SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 24, 1998
SIMON PROPERTY GROUP, INC. SPG REALTY CONSULTANTS, INC.
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)
Delaware Delaware
(State of incorporation or (State of incorporation or
organization) organization)
001-14469 001-14469-01
(Commission File No.) (Commission File No.)
042668599 13-2838638
(I.R.S. Employer Identification (I.R.S. Employer Identification
No.) No.)
National City Center National City Center
115 West Washington Street, Suite 115 West Washington Street, Suite
15 East 15 East
Indianapolis, Indiana 46204 Indianapolis, Indiana 46204
(Address of principal executive (Address of principal executive
offices) offices)
(317) 636-1600 (317) 636-1600
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
<PAGE> 01
This Amendment No. 1 to the Registrants' Report on Form 8-K dated October
9, 1998 regarding the Registrants' combination with Simon DeBartolo Group, Inc.
(predecessor to SPG Properties, Inc.) is being filed to amend Item 7(b) to
provide certain required pro forma financial information which was
impracticable to provide at the time the original Form 8-K was filed.
Capitalized terms used, but not defined herein, shall have the meanings
ascribed to them in the original Form 8-K.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information.
The required pro forma combined condensed financial information of
Simon Property Group, Inc. and SPG Realty Consultants, Inc. follows
beginning at page F-1.
<PAGE> 02
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
SIMON PROPERTY GROUP, INC. AND
SPG REALTY CONSULTANTS, INC.
/s/ John Dahl
---------------------
John Dahl,
Senior Vice President and Chief
Accounting Officer
(Principal Accounting Officer)
Date: December 8, 1998
<PAGE> 03
PRO FORMA COMBINED FINANCIAL INFORMATION
The accompanying financial statements prepared by the management of Simon
Property Group, Inc. ("SPG") present the pro forma combined condensed Statements
of Operations of SPG and subsidiaries and its paired shared affiliate, SPG
Realty Consultants, Inc. ("SRC") and subsidiaries, for the nine months ended
September 30, 1998, and for the year ended December 31, 1997. No pro forma
balance sheet is required because the merger and related transactions and the
Other Property Transactions described below were reflected, where appropriate,
in the companies' unaudited interim balance sheets included in the companies'
joint quarterly report on Form 10-Q for the period ended September 30, 1998.
The pro forma combined condensed Statements of Operations for the nine
months ended September 30, 1998 and for the year ended December 31, 1997, are
presented as if (i) the Corporate Property Investors, Inc. ("CPI") Merger and
related transactions, which were consummated for financial reporting purposes
as of the close of business on September 24, 1998, (ii) the September and
November 1997 transactions by SDG to acquire ten portfolio properties and a
50% ownership interest in an eleventh property of The Retail Property Trust,
("RPT"), (iii)the December 1997 acquisition by SDG of the Fashion Mall at
Keystone at the Crossing, (iv) the January 1998 acquisition by CPI of Phipps
Plaza, (v) the January 1998 sale by CPI of Burnsville Mall, (vi) the January
1998 acquisition by SDG of Cordova Mall, (vii) the February 1998 acquisition by
SDG of a 50% interest in a portfolio of twelve regional malls and (viii) the
sale by CPI of the General Motors Building had occurred as of January 1, 1997,
(items (ii) through (vii) collectively, the "Other Property Transactions").
Preparation of the pro forma financial information was based on assumptions
deemed appropriate by management. These assumptions give effect to the CPI
Merger being accounted for as a reverse purchase in accordance with generally
accepted accounting principles, resulting in the assets and liabilities
transferred to the Operating Partnership being reflected at fair value. The cash
contributed to Corporate Realty Consultants, Inc. ("CRC") and the newly formed
CRC operating partnership in exchange for ownership interests therein have been
accounted for as a capital infusion, or equity transaction. The pro forma
financial information has been updated to reflect revised assumptions based
upon the completion of the CPI Merger and related transactions in
September 1998. SPG and its paired share affiliate qualify as a paired
share REIT, distribute all taxable income and, therefore, incurred no
Federal income taxes during the periods presented. The pro forma
financial information is not necessarily indicative of the results which
actually would have occurred if the transactions had been consummated at the
beginning of the periods presented, nor does it purport to represent the results
of operations for future periods. The pro forma information should be read in
conjunction with the historical financial statements of SDG, CPI and CRC. For
financial reporting purposes, SDG is the predecessor of SPG and its paired share
affiliate.
<Page F1>
<TABLE>
SIMON PROPERTY GROUP, INC. AND
SPG REALTY CONSULTANTS, INC.
Pro Forma Combined Condensed Statement of Operations
For the Nine Months Ended September 30, 1998
(unaudited, in thousands except share and per share amounts)
Pro Forma
Merger and
CPI Sale of GM Related Other
SPG (Historical) SRC Building Transactions Property
(Historical) (A) (1/1 to 9/24) (Historical)(B) (Historical) (C) Adjustments Transactions(I) Total
REVENUE
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum rent $ 565,531 $ 237,413 $2,330 $(46,067) $ 2,250(D) $ (248) $ 761,209
Overage rent 22,773 3,303 -- -- 33 26,109
Tenant
reimbursements 283,906 110,071 635 (7,217) (616) 386,779
Other income 60,759 15,384 185 (6,140) (600)(E) (71) 69,517
Total revenue 932,969 366,171 3,150 (59,424) 1,650 (902) 1,243,614
EXPENSES
Property & other
expenses 328,803 146,215 2,389 (23,552) -- (613) 453,242
Merger-related costs -- 83,019 -- -- (83,019)(L) -- --
Depreciation and
amortization 177,710 61,149 701 (3,493) 29,600(F) 216 265,883
Total expenses 506,513 290,383 3,090 (27,045) (53,419) (397) 719,125
INCOME BEFORE ITEMS
BELOW 426,456 75,788 60 (32,379) 55,069 (505) 524,489
INTEREST EXPENSE 281,749 48,058 1,013 (307) 75,030(G) 2,827 408,370
INCOME BEFORE MINORITY
INTEREST 144,707 27,730 (953) (32,072) (19,961) (3,332) 116,119
MINORITY PARTNERS'
INTEREST (4,704) -- -- -- -- -- (4,704)
(LOSS) GAIN ON SALES OF
ASSETS (7,283) 244,147 -- (198,891) -- -- 37,973
INCOME BEFORE
UNCONSOLIDATED
ENTITIES 132,720 271,877 (953) (230,963) (19,961) (3,332) 149,388
INCOME FROM
UNCONSOLIDATED
ENTITIES 8,789 15,756 398 -- -- 1,879 26,822
INCOME OF THE OPERATING
PARTNERSHIP 141,509 287,633 (555) (230,963) (19,961) (1,453) 176,210
LESS LIMITED PARTNERS'
INTEREST IN
THE OPERATING
PARTNERSHIP 42,867 -- (6) -- (10,054)(J) -- 32,807
PREFERRED DIVIDEND OF
SUBSIDIARY 482 -- -- -- 21,520 (M) -- 22,002
NET INCOME 98,160 287,633 (549) (230,963) (31,427) (1,453) 121,401
(21,520) (M)
PREFERRED DIVIDEND
REQUIREMENT 22,260 10,061 -- -- 23,098(H) -- 33,899
NET INCOME AVAILABLE
TO COMMON
SHAREHOLDERS $ 75,900 $ 277,572 $ (549) $ (230,963) $ (33,005) $(1,453) $ 87,502
NET INCOME PER COMMON
SHARE-
BASIC $ 0.67 $ 0.53
DILUTED $ 0.67 $ 0.53
WEIGHTED AVERAGE
OUTSTANDING
OR EQUIVALENT
SHARES
BASIC 112,956,863 164,868,865(K)
DILUTED 113,325,309 165,237,311(K)
</TABLE>
The accompanying notes and management's assumptions are an integral part of
this statement.
<Page F2>
SIMON PROPERTY GROUP, INC. AND
SPG REALTY CONSULTANTS, INC.
Pro Forma Combined Condensed Statement of Operations
For the Year Ended December 31, 1997
(unaudited, in thousands except share and per share amounts)
<TABLE>
Pro Forma
Merger and
Sale of GM Related Other
SDG CPI CRC Building Transactions Property
(Historical) (A) (Historical)(Historical) (B) (Historical) (C)Adjustments Transactions(I) Total
REVENUE
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum rent $ 641,352 $ 319,862 $ 3,108 $(77,707) $ 3,000(D) $ 88,305 $ 977,920
Overage rent 38,810 10,489 -- (536) -- 5,119 53,882
Tenant reimbursements 322,416 138,579 968 (12,297)
- -- 49,251 498,917
Other income 51,589 24,858 2,539 (962) (800)(E) 4,463 81,687
Total revenue 1,054,167 493,788 6,615 (91,502) 2,200 147,138 1,612,406
EXPENSES
Property & other
expenses 376,237 199,503 5,592 (40,420) -- 53,779 594,691
Depreciation and
amortization 200,900 91,312 889 (17,764) 35,600(F) 28,866 339,803
Total expenses 577,137 290,815 6,481 (58,184) 35,600 82,645 934,494
INCOME BEFORE ITEMS
BELOW 477,030 202,973 134 (33,318) (33,400) 64,493 677,912
INTEREST EXPENSE 287,823 69,562 1,365 (716) 102,790(G) 82,870 543,694
INCOME BEFORE MINORITY
INTEREST 189,207 133,411 (1,231) (32,602) (136,190) (18,377) 134,218
MINORITY PARTNERS'
INTEREST (5,270) -- -- -- -- -- (5,270)
GAIN ON SALE OF ASSETS 20 122,410 1,259 -- -- -- 123,689
INCOME BEFORE
UNCONSOLIDATED
ENTITIES 183,957 255,821 28 (32,602) (136,190) (18,377) 252,637
INCOME FROM UNCONSOLIDATED
ENTITIES 19,176 21,390 1,149 -- -- 8,770 50,485
INCOME OF THE OPERATING
PARTNERSHIPS BEFORE
EXTRAORDINARY ITEMS 203,133 277,211 1,177 (32,602) (136,190) (9,607) 303,122
LESS LIMITED PARTNERS'
INTEREST IN THE OPERATING
PARTNERSHIP 65,954 -- -- -- 303(J) -- 66,257
PREFERRED DIVIDEND OF
SUBSIDIARY -- -- -- -- 29,248(M) -- 29,248
NET INCOME 137,179 277,211 1,177 (32,602) (165,741) (9,607) 207,617
(29,248)(M)
PREFERRED DIVIDEND
REQUIREMENT 29,248 13,712 -- -- 31,488(H) -- 45,200
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 107,931 $ 263,499 $ 1,177 $(32,602) $ (167,981) $ (9,607) $ 162,417
NET INCOME PER COMMON SHARE--
BASIC $ 1.08 $ 1.05
DILUTED $ 1.08 $ 1.05
WEIGHTED AVERAGE
OUTSTANDING
OR EQUIVALENT SHARES
BASIC 99,920,280 154,432,287(K)
DILUTED 100,304,344 154,816,351(K)
</TABLE>
The accompanying notes and management's assumptions are an integral part
of this statement.
<Page F3>
Simon Property Group, Inc. and SPG Realty Consultants, Inc. - Notes and
Management's Assumptions to Unaudited Pro Forma Combined Condensed
Statements of Operations (dollars in thousands)
1. Basis of Presentation
SDG is a self-administered and self-managed REIT which through its
subsidiaries is engaged primarily in the ownership, development,
management, leasing, acquisition and expansion of income-producing
properties, primarily regional malls and community shopping centers.
In February 1998, SDG, CPI and CRC entered into the Merger
Agreement, which provided for the merger of a substantially wholly owned
subsidiary of CPI with and into SDG. CPI is a self-administered and
self-managed privately held REIT which invests in income-producing
properties. As of the CPI Merger date, CPI owned or held interests in 26
properties, 23 shopping centers, one community center and two office
buildings. CRC was engaged in the ownership, operation, acquisition and
development of income producing properties directly or through interests
in joint ventures and other non-REIT qualifying activities.
Pursuant to the Agreement and Plan of Merger dated February 18,
1998, among Simon DeBartolo Group, Inc. ("SDG"), Corporate Property
Investors, Inc. ("CPI"), and Corporate Realty Consultants, Inc. ("CRC"),
the CPI Merger and related transactions were consummated for financial
reporting purposes, as of the close of business on September 24, 1998.
SPG Merger Sub, Inc., a substantially wholly-owned subsidiary of CPI,
merged with and into SDG with SDG continuing as the surviving company.
Legally, SDG became a majority-owned subsidiary of CPI. The outstanding
shares of common stock of SDG were exchanged for a like number of shares
of CPI. Simon DeBartolo Group, L.P. ("SDG, LP" or the "Operating
Partnership") contributed $22 million in cash to CRC and the newly
formed SRC Operating Partnership on behalf of the SDG stockholders and
the limited partners of SDG, LP for beneficial interests in CRC in order
to pair the common stock of CPI with 1/100th of a share of common stock
of CRC and to obtain units in the SRC Operating Partnership in order
that the limited partners of the Operating Partnership will hold the
same proportionate interest in the SRC Operating Partnership as they
hold in the Operating Partnership.
Immediately prior to the consummation of the CPI Merger, the
holders of CPI common stock were paid a merger dividend consisting of
(i) $90 in cash, (ii) 1.0818 additional shares of CPI common stock and
(iii) 0.19 shares of 6.50% Series B convertible preferred stock of CPI.
Each share of the 6.5% $100 par value Series B convertible preferred
stock is convertible into 2.586 shares of SPG common stock. Immediately
prior to the CPI Merger, there were 25,496,476 shares of CPI common
stock outstanding. The aggregate value associated with the completion
of the CPI Merger is approximately $5.9 billion including transaction
costs and liabilities assumed. The purchase price includes 209,249
shares of 6.5% $1,000 par value of Series A convertible preferred stock
previously issued by CPI which remained outstanding following the CPI
Merger. Each share of Series A convertible preferred stock is
convertible into 37.995 shares of SPG common stock.
To finance the cash portion of the CPI Merger consideration, $1.4
billion was borrowed under a new senior unsecured medium term bridge
loan (the "CPI Merger Facility"), which bears interest at a base rate of
LIBOR plus 65 basis points and matures in three mandatory amortization
payments (on June 22, 1999, March 24, 2000 and September 24, 2000). An
additional $236,100 was also borrowed under the Operating Partnership's
existing $1.25 billion credit facility. In connection with the CPI
Merger, CPI was renamed `Simon Property Group, Inc.' CPI's paired share
affiliate, Corporate Realty Consultants, Inc., was renamed `SPG Realty
Consultants, Inc.' ("SRC"). In addition SDG and SDG, LP were renamed
`SPG Properties, Inc.', and `Simon Property Group, L.P.', respectively.
Upon completion of the CPI Merger, SPG transferred substantially
all of the CPI assets acquired, which consisted primarily of 23 regional
malls, one community center, two office buildings and one regional mall
under construction (other than one regional mall, Ocean County Mall, and
certain net leased properties valued at approximately $153.1 million)
net of liabilities assumed (SPG remains a co-obligor with respect to the
CPI Merger Facility) of approximately $2.3 billion to the Operating
Partnership or one or more subsidiaries of the Operating Partnership in
exchange for 47,790,550 limited partnership interests and 5,053,580
preferred partnership interests in the Operating Partnership. The
preferred partnership interests carry the same rights and equal the
number of preferred shares issued and outstanding as a direct result of
the CPI Merger. Likewise, the assets of SRC were transferred to the SRC
Operating Partnership in exchange for partnership interests.
As a result of the CPI Merger and related transactions, the common
stockholders of SPG own a share of common stock of SPG and a beneficial
interest in SRC. The beneficial interest in SRC are stapled to a share
of SPG. Accordingly, a share of SPG cannot be transferred without a
corresponding transfer of the beneficial interest in SRC. SPG and SRC
operate as a paired-share REIT structure for income tax purposes.
<Page F4>
SPG and SRC (together, the "Company") own a 71.6% interest in the
operating partnerships as of September 30, 1998. As of September 30,
1998, the Company owned or held a combined interest in 241 income-
producing properties, which consisted of 153 regional malls, 76
community shopping centers, three specialty retail centers, six office
and mixed-use properties and three value-oriented regional malls in 35
states.
The Company accounted for the merger between SDG and the CPI merger
subsidiary as a reverse purchase in accordance with Accounting Principles
Board Opinion No. 16. Although paired shares of the former CPI and CRC
were issued to SDG common stock holders and SDG became a substantially
wholly owned subsidiary of CPI following the CPI Merger, CPI is considered
the business acquired for accounting purposes. SDG is the acquiring company
because the SDG common stockholders hold a majority of the common stock of
SPG, post-merger. The value of the consideration paid by SDG has been
allocated on a preliminary basis to the estimated fair value of the CPI
assets acquired and liabilities assumed which resulted in goodwill of $62,227.
Goodwill will be amortized over the estimated life of the properties of 35
years. The allocation of the purchase will be finalized when SPG completes
its evaluation of the assets acquired and liabilities assumed and finalizes
its combined operating plan for the Company.
SDG, LP contributed cash to CRC and the SRC Operating Partnership
on behalf of the SDG common stockholders and the limited partners of SDG, LP
to obtain the beneficial interests in CRC, which were paired with the shares
of common stock issued by SPG, and to obtain Units in the SRC Operating
Partnership so that the limited partners of the SDG Operating Partnership
would hold the same proportionate interest in the SRC Operating Partnership
that they hold in the SDG Operating Partnership. The cash contributed to the
CRC Operating Partnership and the SRC Operating Partnership
in exchange for an ownership interest therein have been appropriately
accounted for as capital infusion or equity transactions. The assets and
liabilities of CRC have been reflected at historical cost. Adjusting
said assets and liabilities to fair value would only have been appropriate
if the SDG stockholders' beneficial interests in CRC exceeded 80%.
In addition to the CPI Merger Dividends and the Merger, the
following transactions (the "Other Property Transactions") have been
reflected in the accompanying unaudited pro forma combined Statements of
Operations using the purchase method of accounting. Investments in
non-controlled joint ventures are reflected using the equity method.
Controlled properties have been consolidated.
* On September 29, 1997, SDG completed its cash tender offer for all
of the outstanding shares of beneficial interests of The Retail
Property Trust ("RPT"). In connection therewith, RPT became a
subsidiary of the Operating Partnership. RPT owned 98.8% of
Shopping Center Associates ("SCA"), which owned or had interests
in twelve regional malls and one community shopping center.
Following the completion of the tender offer, the SCA portfolio
was restructured. SDG exchanged its 50% interest in two SCA
properties with a third party for similar interests in two other
SCA properties, in which SDG had 50% interests, with the
result that SCA now owns interest in a total of eleven properties.
Effective November 30, 1997, SDG also acquired the remaining interest
in another of the SCA properties. In addition, SDG acquired the
remaining 1.2% interest in SCA. At the completion of these
transactions, SDG held a 100% interest in ten of the eleven properties,
and a noncontrolling 50% ownership interest in the remaining
property. The total cost for the acquisition of RPT and related
transactions was approximately $1,300,000, which includes SDG common
stock issued valued at approximately $50,000, units of the Operating
Partnership valued at approximately $25,300, and the assumption of
consolidated debt and SDG's pro rata share of joint venture
indebtedness of approximately $475,300. The balance of the transaction
costs was borrowed under the Operating Partnership's credit facility.
* On December 29, 1997, the Operating Partnership completed the
acquisition of the Fashion Mall at Keystone at the Crossing, a
regional mall located in Indianapolis, Indiana, for $124,500.
The purchase price was financed by additional borrowings under the
Operating Partnership's credit facility of approximately $59,700 and
the assumption of approximately $64,800 in mortgage debt. The
mortgage debt bears interest at 7.85%.
* In January 1998, CPI acquired Phipps Plaza, a super
regional mall located in Atlanta, Georgia, for approximately
$198,800. The transaction was financed with cash of $158,800
and debt of $40,000.
* In January 1998, CPI sold one of its shopping centers
(Burnsville Mall) for $80,672 cash. The selling price exceeded
Burnsville Mall's historical net assets of $37,581 at
December 31, 1997, by $43,091. A portion ($40,000) of the
proceeds received in the Burnsville transaction was used to
repay the amount borrowed in connection with the acquisition
of Phipps Plaza.
* In January 1998, SDG acquired Cordova Mall, a regional
mall in Pensacola, Florida, for $94,000. This acquisition was
financed by issuing units of the Operating Partnership valued
at $55,523, the assumption of mortgage debt of $28,935 and
other liabilities of $6,842 and cash of $2,700. The mortgage
debt, which bore interest at 12.125%, has been refinanced
through the Operating Partnership's credit facility.
* In February 1998, SDG, through a joint venture with
another REIT, acquired an interest in a portfolio of twelve
regional malls comprising approximately 10.7 million square
feet of GLA. SDG's non-controlling 50% share of the total
purchase price of $487,250 was financed with a $242,000
unsecured loan which bears interest at 6.4% per annum, accrued
payables of $2,750 and the assumption of $242,500 of mortgage
debt. The weighted average interest rate on the mortgage debt
assumed was 6.94%.
<Page F5>
* In July 1998, CPI sold the General Motors Building for $800,000.
The net proceeds of $798,000 were used to pay off the building's
mortgage balance ($10,706) with the remainder available to
partially finance a portion of the CPI Merger Dividends. CPI
paid a commission to SDG totaling $2.5 million for services
rendered by SDG in connection with the sale of the General Motors
Building. This commission has not been reflected in the
accompanying pro forma financial information.
The accompanying pro forma combined condensed Statements of
Operations are presented as if the CPI Merger Dividends, the CPI Merger
and related transactions and the Other Property Transactions previously
described had occurred on January 1, 1997, and the combined entity
qualified as a REIT, distributed all of its taxable income and,
therefore, incurred no federal income tax for the period presented.
Certain reclassifications have been made in each companies' historical
Statement of Operations to conform them to the condensed combined pro
forma presentation.
These pro forma financial statements should be read in conjunction
with the historical financial statements and notes thereto of SDG, CPI
and CRC. In the opinion of management, all adjustments necessary to
reflect the effects of the CPI Merger and related transactions and the Other
Property Transactions previously described have been made. Certain
adjustments have been estimated based on information currently
available. Final adjustments are not expected to materially impact the
pro forma results reported.
The pro forma financial statements are not necessarily indicative
of the actual results of operations for the period ended September 30, 1998,
or December 31, 1997, or what the actual results of operations would have been
assuming the CPI Merger and the Other Property Transactions had been
completed as of January 1, 1997, nor are they indicative of the results
of operations for future periods.
2. Pro forma Adjustments to Unaudited Pro Forma Combined Condensed
Statements of Operations
In connection with the CPI Merger, CPI incurred $83,019 of
merger-related expenses which have been excluded from the Pro Forma Combined
Condensed Statements of Operations. Further, the gain of $198,891 related to
the sale of the General Motors Building has been excluded from the unaudited
Pro Forma Combined Condensed Statements of Operations.
<Page F6>
For the
Nine For the
Months year
Ended Ended
September December
30, 1998 31, 1997
(A) The historical results of SPG include the
historical results of SDG and the post-merger
results of CPI for the period from September 25,
1998 to September 30, 1998.
(B) The historical results of SRC include the
historical results of its predecessor CRC.
(C) Adjustment to reflect the reversal of the
historical operating results of the General
Motors Building which was sold in July 1998.
(D) To recognize revenue from straight-lining
rent related to leases which will be reset in
connection with the CPI Merger
$ 2,250 $ 3,000
(E) To reflect a reduction in interest income
due to forgiveness of Notes Receivable from CPI
employees ($13,200 multiplied by 6%)
$ (600) $ (800)
(F) To reflect the increase in depreciation and
amortization as a result of recording the
investment properties at acquisition value,
allocating 20% of the premium to land, versus
historical cost, allocating $62,227 to goodwill
and utilizing an estimated useful
life of 35 years for investment properties and
goodwill $29,600 $35,600
(G) To reflect the following adjustments to
interest expense:
(1) To reflect the elimination of amortization
of deferred financing costs related to CPI
written off in connection with the CPI Merger
$ (651) $(868)
(2) To reflect the amortization of the costs
incurred of $9,500 to finance the cash
portion of the CPI Merger consideration
4,633 6,334
(3) To reflect the amortization of $19,165
premium required to adjust mortgages and other
notes payable to fair value (5,888) (7,850)
(4) To reflect interest expense for debt
borrowed to finance the CPI Merger and related
transactions:
CPI Merger Facility $1,400,000 at LIBOR
plus 80 basis points (includes an annual
facility fee of 15 basis points)--6.45% 66,055 90,300
Revolving credit facility $236,100 at
LIBOR plus 65 basis points--6.30% 10,881 14,874
76,936 105,174
$75,030 $102,790
(A 1/8% change in the LIBOR rate would
change the annual pro forma adjustment to
interest expense by $2,045.)
(H) To reflect annual dividends on 6.5% Series B
Preferred Units issued in connection with the CPI
Merger $23,098 $31,488
(I) Other Property Transactions represent the historical operating
results of the properties for the appropriate period to reflect a full
year of activities in the unaudited pro forma
statements of operations. The pro forma adjustments give effect
when applicable to:
(1) An increase in depreciation expense as a result of
recording the properties at
estimated fair value
(2) An increase in interest expense primarily resulting
from debt incurred to financethe transactions
(3) The elimination of expenses included in the historical
results incurred by the seller directly related to the
transaction
(4) The elimination of the historical results to reflect the
sale of Burnsville Mall
The Other Property Transactions include:
(1) The acquisition of Phipps Plaza in January 1998
(2) The sale of Burnsville Mall in January 1998
(3) The acquisition of Cordova Mall in January 1998
(4) The acquisition of a 50% interest in a portfolio of
twelve regional malls in February 1998
<Page F7>
(5) The September and November 1997 transactions by SDG to
acquire ten portfolio properties and a 50% ownership interest
in an eleventh property of The Retail Property Trust,
("RPT")
(6) The December 1997 acquisition by SDG of the Fashion Mall at
Keystone at the Crossing
(J) To reflect the allocation of the Limited Partners' interest in the
net income of the Operating Partnerships, after consideration of the
preferred unit distributions. The Limited Partners' weighted average pro
forma ownership interest in the Operating Partnerships for the nine
months ended September 30, 1998 and for the year ended December 31, 1997, is
28.6% and 29.9%, respectively
For the
Nine
Months For the year
Ended Ended
September December
30, 1998 31, 1997
(K) The pro forma weighted average equivalent
shares is computed as follows:
Historical Weighted Average shares outstanding 112,956,863 99,920,280
Pro forma adjustments:
Shares issued related to RPT transaction -- 1,433,443
Shares issued related to the CPI Merger 51,912,002 53,078,564
Pro forma weighted average equivalent
shares 164,868,865 154,432,287
The diluted pro forma weighted average
equivalent shares for the nine month
period ended September 30, 1998 and for
the year ended December 31, 1997 were
165,237,311 and 154,816,351, respectively.
Each series of preferred stock issued and
outstanding during the periods either were
not convertible or their conversion would
not have had a dilutive effect on earnings
per share. The increase in pro forma
weighted average equivalent shares under
the diluted method is due entirely to the
effect of outstanding stock options.
(L) To eliminate expenses incurred by CPI during
the period related to the CPI Merger including
severance, legal, accounting and investment
banking fees and the write off of notes
receivable from CPI employees related to CPI's
employee stock purchase plan $ (83,019) N/A
(M) To reclassify preferred dividends of SPG Properties, Inc., formerly
SDG, as preferred dividends of subsidiary.
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