General Growth Properties, Inc. (NYSE: GGP) (“GGP” or the
“Company”) today announced its financial results for the three
months ended March 31, 2011, and its second quarter common share
dividend.
“With our strong liquidity, our focus now turns to strengthening
our portfolio of assets. We own strong, high-performing assets in
major markets and highly-desirable areas from coast to coast. We
have begun to create customized business plans for each of our
malls, with the ultimate goal of maximizing each property and its
demographics to its highest potential,” said Sandeep Mathrani,
chief executive officer of GGP.
GAAP OPERATING RESULTS AND EARNINGS PER SHARE (“EPS”)
Three Months Ended March 31 [ $THOUSANDS
EXCEPT PER SHARE ]
2011 2010 TOTAL
REVENUES
$689,831 $701,760 OPERATING
INCOME
$174,255 $260,010 NET INCOME
ATTRIBUTABLE TO COMMON STOCKHOLDERS
$5,662
$51,656 TOTAL BASIC AND DILUTED EPS
--
$0.16
GGP’s emergence resulted in the application of the acquisition
method of accounting as of November 9, 2010. The Company has made
available on its website its quarterly package of supplemental
financial and operational information (the “Supplemental”) which
provides additional details.
CORE NOI, CORE EBITDA, CORE FFO AND FFO1
The following discussion is at share; refer to the Supplemental
for details.
Three Months Ended March 31 [ $THOUSANDS
EXCEPT PER SHARE ]
2011 2010 CORE NOI
$550,789 $540,907 CORE EBITDA
$499,982 $507,972 CORE FFO
$220,947 $216,278 FFO
$306,079
$248,164 CORE FFO PER SHARE
$0.22
$0.67 FFO PER SHARE
$0.30
$0.76
(1) See definitions under NON-GAAP SUPPLEMENTAL FINANCIAL
MEASURES AND DEFINITIONS.
QUARTERLY OPERATIONAL HIGHLIGHTS
- Comparable Tenant Sales on a trailing
12 month basis increased to $457 per square foot, an increase of
7.3% compared to the same period last year.
- Regional Mall Occupancy increased 40
basis points to 92.4% over the same period last year.
- Leasing volume was strong during the
first quarter. In the first quarter, GGP signed 2.2 million square
feet of permanent leasing space, including new and renewal
leases.
QUARTERLY FINANCIAL HIGHLIGHTS
- Core FFO is up 2% compared to the same
period last year primarily attributed to interest savings from
lowered debt balances.
- CORE NOI was up $9.9 million due to
decreased property operating costs and decreased provision for
doubtful accounts, off-set by reduced lease termination income in
the first quarter year over year.
- Property Management and Other Costs
were higher compared to the same period in 2010 due to severance
costs and rent at the Chicago Corporate office.
- A reduction in Warrant Liability
expense of $76 million in the first quarter results from a
mark-to-market adjustment.
CAPITAL TRANSACTIONS AND LIQUIDITY
- GGP recently announced the refinancing
of seven shopping malls representing $1.7 billion of new mortgages
($1.4 billion is GGP’s share). The seven new fixed-rate mortgages
have a weighted average term of 10.3 years and generated cash
proceeds in excess of in-place financing of approximately $400
million to GGP. Since July 2010, GGP has closed in excess of $2.5
billion of new mortgage financing.
- On February 25, 2011, GGP announced an
amendment to its existing $300 million three-year senior secured
revolving credit facility (the "Revolver"). The amendment increased
the Revolver commitment amount up to approximately $720 million and
added a provision that, subject to satisfaction of certain
conditions, allows the Company to further increase the commitment
amounts up to $1 billion. In April 2011, the Company further
increased the capacity of its credit facility to $750 million. The
proceeds from the refinancings combined with cash-on-hand increases
GGP’s liquidity position to more than $2 billion.
- Also in the first quarter, GGP
transferred four Special Consideration Properties to their
respective lenders pursuant to agreements negotiated in conjunction
with our secured property debt restructuring.
“Retailers are reporting increased sales as consumer confidence
continues to return. With diminishing opportunities for new retail
space, malls provide great opportunities to expand retailer
offerings through both traditional and non-traditional uses. We see
shopping malls playing a tremendous role in the growth of retail
moving forward,” said Mathrani.
COMMON SHARE DIVIDEND
- GGP is declaring a common share
dividend of $0.10 per share for the second quarter 2011 to
shareholders of record as of July 15, 2011, payable on July 29,
2011. GGP declared a common share dividend for the first quarter
2011 of $0.10 per share, payable on April 29, 2011, to shareholders
of record on April 15, 2011. GGP’s Dividend Reinvestment Plan
(“DRIP”) provides eligible holders of GGP’s common stock with a
convenient method of increasing their investment in the Company by
reinvesting all or a portion of cash dividends in additional shares
of common stock. GGP has received commitments from select major
shareholders to participate in the DRIP (Brookfield Asset
Management, Inc.; Pershing Square; and Blackstone), subject to
regulatory and other requirements. The GGP Board of Directors
reviews the dividend on an ongoing basis, taking into account
overall liquidity, investment opportunities and tax considerations
as it relates to the amount of the dividend.
1st QUARTER EARNINGS CALL
- Wednesday,
April 27, 2011 at 8:30 a.m. Eastern time / 7:30 a.m.
Central time with Chief Executive Officer Sandeep Mathrani and
Chief Financial Officer Steve Douglas providing investors and
analysts the opportunity to discuss the strategy of GGP and the
recent earnings results.
ACCESSING THE CALL/WEBCAST:
WWW.GGP.COM (listen only)
On April 27, 2011, 10 minutes prior to the start time, visit
http://investor.ggp.com/events.cfm to access this live audio
event.
TELEPHONE (ask
questions)
On April 27, 2011, 10 minutes prior to the start time, dial the
appropriate number below:
- Participant Operator Assisted Toll-Free
Dial-In Number: (877) 845-1018
- Participant Operator Assisted
International Dial-In Number: (707) 287–9345
NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES AND
DEFINITIONS
REAL ESTATE PROPERTY NET OPERATING INCOME (NOI) AND CORE
NOI
The Company believes NOI is a useful supplemental measure of the
Company’s operating performance. The Company defines NOI as
operating revenues (rental income, tenant recoveries and other
income) less property and related expenses (real estate taxes,
property maintenance costs, marketing, other property expenses and
provision for doubtful accounts). NOI has been reflected on a
proportionate 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
non-recoverable development costs, depreciation and amortization,
gains and losses from property dispositions, allocations to
non-controlling interests, reorganization items, strategic
initiatives, provision for income taxes, discontinued operations
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 and operating costs. This measure
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 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.
CORE NOI excludes the NOI impacts of non-cash and certain
non-comparable items such as straight-line rent and intangible
asset and liability amortization resulting from acquisition
accounting. We present Core NOI, and Core EBITDA and Core FFO as
below, as we believe certain investors and other users of our
financial information use them as measures of the Company’s
historical operating performance.
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION (EBITDA) AND CORE EBITDA
EBITDA is defined as net income (loss) attributable to common
stockholders, adjusted to exclude interest expense net of interest
income, Permanent Warrant expense, income tax provision (benefit),
discontinued operations, allocations to non-controlling interests,
depreciation and amortization. “Core EBITDA” comprises EBITDA as
defined immediately above and excludes certain non-cash and certain
non-recurring items such as our Core NOI adjustments described
above, provisions for impairment, emergence reorganization items,
strategic initiatives and certain management and administration
costs.
FUNDS FROM OPERATIONS (“FFO”) 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. As with our presentation of Core
NOI and Core EBITDA, Core FFO excludes from FFO certain items that
are non-cash and certain non-comparable items such as our Core NOI
adjustments, Core EBITDA adjustments, and FFO items such as FFO
from discontinued operations, Permanent Warrant expense, and
interest expense on debt repaid or settled, all as a result of our
emergence, acquisition accounting and other capital contribution or
restructuring events.
RECONCILIATIONS OF NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
In order to provide a better understanding of the relationship
between our non-GAAP Supplemental Financial measures of NOI, Core
NOI, EBITDA, Core EBITDA, FFO and Core FFO, reconciliations have
been provided as follows: a reconciliation of NOI and Core NOI to
GAAP Operating Income (loss); a reconciliation of EBITDA and Core
EBITDA to GAAP net income, a reconciliation of Core FFO and FFO to
GAAP net income (loss) attributable to common stockholders has been
provided. None of our non-GAAP Supplemental Financial measures
represents cash flow from operating activities in accordance with
GAAP, none should be considered as an alternative to GAAP net
income (loss) attributable to common stockholders and none are
necessarily indicative of cash available to fund cash needs. In
addition, the Company has presented such financial measures 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.
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 refinance, extend, restructure or
repay our remaining debt (including that of our Unconsolidated Real
Estate Affiliates) with maturities in the short to intermediate
term, 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 that
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.
ABOUT GGP
GGP is one of the nation’s largest shopping center owners. GGP
has ownership and management interest in 169 regional and super
regional shopping malls in 43 states. The company portfolio totals
172 million square feet of space. A publicly-traded real estate
investment trust (REIT), GGP is listed on the New York Stock
Exchange under the symbol GGP.
FINANCIAL OVERVIEW
Consolidated Statements of
Income1
(In thousands, except per
share)
Three Months Ended
March 31, 2011 March 31, 2010 Successor
Predecessor Revenues: Minimum rents $
443,241 $ 454,291 Tenant recoveries 202,209 201,621 Overage rents
11,965 9,468 Management fees and other corporate revenues 15,352
17,973 Other 17,064 18,407
Total revenues 689,831
701,760 Expenses: Real estate taxes 66,029
66,205 Property maintenance costs 33,461 31,265 Marketing 7,208
6,767 Other property operating costs 110,214 113,404 Provision for
doubtful accounts 149 5,784 Property management and other costs
47,912 34,296
General and administrative 2
765 8,109 Provisions for impairment - 11,057 Depreciation and
amortization 249,838 164,863
Total expenses 515,576
441,750 Operating income 174,255
260,010 Interest income 681 570
Interest expense (239,389 ) (329,221 ) Warrant adjustment
76,448 -
Income (loss) before income taxes,
equity in (loss) income of Unconsolidated Real Estate
Affiliates, reorganization items and noncontrolling
interests
11,995 (68,641 )
Provision for income taxes (3,189 ) (1,931 ) Equity in (loss)
income of Unconsolidated Real Estate Affiliates (2,933 ) 32,259
Reorganization items - 43,194
Income from continuing operations 5,873 4,881
Discontinued operations 1,162 50,912
Net income 7,035 55,793 Allocation to
noncontrolling interests (1,373 ) (4,137 )
Net income attributable to common stockholders $
5,662 $ 51,656 Basic
and Diluted Earnings Per Share: Continuing operations $ - $ -
Discontinued operations - 0.16
Total basic and diluted earnings per share $ -
$ 0.16 1 Successor and
Predecessor amounts presented in accordance with GAAP. 2
The three months ended March 31, 2011,
includes bankruptcy-related items, including a $12.3 million
favorable resolution of previously accrued bankruptcy costs, other
gains on settlements, legal fees and professional fees.
FINANCIAL OVERVIEW
Consolidated Balance
Sheets1
(In thousands)
March 31, 2011 December 31, 2010
Assets: Investment in real estate: Land $ 4,692,077 $
4,722,674 Buildings and equipment 20,200,363 20,300,355 Less
accumulated depreciation (364,131 ) (129,794 ) Developments in
progress 132,544 117,137 Net property
and equipment 24,660,853 25,010,372 Investment in and loans to/from
Unconsolidated Real Estate Affiliates 3,152,234
3,153,698 Net investment in real estate 27,813,087
28,164,070 Cash and cash equivalents 1,033,767 1,021,311 Accounts
and notes receivable, net 132,125 114,099 Deferred expenses, net
172,391 175,669 Prepaid expenses and other assets 2,169,507
2,300,452 Assets held for disposition 373,254
591,778
Total Assets $ 31,694,131
$ 32,367,379 Liabilities:
Mortgages, notes and loans payable $ 17,760,712 $ 17,841,757
Deferred tax liabilities 34,141 36,463 Tax indemnification
liability 303,750 303,750 Accounts payable and accrued expenses
1,761,382 1,931,970 Trust preferred securities 206,200 206,200
Warrant liability 964,556 1,041,004
Liabilities on assets held for
disposition
347,554 592,122
Total
Liabilities 21,378,295
21,953,266 Redeemable noncontrolling interests:
Preferred 120,756 120,756 Common 106,662
111,608
Total Redeemable Noncontrolling Interests
227,418 232,364
Equity: Total stockholders' equity 9,991,009
10,079,102 Noncontrolling interests in consolidated real
estate affiliates 97,409 102,647
Total Equity 10,088,418
10,181,749 Total Liabilities and Equity
$ 31,694,131 $ 32,367,379
1 Presented in accordance with GAAP.
FINANCIAL OVERVIEW
Reconciliation of Core NOI, Core
EBITDA, and Core FFO, at share
(In thousands, except per
share)
Three Months Ended
March 31, 2011 March 31, 2010 NOI $
550,284 $ 553,003 Core NOI adjustments: Straight-line rent 1
(34,532 ) (12,156 ) Above- and below-market tenant leases, net 1
33,254 (1,506 ) Above- and below-market ground rent expense, net 1
1,783 1,593 Other - (27 ) Total Core NOI
adjustments 505 (12,096 )
Core
NOI $ 550,789 $
540,907 EBITDA $ 508,982 $ 552,880 Core
NOI adjustments 505 (12,096 ) Above- and below-market building
rent, net 1 (518 ) - Provisions for impairment - 11,057
Reorganization items 2 - (43,194 ) Management and
administrative costs, net (8,987 ) (675 )
Total Core EBITDA adjustments (9,000 ) (44,908
)
Core EBITDA $ 499,982 $
507,972 FFO $ 306,079 $ 248,164 Core
EBITDA adjustments (9,000 ) (44,908 ) FFO from discontinued
operations (718 ) (64,620 ) Default interest 1,243 - Interest
expense relating to extinguished debt 430 64,302 Mark-to-market
adjustments on debt (3,922 ) 11,700 Warrant adjustment (76,448 ) -
Provision for income taxes 3,283
1,640 Total FFO adjustments (85,132 )
(31,886 )
Core FFO $ 220,947
$ 216,278 Core FFO per share -
diluted $ 0.22 $ 0.67
1 These items were impacted by the effects of
acquisition accounting as of November 9, 2010. 2
Reorganization items reflect
bankruptcy-related activity, including gains/losses on
liabilitiessubject to compromise, interest income, U.S. Trustee
fees, and other restructuring costs incurredduring the Chapter 11
cases from April 16, 2009 to November 9, 2010.
FINANCIAL OVERVIEW
Reconciliation of Non-GAAP to GAAP
Financial Measures
(In thousands)
Three Months Ended March 31, 2011
March 31, 2010 Reconciliation of NOI to GAAP
Operating Income NOI: Segment basis $ 550,284 $ 553,003
Unconsolidated Properties (95,797 )
(96,496 ) Consolidated Properties 454,487 456,507 Management fees
and other corporate revenues 15,352 17,973 Property management and
other costs (47,912 ) (34,296 ) General and administrative (765 )
(8,109 ) Provisions for impairment - (11,057 ) Depreciation and
amortization (249,838 ) (164,863 ) Noncontrolling interest in NOI
of Consolidated Properties and other 2,931
3,855
Operating income $ 174,255
$ 260,010
Reconciliation of EBITDA to GAAP Net Income Attributable to
Common Stockholders EBITDA: Segment basis $ 508,982 $ 552,880
Unconsolidated Properties (90,156 )
(91,004 ) Consolidated Properties 418,826 461,876 Preferred unit
distributions 2,336 2,336 Depreciation and amortization (249,838 )
(164,863 ) Noncontrolling interest in NOI of Consolidated
Properties and other 2,931 3,855 Interest income 681 570 Interest
expense (239,389 ) (329,221 ) Warrant adjustment 76,448 - Provision
for income taxes (3,189 ) (1,931 ) Equity in (loss) income of
Unconsolidated Real Estate Affiliates (2,933 ) 32,259 Discontinued
operations 1,162 50,912 Allocation to noncontrolling interests
(1,373 ) (4,137 )
Net income attributable
to common stockholders $ 5,662
$ 51,656 Reconciliation of FFO to
GAAP Net Income Attributable to Common Stockholders FFO:
Segment basis $ 306,079 $ 248,164 Unconsolidated Properties
- - Consolidated Properties
306,079 248,164 Depreciation and amortization of capitalized real
estate costs (301,929 ) (198,227 ) Gain on sales of investment
properties 3,414 16,120 Noncontrolling interests in depreciation of
Consolidated Properties and other 2,386 1,120 Redeemable
noncontrolling interests (32 ) (1,188 ) Depreciation and
amortization of discontinued operations (4,256 )
(14,333 )
Net income attributable to common
stockholders $ 5,662 $
51,656
Reconciliation of Equity in NOI of
Unconsolidated Properties to GAAP Equity in (Loss) Income of
Unconsolidated Real Estate Affiliates
Equity in Unconsolidated Properties: NOI $ 95,797 $ 96,496 Net
property management fees and costs (4,422 ) (5,129 ) Net interest
expense (39,011 ) (37,967 ) General and administrative, provisions
for impairment, income taxes and noncontrolling interest in FFO
(1,291 ) (52 ) FFO of discontinued Unconsolidated Properties
(3,025 ) 2,739 FFO of Unconsolidated
Properties 48,048 56,087 Depreciation and amortization of
capitalized real estate costs (54,251 ) (37,858 ) Other, including
gain on sales of investment properties 3,270
14,030
Equity in (loss) income of Unconsolidated Real
Estate Affiliates $ (2,933 ) $
32,259
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