GGP Ggp Inc. (delisted)

General Growth Properties, Inc. (NYSE:GGP) today announced first quarter 2005 results. Earnings per share - diluted (EPS) were $.06 for the first quarter of 2005 as compared to $.27 in the first quarter of 2004. Fully diluted Funds From Operations per share (FFO) were $.72 for the first quarter of 2005, a 20% increase over the $.60 reported in the comparable period of 2004. "The first quarter of 2005 was our first full quarter of combined operations of The Rouse Company and General Growth," said John Bucksbaum, chief executive officer, General Growth Properties. "Although we have already captured some efficiencies, there are still significant benefits we expect to obtain throughout the remainder of this year and next from the expanded and more valuable platform that we can now offer to all of our constituents." FINANCIAL AND OPERATIONAL HIGHLIGHTS -- EPS in the first quarter of 2005 were $.06 per share versus $.27 in the comparable period of 2004. Depreciation expense in 2005 was $163.3 million or $.69 per share versus $72.9 million or $.33 per share in 2004. -- Fully diluted FFO per share increased to $.72 in the first quarter of 2005, 20% above the $.60 reported in the first quarter of 2004. Total FFO for the quarter increased 28% to $209.6 million, from $163.7 million in the first quarter of 2004. The effects of non-cash rental revenue recognized pursuant to SFAS No. 141 and 142 resulted in approximately $8.4 million or $.03 of FFO per fully diluted share in the first quarter of 2005 as compared to $7.4 million or $.03 in the comparable period of 2004. Straight-line rent resulted in approximately $21.4 million or $.07 of FFO per fully diluted share in the first quarter of 2005, versus $2.9 million or $.01 in the same period of 2004. Straight-line rent in 2005 includes approximately $10.1 million, or approximately $.04 of FFO per fully diluted share, of cumulative incremental straight-line rent related to a modification in our recognition policies for tenant rent holidays and inducements. -- FFO Guidance for 2005 remains estimated to be at least $3.13 per share. As future short term interest rates cannot be accurately estimated, the Company expects to maintain this guidance until the Federal Reserve Board discontinues its measured increases of interest rates, or until such earlier time, if applicable, that the Company estimates that full year 2005 FFO per share could be below $3.13. SEGMENT RESULTS The Company is presenting for 2005 its operations in two business segments, Retail and Other, and Community Development. As the Community Development properties were acquired in November 2004, only one operating segment has been presented for 2004. Retail and Other Segment -- Real estate property net operating income (NOI) for the first quarter of 2005 increased to $511.2 million, 70.6% above the $299.6 million reported in the first quarter of 2004. -- Revenues from consolidated properties were $628.2 million for the quarter, an increase of 83.7%, compared to $342.0 million for the same period in 2004. Revenues from unconsolidated properties at share increased 58.9% to $157.1 million, compared to $98.9 million in the first quarter of 2004. -- Total tenant sales increased 4.2% in 2005 and comparable tenant sales increased 2.7% compared to the same period last year. -- Comparable NOI from consolidated properties in the first quarter of 2005 increased by 5.0% compared to the same period last year. Comparable NOI from unconsolidated properties at share for the quarter increased by approximately 10.5% compared to the first quarter of 2004. -- Retail Center occupancy decreased to 90.0% at March 31, 2005, compared to 90.4% at March 31, 2004. -- Sales per square foot for first quarter 2005 were $416 versus $359 in the first quarter of 2004. -- Average rent For consolidated properties, average rent per square foot for new/renewal leases signed during the quarter was $33.23 versus $30.75 for 2004. For unconsolidated properties, average rent per square foot for new/renewal leases signed in the first quarter of 2005 was $37.35 versus $35.18 for 2004. Average rent for consolidated properties leases expiring in 2005 was $29.63 versus $25.69 in 2004. For unconsolidated properties, average rent for leases expiring in 2005 was $32.31 compared to $32.35 in 2004. Community Development Segment -- NOI for the properties in the Community Development segment was $7.6 million for consolidated properties and $2.9 million for unconsolidated properties. -- Land sale revenues were approximately $61.4 million for consolidated properties and approximately $8.6 million for unconsolidated properties, amounts which are comparable to the revenues achieved by The Rouse Company in 2004, excluding bulk sales. CONFERENCE CALL/WEBCAST General Growth Properties, Inc. will host a live Webcast of its conference call regarding this announcement on our Web site, www.generalgrowth.com. This Webcast will take place on Tuesday, May 3, 2005, at 10:00 a.m. Eastern Time (9:00 a.m. CT, 7:00 a.m. PT). The Webcast can be accessed by selecting the conference call icon on the GGP home page. General Growth Properties, Inc. is the second largest U.S.-based publicly traded Real Estate Investment Trust (REIT). General Growth currently has ownership interest and management responsibility for a portfolio of 209 regional shopping malls in 44 states, as well as ownership in planned community developments and commercial office buildings. The Company portfolio totals approximately 200 million square feet of retail space and includes over 18,000 retailers nationwide. General Growth Properties, Inc. is listed on the New York Stock Exchange under the symbol GGP. For more information, please visit the Company Web site at http://www.generalgrowth.com. NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES AND DEFINITIONS FUNDS FROM OPERATIONS (FFO) General Growth, consistent with real estate industry and investment community preferences, uses FFO as a supplemental measure of operating performance for a real estate investment trust (REIT). The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from cumulative effects of accounting changes, extraordinary items and sales of properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. The Company considers FFO a supplemental measure for equity REITs and a complement to GAAP measures because it facilitates an understanding of the operating performance of the Company's properties. FFO does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life. Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company's operating performance. In order to provide a better understanding of the relationship between FFO and GAAP net income, a reconciliation of FFO to GAAP net income has been provided. FFO does not represent cash flow from operating activities in accordance with GAAP, should not be considered as an alternative to GAAP net income and is not necessarily indicative of cash available to fund cash needs. In addition, the Company has presented FFO on a consolidated and unconsolidated basis (at the Company's ownership share) as the Company believes that given the significance of the Company's operations that are owned through investments accounted for on the equity method of accounting, the detail of the operations of the Company's unconsolidated properties provides important insights into the income and FFO produced by such investments for the Company as a whole. REAL ESTATE PROPERTY NET OPERATING INCOME (NOI) AND COMPARABLE NOI General Growth believes that Real Estate Property Net Operating Income (NOI) is a useful supplemental measure of the Company's operating performance. The Company defines NOI as operating revenues from continuing operations (rental income, land sales, tenant recoveries and other income) less property and related expenses from continuing operations (real estate taxes, land sales operating costs, repairs and maintenance, marketing and other property expenses). As with FFO described above, NOI has been reflected on a consolidated and unconsolidated basis (at the Company's ownership share). Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to other REITs. Because NOI excludes general and administrative expenses, interest expense, depreciation and amortization, gains and losses from property dispositions, discontinued operations, and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates, land values and operating costs. This measure thereby provides an operating perspective not immediately apparent from GAAP operating or net income. The Company uses NOI to evaluate its operating performance on a property-by-property basis because NOI allows the Company to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company's operating results, gross margins and investment returns. In addition, management believes that NOI provides useful information to the investment community about the Company's operating performance. However, due to the exclusions noted above, NOI should only be used as an alternative measure of the Company's financial performance. For reference and as an aid in understanding of management's computation of NOI, a reconciliation of NOI to consolidated operating income as computed in accordance with GAAP has been presented. Comparable NOI excludes from both years the NOI of properties with significant physical or merchandising changes and those properties acquired or opened during the relevant comparative accounting periods. PROPERTY INFORMATION The Company has presented information on its consolidated and unconsolidated properties separately in the accompanying financial schedules. As a significant portion of the Company's total operations are structured as joint venture arrangements which are unconsolidated, management of the Company believes that operating data with respect to all properties owned provides important insights into the income produced by such investments for the Company as a whole. In addition, the individual items of revenue and expense for the unconsolidated properties have been presented at the Company's ownership share of such unconsolidated ventures. As the management operating philosophies and strategies are the same regardless of ownership structure, an aggregate presentation of NOI and other operating statistics yields a more accurate representation of the relative size and significance of the elements of the Company's overall operations. FORWARD LOOKING STATEMENTS This press release contains forward-looking statements, including our FFO guidance. Actual results may differ materially from the results suggested by these forward-looking statements, for a number of reasons, including, but not limited to, the retail market, tenant occupancy and tenant bankruptcies, the level of our indebtedness and interest rates and our ability to successfully manage our growth. Readers are referred to the documents filed by General Growth Properties, Inc. with the SEC, specifically the most recent report on Form 10-K, which further identify the important risk factors which could cause actual results to differ materially from the forward-looking statements in this release. The Company disclaims any obligation to update any forward-looking statements. -0- *T GENERAL GROWTH PROPERTIES, INC. PORTFOLIO RESULTS (In thousands) Three Months Ended March 31, --------------------------- 2005 2004 ------------ ------------ Funds From Operations (FFO) Operating Partnership $209,615 $163,701 Less: Allocations to Operating Partnership unitholders 39,589 33,367 ------------ ------------ Company stockholders $170,026 $130,334 ============ ============ FFO per share: Company stockholders - basic $0.72 $0.60 Operating Partnership - basic 0.72 0.60 Operating Partnership - diluted 0.72 0.60 Weighted average number of Company shares outstanding: Basic 235,812 217,553 Basic (assuming full conversion of Operating Partnership units) 290,719 273,249 Diluted (assuming full conversion of Operating Partnership units) 291,495 274,175 Portfolio Results Total property revenues $689,558 $341,955 Total property operating expenses (267,811) (107,201) Equity in real estate property net operating income of Unconsolidated Properties 99,917 64,810 ------------ ------------ Real estate property net operating income 521,664 299,564 Net property management fees and costs (1,496) (148) Headquarters/regional costs, general and administrative and depreciation on non-income producing assets (19,514) (11,191) Net interest expense (242,811) (86,670) Income taxes 1,307 (7) Equity in other FFO of Unconsolidated Properties (39,861) (27,130) Preferred unit distributions (9,674) (10,717) ------------ ------------ FFO - Operating Partnership $209,615 $163,701 ============ ============ Summarized Balance Sheet Information March 31, December 31, (In thousands) 2005 2004 ------------ ------------ Cash and cash equivalents $45,117 $39,581 Investment in real estate: Net land, buildings and equipment $19,570,575 $19,657,322 Developments in progress 575,129 559,969 Investment in and loans to/from Unconsolidated Real Estate Affiliates 1,978,013 1,945,541 Investment land and land held for development and sale 1,664,299 1,638,013 ------------ ------------ Net investment in real estate $23,788,016 $23,800,845 ============ ============ Total assets $25,602,508 $25,718,625 Mortgage and other debt payable $20,392,810 $20,310,947 Minority interest - Preferred 219,275 403,161 Minority interest - Common 543,378 551,282 Stockholders' equity 2,124,639 2,143,150 ------------ ------------ Total capitalization (at cost) $23,280,102 $23,408,540 ============ ============ GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three Months Ended March 31, ----------------------- 2005 2004 ---------- ---------- Revenues: Minimum rents $410,484 $221,694 Tenant recoveries 182,007 102,222 Overage rents 13,586 8,352 Land sales 61,406 - Management and other fees 19,563 18,701 Other 22,487 8,857 ---------- ---------- Total revenues 709,533 359,826 ---------- ---------- Expenses: Real estate taxes 53,504 28,121 Repairs and maintenance 53,817 24,659 Marketing 12,368 10,440 Other property operating costs 89,763 41,196 Land sales operations 54,105 - Provision for doubtful accounts 4,254 2,784 Property management and other costs 34,637 25,012 General and administrative 2,811 2,190 Depreciation and amortization 163,309 72,904 ---------- ---------- Total expenses 468,568 207,306 ---------- ---------- Operating income 240,965 152,520 Interest income 2,217 417 Interest expense (245,028) (87,087) Income taxes 1,307 (7) Income allocated to minority interests (12,856) (25,438) Equity in income of unconsolidated affiliates 26,460 17,930 ---------- ---------- Income from continuing operations 13,065 58,335 Discontinued operations Income from discontinued operations, net of minority interest - 788 ---------- ---------- Net income $13,065 $59,123 ========== ========== Basic earnings per share: Continuing operations $0.06 $0.27 Discontinued operations - - ---------- ---------- Total basic earnings per share $0.06 $0.27 ========== ========== Diluted earnings per share: Continuing operations $0.06 $0.27 Discontinued operations - - ---------- ---------- Total diluted earnings per share $0.06 $0.27 ========== ========== GENERAL GROWTH PROPERTIES, INC. BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS (In thousands) Three Months Ended March 31, 2005 -------------------- Consolidated Unconsolidated Properties Properties (a) ------------------------------ Property revenues: Minimum rents (b) $410,484 $96,668 Tenant recoveries 182,007 43,724 Overage rents 13,586 1,727 Land sales 61,406 8,567 Other (c) 22,075 14,965 ----------- -------- Total property revenues 689,558 165,651 ----------- -------- Property operating expenses: Real estate taxes 53,504 13,678 Repairs and maintenance 53,817 10,924 Marketing 12,368 3,589 Other property operating costs 89,763 30,828 Land sales operations 54,105 5,658 Provision for doubtful accounts 4,254 1,057 ----------- -------- Total property operating expenses 267,811 65,734 ----------- -------- Real estate property net operating income 421,747 99,917 Management and other fees 19,563 - Property management and other costs (21,059) - Headquarters/regional costs (d) (13,578) (5,907) General and administrative (2,811) (241) Depreciation on non-income producing assets, including headquarters buildings (3,125) - Interest income 2,217 769 Interest expense (242,404) (33,834) Amortization of deferred finance costs (1,992) (648) Debt extinguishment costs (632) - Income taxes 1,307 - Preferred unit distributions (9,674) - ----------- -------- Funds From Operations 149,559 60,056 $209,615 Equity in Funds From Operations of Unconsolidated Properties 60,056 (60,056) - ----------- -------- --------- Operating Partnership Funds From Operations $209,615 $- $209,615 =========== ======== ========= Three Months Ended March 31, 2004 -------------------- Consolidated Unconsolidated Properties Properties (a) ------------------------------ Property revenues: Minimum rents (b) $221,694 $64,501 Tenant recoveries 102,222 31,730 Overage rents 8,352 1,137 Other (c) 9,687 1,514 ----------- -------- Total property revenues 341,955 98,882 ----------- -------- Property operating expenses: Real estate taxes 28,121 9,176 Repairs and maintenance 24,659 7,475 Marketing 10,440 3,292 Other property operating costs 41,196 13,424 Provision for doubtful accounts 2,785 705 ----------- -------- Total property operating expenses 107,201 34,072 ----------- -------- Real estate property net operating income 234,754 64,810 Management and other fees 18,701 - Property management and other costs (18,849) - Headquarters/regional costs (d) (6,163) (5,592) General and administrative (2,190) (143) Depreciation on non-income producing assets, including headquarters buildings (2,838) - Interest income 417 409 Interest expense (78,934) (20,645) Amortization of deferred finance costs (3,074) (728) Debt extinguishment costs (5,079) (431) Income taxes (7) - Preferred unit distributions (10,717) - ----------- -------- Funds From Operations 126,021 37,680 $163,701 Equity in Funds From Operations of Unconsolidated Properties 37,680 (37,680) - ----------- -------- --------- Operating Partnership Funds From Operations $163,701 $- $163,701 =========== ======== ========= (a)Reflect revenues and expenses of Unconsolidated Properties at Operating Partnership's ownership share of such items. (b)Minimum rents includes the following for the three months ended March 31: Consolidated Unconsolidated Properties Properties 2005 ---------------------------- Straight-line rent $15,023 $6,409 Non-cash rental revenue recognized pursuant to SFAS #141 and #142 7,631 799 2004 Straight-line rent $2,115 $823 Non-cash rental revenue recognized pursuant to SFAS #141 and #142 5,557 1,842 (c)Includes net FFO of investment property sold in 2004 of $1,250 for the three months ended March 31, 2004. (d)Headquarters/regional costs for the Unconsolidated Properties include property management and other fees to General Growth Management, Inc. and the Rouse Management Company, Inc. GENERAL GROWTH PROPERTIES, INC. SEGMENT RESULTS (In thousands) Three Months Ended Three Months Ended March 31, March 31, 2005 2004 ------------------------------- --------- Retail Community Retail and Other Development Total and Other --------- --------------------- --------- Segment Basis (a) Property revenues: Minimum rents $507,152 $- $507,152 $286,195 Tenant recoveries 225,731 - 225,731 133,952 Overage rents 15,313 - 15,313 9,489 Land sales - 69,973 69,973 - Other 37,039 1 37,040 11,201 --------- ----------- --------- --------- Total property revenues 785,235 69,974 855,209 440,837 --------- ----------- --------- --------- Property operating expenses Real estate taxes 67,182 - 67,182 37,297 Repairs and maintenance 64,741 - 64,741 32,134 Marketing 15,957 - 15,957 13,732 Other property operating costs 120,590 1 120,591 54,620 Land sales operations 259 59,504 59,763 - Provision for doubtful accounts 5,311 - 5,311 3,490 --------- ----------- --------- --------- Total property operating expenses 274,040 59,505 333,545 141,273 --------- ----------- --------- --------- Real estate property net operating income $511,195 $10,469 $521,664 $299,564 ========= =========== ========= ========= Unconsolidated Properties Property revenues: Minimum rents $96,668 $- $96,668 $64,501 Tenant recoveries 43,724 - 43,724 31,730 Overage rents 1,727 - 1,727 1,137 Land sales - 8,567 8,567 - Other 14,965 - 14,965 1,514 --------- ----------- --------- --------- Total property revenues 157,084 8,567 165,651 98,882 --------- ----------- --------- --------- Property operating expenses Real estate taxes 13,678 - 13,678 9,176 Repairs and maintenance 10,924 - 10,924 7,475 Marketing 3,589 - 3,589 3,292 Other property operating costs 30,828 - 30,828 13,424 Land sales operations 1 5,657 5,658 - Provision for doubtful accounts 1,057 - 1,057 705 --------- ----------- --------- --------- Total property operating expenses 60,077 5,657 65,734 34,072 --------- ----------- --------- --------- Real estate property net operating income $97,007 $2,910 $99,917 $64,810 ========= =========== ========= ========= Consolidated Properties Property revenues: Minimum rents $410,484 $- $410,484 $221,694 Tenant recoveries 182,007 - 182,007 102,222 Overage rents 13,586 - 13,586 8,352 Land sales - 61,406 61,406 - Other 22,074 1 22,075 9,687 --------- ----------- --------- --------- Total property revenues 628,151 61,407 689,558 341,955 --------- ----------- --------- --------- Property operating expenses Real estate taxes $53,504 - 53,504 28,121 Repairs and maintenance 53,817 - 53,817 24,659 Marketing 12,368 - 12,368 10,440 Other property operating costs 89,762 1 89,763 41,196 Land sales operations 258 53,847 54,105 - Provision for doubtful accounts 4,254 - 4,254 2,785 --------- ----------- --------- --------- Total property operating expenses 213,963 53,848 267,811 107,201 --------- ----------- --------- --------- Real estate property net operating income $414,188 $7,559 $421,747 $234,754 ========= =========== ========= ========= (a)Segment basis results include both Consolidated Properties and the Operating Partnership's ownership share of the results of operations of Unconsolidated Properties. GENERAL GROWTH PROPERTIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In thousands) Three Months Ended March 31, ------------------------ 2005 2004 ---------- ------------- Reconciliation of Real Estate Property Net Operating Income to GAAP Operating Income Real estate property net operating income including Unconsolidated Properties $521,664 $299,564 Unconsolidated Properties (99,917) (64,810) ---------- ------------- Consolidated Properties 421,747 234,754 Management and other fees 19,563 18,701 Property management and other costs (21,059) (18,849) Headquarters/regional costs (13,578) (6,163) General and administrative (2,811) (2,190) Depreciation and amortization (163,309) (72,904) Other (a) 412 (829) ---------- ------------- GAAP Operating income - Consolidated GGPI $240,965 $152,520 ========== ============= (a)Reflects discontinued operations and minority interest in Consolidated Properties real estate property net operating income. Reconciliation of Funds From Operations (FFO) to GAAP Net Income FFO: Company stockholders $170,026 $130,334 Operating Partnership unitholders 39,589 33,367 ---------- ------------- Operating Partnership 209,615 163,701 Depreciation and amortization of capitalized real estate costs (including SFAS #141 and #142 in-place lease costs) other than amortization of financing costs (193,508) (89,527) FFO of discontinued operations - (1,250) Allocations to Operating Partnership unitholders (3,042) (14,589) ---------- ------------- Income from continuing operations 13,065 58,335 Income from discontinued operations, net of minority interest - 788 ---------- ------------- Net income $13,065 $59,123 ========== ============= Reconciliation of Equity in Real Estate Property Net Operating Income of Unconsolidated Properties to GAAP Equity in Income of Unconsolidated Affiliates Equity in Real Estate Property Net Operating Income of Unconsolidated Properties $99,917 $64,810 Equity in net interest expense of Unconsolidated Properties (33,713) (21,395) Equity in headquarters and general and administrative expenses of Unconsolidated Properties (6,148) (5,735) ---------- ------------- Operating Partnership Equity in FFO from Unconsolidated Properties 60,056 37,680 Depreciation and amortization of capitalized real estate costs (including SFAS #141 and #142 in-place lease costs) other than amortization of financing costs (33,596) (19,750) ---------- ------------- Equity in income of unconsolidated affiliates $26,460 $17,930 ========== ============= Reconciliation of Weighted Average Shares Outstanding Basic: Weighted average number of shares outstanding - FFO per share 290,719 273,249 Full conversion of Operating Partnership units (54,907) (55,696) ---------- ------------- Weighted average number of Company shares outstanding - GAAP EPS 235,812 217,553 ========== ============= Diluted: Weighted average number of shares outstanding - FFO per share 291,495 274,175 Full conversion of Operating Partnership units (54,907) (55,696) ---------- ------------- Weighted average number of Company shares outstanding - GAAP EPS 236,588 218,479 ========== ============= *T