<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
Commission file number 1-11656
GENERAL GROWTH PROPERTIES, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
Delaware 42-1283895
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
110 N. Wacker Dr., Chicago, IL 60606
(Address of principal executive offices, Zip Code)
--------------------------------------------------
(312) 960-5000
--------------
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
The number of shares of Common Stock, $.10 par value, outstanding on November
12, 1998 was 35,902,572.
<PAGE> 2
GENERAL GROWTH PROPERTIES, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets
as of September 30, 1998 and December 31, 1997....................................... 3
Consolidated Statements of Operations for the three and nine
months ended September 30, 1998 and 1997............................................ 4
Consolidated Statements of Cash Flows
for the nine months ended September 30, 1998 and 1997............................... 5
Notes to Consolidated Financial Statements........................................... 6
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations........................................ 24
Liquidity and Capital Resources of the Company...................................... 28
Item 3: Quantitative and Qualitative Disclosures about Market Risk....................... 32
PART II OTHER INFORMATION.
Item 6: Exhibits and Reports on Form 8-K................................................. 32
SIGNATURES................................................................................ 33
</TABLE>
2 of 33
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
<S> <C> <C>
Investment in Real Estate:
Land $ 364,562 194,131
Buildings and equipment 3,150,233 1,601,351
Less accumulated depreciation (280,699) (233,295)
Developments in progress 65,920 68,003
----------- ---------
Net property and equipment 3,300,016 1,630,190
Investment in GGP/Homart 197,769 203,142
Investment in Property Joint Ventures 184,205 90,624
----------- ---------
Net Investment In Real Estate 3,681,990 1,923,956
Cash and cash equivalents 26,176 25,898
Tenant accounts receivable, net 55,228 34,849
Deferred expenses, net 56,961 42,343
Investment in and note receivable from
General Growth Management, Inc. 91,515 61,588
Prepaid expenses and other assets 15,498 9,085
----------- ---------
$ 3,927,368 2,097,719
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes and other debts payable $ 2,513,387 1,275,785
Distributions payable 34,748 24,421
Accounts payable and accrued expenses 157,442 36,540
----------- ---------
2,705,577 1,336,746
----------- ---------
Minority interest in Operating Partnership 344,858 262,468
----------- ---------
Commitments and contingencies
Convertible Preferred Stock, $1,000 liquidation value; 5,000,000 shares
authorized; 337,500 and none issued and outstanding at September 30, 1998 and
December 31, 1997, respectively 337,500 --
----------- ---------
Stockholders' Equity:
Common stock; $0.10 par value; 210,000,000 shares authorized; 35,902,572
shares issued and outstanding at September 30, 1998 and 35,769,454 shares
issued and 35,634,977 outstanding at
December 31, 1997, respectively 3,590 3,577
Additional paid-in capital 794,637 738,630
Retained earnings (deficit) (255,630) (239,139)
Treasury stock, at cost; none and 134,477 shares held at
September 30, 1998 and December 31, 1997, respectively -- (4,563)
Notes receivable - common stock purchase (3,164) --
----------- ---------
Total Stockholders' Equity 539,433 498,505
----------- ---------
$ 3,927,368 2,097,719
=========== =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3 of 33
<PAGE> 4
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Minimum rents $ 71,863 43,405 178,382 125,068
Tenant recoveries 37,148 25,067 90,000 70,220
Percentage rents 1,160 2,197 6,173 5,855
Other 1,633 1,820 4,004 4,610
Fee Income 1,251 1,710 3,561 3,468
--------- --------- --------- ---------
Total Revenues 113,055 74,199 282,120 209,221
--------- --------- --------- ---------
Expenses:
Real Estate taxes 9,903 5,732 22,804 15,476
Management fee to affiliate 1,188 875 3,048 2,441
Property operating 28,246 19,303 70,303 53,899
Provision for doubtful accounts 361 795 1,090 2,357
General and Administrative 972 807 3,117 2,509
Depreciation and amortization 23,490 12,661 52,587 35,836
--------- --------- --------- ---------
Total Expenses 64,160 40,173 152,949 112,518
--------- --------- --------- ---------
Operating Income 48,895 34,026 129,171 96,703
Interest expense, net (29,536) (18,318) (70,507) (51,542)
Equity in net income/(loss) of unconsolidated affiliates:
GGP/Homart 2,834 7,272 11,170 12,723
Property Joint Ventures 3,302 444 4,936 1,082
General Growth Management, Inc. (100) 1,016 (9,360) 145
Net gain on sales -- -- -- 58,647
--------- --------- --------- ---------
Income before extraordinary item & allocation to 25,395 24,440 65,410 117,758
minority interest
Income allocated to minority interest (7,355) (8,458) (20,774) (42,696)
--------- --------- --------- ---------
Income before extraordinary item $ 18,040 15,982 44,636 75,062
Extraordinary Item (a) -- (695) -- (1,072)
--------- --------- --------- ---------
Net Income $ 18,040 15,287 44,636 73,990
--------- --------- --------- ---------
Convertible Preferred Stock Dividends (6,117) -- (7,316) --
--------- --------- --------- ---------
Net income available to common stockholders $ 11,923 15,287 37,320 73,990
========= ========= ========= =========
Earnings before extraordinary item per share-basic $ 0.33 0.48 1.04 2.37
========= ========= ========= =========
Earnings before extraordinary item per share-diluted $ 0.33 0.48 1.04 2.36
========= ========= ========= =========
Net earnings per share - basic $ 0.33 0.46 1.04 2.34
========= ========= ========= =========
Net earnings per share - diluted $ 0.33 0.46 1.04 2.33
========= ========= ========= =========
Distributions declared per share $ 0.47 0.45 1.41 1.35
========= ========= ========= =========
Weighted average common shares
outstanding - basic (in thousands) 35,899 33,219 35,822 31,606
========= ========= ========= =========
Weighted average common shares
outstanding - diluted (in thousands) 35,990 33,279 36,022 31,761
========= ========= ========= =========
</TABLE>
(a) Charges related to early retirement of debt.
The accompanying notes are an integral part of
these consolidated financial statements.
4 of 33
<PAGE> 5
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1997
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 44,636 73,990
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest 20,774 42,696
Net gain on sales -- (58,647)
Extraordinary items - related to early retirement of debt -- 1,072
Equity in net income of unconsolidated affiliates (6,746) (13,950)
Provision for doubtful accounts 1,090 2,357
Depreciation 47,403 33,041
Amortization 5,184 2,795
Net Changes:
Tenant accounts receivable (21,469) (6,777)
Prepaid expenses and other assets (6,413) (35,680)
Accounts payable and accrued expenses 28,188 (15,905)
----------- -----------
Net cash provided by (used in) operating activities 112,647 24,992
----------- -----------
Cash flows from investing activities:
Acquisition/development of real estate and improvements
and additions to properties (1,294,729) (170,920)
Increase in investments in property joint ventures (92,050) (83,464)
Change in notes receivable from General Growth Management, Inc. (35,653) (23,796)
Proceeds received from sale of CenterMark stock -- 130,500
Distributions received from GGP/Homart stock 16,544 15,572
Distributions received from property joint ventures 3,405 --
Increase in deferred expenses (17,359) (5,764)
----------- -----------
Net cash provided by (used in) investing activities (1,419,842) (137,872)
----------- -----------
Cash flows from financing activities:
Cash distributions paid to common stockholders (49,764) (40,941)
Cash distributions paid to minority interest (26,137) (23,667)
Proceeds from exercised options -- 249
Proceeds of preferred stock issuance, net of issuance costs 322,755 --
Proceeds of common stock issuance, net of issuance costs -- 166,293
Proceeds from issuance of mortgage / other notes payable 1,670,638 331,526
Principal payments on mortgage notes and other debt payable (606,559) (324,941)
Purchase of treasury stock (1,136) (3,114)
Capital contribution from minority interest 119 --
Prepayment penalty on early retirement of debt -- (1,072)
Increase in deferred financing costs (2,443) (1,279)
----------- -----------
Net cash provided by (used in) financing activities 1,307,473 103,054
----------- -----------
Net change in cash and cash equivalents 278 (9,826)
Cash and cash equivalents at beginning of year 25,898 15,947
----------- -----------
Cash and cash equivalents at end of period $ 26,176 6,121
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid $ 89,864 60,836
Interest capitalized $ 9,087 3,883
----------- -----------
Non-cash investing activities:
Operating partnership units exchanged for treasury stock $ 1,875 --
Debt and other liabilities assumed as consideration to seller
for purchase of real estate 262,816 61,863
Notes receivable issued for exercised stock options 3,164 --
Partnership units and common stock issued as consideration for purchase
of real estate 159,685 11,490
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
5 of 33
<PAGE> 6
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 1 GENERAL
Readers of this quarterly report should refer to the Company's
audited financial statements for the year ended December 31, 1997
which are included in the Company's 1997 Annual Report on Form
10-K (File No. 1-11656) dated March 30, 1998, as certain footnote
disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this
report.
ORGANIZATION
General Growth Properties, Inc., a Delaware corporation (the
"Company"), was formed in 1986 to own and operate enclosed mall
shopping centers. All references to the "Company" in these notes
to consolidated financial statements include the Company and those
entities owned or controlled by the Company (including the
Operating Partnership as described below), unless the context
indicates otherwise. 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.
During June 1998, the Company completed a public offering of
13,500,000 depositary shares (the "Depositary Shares"), each
representing 1/40 of a share of 7.25% Preferred Income Equity
Redeemable Stock, Series A, par value $100 per share ("PIERS"), of
the Company. The Company received proceeds of approximately
$322,755 net of approximately $14,745 of issuance costs, which
were utilized to fund certain of the acquisitions described in
Note 4 and for other working capital needs.
Each owner of a Depositary Share is entitled to its pro rata share
of all the rights and preferences of the PIERS represented
thereby. The PIERS are convertible at any time, at the option of
the holder, into shares of common stock of the Company at the
conversion price of $39.70 per share of common stock. In addition,
the PIERS have a preference on liquidation of the Company equal to
$1,000 per PIERS (equivalent to $25.00 per Depositary Share), plus
accrued and unpaid dividends, if any, to the liquidation date. The
PIERS and the Depositary Shares are subject to mandatory
redemption by the Company on July 15, 2008 at a price of $1,000
per PIERS, plus accrued and unpaid dividends, if any, to the
redemption date. Accordingly, the PIERS have been reflected in the
accompanying financial statements at such liquidation or
redemption value.
6 of 33
<PAGE> 7
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
OPERATING PARTNERSHIP
The Operating Partnership commenced operations on April 15, 1993
and as of September 30, 1998, the Company together with the
Operating Partnership owned 100% of forty-nine enclosed regional
shopping centers (the "Wholly-Owned Centers"); 51% of GGP/Ivanhoe,
Inc. ("GGP/Ivanhoe"), 50% of Quail Springs and Town East and 51%
of GGP Ivanhoe III, Inc. ("GGP Ivanhoe III") (collectively the
"Property Joint Ventures") (see Note 4); 38.2% of the stock of
GGP/Homart, Inc. ("GGP/Homart") (see Note 3) and a 95% non-voting
preferred stock interest in General Growth Management, Inc.
("GGMI") (see Note 5). As of such date, GGP/Homart owned interests
in twenty-three shopping centers (the "Homart Centers"),
GGP/Ivanhoe owned 100% of The Oaks Mall and the Westroads Mall,
and GGP Ivanhoe III (through a wholly owned subsidiary) owned 100%
of six shopping centers.
As of September 30, 1998, the Company owned an approximate 61%
general partnership interest in the Operating Partnership
(excluding its preferred units of partnership interest as
discussed below). The remaining approximate 39% minority interest
in the Operating Partnership is held by limited partners that
include trusts for the benefit of the families of the original
stockholders who initially owned and controlled the Company and
subsequent contributors of properties to the Company. These
minority interests are represented by units of limited partnership
interest in the Operating Partnership (the "Units"). The Units can
be exchanged, with certain restrictions, for shares of the
Company's common stock on a one-for-one basis. Certain Units owned
by or for the benefit of certain officers and directors of the
Company and their families can be exchanged for cash, at the
Company's election, if such persons own, in the aggregate, 25% or
more of the outstanding common stock of the Company at the time of
the exchange. The holders of the Units also share equally with the
Company's stockholders on a per share basis in any distributions
by the Operating Partnership.
In connection with the issuance of the Depository Shares and in
order to enable the Company to comply with its obligations in
respect to the PIERS, the Operating Partnership Agreement was
amended to provide for the issuance to the Company of preferred
units of partnership interest (the "Preferred Units") which have
rights, preferences and other privileges, including distribution,
liquidation, conversion and redemption rights, that mirror those
of the PIERS. Accordingly, the Operating Partnership will be
7 of 33
<PAGE> 8
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
required to make all required distributions on the Preferred Units
prior to any distribution of cash or assets to the holders of the
Units. At September 30, 1998, 100% of the Preferred Units of the
Operating Partnership (337,500) were owned by the Company.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of the Company and the Operating Partnership consisting
of the forty-nine centers and the unconsolidated investments in
GGP/Homart, GGMI, GGP/Ivanhoe, Quail Springs Mall, Town East Mall
and GGP Ivanhoe III. All significant intercompany balances and
transactions have been eliminated.
In the opinion of management, all adjustments (consisting of
normal recurring adjustments) necessary to present fairly the
financial position of the Company as of September 30, 1998 and the
results of operations for the three and nine months ended
September 30, 1998 and 1997 and cash flows for the nine months
ended September 30, 1998 and 1997 have been included.
The consolidated statements of operations for prior periods have
been reclassified to conform with current classifications with no
effect on results of operations.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share," ("Statement 128") which
became effective for both interim and annual financial statement
periods ending after December 15, 1997. As required by Statement
128, the Company adopted the new standards for computing and
presenting earnings per share at the end of 1997, and has
presented all per share data for 1998 and for all prior periods
presented based on the computational methods specified in the
statement.
Basic per share amounts are based on the weighted average of
common shares outstanding of 35,822,027 for 1998 and 31,605,784
for 1997. Diluted per share amounts are based on the total number
of weighted average common shares and dilutive securities (stock
options) outstanding of 36,022,161 for 1998 and 31,761,051 for
1997. The effect of the issuance of the PIERS is anti-dilutive
with respect to the Company's calculation of diluted earnings per
share for the three and nine months ended September 30, 1998 and
therefore has been excluded as specified by Statement 128. The
outstanding Units have been excluded from the diluted earnings per
share
8 of 33
<PAGE> 9
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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.
NOTES RECEIVABLE - COMMON STOCK PURCHASE In April, May and
September, 1998 certain officers of the Company issued to the
Company an aggregate of $3,164 of notes in connection with their
exercise of options to purchase an aggregate of 166,000 shares of
the Company's common stock. The notes, which bear interest at the
rate of 6.25% per annum, are collateralized by the shares of
common stock issued upon exercise of such options, provide for
quarterly payments of interest and are payable to the Company on
demand.
The following are the reconciliations of the numerators and
denominators of the basic and diluted EPS.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Numerators:
Income before extraordinary item $ 18,040 15,982 44,636 75,062
Dividends on PIERS (6,117) -- (7,316) --
-------- -------- -------- --------
Income available to common shareholders
before extraordinary item - for basic and 11,923 15,982 37,320 75,062
diluted EPS
Extraordinary Item -- (695) -- (1,072)
-------- -------- -------- --------
Net income available to common
shareholders - for basic and diluted EPS $ 11,923 15,287 37,320 73,990
======== ======== ======== ========
Denominators:
Weighted average common shares 35,899 33,219 35,822 31,606
outstanding (in thousands) - for basic EPS
Effect of dilutive securities - options 91 60 200 155
-------- -------- -------- --------
Weighted average common shares
outstanding (in thousands) - for diluted EPS 35,990 33,279 36,022 31,761
======== ======== ======== ========
</TABLE>
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 (see Note 11). 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 (including amounts
recognized as receivable due to the recognition of minimum rents
on a straight-line basis as described above) which is estimated to
be uncollectible. Such allowances are reviewed periodically based
upon the recovery experience of the Company.
9 of 33
<PAGE> 10
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 2 CENTERMARK
On February 11, 1994, the Company acquired 40% of the stock of
CenterMark Properties, Inc. ("CenterMark") which owned 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.
The Company sold 25% of its interest in CenterMark on December 19,
1995 for a price of $72,500 which reduced the Company's ownership
to 30% of the outstanding CenterMark stock. Concurrently with the
sale of the stock, the Company also granted an option to the buyer
to purchase the remainder of the Company's CenterMark stock for
$217,500.
Pursuant to such option, the Company sold the remaining 30% of the
outstanding CenterMark stock in two transactions with $87,000
received on July 1, 1996 and $130,500 received on January 2, 1997.
A portion of the gain related to such sale was recognized in 1997.
NOTE 3 GGP/HOMART
The Company owns 38.2% of GGP/Homart with the remaining ownership
interests owned by four institutional investors. 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 the Company.
GGP/Homart currently owns interests in twenty-three regional
shopping malls. GGP/Homart has elected real estate investment
trust status for income tax purposes.
10 of 33
<PAGE> 11
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Summarized below is certain financial information for GGP/Homart for the
three and nine months ended September 30, 1998 and 1997.
GGP/HOMART, INC.
CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Minimum rents $ 30,293 27,388 88,139 76,577
Tenant recoveries 12,644 9,561 35,560 32,301
Percentage rents 107 701 1,650 1,950
Other 447 1,177 2,019 2,740
-------- -------- -------- --------
Total Revenues 43,491 38,827 127,368 113,568
Operating expenses (17,789) (15,988) (54,966) (47,498)
Depreciation (7,853) (7,034) (23,110) (19,987)
-------- -------- -------- --------
Operating Income 17,849 15,805 49,292 46,083
Interest expense, net (12,059) (11,149) (35,211) (31,844)
Equity in net income of unconsolidated
real estate affiliates 1,687 1,450 4,789 5,573
Gain on property sales 335 12,994 11,050 13,675
Income allocated to minority interest (166) (69) (459) (191)
-------- -------- -------- --------
Net Income $ 7,646 19,031 29,461 33,296
======== ======== ======== ========
</TABLE>
11 of 33
<PAGE> 12
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 4 PROPERTY ACQUISITIONS AND DEVELOPMENTS
WHOLLY-OWNED PROPERTIES
1998
On April 2, 1998 the Company acquired a 100% ownership interest in
Southwest Plaza located in Denver, Colorado. On May 8, 1998, the
Company completed the acquisition of 100% of the ownership
interest in the Northbrook Court Shopping Center located in
Northbrook (Chicago), Illinois. The aggregate purchase price for
Southwest Plaza and Northbrook Court, including approximately
$149,000 of assumed debt, was approximately $261,000.
On June 2, 1998, the Company acquired the U.S. retail property
portfolio (the "MEPC Portfolio") of MEPC plc, 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 owned the MEPC Portfolio. The Company acquired the MEPC
Portfolio for approximately $871,000 (less certain adjustments for
tenant allowances, construction costs, MEPC U.S. Subsidiary
liabilities and other items). The Company borrowed approximately
$830,000 to finance the purchase price for the stock, which was
paid in cash at closing as more fully described in Note 6. The
MEPC Portfolio consists 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 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 which was paid
in the form of 3,683,143 Operating Partnership Units 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
12 of 33
<PAGE> 13
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 acquired a 100% ownership
interest in the Spring Hill Mall in West Dundee (Chicago),
Illinois. The aggregate consideration paid by the Company was
approximately $124,000 (subject to prorations and certain
adjustments) which was paid in the form of approximately $32,000
in cash (through the Company's line of credit facility) and a new
10-year fixed-rate $92,000 mortgage from an independent third
party lender. The new mortgage bears interest at 6.60% per annum.
On September 18, 1998, the Company acquired Coastland Center in
Naples, Florida for approximately $114,500 in cash (subject to
prorations and certain adjustments). The aggregate consideration
paid was borrowed under the Company's line of credit.
On October 21, 1998 the Company acquired 100% of Mall St. Vincent
in Shreveport, Louisiana. The aggregate consideration of
approximately $26,400 was paid by issuing 200,052 redeemable Units
in the Operating Partnership (of which 88,871 were immediately
redeemed for cash (funded by the Company's line of credit) upon
demand of the holders of such Units) and by assuming approximately
$19,200 of fixed rate debt at an interest rate of 7.1% maturing in
December 2007.
In addition, in 1998 the Company, through an unconsolidated joint
venture, acquired the U.S. Prime Property, Inc. ("USPPI")
portfolio as described below.
The Company financed the forgoing acquisitions through a
combination of secured and unsecured debt, issuance of Operating
Partnership Units and the proceeds of the PIERS as described in
Note 1.
1997
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.
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 which consisted of
$45,100 of mortgage debt assumption, $11,500
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<PAGE> 14
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
of Operating Partnership Units (353,537 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.
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 of Operating Partnership Units
(518,833 units) and the assumption of approximately $15,600 of
mortgage debt.
The acquisitions completed as of September 30, 1998 were accounted
for utilizing the purchase method and accordingly, the results of
operations are included in the Operating Partnership's results of
operations from the respective dates of acquisition (for pro forma
effect, see Note 12).
DEVELOPMENTS
During 1996, the Company acquired three new development sites in
the following locations: Coralville (Iowa City), Iowa; Grand
Rapids, Michigan and Frisco (Dallas), Texas, respectively. Coral
Ridge Mall, located in Coralville, Iowa was substantially
completed and opened as scheduled in July of 1998. Construction of
the Grand Rapids Mall (Rivertown Crossings) commenced in December,
1997 and is scheduled to open in August of 1999. Construction of
Stonebriar Mall at the Bridges, located in Frisco, Texas commenced
in October of 1998 with an anticipated completion date in
the fall of 2000.
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
1998
On July 23, 1998, effective as of June 30, 1998, the Company,
through GGP Invanhoe III, acquired USPPI through a merger of a
wholly-owned subsidiary of GGP Ivanhoe III into USPPI (which
changed its name to GGP Ivanhoe II, Inc. ("GGP Ivanhoe II")). The
common stock of GGP Ivanhoe III, which will elect to be taxed as a
REIT, is owned 51% by the Company and 49% by a joint venture
partner. 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). The
acquisition was financed with a $392,000 interim loan bearing
interest at LIBOR plus 90 basis points which becomes due July 1,
1999, and capital contributions from the Company and the joint
venture partner in proportion to their respective stock ownership.
Pursuant to the GGP Ivanhoe III stockholders' agreement, the
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<PAGE> 15
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Company has contributed approximately $91,290 to GGP Ivanhoe III
(less certain interest and other credits). The Company's capital
contributions were funded primarily from proceeds from the
Company's 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
(Milwaukee), 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. The properties acquired are managed by GGMI.
The joint venture partner in GGP Ivanhoe III is an affiliate of
Ivanhoe Inc. of Montreal, Quebec, Canada ("Ivanhoe") and is also
the Company's joint venture partner in GGP/Ivanhoe (described
below). The Company and Ivanhoe share in the profits and losses,
cash flows and other matters relating to GGP Ivanhoe III, Inc. in
accordance with their respective ownership percentages except that
certain major operating and capital decisions (as defined in the
stockholders' agreement) require the approval of both
stockholders. Accordingly, the Company is accounting for GGP
Ivanhoe III using the equity method.
Additionally, the stockholders' agreement of GGP Ivanhoe III
contains provisions regarding buy-sell rights of the Company and
Ivanhoe. The stockholders' agreement further provides that Ivanhoe
has the right (exercisable in the next millennium on certain
specified dates) to require the Company to acquire Ivanhoe's
interest in GGP Ivanhoe III, Inc. for a purchase price determined
by reference to the then value of GGP Ivanhoe III. In the
alternative, the Company has the right to market the assets to
third parties rather than acquire Ivanhoe's interest. If the
Company acquires Ivanhoe's interest, the consideration can be paid
in cash, common stock of the Company, or a combination thereof as
unilaterally determined by the Company.
1997
As of September 17, 1997, GGP/Ivanhoe indirectly 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. Ivanhoe owns the remaining 49% ownership
interest in GGP/Ivanhoe.
The Company and Ivanhoe share in the profits and losses, cash
flows and other matters relating to GGP/Ivanhoe in accordance with
their respective ownership percentages except that certain major
operating and capital decisions (as defined in the stockholders'
agreement) require the approval of both stockholders. Accordingly,
the Company is accounting for GGP/Ivanhoe
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<PAGE> 16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
using the equity method. Additionally, the stockholders' agreement
of GGP/Ivanhoe contains provisions regarding buy-sell rights of
the Company and 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.
NOTE 5 GGMI
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 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 GGMI for approximately
$51,500 by exchanging 1,555,855 newly issued shares of common
stock of the Company and 453,791 Operating Partnership Units
(contributed by the Operating Partnership) for 100% of the
outstanding shares in GGMI. A loan of approximately $39,900 from
the Operating Partnership to GGP Management, Inc. was used to
purchase the Company's common stock used to acquire GGMI. The
interest only loan bears interest at 14% and matures in 2016. Upon
acquisition of GGMI, GGP Management, Inc. was 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 to its
stockholders 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. GGMI may make principal payments on the Operating
Partnership loan if it has sufficient cash flow. GGMI manages,
leases, and performs various other services for the Wholly-Owned
Centers, the Property Joint Ventures, GGP/Homart and other
properties owned by unaffiliated parties.
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<PAGE> 17
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
On June 16, 1997, GGMI acquired an office building in downtown
Chicago, Illinois to be used as the new corporate headquarters for
the Company. GGMI and Company personnel took initial occupancy of
approximately 70% of the building in April of 1998.
NOTE 6 MORTGAGE NOTES AND OTHER DEBT PAYABLE
Mortgage notes and other debt payable at September 30, 1998 and
December 31, 1997 consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
<S> <C> <C>
Fixed-Rate debt
Mortgage notes payable $2,028,644 1,173,042
---------- ----------
Variable-Rate debt
Mortgage notes payable 299,743 16,743
Credit facility 185,000 86,000
---------- ----------
Total Variable-Rate debt 484,743 102,743
---------- ----------
Total mortgage notes and other debt payable $2,513,387 1,275,785
========== ==========
</TABLE>
FIXED RATE DEBT
MORTGAGE NOTES PAYABLE
Mortgage notes payable consist primarily of fixed rate
non-recourse notes collateralized by individual or groups of
properties. Certain mortgage 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.
VARIABLE RATE DEBT
MORTGAGE NOTE PAYABLE
Variable mortgage notes payable consist primarily of a $100,000
loan collateralized by Northbrook Court, a $95,000 loan
collateralized by Coral Ridge Mall, and the $63,000 portion of the
MEPC acquisition financing as described below. The Coral Ridge
loan was replaced by an eleven year $82,000 6.5% permanent loan in
October, 1998. The remaining loans are generally short term in
nature and bear interst at LIBOR (5.775% at September 30, 1998)
plus 90 to 120 basis points. The Company expects to retire or
refinance such obligations when due.
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<PAGE> 18
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
ACQUISITION FINANCING
In June, 1998 the Company obtained a loan of approximately
$830,000 to acquire the MEPC portfolio as described in Note 4. The
Company repaid approximately $217,000 of this loan on June 10,
1998 from the net proceeds of the public offering of the PIERS as
described in Note 1. Subsequently, the Company fixed the annual
interest rate with respect to approximately $550,000 of such loan
at 6.7% per annum and the remainder (approximately $63,000) bears
interest at the rate of 6.55% per annum, which rate will be
adjusted monthly to equal LIBOR plus 0.9%. The loan is
collateralized by the MEPC Portfolio and matures on July 1, 1999.
CREDIT FACILITY
The Company's $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, which can unilaterally exercised by the
Company. 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. On September 30,
1998, the credit facility had an outstanding balance of $185,000.
CONSTRUCTION LOANS AND LETTERS OF CREDIT
Two construction loans were arranged in connection with the
development of two regional malls. These recourse loans were
repaid in 1997.
As of September 30, 1998 and December 31, 1997, the Operating
Partnership had outstanding letters of credit of $9,956 and $7,717
respectively, primarily in connection with special real estate
assessments and insurance requirements.
NOTE 7 EXTRAORDINARY ITEMS
The extraordinary items resulted from prepayment costs and
unamortized deferred financing costs related to the early
extinguishment of mortgage notes payable.
NOTE 8 DISTRIBUTIONS PAYABLE
On September 23, 1998 the Company declared a cash distribution of
$.47 per share that was paid on October 30, 1998 to stockholders
of record on October 5, 1998, totaling $16,874. In addition, a
distribution of $10,725 was paid to the limited partners of the
Operating Partnership. Concurrently, the
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<PAGE> 19
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Company declared the initial preferred stock dividend, for the
period from June 10, 1998 through September 30, 1998, in the
amount of $0.5588 per share, payable to preferred stockholders of
record on October 5, 1998 and paid on October 15, 1998. As
described in Note 1, such preferred stock dividend was in the same
amount as the Operating Partnership's distribution to the Company
of the same date with respect to the Preferred Units held by the
Company.
On June 23, 1998 the Company declared a cash distribution of $.47
per share that was paid on July 31, 1998 to stockholders of record
on July 15, 1998, totaling $16,871. In addition, a distribution of
$8,989 was paid to the limited partners of the Operating
Partnership.
On February 20, 1998, the Company declared a cash distribution of
$.47 per share that was paid on April 30, 1998 to stockholders of
record on April 16, 1998, totaling $16,864. In addition, a
distribution of $8,756 was paid to the limited partners of the
Operating Partnership.
On December 16, 1997, the Company declared a cash distribution of
$.45 per share that was paid on 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.
NOTE 9 MORTGAGE NOTE RECEIVABLE
During 1998 the Company advanced $50,000 to an unaffiliated
developer in the form of a mortgage loan (bearing interest at 10%
per annum) collateralized by such developer's ownership interest
in the Pierre Bossier Mall in Shreveport, Louisiana. In connection
with the acquisition of this mall on September 3, 1998 (Note 4),
this mortgage note and related interest due was collected.
NOTE 10 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.
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<PAGE> 20
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
The Company has entered into 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.
NOTE 11 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June of 1997, the Financial Accounting Standards Board ("FASB")
issued Statement No. 130, "Reporting Comprehensive Income" which
the Company has adopted as of January 1, 1998. The Company has no
significant items of other comprehensive income and therefore the
adoption of this standard has not had an impact on its financial
statements. In addition, the FASB issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" ("Statement 131"). Pursuant to the requirements of
Statement 131, the additional reporting and disclosure
requirements will be reflected in the Company's 1998 annual report
and, on a comparative basis, in the Company's 1999 interim
reports.
In March 1998, the Emerging Issues Task Force ("EITF") issued a
consensus opinion entitled "Accounting for Internal Costs Relating
to Real Estate Property Acquisitions" ("EITF 97-11"). EITF 97-11
was effective as of March 19, 1998 and provides that the internal
costs of identifying and acquiring operating property should be
expensed as incurred. The Company currently expects a nominal
increase in expenses in future periods for such expenditures that
were previously capitalized and reflected as property costs to be
depreciated over the useful life of the property acquired.
In April 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities" ("SOP 98-5") which is effective for fiscal
years beginning after December 15, 1998. SOP 98-5 requires that
the net unamortized balance of all start up costs and
organizational costs be written off as a cumulative effect of a
change in accounting principle and all future start-up costs and
organizational costs be expensed. As the Company does not have a
significant amount of such unamortized costs, the effect of
adopting this statement in 1999 is not expected to be material.
In May, 1998, the EITF issued a consensus opinion entitled
"Accounting for Contingent Rent in Interim Financial Periods"
("EITF 98-9"). EITF 98-9 is effective as of May 21, 1998 and
provides that rental income should be deferred in interim periods
by the lessor if the triggering events that create
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<PAGE> 21
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
contingent rent have not yet occurred. The Company had previously
accrued, on an interim basis, percentage rents based on the
prorated annual percentage rent estimated to be due from tenants.
The Company, as provided by EITF 98-9, has prospectively adopted
this consensus and will not record additional percentage rent in
1998 above amounts recognized in the six months ended June 30,
1998 ($5,013) until such triggering events occur. The effect of
EITF 98-9 is not expected to be significant on annual financial
results but, based upon the effective date of the consensus,
adoption of the consensus will cause a shift in the Company's
recognition, including amounts from the operations of GGP/Homart
and the Property Joint Ventures, of percentage rent from interim
quarters to the fourth quarter in 1998 and subsequent years.
On June 1, 1998 the FASB issued a Statement No. 133 "Accounting
for Derivative Instruments and Hedging Activities", effective for
fiscal years beginning after June 15, 1999. As the Company does
not currently have any investments in derivatives, the effect of
adoption of the standard when effective is not expected to have
any significant impact on the Company's financial statements.
NOTE 12 PRO FORMA FINANCIAL INFORMATION
Due to the impact of the public offering of the PIERS in 1998 as
described in Note 1 and the acquisitions during 1997 and 1998
described in Note 4, historical results of operations may not be
indicative of future results of operations. The pro forma
condensed consolidated statements of operations for the nine
months ended September 30, 1998 include adjustments for the public
offering of the PIERS in 1998 and the acquisition of 100% of
Southwest Plaza, Northbrook Court, Altamonte Mall, Pierre Bossier
Mall, Spring Hill Mall and Coastland Mall, the eight operating
properties in the MEPC Portfolio, and a 51% interest in the six
operating properties owned by GGP Ivanhoe II as if such
transactions occurred on January 1, 1998. The pro forma condensed
consolidated statements of operations for the nine months ended
September 30, 1997 include adjustments for the public offering of
the PIERS in 1998 and the acquisition of 100% of the fourteen
operating properties in 1998 and 51% of GGP Ivanhoe II and
adjustments for the acquisition of 100% of Market Place Shopping
Center, Century Plaza, Southlake Mall, Eden Prairie, Valley Hills,
a 51% interest in GGP/Ivanhoe, and a 50% interest in Town East as
if such transactions had occurred on January 1, 1997. The pro
forma information is based upon the historical consolidated
statements of operations excluding the non-recurring gain on the
sale of a portion of the CenterMark stock and extraordinary item
and
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<PAGE> 22
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
does not purport to present what actual results would have been
had the offerings, acquisitions, and related transactions, in
fact, occurred at the previously mentioned dates, or to project
results for any future period.
22 of 33
<PAGE> 23
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
PROFORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
--------- ------------
<S> <C> <C>
Total Revenues: $ 365,723 351,934
========= =========
Expenses:
Property operating $ 127,172 127,968
Management fees 3,706 3,691
Depreciation and amortization 69,290 64,457
--------- ---------
Total expenses 200,168 196,116
--------- ---------
Operating income 165,555 155,818
Interest expense, net (107,990) (114,209)
Equity in net income/(loss) of unconsolidated affiliates
GGP/Homart 11,170 12,723
Property Joint Ventures 4,867 2,023
General Growth Management, Inc. (7,663) 2,699
Minority interest in operating partnership (18,526) (17,141)
--------- ---------
Pro forma net income (a) 47,413 41,913
Pro forma preferred stock dividends (18,352) (18,352)
--------- ---------
Pro forma net income available to common stockholders $ 29,061 23,561
========= =========
Pro forma earnings per share - basic (b) $ 0.81 0.75
========= =========
Pro forma earnings per share - diluted (b) $ 0.81 0.74
========= =========
</TABLE>
(a) The pro forma adjustments include management fee and depreciation
modifications and adjustments to give effect to the public offering and
acquisitions activity described above.
(b) Pro forma basic earnings per share are based upon weighted average common
shares of 35,822,027 for 1998 and 31,605,786 for 1997. Pro forma diluted per
share amounts are based on the weighted average common shares and the effect
of dilutive securities (stock options) outstanding of 36,022,161 for 1998
and 31,761,051 for 1997.
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<PAGE> 24
GENERAL GROWTH PROPERTIES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
All references to numbered Notes are to specific footnotes to the
Consolidated Financial Statements of the Company included in this
quarterly report and which descriptions are hereby incorporated
herein by reference. The following discussion should be read in
conjunction with such Consolidated Financial Statements and Notes
thereto.
On September 30, 1998, the Company together with the Operating
Partnership owned 100% of the forty-nine Wholly-Owned Centers, 51%
of the stock of GGP/Ivanhoe, 50% of Quail Springs and Town East,
51% of the stock of GGP Ivanhoe II, 38.2% of the stock of
GGP/Homart, and a non-voting preferred stock ownership interest
(representing 95% of the equity interest) in GGMI (Note 5).
GGP/Homart owns interests in twenty-three shopping centers,
GGP/Ivanhoe owns interests in two shopping centers, and GGP
Ivanhoe II owns interests in six shopping 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 GGP/Homart, GGP/Ivanhoe,
GGP Ivanhoe II, GGMI, Quail Springs and Town East, the discussion
of results of operations below relates primarily to the revenues
and expenses of the Wholly-Owned Centers. The Wholly-Owned
Centers, the Homart Centers, GGP/Ivanhoe, GGP Ivanhoe II, Quail
Springs and Town East are collectively known as the "Company
Portfolio".
The mall store and free standing store portions of the centers in
the Company Portfolio which were not currently undergoing
redevelopment on September 30, 1997 had an occupancy of
approximately 84.5%. On September 30, 1998, the mall store and
freestanding store portions of the centers in the Company
Portfolio which are not currently undergoing redevelopment were
approximately 87.6% occupied, which is an increase of 3.1% over
1997.
Comparable mall store sales are sales of those tenants that were
open the previous 12 months. Therefore, comparable mall store
sales in the nine months ended September 30, 1998 are of those
tenants that were operating in the nine months ended September 30,
1997. Mall store annualized sales averaged $289 per square foot
for the Company Portfolio in the nine months ended September 30,
1998. In the nine months ended September 30, 1998, total mall
store sales for the Company Portfolio increased by 11.2% over the
same period in 1997, and comparable mall store sales increased by
5.0% over 1997.
The average mall store rent per square foot from leases that
expired in the nine months ended September 30, 1998 was $23.90.
The Company Portfolio benefited from increasing rents inasmuch as
the average mall store rent per
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<PAGE> 25
GENERAL GROWTH PROPERTIES, INC.
square foot on new and renewal leases executed during 1998 was
$27.24 or $3.34 per square foot above the average for expiring
leases.
FORWARD-LOOKING INFORMATION
Forward looking statements contained in this Quarterly Report on
Form 10-Q 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 or 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 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, changes in applicable laws, rules and
regulations (including changes in tax laws), and the continued
availability of financing in the amounts and the terms necessary
to support the Company's future business.
RESULTS OF OPERATIONS OF THE COMPANY
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Total revenues for the three months ended September 30, 1998 were
$113.1 million, which represents an increase of $38.9 million or
approximately 52.4% from $74.2 million in the three months ended
September 30, 1997. Substantially all of the increase is from
acquisitions completed during 1997 and 1998. Minimum rent for the
three months ended September 30, 1998 increased by $28.5 million
or 65.7% from $43.4 million in the comparable period in 1997 to
$71.9 million. The acquisition of properties generated a $26.2
million increase in minimum rents. Expansion space, specialty
leasing and a combination of occupancy, rental charges and
allowance reserve adjustments at the comparable centers accounted
for the remaining increase in minimum rents.
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<PAGE> 26
GENERAL GROWTH PROPERTIES, INC.
Tenant recoveries increased by $12 million or 47.8% from $25.1
million to $37.1 million for the three months ended September 30,
1998. Substantially all of the increase was generated by
properties which were recently acquired. For the three months
ended September 30, 1998, percentage rents decreased to $1.2
million from $2.2 million in 1997. Acquisitions contributed an
increase of approximately $.4 million in percentage rent. The
effect of the adoption of EITF Consensus 98-9 (Note 11) reduced
overage rents by approximately $1.3 million from the amount that
would have been recognized under the Company's previous accounting
policy for the three months ended September 30, 1998.
Total expenses, including depreciation and amortization, increased
by approximately $24 million, from $40.2 million in the three
months ended September 30, 1997 to $64.2 million in the three
months ended September 30, 1998. For the three months ended
September 30, 1998, property operating expenses increased by $8.9
million or 46.1% from $19.3 million in 1997 to $28.2 million in
the third quarter of 1998, substantially all of which is
attributable to new acquisitions. Depreciation and amortization
increased by $10.8 million over the same period in 1997.
Approximately $.8 million of the increase in depreciation and
amortization was generated at comparable centers. The remaining
$10 million was from newly acquired properties. Management fees to
affiliates and general and administrative expenses together were
approximately $.5 million higher than in the three months ended
September 30, 1997.
Net interest expense for the three months ended September 30, 1998
was $29.5 million, an increase of $11.2 million or 61.2% from
$18.3 million in the three months ended September 30, 1997. The
acquisition of new properties was responsible for substantially
all of such increase.
Equity in net income of unconsolidated affiliates in the three
months ended September 30, 1998 decreased by approximately $2.7
million to $6.0 million in 1998, from $8.7 million in the three
months ended September 30, 1997. The Company's equity in the
earnings of GGP/Homart decreased approximately $4.4 million,
primarily due to approximately $13 million of gain recognized by
GGP/Homart on the sale of the Meridan Square Mall in September,
1997. The Company's ownership interest in GGMI resulted in a
decrease of $1.1 million, primarily due to lower fee income from
management and development activities in 1998. Property Joint
Ventures (see Note 1) accounted for an increase of approximately
$2.9 million due primarily to the acquisitions of the Town East
Mall and the two malls by GGP/Ivanhoe in 1997 as described more
fully in Note 4.
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Total revenues for the nine months ended September 30, 1998 were
$282.1 million, which represents an increase of $72.9 million or
approximately 34.8% from $209.2 million in the nine months ended
September 30, 1997.
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GENERAL GROWTH PROPERTIES, INC.
Approximately $67.2 million or 92% of the increase is from
acquisitions completed during 1997 and 1998. Increased revenues at
comparable properties (properties owned at all times during
current and prior periods) accounted for the remaining $5.7
million or 8% of the increase. Minimum rent for the nine months
ended September 30, 1998 increased by $53.3 million or 42.6% from
$125.1 million in 1997 to $178.4 million. The acquisition of
properties generated a $41.3 million increase in minimum rents.
Expansion space, specialty leasing and a combination of occupancy,
rental charges and allowance reserve adjustments at the comparable
centers accounted for the remaining increase in minimum rents.
Tenant recoveries increased by $19.8 million or 28.2% from $70.2
million to $90.0 million for the nine months ended September 30,
1998. Approximately $1.7 million of the increase is attributable
to higher recoverable operating expenses at the comparable malls.
The remaining $18.1 million increase was generated by properties
which were recently acquired. For the nine months ended September
30, 1998, percentage rents increased to $6.2 million from $5.9
million in 1997. Acquisitions yielded approximately a $1.3 million
increase in percentage rent. The effect of the adoption of EITF
Consensus 98-9 (Note 11) reduced percentage rents by approximately
$1.3 million from the amount that would have been recognized under
the Company's previous accounting policy for the nine months ended
September 30, 1998. Other revenues decreased by approximately $.6
million or 13% to $4.0 million for the nine months ended September
30, 1998 from $4.6 million in 1997, substantially all of which
related to comparable centers.
Total expenses, including depreciation and amortization, increased
by approximately $40.4 million, from $112.5 million in the nine
months ended September 30, 1997 to $152.9 million in the nine
months ended September 30, 1998. For the nine months ended
September 30, 1998, property operating expenses increased by $16.4
million or 30.4% from $53.9 million in 1997 to $70.3 million in
1998. Of this increase, recent acquisitions accounted for $14.8
million, while higher recoverable operating costs at comparable
centers contributed the remaining $1.6 million. Depreciation and
amortization increased by $16.8 million over the same period in
1997. Approximately $4.6 million of the $16.8 million increase in
depreciation and amortization was generated at comparable centers.
The remaining $12.2 million was from newly acquired or developed
properties. Management fees to affiliates and general and
administrative expenses together were approximately $1.2 million
higher than in the nine months ended September 30, 1997.
Net interest expense for the nine months ended September 30, 1998
was $70.5 million, an increase of $19 million or 36.9% from $51.5
million in the nine months ended September 30, 1997, substantially
all due to indebtedness incurred in connection with the
acquisition of new properties in 1997 and 1998.
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GENERAL GROWTH PROPERTIES, INC.
Equity in net income of unconsolidated affiliates in the nine
months ended September 30, 1998 decreased by approximately $7.2
million to $6.7 million in 1998, from $13.9 million in the nine
months ended September 30, 1997. The Company's ownership interest
in GGMI resulted in a decrease of $9.5 million, primarily due to
the write-off of certain unamortized third-party management
contract costs recorded at the acquisition of GGMI which relates
to contracts terminated in the first quarter of 1998. The
Company's equity in the earnings of GGP/Homart decreased
approximately $1.6 million, primarily due to gain recognized on
the September, 1997 sale of the Meridan Square Mall partially
offset by the gain recognized on its May, 1998 sale of its
interest in the Rolling Oaks Mall. Property Joint Ventures (see
Note 1) accounted for an increase of approximately $3.9 million
due primarily to the acquisitions of the Town East Mall and the
two malls by GGP/Ivanhoe in 1997 as described more fully in Note
4.
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY
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, unsecured
Company level debt or secured loans collateralized by individual
shopping centers. In such regard, subsequent to September 30,
1998, the Company obtained replacement first mortgage financing of
approximately $318 million for existing loans of approximately
$254 million secured by certain individual properties in the
Company Portfolio. In addition, the Company established a $200
million unsecured credit facility in August of 1997 which matures
on July 31, 1999 excluding a one-year extension option. On
September 30, 1998, the credit facility had an outstanding balance
of $185 million. This facility provided all of the funds necessary
to complete the development of Coralville Mall in Iowa City, Iowa
and, with planned financing and refinancing of certain existing
malls, traditional construction financing and current operating
cash flow, is expected to provide the funds to complete the malls
under development in Grand Rapids, Michigan and Dallas, Texas and
to fund certain other non-recurring capital expenditures or
expansions that are currently under construction or being
contemplated and/or evaluated. The Company acquired Southwest
Plaza in Denver, Colorado in April 1998, Northbrook Court in
Northbrook (Chicago), Illinois in May 1998, Altamonte Mall in
Altamonte Springs (Orlando), Florida in July 1998, Pierre Bossier
Mall in Bossier City (Shreveport), Louisiana, Spring Hill Mall in
West Dundee (Chicago), Illinois, and Coastland Mall in Naples,
Florida in September, 1998 and two portfolios of malls in June
1998 as more fully described in Note 4. As more fully described in
Notes 4 and 6, such acquisitions were funded by cash and cash
equivalents on hand, short and long term debt financing, issuance
of
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<PAGE> 29
GENERAL GROWTH PROPERTIES, INC.
additional Units, joint venture contributions and a public
offering of convertible preferred stock, as described in Note 1.
In addition, subsequent to September 30, 1998 the Company acquired
a 100% interest in Mall St. Vincent for $26.4 million as more
fully described in Note 4, which note is fully incorporated herein
by reference.
Net cash provided by operating activities was $112.6 million in
the first nine months of 1998, an increase of $87.6 million from
$25.0 million in the same period in 1997. Net income before
allocations to the minority interest decreased $51.3 million which
was represented primarily by the $58.6 million gain on the partial
sale of CenterMark recognized in 1997. The other significant
change in cash provided by operating activities was a $28.2
million net change in cash flows from operating activities related
to accounts payable and accrued expenses in 1998.
Net cash used by investing activities was $1,420 million in 1998
compared to $137.9 million of cash used in 1997. Cash flow from
investing activities was impacted by acquisitions (including
liabilities assumed at acquisition), development and improvements
to real estate properties, which caused a decrease in cash of
approximately $1,295 million in 1998. The proceeds from the sale
of CenterMark provided funds of $130.5 million in 1997. No such
sale proceeds were realized in 1998.
Financing activities contributed cash of $1,307 million in 1998,
compared to a source of cash of $103 million in 1997. As described
in Note 1, the Company completed a public offering of preferred
stock in June, 1998. This public offering resulted in net proceeds
of approximately $322.8 million which was primarily used to reduce
acquisition related financing and amounts drawn on the Company's
line of credit. Such payments are reflected in the increase in the
use of cash for financing activities for principal payments on
mortgage notes and other debt in 1998 as compared to 1997. An
additional major contributing factor of cash from financing
activity is financing from mortgages and acquisition debt which
had a positive impact of $1,671 million in 1998 versus
approximately $332 million in 1997. The additional financing was
used to fund the acquisitions and redevelopment of real estate
that was discussed above. The remaining use of cash was primarily
accounted for by increased distributions paid during the first
nine months of 1998.
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 affect
operating cash flow and, accordingly, 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
29 of 33
<PAGE> 30
GENERAL GROWTH PROPERTIES, INC.
or renewal leases; (iii) changes in occupancy rates at existing
centers and procurement of leases for newly developed centers; and
(iv) the Company's share of operating cash flow generated by GGMI,
the Property Joint Ventures, GGP/Homart and distributions
therefrom, less oversight costs and debt service on additional
loans that were incurred to finance a portion of the cash purchase
price for GGP/Homart's stock and other recent company
acquisitions. The Company anticipates that its operating cash
flow, and potential new debt or equity from future offerings, new
financings or refinancings will provide adequate liquidity to
conduct its operations, fund general and administrative expenses,
fund operating costs and interest payments and allow distributions
to the Company's preferred and common stockholders in accordance
with the requirements of the Internal Revenue Code of 1986, as
amended, for continued qualification as a real estate investment
trust and to avoid any Company level federal income or excise tax.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
As more fully described in Note 11, the FASB, EITF and the AICPA
have issued certain statements which are effective for the current
or subsequent year. The Company does not expect a significant
impact on its annual reported operations due to the application of
such new statements.
YEAR 2000 READINESS DISCLOSURES
The Year 2000 problem results from the use of a two digit year
date instead of a four digit date in the programs that operate
computers (information technology or "IT" systems) and other
devices (i.e. "non-IT" systems such as elevators, utility
monitoring systems and time clocks that use computer chips).
Systems with a Year 2000 problem have programs that were written
to assume that the first two digits for any date used in the
program would always be "19". Unless corrected, this assumption
may result in problems when the century date occurs. On that date,
these computer programs likely will misinterpret the date January
1, 2000 as January 1, 1900. This could cause systems to
incorrectly process critical financial and operational
information, generate erroneous information or fail altogether.
The Year 2000 issue effects almost all companies and
organizations.
THE COMPANY'S STATE OF READINESS:
The Company recently upgraded its major information systems
including its databases and primary accounting software which,
when fully operational by the end of 1998, are all Year 2000
compliant. These upgrades were performed primarily for the purpose
of routine improvements to the Company's information systems.
These upgrades were initiated in advance of any concern for the
Year 2000 issue. The Company is in the process of evaluating
several other smaller non-IT systems (i.e. time keeping systems,
elevators, etc.) to verify that they are Year 2000 compliant. In
addition, the Company has formed a Year 2000 Committee that
includes senior personnel from most areas of the Company.
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<PAGE> 31
GENERAL GROWTH PROPERTIES, INC.
These people are charged with the duty of determining the extent
of the Company's exposure and taking the appropriate action to
minimize any impact on the Company's operations. The non-IT
systems evaluation process is expected to be completed by early
1999. If these non-IT systems are found to be not Year 2000
compliant, the appropriate upgrades or replacements will be
purchased. The cost of any upgrades that may be required is not
anticipated to be significant. In addition, the Company is
communicating with its customers, tenants, 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's exposure is widely spread,
with no known major direct exposure.
COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUE:
As the Company's IT systems Year 2000 compliance issues have
already been addressed, the Company does not expect to incur any
significant additional costs regarding its IT systems due to the
Year 2000 issue. Costs to specifically remediate non-IT systems
that are non Year 2000 compliant are not expected to be material.
RISKS RELATING TO THE YEAR 2000 ISSUE AND CONTINGENCY PLANS:
Although the Company is not currently aware of any specific
significant Year 2000 issues involving third-parties, the Company
believes that its most significant potential risk relating to the
Year 2000 issue is in regard to such third parties. For example,
the Company believes there could be failure in the information
systems of certain service providers that the Company relies upon
for electrical, telephone and data transmission and banking
services. The Company believes that any service disruption with
respect to these providers due to a Year 2000 issue would be of a
short-term nature. The Company has existing back-up systems and
procedures, developed primarily for natural disasters, that could
be utilized on a short-term basis to address any service
interruptions. In addition, with respect to tenants, a failure of
their information systems could delay the payment of rents or even
impair their ability to operate. These tenant problems are likely
to be isolated and would likely not impact the operations of any
particular mall or the Company as a whole. While it is not
possible at this time to determine the likely impact of any of
these potential problems, the Company will continue to evaluate
these areas and develop additional contingency plans, as
appropriate. Therefore, although the Company believes that its
Year 2000 issues have been addressed and that suitable remediation
and/or contingency procedures will be in place by December 31,
1999, there can be no assurance that Year 2000 issues will not
have a material adverse effect on the Company's results of
operations or financial condition.
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<PAGE> 32
GENERAL GROWTH PROPERTIES, INC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - See Exhibit Index
(b) Reports on Form 8-K
The following reports on Form 8-K have been filed by the Company
during the quarter covered by this report:
1. Current report on Form 8-K dated July 21, 1998 as amended by
Form 8-K/A dated September 29, 1998 describing under Item 2
the acquisition of Altamonte Mall and containing financial
statements and pro forma information concerning the recent
acquisitions of the Company.
2. Current report on Form 8-K dated July 23, 1998 describing
under Item 2 the acquisition of the USPPI Portfolio. The
report incorporated by reference the financial statements and
pro forma information filed in the Company's 8-K/A dated June
2, 1998.
3. Current report on Form 8-K dated September 30, 1998 as amended
by Form 8-K/A dated November 4, 1998 describing under Item 2
the acquisition of Spring Hill Mall and containing financial
statements and pro forma information concerning the recent
acquisitions of the Company.
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<PAGE> 33
GENERAL GROWTH PROPERTIES, INC.
SIGNATURE
Pursuant to the requirements 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.
(Registrant)
Date: November 12, 1998 by: /s/: Bernard Freibaum
-----------------------------------
Bernard Freibaum
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
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<PAGE> 34
GENERAL GROWTH PROPERTIES, INC.
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)
S-1
<PAGE> 35
GENERAL GROWTH PROPERTIES, INC.
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)
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)
2(n) Stock Purchase Agreement dated as of April 17, 1998 and amended June
2, 1998, among MEPC PLC, MEPC North American Properties Limited, U.K.-American
Holdings Limited and GGP Limited Partnership. (16)
2(o) Purchase and Sale Agreement dated May 8, 1998, among Grosvenor
International Limited, P.I.C. Investments, Northbrook Court I L.L.C. and
Northbrook Court II L.L.C. (17)
2(p) Merger Agreement dated May 14, 1998, among GGP Limited Partnership,
GGP Acquisition L.L.C. and U.S. Prime Property, Inc. (17)
2(q) Sale and Contribution Agreement dated April 2, 1998, between Southwest
Properties Venture and GGP Limited Partnership. (18)
2(r). Contribution and Exchange Agreement dated as of July 10, 1998 (the
"Contribution Agreement") among Nashland Associates, HRE Altamonte, Inc.,
Altamonte Springs Mall L.P., and GGP Limited Partnership. (21)
2(s). 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). (22)
2(t).Purchase and Sale Agreement dated as of the 18th day of September,
1998 by and between Coastland Center Joint Venture (seller) and Coastland
Center, L.P. (purchaser). (23)
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.(15)
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<PAGE> 36
GENERAL GROWTH PROPERTIES, INC.
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, GGPLP
and Peter Leibowits.(15)
4(e) Form of Indenture.(12)
4(f) Certificate of Designations, Preferences and Rights of 7.25% Preferred
Equity Redeemable Stock, Series A. (20)
4(g) Redemption Rights Agreement dated April 2, 1998, among GGP Limited
Partnership, General Growth Properties, Inc. and Southwest Properties Venture.
(17)
4(h) Indenture and Servicing Agreement dated as of November 25, 1997, among
the Issuers named therein, LaSalle National Bank, as Trustee, and Midland Loan
Services, L.P., as Servicer (the "Indenture Agreement"). (18)
4(i) Form of Note pursuant to the Indenture Agreement. (18)
4(j) Mortgage, Deed of Trust, Security Agreement, Assignment of Leases and
Rents, Fixture Filing and Financing Statement, date and effective as of November
25, 1997, among the Issuers, the Trustee and the Deed Trustees named therein.
(18)
10(a) Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership. (19)
10(b) Rights Agreement between the Company and the Limited Partners of the
Operating Partnership.(6)
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GENERAL GROWTH PROPERTIES, INC.
10(c) Real Estate Management Agreement dated July 1, 1996, between General
Growth Management, Inc. and GGP Limited Partnership.(13)
10(d)* General Growth Properties, Inc. 1993 Stock Incentive Plan, as
amended.(14)
10(e) Form of Amended and Restated Agreement of Partnership for each of the
Property Partnerships.(3)
10(f) Sale-Purchase Agreement dated as of December 30, 1992, by and between
Equitable and the Company.(3)
10(g) Form of Indemnification Agreement between the Operating Partnership,
Martin Bucksbaum, Matthew Bucksbaum, Mall Investment L.P. and M. Bucksbaum
Company. (3)
10(h) Form of Registration Rights Agreement between the Company and the
Bucksbaums. (3)
10(i) Form of Registration Rights Agreement between the Company and certain
trustees for the IBM Retirement Plan. (3)
10(j) Form of Incidental Registration Rights Agreement between the Company,
Equitable, Frank Russell and Wells Fargo.(3)
10(k) Form of Letter Agreements restricting sale of certain shares of
Common Stock.(3)
10(l)* Letter Agreement dated October 14, 1993, between the Company and
Bernard Freibaum.(6)
10(m)* Form of Option Agreement between the Company and certain Executive
Officers.(13)
(*) A compensatory plan or arrangement required to be filed.
27 Financial Data Schedule
================================================================================
(1) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated January 5, 1996.
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<PAGE> 38
GENERAL GROWTH PROPERTIES, INC.
(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-8 (No. 333-28449) dated June 3, 1997.
(15) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
(16) Previously filed as an exhibit to the Company's current report on Form
8K dated June 17, 1998.
(17) Previously filed as an exhibit to the Company's current report on Form
8K dated May 26, 1998.
(18) Previously filed as an exhibit to the Company's current report on Form
8K/A dated June 2, 1998.
(19) Previously filed as an exhibit to the Company's current report on Form
10-Q dated May 14, as amended May 21, 1998.
S-5
<PAGE> 39
GENERAL GROWTH PROPERTIES, INC.
(20) Previously filed as an exhibit to the Company's current report on Form
8-K dated August 7, 1998.
(21) Previously filed as an exhibit to the Company's current report on Form 8K
dated August 5, 1998.
(22) Previously filed as an exhibit to the Company's current report on Form
8-K dated September 30, 1998.
(23) Previously filed as an exhibit to the Company's current report on Form
8-K dated October 5, 1998.
S-6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FINANCIAL STATEMENTS INCLUDED IN ITS REPORT ON FORM 10-Q FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000895648
<NAME> GENERAL GROWTH PROPERTIES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
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