November 13, 1996
U.S. Securities and Exchange Commission
Operations Center, Stop 0-7
6432 General Green Way
Alexandria, Virginia 22312
Re: Urban Shopping Centers, Inc.
Commission File No. 1-12278
Form 10-Q
Gentlemen:
Transmitted, for the above-captioned registrant is the
electronically filed executed copy of registrant's current report
on Form 10-Q for the quarter ended September 30, 1996.
Thank you.
Very truly yours,
URBAN SHOPPING CENTERS, INC.
By: ADAM S. METZ
Executive Vice President, Chief Financial
Officer, Director of Acquisitions and
Chief Accounting Officer
ASM/gd
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter
ended September 30, 1996 Commission file number 1-12278
URBAN SHOPPING CENTERS, INC.
(Exact name of registrant as specified in its charter)
Maryland 36-3886885
(State or other jurisdiction (I.R.S. Employer
of incorporation Identification No.)
or organization)
900 North Michigan Avenue, Chicago, Illinois 60611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 915-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares of Common Stock and Unit Voting Common
Stock, $.01 par value, outstanding on November 8, 1996 were
13,447,292 and 301,633, respectively.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 19
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 27
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
($000's omitted, except share amounts)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Investment properties:
Land, including peripheral land parcels $ 79,008 $ 79,331
Buildings and improvements 529,400 525,704
Equipment, furniture and fixtures 2,074 1,871
Construction in progress 53,862 18,912
------------ ------------
664,344 625,818
Accumulated depreciation (92,801) (79,544)
------------ ------------
Investment properties, net of accumulated
depreciation 571,543 546,274
Investments in unconsolidated partnerships 14,062 3,703
Investment in the Management Company 15,168 15,673
Cash, cash equivalents and short-term
investments 4,548 8,152
Interest, rents and other receivables 10,251 11,395
Deferred expenses and other assets 11,515 13,310
------------ ------------
$ 627,087 $ 598,507
============ ============
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
Liabilities:
Mortgage notes payable $ 281,705 $ 251,000
Land sale-leaseback proceeds 75,000 75,000
Deferred lease accrual 15,667 13,911
Accounts payable and other liabilities 23,681 18,663
Investments in unconsolidated partnerships 36,925 33,563
Commitments and contingencies
------------ ------------
Total liabilities 432,978 392,137
Minority interest 67,638 71,861
Stockholders' equity:
Common stock, $.01 par value, 140,000,000
shares authorized, 13,447,292 shares issued
and outstanding 134 134
Unit voting stock, $.01 par value, 5,000,000
shares authorized, 301,633 shares issued and
outstanding 3 3
Additional paid-in capital 259,258 259,120
Retained earnings (deficit) (132,924) (124,748)
------------ ------------
Total stockholders' equity 126,471 134,509
------------ ------------
$ 627,087 $ 598,507
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
($000's omitted, except share amounts)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Shopping center
revenues:
Minimum rents $ 15,047 $ 14,772 $ 44,918 $ 42,592
Percentage rents 1,141 1,091 2,752 2,451
Recoveries from
tenants 7,246 5,755 20,188 18,397
Other 610 695 1,405 2,085
---------- ---------- ---------- ----------
24,044 22,313 69,263 65,525
Interest income 438 414 1,301 2,131
---------- ---------- ---------- ----------
24,482 22,727 70,564 67,656
---------- ---------- ---------- ----------
Expenses:
Shopping center
expenses 7,837 7,347 23,064 23,108
Mortgage and other
interest 3,487 3,524 10,443 10,796
Ground rent 1,106 1,119 3,316 3,297
Depreciation and
amortization 5,317 5,102 15,776 14,528
General and
administrative 552 549 2,034 1,975
Write-off of assets 167 113 292 229
---------- ---------- ---------- ----------
18,466 17,754 54,925 53,933
---------- ---------- ---------- ----------
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
Operating income 6,016 4,973 15,639 13,723
Income from
unconsolidated
partnerships 450 168 1,387 800
Income from the
Management Company 107 2,288 604 3,564
---------- ---------- ---------- ----------
Income before other
gains, minority
interest and
extraordinary loss 6,573 7,429 17,630 18,087
Other gains 608 691 1,328 1,355
Minority interest (2,545) (2,854) (6,727) (6,790)
---------- ---------- ---------- ----------
Income before
extraordinary loss 4,636 5,266 12,231 12,652
Extraordinary loss (net
of minority interest) -- (1,007) -- (1,007)
---------- ---------- ---------- ----------
Net income $ 4,636 $ 4,259 $ 12,231 $ 11,645
========== ========== ========== ==========
Income per common
and unit voting
common share:
Before
extraordinary
loss $ .34 $ .38 $ .89 $ .92
Extraordinary
loss -- (.07) -- (.07)
---------- ---------- ---------- ----------
Net income $ .34 $ .31 $ .89 $ .85
========== ========== ========== ==========
Weighted average
common and unit
voting common
stock outstanding 13,743,596 13,742,259 13,742,708 13,742,259
========== ========== ========== ==========
Dividends declared
and paid $ .495 $ .485 $ 1.485 $ 1.455
========== ========== ========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
($000's omitted, except share amounts)
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,231 $ 11,645
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 15,776 14,528
Write-off of assets 292 229
Provision (recovery) for losses on accounts
receivable (199) 95
Income from unconsolidated partnerships (1,387) (800)
Income from the Management Company, net of
distributions -- (1,984)
Minority interest 6,727 6,790
Deferred lease accrual 1,756 1,905
Other gains (1,328) (1,355)
Extraordinary loss -- 1,007
Other, net (376) (911)
Other changes in assets and liabilities:
Interest, rents and other receivables 1,622 884
Deferred expenses and other assets (410) (48)
Accounts payable and other liabilities 2,259 3,366
------------ ------------
Net cash provided by operating activities 36,963 35,351
------------ ------------
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1996 1995
------------ ------------
Cash flows from investing activities:
Additions to investment properties, net of
change in related payables (36,805) (41,476)
Acquisition of partnership interest (9,431) --
Acquisition of development parcels -- (5,568)
Proceeds from sales of options and development
parcels, net of selling costs 1,909 1,313
Net distributions from the Management Company 505 127
Cash distributions from unconsolidated partnerships 5,041 2,026
Cash contributions to unconsolidated partnerships (1,367) (97)
Net sales and maturities of short-term investments 162 15,148
Decrease in restricted cash 85 2,100
Decrease in notes receivable 10 13
------------ ------------
Net cash used in investing activities (39,891) (26,414)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of debt, net of
issuance costs 50,505 43,320
Repayment of debt (19,800) (34,717)
Cash distributions to partners (10,950) (10,635)
Dividends paid (20,407) (19,995)
Proceeds from issuance of stock 138 --
------------ ------------
Net cash used in financing activities (514) (22,027)
------------ ------------
Net decrease in cash and cash equivalents (3,442) (13,090)
Cash and cash equivalents at beginning of period 7,866 17,842
------------ ------------
Cash and cash equivalents at end of period $ 4,424 $ 4,752
============ ============
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest,
net of amounts capitalized $ 9,919 $ 10,233
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
($000's omitted, except share amounts)
Readers of this quarterly report should refer to the
Company's audited financial statements for the year ended
December 31, 1995, which are incorporated by reference in the
Company's 1995 annual report on Form 10-K, as certain disclosures
which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
(1) BASIS OF PRESENTATION
In the opinion of management, all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair
presentation of the consolidated financial statements have been
included. The results for the interim periods ended September
30, 1996 and 1995 are not necessarily indicative of the results
to be obtained for the full fiscal year.
The accompanying consolidated financial statements include
the accounts of Urban Shopping Centers, Inc. ("Urban"), Urban
Shopping Centers, L.P. (the "Operating Partnership") and all
controlled affiliates (collectively, the "Company"). The effect
of all significant intercompany balances and transactions have
been eliminated in the consolidated presentation.
The equity method of accounting has been applied in the
accompanying consolidated financial statements with respect to
the Company's interest in Water Tower Joint Venture ("Water Tower
Place"), Coral-CS/LTD Associates ("Coral Square Mall"), West Dade
County Associates ("Miami International Mall"), Valencia Town
Center Associates, L.P. ("Valencia Town Center") and Citrus Park
Venture ("Citrus Mall").
In accordance with the consensus reached in FASB Emerging
Issues Task Force Issue 95-6 "Accounting by a Real Estate
Investment Trust for an Investment in a Service Corporation"
issued in September 1995, the Company has changed its method of
accounting for its preferred stock investment in Urban Retail
Properties Co. (the "Management Company") from the cost method to
the equity method. The accompanying consolidated financial
statements for the three and nine months ended September 30,
1995, have been restated to reflect this change in policy. For
the three and nine months ended September 30, 1995, net income
increased $1,221 or $0.09 per share and $1,581 or $0.12 per
share, respectively, as a result of this change in policy.
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation Plans" was issued in
October 1995. The Statement is effective for fiscal years
beginning after December 15, 1995. As allowed by the new
Statement, the Company plans to continue to use Accounting
Principals Board Opinion No. 25, "Accounting for Stock Issued to
Employees" in accounting for its stock options. Certain pro
forma and other information will be disclosed as if the Company
had measured compensation costs in a manner consistent with the
new Statement.
Certain amounts in the 1995 financial statements have been
reclassified to conform with the 1996 presentation.
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(1) BASIS OF PRESENTATION (CONTINUED)
Development costs, including interest and real estate taxes
incurred in connection with construction or expansion of certain
investment properties, are capitalized as a cost of the
investment property and depreciated over the estimated useful
life of the related asset. During the nine months ended September
30, 1996 and 1995, the Company incurred interest of $12,676 and
$11,655, respectively, and capitalized interest of $2,233 and
$859, respectively.
Cash and cash equivalents (which aggregated $4,424 and $7,866
at September 30, 1996 and December 31, 1995, respectively)
include a treasury money market fund which invests principally in
U.S. Treasury notes and bills ($2,558 and $6,301 at September 30,
1996 and December 31, 1995, respectively). Other short-term
investments (generally with original maturities of one year or
less) are generally held to maturity and aggregated $124 and $286
at September 30, 1996 and December 31, 1995, respectively. Cash
equivalents and other short-term investments are held at cost
which approximates market.
(2) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS
The accompanying consolidated financial statements include
investments in certain partnerships in which the Company does not
own a controlling interest. These investments are reported using
the equity method. To the extent the Company's investment basis
differs from its share of the capital of an unconsolidated
partnership, such difference is amortized over the depreciable
lives of the unconsolidated partnership's investment assets.
Investments in unconsolidated partnerships consist of the
following:
Company's
Name Property Ownership
- ----------------------- ------------------------- ---------
Water Tower Joint Water Tower Place,
Venture Chicago, IL 55% (a)
Coral-CS/LTD Associates Coral Square Mall,
Coral Springs, FL 50%
West Dade County Miami International Mall,
Associates Miami, FL 40% (b)
Valencia Town Center Valencia Town Center,
Associates, L.P. Valencia, CA 25% (c)
Citrus Park Venture Tampa, FL 50% (d)
(a) The Company owns a 55% interest in a retail property
(Water Tower Place) through its investment in Water Tower Joint
Venture ("WTJV"). All major decisions concerning the retail
property require the approval of both partners of WTJV and thus
the Company does not control the partnership.
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(2) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS (CONTINUED)
(b) Effective April 1, 1996, JMB/Miami International
Associates (an unconsolidated partnership) distributed its
interest in West Dade County Associates ("West Dade") to its
partners (the Operating Partnership and two affiliates of JMB
Realty). Effective April 1, 1996, the Operating Partnership
purchased an approximate 18% interest in West Dade from one of
the JMB Realty affiliates for $9,431 in cash and the assumption
of the seller's pro rata share of all liabilities of West Dade.
The remaining interests owned by the JMB Realty affiliates were
sold to the outside partner in West Dade for $5,375 in cash and
the assumption of the sellers' pro rata share of all liabilities
of West Dade. Subsequent to these transactions, the Operating
Partnership owns a 40% interest in West Dade and the outside
partner owns the remaining 60% interest.
(c) The outside partner has a right to all cash
distributions until it has received a return on and of its
contributions to the partnership (as set forth in the partnership
agreement).
(d) On June 23, 1995, the Company acquired a 50% interest in
Citrus Park Venture (a 163 acre development parcel). The
Management Company currently owns the remaining 50% interest in
Citrus Park Venture.
<TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(2) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS (CONTINUED)
Summarized financial information for the unconsolidated partnerships is
presented below.
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Assets:
Investment properties, net $ 293,568 $ 292,452
Other assets 25,305 28,817
------------ ------------
318,873 321,269
Less liabilities:
Mortgage notes payable 310,800 310,800
Other liabilities 16,311 16,624
------------ ------------
Total deficit (8,238) (6,155)
Less: Outside partners' capital 14,625 23,705
------------ ------------
Total investments in unconsolidated
partnerships $ (22,863) $ (29,860)
============ ============
Total investments in unconsolidated
partnerships are presented in the accompanying
consolidated balance sheets as follows:
Assets - Investments in unconsolidated
partnerships $ 14,062 $ 3,703
Liabilities - Investments in unconsolidated
partnerships 36,925 33,563
------------ ------------
$ (22,863) $ (29,860)
============ ============
</TABLE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(2) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS (CONTINUED)
Summarized financial information for the unconsolidated partnerships -
continued
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Revenues:
Shopping centers $ 58,247 $ 56,586
Interest income 297 379
Expenses:
Shopping centers (26,890) (25,538)
Mortgage and other interest and ground rent (18,957) (19,153)
Depreciation and amortization (8,505) (8,608)
Write-off of assets -- (138)
------------ ------------
Net income $ 4,192 $ 3,528
============ ============
Company's share of:
Mortgage and other interest and ground rent $ (8,062) $ (7,810)
Depreciation and amortization (3,438) (3,370)
Write-off of assets -- (76)
Net income 1,387 800
============ ============
</TABLE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(3) INVESTMENT IN THE MANAGEMENT COMPANY
As restated, the Company's financial statements present its investment in
the Management Company under the equity method of accounting.
Summarized financial information for the Management Company is presented
below.
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Assets:
Investments in land parcels (a) $ 38,170 $ 36,795
Cash, cash equivalents and short-term
investments 2,617 3,251
Receivables and deferred expenses 11,724 11,274
------------ ------------
$ 52,511 $ 51,320
============ =============
Liabilities:
Notes payable (b) $ 70,000 $ 70,000
Accounts payable and other liabilities 3,308 3,589
------------ ------------
73,308 73,589
Owners' deficit (20,797) (22,269)
------------ ------------
$ 52,511 $ 51,320
============ ============
</TABLE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(3) INVESTMENT IN THE MANAGEMENT COMPANY (CONTINUED)
Summarized financial information for the Management Company - continued
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Revenues $ 28,926 $ 29,114
------------ ------------
Expenses:
Management, leasing and development services 23,109 20,730
Mortgage and other interest 4,037 3,784
Land parcels 276 20
Depreciation and amortization 320 295
Write-down of assets (a) -- 9,580
------------ ------------
27,742 34,409
------------ ------------
Operating income (loss) 1,184 (5,295)
Income tax benefit (provision) (599) 212
Loss on sale of land parcels -- (510)
------------ ------------
Net income (loss) $ 585 $ (5,593)
============ ============
</TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(3) INVESTMENT IN THE MANAGEMENT COMPANY (CONTINUED)
(a) Includes 50% of the outstanding mortgage loan of an
affiliated joint venture which was not part of the JMB Retail
Group. The mortgage loan, with a 50% face value of $25,750, was
acquired by the JMB Retail Group on December 29, 1992, for
$19,312 resulting in a discount of $6,438. The loan bears
interest at a variable rate based on market interest rates (as
defined) and is secured by the affiliated joint venture's
interest in a land parcel located in Chicago, IL. Interest is
recorded for financial reporting purposes when received.
Accordingly, accretion of the discount has also not been
recorded.
The Management Company evaluates its investment properties
periodically to assess whether any impairment indications are
present. If any investment property is considered impaired, a
loss is provided to reduce the carrying value of the property to
its estimated fair value. During the third quarter of 1995, the
carrying values of two retail development parcels were reduced by
$9,580 due to the uncertainty of realizing the carrying values
upon future sale or development.
(b) Includes $51,000 of indebtedness secured by the
Management Company's interest in certain management contracts and
a guarantee by Penn Square Mall Limited Partnership (a
consolidated venture) which is secured by Penn Square Mall. The
$51,000 bears interest at 7.54% per annum and matures on August
1, 2001. Also includes $9,000 of indebtedness owed to affiliates
of JMB Realty Corporation ("JMB Realty") which bore no interest
through the original maturity of May 20, 1996, at which time it
was extended to September 1, 2001, at an interest rate of 7.0%.
The effective interest rate on the aggregate $60,000 of
indebtedness is 7.46% through September 1, 2001. The Management
Company also is indebted under a $10,000 note payable to the
Company. Such note bears interest at 12% per annum and matures on
September 1, 2001.
The Management Company provides management, leasing and
development services to the Company's consolidated and
unconsolidated investment properties, to affiliated entities and
to third parties. During 1995, management contracts for six of
the Company's consolidated investment properties were terminated
and new management contracts were entered into with the Operating
Partnership. In connection therewith, the Operating Partnership
entered into a service agreement with the Management Company to
provide supervisory services by Management Company personnel at
105% of the Management Company's cost thereof. During the nine
months ended September 30, 1996, the Management Company received
such reimbursements from the Operating Partnership of
approximately $447. During the nine months ended September 30,
1996 and 1995, management, leasing and development revenues of
approximately $7,487 and $6,236, respectively, resulted from
services provided to affiliated entities. In addition, the
Management Company received reimbursements (at cost) of payroll
and other operating expenses from affiliated entities for
activities performed on their behalf. Such reimbursements were
approximately $11,061 and $1,777 during the nine months ended
September 30, 1996 and 1995, respectively. The Management
Company did not renew the administrative services agreement with
JMB Service Bureau Co. at December 31, 1995. Commencing January
1, 1996, the Management Company began employing its own personnel
to perform the services previously provided under the
administrative services agreement. Additionally, rent expense,
including building expenses, paid by the Management Company to
affiliates of JMB Realty during the nine months ended September
30, 1996 and 1995 were $656 and $694, respectively.
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(3) INVESTMENT IN THE MANAGEMENT COMPANY (CONTINUED)
The Company has options to purchase certain development
parcels from the Management Company at the lower of fair market
value or 110% of allocable cost (all terms as defined) until
October 2000. In addition, the sale or development of any
development parcels by the Management Company is subject to a
right of first offer in favor of the Company on the same
conditions as described above. On May 25, 1995, the Company
exercised its option to acquire the Management Company's 50%
interest in a 30 acre development parcel in Memphis as further
discussed in Note 6 of Notes to Consolidated Financial
Statements. On August 17, 1995, the Company sold its option to
purchase Woodbury (a development parcel) in Minneapolis from the
Management Company to an unaffiliated third party. The
unaffiliated third party exercised its option and purchased
Woodbury from the Management Company as further discussed in Note
6 of Notes to Consolidated Financial Statements.
(4) MORTGAGE NOTES PAYABLE
On May 29, 1996, the Company executed a construction loan
commitment with a lender in the amount of $65,000 to finance the
remaining construction costs at Wolfchase Galleria. The loan,
which was initially funded in May 1996, bears interest at the
Company's election at (i) the prime rate plus .25% or (ii) LIBOR
plus 1.375% (6.809% as of September 30, 1996). The loan matures
on May 29, 1998; however, it may be extended for three one-year
periods. As of September 30, 1996, $22,605 had been funded.
(5) SALE OF INVESTMENT PROPERTY
On June 25, 1996, the Company completed an outparcel land
sale at Wolfchase Galleria for total proceeds, net of selling
expenses, of $1,044 and recognized a gain of $720 for financial
reporting purposes in the second quarter of 1996. On July 19,
1996, the Company completed a second outparcel land sale at
Wolfchase Galleria for total proceeds, net of selling expenses,
of $841 and recognized a gain of $608 for financial reporting
purposes in the third quarter of 1996. Subsequent to the end of
the third quarter of 1996, the Company completed two additional
outparcel land sales at Wolfchase Galleria for total proceeds,
net of selling expenses, of $2,768.
(6) TRANSACTIONS WITH AFFILIATES
Costs and expenses for services provided by the Management
Company, the Operating Partnership and other affiliates to the
Company's investment properties, including the Company's share of
unconsolidated investment properties, were as follows:
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(6) TRANSACTIONS WITH AFFILIATES (CONTINUED)
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1996 1995
------------ ------------
Property management and leasing services (a) $ 2,070 $ 1,909
Development services 842 796
Insurance commissions 159 136
------------ ------------
$ 3,071 $ 2,841
============ ============
(a) In 1995, the management agreements for the following
properties were terminated by their owners: New York Square
(July 1995), Brandon TownCenter, The Plaza at Brandon TownCenter,
MainPlace and Penn Square Mall (all October 1995), and Service
Merchandise Plaza (formerly The Plaza at Sawmill Place) (November
1995). New management agreements were put in place with the
Operating Partnership on substantially the same terms. Management
services of $1,054 for the nine months ended September 30, 1996,
provided by the Operating Partnership to these consolidated
investment properties and included above, have been eliminated
in consolidation.
The Company has purchase options, until October 2000, with
respect to interests in certain improved retail properties in
which JMB Realty and certain of its affiliates ("JMB Partners")
have an interest. In addition, these interests may not be sold
by JMB Partners without first offering such interests to the
Company at the lower of the option price or the then fair market
value of such property. The Company also has options to purchase
certain retail development land parcels from JMB Partners at the
lower of fair market value or 110% of allocable cost (all terms
as defined) until October 2000. In addition, the sale or
development of any development parcels by JMB Partners is subject
to a right of first offer in favor of the Company on the same
conditions as described above.
On May 25, 1995, the Company exercised its options to acquire
interests in 167 acres of land in Memphis for the development of
Wolfchase Galleria. The aggregate acquisition value of such
parcels was $11,443. A 137 acre parcel from JMB Partners and a
50% interest in a 30 acre parcel from the Management Company were
acquired. The Company acquired the remaining 50% interest in the
30 acre parcel from an unaffiliated third party. The aggregate
consideration was paid in cash of $8,604 and through the issuance
of 134,400 Units.
On June 23, 1995, the Company sold, to an unaffiliated third
party, its option to purchase from JMB Partners a 25% interest in
Northpoint Mall in Atlanta in exchange for $664 and a 50%
interest in Citrus Park Venture (a 163 acre development parcel).
For financial reporting purposes, the $664 was recognized as a
gain in the accompanying consolidated statement of operations
for the nine months ended September 30, 1995.
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(UNAUDITED)
($000's omitted, except share amounts)
(6) TRANSACTIONS WITH AFFILIATES (CONTINUED)
On August 17, 1995, the Company sold, to an unaffiliated
third party, its option to purchase Woodbury (a development
parcel) in Minneapolis from the Management Company for $3,874, of
which $691 was paid in cash at closing and $3,183 in the form of
a promissory note paid on December 11, 1995. For financial
reporting purposes, the $691 was recognized as a gain in the
accompanying consolidated statements of operations for the three
and nine months ended September 30, 1995. For financial
reporting purposes, the $3,183 net of selling expenses of $42 was
recognized as a gain in the fourth quarter of 1995. The
unaffiliated third party exercised its option and purchased
Woodbury from the Management Company for $1,853 net of selling
expenses.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
FINANCIAL CONDITION. Net cash flows from operating
activities increased $1.6 million in the nine months ended
September 30, 1996 from the nine months ended September 30, 1995.
This increase was primarily attributable to an increase in rental
operations as discussed below.
Net cash flows used in investing activities increased $13.5
million in the nine months ended September 30, 1996 from the nine
months ended September 30, 1995. This increase was primarily
attributable to (i) the continuing construction costs incurred at
Wolfchase Galleria in 1996, (ii) the purchase of an additional
18% interest in Miami International Mall in 1996, (iii) a
decrease in the net sales and maturities of short-term
investments and (iv) an increase in cash contributions to Citrus
Park Venture; partially offset by (i) a decrease in additions to
investment properties as a result of the completion and opening
of Brandon TownCenter in 1995, (ii) an increase in cash
distributions from Water Tower Place and (iii) the acquisition of
development parcels at Wolfchase Galleria in 1995.
Net cash flows used in financing activities decreased $21.5
million in the nine months ended September 30, 1996 from the nine
months ended September 30, 1995. This decrease was primarily
attributable to additional net fundings from the Company's Line
and from the construction loan at Wolfchase Galleria in 1996;
partially offset by net fundings from the construction loan at
Brandon TownCenter in 1995.
At September 30, 1996, the Company had cash, cash equivalents
and short-term investments of approximately $4.5 million. Such
funds are available for working capital requirements, recurring
capital expenditures, dividends and distributions to shareholders
and limited partners of the Operating Partnership, respectively,
and future acquisitions, expansions, renovations and
developments.
On September 5, 1996, Urban paid $6.8 million to shareholders
as a dividend of $.495 per share representing its second quarter
1996 dividend. On September 5, 1996, the Operating Partnership
paid $3.6 million to its limited partners as a distribution of
$.495 per Unit representing its second quarter 1996 distribution.
CAPITALIZATION. At September 30, 1996, the Company's debt
(including the Company's share of debt of unconsolidated
partnerships and the Management Company) totaled $477.8 million
of which $436.1 million is fixed rate debt and $41.7 million is
floating rate debt. On May 29, 1996, the Company executed a
construction loan commitment with a lender in the amount of $65.0
million to finance the remaining construction costs at Wolfchase
Galleria. The loan, which was initially funded in May 1996, bears
interest at the Company's election at (i) the prime rate plus
.25% or (ii) LIBOR plus 1.375% (6.809% as of September 30, 1996).
The loan matures on May 29, 1998; however, it may be extended for
three one-year periods. As of September 30, 1996, $22.6 million
had been funded. On July 26, 1995, the Company signed an
agreement with a group of lenders for the establishment of a
$90.0 million secured, revolving line of credit ("Line"). The
Line is secured by Brandon TownCenter, The Plaza at Brandon
TownCenter, Bed Bath and Beyond outparcel at Brandon TownCenter,
New York Square and Service Merchandise Plaza (formerly The Plaza
at Sawmill Place). The Line has an initial three year term and,
subject to lender's approval, may be extended for an additional
one or two year period. As of September 30, 1996, $39.1 million
was outstanding. In connection with the initial funding on the
Line, the Company repaid the $12.0 million then outstanding
balance on the construction loan at Brandon TownCenter. The
Company completed several transactions in 1995 to reduce its
exposure to changing interest rates. In November 1995, the
Company sold its interest rate protection agreements related to
the $82.0 million floating rate indebtedness secured by Oakbrook
Center and simultaneously entered into an interest rate swap
agreement which fixed the rate at 6.23% through maturity. In
December 1995, the interest rate on the $80.0 million
indebtedness secured by MainPlace was reduced by .34% from an
interest rate of 5.7466% to 5.4066%. In December 1995, the
Company entered into an unsecured five year interest rate swap
agreement for $20.0 million of the outstanding balance on the
Line at an all-in interest rate (including loan spread) of 7.10%.
Although there can be no assurances, the Company believes
that operating cash flows will be sufficient to service all
Company debt and anticipates repayment or refinancing when such
amounts are due in the ordinary course of its business. At
September 30, 1996, the Company's ratio of Company debt to total
market capitalization (which includes the market value of issued
and outstanding shares of capital stock of Urban and of
partnership interests in the Operating Partnership not held by
Urban, plus Company debt) was approximately 48%. The debt to
total market capitalization ratio is based upon the market value
of the Common Stock and indebtedness of the Company and,
accordingly, will fluctuate with changes in the value of the
Common Stock (and the issuance of additional shares of Common
Stock, or other forms of capital, if any, and the amount of
outstanding indebtedness).
The Company believes that its cash generated from property
operations will provide the necessary funds on a short-term and
long-term basis for its operating expenses, interest expenses on
outstanding indebtedness and recurring capital expenditures and
all dividends to the shareholders necessary to satisfy the REIT
requirements. Sources of capital for future acquisitions,
development and non-recurring capital expenditures, such as major
building renovations and expansions, as well as for scheduled
principal payments, including balloon payments, on the
outstanding indebtedness are expected to be obtained from the
following: (i) excess funds available for distribution, (ii)
working capital reserves, (iii) additional Company or property
financing, (iv) proceeds from the sale of assets, including
outparcels and (v) additional equity raised in the public or
private markets (including the issuance of additional Units
and/or Unit Voting Stock). Accordingly, the Company expects that
it may incur additional indebtedness. In light of current
economic conditions, relative costs of debt and equity capital,
market values of properties, growth and acquisition opportunities
and other factors, the Company may consider an increase or
decrease in its ratio of Company debt to total market
capitalization accordingly.
CAPITAL INVESTMENTS. Brandon TownCenter, the approximately
one million square foot super-regional mall anchored by Burdines,
Dillard's, JCPenney and Sears, and including approximately
360,000 square feet of mall GLA, opened on February 15, 1995.
The Plaza at Brandon TownCenter, the adjacent 243,000 square foot
community center anchored by Service Merchandise and Target,
opened in August 1994. In addition, there are approximately 25
acres of outparcel land at Brandon TownCenter which may be used
for future sale or development. The addition of the 125,000
square foot JCPenney store and various new mall shops at Penn
Square Mall was completed on October 30, 1995. The Company also
owns approximately 8 acres of land adjacent to Service
Merchandise Plaza (formerly The Plaza at Sawmill Place) (a
consolidated venture) which may be used for future sale or
development.
Construction activity at the Company's newest super-regional
mall, Wolfchase Galleria, in Memphis is on time and on budget for
a scheduled opening on February 26, 1997. The anchor tenants
will be Dillard's, Goldsmith's (a division of Federated
Department Stores, Inc.), JCPenney and Sears. Wolfchase Galleria
will also contain approximately 120 retailers, restaurants, a food
court, a major entertainment complex and approximately 5,450
parking spaces. Pre-opening leasing at Wolfchase Galleria has
reached 80%. Leases with a variety of the high-quality nationally-
recognized retailers have already been signed for the scheduled
opening. The Company has also reached several recent agreements
on outparcels at Wolfchase Galleria that will add to the mall's
overall appeal to shoppers in the Memphis retail market. As of
the date of this report, net proceeds from the sale of four
outparcels at Wolfchase Galleria total $4.7 million. The Company
also signed an agreement with Bed Bath and Beyond to lease a
building that the Company constructed under a build to suit lease
on an outparcel and which opened on September 3, 1996. In
connection with this project, the Company acquired, on May 25,
1995, a 137 acre parcel from JMB Partners, a 50% interest in a 30
acre parcel from the Management Company and the remaining 50%
interest in the 30 acre parcel from an unaffiliated third party.
The aggregate acquisition value of such land parcels of $11.4
million was paid in cash and Units, of which $10.0 million is
included in land and $1.4 million is included in construction in
progress in the accompanying Consolidated Balance Sheets at
September 30, 1996 and December 31, 1995. The total construction
in progress related to Wolfchase Galleria at September 30, 1996
was $51.3 million.
The Company's next planned development project after
Wolfchase Galleria will be Citrus Mall in Tampa, Florida.
Burdines, Dillard's, JCPenney and Sears have agreed to be anchor
stores for the project. Citrus Mall is scheduled to open in the
spring of 1999. Currently, the Company owns a 50% interest in the
163 acre development parcel. The Management Company owns the
remaining 50% interest, subject to a purchase option in favor of
the Company. The Company also has a purchase option from JMB
Partners on 68 acres of land across the street from Citrus Mall
which may be used for development of a large community center.
On January 10, 1996, the Company filed a shelf registration
with the Securities and Exchange Commission which was effective
on April 22, 1996, covering an aggregate public offering price of
Preferred Stock, Depository Shares, Common Stock, Warrants and
Rights, of up to $200.0 million. The Company intends to use
proceeds from any such offerings for general corporate purposes,
which may include acquisition and development of regional malls
and community centers, capital improvements to existing
properties and repayment of certain then outstanding secured or
unsecured indebtedness.
<TABLE>
REVIEW OF OPERATIONS
FUNDS FROM OPERATIONS. The chart below shows the calculation of funds from
operations, based upon the new National Association of Real Estate Investment
Trusts ("NAREIT") definition:
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1996 1995 (a) 1996 1995 (a)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income before minority
interest and
extraordinary loss $ 7,181 $ 8,120 $ 18,958 $ 19,442
Plus depreciation and
amortization 4,813 4,593 14,274 13,042
Plus Company's share
of depreciation and
amortization from
unconsolidated
partnerships and the
Management Company 1,077 1,002 3,139 2,999
---------- ---------- ---------- ----------
Total funds from
operations (b) $ 13,071 $ 13,715 $ 36,371 $ 35,483
========== ========== ========== ==========
Company's share of
funds from
operations (c) $ 8,506 $ 8,942 $ 23,670 $ 23,185
========== ========== ========== ==========
<FN>
(a) Restated to present funds from operations based upon the new NAREIT
definition, which excludes the add back of non-real estate depreciation and
amortization, and to reflect the Company's change in accounting for the
Management Company from the cost method to the equity method as more fully
discussed in Note 1 of Notes to Consolidated Financial Statements.
(b) Funds from operations should not be considered as an alternative to net
income or any other GAAP measurement of performance as an indicator of operating
performance or as an alternative to cash flows from operating, investing or
financing activities as a measure of liquidity.
(c) Based upon a weighted average of 21,117,570 and 21,116,434 shares and
Units outstanding for the three and nine months ended September 30, 1996,
respectively, and 21,090,122 and 21,032,806 for the three and nine months ended
September 30, 1995, respectively. Total shares and Units outstanding at
September 30, 1995 and 1996, were 21,090,122 and 21,122,526, respectively.
</TABLE>
<TABLE>
FUNDS AVAILABLE FOR DISTRIBUTION. The chart below shows the calculation of
funds available for distribution:
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1996 1995 (a) 1996 1995 (a)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Total funds from
operations $ 13,071 $ 13,715 $ 36,371 $ 35,483
Plus non-cash effect
of Oakbrook Center
straight-lined ground
rent and related
interest 797 809 2,369 2,402
Less adjustment to
reflect actual cash
received from the
Management Company (32) (2,369) (128) (2,938)
Plus write-off of
assets (b) 167 671 292 787
Less straight-line
rent adjustments (c) (199) (355) (534) (1,004)
---------- ---------- ---------- ----------
Total funds available
for distribution
including other
gains $ 13,804 $ 12,471 $ 38,370 $ 34,730
========== ========== ========== ==========
Company's share of
funds available for
distribution including
other gains (d) $ 8,983 $ 8,129 $ 24,971 $ 22,693
========== ========== ========== ==========
Total funds available
for distribution
excluding other
gains $ 13,196 $ 11,780 $ 37,042 $ 33,375
========== ========== ========== ==========
Company's share of
funds available for
distribution excluding
other gains (d) $ 8,588 $ 7,677 $ 24,107 $ 21,807
========== ========== ========== ==========
<FN>
(a) Restated to present funds available for distribution based upon the new
NAREIT funds from operations definition, which excludes the add back of non-
real estate depreciation and amortization, and to reflect the Company's change
in accounting for the Management Company from the cost method to the equity
method as more fully discussed in Note 1 of Notes to Consolidated Financial
Statements.
(b) Includes the Company's share of unconsolidated partnerships and the
Management Company.
(c) Includes the Company's share of unconsolidated partnerships.
(d) Based upon a weighted average of 21,117,570 and 21,116,434 shares and
Units outstanding for the three and nine months ended September 30, 1996,
respectively, and 21,090,122 and 21,032,806 for the three and nine months
ended September 30, 1995, respectively. Total shares and Units outstanding
at September 30, 1995 and 1996, were 21,090,122 and 21,122,526.
</TABLE>
SALES. Aggregate sales volume at the Company's regional
malls for those mall shops and anchors that report sales have
increased 2.5% to $296 million in the three months ended September
30, 1996 from $288 million in the three months ended September
30, 1995. Mall tenant sales (excluding anchors and movie
theaters) have increased 1.2% to $215 million in the three months
ended September 30, 1996 from $212 million in the same period for
1995. Comparable reported mall tenant sales increased 2.7% in
the nine months ended September 30, 1996 compared to the same
period for 1995.
OCCUPANCY. The mall GLA was 89.0% occupied at September 30,
1996 compared to 89.3% at June 30, 1996 and 91.3% at September
30, 1995. The mall GLA was 92.6% leased at September 30, 1996.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1995
Shopping center revenues increased $3.8 million, or 5.8%, to
$69.3 million in the nine months ended September 30, 1996 from
$65.5 million in the nine months ended September 30, 1995. This
increase was primarily attributable to the increases in shopping
center revenues at Brandon TownCenter, Oakbrook Center and Penn
Square Mall. Minimum rents and recoveries from tenants increased
at Brandon TownCenter due to its opening on February 15, 1995.
Recoveries from tenants increased at Oakbrook Center primarily
due to an increase in recoverable utilities and repairs and
maintenance. Minimum rents and recoveries from tenants increased
at Penn Square Mall primarily due to its expansion completed in
October 1995.
Interest income decreased $.8 million to $1.3 million in the
nine months ended September 30, 1996 from $2.1 million in the
same period for 1995. This decrease was primarily attributable
to a decrease in the average outstanding investments during the
nine months ended September 30, 1996 as compared to the same
period in 1995.
Shopping center expenses, including depreciation and
amortization, increased $1.2 million to $38.8 million in the nine
months ended September 30, 1996 from $37.6 million in the same
period for 1995. This increase was primarily attributable to (i)
an increase in real estate taxes at Brandon TownCenter resulting
from an increase in the assessed value of the property (which are
generally recoverable from tenants); as well as an increase in
other shopping center expenses, including depreciation and
amortization, as a result of its opening on February 15, 1995,
(ii) an increase in repairs and maintenance at Oakbrook Center
(which are generally recoverable from tenants), and (iii) an
increase in depreciation and amortization at Penn Square Mall as
a result of its expansion completed in October 1995. These
increases were partially offset by a decrease in management fees
as a result of the termination of management contracts with the
Management Company for six of the Company's consolidated
investment properties during 1995. New management contracts were
entered into with the Operating Partnership and those fees are
eliminated in consolidation.
Mortgage and other interest decreased $.4 million to $10.4
million in the nine months ended September 30, 1996 from $10.8
million in the same period for 1995. This decrease was primarily
attributable to (i) the paydown on the construction loan at Brandon
TownCenter during the second quarter of 1995 and (ii) an increase
in capitalized interest relative to Wolfchase Galleria; partially
offset by (i) a decrease in capitalized interest at Brandon
TownCenter and (ii) an increase in interest expense relative to
the fundings from the Line.
Income from unconsolidated partnerships increased $.6 million
to $1.4 million in the nine months ended September 30, 1996 from
$.8 million in the same period for 1995. This increase was
primarily attributable to the purchase of an additional 18%
interest in Miami International Mall on April 1, 1996.
Income from the Management Company decreased $3.0 million to
$0.6 million in the nine months ended September 30, 1996 from
$3.6 million in the same period for 1995. This decrease was
primarily attributable to (i) a decrease in management fees as a
result of the termination of management contracts for six of the
Company's consolidated investment properties during 1995, (ii) an
increase in operating expenses at the Management Company and
(iii) an increase in mortgage interest as a result of the
interest on the JMB Realty affiliated debt beginning in May 1996.
Other gains of $1.3 million for the nine months ended
September 30, 1996 represent the gains on sale of two outparcels
of land at Wolfchase Galleria during the second and third
quarters of 1996. Other gains of $1.4 million for the nine
months ended September 30, 1995 represent (i) the $.7 million
gain relative to the sale of the Company's option to purchase a
25% interest in Northpoint (an improved retail property) during
the second quarter of 1995 and (ii) the $.7 million gain relative
to the sale of the Company's option to purchase Woodbury during
the third quarter of 1995.
The extraordinary loss, net of minority interest, of $1.0
million for the nine months ended September 30, 1995 represents
the write-off of deferred financing costs relative to the
repayment of the construction loan at Brandon TownCenter during
the third quarter of 1995.
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1995
Shopping center revenues increased $1.7 million to $24.0
million in the three months ended September 30, 1996 from $22.3
million in the three months ended September 30, 1995. This
increase was primarily attributable to the increase in shopping
center revenues at Brandon TownCenter, Oakbrook Center and Penn
Square Mall. Recoveries from tenants increased at Brandon
TownCenter due to the increase in real estate taxes resulting
from an increase in the assessed value of the property.
Recoveries from tenants increased at Oakbrook Center primarily
due to an increase in recoverable utilities and repairs and
maintenance. Minimum rents and recoveries from tenants increased
at Penn Square Mall primarily due to its expansion completed in
October 1995.
Shopping center expenses, including depreciation and
amortization, increased $.8 million to $13.2 million in the three
months ended September 30, 1996 from $12.4 million in the same
period for 1995. This increase was primarily attributable to (i)
an increase in real estate taxes at Brandon TownCenter resulting
from an increase in the assessed value of the property (which are
generally recoverable from tenants), (ii) an increase in repairs
and maintenance at Oakbrook Center (which are generally
recoverable from tenants) and (iii) an increase in depreciation
and amortization at Penn Square Mall as a result of its expansion
completed in October 1995.
Income from unconsolidated partnerships increased $.3 million
to $.5 million in the three months ended September 30, 1996 from
$.2 million in the same period for 1995. This increase was
primarily attributable to the purchase of an additional 18%
interest in Miami International Mall on April 1, 1996.
Income from the Management Company decreased $2.2 million to
$.1 million in the three months ended September 30, 1996 from
$2.3 million in the same period for 1995. This decrease was
primarily attributable to (i) a decrease in management fees as a
result of the termination of management contracts for six of the
Company's consolidated investment properties during 1995, (ii) an
increase in operating expenses at the Management Company and
(iii) an increase in mortgage interest as a result of the
interest on the JMB Realty affiliated debt beginning in May 1996.
Other gains of $.6 million for the three months ended
September 30, 1996 represent the gain on the sale of an outparcel
of land at Wolfchase Galleria during the third quarter of 1996.
Other gains of $.7 million for the three months ended September
30, 1995 represent the gain relative to the sale of the Company's
option to purchase Woodbury during the third quarter of 1995.
The extraordinary loss, net of minority interest, of $1.0
million for three months ended September 30, 1995 represents the
write-off of deferred financing costs relative to the repayment
of the construction loan at Brandon TownCenter during the third
quarter of 1995.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Stock Certificate is hereby incorporated
by reference to Exhibit 4.1 to the Registrant's Form
10-Q (File No. 1-12278) filed on November 19, 1993
4.2 Indenture by and between USC Oakbrook,
Inc. and Bankers Trust Company is hereby
incorporated by reference to Exhibit 4.2 to the
Registrant's Form 10-K (File No. 1-12278) filed on
March 25, 1994
4.3 Mortgage Note by and between Oakbrook
Urban Venture, L.P. and USC Oakbrook, Inc. is hereby
incorporated by reference to Exhibit 4.3 to the
Registrant's Form 10-K (File No. 1-12278) filed on
March 25, 1994
4.4 Swap Agreement by and between Oakbrook
Urban Venture, L.P. and G.S. Financial Products
International, L.P. is hereby incorporated by
reference to Exhibit 4.4 to the Registrant's Form 10-
K (File No. 1-12278) filed on March 25, 1994
4.5 Promissory Note by and between Santa Ana
Venture and MainPlace Grantor Trust is hereby
incorporated by reference to Exhibit 4.5 to the
Registrant's Form 10-K (File No. 1-12278) filed on
March 25, 1994
4.6 Swap Agreement by and between Santa Ana
Venture and G.S. Financial Products International,
L.P. is hereby incorporated by reference to Exhibit
4.6 to the Registrant's Form 10-K (File No. 1-12278)
filed on March 25, 1994
4.7 Indenture by and between Water Tower
Finance, Inc., Water Tower Joint Venture and First
National Bank of Chicago is hereby incorporated by
reference to Exhibit 4.7 to the Registrant's Form 10-
K (File No. 1-12278) filed on March 25, 1994
4.8 Indenture by and between JMB Retail
Properties Co. (now Urban Retail Properties Co.),
Penn Square Mall Limited Partnership and Norwest
Bank Minnesota, National Association is hereby
incorporated by reference to Exhibit 4.8 to the
Registrant's Form 10-Q (File No. 1-12278) filed on
August 12, 1994
4.9 Guaranty Agreement between Penn Square
Mall Limited Partnership and Norwest Bank Minnesota,
National Association is hereby incorporated by
reference to Exhibit 4.9 to the Registrant's Form 10-
Q (File No. 1-12278) filed on August 12, 1994
4.10 Credit Agreement among Urban Shopping
Centers, L.P., Union Bank of Switzerland (New York
Branch), Morgan Guaranty Trust Company of New York
and the several Lenders is hereby incorporated by
reference to Exhibit 4.11 to the Registrant's Form
10-Q (File No. 1-12278) filed on November 9, 1995
4.11 First Amendment to Indenture by and
between USC Oakbrook, Inc. and Bankers Trust Company
is hereby incorporated by reference to Exhibit 4.11
to the Registrant's Form 10-K (File No. 1-12278)
filed on March 25, 1996
4.12 Swap Agreement by and between Oakbrook
Urban Venture, L.P. and GS Financial Products
International, L.P. is hereby incorporated by
reference to Exhibit 4.12 to the Registrant's Form
10-K (File No. 1-12278) filed on March 25, 1996
4.13 First Amendment to Promissory Note by and
between Santa Ana Venture and MainPlace Grantor
Trust is hereby incorporated by reference to Exhibit
4.13 to the Registrant's Form 10-K (File No. 1-
12278) filed on March 25, 1996
4.14 Construction Loan Agreement among
Wolfchase Galleria Limited Partnership, the several
banks and financial institutions from time to time
parties hereto, as Lenders, and Union Bank of
Switzerland, New York Branch, is hereby incorporated
by reference to Exhibit 4.14 to the Registrant's
Form 10-Q (File No. 1-12278) filed on August 13, 1996
10.1 Second Amended and Restated Agreement of
Limited Partnership of Urban Shopping Centers, L.P.
is hereby incorporated by reference to Exhibit 10.1
to the Registrant's Form 10-Q (File No. 1-12278)
filed on November 19, 1993
10.2 Administrative Services Agreement between
JMB Retail Properties Co. (now Urban Retail
Properties Co.) and JMB Service Bureau Co. is hereby
incorporated by reference to Exhibit 10.2 to the
Registrant's Form 10-Q (File No. 1-12278) filed on
November 19, 1993
10.3 Corporate Services Agreement among the
Registrant, Urban Shopping Centers, L.P. and JMB
Retail Properties Co. (now Urban Retail Properties
Co.) is hereby incorporated by reference to Exhibit
10.3 to the Registrant's Form 10-Q (File No. 1-
12278) filed on November 19, 1993
10.4 JMB Realty Corporation Employee Savings
Plan is hereby incorporated by reference to Exhibit
10.4 to the Registrant's Registration Statement on
Form S-11 (No. 33-64488)
10.5 Retirement Plan for Employees of Amfac,
Inc. and Subsidiaries is hereby incorporated by
reference to Exhibit 10.5 to the Registrant's
Registration Statement on Form S-11 (No. 33-64488)
10.6 Urban Shopping Centers 1993 Option Plan is
hereby incorporated by reference to Exhibit 10.6 to
the Registrant's Form 10-Q (File No. 1-12278) filed
on November 19, 1993
10.7 Non-Competition Agreement between JMB
Realty Corporation and the Registrant is hereby
incorporated by reference to Exhibit 10.7 to the
Registrant's Form 10-Q (File No. 1-12278) filed on
November 19, 1993
10.8 Non-Competition Agreement between JMB
Institutional Realty Corporation and the Registrant
is hereby incorporated by reference to Exhibit 10.8
to the Registrant's Form 10-Q (File No. 1-12278)
filed on November 19, 1993
10.9 Non-Competition Agreement between Neil G.
Bluhm and the Registrant is hereby incorporated by
reference to Exhibit 10.9 to the Registrant's Form
10-Q (File No. 1-12278) filed on November 19, 1993
10.10 Non-Competition Agreement between
Judd D. Malkin and the Registrant is hereby
incorporated by reference to Exhibit 10.10 to the
Registrant's Form 10-Q (File No. 1-12278) filed on
November 19, 1993
10.11 Omnibus Agreement among Urban
Shopping Centers, L.P., JMB Properties Company, JMB
Retail Properties Co. (now Urban Retail Properties
Co.) and the Registrant is hereby incorporated by
reference to Exhibit 10.12 to the Registrant's Form
10-Q (File No. 1-12278) filed on November 19, 1993
10.12 Indemnification Agreement between the
Registrant and its Directors and Officers is hereby
incorporated by reference to Exhibit 10.13 to the
Registrant's Form 10-Q (File No. 1-12278) filed on
November 19, 1993
10.13 Registration Rights and Lock-Up
Agreement between the Registrant and certain
Investors is hereby incorporated by reference to
Exhibit 10.14 to the Registrant's Form 10-Q (File
No. 1-12278) filed on November 19, 1993
10.14 Stockholders Agreement between Center
Partners, Ltd., Urban Investment & Development Co.,
Urban-Water Tower Associates, JMB/Miami Investors,
L.P., Island Holidays, Ltd., Celtic Funding
Corporation and the Registrant is hereby
incorporated by reference to Exhibit 10.15 to the
Registrant's Form 10-Q (File No. 1-12278) filed on
November 19, 1993
10.15 Lease Agreement, dated December 31,
1990, by and between Teachers' Retirement System of
the State of Illinois and LaSalle National Trust,
N.A., as Trustee for Oakbrook Urban Venture, as
amended by the First Amendment to Lease Agreement
and to Restated and Amended Memorandum of Lease is
hereby incorporated by reference to Exhibit 10.16 to
the Registrant's Registration Statement on Form S-11
(No. 33-64488)
10.16 Second Amendment to Lease Agreement
by and between Teachers' Retirement System of the
State of Illinois and LaSalle National Trust, N.A.,
as Trustee for Oakbrook Urban Venture, L.P. is
hereby incorporated by reference to Exhibit 10.17 to
the Registrant's Form 10-Q (File No. 1-12278) filed
on November 19, 1993
10.17 Net Ground Rental Lease Agreement
with respect to Penn Square Mall, as amended by
Amendment of Net Ground Rental Lease and as further
amended by Second Amendment of Net Ground Rental
Lease is hereby incorporated by reference to Exhibit
10.18 to the Registrant's Registration Statement on
Form S-11 (No. 33-64488)
10.18 Ground Lease by and between The
Newhall Land and Farming Company and Valencia Town
Center Associates is hereby incorporated by
reference to Exhibit 10.19 to the Registrant's
Registration Statement on Form S-11 (No. 33-64488)
10.19 Restated Employment Agreement between
Matthew S. Dominski and the Registrant is hereby
incorporated by reference to Exhibit 10.19 to the
Registrant's Form 10-K (File No. 1-12278) filed on
March 25, 1994
10.20 Third Amendment to Lease Agreement by
and between Teachers' Retirement System of the State
of Illinois and LaSalle National Trust, N.A., as
Trustee for Oakbrook Urban Venture, L.P. is hereby
incorporated by reference to Exhibit 10.20 to the
Registrant's Form 10-K (File No. 1-12278) filed on
March 25, 1994
10.21 First Amendment to Second Amended and
Restated Agreement of Limited Partnership of Urban
Shopping Centers, L.P. is hereby incorporated by
reference to Exhibit 10.21 to the Registrant's Form
10-Q (File No. 1-12278) filed on August 9, 1995
10.22 First and Second Amendments to Urban
Shopping Centers 1993 Option Plan are hereby
incorporated by reference to Exhibit 10.22 to the
Registrant's Form 10-Q (File No. 1-12278) filed on
August 9, 1995
10.23 Dissolution Agreement by and among
JMB Income Properties, Ltd. - XIII, IDS/JMB Balanced
Income Growth, Ltd. and Urban Shopping Centers, L.P.
is hereby incorporated by reference to Exhibit 10.23
to the Registrant's Form 10-Q (File No. 1-12278)
filed on May 2, 1996
10.24 Purchase and Sale Agreement by JMB
Income Properties, Ltd. - XIII and Urban Shopping
Centers, L.P. is hereby incorporated by reference to
Exhibit 10.24 to the Registrant's Form 10-Q (File
No. 1-12278) filed on May 2, 1996
27 Financial Data Schedule, which is
submitted electronically to the Securities and
Exchange Commission for information only and not
filed
---------------
Although certain additional long-term debt
instruments of the Registrant have been excluded from
Exhibit 4 above, pursuant to Rule 601(b)(4)(iii), the
Registrant commits to provide copies of such agreements to
the Securities and Exchange Commission upon request.
(b) No reports on Form 8-K were filed during the
third quarter of 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
URBAN SHOPPING CENTERS, INC.
By: ADAM S. METZ
Executive Vice President, Chief
Financial Officer, Treasurer,
Director of Acquisitions and Chief
Accounting Officer
Date: November 13, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person
in the capacity and on the date indicated.
ADAM S. METZ
Executive Vice President, Chief
Financial Officer, Treasurer,
Director of Acquisitions and Chief
Accounting Officer
Date: November 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FINANCIAL STATEMENTS INCLUDED IN ITS REPORT
ON FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000907077
<NAME> URBAN SHOPPING CENTERS, INC.
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
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