Exhibit 99.1
THE ROUSE COMPANY, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
The following is unaudited consolidated financial information for our subsidiary, The Rouse Company L.L.C. (“TRCLLC”), as of March 31, 2012 and December 31, 2011 and for the three months ended March 31, 2012 and 2011.
TRCLLC (also, “we” or “us”) is a Delaware limited liability company, formed on November 9, 2010 through voluntary conversion of The Rouse Company Limited Partnership (“TRCLP”) into a limited liability company. TRCLLC is a subsidiary of General Growth Properties, Inc. (“GGP” or the “Company”), a Delaware corporation, which was organized in July 2010 and is a self-administered and self-managed real estate investment trust, referred to as a “REIT”.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of TRCLLC, its subsidiaries and joint ventures in which it has a controlling interest. For consolidated joint ventures, the noncontrolling partner’s share of the assets, liabilities and operations of the joint ventures (generally computed as the joint venture partner’s ownership percentage) is included in noncontrolling interests in consolidated real estate affiliates as a permanent element of capital. All significant intercompany balances and transactions have been eliminated.
Reclassifications
Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation as a result of discontinued operations. Amounts included on the Consolidated Statements of Operations and Comprehensive Income (Loss) for properties sold have been reclassified to discontinued operations for all periods presented.
On January 12, 2012, TRCLLC distributed various operating properties to GGP. Amounts included on the Consolidated Statements of Operations and Comprehensive Income (Loss) for properties sold have been reclassified to discontinued operations for all periods presented.
Critical Accounting Policies
Critical accounting policies are those that are both significant to the overall presentation of TRCLLC’s financial condition and results of operations and require management to make difficult, complex or subjective judgments. Our critical accounting policies for the fiscal year ended December 31, 2011 have not changed during the three months ended March 31, 2012.
MANAGEMENT’S DISCUSSION OF TRCLLC OPERATIONS AND LIQUIDITY
Revenues
Tenant rents (which includes minimum rents, tenant recoveries, and overage rents) increased by $0.6 million in the first three months of 2012 as compared to the first three months of 2011 primarily as a result of increases in overage rent.
Operating expenses
Operating expenses decreased by $5.9 million primarily due to a $5.0 million decrease in depreciation and amortization and a $1.6 million decrease in property maintenance costs.
Interest Expense
Interest expense decreased by $2.6 million for the three months ended March 31, 2012 as compared to the first three months of 2011. This decrease was primarily due to a $1.5 million decrease in interest expense relating to the pay down of $106.0 million in mortgage notes at three properties in June 2011.
T-1
THE ROUSE COMPANY, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
Equity in Income of Unconsolidated Real Estate Affiliates
Equity in income of Unconsolidated Real Estate Affiliates for the three months ended March 31, 2012 increased by $1.1 million from 2011, primarily due to an increase in income at our Brazilian joint venture.
Cash position and liquidity at March 31, 2012
TRCLLC’s cash and cash equivalents increased $16.0 million to $458.5 million as of March 31, 2012. The cash position of TRCLLC is largely determined at any point in time by the relative short-term demands for cash by TRCLLC and GGP. We have $349.5 million of publicly-traded unsecured bonds which mature in 2012. TRCLLC expects to remain current with respect to its debt obligations and be able to access additional funds as required from GGP.
T-2
THE ROUSE COMPANY, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| | March 31, | | December 31, | |
| | 2012 | | 2011 | |
| | (In thousands) | |
Assets: | | | |
Investment in real estate: | | | | | |
Land | | $ | 832,046 | | $ | 901,274 | |
Buildings and equipment | | 4,430,002 | | 4,749,122 | |
Less accumulated depreciation | | (251,289 | ) | (251,137 | ) |
Developments in progress | | 29,730 | | 38,535 | |
Net property and equipment | | 5,040,489 | | 5,437,794 | |
Investment in and loans to/from Unconsolidated Real Estate Affiliates | | 1,749,755 | | 1,725,338 | |
Net investment in real estate | | 6,790,244 | | 7,163,132 | |
Cash and cash equivalents | | 458,516 | | 442,559 | |
Accounts and notes receivable, net | | 44,378 | | 45,894 | |
Deferred expenses, net | | 33,926 | | 39,057 | |
Prepaid expenses and other assets | | 343,449 | | 400,401 | |
Total assets | | $ | 7,670,513 | | $ | 8,091,043 | |
| | | | | |
Liabilities and Capital: | | | | | |
| | | | | |
Mortgages, notes and loans payable | | $ | 4,263,223 | | $ | 4,440,481 | |
Accounts payable and accrued expenses | | 309,985 | | 339,596 | |
Total liabilities | | 4,573,208 | | 4,780,077 | |
| | | | | |
Capital: | | | | | |
Members’ capital | | 5,883,134 | | 6,118,338 | |
Receivable from General Growth Properties, Inc. | | (2,770,537 | ) | (2,778,909 | ) |
Accumulated other comprehensive loss | | (34,911 | ) | (48,471 | ) |
Members’ capital attributable to General Growth Properties, Inc. | | 3,077,686 | | 3,290,958 | |
Noncontrolling interests in Consolidated Real Estate Affiliates | | 19,619 | | 20,008 | |
Total capital | | 3,097,305 | | 3,310,966 | |
Total liabilities and capital | | $ | 7,670,513 | | $ | 8,091,043 | |
T-3
THE ROUSE COMPANY, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
| | Three Months Ended March 31, | |
| | 2012 | | 2011 | |
| | (In thousands) | |
Revenues: | | | | | |
Minimum rents | | $ | 95,081 | | $ | 94,583 | |
Tenant recoveries | | 45,576 | | 46,472 | |
Overage rents | | 2,855 | | 1,846 | |
Other | | 3,849 | | 3,518 | |
Total revenues | | 147,361 | | 146,419 | |
Expenses: | | | | | |
Real estate taxes | | 14,094 | | 14,486 | |
Property maintenance costs | | 5,149 | | 6,743 | |
Marketing | | 1,507 | | 1,416 | |
Other property operating costs | | 21,699 | | 21,733 | |
Provision for (recovery of) doubtful accounts | | 672 | | (822 | ) |
Property management and other costs | | 10,312 | | 10,749 | |
Depreciation and amortization | | 53,256 | | 58,288 | |
Total expenses | | 106,689 | | 112,593 | |
Operating income | | 40,672 | | 33,826 | |
| | | | | |
Interest income | | 183 | | 150 | |
Interest expense | | (57,353 | ) | (59,920 | ) |
Loss before income taxes, equity in income of | | | | | |
Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests | | (16,498 | ) | (25,944 | ) |
Provision for income taxes | | (211 | ) | (190 | ) |
Equity in income of Unconsolidated Real Estate Affiliates | | 6,752 | | 5,616 | |
Loss from continuing operations | | (9,957 | ) | (20,518 | ) |
Discontinued operations | | 883 | | (8,169 | ) |
Net loss | | (9,074 | ) | (28,687 | ) |
Allocation to noncontrolling interests | | 382 | | 652 | |
Net loss attributable to General Growth Properties, Inc. | | $ | (8,692 | ) | $ | (28,035 | ) |
| | | | | |
Comprehensive income (loss): | | | | | |
Net loss | | $ | (9,074 | ) | $ | (28,687 | ) |
Other comprehensive income: | | | | | |
Foreign currency translation | | 13,560 | | 276 | |
Other comprehensive income (loss) | | 4,486 | | (28,411 | ) |
Comprehensive income allocated to noncontrolling interests | | 382 | | 652 | |
Comprehensive income (loss), net attributable to General Growth Properties, Inc. | | $ | 4,868 | | $ | (27,759 | ) |
T-4
THE ROUSE COMPANY, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CAPITAL
(UNAUDITED)
| | Members’
Capital | | Accumulated
other
comprehensive
income (loss) | | Receivable
from General
Growth
Properties,
Inc. | | Noncontrolling
Interests in
Consolidated
Real Estate
Affiliates | | Total Capital | |
| | | | | | (In thousands) | | | | | |
| | | | | | | | | | | |
Balance at January 1, 2011 | | $ | 7,496,625 | | $ | — | | $ | (2,812,817 | ) | $ | 21,416 | | $ | 4,705,224 | |
| | | | | | | | | | | |
Net loss | | (28,035 | ) | — | | — | | (652 | ) | (28,687 | ) |
Other comprehensive income | | — | | 276 | | — | | — | | 276 | |
Advances to General Growth Properties, Inc. | | — | | — | | (194,163 | ) | — | | (194,163 | ) |
Distributions to noncontrolling interests in Consolidated Real Estate Affiliates | | — | | — | | — | | (65 | ) | (65 | ) |
Balance at March 31, 2011 | | $ | 7,468,590 | | $ | 276 | | $ | (3,006,980 | ) | $ | 20,699 | | $ | 4,482,585 | |
| | | | | | | | | | | |
Balance at January 1, 2012 | | $ | 6,118,338 | | $ | (48,471 | ) | $ | (2,778,909 | ) | $ | 20,008 | | $ | 3,310,966 | |
| | | | | | | | | | | |
Net loss | | (8,692 | ) | — | | — | | (382 | ) | (9,074 | ) |
Other comprehensive income | | — | | 13,560 | | — | | — | | 13,560 | |
Advances from General Growth Properties, Inc. | | — | | — | | 8,372 | | — | | 8,372 | |
Distribution to General Growth Properties, Inc. | | (226,512 | ) | — | | — | | — | | (226,512 | ) |
Distributions to noncontrolling interests in Consolidated Real Estate Affiliates | | — | | — | | — | | (7 | ) | (7 | ) |
Balance at March 31, 2012 | | $ | 5,883,134 | | $ | (34,911 | ) | $ | (2,770,537 | ) | $ | 19,619 | | $ | 3,097,305 | |
T-5
THE ROUSE COMPANY, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | Three Months Ended March 31, | |
| | 2012 | | 2011 | |
| | (in thousands) | |
Cash flows from operating activities: | | | | | |
Net loss | | $ | (9,074 | ) | $ | (28,687 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | |
Equity in income of Unconsolidated Real Estate Affiliates | | (6,752 | ) | (1,124 | ) |
Provision for (recovery of) doubtful accounts | | 672 | | (780 | ) |
Distributions received from Unconsolidated Real Estate Affiliates | | 2,622 | | 3,132 | |
Depreciation | | 50,703 | | 76,495 | |
Amortization | | 3,055 | | 3,252 | |
Amortization of deferred financing costs | | 11 | | 13 | |
Accretion/write-off of debt market rate adjustments | | (6,734 | ) | (6,859 | ) |
Amortization of intangibles other than in-place leases | | 5,531 | | 8,298 | |
Straight-line rent amortization | | (4,766 | ) | (8,637 | ) |
Net loss on dispositions | | — | | 1,487 | |
Net changes: | | | | | |
Accounts and notes receivable | | 3,270 | | 2,734 | |
Decrease in restricted cash | | 3,938 | | 6,046 | |
Prepaid expenses, deferred expenses and other assets | | 2,827 | | 5,838 | |
Accounts payable and accrued expenses | | (3,257 | ) | 21,535 | |
Net cash provided by operating activities | | 42,046 | | 82,743 | |
| | | | | |
Cash flows from investing activities: | | | | | |
Development of real estate and property additions/improvements | | (11,017 | ) | (11,695 | ) |
Proceeds from sales of investment properties | | — | | 131,867 | |
Distributions received from Unconsolidated Real Estate Affiliates in excess of income | | 12,981 | | 12,561 | |
Increase in investments in Unconsolidated Real Estate Affiliates | | (19,330 | ) | (612 | ) |
Decrease in restricted cash | | 534 | | 2,885 | |
Other, net | | 29 | | 27 | |
Net cash (used in) provided by investing activities | | (16,803 | ) | 135,033 | |
| | | | | |
Cash flows from financing activities: | | | | | |
Principal payments on mortgages, notes and loans payable | | (13,326 | ) | (19,623 | ) |
Borrowings from (advances to) General Growth Properties, Inc. | | 8,372 | | (194,163 | ) |
Distributions to noncontrolling interests | | (7 | ) | (65 | ) |
Prepayment of financing fees | | (4,325 | ) | — | |
Net cash used in financing activities | | (9,286 | ) | (213,851 | ) |
| | | | | |
Net change in cash and cash equivalents | | 15,957 | | 3,925 | |
Cash and cash equivalents at beginning of period | | 442,559 | | 903,630 | |
Cash and cash equivalents at end of period | | $ | 458,516 | | $ | 907,555 | |
T-6
THE ROUSE COMPANY, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
| | Three Months Ended March 31, | |
| | 2012 | | 2011 | |
| | (in thousands) | |
Supplemental disclosure of cash flow information: | | | | | |
Interest paid | | $ | 47,412 | | $ | 61,997 | |
Interest capitalized | | 62 | | 155 | |
Income taxes paid | | — | | 84 | |
Non-Cash Transactions: | | | | | |
Change in accrued capital expenditures incurred in accounts payable and accrued expenses | | $ | (1,831 | ) | $ | 2,748 | |
Non-Cash Distribution to GGPLP: | | | | | |
Assets | | $ | 398,633 | | $ | — | |
Liabilities | | (172,121 | ) | — | |
T-7
