<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of the Securities Act
of 1934
Date of Report (Date of Earliest Event Reported)
September 15, 1998
General Growth Properties, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11656 42-1283895
-------- ------- ----------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
110 N. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 960-5000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
<PAGE> 2
ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN.
The registrant hereby amends its Current Report on Form 8-K dated September 30,
1998 as follows:
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are the financial statements, proforma financial information and
exhibits filed as a part of this report:
(a) Financial Statements of Businesses acquired.
The financial statements of Spring Hill Mall as listed in the accompanying Index
to Financial Statements and Proforma Financial Information are filed as part of
this Current Report on Form 8-K/A.
(b) Proforma Financial Information.
The proforma financial information of General Growth Properties, Inc. (the
"Company") listed in the accompanying Index to Financial Statements and Proforma
Financial Information is filed as part of this Current Report on Form 8-K/A.
(c) Exhibits.
See Exhibit Index attached hereto and incorporated herein by reference.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Bernard Freibaum
______________________________
Bernard Freibaum
Executive Vice President and
Chief Financial Officer
Date: November 4, 1998
3
<PAGE> 4
EXHIBIT INDEX
Exhibit Page
Number Name Number
- -------- ---- ------
2. Purchase and Sale Agreement and Joint Escrow
Instructions dated as of August 21, 1998 by and between
Spring Hill Mall Partnership (seller) and
Spring Hill Mall L.L.C.., (purchaser).*
23. Consent of Independent Accountants.
* Previously filed by the Company in its Current Report on Form 8-K dated
September 30, 1998.
4
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INDEX TO FINANCIAL STATEMENTS AND
PROFORMA FINANCIAL INFORMATION
The following financial information is presented in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, such
historical information has been audited only for the property's most recent
fiscal year as the transactions relating to the acquisition of the property (as
described in the registrant's Current Report on Form 8-K dated September 30,
1998) are not with related parties and the registrant, after reasonable inquiry,
is not aware of any material factors related to the property not otherwise
disclosed that would cause the reported financial information to not be
necessarily indicative of future operating results. In addition, as the
property will be indirectly owned by an entity that has elected to be treated as
a REIT for Federal income tax purposes, a presentation of estimated taxable
operating results is not applicable.
SPRING HILL MALL
Independent Auditors' Report..........................................F-2
Statements of Revenues and Certain Expenses for the
Year Ended December 31, 1997 and for the
Six Months Ended June 30,1998 (Unaudited).............................F-3
Notes to Statements of Revenues and Certain Expenses..................F-4
GENERAL GROWTH PROPERTIES, INC.
Proforma Condensed Consolidated Statement of Operations
for the Year Ended December 31,1997 (Unaudited).......................F-6
Notes to Proforma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1997 (Unaudited)...........F-7
Proforma Condensed Consolidated Statement of Operations for
the Six Months Ended June 30, 1998 (Unaudited).......................F-11
Notes to Proforma Condensed Consolidated Statement of
Operations for the Six Months Ended June 30, 1998 (Unaudited)........F-12
Proforma Condensed Consolidated Balance Sheet as of
June 30, 1998 (Unaudited)............................................F-15
Notes to Proforma Condensed Consolidated Balance Sheet as of
June 30, 1998 (Unaudited)............................................F-16
F-1
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors of General Growth Properties, Inc.:
We have audited the accompanying statement of revenues and certain expenses of
Spring Hill Mall for the year ended December 31, 1997. This statement is the
responsibility of General Growth Properties, Inc.'s management. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission, as described in
note 1 to the statements of revenue and certain expenses. It not intended to be
a complete presentation of Spring Hill Mall's revenues and expenses.
In our opinion, the statement referred to above presents fairly, in all material
respects, the revenue and certain expenses, as described in note 1, of Spring
Hill Mall for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Los Angeles, California
October 22, 1998
F-2
<PAGE> 7
SPRING HILL MALL
STATEMENTS OF REVENUE AND CERTAIN EXPENSES (Note 1)
<TABLE>
<CAPTION>
For the Period
January 1, 1998
Through
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
------------------ -----------------
(Dollars in thousands)
<S> <C> <C>
Revenue:
Minimum rent $ 4,488 $ 9,046
Contingent rent 364 270
Tenant reimbursements 1,734 3,388
Other 10 22
----------- ---------
6,596 12,726
----------- ---------
Certain Expenses:
Building Repairs and Maintenance 263 436
Utilities 151 304
Common Area Repairs and Maintenance 454 1,133
General and Administration 213 482
Legal Fees, Insurance and Miscellaneous 27 90
----------- ---------
Total expenses 1,108 2,445
----------- ---------
Revenue in excess of Certain Expenses $ 5,488 10,281
=========== =========
</TABLE>
See accompanying notes to statements of revenue and certain expenses.
F-3
<PAGE> 8
SPRING HILL MALL
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
PERIOD FROM JANUARY 1, 1998 THROUGH JUNE 30,1998 (UNAUDITED)
AND YEAR ENDED DECEMBER 31,1997
(Dollars in Thousands)
1. BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses relate to the
operations of the regional shopping mall known as Spring Hill Mall (the
"Property") located in West Dundee (Chicago), Illinois. On September 15, 1998,
General Growth Properties, Inc. purchased the Property from TCW Realty Fund V.
The accompanying statements of revenue and certain expenses have been prepared
for the purpose of complying with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired and,
accordingly, are not representative of the actual results of operations of the
Property for the period January 1, 1998 through June 30, 1998 and the year ended
December 31, 1997 due to the exclusion of the following items, which my not be
comparable to the proposed future operations of the Property:
- Management fees
- Property and other taxes
- Depreciation and amortization
- Other items not directly related to the proposed future operations
of the Property
Property taxes are expected to significantly increase in connection with the
reassessment of the Property by the taxing authority as a result of the change
in ownership of the Property and, therefore, property taxes are excluded from
certain expenses in the accompanying statement of revenues and certain expenses.
Tenant reimbursement revenues related to property taxes are included in the
accompanying statement of revenues and certain expenses and the amount of
increase in such reimbursements that may result from increased property taxes
have not been determined.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
(a) Revenue Recognition
Minimum rental income is recognized using the accrual method based on
contractual amounts provided for in the lease agreements which approximates the
straight-line method. Contingent rents, which are based on the operating
results of certain tenants, are accrued as earned. Tenant reimbursements, which
consist of reimbursements from tenants for certain operating expenses are
accrued as such operating expenses are incurred.
F-4
<PAGE> 9
(b) Expenses
Expenses are charged to operations as incurred.
(c) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of revenues and certain expenses during the
reporting period. Actual results could differ from those estimates.
(d) Unaudited Interim Statement of Revenue and Certain Expenses
The statement of revenue and certain expenses for the six-month period ended
June 30, 1998 is unaudited. In management's opinion, such financial statement
reflects all adjustments of a normal recurring nature, necessary for a fair
presentation of revenue and certain expenses for the interim period. All such
adjustments are of a normal, recurring nature.
3. LEASES
Shopping mall space is leased to tenants under various operating leases with
terms ranging primarily from two to ten years.
Future minimum rents to be received under leases in effect at December 31, 1997,
are as follows:
Years Ending
December 31:
------------
1998 $ 8,443
1999 7,832
2000 7,505
2001 6,462
2002 5,963
Thereafter 14,949
--------
$ 51,154
========
F-5
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<TABLE>
<CAPTION>
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
Historical 1998 Fiscal
General Growth Fiscal Proforma Acquisitions 1997
Properties, 1997 Proforma Fiscal Previously Proforma Proforma
Inc.(1) Acquisitions Adjustments 1997 (1) Reported (2) Adjustments (2) As Reported (2)
-------------- ------------ ----------- -------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues $ 291,147 $ 14,427 $ -- $ 305,574 $ 144,084 $ -- $ 449,658
Expenses:
Property operating 106,369 5,818 -- 112,187 57,443 -- 169,630
Management fees 3,308 252 (46) 3,514 1,001 99 (a) 4,614
Depreciation and
amortization 48,509 -- 2,077 50,586 -- 29,331 (b) 79,917
---------- -------- --------- --------- --------- ----------- -----------
Total Expenses 158,186 6,070 2,031 166,287 58,444 29,430 254,161
---------- -------- --------- --------- --------- ----------- -----------
Operating Income 132,961 8,357 (2,031) 139,287 85,640 (29,430) 195,497
Interest expense, net (70,252) -- (8,459) (78,711) -- (60,110) (c) (138,821)
Equity in net income/(loss) unconsolidated
affiliates:
GGP/Homart, Inc. 16,506 -- -- 16,506 -- -- 16,506
Property Joint Ventures 3,032 391 -- 3,423 927 -- 4,350
General Growth
Management, Inc. (194) -- -- (194) 3,405 -- 3,211
--------- -------- --------- --------- -------- ---------- ----------
Income before
minority interest 82,053 8,748 (10,490) 80,311 89,972 (89,540) 80,743
Minority interest in
Operating Partnership (29,398) -- 37 (29,361) -- 6,099 (d) (23,262)
--------- -------- --------- --------- -------- ---------- ----------
Net income 52,655 8,748 (10,453) 50,950 89,972 (83,441) 57,481
Convertible preferred
stock dividends(3) -- -- -- -- -- (24,469) (24,469)
--------- -------- --------- --------- --------- ---------- ----------
Net income available
to common stockholders $ 52,655 $ 8,748 $ (10,453) $ 50,950 $ 89,972 $ (107,910) $ 33,012
========= ======== ========= ========= ========= ========== ==========
Weighted average shares
outstanding - basic 32,622,665
Weighted average shares
outstanding - diluted 32,839,637
Preferred Stock Dividends 24,469 24,469
Dilutive Common Shares-W/A 216,972 216,972
Earnings per share - basic $ 1.01
Earnings per share - diluted $ 1.01
</TABLE>
<TABLE>
<CAPTION>
Pierre Bossier Proforma
Mall Fiscal 1997
Spring Hill Acquisition Proforma for Current
Acquisition (Unaudited) Adjustments 8-K/A
----------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenues
Expenses: $ 12,726 $ 6,706 $ -- $ 469,090
Property operating
Management fees 2,445 2,067 -- 174,142
Depreciation and -- -- 200 (a) 4,814
amortization
-- -- 3,979 (b) 83,896
Total Expenses --------- -------- --------- ----------
2,445 2,067 4,179 262,852
Operating Income --------- -------- --------- ----------
Interest expense, net 10,281 4,639 (4,179) 206,238
-- -- (11,702) (c) (150,523)
Equity in net income/(loss) unconsolidated
affiliates: -- -- -- 16,506
GGP/Homart, Inc. -- -- -- 4,350
Property Joint Ventures
General Growth -- -- -- 3,211
Management, Inc. --------- -------- --------- ----------
Income before 10,281 4,639 (15,881) 79,782
minority interest
Minority interest in -- -- 398 (d) (22,864)
Operating Partnership --------- -------- --------- ----------
10,281 4,639 (15,483) 56,918
Net income
Convertible preferred -- -- -- (24,469)
stock dividends(3) --------- -------- --------- ----------
Net income available $ 10,281 $ 4,639 $ (15,483) $ 32,449
to common stockholders ========= ======== ========= ==========
Weighted average shares 32,622,665
outstanding - basic
Weighted average shares 32,839,637
outstanding - diluted
24,469
Preferred Stock Dividends
Dilutive Common Shares-W/A 216,972
Earnings per share - basic $.99
Earnings per share - diluted $.99
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-K for the
year ended December 31, 1997.
(2) Amounts are from the statements included in the Company's Form 8-K/A dated
September 29, 1998.
(3) Proforma earnings have been reduced by proforma dividends on the 7.25%
Convertible Preferred Stock.
F-6
<PAGE> 11
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited proforma condensed consolidated statement of operations is
presented as if (i) the sale of CenterMark Properties, Inc. ("CenterMark") and
the acquisitions made in 1997 (Market Place Mall, Century Plaza Shopping Center,
Town East Mall, Southlake Mall, Eden Prairie Mall, GGP/Ivanhoe Portfolio Malls
and Valley Hills Mall), (ii) the acquisitions made prior to July 16, 1998
(Southwest Plaza, Northbrook Court, Altamonte Mall, the MEPC Portfolio and the
USPPI Portfolio - all as previously reported in the Company's Form 8-K/A dated
September 29, 1998) and the acquisitions made from July 16, 1998 through
September 15, 1998 (Pierre Bossier Mall and Spring Hill Mall) and (iii) the
Company's use of the net proceeds of the June 4, 1998 public offering of
depositary shares of 7.25% Preferred Income Equity Redeemable Stock (the
"Offering" or "Convertible Preferred Stock") to fund the acquisitions and for
other working capital purposes, had all occurred on January 1, 1997. In
management's opinion, all adjustments necessary to reflect these transactions
have been included. Such proforma statement of operations is based upon the
historical information of General Growth Properties, Inc. excluding the
non-recurring gain on sale of a portion of CenterMark stock and extraordinary
item and the historical information of each of the above-mentioned entities for
the year ended December 31, 1997. The MEPC Portfolio information reflects the
results of operations for the fiscal year ended September 30, 1997. This
unaudited proforma statement of operations is not necessarily indicative of what
actual results of General Growth Properties, Inc. would have been assuming such
transactions had been completed as of January 1, 1997 nor does it purport to
represent the results of operations for future periods.
NOTE 2 ACQUISITIONS/DISPOSITIONS
On June 28, 1996, Westfield U.S. Investments, Pty. Limited exercised its option
to acquire the remaining 30% of the outstanding CenterMark stock from General
Growth Properties, Inc. (the "Company") in two transactions. The first payment
in the amount of $87,000 was received on July 1, 1996, and the second payment in
the amount of $130,500 was received on January 2, 1997. As described above, the
gain on this transaction has been excluded from the continuing operations of the
Company and its pro forma operations for the year ended December 31, 1997.
On March 31, 1997, the Company acquired a 100% interest in Market Place Mall for
a cash purchase price of approximately $70,000 which was funded by an unsecured
short-term facility. Market Place Mall is located in Champaign, Illinois.
During the second quarter of 1997, the Company also acquired a 100% ownership
interest in three properties, Century Plaza Shopping Center, Southlake Mall,
Eden Prairie Mall and a 50% interest in Town East Mall.
F-7
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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 19, 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 newly issued Operating
Partnership Units, and $10,400 in cash. Southlake Mall is located in Atlanta,
Georgia. The aggregate consideration paid for Eden Prairie Center 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 in
short-term liabilities.
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 in cash, the assumption of approximately $27,900 of mortgage
indebtedness and the assumption of $1,100 in net current liabilities.
On September 17, 1997, GGP/Ivanhoe, Inc. ("GGP/Ivanhoe") acquired 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. Ivanhoe, Inc. of Montreal, Quebec, Canada
owns the remaining 49% ownership interest in GGP/Ivanhoe.
On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest
in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook,
Illinois, respectively. The aggregate purchase price for Southwest Plaza and
Northbrook Court was approximately $261,000.
On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC
plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC")
through the purchase of the stock of the three U.S. subsidiaries of MEPC that
directly or indirectly own the MEPC Portfolio. The Company acquired the MEPC
Portfolio for approximately $871,000 (less certain adjustments), approximately
$830,000 of which was borrowed. After repayment of approximately $217,000 of
such acquisition financing from the Offering, the MEPC Portfolio is currently
secured by a 6.7% one year $550,000 loan and an approximately $63,000 one year
floating rate loan bearing interest at LIBOR plus 90 basis points. The MEPC
Portfolio consists of 100% ownership of eight enclosed mall shopping centers;
the Apache Mall in Rochester, Minnesota, the Boulevard Mall in Las Vegas,
Nevada, the Cumberland Mall in Atlanta, Georgia, the McCreless Mall in San
Antonio, Texas, the Northridge Fashion Center in Northridge (Los Angeles),
California, the Regency Square Mall in Jacksonville, Florida, the Riverlands
Shopping Center in LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield,
California.
On May 14, 1998, the Company entered into a definitive merger agreement to
acquire U.S. Prime Property, Inc. ("USPPI"), a private REIT. On July 23, 1998,
effective as of June 30, 1998, the Company acquired through a merger, USPPI.
The Company also reached agreement with a joint venture partner pursuant to
which the joint venture partner acquired 49% of the common stock acquired
pursuant to the merger agreement and the Company retained the remainder of the
common stock. The newly merged entity ("GGP Ivanhoe
F-8
<PAGE> 13
II") will continue to operate as a private REIT and will be accounted for by the
Company on the equity method. The aggregate consideration paid pursuant to the
merger agreement was approximately $625,000 (less certain adjustments, including
a credit of approximately $64,000 for outstanding mortgage indebtedness and
accrued interest thereon). GGP Ivanhoe II obtained a $392,000 interim loan
bearing interest at LIBOR plus 90 basis points and due July 1, 1999, and the
balance of the consideration paid was represented by equity from the Company and
the venture partner in proportion to their respective stock ownership. Pursuant
to the purchase and venture agreements, the Company was obligated to contribute
approximately $91,290 to GGP Ivanhoe II of which approximately $18,800 was
contributed on June 30, 1998 and the remaining approximately $72,490 (less
certain interest and other credits) was contributed in mid-July, 1998. The
Company's capital contributions were funded primarily from its line of credit
facility. GGP Ivanhoe II owns: the Landmark Mall in Alexandria, Virginia; the
Mayfair Mall and adjacent office buildings in Wauwatosa, Wisconsin; the Meadows
Mall in Las Vegas, Nevada; the Northgate Mall in Chattanooga, Tennessee;
Oglethorpe Mall in Savannah, Georgia; and the Park City Center in Lancaster,
Pennsylvania.
On July 21, 1998, the Company acquired a 100% ownership interest in the
Altamonte Mall in Altamonte Springs (Orlando), Florida. The purchase price
consisted of approximately $141,000 (3,683,143 units) of newly issued units of
limited partnership of GGP Limited Partnership, an affiliate of the Company and
approximately $28,000 in cash funded from the Company's credit facility.
On September 3, 1998, the Company acquired a 100% ownership interest in the
Pierre Bossier Mall in Bossier City (Shreveport), Louisiana. The aggregate
consideration paid for the Pierre Bossier Mall was approximately $52,700
(subject to prorations and certain adjustments) which was paid in the form of
approximately $10,000 in cash (funded from the Company's line of credit), a new
mortgage loan (obtained from an independent third party) of approximately
$42,000 and the assumption of approximately $700 of existing debt. The Company
had previously loaned the sellers approximately $50,000 and received an option
to buy the property. In conjunction with the closing of the sale, the loan was
fully repaid.
On September 15, 1998, the Company purchased 100% of the Spring Hill Mall in
West Dundee (Chicago), Illinois. The aggregate consideration paid by the
Operating Company for the Spring Hill Mall was approximately $124,000 consisting
of approximately $32,000 in cash (through the Company's line of credit and a new
10-year fixed-rate $92,000 mortgage with an independent third party lender. The
new mortgage bears interest at 6.60% per annum and provides for monthly payments
of principal and interest of approximately $588.
F-9
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NOTE 3 PROFORMA ADJUSTMENTS
(a) Management Fees
The management fee adjustment represents the difference in management costs
charged and/or allocated to the properties by the previous owners and the new
rates charged by General Growth Management, Inc. ("GGMI"), an affiliate of the
Company.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts related
to the periods from January 1, 1997 to the dates of acquisition for the 1997
acquisitions and for the entire year of 1997 for the acquisitions made in 1998.
(c) Interest Expense
Interest expense increased due to a combination of debt assumption and increased
borrowings. In connection with the acquisitions described above, the Company
assumed approximately $127,000 of mortgage debt bearing interest at the weighted
average rate of 8.50%. The Company also issued approximately $1,028,000 of
secured and unsecured borrowings to fund the cash portion of the acquisitions.
The proforma interest expense on new borrowings was calculated using an interest
rate of 6.65% for acquisitions prior to June 30, 1998 and 6.61% for the
Altamonte Mall, Pierre Bossier Mall and Spring Hill Mall acquisitions.
(d) Minority Interest
The proforma income statement has been adjusted to reflect the allocation of
earnings to the minority interest.
F-10
<PAGE> 15
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA--UNAUDITED)
<TABLE>
<CAPTION>
Historical 1998 Pierre Bossier
General Growth Acquisitions June 30 Mall
Properties, Previously Proforma Proforma Spring Hill Acquisition
Inc.(1) Reported Adjustments As Reported (2) Acquisition (Unaudited)
------ -------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total revenues $169,065 $59,569 $ -- $ 228,634 $ 6,596 $ 3,669
Expenses:
Property operating 57,830 23,405 -- 81,235 1,108 1,087
Management fees 1,860 330 113 (a) 2,303 -- --
Depreciation & amortization 29,099 -- 11,885 (b) 40,984 -- --
-------- ------- --------- ---------- -------- -----------
Total Expenses 88,789 23,735 11,998 124,522 1,108 1,087
-------- ------- --------- ---------- -------- -----------
Operating Income 80,276 35,834 (11,998) 104,112 5,488 2,582
Interest expense, net (40,971) -- (23,878) (c) (64,849) -- --
Equity in unconsolidated
affiliates:
GGP/Homart, Inc. 8,336 -- -- 8,336 -- --
Property Joint Ventures 1,634 (69) -- 1,565 -- --
General Growth
Management, Inc. (9,260) 1,697 -- (7,563) -- --
-------- ------- -------- ---------- -------- -----------
Income before
minority interest 40,015 37,462 (35,876) 41,601 5,488 2,582
Minority interest in
Operating Partnership (13,419) -- 1,976 (d) (11,443) -- --
-------- ------- --------- ---------- -------- -----------
Net income 26,596 37,462 (33,900) 30,158 5,488 2,582
Convertible preferred
stock dividends(3) (1,199) -- (11,035) (12,234) -- --
-------- ------- --------- ---------- -------- -----------
Net income available
to common stockholders $ 25,397 $37,462 $(44,935) $ 17,924 $ 5,488 $ 2,582
======== ======= ========= ========== ======== ===========
Weighted average shares
outstanding - basic 35,783,276
Weighted average shares
outstanding - diluted 35,996,404
Preferred Stock Dividends 1,199 11,035 12,234
Dilutive Common Shares-W/A 213,128
Earnings per share-basic $ 0.50
Earnings per share-diluted $ 0.50
Total
Proforma Proforma
Adjustments Combined
----------- --------
<S> <C> <C>
Total revenues $ -- $ 238,899
Expenses:
Property operating -- 83,430
Management fees 100 (a) 2,403
Depreciation & amortization 1,989 (b) 42,973
Total Expenses -------- ---------
2,089 128,806
-------- ---------
Operating Income
Interest expense, net (2,089) 110,093
(5,851) (c) (70,700)
Equity in unconsolidated
affiliates:
GGP/Homart, Inc.
Property Joint Ventures -- 8,336
General Growth -- 1,565
Management, Inc.
-- (7,563)
Income before -------- ---------
minority interest
Minority interest in (7,940) 41,731
Operating Partnership
(51) (d) (11,494)
Net income -------- ---------
Convertible preferred (7,991) 30,237
stock dividends(3)
-- (12,234)
Net income available -------- ---------
to common stockholders
$ (7,991) $ 18,003
======== =========
Weighted average shares
outstanding - basic
Weighted average shares 35,783,276
outstanding - diluted
35,996,404
Preferred Stock Dividends
Dilutive Common Shares-W/A 12,234
213,128
Earnings per share-basic $ 0.50
Earnings per share-diluted $ 0.50
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-Q for the
quarter ended June 30, 1998.
(2) Amounts are from the statements included in the Company's Form 8-K/A dated
September 29, 1998.
(3) Proforma earnings have been reduced by proforma dividends on the 7.25%
Convertible Preferred Stock.
F-11
<PAGE> 16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited proforma condensed consolidated statement of operations is
presented as if (i) the acquisitions made prior to July 16, 1998 (Southwest
Plaza, Northbrook Court, Altamonte Mall, the MEPC Portfolio and the USPPI
Portfolio - all as previously reported in the Company's Form 8-K/A dated October
1, 1998) and the acquisitions made from July 16, 1998 through September 15, 1998
(Pierre Bossier Mall and Spring Hill Mall) and (ii) the Company's use of the net
proceeds of the June 4, 1998 public offering of depositary shares of 7.25%
Preferred Income Equity Redeemable Stock (the "Offering" or "Convertible
Preferred Stock") to fund the acquisitions and for other working capital
purposes, had all occurred on January 1, 1998. In management's opinion, all
adjustments necessary to reflect these transactions have been included. Such
proforma statement of operations is based upon the historical information of
General Growth Properties, Inc. and the historical information of each of the
above-mentioned entities for the six months ended June 30, 1998. This unaudited
proforma statement of operations is not necessarily indicative of what actual
results of General Growth Properties, Inc. would have been assuming such
transactions had been completed as of January 1, 1998 nor does it purport to
represent the results of operations for future periods.
NOTE 2 ACQUISITIONS
On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest
in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook,
Illinois, respectively. The aggregate purchase price for Southwest Plaza and
Northbrook Court was approximately $261,000.
On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC
plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC")
through the purchase of the stock of the three U.S. subsidiaries of MEPC that
directly or indirectly own the MEPC Portfolio. The Company acquired the MEPC
Portfolio for approximately $871,000 (less certain adjustments), approximately
$830,000 of which was borrowed. After repayment of approximately $217,000 of
such acquisition financing from the Offering, the MEPC Portfolio is currently
secured by a 6.7% one year $550,000 loan and an approximately $63,000 one year
floating rate loan bearing interest at LIBOR plus 90 basis points. The MEPC
Portfolio consists of 100% ownership of eight enclosed mall shopping centers;
the Apache Mall in Rochester, Minnesota, the Boulevard Mall in Las Vegas,
Nevada, the Cumberland Mall in Atlanta, Georgia, the McCreless Mall in San
Antonio, Texas, the Northridge Fashion Center in Northridge (Los Angeles),
California, the Regency Square Mall in Jacksonville, Florida, the Riverlands
Shopping Center in LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield,
California.
F-12
<PAGE> 17
On May 14, 1998, the Company entered into a definitive merger agreement to
acquire U.S. Prime Property, Inc. ("USPPI"), a private REIT. On July 23, 1998,
effective as of June 30, 1998, the Company acquired through a merger, USPPI.
The Company also reached agreement with a joint venture partner pursuant to
which the joint venture partner acquired 49% of the common stock acquired
pursuant to the merger agreement and the Company retained the remainder of the
common stock. The newly merged entity ("GGP Ivanhoe II") will continue to
operate as a private REIT and will be accounted for by the Company on the equity
method. The aggregate consideration paid pursuant to the merger agreement was
approximately $625,000 (less certain adjustments, including a credit of
approximately $64,000 for outstanding mortgage indebtedness and accrued interest
thereon). GGP Ivanhoe II obtained a $392,000 interim loan bearing interest at
LIBOR plus 90 basis points and due July 1, 1999, and the balance of the
consideration paid was represented by equity from the Company and the venture
partner in proportion to their respective stock ownership. Pursuant to the
purchase and venture agreements, the Company was obligated to contribute
approximately $91,290 to GGP Ivanhoe II of which approximately $18,800 was
contributed on June 30, 1998 and the remaining approximately $72,490 (less
certain interest and other credits) was contributed in mid-July, 1998. The
Company's capital contributions were funded primarily from its line of credit
facility as described in Note 6. GGP Ivanhoe II owns: the Landmark Mall in
Alexandria, Virginia; the Mayfair Mall and adjacent office buildings in
Wauwatosa, Wisconsin; the Meadows Mall in Las Vegas, Nevada; the Northgate Mall
in Chattanooga, Tennessee; Oglethorpe Mall in Savannah, Georgia; and the Park
City Center in Lancaster, Pennsylvania.
On July 21, 1998 the Company acquired a 100% ownership interest in the Altamonte
Mall in Altamonte Springs (Orlando), Florida. The purchase price consisted of
approximately $141,000 (3,683,143 units) of newly issued units of limited
partnership of GGP Limited Partnership, an affiliate of the Company and
approximately $28,000 in cash funded from the Company's credit facility.
On September 3, 1998, the Company acquired a 100% ownership interest in the
Pierre Bossier Mall in Bossier City (Shreveport), Louisiana. The aggregate
consideration paid for the Pierre Bossier Mall was approximately $52,700
(subject to prorations and certain adjustments) which was paid in the form of
approximately $10,000 in cash (funded from the Company's line of credit), a new
mortgage loan (obtained from an independent third party) of approximately
$42,000 and the assumption of approximately $700 of existing debt. The Company
had previously loaned the sellers approximately $50,000 and received an option
to buy the property. In conjunction with the closing of the sale, the loan was
fully repaid.
On September 15, 1998, the Company purchased 100% of the Spring Hill Mall in
West Dundee (Chicago), Illinois. The aggregate consideration paid by the
Operating Company for the Spring Hill Mall was approximately $124,000 consisting
of approximately $32,000 in cash (through the Company's line of credit and a new
10-year fixed-rate $92,000 mortgage with an independent third party lender. The
new mortgage bears interest at 6.60% per annum and provides for monthly payments
of principal and interest of approximately $588.
F-13
<PAGE> 18
NOTE 3 PROFORMA ADJUSTMENTS
(a) Management Fees
The management fee adjustment represents the difference in management costs
charged and/or allocated to the properties by the previous owners and the new
rates charged by General Growth Management, Inc.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts related
to the months ended June 30, 1998 for the acquisitions made in 1998.
(c) Interest Expense
Interest expense increased due to a combination of debt assumption and increased
borrowings. In connection with the acquisitions described above, the Company
assumed approximately $127,000 of mortgage debt bearing interest at the weighted
average rate of 8.50%. The Company also issued approximately $1,028,000 of
secured and unsecured borrowings to fund the cash portion of the acquisitions.
The proforma interest expense on new borrowings was calculated using an interest
rate of 6.65% for acquisitions prior to June 30, 1998 and 6.61% for the
Altamonte Mall, Pierre Bossier Mall and Spring Hill Mall acquisitions.
(d) Minority Interest
The proforma income statement has been adjusted to reflect the allocation of
earnings to the minority interest.
F-14
<PAGE> 19
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(DOLLARS IN THOUSANDS--UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PREVIOUSLY PIERRE BOSSIER
GENERAL GROWTH REPORTED PREVIOUSLY MALL
PROPERTIES, PROFORMA REPORTED SPRING HILL ACQUISITION REVISED
INC.(1) ADJUSTMENTS PROFORMA (2) ACQUISITION (Unaudited) PROFORMA
-------------- ----------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- ------
Investment in real estate
Land $312,452 $16,900 $329,352 $12,400 $5,284 $347,036
Buildings and equipment 2,657,295 152,100 2,809,395 111,600 47,556 2,968,551
Less accumulated depreciation (259,214) -- (259,214) -- -- (259,214)
Developments in progress 102,569 -- 102,569 -- -- 102,569
---------- ----------- ---------- ----------- ------- -----------
Net property and equipment 2,813,102 169,000 2,982,102 124,000 52,840 3,158,942
Investment in GGP/Homart 205,221 -- 205,221 -- -- 205,221
Investment in Property Joint Ventures 108,915 -- 108,915 -- -- 108,915
---------- ----------- ---------- ----------- ------- -----------
Net investment in real estate 3,127,238 169,000 3,296,238 124,000 52,840 3,473,078
Cash and cash equivalents 29,913 -- 29,913 -- -- 29,913
Tenant accounts receivable, net 41,913 -- 41,913 -- -- 41,913
Deferred expenses, net 51,960 -- 51,960 -- -- 51,960
Investment in and note
receivable from GGMI 83,725 -- 83,725 -- -- 83,725
Mortgage note receivable 50,061 -- 50,061 -- -- 50,061
Prepaid expenses and other assets 10,079 -- 10,079 -- -- 10,079
---------- ----------- ---------- ----------- ------- -----------
Total Assets $3,394,889 $169,000 $3,563,889 $124,000 $52,840 $3,740,729
========== =========== ========== =========== ======= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Mortgage notes and other debt payable $2,140,895 $28,000 $2,168,895 $124,000 $52,840 $2,345,735
Distributions payable 25,860 -- 25,860 -- -- 25,860
Accounts payable and accrued expenses 138,690 -- 138,690 -- -- 138,690
---------- ----------- ---------- ----------- ------- -----------
Total Liabilities 2,305,445 28,000 2,333,445 124,000 52,840 2,510,285
Minority interest in Operating Partnership 262,519 84,507 347,026 -- -- 347,026
Commitments and Contingencies
Convertible preferred stock 337,500 -- 337,500 -- -- 337,500
Stockholder's equity
Common stock 3,590 -- 3,590 -- -- 3,590
Additional paid-in capital 738,352 56,493 794,845 -- -- 794,845
Retained earnings (deficit) (249,477) -- (249,477) -- -- (249,477)
Note receivable - common stock (3,040) -- (3,040) -- -- (3,040)
---------- ----------- ---------- ----------- ------- -----------
Total stockholders' equity 489,425 56,493 545,918 -- -- 545,918
---------- ----------- ---------- ----------- ------- -----------
Total Liabilities and Equity $3,394,889 169,000 $3,563,889 $124,000 $52,840 $3,740,729
========== =========== ========== =========== ======= ===========
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-Q for
the quarter ended June 30, 1998.
(2) Amounts are from the statements included in the Company's 8-K/A dated
September 29, 1998.
The accompanying notes are an integral part of the Proforma Condensed
Consolidated Balance Sheet.
F-15
<PAGE> 20
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1998
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited condensed consolidated balance sheet is presented as if the
acquisition of Altamonte Mall, Pierre Bossier Mall and Spring Hill Mall had
occurred on June 30, 1998. In management's opinion, all adjustments necessary
to reflect this transaction have been included.
F-16
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation of our report dated October 22, 1998 on the
statement of revenues and certain expenses for Spring Hill Mall for the year
ended December 31, 1997 included in this Form 8-K/A dated November 4, 1998 into
the General Growth Properties, Inc. Registration Statements on Forms S-3 (File
Nos. 333-11067, 333-15907, 333-17021, 333- 23035, 333-37247, 333-37383,
333-41603 and 333-58045) and Registration Statements on Forms S-8 (File Nos.
33-79372, 333-07241, 333-11237 and 333-28449).
Our independent auditor's report contains an explanatory paragraph indicating
that the statement of revenue and certain expenses was prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission as described in note 1 to the statement of revenues and certain
expenses and is not intended to be a complete presentation of Spring Hill Mall's
revenues and expenses.
KPMG Peat Marwick LLP
Los Angeles, California
November 4, 1998
