8-K/A 1 c90586e8vkza.txt AMENDMENT TO FORM 8-K UNITED STATES 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) ----------------------------------------------- November 12, 2004 GENERAL GROWTH PROPERTIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 1-11656 42-1283895 -------- ------- ---------- (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification incorporation) Number) 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN. The registrant hereby amends its Current Report on Form 8-K signed November 12, 2004, as amended November 18, 2004, as follows: ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. Listed below are the financial statements, pro forma financial information and exhibits filed as a part of this report: (a) Financial Statements of Businesses Acquired. 1. Audited consolidated financial statements of The Rouse Company ("Rouse") as of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001 were previously filed by General Growth Properties, Inc. (the "Company") on its Form 8-K/A dated October 29, 2004, as amended November 9, 2004. 2. Unaudited condensed consolidated financial statements of Rouse as of September 30, 2004 and for the three and nine months ended September 30, 2004 and 2003 and attached as Exhibit 99.2 to this report. (b) Pro Forma Financial Information. The pro forma financial information of the Company listed in the accompanying Index is filed as part of this Current Report on Form 8-K/A. (c) Exhibits. See the Exhibit Index attached hereto and incorporated herein by reference (c) Exhibits Exhibit Number Name ------- ---- 2.1 Agreement and Plan of Merger by and Among The Rouse Company, General Growth Properties, Inc. and Red Acquisition, LLC dated as of August 19, 2004 (previously filed) 10.1 $7,295,000,000 Amended and Restated Credit Agreement among General Growth Properties, Inc., GGP Limited Partnership and GGPLP L.L.C, as Borrowers, the Several Lenders from Time to Time Parties hereto, Lehman Brothers Inc., Banc of America Securities LLC, Credit Suisse First Boston and Wachovia Capital Markets, LLC, as Arrangers, Bank of America, N.A. and Credit Suisse First Boston, as Syndication Agents, Eurohypo AG, New York Branch, as Documentation Agent, Lehman Commercial Paper Inc., as Tranche B Administrative Agent, and Wachovia Bank, National Association, as General Administrative Agent dated as of November 12, 2004 (previously filed) 10.2 Sixth Amendment dated November 12, 2004 to the Second Amended and Restated Operating Agreement of GGPLP, L.L.C. (previously filed) 10.3 Amendment dated November 12, 2004 to the Second Amended and Restated Agreement of Limited Partnership of GGP Limited Partnership (previously filed) 99.1 Press Release dated November 12, 2004 entitled "General Growth Properties, Inc. Completes Merger of The Rouse Company" (previously filed) 99.2 Unaudited condensed consolidated financial statements of Rouse as of September 30, 2004 and for the three and nine months ended September 30, 2004 and 2003 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: December 20, 2004 EXHIBIT INDEX
EXHIBIT NUMBER NAME ------- ---- 2.1 Agreement and Plan of Merger by and Among The Rouse Company, General Growth Properties, Inc. and Red Acquisition, LLC dated as of August 19, 2004 (previously filed) 10.1 $7,295,000,000 Amended and Restated Credit Agreement among General Growth Properties, Inc., GGP Limited Partnership and GGPLP L.L.C, as Borrowers, the Several Lenders from Time to Time Parties hereto, Lehman Brothers Inc., Banc of America Securities LLC, Credit Suisse First Boston and Wachovia Capital Markets, LLC, as Arrangers, Bank of America, N.A. and Credit Suisse First Boston, as Syndication Agents, Eurohypo AG, New York Branch, as Documentation Agent, Lehman Commercial Paper Inc., as Tranche B Administrative Agent, and Wachovia Bank, National Association, as General Administrative Agent dated as of November 12, 2004 (previously filed) 10.2 Sixth Amendment dated November 12, 2004 to the Second Amended and Restated Operating Agreement of GGPLP, L.L.C. (previously filed) 10.3 Amendment dated November 12, 2004 to the Second Amended and Restated Agreement of Limited Partnership of GGP Limited Partnership (previously filed) 99.1 Press Release dated November 12, 2004 entitled "General Growth Properties, Inc. Completes Merger of The Rouse Company" (previously filed) 99.2 Unaudited condensed consolidated financial statements of Rouse as of September 30, 2004 and for the three and nine months ended September 30, 2004 and 2003
INDEX GENERAL GROWTH PROPERTIES, INC.: Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2004................. F-2 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2004...................................................... F-3 Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2003.............................................................. F-4 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.......................... F-5
GENERAL GROWTH PROPERTIES, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2004 (DOLLARS IN THOUSANDS)
HISTORICAL HISTORICAL TOTAL GENERAL GROWTH THE ROUSE PRO FORMA PRO FORMA PROPERTIES, INC.(1) COMPANY(2) ADJUSTMENTS(3) CONSOLIDATED ------------------- ------------- -------------- ------------ ASSETS Investment in real estate: Land $ 1,535,836 $ 648,478 $ 498,163 a $ 2,682,477 Building and equipment 9,920,089 5,470,445 4,202,417 a 19,592,951 Less accumulated depreciation (1,333,356) (1,122,143) 1,122,143 a (1,333,356) Developments in progress 171,540 255,362 - 426,902 ------------ ------------ -------------- ------------ Net property and equipment 10,294,109 5,252,142 5,822,723 21,368,974 Investment in Unconsolidated Real Estate Affiliates 759,481 576,679 523,120 a 1,859,280 Investment land and land held for development and sale - 480,337 669,159 a 1,149,496 Properties held for sale 51,935 8,063 - 59,998 ------------ ------------ -------------- ------------ Net investment in real estate 11,105,525 6,317,221 7,015,002 24,437,748 Cash 20,963 33,107 (30,203)b 23,867 Tenant accounts receivable, net 163,009 76,407 - 239,416 Other assets 248,169 622,469 44,096 c 914,734 ------------ ------------ -------------- ------------ TOTAL ASSETS $ 11,537,666 $ 7,049,204 $ 7,028,895 $ 25,615,765 ============ ============ ============== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Mortgage notes and other debt payable $ 8,614,821 $ 4,636,072 $ 7,127,278 d $ 20,378,171 Accounts payable and accrued expenses 531,790 849,791 952,209 e 2,333,790 ------------ ------------ -------------- ------------ 9,146,611 5,485,863 8,079,487 22,711,961 Minority interest: Preferred units 403,486 - - 403,486 Common units 388,932 - (22,519)f 366,413 Stockholders' equity 1,598,637 1,563,341 (1,028,073)f 2,133,905 ------------ ------------ -------------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,537,666 $ 7,049,204 $ 7,028,895 $ 25,615,765 ============ ============ ============== ============
(1) Amounts are derived from the Condensed Consolidated Balance Sheet included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004. (2) Amounts are derived from detail supporting the Condensed Consolidated Balance Sheet included in The Rouse Company's ("Rouse") Quarterly Report on Form 10-Q for the quarter ended September 30, 2004. Certain amounts have been reclassified to conform to the Company's presentation. (3) For alphabetical references, refer to Note 2-Pro Forma Adjustments. The accompanying notes are an integral part of these statements. F-2 GENERAL GROWTH PROPERTIES, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Other Acquisitions Rouse Acquisition Historical -------------------------------- -------------------------- Total General Growth Historical Other Pro Forma Historical Pro Forma Pro Forma Properties, Inc.(1) Acquisitions Adjustments(3) Rouse(2) Adjustments(3) Consolidated ------------------- ---------------- -------------- ---------- -------------- ------------ Revenues Minimum rent $ 698,232 $ 28,211 $ 6,422 g $ 425,911 $ 57,008 g $ 1,215,784 Tenant charges 342,432 21,435 1 h 198,529 2,857 i 565,254 Land sales - - - 258,894 - 258,894 Other 91,041 72 (59)j 55,041 504 i 146,599 ------------- ------------- ---------- --------- ----------- ------------ Total revenues 1,131,705 49,718 6,364 938,375 60,369 2,186,531 ------------- ------------- ---------- --------- ----------- ------------ Expenses: Real estate taxes 87,124 2,692 - 56,512 121 i 146,449 Other property operating 266,658 17,143 - 225,029 2,259 i 511,089 Land sales operations - - - 155,443 60,190 k 215,633 Property management, general and administrative costs 70,994 - - 54,844 l 875 l 126,713 Depreciation and amortization 240,687 371 14,694 m 143,522 78,867 m 478,141 ------------- ------------- ---------- --------- ----------- ------------ Total expenses 665,463 20,206 14,694 635,350 142,312 1,478,025 ------------- ------------- ---------- --------- ----------- ------------ Operating income 466,242 29,512 (8,330) 303,025 (81,943) 708,506 Interest expense, net (277,445) - (19,962)n (179,832) (224,355)n (701,594) Allocations to minority interests (73,011) - (742)o - 41,480 o (32,273) Income taxes, primarily deferred - - - (56,919) 24,076 p (32,843) Equity in income of unconsolidated affiliates 55,770 3,982 (2,970)q 15,134 (2,648)q 69,268 ------------- ------------- ---------- --------- ----------- ------------ Income from continuing operations available to common stockholders $ 171,556 $ 33,494 $ (32,004) $ 81,408 $ (243,390) $ 11,064 ============= ============= ========== ========= =========== ============ Weighted-average shares outstanding: Basic 218,080,000 15,909,000 r 233,989,000 Diluted 218,759,000 15,909,000 r 234,668,000 Income from continuing operations per share: Basic $ 0.79 $ 0.05 Diluted 0.78 0.05
(1) Amounts are derived from the Condensed Consolidated Statement of Operations included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004. (2) Amounts are derived from detail supporting the Condensed Consolidated Statement of Operations included in Rouse's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004. Certain amounts have been reclassified to conform to the Company's presentation. (3) For alphabetical references, refer to Note 2-Pro Forma Adjustments. The accompanying notes are an integral part of these statements. F-3 GENERAL GROWTH PROPERTIES, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Other Acquisitions (2) Rouse Acquisition Historical ---------------------------------------- --------------------------- General Growth Historical Total Properties, Other Pro Forma Historical Pro Forma Pro Forma Inc.(1) Acquisitions Adjustments(5) Pro Forma Rouse(3) Adjustments(5) Consolidated -------------- ------------ -------------- ---------- ----------- -------------- ------------ Revenues Minimum rent $ 775,320 $ 187,582 $ 25,047 g $ 987,949 $ 531,252 $ 76,198 g $ 1,595,399 Tenant charges 367,065 114,031 746 h 481,842 230,506 3,936 i 716,284 Land sales - - - - 284,840 - 284,840 Other 120,406 9,259 (4,120)j 125,545 82,686 680 i 208,911 ------------ --------- ---------- ---------- ----------- ----------- ------------ Total revenues 1,262,791 310,872 21,673 1,595,336 1,129,284 80,814 2,805,434 ------------ --------- ---------- ---------- ----------- ----------- ------------ Expenses: Real estate taxes 88,276 25,557 - 113,833 64,367 162 i 178,362 Other property operating 277,641 91,915 - 369,556 270,098 2,784 i 642,438 Land sales operations - - - - 167,538 65,341 k 232,879 Property management, general and administrative costs 118,377 - - 118,377 64,421 1,150 i 183,948 Depreciation and amortization 230,195 7,724 69,225 m 307,144 171,183 107,674 m 586,001 ------------ --------- ---------- ---------- ----------- ----------- ------------ Total expenses 714,489 125,196 69,225 908,910 737,607 177,111 1,823,628 ------------ --------- ---------- ---------- ----------- ----------- ------------ Operating income 548,302 185,676 (47,552) 686,426 391,677 (96,297) 981,806 Interest expense, net (276,235) - (87,523)n (363,758) (233,498) (307,705)n (904,961) Allocations to minority interests (110,984) - (12,268)o (123,252) - 54,209 o (69,043) Income taxes, primarily deferred - - - - (42,598) 26,136 p (16,462) Equity in income of unconsolidated affiliates 94,480 9,080 (19,928)q 83,632 31,421 (3,524)q 111,529 ------------ --------- ---------- ---------- ----------- ----------- ------------ Income from continuing operations 255,563 194,756 (167,271) 283,048 147,002 (327,181) 102,869 Convertible preferred stock dividends (13,030) - - (13,030) - - (13,030) ------------ --------- ---------- ---------- ----------- ----------- ------------ Income from continuing operations available to common stockholders $ 242,533 $ 194,756 $ (167,271) $ 270,018 $ 147,002 $ (327,181) $ 89,839 ============ ========= ========== ========== =========== =========== ============ Weighted-average shares outstanding: Basic 200,875,000 15,909,000 r 216,784,000 Diluted (4) 215,079,000 2,450,000 r 217,529,000 Income from continuing operations per share: Basic $ 1.21 $ 0.41 Diluted (4) 1.19 0.41
(1) Amounts are derived from the Condensed Consolidated Statement of Operations originally included in the Company's Annual Report on Form 10-K for the Year for the Year Ended December 31, 2003 and revised on Form 8-K filed on December 21, 2004. (2) Amounts are derived from the Company's Form 8-K/A filed on August 2, 2004. (3) Amounts are derived from detail supporting the Condensed Consolidated Statement of Operations originally presented in Rouse's Annual Report on Form 10-K for the Year Ended December 31, 2003 and revised on Form 8-K filed on November 9, 2004. Certain amounts have been reclassified to conform to the Company's presentation. (4) The convertible preferred stock was dilutive to the historical diluted earnings per share of the Company, but anti-dilutive to the total pro forma consolidated results. (5) For alphabetical references, refer to Note 2-Pro Forma Adjustments. The accompanying notes are an integral part of these statements. F-4 NOTE 1 PRO FORMA BASIS OF PRESENTATION GENERAL - The pro forma condensed consolidated financial statements are based upon the historical financial information of General Growth Properties, Inc. ("GGP" or the "Company"), excluding discontinued operations, and the historical financial information of each of the acquisitions listed below as if the acquisitions had occurred on the first day of the earliest period presented for the unaudited pro forma condensed consolidated statements of operations and as of the date of the unaudited pro forma condensed consolidated balance sheet. In management's opinion, all adjustments necessary to reflect these transactions have been included. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the Company's Current Reports on Form 8-K/A filed on August 2, 2004, November 10, 2004 and November 18, 2004, the Company's Current Reports on Form 8-K filed on October 25, 2004, November 12, 2004 and December 21, 2004, The Rouse Company's ("Rouse") Current Report on Form 8-K filed on November 9, 2004, the Annual Reports on Form 10-K for the year ended December 31, 2003 of the Company and Rouse and the Quarterly Reports on Form 10-Q for the quarter ended September 30, 2004 of the Company and Rouse. The Rouse acquisition, as further described below, will be accounted for as a purchase business combination. The fair value of the consideration paid by GGP will be used as the valuation basis for the Rouse acquisition. The consolidated assets and liabilities of Rouse will be revalued based on their respective fair values as of the effective date of the acquisition. The unaudited pro forma adjustments, including the preliminary purchase accounting adjustments, are based on currently available information and upon preliminary assumptions and estimates that the Company believes are reasonable. The preliminary purchase accounting allocations are subject to reallocation as additional information, including third-party market valuations, become available and when the final purchase accounting is completed. The costs of the assets acquired and liabilities assumed in conjunction with the other acquisitions, as further described below, have also been allocated based on estimates of their respective fair values. These preliminary purchase allocations are also based on the information available at this time. Subsequent adjustments and refinements to the allocations are expected to be made as additional information becomes available. The pro forma financial information contained in these pro forma condensed consolidated financial statements may not necessarily be indicative of what actual results of the Company would have been if such transactions had been completed as of the dates indicated nor does it purport to represent the results of operations for future periods. GGP management believes that the Rouse merger will create potential cost savings and operating efficiencies, such as elimination of redundant administrative and property management costs. Additionally, the Company expects to continue to finance or refinance both Rouse and GGP properties with secured debt which is expected to bear interest at rates lower than the interest rates assumed in determining the pro forma interest expense adjustments in the accompanying condensed consolidated statements of operations. These potential cost and interest savings have not been reflected in the accompanying unaudited pro forma condensed consolidated statements of operations as the Company is currently unable to quantify them and there is no assurance that any anticipated savings will be realized. The Company, Rouse, and a majority of their affiliates have elected to be treated as Real Estate Investment Trusts ("REITs") pursuant to the Internal Revenue Code of 1986, as amended. As a REIT, the majority of the Company's operations will generally not be subject to federal income tax on taxable income distributed currently to its stockholders. However, certain affiliates of the Company and Rouse are taxable REIT subsidiaries ("TRS"). A TRS is permitted to engage in non-qualifying REIT activities and the taxable income of a TRS is subject to federal, state and local income taxes. Deferred income taxes relate primarily to the TRS and are accounted for using the asset and liability method. F-5 ROUSE ACQUISITION - On November 12, 2004, the Company completed its previously announced merger with Rouse, a real estate development and management company. Under the terms of the merger agreement, stockholders of Rouse received a cash payment of $65.20526 per share. The total value of the acquisition is estimated as follows:
(IN THOUSANDS) -------------- Purchase of outstanding Rouse shares (103,718,038 shares at $65.20526 per share)................. $ 6,762,962 Assumption of Rouse's historical debt............................................................ 4,636,072 Assumption of Rouse debt related to Rouse's extraordinary dividend............................... 238,006 Assumption of Rouse's historical liabilities..................................................... 849,791 Adjustment to reflect Rouse's historical debt at estimated fair market value..................... 224,225 Adjustment to reflect Rouse's historical other liabilities at estimated fair market value........ 202,277 Below-market lease adjustment.................................................................... 349,932 Merger costs: Employee and related costs................................................................... 275,000 Legal, investment advisory, accounting and other fees........................................ 125,000 ----------- 400,000 ----------- $13,663,265 ===========
The Company entered into a credit agreement on November 12, 2004 to fund the cash portion of the Rouse merger consideration and, with other cash and financing sources, fund other costs of the merger transaction. The credit agreement includes a six-month bridge loan of approximately $1.145 billion, a three-year $3.65 billion term loan, a four-year $2 billion term loan and a three-year $500 million revolving credit facility of which only $250 million was initially borrowed. Repayment of the three-year $3.65 billion term loan begins in November 2005 with semi-annual payments in 2006, quarterly payments in 2007 and a final $1.775 billion payment in November 2007. Repayment of the four-year $2 billion term loan begins in March 2005 with quarterly payments through September 2008 and a final $1.925 billion payment in November 2008. The credit agreement currently bears interest at a weighted-average rate of LIBOR plus approximately 2.21 percent. With exceptions for capital expenditures and other items, the Company is required to apply the net proceeds of future mortgage financings and refinancings, sales of equity, and asset dispositions (including by casualty or condemnation) toward prepayment of the credit agreement in accordance with various priorities set out in the credit agreement. The credit agreement is secured by a pledge of the Company's operating partnership's ownership interest in Rouse and in GGPLP L.L.C and also by a pledge of the interest in an operating account in which the Company will deposit any distributions the operating partnership receives from its interests in the Rouse companies. During the term of the facility, the Company is subject to customary affirmative and negative covenants. Upon the occurrence of an event of default contained in the credit agreement, the lenders under the facilities will have the option of declaring immediately due and payable all amounts outstanding under the agreement. The credit agreement contains events of default including a failure by the Company to maintain its status as a REIT under the Internal Revenue Code, a failure by the Company to remain listed on the New York Stock Exchange and such customary events as nonpayment of principal, interest, fees or other amounts, breach of representations and warranties, breach of covenant, cross-default to other indebtedness and certain bankruptcy events. In addition, on November 9, 2004, the Company closed a warrant offering to existing equity holders. Subscribers in the warrants offering purchased approximately 15.9 million shares of the Company's common stock, at $32.23 per share, for total gross proceeds of approximately $513 million. The Company accepted the subscriptions and issued the common stock on Friday, November 12, 2004. Historical results of operations of Rouse have been prepared in accordance with Rule 3-05 of Regulation S-X of the United States Securities and Exchange Commission ("Regulation S-X"). Pro forma adjustments and results related to the Rouse acquisition have been prepared in accordance with Article 11 of Regulation S-X. F-6 On November 10, 2004, Rouse acquired Oxmoor Center ("Oxmoor"), a regional retail center in Louisville, Kentucky, for $123 million, including $60 million in assumed debt. The results of operations of this center are included in the Rouse acquisition pro forma adjustments. OTHER ACQUISITIONS - Other acquisitions include all acquisitions of the Company since January 1, 2003 other than the Rouse acquisition. These other acquisitions are summarized below. Historical results of operations of the other acquisitions have been prepared in accordance with Rule 3-14 of Regulation S-X. Pro forma adjustments and results related to the other acquisitions have been prepared in accordance with Article 11 of Regulation S-X. As the properties will be directly or indirectly owned by entities that will elect or have elected to be treated as real estate investment trusts (as specified under sections 856-860 of the Internal Revenue Code of 1986) for Federal income tax purposes, a presentation of estimated taxable operating results is not applicable. Other acquisitions include the following:
NEW OR ASSUMED DEBT(1) --------------------------- ACQUISITION PURCHASE PRO FORMA (IN THOUSANDS) DATE PRICE AMOUNT INTEREST RATE ----------- -------- -------- ------------- 2004 A 50% ownership interest in Burlington Town Center .............................................. January 7 $ 10,250 -- -- Redlands Mall.......................................... January 16 14,250 -- -- The remaining 50% ownership interest in Town East Mall ........................................... March 1 44,500 -- -- Four Seasons Town Centre .............................. March 5 161,000 $134,400(2) 5.6% A 33 1/3% ownership interest in GGP/Sambil Costa Rica........................................... April 30 12,217(3) -- -- A 50% ownership interest in Riverchase Galleria ............................................ May 11 166,000 100,000 3.26%(6) Mall of Louisiana ..................................... May 12 265,000 185,000 LIBOR+58 bp The Grand Canal Shoppes ............................... May 17 766,000 766,000 4.18% A 50% ownership interest in GGP/NIG Brazil............. July 30 32,000(4) -- -- Stonestown............................................. August 13 312,550 220,000 LIBOR+68 bp Land held for development and sale..................... November 22 14,158 -- -- 2003 Peachtree Mall......................................... April 30 $ 87,600 $ 53,000 LIBOR+85 bp Saint Louis Galleria................................... June 11 235,000 176,000 LIBOR+165 bp Coronado Center ....................................... June 11 175,000 131,000 LIBOR+85 bp The remaining 49% ownership interest in GGP Ivanhoe III.......................................... July 1 459,000 268,000 3.81% Lynnhaven Mall ........................................ August 27 256,500 180,000 LIBOR+125 bp Sikes Senter .......................................... October 14 61,000 41,500 LIBOR+70 bp The Maine Mall ........................................ October 29 270,000 202,500 LIBOR+125 bp Glenbrook Square....................................... October 31 219,000 164,250 LIBOR+108 bp Foothills Mall ........................................ December 5 100,500 45,750(5) 6.6% Chico Mall ............................................ December 23 62,390 30,600 7.0% Rogue Valley Mall ..................................... December 23 57,495 28,000 7.85%
(1) The interest rate used in the pro forma statements for the new or assumed variable-rate debt incurred in the property acquisitions listed above reflects a LIBOR rate of 1.84% for the nine months ended September 30, 2004 and 1.12% for the year ended December 31, 2003. Funding for the land held for development and sale acquisition was assumed to have been drawn on the $500 million revolving credit facility established in connection with the Rouse acquisition. Additional funding for all acquisitions prior to November 12, 2004, including for those acquisitions for which a specific and separate loan was not obtained or assumed, was assumed to have been drawn on the Company's line of credit at an interest rate of 2.62% for the nine months ended September 30, 2004 and 2.48% for the year ended December 31, 2003. F-7 (2) Excludes approximately $25.1 million in 7% Series E Cumulative Convertible Preferred Units of GGP Limited Partnership interest. (3) Approximately $9.7 million was funded at closing. The remaining amounts will be drawn on a letter of credit provided by the Company as additional construction and development costs of the project are incurred. (4) Approximately $7.0 million was funded at closing. The remaining amounts will be invested by the Company (upon the decision of both partners) to acquire additional interests in the properties currently owned or to acquire interests in other retail centers. (5) Excludes approximately $26.6 million in 6.5% Series D Cumulative Convertible Preferred Units of GGP Limited Partnership interest. (6) Including the impact of interest rate swaps. NOTE 2 PRO FORMA ADJUSTMENTS a) Adjustments to investments in real estate assets reflect preliminary purchase accounting adjustments to Rouse's historical investments in real estate assets based on preliminary estimates of their fair values and a $14.2 million acquisition of land held for development and sale. b) The cash adjustment reflects payment of Rouse's closing dividend on November 12, 2004. The closing dividend of $.29120 per share was equal to the pro rata portion of Rouse's regular quarterly dividend of $.47 per share. c) Adjustments to other assets primarily reflect preliminary purchase accounting adjustments to Rouse's historical other assets based on preliminary estimates of their fair values. d) Mortgage notes and other debt payable adjustments include the following:
(IN THOUSANDS) -------------- Draws on credit facility........................................... $ 7,045,000 Net financing/refinancing of existing GGP properties............... 920,400 Net financing/refinancing of Rouse properties...................... 1,172,000 Repayment of GGP line of credit.................................... (1,799,011) Repayment of Rouse line of credit.................................. (449,494) Fair value adjustment to Rouse historical debt..................... 224,225 Acquisition of land held for development and sale.................. 14,158 ----------- $ 7,127,278 ===========
e) Adjustments to other liabilities primarily reflect pro forma adjustments to Rouse's historical other liabilities to reflect their estimated fair values, accrued merger costs and acquired below-market leases. Preliminary estimates for acquired below-market leases totaled $349.9 million and are included in accounts payable and accrued expenses. f) Minority interest and stockholders' equity adjustments reflect the issuance of approximately $513 million of newly-issued GGP common stock pursuant to the warrants offering. Stockholders' equity adjustments also reflect elimination of Rouse's historical equity. F-8 g) Minimum rent adjustments include the following:
NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, 2004 DECEMBER 31, 2003 ------------------------- ------------------------- OTHER ROUSE OTHER ROUSE (IN THOUSANDS) ACQUISITIONS ACQUISITION ACQUISITIONS ACQUISITION ------------ ----------- ------------ ----------- Net amortization of acquired above and below-market leases for acquisitions ....... $ 3,372 $51,140 $16,717 $67,529 Oxmoor historical ................................. -- 5,868 -- 8,669 New leasing arrangements at Grand Canal Shoppes ... 2,920 -- 7,660 -- Reclassify specialty leasing revenues to conform to GGP presentation ............................... 130 -- 670 -- ------- ------- ------- ------- $ 6,422 $57,008 $25,047 $76,198 ======= ======= ======= =======
h) Tenant charges adjustment reflects the reclassification of overage rents to conform to GGP presentation. i) Adjustments reflect Oxmoor historical results. j) Other acquisitions adjustments to other revenue reflect the following:
OTHER ACQUISITIONS ---------------------------- NINE MONTHS YEAR ENDED ENDED SEPTEMBER 30, DECEMBER 31, (IN THOUSANDS) 2004 2003 ------------- ------------ Termination of management agreements resulting from acquisition of remaining interests in GGP Ivanhoe III and Town East Mall ...... $ (145) $(2,412) Additional Riverchase management fees ............................ 216 600 Reclassifications to conform to GGP presentation: Overage rents ................................................ -- (746) Specialty leasing revenues ................................... (130) (670) Operations of property under development ..................... -- (812) Other ............................................................ -- (80) ------- ------- $ (59) $(4,120) ======= =======
k) Land sales operations adjustments reflect increases in the cost of land sold as a result of preliminary purchase accounting adjustments to increase the historical basis of Rouse's investment land and land held for development and sale based on preliminary estimates of their fair values. l) Historical Rouse results include $52.0 million of nonrecurring expenses resulting from Rouse's agreement with the Internal Revenue Service which addresses certain tax law requirements related to its REIT status. The property management, general and administrative cost adjustment reflects $875,000 of Oxmoor historical results. m) Depreciation and amortization adjustments reflect increases in deprecation and amortization expense as a result of preliminary purchase accounting adjustments to increase the historical basis of depreciable acquired buildings and equipment based on preliminary estimates of their fair market values. Such pro forma adjustments were depreciated over a weighted-average life of 40 years. n) Interest expense adjustments reflect a combination of debt assumption and increased borrowings. Since the interest rates on certain of the loans assumed or obtained in conjunction with the acquisitions are based on a spread over LIBOR and have not been converted to fixed-rate loans through the use of interest rate swap agreements, the rates will periodically change. If the interest F-9 rate on such variable-rate loans increase or decrease by 12.5 basis points, the annual interest expense will increase or decrease by approximately $6.1 million for the nine months ended September 30, 2004 and approximately $8.1 million for the year ended December 31, 2003. o) Minority interest adjustments reflect the allocation of earnings to the minority interests and changes in minority interest percentages pursuant to the issuance of approximately 15.9 million shares of newly-issued GGP common stock pursuant to the warrants offering. p) Income tax adjustments reflect reduced tax expense primarily as it relates to land sales. Substantially all of Rouse's investment land and land held for development and sale are owned by TRSs. As a result, the pro forma adjustments which decreased the profit margin on land sales operations also reduced the related income tax expense. q) Adjustments to equity in unconsolidated affiliates reflect the following:
OTHER ACQUISITIONS ---------------------------- NINE MONTHS YEAR ENDED ENDED SEPTEMBER 30, DECEMBER 31, (IN THOUSANDS) 2004 2003 ------------- ------------ Town East .................. $ (430) $ (3,595) GGP Ivanhoe III ............ -- (9,085) Riverchase ................. (2,333) (6,658) GGP/NIG Brazil ............. (207) (1,037) GGP Ivanhoe IV ............. -- 447 -------- -------- $ (2,970) $(19,928) ======== ========
- Town East and GGP Ivanhoe III - Eliminates equity in income from these ventures due to the purchase of the remaining venture shares which causes the properties owned by these joint ventures to be fully consolidated. - Riverchase and GGP/NIG Brazil - Reflects reductions in the equity in income from these ventures due to pro forma adjustments which resulted in additional depreciation and interest expenses which were partially offset by amortization of below-market leases. - GGP Ivanhoe IV - Reflects equity in income of Eastridge Mall due to the transfer of its ownership by GGP Ivanhoe III, Inc. to GGP Ivanhoe IV. The Rouse acquisition adjustment reflects reductions in the equity in income from its joint ventures due to pro forma adjustments which resulted in additional depreciation and interest expenses which were partially offset by amortization of below-market leases. r) The weighted-average shares outstanding adjustment reflects the issuance of approximately 15.9 million shares of newly-issued GGP common stock pursuant to the warrants offering. The pro forma adjustment for the year ended December 31, 2003 also reflects 13.5 million shares of convertible preferred stock which were dilutive to the historical results and anti-dilutive to the pro forma consolidated results. F-10