<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 March 31, 1999
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 May 10,
1999 was 40,104,277.
<PAGE> 2
GENERAL GROWTH PROPERTIES, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
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NUMBER
------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets
as of March 31, 1999 and December 31, 1998.......................................... 3
Consolidated Statements of Operations for the three
months ended March 31, 1999 and 1998................................................ 4
Consolidated Statements of Cash Flows
for the three months ended March 31, 1999 and 1998.................................. 5
Notes to Consolidated Financial Statements.......................................... 6
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations....................................... 20
Liquidity and Capital Resources of the Company...................................... 22
Item 3: Quantitative and Qualitative Disclosures about Market Risk...................... 26
PART II OTHER INFORMATION.
Item 6: Exhibits and Reports on Form 8-K................................................ 27
SIGNATURES............................................................................... 28
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
ASSETS
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
Investment in Real Estate:
Land $ 372,434 $ 364,699
Buildings and equipment 3,317,050 3,222,237
Less accumulated depreciation (326,242) (301,789)
Developments in progress 101,709 89,860
----------- -----------
Net property and equipment 3,464,951 3,375,007
Investment in Unconsolidated Real Estate Affiliates 409,980 386,301
----------- -----------
Net Investment In Real Estate 3,874,931 3,761,308
Cash and cash equivalents 14,540 19,630
Tenant accounts receivable, net 74,012 74,585
Deferred expenses, net 71,880 71,593
Investment in and note receivable from
General Growth Management, Inc. 90,887 84,716
Prepaid expenses and other assets 13,072 15,642
----------- -----------
4,139,322 $ 4,027,474
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes and other debts payable $ 2,753,373 $ 2,648,776
Distributions payable 34,965 33,757
Accounts payable and accrued expenses 110,136 122,303
----------- -----------
2,898,474 2,804,836
----------- -----------
Minority interest in Operating Partnership 299,832 299,431
----------- -----------
Commitments and contingencies
Convertible Preferred Stock: $100 par value; 5,000,000 shares authorized;
345,000 designated as PIERS (Note 1) with a $1,000 liquidation value;
337,500 of which were issued and outstanding at March 31, 1999 and
December 31, 1998, respectively 337,500 337,500
----------- -----------
Stockholders' Equity:
Common stock; $0.10 par value; 210,000,000 shares authorized; 40,104,277
shares and 39,000,972 shares issued and outstanding at
March 31, 1999 and December 31, 1998, respectively 4,010 3,900
Additional paid-in capital 871,553 843,238
Retained earnings (deficit) (268,883) (258,267)
Notes receivable - common stock purchase (3,164) (3,164)
----------- -----------
Total Stockholders' Equity 603,516 585,707
----------- -----------
$ 4,139,322 $ 4,027,474
=========== ===========
</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 MONTHS ENDED
MARCH 31, 1999 AND 1998
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
--------- ---------
<S> <C> <C>
Revenues:
Minimum rents $ 83,773 $ 50,507
Tenant recoveries 42,132 25,591
Percentage rents 3,861 2,433
Other 2,445 930
Fee Income 2,049 986
--------- ---------
Total Revenues 134,260 80,447
--------- ---------
Expenses:
Real Estate taxes 11,846 5,784
Management fee to affiliate 1,300 875
Property operating 31,139 22,109
Provision for doubtful accounts 1,037 608
General and Administrative 1,501 1,146
Depreciation and amortization 25,015 13,967
--------- ---------
Total Expenses 71,838 44,489
--------- ---------
Operating Income 62,422 35,958
Interest expense, net (39,087) (17,883)
Equity in net income/(loss) of unconsolidated affiliates:
GGP/Homart 3,492 1,735
Property Joint Ventures 3,574 1,041
General Growth Management, Inc. (2,856) (7,969)
--------- ---------
Income before extraordinary item and allocation
to minority interest 27,545 12,882
Income allocated to minority interest (4,216) (4,427)
--------- ---------
Income before extraordinary items 23,329 8,455
Extraordinary items (Note 4) (8,693) --
--------- ---------
Net Income $ 14,636 $ 8,455
--------- ---------
Convertible Preferred Stock Dividends 6,117 --
--------- ---------
Net income available to common stockholders $ 8,519 $ 8,455
========= =========
Earnings before extraordinary item per share-basic $ 0.43 $ 0.24
========= =========
Earnings before extraordinary item per share-diluted $ 0.43 $ 0.24
========= =========
Net earnings per share - basic $ 0.21 $ 0.24
========= =========
Net earnings per share - diluted $ 0.21 $ 0.24
========= =========
Distributions declared per share $ 0.49 $ 0.47
========= =========
Weighted average common shares
outstanding - basic (in thousands) 40,055 35,689
========= =========
Weighted average common shares
outstanding - diluted (in thousands) 40,252 35,937
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE> 5
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 14,636 $ 8,455
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest 4,216 4,427
Extraordinary items 8,693 --
Equity in net income of unconsolidated affiliates (4,210) 5,193
Provision for doubtful accounts 1,037 608
Depreciation 24,453 12,481
Amortization 562 1,486
Net Changes:
Tenant accounts receivable (464) (1,091)
Prepaid expenses and other assets 310 (590)
Accounts payable and accrued expenses (12,167) 4,010
--------- ---------
Net cash provided by (used in) operating activities 37,066 34,979
--------- ---------
Cash flows from investing activities:
Acquisition/development of real estate and improvements
and additions to properties (113,235) (40,353)
Increase in investments in Property Joint Ventures (303) (2,609)
Change in notes receivable from General Growth Management, Inc. (9,027) (13,820)
Increase in mortgage notes receivable, net -- (49,948)
Distributions received from GGP/Homart 6,909 6,257
Distributions received from Property Joint Ventures 11,490 3,122
Increase in deferred expenses (849) (2,616)
--------- ---------
Net cash provided by (used in) investing activities (105,015) (99,967)
--------- ---------
Cash flows from financing activities:
Cash distributions paid to common stockholders (18,330) (16,029)
Cash distributions paid to minority interest (9,309) (8,392)
Payment of dividends on PIERS (6,117) --
Proceeds from exercised options 760 --
Additional equity issuance costs (49) --
Proceeds from issuance of mortgage / other notes payable 105,000 83,000
Principal payments on mortgage notes and other debt payable (9,058) (9,775)
Purchase of treasury stock -- (1,136)
Capital contribution from minority interest -- 119
Penalty on retirement of debt (38) --
Increase in deferred expenses -- (2,261)
--------- ---------
Net cash provided by (used in) financing activities 62,859 45,526
--------- ---------
Net change in cash and cash equivalents (5,090) (19,462)
Cash and cash equivalents at beginning of year 19,630 25,898
--------- ---------
Cash and cash equivalents at end of period $ 14,540 $ 6,436
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 46,246 $ 21,840
Interest capitalized 2,977 2,734
--------- ---------
Non-cash investing and financing activities:
Treasury stock exchanged for Operating Partnership Units $ -- $ 1,875
Common stock issued in exchange for Operating Partnership Units 169 --
Common stock issued in exchange for GGP/Homart stock 33,611 --
Penalty on retirement of debt 8,655 --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE> 6
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
NOTE 1 ORGANIZATION
Readers of this quarterly report should refer to the Company's audited financial
statements for the year ended December 31, 1998 which are included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998
(Commission File No. 1-11656) dated March 19, 1999, as certain footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this report.
GENERAL
General Growth Properties, Inc., a Delaware corporation ("General Growth"), 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
General Growth and those entities owned or controlled by General Growth
(including the Operating Partnership as described below), unless the context
indicates otherwise. Proceeds from General Growth's April 15, 1993 initial
public offering of common stock (the "Common Stock") 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, General Growth 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"). General Growth received proceeds of approximately $322,686, net
of approximately $14,814 of issuance costs, which were utilized to fund certain
of the acquisitions described in Note 2 and for other working capital needs. The
PIERS are convertible at any time, at the option of the holder, into shares of
Common Stock at the conversion price of $39.70 per share of Common Stock. The
PIERS and the Depositary Shares are subject to mandatory redemption by General
Growth on July 15, 2008 at a price of $1,000 per PIERS, plus accrued and unpaid
dividends, if any, to the redemption date. Accordingly, the PIERS have been
reflected in the accompanying financial statements at such liquidation or
redemption value.
OPERATING PARTNERSHIP
The Operating Partnership commenced operations on April 15, 1993 and as of March
31, 1999, the Company owned 100% of fifty-two enclosed regional shopping centers
(the "Wholly-Owned Centers"); 51% of GGP/Ivanhoe, Inc. ("GGP/Ivanhoe"), 50% of
Quail Springs Mall and Town East Mall and 51% of GGP Ivanhoe III, Inc. ("GGP
Ivanhoe III") (collectively the "Property Joint Ventures") or ("PJVs");
approximately 42.9% of the stock of GGP/Homart, Inc. ("GGP/Homart") and a 100%
non-voting preferred stock interest representing 95% of the equity interest in
General Growth Management, Inc. ("GGMI"). 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
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<PAGE> 7
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
the Westroads Mall, and GGP Ivanhoe III (through a wholly owned subsidiary)
owned 100% of six shopping centers. Together, the Wholly-Owned centers, the
centers owned by the Property Joint Ventures and the Homart Centers comprise the
"Company Portfolio" or the "Portfolio Centers".
As of March 31, 1999, the Company owned an approximate 67% general partnership
interest in the Operating Partnership (excluding its preferred units of
partnership interest as discussed below). The remaining approximate 33% minority
interest in the Operating Partnership is held by limited partners that include
trusts for the benefit of the families of the original stockholders who
initially owned and controlled the Company and subsequent contributors of
properties to the Company. These minority interests are represented by common
units of limited partnership interest in the Operating Partnership (the
"Units"). The Units can be redeemed for cash, or at General Growth's election,
with certain restrictions, for shares of Common Stock on a one-for-one basis.
The holders of the Units also share equally with General Growth's 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
General Growth to comply with its obligations in respect to the PIERS, the
Operating Partnership Agreement was amended to provide for the issuance to
General Growth of preferred units of limited partnership interest in the
Operating Partnership (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 March 31,
1999, 100% of the Preferred Units (337,500) were owned by General Growth.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of the
Company and the Operating Partnership consisting of the fifty-two centers and
the unconsolidated investments in GGP/Homart, GGMI, GGP/Ivanhoe, Quail Springs
Mall, Town East Mall and GGP Ivanhoe III. All significant inter-company 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 March 31, 1999 and the results of operations for the three months ended
March 31, 1999 and 1998 and cash flows for the three months ended March 31, 1999
and 1998 have been included.
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<PAGE> 8
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
EARNINGS PER SHARE ("EPS")
Basic per share amounts are based on the weighted average of common shares
outstanding of 40,054,780 for 1999 and 35,689,054 for 1998. Diluted per share
amounts are based on the total number of weighted average common shares and
dilutive securities (stock options) outstanding of 40,252,453 for 1999 and
35,936,812 for 1998. 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 months ended March 31, 1999 and therefore has been excluded. The
outstanding Units have been excluded from the diluted earnings per share
calculation as there would be no effect on the EPS amounts since the minority
interests' share of income would also be added back to net income. Options to
purchase 331,964 shares of Common Stock pursuant to General Growth's 1998
Incentive Stock Plan were granted March 25, 1999 but were not included in the
computation of diluted EPS because the conditions which must be satisfied prior
to the issuance of any such shares under the Plan were not achieved during the
applicable period.
The following are the reconciliations of the numerators and denominators of the
basic and diluted EPS.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
----------- ----------
<S> <C> <C>
Numerators:
Income before extraordinary item $23,329 $ 8,455
Dividends on PIERS (6,117) --
------- -------
Income available to common shareholders before
extraordinary item - for basic and diluted EPS 17,212 8,455
Extraordinary Items (8,693) --
------- -------
Net income available to common
shareholders - for basic and diluted EPS $ 8,519 $ 8,455
======= =======
Denominators:
Weighted average common shares
outstanding (in thousands) - for basic EPS 40,055 35,689
Effect of dilutive securities - options 197 248
------- -------
Weighted average common shares
outstanding (in thousands) - for diluted EPS 40,252 35,937
======= =======
</TABLE>
NOTES RECEIVABLE - COMMON STOCK PURCHASE
In April, May and September, 1998 certain officers of the Company issued to the
Company an aggregate of $3,164 of notes in connection with their exercise of
options to purchase an aggregate of 166,000 shares of the Company's common
stock. The floating rate notes bear interest at a rate (5.56% per annum at March
31, 1999), determined by reference to the published broker call loan rate
adjusted to reflect a market rate, are collateralized by the shares of common
stock issued upon exercise of such options, provide for quarterly payments of
interest and are payable to the Company on demand.
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<PAGE> 9
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
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 8). Recoveries from tenants for taxes, insurance and other shopping center
operating expenses are recognized as revenues in the period the applicable costs
are incurred. However, lease termination payments received from tenants are
deferred and recognized as revenue at the rate of the cancelled lease's monthly
contract rent payable until the space is released at which time the balance if
any, of the deferred termination payment is recognized. 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.
BUSINESS SEGMENT INFORMATION
The Financial Accounting Standards Board (the "FASB") issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information"
("Statement 131") in June of 1997. Statement 131 requires disclosure of certain
operating and financial data with respect to separate business activities within
an enterprise. The sole business of General Growth and its consolidated
affiliates is owning and operating shopping centers. General Growth evaluates
operating results and allocates resources on a property-by-property basis.
General Growth does not distinguish or group its operations on a geographic
basis. Accordingly, General Growth has determined it has a single reportable
segment for Statement 131 purposes. Further, all operations are within the
United States and no customer or tenant comprises more than 10% of consolidated
revenues. Therefore, no additional disclosure due to the adoption of Statement
131 is currently mandated.
NOTE 2 PROPERTY ACQUISITIONS AND DEVELOPMENTS
WHOLLY-OWNED PROPERTIES
1999
- ----
On January 11, 1999, the Company acquired a 100% ownership interest in the
Crossroads Mall in Kalamazoo, Michigan. The aggregate purchase price was
approximately $68,000 (subject to prorations and certain adjustments), which was
funded from a new $83,655 short-term floating rate interim loan. (See Note 4).
On May 3, 1999, the Company entered into a definitive purchase agreement to
acquire Ala Moana Center in Honolulu, Hawaii. The closing of the transaction,
which is subject to the completion of certain closing conditions, is expected to
occur on or before July 30, 1999. The Company currently expects to own 20% - 35%
of a new joint venture that the Company anticipates will be formed to purchase
the property. The total acquisition price is $810,000 (less
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<PAGE> 10
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
certain closing adjustments, including a credit for the cost to complete an
ongoing expansion project), and is expected to be funded from a new first
mortgage loan of $425,000 to $525,000 and capital contributions from the Company
and its potential joint venture partners in proportion to their respective
ownership interest in the joint venture. The property has been managed by GGMI
for the last 10 years and GGMI and the Company will continue to have a
significant management role.
1998
- ----
On April 2, 1998 the Company acquired a 100% ownership interest in Southwest
Plaza located in Denver, Colorado. On May 8, 1998, the Company completed the
acquisition of 100% of the ownership interest in the Northbrook Court Shopping
Center located in Northbrook (Chicago), Illinois. The aggregate purchase price
for Southwest Plaza and Northbrook Court was approximately $261,000, including
approximately $149,000 of assumed and acquisition-related debt.
On June 2, 1998, the Company acquired the U.S. retail property portfolio (the
"MEPC Portfolio") of MEPC plc, a United Kingdom based real estate company
("MEPC"), through the purchase of the stock of the three U.S. subsidiaries of
MEPC that directly or indirectly owned the MEPC Portfolio. The Company acquired
the MEPC Portfolio for approximately $871,000 (less certain adjustments for
tenant allowances, construction costs, MEPC U.S. subsidiary liabilities and
other items). The Company borrowed approximately $830,000 to finance the
purchase price for the stock, which was paid in cash at closing as more fully
described in Note 4. The MEPC Portfolio consists of eight enclosed mall shopping
centers: Apache Mall in Rochester, Minnesota; The Boulevard Mall in Las Vegas,
Nevada; Cumberland Mall in Atlanta, Georgia; McCreless Mall in San Antonio,
Texas; Northridge Fashion Center in Northridge (Los Angeles), California;
Regency Square Mall in Jacksonville, Florida; Riverlands Shopping Center in
LaPlace, Louisiana and Valley Plaza Mall in Bakersfield, California.
On July 21, 1998 the Company acquired Altamonte Mall in Altamonte Springs
(Orlando), Florida. The aggregate consideration paid for the Altamonte Mall was
$169,000 (subject to prorations and certain adjustments) part of which was paid
by the payoff of approximately $24,000 of indebtedness assumed at acquisition
from cash funded from the Company's credit facility (the "Credit Facility") as
more fully described in Note 4 and the balance of which was paid by the issuance
of 3,683,143 Units.
On September 3, 1998, the Company acquired 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 Credit Facility), 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 in early 1998 and received an option to buy the property. In conjunction
with the closing of the sale, the loan was fully repaid.
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<PAGE> 11
On September 15, 1998, the Company acquired Spring Hill Mall in West Dundee
(Chicago), Illinois. The aggregate consideration paid by the Company was
approximately $124,000 (subject to prorations and certain adjustments) which was
paid in the form of approximately $32,000 in cash (through the Company's Credit
Facility) and a new 10-year fixed-rate $92,000 mortgage.
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
Credit Facility.
On October 21, 1998, the Company acquired Mall St. Vincent in Shreveport,
Louisiana. The aggregate consideration paid for Mall St. Vincent was $26,400
(subject to prorations and certain adjustments) which was paid by issuing
200,052 redeemable Units in the Operating Partnership (of which 88,871 were
immediately redeemed for cash, funded by the Company's Credit Facility, upon
demand of the holders of such Units) and by assuming approximately $19,200 of
fixed rate debt maturing in December 2007.
In addition, in 1998 the Company, through an unconsolidated joint venture,
acquired the U.S. Prime Property, Inc. ("USPPI") portfolio as described in Note
3.
The Company financed the forgoing acquisitions through a combination of secured
and unsecured debt, issuance of Operating Partnership Units and the proceeds of
the public offering of Depositary Shares as described in Note 1.
The acquisitions completed as of March 31, 1999 were accounted for utilizing the
purchase method and accordingly, the results of operations are included in the
Company's results of operations from the respective dates of acquisition (for
pro forma effect, see Note 9).
DEVELOPMENTS
During 1996, the Company acquired three new development sites in the following
locations: Coralville (Iowa City), Iowa; Grandville (Grand Rapids), Michigan and
Frisco (Dallas), Texas, respectively. Coral Ridge Mall, located in Coralville,
Iowa was completed and opened as scheduled in July of 1998. Construction of the
RiverTown Crossings Mall located in Grandville, Michigan commenced in December,
1997 and the mall is scheduled to open in November of 1999. Construction of
Stonebriar Mall at the Bridges, located in Frisco, Texas commenced in October of
1998 with an anticipated completion date in the summer of 2000.
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<PAGE> 12
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
NOTE 3 INVESTMENTS IN UNCONSOLIDATED AFFILIATES
GGP/HOMART
The Company currently owns approximately 42.9% of GGP/Homart with the remaining
ownership interests held by three institutional investors. At March 31, 1999,
GGP/Homart owned interests in twenty-three regional shopping malls, six of which
were owned jointly with venture partners. During 1999, GGP/Homart purchased its
venture partner's interest in the Parks at Arlington. GGP/Homart has elected
real estate investment trust status for income tax purposes. The Company shares
in the profits and losses, cash flows and other matters relating to GGP/Homart
in accordance with its ownership percentage. The co-investors in GGP/Homart have
an exchange right according to the GGP/Homart Stockholders Agreement. The
exchange right allows a GGP/Homart stockholder to convert its ownership interest
in GGP/Homart to the more liquid investment of a common stock ownership interest
in General Growth. If such right is exercised by a stockholder, the Company may
alternatively satisfy such conversion in cash. During 1999, the Company received
notice that one of the institutional investors (holding an approximate 4.7%
interest in GGP/Homart) desired to exercise its exchange right. The Company
satisfied the exercise of such exchange right (effective as of January 1, 1999)
by issuing 1,052,182 shares of Common Stock, thereby increasing its ownership
interest in GGP/Homart from approximately 38.2% in 1998 to approximately 42.9%
in 1999.
USPPI
On July 23, 1998, effective as of June 30, 1998, GGP Ivanhoe III, acquired the
U.S. Prime Property, Inc. ("USPPI") portfolio through a merger of a wholly-owned
subsidiary of GGP Ivanhoe III into USPPI. The common stock of GGP Ivanhoe III,
which will elect to be taxed as a REIT, is owned 51% by the Company and 49% by a
joint venture partner. The aggregate consideration paid pursuant to the merger
agreement was approximately $625,000 (less certain adjustments, including a
credit of approximately $64,000 for outstanding mortgage indebtedness and
accrued interest thereon and other miscellaneous items). The acquisition was
financed with a $392,000 interim loan bearing interest at LIBOR plus 90 basis
points which becomes due July 1, 1999, and capital contributions from the
Company and the joint venture partner in proportion to their respective stock
ownership. Pursuant to the GGP Ivanhoe III stockholders' agreement, the Company
has contributed approximately $91,290 to GGP Ivanhoe III (less certain interest
and other credits). The Company's capital contributions were funded primarily
from proceeds from the Company's Credit Facility. The properties acquired
include: Landmark Mall in Alexandria, Virginia; Mayfair Mall and adjacent office
buildings in Wauwatosa (Milwaukee), Wisconsin; Meadows Mall in Las Vegas,
Nevada; Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in Savannah,
Georgia; and Park City Center in Lancaster, Pennsylvania.
The joint venture partner in GGP Ivanhoe III is an affiliate of Ivanhoe Inc. of
Montreal, Quebec, Canada ("Ivanhoe") and is also the Company's joint venture
partner in GGP/Ivanhoe (described below). The Company and Ivanhoe share in the
profits and losses, cash flows and other matters
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<PAGE> 13
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
relating to GGP Ivanhoe III in accordance with their respective ownership
percentages except that certain major operating and capital decisions (as
defined in the stockholders' agreement) require the approval of both
stockholders. Accordingly, the Company is accounting for GGP Ivanhoe III using
the equity method.
GGP/IVANHOE
GGP/Ivanhoe owns The Oaks Mall in Gainesville, Florida and Westroads Mall in
Omaha, Nebraska. The Company contributed approximately $43,700 for its 51%
ownership interest in GGP/Ivanhoe and Ivanhoe owns the remaining 49% ownership
interest. The terms of the stockholder's agreement are similar to those of GGP
Ivanhoe III.
TOWN EAST MALL/QUAIL SPRINGS MALL
The Company owns a 50% interest in Town East Mall, located in Mesquite, Texas
and a 50% interest in Quail Springs Mall in Oklahoma City, Oklahoma. The Company
shares in the profits and losses, cash flows and other matters relating to Town
East Mall and Quail Springs Mall in accordance with its ownership percentage.
GGMI
The Operating Partnership currently holds all of the non-voting preferred stock
ownership interest in GGMI representing 95% of the equity interest. Certain key
employees of the Company hold the remaining 5% equity interest through ownership
of 100% of the common stock of GGMI, which is entitled to all voting rights in
GGMI. Accordingly, the Company utilizes the equity method to account for its
ownership interest in GGMI. GGMI cannot distribute funds to its common
stockholders until its available cash flow exceeds all accumulated preferred
dividends owed to the preferred stockholder. As of March 31, 1999, no such
distributions by GGMI have been made. Due to these currently unpaid and accrued
preferences on the preferred stock, the Company has been allocated 100% of the
earnings (loss) and cash flows generated by GGMI since 1996. Any dividends in
excess of the preferred cumulative dividend are allocated 95% to the preferred
stockholder and 5% to the common stockholders. The Operating Partnership also
has interest-only loans to GGMI which bear interest at rates ranging from 8% to
14% per annum and which mature by 2016. GGMI may make principal payments on the
loans if it has sufficient cash flow. GGMI manages, leases, and performs various
other services for the Portfolio Centers and other properties owned by
unaffiliated parties.
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<PAGE> 14
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
NOTE 4 MORTGAGE NOTES AND OTHER DEBTS PAYABLE
Mortgage notes and other debts payable at March 31, 1999 and December 31, 1998
consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
Fixed-Rate debt
Mortgage notes payable $1,654,718 $2,036,210
---------- ----------
Variable-Rate debt
Mortgage notes payable 906,655 412,566
Credit facility 192,000 200,000
---------- ----------
Total Variable-Rate debt 1,098,655 612,566
---------- ----------
Total mortgage notes and other debts payable $2,753,373 $2,648,776
========== ==========
</TABLE>
FIXED RATE DEBT
MORTGAGE NOTES PAYABLE
Mortgage notes payable consist primarily of fixed rate non-recourse notes
collateralized by individual or groups of properties. Certain mortgage notes
payable may be prepaid but are generally subject to a prepayment penalty of a
yield-maintenance premium or a percentage of the loan balance.
VARIABLE RATE DEBT
MORTGAGE NOTES PAYABLE
Variable mortgage notes payable consist primarily of a $100,000 loan
collateralized by Northbrook Court, (due August 1, 1999), an aggregate of
$113,655 of interim financing as described below and the $613,000 MEPC
acquisition financing as described below. The remaining loans are generally
short term in nature and bear interest at a rate per annum equal to LIBOR
(4.939% at March 31, 1999) plus 90 to 185 basis points. The Company currently
expects to retire or refinance such obligations when due.
MEPC ACQUISITION FINANCING
In June, 1998 the Company obtained a loan of approximately $830,000 to acquire
the MEPC portfolio as described in Note 2. The Company repaid approximately
$217,000 of this loan on June 10, 1998 from the net proceeds of the public
offering of the Depositary Shares as described in Note 1. During 1998, the
Company fixed the annual interest rate with respect to a portion of such loan at
6.7% per annum and the remainder bore interest at a rate per annum equal to
LIBOR plus 90 basis points. As of March 31, 1999 the entire remaining loan
balance
14 of 28
<PAGE> 15
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
of $613,000 bears interest at a rate per annum equal to LIBOR plus 115 basis
points, which rate is adjusted monthly. The loan is collateralized by the MEPC
Portfolio and matures on July 1, 1999.
Shortly after the initial acquisition loan funding, the Company agreed with the
lender an option to allow the extension of this loan at maturity at the lender's
then current rates. During 1999 however, the Company reached agreements in
principle with other lenders for full replacement financing and notified the
current lender that the loan would be fully repaid at maturity. Such
notification obligated the Company to pay $8,655 to the lender as a loan
prepayment fee (included in extraordinary items) which the Company funded from
the proceeds of the interim loan described below.
CREDIT FACILITY
The Company's $200,000 unsecured revolving credit facility bears interest at a
rate per annum equal to LIBOR plus 80 to 120 basis points depending upon the
Company's leverage ratio and matures on July 31, 2000 including a one-year
extension option which can be unilaterally exercised by the Company. The Credit
Facility is subject to financial performance covenants including debt-to-market
capitalization, minimum earnings before interest, taxes, depreciation and
amortization ("EBITDA") ratios and minimum equity values. On March 31, 1999, the
Credit Facility had an outstanding balance of $192,000.
INTERIM FINANCING
In January 1999, the Company obtained an additional $30,000 unsecured
bank loan (maturing June 30, 1999) bearing interest at a floating market rate
(6.46% per annum at March 31, 1999) and an additional $83,655 floating rate
(7.21% at March 31, 1999) interim loan (maturing June 1, 1999). The bank loan
and the interim loan are expected to be replaced or refinanced by their
respective maturity dates with new mortgage financing.
In April 1999, the Company obtained an additional $25,000 bank loan, partially
secured by Park Mall in Tuscon, Arizona. The loan matures September 1, 1999,
bears interest at a rate per annum of LIBOR plus 175 basis points and is
expected to be replaced by maturity with a $90,000 construction loan facility to
be secured by Park Mall which is currently undergoing extensive renovation, with
the final phase of renovation expected to be completed in 2001.
LETTERS OF CREDIT
As of March 31, 1999 and December 31, 1998, the Operating Partnership had
outstanding letters of credit of $10,938 and $9,956, respectively, primarily in
connection with special real estate assessments and insurance requirements.
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<PAGE> 16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
CONSTRUCTION LOAN
During April, 1999 the Company received $30,000 representing the initial loan
draw on a $110,000 construction loan facility. The facility is secured by and
will provide financing for the RiverTown Crossings Mall development in
Grandville (Grand Rapids), Michigan. The construction loan provides for periodic
funding as construction and leasing continues which bear interest at a rate per
annum of LIBOR plus 175 basis points. Interest is due monthly but may be added
to the periodic loan draws. The loan matures on June 29, 2001 and the Company
currently intends to refinance such loan at or prior to maturity with a
non-recourse long-term mortgage loan.
NOTE 5 DISTRIBUTIONS PAYABLE
On March 18, 1999 the Company declared a cash distribution of $.49 per share
that was paid on April 30, 1999 to stockholders of record on April 5, 1999,
totaling $19,136. In addition, a distribution of $9,712 was paid to the limited
partners of the Operating Partnership. Concurrently, the Company declared the
first quarter 1999 preferred stock dividend, for the period from January, 1999
through March 31, 1999, in the amount of $0.4531 per share, payable to preferred
stockholders of record on April 5, 1999 and paid on April 15, 1999. As described
in Note 1, such preferred stock dividend was in the same amount as the Operating
Partnership's distribution to General Growth of the same date with respect to
the Preferred Units held by General Growth.
On December 17, 1998, the Company declared a cash distribution of $.47 per share
that was paid on January 29, 1999, to stockholders of record on January 6, 1999,
totaling $18,330. In addition, a distribution of $9,309 was paid to the limited
partners of the Operating Partnership. Concurrently, the Company declared the
fourth quarter 1998 preferred stock dividend, for the period from October 1,
1998 through December 31, 1998, in the amount of $0.4531 per share, payable to
preferred stockholders of record on January 6, 1999 and paid on January 15,
1999. As described in Note 1, such preferred stock dividend was in the same
amount as the Operating Partnership's distribution to General Growth of the same
date with respect to the Preferred Units held by General Growth.
On September 23, 1998 the Company declared a cash distribution of $.47 per share
that was paid on October 30, 1998 to stockholders of record on October 5, 1998,
totaling $16,874. In addition, a distribution of $10,725 was paid to the limited
partners of the Operating Partnership. Concurrently, the Company declared the
initial preferred stock dividend, for the period from June 10, 1998 through
September 30, 1998, in the amount of $0.5588 per share, payable to preferred
stockholders of record on October 5, 1998 and paid on October 15, 1998. As
described in Note 1, such preferred stock dividend was in the same amount as the
Operating Partnership's distribution to General Growth of the same date with
respect to the Preferred Units held by General Growth.
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.
16 of 28
<PAGE> 17
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
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 6 MORTGAGE NOTE RECEIVABLE
During 1998 the Company advanced $50,000 to an unaffiliated developer in the
form of a mortgage loan (bearing interest at 10% per annum) collateralized by
such developer's ownership interest in the Pierre Bossier Mall in Shreveport,
Louisiana. In connection with the acquisition of this mall on September 3, 1998,
this mortgage note and related interest due was collected.
NOTE 7 COMMITMENTS AND CONTINGENCIES
In the normal course of business, from time to time, the Company is involved in
legal actions relating to the ownership and operations of its properties. In
management's opinion, the liabilities if any, that may ultimately result from
such legal actions are not expected to have a materially adverse effect on the
consolidated financial position, results of operations or liquidity of the
Company.
The Company periodically enters 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 of the project.
NOTE 8 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
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
adopted SOP 98-5 as of January 1, 1999 and the effect thereof has not been, and
is not expected to be, material.
In May, 1998, the Emerging Issues Task Force of the FASB ("EITF") issued a
consensus opinion entitled "Accounting for Contingent Rent in Interim Financial
Periods" ("EITF 98-9"). EITF 98-9 was effective as of May 21, 1998 and provided
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
has contingent rents as a majority of the tenant leases provide for additional
rent
17 of 28
<PAGE> 18
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
computed as a percentage of tenant sales revenues above certain annual
thresholds (predominately computed on a calendar year basis). The Company had
previously accrued, on an interim basis, such percentage rents based on the
prorated annual percentage rent estimated to be due from tenants. The Company,
as provided by EITF 98-9, prospectively adopted this consensus and did not
record additional percentage rent in the third and fourth quarters of 1998 above
amounts recognized in the six months ended June 30, 1998 ($5,013) until such
triggering events occurred. Accordingly, the Company recognized approximately
$1,300 of percentage rent in the fourth quarter of 1998, which would otherwise
have been recognized in previous periods. During the fourth quarter of 1998,
EITF 98-9 was withdrawn and, pursuant to the guidance issued by the EITF, the
Company has, effective January 1, 1999, reverted back to the original policy of
accruing percentage rents on an estimated basis. As of the date of this report,
no further accounting guidance has been issued on this subject. The Company
estimates that consolidated revenues for the three months ended March 31, 1999
would be reduced by approximately $2,260 if EITF 98-9 had not been withdrawn. It
is possible that the Securities and Exchange Commission or the EITF will, in the
future, restrict the accrual of such estimated percentage rent for interim
periods. This would cause a shift in the Company's recognition, including
amounts from the operations of GGP/Homart and the Property Joint Ventures, of
portions of percentage rent from interim quarters to the fourth quarter of 1999
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 9 PRO FORMA FINANCIAL INFORMATION
Due to the impact of the public offering of the Depositary Shares in 1998 as
described in Note 1 and the acquisitions during 1998 and 1999 described in Notes
2 and 3, historical results of operations may not be indicative of future
results of operations. The pro forma condensed consolidated statements of
operations for the three months ended March 31, 1999 include adjustments for the
acquisition of 100% of The Crossroads Mall as if such transaction had occurred
on January 1, 1999. The pro forma condensed consolidated statements of
operations for the three months ended March 31, 1998 include adjustments for the
public offering of the Depositary Shares in 1998 and the acquisition of 100% of
Southwest Plaza, Northbrook Court, Altamonte Mall, Pierre Bossier Mall, Spring
Hill Mall, Coastland Mall, Mall St. Vincent, The Crossroads Mall, the eight
operating properties in the MEPC Portfolio, and a 51% interest in the six
operating properties owned by GGP Ivanhoe III as if such transactions occurred
on January 1, 1998. The pro forma information is based upon the historical
consolidated statements of operations excluding extraordinary items and does not
purport to present what actual results would have been had the offerings,
acquisitions, and related transactions, in fact, occurred at the previously
mentioned dates, or to project results for any future period.
18 of 28
<PAGE> 19
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in thousands, except for per share amounts)
PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998
--------- ---------
<S> <C> <C>
Total Revenues: $ 134,527 $ 126,193
========= =========
Expenses:
Property operating 45,606 46,877
Management fees 1,300 1,275
Depreciation and amortization 25,061 23,325
--------- ---------
Total expenses 71,967 71,477
--------- ---------
Operating income 62,560 54,716
Interest expense, net (39,235) (39,212)
Equity in net income/(loss) of unconsolidated affiliates
GGP/Homart 3,492 1,735
Property Joint Ventures 3,574 1,007
General Growth Management, Inc. (2,856) (7,121)
Minority interest in operating partnership (7,091) (1,962)
--------- ---------
Pro forma net income (a) 20,444 9,163
Pro forma preferred stock dividends (6,117) (6,117)
--------- ---------
Pro forma net income available to common stockholders 14,327 3,046
========= =========
Pro forma earnings per share - basic (b) $ 0.36 $ 0.09
========= =========
Pro forma earnings per share - diluted (b) $ 0.36 $ 0.08
========= =========
</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 and does not include the 1999
extraordinary items.
(b) Pro forma basic earnings per share are based upon weighted average common
shares of 40,054,780 for 1999 and 35,689,054 for 1998. Pro forma diluted
per share amounts are based on the weighted average common shares and the
effect of dilutive securities (stock options) outstanding of 40,252,453 for
1999 and 35,936,820 for 1998.
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<PAGE> 20
GENERAL GROWTH PROPERTIES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All references to numbered Notes are to specific footnotes to the Consolidated
Financial Statements of the Company included in this quarterly report and which
descriptions are hereby incorporated herein by reference. The following
discussion should be read in conjunction with such Consolidated Financial
Statements and Notes thereto.
On March 31, 1999, the Company together with the Operating Partnership owned
100% of the fifty-two Wholly-Owned Centers, 51% of the stock of GGP/Ivanhoe, 50%
of Quail Springs Mall and Town East Mall, 51% of the stock of GGP Ivanhoe III,
approximately 42.9% of the stock of GGP/Homart, and a non-voting preferred stock
ownership interest (representing 95% of the equity interest) in GGMI. GGP/Homart
owns interests in twenty-three shopping centers, GGP/Ivanhoe owns interests in
two shopping centers, and GGP Ivanhoe III 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 III, GGMI, Quail
Springs Mall and Town East Mall, the discussion of results of operations below
relates primarily to the revenues and expenses of the Wholly-Owned Centers.
The mall store and free standing store portions of the centers in the Company
Portfolio which were not undergoing redevelopment on March 31, 1998 had an
occupancy of approximately 85.3% as of such date. On March 31, 1999, the mall
store and freestanding store portions of the centers in the Company Portfolio
which were not undergoing redevelopment were approximately 88.2% occupied as of
such date, representing an increase of 2.9% over 1998.
Total annualized sales averaged $315 per square foot for the Company Portfolio
in the three months ended March 31, 1999. In the three months ended March 31,
1999, total mall store sales for the Company Portfolio increased by 10.8% over
the same period in 1998. Comparable mall store sales are sales of those tenants
that were open the previous 12 months. Therefore, comparable mall store sales in
the three months ended March 31, 1999 are of those tenants that were operating
in the three months ended March 31, 1998. Comparable mall store sales in the
three months ended March 31, 1999 increased by 6.0% over the same period in
1998.
The average mall store rent per square foot from leases that expired in the
three months ended March 31, 1999 was $25.18. The Company Portfolio benefited
from increasing rents inasmuch as the average mall store rent per square foot on
new and renewal leases executed during this same period was $28.03, or $2.85 per
square foot above the average for expiring leases.
FORWARD-LOOKING INFORMATION
Forward looking statements contained in this Quarterly Report on Form 10-Q may
include certain forward-looking information statements, within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including (without limitation)
statements with respect to anticipated future operating and financial
performance, growth and acquisition opportunities and other similar forecasts
and statements of expectation. Words such as "expects", "anticipates",
"intends", "plans", "believes", "seeks",
20 of 28
<PAGE> 21
GENERAL GROWTH PROPERTIES, INC.
"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), the ability to obtain suitable equity and/or debt financing, 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 MARCH 31, 1999 AND 1998
Total revenues for the three months ended March 31, 1999 were $134.2 million,
which represents an increase of $53.8 million or approximately 66.9% from $80.4
million in the three months ended March 31, 1998. Substantially all of the
increase is from acquisitions completed during 1999 and 1998. Minimum rent for
the three months ended March 31, 1999 increased by $33.3 million or 65.9% from
$50.5 million in the comparable period in 1998 to $83.8 million. The acquisition
of properties in 1998 and 1999 generated the majority of such increase in
minimum rents. Expansion space, specialty leasing and occupancy increases at the
comparable centers (properties owned for the entire time during the three months
ended March 31, 1998 and 1999) accounted for the remaining increase in minimum
rents. Tenant recoveries increased by $16.5 million or 64.4% from $25.6 million
to $42.1 million for the three months ended March 31, 1999. Substantially all of
the increase was generated by properties which were acquired in 1998 and 1999.
For the three months ended March 31, 1999, percentage rents increased to $3.9
million from $2.4 million in 1998. Acquisitions contributed an increase of
approximately $1.5 million in percentage rent. As more fully described in Note
8, the accounting as originally contemplated by EITF Consensus 98-9 would have
reduced overage rents by approximately $2.3 million from the amount recognized
under the Company's current accounting policy for the three months ended March
31, 1999.
Total expenses, including depreciation and amortization, increased by
approximately $27.3 million, from $44.5 million in the three months ended March
31, 1998 to $71.8 million in the three months ended March 31, 1999. For the
three months ended March 31, 1999, property operating expenses increased by $9
million or 40.7% from $22.1 million in 1998 to $31.1 million in the first
quarter of 1999, substantially all of which is attributable to new acquisitions.
Depreciation and amortization increased by $11.0 million or 79.1% over the same
period in 1998. Approximately $.5 million of the increase in depreciation and
amortization was generated at comparable centers.
21 of 28
<PAGE> 22
GENERAL GROWTH PROPERTIES, INC.
The remaining $10.5 million was from newly acquired properties. Management fees
to affiliates and general and administrative expenses together were
approximately $.8 million or 38.6% higher than in the three months ended March
31, 1998.
Net interest expense for the three months ended March 31, 1999 was $39.1
million, an increase of $21.2 million or 118.4% from $17.9 million in the three
months ended March 31, 1998. The acquisition of new properties in 1998 and 1999
was responsible for substantially all of such increase.
Equity in net income of unconsolidated affiliates in the three months ended
March 31, 1999 increased by approximately $9.4 million to earnings of $4.2
million in 1999, from a net loss of $5.2 million in the three months ended March
31, 1998. The Company's equity in the earnings of GGP/Homart increased
approximately $1.8 million, primarily due to an increase in average property
occupancy and an increase in the ownership interest of GGP/Homart in The Parks
at Arlington in 1999 versus 1998. The Company's ownership interest in GGMI
resulted in an increase of approximately $5.1 million, primarily due to the
write-off of terminated third-party management contracts in 1998. Property Joint
Ventures (see Note 1) accounted for an increase of approximately $2.5 million
due primarily to the acquisition of USPPI in June 1998 as described more fully
in Note 3.
LIQUIDITY AND CAPITAL RESOURCES OF THE COMPANY
As of March 31, 1999, the Company held approximately $14.5 million of
unrestricted cash and cash equivalents. The Company uses operating cash flow as
the principal source of internal 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. External funding alternatives for acquisitions, new development,
expansions and major renovation programs at individual centers include
construction loans, mini-permanent loans, long-term project financing, joint
venture financing with institutional partners, additional Operating Partnership
level or Company level equity investments, unsecured Company level debt or
secured loans collateralized by individual shopping centers. In addition, the
Company has access to the public equity and debt markets through a currently
effective shelf registration statement under which up to $662.5 million in
equity or debt securities may be issued from time to time. The Company also has
the $200 million Credit Facility, which matures on July 31, 2000 including a
one-year extension option which the Company currently expects to exercise. On
March 31, 1999, the Credit Facility had an outstanding balance of approximately
$192 million.
As of March 31, 1999, the Company had consolidated dept of $2,753 million, of
which $1,655 million is comprised of debt bearing interest at a fixed rate, with
the remaining $1,098 million bearing interest at floating rates. Reference is
made to Note 4 and Item 3 below for additional information regarding the
Company's debt and the potential impact on the Company of interest rate
fluctuations. The Company has already identified replacement financing for all
loans scheduled to mature in the next 120 days and binding commitments are
currently being negotiated.
22 of 28
<PAGE> 23
GENERAL GROWTH PROPERTIES, INC.
The following summarizes certain significant investment and financing
transactions currently planned or completed since December 31,1998:
In January 1999, the Company obtained an additional $30 million unsecured bank
loan (maturing June 30, 1999) bearing interest at a floating market rate and an
additional $83.7 million floating rate interim loan (maturing June 1, 1999),
which loans are expected to be replaced or refinanced by their maturity dates
with new mortgage financing. Approximately $8.655 million of the interim loan
proceeds were paid to the MEPC acquisition-financing lender as a loan prepayment
fee as more fully described in Note 4.
On January 11, 1999, the Company acquired The Crossroads Mall in Kalamazoo,
Michigan. The aggregate purchase price was approximately $68 million, which was
funded from the Company's new short-term floating rate interim loans described
above.
During April 1999, the Company obtained a commitment for $87 million of new
long-term non-recourse mortgage financing to be secured by Coastland Center in
Naples, Florida. The ten year loan, bearing interest at 7% per annum, is
expected to close by May 31, 1999 and will replace the thirteen month loan in
the principal amount of $55 million, secured by a negative pledge (i.e., the
promise not to encumber) of Coastland Center, obtained November 30, 1998.
The Company is currently negotiating a $90 million construction loan facility to
finance the renovation currently underway at Park Mall in Tucson, Arizona (the
final phase of which is expected to be completed in 2001). In conjunction with
such negotiations, the Company obtained in April 1999, a $25 million short-term
bank loan maturing in September 1999. The Company is seeking a floating rate
construction loan, which is expected to be replaced by project completion with
permanent long-term mortgage non-recourse financing (see Note 4).
On April 29, 1999, the Company finalized the terms of a new $110 million
construction loan facility that will be used to fund the remaining construction
costs for RiverTown Crossings Mall (a current development project in Grandville
(Grand Rapids), Michigan as more fully described in Note 2). Loan amounts drawn
on the facility bear interest at a rate per annum equal to LIBOR plus 175 basis
points and the Company expects to refinance this loan facility by the scheduled
maturity of June 29, 2001 with permanent long-term financing secured by the then
completed mall (see Note 4).
On May 3, 1999, the Company entered into a definitive agreement to acquire Ala
Moana Center in Honolulu, Hawaii, as more fully described in Note 2. The
transaction is expected to close on or before July 30, 1999, and is anticipated
to be funded by new long-term first mortgage financing and capital contributions
from the Company and its potential joint venture partners. The Company
anticipates obtaining the funds for its expected capital contribution of
approximately $60 million to $135 million from new financing on currently
unencumbered properties.
The Company is actively pursuing replacement secured financing for all of its
debt becoming due in the remainder of 1999. Although final agreements to
refinance all such loan amounts have not yet been reached, the Company is
satisfied that all of its obligations will be met on a timely basis. Other than
as described above, there are no current plans for additional debt or
23 of 28
<PAGE> 24
GENERAL GROWTH PROPERTIES, INC.
equity capital. However, if additional capital is required, the Company believes
that it can obtain an interim bank loan, obtain extensions of existing loans,
obtain mortgage financing on unencumbered assets or raise additional debt or
equity capital. The Company will continue to monitor its capital structure and
will continue to purchase properties if they can be acquired and financed in a
manner that management of the Company reasonably believes will enhance
stockholder value.
Net cash provided by operating activities was $37 million in the first three
months of 1999, an increase of $2 million from $35 million in the same period in
1998. Net income before extraordinary items and allocations to the minority
interest increased $14.7 million, which was represented primarily by the
earnings contributed by acquisitions completed in 1998 and 1999.
Net cash used by investing activities was $105 million in the first three months
of 1999 compared to $100 million of cash used in the first three months of 1998.
Cash flow from investing activities was impacted by acquisitions (including
liabilities assumed at acquisition), development and improvements to real estate
properties, which caused a decrease in cash of approximately $113 million in the
first three months of 1999. A significant use of cash in the first three months
of 1998 was the funding of the Pierre Bossier $50 million mortgage note
receivable as more fully described in Note 6.
Financing activities contributed cash of $62.9 million in the first three months
of 1999, compared to a source of cash of $45.5 million in 1998. A major
contributing factor of cash from financing activity is financing from mortgages
and other debt, which had a positive impact of $113.7 million in the first three
months of 1999 versus approximately $83 million in the first three months of
1998. The additional financing was used to fund the acquisitions, developments
and redevelopment of real estate discussed above and in Note 2.
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 have been or will be incurred. 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.
24 of 28
<PAGE> 25
GENERAL GROWTH PROPERTIES, INC.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
As more fully described in Note 8, the FASB, EITF and the AICPA have issued
certain statements, which are effective for the current or subsequent year. The
Company does not expect a significant impact on its annual reported operations
due to the application of such new statements.
YEAR 2000 READINESS DISCLOSURES
The Year 2000 problem results from the use of a two digit year date instead of a
four digit date in the programs that operate computers (information technology
or "IT" systems) and other devices (i.e. "non-IT" systems such as elevators,
utility monitoring systems and time clocks that use computer chips). Systems
with a Year 2000 problem have programs that were written to assume that the
first two digits for any date used in the program would always be "19". Unless
corrected, this assumption may result in problems when the century date occurs.
On that date, these computer programs likely will misinterpret the date January
1, 2000 as January 1, 1900. This could cause systems to incorrectly process
critical financial and operational information, generate erroneous information
or fail altogether. The Year 2000 issue affects almost all companies and
organizations.
THE COMPANY'S STATE OF READINESS:
The Company recently upgraded its major information systems including its
databases and primary accounting software which are all Year 2000 compliant.
These upgrades, one minor component of which is still scheduled to be installed
by June, 1999, were performed primarily for the purpose of routine improvements
to the Company's information systems. These upgrades were initiated in advance
of any concern for the Year 2000 issue. The Company is in the process of
evaluating several other smaller non-IT systems (i.e. time keeping systems,
elevators, etc.) to verify that they are Year 2000 compliant. In addition, the
Company has formed a Year 2000 Committee that includes senior personnel from
most areas of the Company. These people are charged with the duty of determining
the extent of the Company's exposure and taking the appropriate action to
minimize any impact on the Company's operations. The non-IT systems evaluation
process is expected to be completed by mid 1999. If these non-IT systems are
found to be not Year 2000 compliant, the appropriate upgrades or replacements
will be purchased. The cost of any upgrades that may be required is expected to
be less than $1 million. In addition, the Company is communicating with its
customers, tenants, suppliers and service providers to determine whether they
are actively involved in projects to ensure that their products and business
systems will be Year 2000 compliant. The Company's exposure is widely spread,
with no known major direct exposure.
COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUE:
As the Company's IT systems Year 2000 compliance issues have already been
addressed, the Company does not expect to incur any significant additional costs
regarding its IT systems due to the Year 2000 issue. Costs to specifically
remediate non-IT systems that are non Year 2000 compliant are not expected to be
material.
25 of 28
<PAGE> 26
GENERAL GROWTH PROPERTIES, INC.
RISKS RELATING TO THE YEAR 2000 ISSUE AND CONTINGENCY PLANS:
Although the Company is not currently aware of any specific significant Year
2000 issues involving third-parties, the Company believes that its most
significant potential risk relating to the Year 2000 issue is in regard to such
third parties. For example, the Company believes there could be failure in the
information systems of certain service providers that the Company relies upon
for electrical, telephone and data transmission and banking services. The
Company believes that any service disruption with respect to these providers due
to a Year 2000 issue would be of a short-term nature. The Company has existing
back-up systems and procedures, developed primarily for natural disasters, that
could be utilized on a short-term basis to address any service interruptions. In
addition, with respect to tenants, a failure of their information systems could
delay the payment of rents or even impair their ability to operate. These tenant
problems are likely to be isolated and would likely not impact the operations of
any particular mall or the Company as a whole. While it is not possible at this
time to determine the likely impact of any of these potential problems, the
Company will continue to evaluate these areas and develop additional contingency
plans, as appropriate. However, although the Company believes that its Year 2000
issues have been addressed and that suitable remediation and/or contingency
procedures will be in place by December 31, 1999, there can be no assurance that
Year 2000 issues will not have a material adverse effect on the Company's
results of operations or financial condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has not entered into any transactions using derivative financial
instruments or derivative commodity instruments. The Company is subject to
market risk associated with changes in interest rates. Interest rate exposure is
principally limited to the $1,098.7 million of debt of the Company outstanding
at March 31, 1999 that is priced at interest rates that float with the market. A
25 basis point movement in the interest rate on the floating rate debt would
result in an approximate $2.7 million annualized increase or decrease in
interest expense and cash flows. The remaining debt is fixed rate debt. The
Company has an ongoing program of refinancing its floating and fixed rate debt
and believes that this program allows it to vary its ratio of fixed to floating
rate debt to respond to changing market rate conditions. Reference is made to
Item 2 above and Note 4 for additional debt information.
26 of 28
<PAGE> 27
GENERAL GROWTH PROPERTIES, INC.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Set forth below is certain information about a sale of securities made by
General Growth during the first quarter of 1999, which sale was not registered
under the Securities Act of 1933, as amended. The sale was made in connection
with the exercise by the purchaser named below of an exchange right as described
in Note 3, was effected in reliance upon the exemption contained in Section 4
(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated
thereunder, and was not an underwritten offering.
<TABLE>
<CAPTION>
EFFECTIVE OFFERING PRICE OR
DATE ISSUER SECURITY AMOUNT PURCHASER CONSIDERATION
--------- ------ -------- --------- --------- -----------------
<S> <C> <C> <C> <C> <C>>
1/01/99 General Growth Common 1,052,182 Trustees of the University 1,000 shares of common
Properties, Inc. Stock of Pennsylvania stock of GGP/Homart, Inc.
(representing an
approximate 4.7% interest
in GGP/Homart, Inc.)
</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 March 18, 1999, describing under
Item 5 the acquisition of The Crossroads Mall. No financial statements were
required to be filed.
27 of 28
<PAGE> 28
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: May 10, 1999 by: /s/ BERNARD FREIBAUM
--------------------------------------
Bernard Freibaum
Executive Vice President and Chief
Financial Officer
(Principal Accounting Officer)
28 of 28
<PAGE> 29
EXHIBIT INDEX
2(a) Amended and Restated Stock Purchase Agreement, dated as of October 16,
1995, by and among Sears, Roebuck and Co., Homart Development Co., Homart Newco
One, Inc. and GGP/Homart, Inc.(1)
2(b) Amendment No. 1 to Amended and Restated Stock Purchase Agreement,
dated as of December 22, 1995, by and among Sears, Roebuck and Co., Homart
Development Co., Homart Newco One, Inc. and GGP/Homart, Inc.(1)
2(c) Real Estate Purchase Agreement, dated as of July 31, 1995, by and
among Sears, Roebuck and Co., Homart Development Co. and GGP/Homart, Inc.(1)
2(d) Amendment No. 1 to Real Estate Purchase Agreement, dated as of October
16, 1995, by and among Sears, Roebuck and Co., Homart Development Co. and
GGP/Homart, Inc.(1)
2(e) Amendment No. 2 to Real Estate Purchase Agreement, dated as of
December 22, 1995, by and among Sears, Roebuck and Co., Homart Development Co.
and GGP/Homart, Inc.(1)
2(f) Mall Purchase Agreement, dated as of December 22, 1995, by and among
Sears, Roebuck and Co., Homart Development Co. and General Growth
Properties-Natick Limited Partnership.(1)
2(g) Contribution Agreement dated December 6, 1996, between Forbes/Cohen
Properties, a Michigan general partnership, and GGP Limited Partnership, a
Delaware limited partnership.(2)
2(h) Contribution Agreement dated December 6, 1996, between Lakeview Square
Associates, a Michigan general partnership, and GGP Limited Partnership, a
Delaware limited partnership.(2)
2(i) Contribution Agreement dated December 6, 1996, between Jackson
Properties, a Michigan general partnership, and GGP limited Partnership, a
Delaware limited partnership.(2)
2(j) Sale and Contribution Agreement dated June 19, 1997, between CA
Southlake Investors, Ltd., a Georgia limited partnership, and GGP Limited
Partnership, a Delaware limited partnership.(10)
2(k) Contribution Agreement dated June 10, 1997, among Atlantic Freeholds
II, a Nevada general partnership, Town East Mall, L.P., a Delaware limited
partnership, and Town East Mall Partnership, a Texas general partnership.(10)
2(l) Purchase and Sale Agreement dated as of March 22, 1997, between
Century Plaza Co., an Alabama general partnership, and Century Plaza L.L.C., a
Delaware limited liability company.(10)
S-1
<PAGE> 30
2(m) Real Estate Purchase Agreement dated March 12, 1997, between Champaign
Venture, an Illinois general partnership, and Champaign Market Place L.L.C., a
Delaware limited liability company.(10)
2(n) Stock Purchase Agreement dated as of April 17, 1998 and amended June
2, 1998, among MEPC PLC, MEPC North American Properties Limited, U.K.-American
Holdings Limited and GGP Limited Partnership.(16)
2(o) Purchase and Sale Agreement dated May 8, 1998, among Grosvenor
International Limited, P.I.C. Investments, Northbrook Court I L.L.C. and
Northbrook Court II L.L.C.(17)
2(p) Merger Agreement dated May 14, 1998, among GGP Limited Partnership,
GGP Acquisition L.L.C. and U.S. Prime Property, Inc.(17)
2(q) Sale and Contribution Agreement dated April 2, 1998, between Southwest
Properties Venture and GGP Limited Partnership.(18)
2(r) Contribution and Exchange Agreement dated as of July 10, 1998 (the
"Contribution Agreement") among Nashland Associates, HRE Altamonte, Inc.,
Altamonte Springs Mall L.P., and GGP Limited Partnership.(21)
2(s) Purchase and Sale Agreement and Joint Escrow Instructions dated as of
August 21, 1998 by and between Spring Hill Mall Partnership (seller) and Spring
Hill Mall L.L.C., (purchaser).(22)
2(t) Purchase and Sale Agreement dated as of the 18th day of September,
1998 by and between Coastland Center Joint Venture (seller) and Coastland
Center, L.P. (purchaser).(23)
3(a) Amended and Restated Certificate of Incorporation of the Company.(3)
3(b) Amendment to Amended and Restated Certificate of Incorporation of the
Company.(5)
3(c) Amendment to Amended and Restated Certificate of Incorporation of the
Company filed on December 21, 1995.(11)
3(d) Amendment to Amended and Restated Certificate of Incorporation of the
Company filed on May 20, 1997.(15)
3(e) Bylaws of the Company.(5)
3(f) Amendment to Bylaws of the Company.(5)
4(a) Redemption Rights Agreement, dated July 13, 1995, by and among GGP
Limited Partnership, General Growth Properties, Inc. and the persons listed on
the signature pages thereof.(8)
4(b) Redemption Rights Agreement dated December 6, 1996, among GGP Limited
Partnership, a Delaware corporation, Forbes/Cohen Properties, a Michigan general
partnership,
S-2
<PAGE> 31
Lakeview Square Associates, a Michigan general partnership, and Jackson
Properties, a Michigan general partnership.(2)
4(c) Redemption Rights Agreement, dated June 19, 1997, among GGP Limited
Partnership, a Delaware limited partnership, General Growth Properties, Inc., a
Delaware corporation, and CA Southlake Investors, Ltd., a Georgia limited
partnership.(13)
4(d) Redemption Rights Agreement dated October 23, 1997, among GGPI, GGPLP
and Peter Leibowits.(15)
4(e) Form of Indenture.(12)
4(f) Certificate of Designations, Preferences and Rights of 7.25% Preferred
Equity Redeemable Stock, Series A.(20)
4(g) Redemption Rights Agreement dated April 2, 1998, among GGP Limited
Partnership, General Growth Properties, Inc. and Southwest Properties Venture.
(17)
4(h) Indenture and Servicing Agreement dated as of November 25, 1997, among
the Issuers named therein, LaSalle National Bank, as Trustee, and Midland Loan
Services, L.P., as Servicer (the "Indenture Agreement").(18)
4(i) Form of Note pursuant to the Indenture Agreement.(18)
4(j) Mortgage, Deed of Trust, Security Agreement, Assignment of Leases and
Rents, Fixture Filing and Financing Statement, date and effective as of November
25, 1997, among the Issuers, the Trustee and the Deed Trustees named
therein.(18)
4(k) Rights Agreement, dated November 18, 1998, between General Growth
Properties, Inc. and Norwest Bank Minnesota, N.A., as Rights Agent (including
the Form of Certificate of Designation of Series A Junior Participating
Preferred Stock attached thereto as Exhibit A, the Form of Right Certificate
attached Preferred Stock attached thereto as Exhibit C).(24)
4(l) Form of Common Stock Certificate.
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)
10(e) Form of Amended and Restated Agreement of Partnership for each of the
Property Partnerships.(3)
S-3
<PAGE> 32
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)
10(n)* General Growth Properties, Inc. 1998 Incentive Stock Plan.(25)
23 Consent of PricewaterhouseCoopers LLP - Independent Accountants.
27 Financial Data Schedule.
(*) A compensatory plan or arrangement required to be filed.
================================================================================
(1) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated January 5, 1996, incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated January 3, 1996, incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Registration Statement on
Form S-11 (No. 33-56640), incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated July 16, 1996, incorporated herein by reference.
(5) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, incorporated herein by reference.
S-4
<PAGE> 33
(6) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993, incorporated herein by reference.
(7) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated February 25, 1994, incorporated herein by reference.
(8) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated July 17, 1996, incorporated herein by reference.
(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, incorporated herein by reference.
(11) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1995, incorporated herein by reference.
(12) Previously filed as an exhibit to the Company's Registration Statement on
Form S-3 (No. 333-37247) dated October 6, 1997, incorporated herein by
reference.
(13) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1996, incorporated herein by reference.
(14) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8 (No. 333-28449) dated June 3, 1997, incorporated herein by reference.
(15) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1997, incorporated herein by reference.
(16) Previously filed as an exhibit to the Company's current report on Form 8K
dated June 17, 1998, incorporated herein by reference.
(17) Previously filed as an exhibit to the Company's current report on Form 8K
dated May 26, 1998, incorporated herein by reference.
(18) Previously filed as an exhibit to the Company's current report on Form
8K/A dated June 2, 1998, incorporated herein by reference.
(19) Previously filed as an exhibit to the Company's current report on Form
10-Q dated May 14, 1998, as amended May 21, 1998, incorporated herein by
reference.
(20) Previously filed as an exhibit to the Company's current report on Form
8-K dated August 7, 1998, incorporated herein by reference.
(21) Previously filed as an exhibit to the Company's current report on Form 8K
dated August 5, 1998, incorporated herein by reference.
S-5
<PAGE> 34
(22) Previously filed as an exhibit to the Company's current report on Form
8-K dated September 30, 1998, incorporated herein by reference.
(23) Previously filed as an exhibit to the Company's current report on Form
8-K dated October 5, 1998, incorporated herein by reference.
(24) Previously filed as an exhibit to the Company's current report on Form
8-K, dated November 18, 1998, incorporated herein by reference.
(25) Previously filed as an exhibit to the Company's current Registration
Statement on Form S-8 (No. 333-74461) dated March 12, 1999, incorporated herein
by reference.
S-6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FINANCIAL STATEMENTS INCLUDED IN ITS REPORT ON FORM 10-Q FOR THE
THREE MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 14,540
<SECURITIES> 0
<RECEIVABLES> 74,012
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 4,292,060
<DEPRECIATION> 326,242
<TOTAL-ASSETS> 4,139,322
<CURRENT-LIABILITIES> 0
<BONDS> 2,753,373
337,500
0
<COMMON> 4,010
<OTHER-SE> 903,348
<TOTAL-LIABILITY-AND-EQUITY> 4,139,322
<SALES> 134,260
<TOTAL-REVENUES> 134,260
<CGS> 0
<TOTAL-COSTS> 70,801
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,037
<INTEREST-EXPENSE> 39,087
<INCOME-PRETAX> 27,545
<INCOME-TAX> 0
<INCOME-CONTINUING> 27,545
<DISCONTINUED> 0
<EXTRAORDINARY> 8,693
<CHANGES> 0
<NET-INCOME> 14,636
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
