Exhibit 99.1
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
The following is unaudited consolidated financial information for our subsidiary, GGP —TRC, L.L.C, (“TRCLLC”), formerly known as The Rouse Company L.L.C., as of June 30, 2012 and December 31, 2011 and for the six months ended June 30, 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. TRCLLC distributed various operating properties to GGP during the six months ended June 30, 2012. Amounts included on the Consolidated Statements of Operations and Comprehensive Loss for properties sold or distributed to GGP 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 six months ended June 30, 2012.
MANAGEMENT’S DISCUSSION OF TRCLLC OPERATIONS AND LIQUIDITY
Revenues
Tenant rents (which includes minimum rents, tenant recoveries, and overage rents) increased by $2.1 million in the first six months of 2012 as compared to the first six months of 2011. This increase is primarily as a result of increases in base minimum rent due to increased occupancy and positive lease spreads.
Operating expenses
Operating expenses decreased by $21.0 million primarily due to a $12.4 million decrease in depreciation and amortization and a $1.5 million decrease in property maintenance costs.
Equity in Income of Unconsolidated Real Estate Affiliates
Equity in income of Unconsolidated Real Estate Affiliates for the six months ended June 30, 2012 increased by $16.3 million from 2011, primarily due to activity at our Brazilian joint venture as a result of growth in property operations and acquisitions of $4.1 million, as well as net gains from the purchase of additional interests in and sale of investment properties of $9.1 million.
Cash position and liquidity at June 30, 2012
TRCLLC’s cash and cash equivalents decreased $228.8 million to $213.8 million as of June 30, 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.
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
| June 30, |
| December 31, |
| ||
|
| 2012 |
| 2011 |
| ||
|
| (Dollars in thousands) |
| ||||
Assets: |
|
|
|
|
| ||
Investment in real estate: |
|
|
|
|
| ||
Land |
| $ | 757,931 |
| $ | 901,274 |
|
Buildings and equipment |
| 4,102,599 |
| 4,749,122 |
| ||
Less accumulated depreciation |
| (255,879 | ) | (251,137 | ) | ||
Construction in progress |
| 28,958 |
| 38,535 |
| ||
Net property and equipment |
| 4,633,609 |
| 5,437,794 |
| ||
Investment in and loans to/from Unconsolidated Real Estate Affiliates |
| 1,244,265 |
| 1,725,338 |
| ||
Net investment in real estate |
| 5,877,874 |
| 7,163,132 |
| ||
Cash and cash equivalents |
| 213,782 |
| 442,559 |
| ||
Accounts and notes receivable, net |
| 40,663 |
| 45,894 |
| ||
Deferred expenses, net |
| 31,984 |
| 39,057 |
| ||
Prepaid expenses and other assets |
| 324,827 |
| 400,401 |
| ||
Total assets |
| $ | 6,489,130 |
| $ | 8,091,043 |
|
|
|
|
|
|
| ||
Liabilities: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Mortgages, notes and loans payable |
| $ | 4,017,835 |
| $ | 4,440,481 |
|
Accounts payable and accrued expenses |
| 270,750 |
| 339,596 |
| ||
Total liabilities |
| 4,288,585 |
| 4,780,077 |
| ||
|
|
|
|
|
| ||
Capital: |
|
|
|
|
| ||
Members’ capital |
| 5,186,173 |
| 6,118,338 |
| ||
Receivable from General Growth Properties, Inc. |
| (2,908,516 | ) | (2,778,910 | ) | ||
Accumulated other comprehensive loss |
| (82,830 | ) | (48,470 | ) | ||
Members’ capital attributable to General Growth Properties, Inc. |
| 2,194,827 |
| 3,290,958 |
| ||
Noncontrolling interests in Consolidated Real Estate Affiliates |
| 5,718 |
| 20,008 |
| ||
Total capital |
| 2,200,545 |
| 3,310,966 |
| ||
Total liabilities and capital |
| $ | 6,489,130 |
| $ | 8,091,043 |
|
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
|
| Six Months Ended June 30, |
| ||||
|
| 2012 |
| 2011 |
| ||
|
| (Dollars In thousands) |
| ||||
Revenues: |
|
|
|
|
| ||
Minimum rents |
| $ | 173,146 |
| $ | 169,909 |
|
Tenant recoveries |
| 83,674 |
| 85,571 |
| ||
Overage rents |
| 3,741 |
| 3,023 |
| ||
Other |
| 7,268 |
| 6,678 |
| ||
Total revenues |
| 267,829 |
| 265,181 |
| ||
Expenses: |
|
|
|
|
| ||
Real estate taxes |
| 26,983 |
| 27,190 |
| ||
Property maintenance costs |
| 9,294 |
| 10,810 |
| ||
Marketing |
| 2,838 |
| 2,536 |
| ||
Other property operating costs |
| 43,121 |
| 43,907 |
| ||
Provision for (recovery of) doubtful accounts | 874 |
| (747 | ) | |||
Property management and other costs |
| 15,948 |
| 23,960 |
| ||
Depreciation and amortization |
| 89,990 |
| 102,351 |
| ||
Total expenses |
| 189,048 |
| 210,007 |
| ||
Operating income |
| 78,781 |
| 55,174 |
| ||
|
|
|
|
|
| ||
Interest income |
| 349 |
| 339 |
| ||
Interest expense |
| (108,397 | ) | (108,856 | ) | ||
Loss before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations and noncontrolling interests |
| (29,267 | ) | (53,343 | ) | ||
Provision for income taxes |
| (418 | ) | (496 | ) | ||
Equity in income of Unconsolidated Real Estate Affiliates |
| 18,390 |
| 2,117 |
| ||
Loss from continuing operations |
| (11,295 | ) | (51,722 | ) | ||
Discontinued operations |
| 787 |
| 3,476 |
| ||
Net loss |
| (10,508 | ) | (48,246 | ) | ||
Allocation to noncontrolling interests |
| 382 |
| 981 |
| ||
Net loss attributable to General Growth Properties, Inc. |
| $ | (10,126 | ) | $ | (47,265 | ) |
|
|
|
|
|
| ||
Comprehensive loss: |
|
|
|
|
| ||
Net loss |
| $ | (10,508 | ) | $ | (48,246 | ) |
Other comprehensive (loss) income: |
|
|
|
|
| ||
Foreign currency translation |
| (34,360 | ) | 42,954 |
| ||
Other comprehensive loss |
| (44,868 | ) | (5,292 | ) | ||
Comprehensive income allocated to noncontrolling interests |
| 382 |
| 981 |
| ||
Comprehensive loss, net attributable to General Growth Properties, Inc. |
| $ | (44,486 | ) | $ | (4,311 | ) |
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CAPITAL
(UNAUDITED)
|
| Members’ |
| Accumulated |
| Receivable |
| Noncontrolling |
| Total Capital |
| |||||
|
| (Dollars in thousands) |
| |||||||||||||
Balance at January 1, 2011 |
| $ | 7,496,625 |
| $ | — |
| $ | (2,812,817 | ) | $ | 21,416 |
| $ | 4,705,224 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
| (47,265 | ) | — |
| — |
| (981 | ) | (48,246 | ) | |||||
Other comprehensive income |
| — |
| 42,954 |
| — |
| — |
| 42,954 |
| |||||
Advances to General Growth Properties, Inc. |
| — |
| — |
| (355,907 | ) | — |
| (355,907 | ) | |||||
Distribution to General Growth Properties, Inc. |
| (449,845 | ) | — |
| 59,824 |
| — |
| (390,021 | ) | |||||
Distributions to noncontrolling interests in Consolidated Real Estate Affiliates |
| — |
| — |
| — |
| (65 | ) | (65 | ) | |||||
Balance at June 30, 2011 |
| $ | 6,999,515 |
| $ | 42,954 |
| $ | (3,108,900 | ) | $ | 20,370 |
| $ | 3,953,939 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance at January 1, 2012 |
| $ | 6,118,338 |
| $ | (48,470 | ) | $ | (2,778,910 | ) | $ | 20,008 |
| $ | 3,310,966 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
| (10,126 | ) | — |
| — |
| (382 | ) | (10,508 | ) | |||||
Other comprehensive loss |
| — |
| (34,360 | ) | — |
| — |
| (34,360 | ) | |||||
Advances to General Growth Properties, Inc. |
| — |
| — |
| (211,632 | ) | — |
| (211,632 | ) | |||||
Distribution to General Growth Properties, Inc. |
| (922,039 | ) | — |
| 82,026 |
| (13,901 | ) | (853,914 | ) | |||||
Distributions to noncontrolling interests in Consolidated Real Estate Affiliates |
| — |
| — |
| — |
| (7 | ) | (7 | ) | |||||
Balance at June 30, 2012 |
| $ | 5,186,173 |
| $ | (82,830 | ) | $ | (2,908,516 | ) | $ | 5,718 |
| $ | 2,200,545 |
|
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
| Six Months Ended June 30, |
| ||||
|
| 2012 |
| 2011 |
| ||
|
| (in thousands) |
| ||||
Cash flows from operating activities: |
|
|
|
|
| ||
Net loss |
| $ | (10,508 | ) | $ | (48,246 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
| ||
Equity in income (loss) of Unconsolidated Real Estate Affiliates |
| (18,390 | ) | 2,911 |
| ||
Provision for (recovery of) doubtful accounts |
| 867 |
| (738 | ) | ||
Distributions received from Unconsolidated Real Estate Affiliates |
| 11,525 |
| 8,169 |
| ||
Depreciation |
| 92,083 |
| 150,364 |
| ||
Amortization |
| 5,283 |
| 6,354 |
| ||
Amortization of deferred financing costs |
| — |
| 27 |
| ||
Accretion of debt market rate adjustments |
| (12,266 | ) | (28,751 | ) | ||
Amortization of intangibles other than in-place leases |
| 12,061 |
| 30,048 |
| ||
Straight-line rent amortization |
| (8,554 | ) | (15,395 | ) | ||
Net loss on dispositions |
| — |
| 1,487 |
| ||
Decrease in restricted cash |
| 3,540 |
| 931 |
| ||
Net changes: |
|
|
|
|
| ||
Accounts and notes receivable |
| 5,679 |
| 5,607 |
| ||
Prepaid expenses, deferred expenses and other assets |
| (14,307 | ) | (1,864 | ) | ||
Accounts payable and accrued expenses |
| (22,695 | ) | (11,486 | ) | ||
Net cash provided by operating activities |
| 44,318 |
| 99,418 |
| ||
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Development of real estate and property additions/improvements |
| (30,518 | ) | (45,704 | ) | ||
Proceeds from sales of investment properties |
| — |
| 131,868 |
| ||
Distributions received from Unconsolidated Real Estate Affiliates in excess of income |
| 19,082 |
| 25,213 |
| ||
Increase in investments in Unconsolidated Real Estate Affiliates |
| (12,921 | ) | (3,408 | ) | ||
Decrease in restricted cash |
| 1,482 |
| 2,929 |
| ||
Other, net |
| 59 |
| 54 |
| ||
Net cash (used in) provided by investing activities |
| (22,816 | ) | 110,952 |
| ||
|
|
|
|
|
| ||
Cash flows from financing activities: |
|
|
|
|
| ||
Principal payments on mortgages, notes and loans payable |
| (25,366 | ) | (297,438 | ) | ||
Advances to General Growth Properties, Inc. |
| (219,706 | ) | (355,907 | ) | ||
Distributions to noncontrolling interests |
| (7 | ) | (65 | ) | ||
Prepayment of financing fees |
| (5,200 | ) | — |
| ||
Deferred financing costs |
| — |
| (2,982 | ) | ||
Net cash used in financing activities |
| (250,279 | ) | (656,392 | ) | ||
|
|
|
|
|
| ||
Net change in cash and cash equivalents |
| (228,777 | ) | (446,022 | ) | ||
Cash and cash equivalents at beginning of period |
| 442,559 |
| 903,630 |
| ||
Cash and cash equivalents at end of period |
| $ | 213,782 |
| $ | 457,608 |
|
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
|
| Six Months Ended June 30, |
| ||||
|
| 2012 |
| 2011 |
| ||
|
| (in thousands) |
| ||||
Supplemental disclosure of cash flow information: |
|
|
|
|
| ||
|
|
|
|
|
| ||
Interest paid |
| $ | 121,294 |
| $ | 156,327 |
|
Interest capitalized |
| 118 |
| 325 |
| ||
Income taxes paid |
| — |
| 932 |
| ||
Non-Cash Transactions: |
|
|
|
|
| ||
Change in accrued capital expenditures incurred in accounts payable and accrued expenses |
| $ | (3,506 | ) | $ | (141 | ) |
Non-Cash Distribution to GGPLP: |
|
|
|
|
| ||
Assets |
| $ | 1,256,510 |
| $ | — |
|
Liabilities |
| (410,810 | ) | — |
|