<PAGE>
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, 1997.
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/go
Enclosures
<PAGE>
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, 1997 Commission file number 1-12278
URBAN SHOPPING CENTERS, INC.
(Exact name of registrant as specified in its charter)
Maryland 36-3886885
(State of incorporation) (I.R.S. Employer
Identification No.)
900 North Michigan Avenue, Suite 1500,
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 7, 1997 were 17,257,742 and 407,935,
respectively.
<PAGE>
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 21
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 33
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
($000's omitted, except share amounts)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
-------------- --------------
<S> <C> <C>
Investment properties:
Land, including peripheral land
parcels $ 105,279 $ 102,559
Buildings and improvements 841,022 766,847
Equipment, furniture and fixtures 3,217 2,560
Construction in progress 4,882 62,216
-------------- --------------
954,400 934,182
Accumulated depreciation (116,983) (97,558)
-------------- --------------
Investment properties, net of
accumulated depreciation 837,417 836,624
Investments in unconsolidated
partnerships 99,757 15,233
Investment in the Management Company 22,977 15,557
Cash, cash equivalents and short-term
investments 8,371 5,276
Interest, rents and other receivables 19,748 19,926
Deferred expenses and other assets 12,386 11,460
-------------- --------------
$ 1,000,656 $ 904,076
============== ==============
<PAGE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
SEPTEMBER 30, DECEMBER 31,
1997 1996
-------------- --------------
Liabilities:
Mortgage notes payable $ 483,077 $ 439,886
Land sale-leaseback proceeds 75,000 75,000
Deferred lease accrual 18,007 16,252
Accounts payable and other
liabilities 32,922 30,512
Investments in unconsolidated
partnerships 37,856 36,030
Commitments and contingencies
-------------- --------------
Total liabilities 646,862 597,680
Minority interest 136,174 111,733
Stockholders' equity:
Common stock, $.01 par value,
authorized 140,000,000 shares, issued
and outstanding 17,247,742 shares in
1997 and 16,737,279 shares in 1996 172 167
Unit voting stock, $.01 par value,
authorized 5,000,000 shares, issued
and outstanding 407,935 shares in 1997
and 344,057 shares in 1996 4 4
Additional paid-in capital 360,310 326,495
Retained earnings (deficit) (142,866) (132,003)
-------------- --------------
Total stockholders' equity 217,620 194,663
-------------- --------------
$ 1,000,656 $ 904,076
============== ==============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
($000's omitted, except share amounts)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Shopping center
revenues:
Minimum rents $ 23,344 $ 15,047 $ 68,112 $ 44,918
Percentage rents 1,518 1,141 3,738 2,752
Recoveries from
tenants 11,582 7,246 33,225 20,188
Other 1,000 610 2,680 1,405
----------- ----------- ----------- -----------
37,444 24,044 107,755 69,263
Interest income 420 438 1,183 1,301
----------- ----------- ----------- -----------
37,864 24,482 108,938 70,564
----------- ----------- ----------- -----------
Expenses:
Shopping center
expenses 12,503 7,837 36,873 23,064
Mortgage and other
interest 8,740 3,487 23,790 10,443
Ground rent 1,162 1,106 3,559 3,316
Depreciation and
amortization 9,449 5,317 24,505 15,776
General and
administrative 677 552 2,386 2,034
Write-off of assets 47 167 69 292
----------- ----------- ----------- -----------
32,578 18,466 91,182 54,925
----------- ----------- ----------- -----------
<PAGE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
Operating income 5,286 6,016 17,756 15,639
Income from
unconsolidated
partnerships 1,348 450 3,514 1,387
Income (loss) from the
Management Company (16) 107 (389) 604
----------- ----------- ----------- -----------
Income before other
gains, minority
interest and
extraordinary
items 6,618 6,573 20,881 17,630
Other gains 1,852 608 3,673 1,328
Minority interest (3,080) (2,545) (8,620) (6,727)
----------- ----------- ----------- -----------
Income before
extraordinary
items 5,390 4,636 15,934 12,231
Extraordinary items from
consolidated and
unconsolidated
partnerships (net of
minority interest) 3 -- (292) --
----------- ----------- ----------- -----------
Net income $ 5,393 $ 4,636 $ 15,642 $ 12,231
=========== =========== =========== ===========
Income per common and
unit voting common
share:
Before extraordinary
items $ .31 $ .34 $ .92 $ .89
Extraordinary items -- -- (.02) --
----------- ----------- ----------- -----------
Net income $ .31 $ .34 $ .90 $ .89
=========== =========== =========== ===========
Weighted average common
and unit voting common
stock outstanding 17,539,686 13,743,596 17,364,903 13,742,708
=========== =========== =========== ===========
Dividends declared and
paid $ .5075 $ .4950 $ 1.5225 $ 1.4850
=========== =========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
($000's omitted, except share amounts)
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 15,642 $ 12,231
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 24,505 15,776
Write-off of assets 69 292
Provision (recovery) for losses on
accounts receivable 663 (199)
Income from unconsolidated partnerships (3,514) (1,387)
Loss from the Management Company 389 --
Minority interest 8,620 6,727
Deferred lease accrual 1,755 1,756
Extraordinary items 292 --
Other gains (3,673) (1,328)
Other, net (703) (376)
Other changes in assets and liabilities:
Interest, rents and other receivables 1,599 1,622
Deferred expenses and other assets (1,017) (410)
Accounts payable and other liabilities 3,472 2,259
-------------- --------------
Net cash provided by operating
activities 48,099 36,963
-------------- --------------
<PAGE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996
-------------- --------------
Cash flows from investing activities:
Additions to investment properties,
net of change in related payables (33,748) (36,805)
Acquisition of partnership interest (31,400) (9,431)
Acquisition of land parcel (3,388) --
Proceeds from the sale of investment
property, net of selling costs 16,933 --
Proceeds from the sale of development
parcels, net of selling costs 2,296 1,909
Cash distributions from unconsolidated
partnerships and the Management
Company 4,841 5,546
Cash contributions to unconsolidated
partnerships and the Management
Company (9,218) (1,367)
Other, net (812) 257
-------------- --------------
Net cash used in investing activities (54,496) (39,891)
-------------- --------------
Cash flows from financing activities:
Proceeds from issuance of debt, net of
issuance costs 170,756 50,505
Proceeds from issuance of Common Stock
under option plan 4,580 138
Proceeds from issuance of Unit Voting
Stock 1,938 --
Repayment of debt (128,103) (19,800)
Cash distributions to unitholders (11,879) (10,950)
Cash distributions to preferred
unitholders (1,470) --
Dividends paid (26,506) (20,407)
-------------- --------------
Net cash provided by (used in)
financing activities 9,316 (514)
-------------- --------------
Net increase (decrease) in cash and cash
equivalents 2,919 (3,442)
Cash and cash equivalents at beginning of
period 5,151 7,866
-------------- --------------
Cash and cash equivalents at end of
period $ 8,070 $ 4,424
============== ==============
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other
interest, net of amounts capitalized $ 22,491 $ 9,919
============== ==============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
(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, 1996, which are
incorporated by reference in the Company's 1996 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, 1997 and 1996 are not necessarily
indicative of the results to be obtained for the full fiscal year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
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. As of September
30, 1997, the Company which is the sole general partner of the Operating
Partnership, owns an approximate 66.8% interest; JMB Realty Corporation
("JMB Realty"), certain of its affiliates and certain other parties hold
limited partnership interests in the Operating Partnership and own an
approximate 33.2% minority interest. 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"),
Citrus Park Venture, Urban Retail Properties Co. (the "Management Company"),
San Francisco Shopping Centre ("San Francisco Centre") and Copley Place
Associates, LLC ("Copley Place").
Certain amounts in the 1996 financial statements have been reclassified
to conform with the 1997 presentation.
<PAGE>
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, 1997 and 1996, the Company incurred interest of $25,154 and
$12,676, respectively, and capitalized interest of $1,364 and $2,233,
respectively.
Cash and cash equivalents (which aggregated $8,070 and $5,151 at
September 30, 1997 and December 31, 1996, respectively) include a treasury
money market fund which invests principally in U.S. Treasury notes and bills
($7,528 and $2,928 at September 30, 1997 and December 31, 1996, respectively).
Other short-term investments (generally with original maturities of one year
or less) are generally held to maturity and aggregated $301 and $125 at
September 30, 1997 and December 31, 1996, respectively. Cash equivalents and
other short-term investments are held at cost which approximates market.
ACCOUNTING FOR DERIVATIVES
The Company uses interest rate swap agreements as part of its interest
rate risk management strategy. These off-balance sheet derivatives are
classified as synthetic alterations. The criteria that must be satisfied by
synthetic alteration accounting are as follows: (i) the liability to be
converted has exposure to interest rate risk and (ii) the derivative is
designated and effective as a synthetic alteration of the liability.
Accrual accounting is applied for these derivatives treated as synthetic
alterations, and income and expense are recorded as adjustments of interest
expense. Fees, if any, related to these off-balance sheet investment products
are amortized on the interest method over the life of the derivative. If the
balance of the liability falls below that of the derivative, the excess
portion of the derivative is marked to market and the resulting gain or loss
included in income, as applicable. If a derivative is terminated independent
of the underlying debt, the gain or loss is deferred and amortized over the
remaining life of the derivative.
Derivatives that do not satisfy the criteria above would be carried at
market value with changes in market value to be recognized in non-interest
income.
(2) ACQUISITIONS
(a) San Francisco Shopping Centre
On June 17, 1997, the Company made an investment in a partnership for
approximately $31,400 in cash resulting in a preferred 50% interest in San
Francisco Shopping Centre ("San Francisco Centre"). The transaction is
structured so that the Company has the option, after approximately eight
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(2) ACQUISITIONS (CONTINUED)
years, to make an additional investment in the partnership resulting in the
Company owning substantially all of the interests in San Francisco Centre.
Concurrent with the investment, a new first mortgage loan of $73,600 was
placed on the property, of which $61,350 was funded at closing with the
balance of $12,250 to be funded in January 2000. The loan bears effective
interest including fees at LIBOR + .62% and matures on July 1, 2002; however,
it may be extended for three one-year periods. On July 14, 1997, the Company
entered into an eight year interest rate swap agreement thereby fixing the
interest rate at an all-in rate of 6.9%. Subsequent to the end of the third
quarter, $7,819 was paid down on the outstanding balance of $61,350. The
Management Company assumed leasing and management responsibilities at the
property at closing. San Francisco Centre, completed in 1989, is a vertical
shopping center located in downtown San Francisco containing approximately
500,000 square feet of retail space and is anchored by a 312,000 square foot
Nordstrom department store. The center also contains more than 180,000 square
feet of mall GLA occupied by approximately 80 specialty retailers and
restaurants.
(b) Roseville, California
On June 24, 1997, the Company acquired approximately 95 acres of land in
Roseville, California for $2,500 in cash plus the assumption of outstanding
obligations of $888. This land is intended to be the site of the Company's
next planned regional mall development, tentatively scheduled for completion
in the year 2000.
(c) Copley Place
On August 1, 1997, the Company acquired a one-third equity interest in
Copley Place Associates LLC (the "LLC") from JMB Realty in a transaction
valued at $42,333 paid through the issuance of 1,282,828 units of partnership
interest in the Operating Partnership. In connection with the transaction,
JMB Realty also purchased 53,451 shares of Unit Voting Stock from the Company
for $1,764 in cash. The remaining interest in the LLC is owned by an
unaffiliated third party. The Management Company will continue to provide
management and leasing services to the property. Concurrent with this
transaction, the LLC secured financing in the amount of $195,000 which bears
interest at a fixed rate of 7.44% and matures on August 1, 2007. Copley
Place, completed in 1984, is a mixed use property containing 369,000 square
feet of retail space in a two-level mall, four office towers aggregating
842,000 square feet of office space on seven levels rising above the mall, a
three-level, 980-space, below grade parking garage and a two-level, 695-space
parking garage located adjacent to the property. The property is located in
the Back Bay section of Boston, Massachusetts. The retail area includes a
108,000 square foot Neiman Marcus store, approximately 110 specialty
retailers and an eleven-screen movie theatre.
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(2) ACQUISITIONS (CONTINUED)
(d) Citrus Park Venture
Prior to August 1, 1997, the Company and the Management Company each
owned a 50% economic interest in Citrus Park Venture, which owns a 163 acre
land parcel which is the site of the Company's next planned regional mall
development project, Citrus Park Town Center, in Tampa, Florida. Construction
is proceeding on schedule on the regional mall for a scheduled opening in
March 1999. On August 1, 1997, the Company acquired rights to the remaining
50% economic interest in Citrus Park Venture from an affiliate of JMB Realty
in exchange for 243,513 units of limited partnership interest in the Operating
Partnership and 10,146 shares of Unit Voting Stock, valued at $8,212 in the
aggregate. Also on August 1, 1997, the Company exercised its option and
purchased 68 acres of land adjacent to the site for the regional mall from an
affiliate of JMB Realty in exchange for 177,316 shares of Common Stock valued
at $5,741. This land was transferred, through sale and contribution, to
Citrus Park Venture. This land will be used for the development of a
community center, Citrus Park Plaza, scheduled to open in the spring of 1999,
and for other commercial uses.
(3) 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:
Name Property Company's Ownership
- ------------------------ ------------------------- -------------------
Water Tower Joint Water Tower Place, 55% (a)
Venture Chicago, IL
Coral-CS/LTD Coral Square Mall, 50%
Associates Coral Springs, FL
West Dade County Miami International Mall, 40% (b)
Associates Miami, FL
Valencia Town Center Valencia Town Center, 25% (c)
Associates, L.P. Valencia, CA
Citrus Park Venture Tampa, FL 50% (d)
San Francisco Shopping San Francisco Centre,
Centre San Francisco, CA 50% (e)
Copley Place Associates, Copley Place, Boston, MA 33% (f)
LLC
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(3) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS (CONTINUED)
(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. On
February 10, 1997, the Company refinanced $170,000 of indebtedness on Water
Tower Place. The new loan matures on February 1, 1999; however, it may be
extended for two one-year periods. Of the total $170,000, $160,000 bears
interest at LIBOR +1.125% and $10,000 bears interest at LIBOR +1.500%.
(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 development parcel). The Management Company owns the remaining
50% interest in Citrus Park Venture which is subject to a purchase option in
favor of the Company. On August 1, 1997, the Company acquired rights to the
remaining 50% economic interest in Citrus Park Venture. In addition, a bond
offering of $26,700 to fund the roadwork surrounding the property was
completed by the Citrus Park Community Development District (the "CDD") during
the fourth quarter of 1996. The Operating Partnership assisted the CDD in
obtaining the financing for the roadwork by guaranteeing the irrevocable
letter of credit (aggregating approximately $27,050) which supports the bonds.
(e) On June 17, 1997, the Company made an investment in a partnership
resulting in a preferred 50% interest in San Francisco Shopping Centre.
(f) On August 1, 1997, the Company acquired a one-third equity interest in
Copley Place Associates, LLC.
<PAGE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(3) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS (CONTINUED)
Summarized financial information for the unconsolidated partnerships is
presented below.
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
-------------- --------------
<S> <C> <C>
Assets:
Investment properties, net $ 710,890 $ 292,829
Other assets 47,432 29,190
-------------- --------------
Less liabilities:
Mortgage notes payable 570,641 310,800
Other liabilities 31,111 16,484
-------------- --------------
Total capital (deficit) 156,570 (5,265)
Less: Outside partners' capital 94,669 15,532
-------------- --------------
Total investments in unconsolidated
partnerships $ 61,901 $ (20,797)
============== ==============
Total investments in unconsolidated
partnerships are presented in the
accompanying consolidated balance sheets
as follows:
Assets - Investments in unconsolidated
partnerships $ 99,757 $ 15,233
Liabilities - Investments in
unconsolidated partnerships 37,856 36,030
-------------- --------------
$ 61,901 $ (20,797)
============== ===============
</TABLE>
<PAGE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(3) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS (CONTINUED)
Summarized financial information for the unconsolidated partnerships -
continued
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Revenues:
Shopping centers $ 75,063 $ 58,247
Interest income 417 297
Expenses:
Shopping centers (34,640) (26,890)
Mortgage and other interest and ground
rent (21,702) (18,957)
Depreciation and amortization (10,895) (8,505)
-------------- --------------
Income before extraordinary item $ 8,243 $ 4,192
Extraordinary item (228) --
-------------- --------------
Net income $ 8,015 $ 4,192
============== ==============
Company's share of:
Mortgage and other interest and ground
rent $ (9,557) $ (8,062)
Depreciation and amortization (4,635) (3,438)
Income before extraordinary item 3,514 1,387
============== ==============
</TABLE>
<PAGE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(4) INVESTMENT IN THE MANAGEMENT COMPANY
The Company's consolidated 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,
1997 1996
-------------- --------------
<S> <C> <C>
Assets:
Investments in land parcels (a) $ 36,263 $ 38,391
Cash, cash equivalents and short-term
investments 1,632 5,443
Receivables and deferred expenses 14,602 11,346
-------------- --------------
$ 52,497 $ 55,180
============== ==============
Liabilities:
Notes payable (b) $ 70,000 $ 70,000
Accounts payable and other liabilities 4,674 5,095
-------------- --------------
74,674 75,095
Owners' deficit (22,177) (19,915)
-------------- --------------
$ 52,497 $ 55,180
============== ==============
</TABLE>
<PAGE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(4) INVESTMENT IN THE MANAGEMENT COMPANY (CONTINUED)
Summarized financial information for the Management Company - continued
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Revenues $ 26,918 $ 28,926
-------------- --------------
Expenses:
Management, leasing and development
services 23,379 23,109
Mortgage and other interest 4,273 4,037
Land parcels 258 276
Depreciation and amortization 338 320
-------------- --------------
28,248 27,742
-------------- --------------
Operating income (loss) (1,330) 1,184
Income tax benefit (provision) 687 (599)
-------------- --------------
Net income (loss) $ (643) $ 585
============== ==============
</TABLE>
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(4) INVESTMENT IN THE MANAGEMENT COMPANY (CONTINUED)
(a) Includes 50% of the outstanding mortgage loan of an affiliated joint
venture. The mortgage loan, with a 50% face value of $25,750, was acquired
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.
(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 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 certain of 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. In the nine months ended September 30,
1997 and 1996, the Management Company received such reimbursements from the
Operating Partnership of approximately $885 and $447, respectively. In the
nine months ended September 30, 1997 and 1996, management, leasing and
development revenues of approximately $5,330 and $7,487, 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 such
affiliated entities' behalf. Such reimbursements were approximately $11,812
and $11,061 during the nine months ended September 30, 1997 and 1996,
respectively. Additionally, rent expense, including building expenses, paid
by the Management Company to affiliates of JMB Realty during the nine months
ended September 30, 1997 and 1996 were $585 and $656, respectively.
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.
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
($000's omitted, except share amounts)
(5) MORTGAGE NOTES PAYABLE
On June 30, 1997, the Company signed an agreement with a lender for
$80,000 of indebtedness secured by Wolfchase Galleria. The loan bears
interest at 7.80% and matures on June 30, 2007. In connection with the
funding of the new loan, the Company repaid the $41,824 then outstanding
balance on the construction loan at Wolfchase Galleria.
Subsequent to the end of the quarter, the Company refinanced $140,000 of
indebtedness on Oakbrook Center. The new loan was rated AAA/Aaa and bears
interest on a floating rate basis at LIBOR +.20% and matures on November 1,
2004. The interest rate was fixed through maturity at 6.12% through the use
of an interest rate swap.
(6) SALE OF INVESTMENT PROPERTY
On September 18, 1997, the Company sold the Burdines store at Brandon
TownCenter to an affiliate of Burdines for $16,933, net of selling expenses
and recognized a gain of $1,852 for financial reporting purposes. The store
was previously leased by the Company to Burdines.
In 1996 and through the third quarter of 1997, the Company has completed
three outparcel land sales at Wolfchase Galleria for total proceeds, net of
selling expenses, of approximately $4,181 and has recognized gains of $3,149
for financial reporting purposes.
(7) TRANSACTIONS WITH AFFILIATES (not disclosed elsewhere)
Costs and expenses for services provided by the Management Company to
the Company's investment properties, including the Company's share of
unconsolidated investment properties, were as follows:
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1997 1996
-------------- --------------
Property management and leasing
services (a) $ 2,049 $ 2,517
Development services 1,004 842
-------------- --------------
$ 3,053 $ 3,359
============== ==============
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(UNAUDITED)
($000's omitted, except share amounts)
(7) TRANSACTIONS WITH AFFILIATES (not disclosed elsewhere) (CONTINUED)
(a) Management services of $1,137 and $1,054 for the nine months ended
September 30, 1997 and 1996, respectively, provided by the Operating
Partnership to certain consolidated investment properties 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 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 ofsuch 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.
(8) EMPLOYEE BENEFIT PLAN
On May 6, 1997, the shareholders approved the Company's 1996 Incentive
Unit Program (the "Program") which provides for the award of up to 525,000
Incentive Units to officers and key employees of the Company and the
Management Company. Incentive Units may be earned 25% in each of calendar
years 1996 through 1999 subject to the Company achieving annual and
cumulative performance targets in its funds available for distribution for
each year. The determination of whether the performance target for any year
has been achieved is to be made not later than March 31 of the following year
(the "Determination Date"). Awards are subject to vesting over a three-year
period following the Determination Date. The Company recognizes deferred
compensation expense for earned awards as of each year's Determination Date.
Such amounts are amortized to expense over the related vesting periods.
Awards for 525,000 Incentive Units were granted in 1996 and 131,250
Incentive Units were earned for calendar year 1996 concurrent with the
shareholder approval of the Program. The Operating Partnership and the
Management Company have accrued deferred compensation expense related to
the 1996 awards and are amortizing the deferred amounts over the three-year
vesting period.
(9) SUBSEQUENT EVENT
On November 5, 1997, the Company contracted to issue $100,000 in
cumulative convertible redeemable preferred stock ("Preferred Stock") expected
to be issued on or about November 13, 1997. Quarterly dividends on the
Preferred Stock are equal to the greater of (i) $0.50 per share or (ii) the
quarterly dividend then payable on the shares of Common Stock. The Preferred
Stock is convertible into Common Stock at the option of the holder, at a
conversion price of $33.34 per share anytime after August 1998. After six
years the Preferred Stock may be redeemed at the option of the Company for
cash.
<PAGE>
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
$11.1 million in the nine months ended September 30, 1997 from the nine months
ended September 30, 1996. This increase was primarily attributable to (i) an
increase in rental operations as discussed below, (ii) receipt of prepaid
rents primarily at Old Orchard and Wolfchase Galleria, (iii) collection of
presale rents at Old Orchard, and (iv) gift certificate receipts at Old
Orchard, Wolfchase Galleria, and Oakbrook Center (prepaid rents, presale
rents, and gift certificates are all included in accounts payable and other
liabilities in the accompanying consolidated balance sheets).
Net cash flows used in investing activities increased $14.6 million in
the nine months ended September 30, 1997 from the nine months ended September
30, 1996. This increase was primarily attributable to (i) the purchase of a
preferred 50% interest in San Francisco Centre June 17, 1997, (ii) the
purchase of land in Roseville, California on June 24, 1997, (iii) an increase
in cash contributions to Citrus Park Venture, and (iv) a decrease in cash
distributions from Coral Square Mall and Miami International Mall as a result
of cash flow being utilized for renovations. These increases were partially
offset by (i) a decrease in additions to investment properties due to a
decrease in construction activity at Wolfchase Galleria, (ii) the purchase of
an additional 18% interest in Miami International Mall in April 1996, (iv)
proceeds from the sale of the Burdines store at Brandon TownCenter in
September 1997, and (v) an increase in the proceeds from the sale of
development parcels at Wolfchase Galleria in 1997 as compared to 1996.
Net cash flows from financing activities increased $9.8 million in the
nine months ended September 30, 1997 from the nine months ended September 30,
1996. This increase was primarily attributable to (i) additional net fundings
in 1997 from the Company's line of credit and the loans at Wolfchase Galleria
and (ii) an increase in the issuance of common stock and unit voting stock in
1997 as compared to 1996. These increases were partially offset by (i) an
increase in the dividends paid as a result of the additional shares of Common
Stock issued in the fourth quarter 1996 and the first through third quarter
1997 and the increase in the dividend per share paid in the first quarter
1997 and (ii) an increase in the distributions paid as result of the issuance
of common and preferred units in connection with the Company's recent
acquisitions and the increase in the distribution per Unit paid in the first
quarter 1997.
At September 30 1997, the Company had cash, cash equivalents and
short-term investments of approximately $8.4 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 4, 1997, Urban paid $8.9 million to shareholders as a
dividend of $.5075 per share representing its second quarter 1997 dividend.
On September 4, 1997, the Operating Partnership paid $4.5 million to its
limited partners as a distribution of $.5075 per Unit representing its second
quarter 1997 distribution.
<PAGE>
CAPITALIZATION. At September 30, 1997, the Company's debt (including the
Company's share of debt of unconsolidated partnerships and the Management
Company) totaled $774.7 million of which $750.4 million is fixed rate debt
(including debt fixed through interest rate swap agreements) and $24.3
million is floating rate debt. On August 1, 1997 the Company acquired a one-
third equity interest in Copley Place. Concurrent with the acquisition, the
LLC secured financing for $195.0 million which bears interest at a fixed rate
of 7.44% and matures on August 1, 2007. On June 17, 1997, the Company made
an investment in a partnership resulting in a preferred 50% interest in San
Francisco Centre. Concurrent with the investment, a new first mortgage loan
of $73.6 million was placed on the property, of which $61.4 million was
outstanding at September 30, 1997. Subsequent to the end of the third
quarter, $7.8 million was paid down on the outstanding balance. The loan
bears effective interest including fees at LIBOR + .62% and matures on July
1, 2002; however, it may be extended for three one-year periods. On July 14,
1997, the Company entered into an eight year interest rate swap agreement
thereby fixing the interest rate at an all-in rate of 6.9%. On December 18,
1996, the Company acquired Old Orchard subject to $159.8 million in property
debt. On November 6, 1996, the Company entered into an agreement with a
lender for a one year $5.0 million unsecured revolving line of credit, which
subsequent to the end of the quarter was extended to December 5, 1997. As of
September 30, 1997, no amounts were outstanding on this line of credit. On
June 30, 1997, the Company signed an agreement with a lender for $80.0 million
of indebtedness secured by Wolfchase Galleria. The loan bears interest at
7.8% and matures on June 30, 2007. In connection with the funding on the new
loan, the Company repaid the $41.8 million then outstanding balance on the
construction loan at Wolfchase Galleria. 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"). As of September 30, 1997,
$24.3 million was outstanding. On February 10, 1997, the Company refinanced
the Water Tower Place $170.0 million of indebtedness. The new loan matures
on February 1, 1999; however, it may be extended for two one-year periods.
Of the total $170.0 million, $160.0 million bears interest at LIBOR + 1.125%
and $10.0 million bears interest at LIBOR + 1.500%. To date, the Company
entered into six separate unsecured interest rate swap agreements for an
aggregate amount of $93.5 million in order to hedge exposure on a portion of
its floating rate indebtedness. Subsequent to the end of the quarter, the
Company refinanced the Oakbrook Center $140.0 million of indebtedness. The
new loan was rated AAA/Aaa and bears interest on a floating rate basis at
LIBOR +.20% and matures on November 1, 2004. The interest rate was fixed
through maturity at 6.12% through the use of an interest rate swap.
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, 1997, 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 the Company and of partnership
interests in the Operating Partnership not held by the Company, plus Company
debt) was approximately 47%, as illustrated by the table at the end of
Liquidity and Capital Resources. 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).
On November 25, 1996, the Company completed an offering of 3,000,000
shares of Common Stock under a shelf registration declared effective by the
Securities and Exchange Commission on April 22, 1996 (for up to $200.0
<PAGE>
million). On December 12, 1996, an overallotment option was exercised for an
additional 225,000 shares of Common Stock. Net proceeds from the sale of
these shares, after underwriter's discount, was $80.6 million. The net
proceeds after deducting transaction costs were used to fund a portion of the
December 18, 1996 acquisition of Old Orchard and to reduce outstanding
borrowings under the Company's Line. The remaining balance outstanding on
this shelf registration is $119.4 million.
On November 5, 1997, the Company contracted to issue $100.0 million in
cumulative convertible redeemable preferred stock ("Preferred Stock") expected
to be issued on or about November 13, 1997. Quarterly dividends on the
Preferred Stock are equal to the greater of (i) $0.50 per share or (ii) the
quarterly dividend then payable on the shares of Common Stock. The Preferred
Stock is convertible into Common Stock at the option of the holder, at a
conversion price of $33.34 per share anytime after August 1998. After six
years the Preferred Stock may be redeemed at the option of the Company for
cash.
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. On September 18, 1997, the Company sold the Burdines
store at Brandon TownCenter to an affiliate of Burdines for total proceeds,
net of selling expenses, of $16.9 million and recognized a gain of $1.9
million for financial reporting purposes.
On August 1, 1997, the Company acquired a one-third equity interest in
Copley Place from JMB Realty in a transaction valued at $42.3 million paid
through the issuance of 1,282,828 units of partnership interest in the
Operating Partnership. In connection with the transaction, JMB Realty also
purchased 53,451 shares of Unit Voting Stock from the Company for $1.8 million
in cash. The remaining interest in the LLC is owned by an unaffiliated third
party. The Management Company will continue to provide management and leasing
services to the property. Concurrent with this transaction, the LLC secured
financing in the amount of $195.0 million which bears interest at a fixed rate
of 7.44% and matures on August 1, 1997. Copley Place, completed in 1984, is a
mixed use property containing 369,000 square feet of retail space in a two-
level mall, four office towers aggregating 842,000 square feet of office space
on seven levels rising above the mall, a three-level, 980-space, below grade
parking garage and a two-level, 695-space parking garage located adjacent to
the property. The property is located in the Back Bay section of Boston,
Massachusetts. The retail area includes a 108,000 square foot Neiman Marcus
store, approximately 110 specialty retailers and an eleven-screen movie theatre.
<PAGE>
On June 17, 1997, the Company made an investment in a partnership
resulting in a preferred 50% interest in San Francisco Centre for $31.4
million in cash. Concurrent with the investment, a new first mortgage loan
of $73.6 million was placed on the property, of which $61.4 million was
outstanding at September 30, 1997. Subsequent to the end of the quarter,
$7,819 was paid down on the outstanding balance. San Francisco Centre is a
vertical shopping center located in downtown San Francisco. San Francisco
Centre contains approximately 500,000 square feet of retail space and is
anchored by a 312,000 square foot Nordstrom department store. The center
also contains more than 180,000 square feet of mall GLA occupied by
approximately 80 specialty retailers and restaurants.
On December 18, 1996, the Company acquired Old Orchard for $78.6 million
in cash prior to prorations and the issuance of $28.0 million in preferred
units in the Operating Partnership, subject to $159.8 million of existing
indebtedness. In connection with the issuance of the preferred units, the
Company issued $1.1 million in Unit Voting Stock. Old Orchard is an open air
regional shopping center located in Skokie, Illinois. Old Orchard contains
1.7 million square feet of retail space and is anchored by Bloomingdale's,
Lord & Taylor, Marshall Field's, Nordstrom and Saks Fifth Avenue. In
addition, Old Orchard contains approximately 120 other stores, theaters and
restaurants. Old Orchard includes approximately 675,000 square feet of mall
GLA and contains parking for over 7,500 vehicles and approximately 60,000
square feet of office space.
The Company's newest super-regional mall development, Wolfchase Galleria,
in Memphis, opened on February 26, 1997. The anchor tenants are Dillard's,
Goldsmiths's (a division of Federated Department Stores, Inc.), JCPenney and
Sears. Wolfchase Galleria also contains approximately 120 retailers,
restaurants, a food court, a major entertainment complex and approximately
5,450 parking spaces. Wolfchase Galleria was approximately 94% leased at
opening. The Company has also sold five outparcels at Wolfchase Galleria to
users that the Company believes add to the mall's overall appeal to shoppers
in the Memphis retail market. As of September 30, 1997, net proceeds from
the sale of these outparcels totaled $7.0 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. There are approximately 25 acres of outparcel land
remaining at Wolfchase Galleria for future sale or development. Total costs
of $94.7 million have been incurred as of September 30, 1997, for the
acquisition of land (including outparcels) and subsequent development of
Wolfchase Galleria and Bed Bath and Beyond, of which $8.9 million is included
in land, $84.4 million is included in buildings and improvements and equipment,
furniture and fixtures and the remainder is included in construction in
progress in the accompanying consolidated balance sheet.
The Company's next planned development project after Wolfchase Galleria
is the 1.2 million square foot Citrus Park Town Center ("Citrus Park") in
Tampa, Florida. Burdines, Dillard's, JCPenney and Sears have agreed to be
anchor stores for the project. Ground has been broken for Citrus Park and
construction is proceeding on schedule for a scheduled opening in March of
1999. In addition, a 450,000 square foot community center opposite the
regional mall, Citrus Park Plaza, is tentatively scheduled to open in the
spring of 1999. Prior to August 1, 1997, the Company and the Management
Company each owned a 50% economic interest in Citrus Park Venture, which owns
a 163 acre land parcel which is the site for the regional mall. On August
1, 1997, the Company acquired rights to the remaining 50% economic interest
in Citrus Park Venture from an affiliate of JMB Realty in exchange for
243,513 units of limited partnership interest in the Operating Partnership
<PAGE>
and 10,146 shares of Unit Voting Stock, valued at $8.2 million in the
aggregate. Also on August 1, 1997, the Company exercised its option and
purchased 68 acres of land adjacent to the site for the regional mall from
an affiliate of JMB Realty in exchange for 177,316 shares of Common Stock
valued at $5.7 million. This land was then sold and contributed down to
Citrus Park Venture. This land will be used for development of a community
center, Citrus Park Plaza, scheduled to open in the fall of 1998, and for
other commercial uses. In addition, a bond offering of $26.7 million to fund
the roadwork surrounding the property was completed by the Citrus Park
Community Development District (the "CDD") during the fourth quarter of 1996.
The Operating Partnership assisted the CDD in obtaining the financing for the
roadwork by guaranteeing the irrevocable letter of credit (aggregating $27.1
million) which supports the bonds.
On September 18, 1997, the Company filed an additional shelf registration
with the Securities and Exchange Commission declared effective on October 20,
1997, covering an aggregate public offering price, of Preferred Stock and
Common Stock, of up to $250.0 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.
Certain statements set forth herein contain forward-looking statements,
including, without limitation, statements relating to the timing and
anticipated capital expenditures of the Company's development progress and
acquisitions. Although the Company believes that the expectations reflected
in such forward-looking statements are based on reasonable assumptions, the
actual results may differ materially from that set forth in the forward-
looking statements. Certain factors that might cause such differences include
general economic conditions, local real estate conditions, construction delays
due to the unavailability of construction materials, weather conditions or
other delays beyond the control of the Company. Consequently, such forward-
looking statements should be regarded solely as reflections of the Company's
current operating and development and acquisition plans and estimates. These
plans and estimates are subject to revision from time to time as additional
information becomes available, and actual results may differ from those
indicated in the referenced statements.
<PAGE>
<TABLE>
<CAPTION>
100%
BALANCE PRO RATA
OF SHARE OF
($000's omitted, ANNUAL MORTGAGE MORTGAGE
except share MATURITY INTEREST NOTES OWNERSHIP NOTES
amounts) DATE RATE PAYABLE INTEREST PAYABLE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated
Entities:
Old Orchard Sep. 2000 8.5269%(1) $ 158,889 100.0% $ 158,889
Oakbrook Center Oct. 2000 6.0751%(2) 140,000 100.0% 140,000
MainPlace Oct. 1998 5.4066% 80,000 100.0% 80,000
Operating
Partnership Apr. 2000(3) 6.4750%(3) 24,300 100.0% 24,300
Wolfchase Galleria Jun. 2007 7.8000% 79,888 100.0% 79,888
- -------------------------------------------------------------------------------
483,077 483,077
Unconsolidated
Entities: (4)
Water Tower Place Feb. 1999(5) (5) 170,000 55.0% 93,500
Coral Square Mall Dec. 2000 7.4000% 53,300 50.0% 26,650
Miami International
Mall Dec. 2003 6.9100% 47,135 40.0% 18,854
San Francisco
Centre Jul. 2002(6) 6.9045% 61,350 50.0% 30,675
Copley Place Aug. 2007 7.4400% 194,854 33.3% 64,951
Management Company Aug. 2001 7.5400% 51,000 95.0% 48,450
Management Company Sep. 2001 7.0000% 9,000 95.0% 8,550
- -------------------------------------------------------------------------------
291,630
- -------------------------------------------------------------------------------
Company debt $ 774,707
- -------------------------------------------------------------------------------
Convertible preferred
units $ 28,000
- -------------------------------------------------------------------------------
Market value of equity
interests as of September
30, 1997, based upon
26,427,963 shares/Units
at $32.00 per share $ 845,695
- -------------------------------------------------------------------------------
Total market
capitalization $1,648,402
- -------------------------------------------------------------------------------
Company debt to total
market capitalization 47%
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Mortgage consists of two notes, one with a balance of $104.3 million
which bears interest at 9.09% and a second with a balance of $54.5 million
which bears interest at 7.45%. Interest rate shown is a weighted average.
(2) Of the $140.0 million of total debt, $58.0 million is subject to a
fixed rate of 5.856% and $82.0 million is subject to a fixed rate of 6.23%.
Interest rate shown is a weighted average. Subsequent to the end of the
quarter, the Oakbrook Center indebtedness was refinanced. The new loan bears
interest at a fixed rate of 6.12% (thru an interest rate swap agreement) and
matures on November 1, 2004.
(3) Represents $24.3 million outstanding under the Company's $90.0
million secured revolving line of credit. The line of credit, subject to
lenders' approval, may be extended for an additional one or two year period
and is subject to a floating rate of .85% over LIBOR which was reduced from
1.42% over LIBOR during the second quarter of 1997. In addition, the
original maturity date was extended from July 31, 1998 to April 30, 2000.
(4) Excludes Valencia Town Center as the Company is currently not
entitled to any cash distributions until the outside partner has received a
return on and of its contributions to the partnership.
(5) On February 10, 1997, the Water Tower Place indebtedness was
refinanced. The new loan matures on February 1, 1999; however, it may be
extended for two one-year periods. Of the total $170.0 million, $160.0
million bears interest at LIBOR + 1.125% and $10.0 million bears interest at
LIBOR + 1.500%.
(6) Loan matures on July 1, 2002; however, it may be extended for three
one-year periods. Subsequent to the end of the quarter, $7.8 million was paid
down on the outstanding balance of $61.4 million.
<PAGE>
<TABLE>
REVIEW OF OPERATIONS
FUNDS FROM OPERATIONS. Funds from the 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. The
chart below shows the calculation of funds from operations, based upon the
National Association of Real Estate Investment Trusts ("NAREIT") definition:
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Income before minority
interest and
extraordinary items $ 8,470 $ 7,181 $ 24,554 $ 18,958
Plus depreciation and
amortization 8,883 4,813 22,622 14,274
Plus the Company's
share of depreciation
and amortization from
unconsolidated
partnerships and the
Management Company 2,077 1,077 4,324 3,139
Less preferred unit
distribution (490) -- (1,470) --
----------- ----------- ----------- -----------
Total funds from
operations $ 18,940 $ 13,071 $ 50,030 $ 36,371
=========== =========== =========== ===========
Company's share of
funds from
operations (a) $ 12,861 $ 8,506 $ 34,741 $ 23,670
=========== =========== =========== ===========
<FN>
(a) Based upon a weighted average of 25,829,715 and 25,006,649 common
shares and units outstanding for the three and nine months ended September
30, 1997, respectively and 21,117,570 and 21,116,434 for the three and nine
months ended September 30, 1996. Total common shares and units outstanding
at September 30, 1997 and 1996, were 26,427,963 and 21,122,526, respectively.
</TABLE>
<PAGE>
<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,
------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total funds from
operations $ 18,940 $ 13,071 $ 50,030 $ 36,371
Plus non-cash effect of
Oakbrook Center
straight-lined ground
rent and related
interest 837 797 2,488 2,369
Plus (less) adjustment
to reflect actual cash
received from the
Management Company (9) (32) 313 (128)
Plus write-off of
assets (a) 47 167 69 292
Less straight-line rent
adjustments (a) (53) (199) (799) (534)
----------- ----------- ----------- -----------
Total funds available
for distribution
including other gains 19,762 13,804 52,101 38,370
Less other gains (1,852) (608) (3,673) (1,328)
----------- ----------- ----------- -----------
Total funds available
for distribution
excluding other gains $ 17,910 $ 13,196 $ 48,428 $ 37,042
=========== =========== =========== ===========
Company's share of
funds available for
distribution
including
other gains (b) $ 13,419 $ 8,983 $ 36,180 $ 24,971
=========== =========== =========== ===========
Company's share of
funds available for
distribution
excluding
other gains (b) $ 12,162 $ 8,588 $ 33,629 $ 24,107
=========== =========== =========== ===========
<FN>
(a) Includes the Company's share of unconsolidated partnerships.
(b) Based upon a weighted average of 25,829,715 and 25,006,649 common shares
and units outstanding for the three and nine months ended September 30, 1997,
respectively and 21,117,570 and 21,116,434 for the three and nine months ended
September 30, 1996. Total common shares and units outstanding at September
30, 1997 and 1996, were 26,427,963 and 21,122,526, respectively.
</TABLE>
<PAGE>
SALES. Aggregate sales volume at the Company's regional malls for those
mall shops and anchors that report sales have increased 14.2% to $466 million
in the three months ended September 30, 1997 from $409 million in the three
months ended September 30, 1996. Mall tenant sales (excluding anchors and
movie theaters) have increased 17.6% to $354 million in the three months
ended September 30, 1997 from $301 million in the same period for 1996.
Comparable reported mall tenant sales increased 3.1% in the nine months
ended September 30, 1997 compared to the same period for 1996. Sales per
square foot for the rolling twelve months ended September 30, 1997 were $370
compared to $351 for the twelve months ended June 30, 1997 and $347 for the
twelve months ended September 30, 1996. Excluding recent acquisitions (Old
Orchard, San Francisco Centre and Copley Place), sales per square foot for
the rolling twelve months ended September 30, 1997 were $355. All sales per
square foot figures exclude Wolfchase Galleria. Sales per square foot were
calculated in accordance with the International Council of Shopping Centers
definition.
OCCUPANCY. The mall GLA was 91.5% occupied at September 30, 1997 as
compared to 91.5% at June 30, 1997 and 89.0% at September 30, 1996. The mall
GLA was 94.3% leased at September 30, 1997.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
Shopping center revenues increased $38.5 million, to $107.8 million in
the nine months ended September 30, 1997 from $69.3 million in the nine months
ended September 30, 1996. This increase was primarily attributable to the
increase in shopping center revenues at Old Orchard, Wolfchase Galleria, Penn
Square Mall, Brandon TownCenter, and Oakbrook Center. Minimum rents and
recoveries increased as a result of the Company's acquisition of Old Orchard
on December 18, 1996. Minimum rents and recoveries increased at Wolfchase
Galleria as a result of its opening on February 26, 1997. Minimum rents
increased at Penn Square Mall, Brandon TownCenter, and Oakbrook Center as a
result of an increase in average occupancy and rents in 1997.
Shopping center expenses, including depreciation and amortization,
increased $22.6 million to $61.4 million in the nine months ended September
30, 1997 from $38.8 million in the same period for 1996. This increase was
primarily attributable to an increase in shopping center expenses, including
depreciation and amortization as a result of the Company's acquisition of Old
Orchard on December 18, 1996 and at Wolfchase Galleria as a result of its
opening on February 26, 1997.
Mortgage and other interest increased $13.4 million to $23.8 million in
the nine months ended September 30, 1997 from $10.4 million in the same period
for 1996. This increase was primarily attributable to an increase in interest
expense as a result of the Company's acquisition of Old Orchard on December
18, 1996 and at Wolfchase Galleria as a result of its opening on February 26,
1997.
General and administrative expenses increased $.4 million to $2.4 million
in the nine months ended September 30, 1997 from $2.0 million in the same
period for 1996 as a result of additional compensation related to the
Company's Incentive Unit Program.
<PAGE>
Income from unconsolidated partnerships increased $2.1 million to $3.5
million in the nine months ended September 30, 1997 from $1.4 million in the
same period for 1996. This increase was primarily attributable to (i) a
decrease in interest expense at Water Tower Place as a result of the February
10, 1997 refinancing and (ii) the purchase of an additional 18% interest in
Miami International Mall on April 1, 1996.
Income from the Management Company decreased $1.0 million to a $.4
million loss in the nine months ended September 30, 1997 from $.6 million in
income in the same period for 1996. This decrease was primarily attributable
to a decrease in management fees resulting from the net decrease in management
contracts, including Old Orchard, which subsequent to the Company's
acquisition on December 18, 1996, is being managed by the Operating
Partnership, and an increase in interest expense as a result of the $9.0
million of indebtedness accruing interest at 7.0% commencing in late May 1996;
partially offset by a decrease in income taxes as a result of the decrease in
operating income.
Other gains of $3.7 million for the nine months ended September 30, 1997
represent (i) the $1.8 million gain relative to the sale of outparcels of
land at Wolfchase Galleria during the second quarter of 1997 and (ii) the
$1.9 million gain relative to the sale of the Burdines store at Brandon
TownCenter during the third quarter of 1997. Other gains of $1.3 million for
the nine months ended September 30, 1996 represent the gains on sale of
outparcels of land at Wolfchase Galleria.
The extraordinary items (net of minority interest) of $.3 million in 1997
resulted from the write-off of deferred expenses and loan fees related to
(i) repayment of debt at Water Tower Place and (ii) repayment of the
construction loan at Wolfchase Galleria.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
Shopping center revenues increased $13.4 million to $37.4 million in the
three months ended September 30, 1997 from $24.0 million in the three months
ended September 30, 1996. This increase was primarily attributable to the
increase in shopping center revenues at Old Orchard, Wolfchase Galleria, Penn
Square Mall and Oakbrook Center. Minimum rents and recoveries increased as a
result of the Company's acquisition of Old Orchard on December 18, 1996.
Minimum rents and recoveries from tenants increased at Wolfchase Galleria as a
result of its opening on February 26, 1997. Minimum rents increased at Penn
Square Mall and Oakbrook Center as a result of an increase in average
occupancy and rents in 1997.
Shopping center expenses, including depreciation and amortization,
increased $8.8 million to $22.0 million in the three months ended September
30, 1997 from $13.2 million in the same period for 1996. This increase was
primarily attributable to an increase in shopping center expenses, including
depreciation and amortization, as a result of the Company's acquisition of
Old Orchard on December 18, 1996 and at Wolfchase Galleria as a result of its
opening on February 26, 1997.
Mortgage and other interest increased $5.2 million to $8.7 million in
the three months ended September 30, 1997 from $3.5 million in the same
period for 1996. This increase was primarily attributable to an increase in
interest expense as a result of the Company's acquisition of Old Orchard on
December 18, 1996 and at Wolfchase Galleria as a result of its opening on
February 26, 1997.
<PAGE>
General and administrative expenses increased $.1 million to $.7 million
in the three months ended September 30, 1997 from $.6 million in the same
period for 1996 as a result of additional compensation related to the
Company's Incentive Unit Program.
Income from unconsolidated partnerships increased $.8 million to $1.3
million in the three months ended September 30, 1997 from $.5 million in the
same period for 1996. This increase was primarily attributable to the a
decrease in interest expense at Water Tower Place as a result of the
February 10, 1997 refinancing.
Other gains of $1.9 million for the three months ended September 30, 1997
represent the sale of the Burdines store at Brandon TownCenter during the
third quarter 1997. 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.
ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
During the first half of 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128, "Earning Per
Share." The statement requires the presentation of basic and diluted earnings
per share for companies with other than simple capital structures. The
statement is effective for financial statements for both interim and annual
periods ending after December 31, 1997 and early application is not permitted.
For the three and nine months ended September 30, 1997 basic and diluted
income per share would have approximated income per common and unit voting
common share (as presented in the accompanying statements of operations).
<PAGE>
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 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
4.5 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
4.6 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
4.7 Fourth Amendment to Loan Agreement by and among ZML-Old Orchard
Limited Partnership, American National Bank and Trust Company
of Chicago, The Prudential Insurance Company of America and
Mellon Bank, N.A. is hereby incorporated by reference to Exhibit
4.7 to the Registrant's Form 10-K (File No. 1-12278) filed on
March 31, 1997
4.8 Mortgage, Security Agreement, Assignment of Leases and Rents and
Fixture Filing dated as of February 10, 1997 made by LaSalle
National Trust, N.A. and Water Tower Joint Venture to and with
Lehman Brothers Holdings Inc. is hereby incorporated by reference
to Exhibit 4.8 to the Registrant's Form 10-Q (File No. 1-12278)
filed on May 12, 1997
4.9 Promissory Note A dated as of February 10, 1997 by and between
Water Tower Joint Venture and Lehman Brothers Holdings Inc. is
hereby incorporated by reference to Exhibit 4.9 to the
Registrant's Form 10-Q (File No. 1-12278) filed on May 12, 1997
4.10 Promissory Note B is dated as of February 10, 1997 by and between
Water Tower Joint Venture and Lehman Brothers Holdings Inc. is
hereby incorporated by reference to Exhibit 4.10 to the
Registrant's Form 10-Q (File No. 1-12278) filed on May 12, 1997
<PAGE>
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 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
10.3 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)
10.4 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)
10.5 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
10.6 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
10.7 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
10.8 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
10.9 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
10.10 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
10.11 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
10.12 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
<PAGE>
10.13 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
10.14 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)
10.15 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
10.16 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)
10.17 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)
10.18 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
10.19 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
10.20 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
10.21 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
10.22 Urban Shopping Centers 1996 Incentive Unit Program is hereby
incorporated by reference to Exhibit 10.1 to the Registrant's
Form 8-K filed on November 25, 1996
<PAGE>
10.23 Second Amendment to Second Amended and Restated Agreement of
Limited Partnership of Urban Shopping Centers, L.P. is hereby
incorporated by reference to Exhibit 10.23 to the Registrant's
Form 10-K (File No. 1-12278) filed on March 31, 1997
10.24 Agreement for Purchase and Sale of Partnership Interest by and
between ZML-00 Associates Limited Partnership, Urban Shopping
Centers, L.P., USC Old Orchard, Inc., and H. Rigel Barber,
Gary A. Nickele and Jeffery A. Gluskin, as owner trustees of
the Old Orchard Trust, is hereby incorporated by reference to
Exhibit 10.24 to the Registrant's Form 10-K (File No. 1-12278)
filed on March 31, 1997
10.25 Amended and Restated Agreement of Limited Partnership of Old
Orchard Urban Limited Partnership by and between USC Old
Orchard, Inc. and Urban Shopping Centers, L.P. is hereby
incorporate by reference to Exhibit 10.25 to the Registrant's
Form 10-K (File No. 1-12278) filed on March 31, 1997
10.26 Third Amendment to Urban Shopping Centers 1993 Option Plan is
hereby incorporated by reference to Exhibit 10.26 to the
Registrant's Form 10-Q (File No. 1-12278) filed on May 12, 1997
27.1 Financial Data Schedule
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.
<PAGE>
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 12, 1997
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 12, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FINANCIAL STATEMENTS INCLUDED IN ITS REPORT
ON FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000907077
<NAME> URBAN SHOPPING CENTERS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,371
<SECURITIES> 0
<RECEIVABLES> 19,748
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28,119
<PP&E> 954,400
<DEPRECIATION> (116,983)
<TOTAL-ASSETS> 1,000,656
<CURRENT-LIABILITIES> 32,922
<BONDS> 483,077
0
0
<COMMON> 172
<OTHER-SE> 217,448
<TOTAL-LIABILITY-AND-EQUITY> 1,000,656
<SALES> 107,755
<TOTAL-REVENUES> 108,938
<CGS> 0
<TOTAL-COSTS> 61,378
<OTHER-EXPENSES> 6,014
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,790
<INCOME-PRETAX> 17,756
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,934
<DISCONTINUED> 0
<EXTRAORDINARY> (292)
<CHANGES> 0
<NET-INCOME> 15,642
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
