EX-99.1 2 a4689528ex991.txt EXHIBIT 99.1 Exhibit 99.1 General Growth Properties, Inc. Reports Solid Quarterly Results CHICAGO--(BUSINESS WIRE)--July 27, 2004--General Growth Properties, Inc. (NYSE:GGP) today announced Earnings per share - diluted (EPS) of $.23 for second quarter 2004 and $.61 in fully-diluted Funds from Operations (FFO) per share. The company has delivered compounded annual FF0 per share growth of over 16% since going public in 1993. "Business and customer traffic are vibrant at our malls enabling GGP to deliver consistently strong profitability," said John Bucksbaum, chief executive officer, General Growth Properties, Inc. "Our company is focused on creating special places and experiences which translate into outstanding operating performance." 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 in second quarter 2004 was $.23, equal to the amount earned for the same period in 2003. The effects of SFAS No. 141 and 142 resulted in approximately $5.7 million or $.03 of EPS in second quarter 2004 as compared to $.02 of EPS in the previous second quarter. Straight line rent contributed approximately $4.0 million or $.02 of EPS in second quarter 2004, equal to second quarter 2003. -- Fully diluted FFO per share increased to $.61 in second quarter of 2004, 22.0% above $.50 reported in second quarter 2003. Total FFO for the quarter increased 28.9% to $167.0 million, from $129.5 million in last year's second quarter. The effects of SFAS No. 141 and 142 resulted in approximately $8.3 million or $.03 of FFO in second quarter 2004 as compared to $.02 of FF0 in second quarter 2003. Straight line rent resulted in approximately $4.0 million or $.01 of FFO in second quarter 2004, consistent with the same period in 2003. -- FFO Guidance. For fiscal year 2004, the company currently estimates that FFO per fully-diluted share will be in the range of $2.66 to $2.72. The company intends to make a final update to this full year estimate in conjunction with its next quarterly earnings release. -- Real estate property net operating income (NOI) for second quarter 2004 increased to $304.5 million, 19.2% above the $255.4 million reported in second quarter 2003. -- Revenues for consolidated properties were $355.7 million for the quarter, an increase of 34.6%, compared to $264.2 million for the same period in 2003. Revenues for unconsolidated properties at share decreased 13.2% to $99.4 million, compared to $114.5 million in second quarter 2003. Included in the 2003 unconsolidated properties revenues of $114.5 million is $16.9 million of revenues from the seven GGP Ivanhoe III properties that the company purchased from its joint venture partner. In 2004, revenues from these properties are reflected at 100% in the company's consolidated properties revenues. -- Total tenant sales increased 8.1% for second quarter 2004 and comparable tenant sales increased 5.7%. -- Comparable NOI for consolidated properties in second quarter 2004 increased by approximately 2.1% compared to the same period last year. Comparable NOI for unconsolidated properties at share for the quarter increased by approximately 4.7% compared to second quarter 2003. -- Mall shop occupancy increased to 90.7% at June 30, 2004, compared to 90.5% at June 30, 2003. -- Sales per square foot, on a trailing 12 month basis, as of June 30, 2004 were $369 versus $352 at the end of second quarter 2003. -- Average rent. For consolidated properties, average rent per square foot for new/renewal leases signed during the first six months of the year was $32.40 versus $34.88 for the same period in 2003. For unconsolidated properties, average rent per square foot for new/renewal leases signed during the first six months of 2004 was $35.27 versus $37.50 for the same period in 2003. Average rent for consolidated properties leases expiring in 2004 is $25.69 versus $22.16 in 2003. For unconsolidated properties, average rent for leases expiring in 2004 is $32.35 compared to $31.29 in 2003. -- Acquisitions. In May 2004, General Growth acquired a 100% interest in The Grand Canal Shoppes at The Venetian Casino Resort and announced an agreement to acquire, upon its completion, the adjacent and connected multi-level retail space under development at The Palazzo in Las Vegas, Nevada. Also in May, the company acquired 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 Wednesday, July 28, 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, Inc. 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 177 regional shopping malls in 41 states. The company portfolio totals approximately 153 million square feet of retail space and includes over 16,000 retailers nationwide. The third largest U.S.-based publicly traded Real Estate Investment Trust (REIT), General Growth Properties, Inc. is listed on the New York Stock Exchange under the symbol GGP. For more information, 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 properties 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 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 NOI reflects NOI of properties with no significant physical or merchandising changes and 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 properties 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 NOI 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 which could cause actual results to differ from those contained in the forward-looking statements 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 reports on Form 10-Q and 10-K, which identify important factors which could affect the forward-looking statements in this release. FUNDS FROM OPERATIONS and PORTFOLIO RESULTS (unaudited) (in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 FUNDS FROM OPERATIONS (FFO) (a) Funds From Operations - Operating Partnership $167,026 $129,533 $330,727 $256,846 Less: Allocations to Operating Partnership unitholders 33,935 30,587 67,302 60,826 ------------ ------------ ------------ ------------ Funds From Operations - Company stockholders $133,091 $98,946 $263,425 $196,020 Funds From Operations per share - Company stockholders - basic $0.61 $0.52 $1.21 $1.04 Funds From Operations per share - Operating Partnership - basic $0.61 $0.52 $1.21 $1.04 Funds From Operations per share - Operating Partnership - diluted $0.61 $0.50 $1.21 $0.99 Weighted average number of Company shares outstanding - basic 218,075 188,623 217,814 188,206 Weighted average number of Company shares outstanding - basic (assuming full conversion of Operating Partnership units) 273,678 246,930 273,464 246,607 Weighted average number of Company shares outstanding - diluted (assuming full conversion of Operating Partnership units and, in 2003, convertible preferred stock) 274,485 272,755 274,300 272,312 PORTFOLIO RESULTS Consolidated Properties revenues (b), (c) $355,666 $264,218 $698,130 $518,074 Consolidated Properties operating expenses (116,476) (83,112) (224,189) (165,771) Equity in real estate property net operating income of Unconsolidated Properties (d), (e) 65,266 74,316 130,076 149,616 ------------ ------------ ------------ ------------ Real estate property net operating income 304,456 255,422 604,017 501,919 Net General Growth Management, Inc. (GGMI) operations 1,928 (527) 1,780 2,331 Headquarters, regional, general and administrative costs including depreciation that reduces FFO (12,276) (14,493) (23,474) (29,087) Net interest expense (90,094) (63,764) (176,761) (123,912) Equity in other FFO of Unconsolidated Properties (f) (27,095) (30,257) (54,225) (61,303) Preferred stock dividends and preferred unit distributions (9,893) (16,848) (20,610) (33,102) ------------ ------------ ------------ ------------ Funds From Operations - Operating Partnership $167,026 $129,533 $330,727 $256,846 ============ ============ ============ ============ SUMMARIZED BALANCE SHEET INFORMATION June 30, December 31, (unaudited) 2004 2003 Cash and marketable securities $15,265 $10,677 Investment in real estate Net land, building and equipment $9,760,149 $8,405,092 Developments in progress 237,832 168,521 Investment in and loans from Unconsolidated Real Estate Affiliates 755,816 630,613 ------------ ------------ Investment in real estate, net $10,753,797 $9,204,226 Total assets $11,148,201 $9,582,897 Mortgage and other notes payable $8,171,891 $6,649,490 Minority interest - Preferred 403,506 495,211 Minority interest - Common 407,566 408,613 Stockholders' equity 1,679,630 1,670,409 ------------ ------------ Total capitalization (at cost) $10,662,593 $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 Properties revenues include straight-line rent of $2,968 and $2,806 for the three months and $5,217 and $6,334 for the six months ended June 30, 2004 and 2003, respectively. (c) Consolidated Properties revenues include non-cash rental revenue recognized pursuant to SFAS #141 and #142 of $6,477 and $4,116 for the three months and $12,034 and $6,655 for the six months ended June 30, 2004 and 2003, respectively. (d) Unconsolidated Properties real estate property net operating income includes (at the applicable Company ownership percentage) straight-line rent of $1,026 and $1,172 for the three months and $1,849 and $2,301 for the six months ended June 30, 2004 and 2003, respectively. (e) Unconsolidated Properties 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 $1,861 and $2,080 for the three months ended and $3,703 and $4,099 for the six months ended June 30, 2004 and 2003, respectively. (f) Other FFO for the Unconsolidated Properties consists primarily of headquarters, general and administrative and net interest costs. GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003 (unaudited) (Dollars in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 --------- --------- --------- --------- Revenues: Minimum rents $232,922 $173,682 $455,578 $343,403 Tenant recoveries 105,832 80,578 208,436 151,656 Overage rents 5,013 3,542 13,781 10,044 Management and other fees 20,163 20,278 38,864 40,601 Other 12,316 6,607 21,172 12,870 --------- --------- --------- --------- Total revenues 376,246 284,687 737,831 558,574 Expenses: Real estate taxes 29,043 20,497 57,356 40,617 Repairs and maintenance 25,496 18,560 50,353 36,269 Marketing 10,515 7,585 20,955 15,761 Other property operating costs 48,855 34,770 90,161 69,611 Provision for doubtful accounts 2,567 1,700 5,364 3,513 Property management and other costs 24,694 29,624 49,713 56,248 General and administrative 2,812 2,893 5,002 5,704 Depreciation and amortization 86,051 52,304 159,218 104,283 --------- --------- --------- --------- Total expenses 230,033 167,933 438,122 332,006 --------- --------- --------- --------- Operating income 146,213 116,754 299,709 226,568 Interest income 366 461 786 1,056 Interest expense (90,460) (64,225) (177,547) (124,968) Income allocated to minority interests (23,125) (23,111) (48,761) (46,765) Equity in income of unconsolidated affiliates 18,154 21,124 36,084 43,409 --------- --------- --------- --------- Income from continuing operations 51,148 51,003 110,271 99,300 Discontinued operations, net of minority interest: Income from operations - - - 222 Gain (loss) on disposition - - - 3,069 --------- --------- --------- --------- Income from discontinued operations, net - - - 3,291 --------- --------- --------- --------- Net income $51,148 $51,003 $110,271 $102,591 --------- --------- --------- --------- Preferred stock dividends - (6,953) - (13,030) --------- --------- --------- --------- Net income available to common stockholders $51,148 $44,050 $110,271 $89,561 ========= ========= ========= ========= Basic earnings per share: Continuing operations $0.23 $0.23 $0.51 $0.46 Discontinued operations - - - 0.02 --------- --------- --------- --------- Total $0.23 $0.23 $0.51 $0.48 ========= ========= ========= ========= Diluted earnings per share: Continuing operations $0.23 $0.23 $0.50 $0.45 Discontinued operations - - - 0.02 --------- --------- --------- --------- Total $0.23 $0.23 $0.50 $0.47 ========= ========= ========= ========= GENERAL GROWTH PROPERTIES, INC BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2004 (In thousands, unaudited) Consolidated Unconsolidated Properties Properties (a) ------------ -------------- Property revenues Minimum rents (b),(c) $232,922 $65,802 Tenant recoveries 105,832 30,821 Overage rents 5,013 726 Other 11,899 2,030 ------------ -------------- Total property revenues 355,666 99,379 Property operating expenses Real estate taxes 29,043 8,725 Repairs and maintenance 25,496 7,271 Marketing 10,515 3,288 Other property operating costs 48,855 14,279 Provision for doubtful accounts 2,567 550 ------------ -------------- Total property operating expenses 116,476 34,113 ------------ -------------- Real estate property net operating income 239,190 65,266 GGMI fees (d) 20,163 - GGMI expenses (d) (18,235) - Headquarters/regional costs (e) (6,459) (5,617) General and administrative (2,812) (384) Depreciation that reduces FFO (f) (3,005) - Interest income 366 340 Interest expense (86,808) (20,882) Amortization of deferred finance costs (2,544) (476) Debt extinguishment costs (1,108) (76) Preferred unit distributions (9,893) - ------------ -------------- Uncombined Funds From Operations 128,855 38,171 167,026 Equity in Funds from Operations of Unconsolidated Properties 38,171 (38,171) - ------------ -------------- Operating Partnership Funds From Operations $167,026 $- $167,026 ============ ===================== GENERAL GROWTH PROPERTIES, INC BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2003 (In thousands, unaudited) Consolidated Unconsolidated Properties Properties (a) ------------ -------------- Property revenues Minimum rents (b), (c) $173,682 $74,325 Tenant recoveries 80,578 37,664 Overage rents 3,542 1,169 Other 6,416 1,358 ------------ -------------- Total property revenues 264,218 114,516 Property operating expenses Real estate taxes 20,497 10,929 Repairs and maintenance 18,560 8,541 Marketing 7,585 3,812 Other property operating costs 34,770 16,414 Provision for doubtful accounts 1,700 504 ------------ -------------- Total property operating expenses 83,112 40,200 ------------ -------------- Real estate property net operating income 181,106 74,316 GGMI fees (d) 20,278 - GGMI expenses (d) (20,805) - Headquarters/regional costs (e) (8,819) (6,183) General and administrative (2,893) (516) Depreciation that reduces FFO (f) (2,781) - Interest income 461 422 Interest expense (61,090) (22,620) Amortization of deferred finance costs (1,662) (893) Debt extinguishment costs (1,473) (467) Preferred stock dividends (6,953) - Preferred unit distributions (9,895) - ------------ -------------- Uncombined Funds From Operations 85,474 44,059 129,533 Equity in Funds from Operations of Unconsolidated Properties 44,059 (44,059) - ------------ --------------------- Operating Partnership Funds From Operations $129,533 $- $129,533 ============ ===================== (a) The Unconsolidated Properties include Quail Springs, Town East (to March 1, 2004), Riverchase (from May 11, 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 $2,968 and $2,806 for the three months ended June 30, 2004 and 2003, respectively, for the Consolidated Properties and (at the Company's applicable ownership percentage) $1,026 and $1,172, respectively, of straight line rent for the Unconsolidated Properties. (c) Includes SFAS #141 and #142 minimum rent accretion of $6,477 and $4,116 for the three months ended June 30, 2004 and 2003, respectively, for the Consolidated Properties and (at the Company's applicable ownership percentage) $1,861 and $2,080, respectively, of SFAS #141 and #142 minimum rent accretion for the Unconsolidated Properties. (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 Properties include property management and other fees to GGMI. (f) Represents depreciation on non-income producing assets including the Company's headquarters building. GENERAL GROWTH PROPERTIES, INC BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2004 (In thousands, unaudited) Consolidated Unconsolidated Properties Properties (a) ------------ -------------- Property revenues Minimum rents (b), (c) $455,578 $130,146 Tenant recoveries 208,436 62,551 Overage rents 13,781 2,020 Other 20,335 3,544 ------------ -------------- Total property revenues 698,130 198,261 Property operating expenses Real estate taxes 57,356 17,901 Repairs and maintenance 50,353 14,746 Marketing 20,955 6,580 Other property operating costs 90,161 27,703 Provision for doubtful accounts 5,364 1,255 ------------ -------------- Total property operating expenses 224,189 68,185 ------------ -------------- Real estate property net operating income 473,941 130,076 GGMI fees (d) 38,864 - GGMI expenses (d) (37,084) - Headquarters/regional costs (e) (12,629) (11,209) General and administrative (5,002) (527) Depreciation that reduces FFO (f) (5,843) - Interest income 786 749 Interest expense (165,742) (41,527) Amortization of deferred finance costs (5,618) (1,204) Debt extinguishment costs (6,187) (507) Preferred unit distributions (20,610) - ------------ -------------- Uncombined Funds From Operations 254,876 75,851 $330,727 Equity in Funds from Operations of Unconsolidated Properties 75,851 (75,851) - ------------ -------------- Operating Partnership Funds From Operations $330,727 $- $330,727 ============ ===================== GENERAL GROWTH PROPERTIES, INC BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (In thousands, unaudited) Consolidated Unconsolidated Properties Properties (a) ------------ -------------- Property revenues Minimum rents (b), (c) $343,403 $148,795 Tenant recoveries 151,656 74,942 Overage rents 10,044 2,260 Other (g) 12,971 2,643 ------------ -------------- Total property revenues 518,074 228,640 Property Operating expenses Real estate taxes 40,617 21,753 Repairs and maintenance 36,269 17,440 Marketing 15,761 7,570 Other property operating costs 69,611 31,562 Provision for doubtful accounts 3,513 699 ------------ -------------- Total property operating expenses 165,771 79,024 ------------ -------------- Real estate property net operating income 352,303 149,616 GGMI fees (d) 40,601 - GGMI expenses (d) (38,270) - Headquarters/regional costs (e) (17,978) (12,577) General and administrative (5,704) (638) Depreciation that reduces FFO (f) (5,405) - Interest income 1,056 908 Interest expense (120,047) (45,950) Amortization of deferred finance costs (3,448) (2,579) Debt extinguishment costs (1,473) (467) Preferred stock dividends (13,030) - Preferred unit distributions (20,072) - ------------ -------------- Uncombined Funds From Operations 168,533 88,313 $256,846 Equity in Funds from Operations of Unconsolidated Properties 88,313 (88,313) - ------------ -------------- Operating Partnership Funds From Operations $256,846 $- $256,846 ============ ===================== (a) The Unconsolidated Properties include Quail Springs, Town East (to March 1, 2004), Riverchase (from May 11, 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 $5,217 and $6,334 for the six months ended June 30, 2004 and 2003, respectively, for the Consolidated Properties and (at the Company's applicable ownership percentage) $1,849 and $2,301, respectively, of straight line rent for the Unconsolidated Properties. (c) Includes SFAS #141 and #142 minimum rent accretion of $12,034 and $6,655 for the six months ended June 30, 2004 and 2003, respectively, for the Consolidated Properties and (at the Company's applicable ownership percentage) $3,703 and $4,099, respectively, of SFAS #141 and #142 minimum rent accretion for the Unconsolidated Properties. (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 Properties include property management and other fees to GGMI. (f) Represents depreciation on non-income producing assets including the Company's headquarters building. (g) Includes $292 for the six months ended June 30, 2003 of net FFO of investment property sold in 2003. RECONCILIATION OF REAL ESTATE PROPERTY NET OPERATING INCOME TO GAAP OPERATING INCOME Three Months Ended Six Months Ended (unaudited) June 30, June 30, 2004 2003 2004 2003 Real estate property net operating income, including Unconsolidated Properties $304,456 $255,422 $604,017 $501,919 Real estate property net operating income - Unconsolidated Properties (65,266) (74,316) (130,076) (149,616) --------- --------- --------- --------- Real estate property net operating income - Consolidated Properties 239,190 181,106 473,941 352,303 GGMI fees 20,163 20,278 38,864 40,601 GGMI expenses (18,235) (20,805) (37,084) (38,270) Headquarters/regional costs (6,459) (8,819) (12,629) (17,978) General and administrative (2,812) (2,893) (5,002) (5,704) Depreciation and amortization (86,051) (52,304) (159,218) (104,283) Other (i) 417 191 837 (101) --------- --------- --------- --------- GAAP Operating income - Consolidated General Growth Properties, Inc. $146,213 $116,754 $299,709 $226,568 ========= ========= ========= ========= (i) Reflects discontinued operations and minority interest in Consolidated Properties real estate property net operating income RECONCILIATION OF GAAP NET INCOME TO FUNDS FROM OPERATIONS - Three Months Ended Six Months Ended (unaudited) (i) June 30, June 30, Net income available to common stockholders $51,148 $44,050 $110,271 $89,561 Income from discontinued operations, net of minority interest - - - (3,291) --------- --------- --------- --------- Income from continuing operations 51,148 44,050 110,271 86,270 Allocations to Operating Partnership unitholders 13,038 13,389 27,822 26,751 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 102,840 72,094 192,634 143,533 --------- --------- --------- --------- Funds From Operations - Operating Partnership 167,026 129,533 330,727 256,846 Funds From Operations - Operating Partnership unitholders (33,935) (30,587) (67,302) (60,826) --------- --------- --------- --------- Funds From Operations - Company stockholders $133,091 $98,946 $263,425 $196,020 ========= ========= ========= ========= (i) 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 UNCONSOLIDATED AFFILIATES TO FUNDS FROM OPERATIONS FROM UNCONSOLIDATED PROPERTIES Three Months Ended Six Months Ended - (unaudited) (i) June 30, June 30, Equity in earnings from Unconsolidated Affiliates $18,154 $21,124 $36,084 $43,409 Depreciation and amortization of capitalized real estate costs (including SFAS #141 and #142 in-place lease costs) other than amortization of financing costs 20,017 22,935 39,767 44,904 --------- --------- --------- --------- Operating Partnership Equity in Funds From Operations from Unconsolidated Properties 38,171 44,059 75,851 88,313 Plus: Equity in headquarters and general and administrative expenses of Unconsolidated Properties 6,001 6,699 11,736 13,215 Equity in net interest expense of Unconsolidated Properties 21,094 23,558 42,489 48,088 --------- --------- --------- --------- Equity in Real Estate Property Net Operating Income of Unconsolidated Properties $65,266 $74,316 $130,076 $149,616 ========= ========= ========= ========= (i) 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 Three Months Ended Six Months Ended COMPUTATIONS - (unaudited) June 30, June 30, Weighted average number of Company shares outstanding - for GAAP basic EPS (i) 218,075 188,623 217,814 188,206 Full conversion of Operating Partnership units 55,603 58,307 55,650 58,401 --------- --------- --------- --------- Weighted average number of Company shares outstanding - for basic FFO per share 273,678 246,930 273,464 246,607 ========= ========= ========= ========= Weighted average number of Company shares outstanding - for GAAP basic EPS 218,075 188,623 217,814 188,206 Effect of dilutive securities - options 807 763 836 643 --------- --------- --------- --------- Weighted average number of Company shares outstanding - for GAAP diluted EPS (ii) 218,882 189,386 218,650 188,849 --------- --------- --------- --------- Full conversion of PIERS - 25,062 - 25,062 Full conversion of Operating Partnership units 55,603 58,307 55,650 58,401 --------- --------- --------- --------- Weighted average number of Company shares outstanding - for diluted FFO per share 274,485 272,755 274,300 272,312 ========= ========= ========= ========= (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 anti-dilutive for the computation of EPS and are therefore excluded from 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