<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of the
Securities Act of 1934
Date of Report (Date of Earliest Event Reported)
September 18, 1998
General Growth Properties, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11656 42-1283895
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
110 N. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 960-5000
[Registrant's telephone number, including area code)
N/A
[Former name or former address, if changed since last report.)
<PAGE> 2
ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN.
The registrant hereby amends its Current Report on Form 8-K dated October 5,
1998 as follows:
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are the financial statements, proforma financial information and
exhibits filed as a part of this report:
(a) Financial Statements of Businesses acquired.
The financial statements of Coastland Center as listed in the accompanying Index
to Financial Statements and Proforma Financial Information are filed as part of
this Current Report on Form 8-K/A.
(b) Proforma Financial Information.
The proforma financial information of General Growth Properties, Inc. (the
"Company") listed in the accompanying Index to Financial Statements and Proforma
Financial Information is filed as part of this Current Report on Form 8-K/A.
(c) Exhibits.
See Exhibit Index attached hereto and incorporated herein by reference.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Bernard Freibaum
-----------------------------
Bernard Freibaum
Executive Vice President and
Chief Financial Officer
Date: November 9, 1998
3
<PAGE> 4
EXHIBIT INDEX
Exhibit Page
Number Name Number
2. 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. Consent of Independent Auditors.
* Previously filed by the Company in its Current Report on Form 8-K dated
October 5, 1998
4
<PAGE> 5
INDEX TO FINANCIAL STATEMENTS AND
PROFORMA FINANCIAL INFORMATION
The following financial information is presented in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, such
historical information has been audited only for the property's most recent
fiscal year as the transactions relating to the acquisition of the property (as
described in the registrant's Current Report on Form 8-K dated October 5, 1998)
are not with related parties and the registrant, after reasonable inquiry, is
not aware of any material factors related to the property not otherwise
disclosed that would cause the reported financial information to not be
necessarily indicative of future operating results. In addition, as the property
will be directly or indirectly owned by entities that elect or have elected to
be treated as REITs for Federal income tax purposes, a presentation of estimated
taxable operating results is not applicable.
COASTLAND CENTER
Report of Independent Auditors........................................F-2
Statements of Revenue and Certain
Expenses for the Year Ended December 31, 1997 and for the
Six Months Ended June 30,1998 (Unaudited)............................ F-3
Notes to Statements of Revenue and Certain
Expenses............................................................. F-4
GENERAL GROWTH PROPERTIES, INC.
Proforma Condensed Consolidated Statement of Operations
for the Year Ended December 31,1997 (Unaudited)...................... F-6
Notes to Proforma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1997 (Unaudited) ......... F-7
Proforma Condensed Consolidated Statement of Operations for
the Six Months Ended June 30, 1998 (Unaudited)....................... F-11
Notes to Proforma Condensed Consolidated Statement of
Operations for the Six Months Ended June 30, 1998 (Unaudited)........ F-12
Proforma Condensed Consolidated Balance Sheet as of
June 30, 1998 (Unaudited)............................................ F-15
Notes to Proforma Condensed Consolidated Balance Sheet as of
June 30, 1998 (Unaudited)............................................ F-16
F-1
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REPORT OF INDEPENDENT AUDITORS
Board of Directors of General Growth Properties, Inc.
We have audited the accompanying statement of revenue and certain expenses of
Coastland Center (the "Property") for the year ended December 31, 1997. The
statement of revenue and certain expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
statement of revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenue and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenue and certain expenses. we believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K/A of General Growth Properties,
Inc. as described in Note 2 and is not intended to be a complete presentation of
the Property's revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses, as
described in Note 2, of the Property for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
Ernst and Young LLP
Chicago, Illinois
October 22, 1998
F-2
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COASTLAND CENTER
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Six months
ended
June 30, 1998 Year Ended
(Unaudited) December 31, 1997
Revenue:
<S> <C> <C>
Rental $ 4,535,605 $ 8,308,985
Tenant reimbursement and other 1,506,974 2,768,269
----------- -----------
Total revenue 6,042,579 11,077,254
----------- -----------
Expenses:
Utilities 110,474 324,853
Repairs and Maintenance 348,710 650,414
Real estate taxes 322,584 573,822
Other property operating 730,046 1,643,677
----------- -----------
Total expenses 1,511,814 3,192,766
----------- -----------
Revenue in excess of Certain Expenses $ 4,530,765 $ 7,884,488
=========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE> 8
COASTLAND CENTER
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. BUSINESS
The accompanying statements of revenue and certain expenses relate to the
operations of Coastland Center (the "Property"), a regional shopping mall
located in Naples, Florida.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K/A of General Growth Properties,
Inc. The statements are not representative of the actual operations of the
Property for the periods presented nor indicative of future operations, as
certain expenses, primarily depreciation, amortization, property management fees
and interest, have been excluded.
Revenue Recognition
Rental income is recognized as income in the period earned. Certain leases of
the Property provide for tenant occupancy during periods for which no rent is
due or where minimum rent payments increase during the term of the lease. The
Property records rental income for the full term of each lease on a
straight-line basis.
Use of Estimates
The preparation of the statements of revenue and certain expenses requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
3. INTERIM PERIOD (Unaudited)
The unaudited statement of revenue and certain expenses for the six months ended
June 30, 1998, has been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments of a normal recurring nature considered necessary
for a fair presentation have been included. Operating results for the period
from January 1, 1998, to June 30, 1998, are not necessarily indicative of future
operating results.
F-4
<PAGE> 9
4. RENTALS
The Property is subject to leases expiring at various dates over the next twelve
years. Minimum future rentals (excluding escalation rentals) to be received
under non-cancelable leases executed as of December 31, 1997, are as follows:
Year Ending
December 31:
1998 $ 8,481,973
1999 8,343,175
2000 8,120,495
2001 7,669,280
2002 7,314,653
Thereafter 22,756,787
----------
$ 62,686,363
============
The leases generally provide for tenants to share in increases in operating
expenses and real estate taxes in excess of specified base amounts.
F-5
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GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA--UNAUDITED)
<TABLE>
<CAPTION>
Historical
General 1998
Growth Fiscal Proforma Acquisitions
Properties, 1997 Proforma Fiscal Previously
Inc.(1) Acquisitions Adjustments 1997(1) Reported(2)
------------ ------------ ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $ 291,147 $ 14,427 $ -- $ 305,574 $ 163,516
Expenses:
Property operating 106,369 5,818 -- 112,187 61,955
Management fees 3,308 252 (46) 3,514 1,001
Depreciation & amortization 48,509 -- 2,077 50,586 --
--------- --------- --------- --------- ---------
Total Expenses 158,186 6,070 2,031 166,287 62,956
--------- --------- --------- --------- ---------
Operating Income 132,961 8,357 (2,031) 139,287 100,560
Interest expense, net (70,252) -- (8,459) (78,711) --
Equity in net income/(loss)
unconsolidated affiliates:
GGP/Homart, Inc. 16,506 -- -- 16,506 --
Property Joint Ventures 3,032 391 -- 3,423 927
General Growth Management, Inc. (194) -- -- (194) 3,405
--------- --------- --------- --------- ---------
Income before minority interest 82,053 8,748 (10,490) 80,311 104,892
Minority interest in Operating Partnership (29,398) -- 37 (29,361) --
--------- --------- --------- --------- ---------
Net Income 52,655 8,748 (10,453) 50,950 104,892
Convertible preferred stock dividends(3) -- -- -- -- --
--------- --------- --------- --------- ---------
Net income available to common stockholders $ 52,655 $ 8,748 $ (10,453) $ 50,950 $ 104,892
========= ========= ========= ========= =========
Weighted average shares
outstanding - basic
Weighted average shares
outstanding - diluted
Preferred Stock Dividends
Dilutive Common Shares W/A
Earnings per share-basic
Earnings per share-diluted
<CAPTION>
Fiscal Proforma
1997 Coastland Fiscal 1997
Proforma Proforma Center Proforma for Current
Adjustments(2) As Reported(2) Acquisition Adjustments 8-K/A
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total revenues $ -- $ 469,090 $ 11,077 $ -- $ 480,167
Expenses:
Property operating -- 174,142 3,193 -- 177,335
Management fees 299 4,814 -- 100 (a) 4,914
Depreciation & amortization 33,310 83,896 -- 2,576 (b) 86,472
--------- --------- --------- --------- ---------
Total Expenses 33,609 262,852 3,193 2,676 268,721
--------- --------- --------- --------- ---------
Operating Income (33,609) 206,238 7,884 (2,676) 211,446
Interest expense, net (71,812) (150,523) -- (7,568)(c) (158,091)
Equity in net income/(loss)
unconsolidated affiliates:
GGP/Homart, Inc. -- 16,506 -- -- 16,506
Property Joint Ventures -- 4,350 -- -- 4,350
General Growth Management, Inc. -- 3,211 -- -- 3,211
--------- --------- --------- --------- ---------
Income before minority interest (105,421) 79,782 7,884 (10,244) 77,422
Minority interest in Operating Partnership 6,497 (22,864) -- 975 (d) (21,889)
--------- --------- --------- --------- ---------
Net Income (98,924) 56,918 7,884 (9,269) 55,533
Convertible preferred stock dividends(3) (24,469) (24,469) -- -- (24,469)
--------- --------- --------- --------- ---------
Net income available to common stockholders $(123,393) $ 32,449 $ 7,884 $ (9,269) $ 31,064
========= ========= ========== ========= =========
Weighted average shares
outstanding basic 32,622,665 32,622,665
Weighted average shares
outstanding diluted 32,839,637 32,839,637
Preferred Stock Dividends 24,469 24,469 24,469
Dilutive Common Shares W/A 216,972 216,972
Earnings per share-basic $ 0.99 $ 0.95
Earnings per share-diluted $ 0.99 $ 0.95
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-K for
the year ended December 31, 1997.
(2) Amounts are from the statements included in the Company's Form 8-K/A dated
November 4, 1998.
(3) Proforma earnings have been reduced by proforma dividends on the 7.25%
Convertible Preferred Stock.
F-6
<PAGE> 11
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited proforma condensed consolidated statement of operations is
presented as if (i) the sale of CenterMark Properties, Inc. ("CenterMark") and
the acquisitions made in 1997 (Market Place Mall, Century Plaza Shopping Center,
Town East Mall, Southlake Mall, Eden Prairie Mall, GGP/Ivanhoe Portfolio Malls
and Valley Hills Mall), (ii) the acquisitions made prior to September 15, 1998
(Southwest Plaza, Northbrook Court, Altamonte Mall, Pierre Bossier Mall, Spring
Hill Mall, the MEPC Portfolio and the USPPI Portfolio - all as previously
reported in the Company's Form 8-K/A dated November 4, 1998) and the Coastland
Center acquisition and (iii) the Company's use of the net proceeds of the June
4, 1998 public offering of depositary shares of 7.25% Preferred Income Equity
Redeemable Stock (the "Offering" or "Convertible Preferred Stock") to fund the
acquisitions and for other working capital purposes, had all occurred on January
1, 1997. In management's opinion, all adjustments necessary to reflect these
transactions have been included. Such proforma statement of operations is based
upon the historical information of General Growth Properties, Inc. excluding the
non-recurring gain on sale of a portion of CenterMark stock and extraordinary
item and the historical information of each of the above mentioned entities for
the year ended December 31, 1997. The MEPC Portfolio information reflects the
results of operations for the fiscal year ended September 30, 1997. This
unaudited proforma statement of operations is not necessarily indicative of what
actual results of General Growth Properties, Inc. would have been assuming such
transactions had been completed as of January 1, 1997 nor does it purport to
represent the results of operations for future periods.
NOTE 2 ACQUISITIONS/DISPOSITIONS
On June 28, 1996, Westfield U.S. Investments, Pty. Limited exercised its option
to acquire the remaining 30% of the outstanding CenterMark stock from General
Growth Properties, Inc. (the "Company") in two transactions. The first payment
in the amount of $87,000 was received on July 1, 1996, and the second payment in
the amount of $130,500 was received on January 2, 1997. As described above, the
gain on this transaction has been excluded from the continuing operations of the
Company and its pro forma operations for the year ended December 31, 1997.
On March 31, 1997, the Company acquired a 100% interest in Market Place Mall for
a cash purchase price of approximately $70,000 which was funded by an unsecured
short-term facility. Market Place Mall is located in Champaign, Illinois.
During the second quarter of 1997, the Company also acquired a 100% ownership
interest in three properties, Century Plaza Shopping Center, Southlake Mall,
Eden Prairie Mall and a 50% interest in Town East Mall. Century Plaza Shopping
Center located in Birmingham, Alabama was acquired on May 1, 1997 for $31,800 in
cash. Southlake Mall was acquired on June 19, 1997, for a purchase price of
$67,000. The purchase price consisted of $45,100 of mortgage debt assumption,
$11,500 (353,537 units) of newly issued Operating Partnership Units, and $10,400
in cash. Southlake Mall is located in Atlanta, Georgia. The aggregate
consideration paid for Eden Prairie Center located in Minneapolis, Minnesota was
$19,900. It included
F-7
<PAGE> 12
the assumption of a $16,800 mortgage, the payment of $1,100 in cash and the
assumption of $2,000 in short-term liabilities.
On June 11, 1997, the Company acquired a 50% interest in Town East Mall, located
in Mesquite, Texas for $56,500. The consideration included approximately $27,500
in cash, the assumption of approximately $27,900 of mortgage indebtedness and
the assumption of $1,100 in net current liabilities.
On September l7, 1997, GGP/Ivanhoe, Inc. ("GGP/Ivanhoe") acquired the Oaks Mall
in Gainesville, Florida and Westroads Mall in Omaha, Nebraska. The purchase
price for the two properties was approximately $206,000 of which $125,000 was
financed through property level indebtedness. The Company owns 51% of the
ownership interest in GGP/Ivanhoe. Ivanhoe, Inc. of Montreal, Quebec, Canada
owns the remaining 49% ownership interest in GGP/Ivanhoe.
On April 3, 1998 and May 8, 1998, the Company acquired a 100%, ownership
interest in Southwest Plaza in Denver, Colorado and Northbrook Court in
Northbrook, Illinois, respectively. The aggregate purchase price for Southwest
Plaza and Northbrook Court was approximately $261,000.
On June 2, 1998, the Company acquired the U.S. retail property portfolio of MEPC
plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC")
through the purchase of the stock of the three U.S. subsidiaries of MEPC that
directly or indirectly own the MEPC Portfolio. The Company acquired the MEPC
Portfolio for approximately $871,000 {less certain adjustments), approximately
$830,000 of which was borrowed. After repayment of approximately $217,000 of
such acquisition financing from the Offering, the MEPC Portfolio is currently
secured by a 6.7% one year $550,000 loan and an approximately $63,000 one year
floating rate loan bearing interest at LIBOR plus 90 basis points. The MEPC
Portfolio consists of 100% ownership of eight enclosed mall shopping centers;
the Apache Mall in Rochester, Minnesota, the Boulevard Mall in Las Vegas,
Nevada, the Cumberland Mall in Atlanta, Georgia, the McCreless Mall in San
Antonio, Texas, the Northridge Fashion Center in Northridge (Los Angeles),
California, the Regency Square Mall in Jacksonville, Florida, the Riverlands
Shopping Center in LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield,
California.
On May 14, 1998, the Company entered into a definitive merger agreement to
acquire U.S. Prime Property, Inc. ("USPPI"), a private REIT. On July 23, 1998,
effective as of June 30, 1998 the Company acquired through a merger, USPPI. The
Company also reached agreement with a joint venture partner pursuant to which
the joint venture partner acquired 49% of the common stock acquired pursuant to
the merger agreement and the Company retained the remainder of the common stock.
The newly merged entity ("GGP Ivanhoe II") will continue to operate as a private
REIT and will be accounted for by the Company on the equity method. The
aggregate consideration paid pursuant to the merger agreement was approximately
$625,000 (less certain adjustments, including a credit of approximately $64,000
for outstanding mortgage indebtedness and accrued interest thereon). GGP Ivanhoe
II obtained a $392,000 interim loan bearing interest at LIBOR plus 90 basis
points and due July l, 1999, and the balance of the consideration paid was
represented by equity from the Company and the venture partner in proportion to
their respective stock ownership. Pursuant to the purchase and venture
agreements, the Company was obligated to contribute approximately $91,290 to GGP
Ivanhoe II of which approximately $18,800 was contributed on June 30, 1998 and
the remaining approximately $72,490 (less certain interest and other credits)
was contributed in mid-July, 1998. The Company's capital contributions were
funded primarily from its line of credit facility. GGP Ivanhoe II owns: the
F-8
<PAGE> 13
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.
On July 21, 1998, the Company acquired a 100% ownership interest in the
Altamonte Mall in Altamonte Springs (Orlando), Florida. The purchase price
consisted of approximately $141,000 (3,683,143 units) of newly issued units of
limited partnership of GGP Limited Partnership, an affiliate of the Company and
approximately $28,000 in cash funded from the Company's credit facility.
On September 3, 1998, the Company acquired a 100% ownership interest in the
Pierre Bossier Mall in Bossier City (Shreveport), Louisiana. The aggregate
consideration paid for the Pierre Bossier Mall was approximately $52,700
(subject to prorations and certain adjustments) which was paid in the form of
approximately $10,000 in cash {funded from the Company's line of credit), a new
mortgage loan (obtained from an independent third party) of approximately
$42,000 and the assumption of approximately $700 of existing debt. The Company
had previously loaned the sellers approximately $50,000 and received an option
to buy the property. In conjunction with the closing of the sale, the loan was
fully repaid.
On September 15, 1998, the Company purchased 100% of the Spring Hill Mall in
West Dundee (Chicago), Illinois. The aggregate consideration paid by the
Operating Company for the Spring Hill Mall was approximately $124,000 consisting
of approximately $32,000 in cash (through the Company's line of credit and a new
10-year fixed-rate $92,000 mortgage with an independent third party lender. The
new mortgage bears interest at 6.60% per annum and provides for monthly payments
of principal and interest of approximately $588.
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.
F-9
<PAGE> 14
NOTE 3 PROFORMA ADJUSTMENTS
(a) Management Fees
The management fee adjustment represents the difference in management costs
charged and/or allocated to the properties by the previous owners and the new
rates charged by General Growth Management, Inc. ("GGMI"), an affiliate of the
Company.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts related
to the periods from January 1, 1997 to the dates of acquisition for the 1997
acquisitions and for the entire year of 1997 for the acquisitions made in 1998.
(c) Interest Expense
Interest expense increased due to a combination of debt assumption and increased
borrowings. In connection with the acquisitions described above, the Company
assumed approximately $127,000 of mortgage debt bearing interest at the weighted
average rate of 8.50%. The Company also issued approximately $1,319,097 of
secured and unsecured borrowings to fund the cash portion of the acquisitions.
The proforma interest expense on new borrowings was calculated using an interest
rate of 6.65% for acquisitions prior to June 30, 1998 and 6.61% for the
Altamonte Mall, Pierre Bossier Mall, Spring Hill Mall, and Coastland Center
acquisitions.
(d) Minority Interest
The proforma income statement has been adjusted to reflect the allocation of
earnings to the minority interest.
F-10
<PAGE> 15
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA--UNAUDITED)
<TABLE>
<CAPTION>
1998
Historical Acquisitions June 30
General Growth Previously Proforma Proforma
Properties, Inc.(1) Reported Adjustments As Reported(2)
------------------ ------------ ----------- --------------
<S> <C> <C> <C> <C>
Total revenues $ 169,065 $ 69,834 $ -- $ 238,899
Expenses:
Property operating 57,830 25,600 -- 83,430
Management fees 1,860 330 213 2,403
Depreciation & amortization 29,099 -- 13,874 42,973
--------- --------- --------- ---------
Total Expenses 88,789 25,930 14,087 128,806
--------- --------- --------- ---------
Operating Income 80,276 43,904 (14,087) 110,093
Interest expense, net (40,971) -- (29,729) (70,700)
Equity in unconsolidated affiliates:
GGP/Homart, Inc. 8,336 -- -- 8,336
Property Joint Ventures 1,634 (69) -- 1,565
General Growth Management, Inc. (9,260) 1,697 -- (7,563)
--------- --------- --------- ---------
Income before minority interest 40,015 45,532 (43,816) 41,731
Minority interest in Operating Partnership (13,419) -- 1,926 (11,494)
--------- --------- --------- ---------
Net Income 26,596 45,532 (41,891) 30,237
Convertible preferred stock dividends(3) (1,199) -- (11,035) (12,234)
--------- --------- --------- ---------
Net income available to common stockholders $ 25,397 $ 45,532 $ (52,926) $ 18,003
========= ========= ========= =========
Weighted average shares
outstanding - basic 35,783,276 35,783,276
Weighted average shares
outstanding - diluted 35,996,404 35,996,404
Preferred Stock Dividends 1,199 11,035 12,234
Dilutive Common Shares-W/A 213,128 213,128
Earnings per share-basic $ 0.71 $0.50
Earnings per share-diluted $ 0.71 $0.50
<CAPTION>
Coastland Total
Center Proforma Proforma
Acquisition Adjustments Combined
----------- ----------- ------------
<S> <C> <C> <C>
Total revenues $ 6,043 $ -- $ 244,942
Expenses:
Property operating 1,512 -- 84,942
Management fees -- 50(a) 2,453
Depreciation & amortization -- 1,288(b) 44,261
--------- --------- ---------
Total Expenses 1,512 1,338 131,656
--------- --------- ---------
Operating Income 4,531 (1,338) 113,286
Interest expense, net -- (3,784)(c) (74,484)
Equity in unconsolidated affiliates:
GGP/Homart, Inc. -- -- 8,336
Property Joint Ventures -- -- 1,565
General Growth Management, Inc. -- -- (7,563)
--------- --------- ---------
Income before minority interest 4,531 (5,122) 41,140
Minority interest in Operating Partnership -- 230(d) (11,264)
--------- --------- ---------
Net Income 4,531 (4,892) 29,876
Convertible preferred stock dividends(3) -- -- (12,234)
--------- --------- ---------
Net income available to common stockholders $ 4,531 $ (4,892) $ 17,642
========= ========= =========
Weighted average shares 35,783,276
outstanding - basic
Weighted average shares
outstanding - diluted 35,996,404
Preferred Stock Dividends 12,234
Dilutive Common Shares-W/A 213,128
Earnings per share-basic $ 0.49
Earnings per share-diluted $ 0.49
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-Q for
the quarter ended June 30, 1998.
(2) Amounts are from the statements included in the Company's Form 8-K/A dated
November 4, 1998.
(3) Proforma earnings have been reduced by proforma dividends on the 7.25%
Convertible Preferred Stock.
F-11
<PAGE> 16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited proforma condensed consolidated statement of operations is
presented as if (i) the acquisitions made prior to September 15, 1998 (Southwest
Plaza, Northbrook Court, Altamonte Mall, Pierre Bossier Mall, Spring Hill Mall,
the MEPC Portfolio and the USPPI Portfolio - all as previously reported in the
Company's Form 8-K/A dated November 4, 1998) and the Coastland Center
acquisition and (ii) the Company's use of the net proceeds of the June 4, 1998
public offering of depositary shares of 7.25% Preferred Income Equity Redeemable
Stock (the "Offering" or "Convertible Preferred Stock") to fund the acquisitions
and for other working capital purposes, had all occurred on January l, 1998. In
management's opinion, all adjustments necessary to reflect these transactions
have been included. Such proforma statement of operations is based upon the
historical information of General Growth Properties, Inc. and the historical
information of each of the above mentioned entities for the six months ended
June 30, 1998. This unaudited proforma statement of operations is not
necessarily indicative of what actual results of General Growth Properties, Inc.
would have been assuming such transactions had been completed as of January l,
1998 nor does it purport to represent the results of operations for future
periods.
NOTE 2 ACQUISITIONS
On April 3, 1998 and May 8, 1998, the Company acquired a 100% ownership interest
in Southwest Plaza in Denver, Colorado and Northbrook Court in Northbrook,
Illinois, respectively. The aggregate purchase price for Southwest Plaza and
Northbrook Court was approximately $261,000.
On June 2, 1998 the Company acquired the U.S. retail property portfolio of MEPC
plc (the "MEPC Portfolio"), a United Kingdom based real estate company ("MEPC")
through the purchase of the stock of the three U.S. subsidiaries of MEPC that
directly or indirectly own the MEPC Portfolio. The Company acquired the MEPC
Portfolio for approximately $871,000 (less certain adjustments), approximately
$830,000 of which was borrowed. After repayment of approximately $217,000 of
such acquisition financing from the Offering, the MEPC Portfolio is currently
secured by a 6.7% one year $550,000 loan and an approximately $63,000 one year
floating rate loan bearing interest at LIBOR plus 90 basis points. The MEPC
Portfolio consists of 100% ownership of eight enclosed mall shopping centers:
the Apache Mall in Rochester, Minnesota, the Boulevard Mall in Las Vegas,
Nevada, the Cumberland Mall in Atlanta, Georgia, the McCreless Mall in San
Antonio, Texas, the Northridge Fashion Center in Northridge (Los Angeles),
California, the Regency Square Mall in Jacksonville, Florida, the Riverlands
Shopping Center in LaPlace, Louisiana and the Valley Plaza Mall in Bakersfield,
California.
On May 14, 1998, the Company entered into a definitive merger agreement to
acquire U.S. Prime Property, Inc. ("USPPI"), a private REIT. On July 23, 1998,
effective as of June 30, 1998, the Company acquired through a merger, USPPI. The
Company also reached agreement with a joint venture partner pursuant to which
the joint venture partner acquired 49% of the common stock acquired pursuant to
the merger agreement and the Company retained the remainder of the common stock.
The newly merged entity ("GOP Ivanhoe II") will continue to operate as a private
REIT and will be accounted for by
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<PAGE> 17
the Company on the equity method. The aggregate consideration paid pursuant to
the merger agreement was approximately $625,000 (less certain adjustments,
including a credit of approximately $64,000 for outstanding mortgage
indebtedness and accrued interest thereon). GGP Ivanhoe II obtained a $392,000
interim loan bearing interest at LIBOR plus 90 basis points and due July 1,
1999, and the balance of the consideration paid was represented by equity from
the Company and the venture partner in proportion to their respective stock
ownership. Pursuant to the purchase and venture agreements, the Company was
obligated to contribute approximately $91,290 to GGP Ivanhoe II of which
approximately $18,800 was contributed on June 30, 1998 and the remaining
approximately $72,490 (less certain interest and other credits) was contributed
in mid-July, 1998. The Company's capital contributions were funded primarily
from its line of credit facility as described in Note 6. GGP Ivanhoe II owns:
the Landmark Mall in Alexandria, Virginia; the Mayfair Mall and adjacent office
buildings in Wauwatosa (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.
On July 21, 1998 the Company acquired a 100% ownership interest in the Altamonte
Mall in Altamonte Springs (Orlando), Florida. The purchase price consisted of
approximately $141,000 (3,683,143 units) of newly issued units of limited
partnership of GGP Limited Partnership, an affiliate of the Company and
approximately $28,000 in cash funded from the Company's credit facility.
On September 3, 1998, the Company acquired a 100% ownership interest in the
Pierre Bossier Mall in Bossier City (Shreveport), Louisiana. The aggregate
consideration paid for the Pierre Bossier Mall was approximately $52,700
(subject to prorations and certain adjustments) which was paid in the form of
approximately $10,000 in cash (funded from the Company's line of credit), a new
mortgage loan (obtained from an independent third party) of approximately
$42,000 and the assumption of approximately $700 of existing debt. The Company
had previously loaned the sellers approximately $50,000 and received an
option to buy the property. In conjunction with the closing of the sale, the
loan was fully repaid.
On September 15, 1998, the Company purchased 100% of the Spring Hill Mall in
west Dundee (Chicago), Illinois, The aggregate consideration paid by the
Operating Company for the Spring Hill Mall was approximately $124,000 consisting
of approximately $32,000 in cash (through the Company's line of credit and a new
10-year fixed-rate $92,000 mortgage with an independent third party lender. The
new mortgage bears interest at 6.60% per annum and provides for monthly payments
of principal and interest of approximately $588.
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.
NOTE 3 PROFORMA ADJUSTMENTS
(a) Management Fees
The management fee adjustment represents the difference in management costs
charged and/or allocated to the properties by the previous owners and the new
rates charged by General Growth Management, Inc.
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<PAGE> 18
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts related
to the months ended June 30, 1998 for the acquisitions made in 1998.
(c) Interest Expense
Interest expense increased due to a combination of debt assumption and increased
borrowings. In connection with the acquisitions described above, the Company
assumed approximately $49,778 of mortgage debt bearing interest at the weighted
average rate of 8.50%. The Company also issued approximately $1,134,000 of
secured and unsecured borrowings to fund the cash portion of the acquisitions.
The proforma interest expense on new borrowings was calculated using an interest
rate of 6.65% for acquisitions prior to June 30, 1998 and 6.61% for the
Altamonte Mall, Pierre Bossier Mall, Spring Hill Mall and Coastland Center
acquisitions.
(d) Minority Interest
The proforma income statement has been adjusted to reflect the allocation of
earnings to the minority interest.
F-14
<PAGE> 19
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(DOLLARS IN THOUSANDS--UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
GENERAL PREVIOUSLY
GROWTH REPORTED PREVIOUSLY COASTLAND
PROPERTIES, PROFORMA REPORTED CENTER PROFORMA REVISED
INC.(1) ADJUSTMENTS PROFORMA(2) ACQUISTION ADUSTMENTS PROFORMA
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- ------
Investment in real estate
Land $ 312,452 $ 34,584 $ 347,036 $ 11,450 $ 0 $ 358,486
Buildings and equipment 2,657,295 311,256 2,968,551 103,050 -- 3,071,601
Less accumulated depreciation (259,214) -- (259,214) -- -- (259,214)
Developments in progress 102,569 -- 102,569 -- -- 102,569
----------- ----------- ----------- ----------- ------ -----------
Net property and equipment 2,813,102 345,840 3,158,942 114,500 3,273,442
Investment in GGP/Homart 205,221 -- 205,221 -- -- 205,221
Investment in Property Joint Ventures 108,915 -- 108,915 -- -- 108,915
----------- ----------- ----------- ----------- ------ -----------
Net investment in real estate 3,127,238 345,840 3,473,078 114,500 -- 3,587,578
Cash and cash equivalents 29,913 -- 29,913 -- -- 29,913
Tenant accounts receivable, net 41,913 -- 41,913 -- -- 41,913
Deferred expenses, net 51,960 -- 51,960 -- -- 51,960
Investment in and note receivable
from GGMI 83,725 -- 83,725 -- -- 83,725
Mortgage note receivable 50,061 -- 50,061 -- -- 50,061
Prepaid expenses and other assets 10,079 -- 10,079 -- -- 10,079
----------- ----------- ----------- ----------- ------ -----------
Total Assets $ 3,394,889 $ 345,840 $ 3,740,729 $ 114,500 $ 0 $ 3,855,229
=========== =========== =========== ========= ------ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Mortgage notes and other debt payable $ 2,140,895 $ 204,840 $ 2,345,735 $ 114,500 $ 0 $ 2,460,235
Distributions payable 25,860 -- 25,860 -- -- 25,860
Accounts payable and accrued expenses 138,690 -- 138,690 -- -- 138,690
----------- ----------- ----------- --------- ------ -----------
Total Liabilities 2,305,445 204,840 2,510,285 114,500 -- 2,624,785
Minority interest in Operating Partnership 262,519 84,507 347,026 -- -- 347,026
Commitments and Contingencies
Convertible preferred stock 337,500 -- 337,500 -- -- 337,500
Stockholder's equity
Common stock 3,590 -- 3,590 -- -- 3,590
Additional paid-in capital 738,352 56,493 794,845 -- -- 794,845
Retained earnings (deficit) (249,477) -- (249,477) -- -- (249,477)
Note receivable - common stock (3,040) -- (3,040) -- -- (3,040)
----------- ----------- ----------- ---------- ------ -----------
Total stockholders' equity 489,425 56,493 545,918 -- -- 545,918
----------- ----------- ----------- ---------- ------ -----------
Total Liabilities and Equity $ 3,394,889 $ 345,840 $ 3,740,729 $ 114,500 $ 0 $ 3,855,229
=========== =========== =========== ========== ====== ===========
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-Q for the
quarter ended June 30, 1998.
(2) Amounts are from the statements included in the Company's Form 8-K/A dated
November 4, 1998.
The accompanying note is an integral part of the Proforma Condensed
Consolidated Balance Sheet.
F-15
<PAGE> 20
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1998
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited condensed consolidated balance sheet is presented as if the
acquisition of Coastland Center had occurred on June 30, 1998. In management's
opinion, all adjustments necessary to reflect this transaction have been
included.
F-16
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-3 Nos. 333-11067, 333-15907, 333-17021, 333- 23035, 333- 37247,
333-37383, 333-41603 and 333-58045) of General Growth Properties, Inc., the
Registration Statements (Form S-8 Nos. 33-79372, 333-07241, and 333-28449)
pertaining to the General Growth Properties, Inc. 1993 Stock Incentive Plan and
the Registration Statement (Form S-8 No. 333-11237) pertaining to the General
Growth Management Savings Plan, of our report dated October 22, 1998 with
respect to the Statement of Revenue and Certain Expenses of Coastland Center for
the year ended December 31, 1997 included in this current report on Form 8-K/A.
Ernst and Young LLP
Chicago, Illinois
November 9, 1998
F-17
