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 June 30, 1998 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 August 7, 1998 were 17,335,634 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 . 14
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . 24
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . 25
Item 7A. Quantitative and Qualitative Disclosures about
Market Risk . . . . . . . . . . . . . . . . . . 28
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
($000's omitted, except share amounts)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
Investment properties:
Land, including peripheral land parcels. . . . . . . . . . . . . . $ 152,913 $ 152,913
Buildings and improvements . . . . . . . . . . . . . . . . . . . . 1,075,569 1,072,673
Equipment, furniture and fixtures. . . . . . . . . . . . . . . . . 3,219 3,297
Construction in progress . . . . . . . . . . . . . . . . . . . . . 12,943 6,025
------------ -----------
1,244,644 1,234,908
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . (144,462) (125,594)
------------ -----------
Investment properties, net of accumulated depreciation . . . . . 1,100,182 1,109,314
Investments in unconsolidated partnerships . . . . . . . . . . . . . 130,713 118,800
Investment in the Management Company . . . . . . . . . . . . . . . . 16,100 15,058
Cash, cash equivalents and short-term investments. . . . . . . . . . 1,267 1,268
Interest, rents and other receivables. . . . . . . . . . . . . . . . 19,216 21,096
Deferred expenses and other assets . . . . . . . . . . . . . . . . . 16,258 15,440
------------ -----------
$ 1,283,736 $ 1,280,976
============ ===========
<PAGE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
JUNE 30, DECEMBER 31,
1998 1997
------------- -----------
Liabilities:
Mortgage notes payable . . . . . . . . . . . . . . . . . . . . . . $ 675,315 $ 666,908
Land sale-leaseback proceeds . . . . . . . . . . . . . . . . . . . 75,000 75,000
Deferred lease accrual . . . . . . . . . . . . . . . . . . . . . . 19,663 18,593
Accounts payable and other liabilities . . . . . . . . . . . . . . 42,778 38,538
Investments in unconsolidated partnerships . . . . . . . . . . . . 40,863 39,665
Commitments and contingencies
----------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . 853,619 838,704
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . 128,406 132,616
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized,
issued and outstanding 2,999,400 shares in 1998 and 1997
(liquidation preference of $100,000) . . . . . . . . . . . . . . 30 30
Common stock, $.01 par value, authorized 140,000,000 shares,
issued and outstanding 17,335,634 shares in 1998 and
17,259,408 shares in 1997. . . . . . . . . . . . . . . . . . . . 173 173
Unit voting stock, $.01 par value, authorized 5,000,000 shares,
issued and outstanding 407,935 shares in 1998 and 1997 . . . . . 4 4
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . 461,392 459,738
Retained earnings (deficit). . . . . . . . . . . . . . . . . . . . (159,888) (150,289)
------------ -----------
Total stockholders' equity . . . . . . . . . . . . . . . . 301,711 309,656
------------ -----------
$ 1,283,736 $ 1,280,976
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
($000's omitted, except share amounts)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Shopping center revenues:
Minimum rents. . . . . . . . . . . . . . . . $ 29,496 $ 23,294 $ 58,852 $ 44,768
Percentage rents . . . . . . . . . . . . . . 1,449 1,252 2,692 2,220
Recoveries from tenants. . . . . . . . . . . 15,280 11,331 30,174 21,643
Other. . . . . . . . . . . . . . . . . . . . 1,202 1,102 2,228 1,680
---------- ---------- ---------- ----------
47,427 36,979 93,946 70,311
Interest income. . . . . . . . . . . . . . . . 445 377 834 763
---------- ---------- ---------- ----------
47,872 37,356 94,780 71,074
---------- ---------- ---------- ----------
Expenses:
Shopping center expenses . . . . . . . . . . . 17,189 12,465 34,823 24,370
Mortgage and other interest. . . . . . . . . . 10,632 8,053 21,466 15,050
Ground rent. . . . . . . . . . . . . . . . . . 1,212 1,181 2,400 2,397
Depreciation and amortization. . . . . . . . . 10,383 7,897 20,697 15,056
General and administrative . . . . . . . . . . 1,083 751 2,418 1,709
Write-off of assets. . . . . . . . . . . . . . 32 1 113 22
---------- ---------- ---------- ----------
40,531 30,348 81,917 58,604
---------- ---------- ---------- ----------
<PAGE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
Operating income . . . . . . . . . . . 7,341 7,008 12,863 12,470
Income from unconsolidated partnerships. . . . . 2,830 1,256 4,680 2,166
Loss from the Management Company . . . . . . . . (511) (223) (1,346) (373)
----------- ----------- ----------- -----------
Income before other gains, minority
interest and extraordinary items . . 9,660 8,041 16,197 14,263
Other gains. . . . . . . . . . . . . . . . . . . 479 1,821 479 1,821
Minority interest. . . . . . . . . . . . . . . . (3,224) (3,140) (5,221) (5,540)
----------- ----------- ----------- -----------
Income before extraordinary items. . . 6,915 6,722 11,455 10,544
Extraordinary items from consolidated and
unconsolidated partnerships (net of minority
interest) . . . . . . . . . . . . . . . . . . . -- (207) -- (295)
----------- ----------- ----------- -----------
Net income . . . . . . . . . . . . . . 6,915 6,515 11,455 10,249
Dividends on preferred stock . . . . . . . . . . (1,575) -- (3,196) --
----------- ----------- ----------- -----------
Income applicable to common and
unit voting common stock . . . . . . $ 5,340 $ 6,515 $ 8,259 $ 10,249
=========== =========== =========== ===========
<PAGE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
Basic income per common and unit voting
common share:
Before extraordinary items . . . . . . . . . . $ .30 $ .39 $ .47 $ .61
Extraordinary items. . . . . . . . . . . . . . -- (.01) -- (.02)
----------- ----------- ----------- -----------
Net income . . . . . . . . . . . . . . $ .30 $ .38 $ .47 $ .59
=========== =========== =========== ===========
Diluted income per common and unit voting
common share:
Before extraordinary items . . . . . . . . . . $ .30 $ .39 $ .47 $ .61
Extraordinary items. . . . . . . . . . . . . . -- (.01) -- (.02)
----------- ----------- ----------- -----------
Net income . . . . . . . . . . . . . . $ .30 $ .38 $ .47 $ .59
=========== =========== =========== ===========
Weighted average common and
unit voting common stock outstanding . . . . . 17,743,463 17,332,715 17,731,318 17,276,063
=========== =========== =========== ===========
Dividends declared and paid per common and unit
voting common share. . . . . . . . . . . . . . $ .5250 $ .5075 $ 1.0500 $ 1.0150
=========== =========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
($000's omitted, except share amounts)
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,455 $ 10,249
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . 20,697 15,056
Write-off of assets. . . . . . . . . . . . . . . . . . . . . . . . . 113 22
Provision for losses on accounts receivable. . . . . . . . . . . . . 983 512
Income from unconsolidated partnerships. . . . . . . . . . . . . . . (4,680) (2,166)
Loss from the Management Company . . . . . . . . . . . . . . . . . . 1,346 373
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . 5,221 5,540
Deferred lease accrual . . . . . . . . . . . . . . . . . . . . . . . 1,070 1,170
Extraordinary items. . . . . . . . . . . . . . . . . . . . . . . . . -- 295
Other gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (479) (1,821)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (791) (676)
Other changes in assets and liabilities:
Interest, rents and other receivables. . . . . . . . . . . . . . . . 1,462 (407)
Deferred expenses and other assets . . . . . . . . . . . . . . . . . 579 (334)
Accounts payable and other liabilities . . . . . . . . . . . . . . . 4,915 9,408
----------- -----------
Net cash provided by operating activities. . . . . . . . . . . 41,891 37,221
----------- -----------
<PAGE>
URBAN SHOPPING CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997
------------ ------------
Cash flows from investing activities:
Additions to investment properties, net of change in related payables. (10,815) (25,929)
Acquisition of partnership interest. . . . . . . . . . . . . . . . . . -- (31,400)
Acquisition of land parcel . . . . . . . . . . . . . . . . . . . . . . -- (3,388)
Proceeds from the sale of development parcels, net of selling costs. . 490 2,296
Cash contributions to unconsolidated partnerships and the
Management Company . . . . . . . . . . . . . . . . . . . . . . . . . (15,401) (4,544)
Cash distributions from unconsolidated partnerships and the
Management Company . . . . . . . . . . . . . . . . . . . . . . . . . 7,486 3,743
Increase in restricted cash. . . . . . . . . . . . . . . . . . . . . . (2,530) (70)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) (427)
----------- -----------
Net cash used in investing activities. . . . . . . . . . . . . (20,773) (59,719)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of debt, net of issuance costs. . . . . . . . . 58,648 152,026
Proceeds from issuance of Common Stock under option plan
and unit incentive plan. . . . . . . . . . . . . . . . . . . . . . . 1,871 4,478
Repayment of debt. . . . . . . . . . . . . . . . . . . . . . . . . . . (50,443) (110,230)
Cash distributions to common unitholders . . . . . . . . . . . . . . . (9,220) (7,406)
Cash distributions to preferred unitholders. . . . . . . . . . . . . . (980) (980)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,055) (17,567)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 --
----------- -----------
Net cash provided by (used in) financing activities. . . . . . (21,122) 20,321
----------- -----------
Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . . (4) (2,177)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . 1,143 5,151
----------- -----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . $ 1,139 $ 2,974
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest, net of amounts capitalized. $ 20,846 $ 14,480
=========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(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, 1997, which are
incorporated by reference in the Company's 1997 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 June 30, 1998 and 1997 are not necessarily indicative
of the results to be obtained for the full fiscal year.
The accompanying consolidated financial statements include the
accounts of the Company, Urban Shopping Centers, L.P. (the "Operating
Partnership") and all controlled affiliates. 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"), S. F. Shopping Centre Associates, L.P. ("San Francisco Shopping
Centre"), Copley Place Associates, LLC ("Copley Place"), Valencia Town
Center Associates, L.P. ("Valencia Town Center"), Citrus Park Venture and
Urban Retail Properties Co. (the "Management Company").
For the three and six months ended June 30, 1998 and 1997, the common
units, preferred units, preferred stock, stock options and incentive units
are either antidilutive or do not have a significant effect on the
computation of earnings per share.
Certain amounts in the 1997 financial statements have been
reclassified to conform with the 1998 presentation.
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 six months ended June 30, 1998 and 1997, the Company incurred interest
of $23,094 and $16,141, respectively, and capitalized interest of $1,628
and $1,090, respectively.
Cash and cash equivalents (which aggregated $1,139 and $1,143 at
June 30, 1998 and December 31, 1997, respectively) include a treasury money
market fund which invests principally in U.S. Treasury notes and bills ($0
and $207 at June 30, 1998 and December 31, 1997, respectively). Other
short-term investments (generally with original maturities of one year or
less) are generally held to maturity and aggregated $128 and $125 at
June 30, 1998 and December 31, 1997, respectively. Cash equivalents and
other short-term investments are held at cost which approximates market.
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(UNAUDITED)
($000's omitted, except share amounts)
(1) Basis of Presentation (Continued)
ACCOUNTING FOR DERIVATIVES
The Company uses interest rate swap agreements and treasury locks 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 as current
income or expense.
(2) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS
Summarized financial information for the unconsolidated partnerships
is presented below:
June 30, December 31,
1998 1997
----------- -------------
Assets:
Investment properties, net . . . $ 749,024 $ 738,757
Other assets . . . . . . . . . . 55,028 43,381
----------- -----------
Less liabilities:
Mortgage notes payable . . . . . 561,078 562,251
Other liabilities. . . . . . . . 42,548 29,617
----------- -----------
Total capital 200,426 190,270
Less: Outside partners' capital. . 110,576 111,135
----------- -----------
Total investments in
unconsolidated partnerships $ 89,850 $ 79,135
=========== ===========
Total investments in unconsolidated
partnerships are presented in the
accompanying consolidated balance
sheets as follows:
Assets - Investments in
unconsolidated partnerships. $ 130,713 $ 118,800
Liabilities - Investments in
unconsolidated partnerships. 40,863 39,665
----------- -----------
$ 89,850 $ 79,135
=========== ===========
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(UNAUDITED)
($000's omitted, except share amounts)
(2) INVESTMENTS IN UNCONSOLIDATED PARTNERSHIPS (Continued)
Six Months Ended
June 30,
---------------------------
1998 1997
----------- -----------
Revenues:
Shopping centers . . . . . . . . $ 79,581 $ 41,027
Interest income. . . . . . . . . 460 230
----------- -----------
80,041 41,257
----------- -----------
Expenses:
Shopping centers . . . . . . . . 36,185 18,414
Mortgage and other interest and
ground rent. . . . . . . . . . 21,572 11,937
Depreciation and amortization. . 11,380 5,751
----------- -----------
69,137 36,102
----------- -----------
Income before other
gains and extra-
ordinary items . . . . . 10,904 5,155
Other gains. . . . . . . . . . . . 729 --
----------- -----------
Income before
extraordinary items. . . 11,633 5,155
Extraordinary items. . . . . . . . -- (228)
----------- -----------
Net income . . . . . . . $ 11,633 $ 4,927
=========== ===========
Company's share of:
Mortgage and other interest and
ground rent. . . . . . . . . . $ 9,557 $ 5,099
Depreciation and amortization. . 4,908 2,415
Other gains. . . . . . . . . . . 292 --
Income before extraordinary items 4,680 2,166
=========== ===========
(3) 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.
June 30, December 31,
1998 1997
----------- -------------
Assets:
Investments in land parcels. . . $ 27,387 $ 27,451
Cash, cash equivalents and
short-term investments . . . . 1,850 1,805
Receivables and deferred expenses 18,055 16,097
----------- -----------
$ 47,292 $ 45,353
=========== ===========
<PAGE>
URBAN SHOPPING CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Concluded
(UNAUDITED)
($000's omitted, except share amounts)
(3) INVESTMENT IN THE MANAGEMENT COMPANY (Continued)
June 30, December 31,
1998 1997
----------- -------------
Liabilities:
Notes payable. . . . . . . . . . $ 70,000 $ 70,000
Accounts payable and
other liabilities. . . . . . . 5,975 5,652
----------- -----------
75,975 75,652
Owners' deficit. . . . . . . . . . (28,683) (30,299)
----------- -----------
$ 47,292 $ 45,353
=========== ===========
Six Months Ended
June 30,
---------------------------
1998 1997
----------- -----------
Revenues:
Management, leasing and
development services . . . . . $ 18,828 $ 17,787
Interest income. . . . . . . . . 382 102
----------- -----------
19,210 17,889
----------- -----------
Expenses:
Management, leasing and
development services . . . . . 17,262 15,329
Mortgage and other interest. . . 2,843 2,854
Land parcels . . . . . . . . . . 452 106
Depreciation and amortization. . 710 219
----------- -----------
21,267 18,508
----------- -----------
Operating loss . . . . . (2,057) (619)
Income tax benefit . . . . . . . . 548 137
----------- -----------
Net loss . . . . . . . . $ (1,509) $ (482)
=========== ===========
(4) SALE OF INVESTMENT PROPERTY
On April 30, 1998, the Company completed an outparcel of land sale at
Wolfchase Galleria for total proceeds, net of selling expenses, of
approximately $490 and recognized a gain of $479 for financial reporting
purposes.
On May 27, 1997, the Company completed an outparcel land sale at
Wolfchase Galleria for total proceeds, net of selling expenses, of
approximately $2,296 and recognized a gain of $1,821 for financial
reporting purposes.
<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 $4.7 million in the six months ended June 30, 1998 from the six
months ended June 30, 1997. This increase was primarily attributable to an
increase in rental operations as discussed below.
Net cash flows used in investing activities decreased $38.9 million in
the six months ended June 30, 1998 from the six months ended June 30, 1997.
This decrease was primarily attributable to (i) a decrease in additions to
investment properties at Wolfchase Galleria resulting from its completion
and opening on February 26, 1997, (ii) the purchase of a preferred 50%
interest in San Francisco Shopping Centre on June 17, 1998 and (iii) the
purchase of land in Roseville, California on June 24, 1997. These
decreases were partially offset by (i) an increase in cash contributions to
Citrus Park Venture and (ii) an increase in cash distributions from San
Francisco Shopping Centre, Copley Place and Coral Square Mall.
Net cash flows from financing activities decreased $41.4 million in
the six months ended June 30, 1998 from the six months ended June 30, 1997.
This decrease was primarily attributable to (i) an increase in the
dividends paid resulting from the issuance of additional shares of common
stock, unit voting common stock and preferred stock from the second quarter
of 1997 through the second quarter of 1998, (ii) an increase in the
distributions paid resulting from the issuance of common and preferred
units in connection with certain of the Company's 1997 acquisitions, (iii)
an increase in the quarterly distribution and dividend per unit and share,
respectively, beginning in the first quarter of 1998, (iv) a decrease in
the proceeds from shares of common stock issued during the first six months
of 1998 as compared to the first six months of 1997 and (v) a decrease in
the net fundings of the construction loan at Wolfchase Galleria due to the
repayment of the construction loan during the second quarter of 1997.
At June 30, 1998, the Company had cash, cash equivalents and short-
term investments of approximately $1.3 million.
On June 5, 1998, the Company paid $10.9 million to common and
preferred shareholders as a dividend of $.5250 per share representing its
first quarter 1998 dividend. On June 5, 1998, the Operating Partnership
paid $4.6 million to its limited partners as a distribution of $.5250 per
unit representing its first quarter 1998 distribution.
CAPITALIZATION. At June 30, 1998, the Company's debt (including the
Company's share of debt of unconsolidated partnerships and the Management
Company) totaled $962.4 million of which $927.0 million is fixed rate debt
and $35.4 million is floating rate 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 on January 30, 1998, was amended
to increase the line to $7.5 million and extend the maturity to January 29,
1999. As of June 30, 1998, $2.6 million was outstanding on this line of
credit. As of June 30, 1998, $42.8 million was outstanding on the
Company's $90.0 million secured, revolving line of credit. Subsequent to
the end of the second quarter of 1998, the Company executed a construction
loan commitment with a lender in the amount of $86.1 million to finance the
remaining construction costs at Citrus Park Town Center. The loan was
initially funded on August 7, 1998 and matures in two years; however, it
may be extended for three one-year periods. The current interest rate on
the loan is LIBOR + 1.20%. During the second quarter of 1998, the Company
entered into an interest rate swap agreement with a maturity date of
December 1, 2005 for the MainPlace indebtedness thereby fixing the all-in
interest rate at 6.25% commencing May 1, 1998. In addition, during the
second quarter, the Company entered into an $80.0 million ten-year treasury
<PAGE>
lock with an expiration date of September 14, 1999. This treasury lock
will be used in connection with the permanent financing anticipated for
Citrus Park Town Center. The transaction fixes the base rate for a ten-
year financing at 5.485%. During the first quarter of 1998, the Company
entered into a seven year interest rate swap agreement on $10.0 million of
its floating rate indebtedness thereby fixing the base rate at 5.794%.
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 June 30, 1998, 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 50%, as illustrated by the
table at the end of liquidity and capital resources section. 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 13, 1997, the Company issued $100.0 million in cumulative
convertible redeemable preferred stock ("Preferred Stock") with a
liquidation preference of $33.34 per share. 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 into which
the Preferred Stock is convertible. The Preferred Stock is convertible
into common stock, at the option of the holder, at a conversion price of
$33.34 per share (subject to antidilution adjustments) at anytime after
August 1998. After six years the Preferred Stock may be redeemed, at the
option of the Company, for cash at a redemption price of $33.34 per share.
The net proceeds of the issue, after deducting transaction costs, were used
to fund a portion of the November 14, 1997 acquisitions of Fox Valley
Center and Hawthorn Center.
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 sources: (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 common 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 November 14, 1997, the Company acquired Fox
Valley Center and Hawthorn Center. The Company is in the process of
renovating Fox Valley Center at a cost of approximately $13.0 million.
Work has begun on the renovation and it is expected to be completed in the
fourth quarter of 1998. In addition, the Company entered into a put option
agreement with an unaffiliated third party for the purchase of a regional
mall. The unaffiliated third party may exercise the put option from
October 1, 1998 through December 31, 1998 for a purchase price to the
Company of $115.0 million plus any capital expenditures incurred by the
third party.
<PAGE>
The Company's current development project is the approximate 1.1
million square foot Citrus Park Town Center ("Citrus Park") in Tampa,
Florida. Anchor stores for the project are Burdines, Dillard's, JCPenney
and Sears. Citrus Park is scheduled to open in March 1999. In addition,
an approximate 350,000 square foot community center opposite the regional
mall, The Plaza at Citrus Park, is scheduled to open in May 1999.
Currently this project is owned 50% by the Company and 50% by the
Management Company. However, the Company has the right to acquire the
Management Company's economic interest in the project. 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"). The
Operating Partnership assisted the CDD in obtaining the financing for the
roadwork by guaranteeing the irrevocable letter of credit which supports
the bonds.
The Company's next planned development project is scheduled to be the
Galleria at Roseville in Roseville, California, which is near Sacramento.
Current plans for Roseville to open in Fall 2000 are progressing on
schedule. Groundbreaking for the center is scheduled for September 1998.
Macy's, Nordstrom and Sears have already committed to be three of the
anchor stores for the approximate 1.1 million square foot mall.
Negotiations are underway with one additional anchor.
As of the date of this report, there are approximately twenty-five and
thirty acres, respectively, at Brandon Town Center and Wolfchase Galleria
available for future sale or development.
<PAGE>
<TABLE>
<CAPTION>
100% Pro Rata
Balance of Share of
($000's omitted, Annual Mortgage Mortgage
except share and Maturity Interest Notes Ownership Notes
per share amounts) Date Rate Payable Interest Payable
- ----------------------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Consolidated Entities:
Old Orchard Center Dec. 2009 6.9800% $167,158 100.0% $ 167,158
Oakbrook Center Oct. 2004 6.1375% 140,000 100.0% 140,000
MainPlace Oct. 1998 6.2500%(1) 80,000 100.0% 80,000
Wolfchase Galleria June 2007 7.8000% 79,365 100.0% 79,365
Fox Valley Center Nov. 2006 6.7500% 85,528 100.0% 85,528
Hawthorn Center Nov. 2008 6.7500% 77,864 100.0% 77,864
Operating Partnership (2) (2) 45,400 100.0% 45,400
- -------------------------------------------------------------------------------------------------------------
675,315 675,315
Unconsolidated Entities: (3)
Water Tower Place Feb. 1999(4) (4) 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% 46,751 40.0% 18,700
San Francisco Shopping CentreJuly 2002(5) 6.9045% 53,531 50.0% 26,766
Copley Place Aug. 2007 7.4400% 193,494 33.3% 64,498
Management Company Aug. 2001 7.5400% 51,000 95.0% 48,450
Management Company Sept. 2001 7.0000% 9,000 95.0% 8,550
- -------------------------------------------------------------------------------------------------------------
577,076 287,114
- -------------------------------------------------------------------------------------------------------------
Company debt $ 962,429
- -------------------------------------------------------------------------------------------------------------
Convertible preferred units
(convertible into 1,018,182
common units) $ 28,000
Convertible preferred stock
(convertible into 2,999,400
shares of common stock) $ 100,000
- -------------------------------------------------------------------------------------------------------------
Market value of equity interests
as of June 30, 1998, based upon
26,524,605 common shares, unit
voting common shares and common
units at $31.50 per share/unit $ 835,525
- -------------------------------------------------------------------------------------------------------------
Total market capitalization $1,925,954
- -------------------------------------------------------------------------------------------------------------
Company debt to total market
capitalization 50%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) During the second quarter, the Company entered into an interest
rate swap agreement with a maturity date of December 1, 2005 for the
MainPlace indebtedness thereby fixing the all-in interest rate at 6.25%
which commenced on May 1, 1998. The Company expects to refinance the
MainPlace indebtedness on a long-term basis upon maturity.
(2) Includes $42.8 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 currently subject to a floating rate of 0.85% over LIBOR (6.5063% at
June 30, 1998). Also, includes $2.6 million outstanding under the
Company's $7.5 million unsecured revolving line of credit bearing interest
at the reference rate minus 1.50% (6.50% at June 30, 1998). During the
first quarter of 1998, the Company entered into a seven year interest rate
swap agreement on $10.0 million of its floating rate indebtedness thereby
fixing the all-in interest rate at 6.644%.
(3) 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.
(4) The 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% (6.7813% and 7.1563%, respectively at June 30, 1998).
(5) The loan matures on July 1, 2002; however, it may be extended for
three one-year periods.
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:
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income before minority interest and
extraordinary items. . . . . . . . . . . . . . $ 10,139 $ 9,862 $ 16,676 $ 16,084
Plus depreciation and amortization . . . . . . . 9,831 7,169 19,600 13,739
Plus Company's share of depreciation
and amortization from unconsolidated
partnerships and the Management Company . . . . 2,317 1,167 4,611 2,247
Less preferred unit distributions and
preferred stock dividends. . . . . . . . . . . (2,065) (490) (4,176) (980)
---------- ---------- ---------- ----------
Total funds from operations. . . . . . . . . . . $ 20,222 $ 17,708 $ 36,711 $ 31,090
========== ========== ========== ==========
Company's share of funds from operations (a) . . $ 13,527 $ 12,465 $ 24,552 $ 21,844
========== ========== ========== ==========
<FN>
(a) Based upon a weighted average of 26,524,505 and 26,512,430 common shares and units outstanding for the
three and six months ended June 30, 1998, respectively and 24,623,409 and 24,588,295 for the three and six months
ended June 30, 1997. Total common shares and units outstanding at June 30, 1998 and 1997, were 26,524,605 and
24,650,809, respectively.
</TABLE>
<PAGE>
<TABLE>
FUNDS AVAILABLE FOR DISTRIBUTION. The chart below shows the calculation of funds available for distribution:
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Total funds from operations. . . . . . . . . . . $ 20,222 $ 17,708 $ 36,711 $ 31,090
Plus non-cash effect of Oakbrook Center
straight-lined ground rent and related
interest . . . . . . . . . . . . . . . . . . . 820 829 1,633 1,651
Plus adjustment to reflect actual cash
received from the Management Company . . . . . 482 197 1,291 322
Plus write-off of assets . . . . . . . . . . . . 32 1 113 22
Less straight-line rent adjustments (a). . . . . (420) (433) (971) (746)
---------- ---------- ---------- ----------
Total funds available for distribution
including other gains. . . . . . . . . . . . . 21,136 18,302 38,777 32,339
Less other gains (a) . . . . . . . . . . . . . . (771) (1,821) (771) (1,821)
---------- ---------- ---------- ----------
Total funds available for distribution
excluding other gains. . . . . . . . . . . . . $ 20,365 $ 16,481 $ 38,006 $ 30,518
========== ========== ========== ==========
Company's share of funds available for
distribution including other gains (b) . . . . $ 14,139 $ 12,883 $ 25,934 $ 22,721
========== ========== ========== ==========
Company's share of funds available for
distribution excluding other gains (b) . . . . $ 13,623 $ 11,601 $ 25,418 $ 21,442
========== ========== ========== ==========
<FN>
(a) Includes the Company's share of unconsolidated partnerships.
(b) Based upon a weighted average of 26,524,505 and 26,512,430 common shares and units outstanding for the
three and six months ended June 30, 1998, respectively and 24,623,409 and 24,588,295 for the three and six months
ended June 30, 1997. Total common shares and units outstanding at June 30, 1998 and 1997 were 26,524,605 and
24,650,809, respectively.
</TABLE>
<PAGE>
SALES. Aggregate sales volume at the Company's regional malls for
those mall shops and anchors that report sales have increased 5.7% to $581
million in the three months ended June 30, 1998 from $549 million in the
three months ended June 30, 1997. Mall tenant sales (excluding anchors and
movie theaters) have increased 6.7% to $406 million in the three months
ended June 30, 1998 from $380 million in the same period for 1997.
Comparable reported mall tenant sales increased 5.2% in the six months
ended June 30, 1998 compared to the same period for 1997. Sales per square
foot for the rolling twelve months ended June 30, 1998 were $371 compared
to $365 for the twelve months ended March 31, 1998 and $361 for the twelve
months ended December 31, 1997. Excluding 1997 acquisitions, sales per
square foot for the twelve months ended June 30, 1998 were $374 compared to
$351 for the twelve months ended June 30, 1997. All sales per square foot
figures exclude Wolfchase Galleria.
OCCUPANCY. The mall GLA was 90.6% occupied at June 30, 1998 as
compared to 90.4% at March 31, 1998 and 91.5% at June 30, 1997. The mall
GLA was 93.2% leased at June 30, 1998.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE SIX MONTHS ENDED
JUNE 30, 1997
Shopping center revenues increased $23.6 million to $93.9 million in
the six months ended June 30, 1998 from $70.3 million in the six months
ended June 30, 1997. This increase was primarily a result of the Company's
acquisitions of Fox Valley Center and Hawthorn Center on November 14, 1997
and due to Wolfchase Galleria having been open for six months in 1998 as
compared to four months in 1997.
Shopping center expenses, including depreciation and amortization,
increased $16.1 million to $55.5 million in the six months ended June 30,
1998 from $39.4 million in the same period for 1997. This increase was
primarily a result of the Company's acquisitions of Fox Valley Center and
Hawthorn Center on November 14, 1997 and due to Wolfchase Galleria having
been open for six months in 1998 as compared to four months in 1997.
Mortgage and other interest increased $6.4 million to $21.5 million in
the six months ended June 30, 1998 from $15.1 million in the same period
for 1997. This increase was primarily a result of the Company's
acquisitions of Fox Valley Center and Hawthorn Center on November 14, 1997
and due to Wolfchase Galleria having been open for six months in 1998 as
compared to four months in 1997.
General and administrative expenses increased $.7 million to $2.4
million in the six months ended June 30, 1998 from $1.7 million in the same
period for 1997 as a result of additional compensation expense related to
the Company's incentive unit program.
Income from unconsolidated partnerships increased $2.5 million to $4.7
million in the six months ended June 30, 1998 from $2.2 million in the same
period for 1997. This increase was primarily attributable to the Company's
investment in a partnership resulting in a preferred 50% ownership interest
in San Francisco Shopping Centre on June 17, 1997 and the purchase of a
one-third equity interest in Copley Place on August 1, 1997.
Income from the Management Company decreased $.9 million to a $1.3
million loss in the six months ended June 30, 1998 from a $.4 million loss
in the same period for 1997. This decrease was primarily attributable to
an increase in compensation expense as a result of the incentive unit
program and an increase in depreciation expense as a result of the purchase
of computer hardware and software during 1997.
Other gains of $.5 million and $1.8 million for the six months ended
June 30, 1998 and 1997, respectively, represent the gains on the sale of
outparcels of land at Wolfchase Galleria.
<PAGE>
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 JUNE 30, 1998 COMPARED TO THE THREE MONTHS
ENDED JUNE 30, 1997
Shopping center revenues increased $10.4 million to $47.4 million in
the three months ended June 30, 1998 from $37.0 million in the three months
ended June 30, 1997. This increase was primarily a result of the Company's
acquisitions of Fox Valley Center and Hawthorn Center on November 14, 1997.
Shopping center expenses, including depreciation and amortization,
increased $7.2 million to $27.6 million in the three months ended June 30,
1998 from $20.4 million in the same period for 1997. This increase was
primarily a result of the Company acquisitions of Fox Valley Center and
Hawthorn Center on November 14, 1997.
Mortgage and other interest increased $2.5 million to $10.6 million in
the three months ended June 30, 1998 from $8.1 million in the same period
for 1997. This increase was primarily a result of the Company's
acquisitions of Fox Valley Center and Hawthorn Center on November 14, 1997.
General and administrative expenses increased $.3 million to $1.1
million in the three months ended June 30, 1998 from $.8 million in the
same period for 1997 as a result of additional compensation expense related
to the Company's incentive unit program.
Income from unconsolidated partnerships increased $1.5 million to $2.8
million in the three months ended June 30, 1998 from $1.3 million in the
same period for 1997. This increase was primarily attributable to the
Company's investment in a partnership resulting in a preferred 50%
ownership interest in San Francisco Shopping Center on June 17, 1997 and
the purchase of a one-third equity interest in Copley Place on August 1,
1997.
Income from the Management Company decreased $.3 million to a $.5
million loss in the three months ended June 30, 1998 from a $.2 million
loss in the same period for 1997. This decrease was primarily attributable
to an increase in deprecation expense as a result of the purchase of
computer hardware and software during 1997.
Other gains of $.5 million and $1.8 million for the three months ended
June 30, 1998 and 1997, respectively, represent the gains on the sale of
outparcels of land at Wolfchase Galleria.
The extraordinary items (net of minority interest) of $.2 million in
1997 resulted from the write-off of deferred expenses and loan fees related
to the repayment of the construction loan at Wolfchase Galleria.
EITF NO. 98-9 "ACCOUNTING FOR CONTINGENT RENT IN INTERIM FINANCIAL
PERIODS"
On May 21, 1998, the Emerging Issues Task Force (EITF) of the
Financial Accounting Standards Board (FASB) reached a consensus on
Issue 98-9 "Accounting for Contingent Rent in Interim Financial Periods."
The Task Force determined that a lessor should defer recognition of
contingent rental income (i.e., percentage/excess rent) in interim periods
until the specified target (i.e., breakpoint) that triggers the contingent
rental income is achieved. The Company implemented the consensus as of
May 21, 1998, and it did not have a material effect on the Company's net
income for the second quarter of 1998. This consensus affects timing of
revenue recognition for interim financial periods and it is expected to
have an effect on net income for the third and fourth quarters of 1998;
however, it is not expected to have any effect on the Company's net income
for the full calendar year 1998.
<PAGE>
SFAS NO. 133 "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (Statement 133), was issued
by the FASB in June 1998. The effective date of this statement for the
Company is January 1, 2000 and the Company does not anticipate earlier
implementation. Statement 133 standardizes the accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts. Under the standard, entities will be required to carry all
derivative instruments in the balance sheet at fair value. The accounting
for changes in the fair value (i.e., gains or losses) of a derivative
instrument depends on whether it has been designated and qualifies as part
of a hedging relationship and, if so, on the reason for holding it. The
Company uses interest rate swap agreements and treasury locks as part of
its interest rate risk management strategy. These derivatives are used to
hedge cash flow exposure and under Statement 133 the effective portion of
the gain or loss on the derivative instrument will be reported initially as
a component of other comprehensive income (outside earnings) and
subsequently reclassified into earnings when the hedged transaction affects
earnings. Any amounts excluded from the assessment of hedge effectiveness
as well as the ineffective portion of the gain or loss will be reported in
earnings immediately.
The Company has not determined the impact that Statement 133 will have
on its financial statements and believes that such determination will not
be meaningful until closer to the date of initial adoption.
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
programs 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>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 6, 1998, at the Company's annual meeting of shareholders,
actions were taken on the election of directors and the ratification of
independent auditors. The results of these actions are presented below.
Election of Directors:
For Withheld
---------- --------
Neil G. Bluhm 25,627,719 42,008
James B. Digney 25,634,319 35,408
Matthew S. Dominski 25,648,969 20,758
Susan Getzendanner 25,629,244 40,483
Judd D. Malkin 25,644,763 24,964
John E. Neal 25,632,333 37,394
Phillip B. Rooney 25,632,933 36,794
John G. Schreiber 25,647,445 22,282
Henry T. Segerstrom 25,631,307 38,420
Messrs. Bluhm, Malkin and Dominski have been directors since
inception. Messrs. Digney, Rooney, Segerstrom and Ms. Getzendanner have
held such positions since October 18, 1993. Messrs. Neal and Schreiber
have been directors since February 13, 1995.
Each of the above directors will serve until the Company's next annual
meeting of shareholders and until their respective successors have been
elected and qualified, or until their resignation, death, termination or
removal.
Ratification of Appointment of KPMG Peat Marwick LLP as independent
auditors for 1998:
For Against Abstain
---------- ------- -------
25,633,109 16,312 20,306
No other matters were submitted to a vote of security holders during
the meeting or during the period covered by this report.
<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 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
4.3 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 13, 1997
4.4 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 13, 1997
4.5 Promissory Note B 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 13, 1997
4.6 Mortgage, Security Agreement and Assignment of Rents dated as
of November 3, 1997 made by LaSalle National Bank and Oak Brook Urban
Venture, L.P. to and with USC Oakbrook, Inc., Goldman Sachs Mitsui Marine
Derivative Products, L.P. and Teachers' Retirement System of the State of
Illinois is hereby incorporated by reference to Exhibit 4.6 to the
Registrant's Form 10-K (File no. 1-12278) filed on March 27, 1998
4.7 Fifth Amendment to Loan Agreement dated December 11, 1997 by
and among The Prudential Insurance Company of America, Old Orchard Urban
Limited Partnership and American National Bank and Trust Company 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 27, 1998
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)
<PAGE>
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
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
<PAGE>
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
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 incorporated 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
<PAGE>
10.27 Hawthorn, L.P. Agreement of Purchase and Sale of Partnership
Interest dated November 14, 1997 is hereby incorporated by reference to
Exhibit 10.1 to the Registrant's Form 8-K/A filed on December 22, 1997
10.28 Fox Valley Mall LLC Agreement of Purchase and Sale of
Membership Interest dated November 14, 1997 is hereby incorporated by
reference to Exhibit 10.2 to the Registrant's Form 8-K/A filed on December
22, 1997
10.29 Registration Rights Agreement between the Company and
Security Capital Preferred Growth Incorporated dated November 13, 1997 is
hereby incorporated by reference to Exhibit 10.5 to the Registrant's form
8-K/A filed on December 22, 1997
10.30 Third Amendment to Second Amended and Restated Agreement of
Limited Partnership of Urban Shopping Centers, L.P. is hereby incorporated
by reference to Exhibit 10.7 to the Registrant's Form 8-K/A filed on
December 22, 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.
(b) No reports on Form 8-K were filed during the second quarter of
1998.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
<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: August 13, 1998
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: August 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH
REPORT.
</LEGEND>
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