CHICAGO, July 12 /PRNewswire/ -- General Growth Properties, Inc.
(NYSE: GGP) announced today that it has discontinued its Network Services
development activities. Since early 2000, the Company has been engaged in an
effort to develop its Network Services business, a high-speed communications
network for retailers consisting of a suite of broadband applications to
support retail tenant operations, on-line sales, and private wide area network
services. The discontinuance of the Network Services development activities
will result in a non-recurring, pre-tax charge to second quarter 2001 earnings
of approximately $62 to $65 million, which represents the Company's entire
investment in the Network Services development activities. In addition, the
Company expects that approximately $1 million of incremental discontinuance
costs will be incurred in the third quarter of 2001.
John Bucksbaum, CEO of the Company, stated, "We undertook this Network
Services effort to insure that our properties would meet any challenges
presented by recent technological advancements and because we saw an
opportunity to become one of the only companies to develop and provide
Internet-based applications to drive retailer productivity. It is now
apparent that our retail partners do not currently view these additional
broadband applications and capabilities as essential components of their
current operations. Therefore, we have decided not to pursue this component
of our strategy further at the present time."
"The second component of our strategy, which is not affected by our
decision to discontinue the Network Services development activities, was to
completely wire our operating properties and provide the most modern broadband
infrastructure for each tenant to access the Internet," Bucksbaum said. "We
are pleased to report that we have completed this task and that virtually all
of our tenant spaces have what we believe is the most up-to-date equipment to
access the Internet. We continue to believe that the communication and
information available via the Internet are necessities in today's business
world and will, over time, enrich our retailers and our shopping centers."
While the non-recurring charge to second quarter 2001 earnings is expected
to result in a net loss for the quarter, the charge will not affect the
Company's funds from recurring real estate operations for the quarter or the
current year and is not expected to impact the Company's current or future
dividend policies. The Company remains comfortable that funds from recurring
real estate operations for fiscal year 2001 will fall into the range of $4.86
to $5.00 per fully-diluted share.
Notwithstanding the foregoing announcement, it continues to be the
Company's regular policy not to provide periodic financial guidance updates.
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 , and
http://www.StreetFusion.com . The webcast will take place on Friday, July 13, 2001
at 8:30 a.m., Eastern Time (7:30 a.m. CT, 6:30 a.m. MT, 5:30 a.m. PT). The
webcast can be accessed by selecting the conference call icon on the GGP home
page. Both sites will archive the call for one week subsequent to the end of
the live webcast.
General Growth Properties, Inc. is one of the oldest and most experienced
shopping center owners, developers and managers in the United States. It
currently owns interests in and/or manages 146 shopping malls in 39 states,
comprising approximately 125 million square feet of retail space.
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 by the Company 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.
SOURCE General Growth Properties, Inc.
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Related links:
http://www.generalgrowth.com
Photo Notes:http://www.newscom.com/cgi-bin/prnh/19990208/CGM015
PR Newswire Photo Desk, 888-776-6555 or 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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