SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of Earliest Event Reported)
June 11, 2003
General Growth Properties, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11656 42-1283895
-------- ------- ----------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
incorporation) Number)
110 N. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 960-5000
--------------
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN.
The registrant hereby amends its Current Report on Form 8-K dated July 11,
2003 to change the date of the earliest event reported to June 11, 2003 and as
follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are the financial statements, pro forma financial information
and exhibits filed as a part of this report:
(a) Financial Statements of Businesses Acquired.
The combined statements of revenues and certain expenses for certain
properties owned by GGP Ivanhoe III, Inc. and the statements of revenues and
certain expenses of Saint Louis Galleria as listed in the accompanying Index to
Financial Statements and Pro Forma Financial Information are filed as part of
this Current Report on Form 8-K/A.
(b) Pro Forma Financial Information.
The pro forma financial information of General Growth Properties, Inc. (the
"Company") listed in the accompanying Index to Financial Statements and Pro
Forma Financial Information is filed as part of this Current Report on Form
8-K/A.
(c) Exhibits.
See the Exhibit Index attached hereto and incorporated herein by reference.
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
The following historical financial statements and pro forma financial
information is presented in accordance with Rule 3-14 and Article 11,
respectively, of Regulation S-X of the Securities and Exchange Commission. The
historical financial statements have been audited only for certain properties
acquired. With respect to the properties acquired in the GGP Ivanhoe III, Inc.
transaction, the historical financial statements have been audited for the three
most recent fiscal years as GGP Ivanhoe III, Inc. was formerly owned 51% by the
registrant and therefore was a related party. For Saint Louis Galleria, the
historical financial statement has been audited only for its most recent fiscal
year as the transaction relating to this property acquisition (as described in
the registrant's Current Report on Form 8-K dated July 11, 2003) did not involve
a related party and the registrant, after reasonable inquiry, is not aware of
any material factors related to the property not otherwise disclosed that would
cause the reported financial information to not be necessarily indicative of
future operating results. In accordance with Rule 3-14 of Regulation S-X of the
Securities and Exchange Commission, certain unaudited financial information for
properties acquired during 2003 that are not individually significant has also
been presented. In addition, as the properties will be directly or indirectly
owned by entities that will elect or have elected to be treated as real estate
investment trusts (as specified under sections 856-860 of the Internal Revenue
Code of 1986) for Federal income tax purposes, a presentation of estimated
taxable operating results is not applicable.
GGP IVANHOE III, INC.
Independent Auditors' Report ............................................................... F-2
Combined Statements of Revenues and Certain Expenses for the Years Ended December 31,
2000, 2001 and 2002 and for the Six Months Ended June 30, 2002 and 2003 (unaudited) ...... F-3
Notes to Combined Statements of Revenues and Certain Expenses .............................. F-4 to F-5
SAINT LOUIS GALLERIA
Independent Auditors' Report ............................................................... F-6
Statements of Revenues and Certain Expenses for the Year Ended December 31, 2002
and for the Period January 1 to June 10, 2003 (immediately prior to acquisition)
(unaudited) .............................................................................. F-7
Notes to Statements of Revenues and Certain Expenses ....................................... F-8 to F-9
GENERAL GROWTH PROPERTIES, INC.
Pro Forma Condensed Consolidated Statement of Operations for the Year
Ended December 31, 2002 .................................................................. F-10
Notes to Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended December 31, 2002 ............................................................. F-11 to F-15
Pro Forma Condensed Consolidated Statement of Operations for the Six
Months Ended June 30, 2003 ............................................................... F-16
Notes to Pro Forma Condensed Consolidated Statement of Operations for the
Six Months Ended June 30, 2003............................................................ F-17 to F-19
Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2003 ......................... F-20 to F-21
Notes to Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2003 ................ F-22
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
GGP Ivanhoe III, Inc.:
We have audited the accompanying combined statements of revenues and certain
expenses for certain properties (owned by GGP Ivanhoe III, Inc. and listed in
Note 1 to the combined statements) (the "Properties") for the years ended
December 31, 2002, 2001 and 2000. These Properties are under common ownership.
These financial statements are the responsibility of GGP Ivanhoe III, Inc.'s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
The accompanying combined statements of revenues and certain expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission (for inclusion in the filing of Form 8-K/A of
General Growth Properties, Inc. as a result of the acquisition of the
controlling interest in the Properties). Material amounts, described in Note 1
to the combined statements of revenues and certain expenses, that would not be
directly attributable to those resulting from future operations of the
Properties are excluded, and the combined statements are not intended to be a
complete presentation of the Properties' revenues and expenses.
In our opinion, such financial statements present fairly, in all material
respects, the combined revenues and certain expenses of the Properties for the
years ended December 31, 2002, 2001 and 2000 in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Chicago, Illinois
August 29, 2003
F-2
GGP IVANHOE III, INC.
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
AND SIX MONTHS ENDED JUNE 30, 2002 AND 2003 (UNAUDITED)
(DOLLARS IN THOUSANDS)
Year Ended Year Ended Year Ended
December 31, 2000 December 31, 2001 December 31, 2002
----------------- ------------------ -----------------
Revenues:
Minimum rents $ 70,023 $ 73,304 $ 80,639
Tenant charges 42,303 42,457 45,817
Other revenue 5,591 5,616 4,597
----------------- ------------------ -----------------
Total revenues 117,917 121,377 131,053
Certain expenses:
Real estate taxes 13,094 13,544 13,169
Other property operating 29,559 30,682 32,168
Provision for doubtful accounts 836 474 636
----------------- ------------------ -----------------
Total certain expenses 43,489 44,700 45,973
----------------- ------------------ -----------------
Revenues in excess of certain expenses $ 74,428 $ 76,677 $ 85,080
================= ================== =================
Six Months Ended Six Months Ended
June 30, 2002 June 30, 2003
(unaudited) (unaudited)
---------------- ----------------
Certain revenues:
Minimum rents $ 37,603 $ 41,053
Tenant charges 22,068 24,316
Other revenue 1,531 1,363
---------------- ----------------
Total revenues 61,202 66,732
Certain expenses:
Real estate taxes 7,181 7,237
Other property operating 14,968 16,701
Provision for doubtful accounts 498 (201)
---------------- ----------------
Total certain expenses 22,647 23,737
---------------- ----------------
Revenues in excess of certain expenses $ 38,555 $ 42,995
================= ================
The accompanying notes are an integral part of these statements.
F-3
GGP IVANHOE III, INC.
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
AND SIX MONTHS ENDED JUNE 30, 2002 AND 2003 (UNAUDITED)
(DOLLARS IN THOUSANDS)
1. ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) ORGANIZATION AND PROPERTIES ACQUIRED
GGP Ivanhoe III, Inc. ("GGP Ivanhoe III"), a Delaware corporation, owned and
managed eight enclosed regional mall shopping centers (the "Shopping Centers").
The Shopping Centers were owned through certain wholly-owned subsidiaries of GGP
Ivanhoe III and consisted of: Landmark Mall in Alexandria, Virginia; Mayfair
Mall and Office Complex in Wauwatosa, Wisconsin; The Meadows Mall in Las Vegas,
Nevada; Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in Savannah,
Georgia; Park City Center in Lancaster, Pennsylvania; The Oak View Mall in
Omaha, Nebraska; and Eastridge Mall in San Jose, California. The Shopping
Centers contain approximately 2.9 million square feet of gross leaseable area
and are currently approximately 82.3% occupied. The two common stockholders of
GGP Ivanhoe III were GGP Limited Partnership, a Delaware limited liability
partnership for which General Growth Properties, Inc. (the "Company") serves as
the general partner ("GGPLP"), and Ivanhoe Equities V LP ("Ivanhoe"), which
owned 51% and 49%, respectively, of the outstanding common stock of GGP Ivanhoe
III.
On July 1, 2003, GGPLP caused GGP Ivanhoe III to redeem all of its common
stock owned by Ivanhoe, thus increasing GGPLP's ownership interest in GGP
Ivanhoe III to a full 100%. The aggregate consideration for the 49% ownership
interest in GGP Ivanhoe III was approximately $459,000 (subject to certain
prorations and adjustments). Approximately $268,000 of existing mortgage debt
was assumed in connection with the acquisition with the balance of the aggregate
consideration, or approximately $191,000, being funded by GGPLP utilizing
proceeds from the refinancing of existing GGPLP long-term debt and new mortgage
loans on previously unencumbered GGPLP properties. Concurrently with this
redemption, GGPLP and Ivanhoe formed a new joint venture, GGP Ivanhoe IV, Inc.
("GGP Ivanhoe IV"), to own Eastridge Mall, which previously was owned by GGP
Ivanhoe III.
(b) BASIS OF PRESENTATION
The accompanying combined statements of revenues and certain expenses have
been prepared for the purpose of complying with certain rules and regulations of
the Securities and Exchange Commission and are not intended to be a complete
presentation of the actual operations of the properties owned by GGP Ivanhoe III
for the periods presented. As a result of the transfer of Eastridge Mall
described above, the operations of Eastridge Mall have been excluded from the
accompanying combined statements of revenues and certain expenses. In addition,
certain items that may not be comparable to the future operations of the
remaining seven properties owned by GGP Ivanhoe III (the "Properties") have been
excluded. Excluded items consist of interest expense, depreciation and
amortization, and other costs (primarily management fees) not directly related
to the future operations of the Properties.
F-4
GGP IVANHOE III, INC.
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
AND SIX MONTHS ENDED JUNE 30, 2002 AND 2003 (UNAUDITED)
(DOLLARS IN THOUSANDS)
(c) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION -- All leases are classified as operating leases. Rental
revenue is recognized on a straight-line basis over the term of the individual
leases. Percentage rents, which are based upon the level of sales achieved by
the lessee, are recognized when the contractual sales levels are achieved.
Recoveries from tenants for common area maintenance, real estate taxes,
insurance and other shopping center operating expenses are recognized as
revenues in the period the applicable costs are incurred.
OTHER PROPERTY OPERATING EXPENSES -- Other property operating expenses represent
the direct expenses of operating the Properties and consist primarily of common
area maintenance, security, utilities, insurance, advertising and promotion,
general and administrative, and other operating expenses that are expected to
continue in the ongoing operation of the Properties.
USE OF ESTIMATES -- The preparation of the combined statements of revenues and
certain expenses in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and
assumptions that affect the reported amounts of certain revenues and expenses
during the periods presented. Actual results could differ from these estimates.
2. RENTALS UNDER OPERATING LEASES
Principal operations consist of leasing building space and land to commercial
tenants under operating leases.
Percentage rentals are based upon a percentage of the tenant's gross sales and
amounted to approximately $4,314, $3,434 and $3,355 for the years ended December
31, 2000, 2001 and 2002, respectively.
At December 31, 2002, minimum future rental income on noncancelable operating
leases is as follows:
Year ending December 31:
2003.......................................$ 65,318
2004.........................................60,241
2005.........................................56,509
2006.........................................51,197
2007.........................................44,147
Thereafter..................................132,607
Minimum future rental income does not include amounts which are payable by
certain tenants based upon a percentage of their gross sales or as reimbursement
of operating expenses.
3. UNAUDITED INTERIM STATEMENTS
The combined statements of revenues and certain expenses for the six months
ended June 30, 2002 and 2003 are unaudited. In the opinion of management, all
significant adjustments necessary for a fair presentation of the statements for
the interim periods have been included. The results of operations for the
interim periods are not necessarily indicative of the results to be expected for
a full year of operations of the Properties.
F-5
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
General Growth Properties, Inc.:
We have audited the accompanying statement of revenues and certain expenses of
the Saint Louis Galleria (the "Property") for the year ended December 31, 2002.
This financial statement is the responsibility of General Growth Properties,
Inc.'s management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statement. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form 8-K/A of General Growth
Properties, Inc. as a result of the acquisition of the Property). Material
amounts, described in Note 1 to the statement of revenues and certain expenses
that would not be directly attributable to those resulting from future
operations of the Property are excluded, and the financial statement is not
intended to be a complete presentation of the Property's revenues and expenses.
In our opinion, such financial statement presents fairly, in all material
respects, the revenues and certain expenses of the Property for the year ended
December 31, 2002 in conformity with accounting principles generally accepted in
the United States of America.
/s/ Deloitte & Touche LLP
Chicago, Illinois
August 29, 2003
F-6
SAINT LOUIS GALLERIA
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 2002 AND THE PERIOD JANUARY 1 TO JUNE
10, 2003 (UNAUDITED)
(DOLLARS IN THOUSANDS)
Period from January 1
Year Ended to June 10, 2003
December 31, 2002 (unaudited)
----------------- ---------------------
Revenues:
Minimum rents $ 14,829 $ 6,691
Tenant charges 10,479 3,974
Other revenue 1,855 1,407
----------------- ---------------------
Total revenues 27,163 12,072
Certain expenses:
Real estate taxes 3,300 1,510
Other property operating 8,720 4,029
----------------- ---------------------
Total certain expenses 12,020 5,539
----------------- ---------------------
Revenues in excess of certain expenses $ 15,143 $ 6,533
================= =====================
The accompanying notes are an integral part of these statements.
F-7
SAINT LOUIS GALLERIA
NOTES TO STATEMENTS OF REVENUES AND CERTAIN
EXPENSES YEAR ENDED DECEMBER 31, 2002 AND THE PERIOD JANUARY 1
TO JUNE 10, 2003 (UNAUDITED)
(DOLLARS IN THOUSANDS)
1. ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) ORGANIZATION AND PROPERTY ACQUIRED
On June 11, 2003, an indirect subsidiary of GGP Limited Partnership, a
Delaware limited partnership for which General Growth Properties, Inc. (the
"Company") serves as the general partner, acquired Saint Louis Galleria, located
in St. Louis, Missouri, (the "Property") from Hycel Partners I, L.P. for a
purchase price of approximately $235,000. The consideration was paid from cash
on hand, including proceeds from refinancings of long-term debt and a $176,000
acquisition loan bearing interest at a rate per annum equal to LIBOR
(approximately 1.12% at June 11, 2003) plus 105 basis points. The Property
opened in 1986 and was expanded in 1991, 1995 and 2002. It is a two-level mall
containing approximately 1.2 million square feet of gross leaseable area. The
Property is anchored by Famous Barr, Lord & Taylor, Dillard's and Mark Shale and
contains approximately 165 mall shops. The Property was currently approximately
94% occupied on the acquisition date.
(b) BASIS OF PRESENTATION
The accompanying statements of revenues and certain expenses have been
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and are not intended to be a complete
presentation of the actual operations of the Property for the periods presented.
In addition, certain items that may not be comparable to the future operations
of the Property have been excluded. Excluded items consist of certain expenses,
primarily depreciation and amortization expense, interest expense, management
fees and other costs not directly related to the future operations of the
Property.
(c) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION - Minimum rents are recognized on a straight-line basis over
the term of the related leases. Percentage rents, which are based upon the level
of sales achieved by the lessee, are recognized when the contractual sales
levels are achieved. Recoveries from tenants for common area maintenance, real
estate taxes, insurance and other shopping center operating expenses,
are recognized as revenues in the period the applicable costs are incurred.
OTHER PROPERTY OPERATING EXPENSES -- Other property operating expenses represent
the direct expenses of operating the Property and consist primarily of common
area maintenance, security, utilities, insurance, advertising and promotion,
general and administrative, and other operating expenses that are expected to
continue in the ongoing operation of the Property.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions of the reported amounts of
revenues and certain expenses during the reporting period. Actual results could
differ from those estimates.
F-8
SAINT LOUIS GALLERIA
NOTES TO STATEMENTS OF REVENUES AND CERTAIN
EXPENSES YEAR ENDED DECEMBER 31, 2002 AND THE PERIOD
JANUARY 1 TO JUNE 10, 2003 (UNAUDITED)
(DOLLARS IN THOUSANDS)
2. RENTALS UNDER OPERATING LEASES
Minimum future rentals based on noncancelable operating leases held as of
December 31, are as follows:
YEARS ENDING
2003................................. $14,788
2004................................. 13,697
2005................................. 11,699
2006................................. 10,328
2007................................. 8,338
Minimum future rentals do not include amounts which are payable by certain
tenants based upon a percentage of their gross sales or as reimbursement of
operating expenses. For the year ended December 31, 2002, such percentage
rentals were $1,182.
3. UNAUDITED INTERIM STATEMENT
The statement of revenues and certain expenses for the period from January 1,
2003 to June 10, 2003 is unaudited. In the opinion of management, all
significant adjustments necessary for a fair presentation of the statement for
the interim period have been included. The results of operations for the interim
period is not necessarily indicative of the results to be expected for the full
year for the operation of the Property.
F-9
GENERAL GROWTH PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
2002
HISTORICAL 2002 ACQUISITIONS
GENERAL GROWTH HISTORICAL PRO FORMA
PROPERTIES, INC. ACQUISITIONS ADJUSTMENTS
-------------------- ------------ ------------
Total revenues $ 980,466 $ 114,058 $ -
Expenses:
Real estate taxes 62,179 9,903 -
Other property operating 294,938 32,843 -
Provision for doubtful accounts 3,894 - -
General and administrative 8,720 - -
Depreciation and amortization 180,028 - 18,862
-------------------- ------------ ------------
Total expenses 549,759 42,746 18,862
-------------------- ------------ ------------
Operating income 430,707 71,312 (18,862)
Interest expense, net (215,246) - (33,571)
Equity in income of unconsolidated affiliates:
GGP Ivanhoe III 19,243 - -
GGP Ivanhoe IV - - -
Other joint ventures 62,875 37,379 (23,925)
-------------------- ------------ ------------
Income before minority interest 297,579 108,691 (76,358)
Allocations to minority interests (87,003) - (15,750)
-------------------- ------------ ------------
Income 210,576 108,691 (92,108)
Convertible preferred stock dividends (24,467) - -
-------------------- ------------ ------------
Income from continuing operations $ 186,109 $ 108,691 $ (92,108)
available to common stockholders ==================== ============ ============
Weighted average shares outstanding-basic 62,181
Weighted average shares outstanding-diluted 70,851
Earnings per share-basic $ 2.99
Earnings per share-diluted $ 2.97
GENERAL GROWTH HISTORICAL HISTORICAL HISTORICAL
PROPERTIES, INC. GGP SAINT LOUIS 2003 OTHER
PRO FORMA 2002 IVANHOE III, INC. GALLERIA ACQUISITIONS
---------------- ----------------- ---------- ------------
Total revenues $ 1,094,524 $ 131,053 $ 27,163 $ 53,196
Expenses:
Real estate taxes 72,082 13,169 3,300 3,801
Other property operating 327,781 32,168 8,720 14,815
Provision for doubtful accounts 3,894 636 - -
General and administrative 8,720 - - -
Depreciation and amortization 198,890 - - -
---------------- ----------------- ---------- ------------
Total expenses 611,367 45,973 12,020 18,616
---------------- ----------------- ---------- ------------
Operating income 483,157 85,080 15,143 34,580
Interest expense, net (248,817) - - -
Equity in income of unconsolidated affiliates:
GGP Ivanhoe III 19,243 - - -
GGP Ivanhoe IV - - - -
Other joint ventures 76,329 - - -
---------------- ----------------- ---------- ------------
Income before minority interest 329,912 85,080 15,143 34,580
Allocations to minority interests (102,753) - - -
---------------- ----------------- ---------- ------------
Income 227,159 85,080 15,143 34,580
Convertible preferred stock dividends (24,467) - - -
---------------- ----------------- ---------- ------------
Income from continuing operations $ 202,692 $ 85,080 $ 15,143 $ 34,580
available to common stockholders ================ ================= ========== ============
Weighted average shares outstanding-basic
Weighted average shares outstanding-diluted
Earnings per share-basic
Earnings per share-diluted
COMBINED
2002 2003
PRO FORMA ACQUISITIONS GENERAL GROWTH
AND 2003 PRO FORMA PROPERTIES, INC.
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ---------------
Total revenues 1,305,936 $ 2,802 (a) $ 1,308,738
Expenses:
Real estate taxes 92,352 - 92,352
Other property operating 383,484 - 383,484
Provision for doubtful accounts 4,530 - 4,530
General and administrative 8,720 - 8,720
Depreciation and amortization 198,890 27,697 (b) 226,587
--------- ------------ ---------------
Total expenses 687,976 27,697 715,673
--------- ------------ ---------------
Operating income 617,960 (24,895) 593,065
Interest expense, net (248,817) (47,410)(c) (296,227)
Equity in income of unconsolidated affiliates:
GGP Ivanhoe III 19,243 (19,243)(a)(d) -
GGP Ivanhoe IV - 2,651 (e) 2,651
Other joint ventures 76,329 - 76,329
--------- ------------ ---------------
Income before minority interest 464,715 (88,897) 375,818
Allocations to minority interests (102,753) (7,125)(f) (109,878)
--------- ------------ ---------------
Income from continuing operations 361,962 (96,022) 265,940
Convertible preferred stock dividends (24,467) - (24,467)
--------- ------------ ---------------
Income from continuing operations $ 337,495 $ (96,022) $ 241,473
available to common stockholders ========= ============ ===============
Weighted average shares outstanding-basic 62,181
Weighted average shares outstanding-diluted 70,851
Earnings from continuing operations per share-basic $ 3.88
Earnings from continuing operations per share-diluted $ 3.75
The accompanying notes are an integral part of these statements.
For alphabetical references, please refer to Note 3-Pro Forma Adjustments.
F-10
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
YEAR ENDED DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
NOTE 1 PRO FORMA BASIS OF PRESENTATION
This unaudited pro forma condensed consolidated statement of operations of
General Growth Properties, Inc. (the "Company") is presented as if (i) the
acquisitions made in 2002 (Victoria Ward, Limited, JP Realty, Inc., the
properties comprising the GGP-TRS L.L.C. joint venture (Clackamas Town Center,
Galleria at Tyler, Kenwood Towne Center, Silver City Galleria and Florence Mall)
(collectively, the "GGP/Teachers' Properties"), the properties acquired through
the GGP/Homart, Inc. and GGP/Homart II L.L.C. joint ventures (Glendale Galleria
and First Colony Mall by GGP/Homart II L.L.C. and a 50% interest in Woodlands
Mall by GGP/Homart, Inc.) (collectively, the "GGP/Homart Properties"), Prince
Kuhio Plaza (acquired from GGP/Homart, Inc. as described below), Pecanland Mall
and Southland Mall) and (ii) the acquisitions made in 2003 (Peachtree Mall,
Saint Louis Galleria, Coronado Center, the 49% interest in GGP Ivanhoe III and
Lynnhaven Mall) had all occurred on January 1, 2002. The total pro forma
condensed consolidated statement of operations reflects these transactions plus
the effect of the respective joint venture partnership agreements with respect
to the GGP/Teachers' Properties and the GGP/Homart Properties (as described
below). In management's opinion, all adjustments necessary to reflect these
transactions have been included. The pro forma condensed consolidated statement
of operations is based upon the historical information of the Company, excluding
gain on sale and extraordinary items, and the historical information of each of
the above-mentioned entities for the year ended December 31, 2002. This
unaudited pro forma condensed consolidated statement of operations should be
read in conjunction with the Statements of Revenues and Certain Expenses
included elsewhere in this report and is not necessarily indicative of what
actual results of the Company would have been if such transactions had been
completed as of January 1, 2002, nor does it purport to represent the results of
operations for future periods.
NOTE 2 ACQUISITIONS
2002 ACQUISITIONS
On May 28, 2002, the Company acquired the stock of Victoria Ward, Limited, a
privately held real estate corporation. The total acquisition price was
approximately $250,000, including the assumption of approximately $50,000 of
existing debt, substantially all of which was repaid immediately following the
closing. The $250,000 total cash requirement was funded from the proceeds of the
sale of the Company's investment in marketable securities and from available
cash and cash equivalents. The principal Victoria Ward, Limited assets include
65 fee simple acres in Kakaako, central Honolulu, Hawaii, improved with, among
other uses, an entertainment, shopping and dining district which includes Ward
Entertainment Center, Ward Warehouse, Ward Village and Village Shops. In total,
Victoria Ward, Limited had 17 properties subject to ground leases and 29 owned
buildings containing in the aggregate approximately 878,000 square feet of
retail space, as well as approximately 441,000 square feet of office, commercial
and industrial leaseable area.
On July 10, 2002, the Company acquired JP Realty, Inc. ("JP Realty"), a
publicly held real estate investment trust, and its operating partnership
subsidiary, Price Development Company, Limited Partnership ("PDC"). The total
acquisition price was approximately $1,100,000 which included the assumption of
approximately $460,000 in existing debt and approximately $116,000 of existing
preferred operating units in PDC. Pursuant to the terms of the agreement, the
outstanding shares of JP Realty common stock were converted into $26.10 per
share of cash (approximately $431,470).
F-11
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
YEAR ENDED DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
Holders of common units of limited partnership interest in PDC were entitled to
receive $26.10 per unit in cash or, at the election of the holder, .522 8.5%
Series B Cumulative Preferred Units of limited partnership interest of GGP
Limited Partnership (the "Series B Units") (convertible into that number of
common units of limited partnership interest of GGP Limited Partnership
determined by dividing the $50 base liquidation preference per Series B Unit by
the conversion price of $50 per common unit). Based upon the elections of such
holders, 1,426,393 Series B Units were issued and the holders of the remaining
common units of limited partnership interest of PDC received approximately
$23,600 in cash. JP Realty owned or had an interest in 51 properties, including
18 enclosed regional mall centers, 26 anchored community centers, one
free-standing retail property and 6 mixed-use commercial/business properties,
containing an aggregate of over 15.2 million square feet of gross leaseable area
in 10 western states. The cash portion of the acquisition price was funded from
the net proceeds of certain new mortgage loans, a new $350,000 acquisition loan,
and available cash and cash equivalents. The new acquisition loan bore interest
at a rate of per annum of LIBOR (1.38% at December 31, 2002) plus 150 basis
points, provided for periodic principal payments (including from certain
refinancing proceeds) and was initially scheduled to mature in July 2003. This
loan was refinanced in April 2003 with proceeds from borrowings under the
Company's new revolving credit facility which bears interest at LIBOR plus 150
basis points.
On August 5, 2002 the Company acquired from GGP/Homart, Inc., a joint venture
in which the Company has a 50% common stock interest, the Prince Kuhio Plaza in
Hilo, Hawaii for approximately $39,000. Prince Kuhio Plaza, which contains
approximately 504,000 square feet of gross leaseable area, was acquired by the
assumption by the Company of approximately $24,000 of financing and the payment
to GGP/Homart, Inc. of $7,500 in cash and $7,500 in the form of a promissory
note. Immediately following the acquisition, GGP/Homart, Inc. paid a dividend of
$15,000 to its two co-investors, paid in the form of $7,500 in cash to its
independent institutional joint venture partner and the $7,500 promissory note
to the Company. Upon receipt of the promissory note as a dividend, the Company
caused the promissory note to GGP/Homart, Inc. to be cancelled.
On August 26, 2002, the Company formed a new joint venture, owned 50% by the
Company and 50% by Teachers' Retirement System of the State of Illinois
("Illinois Teachers"). Upon formation of the new joint venture, GGP-TRS L.L.C.
("GGP/Teachers"), Clackamas Town Center in Portland, Oregon, which was 100%
owned by Illinois Teachers, was contributed to the new joint venture. In
addition, concurrent with its formation, GGP/Teachers acquired Galleria at Tyler
in Riverside, California, Kenwood Towne Centre in Cincinnati, Ohio, and Silver
City Galleria in Taunton, Massachusetts, from an institutional investor for an
aggregate purchase price of approximately $475,000. An existing $75,000 fixed
rate nonrecourse loan on Silver City Galleria, bearing interest at a rate per
annum of 7.41%, was assumed and three new nonrecourse acquisition loans totaling
approximately $337,000 were obtained. The new loans bear interest at a weighted
average rate per annum of LIBOR plus 76 basis points. The Company's share
(approximately $112,000) of the equity of GGP/Teachers was funded by a portion
of new unsecured loans that total $150,000 and bear interest at LIBOR plus 100
basis points.
On September 13, 2002, the Company acquired a 100% ownership interest in
Pecanland Mall, in Monroe, Louisiana. The aggregate purchase price was
approximately $72,000, which was funded by approximately $22,000 of cash on hand
and the assumption of an existing $50,000 mortgage loan bearing interest at
6.5%.
F-12
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
YEAR ENDED DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
On November 27, 2002, Glendale Galleria in Glendale, California was acquired
by the Company through GGP/Homart II L.L.C. for approximately $415,000. A
portion of the purchase price was paid by the issuance of 822,626 convertible
preferred operating partnership units of the Company having a liquidation
preference of approximately $41,100.
On December 4, 2002, the Company acquired Southland Mall, an enclosed
regional mall in Hayward, California. The aggregate consideration paid was
approximately $89,000. The purchase was financed with approximately $24,000 of
cash on hand and a new 5-year (assuming all no-cost options to extend are
exercised) $65,000 mortgage loan that bears interest at LIBOR plus 75 basis
points.
On December 19, 2002, the Company, through GGP/Teachers, acquired Florence
Mall in Florence, Kentucky for a purchase price of approximately $97,000
including a new, two-year $60,000 mortgage loan that bears interest at a rate
per annum of LIBOR plus 89 basis points and matures in January 2008 (assuming an
exercise of both no-cost extension options).
On December 19, 2002, the Company, through GGP/Homart, Inc., acquired for a
purchase price of approximately $50,000, the 50% interest that GGP/Homart did
not own in The Woodlands Mall in Houston, Texas from The Woodlands Commercial
Property Company, LP. An additional $50,000 mortgage loan bearing interest at a
rate per annum of LIBOR plus 250 basis points was placed at the property on
December 31, 2002 which is scheduled to mature in December 2006.
On December 30, 2002, the Company, through GGP/Homart II L.L.C., acquired
First Colony Mall, an enclosed regional mall in Sugar Land, Texas for
approximately $105,000. The acquisition was funded by cash on hand and a new
$67,000 mortgage loan bearing interest at a rate per annum of LIBOR plus 80
basis points with a scheduled maturity of January 2006.
2003 ACQUISITIONS
On April 30, 2003, the Company acquired Peachtree Mall, an enclosed regional
mall located in Columbus, Georgia. The purchase price was approximately $87,600,
which was paid at closing with an acquisition loan of approximately $53,000
(bearing interest at a rate per annum of LIBOR plus 85 basis points and maturing
in April 2008, assuming all no-cost extension options are exercised) and the
balance from cash on hand and amounts borrowed under the Company's credit
facilities.
On June 11, 2003, the Company acquired Saint Louis Galleria, an enclosed mall
in St. Louis, Missouri. The aggregate consideration paid for Saint Louis
Galleria was approximately $235,000 (subject to certain prorations and
adjustments). The consideration was paid from cash on hand, including proceeds
from refinancings of existing long-term debt and an approximately $176,000
acquisition loan which initially bears interest at LIBOR plus 105 basis points.
After October 2003, depending upon certain factors, the interest rate spread on
the loan could vary from 85 basis points to 165 basis points. The loan requires
monthly payments of interest only, is scheduled to mature in October 2005, and
is subject to three one-year, no-cost extension options.
F-13
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
YEAR ENDED DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
On June 12, 2003, the Company acquired Coronado Center, an enclosed mall in
Albuquerque, New Mexico. The aggregate consideration paid for Coronado Center
was approximately $175,000 (subject to certain prorations and adjustments). The
consideration was paid in the form of cash borrowed under an existing unsecured
revolving credit facility and an approximately $131,250 acquisition loan which
initially bears interest at LIBOR plus 85 basis points. After October 2003,
depending upon certain factors, the interest rate spread on the loan could vary
from 90 basis points to 195 basis points. The loan requires monthly payments of
interest only, is scheduled to mature in October 2005, and is subject to three
one-year, no-cost extension options.
On July 1, 2003, the Company acquired the 49% ownership interest in GGP
Ivanhoe III, Inc. ("GGP Ivanhoe III") which was held by the Company's joint
venture partner (an affiliate of Ivanhoe Cambridge, Inc. of Montreal, Canada
("Ivanhoe")), thereby increasing the Company's ownership interest to a full
100%. The aggregate consideration for the 49% ownership interest in Ivanhoe III
was approximately $459,000 (subject to certain prorations and adjustments).
Approximately $268,000 of mortgage debt was assumed in connection with this
acquisition with the balance of the aggregate consideration, or approximately
$191,000, being funded using a combination of proceeds from the refinancing of
existing long-term debt and new mortgage loans on previously unencumbered
properties. Concurrently with this transaction, a new joint venture, GGP Ivanhoe
IV, Inc., ("GGP Ivanhoe IV") was created between the Company and Ivanhoe to own
Eastridge Mall, which previously had been owned by GGP Ivanhoe III. The
Company's ownership interest in GGP Ivanhoe IV is 51% and Ivanhoe's ownership
interest is 49%.
On August 27, 2003, the Company acquired Lynnhaven Mall, an enclosed mall in
Virginia Beach, Virginia for approximately $256,500. The consideration (after
certain prorations and adjustments) was paid in the form of cash borrowed under
an existing unsecured credit facility and a $180,000 acquisition loan. The
acquisition loan currently bears interest at a rate per annum of LIBOR plus 125
basis points and is scheduled to mature in August 2005, and is subject to three
one-year, no-cost extension options.
NOTE 3 PRO FORMA ADJUSTMENTS
(a) Revenues and equity in income of unconsolidated affiliates
The adjustments to revenues and equity in income of joint ventures primarily
represent the differences in amounts charged and/or allocated to the properties
owned by the joint ventures by the previous owners and the fees charged by
General Growth Management, Inc. to such joint ventures, the effect of the
amortization of acquired below-market leases and additional depreciation expense
of the joint ventures based on the cost of the acquired properties.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts for
the properties acquired 100% by the Company related to the periods from January
1, 2002 to the dates of acquisition for the 2002 acquisitions and for the entire
year of 2002 for the acquisitions made in 2003.
F-14
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
YEAR ENDED DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
(c) Interest Expense, net
Interest expense increased due to a combination of debt assumption and
increased borrowings. In connection with the 2003 acquisitions described above,
the Company assumed or obtained approximately $808,250 of debt bearing interest
at the weighted average rate of 2.40%. The pro forma interest expense on such
borrowings was calculated using the interest rates described above and using
LIBOR equal to approximately 1.38%. The Company also incurred approximately
$404,850 of other borrowings to fund the remaining portion of the 2003
acquisitions and the pro forma interest expense was calculated using the
interest cost on the Company's incremental borrowing facilities (3.42%).
Since the interest rates on certain of the loans assumed or obtained in
conjunction with the acquisitions are based on a spread over LIBOR, the rates
will periodically change. If the interest rate on such variable rate loans
increase or decrease by 12.5 basis points, the annual interest expense will
increase or decrease by approximately $2,004.
(d) Equity in Earnings of GGP Ivanhoe III
Reduces GGP Ivanhoe III equity in earnings to zero due to the purchase of the
49% share of the joint venture which causes the properties to be fully
consolidated.
(e) Equity in earnings of GGP Ivanhoe IV
Reflects the equity in income of Eastridge Mall due to the transfer of its
ownership by GGP Ivanhoe III.
(f) Minority Interest
The pro forma condensed consolidated statement of operations has been
adjusted to reflect the allocation of earnings to the minority interests.
F-15
GENERAL GROWTH PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2003
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
HISTORICAL
GENERAL GROWTH HISTORICAL HISTORICAL
PROPERTIES, INC. GGP IVANHOE III, INC. SAINT LOUIS GALLERIA
--------------------- --------------------- ---------------------
Total revenues $ 558,574 $ 66,732 $ 12,072
Expenses:
Real estate taxes 40,617 7,237 1,510
Other property operating 177,889 16,701 4,029
Provision for doubtful accounts 3,513 (201) -
General and administrative 5,704 - -
Depreciation and amortization 104,283 - -
--------------------- --------------------- ---------------------
Total expenses 332,006 23,737 5,539
--------------------- --------------------- ---------------------
Operating income 226,568 42,995 6,533
Interest expense, net (123,912) - -
Equity in income of unconsolidated affiliates:
GGP Ivanhoe III 9,085 - -
GGP Ivanhoe IV - - -
Other joint ventures 34,324 - -
--------------------- --------------------- ---------------------
Income before minority interest 146,065 42,995 6,533
Allocations to minority interests (47,804) - -
--------------------- --------------------- ---------------------
Income from continuing operations 98,261 42,995 6,533
Convertible preferred stock dividends (13,030) - -
--------------------- --------------------- ---------------------
Income from continuing operations $ 85,231 $ 42,995 $ 6,533
available to common stockholders ===================== ===================== =====================
Weighted average shares outstanding-basic 62,735
Weighted average shares outstanding-diluted 62,950
Earnings from continuing operations per share-basic $ 1.36
Earnings from continuing operations per share-diluted $ 1.35
HISTORICAL TOTAL GENERAL GROWTH
OTHER HISTORICAL PRO FORMA PROPERTIES, INC.
ACQUISITIONS COMBINED ADJUSTMENTS PRO FORMA
------------- ---------- ----------- ----------------
Total revenues $ 23,221 $ 660,599 $ 707 (a) $ 661,306
Expenses:
Real estate taxes 1,708 51,072 - 51,072
Other property operating 6,878 205,497 - 205,497
Provision for doubtful accounts - 3,312 - 3,312
General and administrative - 5,704 - 5,704
Depreciation and amortization - 104,283 13,383 (b) 117,666
------------- ---------- ----------- ----------------
Total expenses 8,586 369,868 13,383 383,251
------------- ---------- ----------- ----------------
Operating income 14,635 290,731 (12,676) 278,055
Interest expense, net - (123,912) (21,572) (c) (145,484)
Equity in income of unconsolidated affiliates:
GGP Ivanhoe III - 9,085 (9,085) (d) -
GGP Ivanhoe IV - - 975 (e) 975
Other joint ventures - 34,324 - 34,324
------------- ---------- ----------- ----------------
Income before minority interest 14,635 210,228 (42,358) 167,870
Allocations to minority interests - (47,804) (7,136) (f) (54,940)
------------- ---------- ----------- ----------------
Income from continuing operations 14,635 162,424 (49,494) 112,930
Convertible preferred stock dividends - (13,030) - (13,030)
------------- ---------- ----------- ----------------
Income from continuing operations $ 14,635 $ 149,394 $ (49,494) $ 99,900
available to common stockholders ============= ========== =========== ================
Weighted average shares outstanding-basic 62,735
Weighted average shares outstanding-diluted 62,950
Earnings from continuing operations per share-basic $ 1.59
Earnings from continuing operations per share-diluted $ 1.59
The accompanying notes are an integral part of these statements.
For alphabetical references, please refer to Note 3-Pro Forma Adjustments.
F-16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2003
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
NOTE 1 PRO FORMA BASIS OF PRESENTATION
This unaudited pro forma condensed consolidated statement of operations of
General Growth Properties, Inc. ("the Company") is presented as if the
acquisitions made in 2003 (as described below) had all occurred on January 1,
2003. The total pro forma condensed consolidated statement of operations
reflects these transactions and in management's opinion, all adjustments
necessary to reflect these transactions have been included. Such pro forma
condensed consolidated statement of operations is based upon the historical
information of the Company, excluding discontinued operations and the historical
information from January 1 to the dates immediately prior to their respective
acquisitions for Peachtree Mall, Saint Louis Galleria and Coronado Center and
for the six months ended June 30, 2003 for the properties acquired after June
30, 2003 as described in Note 2 below. This unaudited pro forma condensed
consolidated statement of operations should be read in conjunction with the
"Statements of Revenues and Certain Expenses" included elsewhere in this report
and is not necessarily indicative of what actual results of the Company would
have been assuming such transactions had been completed as of January 1, 2003
nor does it purport to represent the results of operations for future periods.
NOTE 2 ACQUISITIONS
On April 30, 2003, the Company acquired Peachtree Mall, an enclosed regional
mall located in Columbus, Georgia. The purchase price was approximately $87,600,
which was paid at closing with an acquisition loan of approximately $53,000
(bearing interest at a rate per annum of LIBOR (1.12% at June 30, 2003) plus 85
basis points and maturing in April 2008, assuming all no-cost extension options
are exercised) and the balance from cash on hand and amounts borrowed under the
Company's credit facilities.
On June 11, 2003, the Company acquired Saint Louis Galleria, an enclosed mall
in St. Louis, Missouri. The aggregate consideration paid for Saint Louis
Galleria was approximately $235,000 (subject to certain prorations and
adjustments). The consideration was paid from cash on hand, including proceeds
from refinancings of existing long-term debt and an approximately $176,000
acquisition loan which initially bears interest at LIBOR plus 105 basis points.
After October 2003, depending upon certain factors, the interest rate spread on
the loan could vary from 85 basis points to 165 basis points. The loan requires
monthly payments of interest only, is scheduled to mature in October 2005, and
is subject to three one-year, no-cost extension options.
On June 12, 2003, the Company acquired Coronado Center, an enclosed mall in
Albuquerque, New Mexico. The aggregate consideration paid for Coronado Center
was approximately $175,000 (subject to certain prorations and adjustments). The
consideration was paid in the form of cash borrowed under an existing unsecured
revolving credit facility and an approximately $131,000 acquisition loan which
initially bears interest at LIBOR plus 85 basis points. After October 2003,
depending upon certain factors, the interest rate spread on the loan could vary
from 90 basis points to 195 basis points. The loan requires monthly payments of
interest only, is scheduled to mature in October 2005, and is subject to three
one-year, no-cost extension options.
F-17
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2003
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
On July 1, 2003, the Company acquired the 49% ownership interest in GGP
Ivanhoe III, Inc. ("GGP Ivanhoe III") which was held by the Company's joint
venture partner (an affiliate of Ivanhoe Cambridge, Inc. of Montreal, Canada
("Ivanhoe")), thereby increasing the Company's ownership interest to a full
100%. The aggregate consideration for the 49% ownership interest in Ivanhoe III
was approximately $459,000 (subject to certain prorations and adjustments).
Approximately $268,000 of existing mortgage debt was assumed in connection with
this acquisition with the balance of the aggregate consideration, or
approximately $191,000, being funded using a combination of proceeds from the
refinancing of existing long-term debt and new mortgage loans on previously
unencumbered properties. Concurrently with this transaction, a new joint
venture, GGP Ivanhoe IV, Inc., ("GGP Ivanhoe IV") was created between the
Company and Ivanhoe to own Eastridge Mall, which previously had been owned by
GGP Ivanhoe III. The Company's ownership interest in GGP Ivanhoe IV is 51% and
Ivanhoe's ownership interest is 49%.
On August 27, 2003, the Company acquired Lynnhaven Mall, an enclosed mall in
Virginia Beach, Virginia for approximately $256,500. The consideration (after
certain prorations and adjustments) was paid in the form of cash borrowed under
an existing unsecured credit facility and a $180,000 acquisition loan. The
acquisition loan currently bears interest at a rate per annum of LIBOR plus 125
basis points and is scheduled to mature in August 2005, and is subject to three
one-year, no-cost extension options.
NOTE 3 PRO FORMA ADJUSTMENTS
(a) Revenues and equity in income of unconsolidated affiliates
The adjustments to revenues and equity in income of joint ventures primarily
represents the differences in amounts charged to the properties owned by GGP
Ivanhoe III by General Growth Management, Inc. versus amounts allocated by
General Growth Management, Inc. as a result of the properties becoming
wholly-owned by the Company and the effect of the amortization of acquired
below-market leases.
(b) Depreciation and Amortization
Depreciation and amortization is adjusted to include additional amounts
related to the six months ended June 30, 2003 for the acquisitions made in 2003.
(c) Interest Expense, net
Interest expense increased due to a combination of debt assumption and
increased borrowings. In connection with the acquisitions described above, the
Company obtained or assumed an aggregate of $808,250 of mortgage debt bearing
interest at the weighted average rate of 2.22%. The pro forma interest expense
on such borrowings was calculated using the interest rates described above and
LIBOR equal to approximately 1.12%. The Company also issued approximately
$404,850 of other borrowings to fund the remaining portion of the acquisitions
and the pro forma interest expense was calculated using the interest cost on the
Company's incremental borrowing facilities (3.14%).
F-18
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2003
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
Since the interest rates on certain of the loans assumed or obtained in
conjunction with the acquisitions on based on a spread over LIBOR, the rates
will periodically change. If the interest rate on such variable rate loans
increase or decrease by 12.5 basis points, the six month interest expense will
increase or decrease by approximately $505.
(d) Equity in Earnings of GGP Ivanhoe III, Inc.
Reduces GGP Ivanhoe III, Inc. equity in earnings to zero due to the purchase
of the 49% share of the joint venture which causes the properties to be fully
consolidated.
(e) Equity in Earnings of GGP/Ivanhoe IV, Inc.
Reflects the increase in the equity in income of GGP/Ivanhoe IV, Inc. due to
the transfer of Eastridge Mall by GGP/Ivanhoe III, Inc.
(f) Minority Interest
The pro forma condensed consolidated statement of operations has been
adjusted to reflect the allocation of earnings to the minority interests.
F-19
GENERAL GROWTH PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2003
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
HISTORICAL HISTORICAL
GENERAL GROWTH HISTORICAL LYNNHAVEN OTHER 2003
PROPERTIES, INC. GGP IVANHOE III, INC. MALL ACQUISITIONS (*)
---------------- --------------------- ----------- ---------------
Investment in real estate:
Land $ 1,175,094 $ 99,901 26,158 $ -
Building and equipment 6,237,215 758,910 221,386 -
-------------- -------------------- ----------- ----------------
7,412,309 858,811 247,544 -
Less accumulated depreciation (893,380) (92,037) (70,757) -
-------------- -------------------- ----------- ----------------
6,518,929 766,774 176,787 -
Development in progress 83,403 6,493 - -
-------------- -------------------- ----------- ----------------
Net property and equipment 6,602,332 773,267 176,787 -
Investment in Unconsolidated Real Estate Affiliates 785,387 - - -
-------------- -------------------- ----------- ----------------
Net investment in real estate 7,387,719 773,267 176,787 -
Cash 20,015 34,282 3,369 -
Tenant accounts receivable, net 129,909 16,084 820 -
Deferred expenses, net 124,402 10,796 2,210 -
Prepaid and other assets 90,974 4,931 6 -
-------------- -------------------- ----------- ----------------
TOTAL ASSETS $ 7,753,019 $ 839,360 $ 183,192 $ -
============== ==================== =========== ================
TOTAL GENERAL GROWTH
HISTORICAL PRO FORMA PROPERTIES, INC.
COMBINED ADJUSTMENTS PRO FORMA
------------- ----------- ----------------
Investment in real estate:
Land $ 1,301,153 $ 21,149 (a) $ 1,322,302
Building and equipment 7,217,511 (22,325) (a) 7,195,186
------------- ----------- ----------------
8,518,664 (1,176) 8,517,488
Less accumulated depreciation (1,056,174) 162,794 (a) (893,380)
------------- ----------- ----------------
7,462,490 161,618 7,624,108
Development in progress 89,896 - 89,896
------------- ----------- ----------------
Net property and equipment 7,552,386 161,618 7,714,004
Investment in Unconsolidated Real Estate Affiliates 785,387 (172,899) (c) 612,488
------------- ----------- ----------------
Net investment in real estate 8,337,773 (11,281) 8,326,492
Cash 57,666 - 57,666
Tenant accounts receivable, net 146,813 - 146,813
Deferred expenses, net 137,408 - 137,408
Prepaid and other assets 95,911 - 95,911
------------- ----------- ----------------
TOTAL ASSETS $ 8,775,571 $ (11,281) $ 8,764,290
============= =========== ================
(*) All other acquisitions in 2003 closed prior to June 30, 2003 and therefore
have already been reflected in the historical General Growth Properties,
Inc. balance sheet.
F-20
GENERAL GROWTH PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2003
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
HISTORICAL HISTORICAL
GENERAL GROWTH HISTORICAL LYNNHAVEN OTHER 2003
PROPERTIES, INC. GGP IVANHOE III, INC. MALL ACQUISITIONS (*)
---------------- --------------------- --------- ----------------
Mortgage notes and other debt payable $ 5,021,006 $ 534,210 $ - $ -
Distributions payable 73,053 - - -
Network discontinuance reserve 4,076 - - -
Accounts payable and accrued expenses 263,359 14,846 14,099 -
---------------- --------------------- --------- ---------------
TOTAL LIABILITIES 5,361,494 549,056 14,099 -
Minority interest:
Preferred Units 468,201 - - -
Common Units 370,998 - - -
Preferred stock 331,668 - - -
Common stock - par value 6,305 - - -
Additional paid-in capital 1,571,659 - - -
Retained earnings (accumulated deficit) (316,929) 290,304 169,093 -
Notes receivable-common stock purchase (7,210) - - -
Unearned compensation-restricted stock (2,491)
Accumulated other comprehensive gains (losses) (30,676) - - -
---------------- --------------------- --------- ---------------
Total $ 7,753,019 $ 839,360 $ 183,192 $ -
============== ===================== ========= ===============
TOTAL GENERAL GROWTH
HISTORICAL PRO FORMA PROPERTIES, INC.
COMBINED ADJUSTMENTS PRO FORMA
---------- ----------- ---------------
Mortgage notes and other debt payable $ 5,555,216 $ 447,500 (b),(d) $ 6,002,716
Distributions payable 73,053 - 73,053
Network discontinuance reserve 4,076 - 4,076
Accounts payable and accrued expenses 292,304 21,845 (d) 314,149
----------- ----------- ----------------
TOTAL LIABILITIES 5,924,649 469,345 6,393,994
Minority interest:
Preferred Units 468,201 - 468,201
Common Units 370,998 - 370,998
Preferred stock 331,668 - 331,668
Common stock - par value 6,305 - 6,305
Additional paid-in capital 1,571,659 - 1,571,659
Retained earnings (accumulated deficit) 142,468 (480,626) (338,158)
Notes receivable-common stock purchase (7,210) - (7,210)
Unearned compensation-restricted stock (2,491) (2,491)
Accumulated other comprehensive gains (losses) (30,676) - (30,676)
----------- ----------- ----------------
Total $ 8,775,571 $ (11,281) $ 8,764,290
=========== =========== ================
(*) All other acquisitions in 2003 closed prior to June 30, 2003 and therefore
have already been reflected in the historical General Growth Properties,
Inc. balance sheet.
The accompanying notes are an integral part of these statements.
For alphabetical references, please refer to Note 2-Pro Forma Adjustments.
F-21
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2003
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND PER UNIT AMOUNTS)
NOTE 1 PRO FORMA BASIS OF PRESENTATION
This unaudited condensed consolidated balance sheet of General Growth
Properties, Inc. is presented as if the acquisitions made in 2003 subsequent to
June 30, 2003 (GGP Ivanhoe III, Inc. ("GGP Ivanhoe III") and Lynnhaven Mall),
had all occurred on June 30, 2003. In management's opinion, all adjustments
necessary to reflect these transactions have been included.
The cost of the acquired assets and acquired or assumed liabilities described
in this Form 8-K/A have been allocated on their respective fair values. Upon
acquisition the aggregate fair value of the tangible and intangible assets
acquired was approximately $1,184,170 and the liabilities incurred or assumed
was approximately $1,032,500, including a net deferred credit of approximately
$21,845 related to acquired below-market leases. The purchase allocation
adjustments made in connection with the development of the unaudited pro forma
condensed consolidated financial statements are based on the information
available at this time. Subsequent adjustments and refinements to the allocation
may be made based on additional information.
2003 GENERAL GROWTH
ACQUISITIONS PRO FORMA PROPERTIES, INC.
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ----------- ----------------
NOTE 2 PRO FORMA ADJUSTMENTS
(a) Investment in Real Estate
Asset additions are as follows:
GGP Ivanhoe III acquisition.................... $ 773,267 $ 69,080 $ 842,347
Lynnhaven Mall................................. 176,787 92,538 269,325
---------------- ------------- ------------
$ 950,054 $ 161,618 $ 1,111,672
================ ============= ============
Allocated to:
Land........................................... $ 126,059 $ 21,149 $ 147,208
Buildings, equipment and intangibles.......... 823,995 140,469 964,464
---------------- ------------- ------------
$ 950,054 $ 161,618 $ 1,111,672
================ ============= ============
(b) Mortgage Notes and other Debt Payable
Additional debt related to the acquisitions:
GGP Ivanhoe III additional debt to fund acquisition.......... $ 191,000
Lynnhaven Mall acquisition loan.............................. 180,000
Lynnhaven Mall additional debt to fund acquisition........... 76,500
-------------
$ 447,500
=============
(c) Adjustments to reflect acquisition of 49% share of GGP Ivanhoe III
and creation of GGP Ivanhoe IV.
(d) Adjustments in other tangible and intangible assets and
liabilities to reflect acquisitions at their fair market value.
F-22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Bernard Freibaum
----------------------------------
Bernard Freibaum
Executive Vice President and
Chief Financial Officer
Date: September 12, 2003
EXHIBIT INDEX
EXHIBIT
NUMBER NAME
23.1 Consent of Deloitte & Touche LLP regarding certain properties owned by
GGP Ivanhoe III, Inc.
23.2 Consent of Deloitte & Touche LLP regarding Saint Louis Galleria.