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 March 31, 2013 and December 31, 2012 and for the three months ended March 31, 2013 and 2012.
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 venture (generally computed as the joint venture partner’s ownership percentage) is included in noncontrolling interests in consolidated real estate affiliates as permanent equity of the Company. All significant intercompany balances and transactions have been eliminated.
Reclassifications
Certain prior period amounts included on the Consolidated Statements of Operations and Comprehensive Income (Loss) associated with properties we have disposed of or distributed 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, 2012 have not changed during the three months ended March 31, 2013.
MANAGEMENT’S DISCUSSION OF TRCLLC OPERATIONS AND LIQUIDITY
The following table summarizes minimum rents for the three months ended March 31, 2013 and 2012:
| | Three Months Ended March, 31 | | | | | |
| | 2013 | | 2012 | | $ Change | | % Change | |
| | (In thousands) | | | | | |
Components of Minimum rents: | | | | | | | | | |
Base minimum rents | | $ | 47,283 | | $ | 45,810 | | $ | 1,473 | | 3.2 | % |
Lease termination income | | 1,896 | | 75 | | 1,821 | | 2,428.0 | |
Straight-line rent | | 1,766 | | 2,231 | | (465 | ) | (20.8 | ) |
Above- and below-market tenant leases, net | | (2,087 | ) | (2,772 | ) | 685 | | (24.7 | ) |
Total Minimum rents | | $ | 48,858 | | $ | 45,344 | | $ | 3,514 | | 7.7 | % |
Base minimum rents increased by $1.5 million primarily due to increased permanent occupancy and positive lease spreads.
Lease termination income increased by $1.8 million primarily due to $1.8 in termination fees recorded at two operating properties.
Property management and other costs decreased by $10.5 million primarily as a result of the discontinuance of corporate cost allocations from GGP.
Depreciation and amortization increased $2.6 million primarily due to write off of land of $2.1 million at one of our operating properties.
Interest expense decreased by $23.4 million primarily due to the redemption of corporate unsecured bonds during 2012 resulting in interest savings of $17.1 million.
Loss on extinguishment of debt of $3.6 million relates to fees associated with the early redemption of corporate unsecured bonds during the three months ended March 31, 2013.
T- 1
Equity in income of Unconsolidated Real Estate Affiliates — gain on investment represents the gain recognized as a result of the additional offering at our Brazilian join venture, Aliansce. The offering diluted GGP’s ownership percentage from 27.77% to 27.59% during January 2013 and resulted in a gain of $2.9 million.
Discontinued operations for the three months ended March 31, 2013, includes the net income on one operating property that was distributed to GGP during the current quarter.
Cash position and liquidity at March 31, 2013
TRCLLC’s cash and cash equivalents increased $1.6 million to $2.1million as of March 31, 2013. 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.
TRCLLC has publicly-traded unsecured bonds of $608.7 million outstanding as of March 31, 2013 and $700.5 million outstanding as of December 31, 2012. The bonds have covenants, including ratios of secured debt to gross assets and total debt to total gross assets. We are not aware of any instances of non-compliance with such covenants as of March 31, 2013.
On April 2, 2013, TRCLLC called for redemption the remaining bonds, $608.7 million of 6.75% unsecured corporate bonds due November 9, 2015. The bonds were redeemed on May 1, 2013, and the full amount of the 6.75% unsecured corporate bonds were redeemed in cash and required the payment of an early redemption fee of approximately $20.5 million, plus accrued and unpaid interest up to, but excluding, the redemption date. The early redemption fee will be recognized in earnings during the three months ended June 30, 2013.
TRCLLC expects to remain current with respect to its debt obligations and be able to access additional funds as required from GGP.
T- 2
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| | March 31, | | December 31, | |
| | 2013 | | 2012 | |
| | (In thousands) | |
Assets: | | | | | |
Investment in real estate: | | | | | |
Land | | $ | 422,233 | | $ | 463,455 | |
Buildings and equipment | | 2,056,990 | | 2,269,051 | |
Less accumulated depreciation | | (185,938 | ) | (188,672 | ) |
Construction in progress | | 7,506 | | 14,182 | |
Net property and equipment | | 2,300,791 | | 2,558,016 | |
Investment in and loans to/from Unconsolidated Real Estate Affiliates | | 894,782 | | 904,922 | |
Net investment in real estate | | 3,195,573 | | 3,462,938 | |
Cash and cash equivalents | | 2,072 | | 434 | |
Accounts and notes receivable, net | | 29,540 | | 31,138 | |
Deferred expenses, net | | 17,828 | | 17,064 | |
Prepaid expenses and other assets | | 148,821 | | 162,764 | |
Total assets | | $ | 3,393,834 | | $ | 3,674,338 | |
| | | | | |
Liabilities: | | | | | |
Mortgages, notes and loans payable | | $ | 2,153,426 | | $ | 2,061,943 | |
Investment in and loans to/from Unconsolidated Real Estate Affiliates | | 15,439 | | — | |
Accounts payable and accrued expenses | | 155,173 | | 164,131 | |
Total liabilities | | 2,324,038 | | 2,226,074 | |
| | | | | |
Capital: | | | | | |
Members’ capital | | 3,168,157 | | 3,310,504 | |
Receivable from General Growth Properties, Inc. | | (2,018,999 | ) | (1,776,138 | ) |
Accumulated other comprehensive loss | | (79,362 | ) | (86,102 | ) |
Members’ capital attributable to General Growth Properties, Inc. | | 1,069,796 | | 1,448,264 | |
Noncontrolling interests in Consolidated Real Estate Affiliates | | — | | — | |
Total capital | | 1,069,796 | | 1,448,264 | |
Total liabilities and capital | | $ | 3,393,834 | | $ | 3,674,338 | |
T- 3
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
| | Three Months Ended March 31, | |
| | 2013 | | 2012 | |
| | (In thousands) | |
Revenues: | | | | | |
Minimum rents | | $ | 48,858 | | $ | 45,344 | |
Tenant recoveries | | 23,259 | | 22,659 | |
Overage rents | | 1,257 | | 1,349 | |
Other | | 2,731 | | 2,607 | |
Total revenues | | 76,105 | | 71,959 | |
Expenses: | | | | | |
Real estate taxes | | 8,360 | | 7,992 | |
Property maintenance costs | | 3,069 | | 2,689 | |
Marketing | | 18 | | 623 | |
Other property operating costs | | 10,546 | | 10,781 | |
Provision for doubtful accounts | | (171 | ) | 226 | |
Property management and other costs | | (421 | ) | 10,071 | |
Depreciation and amortization | | 26,872 | | 24,242 | |
Total expenses | | 48,273 | | 56,624 | |
Operating income | | 27,832 | | 15,335 | |
| | | | | |
Interest income | | 136 | | 179 | |
Interest expense | | (18,237 | ) | (41,618 | ) |
Loss on extinguishment of debt | | (3,568 | ) | — | |
Loss before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations and allocation to noncontrolling interests | | 6,163 | | (26,104 | ) |
Benefit from (provision for) income taxes | | — | | (25 | ) |
Equity in income of Unconsolidated Real Estate Affiliates | | 6,622 | | 6,752 | |
Equity in income of Unconsolidated Real Estate Affiliates - gain on investment | | 2,926 | | — | |
Loss from continuing operations | | 15,711 | | (19,377 | ) |
Discontinued operations | | 663 | | 10,303 | |
Net income (loss) | | 16,374 | | (9,074 | ) |
Allocation to noncontrolling interests | | — | | 382 | |
Net income (loss) attributable to General Growth Properties, Inc. | | $ | 16,374 | | $ | (8,692 | ) |
| | | | | |
Comprehensive income: | | | | | |
Net income (loss) | | $ | 16,374 | | $ | (9,074 | ) |
Other comprehensive income: | | | | | |
Foreign currency translation | | 6,740 | | 13,560 | |
Other comprehensive income | | 23,114 | | 4,486 | |
Comprehensive income allocated to noncontrolling interests | | — | | 382 | |
Comprehensive income, net attributable to General Growth Properties, Inc. | | $ | 23,114 | | $ | 4,868 | |
T- 4
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CAPITAL
(UNAUDITED)
| | Members’
Capital | | Accumulated
other
comprehensive
loss | | Receivable from
General Growth
Properties, Inc. | | Noncontrolling
Interests in
Consolidated
Real Estate
Affiliates | | Total Capital | |
| | (In thousands) | |
| | | | | | | | | | | |
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 loss | | — | | 13,560 | | — | | — | | 13,560 | |
Advances to General Growth Properties, Inc. | | — | | — | | 8,372 | | — | | 8,372 | |
Distributions 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 | |
| | | | | | | | | | | |
Balance at January 1, 2013 | | 3,310,504 | | (86,102 | ) | (1,776,138 | ) | — | | 1,448,264 | |
| | | | | | | | | | | |
Net income | | 16,374 | | — | | — | | — | | 16,374 | |
Other comprehensive loss | | — | | 6,740 | | — | | — | | 6,740 | |
Advances from General Growth Properties, Inc. | | — | | — | | (245,847 | ) | — | | (245,847 | ) |
Distributions to General Growth Properties, Inc. | | (158,721 | ) | — | | 2,986 | | — | | (155,735 | ) |
Balance at March 31, 2013 | | $ | 3,168,157 | | $ | (79,362 | ) | $ | (2,018,999 | ) | $ | — | | $ | 1,069,796 | |
| | | | | | | | | | | | | | | | |
T- 5
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | Three Months Ended March 31, | |
| | 2013 | | 2012 | |
| | (In thousands) | |
Cash Flows from Operating Activities: | | | | | |
Net income (loss) | | $ | 16,374 | | $ | (9,074 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | |
Equity in income of Unconsolidated Real Estate Affiliates | | (6,622 | ) | (6,752 | ) |
Equity in income of Unconsolidated Real Estate Affiliates - gain on investment | | (2,926 | ) | | |
Distributions received from Unconsolidated Real Estate Affiliates | | 2,584 | | 2,622 | |
Provision for doubtful accounts | | (176 | ) | 672 | |
Depreciation | | 27,651 | | 50,703 | |
Amortization | | 1,234 | | 3,055 | |
Amortization/write-off of deferred finance costs | | — | | 11 | |
Accretion/write-off of debt market rate adjustments | | (9,665 | ) | (6,734 | ) |
Amortization of intangibles other than in-place leases | | 2,631 | | 5,531 | |
Straight-line rent amortization | | (1,810 | ) | (4,766 | ) |
Loss on extinguishment of debt | | 3,568 | | — | |
Net Changes: | | | | | |
Accounts and notes receivable | | 1,138 | | 3,270 | |
Prepaid expenses and other assets | | (5,594 | ) | 3,938 | |
Accounts payable and accrued expenses | | 6,773 | | 2,827 | |
Other, net | | — | | (3,257 | ) |
Net cash provided by operating activities | | 35,160 | | 42,046 | |
| | | | | |
Cash Flows from Investing Activities: | | | | | |
Acquisition/development of real estate and property additions/improvements | | (7,807 | ) | (11,017 | ) |
Distributions received from Unconsolidated Real Estate Affiliates in excess of income | | 41,720 | | 12,981 | |
Contributions to Unconsolidated Real Estate Affiliates | | (2,376 | ) | (19,330 | ) |
Decrease in restricted cash | | 170 | | 534 | |
Other, net | | 21 | | 29 | |
Net cash provided by (used in) investing activities | | 31,728 | | (16,803 | ) |
| | | | | |
Cash Flows from Financing Activities: | | | | | |
Proceeds from refinance/issuance of mortgages, notes and loans payable | | 557,500 | | — | |
Principal payments on mortgages, notes and loans payable | | (376,903 | ) | (13,326 | ) |
Prepayment of financing fees | | ��� | | (4,325 | ) |
(Advances to) borrowings from General Growth Properties, Inc. | | (245,847 | ) | 8,372 | |
Distribution to noncontrolling interests | | — | | (7 | ) |
Net cash used in financing activities | | (65,250 | ) | (9,286 | ) |
| | | | | |
Net change in cash and cash equivalents | | 1,638 | | 15,957 | |
Cash and cash equivalents at beginning of period | | 434 | | 442,559 | |
Cash and cash equivalents at end of period | | $ | 2,072 | | $ | 458,516 | |
T- 6
GGP - TRC, L.L.C., A SUBSIDIARY OF GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(UNAUDITED)
| | Three Months Ended March 31, | |
| | 2013 | | 2012 | |
| | (In thousands) | |
Supplemental Disclosure of Cash Flow Information: | | | | | |
Interest paid | | $ | 37,772 | | $ | 47,412 | |
Interest capitalized | | 103 | | 62 | |
Accrued capital expenditures included in accounts payable and accrued expenses | | 5,425 | | $ | 7,029 | |
Non-Cash Distribution to GGPLP: | | | | | |
Assets | | $ | 246,864 | | $ | 398,633 | |
Liabilities | | (91,129 | ) | (172,121 | ) |
T- 7
