GGP Ggp Inc. (delisted)

General Growth Properties, Inc. (NYSE:GGP) announced today its results for the first quarter of 2006. Earnings per share - diluted (EPS) were $.10 for the first quarter of 2006 as compared to $.06 in the first quarter of 2005. Fully diluted Funds From Operations per share (FFO) were $.77 for the first quarter of 2006, a 6.9% increase over the $.72 reported in the comparable period of 2005. "We are pleased with the strong net operating income (NOI) gains shown across our properties. This increase in NOI reflects strong results from GGP operations, as well as the continued robust retail environment," stated John Bucksbaum, Chief Executive Officer of General Growth Properties. -0- *T FINANCIAL AND OPERATIONAL HIGHLIGHTS -- EPS in the first quarter of 2006 were $.10 per share versus $.06 in the comparable period of 2005. Income tax expense (primarily deferred) in 2006 was $26.0 million or $.11 per share versus a $1.3 million benefit in 2005. -- Fully diluted FFO per share increased to $.77 in the first quarter of 2006, 6.9% above the $.72 reported in the first quarter of 2005. Total FFO for the quarter increased 8.4% to $227.3 million, from $209.7 million in the first quarter of 2005. The effects of non-cash rental revenue recognized pursuant to SFAS No. 141 and 142 resulted in approximately $11.6 million or $.04 of FFO per fully diluted share in the first quarter of 2006 as compared to $8.5 million or $.03 in the comparable period of 2005. Straight-line rent resulted in approximately $15.2 million or $.05 of FFO per fully diluted share in the first quarter of 2006, versus $21.4 million or $.07 in the same period of 2005. Minimum rent in the first quarter of 2006 includes approximately $19.4 million of lease termination income or approximately $.07 of FFO per fully diluted share in excess of the amount in the first quarter of 2005. In addition, FFO in the first quarter of 2006 includes interest expense of approximately $4.3 million or approximately $.01 of FFO per fully diluted share of deferred finance fees written-off in excess of the amount in the first quarter of 2005. -- FFO Guidance for 2006 currently remains estimated to be in the range of $3.27 to $3.37 per share, or approximately 7% to 10% greater than the actual 2005 FFO of $3.06 per share. *T SEGMENT RESULTS The Company presents its operations in two business segments, Retail and Other and Master Planned Communities. As certain properties were sold and we completed a complete general ledger system migration for the former Rouse Company properties in late 2005, we have reflected the NOI of net discontinued operations in other income and made certain other reclassifications to conform the 2005 results to the 2006 presentation. -0- *T Retail and Other Segment -- Real estate property net operating income (NOI) for the first quarter of 2006 increased to $561.6 million, 9.2% above the $514.1 million reported in the first quarter of 2005. -- Revenues from consolidated properties were $659.5 million for the quarter, an increase of 4.9% compared to $628.6 million for the same period in 2005. Revenues from unconsolidated properties at the Company's ownership share increased 12.5% to $176.4 million, compared to $156.8 million in the first quarter of 2005. -- Total tenant sales increased 5.8% in 2006 and comparable tenant sales increased 2.6% compared to the same period last year. -- Comparable NOI from consolidated properties in the first quarter of 2006 increased by 8.5% compared to the same period last year. Comparable NOI from unconsolidated properties at the Company's ownership share for the quarter increased by approximately 7.6% compared to the first quarter of 2005. -- Retail Center occupancy increased to 91.1% at March 31, 2006, compared to 90.0% at March 31, 2005. -- Sales per square foot for first quarter 2006 were $444 versus $416 in the first quarter of 2005. -- Average rent For consolidated properties, average rent per square foot for new/renewal leases signed during the first quarter of 2006 was $35.17 versus $33.23 for 2005. For unconsolidated properties, average rent per square foot for new/renewal leases signed in the first quarter of 2006 was $36.19 versus $37.35 for 2005. Average rent for consolidated properties leases expiring in 2006 was $30.16 versus $29.63 in 2005. For unconsolidated properties, average rent for leases expiring in 2006 was $33.59 compared to $32.31 in 2005. Master Planned Communities Segment -- NOI in 2006 for the Master Planned Communities segment was $38.6 million for consolidated properties and $6.2 million for unconsolidated properties as compared to $7.4 million and $2.9 million, respectively, in 2005. -- Land sale revenues in 2006 were approximately $137.2 million for consolidated properties and approximately $18.5 million for unconsolidated properties, compared to $61.3 million and $8.6 million, respectively, for revenues in 2005. *T CONFERENCE CALL/WEBCAST General Growth Properties, Inc. will host a live Webcast of its conference call regarding this announcement on our website, www.generalgrowth.com. This Webcast will take place on Tuesday, May 9, 2006, at 9:00 a.m. Eastern Time (8:00 a.m. CT, 6:00 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 in, or management responsibility for, over 200 regional shopping malls in 44 states, as well as ownership in planned community developments and commercial office buildings. The Company portfolio totals over 175 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 website 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 (rental income, land sales, tenant recoveries and other income) less property and related expenses (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, minority interest in consolidated joint ventures, 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 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 the Company's indebtedness and interest rates and the Company's ability to successfully manage its 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. OVERVIEW (In thousands, except per share amounts) ---------------------------------------------------------------------- Three Months Ended March 31, --------------------------- 2006 2005 ------------- ------------- Funds From Operations ("FFO") (i) Company stockholders $186,269 $170,089 Operating Partnership unitholders 41,000 39,589 ------------- ------------- Operating Partnership $227,269 $209,678 ============= ============= FFO per share: Company stockholders - basic $0.77 $0.72 Operating Partnership - basic 0.77 0.72 Operating Partnership - diluted 0.77 0.72 Increase in diluted FFO over comparable prior year period 6.9% 15.8% Dividends Dividends paid per share $0.41 $0.36 Payout ratio (% of diluted FFO paid out) 53.2% 50.0% Portfolio Results (i) Real estate property net operating income: Retail and Other: Consolidated $452,373 $415,879 Unconsolidated 109,247 98,269 Master Planned Communities: Consolidated 38,622 7,439 Unconsolidated 6,155 2,908 ------------- ------------- Real estate property net operating income 606,397 524,495 Net property management fees and costs 4,869 (2,143) Headquarters/regional costs, general and administrative and depreciation on non-income producing assets (29,757) (20,594) Net interest expense (275,571) (244,234) Income taxes (25,974) 1,307 Equity in other FFO of Unconsolidated Properties (49,147) (40,501) Preferred unit distributions (4,315) (8,534) FFO from minority interest 767 (118) ------------- ------------- FFO - Operating Partnership $227,269 $209,678 ============= ============= (i) Certain amounts within categories of real estate property net operating income and other items included in or excluded from FFO for prior periods in 2005 have been reclassified to conform to the current period presentation. Weighted average number of Company shares outstanding: Basic 240,621 235,812 Diluted 241,588 236,588 Assuming full conversion of Operating Partnership units: Basic 293,584 290,719 Diluted 294,551 291,495 March 31, December 31, Selected Balance Sheet Information 2006 2005 ------------- ------------- Cash and cash equivalents $65,233 $102,791 Investment in real estate: Net land, buildings and equipment 19,358,716 19,461,255 Developments in progress 406,734 366,262 Investment in and loans to/from Unconsolidated Real Estate Affiliates 1,785,286 1,818,097 Investment land and land held for development and sale 1,644,734 1,651,063 ------------- ------------- Net investment in real estate $23,195,470 $23,296,677 ============= ============= Total assets $25,221,431 $25,307,019 ============= ============= Mortgage and other property debt payable $20,448,048 $20,418,875 Minority interest - Preferred 202,110 205,944 Minority interest - Common 420,537 430,292 Stockholders' equity 1,913,520 1,932,918 ------------- ------------- Total capitalization (at cost) $22,984,215 $22,988,029 ============= ============= Unconsolidated Consolidated Properties Properties (a) ------------------------ -------------------- Average Average Summarized Debt Outstanding Interest Outstanding Interest Information Balance Rate (d) Balance Rate (d) ------------ -------- ----------- -------- Fixed rate (c) $14,913,036 5.45% $2,804,577 5.41% Variable rate (c) 5,267,365 6.06 518,634 6.23 ------------ -------- ----------- -------- Totals $20,180,401 (b) 5.61% $3,323,211 5.54% ============ ======== =========== ======== (a) Reflects the Company's share of debt relating to the properties owned by the Unconsolidated Real Estate Affiliates. (b) Excludes special improvement districts liability of $63.1 million, minority interest adjustment of $67.6 million and purchase accounting mark-to-market adjustment of $137.0 million. (c) Includes the effects of swaps. (d) Excludes the effect of deferred finance costs. ---------------------------------------------------------------------- GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) ---------------------------------------------------------------------- Three Months Ended March 31, ------------------- 2006 2005 Revenues: Minimum rents $437,731 $405,834 Tenant recoveries 185,442 185,057 Overage rents 14,227 13,607 Land sales 137,220 61,250 Management and other fees 28,713 18,356 Other 25,286 22,353 --------- --------- Total revenues 828,619 706,457 --------- --------- Expenses: Real estate taxes 54,964 53,190 Repairs and maintenance 47,054 48,435 Marketing 12,030 13,952 Other property operating costs 86,833 92,937 Land sales operations 98,598 53,811 Provision for doubtful accounts 6,213 4,197 Property management and other costs 46,707 34,964 General and administrative 3,558 2,811 Depreciation and amortization 165,346 161,725 --------- --------- Total expenses 521,303 466,022 --------- --------- Operating income 307,316 240,435 Interest income 3,222 1,040 Interest expense (278,794) (245,274) --------- --------- Income (loss) before income taxes and allocations to minority interests and from unconsolidated affiliates 31,744 (3,799) Benefit (provision) for income taxes (25,974) 1,307 Income allocated to minority interests (11,224) (12,664) Equity in income of unconsolidated affiliates 28,468 26,691 --------- --------- Income from continuing operations 23,014 11,535 Income from discontinued operations, net of minority interest - 1,530 --------- --------- Net income available to common stockholders $23,014 $13,065 ========= ========= Basic Earnings Per Share: Continuing operations $0.10 $0.05 Discontinued operations - 0.01 --------- --------- Total basic earnings per share $0.10 $0.06 ========= ========= Diluted Earnings Per Share: Continuing operations $0.10 $0.05 Discontinued operations - 0.01 --------- --------- Total diluted earnings per share $0.10 $0.06 ========= ========= ---------------------------------------------------------------------- GENERAL GROWTH PROPERTIES, INC. PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS ("FFO") (In thousands) ---------------------------------------------------------------------- Three Months Ended March 31, 2006 -------------------------------------- Consolidated Unconsolidated Segment Retail and Other Properties Properties Basis ------------ -------------- ---------- Property revenues: Minimum rents $437,731 $105,367 $543,098 Tenant recoveries 185,442 46,566 232,008 Overage rents 14,227 2,350 16,577 Other, including minority interest 22,067 22,106 44,173 ------------ ------------- ----------- Total property revenues 659,467 176,389 835,856 ------------ ------------- ----------- Property operating expenses: Real estate taxes 54,964 14,868 69,832 Repairs and maintenance 47,054 10,556 57,610 Marketing 12,030 3,507 15,537 Other property operating costs 86,833 38,074 124,907 Provision for doubtful accounts 6,213 137 6,350 ------------ ------------- ----------- Total property operating expenses 207,094 67,142 274,236 ------------ ------------- ----------- Retail and other net operating income 452,373 109,247 561,620 ------------ ------------- ----------- Master Planned Communities Land sales 137,220 18,549 155,769 Land sales operations (98,598) (12,394) (110,992) ------------ ------------- ----------- Master Planned Communities net operating income 38,622 6,155 44,777 ------------ ------------- ----------- Real estate property net operating income 490,995 115,402 $606,397 =========== Management and other fees 28,713 - Property management and other costs (23,844) - Headquarters/regional costs (22,863) (8,007) (a) General and administrative (3,558) (956) Depreciation on non-income producing assets, including headquarters building (3,336) - Interest income 3,222 2,977 Interest expense (278,793) (43,080) Income taxes (25,974) (81) Preferred unit distributions (4,315) - FFO from minority interest 767 - ------------ ------------- FFO $161,014 $66,255 Equity in FFO of Unconsolidated Properties 66,255 (66,255) ------------ ------------- Operating Partnership FFO $227,269 $- ============ ============= Three Months Ended March 31, 2005 -------------------------------------- Consolidated Unconsolidated Segment Retail and Other Properties Properties Basis ------------ -------------- ---------- Property revenues: Minimum rents $405,834 $96,250 $502,084 Tenant recoveries 185,057 43,237 228,294 Overage rents 13,607 1,722 15,329 Other, including NOI from discontinued operations and minority interest 24,092 15,612 39,704 ------------ ------------- ----------- Total property revenues 628,590 156,821 785,411 ------------ ------------- ----------- Property operating expenses: Real estate taxes 53,190 13,570 66,760 Repairs and maintenance 48,435 10,632 59,067 Marketing 13,952 3,447 17,399 Other property operating costs 92,937 29,856 122,793 Provision for doubtful accounts 4,197 1,047 5,244 ------------ ------------- ----------- Total property operating expenses 212,711 58,552 271,263 ------------ ------------- ----------- Retail and other net operating income 415,879 98,269 514,148 ------------ ------------- ----------- Master Planned Communities Land sales 61,250 8,567 69,817 Land sales operations (53,811) (5,659) (59,470) ------------ ------------- ----------- Master Planned Communities net operating income 7,439 2,908 10,347 ------------ ------------- ----------- Real estate property net operating income 423,318 101,177 $524,495 =========== Management and other fees 18,356 - Property management and other costs (20,499) - Headquarters/regional costs (14,465) (6,963) (a) General and administrative (2,811) (241) Depreciation on non-income producing assets, including headquarters building (3,318) - Interest income 1,040 766 Interest expense (245,274) (34,063) Income taxes 1,307 - Preferred unit distributions (8,534) - FFO from discontinued operations and minority interest (118) - ------------ ------------- FFO 149,002 60,676 Equity in FFO of Unconsolidated Properties 60,676 (60,676) ------------ ------------- Operating Partnership FFO $209,678 $- ============ ============= (a) Includes property management and other fees to General Growth Management, Inc. and Rouse Property Management, Inc. ---------------------------------------------------------------------- GENERAL GROWTH PROPERTIES, INC. SUPPLEMENTAL DISCLOSURE OF CERTAIN REVENUES AND EXPENSES REFLECTED IN FFO (In thousands) ---------------------------------------------------------------------- Three Months Ended Three Months Ended March 31, 2006 March 31, 2005 --------------------------- --------------------------- Consolidated Unconsolidated Consolidated Unconsolidated Properties Properties Properties Properties ----------- --------------- ------------ -------------- Minimum rents: Above- and below-market tenant leases, net $9,104 $2,486 $7,726 $799 Straight-line rent 12,531 2,706 15,023 6,409 Other property operating costs: Above- and below-market ground leases, net (1,720) (140) (1,896) (154) Real estate taxes: Real estate tax stabilization agreement (843) - (1,072) - Interest expense: Mark-to-market adjustments on debt 7,939 853 8,335 178 Amortization of deferred finance costs (2,708) (619) (2,101) (768) Debt extinguishment costs Write-off of mark-to-market adjustments 3,143 - - - Write-off of deferred finance costs (4,898) - (632) - All amounts exclude discontinued operations. ---------------------------------------------------------------------- GENERAL GROWTH PROPERTIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In thousands) ---------------------------------------------------------------------- Three Months Ended March 31, --------------------- 2006 2005 ---------- ---------- Reconciliation of Real Estate Property Net Operating Income ("NOI") to GAAP Operating Income Real estate property net operating income: Segment basis $606,397 $524,495 Unconsolidated Properties (115,402) (101,177) ---------- ---------- Consolidated Properties 490,995 423,318 Management and other fees 28,713 18,356 Property management and other costs (23,844) (20,499) Headquarters/regional costs (22,863) (14,465) General and administrative (3,558) (2,811) Depreciation and amortization (165,346) (161,725) Discontinued operations and minority interest in NOI of Consolidated Properties 3,219 (1,739) ---------- ---------- Operating Income $307,316 $240,435 ========== ========== Reconciliation of Funds From Operations ("FFO") to GAAP Net Income FFO: Company stockholders $186,269 $170,089 Operating Partnership unitholders 41,000 39,589 ---------- ---------- Operating Partnership 227,269 209,678 Depreciation and amortization of capitalized real estate costs (199,011) (192,118) FFO of discontinued operations and minority interest 1,486 (2,035) Allocations to Operating Partnership unitholders (6,730) (3,990) ---------- ---------- Income from continuing operations 23,014 11,535 Income from discontinued operations, net of minority interest - 1,530 ---------- ---------- Net income $23,014 $13,065 ========== ========== Reconciliation of Equity in NOI of Unconsolidated Properties to GAAP Equity in Income of Unconsolidated Affiliates Equity in Unconsolidated Properties: NOI $115,402 $101,177 Net interest expense (40,103) (33,297) Headquarters, general and administrative and income taxes (9,044) (7,204) ---------- ---------- FFO 66,255 60,676 Depreciation and amortization of capitalized real estate costs (37,787) (33,985) ---------- ---------- Equity in income of unconsolidated affiliates $28,468 $26,691 ========== ========== Reconciliation of Weighted Average Shares Outstanding Basic: Weighted average number of shares outstanding - FFO per share 293,584 290,719 Conversion of Operating Partnership units (52,963) (54,907) ---------- ---------- Weighted average number of Company shares outstanding - GAAP EPS 240,621 235,812 ========== ========== Diluted: Weighted average number of shares outstanding - FFO per share 294,551 291,495 Conversion of Operating Partnership units (52,963) (54,907) ---------- ---------- Weighted average number of Company shares outstanding - GAAP EPS 241,588 236,588 ========== ========== *T