UNITED STATES
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)
-----------------------------------------------
November 12, 2004
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)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN.
The registrant hereby amends its Current Report on Form 8-K signed November 12,
2004, as amended November 18, 2004, as follows:
ITEM 9.01 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.
1. Audited consolidated financial statements of The Rouse Company
("Rouse") as of December 31, 2003 and 2002 and for the years
ended December 31, 2003, 2002 and 2001 were previously filed
by General Growth Properties, Inc. (the "Company") on its Form
8-K/A dated October 29, 2004, as amended November 9, 2004.
2. Unaudited condensed consolidated financial statements of Rouse
as of September 30, 2004 and for the three and nine months
ended September 30, 2004 and 2003 and attached as Exhibit 99.2
to this report.
(b) Pro Forma Financial Information.
The pro forma financial information of the Company listed in the
accompanying Index 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
(c) Exhibits
Exhibit
Number Name
------- ----
2.1 Agreement and Plan of Merger by and Among The Rouse Company,
General Growth Properties, Inc. and Red Acquisition, LLC dated
as of August 19, 2004 (previously filed)
10.1 $7,295,000,000 Amended and Restated Credit Agreement among
General Growth Properties, Inc., GGP Limited Partnership and
GGPLP L.L.C, as Borrowers, the Several Lenders from Time to
Time Parties hereto, Lehman Brothers Inc., Banc of America
Securities LLC, Credit Suisse First Boston and Wachovia
Capital Markets, LLC, as Arrangers, Bank of America, N.A. and
Credit Suisse First Boston, as Syndication Agents, Eurohypo
AG, New York Branch, as Documentation Agent, Lehman Commercial
Paper Inc., as Tranche B Administrative Agent, and Wachovia
Bank, National Association, as General Administrative Agent
dated as of November 12, 2004 (previously filed)
10.2 Sixth Amendment dated November 12, 2004 to the Second Amended
and Restated Operating Agreement of GGPLP, L.L.C. (previously
filed)
10.3 Amendment dated November 12, 2004 to the Second Amended and
Restated Agreement of Limited Partnership of GGP Limited
Partnership (previously filed)
99.1 Press Release dated November 12, 2004 entitled "General Growth
Properties, Inc. Completes Merger of The Rouse Company"
(previously filed)
99.2 Unaudited condensed consolidated financial statements of Rouse
as of September 30, 2004 and for the three and nine months
ended September 30, 2004 and 2003
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: December 20, 2004
EXHIBIT INDEX
EXHIBIT
NUMBER NAME
------- ----
2.1 Agreement and Plan of Merger by and Among The Rouse Company, General
Growth Properties, Inc. and Red Acquisition, LLC dated as of August
19, 2004 (previously filed)
10.1 $7,295,000,000 Amended and Restated Credit Agreement among General
Growth Properties, Inc., GGP Limited Partnership and GGPLP L.L.C, as
Borrowers, the Several Lenders from Time to Time Parties hereto,
Lehman Brothers Inc., Banc of America Securities LLC, Credit Suisse
First Boston and Wachovia Capital Markets, LLC, as Arrangers, Bank
of America, N.A. and Credit Suisse First Boston, as Syndication
Agents, Eurohypo AG, New York Branch, as Documentation Agent, Lehman
Commercial Paper Inc., as Tranche B Administrative Agent, and
Wachovia Bank, National Association, as General Administrative Agent
dated as of November 12, 2004 (previously filed)
10.2 Sixth Amendment dated November 12, 2004 to the Second Amended and
Restated Operating Agreement of GGPLP, L.L.C. (previously filed)
10.3 Amendment dated November 12, 2004 to the Second Amended and Restated
Agreement of Limited Partnership of GGP Limited Partnership
(previously filed)
99.1 Press Release dated November 12, 2004 entitled "General Growth
Properties, Inc. Completes Merger of The Rouse Company" (previously
filed)
99.2 Unaudited condensed consolidated financial statements of Rouse as of
September 30, 2004 and for the three and nine months ended September
30, 2004 and 2003
INDEX
GENERAL GROWTH PROPERTIES, INC.:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2004................. F-2
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Nine Months Ended September 30, 2004...................................................... F-3
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the Year Ended December 31, 2003.............................................................. F-4
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.......................... F-5
GENERAL GROWTH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2004
(DOLLARS IN THOUSANDS)
HISTORICAL HISTORICAL TOTAL
GENERAL GROWTH THE ROUSE PRO FORMA PRO FORMA
PROPERTIES, INC.(1) COMPANY(2) ADJUSTMENTS(3) CONSOLIDATED
------------------- ------------- -------------- ------------
ASSETS
Investment in real estate:
Land $ 1,535,836 $ 648,478 $ 498,163 a $ 2,682,477
Building and equipment 9,920,089 5,470,445 4,202,417 a 19,592,951
Less accumulated depreciation (1,333,356) (1,122,143) 1,122,143 a (1,333,356)
Developments in progress 171,540 255,362 - 426,902
------------ ------------ -------------- ------------
Net property and equipment 10,294,109 5,252,142 5,822,723 21,368,974
Investment in Unconsolidated
Real Estate Affiliates 759,481 576,679 523,120 a 1,859,280
Investment land and land held for
development and sale - 480,337 669,159 a 1,149,496
Properties held for sale 51,935 8,063 - 59,998
------------ ------------ -------------- ------------
Net investment in real estate 11,105,525 6,317,221 7,015,002 24,437,748
Cash 20,963 33,107 (30,203)b 23,867
Tenant accounts receivable, net 163,009 76,407 - 239,416
Other assets 248,169 622,469 44,096 c 914,734
------------ ------------ -------------- ------------
TOTAL ASSETS $ 11,537,666 $ 7,049,204 $ 7,028,895 $ 25,615,765
============ ============ ============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes and other debt payable $ 8,614,821 $ 4,636,072 $ 7,127,278 d $ 20,378,171
Accounts payable and accrued expenses 531,790 849,791 952,209 e 2,333,790
------------ ------------ -------------- ------------
9,146,611 5,485,863 8,079,487 22,711,961
Minority interest:
Preferred units 403,486 - - 403,486
Common units 388,932 - (22,519)f 366,413
Stockholders' equity 1,598,637 1,563,341 (1,028,073)f 2,133,905
------------ ------------ -------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,537,666 $ 7,049,204 $ 7,028,895 $ 25,615,765
============ ============ ============== ============
(1) Amounts are derived from the Condensed Consolidated Balance Sheet included
in the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004.
(2) Amounts are derived from detail supporting the Condensed Consolidated
Balance Sheet included in The Rouse Company's ("Rouse") Quarterly Report
on Form 10-Q for the quarter ended September 30, 2004. Certain amounts
have been reclassified to conform to the Company's presentation.
(3) For alphabetical references, refer to Note 2-Pro Forma Adjustments.
The accompanying notes are an integral part of these statements.
F-2
GENERAL GROWTH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Other Acquisitions Rouse Acquisition
Historical -------------------------------- -------------------------- Total
General Growth Historical Other Pro Forma Historical Pro Forma Pro Forma
Properties, Inc.(1) Acquisitions Adjustments(3) Rouse(2) Adjustments(3) Consolidated
------------------- ---------------- -------------- ---------- -------------- ------------
Revenues
Minimum rent $ 698,232 $ 28,211 $ 6,422 g $ 425,911 $ 57,008 g $ 1,215,784
Tenant charges 342,432 21,435 1 h 198,529 2,857 i 565,254
Land sales - - - 258,894 - 258,894
Other 91,041 72 (59)j 55,041 504 i 146,599
------------- ------------- ---------- --------- ----------- ------------
Total revenues 1,131,705 49,718 6,364 938,375 60,369 2,186,531
------------- ------------- ---------- --------- ----------- ------------
Expenses:
Real estate taxes 87,124 2,692 - 56,512 121 i 146,449
Other property operating 266,658 17,143 - 225,029 2,259 i 511,089
Land sales operations - - - 155,443 60,190 k 215,633
Property management, general and
administrative costs 70,994 - - 54,844 l 875 l 126,713
Depreciation and amortization 240,687 371 14,694 m 143,522 78,867 m 478,141
------------- ------------- ---------- --------- ----------- ------------
Total expenses 665,463 20,206 14,694 635,350 142,312 1,478,025
------------- ------------- ---------- --------- ----------- ------------
Operating income 466,242 29,512 (8,330) 303,025 (81,943) 708,506
Interest expense, net (277,445) - (19,962)n (179,832) (224,355)n (701,594)
Allocations to minority interests (73,011) - (742)o - 41,480 o (32,273)
Income taxes, primarily deferred - - - (56,919) 24,076 p (32,843)
Equity in income of unconsolidated
affiliates 55,770 3,982 (2,970)q 15,134 (2,648)q 69,268
------------- ------------- ---------- --------- ----------- ------------
Income from continuing operations
available to common stockholders $ 171,556 $ 33,494 $ (32,004) $ 81,408 $ (243,390) $ 11,064
============= ============= ========== ========= =========== ============
Weighted-average shares outstanding:
Basic 218,080,000 15,909,000 r 233,989,000
Diluted 218,759,000 15,909,000 r 234,668,000
Income from continuing operations
per share:
Basic $ 0.79 $ 0.05
Diluted 0.78 0.05
(1) Amounts are derived from the Condensed Consolidated Statement of
Operations included in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2004.
(2) Amounts are derived from detail supporting the Condensed Consolidated
Statement of Operations included in Rouse's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004. Certain amounts have been
reclassified to conform to the Company's presentation.
(3) For alphabetical references, refer to Note 2-Pro Forma Adjustments.
The accompanying notes are an integral part of these statements.
F-3
GENERAL GROWTH PROPERTIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Other Acquisitions (2) Rouse Acquisition
Historical ---------------------------------------- ---------------------------
General Growth Historical Total
Properties, Other Pro Forma Historical Pro Forma Pro Forma
Inc.(1) Acquisitions Adjustments(5) Pro Forma Rouse(3) Adjustments(5) Consolidated
-------------- ------------ -------------- ---------- ----------- -------------- ------------
Revenues
Minimum rent $ 775,320 $ 187,582 $ 25,047 g $ 987,949 $ 531,252 $ 76,198 g $ 1,595,399
Tenant charges 367,065 114,031 746 h 481,842 230,506 3,936 i 716,284
Land sales - - - - 284,840 - 284,840
Other 120,406 9,259 (4,120)j 125,545 82,686 680 i 208,911
------------ --------- ---------- ---------- ----------- ----------- ------------
Total revenues 1,262,791 310,872 21,673 1,595,336 1,129,284 80,814 2,805,434
------------ --------- ---------- ---------- ----------- ----------- ------------
Expenses:
Real estate taxes 88,276 25,557 - 113,833 64,367 162 i 178,362
Other property operating 277,641 91,915 - 369,556 270,098 2,784 i 642,438
Land sales operations - - - - 167,538 65,341 k 232,879
Property management,
general and
administrative costs 118,377 - - 118,377 64,421 1,150 i 183,948
Depreciation and
amortization 230,195 7,724 69,225 m 307,144 171,183 107,674 m 586,001
------------ --------- ---------- ---------- ----------- ----------- ------------
Total expenses 714,489 125,196 69,225 908,910 737,607 177,111 1,823,628
------------ --------- ---------- ---------- ----------- ----------- ------------
Operating income 548,302 185,676 (47,552) 686,426 391,677 (96,297) 981,806
Interest expense, net (276,235) - (87,523)n (363,758) (233,498) (307,705)n (904,961)
Allocations to minority
interests (110,984) - (12,268)o (123,252) - 54,209 o (69,043)
Income taxes, primarily
deferred - - - - (42,598) 26,136 p (16,462)
Equity in income of
unconsolidated affiliates 94,480 9,080 (19,928)q 83,632 31,421 (3,524)q 111,529
------------ --------- ---------- ---------- ----------- ----------- ------------
Income from continuing
operations 255,563 194,756 (167,271) 283,048 147,002 (327,181) 102,869
Convertible preferred stock
dividends (13,030) - - (13,030) - - (13,030)
------------ --------- ---------- ---------- ----------- ----------- ------------
Income from continuing
operations available to
common stockholders $ 242,533 $ 194,756 $ (167,271) $ 270,018 $ 147,002 $ (327,181) $ 89,839
============ ========= ========== ========== =========== =========== ============
Weighted-average shares
outstanding:
Basic 200,875,000 15,909,000 r 216,784,000
Diluted (4) 215,079,000 2,450,000 r 217,529,000
Income from continuing
operations
per share:
Basic $ 1.21 $ 0.41
Diluted (4) 1.19 0.41
(1) Amounts are derived from the Condensed Consolidated Statement of
Operations originally included in the Company's Annual Report on Form 10-K
for the Year for the Year Ended December 31, 2003 and revised on Form 8-K
filed on December 21, 2004.
(2) Amounts are derived from the Company's Form 8-K/A filed on August 2, 2004.
(3) Amounts are derived from detail supporting the Condensed Consolidated
Statement of Operations originally presented in Rouse's Annual Report on
Form 10-K for the Year Ended December 31, 2003 and revised on Form 8-K
filed on November 9, 2004. Certain amounts have been reclassified to
conform to the Company's presentation.
(4) The convertible preferred stock was dilutive to the historical diluted
earnings per share of the Company, but anti-dilutive to the total pro
forma consolidated results.
(5) For alphabetical references, refer to Note 2-Pro Forma Adjustments.
The accompanying notes are an integral part of these statements.
F-4
NOTE 1 PRO FORMA BASIS OF PRESENTATION
GENERAL - The pro forma condensed consolidated financial statements are based
upon the historical financial information of General Growth Properties, Inc.
("GGP" or the "Company"), excluding discontinued operations, and the historical
financial information of each of the acquisitions listed below as if the
acquisitions had occurred on the first day of the earliest period presented for
the unaudited pro forma condensed consolidated statements of operations and as
of the date of the unaudited pro forma condensed consolidated balance sheet. In
management's opinion, all adjustments necessary to reflect these transactions
have been included.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the Company's Current Reports on Form 8-K/A filed on
August 2, 2004, November 10, 2004 and November 18, 2004, the Company's Current
Reports on Form 8-K filed on October 25, 2004, November 12, 2004 and December
21, 2004, The Rouse Company's ("Rouse") Current Report on Form 8-K filed on
November 9, 2004, the Annual Reports on Form 10-K for the year ended December
31, 2003 of the Company and Rouse and the Quarterly Reports on Form 10-Q for the
quarter ended September 30, 2004 of the Company and Rouse.
The Rouse acquisition, as further described below, will be accounted for as a
purchase business combination. The fair value of the consideration paid by GGP
will be used as the valuation basis for the Rouse acquisition. The consolidated
assets and liabilities of Rouse will be revalued based on their respective fair
values as of the effective date of the acquisition. The unaudited pro forma
adjustments, including the preliminary purchase accounting adjustments, are
based on currently available information and upon preliminary assumptions and
estimates that the Company believes are reasonable. The preliminary purchase
accounting allocations are subject to reallocation as additional information,
including third-party market valuations, become available and when the final
purchase accounting is completed.
The costs of the assets acquired and liabilities assumed in conjunction with the
other acquisitions, as further described below, have also been allocated based
on estimates of their respective fair values. These preliminary purchase
allocations are also based on the information available at this time. Subsequent
adjustments and refinements to the allocations are expected to be made as
additional information becomes available.
The pro forma financial information contained in these pro forma condensed
consolidated financial statements may not necessarily be indicative of what
actual results of the Company would have been if such transactions had been
completed as of the dates indicated nor does it purport to represent the results
of operations for future periods. GGP management believes that the Rouse merger
will create potential cost savings and operating efficiencies, such as
elimination of redundant administrative and property management costs.
Additionally, the Company expects to continue to finance or refinance both Rouse
and GGP properties with secured debt which is expected to bear interest at rates
lower than the interest rates assumed in determining the pro forma interest
expense adjustments in the accompanying condensed consolidated statements of
operations. These potential cost and interest savings have not been reflected in
the accompanying unaudited pro forma condensed consolidated statements of
operations as the Company is currently unable to quantify them and there is no
assurance that any anticipated savings will be realized.
The Company, Rouse, and a majority of their affiliates have elected to be
treated as Real Estate Investment Trusts ("REITs") pursuant to the Internal
Revenue Code of 1986, as amended. As a REIT, the majority of the Company's
operations will generally not be subject to federal income tax on taxable income
distributed currently to its stockholders. However, certain affiliates of the
Company and Rouse are taxable REIT subsidiaries ("TRS"). A TRS is permitted to
engage in non-qualifying REIT activities and the taxable income of a TRS is
subject to federal, state and local income taxes. Deferred income taxes relate
primarily to the TRS and are accounted for using the asset and liability method.
F-5
ROUSE ACQUISITION - On November 12, 2004, the Company completed its previously
announced merger with Rouse, a real estate development and management company.
Under the terms of the merger agreement, stockholders of Rouse received a cash
payment of $65.20526 per share. The total value of the acquisition is estimated
as follows:
(IN THOUSANDS)
--------------
Purchase of outstanding Rouse shares (103,718,038 shares at $65.20526 per share)................. $ 6,762,962
Assumption of Rouse's historical debt............................................................ 4,636,072
Assumption of Rouse debt related to Rouse's extraordinary dividend............................... 238,006
Assumption of Rouse's historical liabilities..................................................... 849,791
Adjustment to reflect Rouse's historical debt at estimated fair market value..................... 224,225
Adjustment to reflect Rouse's historical other liabilities at estimated fair market value........ 202,277
Below-market lease adjustment.................................................................... 349,932
Merger costs:
Employee and related costs................................................................... 275,000
Legal, investment advisory, accounting and other fees........................................ 125,000
-----------
400,000
-----------
$13,663,265
===========
The Company entered into a credit agreement on November 12, 2004 to fund the
cash portion of the Rouse merger consideration and, with other cash and
financing sources, fund other costs of the merger transaction. The credit
agreement includes a six-month bridge loan of approximately $1.145 billion, a
three-year $3.65 billion term loan, a four-year $2 billion term loan and a
three-year $500 million revolving credit facility of which only $250 million was
initially borrowed. Repayment of the three-year $3.65 billion term loan begins
in November 2005 with semi-annual payments in 2006, quarterly payments in 2007
and a final $1.775 billion payment in November 2007. Repayment of the four-year
$2 billion term loan begins in March 2005 with quarterly payments through
September 2008 and a final $1.925 billion payment in November 2008. The credit
agreement currently bears interest at a weighted-average rate of LIBOR plus
approximately 2.21 percent.
With exceptions for capital expenditures and other items, the Company is
required to apply the net proceeds of future mortgage financings and
refinancings, sales of equity, and asset dispositions (including by casualty or
condemnation) toward prepayment of the credit agreement in accordance with
various priorities set out in the credit agreement. The credit agreement is
secured by a pledge of the Company's operating partnership's ownership interest
in Rouse and in GGPLP L.L.C and also by a pledge of the interest in an operating
account in which the Company will deposit any distributions the operating
partnership receives from its interests in the Rouse companies.
During the term of the facility, the Company is subject to customary affirmative
and negative covenants. Upon the occurrence of an event of default contained in
the credit agreement, the lenders under the facilities will have the option of
declaring immediately due and payable all amounts outstanding under the
agreement. The credit agreement contains events of default including a failure
by the Company to maintain its status as a REIT under the Internal Revenue Code,
a failure by the Company to remain listed on the New York Stock Exchange and
such customary events as nonpayment of principal, interest, fees or other
amounts, breach of representations and warranties, breach of covenant,
cross-default to other indebtedness and certain bankruptcy events.
In addition, on November 9, 2004, the Company closed a warrant offering to
existing equity holders. Subscribers in the warrants offering purchased
approximately 15.9 million shares of the Company's common stock, at $32.23 per
share, for total gross proceeds of approximately $513 million. The Company
accepted the subscriptions and issued the common stock on Friday, November 12,
2004.
Historical results of operations of Rouse have been prepared in accordance with
Rule 3-05 of Regulation S-X of the United States Securities and Exchange
Commission ("Regulation S-X"). Pro forma adjustments and results related to the
Rouse acquisition have been prepared in accordance with Article 11 of
Regulation S-X.
F-6
On November 10, 2004, Rouse acquired Oxmoor Center ("Oxmoor"), a regional retail
center in Louisville, Kentucky, for $123 million, including $60 million in
assumed debt. The results of operations of this center are included in the Rouse
acquisition pro forma adjustments.
OTHER ACQUISITIONS - Other acquisitions include all acquisitions of the Company
since January 1, 2003 other than the Rouse acquisition. These other acquisitions
are summarized below. Historical results of operations of the other acquisitions
have been prepared in accordance with Rule 3-14 of Regulation S-X. Pro forma
adjustments and results related to the other acquisitions have been prepared in
accordance with Article 11 of Regulation S-X. 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.
Other acquisitions include the following:
NEW OR ASSUMED DEBT(1)
---------------------------
ACQUISITION PURCHASE PRO FORMA
(IN THOUSANDS) DATE PRICE AMOUNT INTEREST RATE
----------- -------- -------- -------------
2004
A 50% ownership interest in Burlington Town
Center .............................................. January 7 $ 10,250 -- --
Redlands Mall.......................................... January 16 14,250 -- --
The remaining 50% ownership interest in Town
East Mall ........................................... March 1 44,500 -- --
Four Seasons Town Centre .............................. March 5 161,000 $134,400(2) 5.6%
A 33 1/3% ownership interest in GGP/Sambil
Costa Rica........................................... April 30 12,217(3) -- --
A 50% ownership interest in Riverchase
Galleria ............................................ May 11 166,000 100,000 3.26%(6)
Mall of Louisiana ..................................... May 12 265,000 185,000 LIBOR+58 bp
The Grand Canal Shoppes ............................... May 17 766,000 766,000 4.18%
A 50% ownership interest in GGP/NIG Brazil............. July 30 32,000(4) -- --
Stonestown............................................. August 13 312,550 220,000 LIBOR+68 bp
Land held for development and sale..................... November 22 14,158 -- --
2003
Peachtree Mall......................................... April 30 $ 87,600 $ 53,000 LIBOR+85 bp
Saint Louis Galleria................................... June 11 235,000 176,000 LIBOR+165 bp
Coronado Center ....................................... June 11 175,000 131,000 LIBOR+85 bp
The remaining 49% ownership interest in GGP
Ivanhoe III.......................................... July 1 459,000 268,000 3.81%
Lynnhaven Mall ........................................ August 27 256,500 180,000 LIBOR+125 bp
Sikes Senter .......................................... October 14 61,000 41,500 LIBOR+70 bp
The Maine Mall ........................................ October 29 270,000 202,500 LIBOR+125 bp
Glenbrook Square....................................... October 31 219,000 164,250 LIBOR+108 bp
Foothills Mall ........................................ December 5 100,500 45,750(5) 6.6%
Chico Mall ............................................ December 23 62,390 30,600 7.0%
Rogue Valley Mall ..................................... December 23 57,495 28,000 7.85%
(1) The interest rate used in the pro forma statements for the new or assumed
variable-rate debt incurred in the property acquisitions listed above
reflects a LIBOR rate of 1.84% for the nine months ended September 30,
2004 and 1.12% for the year ended December 31, 2003. Funding for the land
held for development and sale acquisition was assumed to have been drawn
on the $500 million revolving credit facility established in connection
with the Rouse acquisition. Additional funding for all acquisitions prior
to November 12, 2004, including for those acquisitions for which a
specific and separate loan was not obtained or assumed, was assumed to
have been drawn on the Company's line of credit at an interest rate of
2.62% for the nine months ended September 30, 2004 and 2.48% for the year
ended December 31, 2003.
F-7
(2) Excludes approximately $25.1 million in 7% Series E Cumulative Convertible
Preferred Units of GGP Limited Partnership interest.
(3) Approximately $9.7 million was funded at closing. The remaining amounts
will be drawn on a letter of credit provided by the Company as additional
construction and development costs of the project are incurred.
(4) Approximately $7.0 million was funded at closing. The remaining amounts
will be invested by the Company (upon the decision of both partners) to
acquire additional interests in the properties currently owned or to
acquire interests in other retail centers.
(5) Excludes approximately $26.6 million in 6.5% Series D Cumulative
Convertible Preferred Units of GGP Limited Partnership interest.
(6) Including the impact of interest rate swaps.
NOTE 2 PRO FORMA ADJUSTMENTS
a) Adjustments to investments in real estate assets reflect preliminary
purchase accounting adjustments to Rouse's historical investments in real
estate assets based on preliminary estimates of their fair values and a
$14.2 million acquisition of land held for development and sale.
b) The cash adjustment reflects payment of Rouse's closing dividend on
November 12, 2004. The closing dividend of $.29120 per share was equal to
the pro rata portion of Rouse's regular quarterly dividend of $.47 per
share.
c) Adjustments to other assets primarily reflect preliminary purchase
accounting adjustments to Rouse's historical other assets based on
preliminary estimates of their fair values.
d) Mortgage notes and other debt payable adjustments include the following:
(IN THOUSANDS)
--------------
Draws on credit facility........................................... $ 7,045,000
Net financing/refinancing of existing GGP properties............... 920,400
Net financing/refinancing of Rouse properties...................... 1,172,000
Repayment of GGP line of credit.................................... (1,799,011)
Repayment of Rouse line of credit.................................. (449,494)
Fair value adjustment to Rouse historical debt..................... 224,225
Acquisition of land held for development and sale.................. 14,158
-----------
$ 7,127,278
===========
e) Adjustments to other liabilities primarily reflect pro forma adjustments
to Rouse's historical other liabilities to reflect their estimated fair
values, accrued merger costs and acquired below-market leases. Preliminary
estimates for acquired below-market leases totaled $349.9 million and are
included in accounts payable and accrued expenses.
f) Minority interest and stockholders' equity adjustments reflect the
issuance of approximately $513 million of newly-issued GGP common stock
pursuant to the warrants offering. Stockholders' equity adjustments also
reflect elimination of Rouse's historical equity.
F-8
g) Minimum rent adjustments include the following:
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2004 DECEMBER 31, 2003
------------------------- -------------------------
OTHER ROUSE OTHER ROUSE
(IN THOUSANDS) ACQUISITIONS ACQUISITION ACQUISITIONS ACQUISITION
------------ ----------- ------------ -----------
Net amortization of acquired above
and below-market leases for acquisitions ....... $ 3,372 $51,140 $16,717 $67,529
Oxmoor historical ................................. -- 5,868 -- 8,669
New leasing arrangements at Grand Canal Shoppes ... 2,920 -- 7,660 --
Reclassify specialty leasing revenues to conform to
GGP presentation ............................... 130 -- 670 --
------- ------- ------- -------
$ 6,422 $57,008 $25,047 $76,198
======= ======= ======= =======
h) Tenant charges adjustment reflects the reclassification of overage rents
to conform to GGP presentation.
i) Adjustments reflect Oxmoor historical results.
j) Other acquisitions adjustments to other revenue reflect the following:
OTHER ACQUISITIONS
----------------------------
NINE MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2004 2003
------------- ------------
Termination of management agreements resulting from acquisition of
remaining interests in GGP Ivanhoe III and Town East Mall ...... $ (145) $(2,412)
Additional Riverchase management fees ............................ 216 600
Reclassifications to conform to GGP presentation:
Overage rents ................................................ -- (746)
Specialty leasing revenues ................................... (130) (670)
Operations of property under development ..................... -- (812)
Other ............................................................ -- (80)
------- -------
$ (59) $(4,120)
======= =======
k) Land sales operations adjustments reflect increases in the cost of land
sold as a result of preliminary purchase accounting adjustments to
increase the historical basis of Rouse's investment land and land held for
development and sale based on preliminary estimates of their fair values.
l) Historical Rouse results include $52.0 million of nonrecurring expenses
resulting from Rouse's agreement with the Internal Revenue Service which
addresses certain tax law requirements related to its REIT status. The
property management, general and administrative cost adjustment reflects
$875,000 of Oxmoor historical results.
m) Depreciation and amortization adjustments reflect increases in deprecation
and amortization expense as a result of preliminary purchase accounting
adjustments to increase the historical basis of depreciable acquired
buildings and equipment based on preliminary estimates of their fair
market values. Such pro forma adjustments were depreciated over a
weighted-average life of 40 years.
n) Interest expense adjustments reflect a combination of debt assumption and
increased borrowings. Since the interest rates on certain of the loans
assumed or obtained in conjunction with the acquisitions are based on a
spread over LIBOR and have not been converted to fixed-rate loans through
the use of interest rate swap agreements, the rates will periodically
change. If the interest
F-9
rate on such variable-rate loans increase or decrease by 12.5 basis
points, the annual interest expense will increase or decrease by
approximately $6.1 million for the nine months ended September 30, 2004
and approximately $8.1 million for the year ended December 31, 2003.
o) Minority interest adjustments reflect the allocation of earnings to the
minority interests and changes in minority interest percentages pursuant
to the issuance of approximately 15.9 million shares of newly-issued GGP
common stock pursuant to the warrants offering.
p) Income tax adjustments reflect reduced tax expense primarily as it relates
to land sales. Substantially all of Rouse's investment land and land held
for development and sale are owned by TRSs. As a result, the pro forma
adjustments which decreased the profit margin on land sales operations
also reduced the related income tax expense.
q) Adjustments to equity in unconsolidated affiliates reflect the following:
OTHER ACQUISITIONS
----------------------------
NINE MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2004 2003
------------- ------------
Town East .................. $ (430) $ (3,595)
GGP Ivanhoe III ............ -- (9,085)
Riverchase ................. (2,333) (6,658)
GGP/NIG Brazil ............. (207) (1,037)
GGP Ivanhoe IV ............. -- 447
-------- --------
$ (2,970) $(19,928)
======== ========
- Town East and GGP Ivanhoe III - Eliminates equity in income from
these ventures due to the purchase of the remaining venture shares
which causes the properties owned by these joint ventures to be
fully consolidated.
- Riverchase and GGP/NIG Brazil - Reflects reductions in the equity in
income from these ventures due to pro forma adjustments which
resulted in additional depreciation and interest expenses which were
partially offset by amortization of below-market leases.
- GGP Ivanhoe IV - Reflects equity in income of Eastridge Mall due to
the transfer of its ownership by GGP Ivanhoe III, Inc. to GGP
Ivanhoe IV.
The Rouse acquisition adjustment reflects reductions in the equity in
income from its joint ventures due to pro forma adjustments which resulted
in additional depreciation and interest expenses which were partially
offset by amortization of below-market leases.
r) The weighted-average shares outstanding adjustment reflects the issuance
of approximately 15.9 million shares of newly-issued GGP common stock
pursuant to the warrants offering. The pro forma adjustment for the year
ended December 31, 2003 also reflects 13.5 million shares of convertible
preferred stock which were dilutive to the historical results and
anti-dilutive to the pro forma consolidated results.
F-10