EX-99.1 2 a4627794ex99.txt PRESS RELEASE Exhibit 99.1 General Growth Properties, Inc. Delivers Substantial Quarterly Increases CHICAGO--(BUSINESS WIRE)--April 28, 2004--General Growth Properties, Inc. (NYSE:GGP) today announced a 12.5% increase in Earnings per share - diluted (EPS) for first quarter 2004 and a 22.5% increase in fully-diluted Funds from Operations (FFO) per share as compared to first quarter 2003. The company has delivered compounded annual FF0 per share growth of approximately 16% since going public in 1993. "I'm pleased to report another strong quarter for GGP," said John Bucksbaum, chief executive officer, General Growth Properties. "The breadth and diversity of our portfolio positions GGP to continue to deliver excellent performance which continues to validate the viability of the regional mall." FINANCIAL AND OPERATIONAL HIGHLIGHTS Due to the three-for-one stock split effective December 5, 2003, all share and per share amounts for all periods presented have been reflected on a post-split basis. -- EPS increased 12.5% in first quarter 2004 to $.27 versus $.24 for the comparable period in 2003. The effects of SFAS No. 141 and 142 resulted in approximately $5.1 million or $.02 of EPS in first quarter 2004 as compared to $.01 of EPS in the previous first quarter. Straight Line Rent resulted in approximately $3.1 million or $.01 of EPS in first quarter 2004 versus $.02 in the same period last year. -- Fully diluted FFO per share increased to $.60 in first quarter of 2004, 22.5% above $.49 reported in first quarter 2003. Total FFO for the quarter increased 28.6% to $163.7 million, from $127.3 million in last year's first quarter. The effects of SFAS No. 141 and 142 resulted in approximately $7.4 million or $.03 of FFO in first quarter 2004 as compared to $.02 of FF0 in first quarter 2003. Straight Line Rent resulted in approximately $3.1 million or $.01 of FFO in first quarter 2004 compared to $.02 of FFO in the previous first quarter. -- FFO Guidance For fiscal year 2004, the company currently estimates that FFO per fully-diluted share will be in the range of $2.62 to $2.70. The company intends to update this annual estimate in conjunction with its quarterly earnings releases. -- Real estate property net operating income (NOI) for first quarter 2004 increased to $299.6 million, 21.5% over $246.5 million reported in first quarter 2003. -- Revenues for consolidated centers were $342.5 million for the quarter, an increase of 34.9%, compared to $253.9 million for the same period in 2003. Revenues for unconsolidated centers at share decreased 13.4% to $98.9 million, compared to $114.1 million in first quarter 2003. Included in the 2003 unconsolidated center revenues of $114.1 million is $16.9 million of revenues of the seven GGP Ivanhoe III properties. In July 2003, the company purchased its joint venture partner's interest in these properties and revenues are reflected in 2004 at 100% in consolidated center revenues. -- Total tenant sales increased 9.3% for the quarter and comparable tenant sales increased 6.9%. -- Comparable center NOI for consolidated centers in first quarter 2004 increased by approximately 4.1% compared to the first quarter 2003. Comparable center NOI for unconsolidated centers at share in the same period increased by approximately 3.0% compared to first quarter 2003. -- Mall shop occupancy remained constant at 90.4% as of March 31, 2004, compared to March 31, 2003. -- Sales per square foot for first quarter 2004 were $359 versus $345 per square foot in first quarter 2003. -- Average rent For consolidated centers, average rent per square foot for new/renewal leases signed for the quarter was $30.75 versus $31.06 for the same period in 2003. For unconsolidated centers, average rent per square foot for new/renewal leases signed for first quarter 2004 was $35.18 versus $36.00 for first quarter 2003. Average rent for consolidated center leases expiring in 2004 is $25.69 versus $22.16 in 2003. For unconsolidated centers, average rent for leases expiring in 2004 is $32.35 compared to $31.29 in 2003. -- Acquisitions In first quarter 2004, General Growth acquired a 50% interest in Burlington Town Center in Burlington, Vermont; a 100% interest in Redlands Mall in Redlands, California; a 100% interest in Four Seasons Town Centre in Greensboro, NC; and also increased its ownership interest of Town East Mall in Mesquite (Dallas), Texas from 50% to 100%. After quarter end, the company announced an agreement to acquire a 100% interest in The Grand Canal Shoppes at The Venetian Casino Resort and an additional agreement to acquire the adjacent multi-level retail space under development at The Palazzo in Las Vegas, Nevada. The company also announced, on April 20, 2004, the agreement to acquire a 100% interest in the Mall of Louisiana in Baton Rouge, Louisiana, and a 50% interest in Riverchase Galleria in Birmingham, Alabama. CONFERENCE CALL/WEBCAST General Growth will host a live webcast of its conference call regarding this announcement on the company's web site, www.generalgrowth.com. This webcast will take place on Thursday, April 29, at 10:00 a.m., Eastern Time (9:00 a.m. CT, 7:00 a.m. PT). The webcast can be accessed by selecting the conference call icon on the GGP home page. General Growth Properties is the country's second largest shopping center owner, developer and manager of regional shopping malls. General Growth currently has ownership interest in, or management responsibility for, a portfolio of 172 regional shopping malls in 41 states. The company portfolio totals approximately 150 million square feet of retail space and includes over 16,000 retailers nationwide. A publicly traded Real Estate Investment Trust (REIT), General Growth Properties is listed on the New York Stock Exchange under the symbol GGP. For more information on General Growth Properties and its portfolio of malls, please visit the company web site at http://www.generalgrowth.com. NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES AND DEFINITIONS FUNDS FROM OPERATIONS (FFO) General Growth, consistent with real estate industry and investment community preferences, uses FFO as a supplemental measure of operating performance for a real estate investment trust (REIT). The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from cumulative effects of accounting changes, extraordinary items and sales of properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. The company considers FFO a supplemental measure for equity REITs and a complement to GAAP measures because it facilitates an understanding of the operating performance of the company's properties. FFO does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life. Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the company believes that FFO provides investors with a clearer view of the company's operating performance. In order to provide a better understanding of the relationship between FFO and GAAP net income, a reconciliation of GAAP net income to FFO has been provided. FFO does not represent cash flow from operating activities in accordance with GAAP, should not be considered as an alternative to GAAP net income and is not necessarily indicative of cash available to fund cash needs. In addition, the company has presented FFO on a consolidated and unconsolidated basis (at the company's ownership share) as we believe that given the significance of the company's operations that are owned through investments accounted for on the equity method of accounting, the detail of the operations of our unconsolidated centers provides important insights into the income and FFO produced by such investments for the company as a whole. REAL ESTATE PROPERTY NET OPERATING INCOME (NOI) AND COMPARABLE CENTER NOI General Growth believes that Real Estate Property Net Operating Income (NOI) is a useful supplemental measure of the company's operating performance. The company defines NOI as operating revenues from continuing operations (rental income, tenant recoveries and other income) less property and related expenses from continuing operations (real estate taxes, repairs and maintenance, marketing and other property expenses). As with FFO described above, NOI has been reflected on a consolidated and unconsolidated basis (at the company's ownership share). Other REITs may use different methodologies for calculating NOI, and accordingly, the company's NOI may not be comparable to other REITs. Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, gains and losses from property dispositions, discontinued operations, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs. This measure thereby provides an operating perspective not immediately apparent from GAAP operating or net income. The company uses NOI to evaluate its operating performance on a property-by-property basis because NOI allows the company to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the company's operating results, gross margins and investment returns. In addition, management believes that NOI provides useful information to the investment community about the company's operating performance. However, due to the exclusions noted above, NOI should only be used as an alternative measure of the company's financial performance. For reference and as an aid in understanding of management's computation of NOI, a reconciliation of NOI to consolidated operating income as computed in accordance with GAAP has been presented. Comparable Center NOI reflects NOI of properties owned for the entire time of the relevant comparative accounting periods. PROPERTY INFORMATION The company has presented information on its consolidated and unconsolidated properties separately in the accompanying financial schedules. As a significant portion of the company's total operations are structured as joint venture arrangements which are unconsolidated, management of the company believes that operating data with respect to all properties owned provides important insights into the income produced by such investments for the company as a whole. In addition, the individual items of revenue and expense for the unconsolidated centers have been presented at the company's ownership share (generally 50%) of such unconsolidated ventures. As the management operating philosophies and strategies are the same regardless of ownership structure, an aggregate presentation of revenues and expenses and other operating statistics yields a more accurate representation of the relative size and significance of the elements of the company's overall operations. RISKS AND UNCERTAINTIES This release may contain forward-looking statements that involve risks and uncertainties. All statements other than statements of historical fact are statements that may be deemed forward-looking statements, which are subject to a number of risks, uncertainties and assumptions. Representative examples of these risks, uncertainties and critical accounting or other assumptions include (without limitation) general industry and economic conditions, acts of terrorism, 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. Readers are referred to the documents filed by General Growth Properties, Inc. with the SEC, specifically the most recent report on Forms 10-K, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. FUNDS FROM OPERATIONS and Three Months Ended PORTFOLIO RESULTS (unaudited) March 31, (in thousands, except share and per share data) 2004 2003 FUNDS FROM OPERATIONS (FFO) (a) Funds From Operations - Operating Partnership $163,701 $127,313 Less: Allocations to Operating Partnership unitholders 33,367 30,238 ----------- ----------- Funds From Operations - Company stockholders $130,334 $97,075 Funds From Operations per share - Company stockholders - basic $0.60 $0.52 Funds From Operations per share - Operating Partnership - basic $0.60 $0.52 Funds From Operations per share - Operating Partnership - diluted $0.60 $0.49 Weighted average number of Company shares outstanding - basic 217,553 187,785 Weighted average number of Company shares outstanding - basic (assuming full conversion of Operating Partnership units) 273,249 246,282 Weighted average number of Company shares outstanding - diluted (assuming full conversion of Operating Partnership units and, in 2003, convertible preferred stock) 274,175 272,193 PORTFOLIO RESULTS Consolidated Centers revenues (b), (c) $342,464 $253,856 Consolidated Centers operating expenses (107,713) (82,659) Equity in real estate property net operating income of Unconsolidated Centers (d), (e) 64,810 75,300 ----------- ----------- Real estate property net operating income 299,561 246,497 Net General Growth Management, Inc. (GGMI) operations (148) 2,858 Headquarters, regional, general and administrative costs including depreciation that reduces FFO (11,198) (14,594) Net interest expense (86,667) (60,148) Equity in other FFO of Unconsolidated Centers (f) (27,130) (31,046) Preferred stock dividends and preferred unit distributions (10,717) (16,254) ----------- ----------- Funds From Operations - Operating Partnership $163,701 $127,313 =========== =========== SUMMARIZED BALANCE SHEET INFORMATION March 31, December 31, (unaudited) 2004 2003 Cash and marketable securities $8,938 $10,677 Investment in real estate Net land, building and equipment $8,725,022 $8,405,092 Developments in progress 192,814 168,521 Investment in and loans from Unconsolidated Real Estate Affiliates 606,098 630,613 ----------- ----------- Investment in real estate, net $9,523,934 $9,204,226 Total assets $9,911,465 $9,582,897 Mortgage and other notes payable $6,968,322 $6,649,490 Minority interest - Preferred 520,343 495,211 Minority interest - Common 410,459 408,613 Stockholders' equity 1,666,185 1,670,409 ----------- ----------- Total capitalization (at cost) $9,565,309 $9,223,723 =========== =========== (a) Due to the three-for-one stock split effective December 5, 2003, all share and per share amounts have been reflected on a post- split basis. (b) Consolidated Centers revenues include straight-line rent of $2,249 and $3,527 for the three months ended March 31, 2004 and 2003, respectively. (c) Consolidated Centers revenues include non-cash rental revenue recognized pursuant to SFAS #141 and #142 of $5,557 and $2,539 for the three months ended March 31, 2004 and 2003, respectively. (d) Unconsolidated Centers real estate property net operating income includes (at the applicable Company ownership percentage) straight-line rent of $823 and $1,129 for the three months ended March 31, 2004 and 2003, respectively. (e) Unconsolidated Centers real estate property net operating income includes (at the applicable Company ownership percentage) non-cash rental revenue recognized pursuant to SFAS #141 and #142 of $1,842 and $2,019 for the three months ended March 31, 2004 and 2003, respectively. (f) Other FFO for the Unconsolidated Centers consists primarily of headquarters, general and administrative and net interest costs. GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003 (UNAUDITED) (Dollars in thousands, except per share amounts) Three Months Ended March 31, 2004 2003 ----------- ----------- Revenues: Minimum rents $222,656 $169,721 Tenant recoveries 102,604 71,078 Overage rents 8,768 6,502 Management and other fees 18,701 20,323 Other 8,856 6,263 ----------- ----------- Total revenues 361,585 273,887 Expenses: Real estate taxes 28,313 20,120 Repairs and maintenance 24,857 17,709 Marketing 10,440 8,176 Other property operating costs 41,306 34,841 Provision for doubtful accounts 2,797 1,813 Property management and other costs 25,019 26,624 General and administrative 2,190 2,811 Depreciation and amortization 73,167 51,979 ----------- ----------- Total expenses 208,089 164,073 ----------- ----------- Operating income 153,496 109,814 Interest income 420 595 Interest expense (87,087) (60,743) Income allocated to minority interests (25,636) (23,654) Equity in income of unconsolidated affiliates 17,930 22,285 ----------- ----------- Income from continuing operations 59,123 48,297 Discontinued operations, net of minority interest: Income from operations - 222 Gain on disposition - 3,069 ----------- ----------- Income from discontinued operations, net - 3,291 ----------- ----------- Net income $59,123 $51,588 ----------- ----------- Preferred stock dividends - (6,077) ----------- ----------- Net income available to common stockholders $59,123 $45,511 =========== =========== Earnings from continuing operations per share- basic $0.27 $0.22 =========== =========== Earnings from continuing operations per share- diluted $0.27 $0.22 =========== =========== Earnings from discontinued operations, net per share-basic $- $0.02 =========== =========== Earnings from discontinued operations, net per share-diluted $- $0.02 =========== =========== Earnings per share-basic $0.27 $0.24 =========== =========== Earnings per share-diluted $0.27 $0.24 =========== =========== GENERAL GROWTH PROPERTIES, INC BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2004 (In thousands, unaudited) Consolidated Unconsolidated Centers Centers (a) ------------ -------------- Property revenues Minimum rents (b),(c) $222,656 $64,344 Tenant recoveries 102,604 31,730 Overage rents 8,768 1,294 Other 8,436 1,514 ------------ ------------ Total property revenues 342,464 98,882 Property operating expenses Real estate taxes 28,313 9,176 Repairs and maintenance 24,857 7,475 Marketing 10,440 3,292 Other property operating costs 41,306 13,424 Provision for doubtful accounts 2,797 705 ------------ ------------ Total property operating expenses 107,713 34,072 ------------ ------------ Real estate property net operating income 234,751 64,810 GGMI fees (d) 18,701 - GGMI expenses (d) (18,849) - Headquarters/regional costs (6,170) (5,592)(e) General and administrative (2,190) (143) Depreciation that reduces FFO (f) (2,838) - Interest income 420 409 Interest expense (78,934) (20,645) Amortization of deferred finance costs (3,074) (728) Debt extinguishment costs (5,079) (431) Preferred unit distributions (10,717) - ------------ ------------ Uncombined Funds From Operations 126,021 37,680 $163,701 Equity in Funds from Operations of Unconsolidated Centers 37,680 (37,680) - ------------ ------------ ----------- Operating Partnership Funds From Operations $163,701 $- $163,701 ============ ============ =========== GENERAL GROWTH PROPERTIES, INC BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003 (In thousands, unaudited) Consolidated Unconsolidated Centers Centers (a) ------------ -------------- Property revenues Minimum rents (b) $169,721 $74,470 Tenant recoveries 71,078 37,278 Overage rents 6,502 1,091 Other (h) 6,555 1,285 ------------ ------------ Total property revenues 253,856 114,124 Property Operating expenses Real estate taxes 20,120 10,824 Repairs and maintenance 17,709 8,899 Marketing 8,176 3,758 Other property operating costs 34,841 15,148 Provision for doubtful accounts 1,813 195 ------------ ------------ Total property operating expenses 82,659 38,824 ------------ ------------ Real estate property net operating income 171,197 75,300 GGMI fees (d) 20,323 - GGMI expenses (d) (17,465) - Headquarters/regional costs (9,159) (6,394)(e) General and administrative (2,811) (122) Depreciation that reduces FFO (f) (2,624) - Interest income 595 486 Interest expense (58,957) (23,330) Amortization of deferred finance costs (1,786) (1,686) Debt extinguishment costs - - Preferred stock dividends (6,077) - Preferred unit distributions (10,177) - ------------ ------------ Uncombined Funds From Operations 83,059 44,254 $127,313 Equity in Funds from Operations of Unconsolidated Centers 44,254 (44,254) - ------------ ------------ ----------- Operating Partnership Funds From Operations $127,313 $- $127,313 ============ ============ =========== (a) The Unconsolidated Centers include Quail Springs, Town East (to March 1, 2004), the GGP/Ivanhoe entities (GGP/Ivanhoe III only in 2003 and GGP/Ivanhoe IV only in 2004), the GGP/Teachers entities and the GGP/Homart entities and are reflected at the Operating Partnership's share of such items of revenue and expense. (b) Includes straight-line rent of $2,249 and $3,527 for the three months ended March 31, 2004 and 2003, respectively, for the Consolidated Centers and (at the Company's applicable ownership percentage) $823 and $1,129, respectively, of straight line rent for the Unconsolidated Centers. (c) Includes SFAS #141 and #142 minimum rent accretion of $5,557 and $2,539 for the three months ended March 31, 2004 and 2003, respectively, for the Consolidated Centers and (at the Company's applicable ownership percentage) $1,842 and $2,019, respectively, of SFAS #141 and #142 minimum rent accretion for the Unconsolidated Centers. (d) Represents the revenues (primarily management fees) and operating expenses of GGMI, one of the Company's consolidated taxable REIT subsidiaries. (e) Headquarters/regional costs for the unconsolidated centers include property management and other fees to GGMI. (f) Represents depreciation on non-income producing assets including the Company's headquarters building. (h) Includes $292 for the three months ended March 31, 2003 of net FFO of investment property sold in 2003. RECONCILIATION OF REAL ESTATE PROPERTY NET Three Months Ended OPERATING INCOME TO GAAP OPERATING INCOME March 31, (unaudited) 2004 2003 Real estate property net operating income, including Unconsolidated Centers $299,561 $246,497 Real estate property net operating income - Unconsolidated Centers (64,810) (75,300) ----------- ----------- Real estate property net operating income - Consolidated Centers 234,751 171,197 GGMI fees 18,701 20,323 GGMI expenses (18,849) (17,465) Headquarters/regional costs (6,170) (9,159) General and administrative (2,190) (2,811) Depreciation and amortization (73,167) (51,979) Other (x) 420 (292) ----------- ----------- GAAP Operating income - Consolidated General Growth Properties, Inc. $153,496 $109,814 =========== =========== (x) Reflects discontinued operations and minority interest in Consolidated Centers real estate property net operating income RECONCILIATION OF GAAP NET INCOME TO Three Months Ended FUNDS FROM OPERATIONS - (unaudited) (x) March 31, Net income (loss) available to common stockholders $59,123 $45,511 Income from discontinued operations, net of minority interest - (3,291) ----------- ----------- Income from continuing operations 59,123 42,220 Allocations to Operating Partnership unitholders 14,786 13,362 FFO of property sold in 2003 - 292 Depreciation and amortization of capitalized real estate costs (including SFAS #141 and #142 in-place lease costs) other than amortization of financing costs 89,792 71,439 ----------- ----------- Funds From Operations - Operating Partnership 163,701 127,313 Funds From Operations - Operating Partnership unitholders (33,367) (30,238) ----------- ----------- Funds From Operations - Company stockholders $130,334 $97,075 =========== =========== (x) Reconciliation of net income determined in accordance with generally accepted accounting principles to FFO (Company non-GAAP supplemental measure of operating performance) as defined by NAREIT and as required by SEC Regulation G. RECONCILIATION OF EQUITY IN GAAP EARNINGS FROM Three Months Ended UNCONSOLIDATED AFFILIATES TO FUNDS FROM March 31, OPERATIONS FROM UNCONSOLIDATED CENTERS - (unaudited) (x) Equity in earnings from Unconsolidated Affiliates $17,930 $22,285 Depreciation and amortization of capitalized real estate costs (including SFAS #141 and #142 in-place lease costs) other than amortization of financing costs 19,750 21,969 ----------- ----------- Operating Partnership Equity in Funds From Operations from Unconsolidated Affiliates 37,680 44,254 Plus: Equity in headquarters and general and administrative expenses of Unconsolidated Affiliates 5,735 6,516 Equity in interest expense of Unconsolidated Affiliates 21,395 24,530 ----------- ----------- Equity in Real Estate Property Net Operating Income of Unconsolidated Affiliates $64,810 $75,300 =========== =========== (x) Reconciliation of net income determined in accordance with generally accepted accounting principles to FFO (Company non-GAAP supplemental measure of operating performance) as defined by NAREIT and as required by SEC Regulation G. RECONCILIATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR GAAP AND FFO PER SHARE COMPUTATIONS - (unaudited) Weighted average number of Company shares outstanding - for GAAP basic EPS (i) 217,553 187,785 Full conversion of Operating Partnership units 55,696 58,497 ----------- ----------- Weighted average number of Company shares outstanding - for basic FFO per share 273,249 246,282 =========== =========== Weighted average number of Company shares outstanding - for GAAP diluted EPS (ii) 218,479 213,696 Full conversion of Operating Partnership units 55,696 58,497 ----------- ----------- Weighted average number of Company shares outstanding - for diluted FFO per share 274,175 272,193 =========== =========== (i) Due to the three-for-one stock split effective December 5, 2003, all share and per share amounts have been reflected on a post- split basis. (ii) In 2003, the PIERS were dilutive for the computation of EPS and are included in the total weighted average outstanding shares for diluted EPS purposes. CONTACT: General Growth Properties, Inc. John Bucksbaum, 312-960-5005 Bernard Freibaum, 312-960-5252