vegas, Nevada, the Cumberland Mall in Atlanta, Georgia, the McCreless Mall in San Antonio, Texas, the Northridge Fashion Center in Northridge (Los Angeles), California, the Regency Square Mall in Jacksonville, Florida, the Riverlands Shopping Center in LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield, California. F-12 17 On May 14, 1998, the Company entered into a definitive merger agreement to acquire U.S. Prime Property, Inc. ("USPPI"), a private REIT. On July 23, 1998, effective as of June 30, 1998, the Company acquired through a merger, USPPI. The Company also reached agreement with a joint venture partner pursuant to which the joint venture partner acquired 49% of the common stock acquired pursuant to the merger agreement and the Company retained the remainder of the common stock. The newly merged entity ("GGP Ivanhoe II") will continue to operate as a private REIT and will be accounted for by the Company on the equity method. The aggregate consideration paid pursuant to the merger agreement was approximately $625,000 (less certain adjustments, including a credit of approximately $64,000 for outstanding mortgage indebtedness and accrued interest thereon). GGP Ivanhoe II obtained a $392,000 interim loan bearing interest at LIBOR plus 90 basis points and due July 1, 1999, and the balance of the consideration paid was represented by equity from the Company and the venture partner in proportion to their respective stock ownership. Pursuant to the purchase and venture agreements, the Company was obligated to contribute approximately $91,290 to GGP Ivanhoe II of which approximately $18,800 was contributed on June 30, 1998 and the remaining approximately $72,490 (less certain interest and other credits) was contributed in mid-July, 1998. The Company's capital contributions were funded primarily from its line of credit facility as described in Note 6. GGP Ivanhoe II owns: the Landmark Mall in Alexandria, Virginia; the Mayfair Mall and adjacent office buildings in Wauwatosa, Wisconsin; the Meadows Mall in Las Vegas, Nevada; the Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in Savannah, Georgia; and the Park City Center in Lancaster, Pennsylvania. On July 21, 1998 the Company acquired a 100% ownership interest in the Altamonte Mall in Altamonte Springs (Orlando), Florida. The purchase price consisted of approximately $141,000 (3,683,143 units) of newly issued units of limited partnership of GGP Limited Partnership, an affiliate of the Company and approximately $28,000 in cash funded from the Company's credit facility. On September 3, 1998, the Company acquired a 100% ownership interest in the Pierre Bossier Mall in Bossier City (Shreveport), Louisiana. The aggregate consideration paid for the Pierre Bossier Mall was approximately $52,700 (subject to prorations and certain adjustments) which was paid in the form of approximately $10,000 in cash (funded from the Company's line of credit), a new mortgage loan (obtained from an independent third party) of approximately $42,000 and the assumption of approximately $700 of existing debt. The Company had previously loaned the sellers approximately $50,000 and received an option to buy the property. In conjunction with the closing of the sale, the loan was fully repaid. On September 15, 1998, the Company purchased 100% of the Spring Hill Mall in West Dundee (Chicago), Illinois. The aggregate consideration paid by the Operating Company for the Spring Hill Mall was approximately $124,000 consisting of approximately $32,000 in cash (through the Company's line of credit and a new 10-year fixed-rate $92,000 mortgage with an independent third party lender. The new mortgage bears interest at 6.60% per annum and provides for monthly payments of principal and interest of approximately $588. F-13 18 NOTE 3 PROFORMA ADJUSTMENTS (a) Management Fees The management fee adjustment represents the difference in management costs charged and/or allocated to the properties by the previous owners and the new rates charged by General Growth Management, Inc. (b) Depreciation and Amortization Depreciation and amortization is adjusted to include additional amounts related to the months ended June 30, 1998 for the acquisitions made in 1998. (c) Interest Expense Interest expense increased due to a combination of debt assumption and increased borrowings. In connection with the acquisitions described above, the Company assumed approximately $127,000 of mortgage debt bearing interest at the weighted average rate of 8.50%. The Company also issued approximately $1,028,000 of secured and unsecured borrowings to fund the cash portion of the acquisitions. The proforma interest expense on new borrowings was calculated using an interest rate of 6.65% for acquisitions prior to June 30, 1998 and 6.61% for the Altamonte Mall, Pierre Bossier Mall and Spring Hill Mall acquisitions. (d) Minority Interest The proforma income statement has been adjusted to reflect the allocation of earnings to the minority interest. F-14 19 GENERAL GROWTH PROPERTIES, INC. PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1998 (DOLLARS IN THOUSANDS--UNAUDITED)
HISTORICAL PREVIOUSLY PIERRE BOSSIER GENERAL GROWTH REPORTED PREVIOUSLY MALL PROPERTIES, PROFORMA REPORTED SPRING HILL ACQUISITION REVISED INC.(1) ADJUSTMENTS PROFORMA (2) ACQUISITION (Unaudited) PROFORMA -------------- ----------- ---------- ----------- ----------- -------- ASSETS - ------ Investment in real estate Land $312,452 $16,900 $329,352 $12,400 $5,284 $347,036 Buildings and equipment 2,657,295 152,100 2,809,395 111,600 47,556 2,968,551 Less accumulated depreciation (259,214) -- (259,214) -- -- (259,214) Developments in progress 102,569 -- 102,569 -- -- 102,569 ---------- ----------- ---------- ----------- ------- ----------- Net property and equipment 2,813,102 169,000 2,982,102 124,000 52,840 3,158,942 Investment in GGP/Homart 205,221 -- 205,221 -- -- 205,221 Investment in Property Joint Ventures 108,915 -- 108,915 -- -- 108,915 ---------- ----------- ---------- ----------- ------- ----------- Net investment in real estate 3,127,238 169,000 3,296,238 124,000 52,840 3,473,078 Cash and cash equivalents 29,913 -- 29,913 -- -- 29,913 Tenant accounts receivable, net 41,913 -- 41,913 -- -- 41,913 Deferred expenses, net 51,960 -- 51,960 -- -- 51,960 Investment in and note receivable from GGMI 83,725 -- 83,725 -- -- 83,725 Mortgage note receivable 50,061 -- 50,061 -- -- 50,061 Prepaid expenses and other assets 10,079 -- 10,079 -- -- 10,079 ---------- ----------- ---------- ----------- ------- ----------- Total Assets $3,394,889 $169,000 $3,563,889 $124,000 $52,840 $3,740,729 ========== =========== ========== =========== ======= =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Mortgage notes and other debt payable $2,140,895 $28,000 $2,168,895 $124,000 $52,840 $2,345,735 Distributions payable 25,860 -- 25,860 -- -- 25,860 Accounts payable and accrued expenses 138,690 -- 138,690 -- -- 138,690 ---------- ----------- ---------- ----------- ------- ----------- Total Liabilities 2,305,445 28,000 2,333,445 124,000 52,840 2,510,285 Minority interest in Operating Partnership 262,519 84,507 347,026 -- -- 347,026 Commitments and Contingencies Convertible preferred stock 337,500 -- 337,500 -- -- 337,500 Stockholder's equity Common stock 3,590 -- 3,590 -- -- 3,590 Additional paid-in capital 738,352 56,493 794,845 -- -- 794,845 Retained earnings (deficit) (249,477) -- (249,477) -- -- (249,477) Note receivable - common stock (3,040) -- (3,040) -- -- (3,040) ---------- ----------- ---------- ----------- ------- ----------- Total stockholders' equity 489,425 56,493 545,918 -- -- 545,918 ---------- ----------- ---------- ----------- ------- ----------- Total Liabilities and Equity $3,394,889 169,000 $3,563,889 $124,000 $52,840 $3,740,729 ========== =========== ========== =========== ======= ===========
(1) Amounts are from the statements included in the Company's Form 10-Q for the quarter ended June 30, 1998. (2) Amounts are from the statements included in the Company's 8-K/A dated September 29, 1998. The accompanying notes are an integral part of the Proforma Condensed Consolidated Balance Sheet. F-15 20 GENERAL GROWTH PROPERTIES, INC. PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET June 30, 1998 (DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS) NOTE 1 PROFORMA BASIS OF PRESENTATION This unaudited condensed consolidated balance sheet is presented as if the acquisition of Altamonte Mall, Pierre Bossier Mall and Spring Hill Mall had occurred on June 30, 1998. In management's opinion, all adjustments necessary to reflect this transaction have been included. F-16 EX-23 2 CONSENT OF KPMG PEAT MARWICK LLP 1 Exhibit 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation of our report dated October 22, 1998 on the statement of revenues and certain expenses for Spring Hill Mall for the year ended December 31, 1997 included in this Form 8-K/A dated November 4, 1998 into the General Growth Properties, Inc. Registration Statements on Forms S-3 (File Nos. 333-11067, 333-15907, 333-17021, 333- 23035, 333-37247, 333-37383, 333-41603 and 333-58045) and Registration Statements on Forms S-8 (File Nos. 33-79372, 333-07241, 333-11237 and 333-28449). Our independent auditor's report contains an explanatory paragraph indicating that the statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in note 1 to the statement of revenues and certain expenses and is not intended to be a complete presentation of Spring Hill Mall's revenues and expenses. KPMG Peat Marwick LLP Los Angeles, California November 4, 1998 -----END PRIVACY-ENHANCED MESSAGE-----