General Growth Properties, Inc. (NYSE: GGP) (the Company) released
its third quarter 2008 results of operations today. For the third
quarter of 2008, Core Funds From Operations (Core FFO) per fully
diluted share were $0.64, Funds From Operations (FFO) per fully
diluted share were $0.58 and Earnings per share � diluted (EPS)
were a loss of $0.06. Although retail property revenue has remained
relatively stable, Core FFO and FFO per fully diluted share have
both declined from the comparable amounts reported for the third
quarter of 2007 primarily due to provisions for impairment
recognized in the third quarter 2008, as described below. For EPS
purposes, such provisions for impairment were partially offset by
gains on sales of non-core assets. 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 benefit from (provision for)
income taxes. Core FFO for the third quarter of 2008 was $205.7
million or $0.64 per fully diluted share as compared to $200.7
million or $0.68 per fully diluted share for the third quarter of
2007. The $5.0 million, or 2.5%, increase in Core FFO compared to
the third quarter of 2007 was primarily due to the recognition of
our share of the Glendale Galleria litigation cost of approximately
$37.1 million in the third quarter of 2007. Core FFO for the third
quarter of 2008 includes provisions for impairment of $7.8 million
at one of our core operating properties and an aggregate of $7.4
million of non-recoverable development costs (approximately $0.05
per fully diluted share in the aggregate). Core FFO per fully
diluted share declined relative to the third quarter of 2007 due to
the dilutive affect of the issuance of 22.8 million shares of GGP
common stock in March 2008. FFO was $185.4 million in the third
quarter of 2008, a decline of approximately 11.0% or $23.0 million,
from $208.4 million in the third quarter of 2007. The decline in
FFO was due to significantly lower NOI at certain of our
communities within the master planned community operating segment
in 2008, as well as a provision for impairment of $40.3 million (or
approximately $0.13 per fully diluted share) for Nouvelle at Natick
(a residential condominium project that is classified as property
held for development and sale) as a result of non-recoverable
development costs at September 30, 2008. The remaining Nouvelle
carrying value, including estimated costs to complete, is currently
estimated to be fully recoverable through unit sales which
commenced in October 2008. EPS were a loss of $0.06 in the third
quarter of 2008 compared to a loss of $0.04 in the third quarter of
2007. The decrease in EPS was primarily due to lower land sales and
provisions for impairment and is partially offset by the $15.1
million, net of minority interest (or approximately $0.06 per fully
diluted share), recognized on the previously reported sales of
certain office parks in the third quarter of 2008. Strategic,
development and financing update The Company�s Board of Directors
and management team, together with their financial and legal
advisors, continue to comprehensively examine all financial and
strategic alternatives for the Company, including, but not limited
to, sales of both core and non-core assets, sales of joint venture
interests, corporate level capital infusions and broader strategic
business combinations. The Company has deferred the development,
construction or opening of certain near and intermediate term new
development and redevelopment projects. As a result, all future
development expenditures other than expenditures for projects that
are near completion and approved projects at our jointly owned
properties have been deferred. The regularly scheduled quarterly
dividend for the third quarter of 2008 was suspended and, since
June 30, 2008, approximately $47 million of non-core asset sales
have been completed. In addition, as of today, approximately $1.74
billion of new and/or replacement financing has funded since June
30, 2008, consisting of the July 2008, $1.51 billion secured
portfolio facility and a new $225 million short term secured loan.
As a result, all loans previously scheduled to mature in 2008
through the date of this release have been refinanced, continued or
repaid. The Company has approximately $900 million of property
secured debt and approximately $58 million of corporate debt that
is scheduled to mature by December 1, 2008 that remains to be
refinanced and extended. As previously announced, the Company is
working with its syndicate of lenders for the property secured debt
(for Fashion Show and The Shoppes at The Palazzo, two of our
premier Las Vegas properties) to extend the November 28, 2008
maturity dates and is marketing these properties for sale. Core FFO
per share guidance We currently project 2008 Core FFO to be in the
range of $2.85 to $2.95 per share. The 2008 Core FFO guidance has
been reduced as a result of lower expected NOI growth, the
provisions for impairment discussed above and increases in
amortization of refinancing costs. The 2008 Core FFO guidance does
not include the impact of implementing our strategic alternatives
or any future provisions for impairment. SEGMENT RESULTS Retail and
Other Segment NOI increased to $622.5 million for the third quarter
of 2008, 1.0% above the $616.3 million reported for the third
quarter of 2007. This increase is due to the opening of expansions
and renovations at certain operating properties and, in March of
2008, the acquisition of The Shoppes at The Palazzo. Comparable NOI
from consolidated properties in the third quarter of 2008 decreased
by 1.8% compared to the same period last year, and increased by
1.8% for third quarter year-to-date 2008 compared to third quarter
year-to-date 2007. Comparable NOI from unconsolidated properties at
the Company�s ownership share for the quarter increased by
approximately 8.0% compared to the third quarter of 2007 and
increased by 7.1% for third quarter year-to-date 2008 compared to
third quarter year-to-date 2007. Revenues from consolidated
properties for the third quarter of 2008 were $784.3 million, an
increase of 0.4% compared to $781.1 million for the same period in
2007. Increases were substantially offset by declines in SFAS 141
rents, termination income and overage rent. Revenues from
unconsolidated properties, at the Company�s ownership share, for
the third quarter increased 3.8% to $151.4 million, compared to
$145.8 million in the third quarter of 2007. The increase was
primarily due to increased minimum rents from certain expansions
and renovations opened since mid 2007 and certain ownership
increases in properties owned through our international joint
ventures. Comparable tenant sales, on a trailing twelve month
basis, increased 0.3% compared to the same period last year. Sales
per square foot, on a trailing twelve month basis, decreased 0.7%
compared to the same period last year. Retail Center occupancy
decreased slightly to 92.7% at September 30, 2008 from 93.2% at
September 30, 2007. Master Planned Communities Segment NOI from the
Master Planned Communities segment for the third quarter of 2008
was a loss of $42.7 million for consolidated properties and income
of $3.6 million for unconsolidated properties as compared to income
of $11.0 million and $11.5 million, respectively, in 2007. In
addition to the provision from impairment that resulted from the
non-recoverable development costs for Nouvelle as described above,
the change in 2008 NOI compared to 2007 NOI reflects the continuing
adverse effect of the credit market on new home sales and the
resulting reduction in demand for residential lots. Land sale
revenues for the third quarter of 2008 were $6.2 million for
consolidated properties and $13.1 million for unconsolidated
properties, compared to $54.2 million and $33.5 million,
respectively, for the third quarter of 2007. Such declines in land
sale revenues reflect a continuation of the reduced sales pace for
2008, a trend from the first quarter of 2008 that is expected to
continue into 2009. 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 Wednesday, November 5, 2008, at 9:00
a.m. Eastern Time (8:00 a.m. CST, 6:00 a.m. PST). The Webcast can
be accessed by selecting the conference call icon on the GGP home
page. The Company currently has ownership interest in, or
management responsibility for, over 200 regional shopping malls in
44 states, as well as ownership in master 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 The Company,
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 including 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. However, we
believe that FFO is a less meaningful supplemental measure for the
Master Planned Communities segment of our business. FFO 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 benefit from
(provision for) 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 FFO is a relevant measure
of operating performance, the Company also uses Core FFO as an
operating measure. Core FFO is defined as FFO excluding the NOI
from the Master Planned Communities segment and the benefit from
(provision for) income taxes. In order to provide a better
understanding of the relationship between Core FFO, FFO and GAAP
net income, a reconciliation of Core FFO and FFO to GAAP net income
has been provided. Neither Core FFO nor FFO 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 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 The Company believes that 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, retail investment property impairment or other
non-recoverable development costs, 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 (with respect to the Master Planned Communities) 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 such
elements of the Company�s overall operations. FORWARD LOOKING
STATEMENTS This press release contains forward-looking statements,
including full year 2008 Core FFO per share guidance and the
Company�s strategic and financing review. Actual results may differ
materially from the results suggested by these forward-looking
statements, for a number of reasons, including, but not limited to,
tenant occupancy and tenant bankruptcies, the level of indebtedness
and interest rates, retail and credit market conditions,
impairments, land sales in the Master Planned Communities segment,
the cost and success of development and re-development projects and
our ability to successfully manage our strategic and financial
review and our liquidity and refinancing demands. Readers are
referred to the documents filed by General Growth Properties, Inc.
with the SEC, 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 Nine Months Ended September 30,
September 30, 2008 2007 2008 2007 Funds From Operations ("FFO") �
Company stockholders $ 155,499 $ 171,877 $ 530,991 $ 749,894
Operating Partnership unitholders 29,935 � 36,566 105,667 � 160,492
Operating Partnership $ 185,434 � $ 208,443 $ 636,658 � $ 910,386 �
(Decrease) increase in FFO over comparable prior year period (11.0
) % 8.7 % (30.1 ) % 51.5 % � FFO per share: Company stockholders -
basic $ 0.58 $ 0.71 $ 2.04 $ 3.07 Operating Partnership - basic
0.58 0.71 2.04 3.07 Operating Partnership - diluted 0.58 0.70 2.04
3.07 (Decrease) increase in diluted FFO per share over comparable
prior year period (17.1 ) % 7.7 % (33.6 ) % 50.5 % � Core Funds
From Operations ("Core FFO") Core FFO $ 205,711 $ 200,724 $ 660,775
$ 609,700 Increase in Core FFO over comparable prior year period
2.5 % 7.5 % 8.4 % 5.1 % � Core FFO per share - diluted 0.64 0.68
2.12 2.05 (Decrease) increase in diluted Core FFO per share over
comparable prior year period (5.9 ) % 7.9 % 3.4 % 4.1 % � Dividends
Dividends paid per share $ 0.50 $ 0.45 $ 1.50 $ 1.35 Payout ratio
(% of diluted FFO paid out) 86.2 % 64.3 % 73.5 % 44.0 % � Real
Estate Property Net Operating Income ("NOI") Retail and Other:
Consolidated $ 525,728 $ 527,523 $ 1,596,571 $ 1,443,186
Unconsolidated 96,737 � 88,753 289,399 � 314,306 Total Retail and
Other 622,465 � 616,276 1,885,970 � 1,757,492 Master Planned
Communities: Consolidated (42,700 ) 11,029 (42,910 ) 21,266
Unconsolidated 3,631 � 11,480 17,949 � 25,041 Total Master Planned
Communities (39,069 ) 22,509 (24,961 ) 46,307 Total Real estate
property net operating income $ 583,396 � $ 638,785 $ 1,861,009 � $
1,803,799 � September 30, December 31, Selected Balance Sheet
Information 2008 2007 Cash and cash equivalents $ 139,175 $ 99,534
� Investment in real estate: Net land, buildings and equipment $
22,725,595 $ 22,359,249 Developments in progress 1,143,693 987,936
Net investment in and loans to/from Unconsolidated Real Estate
Affiliates 1,879,403 1,803,366 Investment property and property
held for development and sale 1,809,667 � 1,639,372 Net investment
in real estate $ 27,558,358 � $ 26,789,923 � Total assets $
29,662,127 $ 28,814,319 � Mortgage, notes and loans payable $
24,766,701 $ 24,282,139 Minority interest - Preferred 121,399
121,482 Minority interest - Common 398,853 351,362 Stockholders'
equity 1,814,885 � 1,456,696 Total capitalization (at cost) $
27,101,838 � $ 26,211,679 � Consolidated Properties Unconsolidated
Properties (a) Average Average Outstanding Interest Outstanding
Interest Summarized Debt Information Balance Rate (d) Balance Rate
(d) Fixed rate (c) $ 20,353,549 5.61 % $ 2,858,298 5.66 % Variable
rate (c) 4,216,137 � 4.83 338,745 � 7.23 Totals $ 24,569,686 � (b)
5.48 % $ 3,197,043 � 5.83 % � (a) Reflects the Company's share of
debt relating to the properties owned by the Unconsolidated Real
Estate Affiliates. (b) Excludes liabilities to special improvement
districts of $70.7 million, minority interest adjustment of $71.2
million and purchase accounting mark-to-market adjustments of $55.1
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 Nine Months
Ended September 30, September 30, 2008 2007 2008 2007 Revenues:
Minimum rents $ 514,186 $ 509,762 $ 1,546,227 $ 1,389,235 Tenant
recoveries 231,548 231,395 694,727 626,253 Overage rents 14,563
16,122 38,973 42,578 Land sales 6,158 54,188 31,080 114,111
Management and other fees 21,561 26,484 63,718 80,404 Other 26,685
� 26,307 � 85,916 � 80,550 � Total revenues 814,701 � 864,258 �
2,460,641 � 2,333,131 � Expenses: Real estate taxes 68,128 68,054
205,781 180,004 Repairs and maintenance 57,725 52,624 176,822
151,514 Marketing 10,425 12,237 31,477 35,530 Other property
operating costs 116,329 114,418 332,047 310,062 Land sales
operations 8,513 43,159 33,645 92,845 Provision for doubtful
accounts 5,938 6,275 14,934 10,066 Property management and other
costs 38,813 45,252 145,755 154,841 General and administrative
5,259 4,631 17,774 20,929 Provisions for impairment 55,514 629
56,123 2,630 Depreciation and amortization 190,386 � 189,436 �
565,888 � 527,844 � Total expenses 557,030 � 536,715 � 1,580,246 �
1,486,265 � Operating income 257,671 327,543 880,395 846,866 �
Interest income 950 2,027 2,957 7,004 Interest expense (324,195 )
(310,868 ) (956,532 ) (854,764 ) (Loss) income before income taxes,
minority interest and equity in income (loss) of Unconsolidated
Real Estate Affiliates (65,574 ) 18,702 (73,180 ) (894 ) Benefit
from (provision for) income taxes 14,841 (14,293 ) (1,416 ) 256,451
Minority interest 3,258 (1,269 ) (6,032 ) (60,771 ) Equity in
income (loss) of Unconsolidated Real Estate Affiliates 16,939 �
(12,499 ) 61,912 � 34,441 � (Loss) income from continuing
operations (30,536 ) (9,359 ) (18,716 ) 229,227 Discontinued
operations, net of minority interest - gains on dispositions 15,121
� - � 45,941 � - � Net (loss) income $ (15,415 ) $ (9,359 ) $
27,225 � $ 229,227 � � Basic and Diluted (Loss) Earnings Per Share:
Continuing operations $ (0.11 ) $ (0.04 ) $ (0.07 ) $ 0.94
Discontinued operations 0.05 � - � 0.17 � - � Total basic and
diluted (loss) earnings per share $ (0.06 ) $ (0.04 ) $ 0.10 � $
0.94 � � GENERAL GROWTH PROPERTIES, INC. PORTFOLIO RESULTS AND
FUNDS FROM OPERATIONS ("FFO") (In thousands) � � � Three Months
Ended September 30, 2008 Consolidated Unconsolidated Segment Retail
and Other Properties Properties � Basis Property revenues: Minimum
rents $ 514,186 $ 96,151 $ 610,337 Tenant recoveries 231,548 40,369
271,917 Overage rents 14,563 2,002 16,565 Other, including minority
interest 23,976 � 12,840 � 36,816 � Total property revenues 784,273
� 151,362 � 935,635 � Property operating expenses: Real estate
taxes 68,128 10,348 78,476 Repairs and maintenance 57,725 8,763
66,488 Marketing 10,425 1,940 12,365 Other property operating costs
116,329 32,344 148,673 Provision for doubtful accounts 5,938 �
1,230 � 7,168 � Total property operating expenses 258,545 � 54,625
� 313,170 � Retail and other net operating income 525,728 � 96,737
� 622,465 � � Master Planned Communities Land sales 6,158 13,144
19,302 Land sales operations (8,513 ) (9,513 ) (18,026 ) Master
Planned Communities net operating (loss) income before � � �
provision for impairment (2,355 ) 3,631 1,276 � Provision for
impairment (40,345 ) - � (40,345 ) Master Planned Communities net
operating (loss) income (42,700 ) 3,631 (39,069 ) � � � Real estate
property net operating income 483,028 100,368 $ 583,396 � �
Management and other fees 21,561 5,444 Property management and
other costs (10,950 ) (355 ) Headquarters/regional costs (27,863 )
(11,853 ) General and administrative (5,259 ) (2,997 ) Provisions
for impairment (15,169 ) (61 ) Depreciation on non-income producing
assets, including headquarters building (2,518 ) - Interest income
950 1,653 Interest expense (324,195 ) (44,208 ) Benefit from income
taxes 14,841 3,951 Preferred unit distributions (2,339 ) - Other
FFO from minority interest 1,375 � 30 � FFO 133,462 51,972 Equity
in FFO of Unconsolidated Properties 51,972 � (51,972 ) Operating
Partnership FFO $ 185,434 � $ - � � � Three Months Ended September
30, 2007 Consolidated Unconsolidated Segment Retail and Other
Properties Properties Basis Property revenues: Minimum rents $
509,762 $ 88,684 $ 598,446 Tenant recoveries 231,395 38,444 269,839
Overage rents 16,122 1,919 18,041 Other, including minority
interest 23,852 � 16,787 � 40,639 � Total property revenues 781,131
� 145,834 � 926,965 � Property operating expenses: Real estate
taxes 68,054 11,094 79,148 Repairs and maintenance 52,624 8,355
60,979 Marketing 12,237 2,378 14,615 Other property operating costs
114,418 34,561 148,979 Provision for doubtful accounts 6,275 � 693
� 6,968 � Total property operating expenses 253,608 � 57,081 �
310,689 � Retail and other net operating income 527,523 � 88,753 �
616,276 � � Master Planned Communities Land sales 54,188 33,536
87,724 Land sales operations (43,159 ) (22,056 ) (65,215 ) Master
Planned Communities net operating income 11,029 11,480 22,509 � � �
Real estate property net operating income 538,552 100,233 $ 638,785
� � Management and other fees 26,484 4,661 Property management and
other costs (19,845 ) (530 ) Headquarters/regional costs (25,407 )
(9,362 ) General and administrative (4,631 ) (39,455 ) Provisions
for impairment (629 ) - Depreciation on non-income producing
assets, including headquarters building (3,015 ) - Interest income
2,027 2,078 Interest expense (310,868 ) (35,577 ) Provision for
income taxes (14,293 ) (497 ) Preferred unit distributions (2,903 )
- Other FFO from minority interest 1,389 � 31 � FFO 186,861 21,582
Equity in FFO of Unconsolidated Properties 21,582 � (21,582 )
Operating Partnership FFO $ 208,443 � $ - � � GENERAL GROWTH
PROPERTIES, INC. PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
("FFO") (In thousands) � � � Nine Months Ended September 30, 2008
Consolidated Unconsolidated Segment Retail and Other Properties
Properties Basis Property revenues: Minimum rents $ 1,546,227 $
283,387 $ 1,829,614 Tenant recoveries 694,727 118,982 813,709
Overage rents 38,973 5,037 44,010 Other, including minority
interest 77,705 � 44,393 � 122,098 � Total property revenues
2,357,632 � 451,799 � 2,809,431 � Property operating expenses: Real
estate taxes 205,781 33,929 239,710 Repairs and maintenance 176,822
27,009 203,831 Marketing 31,477 5,719 37,196 Other property
operating costs 332,047 93,731 425,778 Provision for doubtful
accounts 14,934 � 2,012 � 16,946 � Total property operating
expenses 761,061 � 162,400 � 923,461 � Retail and other net
operating income 1,596,571 � 289,399 � 1,885,970 � � Master Planned
Communities Land sales 31,080 54,064 85,144 Land sales operations
(33,645 ) (36,115 ) (69,760 ) Master Planned Communities net
operating (loss) income before � � � provision for impairment
(2,565 ) 17,949 15,384 � Provision for impairment (40,345 ) - �
(40,345 ) Master Planned Communities net operating (loss) income
(42,910 ) 17,949 (24,961 ) � � � Real estate property net operating
income 1,553,661 307,348 $ 1,861,009 � � Management and other fees
63,718 15,952 Property management and other costs (49,963 ) (1,881
) Headquarters/regional costs (95,792 ) (30,050 ) General and
administrative (17,774 ) (7,717 ) Provisions for impairment (15,778
) (61 ) Depreciation on non-income producing assets, including
headquarters building (7,916 ) - Interest income 2,957 4,724
Interest expense (956,532 ) (125,195 ) (Provision for) benefit from
income taxes (1,416 ) 2,260 Preferred unit distributions (8,145 ) -
Other FFO from minority interest 4,167 � 91 � FFO 471,187 165,471
Equity in FFO of Unconsolidated Properties 165,471 � (165,471 )
Operating Partnership FFO $ 636,658 � $ - � � � Nine Months Ended
September 30, 2007 Consolidated Unconsolidated Segment Retail and
Other Properties Properties Basis Property revenues: Minimum rents
$ 1,389,235 $ 309,903 $ 1,699,138 Tenant recoveries 626,253 134,388
760,641 Overage rents 42,578 5,852 48,430 Other, including minority
interest 72,296 � 61,446 � 133,742 � Total property revenues
2,130,362 � 511,589 � 2,641,951 � Property operating expenses: Real
estate taxes 180,004 40,615 220,619 Repairs and maintenance 151,514
30,116 181,630 Marketing 35,530 8,624 44,154 Other property
operating costs 310,062 115,987 426,049 Provision for doubtful
accounts 10,066 � 1,941 � 12,007 � Total property operating
expenses 687,176 � 197,283 � 884,459 � Retail and other net
operating income 1,443,186 � 314,306 � 1,757,492 � � Master Planned
Communities Land sales 114,111 69,558 183,669 Land sales operations
(92,845 ) (44,517 ) (137,362 ) Master Planned Communities net
operating income 21,266 25,041 46,307 � � � Real estate property
net operating income 1,464,452 339,347 $ 1,803,799 � � Management
and other fees 80,404 12,823 Property management and other costs
(65,118 ) (2,108 ) Headquarters/regional costs (89,723 ) (31,354 )
General and administrative (20,929 ) (41,013 ) Provisions for
impairment (2,630 ) (217 ) Depreciation on non-income producing
assets, including headquarters building (9,206 ) - Interest income
7,004 13,801 Interest expense (854,764 ) (138,965 ) Benefit from
(provision for) income taxes 256,451 (2,072 ) Preferred unit
distributions (10,016 ) - Other FFO from minority interest 4,188 �
31 � FFO 760,113 150,273 Equity in FFO of Unconsolidated Properties
150,273 � (150,273 ) Operating Partnership FFO $ 910,386 � $ - � �
GENERAL GROWTH PROPERTIES, INC. RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In thousands) � � �
� � � Three Months Ended Nine Months Ended September 30, September
30, 2008 2007 2008 2007 Reconciliation of Real Estate Property Net
Operating Income ("NOI") to GAAP Operating Income Real estate
property net operating income: Segment basis $ 583,396 $ 638,785 $
1,861,009 $ 1,803,799 Unconsolidated Properties (100,368 ) (100,233
) (307,348 ) (339,347 ) Consolidated Properties 483,028 538,552
1,553,661 1,464,452 Management and other fees 21,561 26,484 63,718
80,404 Property management and other costs (10,950 ) (19,845 )
(49,963 ) (65,118 ) Headquarters/regional costs (27,863 ) (25,407 )
(95,792 ) (89,723 ) General and administrative (5,259 ) (4,631 )
(17,774 ) (20,929 ) Provisions for impairment (15,169 ) (629 )
(15,778 ) (2,630 ) Depreciation and amortization (190,386 )
(189,436 ) (565,888 ) (527,844 ) Minority interest in NOI of
Consolidated Properties and other 2,709 � 2,455 � 8,211 � 8,254 �
Operating income $ 257,671 � $ 327,543 � $ 880,395 � $ 846,866 � �
� � Reconciliation of Core FFO to Funds From Operations ("FFO") and
to GAAP Net Income Core FFO $ 205,711 $ 200,724 $ 660,775 $ 609,700
Master Planned Communities net operating (loss) income (39,069 )
22,509 (24,961 ) 46,307 Benefit from (provision for) income taxes
18,792 � (14,790 ) 844 � 254,379 � Funds From Operations -
Operating Partnership 185,434 208,443 636,658 910,386 Depreciation
and amortization of capitalized real estate costs (222,918 )
(219,764 ) (661,578 ) (632,751 ) Minority interest in depreciation
of Consolidated Properties and other 833 (196 ) 2,481 649 Minority
interest to Operating Partnership unitholders 6,115 � 2,158 � 3,723
� (49,057 ) (Loss) income from continuing operations (30,536 )
(9,359 ) (18,716 ) 229,227 Discontinued operations, net of minority
interest - gains on dispositions 15,121 � - � 45,941 � - � Net
(loss) income $ (15,415 ) $ (9,359 ) $ 27,225 � $ 229,227 � � � �
Reconciliation of Equity in NOI of Unconsolidated Properties to
GAAP Equity in Income of Unconsolidated Affiliates Equity in
Unconsolidated Properties: NOI $ 100,368 $ 100,233 $ 307,348 $
339,347 Net property management fees and costs 5,089 4,131 14,071
10,715 Net interest expense (42,555 ) (33,499 ) (120,471 ) (125,164
) Headquarters, general and administrative, income taxes and
minority interest in FFO (10,930 ) (49,283 ) (35,477 ) (74,625 )
FFO of unconsolidated properties 51,972 21,582 165,471 150,273
Depreciation and amortization of capitalized real estate costs
(35,050 ) (33,343 ) (103,607 ) (114,113 ) Other, including loss on
sales of investment properties 17 � (738 ) 48 � (1,719 ) Equity in
income (loss) of unconsolidated real estate affiliates $ 16,939 � $
(12,499 ) $ 61,912 � $ 34,441 � � � � Reconciliation of Weighted
Average Shares Outstanding Basic: Weighted average number of shares
outstanding - FFO per share 319,527 295,637 311,806 296,262
Conversion of Operating Partnership units (51,582 ) (51,862 )
(51,751 ) (52,228 ) Weighted average number of Company shares
outstanding - GAAP EPS 267,945 � 243,775 � 260,055 � 244,034 � �
Diluted: Weighted average number of shares outstanding - FFO per
share 319,608 296,064 311,929 296,868 Conversion of Operating
Partnership units (51,582 ) (51,862 ) (51,751 ) (52,228 )
Anti-dilutive common stock equivalents for GAAP EPS (81 ) (427 )
(123 ) - � Weighted average number of Company shares outstanding -
GAAP EPS 267,945 � 243,775 � 260,055 � 244,640 � � GENERAL GROWTH
PROPERTIES, INC. SUPPLEMENTAL DISCLOSURE OF CERTAIN NON-CASH
REVENUES AND EXPENSES REFLECTED IN FFO (In thousands) � � � � �
Three Months Ended Three Months Ended September 30, 2008 September
30, 2007 Consolidated Unconsolidated Consolidated Unconsolidated
Properties Properties Properties Properties Minimum rents: Above-
and below-market tenant leases, net $ 3,191 $ 2,152 $ 10,447 $
2,341 Straight-line rent 11,253 2,056 8,894 1,669 Real estate
taxes: Real estate tax stabilization agreement (981 ) - (981 ) -
Other property operating costs: . Non-cash ground rent expense
(1,705 ) (231 ) (1,606 ) (193 ) Provisions for impairment (55,514 )
(61 ) (629 ) - Interest expense: Statutory interest expense on
Glendale judgment being appealed (2,249 ) - - - Mark-to-market
adjustments on debt 3,622 739 6,436 1,082 Amortization of deferred
finance costs (10,479 ) (675 ) (5,558 ) (401 ) Debt extinguishment
costs: Write-off of mark-to-market adjustments 212 - 3,652 -
Write-off of deferred finance costs (50 ) 244 � (714 ) - � Totals $
(52,700 ) $ 4,224 � $ 19,941 � $ 4,498 � � � Nine Months Ended Nine
Months Ended September 30, 2008 September 30, 2007 Consolidated
Unconsolidated Consolidated Unconsolidated Properties Properties
Properties Properties Minimum rents: Above- and below-market tenant
leases, net $ 11,938 $ 6,432 $ 28,503 $ 7,075 Straight-line rent
33,156 6,990 26,649 7,155 Real estate taxes: Real estate tax
stabilization agreement (2,943 ) - (2,943 ) - Other property
operating costs: Non-cash ground rent expense (5,260 ) (693 )
(4,785 ) (577 ) Provisions for impairment (56,123 ) (61 ) (2,630 )
(217 ) Interest expense: Statutory interest expense on Glendale
judgment being appealed (6,706 ) - - - Mark-to-market adjustments
on debt 12,143 2,204 24,473 3,152 Amortization of deferred finance
costs (22,709 ) (1,496 ) (13,628 ) (1,314 ) Debt extinguishment
costs: Write-off of mark-to-market adjustments 212 - 3,765 -
Write-off of deferred finance costs 157 � - � (3,102 ) - � Totals $
(36,135 ) $ 13,376 � $ 56,302 � $ 15,274 � � � � � � � � � � � �
WEIGHTED AVERAGE SHARES (In thousands) � Three Months Ended Nine
Months Ended September 30, September 30, 2008 2007 2008 2007 �
Basic 267,945 243,775 260,055 244,034 Diluted 267,945 243,775
260,055 244,640 Assuming full conversion of Operating Partnership
units: Basic 319,527 295,637 311,806 296,262 Diluted 319,608
296,064 311,929 296,868
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