GGP Ggp Inc. (delisted)

General Growth Properties, Inc. (NYSE:GGP) reported its operating results today for the first quarter of 2007. Core Funds From Operations (Core FFO) per fully diluted share were $0.65 for the first quarter of 2007 as compared to $0.71 in the comparable period of 2006. Fully diluted Funds From Operations per share (FFO) were $1.66 for the first quarter of 2007, as compared to $.77 reported last year. Earnings per share � diluted (EPS) were $0.94 for the first quarter of 2007 as compared to $0.10 in the first quarter of 2006. �Our multi-purpose shopping, dining, socializing and entertainment venues continue to perform well and to attract consumers of all ages,� John Bucksbaum, Chief Executive Officer of General Growth Properties, reported.��Retailer demand for space remains strong and sales productivity is climbing.� FINANCIAL AND OPERATIONAL HIGHLIGHTS Core FFO is defined as Funds From Operations excluding the Real Estate Property Net Operating Income (NOI) from the Master Planned Communities segment and the provision for income taxes. Core FFO for the first quarter of 2007 was $192.4 million or $0.65 per fully diluted share as compared to $209.1 million or $0.71 per fully diluted share in the first quarter of 2006. Straight-line rent resulted in approximately $12.4 million or $.04 of Core FFO per fully diluted share in the first quarter of 2007, versus $15.2 million or $.05 in the same period of 2006. Minimum rent in the first quarter of 2007 includes approximately $18.7 million less of lease termination income or approximately $.06 less Core FFO per fully diluted share than the amount of such income recognized in the first quarter of 2006. FFO increased to $1.66 in the first quarter of 2007, 115.6% above the $.77 reported in the first quarter of 2006. Total Funds From Operations for the quarter increased 116.3% to $491.7 million, from $227.3 million in the first quarter of 2006. The significant increase in total Funds From Operations is primarily due to the approximately $298 million, or $1.00 of FFO, total tax benefit recognized in the first quarter of 2007 attributable to the completion of the previously reported restructuring of certain of our operating subsidiaries. As a result of such restructuring, previously recorded net deferred tax liabilities with respect to such operating subsidiaries were relieved through the current period provision for income taxes. EPS were $0.94 per share in the first quarter of 2007 versus $0.10 in the first quarter of 2006. As discussed above, our first quarter 2007 EPS were significantly impacted by the restructuring of certain of our operating subsidiaries. The reduction of net deferred tax liabilities due to the restructuring increased net earnings, net of minority interest, by approximately $245 million or approximately $1.00 per share. Also as previously reported, we adopted FASB Interpretation No. 48, �Accounting for Uncertain Tax Positions� (FIN 48), in the first quarter of 2007. Such adoption resulted in the accrual of approximately $81.9 million in additional net tax liabilities as of January 1, 2007. As required by FIN 48, approximately $27.8 million of such tax liabilities were recorded as an increase in goodwill, with the remaining amount of approximately $54.1 million reflected as a reduction in retained earnings, with no effect on current operating results. Interest expense of approximately $2.3 million in the first quarter of 2007 has been accrued for the FIN 48 net tax liabilities recorded and similar interest expense accruals, and penalties, if applicable, will continue to be recorded and reported in subsequent periods within the periodic provision for income taxes. Core FFO per share guidance - As indicated in previous public communications, per share guidance for the full year 2007 and beyond will be solely for Core FFO per fully diluted share. Operating results for our Master Planned Communities segment, and our income tax expense that is largely a function of such operations, are very difficult to estimate in advance. Actual EPS, Funds From Operations (including these excluded items), NOI and Core FFO will be provided each quarter. Full year per share guidance will also be provided on a quarterly basis; however, such guidance will only be given for Core FFO per fully diluted share. Based on actual first quarter results and forecasted information, including the projected reduction in our future interest expense as a result of our newly issued $1.55 billion 3.98% senior exchangeable notes, we currently project 2007 Core FFO per fully diluted share to be in the range of $3.25 to $3.27 per share, approximately 10% above the Core FFO per fully diluted share amount of $2.96 for 2006. SEGMENT RESULTS Retail and Other Segment Real estate property net operating income (NOI) for the first quarter of 2007 was $558.7 million, comparable to the $561.4 million produced in the first quarter of 2006. Revenues from consolidated properties were $674.6 million for the quarter, an increase of 2.4% compared to $658.8 million for the same period in 2006. Revenues from unconsolidated properties at the Company�s ownership share increased 2.9% to $181.4 million, compared to $176.3 million in the first quarter of 2006. Total tenant sales increased 7.0% in 2007 and comparable tenant sales increased 4.1% compared to the same period last year. Comparable NOI from consolidated properties in the first quarter of 2007 increased by 0.5% compared to the same period last year. Excluding lease termination income from both periods, Comparable NOI from consolidated properties increased by 4.0%. Comparable NOI from unconsolidated properties at the Company�s ownership share for the quarter declined by approximately 0.3% compared to the first quarter of 2006. Excluding lease termination income from both periods, Comparable NOI from unconsolidated properties increased by 3.8%. Retail Center occupancy increased to 92.9% at March 31, 2007, compared to 91.1% at March 31, 2006. Sales per square foot for first quarter 2007 (on a trailing twelve month basis) were $458 versus $444 in the first quarter of 2006. Average rent and recoverable common area costs - For consolidated properties, the sum of average rent and recoverable common area costs per square foot for new/renewal leases signed during the first quarter of 2007 was $36.87 whereas the sum of average rent and recoverable common area costs for leases expiring in 2007 was $31.38. For unconsolidated properties, the sum of average rent and recoverable common area costs per square foot for new/renewal leases signed in the first quarter of 2007 was $44.64 as compared to such amounts for leases expiring in 2007 was $37.95. Master Planned Communities Segment NOI in the first quarter of 2007 for the Master Planned Communities segment was $3.6 million for consolidated properties and $5.7 million for unconsolidated properties as compared to $38.6 million and $6.2 million, respectively, in 2006. Land sale revenues in the first quarter of 2007 were approximately $23.8 million for consolidated properties and approximately $13.4 million for unconsolidated properties, compared to $137.2 million and $18.5 million, respectively, for revenues in 2006. CONFERENCE CALL/WEBCAST General Growth Properties, Inc. will host a live Webcast of its conference call regarding this announcement on our website, www.ggp.com. This Webcast will take place on Tuesday, May 1, 2007, 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 45 states, as well as ownership in planned community developments and commercial office buildings. The Company�s portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide. The Company is listed on the New York Stock Exchange under the symbol GGP. For more information, please visit the Company website at http://www.ggp.com. NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES AND DEFINITIONS FUNDS FROM OPERATIONS AND CORE FFO General Growth, consistent with real estate industry and investment community preferences, uses Funds From Operations as a supplemental measure of operating performance for a REIT. The National Association of Real Estate Investment Trusts (NAREIT) defines Funds From Operations 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 Funds From Operations 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. Funds From Operations 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 Funds From Operations provides investors with a clearer view of the Company�s operating performance. However, we believe that Funds From Operations is a less meaningful supplemental measure for the Master Planned Communities segment of our business. Funds From Operations does not facilitate an understanding of the operating performance of the Master Planned Communities segment of our business as our primary strategy in this segment is to develop and sell land in a manner that increases the value of the remaining land. In addition, the Master Planned Communities segment of our business is operated within taxable REIT subsidiaries and therefore our income tax expense is largely attributable to this segment of the business. To isolate these parts of the Company from the Retail and Other segment for which Funds From Operations is a relevant measure of operating performance, the Company also uses Core FFO as an operating measure. Core FFO is defined as Funds From Operations excluding the Real Estate Property Net Operating Income from the Master Planned Communities segment and the provision for income taxes. In order to provide a better understanding of the relationship between Core FFO, Funds From Operations and GAAP net income, a reconciliation of Core FFO and Funds from Operations to GAAP net income has been provided. Neither Core FFO nor Funds From Operations represent cash flow from operating activities in accordance with GAAP, neither should be considered as an alternative to GAAP net income and neither is necessarily indicative of cash available to fund cash needs. In addition, the Company has presented Funds From Operations 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 Funds From Operations 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 Funds From Operations 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 substantially all of 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 Core FFO per fully diluted share 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 indebtedness and interest rates, market conditions, land sales in the Master Planned Communities segment, the cost and success of development and re-development projects and ability to successfully manage 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. � GENERAL GROWTH PROPERTIES, INC. OVERVIEW (In thousands, except per share amounts) � Three Months Ended March 31, 2007 2006 Funds From Operations ("FFO") � Company stockholders $ 404,282� $ 186,269� Operating Partnership unitholders 87,385� 41,000� Operating Partnership $ 491,667� $ 227,269� � Increase in FFO over comparable prior year period 116.3� % 8.4� % � FFO per share: Company stockholders - basic $ 1.66� $ 0.77� Operating Partnership - basic 1.66� 0.77� Operating Partnership - diluted 1.66� 0.77� Increase in diluted FFO over comparable prior year period 115.6� % 6.9� % � Core Funds From Operations ("Core FFO") Core FFO $ 192,412� $ 209,055� Core FFO per share - diluted 0.65� 0.71� � Dividends Dividends paid per share $ 0.45� $ 0.41� Payout ratio (% of diluted FFO paid out) 27.1� % 53.2� % � Real Estate Property Net Operating Income ("NOI") �Retail and Other: Consolidated $ 448,679� $ 452,061� Unconsolidated 110,032� 109,342� Total Retail and Other 558,711� 561,403� �Master Planned Communities: Consolidated 3,649� 38,622� Unconsolidated 5,666� 6,155� Total Master Planned Communities 9,315� 44,777� �Total Real estate property net operating �income $ 568,026� $ 606,180� � (note) Certain prior period amounts have been reclassified to conform to the current period presentation. � � � Selected Balance Sheet Information March 31, 2007 December 31, 2006 Cash and cash equivalents $ 64,918� $ 97,139� Investment in real estate: Net land, buildings and equipment $19,495,428� $19,564,992� Developments in progress 754,233� 673,900� Investment in and loans to/from Unconsolidated Real Estate Affiliates 1,545,714� 1,499,036� Investment land and land held for development and sale 1,685,181� 1,655,838� Net investment in real estate $23,480,556� $23,393,766� Total assets $25,304,426� $25,241,445� � Mortgage and other property debt payable $20,739,953� $20,521,967� Minority interest - Preferred 181,572� 182,828� Minority interest - Common 372,277� 347,753� Stockholders' equity 1,824,823� 1,664,079� Total capitalization (at cost) $23,118,625� $22,716,627� � Consolidated Properties Unconsolidated Properties (a) Summarized Debt Information Outstanding Balance Average Interest Rate (d) Outstanding Balance Average Interest Rate (d) Fixed rate (c) $17,093,986� 5.66� % $ 3,564,616� 5.61� % Variable rate (c) 3,417,237� 6.96� 284,426� 7.46� Totals $20,511,223� (b) 5.88� % $ 3,849,042� 5.75� % � � (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 $59.1 million, minority interest adjustment of $66.3 million and purchase accounting mark-to-market adjustments of $103.3 million. � (c) Includes the effects of interest rate swaps. � (d) Rates include the effects of deferred finance costs and the effect of a 360 day rate applied over a 365 day period. � � GENERAL GROWTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) � Three Months Ended March 31, 2007 2006 Revenues: Minimum rents $ 436,041� $ 437,731� Tenant recoveries 199,455� 185,442� Overage rents 15,580� 14,227� Land sales 23,793� 137,220� Management and other fees 27,572� 28,713� Other 26,347� 25,286� Total revenues 728,788� 828,619� Expenses: Real estate taxes 56,860� 54,964� Repairs and maintenance 50,972� 47,054� Marketing 12,580� 12,030� Other property operating costs 100,037� 86,450� Land sales operations 20,144� 98,598� Provision for doubtful accounts 5,493� 6,213� Property management and other costs 53,142� 45,060� General and administrative 12,268� 5,158� Depreciation and amortization 175,118� 165,346� Total expenses 486,614� 520,873� Operating income 242,174� 307,746� � Interest income 2,034� 3,222� Interest expense (268,348) (278,794) Income (loss) before income taxes andminority interest and equity in income ofunconsolidated affiliates (24,140) 32,174� Benefit (provision) for income taxes 288,392� (26,404) Minority interest (54,417) (11,224) Equity in income of unconsolidated affiliates 20,359� 28,468� Net income $ 230,194� $ 23,014� � Basic Earnings Per Share $ 0.94� $ 0.10� Diluted Earnings Per Share 0.94� 0.10� � � GENERAL GROWTH PROPERTIES, INC. PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS ("FFO") (In thousands) � Three Months Ended March 31, 2007 Consolidated Unconsolidated Segment Retail and Other Properties Properties Basis Property revenues: Minimum rents $ 436,041� $ 109,166� $ 545,207� Tenant recoveries 199,455� 48,261� 247,716� Overage rents 15,580� 2,467� 18,047� Other, including minority interest 23,545� 21,458� 45,003� Total property revenues 674,621� 181,352� 855,973� Property operating expenses: Real estate taxes 56,860� 15,129� 71,989� Repairs and maintenance 50,972� 11,121� 62,093� Marketing 12,580� 3,372� 15,952� Other property operating costs 100,037� 40,847� 140,884� Provision for doubtful accounts 5,493� 851� 6,344� Total property operating expenses 225,942� 71,320� 297,262� ��Retail and other net operating income 448,679� 110,032� 558,711� � Master Planned Communities Land sales 23,793� 13,361� 37,154� Land sales operations (20,144) (7,695) (27,839) Master Planned Communities net operating income 3,649� 5,666� 9,315� � � � Real estate property net operating income 452,328� 115,698� $ 568,026� � Management and other fees 27,572� 4,089� Property management and other costs (26,559) (799) Headquarters/regional costs (26,583) (11,126) General and administrative (12,268) (135) Depreciation on non-income producing assets, including headquarters building (3,115) -� Interest income 2,034� 3,677� Interest expense (268,348) (52,084) Benefit for income taxes 288,392� 1,548� Preferred unit distributions (4,059) -� Other FFO from minority interest 1,405� -� FFO 430,799� 60,868� Equity in FFO of Unconsolidated Properties 60,868� (60,868) Operating Partnership FFO $ 491,667� $ -� � � Three Months Ended March 31, 2006 Consolidated Unconsolidated Segment Retail and Other Properties Properties Basis Property revenues: Minimum rents $ 437,731� $ 105,329� $ 543,060� Tenant recoveries 185,442� 46,566� 232,008� Overage rents 14,227� 2,350� 16,577� Other, including minority interest 21,372� 22,068� 43,440� Total property revenues 658,772� 176,313� 835,085� 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 86,450� 37,948� 124,398� Provision for doubtful accounts 6,213� 92� 6,305� Total property operating expenses 206,711� 66,971� 273,682� ��Retail and other net operating income 452,061� 109,342� 561,403� � 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 490,683� 115,497� $ 606,180� � Management and other fees 28,713� -� Property management and other costs (23,844) -� Headquarters/regional costs (21,216) (8,007) General and administrative (5,158) (975) Depreciation on non-income producing assets, including headquarters building (3,336) -� Interest income 3,222� 2,977� Interest expense (278,794) (43,081) Provision for income taxes (26,404) (159) Preferred unit distributions (4,315) -� Other FFO from minority interest 1,466� -� FFO 161,017� 66,252� Equity in FFO of Unconsolidated Properties 66,252� (66,252) Operating Partnership FFO $ 227,269� $ -� � � GENERAL GROWTH PROPERTIES, INC. SUPPLEMENTAL DISCLOSURE OF CERTAIN REVENUES AND EXPENSES REFLECTED IN FFO (In thousands) � Three Months Ended Three Months Ended March 31, 2007 March 31, 2006 Consolidated Unconsolidated Consolidated Unconsolidated Properties Properties Properties Properties Minimum rents: Above- and below-market tenant leases, net $ 9,539� $ 2,367� $ 9,104� $ 2,486� Straight-line rent 9,408� 2,979� 12,530� 2,705� Other property operating costs: Non-cash ground rent expense (1,589) (193) (1,720) (140) Real estate taxes: Real estate tax stabilization agreement (981) -� (843) -� Interest expense: Mark-to-market adjustments on debt 10,506� 994� 7,939� 853� Amortization of deferred finance costs (3,531) (452) (2,708) (619) Debt extinguishmentcosts: �Write-off of mark-to-market adjustments -� -� 3,143� -� �Write-off of deferred finance costs -� -� (4,898) -� Totals $ 23,352� $ 5,695� $ 22,547� $ 5,285� � � WEIGHTED AVERAGE SHARES (In thousands) � Three Months Ended March 31, 2007 2006 � Basic 243,653� 240,621� Diluted 244,407� 241,588� Assuming full conversion of Operating Partnership units: Basic 296,318� 293,584� Diluted 297,072� 294,551� � � GENERAL GROWTH PROPERTIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In thousands) � Three Months Ended March 31, 2007 2006 Reconciliation of Real Estate Property Net Operating Income ("NOI") to GAAP Operating Income � Real estate property net operating income: Segment basis $ 568,026� $ 606,180� Unconsolidated Properties (115,698) (115,497) Consolidated Properties 452,328� 490,683� Management and other fees 27,572� 28,713� Property management and other costs (26,559) (23,844) Headquarters/regional costs (26,583) (21,216) General and administrative (12,268) (5,158) Depreciation and amortization (175,118) (165,346) Minority interest in NOI of Consolidated Properties 2,802� 3,914� Operating income $ 242,174� $ 307,746� � � � Reconciliation of Core FFO to Funds From Operations ("FFO") and to GAAP Net Income � Core FFO $ 192,412� $ 209,055� Master Planned Communities net operating income 9,315� 44,777� Benefit (provision) for income taxes 289,940� (26,563) Funds From Operations - Operating Partnership 491,667� 227,269� Depreciation and amortization of capitalized real estate costs (212,510) (199,795) Other 793� 784� Minority interest to Operating Partnership unitholders (49,756) (5,244) Net income $ 230,194� $ 23,014� � � � Reconciliation of Equity in NOI of Unconsolidated Properties to GAAP Equity in Income of Unconsolidated Affiliates � Equity in Unconsolidated Properties: NOI $ 115,698� $ 115,497� Net property management fees and costs 3,290� -� Net interest expense (48,407) (40,104) Headquarters, general and administrative and income taxes (9,713) (9,138) FFO of unconsolidated properties 60,868� 66,255� Depreciation and amortization of capitalized real estate costs (40,507) (37,787) Other, including gains on sale of investment properties (2) -� Equity in income of unconsolidated affiliates $ 20,359� $ 28,468� � � � Reconciliation of Weighted Average Shares Outstanding Basic: Weighted average number of shares outstanding - FFO per share 296,318� 293,584� Conversion of Operating Partnership units (52,665) (52,963) Weighted average number of Company shares outstanding - GAAP EPS 243,653� 240,621� � Diluted: Weighted average number of shares outstanding - FFO per share 297,072� 294,551� Conversion of Operating Partnership units (52,665) (52,963) Weighted average number of Company shares outstanding - GAAP EPS 244,407� 241,588�