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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-12923
WESTFIELD AMERICA, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 43-0758627
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11601 WILSHIRE BOULEVARD
12TH FLOOR
LOS ANGELES, CALIFORNIA 90025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 478-4456
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 [ ]
As of November 12, 1999, 73,346,541 shares of Common Stock par value
$.01 per share, were outstanding.
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<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1: Condensed Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 1999 (unaudited) and
December 31, 1998 ........................................................ 1
Consolidated Statements of Income (unaudited) for the three months ended
September 30, 1999 and 1998 and for the nine months ended September 30,
1999 and 1998 ............................................................ 2
Consolidated Statements of Cash Flows (unaudited) for the nine months
ended September 30, 1999 and 1998 ........................................ 3
Notes to Condensed Consolidated Financial Statements (unaudited) .......... 4
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations .................................................... 13
Item 3: Quantitative and Qualitative Disclosures about Market Risk ................ 26
PART II -- OTHER INFORMATION
Item 1: Legal Proceedings ......................................................... 27
Item 2: Changes in Securities ..................................................... 27
Item 3: Defaults Upon Senior Securities ........................................... 28
Item 4: Submission of Matters to a Vote of Security Holders ....................... 28
Item 5: Other Information ......................................................... 28
Item 6: Exhibits and Reports on Form 8-K .......................................... 28
</TABLE>
i
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Land $ 463,183 $ 457,801
Buildings, improvements and equipment 2,923,957 3,185,969
Less accumulated depreciation (418,009) (340,727)
---------- ----------
Net property and equipment 2,969,131 3,303,043
Construction in progress 84,861 20,254
Investments in unconsolidated real estate affiliates 169,335 138,747
Participating loan to affiliates 145,000 145,000
Direct financing leases receivable 81,513 83,214
---------- ----------
Net investment in real estate 3,449,840 3,690,258
Cash and cash equivalents 20,748 25,272
Restricted cash 14,967 25,820
Accounts receivable, net of allowance of $7,524 and
$8,400 in 1999 and 1998, respectively 51,864 45,325
Deferred expenses and other assets, net 35,984 33,964
---------- ----------
Total assets $3,573,403 $3,820,639
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable and revolving credit facility $2,349,284 $2,641,015
Accounts payable and accrued expenses 114,259 82,658
Distribution payable 36,931 33,242
---------- ----------
Total liabilities 2,500,474 2,756,915
---------- ----------
Minority interests 34,594 42,605
Series C, D and E preferred stock 361,000 275,000
Common stock 733 731
Series A and B preferred stock 121,000 121,000
Additional paid-in capital 555,602 624,388
---------- ----------
Total shareholders' equity 677,335 746,119
---------- ----------
Total liabilities and shareholders' equity $3,573,403 $3,820,639
---------- ----------
---------- ----------
The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>
1
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED AND IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- --------------------------
1999 1998 1999 1998
----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
REVENUES:
Minimum rents $ 82,119 $ 53,143 $252,596 $149,662
Tenant recoveries 34,924 23,927 110,553 61,706
Percentage rents 2,908 1,591 9,373 5,889
-------- -------- -------- --------
Total revenues 119,951 78,661 372,522 217,257
-------- -------- -------- --------
EXPENSES:
Operating 37,690 23,302 113,841 63,066
Management fees 2,497 1,507 7,725 4,276
Advisory fee 2,309 1,333 5,951 4,300
General and administrative 160 281 1,342 1,181
Depreciation and amortization 26,950 18,374 84,769 52,252
-------- -------- -------- --------
Total expenses 69,606 44,797 213,628 125,075
-------- -------- -------- --------
OPERATING INCOME 50,345 33,864 158,894 92,182
INTEREST EXPENSE, net (42,424) (25,809) (141,609) (65,011)
OTHER INCOME:
Equity in income of unconsolidated
real estate affiliates 1,670 2,184 3,990 3,092
(Loss) gain on sale of investments - (11,816) 1,971 53,895
Interest and other income 4,691 5,500 13,464 12,941
-------- -------- -------- --------
INCOME BEFORE MINORITY INTEREST 14,282 3,923 36,710 97,099
Minority interests in earnings of
consolidated real estate affiliates (726) (926) (2,062) (2,904)
-------- -------- -------- --------
NET INCOME $ 13,556 $ 2,997 $ 34,648 $ 94,195
-------- -------- -------- --------
-------- -------- -------- --------
Net income allocable to preferred shares $ 9,559 $ 5,052 $ 26,809 $ 10,499
Net income (loss) allocable to common shares 3,997 (2,055) 7,839 83,696
-------- -------- -------- --------
$ 13,556 $ 2,997 $ 34,648 $ 94,195
-------- -------- -------- --------
-------- -------- -------- --------
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ 0.05 $ (0.03) $ 0.11 $ 1.14
-------- -------- -------- --------
-------- -------- -------- --------
Diluted $ 0.05 $ (0.03) $ 0.11 $ 1.13
-------- -------- -------- --------
-------- -------- -------- --------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES:
Basic 73,345 73,337 73,342 73,333
-------- -------- -------- --------
-------- -------- -------- --------
Diluted 74,413 74,689 74,374 83,548
-------- -------- -------- --------
-------- -------- -------- --------
The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>
2
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 34,648 $ 94,195
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 84,769 52,252
Amortization of deferred loan costs 4,209 965
Equity in income of unconsolidated real estate affiliates (3,990) (3,092)
Minority interests in earnings of consolidated real estate
affiliates 2,062 2,904
Gain on sales of investments (1,971) (53,895)
Issuance of common stock to independent directors 140 140
Changes in assets and liabilities:
Accounts receivable, net (6,871) (5,426)
Deferred expenses and other assets (7,733) (8,361)
Accounts payable and accrued expenses 11,966 8,413
--------- ----------
Net cash flows provided by operating activities 117,229 88,095
--------- ----------
INVESTING ACTIVITIES:
Capital expenditures and acquisitions (306,525) (777,869)
Proceeds from sales of investments 314,527 99,670
Cash (contributions) distributions to unconsolidated real estate
affiliates, net (1,929) 5,397
Notes receivable repayments 500 396
Direct financing leases receivable payments 1,701 1,590
Decrease in restricted cash 10,853 20,116
--------- ----------
Net cash flows provided by (used in) investing activities 19,127 (650,700)
--------- ----------
FINANCING ACTIVITIES:
Proceeds from sale of option 4,000 -
Proceeds from issuance of preferred stock 86,000 200,000
Redemption of preferred shares - (67)
Stock issuance costs (1,099) (1,006)
Cash distributions paid to preferred shareholders (24,273) (8,130)
Cash distributions paid to common shareholders (79,208) (77,732)
Cash distributions paid to minority interests, net (3,694) (3,669)
Proceeds from notes payable and revolving credit facility 738,019 1,073,087
Principal payments on notes payable and revolving credit facility (860,625) (616,377)
--------- ----------
Net cash flows (used in) provided by financing activities (140,880) 566,106
--------- ----------
Net (decrease) increase in cash and cash equivalents (4,524) 3,501
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,272 11,003
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 20,748 $ 14,504
--------- ----------
--------- ----------
SUPPLEMENTAL CASH FLOW INFORMATION PROVIDED IN NOTE 8.
The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>
3
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
1. ORGANIZATION:
Westfield America, Inc., a Missouri Corporation (together with its
subsidiaries or separately, the "Company"), is a publicly traded real estate
investment trust ("REIT") specializing in enclosed shopping centers. At
September 30, 1999, the Company had interests in 38 shopping centers branded
nationwide as "Westfield Shoppingtowns." The Company's portfolio of Westfield
Shoppingtowns includes multi-center clusters of shopping centers in the east
coast, midwest and west coast.
The Company, through its controlling interest in Westfield America
Limited Partnership (the "Operating Partnership") and its other subsidiaries
and affiliates, owns interests in a portfolio of 23 super-regional shopping
centers, 12 regional shopping centers, three power centers (each individually
a "Center" and collectively the "Centers"), 12 separate department store
properties which are net leased under financing leases to The May Department
Stores Company and certain other real estate investments (collectively, the
"Properties").
The Company is externally managed and advised by Westfield Holdings
Limited ("WHL"), an affiliate of the Company and an Australian public
company. The Company has engaged a property management company (the
"Manager"), an asset management company (the "Advisor") and a development
company (the "Developer") to provide property management, asset management
and development services to the Company. Each of the Manager, Advisor and
Developer is a wholly-owned subsidiary of WHL.
2. BASIS OF PRESENTATION:
The accompanying Condensed Consolidated Financial Statements of the
Company are unaudited; however, they have been prepared in accordance with
generally accepted accounting principles for interim financial information
and the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the disclosures required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting solely of normal recurring
matters) necessary for a fair presentation of the Condensed Consolidated
Financial Statements for these interim periods have been included. The
results for the interim period ended September 30, 1999 are not necessarily
indicative of the results to be obtained for the full fiscal year. These
unaudited Condensed Consolidated Financial Statements should be read in
conjunction with the December 31, 1998 audited Consolidated Financial
Statements and Notes thereto included in the Company's Annual Report on Form
10-K filed on March 23, 1999 and the Company's Quarterly Reports on Form 10-Q
filed on May 17, 1999 and August 16, 1999.
The Company conducts its business through its Operating Partnership,
wholly-owned subsidiaries and affiliates. The consolidated financial
statements include the accounts of the Company, the Operating Partnership and
its other subsidiaries and affiliates over which the Company is able to
exercise significant control. The Company does not consider itself to be in
control when other third party equity holders have important approval rights
over major actions. Investments in non-controlled affiliates are accounted
for using the equity method. All significant intercompany accounts and
transactions have been eliminated in consolidation. Certain amounts in the
1998 Condensed Consolidated Financial Statements have been reclassified to
conform to the 1999 presentation.
4
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
3. ACQUISITIONS:
In August 1999, the Company acquired Palm Desert Town Center in Palm
Desert, California for $82,010. Westfield Shoppingtown Palm Desert is an
869,000 square foot super-regional shopping center with five anchors and 129
specialty stores. Funds for the purchase of Palm Desert were obtained from
the issuance of $86,000 in convertible preferred stock as further described
in footnote 7.
4. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE AFFILIATES:
As of September 30, 1999, the Company's economic interest in Properties
held by unconsolidated affiliates is as follows:
<TABLE>
<CAPTION>
ECONOMIC
WESTFIELD SHOPPINGTOWN LOCATION INTEREST
- ---------------------- -------- --------
<S> <C> <C>
Independence Mall Wilmington, NC 85.0%
Plaza Camino Real Carlsbad, CA 40.0%
UTC La Jolla, CA 50.0%
Valley Fair San Jose, CA 50.0%
Vancouver Vancouver, WA 50.0%
West Valley Canoga Park, CA 42.5%
</TABLE>
A summary of the condensed balance sheets and statements of income for
all unconsolidated real estate affiliates on a combined basis is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
CONDENSED COMBINED BALANCE SHEETS:
Investment in real estate:
Land, building and improvements, at cost $ 640,712 $ 490,214
Less accumulated depreciation and amortization (43,830) (46,908)
Construction in progress 38,534 5,081
--------- ---------
Net investment in real estate 635,416 448,387
Notes payable (344,672) (185,674)
Other assets and liabilities, net and
outside interests (121,409) (123,966)
--------- ---------
Investments in unconsolidated real estate affiliates $ 169,335 $ 138,747
--------- ---------
--------- ---------
</TABLE>
5
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
4. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE AFFILIATES: (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------------------
1999 1998 1999 1998
----------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
CONDENSED COMBINED STATEMENTS OF INCOME:
Total revenues $21,856 $24,308 $51,308 $53,012
Costs and expenses:
Operating, general and administrative expenses 6,635 7,234 16,123 15,780
Interest expense, net 6,151 6,339 12,820 15,935
Depreciation and amortization 4,747 5,334 11,540 11,815
------- ------- ------- -------
Net income 4,323 5,401 10,825 9,482
Other partners' share of net income (2,653) (3,217) (6,835) (6,390)
------- ------- ------- -------
Equity in income of unconsolidated real
estate affiliates $ 1,670 $ 2,184 $ 3,990 $ 3,092
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Significant accounting policies used by unconsolidated real estate
affiliates are similar to those used by the Company.
5. NOTES PAYABLE AND REVOLVING CREDIT FACILITY:
As of September 30, 1999 and December 31, 1998, the Company had
consolidated indebtedness as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Collateralized non-recourse notes to an insurance company,
interest only payable monthly at 6.51%. This note was repaid
and retired in September 1999 $ - $167,000
Collateralized non-recourse notes payable to insurance
companies, interest at 7.72%, principal and interest payable
monthly, due in 2010 159,000 -
Collateralized term loan, interest only at LIBOR + 1.50%
(7.73% effective rate at September 30, 1999), payable
monthly, due in 2001 64,000 -
Collateralized construction loan with a maximum commitment
of $37,500, interest only at LIBOR + 1.75% (8.11% effective
rate at September 30, 1999), payable monthly, due in 2001 29,163 -
Senior collateralized non-recourse notes, interest at 6.39%,
principal and interest payable quarterly, due in 2004 14,713 16,782
Senior collateralized non-recourse notes bearing interest
at 7.33%, interest only payable until 2004, principal and
interest payable thereafter, due in 2014 55,167 55,167
</TABLE>
6
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
5. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Collateralized non-recourse note payable to an insurance
company, interest at an effective rate of 7.15%, principal
and interest payable monthly, due in 2000 132,918 136,456
Unsecured revolving credit facility with a group of banks
with a maximum commitment of $600,000, interest only at
LIBOR + 1.00% (7.10% effective rate at September 30, 1999),
payable monthly, due in 2000 with options to extend 484,200 490,000
Unsecured bridge facility with a group of banks, interest only
at LIBOR + 1.75%, payable monthly. This note was repaid and
retired in June 1999 - 100,000
Collateralized commercial mortgage notes due in 2004, interest
only, payable monthly at 6.78% 75,000 75,000
Secured bridge facility with a group of banks, interest only
at LIBOR + 1.50%, payable monthly. This note was repaid and
retired in January 1999 - 44,000
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.77%, principal and interest
payable monthly, due in 2002 43,811 -
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2002 60,041 61,603
Secured bridge facility with a group of banks, interest only
at LIBOR + 1.75%, payable monthly. This note was repaid and
retired in June 1999 - 95,000
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2018 18,677 19,026
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2006 22,661 23,043
Collateralized non-recourse note payable to a bank, interest
at LIBOR + 2.00% interest only, payable monthly. This note was
repaid and retired in May 1999 - 92,476
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2022 72,728 73,745
Collateralized non-recourse note payable to an insurance
company, effective interest at 7.20%, principal and interest
payable monthly, due in 2006. This note was accounted for under
the equity method upon the sale of a 50% interest in UTC to
J.P. Morgan (see note 8) - 81,041
</TABLE>
7
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
5. NOTES PAYABLE AND REVOLVING CREDIT FACILITY: (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Collateralized non-recourse notes payable to an insurance
company, effective interest at 7.00%, principal and interest
payable monthly, due in 2004 62,017 63,488
Collateralized note payable, interest only payable monthly
at LIBOR + 0.53% (6.36% effective rate at September 30, 1999)
due in 2001 754,100 746,100
Unsecured subordinated notes to Australian investors, interest
payable semi-annually at LIBOR + 2.32% (8.38% effective rate
at September 30, 1999), due in equal installments in 2001,
2002 and 2003 301,088 301,088
---------- ----------
$2,349,284 $2,641,015
---------- ----------
---------- ----------
</TABLE>
Interest costs capitalized for the three months ended September 30, 1999
and 1998, and the nine months ended September 30, 1999 and 1998, totaled
$844, $606, $1,688 and $1,267, respectively.
In conjunction with the issuance of the unsecured subordinated notes to
Australian investors in June 1998, the Company entered into a foreign
currency hedge and swap agreement effectively fixing the principal and
interest payments due to the note holders. The unrealized loss on the foreign
currency hedge and swap agreement was approximately $699 at September 30,
1999 as compared to $12,551 at December 31, 1998.
The annual maturities of notes payable and revolving credit facility as
of September 30, 1999, are as follows:
<TABLE>
<S> <C>
1999 $ 3,634
2000 625,964
2001 958,404
2002 206,782
2003 109,513
----------
Thereafter 444,987
----------
$2,349,284
----------
----------
</TABLE>
8
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
6. INTEREST RATE SWAP CONTRACTS:
Interest rate swaps are contractual agreements between the Company and
third parties to exchange fixed and floating interest payments periodically
without the exchange of the underlying principal amounts (notional amounts).
In the unlikely event that a counterparty fails to meet the terms of an
interest rate swap agreement, the Company's exposure is limited to the
interest rate differential on the notional amount. The Company does not
anticipate non-performance by any of the counterparties.
The Company has also entered into deferred interest rate exchange
agreements to manage future interest rates corresponding with the expiration
of existing fixed rate debt. The agreements consist of swaps and involve the
future receipt of a floating rate based on LIBOR and the payment of a fixed
rate.
<TABLE>
<CAPTION>
RANGE OF
RANGE OF FIXED MATURITY
NOTIONAL AMOUNT RATES RATES
--------------- -------------- ---------------
<S> <C> <C> <C>
Current swaps where the Company receives
LIBOR $1,687,000 5.85% to 7.17% 6/30/01 to
12/11/08
Deferred swaps where the Company receives
LIBOR $730,000 6.07% to 6.35% 4/01/02 to
04/01/08
</TABLE>
The net unrealized gain on interest rate swap contracts was approximately
$46,952 at September 30, 1999 as compared to a net unrealized loss of
approximately $88,675 at December 31, 1998.
7. CAPITAL STOCK:
In August 1999, the Company issued 477,778 shares of Series E cumulative
convertible redeemable preferred stock (the "Series E Preferred Stock") to
Westfield America Trust for $86,000. Holders of the Series E Preferred Stock
are entitled to receive, when declared, cumulative cash dividends equal to
the greater of $15.30 per annum per share or an amount equal to 10.0 times
the dollar amount declared on the Company's common stock during the period.
The Series E Preferred Stock is not convertible into the Company's common
stock, unless (i) the conversion is approved by the shareholders of the
Company or (ii) the Series E Preferred Stock is sold to an individual or
entity to whom the Company may issue its common stock without shareholder
approval. Subject to the foregoing, each share of Series E Preferred Stock
is currently convertible into 10 shares of common stock of the Company,
subject to adjustment. The Company has the option to redeem the Series E
Preferred Stock anytime on or after August 2009 at a redemption price of $180
per share, which is equal to the liquidation preference. The original holders
of the Company's Series E Preferred Stock have the right to require the
Company to redeem the Series E Preferred Stock if the Company ceases to
qualify as a REIT for federal tax purposes. Additionally, if there is a
change in control, as defined, or, if after August 2009, the market price of
the Company's common stock is less than $18.00 per share, holders of the
Company's Series E Preferred Stock have the right to require the Company to
redeem the Series E Preferred Stock.
9
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
7. CAPITAL STOCK: (CONTINUED)
In May 1998, the Company entered into a stock subscription agreement with
Westfield America Trust ("WAT"), under which WAT has the obligation to
purchase and the Company has the right to sell, up to AUS $465,000
(approximately US $303,180 at September 30, 1999) of the Company's common
stock in three equal installments at a 5% discount to the then prevailing
market price of the Company's common stock at June 2001, 2002 and 2003. In
lieu of issuing common stock at each installment date, the Company has the
option to pay the 5% discount in cash or common stock.
Each director who is not an officer of the Company or an employee of WHL
is entitled to annual compensation equal to $20 in cash and $20 in common
stock. The number of shares issued is based on the share price of the
Company's common stock on the anniversary of the director's appointment. In
May and September 1999, the Company issued 7,446 and 1,404 shares,
respectively, of common stock to directors.
A quarterly distribution was declared September 21, 1999 to shareholders
of record on September 30, 1999 of $0.3625 per common share, which is equal
to $1.45 per share on an annualized basis.
Under certain circumstances investors in the Company's Operating
Partnership may exchange their Investor Unit Rights for cash or, at the
discretion of the Company, shares of the Company's common stock. Holders of
Investor Unit Rights are entitled to receive, when declared, distributions
from the Operating Partnership in proportion to the dividends paid to holders
of the Company's common stock. On a weighted average basis, there were
2,164,235 Investor Unit Rights outstanding in the Operating Partnership for
the three and nine months ended September 30, 1999, plus an additional
909,143 partnership units outstanding in partnerships related to Independence
Mall which may be converted into an equivalent number of Investor Unit Rights
in the Operating Partnership.
As of September 30, 1999, there were 73,346,541 shares of common stock,
par value $0.01 per share, outstanding.
8. SUPPLEMENTAL CASH FLOW INFORMATION:
For the nine months ended September 30, 1999 and 1998, the Company paid
interest totaling $134,743 and $58,722, respectively, net of capitalized
interest.
NON CASH INVESTING AND FINANCING INFORMATION:
During the nine months ended September 30, 1999, the Company recorded a
decrease in minority interest totaling $5,213 as a result of the acquisition
of a 16% interest in Wheaton Plaza for Investor Unit Rights in January 1999.
10
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
8. SUPPLEMENTAL CASH FLOW INFORMATION: (CONTINUED)
Prior to the formation of a joint venture with J.P. Morgan Investment
Management, Inc., ("J.P. Morgan") in June 1999, which effectively transferred
a 50% interest in University Towne Centre ("UTC") and Valley Fair to J.P.
Morgan, UTC was included in the Company's consolidated accounts. After the
Company transferred a 50% interest to J.P. Morgan in conjuction with the
joint venture transaction, the Company began accounting for UTC under the
equity method. The Company's 50% interest in the fixed assets and liabilities
transferred to J.P. Morgan were as follows:
<TABLE>
<S> <C>
Land $ 9,540
Building and improvements 177,925
Less accumulated depreciation (4,180)
--------
Net investment in real estate 183,285
Note payable (80,269)
--------
Net investment in UTC 103,016
Cash proceeds from J.P. Morgan (50,865)
--------
Non-cash addition to investments in
unconsolidated real estate affiliates $ 52,151
--------
--------
</TABLE>
9. RELATED PARTIES:
The Manager entered into an agreement with the Company to manage and
lease the properties in the Company's portfolio beginning January 1, 1995. In
consideration for these management and leasing services, the Company
reimburses the Manager for certain recoverable property operating costs,
including mall related payroll, and pays the Manager gross fees of 5% of
minimum and percentage rents received by the Centers. Property management
fees totaling $2,497 and $1,507, net of capitalized leasing fees of $1,793
and $1,164 were expensed for the three months ended September 30, 1999 and
1998, respectively. Property management fees totaling $7,725 and $4,276, net
of capitalized leasing fees of $5,349 and $3,227, were expensed by the
Company for the nine months ended September 30, 1999 and 1998, respectively.
Included in accounts payable and accrued expenses at December 31, 1998, are
management fees payable to the Manager totaling $1,299.
In addition to the management fees, the Manager was reimbursed for
recoverable operating costs, including mall related payroll costs, totaling
$5,261 and $3,712, for the three months ended September 30, 1999 and 1998,
respectively, and $15,968 and $11,649 for the nine months ended September 30,
1999 and 1998, respectively.
The Company entered into a Master Development Framework Agreement with
the Developer under which the Company granted the Developer the exclusive
right to carry out expansion, redevelopment and related works on the
Company's wholly-owned shopping centers and agreed to endeavor to have the
Developer be appointed to carry out similar activities for jointly owned real
estate affiliates. During the three months ended September 30, 1999 and
1998, the Company paid the Developer $30,762 and $15,840, respectively, and
$65,949 and $35,944 for the nine months ended September 30, 1999 and 1998,
respectively, for expansion, redevelopment and related work.
11
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS EXCEPT SHARES, UNITS AND PER SHARE AMOUNTS)
9. RELATED PARTIES: (CONTINUED)
In July 1996, the Company engaged the Advisor to provide a variety of
asset management and investment services, subject to supervision of the
Company. The Advisor is entitled to an annual fee equal to 25% of the annual
Funds from Operations ("FFO") in excess of the Advisory FFO Amount ($152,807
at September 30, 1999), but not to exceed 55 basis points of the Net Equity
Value (as defined) of the Company's assets. The Advisory FFO amount increases
whenever the Company issues additional common stock. The advisory fee was
$2,309 and $1,333 for the three months ended September 30, 1999 and 1998,
respectively, and $5,951 and $4,300 for the nine months ended September 30,
1999 and 1998, respectively.
Included in interest and other income for the three months ended
September 30, 1999 and 1998 and nine months ended September 30, 1999 and
1998, is interest income earned on a participating loan to wholly-owned
indirect subsidiaries of WHL totaling $4,280, $3,566, $11,943 and $10,656,
respectively.
10. COMMITMENTS AND CONTINGENCIES:
The Company is currently involved in several development projects and had
outstanding commitments to the Developer totaling approximately $99,361 on a
prorata basis at September 30, 1999.
The Company currently is neither subject to any material litigation nor,
to management's knowledge, is any material litigation currently threatened
against the Company other than routine litigation and administrative
proceedings arising in the ordinary course of business. Based on consultation
with counsel, management believes that these items will not have a material
adverse impact on the Company's consolidated financial position or results of
operations.
12
<PAGE>
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Westfield America, Inc. (the "Company"), is a publicly traded real estate
investment trust ("REIT") specializing in enclosed shopping centers. The
Company's portfolio, branded nationwide as "Westfield Shoppingtowns",
includes multi-center clusters of shopping centers in the East Coast, Midwest
and West Coast.
The Company has been engaged for over 40 years in the business of owning,
acquiring, financing, operating, leasing, developing, and redeveloping
regional and super-regional shopping centers. As of September 30, 1999, the
Company's portfolio of 38 shopping centers (the "Centers") consisted of 23
super-regional shopping centers with approximately 25.2 million square feet
of space, 12 regional shopping centers with approximately 8.1 million square
feet of space, three power centers with approximately 1.4 million square feet
of space and six office buildings adjacent to its Centers with approximately
0.6 million square feet of space, representing approximately 71.4%, 22.9%,
4.0%, and 1.7%, respectively, of the Company's 35.3 million square feet of
gross leasable area.
The following discussion should be read in conjunction with the unaudited
Condensed Consolidated Financial Statements of the Company and the Notes
thereto for the nine months ended September 30, 1999, the Consolidated
Financial Statements of the Company for the year ended December 31, 1998
included in the Company's Annual Report on Form 10-K filed on March 23, 1999
and the Company's Quarterly Reports on Form 10-Q filed on May 17, 1999 and
August 16, 1999.
GENERAL BACKGROUND
Fluctuations in the Company's results of operations from period to period
were primarily affected by acquisitions that occurred during the year ended
December 31, 1998. In 1998, the Company acquired interests in 16 shopping
centers, (the "1998 Acquisition Centers"), including a portfolio of 12
shopping centers (the "Hahn Centers") from TrizecHahn Centers, Inc.
("TrizecHahn"), for approximately $1.8 billion.
The Centers acquired in 1998 were acquired with proceeds obtained from
the Company's unsecured revolving credit facility, issuance of new secured
and unsecured debt in the third and fourth quarter of 1998, assumption of
debt, the issuance of notes to Australian investors (the "Capital Notes") in
June 1998, the issuance of shares of the Company's Series C and D Preferred
Stock in August and December 1998, the exercise of warrants in Westfield
Holdings Limited ("WHL") and subsequent sale of WHL shares in April 1998 and
issuance of Investor Unit Rights in Westfield America Limited Partnership and
partnership interests in other affiliated partnerships.
At September 30, 1999 and for the nine months then ended, the Condensed
Consolidated Financial Statements and Notes thereto reflect the consolidated
financial results of 31 Centers, Palm Desert Town Center following its
acquisition in August 1999, the equity in income of six unconsolidated real
estate affiliates, including University Towne Centre which became a
deconsolidated entity in June 1999, Los Cerritos Center until it was sold in
June 1999 and an additional 32% interest and 15% interest in Wheaton Plaza
and Independence Mall, respectively, which were effectively acquired in
January 1999, 12 separate department store properties that are net leased to
The May Company under financing leases and a $145 million participating loan
made to two wholly-owned affiliates of WHL in May of 1997 (the "Garden State
Plaza Loan").
13
<PAGE>
At September 30, 1998 and for the nine months then ended, the Condensed
Consolidated Financial Statements and Notes thereto reflect the consolidated
financial results of 19 centers, the equity in income of five unconsolidated
real estate partnerships, Crestwood Plaza following its acquisition in
January 1998, The Promenade at Woodland Hills following its acquisition in
June 1998, University Towne Centre and the equity in income of Valley Fair
and Los Cerritos Center following their acquisition in July 1998,
Independence Mall following its acquisition in August 1998, Solano Mall,
Parkway Plaza and the equity in income from Santa Anita Fashion Park
following their acquisition in September 1998, 12 separate department store
properties that are net leased to the May Department Stores Company under
financing leases, certain other real estate investments, the Garden State
Plaza Loan and the sale of investments.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1999 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1998
TOTAL REVENUES increased $41.3 million or 53% to $120.0 million for the
three months ended September 30, 1999 as compared to $78.7 million for the
same period in 1998. The increase was primarily the result of the addition
of the 1998 Acquisition Centers which contributed $40.2 million or 97% of the
increase in total revenues. Excluding the 1998 Acquisition Centers, total
revenues increased $1.1 million due primarily to increased revenues generated
by completed redevelopments at Westfield Shoppingtowns Mission Valley - West,
South Shore, Eastland, Enfield and Annapolis.
TOTAL EXPENSES increased $ 24.8 million or 55% to $69.6 million for the
three months ended September 30, 1999 as compared to $44.8 million for the
same period in 1998. The increase was primarily the result of the addition of
the 1998 Acquisition Centers, which contributed $21.5 million or 87% of the
increase in total expenses, including $7.2 million in depreciation. Excluding
the 1998 Acquisition Centers, total expenses increased $3.3 million due
primarily to increased operating costs including depreciation from recently
completed redevelopments and higher advisory fee.
INTEREST EXPENSE, net of capitalized interest, increased $16.6 million or
64% to $42.4 million for the three months ended September 30, 1999, as
compared to $25.8 million for the same period in 1998, due primarily to
increased borrowings under the Company's secured and unsecured loan
facilities, and secured debt assumed and issued in conjunction with the
acquisition of the 1998 Acquisition Centers.
EQUITY IN INCOME OF UNCONSOLIDATED REAL ESTATE AFFILIATES decreased
approximately $0.5 million to $1.7 million for the three months ended
September 30, 1999 as compared to $2.2 million for the same period in 1998
primarily due to the acquisition of the remaining interests in Topanga and
Los Cerritos in November 1998, partially offset by the sale of a 50% interest
in UTC in June 1999.
LOSS ON SALE OF INVESTMENTS for the three months ended September 30, 1998
reflects a loss of $11.8 million due to the reversal of certain interest rate
swap contracts originally completed in connection with the TrizecHahn
acquisition.
INTEREST AND OTHER INCOME decreased $0.8 million to $4.7 million for the
three months ended September 30, 1999 as compared to $5.5 million for the
same period in 1998. The decrease was due to interest earned on a note
receivable which was repaid in full in October 1998, partially offset by an
increase in participation interest earned on the Garden State Plaza Loan and
interest earned on temporary investments.
14
<PAGE>
MINORITY INTERESTS decreased $0.2 million to $0.7 million for the three
months ended September 30, 1999, as compared to $0.9 million for the same
period in 1998, due to the acquisition of a 16% interest in Wheaton Plaza in
January 1999 which was partially offset by minority interests in Santa Anita
and Capital Mall and increased net income generated by the completed
redevelopment at Mission Valley.
NET INCOME increased $10.6 million to $13.6 million for the three months
ended September 30, 1999 as compared to $3.0 million for the same period in
1998 for the reasons discussed above.
RESULTS OF OPERATIONS
COMPARISONS OF THE NINE MONTHS ENDED SEPTEMBER 30, 1999 TO THE NINE MONTHS
ENDED SEPTEMBER 30, 1998
TOTAL REVENUES increased $155.3 million or 72% to $372.5 million for the
nine months ended September 30, 1999 as compared to $217.2 million for the
same period in 1998. The increase was primarily the result of the addition of
the 1998 Acquisition Centers which contributed $144.7 million or 93% of the
increase in total revenues. Excluding the 1998 Acquisition Centers, total
revenues increased $10.6 million due to increased revenues generated by
completed redevelopments, at Westfield Shoppingtowns Mission valley - West,
South Shore, Eastland, Enfield and Annapolis and higher percentage rents due
to increased sales throughout the portfolio.
TOTAL EXPENSES increased $88.5 million or 71% to $213.6 million for the
nine months ended September 30, 1999, as compared to $125.1 million for the
same period in 1998. The increase was primarily the result of the addition of
the 1998 Acquisition Centers, which contributed a combined $79.0 million or
89% of the increase in total expenses, including $28.4 million in depreciation
expense. Excluding the 1998 Acquisition Centers, total expenses increased $9.5
million due primarily to increased operating costs including depreciation from
completed redevelopments and higher advisory fee.
INTEREST EXPENSE, net of capitalized interest, increased $76.6 million
or 118% to $141.6 million for the nine months ended September 30, 1999, as
compared to $65.0 million for the same period in 1998, due primarily to
increased borrowings under the Company's secured and unsecured loan
facilities, the Capital Notes and secured debt assumed and issued in
conjunction with the acquisition of the 1998 Acquisition Centers.
EQUITY IN NET INCOME OF UNCONSOLIDATED REAL ESTATE AFFILIATES increased
approximately $0.9 million to $4.0 million for the nine months ended
September 30, 1999, as compared to $3.1 million for the same period in 1998,
due primarily to the acquisition of a joint venture interest in Valley Fair
in July 1998 and the sale of 50% joint venture interest in UTC in June 1999,
partially offset by the acquisition of the remaining 58% interest in Topanga
acquired in November 1998.
GAIN ON SALE OF INVESTMENTS for the nine months ended September 30, 1999,
was $2.0 million as a result of the sale of Los Cerritos Center. For the
same period in 1998, the Company recognized a net gain of $53.9 million due
primarily to the sale of WHL warrants in April 1998, partially offset by the
1998 third quarter reversal of certain interest rate swap contracts
originally completed in connection with the TrizecHahn acquisition.
15
<PAGE>
INTEREST AND OTHER INCOME increased $0.5 million to $13.4 million for the
nine months ended September 30, 1999 as compared to $12.9 million for the
same period in 1998. The increase was due to an increase in participation
interest earned on the Garden State Plaza Loan and interest earned on
temporary investments.
MINORITY INTERESTS decreased $0.8 million to $2.1 million for the nine
months ended September 30, 1999 as compared to $2.9 million for the same
period in 1998 due to the acquisition of a 16% interest in Wheaton Plaza in
January 1999 which was partially offset by minority interests in Santa Anita
and Capital Mall and increased net income generated by the completed
redevelopment at Mission Valley.
NET INCOME decreased $59.5 million to $34.6 million for the nine months
ended September 30, 1999 as compared to $94.2 million for the same period in
1998 for the reasons discussed above.
FFO FUNDS FROM OPERATIONS
The Company computes FFO in accordance with standards established by the
White Paper on FFO approved by the Board of Governors of NAREIT in March 1995
which defines FFO as net income (loss) (computed in accordance with generally
accepted accounting principles ("GAAP")), excluding gains (or losses) from
debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
affiliates and joint ventures. FFO should not be considered as an alternative
to net income (determined in accordance with GAAP) as a measure of the
Company's financial performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the Company's liquidity,
nor is it indicative of funds available to fund the Company's cash needs,
including its ability to make distributions. The Company believes that FFO is
an effective measure of the Company's operating performance because analysts
and investors utilize FFO in analyzing the operating results of real estate
companies rather than using earnings per share. FFO, as computed by the
Company, may not be comparable to similarly titled figures reported by other
REITs.
16
<PAGE>
The following is a summary of the Company's FFO and a reconciliation of
net income to FFO for the periods presented (amounts in thousands, except
percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
1999 1998 1999 1998
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Funds from operations $44,087 $36,148 $127,294 $ 99,860
------- ------- -------- --------
------- ------- -------- --------
Increase in funds from operations from
prior period 22% 27%
------- --------
------- --------
Reconciliation:
Net income $13,556 $ 2,997 $ 34,648 $ 94,195
Loss (gain) on sales of investments - 11,816 (1,971) (53,895)
Income allocable to Investor Unit Rights 490 - 2,023 -
Depreciation and amortization:
Deferred financing leases 577 539 1,701 1,590
Consolidated properties 26,950 18,374 84,769 52,252
Unconsolidated real estate affiliates 2,777 2,868 6,920 6,744
Minority interest portion (263) (446) (796) (1,026)
------- ------- -------- --------
Funds from operations $44,087 $36,148 $127,294 $ 99,860
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
EBITDA EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
The Company believes that there are several important factors that
contribute to the ability of the Company to increase rent and improve
profitability of its shopping centers, including aggregate retailer sales
volume, sales per square foot, occupancy levels and retailer costs. Each of
these factors has a significant effect on EBITDA. The Company believes that
EBITDA is an effective measure of operating performance because EBITDA is
unaffected by the debt and equity structure of the property owner. EBITDA:
(i) does not represent cash flow from operations as defined by GAAP; (ii)
should not be considered as an alternative to net income (determined in
accordance with GAAP) as a measure of the Company's overall performance;
(iii) is not indicative of cash flows from operating, investing and financing
activities (determined in accordance with GAAP); and (iv) is not an
alternative to cash flows (determined in accordance with GAAP) as a measure
of the Company's liquidity.
The Company's EBITDA after minority interest plus its pro-rata share of
EBITDA of unconsolidated real estate affiliates increased 60% from $171.0
million for the nine months ended September 30, 1998 to $274.3 million for
the same period in 1999. The growth in EBITDA reflects the addition of total
gross leasable area, increased rental rates, increased retailer sales
improved occupancy levels and control of operating costs.
17
<PAGE>
The following is a summary of the Company's EBITDA and a reconciliation
of EBITDA to FFO (which has been reconciled to the Company's net income
above) for the periods presented (amounts in thousands, except percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ---------------------
1999 1998 1999 1998
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
EBITDA $89,251 $64,320 $274,268 $171,036
------- ------- -------- --------
------- ------- -------- --------
Increase in EBITDA from prior period 39% 60%
------- --------
------- --------
Reconciliation:
Funds from Operations $44,087 $36,148 $127,294 $ 99,860
Interest expense:
Consolidated properties 42,424 25,809 141,609 65,011
Unconsolidated real estate affiliates 3,211 2,694 6,750 6,916
Minority interest portion of consolidated
properties (471) (331) (1,385) (751)
------- ------- -------- --------
EBITDA $89,251 $64,320 $274,268 $171,036
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
PORTFOLIO DATA
SEASONALITY
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season when retailer occupancy and retail
sales are typically at their highest levels. In addition, shopping malls
achieve a substantial portion of their specialty (temporary retailer) rents
during the holiday season. As a result of these factors, earnings are
generally highest in the fourth quarter of each year.
The following table summarizes certain quarterly operating data for 1998
and the first three quarters of 1999 for the Company's Centers (amounts in
thousands, except percentages):
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
<S> <C> <C> <C> <C>
1999 QUARTERLY DATA
Mall Shop sales $659,438 $729,237 $733,418 N/A
Revenues $145,599 $145,197 $146,498 N/A
Percentage leased 91% 92% 93% N/A
1998 QUARTERLY DATA
Mall Shop sales $615,302 $685,548 $688,089 $1,071,951
Revenues $ 87,933 $ 86,807 $108,469 $ 145,072
Percentage leased 92% 93% 93% 93%
</TABLE>
18
<PAGE>
REPORTED TENANT SALES VOLUME
Total sales for Mall Shops (retail stores with less than 20,000 square
feet of leasable area) affect revenue and profitability levels of the Company
because they determine the amount of minimum rent the Company can charge, the
percentage rent it realizes and the recoverable expenses (common area
maintenance, real estate taxes, etc.) the retailers can afford to pay. Mall
Shop sales for the Company's Centers, for the nine months ended September 30,
1999, increased 5.9% on a per square foot basis over the same period in 1998.
The Company believes these sales levels enhance the Company's ability to
obtain higher rents from retailers.
The table below sets forth Mall Shop sales and per square foot percentage
increases over the same periods in 1998 for the Company's Centers, in the
east coast, the midwest and the west coast regions of the United States
(amounts in thousands, except percentages):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
----------------------------- -------------------------------
MALL SHOP INCREASE PER MALL SHOP INCREASE PER
SALES SQ. FT. SALES SQ. FT.
------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
East coast $208,814 6.6% $ 601,362 6.0%
Midwest 83,900 1.0% 250,094 2.1%
West coast 440,704 8.1% 1,270,637 6.6%
-------- ------ ---------- -----
Total Centers $733,418 6.8% $2,122,093 5.9%
-------- ------ ---------- -----
-------- ------ ---------- -----
</TABLE>
LEASING
Mall Shop space was 93% leased at September 30, 1999, including the
TrizecHahn Centers, which were acquired in the last half of 1998. The Company
excludes temporary leasing from the calculation of leased Mall Shop space
because such leases are on a short-term basis (less than one year) and are
subject to termination by the Company on thirty days' notice. The following
table sets forth leased status for the Company's Centers in the East Coast,
the Midwest and the West Coast regions of the United States.
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1999 1998
--------- ----------
<S> <C> <C>
East coast 95% 94%
Midwest 92% 93%
West coast 91% 92%
Total Centers 93% 93%
</TABLE>
RENTAL RATES
As leases have expired, the Company has generally been able to rent the
available space, either to the existing retailer or a new retailer, at rental
rates that are higher than those of the expired leases. In a period of
increasing sales, rents on new leases will tend to rise as retailers'
expectations of future growth become more optimistic. In periods of slower
growth or declining sales, rents on new leases will grow more slowly or will
decline for the opposite reason.
19
<PAGE>
Average Mall Shop base rent was $30.03 per square foot at September 30,
1999. The following table contains certain information regarding base rent
per square foot of Mall Shop leases, excluding leases in excess of 20,000
square feet that have been executed or expired since January 1, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ---------------------
1999 1998(1) 1999 1998(1)
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Average base rent of Mall Shop leases, at the
end of the period $30.03 $28.07 $30.03 $28.07
Leases expired during the period 26.86 24.28 25.09 24.96
Leases executed during the period 36.21 32.65 37.24 30.26
- --------------
(1) Excluding North County Fair.
</TABLE>
As required by GAAP, contractual rent increases are recognized as rental
income using the straight-line method over the respective lease terms, which
may result in the recognition of income not evidenced by cash receipts. The
amount of contractual rent increases not represented by cash receipts (in
thousands) was $1,056, $1,115, $3,566 and $3,127 for the three months ended
September 30, 1999 and 1998 and nine months ended September 30, 1999 and
1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company had unused capacity under its
unsecured revolving credit facility totaling $115.8 million which will be
utilized to fund acquisition and redevelopment activities and as a revolving
working capital facility. Through its hedging activities, the Company has
fixed the interest rates applicable to the outstanding balance under this
facility at rates ranging from 6.94% to 7.25%.
At September 30, 1999, the Company's cash and cash equivalents totaled
$20.7 million, excluding its proportionate share of cash held by
unconsolidated real estate affiliates.
During the quarter ended September 30, 1999, the Company refinanced
secured debt totaling $167 million, due in 2001, with a new ten-year
commercial loan from Prudential Mortgage Capital and New York Life Insurance
Company, secured by a mortgage on Westfield Shoppingtown Montgomery Mall,
totaling $159 million. The loan bears interest at 7.72% and is due in 2010.
This refinancing retired first mortgages on Westfield Shoppingtown South
County and Westfield Shoppingtown West County and facilitates separate
construction loans for future redevelopments.
In August 1999, the Company issued 477,778 shares of Series E cumulative
convertible redeemable preferred stock (the "Series E Preferred Stock") to
Westfield America Trust for $86,000. Holders of the Series E Preferred Stock
are entitled to receive, when declared, cumulative cash dividends equal to
the greater of $15.30 per annum per share or an amount equal to 10.0 times
the dollar amount declared on the Company's common stock during the period.
Of the $86 million raised, $82 million was used to acquire Palm Desert Town
Center.
20
<PAGE>
The Company's consolidated indebtedness at September 30, 1999 was
$2,349.3 million, of which 98% is fixed rate debt after considering interest
rate protection agreements with notional amounts totaling approximately $1.7
billion. The interest rate on the fixed rate debt including swap contracts
ranges from 6.36% to 8.38%. The Company's pro-rata share of debt-to-total
market capitalization, based on the share price at September 30, 1999 was
55.6%, excluding the Capital Notes from the numerator. The maturity dates of
consolidated indebtedness range from 2000 to 2018. Scheduled principal
amortization and balloon payments in connection with maturing mortgage
indebtedness are included in Note 5 of the Condensed Consolidated Financial
Statements included in this quarterly report on Form 10-Q.
The historical sources of capital used to fund the Company's interest
expense, recurring capital expenditures and non-recurring capital
expenditures (such as major building renovations and expansions) have been:
(a) EBITDA, (b) secured and unsecured financing and (c) capital
contributions. The Company anticipates that development projects, expansion
projects and potential acquisitions will be funded by external financing
sources.
Capital expenditures and capital leasing costs totaled approximately
$90.8 million and $46.0 million, for the nine months ended September 30, 1999
and 1998, respectively. The following table shows the components of capital
expenditures and capital leasing costs (amounts in millions):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Renovations and expansions $73.1 $35.5
Tenant allowances 10.2 6.7
Capital leasing costs 5.3 3.2
Other capital expenditures 2.2 0.6
----- -----
Total $90.8 $46.0
----- -----
----- -----
</TABLE>
The Company believes that redevelopment, repositioning and expansion are
key to maximizing the use and performance of its assets and increasing its
income growth and capital appreciation. The Company continually evaluates
the redevelopment potential of its Centers. Due to the financial and
regulatory burdens presented by the development of new regional shopping
centers, the Company believes that an on-going redevelopment program provides
a cost efficient means of ensuring that the Company's Centers compete
effectively within their existing markets and are able to attract new
customers.
The Company is currently involved in several development projects and had
outstanding commitments with contractors totaling approximately $99.4 million
on a proportional basis as of September 30, 1999, which will be funded
through existing mortgage debt and the unsecured revolving credit facility.
The Company anticipates that its EBITDA will provide the necessary funds
on a short-term and long-term basis for its interest expense on oustanding
indebtedness and all distributions to the shareholders in accordance with
REIT requirements. Sources of recurring and non-recurring capital
expenditures on a short-term and long-term basis, such as major building
renovations and expansions, as well as for scheduled principal payments,
including balloon payments on outstanding indebtedness, are expected to be
obtained from: (a) additional debt financing, (b) additional equity and (c)
working capital reserves.
Although no assurance can be given, the Company believes that it will
have access to capital resources sufficient to satisfy the Company's cash
requirements and expand and develop its business in accordance with its
strategy for growth.
21
<PAGE>
DISTRIBUTIONS
A quarterly distribution was declared September 21, 1999 to shareholders
of record on September 30, 1999 of $0.3625 per common share, which is equal
to $1.45 per share on an annualized basis.
YEAR 2000 READINESS
The Year 2000 Problem is the result of computer hardware and software
systems (collectively referred to as "Systems" and individually as a
"System") having been designed to use a two-digit code rather than a
four-digit code to define the applicable year, as in "98" to represent
"1998". Systems may misinterpret a date using "00" as the year 1900 rather
than the year 2000. This could result in errors causing such Systems to
become unreliable or to fail.
On behalf of the Company, the Company's Manager began a company-wide
assessment in 1997 (the "Project") to identify the Company's reliance on
Systems using a two digit date code as well as the Company's exposure to
third party customers and suppliers critical to the Company's operations.
The Project included an assessment of the Company's dependence upon such
Systems and third parties as well as establishing priorities for addressing
any Systems or third party customers and suppliers which are assessed as
potential year 2000 compliance risks.
The Company's initial assessment identified four areas of concern: (i)
internal Systems which the Company uses for information processing, data
storage and communication, (ii) fire, life and safety systems installed at
the Company's Properties which are used for measurement and control of
mechanical devices essential to the Properties' use and operations, (iii)
economic dependence upon significant customers which are critical to the
Company's operations, and (iv) relationships with third party suppliers upon
which the Company's business is substantially dependent.
INTERNAL SYSTEMS
In 1997, the Manager completed a comprehensive assessment of all
communication, hardware and software Systems believed to be critical to the
Company's operations. As a result of that assessment, the Manager began a
program of replacing and upgrading all Systems which were identified as not
being Year 2000 compliant. Requirements for replacing all hardware and
software Systems included receipt of written confirmation that the new
Systems were Year 2000 compliant. The conversion was substantially completed
on October 31, 1998. Based upon the assessments and testing to date, no
contingency plans are expected to be needed. Management considers its efforts
to ensure Year 2000 compliance of its internal Systems to be adequate;
however, assurances obtained from hardware and software vendors have not been
independently verified and there can be no assurance that testing has been or
will be adequate, in all instances, to ensure that all software and hardware
systems are compatible and able to function reliably in the year 2000 and
thereafter. The cost of the computer conversion as well as the costs to test
the System's Year 2000 compliance were incurred by the Manager and were not
reimbursed by the Company.
22
<PAGE>
FIRE, LIFE AND SAFETY SYSTEMS
Management's initial assessment of the fire, life and safety Systems and
the heating, ventilating and air conditioning ("HVAC") Systems at the
properties indicates that manual overrides on most Systems are available as
an alternative to automated controls for monitoring and controlling existing
Systems. The Manager has completed an assessment of all electronic and
mechanical control systems at the Properties and has upgraded all Systems,
which were identified as not Year 2000 compliant. Any cost incurred to
replace or upgrade such Systems are a cost of maintaining the Centers and are
therefore considered to be recoverable from the tenants under the terms of
existing leases. Although there can be no assurance, management considers
that the financial impact and risk of significant loss because of System
changes or business interruptions caused by fire, life and safety Systems and
HVAC Systems, which are not Year 2000 compliant, will not be material.
SIGNIFICANT CUSTOMERS
The Company is also reliant on its customers to make the necessary
preparations for the year 2000 so that their business operations will not be
interrupted, thus threatening their ability to honor their financial
commitments. As of December 31, 1998, all tenants had been notified of their
responsibilities under their leases notwithstanding interruptions to their
business resulting from Year 2000 problems. Although the Company's tenants
have indicated that they are in the process of upgrading and testing their
Systems, there can be no assurance that all tenants will adequately complete
the necessary upgrades or that the tests being, or to be, performed will be
adequate to ensure that all of their Systems will function reliably in the
year 2000 and thereafter.
THIRD PARTY SUPPLIERS
Exposure to third party suppliers is considered to pose a significant
risk. Information requests distributed to key third party suppliers and
replies have been evaluated. Where the risk assessment indicates significant
exposure, follow-up questionnaires and direct contact in the form of
teleconferences and site visits are being performed to assess accuracy of
information received and to determine and minimize, to the extent possible,
potential loss exposure. This assessment is substantially complete. Although
management believes that its efforts with respect to such risks have been
appropriate, there can be no assurance that such efforts have been adequate
for purposes of determining whether key third party suppliers are Year 2000
compliant and thereby preventing a material adverse effect on the Company. As
part of its contingency planning for non-compliant third party suppliers the
Company has identified, to the extent possible, alternative suppliers who are
Year 2000 compliant as a replacement source for goods or services. The cost
of communicating with the Company's third party suppliers has been incurred
by the Manager and is not reimbursable by the Company. There can be no
assurance that all suppliers of critical goods and services will in fact be
Year 2000 compliant or that, if they are not, alternative suppliers who are
compliant will exist or will be able to furnish such goods and services
without substantial interruption.
23
<PAGE>
WORST CASE SCENARIO
The worse case scenario could be as far reaching as an extended loss of
utility services resulting from interruptions at the point of power
generation or line transmission or local distribution to the Properties.
Such an interruption could result in an inability to provide tenants with
access to their spaces thereby affecting the Company's ability to collect
rent and pay its obligations which could result in a material adverse effect
on the Company. The effect could be as insignificant as a minor interruption
in services provided to tenants at the Centers resulting from unanticipated
problems encountered by the Company's Systems or any of the significant third
parties with whom the Company does business. The pervasiveness of the Year
2000 issue makes it likely that previously unidentified issues will require
remediation during the normal course of business. In such a case, the
Company anticipates that automated procedures could be replaced by manual
procedures while Systems are repaired and that such interruptions would have
a minor effect on the Company's operations.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report includes, and future public filings and oral and written
statements by the Company and its management may include, statements (other
than the consolidated financial statements and other statements of historical
fact) that are subject to risks and uncertainties. Forward-looking statements
include the information concerning possible future results of operations,
earnings, expenses, cash flows, funds from operations and other capital
resources of the Company (including with respect to increased revenues and
rental rates, cost savings and operating efficiencies) and market trends set
forth under (a) "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "-Portfolio Data," "-Liquidity and Capital
Resources," "-Distributions," and "-Year 2000 Readiness," (b) "Quantitative
and Qualitative Disclosure about Market Risk," "Legal Proceedings" and (c)
statements preceded by, followed by or that include the words "believes,"
"expects," "may," "will," "anticipates," "intends," "plans," "estimates,"
"proposes," "scheduled," or other similar expressions.
Forward-looking statements are made based on management's current
expectations and beliefs concerning future developments and their potential
effects on the Company. There can be no assurance that future developments
will be in accordance with management's expectations or that the effect of
future developments on the Company will be those anticipated by management.
Many of the factors that will determine these results are beyond the
Company's ability to control or predict.
The following important factors, and those important factors described
elsewhere in this report (including without limitation those discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Quantitative and Qualitative Disclosures about Market Risk" and
"Legal Proceedings"), or in other Securities and Exchange Commission filings,
could affect (and in some cases have affected) the Company's actual results
and could cause such results to differ materially from estimates or
expectations reflected in such forward-looking statements; (a) risks
generally inherent in real estate investment, such as: changes in the
national economic climate, the regional economic climate (including the
impact of local employers or industry concentrations on the economic climate)
or local real estate conditions; perceptions by retailers or shoppers of the
safety, convenience and attractiveness of a shopping center; trends in the
retail industry; competition for retailers; changes in market rental rates
and vacancy rates; the ability to collect rent from retailers; the need to
periodically renovate, repair and relet space and the costs thereof; the
ability of an owner to provide adequate management and maintenance and
insurance; increased operating costs; changes in governmental regulations,
zoning or tax laws; environmental or other legal liabilities; and changes in
interest rate levels; (b) the ability of the Company to successfully redevelop
properties (including the ability to complete the redevelopment, to complete
construction within the estimated time frame and budget or to realize
anticipated occupancy and rental rates from completed projects), or to
achieve anticipated operating results from acquired properties; (c)
competition from other shopping centers and other forms of retailing,
including electronic commerce; (d)
24
<PAGE>
the impact of the financial condition of anchors and major tenants on the
Centers' operations, including the bankruptcy or insolvency of anchors or
retailers or the decision of any anchor or major tenant to not renew its
lease when it expires; (e) possible conflicts of interest with unrelated
third parties in jointly owned properties, as well as the impact of the
financial condition of unaffiliated partners; (f) the Company's ability to
make scheduled payments of principal or interest on, or to refinance its
obligations with respect to its indebtedness and to comply with the covenants
and restrictions contained in the instruments governing such indebtedness,
which will depend on its future operating performance and cash flow, which
are subject to prevailing economic conditions, prevailing interest rate
levels, and financial, competitive, business and other factors beyond its
control, including changes in consumer buying patterns, regulatory
developments and increased operating costs; (g) the Company's ability to
continue to qualify as a REIT for federal income tax purposes and the
taxation of the Company as a regular corporation if it were to lose that
status, the 100% tax on net income from transactions that constitute
prohibited transactions pursuant to the rules relating to REIT's under the
Code; and possible taxation of the Company with respect to built-in gain on
disposition of certain property if such property were disposed of during a
ten-year period; and the possibility of a dramatic decrease in cash available
for distributions if such taxes become payable; and (h) possible conflicts of
interest due to the controlling ownership interest of affiliates.
While the Company periodically reassesses material trends and
uncertainties affecting the operations and financial condition in connection
with the preparation of its quarterly and annual reports, the Company does
not intend to review or revise any particular forward-looking statement
referenced in this report in light of future events, even if new information,
future events or other circumstances have made them incorrect or misleading.
The information referred to above should be considered by investors when
reviewing any forward-looking statements contained in this report, in any
documents incorporated herein by reference, in any of the Company's public
filings or press releases or in any oral statements made by the Company or
any of its officers or any other persons acting on its behalf. For those
statements, the Company intends to avail itself of the protection of the safe
harbor from liability with respect to forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995.
25
<PAGE>
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
In the normal course of business the Company enters into interest rate
swap contracts to reduce its exposure to fluctuations in interest rates. Net
interest differentials to be paid or received related to these contracts are
accrued as incurred or earned. The Company's policy is to maintain fixed rate
borrowing (including fixed rate mortgages and interest rate swaps) for
approximately 75% of forecast debt (existing debt and future expiring debt
anticipated to be refinanced) for a term of not more than ten years.
Additional hedging may be entered into for up to 100% of forecast debt if
interest rates are extremely favorable.
It is the Company's policy to enter into interest rate swap contracts to
hedge fluctuations in interest rates only to the extent necessary to meet its
objectives as stated above. The Company does not enter into interest rate
swap contracts for speculative purposes but rather for limiting the Company's
exposure to changes in interest rates.
Interest rate swaps are contractual agreements between the Company and
third parties to exchange fixed and floating interest payments periodically
without the exchange of the underlying principal amounts (notional amounts).
In the unlikely event that a counterparty fails to meet the terms of an
interest rate swap contract, the Company's exposure is limited to the
interest rate differential between the contract rate and the market rate on
the notional amount. The Company does not anticipate non-performance by any
of the counterparties.
The following is a summary of fixed rate debt, average fixed interest
rate and average remaining term to maturity for the Company's pro rata share
of fixed rate notes payable and other fixed rate payable instrument (amounts
in thousands, except percentages and years):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Principal amount of fixed rate debt $ 762,159 $ 777,911
Principal (notional) amount of other
current fixed rate payable instruments 1,687,000 1,700,000
---------- ----------
$2,449,159 $2,477,911
---------- ----------
---------- ----------
Fixed rate debt as a percentage of total notes
payable and unsecured revolving credit facility 97.8% 91.4%
---------- ----------
---------- ----------
Average effective fixed rate (inclusive of
margins) of total fixed rate debt and hedges 7.21% 7.09%
---------- ----------
---------- ----------
Average remaining term (in years) of total
fixed rate debt and hedges, including delayed
start swaps 8.5 9.1
---------- ----------
---------- ----------
</TABLE>
As of September 30, 1999, there have been no material changes in the
market risks reported in the Company's Annual Report on Form 10-K other than
those disclosed in Notes 5 and 6 of the Condensed Consolidated Financial
Statements for the quarter ended September 30, 1999 included in this
quarterly report on Form 10-Q.
26
<PAGE>
PART II-OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company currently is neither subject to any material litigation nor,
to management's knowledge, is any material litigation currently threatened
against the Company other than routine litigation and administrative
proceedings arising in the ordinary course of business. Based on consultation
with counsel, management believes that these items will not have a material
adverse impact on the Company's consolidated financial position or results of
operations.
ITEM 2: CHANGES IN SECURITIES
SHARES ISSUED TO DIRECTORS
Each director who is not an officer of the Company or an employee of WHL
is entitled to annual compensation equal to $20,000 in cash and $20,000 in
common stock. The number of shares issued is based on the share price of the
Company's common stock on the anniversary of the director's appointment. On
September 17, 1999, the Company issued a total of 1,404 shares of common
stock to a director. Such shares of common stock were issued in a private
placement to the director pursuant to the exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 4(2) of the Securities Act.
SERIES E CONVERTIBLE PREFERRED STOCK
On August 16, 1999, the Company issued 477,778 shares of Series E
cumulative convertible redeemable preferred stock (the "Series E Preferred
Stock"). The Series E Preferred Stock was issued to WAT, the Company's
largest shareholder, in exchange for gross proceeds of $86,000,040, and has a
par value of $1.00 per share and a liquidation value of $180 per share. The
Series E Preferred Stock is not convertible into the Company's common stock,
unless (i) the conversion is approved by the shareholders of the Company,
which consent the Company will seek to obtain at its next annual meeting or
(ii) the Series E Preferred Stock is sold to an individual or entity to whom
the Company may issue its common stock without shareholder approval. Subject
to the foregoing, each share of Series E Preferred Stock is currently
convertible into 10 shares of common stock of the Company, subject to
adjustment. All of the Series E Preferred Stock was offered and sold to WAT
pursuant to the exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Act"), provided by Section 4(2) of
the Act.
27
<PAGE>
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5: OTHER INFORMATION
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
NO. DESCRIPTION
---- -----------
<S> <C>
3.1 Restated Articles of Incorporation of the Company (Exhibit 3.1(1)).
3.2 Second Amended and Restated By-Laws of the Company (Exhibit 3.2(2)).
3.3 Amendment No. 1 to the Second Amended and Restated By-Laws for the Company
(Exhibit 3.3(2)).
3.4 Amendment No. 2 to the Second Amended and Restated By-Laws of the Company
(Exhibit 3.4(2)).
3.5 Amendment No. 3 to the Second Amended and Restated By-Laws of the Company
(Exhibit 3.5(2)).
10.1 WAT Subscription Agreement dated December 17, 1998, between Westfield
America, Inc., Perpetual Trustee Company Limited and Westfield America
Management Limited.
10.2 WAT Subscription Agreement dated July 15, 1999, between Westfield America,
Inc., Perpetual Trustee Company Limited and Westfield America Management
Limited.
10.3 Second Amendment of Loan Agreement, dated as of February 25, 1999, to the
Loan Agreement between Northwest Plaza LLC, WEA Crestwood Plaza LLC,
Enfield Square LLC, Plaza Bonita LLC, Plaza West Covina LLC, Mid Rivers Mall
LLC, West Park Partners L.P., Capital Mall Company, Fox Hills Mall LLC,
Horton Plaza LLC, Oakridge Mall LLC, Parkway Plaza LLC and The Capital Company
of America LLC, dated as of October 30, 1998.
11.1 Statement regarding Computation of per Share Earnings for the three months
ended September 30, 1999.
11.2 Statement regarding Computation of Per Share Earnings for the nine months
ended September 30, 1999.
12 Statement regarding Computation of Ratios.
27 Financial Data Schedule.
99 Agreement regarding Disclosure of Long-Term Debt Instruments.
</TABLE>
- --------------
(1) Incorporated by reference to the designated exhibit to the Company's
quarterly report on Form 10-Q filed on August 16, 1999.
(2) Incorporated by reference to the designated exhibit to the Company's
quarterly report on Form 10-Q filed on May 17, 1999.
28
<PAGE>
(b) Reports on Form 8-K:
The Company filed the following reports on Form 8-K during the three
months ended September 30, 1999:
<TABLE>
<CAPTION>
DATE OF FILING ITEMS REPORTED FINANCIAL STATEMENT
<S> <C> <C>
July 8, 1999 2, 7 Yes
July 13, 1999 2, 7 Yes
August 26, 1999 5, 7 No
</TABLE>
Form 8-K was filed on July 8, 1999. Under Item 2 Acquisition or
Disposition of Assets, the Company reported the formation of a joint venture
with J.P. Morgan Investment Management, Inc. for two of its malls, Westfield
Shoppingtown Valley Fair and Westfield Shoppingtown UTC and the disposition
of Los Cerritos Mall. Under Item 7 Financial Statements and Exhibits, the
Company presented the pro forma financial statements for Los Cerritos Mall and
filed the press release announcing the joint venture.
Form 8-K/A was filed on July 13, 1999. Under Item 2 Acquisition or
Disposition of Assets, the Company updated and amended the description
regarding the joint venture and the disposition of Los Cerritos Mall
contained in the previous 8-K filed on July 8, 1999. Under Item 7 Financial
Statements and Exhibits, the Company updated and amended the pro forma
financial statements contained in the previous 8-K filed on July 8, 1999.
Form 8-K was filed on August 26, 1999. Under Item 5 Other Events, the
Company reported the issuance of 477,778 shares of Series E preferred shares
to Westfield America Trust in August 1999. Under Item 7 Financial
Statements and Exhibits, the Company filed the related press release.
29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
WESTFIELD AMERICA, INC.
Date: November 12, 1999 By: /s/ Peter S. Lowy
--------------------------------------
Peter S. Lowy
CO-PRESIDENT
/s/ Richard E. Green
--------------------------------------
Richard E. Green
CO-PRESIDENT
/s/ Mark A. Stefanek
--------------------------------------
Mark A. Stefanek
CHIEF FINANCIAL OFFICER AND TREASURER
30
<PAGE>
EXHIBIT 10.1
WAT SUBSCRIPTION AGREEMENT
WAT SUBSCRIPTION AGREEMENT, dated as of December 17, 1998, between
Westfield America, Inc.(ARBN 082 554 541), a Missouri corporation (the
"COMPANY"), Perpetual Trustee Company Limited (ACN 000 001 007), an
Australian company (the "TRUSTEE"), and Westfield America Management
Limited (ACN 072 780 619), an Australian company (the "MANAGER").
W I T N E S S E T H:
WHEREAS, pursuant to the Trust Deed, dated March 28, 1996, as amended
(the "Trust Deed"), between the Trustee and the Manager, Westfield America
Trust, an Australian public property trust ("WAT"), was created; and the
Trustee and the Manager have authority to act on behalf of WAT under the
Trust Deed;
WHEREAS, the Manager has directed the Trustee on behalf of WAT to
subscribe for and purchase, and the Company desires to sell to the Trustee on
behalf of WAT, 138,889 shares (the "SHARES") of Series D-1 Cumulative
Convertible Redeemable Preferred Stock of the Company, par value $1.00 (the
"Series D-1 Preferred Stock"), subject to the terms and conditions contained
herein.
NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein, the parties hereto hereby agree as
follows:
1. PURCHASE AND SALE OF THE SHARES. Subject to all of the terms and
conditions of this Agreement, the Company agrees to sell and the Trustee on
behalf of WAT agrees to purchase the Shares on the Closing Date (as defined
in Section 2) for consideration as provided in Section 2(b). The Shares shall
have the rights set forth in the Certificate of Designation relating to the
Series D-1 Preferred Stock, substantially in the form attached as Exhibit A
hereto (the "Series D-1 Certificate").
2. CLOSING.
(a) TIME AND PLACE. Subject to the satisfaction of the conditions
contained herein, the closing of the sale of the Shares (the
"CLOSING") shall take place on a date mutually agreed upon by
the parties hereto (the "CLOSING DATE"). The Closing shall
occur at the offices of Westfield America Inc., 11601 Wilshire
Boulevard, 12th Floor, Los Angeles, California 90025.
(b) DELIVERY BY THE TRUSTEE. At the Closing, the Trustee shall
deliver $25,000,020 to the Company by wire transfer of
immediately available funds to the following account:
<PAGE>
Account Name: Westfield America Limited
Partnership
Account Number: 1420203965
Bank Name: Bank of America
Routing ABA Number: 121000358
(c) DELIVERY BY THE COMPANY. At the Closing, the Company shall
deliver to the Trustee on behalf of WAT, a stock certificate
registered in the Trustee's name and representing the Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Trustee as follows:
(a) AUTHORIZATION. The Company has full power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been or will be duly authorized by the Company.
(b) THE SHARES. The Shares, to be delivered by the Company at the
Closing, as of the Closing Date, will have been duly
authorized for issuance and, when delivered in accordance with
this Agreement, will be validly issued, fully paid and
non-assessable.
(c) SERIES C-1 PREFERRED STOCK PURCHASE AGREEMENT. The
representations and warranties of the Company contained in
the Series C-1 Preferred Stock Purchase Agreement, dated as of
the date hereof, among the Company, Westfield America Limited
Partnership and Security Capital Preferred Growth Incorporated
(the "Series C-1 Purchase Agreement") are true and correct in
all material respects.
4. REPRESENTATIONS AND WARRANTIES OF TRUSTEE AND MANAGER. The Manager
and the Trustee hereby represent and warrant to the Company as follows:
(a) AUTHORIZATION. Each of the Trustee and the Manager has full
power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby in
accordance with the terms hereof and on behalf of WAT. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by or on behalf of each of the Trustee and the
Manager.
2
<PAGE>
(b) ACQUISITION FOR INVESTMENT.
(i) The Trustee is acquiring the Shares in its capacity as
Trustee of WAT for investment on behalf of WAT and not
with a view to or for sale in connection with any
distribution thereof, and WAT has no present intention
or plan to effect any distribution thereof within the
meaning of the Securities Act of 1933, as amended (the
"SECURITIES ACT"). The Trustee and the Manager have
received copies of the Company's Report on Form 10-K for
the year ended December 31, 1997, the reports filed with
the Securities and Exchange Commission since December
31, 1997, pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended, and the Company's
Registration Statement on Form S-3 (File No. 333-52977),
as filed with the Commission on June 1, 1998
(collectively, the "Disclosure Documents"). The Trustee
and the Manager have been furnished the opportunity to
ask questions of and receive answers from
representatives of the Company concerning the Disclosure
Documents and the business and financial affairs of the
Company.
(ii) The Trustee and the Manager understand that the Shares
and the common stock to be issued upon conversion
thereof (the "CONVERSION STOCK") have not been
registered under the Securities Act or applicable state
securities laws and agree not to sell, pledge or
otherwise transfer any of the Shares or Conversion Stock
in the absence of such registration or an opinion of
counsel reasonably satisfactory to the Company that such
registration is not required. The Trustee and the
Manager acknowledge that the Company is not required to
register the Shares or the Conversion Stock.
5. LEGENDS. The Manager acknowledges and agrees that any certificates
evidencing the Series D-1 Preferred Stock purchased pursuant to this
Agreement and the Conversion Stock issuable upon conversion thereof shall be
stamped or endorsed with legends in substantially the following form and
shall be subject to the provisions of such legends:
"THE SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE
OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM AND AS SET FORTH HEREIN.
3
<PAGE>
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF
THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (2) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO (i) THE
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE ISSUER THAT SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, AND (ii) THE RECEIPT BY THE ISSUER
OF SUCH OTHER EVIDENCE REASONABLY ACCEPTABLE TO THE ISSUER THAT SUCH
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS, (3) TO THE ISSUER, ITS
AFFILIATES, AND (4) IN THE CASE OF A TRANSFER UNDER (1), (2) OR (3) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
The Manager acknowledges and agrees that each certificate in respect of
the Series D-1 Preferred Stock shall bear the following additional legend:
"THE PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT
TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. NO
INDIVIDUAL MAY BENEFICIALLY OWN SHARES IN EXCESS OF THE THEN APPLICABLE
OWNERSHIP LIMIT, WHICH MAY DECREASE OR INCREASE FROM TIME TO TIME,
UNLESS SUCH INDIVIDUAL IS AN EXISTING HOLDER. IN GENERAL, ANY
INDIVIDUAL WHO ATTEMPTS TO BENEFICIALLY OWN SHARES IN EXCESS OF THE
OWNERSHIP LIMIT MUST IMMEDIATELY NOTIFY THE CORPORATION. ALL
CAPITALIZED TERMS USED IN THIS LEGEND HAVE THE MEANINGS SET FORTH IN THE
RESTATED ARTICLES OF INCORPORATION, A COPY OF WHICH, INCLUDING THE
RESTRICTIONS ON OWNERSHIP AND TRANSFER, WILL BE SENT WITHOUT CHARGE TO
EACH SHAREHOLDER WHO SO REQUESTS. IF THE RESTRICTIONS ON OWNERSHIP AND
TRANSFER ARE VIOLATED, THE PREFERRED SHARES REPRESENTED HEREBY MAY BE
AUTOMATICALLY EXCHANGED FOR EXCESS SHARES AND DEEMED TRANSFERRED TO A
SPECIAL TRUST AS PROVIDED IN THE RESTATED ARTICLES OF INCORPORATION."
4
<PAGE>
The Manager acknowledges and agrees that the certificates in respect
of the Conversion Stock shall bear the following additional legend.
"THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT
TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. NO INDIVIDUAL
MAY BENEFICIALLY OWN SHARES IN EXCESS OF THE THEN APPLICABLE OWNERSHIP
LIMIT, WHICH MAY DECREASE OR INCREASE FROM TIME TO TIME, UNLESS SUCH
INDIVIDUAL IS AN EXISTING HOLDER. IN GENERAL, ANY INDIVIDUAL WHO
ATTEMPTS TO BENEFICIALLY OWN SHARES IN EXCESS OF THE OWNERSHIP LIMIT
MUST IMMEDIATELY NOTIFY THE CORPORATION. ALL CAPITALIZED TERMS USED IN
THIS LEGEND HAVE THE MEANINGS SET FORTH IN THE RESTATED ARTICLES OF
INCORPORATION, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON OWNERSHIP
AND TRANSFER, WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO
REQUESTS. IF THE RESTRICTIONS ON OWNERSHIP AND TRANSFER ARE VIOLATED,
THE COMMON SHARES REPRESENTED HEREBY MAY BE AUTOMATICALLY EXCHANGED FOR
EXCESS SHARES AND DEEMED TRANSFERRED TO A SPECIAL TRUST AS PROVIDED IN
THE RESTATED ARTICLES OF INCORPORATION.
6. COVENANTS.
(a) COVENANTS OF THE COMPANY. The Company hereby covenants to
submit to a shareholder vote at its 1999 Annual Meeting
(the "1999 ANNUAL MEETING") or at a special shareholder
meeting held prior to such time, the question of whether
the Series D-1 Preferred Stock shall be convertible into
common stock, par value $0.01 of the Company (the
"PROPOSITION").
(b) COVENANTS BY THE TRUSTEE. The Trustee agrees to attend, in
person or by proxy, the 1999 Annual Meeting or any
special shareholder meeting held prior to such time, and
to vote upon the Proposition.
7. CONDITIONS.
(a) CONDITIONS TO THE OBLIGATIONS OF THE TRUSTEE. The
obligation of the Trustee to purchase the Shares at the
Closing is subject to the satisfaction or waiver at or
prior to the Closing Date of the following conditions:
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(i) The representations and warranties of the Company
contained in this Agreement shall be true and correct
in all material respects at and as of the date hereof,
and true and correct in all material respects at and
as of the Closing Date as if made at and as of such
time;
(ii) No Bankruptcy Event or Acceleration Event with respect
to the Company shall have occurred and be continuing,
and the Trustee shall have received a certificate of a
Co-President, Chief Financial Officer or the Secretary
of the Company, dated as of the Closing Date, to the
effect that no such Bankruptcy Event or Acceleration
Event has occurred and is continuing (in each case,
subject to clause (y) of the definition of
"Acceleration Event").
A "BANKRUPTCY EVENT" shall occur with respect to the Company if (x) a
court of appropriate jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Receiver of the Company or for all or substantially all
of its property or (C) orders the liquidation of the Company; or (y) the
Company pursuant to or within the meaning of any Bankruptcy Law (A) commences
a voluntary case, (B) consents to the entry of an order for relief in an
involuntary case, (C) consents to the appointment of a Receiver of it or for
all or substantially all of its property, or (D) makes a general assignment
for the benefit of its creditors.
An "ACCELERATION EVENT" shall occur with respect to the Company if the
Company defaults under the terms of any agreement or instrument evidencing or
under which the Company has at the date of this Agreement or hereafter
outstanding any Senior Indebtedness that is full recourse to the Company and
such Senior Indebtedness shall be accelerated so that the same shall be or
become due and payable prior to the date on which the same would otherwise
become due and payable and the aggregate principal amount thereof so
accelerated exceeds U.S.$150,000,000 and such acceleration is not rescinded
or annulled within 90 Business Days; PROVIDED, HOWEVER, that (x) if such
default under such agreement or instrument is remedied or cured by the
Company or waived by the holders of such Senior Indebtedness, then the
Acceleration Event hereunder by reason thereof shall be deemed likewise to
have been thereupon remedied, cured or waived or (y) if the Company provides
to the Trustee a certificate of the president or a co-president, chief
financial officer or a vice president of the Company to the effect that the
Company holds sufficient funds, or has sufficient availability under its
credit facilities, to discharge such Senior Indebtedness, then for all
purposes of this Agreement the Acceleration Event shall be deemed not to have
occurred.
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For the purposes of this Section 7:
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banking institutions in New York are authorized or obligated by law or
executive order to close.
"INDEBTEDNESS" means (i) the principal obligations of the Company for
borrowed money (other than (x) the deferred purchase price of property or
services and (y) indebtedness to trade creditors and service providers
incurred in the ordinary course of business) and (ii) the principal
obligations of the Company evidenced by bonds, notes, debentures or other
similar instruments.
"RECEIVER" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company that is not
subordinated in right of payment to any other Indebtedness of the Company.
(iii) The Company shall have performed in all material
respects its obligations under this Agreement required
to be performed by it at or prior to the Closing Date
pursuant to the terms hereof;
(iv) The closing under the Series C-1 Purchase Agreement
shall be occurring simultaneously with the Closing of
the issuance and sale of the Shares.
(b) CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation
of the Company to sell the Shares at the Closing is subject
to the satisfaction or waiver at or prior to the Closing Date
of the following conditions:
(i) The representations and warranties of the Manager and
the Trustee contained in this Agreement shall be true
and correct in all material respects at and as of the
date hereof, and true and correct in all material
respects at and as of the Closing Date as if made at
and as of such time; and
(ii) Each of the Trustee and the Manager shall have
performed in all material respects its obligations
under this Agreement required to be performed by it at
or prior to the Closing Date pursuant to the terms
hereof.
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8. CONDITIONS TO EFFECTIVENESS. The Trustee shall have no obligation to
purchase the Shares until the Trustee receives all of the following opinions
in a form reasonably acceptable to the Trustee: an Australian legal opinion
and United States legal opinion, an Australian taxation opinion and a United
States tax opinion.
9. MAINTENANCE OF REIT STATUS.
(a) So long as the Trustee on behalf of WAT owns any of the Shares
of Series D-1 Preferred Stock, the Company will continue to be
taxed as a real estate investment trust pursuant to Sections 856
through 860 of the Code.
(b) If the Company shall fail to continue to be taxed as a real
estate investment trust pursuant to Sections 856 through 860 of
the Code (a "REIT-TERMINATION EVENT"), the Trustee on behalf of
WAT shall have the right to require the Company, to the extent
the Company shall have funds legally available therefor, to
repurchase any or all of the Series D-1 Preferred Stock held by
the Trustee on behalf of WAT at a repurchase price payable in
cash (the "REIT-REPURCHASE PAYMENT") in an amount equal to 115%
of the Liquidation Preference (as defined in the Series D-1
Certificate) thereof, plus accrued and unpaid dividends whether
or not declared, if any to the date of repurchase or the date
payment is made available (the "REIT-REPURCHASE DATE").
(c) Within 15 days following the Company becoming aware that a
REIT-Termination Event has occurred, the Corporation shall mail
by first class mail or recognized overnight courier a notice to
the Trustee and the Manager stating (A) that a REIT-Termination
Event has occurred and that the Trustee on behalf of WAT has the
right to require the Company to repurchase any or all of the
Series D-1 Preferred Shares then held by the Trustee on behalf
of WAT, (B) the date of repurchase (which shall be a Business
Day (as defined in the Series D-1 Certificate), no earlier than
30 days and no later than 60 days from the date such notice is
mailed, or such later date as may be necessary to comply with
the requirements of the Securities Exchange Act of 1934, as
amended), (C) the repurchase price and (D) the instructions
determined by the Company, consistent with this subsection,
that the Trustee must follow in order to have the Series D-1
Preferred Shares repurchased.
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(d) On the REIT-Repurchase Date, the Company, to the extent lawful,
shall accept for payment Series D-1 Preferred Stock or portions
thereof tendered by the holders thereof pursuant to the
REIT-Repurchase Offer and promptly, by wire transfer of
immediately available funds to such holders, as directed by
such holders, send an amount equal to the REIT-Repurchase Payment
in respect of all Series D-1 Preferred Stock, or portions thereof
so tendered.
(e) Notwithstanding anything else herein to the contrary, to the
extent they are applicable to any REIT-Repurchase Offer, the
Company will comply with any federal and state securities laws,
rules and regulations and all time periods and requirements
shall be adjusted accordingly.
10. TRUSTEE'S LIMITATION OF LIABILITY.
(a) The Trustee enters into this Agreement only in its capacity as
trustee of WAT and in no other capacity. Any liability arising
under or in connection with this Agreement will be limited to,
and can be enforced against the Trustee only to the extent to
which such liability can be satisfied out of, the property or
assets of WAT from which the Trustee is actually indemnified
for such liability. This limitation of the Trustee's liability
under this Agreement will apply despite any other provision of
this Agreement and extends to all liabilities and obligations
of the Trustee in any way related to any representation,
warranty, conduct, omission, agreement or transaction related
to this Agreement, subject to paragraph (c)(i) of this Section
10.
(b) Neither the Company nor the Manager may sue the Trustee in any
capacity other than as trustee of WAT, including to seek the
appointment of a receiver (except in relation to the property
or assets of WAT), a liquidator, an administrator or any
similar person with respect to the Trustee or to prove in any
liquidation, administration or arrangement of or affecting the
Trustee (except in relation to the property or assets of WAT),
subject to paragraph (c)(i) of this Section 10.
(c) Notwithstanding the foregoing paragraphs (a) and (b), the
provisions of this Section 10 shall not: (i) apply to any
obligation or liability of the Trustee to the extent that it is
not satisfied because under the Trust Deed establishing WAT or
by operation of law
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there is a reduction in the extent of the Trustee's
indemnification out of the property or assets of WAT as a
result of the Trustee's fraud, negligence or breach of trust;
or (ii) in any way limit the right of the Company to bring any
action or proceeding for the performance by the Trustee (in its
capacity as trustee of WAT) or the Manager of any of their
respective obligations under this Agreement or the Company's
right to recover damages from the property or assets of WAT.
11. DIVIDENDS. The Trustee and the Manager hereby acknowledge and agree
that the Company will pay the dividends due and payable on the Series D-1
Preferred Shares for the quarter ended December 31, 1998 concurrently with
the dividends due and payable for the quarter ended March 31, 1999.
12. MISCELLANEOUS.
(a) NOTICES. All notices and other communications made in
connection with this Agreement shall be in writing and shall
be (i) sent by facsimile, with a copy mailed by first-class,
registered or certified mail, return receipt requested, postage
prepaid, or (ii) transmitted by hand delivery, addressed as
follows (or at such other address as may be specified in writing
to the other party hereto):
(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: 310-478-8776
Attention: Irv Hepner, Secretary
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telecopy: 213-687-5600
Attention: Gregg A. Noel, Esq.
(ii) if to the Manager, to:
Westfield America Management Limited
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Level 24 Westfield Towers
100 William Street
Sydney NSW 2011 Australia
Telecopy: 011 612 93587077
Attention: Craig Van der Laan, Secretary
(iii) if to the Trustee, to:
Perpetual Trustee Company Limited
39 Hunter Street
Sydney NSW 2000 Australia
Telecopy: 011 612 92315606
Attention: Allan Cowper,
National Manager-Property Trusts
All such notices and communications shall be deemed to have been received
on the date of delivery.
(b) BINDING EFFECT; BENEFITS, ETC. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement
and their respective successors and assigns. Nothing in this
Agreement, express or implied, is intended or shall be
construed to give any person other than the parties to this
Agreement or their respective successors or assigns any
benefit or any legal or equitable right, remedy or claim under
or in respect of any agreement or any provision contained
herein.
(c) WAIVER; AMENDMENT.
(i) WAIVER. No amendment, modification or discharge of this
Agreement, and no waiver hereunder, shall be valid or
binding unless set forth in writing and duly executed by
the party against whom enforcement of the amendment,
modification, discharge or waiver is sought. Any such
waiver or instance shall constitute a waiver, modification
or discharge, as the case may be, only with respect to the
specific matter described in such writing and shall in no
way impair the rights of the party granting such waiver in
any other respect or at any other time.
(ii) AMENDMENT. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the
Company, the Trustee and the Manager.
(d) ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof
shall be assignable by the Company, the Manager or the Trustee
without the prior written consent of the other parties.
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<PAGE>
(e) SEPARABILITY. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
(f) GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. INCLUDING WITHOUT LIMITATION, SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATION LAW AND
NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b).
The Company, the Trustee and the Manager each irrevocably submits to the
non-exclusive jurisdiction of any New York State or United States federal
court sitting in the City of New York over any suit, action or proceeding
arising out of or relating to this Agreement. The Company, the Trustee and
the Manager each irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in any such court and any claim that any such
proceeding brought in such court has been brought in an inconvenient forum.
The Company, the Trustee and the Manager each agree that final judgment in
any such suit, action or proceeding brought in such a court shall be
conclusive and binding on it and may be enforced in any court to the
jurisdiction of which it is subject by a suit upon such judgment. The
Company, the Trustee and the Manager each hereby irrevocably consent to
service of copies of the summonses and complaints and any other process.
Such service may be made by mailing or delivering a copy of such process to
their respective addresses set forth above or by any other means provided for
by applicable law.
(g) SECTION AND OTHER HEADINGS, ETC. The section and other headings
contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original
and all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the Company, the Manager and the Trustee have duly
executed this WAT Subscription Agreement by their authorized representatives
as of the date first above written.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
--------------------------------
Name: Peter S. Lowy
Title: Co-President
WESTFIELD AMERICA MANAGEMENT
LIMITED,
As Manager of Westfield America Trust
By: /s/ Craig van der Laan de Vries
--------------------------------
Name: Craig van der Laan de Vries
Title: Attorney Appointed under Power
of Attorney, dated 14 December 1998
PERPETUAL TRUSTEE COMPANY LIMITED,
As Trustee of Westfield America Trust
By: /s/ Allan Cowper
--------------------------------
Name: Allan Cowper
Title: National Manager Property Trusts
<PAGE>
EXHIBIT 10.2
WAT SUBSCRIPTION AGREEMENT
WAT SUBSCRIPTION AGREEMENT, dated as of July 15, 1999, between Westfield
America, Inc. (ARBN 082 554 541), a Missouri corporation (the "COMPANY"),
Perpetual Trustee Company Limited (ACN 000 001 007), an Australian company
(the "TRUSTEE"), and Westfield America Management Limited (ACN 072 780 619),
an Australian company (the "MANAGER").
W I T N E S S E T H:
WHEREAS, pursuant to the Trust Deed, dated March 28, 1996, as amended
(the "TRUST DEED"), between the Trustee and the Manager, Westfield America
Trust, an Australian public property trust ("WAT"), was created; and the
Trustee and the Manager have authority to act on behalf of WAT under the
Trust Deed;
WHEREAS, the Manager has directed the Trustee on behalf of WAT to
subscribe for and purchase, and the Company desires to sell to the Trustee on
behalf of WAT, 477,778 shares (the "SHARES") of Series E Cumulative
Convertible Redeemable Preferred Stock of the Company, par value $1.00 (the
"SERIES E PREFERRED STOCK"), subject to the terms and conditions contained
herein.
NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein, the parties hereto hereby agree as
follows:
1. PURCHASE AND SALE OF THE SHARES. Subject to all of the terms and
conditions of this Agreement, the Company agrees to sell and the Trustee on
behalf of WAT agrees to purchase the Shares on the Closing Date (as defined
in Section 2) for consideration as provided in Section 2(b). The Shares shall
have the rights set forth in the Certificate of Designation relating to the
Series E Preferred Stock, substantially in the form attached as Exhibit A
hereto (the "SERIES E CERTIFICATE").
2. CLOSING.
(a) TIME AND PLACE. Subject to the satisfaction of the conditions
contained herein, the closing of the sale of the Shares (the
"CLOSING") shall take place on a date mutually agreed upon by
the parties hereto (the "CLOSING DATE"). The Closing shall
occur at the offices of Westfield America Inc., 11601 Wilshire
Boulevard, 12th Floor, Los Angeles, California 90025.
(b) DELIVERY BY THE TRUSTEE. At the Closing, the Trustee shall
deliver to the Company its rights to the Money Market Term
Deposit with National Australia Bank Limited ("NAB") to be
acquired by the
<PAGE>
Trustee on July 15, 1999 in an amount of $86,000,040, in form
and substance satisfactory to the Company and duly assigned to
the Company (the "NAB Deposit").
(c) DELIVERY BY THE COMPANY. At the Closing, the Company shall
deliver to the Trustee on behalf of WAT, a stock certificate
registered in the Trustee's name and representing the Shares,
provided that the Company shall not issue the Shares and shall
retain such certificates until such time as the Company
receives from NAB cash in payment of the NAB Deposit of an
amount equal to $86,000,040.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Trustee as follows:
(a) AUTHORIZATION. The Company has full power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
or will be duly authorized by the Company.
(b) THE SHARES. The Shares, to be delivered by the Company at the
Closing, as of the Closing Date, will have been duly authorized
for issuance and, when delivered in accordance with this
Agreement, will be validly issued, fully paid and
non-assessable.
4. REPRESENTATIONS AND WARRANTIES OF TRUSTEE AND MANAGER. The Manager
and the Trustee hereby represent and warrant to the Company as follows:
(a) AUTHORIZATION. If UnitHolder Approval is obtained, then each
of the Trustee and the Manager will have full power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance
with the terms hereof and on behalf of WAT. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby will be, if UnitHolder
Approval is obtained, duly authorized by or on behalf of each
of the Trustee and the Manager.
"UnitHolder Approval" means the passing by a meeting of
unitholders of WAT of a resolution authorizing and empowering
the Manager and the Trustee to, amongst other things, enter
into
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the transactions contemplated by this Agreement for the purposes
of the Listing Rules of the Australian Stock Exchange Limited.
(b) ACQUISITION FOR INVESTMENT.
(i) The Trustee is acquiring the Shares in its capacity as
Trustee of WAT for investment on behalf of WAT and not
with a view to or for sale in connection with any
distribution thereof, and WAT has no present intention or
plan to effect any distribution thereof within the
meaning of the Securities Act of 1933, as amended (the
"SECURITIES ACT"). The Trustee and the Manager have
received copies of the Company's Reports on Form 10-K for
the year ended December 31, 1998 and Form 10-Q for the
quarter ended March 31, 1999, the reports filed with the
Securities and Exchange Commission since December 31,
1998 pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended, and the Company's Registration
Statement on Form S-3 (File No. 333-52977), as filed with
the Commission on June 1, 1998 (collectively, the
"Disclosure Documents"). The Trustee and the Manager
have been furnished the opportunity to ask questions of
and receive answers from representatives of the Company
concerning the Disclosure Documents and the business and
financial affairs of the Company.
(ii) The Trustee and the Manager understand that the Shares
and the common stock to be issued upon conversion thereof
(the "CONVERSION STOCK") have not been registered under
the Securities Act or applicable state securities laws
and agree not to sell, pledge or otherwise transfer any
of the Shares or Conversion Stock in the absence of such
registration or an opinion of counsel reasonably
satisfactory to the Company that such registration is not
required. The Trustee and the Manager acknowledge that
the Company is not required to register the Shares or the
Conversion Stock.
5. LEGENDS. The Manager acknowledges and agrees that any certificates
evidencing the Series E Preferred Stock purchased pursuant to this Agreement
and the Conversion Stock issuable upon conversion thereof shall be stamped or
endorsed with legends in substantially the following form and shall be
subject to the provisions of such legends:
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"THE SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE
OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM AND AS SET FORTH HEREIN.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF
THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (2) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO (i) THE
RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE ISSUER THAT SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, AND (ii) THE RECEIPT BY THE ISSUER
OF SUCH OTHER EVIDENCE REASONABLY ACCEPTABLE TO THE ISSUER THAT SUCH
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS, (3) TO THE ISSUER, ITS
AFFILIATES, AND (4) IN THE CASE OF A TRANSFER UNDER (1), (2) OR (3) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
The Manager acknowledges and agrees that each certificate in respect
of the Series E Preferred Stock shall bear the following additional legend:
"THE PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT
TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. NO
INDIVIDUAL MAY BENEFICIALLY OWN SHARES IN EXCESS OF THE THEN APPLICABLE
OWNERSHIP LIMIT, WHICH MAY DECREASE OR INCREASE FROM TIME TO TIME,
UNLESS SUCH INDIVIDUAL IS AN EXISTING HOLDER. IN GENERAL, ANY
INDIVIDUAL WHO ATTEMPTS TO BENEFICIALLY OWN SHARES IN EXCESS OF THE
OWNERSHIP LIMIT MUST IMMEDIATELY NOTIFY THE CORPORATION. ALL
CAPITALIZED TERMS USED IN THIS LEGEND HAVE THE MEANINGS SET FORTH IN THE
RESTATED ARTICLES OF INCORPORATION, A COPY OF WHICH, INCLUDING THE
RESTRICTIONS ON OWNERSHIP AND TRANSFER, WILL BE SENT WITHOUT CHARGE TO
EACH SHAREHOLDER WHO SO REQUESTS. IF THE RE-
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<PAGE>
STRICTIONS ON OWNERSHIP AND TRANSFER ARE VIOLATED, THE PREFERRED SHARES
REPRESENTED HEREBY MAY BE AUTOMATICALLY EXCHANGED FOR EXCESS SHARES AND
DEEMED TRANSFERRED TO A SPECIAL TRUST AS PROVIDED IN THE RESTATED ARTICLES
OF INCORPORATION."
The Manager acknowledges and agrees that the certificates in respect
of the Conversion Stock shall bear the following additional legend.
"THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT
TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. NO INDIVIDUAL
MAY BENEFICIALLY OWN SHARES IN EXCESS OF THE THEN APPLICABLE OWNERSHIP
LIMIT, WHICH MAY DECREASE OR INCREASE FROM TIME TO TIME, UNLESS SUCH
INDIVIDUAL IS AN EXISTING HOLDER. IN GENERAL, ANY INDIVIDUAL WHO
ATTEMPTS TO BENEFICIALLY OWN SHARES IN EXCESS OF THE OWNERSHIP LIMIT
MUST IMMEDIATELY NOTIFY THE CORPORATION. ALL CAPITALIZED TERMS USED IN
THIS LEGEND HAVE THE MEANINGS SET FORTH IN THE RESTATED ARTICLES OF
INCORPORATION, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON OWNERSHIP
AND TRANSFER, WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO
REQUESTS. IF THE RESTRICTIONS ON OWNERSHIP AND TRANSFER ARE VIOLATED,
THE COMMON SHARES REPRESENTED HEREBY MAY BE AUTOMATICALLY EXCHANGED FOR
EXCESS SHARES AND DEEMED TRANSFERRED TO A SPECIAL TRUST AS PROVIDED IN
THE RESTATED ARTICLES OF INCORPORATION.
6. COVENANTS.
(a) COVENANTS OF THE COMPANY. The Company hereby covenants to
submit to a shareholder vote at its 2000 Annual Meeting (the
"2000 Annual Meeting") or at a special shareholder meeting held
prior to such time, the question of whether the Series E
Preferred Stock shall be convertible into common stock, par
value $0.01 of the Company (the "PROPOSITION").
(b) COVENANTS OF THE MANAGER. The Manager hereby agrees to convene
a meeting of unitholders of WAT for the purpose of seeking
UnitHolder Approval as soon as practicable, but in no event
later than August 31, 1999.
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(c) COVENANTS BY THE TRUSTEE. The Trustee agrees to attend, in
person or by proxy, the 2000 Annual Meeting or any special
shareholder meeting held prior to such time, and to vote upon
the Proposition.
7. CONDITIONS.
(a) CONDITIONS TO THE OBLIGATIONS OF THE TRUSTEE. The obligation
of the Trustee to purchase the Shares at the Closing is subject
to the satisfaction or waiver at or prior to the Closing Date
of the following conditions:
(i) UnitHolder Approval;
(ii) The representations and warranties of the Company
contained in this Agreement shall be true and correct in
all material respects at and as of the date hereof, and
true and correct in all material respects at and as of
the Closing Date as if made at and as of such time;
(iii) No Bankruptcy Event or Acceleration Event with respect to
the Company shall have occurred and be continuing, and
the Trustee shall have received a certificate of a
Co-President, Chief Financial Officer or the Secretary of
the Company, dated as of the Closing Date, to the effect
that no such Bankruptcy Event or Acceleration Event has
occurred and is continuing (in each case, subject to
clause (y) of the definition of "Acceleration Event");
A "BANKRUPTCY EVENT" shall occur with respect to the Company if (x) a
court of appropriate jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Receiver of the Company or for all or substantially all
of its property or (C) orders the liquidation of the Company; or (y) the
Company pursuant to or within the meaning of any Bankruptcy Law (A) commences
a voluntary case, (B) consents to the entry of an order for relief in an
involuntary case, (C) consents to the appointment of a Receiver of it or for
all or substantially all of its property, or (D) makes a general assignment
for the benefit of its creditors.
An "ACCELERATION EVENT" shall occur with respect to the Company if the
Company defaults under the terms of any agreement or instrument evidencing or
under which the Company has at the date of this Agreement or hereafter
outstanding any Senior Indebtedness that is full recourse to the Company and
such Senior Indebtedness shall be accelerated so that the same shall be or
become due and payable prior to the date on which the same would otherwise
become due and payable and the aggregate principal amount
6
<PAGE>
thereof so accelerated exceeds U.S. $150,000,000 and such acceleration is not
rescinded or annulled within 90 Business Days; PROVIDED, HOWEVER, that (x) if
such default under such agreement or instrument is remedied or cured by the
Company or waived by the holders of such Senior Indebtedness, then the
Acceleration Event hereunder by reason thereof shall be deemed likewise to
have been thereupon remedied, cured or waived or (y) if the Company provides
to the Trustee a certificate of the president or a co-president, chief
financial officer or a vice president of the Company to the effect that the
Company holds sufficient funds, or has sufficient availability under its
credit facilities, to discharge such Senior Indebtedness, then for all
purposes of this Agreement the Acceleration Event shall be deemed not to have
occurred.
For the purposes of this Section 7:
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banking institutions in New York are authorized or obligated by law or
executive order to close.
"INDEBTEDNESS" means (i) the principal obligations of the Company for
borrowed money (other than (x) the deferred purchase price of property or
services and (y) indebtedness to trade creditors and service providers
incurred in the ordinary course of business) and (ii) the principal
obligations of the Company evidenced by bonds, notes, debentures or other
similar instruments.
"RECEIVER" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Company that is not
subordinated in right of payment to any other Indebtedness of the Company.
(iv) The Company shall have performed in all material
respects its obligations under this Agreement required to
be performed by it at or prior to the Closing Date
pursuant to the terms hereof.
(b) CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation
of the Company to sell the Shares at the Closing is subject to
the satisfaction or waiver at or prior to the Closing Date of
the following conditions:
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(i) The representations and warranties of the Manager and the
Trustee contained in this Agreement shall be true and
correct in all material respects at and as of the date
hereof, and true and correct in all material respects at
and as of the Closing Date as if made at and as of such
time; and
(ii) Each of the Trustee and the Manager shall have performed
in all material respects its obligations under this
Agreement required to be performed by it at or prior to
the Closing Date pursuant to the terms hereof.
8. CONDITIONS TO EFFECTIVENESS. This Agreement shall not be binding on
any party hereto and is to have no legal effect unless and until the Manager
allots and issues 90.4 million units on July 15, 1999 pursuant to the
underwriting agreement dated July 8, 1999 with Warburg Dillon Read Australia
Limited.
9. MAINTENANCE OF REIT STATUS.
(a) So long as the Trustee on behalf of WAT holds any of the Shares
of Series E Preferred Stock, the Company will continue to be
taxed as a real estate investment trust pursuant to Sections
856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code").
(b) If the Company shall fail to continue to be taxed as a real
estate investment trust pursuant to Sections 856 through 860 of
the Code (a "REIT-TERMINATION EVENT"), the Trustee on behalf of
WAT shall have the right to require the Company, to the extent
the Company shall have funds legally available therefor, to
repurchase any or all of the Series E Preferred Stock held by
the Trustee on behalf of WAT at a repurchase price payable in
cash (the "REIT-REPURCHASE PAYMENT") in an amount equal to
115% of the Liquidation Preference (as defined in the Series E
Certificate) thereof, plus accrued and unpaid dividends whether
or not declared, if any to the date of repurchase or the date
payment is made available (the "REIT-REPURCHASE DATE").
(c) Within 15 days following the Company becoming aware that a
REIT-Termination Event has occurred, the Corporation shall mail
by first class mail or recognized overnight courier a notice to
the Trustee and the Manager stating (A) that a REIT-Termination
Event has occurred and that the Trustee on behalf of WAT has
the right to require the Company to repurchase any or all of
the Series
8
<PAGE>
E Preferred Shares then held by the Trustee on behalf of WAT, (B)
the date of repurchase (which shall be a Business Day (as defined
in the Series E Certificate), no earlier than 30 days and no
later than 60 days from the date such notice is mailed, or such
later date as may be necessary to comply with the requirements
of the Securities Exchange Act of 1934, as amended), (C) the
repurchase price and (D) the instructions determined by the
Company, consistent with this subsection, that the Trustee must
follow in order to have the Series E Preferred Shares repurchased.
(d) On the REIT-Repurchase Date, the Company, to the extent lawful,
shall accept for payment Series E Preferred Stock or portions
thereof tendered by the holders thereof pursuant to the
REIT-Repurchase Offer and promptly, by wire transfer of
immediately available funds to such holders, as directed by
such holders, send an amount equal to the REIT-Repurchase
Payment in respect of all Series E Preferred Stock, or portions
thereof so tendered.
(e) Notwithstanding anything else herein to the contrary, to the
extent they are applicable to any REIT-Repurchase Offer, the
Company will comply with any federal and state securities laws,
rules and regulations and all time periods and requirements
shall be adjusted accordingly.
10. TRUSTEE'S LIMITATION OF LIABILITY.
(a) The Trustee enters into this Agreement only in its capacity as
trustee of WAT and in no other capacity. Any liability arising
under or in connection with this Agreement will be limited to,
and can be enforced against the Trustee only to the extent to
which such liability can be satisfied out of, the property or
assets of WAT from which the Trustee is actually indemnified
for such liability. This limitation of the Trustee's liability
under this Agreement will apply despite any other provision of
this Agreement and extends to all liabilities and obligations
of the Trustee in any way related to any representation,
warranty, conduct, omission, agreement or transaction related
to this Agreement, subject to paragraph (c)(i) of this Section
10.
(b) Neither the Company nor the Manager may sue the Trustee in any
capacity other than as trustee of WAT, including to seek the
appointment of a receiver (except in relation to the property
or assets of WAT), a liquidator, an administrator or any
similar person with
9
<PAGE>
respect to the Trustee or to prove in any liquidation,
administration or arrangement of or affecting the Trustee (except
in relation to the property or assets of WAT), subject to
paragraph (c)(i) of this Section 10.
(c) Notwithstanding the foregoing paragraphs (a) and (b), the
provisions of this Section 10 shall not: (i) apply to any
obligation or liability of the Trustee to the extent that it is
not satisfied because under the Trust Deed establishing WAT or
by operation of law there is a reduction in the extent of the
Trustee's indemnification out of the property or assets of WAT
as a result of the Trustee's fraud, negligence or breach of
trust; or (ii) in any way limit the right of the Company to
bring any action or proceeding for the performance by the
Trustee (in its capacity as trustee of WAT) or the Manager of
any of their respective obligations under this Agreement or the
Company's right to recover damages from the property or assets
of WAT.
11. MISCELLANEOUS.
(a) NOTICES. All notices and other communications made in
connection with this Agreement shall be in writing and shall be
(i) sent by facsimile, with a copy mailed by first-class,
registered or certified mail, return receipt requested, postage
prepaid, or (ii) transmitted by hand delivery, addressed as
follows (or at such other address as may be specified in
writing to the other party hereto):
(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: 310-478-8776
Attention: Irv Hepner, Secretary
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telecopy: 213-687-5600
Attention: Gregg A. Noel, Esq.
10
<PAGE>
(ii) if to the Manager, to:
Westfield America Management Limited
Level 24 Westfield Towers
100 William Street
Sydney NSW 2011 Australia
Telecopy: 011 612 93587077
Attention: Craig Van der Laan, Secretary
(iii) if to the Trustee, to:
Perpetual Trustee Company Limited
39 Hunter Street
Sydney NSW 2000 Australia
Telecopy: 011 612 92315606
Attention: Allan Cowper, National
Manager-Property Trusts
All such notices and communications shall be deemed to have been
received on the date of delivery.
(b) BINDING EFFECT; BENEFITS, ETC. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement
and their respective successors and assigns. Nothing in this
Agreement, express or implied, is intended or shall be
construed to give any person other than the parties to this
Agreement or their respective successors or assigns any benefit
or any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
(c) WAIVER; AMENDMENT.
(i) WAIVER. No amendment, modification or discharge of this
Agreement, and no waiver hereunder, shall be valid or
binding unless set forth in writing and duly executed by
the party against whom enforcement of the amendment,
modification, discharge or waiver is sought. Any such
waiver or instance shall constitute a waiver,
modification or discharge, as the case may be, only with
respect to the specific matter described in such writing
and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other
time.
11
<PAGE>
(ii) AMENDMENT. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the
Company, the Trustee and the Manager.
(d) ASSIGNABILITY. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof
shall be assignable by the Company, the Manager or the Trustee
without the prior written consent of the other parties.
(e) SEPARABILITY. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
(f) GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. INCLUDING WITHOUT LIMITATION, SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATION LAW AND
NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b).
The Company, the Trustee and the Manager each irrevocably
submits to the non-exclusive jurisdiction of any New York State
or United States federal court sitting in the City of New York
over any suit, action or proceeding arising out of or relating
to this Agreement. The Company, the Trustee and the Manager
each irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in any such
court and any claim that any such proceeding brought in such
court has been brought in an inconvenient forum. The Company,
the Trustee and the Manager each agree that final judgment in
any such suit, action or proceeding brought in such a court
shall be conclusive and binding on it and may be enforced in
any court to the jurisdiction of which it is subject by a suit
upon such judgment. The Company, the Trustee and the Manager
each hereby irrevocably consent to service of copies of the
summonses and complaints and any other process. Such service
may be made by mailing or delivering a copy of such process to
their respective addresses set forth above or by any other
means provided for by applicable law.
(g) SECTION AND OTHER HEADINGS, ETC. The section and other
headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original
and all of which together shall constitute one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the Company, the Manager and the Trustee have duly
executed this WAT Subscription Agreement by their authorized representatives
as of the date first above written.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
--------------------------------
Name: Peter S. Lowy
Title: Co-President
WESTFIELD AMERICA MANAGEMENT
LIMITED,
As Manager of Westfield America Trust
By: /s/ Craig van der Laan de Vries
--------------------------------
Name: Craig van der Laan de Vries
Title: Attorney Appointed under Power
of Attorney, dated 15 July 1999
PERPETUAL TRUSTEE COMPANY LIMITED,
As Trustee of Westfield America Trust
By: /s/ Allan Cowper
--------------------------------
Name: Allan Cowper
Title: National Manager Property Trusts
<PAGE>
EXHIBIT 10.3
SECOND AMENDMENT OF LOAN AGREEMENT
This Second Amendment of Loan Agreement (this "Agreement") is made as of
this 25th day of February 1999, by NORTHWEST PLAZA LLC, a Delaware limited
liability company, WEA CRESTWOOD PLAZA LLC, a Delaware limited liability
company, ENFIELD SQUARE LLC, a Delaware limited liability company, PLAZA
BONITA LLC, a Delaware limited liability company, PLAZA WEST COVINA LLC, a
Delaware limited liability company, MID RIVERS MALL LLC, a Delaware limited
liability company, WEST PARK PARTNERS, L.P., a Missouri limited partnership,
CAPITAL MALL COMPANY, a Washington limited partnership, FOX HILLS MALL LLC, a
Delaware limited liability company, HORTON PLAZA LLC, a Delaware limited
liability company, PARKWAY PLAZA LLC, a Delaware limited liability company,
and OAKRIDGE MALL LLC, a Delaware limited liability company (each, a
"Borrower" and collectively, the "Borrowers") and THE CAPITAL COMPANY OF
AMERICA LLC (together with its successors and assigns, "Lender").
R E C I T A L S
A. Lender and four of the Borrowers (the "Initial Borrowers") entered
into that certain Loan Agreement dated as of October 30, 1998 (the "October
Loan Agreement") pursuant to which Lender agreed to make a series of loans in
the maximum aggregate amount of $850,000,000 to the Initial Borrowers and
certain of their affiliates, respectively.
B. Pursuant to an Assumption and Amendment of Loan Agreement dated as
of December 9, 1998 (the "First Amendment"), Lender and the Borrowers amended
the October Loan Agreement so as, among other things, to reduce the size of
the loan facility to $746,100,000 and to have the Borrowers other than the
Initial Borrowers assume the October Loan Agreement. The October Loan
Agreement as amended by the First Amendment is hereinafter referred to as the
"Original Loan Agreement".
C. Lender and Borrowers have agreed to amend the Loan Agreement so as
to increase the size of the facility to $754,100,000 and to otherwise modify
certain provisions of the Loan Agreement.
<PAGE>
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, and the additional advances to be made by Lender pursuant
to the terms hereof, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrowers and
Lender hereby agree as follows:
1. DEFINITIONS. Capitalized terms appearing herein and not
otherwise defined shall have the respective meanings ascribed to such terms
in the Loan Agreement. The term "Loan Agreement" as used in any of the Loan
Documents, and the term "Agreement" as used in the Loan Agreement, shall
hereafter be deemed to refer to the Original Loan Agreement as amended by
this Agreement and by the REMIC Letter Agreement (as hereinafter defined) and
as it may hereafter be further amended or modified from time to time.
2. CORRECTIONS AND CLARIFICATIONS.
(a) In Section 2.6(a)(xi) of the October Loan Agreement, the
reference to "Appraisal Value" is changed to "Appraised Value."
(b) The Oakridge Option Fund shall be deemed a Fund for all
purposes of the Loan Agreement.
(c) In Section 4.13(c) of the October Loan Agreement, the
reference to "June 15, 2002" is changed to "June 15, 2001".
(d) Any letter of credit delivered to Lender in lieu of all or
part of any Fund may be drawn by Lender upon the Maturity Date (unless the
Loans have then been paid in full), and the proceeds of any such draw(s)
shall be deemed to be a Fund for all purposes of the Loan Agreement. The
provisions of this Paragraph 2(d) are not intended to limit Lender's right
to draw on any letter of credit prior to the Maturity Date in accordance
with the provisions of the Loan Agreement.
(e) Sections 4.14(a) and (b) of the October Loan Agreement are
amended and restated in their entirety to read as follows:
"(a) AFTER THE OCCURRENCE OF A CASH MANAGEMENT EVENT, ALL RENTS
REMAINING IN A DEPOSIT ACCOUNT AFTER APPLICATION THEREOF
PURSUANT TO CLAUSE "NINTH" OF SECTION 3.1.3(a), SHALL BE
TRANSFERRED TO THE MASTER
2
<PAGE>
DEPOSIT ACCOUNT (ALL FUNDS AT ANY TIME IN THE CASH COLLATERAL
SUBACCOUNT OF THE MASTER DEPOSIT ACCOUNT BEING CALLED THE "CASH
COLLATERAL FUND")."
"(b) AFTER THE OCCURRENCE OF A CASH MANAGEMENT EVENT AND THE
CONTINUATION THEREOF FOR 30 DAYS OR MORE, FUNDS IN THE CASH
COLLATERAL SUBACCOUNT SHALL BE UTILIZED TO PAY (i) FEES AND
OTHER SUMS DUE AND PAYABLE TO THE MANAGEMENT CONSULTANTS, TO THE
EXTENT SUCH FEES AND SUMS HAVE NOT BEEN PAID PURSUANT TO CLAUSES
"EIGHTH" AND "NINTH" OF SECTION 3.1.3(a), AND (ii) OTHER
PAYMENTS DESCRIBED IN CLAUSE (i) THROUGH (ix) OF SECTION 3.1.3(a)
TO THE EXTENT THE RENTS FROM ANY BORROWER'S COLLATERAL PROPERTY
ARE INSUFFICIENT TO PAY SAME. PRIOR TO THE EXPIRATION OF SUCH 30
DAY PERIOD, SUMS IN THE CASH COLLATERAL SUBACCOUNT SHALL BE
DISBURSED ON A TWICE WEEKLY BASIS TO AN ACCOUNT SPECIFIED IN
WRITING BY BORROWERS' AGENT.
(f) In Section 5.1.37 of the October Loan Agreement, the term "the
Trust Property" is changed to "a Collateral Property."
(g) In clause (y) of Section 3.5(a) of the October Loan Agreement,
the words "Section 3.2.2 which causes the Debt Service Coverage Ratio to
increase to 1.20 or greater" are deleted and the words "Section 3.3" are
inserted in their place.
(h) In clause (ix) (E) of Section 6.15 of the October Loan
Agreement the words "(other than amendments in effect as of December 9, 1998
or amendments subsequently entered into with respect to which a Rating
Comfort Letter has been obtained from each of the Rating Agencies or
amendments entered into accordance with Section 7.11 of the this Agreement)"
are inserted immediately following the words "organizational documents".
3. REMIC CHANGES. Simultaneously with the execution and delivery
of this Agreement, the Borrowers and the Lender shall enter into a letter
agreement in the form of EXHIBIT A hereto (the "REMIC Letter Agreement").
4. CAP ON INTEREST RATE.
3
<PAGE>
(a) In Section 1.1 of the October Loan Agreement, the
definition of "Interest Rate" is amended and restated in its entirety as
follows:
"INTEREST RATE": FOR ANY INTEREST PERIOD, THE LESSER OF (A)
THE MINIMUM RATE AND (B) THE MAXIMUM RATE (OR, WHEN APPLICABLE
PURSUANT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE
DEFAULT RATE.)"
(b) In Section 1.1 of the October Loan Agreement, the following
new definition is added immediately after the definition of "Maximum Rate":
"MINIMUM RATE": FOR ANY INTEREST PERIOD, THE LESSER OF (A)
LIBOR FOR SUCH INTEREST PERIOD PLUS THE MARGIN, AND (B) 9.25%
PER ANNUM.
(c) In Section 1.1 of the October Loan Agreement, the
definition of "Default Rate" is amended and restated in its entirety as
follows:
"DEFAULT RATE": PRIOR TO THE STATED MATURITY DATE: A RATE
PER ANNUM EQUAL TO THE LESSER OF (i) THE MAXIMUM RATE AND (ii)
5% ABOVE THE UNCAPPED INTEREST RATE, COMPOUNDED MONTHLY; FROM
AND AFTER THE STATED MATURITY DATE: A RATE PER ANNUM EQUAL TO
THE LESSER OF (i) THE MAXIMUM RATE AND (ii) 10% ABOVE THE
UNCAPPED INTEREST RATE, COMPOUNDED MONTHLY."
(d) In Section 1.1 of the October Loan Agreement, the following
new definition is added immediately after the definition of "UCC":
"UNCAPPED INTEREST RATE": FOR ANY INTEREST PERIOD, LIBOR
FOR SUCH INTEREST PERIOD PLUS THE MARGIN."
4
<PAGE>
5. ADDITIONAL ADVANCES.
(a) On the date hereof Lender is making an advance in the
amount of $8,000,000 to the Oakridge Borrower. Lender shall have no
obligation to make any further advance to any Borrower.
(b) The Borrowers shall execute and deliver to Lender such
documents, instruments and agreements (including without limitation,
amendments to Mortgages, Guaranties, the Note and other Loan Documents), and
deliver to Lender legal opinions, title insurance and other closing items,
in each case as Lender may require to evidence and secure such additional
advances, with the intention that Lender have the same guaranties and
security and other benefits with respect to such additional advances as
Lender has with respect to the prior advances under the Loan Agreement.
6. OAKRIDGE OPTIONS.
(a) If, upon the expiration of the Secondary Option Period (as
defined in the Oakridge Option Agreement), neither the Primary Option nor
the Secondary Option have been exercised, and provided no Event of Default
then exists, the Oakridge Borrower shall be entitled to receive all sums in
the Oakridge Option Fund in excess of $8,000,000. The balance of the
Oakridge Option Fund (i.e., $8,000,000) shall continue to be held by Lender
as cash collateral for the Loans until the Loans have been paid in full.
For purposes of this Paragraph 6(a), any Oakridge L/C may be held by Lender
upon the expiration of the Secondary Option Period shall be deemed part of
the Oakridge Option Fund.
(b) Borrower acknowledges that, in connection with a Secondary
Market Transaction, the Capital Company of America LLC ("CCA") (or its
affiliate) may deliver to the Servicer (i) funds, a letter of credit or
other collateral to secure the obligations of the Oakridge Borrower under
paragraphs (b), (c), and (h) of Section 4.13 of the October Loan Agreement
(the "CCA Oakridge Option Collateral") and/or (ii) funds, a letter of credit
or other collateral to secure the obligations of the Oakridge Borrower to
make all rental payments becoming due and payable by the Oakridge Borrower
in its capacity as tenant under the Ground Lease of the Oakridge Property
(the "CCA Oakridge Rent Collateral").
5
<PAGE>
7. WEA AND WALP AGREEMENTS. Simultaneously with the execution and
delivery of this Agreement, Westfield America, Inc. ("WEA") is executing and
delivering to CCA that certain Reimbursement Agreement dated the date hereof
(the "Oakridge Reimbursement Agreement") and Westfield America Limited
Partnership ("WALP") is executing and delivering to CCA an interest Rate Cap
Agreement dated the date hereof (the "Interest Rate Cap Agreement").
8. GRID TO NOTE. As of the date hereof, the SCHEDULE A to the Note
is as set forth on SCHEDULE A hereto.
9. MISCELLANEOUS.
(a) This Agreement may be relied upon by, shall run to the
benefit of and may be enforced by Lender and its successors and assigns.
(b) This Agreement shall be governed by the laws of the State
of New York applicable to agreements executed and to be performed in New
York.
(c) This Agreement cannot be modified, changed, or discharged
except by an agreement in writing signed by Borrowers and Lender.
(d) A telephone facsimile of an executed copy of this Agreement
or of any other document executed in connection herewith shall be deemed an
original for all purposes.
(e) This Agreement and any document executed in connection
herewith may be executed with counterpart signature pages.
6
<PAGE>
IN WITNESS WHEREOF each of the undersigned has caused this Agreement to
be duly executed by its duly authorized representatives as of the day and
year first above written.
NORTHWEST PLAZA LLC, a Delaware limited liability
company
By: Northwest Plaza, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
WEA CRESTWOOD PLAZA LLC, a Delaware limited
liability company
By: Crestwood Plaza, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
ENFIELD SQUARE LLC, a Delaware limited liability
company
By: Enfield Square, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
<PAGE>
PLAZA BONITA LLC, a Delaware limited liability
company
By: Plaza Bonita, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
PLAZA WEST COVINA LLC, a Delaware limited
liability company
By: Plaza West Covina, Inc., a Delaware
corporation, its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
MID RIVERS MALL LLC, a Delaware limited liability
company
By: Mid Rivers, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
<PAGE>
WEST PARK PARTNERS, L.P., a Missouri limited
partnership
By: West Park Shopping Center, Inc., a Delaware
corporation, its general partner
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
CAPITAL MALL COMPANY, a Washington limited
partnership
By: Capital Shopping Center, Inc., a Delaware
corporation, its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
FOX HILLS MALL LLC, a Delaware limited liability
company
By: Fox Hills Mall, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
<PAGE>
HORTON PLAZA LLC, a Delaware limited liability
company
By: Horton Plaza, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
PARKWAY PLAZA LLC, a Delaware limited liability
company
By: Parkway Plaza, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
OAKRIDGE MALL LLC, a Delaware limited liability
company
By: Oakridge Mall, Inc., a Delaware corporation,
its managing member
By: /s/ Mark A. Stefanek
-----------------------------------------
Name: Mark A. Stefanek
Title: Treasurer
<PAGE>
THE CAPITAL COMPANY OF AMERICA LLC
By: /s/ Michael L. Hurdlebrink
------------------------------------
Name: Michael L. Hurdlebrink
Title:
<PAGE>
EXHIBIT A
THE CAPITAL COMPANY OF AMERICA LLC
2 WORLD FINANCIAL CENTER, BUILDING B
NEW YORK, NEW YORK 10281
February __, 1999
Northwest Plaza LLC
WEA Crestwood Plaza LLC
Enfield Square LLC
Plaza Bonita LLC
Plaza West Covina LLC
Mid Rivers Mall LLC
West Park Partners, L.P.
Capital Mall Company
Fox Hills Mall LLC
Horton Plaza LLC
Parkway Plaza LLC
Oakridge Mall LLC
c/o Westfield America, Inc.
11601 Wilshire Blvd.
12th Floor
Los Angeles, CA 90025
Re: $754,100,000 FINANCING - WESTFIELD/CCA
Gentlemen:
We refer to that certain Loan Agreement dated as of October 30, 1998
(the "October Loan Agreement"), as modified by that certain Assumption and
Amendment Agreement dated as of December 9, 1998 and as further amended by
that certain Second Amendment to Loan Agreement dated as of the date hereof
(collectively, the "Loan Agreement"). All capitalized terms used and not
defined herein shall have the respective meanings given such terms in the
Loan Agreement.
As you know, The Capital Company of America LLC ("CCA") contemplates
securitizing the Loans (the "Securitization"), and assigning the Loans to a
trustee
<PAGE>
(together with its successors and assigns, the "Trustee") for the benefit of
holders of securities (the "Securities") issued as part of the Securitization.
The Loan Agreement currently provides that the Borrowers may substitute
retail properties for one or more of the Collateral Properties.
CCA, by its execution and delivery of this letter agreement, irrevocably
agrees with you that the Loan Agreement is hereby modified to provide that,
effective immediately upon the assignment of the Loans to the Trustee, and
for so long as the Trustee or other service provider to the Securitization is
the holder of the Loans, the provisions of Section 2.6(a) of the October Loan
Agreement shall be modified as follows: (A) Section 2.6(a)(iv), (v) and (vi)
are deleted in their entirety; (B) Section 2.6(a)(xiv) is modified to delete
the introductory clause and replace it with "the Borrowers shall have
demonstrated that"; (C) Section 2.6(a)(xiv) is further modified to delete
clause (A) thereof; and (D) Section 2.6(a)(xviii) is deleted in its entirety
and replaced with "receipt of written affirmation from each Rating Agency
rating the Securities that such substitution will not cause the rating
assigned to any class of Securities to be withdrawn, qualified or
downgraded." All other terms of the Loans and the Loan Documents shall remain
in full force and effect, without any modification thereof.
This modification is NOT binding on any holder of the Loans other than
the Trustee or other service provider to the Securitization. In the event the
Trustee transfers the Loans and the Loans are removed from the
Securitization, the Loan Agreement substitution provisions shall remain as
written, without giving effect to this modification.
<PAGE>
This letter agreement constitutes an amendment to the Loan Agreement and
may be cited in any Loan Document as the "REMIC Letter Agreement".
Very truly yours,
THE CAPITAL COMPANY OF AMERICA LLC
By:
------------------------------
Name:
Title:
AGREED TO:
NORTHWEST PLAZA LLC,
a Delaware limited liability company
By: Northwest Plaza, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
<PAGE>
WEA CRESTWOOD PLAZA LLC,
a Delaware limited liability company
By: Crestwood Plaza, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
ENFIELD SQUARE LLC,
a Delaware limited liability company
By: Enfield Square, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
PLAZA BONITA LLC,
a Delaware limited liability company
By: Plaza Bonita, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
<PAGE>
PLAZA WEST COVINA LLC, a Delaware
limited liability company
By: Plaza West Covina, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
MID RIVERS MALL LLC, a Delaware
limited liability company
By: Mid Rivers, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
WEST PARK PARTNERS, L.P., a Missouri
limited partnership
By: West Park Shopping Center, Inc., a Delaware
corporation, its general partner
By:
------------------------------
Name:
Title:
<PAGE>
CAPITAL MALL COMPANY, a Washington
limited partnership
By: Capital Shopping Center, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
FOX HILLS MALL LLC, a Delaware
limited liability company
By: Fox Hills Mall, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
HORTON PLAZA LLC, a Delaware
limited liability company
By: Horton Plaza, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
<PAGE>
PARKWAY PLAZA LLC, a Delaware
limited liability company
By: Parkway Plaza, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
OAKRIDGE MALL LLC, a Delaware
limited liability company
By: Oakridge Mall, Inc., a Delaware
corporation, its managing member
By:
------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
ADVANCE/PREPAYMENT GRID*
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
AMOUNT OF DATE OF AMOUNT
BORROWER DATE OF ADVANCE ADVANCE PREPAYMENT PREPAID
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fox Hills Mall LLC October 30, 1998 $ 47,200,000
- ----------------------------------------------------------------------------------------------
Horton Plaza LLC October 30, 1998 $113,100,000
- ----------------------------------------------------------------------------------------------
Oakridge Mall LLC October 30, 1998 $ 37,400,000
Oakridge Mall LLC February 25, 1999 $ 8,000,000
- ----------------------------------------------------------------------------------------------
Parkway Plaza LLC October 30, 1998 $ 83,300,000
- ----------------------------------------------------------------------------------------------
Northwest Plaza LLC December 9, 1998 $ 85,511,459
- ----------------------------------------------------------------------------------------------
WEA Crestwood Plaza LLC December 9, 1998 $ 73,682,162
- ----------------------------------------------------------------------------------------------
Enfield Square LLC December 9, 1998 $ 30,795,763
- ----------------------------------------------------------------------------------------------
Plaza Bonita LLC December 9, 1998 $ 75,524,495
- ----------------------------------------------------------------------------------------------
Plaza West Covina LLC December 9, 1998 $ 83,152,469
- ----------------------------------------------------------------------------------------------
Mid Rivers Mall LLC December 9, 1998 $ 56,989,708
- ----------------------------------------------------------------------------------------------
West Park Partners, L.P. December 9, 1998 $ 29,420,464
- ----------------------------------------------------------------------------------------------
Capital Mall Company December 9, 1998 $ 30,023,481
- ----------------------------------------------------------------------------------------------
</TABLE>
- --------------
* Payee may attach additional grid pages as necessary throughout the term of
the Loan.
<PAGE>
EXHIBIT 11.1
WESTFIELD AMERICA, INC.
COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
DAYS AVERAGE SHARES
OUTSTANDING OUTSTANDING
----------- --------------
<S> <C> <C> <C> <C>
Average share price for three months
ended September 30,1999(1) $14.95
BASIC
COMMON SHARES OUTSTANDING
As of July 1, 1999 73,345,137 92 73,345,137
Issued on September 17, 1999 1,404 13 198
-----------
Weighted average common shares outstanding 73,345,335
-----------
-----------
Net income $ 13,556
Less net income allocable to preferred shares (9,559)
-----------
Net income allocable to common shares $ 3,997
-----------
-----------
Per share amount $ 0.05
-----------
-----------
DILUTED
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 73,345,335
1998 SUBSCRIPTION AGREEMENT:
Subscription amount (b) AU$465,000
Exchange rate at 9/30/99 (c) $ 0.6520
Converted subscription amount
(d) = (b)*(c) $303,180
Per Share Price
Average market price (a) $ 14.95
Common equivalent shares
(d*.05)/(a*.95) 1,067,347 92 1,067,347
----------
Weighted average common and common
equivalent shares 74,412,682
----------
----------
Net income $ 13,556
Less net income allocable to preferred
shares (9,559)
----------
Net income allocable to common shares $ 3,997
----------
----------
Per share amount $ 0.05
----------
----------
</TABLE>
Note 1 - The Company's preferred shares were not included in the earnings per
share calculation, as their effect is antidilutive.
Note 2 - The Company's Investor Unit Rights, which may be converted under
certain circumstances into shares of the Company's common stock, were not
included in the EPS Calculation as their effect is antidilutive.
(1) The share price used for the EPS calculation is based on the average
daily closing market price of the Company's common stock as reported
by the New York Stock Exchange.
<PAGE>
EXHIBIT 11.2
WESTFIELD AMERICA, INC.
COMPUTATION OF PER SHARE EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
DAYS AVERAGE SHARES
OUTSTANDING OUTSTANDING
----------- --------------
<S> <C> <C> <C> <C>
Average share price for nine months
ended September 30,1999(1) $ 15.65
BASIC
COMMON SHARES OUTSTANDING
As of January 1, 1999 73,337,691 273 73,337,691
Issued on May 13, 1999 7,446 140 3,818
Issued on September 17, 1999 1,404 13 67
-----------
Weighted average common shares outstanding 73,341,576
-----------
-----------
Net income $ 34,648
Less net income allocable to preferred shares (26,809)
-----------
Net income allocable to common shares $ 7,839
-----------
-----------
Per share amount $ 0.11
-----------
-----------
DILUTED
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 73,341,576
1997 WARRANTS:
As of January 1, 1998 2,089,552
Series B Preferred Shares (1,800,000)
-----------
Excess 1997 Warrants (b) 289,552
-----------
-----------
Per Share Price
Average Market Price (a) $ 15.65
Exercise Price (c) $ 15.00
Common equivalent shares ((a-c)*b)/a 273 12,026
1998 SUBSCRIPTION AGREEMENT:
Subscription amount (d) AU$465,000
Exchange rate at 9/30/99 (e) $ 0.6520
Converted subscription amount
(f) = (d)*(e) $303,180
Per Share Price
Average market price (a) $ 15.65
Common equivalent shares
(f*.05)/(a*.95) 1,019,607 273 1,019,607
----------
Weighted average common and common
equivalent shares 74,373,209
----------
----------
</TABLE>
<PAGE>
EXHIBIT 11.2
(CONTINUED)
WESTFIELD AMERICA, INC.
COMPUTATION OF PER SHARE EARNINGS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WEIGHTED
DAYS AVERAGE SHARES
OUTSTANDING OUTSTANDING
----------- --------------
<S> <C> <C>
Net income $ 36,648
Less net income allocable to preferred
shares (26,809)
----------
Net income allocable to common shares $ 7,839
----------
----------
Per share amount $ 0.11
----------
----------
</TABLE>
Note 1 - The Company's preferred shares were not included in the earnings per
share calculation, as their effect is antidilutive.
Note 2 - The Company's Investor Unit Rights, which may be converted under
certain circumstances into shares of the Company's common stock, were not
included in the EPS Calculation as their effect is antidilutive.
(1) The share price used for the EPS calculation is based on the average
daily closing market price of the Company's common stock as reported
by the New York Stock Exchange.
<PAGE>
EXHIBIT 12
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- ----------------------
1999 1998 1999 1998
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Income before income taxes $13,556 $ 2,997 $ 34,648 $ 94,195
Add: Minority interest in consolidated real
estate affiliates 726 926 2,062 2,904
Equity in income of unconsolidated real
estate affiliates (1,670) (2,184) (3,990) (3,092)
Distributions from unconsolidated real
estate affiliates 963 1,421 3,996 5,397
Interest expense 42,424 25,809 141,609 65,011
Loss (gains) on sales of investments - 11,816 (1,971) (53,895)
------- ------- -------- --------
Total earnings available to cover fixed charges $55,999 $40,785 $176,354 $110,520
------- ------- -------- --------
------- ------- -------- --------
Total fixed charges-interest expensed and
capitalized $43,268 $26,415 $143,297 $ 66,278
Total Preferred Stock Dividends 9,559 5,052 26,809 10,499
------- ------- -------- --------
Total combined fixed charges and preferred stock dividends $52,827 $31,467 $170,106 $76,777
------- ------- -------- --------
------- ------- -------- --------
Ratio of earnings to fixed charges 1.29x 1.54x 1.23x 1.67x
------- ------- -------- --------
------- ------- -------- --------
Ratio of earnings to fixed charges and preferred
stock dividends 1.06x 1.30x 1.04x 1.44x
------- ------- -------- --------
------- ------- -------- --------
Supplemental Disclosure of Ratio of Funds
from Operations (FFO) to Fixed Charges:
FFO $44,087 $36,148 $127,294 $ 99,860
Interest expense 42,424 25,809 141,609 65,011
------- ------- -------- --------
Adjusted FFO available to cover fixed charges $86,511 $61,957 $268,903 $164,871
------- ------- -------- --------
------- ------- -------- --------
Total fixed charges - interest expense and
capitalized $43,268 $26,415 $143,297 $ 66,278
Total preferred stock dividends 9,559 5,052 26,809 10,499
------- ------- -------- --------
Total combined fixed charges and preferred
Stock dividends $52,827 $31,467 $170,106 $ 76,777
------- ------- -------- --------
------- ------- -------- --------
Ratio of FFO to fixed charges 2.0x 2.35x 1.88x 2.49x
------- ------- -------- --------
------- ------- -------- --------
Ratio of FFO to fixed charges and preferred
stock dividends 1.64x 1.97x 1.58x 2.15x
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K,
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JUL-01-1999 JAN-01-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<CASH> 20,748 20,748
<SECURITIES> 0 0
<RECEIVABLES> 59,388 59,388
<ALLOWANCES> (7,524) (7,524)
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 3,387,140 3,387,140
<DEPRECIATION> (419,009) (419,009)
<TOTAL-ASSETS> 3,573,403 3,573,403
<CURRENT-LIABILITIES> 0 0
<BONDS> 2,349,284 2,349,284
0 0
482,000 482,000
<COMMON> 733 733
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 3,573,403 3,573,403
<SALES> 0 0
<TOTAL-REVENUES> 119,951 372,522
<CGS> 0 0
<TOTAL-COSTS> (69,606) (213,628)
<OTHER-EXPENSES> 5,635 17,363
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (42,424) (141,609)
<INCOME-PRETAX> 13,556 34,648
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 13,556 34,698
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 13,556 34,648
<EPS-BASIC> 0.05 0.11
<EPS-DILUTED> 0.05 0.11
</TABLE>
<PAGE>
EXHIBIT 99
AGREEMENT REGARDING DISCLOSURE OF LONG-TERM DEBT INSTRUMENTS
In reliance upon Item 601(b)(4)(iii)(A), of Regulation S-K, Westfield
America, Inc., a Missouri corporation (the "Company"), has not filed as an
exhibit to its Quarterly Report on Form 10-Q for the quarter ended September
30, 1999, any instrument with respect to long-term debt not being registered
where the total amount of securities authorized thereunder does not exceed 10
percent of the total assets of the Company and its subsidiaries on a
consolidated basis. Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the
Company hereby agrees to furnish a copy of any such agreement to the
Securities and Exchange Commission upon request.
WESTFIELD AMERICA, INC.
By: /s/ Peter S. Lowy
-----------------------------------
Peter S. Lowy
CO-PRESIDENT
