SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
AMENDMENT NO. 1
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 10, 1999
URBAN SHOPPING CENTERS, INC.
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(Exact name of registrant as specified in its charter)
Maryland 1-12278 36-3886885
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(State of incorpor- (Commission (IRS Employer
ation) File Number) Identification No.)
900 North Michigan Avenue,
Suite 1500
Chicago, Illinois 60611
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 915-2000
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Not Applicable
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(Former name or former address, if changed since last report)
<PAGE>
The undersigned registrant hereby amends the following section of its
Report dated May 27, 1999 on Form 8-K:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Listed below are the financial statements, pro forma financial
information and exhibits which are filed as part of this report:
a. Financial Statements.
Historical Statements of Operations for Century City Shopping
Center & Marketplace for the three months ended March 31, 1999 (unaudited)
and the year ended December 31, 1998 with Independent Auditors' Report
thereon
b. Pro Forma Financial Information.
Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1999 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for
the three months ended March 31, 1999 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for
the year ended December 31, 1998 (unaudited)
c. Exhibits
23.1 Independent Auditors' Consent
<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 hereunto 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 24, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Urban Shopping Centers, Inc.:
We have audited the accompanying Historical Statement of Operations
(Historical Statement) of Century City Shopping Center & Marketplace
(Century City) for the year ended December 31, 1998. This Historical
Statement is the responsibility of management of Urban Shopping Centers,
Inc. Our responsibility is to express an opinion on the Historical
Statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Historical
Statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall presentation of the Historical Statement. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying Historical Statement was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission and for inclusion in the Form 8-K/A of Urban Shopping Centers,
Inc., as described in Note 1. The presentation is not intended to be a
complete presentation of Century City's revenues and expenses.
In our opinion, the Historical Statement referred to above presents
fairly, in all material respects, certain operating revenues and expenses
described in Note 1 of Century City for the year ended December 31, 1998,
in conformity with generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
August 24, 1999
<PAGE>
URBAN SHOPPING CENTERS, INC.
Century City Shopping Center & Marketplace
Historical Statements of Operations (Note 1)
For the Three Months Ended March 31, 1999 (Unaudited)
and the Year Ended December 31, 1998
($000's omitted)
Three Months
Ended
March 31, Year Ended
1999 December 31,
(Unaudited) 1998
------------ ------------
Shopping center revenues:
Minimum rents . . . . . . . . . . . $ 4,181 $ 16,514
Percentage rents. . . . . . . . . . 292 1,465
Recoveries from tenants . . . . . . 2,349 8,920
Other . . . . . . . . . . . . . . . 617 2,114
-------- --------
7,439 29,013
-------- --------
Shopping center expenses:
Real estate taxes . . . . . . . . . 360 1,844
Utilities . . . . . . . . . . . . . 229 726
Repairs and maintenance . . . . . . 1,239 4,614
Advertising . . . . . . . . . . . . 56 217
Other operating . . . . . . . . . . 933 2,586
-------- --------
2,817 9,987
-------- --------
Operating income. . . . . . . . . . $ 4,622 $ 19,026
======== ========
See accompanying notes to statements of operations.
<PAGE>
URBAN SHOPPING CENTERS, INC.
Notes to Historical Statements of Operations
Three Months Ended March 31, 1999 (Unaudited)
and Year Ended December 31, 1998
($000's omitted)
(1) BASIS OF PRESENTATION
The accompanying historical statements of operations for Century City
Shopping Center & Marketplace (Century City) are presented in conformity
with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission.
The historical statements of operations are not representative of the
actual operations for the three months ended March 31, 1999 and the year
ended December 31, 1998, as certain revenues and expenses, which may not be
comparable to the revenues and expenses expected to be incurred in the
future operations have been excluded. Revenues and expenses excluded
consist of interest income on short-term investments, mortgage interest,
and depreciation and amortization.
In the opinion of management, all adjustments (consisted solely of
normal recurring adjustments) necessary for a fair presentation of the
historical statement of operations for the interim period presented have
been included. The results for the interim period ended March 31, 1999 are
not necessarily indicative of the results to be obtained for the full
fiscal year.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT PROPERTY
Repair and maintenance expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and appreciated
over their estimated useful lives.
REVENUE RECOGNITION
Minimum rent is recognized on a straight-line basis over the terms of
the related leases.
INCOME TAXES
Century City is owned by Urban Shopping Centers, Inc. (Urban) through
Urban Shopping Centers, L.P. as of June 10, 1999. Urban operates as a real
estate investment trust (REIT) and under the provision of the Internal
Revenue Code, a REIT will generally not be subject to Federal and state
income taxes.
USE OF ESTIMATES
The preparation of statements of operations in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from
those estimates.
(3) LEASES
Management has determined that all leases relating to Century City are
properly classified as operating leases; therefore, rental income is
reported when earned. Leases with tenants range in term from one to 47
years and generally provide for fixed minimum rents and reimbursement of
operating costs. In addition, leases with shopping center tenants provide
for additional rent based upon percentages of tenant sales volumes.
Minimum lease payments to be received in the year 1999 to 2003, and
thereafter, under the above lease agreements are $16,325, $15,794, $14,744,
$13,956, $11,948, and $36,692, respectively.
<PAGE>
URBAN SHOPPING CENTERS, INC.
Pro Forma Financial Statements
March 31, 1999
(Unaudited)
The following unaudited pro forma condensed consolidated financial
statements for Urban Shopping Centers, Inc. (Urban) reflect the acquisition
by Urban of Century City Shopping Center & Marketplace (Century City). The
pro forma condensed consolidated financial statements have been prepared
based upon certain pro forma adjustments to the historical financial
statements of Urban.
The accompanying unaudited pro forma condensed consolidated balance
sheet as of March 31, 1999 has been prepared as if Century City had been
acquired as of the balance sheet date.
The accompanying unaudited pro forma condensed consolidated statements
of operations for the three months ended March 31, 1999 and for the year
ended December 31, 1998 have been prepared as if the Century City
acquisition had occurred as of January 1, 1998.
The unaudited pro forma condensed consolidated financial statements do
not purport to be indicative of the results which would actually have been
obtained had the transaction described above been completed on the dates
indicated or which may be obtained in the future. The unaudited pro forma
condensed consolidated financial statements should be read in conjunction
with the statements of operations for Century City included herein.
<PAGE>
URBAN SHOPPING CENTERS, INC.
Pro Forma Condensed Consolidated Balance Sheet
March 31, 1999
(Unaudited)
($000's omitted, except share amounts)
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ----------
ASSETS
Investment properties, net of
accumulated depreciation. . . $1,206,629 $ 272,102(a) $1,478,731
Investment property held for
sale. . . . . . . . . . . . . 12,568 12,568
Investments in unconsolidated
partnerships and the
Management Company. . . . . . 184,797 184,797
Cash, cash equivalents and
short-term investments. . . . 2,189 2,189
Interest, rents and other
receivables . . . . . . . . . 17,855 17,855
Deferred expenses and other
assets. . . . . . . . . . . . 16,081 172(b) 16,253
---------- ---------- ----------
$1,440,119 $ 272,274 $1,712,393
========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable. . . . $ 783,986 $ 230,079(c) $1,014,065
Land sale-leaseback
proceeds . . . . . . . . . . 75,000 75,000
Deferred lease accrual. . . . 21,269 21,269
Accounts payable and other
liabilities. . . . . . . . . 67,352 67,352
Investments in uncon-
solidated partnerships . . . 43,693 43,693
Commitments and
contingencies. . . . . . . .
---------- ---------- ----------
Total liabilities . . . . 991,300 230,079 1,221,379
Minority interest . . . . . . . 127,038 42,195(d) 169,233
<PAGE>
URBAN SHOPPING CENTERS, INC.
Pro Forma Condensed Consolidated Balance Sheet - Continued
March 31, 1999
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ----------
Stockholders' equity:
Preferred stock, $.01 par
value, 5,000,000 shares
authorized, 3,772,915
historical and pro forma
shares issued and out-
standing . . . . . . . . . . 38 38
Common stock, $.01 par
value, 140,000,000 shares
authorized, 17,487,684
historical and pro forma
shares issued and out-
standing . . . . . . . . . . 175 175
Unit voting stock, $.01 per
value, 5,000,000 shares
authorized, 407,935
historical and pro forma
shares issued and out-
standing . . . . . . . . . . 4 4
Additional paid-in capital. . 492,131 492,131
Retained earnings (deficit) . (170,567) (170,567)
---------- ---------- ----------
Total stockholders'
equity . . . . . . . . . 321,781 -- 321,781
---------- ---------- ----------
$1,440,119 $ 272,274 $1,712,393
========== ========== ==========
See accompanying notes to pro forma financial statements.
<PAGE>
URBAN SHOPPING CENTERS, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 1999
(Unaudited)
($000's omitted, except share amounts)
Pro Forma
Adjustments
Historical (e) Pro Forma
---------- ----------- ----------
Revenues:
Shopping center revenues:
Minimum rents. . . . . . . . $ 31,252 $ 4,181 $ 35,433
Percentage rents . . . . . . 645 292 937
Recoveries from tenants. . . 16,327 2,349 18,676
Other. . . . . . . . . . . . 1,487 723 (f) 2,210
---------- ---------- ----------
49,711 7,545 57,256
Interest income . . . . . . . 181 181
---------- ---------- ----------
49,892 7,545 57,437
---------- ---------- ----------
Expenses:
Shopping center expenses. . . 18,311 2,766 (g) 21,077
Mortgage and other interest
and ground rent. . . . . . . 13,063 4,185 (h) 17,248
Depreciation, amortization
and write-off of assets. . . 10,845 1,932 (i) 12,777
General and administrative. . 1,504 1,504
---------- ---------- ----------
43,723 8,883 52,606
---------- ---------- ----------
Operating income. . . . . . 6,169 (1,338) 4,831
Income from unconsolidated
partnerships and the
Management Company. . . . . . 2,533 2,533
---------- ---------- ----------
Income before minority
interest and extra-
ordinary items . . . . . . 8,702 (1,338) 7,364
Minority interest . . . . . . . (2,603) (469)(j) (3,072)
---------- ---------- ----------
Income before extra-
ordinary items . . . . . . 6,099 (1,807) 4,292
Dividends on preferred stock. . (2,113) (2,113)
---------- ---------- ----------
Income before extra-
ordinary items applicable
to common and unit
voting common stock. . . . $ 3,986 $ (1,807) $ 2,179
========== ========== ==========
Basic income before
extraordinary items per
common and unit voting
common stock . . . . . . . $ 0.22 $ 0.12
========== ==========
<PAGE>
URBAN SHOPPING CENTERS, INC.
Pro Forma Condensed Consolidated Statement of Operations - Continued
For the Three Months Ended March 31, 1999
Pro Forma
Adjustments
Historical (e) Pro Forma
---------- ----------- ----------
Diluted income before
extraordinary items per
common and unit voting
common stock. . . . . . . $ 0.22 $ 0.12
========== ==========
Weighted average common
and unit voting common
stock outstanding:
Basic. . . . . . . . . . 17,885,675 17,885,675
========== ==========
Diluted. . . . . . . . . 18,099,093 18,099,093
========== ==========
See accompanying notes to pro forma financial statements.
<PAGE>
URBAN SHOPPING CENTERS, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1998
(Unaudited)
($000's omitted, except share amounts)
Pro Forma
Adjustments
Historical (e) Pro Forma
---------- ----------- ----------
Revenues:
Shopping center revenues:
Minimum rents. . . . . . . . $ 118,290 $ 16,514 $ 134,804
Percentage rents . . . . . . 7,322 1,465 8,787
Recoveries from tenants. . . 65,108 8,920 74,028
Other. . . . . . . . . . . . 6,866 2,385 (f) 9,251
---------- ---------- ---------
197,586 29,284 226,870
Interest income . . . . . . . 1,103 1,103
---------- ---------- ---------
198,689 29,284 227,973
---------- ---------- ---------
Expenses:
Shopping center expenses. . . 72,538 9,870 (g) 82,408
Mortgage and other interest
and ground rent. . . . . . . 48,347 16,606 (h) 64,953
Depreciation, amortization
and write-off of assets. . . 41,649 7,729 (i) 49,378
General and administrative. . 4,829 4,829
---------- ---------- ---------
167,363 34,205 201,568
---------- ---------- ---------
Operating income. . . . . . 31,326 (4,921) 26,405
Income from unconsolidated
partnerships and the
Management Company. . . . . . 11,042 11,042
---------- --------- ---------
Income before minority
interest and extra-
ordinary items . . . . . . 42,368 (4,921) 37,447
Other gains . . . . . . . . . . 479 479
Minority interest . . . . . . . (13,540) (2,028)(j) (15,568)
---------- --------- ---------
Income before extra-
ordinary items . . . . . . 29,307 (6,949) 22,358
Dividends on preferred stock. . (6,359) (6,359)
---------- --------- ---------
Income before extra-
ordinary items applicable
to common and unit
voting common stock. . . . $ 22,948 $ (6,949) $ 15,999
========== ========= =========
Basic income before
extraordinary items per
common and unit voting
common stock . . . . . . . $ 1.29 $ 0.90
========== =========
<PAGE>
URBAN SHOPPING CENTERS, INC.
Pro Forma Condensed Consolidated Statement of Operations - Continued
For the Year Ended December 31, 1998
Pro Forma
Adjustments
Historical (e) Pro Forma
---------- ----------- ----------
Diluted income before
extraordinary items per
common and unit voting
common stock. . . . . . . $ 1.27 $ 0.88
========== =========
Weighted average common
and unit voting common
stock outstanding:
Basic. . . . . . . . . . 17,744,072 17,744,072
========== ==========
Diluted. . . . . . . . . 18,013,943 18,013,943
========== ==========
See accompanying notes to pro forma financial statements.
<PAGE>
URBAN SHOPPING CENTERS, INC.
Notes to Pro Forma Condensed Consolidated Financial Statements
March 31, 1999 and for the Three Months Ended
March 31, 1999 and the Year Ended December 31, 1998
(Unaudited)
($000's omitted, except share amounts)
(a) The pro forma adjustment reflects Urban's acquisition of Century
City, including closing costs, as if it occurred on March 31, 1999.
(b) The pro forma adjustment reflects the deferred financing costs
associated with the mortgage note payable secured in connection with the
acquisition.
(c) The pro forma adjustment reflects the nine-year $160,000 mortgage
note payable amended and restated in connection with the acquisition and
additional fundings on Urban's line of credit.
(d) The pro forma adjustment reflects the issuance of $40,000 of Series C
Cumulative Redeemable Preferred Partnership Units, net of $1,000 of closing
costs. The preferred units are entitled to fully cumulative distributions
at a rate of 9.125% per annum. Urban Shopping Centers, L.P. also issued
approximately 81,000 operating partnership units for proceeds totaling
$3,195. Proceeds from both equity issuances were used to fund a portion of
the acquisition of Century City.
(e) The pro forma adjustments reflect, unless otherwise noted, certain
historical revenues and expenses for Century City.
(f) The pro forma adjustment includes amounts required to adjust
historical parking income as a result of the new management agreement
related to the parking garage.
(g) The pro forma adjustment includes amounts required to adjust
historical management fees to equal 3.0% of minimum rents and percentage
rents as a result of the new management agreement with Urban Retail
Properties Co. and a $75 per annum management fee as a result of the new
management agreement related to the parking garage.
(h) The pro forma adjustment reflects interest expense on (i) the
property mortgage note payable of $160,000 at a blended interest rate of
7.58% and (ii) the additional fundings on Urban's line of credit of $70,079
at a floating interest rate of LIBOR + 0.85% (6.58% and 6.39% at March 31,
1999 and December 31, 1998, respectively).
(i) The pro forma adjustment reflects (i) the depreciation expense
resulting from the acquisition of Century City, assuming an asset life of
30 years and (ii) the amortization expense resulting from the deferred
financing costs of $172 related to the nine-year mortgage note payable.
(j) The pro forma adjustment reflects the adjustment for (i) dividends
payable to the preferred unit holders' (($913) and ($3,650)) and (ii) the
operating partnership unit holders' share of pro forma income before
extraordinary items ($444 and $1,622).
EXHIBIT 23.1
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Consent of Independent Auditors
-------------------------------
The Board of Directors
Urban Shopping Centers, Inc.:
We consent to incorporation by reference in the registration statements No.
333-35909 (Form S-8), No. 33-86778 (Form S-8), No. 33-96388 (Form S-8), No.
333-00334 (Form S-3), No. 333-35911 (Form S-3) and No. 333-63509 (Form S-3)
of Urban Shopping Centers, Inc. of our report dated August 24, 1999
relating to the Historical Statement of Operations of Century City Shopping
Center & Marketplace as of December 31, 1998, which report appears in Form 8-K/A
of Urban Shopping Centers, Inc. dated August 24, 1999.
KPMG LLP
Chicago, Illinois
August 24, 1999
