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CHICAGO--(BUSINESS WIRE)-- General Growth Properties, Inc. (the Company) reported today its third quarter 2009 operating results. For the third quarter of 2009, Core Funds From Operations (Core FFO) per fully diluted share were $0.28, Funds From Operations (FFO) per fully diluted share were $0.31 and Earnings per share - diluted (EPS) were a loss of $0.38. In the comparable 2008 period, Core FFO per fully diluted share were $0.62, FFO per fully diluted share were $0.56 and EPS were a loss of $0.08. Core FFO and FFO declined for the third quarter of 2009 as compared to the third quarter of 2008 primarily as a result of the impact of the continued weak retail market on our operations and our ongoing costs associated with our April 2009 bankruptcy filings. A Supplemental Schedule of Significant FFO Items that Impact Comparability is provided with this release. Consistent with our previous releases for this year, the third quarter and year to date 2008 results have been restated from the amounts originally reported in 2008 to reflect the adoption of two accounting pronouncements as of January 1, 2009 that required retrospective application.
OPERATIONAL AND FINANCIAL HIGHLIGHTS
"Although comparable and total tenant sales on a trailing twelve month basis continue to be down, third quarter 2009 comparable tenant sales were only down 4.6% as compared to the third quarter 2008," stated Adam Metz, Chief Executive Officer of General Growth. "September 2009 comparable tenant sales actually increased 0.8% as compared to September 2008 comparable tenant sales. While we are hopeful these trends will continue, our outlook remains cautious for the upcoming Holiday season." Elaborating on leasing spreads and Comparable NOI, Mr. Metz stressed, "We have significantly reduced tenant allowance expenditures on new leases signed such that the face rent amount is not reflective of the true value of our new leases when compared to those expiring. Further, although we have increased certain repairs and maintenance expenses in 2009 because the upkeep of our physical plant is critical to building and maintaining the long-term value of our properties, we have also negotiated reductions in certain janitorial and security contracts with no significant declines in service levels. Finally, a portion of our real estate tax increase in 2009 is a result of certain of such taxes no longer qualifying for capitalization due to decreased development spending."
-- Core FFO is defined as Funds From Operations excluding the Real Estate
Property Net Operating Income (NOI) from the Master Planned Communities
segment and the benefit from (provision for) income taxes. Core FFO for
the third quarter of 2009 were $88.9 million or $0.28 per fully diluted
share as compared to $199.2 million or $0.62 per fully diluted share for
the third quarter of 2008. During the third quarter of 2009 we recorded
additional retail property, development project and goodwill impairments
of $60.9 million, $0.19 per fully diluted share, which was in excess of
similar provisions for impairment of $15.2 million, $0.05 per fully
diluted share, recorded in the comparable 2008 period. In addition,
$22.6 million, $0.07 per fully diluted share, of net reorganization
items were reflected in the third quarter of 2009 as compared to no such
reorganization items incurred in the third quarter of 2008. The
remaining declines in Core FFO in 2009 are related to retail and other
segment declines described below.
-- FFOper fully diluted share was $0.31 in the third quarter of 2009. FFO
for the quarter were $100.2 million as compared to $178.9 million in the
third quarter of 2008. In addition to the changes in Core FFO for 2009
as compared to 2008 listed above, during the third quarter of 2008 an
impairment provision of $40.3 million, $0.13 per fully diluted share,
was recorded at our Nouvelle at Natick condominium development.
Reference is made to the attached Supplemental Schedule of Significant
FFO Items that Impact Comparability for additional items impacting FFO
comparability.
-- EPS for the third quarter of 2009 were a loss of $0.38 per share versus
a loss of $0.08 in the third quarter of 2008. Our third quarter 2009 EPS
were significantly impacted by the Core FFO and FFO items discussed
above. In addition, there were no significant sales of Retail and Other
assets in 2009 whereas, in the third quarter of 2008, we sold (in two
separate transactions) two office parks located in Maryland resulting in
gains of approximately $18.0 million, which, after allocation of
approximately $2.9 million attributable to non-controlling interests,
increased EPS by $0.05 per share in 2008.
-- Chapter 11 Cases. The Company and certain of our wholly-owned
subsidiaries (representing approximately 166 of our regional malls,
collectively, the "Debtors") continue to operate as
debtors-in-possession pursuant to the provisions of Chapter 11 of the
U.S. Bankruptcy Code ("Chapter 11"). The Chapter 11 cases are being
jointly administered in the Bankruptcy Court of the Southern District of
New York (the "Bankruptcy Court"). However, our property management
subsidiary, certain of our wholly-owned subsidiaries, and our joint
ventures, either consolidated or unconsolidated, have not sought such
Chapter 11 protection. Since the commencement of the Chapter 11 cases,
the Debtors have continued their normal operations, as approved by
Bankruptcy Court rulings. The Debtors have been granted the exclusive
right, until February 2010 and April 2010, respectively, to present and
obtain acceptance of a plan of reorganization. As part of the plan of
reorganization currently being developed, the Debtors are in
negotiations with certain secured lenders to extend the maturities on
their mortgage loans.
SEGMENT RESULTS
Retail and Other Segment
-- Revenues from consolidated properties were $736.4 million for the third
quarter of 2009 as compared to $784.3 million for the same period in
2008,whilerevenues from unconsolidated properties,at the Company's
ownership share, decreased to $147.6 million for the third quarter of
2009 compared to $151.4 million in the third quarter of 2008. This
represents revenue declines in the current quarter of 6.1% and 2.5%,
respectively, as compared to the prior year period. Revenues for both
consolidated and unconsolidated properties decreased primarily in the
areas of minimum rents (including temporary tenant revenues), overage
rents, and other revenues (including sponsorship, vending, parking and
advertising) due to occupancy declines and reduced tenant sales volumes
in the third quarter of 2009 as compared to the same period of 2008.
-- NOI for the third quarter of 2009 was $585.2 million, a decrease of
approximately 6.0% from the $622.5 million reported in the third quarter
of 2008. In addition to the revenue items discussed above, we sold two
office parks in 2008 which also contributed to the decrease in NOI in
2009.
-- Total tenant sales declined 9.8% and comparable tenant sales declined
10.7% in 2009, both on a trailing 12 month basis, compared to the same
period last year.
-- Comparable NOI from consolidated properties in the third quarter of 2009
declined by 6.3% compared to the third quarter of 2008. Comparable NOI
from unconsolidated properties at the Company's ownership share in the
third quarter of 2009 declined 2.7% compared to the third quarter of
2008. In the aggregate, comparable retail and other NOI decreased 5.8%
as compared to the third quarter of 2008. Such comparable NOI declines
for the three months ended September 2009 versus the three months ended
September 2008 are primarily the result of negative new leasing spreads
and higher net real estate tax expense.
-- Retail Center occupancy increased slightly to 91.3% at September 30,
2009 as compared to 91.0% at June 30, 2009 but declined as compared to
92.7% at September 30, 2008. Although declines in the economy have
yielded year-over-year occupancy reductions, quarter over quarter
occupancy improvements in 2009 are primarily attributable to increases
in shorter term tenant leasing.
-- Tenant sales per square footfor third quarter 2009 (on a trailing twelve
month basis) were $409 as compared to $455 in the third quarter of 2008.
Master Planned Communities Segment
-- NOIin the third quarter of 2009for the Master Planned Communities
segment was a loss of $2.2 million for consolidated properties and $0.8
million for unconsolidated properties as compared to a loss of $42.7
million for consolidated properties and income of $3.6 million for
unconsolidated properties, respectively, in the third quarter of 2008.
NOI remains negative for certain communities as operating expenses
cannot be completely eliminated despite the significant reduction in
current sales revenues.As detailed in the Supplemental Schedule of FFO
Items that Impact Comparability, the NOI loss in the third quarter of
2008 for consolidated properties is due primarily to the $40.3 million
provision for impairment related to the Nouvelle at Natick condominium
development. Although an auction of certain of the remaining inventory
of unsold condominiums was held at Nouvelle at Natick in early October
2009, the sales prices in the executed contracts obtained did not
trigger any additional impairment provisions at September 30, 2009
beyond those recognized in previous periods.
-- Land sale revenuesin the third quarter of 2009were approximately $7.4
million for consolidated properties and approximately $7.8 million for
unconsolidated properties, compared to $6.2 million for consolidated
properties and $13.1 million for unconsolidated properties, in the third
quarter of 2008.
GGP INFORMATION/WEBSITE
The Company currently has ownership interest in, or management responsibility for, over 200 regional shopping malls in 44 states, as well as ownership in planned community developments and commercial office buildings. The Company's portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide. The Company's common stock is currently traded in the over-the-counter securities market operated by Pink OTC Markets Inc. using the symbol GGWPQ. For more information, please visit the Company website at http://www.ggp.com.
NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES AND DEFINITIONS
FUNDS FROM OPERATIONS AND CORE FFO
The Company, 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) attributable to controlling interests (computed in accordance with Generally Accepted Accounting Principles (GAAP)), excluding gains (or losses) from cumulative effects of accounting changes, extraordinary items and sales of properties, plus real estate related depreciation and amortization and including 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. FFO does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a 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. However, we believe that FFO is a less meaningful supplemental measure for the Master Planned Communities segment of our business. FFO does not facilitate an understanding of the operating performance of the Master Planned Communities segment of our business as our primary strategy in this segment is to develop and sell land in a manner that increases the value of the remaining land. In addition, the Master Planned Communities segment of our business is operated within taxable REIT subsidiaries and therefore our benefit from (provision for) income tax expense is largely attributable to this segment of the business. To isolate these parts of the Company from the Retail and Other segment, for which FFO is a relevant measure of operating performance, the Company also uses Core FFO as an operating measure. Core FFO is defined as FFO excluding the NOI from the Master Planned Communities segment and the benefit from (provision for) income taxes.
In order to provide a better understanding of the relationship between Core FFO, FFO and GAAP net income (loss), a reconciliation of Core FFO and FFO to GAAP net income (loss) attributable to controlling interests has been provided. Neither Core FFO nor FFO represent cash flow from operating activities in accordance with GAAP, neither should be considered as an alternative to GAAP net income (loss) attributable to controlling interests and neither is necessarily indicative of cash available to fund cash needs. In addition, the Company has presented FFO on a consolidated and unconsolidated basis (at the Company's ownership share) as the Company believes that given the significance of the Company's operations that are owned through investments accounted for on the equity method of accounting, the detail of the operations of the Company's unconsolidated properties provides important insights into the income and FFO produced by such investments for the Company as a whole.
REAL ESTATE PROPERTY NET OPERATING INCOME (NOI) AND COMPARABLE NOI
The Company believes that NOI is a useful supplemental measure of the Company's operating performance. The Company defines NOI as operating revenues (rental income, land sales, tenant recoveries and other income) less property and related expenses (real estate taxes, land sales operating costs, repairs and maintenance, marketing and other property expenses). As with FFO described above, NOI has been reflected on a consolidated and unconsolidated basis (at the Company's ownership share). Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to other REITs.
Because NOI excludes general and administrative expenses, interest expense, retail investment property impairment or other non-recoverable development costs, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests, reorganization items and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates, land values (with respect to the Master Planned Communities) and operating costs. This measure thereby provides an operating perspective not immediately apparent from GAAP operating or net income attributable to controlling interests. The Company uses NOI to evaluate its operating performance on a property-by-property basis because NOI allows the Company to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company's operating results, gross margins and investment returns.
In addition, management believes that NOI provides useful information to the investment community about the Company's operating performance. However, due to the exclusions noted above, NOI should only be used as an alternative measure of the Company's financial performance. For reference, and as an aid in understanding management's computation of NOI, a reconciliation of NOI to consolidated operating income as computed in accordance with GAAP has been presented.
Comparable NOI excludes from both years the NOI of properties with significant physical or merchandising changes and those properties acquired or opened during the relevant comparative accounting periods.
PROPERTY INFORMATION
The Company has presented information on its consolidated and unconsolidated properties separately in the accompanying financial schedules. As a significant portion of the Company's total operations are structured as joint venture arrangements which are unconsolidated, management of the Company believes that operating data with respect to all properties owned provides important insights into the income produced by such investments for the Company as a whole. In addition, the individual items of revenue and expense for the unconsolidated properties have been presented at the Company's ownership share of such unconsolidated ventures. As substantially all of the management operating philosophies and strategies are the same regardless of ownership structure, an aggregate presentation of NOI and other operating statistics yields a more accurate representation of the relative size and significance of such elements of the Company's overall operations.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. Actual results may differ materially from the results suggested by these forward-looking statements, for a number of reasons, including, but not limited to, the bankruptcy filings of the Debtors, our ability to refinance, extend or repay our near and intermediate term debt, our substantial level of indebtedness, changes in interest rates, retail and credit market conditions, impairments, land sales in the Master Planned Communities segment, the cost and success of development and re-development projects and our liquidity demands. Readers are referred to the documents filed by General Growth Properties, Inc. with the Securities and Exchange Commission, which further identify the important risk factors which could cause actual results to differ materially from the forward-looking statements in this release. The Company disclaims any obligation to update any forward-looking statements.
GENERAL GROWTH PROPERTIES, INC.
OVERVIEW
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Funds From
Operations ("FFO")
Company $ 97,963 $ 150,055 $ (7,306 ) $ 515,019
stockholders
Operating
Partnership unit 2,278 28,887 (181 ) 102,489
holders
Operating $ 100,241 $ 178,942 $ (7,487 ) $ 617,508
Partnership
Decrease in FFO
over comparable (44.0 ) % (11.6 ) % (101.2 ) % (31.3 ) %
prior year period
FFO per share:
Company
stockholders - $ 0.31 $ 0.56 $ (0.02 ) $ 1.98
basic
Operating
Partnership - 0.31 0.56 (0.02 ) 1.98
basic
Operating
Partnership - 0.31 0.56 (0.02 ) 1.98
diluted
Decrease in diluted
FFO per share over
comparable
prior year (44.6 ) % (17.6 ) % (101.0 ) % (34.7 ) %
periods
Core Funds From
Operations ("Core
FFO")
Core FFO $ 88,862 $ 199,219 $ 90,530 $ 641,625
(Decrease) increase
in Core FFO over (55.4 ) % 2.4 % (85.9 ) % 7.2 %
comparable prior
year period
Core FFO per share 0.28 0.62 0.28 2.06
- diluted
(Decrease) increase
in diluted Core FFO
per share over
comparable
prior year (54.8 ) % (6.1 ) % (86.4 ) % 2.0 %
periods
Dividends
Dividends paid per $ - $ 0.50 $ - $ 1.50
share
Payout ratio (% of
diluted FFO paid - % 89.3 % - % 75.8 %
out)
Real Estate
Property Net
Operating Income
("NOI")
Retail and Other:
Consolidated $ 488,707 $ 525,728 $ $
1,515,431 1,596,571
Unconsolidated 96,496 96,759 294,165 289,526
Total Retail 585,203 622,487 1,809,596 1,886,097
and Other
Master Planned
Communities:
Consolidated (2,173 ) (42,700 ) (111,893 ) (42,910 )
Unconsolidated (847 ) 3,631 4,172 17,949
Total Master
Planned (3,020 ) (39,069 ) (107,721 ) (24,961 )
Communities
Total Real estate $ $
property net $ 582,183 $ 583,418 1,701,875 1,861,136
operating income
September December 31,
30,
Selected Balance 2009 2008
Sheet Information
Cash and cash $ 691,765 $ 168,993
equivalents
Investment in real
estate:
Net land, $ $
buildings and 22,047,432 22,723,390
equipment
Developments in 902,000 1,076,675
progress
Net investment
in and loans
to/from
Unconsolidated
Real Estate 1,979,944 1,837,635
Affiliates
Investment
property and
property held 1,736,456 1,823,362
for development
and sale
Net investment in $ $
real estate 26,665,832 27,461,062
Total assets $ $
29,042,157 29,557,330
Mortgages, notes
and loans payable $ $
not subject to 3,030,340 24,756,577
compromise
Mortgages, notes
and loans payable 21,834,167 -
subject to
compromise (a)
Redeemable
noncontrolling 120,756 120,756
interests -
Preferred
Redeemable
noncontrolling 36,038 379,169
interests - Common
Total equity 1,574,439 1,860,407
Total $ $
capitalization (at 26,595,740 27,116,909
cost)
(a)
Mortgages, notes and loans payable subject to compromise are for
obligations of the Debtors which principal amounts may change depending on
the outcome of our Chapter 11 cases.
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Minimum rents $ 489,472 $ 514,186 $ 1,487,288 $ 1,546,227
Tenant recoveries 217,040 231,548 674,750 694,727
Overage rents 10,408 14,563 26,214 38,973
Land sales 7,409 6,158 38,844 31,080
Management and other 14,500 21,561 49,618 63,718
fees
Other 22,132 26,685 64,982 85,916
Total revenues 760,961 814,701 2,341,696 2,460,641
Expenses:
Real estate taxes 69,925 68,128 210,443 205,781
Repairs and maintenance 56,472 57,725 161,910 176,822
Marketing 7,358 10,425 21,840 31,477
Other property 108,009 116,329 310,208 332,047
operating costs
Land sales operations 9,582 8,513 42,046 33,645
Provision for doubtful 5,925 5,938 25,104 14,934
accounts
Property management and 44,876 38,813 130,485 145,755
other costs
General and 11,652 5,259 89,777 17,774
administrative
Provisions for 60,940 55,514 474,420 56,123
impairment
Depreciation and 185,016 190,386 576,103 565,888
amortization
Total expenses 559,755 557,030 2,042,336 1,580,246
Operating income 201,206 257,671 299,360 880,395
Interest income 523 950 1,754 2,957
Interest expense (326,357 ) (330,687 ) (983,198 ) (975,682 )
Loss before income
taxes, noncontrolling
interests,
reorganization items,
and equity in income of
Unconsolidated Real (124,628 ) (72,066 ) (682,084 ) (92,330 )
Estate Affiliates
Benefit from (provision 14,430 14,841 10,202 (1,416 )
for) income taxes
Equity in income of
Unconsolidated Real 15,341 16,939 39,218 61,912
Estate Affiliates
Reorganization items (22,597 ) - (47,515 ) -
Loss from continuing (117,454 ) (40,286 ) (680,179 ) (31,834 )
operations
Discontinued operations
- gain (loss) on 29 18,023 (26 ) 55,083
dispositions
Net (loss) income (117,425 ) (22,263 ) (680,205 ) 23,249
Allocation to (422 ) 1,404 7,876 (11,996 )
noncontrolling interests
Net (loss) income
attributable to common $ (117,847 ) $ (20,859 ) $ (672,329 ) $ 11,253
stockholders
Basic and Diluted (Loss)
Earnings Per Share:
Continuing operations $ (0.38 ) $ (0.13 ) $ (2.16 ) $ (0.13 )
Discontinued operations - 0.05 - 0.17
Total basic and
diluted (loss) $ (0.38 ) $ (0.08 ) $ (2.16 ) $ 0.04
earnings per share
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS ("FFO")
(In thousands)
Three Months Ended September 30, 2009
Consolidated Unconsolidated Segment
Retail and Other Properties Properties Basis
Property revenues:
Minimum rents $ 489,472 $ 94,264 $ 583,736
Tenant recoveries 217,040 39,718 256,758
Overage rents 10,408 1,442 11,850
Other, including noncontrolling 19,476 12,172 31,648
interests
Total property revenues 736,396 147,596 883,992
Property operating expenses:
Real estate taxes 69,925 11,775 81,700
Repairs and maintenance 56,472 8,784 65,256
Marketing 7,358 1,484 8,842
Other property operating costs 108,009 27,518 135,527
Provision for doubtful accounts 5,925 1,539 7,464
Total property operating expenses 247,689 51,100 298,789
Retail and other net operating 488,707 96,496 585,203
income
Master Planned Communities
Land sales 7,409 7,800 15,209
Land sales operations (9,582) (8,647) (18,229)
Master Planned Communities net (2,173) (847) (3,020)
operating loss
Real estate property net operating 486,534 95,649 $ 582,183
income
Management and other fees 14,500 4,267
Property management and other costs (44,876) (8,660)
General and administrative (11,652) (1,390)
Provisions for impairment (60,940) -
Depreciation on non-income producing (2,328) -
assets, including headquarters building
Interest income 523 1,040
Interest expense (326,357) (36,811)
Benefit from (provision for) income 14,430 (31)
taxes
Preferred unit distributions (2,336) -
Other FFO from noncontrolling interests 1,246 30
Reorganization items (22,597) -
FFO 46,147 54,094
Equity in FFO of Unconsolidated 54,094 (54,094)
Properties
Operating Partnership FFO $ 100,241 $ -
Three Months Ended September 30, 2008
Consolidated Unconsolidated Segment
Retail and Other Properties Properties Basis
Property revenues:
Minimum rents $ 514,186 $ 96,151 $ 610,337
Tenant recoveries 231,548 40,369 271,917
Overage rents 14,563 2,002 16,565
Other, including noncontrolling 23,976 12,840 36,816
interests
Total property revenues 784,273 151,362 935,635
Property operating expenses:
Real estate taxes 68,128 10,348 78,476
Repairs and maintenance 57,725 8,763 66,488
Marketing 10,425 1,940 12,365
Other property operating costs 116,329 32,322 148,651
Provision for doubtful accounts 5,938 1,230 7,168
Total property operating expenses 258,545 54,603 313,148
Retail and other net operating 525,728 96,759 622,487
income
Master Planned Communities
Land sales 6,158 13,144 19,302
Land sales operations (8,513) (9,513) (18,026)
Master Planned Communities net
operating (loss) income
before provision for impairment (2,355) 3,631 1,276
Provision for impairment (40,345) - (40,345)
Master Planned Communities net (42,700) 3,631 (39,069)
operating (loss) income
Real estate property net operating 483,028 100,390 $ 583,418
income
Management and other fees 21,561 5,444
Property management and other costs (38,813) (12,230)
General and administrative (5,259) (2,997)
Provisions for impairment (15,169) (61)
Depreciation on non-income producing (2,518) -
assets, including headquarters building
Interest income 950 1,653
Interest expense (330,687) (44,208)
Benefit from income taxes 14,841 3,951
Preferred unit distributions (2,339) -
FFO from noncontrolling interest 1,375 30
FFO 126,970 51,972
Equity in FFO of Unconsolidated 51,972 (51,972)
Properties
Operating Partnership FFO $ 178,942 $ -
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO RESULTS AND FUNDS FROM OPERATIONS ("FFO")
(In thousands)
Nine Months Ended September 30, 2009
Consolidated Unconsolidated Segment
Retail and Other Properties Properties Basis
Property revenues:
Minimum rents $ 1,487,288 $ 288,698 $ 1,775,986
Tenant recoveries 674,750 119,259 794,009
Overage rents 26,214 3,632 29,846
Other, including minority interest 56,684 37,813 94,497
Total property revenues 2,244,936 449,402 2,694,338
Property operating expenses:
Real estate taxes 210,443 36,620 247,063
Repairs and maintenance 161,910 25,529 187,439
Marketing 21,840 4,234 26,074
Other property operating costs 310,208 84,262 394,470
Provision for doubtful accounts 25,104 4,592 29,696
Total property operating 729,505 155,237 884,742
expenses
Retail and other net operating 1,515,431 294,165 1,809,596
income
Master Planned Communities
Land sales 38,844 26,320 65,164
Land sales operations (42,046 ) (22,148 ) (64,194 )
Master Planned Communities net operating (loss)
income before
provision for impairment (3,202 ) 4,172 970
Provision for impairment (108,691 ) - (108,691 )
Master Planned Communities net (111,893 ) 4,172 (107,721 )
operating (loss) income
Real estate property net 1,403,538 298,337 $ 1,701,875
operating income
Management and other fees 49,618 12,195
Property management and other costs (130,485 ) (26,960 )
General and administrative (89,777 ) (8,133 )
Provisions for impairment (365,729 ) (3,206 )
Depreciation on non-income
producing assets, including (7,201 ) -
headquarters building
Interest income 1,754 2,972
Interest expense (983,198 ) (120,395 )
Benefit from (provision for) income 10,202 (498 )
taxes
Preferred unit distributions (7,007 ) -
Other FFO from noncontrolling 3,912 89
interests
Reorganization items (47,515 ) -
FFO (161,888 ) 154,401
Equity in FFO of Unconsolidated 154,401 (154,401 )
Properties
Operating Partnership FFO $ (7,487 ) $ -
Nine Months Ended September 30, 2008
Consolidated Unconsolidated Segment
Retail and Other Properties Properties Basis
Property revenues:
Minimum rents $ 1,546,227 $ 283,387 $ 1,829,614
Tenant recoveries 694,727 118,982 813,709
Overage rents 38,973 5,037 44,010
Other, including minority interest 77,705 44,393 122,098
Total property revenues 2,357,632 451,799 2,809,431
Property operating expenses:
Real estate taxes 205,781 33,929 239,710
Repairs and maintenance 176,822 27,009 203,831
Marketing 31,477 5,719 37,196
Other property operating costs 332,047 93,604 425,651
Provision for doubtful accounts 14,934 2,012 16,946
Total property operating 761,061 162,273 923,334
expenses
Retail and other net operating 1,596,571 289,526 1,886,097
income
Master Planned Communities
Land sales 31,080 54,064 85,144
Land sales operations (33,645 ) (36,115 ) (69,760 )
Master Planned Communities net operating (loss)
income before
provision for impairment (2,565 ) 17,949 15,384
Provision for impairment (40,345 ) - (40,345 )
Master Planned Communities net (42,910 ) 17,949 (24,961 )
operating (loss) income
Real estate property net 1,553,661 307,475 $ 1,861,136
operating income
Management and other fees 63,718 15,952
Property management and other costs (145,755 ) (32,058 )
General and administrative (17,774 ) (7,717 )
Provisions for impairment (15,778 ) (61 )
Depreciation on non-income
producing assets, including (7,916 ) -
headquarters building
Interest income 2,957 4,724
Interest expense (975,682 ) (125,195 )
(Provision for) benefit from income (1,416 ) 2,260
taxes
Preferred unit distributions (8,145 ) -
FFO from noncontrolling interest 4,167 91
FFO 452,037 165,471
Equity in FFO of Unconsolidated 165,471 (165,471 )
Properties
Operating Partnership FFO $ 617,508 $ -
GENERAL GROWTH PROPERTIES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Reconciliation of Real
Estate Property Net
Operating
Income ("NOI") to GAAP
Operating Income
Real estate property
net operating income:
Segment basis $ 582,183 $ 583,418 $ 1,701,875 $ 1,861,136
Unconsolidated (95,649 ) (100,390 ) (298,337 ) (307,475 )
Properties
Consolidated 486,534 483,028 1,403,538 1,553,661
Properties
Management and other 14,500 21,561 49,618 63,718
fees
Property management and (44,876 ) (38,813 ) (130,485 ) (145,755 )
other costs
General and (11,652 ) (5,259 ) (89,777 ) (17,774 )
administrative
Provisions for (60,940 ) (15,169 ) (365,729 ) (15,778 )
impairment
Depreciation and (185,016 ) (190,386 ) (576,103 ) (565,888 )
amortization
Noncontrolling interest
in NOI of Consolidated 2,656 2,709 8,298 8,211
Properties and other
Operating income $ 201,206 $ 257,671 $ 299,360 $ 880,395
Reconciliation of Core
FFO to Funds From
Operations ("FFO")
and to GAAP Net (Loss)
Income Attributable to
Controlling Interest
Core FFO $ 88,862 $ 199,219 $ 90,530 $ 641,625
Master Planned
Communities net (3,020 ) (39,069 ) (107,721 ) (24,961 )
operating loss
Benefit from
(provision for) income 14,399 18,792 9,704 844
taxes
Funds From Operations
- Operating 100,241 178,942 (7,487 ) 617,508
Partnership
Depreciation and
amortization of (221,460 ) (222,918 ) (684,142 ) (661,578 )
capitalized real estate
costs
Discontinued operations
- gain (loss) on 29 18,023 (26 ) 55,083
dispositions
Noncontrolling
interests in
depreciation of 862 833 2,629 2,481
Consolidated Properties
and other
Redeemable
noncontrolling 2,481 4,261 16,697 (2,241 )
interests
Net (loss) income
attributable to common $ (117,847 ) $ (20,859 ) $ (672,329 ) $ 11,253
stockholders
Reconciliation of
Equity in NOI of
Unconsolidated
Properties
to GAAP Equity in
Income of
Unconsolidated Real
Estate Affiliates
Equity in
Unconsolidated
Properties:
NOI $ 95,649 $ 100,390 $ 298,337 $ 307,475
Net property
management fees and (4,393 ) (6,786 ) (14,765 ) (16,106 )
costs
Net interest expense (35,771 ) (42,555 ) (117,423 ) (120,471 )
General and
administrative,
provisions for
impairment,
income taxes and
noncontrolling (1,391 ) 923 (11,748 ) (5,427 )
interest in FFO
FFO of unconsolidated 54,094 51,972 154,401 165,471
properties
Depreciation and
amortization of (38,770 ) (35,050 ) (115,239 ) (103,607 )
capitalized real estate
costs
Other, including gains
on sales of investment 17 17 56 48
properties
Equity in income of
Unconsolidated Real $ 15,341 $ 16,939 $ 39,218 $ 61,912
Estate Affiliates
Reconciliation of
Weighted Average Shares
Outstanding
Basic:
Weighted average
number of shares 319,628 319,527 319,606 311,806
outstanding - FFO per
share
Conversion of
Operating Partnership (7,265 ) (51,582 ) (7,745 ) (51,751 )
units
Weighted average
number of Company 312,363 267,945 311,861 260,055
shares outstanding -
GAAP EPS
Diluted:
Weighted average
number of shares 319,628 319,527 319,606 311,806
outstanding - FFO per
share
Conversion of
Operating Partnership (7,265 ) (51,582 ) (7,745 ) (51,751 )
units
Weighted average
number of Company 312,363 267,945 311,861 260,055
shares outstanding -
GAAP EPS
GENERAL GROWTH PROPERTIES, INC.
SUPPLEMENTAL DISCLOSURE OF CERTAIN NON-CASH REVENUES AND EXPENSES
REFLECTED IN FFO
(In thousands)
Three Months Ended Three Months Ended
September 30, 2009 September 30, 2008
Consolidated Unconsolidated Consolidated Unconsolidated
Properties Properties Properties Properties
Minimum rents:
Above- and
below-market tenant $ 2,737 $ 384 $ 3,191 $ 2,152
leases, net
Straight-line rent 8,480 2,998 11,253 2,056
Real estate taxes:
Real estate tax
stabilization (981 ) - (981 ) -
agreement
Other property
operating costs:
Non-cash ground (1,576 ) (247 ) (1,705 ) (231 )
rent expense
Provisions for (60,940 ) - (55,514 ) (61 )
impairment
Interest expense:
Mark-to-market 3,294 155 3,622 739
adjustments on debt
Amortization of
deferred finance (9,916 ) (396 ) (10,479 ) (675 )
costs
Amortization of
discount on (6,897 ) - (6,492 ) -
exchangeable notes
Termination of (4,519 ) - - -
interest rate swaps
Statutory interest
expense on Glendale - - (2,249 ) -
judgment
Debt extinguishment
costs:
Write-off of
mark-to-market - - 212 -
adjustments
Write-off of
deferred finance - - (50 ) 244
costs
Totals $ (70,318 ) $ 2,894 $ (59,192 ) $ 4,224
Nine Months Ended Nine Months Ended
September 30, 2009 September 30, 2008
Consolidated Unconsolidated Consolidated Unconsolidated
Properties Properties Properties Properties
Minimum rents:
Above- and
below-market tenant $ 6,094 $ 3,317 $ 11,938 $ 6,432
leases, net
Straight-line rent 27,173 9,523 33,156 6,990
Real estate taxes:
Real estate tax
stabilization (2,943 ) - (2,943 ) -
agreement
Other property
operating costs:
Non-cash ground (4,740 ) (927 ) (5,260 ) (693 )
rent expense
Provisions for (474,420 ) (3,206 ) (56,123 ) (61 )
impairment
Interest expense:
Mark-to-market 9,357 1,486 12,143 2,204
adjustments on debt
Amortization of
deferred finance (35,889 ) (1,221 ) (22,709 ) (1,496 )
costs
Amortization of
discount on (20,347 ) - (19,150 ) -
exchangeable notes
Termination of 14,156 - - -
interest rate swaps
Statutory interest
expense on Glendale - - (6,706 ) -
judgment
Debt extinguishment
costs:
Write-off of
mark-to-market - - 212 -
adjustments
Write-off of
deferred finance (578 ) - 157 -
costs
Totals $ (482,137 ) $ 8,972 $ (55,285 ) $ 13,376
WEIGHTED AVERAGE SHARES
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Basic 312,363 267,945 311,861 260,055
Diluted 312,363 267,945 311,861 260,055
Assuming full
conversion of
Operating
Partnership units:
Basic 319,628 319,527 319,606 311,806
Diluted 319,628 319,527 319,606 311,806
GENERAL GROWTH PROPERTIES, INC.
SUPPLEMENTAL SCHEDULE OF SIGNIFICANT FFO ITEMS THAT IMPACT COMPARABILITY (a)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Operating Partnership FFO $ 100,241 $ 178,942 $ (7,487 ) $ 617,508
Operating Partnership FFO $ 0.31 $ 0.56 $ (0.02 ) $ 1.98
per share - diluted
Significant items that
affect comparability
increase (decrease)
Provisions for
impairment:
Operating properties 18,161 7,819 139,583 7,819
Non-recoverable 36,496 7,411 94,319 8,020
development costs
Goodwill 6,283 - 135,033 -
Core FFO Impairments 60,940 15,230 368,935 15,839
Master planned
communities impairment - - 40,345 86,394 40,345
net of tax (b)
Total impairments 60,940 55,575 455,329 56,184
Restructuring costs (c) 77 - 43,161 -
Financing costs -
proposed transactions 3,250 - 24,179 -
(d)
Termination of interest - - 34,813 -
rate swaps
Reorganization items (e) 22,597 - 47,515 -
Statutory interest
expense on Glendale - 2,249 - 6,706
Judgement
Termination income (3,859 ) (6,359 ) (24,412 ) (34,842 )
Operating Partnership FFO as $ 183,246 $ 230,407 $ 573,098 $ 645,556
adjusted for comparability
Adjusted Operating
Partnership FFO per share - $ 0.57 $ 0.72 $ 1.79 $ 2.07
diluted
(a) Includes consolidated and unconsolidated properties.
(b)
Master planned communities impairment is presented net of tax. Included in
the nine months ended September 30, 2009 is a $55.9 million impairment
charge related to our Nouvelle at Natick condominium project, which did not
result in a tax benefit due to a valuation allowance on the related deferred
tax asset as a result of filing for Chapter 11 protection.
(c)
Restructuring costs include fees and expenses incurred for various
consultants and advisors that assisted in the development of strategic
alternatives relating to our liquidity and financing situation prior to
filing for Chapter 11 protection on April 16, 2009. Amounts reflected in the
three months ended September 30, 2009 include adjustments to amounts
previously accrued.
(d) Financing costs - proposed transactions reflects the write off of various
financing costs on proposed transactions which were not completed.
(e)
Reorganization items reflect bankruptcy-related activity, including gains on
liabilities subject to compromise, interest income, U.S. Trustee fees, and
other restructuring costs, incurred after filing for Chapter 11 protection
on April 16, 2009.
Source: General Growth Properties, Inc.
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