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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997.
OR
[GRAPHIC OMITTED] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] FOR THE TRANSITION PERIOD FROM ______________________ TO _________________
COMMISSION FILE NUMBER 1-11656
GENERAL GROWTH PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 42-1283895
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
55 W. MONROE - SUITE 3100
CHICAGO, ILLINOIS 60603
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 551-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK, $.10 PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such report(s)) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
[ ] Indicate by a check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form
10-K.
As of March 26, 1998, the aggregate market value of the 32,207,536 shares of
Common Stock held by non-affiliates of the registrant was $1,223,886,368, based
upon the closing price on the New York Stock Exchange composite tape on such
date. (For this computation, the registrant has excluded the market value of all
shares of its Common Stock reported as beneficially owned by executive officers
and directors of the registrant and certain other stockholders; such exclusion
shall not be deemed to constitute an admission that any such person is an
"affiliate" of the registrant.) As of March 26, 1998, there were 35,768,922
shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual stockholders meeting to be
held on May 14, 1998 are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
FORWARD LOOKING INFORMATION
Forward looking statements contained in this Annual Report on Form 10-K may
include certain forward-looking information statements, within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including (without limitation)
statements with respect to anticipated future operating and financial
performance, growth and acquisition opportunities and other similar forecasts
and statements of expectation. Words such as "expects", "anticipates",
"intends", "plans", "believes", "seeks", "estimates" and "should" and variations
of these words and similar expressions, are intended to identify these
forward-looking statements. Forward-looking statements made by the Company, its
Operating Partnership and Subsidiaries (the "Company") and its management are
based on estimates, projections, beliefs and assumptions of management at the
time of such statements and are not guarantees of future performance. The
Company disclaims any obligation to update or revise any forward-looking
statement based on the occurrence of future events, the receipt of new
information or otherwise.
Actual future performance, outcomes and results may differ materially from those
expressed in forward-looking statements made by the Company and its management
as a result of a number of risks, uncertainties and assumptions. Representative
examples of these factors include (without limitation) general industry and
economic conditions, 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, shifts in
customer demands, tenant bankruptcies, changes in operating expenses, including
employee wages, benefits and training, governmental and public policy changes
and the continued availability of financing in the amounts and at the terms
necessary to support the Company's future business.
GENERAL
General Growth Properties, Inc. was formed in 1986 by Martin Bucksbaum and
Matthew Bucksbaum (the "Original Stockholders"). On April 15, 1993, an initial
public offering (the "IPO") of the common stock (the "Common Stock") of General
Growth Properties, Inc. and certain related transactions were completed. In
connection with the IPO, General Growth Properties, Inc. and the Original
Stockholders formed GGP Limited Partnership (the "Operating Partnership"). As a
result of the IPO and related transactions, General Growth Properties, Inc. and
the Operating Partnership (collectively the "Company") together owned 100% of
twenty-one enclosed mall shopping centers. During May of 1995, the Company
completed a follow-on stock offering of 4,500,000 shares of Common Stock. The
Company issued 3,451,783 shares of Common Stock during 1996 in connection with
various acquisitions. In the third quarter of 1997 the Company sold an
additional 4,927,680 shares of Common Stock in two separate transactions. At
December 31, 1997, the Company owned 100% of thirty-five enclosed regional
shopping centers, 51% of the stock of GGP/Ivanhoe, Inc., 50% of each of two
enclosed mall shopping centers, Quail Springs and Town East, 38.2% of the stock
of GGP/Homart, Inc. ("GGP/Homart") and a non-voting preferred stock interest in
General Growth Management, Inc. ("GGMI"). The thirty-five 100% owned regional
shopping centers, the 51% ownership interest in GGP/Ivanhoe, Inc., and the 50%
ownership in both Quail Springs and Town East comprise the "GGP Centers". On
December 31, 1997, General Growth Properties, Inc. owned a 66% general
partnership interest in the Operating Partnership, and various minority holders,
primarily the Original Stockholders, owned the remaining 34% limited partnership
interest. The Company is engaged in the ownership, operation, management,
leasing, acquisition, development, expansion and financing of enclosed mall
shopping centers. See the Consolidated Financial Statements and Notes thereto
included in item 8 of this Annual Report on Form 10-K for certain financial
information required by this Item 1.
On February 11, 1994, the Company acquired 40% of the outstanding stock of
CenterMark Properties, Inc. ("CenterMark") for approximately $182.0 million in
cash. CenterMark owned interests in sixteen enclosed regional shopping centers,
three power centers and other real estate, including fourteen free-standing
department stores net leased to May Company and a 116-unit apartment project in
LaJolla, California. On December 19, 1995, the Company sold a portion of its
interest in CenterMark for $72.5 million and granted the buyer an option to
purchase its remaining interest. The Company's remaining interest was sold in
two transactions with $87.0 million received on July 1, 1996 and $130.5 million
received on January 2, 1997.
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On December 22, 1995 the Company, jointly with four other investors, acquired
100% of the stock in GGP/Homart which owned substantially all of the regional
mall assets and liabilities that were owned by Homart Development Co., an
indirect wholly-owned subsidiary of Sears, Roebuck & Co. The Company acquired
38.2% of GGP/Homart for approximately $178 million including certain transaction
costs. All of the stockholders of GGP/Homart committed to contribute up to $80.0
million of additional capital and as of December 31, 1997 this commitment had
been fulfilled. At December 31, 1997 GGP/Homart owned interests in twenty-five
shopping centers (the "Homart Centers"). Together, the GGP Centers and the
Homart Centers comprise the Company portfolio ("the "Portfolio Centers").
On December 22, 1995, GGP Management, Inc. ("GGP Management") was formed to
manage, lease, develop and operate enclosed malls. The Operating Partnership
owned 100% of the non-voting preferred stock ownership interest in GGP
Management representing 95% of the equity interest. Key employees of the Company
held the remaining 5% ownership interest therein, in the form of common stock
entitled to all of the voting rights in GGP Management. In August of 1996, GGP
Management acquired GGMI through arm's length negotiations for approximately
$51.5 million, which was accounted for as a purchase, by completing the
following steps: GGP Management borrowed approximately $39.9 million from the
Operating Partnership, and used the loan proceeds to acquire 1,555,855
newly-issued shares of Common Stock from the Company. GGP Management then
exchanged the 1,555,855 shares of Common Stock and 453,791 Operating Partnership
Units (contributed by the Operating Partnership) for 100% of the outstanding
shares in GGMI. GGP Management was then merged into GGMI with GGMI as the
surviving entity.
The Operating Partnership currently holds all of the non-voting preferred stock
ownership interest in GGMI representing 95% of the equity interest. Five key
employees of the Company hold the remaining 5% equity interest through ownership
of 100% of the common stock which is entitled to all voting rights in GGMI. GGMI
cannot distribute funds until its available cash flow exceeds all accumulated
preferred dividends owed to the preferred stockholder. Any dividends in excess
of the preferred cumulative dividend are allocated 95% to the preferred
stockholder and 5% to the common stockholders. The interest only loan from the
Operating Partnership to GGMI bears interest at 14% and matures in 2016. GGMI
may make principal payments on the loan if it has sufficient cash flow. GGMI
manages, leases, and performs various other services for the GGP Centers, Homart
Centers and other properties owned by unaffiliated parties.
As used herein, the term "GLA" refers to gross retail space, including anchors
and mall tenant areas; the term "Mall GLA" refers to gross retail space,
excluding anchors; the term "Anchor" refers to a department store or other large
retail store; the term "Mall Stores" refers to stores (other than anchors) that
are typically specialty retailers who lease space in shopping centers; and the
term "Freestanding GLA" means gross leasable area of freestanding retail stores
or convenience stores located along the perimeter of a center's parking area.
BUSINESS OF THE COMPANY
The Company is engaged in the ownership, operation, management, leasing,
acquisition, development, expansion and financing of enclosed mall shopping
centers. Most of the GGP Centers are strategically located nationwide in middle
markets where they have strong competitive positions. The GGP Centers'
geographic diversification should mitigate the effects of regional economic
conditions and local factors. The Homart Centers are primarily concentrated in
areas not served by the GGP Centers. In addition most of the Homart Centers are
located in major markets which further diversify the Portfolio Centers in terms
of geographic region and market type of the Company's enclosed mall shopping
centers.
The Company is the asset manager of the GGP Centers, making all key strategic
decisions. It retains final authority over all operating matters and supervises
GGMI, the property manager of the GGP Centers. GGMI performs day-to-day property
management functions including leasing, construction management, data
processing, maintenance, accounting, marketing, promotion and security at the
GGP Centers pursuant to the management agreements. The Company, along with its
stockholders in GGP/Homart, makes all key strategic decisions for the Homart
Centers. The Company is the asset manager of the Homart Centers, executing the
strategic plans and overseeing the day-to-day activities performed by GGMI. As
of December 31, 1997 GGMI was the property manager for twenty-one of the Homart
Centers, and the joint venture partners managed the other four Homart Centers.
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The majority of the mall income is derived from rents received through long term
leases with retail tenants. The long term leases require the tenant to pay base
rent which is a fixed amount specified in the lease. The base rent is often
subject to scheduled increases defined in the lease. Another component of income
is percentage rent. Percentage rent is paid by the tenant if their sales exceed
an agreed upon minimum annual amount. Percentage rent is calculated by
multiplying the sales in excess of the minimum annual amount by a percentage
defined in the lease agreement. Long term leases generally contain a provision
for the mall to recover expenses incurred in the day-to-day operations including
common area maintenance and real estate taxes. The recovery is calculated by
multiplying the tenants pro-rata share of space by the total recoverable expense
amounts.
The evolution of the shopping center business necessitates the implementation of
new approaches to shopping center management and leasing. Management's
strategies to increase shareholder value and cash flow include the integration
of mass merchandise retailers with traditional department stores, specialty
leasing, entertainment-oriented tenants, proactive property management and
leasing, strategic expansions and acquisitions, and selective new shopping
center developments. These approaches should enable the Company to operate and
grow successfully in today's value-oriented environment. Following is a summary
of recent acquisition, development and expansion and redevelopment activity.
ACQUISITIONS
The Company continues to seek desirable properties for acquisition. In 1997, the
Company acquired 100% ownership interests in five regional malls and partial
ownership interests in three additional regional malls for an aggregate
investment of approximately $387 million.
The Company acquired a 100% ownership interest in Valley Hills Mall located in
Hickory, North Carolina on October 23, 1997 for a purchase price of
approximately $34.5 million. During the second quarter of 1997, the Company
acquired 100% ownership of three other properties, Century Plaza Shopping
Center, Southlake Mall and Eden Prairie Mall. Century Plaza Shopping Center
located in Birmingham, Alabama was acquired on May 1, 1997 for $31.8 million.
Southlake Mall, located in Atlanta, Georgia, was acquired on June 18, 1997, for
a purchase price of $67.0 million. The aggregate consideration paid for Eden
Prairie Mall, located in Minneapolis, Minnesota, was $19.9 million. On March 31,
1997, the Company acquired a 100% ownership interest in Market Place Mall,
located in Champaign, Illinois, for a purchase price of approximately $70.0
million. On September 17, 1997, GGP/Ivanhoe, Inc. acquired both The Oaks Mall In
Gainesville, Florida and Westroads Mall in Omaha, Nebraska. The Company owns 51%
of the ownership interest in GGP/Ivanhoe for an investment of $107.5 million
including its prorata share of the property level indebtedness. On June 11,
1997, the Company acquired a 50% interest in Town East Mall, located in
Mesquite, Texas for $56.5 million including its pro rata share of the property
level indebtedness.
The Company's management believes that it has the following competitive
advantages and reasons to acquire enclosed shopping malls:
o The funds necessary for a cash acquisition of a shopping center can
be obtained by the Company from a combination of sources, including
mortgage or unsecured financing or the issuance of public debt or
equity.
o The Company has the flexibility to pay for an acquisition with a
combination of cash, Common Stock or limited partnership units in
the Operating Partnership. This creates the opportunity for
tax-advantaged transactions for the seller.
o Management's expertise allows it to evaluate proposed acquisitions
for their increased profit potential. Additional profit can
originate from many sources including expansions, remodeling,
remerchandising, and more efficient management of the property.
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DEVELOPMENT
The Company intends to pursue development when warranted by the potential
financial returns. Brass Mill, a Homart development project, was completed and
had a grand opening ceremony in September of 1997. The Company is currently
developing an enclosed shopping center in Coralville (Iowa City), Iowa and
completing predevelopment work on the site located in Grand Rapids, Michigan.
Brass Mill includes Brass Mill Commons a 930,000 square foot enclosed mall and
power center which includes approximately 330,000 square feet of Mall Store
space and a 200,000 square foot power center in Waterbury, Connecticut. As of
December 31, 1997 the mall had approximately 250,000 square feet of Mall Store
space signed and an additional 30,000 square feet out for signature. Sears,
JCPenney, Filenes and Hoyt's theater anchor the enclosed regional mall. The
power center, Brass Mill Commons, is currently 100% leased. Brass Mill includes
Chili's, Office Max, Kids R Us, Toys R Us, Barnes & Noble, Hometown Buffet, TGI
Friday's and Shaw's Grocery Store.
Coral Ridge Mall, a 1,200,000 square foot enclosed regional mall located in
Coralville, Iowa is scheduled to open in July of 1998. The mall will include
five department store anchors, several big box retailers, a theater, an ice
arena, a children's museum and approximately 200,000 square feet of Mall Store
space. The Mall Store space was 52% signed and 47% out for signature at the end
of 1997. As of December 31, 1997 approximately $26 million has been spent of an
estimated total cost of $70 million. The funding for the development of this
project comes primarily from an unsecured credit facility.
The development in Grand Rapids, Michigan will consist of approximately
1,100,000 square feet and is currently expected to open in late 1999.
EXPANSIONS AND RENOVATIONS
Most of the Portfolio Centers were designed to allow for expansion and growth
through the addition of new Anchors or Mall and Freestanding Stores. Five GGP
Centers and eight Homart Centers are in the process of an expansion, Anchor
addition or renovation. The expansion and renovation of a Portfolio Center often
increases customer traffic, trade area penetration and typically improves the
competitive position of the property.
Three of the larger renovation and expansion projects are the renovation and
expansion of Chapel Hills Mall, the expansion of Fox River Mall and Neshaminy
Mall, a Homart Center.
Chapel Hills Mall, a 1,159,187 square foot center located in Colorado Springs,
Colorado recently added a three level 203,000 square foot Dillards department
store and adjoining parking deck. The new Dillards opened in March of 1997.
Additional improvements will include the addition of an ice rink, a two-level
Borders Book Store, a food court expansion, new skylights, new ceilings, hand
rails, remodeled restrooms and flooring upgrades. The ice rink and renovation
are expected to be completed during 1998.
Fox River Mall, a 1,045,806 square foot center, located in Appleton, Wisconsin
is completing the expansion of its food court. The 36,000 square foot project
includes a 7,000 square foot restaurant/brew pub, eight new permanent food court
locations and an additional 300 seats, bringing the total seating capacity to
850 seats. The modifications were substantially complete by the end of 1997.
Neshaminy Mall is currently a 945,779 square foot enclosed mall anchored by
Boscov, Sears, and Strawbridge & Clothier. Neshaminy Mall, located in Bensalem,
Pennsylvania, a suburb of Philadelphia, is currently undergoing an expansion
project consisting of a 24 screen AMC Theater and approximately 20,000 square
feet of Mall Store space. The addition of the 24 screen theater will complement
the existing entertainment oriented tenant mix and differentiate Neshaminy Mall
from its competition. The theater and additional Mall Store space is projected
to open in late 1998.
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THE PORTFOLIO CENTERS
All of the sixty-four Portfolio Centers are enclosed mall shopping centers with
at least two major department stores as Anchors and a wide variety of smaller
Mall Stores. Most of the Portfolio Centers have three or four Anchors and
additional Freestanding Stores which are located along the perimeter of the
parking area. Each Portfolio Center provides ample surface parking for shoppers.
The Portfolio Centers:
o range in size between approximately 340,000 and 1,365,000 square feet of
total GLA and between approximately 125,000 and 425,000 square feet of
Mall and Freestanding GLA. The smallest Portfolio Center has
approximately 40 stores, and the largest has over 200 stores;
o have approximately 250 Anchors, operating under approximately 53 trade
names; and
o have approximately 9,600 Mall and Freestanding Stores.
The average size of the sixty-four Portfolio Centers is approximately 800,000
square feet of GLA, including all Anchors, Mall Stores and Freestanding Stores.
The average Mall and Freestanding GLA per Portfolio Center is approximately
310,000 square feet.
As of December 31, 1997, the GGP Centers contain approximately 28.9 million
square feet of GLA consisting of Anchors (whether owned or leased), Mall Stores
and Freestanding Stores. The Homart Centers contain approximately 22.3 million
square feet of GLA.
The Company's share of total revenues from the Portfolio Centers and GGMI
increased to $443.7 million in 1997 from $363.4 million in 1996. No single
Portfolio Center generated more than 7% of the Company's total 1997 pro rata
revenues. In 1997, total Mall Store sales at all of the Portfolio Centers
increased by approximately 7.2%.
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MALL AND FREESTANDING STORES
The Portfolio Centers have an aggregate of approximately 9,600 Mall and
Freestanding Stores. The following table reflects the tenant representation by
category in the GGP Centers as of December 31, 1997. Management believes that
similar tenant representation by category existed in the Portfolio Centers as of
December 31, 1997.
<TABLE>
<CAPTION>
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% Of Sq. Ft. in
Tenant Categories GGP Centers Types of Tenants/Products Sold
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<S> <C> <C>
Women's Apparel 21% Women's apparel
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Men's Apparel 2% Men's apparel
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Apparel 10% Unisex apparel, children's apparel, lingerie, formalwear
- -------------------------------------------------------------------------------------------------------------
Shoes 11% Shoes
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Specialty Food 3% Candy, coffee, nuts, chocolate, health food/vitamins
- -------------------------------------------------------------------------------------------------------------
Food 9% Restaurant, food court
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Gifts 6% Cards, candles, engraving stores, other gift or novelty
- -------------------------------------------------------------------------------------------------------------
Jewelry 3% Fine jewelry and costume jewelry
- -------------------------------------------------------------------------------------------------------------
Music/Electronics 6% Music, electronics, computer and software, video rental
- -------------------------------------------------------------------------------------------------------------
Sporting Goods 4% Sports apparel, sports and exercise equipment
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Entertainment 4% Arcades and interactive entertainment
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Specialty 21% Photo studios and development, beauty and nail salons,
pharmacy and sundries, variety stores, pet stores,
newsstands, jewelry repair, shoe repair, tailor, optical,
video games, sporting goods, shops for home/bath/kitchen,
rugs, fabric stores, beds/waterbeds, luggage, perfume,
tobacco, toys, cameras, sunglasses, books
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Total 100%
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</TABLE>
Typical tenants in Women's Apparel include the Limited, Casual Corner, Talbots
and Lerner. Men's Apparel includes tenants such as J. Riggins and Nicks for Men.
The Apparel category typically includes Gap, Eddie Bauer, American Eagle, Buckle
and Gymboree. The Shoes category often includes tenants such as Kinney,
Footlocker and Payless Shoesource. Specialty Food tenants often include General
Nutrition Center, Mr. Bulky, and Barnie's Coffee and Tea Company. The Food
category typically includes restaurants such as Garfield's, fast food
restaurants such as Arby's, and food court tenants such as Sbarro. Typical
tenants in the Gifts Category include Disney, Things Remembered, Kirlin's
Hallmark and Spencer Gifts. Jewelry tenants typically include Friedman's
Jewelers and Golden Chain Gang. The Music/Electronics category includes tenants
such as Camelot Music, Radio Shack, Suncoast Pictures and Waldensoftware.
Sporting Goods include tenants such as Champs, Pro Image and Scheel's Sports.
Entertainment tenants typically include Pocket Change, Aladdin's Castle and
Tilt. Specialty tenants include Mastercuts, One Hour Photo, California Nails,
Lechter's, Kay-Bee Toys, Dollar Tree, Lemstone Books, Garden Botanika and many
others.
The table below shows mall shop tenants (excluding department stores) in the GGP
Centers with more than 50,000 total square feet on December 31, 1997. Management
believes that similar square footage percentages existed in the Portfolio
Centers as of December 31, 1997.
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Total
Tenant Name Sq. Ft. % of Total
- ------------------------------------------------------------------------------------
<S> <C> <C>
Lerner New York 200,988 1.8%
Express 161,923 1.5%
Limited 153,121 1.4%
Lane Bryant 139,980 1.3%
Victoria's Secret 127,154 1.2%
Footlocker 102,528 0.9%
Radio Shack 87,898 0.8%
Gap 86,509 0.8%
Waldenbooks 82,361 0.8%
Famous Footwear 77,142 0.7%
Champs Sports 75,805 0.7%
B. Dalton Bookseller 70,666 0.6%
Lenscrafters 57,598 0.5%
Casual Corner 55,363 0.5%
</TABLE>
COMPETITION
The Portfolio Centers compete with numerous shopping alternatives in seeking to
attract retailers to lease space as retailers themselves face increasing
competition from discount shopping centers, outlet malls, discount shopping
clubs, direct mail and telemarketing. Below are detailed descriptions of the
type of competitor the Portfolio Centers face.
Fox River Mall is an enclosed super regional mall located in Appleton,
Wisconsin. It consists of the main building, an adjacent community center and
nine outparcels totaling 1,045,806 square feet. The mall is anchored by
Dayton's, Younkers, JCPenney, Sears and Target. The primary competition for Fox
River consists of three centers. One of the centers, located 26 miles northeast,
consists of 601,630 square feet and is anchored by Elder Beerman, Kohl's,
Montgomery Ward and Shopko. This center offers merchandise with lower price
points and more discount retailers than Fox River Mall. A 903,538 square foot
center located 29 miles northeast is anchored by Boston Store, JCPenney and
Younkers. This center lacks a fashion anchor similar to the Dayton's at Fox
River and is not easily accessible in its downtown location. In addition, a
328,775 square foot community center located approximately three miles from Fox
River is anchored by Kohl's and Shopko. This center primarily serves as a
convenience shopping facility for residents on the north side of Appleton and
offers little direct competition to Fox River.
Bellis Fair Mall is a 768,527 square foot regional shopping center located on
Interstate 5 in Bellingham, Washington, 90 miles north of Seattle and 25 miles
south of the Canadian border. The Mall is anchored by JCPenney, Bon Marche,
Sears, Target and Mervyns. The primary competition for Bellis Fair consists of
discount retailers. While these discount retailers help draw Canadian shoppers
they in turn attract shoppers to Bellis Fair due to its stronger, fashion
oriented tenant mix. The discount retailers that compete with Bellis Fair
include Ross Dress for Less, Home Base, Office Depot, Good Guys, Circuit City
and Wal-Mart. Other competition includes a 110,000 square foot center located 15
miles north that also helps draw Canadian shoppers. Located approximately 25
miles south is a 525,000 square foot center anchored by Bon Marche, Sears and
Emporium. This center lacks the desirable national tenant mix available at
Bellis Fair. As a whole, these outlet centers have little impact on Bellis
Fair's core market.
Natick Mall is a 1,152,039 square foot regional mall located in Boston,
Massachusetts. The mall is anchored by Filenes, Macy's, Lord & Taylor, Jordan
Marsh and Sears. Natick Mall is situated in a highly competitive market of
regional malls, yet the center's excellent location makes it the dominant retail
facility in the trade area. The primary competition for Natick Mall consists of
an upscale 444,000 square foot specialty retail center with an adjacent
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300,000 square foot center. The specialty center is anchored by Bloomingdales,
Homestore and Filenes. The 300,000 square foot adjacent center is anchored by
Henri Bendel. These centers offer unique upscale merchants with a much smaller
number of tenants and a more limited fashion mix than is offered at Natick. A
1,250,000 square foot center located approximately 22 miles north is anchored by
Sears, Lord & Taylor, Filenes and Macy's. A 1988 renovation to this center,
which included the addition of a second level of mall shops, has secured its
strong competitive position in the northwest suburban Boston community, yet its
market demographics remain weaker than Natick's. A new 1,100,000 square foot
center located approximately 20 miles west is anchored by Sears, JCPenney and
Filenes. This center offers a more moderately priced tenant mix and is also
located in a weaker demographic area than Natick's market area. In addition, a
1,370,000 square foot center is located 25 miles southeast and is anchored by
Sears, Filenes, Lord & Taylor and Macy's. This center contains similar tenants
to and the same anchors as Natick. Because of its good location and tenant mix,
it poses the most direct competition to Natick Mall.
In addition to competition from other centers which the Portfolio Centers also
face direct competition from other companies, catalogues, direct mail, internet
sales and telemarketers.
ENVIRONMENTAL MATTERS
Under various federal, state and local laws and regulations, an owner of real
estate is liable for the costs of removal or remediation of certain hazardous or
toxic substances on such property. These laws often impose such liability
without regard to whether the owner knew of, or was responsible for, the
presence of such hazardous or toxic substances. The costs of remediation or
removal of such substances may be substantial, and the presence of such
substances, or the failure to promptly remediate such substances, may adversely
affect the owner's ability to sell such real estate or to borrow using such real
estate as collateral. In connection with its ownership and operation of the
Portfolio Centers, the Company, the Operating Partnership or the relevant
Property Partnership, may be potentially liable for such costs.
All of the Portfolio Centers have been subject to Phase I environmental
assessments, which are intended to discover information regarding, and to
evaluate the environmental condition of, the surveyed and surrounding
properties. The Phase I assessments included an historical review, a public
records review, a preliminary investigation of the site and surrounding
properties, screening for the presence of asbestos, polychlorinated biphenyls
("PCBs") and underground storage tanks and the preparation and issuance of a
written report, but do not include soil sampling or subsurface investigations.
Where the Phase I assessment so recommended, a Phase II assessment was conducted
to further investigate any issues raised by the Phase I assessment. In each case
where Phase I and/or Phase II assessments resulted in specific recommendations
for remedial actions, management has either taken or scheduled the recommended
action.
Neither the Phase I nor the Phase II assessments have revealed any environmental
liability that the Company believes would have a material effect on the
Company's business, assets or results of operations, nor is the Company aware of
any such liability. Nevertheless, it is possible that these assessments do not
reveal all environmental liabilities or that there are material environmental
liabilities of which the Company is unaware. Moreover, no assurances can be
given that (i) future laws, ordinances or regulations will not impose any
material environmental liability or (ii) the current environmental condition of
the Portfolio Centers will not be affected by tenants and occupants of the
Portfolio Centers, by the condition of properties in the vicinity of the
Portfolio Centers (such as the presence of underground storage tanks) or by
third parties unrelated to the Operating Partnership or the Company.
EMPLOYEES
As of March 25, 1998, the Company and GGMI had approximately 2,800 full-time
employees. None of the employees are subject to a collective bargaining
agreement and the Company has not experienced a labor-related work stoppage.
INSURANCE
The Company has comprehensive liability, fire, flood, extended coverage and
rental loss insurance with respect to the Portfolio Centers. The Company's
management believes that all of the Portfolio Centers described herein which are
owned by the Company, in whole or in part, are adequately covered by insurance.
-9-
<PAGE> 10
QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST AND TAXABILITY OF DISTRIBUTIONS
The Company currently qualifies as a real estate investment trust pursuant to
the requirements contained under Sections 856-858 of the Internal Revenue Code
of 1986, as amended (the "Code"). If, as the Company contemplates, such
qualification continues, the Company will not be taxed on its real estate
investment trust taxable income. During 1997, the Company distributed (or was
deemed to have distributed) 100% of its taxable income to stockholders. Cash
distributions in the amount of $1.78 per share were paid in 1997. Of that
amount, $.53 (29.8%) was ordinary income, based on the taxable income of the
Company and $1.25 (70.2%) was a long-term capital gain from the sale of a
portion of the CenterMark stock.
-10-
<PAGE> 11
ITEM 2. PROPERTIES
The Company's investment in real estate as of December 31, 1997 consisted of its
interest in the Portfolio Centers, development in progress and certain other
real estate. As described elsewhere herein, on December 22, 1995 the Company
acquired 38.2% of GGP/Homart. GGP/Homart owns interests in the Homart Centers
and certain other real estate assets. The Company completed the sale of its
remaining interest in CenterMark on January 2, 1997. As a result of the sale,
the Company no longer has an ownership interest in the real estate assets of
CenterMark.
In most cases, the land underlying the Portfolio Centers is owned in fee;
however, at a few of the GGP Centers, all or part of the underlying land is
owned by a third party that leases the land pursuant to a ground lease. The
Company currently leases the land under Rio West Mall. It also leases a portion
of the Fallbrook Mall land and a portion of the SouthShore and Bayshore parking
areas. The leases contain various purchase options in favor of the Company and
typically provide for a right of first refusal in favor of the Company in the
event of a proposed sale of the property by the Landlord. In addition, Prince
Kuhio Plaza, one of the Homart Centers, is located on land leased pursuant to a
long-term ground lease.
The Portfolio Centers weighted average Mall Store rent per square foot from
leases that expired in 1997 was $20.81. As a result of market rents being higher
than the rents under many of the expiring leases, the weighted average Mall
Store rent per square foot on new and renewal leases during 1997 was $25.84, or
$5.03 per square foot more than the above-indicated average for expiring leases.
Below is a schedule of the lease expirations over the next five years.
COMPANY PORTFOLIO
FIVE YEAR LEASE EXPIRATION SCHEDULE
<TABLE>
<CAPTION>
All Expirations Expirations @ Share(1)
-------------------------------------------- -------------------------------------------------
Base Rent Sq. Ft. Rent/Sq. Ft. Base Rent Sq. Ft. Rent/Sq. Ft.
- ----------------------------------------------------------------------------------------------------------------------------------
GGP Centers
<S> <C> <C> <C> <C> <C> <C> <C>
1998 $ 12,275,741 624,190 $ 19.67 $ 11,261,988 577,833 $ 19.49
1999 13,318,630 632,270 21.06 12,296,333 593,946 20.70
2000 11,270,130 511,754 22.02 10,601,982 486,771 21.78
2001 14,637,060 679,505 21.54 13,589,964 635,040 21.40
2002 15,373,776 684,733 22.45 13,925,430 632,646 22.01
------------ ---------- -------- ------------ ---------- ---------
66,875,337 3,132,452 21.35 61,675,697 2,926,236 21.08
------------ ---------- -------- ------------ ---------- ---------
Homart Centers
1998 10,578,959 349,311 30.29 2,565,123 80,851 31.73
1999 11,821,594 369,708 31.98 2,717,458 82,529 32.93
2000 16,028,705 491,221 32.63 3,833,424 124,176 30.87
2001 10,281,914 338,574 30.37 2,546,634 84,584 30.11
2002 13,032,440 422,241 30.86 3,871,919 120,671 32.09
------------ ---------- -------- ------------ ---------- ---------
61,743,612 1,971,055 31.33 15,534,558 492,811 31.52
------------ ---------- -------- ------------ ---------- ---------
Portfolio Centers
1998 22,854,700 973,501 23.48 13,827,111 658,684 20.99
1999 25,140,224 1,001,978 25.09 15,013,791 676,475 22.19
2000 27,298,835 1,002,975 27.22 14,435,406 610,947 23.63
2001 24,918,974 1,018,079 24.48 16,136,598 719,624 22.42
2002 28,406,216 1,106,974 25.66 17,797,349 753,317 23.63
------------ ---------- -------- ------------- ----------- ---------
$128,618,949 5,103,507 $ 25.20 $ 77,210,255 3,419,047 $ 22.58
============ ========== ======== ============ ========== =========
</TABLE>
(1) Expirations at share reflect the Company's direct or indirect ownership
interest in a joint venture.
-11-
<PAGE> 12
At December 31, 1997, the Company had direct or indirect ("pro rata") mortgage
debt totaling $1,709,003. The Company decreased its ratio of consolidated pro
rata floating rate debt to total pro rata debt from 34% at December 31, 1996 to
less than 13% at December 31, 1997. In addition to the reduction in the
percentage of floating rate debt, the consolidated pro rata weighted average
interest rate was reduced to 7.14% as of December 31, 1997 compared to 7.25% in
the prior year. The following table reflects the maturity dates of the Company's
pro rata debt and the related interest rates.
COMPANY PORTFOLIO DEBT
MATURITY AND CURRENT AVERAGE INTEREST RATE SUMMARY(a)
AS OF DECEMBER 31, 1997
(Dollars in Thousands, unaudited)
<TABLE>
<CAPTION>
Company
GGP Centers GGP/Homart(b) Portfolio Debt
------------------------- ------------------------- --------------------------
Current Current Current
Maturing Average Maturing Average Maturing Average
Year Amount Rate Amount Rate Amount Rate
- ---------------------------- -------------- -------- ---------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
1998 $ 16,743 6.93% $ 43,264 7.03% $ 60,007 7.00%
1999 196,687 7.83% 89,513 7.02% 286,200 7.58%
2000 - - 50,470 6.96% 50,470 6.96%
2001 152,000 6.41% - - 152,000 6.41%
Subsequent 1,007,721 7.10% 152,605 7.46% 1,160,326 7.15%
-------------- -------- ---------- --------- ------------ ---------
Totals $ 1,373,151 7.13% $ 335,852 7.21% $ 1,709,003 7.14%
============== ======== ========== ========= ============ =========
Floating Rate $ 86,000 6.65% $ 129,051 6.96% $ 215,051 6.84%
Fixed Rate (c) 1,287,151 7.16% 206,801 7.37% 1,493,952 7.19%
-------------- -------- ---------- --------- ------------ ---------
Totals $ 1,373,151 7.13% $ 335,852 7.21% $ 1,709,003 7.14%
============== ======== ========== ========= ============ =========
</TABLE>
(a) Excludes principal amortization.
(b) GGP/Homart debt reflects the Company's share of its total portfolio debt.
(c) Includes $44,728 of floating rate debt with a 9% cap on the all-in rate
through maturity.
The following tables set forth certain information regarding the GGP Centers
and the Homart Centers as of December 31, 1997. The first table depicts the GGP
Centers and the second table depicts the Homart Centers.
-12-
<PAGE> 13
GGP CENTERS
-----------
<TABLE>
<CAPTION>
TOTAL GLA/MALL
YEAR AND FREESTANDING
NAME OF CENTER/ OPENED/REMODELED GLA ANCHOR
LOCATION(1) OR EXPANDED (SQUARE FEET) ANCHORS VACANCIES
----------- ----------- ----------- ------- ---------
<S> <C> <C> <C> <C>
Bayshore Mall 1987/ 615,481/ Gottschalks, JCPenney, Sears, Mervyn's, None
Eureka, California 1989 345,466
Bellis Fair Mall 1988/ 768,527/ The Bon Marche, JCPenney, Sears, Target, None
Bellingham, Washington N/A 349,606 Mervyn's
Birchwood Mall 1990/ 716,449/ Younkers, JCPenney, Sears, Target, Hudson's None
Port Huron, Michigan 1991, 1997 287,306
Capital Mall 1978/ 517,680/ Dillard's, JCPenney, Sears None
Jefferson City, Missouri 1985, 1992 307,815
Century Mall 1975/ 726,109/ JCPenney, McRae's, Rich's, Sears None
Birmingham, Alabama 1990, 1994 237,764
Chapel Hills Mall 1982/ 1,159,187/ Joslin's, Sears, Mervyn's, KMart, JCPenney, None
Colorado Springs, 1986 420,010 Dillard's
Colorado
Colony Square Mall 1981/ 547,738/ Lazarus, Elder-Beerman, JCPenney, Sears None
Zanesville, Ohio 1987 289,559
Columbia Mall 1985/ 733,368/ Dillard's, JCPenney, Sears, Target None
Columbia, Missouri 1987 317,924
Eagle Ridge Mall 1996/ 735,909/ Dillard's, JCPenney, Sears None
Winter Haven, Florida N/A 317,648
Eden Prairie Mall 1976/ 862,399/ Sears, Target, Kohl's, Mervyn's None
Eden Prairie, Minnesota 1994 325,602
Fallbrook Mall 1966/ 992,856/ JCPenney, Target, Mervyn's, KMart, None
West Hills, California 1985 452,251 Burlington Coat Factory
(Los Angeles,
California)
Fox River Mall 1984/ 1,045,806/ Dayton's, Younkers, JCPenney, Sears, Target None
Appleton, Wisconsin 1991 537,813
Gateway Mall 1990/ 643,864/ The Emporium, Sears, Target None
Springfield/Eugene, 1990 357,964
Oregon
Grand Traverse Mall 1992/ 577,733/ Hudson's, JCPenney, Target None
Traverse City, Michigan N/A 312,756
Greenwood Mall 1979/ 746,617/ Castner Knott, JCPenney, Sears, Dillard's None
Bowling Green, Kentucky 1987 367,682
Knollwood Mall 1955/ 511,445/ Montgomery Ward, Kohl's None
St. Louis Park, 1981 301,309
Minnesota
(Minneapolis, Minnesota)
Lakeview Mall 1993/ 621,729/ Hudson's, JCPenney, Sears None
Battle Creek, Michigan N/A 331,464
Lansing Mall 1969/ 833,108/ Hudson's, JCPenney, Mervyn's, Montgomery Ward None
Lansing, Michigan N/A 390,980
Lockport Mall 1971/ 345,932/ Montgomery Ward, Hills, Bon Ton None
Lockport, New York 1984 125,535
Mall of the Bluffs 1986/ 587,201/ Dillard's, JCPenney, Target None
Council Bluffs, Iowa 1988 353,567
(Omaha, Nebraska)
Market Place Mall 1975/ 821,117/ Sears, Bergner's, JCPenney None
Champaign, Illinois N/A 357,966
Natick Mall 1966/ 1,152,039/ Sears, Filene's, Lord & Taylor, Macy's None
Natick, Massachusetts 1994 428,039
</TABLE>
-13-
<PAGE> 14
GGP CENTERS
-----------
<TABLE>
<CAPTION>
TOTAL GLA/MALL
YEAR AND FREESTANDING
NAME OF CENTER/ OPENED/REMODELED GLA ANCHOR
LOCATION(1) OR EXPANDED (SQUARE FEET) ANCHORS VACANCIES
----------- ----------- ------------- ------- ----------
<S> <C> <C> <C> <C>
Oaks Mall (2) 1978/ 907,392/ Dillard's, Burdines, Sears, JCPenney, Belk None
Gainesville, Florida N/A 349,725
Oakwood Mall 1986/ 786,326/ Dayton's, JCPenney, Target, Sears, Scheel's None
Eau Claire, Wisconsin 1991 321,250 All Sports
Park Mall 1974/ 848,325/ Sears, Dillards, Macy's None
Tucson, Arizona N/A 339,325
Piedmont Mall 1984/ 652,195/ Belk, Hills, JCPenney, Sears, Belk Mens None
Danville, Virginia 1995 187,045
The Pines 1986/ 607,543/ Dillard's, JCPenney, Sears, Wal-Mart None
Pine Bluff, Arkansas 1990 268,034
Quail Springs Mall (2) 1980/ 1,111,935/ Dillard's, Foley's, JCPenney, Sears None
Oklahoma City, Oklahoma 1992 329,183
Rio West Mall 1981/ 379,195/ Beall's, JCPenney, KMart None
Gallup, New Mexico 1991 193,580
River Falls Mall 1990/ 744,532/ Bacons, Wal-Mart, Toys "R" Us None
Clarksville, Indiana N/A 399,367
(Louisville, Kentucky)
River Hills Mall 1991/ 637,262/ Herberger's, JCPenney, Target, Sears None
Mankato, Minnesota 1996 285,213
Sooner Fashion Square 1976/ 431,536/ Dillard's, JCPenney, Sears None
Norman, Oklahoma N/A 199,911
Southlake Mall 1976/ 1,023,428/ Sears, Rich's, JCPenney, Macy's None
Morrow, Georgia N/A 285,328
SouthShore Mall 1981/ 339,815/ JCPenney, Sears, KMart None
Aberdeen, Washington N/A 150,497
Town East Mall (2) 1971/ 1,270,363/ Sears, Foley's, JCPenney, Dillard's None
Mesquite, Texas 1986 434,586
Valley Hills Mall 1978/ 618,126/ Belk, JCPenney, Sears None
Hickory, North Carolina 1986 205,830
Westwood Mall 1972/ 465,154/ Elder-Beerman, JCPenney, Montgomery Ward None
Jackson, Michigan 1993 147,124
Westroads Mall (2) 1968/ 1,074,046/ Von Maur, JCPenney, Younkers, Montgomery Ward None
Omaha, Nebraska 1995 382,836
West Valley Mall 1995/ 665,483/ Gottschalks, JCPenney, Target, Sears None
Tracy, California N/A 147,467
MALLS UNDER DEVELOPMENT
Coral Ridge Mall 1998/ 1,200,000/ Dillard's, Younkers, Sears, JCPenney, Target None
Iowa City, Iowa N/A 200,000
</TABLE>
(1) In some cases, where a center's location is part of a larger metropolitan
area, the metropolitan area is identified in parentheses.
(2) The Company owns 50% of Quail Springs Mall and Town East Mall and 51% of
Oaks Mall and Westroads Mall.
-14-
<PAGE> 15
HOMART CENTERS
--------------
<TABLE>
<CAPTION>
OWNERSHIP TOTAL GLA/MALL
YEAR INTEREST % AND FREESTANDING
NAME OF CENTER/ OPENED/REMODELED OF GLA ANCHOR
LOCATION(1) OR EXPANDED GGP/HOMART (SQUARE FEET) (2) ANCHORS VACANCIES
------------ --------------- ----------- ------------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Arrowhead Towne Center 1993/ 33.3 1,130,901/ Dillard's, JCPenney, Mervyn's, None
Glendale, Arizona 1996 397,656 Montgomery Ward,
Robinson's-May
Bay City Mall 1991/ 100 527,273/ Sears, Target, JCPenney, None
Bay City, Michigan 1993 211,595 Younkers
Brass Mill Center/Commons 1997/ 100 1,128,255/ Sears, Filene's, One
Waterbury, Connecticut N/A 528,608 JCPenney
Chula Vista Center 1960/ 100 884,227/ Macy's, Sears, JCPenney, None
Chula Vista, California 1994 302,364 Mervyn's
Columbiana Centre 1990/ 100 811,047/ Sears, Parisian's, Dillard's, None
Columbia, South Carolina 1992 251,130 J. B. White
Deerbrook Mall 1984/ 100 1,195,527/ Sears, Mervyn's, Foley's, None
Humble, Texas N/A 362,936 JCPenney, Dillard's
(Houston, Texas)
Lakeland Square 1988/ 50 903,660/ Sears, Belk-Lindsey, Dillard's, None
Lakeland, Florida 1994 291,780 JCPenney, Burdines, Dillard's
(Men's & Home Furnishings)
Moreno Valley Mall 1992/ 100 1,035,508/ Sears, Robinson's-May, None
Moreno Valley, California N/A 429,254 JCPenney, Harris'
Neshaminy Mall 1968/ 50 945,779/ Sears, Strawbridge & Clothier, None
Bensalem, Pennsylvania 1995 257,381 Boscov's
Newgate Mall 1981/ 100 625,953/ Sears, Mervyn's, Dillard's None
Ogden, Utah 1994 247,428
New Park Mall 1980/ 50 1,131,329/ Sears, Macy's, Mervyn's, None
Newark, California 1993 388,005 JCPenney
North Point Mall 1993/ 100 1,366,405/ Sears, JCPenney, Lord & Taylor, None
Alpharetta, N/A 396,287 Rich's, Dillard's, Parisian
Georgia
(Atlanta, Georgia)
The Parks at Arlington 1988/ N/A(3) 1,191,828/ Sears, Dillard's, Mervyn's, None
Arlington, Texas N/A 359,912 Foley's, JCPenney
The Pavilions at Buckland Hills 1990/ N/A(3) 963,419/ Sears, Filene's, JCPenney, Lord &
Manchester, Connecticut 1994 327,284 Taylor, Filene's Home Store, None
Dick's Sporting Goods
Pembroke Lakes Mall 1992/ 100 1,063,955/ Sears, Burdine's, JCPenney, None
Pembroke Pines, Florida N/A 337,235 Dillard's, Dillard's (Men's &
Home Furnishings)
Prince Kuhio Plaza 1985/ 100 504,217/ Sears, Liberty House, JCPenney None
Hilo, Hawaii N/A 166,191
Rolling Oaks Mall 1988/ 50 758,584/ Sears, Dillard's, Foley's None
San Antonio, Texas 1992 297,727
Sequoia Mall and Tower Plaza 1975/ 100 345,940/ Sears, Mervyn's, Ross Dress for None
Visalia, California N/A 172,940 Less
Steeplegate Mall 1990/ 100 447,180/ Sears, JCPenney, Steinbach One
Concord, New Hampshire N/A 162,655
Superstition Springs Center 1990/ 33.3 1,073,726/ Sears, JCPenney, Dillard's, None
East Mesa, Arizonia 1994 368,361 Mervyn's, Robinson's-May
</TABLE>
-15-
<PAGE> 16
HOMART CENTERS
--------------
<TABLE>
<CAPTION>
OWNERSHIP TOTAL GLA/MALL
YEAR INTEREST % AND FREESTANDING
NAME OF CENTER/ OPENED/REMODELED OF GLA ANCHOR
LOCATION(1) OR EXPANDED GGP/HOMART (SQUARE FEET) (2) ANCHORS VACANCIES
------------ ------------ ----------- ------------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Tysons Galleria 1988/ 100 809,225/ Macy's, Saks Fifth Avenue, None
McLean, Virginia 1997 296,838 Neiman Marcus
Vista Ridge Mall 1989/ 80 1,052,419/ Sears, Dillard's, Foley's, None
Lewisville, Texas 1991 379,555 JCPenney
Washington Park Mall 1984/ 100 351,483/ Sears, Dillard's, JCPenney None
Bartlesville, Oklahoma 1986 157,190
West Oaks Mall 1996/ 100 1,042,723/ Dillard's, Sears, JCPenney, None
Ocoee, Florida N/A 312,626 Gayfers
(Orlando, Florida)
The Woodlands Mall 1994/ 50 1,031,892/ Sears, Dillard's, Mervyn's, None
The Woodlands, N/A 350,082 Foley's, JCPenney
Texas
(Houston, Texas)
</TABLE>
(1) In cases where a Center's location is part of a larger metropolitan area,
the metropolitan area is identified in parenthesis.
(2) Includes square footage added in redevelopment/expansion projects.
(3) GGP/Homart's participation is subordinated to certain preferred returns to
its Joint Venture Partners.
-16-
<PAGE> 17
ANCHORS
Anchors have traditionally been a major factor in the public's image of an
enclosed shopping center. Anchors are generally department stores whose
merchandise appeals to a broad range of shoppers. Anchors either own their
stores, the land under them and adjacent parking areas, or enter into long-term
leases at rates that are generally lower than the rents charged to Mall Store
tenants. Although the Portfolio Centers receive a smaller percentage of their
operating income from Anchors than from Mall Stores, strong Anchors play an
important part in maintaining customer traffic and making the Portfolio Centers
desirable locations for Mall Store tenants.
The following table indicates the parent company of each Anchor and sets forth
the number of stores and square feet owned or leased by each Anchor at the GGP
Centers and the Homart Centers as of December 31, 1997.
-17-
<PAGE> 18
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO ANCHORS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Total Square Feet
Name Stores (000's)
- ------------------------------------------------------------ ------------ ----------------
<S> <C> <C>
Sears 52 6,716
JCPenney 50 5,087
Dayton Hudson
Dayton's 2 269
Hudson's 4 405
Mervyn's 15 1,228
Target 14 1,530
------------ ----------------
Sub-Total Dayton Hudson 35 3,432
------------ ----------------
Dillard's 28 4,206
May Department Stores Company
Filene's 3 523
Filene's Home Store 1 36
Foley's 7 1,258
Lord & Taylor 3 335
Robinson's-May 3 497
------------ ----------------
Sub-Total May Department Stores Company 17 2,649
------------ ----------------
Proffitt's
Younkers 4 426
Herberger's 1 71
Parisian 2 182
------------ ----------------
Sub-Total Proffitt's 7 679
------------ ----------------
Federated Department Stores
Burdines 3 387
Lazarus 1 50
Macy's 6 1,134
Rich's 3 524
The Bon Marche 1 100
------------ ----------------
Sub-Total Federated Department Stores 14 2,195
------------ ----------------
Montgomery Ward & Co.
Montgomery Ward 6 770
------------ ----------------
Sub-Total Montgomery Ward & Co. 6 770
------------ ----------------
Harcourt General
Neiman-Marcus 1 132
Mercantile Stores
Bacons 1 187
Castner Knott 1 101
Gayfer's 1 213
Joslin's 1 171
JB White 1 181
------------ ----------------
Sub-Total Mercantile Stores 5 853
------------ ----------------
Kohl's 2 178
Mc Rae's 1 124
Burlington Coat Factory 1 101
KMart 4 357
Wal-Mart 2 197
Elder-Beerman 2 142
Emporium 1 50
Gottschalks 2 174
Hills Department Store 2 175
Ross Dress For Less 1 40
Beall's 1 31
Belk 2 286
Belk-Lindsey 2 182
Boscov 1 185
Bergners 1 154
Dick's Sporting Goods 1 80
Harris 1 150
Liberty House 1 50
Saks Fifth Avenue 1 120
Scheel's All Sports 1 50
Steinbach's 1 55
Strawbridge & Clothier 1 218
The Bon Ton 1 82
Toys "R" Us 1 47
Von Maur 1 179
Woolworth 1 50
</TABLE>
-18-
<PAGE> 19
For other information concerning the GGP Centers and the Homart Centers see
"Item 1 - Business - Business of the Company" and for additional information
concerning the mortgage debt encumbering the GGP Centers see Note 8 to the
Consolidated Financial Statements appearing in Item 8 of this Annual Report on
Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material litigation nor, to the
Company's knowledge, is any material litigation currently threatened against the
Company, the properties or GGP/Homart other than routine litigation arising in
the ordinary course of business, most of which is expected to be covered by
liability insurance. For information about certain environmental matters, see
"Item 1 - Business - Environmental Matters."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the Company's stockholders during the fourth
quarter of fiscal 1997.
-19-
<PAGE> 20
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Common Stock is listed on the New York Stock Exchange ("NYSE") and trades
under the symbol "GGP". As of March 26, 1998, the 35,768,922 outstanding shares
of Common Stock were held by approximately 1,129 stockholders of record. The
closing price per share of Common Stock on the NYSE on such date was $38.00 per
share.
Set forth below are the high and low sales prices per share of Common Stock as
reported on the composite tape, and the distributions per share of Common Stock
declared for each such period.
<TABLE>
<CAPTION>
==================================== =================================== =================
1997 Price Declared
Quarter Ending High Low Distribution
------------------------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C>
March 31, 1997 $32.13 $30.25 $.45
------------------------------------ ----------------- ----------------- -----------------
June 30, 1997 $33.75 $31.13 $.45
------------------------------------ ----------------- ----------------- -----------------
September 30, 1997 $37.00 $32.44 $.45
------------------------------------ ----------------- ----------------- -----------------
December 31, 1997 $38.25 $31.81 $.45
==================================== ================= ================= =================
==================================== =================================== =================
1996 Price Declared
Quarter Ending High Low Distribution
------------------------------------ ----------------- ----------------- -----------------
March 31, 1996 $24.00 $20.63 $.43
------------------------------------ ----------------- ----------------- -----------------
June 30, 1996 $24.63 $20.63 $.43
------------------------------------ ----------------- ----------------- -----------------
September 30, 1996 $26.00 $23.50 $.43
------------------------------------ ----------------- ----------------- -----------------
December 31, 1996 $32.75 $23.88 $.43
==================================== ================= ================= =================
==================================== =================================== =================
1995 Price Declared
Quarter Ending High Low Distribution
------------------------------------ ----------------- ----------------- -----------------
March 31, 1995 $22.63 $20.38 $.41
------------------------------------ ----------------- ----------------- -----------------
June 30, 1995 $21.75 $19.38 $.41
------------------------------------ ----------------- ----------------- -----------------
September 30, 1995 $20.63 $19.00 $.41
------------------------------------ ----------------- ----------------- -----------------
December 31, 1995 $21.63 $18.50 $.43
==================================== ================= ================= =================
</TABLE>
-20-
<PAGE> 21
Set forth below is certain information about sales made by the Operating
Partnership of securities during the fourth quarter of 1997, which sales were
not registered under the Securities Act of 1933, as amended. The sales were all
made in connection with the acquisition of the malls and interests therein
indicated below, were effected in reliance upon the exemption contained in
Section 4 (2) of the Securities Act of 1933, as amended and/or Regulation D
promulgated thereunder, and were not underwritten offerings.
<TABLE>
<CAPTION>
=================== ================= ===================== ======================= ===================== =======================
Offering Price or
Date Issuer Security Amount Purchaser Consideration
=================== ================= ===================== ======================= ===================== =======================
<S> <C> <C> <C> <C> <C>
10/23/97 Operating Operating 518,833 Peter D. Leibowits Valley Hills Mall
Partnership (1) Partnership Units
=================== ================= ===================== ======================= ===================== =======================
12/31/97 GGP Common Stock 7,873 John Bucksbaum 7,873 Operating
Partnership Units
=================== ================= ===================== ======================= ===================== =======================
12/31/97 GGP Common Stock 7,873 Ann Bucksbaum 7,873 Operating
Partnership Units
=================== ================= ===================== ======================= ===================== =======================
</TABLE>
(1) Holders of the units sold by the Operating Partnership have the right, on or
after October 24, 1999, to require that the Operating Partnership redeem such
units for cash; provided, however, that General Growth Properties, Inc. may
assume the Operating Partnership's obligations and redeem the units for cash or
shares of Common Stock on a one-for-one basis.
-21-
<PAGE> 22
ITEM 6. SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following table sets forth selected financial data for the Company and
should be read in conjunction with the Consolidated Financial Statements and
notes thereto and Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in this Annual Report.
<TABLE>
<CAPTION>
====================================================================================================================================
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING DATA
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $ 291,147 $ 217,405 $ 167,396 $ 152,583 $ 142,210
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses 109,677 75,954 63,968 63,118 55,073
- -----------------------------------------------------------------------------------------------------------------------------------
Depreciation and Amortization 48,509 39,809 30,855 28,190 25,377
- -----------------------------------------------------------------------------------------------------------------------------------
Interest Expense, Net 70,252 66,439 46,334 42,995 37,495
- -----------------------------------------------------------------------------------------------------------------------------------
Equity in Net Income of
Unconsolidated Affiliates 19,344 17,589 9,274 6,096 -
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain on the sale of a portion of
CenterMark 58,647 43,821 33,397 - -
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Minority Interest 140,700 96,613 68,910 24,376 24,265
- -----------------------------------------------------------------------------------------------------------------------------------
Minority Interest (49,997) (34,580) (25,856) (9,518) (9,823)
- -----------------------------------------------------------------------------------------------------------------------------------
Income Before Extraordinary Item 90,703 62,033 43,054 14,858 14,442
- -----------------------------------------------------------------------------------------------------------------------------------
Extraordinary Item (1,152) (2,291) - (693) (1,832)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income 89,551 59,742 43,054 14,165 12,610
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings Before Extraordinary Item
Per Share - Basic 2.78 2.20 1.69 .65 .63
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings Before Extraordinary Item
Per Share - Diluted 2.76 2.20 1.69 .65 .63
- -----------------------------------------------------------------------------------------------------------------------------------
Net Earnings Per Share - Basic 2.75 2.12 1.69 .62 .55
- -----------------------------------------------------------------------------------------------------------------------------------
Net Earnings Per Share - Diluted 2.73 2.12 1.69 .62 .55
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions Declared Per Share 1.80 1.72 1.66 1.58 1.05
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOW DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Activities $ 85,716 $ 67,202 $ 60,660 $ 48,936 $ 53,077
- -----------------------------------------------------------------------------------------------------------------------------------
Investing Activities (167,029) (29,285) (469,204) (145,253) (111,408)
- -----------------------------------------------------------------------------------------------------------------------------------
Financing Activities 91,264 (40,268) 421,225 96,380 52,587
- -----------------------------------------------------------------------------------------------------------------------------------
FUNDS FROM OPERATIONS
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Funds From Operations (1)
Operating Partnership $ 143,010 $ 108,526 $ 81,214 $ 69,610 $ 47,810
- -----------------------------------------------------------------------------------------------------------------------------------
Minority Interest (51,238) (39,841) (30,915) (27,927) (19,189)
- -----------------------------------------------------------------------------------------------------------------------------------
Funds From Operations Company 91,772 68,685 50,299 41,683 28,621
- -----------------------------------------------------------------------------------------------------------------------------------
Funds From Operations per share 2.81 2.44 1.97 1.83 1.58
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Investment in Real Estate Assets - Cost $ 2,157,251 $ 1,828,184 $1,547,621 $ 996,125 $ 786,008
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 2,097,719 1,757,717 1,455,982 906,533 789,455
- -----------------------------------------------------------------------------------------------------------------------------------
Total Debt 1,275,785 1,168,522 1,027,932 607,561 453,437
- -----------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity 498,505 330,267 229,383 154,426 173,013
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)Represents income before minority interest excluding straight line rent plus
real estate depreciation and amortization and adjusted for equity in net
income of unconsolidated affiliates (including related depreciation and
amortization). Funds From Operations does not represent cash flow from
operations as defined by Generally Accepted Accounting Principles (GAAP) and
is not necessarily indicative of cash available to fund all cash
requirements.
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<PAGE> 23
FUNDS FROM OPERATIONS
Funds from Operations is used by the real estate industry and investment
community as a primary measure of the performance of real estate companies. The
National Association of Real Estate Investment Trusts ("NAREIT") defines Funds
from Operations as net income (loss) (computed in accordance with generally
accepted accounting principles ("GAAP")), excluding gains (or losses) from debt
restructuring and sales of properties, plus real estate related depreciation and
amortization and after adjustments for unconsolidated partnerships and joint
ventures. In calculating its Funds from Operations, the Company also excludes
non-cash straight line rent and gains on land sales, if any. The NAREIT
definition of Funds from Operations does not exclude the aforementioned items.
The Company's Funds from Operations may not be directly comparable to similarly
titled measures reported by other real estate investment trusts. Funds from
Operations does not represent cash generated from operating activities in
accordance with GAAP and should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of the Company's
financial performance or to cash flow from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash needs, including its
ability to make cash distributions.
RECONCILIATION OF NET INCOME DETERMINED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO FFO:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
--------- ---------- --------
<S> <C> <C> <C>
Net Income $ 89,551 $ 59,742 $ 43,054
Extraordinary item - charges related to early
retirement of debt 1,152 2,291
Allocations to Operating Partnership Unitholders 49,997 34,580 25,856
Net gain on sales (63,813) (43,975) (33,397)
Straight line rents (4,615) (6,195) (2,997)
Depreciation and amortization 70,738 62,083 48,698
--------- --------- ---------
Funds From Operations $ 143,010 $ 108,526 $ 81,214
========= ========= =========
</TABLE>
-23-
<PAGE> 24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto appearing later in this Annual
Report.
CERTAIN INFORMATION ABOUT THE PORTFOLIO CENTERS
As of December 31, 1997 the Company owned 100% of thirty-five enclosed regional
shopping centers, 51% of the stock of GGP/Ivanhoe, Inc., 50% of each of two
enclosed shopping centers, Quail Springs and Town East, 38.2% of the stock of
GGP/Homart, Inc. and a non-voting preferred stock interest in GGMI. GGP/Homart
owns interests in twenty-five shopping centers, (the "Homart Centers").
GGP/Ivanhoe owns interests in two shopping centers, The Oaks and Westroads.
During 1996 the Company owned an interest in CenterMark Properties, Inc. (the
"CenterMark Centers"). Revenues are primarily derived from fixed minimum rents,
percentage rents and recoveries of operating expenses from tenants. Inasmuch as
the Company's financial statements reflect the use of the equity method to
account for its investments in CenterMark, GGP/Homart, the Property Joint
Ventures ("GGP/Ivanhoe, Quail Springs and Town East") and GGMI, the discussion
of results of operations below relates primarily to the revenues and expenses of
thirty-five 100% owned centers.
On December 31, 1997, the Portfolio Centers (all centers in which the Company
holds a direct or indirect ownership interest) were approximately 85.1% leased.
The occupancy of the Portfolio Centers which are not currently undergoing
redevelopment on December 31, 1997, was approximately 85.7%.
Comparable mall store sales are sales of those tenants that were open the
previous 12 months. Therefore comparable mall store sales in 1997 are of those
tenants that were operating the entire year of 1996 and 1997. Comparable mall
store sales averaged $276 per square foot at the Portfolio Centers in 1997. In
1997, total mall store sales at the Portfolio Centers increased by 7.2% over
1996, and comparable mall store sales increased by 3.2% over 1996.
The average mall store rent per square foot from leases that expired in 1997 was
$20.81. The Portfolio Centers benefited from increasing rents inasmuch as the
weighted average mall store rent per square foot on new and renewal leases
executed during 1997 was $25.84, or $5.03 per square foot above the average for
expiring leases.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
Total revenues for 1997 were $291.1 million, which represents an increase of
$73.7 million or approximately 33.9% from $217.4 million in 1996. Approximately
$55.8 million of the increase was from properties acquired or developed after
January 1, 1996. Minimum rent during 1997 increased $35.3 million or 25.1% from
$140.5 million in 1996 to $175.8 million. The $35.3 million increase in minimum
rent was primarily caused by the acquisition and development of properties after
January 1, 1996. Tenant recoveries increased by $34.3 million or 54.4% from
$63.0 million to $97.3 million in 1997. The increase in tenant recoveries was
generated by a combination of new acquisitions and increased recoverable
operating costs at the comparable (properties owned for the entire time during
current and prior periods) centers. Percentage rents and other income increased
$4.3 million or 46.2% from $9.3 million in 1996 to $13.6 million in 1997. The
acquisition of new properties and improved performance at the comparable centers
accounted for the increase in percentage rents and other income. Fee income
during 1997 was essentially flat compared to the year ended December 31, 1996.
The fee revenue was primarily generated by asset management services performed
for GGP/Homart.
Total expenses, including depreciation and amortization increased by
approximately 36.6% or $42.4 million, from $115.8 million in 1996 to $158.2
million in 1997. Approximately $28.5 million or 67.2% of the increase in total
expenses was from properties acquired and developed since January 1, 1996. The
increase in total expenses consists of $4.4 million of real estate taxes, $0.6
million of management fees, $27.7 million of property operating costs, $0.6
million of provision for doubtful accounts, $0.4 million of general and
administrative and $8.7 million of depreciation and amortization. The remaining
$13.9 million of the increase was primarily accounted for by increased
recoverable operating costs.
-24-
<PAGE> 25
Net interest expense increased by $3.9 million or 5.8% from $66.4 million in
1996 to $70.3 million in 1997. Acquisitions generated an $18.5 million increase
in 1997 compared to 1996. This increase was partially offset with the use of the
stock offering proceeds and CenterMark sale proceeds to repay existing
indebtedness. The note receivable from GGMI generated $6.4 million of interest
income in 1997, an increase of $3.6 million from $2.8 million in 1996.
Equity in net income of unconsolidated affiliates during 1997 increased by $1.7
million to $19.3 million from $17.6 million in 1996. A $9.4 million decrease is
attributable to the sale of the Company's interest in CenterMark. GGP/Homart and
the Property Joint Ventures accounted for increases of approximately $7.1
million and $2.9 million, respectively. The Company's ownership interest in GGMI
resulted in an increase of $1.1 million. In addition the Company had a net gain
of $58.6 million on the sale of its remaining interest in CenterMark on January
2, 1997. As of that date, the Company no longer held an ownership interest in
CenterMark.
Net income increased by approximately $29.8 million in 1997 to $89.5 million,
from $59.7 million in 1996. The increase resulted from a larger gain on the sale
of CenterMark in the amount of $9.9 million (net of minority interest share) and
a combination of the aforementioned items.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
Total 1996 revenues increased by $50.0 million or 29.9% to $217.4 million from
$167.4 million in 1995. Of the $50.0 million increase, $44.4 million was
generated from increased minimum rents, tenant recoveries, percentage rents and
other income. A majority of the increases came from new developments that were
placed in service during 1995 and five properties that were acquired in 1996.
The remaining $5.6 million was generated by increased straight line rents of
$1.9 million and fee revenue of $3.7 million.
Total 1996 operating expenses, including depreciation and amortization,
increased by $21.0 million or 22.1% to $115.8 million in 1996 compared to $94.8
million in 1995. The $20.9 million increase consists of $3.0 million of real
estate taxes and management fees, $8.9 million of depreciation expense, $1.7
million increase in provision for doubtful accounts and $7.3 million of property
operating and general and administrative expenses from all properties, including
five properties acquired during the fourth quarter of 1996.
Net interest expense increased by $20.1 million or 43.4% to $66.4 million in
1996 compared to $46.3 million in 1995. The acquisitions and development of new
properties, net of interest cost savings as a result of the use of the
CenterMark sale proceeds to repay debt accounted for a $27.7 million increase.
Additional interest cost savings due to lower interest rates reduced net
interest expense by $4.3 million. Interest income increased by $3.3 million of
which $2.8 million was interest income from General Growth Management, Inc.
Equity in net income of unconsolidated affiliates increased by $8.3 million,
from $9.3 million in 1995 to $17.6 million in 1996, or an 89% increase.
Approximately $8.7 million of the increase is attributable to the Company's
38.2% interest in GGP/Homart's net income. The increase of $0.8 million in
CenterMark's net income was due to changing from the equity method to the cost
method as a result of the Company's reduced control in mid 1996. The Company's
investment in Quail Springs Mall accounted for a $0.1 million increase and GGMI
accounted for a decrease of approximately $1.3 million. In addition, the Company
had a net gain of $43.8 million on the sale of a portion of its interest in
CenterMark on July 1, 1996. As of that date, the Company's interest in
CenterMark was reduced to 14%.
Net income increased by $16.6 million in 1996 to $59.7 million from $43.1
million in 1995. The increase resulted from a larger gain on CenterMark in the
amount of $6.6 million (net of minority interest share) and a combination of the
aforementioned items.
LIQUIDITY AND CAPITAL RESOURCES
The Company uses operating cash flow as the principal source of funding for
recurring capital expenditures such as tenant construction allowances and minor
improvements made to individual properties that are not recoverable through
common area maintenance charges to tenants. Funding alternatives for
acquisitions, new development, expansions and major renovation programs at
individual centers include construction loans, mini-permanent loans, long-term
project financing, additional property level or Company level equity
investments,
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<PAGE> 26
unsecured Company level debt or secured loans collateralized by individual
shopping centers. As of December 31, 1997 the Company held $25.9 million of
unrestricted cash and cash equivalents. In addition to the cash balance, a $200
million unsecured credit facility had a balance of $86 million leaving $114
million available for future borrowings. The Company also has access to the
public equity market through various shelf registrations.
On January 31, 1996, the Company closed on a $340 million permanent nonrecourse
loan on nine properties. Existing loans on the properties totaling $290 million
were repaid and the $50 million of excess loan proceeds were used to reduce an
interim loan.
On June 28, 1996, the buyer's option to purchase the Operating Partnership's
remaining interest in CenterMark was exercised. The first payment of $87 million
was received in July of 1996 and was used to retire an interim loan arranged as
part of the GGP/Homart acquisition.
On October 15, 1996, approximately $200 million of mortgage debt on seven wholly
owned centers matured. These mortgages were replaced with a $250 million short
term, floating rate loan which bears interest at LIBOR plus 100 basis points.
The excess proceeds were used to pay down a credit facility arranged by the
Company during 1996.
On January 2, 1997, the final portion of the proceeds from the sale of
CenterMark totaling $130.5 million were used to repay a $12.6 million mortgage
on Westwood Mall and to reduce the balance on a non-recourse bridge loan
facility.
In August of 1997 the Company completed a $200 million unsecured credit facility
to be used for general corporate purposes including any potential future
acquisitions or developments. On December 31, 1997, the credit facility had an
outstanding balance of $86 million.
During the third quarter of 1997 the Company sold approximately 4.9 million
shares of common stock. The net proceeds from the transactions totaled $165.8
million and were primarily used to reduce the outstanding balance on two
development loans and the unsecured credit facility.
In addition to the $250 million non-recourse bridge loan that is collateralized
in part by mortgages on seven wholly owned centers, the Company obtained
additional short term unsecured financing. As part of the additional financing
totaling $116.7 million, the Company agreed not to encumber four additional
wholly owned centers. In September of 1997 the Company arranged a $125 million
unsecured bridge loan, indirectly collateralized by The Oaks Mall and Westroads
Mall owned by GGP/Ivanhoe. These unsecured bridge loans totaling $491.7 million
were replaced with long term fixed rate permanent financing during November of
1997.
During the third quarter of 1997, two property level loans totaling
approximately $60.5 million with a weighted average interest rate of
approximately 8.9% were repaid.
In November of 1997 the Company completed the private placement of $560 million
of collateralized mortgage-backed securities. The interest only notes include
$250 million of 7 year notes and $310 million of 10 year notes. After reflecting
the impact of amortizing all transaction costs, the weighted average effective
annual interest rate will be approximately 6.95%. The notes are collateralized
by mortgages on eleven wholly owned regional malls ($435 million) and two 51%
owned regional malls ($125 million).
At December 31, 1997, the stock market value of the common stock and partnership
units outstanding (54,398,932 x $36.125 per share) was approximately $1,965
million. The consolidated pro rata debt of $1,709 million combined with the
stock market value of the common stock and partnership units of $1,965 million
equal a total market capitalization of approximately $3,674 million.
The Company is comfortable with this level of debt and expects earnings before
interest, taxes, depreciation and amortization ("EBITDA") to interest expense
coverage to be at least 2.0 times, leaving a substantial cushion for
unanticipated costs. There are no current plans to raise additional equity
capital. However, if additional capital is required, the Company believes that
it will be able to obtain an interim bank loan, obtain mortgage financing on
unencumbered assets or raise additional equity capital. The Company will
continue to constantly
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<PAGE> 27
monitor its capital structure and plans to make new investments if they can be
acquired and financed in a manner that will be likely to increase stockholder
value.
DEVELOPMENT
The Company intends to pursue development when warranted by the potential
financial returns. During 1996, the Company acquired 100% of a new development
site located in Coralville (Iowa City), Iowa where the Company is developing an
enclosed shopping center. The Company is currently performing predevelopment
work at another development site located in Grand Rapids, Michigan.
Coral Ridge Mall, a 1,200,000 square foot enclosed regional mall located in
Coralville, Iowa is scheduled to open in July of 1998. The mall will include
five department store anchors, several big box retailers, a theater, an ice
arena, a children's museum and approximately 200,000 square feet of mall shop
space. As of December 31, 1997 approximately $26 million has been spent of an
estimated total cost of $70 million. The funding for the development of this
project comes primarily from an unsecured credit facility.
The development in Grand Rapids, Michigan will consist of approximately
1,100,000 square feet and is currently expected to open in late 1999.
SUMMARY OF INVESTING ACTIVITIES
Net cash used by investing activities in 1997 was $167.0 million, compared to a
use of $29.3 million in 1996. Cash flow from investing activities was affected
by the timing of acquisitions, development and improvements to real estate
properties, requiring a use of cash of approximately $200.6 million in 1997
compared to $121.1 in 1996. Market Place Shopping Center and Century Plaza were
acquired in 1997 for approximately $101.8 million . The sale of portions of the
Company's interest in CenterMark provided cash flow of $130.5 million in 1997
and $87.0 million in 1996. Investments in GGP/Homart and the Property Joint
Ventures used $86.2 million of cash flow in 1997 compared to $33.5 million in
1996. During 1996 distributions of $21.5 million were received from CenterMark.
Distributions received from GGP/Homart in 1997 were $20.4 million compared to
$13.8 million in 1996. The change in notes receivable from affiliates used $24.0
million of cash flow compared to the receipt of $12.6 million in 1996.
Net cash used by investing activities in 1996 was $29.3 million, compared to a
use of $469.2 million in 1995. Cash flow from investing activities was affected
by the timing of acquisitions, development and improvements to real estate
properties, requiring a use of cash of approximately $121.1 million in 1996
compared to $380.0 million in 1995. Natick Mall was acquired in 1995 for
approximately $265.0 million. The sale of portions of CenterMark provided
cash flow of $87.0 million in 1996 and $72.5 million in 1995. Investments in
GGP/Homart and the Property Joint Ventures used $33.5 million of cash flow in
1996 compared to a use of $178.0 million in 1995. GGP/Homart was acquired
during 1995. The collection of notes receivable from affiliates increased cash
flow from investing activities by $12.6 million in 1996.
SUMMARY OF FINANCING ACTIVITIES
Financing activities in 1997 provided $91.3 million of cash compared to a $40.3
million use of cash flow in 1996. Distributions to common stockholders and the
minority interest were $88.9 million in 1997 compared to $75.5 million in 1996.
The increase is due to the increased distribution rate and additional shares and
Operating Partnership Units outstanding during 1997 compared to 1996. Net
proceeds from the issuance of common stock during 1997 provided $165.8 million
of cash flow. Net borrowing activity provided $29.6 million of cash flow in 1997
compared to $37.7 million in 1996. The purchase of treasury stock used $5.7
million of cash flow during 1997. The payment of deferred financing costs used
$9.3 million of cash flow in 1997 compared to $2.4 million in 1996.
Financing activities in 1996 used $40.3 million of cash compared to a $421.2
million source of cash flow in 1995. The net change in cash flow from financing
activities from 1995 to 1996 is made up of three main components. First,
distributions decreased cash flow from 1995 to 1996 by $8.9 million due to the
increased distribution rate and additional shares and Operating Partnership
Units outstanding during 1996 compared to 1995. Net borrowing activity was a
$37.7 million source in 1996 compared to a $400.7 million source of cash flow in
1995. The financing associated with the acquisitions of GGP/Homart and Natick
Mall accounted for the
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<PAGE> 28
majority of activity in 1995. The third main component is the net proceeds from
the sale of common stock totaling $87.9 million in May of 1995 and none in 1996.
REIT REQUIREMENTS
In order to remain qualified as a real estate investment trust for federal
income tax purposes, the Company must distribute 100% of capital gains and at
least 95% of its ordinary taxable income to stockholders. The following factors,
among others will influence the decisions of the Board of Directors regarding
distributions: (i) scheduled increases in base rents of existing leases; (ii)
changes in minimum base rents and/or percentage rents attributable to
replacement of existing leases with new or replacement leases; and (iii) changes
in occupancy rates at existing Portfolio Centers and procurement of leases for
newly developed Portfolio Centers. The Company anticipates that its cash from
operations, together with existing loan facilities and additional borrowing
capacity, will provide adequate liquidity to conduct its operations, fund
administrative and operating costs and interest payments and allow distributions
to the Company's stockholders in accordance with the Internal Revenue Code's
requirements for qualification as a real estate investment trust and to avoid
any Company or entity level federal income or excise tax.
The distributions paid to Company stockholders in 1997 were approximately 29.8%
taxable as ordinary income and approximately 70.2% taxable as long-term capital
gain, due to the sale of a portion of the CenterMark stock. The Company
currently plans to maintain its policy of increasing its distributions at a
slower rate of growth than increases, if any, of funds from operations. Despite
this general policy, the Company's Board of Directors will continue to evaluate
the level of distributions on a quarterly basis and will typically consider
increasing the quarterly distribution after the results of each year's
operations have been reviewed. Given the critical importance of the holiday
selling season, the Board of Directors plans to make its typical annual
evaluation of a possible distribution increase during the first quarter of each
year, after the results of the previous year's holiday selling season have been
thoroughly analyzed.
ECONOMIC CONDITIONS
Inflation has been relatively low and has not had a significant detrimental
impact on the Company. Should inflation rates increase in the future,
substantially all of the tenants' leases contain provisions designed to mitigate
the negative impact of inflation. Such provisions include clauses enabling the
Company to receive percentage rents based on tenants' gross sales, which
generally increase as prices rise, and/or escalation clauses, which generally
increase rental rates during the terms of the leases. In addition, many of the
leases are for terms of less than 10 years which may enable the Company to
replace or renew expiring leases with new leases at higher base and/or
percentage rents, if rents of the existing leases are below the then-existing
market rates. Finally, most of the leases require the tenants to pay their share
of certain operating expenses, including common area maintenance, real estate
taxes and insurance, thereby reducing the Company's exposure to increases in
costs and operating expenses resulting from inflation.
A number of local, regional and national retailers filed for bankruptcy
protection during the last few years. Most of the bankrupt retailers reorganized
their operations and/or sold stores to stronger operators. Although some leases
were terminated by virtue of the lease cancellation rights afforded by the
bankruptcy laws, the impact on Company earnings was negligible. Over the last
three years, the provision for doubtful accounts has averaged only $2.0 million
per year, which represents less than 1% of average total revenues of $225
million. The difficult retail sales climate has probably contributed to the
relatively flat average occupancy.
The Company and its affiliates currently have an interest in 64 shopping
centers. The Portfolio Centers have been diversified both geographically and by
property type (both major and middle market properties) and this may mitigate
the impact of a potential downturn at a particular property or in a particular
region of the country.
The shopping center business is still seasonal in nature. Mall stores typically
achieve higher sales levels during the fourth quarter because of the holiday
selling season. Although the Company has a year-long temporary leasing program,
most of the rents received from short-term tenants are collected during the
months of November and December. Thus, occupancy levels and revenue production
are generally highest in the fourth quarter of each year and lower during the
first and second quarters of each year.
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<PAGE> 29
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June of 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Statement No. 130 requires
the reporting of comprehensive income which for the Company would be the same as
net income currently reported. Statement No. 131 establishes standards for
publicly-held business enterprises to report information about operating
segments in annual financial statements and requires that these enterprises
report selected information about operating segments in interim financial
reports issued to stockholders. The Company will adopt the provisions under the
new reporting and disclosure requirements promulgated in these statements
beginning in its fiscal 1998 year.
YEAR 2000 COMPLIANCE
The Company has recently upgraded its major information systems including the
database and accounting software which is Year 2000 compliant. The Company is in
the process of evaluating several other smaller systems (time keeping systems,
elevators, etc.) to verify that they are compliant. If these systems are not
Year 2000 compliant, the appropriate upgrades will be purchased. The cost of any
required upgrades are not anticipated to be significant. In addition, the
Company is communicating with its customers, suppliers and service providers to
determine whether they are actively involved in projects to ensure that their
products and business systems will be Year 2000 compliant. The Company is not
aware of any significant Year 2000 issues involving its customers, suppliers or
service providers.
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<PAGE> 30
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to the Index on page F-1 to Financial Statements and Financial Statement
Schedules for the required information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
There is hereby incorporated by reference the information which appears under
the captions "Election of Directors" and "Executive Officers" in the Company's
definitive proxy statement for its 1998 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information which appears under
the caption "Compensation of Executive Officers" in the Company's definitive
proxy statement for its 1998 Annual Meeting of Stockholders; provided, however,
that neither the Report of the Compensation Committee of the Board of Directors
on Executive Compensation nor the Performance Graph set forth therein shall be
incorporated by reference herein, in any of the Company's previous filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, or in any of the Company's future filings.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information which appears under
the captions "Common Stock Ownership of Certain Beneficial Owners" and "Common
Stock Ownership of Management" in the Company's definitive proxy statement for
its 1998 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information which appears under
the caption "Compensation Committee Interlocks and Insider Participation" in the
Company's definitive proxy statement for its 1998 Annual Meeting of
Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules.
The financial statements and schedules listed in the accompanying Index to
Consolidated Financial Statements and Financial Statement Schedules are filed as
part of this Annual Report on Form 10-K.
(b) Exhibits.
See Exhibit Index on page S-1
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<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Matthew Bucksbaum
-------------------------------------
Matthew Bucksbaum, Chairman of the Board
and Chief Executive Officer
Date: March 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Robert Michaels President and Director March 30, 1998
- ------------------------------------
Robert Michaels
/s/ John Bucksbaum Executive Vice President - March 30, 1998
- ------------------------------------ Director
John Bucksbaum
/s/ Bernard Freibaum Executive Vice President - March 30, 1998
- ------------------------------------ Chief Financial Officer and
Bernard Freibaum Principal Accounting Officer
/s/ Anthony Downs Director March 30, 1998
- ------------------------------------
Anthony Downs
/s/ Morris Mark Director March 30, 1998
- ------------------------------------
Morris Mark
/s/ Beth Stewart Director March 30, 1998
- ------------------------------------
Beth Stewart
/s/ Lorne Weil Director March 30, 1998
- ------------------------------------
A. Lorne Weil
</TABLE>
-31-
<PAGE> 32
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT
SCHEDULE
The following financial statements and financial statement schedule are included
in Item 8 of this Annual Report on Form 10-K:
General Growth Properties, Inc.
<TABLE>
<CAPTION>
Financial Statements Page(s)
-------------------- -------
<S> <C>
Report of Independent Accountants F-2
Consolidated Balance Sheets as of December 31, 1997 and 1996 F-3
Consolidated Statements of Operations for the years ended
December 31, 1997, 1996 and 1995. F-4
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1997, 1996 and 1995 F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7 to F-20
Financial Statement Schedule
----------------------------
Report of Independent Accountants F-21
Schedule III - Real Estate and Accumulated Depreciation F-22
</TABLE>
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission
of the schedule or because the information required is included in the
consolidated financial statements and notes hereof.
F-1
<PAGE> 33
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
General Growth Properties, Inc.
We have audited the accompanying consolidated balance sheets of General Growth
Properties, Inc. as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects,the consolidated financial position of General Growth
Properties, Inc. as of December 31, 1997 and 1996 and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
Chicago, Illinois Coopers & Lybrand L.L.P.
February 9, 1998
F-2
<PAGE> 34
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, except for Per Share Amounts)
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
--------------- --------------
<S> <C> <C>
ASSETS
Investment in real estate:
Land $ 194,131 $ 173,263
Buildings and equipment 1,601,351 1,337,366
Less accumulated depreciation (233,295) (188,744)
Developments in progress 68,003 44,439
--------------- --------------
Net property and equipment 1,630,190 1,366,324
Investment in CenterMark 64,769
Investment in GGP/Homart 203,142 193,270
Investment in Property Joint Ventures 90,624 15,077
--------------- --------------
Net investment in real estate 1,923,956 1,639,440
Cash and cash equivalents 25,898 15,947
Tenant accounts receivable, net 34,849 25,384
Deferred expenses, net 42,343 30,078
Investment in and note receivable from
General Growth Management, Inc. 61,588 37,737
Prepaid expenses and other assets 9,085 9,131
--------------- --------------
$ 2,097,719 $ 1,757,717
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes and other debt payable $ 1,275,785 $ 1,168,522
Distributions payable 24,421 20,744
Accounts payable and accrued expenses 36,540 45,807
--------------- --------------
1,336,746 1,235,073
--------------- --------------
Minority interest in Operating Partnership 262,468 192,377
--------------- --------------
Commitments and contingencies
Stockholders' equity:
Preferred stock: $100 par value; 5,000,000 shares authorized;
none issued
Common stock: $.10 par value;
210,000,000 shares authorized in 1997 (70,000,000 in 1996)
35,769,454 shares issued in 1997 (30,789,185 in 1996)
35,634,977 shares outstanding in 1997 (30,789,185 in 1996) 3,577 3,079
Additional paid-in capital 738,630 595,628
Retained earnings (deficit) (239,139) (268,440)
Treasury stock, at cost: 134,477 shares held as of December 31, 1997 (4,563)
--------------- --------------
Total stockholders' equity 498,505 330,267
--------------- --------------
$ 2,097,719 $ 1,757,717
=============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 35
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, except for Per Share Amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Revenues:
Minimum rents $ 175,830 $ 140,468 $ 103,915
Tenant recoveries 97,291 63,040 54,072
Percentage rents 7,976 5,412 4,793
Other 5,577 3,925 3,811
Fee Income 4,473 4,560 805
------------ ----------- ------------
Total revenues 291,147 217,405 167,396
------------ ----------- ------------
Expenses:
Real estate taxes 20,761 16,332 13,012
Management fees to affiliate 3,308 2,713 2,463
Property operating 79,175 51,466 45,075
Provision for doubtful accounts 3,025 2,421 607
General and administrative 3,408 3,022 2,811
Depreciation and amortization 48,509 39,809 30,855
------------ ----------- ------------
Total expenses 158,186 115,763 94,823
------------ ----------- ------------
Operating income 132,961 101,642 72,573
Interest expense (78,775) (70,272) (46,852)
Interest income 8,523 3,833 518
Equity in net income (loss) of unconsolidated affiliates:
CenterMark 9,397 8,628
GGP/Homart 16,505 9,355 646
Property Joint Ventures 3,033 110
General Growth Management, Inc. (194) (1,273)
Net gain on sales 58,647 43,821 33,397
------------ ----------- ------------
Income before allocation to minority
interest and extraordinary item 140,700 96,613 68,910
Income allocated to minority interest (49,997) (34,580) (25,856)
------------ ----------- ------------
Income before extraordinary item 90,703 62,033 43,054
Extraordinary item (1,152) (2,291)
------------ ----------- ------------
Net income $ 89,551 $ 59,742 $ 43,054
============ =========== ============
Earnings before extraordinary item per share - Basic $ 2.78 $ 2.20 $ 1.69
============ =========== ============
Earnings before extraordinary item per share - Diluted $ 2.76 $ 2.20 $ 1.69
============ =========== ============
Net earnings per share - Basic $ 2.75 $ 2.12 $ 1.69
============ =========== ============
Net earnings per share - Diluted $ 2.73 $ 2.12 $ 1.69
============ =========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 36
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands, except for Per Share Amounts)
<TABLE>
<CAPTION>
Additional Retained Total
Common Stock Paid-in Earnings Treasury Stockholders'
Shares Amount Capital (Deficit) Stock Equity
------------- --------- ----------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 22,772,560 $ 2,277 $ 431,226 $ (279,077) $ - $ 154,426
Net income 43,054 43,054
Issuance of common stock,
less $5,482 of offering costs 4,500,000 450 87,443 87,893
Cash distributions declared
($1.66 per share) (43,428) (43,428)
Adjustment for minority interest
in operating partnership (12,562) (12,562)
------------- --------- ----------- ------------ ---------- -------------
Balance, December 31, 1995 27,272,560 $ 2,727 $ 506,107 $ (279,451) $ - $ 229,383
Net income 59,742 59,742
Cash distributions declared
($1.72 per share) (48,731) (48,731)
Acquisitions:
General Growth Management, Inc.
less $38 of issuance costs 1,555,855 156 39,675 39,831
Real estate investments 1,895,928 190 49,511 49,701
Exercise of stock options 66,667 7 1,381 1,388
Purchase and retirement of common stock (66,667) (7) (1,443) (1,450)
Conversion of operating partnership
units to common stock 64,842 6 1,315 1,321
Adjustment for minority interest
in operating partnership (918) (918)
------------- --------- ----------- ------------ ---------- -------------
Balance, December 31, 1996 30,789,185 $ 3,079 $ 595,628 $ (268,440) $ - $ 330,267
Net income 89,551 89,551
Cash distributions declared
($1.80 per share) (59,779) (59,779)
Issuance of common stock, less
$533 of offering costs 4,927,680 493 165,270 165,763
Issuance of common stock for services 2,000 50 50
Exercise of stock options 44,500 147 (471) 1,185 861
Purchase treasury stock (171,213) (5,748) (5,748)
Conversion of operating partnership
units to common stock 42,825 5 776 781
Adjustment for minority interest in
operating partnership (23,241) (23,241)
------------- --------- ----------- ------------ ---------- -------------
Balance, December 31, 1997 35,634,977 $ 3,577 $ 738,630 $ (239,139) $ (4,563) $ 498,505
============= ========= =========== ============ ========== =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 37
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996 1995
---------------- ---------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 89,551 $ 59,742 $ 43,054
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest 49,997 34,580 25,856
Net gain on sales (58,647) (43,821) (33,397)
Extraordinary items 1,152 2,291
Equity in net income of unconsolidated affiliates (19,344) (17,589) (9,274)
Provision for doubtful accounts 3,025 2,421 607
Depreciation 44,551 35,469 26,104
Amortization 3,957 4,340 4,751
Net changes in:
Tenant accounts receivable (12,490) (12,974) (6,723)
Prepaid and other assets 46 (5,744) (1,963)
Accounts payable and accrued expenses (16,082) 8,487 11,645
---------------- ---------------- ----------------
Net cash provided by operating activities 85,716 67,202 60,660
---------------- ---------------- ----------------
Cash flows from investing activities:
Acquisition/development of real estate and improvements
and additions to properties (200,564) (121,138) (379,976)
Change in investment and note receivable with GGMI (24,045) 12,532
Proceeds from the sale of CenterMark stock 130,500 87,000 72,500
Distributions received from CenterMark 21,531 23,462
Distributions received from GGP/Homart 20,352 13,791
Investment in Property Joint Ventures (72,514) (14,397)
Investment in GGP/Homart (13,719) (19,058) (178,001)
Increase in deferred expenses (7,039) (9,546) (7,189)
---------------- ---------------- ----------------
Net cash used in investing activities (167,029) (29,285) (469,204)
---------------- ---------------- ----------------
Cash flows from financing activities:
Cash distributions paid to common stockholders (56,989) (47,604) (41,037)
Cash distributions paid to minority interest (31,884) (27,861) (25,494)
Gross proceeds from sale of common stock 166,296 93,375
Payment of stock issuance costs (533) (38) (5,482)
Proceeds from issuance of mortgage and other notes payable 832,525 705,815 506,450
Principal payments on mortgage and other notes payable (802,929) (668,107) (105,728)
Purchase of treasury stock (5,748)
Proceeds from exercised options 861 1,388
Retirement of common stock (1,450)
Increase in deferred financing costs (9,262) (2,411) (859)
Prepayment penalty on early retirement of debt (1,073)
---------------- ---------------- ----------------
Net cash provided by financing activities 91,264 (40,268) 421,225
---------------- ---------------- ----------------
Net change in cash and cash equivalents 9,951 (2,351) 12,681
Cash and cash equivalents at beginning of year 15,947 18,298 5,617
---------------- ---------------- ----------------
Cash and cash equivalents at end of year $ 25,898 $ 15,947 $ 18,298
================ ================ ================
Supplemental disclosure of cash flow information:
Interest paid $ 79,787 $ 73,386 $ 51,310
Interest capitalized 4,753 5,947 5,409
Supplemental schedule of non-cash investing and financing activities:
Acquisition of real estate and General Growth Management, Inc. (1996) 107,853 244,787 37,558
Operating partnership units and stock issued as consideration for:
Additional real estate investments 30,408 89,438 17,908
Acquisition of General Growth Management, Inc. 51,497
Mortgage debt assumed as consideration for additional real
estate investments 77,445 103,852 19,650
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 38
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
General Growth Properties, Inc., a Delaware corporation, was formed in
1986 to own and operate enclosed mall shopping centers. On April 15,
1993, the Company completed its initial public offering and a business
combination involving entities under varying common ownership. Proceeds
from the initial public offering were used to acquire a majority
interest in GGP Limited Partnership (the "Operating Partnership") which
was formed to succeed to substantially all of the interests in enclosed
mall general partnerships owned and controlled by the Company and its
original stockholders. The Company conducts substantially all of its
business through the Operating Partnership.
OPERATING PARTNERSHIP
The Operating Partnership commenced operations on April 15, 1993 and as
of December 31, 1997, the Company together with the Operating
Partnership owned 100% of thirty-five enclosed regional shopping
centers, 51% of GGP/Ivanhoe, Inc. and 50% of both Quail Springs and
Town East (the "Property Joint Ventures"), 38.2% of the stock of
GGP/Homart, Inc. and a 95% non-voting preferred stock interest in
General Growth Management, Inc. ("GGMI"). At December 31, 1997, the
Company owned a 66% general partnership interest in the Operating
Partnership.
The minority interest in the Operating Partnership is held primarily by
trusts for the benefit of families of the original stockholders which
initially owned and controlled the Company and is represented by units
of limited partnership interests ("Units"). The Units can be exchanged,
with certain restrictions, for shares of the Company on a one-for-one
basis. The original stockholders' Units can be exchanged for cash, at
the Company's election, if 25% or more of the outstanding common stock
of the Company is owned by the original stockholders at the time of the
exchange. The Unitholders also share equally with the stockholders on a
per share basis in any distributions by the Operating Partnership.
Changes in Operating Partnership Units for the three years ending
December 31, 1997, are as follows:
<TABLE>
<CAPTION>
Units
--------------
<S> <C>
December 31, 1994 15,267,525
Acquisition of Piedmont Mall 832,936
--------------
December 31, 1995 16,100,461
Acquisition of General Growth
Management, Inc. (issued to the original stockholders) 453,791
Acquisition of Lakeview Square, Lansing and Westwood Malls 1,445,000
Conversion to common stock (64,842)
--------------
December 31, 1996 17,934,410
Acquisition of Southlake Mall 353,537
Acquisition of Valley Hills Mall 518,833
Conversion to common stock (42,825)
--------------
December 31, 1997 18,763,955
==============
</TABLE>
F-7
<PAGE> 39
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements of the Company have been prepared
on a consolidated basis which include the accounts of the Company, its
majority owned Operating Partnership and subsidiaries (hereinafter the
"Company"). All significant intercompany balances and transactions have
been eliminated.
REVENUE RECOGNITION
Minimum rent revenues are recognized on a straight-line basis over the
term of the related leases. Percentage rents are recognized on an
accrual basis. Recoveries from tenants for taxes, insurance and other
shopping center operating expenses are recognized as revenues in the
period the applicable costs are incurred.
The Company provides an allowance for doubtful accounts against the
portion of accounts receivable which is estimated to be uncollectible.
Accounts receivable in the accompanying consolidated balance sheets are
shown net of an allowance for doubtful accounts of $5,011 and $5,117 as
of December 31, 1997 and 1996, respectively.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents. The
carrying amount approximates fair value due to the short maturity of
these investments.
DEFERRED EXPENSES
Deferred expenses consist principally of financing fees and leasing
commissions which are amortized over the terms of the respective
agreements. Deferred expenses in the accompanying consolidated balance
sheets are shown net of accumulated amortization of $25,235 and $21,996
as of December 31, 1997 and 1996, respectively.
PROPERTIES
Real estate assets are stated at cost. Interest and real estate taxes
incurred during construction periods are capitalized and amortized on
the same basis as the related assets. The real estate assets of the
Company are periodically reviewed for impairment. Based principally on
a review of cash flows, management has determined that the fair value
of its real estate assets exceeds their carrying value. Depreciation
expense is computed using the straight-line method based upon the
following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and Improvements 40
Equipment and fixtures 10
</TABLE>
Construction allowances paid to tenants are capitalized and depreciated
over the average lease term. Maintenance and repairs are charged to
expense when incurred. Expenditures for improvements are capitalized.
F-8
<PAGE> 40
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
INVESTMENTS IN AFFILIATES
The Company accounts for its investments in affiliates using the equity
method whereby the cost of an investment is adjusted for the Company's
share of equity in net income or loss from the date of acquisition and
reduced by distributions received. Due to currently unpaid and accrued
preferences as described in Note 7 on the preferred stock, the
Operating Partnership was entitled to 100% of the earnings and cash
flows generated by GGMI in 1997 and 1996. Subsequent to the July 1996
sale, the remaining investment in CenterMark was accounted for using
the cost method whereby distributions received were included in income
instead of its share of equity in net income or loss.
INCOME TAXES
The Company elected to be taxed as a real estate investment trust under
sections 856-860 of the Internal Revenue Code of 1986, commencing with
its taxable year beginning January 1, 1993. In order to qualify as a
real estate investment trust, the Company is required to distribute at
least 95% of its ordinary taxable income and 100% of capital gains to
stockholders and to meet certain asset and income tests as well as
certain other requirements. As a real estate investment trust, the
Company will generally not be liable for Federal income taxes, provided
it satisfies the necessary requirements. As a result, Federal income
taxes on the net taxable income of the Company are payable by the
stockholders of the Company. Accordingly, the consolidated statements
of operations do not reflect a provision for income taxes. State income
taxes are not significant.
The Company's affiliate, GGMI, is a taxable corporation and
accordingly, state and Federal income taxes on its net taxable income
are payable by GGMI.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share," which became effective for
both interim and annual financial statement periods ending after
December 15, 1997. As required by this statement, the Company adopted
the new standards for computing and presenting earnings per share for
1997, and for all prior period earnings per share data presented.
Basic per share amounts are based on the weighted average of common
shares outstanding of 32,622,665 for 1997, 28,145,091 for 1996 and
25,509,546 for 1995. Diluted per share amounts are based on the
weighted average common shares and the effect of dilutive securities
(stock options) outstanding of 32,839,637 for 1997, 28,220,707 for 1996
and 25,521,875 for 1995. The outstanding Operating Partnership Units
have been excluded from the diluted earnings per share calculation as
there would be no effect on the amounts since the minority interests'
share of income would also be added back to net income.
MINORITY INTEREST
Income before minority interest is allocated to the limited partners
(the "Minority Interest") based on their ownership percentage of the
Operating Partnership. The ownership percentage is determined by
dividing the numbers of Operating Partnership Units held by the
Minority Interest by the total Operating Partnership Units outstanding.
The issuance of additional shares of common stock or Operating
Partnership Units changes the percentage ownership of both the Minority
Interest and the Company. Since a Unit is convertible into common stock
and thus equivalent to a common share, such transactions are treated as
capital transactions and result in an allocation between stockholders'
equity and Minority Interest in the balance sheet to account for the
change in the ownership of the underlying equity in the Operating
Partnership.
F-9
<PAGE> 41
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
RECLASSIFICATIONS
The consolidated statements of operations for prior periods have been
reclassified to conform with current classifications with no effect on
results of operations.
3. CENTERMARK ACQUISITION AND DISPOSITION
On February 11, 1994, the Company and Subsidiaries acquired 40% of the
outstanding stock of CenterMark which owns interests in several major
regional shopping malls and power centers. The Company's portion of the
cash purchase price for the CenterMark stock, including certain
transaction costs, was approximately $182,000. CenterMark elected real
estate investment trust status for income tax purposes. The Company
sold 25% of its interest in CenterMark on December 19, 1995 for $72,500
which reduced the Company's ownership to 30% of the outstanding
CenterMark stock. Concurrent with the sale of the stock, the Company
also granted an option to purchase the remainder of the Company's
CenterMark stock for $217,500. The Company's remaining interest was
sold in two transactions with $87,000 received on July 1, 1996 and
$130,500 received on January 2, 1997.
4. GGP/HOMART ACQUISITION
On December 22, 1995, the Company, jointly with four other investors,
acquired 100% of the stock of GGP/Homart, Inc. ("GGP/Homart") from
Sears, Roebuck and Co. The Company acquired 38.2% of GGP/Homart for
approximately $178,000 including certain transaction costs. All of the
stockholders of GGP/Homart committed to contribute up to $80,000 of
additional capital and as of December 31, 1997 this commitment had been
fulfilled. The co-investors in GGP/Homart are allowed to exercise an
exchange right according to the stockholders agreement. The exchange
right is designed to allow a GGP/Homart stockholder to convert their
ownership interest in GGP/Homart to a common stock ownership interest
in General Growth Properties, Inc. GGP/Homart elected real estate
investment trust status for income tax purposes. During the second
quarter of 1997, GGP/Homart sold its ownership interest in Eden Prairie
Mall to the Company (see Note 5). In September of 1997, GGP/Homart sold
its ownership interest in Meriden Square to its joint venture partner
and opened Brass Mill Center and Commons Mall, a new development,
located in Waterbury, Connecticut. As of December 31, 1997 GGP/Homart
owned interests in twenty-five regional shopping malls.
F-10
<PAGE> 42
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
The following is summarized financial information for GGP/Homart.
<TABLE>
<CAPTION>
December 31,
Balance Sheet as of 1997 1996
- -------------------
----------------- -----------------
Assets:
<S> <C> <C>
Net investment in real estate $ 1,088,310 $ 1,007,008
Investment in real estate partnerships 154,109 179,228
Other assets 64,558 55,957
----------------- -----------------
$ 1,306,977 $ 1,242,193
================= =================
Liabilities and Stockholders' Equity:
Mortgage and other notes payable $ 742,362 $ 689,773
Accounts payable and accrued expenses 54,806 83,547
Stockholders' equity 509,809 468,873
----------------- -----------------
$ 1,306,977 $ 1,242,193
================= =================
Period from
Year ended December 31, December 22 through
1997 1996 December 31, 1995
----------------- ----------------- --------------------
Summary of Operations
- ---------------------
Revenues $ 162,347 $ 145,689 $ 4,782
Operating costs (66,619) (62,002) (2,040)
Depreciation and amortization (25,879) (20,824) (455)
Interest expense (46,047) (40,575) (1,248)
Equity in net income of real estate partnerships 5,999 2,434 314
Gain on sale of joint venture interest 13,767
Minority interest (372) (239)
----------------- ----------------- -----------------
Net income $ 43,196 $ 24,483 $ 1,353
================= ================= =================
</TABLE>
Significant accounting policies used by GGP/Homart are the same as
those used by the Company.
5. PROPERTY ACQUISITIONS AND DEVELOPMENTS
ACQUISITIONS - 1997
The Company acquired a 100% ownership interest in Valley Hills Mall
located in Hickory, North Carolina on October 23, 1997 for a purchase
price of approximately $34,500. The purchase price consisted of
approximately $18,900 (518,833 units) of Operating Partnership Units
and the assumption of approximately $15,600 mortgage debt.
During the second quarter of 1997, the Company acquired 100% ownership
of three other properties, Century Plaza Shopping Center, Southlake
Mall and Eden Prairie Mall. Century Plaza Shopping Center located in
Birmingham, Alabama was acquired on May 1, 1997 for $31,800 in cash.
Southlake Mall was acquired on June 18, 1997, for a purchase price of
$67,000. The purchase price consisted of $45,100 of mortgage debt
assumption, $11,500 (353,537 units) of Operating Partnership Units, and
$10,400 in cash. Southlake Mall is located in Atlanta, Georgia. The
aggregate consideration paid for Eden Prairie Mall located in
Minneapolis, Minnesota was $19,900. It included the assumption of a
$16,800 mortgage, the payment of $1,100 in cash and the assumption of
$2,000 of short-term liabilities.
On March 31, 1997, the Company acquired a 100% ownership interest in
Market Place Mall for a cash purchase price of approximately $70,000.
Market Place Mall is located in Champaign, Illinois.
F-11
<PAGE> 43
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
ACQUISITIONS - 1996
On October 4, 1996, Park Mall in Tucson, Arizona was acquired for one
million shares of newly issued common stock and the payment of $23,995
in cash. Sooner Fashion Mall and 50% of Quail Springs Mall, in Norman
and Oklahoma City, Oklahoma, respectively, were acquired on November
27, 1996, for 895,928 newly issued common shares, the assumption of
$8,636 of mortgage debt and the payment of $16,695 in cash. On December
6, 1996, the Company acquired Lakeview Square, Lansing Mall and
Westwood Mall, all located in south central Michigan for an aggregate
purchase price of $132,148. The purchase price consisted of $92,411 of
mortgage debt assumption, of which $4,436 was retired at closing, and
the issuance of $39,737 (1,445,000 units) of Operating Partnership
Units.
ACQUISITIONS - 1995
Piedmont Mall was acquired on July 1, 1995, by assuming $19,650 of
mortgage debt, issuing $17,908 (832,936 units) of Operating Partnership
Units and the payment of approximately $1,700 in cash. Natick Mall was
acquired on December 22, 1995, in conjunction with the GGP/Homart
transaction, for an aggregate purchase price of approximately $265,000
consisting of $82,000 in cash and a mortgage loan for $183,000.
The acquisitions were accounted for utilizing the purchase method and
accordingly, the results of operations are included in the Company's
results of operations from the dates of acquisition.
DEVELOPMENTS
During 1996, the Company acquired two new development sites located in
Coralville (Iowa City), Iowa and Grand Rapids, Michigan. Coral Ridge
Mall, located in Coralville, Iowa is currently under construction and
is scheduled to open in July of 1998. The Grand Rapids project recently
began site work and is scheduled to open in late 1999.
6. INVESTMENTS IN AFFILIATES
On September 17, 1997, GGP/Ivanhoe, Inc. ("GGP/Ivanhoe") acquired both
The Oaks Mall In Gainesville, Florida and Westroads Mall in Omaha,
Nebraska. The purchase price for the two properties was approximately
$206,000 of which $125,000 was financed through property level
indebtedness. The Company owns 51% of the ownership interest in
GGP/Ivanhoe for a net investment of $43,766. Ivanhoe, Inc. of Montreal,
Quebec, Canada owns the remaining 49% ownership interest in
GGP/Ivanhoe.
On June 11, 1997, the Company acquired a 50% interest in Town East
Mall, located in Mesquite, Texas for $56,500. The consideration
included approximately $27,500 million in cash, the assumption of
approximately $27,900 of mortgage indebtedness and the assumption of
$1,100 in net current liabilities.
7. ACQUISITION OF GENERAL GROWTH MANAGEMENT, INC.
On December 22, 1995, GGP Management, Inc. was formed to manage, lease,
develop and operate enclosed malls. The Operating Partnership owned
100% of the non-voting preferred stock ownership interest in GGP
Management, Inc. representing 95% of the equity interest. Key employees
of the Company held the remaining 5% ownership interest therein, which
interest was in the form of common stock which was entitled to all of
the voting rights in GGP Management, Inc. In August 1996, GGP
Management Inc., acquired General Growth Management, Inc. ("GGMI")
through arm's length negotiations for approximately $51,500, which was
accounted for as a purchase by completing the following steps: GGP
Management, Inc. borrowed approximately $39,900 from the
F-12
<PAGE> 44
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
Operating Partnership and used the loan proceeds to acquire 1,555,855
newly-issued common shares of the Company from the Company. GGP
Management, Inc. then exchanged the 1,555,855 common shares and 453,791
Operating Partnership Units (contributed by the Operating Partnership)
for 100% of the outstanding shares in GGMI. GGP Management, Inc. was
then merged into GGMI with GGMI as the surviving entity.
The Operating Partnership currently holds all of the non-voting
preferred stock ownership interest in GGMI representing 95% of the
equity interest. Five key employees of the Company hold the remaining
5% equity interest through ownership of 100% of the common stock which
is entitled to all voting rights in GGMI. GGMI can not distribute funds
until its available cash flow exceeds all accumulated preferred
dividends owed to the preferred stockholder. Any dividends in excess of
the preferred cumulative dividend are allocated 95% to the preferred
stockholder and 5% to the common stockholders. The interest only loan
from the Operating Partnership to GGMI bears interest at 14% and
matures in 2016. GGMI may make principal payments on the loan if it has
sufficient cash flow. GGMI manages, leases, and performs various other
services for the Company owned shopping centers, GGP/Homart properties
and other properties owned by unaffiliated parties.
On June 16, 1997, GGMI acquired an office building in downtown Chicago,
Illinois to be used as the Company's new corporate headquarters. The
office building is in the process of being upgraded and retrofitted to
create class A office space. GGMI and Company personnel are expected to
initially occupy approximately half of the building commencing in the
second quarter of 1998. The balance of the space will be leased to
other tenants.
8. MORTGAGE NOTES AND OTHER DEBT PAYABLE
Mortgage notes and other debt payable at December 31, 1997 and 1996,
consisted of the following:
<TABLE>
<CAPTION>
1997 1996
---------------- ------------------
<S> <C> <C>
Fixed-Rate debt
Mortgage notes payable $1,173,042 $ 766,783
Variable-Rate debt
Mortgage notes payable 16,743 250,000
Credit facility 86,000 40,000
Construction loans 111,739
---------------- ------------------
Total Variable-Rate debt 102,743 401,739
================ ==================
Total mortgage notes and other debt payable $1,275,785 $1,168,522
================ ==================
</TABLE>
FIXED-RATE DEBT
MORTGAGE NOTES PAYABLE
The fixed-rate mortgage notes bear interest ranging from 6.00% to
10.00% (weighted average of 7.11%), require monthly payments of
principal and/or interest and have various maturity dates through 2020
(average remaining term of 7.8 years). Certain properties are pledged
as collateral for the related mortgage note. The Mortgage notes payable
as of December 31, 1997 are non-recourse to the Company. Certain
properties are cross-defaulted and cross-collateralized as part of a
group of properties. Under certain cross-default provisions, a default
under any mortgage included in a cross-defaulted package may constitute
a default under all such mortgages and may lead to acceleration of the
indebtedness due on each property within the collateral package.
GGP/Ivanhoe debt
F-13
<PAGE> 45
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
totaling $125,000 is cross-defaulted and cross-collateralized with
eleven wholly owned centers. Certain properties are subject to
financial performance covenants, primarily minimum earnings before
interest, taxes, depreciation and amortization ("EBITDA") ratios.
VARIABLE-RATE DEBT
MORTGAGE NOTES PAYABLE
The mortgage note at December 31, 1997 is a non-recourse loan that
bears interest at LIBOR plus 118 basis points and matures in December
of 1998. This mortgage note is cross-collateralized with several
GGP/Homart centers.
CREDIT FACILITY
The $200,000 unsecured revolving credit facility bears interest at
LIBOR plus 80 to 120 basis points depending upon the Company's leverage
ratio and matures on July 31, 1999 excluding a one year extension
option. The credit facility is subject to financial performance
covenants including debt-to-market capitalization, minimum earnings
before interest, taxes, depreciation and amortization ("EBITDA") ratios
and minimum equity values.
CONSTRUCTION LOANS
The construction loans were arranged in connection with the development
of two regional malls. These recourse loans were repaid in 1997.
Principal amounts due under mortgage notes and other debt payable
mature as follows:
<TABLE>
<CAPTION>
Year Amount Maturing
---- ---------------
<S> <C>
1998 $ 19,946
1999 197,432
2000 2,260
2001 154,486
2002 185,718
Subsequent 715,943
----------------
Total $ 1,275,785
================
</TABLE>
Certain mortgages notes payable may be prepaid but are generally
subject to a prepayment penalty of a yield-maintenance premium or a
percentage of the loan balance.
Land, buildings and equipment related to the mortgages payable, with an
aggregate cost of $1,524,740 at December 31, 1997 have been pledged as
collateral. Based on borrowing rates available to the Company at the
end of 1997 for mortgage loans with similar terms and maturities, the
fair value of the mortgage notes and other debt payable approximates
carrying value at December 31, 1997 and 1996.
As of December 31, 1997 and 1996, the Operating Partnership had
outstanding letters of credit of $7,717 and $6,200, respectively, in
connection with special real estate assessments and liability insurance
requirements.
9. RENTALS UNDER OPERATING LEASES
The Company receives rental income from the leasing of retail shopping
center space under operating leases. The minimum future rentals based
on operating leases held as of December 31, 1997, are as follows:
F-14
<PAGE> 46
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1998 $159,827
1999 152,580
2000 143,179
2001 129,562
2002 116,606
Thereafter 514,185
</TABLE>
Minimum future rentals do not include amounts which may be received
from certain tenants based upon a percentage of their gross sales or as
reimbursement of shopping center operating expenses.
No single tenant collectively accounts for more than 10% of the
Company's total revenues. The tenant base includes national and
regional retail chains and local retailers, and consequently the
Company's credit risk is concentrated in the retail industry.
10. TRANSACTIONS WITH AFFILIATES
GGMI has been contracted to provide management, leasing, development
and construction management services for the owned properties. In
addition, certain shopping center advertising and payroll costs of the
properties are paid by GGMI and reimbursed by the Company. Total costs
included in the consolidated financial statements related to agreements
with GGMI are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
----------------- ----------------- ----------------
<S> <C> <C> <C>
Management and Leasing Fees $ 8,285 $ 7,956 $ 8,514
Cost Reimbursements 28,099 23,641 20,049
Development Costs 2,015 1,529 1,637
</TABLE>
In December 1996, the Operating Partnership acquired a development site
located in Grand Rapids, Michigan from a related partnership for
$11,441.
11. STOCK INCENTIVE PLAN
The Company's Stock Incentive Plan provides incentives to attract and
retain officers and key employees. The Stock Incentive Plan originally
consisted of 1,000,000 shares of common stock available for grant which
was increased by 1,000,000 shares in both 1996 and 1997. As of December
31, 1997, the number of shares of common stock authorized for issuance
under the plan were 3,000,000. Options are granted by the Compensation
Committee of the Board of Directors at an exercise price of not less
than 100% of the fair market value of the Common Stock on the date of
grant. The term of the option is fixed by the Compensation Committee,
but no option shall be exercisable more than 10 years after the date of
the grant. Options granted to employee-officers are for 10-year terms
and are exercisable in either 33 1/3% or 20% annual increments from the
date of the grants. Options granted to non-employee directors are
exercisable in full commencing on the date of grant and expire on the
tenth anniversary of the date of the grant.
F-15
<PAGE> 47
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
A summary of the status of the Company's stock options as of December
31, 1997, 1996 and 1995 and changes during the year ended on those
dates is presented below.
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------- -------------------------- ------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------------------------- -------------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 827,500 $ 24.48 425,500 $ 19.50 173,500 $ 20.89
Granted 2,000 $ 31.75 502,000 $ 27.97 312,000 $ 19.02
Exercised (44,500) $ 19.35 (66,667) $ 20.81
Forfeited (33,333) $ 20.81
Cancelled (60,000) $ 21.03
-------------------------- -------------------------- ------------------------
Outstanding at end of year 785,000 $ 24.79 827,500 $ 24.48 425,500 $ 19.50
========================== ========================== ========================
Exercisable at end of year 379,000 267,500 161,500
Options available for future grants 2,103,833 1,105,833 574,500
Weighted average per share fair value
of options granted during the year $ 2.74 $ 2.28 $ 1.53
</TABLE>
The fair value of each option grant for 1997, 1996 and 1995 was
estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Risk free interest rate 6.23% 5.78% 5.68%
Dividend yield 7.77% 7.75% 7.75%
Expected life 4.75 years 4.00 years 4.00 years
Expected volatility 18.8% 18.8% 18.8%
</TABLE>
The following table summarizes information about stock options
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------- -----------------------------------
Weighted
Average Weighted Weighted
Number Remaining Average Options Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/31/97 Life Price at 12/31/97 Price
- ---------------------- --------------- --------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
$19.00 - $31.75 785,000 8.5 years $24.79 379,000 $23.85
</TABLE>
The Company has applied Accounting Principles Board Opinion 25 and
selected interpretations in accounting for its plan. Accordingly, no
compensation costs have been recognized. Had compensation costs for the
Company's Plan been determined based on the fair value at the grant
date for options granted in 1997, 1996 and 1995 in accordance with the
method required by Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation", the Company's net income and
net income per share would have been reduced to the pro forma amounts
as follows:
F-16
<PAGE> 48
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Net Income As Reported $89,551 $59,742 $43,054
Pro Forma $89,341 $59,536 $42,991
Net earnings per share -
basic As Reported $ 2.75 $ 2.12 $ 1.69
Pro Forma $ 2.74 $ 2.12 $ 1.69
Net earnings per share -
diluted As Reported $ 2.73 $ 2.12 $ 1.69
Pro Forma $ 2.72 $ 2.11 $ 1.68
</TABLE>
12. EXTRAORDINARY ITEMS
The extraordinary items resulted from prepayment costs and unamortized
deferred financing costs related to the early retirement of mortgage
notes payable. The basic and diluted per share impact of the
extraordinary items was $.03 in 1997 and $.08 in 1996.
13. DISTRIBUTIONS PAYABLE
On December 16, 1997, the Company declared a cash distribution of $.45
per share payable January 30, 1998, to stockholders of record on
December 30, 1997, totaling $16,029. In addition a distribution of
$8,392 was paid to the limited partners of the Operating Partnership.
On December 17, 1996, the Company declared a cash distribution of $.43
per share payable January 31, 1997, to stockholders of record on
December 31, 1996, totaling $13,239. In addition a distribution of
$7,505 was paid to the limited partners of the Operating Partnership.
On December 15, 1995, the Company declared a cash distribution of $.43
per share payable January 31, 1996, to stockholders of record on
December 29, 1995, totaling $11,727. In addition a distribution of
$6,923 was paid to the limited partners of the Operating Partnership.
The allocations of the distributions declared and paid for income tax
purposes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996 1995
-------------- --------------- -------------
<S> <C> <C> <C>
Ordinary Income 29.8% 47.0% 51.6%
Capital Gain 70.2 53.0 48.4
============== =============== =============
100.0% 100.0% 100.0%
============== =============== =============
</TABLE>
14. COMMITMENTS AND CONTINGENCIES
In the normal course of business, from time to time, the Company is
involved in legal actions relating to the ownership and operations of
its properties. In management's opinion, the liabilities, if any, that
may ultimately result from such legal actions are not expected to have
a materially adverse effect on the consolidated financial position,
results of operations or liquidity of the Company.
The Company leases land at a few properties from third parties. Rental
expense including participation rent related to these leases was $595,
$590 and $526 for the years ended December 31, 1997, 1996 and 1995,
respectively. The leases provide for a right of first
F-17
<PAGE> 49
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
refusal in favor of the Company in the event of a proposed sale of the
property by the landlord.
The Company has entered into several contingent agreements for the
acquisition of properties. Each acquisition is subject to satisfactory
completion of due diligence and, in the case of developments,
completion and occupancy of the project.
15. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June of 1997, the Financial Accounting Standards Board issued
Statement No. 130, "Reporting Comprehensive Income" and Statement No.
131, "Disclosures about Segments of an Enterprise and Related
Information." Statement No. 130 requires the reporting of comprehensive
income which for the Company would be the same as net income currently
reported. Statement No. 131 establishes standards for publicly-held
business enterprises to report information about operating segments in
annual financial statements and requires that these enterprises report
selected information about operating segments in interim financial
reports issued to shareholders. The Company will adopt the provisions
under the new reporting and disclosure requirements promulgated in
these statements beginning in its fiscal 1998 year.
16. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Due to the impact of the acquisitions and dispositions during 1995,
1996 and 1997 historical results of operations may not be indicative of
future results of operations. The pro forma condensed consolidated
statements of operations for 1997 include adjustments for the
acquisition of 100% of Market Place Shopping Center, Century Plaza and
Southlake Mall and 50% of Town East as if they had occurred on January
1, 1997. The pro forma condensed consolidated statements of operations
for 1996 include adjustments for the acquisition of 100% of the three
operating properties in 1997, 50% of Town East, 100% of the five
operating properties in 1996, 50% of Quail Springs Mall and the
disposition of CenterMark Properties as if they had occurred on January
1, 1996. The pro forma condensed consolidated statements of operations
for 1995 include adjustments for the acquisition of 100% of the five
operating properties, 50% of Quail Springs Mall, GGP/Homart, the
follow-on stock offering, Natick Mall and the disposition of a portion
of the interest in CenterMark Properties as if they had occurred on
January 1, 1995. The pro forma information is based upon the historical
consolidated statements of operations and does not purport to present
what actual results would have been had the offerings, acquisitions,
sale and related transactions, in fact, occurred at the previously
mentioned dates, or to project results for any future period.
F-18
<PAGE> 50
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Total revenues $ 305,574 $ 280,939 $ 228,030
--------------- ---------------- --------------
Expenses:
Property operating 112,187 96,512 76,188
Management fees 3,514 3,630 4,208
Depreciation and amortization 50,586 48,705 40,423
--------------- ---------------- --------------
Total expenses 166,287 148,847 120,819
--------------- ---------------- --------------
Operating income 139,287 132,092 107,211
Interest expense, net (78,711) (83,061) (74,168)
Equity in net income/(loss) of unconsolidated affiliates
CenterMark - - 8,023
GGP/Homart 16,506 9,355 9,075
Property Joint Ventures 3,423 2,758 927
General Growth Management, Inc. (194) (1,273) -
--------------- ---------------- --------------
80,311 59,871 51,068
Minority interest in operating partnership 29,361 23,005 19,202
--------------- ---------------- --------------
Pro forma net income (a) $ 50,950 $ 36,866 $ 31,866
=============== ================ ==============
Pro forma earnings per share - basic (b) $ 1.56 $ 1.24 $ 1.09
=============== ================ ==============
Pro forma earnings per share - diluted (b) $ 1.55 $ 1.24 $ 1.09
=============== ================ ==============
</TABLE>
(a) The proforma adjustments include management fee and depreciation
modifications and acquisition and disposition activity described in the
above paragraph. The equity income from CenterMark reflects the reductions
in ownership interest offset by the change from the equity method of
accounting to the cost method 1995. Pro forma net income is before
extraordinary item.
(b) Basic earnings per share are based upon 32,622,665 for 1997, 29,717,353 for
1996 and 29,168,488 for 1995. Diluted per share amounts are based on the
weighted average common shares and the effect of dilutive securities (stock
options) outstanding of 32,839,637 for 1997, 29,792,969 for 1996 and
29,180,817 for 1995.
F-19
<PAGE> 51
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except Per Share Amounts)
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended First Second Third Fourth
December 31, 1997 Quarter Quarter Quarter Quarter Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenues $ 65,328 $ 69,694 $ 74,199 $81,926 $ 291,147
Income before minority interest 75,495 17,823 24,440 22,942 140,700
Income before extraordinary item 47,953 11,127 15,982 15,641 90,703
Net income applicable to common shares 47,576 11,127 15,287 15,561 89,551
Earnings before extraordinary item per share - basic (a) 1.56 0.36 0.48 0.44 2.78
Earnings before extraordinary item per share - diluted (a) 1.55 0.36 0.48 0.44 2.76
Net earnings per share - basic (a) 1.55 0.36 0.46 0.44 2.75
Net earnings per share - diluted (a) 1.54 0.36 0.46 0.44 2.73
Distributions declared per share 0.45 0.45 0.45 0.45 1.80
Weighted average shares outstanding (in thousands) - basic 30,789 30,781 33,219 35,640 32,623
Weighted average shares outstanding (in thousands) - diluted 30,835 30,831 33,279 35,701 32,840
</TABLE>
(a) Earnings per share for the four quarters do not add up to the annual
earnings per share due to the issuance of additional stock and the gain on
the sale of a portion of CenterMark stock in the first quarter.
<TABLE>
<CAPTION>
Year Ended First Second Third Fourth
December 31, 1996 Quarter Quarter Quarter Quarter Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenues $ 51,741 $ 51,671 $ 51,569 $62,424 $ 217,405
Income before minority interest 9,810 11,607 58,275 16,921 96,613
Income before extraordinary item 6,996 7,275 36,667 11,095 62,033
Net income applicable to common shares 4,705 7,275 36,667 11,095 59,742
Earnings before extraordinary item per share - basic (a) 0.26 0.27 1.33 0.36 2.20
Earnings before extraordinary item per share - diluted (a) 0.26 0.27 1.33 0.36 2.20
Net earnings per share - basic (a) 0.18 0.27 1.33 0.36 2.12
Net earnings per share - diluted (a) 0.18 0.27 1.33 0.36 2.12
Distributions declared per share 0.43 0.43 0.43 0.43 1.72
Weighted average shares outstanding (in thousands) - basic 27,273 27,273 27,554 30,180 28,145
Weighted average shares outstanding (in thousands) - diluted 27,284 27,288 27,574 30,208 28,221
</TABLE>
(a) Earnings per share for the four quarters do not add up to the annual
earnings per share due to the issuance of additional stock and the gain on
the sale of a portion of CenterMark stock in the third quarter.
F-20
<PAGE> 52
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
General Growth Properties, Inc.
Our report on the consolidated financial statements of General Growth
Properties, Inc. is included as page F-2 of this Form 10-K. In connection with
our audits of such financial statements, we have also audited the related
financial statement schedule listed in the Index to Consolidated Financial
Statements on page F-1 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.
Chicago, Illinois Coopers & Lybrand L.L.P.
February 9, 1998
F-21
<PAGE> 53
General Growth Properties, Inc.
Schedule III - Real Estate and Accumulated Depreciation
as of December 31, 1997
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Costs Capitalized
Subsequent
Initial Cost To Acquisition
----------------------------- ----------------------------
Buildings
and
Encumbrances Improvements Carrying
Description (e) Land (a) Improvements Costs (b)
- ------------------- ------------- -------------- ------------- ------------- -----------
Bayshore Mall,
<S> <C> <C> <C> <C> <C>
Eureka, CA 37,250,000 3,004,345 27,398,907 19,903,001 2,887,090
Bellis Fair Mall,
Bellingham, WA 73,000,000 7,616,458 47,040,131 6,117,887 6,122,020
Birchwood Mall,
Port Huron, MI 39,122,228 1,768,935 34,574,635 6,831,866 1,967,320
Capital Mall
Jefferson City, MO 16,500,000 4,200,000 14,201,000 3,155,283 0
Century Mall
Birmingham, AL 0 3,164,000 28,513,908 369,014 0
Chapel Hills
Colorado
Springs, CO 36,750,000 4,300,000 34,017,000 32,776,554 36,805
Colony Square Mall
Zanesville, OH 25,600,000 1,000,000 24,500,000 8,626,983 0
Columbia Mall
Columbia, MO 56,100,000 5,383,208 19,663,231 7,732,810 1,368,803
Development in Progress 0 35,991,118 32,012,357 0 0
Eagle Ridge Mall
Lake Wales, FL 0 7,619,865 49,560,538 146,702 5,678,662
Eden Prairie Mall
Eden Prairie, MN 16,743,017 465,063 19,024,047 912,950 0
Fallbrook Mall,
West Hills, CA 46,900,000 6,117,338 10,076,520 55,301,557 1,628,171
Fox River Mall
Appleton, WI 93,200,000 2,700,566 18,291,067 26,938,650 1,820,253
Gateway Mall,
Springfield, OR 30,750,000 8,728,263 34,707,170 8,082,899 7,520,779
GGPLP Corp
Chicago, IL 86,000,000 89,115 0 0
Grand Traverse Mall,
Grand Traverse, MI 51,500,000 3,529,966 20,775,772 18,649,321 3,643,793
Greenwood Mall
Bowling Green, KY 39,500,000 3,200,000 40,202,000 11,626,083 0
Knollwood Mall,
St. Louis Park, MN 0 0 9,748,047 22,343,715 1,767,267
Lakeview Square Mall
Battle Creek, MI 27,077,893 3,578,619 32,209,980 954,294 0
Lansing Mall
Lansing, MI 44,696,922 6,977,798 62,800,179 1,249,912 0
Lockport Mall,
<CAPTION>
Col. A Col. E Col. F
------ ------ ------
Gross Amounts at Which
Carried at Close of Period
------------------------------------------
Buildings
and Accumulated
Description Land Improvements Total(c)(d) Depreciation
- ------------------- - ------------- ------------ ------------ ---------------
Bayshore Mall,
<S> <C> <C> <C> <C>
Eureka, CA 3,005,040 50,188,998 53,194,038 13,001,263
Bellis Fair Mall,
Bellingham, WA 7,485,224 59,280,038 66,765,262 17,557,848
Birchwood Mall,
Port Huron, MI 3,045,616 43,373,821 46,419,437 9,869,863
Capital Mall
Jefferson City, MO 3,912,935 17,356,283 21,269,218 2,140,538
Century Mall
Birmingham, AL 3,164,000 28,882,922 32,046,922 386,719
Chapel Hills
Colorado
Springs, CO 4,300,000 66,830,359 71,130,359 5,163,549
Colony Square Mall
Zanesville, OH 1,243,184 33,126,983 34,370,167 9,867,946
Columbia Mall
Columbia, MO 5,383,208 28,764,844 34,148,052 10,526,793
Development in Progress 35,991,118 32,012,357 68,003,475 0
Eagle Ridge Mall
Lake Wales, FL 7,621,768 55,385,902 63,007,670 2,157,684
Eden Prairie Mall
Eden Prairie, MN 465,063 19,936,997 20,402,060 249,235
Fallbrook Mall,
West Hills, CA 6,127,138 67,006,248 73,133,386 19,700,687
Fox River Mall
Appleton, WI 2,700,566 47,049,970 49,750,536 13,064,622
Gateway Mall,
Springfield, OR 8,749,088 50,310,848 59,059,936 11,891,262
GGPLP Corp
Chicago, IL 0 89,115 89,115 65,402
Grand Traverse Mall,
Grand Traverse, MI 3,533,745 43,068,886 46,602,631 8,373,627
Greenwood Mall
Bowling Green, KY 3,202,734 51,828,083 55,030,817 6,184,455
Knollwood Mall,
St. Louis Park, MN 267,514 33,859,029 34,126,543 11,400,424
Lakeview Square Mall
Battle Creek, MI 3,578,619 33,164,274 36,742,893 921,348
Lansing Mall
Lansing, MI 6,977,798 64,050,091 71,027,889 1,746,874
Lockport Mall,
</TABLE>
F-22
<PAGE> 54
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Costs Capitalized
Subsequent
Initial Cost To Acquisition
----------------------------- ----------------------------
Buildings
and
Encumbrances Improvements Carrying
Description (e) Land (a) Improvements Costs (b)
- ------------------- ------------- -------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Lockport, NY 9,300,000 800,000 10,000,000 3,644,396 23,656
Mall of the Bluffs,
Council Bluffs, IA 36,259,626 1,860,116 24,016,343 6,853,872 2,529,093
Marketplace
Champaign, IL 47,000,000 7,000,000 63,972,357 391,634 0
Natick Mall
Natick, MA 183,000,000 65,744,891 198,358,969 914,569 0
Oakwood Mall,
Eau Claire, WI 35,305,425 3,266,669 18,281,160 12,344,975 1,711,573
Park Mall
Tucson, AZ 0 4,996,024 44,993,177 1,003,287 10,274
Piedmont Mall,
Danville, VA 17,040,000 2,000,000 38,000,000 1,501,724 20,787
The Pines,
Pine Bluff, AR 26,750,000 1,488,928 17,627,258 6,425,989 1,365,091
Rio West Mall,
Gallup, NM 13,500,000 0 19,500,000 3,086,211 0
River Falls Mall,
Clarksville, IN 28,000,000 3,177,688 54,610,421 3,535,991 5,281,892
River Hills Mall,
Mankato, MN 51,200,000 3,713,529 29,013,757 14,971,036 2,584,241
Sooner Fashion Mall,
Norman, OK 20,000,000 2,700,000 24,300,000 412,524 0
Southlake Mall,
Morrow, GA 51,300,000 6,700,000 60,406,902 123,261 0
SouthShore Mall,
Aberdeen, WA 0 650,000 15,350,000 3,781,707 0
Valley Hills,
Harrisonburg, VA 15,539,394 3,443,594 31,025,471 78,357 0
West Valley Mall,
Tracy, CA 0 9,295,045 47,789,310 5,915,969 7,686,293
Westwood Mall
Jackson, MI 20,900,000 2,658,208 23,923,869 429,573 0
------------- -------------- ------------- ------------- ------------
Grand Totals 1,275,784,505 228,840,234 1,280,574,598 297,134,556 55,653,863
============= ============== ============= ============= ============
<CAPTION>
Col. A Col. E Col. F
------ ------ ------
Gross Amounts at Which
Carried at Close of Period
------------------------------------------
Buildings
and Accumulated
Description Land Improvements Total(c)(d) Depreciation
- ------------------- ------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Lockport, NY 800,000 13,668,052 14,468,052 3,744,323
Mall of the Bluffs,
Council Bluffs, IA 1,866,012 33,399,308 35,265,320 11,037,669
Marketplace
Champaign, IL 7,000,000 64,363,991 71,363,991 618,205
Natick Mall
Natick, MA 65,751,628 199,273,538 265,025,166 10,114,580
Oakwood Mall,
Eau Claire, WI 3,266,669 32,337,708 35,604,377 10,111,431
Park Mall
Tucson, AZ 4,996,024 46,006,738 51,002,762 1,310,569
Piedmont Mall,
Danville, VA 2,000,000 39,522,511 41,522,511 2,333,678
The Pines,
Pine Bluff, AR 1,276,001 25,418,338 26,694,339 8,129,450
Rio West Mall,
Gallup, NM 0 22,586,211 22,586,211 6,105,645
River Falls Mall,
Clarksville, IN 3,182,305 63,428,304 66,610,609 15,841,145
River Hills Mall,
Mankato, MN 3,782,109 46,569,034 50,351,143 8,894,889
Sooner Fashion Mall,
Norman, OK 2,700,000 24,712,524 27,412,524 680,909
Southlake Mall,
Morrow, GA 6,700,000 60,530,163 67,230,163 447,112
SouthShore Mall,
Aberdeen, WA 650,000 19,131,707 19,781,707 5,582,610
Valley Hills,
Harrisonburg, VA 3,443,594 31,103,828 34,547,422 99,184
West Valley Mall,
Tracy, CA 9,295,045 61,391,572 70,686,617 3,299,980
Westwood Mall
Jackson, MI 2,658,208 24,353,442 27,011,650 673,819
------------ ------------- ------------- -------------
Grand Totals 230,121,953 1,633,363,017 1,863,484,970 233,295,337
============ ============= ============= =============
</TABLE>
F-23
<PAGE> 55
General Growth Properties, Inc.
Notes to Schedule III
(Dollars in Thousands)
(a) See description of mortgage notes payable in Note 7 of Notes to Consolidated
Financial Statements.
(b) Initial cost for constructed malls is cost at end of first complete calendar
year subsequent to opening.
(c) Carrying costs consists of capitalized construction-period interest and
taxes.
(d) The aggregate cost of land, buildings and equipment for federal income tax
purposes is approximately $1.74 billion.
<TABLE>
<CAPTION>
(e) Reconciliation of Real Estate
----------------------------------------------------------------------
1995 1996 1997
-------------------- -------------------- -------------------------
<S> <C> <C> <C>
Balance at beginning of year 823,108 1,248,892 1,555,068
Additions: 425,784 306,176 308,417
-------------------- -------------------- -------------------------
Balance at close of year 1,248,892 1,555,068 1,863,485
==================== ==================== =========================
Reconciliation of Accumulated Depreciation
----------------------------------------------------------------------
1995 1996 1997
-------------------- -------------------- -------------------------
Balance at beginning of year 127,152 153,275 188,744
Depreciation Expense 26,123 35,469 44,551
-------------------- -------------------- -------------------------
Balance at close of year 153,275 188,744 233,295
==================== ==================== =========================
</TABLE>
(f) Depreciation is computed based upon the following estimated lives:
<TABLE>
<S> <C>
Buildings, improvements and carrying costs 40 years
Tenant allowances 10 - 40 years
Equipment and fixtures 10 years
</TABLE>
F-24
<PAGE> 56
EXHIBIT INDEX
2(a) Amended and Restated Stock Purchase Agreement, dated as of October
16, 1995, by and among Sears, Roebuck and Co., Homart Development Co., Homart
Newco One, Inc. and GGP/Homart, Inc.(1)
2(b) Amendment No. 1 to Amended and Restated Stock Purchase Agreement,
dated as of December 22, 1995, by and among Sears, Roebuck and Co., Homart
Development Co., Homart Newco One, Inc. and GGP/Homart, Inc.(1)
2(c) Real Estate Purchase Agreement, dated as of July 31, 1995, by and
among Sears, Roebuck and Co., Homart Development Co. and GGP/Homart, Inc.(1)
2(d) Amendment No. 1 to Real Estate Purchase Agreement, dated as of
October 16, 1995, by and among Sears, Roebuck and Co., Homart Development Co.
and GGP/Homart, Inc.(1)
2(e) Amendment No. 2 to Real Estate Purchase Agreement, dated as of
December 22, 1995, by and among Sears, Roebuck and Co., Homart Development Co.
and GGP/Homart, Inc.(1)
2(f) Mall Purchase Agreement, dated as of December 22, 1995, by and among
Sears, Roebuck and Co., Homart Development Co. and General Growth
Properties-Natick Limited Partnership.(1)
2(g) Contribution Agreement dated December 6, 1996, between Forbes/Cohen
Properties, a Michigan general partnership, and GGP Limited Partnership, a
Delaware limited partnership.(2)
2(h) Contribution Agreement dated December 6, 1996, between Lakeview
Square Associates, a Michigan general partnership, and GGP Limited Partnership,
a Delaware limited partnership.(2)
2(i) Contribution Agreement dated December 6, 1996, between Jackson
Properties, a Michigan general partnership, and GGP limited Partnership, a
Delaware limited partnership.(2)
2(j) Sale and Contribution Agreement dated June 19, 1997, between CA
Southlake Investors, Ltd., a Georgia limited partnership, and GGP Limited
Partnership, a Delaware limited partnership.(10)
2(k) Contribution Agreement dated June 10, 1997, among Atlantic Freeholds
II, a Nevada general partnership, Town East Mall, L.P., a Delaware limited
partnership, and Town East Mall Partnership, a Texas general partnership.(10)
2(l) Purchase and Sale Agreement dated as of March 22, 1997, between
Century Plaza Co., an Alabama general partnership, and Century Plaza L.L.C., a
Delaware limited liability company.(10)
S-1
<PAGE> 57
2(m) Real Estate Purchase Agreement dated March 12, 1997, between
Champaign Venture, an Illinois general partnership, and Champaign Market Place
L.L.C., a Delaware limited liability company. (10)
3(a) Amended and Restated Certificate of Incorporation of the Company.(3)
3(b) Amendment to Amended and Restated Certificate of Incorporation of the
Company.(5)
3(c) Amendment to Amended and Restated Certificate of Incorporation of the
Company filed on December 21, 1995.(11)
3(d) Amendment to Amended and Restated Certificate of Incorporation of the
Company filed on May 20, 1997.
3(e) Bylaws of the Company.(5)
3(f) Amendment to Bylaws of the Company.(5)
4(a) Redemption Rights Agreement, dated July 13, 1995, by and among GGP
Limited Partnership, General Growth Properties, Inc. and the persons listed on
the signature pages thereof.(8)
4(b) Redemption Rights Agreement dated December 6, 1996, among GGP Limited
Partnership, a Delaware corporation, Forbes/Cohen Properties, a Michigan
general partnership, Lakeview Square Associates, a Michigan general
partnership, and Jackson Properties, a Michigan general partnership.(2)
4(c) Redemption Rights Agreement, dated June 19, 1997, among GGP Limited
Partnership, a Delaware limited partnership, General Growth Properties, Inc, a
Delaware corporation, and CA Southlake Investors, Ltd., a Georgia limited
partnership.(13)
4(d) Redemption Rights Agreement dated October 23, 1997, among GGPI, GGPL
and Peter Leibowits.
4(e) Form of Indenture.(12)
10(a) Amended and Restated Agreement of Limited Partnership of the
Operating Partnership.(6)
10(b) First Amendment to Amended and Restated Agreement of Limited
Partnership.(5)
10(c) Second Amendment to Amended and Restated Agreement of Limited
Partnership.(5)
10(d) Third Amendment to Amended and Restated Agreement of Limited
Partnership.(9)
S-2
<PAGE> 58
10(e) Fourth Amendment to Amended and Restated Agreement of Limited
Partnership.(9)
10(f) Fifth Amendment to Amended and Restated Agreement of Limited
Partnership.(9)
10(g) Sixth Amendment to Amended and Restated Agreement of Limited
Partnership.(9)
10(h) Seventh Amendment to Amended and Restated Agreement of Limited
Partnership.(9)
10(i) Eighth Amendment to Amended and Restated Agreement of Limited
Partnership.(9)
10(j) Ninth Amendment to Amended and Restated Agreement of Limited
Partnership.
10(k) Tenth Amendment to Amended and Restated Agreement of Limited
Partnership.
10(l) Eleventh Amendment to Amended and Restated Agreement of Limited
Partnership.
10(m) Twelfth Amendment to Amended and Restated Agreement of Limited
Partnership.
10(n) Thirteenth Amendment to Amended and Restated Agreement of Limited
Partnership.
10(o) Fourteenth Amendment to Amended and Restated Agreement of Limited
Partnership.
10(p) Rights Agreement between the Company and the Limited Partners of the
Operating Partnership.(6)
10(q) Real Estate Management Agreement dated July 1, 1996, between General
Growth Management, Inc. and GGP Limited Partnership.(13)
10(r)* General Growth Properties, Inc. 1993 Stock Incentive Plan, as
amended.(14)
10(s) Form of Amended and Restated Agreement of Partnership for each of
the Property Partnerships.(3)
10(t) Sale-Purchase Agreement dated as of December 30, 1992, by and
between Equitable and the Company.(3)
10(u) Form of Indemnification Agreement between the Operating Partnership,
Martin Bucksbaum, Matthew Bucksbaum, Mall Investment L.P. and M. Bucksbaum
Company. (3)
S-3
<PAGE> 59
10(v) Form of Registration Rights Agreement between the Company and the
Bucksbaums. (3)
10(w) Form of Registration Rights Agreement between the Company and
certain trustees for the IBM Retirement Plan. (3)
10(aa) Form of Incidental Registration Rights Agreement between the
Company, Equitable, Frank Russell and Wells Fargo.(3)
10(bb) Form of Letter Agreements restricting sale of certain shares of
Common Stock.(3)
10(cc)* Letter Agreement dated October 14, 1993, between the Company and
Bernard Freibaum.(6)
10(dd)* Form of Option Agreement between the Company and certain Executive
Officers.(13)
21 List of Subsidiaries.
23 Consent of Coopers & Lybrand L.L.P. - Independent Accountants.
27 Financial Data Schedule
*A compensatory plan or arrangement required to be filed.
S-4
<PAGE> 60
(1) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated January 5, 1996.
(2) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated January 3, 1996.
(3) Previously filed as an exhibit to the Company's Registration Statement
on Form S-11 (No. 33-56640), incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated July 16, 1996.
(5) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1994.
(6) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1993.
(7) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated February 25, 1994.
(8) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated July 17, 1996.
(9) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (No. 33-23035), incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Current Report on
Form 8-K dated June 19, 1997.
(11) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
(12) Previously filed as an exhibit to the Company's Registration
Statement on Form S-3 (No. 333-37247) dated October 6, 1997.
(13) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
(14) Previously filed as an exhibit to the Company's Registration
Statement on Form S-9 (No. 333-28449) dated June 3, 1997.
S-5
<PAGE> 1
EXHIBIT 3(d)
[LETTERHEAD OF STATE OF DELAWARE]
CERTIFICATE OF AMENDMENT
OF
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GENERAL GROWTH PROPERTIES, INC.
It is hereby certified that:
1. The name of the Corporation is General Growth Properties, Inc. (the
"Corporation").
2. The amendment to the Second Amended and Restated Certificate of
Incorporation of the Corporation effected by this Amendment is as follows:
By deleting Pargraph A of Article IV thereof as it now exists and
inserting in lieu thereof a new Paragraph A of Article IV, reading in its
entirety as follows:
"ARTICLE IV
A. Classes and Number of Shares.
The total number of shares of all classes of capital stock that
the Corporation shall have authority to issue is Two Hundred Fifteen
Million (215,000,000) shares, consisting of (i) Five Million
(5,000,000) shares of preferred stock, par value $100.00 per share
(the "Preferred Stock") and (ii) Two Hundred Ten Million
(210,000,000) shares of common stock, par value $0.10 per share (the
"Common Stock")."
3. The aforesaid amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, General Growth Properties, Inc. has caused this
Certificate of Amendment to be executed by its duly authorized Secretary this
19th day of May, 1997.
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By /s/ Marshall E. Eisenberg
--------------------------------
Marshall E. Eisenberg, Secretary
<PAGE> 1
EXHIBIT 4(d)
REDEMPTION RIGHTS AGREEMENT
Redemption Rights Agreement, dated October ___, 1997, among GGP Limited
Partnership, a Delaware limited partnership (the "Partnership"), General Growth
Properties, Inc., a Delaware corporation (the "General Partner"), and Peter D.
Leibowits (collectively, "Contributing Partner").
R E C I T A L S
WHEREAS, concurrently herewith, Contributing Partner is being admitted as
a limited partner of the Partnership, the general partner of which is the
General Partner;
WHEREAS, shares of common stock, $.10 par value per share, of the General
Partner (the "Common Stock") are listed on the New York Stock Exchange; and
WHEREAS, the parties desire to set forth herein the terms and conditions
upon which the Contributing Partner may cause the Partnership to redeem his
limited partnership units in the Partnership.
NOW, THEREFORE, the parties hereby agree as follows:
I. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Acts" shall mean the Securities Act and the Exchange Act, collectively.
"Affiliates" shall mean "affiliates" as defined pursuant to the Securities
Act and the regulations promulgated thereunder.
"Business Day" shall mean any day upon which commercial banks are open for
business in Chicago, Illinois.
"Cash Purchase Price" shall mean, with respect to any redeemed or
purchased Units, an amount of cash equal to the value of the Share Purchase
Price (computed as of the Computation Date and equal to the Current Per Share
Market Price on such Computation Date multiplied by the number of Shares) that
would be payable with respect to such Units assuming the Share Purchase Price
were paid in full satisfaction of the Purchase Price of such Units. In the
event that the Share Purchase Price includes securities other than Shares, then
the value of such other securities shall be determined by the General Partner
acting in good faith on the basis of the closing prices of securities if listed
on a nationally recognized exchange and otherwise on the basis of such
quotations and other
<PAGE> 2
information as the General Partner considers, in its reasonable judgment,
appropriate.
"Certificate of Incorporation" shall mean the Certificate of Incorporation
of the General Partner, as the same may be amended from time to time.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor code.
"Common Stock" shall have the meaning set forth in the recitals.
"Computation Date" shall mean the date on which the applicable Notice is
received by the Partnership or, if such date is not a Business Day, the first
Business Day thereafter.
"Conversion Factor" shall mean 100%, provided that such factor shall be
adjusted in accordance with Section 6(a).
"Contribution Agreement" shall mean that certain Contribution Agreement
dated September 25, 1997, among the Partnership, the General Partner and
Contributing Partner, as the same has been and may hereafter be amended from
time to time, pursuant to which this Agreement is being executed.
"Current Per Share Market Price" shall have the meaning set forth in the
Partnership Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor statute.
"Exchange Act Reporting Company" shall mean any corporation or other
entity which is subject to the reporting requirements of the Exchange Act.
"Expiration Date" shall mean the earlier of (a) April 16, 2023 and (b) the
date upon which all Units have been redeemed or purchased in accordance with
the terms hereof.
"Liens" shall have the meaning set forth in the Contribution Agreement.
"Major Transaction Event" shall mean, with respect to the General Partner,
(a) a reclassification, capital reorganization or other similar change
regarding or affecting outstanding Shares (other than a change addressed in
Section 6(a)); (b) a
2
<PAGE> 3
merger or consolidation of the General Partner with one or more other
corporations or entities, other than a merger pursuant to which the General
Partner is the surviving corporation and the outstanding Shares are not
affected, (c) a sale, lease or exchange of all or substantially all of the
General Partner's assets or (d) the liquidation, dissolution or winding up of
the General Partner.
"Notice" shall have the meaning set forth in Section 3.2.
"Partnership Agreement" shall mean that certain Amended and Restated
Agreement of Limited Partnership of the Partnership, dated July 27, 1993, as
amended by that certain First Amendment thereto dated May 23, 1995, that
certain Second Amendment thereto dated June 13, 1995, that certain Third
Amendment thereto dated May 21, 1996, that certain Fourth Amendment thereto
dated August 30, 1996, that certain Fifth Amendment thereto dated as of October
4, 1996, that certain Sixth Amendment thereto dated as of November 27, 1996,
that certain Seventh Amendment thereto dated December 6, 1996, that certain
Eighth Amendment thereto dated June 19, 1997, that certain Ninth Amendment
thereto dated as of August 8, 1997, that certain Tenth Amendment thereto dated
as of September 8, 1997, that certain Eleventh Amendment thereto dated as of
September 11, 1997 and that certain Twelfth Amendment thereto dated October 15,
1997 and as the same may be further amended.
"Person" shall mean any natural person, corporation, partnership,
association, limited liability company, trust or other entity.
"Purchase Price" shall mean the Cash Purchase Price or the Share Purchase
Price, or a combination thereof.
"Purchase Right" shall have the meaning set forth in Section 7.1.
"Redemption Rights" shall have the meaning set forth in Section 2.
"REIT" shall mean real estate investment trust as such term is defined
under the Code.
"REIT Requirements" shall have the meaning set forth in the Partnership
Agreement, as the same may change from time to time.
3
<PAGE> 4
"Registration Expenses" shall mean all expenses incident to the General
Partner's performance of or compliance with the registration requirements set
forth in this Agreement, including without limitation (a) the fees,
disbursements and expenses of the General Partner's counsel and accountants in
connection with the registration of Shares issuable upon the exercise of the
Redemption Rights; (b) all expenses in connection with the preparation and
printing of the registration statement or statements, any preliminary
prospectus or final prospectus, any other offering document and amendments and
supplements thereto; (c) the cost of printing or producing any blue sky or
legal investment memoranda or other documents in connection with the offering,
sale or delivery of such Shares; (d) all expenses in connection with the
qualification of such Shares under state securities laws; (e) the fees and
expenses incurred in connection with the listing of such Shares on each
securities exchange on which securities of the same class are then listed and
(f) all SEC, stock exchange and National Association of Securities Dealers,
Inc. registration and filing fees. Notwithstanding the foregoing, Registration
Expenses shall not include (and the General Partner will pay) any costs
incurred by the Partnership or the General Partner in preparing any document
that is incorporated by reference in a registration statement, or any
professional fee or other expenses, that would have been incurred apart from
the obligation of the General Partner hereunder to file a Registration
Statement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor statute.
"Share Purchase Price" shall mean, with respect to the exercise of any
Redemption Rights and subject to the provisions of Section 6(c), a number of
Shares equal to the product of (a) the number of Units being redeemed or
purchased multiplied by (b) the Conversion Factor; provided, however, that, in
the event the General Partner, after the date of this Agreement, issues to all
holders of Shares rights, options, warrants or convertible or exchangeable
securities entitling the stockholders to subscribe for or purchase Shares
(other than rights referred to in Section 6(b)) or any other securities or
property, then the Share Purchase Price also shall include such rights,
options, warrants or convertible or exchangeable securities that a holder of
that number of Shares would have been entitled to receive.
"Shares" shall mean shares of the Common Stock.
4
<PAGE> 5
"Units" shall mean the limited partnership units in the Partnership issued
to Contributing Partner pursuant to the Contribution Agreement.
"Unitholder" shall mean the Person who at the time in question holds one
or more Units in accordance with the Partnership Agreement, as the same may be
amended from time to time.
2. Grant of Redemption Rights.
(a) Upon the terms and subject to the conditions contained herein, the
Partnership does hereby grant to Contributing Partner, and Contributing Partner
does hereby accept, the right, but without obligation on the part of
Contributing Partner, to require the Partnership to redeem from time to time
part or all of the Units of Contributing Partner for the Cash Purchase Price
("Redemption Rights").
(b) Notwithstanding the provisions of Section 2(a), the General Partner
may, in its sole and absolute discretion, assume the obligation of the
Partnership with respect to and satisfy Contributing Partner's exercise of a
Redemption Right by paying to Contributing Partner, at the General Partner's
election (which may be exercised in the General Partner's sole discretion),
either the Cash Purchase Price or the Share Purchase Price (or a combination
thereof) with respect to the Units for which Contributing Partner exercised its
Redemption Rights. If the General Partner assumes such obligations with
respect to the exercise by Contributing Partner of a Redemption Right as to
certain Units and makes the required payment within the required period of
time, then the Partnership shall have no obligation to pay any amount to
Contributing Partner with respect to the exercise of a Redemption Right for
such Units, and any Units purchased shall be owned by the General Partner for
all purposes.
(c) If the General Partner shall assume the obligations of the Partnership
with respect to and satisfy a Redemption Right, the Partnership, the
Contributing Partner and the General Partner each shall treat the transaction
between the General Partner and Contributing Partner as a sale of Contributing
Partner's Units (or a portion thereof) to the General Partner for federal
income tax purposes.
(d) Upon the redemption or purchase of part or all of Contributing
Partner's Units and the payment of the Purchase
5
<PAGE> 6
Price with respect thereto, such Person shall be deemed withdrawn as a Partner
in the Partnership to the extent of the Units redeemed or purchased and shall
have no further rights or obligations under this Agreement with respect to such
redeemed or purchased Units; provided, however, that Contributing Partner's
rights under this Agreement with regard to any other Units will continue in
full force and effect.
(e) No fractional Shares shall be issued hereunder. In lieu of
fractional Shares, the General Partner shall pay cash based on the Current Per
Share Market Price on the relevant Computation Date.
3. Exercise of Redemption Rights.
3.1 Time for Exercise of Redemption Rights. Contributing Partner may
exercise his Redemption Rights in whole or in part and at any time and from
time to time on or after the second anniversary of the date hereof but prior to
the Expiration Date; provided, however, that the Redemption Rights may not be
exercised at any one time by Contributing Partner with respect to less than
1,000 Units (or all the Units then owned by Contributing Partner if
Contributing Partner owns less than 1,000 Units) or in the event that such
exercise of Redemption Rights (or the assignment of Units or delivery of either
the Cash Purchase Price or the Share Purchase Price with respect thereto)
violates the terms of the Partnership Agreement or applicable law. Once given,
a Notice shall be irrevocable subject to the payment of the Purchase Price for
the Units specified therein in accordance with the terms hereof.
3.2 Method of Exercise. The Redemption Rights shall be exercised by
written notice (the "Notice") to the Partnership in the form of Exhibit A
specifying the number of Units to be redeemed and the name or names (with
address) in which any Shares issuable upon such exercise shall be registered
if different than the Contributing Partner.
3.3 Closing. The closing of the redemption or purchase and sale pursuant
to an exercise of the Redemption Rights shall occur within 30 days following
the giving of the Notice. Contributing Partner shall execute such documents as
the General Partner may reasonably require in connection with the closing of
such redemption or purchase and sale.
3.4 Payment of Cash or Issuance of Shares. At the closing of the
redemption or purchase and sale of Units pursuant to an
6
<PAGE> 7
exercise of Redemption Rights, the Partnership shall deliver to Contributing
Partner the Cash Purchase Price by check or, in the event that the General
Partner has assumed the obligations of the Partnership with respect to such
exercise of Redemption Rights, the General Partner shall deliver to the
Partnership, at the election of the General Partner, which may be exercised in
the General Partner's sole discretion, either (a) the Cash Purchase Price in
immediately available funds or (b) certificates representing the Shares and any
other securities constituting the Share Purchase Price, together with cash in
lieu of the issuance of any fraction of a Share as provided in Section 2(e), or
a combination thereof.
4. Matters Relating to Shares.
4.1 Registration.
(a) The General Partner shall (i) prepare, file and use reasonable efforts
to cause to become effective on or before the ninetieth day following the
second anniversary of the date hereof a registration statement, which may be on
Form S-3, under the Securities Act relating to the Shares to be issued upon
exercise of the Redemption Rights assuming full satisfaction of the Redemption
Rights by delivery of Shares and (ii) prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act.
(b) The General Partner shall pay all Registration Expenses incurred prior
to the seventh anniversary of the date hereof with respect to filing and
keeping effective the registration statement through such date, and the
Unitholders shall reimburse the General Partner for Registration Expenses (or a
pro rata portion of the Registration Expenses based on the number of Shares
issuable to such Unitholders upon full exercise of the Redemption Rights of
such Unitholders relative to the total number of Shares issuable pursuant to
such registration statement) which are incurred after the seventh anniversary
of the date hereof in respect of maintaining effective (but not the initial
filing and causing to become effective of) such registration statement;
provided, however, that Contributing Partner shall not be required to reimburse
any costs (i) of preparing any documents filed with the SEC that are
incorporated by reference in the Registration Statement or (ii) that become
necessary because the General Partner is unable to use Form S-3
7
<PAGE> 8
(or any equivalent short form that relies on incorporation by reference) for
the reason that the General Partner has failed to comply on a timely basis with
any requirement of the Acts or Form S-3. The reimbursement of such expenses by
the Unitholders shall be paid upon demand.
(c) If under the Securities Act or then current SEC policy the
above-described registration of the Shares constituting the Share Purchase
Price (assuming full satisfaction of the Redemption Rights by delivery of
Shares) is not permitted for any reason or the public resale of such Shares may
not be effected by Contributing Partner without the further registration under
the Securities Act of such Shares for resale, the General Partner shall use
reasonable efforts to register such Shares for resale, which may be
accomplished by means of a shelf registration (and the General Partner shall
not be required to register such Shares pursuant to Section 4.1(a)), and
Contributing Partner and the General Partner shall enter into customary
agreements with respect thereto which contain provisions similar to those
contained in Section 4.1(a) and (b) (except that (i) such registration
statement only shall be maintained until the Shares registered thereunder have
been sold or are eligible for resale under Rule 144(k) promulgated under the
Securities Act (without regard to the period that Units were held prior to the
exchange of such Units for Shares pursuant to the Redemption Rights) and (ii)
after the seventh anniversary of the date hereof, Contributing Partner shall
pay the Registration Expenses therefor or a pro rata portion thereof based on
the number of Shares of Contributing Partner which remain available for sale
pursuant to such registration statement relative to the total number of Shares
that remain available for sale pursuant to such registration statement) and
other customary provisions, including without limitation customary
indemnification provisions.
(d) If a registration statement referred to in Section 4.1(a) or (c) is
not effective on the later of the ninetieth day following the second
anniversary of the date hereof and the closing pursuant to any exercise of
Redemption Rights where Shares are otherwise issuable (unless, in either case,
Contributing Partner has defaulted hereunder), the General Partner shall not
have the right to deliver the Share Purchase Price in respect of such exercise
of Redemption Rights, and the General Partner or the Partnership shall deliver
the Cash Purchase Price on the date specified in Section 3.3 (but the General
Partner shall not otherwise have any liability therefor); provided, however,
that the General Partner may
8
<PAGE> 9
deliver Shares if it previously filed a registration statement under Section
4.1(c) and such registration statement has not yet been declared effective
solely by reason of the fact that the Shares are not yet outstanding. In the
event that Shares are delivered to Contributing Partner pursuant to an exercise
of Redemption Rights and the proviso contained in the immediately preceding
sentence and the registration statement referred to in such sentence shall not
have been declared effective on or before the tenth business day following
delivery of such Shares, the General Partner shall, upon written notice from
Contributing Partner to the General Partner, repurchase such Shares, and
Contributing Partner shall sell such Shares to the General Partner, for a
purchase price equal to the Cash Purchase Price relating to such exercise of
Redemption Rights. Each of Contributing Partner and the General Partner shall
execute such documents as may be reasonably requested by the other to
effectuate such repurchase and sale.
(e) Notwithstanding anything to the contrary contained herein, the General
Partner shall have no obligation to keep any registration statement filed
pursuant to this Section 4.1 effective after the Expiration Date or if the
status of the General Partner (or its successor) as an Exchange Act Reporting
Company is terminated or all of the Unitholders notify the General Partner in
writing that the General Partner no longer need keep such registration
statement effective.
4.2 Reservation of Shares. At all times while the Redemption Rights are
outstanding, the General Partner shall reserve for issuance such number of
Shares as may be necessary to enable the General Partner to issue Shares in
full satisfaction of all Redemption Rights which are from time to time
outstanding (assuming no limitations as to the ownership of such Shares under
the Certificate of Incorporation which relate to compliance with the REIT
Requirements and that the General Partner elected to pay the Share Purchase
Price with respect to all such Redemption Rights).
4.3 Fully Paid and Non-Assessable. All Shares which may be issued upon
exercise of the Redemption Rights shall be duly and validly issued and fully
paid and non-assessable.
5. Transfer and Other Taxes. In the event that any state or local
property transfer or other tax is payable as the result of or in connection
with any exercise of the Redemption Rights by Contributing Partner, Contributor
Partner shall pay such tax, and no Shares shall be issued pursuant hereto until
such
9
<PAGE> 10
Contributor Partner has paid to the General Partner or the Partnership, as
the case may be, the amount of such tax or has provided evidence, in form
reasonably satisfactory to the General Partner or the Partnership, as the case
may be, as to the payment thereof.
6. Anti-Dilution and Adjustment Provisions.
(a) The Conversion Factor shall be adjusted in the event that the General
Partner (i) declares or pays a dividend on its outstanding Shares in Shares or
makes a distribution to all holders of its outstanding Shares in Shares, (ii)
subdivides its outstanding Shares, or (iii) combines its outstanding Shares
into a smaller number of Shares. The Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time) and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination. Any
adjustment to the Conversion Factor shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.
(b) If at any time the General Partner grants to its stockholders any
right to subscribe pro rata for additional securities of the General Partner,
whether Common Stock or other classifications, or for any other securities or
interests that Contributing Partner would have been entitled to subscribe for
if, immediately prior to such grant, Contributing Partner had exercised his
Redemption Rights and received the Share Purchase Price in payment thereof, in
lieu of any adjustment under any other subsection of this Section 6 or other
provision of this Agreement, then the General Partner also shall grant to
Contributing Partner the same subscription rights that Contributing Partner
would be entitled to if Contributing Partner had exercised his Redemption
Rights in full and received the Share Purchase Price in satisfaction thereof
prior to such grant.
(c) Upon the occurrence of a Major Transaction Event where at least
one-half of the value (as determined in good faith by the General Partner) of
the consideration received by the stockholders of the General Partner in
connection with such
10
<PAGE> 11
Major Transaction Event is in the form of securities in a successor entity,
the General Partner shall cause effective provision to be made so that, upon
exercise of the Redemption Rights and payment of the Purchase Price at any time
following such Major Transaction Event by means of the Share Purchase Price,
Unitholders shall have the right to acquire, in lieu of the Shares which
otherwise would have been issued to Contributing Partner, the kind and amount
of shares of stock and other securities and property (and the provisions
contained in Section 4.1 shall apply anew to the extent that such securities
are of a class of securities of the General Partner or its successor that are
registered under the Exchange Act) and interests as would be issued or payable
with respect to or in exchange for the number of Shares constituting the Share
Purchase Price as if such Redemption Rights had been exercised and the General
Partner had satisfied the Redemption Rights by delivery of the Share Purchase
Price immediately before such Major Transaction Event.
(d) In the event of any other Major Transaction Event, each Unitholder
shall be entitled to exercise the Redemption Rights in full prior to the
consummation of such Major Transaction Event, and, with respect to any Shares
acquired upon exercise thereof, shall be entitled to all of the rights of the
other holders of Shares with respect to any distribution by the General Partner
(or the other party to such Major Transaction Event) in connection with such
Major Transaction Event. If not exercised within forty-five days after written
notice from the General Partner of such Major Transaction Event or such shorter
period between the date of such notice and the effective date of such Major
Transaction Event, the Redemption Rights shall terminate at the expiration of
such period, but the Redemption Rights shall be revived if such Major
Transaction Event is not consummated.
(e) The Partnership shall give written notice of any Major Transaction
Event promptly after such Major Transaction is announced to the public.
(f) The provisions of this Section 6 shall apply to successive events that
may occur from time to time but only shall apply to a particular event if it
occurs prior to the exercise in full of the Redemption Rights or the
liquidation of the Partnership. Nothing contained herein shall prevent or
otherwise limit the liquidation of the Partnership pursuant to the Partnership
Agreement, as amended from time to time.
11
<PAGE> 12
(g) Whenever the Conversion Factor is adjusted as herein provided, the
General Partner shall compute the adjusted Conversion Factor in accordance with
this Section 6 and shall prepare a certificate signed by the chief financial
officer of the General Partner setting forth the adjusted Conversion Factor and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed at the offices of the General Partner
and mailed to the holders of the Redemption Rights within thirty days of any
such adjustment.
7. Miscellaneous Provisions.
7.1 NoticesNotices. All notices or other communications given pursuant to
this Agreement, including without limitation any Notice, shall be sent to the
party to whom or to which such notice is being sent, by certified or registered
mail, return receipt requested, commercial overnight delivery service,
facsimile or delivered by hand with receipt acknowledged in writing and
otherwise as set forth in this Section 8.1. All notices (a) shall be deemed
given when received or, if mailed as described above, after 5 Business Days or,
if sent by facsimile, upon receipt of confirmed answerback and (b) may be
given either by a party or by such party's attorneys. For purposes of this
Section 8.1, the addresses of the parties shall be, in the case of the
Partnership and the General Partner, 55 West Monroe Street, Suite 3100,
Chicago, Illinois 60603, facsimile number (312) 551-5475, Attention: Matthew
Bucksbaum and Bernard Freibaum (with a copy to Neal, Gerber & Eisenberg, Two
North LaSalle Street, Suite 2200, Chicago, Illinois 60602, Attn: Marshall E.
Eisenberg), and, in the case of Contributing Partner, as set forth on the
records of the Partnership. The address of any party may be changed by a
notice in writing given in accordance with the provisions hereof.
7.2 Assignment. The rights of Contributing Partner hereunder (including
the Redemption Rights) shall automatically devolve upon any Person to the
extent that such Person holds Units, and becomes a substituted partner with
respect to such Units, in accordance with the Partnership Agreement, as
amended from time to time, and delivers to the Partnership a written
instrument, in form reasonably satisfactory to the Partnership, pursuant to
which such Person agrees to be bound by the terms hereof (but the rights of
Contributing Partner hereunder are not otherwise assignable). Subject to the
provisions of Section 6, the General Partner may assign this Agreement without
the consent of Contributing Partner, provided that no such
12
<PAGE> 13
assignment shall relieve the General Partner of its obligations
under this Agreement.
7.3 Binding Effect. Except as otherwise set forth herein, this Agreement
shall be binding upon, and inure to the benefit of, the parties and their
successors and permitted assigns.
7.4 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware (without regard to its conflicts of law principles).
7.5 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which shall constitute one document.
7.6 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
prior written or oral understandings and/or agreements among them with respect
thereto.
7.7 Pronouns; Headings; Etc. As used herein, all pronouns shall include
the masculine, feminine and neuter, and all terms shall include the singular
and plural thereof wherever the context and facts require such construction.
The headings herein are inserted for convenience of reference only and are to
be ignored in any construction of the provisions hereof. Any references in
this Agreement to a "Section" or "Exhibit" shall refer to a Section or Exhibit
of this Agreement unless otherwise specified.
7.8 Survival. The representations, warranties and covenants contained
herein or made pursuant hereto shall survive the execution and delivery of
this Agreement and the issuance of Shares pursuant hereto.
7.9 Further Assurances. Each of the parties shall hereafter execute and
deliver such other instruments and documents and do such further acts and
things as may be required or useful to carry out the purposes of this Agreement.
7.10 No Right of Set-off. Each of the Partnership and the General Partner
shall perform all of its obligations under this Agreement without asserting any
right of setoff, counterclaim or similar justification for non-performance of
its obligations under this Agreement on account of any claim that the
13
<PAGE> 14
Partnership or the General Partner may have against Contributing Partner that
does not arise under this Agreement.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
CONTRIBUTING PARTNER:
- -----------------------------------
Peter D. Leibowits
PARTNERSHIP:
GGP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: General Growth Properties, Inc.
a Delaware corporation
By:
------------------------------------
Its
---------------------------------
GENERAL PARTNER:
General Growth Properties, Inc.
a Delaware corporation
By:
--------------------------------
Its
---------------------------
<PAGE> 16
EXHIBIT A
Notice of Redemption
The undersigned hereby irrevocably (i) exercises its Redemption Rights as
to ___________ units of limited partnership interest (the "Units") in GGP
Limited Partnership (the "Partnership") in accordance with the terms of that
certain Redemption Rights Agreement, dated _______________, 1997 (the
"Agreement"), among the Partnership, General Growth Properties, Inc. (the
"General Partner"), and the other parties thereto, (ii) transfers and
surrenders such Units and all right, title and interest of the undersigned
therein to the party, which shall be either the Partnership or the General
Partner, that shall purchase or redeem such Units pursuant to the Agreement,
and (iii) directs that the Cash Purchase Price or Share Purchase Price payable
upon exercise of the Redemption Right be delivered to the address specified
below and, if the Share Purchase Price is to be delivered, the Shares shall be
registered or placed in the name(s) and at the address(es) specified below.
The undersigned hereby represents, warrants, certifies and agrees (i) that
the undersigned has unencumbered title to the Units, free and clear of all
Liens, (ii) that the undersigned has the full right, power and authority to
transfer and surrender the Units as provided herein and such transfer and
surrender has been authorized by all necessary action, and (iii) that the
undersigned has obtained the consent or approval of all persons or entities, if
any, having the right to consent to or approve such transfer and surrender.
<PAGE> 17
Capitalized terms used but not defined herein shall have the meanings set
forth in the Agreement.
Dated: ____________________
Name: ________________________
_____________________________
(Signature of Limited Partner)
_____________________________
(Street Address)
_____________________________
City (State (Zip Code)
Signature Guaranteed by
______________________________
If Shares are to be issued, issue to:
Please insert social security or identifying number:
<PAGE> 1
EXHIBIT 10(j)
NINTH AMENDMENT TO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
Ninth Amendment to Amended and Restated Agreement of Limited Partnership
(the "Amendment"), dated as of August 8, 1997, among the undersigned parties.
R E C I T A L S:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership
exists pursuant to that certain Amended and Restated Agreement of Limited
Partnership dated July 27, 1993, as amended by that certain First Amendment
thereto dated May 23, 1995, that certain Second Amendment thereto dated July
13, 1995, that certain Third Amendment thereto dated as of May 21, 1996, that
certain Fourth Amendment thereto dated as of August 30, 1996, that certain
Fifth Amendment thereto dated as of October 4, 1996, that certain Sixth
Amendment thereto dated as of November 27, 1996, that certain Seventh Amendment
thereto dated as of December 6, 1996 and that certain Eighth Amendment thereto
dated as of June 19, 1997 (the "Initial Partnership Agreement");
WHEREAS, as of the date hereof, General Growth Properties, Inc., a
Delaware corporation and the general partner of the Partnership (the "General
Partner"), sold 4,000,000 shares of its common stock, $.10 par value per share,
in a public offering (the "Offering") and, in connection therewith, received
gross proceeds of $135.6 million (the "Proceeds"); and
WHEREAS, pursuant to the Initial Partnership Agreement, the General
Partner has made, as of the date hereof, an additional contribution to the
capital of the Partnership in the amount of the Proceeds; and
WHEREAS, the parties hereto, being the general partner of the Partnership
and a majority in interest of other partners of the Partnership, desire to
amend the Initial Partnership Agreement to reflect the foregoing, the previous
transfers of certain units of partnership interest, the previous redemption by
the Partnership of 31,852 units of partnership interest in the Partnership held
by the General Partner and certain other understandings as set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
set forth in the Initial Partnership Agreement, as amended hereby.
2. The issuance of 4,000,000 additional Units to the General Partner in
consideration of the contribution of the Proceeds to the capital of the
Partnership is hereby approved, and any and all notices relating thereto are
hereby waived. The Partnership shall bear all expenses incurred by the Company
in connection with the Offering.
<PAGE> 2
3. Exhibit A of the Initial Partnership Agreement is hereby deleted and
Exhibit A in the form attached to this Amendment is hereby inserted in lieu
thereof.
4. Except as specifically set forth herein, the Initial Partnership
Agreement shall remain in full force and effect.
5. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware (without regard to its conflicts of law principles).
6. This Amendment may be executed in counterparts, each of which shall be
an original and all of which together shall constitute the same document.
7. This Amendment shall be binding upon, and inure to the benefit of, the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first written above.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By:
-----------------------------------
Its:
-------------------------------
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By:
-----------------------------
Its:
-------------------------
<PAGE> 3
EXHIBIT A
PARTNERS
<TABLE>
<CAPTION>
Number
of Percentage
General Partner: Units Interest
---------------- ----- --------
<S> <C> <C>
General Growth
Properties, Inc. 34,445,932.0000 65.3203
Limited Partners:
-----------------
M.B. Capital Partners III 15,571,609.6062 29.5285
Stanley Richards
Revocable Trust 149,706.3938 0.2839
Joe W. Lowrance 57,620.0000 0.1093
LWLDA Limited Partnership 45,223.0000 0.0858
Brent M. Milgrom 57,620.0000 0.1093
GDC/A&B Limited Partnership 45,223.0000 0.0858
Edward S. Brown 38,098.0000 0.0722
Edward S. Brown and Susan
Garber, Husband and Wife,
as Tenants by the Entirety 40,846.0000 0.0775
Lawrence A. Brown 17,647.0000 0.0335
Merrill H.J. Roth 29,024.0000 0.0550
The Roth Family 22,308.0000 0.0423
Limited Partnership
Arthur B. Morgenstern 54,625.0000 0.1036
Joseph Straus, Jr. 78,017.0000 0.1479
HIA Limited Partnership 107,080.0000 0.2031
Morgenstern, Rounick-Weiner 63,422.0000 0.1203
Associates
Marvin Rounick and
Judy Rounick, Husband
and Wife, as Tenants-by-
the-Entirety 55,670.0000 0.1056
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Joint Revocable Trust of
Warren and Penny Weiner 18,557.0000 0.0352
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Robyn Weiner 18,557.0000 0.0352
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Kimberly Weiner 18,557.0000 0.0352
Forbes/Cohen Properties 801,842.0000 1.5205
Jackson Properties 346,795.0000 0.6576
Lakeview Square Properties 296,363.0000 0.5620
CA Southlake Investors, Ltd. 353,537.0000 0.6704
------------ ------
Total Units: 52,733,879.0000 100.0000
=============== ========
</TABLE>
2
<PAGE> 1
EXHIBIT 10(k)
TENTH AMENDMENT TO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
Tenth Amendment to Amended and Restated Agreement of Limited Partnership
(the "Amendment"), dated as of September 8, 1997, among the undersigned
parties.
R E C I T A L S:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership
exists pursuant to that certain Amended and Restated Agreement of Limited
Partnership dated July 27, 1993, as amended by that certain First Amendment
thereto dated May 23, 1995, that certain Second Amendment thereto dated July
13, 1995, that certain Third Amendment thereto dated as of May 21, 1996, that
certain Fourth Amendment thereto dated as of August 30, 1996, that certain
Fifth Amendment thereto dated as of October 4, 1996, that certain Sixth
Amendment thereto dated as of November 27, 1996, that certain Seventh Amendment
thereto dated as of December 6, 1996, that certain Eighth Amendment thereto
dated as of June 19, 1997 and that certain Ninth Amendment thereto dated as of
August 8, 1997 (the "Initial Partnership Agreement");
WHEREAS, on August 8, 1997, General Growth Properties, Inc., a Delaware
corporation and the general partner of the Partnership (the "General Partner"),
sold 4,000,000 shares of its common stock, $.10 par value per share, in a
public offering (the "Offering") and, in connection therewith, granted the
underwriter (the "Underwriter") an option to purchase up to 600,000 additional
shares of common stock (the Overallotment Option");
WHEREAS, the Underwriter has exercised the Overallotment Option as to
350,000 shares of common stock (the "Shares") and, as of the date hereof, the
Company has issued the Shares and received gross proceeds of $11,865,000 (the
"Proceeds");
WHEREAS, pursuant to the Initial Partnership Agreement, the General
Partner has made, as of the date hereof, an additional contribution to the
capital of the Partnership in the amount of the Proceeds; and
WHEREAS, the parties hereto, being the general partner of the Partnership
and a majority in interest of other partners of the Partnership, desire to
amend the Initial Partnership Agreement to reflect the foregoing and certain
other understandings as set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
set forth in the Initial Partnership Agreement, as amended hereby.
<PAGE> 2
2. The issuance of 350,000 additional Units to the General Partner in
consideration of the contribution of the Proceeds to the capital of the
Partnership is hereby approved, and any and all notices relating thereto are
hereby waived. The Partnership shall bear all expenses incurred by the Company
in connection with the issuance of the Shares.
3. Exhibit A of the Initial Partnership Agreement is hereby deleted and
Exhibit A in the form attached to this Amendment is hereby inserted in lieu
thereof.
4. Except as specifically set forth herein, the Initial Partnership
Agreement shall remain in full force and effect.
5. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware (without regard to its conflicts of law principles).
6. This Amendment may be executed in counterparts, each of which shall be
an original and all of which together shall constitute the same document.
7. This Amendment shall be binding upon, and inure to the benefit of, the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first written above.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By:
--------------------------------
Its:
----------------------------
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By:___________________________
Its:_______________________
<PAGE> 3
EXHIBIT A
PARTNERS
<TABLE>
<CAPTION>
Number
of Percentage
General Partner: Units Interest
---------------- ----- --------
<S> <C> <C>
General Growth 34,795,932.00 65.5490
Properties, Inc.
Limited Partners:
-----------------
M.B. Capital Partners III 15,571,609.6062 29.3340
Stanley Richards
Revocable Trust 149,706.3938 .2820
Joe W. Lowrance 57,620.0000 .1085
LWLDA Limited Partnership 45,223.0000 .0852
Brent M. Milgrom 57,620.0000 .1085
GDC/A&B Limited Partnership 45,223.0000 .0852
Edward S. Brown 38,098.0000 .0718
Edward S. Brown and Susan
Garber, Husband and Wife,
as Tenants by the Entirety 40,846.0000 .0769
Lawrence A. Brown 17,647.0000 .0332
Merrill H.J. Roth 29,024.0000 .0547
The Roth Family 22,308.0000 .0420
Limited Partnership
Arthur B. Morgenstern 54,625.0000 .1029
Joseph Straus, Jr. 78,017.0000 .1470
HIA Limited Partnership 107,080.0000 .2017
Morgenstern, Rounick-Weiner 63,422.0000 .1195
Associates
Marvin Rounick and
Judy Rounick, Husband
and Wife, as Tenants-by-
the-Entirety 55,670.0000 .1049
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Joint Revocable Trust of
Warren and Penny Weiner 18,557.0000 .0350
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Robyn Weiner 18,557.0000 .0350
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Kimberly Weiner 18,557.0000 .0350
Forbes/Cohen Properties 801,842.0000 1.5105
Jackson Properties 346,795.0000 .6533
Lakeview Square Properties 296,363.0000 .5583
CA Southlake Investors, Ltd. 353,537.0000 .6660
------------ -----
Total Units: 53,083,879.0000 100.0000
=============== ========
</TABLE>
2
<PAGE> 1
EXHIBIT 10(l)
ELEVENTH AMENDMENT TO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
Eleventh Amendment to Amended and Restated Agreement of Limited
Partnership (the "Amendment"), dated as of September 11, 1997, among the
undersigned parties.
R E C I T A L S:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership
exists pursuant to that certain Amended and Restated Agreement of Limited
Partnership dated July 27, 1993, as amended by that certain First Amendment
thereto dated May 23, 1995, that certain Second Amendment thereto dated July
13, 1995, that certain Third Amendment thereto dated as of May 21, 1996, that
certain Fourth Amendment thereto dated as of August 30, 1996, that certain
Fifth Amendment thereto dated as of October 4, 1996, that certain Sixth
Amendment thereto dated as of November 27, 1996, that certain Seventh Amendment
thereto dated as of December 6, 1996, that certain Eighth Amendment thereto
dated as of June 19, 1997, that certain Ninth Amendment thereto dated as of
August 8, 1997 and that certain Tenth Amendment thereto dated as of September
8, 1997 (the "Initial Partnership Agreement");
WHEREAS, on the date hereof, General Growth Properties, Inc., a Delaware
corporation and the general partner of the Partnership (the "General Partner"),
sold 577,680 shares of its common stock, $.10 par value per share, to Smith
Barney Inc. and received proceeds of $18,830,562.75 (the "Proceeds");
WHEREAS, pursuant to the Initial Partnership Agreement, the General
Partner has made, as of the date hereof, an additional contribution to the
capital of the Partnership in the amount of the Proceeds; and
WHEREAS, the parties hereto, being the general partner of the Partnership
and a majority in interest of other partners of the Partnership, desire to
amend the Initial Partnership Agreement to reflect the foregoing and certain
other understandings as set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
set forth in the Initial Partnership Agreement, as amended hereby.
2. The issuance of 577,680 additional Units to the General Partner in
consideration of the contribution of the Proceeds to the capital of the
Partnership is hereby approved, and any and all notices relating thereto are
hereby waived. The Partnership shall bear all expenses incurred by the Company
in connection with the issuance of the Shares.
<PAGE> 2
3. Exhibit A of the Initial Partnership Agreement is hereby deleted and
Exhibit A in the form attached to this Amendment is hereby inserted in lieu
thereof. The parties hereby acknowledge that, for purposes of Sections 6.11
and 13.7 of the Initial Partnership Agreement, as amended hereby, the Bucksbaum
Limited Partners include M.B. Capital Partners III and its successors and
assigns.
4. Except as specifically set forth herein, the Initial Partnership
Agreement shall remain in full force and effect.
5. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware (without regard to its conflicts of law principles).
6. This Amendment may be executed in counterparts, each of which shall be
an original and all of which together shall constitute the same document.
7. This Amendment shall be binding upon, and inure to the benefit of, the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first written above.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By:
--------------------------------
Its:
----------------------------
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By:___________________________
Its:_______________________
<PAGE> 3
EXHIBIT A
PARTNERS
<TABLE>
<CAPTION>
Number
of Percentage
General Partner: Units Interest
---------------- ----- --------
<S> <C> <C>
General Growth 35,373,612.0000 65.9198
Properties, Inc.
Limited Partners:
-----------------
M.B. Capital Partners III 15,571,609.6062 29.0182
Stanley Richards
Revocable Trust 149,706.3938 0.2790
Joe W. Lowrance 57,620.0000 0.1074
LWLDA Limited Partnership 45,223.0000 0.0843
Brent M. Milgrom 57,620.0000 0.1074
GDC/A&B Limited Partnership 45,223.0000 0.0843
Edward S. Brown 38,098.0000 0.0710
Edward S. Brown and Susan
Garber, Husband and Wife,
as Tenants by the Entirety 40,846.0000 0.0761
Lawrence A. Brown 17,647.0000 0.0329
Merrill H.J. Roth 29,024.0000 0.0541
The Roth Family 22,308.0000 0.0416
Limited Partnership
Arthur B. Morgenstern 54,625.0000 0.1018
Joseph Straus, Jr. 78,017.0000 0.1454
HIA Limited Partnership 107,080.0000 0.1995
Morgenstern, Rounick-Weiner 63,422.0000 0.1182
Associates
Marvin Rounick and
Judy Rounick, Husband
and Wife, as Tenants-by-
the-Entirety 55,670.0000 0.1037
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Joint Revocable Trust of
Warren and Penny Weiner 18,557.0000 0.0346
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Robyn Weiner 18,557.0000 0.0346
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Kimberly Weiner 18,557.0000 0.0346
Forbes/Cohen Properties 801,842.0000 1.4943
Jackson Properties 346,795.0000 0.6463
Lakeview Square Properties 296,363.0000 0.5523
CA Southlake Investors, Ltd. 353,537.0000 0.6588
------------ ------
Total Units: 53,661,559.0000 100.0000
=============== ==========
</TABLE>
2
<PAGE> 1
EXHIBIT 10(m)
TWELFTH AMENDMENT TO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
Twelfth Amendment to Amended and Restated Agreement of Limited Partnership
(the "Amendment"), dated October __, 1997, among the undersigned parties.
R E C I T A L S:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership
exists pursuant to that certain Amended and Restated Agreement of Limited
Partnership dated July 27, 1993, as amended by that certain First Amendment
thereto dated May 23, 1995, that certain Second Amendment thereto dated July
13, 1995, that certain Third Amendment thereto dated as of May 21, 1996, that
certain Fourth Amendment thereto dated as of August 30, 1996, that certain
Fifth Amendment thereto dated as of October 4, 1996, that certain Sixth
Amendment thereto dated as of November 27, 1996, that certain Seventh Amendment
thereto dated as of December 6, 1996, that certain Eighth Amendment thereto
dated as of June 19, 1997, that certain Ninth Amendment thereto dated as of
August 8, 1997, that certain Tenth Amendment thereto dated as of September 8,
1997 and that certain Eleventh Amendment thereto dated as of September 11, 1997
(the "Initial Partnership Agreement");
WHEREAS, in order to attract foreign investors to real estate investment
trusts in which the Partnership desires to invest, the general partner of the
Partnership deems it advisable to ensure that any such real estate investment
trust is treated as a "domestically-controlled REIT" within the meaning of
Section 897(h)(4)(B) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, in furtherance thereof, the parties hereto, being the general
partner of the Partnership and a majority in interest of other partners of the
Partnership, desire to amend the Initial Partnership Agreement to require that
all partners of the Partnership provide prior written notice to the general
partner of the Partnership of any sale, assignment or other transfer of any
direct or indirect interest in the Partnership to a foreign person or a person
that is directly or indirectly owned, in whole or in part, by a foreign person
as determined in accordance with Section 897(h)(4) of the Code and the Treasury
Department regulations promulgated thereunder (a "Foreign Owner").
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
set forth in the Initial Partnership Agreement, as amended hereby.
2. Notwithstanding anything in the Initial Partnership Agreement to the
contrary, no Partner may sell, assign or otherwise transfer its Units or other
interest in the Partnership or any
<PAGE> 2
portion thereof (or permit any interest in any Person that directly or through
another Person owns Units or other interests in the Partnership to be
transferred) to any Foreign Owner without providing written notice of the same
to the General Partner, and any such written notice shall be received by the
General Partner at least thirty days prior to any such sale, assignment or
other transfer. Any such sale, assignment or other transfer of Units or other
interests in the Partnership shall be null and void ab initio unless such
notice shall have been given as required above.
3. Except as specifically set forth herein, the Initial Partnership
Agreement shall remain in full force and effect.
4. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware (without regard to its conflicts of law principles).
5. This Amendment may be executed in counterparts, each of which shall be
an original and all of which together shall constitute the same document.
6. This Amendment shall be binding upon, and inure to the benefit of, the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first written above.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By:
--------------------------------
Its:
-------------------------
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By:
---------------------------
Its:
-----------------------
<PAGE> 1
EXHIBIT 10(n)
THIRTEENTH AMENDMENT TO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
Thirteenth Amendment to Amended and Restated Agreement of Limited
Partnership (the "Amendment"), dated October 23, 1997, among the undersigned
parties.
R E C I T A L S:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership
exists pursuant to that certain Amended and Restated Agreement of Limited
Partnership dated July 27, 1993, as amended by that certain First Amendment
thereto dated May 23, 1995, that certain Second Amendment thereto dated July
13, 1995, that certain Third Amendment thereto dated as of May 21, 1996, that
certain Fourth Amendment thereto dated as of August 30, 1996, that certain
Fifth Amendment thereto dated as of October 4, 1996, that certain Sixth
Amendment thereto dated as of November 27, 1996, that certain Seventh Amendment
thereto dated as of December 6, 1996, that certain Eighth Amendment dated June
19, 1997, that certain Ninth Amendment dated August 8, 1997 (the "Initial
Partnership Agreement"), that certain Tenth Amendment dated as of September 8,
1997, that certain Eleventh Amendment dated as of September 11, 1997 and that
certain Twelfth Amendment thereto dated October 15, 1997;
WHEREAS, concurrently herewith, Peter D. Leibowits ("Contributor") is
being admitted as an additional limited partner of the Partnership pursuant to
that certain Contribution Agreement dated September 25, 1997, between the
Partnership, General Growth Properties, Inc., a Delaware corporation and the
general partner of the Partnership (the "General Partner"), and Contributor
(the "Contribution Agreement"); and
WHEREAS, the parties hereto, being the general partner of the Partnership,
Contributor and a majority in interest of other partners of the Partnership,
desire to amend the Initial Partnership Agreement to reflect the foregoing
admission, a previous transfer of units of partnership interest, a previous
redemption of 55,900 units of partnership interest held by the General Partner
and certain other understandings as set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
set forth in the Initial Partnership Agreement, as amended hereby.
2. The issuance of Additional Units to Contributor upon the terms set
forth in the Contribution Agreement is hereby approved and Contributor is
hereby admitted as an Additional Partner.
<PAGE> 2
3. Contributor hereby agrees to be bound by the Initial Partnership
Agreement, as the same is amended hereby and as the same hereafter may be
amended.
4. The last sentence of Section 13.7 of the Initial Partnership Agreement
may not be amended to modify the approval rights of Contributor without the
consent of Contributor. In addition, without the consent of Contributor,
Section 2 hereof may not be amended.
5. Exhibit A of the Initial Partnership Agreement is hereby deleted and
the Exhibit A attached to this Amendment is hereby inserted in lieu thereof.
6. Except as specifically set forth herein, the Initial Partnership
Agreement shall remain in full force and effect.
7. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware (without regard to its conflicts of law principles).
8. This Amendment may be executed in counterparts, each of which shall be
an original and all of which together shall constitute the same document.
9. This Amendment shall be binding upon, and inure to the benefit of, the
parties and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first written above.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By:
--------------------------------
Its:
----------------------------
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By:___________________________
Its:_______________________
______________________________
Peter D. Leibowits
32 Lafayette Place
Greenwich, Connecticut 06830
<PAGE> 4
EXHIBIT A
PARTNERS
<TABLE>
<CAPTION>
Number
of Percentage
General Partner: Units Interest
---------------- ----- --------
<S> <C> <C>
General Growth
Properties, Inc. 35,344,791.0000
Limited Partners:
-----------------
M.B. Capital Partners III 15,571,609.6062
Stanley Richards
Revocable Trust 149,706.3938
Joe W. Lowrance 57,620.0000
LWLDA Limited Partnership 45,223.0000
Brent M. Milgrom 57,620.0000
GDC/A&B Limited Partnership 45,223.0000
Edward S. Brown 38,098.0000
Edward S. Brown and Susan
Garber, Husband and Wife,
as Tenants by the Entirety 40,846.0000
Lawrence A. Brown 17,647.0000
Merrill H.J. Roth 29,024.0000
The Roth Family 22,308.0000
Limited Partnership
Arthur B. Morgenstern 54,625.0000
Joseph Straus, Jr. 78,017.0000
HIA Limited Partnership 80,001.0000
Morgenstern, Rounick-Weiner 63,422.0000
Associates
Marvin Rounick and
Judy Rounick, Husband
and Wife, as Tenants-by-
the-Entirety 55,670.0000
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
Joint Revocable Trust of
Warren and Penny Weiner 18,557.0000
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Robyn Weiner 18,557.0000
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Kimberly Weiner 18,557.0000
Forbes/Cohen Properties 801,842.0000
Jackson Properties 346,795.0000
Lakeview Square Properties 296,363.0000
CA Southlake Investors, Ltd. 353,537.0000
Peter D. Leibowits . .
--------------- ----------
Total Units: . 100.0000%
=============== ==========
</TABLE>
2
<PAGE> 1
EXHIBIT 10(o)
FOURTEENTH AMENDMENT TO
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
Fourteenth Amendment to Amended and Restated Agreement of Limited
Partnership (the "Amendment"), dated as of October 29, 1997, among the
undersigned parties.
R E C I T A L S:
WHEREAS, a Delaware limited partnership known as GGP Limited Partnership
exists pursuant to that certain Amended and Restated Agreement of Limited
Partnership dated July 27, 1993, as amended by that certain First Amendment
thereto dated May 23, 1995, that certain Second Amendment thereto dated July
13, 1995, that certain Third Amendment thereto dated as of May 21, 1996, that
certain Fourth Amendment thereto dated as of August 30, 1996, that certain
Fifth Amendment thereto dated as of October 4, 1996, that certain Sixth
Amendment thereto dated as of November 27, 1996, that certain Seventh Amendment
thereto dated as of December 6, 1996, that certain Eighth Amendment thereto
dated as of June 19, 1997, that certain Ninth Amendment thereto dated as of
August 8, 1997, that certain Tenth Amendment thereto dated as of September 8,
1997, that certain Eleventh Amendment thereto dated as of September 11, 1997,
that certain Twelfth Amendment thereto dated October 15, 1997 and that certain
Thirteenth Amendment thereto dated October 23, 1997 (the "Initial Partnership
Agreement");
WHEREAS, concurrently herewith, General Growth Properties, Inc., a
Delaware corporation and the general partner of the Partnership (the "General
Partner"), is contributing to the capital of the Partnership the partnership
and membership interests described on Schedule A, attached hereto and by this
reference made a part hereof (collectively, the "Interests"); and
WHEREAS, the parties hereto, being the General Partner and a majority in
interest of other partners of the Partnership, desire to amend the Initial
Partnership Agreement to issue additional units of partnership interest to the
General Partner in consideration for the contribution of the Interests to the
capital of the Partnership upon the terms set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
set forth in the Initial Partnership Agreement, as amended hereby.
2. The issuance of 94,500 additional Units to the General Partner in
consideration of the contribution of the Interests to the capital of the
Partnership is hereby approved, and any and all notices relating thereto are
hereby waived.
<PAGE> 2
3. Exhibit A of the Initial Partnership Agreement is hereby deleted and
Exhibit A in the form attached to this Amendment is hereby inserted in lieu
thereof.
4. Except as specifically set forth herein, the Initial Partnership
Agreement shall remain in full force and effect.
5. This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware (without regard to its conflicts of law principles).
6. This Amendment may be executed in counterparts, each of which shall be
an original and all of which together shall constitute the same document.
7. This Amendment shall be binding upon, and inure to the benefit of, the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first written above.
GENERAL PARTNER:
- ---------------
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By:
-------------------------------
Its:
---------------------------
LIMITED PARTNERS:
- ----------------
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By:___________________________
Its:_______________________
<PAGE> 3
EXHIBIT A
PARTNERS
<TABLE>
<CAPTION>
General Partner: Number of Units Percentage Interest
- ---------------- --------------- --------------------
<S> <C> <C>
General Growth
Properties, Inc. 35,439,291.000
Limited Partners:
- ----------------- 15,571,609.6062
M.B. Capital Partners III
Stanley Richards
Revocable Trust 149,706.3938
Joe W. Lowrance 57,620.0000
LWLDA Limited Partnership 45,223.0000
Brent M. Milgrom 57,620.0000
GDC/A&B Limited Partnership 45,223.0000
Edward S. Brown 38,098.0000
Edward S. Brown and Susan
Garber, Husband and Wife,
as Tenants by the Entirety 40,846.0000
Lawrence A. Brown 17,647.0000
Merrill H.J. Roth 29,024.0000
The Roth Family
Limited Partnership 22,308.0000
Arthur B. Morgenstern 54,625.0000
Joseph Straus, Jr. 78,017.0000
HIA Limited Partnership 80,001.0000
Morgenstern, Rounick-Weiner
Associates 63,422.0000
Marvin Rounick and
Judy Rounick, Husband
and Wife, as Tenants-by-
the-Entirety 55,670.0000
Joint Revocable Trust of
Warren and Penny Weiner 18,557.0000
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Robyn Weiner 18,557.0000
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Irrevocable Trust of 18,557.0000
Warren Weiner dated
January 24, 1978 F/B/O
Kimberly Weiner
Forbes/Cohen Properties 801,842.0000
Jackson Properties 346,795.0000
Lakeview Square Properties 296,363.0000
CA Southlake Investors, Ltd. 353,537.0000
Peter D. Leibowits 518,833.0000
------------ --------
Total Units: . 100.0000
============ ========
</TABLE>
<PAGE> 5
SCHEDULE A
INTERESTS
.999% general partnership interest in Colony Square Partners, a Delaware
general partnership
.999% general partnership interest in Columbia Mall Partners, an Iowa general
partnership
.999% general partnership interest in Fallbrook Square Partners, a California
general partnership
.999% general partnership interest in Fox River Shopping Center Partners, an
Iowa general partnership
.999% general partnership interest in Lockport Partners, a Delaware general
partnership
.999% general partnership interest in Rio West Partners, a Delaware general
partnership
.999% general partnership interest in River Hills Mall Partners, a Delaware
general partnership
.999% limited partnership interest in Westwood Mall Limited Partnership, a
Delaware limited partnership
.999 units of membership interest in Sooner Fashion Mall L.L.C.
3
<PAGE> 1
EXHIBIT 21
ENTITY* STATE OF FORMATION
BOSSIER FUNDING, INC. DELAWARE
CENTURY PLAZA, INC. DELAWARE
CHAMPAIGN MARKET PLACE, INC. DELAWARE
EAGLE RIDGE MALL, INC. DELAWARE
EDEN PRAIRIE MALL, INC. DELAWARE
FALLBROOK SQUARE, INC. DELAWARE
GENERAL GROWTH FINANCE SPE, INC. DELAWARE
GGP IVANHOE, INC. DELAWARE
GGP LIMITED PARTNERSHIP DELAWARE
GGP-LAKEVIEW SQUARE, INC. DELAWARE
GGP-LANSING MALL, INC. DELAWARE
GGP-NATICK TRUST MASSACHUSETTS
GGP-WESTWOOD MALL, INC. DELAWARE
GRANDVILLE MALL, INC. DELAWARE
OAKS MALL GAINESVILLE II, INC. DELAWARE
OKLAHOMA MALL, INC. DELAWARE
PIERRE BOSSIER MALL, INC. DELAWARE
SOUTHLAKE MALL, INC. DELAWARE
TOWN EAST MALL, INC. DELAWARE
TRACY MALL, INC. DELAWARE
VALLEY HILLS MALL, INC. DELAWARE
WESTROADS MALL II, INC. DELAWARE
* Does not include entities in which the Company has only a minority
interest or in which the Company holds securities other than common stock.
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
General Growth Properties, Inc. on Forms S-3 (File Nos. 333-11067, 333-15907,
333-17021, 333-23035, 333-37247, 333-37383 and 333-41603) and the Registration
Statement on Forms S-8 (File Nos. 33-79372, 333-07241, 333-11237 and 333-28449)
of our reports dated February 9, 1998, on our audits of the consolidated
financial statements and financial statement schedule of General Growth
Properties, Inc. as of December 31, 1997 and 1996, and for the three years in
the period ended December 31, 1997, which reports are included in this Annual
Report on Form 10-K.
Coopers & Lybrand L.L.P.
Chicago, Illinois
March 25, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000895648
<NAME> GENERAL GRWOTH PROPERTIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 25,898
<SECURITIES> 0
<RECEIVABLES> 87,602
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 47,638
<PP&E> 2,169,876
<DEPRECIATION> (233,295)
<TOTAL-ASSETS> 2,097,719
<CURRENT-LIABILITIES> 60,211
<BONDS> 1,276,535
0
0
<COMMON> 3,577
<OTHER-SE> 757,396
<TOTAL-LIABILITY-AND-EQUITY> 2,097,719
<SALES> 0
<TOTAL-REVENUES> 291,147
<CGS> 0
<TOTAL-COSTS> 106,652
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,025
<INTEREST-EXPENSE> 70,252
<INCOME-PRETAX> 82,053
<INCOME-TAX> 0
<INCOME-CONTINUING> 82,053
<DISCONTINUED> 58,647
<EXTRAORDINARY> (1,152)
<CHANGES> 0
<NET-INCOME> 139,548
<EPS-PRIMARY> 2.78
<EPS-DILUTED> 2.76
</TABLE>
