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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-11656
GENERAL GROWTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 42-1283895
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
110 N. Wacker Dr., Chicago, IL 60606
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(Address of principal executive offices) (Zip Code)
(312) 960-5000
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(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, $.10 par value New York Stock Exchange
Depositary Shares, each representing New York Stock Exchange
1/40 of a share of 7.25% Preferred Income
Equity Redeemable Stock, Series A
Preferred Stock Purchase Rights New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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
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[X] Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
As of March 14, 2000, the aggregate market value of the 48,959,071 shares of
Common Stock held by non-affiliates of the registrant was $1,395,333,523, based
upon the closing price on the New York Stock Exchange composite tape on such
date. (For this computation, the registrant has excluded the market value of all
shares of its Common Stock reported as beneficially owned by executive officers
and directors of the registrant and certain other stockholders; such exclusion
shall not be deemed to constitute an admission that any such person is an
"affiliate" of the registrant). As of March 14, 2000, there were 51,927,576
shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual stockholders meeting to be held
on May 9, 2000 are incorporated by reference into Part III.
<PAGE> 2
PART I All references to numbered Notes are to specific
ITEM 1. BUSINESS footnotes to the Consolidated Financial Statements
of the Company (as defined below) included in this
Annual Report on Form 10-K and the descriptions
included in such Notes are incorporated into the
applicable Item response by reference. The
following discussion should be read in conjunction
with such Consolidated Financial Statements and
related Notes.
FORWARD LOOKING Forward looking statements contained in this Annual
INFORMATION Report on Form 10-K 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", "estimates" and "should" and variations of
these words and similar expressions, are intended
to identify these forward-looking statements.
Forward looking statements made by General Growth
Properties, Inc. ("General Growth"), its Operating
Partnership (as defined below) and subsidiaries
(collectively, 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, changes in retail rent rates in the
Company's markets, shifts in customer demands,
tenant bankruptcies, changes in vacancy rates at
the Company's properties, 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 on the terms necessary to support the
Company's future business.
GENERAL General Growth Properties, Inc. was formed in 1986
by Martin Bucksbaum and Matthew Bucksbaum (the
"Original Stockholders"). On April 15, 1993, an
initial public offering of the common stock (the
"Common Stock") of General Growth and certain
related transactions were completed. Concurrently,
General Growth (as general partner) and the
Original Stockholders (as limited partners) formed
GGP Limited Partnership (the "Operating
Partnership"). As of December 31, 1999, the Company
owned 100% of fifty-two regional mall shopping
centers (the "Wholly-Owned Centers"); 50% of the
stock of GGP/Homart, Inc. ("GGP/Homart"), 50% of
the stock of GGP/Homart II, L.L.C. ("GGP/Homart
II"), 51% of the stock of GGP Ivanhoe, Inc. ("GGP
Ivanhoe"), and 51% of the stock of GGP Ivanhoe III,
Inc. ("GGP Ivanhoe III"), 50% of each of two
regional mall shopping centers, Quail Springs Mall
and Town East Mall, and a non-voting preferred
stock interest in General Growth Management, Inc.
("GGMI") (collectively, the "Unconsolidated Joint
Ventures"). The 50% interest in the twenty-three
centers owned by GGP/Homart, the 50% interest in
the seven centers owned by GGP/Homart II, the 51%
ownership interest in the two centers owned by GGP
Ivanhoe,
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the 51% ownership interest in the eight
centers owned by GGP Ivanhoe III, and the 50%
ownership interest in both Quail Springs Mall and
Town East Mall comprise the "Unconsolidated
Centers". Together, the Wholly-Owned Centers and
the Unconsolidated Centers comprise the "Company
Portfolio" or the "Portfolio Centers". On December
31, 1999, General Growth owned an approximate 72%
general partnership interest in the Operating
Partnership, and various minority holders,
including the Original Stockholders and subsequent
contributors of properties to the Company, owned
the remaining 28% limited partnership interest. See
Item 7 and the Consolidated Financial Statements
and Notes included in Item 8 of this Annual Report
on Form 10-K for certain financial and other
information required by this Item 1.
On December 22, 1995 the Company, jointly with four
other investors, acquired 100% of the stock in
GGP/Homart which owned substantially all of the
regional mall assets and liabilities of Homart
Development Co., an indirect wholly-owned
subsidiary of Sears, Roebuck & Co. The Company
acquired approximately 38.2% of GGP/Homart for
approximately $178 million including certain
transaction costs. All of the stockholders of
GGP/Homart committed to contribute up to $80.0
million of additional capital and, as of December
31, 1997 this commitment had been fulfilled. During
1999, three of the original four other investors,
in independent transactions and pursuant to their
respective exchange rights, exchanged their
interests in GGP/Homart for Common Stock of General
Growth. As a result of these transactions, the
Company currently owns a 50% interest in
GGP/Homart.
On December 22, 1995, GGP Management, Inc. ("GGP
Management") was formed to manage, lease, develop
and operate enclosed malls. The Operating
Partnership owned 100% of the non-voting preferred
stock ownership interest in GGP Management
representing 95% of the equity interest. Key
employees of the Company held the remaining 5%
ownership interest therein in the form of common
stock entitled to all of the voting rights in GGP
Management. In August of 1996, GGP Management
acquired GGMI through arm's length negotiations for
approximately $51.5 million, which was accounted
for as a purchase, by completing the following
steps: GGP Management borrowed approximately $39.9
million from the Operating Partnership, and used
the loan proceeds to acquire 1,555,855 newly-issued
shares of Common Stock from the Company. GGP
Management then exchanged the 1,555,855 shares of
Common Stock and 453,791 Operating Partnership
Units (contributed by the Operating Partnership)
for 100% of the outstanding shares in GGMI. GGP
Management was then merged into GGMI with GGMI as
the surviving entity.
As a result of these transactions, the Operating
Partnership owns 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,
which is entitled to all voting rights in GGMI.
GGMI cannot distribute funds until its available
cash flow exceeds all accumulated preferred
dividends owed to the preferred stockholder. As of
December 31, 1999, no such distributions by GGMI
have been made. Any dividends in excess of the
preferred cumulative dividend are allocated 95% to
the preferred stockholder and 5% to the common
stockholders. The interest only loans from the
Operating Partnership to GGMI bear interest at
rates ranging from 8% to 14% per annum and mature
in 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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On September 17, 1997, GGP Ivanhoe indirectly
acquired The Oaks Mall in Gainesville, Florida and
Westroads Mall in Omaha, Nebraska. The purchase
price for the two properties was approximately $206
million of which $125 million was financed through
property level indebtedness. The Company
contributed approximately $43 million for its 51%
ownership interest in GGP Ivanhoe. Ivanhoe, Inc. of
Montreal, Canada ("Ivanhoe") owns the remaining 49%
ownership interest in GGP Ivanhoe.
Effective as of June 30, 1998, GGP Ivanhoe III
acquired the U.S. Prime Property, Inc. ("USPPI")
real estate portfolio through a merger of a
wholly-owned subsidiary of GGP Ivanhoe III into
USPPI. The common stock of GGP Ivanhoe III, which
has elected to be taxed as a REIT, is owned 51% by
the Company and 49% by Ivanhoe. The aggregate
consideration paid pursuant to the merger agreement
was approximately $625 million (less certain
adjustments, including a credit of approximately
$64 million for outstanding mortgage indebtedness
and accrued interest thereon as well as credits for
tenant allowances, construction costs, commissions,
due diligence items and certain miscellaneous
items). The acquisition was financed with a $392
million interim loan, which was replaced in 1999,
and capital contributions from the Company and the
joint venture partner in proportion to their
respective stock ownership. The properties acquired
include 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. During 1999, GGP Ivanhoe
III acquired Oak View Mall in Omaha, Nebraska and
Eastridge Mall in San Jose, California. The
aggregate purchase price for the two properties was
approximately $160 million, financed by capital
contributions of the partners, a new $83 million
long-term mortgage loan and certain short-term
financing.
In November 1999, the Company formed GGP/Homart II,
a new joint venture with the New York State Common
Retirement Fund, the Company's venture partner in
GGP/Homart. GGP/Homart II owns three regional malls
contributed by the New York State Common Retirement
Fund (Alderwood Mall in Lynnwood (Seattle),
Washington; Carolina Place in Charlotte, North
Carolina; and Montclair Plaza in Montclair (Los
Angeles), California), and three regional malls
(Altamonte Mall in Orlando, Florida; Natick Mall in
Natick, Massachusetts; Northbrook Court in
Northbrook, Illinois) and one mall (Stonebriar
Centre in Frisco (Dallas), Texas) currently under
construction contributed by the Company as more
fully described in Note 3.
BUSINESS OF THE The Company is primarily engaged in the ownership,
COMPANY operation, management, leasing, acquisition,
development, expansion and financing of regional
mall shopping centers in the United States. Most
of the shopping centers in the Company Portfolio
are strategically located in major and middle
markets where they have strong competitive
positions. A detailed listing starting on page 15
of this report contains information on each
regional mall shopping center in the Company
Portfolio including location, year opened, square
footage, anchors, and anchor vacancies. The Company
Portfolio's geographic diversification should
mitigate the effects of regional economic
conditions and local factors.
The Company makes all key strategic decisions for
the Portfolio Centers. However, in connection with
the Unconsolidated Centers, such strategic
decisions are made jointly with the respective
stockholders or joint venture partners. The Company
is also the
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asset manager of the Portfolio Centers, executing
the strategic decisions and overseeing the
day-to-day activities performed by GGMI. GGMI
performs day-to-day property management functions
including leasing, construction management, data
processing, maintenance, accounting, marketing,
promotion and security pursuant to the management
agreements. As of December 31, 1999 GGMI was the
property manager for all of the Wholly-Owned
Centers and thirty-nine of the Unconsolidated
Centers. The remaining three centers, owned by
GGP/Homart through joint ventures, are managed by
certain joint venture partners of GGP/Homart.
During February 2000, the venture partner's 50%
interest in Lakeland Square, one of the three
centers not managed by GGMI, was purchased by
GGP/Homart. As a result, GGMI took over management
of this mall in February 2000.
The majority of the income from the Portfolio
Centers is derived from rents received through long
term leases with retail tenants. The long-term
leases require the tenants to pay base rent which
is a fixed amount specified in the lease. The base
rent is often subject to scheduled increases
defined in the lease. Another component of income
is percentage rent. Percentage rent is paid by the
tenant if their sales exceed an agreed upon minimum
annual amount. Percentage rent is calculated by
multiplying the sales in excess of the minimum
annual amount by a percentage defined in the lease.
Long-term leases generally contain a provision for
the lessor to recover certain expenses incurred in
the day-to-day operations including common area
maintenance and real estate taxes. The recovery is
generally related to the tenant's pro-rata share of
space in the property.
The evolution of the shopping center business
necessitates the implementation of new approaches
to shopping center management and leasing.
Management's strategies to increase shareholder
value and cash flow include the integration of mass
merchandise retailers with traditional department
stores, specialty leasing, entertainment-oriented
tenants, proactive property management and leasing,
operating cost reductions including those resulting
from economies of scale, strategic expansions and
acquisitions, e-business initiatives and selective
new shopping center developments. Management
believes that these approaches should enable the
Company to operate and grow successfully in today's
value-oriented and technological environment.
Following is a summary of recent acquisition,
development and expansion and redevelopment
activity.
As used in this Annual report, the term "GLA"
refers to gross leaseable retail space, including
Anchors and mall tenant areas; the term "Mall GLA"
refers to gross leaseable retail space, excluding
Anchors; the term "Anchor" refers to a department
store or other large retail store; the term "Mall
Stores" refers to stores (other than Anchors) that
are typically specialty retailers who lease space
in shopping centers; and the term "Freestanding
GLA" means gross leaseable area of freestanding
retail stores in locations that are not attached to
the primary complex of buildings that comprise a
regional mall shopping center.
ACQUISITIONS The Company continues to seek to acquire properties
that provide opportunities for enhanced
profitability and appreciation in value and
corresponding increases in shareholder value. In
1999, the Company acquired 100% ownership interests
in three regional malls and partial ownership
interests in five additional regional malls for an
aggregate investment by the Company of
approximately $1,170 million. The following is a
summary description of the acquisitions made by the
Company since December 31, 1998.
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On January 11, 1999, the Company acquired a 100%
ownership interest in the Crossroads Mall in
Kalamazoo, Michigan for a purchase price of
approximately $68 million. The Company utilized a
$45 million long-term mortgage loan and interim
loan proceeds to finance this acquisition.
On July 30, 1999, the Company acquired 100% of the
Ala Moana Center in Honolulu, Hawaii, as more fully
described in Note 3. The transaction was funded by
a new $438 million short-term first mortgage loan
and approximately $294 million in cash including a
portion of the net proceeds of the 1999 Offering as
further described in Note 1. The Company repaid the
short-term mortgage loan in August 1999 through the
issuance of $500 million of commercial
mortgage-backed securities maturing September 2004
(assuming the exercise of extension options
aggregating two years) as more fully described in
Note 5. The Company may discuss with institutional
investors the formation of a new joint venture to
own the property. The terms of any joint venture
and the Company's interest in any joint venture,
have not been determined and the Company may not
ultimately elect to form any such joint venture.
On September 28, 1999 the Company, through GGP
Ivanhoe III, acquired the Oak View Mall and on
December 22, 1999 acquired the Eastridge Mall in
San Jose, California. The aggregate purchase price
for the two properties was approximately $160
million, financed by capital contributions from the
partners, a new $83 million long-term mortgage loan
and approximately $30 million of other short-term
floating rate financing.
In October 1999, the Company acquired a 100%
interest in the Baybrook Mall in Houston, Texas.
The aggregate purchase price was approximately $133
million, which was paid with a new 10 year $95
million mortgage on the property and proceeds of
other new secured financing.
In November 1999, the Company formed GGP/Homart II,
a new joint venture with the New York State Common
Retirement Fund, its venture partner in GGP/Homart.
GGP/Homart II owns six operating regional malls and
one regional mall currently under construction as
more fully described in Note 4.
The Company's management feels that it has a
competitive advantage with respect to the
acquisition of regional mall shopping centers for
the following reasons:
- The funds necessary for a cash acquisition
of a shopping center may be available to
the Company from a combination of sources,
including mortgage or unsecured financing
or the issuance of public or private debt
or equity.
- The Company has the flexibility to pay for
an acquisition with a combination of cash,
Preferred or Common Stock or common units
of limited partnership interest in the
Operating Partnership (the "Units"). This
creates the opportunity for a
tax-advantaged transaction for the seller
- Management's expertise allows it to
evaluate proposed acquisitions for their
increased profit potential. Additional
profit can originate from many sources
including expansions, remodeling,
re-merchandising, and more efficient
management of the property
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DEVELOPMENT The Company intends to pursue development when
warranted by the potential financial returns.
RiverTown Crossings in Grandville, Michigan was
completed and opened in November 1999. GGP/Homart
II is currently developing an enclosed shopping
center in Frisco (Dallas), Texas and the Company is
preparing to develop (with a joint venture partner)
an enclosed regional mall in Westlake (Dallas),
Texas as described below.
RiverTown Crossings in Grandville, Michigan is an
approximately 1,100,000 square foot regional mall
including five anchor stores. The funding for the
development of this project came from a
construction loan, the Company's line of credit
facility ("Credit Facility") and retained cash flow
of the Company. RiverTown Crossings was 100% leased
at its grand opening.
The Company broke ground on the construction of the
Stonebriar Centre in Frisco, Texas in October 1998.
Upon its scheduled completion in August of 2000,
this 1,600,000 square foot regional mall shopping
center will initially feature five department store
anchors, a 24 screen AMC theater, approximately
350,000 square feet of Mall Stores and up to
150,000 square feet of big box or large format
retailers. Plans also include a possible second
phase expansion to include two additional
department stores. As of December 31, 1999,
approximately $73 million of construction costs has
been spent, primarily funded by the Company's
Credit Facility and other joint venture and secured
financing and retained cash flow. This mall was
contributed to GGP/Homart II in 1999 as part of the
joint venture formation transaction discussed
above.
During 1999, the Company formed a joint venture to
develop an enclosed mall in Westlake (Dallas),
Texas. As of December 31, 1999, the Company has
invested approximately $12.8 million in the joint
venture. The Company is currently obligated to fund
pre-development costs (estimated to be
approximately $1.5 million, most of which remains
to be incurred) and actual development costs have
not yet been finalized. The retail site, part of a
planned community which is expected to contain a
resort hotel, a golf course, luxury homes and
corporate offices, is currently planned to contain
up to 1.6 million square feet of tenant space
including up to six anchor stores and a
multi-screen theater. There can be no assurance
that development of this site will proceed beyond
the pre-development phase.
EXPANSIONS AND During 1999, 21 major projects were underway or
RENOVATIONS completed. The expansion and renovation of a
Portfolio Center often increases customer traffic,
trade area penetration and typically improves the
competitive position of the property. Four of the
larger renovation and expansion projects
undertaken or completed in 1999 are described
below.
The redevelopment of an Anchor location at the
Northridge Fashion Center, a 1,465,261 square foot
center located in Northridge (Los Angeles),
California was completed in the summer of 1999. The
project included adding a 48,000 square foot
theater complex and a new outdoor retail /
entertainment area containing approximately 168,000
square feet of Mall Stores.
Eden Prairie Mall, located in Eden Prairie,
Minnesota, a suburb of Minneapolis, was previously
a four-anchor center with approximately 325,000
square feet of Mall Stores. Phase I of the
renovation commenced in early 1999 consisting of a
new 160,000 square foot building with a
multi-screen theater, 4 restaurants and a Barnes
and Noble bookstore. Construction of Phase II of
the project recently commenced and will consist
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of a Von Maur anchor store and a new 500 car
parking structure. Both phases are scheduled to be
completed in early 2001.
Market Place Mall is an 821,117 square foot
enclosed mall located in Champaign, Illinois and
anchored by Bergner's, JCPenney and Sears. The
renovation and expansion of the mall consisting of
a new 150,000 square foot Famous-Barr department
store, approximately 43,000 square feet of
additional Mall Store space, a new food court, a
new service center and other customer amenities was
recently completed.
Park Mall, an 965,371 square foot center located in
Tucson, Arizona is undergoing a remodeling and
expansion to 1,350,000 square feet. The mall has
added a new Dillards store to the existing anchors,
Macy's and Sears. The project also includes a food
court, a multiplex theater and an outdoor plaza for
fine dining, and is expected to be completed during
2001.
THE PORTFOLIO CENTERS All of the 93 Portfolio Centers are shopping
centers with at least one major department store
as an Anchor and a wide variety of smaller Mall
Stores. Most of the Portfolio Centers have three
or four Anchors and additional Freestanding Stores.
Each Portfolio Center provides ample parking for
shoppers. The Portfolio Centers:
- Range in size between approximately
184,000 and 1,780,000 square feet of total
GLA and between approximately 125,000 and
867,000 square feet of Mall and
Freestanding GLA. The smallest Portfolio
Center has approximately 20 stores, and
the largest has over 265 stores;
- Have approximately 380 Anchors,
operating under approximately 60 trade
names; and
- Have approximately 9,500 Mall and
Freestanding Stores.
The average size of the 93 Portfolio Centers is
approximately 890,000 square feet of GLA, including
all Anchors, Mall Stores and Freestanding Stores.
The average Mall and Freestanding GLA per Portfolio
Center is approximately 385,000 square feet.
As of December 31, 1999, the Wholly-Owned Centers
contained approximately 41.9 million square feet of
GLA consisting of Anchors (whether owned or
leased), Mall Stores and Freestanding Stores. The
Unconsolidated Centers contained approximately 41.3
million square feet of GLA.
The Company's share of total revenues from the
Portfolio Centers and GGMI increased to $907
million in 1999 from $627.9 million in 1998. No
single Portfolio Center generated more than 7% of
the Company's total 1999 pro rata revenues. In
1999, total Mall Store sales from the Portfolio
Centers increased by approximately 10.1% in
comparison to the total Mall Store sales in 1998.
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The table below shows tenants, by trade name, with
more than .75% of annualized effective rents as
compared to consolidated effective rents on an
annualized basis in the Wholly-Owned Centers at
December 31, 1999. In addition, similar percentages
existed in the Portfolio Centers as of December 31,
1999.
% OF TOTAL
TENANT NAME ANNUALIZED RENTS
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JCPenney 1.69%
Sears 1.43%
Victoria's Secret (1) 1.18%
Express (1) 1.18%
Footlocker 1.17%
Gap 1.01%
Lane Bryant (1) 0.96%
Payless 0.94%
Lerner New York (1) 0.92%
Kay-Bee Toys 0.92%
Disney Store 0.86%
Disc Jockey 0.82%
The Limited (1) 0.79%
(1) Under common ownership by The Limited, Inc.
MALL AND The Portfolio Centers have a total of
FREESTANDING STORES approximately 9,500 Mall and Freestanding Stores.
The following table reflects the tenant
representation by category in the Wholly-Owned
Centers as of December 31, 1999. In addition,
similar tenant representation by category
existed in the Portfolio Centers as of December 31,
1999.
<TABLE>
<CAPTION>
% OF SQ. FT. IN
WHOLLY-OWNED
TENANT CATEGORIES CENTERS TYPES OF TENANTS/PRODUCTS SOLD
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<S> <C> <C>
Specialty 21% Photo studios, beauty and nail salons, pharmacy
and sundries, variety stores, pet stores,
newsstands, jewelry repair, shoe repair, tailor,
video games, shops for home/bath/kitchen, rugs,
fabric stores, beds/waterbeds, luggage, perfume,
tobacco, toys, arcades, cameras, sunglasses,
books
--------------------------------------------------------------------------------------
Women's Apparel 19% Women's apparel
Apparel 16% Unisex apparel, children's apparel, lingerie, and
formalwear
--------------------------------------------------------------------------------------
Shoes 12% Shoes
--------------------------------------------------------------------------------------
Food 8% Restaurant, food court
--------------------------------------------------------------------------------------
Gifts 7% Cards, candles, engraving stores, other gift or
novelty
--------------------------------------------------------------------------------------
Music/Electronics 6% Music, electronics, computer and software, video
rental
--------------------------------------------------------------------------------------
Sporting Goods 4% Sports apparel, sports and exercise equipment
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</TABLE>
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<TABLE>
<S> <C> <C>
Jewelry 3% Fine jewelry and costume jewelry
--------------------------------------------------------------------------------------
Men's Apparel 2% Men's apparel
--------------------------------------------------------------------------------------
Specialty Food 2% Candy, coffee, nuts, chocolate, health
food/vitamins
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Total 100%
</TABLE>
Specialty tenants include Mastercuts, One Hour
Photo, California Nails, Lechter's, Kay-Bee Toys,
Dollar Tree, Pottery Barn and many others. Typical
tenants in the Women's Apparel category include The
Limited, Casual Corner, Lane Bryant and Victoria's
Secret. The Apparel category typically includes
tenants such as The Gap, Eddie Bauer, American
Eagle, Old Navy and J.Crew. The Shoes category
includes tenants such as Footlocker and Payless
Shoesource. The Food category includes restaurants
such as Ruby Tuesday and Max and Erma's, fast food
restaurants such as Arby's, and food court tenants
such as Sbarro. Typical tenants in the Gifts
Category include Disney, Things Remembered,
Kirlin's Hallmark and Spencer Gifts. The
Music/Electronics category includes tenants such as
Camelot Music, Radio Shack, and Suncoast Pictures.
Sporting Goods include tenants such as Champs, Big
5 Sports and Scheel's Sports. Jewelry tenants
typically include Zales, Friedman's Jewelers and
Kay Jewelers. The Men's Apparel category includes
tenants such as The Men's Warehouse and Nicks for
Men. Specialty Food tenants include General
Nutrition Center, Mr. Bulky, and Barnie's Coffee
and Tea Company.
COMPETITION The Portfolio Centers compete with numerous
shopping alternatives in seeking to attract
retailers to lease space as retailers themselves
face increasing competition from discount
shopping centers, outlet malls, discount shopping
clubs, direct mail, internet sales and
telemarketing. The nature and extent of competition
varies from property to property within the Company
Portfolio. Below is a description of the type of
competition that three of the Portfolio Centers
face from other retail locations within their trade
area. These examples are representative of the
comparative environment in which the Company
operates.
Northridge Fashion Center is a 1.5 million square
foot, two-story enclosed regional shopping center
located in Northridge, California, 25 miles
northwest of Los Angeles. The mall opened in 1971
and was extensively rebuilt and retrofitted after
damage from the Northridge earthquake in 1994.
Northridge serves a ten-mile radius trade area
which includes over 1.1 million people. Major
employees in the area include Walt Disney, Boeing
and Hughes Electronics. The mall currently has four
Anchor tenants: Robinson-May, JCPenney, Macy's, and
Sears. The mall has over 180 mall shops with
national retailers such as Old Navy, Borders Books
and Zainy Brainy. Northridge's regional mall
competition within its trade area consists of
Topanga Plaza, a four Anchor mall built in 1964
located four miles southwest of the center and
Sherman Oaks Fashion Center, a two Anchor enclosed
mall built in 1963, 10 miles southeast of
Northridge. The mall also faces competition from
neighborhood strip shopping centers which are
located within a few miles of the center.
Northbrook Court is a two-story, 978,000 square
foot regional mall located in Northbrook, Illinois.
The mall contains 128 mall shops, and three Anchor
department stores. The mall is anchored by Lord &
Taylor, Marshall Fields and Neiman-Marcus. The
property includes a 14-screen General Cinema
Theater and national retailers such as Abercrombie
& Fitch, Ann Taylor, The Gap and J.Crew. Northbrook
Court faces
10 of 39
<PAGE> 11
competition from two regional malls in
its primary trade area. Old Orchard Shopping Center
is a recently renovated open-air regional shopping
mall located eight miles southeast of Northbrook
Court. Old Orchard features five Anchor department
stores and includes 1.8 million square feet of
leaseable area. Hawthorn Center, a 1.06 million
square foot regional mall located ten miles
northwest of Northbrook Court, includes three
Anchor department stores. The secondary competition
for Northbrook Court consists of discount
retailers, numerous strip shopping centers located
within a few miles of the center, and a super
regional mall (Woodfield Mall), a 2.1 million
square foot mall located fifteen miles southwest of
Northbrook Court.
Park City Center is a 1.5 million square foot,
single-level, regional shopping center located in
Lancaster, Pennsylvania, in Pennsylvania Dutch
Country. Park City is anchored by Boscov's, The Bon
Ton, Kohl's, Sears and JCPenney as well as over 165
specialty mall shops. Park City is the only
enclosed regional shopping center in Lancaster, is
the only enclosed mall within 25 miles and is the
largest retail venue in the area. Park City opened
in 1970 and renovations were made in 1988 and 1997,
including a new food court and carousel. Park
City's trade area includes over 277,000 people and
major employers include Armstrong World Industries,
RR Donnelly and the County of Lancaster. The
Center's primary competition is from a number of
smaller factory outlet/power centers. Examples of
such centers include Red Rose Commons, built in
1998, located two miles northeast of Park City and
which features a Circuit City, a Home Depot and a
Linen's and Things. An additional competitor is
Tanger Factory Outlet Center, located seven miles
east of the mall and featuring Ann Taylor, J. Crew
and Coach outlet stores. These centers typically
target discount shoppers and do not offer a broad
selection of merchandise or price points and
therefore do not pose a significant competitive
threat to Park City.
ENVIRONMENTAL Under various federal, state and local laws and
MATTERS and regulations, an owner of real estate is liable
for the costs of removal or remediation of certain
hazardous or toxic substances on such property.
These laws often impose such liability without
regard to whether the owner knew of, or was
responsible for, the presence of such hazardous or
toxic substances. The costs of remediation or
removal of such substances may be substantial, and
the presence of such substances, or the failure to
promptly remediate such substances, may adversely
affect the owner's ability to sell such real estate
or to borrow using such real estate as collateral.
In connection with its ownership and operation of
the Portfolio Centers, General Growth, the
Operating Partnership or the relevant property
venture through which the property is owned, may be
potentially liable for such costs.
All of the Portfolio Centers have been subject to
Phase I environmental assessments, which are
intended to discover information regarding, and to
evaluate the environmental condition of, the
surveyed and surrounding properties. The Phase I
assessments included a historical review, a public
records review, a preliminary investigation of the
site and surrounding properties, screening for the
presence of asbestos, polychlorinated biphenyls
("PCBs") and underground storage tanks and the
preparation and issuance of a written report, but
do not include soil sampling or subsurface
investigations. Where the Phase I assessment so
recommended, a Phase II assessment was conducted to
further investigate any issues raised by the Phase
I assessment. In each case where Phase I and/or
Phase II assessments resulted in specific
recommendations for remedial actions, management
has either taken or scheduled the recommended
action.
11 of 39
<PAGE> 12
Neither the Phase I nor the Phase II assessments
have revealed any environmental liability that the
Company believes would have a material effect on
the Company's business, assets or results of
operations, nor is the Company aware of any such
liability. Nevertheless, it is possible that these
assessments do not reveal all environmental
liabilities or that there are material
environmental liabilities of which the Company is
unaware. Moreover, no assurances can be given that
(i) future laws, ordinances or regulations will not
impose any material environmental liability or (ii)
the current environmental condition of the
Portfolio Centers will not be adversely affected by
tenants and occupants of the Portfolio Centers, by
the condition of properties in the vicinity of the
Portfolio Centers (such as the presence of
underground storage tanks) or by third parties
unrelated to the Company.
EMPLOYEES As of March 14, 2000, the Company and GGMI had
3,311 full-time employees. Certain employees at
three of the Portfolio Centers are subject to
collective bargaining agreement. The Company's
management believes that their employee relations
are satisfactory and there has not been a
labor-related work stoppage at any of its Centers.
INSURANCE The Company has comprehensive liability, fire,
flood, earthquake, extended coverage and rental
loss insurance with respect to the Portfolio
Centers. The Company's management believes that all
of the Portfolio Centers are adequately covered by
insurance.
QUALIFICATION AS A General Growth currently qualifies as a real estate
REAL ESTATE investment trust pursuant to the requirements
INVESTMENT TRUST AND contained in Sections 856-858 of the Internal
TAXABILITY OF Revenue Code of 1986, as amended (the "Code"). If,
DISTRIBUTONS as General Growth contemplates, such qualification
continues, General Growth will not be taxed on its
real estate investment trust taxable income. During
1999, General Growth distributed (or was deemed to
have distributed) 100% of its taxable income to its
preferred and common stockholders. Cash
distributions in the amount of $1.98 per share of
Common Stock were paid in 1999, of which $1.31
(66.0%) was ordinary income, $0.06 (3.0%) was
long-term capital gain from sales of property, and
$0.61 (31%) was a return of capital based on the
taxable income of General Growth.
ITEM 2. The Company's investment in real estate as of
PROPERTIES December 31, 1999 consisted of its interests in
the Portfolio Centers, developments in progress
and certain other real estate. In most cases, the
land underlying the Portfolio Centers is also owned
by the Company; however, at a few of the centers,
all or part of the underlying land is owned by a
third party that leases the land pursuant to a
ground lease.
LEASING The Portfolio Centers average Mall Store rent per
square foot from leases that expired in 1999 was
$26.04. As a result of market rents being higher
than the rents under many of the expiring leases,
the average Mall Store rent per square foot on new
and renewal leases during 1999 was $33.78, or $7.74
per square foot more than the average for expiring
leases. The following schedule shows lease
expirations over the next five years.
12 of 39
<PAGE> 13
PORTFOLIO CENTERS
FIVE YEAR LEASE EXPIRATION SCHEDULE
<TABLE>
<CAPTION>
ALL EXPIRATIONS EXPIRATIONS @ SHARE (1)
------------------------------------ ------------------------------------
BASE RENT FOOTAGE RENT/PSF BASE RENT FOOTAGE RENT/PSF
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WHOLLY OWNED
2000 $20,127,300.00 782,173.00 $25.73 $20,127,300.00 782,173.00 $25.73
2001 20,899,225.00 931,839.00 22.43 20,899,225.00 931,839.00 22.43
2002 27,211,128.00 1,281,682.00 21.23 27,211,128.00 1,281,682.00 21.23
2003 29,124,286.00 1,314,672.00 22.15 29,124,286.00 1,314,672.00 22.15
2001 24,077,853.00 1,036,164.00 23.24 24,077,853.00 1,036,164.00 23.24
--------------- ------------ ------ --------------- ------------ ------
PORTFOLIO TOTAL $121,439,792.00 5,346,530.00 $22.71 $121,439,792.00 5,346,530.00 $22.71
UNCONSOLIDATED (2)
2000 $21,282,042.00 650,044.00 $32.74 $10,548,325.00 321,699.00 $32.79
2001 19,320,350.00 659,709.00 29.29 9,480,249.00 325,664.00 29.11
2002 27,225,308.00 926,648.00 29.38 13,415,471.00 456,514.00 29.39
2003 25,895,624.00 970,500.00 26.68 12,709,996.00 476,496.00 26.67
2004 24,717,558.00 964,780.00 25.62 12,007,839.00 473,629.00 25.35
--------------- ------------ ------ --------------- ------------ ------
PORTFOLIO TOTAL $118,440,882.00 4,171,681.00 $28.39 $ 58,161,880.00 2,054,002.00 $28.32
--------------- ------------ ------ --------------- ------------ ------
GRAND TOTAL $239,880,674.00 9,518,211.00 $25.20 $179,601,672.00 7,400,532.00 $24.27
=============== ============ ====== =============== ============ ======
</TABLE>
(1) Expirations at share reflect the Company's direct or indirect ownership
interest in a joint venture.
(2) Excludes the three malls managed by joint venture partners of GGP/Homart
(Arrowhead Towne Center, Lakeland Square and Superstition Springs).
13 of 39
<PAGE> 14
COMPANY PORTFOLIO At December 31, 1999, the Company had direct or indirect
DEBT ("pro rata") mortgage debt of approximately $4,332,695. The
ratio of pro rata floating rate debt to total pro rata debt
and preferred stock was 41.4% at December 31, 1999. The
following table reflects the maturity dates of the
Company's pro rata debt and the related interest rates.
COMPANY PORTFOLIO DEBT
MATURITY AND CURRENT AVERAGE INTEREST RATE SUMMARY (A)
AS OF DECEMBER 31, 1999
(Dollars in Thousands)
<TABLE>
<CAPTION>
UNCONSOLIDATED
WHOLLY-OWNED JOINT VENTURE COMPANY
CENTERS PROPERTIES (B) PORTFOLIO DEBT
-------------------- ------------------ -----------------
CURRENT CURRENT CURRENT
AVERAGE AVERAGE AVERAGE
MATURING INTEREST MATURING INTEREST MATURING INTEREST
YEAR AMOUNT(C) RATE AMOUNT RATE AMOUNT RATE
---- ------ -------- ------ -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
2000 $ 318,000 7.74% $93,000 7.51% $ 411,000 7.69%
2001 369,862 7.52% 15,300 7.15% 385,162 7.50%
2002 -0- -0-% 124,228 6.72% 124,228 6.72%
2003 -0- -0-% 410,596 7.23% 410,596 7.23%
2004 1,064,973 7.38% 202,188 7.46% 1,267,161 7.39%
Subsequent $1,366,699 7.14% 367,849 7.47% 1,734,548 7.21%
---------- ------ --------- ----- ---------- ------
Totals $3,119,534 7.33% $1,213,161 7.31% $4,332,695 7.32%
========== ====== ========== ===== ========== ======
Floating $1,394,680 7.67% $540,030 7.41% $1,934,710 7.60%
Fixed Rate 1,724,854 7.05% 673,131 7.23% 2,397,985 7.10%
----------- ------ --------- ----- ----------- ------
Totals $3,119,534 7.33% $1,213,161 7.31% $4,332,695 7.32%
========== ====== ========== ===== ========== ======
</TABLE>
(a) Excludes principal amortization.
(b) Unconsolidated properties debt reflects the Company's share of debt
(based on its respective equity ownership interests in the
Unconsolidated Joint Ventures) relating to the properties owned by the
Unconsolidated Joint Ventures.
14 of 39
<PAGE> 15
PROPERTY DATA The following tables set forth certain information regarding
the Wholly-Owned Centers and the Unconsolidated Centers as
of December 31, 1999. The first table depicts the
Wholly-Owned Centers and the second table depicts the
Unconsolidated Centers.
<TABLE>
<CAPTION>
WHOLLY-OWNED CENTERS
--------------------
TOTAL GLA/MALL
YEAR AND FREESTANDING
NAME OF CENTER/ OPENED/REMODELED GLA ANCHOR
LOCATION (1) OR EXPANDED (SQUARE FEET) (2) ANCHORS VACANCIES
- --------------------- ------------------ ----------------- ---------------------------------------- ---------
<S> <C> <C> <C> <C>
Ala Moana Center 1959/ 1,779,099/ JCPenney, Liberty House, None
Honolulu, Hawaii 1966, 1987, 1989, 1999 769,355 Neiman Marcus, Sears
Apache Mall 1969/ 753,690/ Dayton's, JCPenney, Montgomery Ward, None
Rochester, Minnesota 1985, 1992 257,424 Sears
Baybrook Mall 1978/ 1,086,938/ Dillards, Mervyn's, Montgomery Ward, Sears None
Houston, Texas 1984, 1985 343,415
Bayshore Mall 1987/ 613,707/ Gottschalks, JCPenney, Sears, Mervyn's None
Eureka, California 1989 343,692
Bellis Fair Mall 1988/ 762,955/ JCPenney, Mervyn's, Sears, None
Bellingham, Washington N/A 349,792 Target, The Bon Marche
Birchwood Mall 1990/ 714,462/ Hudson's, JCPenney, Sears, None
Port Huron, Michigan 1991, 1997 288,328 Target, Younkers
The Boulevard Mall 1968/ 1,211,693/ Dillard's, JCPenney, Macy's, Sears None
Las Vegas, Nevada 1992 423,657
Capital Mall 1978/ 528,829/ Dillard's, JCPenney, Sears None
Jefferson City, Missouri 1985, 1992 305,384
Century Mall 1975/ 722,728/ JCPenney, McRae's, Rich's, Sears None
Birmingham, Alabama 1990, 1994 234,252
Chapel Hills Mall 1982/ 1,173,027/ Dillard's, Foley's, JCPenney, KMart, None
Colorado Springs, CO 1986, 1997, 1998 426,869 Mervyn's, Sears
Coastland Center 1977/ 925,006/ Burdines, Dillard's, JCPenney, Sears None
Naples, Florida 1985, 1996 334,616
Colony Square Mall 1981/ 547,516/ Elder-Beerman, JCPenney, Lazarus, None
Zanesville, Ohio 1987 289,512 Sears
Columbia Mall 1985/ 731,924/ Dillard's, JCPenney, Sears, Target None
Columbia, Missouri 1987 316,480
Coral Ridge Mall 1998/ 998,294/ Dillard's, JCPenney, Scheel's, None
Iowa City, Iowa N/A 361,256 Sears, Target, Younkers
The Crossroads 1980/1982, 765,882/ Hudson's, JCPenney, Mervyn's, None
Kalamazoo, Michigan 1988, 1998 262,922 Sears
Cumberland Mall 1973/ 1,199,672/ JCPenney, Macy's, Rich's, Sears None
Atlanta, Georgia N/A 365,557
</TABLE>
15 of 39
<PAGE> 16
<TABLE>
<CAPTION>
TOTAL GLA/MALL
YEAR AND FREESTANDING
NAME OF CENTER/ OPENED/REMODELED GLA ANCHOR
LOCATION (1) OR EXPANDED (SQUARE FEET) (2) ANCHORS VACANCIES
- --------------------- ---------------- ----------------- ---------------------------------------- ---------
<S> <C> <C> <C> <C>
Eagle Ridge Mall 1996/ 629,841/ Dillard's, JCPenney, Sears None
Winter Haven, Florida N/A 317,589
Eden Prairie Mall 1976/ 861,380/ Kohl's, Mervyn's, Sears, Target None
Eden Prairie, Minnesota 1989, 1994 325,572
Fallbrook Mall 1966/ 1,024,763/ Burlington Coat Factory, JCPenney, Kmart, None
West Hills, (Los Angeles), 1985 472,749 Mervyn's, Target
California
Fox River Mall 1984/ 1,101,979/ Dayton's, JCPenney, Sears, None
Appleton, Wisconsin 1991, 1998 537,065 Target, Younkers
Gateway Mall 1990/ 631,543/ Sears, Target, The Emporium None
Springfield/Eugene, Oregon N/A 348,278
Grand Traverse Mall 1992/ 577,785/ Hudson's, JCPenney, Target None
Traverse City, Michigan N/A 312,436
Greenwood Mall 1979/ 753,397/ Dillard's, Famous-Barr, JCPenney, Sears, None
Bowling Green, Kentucky 1987 352,774
Knollwood Mall 1955/ 500,074/ Cub Foods, Kohl's None
St. Louis Park, 1981 289,474
(Minneapolis), Minnesota
Lakeview Mall 1983/ 621,510/ Hudson's, JCPenney, Sears None
Battle Creek, Michigan 1998 329,917
Lansing Mall 1969/ 830,845/ Hudson's, JCPenney, Mervyn's, None
Lansing, Michigan N/A 387,443 Younkers
Lockport Mall 1971/ 345,796/ Hills, Montgomery Ward, The Bon Ton None
Lockport, New York 1984 125,399
Mall of the Bluffs 1986/ 669,050/ Dillard's, JCPenney, Sears, Target None
Council Bluffs, Iowa 1988, 1998 355,176
(Omaha, Nebraska)
Mall St. Vincent 1977/ 567,819/ Dillard's, Sears None
Shreveport, Louisiana 1991 219,819
Market Place Mall 1975/ 1,067,973/ Bergner's, Famous-Barr, JCPenney, None
Champaign, Illinois 1987, 1994, 1999 391,342 Kohl's, Sears
McCreless Mall 1962/ 476,799/ Beall's, Montgomery Ward None
San Antonio, Texas 1997 290,941
Northridge Fashion Center 1971/ 1,465,261/ JCPenney, Macy's, Robinson's-May, None
Northridge, California 1995, 1997 658,343 Sears
Oakwood Mall 1986/ 786,464/ Dayton's, JCPenney, None
Eau Claire, Wisconsin 1991, 1997 321,388 Scheel's All Sports, Sears, Target
</TABLE>
16 of 39
<PAGE> 17
<TABLE>
<CAPTION>
TOTAL GLA/MALL
YEAR AND FREESTANDING
NAME OF CENTER/ OPENED/REMODELED GLA ANCHOR
LOCATION (1) OR EXPANDED (SQUARE FEET) (2) ANCHORS VACANCIES
- --------------------- ------------------ ----------------- ---------------------------------------- ---------
<S> <C> <C> <C> <C>
Park Mall 1974/ 965,371/ Dillards, Macy's, Sears None
Tucson, Arizona 1998 345,371
Piedmont Mall 1984/ 661,606/ Belk, Hills, Belk Men's, None
Danville, Virginia 1995 188,986 JCPenney, Sears
Pierre Bossier Mall 1982/ 643,396/ Dillard's, JCPenney, Sears, None
Bossier City, Louisiana 1985, 1992 261,492 Service Merchandise, Stage
The Pines 1986/ 609,047/ Dillard's, JCPenney, None
Pine Bluff, Arkansas 1990 269,338 Sears, Wal-Mart
Regency Square Mall 1967/ 1,400,320/ Belk, Dillard's, JCPenney, None
Jacksonville, Florida 1992, 1998, 1999 588,689 Montgomery Ward, Sears
Rio West Mall 1981/ 445,270/ Beall's, JCPenney, KMart None
Gallup, New Mexico 1991, 1998 264,137
River Falls Mall 1990/ 748,298/ Bacon's, Toys "R" Us, Wal-Mart None
Clarksville, Indiana N/A 403,260
(Louisville, Kentucky)
River Hills Mall 1991/ 646,284/ Herberger's, JCPenney, None
Mankato, Minnesota 1996 284,235 Sears ,Target
Riverlands Shopping Center 1965/ 183,808/ Winn-Dixie None
LaPlace, Louisiana 1984 136,874 (3)
RiverTown Crossings 1999/ 1,125,410/ Hudson's, JCPenney, Kohl's, Sears, None
Grand Rapids, Michigan N/A 510,138 Younkers
Sooner Fashion Square 1976/ 480,090/ Dillard's, JCPenney, Sears, None
Norman, Oklahoma 1999 175,136 Stein Mart, Service Merchandise
Southlake Mall 1976/ 1,026,030/ JCPenney, Macy's, Rich's, Sears None
Morrow, Georgia 1995, 1999 287,530
SouthShore Mall 1981/ 337,807/ JCPenney, KMart, Sears None
Aberdeen, Washington N/A 148,480
Southwest Plaza 1983/ 1,238,089/ Dillards, Foley's, JCPenney, None
Littleton, Colorado 1994, 1995 600,912 Montgomery Ward, Sears
Spring Hill Mall 1980/ 1,075,394/ Carson Pirie Scott, JCPenney, Kohl's, None
West Dundee, Illinois 1992, 1996 393,814 Marshall Field's, Sears
Valley Hills Mall 1978/ 619,921/ Belk, JCPenney, Sears None
Hickory, North Carolina 1988, 1990, 1996 207,625
Valley Plaza Mall 1967/ 1,158,818/ Gottschalks, JCPenney, None
Bakersfield, California 1988, 1997, 1998 432,129 Macy's, Robinson's-May, Sears
</TABLE>
17 of 39
<PAGE> 18
<TABLE>
<CAPTION>
TOTAL GLA/MALL
YEAR AND FREESTANDING
NAME OF CENTER/ OPENED/REMODELED GLA ANCHOR
LOCATION (1) OR EXPANDED (SQUARE FEET) (2) ANCHORS VACANCIES
- --------------------- ---------------- ----------------- --------------------------------- ---------
<S> <C> <C> <C> <C>
West Valley Mall 1995/ 687,400/ Gottschalks, JCPenney, Ross Dress None
Tracy, California 1997 336,585 for Less, Sears, Target
Westwood Mall 1972/ 453,167/ Elder-Beerman, JCPenney, None
Jackson, Michigan 1978, 1993 135,073 Montgomery Ward
</TABLE>
(1) In certain cases, where a Center's location is part of a larger
metropolitan area, the metropolitan area is identified in parentheses.
(2) Includes square footage added in redevelopment/expansion projects.
(3) Winn-Dixie does not occupy its space but is currently paying rent under a
lease, which expires in October 2002.
18 or 39
<PAGE> 19
<TABLE>
<CAPTION>
UNCONSOLIDATED CENTERS
OWNERSHIP TOTAL GLA/MALL
YEAR OPENED/ INTEREST % AND FREESTANDING
NAME OF CENTER/ REMODELED OF OPERATING GLA ANCHOR
LOCATION (1) OR EXPANDED PARTNERSHIP SQUARE FEET(2) ANCHORS VACANCIES
- ------------------------- ------------- ------------- ----------------- --------------------- ---------
<S> <C> <C> <C> <C> <C>
Alderwood Mall 1979/ 50 1,046,967/ JCPenney, Lamonts, Nordstrom, None
Lynnwood (Seattle), 1995, 1996 305,232 Sears, The Bon Marche
Washington
Altamonte Mall 1974/ 50 1,070,548/ Burdine's, Dillard's, None
Orlando, Florida 1989 392,000 JCPenney, Sears
Arrowhead Towne Center 1993/ 16.7 1,130,901/ Dillard's, JCPenney, Mervyn's, None
Glendale, Arizona N/A 392,954 Montgomery Ward,
Robinson's-May
Bay City Mall 1991/ 50 527,273/ JCPenney, Sears, None
Bay City, Michigan 1993 211,622 Target, Younkers
Brass Mill Center/Commons 1997/ 50 1,043,522/ Filene's, JCPenney, One
Waterbury, Connecticut N/A 598,884 Sears
Carolina Place 1991/ 50 1,091,307/ Belk's, Dillards, Hecht's, None
Charlotte, North Carolina 1994 317,805 JCPenney, Sears
Chula Vista Center 1962/ 50 882,501/ JCPenney, Macy's, None
Chula Vista, California 1993, 1994 328,401 Mervyn's, Sears
Columbiana Centre 1990/ 50 817,847/ Belk, Dillards, None
Columbia, South Carolina 1992 258,870 Parisian, Sears
Deerbrook Mall 1984/ 50 1,196,155/ Dillard's, JCPenney, Foley's, None
Humble (Houston), Texas 1996, 1997 456,562 Mervyn's, Sears
Eastridge Mall 1970/ 51 1,380,683/ JCPenney, Macy's, Sears One
San Jose, California 1982, 1995 523,202
Lakeland Square 1988/ 25 904,993/ Belk, Burdines, Dillard's, None
Lakeland, Florida 1994 291,862 JCPenney, Mervyn's, Sears
Landmark Mall 1965/ 51 969,508/ Hecht's, JCPenney, Sears None
Alexandria, VA 1989, 1991 338,502
Mayfair Mall 1958/ 51 1,366,043/ Marshall Fields, None
Wauwatosa, Wisconsin 1986, 1994 866,733 The Boston Store
Meadows Mall 1978/ 51 947,507/ Dillard's, JCPenney, Macy's, None
Las Vegas, Nevada 1987, 1997 310,654 Sears
Montclair Plaza 1968/ 50 1,496,089/ JCPenney, Macy's, None
Montclair (Los Angeles) 1985 511,617 Montgomery Ward, Nordstrom,
California Robinson's-May, Sears
Moreno Valley Mall 1992/ 50 1,035,508/ Harris, JCPenney, None
Moreno Valley, California N/A 429,974 Robinson's-May, Sears
Natick Mall 1966/ 50 1,154,701/ Filene's, Lord & Taylor, None
Natick, Massachusetts 1994 428,039 Macy's, Sears
</TABLE>
19 of 39
<PAGE> 20
<TABLE>
<CAPTION>
OWNERSHIP TOTAL GLA/MALL
YEAR OPENED/ INTEREST % AND FREESTANDING
NAME OF CENTER/ REMODELED OF OPERATING GLA ANCHOR
LOCATION (1) OR EXPANDED PARTNERSHIP SQUARE FEET(2) ANCHORS VACANCIES
- ------------------------- ----------- ----------- -------------- --------------------- ---------
<S> <C> <C> <C> <C> <C>
Neshaminy Mall 1968/ 25 975,469/ Boscov's, Sears, One
Bensalem, Pennsylvania 1995, 1998 371,874 Strawbridge
Newgate Mall 1981/ 50 726,918/ Dillard's, Mervyn's,
Ogden, Utah 1994, 1998 316,754 Oshman's, Sears None
New Park Mall 1980/ 50 1,131,329/ JCPenney, Macy's, Mervyn's, None
Newark, California 1993 387,865 Sears, Target
Northbrook Court 1976/ 50 977,507/ Lord & Taylor, Marshall Fields, None
Northbrook, Illinois 1995, 1996 441,230 Neiman Marcus
Northgate Mall 1972/ 51 858,309/ JCPenney, Proffitt's, Sears None
Chattanooga, Tennessee 1991 415,689
North Point Mall 1993/ 50 1,362,631/ Dillard's, JCPenney, Lord & None
Alpharetta (Atlanta), Georgia N/A 396,344 Taylor, Parisian, Rich's, Sears
Oaks Mall (2) 1978/ 51 907,628/ Belk, Burdines, Dillard's, None
Gainesville, Florida N/A 349,761 JCPenney, Sears
Oak View Mall 1991/ 51 869,242/ Dillard's, JCPenney, None
Omaha, Nebraska N/A 264,982 Sears, Younkers
Oglethorpe Mall 1969/ 51 970,843/ Belk, JCPenney, Rich's, Sears None
Savannah, Georgia 1989, 1990, 1992 434,259
Park City Center 1970/ 51 1,397,994/ Boscov's, JCPenney, None
Lancaster, Pennsylvania 1988, 1997 533,637 Kohl's, Sears, The Bon-Ton
The Parks at Arlington 1988/ 50 1,191,471/ Dillard's, Foley's, JCPenney, None
Arlington, Texas N/A 360,526 Mervyn's, Sears
The Pavilions at Buckland Hills 1990/ N/A (3) 961,105/ Dick's Sporting Goods, Filene's, None
Manchester, Connecticut 1994 327,583 Filene's Home Store, JCPenney,
Lord & Taylor, Sears
Pembroke Lakes Mall 1992/ 50 1,063,860/ Burdine's, Dillard's, Dillard's None
Pembroke Pines, Florida N/A 352,585 (Men's & Home Furnishings),
JCPenney, Sears
Prince Kuhio Plaza 1985/ 50 517,264/ JCPenney, Liberty House, One
Hilo, Hawaii 1994, 1999 281,144 Sears
Quail Springs 1980/ 50 1,019,817/ Dillard's, Foley's, None
Oklahoma City, Oklahoma 1992, 1998, 1999 331,964 JCPenney, Sears
Steeplegate Mall 1990/ 50 447,649/ JCPenney, Sears, None
Concord, New Hampshire N/A 191,237 The Bon Ton
Superstition Springs 1990/ 16.7 1,073,726/ Dillard's, JCPenney, Mervyn's, None
East Mesa, Arizona 1994 367,032 Robinson's-May, Sears
Town East Mall 1971/ 50 1,242,873/ Dillard's, Foley's, JCPenney, None
Mesquite, Texas 1986 433,487 Sears
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
OWNERSHIP TOTAL GLA/MALL
YEAR OPENED/ INTEREST % AND FREESTANDING
NAME OF CENTER/ REMODELED OF OPERATING GLA ANCHOR
LOCATION (1) OR EXPANDED PARTNERSHIP SQUARE FEET(2) ANCHORS VACANCIES
- ------------------------- ------------ ------------ --------------- --------------------- ---------
<S> <C> <C> <C> <C> <C>
Tysons Galleria 1988/ 50 808,473/ Macy's, Neiman Marcus, None
McLean, Virginia 1994, 1997 296,540 Saks Fifth Avenue
Vista Ridge Mall 1989/ 40 1,059,133/ Dillard's, Foley's, None
Lewisville, Texas 1991 386,071 JCPenney, Sears
Washington Park Mall 1984/ 50 351,483/ Dillard's, JCPenney, None
Bartlesville, Oklahoma 1986 157,187 Sears
West Oaks Mall 1996/ 50 1,075,960/ Dillard's, JCPenney, None
Ocoee (Orlando), Florida N/A 432,478 Parisian, Sears
Westroads Mall 1968/ 51 1,079,188/ JCPenney, The Jones Store, None
Omaha, Nebraska 1995, 1999 382,778 Von Maur, Younkers
The Woodlands Mall 1994/ 25 1,178,455/ Dillard's, Foley's, JCPenney, None
The Woodlands, 1998 350,377 Mervyn's, Sears
(Houston), Texas
MALLS UNDER DEVELOPMENT
Stonebriar Centre 2000/ 50 1,600,000/ (4) (4)
Frisco (Dallas), Texas N/A 612,000
</TABLE>
(1) In certain cases where a Center's location is part of a larger metropolitan
area, the metropolitan area is identified in parenthesis.
(2) Includes square footage added in redevelopment/expansion projects.
(3) GGP/Homart's participation is subordinated to certain preferred returns to
its Joint Venture Partners.
(4) Upon completion, this mall will contain up to five major department stores,
currently expected to be Foley's, JCPenney, Sears, Macy's, and Nordstrom.
21 of 39
<PAGE> 22
ANCHORS Anchors have traditionally been a major factor in the public's
image of an enclosed shopping center. Anchors are generally department
stores whose merchandise appeals to a broad range of shoppers. Anchors
either own their stores, the land under them and adjacent parking
areas, or enter into long-term leases at rates that are generally
lower than the rents charged to Mall Store tenants. Although the
Portfolio Centers receive a smaller percentage of their operating
income from Anchors than from Mall Stores, strong Anchors play an
important part in maintaining customer traffic and making the
Portfolio Centers desirable locations for Mall Store tenants.
The following table indicates the parent company of each Anchor and
sets forth the number of stores and square feet owned or leased by
each Anchor at the Portfolio Centers as of December 31, 1999.
<TABLE>
<CAPTION>
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO ANCHORS
AS OF DECEMBER 31, 1999
TOTAL SQUARE FEET
NAME STORES (000'S)
---- ------ --------
<S> <C> <C>
Sears 82 11,568
JCPenney 77 9,030
Dillard's Inc.
Dillard's 37 5,975
Dillard's Home Store 1 22
Dillard's Men's Store 2 213
Bacon's 1 187
---- ------
Sub-Total Dillard's Inc. 41 6,397
==== ======
Dayton Hudson Corporation
Target 15 1,650
Mervyn's 17 1,409
Marshall Fields 3 693
Dayton's 3 432
Hudson's 6 692
---- ------
Sub-Total Dayton Hudson Corporation 44 4,876
==== ======
May Department Stores Company
Foley's 10 1,423
Robinson's-May 6 946
Filene's 3 520
Filene's Home Store 1 36
Lord & Taylor 4 457
Strawbridge's 1 218
Hecht's 2 345
Famous-Barr 1 122
The Jones Store 1 153
---- ------
Sub-Total May Department Stores Company 29 4,220
==== ======
Federated Department Stores, Inc.
Macy's 13 2,294
Rich's 5 937
Burdines 5 681
The Bon Marche 2 321
Lazarus 1 50
---- ------
Sub-Total Federated Department Stores, Inc. 26 4,283
==== ======
</TABLE>
22 of 39
<PAGE> 23
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO ANCHORS
AS OF DECEMBER 31, 1999
(continued)
<TABLE>
<CAPTION>
TOTAL SQUARE FEET
NAME STORES (000'S)
---- ------ -------
<S> <C> <C>
Saks Incorporated
Younkers 8 983
Parisian 3 395
Carson Pirie Scott 1 138
Boston Store 1 211
Bergners 1 154
McRae's 1 124
Saks Fifth Avenue 1 120
Proffitt's 1 90
Herberger's 1 71
---- -----
Sub-Total Saks Incorporated 18 2,286
==== =====
Montgomery Ward & Co. 7 907
Belk
Belk 8 1,105
Belk Men's 1 34
---- -----
Sub-Total Belk 9 1,139
==== =====
Kohl's 6 515
Neiman-Marcus 3 422
Boscov 2 413
Liberty House 2 377
KMart 4 356
The Bon Ton 3 312
Joslins 3 301
Gottschalks 3 268
Nordstrom 2 245
Wal-Mart 2 196
Bullock's 1 190
Von Maur 1 179
Hills Department Store 2 176
Scheel's All Sports 2 154
Harris 1 150
Elder-Beerman 2 141
Cub Foods 1 130
Costner-Knott 2 122
JLHudson 1 122
Burlington Coat Factory 1 101
Service Merchandise 2 93
Goody's 3 83
Ames 1 81
Dick's Sporting Goods 1 80
Biggs 1 78
Oshman's 1 64
Lamont's 1 60
Beall's 2 56
The Emporium 1 50
Toys "R" Us 1 47
Winn-Dixie 1 47
Stein Mart 1 39
Office Depot 1 35
Stage 1 35
Ross Dress for Less 1 28
</TABLE>
23 of 39
<PAGE> 24
GROUND LEASES The Company currently leases the land under Rio West Mall,
a portion of the Northridge Fashion Center, a portion of
the Fallbrook Mall land and a portion of the SouthShore and
Bayshore parking areas. In addition, Prince Kuhio Plaza, one of
the Homart Centers, and the office building owned and used by the
Company as its headquarters are subject to long-term ground
leases. The leases generally contain various purchase options in
favor of the Company and typically provide for a right of first
refusal in favor of the Company in the event of a proposed sale
of the property by the Landlord.
For other information concerning the Portfolio Centers see "Item
1 - Business - Business of the Company" and for additional
information concerning the mortgage debt encumbering the GGP
Centers, see Note 5. As stated in Item 1 above, management of the
Company believes that each of the properties in the Company
Portfolio is adequately insured.
ITEM 3. LEGAL The Company is not currently involved in any material litigation
PROCEEDINGS nor, to the Company's knowledge, is any material litigation
currently threatened against the Company, the properties or any
of the Unconsolidated Joint Ventures other than routine
litigation arising in the ordinary course of business, most of
which is expected to be covered by liability insurance. For
information about certain environmental matters, see "Item 1 -
Business - Environmental Matters."
ITEM 4. No matters were submitted to General Growth's stockholders
SUBMISSION OF during the fourth quarter of fiscal 1999.
MATTERS TO A
VOTE OF
SECURITY
HOLDERS
PART II The Common Stock is listed on the New York Stock Exchange
ITEM 5. ("NYSE") and trades under the symbol "GGP". As of March 14, 2000,
MARKET FOR the 51,927,576 outstanding shares of Common Stock were held by
REGISTRANT'S approximately 1,107 stockholders of record. The closing price
COMMON EQUITY per share of the Common Stock on the NYSE on such date was
AND RELATED $28.50 per share.
STOCKHOLDER
MATTERS
Set forth below are the high and low sales prices per share of
Common Stock as reported on the composite tape, and the
distributions per share of Common Stock declared for each such
period.
<TABLE>
<CAPTION>
PRICE
1999 ----- DECLARED
QUARTER ENDING HIGH LOW DISTRIBUTION
-------------- ---- ------ ------------
<S> <C> <C> <C>
March 31 $38.44 $31.25 $.49
June 30 $38.63 $31.13 $.49
September 30 $35.63 $31.06 $.49
December 31 $31.69 $25.00 $.51
</TABLE>
24 of 39
<PAGE> 25
<TABLE>
<CAPTION>
PRICE
1998 ----- DECLARED
QUARTER ENDING HIGH LOW DISTRIBUTION
-------------- ---- ------ ------------
<S> <C> <C> <C>
March 31 $38.00 $34.88 $.47
June 30 $38.63 $34.44 $.47
September 30 $38.69 $33.19 $.47
December 31 $37.94 $32.88 $.47
</TABLE>
<TABLE>
<CAPTION>
PRICE
1997 ----- DECLARED
QUARTER ENDING HIGH LOW DISTRIBUTION
-------------- ---- --- ------------
<S> <C> <C> <C>
March 31 $32.13 $30.25 $.45
June 30 $33.75 $31.13 $.45
September 30 $37.00 $32.44 $.45
December 31 $38.25 $31.81 $.45
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
(Dollars in Thousands, except per Share Amounts)
The following table sets forth selected financial data for the Company which is
derived from and therefore should be read in conjunction with the audited
Consolidated Financial Statements and the related Notes and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in this Annual Report.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Revenue $ 612,342 $ 426,576 $ 291,147 $217,405 $167,396
Operating Expenses 206,088 151,784 109,677 75,954 63,968
Depreciation and Amortization 112,874 75,227 48,509 39,809 30,855
Interest Expense, Net 169,502 109,840 70,252 66,439 46,334
Equity in Net Income of
Unconsolidated Affiliates 19,689 11,067 19,344 17,589 9,274
Net gain on sales including
CenterMark in 1997, 1996 & 1995 $ 4,412 $ 196 $ 58,647 $ 43,821 $ 33,397
--------- --------- --------- -------- --------
Income Before Minority Interest 147,979 100,988 140,700 96,613 68,910
Minority Interest (33,058) (29,794) (49,997) (34,580) (25,856)
--------- --------- --------- -------- ---------
Income Before Extraordinary Items 114,921 71,194 90,703 62,033 43,054
Extraordinary Items (13,796) (4,749) (1,152) (2,291) -
--------- --------- --------- -------- -----------
Net Income 101,125 66,445 89,551 59,742 43,054
--------- --------- --------- -------- ------
Convertible Preferred Stock Dividends (24,467) (13,433) -- -- --
Net Income available
to common stockholders $ 76,658 $ 53,012 $ 89,551 $ 59,742 $43,054
========= ========= ========= ======== =======
Earnings Before Extraordinary Item
Per Share - Basic 1.97 1.60 2.78 2.20 1.69
Earnings Before Extraordinary Item
Per Share - Diluted 1.96 1.59 2.76 2.20 1.69
Net Earnings Per Share - Basic 1.67 1.46 2.75 2.12 1.69
Net Earnings Per Share - Diluted 1.66 1.46 2.73 2.12 1.69
Distributions Declared Per Share 1.98 1.88 1.80 1.72 1.66
</TABLE>
25 of 39
<PAGE> 26
<TABLE>
<S> <C> <C> <C> <C> <C>
CASH FLOW DATA
Operating Activities $ 222,134 $ 118,304 $ 101,149 $ 67,202 $ 60,660
Investing Activities (1,254,697) (1,513,147) (183,535) (29,285) (469,204)
Financing Activities 1,038,526 1,388,575 92,337 (40,268) 421,225
FUNDS FROM OPERATIONS (1)
Operating Partnership $ 274,234 $ 192,274 $ 147,625 $ 114,721 $ 85,138
Minority Interest (82,631) (69,182) (52,890) (42,115) (32,409)
Funds From Operations - Company 191,603 123,092 94,735 72,606 52,729
BALANCE SHEET DATA
Investment in Real Estate Assets-Cost $ 5,023,690 $ 4,063,097 $2,157,251 $1,828,184 $1,547,621
Total Assets 4,954,895 4,027,474 2,097,719 1,757,717 1,455,982
Total Debt 3,119,534 2,648,776 1,275,785 1,168,522 1,027,932
Convertible Preferred Stock 337,500 337,500 -- -- --
Stockholders' Equity 927,758 585,707 498,505 330,267 229,383
</TABLE>
(1) Funds from Operations (as defined below) does not represent cash flow from
operations as defined by Generally Accepted Accounting Principles ("GAAP")
and is not necessarily indicative of cash available to fund all cash
requirements.
FUNDS FROM Funds from Operations is used by the real estate industry
OPERATIONS and investment community as a primary measure of the
performance of real estate companies. The National
Association of Real Estate Investment Trusts ("NAREIT")
defines Funds from Operations as net income (loss) (computed
in accordance with GAAP), excluding gains (or losses) from
debt restructuring and sales of properties, plus real estate
related depreciation and amortization and after adjustments
for unconsolidated partnerships and joint ventures. In
calculating its Funds from Operations, the Company also
excludes gains on land sales, if any. The NAREIT definition
of Funds from Operations does not exclude the aforementioned
item. The Company's Funds from Operations may not be
directly comparable to similarly titled measures reported by
other real estate investment trusts. Funds from Operations
does not represent cash flow from operating activities in
accordance with GAAP and should not be considered as an
alternative to net income (determined in accordance with
GAAP) as an indication of the Company's financial
performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it indicative of funds available
to fund the Company's cash needs, including its ability to
make cash distributions.
RECONCILIATION OF NET INCOME DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES TO FUNDS FROM OPERATIONS:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net Income available to common stockholders $ 76,658 $ 53,012 $ 89,551
Extraordinary item - charges related to early retirement of debt 13,796 4,749 1,152
Allocations to Operating Partnership unitholders 33,058 29,794 49,997
Net gain on sales (4,412) (196) (63,813)
Depreciation and amortization 155,134 104,915 70,738
--------- -------- --------
Funds From Operations $ 274,234 $192,274 $147,625
========= ======== ========
</TABLE>
26 of 39
<PAGE> 27
GENERAL GROWTH PROPERTIES, INC.
ITEM 7. 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 Annual Report,
which descriptions are incorporated into the
applicable response by reference. The following
discussion should be read in conjunction with such
Consolidated Financial Statements and related
Notes. Capitalized terms used but not defined in
this Management's Discussion of Financial Condition
and Results of Operations have the same meanings as
in such Notes.
CERTAIN INFORMATION ABOUT As of December 31, 1999, the Company owned 100% of
THE COMPANY PORTFOLIO the fifty-two Wholly-Owned Centers, 50% of the
stock of GGP/Homart, 50% of the stock of GGP/Homart
II, 51% of the stock of GGP Ivanhoe, 51% of the
stock of GGP Ivanhoe III, 50% of Quail Springs Mall
and Town East Mall, (collectively, the "Company
Portfolio") and a non-voting preferred stock
ownership interest (representing 95% of the equity
interest) in GGMI. The Company is also in the
process of constructing one additional center as
discussed below. Reference is made to Notes 3 and 4
for a further discussion of such entities owned by
the Company. As of December 31, 1999 GGP/Homart
owned interests in twenty-three shopping centers,
GGP/Homart II owned interests in seven shopping
centers (including one currently under
construction), GGP Ivanhoe owned interests in two
shopping centers, and GGP Ivanhoe III owned
interests in eight shopping centers.
As used in this annual report, the term "GLA"
refers to gross leaseable retail space, including
Anchors and mall tenant areas; the term "Mall GLA"
refers to gross leaseable retail space, excluding
Anchors; the term "Anchor" refers to a department
store or other large retail store; the term "Mall
Stores" refers to stores (other than Anchors) that
are typically specialty retailers who lease space
in shopping centers; and the term "Freestanding
GLA" means gross leaseable area of freestanding
retail stores in locations that are not attached to
the primary complex of buildings that comprise a
regional mall shopping center.
The Mall Store and Freestanding Store portions of
the centers in the Company Portfolio which were not
undergoing redevelopment on December 31, 1998, had
an occupancy rate of approximately 88.6% as of such
date. On December 31, 1999, the Mall Store and
Freestanding Store portions of the centers in the
Company Portfolio which were not undergoing
redevelopment were approximately 90.1% occupied,
representing an increase of 1.5% over 1998.
Total annualized sales averaged $341 per square
foot for the Company Portfolio for the year ended
December 31, 1999. For the year ended December 31,
1999, total Mall Store sales for the Company
Portfolio increased by 10.1% over the same period
in 1998. Comparable Mall Store sales are current
sales of those certain tenants that were open
during the previous measuring period compared to
the sales of those same tenants for the previous
measuring period. Therefore, Comparable Mall Store
sales in the year ended December 31, 1999 are of
those tenants that were also operating in the year
ended December 31, 1998. Comparable Mall Store
sales in the year ended December 31, 1999 increased
by 6.1% over the same period in 1998.
The average Mall Store rent per square foot from
leases that expired in the year ended December 31,
1999 was $26.04. The Company Portfolio benefited
from increasing rents inasmuch as the average Mall
Store rent per square foot on new and renewal
leases
27 of 39
<PAGE> 28
GENERAL GROWTH PROPERTIES, INC.
executed during 1999 was $33.78, or $7.74 per
square foot above the average for expiring leases.
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/Homart II, GGP Ivanhoe, GGP Ivanhoe
III, GGMI, Quail Springs Mall and Town East Mall,
the discussion of results of operations which
follows relates primarily to the revenues and
expenses of the Wholly-Owned Centers.
RESULTS OF COMPARISON OF YEAR ENDED 1999 TO YEAR ENDED
OPERATIONS OF THE DECEMBER 31, 1998 Total revenues for 1999 were
COMPANY $612.3 million, which represents an increase of
$185.7 million or approximately 43.5% from $426.6
million in 1998. Approximately $168.2 million of
the increase was from properties acquired or
developed after January 1, 1998. Minimum rent
during 1999 increased $118.5 million or 44.1% from
$269.0 million in 1998 to $387.5 million. $103.8
million of the increase in minimum rent resulted
from the acquisition and development of properties
after January 1, 1998. Tenant recoveries (amounts
received from tenants related to property operating
costs) increased by $49.7 million or 38.0% from
$130.9 million to $180.6 million in 1999. The
increase in tenant recoveries was generated by a
combination of new acquisitions and increased
recoverable operating costs at the comparable
centers (properties owned for the entire time
during current and prior periods). Percentage rents
and other income increased $16.8 million or 76.4%
from $22.0 million in 1998 to $38.8 million in 1999
primarily due to the acquisition of new properties
and improved performance at the comparable centers.
Fee income increased slightly during 1999 as
compared to the year ended December 31, 1998
primarily due to fee revenue generated by asset
management services performed for the
Unconsolidated Joint Ventures.
Total expenses, including depreciation and
amortization, increased by approximately 40.5% or
$92 million, from $227.0 million in 1998 to $319
million in 1999. Approximately $86.5 million or
94.0% of the increase in total expenses related to
properties acquired and developed since January 1,
1998. The remaining $5.5 million of the increase
was primarily accounted for by increased operating
costs, the majority of which were recoverable from
tenants. The increase in total expenses consists of
$12 million of real estate taxes, $2.3 million of
management fees, $36.6 million of property
operating costs, $2.0 million of provision for
doubtful accounts, $1.3 million of general and
administrative and $37.6 million of depreciation
and amortization.
Interest expense increased by $60.2 million or
47.8% from $125.8 million in 1998 to $186 million
in 1999. Debt used to fund acquisitions generated a
$53.9 million increase in interest expense in 1999
compared to 1998. This increase was partially
offset by the use of a portion of the proceeds of
the Company's public offering of Common Stock to
repay existing indebtedness. The note receivable
from GGMI generated $11.4 million of interest
income in 1999, an increase of $0.7million from
$10.7 million in 1998.
Equity in net income of unconsolidated affiliates
during 1999 increased by $8.6 million to $19.7
million from $11.1 million in 1998. The Company's
equity in the earnings of GGP/Homart increased
approximately $1.1 million, primarily due to the
increase in average property occupancy, an increase
in the ownership interest of GGP/Homart in The
Parks at Arlington and an increase in the Company's
ownership interest in
28 of 39
<PAGE> 29
GENERAL GROWTH PROPERTIES, INC.
GGP/Homart in 1999 versus 1998. The Company's
equity in the earnings of GGMI resulted in an
increase of approximately $3.9 million, primarily
due to reduced write-offs of terminated third-party
management contracts. GGP Ivanhoe III accounted for
an increase of approximately $1.2 million due
primarily to the acquisition of USPPI in June 1998
as described more fully in Note 4.
Net income after extraordinary items increased by
approximately $34.7 million in 1999 to $101.1
million, from $66.4 million in 1998. The increase
resulted from a combination of the above items.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR
ENDED DECEMBER 31, 1997 Total revenues for 1998
were $426.6 million, which represents an increase
of $135.5 million or approximately 46.5% from
$291.1 million in 1997. Approximately $128.8
million or 95.1% of the increase was from
properties acquired or developed after January 1,
1997. Minimum rent during 1998 increased $93.2
million or 53.0% from $175.8 million in 1997 to
$269.0 million. The acquisition and development of
properties after January 1, 1997 generated a $77.5
million increase in minimum rents. Expansion space,
specialty leasing and a combination of occupancy,
rental charges and allowance reserve adjustments at
the comparable centers accounted for the remaining
increase in minimum rents. Tenant recoveries
increased by $33.6 million or 34.5% from $97.3
million to $130.9 million in 1998. The increase in
tenant recoveries was generated by a combination of
new acquisitions and increased recoverable
operating costs at the comparable centers.
Percentage rents and other income increased $8.4
million or 61.8% from $13.6 million in 1997 to
$22.0 million in 1998 as a result of the
acquisition of new properties and improved
performance at the comparable centers. Fee income
during 1998 was comparable to the year ended
December 31, 1997. The fee revenue was primarily
generated by asset management services performed
for GGP/Homart.
Total expenses, including depreciation and
amortization, increased by approximately 43.5% or
$68.8 million, from $158.2 million in 1997 to
$227.0 million in 1998. Virtually all of the
increase in total expenses was attributable to
properties acquired and developed since January 1,
1997. The increase in total expenses from the new
properties consists of $13.4 million of real estate
taxes, $1.0 million of management fees, $32.3
million of property operating costs, $0.9 million
of provision for doubtful accounts, and $21.1
million of depreciation and amortization.
Net interest expense increased by $39.5 million or
56.2% from $70.3 million in 1997 to $109.8 million
in 1998, substantially all due to indebtedness
incurred in connection with the acquisition of new
properties in 1997 and 1998. The note receivable
from GGMI generated $10.7 million of interest
income in 1998, an increase of $4.3 million from
$6.4 million in 1997. The change was due to the
increase in the outstanding balance of the note,
the proceeds of which were primarily used to
finance the cost of the Company's new corporate
headquarters building in downtown Chicago.
Equity in net income of unconsolidated affiliates
during 1998 decreased by $8.2 million to $11.1
million from $19.3 million in 1997. GGP/Homart
accounted for an increase of approximately $1.4
million and the remaining property joint ventures
accounted for an aggregate increase of $6.8
million. The Company's ownership interest in GGMI
resulted in a decrease of $16.4 million, caused
primarily by increased write-offs of terminated
third-party management contracts.
29 of 39
<PAGE> 30
GENERAL GROWTH PROPERTIES, INC.
Net income decreased by approximately $23.2 million
in 1998 to $66.4 million, from $89.6 million in
1997. Net income in 1997 included a $58.6 million
gain on the January 1997 sale of the remaining
investment in CenterMark. 1997 net income without
the CenterMark gain (net of minority interest)
would have been $52.9 million and 1998 net income
increased by $13.5 million compared to this amount,
primarily as a result of net income from newly
acquired properties and higher income on comparable
centers.
LIQUIDITY AND CAPITAL As of December 31, 1999, the Company held
RESOURCES OF THE COMPANY approximately $25.6 million of unrestricted cash
and cash equivalents. The Company uses operating
cash flow as the principal source of internal
funding for short-term liquidity and capital needs
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 longer-term liquidity needs such as
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
securities, unsecured Company level debt or secured
loans collateralized by individual shopping
centers. Currently, the Company has access to the
public equity and debt markets through a currently
effective shelf registration statement under which
up to $329.2 million in equity or debt securities
may be issued from time to time. The Company also
has a $200 million unsecured credit facility (the
"Credit Facility") which matures on July 31, 2000.
As of December 31, 1999, $160 million of the Credit
Facility was drawn.
As of December 31, 1999, the Company had
consolidated debt of approximately $3,120 million,
of which $1,725 million is comprised of debt
bearing interest at a fixed rate, with the
remaining $1,395 million bearing interest at
floating rates. Reference is made to Note 5 and
Items 2 and 7A of the Company's Annual Report on
Form 10-K for additional information regarding the
Company's debt and the potential impact on the
Company of interest rate fluctuations.
The following summarizes certain significant
financing and refinancing transactions completed
since December 31,1998:
In January 1999, the Company obtained a $30 million
short-term unsecured bank loan which bore interest
at a floating market rate. The bank loan was repaid
on May 21,1999 in conjunction with the replacement
of the $55 million negative pledge (i.e., the
promise not to encumber) of Coastland Mall with a
ten-year 7.0% mortgage loan in the principal amount
of $87 million collateralized by the Coastland
Mall.
In January 1999, the Company obtained an additional
$83.7 million floating rate interim loan (scheduled
to mature June 1, 1999 but partially repaid in May,
1999 with the remainder subsequently extended to
November 1999, and repaid as discussed below).
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 loan described
above. In May 1999, the Company obtained a new $45
million mortgage loan collateralized by The
Crossroads Mall to replace a portion of the $83.7
million of interim financing. The new mortgage loan
bears interest at 7.40% and matures in June 2009.
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GENERAL GROWTH PROPERTIES, INC.
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,
which was increased to $50 million in October 1999.
The loan is currently scheduled to mature on March
31, 2000, and the Company expects to obtain an
extension of the maturity date. The Company is
seeking a floating rate construction loan, which is
expected to be replaced at project completion with
permanent long-term mortgage non-recourse financing
(see Note 5).
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
recently completed project in Grandville (Grand
Rapids), Michigan as more fully described in Note
2). Loan amounts drawn on the facility
(approximately $88 million) bear interest at a rate
per annum equal to LIBOR plus 175 basis points. The
Company expects to refinance this loan facility by
the scheduled maturity of June 29, 2001 with
permanent long-term financing collateralized by the
center (see Note 5).
On July 1, 1999, the Company obtained approximately
$57 million of permanent long term mortgage
financing. The new mortgage loan, collateralized by
the Apache Mall, bears interest at 7.0% and is
scheduled to mature August 1, 2009.
On July 1, 1999, the Company obtained an extension
of the maturity date of approximately $833 million
of indebtedness (comprised of acquisition financing
of $441 million and $392 million for MEPC and
USPPI, respectively) from its scheduled maturity
date on July 1, 1999 to October 1, 1999. In
September 1999 the Company issued approximately
$700 million of commercial mortgage backed
securities maturing October 2004 assuming the
exercise of no-cost extension options aggregating
two years (the GGP-Ivanhoe CMBS as more fully
described in Note 5). The Company used the proceeds
from the issuance of the GGP Ivanhoe CMBS to repay
most of the $441 million of the MEPC Acquisition
Financing and, with capital contributions from
Ivanhoe, the $392 million interim loan
collateralized by the USPPI portfolio. In September
1999, the Company also obtained a $95 million
unsecured interim loan to provide among other
things, the remaining amount to retire the MEPC
Acquisition Financing. The unsecured interim loan,
as more fully described in Note 5, required
periodic principal payments ($12 million paid as of
December 31, 1999) until its July, 2000 maturity
and was fully repaid in January 2000 as described
below.
During July 1999, General Growth completed the 1999
Offering as more fully described in Note 1. General
Growth received net proceeds of approximately
$330.3 million from the sale of 10,000,000 shares
of Common Stock which were ultimately used to pay a
portion of the purchase price for the Ala Moana
Center.
On July 26, 1999, the Company obtained a ten-year
loan in the principal amount of $100 million
collateralized by a mortgage encumbering Cumberland
Mall in Atlanta, Georgia. The loan proceeds were
used to repay a portion of the MEPC Acquisition
Financing which had been collateralized by a
mortgage on the MEPC Portfolio (which includes
Cumberland Mall).
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GENERAL GROWTH PROPERTIES, INC.
On July 30, 1999, the Company obtained a three
month loan (with an additional three-month
extension option) in the principal amount of $25
million collateralized by a negative pledge (i.e.,
the promise not to encumber) of Eagle Ridge Mall in
Lake Wales, Florida. This loan was repaid in
October 1999 with a portion of the proceeds of the
$130 million two-year mortgage pool financing
described below and in Note 5. The proceeds of the
loan were distributed to the Operating Partnership
to fund ongoing acquisition and development
activity.
During July 1999, the $100 million loan
collateralized by Northbrook Court was extended
from its scheduled maturity of August 1, 1999 to
November 30, 1999. Due to the formation of Homart
II as described below and in Note 4, this $100
million loan was repaid by GGP/Homart II on
November 30, 1999 with the proceeds from new
commercial mortgage-backed securities,
collateralized by a portion of GGP/Homart II's
portfolio of properties (including Northbrook
Court).
On July 30, 1999, the Company acquired 100% of the
Ala Moana Center in Honolulu, Hawaii, as more fully
described in Note 3. The transaction was funded by
a new $438 million short-term first mortgage loan
and approximately $294 million in cash including a
portion of the net proceeds of the 1999 Offering as
further described in Note 1. The Company repaid the
short-term mortgage loan in August 1999 through the
issuance of $500 million of commercial
mortgage-backed securities maturing September 2004
(assuming the exercise of no-cost extension options
aggregating two years) as more fully described in
Note 5. The Company may discuss with institutional
investors the formation of a new joint venture to
own the property. The terms of any joint venture
and the Company's interest in any joint venture,
have not been determined and the Company may not
ultimately elect to form any such joint venture.
On September 28, 1999 GGP Ivanhoe III acquired the
Oak View Mall in Omaha, Nebraska, and on December
22, 1999 it acquired the Eastridge Mall in San
Jose, California. The aggregate purchase price for
the two properties was approximately $160 million,
financed by capital contributions from its
partners, a new $83 million long-term mortgage loan
and approximately $30 million of other short-term
floating rate debt.
Additionally, in September 1999, the Company agreed
to advance approximately $31 million collateralized
by a second mortgage on the Crossroads Center in
St. Cloud (Minneapolis), Minnesota. In connection
with the second mortgage, the Company may be
required to or may elect to acquire the property in
April 2000 as more further described in Note 3.
In October 1999, the Company acquired the Baybrook
Mall in Houston, Texas. The aggregate purchase
price was approximately $133 million, which was
paid with the proceeds of a ten year $95 million
mortgage on the property and the proceeds of other
new secured financing.
In October 1999, the Company obtained a $130
million two-year term loan collateralized by six
properties which is scheduled to mature in October
2001 as more fully described in Note 5.
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GENERAL GROWTH PROPERTIES, INC.
In November 1999, the Company formed GGP/Homart II,
a new joint venture with the New York State Common
Retirement Fund, its venture partner in GGP/Homart.
GGP/Homart II owns three regional malls contributed
by New York State Common Retirement Fund and three
operating regional malls and one mall currently
under construction contributed by the Company (Note
4).
In January 2000, the Company obtained a new $200
million unsecured short-term bank loan. The initial
funding of $120 million on this loan was used to
fund ongoing redevelopment projects and repay the
interim loan obtained in September 1999. This loan
bears interest at LIBOR plus 150 basis points and
matures concurrently with the July 2000 maturity of
the Company's Credit Facility. The Company
currently expects to jointly refinance these
obligations when due with a new revolving credit
facility and term loans.
Approximately $318 million of the Company's debt is
scheduled to mature in 2000. Although agreements to
refinance all of such indebtedness have not yet
been reached, the Company anticipates that all of
its debt will be repaid on a timely basis. Other
than as described above or in conjunction with
possible future acquisitions, there are no current
plans to incur additional debt or raise equity
capital. If additional capital is required, the
Company believes that it can obtain an interim bank
loan, obtain additional mortgage financing on
under-leveraged assets, enter into new joint
venture partnership arrangements or raise
additional debt or equity capital. However, there
can be no assurance that the Company can obtain
such financing on satisfactory terms. The Company
will continue to monitor its capital structure,
investigate potential joint venture arrangements
and purchase additional properties if they can be
acquired and financed on terms that the Company
reasonably believes will enhance long-term
stockholder value. When property operating cash
flow has been increased, the Company will consider
the refinancing of portions of its long-term
floating rate debt to pooled or property-specific
non-recourse fixed-rate mortgage financing.
Net cash provided by operating activities was
$222.1 million in 1999, an increase of $103.8
million from $118.3 million in the same period in
1998. Net income before allocations to the minority
interest increased $48 million, which was primarily
due to earnings attributable to properties acquired
in 1999 and 1998. Another significant change in
cash provided by operating activities was a $37.6
million net change in cash flows from operating
activities in 1999 as compared to 1998 related to
depreciation and amortization.
SUMMARY OF INVESTING Net cash used by investing activities was $1,254.7
ACTIVITIES million in 1999 compared to $1,513.1 million of
cash used in 1998. Cash flow from investing
activities was impacted by acquisitions,
development and improvements to real estate
properties, which utilized cash of approximately
$1,248.4 million in 1999 and $1,360.1 million in
1998.
Net cash used by investing activities in 1998 was
$1,513.1 million, compared to a use of $183.5
million in 1997. Cash flow from investing
activities was affected by the timing of
acquisitions, development and improvements to real
estate properties, requiring a use of cash of
approximately $1,360.1 million in 1998 compared to
$200.6 million in 1997. The proceeds from the sale
of CenterMark provided funds of $130.5 million in
1997.
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<PAGE> 34
GENERAL GROWTH PROPERTIES, INC.
SUMMARY OF FINANCING Financing activities provided cash of $1,038.5
ACTIVITIES million in 1999, compared to $1,388.6 million in
1998. The Common Stock offering in July 1999
provided net proceeds of approximately $330.3
million which, as described in Note 1, was utilized
to reduce outstanding indebtedness and to fund the
acquisition of the Ala Moana Center. As also
described in Note 1, the Company completed a public
offering of preferred stock in June 1998, the net
proceeds of which (approximately $322.7 million)
were used primarily to reduce acquisition-related
financing and amounts drawn on the Company's Credit
Facility. Such payments are reflected in the use of
cash for financing activities for principal
payments on mortgage notes and other debt in 1999
and 1998. An additional significant contribution of
cash from financing activity is financing from
mortgages and acquisition debt, which had a
positive impact of $1,736 million in 1999 versus
approximately $2,093 million in 1998. The
additional financing was used to repay existing
indebtedness and to fund the acquisitions and
redevelopment of real estate as discussed above.
The remaining use of cash consisted primarily of
increased distributions (including dividends paid
to preferred stockholders in 1999 and 1998).
Financing activities in 1998 provided $1,388.6
million of cash compared to a $92 million source of
cash flow in 1997. Distributions to common
stockholders and the minority interest in the
Operating Partnership were $103.1 million in 1998
compared to $88.9 million in 1997. The increase in
distributions is due to the increased distribution
rate and additional shares of Common Stock and
Operating Partnership Units outstanding during 1998
compared to 1997. Net proceeds from the issuance of
common stock during 1997 provided $165.8 million of
cash flow. Net borrowing activity provided $29.6
million of cash flow in 1998 compared to $37.7
million in 1997. The purchase of treasury stock
used $5.7 million of cash flow during 1997.
General Growth has, effective January 1, 2000,
established a Dividend Reinvestment and Stock
Purchase Plan ("DRSP"). General Growth has reserved
for issuance up to 1,000,000 shares of Common Stock
for issuance under the DRSP. The DRSP will, in
general, allow participants in the plan to make
purchases of Common Stock from dividends received
or additional cash investments. Although the
purchase price of the Common Stock will be
determined by the current market price, the
purchases will be made without fees or commissions.
General Growth will satisfy DRSP Common Stock
purchase needs through the issuance of new shares
of Common Stock or by repurchases of currently
outstanding Common Stock. Any new issuances of
Common Stock pursuant to the DRSP will not reduce
amounts otherwise available under the Company's
currently effective shelf-registration described
above.
REIT REQUIREMENTS 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 and
the Unconsolidated Joint Ventures, to the extent
distributed to the Company, less oversight costs
and debt service on additional loans that were
incurred to finance Company acquisitions. The
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<PAGE> 35
GENERAL GROWTH PROPERTIES, INC.
Company anticipates that its operating cash flow,
and potential new debt or equity from future
offerings, new financings or refinancings will
provide adequate liquidity to conduct its
operations, fund general and administrative
expenses, fund operating costs and interest
payments and allow distributions to the Company's
preferred and common stockholders in accordance
with the requirements of the Internal Revenue Code
of 1986, as amended, for continued qualification as
a real estate investment trust and to avoid any
Company level federal income or excise tax.
RECENTLY ISSUED ACCOUNTING As more fully described in Note 12, certain
PRONOUNCEMENTS accounting pronouncements were issued in 1999,
which became effective in 1999 or will become
effective in 2000. The Company does not expect the
application of such new pronouncements to have a
significant impact on its annual reported results
of operations.
YEAR 2000 DISCLOSURES The Year 2000 problem resulted 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
had 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 could have resulted in problems when the
century date occurred. On that date, these computer
programs could have misinterpreted the date January
1, 2000, as January 1, 1900. This could have caused
systems to incorrectly process critical financial
and operational information, generate erroneous
information or fail altogether. The Year 2000 issue
was expected to affect almost all companies and
organizations.
THE COMPANY'S YEAR 2000 The Company recently upgraded its major information
EXPERIENCE: systems, including its databases and primary
accounting software, which were fully operational
prior to December 31, 1999. These upgrades were
performed primarily for the purpose of routine
improvements to the Company's information systems
and were initiated in advance of any concern for
the Year 2000 issue. The Company also evaluated
several other smaller non-IT systems (i.e. time
keeping systems, elevators, etc.) to verify that
they were Year 2000 compliant. The non-IT systems
evaluation process resulted in upgrades or
replacements purchased for certain non-IT systems
found to be not Year 2000 compliant. The cost of
the required upgrades was not significant.
As of the date of this report, the Company's IT
systems and non-IT systems have not encountered any
significant Year 2000 operating problems. In
addition, there were no significant third-party
Year 2000 operating problems that had any impact on
the Company's operations. Therefore, the Company
does not expect to incur any significant additional
costs relating the Year 2000 issue.
ECONOMIC CONDITIONS Inflation has been relatively low and has not had a
significant detrimental impact on the Company.
Should inflation rates increase in the future,
substantially all of the Company's tenant leases
contain provisions designed to mitigate the
negative impact of inflation. Such provisions
include clauses enabling the Company to receive
percentage rents based on tenants' gross sales,
which generally increase as prices rise, and/or
escalation clauses, which generally increase rental
rates during the terms of the leases. In addition,
many of the leases are for terms of less than 10
years which may enable the Company to replace or
renew expiring leases with new leases at higher
base and/or percentage rents, if rents under the
expiring leases are below the then-existing market
rates. Finally, most of the existing leases require
the tenants to pay their share of certain
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<PAGE> 36
GENERAL GROWTH PROPERTIES, INC.
operating expenses, including common area
maintenance, real estate taxes and insurance,
thereby reducing the Company's exposure to
increases in costs and operating expenses resulting
from inflation.
Inflation also poses a potential threat to the
Company due to the possibility of future increases
in interest rates. Such increases would adversely
impact the Company due to the amount of its
outstanding floating rate debt. However, in recent
years, the Company's ratio of interest expense to
cash flow has continued to decrease. Therefore, the
relative risk the Company bears due to interest
expense exposure has been declining. In addition,
the Company has a policy of replacing floating rate
debt with fixed rate debt as market conditions
allow. (See also Note 5).
A number of local, regional and national retailers,
including tenants of the Company, filed for
bankruptcy protection during the last few years.
Most of the bankrupt retailers reorganized their
operations and/or sold stores to stronger
operators. Although some leases were terminated
pursuant to the lease cancellation rights afforded
by the bankruptcy laws, the impact on Company
earnings was negligible. Over the last three years,
the provision for doubtful accounts has averaged
only $3.3 million per year, which represents less
than 1% of average total revenues of $443.4
million.
The Company and its affiliates currently have
interests in 93 shopping centers. The Portfolio
Centers are diversified both geographically and by
property type (both major and middle market
properties) and this may mitigate the impact of a
potential economic downturn at a particular
property or in a particular region of the country.
The shopping center business is seasonal in nature.
Mall stores typically achieve higher sales levels
during the fourth quarter because of the holiday
selling season. Although the Company has a
year-long temporary leasing program, a significant
portion of the rents received from short-term
tenants are collected during the months of November
and December. Thus, occupancy levels and revenue
production are generally highest in the fourth
quarter of each year and lower during the first and
second quarters of each year.
The Internet and electronic retailing are growing
at significant rates. In 1999 the Company launched
a new website - Mallibu.com - and has engaged in a
number of other e.business initiatives. Although
the amount of retail sales conducted solely via the
Internet is expected to rise in the future, the
Company believes that traditional retailing and
"e-tailing" will converge such that the regional
mall will continue to be a vital part of the
overall mix of shopping alternatives for the
consumer.
ITEM 7A. QUANTITATIVE AND The Company has not entered into any transactions
QUALITATIVE DISCLOSURES using derivative commodity instruments. The Company
ABOUT MARKET RISK is subject to market risk associated with changes
in interest rates. The economy is currently in a
period of rising interest rates. Interest rate
exposure is principally limited to the $1,395
million of consolidated debt of the Company
outstanding at December 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
$3.5 million annualized increase or decrease in
interest expense and a corresponding opposite
effect on cash flows. Additionally, approximately
$859 million of such floating rate consolidated
debt is comprised of commercial mortgage-backed
securities which are subject to interest rate cap
agreements, the effect of which is to limit the
interest rate the Company would be
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<PAGE> 37
GENERAL GROWTH PROPERTIES, INC.
required to pay on such debt to no more than
approximately 9% per annum. The remaining $1,725
million of consolidated 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 and to stagger its debt
maturities in order to respond to changing market
rate conditions. Reference is made to Item 2 above
and Note 5 for additional debt information.
ITEM 8. FINANCIAL Reference is made to the Index on page F-1 to
STATEMENTS AND Financial Statements and Financial Statement
SUPPLEMENTARY DATA Schedules for the required information.
ITEM 9. CHANGES IN AND None.
DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
PART III
ITEM 10. DIRECTORS AND The information which appears under the captions
EXECUTIVE OFFICERS OF THE "Proposal No. 1 - Election of Directors" and
COMPANY "Executive Officers" in the Company's definitive
proxy statement for its 2000 Annual Meeting of
Stockholders is incorporated by reference into this
Item 10.
ITEM 11. EXECUTIVE The information which appears under the caption
COMPENSATION "Executive Compensation" in the Company's
definitive proxy statement for its 2000 Annual
Meeting of Stockholders is incorporated by
reference into this Item 11; provided, however,
that neither the Report of the Compensation
Committee of the Board of Directors on Executive
Compensation nor the Performance Graph set forth
therein shall be incorporated by reference herein,
in any of the Company's previous filings under the
Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or in
any of the Company's future filings.
ITEM 12. SECURITY The information which appears under the captions
OWNERSHIP OF CERTAIN "Certain Relationships and Related Transactions"
BENEFICIAL OWNERS AND and "Common Stock Ownership of Management" in the
Company's definitive proxy statement for its 2000
Annual Meeting of Stockholders is incorporated by
MANAGEMENT reference into this Item 12.
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<PAGE> 38
GENERAL GROWTH PROPERTIES, INC.
ITEM 13. CERTAIN The information which appears under the caption
RELATIONSHIPS AND RELATED "Compensation Committee Interlocks and Insider
TRANSACTIONS Participation" and "Certain Relationships and
Related Transactions" in the Company's definitive
proxy statement for its 2000 Annual Meeting of
Stockholders is incorporated by reference into this
Item 13.
PART IV
ITEM 14. EXHIBITS, (a) Financial Statements and Financial Statement
FINANCIAL STATEMENTS, Schedules.
SCHEDULES AND REPORTS ON
The financial statements and schedules
listed in the accompanying Index to FORM 8-K
Consolidated Financial Statements and Financial
Statement Schedules are filed as part of this
Annual Report on Form 10-K.
(b) The following reports on Form 8-K were filed by
the Company during the last quarter of the period
covered by this report.
1) Current Report on Form 8-K dated November
23, 1999, as amended by Form 8-K/A dated
January 11, 2000, concerning the formation
of GGP/Homart II. Financial statements
relating to the formation of GGP/Homart II
and other recent acquisitions of the
Company were filed with this 8-K, as
amended.
(c) Exhibits.
See Exhibit Index on page S-1
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<PAGE> 39
GENERAL GROWTH PROPERTIES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>
<S> <C>
By: /s/ John Bucksbaum
- ---------------------------------
John Bucksbaum,
Chief Executive Officer March 14, 2000
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Matthew Bucksbaum
- ---------------------------------
Matthew Bucksbaum Chairman of the Board March 14, 2000
/s/ Robert Michaels
- ---------------------------------
Robert Michaels President and Director March 14, 2000
/s/ Bernard Freibaum
- ---------------------------------
Bernard Freibaum Executive Vice President, Chief Financial
Officer and Principal Accounting Officer March 14, 2000
/s/ Anthony Downs
- ---------------------------------
Anthony Downs Director March 14, 2000
/s/ Morris Mark
- ---------------------------------
Morris Mark Director March 14, 2000
/s/ Beth Stewart
- ---------------------------------
Beth Stewart Director March 14, 2000
/s/ Lorne Weil
- ---------------------------------
A. Lorne Weil Director March 14, 2000
</TABLE>
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<PAGE> 40
GENERAL GROWTH PROPERTIES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT
SCHEDULE
The following financial statements and financial statement schedule are included
in Item 8 of this Annual Report on Form 10-K:
General Growth Properties, Inc.
<TABLE>
<CAPTION>
Financial Statements Page(s)
<S> <C>
Report of Independent Accountants F-2
Consolidated Balance Sheets as of December 31, 1999 and 1998 F-3
Consolidated Statements of Operations and Comprehensive Income
for the years ended December 31, 1999, 1998 and 1997. F-4
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1999, 1998 and 1997 F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 F-8
Notes to Consolidated Financial Statements F-9 to F-31
Financial Statement Schedule
Report of Independent Accountants F-32
Schedule III - Real Estate and Accumulated Depreciation F-33
</TABLE>
All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule or
because the information required is included in the consolidated financial
statements and related notes.
F-1
<PAGE> 41
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
General Growth Properties, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and comprehensive income, of stockholders'
equity and of cash flows present fairly, in all material respects, the
consolidated financial position of General Growth Properties, Inc. as of
December 31, 1999 and 1998 and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and the
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion expressed above.
Chicago, Illinois PricewaterhouseCoopers LLP
February 8, 2000
F-2
<PAGE> 42
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31,
- ------ -----------------------------
1999 1998
---------- ----------
<S> <C> <C>
Investment in Real Estate:
Land $ 640,276 $ 364,699
Buildings and equipment 3,664,832 3,222,237
Less accumulated depreciation (376,673) (301,789)
Developments in progress 21,443 89,860
---------- ----------
Net property and equipment 3,949,878 3,375,007
Investment in Unconsolidated Real Estate Affiliates 666,074 386,301
Mortgage note receivable 31,065 -
---------- ----------
Net Investment in Real Estate 4,647,017 3,761,308
Cash and cash equivalents 25,593 19,630
Tenant accounts receivable, net 84,123 74,585
Deferred expenses, net 93,536 71,593
Investment in and note receivable from
General Growth Management, Inc. 65,307 84,716
Prepaid expenses and other assets 39,319 15,642
========== ===========
$4,954,895 $4,027,474
========== ==========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Mortgage notes and other debts payable $3,119,534 $2,648,776
Distributions payable 42,695 33,757
Accounts payable and accrued expenses 170,868 122,303
---------- ----------
3,333,097 2,804,836
---------- ----------
Minority interest in Operating Partnership 356,540 299,431
---------- ----------
Commitments and contingencies - -
Convertible Preferred Stock: $100 par value; 5,000,000
shares authorized; 345,000 designated as PIERS (Note 1)
which are convertible and carry a $1,000 liquidation value, 337,500
of which were issued and outstanding at
December 31, 1999 and 1998 337,500 337,500
---------- ----------
Stockholders' Equity:
Common stock: $0.10 par value; 210,000,000 shares
authorized; 51,697,425 and 39,000,972 shares issued
and outstanding at December 31, 1999 and 1998, respectively 5,170 3,900
Additional paid-in capital 1,199,921 843,238
Retained earnings (deficit) (272,199) (258,267)
Notes receivable - common stock purchase (3,420) (3,164)
Accumulated equity in other comprehensive loss of unconsolidated
affiliate (1,714) -
---------- ----------
Total Stockholders' Equity 927,758 585,707
---------- ----------
$4,954,895 $4,027,474
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 43
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997
-------- -------- --------
Revenues:
<S> <C> <C> <C>
Minimum rents $387,547 $268,976 $175,830
Tenant recoveries 180,584 130,903 97,291
Percentage rents 27,011 16,226 7,976
Other 11,795 5,796 5,577
Fee Income 5,405 4,675 4,473
-------- -------- --------
Total Revenues 612,342 426,576 291,147
-------- -------- --------
Expenses:
Real estate taxes 45,572 33,548 20,761
Management fee to affiliate 6,612 4,288 3,308
Property operating 143,622 106,986 79,175
Provision for doubtful accounts 4,425 2,451 3,025
General and administrative 5,857 4,511 3,408
Depreciation and amortization 112,874 75,227 48,509
-------- -------- --------
Total Expenses 318,962 227,011 158,186
-------- -------- --------
Operating Income 293,380 199,565 132,961
Interest income 16,482 16,011 8,523
Interest expense (185,984) (125,851) (78,775)
Equity in net income (loss) of unconsolidated affiliates 19,689 11,067 19,344
Net gain on sales 4,412 196 58,647
-------- -------- --------
Income before extraordinary items &
allocation to minority interest 147,979 100,988 140,700
Income allocated to minority interest (33,058) (29,794) (49,997)
-------- -------- --------
Income before extraordinary items 114,921 71,194 90,703
Extraordinary Items (13,796) (4,749) (1,152)
-------- -------- --------
Net Income 101,125 66,445 89,551
Convertible Preferred Stock Dividends (24,467) (13,433) -
-------- -------- --------
Net income available to common stockholders $ 76,658 $ 53,012 $ 89,551
======== ======== ========
Earnings before extraordinary item per share - basic $ 1.97 $ 1.60 $ 2.78
======== ======== ========
Earnings before extraordinary item per share - diluted $ 1.96 $ 1.59 $ 2.76
======== ======== ========
Net earnings per share - basic $ 1.67 $ 1.46 $ 2.75
======== ======== ========
Net earnings per share - diluted $ 1.66 $ 1.46 $ 2.73
======== ======== ========
Net Income $101,125 $ 66,445 $ 89,551
Other comprehensive income (loss):
Equity in unrealized loss on available-for-sale
securities of unconsolidated affiliate, net of
minority interest (1,714) - -
======== ======== ========
Comprehensive income $ 99,411 $ 66,445 $ 89,551
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 44
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands, except for Per Share Amounts)
<TABLE>
<CAPTION>
ADDITIONAL RETAINED EMPLOYEE TOTAL
COMMON STOCK PAID-IN EARNINGS TREASURY STOCK STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) STOCK LOANS EQUITY
---------- ------- -------- --------- -------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 30,789,185 $ 3,079 $595,628 $(268,440) $ - $ - $330,267
89,551 89,551
Net income
Cash distributions declared
($1.80 per share) (59,779) (59,779)
Issuance of common stock,
less $533 of issuance costs 4,927,680 493 165,270 165,763
Issuance of common stock for services 2,000 50 50
Exercise of stock options 44,500 147 (471) 1,185 861
Purchase treasury stock (171,213) (5,748) (5,748)
Conversion of operating partnership
units to common stock 42,825 5 776 781
Adjustment for minority interest
in operating partnership (23,241) (23,241)
---------- ------- -------- --------- ------- ------- ---------
Balance, December 31, 1997 35,634,977 $ 3,577 $738,630 $(239,139) $(4,563) $ - $498,505
Net income 66,445 66,445
Cash distributions declared
($1.88 per share) (68,940) (68,940)
PIERS Dividends (13,433) (13,433)
Cost of issuance of preferred stock (14,814) (14,814)
Exercise of stock options,
net of employee stock loans 166,000 14 2,526 (530) 1, 154 (3,164) -
Purchase treasury stock (32,350) (1,136) (1,136)
Conversion of operating partnership
units to common stock 3,232,345 309 47,932 (2,670) 4,545 50,116
Adjustment for minority interest
in operating partnership 68,964 68,964
</TABLE>
- ----------
continued on next page
F-5
<PAGE> 45
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands, except for Per Share Amounts)
- continued -
<TABLE>
<CAPTION>
ADDITIONAL RETAINED EMPLOYEE TOTAL
COMMON STOCK PAID-IN EARNINGS TREASURY STOCK STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) STOCK LOANS EQUITY
---------- ------ ---------- --------- ----- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 39,000,972 $3,900 $ 843,238 $(258,267) $ - $(3,164) $585,707
---------- ------ ---------- --------- ----- ------- --------
Net income 101,125 101,125
Cash distributions declared
($1.98 per share) (90,590) (90,590)
PIERS Dividends (24,467) (24,467)
Issuance of common stock,
net of $1,929 of issuance costs 10,000,000 1,000 329,296 330,296
Exercise of stock options,
net of employee stock loans 60,000 6 1,134 (380) 760
Reduction in employee stock loans
Conversion of operating partnership 124 124
units to common stock
Conversion of interests
in GGP/Homart to Common Stock 2,603,291 261 90,252 90,513
Conversion of operating partnership
units to common stock 33,162 3 519 522
Adjustment for minority interest
in operating partnership (64,518) (64,518)
---------- ------ ---------- --------- ----- ------- --------
Totals 51,697,425 $5,170 $1,199,921 $(272,199) $ - $(3,420) $929,472
========== ====== ========== ========= ===== ======= ========
Accumulated equity in other
comprehensive loss of
unconsolidated affiliate (1,714)
--------
Balance, December 31, 1999 $927,758
========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 46
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income $ 101,125 $ 66,445 $ 89,551
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest 33,058 29,794 49,997
Net gain on sales (4,412) (196) (58,647)
Extraordinary items 10,454 - 79
Equity in net income of unconsolidated affiliates (19,689) (11,067) (19,344)
Provision for doubtful accounts 4,425 2,451 3,025
Distributions received from unconsolidated affiliates 29,825 21,672 16,506
Depreciation 105,046 68,494 44,551
Amortization 7,828 6,733 3,957
Net Changes:
Tenant accounts receivable (26,856) (42,187) (12,490)
Prepaid expenses and other assets (9,183) (6,557) 46
Accounts payable and accrued expenses (9,487) (17,278) (16,082)
---------- ---------- --------
Net cash provided by (used in) operating activities 222,134 118,304 101,149
---------- ---------- --------
Cash flows from investing activities:
Acquisition/development of real estate
and additions to properties (1,248,371) (1,360,071) (200,564)
Increase in investments in unconsolidated affiliates (55,361) (92,990) (86,233)
Increase in mortgage note receivable (31,065) - -
Change in notes receivable from General
Growth Management, Inc. 6,671 (33,031) (24,045)
Reduction in employee stock loans 124 - -
Proceeds received from sale of CenterMark stock - - 130,500
Distributions received from unconsolidated affiliates 89,734 6,485 3,846
Increase in deferred expenses (16,429) (33,540) (7,039)
---------- ---------- --------
Net cash provided by (used in) investing activities (1,254,697) (1,513,147) (183,535)
---------- ---------- --------
Cash flows from financing activities:
Cash distributions paid to common stockholders (82,439) (66,639) (56,989)
Cash distributions paid to minority interest (38,434) (36,467) (31,884)
Proceeds from exercised options 760 - 861
Proceeds of preferred stock issuance,
net of issuance costs of $14,814 - 322,686 -
Proceeds of common stock issuance, net of
issuance costs of $1,929 in 1999 and $533 in 1997 330,296 - 165,763
Capital contribution from minority interest - 119 -
</TABLE>
continued on next page
F-7
<PAGE> 47
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except for per share amounts)
- continued -
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1999 1998 1997
---------- ---------- ---------
<S> <C> <C> <C>
Payment of dividends on PIERS $ (24,467) $ (7,316) $ -
Proceeds from issuance of mortgage / other
notes payable 1,736,072 2,093,000 832,525
Principal payments on mortgage notes and
other debts payable (867,713) (913,229) (802,929)
Purchase of treasury stock - (1,136) (5,748)
Increase in deferred financing costs (15,549) (2,443) (9,262)
---------- ---------- ---------
Net cash provided by (used in) financing activities 1,038,526 1,388,575 92,337
---------- ---------- ---------
Net change in cash and cash equivalents 5,963 (6,268) 9,951
Cash and cash equivalents at beginning of year 19,630 25,898 15,947
========== ========== =========
Cash and cash equivalents at end of year $ 25,593 $ 19,630 $ 25,898
========== ========== =========
Supplemental disclosure of cash flow information:
Interest paid $ 197,178 $ 128,987 $ 79,787
Interest capitalized 17,166 12,028 4,753
========== ========== =========
Non-cash investing and financing activities:
Debt assumed as consideration to seller for purchase
of real estate $ - $ 289,530 $185,298
Treasury stock exchanged for Operating Partnership Units - 1,875 -
Common stock issued in exchange for Operating
Partnership Units 522 48,241 781
Common stock issued in exchange for GGP/Homart stock 90,513 - -
Contribution of property, other assets and related debt,
net to GGP/Homart II 224,033 - -
Notes receivable issued for exercised stock options 380 3,164 -
Operating Partnership Units and common stock
issued as consideration for purchase of real estate - 163,514 30,408
Penalty on retirement of debt 8,655 - -
Distributions payable 42,695 33,757 24,421
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-8
<PAGE> 48
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 1 ORGANIZATION GENERAL
General Growth Properties, Inc., a Delaware
corporation ("General Growth"), was formed in 1986
to own and operate regional 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. On April 15, 1993, General Growth
completed its initial public offering and a
business combination involving entities under
varying common ownership. Proceeds from the initial
public offering were used to acquire a majority
interest in GGP Limited Partnership (the "Operating
Partnership") which was formed to succeed to
substantially all of the interests in regional 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 July 1999, General Growth completed a public
offering of 10,000,000 shares of Common Stock (the
"1999 Offering"). General Growth received net
proceeds of approximately $330,296 of which a
portion was used to reduce outstanding loans
including certain indebtedness to affiliates of the
underwriter of the 1999 Offering. In addition, a
portion of the proceeds of the 1999 Offering were
used to fund a portion of the purchase price of Ala
Moana Center (Note 3).
REDEEMABLE PREFERRED STOCK
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 net proceeds of
approximately $322,686 which were utilized to fund
certain of the acquisitions described in Note 3 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. In addition, the PIERS have a preference on
liquidation of General Growth equal to $1,000 per
PIERS (equivalent to $25.00 per Depositary Share),
plus accrued and unpaid dividends, if any, to the
liquidation date. The PIERS and the Depositary
Shares are subject to mandatory redemption by
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.
SHAREHOLDER RIGHTS PLAN In November 1998, General Growth adopted a
shareholder rights plan (the "Plan"), pursuant to
which General Growth declared a dividend of one
preferred share purchase right (a "Right") for each
outstanding share of Common Stock outstanding on
December 10, 1998 to the shareholders of record on
that date. Prior to becoming exercisable, the
Rights trade together with the Common Stock. In
general, the Rights will become exercisable if a
person or group acquires or announces a tender or
exchange offer for 15% or more of the Common Stock.
Each Right will initially entitle the holder to
purchase from General Growth one one-thousandth of
a share of newly-created Series A Junior
Participating Preferred Stock, par value $100 per
share (the "Preferred Stock"), at an exercise price
of $148 per one one-thousandth of a share, subject
to adjustment. In the event that a person or group
acquires 15% or more of the Common Stock, each
Right
F-9
<PAGE> 49
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
will entitle the holder (other than the acquirer)
to purchase shares of Common Stock (or, in certain
circumstances, cash or other securities) having a
market value of twice the exercise price of a Right
at such time. Under certain circumstances, each
Right will entitle the holder (other than the
acquirer) to purchase common stock of the acquirer
having a market value of twice the exercise price
of a Right at such time. In addition, under certain
circumstances, the Board of Directors of General
Growth may exchange each Right (other than those
held by the acquirer) for one share of Common
Stock, subject to adjustment. The Rights expire on
November 18, 2008, unless earlier redeemed by the
General Growth for $0.01 per Right or such
expiration date is extended.
OPERATING PARTNERSHIP
The Operating Partnership commenced operations on
April 15, 1993 and as of December 31, 1999, it
owned 100% of fifty-two regional shopping centers
(the "Wholly-Owned Centers"); 50% of the stock of
GGP/Homart, Inc. ("GGP/Homart"), 50% of the stock
of GGP/Homart II, L.L.C. ("GGP/Homart II"), 51% of
GGP Ivanhoe, Inc. ("GGP Ivanhoe"), 51% of GGP
Ivanhoe III, Inc. ("GGP Ivanhoe III"), 50% of Quail
Springs Mall and Town East Mall, (collectively the
"Unconsolidated Joint Ventures"), 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, GGP/Homart II owned interests in seven
shopping centers (including one shopping center
under construction), GGP Ivanhoe owned 100% of two
shopping centers, and GGP Ivanhoe III (through a
wholly owned subsidiary) owned 100% of eight
shopping centers.
As of December 31, 1999, the Company owned an
approximate 72% general partnership interest in the
Operating Partnership (excluding its preferred
units of partnership interest as discussed below).
The remaining approximate 28% 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
common stockholders on a per share basis in any
distributions by the Operating Partnership on the
basis that one Unit is equivalent to one share of
Common Stock.
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 (the "Preferred Units") in the Operating
Partnership which have rights, preferences and
other privileges, including distribution,
liquidation, conversion and redemption rights, that
mirror those of the PIERS. Accordingly, the
Operating Partnership is 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 December 31, 1999, 100% of
the Preferred Units of the Operating Partnership
(337,500) were owned by General Growth.
F-10
<PAGE> 50
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Changes in outstanding Operating Partnership Units
(excluding the Preferred Units) for the three years
ending December 31, 1999, are as follows:
<TABLE>
<CAPTION>
UNITS
-----------
<S> <C>
December 31, 1996 17,934,410
Acquisition of Southlake Mall 353,537
Acquisition of Valley Hills Mall 518,833
Conversion to common stock (42,825)
-----------
December 31, 1997 18,763,955
Acquisition of Southwest Plaza 505,420
Acquisition of Altamonte Mall 3,683,143
Acquisition of Mall St. Vincent 111,181
Conversion to common stock (3,232,345)
-----------
December 31, 1998 19,831,354
Conversion to common stock (33,162)
December 31, 1999 19,798,192
===========
</TABLE>
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 the owning and operation
of 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 concluded 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 Statement 131 is
currently required.
F-11
<PAGE> 51
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 2 PRINCIPLES OF CONSOLIDATION
SUMMARY OF SIGNIFICANT The accompanying consolidated financial statements
ACCOUNTING include the accounts of the Company consisting of
POLICIES the fifty-two centers and the unconsolidated
investments in GGP/Homart, GGP/Homart II, GGP
Ivanhoe, GGP Ivanhoe III, Quail Springs Mall, Town
East Mall and GGMI. All significant intercompany
balances and transactions have been eliminated.
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 12). Recoveries from tenants
for taxes, insurance and other shopping center
operating expenses are recognized as revenues in the
period the applicable costs are incurred.
The Company provides an allowance for doubtful
accounts against the portion of accounts receivable
which is estimated to be uncollectible. Such
allowances are reviewed periodically based upon the
recovery experience of the Company. Accounts
receivable in the accompanying consolidated balance
sheets are shown net of an allowance for doubtful
accounts of $7,600 and $7,737 as of December 31,
1999 and 1998, respectively.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments
purchased with original maturities of three months
or less to be cash equivalents. The cash and cash
equivalents of the Company are held at two financial
institutions.
DEFERRED EXPENSES
Deferred expenses consist principally of financing
fees and leasing commissions, which are amortized
over the terms of the respective agreements.
Deferred expenses in the accompanying consolidated
balance sheets are shown at cost, net of accumulated
amortization of $38,004 and $30,685 as of December
31, 1999 and 1998, respectively.
FAIR VALUE OF FINANCIAL INVESTMENTS
Statement No. 107, Disclosure about the Fair Value
of Financial Instruments, ("SFAS No. 107"), issued
by the Financial Accounting Standards Board
("FASB"), requires the disclosure of the fair value
of the Company's financial instruments for which it
is practicable to estimate that value, whether or
not such instruments are recognized in the
consolidated balance sheets. SFAS No. 107 does not
apply to all balance sheet items and the Company has
utilized market information as available or present
value techniques to estimate the SFAS No. 107 values
required to be disclosed. Since such values are
estimates, there can be no assurance that the SFAS
No. 107 value of any financial instrument could be
realized by immediate settlement of the instrument.
The Company considers the carrying value of its cash
and cash equivalents to approximate the SFAS No. 107
value due to the short maturity of these
investments. Based on borrowing rates available to
the Company at the end of 1999 for mortgage loans
with similar terms and maturities, the SFAS No. 107
value of the mortgage notes and other debts payable
approximates carrying value at December 31, 1999 and
1998. In addition, the Company estimates that the
SFAS No. 107 value of its interest rate cap
agreements (Note 5) at December 31, 1999 is
approximately $7,259. The Company has no other
significant financial instruments.
F-12
<PAGE> 52
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
PROPERTIES
Real estate assets are stated at cost. Interest and
real estate taxes incurred during construction
periods are capitalized and amortized on the same
basis as the related assets. The real estate assets
of the Company are periodically reviewed for
impairment. Depreciation expense is computed using
the straight-line method based upon the following
estimated useful lives:
<TABLE>
<CAPTION>
YEARS
<S> <C>
Buildings and improvements 40
Equipment and fixtures 10
</TABLE>
Construction allowances paid to tenants are
capitalized and depreciated over the average lease
term. Maintenance and repairs are charged to expense
when incurred. Expenditures for improvements are
capitalized.
INVESTMENTS IN UNCONSOLIDATED AFFILIATES
The Company accounts for its investments in
unconsolidated affiliates using the equity method
whereby the cost of an investment is adjusted for
the Company's share of equity in net income or loss
from the date of acquisition and reduced by
distributions received. The Company generally shares
in the profit and losses, cash flows and other
matters relating to its unconsolidated affiliates in
accordance with its respective ownership
percentages. However, due to currently unpaid and
accrued preferences on the GGMI preferred stock as
described in Note 4, the Company was entitled to
100% of the earnings (loss) and cash flows generated
by GGMI in 1999, 1998 and 1997. In addition,
differences between the Company's carrying value of
its investment in the unconsolidated affiliates and
the Company's share of the underlying equity of such
unconsolidated affiliates are amortized over the
respective lives of the unconsolidated affiliates.
INCOME TAXES
General Growth elected to be taxed as a real estate
investment trust under sections 856-860 of the
Internal Revenue Code of 1986 (the "Code"),
commencing with its taxable year beginning January
1, 1993. In order to qualify as a real estate
investment trust, General Growth is required to
distribute at least 95% of its ordinary taxable
income and 100% of capital gains to stockholders and
to meet certain asset and income tests as well as
certain other requirements. As a real estate
investment trust, General Growth will generally not
be liable for Federal income taxes, provided it
satisfies the necessary requirements. As a result,
Federal income taxes related to the distribution in
the form of dividends of substantially all of the
net taxable income of General Growth as described
above are payable by the stockholders of General
Growth. Accordingly, the consolidated statements of
operations do not reflect a provision for income
taxes. State income taxes are not significant.
One of the Company's affiliates, GGMI, is a taxable
corporation and accordingly, state and Federal
income taxes on its net taxable income are payable
by GGMI.
EARNINGS PER SHARE ("EPS")
Basic per share amounts are based on the weighted
average of common shares outstanding of 45,940,104
for 1999, 36,190,367 for 1998 and 32,622,665 for
1997. Diluted per share amounts are based on the
total number of weighted average common
F-13
<PAGE> 53
shares and dilutive securities (stock options)
outstanding of 46,030,559 for 1999, 36,381,914 for
1998 and 32,839,637 for 1997. The effect of the
issuance of the PIERS is anti-dilutive with respect
to the Company's calculation of diluted earnings per
share for the year ended December 31, 1999 and 1998
and therefore has been excluded. Of the options
outstanding, options to purchase 2,000 shares of
Common Stock at $37.69 per share (granted in 1999)
and 227,500 shares of Common Stock at $36.19 per
share (granted in 1998) were not included in the
computation of diluted earnings per share because
the exercise price of the options was higher than
the average market price of the Common Stock for the
applicable periods and, therefore, the effect would
be anti-dilutive. 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 313,964 shares of Common Stock
pursuant to General Growth's 1998 Incentive Stock
Plan were granted on 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>
YEAR ENDED
DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
Numerators:
Income before extraordinary items $114,921 $ 71,194 $ 90,703
Dividends on PIERS (24,467) (13,433) --
Extraordinary items (13,796) (4,749) (1,152)
-------- -------- --------
Net income available to common shareholders for basic
and diluted EPS $ 76,658 $ 53,012 $ 89,551
-------- -------- --------
Denominators (in thousands):
Weighted average common shares outstanding for basic EPS 45,940 36,190 32,623
Effect of dilutive securities - options 91 192 217
-------- -------- --------
Weighted average common shares outstanding for diluted EPS 46,031 36,382 32,840
======== ======== ========
</TABLE>
MINORITY INTEREST
Income before minority interest is allocated to the
limited partners (the "Minority Interest") based on
their ownership percentage of the Operating
Partnership. The ownership percentage is determined
by dividing the numbers of Operating Partnership
Units held by the Minority Interest by the total
Operating Partnership Units (excluding Preferred
Units) outstanding. The issuance of additional
shares of common stock or Operating Partnership
Units changes the percentage ownership of both the
Minority Interest and the Company. Since a Unit is
generally redeemable for cash or Common Stock at the
option of the Company, it may be deemed to be
equivalent to a common share. Therefore, such
transactions are treated as capital transactions and
result in an allocation between stockholders' equity
and Minority Interest in the accompanying balance
sheets to account for the change in the ownership of
the underlying equity in the Operating Partnership.
F-14
<PAGE> 54
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
ESTIMATES
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates and
assumptions. These estimates and assumptions affect
the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities
at the date of the financial statements and the
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from
those estimates.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" requires that the
Company disclose comprehensive income in addition to
net income. Comprehensive income is a more inclusive
financial reporting methodology that encompasses net
income and all other changes in equity except those
resulting from investments by and distributions to
equity holders. One item included in comprehensive
income but not net income is unrealized holding
gains or losses on marketable securities classified
as available-for-sale. Although General Growth and
its consolidated affiliates do not have any
available-for-sale securities, one of its
unconsolidated affiliates received common stock of
an unrelated publicly traded entity as part of a
1998 transaction. Unrealized holding gains or losses
on such securities through December 31, 1998 were
not significant and were not reflected. However, the
Company has reduced its carrying amount for its
investment in such unconsolidated affiliate by
$2,436 and reflected $1,714 as other comprehensive
loss, net of minority interest of $722, as its
equity in such unconsolidated affiliate's cumulative
unrealized holding loss on such securities for the
year ended December 31, 1999.
RECLASSIFICATIONS
The consolidated financial statements for prior
periods have been reclassified to conform with
current classifications with no effect on results of
operations.
NOTE 3 PROPERTY WHOLLY-OWNED PROPERTIES
ACQUISITIONS AND 1999
DEVELOPMENTS 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 pro-rations
and certain adjustments), which was funded initially
from a new $83,655 short-term floating rate interim
loan. In May 1999, a new $45,000 ten-year
non-recourse mortgage loan collateralized by the
property was obtained.
On July 30, 1999, the Company acquired a 100%
ownership interest in the Ala Moana Center in
Honolulu, Hawaii. The price paid to the seller was
$810,000 (before closing adjustments, including a
credit for the cost to complete an ongoing expansion
project), and was funded with the proceeds of a
short-term first mortgage loan of approximately
$438,000 and approximately $294,000 in cash
including a portion of the net proceeds from the
1999 Offering. The short-term floating rate loan was
fully repaid on August 26,1999 with the proceeds of
the issuance of commercial mortgage-backed
securities.
On October 28, 1999, the Company acquired Baybrook
Mall in Houston, Texas. The aggregate consideration
paid by the Company was approximately $133,000
(subject to
F-15
<PAGE> 55
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
pro-rations and certain adjustments), which was paid
in cash (raised primarily through new long-term
financing on other previously unsecured properties),
and a new 10-year $95,000 non-recourse loan.
1998
On April 2, 1998, the Company acquired Southwest
Plaza located in Denver, Colorado. On May 8, 1998,
the Company completed the acquisition of 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 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 ("MEPC U.S.
Subsidiaries") 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 5. 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 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 with cash borrowed under the Company's
line of credit facility (the "Credit Facility") as
described in Note 5, 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
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 (borrowed under 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 1999 and received an
option to buy the property. In conjunction with the
closing of the sale, the loan was fully repaid.
On September 15, 1998, the Company acquired 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 (borrowed under the
Company's Credit Facility) and a new ten year fixed
rate $92,000 mortgage loan.
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
F-16
<PAGE> 56
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 Units (of which
88,871 were immediately redeemed for cash (borrowed
under the Company's Credit Facility) upon demand of
the holders of such Units) and by assuming
approximately $19,200 of mortgage debt.
1997
On March 31, 1997, the Company acquired Market Place
Mall for a cash purchase price of approximately
$70,000 (borrowed under the Company's Credit
Facility). Market Place Mall is located in
Champaign, Illinois.
During the second quarter of 1997, the Company
acquired three properties, Century Plaza, Southlake
Mall and Eden Prairie Center. Century Plaza located
in Birmingham, Alabama, was acquired on May 1, 1997,
for $31,800 in cash. Southlake Mall, located in
Atlanta, Georgia, was acquired on June 18, 1997, for
a purchase price of $67,000 which consisted of
$45,100 of mortgage debt assumption, $11,500 of
Operating Partnership Units (353,537 units), and
$10,400 in cash. The aggregate consideration paid
for Eden Prairie Center located in Eden Prairie
(Minneapolis), Minnesota was $19,900. It included
the assumption of a $16,800 mortgage loan, the
payment of $1,100 in cash and the assumption of
$2,000 of short-term liabilities.
The Company acquired Valley Hills Mall, located in
Hickory, North Carolina, on October 23, 1997, for a
purchase price of approximately $34,500. The
purchase price consisted of approximately $18,900 of
Operating Partnership Units (518,833 units) and the
assumption of approximately $15,600 of mortgage
debt.
GENERAL
The acquisitions 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 13). 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 offerings of Depositary Shares and Common
Stock as described in Note 1.
MORTGAGE NOTE RECEIVABLE
During September 1999, St. Cloud Funding, L.L.C., a
wholly-owned subsidiary of the Operating Partnership
("St. Cloud Funding"), agreed to advance
approximately $31,000 to an unaffiliated developer
in the form of a second mortgage loan (bearing
interest at 15% per annum) collateralized by such
developer's ownership interest in Crossroads Center
in St. Cloud (Minneapolis), Minnesota.
Contemporaneously with the loan, St. Cloud Mall
L.L.C., all of the interests of which are owned by
the Company ("St. Cloud Mall"), was granted an
option to acquire the property in 2002. The loan had
a scheduled maturity of June 1, 2004 which was
accelerated in February 2000 to April 28, 2000. In
conjunction with the maturity date modification, a
put option agreement now permits the borrower (after
March 15, 2000) to require St. Cloud Mall to
purchase the property. In addition, St. Cloud Mall's
purchase option was advanced to April 2000. Any
resulting purchase of the property would occur in
April 2000 at a price equal to approximately $2,000
plus the then outstanding balances of the first
mortgage (approximately $46,600) and St. Cloud
Funding's second mortgage.
F-17
<PAGE> 57
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
DEVELOPMENTS
During the three year period ending December 31,
1999, the Company was developing or had completed
construction at three development sites in the
following locations: Coralville (Iowa City), Iowa;
Grandville (Grand Rapids), Michigan and Frisco
(Dallas), Texas. Coral Ridge Mall, located in
Coralville (Iowa City), Iowa was completed and
opened as scheduled in July 1998. Construction of
the Grandville (Grand Rapids) mall (RiverTown
Crossings) commenced in December, 1997, and opened
in November 1999. Construction of Stonebriar Centre,
currently owned by GGP/Homart II, located in Frisco
(Dallas), Texas commenced in October of 1999 with an
anticipated completion date in August of 2000.
During 1999, the Company formed a joint venture to
develop a regional mall in Westlake (Dallas), Texas.
As of December 31, 1999, the Company had invested
approximately $12,816 in the joint venture. The
Company is currently obligated to fund
pre-development costs (estimated to be approximately
$1,545, most of which remains to be incurred).
Actual development costs are not resolved at this
time. The retail site, part of a planned community
which is expected to contain a resort hotel, a golf
course, luxury homes and corporate offices, is
currently planned to contain up to 1.6 million
square feet of tenant space including up to six
anchor stores and a multi-screen theater. There can
be no assurance that development of this site will
proceed beyond the pre-development phase.
The Company also owns and is investigating certain
other potential development sites, but active
development of these sites has not yet commenced.
NOTE 4 GGP/HOMART
INVESTMENTS IN The Company currently owns 50% of GGP/Homart with
UNCONSOLIDATED the remaining ownership interest held by the New
AFFILIATES York State Common Retirement Fund, an institutional
investor. The Company's co-investor in GGP/Homart
has an exchange right under the GGP/Homart
Stockholders Agreement, which permits it to convert
its ownership interest in GGP/Homart to shares of
Common Stock of General Growth. If such exchange
right is exercised, the Company may alternatively
satisfy such exchange in cash. In early 1999, the
Company received notice that an institutional
investor (which then owned 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% for the first quarter of 1999.
During the second quarter of 1999, two other
co-investors (which then owned in the aggregate an
approximate 7.1% interest in GGP/Homart) notified
the Company that they desired to exercise their
exchange rights. The Company satisfied the exercise
of such exchange rights (effective as of April 1,
1999) by issuing an aggregate of 1,551,109 shares of
Common Stock, thereby increasing its ownership
interest in GGP/Homart to 50%.
GGP/HOMART II In November 1999, the Company, together with New
York State Common Retirement Fund, the Company's
co-investor in GGP/Homart, formed GGP/Homart II, a
Delaware limited liability company which is owned
equally. GGP/Homart II owns 100% interests in
Stonebriar Centre in Frisco (Dallas), Texas
(currently under construction), Altamonte Mall in
Altamonte Springs (Orlando), Florida, Natick Mall in
Natick (Boston), Massachusetts and Northbrook Court
in Northbrook (Chicago), Illinois which were
F-18
<PAGE> 58
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
contributed by the Company; and 100% interests in
Alderwood Mall in Lynnwood (Seattle), Washington;
Carolina Place in Charlotte, North Carolina; and
Montclair Plaza in Los Angeles, California which
were contributed by the New York State Common
Retirement Fund. Certain of the malls were
contributed subject to existing financing in order
to balance the net equity values of the malls
contributed by each of the venture partners.
According to the membership agreement between the
venture partners, the Company and its joint venture
partner share in the profits and losses, cash flows
and other matters relating to GGP/Homart II in
accordance with their respective ownership
percentages. As major operating and capital
decisions require the approval of both venture
partners, the Company will account for GGP/Homart II
using the equity method.
GGP IVANHOE III
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
has elected to be taxed as a REIT, is owned 51% by
the Company and 49% by an affiliate of Ivanhoe Inc.
of Montreal, Quebec, Canada ("Ivanhoe"). 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
acquisition loan bearing interest at LIBOR plus 90
basis points which became due July 1, 1999,
(subsequently extended and repaid in September 1999
as described below) 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 initially contributed
approximately $91,290 to GGP Ivanhoe III (less
certain interest and other credits). The Company's
capital contributions were funded primarily with
borrowing under 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.
Effective as of September 28, 1999, GGP Ivanhoe III
acquired, through its wholly-owned subsidiary, Oak
View Mall in Omaha, Nebraska from an unrelated third
party. In addition, on December 22, 1999, GGP
Ivanhoe III acquired Eastridge Shopping Center in
San Jose, California. The aggregate purchase price
for the two properties was approximately $160,000. A
portion of the purchase price was financed with an
$83,000 ten-year mortgage loan, collateralized by
the Oak View Mall which bears interest at 7.71% per
annum (and requires monthly payments of principal
and interest based upon a 30-year amortization
schedule). The remainder of the purchase price was
funded by capital contributions from the Company and
Ivanhoe in proportion to their respective stock
ownership in GGP Ivanhoe III and short-term loans of
approximately $30,000 bearing interest at LIBOR
(5.82% at December 31, 1999) plus 185 basis points
and maturing in June 2001. The Company's capital
contributions were funded primarily from proceeds
from the Company's Credit Facility.
On September 30, 1999, GGP Ivanhoe III repaid the
$392,000 acquisition loan with its allocated portion
of the proceeds of the issuance of commercial
mortgage-backed securities as described in Note 5
and capital contributions of approximately $26,000
and $25,000 from each of the Company and Ivanhoe,
respectively. In conjunction with the
F-19
<PAGE> 59
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
repayment, GGP Ivanhoe III expensed previously
unamortized deferred financing costs, the Company's
share of which (approximately $1,799) has been
reflected as an extraordinary item for the year
ended December 31, 1999.
The joint venture partner in GGP Ivanhoe III is also
the Company's joint venture partner in GGP Ivanhoe
(described below). The Company and Ivanhoe share in
the profits and losses, cash flows and other matters
relating to GGP Ivanhoe III 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 stockholders' 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 December 31, 1999, no preferred
stock dividends have been paid by GGMI. 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
advanced funds to GGMI at interest rates ranging
from 8% to 14% per annum and which mature by 2016.
The loans require payment of interest only until
maturity, but 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.
F-20
<PAGE> 60
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
SUMMARIZED FINANCIAL INFORMATION OF INVESTMENT IN UNCONSOLIDATED AFFILIATES
Following is summarized financial information for the Company's unconsolidated
affiliates as of December 31, 1999 and 1998 and for the years ended December 31,
1999, 1998 and 1997.
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS
DECEMBER 31,1999
GGP/HOMART GGMI ALL OTHER JV'S
----------- ---------- --------------
<S> <C> <C> <C>
Assets:
Net investment in real estate $1,225,379 $15,622 $2,323,587
Investment in real estate joint ventures 110,540 0 0
Other assets 116,817 81,038 345,547
---------- --------- ------------
$1,452,736 $96,660 $2,669,134
========== ========= ============
Liabilities and Owners' Equity:
Mortgage and other notes payable $945,553 $0 $1,375,785
Accounts payable and accrued expense 37,941 104,475 78,619
Owners' equity 469,242 (7,815) 1,214,730
---------- --------- ------------
$1,452,736 $96,660 $2,669,134
========== ========= ============
<CAPTION>
DECEMBER 31,1998
GGP/HOMART GGMI ALL OTHER JV'S
---------- --------- --------------
<S> <C> <C> <C>
Assets:
Net investment in real estate $1,102,907 $ 39,711 $972,024
Investment in real estate joint ventures 124,668 - -
Other assets 123,739 80,901 66,531
---------- --------- ------------
$1,351,314 $120,612 $1,038,555
========== ========= ============
Liabilities and Owners' Equity:
Mortgage and other notes payable $ 814,738 $ 1,500 $674,627
Accounts payable and accrued expenses 39,881 125,997 30,394
Owners' equity 496,695 (6,885) 333,534
---------- --------- ------------
$1,351,314 $120,612 $1,038,555
========== ========= ============
</TABLE>
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
DECEMBER 31,1999
GGP/HOMART GGMI ALL OTHER JV'S
---------- -------- --------------
<S> <C> <C> <C>
Revenues:
Tenant rents $224,559 $0 $175,980
Fees and other revenues 0 78,701 0
----------- -------- -----------
Total Revenues 224,599 78,701 175,980
Operating expenses (1) 129,465 80,400 100,289
----------- -------- -----------
Operating Income (loss) 95,134 (1,699) 75,691
Interest expense, net (2) (60,814) (11,040) (47,382)
Equity in net income of unconsolidated
real estate affiliates 5,504 0 0
Gain on property sales 816 5,922 0
Income allocated to minority interest (808) 0 (3,528)
----------- -------- -----------
Net Income (loss) $39,832 ($6,817) $24,781
=========== ======== ===========
</TABLE>
F-21
<PAGE> 61
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
DECEMBER 31,1998
GGP/HOMART GGMI ALL OTHER JV'S
----------- ------- --------------
<S> <C> <C> <C>
Revenues:
Tenant rents $ 184,783 $ - $103,803
Fees and other revenues - 63,771 -
----------- ------- -----------
Total Revenues 184,783 63,771 103,803
Operating expenses (1) 107,717 70,407 54,530
----------- ------- -----------
Operating Income (loss) 77,066 (6,636) 49,273
Interest expense, net (2) (47,799) (9,999) (29,882)
Equity in net income of
unconsolidated real
estate affiliates 5,011 - -
Gain on property sales 13,182 - -
Income allocated to minority (705) - -
interest ----------- ------- -----------
Net Income (loss) $ 46,755 $(16,635) $ 19,391
=========== ======== ===========
<CAPTION>
DECEMBER 31,1997
GGP/HOMART GGMI ALL OTHER JV'S
----------- -------- --------------
<S> <C> <C> <C>
Revenues:
Tenant rents $ 159,280 $ - $28,540
Fees and other revenues - 62,867 -
--------- -------- -------
Total Revenues 159,280 62,867 28,540
Operating expenses (1) 92,498 57,166 15,724
--------- -------- -------
Operating Income (loss) 66,782 5,701 12,816
Interest expense, net (2) (42,980) (5,895) (6,787)
Equity in net income of
unconsolidated real
estate affiliates 5,999 - -
Gain on property sales 13,767 - -
Income allocated to minority interest (372) - -
--------- -------- -------
Net Income (loss) $ 43,196 $ (194) $ 6,029
========= ======== =======
</TABLE>
Significant accounting policies used by joint
ventures are the same as those used by the Company.
(1) Includes depreciation and amortization.
(2) Includes extraordinary items.
F-22
<PAGE> 62
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 5 MORTGAGE Mortgage notes and other debts payable at December 31, 1999
NOTES AND OTHER and 1998 consisted of the following:
DEBTS PAYABLE
<TABLE>
<CAPTION>
DECEMBER 31,
1999 1998
------------ --------
<S> <C> <C>
Fixed-Rate debt
Mortgage notes payable $1,724,854 $2,036,210
Variable-Rate debt
Mortgage notes payable 1,234,680 412,566
Line of credit facility 160,000 200,000
---------- ---------
Total Variable-Rate debt 1,394,680 612,566
---------- ----------
Total mortgage notes and $3,119,534 $2,648,776
other debts payable ========== ==========
</TABLE>
FIXED RATE DEBT
MORTGAGE NOTES PAYABLE
The fixed-rate mortgage notes bear interest ranging
from 6.41% to 10.00% per annum (weighted average of
7.05% per annum), require monthly payments of
principal and/or interest and have various maturity
dates through 2020 (weighted average remaining term
of 5.8 years). Certain properties are pledged as
collateral for the related mortgage note(s). The
mortgage notes payable as of December 31, 1999 are
non-recourse to the Company (except to the extent
of supplemental guarantees executed by the
Company). Certain loans have cross-default
provisions and are cross-collateralized as part of
a group of properties. Under certain cross-default
provisions, a default under any mortgage included
in a cross-defaulted package may constitute a
default under all such mortgages and may lead to
acceleration of the indebtedness due on each
property within the collateral package. In general,
the cross-defaulted properties are under common
ownership. However, GGP Ivanhoe debt collateralized
by two GGP Ivanhoe centers totaling $125,000 is
cross-defaulted and cross-collateralized with
eleven Wholly-Owned centers. GGP Ivanhoe III debt
collateralized by five GGP Ivanhoe III centers
totaling $341,019 is cross-defaulted and
cross-collateralized with four Wholly-Owned
Centers.
VARIABLE RATE DEBT
MORTGAGE NOTES PAYABLE
Variable mortgage notes payable at December 31,
1999 consist primarily of the approximate $87.8
outstanding on the construction loan collateralized
by Rivertown Crossings as described below and
approximately $858,800 of collateralized
mortgage-backed securities as described below. The
loans bear interest at a rate per annum equal to
LIBOR plus 90 to 250 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 3. 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. The loan was collateralized by the MEPC
Portfolio and the remaining balance was repaid in
1999 as described below. During most of 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
F-23
<PAGE> 63
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
to LIBOR plus 90 basis points. During 1999 the
entire loan balance bore interest at a rate per
annum equal to LIBOR plus 115 basis points, which
rate was adjusted monthly. During the first quarter
of 1999, 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 and not rolled into a
new long-term fixed rate financing, as was
originally contemplated. Such notification
obligated the Company to pay $8,655 to the lender
as a loan prepayment fee which the Company paid
using the proceeds of the interim loan described
below. On July 1, 1999, the Company obtained
approximately $57,000 of permanent long term
mortgage financing to partially repay the amount
scheduled to mature on that date and the maturity
date of the remaining indebtedness was extended to
October 1, 1999 as described below. The new $57,000
mortgage loan, collateralized by the Apache Mall,
bears interest at 7.0% per annum and matures August
1, 2009. In addition, during July 1999,
approximately $15,000 of the amount remaining due
was repaid from a portion of the proceeds of the
1999 Offering and approximately $100,000 was repaid
from a new mortgage loan collateralized by the
Cumberland Mall. The Cumberland Mall ten-year loan
bears interest at a rate of 7.85% per annum and
provides for monthly payments of principal and
interest until its maturity on July 31, 2009. The
remaining MEPC Acquisition Financing, approximately
$441,000, was repaid in September 1999 with the
proceeds of the GGP-Ivanhoe CMBS financing and
other interim financing described below. In
conjunction with the repayment, the Company
expensed previously unamortized deferred financing
costs of approximately $3,280.
COMMERCIAL MORTGAGE-BACKED SECURITIES
In August 1999, the Company issued $500,000 of
commercial mortgage-backed securities,
collateralized by the Ala Moana Center (see Note
3), with a maturity date of September 10, 2004
assuming the exercise of no-cost extension options
aggregating two years. The securities (the "Ala
Moana CMBS") are comprised of notes which bear
interest at rates per annum ranging from LIBOR plus
50 basis points to LIBOR plus 275 basis points
(weighted average equal to LIBOR plus 95 basis
points), calculated and payable monthly. In
conjunction with the issuance of the Ala Moana
CMBS, the Company arranged for an interest rate cap
agreement, the effect of which will limit the
maximum interest rate the Company will be required
to pay on the securities to 9% per annum.
Approximately $438,000 of the proceeds from the
sale of the Ala Moana CMBS was used by the Company
to repay the short-term mortgage loan obtained in
July, 1999 to enable it to purchase the Ala Moana
Center. The remainder was utilized by the Company
for general working capital purposes including
paydowns on the Company's Credit Facility.
In September 1999, the Company issued $700,229 of
commercial mortgage backed securities with a
maturity date of October 10, 2004, assuming the
exercise of no-cost extension options aggregating
two years, cross-collateralized and cross-defaulted
by a portfolio of nine regional malls and an office
complex adjacent to one of the regional malls. The
properties in the portfolio are Northridge Fashion
Center in Northridge (Los Angeles), California;
Mayfair Mall and adjacent office buildings in
Wauwatosa (Milwaukee), Wisconsin; Park City Center
in Lancaster, Pennsylvania; The Boulevard Mall in
Las Vegas, Nevada; Regency Square Mall in
Jacksonville, Florida; Valley Plaza Shopping Center
in Bakersfield, California; Oglethorpe Mall in
Savannah, Georgia; Landmark Mall in Alexandria,
Virginia; and Northgate Mall in Chattanooga,
Tennessee. The securities (the "GGP-Ivanhoe CMBS")
are comprised of notes which bear interest at
F-24
<PAGE> 64
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
rates per annum ranging from LIBOR plus 52 basis points
to LIBOR plus 325 basis points (weighted average
equal to LIBOR plus approximately 109 basis
points), calculated and payable monthly. In
conjunction with the issuance of the GGP-Ivanhoe
CMBS, the Company arranged for an interest rate cap
agreement, the effect of which will limit the
maximum interest rate the Company will be required
to pay on the securities to 9.03% per annum. The
$392,000 interim loan collateralized by the USPPI
portfolio described above was repaid with $341,019
of the proceeds from the sale of the GGP-Ivanhoe
CMBS and capital contributions by the Company (from
its Credit Facility) and from Ivanhoe in the ratio
of their respective stock ownership percentages.
The remaining proceeds from the sale of the
GGP-Ivanhoe CMBS along with approximately $81,800
of the proceeds from the new $95,000 short term
interim financing were used by the Company to repay
the $441,000 remaining balance on the MEPC
Acquisition Financing.
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. 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 December 31, 1999, the Credit Facility
had an outstanding balance of $160,000.
INTERIM FINANCING
In January 1999, the Company obtained an additional
$30,000 unsecured bank loan, which bore interest at
a floating market rate (average rate equal to 6.46%
per annum). The Company had obtained in November
1998 a thirteen-month loan in the principal amount
of $55,000 collateralized by a negative pledge
(i.e., the promise not to encumber) of Coastland
Center. These loans were repaid on May 21, 1999
with a ten-year 7.0% mortgage loan in the principal
amount of $87,000 collateralized by Coastland
Center.
In January 1999, the Company obtained an additional
$83,655 floating rate (7.27% at September 30, 1999)
interim loan (originally scheduled to mature June
1, 1999) which was expected to be replaced or
refinanced by the maturity date with new mortgage
financing. During May, 1999, the Company obtained a
new $45,000 mortgage loan collateralized by The
Crossroads Mall. The loan, which bears interest at
7.40% and matures on June 1, 2009, partially repaid
the interim loan and the maturity of the remaining
balance, approximately $38,655 at June 30, 1999,
was extended and repaid in October 1999 with a
portion of the proceeds of the six property
two-year non-recourse mortgage pool financing
described below.
In April 1999, the Company obtained a $25,000 bank
loan, collateralized by Park Mall in Tucson,
Arizona. In October 1999, the loan was increased to
$50,000 and the term was extended to March 30,
2000. The loan bears interest at a rate per annum
equal to LIBOR plus 175 basis points and is
expected to be replaced with a $90,000 construction
loan facility that will finance a renovation and
expansion of Park Mall. The renovation and
expansion has already commenced with the entire
project expected to be completed in 2001.
F-25
<PAGE> 65
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
On July 30, 1999, the Company obtained a three
month loan in the principal amount of $25,000,
collateralized by a negative pledge (i.e., the
promise not to encumber) of Eagle Ridge Mall in
Lake Wales, Florida. The proceeds of the loan were
distributed to the Operating Partnership to fund
ongoing acquisition and development activity. The
short-term loan bore interest at a rate per annum
of LIBOR plus 175 basis points. This loan was
refinanced in October 1999 with a portion of the
proceeds of the six-property two-year non-recourse
mortgage pool financing described below.
In September 1999, the Company obtained an
additional $95,000 unsecured floating rate (LIBOR
plus 250 basis points) interim loan which was
scheduled to mature July 31, 2000. The loan
provided for periodic principal payments ($12,000
paid in 1999) to maturity and the majority of the
proceeds of this loan were used to repay the
remaining balance on the MEPC Acquisition
Financing. This loan was repaid in January 2000 as
described below.
In October 1999, the Company obtained a $130,000
two-year loan collateralized by six properties,
five regional malls (Knollwood Mall, Eagle Ridge
Mall, West Valley Mall, South Shore Mall and
Century Mall) and the Company's headquarters, the
110 N. Wacker Drive office building in Chicago,
Illinois. This loan bears interest at LIBOR plus
185 basis points and matures on November 1, 2001.
The Company intends to replace this loan on or
before maturity with non-recourse long-term
mortgage financing.
In January 2000, the Company obtained a new
$200,000 unsecured short-term bank loan. The
initial funding of $120,000 under this loan was
used to fund ongoing redevelopment projects and
repay the interim loan obtained in September 1999.
This loan bears interest at LIBOR plus 150 basis
points and matures concurrently with the July 2000
maturity of the Company's Credit Facility. The
Company currently expects to jointly refinance
these obligations when due with a new revolving
credit facility and term loans.
CONSTRUCTION LOAN
During April 1999 the Company obtained a $110,000
construction loan facility collateralized by the
RiverTown Crossings Mall development in Grandville
(Grand Rapids), Michigan. Concurrently with the
closing, the Company made an initial loan draw of
$30,000. As of December 31, 1999, additional loan
draws of approximately $57,862 have been made. The
construction loan provides for periodic funding as
construction and leasing continues and bears
interest at a rate per annum of LIBOR plus 175
basis points (150 basis points after achievement of
certain debt service ratios). 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.
LETTERS OF CREDIT
As of December 31, 1999 and 1998, the Operating
Partnership had outstanding letters of credit of
$7,934 and $9,956, respectively, primarily in
connection with special real estate assessments and
insurance requirements. In addition, the Company
obtained a letter of credit of approximately
$54,000 related to the funding of the Ala Moana
CMBS and pending construction projects at the Ala
Moana Center.
F-26
<PAGE> 66
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Principal amounts due under mortgage notes and other debts
payable mature as follows:
YEAR AMOUNT MATURING
---- ---------------
2000 $ 329,321
2001 382,035
2002 13,094
2003 14,104
2004 1,068,030
Subsequent 1,312,950
----------
Total $3,119,534
==========
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.
Land, buildings and equipment related to the
mortgage notes payable with an aggregate cost of
approximately $4,264,000 at December 31, 1999 have
been pledged as collateral. In addition, loans
totaling approximately $367,117 (collateralized by
assets with a total carrying value of approximately
$415,845) were supplementally guaranteed by the
Company. Certain properties, including those within
the portfolios collateralized by commercial
mortgage backed securities, are subject to
financial performance convenants, primarily EBITDA
ratios.
NOTE 6 The extraordinary items resulted from prepayment
EXTRAORDINARY costs and unamortized deferred financing costs
ITEMS related to the early extinguishment, primarily
through refinancings, of mortgage notes payable.
In 1999, the basic and diluted per share impact
of the extraordinary items was $.30. The basic
per share impact of the extraordinary items in
1998 was $.14, and the diluted per share impact
was $.13. The basic and diluted per share impact
of the extraordinary items was $.03 in 1997.
NOTE 7 RENTALS The Company receives rental income from the leasing
UNDER OPERATING of retail shopping center space under operating
LEASES leases. The minimum future rentals based on operating
leases held as of December 31, 1999 are as follows:
YEAR AMOUNT
---- ------
2000 $ 290,908
2001 281,037
2002 264,223
2003 239,773
2004 216,056
Thereafter 996,515
Minimum future rentals do not include amounts,
which may be received from certain tenants based
upon a percentage of their gross sales or as
reimbursement of shopping center operating
expenses.
F-27
<PAGE> 67
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
The tenant base includes national and regional
retail chains and local retailers, and
consequently, the Company's credit risk is
concentrated in the retail industry.
NOTE 8 WITH GGMI
TRANSACTIONS GGMI has been contracted to provide management,
AFFILIATES leasing, development and construction management
services for the Wholly-Owned Centers. In addition,
certain shopping center advertising and payroll
costs of the properties are paid by GGMI and
reimbursed by the Company. Total costs included in
the consolidated financial statements related to
agreements with GGMI are as follows:
YEAR ENDED DECEMBER 31,
1999 1998 1997
------ ------ ------
Management and Leasing Fees $21,201 $15,074 $ 8,285
Cost Reimbursements 56,548 41,594 28,099
Development Costs 3,499 7,801 2,015
NOTES RECEIVABLE
In April, May and September, 1998, certain officers
of the Company issued to the Company an aggregate
of $3,164 of promissory notes in connection with
such officers' exercise of options to purchase an
aggregate of 166,000 shares of the Company's Common
Stock. During 1999, the Company received
approximately $62 in payments, made advances of
approximately $380 in conjunction with additional
advances and stock purchases by such officers and
forgave approximately $64 in principal and accrued
interest on such notes. The notes, which bear
interest at a rate (6.02% per annum at December 31,
1999) computed as a formula of 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.
NOTE 9 EMPLOYEE STOCK INCENTIVE PLAN
BENEFIT AND The Company's Stock Incentive Plan provides incentives to
STOCK PLANS attract and retain officers and key employees. An aggregate
of 3,000,000 shares of Common Stock have been authorized
for issuance under the plan. Options are granted by the
Compensation Committee of the Board of Directors at an
exercise price of not less than 100% of the fair market
value of the Common Stock on the date of grant. The term of
the option is fixed by the Compensation Committee, but no
option is exercisable more than 10 years after the date of
the grant. Options granted to officers and key employees
are for 10-year terms and are generally exercisable
in either 33 1/3% or 20% annual increments from the
date of the grants. Options granted to non-employee
directors are exercisable in full commencing on the date
of grant and expire on the tenth anniversary of the date
of the grant.
F-28
<PAGE> 68
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
A summary of the status of the Company's Stock
Incentive Plan as of December 31, 1999, 1998 and
1997 and changes during the year ended on those
dates is presented below.
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ----------------- -----------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 848,500 $28.99 785,000 $ 24.79 827,500 $24.48
Granted 47,500 $32.42 229,500 $ 36.19 2,000 $31.75
Exercised (60,000) $19.00 (166,000) $ 19.06 (44,500) $19.35
Forfeited (8,500) $34.78 -- -- -- --
------- ------ ------- ------- ------- ------
Outstanding at end of year 827,500 $29.85 848,500 $ 28.99 785,000 $24.79
======= ======= =======
Exercisable at end of year 595,500 $28.76 414,500 $ 27.57 379,000 $23.85
Options available
for future grants 1,826,833 1,874,333 2,103,833
Weighted average per
share fair value of
options granted during $ 2.84 $ 3.18 $ 2.74
the year
</TABLE>
The following table summarizes information about
stock options outstanding pursuant to the Stock
Incentive Plan at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------------------- --------------------------
WEIGHTED AVERAGE
NUMBER REMAINING WEIGHTED AVERAGE OPTIONS WEIGHTED AVERAGE
RANGE OF OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
EXERCISE PRICES AT 12/31/99 LIFE PRICE AT 12/31/99 PRICE
--------------- ----------- ---- ----- ----------- -----
<S> <C> <C> <C> <C> <C>
$19.00 - $28.00 557,500 6.79 years $27.10 457,500 $26.90
$31.75 - $37.69 270,000 8.31 years $35.55 138,000 $34.93
------- -------
827,500 7.28 years $29.85 595,500 $28.76
======= ========== ====== ======= ======
</TABLE>
1998 INCENTIVE PLAN
General Growth and its stockholders have also
approved an incentive stock plan entitled the 1998
Incentive Stock Plan (the "1998 Incentive Plan").
Under the 1998 Incentive Plan, the Compensation
Committee of the Board of Directors of General
Growth is authorized to grant to employees, stock
incentive awards in the form of threshold-vesting
stock options ("TSOs"). The exercise price of the
TSOs to be granted to a participant will be the
Fair Market Value ("FMV") of a share of Common
Stock on the date the TSO is granted. The threshold
price (the "Threshold Price") which must be
F-29
<PAGE> 69
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
achieved in order for the TSO to vest will be
determined by multiplying the FMV on the date of
grant by the Estimated Annual Growth Rate
(currently set at 7% in the 1998 Incentive Plan)
and compounding the product over a five year
period. Shares of the Common Stock must achieve and
sustain the Threshold Price for at least 20
consecutive trading days at any time over the five
years following the date of grant in order for the
TSO to vest. All TSOs granted will have a term of
10 years but must vest within 5 years of the grant
date in order to avoid forfeiture.
The purpose of the 1998 Incentive Plan is to give
the Company an advantage in attracting, retaining
and motivating employees and to provide the Company
with the ability to provide competitive incentives
which are directly linked to the profitability of
the Company's business and increases in stockholder
value. Grants under the 1998 Incentive Plan are
intended to reinforce the attainment of annual
performance goals while encouraging sustained
profitable long-term growth.
The aggregate number of shares of Common Stock
which may be subject to TSOs issued pursuant to the
1998 Incentive Plan may not exceed 1,000,000,
subject to certain customary adjustments to prevent
dilution. The initial grant, TSOs to purchase
313,964 shares of Common Stock at an exercise price
of $31.69 and with an estimated fair value of
$1.36, under the 1998 Incentive Plan was made in
1999. None of the TSO's vested or were forfeited
during 1999.
The fair value of each option grant for 1999, 1998
and 1997 for the Stock Incentive Plan and the 1998
Incentive Plan was estimated on the date of grant
using the Black-Scholes option pricing model with
the following assumptions:
1999 1998 1997
------ ------ ------
Risk free interest rate 5.21% 5.48% 6.23%
Dividend yield 7.22% 7.28% 7.77%
Expected life 4.6 years 4.2 years 4.75 years
Expected volatility 20.0% 19.4% 18.8%
EMPLOYEE STOCK PURCHASE PLAN
During 1999, General Growth established the General
Growth Properties, Inc. Employee Stock Purchase
Plan (the "ESPP") to assist eligible employees in
acquiring a stock ownership interest in the General
Growth. A maximum of 500,000 shares of Common Stock
is reserved for issuance under the ESPP. Under the
ESSP, eligible employees make payroll deductions
over a six-month purchase period at which time the
amounts withheld are used to purchase shares of
Common Stock at a purchase price equal to 85% of
the lesser of the closing price of a share of
Common Stock on the first trading day of the
purchase period or the last trading day of the
purchase period. The first purchase period under
the ESSP ended December 31, 1999. On January 3,
2000, 26,205 shares of Common Stock were sold to
ESPP participants at a price of $23.80 per share.
The fair value of the rights to purchase pursuant
to the ESPP was estimated to be $6.16 per share
using the Black-Scholes option pricing model, a
risk free rate of 4.88%, a dividend yield of 7.22%
and expected volatility of 20.0%.
F-30
<PAGE> 70
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
STOCK OPTION PRO FORMA DATA
The Company has applied Accounting Principles Board
Opinion 25 in accounting for the Stock Incentive
Plan, the 1998 Incentive Plan and the Employee Stock
Purchase Plan. Accordingly, no compensation costs
have been recognized. Had compensation costs for the
Company's plans been determined based on the fair
value at the grant date for options granted in 1999,
1998 and 1997 in accordance with the method required
by Statement of Financial Accounting Standards No.
123 "Accounting for Stock-Based Compensation", the
Company's net income and net income per share would
have been reduced to the pro forma amounts as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net Income
As Reported $76,658 $53,012 $89,551
Pro Forma $76,160 $52,709 $89,341
Net earnings per share - basic
As Reported $ 1.67 $ 1.46 $ 2.75
Pro Forma $ 1.66 $ 1.46 $ 2.74
Net earnings per share - diluted
As Reported $ 1.66 $ 1.46 $ 2.73
Pro Forma $ 1.65 $ 1.45 $ 2.72
</TABLE>
MANAGEMENT SAVINGS PLAN
The Company sponsors the General Growth Management
Savings and Employee Stock Ownership Plan (the
"401(k) Plan") which permits all eligible employees
to defer a portion of their compensation in
accordance with the provisions of Section 401(k) of
the Code. Under the 401(k) Plan, the Company may
make, but is not obligated to make, contributions to
match the contributions of the employees. For the
year ending December 31, 1999, 1998 and 1997 the
Company made matching contributions of approximately
$2,891, $2,042 and $625, respectively.
NOTE 10 On December 13, 1999, the Company declared a cash
DISTRIBUTIONS distribution of $.51 per share that was paid on
PAYABLE January 31, 2000, to stockholders of record (1,121
owners of record) on January 6, 2000, totaling
$26,481. In addition, a distribution of $10,097 was
paid to the limited partners of the Operating
Partnership. Concurrently, the Company declared the
fourth quarter 1999 preferred stock dividend, for
the period from October 1, 1999 through December 31,
1999, in the amount of $0.4531 per share, payable to
preferred stockholders of record on January 6, 2000
and paid on January 14, 2000. As described in Note
1, such preferred stock dividend was in the same
amount as the Operating Partnership's distribution
to the Company of the same date with respect to the
Preferred Units held by the Company.
On December 17, 1998, the Company declared a cash
distribution of $.47 per share that was paid on
January 29, 1999, to stockholders of record (1,106
owners of record) on January 6, 1999, totaling
$18,330. In addition, a distribution of $9,309 was
paid to the
F-31
<PAGE> 71
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
limited partners of the Operating Partnership.
Concurrently, the Company declared the fourth
quarter 1999 preferred stock dividend, for the
period from October 1, 1999 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.
The allocations of the distributions declared and
paid for income tax purposes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Ordinary Income 66.0% 98.0% 29.8%
Capital Gain 3.0% 2.0% 70.2%
Return of Capital 31.0% --% --%
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
NOTE 11 In the normal course of business, from time to time,
COMMITMENTS AND the Company is involved in legal actions relating to
CONTINGENCIES 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 material adverse effect on
the consolidated financial position, results of
operations or liquidity of the Company.
The Company leases land at certain properties from
third parties. Rental expense including
participation rent related to these leases was $375,
$292, and $595 for the years ended December 31,
1999, 1998, and 1997 respectively. The leases
provide for a right of first refusal in favor of the
Company in the event of a proposed sale of the
property by the landlord.
From time to time the Company has entered into
contingent agreements for the acquisition of
properties. Each acquisition is subject to
satisfactory completion of due diligence and, in the
case of developments, completion and occupancy of
the project.
NOTE 12 RECENTLY In May, 1998, the Emerging Issues Task Force
ISSUED ("EITF") of the FASB issued a consensus opinion
ACCOUNTING entitled "Accounting for Contingent Rent in Interim
PRONOUNCEMENTS 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
is entitled to receive contingent rents because a
majority of the tenant leases provide for additional
rent computed as a percentage of tenant sales
revenues above certain annual thresholds
(predominantly 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, effective January
1, 1999, reverted back to the original policy of
accruing percentage rents on an estimated basis.
During December 1999, the Securities and Exchange
Commission (the "SEC") issued Staff Accounting
Bulletin 101
F-32
<PAGE> 72
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
"Revenue Recognition". This pronouncement, as
subsequently extended to all publicly traded
companies by the EITF, among other things,
effectively reinstated the provisions of EITF 98-9.
The Company will apply this revised accounting
effective January 1, 2000. The only material effect
of this pronouncement will be to shift the Company's
recognition, including amounts from the operations
of the Unconsolidated Joint Ventures, of major
portions of percentage rent from interim quarters to
the fourth quarter of 2000 and subsequent years. The
Company's cash collections of percentage rents will
not be affected by this accounting recognition
change.
On June 1, 1999 the FASB issued Statement No. 133
"Accounting for Derivative Instruments and Hedging
Activities", effective for fiscal years beginning
after June 15, 2000. The Company's only hedging
activity is the cash value hedge represented by its
cap agreements relating to its commercial
mortgage-backed securities (Note 5). The interest
rate cap agreements place a limit on the effective
rate of interest the Company will bear on such
floating rate obligations. The Company has concluded
that these cap agreements are highly effective in
achieving its objective of eliminating its exposure
to variability in cash flows relating to these
floating rate obligations when LIBOR rates exceed
the strike rates of the cap agreements. Therefore,
the Company does not believe there will be a
material effect of adoption on the Company's
financial statements when the standard is effective.
NOTE 13 PRO Due to the impact of the public offering of the in
FORMA PIERS 1998 and of Common Stock in 1999 and the
FINANCIAL acquisitions and other significant transactions
INFORMATION during 1997, 1998 and 1999, historical results of
(UNAUDITED) operations may not be indicative of future results
of operations. The pro forma condensed consolidated
statements of operations for the year ended December
31, 1999 include adjustments for the 1999 Offering,
the acquisition of 100% of The Crossroads Mall, the
Ala Moana Center and Baybrook Mall and a 51%
interest in Oak View Mall and Eastridge Mall
(through GGP Ivanhoe III) and the formation of
GGP/Homart II and the exchange of certain interests
in GGP/Homart for shares of Common Stock as if such
transactions had occurred on January 1, 1999. The
pro forma condensed consolidated statements of
operations for the year ended December 31, 1998
include adjustments for the public offering of the
PIERS in 1998 and Common Stock in 1999 and the
acquisition of 100% of the three operating
properties in 1999 and 51% of the two operating
properties acquired by GGP Ivanhoe III, of the
GGP/Homart and GGP/Homart II transactions, the
acquisition of 100% of Southwest Plaza, Northbrook
Court, Altamonte Mall, Pierre Bossier Mall, Spring
Hill Mall, Coastland Mall, and Mall St. Vincent, 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 condensed
consolidated statements of operations for the year
ended December 31, 1997 include adjustments for the
public offering of the PIERS in 1998 and for the
acquisition of 100% of the fifteen operating
properties in 1998 and 51% of GGP Ivanhoe III and
adjustments for the acquisitions of Market Place
Shopping Center, Century Plaza, Southlake Mall, Eden
Prairie, Valley Hills, a 51% interest in GGP
Ivanhoe, and a 50% interest in Town East as if such
transactions had occurred on January 1, 1997. The
pro forma information is based upon the historical
consolidated statements of operations excluding
extraordinary items and non-recurring gains on
sales, including the gain in 1997 on the sale of a
portion of the CenterMark stock 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.
F-33
<PAGE> 73
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED
1999 1998 1997
--------------- --------------- --------------
<S> <C> <C> <C>
Total Revenues: $ 615,616 $ 561,106 $ 482,248
Expenses:
Property operating 199,969 191,529 179,091
Management fees 8,348 8,146 5,014
Depreciation and amortization 116,356 102,906 87,009
--------------- --------------- --------------
Total expenses 324,673 302,581 271,114
--------------- --------------- --------------
Operating income 290,943 258,525 211,134
Interest expense, net (183,018) (179,510) (160,120)
Equity in net income/(loss) of unconsolidated
affiliates. 45,151 43,261 24,067
--------------- --------------- --------------
153,076 122,276 75,081
Minority interest in operating partnership (37,342) (38,701) (20,981)
--------------- --------------- --------------
Pro forma net income (a) 115,734 83,575 54,100
Pro forma preferred stock dividends (24,467) (24,467) (24,467)
--------------- --------------- --------------
Pro forma net income available to common
stockholders $ 91,267 $ 59,108 $29,633
=============== =============== ==============
Pro forma earnings per share - basic (b) $1.77 $ 1.21 $0.91
Pro forma earnings per share - diluted (b) $1.76 $ 1.21 $0.90
</TABLE>
(a) The pro forma adjustments include management fee and depreciation
modifications and adjustments to give effect to the public offering and
acquisitions activity described above.
(b) Pro forma basic earnings per share are based upon weighted average common
shares of 51,655,035 for 1999, 48,793,658 for 1998, and 32,622,665 for 1997.
Pro forma diluted per share amounts are based on the weighted average common
shares and the effect of dilutive securities (stock options) outstanding of
51,755,490 for 1999, 48,985,205 for 1998, and 32,839,637 for 1997.
F-34
<PAGE> 74
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 14 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED FIRST SECOND THIRD FOURTH
DECEMBER 31, 1999 QUARTER QUARTER QUARTER QUARTER
------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Total Revenues $134,260 $135,916 $156,027 $186,139
Income before minority interest 27,545 33,208 35,770 51,456
Income before extraordinary items 23,329 24,415 28,783 38,394
Net income applicable to common shares 8,519 18,298 17,573 32,267
Earnings before extraordinary item
per share-basic (a) $ 0.43 $ 0.44 $ 0.45 $ 0.62
Earnings before extraordinary item
per share-diluted (a) 0.43 0.44 0.45 0.62
Net earnings per share-basic (a) 0.21 0.44 0.35 0.62
Net earnings per share-diluted (a) 0.21 0.44 0.35 0.62
Distributions declared per share $ 0.49 $ 0.49 $ 0.49 $ 0.51
Weighted average shares
outstanding (in thousands) -basic 40,055 41,638 50,149 51,694
Weighted average shares
outstanding (in thousands) - diluted 40,252 41,776 50,214 51,695
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FIRST SECOND THIRD FOURTH
DECEMBER 31, 1998 QUARTER QUARTER QUARTER(B) QUARTER(B)
------------------ ------- ------- ---------- -------
<S> <C> <C> <C> <C>
Total Revenues $80,447 $88,618 $113,055 $144,456
Income before minority interest 12,882 27,133 25,395 35,578
Income before extraordinary items 8,455 18,141 18,040 26,558
Net income applicable to common shares 8,455 16,942 11,923 15,692
Earnings before extraordinary item
per share-basic (a) $ 0.24 $ 0.47 $ 0.33 $ 0.56
Earnings before extraordinary item
per share-diluted (a) 0.24 0.47 0.33 0.55
Net earnings per share-basic (a) 0.24 0.47 0.33 0.42
Net earnings per share-diluted (a) 0.24 0.47 0.33 0.42
Distributions declared per share $ 0.47 $ 0.47 $ 0.47 $ 0.47
Weighted average shares
outstanding (in thousands) -basic 35,689 35,877 35,899 37,283
Weighted average shares
outstanding (in thousands) - diluted 35,936 36,047 35,990 37,450
</TABLE>
(a) Earnings per share for the four quarters do
not add up to the annual earnings per share
due to the issuance of additional stock during
the year.
(b) Application of EITF 98-9 resulted in the
recognition of approximately $1,300 of
percentage rental revenue in the fourth
quarter of 1998, which would have otherwise
been recognized in the third quarter.
F-35
<PAGE> 75
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
General Growth Properties, Inc.
Our report on the consolidated financial statements of General Growth
Properties, Inc. is included on page F-2 of this Form 10-K. In connection with
our audits of such financial statements, we have also audited the related
financial statement schedule listed in the Index to Consolidated Financial
Statements on page F-1 of this Form 10-K. In our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
Chicago, Illinois PricewaterhouseCoopers LLP
February 8, 2000
F-36
<PAGE> 76
<TABLE>
<CAPTION>
GENERAL GROWTH PROPERTIES, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION AS OF DECEMBER 31, 1999
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Costs Capitalized
Subsequent Gross Amounts at Which
Initial Cost To Acquisition Carried at Close of Period
------------------------ ----------------------- --------------------------------------
Buildings
and Buildings
Encumbrances Improvements Carrying and
Description (e) Land (a) Improvements Costs (b) Land Improvements Total(c)(d)
- -------------------- ------------ --------- ------------- ------------ --------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ala Moana Combined
Honolulu, HI 500,000,000 336,229,259 473,770,741 10,130,876 1,854,477 336,229,497 485,756,094 21,985,591
Apache Mall
Rochester, MN 56,811,469 8,110,292 72,992,628 1,106,574 0 8,110,292 74,099,202 82,209,494
Baybrook Mall
Friendswood, TX 94,932,407 13,300,000 117,162,546 329,842 0 13,300,000 117,492,388 130,792,388
Bayshore Mall,
Eureka, CA 37,250,000 3,004,345 27,398,907 22,106,509 2,887,090 3,005,040 52,392,506 55,397,546
Bellis Fair Mall,
Bellingham, WA 73,000,000 7,616,458 47,040,131 8,179,511 6,122,020 7,485,224 61,341,662 68,826,886
Birchwood Mall,
Port Huron, MI 44,473,981 1,768,935 34,574,635 11,040,651 1,967,320 3,045,616 47,582,606 50,628,222
Boulevard Mall
Las Vegas, NV 89,382,491 16,490,343 148,413,086 1,406,662 0 16,490,343 149,819,748 166,310,091
Capital Mall
Jefferson City, MO 16,500,000 4,200,000 14,201,000 5,103,140 0 3,912,935 19,304,140 23,217,075
Century Mall
Birmingham, AL 32,000,000 3,164,000 28,513,908 2,463,506 0 3,164,000 30,977,414 34,141,414
Chapel Hills
Colorado
Springs, CO 36,750,000 4,300,000 34,017,000 55,921,010 36,805 4,300,000 89,974,815 94,274,815
Coastland Center
Naples, FL 86,565,832 11,450,000 103,050,200 2,025,747 0 11,450,000 105,075,947 116,525,947
Colony Square Mall
Zanesville, OH 25,600,000 1,000,000 24,500,000 11,538,684 0 1,243,184 36,038,684 37,281,868
Columbia Mall
Columbia, MO 56,100,000 5,383,208 19,663,231 9,695,536 1,368,803 5,383,208 30,727,570 36,110,778
Coral Ridge Mall
Coralville, IA 81,008,135 3,363,602 64,217,772 7,520,577 4,420,355 3,363,602 76,158,704 79,522,306
</TABLE>
<TABLE>
<CAPTION>
Col. F Col. G Col. H Col. I
------ ------ ------ -------
Life Upon Which
Depreciation in
Latest Income
Accumulated Date of Date Statement is
Description Depreciation Construction Acquired Computed
- -------------------- ------------ ------------ -------- ---------------
<S> <C> <C> <C> <C>
Ala Moana Combined
Honolulu, HI 6,609,079 1999 (f)
Apache Mall
Rochester, MN 2,813,256 1998 (f)
Baybrook Mall
Friendswood, TX 524,369 1999 (f)
Bayshore Mall,
Eureka, CA 16,068,894 1986-1987 (f)
Bellis Fair Mall,
Bellingham, WA 21,821,145 1987-1988 (f)
Birchwood Mall,
Port Huron, MI 13,695,579 1989-1990 (f)
Boulevard Mall
Las Vegas, NV 5,671,819 1998 (f)
Capital Mall
Jefferson City, MO 3,445,926 1993 (f)
Century Mall
Birmingham, AL 2,060,497 1997 (f)
Chapel Hills
Colorado
Springs, CO 10,208,106 1993 (f)
Coastland Center
Naples, FL 3,114,536 1998 (f)
Colony Square Mall
Zanesville, OH 12,034,612 1986 (f)
Columbia Mall
Columbia, MO 12,595,199 1984-1985 (f)
Coral Ridge Mall
Coralville, IA 3,382,029 1998-1999 (f)
</TABLE>
<PAGE> 77
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Costs Capitalized
Subsequent Gross Amounts at Which
Initial Cost To Acquisition Carried at Close of Period
------------------------ ----------------------- --------------------------------------
Buildings
and Buildings
Encumbrances Improvements Carrying and
Description (e) Land (a) Improvements Costs (b) Land Improvements Total(c)(d)
- -------------------- ------------ --------- ------------- ------------ --------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Crossroads (MI)
Kalamazoo, MI 44,820,562 6,800,000 61,200,000 1,207,393 0 6,800,000 62,407,393 69,207,393
Cumberland Mall
Atlanta, GA 99,720,600 15,198,568 136,787,110 688,747 0 15,198,568 137,475,857 152,674,425
Development in Progress 0 17,936,214 3,506,695 0 17,936,214 3,506,695 21,442,909
Eagle Ridge Mall
Lake Wales, FL 27,000,000 7,619,865 49,560,538 4,140,109 5,678,662 7,621,768 59,379,309 67,001,077
Eden Prairie Mall
Eden Prairie, MN 0 465,063 19,024,047 4,301,120 1,684,662 465,063 25,009,829 25,474,892
Fallbrook Mall,
West Hills, CA 46,900,000 6,117,338 10,076,520 56,643,397 2,520,315 6,127,138 69,240,232 75,367,370
Fox River Mall
Appleton, WI 93,200,000 2,700,566 18,291,067 31,931,033 1,820,253 2,700,566 52,042,353 54,742,919
Gateway Mall,
Springfield, OR 30,750,000 8,728,263 34,707,170 16,751,749 7,520,779 8,749,088 58,979,698 67,728,786
GGPLP Corp.
Chicago, IL 243,000,000 0 556,740 31,986 0 0 588,726 588,726
110 Building
Chicago, IL 20,000,000 0 29,035,510 0 0 0 29,035,510 29,035,510
Grand Traverse Mall,
Grand Traverse, MI 51,500,000 3,529,966 20,775,772 20,366,714 3,643,793 3,533,745 44,786,279 48,320,024
Greenwood Mall
Bowling Green, KY 39,500,000 3,200,000 40,202,000 16,660,039 0 3,207,010 56,862,039 60,069,049
Knollwood Mall,
St. Louis Park, MN 10,000,000 0 9,748,047 24,049,591 2,198,782 7,025,606 35,996,420 43,022,026
Lakeview Square Mall
Battle Creek, MI 26,676,046 3,578,619 32,209,980 6,882,102 0 3,578,619 39,092,082 42,670,701
Lansing Mall
Lansing, MI 43,021,422 6,977,798 62,800,179 3,862,950 0 6,977,798 66,663,129 73,640,927
Lockport Mall,
Lockport, NY 9,300,000 800,000 10,000,000 4,221,701 23,656 800,000 14,245,357 15,045,357
</TABLE>
<TABLE>
<CAPTION>
Col. F Col. G Col. H Col. I
------ ------ ------ -------
Life Upon Which
Depreciation in
Latest Income
Accumulated Date of Date Statement is
Description Depreciation Construction Acquired Computed
- -------------------- ------------ ------------ -------- ---------------
<S> <C> <C> <C> <C>
Crossroads (MI)
Kalamazoo, MI 1,583,003 1999 (f)
Cumberland Mall
Atlanta, GA 5,203,134 1998 (f)
Development in Progress 0
Eagle Ridge Mall
Lake Wales, FL 6,559,418 1995-1996 (f)
Eden Prairie Mall
Eden Prairie, MN 1,352,772 1997 (f)
Fallbrook Mall,
West Hills, CA 23,883,518 1984 (f)
Fox River Mall
Appleton, WI 16,809,618 1983-1984 (f)
Gateway Mall,
Springfield, OR 16,319,197 1989-1990 (f)
GGPLP Corp.
Chicago, IL 86,867
110 Building
Chicago, IL 1,361,462
Grand Traverse Mall,
Grand Traverse, MI 12,037,271 1990-1991 (f)
Greenwood Mall
Bowling Green, KY 10,262,394 1993 (f)
Knollwood Mall,
St. Louis Park, MN 13,477,097 1978 (f)
Lakeview Square Mall
Battle Creek, MI 2,970,710 1996 (f)
Lansing Mall
Lansing, MI 5,181,088 1996 (f)
Lockport Mall,
Lockport, NY 4,681,404 1986 (f)
</TABLE>
<PAGE> 78
GENERAL GROWTH PROPERTIES, INC
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Costs Capitalized
Subsequent Gross Amounts at Which
Initial Cost To Acquisition Carried at Close of Period
------------------------ ------------------------ --------------------------------------
Buildings
and Buildings
Encumbrances Improvements Carrying and
Description (e) Land (a) Improvements Costs (b) Land Improvements Total(c)(d)
- -------------------- ------------ ---------- ------------ ------------ ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mall of the Bluffs,
Council Bluffs, IA 44,473,981 1,860,116 24,016,343 12,490,311 2,529,093 1,894,220 39,035,747 40,929,967
Mall St. Vincent
Shreveport, LA 18,980,553 2,640,000 23,760,000 1,001,642 0 2,640,000 24,761,642 27,401,642
Marketplace
Champaign, IL 47,000,000 7,000,000 63,972,357 23,340,190 1,215,376 7,000,000 88,527,923 95,527,923
McCreless Mall
San Antonio, TX 0 1,000,000 9,000,002 239,606 0 1,000,000 9,239,608 10,239,608
MEPC Acquisition
Financing 25,000,000 0 0 0 0 0 0 0
Northridge Fashion
Center
Northridge, CA 107,103,159 16,618,095 149,562,583 6,348,900 2,930,658 16,663,260 158,842,141 175,505,401
Oakwood Mall,
Eau Claire, WI 59,298,641 3,266,669 18,281,160 13,942,471 1,711,573 3,266,669 33,935,204 37,201,873
Park Mall
Tucson, AZ 50,000,000 4,996,024 44,993,177 34,408,136 3,197,994 4,715,836 82,599,307 87,315,143
Piedmont Mall,
Danville, VA 16,855,000 2,000,000 38,000,000 2,890,655 20,787 2,000,000 40,911,442 42,911,442
Pierre Bossier Mall
Bossier City, LA 41,452,426 5,280,707 47,558,468 2,050,544 0 5,283,970 49,609,012 54,892,982
The Pines,
Pine Bluff, AR 26,750,000 1,488,928 17,627,258 8,514,357 1,365,091 1,247,414 27,506,706 28,754,120
Regency Square Mall
Jacksonville, FL 87,134,943 16,497,552 148,477,968 2,310,647 0 16,506,853 150,788,615 167,295,468
Rio West Mall,
Gallup, NM 13,500,000 0 19,500,000 4,567,420 0 0 24,067,420 24,067,420
River Falls Mall,
Clarksville, IN 28,000,000 3,177,688 54,610,421 6,833,658 5,281,892 3,182,305 66,725,971 69,908,276
River Hills Mall,
Mankato, MN 51,200,000 3,713,529 29,013,757 18,489,952 2,584,241 4,707,314 50,087,950 54,795,264
Riverlands Shopping
Center
LaPlace, LA 0 500,000 4,500,000 185,285 0 500,000 4,685,285 5,185,285
<CAPTION>
Col. A Col. F Col. G Col. H Col. I
------ ------ ------ ------ ------
Life Upon Which
Depreciation in
Latest Income
Accumulated Date of Date Statement is
Description Depreciation Construction Acquired Computed
- ---------------------- ------------ ------------ -------- ---------------
<S> <C> <C> <C> <C>
Mall of the Bluffs,
Council Bluffs, IA 12,958,603 1985-1986 (f)
Mall St. Vincent
Shreveport, LA 849,516 1998 (f)
Marketplace
Champaign, IL 4,370,612 1997 (f)
McCreless Mall
San Antonio, TX 380,970 1998 (f)
MEPC Acquisition
Financing 0
Northridge Fashion
Center
Northridge, CA 6,150,945 1998 (f)
Oakwood Mall,
Eau Claire, WI 12,589,829 1985-1986 (f)
Park Mall
Tucson, AZ 4,300,398 1996 (f)
Piedmont Mall,
Danville, VA 4,608,710 1995 (f)
Pierre Bossier Mall
Bossier City, LA 1,509,172 1998 (f)
The Pines,
Pine Bluff, AR 9,633,578 1985-1986 (f)
Regency Square Mall
Jacksonville, FL 5,713,919 1998 (f)
Rio West Mall,
Gallup, NM 7,392,436 1986 (f)
River Falls Mall,
Clarksville, IN 20,837,281 1989-1990 (f)
River Hills Mall,
Mankato, MN 12,558,294 1990-1991 (f)
Riverlands Shopping
Center
LaPlace, LA 206,394 1998 (f)
</TABLE>
F-39
<PAGE> 79
GENERAL GROWTH PROPERTIES, INC
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Costs Capitalized Gross Amounts at
Subsequent Which Carried at
Initial Cost To Acquisition Close of Period
------------------------------- ------------------------------- -----------------
Buildings
and
Encumbrances Improvements Carrying
Description (e) Land (a) Improvements Costs (b) Land
- ---------------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Rivertown Crossing
Grandville, MI 87,861,668 10,972,923 97,141,738 0 12,132,835 10,972,923
Sooner Fashion Mall,
Norman, OK 20,000,000 2,700,000 24,300,000 8,230,874 0 2,700,000
Southlake Mall,
Morrow, GA 51,300,000 6,700,000 60,406,902 6,054,951 51,340 6,700,000
SouthShore Mall,
Aberdeen, WA 9,000,000 650,000 15,350,000 4,886,262 0 650,000
Southwest Plaza
Littleton , CO 84,961,720 9,000,000 103,983,673 7,078,809 0 9,000,000
Spring Hill
West Dundee, IL 90,816,339 12,400,000 111,643,525 2,472,773 0 12,400,000
St Cloud Mall LLC
St Cloud, Minnesota 0 0 0 0 0 2,812,169
Valley Hills,
Harrisonburg, VA 14,984,664 3,443,594 31,025,471 2,697,016 0 5,613,508
Valley Plaza Shopping
Center
Bakersfield, CA 75,197,965 12,685,151 114,166,356 -7,462,342 0 12,685,151
West Valley Mall,
Tracy, CA 32,000,000 9,295,045 47,789,310 9,107,910 7,686,293 9,295,045
Westwood Mall
Jackson, MI 20,900,000 2,658,208 23,923,869 2,295,190 0 3,571,208
-------------- -------------- -------------- -------------- -------------- --------------
Grand Totals $3,119,534,004 $ 643,576,931 $3,070,601,498 $ 513,282,673 $ 84,454,945 $ 658,211,969
============== ============== ============== ============== ============== ==============
<CAPTION>
Col. A Col. E Col. F Col. G Col. H Col. I
------ ------ ------ ------ ------ ------
Gross Amounts at Which
Carried at Close of Period
------------------------------- Life Upon Which
Depreciation in
Buildings Latest Income
and Accumulated Date of Date Statement is
Description Improvements Total(c)(d) Depreciation Construction Acquired Computed
- ---------------------- -------------- -------------- -------------- ------------ -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Rivertown Crossing
Grandville, MI 109,274,573 120,247,496 282,091 1998-1999 (f)
Sooner Fashion Mall,
Norman, OK 32,530,874 35,230,874 2,211,541 1996 (f)
Southlake Mall,
Morrow, GA 66,513,193 73,213,193 3,718,949 1997 (f)
SouthShore Mall,
Aberdeen, WA 20,236,262 20,886,262 6,741,260 1986 (f)
Southwest Plaza
Littleton , CO 111,062,482 120,062,482 4,240,644 1998 (f)
Spring Hill
West Dundee, IL 114,116,298 126,516,298 4,295,498 1998 (f)
St Cloud Mall LLC
St Cloud, Minnesota 0 2,812,169 0 1999 (f)
Valley Hills,
Harrisonburg, VA 33,722,487 39,335,995 1,844,486 1997 (f)
Valley Plaza Shopping
Center
Bakersfield, CA 106,704,014 119,389,165 4,120,658 1998 (f)
West Valley Mall,
Tracy, CA 64,583,513 73,878,558 7,295,145 1995 (f)
Westwood Mall
Jackson, MI 26,219,059 29,790,267 2,048,540 1996 (f)
-------------- -------------- --------------
Grand Totals $3,668,339,116 $4,326,551,085 $ 376,673,468
============== ============== ==============
</TABLE>
F-40
<PAGE> 80
GENERAL GROWTH PROPERTIES, INC.
GENERAL GROWTH PROPERTIES, INC.
NOTES TO SCHEDULE III
(Dollars in Thousands)
(a) See description of mortgage notes payable in
Note 5 of Notes to Consolidated Financial
Statements.
(b) Initial cost for constructed malls is cost at
end of first complete calendar year subsequent
to opening.
(c) Carrying costs consists of capitalized
construction-period interest and taxes.
(d) The aggregate cost of land, buildings and
equipment for federal income tax purposes is
approximately $3,556,155.
<TABLE>
<CAPTION>
RECONCILIATION OF REAL ESTATE
-----------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $1,555,068 $1,863,485 $3,676,796
Additions: 308,417 1,813,311 1,238,874
Reductions: -- -- (589,119)
---------- ---------- ----------
Balance at close of year $1,863,485 $3,676,796 $4,326,551
========== ========== ==========
<CAPTION>
RECONCILIATION OF ACCUMULATED DEPRECIATION
------------------------------------------
1996 1998 1999
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $188,744 $233,295 $301,789
Depreciation Expense 44,551 68,494 105,046
Reductions: -- -- (30,162)
--------- -------- --------
Balance at close of year $233,295 $301,789 $376,673
======== ======== ========
</TABLE>
(f) Depreciation is computed based upon the
following estimated lives:
<TABLE>
<CAPTION>
<S> <C>
Buildings, improvements and carrying costs 40 years
Tenant allowances 10 - 40 years
Equipment and fixtures 10 years
</TABLE>
F-41
<PAGE> 81
GENERAL GROWTH PROPERTIES, INC.
EXHIBIT INDEX
2(a) Amended and Restated Stock Purchase Agreement, dated as of October 16,
1995, by and among Sears, Roebuck and Co., Homart Development Co., Homart Newco
One, Inc. and GGP/Homart, Inc.(1)
2(b) Amendment No. 1 to Amended and Restated Stock Purchase Agreement,
dated as of December 22, 1995, by and among Sears, Roebuck and Co., Homart
Development Co., Homart Newco One, Inc. and GGP/Homart, Inc.(1)
2(c) Real Estate Purchase Agreement, dated as of July 31, 1995, by and
among Sears, Roebuck and Co., Homart Development Co. and GGP/Homart, Inc.(1)
2(d) Amendment No. 1 to Real Estate Purchase Agreement, dated as of October
16, 1995, by and among Sears, Roebuck and Co., Homart Development Co. and
GGP/Homart, Inc.(1)
2(e) Amendment No. 2 to Real Estate Purchase Agreement, dated as of
December 22, 1995, by and among Sears, Roebuck and Co., Homart Development Co.
and GGP/Homart, Inc.(1)
2(f) Mall Purchase Agreement, dated as of December 22, 1995, by and among
Sears, Roebuck and Co., Homart Development Co. and General Growth
Properties-Natick Limited Partnership.(1)
2(g) Contribution Agreement dated December 6, 1996, between Forbes/Cohen
Properties, a Michigan general partnership, and GGP Limited Partnership, a
Delaware limited partnership.(2)
2(h) Contribution Agreement dated December 6, 1996, between Lakeview Square
Associates, a Michigan general partnership, and GGP Limited Partnership, a
Delaware limited partnership.(2)
2(i) Contribution Agreement dated December 6, 1996, between Jackson
Properties, a Michigan general partnership, and GGP limited Partnership, a
Delaware limited partnership.(2)
2(j) Sale and Contribution Agreement dated June 19, 1997, between CA
Southlake Investors, Ltd., a Georgia limited partnership, and GGP Limited
Partnership, a Delaware limited partnership.(10)
2(k) Contribution Agreement dated June 10, 1997, among Atlantic Freeholds
II, a Nevada general partnership, Town East Mall, L.P., a Delaware limited
partnership, and Town East Mall Partnership, a Texas general partnership.(10)
2(l) Purchase and Sale Agreement dated as of March 22, 1997, between
Century Plaza Co., an Alabama general partnership, and Century Plaza L.L.C., a
Delaware limited liability company. (10)
2(m) Real Estate Purchase Agreement dated March 12, 1997, between Champaign
Venture, an Illinois general partnership, and Champaign Market Place L.L.C., a
Delaware limited liability company. (10)
2(n) Stock Purchase Agreement dated as of April 17, 1998 and amended June
2, 1998, among MEPC PLC, MEPC North American Properties Limited, U.K.-American
Holdings Limited and GGP Limited Partnership. (16)
2(o) Purchase and Sale Agreement dated May 8, 1998, among Grosvenor
International Limited, P.I.C. Investments, Northbrook Court I L.L.C. and
Northbrook Court II L.L.C. (17)
2(p) Merger Agreement dated May 14, 1998, among GGP Limited Partnership,
GGP Acquisition L.L.C. and U.S. Prime Property, Inc. (17)
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GENERAL GROWTH PROPERTIES, INC.
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)
2(u) Purchase and Sale Agreement dated as of May 3, 1999, among D/E Hawaii
Joint Venture, GGP Limited Partnership and General Growth Properties, Inc. (27)
2(v) Agreement of Purchase and Sale, dated as of July 27, 1999, among Oak
View Mall Corporation, a Delaware corporation, and Oak View Mall, L.L.C., a
Delaware limited liability company. (28)
2(w) Agreement of Purchase and Sale, dated as of July 22, 1999 between
General Growth Properties, Inc., a Delaware corporation (the "Company"), and
RREEF USA Fund-III, a California group trust. (28)
2(x) Operating Agreement, dated November 10, 1999, between GGP Limited
Partnership, a Delaware limited partnership, The Comptroller of the State of New
York as Trustee of the Common Retirement Fund ("NYSCRF"), and GGP/Homart II
L.L.C. a Delaware limited liability company ("GGP/ Homart II"). (28)
2(y) Contribution Agreement dated November 10, 1999, by and between GGP
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), and GGP/Homart II (Altamonte Mall). (29)
2(z) Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Northbrook Court). (29)
2(aa) Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Natick Trust). (29)
2(bb) Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Stonebriar Centre). (29)
2(cc) Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Carolina Place). (29)
2(dd) Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Alderwood Mall). (29)
2(ee) Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Montclair Plaza). (29)
2(ff) Contribution Agreement, dated February 1, 2000, by and between
General Growth Companies, Inc. and GGP Limited Partnership.
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)
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GENERAL GROWTH PROPERTIES, INC.
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) Amendment to Second Amendment and Restated Certificate of
Incorporation of the Company filed on May 17, 1999. (27)
3(f) Bylaws of the Company.(5)
3(g) Amendment to Bylaws of the Company.(5)
4(a) Redemption Rights Agreement, dated July 13, 1995, by and among GGP
Limited Partnership, General Growth Properties, Inc. and the persons listed on
the signature pages thereof.(8)
4(b) Redemption Rights Agreement dated December 6, 1996, among GGP Limited
Partnership, a Delaware corporation, Forbes/Cohen Properties, a Michigan general
partnership, Lakeview Square Associates, a Michigan general partnership, and
Jackson Properties, a Michigan general partnership.(2)
4(c) Redemption Rights Agreement, dated June 19, 1997, among GGP Limited
Partnership, a Delaware limited partnership, General Growth Properties, Inc., a
Delaware corporation, and CA Southlake Investors, Ltd., a Georgia limited
partnership.(13)
4(d) Redemption Rights Agreement dated October 23, 1997, among GGPI, GGPLP
and Peter Leibowits.(15)
4(e) Form of Indenture.(12)
4(f) Certificate of Designations, Preferences and Rights of 7.25% Preferred
Equity Redeemable Stock, Series A.
(20)
4(g) Amendment to Certificate of Designations, Preferences and Rights of
7.25% Preferred Income Equity Redeemable Stock, Series A of General Growth
Properties, Inc. filed on May 17, 1999. (27)
4(h) Redemption Rights Agreement dated April 2, 1998, among GGP Limited
Partnership, General Growth Properties, Inc. and Southwest Properties Venture.
(17)
4(i) 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(j) Form of Note pursuant to the Indenture Agreement. (18)
4(k) 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(l) 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(m) Form of Common Stock Certificate. (25)
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GENERAL GROWTH PROPERTIES, INC.
4(n) First Amendment to Rights Agreement, dated as of November 10,1999,
between the Company and Norwest Bank, Minnesota, N.A. (28)
4(o) Letter Agreement concerning Rights Agreement, dated November 10, 1999,
between the Operating Partnership and NYSCRF. (28)
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)
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.
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<PAGE> 85
GENERAL GROWTH PROPERTIES, INC.
(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.
(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.
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<PAGE> 86
GENERAL GROWTH PROPERTIES, INC.
(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.
(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 Annual Report on Form
10-K for the year ended December 31, 1998, incorporated herein by reference.
(26) Previously filed as an exhibit to the Company's Registration Statement
on Form S-8 (No. 333-74461) dated March 12, 1999, incorporated herein by
reference.
(27) Previously filed as an exhibit to the Company's Current Report on Form
8-K, dated July 12, 1999, incorporated herein by reference.
(28) Previously filed as an exhibit to the Company's Current Report on Form
8-K, dated November 23, 1999, incorporated herein by reference.
(29) Previously filed as an exhibit to the Company's Current Report on Form
8-K/A, dated January 11, 2000, incorporated herein by reference.
S-6
<PAGE> 1
EXHIBIT 2(ff)
CONTRIBUTION AGREEMENT
BETWEEN
GENERAL GROWTH COMPANIES, INC.
a Delaware corporation
and
GGP LIMITED PARTNERSHIP
a Delaware limited partnership
<PAGE> 2
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is dated as of the 1st day of February,
2000, by and between GENERAL GROWTH COMPANIES, INC., a Delaware corporation
("Contributor"), and GGP LIMITED PARTNERSHIP, a Delaware limited partnership
("the Partnership").
RECITALS
WHEREAS, Contributor is the fee owner of approximately 3.94 acres of
land located in Bowling Green, Kentucky, which land is more particularly
described on Exhibit A attached hereto and made a part hereof (the "Land"); and
WHEREAS, Contributor desires to contribute to the capital of
Partnership such Land, and Partnership desires to accept such contribution to
capital, upon the terms and subject to the conditions contained herein.
WHEREAS, Partnership desires to acquire the Land for purposes of
developing and operating a self-storage facility (the "Improvements").
WHEREAS, to facilitate Partnership's construction and development of
the Improvements, Contributor and Partnership have entered into a License
Agreement dated as of August 1, 1998 ("License Agreement") pursuant to which
Contributor granted to Partnership the right to enter the land and construct the
Improvements.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
Definitions
I.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
"AFFILIATE" shall mean a Person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with the Person specified.
"AGREEMENT" shall mean this Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING DATE" shall have the meaning set forth in Section 4.1.
"CLOSING DOCUMENTS" shall mean the Contributor Closing Documents and
Partnership Closing
<PAGE> 3
Documents, collectively.
"CONTRIBUTOR CLOSING DOCUMENTS" shall have the meaning set forth in
Section 4.2.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, guidelines, orders and decrees
regulating, relating to or imposing liability or standards concerning or in
connection with Hazardous Materials, Underground Storage Tanks or the protection
of human health or the environment, as any of the same may be amended from time
to time, including but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et. seq., as
amended by the Superfund Amendments and Reauthorization Act or any equivalent
state or local laws or ordinances; the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq., as amended by the Hazardous and Solid
Waste Amendments of 1984, or any equivalent state or local laws or ordinances;
the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C.
Section 136 et. seq. or any equivalent state or local laws or ordinances; the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.); the
Emergency Planning and Community Right-to-Know Act ("EPCRA"), 42 U.S.C. Section
11001 et. seq. or any equivalent state or local laws or ordinances; the Toxic
Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et. seq. or any
equivalent state or local laws or ordinances; the Atomic Energy Act, 42 U.S.C.
Section 2011 et. seq., or any equivalent state or local laws or ordinances; the
Clean Water Act (the "Clean Water Act"), 33 U.S.C. Section 1251 et. seq. or any
equivalent state or local laws or ordinances; the Clean Air Act (the "Clean Air
Act"), 42 U.S.C. Section 7401 et seq. or any equivalent state or local laws or
ordinances; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq. or any equivalent state or local laws or ordinances.
"GENERAL PARTNER" shall mean General Growth Properties, Inc., a
Delaware corporation.
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas or
particulate matter which (i) is now, or at any future time may be, regulated by
the United States Government, the State of Kentucky, any other state with
jurisdiction, or any local governmental authority, or (ii) the exposure to, or
manufacture, possession, presence, use generation, storage, transportation,
treatment, release, disposal, abatement, cleanup, removal, remediation or
handling of is prohibited, controlled or regulated by any Environmental Law, or
(iii) requires investigation or remediation under any Environmental Law or
common law, or (iv) is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous, or (v) causes or
threatens to cause a nuisance upon the Property or to adjacent properties or
poses or threatens to pose a hazard to the health or safety of persons on or
about the Property, or (vi) could or does cause Contributor or Buyer to be
liable for trespass. Such term includes, without limitation, any material or
substance which is (1) now or at any future time defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous waste,"
"restricted hazardous waste" or any like or similar term under any applicable
Environmental Law; (2) oil and petroleum products; (3) asbestos or
asbestos-containing material as defined in the regulations of the Occupational
Safety and Health Administration at 29 C.F.R. Section 1910.1001; (4)
polychlorinated biphenyls; (5) radioactive material; (6) now or at any future
time designated as a "toxic pollutant" or a "hazardous substance" pursuant to
Sections 307 or 311 of the Clean Water Act; (7)
2
<PAGE> 4
now or at any future time defined as a "hazardous waste" pursuant to Section
1004 of RCRA; (8) now or at any future time defined as a "hazardous substance"
pursuant to Section 101 of CERCLA; (9) now or at any future time designated as a
"hazardous chemical" substance or mixture pursuant to TSCA; (10) now or at any
future time designated as an "extremely hazardous" substance under Section 302
of EPCRA; (11) now or at any future time designated as a "priority pollutant" or
"hazardous air pollutant" pursuant to the Clean Air Act; (12) now or at any
future time designated as a hazardous chemical under the Occupational Safety and
Health Act; (13) radon gas or other radioactive source material, including
special nuclear material, and byproduct materials regulated under the Atomic
Energy Act, 42 U.S.C. Section 2011 et. seq.; (14) now or at any future time
subject to regulation under FIFRA; (15) natural gas, natural gas liquids,
liquefied natural gas, and synthetic gas usable for fuel; or (16) infectious
wastes or materials and pathogenic bacteria or other pathogenic microbial
agents.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
"PARTNERSHIP AGREEMENT" shall mean the second Amended and Restated
Agreement of Limited Partnership of Partnership dated as of April 1, 1998, as
amended.
"PARTNERSHIP CLOSING DOCUMENTS" shall have the meaning set forth in
Section 4.2.
"PROPERTY" shall mean the Land, together with all of the estate, right,
title and interest of Contributor therein, and in and to (a) any land lying in
the beds of any streets, roads or avenues, open or proposed, public or private,
in front of or adjoining the Property to the center lines thereof, and in and to
any awards to be made in lieu thereof and in and to any unpaid awards for damage
to the foregoing by reason of the change of grade of any such streets, roads or
avenues; and (b) all easements, rights, licenses, privileges, rights-of-way,
strips and gores, hereditaments and such other real property rights and
interests appurtenant to the foregoing (including, without limitation, all
rights of Contributor under any reciprocal easement agreement affecting the
Property). The parties expressly agree that the term "Property" shall not
include any improvements constructed on the Land by or on behalf of Partnership
in accordance with the terms of the License Agreement.
"SUBSTANTIAL TAKING" shall mean a Taking with respect to such portion
of the Property as, when so taken would, in the reasonable opinion of
Partnership, leave remaining a balance of the Property, which, due either to the
area taken or the location of the part taken would not, under applicable zoning
laws, building regulations and economic conditions then prevailing or otherwise,
readily accommodate development of the Property as a storage facility.
"TAKING" shall mean a taking of all or any portion of the Property in
condemnation or by exercise of the power of eminent domain or by an agreement in
lieu thereof.
"TITLE POLICY" shall mean an ALTA Form Owner's Policy of Title
Insurance issued by Reynolds, Johnston, Hinton, Thomas & Pepper LLP, as agent
for Chicago Title Insurance Company ("Title Company"), dated the date and time
of Closing and with policy coverage in an amount not less than the Contribution
Price, insuring Partnership as owner of good, marketable and indefeasible fee
title
3
<PAGE> 5
to the Property, subject only to the matters described in Schedule B of that
certain Commitment for Title Insurance Number 17190 dated as of January 13, 1999
prepared on behalf of Title Company, which title commitment Partnership
acknowledges it has reviewed and approved as of the date hereof.
"UNDERGROUND STORAGE TANKS" shall mean Underground Storage Tanks as
defined in Section 9001 of RCRA and as used herein, such term shall also include
(i) any farm or residential tank of 1,100 gallons or less capacity used for
storing motor fuel for noncommercial purposes, (ii) any tank used for storing
heating oil for consumption on the premises where stored, (iii) any septic tank
and (iv) any pipes connected to any of the items described in clauses (i)
through (iii).
"UNIT PRICE" shall mean the average of the closing price per share of
Common Stock, $0.10 par value of the General Partner for the twenty (20) trading
days preceding the Closing Date.
"UNITS" shall mean common units of limited partnership interest in
Partnership.
I.2 References. All references in this Agreement to particular
sections or articles shall, unless expressly otherwise provided, or unless the
context otherwise requires, be deemed to refer to the specific sections or
articles in this Agreement, and any references to "Exhibit" shall, unless
otherwise specified, refer to one of the exhibits annexed hereto and, by such
reference, be made a part hereof. The words "herein", "hereof", "hereunder",
"hereinafter", "hereinabove" and other words of similar import refer to this
Agreement as a whole and not to any particular section, subsection or article
hereof.
ARTICLE II
Contribution of Property
II.1 Contribution. Upon the terms and subject to the conditions
contained herein, at the Closing, Contributor shall contribute to the capital of
Partnership, and Partnership shall accept from Contributor, all of Contributor's
right, title and interest in and to the Property.
II.2 Consideration.
(a) In exchange for the contribution of the Property, at the
Closing, Partnership shall (i) issue to Contributor the number of Units equal to
the quotient of (A) $215,000 (the "Contribution Price") divided by (B) the Unit
Price.
(b) Notwithstanding anything contained herein to the contrary,
fractional Units shall not be issued hereunder; instead, the number of Units to
be issued hereunder shall be the number of Units issuable pursuant to the other
provisions of this Agreement rounded up to the nearest whole Unit.
II.3 Admission to Partnership; Conversion Rights; Etc.
4
<PAGE> 6
(a) At the Closing, Partnership shall deliver to Contributor a
certificate representing the Units to be issued pursuant hereto, and Contributor
shall execute and deliver to Partnership a signature page to the Partnership
Agreement.
(b) At the Closing, Contributor shall execute and deliver, and
Partnership shall cause the other parties thereto to execute and deliver, an
Amendment to Rights Agreement (the "Rights Agreement Amendment") and an
Amendment to Registration Rights Agreement (the "RRA Amendment") in the form of
Exhibits B and C, respectively, pursuant to which the parties thereto agree that
Contributor is entitled to the rights thereunder in respect of the Units.
(c) Contributor acknowledges that, notwithstanding anything to
the contrary contained in the Partnership Agreement, Contributor will be
entitled to receive as a distribution only a pro rata portion of the Net
Operating Cash Flow (as defined in the Partnership Agreement) which is
distributed for the calendar quarter during which the Closing occurs based on
the number of Units issued to it pursuant hereto relative to the total number of
issued and outstanding Units and the number of days in such quarter from and
following the Closing Date relative to the total number of days in such quarter
(and Contributor will be entitled to receive no distributions for previous
quarters). Contributor acknowledges that the distribution for a calendar quarter
is made in the immediately succeeding calendar quarter.
ARTICLE III
Costs and Expenses
III.1 Payment of Costs and Expenses.
(a) Partnership shall pay the cost of recording any documents;
(b) Contributor shall be solely responsible for the payment of
any real property transfer taxes, gains taxes levied or imposed upon Contributor
or the Property as a result of the transfer of the Land to Partnership, sales
taxes levied or imposed upon Contributor or the Property as a result of the
transfer of the Land to Partnership, documentary stamps and other taxes, fees or
charges imposed in connection with the conveyance of the Land or any portion
thereof;
(c) Partnership and Contributor shall each pay their
respective legal fees incurred in connection with the drafting and negotiation
of this Agreement and the closing of the transactions contemplated hereunder;
and
(d) Contributor shall bear its proportionate share of the cost
of the issuance of the Title Policy, such proportionate share being equal to the
total cost of such issuance multiplied by a fraction, the numerator of which is
the Contribution Price and the denominator of which is the total insurance
coverage afforded under the Title Policy; provided, however, Partnership shall
pay the cost of any extended coverage or other endorsements. The parties shall
split equally the cost of any escrow
5
<PAGE> 7
fees or other closing charges.
ARTICLE IV
Closing
IV.1 Closing. The closing of the transactions contemplated hereby
(the "CLOSING") shall take place at the offices of Neal, Gerber & Eisenberg, Two
North LaSalle Street, Chicago, Illinois 60602, at 9:00 a.m. Central Time on
February 1, 2000, or such other date and time as may be mutually acceptable to
Contributor and Partnership (the "CLOSING DATE").
IV.2 Contributor Closing Documents. On or prior to the Closing
Date, Contributor shall deliver, or cause to be delivered, to Partnership the
following documents (collectively, the "CONTRIBUTOR CLOSING DOCUMENTS"), duly
executed by Contributor and the other parties thereto (other than Partnership)
and in form and substance reasonably acceptable to Partnership and to
Contributor:
(a) Special Warranty Deed in proper statutory form for
recording, so as to convey the entire fee simple estate of Contributor in the
Property to Partnership.
(b) An affidavit of Contributor stating its U.S. taxpayer
identification number and that it is a "United States person", as defined by
Sections 1445(f)(3) and 7701(b) of the Code.
(c) A written certificate executed on behalf of Contributor
and addressed to Partnership to the effect that all of the representations and
warranties of Contributor herein contained in Section 6.1 are true and correct
in all material respects as of the Closing Date with the same force and effect
as though remade and repeated in full on and as of the Closing Date or stating
the specific respects, if any, in which any of the representations and
warranties is untrue.
(d) Any instruments, documents or certificates required to be
executed by Contributor with respect to any state, county or local transfer
taxes applicable to the conveyance of the Property pursuant to this Agreement.
(e) The Rights Agreement Amendment.
(f) The RRA Amendment.
(g) The signature page referred to in Section 2.3(a).
(h) The Title Policy.
(i) Such other documents, instruments or agreements which
Contributor may be required to deliver to Partnership pursuant to the other
provisions of this Agreement or which
6
<PAGE> 8
Partnership reasonably may deem necessary or desirable in order to consummate
the transactions contemplated hereunder; provided, however, that any such
document, instrument or agreement which Partnership reasonably deems necessary
or desirable shall not impose upon Contributor any obligation or liability other
than an obligation or liability expressly imposed upon Contributor pursuant to
the terms of this Agreement or pursuant to the terms of the other Contributor
Closing Documents specified in this Section 4.2.
IV.3 Partnership Closing Documents. On or prior to the Closing
Date, Partnership shall deliver to Contributor the following documents (herein
referred to collectively as the "PARTNERSHIP CLOSING DOCUMENTS"), duly executed
by Partnership and the other parties thereto (other than Contributor) and in
form and substance reasonably acceptable to Contributor and to Partnership
unless the form thereof is attached hereto:
(a) A written certificate addressed to Contributor to the
effect that all of the representations and warranties of Partnership contained
in Section 6.2 are true and correct in all material respects on and as of the
Closing Date with the same force and effect as though remade and repeated in
full on and as of the Closing Date (except for actions taken in accordance with
or as contemplated by this Agreement and except for matters approved in writing
or consented to in writing by Contributor) or stating the specific respects, if
any, in which any of the representations and warranties is untrue.
(b) Any instruments, documents or certificates required to be
executed by Partnership with respect to any state, county or local transfer
taxes applicable to the conveyance of the Property pursuant to this Agreement.
(c) The Rights Agreement Amendment.
(d) The RRA Amendment.
(e) The signature page referred to in Section 2.3(a).
(f) Such other documents, instruments or agreements which
Partnership may be required to deliver to Contributor pursuant to the other
provisions of this Agreement or which Contributor reasonably may deem necessary
or desirable to consummate the transactions contemplated hereunder; provided,
however, that any such other document, instrument or agreement which Contributor
reasonably deems necessary or desirable shall not impose upon Partnership any
obligation or liability other than an obligation or liability expressly imposed
upon Partnership pursuant to the terms of this Agreement or pursuant to the
terms of the other Partnership Closing Documents specified in this Section 4.3.
IV.4 Joint Deliveries. Contributor and Partnership shall jointly
execute and deliver a Closing Statement with respect to the contribution of the
Property.
7
<PAGE> 9
ARTICLE V
Prorations and Adjustments
V.1 Prorations. Subject to the other provisions of this Article
and the terms of the License Agreement, the items pertaining to the Property
that are identified in this Article shall be prorated between the parties on a
per diem basis (employing the actual number of calendar days in the period
involved and a 365-day year) so that credits and charges with respect to such
items for all days preceding the Closing Date shall be allocated to Contributor,
and credits and charges with respect to such items for all days including and
after the Closing Date shall be allocated to Partnership. Each payment received
shall be attributed to the most recent period for which such a payment is due.
The parties shall make final adjusting payments as provided in Section 5.4
hereof. All prorations not specifically agreed to herein shall be made in
accordance with customary practice in the county in which the Property is
located. This Article V shall survive the Closing.
V.2 Items to be Prorated. Subject to the terms of the License
Agreement, the following items shall be prorated between Partnership and
Contributor as of 11:59 pm on the day immediately preceding the Closing Date:
(a) real property taxes and assessments (or installments
thereof) based on the most recent tax bills;
(b) sewer taxes and rents, if any;
(c) all other items customarily apportioned in connection with
the sale of similar properties similarly located.
V.3 Installment Payment of Assessments. In furtherance of Section
5.2, if any real property assessment affects the Property at the Closing and
such real property assessment is payable in installments (whether at the
election of Contributor or otherwise), the installment relating to, or payable
over, the applicable calendar or fiscal year in which Closing occurs, shall be
apportioned between Contributor and Partnership as of 11:59 p.m. Central
Standard Time on the day immediately preceding the Closing Date, and the
remaining installments shall be the obligation of Partnership.
8
<PAGE> 10
V.4 Settlement of Adjustments.
(a) Contributor and Partnership acknowledge that it may be
difficult to calculate, as of the day immediately preceding the Closing Date,
certain of the adjustments, apportionments and payments to be made pursuant to
this Article V. Accordingly, Contributor and Partnership hereby agree that any
adjustments, apportionments and payments otherwise required to be made as of the
Closing Date may to the extent necessary or desirable be estimated by
Partnership and Contributor based on the most recent available data, and, as
soon as practicable and if necessary from time to time after the Closing Date,
additional adjustments, apportionments and payments shall be made to adjust for
any differences between the actual apportionment or adjustment and the amount
thereof estimated as of the Closing Date. Any errors or omissions in computing
apportionments at the Closing shall be corrected promptly after their discovery.
(b) Net prorations and adjustments made pursuant to this
Article V as of the Closing Date and determined as provided in subsection (a)
above shall be settled in cash. From time to time after the Closing as further
adjustments are made as herein provided, settlement thereon between Contributor
and Partnership shall be made in cash.
(c) Notwithstanding anything to the contrary contained herein,
a final determination of the amounts owing under this Article V shall be made as
of the date that is eighteen (18) months after the Closing Date, and the amounts
determined as of such date to be owing settled in cash no later than ten (10)
days thereafter. No further adjustments or payments shall be required to be made
under this Article V thereafter.
ARTICLE VI
Representations and Warranties
VI.1 Contributor's Representations and Warranties. Contributor
represents and warrants to Partnership as follows:
(a) Contributor is a corporation duly formed, validly existing
and in good standing under the laws of the State of Delaware with full power and
authority to execute, deliver and perform this Agreement.
(b) The execution, delivery and performance of this Agreement
by Contributor have been duly and validly authorized by all necessary action on
the part of Contributor. This Agreement has been, and the Contributor Closing
Documents will be, duly executed and delivered by Contributor. This Agreement
constitutes, and when so executed and delivered the Contributor Closing
Documents will constitute, the legal, valid and binding obligations of
Contributor, enforceable against Contributor in accordance with their respective
terms.
(c) None of the execution, delivery or performance of this
Agreement by
9
<PAGE> 11
Contributor does or will, with or without the giving of notice, lapse of time or
both, violate, conflict with, constitute a default, result in a loss of rights,
acceleration of payments due or creation of any lien upon the Property or
require the approval or waiver of or filing with any Person (including without
limitation any governmental body, agency or instrumentality) under (i) the
articles of incorporation and by-laws of Contributor, (ii) any agreement,
instrument or other document to which Contributor is a party or by which it is
bound or (iii) any judgment, decree, order, statute, injunction, rule,
regulation or the like of a governmental unit applicable to Contributor.
(d) Except for the License Agreement, there are no leases or
other occupancy rights affecting the Property.
(e) Neither Contributor, nor, to Contributor's knowledge, any
other Person has caused or permitted any Hazardous Material to be maintained,
disposed of, stored, released or generated on, under or at the Property or any
part thereof. To Contributor's knowledge, Contributor is in compliance with, and
has heretofore complied with, all Environmental Laws with respect to the
Property and, to Contributor's knowledge, all other occupants of the Property
are and have been in compliance with the Environmental Laws. Contributor has not
received any notice from any governmental unit or other person that it or the
Property is not in compliance with any Environmental Law or that it has any
liability with respect thereto and there are no administrative, regulatory or
judicial proceedings pending or, to the knowledge of Contributor, threatened
with respect to the Property pursuant to, or alleging any violation of, or
liability under any Environmental Law. Contributor has not installed any
underground or above ground storage tanks on, under or about the Property and,
to Contributor's knowledge, no such tanks are located on, under or about the
Property. To Contributor's knowledge, there is no facility located on or at the
Property that is subject to the reporting requirements of Section 312 of the
Federal Emergency Planning and Community Right to Know Act of 1986 and the
federal regulations promulgated thereunder (42 U.S.C. Section 11022).
(f) There is no litigation, including any arbitration,
investigation or other proceeding by or before any court, arbitrator or
governmental or regulatory official, body or authority which is pending or, to
Contributor's knowledge, threatened against Contributor relating to the
Property, there are no unsatisfied arbitration awards or judicial orders against
Contributor and, to Contributor's knowledge, there is no basis for any such
arbitration, investigation or other proceeding.
(g) No condemnation proceeding or other proceeding or action
in the nature of eminent domain is pending with respect to all or any part of
the Property, and, to Contributor's knowledge, no condemnation proceeding or
other proceeding or action in the nature of eminent domain is threatened with
respect to the Property.
(h) Copies of current real estate tax bills with respect to
the Property have been delivered or made available to Partnership. No portion of
the Property comprises part of a tax parcel which includes property other than
property comprising all or a portion of the Property. No application or
proceeding is pending with respect to a reduction or an increase of such taxes.
There are no tax refund proceedings relating to the Property which are currently
pending. Contributor has no
10
<PAGE> 12
knowledge of any special tax or assessment to be levied against the Property or
any change in the tax assessment of the Property.
(i) Contributor has not received notice that there is, and
there does not now exist, any violation of any restriction, condition or
agreement contained in any easement, restrictive covenant or any similar
instrument or agreement affecting the Property or any portion thereof.
(j) No approval, consent, waiver, filing, registration or
qualification of or with any third party, including, but not limited to, any
governmental bodies, agencies or instrumentalities is required to be made,
obtained or given for the execution, delivery and performance of this Agreement
or any of the Contributor Closing Documents by Contributor.
(k) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the contribution of the Property based upon arrangements made by or on
behalf of Contributor.
(l) To Contributor's knowledge, there is no bulk sales notice
required in connection with the transfer of the Property to Partnership.
(m) Contributor is an "accredited investor" within the meaning
of Regulation D under the Securities Act of 1933, as amended, and has knowledge
and experience in financial and business matters such that it is capable of
evaluating the merits and risks of receiving and owning the Units to be issued
to Contributor pursuant hereto, and Contributor is able to bear the economic
risk of such ownership. The Units to be acquired by Contributor pursuant to this
Agreement are being acquired by Contributor for its own account, for investment
purposes only and not with a view to, and with no present intention of, selling
or distributing the same.
VI.2 Partnership Representations and Warranties. Partnership
represents and warrants to Contributor as follows:
(a) Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by Partnership of
this Agreement have been duly and validly authorized by all requisite action on
the part of Partnership. This Agreement has been, and the Partnership Closing
Documents will be, duly executed and delivered by Partnership. This Agreement
constitutes, and when so executed and delivered the Partnership Closing
Documents will constitute, the legal, valid and binding obligations of
Partnership, enforceable against it in accordance with their terms.
(c) None of the execution, delivery or performance of this
Agreement or the Partnership Closing Documents by Partnership does or will, with
or without the giving of notice, lapse
11
<PAGE> 13
of time or both, violate, conflict with, constitute a default or result in a
loss of rights under or require the approval or waiver of or filing with any
Person (including without limitation any governmental body, agency or
instrumentality) under (i) the organizational documents of Partnership, (ii) any
material agreement, instrument or other document to which Partnership is a party
or by which Partnership is bound, or (iii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
Partnership.
(d) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the contribution of the Property based upon arrangements made by or on
behalf of Partnership.
(e) The Units issued to Contributor pursuant to this Agreement
have been authorized for issuance by all necessary partnership action on the
part of Partnership and have been duly and validly issued.
ARTICLE VII
Conditions to Closing
VII.1 Conditions to Contributor's Obligations. Contributor's
obligation to close is subject to satisfaction of each of the following
conditions (any of which may be waived by Contributor in its sole discretion):
(a) Compliance with Agreement. On the Closing Date, all of the
covenants and agreements to be complied with or performed by Partnership under
this Agreement on or before the Closing shall have been complied with or
performed in all material respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties made by Partnership in this Agreement shall be
true and complete in all material respects on and as of the Closing Date.
(c) No Other Termination. No termination of this Agreement by
Contributor or Partnership shall have occurred pursuant to any other provision
hereof.
(d) No Litigation. At Closing, there is no litigation,
including any arbitration, investigation or other proceeding, pending by or
before any court, arbitrator or governmental or regulatory official, body or
authority nor any decree, order or injunction issued by any such court,
arbitrator or governmental or regulatory official, body or authority and
remaining in effect which does or is likely to prevent or hinder the timely
consummation of the Closing or materially and adversely affect the Property.
(e) Title Policy. At Closing, Title Company shall issue the
Title Policy to Partnership.
12
<PAGE> 14
(f) Plat of Subdivision. At Closing (i) the City-County
Planning Commission of Warren County, Kentucky, shall have approved a final
subdivision plat ("Plat") pursuant to which the Land shall become a separate
legal parcel which may be conveyed pursuant to the Deed, and (ii) such Plat
shall be recorded in the land records of Warren County, Kentucky.
VII.2 Conditions to Partnership's Obligations. Partnership's
obligation to close is subject to satisfaction of each of the following
conditions (any of which may be waived by Partnership in its sole discretion):
(a) Compliance with Agreement. On the Closing Date, all of the
covenants and agreements to be complied with or performed by Contributor under
this Agreement on or before the Closing shall have been complied with or
performed in all material respects.
(b) Accuracy of Representation and Warranties. The
representations and warranties made by Contributor in this Agreement shall be
true and complete in all material respects on and as of the Closing Date.
(c) No Other Termination. No termination of this Agreement by
Partnership or Contributor shall have occurred pursuant to any other provision
hereof.
(d) No Litigation. At Closing, there is no litigation,
including any arbitration, investigation or other proceeding, pending by or
before any court, arbitrator or governmental or regulatory official, body or
authority nor any decree, order or injunction issued by any such court,
arbitrator or governmental or regulatory official, body or authority and
remaining in effect which does or is likely to prevent or hinder the timely
consummation of the Closing or materially adversely affect the Property.
(e) Plat of Subdivision. At Closing, Plat shall be approved by
the Planning Commission and recorded in the land records of Warren County,
Kentucky.
ARTICLE VIII
Additional Covenants
VIII.1 Conduct of Business Pending Closing. From the date hereof
until the Closing, Contributor shall (i) not enter into any lease or contracts
with respect to the Property, (ii) not sell, transfer, exchange, further
encumber or grant interests (including easements) in the Property or any part
thereof or engage in negotiations or discussions with, or otherwise solicit or
assist, any third party relating to the acquisition by such third party of the
Property, (iii) not otherwise take any action which could or would render
inaccurate any of the representations or warranties made by Contributor in this
Agreement, and (iv) otherwise operate the Property in the ordinary course
consistent with current practice.
13
<PAGE> 15
VIII.2 Publicity. In no event shall either Contributor or Partnership
issue any press release or otherwise disclose any non-public information
regarding this Agreement or the contribution of the Property unless the other
party has consented thereto in writing (and Contributor and Partnership agree
not unreasonably to withhold or delay such consent) and to the form and
substance of any such statement or disclosure; provided, however, that nothing
herein shall be deemed to limit or impair in any way any party's ability to
disclose the details of or information concerning this Agreement, or the
Property to such party's attorneys, accountants or other advisors or to the
extent such party reasonably deems necessary or desirable pursuant to any court
or governmental order or applicable securities laws or regulations or financial
reporting requirements, and to assess the Property in connection with
Partnership's due diligence examination. Further, either party may disclose any
information regarding this Agreement to its direct or indirect constituent
partners, members or shareholders, as the case may be (and to counsel for such
constituent partners, members and shareholders) and as otherwise necessary to
comply with the terms of this Agreement. Any disclosure by a party's advisors or
direct or indirect constituent partners, members or shareholders shall be deemed
a breach hereof by such party. If for any reason this Closing is not
consummated, Partnership will promptly return to Contributor all originals and
copies of documents, reports and financial and other information relating to the
Property and to Contributor which Contributor has furnished to Partnership. The
obligations of Contributor and Partnership under this Section 8.2 shall survive
the termination hereof, however caused, but shall terminate at Closing.
VIII.3 Further Assurances. Each of Contributor and Partnership agree,
at any time and from time to time after the Closing, to execute, acknowledge
where appropriate and deliver such further instruments and other documents (and
to bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither
Contributor nor Partnership shall be obligated pursuant to this Section 8.4 to
incur any expense of a material nature and/or to incur any material obligations
in addition to those set forth in this Agreement and/or its respective Closing
Documents.
ARTICLE IX
Condemnation
IX.1 Condemnation in General.
(a) If prior to the Closing Date the Property shall be the
subject of a Taking, Contributor shall promptly inform Partnership of same.
(b) If prior to the Closing Date the Property shall be the
subject of a Substantial Taking, Partnership may by written notice delivered to
Contributor on or before the Closing Date, elect as its sole remedy on account
thereof, either (i) to terminate this Agreement, and the rights of the
14
<PAGE> 16
parties hereto, in which event this Agreement (other than any right or
obligation that expressly survives the termination of this Agreement) shall
terminate as of the date of delivery of such notice; or (ii) to continue this
Agreement in effect, in which event Contributor (A) shall transfer and assign to
Partnership, at the Closing, its full right, title and interest in and to any
condemnation awards with respect thereto, and shall cooperate in all reasonable
respects with Partnership, at Partnership's sole cost and expense, in connection
with the collection thereof, to the extent not collected at the Closing, and (B)
to the extent any condemnation awards shall have been received by Contributor
prior to the Closing, remit to Partnership the full amount thereof so collected,
less, in each such case, (i) reasonable costs of collection thereof, and (ii)
amounts, if any, applied by Contributor prior to Closing to the preservation,
repair or restoration of the Property.
(c) If prior to the Closing Date, the Property, or any portion
thereof, is the subject of a Taking (other than a Substantial Taking), this
Agreement shall nevertheless remain in full force and effect with no abatement
of the consideration to be delivered to Contributor on account thereof and
Partnership shall nevertheless acquire the Property or remaining balance thereof
pursuant to the provisions hereof. In such event, any condemnation awards shall
be applied and paid in the same manner and subject to the same provisions set
forth above as are applicable in a case of a Substantial Taking as to which
Partnership has elected nevertheless to continue this Agreement in effect.
IX.2 Adjustment of Claims and Condemnation Proceedings. If a Taking
shall occur and otherwise participate in condemnations brought against
Contributor, Contributor shall initiate all actions required to adjust,
compromise and collect the awards payable by the condemning authority.
Partnership shall have the right (but not the obligation) to participate with
Contributor in the initiation of all such actions and, in any event, Contributor
shall consult with, and keep Partnership advised of, Contributor's progress in
connection therewith. Contributor shall not agree to any settlement of the
awards payable in connection with any such Taking (or enter into any agreement
in lieu of a Taking) without Partnership's approval, which approval shall not be
unreasonably withheld or delayed.
ARTICLE X
Miscellaneous
X.1 Survival. The representations and warranties of Contributor
and of Partnership set forth herein and in the Closing Documents shall survive
Closing for a period of twelve (12) months.
X.2 Notices. Notices must be in writing and sent to the party to
whom or to which such notice is being sent, by (a) certified or registered mail,
postage prepaid and return receipt requested, (b) commercial overnight courier
service, or (c) delivered by hand with receipt acknowledged in writing, as
follows:
15
<PAGE> 17
To Partnership:
GGP Limited Partnership
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Bernard Freibaum
To Contributor:
General Growth Companies, Inc.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Matthew Bucksbaum
All notices (i) shall be deemed given when received or, if mailed as described
above with appropriate postage, after 5 business days and (ii) may be given
either by a party or by such party's attorneys. The cost of delivery shall be
borne by the party delivering the notice.
X.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed and
delivered by each party hereto.
X.4 Amendments. Except as otherwise provided herein, this
Agreement may not be changed, modified, supplemented or terminated, except by an
instrument executed by the party hereto which is or will be affected by the
terms of such change, modification, supplement or termination.
X.5 Waiver. Each party shall have the right exercisable in its
sole and absolute discretion, but under no circumstances shall be obligated, to
waive or defer compliance by any other party with its obligations hereunder or
to waive satisfaction of any conditions contained herein for its benefit. No
waiver by any party of a breach of any covenant or a failure to satisfy any
condition shall be deemed a waiver of any other or subsequent breach or failure
to satisfy any other condition. All waivers of any term, breach or condition
hereof must be in writing.
X.6 Successors and Assigns. Subject to the provisions of Section
10.10, the terms, covenants, agreements, conditions, representations and
warranties contained in this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
X.7 Third Party Beneficiaries. The provisions of this Agreement
are made for the benefit of the parties hereto and their respective successors
in interest and assigns and are not intended for, and may not be enforced by,
any other person or entity.
X.8 Partial Invalidity. If any term or provision of this Agreement
or the application thereof
16
<PAGE> 18
to any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent permitted by law.
X.9 Governing Law. This Agreement has been made pursuant to and
shall be governed by the laws of the State of Kentucky (without regard to
conflicts of law rules).
X.10 Assignment. This Agreement may not be assigned or delegated by
any party without the written consent of the other except that Partnership may
assign this Agreement to an Affiliate of Partnership, it being acknowledged and
agreed by Partnership that no such assignment shall relieve Partnership of its
obligations under this Agreement.
X.11 Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
X.12 Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
X.13 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any prior written or oral understandings and/or agreement among them
with respect thereto.
X.14 Costs of Enforcement. In the event that any action is brought
by any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs in
such action, including reasonable attorneys' fees, shall be paid by the other
party or parties. Any amounts owing hereunder which are not paid when due shall
bear interest at the per annum rate equal to the prime rate of Bank of America
Illinois, N.A. (or any successor), as the same may change from time to time,
plus four percent.
X.15 Time of the Essence. Time is of the essence with regard to
each provision of this Agreement. If the final date of any period provided for
herein for the performance of an obligation or for the taking of any action
falls on a Saturday, Sunday or banking holiday, then the time of that period
shall be deemed extended to the next day which is not a Sunday, Saturday or
banking holiday. Each and every day described herein shall be deemed to end at
5:00 p.m. Central Standard Time.
17
<PAGE> 19
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
Contributor: Partnership:
GENERAL GROWTH COMPANIES, INC. GGP LIMITED PARTNERSHIP,
a Delaware corporation a Delaware limited partnership
By: General Growth Properties, Inc.,
a Delaware corporation, its general
partner
By: By:
Name: Name:
Title: Title:
18
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (File Nos. 333-11067, 333-15907, 333-17021, 333-23035,
333-37247, 333-37383, 333-41603, 333-58045, 333-68505, 333-76379, 333-76757,
333-82569, 333-84419, 333-88813, 333-88819 and 333-91621) and the Registration
Statements on Form S-8 (File Nos. 33-79372, 333-07241, 333-11237, 333-28449,
333-74461 and 333-79737) of General Growth Properties, Inc. of our report dated
February 8, 2000 relating to the consolidated financial statements, which
appears in this Annual Report on Form 10-K. We also consent to the incorporation
by reference of our report dated February 8, 2000 relating to the financial
statement schedule, which appears in this Form 10-K.
Chicago, Illinois PricewaterhouseCoopers LLP
March 14, 2000
<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-K FOR THE
YEAR ENDED DECEMBER 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 25,593
<SECURITIES> 0
<RECEIVABLES> 84,123
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,088,997
<DEPRECIATION> 376,673
<TOTAL-ASSETS> 4,954,895
<CURRENT-LIABILITIES> 0
<BONDS> 3,119,534
337,500
0
<COMMON> 5,170
<OTHER-SE> 1,284,298
<TOTAL-LIABILITY-AND-EQUITY> 4,954,895
<SALES> 612,342
<TOTAL-REVENUES> 612,342
<CGS> 0
<TOTAL-COSTS> 314,537
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,425
<INTEREST-EXPENSE> 169,502
<INCOME-PRETAX> 114,921
<INCOME-TAX> 0
<INCOME-CONTINUING> 114,921
<DISCONTINUED> 0
<EXTRAORDINARY> 13,796
<CHANGES> 0
<NET-INCOME> 101,125
<EPS-BASIC> 2.01
<EPS-DILUTED> 2.00
</TABLE>
