<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 June 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 August 12,
1998 was 35,896,572.
<PAGE> 2
GENERAL GROWTH PROPERTIES, INC.
-------------------------------
INDEX
-------
<TABLE>
<CAPTION>
PAGE
----------
NUMBER
----------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets
as of June 30, 1998 and December 31, 1997........................ 3
Consolidated Statements of Operations for the three and six
months ended June 30, 1998 and 1997.............................. 4
Consolidated Statements of Cash Flows
for the six months ended June 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..................... 22
Liquidity and Capital Resources of the Company.................... 26
Item 3: Quantitative and Qualitative Disclosures about Market Risk.... 28
PART II OTHER INFORMATION
Item 2: Changes in Securities and Use of Proceeds.................... 28
Item 4: Submission of Matters to a Vote of Security Holders.......... 29
Item 6: Exhibits and Reports on Form 8-K............................. 29
SIGNATURES............................................................ 30
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, 1998 DECEMBER 31, 1997
-------------- ------------------
<S> <C> <C>
Investment in Real Estate:
Land $ 312,452 194,131
Buildings and equipment 2,657,295 1,601,351
Less accumulated depreciation (259,214) (233,295)
Developments in progress 102,569 68,003
----------- -----------
Net property and equipment 2,813,102 1,630,190
Investment in GGP/Homart 205,221 203,142
Investment in Property Joint Ventures 108,915 90,624
----------- -----------
Net Investment In Real Estate 3,127,238 1,923,956
Cash and cash equivalents 29,913 25,898
Tenant accounts receivable, net 41,913 34,849
Deferred expenses, net 51,960 42,343
Investment in and note receivable from
General Growth Management, Inc. 83,725 61,588
Mortgage note receivable 50,061 --
Prepaid expenses and other assets 10,079 9,085
----------- -----------
$ 3,394,889 2,097,719
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes and other debts payable $ 2,140,895 1,275,785
Distributions payable 25,860 24,421
Accounts payable and accrued expenses 138,690 36,540
----------- -----------
2,305,445 1,336,746
----------- -----------
Minority interest in Operating Partnership 262,519 262,468
----------- -----------
Commitments and contingencies
Convertible Preferred Stock, $1,000 liquidation value;
5,000,000 shares authorized; 337,500
and none issued and outstanding at
June 30, 1998 and December 31, 1997,
respectively 337,500 --
----------- -----------
Stockholders' Equity:
Common stock; $0.10 par value;
210,000,000 shares authorized; 35,896,572
shares issued and outstanding at June 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 738,352 738,630
Retained earnings (deficit) (249,477) (239,139)
Treasury stock, at cost; none and 134,477 shares
held at June 30, 1998 and December 31, 1997,
respectively -- (4,563)
Notes receivable - common stock purchase (3,040) --
----------- -----------
Total Stockholders' Equity 489,425 498,505
----------- -----------
$ 3,394,889 2,097,719
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 4
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 1998 AND 1997
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues:
Minimum rents $ 56,012 42,488 106,519 81,663
Tenant recoveries 27,261 23,531 52,852 45,153
Percentage rents 2,580 1,585 5,013 3,658
Other 1,441 1,197 2,371 2,790
Fee Income 1,324 893 2,310 1,758
-------- -------- -------- --------
Total Revenues 88,618 69,694 169,065 135,022
-------- -------- -------- --------
Expenses:
Real Estate taxes 7,117 4,940 12,901 9,744
Management fee to affiliate 985 816 1,860 1,566
Property operating 19,948 17,865 42,057 34,596
Provision for doubtful accounts 121 930 729 1,562
General and Administrative 997 862 2,143 1,702
Depreciation and amortization 15,132 12,013 29,099 23,175
-------- -------- -------- --------
Total Expenses 44,300 37,426 88,789 72,345
-------- -------- -------- --------
Operating Income 44,318 32,268 80,276 62,677
Interest expense, net (23,088) (17,785) (40,971) (33,224)
Equity in net income/(loss) of unconsolidated affiliates:
GGP/Homart 6,601 3,627 8,336 5,451
Property Joint Ventures 593 311 1,634 638
General Growth Management, Inc. (1,291) (598) (9,260) (871)
Net gain on sales -- -- -- 58,647
-------- -------- -------- --------
Income before extraordinary item & allocation to
minority interest 27,133 17,823 40,015 93,318
Income allocated to minority interest (8,992) (6,696) (13,419) (34,238)
-------- -------- -------- --------
Income before extraordinary item 18,141 11,127 26,596 59,080
Extraordinary Item (a) -- -- -- (377)
-------- -------- -------- --------
Net Income $ 18,141 11,127 26,596 58,703
-------- -------- -------- --------
Convertible Preferred Stock Dividends (1,199) -- (1,199) --
-------- -------- -------- --------
Net income available to common stockholders $ 16,942 11,127 25,397 58,703
======== ======== ======== ========
Earnings before extraordinary item per share-basic $ .47 .36 .71 1.92
======== ======== ======== ========
Earnings before extraordinary item per share-diluted $ .47 .36 .71 1.91
======== ======== ======== ========
Net earnings per share - basic $ .47 .36 .71 1.91
======== ======== ======== ========
Net earnings per share - diluted $ .47 .36 .71 1.90
======== ======== ======== ========
Distributions declared per share $ .47 .45 .47 .45
======== ======== ======== ========
Weighted average common shares
outstanding - basic (in thousands) 35,877 30,781 35,783 30,785
======== ======== ======== ========
Weighted average common shares
outstanding - diluted (in thousands) 36,047 30,831 35,997 30,880
======== ======== ======== ========
</TABLE>
(a) Charges related to early retirement of debt.
The accompanying notes are an integral part of these
consolidated financial statements.
4 of 30
<PAGE> 5
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 26,596 58,703
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest 13,419 34,238
Net gain on sales -- (58,647)
Extraordinary items - related to early retirement of debt -- 377
Equity in net income of unconsolidated affiliates (710) (5,218)
Provision for doubtful accounts 729 1,562
Depreciation 25,919 21,391
Amortization 3,180 1,784
Net Changes:
Tenant accounts receivable (7,793) (2,937)
Prepaid expenses and other assets (994) 1,415
Accounts payable and accrued expenses 6,598 (15,010)
----------- -----------
Net cash provided by (used in) operating activities 66,944 37,658
----------- -----------
Cash flows from investing activities:
Acquisition/development of real estate and improvements
and additions to properties (923,787) (146,543)
Increase in investments in property joint ventures (19,207) (33,407)
Increase in mortgage notes receivable, net (50,061) --
Change in notes receivable from General Growth Management, Inc. (27,764) (19,348)
Proceeds received from sale of CenterMark stock -- 130,500
Distributions received from GGP/Homart stock 6,257 6,077
Distributions received from property joint ventures 2,550 --
Increase in deferred expenses (10,354) (3,796)
----------- -----------
Net cash provided by (used in) investing activities (1,022,366) (66,517)
----------- -----------
Cash flows from financing activities:
Cash distributions paid to common stockholders (32,893) (26,853)
Cash distributions paid to minority interest (17,148) (15,818)
Proceeds from exercised options -- 248
Proceeds of preferred stock issuance, net of issuance costs 322,604 --
Proceeds of common stock issuance, net of issuance costs -- (3)
Proceeds from issuance of mortgage / other notes payable 1,141,000 187,526
Principal payments on mortgage notes and other debt payable (450,666) (124,143)
Purchase of treasury stock (1,136) (1,179)
Capital contribution from minority interest 119 --
Prepayment penalty on early retirement of debt -- (377)
Increase in deferred financing costs (2,443) --
----------- -----------
Net cash provided by (used in) financing activities 959,437 19,401
----------- -----------
Net change in cash and cash equivalents 4,015 (9,458)
Cash and cash equivalents at beginning of year 25,898 15,947
----------- -----------
Cash and cash equivalents at end of period $ 29,913 6,489
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid $ 45,517 43,666
Interest capitalized 2,806 2,718
=========== ===========
Non-cash investing activities:
Operating partnership units exchanged for treasury stock $ 1,875 --
Debt assumed as consideration to seller for purchase of real estate 174,026 61,863
Notes receivable issued for exercised stock options 3,040 --
Partnership units and common stock issued as consideration for purchase
of real estate 18,437 11,490
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 6
GENERAL GROWTH PROPERTIES, INC.
NOTE 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 $322,600, net of approximately $14,900 of
issuance costs, which were utilized to fund the acquisitions as
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
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<PAGE> 7
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
redemption date. Accordingly, the PIERS have been reflected in the
accompanying financial statements at such liquidation or redemption
value.
OPERATING PARTNERSHIP
The Operating Partnership commenced operations on April 15, 1993 and as
of June 30, 1998, the Company together with the Operating Partnership
owned 100% of forty-five 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 II, Inc. ("GGP
Ivanhoe II") (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 II
owned 100% of six shopping centers.
As of June 30, 1998, the Company owned an approximate 65% general
partnership interest in the Operating Partnership. The remaining
approximate 35% minority interest in the Operating Partnership is held
by limited partners that include trusts for the benefit of families of
the original stockholders which initially owned and controlled the
Company and by subsequent contributors of properties to the Company and
is represented by units of limited partnership interest ("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
they own 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 stockholders on a per share basis in any distributions by the
Operating Partnership.
In connection with the issuance of the Depositary 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 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 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 June 30, 1998, 100% of the Preferred Units (337,500) were
owned by the Company.
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<PAGE> 8
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of the Company and the Operating Partnership consisting of the
forty-five centers and the unconsolidated investments in GGP/Homart,
GGMI, GGP/Ivanhoe, Quail Springs Mall, Town East Mall and GGP Ivanhoe
II. 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 June 30, 1998 , and the results of operations for
the three and six months ended June 30, 1998 and 1997 and cash flows for
the six months ended June 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 35,783,276 for 1998 and 30,784,649 for 1997.
Diluted per share amounts are based on the weighted average common
shares and the effect of dilutive securities (stock options) outstanding
of 35,996,404 for 1998 and 30,880,409 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 six months
ended June 30, 1998 and therefore has been excluded as specified by
Statement 128. In addition, options to purchase 227,500 shares of
common stock at 36.19 per share were outstanding during 1998 but were
not included in the computation of diluted earnings per share because
the options' exercise price was greater than the average market price of
the common shares and, therefore, the effect would by antidilutive. The
outstanding Units have been excluded from the diluted earnings per share
calculation as there would be no effect on the amounts since the
minority interests' share of income would also be added back to net
income.
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<PAGE> 9
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTES RECEIVABLE - COMMON STOCK PURCHASE
In April and May, 1998 certain officers of the Company issued to the
Company an aggregate of $3,040 of notes in connection with their
exercise of options to purchase an aggregate of 160,000 shares of
Company common stock. The notes, bearing interest at 6.25% per annum,
are collateralized by the 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Numerators:
Income before extraordinary item $18,141 11,127 26,596 59,080
Dividends on PIERS (1,199) -- (1,199) --
------- ------ ------ ------
Income available to common shareholders
before extraordinary item - for basic and
diluted EPS 16,942 11,127 25,397 59,080
Extraordinary Item -- -- -- (377)
------- ------ ------ ------
Net income available to common
shareholders - for basic and diluted EPS $16,942 11,127 25,397 58,703
======= ====== ====== ======
Denominators:
Weighted average common shares
outstanding (in thousands) - for basic EPS 35,877 30,781 35,783 30,785
Effect of dilutive securities - options 170 50 214 95
------- ------ ------ ------
Weighted average common shares
outstanding (in thousands) - for diluted EPS 36,047 30,831 35,997 30,880
======= ====== ====== ======
</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.
NOTE 2 CENTERMARK
On February 11, 1994, the Company acquired 40% of the stock of
CenterMark which owned interests in several major regional shopping
malls and power
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<PAGE> 10
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 General Growth Properties, Inc.
GGP/Homart currently owns interests in twenty-three regional shopping
malls. GGP/Homart has elected real estate investment trust status for
income tax purposes.
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<PAGE> 11
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Below is summarized financial information for GGP/Homart for the three and
six months ended June 30, 1998 and 1997.
GGP/HOMART, INC.
CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Minimum rents $ 29,026 24,349 57,846 49,189
Tenant recoveries 11,762 12,005 22,916 22,740
Percentage rents 799 615 1,543 1,249
Other 775 856 1,572 1,563
-------- ------ ------ ------
Total Revenues 42,362 37,825 83,877 74,741
Operating expenses (17,215) (15,475) (37,177) (31,510)
Depreciation (7,475) (6,447) (15,257) (12,953)
-------- ------ ------ ------
Operating Income 17,672 15,903 31,443 30,278
Interest expense, net (11,359) (9,867) (23,152) (20,695)
Equity in net income of unconsolidated real
estate affiliates 1,660 2,785 3,102 4,123
Gain on property sales 9,465 735 10,715 681
Income allocated to minority interest (164) (66) (293) (122)
-------- ------ ------ ------
Net Income $ 17,274 9,490 21,815 14,265
======== ===== ====== ======
</TABLE>
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<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
ACQUISITIONS
1998
-----
On April 2, 1998 the Company acquired a 100% ownership interest in
Southwest Plaza in Denver, Colorado. On May 8, 1998, the Company
completed the acquisition of 100% of the ownership interest in the
Northbrook Court Shopping Center in Northbrook (Chicago), Illinois. The
aggregate purchase price for Southwest Plaza and Northbrook Court,
including 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 own 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 (3,683,143 units) of Operating
Partnership Units and approximately $28,000 in cash funded from the
Company credit facility.
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 and the proceeds of the PIERS as described in
Note 1.
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<PAGE> 13
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
1997
----
The Company acquired a 100% ownership interest in Valley Hills Mall
located in Hickory, North Carolina on October 23, 1997 for a purchase
price of approximately $34,500. The purchase price consisted of
approximately $18,900 (518,833 units) of Operating Partnership Units and
the assumption of approximately $15,600 of mortgage debt.
During the second quarter of 1997, the Company acquired 100% ownership
of three other properties, Century Plaza Shopping Center, Southlake Mall
and Eden Prairie Mall. Century Plaza Shopping Center located in
Birmingham, Alabama was acquired on May 1, 1997 for $31,800 in cash.
Southlake Mall was acquired on June 18, 1997, for a purchase price of
$67,000. The purchase price consisted of $45,100 of mortgage debt
assumption, $11,500 (353,537 units) of Operating Partnership Units, and
$10,400 in cash. Southlake Mall is located in Atlanta, Georgia. The
aggregate consideration paid for Eden Prairie Mall located in
Minneapolis, Minnesota was $19,900. It included the assumption of a
$16,800 mortgage, the payment of $1,100 in cash and the assumption of
$2,000 of short-term liabilities.
On March 31, 1997, the Company acquired a 100% ownership interest in
Market Place Mall for a cash purchase price of approximately $70,000.
Market Place Mall is located in Champaign, Illinois.
The acquisitions completed as of June 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 two new development sites located in
Coralville (Iowa City), Iowa, and Grand Rapids, Michigan. Coral Ridge
Mall, located in Coralville, Iowa was substantially completed and opened
as scheduled in July of 1998. The Grand Rapids mall (Rivertown
Crossings) is currently under construction and is scheduled to open in
August of 1999.
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
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 by the Operating Partnership pursuant to
the merger agreement and the Operating Partnership retained the
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<PAGE> 14
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
remainder of the common stock. The newly merged entity ("GGP Ivanhoe
II") will continue to operate as a private REIT. The aggregate
consideration paid pursuant to the merger agreement was approximately
$625,000 (less certain adjustments, including a credit of approximately
$64 million 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 which becomes due July 1, 1999.
The balance of the consideration paid was represented by equity from the
Operating Partnership and the venture partner in proportion to their
respective stock ownership. Pursuant to the purchase and venture
agreements, the Operating Partnership 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 Operating Partnership'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. The properties acquired will be managed by
GGMI.
The joint venture partner ("Ivanhoe") in GGP Ivanhoe II is an affiliate
of the Operating Partnership's joint venture partner in GGP/Ivanhoe
(described below). The Operating Partnership and Ivanhoe share in the
profits and losses, cash flows and other matters relating to GGP Ivanhoe
II in accordance with their respective ownership percentages except that
certain major operating and capital decisions (as defined in the venture
agreements) will require the approval of both partners. Accordingly, the
Operating Partnership is accounting for GGP Ivanhoe II using the equity
method.
Additionally, the stockholders' agreement of GGP Ivanhoe II contains
provisions regarding buy-sell rights of the Operating Partnership and
Ivanhoe. The stockholders' agreement further provides that Ivanhoe has
the right (exercisable on the fifth or seventh anniversary of the
closing date) to require the Operating Partnership to acquire Ivanhoe's
interest in GGP Ivanhoe II for a purchase price determined by reference
to the then value of the GGP Ivanhoe II assets. If the Operating
Partnership acquires Ivanhoe's interest, the consideration can be paid
in cash, common stock of the Company, or a combination thereof.
On September 17, 1997, GGP/Ivanhoe acquired both The Oaks Mall in
Gainesville, Florida and Westroads Mall in Omaha, Nebraska. The
purchase price for the two properties was approximately $206,000 of
which $125,000 was financed through property level indebtedness. The
Company owns 51% of the ownership interest in GGP/Ivanhoe. Ivanhoe,
Inc. of Montreal, Quebec, Canada owns the remaining 49% ownership
interest in GGP/Ivanhoe.
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<PAGE> 15
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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, which
interest was in the form of common stock which was entitled to all of
the voting rights in GGP Management, Inc. In August 1996, GGP
Management, Inc., acquired 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 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.
On June 16, 1997, GGMI acquired an office building in downtown Chicago,
Illinois to be used as the new corporate headquarters for the Company.
The office building has been completely upgraded and retrofitted to
create class A office space. GGMI and Company personnel took initial
occupancy of approximately 70% of the building in April of 1998.
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<PAGE> 16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 6 MORTGAGE NOTES AND OTHER DEBT PAYABLE
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
The mortgage note secured by the Eden Prairie Mall at June 30, 1998 is a
non-recourse loan that bears interest at LIBOR (5.65% at June 30, 1998)
plus 118 basis points and matures in December of 1998. The Company
expects to retire this $16,743 obligation when due. The mortgage note
is cross-collateralized with several GGP/Homart centers.
ACQUISITION FINANCING
The Company obtained in June, 1998 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, has fixed the annual interest rate with
respect to approximately $550,000 of such loan at 6.7% per annum, with a
maturity date of ten years and the remainder (approximately $63,000)
bearing interest at the rate of 6.55% per annum, which rate will be
adjusted monthly to equal LIBOR plus 0.9% and maturing June 1, 1999.
The loan is secured by the MEPC Portfolio.
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. 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 June 30, 1998 , the
credit facility had an outstanding balance of $70,000.
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.
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<PAGE> 17
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
As of June 30, 1998 and December 31, 1997, the Operating Partnership
had outstanding letters of credit of $8,575 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 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 a regional
shopping mall in Shreveport, Louisiana. At June 30, 1998 the excess of
accrued interest receivable over the monthly payments by the borrower of
$61 has been added to the loan balance. The Company expects this
mortgage note and related interest due to be collected by the end of
1998.
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
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<PAGE> 18
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
management's opinion, the liabilities, if any, that may ultimately
result from such legal actions are not expected to have a materially
adverse effect on the consolidated financial position, results of
operations or liquidity of the Company.
The Company 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. The
Company has not completed its evaluation of the effects of the
implementation of SOP 98-5, but as the Company does not believe it has
a significant amount of such unamortized costs, the effect of adopting
this statement in 1999 is not expected to be material.
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<PAGE> 19
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 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 three and six months ended June 30, 1998
($2,580 and $5,013, respectively) 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 six months ended June 30, 1998 include
adjustments for the public offering of the PIERS in 1998 and the
acquisition of 100% of the eight operating properties in the MEPC
Portfolio, Northbrook Court, Southwest Plaza 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 six months ended June 30,
1997 include adjustments for the public offering of the PIERS in 1998
and the acquisition of 100% of the ten operating properties in 1998 and
51% of GGP Ivanhoe II and adjustments for the acquisition of 100% of
Market Place Shopping Center, Century Plaza and 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 and does not purport to present
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<PAGE> 20
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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.
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<PAGE> 21
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997
------------------ ------------------
<S> <C> <C>
Total Revenues: $ 219,721 210,698
========= =========
Expenses:
Property operating 78,236 78,559
Management fees 2,253 2,241
Depreciation and amortization 39,083 37,628
--------- ---------
Total expenses 119,572 118,428
--------- ---------
Operating income 100,149 92,270
Interest expense, net (63,924) (66,790)
Equity in net income/(loss) of unconsolidated affiliates
GGP/Homart 8,336 5,451
Property Joint Ventures 1,524 1,348
General Growth Management, Inc. (7,563) 832
Minority interest in operating partnership (9,168) (8,049)
--------- ---------
Pro forma net income (a) $ 29,354 25,062
Pro forma preferred stock dividends (12,234) (12,234)
--------- ---------
Pro forma net income available to common stockholders 17,120 12,828
========= =========
Pro forma earnings per share - basic (b) .48 .42
========= =========
Pro forma earnings per share - diluted (b) .48 .42
========= =========
</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 35,783,276 for 1998 and 30,784,649 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 35,996,404 for
1998 and 30,880,409 for 1997.
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<PAGE> 22
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.
Effective June 30, 1998, the Company together with the Operating
Partnership owned 100% of the forty-five 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
June 30, 1997 had an occupancy of approximately 83.8%. On June 30,
1998, the mall store and freestanding store portions of the centers in
the Company Portfolio which are not currently undergoing redevelopment
were approximately 86.7% occupied, which is an increase of 2.9% 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
six months ended June 30, 1998 are of those tenants that were
operating in the first and second quarter of 1997. Comparable mall
store sales averaged $280 per square foot for the Company Portfolio in
the first and second quarter of 1998. In the first and second quarter
of 1998, total mall store sales for the Company Portfolio increased by
11% over the same period in 1997, and comparable mall store sales
increased by 5.5% over 1997.
The average mall store rent per square foot from leases that expired
in the six months ended June 30, 1998 was $23.90. The Company
Portfolio benefited from increasing rents inasmuch as the weighted
average mall store rent per square foot on new and renewal leases
executed during 1998 was $27.21 or $3.31 per square foot above the
average for expiring leases.
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<PAGE> 23
GENERAL GROWTH PROPERTIES, INC.
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 JUNE 30, 1998 AND 1997
Total revenues for the three months ended June 30, 1998 were $88.6
million, which represents an increase of $18.9 million or
approximately 27.1% from $69.7 million in the three months ended June
30, 1997. Approximately $15.5 million or 82.0% of the increase is
from acquisitions completed after June 30, 1997. Increased revenues
at comparable properties (properties owned at all times during current
and prior periods) accounted for the remaining $3.4 million or 18.0%
of the increase. Minimum rent for the three months ended June 30,
1998 increased by $13.5 million or 31.8% from $42.5 million in the
comparable period in 1997 to $56.0 million. The acquisition of
properties generated a $9.5 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 $3.7 million or 15.7% from $23.5 million to
$27.2 million for the three months ended June 30, 1998. Substantially
all of the increase was generated by properties which were
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<PAGE> 24
GENERAL GROWTH PROPERTIES, INC.
recently acquired. For the three months ended June 30, 1998, percentage
rents increased to $2.6 million from $1.6 million in 1997. Acquisitions
contributed approximately $.3 million of the increase in percentage
rent, with increased sales of tenants at comparable centers generating
the remaining increase. Other revenues increased by approximately $.2
million or 16.7% to $1.4 million for the three months ended June 30,
1998 from $1.2 million in 1997, substantially all of which related to
comparable centers.
Total expenses, including depreciation and amortization, increased by
approximately $6.9 million, from $37.4 million in the three months
ended June 30, 1997 to $44.3 million in the three months ended June
30, 1998. For the three months ended June 30, 1998, property
operating expenses increased by $2.0 million or 11.2% from $17.9
million in 1997 to $19.9 million in the first quarter of 1998,
substantially all of which is attributable to new acquisitions.
Depreciation and amortization increased by $3.1 million over the same
period in 1997. Approximately $1.8 million of the increase in
depreciation and amortization was generated at comparable centers.
The remaining $1.3 million was from newly acquired properties.
Management fees to affiliates and general and administrative expenses
together were approximately $.3 million higher than in the three
months ended June 30, 1997.
Net interest expense for the three months ended June 30, 1998 was $23.1
million, an increase of $5.3 million or 29.8% from $17.8 million in the
three months ended June 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 June 30, 1998 increased by approximately $2.6 million to $5.9
million in 1998, from $3.3 million in the three months ended June 30,
1997. The Company's equity in the earnings of GGP/Homart increased
approximately $3.0 million, primarily due to the gain recognized by
GGP/Homart on its May, 1998 sale of its interest in the Rolling Oaks
Mall in San Antonio, Texas. The Company's ownership interest in GGMI
resulted in a decrease of $.7 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
$.3 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.
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<PAGE> 25
GENERAL GROWTH PROPERTIES, INC.
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Total revenues for the six months ended June 30, 1998 were $169.0
million, which represents an increase of $34.0 million or
approximately 25.2% from $135.0 million in the six months ended June
30, 1997. Approximately $24.7 million or 72.6% 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 $9.3 million or 27.4%
of the increase. Minimum rent for the six months ended June 30, 1998
increased by $24.9 million or 30.5% from $81.6 million in 1997 to
$106.5 million. The acquisition of properties generated a $15.0
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 $7.7
million or 17.0% from $45.2 million to $52.9 million for the six
months ended June 30, 1998. Approximately $2.5 million of the
increase is attributable to higher recoverable operating expenses at
the comparable malls. The remaining $5.2 million increase was
generated by properties which were recently acquired. For the six
months ended June 30, 1998, overage rents increased to $5.0 million
from $3.6 million in 1997. Acquisitions contributed $.8 million of
the $1.4 million increase in overage rent. Other revenues decreased
by approximately $.4 million or 14.3% to $2.4 million for the six
months ended June 30, 1998 from $2.8 million in 1997, substantially
all of which related to comparable centers.
Total expenses, including depreciation and amortization, increased by
approximately $16.5 million, from $72.3 million in the six months
ended June 30, 1997 to $88.8 million in the six months ended June 30,
1998. For the six months ended June 30, 1998, property operating
expenses increased by $7.5 million or 21.7% from $34.6 million in 1997
to $42.1 million in the first quarter of 1998. Of this increase,
recent acquisitions accounted for $5.6 million, while higher
recoverable operating costs at comparable centers contributed the
remaining $1.9 million. Depreciation and amortization increased by
$5.9 million over the same period in 1997. Approximately $2.6 million
of the $5.9 million increase in depreciation and amortization was
generated at comparable centers. The remaining $3.3 million was from
newly acquired properties. Management fees to affiliates and general
and administrative expenses together were approximately $.7 million
higher than in the six months ended June 30, 1997.
Net interest expense for the six months ended June 30, 1998 was $40.9
million, an increase of $7.7 million or 23.2% from $33.2 million in
the six months ended June 30, 1997, substantially all due to
indebtedness incurred in connection with the acquisition of new
properties in 1997 and 1998.
Equity in net income of unconsolidated affiliates in the six months
ended June 30, 1998 decreased by approximately $4.5 million to $.7
million in 1998, from $5.2 million in the six months ended June 30,
1997. The Company's ownership interest in GGMI resulted in a decrease
of $8.4 million, primarily due to the write-off of certain
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<PAGE> 26
GENERAL GROWTH PROPERTIES, INC.
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
increased approximately $2.9 million, primarily due to the gain
recognized by GGP/Homart on its May, 1998 sale of its interest in the
Rolling Oaks Mall in San Antonio, Texas. Property Joint Ventures (see
Note 1) accounted for an increase of approximately $1.0 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. The Company established a $200 million
unsecured credit facility in August of 1997. This facility provided
all of the funds necessary to complete the development of Coralville
Mall in Iowa City, Iowa and is expected to provide the funds to
complete the mall under development in Grand Rapids, Michigan 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 and Northbrook Court in Northbrook (Chicago), Illinois
in May 1998 and two portfolios of malls in June 1998 as more fully
described in Note 4. In addition, the Company acquired the Altamonte
Mall in Altamonte Springs (Orlando), Florida in July 1998 as also
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 additional Units, joint
venture contributions and a public offering of convertible preferred
stock, as described in Note 1.
Net cash provided by operating activities was $6.6 million in the
first six months of 1998, an increase of $29.2 million from $37.7
million in the same period in 1997. Net income before allocations to
the minority interest decreased $52.9 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 $6.6 million increase in cash flows from
operating activities related to accounts payable and accrued expenses
in 1998.
Net cash used by investing activities was $1,022 million in 1998
compared to $67 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
26 of 30
<PAGE> 27
GENERAL GROWTH PROPERTIES, INC.
approximately $923.8 million in 1998. The Company advanced $50
million in 1998 to an unaffiliated borrower. The Company has an
option in 1998 to acquire the underlying asset collateralizing this
mortgage note receivable. 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 $959.4 million in 1998,
compared to a source of cash of $19.4 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 $322.6 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 $1,141
million in 1998 versus approximately $187.5 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 six 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 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.
27 of 30
<PAGE> 28
GENERAL GROWTH PROPERTIES, INC.
YEAR 2000 COMPLIANCE
The Company recently upgraded its major information systems including
the database and accounting software which is Year 2000 compliant.
The Company is in the process of evaluating several other smaller
systems (time keeping systems, elevators, etc.) to verify that they
are compliant. If these systems are not Year 2000 compliant, the
appropriate upgrades will be purchased. The cost of any upgrades that
may be required are not anticipated to be significant. In addition,
the Company is communicating with its customers, suppliers and service
providers to determine whether they are actively involved in projects
to ensure that their products and business systems will be Year 2000
compliant. The Company is not aware of any significant Year 2000
issues involving its customers, suppliers or service providers.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) In the second quarter of 1998 and in conjunction with the issuance
of the PIERS as described below and in Note 1 of the Notes to
Consolidated Financial Statements of the Company, the Agreement of
Limited Partnership of the Operating Partnership was amended to enable
the Operating Partnership to issue to the Company preferred units of
partnership interest which have rights, preferences and other
privileges that mirror those of the PIERS. The Operating Partnership
is required to make all required distributions to the holders of the
preferred units prior to making any distribution of cash or assets to
the holders of Units.
(b) In June, 1998 the Company issued 13,500,000 Depository Shares, each
representing 1/40 of a share of the PIERS issued by the Company as more
fully described in Note 1, which description is hereby incorporated
herein by reference. Holders of PIERS have certain preferences with
respect to the receipt of dividends and amounts payable upon
liquidation of the Company over the holders of common stock of the
Company. The Company is therefore prohibited from making any
distributions to holders of common stock unless all required payments
with respect to the PIERS have been made.
28 of 30
<PAGE> 29
GENERAL GROWTH PROPERTIES, INC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At its Annual Meeting of Stockholders held on May 14, 1998, the
stockholders voted upon the re-election of John Bucksbaum, Anthony
Downs and A. Lorne Weil as Directors, the adoption of the 1998
Incentive Stock Plan and the ratification of the reappointment of
Pricewaterhouse Coopers LLP as Independent Auditors. A total of
35,736,572 shares were eligible to vote on each matter presented at
the Annual Meeting, which were approved by the following votes of
stockholders:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
MATTER SHARES FOR SHARES AGAINST ABSTAIN
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. (a) Re-elect John Bucksbaum 18,403,504 107,462 ---
(b) Re-elect Anthony Downs 18,403,504 107,462 ---
(c) Re-elect A. Lorne Weil 18,403,504 107,462 ---
2. Approve the 1998 Incentive Stock Plan 14,766,422 3,644,692 89,852
3. Re-appointment of Pricewaterhouse
Coopers LLP as Independent Auditors 18,456,967 23,140 30,858
</TABLE>
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 May 20, 1998 as amended
by Form 8-K/A dated June 2, 1998 describing under Item 2 the
acquisition of Southwest Plaza and Northbrook Court and Financial
Statements and containing financial statements and pro forma
information concerning the recent acquisitions of the Company.
2. Current report on Form 8-K dated June 4, 1998 describing
under Item 5 the public offering of the PIERS preferred stock
underwriting. No financial statements were filed therewith.
3. Current report on Form 8-K dated June 17, 1998 describing
under Item 2 the acquisition of the MEPC 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.
29 of 30
<PAGE> 30
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: August 12, 1998 by: /s/: Bernard Freibaum
-------------------------------
Bernard Freibaum
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
30 of 30
<PAGE> 31
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> 32
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)
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)
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)
S-2
<PAGE> 33
GENERAL GROWTH PROPERTIES, INC.
4(b) Redemption Rights Agreement dated December 6, 1996, among GGP Limited
Partnership, a Delaware corporation, Forbes/Cohen Properties, a Michigan general
partnership, Lakeview Square Associates, a Michigan general partnership, and
Jackson Properties, a Michigan general partnership.(2)
4(c) Redemption Rights Agreement, dated June 19, 1997, among GGP Limited
Partnership, a Delaware limited partnership, General Growth Properties, Inc., a
Delaware corporation, and CA Southlake Investors, Ltd., a Georgia limited
partnership.(13)
4(d) Redemption Rights Agreement dated October 23, 1997, among GGPI, GGPL
and Peter Leibowits.(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)
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)
S-3
<PAGE> 34
GENERAL GROWTH PROPERTIES, INC.
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.
(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.
S-4
<PAGE> 35
GENERAL GROWTH PROPERTIES, INC.
(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.
(20) Previously filed as an exhibit to the Company's current report on Form
8-K dated August 7, 1998.
S-5
<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
SIX MONTHS ENDED JUNE 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.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 29,913
<SECURITIES> 0
<RECEIVABLES> 91,974
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,470,178
<DEPRECIATION> (259,214)
<TOTAL-ASSETS> 3,394,889
<CURRENT-LIABILITIES> 0
<BONDS> 2,140,895
337,500
0
<COMMON> 3,590
<OTHER-SE> 751,944
<TOTAL-LIABILITY-AND-EQUITY> 3,394,889
<SALES> 169,065
<TOTAL-REVENUES> 169,065
<CGS> 0
<TOTAL-COSTS> 88,060
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 729
<INTEREST-EXPENSE> 40,971
<INCOME-PRETAX> 40,015
<INCOME-TAX> 0
<INCOME-CONTINUING> 40,015
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,596
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
</TABLE>
