CHICAGO, July 28 /PRNewswire-FirstCall/ -- General Growth Properties, Inc.
(NYSE: GGP) today announced a 27.1% increase in Funds from Operations (FFO)
per share for second 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.
"Once again, we are pleased to report strong results which reinforce the
viability of the regional mall in a challenging economic environment," said
John Bucksbaum, CEO of General Growth Properties. "Our consistent growth and
sustained momentum reflect how we create value through acquisition, leasing,
management, and marketing, while building upon solid fundamentals."
FINANCIAL AND OPERATIONAL HIGHLIGHTS
-- Earnings per share-diluted (EPS) in second quarter 2003 increased
25.0% to $.70 versus $.56 for the comparable period in 2002. The
adoption of SFAS No. 141 - Business Combinations - and SFAS No. 142 -
Goodwill and Other Intangible Assets -- resulted in an earnings
increase of approximately $3.1 million or $.049 per share-diluted in
second quarter 2003 related to the acquisitions of investment
property in 2002 and 2003. Reflected in EPS for second quarter 2003
is stock option compensation expense of approximately $4.9 million,
or $.078 per share-diluted, including $4.2 million related to the
vesting of certain previously-granted stock options, which become
exercisable only when the company's stock price surpasses a stated
threshold.
-- FFO on a per share, fully-diluted basis, rose 27.1% to $1.50 in the
second quarter of 2003, up from $1.18 in the second quarter of 2002.
Total FFO for the quarter increased 28.7% to $129.5 million, from
$100.6 million in last year's second quarter. The adoption of SFAS
No. 141 and 142 resulted in an increase of approximately $6.2 million
in FFO or $.068 per fully-diluted share in second quarter 2003.
Stock option compensation expense decreased FFO per fully-diluted
share by approximately $.054.
-- 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 $6.60 to $6.70.
Consistent with the financial information presented for first quarter
2003, 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 33.6% in the
quarter to $255.4 million, from $191.2 million during the second
quarter of 2002. Total prorata property revenues were $378.7 million
for the quarter, an increase of 36.8%, compared to $276.8 million for
the same period in 2002.
-- Total tenant sales increased 1.5% for second quarter 2003 and
comparable tenant sales decreased 1.0% versus the same period last
year.
-- Comparable center NOI increased by approximately 6.5% during the
second quarter.
-- Mall shop occupancy increased to 90.5%, compared to 89.2% in second
quarter 2002.
-- Sales per square foot, on a trailing 12 month basis, as of June 30,
2003, were $352 versus $358 at the end of second quarter 2002.
-- Average rent per square foot for new/renewal leases signed during the
first six months of the year was $36.20 versus $35.08 for the same
period in 2002. Average rent for all leases expiring in 2003 is
$26.70 versus $29.90 in 2002.
-- On April 30, 2003, General Growth Properties acquired 100% of
Peachtree Mall in Columbus, Georgia. In mid-June 2003, General
Growth acquired a 100% interest in both Saint Louis Galleria in St.
Louis, Missouri and Coronado Center in Albuquerque, New Mexico.
-- After quarter end, on July 1, 2003, the company acquired the 49%
ownership interest in GGP Ivanhoe III previously held by joint
venture partner Ivanhoe Cambridge, bringing General Growth's
ownership to 100%.
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 is intended to allocate the cost of
property over its useful life. Since values for well-maintained real estate
assets have historically increased or decreased based upon prevailing market
conditions, the company believes that FFO provides investors with a clearer
view of the company's operating performance. 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, July 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 162 regional shopping malls in 39 states. The company portfolio
totals approximately 142 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 Six Months Ended
PORTFOLIO RESULTS (unaudited) 30-Jun 30-Jun
(in thousands, except per share
data) 2003 2002 2003 2002
FUNDS FROM OPERATIONS (FFO)
Funds From Operations - Operating
Partnership $129,533 $100,603 $256,846 $194,987
Less: Allocations to Operating
Partnership unitholders $30,587 $24,089 $60,826 $46,751
Funds From Operations - Company
stockholders $98,946 $76,514 $196,020 $148,236
Funds From Operations per share -
basic $1.57 $1.23 $3.12 $2.39
Funds From Operations per share -
diluted $1.50 $1.18 $2.97 $2.30
Weighted average number of Company
shares outstanding - basic
(assuming full conversion of
Operating Partnership units) 82,310 81,710 82,202 81,631
Weighted average number of Company
shares outstanding - diluted
(assuming full conversion of
Operating Partnership units and
convertible preferred stock) 90,918 90,367 90,771 90,266
PORTFOLIO RESULTS (a)
Total revenues (b),(c) $378,734 $276,763 $746,714 $550,533
Operating expenses (123,312) (85,515) (244,795) (175,400)
Real estate net operating income 255,422 191,248 501,919 375,133
Net General Growth Management, Inc.
(GGMI) operations (527) 3,019 2,331 4,475
Headquarters and regional costs
including depreciation that
reduces FFO (17,783) (11,955) (35,960) (23,033)
General and administrative (3,409) (1,809) (6,342) (3,173)
Net interest expense (d) (87,322) (68,725) (172,000) (137,208)
Preferred stock dividends (6,953) (6,117) (13,030) (12,234)
Preferred unit distributions (9,895) (5,058) (20,072) (8,973)
Funds From Operations - Operating
Partnership 129,533 100,603 256,846 194,987
RECONCILIATION OF GAAP NET INCOME
TO FUNDS FROM OPERATIONS (e)
Net income (loss) available to
common stockholders $44,050 $34,696 $89,561 $66,114
Extraordinary items (d) - - - -
Income available to common
stockholders before extraordinary
items 44,050 34,696 89,561 66,114
Income from discontinued
operations, including gain on
sale - (435) (4,330) (758)
Income from continuing operations 44,050 34,261 85,231 65,356
Allocations to Operating
Partnership unitholders 13,389 10,925 27,790 20,852
FFO of property sold in 2003 - 530 292 945
Depreciation and amortization of
capitalized real estate costs
(including SFAS #141 and #142
lease origination costs) other
than amortization of financing
costs 72,094 54,887 143,533 107,834
Funds From Operations - Operating
Partnership 129,533 100,603 256,846 194,987
Funds From Operations - Minority
interest (30,587) (24,089) (60,826) (46,751)
Funds From Operations - Company
stockholders 98,946 76,514 196,020 148,236
RECONCILIATION OF WEIGHTED AVERAGE
SHARES OUTSTANDING
FOR GAAP AND FFO PER SHARE
COMPUTATIONS
Weighted average number of Company
shares outstanding - for GAAP
basic EPS 62,874 62,138 62,735 62,059
Full conversion of Operating
Partnership units 19,436 19,572 19,467 19,572
Weighted average number of Company
shares outstanding - for basic
FFO per share 82,310 81,710 82,202 81,631
Weighted average number of Company
shares outstanding - for GAAP
diluted EPS 63,128 62,294 62,950 62,193
Conversion of PIERS to Common
Stock 8,354 8,501 8,354 8,501
Full conversion of Operating
Partnership units 19,436 19,572 19,467 19,572
Weighted average number of Company
shares outstanding - for diluted
FFO per share 90,918 90,367 90,771 90,266
Earnings from continuing
operations per share - basic $0.70 $0.55 $1.36 $1.06
Earnings from continuing
operations per share - diluted $0.70 $0.55 $1.35 $1.05
Earnings from discontinued
operations per share - basic $- $0.01 $0.07 $0.01
Earnings from discontinued
operations per share - diluted $- $0.01 $0.07 $0.01
Earnings (loss) per share - basic $0.70 $0.56 $1.43 $1.07
Earnings (loss) per share -
diluted $0.70 $0.56 $1.42 $1.06
SUMMARIZED BALANCE SHEET INFORMATION June 30, December 31,
(unaudited) 2003 2002
Cash and marketable securities $20,015 $54,116
Investment in real estate, net $7,387,719 $6,926,084
Total assets $7,753,019 $7,280,822
Mortgage and other notes payable $5,021,006 $4,592,311
Minority interest - Preferred $468,201 $468,201
Minority interest - Common $371,001 $377,746
Preferred stock $331,668 $337,500
Stockholders' equity $1,220,668 $1,196,525
Total capitalization (at cost) $7,412,544 $6,972,283
PORTFOLIO CAPITALIZATION DATA
(unaudited)
Total portfolio debt (Company debt
above ($5,021,006 and $4,592,311,
respectively) plus pro rata
share of debt ($2,127,998 and
$2,177,024, respectively) from
unconsolidated affiliates)
of which (after the effect of the
Company's current swap agreements)
$2,282,643 and $2,453,571,
respectively, is comprised of
variable rate debt $7,149,004 $6,769,335
Preferred stock 521,128 449,415
Preferred Operating Partnership units 468,201 468,201
Stock market value of common stock and
Operating Partnership units
outstanding at end of period 5,149,110 4,261,573
Total market capitalization at end of
period $13,287,443 $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 $3,978 and $2,724 for the three months
ended and $8,635 and $5,543 for the six months ended June 30, 2003 and
2002, respectively.
(c) Includes non-cash rental revenue recognized pursuant to SFAS #141 and
#142 for the three and six months ended June 30, 2003 of $6,196 and
$10,754, respectively.
(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, FFO for the three and six months
ended June 30, 2002 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 JUNE 30, 2003
(In thousands, unaudited)
Wholly
Owned Unconsolidated
Centers Centers (a) Total
Revenues
Minimum rents (b),(c) $173,491 $74,325 $247,816
Tenant recoveries 80,578 37,664 118,242
Overage rents 3,542 1,169 4,711
Other (d) 6,607 1,358 7,965
Total revenues 264,218 114,516 378,734
Operating expenses
Real estate taxes 20,497 10,929 31,426
Repairs and maintenance 18,560 8,541 27,101
Marketing 7,585 3,812 11,397
Other property operating costs 34,770 16,414 51,184
Provision for doubtful accounts 1,700 504 2,204
Total operating expenses 83,112 40,200 123,312
Real estate net operating income 181,106 74,316 255,422
GGMI fees (e) 20,278 - 20,278
GGMI expenses (e) (20,805) - (20,805)
Headquarters/regional costs (8,819) (6,183)(f) (15,002)
General and administrative (2,893) (516) (3,409)
Depreciation that reduces FFO (g) (2,781) - (2,781)
Interest income 461 422 883
Interest expense (61,090) (22,620) (83,710)
Amortization of deferred finance costs (1,662) (893) (2,555)
Debt extinguishment costs (h) (1,473) (467) (1,940)
Preferred stock dividends (6,953) - (6,953)
Preferred unit distributions (9,895) - (9,895)
Operating Partnership Funds From
Operations $85,474 $44,059 $129,533
GENERAL GROWTH PROPERTIES, INC
BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2002
(In thousands, unaudited)
Wholly
Owned Unconsolidated
Centers Centers (a) Total
Revenues
Minimum rents (b) $124,317 $57,275 $181,592
Tenant recoveries 57,432 28,251 85,683
Overage rents 1,716 761 2,477
Other (d) 5,863 1,148 7,011
Total revenues 189,328 87,435 276,763
Operating expenses
Real estate taxes 13,665 8,211 21,876
Repairs and maintenance 13,770 6,669 20,439
Marketing 5,829 1,777 7,606
Other property operating costs 22,010 12,418 34,428
Provision for doubtful accounts 886 280 1,166
Total operating expenses 56,160 29,355 85,515
Property net operating income 133,168 58,080 191,248
GGMI fees (e) 20,730 - 20,730
GGMI expenses (e) (17,711) - (17,711)
Headquarters/regional costs (5,039) (4,778)(f) (9,817)
General and administrative (1,791) (18) (1,809)
Depreciation that reduces FFO (g) (2,138) - (2,138)
Interest income 67 1,558 1,625
Interest expense (46,599) (22,385) (68,984)
Amortization of deferred finance costs (954) (412) (1,366)
Debt extinguishment costs (h) - - -
Preferred stock dividends (6,117) - (6,117)
Preferred unit distributions (5,058) - (5,058)
Operating Partnership Funds From
Operations $68,558 $32,045 $100,603
(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 $3,978 and $2,724 for the three months
ended June 30, 2003 and 2002, respectively.
(c) Includes SFAS #141 and #142 minimum rent accretion of $6,196 for the
three months ended June 30, 2003.
(d) Includes zero and $507 for the three months ended June 30, 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, second quarter 2002 FFO has been
adjusted to maintain comparability.
GENERAL GROWTH PROPERTIES, INC
BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(In thousands, unaudited)
Wholly
Owned Unconsolidated
Centers Centers (a) Total
Revenues
Minimum rents (b),(c) $343,212 $148,795 $492,007
Tenant recoveries 151,656 74,942 226,598
Overage rents 10,044 2,260 12,304
Other (d) 13,162 2,643 15,805
Total revenues 518,074 228,640 746,714
Operating expenses
Real estate taxes 40,617 21,753 62,370
Repairs and maintenance 36,269 17,440 53,709
Marketing 15,761 7,570 23,331
Other property operating costs 69,611 31,562 101,173
Provision for doubtful accounts 3,513 699 4,212
Total operating expenses 165,771 79,024 244,795
Real estate net operating income 352,303 149,616 501,919
GGMI fees (e) 40,601 - 40,601
GGMI expenses (e) (38,270) - (38,270)
Headquarters/regional costs (17,978) (12,577)(f) (30,555)
General and administrative (5,704) (638) (6,342)
Depreciation that reduces FFO (g) (5,405) - (5,405)
Interest income 1,056 908 1,964
Interest expense (120,047) (45,950) (165,997)
Amortization of deferred finance costs (3,448) (2,579) (6,027)
Debt extinguishment costs (h) (1,473) (467) (1,940)
Preferred stock dividends (13,030) - (13,030)
Preferred unit distributions (20,072) - (20,072)
Operating Partnership Funds From
Operations $168,533 $88,313 $256,846
GENERAL GROWTH PROPERTIES, INC
BREAKDOWN OF COMPANY PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(In thousands, unaudited)
Wholly
Owned Unconsolidated
Centers Centers (a) Total
Revenues
Minimum rents (b) $243,172 $113,600 $356,772
Tenant recoveries 114,293 56,658 170,951
Overage rents 7,144 1,816 8,960
Other (d) 11,862 1,988 13,850
Total revenues 376,471 174,062 550,533
Operating expenses
Real estate taxes 27,359 16,552 43,911
Repairs and maintenance 27,265 13,268 40,533
Marketing 10,751 4,023 14,774
Other property operating costs 47,417 24,823 72,240
Provision for doubtful accounts 2,887 1,055 3,942
Total operating expenses 115,679 59,721 175,400
Property net operating income 260,792 114,341 375,133
GGMI fees (e) 37,231 - 37,231
GGMI expenses (e) (32,756) - (32,756)
Headquarters/regional costs (9,122) (9,754)(f) (18,876)
General and administrative (3,032) (141) (3,173)
Depreciation that reduces FFO (g) (4,157) - (4,157)
Interest income 166 3,369 3,535
Interest expense (92,942) (45,178) (138,120)
Amortization of deferred finance costs (1,812) (779) (2,591)
Debt extinguishment costs (h) (32) - (32)
Preferred stock dividends (12,234) - (12,234)
Preferred unit distributions (8,973) - (8,973)
Operating Partnership Funds From
Operations $133,129 $61,858 $194,987
(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 $8,635 and $5,543 for the six months
ended June 30, 2003 and 2002, respectively.
(c) Includes SFAS #141 and #142 minimum rent accretion of $10,754 for the
six months ended June 30, 2003.
(d) Includes $292 and $945 for the six months ended June 30, 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 and second quarter 2002 FFO
has been adjusted to maintain comparability.
OTHER COMPANY PORTFOLIO DATA (a)
AS OF AND/OR FOR THE SIX MONTHS ENDED JUNE 30, 2003
(unaudited)
Wholly Uncon-
Owned solidated Weighted
Centers Centers Average
Space leased at centers not under
redevelopment (b) 91.0% 89.8% 90.5%
Tenant allowances/improvements and
capitalized leasing costs
(in thousands) $23,891 $11,490 $35,381
Trailing 12 month total sales per
sq. ft. (c) $336 $369 $352
Average annualized in place rent per
sq. ft. $27.77 $32.34 $29.78
Average rent per sq. ft. for
new/renewal leases $34.88 $37.50 $36.20
Average rent per sq. ft. for leases
expiring in 2003 $22.16 $31.29 $26.70
% change in total sales 0.3% 2.7% 1.5%
% change in comparable sales -0.5% -1.4% -1.0%
(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, occupancy at Wholly Owned Centers was
92.2% and weighted average occupancy was 91.1%.
(c) Excluding the JP Realty malls, sales per sq. ft. at the Wholly Owned
Centers were $353 and weighted average annualized sales per sq. ft.
were $361.
SOURCE General Growth Properties, Inc.
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CONTACT:
John Bucksbaum, +1-312-960-5005, Bernard
Freibaum, +1-312-960-5252, or Beth Coronelli, +1-312-960-2750,
all of General Growth Properties
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