CHICAGO, April 28 /PRNewswire-FirstCall/ -- General Growth Properties,
Inc. (NYSE: GGP) today announced a 31.3% increase in Funds from Operations
(FFO) per share for first quarter 2003. Since becoming a public company more
than 10 years ago, General Growth has increased FFO per share approximately
15% on a compounded annual basis.
"The resilience of the regional mall is still a bright spot in this soft
economic environment," said John Bucksbaum, CEO of General Growth Properties.
"The General Growth team continues to execute our strategy to create long-term
growth and high returns through the performance of our assets."
FINANCIAL AND OPERATIONAL HIGHLIGHTS
-- Earnings per share-diluted (EPS) in first quarter 2003 increased 41.2%
to $.72 versus $.51 for the comparable period in 2002. The mandatory
adoption of SFAS No. 141 - Business Combinations -- and SFAS No. 142 -
Goodwill and Other Intangible Assets -- resulted in an earnings
increase of approximately $2.2 million or $.03 per share in first
quarter 2003 related to the acquisition of investment property in 2002.
-- FFO on a per share, fully-diluted basis, grew 31.3% to $1.47 in the
first quarter of 2003, up from $1.12 in the first quarter of 2002.
Total FFO for the quarter increased 34.9% to $127.3 million, from $94.4
million in last year's first quarter. In order to comply with the
Securities and Exchange Commission's recently issued Regulation G
concerning non-GAAP financial measures, the company has revised its
definition of FFO to include the effect of SFAS No. 141 and 142.
Effective first quarter 2003, the company will report this change
retroactively for all periods presented. The adoption of SFAS No. 141
and 142 resulted in an increase of approximately $4.6 million in FFO or
$.05 per share in first quarter 2003.
-- For fiscal year 2003, the company currently anticipates that FFO per
fully-diluted share, including the effects of SFAS No. 141 and SFAS No.
142, will be in the range of $6.30 to $6.40.
The company now provides additional disclosure in the accompanying
financial schedules. The number of categories reported for certain items of
revenues and expenses has been expanded. The results for 2002 have been
reclassified to reflect this more detailed disclosure.
-- Prorata real estate net operating income (NOI) increased 34.0% in the
quarter to $246.5 million, from $183.9 million during the first quarter
of 2002. Total prorata property revenues were $367.9 million for the
quarter, an increase of 34.4%, compared to $273.8 million for the same
period in 2002. The increase reported includes the results of 30
properties acquired in the second half of 2002.
-- Total tenant sales increased 4.0% for first quarter 2003 and comparable
tenant sales increased 0.7% versus the same period last year.
-- Comparable center NOI increased by approximately 6.4% during the first
quarter.
-- Mall shop occupancy increased to 90.4%, compared to 89.1% in first
quarter 2002.
-- Sales per square foot, on a trailing 12 month basis, as of March 31,
2003, were $345 versus $356 at the end of first quarter 2002. Sales
from the JP Realty and Victoria Ward portfolios are reflected as of
March 31, 2003, but were not owned as of March 31, 2002.
-- Average rent per square foot for new/renewal leases signed in the
quarter was $32.90 versus $34.99 for the same period in 2002. Average
rent for all leases expiring in 2003 is $26.70 versus $29.90 in 2002.
The reduced 2003 rents per square foot compared to 2002 are in large
part attributable to the inclusion of the JP Realty and Victoria Ward
portfolios, which were not included in 2002.
General Growth, consistent with real estate industry and investment
community preferences, uses FFO as a supplemental measure of operating
performance for a real estate investment trust (REIT). The National
Association of Real Estate Investment Trusts (NAREIT) defines FFO as net
income (loss) (computed in accordance with Generally Accepted Accounting
Principles (GAAP)), excluding gains (or losses) from extraordinary items and
sales of properties, plus real estate related depreciation and amortization
and after adjustments for unconsolidated partnerships and joint ventures. The
company considers FFO a supplemental measure for equity REITs and a complement
to GAAP measures because it facilitates an understanding of the operating
performance of the company's properties without giving effect to real estate
depreciation and amortization, which historically assumes that the value of
real estate assets diminish predictably over time. Since values for well
maintained real estate have instead historically increased or decreased based
upon prevailing market conditions, the company believes that FFO provides
investors with a clearer view of the company's operating performance. A
reconciliation of GAAP net income to FFO is provided in the portfolio results
schedule included herein. FFO does not represent cash flow from operating
activities in accordance with GAAP, should not be considered as an alternative
to net income (determined in accordance with GAAP) and is not necessarily
indicative of cash available to fund cash needs. In addition, the company's
FFO may not be directly comparable to similarly titled measures reported by
other REITs.
WEBCAST/CONFERENCE CALL
General Growth will host a live webcast of its conference call regarding
this announcement on the Company's web site, http://www.generalgrowth.com . This
webcast will take place on Tuesday, April 29, 2003 at 10:00 a.m., Eastern Time
(9:00 a.m. CT, 8:00 a.m. MT, 7:00 a.m. PT). The webcast can be accessed by
selecting the conference call icon on the GGP home page. The call will be
archived subsequent to the end of the live webcast.
General Growth Properties is the country's second largest shopping center
owner, developer and manager of regional shopping malls. General Growth
currently has ownership interest in, or management responsibility for, a
portfolio of 159 regional shopping malls in 39 states. The company portfolio
totals approximately 140 million square feet of retail space and includes over
16,000 retailers nationwide. A publicly traded REIT, General Growth Properties
is listed on the New York Stock Exchange under the symbol GGP. For more
information on General Growth Properties and its portfolio of malls, please
visit the company web site at http://www.generalgrowth.com .
This release may contain forward-looking statements that involve risks and
uncertainties. All statements other than statements of historical fact are
statements that may be deemed forward-looking statements, which are subject to
a number of risks, uncertainties and assumptions. Representative examples of
these risks, uncertainties and assumptions include (without limitation)
general industry and economic conditions, interest rate trends, cost of
capital and capital requirements, availability of real estate properties,
competition from other companies and venues for the sale/distribution of goods
and services, changes in retail rental rates in the company's markets, shifts
in customer demands, tenant bankruptcies or store closures, changes in vacancy
rates at the company's properties, changes in operating expenses, including
employee wages, benefits and training, governmental and public policy changes,
changes in applicable laws, rules and regulations (including changes in tax
laws), the ability to obtain suitable equity and/or debt financing, and the
continued availability of financing in the amounts and on the terms necessary
to support the company's future business. Readers are referred to the
documents filed with the SEC, specifically the most recent reports on Forms
10-K and 10-Q, which identify important risk factors which could cause actual
results to differ from those contained in the forward-looking statements.
FUNDS FROM OPERATIONS and Three Months Ended
PORTFOLIO RESULTS (unaudited) March 31,
(in thousands, except per share data) 2003 2002
FUNDS FROM OPERATIONS (FFO)
Funds From Operations - Operating Partnership $127,313 $94,400
Less: Allocations to Operating
Partnership unitholders $30,238 $22,662
Funds From Operations - Company stockholders $97,075 $71,738
Funds From Operations per share - basic $1.55 $1.16
Funds From Operations per share - diluted $1.47 $1.12
Weighted average number of Company shares
outstanding - basic (assuming full conversion
of Operating Partnership units) 82,094 81,551
Weighted average number of Company shares
outstanding - diluted (assuming full conversion
of Operating Partnership units and convertible
preferred stock) 90,731 90,177
PORTFOLIO RESULTS (a)
Total revenues (b),(c) $367,980 $273,770
Operating expenses (121,483) (89,871)
Real estate net operating income 246,497 183,899
Net GGMI operations 2,858 1,456
Headquarters and regional costs including
depreciation that reduces FFO (18,177) (11,078)
General and administrative (2,933) (1,362)
Net interest expense (d) (84,678) (68,483)
Preferred stock dividends (6,077) (6,117)
Preferred unit distributions (10,177) (3,915)
Funds From Operations - Operating Partnership 127,313 94,400
RECONCILIATION OF GAAP NET INCOME TO
FUNDS FROM OPERATIONS (e)
Net income (loss) available to common
stockholders $45,511 $31,434
Extraordinary items (d) - -
Income available to common stockholders before
extraordinary items 45,511 31,434
Income from discontinued operations,
including gain on sale (4,330) (442)
Income from continuing operations 41,181 30,992
Allocations to Operating Partnership
unitholders 14,401 9,927
FFO of property sold in 2003 292 507
Depreciation and amortization of capitalized real
estate costs (including SFAS #141 and #142 lease
origination costs) other than amortization of
financing costs 71,439 52,974
Funds From Operations - Operating Partnership 127,313 94,400
Funds From Operations - Minority interest (30,238) (22,662)
Funds From Operations - Company stockholders 97,075 71,738
Weighted average number of Company
shares outstanding - basic 62,595 61,979
Weighted average number of Company
shares outstanding - diluted 71,232 62,104
Earnings from continuing operations
per share - basic $0.66 $0.50
Earnings from continuing operations
per share - diluted $0.66 $0.50
Earnings from discontinued operations
per share - basic $0.07 $0.01
Earnings from discontinued operations
per share - diluted $0.06 $0.01
Earnings (loss) per share - basic $0.73 $0.51
Earnings (loss) per share - diluted $0.72 $0.51
March 31, December 31,
SUMMARIZED BALANCE SHEET INFORMATION
(unaudited) 2003 2002
Cash and marketable securities $24,232 $54,116
Investment in real estate, net $6,910,801 $6,926,084
Total assets $7,241,355 $7,280,822
Mortgage and other notes payable $4,531,538 $4,592,311
Minority interest - Preferred $468,201 $468,201
Minority interest - Common $375,767 $377,746
Preferred stock $335,282 $337,500
Stockholders' equity $1,214,163 $1,196,525
Total capitalization (at cost) $6,924,951 $6,972,283
PORTFOLIO CAPITALIZATION DATA (unaudited)
Total portfolio debt (Company debt above
($4,531,538 and $4,592,311, respectively)
plus pro rata share of debt ($2,121,765 and
$2,177,024, respectively) from unconsolidated
affiliates) of which (after the effect of
the Company's current swap agreements)
approximately 35.4% and 36.2%, respectively,
is comprised of variable rate debt. $6,653,303 $6,769,335
Preferred stock 462,446 449,415
Preferred Operating Partnership units 468,201 468,201
Stock market value of common stock
and Operating Partnership units
outstanding at end of period 4,437,709 4,261,573
Total market capitalization at end of
period $12,021,659 $11,948,524
(a) Portfolio results combine the revenues and expenses of General Growth
Management, Inc. (a Taxable REIT Subsidiary) with the applicable
ownership percentage multiplied by the revenues and expenses from
properties wholly and/or partially owned by the Operating Partnership.
(b) Includes straight-line rent of $4,656 and $2,819 for the three months
ended March 31, 2003 and 2002, respectively.
(c) Includes non-cash rental revenue recognized pursuant to SFAS #141 and
#142 for the three months ended March 31, 2003 of $4,558.
(d) As of the first quarter of 2003 and pursuant to SFAS 145 - Rescission
of FASB Statements 4,44 and 64 and Technical Corrections, the Company
now reflects costs related to the extinguishment of debt as additional
interest expense. Previously, such costs were reflected as an
extraordinary item. As required, first quarter 2002 FFO has been
adjusted to maintain comparability.
(e) Reconciliation of net income determined in accordance with generally
accepted accounting principles to FFO (Company non-GAAP supplemental
measure of operating performance) as defined by NAREIT and as required
by SEC Regulation G.
GENERAL GROWTH PROPERTIES, INC
BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(In thousands, unaudited)
Wholly
Owned Unconsolidated
Centers Centers(a) Total
Revenues
Minimum rents (b),(c) $169,721 $74,470 $244,191
Tenant recoveries 71,078 37,278 108,356
Overage rents 6,502 1,091 7,593
Other (d) 6,555 1,285 7,840
Total revenues 253,856 114,124 367,980
Operating expenses
Real estate taxes 20,120 10,824 30,944
Repairs and maintenance 17,709 8,899 26,608
Marketing 8,176 3,758 11,934
Other property operating costs 34,841 15,148 49,989
Provision for doubtful accounts 1,813 195 2,008
Total operating expenses 82,659 38,824 121,483
Real estate net operating income 171,197 75,300 246,497
GGMI fees (e) 20,323 - 20,323
GGMI expenses (e) (17,465) - (17,465)
Headquarters/regional costs (9,159) (6,394)(f) (15,553)
General and administrative (2,811) (122) (2,933)
Depreciation that reduces FFO (g) (2,624) - (2,624)
Interest income 595 486 1,081
Interest expense (58,957) (23,330) (82,287)
Amortization of deferred finance costs (1,786) (1,686) (3,472)
Debt extinguishment costs (h) - - -
Preferred stock dividends (6,077) - (6,077)
Preferred unit distributions (10,177) - (10,177)
Operating Partnership Funds From
Operations $83,059 $44,254 $127,313
GENERAL GROWTH PROPERTIES, INC
BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(In thousands, unaudited)
Wholly
Owned Unconsolidated
Centers Centers(a) Total
Revenues
Minimum rents (b) $118,855 $56,325 $175,180
Tenant recoveries 56,861 28,407 85,268
Overage rents 5,428 1,055 6,483
Other (d) 5,999 840 6,839
Total revenues 187,143 86,627 273,770
Operating expenses
Real estate taxes 13,694 8,341 22,035
Repairs and maintenance 13,495 6,599 20,094
Marketing 4,922 2,246 7,168
Other property operating costs 25,391 12,407 37,798
Provision for doubtful accounts 2,001 775 2,776
Total operating expenses 59,503 30,368 89,871
Property net operating income 127,640 56,259 183,899
GGMI fees (e) 16,501 - 16,501
GGMI expenses (e) (15,045) - (15,045)
Headquarters/regional costs (4,083) (4,976)(f) (9,059)
General and administrative (1,241) (121) (1,362)
Depreciation that reduces FFO (g) (2,019) - (2,019)
Interest income 1,096 1,811 2,907
Interest expense (47,297) (22,793) (70,090)
Amortization of deferred finance costs (901) (367) (1,268)
Debt extinguishment costs (h) (32) - (32)
Preferred stock dividends (6,117) - (6,117)
Preferred unit distributions (3,915) - (3,915)
Operating Partnership Funds From
Operations $64,587 $29,813 $94,400
(a) The Unconsolidated Centers include Quail Springs, Town East, the
GGP/Ivanhoe entities, the GGP/Teachers entities and the GGP/Homart
entities.
(b) Includes straight-line rent of $4,656 and $2,819 for the three months
ended March 31, 2003 and 2002, respectively.
(c) Includes SFAS #141 and #142 minimum rent accretion of $4,558 for the
three months ended March 31, 2003.
(d) Includes $292 and $507 for the three months ended March 31, 2003 and
2002, respectively, of net FFO of investment property sold in 2003.
(e) Represents the revenues and operating expenses of GGMI, the Company's
taxable REIT subsidiary.
(f) Headquarters/regional costs for the unconsolidated centers include
property management and other fees to GGMI.
(g) Represents depreciation on non-income producing assets including the
Company's headquarters building.
(h) As of the first quarter of 2003 and pursuant to SFAS 145 - Rescission
of FASB Statements 4, 44 and 64 and Technical Corrections, the Company
now reflects costs related to the extinguishment of debt as additional
interest expense. Previously, such costs were reflected as an
extraordinary item. As required, first quarter 2002 FFO has been
adjusted to maintain comparability.
OTHER COMPANY PORTFOLIO DATA (a)
AS OF AND/OR FOR THE THREE MONTHS ENDED MARCH 31, 2003
(unaudited)
Wholly
Owned Unconsolidated Weighted
Centers Centers Average
Space leased at centers not under
redevelopment (b) 90.5% 90.3% 90.4%
Tenant allowances and capitalized leasing
costs (in thousands) $10,425 $4,303 $14,728
Trailing 12 month total sales per
sq. ft. (c) $334 $357 $345
Average annualized in place rent per
sq. ft. $28.55 $31.58 $29.95
Average rent per sq. ft. for new/renewal
leases $31.06 $36.00 $32.90
Average rent per sq. ft. for leases
expiring in 2003 $22.16 $31.29 $26.70
% change in total sales 3.7% 4.3% 4.0%
% change in comparable sales 2.1% -0.9% 0.7%
(a) Data is for 100% of the mall non-anchor GLA in each portfolio,
including those centers that are owned in part by unconsolidated
affiliates. Data excludes properties currently being redeveloped
and/or remerchandised and miscellaneous (non-mall) properties.
(b) Excluding the JP Realty malls, space leased at Wholly Owned Centers
was 91.6% and weighted average space leased was 91.0%.
(c) Excluding the JP Realty malls, sales per sq. ft. at the Wholly Owned
Centers were $352 and weighted average annualized sales per sq. ft.
were $355.
SOURCE General Growth Properties, Inc.
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Related links:
http://www.generalgrowth.com
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PR Newswire Photo Desk, +1-888-776-6555 or +1-212-782-2840
Company News On-Call:
http://www.prnewswire.com/comp/110740.html
CONTACT:
John Bucksbaum, +1-312-960-5005, or Bernard
Freibaum, +1-312-960-5252, both of General Growth Properties,
Inc.
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