General Growth Properties (NYSE: GGP) today announced operating
results for the three months ending September 30, 2010.
For the third quarter of 2010, Retail and Other Segment net
operating income (NOI) was $581.8 million compared to $582.9
million for the third quarter of 2009. Loss per share was $0.73 in
the third quarter of 2010 compared to a loss of $0.38 in the third
quarter of 2009. Core Funds from Operations (Core FFO) were losses
of $29.3 million in the third quarter of 2010 compared to a
positive $88.9 million in the third quarter of 2009. Decreases in
the third quarter of 2010 were primarily the result of net
incremental reorganization expense items of approximately $79.9
million and incremental accrued interest expense (related to final
consensual plans of reorganization which were approved on October
21, 2010) of approximately $83.7 million. During the quarter,
tenant sales at comparable properties increased by 10.2% over the
third quarter of 2009, building on the year-over-year sales growth
momentum in the first and second quarter of 7.5% and 7.8%
respectively.
A schedule showing adjustments and non-comparable income and
expense items and their impact on 2010 and 2009 NOI from the Retail
and Other Segment is provided with this release. Concurrent with
this release, the Company has made available on its website its
quarterly package of supplemental financial information, which
provides additional operational result detail.
THIRD QUARTER 2010 AND 2009 COMPARABLE
RETAIL AND OTHER SEGMENT NOI
($ in thousands)
2010
2009 Retail and Other Segment NOI $ 581,829 $
582,852 Adjustments (15,469) (10,498) Comparable
Retail and Other Segment NOI $ 566,360 $ 572,354
Decrease in Comparable Retail and Other Segment NOI (1.0%)
“GGP’s underlying operating performance continues to improve. We
are particularly pleased with the improving retail sales
performance of our malls,” said Adam Metz, chief executive officer
of GGP. “Comparable tenant sales rose more than 10 percent in the
quarter from the same quarter in 2009, which is evidence that our
operational strategy is working. During the restructuring, GGP’s
employees remained very focused on maintaining high standards at
our properties to ensure that they continue to perform for our
shoppers and retailers. I am happy to report that we accomplished
that. We expect these sales results to drive rents on a long-term
basis, which bodes well for the future performance of ‘new’ GGP
once it emerges from bankruptcy early next month. As the next
management team takes the helm, I am confident that GGP has a
strong financial and operational foundation for a successful
future.”
As previously announced on October 28, 2010, Sandeep Mathrani
will become the chief executive officer of the “new” GGP at the
beginning of 2011. Mr. Metz will step down as CEO at the end of the
year.
CORE FFO, FFO AND EPS HIGHLIGHTS
- Core FFO for the third quarter
of 2010 was a loss of $29.3 million, or a loss of $0.09 per fully
diluted share, compared to a positive $88.9 million, or $0.28 per
fully diluted share, for the third quarter of 2009. Core FFO
excludes results from the Master Planned Communities segment and
the (provision for) benefit from income taxes. FFO was a
loss of $27.8 million in the third quarter of 2010 compared to
$100.2 million in the third quarter of 2009, a decrease of
approximately $128 million. The primary drivers for these quarterly
decreases were an increase of approximately $79.9 million in net
reorganization expense items in 2010 and the recognition of
approximately $83.7 million of incremental accrued interest expense
related to loans of debtors which have had their consensual plans
of reorganization recently confirmed by the Bankruptcy Court. Such
increases were partially offset by a reduction in aggregate
provisions for impairment of approximately $56.3 million compared
to third quarter 2009.
- EPS were a loss of $0.73 in the
third quarter of 2010 compared to a loss of $0.38 in the third
quarter of 2009. A substantial majority of the additional loss in
EPS in 2010 was due to the items listed in the attached
supplemental comparative schedule of matters affecting NOI, Core
FFO and FFO described above.
CAPITAL TRANSACTIONS
During the third quarter of 2010, General Growth Properties, on
behalf of certain of its Unconsolidated Joint Ventures, refinanced
three individual secured mortgage loans totaling approximately $615
million at a weighted average interest rate of approximately 4.66%
and at a weighted average term of approximately 10 years. Total net
proceeds, at GGP’s share, were approximately $98.2 million and the
weighted average loan to value ratio at closing was approximately
45%. Also during the quarter, General Growth Properties
restructured a $260.0 million secured mortgage loan on behalf of
another Unconsolidated Joint Venture, at an interest rate of
approximately 6.65%. Total net proceeds, at GGP’s share, were
approximately ($10.4 million) and the maturity date was extended an
additional 5 years.
SEGMENT RESULTS
Retail and Other Segment
- Comparable tenant sales on a
trailing 12 month basis increased to $426 per square foot or 3.6%
compared to the same period last year. On a quarterly basis,
comparable tenant sales rose a strong 10.2% year-over-year, with
first half momentum growing in the third quarter.
- Retail Center occupancy
increased to 91.4% at September 30, 2010, from 91.3% at September
30, 2009.
- NOI in this segment was $581.8
million for the third quarter of 2010 compared to $582.9 million
for the third quarter of 2009. Excluding the items detailed in the
attached schedule of significant items that impact comparability,
NOI for the third quarter of 2010 declined 1.0% year-over-year
primarily due to lower temporary tenant revenue and occupancy and
lower NOI at GGP’s Special Consideration Properties (the 13
properties identified as underperforming assets as part of our
bankruptcy emergence and loan restructuring process). At those
properties, aggregate NOI decreased approximately $2.0 million in
the third quarter of 2010 compared to the third quarter of
2009.
- Revenues from consolidated
properties declined $1.9 million, or approximately 0.3%, for
the third quarter of 2010 to $732.2 million from $734.0 million in
the third quarter of 2009.
- Revenues from unconsolidated
properties at the Company’s ownership share were $144.2 million
for the third quarter of 2010, a decline from $147.6 million in
2009, primarily due to declines in temporary tenant rents.
Operational Highlights
GGP continues to strengthen 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
fostering long-lasting relationships with its retail partners.
During the third quarter, the company signed 1.8 million square
feet of new and renewal leases.
- GGP continues to attract some of the
nation’s leading retailers and new concept stores. In the third
quarter, Forever 21 opened five new stores totaling more than
393,000 square feet, including three in Texas (Baybrook Mall and
The Woodlands in Houston and North Star Mall in San Antonio).
Luxury fashion designer Michael Kors opened five new stores at
Oakbrook Center, Park Meadows, Towson Town Center, Staten Island
Mall, and Tysons Galleria; and Australian-based retailer Cotton On
signed leases to open seven new stores at California and
Florida-based properties. The company also opened another new Apple
store at Boise Towne Square in September.
Master Planned Communities Segment
GGP’s 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. This segment
also includes the Nouvelle at Natick condominium project in
Massachusetts. As a result of the confirmation of GGP’s plan of
reorganization on October 21, 2010, the projects in this segment
will be part of the assets included in The Howard Hughes
Corporation (“THHC”), a new company that will be created upon GGP’s
emergence from bankruptcy.
- During the quarter, GGP sold 24
units at its Nouvelle Natick condominium project and has executed
sales contracts pending for an additional 7 units. Such unit sales
yielded recognized revenues of approximately $10.3 million for the
third quarter of 2010.
- Land sale revenues for the third
quarter of 2010 were $10.0 million for consolidated master planned
communities and $10.8 million (at the Company’s ownership share)
for The Woodlands, the company’s unconsolidated community, compared
to $7.4 million and $7.8 million, respectively, for the third
quarter of 2009. Increases in land sale revenues for the
consolidated master planned communities were largely a result of
the collection of participation amounts on previous sales as lot
sales to residential builders continue to reflect continued weak
overall demand for individual lots. The increases in revenues at
The Woodlands are predominantly due to increases in commercial
acreage sold, with 11.3 acres sold in 2010 compared to 0.6 acres
sold in 2009.
- NOI from the Master Planned
Communities segment for the third quarter of 2010 was $0.5 million
for consolidated properties and $2.7 million for the unconsolidated
properties, as margins from lot or unit sales did not significantly
exceed selling and community/property-specific general and
administrative costs, which are largely fixed.
SUMMARY OF BANKRUPTCY EMERGENCE PLANS
On October 21, 2010, the U.S. Bankruptcy Court for the Southern
District of New York confirmed the Company’s plan of
reorganization. GGP expects to emerge from Chapter 11 restructuring
on or around November 8th.
GGP will emerge from its financial restructuring with a strong
balance sheet and substantially less debt, providing it with a
solid financial foundation on which to execute its growth strategy.
Upon emergence, GGP will have a significantly improved capital
structure, having secured $6.8 billion in equity commitments from
Brookfield Asset Management, Fairholme Funds, Pershing Square
Capital Management, and The Teacher Retirement System of Texas (and
Blackstone, if it elects, as anticipated, to subscribe to a portion
of such $6.8 billion in equity).
As part of its plan of reorganization, GGP will split upon
emergence into two separate publicly traded corporations, a
reorganized GGP (“New GGP”) and The Howard Hughes Corporation
(“THHC”), with current shareholders receiving common stock in both
companies. New GGP will remain the second-largest shopping mall
owner and operator in the country, with more than 185 regional
malls in 43 states, and will focus on largely stable,
income-producing shopping malls and other real estate assets. THHC,
a spin-off company, will consist of GGP’s portfolio of master
planned communities and other strategic real estate development
opportunities. The plan of reorganization yields a substantial
recovery to current common stockholders of GGP, who will as a group
own a majority of the outstanding common stock of THHC and a
significant minority of the outstanding common stock of New GGP
upon emergence.
All pre-petition GGP creditors will be satisfied in full. The
restructured loans provide for the repayment of such restructured
secured mortgage debt without any prepayment penalties. In
addition, the holders of $1.65 billion of certain corporate bonds
have elected to either exchange their holdings for new,
longer-dated bonds or be reinstated at existing rates, thereby
providing the Company an even more attractive maturity profile
while allowing the Company to forgo the more costly standby term
debt facility it had arranged.
EQUITY OFFERING
A key feature of the $6.8 billion of new capital to be received
pursuant to the investment agreements is a clawback provision that
provides GGP with the option to replace up to $2.15 billion of the
capital being committed by Fairholme, Pershing Square and Teacher
Retirement System of Texas with the proceeds of equity issuances at
more advantageous pricing. New GGP has filed a registration
statement on Form S-11 with the Securities and Exchange Commission
to raise public equity shortly after emergence from Chapter 11.
The offering of equity shortly after emergence from Chapter 11
will be made only by means of a prospectus. A registration
statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor may offers to buy
be accepted prior to the time the registration statement becomes
effective. The registration statement on Form S-11 may be accessed
through the Securities and Exchange Commission’s website at
www.sec.gov. This press release shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any
sale of these securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or
jurisdiction.
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, the Company believes that
FFO is a less meaningful supplemental measure for the Master
Planned Communities segment of its business. FFO does not
facilitate an understanding of the operating performance of the
Master Planned Communities segment of its business as its 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 the Company’s business is
operated within taxable REIT subsidiaries and therefore its
(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 and condominium sales,
tenant recoveries and other income) less property and related
expenses (real estate taxes, land and condominium 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, strategic
initiatives 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 retail and other segment 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.
GGP INFORMATION/WEBSITE
The Company currently has ownership interest in more than 200
regional shopping malls in 43 states and internationally, 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.
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, our ability to emerge from
bankruptcy pursuant to our approved plan of reorganization, our
ability to refinance, extend, restructure or repay our short and
intermediate term debt, our substantial level of indebtedness, our
ability to raise capital through equity issuances, asset sales or
the incurrence of new debt, retail and credit market conditions,
impairments, our liquidity demands and retail and economic
conditions. 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
Nine Months Ended September 30, September 30,
2010 2009 2010 2009 Funds From
Operations ("FFO") Company stockholders $ (27,209 ) $
97,963 $ 306,900 $ (7,306 ) Operating Partnership unit holders
(623 ) 2,278 7,037 (181 )
Operating Partnership $ (27,832 ) $ 100,241 $ 313,937
$ (7,487 ) (Decrease) increase in FFO over comparable prior
year period (127.8 ) % (44.0 ) % 4,293.1
% (101.2 ) % FFO per share: Company
stockholders - basic $ (0.09 ) $ 0.31 $ 0.97 $ (0.02 ) Operating
Partnership - basic (0.09 ) 0.31 0.97 (0.02 ) Operating Partnership
- diluted (0.09 ) 0.31 0.96 (0.02 )
(Decrease) increase in diluted FFO per
share over comparable prior year periods
(129.0 ) % (44.6 ) % 4,900.0 % (101.0 ) %
Core Funds From
Operations ("Core FFO") Core FFO $ (29,320 ) $ 88,862 $ 327,714
$ 90,530 (Decrease) increase in Core FFO over comparable prior year
period (133.0 ) % (55.4 ) % 262.0 % (85.9 ) % Core FFO per
share - diluted (0.09 ) 0.28 1.01 0.28
(Decrease) increase in diluted Core FFO
per share over comparable prior year periods
(132.1 ) % (54.8 ) % 260.7 % (86.4 ) %
Dividends
Dividends paid per share (a) $ - $ - $ 0.19 $ - Payout ratio (% of
diluted FFO paid out) - % - % 19.8 % - %
Real Estate
Property Net Operating Income ("NOI") Retail and Other:
Consolidated $ 486,550 $ 486,356 $ 1,464,210 $ 1,507,480
Unconsolidated 95,279 96,496
294,803 294,165 Total Retail and Other
581,829 582,852 1,759,013
1,801,645 Master Planned Communities: Consolidated 520
(2,173 ) (3,676 ) (111,893 ) Unconsolidated 2,744
(847 ) 9,975 4,172 Total Master
Planned Communities 3,264 (3,020 )
6,299 (107,721 ) Total Real estate property net
operating income $ 585,093 $ 579,832 $ 1,765,312
$ 1,693,924
September 30,
December 31, Selected Balance Sheet Information
2010 2009 Cash and cash equivalents $ 630,014 $
654,396 Investment in real estate: Net land, buildings and
equipment $ 21,271,450 $ 21,684,661 Developments in progress
424,616 417,969 Net investment in and loans to/from Unconsolidated
Real Estate Affiliates 1,869,381 1,941,024 Investment property and
property held for development and sale 1,906,163
1,753,175 Net investment in real estate $ 25,471,610
$ 25,796,829 Total assets $ 27,742,933 $
28,149,774 Mortgages, notes and loans payable not subject to
compromise $ 16,927,928 $ 7,300,772 Mortgages, notes and loans
payable subject to compromise (b) 6,932,135 17,155,245 Redeemable
noncontrolling interests - Preferred 120,756 120,756 Redeemable
noncontrolling interests - Common 115,117 86,077 Total equity
586,385 847,339 Total capitalization
(at cost) $ 24,682,321 $ 25,510,189 (a)
Represents 2009 dividend declared in December 2009 that was paid in
January 2010 (approximately $6.0 million in cash and 4,923,287
shares of common stock). (b) Mortgages, notes and loans payable
subject to compromise as of the respective balance sheet dates are
for obligations of the Debtors which do not have effective plans of
reorganization as of such dates. The contractual principal amount
of such mortgages, notes and loans payable reflected as subject to
compromise at September 30, 2010, are expected to be $1.86 billion
at our projected emergence from bankruptcy on November 8, 2010, as
a result of GGP's confirmed plans of reorganization.
GENERAL GROWTH
PROPERTIES, INC. CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30, 2010 2009
2010 2009 Revenues: Minimum rents $ 487,433 $
489,472 $ 1,464,650 $ 1,487,288 Tenant recoveries 217,906 217,040
647,744 674,750 Overage rents 10,333 10,408 28,126 26,214 Land and
condominium sales 20,290 7,409 85,325 38,844 Management fees and
other corporate revenues 14,075 16,851 48,063 57,569 Other
19,655 19,781 62,337
57,031 Total revenues 769,692 760,961
2,336,245 2,341,696
Expenses: Real estate taxes 71,339 69,925 214,496 210,443
Property maintenance costs 27,176 28,246 89,207 77,704 Marketing
9,043 7,358 22,374 21,840 Other property operating costs 132,441
136,235 387,713 394,414 Land and condominium sales operations
19,770 9,582 89,001 42,046 Provision for doubtful accounts 5,628
5,925 15,575 25,104 Property management and other costs 41,057
44,876 125,007 130,485 General and administrative 9,401 8,324
22,707 22,436 Strategic Initiatives (a) - 3,328 - 67,341 Provisions
for impairment 4,620 60,940 35,893 474,420 Depreciation and
amortization 175,336 185,016
527,956 576,103 Total expenses 495,811
559,755 1,529,929
2,042,336 Operating income 273,881 201,206 806,316 299,360
Interest income 274 523 1,087 1,754 Interest expense
(413,237 ) (326,357 ) (1,050,241 ) (983,198 )
Loss before income taxes, noncontrolling
interests, reorganization items, and equity in income of
Unconsolidated Real Estate Affiliates
(139,082 ) (124,628 ) (242,838 ) (682,084 ) (Provision for) benefit
from income taxes (1,913 ) 14,430 (19,797 ) 10,202 Equity in income
of Unconsolidated Real Estate Affiliates 9,789 15,341 60,441 39,218
Reorganization items (102,517 ) (22,597 )
(93,216 ) (47,515 ) Loss from continuing operations (233,723
) (117,454 ) (295,410 ) (680,179 ) Discontinued operations - gain
(loss) on dispositions - 29 -
(26 ) Net loss (233,723 ) (117,425 ) (295,410 )
(680,205 ) Allocation to noncontrolling interests 2,538
(422 ) (1,646 ) 7,876 Net loss
attributable to common stockholders $ (231,185 ) $ (117,847 ) $
(297,056 ) $ (672,329 )
Basic and Diluted Loss Per
Share: Continuing operations $ (0.73 ) $ (0.38 ) $ (0.94 ) $
(2.16 ) Discontinued operations - -
- - Total basic and diluted loss per
share $ (0.73 ) $ (0.38 ) $ (0.94 ) $ (2.16 ) (a)
Reclassified from general and administrative, as presented in the
third quarter 2009, to conform to the 2009 audited financial
statement presentation.
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS ("FFO") (In
thousands)
Three Months Ended September 30,
2010 Consolidated Unconsolidated Segment
Retail and Other Properties Properties
Basis Property revenues: Minimum rents $ 487,433 $ 94,000 $
581,433 Tenant recoveries 217,906 38,364 256,270 Overage rents
10,333 1,065 11,398 Other, including noncontrolling interests
16,505 10,802 27,307
Total property revenues 732,177 144,231
876,408 Property operating expenses: Real estate
taxes 71,339 11,047 82,386 Property maintenance costs 27,176 4,840
32,016 Marketing 9,043 2,009 11,052 Other property operating costs
132,441 30,118 162,559 Provision for doubtful accounts 5,628
938 6,566 Total property
operating expenses 245,627 48,952
294,579 Retail and other net operating income
486,550 95,279 581,829
Master Planned Communities Land and condominium sales 20,290
10,824 31,114 Land and condominium sales operations (19,770
) (8,080 ) (27,850 ) Master Planned Communities net
operating income 520 2,744 3,264 Real estate
property net operating income $ 487,070 $ 98,023 $
585,093 Management fees and other corporate revenues
14,075 4,376 Property management and other costs (41,057 ) (8,235 )
General and administrative (9,401 ) (5,095 ) Provisions for
impairment (4,620 ) (20 ) Depreciation on non-income producing
assets, including headquarters building (2,428 ) - Interest income
274 2,201 Interest expense (413,237 ) (43,698 ) (Provision for)
benefit from income taxes (1,913 ) 137 Preferred unit distributions
(2,336 ) - Other FFO from noncontrolling interests 528 41
Reorganization items (102,517 ) - FFO (75,562
) 47,730 Equity in FFO of Unconsolidated Properties 47,730
(47,730 ) Operating Partnership FFO $ (27,832 ) $ -
Three Months Ended September 30, 2009
Consolidated Unconsolidated Segment Retail
and Other Properties Properties Basis
Property revenues: Minimum rents $ 489,472 $ 94,264 $ 583,736
Tenant recoveries 217,040 39,718 256,758 Overage rents 10,408 1,442
11,850 Other, including noncontrolling interests (a) 17,125
12,172 29,297 Total property
revenues 734,045 147,596 881,641
Property operating expenses: Real estate taxes 69,925 11,775
81,700 Property maintenance costs (b) 28,246 5,024 33,270 Marketing
7,358 1,484 8,842 Other property operating costs (b) 136,235 31,278
167,513 Provision for doubtful accounts 5,925
1,539 7,464 Total property operating expenses
247,689 51,100 298,789
Retail and other net operating income 486,356
96,496 582,852
Master Planned
Communities Land and condominium sales 7,409 7,800 15,209 Land
and condominium sales operations (9,582 ) (8,647 )
(18,229 ) Master Planned Communities net operating (loss)
income (2,173 ) (847 ) (3,020 ) Real estate
property net operating income $ 484,183 $ 95,649 $
579,832 Management fees and other corporate revenues
16,851 4,267 Property management and other costs (44,876 ) (8,660 )
General and administrative (8,324 ) (1,390 ) Strategic initiatives
(c) (3,328 ) - Provisions for impairment (60,940 ) - Depreciation
on non-income producing assets, including headquarters building
(2,328 ) - Interest income 523 1,040 Interest expense (326,357 )
(36,811 ) Benefit from (provision for) income taxes 14,430 (31 )
Preferred unit distributions (2,336 ) - Other FFO from
noncontrolling interests 1,246 30 Reorganization items
(22,597 ) - FFO 46,147 54,094 Equity in FFO of
Unconsolidated Properties 54,094 (54,094 )
Operating Partnership FFO $ 100,241 $ - (a)
2009 NOI was reduced by $2.4 million of
other revenue, which represents joint venture asset management fees
that were reclassified to management fees and other corporate
revenues to conform to the 2010 presentation.
(b)
Other property operating costs were
increased by $32.0 million of expenses primarily related to
cleaning and janitorial costs that were reclassified from property
maintenance costs to conform to the 2010 presentation.
(c)
Reclassified from general and
administrative, as presented in the third quarter 2009, to conform
to the 2009 audited financial statement presentation.
GENERAL GROWTH
PROPERTIES, INC. PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
("FFO") (In thousands)
Nine Months
Ended September 30, 2010 Consolidated
Unconsolidated Segment Retail and Other
Properties Properties Basis Property revenues:
Minimum rents $ 1,464,650 $ 288,606 $ 1,753,256 Tenant recoveries
647,744 115,135 762,879 Overage rents 28,126 3,251 31,377 Other,
including noncontrolling interests 53,055
33,143 86,198 Total property revenues
2,193,575 440,135 2,633,710
Property operating expenses: Real estate taxes 214,496 35,711
250,207 Property maintenance costs 89,207 14,721 103,928 Marketing
22,374 4,637 27,011 Other property operating costs 387,713 87,198
474,911 Provision for doubtful accounts 15,575
3,065 18,640 Total property operating expenses
729,365 145,332 874,697
Retail and other net operating income 1,464,210
294,803 1,759,013
Master
Planned Communities Land and condominium sales 85,325 36,796
122,121 Land and condominium sales operations (89,001 )
(26,821 ) (115,822 ) Master Planned Communities net
operating income (3,676 ) 9,975 6,299 Real
estate property net operating income 1,460,534 304,778 $ 1,765,312
Management fees and other corporate revenues 48,063
14,069 Property management and other costs (125,007 ) (27,106 )
General and administrative (22,707 ) (4,572 ) Provisions for
impairment (35,893 ) (441 ) Depreciation on non-income producing
assets, including headquarters building (7,221 ) - Interest income
1,087 5,361 Interest expense (1,050,241 ) (129,432 ) Provision for
income taxes (19,797 ) (279 ) Preferred unit distributions (7,006 )
- Other FFO from noncontrolling interests 2,865 98 Reorganization
items (93,216 ) - FFO 151,461 162,476 Equity
in FFO of Unconsolidated Properties 162,476
(162,476 ) Operating Partnership FFO $ 313,937 $ -
Nine Months Ended September 30, 2009
Consolidated Unconsolidated Segment Retail
and Other Properties Properties Basis
Property revenues: Minimum rents $ 1,487,288 $ 288,698 $ 1,775,986
Tenant recoveries 674,750 119,259 794,009 Overage rents 26,214
3,632 29,846 Other, including noncontrolling interests (a)
48,733 37,813 86,546 Total
property revenues 2,236,985 449,402
2,686,387 Property operating expenses: Real estate
taxes 210,443 36,620 247,063 Property maintenance costs (b) 77,705
14,023 91,728 Marketing 21,840 4,234 26,074 Other property
operating costs (b) 394,413 95,768 490,181 Provision for doubtful
accounts 25,104 4,592 29,696
Total property operating expenses 729,505
155,237 884,742 Retail and other net
operating income 1,507,480 294,165
1,801,645
Master Planned Communities
Land and condominium sales 38,844 26,320 65,164 Land and
condominium sales operations (42,046 ) (22,148 )
(64,194 ) Master Planned Communities net operating income
(3,202 ) 4,172 970 Provision for impairment (108,691
) - (108,691 ) Master Planned Communities net
operating (loss) income (111,893 ) 4,172 (107,721 )
Real estate property net operating income 1,395,587 298,337
$ 1,693,924 Management fees and other corporate
revenues 57,569 12,195 Property management and other costs (130,485
) (26,960 ) General and administrative (22,436 ) (8,133 ) Strategic
initiatives (c) (67,341 ) - Provisions for impairment (365,729 )
(3,206 ) Depreciation on non-income producing assets, including
headquarters building (7,201 ) - Interest income 1,754 2,972
Interest expense (983,198 ) (120,395 ) Benefit from (provision for)
income taxes 10,202 (498 ) Preferred unit distributions (7,007 ) -
Other FFO from noncontrolling interests 3,912 89 Reorganization
items (47,515 ) - FFO (161,888 ) 154,401
Equity in FFO of Unconsolidated Properties 154,401
(154,401 ) Operating Partnership FFO $ (7,487 ) $ -
(a)
2009 NOI was reduced by $8.0 million of
other revenue, which represents joint venture asset management fees
that were reclassified to management fees and other corporate
revenues to conform to the 2010 presentation.
(b)
Other property operating costs were
increased by $95.7 million of expenses primarily related to
cleaning and janitorial costs that were reclassified from property
maintenance costs to conform to the 2010 presentation.
(c)
Reclassified from general and
administrative, as presented in the third quarter 2009, to conform
to the 2009 audited financial statement presentation.
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, 2010
September 30, 2009 Consolidated Unconsolidated
Consolidated Unconsolidated Properties
Properties Properties Properties Minimum
rents: Above- and below-market tenant leases, net $ 1,318 $
(127 ) $ 2,737 $ 384 Straight-line rent 8,035 3,067 8,480 2,998
Real estate taxes: Real estate tax stabilization agreement
(981 ) - (981 ) -
Other property operating costs: Non-cash
ground rent expense (1,570 ) (249 ) (1,576 ) (247 )
Provisions
for impairment (4,620 ) (20 ) (60,940 ) -
Interest
expense: Mark-to-market adjustments on debt (18,734 ) 2,071
3,294 155 Amortization of deferred finance costs (2,528 ) (523 )
(9,916 ) (396 ) Amortization of discount on exchangeable notes
(7,329 ) - (6,897 ) - Termination of interest rate swaps (596 ) -
(4,519 ) - Debt extinguishment costs (8,850 ) (31 ) - -
Non-cash
reorganization items (71,132 ) -
7,062 - Totals $ (106,987 ) $ 4,188 $
(63,256 ) $ 2,894
Nine Months Ended
Nine Months Ended September 30, 2010 September 30,
2009 Consolidated Unconsolidated
Consolidated Unconsolidated Properties
Properties Properties Properties Minimum
rents: Above- and below-market tenant leases, net $ 4,403 $ (42
) $ 6,094 $ 3,317 Straight-line rent 27,153 8,117 27,173 9,523
Real estate taxes: Real estate tax stabilization agreement
(2,943 ) - (2,943 ) -
Other property operating costs:
Non-cash ground rent expense (4,702 ) (642 ) (4,740 ) (927 )
Provisions for impairment (35,893 ) (441 ) (474,420 ) (3,206
)
Interest expense: Mark-to-market adjustments on debt
(9,912 ) 2,284 9,357 1,486 Amortization of deferred finance costs
(18,880 ) (1,361 ) (35,889 ) (1,221 ) Amortization of discount on
exchangeable notes (21,619 ) - (20,347 ) - Termination of interest
rate swaps (9,636 ) - 14,156 - Debt extinguishment costs (9,007 )
(31 ) (578 ) -
Non-cash reorganization items 127,401
- (24,114 ) - Totals $
46,365 $ 7,884 $ (506,251 ) $ 8,972
SUPPLEMENTAL SCHEDULE OF MANAGEMENT AND ADMINISTRATIVE
COSTS, NET (In thousands)
Three Months Ended
Three Months Ended September 30, 2010 September
30, 2009 Consolidated Unconsolidated
Consolidated Unconsolidated Properties
Properties Properties Properties Management
fees and other corporate revenues, net (a) $ 8,434 $ 4,376 $ 11,210
$ 4,267 Property management and other costs (41,057 ) (2,594 )
(44,876 ) (3,019 ) General and administrative (9,401 )
(5,095 ) (8,324 ) (1,390 ) Total management
and administrative costs, net $ (42,024 ) $ (3,313 ) $ (41,990 ) $
(142 )
Nine Months Ended Nine Months
Ended September 30, 2010 September 30, 2009
Consolidated Unconsolidated Consolidated
Unconsolidated Properties Properties
Properties Properties Management fees and other
corporate revenues, net (a) $ 30,737 $ 14,069 $ 40,076 $ 12,195
Property management and other costs (125,007 ) (9,780 ) (130,485 )
(9,467 ) General and administrative (22,707 ) (4,572
) (22,436 ) (8,133 ) Total management and
administrative costs, net $ (116,977 ) $ (283 ) $ (112,845 ) $
(5,405 ) (a) 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 $5.6 million for the three months ended September
30, 2010, $5.6 million for the three months ended September 30,
2009, $17.3 million for the nine months ended September 30, 2010,
and $17.5 million for the nine months ended September 30, 2009.
GENERAL GROWTH PROPERTIES, INC.
SUPPLEMENTAL SCHEDULE OF SIGNIFICANT ITEMS THAT IMPACT
COMPARABILITY (a) (In thousands, except per share amounts)
Three Months Ended Nine Months
Ended September 30, September 30, 2010
2009
2010
2009 Retail and other net operating income $
581,829 $ 582,852 $ 1,759,013 $ 1,801,645
Retail and
other net operating income adjustments: Net operating income
from noncomparable properties (10,401 ) (9,855 ) (31,810 ) (33,937
) Corporate and other (773 ) 3,216 (624 ) 3,963 Termination income
(4,295 ) (3,859 ) (25,127 ) (24,053 )
Total Retail and other net operating income adjustments
(15,469 ) (10,498 ) (57,561 ) (54,027 )
Comparable retail and other net operating
income $ 566,360 $ 572,354 $ 1,701,452 $
1,747,618
Core FFO $ (29,320 ) $ 88,862
$ 327,714 $ 90,530
Core FFO adjustments: Retail and
other net operating income adjustments (15,469 ) (10,498 ) (57,561
) (54,027 ) Provisions for impairment: Operating properties 4,516
18,161 35,290 139,583 Non-recoverable development and
pre-development costs 124 36,496 1,044 94,318 Goodwill -
6,283 - 135,034
Core FFO provisions for impairment 4,640 60,940 36,334 368,935
Reorganization items (b) Gains on liabilities subject to
compromise - vendors 188 (2,670 ) (6,687 ) (5,049 ) Gains on
liabilities subject to compromise - mortgage debt (4,309 ) -
(323,319 ) - Restructuring costs 105,287 23,864 419,125 50,071
Interest income (72 ) (16 ) (162 ) (23 ) U.S. Trustee fees
1,423 1,419 4,259 2,516
Total reorganization items 102,517 22,597 93,216 47,515
Strategic initiatives (c) - 3,328 - 67,341
Termination of interest rate swaps - - - 34,813 Accrued interest
expense related to the plan 83,739 - 83,739 - Total Core FFO
adjustments 175,427 76,367
155,728 464,577
Comparable Core FFO $
146,107 $ 165,229 $ 483,442 $ 555,107
Comparable Core FFO per share -
diluted $ 0.45 $ 0.52 $ 1.48 $ 1.74
(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 who assisted
in the development of strategic alternatives prior to filing for
Chapter 11 protection.
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,
2010 2009 2010 2009
Reconciliation of Real Estate Property
Net Operating Income ("NOI") to GAAP Operating Income
(Loss)
Real estate property net operating income: Segment basis $ 585,093
$ 579,832 $ 1,765,312 $ 1,693,924 Unconsolidated Properties
(98,023 ) (95,649 ) (304,778 ) (298,337 )
Consolidated Properties 487,070 484,183 1,460,534 1,395,587
Management fees and other corporate revenues 14,075 16,851 48,063
57,569 Property management and other costs (41,057 ) (44,876 )
(125,007 ) (130,485 ) General and administrative (9,401 ) (8,324 )
(22,707 ) (22,436 )
Strategic Initiatives
- (3,328 ) - (67,341 ) Provisions for impairment (4,620 ) (60,940 )
(35,893 ) (365,729 ) Depreciation and amortization (175,336 )
(185,016 ) (527,956 ) (576,103 ) Noncontrolling interest in NOI of
Consolidated Properties and other 3,150 2,656
9,282 8,298 Operating income $
273,881 $ 201,206 $ 806,316 $ 299,360
Reconciliation of Core FFO to Funds
From Operations ("FFO") and to GAAP Net Income (Loss) Attributable
to Common Stockholders
Core FFO $ (29,320 ) $ 88,862 $ 327,714 $ 90,530 Master Planned
Communities net operating loss 3,264 (3,020 ) 6,299 (107,721 )
Provision for income taxes (1,776 ) 14,399
(20,076 ) 9,704 Funds From Operations -
Operating Partnership (27,832 ) 100,241 313,937 (7,487 )
Depreciation and amortization of capitalized real estate costs
(211,169 ) (221,460 ) (634,208 ) (684,142 ) Gains (losses) on sales
of investment properties (a) 757 29 12,683 (26 ) Noncontrolling
interests in depreciation of Consolidated Properties and other
1,734 862 3,696 2,629 Redeemable noncontrolling interests
5,325 2,481 6,836 16,697
Net loss attributable to common stockholders $ (231,185 ) $
(117,847 ) $ (297,056 ) $ (672,329 )
Reconciliation of Equity in NOI of
Unconsolidated Properties to GAAP Equity in Income of
Unconsolidated Real Estate Affiliates
Equity in Unconsolidated Properties: NOI $ 98,023 $ 95,649 $
304,778 $ 298,337 Net property management fees and costs (3,859 )
(4,393 ) (13,037 ) (14,765 ) Net interest expense (41,497 ) (35,771
) (124,071 ) (117,423 )
General and administrative, provisions for
impairment, income taxes and noncontrolling interest in FFO
(4,937 ) (1,391 ) (5,194 ) (11,748 )
FFO of unconsolidated properties 47,730 54,094 162,476 154,401
Depreciation and amortization of capitalized real estate costs
(38,261 ) (38,770 ) (113,473 ) (115,239 ) Other, including gains on
sales of investment properties (a) 320 17
11,438 56 Equity in income of
Unconsolidated Real Estate Affiliates $ 9,789 $ 15,341
$ 60,441 $ 39,218
Reconciliation of
Weighted Average Shares Outstanding Basic: Weighted average
number of shares outstanding - FFO per share 324,658 319,628
324,114 319,606 Conversion of Operating Partnership units
(7,265 )
(7,265
) (7,265 ) (7,745 ) Weighted average number of
Company shares outstanding - GAAP EPS 317,393
312,363 316,849 311,861
Diluted: Weighted average number of shares outstanding - FFO per
share 326,137 319,628 325,567 319,606 Conversion of Operating
Partnership units (7,265 )
(7,265
) (7,265 ) (7,745 ) Effect of dilutive securities - options
(1,479 ) - (1,453 ) - Weighted
average number of Company shares outstanding - GAAP EPS
317,393 312,363 316,849
311,861
(a)
Included in such amounts for the nine
months ended September 30, 2010 is $9.7 million of gain, which is
recognized because our Brazilian joint venture issued common stock
with an issue price in excess of our carrying value per share of
our investment in such venture.
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