General Growth Properties, Inc. (the Company or GGP) today
announced its operating results for the three months ending March
31, 2010.
“First quarter sales trends improved significantly from the same
period last year,” said Adam Metz, chief executive officer of
General Growth Properties. “The macroeconomic outlook is improving,
and we are seeing signs of recovery and growth in a number of our
markets. Even previously hard-hit markets like Florida are showing
positive trends. Our retailer tenants are largely more profitable
than a year ago, with higher margins, improved balance sheets and
rising same-store-sales results. Improvement in comparable tenant
sales accelerated over the course of the quarter, including a 10%
year-over-year increase in March. In this improving environment, we
continue to execute a business strategy designed both to strengthen
operations within our portfolio of high-quality retail properties
and to create long-term value for our stockholders. The combination
of these improving conditions and our disciplined operating
strategy has led to increased sales and leasing performance in the
first quarter. Leasing activity grew 21% year-over-year, and our
strong leasing pipeline is a very positive leading indicator for
our business.
“Our other operating metrics show progress as well,” said Mr.
Metz. “Occupancy rates have stabilized and we are controlling
expenses. Unfortunately, we will not see the full impact of this
recovery and improved performance in our operating results for
three or four more quarters, the time it takes for signed leases to
be reflected in revenue flow.”
“The decrease in comparable NOI for the quarter, which was
consistent with our expectations, reflects the temporary impact of
our restructuring and the difficult market conditions of last year,
when many of our newer leases were executed. Also, the majority of
the negative NOI performance is concentrated in our malls with
tenant sales below $350 per square foot. The NOI for malls with
tenant sales above $350 per square foot remained essentially flat.
We are optimistic that NOI will grow as the economic environment
continues to improve and we complete our restructuring. The
property-specific planning process we initiated in 2009 is helping
us to more effectively execute our business strategy of focusing on
the unique characteristics of the market served by each individual
shopping center. In the first quarter, we continued to enhance the
appeal of our properties to both shoppers and tenants while
building a strong financial platform for the future. Also in the
first quarter, our Brazilian joint venture Aliansce successfully
completed its initial public offering, and our 31% ownership
interest in the company provides us access to Brazil's exciting and
growing market,” continued Mr. Metz.
First Quarter 2010 and 2009
Comparable Retail and other Segment NOI
2010
2009
Retail and other segment NOI: $586,277 $605,920 Adjustments:
(16,657
) (18,470 )
Comparable retail and other
Segment NOI:
$569,620
$587,450
Decrease in Comparable Retail and
other segment NOI:
(3.0 %)
A schedule showing adjustments and non-comparable income and
expense items and their impact on 2010 and 2009 operating results
is provided with this release. Concurrent with this release, the
Company has also made available on its website its quarterly
package of supplemental financial information that provides
additional detail on its operational results.
OPERATIONAL HIGHLIGHTS
GGP is focused on strengthening its assets and operational
performance in order to maximize value over the long term. GGP
invests in its properties to enhance their positions in the market
and their appeal to shoppers and tenants and is committed to
nurturing strong and long-lasting relationships with its retail
partners.
Among the operational highlights of the first quarter of 2010 at
the retail property level are:
- Anchor Store Activity –
The Company experienced particularly strong big box and department
store activity in the first quarter, signing or commencing
construction on eleven locations totaling nearly 1.2 million square
feet filling previously empty anchor locations. This activity
includes new Nordstrom’s at St. Louis Galleria (St. Louis, MO) and
Christiana Mall (Newark, DE), a new Kohl’s at Coronado Center
(Albuquerque, NM) and new Target stores at Christiana Mall (Newark,
DE) and Valley Plaza Mall (Bakersfield, CA)
- Ala Moana Center (Honolulu,
HI) – Ala Moana Center remains the premier shopping destination
in Hawaii, which was reinforced by two high-profile “firsts” in the
first quarter of 2010. The first Diane von Furstenberg and the
first Tory Burch stores in Hawaii were both approved in the quarter
and are expected to open later this year.
- The Mall in Columbia
(Columbia, MD) – Following one of the most extensive community
processes ever conducted, the County Council in Howard County, Md.
approved a 30-year master plan for downtown Columbia. This
long-term plan is expected to add 5,500 households, 4.3 million
square feet of office space and 1.25 million square feet of retail
space to this innovative project.
- Park Meadows (Lone Tree,
CO) – American Girl opened its eighth store in the nation at
the Park Meadows property, a highly anticipated event that
attracted approximately 1,800 shoppers by 9:00 AM. In addition,
Microsoft closed on a lease for an 8,748 square-foot space with a
projected opening date of June 1, a new first-to-market store for
Park Meadows.
- Water Tower Place (Chicago,
IL) – In an innovative new agreement, Broadway in Chicago (BIC)
leased 10,000 square feet of outparcel space in March 2010, with an
opening planned in September. BIC is responsible for bringing some
of Broadway’s hottest shows to Chicago, including Wicked, Mary
Poppins, The Producers and Billy Elliott. Broadway in Chicago at
Water Tower further solidifies Water Tower’s standing as the
ultimate Michigan Avenue destination. In addition, Ed
Debevic’s, a Chicago institution for both locals and tourists, will
open in November on Water Tower’s mezzanine level.
In addition, in January 2010, Aliansce Shopping Centers S.A.
(“Aliansce”) completed an initial public offering of Aliansce’s
common shares on the Brazilian Stock Exchange, or BM&FBovespa.
GGP did not sell any of its Aliansce shares in the offering and now
has approximately a 31.4% ownership interest in Aliansce, which
develops, owns and manages shopping centers in Brazil.
SEGMENT RESULTS
Retail and Other Segment
- NOI in this segment
decreased to $586.3 million for the first quarter of 2010 from the
$605.9 million reported for the first quarter of 2009. Excluding
the items detailed in the attached schedule of significant items
that impact comparability, Comparable NOI for the first quarter of
2010 declined 3.0% year over year. NOI was primarily impacted by
reduced revenue and occupancy as a result of the Company’s
bankruptcy and the economic recession in 2009 when many of our
newer leases were signed. See table below.
Comparable Property NOI
Bridge
2010
2009
Y-o-Y Change
Total Annual Retail and Other
NOI
$586,277
$605,920
(3.2
%)
Adjustments: NOI from non-comparable properties (4,084 )
(7,998 ) Termination Income (12,824 ) (9,267 ) Corporate and Other
251
(1,205 )
Comparable Retail and Other
NOI
$569,620
$587,450
(3.0
%)
- Revenues from consolidated
properties declined $20.8 million, or approximately 2.8%, for
the first quarter of 2010 to $734.2 million, primarily due to
declines in minimum rents and tenant recoveries as a result of
declines in occupancy rates and in specialty leasing occupancy and
sales volumes. Operating expenses for consolidated properties
decreased slightly overall, driven by continuing improvements in
controllable expenses, partially offset by expenses in the first
quarter related to unusual weather events and other one-time
costs.
- Revenues from unconsolidated
properties at the Company’s ownership share were $151.1 million
for the first quarter of 2010, roughly comparable to the $152.1
million in the first quarter of 2009, reflecting continued steady
performance.
- Comparable tenant sales,
on a trailing 12 month basis, decreased 3.5% compared to the same
period last year. However, on a quarterly basis, comparable tenant
sales rose a healthy 7.5% year-over-year, with momentum picking up
over the course of the quarter. January 2010 comparable sales
increased 2.5% year-over-year, with February and March showing
accelerating increases of 6.0% and 10.0%, respectively.
- Retail leasing activity
increased significantly in the first quarter of 2010, with total
in-line and outparcel tenant leasing deals covering 1.36 million
square feet signed, an increase of 21% over the same period of last
year. Within total deals, the number of new lease deals grew 84%,
representing new deal square footage of approximately 284 thousand
square feet. Although rents remain below 2007 peak levels, they
have stabilized. As sales continue their upward trend, the Company
expects lease rates to reflect those increases over time.
- Retail Center occupancy
decreased to 90.5% at March 31, 2010 from 90.9% at March 31,
2009 as current occupancy is a sign of, in part, the 2009 economic
recession and, accordingly, does not yet reflect the current year
increased retail leasing activity described immediately above.
Master Planned Communities Segment
GGP’s premier master planned community segment includes The
Woodlands and Bridgeland, both in the Houston metropolitan area,
Summerlin in Las Vegas and Columbia and Emerson in Maryland.
- Land sale revenues for
the first quarter of 2010 were $5.1 million for consolidated
properties and $12.6 million for unconsolidated properties,
compared to $9.0 million and $5.1 million, respectively, for the
first quarter of 2009. Decreases in land sale revenues for the
consolidated communities, particularly Summerlin, reflect continued
weak overall demand for individual lots. These decreases were
partially offset by sales of lots in the Houston communities, which
improved compared to 2009.
- NOI from the Master
Planned Communities segment for the first quarter of 2010 was a
loss of $5.1 million for consolidated properties and earnings of
$2.7 million for unconsolidated properties, compared to a loss of
$54.4 million and earnings of $0.3 million, respectively, in the
first quarter of 2009. The 2009 amount for the consolidated
properties includes a provision for impairment of $52.8 million
recorded at the Fairwood (Maryland) community to reflect an
agreement to sell substantially all of the remaining acreage at the
community in a single bulk transaction, which closed in the second
quarter of 2009. Individual lot sales in 2010 for the consolidated
communities did not exceed selling and community-specific general
and administrative costs, which are largely fixed.
CORE FFO, FFO AND EPS HIGHLIGHTS
- Core FFO for the first
quarter of 2010 was $254.1 million, or $0.78 per fully diluted
share, compared to a loss of $122.9 million, or $0.38 per fully
diluted share, for the first quarter of 2009. FFO was $248.2
million in the first quarter of 2010 compared to a loss of $165.9
million in the first quarter of 2009, an increase of approximately
$414.1 million. The primary drivers for this quarterly increase
were (i) a decrease in aggregate provisions for impairment of
$319.7 million, reflecting improving economic prospects since the
downturn in 2009, and (ii) gains of approximately $283.1 million
(included as a component of reorganization items) recorded in the
first quarter of 2010 related to estimated fair value adjustments
of the secured debt of the subsidiary debtors that emerged from
bankruptcy in the quarter (as required under GAAP and solely for
such accounting purposes). Partially offsetting these increases
were $193.7 million, net, of other reorganization items incurred in
the first quarter of 2010 arising from the Company’s bankruptcy
proceedings, as detailed in the supplemental schedule of items that
impact comparability. Similar costs incurred in the first quarter
of 2009 were $38.3 million (recorded as strategic initiative costs
because these costs were incurred prior to GGP’s petitions for
bankruptcy protection in April 2009).Given the uncertainties
concerning GGP’s capital structure and the timing of the conclusion
of its exit from bankruptcy, GGP will not provide FFO guidance for
2010 at this time.
- EPS were $0.25 in the
first quarter of 2010 compared to a loss $1.27 in the first quarter
of 2009. Although a substantial majority of the increase in EPS was
due to the items listed in the attached supplemental comparative
schedule of the matters affecting NOI, Core FFO and FFO described
above, first quarter 2010 EPS was also positively impacted by
approximately $42.6 million of gain the Company was required to
recognize under applicable accounting rules as a result of the
dilution in ownership interest following the January 27, 2010
public offering of common stock by Aliansce, our unconsolidated
affiliate in Brazil. GGP has excluded this gain from FFO. Any
subsequent increases or decreases in the market value of Aliansce
common stock are not, and will not be, reflected in GGP’s earnings
as the Company will continue to account for its Aliansce ownership
based on the equity method of accounting.
FINANCIAL RESTRUCTURING
In April 2009, GGP and certain of its subsidiaries filed for
relief under Chapter 11 of the Bankruptcy Code. The Chapter 11 case
created the protection necessary for GGP to execute a restructuring
to extend mortgage maturities and reduce corporate debt. GGP has
pursued a deliberate two-stage strategy to establish a sustainable,
long-term capital structure for the Company. The first step was to
restructure its property-level secured mortgage debt. The Company
believes it has achieved substantial progress with respect to the
first phase of its restructuring strategy. Through April 30, 2010,
the Company has signed consensual plans of reorganization for
$14.80 billion of secured mortgage debt and substantially all of
the GGP subsidiaries associated with such debt have emerged from
bankruptcy.
The Company is now in the midst of the second phase: exploring
all potential alternatives for emergence from bankruptcy. As part
of that process, GGP entered into agreements with an affiliate of
Brookfield Asset Management Inc. (“Brookfield”), Pershing Square
Capital Management (“Pershing”) and Fairholme Funds (“Fairholme”),
to invest in a proposed recapitalization of GGP at a plan value of
$15.00 per share with full recovery at par plus accrued interest to
unsecured creditors. As a result of these agreements, the Company
now has commitments for all financing necessary to emerge from
Chapter 11. Consummation of the transactions contemplated by the
agreements with Brookfield, Pershing and Fairholme are subject to
higher and better offers pursuant to the bidding process approved
by the Bankruptcy Court. There is no assurance that these
transactions will be consummated. The Company is focused on
continued progress in the Chapter 11 Cases and a comprehensive
capital raise process, and is continuing to consider all
alternatives to maximize value for all of the Company’s
stakeholders.
GGP INFORMATION/WEBSITE
The Company currently has ownership interest in, or management
responsibility for, over 200 regional shopping malls in 43 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’s common stock is
currently traded 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) attributable to common
stockholders (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 (provision for) benefit from 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 (provision for) benefit
from income taxes.
In order to provide a better understanding of the relationship
between Core FFO, FFO and GAAP net income (loss), a reconciliation
of Core FFO and FFO to GAAP net income (loss) attributable to
common stockholders 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 (loss) attributable to common stockholders 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, property maintenance costs,
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, allocations to
non-controlling interests, reorganization items, 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 (loss) attributable to common stockholders. 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 (loss) 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. 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 bankruptcy filings of the debtors not currently
emerging from bankruptcy, our ability to refinance, extend,
restructure or repay our near and intermediate term debt, our
substantial level of indebtedness, our ability to implement a plan
or plans of reorganization for the remaining debtors to emerge from
bankruptcy, our ability to raise capital through equity issuances,
asset sales or the incurrence of new debt, retail and credit market
conditions, impairments, land sales in the Master Planned
Communities segment, and our liquidity demands. Readers are
referred to the documents filed by General Growth Properties, Inc.
with the Securities and Exchange Commission, 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, 2010 2009 Funds
From Operations ("FFO") Company stockholders $ 242,583 $
(161,388 ) Operating Partnership unit holders 5,581
(4,528 ) Operating Partnership $ 248,164 $ (165,916 )
Increase (decrease) in FFO over comparable prior year period
249.6 % (176.5 ) % FFO per share:
Company stockholders - basic $ 0.77 $ (0.52 ) Operating Partnership
- basic 0.77 (0.52 ) Operating Partnership - diluted 0.76 (0.52 )
Increase (decrease) in diluted FFO per share over comparable prior
year periods 246.2 % (171.2 ) %
Core Funds From
Operations ("Core FFO") Core FFO $ 254,119 $ (122,886 )
Increase (decrease) in Core FFO over comparable prior year period
306.8 % (155.8 ) % Core FFO per share - diluted 0.78 (0.38 )
Increase (decrease) in diluted Core FFO per share over comparable
prior year periods 305.3 % (151.2 ) %
Dividends
Dividends paid per share (a) $ 0.19 $ - Payout ratio (% of diluted
FFO paid out) 25.0 % - %
Real Estate Property Net
Operating Income ("NOI") Retail and Other: Consolidated $
485,740 $ 506,425 Unconsolidated 100,537
99,495 Total Retail and Other 586,277
605,920 Master Planned Communities: Consolidated (5,097 )
(54,397 ) Unconsolidated 2,664 333
Total Master Planned Communities (2,433 ) (54,064 )
Total Real estate property net operating income $ 583,844 $
551,856
March 31, December 31,
Selected Balance Sheet Information 2010 2009
Cash and cash equivalents $ 573,120 $ 654,396 Investment in
real estate: Net land, buildings and equipment $ 21,528,979 $
21,684,661 Developments in progress 434,449 417,969 Net investment
in and loans to/from Unconsolidated Real Estate Affiliates
1,978,354 1,941,024 Investment property and property held for
development and sale 1,768,098 1,753,175
Net investment in real estate $ 25,709,880 $
25,796,829 Total assets $ 27,917,950 $ 28,149,774
Mortgages, notes and loans payable not subject to compromise
$ 13,789,048 $ 7,300,772 Mortgages, notes and loans payable subject
to compromise (b) 10,269,017 17,155,245 Redeemable noncontrolling
interests - Preferred 120,756 120,756 Redeemable noncontrolling
interests - Common 116,890 86,077 Total equity 949,836
847,339 Total capitalization (at cost) $
25,245,547 $ 25,510,189 (a) Represents 2009
dividend declared in December 2009 that was paid in January 2010
($6.0 million in cash and 4.9 million shares of common stock). (b)
Mortgages, notes and loans payable
subject to compromise are for obligations of the Debtors which do
not have effective plans of reorganization as of March 31, 2010.
The principal amounts of such mortgages, notes and loans payable
may change in the future depending on the outcome of their
respective Chapter 11 cases. During April 2010, four additional
properties, representing $1.41 billion of mortgage debt as of March
31, 2010, emerged from bankruptcy.
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except
per share amounts) Three Months
Ended March 31, 2010 2009 Revenues:
Minimum rents $ 492,758 $ 499,107 Tenant recoveries 214,251 233,019
Overage rents 10,346 10,025 Land sales 5,070 8,986 Management fees
and other corporate revenues 18,086 21,858 Other 20,726
15,645 Total revenues 761,237
788,640
Expenses: Real estate taxes 72,095
71,558 Property maintenance costs 35,844 27,358 Marketing 7,081
7,576 Other property operating costs 127,071 131,699 Land sales
operations 10,167 10,614 Provision for doubtful accounts 6,327
10,332 Property management and other costs 35,432 43,408 General
and administrative 7,638 7,525 Strategic Initiatives - 38,300
Provisions for impairment 11,350 331,093 Depreciation and
amortization 177,302 204,615 Total
expenses 490,307 884,078 Operating
income (loss) 270,930 (95,438 ) Interest income 676 730
Interest expense (335,278 ) (328,489 ) Loss before
income taxes, noncontrolling interests, reorganization items, and
equity in income of Unconsolidated Real Estate Affiliates (63,672 )
(423,197 ) (Provision for) benefit from income taxes (3,650 )
11,514 Equity in income of Unconsolidated Real Estate Affiliates
61,068 7,538 Reorganization items 89,412 -
Income (loss) from continuing operations 83,158 (404,145 )
Discontinued operations - loss on dispositions -
(55 ) Net income (loss) 83,158 (404,200 ) Allocation to
noncontrolling interests (4,800 ) 8,118 Net
income (loss) attributable to common stockholders $ 78,358 $
(396,082 )
Basic Earnings (Loss) Per Share:
Continuing operations $ 0.25 $ (1.27 ) Discontinued operations
- - Total basic earnings (loss) per
share $ 0.25 $ (1.27 )
Diluted Earnings (Loss) Per
Share: Continuing operations $ 0.25 $ (1.27 ) Discontinued
operations - - Total diluted earnings
per share $ 0.25 $ (1.27 )
GENERAL GROWTH
PROPERTIES, INC. PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
("FFO") (In thousands)
Three Months
Ended March 31, 2010 Consolidated Unconsolidated
Segment Retail and Other Properties
Properties Basis Property revenues: Minimum rents $
492,758 $ 99,879 $ 592,637 Tenant recoveries 214,251 39,271 253,522
Overage rents 10,346 1,239 11,585 Other, including noncontrolling
interests 16,803 10,688 27,491
Total property revenues 734,158 151,077
885,235 Property operating expenses: Real
estate taxes 72,095 12,585 84,680 Property maintenance costs 35,844
5,282 41,126 Marketing 7,081 1,521 8,602 Other property operating
costs 127,071 29,722 156,793 Provision for doubtful accounts
6,327 1,430 7,757 Total property
operating expenses 248,418 50,540
298,958 Retail and other net operating income
485,740 100,537 586,277
Master Planned Communities Land sales 5,070 12,635 17,705
Land sales operations (10,167 ) (9,971 )
(20,138 ) Master Planned Communities net operating (loss) income
(5,097 ) 2,664 (2,433 ) Real estate property
net operating income 480,643 103,201 $ 583,844
Management fees and other corporate revenues 18,086 3,890 Property
management and other costs (35,432 ) (9,226 ) General and
administrative (7,638 ) (422 ) Provisions for impairment (11,350 )
- Depreciation on non-income producing assets, including
headquarters building (2,342 ) - Interest income 676 672 Interest
expense (335,278 ) (42,185 ) (Provision for) benefit from income
taxes (3,650 ) 128 Preferred unit distributions (2,336 ) - Other
FFO from noncontrolling interests 1,286 29 Reorganization items
89,412 - FFO 192,077 56,087 Equity in
FFO of Unconsolidated Properties 56,087
(56,087 ) Operating Partnership FFO $ 248,164 $ -
Three Months Ended March 31, 2009
Consolidated Unconsolidated Segment Retail
and Other Properties Properties Basis
Property revenues: Minimum rents $ 499,107 $ 97,391 $ 596,498
Tenant recoveries 233,019 40,819 273,838 Overage rents 10,025 1,216
11,241 Other, including noncontrolling interests * 12,797
12,628 25,425 Total property
revenues 754,948 152,054 907,002
Property operating expenses: Real estate taxes 71,558 12,581
84,139 Property maintenance costs * 27,358 4,834 32,192 Marketing
7,576 1,475 9,051 Other property operating costs * 131,699 32,422
164,121 Provision for doubtful accounts 10,332
1,247 11,579 Total property operating expenses
248,523 52,559 301,082
Retail and other net operating income 506,425
99,495 605,920
Master Planned
Communities Land sales 8,986 5,101 14,087 Land sales operations
(10,614 ) (4,768 ) (15,382 ) Master Planned
Communities net operating (loss) income (1,628 ) 333 (1,295 )
Provision for impairment (52,769 ) -
(52,769 ) Master Planned Communities net operating (loss)
income (54,397 ) 333 (54,064 ) Real estate
property net operating income 452,028 99,828 $ 551,856
Management fees and other corporate revenues * 21,858 3,532
Property management and other costs (43,408 ) (9,046 ) General and
administrative (7,525 ) (4,261 ) Strategic initiatives (38,300 ) -
Provisions for impairment (278,324 ) (1,446 ) Depreciation on
non-income producing assets, including headquarters building (2,480
) - Interest income 730 917 Interest expense (328,489 ) (41,592 )
Benefit from (provision for) income taxes 11,514 (480 ) Preferred
unit distributions (2,336 ) - Other FFO from noncontrolling
interest 1,335 29 FFO (213,397 ) 47,481
Equity in FFO of Unconsolidated Properties 47,481
(47,481 ) Operating Partnership FFO $ (165,916 ) $ -
* Approximately $2.7 million of fee revenue and $28.0
million of operating costs, primarily cleaning and janitorial
costs, were reclassified to conform to the 2010 presentation.
GENERAL GROWTH PROPERTIES, INC.
SUPPLEMENTAL SCHEDULE OF SIGNIFICANT ITEMS THAT IMPACT
COMPARABILITY (a) (In thousands, except per share amounts)
Three Months Ended March 31,
2010 2009 Retail and other net operating
income $ 586,277 $ 605,920
Retail and other net
operating income adjustments: Net operating income from
noncomparable properties (4,084 ) (7,998 ) Corporate and other 251
(1,205 ) Termination income (12,824 ) (9,267 ) Total
Retail and other net operating income adjustments (16,657 )
(18,470 )
Comparable retail and other net
operating income $ 569,620 $ 587,450
Core FFO $ 254,119 $ (122,886 )
Core FFO
adjustments: Retail and other net operating income adjustments
(16,657 ) (18,470 ) Provisions for impairment: Operating properties
11,057 121,422 Non-recoverable development and pre-development
costs 293 48,959 Goodwill - 109,389
Core FFO provisions for impairment 11,350 279,770
Reorganization items (b) Gains on liabilities subject to compromise
- vendors (1,203 ) - Gains on liabilities subject to compromise -
mortgage debt (283,072 ) - Restructuring costs 193,451 - Interest
income (11 ) - U.S. Trustee fees 1,423 -
Total reorganization items (89,412 ) - Strategic
initiatives (c) - 38,300 Total Core FFO adjustments
(94,719 ) 299,600
Comparable Core FFO $
159,400 $ 176,714
Comparable Core
FFO per share - diluted $ 0.49 $ 0.55
(a) Includes consolidated and unconsolidated properties. (b)
Reorganization items reflect bankruptcy-related activity, including
gains on liabilities subject to compromise, interest income, U.S.
Trustee fees, and other restructuring costs, incurred after filing
for Chapter 11 protection on April 16, 2009. (c) Strategic
initiatives include fees and expenses incurred for various
consultants and advisors that assisted in the development of
strategic alternatives relating to our liquidity and financing
situation prior to filing for Chapter 11 protection.
GENERAL GROWTH PROPERTIES, INC. SUPPLEMENTAL DISCLOSURE
OF CERTAIN NON-CASH REVENUES AND EXPENSES REFLECTED IN FFO (In
thousands)
Three Months Ended Three
Months Ended March 31, 2010 March 31, 2009
Consolidated Unconsolidated Consolidated
Unconsolidated Properties Properties
Properties Properties Minimum rents: Above-
and below-market tenant leases, net $ 1,283 $ 5 $ 854 $ 1,718
Straight-line rent 10,547 2,372 8,636 3,778
Real estate
taxes: Real estate tax stabilization agreement (981 ) - (981 )
-
Other property operating costs: Non-cash ground rent
expense (1,563 ) (145 ) (1,587 ) (200 )
Provisions for
impairment (11,350 ) - (331,093 ) (1,446 )
Interest
expense: Mark-to-market adjustments on debt (12,391 ) 76 2,247
387 Amortization of deferred finance costs (8,856 ) (413 ) (20,131
) (425 ) Amortization of discount on exchangeable notes (7,110 ) -
(6,692 ) - Termination of interest rate swaps (4,520 ) - - -
Non-cash reorganization items 203,580 -
- - Totals $ 168,639 $
1,895 $ (348,747 ) $ 3,812
SUPPLEMENTAL SCHEDULE OF MANAGEMENT AND ADMINISTRATIVE COSTS,
NET (In thousands)
Three Months Ended Three
Months Ended March 31, 2010 March 31, 2009
Consolidated Unconsolidated Consolidated
Unconsolidated Properties Properties
Properties Properties Management fees and other
corporate revenues, net * $ 12,206 $ 3,890 $ 15,885 $ 3,532
Property management and other costs (35,432 ) (3,346 ) (43,408 )
(3,073 ) General and administrative (7,638 ) (422 )
(7,525 ) (4,261 ) Total management and administrative
costs, net $ (30,864 ) $ 122 $ (35,048 ) $ (3,802 )
* Management and other fees are net of property management
fee expense incurred by the unconsolidated properties, at our
ownership share, which are reflected as a component of property
management and other costs in unconsolidated properties. Such
amounts are $5.9 million for the three months ended March 31, 2010
and $6.0 million for the three months ended March 31, 2009.
GENERAL GROWTH PROPERTIES, INC. RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In
thousands)
Three Months Ended March 31,
2010 2009 Reconciliation of Real Estate Property
Net Operating Income ("NOI") to GAAP Operating Income
(Loss) Real estate property net operating income: Segment basis
$ 583,844 $ 551,856 Unconsolidated Properties (103,201 )
(99,828 ) Consolidated Properties 480,643 452,028 Management
fees and other corporate revenues 18,086 21,858 Property management
and other costs (35,432 ) (43,408 ) General and administrative
(7,638 ) (7,525 ) Strategic Inititaives - (38,300 ) Provisions for
impairment (11,350 ) (278,324 ) Depreciation and amortization
(177,302 ) (204,615 ) Noncontrolling interest in NOI of
Consolidated Properties and other 3,923 2,848
Operating income (loss) $ 270,930 $ (95,438 )
Reconciliation of Core FFO to Funds From Operations
("FFO") and to GAAP Net Income (Loss) Attributable to Common
Stockholders Core FFO $ 254,119 $ (122,886 ) Master Planned
Communities net operating loss (2,433 ) (54,064 ) (Provision for)
benefit from income taxes (3,522 ) 11,034
Funds From Operations - Operating Partnership
248,164 (165,916 ) Depreciation and amortization of capitalized
real estate costs (212,582 ) (242,097 ) Gains (losses) on sales of
investment properties * 43,437 (55 ) Noncontrolling interests in
depreciation of Consolidated Properties and other 1,142 874
Redeemable noncontrolling interests (1,803 ) 11,112
Net income (loss) attributable to common stockholders $
78,358 $ (396,082 )
Reconciliation of Equity in NOI of Unconsolidated
Properties to GAAP Equity in Income of Unconsolidated Real
Estate Affiliates Equity in Unconsolidated Properties: NOI $
103,201 $ 99,828 Net property management fees and costs (5,336 )
(5,514 ) Net interest expense (41,513 ) (40,675 ) General and
administrative, provisions for impairment,
income taxes and noncontrolling interest in FFO (265 )
(6,158 ) FFO of unconsolidated properties 56,087 47,481
Depreciation and amortization of capitalized real estate costs
(37,623 ) (39,962 ) Other, including gains on sales of investment
properties * 42,604 19 Equity in income
of Unconsolidated Real Estate Affiliates $ 61,068 $ 7,538
Reconciliation of Weighted Average Shares
Outstanding Basic: Weighted average number of shares
outstanding - FFO per share 323,038 319,590 Conversion of Operating
Partnership units (7,265 ) (8,722 ) Weighted average
number of Company shares outstanding - GAAP EPS 315,773
310,868 Diluted: Weighted average
number of shares outstanding - FFO per share 324,414 319,590
Conversion of Operating Partnership units (7,265 ) (8,722 ) Effect
of dilutive securities - options (79 ) -
Weighted average number of Company shares outstanding - GAAP EPS
317,070 310,868 * Included in
such amounts for the three months ended March 31, 2010 is $42.6
million of gain, which, according to current GAAP guidance, is
recognized due to our Brazilian joint venture issuing common stock
with an issue price in excess of our carrying value per share of
our investment in such venture.
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