-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TpjZg2RKudGZTq1b6hFC7cc6KbBVMMNavkHN8dTlsm4vpA11I70hs73GXyltcpec cEhq09hOYExQVzTmTaAMBQ== 0001157523-04-009809.txt : 20041026 0001157523-04-009809.hdr.sgml : 20041026 20041026091329 ACCESSION NUMBER: 0001157523-04-009809 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041026 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041026 DATE AS OF CHANGE: 20041026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL GROWTH PROPERTIES INC CENTRAL INDEX KEY: 0000895648 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 421283895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11656 FILM NUMBER: 041095460 BUSINESS ADDRESS: STREET 1: 110 N WACKER DRIVE STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129605000 MAIL ADDRESS: STREET 1: 110 N WACKER DRIVE STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 8-K 1 a4750392.txt GENERAL GROWTH PROPERTIES UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934 Date of Report (Date of Earliest Event Reported) October 26, 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 following obligation of the registrant under any of the following provisions: __ Written communication 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 communication pursuant to Rule 14b-2 (b) under the Exchange Act (17 CFR 240.14d-2(b)) __ Pre-commencement communication pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition --------------------------------------------- On October 25, 2004, General Growth Properties, Inc. issued a press release describing its results of operations for its third quarter ended September 30, 2004. A copy of the press release is being furnished as Exhibit 99.1 to this report. This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. Item 7.01. Regulation FD Disclosure ------------------------ On October 25, 2004, General Growth Properties, Inc. issued a press release describing its results of operations for its third quarter ended September 30, 2004. A copy of the press release is being furnished as Exhibit 99.1 to this report. Item 9.01. Financial Statements and Exhibits. --------------------------------- Listed below are the financial statements, pro forma financial information and exhibits filed as part of this report: (a), (b) Not applicable. (c) Exhibits Exhibit No. Description 99.1 Press Release dated October 25, 2004 (furnished herewith). 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: October 25, 2004 EXHIBIT INDEX Exhibit Number Name 99.1 Press Release dated October 25, 2004. EX-99.1 2 a4750392ex991.txt NEWS RELEASE Exhibit 99.1 General Growth Properties, Inc. Announces Improved Results for Third Quarter 2004 CHICAGO--(BUSINESS WIRE)--Oct. 25, 2004--General Growth Properties, Inc. (NYSE:GGP) today announced Earnings per share - diluted (EPS) of $.29 for third quarter 2004 and $.66 in fully-diluted Funds from Operations (FFO) per share. The company has produced compounded annual FFO per share growth of over 16% since going public in 1993. "General Growth is focused on continually delivering profitable growth. As we move toward the anticipated fourth quarter closing of the Rouse transaction, it is clear our combined portfolio provides tremendous opportunity, a broad geographic reach and an excellent mix of properties," said John Bucksbaum, chief executive officer, General Growth Properties, Inc. "General Growth is positioned as the leader in providing retailers a national platform from which to do business, consumers an outstanding shopping experience, and investors consistent profitable growth with a goal of strong total returns." 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 third quarter 2004 was $.29, the same as the comparable period in 2003. The effects of SFAS No. 141 and 142 resulted in approximately $6.1 million or $.03 of EPS in third quarter 2004 as compared to $.02 of EPS in the previous third quarter. Straight line rent contributed approximately $4.8 million or $.02 of EPS in third quarter 2004, equal to third quarter 2003. -- Fully diluted FFO per share increased to $.66 in third quarter of 2004, 15.8% above $.57 reported in third quarter 2003. Total FFO for the quarter increased 15.7% to $180.2 million, from $155.8 million in last year's third quarter. The effects of non-cash rental revenue recognized due to SFAS No. 141 and 142 resulted in approximately $9.0 million or $.03 of FFO per share in third quarter 2004 equal to the effect on FFO per share for the same period in 2003. Straight line rent resulted in approximately $4.8 million or $.02 of FFO per share in third quarter 2004, consistent with the same period in 2003. -- FFO Guidance The timing of the pending Rouse transaction impacts estimates of future FFO. Assuming the transaction closes in mid-November and all available warrants to purchase new shares of GGP common stock are exercised, the company currently estimates that FFO per fully-diluted share will be at least $2.73 for fiscal year 2004 and at least $3.10 for fiscal year 2005. -- Real estate property net operating income (NOI) for third quarter 2004 increased to $326.9 million, 18.6% above the $275.7 million reported in third quarter 2003. -- Revenues for consolidated properties were $380.0 million for the quarter, an increase of $24.5%, compared to $305.3 million for the same period in 2003. Revenues for unconsolidated properties at share increased 1.2% to $102.2 million, compared to $101.0 million in third quarter 2003. -- Total tenant sales increased 7.2% for third quarter 2004 and comparable tenant sales increased 4.8% versus the same period last year. -- Comparable NOI for consolidated properties in third quarter 2004 increased by approximately 3.8% compared to the same period last year. Comparable NOI for unconsolidated properties at share for the quarter increased by approximately 3.1% compared to third quarter 2003. -- Mall shop occupancy increased to 90.8% at September 30, 2004, compared to 90.7% at September 30, 2003. -- Sales per square foot, on a trailing 12 month basis, as of September 30, 2004 were $377 versus $354 at the end of third quarter 2003. -- Average rent For consolidated properties, average rent per square foot for new/renewal leases signed during the first nine months of the year was $34.83 versus $31.53 for the same period in 2003. For unconsolidated properties, average rent per square foot for new/renewal leases signed during the first nine months of 2004 was $36.69 versus $35.79 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 The company acquired a 100% interest in Stonestown in San Francisco, California on August 13, 2004. On August 20, 2004, the company announced an agreement to acquire the Rouse Company (NYSE:RSE) which is anticipated to close in fourth quarter 2004. 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 Tuesday, October 26, 2004 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 179 regional shopping malls in 41 states. The company portfolio totals approximately 154 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 excludes from both years the NOI of properties with significant physical or merchandising changes and those properties acquired or opened during 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. GENERAL GROWTH PROPERTIES, INC. BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS (In thousands, unaudited) Nine Months Ended September 30, 2004 ------------------------------- Consolidated Unconsolidated Properties Properties (a) --------------- --------------- Property revenues: Minimum rents (b) $698,232 $198,462 Tenant recoveries 319,264 93,476 Overage rents 23,168 3,426 Other (c) 36,547 5,105 --------------- --------------- Total property revenues 1,077,211 300,469 --------------- --------------- Property operating expenses: Real estate taxes 87,124 27,083 Repairs and maintenance 77,265 21,769 Marketing 33,325 9,732 Other property operating costs 141,048 39,538 Provision for doubtful accounts 7,940 1,920 --------------- --------------- Total property operating expenses 346,702 100,042 --------------- --------------- Real estate property net operating income 730,509 200,427 GGMI fees (d) 57,263 - GGMI expenses (d) (55,652) - Headquarters/regional costs (e) (15,342) (16,668) General and administrative (7,080) (2,989) Depreciation that reduces FFO (f) (8,912) - Interest income 1,119 1,216 Interest expense (263,467) (62,688) Amortization of deferred finance costs (8,910) (2,080) Debt extinguishment costs (6,187) (507) Preferred unit distributions (29,097) - --------------- --------------- Uncombined Funds From Operations 394,244 116,711 $510,955 Equity in Funds from Operations of Unconsolidated Properties 116,711 (116,711) - --------------- --------------- ---------- Operating Partnership Funds From Operations $510,955 $- $510,955 =============== =============== ========== Nine Months Ended September 30, 2003 ------------------------------- Consolidated Unconsolidated Properties Properties (a) --------------- --------------- Property revenues: Minimum rents (b) $543,394 $214,172 Tenant recoveries 237,395 107,773 Overage rents 16,086 3,410 Other (c) 25,861 4,288 --------------- --------------- Total property revenues 822,736 329,643 Property operating expenses: Real estate taxes 63,956 30,830 Repairs and maintenance 56,557 24,759 Marketing 25,294 10,926 Other property operating costs 109,118 46,175 Provision for doubtful accounts 5,689 1,482 --------------- --------------- Total property operating expenses 260,614 114,172 --------------- --------------- Real estate property net operating income 562,122 215,471 GGMI fees (d) 61,672 - GGMI expenses (d) (57,539) - Headquarters/regional costs (e) (23,881) (18,356) General and administrative (6,479) (817) Depreciation that reduces FFO (f) (8,274) - Interest income 1,667 1,281 Interest expense (192,065) (66,633) Amortization of deferred finance costs (5,076) (4,025) Debt extinguishment costs (2,497) (657) Preferred stock dividends (13,030) - Preferred unit distributions (30,248) - --------------- --------------- Funds From Operations 286,372 126,264 $412,636 Equity in Funds from Operations of Unconsolidated Properties 126,264 (126,264) - --------------- --------------- ---------- Operating Partnership Funds From Operations $412,636 $- $412,636 =============== =============== ========== (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 to July 1, 2003 and GGP/Ivanhoe IV from July 1, 2003), GGP/NIG Brazil (from July 31, 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) Minimum rents includes the following for the nine months ended September 30: Consolidated Unconsolidated Properties Properties --------------- --------------- 2004 Straight-line rent $8,800 $3,004 Non-cash rental revenue recognized pursuant to SFAS #141 and #142 19,079 5,615 2003 Straight-line rent $9,826 $3,563 Non-cash rental revenue recognized pursuant to SFAS #141 and #142 12,315 6,661 (c) Includes $4,054 and $4,951, respectively, for the nine months ended September 30, 2004 and 2003 of net FFO of investment property held for sale and either sold in 2003 or scheduled for sale in the fourth quarter of 2004. (d) GGMI fees represents the revenues (primarily management fees) and GGMI expenses represents the 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) Depreciation that reduces FFO 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 (In thousands, unaudited) Three Months Ended September 30, 2004 ------------------------------- Consolidated Unconsolidated Properties Properties (a) --------------- --------------- Property revenues: Minimum rents (b) $245,538 $68,316 Tenant recoveries 111,570 30,925 Overage rents 9,386 1,406 Other (c) 13,544 1,561 --------------- --------------- Total property revenues 380,038 102,208 --------------- --------------- Property operating expenses Real estate taxes 30,155 9,182 Repairs and maintenance 27,286 7,023 Marketing 12,370 3,152 Other property operating costs 51,072 11,835 Provision for doubtful accounts 2,591 665 --------------- --------------- Total property operating expenses 123,474 31,857 --------------- --------------- Real estate property net operating income 256,564 70,351 GGMI fees (d) 18,400 - GGMI expenses (d) (18,568) - Headquarters/regional costs (e) (2,713) (5,459) General and administrative (2,078) (2,462) Depreciation that reduces FFO (f) (3,069) - Interest income 336 467 Interest expense (97,725) (21,161) Amortization of deferred finance costs (3,292) (876) Debt extinguishment costs - - Preferred unit distributions (8,487) - --------------- --------------- Funds From Operations $139,368 $40,860 $180,228 Equity in Funds from Operations of Unconsolidated Properties 40,860 (40,860) - --------------- --------------- ---------- Operating Partnership Funds From Operations $180,228 $- $180,228 =============== =============== ========== Three Months Ended September 30, 2003 ------------------------------- Consolidated Unconsolidated Properties Properties (a) --------------- --------------- Property revenues: Minimum rents (b) $203,420 $65,377 Tenant recoveries 86,329 32,831 Overage rents 6,042 1,150 Other (c) 9,557 1,645 --------------- --------------- Total property revenues 305,348 101,003 --------------- --------------- Property operating expenses: Real estate taxes 23,714 9,077 Repairs and maintenance 20,465 7,319 Marketing 9,533 3,356 Other property operating costs 39,672 14,613 Provision for doubtful accounts 2,145 783 --------------- --------------- Total property operating expenses 95,529 35,148 --------------- --------------- Real estate property net operating income 209,819 65,855 GGMI fees (d) 21,071 - GGMI expenses (d) (19,269) - Headquarters/regional costs (e) (5,003) (5,779) General and administrative (1,675) (179) Depreciation that reduces FFO (f) (2,869) - Interest income 611 373 Interest expense (72,018) (20,683) Amortization of deferred finance costs (1,628) (1,446) Debt extinguishment costs (1,024) (190) Preferred unit distributions (10,176) - --------------- --------------- Funds From Operations 117,839 37,951 $155,790 Equity in Funds from Operations of Unconsolidated Properties 37,951 (37,951) - --------------- --------------- ---------- Operating Partnership Funds From Operations $155,790 $- $155,790 =============== =============== ========== (a) The Unconsolidated Properties include Quail Springs, Town East (to March 1, 2004), Riverchase (from May 11, 2004), GGP/Ivanhoe IV, GGP/NIG Brazil (from July 31, 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) Minimum rents includes the following for the three months ended September 30: Consolidated Unconsolidated Properties Properties (a) --------------- --------------- 2004 Straight-line rent $3,679 $1,155 Non-cash rental revenue recognized pursuant to SFAS #141 and #142 7,045 1,912 2003 Straight-line rent $3,492 $1,262 Non-cash rental revenue recognized pursuant to SFAS #141 and #142 5,660 2,562 (c) Includes $1,387 and $1,328, respectively, for the three months ended September 30, 2004 and 2003 of net FFO of investment property held for sale and either sold in 2003 or scheduled for sale in the fourth quarter of 2004. (d) GGMI fees represents the revenues (primarily management fees) and GGMI expenses represents the 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) Depreciation that reduces FFO represents depreciation on non-income producing assets including the Company's headquarters building. GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts, unaudited) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Revenues: Minimum rents $245,538 $203,420 $698,232 $543,394 Tenant recoveries 111,570 86,329 319,264 237,395 Overage rents 9,386 6,042 23,168 16,086 Management and other fees 18,400 21,071 57,263 61,672 Other 12,607 8,703 33,778 21,572 ---------- ---------- ---------- ---------- Total revenues 397,501 325,565 1,131,705 880,119 ---------- ---------- ---------- ---------- Operating expenses: Real estate taxes 30,155 23,714 87,124 63,956 Repairs and maintenance 27,286 20,465 77,265 56,557 Marketing 12,370 9,533 33,325 25,294 Other property operating costs 51,072 39,672 141,048 109,118 Provision for doubtful accounts 2,591 2,145 7,940 5,689 Property management and other costs 21,281 24,272 70,994 81,420 General and administrative 2,078 1,675 7,080 6,479 Depreciation and amortization 82,027 61,349 240,687 165,103 ---------- ---------- ---------- ---------- Total operating expenses 228,860 182,825 665,463 513,616 ---------- ---------- ---------- ---------- Operating income 168,641 142,740 466,242 366,503 Interest income 336 611 1,119 1,667 Interest expense (101,017) (74,670) (278,564) (199,638) Income allocated to minority interests (24,673) (27,197) (73,011) (73,289) Equity in income of unconsolidated affiliates 19,686 18,571 55,770 61,980 ---------- ---------- ---------- ---------- Income from continuing operations 62,973 60,055 171,556 157,223 Discontinued operations, net of minority interest: Income from operations 1,000 727 2,687 3,081 Gain on disposition - 651 - 3,720 ---------- ---------- ---------- ---------- Net income $63,973 $61,433 $174,243 $164,024 ---------- ---------- ---------- ---------- Convertible preferred stock dividends - - - (13,030) ---------- ---------- ---------- ---------- Net income available to common stockholders $63,973 $61,433 $174,243 $150,994 ========== ========== ========== ========== Basic earnings per share: Continuing operations $0.29 $0.28 $0.79 $0.74 Discontinued operations - 0.01 0.01 0.03 ---------- ---------- ---------- ---------- Total basic earnings per share $0.29 $0.29 $0.80 $0.77 ========== ========== ========== ========== Diluted earnings per share: Continuing operations $0.29 $0.28 $0.78 $0.73 Discontinued operations - - 0.01 0.03 ---------- ---------- ---------- ---------- Total diluted earnings per share $0.29 $0.28 $0.79 $0.76 ========== ========== ========== ========== FUNDS FROM OPERATIONS AND PORTFOLIO RESULTS (In thousands, except share and per share data, unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ----------------------- 2004 2003 2004 2003 ------------ ------------ ----------- ----------- FUNDS FROM OPERATIONS (FFO) (a) Operating Partnership $180,228 $155,790 $510,955 $412,636 Less: Allocations to Operating Partnership unitholders 36,513 33,653 103,824 94,658 ------------ ------------ ----------- ----------- Company stockholders $143,715 $122,137 $407,131 $317,978 ============ ============ =========== =========== FFO per share: Company stockholders - basic $0.66 $0.58 $1.87 $1.62 Operating Partnership - basic 0.66 0.58 1.87 1.62 Operating Partnership - diluted 0.66 0.57 1.86 1.56 Weighted average number of Company shares outstanding: Basic 218,605 210,889 218,080 195,850 Basic (assuming full conversion of Operating Partnership units) 274,145 268,997 273,693 254,152 Diluted (assuming full conversion of Operating Partnership units and, in 2003, convertible preferred stock) 274,838 273,372 274,372 272,802 (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. PORTFOLIO RESULTS Consolidated Properties revenues (a)$380,038 $305,348 $1,077,211 $822,736 Consolidated Properties operating expenses (123,474) (95,529) (346,702) (260,614) Equity in real estate property net operating income of Unconsolidated Properties (b) 70,351 65,855 200,427 215,471 ------------ ------------ ----------- ----------- Real estate property net operating income 326,915 275,674 930,936 777,593 Net General Growth Management, Inc. (GGMI) operations (168) 1,802 1,611 4,133 Headquarters, regional, general and administrative costs including depreciation that reduces FFO (7,860) (9,547) (31,334) (38,634) Net interest expense (100,681) (74,059) (277,445) (197,971) Equity in other FFO of Unconsolidated Properties (c) (29,491) (27,904) (83,716) (89,207) Preferred stock dividends and preferred unit distributions (8,487) (10,176) (29,097) (43,278) ------------ ------------ ----------- ----------- FFO - Operating Partnership $180,228 $155,790 $510,955 $412,636 ============ ============ =========== =========== (a) Consolidated Properties revenues includes the following: Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ----------------------- 2004 2003 2004 2003 ------------ ------------ ----------- ----------- Straight-line rent $3,679 $3,492 $8,800 $9,826 Non-cash rental revenue recognized pursuant to SFAS #141 and #142 7,045 5,660 19,079 12,315 (b) Equity in real estate property net operating income of Unconsolidated Properties includes the following: Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ----------------------- 2004 2003 2004 2003 ------------ ------------ ----------- ----------- Straight-line rent $1,155 $1,262 $3,004 $3,563 Non-cash rental revenue recognized pursuant to SFAS #141 and #142 1,912 2,562 5,615 6,661 (c) Equity in Other FFO of Unconsolidated Properties consists primarily of headquarters, general and administrative and net interest costs. SUMMARIZED BALANCE SHEET INFORMATION (In thousands, unaudited) September 30, December 31, 2004 2003 ------------ ------------ Cash and cash equivalents $20,963 $10,677 Investment in real estate: Net land, buildings and equipment $10,104,427 $8,405,092 Developments in progress 189,682 168,521 Investment in and loans to/from Unconsolidated Real Estate Affiliates 759,481 630,613 ------------ ------------ Net investment in real estate (a) $11,053,590 $9,204,226 ============ ============ Total assets $11,537,666 $9,582,897 Mortgage and other debt payable $8,614,821 $6,649,490 Minority interest - Preferred 403,486 495,211 Minority interest - Common 408,902 408,613 Stockholders' equity 1,677,263 1,670,409 ------------ ------------ Total capitalization (at cost) $11,104,472 $9,223,723 ============ ============ (a) Excludes approximately $51,935 of investment property held for sale at September 30, 2004. RECONCILIATION OF REAL ESTATE PROPERTY NET OPERATING INCOME TO GAAP OPERATING INCOME (In thousands, unaudited) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Real estate property net operating income including unconsolidated properties $326,915 $275,674 $930,936 $777,593 Unconsolidated Properties (70,351) (65,855) (200,427) (215,471) ---------- ---------- ---------- ---------- Consolidated Properties 256,564 209,819 730,509 562,122 GGMI fees 18,400 21,071 57,263 61,672 GGMI expenses (18,568) (19,269) (55,652) (57,539) Headquarters/regional costs (2,713) (5,003) (15,342) (23,881) General and administrative (2,078) (1,675) (7,080) (6,479) Depreciation and amortization (82,027) (61,349) (240,687) (165,103) Other (a) (937) (854) (2,769) (4,289) ---------- ---------- ---------- ---------- GAAP operating income - Consolidated General Growth Properties, Inc. $168,641 $142,740 $466,242 $366,503 ========== ========== ========== ========== (a) Reflects discontinued operations and minority interest in Consolidated Properties real estate property net operating income. RECONCILIATION OF GAAP NET INCOME TO FUNDS FROM OPERATIONS (FFO) (a) (In thousands, unaudited) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Net income $63,973 $61,433 $174,243 $164,024 Income from discontinued operations, net of minority interest (1,000) (1,378) (2,687) (6,801) ---------- ---------- ---------- ---------- Income from continuing operations 62,973 60,055 171,556 157,223 Allocations to Operating Partnership unitholders 16,012 16,945 43,412 29,853 FFO of discontinued operations 1,387 1,328 4,054 4,951 Depreciation and amortization of capitalized real estate costs (including SFAS #141 and #142 in-place lease costs) other than amortization of financing costs 99,856 77,462 291,933 220,609 ---------- ---------- ---------- ---------- FFO: Operating Partnership 180,228 155,790 510,955 412,636 Operating Partnership unitholders (36,513) (33,653) (103,824) (94,658) ---------- ---------- ---------- ---------- Company stockholders $143,715 $122,137 $407,131 $317,978 ========== ========== ========== ========== (a) Reconciliation of equity in income of unconsolidated affiliates 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 GAAP EQUITY IN GAAP INCOME OF UNCONSOLIDATED AFFILIATES TO FFO FROM UNCONSOLIDATED PROPERTIES (a) (In thousands, unaudited) Three Months Ended Nine Months Ended September 30, September 30, ----------------- --------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Equity in income of unconsolidated affiliates $19,686 $18,571 $55,770 $61,980 Depreciation and amortization of capitalized real estate costs (including SFAS #141 and #142 in-place lease costs) other than amortization of financing costs 21,174 19,380 60,941 64,284 ---------- ---------- ---------- ---------- Operating Partnership Equity in FFO from Unconsolidated Properties 40,860 37,951 116,711 126,264 Plus: Equity in headquarters and general and administrative expenses of Unconsolidated Properties 7,921 5,958 19,657 19,173 Equity in net interest expense of Unconsolidated Properties 21,570 21,946 64,059 70,034 ---------- ---------- ---------- ---------- Equity in Real Estate Property Net Operating Income of Unconsolidated Properties $70,351 $65,855 $200,427 $215,471 ========== ========== ========== ========== (a) Reconciliation of equity in income of unconsolidated affiliates 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 (In thousands, unaudited) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Basic: Weighted average number of Company shares outstanding - for GAAP basic EPS (a) 218,605 210,889 218,080 195,850 Full conversion of Operating Partnership units 55,540 58,108 55,613 58,302 ---------- ---------- ---------- ---------- Weighted average number of Company shares outstanding - for basic FFO per share 274,145 268,997 273,693 254,152 ========== ========== ========== ========== Diluted: Weighted average number of Company shares outstanding - for GAAP basic EPS 218,605 210,889 218,080 195,850 Effect of dilutive securities - options (and PIERS in 2003) (b) 693 4,375 679 18,650 ---------- ---------- ---------- ---------- Weighted average number of Company shares outstanding - for GAAP diluted EPS 219,298 215,264 218,759 214,500 Full conversion of Operating Partnership units 55,540 58,108 55,613 58,302 ---------- ---------- ---------- ---------- Weighted average number of Company shares outstanding - for diluted FFO per share 274,838 273,372 274,372 272,802 ========== ========== ========== ========== (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) In 2003, the PIERS were dilutive for the computation of EPS and are therefore included in the total weighted average outstanding shares for diluted EPS purposes. CONTACT: General Growth Properties, Inc. John Bucksbaum, 312-960-5005 or Bernard Freibaum, 312-960-5252 -----END PRIVACY-ENHANCED MESSAGE-----