SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-11656
GENERAL GROWTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 42-1283895
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
110 N. Wacker Dr., Chicago, IL 60606
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(Address of principal executive offices) (Zip Code)
(312) 960-5000
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(Registrant's telephone number, including area
code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, $.10 par value New York Stock Exchange
Depositary Shares, each representing New York Stock Exchange
1/40 of a share of 7.25% Preferred Income
Equity Redeemable Stock, Series A
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
[ ] Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (ss. 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.
As of March 14, 2001, the aggregate market value of the 50,134,462 shares of
Common Stock held by non-affiliates of the registrant was $1,724,628,493,
based upon the closing price on the New York Stock Exchange composite tape on
such date. (For this computation, the registrant has excluded the market value
of all shares of its Common Stock reported as beneficially owned by executive
officers and directors of the registrant; such exclusion shall not be deemed
to constitute an admission that any such person is an "affiliate" of the
registrant). As of March 14, 2001, there were 52,374,034 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the annual stockholders meeting to be held
on May 8, 2001 are incorporated by reference into Part III.
PART I All references to numbered Notes are to specific footnotes
ITEM 1. to the Consolidated Financial Statements of the Company (as
BUSINESS defined below) included in this Annual Report on Form 10-K
and the descriptions included in such Notes are incorporated
into the applicable Item response by reference. The
following discussion should be read in conjunction with such
Consolidated Financial Statements and related Notes.
General
General Growth Properties Inc. ("General Growth") was formed
in 1986 by Martin Bucksbaum and Matthew Bucksbaum (the
"Original Stockholders"). On April 15, 1993, an initial
public offering of the common stock (the "Common Stock") of
General Growth and certain related transactions were
completed. Concurrently, General Growth (as general partner)
and the Original Stockholders (as limited partners) formed
GGP Limited Partnership (the "Operating Partnership").
General Growth has elected to be taxed as a real estate
investment trust (a "REIT") for federal income tax purposes.
As of December 31, 2000, General Growth either directly or
through the Operating Partnership and subsidiaries
(collectively, the "Company") owned 100% of fifty-three
regional mall shopping centers (the "Wholly-Owned Centers");
50% of the stock of GGP/Homart, Inc. ("GGP/Homart"), 50% of
the membership interest of GGP/Homart II, L.L.C.
("GGP/Homart II"), 51% of the stock of GGP Ivanhoe, Inc.
("GGP Ivanhoe"), and 51% of the stock of GGP Ivanhoe III,
Inc. ("GGP Ivanhoe III"), and 50% of each of two regional
mall shopping centers, Quail Springs Mall and Town East Mall
(collectively, the "Unconsolidated Real Estate Affiliates").
In addition, as of December 31, 2001 the Company owned a
non-voting preferred stock interest in General Growth
Management, Inc. ("GGMI"). The Unconsolidated Real Estate
Affiliates and GGMI comprise the "Unconsolidated
Affiliates". The 50% interest in the twenty-three centers
owned by GGP/Homart, the 50% interest in the seven centers
owned by GGP/Homart II, the 51% ownership interest in the
two centers owned by GGP Ivanhoe, the 51% ownership interest
in the eight centers owned by GGP Ivanhoe III, and the 50%
ownership interest in both Quail Springs Mall and Town East
Mall comprise the "Unconsolidated Centers". Together, the
Wholly-Owned Centers and the Unconsolidated Centers comprise
the "Company Portfolio" or the "Portfolio Centers". On
December 31, 2000, General Growth owned an approximate 73%
general partnership interest in the Operating Partnership,
and various minority holders, including the Original
Stockholders and subsequent contributors of properties to
the Operating Partnership, owned the remaining 27% limited
partnership interest. See Item 7 and the Consolidated
Financial Statements and Notes included in Item 8 of this
Annual Report on Form 10-K for certain financial and other
information required by this Item 1.
On December 22, 1995 the Company, jointly with four other
investors, acquired 100% of the stock of GGP/Homart which
owned substantially all of the regional mall assets and
liabilities of Homart Development Co., an indirect wholly-
owned subsidiary of Sears, Roebuck & Co. The Company
acquired approximately 38.2% of GGP/Homart for approximately
$178 million including certain transaction costs. All of the
stockholders of GGP/Homart committed to contribute up to
$80.0 million of additional capital and, as of December 31,
1997 this commitment had been fulfilled. During 1999, three
of the original four other investors, in independent
transactions and pursuant to their respective exchange
rights, exchanged their interests in GGP/Homart for Common
Stock of General Growth. As a result of these transactions,
the Company currently owns a 50% interest in GGP/Homart,
which has elected to be taxed as a REIT.
2
On December 22, 1995, GGP Management, Inc. ("GGP
Management") was formed to manage, lease, develop and
operate enclosed malls. The Operating Partnership owned 100%
of the non-voting preferred stock ownership interest in GGP
Management representing 95% of the equity interest. Key
employees of the Company held the remaining 5% equity
interest in the form of common stock entitled to all of the
voting rights in GGP Management. In August of 1996, GGP
Management acquired GGMI through arm's length negotiations
for approximately $51.5 million (including borrowings from
the Operating Partnership of approximately $39.9 million)
which was accounted for as a purchase. GGP Management was
then merged into GGMI with GGMI as the surviving entity. At
December 31, 2000, the Operating Partnership owned all of
the non-voting preferred stock ownership interest in GGMI
representing 95% of the equity interest. Certain key current
or former employees of the Company held the remaining 5%
equity interest through ownership of 100% of the common
stock, which was entitled to all voting rights in GGMI. The
interest only loans from the Operating Partnership to GGMI
bore interest at rates ranging from 8% to 14% per annum and
were scheduled to mature in 2016.
On January 1, 2001 the REIT provisions of the Tax Relief
Extension Act of 1999 became effective. Among other things,
the law permits a REIT to own up to 100% of the stock of a
taxable REIT subsidiary (a "TRS"). A TRS, which must pay
corporate income tax, can provide services to REIT tenants
and others without disqualifying the rents that a REIT
receives from its tenants. Accordingly, on January 1, 2001
the Company acquired for nominal consideration 100% of the
common stock of GGMI and will elect to have GGMI treated as
a TRS. In connection with the acquisition, the GGMI
preferred stock owned by the Company was cancelled and
approximately $40 million of the outstanding loans owed by
GGMI to the Company were contributed to the capital of GGMI.
The Company and GGMI concurrently terminated the management
contracts for the Wholly-Owned Centers as the management
activities will be performed directly by the Company. GGMI
will continue to manage, lease, and perform various other
services for the Unconsolidated Centers and other properties
owned by unaffiliated third parties.
On September 17, 1997, GGP Ivanhoe indirectly acquired The
Oaks Mall in Gainesville, Florida and Westroads Mall in
Omaha, Nebraska. The purchase price for the two properties
was approximately $206 million of which $125 million was
financed through property level indebtedness. The Company
contributed approximately $43 million for its 51% ownership
interest in GGP Ivanhoe. Ivanhoe, Inc. of Montreal, Canada
("Ivanhoe") owns the remaining 49% ownership interest in GGP
Ivanhoe. GGP Ivanhoe has elected to be taxed as a REIT.
Effective as of June 30, 1998, GGP Ivanhoe III acquired the
U.S. Prime Property, Inc. ("USPPI") real estate portfolio
through a merger of a wholly-owned subsidiary of GGP Ivanhoe
III into USPPI. The common stock of GGP Ivanhoe III, which
has elected to be taxed as a REIT, is owned 51% by the
Company and 49% by Ivanhoe. The aggregate consideration paid
pursuant to the merger agreement was approximately $625
million. The acquisition was financed with a $392 million
interim loan, which was replaced in 1999, and capital
contributions from the Company and the joint venture partner
in proportion to their respective stock ownership. The
properties acquired include Landmark Mall in Alexandria,
Virginia; the Mayfair Mall and adjacent office buildings in
Wauwatosa (Milwaukee), Wisconsin; the Meadows Mall in Las
Vegas, Nevada; the Northgate Mall in Chattanooga, Tennessee;
Oglethorpe Mall in Savannah, Georgia; and the Park City
Center in Lancaster,
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Pennsylvania. During 1999, GGP Ivanhoe III acquired Oak View
Mall in Omaha, Nebraska and Eastridge Mall in San Jose,
California. The aggregate purchase price for the two
properties was approximately $160 million, financed by
capital contributions of the partners, a new $83 million
long-term mortgage loan and certain short-term financing.
In November 1999, the Company formed GGP/Homart II, a new
joint venture with the New York State Common Retirement
Fund, the Company's venture partner in GGP/Homart.
GGP/Homart II owns three regional malls contributed by the
New York State Common Retirement Fund (Alderwood Mall in
Lynnwood (Seattle), Washington; Carolina Place in Charlotte,
North Carolina; and Montclair Plaza in Montclair (Los
Angeles), California), and four regional malls (Altamonte
Mall in Orlando, Florida; Natick Mall in Natick,
Massachusetts; Northbrook Court in Northbrook, Illinois;
Stonebriar Centre in Frisco (Dallas), Texas) contributed by
the Company as more fully described in Note 3.
During May 2000, the Operating Partnership formed GGPLP
L.L.C., a Delaware limited liability company (the "LLC") by
contributing its interest in a portfolio of 44 Wholly-Owned
Centers to the LLC in exchange for all of the common units
of membership interest in the LLC. On May 25, 2000, a total
of 700,000 redeemable preferred units of membership interest
in the LLC (the "RPUs") were issued to an institutional
investor by the LLC, which yielded approximately $170.6
million in net proceeds to the Company. The net proceeds of
the sale of the RPUs were used to repay a portion of the
Company's unsecured debt.
Business of the The Company is primarily engaged in the ownership,
Company operation, management, leasing, acquisition, development,
expansion and financing of regional mall shopping centers in
the United States. Most of the shopping centers in the
Company Portfolio are strategically located in major and
middle markets where they have strong competitive positions.
A detailed listing starting on page 14 of this report
contains information on each regional mall shopping center
in the Company Portfolio including location, year opened,
square footage, anchors, and anchor vacancies. The Company
Portfolio's geographic diversification should mitigate the
effects of regional economic conditions and local factors.
The Company makes all key strategic decisions for the
Portfolio Centers. However, in connection with the
Unconsolidated Centers, such strategic decisions are made
jointly with the respective stockholders or joint venture
partners. The Company is also the asset manager of the
Portfolio Centers, executing the strategic decisions and
overseeing the day-to-day activities performed directly by
the Operating Partnership or, with respect to the
Unconsolidated Centers, by GGMI. GGMI performs day-to-day
property management functions including leasing,
construction management, data processing, maintenance,
accounting, marketing, promotion and security pursuant to
the management agreements with the Unconsolidated Centers.
As of December 31, 2000 GGMI was the property manager for
forty of the Unconsolidated Centers. The remaining two
centers, owned by GGP/Homart through joint ventures, are
managed by certain joint venture partners of GGP/Homart.
The majority of the income from the Portfolio Centers is
derived from rents received through long term leases with
retail tenants. The long-term leases require the tenants to
pay base rent which is a fixed amount specified in the
lease. The base rent is often subject to scheduled increases
defined in the lease. Another component of income is overage
rent. Overage rent is paid by a tenant generally if their
sales exceed an agreed
4
upon minimum annual amount. Overage rent is calculated by
multiplying the sales in excess of the minimum annual amount
by a percentage defined in the lease. Long-term leases
generally contain a provision for the lessor to recover
certain expenses incurred in the day-to-day operations
including common area maintenance and real estate taxes. The
recovery is generally related to the tenant's pro-rata share
of space in the property.
The evolution of the shopping center business necessitates
the implementation of new approaches to shopping center
management and leasing. Management's strategies to increase
shareholder value and cash flow include the integration of
mass merchandise retailers with traditional department
stores, specialty leasing, entertainment-oriented tenants,
proactive property management and leasing, operating cost
reductions including those resulting from economies of
scale, strategic expansions and acquisitions, e-business
initiatives and selective new shopping center developments.
Management believes that these approaches should enable the
Company to operate and grow successfully in today's value-
oriented and technological environment. Following is a
summary of recent acquisition, development and expansion and
redevelopment activity.
As used in this Annual Report on Form 10-K, the term "GLA"
refers to gross leaseable retail space, including Anchors
and mall tenant areas; the term "Mall GLA" refers to gross
leaseable retail space, excluding Anchors; the term "Anchor"
refers to a department store or other large retail store;
the term "Mall Stores" refers to stores (other than Anchors)
that are typically specialty retailers who lease space in
shopping centers; and the term "Freestanding GLA" means
gross leaseable area of freestanding retail stores in
locations that are not attached to the primary complex of
buildings that comprise a regional mall shopping center.
Acquisitions The Company continues to seek to acquire properties that
provide opportunities for enhanced profitability and
appreciation in value and corresponding increases in
shareholder value. In 2000, the Company acquired an 100%
ownership interest in Crossroads Center, a regional mall in
St. Cloud (Minneapolis), Minnesota for an aggregate
investment by the Company of approximately $80 million.
The Company's management feels that it has a competitive
advantage with respect to the acquisition of regional mall
shopping centers for the following reasons:
. The funds necessary for a cash acquisition of a
shopping center may be available to the Company from
a combination of sources, including mortgage or
unsecured financing or the issuance of public or
private debt or equity.
. The Company has the flexibility to pay for an
acquisition with a combination of cash, Preferred or
Common Stock or common units of limited partnership
interest in the Operating Partnership (the "Units").
This creates the opportunity for a tax-advantaged
transaction for the seller.
. Management's expertise allows it to evaluate proposed
acquisitions for their increased profit potential.
Additional profit can originate from many sources
including expansions, remodeling, re-merchandising,
and more efficient management of the property.
Development The Company intends to pursue development when warranted by
the potential financial returns. GGP/Homart II completed and
opened on schedule in August 2000 the Stonebriar Centre
(described below), an enclosed shopping center in Frisco
(Dallas), Texas. In addition, the Company is preparing to
develop (with a joint venture
5
partner) an enclosed regional mall in Westlake (Dallas),
Texas (described below) and is investigating certain other
development sites, including Toledo, Ohio and West
Des Moines, Iowa. However, there can be no assurance that
development of these sites will proceed.
Construction commenced on the Stonebriar Centre in Frisco,
Texas in October 1998. Upon its completion in August 2000,
this 1,600,000 square foot regional mall shopping center
featured five department store anchors, a 24 screen AMC
theater, approximately 350,000 square feet of Mall Stores
and 150,000 square feet of big box and large format
retailers. Plans still include a possible second phase
expansion to include two additional department stores.
During 1999, the Company formed a joint venture to develop
an enclosed mall in Westlake (Dallas), Texas. As of December
31, 2000, the Company had invested approximately $14.5
million in the joint venture. The Company is currently
obligated to fund pre-development costs (estimated to be
approximately $1.5 million, most of which has been incurred)
and actual development costs have not yet been finalized.
The retail site, part of a planned community which is
expected to contain a resort hotel, a golf course, luxury
homes and corporate offices, is currently planned to contain
up to 1.5 million square feet of tenant space including up
to six anchor stores and a multi-screen theater. There can
be no assurance that development of this site will proceed
beyond the pre-development phase.
Expansions and
Renovations During 2000, 16 major projects were underway or completed.
The expansion and renovation of a Portfolio Center often
increases customer traffic, trade area penetration and
typically improves the competitive position of the property.
Four of the larger renovation and expansion projects under
construction in 2000 are described below.
The redevelopment of the Knollwood Mall, a 402,182 square
foot center located in St. Louis Park (Minneapolis),
Minnesota began in 1999. The project includes adding a 16-
screen theater complex and completely remerchandising the
center, which is expected to be completed in early 2001.
Eden Prairie Mall, located in Eden Prairie, Minnesota, a
suburb of Minneapolis, was previously a four-anchor center
with approximately 325,000 square feet of Mall Stores. Phase
I of the renovation commenced in early 1999 consisting of a
new Von Maur anchor store and a new 500 car parking
structure. Construction of Phase II of the project commenced
in late 1999 and will consist of a mall renovation, a food
court renovation, and the construction of a multi-screen
theatre. Both phases are scheduled to be completed in 2001.
Fallbrook Mall is a 1,024,737 square foot enclosed mall
located in West Hills, (Los Angeles) California. The
renovation of the mall commenced in 2000 and will consist of
converting the mall to an outdoor, 1,100,000 square foot
power center with an additional anchor store and additional
big box retailers. Completion of the project is anticipated
for fall 2002.
Valley Hills Mall, a 619,921 square foot center located in
Hickory, North Carolina is undergoing an extensive
renovation which commenced in 2000. The mall will add a new
Dillards store to the existing anchors, Belk, JC Penney and
Sears. The project also includes a food court, approximately
30,000 square feet of new mall shop space and two new
parking decks. Completion is planned for late 2001.
6
The Portfolio
Centers All of the 95 Portfolio Centers are shopping centers with at
least one major department store as an Anchor and a wide
variety of smaller Mall Stores. Most of the Portfolio
Centers have three or four Anchors and additional
Freestanding Stores. Each Portfolio Center provides ample
parking for shoppers. The Portfolio Centers:
. Range in size between approximately 184,000 and
1,810,000 square feet of total GLA and between
approximately 125,000 and 800,000 square feet of Mall
and Freestanding GLA. The smallest Portfolio Center
has approximately 20 stores, and the largest has over
265 stores;
. Have approximately 396 Anchors, operating under
approximately 68 trade names; and
. Have approximately 9,500 Mall and Freestanding
Stores.
The average size of the 95 Portfolio Centers is
approximately 910,000 square feet of GLA, including all
Anchors, Mall Stores and Freestanding Stores. The average
Mall and Freestanding GLA per Portfolio Center is
approximately 360,000 square feet.
As of December 31, 2000, the Wholly-Owned Centers contained
approximately 43.2 million square feet of GLA consisting of
Anchors (whether owned or leased), Mall Stores and
Freestanding Stores. The Unconsolidated Centers contained
approximately 43.0 million square feet of GLA.
The Company's share of total revenues from the Portfolio
Centers and GGMI increased to $1,112 million in 2000 from
$907 million in 1999. No single Portfolio Center generated
more than 9.6% of the Company's total 2000 pro rata
revenues. In 2000, total Mall Store sales from the Portfolio
Centers increased by approximately 7.4% in comparison to the
total Mall Store sales in 1999.
7
The table below shows tenants, by trade name, with more than
.75% of aggregate annualized effective rents as compared to
consolidated effective rents on an annualized basis in the
Wholly-Owned Centers at December 31, 2000. In addition,
similar percentages existed in the Portfolio Centers as of
December 31, 2000.
% of Total
Tenant Name Annualized Rents
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JCPenney 1.52%
Sears 1.34%
Express (/1/) 1.31%
Victoria's Secret (/1/) 1.12%
Gap 1.10%
Lerner N.Y. 0.94%
Footlocker 0.91%
The Limited 0.89%
Zales Jewelers 0.88%
Old Navy 0.85%
American Eagle Outfitters 0.83%
Eddie Bauer 0.82%
Payless 0.81%
Kay Bee Toys 0.81%
Champs Sports 0.78%
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(1) Under common ownership by The Limited, Inc.
Mall and The Portfolio Centers have a total of approximately 9,500
Freestanding Mall and Freestanding Stores. The following table reflects
Stores the tenant representation by category in the Portfolio
Centers as of December 31, 2000.
% of Sq. Ft. in
Portfolio
Tenant Categories Centers (*) Types of Tenants/Products Sold
----------------- --------------- --------------------------------
Specialty 22% Photo studios, beauty and nail
salons, pharmacy and sundries,
variety stores, pet stores,
newsstands, jewelry repair, shoe
repair, tailor, video games,
shops for home/bath/kitchen,
rugs, fabric stores, beds/
waterbeds, luggage, perfume,
tobacco, toys, arcades, cameras,
sunglasses, books
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Women's Apparel 19% Women's apparel
-------------------------------------------------------------
Apparel 18% Unisex apparel, children's
apparel, lingerie, and
formalwear
-------------------------------------------------------------
Shoes 11% Shoes
-------------------------------------------------------------
Food 8% Restaurant, food court
-------------------------------------------------------------
Gifts 5% Cards, candles, engraving
stores, other gift or novelty
-------------------------------------------------------------
Music/Electronics 6% Music, electronics, computer and
software, video rental
-------------------------------------------------------------
Sporting Goods 3% Sports apparel, sports and
exercise equipment
-------------------------------------------------------------
Jewelry 4% Fine jewelry and costume jewelry
-------------------------------------------------------------
Men's Apparel 2% Men's apparel
-------------------------------------------------------------
Specialty Food 2% Candy, coffee, nuts, chocolate,
health food/vitamins
-------------------------------------------------------------
Total 100% --------------------------------
--
8
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(*) Excludes the two malls managed by joint venture
partners of GGP/Homart (Arrowhead Towne Center and
Superstition Springs).
Specialty tenants include Mastercuts, One Hour Photo,
California Nails, Kay-Bee Toys, Dollar Tree, Pottery Barn
and many others. Typical tenants in the Women's Apparel
category include The Limited, Casual Corner, Lane Bryant and
Victoria's Secret. The Apparel category typically includes
tenants such as The Gap, American Eagle, Old Navy and
J.Crew. The Shoes category includes tenants such as
Footlocker, Journeys and Payless Shoesource. The Food
category includes restaurants such as Ruby Tuesday,
Cheesecake Factory and Max and Erma's, fast food restaurants
such as Arby's, and food court tenants such as Sbarro.
Typical tenants in the Gifts Category include Disney, Things
Remembered, Kirlin's Hallmark and Spencer Gifts. The
Music/Electronics category includes tenants such as Camelot
Music, Radio Shack, and Suncoast Pictures. Sporting Goods
include tenants such as Champs, Big 5 Sports and Scheel's
Sports. Jewelry tenants typically include Zales, Helzberg
Diamonds and Kay Jewelers. The Men's Apparel category
includes tenants such as The Men's Warehouse and Nicks for
Men. Specialty Food tenants include General Nutrition
Center, Mr. Bulky, and Barnie's Coffee and Tea Company.
Competition The Portfolio Centers compete with numerous shopping
alternatives in seeking to attract retailers to lease space
as retailers themselves face increasing competition from
discount shopping centers, outlet malls, discount shopping
clubs, direct mail, internet sales and telemarketing. The
nature and extent of competition varies from property to
property within the Company Portfolio. Below is a
description of the type of competition that three of the
Portfolio Centers face from other retail locations within
their trade area. These examples are representative of the
competitive environment in which the Company operates.
Valley Hills Mall is a 616,000 square foot, enclosed
regional shopping center located in Hickory, North Carolina.
The mall opened in 1978 and serves a six county trade area
which includes over 307,000 people. Major manufacturing
industries in the area include furniture, textiles and fiber
optics. The mall currently has three Anchor tenants: Belk,
JCPenney and Sears. The mall has 78 mall shops with national
retailers such as FootAction, American Eagle and Abercrombie
& Fitch. Valley Hills' primary regional mall competition is
just outside of its trade area and consists of super-
regional centers such as Eastridge Mall, Hanes Mall and
Carolina Place Mall. The mall also faces competition from
neighborhood strip and power shopping centers including
Kohl's, Marshalls and Barnes and Noble which have opened
within the last year and are located within a one-mile
radius of the center.
Northbrook Court is a two-story, 978,000 square foot
regional mall located in Northbrook (Chicago), Illinois. The
mall contains 128 mall shops, and three Anchor department
stores. The mall is anchored by Lord & Taylor, Marshall
Fields and Neiman-Marcus. The property includes a 14-screen
General Cinema Theater and national retailers such as
Abercrombie & Fitch, Ann Taylor, The Gap and J.Crew.
Northbrook Court faces competition from two regional malls
in its primary trade area. Old Orchard Shopping Center is a
recently renovated open-air regional shopping mall located
eight miles southeast of Northbrook Court. Old Orchard
features five Anchor department stores and includes 1.8
million square feet of leaseable area. Hawthorn Center, a
1.06 million square foot regional mall located ten miles
northwest of Northbrook Court, includes three Anchor
department stores. The secondary competition for Northbrook
Court consists of discount retailers, numerous strip
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shopping centers located within a few miles of the center,
and a super regional mall (Woodfield Mall), with 2.1 million
square feet located fifteen miles southwest of Northbrook
Court.
Crossroads Center is a 782,000 million square foot, single-
level, regional shopping center located in St. Cloud
(Minneapolis), Minnesota, one of Minnesota's fastest growing
metropolitan areas. Crossroads Center is anchored by
Dayton's, Sears, JCPenney and Target and has 119 specialty
mall shops. Crossroads Center opened in 1966 and renovations
were made in 1999, including a new food court and carousel.
The mall's trade area includes over 415,000 people and major
employers include granite, printing and lens manufacturing
companies as well as medical, retail and high technology
firms. The Center's primary competition is from a free-
standing Kohl's department store and a number of "big-box"
retailers in the immediate area, including Circuit City, K-
Mart, Wal-Mart, Sam's Club and Best Buy. Additional
competitors are Kendi Mall and Ridgedale Center, both over
50 miles to the south of Crossroads Center.
Environmental Under various federal, state and local laws and regulations,
Matters an owner of real estate is liable for the costs of removal
or remediation of certain hazardous or toxic substances on
such property. These laws often impose such liability
without regard to whether the owner knew of, or was
responsible for, the presence of such hazardous or toxic
substances. The costs of remediation or removal of such
substances may be substantial, and the presence of such
substances, or the failure to promptly remediate such
substances, may adversely affect the owner's ability to sell
such real estate or to borrow using such real estate as
collateral. In connection with its ownership and operation
of the Portfolio Centers, General Growth, the Operating
Partnership or the relevant property venture through which
the property is owned, may be potentially liable for such
costs.
All of the Portfolio Centers have been subject to Phase I
environmental assessments, which are intended to discover
information regarding, and to evaluate the environmental
condition of, the surveyed and surrounding properties. The
Phase I assessments included a historical review, a public
records review, a preliminary investigation of the site and
surrounding properties, screening for the presence of
asbestos, polychlorinated biphenyls ("PCBs") and underground
storage tanks and the preparation and issuance of a written
report, but do not include soil sampling or subsurface
investigations. Where the Phase I assessment so recommended,
a Phase II assessment was conducted to further investigate
any issues raised by the Phase I assessment. In each case
where Phase I and/or Phase II assessments resulted in
specific recommendations for remedial actions, management
has either taken or scheduled the recommended action.
Neither the Phase I nor the Phase II assessments have
revealed any environmental liability that the Company
believes would have a material effect on the Company's
business, assets or results of operations, nor is the
Company aware of any such liability. Nevertheless, it is
possible that these assessments do not reveal all
environmental liabilities or that there are material
environmental liabilities of which the Company is unaware.
Moreover, no assurances can be given that (i) future laws,
ordinances or regulations will not impose any material
environmental liability or (ii) the current environmental
condition of the Portfolio Centers will not be adversely
affected by tenants and occupants of the Portfolio Centers,
by the condition of properties in the vicinity of the
Portfolio Centers (such as the presence of underground
storage tanks) or by third parties unrelated to the Company.
10
Employees As of March 14, 2001, the Company and GGMI had 3,506 full-
time employees. Certain employees at three of the Portfolio
Centers are subject to collective bargaining agreements. The
Company's management believes that their employee relations
are satisfactory and there has not been a labor-related work
stoppage at any of its Centers.
Insurance The Company has comprehensive liability, fire, flood,
earthquake, extended coverage and rental loss insurance with
respect to the Portfolio Centers. The Company's management
believes that all of the Portfolio Centers are adequately
covered by insurance.
Qualification General Growth currently qualifies as a real estate
as a Real investment trust pursuant to the requirements contained in
Estate Sections 856-858 of the Internal Revenue Code of 1986, as
Investment amended (the "Code"). If, as General Growth contemplates,
Trust and such qualification continues, General Growth will not be
Taxability of taxed on its real estate investment trust taxable income.
Distributions During 2000, General Growth distributed (or was deemed to
have distributed) 100% of its taxable income to its
preferred and common stockholders. Cash distributions in the
amount of $2.06 per share of Common Stock were paid for
2000, of which $1.90 (92.2%) was ordinary income and $0.16
(7.8%) was a return of capital based on the taxable income
of General Growth.
ITEM 2. The Company's investment in real estate as of December 31,
PROPERTIES 2000 consisted of its interests in the Portfolio Centers,
developments in progress and certain other real estate. In
most cases, the land underlying the Portfolio Centers is
also owned by the Company; however, at a few of the centers,
all or part of the underlying land is owned by a third party
that leases the land pursuant to a ground lease.
Leasing The Portfolio Centers average Mall Store rent per square
foot from leases that expired in 2000 was $29.29. As a
result of market rents being higher than the rents under
many of the expiring leases, the average Mall Store rent per
square foot on new and renewal leases during 2000 was
$35.24, or $5.95 per square foot more than the average for
expiring leases. The following schedule shows scheduled
lease expirations over the next five years.
11
PORTFOLIO CENTERS
FIVE YEAR LEASE EXPIRATION SCHEDULE
All Expirations Expirations @ Share (/1/)
-------------------------------- -------------------------------
Base Rent Footage Rent/PSF Base Rent Footage Rent/PSF
------------ ---------- -------- ------------ --------- --------
Wholly Owned
2001 $ 17,325,771 759,767 $22.80 $ 17,325,771 759,767 $22.80
2002 27,792,429 1,202,392 23.11 27,792,429 1,202,392 23.11
2003 29,945,519 1,386,243 21.60 29,945,519 1,386,243 21.60
2004 24,772,976 1,055,919 23.46 24,772,976 1,055,919 23.46
2005 38,815,920 1,640,130 23.67 38,815,920 1,640,130 23.67
------------ ---------- ------ ------------ --------- ------
Portfolio Total $138,652,615 6,044,451 $22.94 $138,652,615 6,044,451 $22.94
Unconsolidated (/2/)
2001 $ 19,410,277 929,961 $20.87 $ 10,038,593 476,976 $21.05
2002 28,088,561 964,298 29.13 14,492,194 501,162 28.92
2003 27,369,549 964,575 28.37 14,159,561 500,306 28.30
2004 36,568,270 1,283,863 28.48 18,460,733 653,794 28.24
2005 30,086,497 1,050,881 28.63 15,189,306 534,992 28.39
------------ ---------- ------ ------------ --------- ------
Portfolio Total $141,523,154 5,193,578 $27.25 $ 72,340,387 2,667,230 $27.12
Grand Total $280,175,769 11,238,029 $24.93 $210,993,002 8,711,681 $24.22
============ ========== ====== ============ ========= ======
- --------
(1) Expirations at share reflect the Company's direct or indirect ownership
interest in a joint venture.
(2) Excludes the two malls managed by joint venture partners of GGP/Homart
(Arrowhead Towne Center and Superstition Springs).
12
Company At December 31, 2000, the Company had direct or indirect
Portfolio Debt ("pro rata") mortgage and other debt of approximately
$4,540,036. The ratio of pro rata floating rate debt to
total pro rata debt and preferred stock and preferred
Operating Partnership Units was 40.0% at December 31, 2000.
The following table reflects the maturity dates of the
Company's pro rata debt and the related interest rates.
COMPANY PORTFOLIO DEBT
MATURITY AND CURRENT AVERAGE INTEREST RATE SUMMARY(a)
AS OF DECEMBER 31, 2000
(Dollars in Thousands)
Unconsolidated
Wholly-Owned Joint Venture Company
Centers Properties (b) Portfolio Debt
------------------- ------------------- -------------------
Current Current Current
Average Average Average
Maturing Interest Maturing Interest Maturing Interest
Year Amount Rate Amount Rate Amount Rate
---- ---------- -------- ---------- -------- ---------- --------
2001.................... $ 392,000 7.66% $ 78,300 8.11% $ 470,300 7.74%
2002.................... 96,055 7.93% 178,909 7.12% 274,964 7.41%
2003.................... 265,000 8.20% 474,272 7.43% 739,272 7.71%
2004.................... 1,109,377 7.57% 200,989 7.66% 1,310,366 7.58%
2005.................... 25,614 7.99% 0 0.00% 25,614 7.99%
Subsequent.............. $1,356,080 7.08% 363,440 7.38% 1,719,520 7.07%
---------- ----- ---------- ----- ---------- -----
Totals.................. $3,244,126 7.44% $1,295,910 7.45% $4,540,036 7.42%
========== ===== ========== ===== ========== =====
Floating................ $1,411,343 7.97% $ 608,978 7.71% $2,020,321 7.89%
Fixed Rate.............. 1,832,783 7.01% 686,932 7.22% 2,519,715 7.07%
---------- ----- ---------- ----- ---------- -----
Totals.................. $3,244,126 7.44% $1,295,910 7.45% $4,540,036 7.42%
========== ===== ========== ===== ========== =====
- --------
(a) Excludes principal amortization.
(b) Unconsolidated properties debt reflects the Company's share of debt (based
on its respective equity ownership interests in the Unconsolidated Joint
Ventures) relating to the properties owned by the Unconsolidated Joint
Ventures.
13
Property Data The following tables set forth certain information regarding
the Wholly-Owned Centers and the Unconsolidated Centers as
of December 31, 2000. The first table depicts the Wholly-
Owned Centers and the second table depicts the
Unconsolidated Centers.
Wholly-Owned Centers
Total GLA/Mall
and Freestanding
Year Opened/ GLA
Name of Center/ Remodeled or (Square Feet) Anchor
Location (/1/) Expanded (/2/) Anchors Vacancies
- ------------------------- -------------- ---------------- -------------------------------------- ---------
Ala Moana Center 1959/ 1,812,089/ JCPenney, Liberty House, None
Honolulu, Hawaii 1966,1987, 800,624 Neiman Marcus, Sears
1989,1999
Apache Mall 1969/ 742,028/ Dayton's, JCPenney, None
Rochester, Minnesota 1985,1992 232,762 Sears, Ward
Baybrook Mall 1978/ 1,087,088/ Dillards, Mervyn's, Sears, Ward None
Houston, Texas 1984,1985 343,565
Bayshore Mall 1987/ 613,464/ Gottschalks, JCPenney, Mervyn's, Sears None
Eureka, California 1989 293,304
Bellis Fair Mall 1988/ 762,709/ The Bon Marche, JCPenney, Mervyn's, None
Bellingham, Washington N/A 336,150 Sears, Target,
Birchwood Mall 1990/ 786,425/ Hudson's, JCPenney, Sears, None
Port Huron, Michigan 1991, 1997 287,291 Target, Younkers
The Boulevard Mall 1968/ 1,184,772/ Dillard's, JCPenney, Macy's, Sears None
Las Vegas, Nevada 1992 327,375
Capital Mall 1978/ 532,749/ Dillard's, JCPenney, Sears None
Jefferson City, Missouri 1985,1992 234,294
Century Plaza 1975/ 743,609/ JCPenney, McRae's, Rich's, Sears None
Birmingham, Alabama 1990,1994 235,213
Chapel Hills Mall 1982/ 1,172,585/ Dillard's, Foley's, JCPenney, KMart, None
Colorado Springs, CO 1986,1997,1998 398,145 Mervyn's, Sears,
Coastland Center 1977/ 927,014/ Burdines, Dillard's, JCPenney, Sears None
Naples, Florida 1985,1996 336,624
Colony Square Mall 1981/ 546,318/ Elder-Beerman, JCPenney, Lazarus, None
Zanesville, Ohio 1987 231,154 Sears
Columbia Mall 1985/ 741,213/ Dillard's, JCPenney, Sears, Target None
Columbia, Missouri 1987 314,269
Coral Ridge Mall 1998/ 997,363/ Dillard's, JCPenney, Scheel's, None
Iowa City, Iowa N/A 291,750 Sears, Target, Younkers
Crossroads Center 1966/ 783,934/ Dayton's, JCPenney, None
St. Cloud, Minnesota 1995,1999 277,005 Sears, Target
The Crossroads 1980/ 755,127/ Hudson's, JCPenney, Mervyn's, None
Portage, Michigan 1982,1988,1998 252,167 Sears
Cumberland Mall 1973/ 1,159,723/ JCPenney, Macy's, Rich's, Sears None
Atlanta, Georgia 1989 325,608
14
Total GLA/Mall
Year Opened/ and Freestanding
Name of Center/ Remodeled GLA Anchor
Location (/1/) or Expanded (Square Feet) (/2/) Anchors Vacancies
- ------------------------ -------------- ------------------- --------------------------------------------- ---------
Eagle Ridge Mall 1996/ 624,073/ Dillard's, JCPenney, Sears None
Lake Wales, Florida N/A 279,291
Eden Prairie Mall 1976/ 873,766/ Kohl's, Mervyn's, Sears, Target None
Eden Prairie, Minnesota 1989,1994 337,958
Fallbrook Mall 1966/ 1,041,141/ Burlington Coat Factory, JCPenney, Kmart, None
West Hills, (Los
Angeles), 1985 386,182 Mervyn's, Target
California
Fox River Mall 1984/ 1,128,712/ Dayton's, JCPenney, Sears, None
Appleton, Wisconsin 1991,1998 434,152 Target, Younkers
Gateway Mall 1990/ 646,747/ The Emporium, Sears, Target None
Springfield/Eugene, 1999 287,796
Oregon
Grand Traverse Mall 1992/ 577,399/ Hudson's, JCPenney, Target None
Traverse City, Michigan N/A 299,928
Greenwood Mall 1979/ 783,837/ Dillard's, Dillard's Home Store, Famous Barr, None
Bowling Green, Kentucky 1987 265,710 JCPenney, Sears
Knollwood Mall 1955/ 399,699/ Cub Foods, Kohl's None
St. Louis Park, 1981 168,439
(Minneapolis),
Minnesota
Lakeview Square Mall 1983/ 610,432/ Hudson's, JCPenney, Sears None
Battle Creek, Michigan 1998 235,756
Lansing Mall 1969/ 846,524/ Hudson's, JCPenney, Mervyn's, None
Lansing, Michigan N/A 319,619 Younkers
Lockport Mall 1971/ 345,686/ Ames, The Bon Ton, None
Lockport, New York 1984 114,015 Rosa's Homestore
Mall of the Bluffs 1986/ 667,106/ Dillard's, JCPenney, Sears, Target None
Council Bluffs, Iowa 1988,1998 319,060
(Omaha, Nebraska)
Mall St. Vincent 1977/ 548,370/ Dillard's, Sears None
Shreveport, Louisiana 1991 200,370
Market Place Shopping
Center 1975/ 1,105,076/ Bergner's, Famous Barr, JCPenney, One
Champaign, Illinois 1987,1994,1999 276,538 Kohl's, Sears
McCreless Mall 1962/ 477,114/ Beall's, Montgomery Ward None
San Antonio, Texas 1997 268,231
Northridge Fashion
Center 1971/ 1,512,712/ JCPenney, Macy's, Robinson-May, None
Northridge, California 1995,1997 625,105 Sears
Oakwood Mall 1986/ 790,596/ Dayton's, JCPenney, None
Eau Claire, Wisconsin 1991,1997 319,900 Scheel's All Sports, Sears, Target
15
Total GLA/Mall
and Freestanding
Year Opened/ GLA
Name of Center/ Remodeled (Square Anchor
Location (/1/) or Expanded Feet) (/2/) Anchors Vacancies
- ------------------------ -------------- ---------------- ------------------------------------- ---------
Park Place 1974/ 981,449/ Dillards, Macy's, Sears None
Tucson, Arizona 1998 346,915
Piedmont Mall 1984/ 667,278/ Ames, Belk, Belk Men's, None
Danville, Virginia 1995 189,160 JCPenney, Sears, Ames
Pierre Bossier Mall 1982/ 610,345/ Dillard's, JCPenney, Sears, None
Bossier City, Louisiana 1985,1992 263,453 Service Merchandise, Stage
The Pines 1986/ 609,182/ Dillard's, JCPenney, None
Pine Bluff, Arkansas 1990 265,396 Sears, Wal-Mart
Regency Square Mall 1967/ 1,429,962/ Belk, Dillard's, JCPenney, None
Jacksonville, Florida 1992,1998,1999 470,927 Sears, Wards
Rio West Mall 1981/ 445,009/ Beall's, JCPenney, KMart None
Gallup, New Mexico 1991,1998 170,130
River Falls Mall 1990/ 752,167/ Dillard's, Toys "R" Us, Wal-Mart, None
Clarksville, Indiana N/A 277,836
(Louisville, Kentucky)
River Hills Mall 1991/ 725,561/ Herberger's, JCPenney, None
Mankato, Minnesota 1996 259,643 Sears ,Target
Riverlands Shopping
Center 1965/ 183,768/ Winn-Dixie None
LaPlace, Louisiana 1984 183,768 (/3/)
RiverTown Crossings 1999/ 1,248,624/ Galyan's, Hudson's, JCPenney, None
Granville (Grand
Rapids), N/A 499,999 Kohl's, Sears, Younkers,
Michigan
Sooner Fashion Square 1976/ 515,266/ Dillard's, JCPenney, None
Norman, Oklahoma 1999 175,194 Sears, Stein Mart,
Old Navy Clothing Company
Southlake Mall 1976/ 1,015,835/ JCPenney, Macy's, Rich's, Sears None
Morrow, Georgia 1995,1999 277,335
SouthShore Mall 1981/ 337,828/ JCPenney, KMart, Sears None
Aberdeen, Washington N/A 148,501
Southwest Plaza 1983/ 1,236,551/ Dillards, Foley's, JCPenney, None
Littleton, Colorado 1994,1995 430,732 Sears, Wards
Spring Hill Mall 1980/ 1,100,033/ Carson Pirie Scott, JCPenney, Kohl's, None
West Dundee, Illinois 1992,1996 394,129 Marshall Field's, Sears
Valley Hills Mall 1978/ 616,427/ Belk, JCPenney, Sears None
Hickory, North Carolina 1988,1990,1996 204,131
Valley Plaza Mall 1967/ 1,157,240/ Gottschalks, JCPenney, None
Bakersfield, California 1988,1997,1998 338,317 Macy's, Robinson-May, Sears
16
Total GLA/Mall
and Freestanding
Name of Center/ Year Opened/ GLA
Location Remodeled or (Square Feet) Anchor
(/1/) Expanded (/2/) Anchors Vacancies
- ------------------ ------------ ---------------- ------------------------------------------- ---------
West Valley Mall 1995/ 742,768/ Gottschalks, JCPenney, Ross Dress for Less, None
Tracy, California 1997 273,740 Sears, Target
Westwood Mall 1972/ 453,971/ Elder-Beerman, JCPenney, None
Jackson, Michigan 1978,1993 131,886 Wards
- --------
(1) In certain cases, where a Center's location is part of a larger
metropolitan area, the metropolitan area is identified in parentheses.
(2) Includes square footage added in redevelopment/expansion projects.
(3) Winn-Dixie does not occupy its space but is currently paying rent under a
lease which expires in October 2002.
17
UNCONSOLIDATED CENTERS
Ownership Total GLA/Mall
Year Opened/ Interest % and Freestanding
Name of Center/ Remodeled or of Operating GLA Anchor
Location (/1/) Expanded Partnership Square Feet (/2/) Anchors Vacancies
- ------------------------ ------------ ------------ ----------------- ------------------------------ ---------
Alderwood Mall 1979/ 50 1,042,642/ The Bon Marche, JCPenney, One
Lynnwood (Seattle), 1995,1996 310,834 Nordstrom, Sears,
Washington
Altamonte Mall 1974/ 50 1,090,250/ Burdines, Dillard's, None
Orlando, Florida 1989,1990 389,202 JCPenney, Sears
Arrowhead Towne Center 1993/ 16.7 1,130,901/ Dillard's, JCPenney, Mervyn's, None
Glendale, Arizona N/A 392,954 Robinson-May, Wards
Bay City Mall 1991/ 50 517,141/ JCPenney, Sears, None
Bay City, Michigan 1993 211,290 Target, Younkers
Brass Mill
Center/Commons 1997/ 50 1,265,877/ Boscov's, Filene's, JCPenney, One
Waterbury, Connecticut N/A 326,385 Sears
Carolina Place 1991/ 50 1,090,910/ Belk, Dillards, Hecht's, None
Charlotte, North
Carolina 1994 317,408 JCPenney, Sears
Chula Vista Center 1962/ 50 885,616/ JCPenney, Macy's, None
Chula Vista, California 1993,1994 302,666 Mervyn's, Sears
Columbiana Centre 1990/ 50 871,494/ Belk, Dillards, None
Columbia, South
Carolina 1992 258,067 Parisian, Sears
Deerbrook Mall 1984/ 50 1,202,386/ Dillard's, Foley's, JCPenney, None
Humble (Houston), Texas 1996,1997 462,793 Mervyn's, Sears
Eastridge Mall 1970/ 51 1,358,684/ JCPenney, Macy's, Sears One
San Jose, California 1982,1995 431,142
Lakeland Square 1988/ 50 900,600/ Belk, Burdines, Dillard's, None
Lakeland, Florida 1994 290,562 JCPenney, Sears
Landmark Mall 1965/ 51 962,931/ Hecht's, Lord & Taylor, Sears One
Alexandria, VA 1989,1991 343,455
Mayfair Mall 1958/ 51 1,045,492/ The Boston Store, None
Wauwatosa, Wisconsin 1986,1994 546,182 Marshall Fields
Meadows Mall 1978/ 51 947,657/ Dillard's, JCPenney, Macy's, None
Las Vegas, Nevada 1987,1997 310,804 Sears
Montclair Plaza 1968/ 50 1,358,369/ JCPenney, Macy's, None
Montclair (Los Angeles) 1985 518,359 Nordstrom, Robinson-May,
California Sears, Wards
Moreno Valley Mall 1992/ 50 1,035,060/ Harris, JCPenney, None
Moreno Valley,
California N/A 429,526 Robinson-May, Sears
Natick Mall 1966/ 50 1,154,191/ Filene's, Lord & Taylor, None
Natick, Massachusetts 1994 427,529 Macy's, Sears
18
Total GLA/Mall
Ownership and Freestanding
Year Opened/ Interest % GLA
Name of Center/ Remodeled of Operating Square Anchor
Location (/1/) or Expanded Partnership Feet (/2/) Anchors Vacancies
- --------------------------- -------------- ------------ ---------------- -------------------------------- ---------
Neshaminy Mall 1968/ 25 1,060,529/ Boscov's, Sears, One
Bensalem, 1995,1998 423,738 Strawbridge and Clothiers
Pennsylvania
Newgate Mall 1981/ 50 688,921/ Dillard's, Mervyn's, None
Ogden, Utah 1994,1998 275,757 Oshman's, Sears
New Park Mall 1980/ 50 1,168,681/ JCPenney, Macy's, Mervyn's, None
Newark, California 1993 389,628 Sears, Target
Northbrook Court 1976/ 50 982,013/ Lord & Taylor, Marshall Fields, None
Northbrook, Illinois 1995,1996 359,094 Neiman Marcus
Northgate Mall 1972/ 51 816,894/ JCPenney, Proffitt's, Sears None
Chattanooga, 1991 242,730
Tennessee
North Point Mall 1993/ 50 1,367,587/ Dillard's, JCPenney, Lord & None
Alpharetta (Atlanta), N/A 397,526 Taylor, Parisian, Rich's, Sears
Georgia
The Oaks Mall(/2/) 1978/ 51 907,647/ Belk, Burdines, Dillard's, None
Gainesville, Florida N/A 337,646 JCPenney, Sears
Oak View Mall 1991/ 51 867,615/ Dillard's, JCPenney, None
Omaha, Nebraska 1995 249,690 Sears, Younkers
Oglethorpe Mall 1969/ 51 957,220/ Belk, JCPenney, Rich's, Sears None
Savannah, Georgia 1989,1990,1992 409,249
Park City Center 1970/ 51 1,397,459/ The Bon-Ton, Boscov's, JCPenney, None
Lancaster, 1988,1997 488,962 Kohl's, Sears
Pennsylvania
The Parks at Arlington 1988/ 50 1,189,299/ Dillard's, Foley's, JCPenney, None
Arlington, Texas N/A 358,354 Mervyn's, Sears
Pavilions at Buckland Hills 1990/ 50 1,011,140/ Dick's Sporting Goods, Filene's, None
Manchester, 1994 327,618 Filene's Home Store, JCPenney,
Connecticut Lord & Taylor, Sears
Pembroke Lakes Mall 1992/ 50 1,116,825/ Burdine's, Dillard's, None
Pembroke Pines, N/A 335,836 JCPenney, Sears
Florida
Prince Kuhio Plaza 1985/ 50 504,387/ JCPenney, Liberty House, One
Hilo, Hawaii 1994,1999 165,061 Sears
Quail Springs 1980/ 50 1,127,030/ Dillard's, Foley's, None
Oklahoma City, 1992,1998,1999 333,258 JCPenney, Sears
Oklahoma
Steeplegate Mall 1990/ 50 483,109/ JCPenney, Sears, None
Concord, N/A 185,506 The Bon Ton
New Hampshire
Stonebriar Centre 2000/ 50 1,648,094/ Foley's, JCPenney, One
Frisco (Dallas), Texas N/A 524,013 Macy's, Nordstrom, Sears
Superstition Springs 1990/ 16.7 1,073,726/ Dillard's, JCPenney, Mervyn's, None
East Mesa, Arizona 1994 367,032 Robinson-May, Sears
Town East Mall 1971/ 50 1,256,888/ Dillard's, Foley's, JCPenney, None
Mesquite, Texas 1986 425,482 Sears
19
Ownership Total GLA/Mall
Year Opened/ Interest % and Freestanding
Name of Center/ Remodeled or of Operating GLA Square Feet Anchor
Location (/1/) Expanded Partnership (/2/) Anchors Vacancies
- ----------------------- ------------ ------------ ---------------- ----------------------------- ---------
Tysons Galleria 1988/ 50 810,710/ Macy's, Neiman Marcus, None
McLean, Virginia 1994,1997 298,777 Saks Fifth Avenue
Vista Ridge Mall 1989/ 50 1,053,369/ Dillard's, Foley's, None
Lewisville, Texas 1991 380,307 JCPenney, Sears
Washington Park Mall 1984/ 50 351,469/ Dillard's, JCPenney, None
Bartlesville, Oklahoma 1986 157,173 Sears
West Oaks Mall 1996/ 50 1,071,183/ Dillard's, JCPenney, None
Ocoee (Orlando),
Florida 1998 365,854 Parisian, Sears
Westroads Mall 1968/ 51 1,085,515/ JCPenney, The Jones Store, None
Omaha, Nebraska 1995,1999 373,895 Von Maur, Younkers
The Woodlands Mall 1994/ 25 1,177,816/ Dillard's, Foley's, JCPenney, None
The Woodlands, 1998 351,301 Mervyn's, Sears
(Houston), Texas
- --------
(1) In certain cases where a Center's location is part of a larger metropolitan
area, the metropolitan area is identified in parenthesis.
(2) Includes square footage added in redevelopment/expansion projects.
20
Anchors Anchors have traditionally been a major factor in the
public's image of an enclosed shopping center. Anchors are
generally department stores whose merchandise appeals to a
broad range of shoppers. Anchors either own their stores,
the land under them and adjacent parking areas, or enter
into long-term leases at rates that are generally lower than
the rents charged to Mall Store tenants. Although the
Portfolio Centers receive a smaller percentage of their
operating income from Anchors than from Mall Stores, strong
Anchors play an important part in maintaining customer
traffic and making the Portfolio Centers desirable locations
for Mall Store tenants.
The following table indicates the parent company of each
Anchor and sets forth the number of stores and square feet
owned or leased by each Anchor at the Portfolio Centers as
of December 31, 2000.
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO ANCHORS
AS OF DECEMBER 31, 2000
Total Square Feet
Name Stores (000's)
----------------------------------------------- ------ -----------
Sears 82 11,775
JCPenney 79 8,957
Dillard's Inc.
Dillard's 41 6,487
Dillard's Home Store 1 22
--- ------
Sub-Total Dillard's Inc. 42 6,409
=== ======
Target Corporation
Target 16 1,758
Mervyn's 16 1,353
Marshall Fields 3 692
Dayton's 4 532
Hudson's 6 695
--- ------
Sub-Total Target Corporation 45 5,030
=== ======
May Department Stores Company
Foley's 11 1,623
Robinson's-May 6 985
Filene's 3 520
Filene's Home Store 1 36
Lord & Taylor 5 577
Strawbridge and Clothier 1 218
Hecht's 2 345
Famous Barr 2 272
The Jones Store 1 175
--- ------
Sub-Total May Department Stores Company 34 4,949
=== ======
Federated Department Stores, Inc.
Macy's 14 2,512
Rich's 5 937
Burdines 5 676
The Bon Marche 2 321
Lazarus 1 50
--- ------
Sub-Total Federated Department Stores, Inc. 27 4,496
=== ======
21
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO ANCHORS
AS OF DECEMBER 31, 2000
(continued)
Total Square Feet
Name Stores (000's)
---------------------------------------- ------ -----------
Saks Holdings Incorporated
Younkers 8 982
Parisian 3 395
Carson Pirie Scott 1 138
Boston Store 1 211
Bergners 1 154
McRae's 1 124
Saks Fifth Avenue 1 120
Proffitt's 1 90
Herberger's 1 71
--- -----
Sub-Total Saks Holdings Incorporated 18 2,285
=== =====
Montgomery Ward & Co. 7 907
Belk
Belk 9 1,144
Belk Men's 1 34
--- -----
Sub-Total Belk 10 1,178
=== =====
Kohl's 6 544
Neiman-Marcus 3 423
Boscov 4 552
Liberty House 2 377
KMart 3 301
The Bon Ton 3 312
Gottschalks 3 268
Nordstrom 3 388
Wal-Mart 2 196
Von Maur 1 179
Scheel's All Sports 2 155
Harris 1 150
Elder-Beerman 3 141
Cub Foods 1 130
Ames 2 176
Burlington Coat Factory 1 101
Galyans 1 100
Dick's Sporting Goods 1 80
Oshman's 1 64
Service Merchandise 1 59
Rosa's Home Store 1 57
Beall's 2 56
The Emporium 1 50
Toys "R" Us 1 47
Winn-Dixie 1 47
Stein Mart 1 39
Stage 1 35
Old Navy Clothing Company 1 34
Ross Dress for Less 1 28
22
Ground Leases The Company currently leases the land under Rio West Mall, a
portion of the Fallbrook Mall land and a portion of the
SouthShore and Bayshore parking areas. In addition, Prince
Kuhio Plaza, one of the Homart Centers, and the office
building owned and used by the Company as its headquarters
are subject to long-term ground leases. The leases generally
contain various purchase options in favor of the Company and
typically provide for a right of first refusal in favor of
the Company in the event of a proposed sale of the property
by the landlord.
For other information concerning the Portfolio Centers see
"Item 1--Business--Business of the Company" and for
additional information concerning the mortgage debt
encumbering the Wholly-Owned Centers, see Note 5. As stated
in Item 1 above, management of the Company believes that
each of the properties in the Company Portfolio is
adequately insured.
ITEM 3. LEGAL The Company is not currently involved in any material
PROCEEDINGS litigation nor, to the Company's knowledge, is any material
litigation currently threatened against the Company, the
properties or any of the Unconsolidated Joint Ventures other
than routine litigation arising in the ordinary course of
business, most of which is expected to be covered by
liability insurance. For information about certain
environmental matters, see "Item 1--Business--Environmental
Matters."
ITEM 4. SUBMISSIONNo matters were submitted to a vote of General Growth's
OF MATTERS TO Astockholders during the fourth quarter of fiscal 2000.
VOTE OF
SECURITY
HOLDERS
PART II
ITEM 5. MARKET The Common Stock is listed on the New York Stock Exchange
FOR REGISTRANT'S ("NYSE") and trades under the symbol "GGP". As of March 14,
COMMON EQUITY 2001, the 52,374,034 outstanding shares of Common Stock were
AND RELATED held by approximately 1,388 stockholders of record. The
STOCKHOLDER closing price per share of the Common Stock on the NYSE on
MATTERS such date was $34.40 per share.
Set forth below are the high and low sales prices per share
of Common Stock as reported on the composite tape, and the
distributions per share of Common Stock declared for each
such period.
Price
2000 -------------
Quarter Declared
Ended High Low Distribution
------- ------ ------ ------------
March 31 $30.56 $30.44 $.51
June 30 $32.60 $31.75 $.51
September 30 $33.06 $32.19 $.51
December 31 $36.50 $36.12 $.53
Price
1999 -------------
Quarter Declared
Ended High Low Distribution
------- ------ ------ ------------
March 31 $38.44 $31.25 $.49
June 30 $38.63 $31.13 $.49
September 30 $35.63 $31.06 $.49
December 31 $31.69 $25.00 $.51
23
Price
1998 -------------
Quarter Declared
Ended High Low Distribution
------- ------ ------ ------------
March 31 $38.00 $34.88 $.47
June 30 $38.63 $34.44 $.47
September 30 $38.69 $33.19 $.47
December 31 $37.94 $32.88 $.47
ITEM 6. SELECTED FINANCIAL DATA
(Dollars in Thousands, except per Share Amounts)
The following table sets forth selected financial data for the Company which
is derived from and therefore should be read in conjunction with the audited
Consolidated Financial Statements and the related Notes and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in this Annual Report.
2000 1999 1998 1997 1996
--------- ----------- ----------- --------- --------
OPERATING DATA
Revenue $ 698,767 $ 612,342 $ 426,576 $ 291,147 $217,405
Operating Expenses 226,234 206,088 151,784 109,677 75,954
Depreciation and
Amortization 126,689 112,874 75,227 48,509 39,809
Interest Expense, Net 205,623 169,502 109,840 70,252 66,439
Equity in Net Income of
Unconsolidated
Affiliates 50,063 19,689 11,067 19,344 17,589
Net gain on sales
including CenterMark in
1997 & 1996 44 4,412 196 58,647 43,821
--------- ----------- ----------- --------- --------
Income Before Minority
Interest 190,328 147,979 100,988 140,700 96,613
Minority Interest (52,380) (33,058) (29,794) (49,997) (34,580)
--------- ----------- ----------- --------- --------
Income Before
Extraordinary Items 137,948 114,921 71,194 90,703 62,033
Extraordinary Items -- (13,796) (4,749) (1,152) (2,291)
--------- ----------- ----------- --------- --------
Net Income 137,948 101,125 66,445 89,551 59,742
--------- ----------- ----------- --------- --------
Convertible Preferred
Stock Dividends (24,467) (24,467) (13,433) -- --
Net Income available to
common stockholders $ 113,481 $ 76,658 $ 53,012 $ 89,551 $ 59,742
========= =========== =========== ========= ========
Earnings Before
Extraordinary Item Per
Share--Basic 2.18 1.97 1.60 2.78 2.20
Earnings Before
Extraordinary Item Per
Share--Diluted 2.18 1.96 1.59 2.76 2.20
Net Earnings Per Share--
Basic 2.18 1.67 1.46 2.75 2.12
Net Earnings Per Share--
Diluted 2.18 1.66 1.46 2.73 2.12
Distributions Declared
Per Share 2.06 1.98 1.88 1.80 1.72
CASH FLOW DATA
Operating Activities $ 309,474 $ 222,134 $ 118,304 $ 101,149 $ 67,202
Investing Activities (379,285) (1,254,697) (1,513,147) (183,535) (29,285)
Financing Activities 71,447 1,038,526 1,388,575 92,337 (40,268)
FUNDS FROM OPERATIONS
(/1/)
Operating Partnership $ 330,299 $ 274,234 $ 192,274 $ 147,625 $114,721
Minority Interest (90,805) (82,631) (69,182) (52,890) (42,115)
Funds From Operations--
Company 239,494 191,603 123,092 94,735 72,606
24
BALANCE SHEET DATA
Investment in Real
Estate Assets--Cost $5,439,466 $5,023,690 $4,063,097 $2,157,251 $1,828,184
Total Assets 5,284,104 4,954,895 4,027,474 2,097,719 1,757,717
Total Debt 3,244,126 3,119,534 2,648,776 1,275,785 1,168,522
Redeemable Preferred
Units 175,000 -- -- -- --
Convertible Preferred
Stock 337,500 337,500 337,500 -- --
Stockholders' Equity 938,418 927,758 585,707 498,505 330,267
- --------
(1) Funds from Operations (as defined below) does not represent cash flow from
operations as defined by Generally Accepted Accounting Principles ("GAAP")
and is not necessarily indicative of cash available to fund all cash
requirements.
Funds From Funds from Operations is used by the real estate industry
Operations and investment community as a primary measure of the
performance of real estate companies. As revised in October
1999, the National Association of Real Estate Investment
Trusts ("NAREIT") defines Funds from Operations as net
income (loss) (computed in accordance with GAAP), excluding
gains (or losses) from debt restructuring and sales of
properties, plus real estate related depreciation and
amortization and after adjustments for unconsolidated
partnerships and joint ventures. In calculating its Funds
from Operations, the Company also excluded gains on land
sales, if any, through 1999. The NAREIT definition of Funds
from Operations does not exclude the aforementioned item.
The Company's Funds from Operations may not be directly
comparable to similarly titled measures reported by other
real estate investment trusts. Funds from Operations does
not represent cash flow from operating activities in
accordance with GAAP and should not be considered as an
alternative to net income (determined in accordance with
GAAP) as an indication of the Company's financial
performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it indicative of funds available
to fund the Company's cash needs, including its ability to
make cash distributions.
RECONCILIATION OF NET INCOME DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES TO FUNDS FROM OPERATIONS:
2000 1999 1998
-------- -------- --------
Net Income available to common stockholders $113,481 $ 76,658 $ 53,012
Extraordinary item--charges related to early
retirement of debt -- 13,796 4,749
Allocations to Operating Partnership
unitholders 43,026 33,058 29,794
Net loss (gain) on sales 1,005 (4,412) (196)
Depreciation and amortization 172,787 155,134 104,915
-------- -------- --------
Funds From Operations $330,299 $274,234 $192,274
======== ======== ========
25
GENERAL GROWTH PROPERTIES, INC.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
All references to numbered Notes are to specific footnotes
to the Consolidated Financial Statements of the Company
included in this Annual Report, which descriptions are
incorporated into the applicable response by reference. The
following discussion should be read in conjunction with such
Consolidated Financial Statements and related Notes.
Capitalized terms used but not defined in this Management's
Discussion of Financial Condition and Results of Operations
have the same meanings as in such Notes.
Forward-Looking Forward-looking statements contained in this Annual Report
Information on Form 10-K may include certain forward-looking information
statements, within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including
(without limitation) statements with respect to anticipated
future operating and financial performance, growth and
acquisition opportunities and other similar forecasts and
statements of expectation. Words such as "expects",
"anticipates", "intends", "plans", "believes", "seeks",
"estimates" and "should" and variations of these words and
similar expressions, are intended to identify these forward-
looking statements. Forward-looking statements made by the
Company and its management are based on estimates,
projections, beliefs and assumptions of management at the
time of such statements and are not guarantees of future
performance. The Company disclaims any obligation to update
or revise any forward-looking statement based on the
occurrence of future events, the receipt of new information
or otherwise.
Actual future performance, outcomes and results may differ
materially from those expressed in forward-looking
statements made by the Company and its management as a
result of a number of risks, uncertainties and assumptions.
Representative examples of these factors 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.
Certain As of December 31, 2000, the Company owned 100% of the
Information fifty-three Wholly-Owned Centers, 50% of the stock of
About The GGP/Homart, 50% of the membership interest in GGP/Homart II,
Company 51% of the stock of GGP Ivanhoe, 51% of the stock of GGP
Portfolio Ivanhoe III, 50% of Quail Springs Mall and Town East Mall,
(collectively, the "Company Portfolio") and a non-voting
preferred stock ownership interest (representing 95% of the
equity interest) in GGMI. On January 1, 2001, the Operating
Partnership purchased the common stock of GGMI and the
preferred stock of GGMI, which was 100% owned by the
Company, was cancelled as discussed below.
26
GENERAL GROWTH PROPERTIES, INC.
Reference is made to Notes 3 and 4 for a further discussion
of such entities owned by the Company. As of December 31,
2000, GGP/Homart owned interests in twenty-three shopping
centers, GGP/Homart II owned interests in seven shopping
centers, GGP Ivanhoe owned interests in two shopping
centers, and GGP Ivanhoe III owned interests in eight
shopping centers.
As used in this Annual Report, the term "GLA" refers to
gross leaseable retail space, including Anchors and mall
tenant areas; the term "Mall GLA" refers to gross leaseable
retail space, excluding Anchors; the term "Anchor" refers to
a department store or other large retail store; the term
"Mall Stores" refers to stores (other than Anchors) that are
typically specialty retailers who lease space in shopping
centers; and the term "Freestanding GLA" means gross
leaseable area of freestanding retail stores in locations
that are not attached to the primary complex of buildings
that comprise a regional mall shopping center.
The Mall Store and Freestanding Store portions of the
centers in the Company Portfolio which were not undergoing
redevelopment on December 31, 1999, had an occupancy rate of
approximately 90.1% as of such date. On December 31, 2000,
the Mall Store and Freestanding Store portions of the
centers in the Company Portfolio which were not undergoing
redevelopment were approximately 91.0% occupied,
representing an increase in occupancy percentage of 0.9%
over 1999.
Total annualized sales averaged $357 per square foot for the
Company Portfolio for the year ended December 31, 2000, an
increase of $16 per square foot over the comparable amount
for 1999. For the year ended December 31, 2000, total Mall
Store sales for the Company Portfolio increased by 7.4% over
the same period in 1999. Comparable Mall Store sales are
current sales of those certain tenants that were open during
the previous measuring period compared to the sales of those
same tenants for the previous measuring period. Therefore,
Comparable Mall Store sales in the year ended December 31,
2000 are of those tenants that were also operating for the
full year ended December 31, 1999. Comparable Mall Store
sales in the year ended December 31, 2000 increased by 2.4%
over the same period in 1999.
The average Mall Store rent per square foot from leases that
expired in the year ended December 31, 2000 was $29.29. The
Company Portfolio benefited from increasing rents inasmuch
as the average Mall Store rent per square foot on new and
renewal leases executed during 2000 was $35.24, or $5.95 per
square foot above the average for expiring leases.
RESULTS OF
OPERATIONS OF General:
THE COMPANY Company revenues are primarily derived from fixed minimum
rents, overage rents and recoveries of operating expenses
from tenants. Inasmuch as the Company's financial statements
reflect the use of the equity method to account for its
investments in GGP/Homart, GGP/Homart II, GGP Ivanhoe, GGP
Ivanhoe III, GGMI, Quail Springs Mall and Town East Mall,
the discussion of results of operations which follows
relates primarily to the revenues and expenses of the
Wholly-Owned Centers. In addition, during 1999, the Company
opened Rivertown Crossings and purchased interests in the
following Wholly-Owned Centers: The Crossroads, Ala Moana,
and Baybrook. Also
27
GENERAL GROWTH PROPERTIES, INC.
during 1999, the Company contributed its 100% interests in
one development project, Stonebriar, as well as three
operating properties, Northbrook Court, Natick, and
Altamonte to GGP/Homart II, an unconsolidated entity. During
April 2000, the Company purchased a 100% interest in
Crossroads Center. For purposes of the following discussion
of the results of operations, the net effect of acquisitions
will include the effect of the Rivertown Crossings opening,
the effect of the new acquisitions in 1999 and 2000 and the
effect of the three operating properties contributed to
GGP/Homart II.
Comparison of Year Ended December 31, 2000 To Year Ended
December 31, 1999
Total revenues for 2000 were $698.8 million, which
represents an increase of $86.5 million or approximately
14.1% from $612.3 million in 1999. Approximately
$46.5 million or 52.7% of the increase was from properties
acquired or developed after July 30, 1999. Minimum rent
during 2000 increased $52.5 million or 13.5% from $387.5
million in 1999 to $440 million. The acquisition and
development of properties generated a $27.9 million increase
in minimum rents. Expansion space, specialty leasing and a
combination of occupancy, rental charges and allowance
reserve adjustments at the comparable centers accounted for
the remaining increase in minimum rents. Tenant recoveries
increased by $32.9 million or 18.2% from $180.6 million to
$213.5 million in 2000. The increase in tenant recoveries
was generated by a combination of new acquisitions and
increased recoverable operating costs at the comparable
centers. Overage rents increased $1.6 million or 6.0% from
$27.0 million in 1999 to $28.6 million in 2000 as a result
of the acquisition of new properties and improved
performance at the comparable centers. Fee income for 2000
increased $1.6 million or 29.6% from $5.4 million in 1999 to
$7.0 million in 2000. The fee revenue was primarily
generated by asset management services performed for
GGP/Homart and GGP/Homart II.
Total expenses, including depreciation and amortization,
increased by approximately 10.6% or $33.9 million, from $319
million in 1999 to $352.9 million in 2000. The majority of
the increase in total expenses was attributable to
properties acquired and developed in 1999 and 2000. The
increase in total expenses from the new properties consists
primarily of approximately $3.6 million of real estate
taxes, $9.9 million of property operating costs, and $6.0
million of depreciation and amortization.
Interest expense increased by $32.1 million or 17.3% from
$186 million in 1999 to $218.1 million in 2000,
substantially all due to indebtedness incurred in connection
with the acquisition of new properties in 1999 and 2000. The
note receivable from GGMI generated $6.8 million of interest
income in 2000, a decrease of $4.6 million from $11.4
million in 1999.
Equity in net income of unconsolidated affiliates during
2000 increased by $30.3 million to $50.0 million from $19.7
million in 1999. GGP/Homart II accounted for an increase of
approximately $19.0 million. The Company's ownership
interest in GGMI resulted in an increase of $11.1 million..
Net income after extraordinary items increased by
approximately $36.8 million in 2000 to $137.9 million, from
$101.1 million in 1999. The increase resulted from a
combination of the above items.
28
GENERAL GROWTH PROPERTIES, INC.
Comparison of Year Ended December 31, 1999 To Year Ended
December 31, 1998
Total revenues for 1999 were $612.3 million, which
represents an increase of $185.7 million or approximately
43.5% from $426.6 million in 1998. Approximately
$168.2 million of the increase was from properties acquired
or developed after January 1, 1998. Minimum rent during 1999
increased $118.5 million or 44.1% from $269.0 million in
1998 to $387.5 million. $103.8 million of the increase in
minimum rent resulted from the acquisition and development
of properties after January 1, 1998. Tenant recoveries
(amounts received from tenants related to property operating
costs) increased by $49.7 million or 38.0% from $130.9
million to $180.6 million in 1999. The increase in tenant
recoveries was generated by a combination of new
acquisitions and increased recoverable operating costs at
the comparable centers (properties owned for the entire time
during current and prior periods). Overage rents and other
income increased $16.8 million or 76.4% from $22.0 million
in 1998 to $38.8 million in 1999 primarily due to the
acquisition of new properties and improved performance at
the comparable centers. Fee income increased slightly during
1999 as compared to the year ended December 31, 1998
primarily due to fee revenue generated by asset management
services performed for the Unconsolidated Joint Ventures.
Total expenses, including depreciation and amortization,
increased by approximately 40.5% or $92 million, from $227.0
million in 1998 to $319 million in 1999. Approximately $86.5
million or 94.0% of the increase in total expenses related
to properties acquired and developed since January 1, 1998.
The remaining $5.5 million of the increase was primarily
accounted for by increased operating costs, the majority of
which were recoverable from tenants. The increase in total
expenses consists of $12 million of real estate taxes, $2.3
million of management fees, $36.6 million of property
operating costs, $2.0 million of provision for doubtful
accounts, $1.3 million of general and administrative and
$37.6 million of depreciation and amortization.
Interest expense increased by $60.2 million or 47.8% from
$125.8 million in 1998 to $186 million in 1999. Debt used to
fund acquisitions generated a $53.9 million increase in
interest expense in 1999 compared to 1998. This increase was
partially offset by the use of a portion of the proceeds of
the Company's public offering of Common Stock to repay
existing indebtedness. The note receivable from GGMI
generated $11.4 million of interest income in 1999, an
increase of $0.7 million from $10.7 million in 1998.
Net income after extraordinary items increased by
approximately $34.7 million in 1999 to $101.1 million from
$66.4 million in 1998. The increase resulted from a
combination of the above items.
Liquidity and As of December 31, 2000, the Company held approximately
Capital $27.2 million of unrestricted cash and cash equivalents. The
Resources of Company uses operating cash flow as the principal source of
The Company internal funding for short-term liquidity and capital needs
such as tenant construction allowances and minor
improvements made to individual properties that are not
recoverable through common area maintenance charges to
tenants. External funding alternatives for longer-term
liquidity needs such as acquisitions, new development,
expansions and major renovation programs at individual
centers include construction loans, mini-permanent loans,
long-term project financing, joint venture
29
GENERAL GROWTH PROPERTIES, INC.
financing with institutional partners, additional Operating
Partnership level or Company level equity securities,
unsecured Company level debt or secured loans collateralized
by individual shopping centers. In addition, the Company has
access to the public equity and debt markets through a
currently effective shelf registration statement under which
up to $329.2 million in equity or debt securities may be
issued from time to time. The Company also has a revolving
credit facility and term loans (with a collective balance of
approximately $265 million at December 31, 2000) which
mature on July 31, 2003 as discussed below. The Company
currently anticipates that it will be able to increase, if
necessary, the aggregate principal amounts available to be
borrowed under such facilities from an aggregate of $390
million as of December 31, 2000 to $650 million.
As of December 31, 2000, the Company had consolidated debt
of approximately $3,244 million, of which $1,833 million is
comprised of debt bearing interest at a fixed rate, with the
remaining $1,411 million bearing interest at floating rates.
Reference is made to Note 5 and Items 2 and 7A of the
Company's Annual Report on Form 10-K for additional
information regarding the Company's debt and the potential
impact on the Company of interest rate fluctuations.
The following summarizes certain significant investment and
financing transactions currently planned or completed since
December 31,1999:
The Company had previously advanced approximately $31
million collateralized by a second mortgage on the
Crossroads Center in St. Cloud (Minneapolis), Minnesota. In
connection with the second mortgage (as modified in February
2000) the Company acquired the property in April 2000 as
further described in Note 3.
In January 2000, the Company obtained a new $200 million
unsecured short-term bank loan. The Company's initial draw
under this loan was $120 million which was used to fund
ongoing redevelopment projects and repay an $83 million
interim loan obtained in September 1999. This loan bore
interest at LIBOR plus 150 basis points and the remaining
available amounts were drawn by June 30, 2000. The loan was
repaid on August 1, 2000 with the proceeds of a new
revolving credit facility (the "Revolver") and the term loan
(the "Term Loan") described below.
In May 2000, the Company received approximately $170.6
million of net proceeds through the issuance of preferred
units of membership interest in GGPLP L.L.C. as more fully
described in Note 1. These units provide for annual 8.95%
preferred distributions and have a liquidation preference of
$175 million. The net proceeds were used primarily to reduce
the Company's outstanding short-term floating rate debt.
As of July 31, 2000, the Company completed the refinancing
of its Credit Facility. The Company's outstanding draws
under the Revolver, its new unsecured revolving credit
facility, were approximately $35 million as of December 31,
2000. The Revolver has a maturity of July 31, 2003 and bears
interest at a rate per annum equal to LIBOR plus 100 to 190
basis points depending on the Company's average leverage
ratio. In addition, the Company obtained an unsecured Term
Loan which had an outstanding balance of $230 million at
December 31, 2000. The Term Loan has a maturity of July 31,
2003 and bears interest at a rate per annum equal to LIBOR
plus 100 to 170 basis points depending on the Company's
average leverage ratio.
30
GENERAL GROWTH PROPERTIES, INC.
In December 2000, the Company obtained an additional $20
million mortgage loan collateralized by the Valley Hills
Mall. The new mortgage loan is payable interest only until
maturity at a rate of 7.91% per annum and matures in
February 2004.
In January 2001, GGMI borrowed $37.5 million under a new
revolving line of credit obtained by GGMI and an affiliate,
which is guaranteed by General Growth and the Operating
Partnership. The interest rate per annum with respect to any
borrowings varies from LIBOR plus 100 to 190 basis points
depending on the Company's average leverage ratio and the
revolving line of credit matures in July 2003.
Approximately $392 million of the Company's debt is
scheduled to mature in 2001. Although agreements to
refinance all of such indebtedness have not yet been
reached, the Company anticipates that all of its debt will
be repaid on a timely basis. Other than as described above
or in conjunction with possible future acquisitions, there
are no current plans to incur additional debt, increase the
amounts available under the Revolver or Term Loans or raise
equity capital. If additional capital is required, the
Company believes that it can increase the amounts available
under the Revolver or Term Loans, obtain an interim bank
loan, obtain additional mortgage financing on under-
leveraged assets, enter into new joint venture partnership
arrangements or raise additional debt or equity capital.
However, there can be no assurance that the Company can
obtain such financing on satisfactory terms. The Company
will continue to monitor its capital structure, investigate
potential investments or joint venture partnership
arrangements and purchase additional properties if they can
be acquired and financed on terms that the Company
reasonably believes will enhance long-term stockholder
value. When property operating cash flow has been increased,
the Company anticipates the refinancing of portions of its
long-term floating rate debt with pooled or property-
specific non-recourse fixed-rate mortgage financing.
Accordingly, the Company anticipates that up to
approximately $1,000 million of collateralized floating rate
debt may be replaced in 2001 with new floating rate or long-
term fixed rate mortgage financing.
Net cash provided by operating activities was $309.5 million
in 2000, an increase of $87.4 million from $222.1 million in
the same period in 1999. Net income before allocations to
the minority interest increased $42.3 million, which was
primarily due to earnings attributable to properties
acquired in 2000 and 1999.
Summary of Net cash used by investing activities was $379.3 million in
Investing 2000 compared to $1,254.7 million of cash used in 1999. Cash
Activities flow from investing activities was impacted by acquisitions,
development and improvements to real estate properties,
which utilized cash of approximately $286.7 million in 2000
and $1,248.4 million in 1999 due to fewer acquisitions of
investment property in 2000 as compared to 1999.
Net cash used by investing activities in 1999 was $1,254.7
million, compared to a use of $1,513.1 million in 1998. Cash
flow from investing activities was affected by the timing of
acquisitions, development and improvements to real estate
properties, requiring a use of cash of approximately
$1,248.4 million in 1999 compared to $1,360.1 million in
1998.
31
GENERAL GROWTH PROPERTIES, INC.
Summary of Financing activities in 2000 provided $71.4 million of cash
Financing compared to a $1,038.5 million source of cash flow in 1999.
Activities The proceeds from the issuance of the preferred units of
membership interest provided approximately $170.6 million of
cash from financing activities in 2000. The majority of the
cash flow from financing activities in 1999 were from the
$1,736.1 million of proceeds of mortgage and other notes
payable. Distributions to common stockholders and the
minority interests in the Operating Partnership were $152.5
million in 2000 compared to $120.8 million in 1999. The
increase in distributions is due to the increased
distribution rate on the Common Stock and Operating
Partnership Units during 2000 compared to 1999 as well as
the issuance of the preferred units of membership interest
as discussed above and in Note 1.
Financing activities provided cash of $1,038.5 million in
1999, compared to $1,388.6 million in 1998. The Common Stock
offering in July 1999 provided net proceeds of approximately
$330.3 million which, as described in Note 1, was utilized
to reduce outstanding indebtedness and to fund the
acquisition of the Ala Moana Center. As also described in
Note 1, General Growth completed a public offering of
preferred stock in June 1998, the net proceeds of which
(approximately $322.7 million) were used primarily to reduce
acquisition-related financing and amounts drawn on the
Company's Credit Facility. Such payments are reflected in
the use of cash for financing activities for principal
payments on mortgage notes and other debt in 1999 and 1998.
An additional significant contribution of cash from
financing activity is financing from mortgages and
acquisition debt, which had a positive impact of $1,736
million in 1999 versus approximately $2,093 million in 1998.
The additional financing was used to repay existing
indebtedness and to fund the acquisitions and redevelopment
of real estate as discussed above. The remaining uses of
cash consisted primarily of increased distributions
(including dividends paid to preferred stockholders in 1999
and 1998).
General Growth has established a Dividend Reinvestment and
Stock Purchase Plan ("DRSP") under which it has reserved for
issuance up to 1,000,000 shares of Common Stock. The DRSP,
in general, allows participants to make purchases of Common
Stock from dividends received or additional cash
investments. Although the purchase price of the Common Stock
is determined by the current market price, the purchases are
made without fees or commissions. General Growth can satisfy
DRSP Common Stock purchase needs through the issuance of new
shares of Common Stock or by repurchases of currently
outstanding Common Stock. Any new issuances of Common Stock
pursuant to the DRSP will not reduce amounts otherwise
available under the Company's currently effective shelf-
registration described above.
REIT In order to remain qualified as a real estate investment
Requirements trust for federal income tax purposes, the Company must
distribute 100% of capital gains and at least 95% (90% in
2001 and subsequent years) of its ordinary taxable income to
stockholders. The following factors, among others, will
affect operating cash flow and, accordingly, influence the
decisions of the Board of Directors regarding distributions:
(i) scheduled increases in base rents of existing leases;
(ii) changes in minimum base rents and/or percentage rents
attributable to replacement of existing leases with new or
renewal leases; (iii) changes in occupancy rates at existing
centers and procurement of leases for newly developed
centers; and (iv) the Company's share of operating cash flow
32
GENERAL GROWTH PROPERTIES, INC.
generated by the Unconsolidated Joint Ventures, to the
extent distributed to the Company, less oversight costs and
debt service on additional loans that have been or will be
incurred to finance Company acquisitions. The Company
anticipates that its operating cash flow, and potential new
debt or equity from future offerings, new financings or
refinancings will provide adequate liquidity to conduct its
operations, fund general and administrative expenses, fund
operating costs and interest payments and allow
distributions to the Company's preferred and common
stockholders in accordance with the requirements of the
Internal Revenue Code of 1986, as amended, for continued
qualification as a real estate investment trust and to avoid
any Company level federal income or excise tax and will
elect to have GGMI treated as a TRS.
On January 1, 2001 the REIT provisions of the Tax Relief
Extension Act of 1999 became effective. Among other things,
the law permits a REIT to own up to 100% of the stock of a
TRS. A TRS, which must pay corporate income tax, can provide
services to REIT tenants and others without disqualifying
the rents that a REIT receives from its tenants.
Accordingly, on January 1, 2001 the Company acquired for
nominal consideration 100% of the common stock of GGMI and
will elect to have GGMI treated as a TRS. In connection with
the acquisition, the GGMI preferred stock owned by the
Company was cancelled and approximately $40 million of the
outstanding loans owed by GGMI to the Company were
contributed to the capital of GGMI. The Company and GGMI
concurrently terminated the management contracts for the
Wholly-Owned Centers as the management activities will be
performed directly by the Company. GGMI will continue to
manage, lease, and perform various other services for the
Unconsolidated Centers and other properties owned by
unaffiliated third parties.
Recently Issued As more fully described in Note 12, certain accounting
Accounting pronouncements were issued in 2000, which became effective
Pronouncements in 2000 or will become effective in 2001. The Company does
not expect the application of such new pronouncements to
have a significant impact on its annual reported results of
operations.
Economic Inflation has been relatively low and has not had a
Conditions significant detrimental impact on the Company. Should
inflation rates increase in the future, substantially all of
the Company's tenant leases contain provisions designed to
mitigate the negative impact of inflation. Such provisions
include clauses enabling the Company to receive percentage
rents based on tenants' gross sales, which generally
increase as prices rise, and/or escalation clauses, which
generally increase rental rates during the terms of the
leases. In addition, many of the leases are for terms of
less than 10 years which may enable the Company to replace
or renew expiring leases with new leases at higher base
and/or percentage rents, if rents under the expiring leases
are below the then-existing market rates. Finally, most of
the existing leases require the tenants to pay their share
of certain operating expenses, including common area
maintenance, real estate taxes and insurance, thereby
reducing the Company's exposure to increases in costs and
operating expenses resulting from inflation.
Inflation also poses a potential threat to the Company due
to the possibility of future increases in interest rates.
Such increases would adversely impact the Company due to the
amount of its outstanding floating rate debt. However, in
recent years, the Company's ratio of interest expense to
cash flow has continued to decrease. Therefore,
33
GENERAL GROWTH PROPERTIES, INC.
the relative risk the Company bears due to interest expense
exposure has been declining. In addition, the Company has
limited its exposure to interest rate increases on a portion
of its floating rate debt by arranging interest rate cap
agreements as described below. Finally, the Company has a
policy of replacing floating rate debt with fixed rate debt
as market conditions allow. (See Note 5).
The current retail sector is experiencing declining growth
and certain portions of the retail economy is in decline.
Such reversals or reductions in the retail market adversely
impacts the Company as demand for leasable space is reduced
and rents computed as a percentage of tenant sales declines.
In addition, the number of local, regional and national
retailers, including tenants of the Company, filed for
bankruptcy protection during the last few years. Most of the
bankrupt retailers reorganized their operations and/or sold
stores to stronger operators. Although some leases were
terminated pursuant to the lease cancellation rights
afforded by the bankruptcy laws, the impact on Company
earnings was negligible. Over the last three years, the
provision for doubtful accounts has averaged only
$3.0 million per year, which represents less than 1% of
average total revenues of $579.2 million.
The Company and its affiliates currently have interests in
95 operating shopping centers. The Portfolio Centers are
diversified both geographically and by property type (both
major and middle market properties) and this may mitigate
the impact of a potential economic downturn at a particular
property or in a particular region of the country.
The shopping center business is seasonal in nature. Mall
stores typically achieve higher sales levels during the
fourth quarter because of the holiday selling season.
Although the Company has a year-long temporary leasing
program, a significant portion of the rents received from
short-term tenants are collected during the months of
November and December. Thus, occupancy levels and revenue
production are generally highest in the fourth quarter of
each year and lower during the first and second quarters of
each year.
The Internet and electronic retailing are growing at
significant rates. Although the amount of retail sales
conducted solely via the Internet is expected to rise in the
future, the Company believes that traditional retailing and
"e-tailing" will converge such that the regional mall will
continue to be a vital part of the overall mix of shopping
alternatives for the consumer.
In order to enhance the value and competitiveness of its
properties through technology, the Company has commenced
construction of an integrated broadband distribution system
that will provide tenants at its properties with a private
wide-area network, as well as supporting applications and
equipment (the "Broadband System"), that will link tenants
and mall locations via the Internet. The Company anticipates
that the Broadband System will be installed and operating at
substantially all of its properties before the end of the
second quarter of 2001 as more fully discussed in Note 3.
34
GENERAL GROWTH PROPERTIES, INC.
ITEM 7A. The Company has not entered into any transactions using
QUANTITATIVE derivative commodity instruments. The Company is subject to
AND QUALITATIVE market risk associated with changes in interest rates.
DISCLOSURES Although the current interest rate trend is downward, the
ABOUT MARKET economy during most of 2000 was in a period of rising
RISK interest rates. Interest rate exposure is principally
limited to the $1,411 million of consolidated debt of the
Company outstanding at December 31, 2000 that is priced at
interest rates that float with the market. A 25 basis point
movement in the interest rate on the floating rate debt
would result in an approximate $3.5 million annualized
increase or decrease in interest expense and a corresponding
opposite effect on cash flows. Additionally, approximately
$856 million of such floating rate consolidated debt is
comprised of commercial mortgage-backed securities which are
subject to interest rate cap agreements, the effect of which
is to limit the interest rate the Company would be required
to pay on such debt to no more than approximately 9% per
annum. The remaining $1,833 million of consolidated debt is
fixed rate debt. The Company has an ongoing program of
refinancing its floating and fixed rate debt and believes
that this program allows it to vary its ratio of fixed to
floating rate debt and to stagger its debt maturities in
order to respond to changing market rate conditions.
Reference is made to Note 5 for additional debt information.
ITEM Reference is made to the Index to Financial Statements and
8. FINANCIAL Financial Statement Schedules on page F-1 for the required
STATEMENTS AND information.
SUPPLEMENTARY
DATA
ITEM 9. CHANGES Not applicable.
IN AND
DISAGREEMENTS
WITH
ACCOUNTANTS ON
ACCOUNTING AND
FINANCIAL
DISCLOSURE
35
GENERAL GROWTH PROPERTIES, INC.
PART III
ITEM 10. DIRECTORSThe information which appears under the captions "Election
AND EXECUTIVEof Directors" and "Executive Officers" in the Company's
OFFICERS OF THEproxy statement for its 2001 Annual Meeting of Stockholders
COMPANYis incorporated by reference into this Item 10.
ITEM 11. EXECUTIVEThe information which appears under the caption "Executive
COMPENSATIONCompensation" in the Company's proxy statement for its 2001
Annual Meeting of Stockholders is incorporated by reference
into this Item 11; provided, however, that the Report of the
Compensation Committee of the Board of Directors on
Executive Compensation shall not be incorporated by
reference herein, in any of the Company's previous filings
under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or in any of
the Company's future filings.
ITEM The information which appears under the captions "Certain
12. SECURITY Relationships and Related Party Transactions" and "Stock
OWNERSHIP OF Ownership" in the Company's proxy statement for its 2001
CERTAIN Annual Meeting of Stockholders is incorporated by reference
BENEFICIAL into this Item 12.
OWNERS AND
MANAGEMENT
ITEM The information which appears under the caption
13. CERTAIN "Compensation Committee Interlocks and Insider
RELATIONSHIPS Participation" and "Certain Relationships and Related Party
AND RELATED Transactions" in the Company's proxy statement for its 2001
TRANSACTIONS Annual Meeting of Stockholders is incorporated by reference
into this Item 13.
PART IV
ITEM (a) Financial Statements and Financial Statement Schedules.
14. EXHIBITS,
FINANCIAL
STATEMENTS,
SCHEDULES AND
REPORTS ON
FORM 8-K
The financial statements and schedules listed in the
accompanying Index to Consolidated Financial Statements and
Financial Statement Schedules are filed as part of this
Annual Report on Form 10-K.
(b) No reports on Form 8-K were filed by the Company during
the last quarter of the period covered by this report.
(c) Exhibits.
See Exhibit Index on page S-1
36
GENERAL GROWTH PROPERTIES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ John Bucksbaum
_______________________
John Bucksbaum,
Chief Executive Officer March 14, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Matthew Bucksbaum
__________________________
Matthew Bucksbaum Chairman of the Board March 14, 2001
/s/ Robert Michaels
__________________________
Robert Michaels President and Director March 14, 2001
/s/ Bernard Freibaum
__________________________
Bernard Freibaum Executive Vice President, Chief
Financial
Officer and Principal
Accounting Officer March 14, 2001
/s/ Anthony Downs
__________________________
Anthony Downs Director March 14, 2001
/s/ Morris Mark
__________________________
Morris Mark Director March 14, 2001
/s/ Beth Stewart
__________________________
Beth Stewart Director March 14, 2001
/s/ Lorne Weil
__________________________
A. Lorne Weil Director March 14, 2001
37
GENERAL GROWTH PROPERTIES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT
SCHEDULE
The following financial statements and financial statement schedule are
included in Item 8 of this Annual Report on Form 10-K:
General Growth Properties, Inc.
Financial Statements Page(s)
Report of Independent Accountants F-2
Consolidated Balance Sheets as of December 31, 2000 and 1999 F-3
Consolidated Statements of Operations and Comprehensive Income
for the years ended December 31, 2000, 1999 and 1998 F-4
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 2000, 1999, and 1998 F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999, and 1998 F-7
Notes to Consolidated Financial Statements F-8 to F-37
Financial Statement Schedule
Report of Independent Accountants F-38
Schedule III - Real Estate and Accumulated Depreciation F-39
All other schedules are omitted since the required information is not present
or is not present in amounts sufficient to require submission of the schedule
or because the information required is included in the consolidated financial
statements and related notes.
F-1
Report of Independent Accountants
To the Board of Directors and Stockholders
General Growth Properties, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and comprehensive income, of
stockholders' equity and of cash flows present fairly, in all material
respects, the financial position of General Growth Properties, Inc. at
December 31, 2000 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
Chicago, Illinois PricewaterhouseCoopers LLP
February 6, 2001
F-2
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(Dollars in thousands, except for per share amounts)
ASSETS December 31,
------ ----------------------
2000 1999
---------- ----------
Investment in real estate:
Land $ 649,160 $ 640,276
Building and equipment 4,016,493 3,664,832
Less accumulated depreciation (488,130) (376,673)
Developments in progress 25,547 21,443
---------- ----------
Net property and equipment 4,203,070 3,949,878
Investments in Unconsolidated Real Estate Affiliates 748,266 666,074
Mortgage note receivable - 31,065
---------- ----------
Net investment in Real Estate 4,951,336 4,647,017
Cash and cash equivalents 27,229 25,593
Tenant accounts receivable, net 96,157 84,123
Deferred expenses, net 105,534 93,536
Investment in and note receivable from General Growth
Management, Inc. 66,079 65,307
Prepaid expenses and other assets 37,769 39,319
---------- ----------
$5,284,104 $4,954,895
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Mortgage notes and other debt payable $3,244,126 $3,119,534
Distributions payable 47,509 42,695
Accounts payable and accrued expenses 186,393 170,868
---------- ----------
3,478,028 3,333,097
---------- ----------
Minority interest
Redeemable Preferred Units 175,000
Common Units 355,158 356,540
---------- ----------
530,158 356,540
---------- ----------
Commitments and contingencies
Preferred Stock: $100 par value; 5,000,000 shares
authorized; 345,000 designated as PIERS (Note 1)
which are convertible and carry a $1,000 liquidation
value, 337,500 of which were issued and outstanding
at December 31, 2000 and 1999 337,500 337,500
Stockholders' Equity:
Common stock: $.10 par value; 210,000,000 shares
authorized; 52,281,259 and 51,697,425 shares issued
and outstanding as of December 31, 2000 and 1999,
respectively 5,228 5,170
Additional paid-in capital 1,210,261 1,199,921
Retained earnings (deficit) (266,085) (272,199)
Notes receivable-common stock purchases (9,449) (3,420)
Accumulated equity in other comprehensive loss of
unconsolidated affiliate (1,537) (1,714)
---------- ----------
Total stockholders' equity 938,418 927,758
---------- ----------
$5,284,104 $4,954,895
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Dollars in thousands, except for per share amounts)
Years ended December 31,
2000 1999 1998
--------- --------- ---------
Revenues:
Minimum rents $439,981 $387,547 $268,976
Tenant recoveries 213,502 180,584 130,903
Overage rents 28,626 27,011 16,226
Other 9,641 11,795 5,796
Fee income 7,017 5,405 4,675
--------- --------- ---------
Total revenues 698,767 612,342 426,576
--------- --------- ---------
Expenses:
Real estate taxes 49,447 45,572 33,548
Management fees to affiliate 4,439 6,612 4,288
Property operating 163,972 143,622 106,986
Provision for doubtful accounts 2,025 4,425 2,451
General and administrative 6,351 5,857 4,511
Depreciation and amortization 126,689 112,874 75,227
--------- --------- ---------
Total expenses 352,923 318,962 227,011
--------- --------- ---------
Operating income 345,844 293,380 199,565
Interest income 12,452 16,482 16,011
Interest expense (218,075) (185,984) (125,851)
Equity in net income/(loss) of
unconsolidated affiliates 50,063 19,689 11,067
Gains on sales 44 4,412 196
Income before extraordinary items and
allocation to minority interests 190,328 147,979 100,988
Income allocated to minority interest,
including $9,354 applicable to Redeemable
Preferred Units in 2000 (52,380) (33,058) (29,794)
--------- --------- ---------
Income before extraordinary items 137,948 114,921 71,194
Extraordinary items - (13,796) (4,749)
--------- --------- ---------
Net income 137,948 101,125 66,445
--------- --------- ---------
Convertible Preferred Stock Dividends (24,467) (24,467) (13,433)
--------- --------- ---------
Net income available to common
stockholders $113,481 $76,658 $53,012
========= ========= =========
Earnings before extraordinary items per
share-basic $2.18 $1.97 $1.60
========= ========= =========
Earnings before extraordinary items per
share-diluted $2.18 $1.96 $1.59
========= ========= =========
Earnings per share-basic $2.18 $1.67 $1.46
========= ========= =========
Earnings per share-diluted $2.18 $1.66 $1.46
========= ========= =========
Net income $137,948 $101,125 $ 66,445
Other Comprehensive income (loss):
Equity in unrealized income/(loss) on
available-for-sale securities of
unconsolidated affiliate, net of
minority interest 177 (1,714) -
--------- --------- ---------
Comprehensive income $138,125 $99,411 $ 66,445
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands, except for Per Share Amounts)
Common Stock Additional Retained Employee Total
------------------ Paid-in Earnings Treasury Stock Stockholders'
Shares Amount Capital (Deficit) Stock Loans Equity
---------- ------ ---------- --------- -------- -------- -------------
Balance, December 31,
1997 35,634,977 $3,577 $738,630 $(239,139) $(4,563) $ -- $498,505
Net income 66,445 66,445
Cash distributions
declared ($1.88 per
share) (68,940) (68,940)
Convertible Preferred
Stock Dividends (13,433) (13,433)
Cost of issuance of
preferred stock (14,814) (14,814)
Exercise of stock
options, net of
employee stock loans 166,000 14 2,526 (530) 1, 154 (3,164) --
Purchase treasury stock (32,350) (1,136) (1,136)
Conversion of operating
partnership units to
common stock 3,232,345 309 47,932 (2,670) 4,545 50,116
Adjustment for minority
interest in operating
partnership 68,964 68,964
- --------
continued on next page
F-5
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands, except for Per Share Amounts)
- continued -
Additional Retained Employee Total
Common Stock Paid-in Earnings Treasury Stock Stockholders'
Shares Amount Capital (Deficit) Stock Loans Equity
---------- ------ ---------- --------- -------- -------- -------------
Balance, December 31,
1998 39,000,972 $3,900 $ 843,238 $(258,267) $ - $(3,164) $585,707
---------- ------ ---------- --------- --- ------- --------
Net income 101,125 101,125
Cash distributions
declared
($1.98 per share) (90,590) (90,590)
Convertible Preferred
Stock Dividends (24,467) (24,467)
Issuance of common
stock, net of $1,929 of
issuance costs 10,000,000 1,000 329,296 330,296
Exercise of stock
options, net of
employee stock loans 60,000 6 1,134 (380) 760
Reduction in employee
stock loans
Conversion of operating
partnership units to
common stock 124 124
Conversion of interests
in GGP/Homart to Common
Stock 2,603,291 261 90,252 90,513
Conversion of operating
partnership units to
common stock 33,162 3 519 522
Adjustment for minority
interest in operating
partnership (64,518) (64,518)
---------- ------ ---------- --------- --- ------- --------
Balance, December 31,
1999 51,697,425 5,170 1,199,921 (272,199) $ - (3,420) 929,472
---------- ------ ---------- --------- --- ------- --------
Accumulated equity in
other comprehensive
loss of unconsolidated
affiliate (1,714)
--------
Adjusted Total $927,758
--------
Balance, December 31,
1999 51,697,425 5,170 1,199,921 (272,199) $ - (3,420) $929,472
---------- ------ ---------- --------- --- ------- --------
Net income 137,948 137,948
Cash distributions
declared
($2.06 per share) (107,367) (107,367)
Convertible Preferred
Stock Dividends (24,467) (24,467)
RPU issuance costs (4,375) (4,375)
Conversion of operating
partnership units to
common stock 212,050 21 5,490 5,511
Adjustment for minority
interest in operating
partnership (1,441) (1,441)
Issuance of Common
Stock, net of employee
stock option loans 371,784 37 10,666 (6,029) 4,674
---------- ------ ---------- --------- --- ------- --------
Balance, December 31,
2000 52,281,259 $5,228 $1,210,261 $(266,085) $ - $(9,449) $939,955
========== ====== ========== ========= === ======= ========
Accumulated equity in
other comprehensive
loss of unconsolidated
affiliate (1,537)
--------
Adjusted Total $938,418
========
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
GENERAL GROWTH PROPERTIES,INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except for per share amounts)
Year ended December 31,
-----------------------------------
2000 1999 1998
--------- ----------- -----------
Cash flows from operating activities:
Net Income $ 137,948 $ 101,125 $ 66,445
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interests 52,380 33,058 29,794
Extraordinary items - 10,454 -
Equity in net income of unconsolidated
affiliates (50,063) (19,689) (11,067)
Provision for doubtful accounts 2,025 4,425 2,451
Distributions received from
unconsolidated affiliates 37,523 29,825 21,672
Depreciation 111,457 105,046 68,494
Amortization 15,232 7,828 6,733
Gain on sales (44) (4,412) (196)
Net Changes:
Tenant accounts receivable (14,059) (26,856) (42,187)
Prepaid expenses and other assets 1,550 (9,183) (6,557)
Accounts payable and accrued expenses 15,525 (9,487) (17,278)
--------- ----------- -----------
Net cash provided by (used in) operating
activities 309,474 222,134 118,304
--------- ----------- -----------
Cash flows from investing activities:
Acquisition/development of real estate
and improvements and additions to
properties (286,734) (1,248,371) (1,360,071)
Increase in investments in unconsolidated
affiliates (91,663) (55,361) (92,990)
Increase in mortgage note receivable - (31,065) -
Change in notes receivable from General
Growth Management, Inc. (2,406) 6,671 (33,031)
Reduction in employee stock loans - 124 -
Distributions received from
unconsolidated affiliates 23,889 89,734 6,485
Increase in deferred expenses (22,371) (16,429) (33,540)
--------- ----------- -----------
Net cash provided by (used in) investing
activities (379,285) (1,254,697) (1,513,147)
--------- ----------- -----------
Cash flows from financing activities:
Cash distributions paid to common
stockholders (106,103) (82,439) (66,639)
Cash distributions paid to Operating
Partnership Unitholders (40,333) (38,434) (36,467)
Cash distributions paid to holders of
RPU's (6,091) - -
Payments of dividends on PIERS (24,467) (24,467) (7,316)
Proceeds of preferred stock, net of
issuance costs - - 322,686
Proceeds from sale of common stock and
options, net 4,674 331,056 -
Proceeds from issuance of RPU's, net of
issuance costs 170,625 - -
Capital contributions from minority
interest - - 119
Proceeds from issuance of mortgage /
other notes payable 360,301 1,736,072 2,093,000
Principal payments on mortgage notes and
other debt payable (282,301) (867,713) (913,229)
Purchase of treasury stock - - (1,136)
Increase in deferred expenses (4,858) (15,549) (2,443)
--------- ----------- -----------
Net cash provided by (used in) financing
activities 71,447 1,038,526 1,388,575
--------- ----------- -----------
Net change in cash and cash equivalents 1,636 5,963 (6,268)
Cash and cash equivalents at beginning of
year 25,593 19,630 25,898
--------- ----------- -----------
Cash and cash equivalents at end of period $ 27,229 $ 25,593 $ 19,630
========= =========== ===========
Supplemental disclosure of cash flow
information:
Interest paid $ 222,711 $ 197,178 $ 128,987
Interest capitalized 17,709 17,166 12,028
========= =========== ===========
Non-cash investing and financing
activities:
Debt assumed as consideration to seller
for purchase of real estate $ - $ - $ 289,530
Treasury stock exchanged for Operating
Partnership Units - - 1,875
Common stock issued in exchange for
Operating Partnership Units 5,511 522 48,241
Common stock issued in exchange for
GGP/Homart stock - 90,513 -
Contribution of property, other assets
and related debt, net to GGP/Homart II - 224,033 -
Notes receivable issued for exercised
stock options 7,149 380 3,164
Assumption and conversion of notes In
conjunction with acquisition of property 77,657 - -
Operating Partnership Units and common
stock issued as consideration for
purchase of real estate 215 - 163,514
Penalty on retirement of debt - 8,655 -
Distributions payable 47,509 42,695 33,757
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 1
ORGANIZATION
General
General Growth Properties, Inc., a Delaware corporation
("General Growth"), was formed in 1986 to own and operate
regional mall shopping centers. All references to the
"Company" in these notes to Consolidated Financial
Statements include General Growth and those entities owned
or controlled by General Growth (including the Operating
Partnership and the LLC as described below), unless the
context indicates otherwise. On April 15, 1993, General
Growth completed its initial public offering and a business
combination involving entities under varying common
ownership. Proceeds from the initial public offering were
used to acquire a majority interest in GGP Limited
Partnership (the "Operating Partnership") which was formed
to succeed to substantially all of the interests in regional
mall general partnerships owned and controlled by the
Company and its original stockholders. The Company conducts
substantially all of its business through the Operating
Partnership.
Effective January 1, 2000, General Growth established a
Dividend Reinvestment and Stock Purchase Plan ("DRSP").
General Growth has reserved for issuance up to 1,000,000
shares of Common Stock for issuance under the DRSP. The DRSP
will, in general, allow participants in the plan to make
purchases of Common Stock from dividends received or
additional cash investments. Although the purchase price of
the Common Stock will be determined by the current market
price, the purchases will be made without fees or
commissions. General Growth will satisfy DRSP Common Stock
purchase needs through the issuance of new shares of Common
Stock or by repurchases of currently outstanding Common
Stock. As of December 31, 2000 an aggregate of 25,045 shares
of Common Stock have been issued under the DRSP.
During July 1999, General Growth completed a public offering
of 10,000,000 shares of Common Stock (the "1999 Offering").
General Growth received net proceeds of approximately
$330,296 of which a portion was used to reduce outstanding
loans including certain indebtedness to affiliates of the
underwriter of the 1999 Offering. In addition, a portion of
the proceeds of the 1999 Offering were used to fund a
portion of the purchase price of Ala Moana Center (Note 3).
Redeemable Preferred Stock
During June 1998, General Growth completed a public offering
of 13,500,000 depositary shares (the "Depositary Shares"),
each representing 1/40 of a share of 7.25% Preferred Income
Equity Redeemable Stock, Series A, par value $100 per share
("PIERS"). General Growth received net proceeds of
approximately $322,686 which were utilized to fund certain
of the acquisitions described in Note 3 and for other
working capital needs. The Depositary Shares are convertible
at any time, at the option of the holder, into shares of
Common Stock at the conversion price of $39.70 per share of
Common Stock. In addition, the PIERS have a preference on
liquidation of General Growth equal to $1,000 per PIERS
(equivalent to $25.00 per Depositary Share), plus accrued
and unpaid dividends, if any, to the liquidation date. The
PIERS and the Depositary Shares are subject to mandatory
redemption by General Growth on July 15, 2008 at a price of
$1,000 per PIERS, plus accrued and unpaid dividends, if
F-8
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
any, to the redemption date. Accordingly, the PIERS have
been reflected in the accompanying financial statements at
such liquidation or redemption value.
Shareholder Rights Plan
In November 1998, General Growth adopted a shareholder
rights plan (the "Plan"), pursuant to which General Growth
declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock
outstanding on December 10, 1998 to the shareholders of
record on that date. Prior to becoming exercisable, the
Rights trade together with the Common Stock. In general, the
Rights will become exercisable if a person or group acquires
or announces a tender or exchange offer for 15% or more of
the Common Stock. Each Right will initially entitle the
holder to purchase from General Growth one one-thousandth of
a share of newly-created Series A Junior Participating
Preferred Stock, par value $100 per share (the "Preferred
Stock"), at an exercise price of $148 per one one-thousandth
of a share, subject to adjustment. In the event that a
person or group acquires 15% or more of the Common Stock,
each Right will entitle the holder (other than the acquirer)
to purchase shares of Common Stock (or, in certain
circumstances, cash or other securities) having a market
value of twice the exercise price of a Right at such time.
Under certain circumstances, each Right will entitle the
holder (other than the acquirer) to purchase common stock of
the acquirer having a market value of twice the exercise
price of a Right at such time. In addition, under certain
circumstances, the Board of Directors of General Growth may
exchange each Right (other than those held by the acquirer)
for one share of Common Stock, subject to adjustment. The
Rights expire on November 18, 2008, unless earlier redeemed
by General Growth for $0.01 per Right or such expiration
date is extended.
Operating Partnership
The Operating Partnership commenced operations on April 15,
1993 and as of December 31, 2000, it owned 100% of fifty-
three regional shopping centers (the "Wholly-Owned
Centers"); 50% of the stock of GGP/Homart, Inc.
("GGP/Homart"), 50% of the membership interest of GGP/Homart
II, L.L.C. ("GGP/Homart II"), 51% of the stock of GGP
Ivanhoe, Inc. ("GGP Ivanhoe"), 51% of the stock of
GGP Ivanhoe III, Inc. ("GGP Ivanhoe III"), 50% of Quail
Springs Mall and Town East Mall, (collectively, the
"Unconsolidated Real Estate Affiliates"), and a 100% non-
voting preferred stock interest representing 95% of the
equity interest in General Growth Management, Inc. ("GGMI").
The Unconsolidated Real Estate Affiliates and GGMI comprise
the "Unconsolidated Affiliates". As of such date, GGP/Homart
owned interests in twenty-three shopping centers, GGP/Homart
II owned interests in seven shopping centers GGP Ivanhoe
owned 100% of two shopping centers, and GGP Ivanhoe III
(through a wholly-owned subsidiary) owned 100% of eight
shopping centers, collectively the "Unconsolidated Centers".
Together, the Wholly-Owned Centers and the Unconsolidated
Centers comprise the "Company Portfolio" or the "Portfolio
Centers".
During May 2000, the Operating Partnership formed GGPLP
L.L.C., a Delaware limited liability company (the "LLC") by
contributing its interest in a portfolio of 44 Wholly-Owned
regional shopping centers to the LLC in exchange for all of
the
F-9
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
common units of membership interest in the LLC. On May 25,
2000, a total of 700,000 redeemable preferred units of
membership interest in the LLC (the "RPUs") were issued to
an institutional investor by the LLC, which yielded
approximately $170,625 in net proceeds to the Company. The
net proceeds of the sale of the RPUs were used to repay a
portion of the Company's unsecured debt. Holders of the RPUs
are entitled to receive cumulative preferential cash
distributions per RPU (payable quarterly commencing July 15,
2000) at a per annum rate of 8.95% of the $250 liquidation
preference thereof (or $5.59375 per quarter) prior to any
distributions by the LLC to the Operating Partnership.
Subject to certain limitations, the RPUs may be redeemed at
the option of the LLC at any time on or after May 25, 2005
for cash equal to the liquidation preference amount plus
accrued and unpaid distributions and may be exchanged at the
option of the holders of the RPUs on or after May 25, 2010
for an equivalent amount of a newly created series of
redeemable preferred stock of General Growth. Such preferred
stock would provide for an equivalent 8.95% annual preferred
distribution and would be redeemable at the option of
General Growth for cash equal to the liquidation preference
amount plus accrued and unpaid distributions. The RPUs have
been reflected in the accompanying consolidated financial
statements as a component of minority interest at the
current total liquidation preference amount of $175,000.
As of December 31, 2000, the Company owned an approximate
73% general partnership interest in the Operating
Partnership (excluding its preferred units of partnership
interest as discussed below). The remaining approximate 27%
minority interest in the Operating Partnership is held by
limited partners that include trusts for the benefit of the
families of the original stockholders who initially owned
and controlled the Company and subsequent contributors of
properties to the Company. These minority interests are
represented by common units of limited partnership interest
in the Operating Partnership (the "Units"). The Units can be
redeemed at the option of the holders for cash or, at
General Growth's election with certain restrictions, for
shares of Common Stock on a one-for-one basis. The holders
of the Units also share equally with General Growth's common
stockholders on a per share basis in any distributions by
the Operating Partnership on the basis that one Unit is
equivalent to one share of Common Stock.
In connection with the issuance of the Depositary Shares and
in order to enable General Growth to comply with its
obligations in respect to the PIERS, the Operating
Partnership Agreement was amended to provide for the
issuance to General Growth of preferred units of limited
partnership interest (the "Preferred Units") in the
Operating Partnership which have rights, preferences and
other privileges, including distribution, liquidation,
conversion and redemption rights, that mirror those of the
PIERS. Accordingly, the Operating Partnership is required to
make all required distributions on the Preferred Units prior
to any distribution of cash or assets to the holders of the
Units. At December 31, 2000, 100% of the Preferred Units of
the Operating Partnership (337,500) were owned by General
Growth.
F-10
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Changes in outstanding Operating Partnership Units
(excluding the Preferred Units) for the three years ending
December 31, 2000, are as follows:
Units
-----
December 31, 1997 18,763,955
Acquisition of Southwest Plaza 505,420
Acquisition of Altamonte Mall 3,683,143
Acquisition of Mall St. Vincent 111,181
Conversion to common stock (3,232,345)
----------
December 31, 1998 19,831,354
Conversion to common stock (33,162)
----------
December 31, 1999 19,798,192
----------
Acquisition of outparcel
at Greenwood Mall 7,563
Conversion to common stock (212,050)
----------
December 31, 2000 19,593,705
==========
Business Segment Information
The Financial Accounting Standards Board (the "FASB") issued
Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("Statement 131") in
June of 1997. Statement 131 requires disclosure of certain
operating and financial data with respect to separate
business activities within an enterprise. The sole business
of General Growth and its consolidated affiliates is the
owning and operation of shopping centers. General Growth
evaluates operating results and allocates resources on a
property-by-property basis. General Growth does not
distinguish or group its consolidated operations on a
geographic basis. Accordingly, General Growth has concluded
it currently has a single reportable segment for Statement
131 purposes. Further, all operations are within the United
States and no customer or tenant comprises more than 10% of
consolidated revenues.
F-11
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 2 Principles of Consolidation
SUMMARY OF The accompanying consolidated financial statements include
SIGNIFICANT the accounts of the Company consisting of the fifty-three
ACCOUNTING centers and the unconsolidated investments in GGP/Homart,
POLICIES GGP/Homart II, GGP Ivanhoe, GGP Ivanhoe III, Quail Springs
Mall, Town East Mall and GGMI. All significant intercompany
balances and transactions have been eliminated.
Revenue Recognition
Minimum rent revenues are recognized on a straight-line
basis over the term of the related leases. Overage rents are
recognized on an accrual basis once tenant sales revenues
exceed contractual tenant lease annual thresholds.
Recoveries from tenants for taxes, insurance and other
shopping center operating expenses are recognized as
revenues in the period the applicable costs are incurred.
(See also Note 12.)
The Company provides an allowance for doubtful accounts
against the portion of accounts receivable which is
estimated to be uncollectible. Such allowances are reviewed
periodically based upon the recovery experience of the
Company. Accounts receivable in the accompanying
consolidated balance sheets are shown net of an allowance
for doubtful accounts of $7,665 and $7,600 as of December
31, 2000 and 1999, respectively.
Cash And Cash Equivalents
The Company considers all highly liquid investments
purchased with original maturities of three months or less
to be cash equivalents. The cash and cash equivalents of the
Company are held at two financial institutions.
Deferred Expenses
Deferred expenses consist principally of financing fees and
leasing commissions, which are amortized over the terms of
the respective agreements. Deferred expenses in the
accompanying consolidated balance sheets are shown at cost,
net of accumulated amortization of $52,240 and $38,004 as of
December 31, 2000 and 1999, respectively.
Fair Value of Financial Investments
Statement No. 107, Disclosure about the Fair Value of
Financial Instruments, ("SFAS No. 107"), issued by the
Financial Accounting Standards Board ("FASB"), requires the
disclosure of the fair value of the Company's financial
instruments for which it is practicable to estimate that
value, whether or not such instruments are recognized in the
consolidated balance sheets. SFAS No. 107 does not apply to
all balance sheet items and the Company has utilized market
information as available or present value techniques to
estimate the SFAS No. 107 values required to be disclosed.
Since such values are estimates, there can be no assurance
that the SFAS No. 107 value of any financial instrument
could be realized by immediate settlement of the instrument.
The Company considers the carrying value of its cash and
cash equivalents to approximate the SFAS No. 107 value due
to the short maturity of these investments. Based on
borrowing rates available to the Company at the end of 2000
for mortgage loans with similar terms and maturities, the
SFAS No. 107 value of the
F-12
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
mortgage notes and other debts payable approximates carrying
value at December 31, 2000 and 1999. In addition, the
Company estimates that the SFAS No. 107 value of its
interest rate cap agreements (Note 5) at December 31, 2000
is approximately $344. The Company has no other significant
financial instruments.
Acquisitions
Acquisitions of properties are accounted for utilizing the
purchase method and, accordingly, the results of operations
are included in the Company's results of operations from the
respective dates of acquisition. The Company has financed
the acquisitions through the date of this report through a
combination of secured and unsecured debt, issuance of
Operating Partnership Units and the proceeds of the public
offerings of Depositary Shares and Common Stock as described
in Note 1.
Properties
Real estate assets are stated at cost. Interest and real
estate taxes incurred during construction periods are
capitalized and amortized on the same basis as the related
assets. The real estate assets of the Company are reviewed
for impairment whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. A
real estate asset is considered to be impaired when the
estimated future undiscounted operating income is less than
its carrying value. To the extent an impairment has
occurred, the excess of carrying value of the asset over its
estimated fair value will be charged to income. Depreciation
expense is computed using the straight-line method based
upon the following estimated useful lives:
Years
-----
Buildings and improvements......................... 40
Equipment and fixtures............................. 10
Construction allowances paid to tenants are capitalized and
depreciated over the average lease term. Maintenance and
repairs are charged to expense when incurred. Expenditures
for significant betterments and improvements are
capitalized.
Investments In Unconsolidated Affiliates
The Company accounts for its investments in unconsolidated
affiliates using the equity method whereby the cost of an
investment is adjusted for the Company's share of equity in
net income or loss from the date of acquisition and reduced
by distributions received. The Company generally shares in
the profit and losses, cash flows and other matters relating
to its unconsolidated affiliates in accordance with its
respective ownership percentages. However, due to currently
unpaid and accrued preferences on the GGMI preferred stock
as described in Note 4, the Company was entitled to 100% of
the earnings (loss) and cash flows generated by GGMI in
2000, 1999 and 1998. In addition, differences between the
Company's carrying value of its investment in the
unconsolidated affiliates and the Company's share of the
underlying equity of such unconsolidated affiliates are
amortized over the respective lives of the unconsolidated
affiliates.
F-13
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Income Taxes
General Growth elected to be taxed as a real estate
investment trust under sections 856-860 of the Internal
Revenue Code of 1986 (the "Code"), commencing with its
taxable year beginning January 1, 1993. In order to qualify
as a real estate investment trust, General Growth is
required to distribute at least 95% (90% in 2001 and
subsequent years) of its ordinary taxable income and 100% of
capital gains to stockholders and to meet certain asset and
income tests as well as certain other requirements. As a
real estate investment trust, General Growth will generally
not be liable for Federal income taxes, provided it
satisfies the necessary requirements. Accordingly, the
consolidated statements of operations do not reflect a
provision for income taxes. State income taxes are not
significant.
One of the Company's affiliates, GGMI, is a taxable
corporation and accordingly, state and Federal income taxes
on its net taxable income are payable by GGMI.
Earnings Per Share ("EPS")
Basic per share amounts are based on the weighted average of
common shares outstanding of 52,058,320 for 2000, 45,940,104
for 1999 and 36,190,367 for 1998. Diluted per share amounts
are based on the total number of weighted average common
shares and dilutive securities (stock options) outstanding
of 52,096,331 for 2000, 46,030,559 for 1999, and 36,381,914
for 1998. The effect of the issuance of the PIERS is anti-
dilutive with respect to the Company's calculation of
diluted earnings per share for the year ended December 31,
2000, 1999 and 1998 and therefore has been excluded.
However, certain options outstanding were not included in
the computation of diluted earnings per share either because
the exercise price of the options was higher than the
average market price of the Common Stock for the applicable
periods and therefore, the effect would be anti-dilutive or
because the conditions which must be satisfied prior to the
issuance of any such shares were not achieved during the
applicable periods. The outstanding Units have been excluded
from the diluted earnings per share calculation as there
would be no effect on the EPS amounts since the minority
interests' share of income would also be added back to net
income.
F-14
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
The following are the reconciliations of the numerators and
denominators of the basic and diluted EPS:
Year ended December 31,
----------------------------
2000 1999 1998
-------- -------- --------
Numerators:
Income before extraordinary items $137,948 $114,921 $ 71,194
Dividends on PIERS (24,467) (24,467) (13,433)
-------- -------- --------
Income available to common
stockholders before extraordinary
items - for basic and diluted EPS $113,481 90,454 $ 57,761
Extraordinary items - (13,796) (4,749)
-------- -------- --------
Net income available to common
stockholders - for basic and
diluted EPS $113,481 $ 76,658 $ 53,012
======== ======== ========
Denominators:
Weighted average common shares
outstanding (in thousands) - for
basic EPS 52,058 45,940 36,190
Effect of dilutive securities -
options 38 91 192
-------- -------- --------
Weighted average common shares
outstanding (in thousands) - for
diluted EPS 52,096 46,031 36,382
======== ======== ========
Minority Interest
Income before minority interest is allocated to the limited
partners (the "Minority Interest") based on their ownership
percentage of the Operating Partnership. The ownership
percentage is determined by dividing the numbers of
Operating Partnership Units held by the Minority Interest by
the total Operating Partnership Units (excluding Preferred
Units) outstanding. The issuance of additional shares of
Common Stock or Operating Partnership Units changes the
percentage ownership of both the Minority Interest and the
Company. Since a Unit is generally redeemable for cash or
Common Stock at the option of the Company, it may be deemed
to be equivalent to a common share. Therefore, such
transactions are treated as capital transactions and result
in an allocation between stockholders' equity and Minority
Interest in the accompanying balance sheets to account for
the change in the ownership of the underlying equity in the
Operating Partnership.
Comprehensive Income
Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" requires that the Company
disclose comprehensive income in addition to net income.
Comprehensive income is a more inclusive financial reporting
methodology that encompasses net income and all other
changes in equity except those resulting from investments by
and distributions to equity holders. Included in
comprehensive income but not net income is unrealized
holding gains or losses on marketable securities classified
as available-for-sale. Although General Growth and its
F-15
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
consolidated affiliates do not have any available-for-sale
securities, one of its unconsolidated affiliates received
common stock of Simon Property Group, Inc. as part of a 1998
transaction. Unrealized holding gains or losses on such
securities through December 31, 1998 were not significant
and were not reflected. However, during 1999 the Company
reduced its carrying amount for its investment in such
unconsolidated affiliate by $2,436 and reflected $1,714 as
other comprehensive loss, net of minority interest of $722,
as its equity in such unconsolidated affiliate's cumulative
unrealized holding loss on such securities. For the year
ended December 31, 2000 there were holding gains on such
securities of $177, net of minority interest of $67 which
were recorded.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Reclassifications
The consolidated financial statements for prior periods have
been reclassified to conform with current classifications
with no effect on results of operations.
NOTE 3 PROPERTY Wholly-Owned Properties
ACQUISITIONS 2000
AND
DEVELOPMENTS
During September 1999, St. Cloud Funding, L.L.C., a wholly-
owned subsidiary of the Operating Partnership ("St. Cloud
Funding"), agreed to advance approximately $31,000 to an
unaffiliated developer in the form of a second mortgage loan
(bearing interest at 15% per annum) collateralized by such
developer's ownership interest in Crossroads Center in St.
Cloud (Minneapolis), Minnesota. Contemporaneously with the
loan, St. Cloud Mall L.L.C., all of the interests of which
are owned by the Company ("St. Cloud Mall"), was granted an
option to acquire the property in 2002. The loan had a
scheduled maturity of June 1, 2004 which was accelerated in
February 2000 to April 28, 2000. In conjunction with the
maturity date modification, a put option agreement was
executed which would permit the borrower (after March 15,
2000) to require St. Cloud Mall to purchase the property. In
addition, St. Cloud Mall's purchase option was advanced to
April 2000. On March 15, 2000, the borrower notified St.
Cloud Mall of the exercise of the put option. Pursuant to
the put option agreement, on April 26, 2000, St. Cloud Mall
purchased the property at a price equal to approximately
$2,000 plus the then outstanding balances of the first
mortgage (approximately $46,600) and St. Cloud Funding's
second mortgage.
1999
On January 11, 1999, the Company acquired a 100% ownership
interest in The Crossroads Mall in Kalamazoo, Michigan. The
aggregate purchase price was approximately $68,000 (subject
to pro-rations and certain adjustments), which was
F-16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
funded initially from a new $83,655 short-term floating rate
interim loan. In May 1999, a new $45,000 ten-year non-
recourse mortgage loan collateralized by the property was
obtained.
On July 30, 1999, the Company acquired a 100% ownership
interest in the Ala Moana Center in Honolulu, Hawaii. The
price paid to the seller was $810,000 (before closing
adjustments, including a credit for the cost to complete an
ongoing expansion project), and was funded with the proceeds
of a short-term first mortgage loan of approximately
$438,000 and approximately $294,000 in cash including a
portion of the net proceeds from the 1999 Offering. The
short-term floating rate loan was fully repaid on
August 26,1999 with the proceeds of the issuance of
commercial mortgage-backed securities.
On October 28, 1999, the Company acquired Baybrook Mall in
Houston, Texas. The aggregate consideration paid by the
Company was approximately $133,000 (subject to pro-rations
and certain adjustments), which was paid in cash (raised
primarily through new long-term financing on other
previously unsecured properties), and a new 10-year $95,000
non-recourse loan.
1998
On April 2, 1998, the Company acquired Southwest Plaza
located in Denver, Colorado. On May 8, 1998, the Company
completed the acquisition of Northbrook Court Shopping
Center located in Northbrook (Chicago), Illinois. The
aggregate purchase price for Southwest Plaza and Northbrook
Court was approximately $261,000, including approximately
$149,000 of assumed debt. The Company contributed Northbrook
Court to GGP/Homart II in November 1999 as described in Note
4.
On June 2, 1998, the Company acquired the U.S. retail
property portfolio (the "MEPC Portfolio") of MEPC plc, a
United Kingdom based real estate company ("MEPC"), through
the purchase of the stock of the three U.S. subsidiaries of
MEPC ("MEPC U.S. Subsidiaries") that directly or indirectly
owned the MEPC Portfolio. The Company acquired the MEPC
Portfolio for approximately $871,000 (less certain
adjustments for tenant allowances, construction costs, MEPC
U.S. Subsidiary liabilities and other items). The Company
borrowed approximately $830,000 to finance the purchase
price for the stock, which was paid in cash at closing as
more fully described in Note 5. The MEPC Portfolio consists
of eight enclosed mall shopping centers: Apache Mall in
Rochester, Minnesota; The Boulevard Mall in Las Vegas,
Nevada; Cumberland Mall in Atlanta, Georgia; McCreless Mall
in San Antonio, Texas; Northridge Fashion Center in
Northridge (Los Angeles), California; Regency Square Mall in
Jacksonville, Florida; Riverlands Shopping Center in
LaPlace, Louisiana and Valley Plaza Mall in Bakersfield,
California.
On July 21, 1998, the Company acquired Altamonte Mall in
Altamonte Springs (Orlando), Florida. The aggregate
consideration paid for Altamonte Mall was $169,000 (subject
to prorations and certain adjustments), part of which was
paid by the payoff of approximately $24,000 of indebtedness
assumed at acquisition with cash
F-17
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
borrowed under the Company's line of credit facility (the
"Credit Facility") as described in Note 5, and the balance
of which was paid by the issuance of 3,683,143 Units. The
Company contributed Altamonte Mall to GGP/Homart II in
November, 1999 as described in Note 4.
On September 3, 1998, the Company acquired Pierre Bossier
Mall in Bossier City (Shreveport), Louisiana. The aggregate
consideration paid for Pierre Bossier Mall was approximately
$52,700 (subject to prorations and certain adjustments)
which was paid in the form of approximately $10,000 in cash
(borrowed under the Company's Credit Facility), a new
mortgage loan (obtained from an independent third party) of
approximately $42,000 and the assumption of approximately
$700 of existing debt. The Company had previously loaned the
sellers approximately $50,000 in early 1999 and received an
option to buy the property. In conjunction with the closing
of the sale, the loan was fully repaid.
On September 15, 1998, the Company acquired Spring Hill Mall
in West Dundee (Chicago), Illinois. The aggregate
consideration paid by the Company was approximately $124,000
(subject to prorations and certain adjustments) which was
paid in the form of approximately $32,000 in cash (borrowed
under the Company's Credit Facility) and a new ten year
fixed rate $92,000 mortgage loan.
On September 18, 1998, the Company acquired Coastland Center
in Naples, Florida, for approximately $114,500 in cash
(subject to prorations and certain adjustments). The
aggregate consideration paid was borrowed under the
Company's Credit Facility.
On October 21, 1998, the Company acquired Mall St. Vincent
in Shreveport, Louisiana. The aggregate consideration paid
for Mall St. Vincent was $26,400 (subject to prorations and
certain adjustments) which was paid by issuing 200,052
Units, of which 88,871 were immediately redeemed for cash
(borrowed under the Company's Credit Facility) upon demand
of the holders of such Units, and by assuming approximately
$19,200 of mortgage debt.
Developments
During the three year period ending December 31, 2000, the
Company was developing or had completed construction at the
following three development sites: Coralville (Iowa City),
Iowa; Grandville (Grand Rapids), Michigan and Frisco
(Dallas), Texas. Coral Ridge Mall, located in Coralville
(Iowa City), Iowa was completed and opened in July 1998.
Construction of the Grandville (Grand Rapids) mall
(RiverTown Crossings) commenced in December 1997, and opened
in November 1999. Construction of Stonebriar Centre,
currently owned by GGP/Homart II, located in Frisco
(Dallas), Texas commenced in October of 1999 and opened in
August of 2000.
The Company has an ongoing program of renovations and
expansions at its properties including significant projects
currently under construction at the Park Mall in Tuscon,
Arizona; Eden Prairie Mall in Eden Prairie (Minneapolis),
Minnesota; and Knollwood Mall in St. Louis Park
(Minneapolis), Minnesota. In addition, the Company has
commenced construction of an integrated broadband
distribution system that will
F-18
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
provide tenants at its properties with a private wide-area
network as well as supporting applications and equipment
(the "Broadband System"). The Company has already incurred
the majority of these network costs (financed or to be
financed by fixed-rate intermediate term equipment
financing) and anticipates having the majority of its
regional shopping centers wired for such broadband
connectivity by the end of the second quarter of 2001.
During 1999, the Company formed a joint venture to develop a
regional mall in Westlake (Dallas), Texas. As of December
31, 2000, the Company had invested approximately $14,460 in
the joint venture. The Company is currently obligated to
fund pre-development costs (estimated to be approximately
$1,545, most of which has been incurred). Actual development
costs are not resolved at this time. The retail site, part
of a planned community which is expected to contain a resort
hotel, a golf course, luxury homes and corporate offices, is
currently planned to contain up to 1.6 million square feet
of tenant space including up to six anchor stores and a
multi-screen theater. There can be no assurance that
development of this site will proceed beyond the pre-
development phase.
The Company also owns and is investigating certain other
potential development sites, including sites in Toledo, Ohio
and West Des Moines, Iowa but there can be no assurance that
development of these sites will proceed.
NOTE 4 GGP/Homart
INVESTMENTS IN The Company owns 50% of GGP/Homart with the remaining
UNCONSOLIDATED ownership interest held by the New York State Common
AFFILIATES Retirement Fund, an institutional investor. GGP/Homart has
elected to be taxed as a REIT. The Company's co-investor in
GGP/Homart has an exchange right under the GGP/Homart
Stockholders Agreement, which permits it to convert its
ownership interest in GGP/Homart to shares of Common Stock
of General Growth. If such exchange right is exercised, the
Company may alternatively satisfy such exchange in cash.
In early 1999, the Company received notice that an
institutional investor (which then owned an approximate 4.7%
interest in GGP/Homart) desired to exercise its exchange
right. The Company satisfied the exercise of such exchange
right (effective as of January 1, 1999) by issuing 1,052,182
shares of Common Stock, thereby increasing its ownership
interest in GGP/Homart from approximately 38.2% in 1998 to
approximately 42.9% for the first quarter of 1999. During
the second quarter of 1999, two other co-investors (which
then owned in the aggregate an approximate 7.1% interest in
GGP/Homart) notified the Company that they desired to
exercise their exchange rights. The Company satisfied the
exercise of such exchange rights (effective as of April 1,
1999) by issuing an aggregate of 1,551,109 shares of Common
Stock, thereby increasing its ownership interest in
GGP/Homart to 50%.
GGP/Homart II
In November 1999, the Company, together with New York State
Common Retirement Fund, the Company's co-investor in
GGP/Homart, formed GGP/Homart II, a Delaware limited
liability company which is owned equally. GGP/Homart II owns
F-19
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
100% interests in Stonebriar Centre in Frisco (Dallas),
Texas, Altamonte Mall in Altamonte Springs (Orlando),
Florida, Natick Mall in Natick (Boston), Massachusetts and
Northbrook Court in Northbrook (Chicago), Illinois which
were contributed by the Company; and 100% interests in
Alderwood Mall in Lynnwood (Seattle), Washington; Carolina
Place in Charlotte, North Carolina; and Montclair Plaza in
Los Angeles, California which were contributed by the New
York State Common Retirement Fund. Certain of the malls were
contributed subject to existing financing in order to
balance the net equity values of the malls contributed by
each of the venture partners. According to the membership
agreement between the venture partners, the Company and its
joint venture partner share in the profits and losses, cash
flows and other matters relating to GGP/Homart II in
accordance with their respective ownership percentages.
GGP Ivanhoe III
On July 23, 1998, effective as of June 30, 1998, GGP Ivanhoe
III acquired the U.S. Prime Property, Inc. ("USPPI")
portfolio through a merger of a wholly-owned subsidiary of
GGP Ivanhoe III into USPPI. The common stock of GGP Ivanhoe
III is owned 51% by the Company and 49% by an affiliate of
Ivanhoe Inc. of Montreal, Quebec, Canada ("Ivanhoe"). GGP
Ivanhoe III has elected to be taxed as a REIT. The aggregate
consideration paid pursuant to the merger agreement was
approximately $625,000 (less certain adjustments, including
a credit of approximately $64,000 for outstanding mortgage
indebtedness and accrued interest thereon and other
miscellaneous items). The acquisition was financed with a
$392,000 acquisition loan bearing interest at LIBOR plus 90
basis points which became due July 1, 1999, (subsequently
extended and repaid in September 1999 as described below)
and capital contributions from the Company and the "joint
venture partner" in proportion to their respective stock
ownership. Pursuant to the GGP Ivanhoe III stockholders'
agreement, the Company initially contributed approximately
$91,290 to GGP Ivanhoe III (less certain interest and other
credits). The Company's capital contributions were funded
primarily with borrowing under the Company's Credit
Facility. The properties acquired include: Landmark Mall in
Alexandria, Virginia; Mayfair Mall and adjacent office
buildings in Wauwatosa (Milwaukee), Wisconsin; Meadows Mall
in Las Vegas, Nevada; Northgate Mall in Chattanooga,
Tennessee; Oglethorpe Mall in Savannah, Georgia; and Park
City Center in Lancaster, Pennsylvania.
Effective as of September 28, 1999, GGP Ivanhoe III
acquired, through its wholly-owned subsidiary, Oak View Mall
in Omaha, Nebraska from an unrelated third party. In
addition, on December 22, 1999, GGP Ivanhoe III acquired
Eastridge Shopping Center in San Jose, California. The
aggregate purchase price for the two properties was
approximately $160,000. A portion of the purchase price was
financed with an $83,000 ten-year mortgage loan,
collateralized by the Oak View Mall which bears interest at
7.71% per annum (and requires monthly payments of principal
and interest based upon a 30-year amortization schedule).
The remainder of the purchase price was funded by capital
contributions from the Company and Ivanhoe in proportion to
their respective stock ownership in GGP Ivanhoe III and
short-term loans of approximately $30,000 bearing interest
at LIBOR (6.56% at December 31, 2000) plus 185 basis
F-20
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
points and maturing in June 2001. The Company's capital
contributions were funded primarily from proceeds from the
Company's Credit Facility.
On September 30, 1999, GGP Ivanhoe III repaid the $392,000
acquisition loan with its allocated portion of the proceeds
of the issuance of commercial mortgage-backed securities as
described in Note 5 and capital contributions of
approximately $26,000 and $25,000 from each of the Company
and Ivanhoe, respectively. In conjunction with the
repayment, GGP Ivanhoe III expensed previously unamortized
deferred financing costs, the Company's share of which
(approximately $1,799) has been reflected as an
extraordinary item for the year ended December 31, 1999.
The joint venture partner in GGP Ivanhoe III is also the
Company's joint venture partner in GGP Ivanhoe (described
below). The Company and Ivanhoe share in the profits and
losses, cash flows and other matters relating to GGP Ivanhoe
III in accordance with their respective ownership
percentages except that certain major operating and capital
decisions (as defined in the stockholders' agreement)
require the approval of both stockholders. Accordingly, the
Company is accounting for GGP Ivanhoe III using the equity
method.
GGP Ivanhoe
GGP Ivanhoe owns The Oaks Mall in Gainesville, Florida and
Westroads Mall in Omaha, Nebraska. The Company contributed
approximately $43,700 for its 51% ownership interest in GGP
Ivanhoe and Ivanhoe owns the remaining 49% ownership
interest. The terms of the stockholders' agreement are
similar to those of GGP Ivanhoe III.
Town East Mall / Quail Springs Mall
The Company owns a 50% interest in Town East Mall, located
in Mesquite, Texas and a 50% interest in Quail Springs Mall
in Oklahoma City, Oklahoma. The Company shares in the
profits and losses, cash flows and other matters relating to
Town East Mall and Quail Springs Mall in accordance with its
ownership percentage.
GGMI
At December 31, 2000, the Operating Partnership owned all of
the non-voting preferred stock of GGMI representing 95% of
the equity interest. Certain key current and former
employees of the Company held the remaining 5% equity
interest through ownership of 100% of the common stock of
GGMI, which was entitled to all voting rights in GGMI.
Accordingly, the Company utilized the equity method to
account for its ownership interest in GGMI. As no preferred
stock dividends had been paid by GGMI, the Company had been
allocated 100% of the earnings (loss) and cash flows
generated by GGMI since 1996. The Operating Partnership also
had advanced funds to GGMI, at interest rates ranging from
8% to 14% per annum, which were scheduled to mature by 2016.
The loans required payment of interest only until maturity.
GGMI manages, leases, and performs various other services
for the Portfolio Centers and other properties owned by
unaffiliated third parties.
F-21
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
On January 1, 2001 the Company acquired 100% of the common
stock of GGMI. In connection with the acquisition, the GGMI
preferred stock owned by the Company was cancelled and
approximately $40,000 of the outstanding loans owed by GGMI
to the Company were contributed to the capital of GGMI. In
addition, the Company and GGMI concurrently terminated the
management contracts for the Wholly-Owned Centers as the
management activities will be performed directly by the
Company. The operations of GGMI will be fully consolidated
with the Company but GGMI will continue to manage, lease,
and perform various other services for the Unconsolidated
Centers and other properties owned by unaffiliated third
parties. During 2001, the Company will elect for GGMI to be
treated as a taxable REIT subsidiary (a "TRS") as permitted
by the Tax Relief Extension Act of 1999.
F-22
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
SUMMARIZED FINANCIAL INFORMATION OF INVESTMENTS IN UNCONSOLIDATED REAL ESTATE
AFFILIATES
Following is summarized financial information for the Company's Unconsolidated
Real Estate Affiliates as of December 31, 2000 and 1999 and for the years
ended December 31, 2000, 1999 and 1998.
CONDENSED BALANCE SHEETS
December 31, 2000
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- -----------
Assets:
Net investment in real estate $1,437,600 $1,240,709 $1,164,122
Investment in real estate
joint ventures 49,563 - -
Other assets 116,242 80,866 69,362
---------- ---------- ----------
$1,603,405 $1,321,575 $1,233,484
========== ========== ==========
Liabilities and Owners'
Equity:
Mortgage and other notes
payable $1,134,346 $ 621,924 $ 728,343
Accounts payable and accrued
expenses 38,712 38,018 49,195
Owners' equity 430,347 661,633 $ 455,946
---------- ---------- ----------
$1,603,405 $1,321,575 $1,233,484
========== ========== ==========
December 31, 1999
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- -----------
Assets:
Net investment in real estate $1,225,379 $1,178,202 $1,145,385
Investment in real estate
joint ventures 110,540 - -
Other assets 116,817 293,721 51,826
---------- ---------- ----------
$1,452,736 $1,471,923 $1,197,211
========== ========== ==========
Liabilities and Owners'
Equity:
Mortgage and other notes
payable $ 945,553 $ 641,850 $ 733,935
Accounts payable and accrued
expense 37,941 41,886 36,733
Owners' equity 469,242 788,187 426,543
---------- ---------- ----------
$1,452,736 $1,471,923 $1,197,211
========== ========== ==========
CONDENSED STATEMENTS OF OPERATIONS
December 31, 2000
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- -----------
Revenues:
Tenant rents $254,275 $146,730 $199,709
Operating expenses (1) 146,138 81,678 117,266
-------- -------- --------
Operating Income (loss) 108,137 65,052 82,443
Interest expense, net (2) (73,098) (34,914) (53,128)
Equity in net income of
unconsolidated real estate
affiliates 4,333 - -
Gain on property sales (1,811) - -
Income allocated to minority
interest (408) - -
-------- -------- --------
Net Income (loss) $ 37,153 $ 30,138 $ 29,315
======== ======== ========
F-23
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
December 31, 1999
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- -----------
Revenues:
Tenant rents $224,599 $12,535 $163,445
Operating expenses (1) 129,465 6,590 $ 93,699
-------- ------- --------
Operating Income (loss) 95,134 5,945 69,746
Interest expense, net (2) (60,814) (1,758) (45,624)
Equity in net income of
unconsolidated real estate
affiliates 5,504 - -
Gain on property sales 816 -
Extraordinary Item (3,528)
Income allocated to minority
interest (808) - -
-------- ------- --------
Net Income (loss) $ 39,832 $ 4,187 $ 20,594
======== ======= ========
December 31, 1998
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- -----------
Revenues:
Tenant rents $184,783 $ - $103,803
Operating expenses (1) 107,717 - 54,530
-------- ------- --------
Operating Income (loss) 77,066 - 49,273
Interest expense, net (2) (47,799) (29,882)
Equity in net income of
unconsolidated real estate
affiliates 5,011 - -
Gain on property sales 13,182 - -
Income allocated to minority
interest (705) - -
-------- ------- --------
Net Income (loss) $ 46,755 $ - $ 19,391
======== ======= ========
Significant accounting policies used by the Unconsolidated
Real Estate Affiliates are the same as those used by the
Company.
--------
(1) Includes depreciation and amortization.
(2) Includes extraordinary items.
F-24
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 5 MORTGAGE Mortgage notes and other debts payable at December 31, 2000
NOTES AND OTHER and 1999 consisted of the following:
DEBTS PAYABLE
December 31,
2000 1999
---------- ----------
Fixed-Rate debt
Mortgage and other notes payable $1,832,783 $1,724,854
Variable-Rate debt
Mortgage notes payable 1,146,343 1,234,680
Credit Facility and bank loans 265,000 160,000
---------- ----------
Total Variable-Rate debt 1,411,343 1,394,680
---------- ----------
Total $3,244,126 $3,119,534
========== ==========
FIXED RATE DEBT
Mortgage Notes Payable
The fixed-rate mortgage notes bear interest ranging from
6.41% to 10.00% per annum (weighted average of 7.01% per
annum), require monthly payments of principal and/or
interest and have various maturity dates through 2020
(weighted average remaining term of 5.0 years). Certain
properties are pledged as collateral for the related
mortgage notes. The mortgage notes payable as of December
31, 2000 are non-recourse to the Company (except to the
extent of supplemental guarantees executed by the Company).
Certain loans have cross-default provisions and are cross-
collateralized as part of a group of properties. Under
certain cross-default provisions, a default under any
mortgage notes included in a cross-defaulted package may
constitute a default under all such mortgage notes and may
lead to acceleration of the indebtedness due on
each property within the collateral package. In general, the
cross-defaulted properties are under common ownership.
However, GGP Ivanhoe debt collateralized by two GGP Ivanhoe
centers totaling $125,000 is cross-defaulted and cross-
collateralized with debt collateralized by eleven Wholly-
Owned centers. GGP Ivanhoe III debt collateralized by five
GGP Ivanhoe III centers totaling $341,019 is cross-defaulted
and cross-collateralized with debt collateralized by four
Wholly-Owned Centers.
VARIABLE RATE DEBT
Mortgage Notes Payable
Variable mortgage notes payable at December 31, 2000 consist
primarily of the approximate $110,000 outstanding on the
construction loan collateralized by Rivertown Crossings as
described below, approximately $130,000 of non-recourse
financing collateralized by a pool of six Wholly-Owned
properties and approximately $856,350 of collateralized
mortgage-backed securities as described below. The loans
bear interest at a rate per annum equal to LIBOR plus 90 to
250 basis points.
Commercial Mortgage-Backed Securities
In August 1999, the Company issued $500,000 of commercial
mortgage-backed securities, collateralized by the Ala Moana
Center (see Note 3), with a maturity date of September 10,
2004 assuming the exercise by the Company of no-cost
extension
F-25
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
options aggregating two years. The securities (the "Ala
Moana CMBS") are comprised of notes which bear interest at
rates per annum ranging from LIBOR plus 50 basis points to
LIBOR plus 275 basis points (weighted average equal to LIBOR
plus 95 basis points), calculated and payable monthly. In
conjunction with the issuance of the Ala Moana CMBS, the
Company arranged for an interest rate cap agreement, the
effect of which will limit the maximum interest rate the
Company will be required to pay on the securities to 9% per
annum. Payments received pursuant to the interest rate cap
agreement for the year ended December 31, 2000 were
approximately $77, which were reflected as a reduction in
net interest expense. Approximately $438,000 of the proceeds
from the sale of the Ala Moana CMBS was used by the Company
to repay the short-term mortgage loan obtained in July, 1999
to enable it to purchase the Ala Moana Center. The remainder
was utilized by the Company for general working capital
purposes including paydowns on the Company's Credit
Facility.
In September 1999, the Company issued $700,229 of commercial
mortgage backed securities with a maturity date of October
10, 2004, assuming the exercise of no-cost extension options
aggregating two years, cross-collateralized and cross-
defaulted by a portfolio of nine regional malls and an
office complex adjacent to one of the regional malls. The
properties in the portfolio are Mayfair Mall and adjacent
office buildings in Wauwatosa (Milwaukee), Wisconsin; Park
City Center in Lancaster, Pennsylvania; Oglethorpe Mall in
Savannah, Georgia; Landmark Mall in Alexandria, Virginia,
all centers owned by GGP Ivanhoe III; and Northgate Mall in
Chattanooga, Tennessee; The Boulevard Mall in Las Vegas,
Nevada; Regency Square Mall in Jacksonville, Florida; Valley
Plaza Shopping Center in Bakersfield, California; Northridge
Fashion Center in Northridge (Los Angeles), California, all
Wholly-Owned Centers. The securities (the "GGP-Ivanhoe
CMBS") are comprised of notes which bear interest at rates
per annum ranging from LIBOR plus 52 basis points to LIBOR
plus 325 basis points (weighted average equal to LIBOR plus
approximately 109 basis points), calculated and payable
monthly. In conjunction with the issuance of the GGP-Ivanhoe
CMBS, the Company arranged for an interest rate cap
agreement, the effect of which will limit the maximum
interest rate the Company will be required to pay on the
securities to 9.03% per annum. Payments received pursuant to
the interest rate cap agreement for the year ended December
31, 2000 were approximately $366, which were reflected as a
reduction in net interest expense. Approximately $340,000 of
the proceeds from the sale of the GGP-Ivanhoe CMBS repaid
amounts collateralized by the GGP Ivanhoe III properties in
the GGP-Ivanhoe CMBS Portfolio of properties and the
remaining approximately $360,000 repaid amounts
collateralized by Wholly-Owned properties in the GGP-Ivanhoe
CMBS portfolio of properties.
Credit Facility
The Company's $200,000 unsecured revolving Credit Facility
was originally scheduled to mature on July 31, 2000. On June
23, 2000, the Company prepaid all remaining outstanding
principal amounts and terminated the Credit Facility. The
Credit Facility bore interest at a floating rate per annum
equal to LIBOR plus 80 to 120 basis points depending upon
the Company's leverage ratio. The Credit Facility
F-26
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
was subject to financial performance covenants including
debt-to-market capitalization, minimum earnings before
interest, taxes, depreciation and amortization ("EBITDA")
ratios and minimum equity values.
As of July 31, 2000 the Company obtained a new unsecured
revolving credit facility (the "Revolver") in a maximum
aggregate principal amount of $135,000 (increased to
$160,000 in September 2000). At December 31, 2000 the
outstanding balance of the Revolver was $35,000. The
Revolver has a maturity of July 31, 2003 and bears interest
at a floating rate per annum equal to LIBOR plus 100 to 190
basis points, depending on the Company's average leverage
ratio. The Revolver is subject to financial performance
covenants including debt to value and net worth ratios,
EBITDA ratios and minimum equity values.
Interim Financing
In January 1999, the Company obtained an additional $30,000
unsecured bank loan, which bore interest at a floating
market rate (average rate equal to 6.46% per annum). The
Company had obtained in November 1998 a thirteen-month loan
in the principal amount of $55,000 collateralized by a
negative pledge (i.e., the promise not to encumber) of
Coastland Center in Naples, Florida. These loans were repaid
on May 21, 1999 with a ten-year 7.0% mortgage loan in the
principal amount of $87,000 collateralized by Coastland
Center.
In January 1999, the Company obtained an additional $83,655
floating rate (7.27% at September 30, 1999) interim loan
(originally scheduled to mature June 1, 1999) which was
expected to be replaced or refinanced by the maturity date
with new mortgage financing. During May, 1999, the Company
obtained a new $45,000 mortgage loan collateralized by The
Crossroads Mall in Kalamazoo, Michigan. The loan, which
bears interest at 7.40% and matures on June 1, 2009,
partially repaid the interim loan and the maturity of the
remaining balance, approximately $38,655 at June 30, 1999,
was extended and repaid in October 1999 with a portion of
the proceeds of the six property two-year non-recourse
mortgage pool financing described below.
In April 1999, the Company obtained an additional $25,000
bank loan, partially secured by Park Mall in Tucson,
Arizona. In October 1999, the loan was increased to $50,000.
The loan matures November 15, 2002 as extended, bears
interest at a rate per annum of LIBOR plus 175 basis points
and is expected to be further extended and then replaced by
maturity with a $90,000 construction loan facility to be
collateralized by Park Mall which is currently undergoing
extensive renovation, with the final phase of renovation
expected to be completed in 2001.
On July 30, 1999, the Company obtained a three month loan in
the principal amount of $25,000, collateralized by a
negative pledge (i.e., the promise not to encumber) of Eagle
Ridge Mall in Lake Wales, Florida. The proceeds of the loan
were distributed to the Operating Partnership to fund
ongoing acquisition and development activity. The short-term
loan bore interest at a rate per annum of LIBOR plus 175
basis points. This loan was refinanced in October 1999 with
a portion of the proceeds of the six-property two-year non-
recourse mortgage pool financing described below.
F-27
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
In September 1999, the Company obtained an additional
$95,000 unsecured floating rate (LIBOR plus 250 basis
points) interim loan which was scheduled to mature July 31,
2000. The loan provided for periodic principal payments
($12,000 paid in 1999) to maturity and the majority of the
proceeds of this loan were used to repay the remaining
balance on the MEPC Acquisition Financing. This loan was
repaid in January 2000 as described below.
In October 1999, the Company obtained a $130,000 two-year
loan collateralized by six properties, five regional malls
(Knollwood Mall, Eagle Ridge Mall, West Valley Mall, South
Shore Mall and Century Mall) and the Company's headquarters,
the 110 N. Wacker Drive office building in Chicago,
Illinois. This loan bears interest at LIBOR plus 185 basis
points and matures on November 1, 2001. The Company intends
to replace this loan on or before maturity with non-recourse
long-term mortgage financing.
In January 2000, the Company obtained a new $200,000
unsecured short-term bank loan. The Company's initial draw
under this loan was $120,000 in January, 2000 and the
remaining available amounts were fully drawn at June 30,
2000. Loan proceeds were used to fund ongoing redevelopment
projects and repay the remaining balance of $83,000 on an
interim loan obtained in September 1999. The bank loan bore
interest at a rate per annum of LIBOR plus 150 basis points
and was refinanced on August 1, 2000 with the Revolver and
the Term Loan described below.
As of July 31, 2000, the Company obtained an unsecured term
loan (the "Term Loan") in a maximum principal amount of
$100,000. The principal amount of the Term Loan was
increased to $155,000 in September, 2000. Term Loan proceeds
were used to fund ongoing redevelopment projects and repay a
portion of the remaining balance of the bank loan described
in the prior paragraph immediately above. During the fourth
quarter of 2000, the principal amount of the Term Loan was
further increased to $230,000. The additional $75,000 was
used to pay down the Revolver as discussed above and for
current redevelopment projects. The Term Loan has a maturity
of July 31, 2003 and bears interest at a rate per annum of
LIBOR plus 100 to 170 basis points depending on the
Company's average leverage ratio.
Construction Loan
During April 1999 the Company received $30,000 representing
the initial loan draw on an $110,000 construction loan
facility. The facility is collateralized by and provided
financing for the RiverTown Crossings Mall development
(including outparcel development) in Grandville (Grand
Rapids), Michigan. The construction loan provides for
periodic funding as construction and leasing continue and
currently bears interest at a rate per annum of LIBOR plus
150 basis points. As of July 17, 2000 additional loan draws
of approximately $80,000 had been made and no further
amounts are available under the construction loan facility.
Interest is due monthly but during 1999 was added to the
periodic loan draws. The loan matures on June 29, 2001 and
the Company currently intends to refinance the loan at or
prior to maturity with a non-recourse long-term mortgage
loan.
F-28
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Letters of Credit
As of December 31, 2000 and 1999, the Operating Partnership
had outstanding letters of credit of $7,693 and $7,934,
respectively, primarily in connection with special real
estate assessments and insurance requirements. In addition,
the Company has a letter of credit of approximately $11,200
related to the funding of the Ala Moana CMBS and pending
construction projects at the Ala Moana Center.
Principal amounts due under mortgage notes and other debts
payable mature as follows:
Amount
Year Maturing
---- ----------
2001 $407,736
2002 111,254
2003 282,344
2004 1,112,189
2005 40,894
Subsequent 1,289,709
----------
Total $3,244,126
==========
Certain mortgage notes payable may be prepaid but are
generally subject to a prepayment penalty of a yield-
maintenance premium or a percentage of the loan balance.
Land, buildings and equipment related to the mortgage notes
payable with an aggregate cost of approximately $4,599,615
at December 31, 2000 have been pledged as collateral. In
addition, loans totaling approximately $386,540
(collateralized by assets with a total carrying value of
approximately $477,389) were supplementally guaranteed by
the Company. Certain properties, including those within the
portfolios collateralized by commercial mortgage backed
securities, are subject to financial performance convenants,
primarily EBITDA ratios.
NOTE 6 The extraordinary items resulted from prepayment costs and
EXTRAORDINARY unamortized deferred financing costs related to the early
ITEMS extinguishment, primarily through refinancings, of mortgage
notes payable. In 1999, the basic and diluted per share
impact of the extraordinary items was $.30. The basic per
share impact of the extraordinary items in 1998 was $.14,
and the diluted per share impact was $.13.
NOTE 7 RENTALS The Company receives rental income from the leasing of
UNDER OPERATING retail shopping center space under operating leases. The
LEASES minimum future rentals based on operating leases of Wholly-
Owned Centers held as of December 31, 2000 are as follows:
Year Amount
---- --------
2001 $367,233
2002 352,886
2003 325,220
2004 300,440
2005 262,294
Thereafter 982,599
F-29
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Minimum future rentals do not include amounts which are
payable by certain tenants based upon a percentage of their
gross sales or as reimbursement of shopping center operating
expenses.
The tenant base includes national and regional retail chains
and local retailers, and consequently, the Company's credit
risk is concentrated in the retail industry.
NOTE 8 GGMI
TRANSACTIONS GGMI had previously been contracted to provide management,
WITH AFFILIATES leasing, development and construction management services
for the Wholly-Owned Centers. In addition, certain shopping
center advertising and payroll costs of the properties were
paid by GGMI and reimbursed by the Company. Total costs
included in the consolidated financial statements related to
agreements with GGMI are as follows:
Year Ended December 31,
2000 1999 1998
------- ------- -------
Management and Leasing Fees $22,834 $21,201 $15,074
Cost Reimbursements 55,937 56,548 41,594
Development Costs 8,833 3,499 7,801
On January 1, 2001, in connection with the acquisition of
the common stock of GGMI, the Company and GGMI agreed to
concurrently terminate the management contracts with respect
to the Wholly-Owned Centers. Effective January 1, 2001, the
Wholly-Owned Centers will be self-managed under the same
standards and procedures in effect prior to January 1, 2001.
Notes Receivable-Officers
In April, May and September, 1998 certain officers of the
Company issued to the Company an aggregate of $3,164 of
promissory notes in connection with their exercise of
options to purchase an aggregate of 166,000 shares of the
Company's Common Stock. During 1999, the Company received
approximately $62 in payments, made advances of
approximately $380 in conjunction with additional advances
and Common Stock purchases by such officers and forgave
approximately $64 in principal and accrued interest on such
notes. During 2000, the Company has made aggregate advances
of $7,149 in conjunction with the exercise of options to
purchase an aggregate 270,000 shares of Common Stock by
officers. In June 2000, a $1,120 loan was repaid by one of
the officers. Also in 2000, the Company forgave
approximately $150 of other notes receivable from an officer
(previously reflected in prepaid expenses and other assets).
In January 2001, the Company made an additional
$1,120 advance to an officer in conjunction with the
exercise of options to purchase 40,000 shares of Common
Stock. The notes, which bear interest at a rate computed as
a formula of a market rate, are collateralized by the shares
of Common Stock issued upon exercise of such options,
provide for quarterly payments of interest and are payable
to the Company on demand.
F-30
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 9 EMPLOYEE Stock Incentive Plan
BENEFIT AND The Company's Stock Incentive Plan provides incentives to
STOCK PLANS attract and retain officers and key employees. An aggregate
of 3,000,000 shares of Common Stock have been authorized for
issuance under the plan. Options are granted by the
Compensation Committee of the Board of Directors at an
exercise price of not less than 100% of the fair market
value of the Common Stock on the date of grant. The term of
the option is fixed by the Compensation Committee, but no
option is exercisable more than 10 years after the date of
the grant. Options granted to officers and key employees are
for 10-year terms and are generally exercisable in either 33
1/3% or 20% annual increments from the date of the grants.
However, during 2000, 53,319 options were granted to certain
employees under the Stock Incentive Plan (of which 5,000
were forfeited during 2000) with the same terms as the TSO's
granted in 2000 (as described and defined below). Options
granted to non-employee directors are exercisable in full
commencing on the date of grant and expire on the tenth
anniversary of the date of the grant.
A summary of the status of the Company's Stock Incentive
Plan as of December 31, 2000, 1999 and 1998 and changes
during the year ended on those dates is presented below.
2000 1999 1998
------------------- ------------------- -------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------- -------- --------- -------- --------- --------
Outstanding at beginning
of year 827,500 $29.85 848,500 $28.99 785,000 $24.79
Granted 205,319 30.89 47,500 $32.42 229,500 $36.19
Exercised (276,500) 26.38 (60,000) $19.00 (166,000) $19.06
Forfeited (14,000) 33.97 (8,500) $34.78 -- --
--------- ------ --------- ------ --------- ------
Outstanding at end of
year 742,319 31.36 827,500 $29.85 848,500 $28.99
========= ========= =========
Exercisable at end of
year 467,500 30.64 595,500 $28.76 414,500 $27.57
Options available for
future grants 1,644,014 1,835,333 1,874,333
Weighted average per
share fair value of
options granted during
the year $2.62 $2.84 $3.18
F-31
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
The following table summarizes information about stock
options outstanding pursuant to the Stock Incentive Plan at
December 31, 2000:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------------------------------------------------------
Number Weighted Average Options
Range Of Outstanding Remaining Weighted Average Exercisable Weighted Average
Exercise Prices At 12/31/00 Contractual Life Exercise Price At 12/31/00 Exercise Price
--------------- ----------- ---------------- ---------------- ----------- ----------------
$19.00 - $22.50 2,000 3.8 years $21.31 2,000 $21.31
$27.81 - $29.97 429,819 6.9 years $28.59 301,500 $27.99
$31.75 - $33.84 93,500 8.9 years $33.07 28,000 $32.76
$36.06 - $37.69 217,000 6.8 years $36.20 136,000 $36.21
------- --------- ------ ------- ------
742,319 7.1 years $31.36 467,500 $30.64
======= ========= ====== ======= ======
1998 Incentive Plan
General Growth also has an incentive stock plan entitled the
1998 Incentive Stock Plan (the "1998 Incentive Plan"). Under
the 1998 Incentive Plan, stock incentive awards in the form
of threshold-vesting stock options ("TSOs") are granted to
employees. The exercise price of the TSOs to be granted to a
participant will be the Fair Market Value ("FMV") of a share
of Common Stock on the date the TSO is granted. The
threshold price (the "Threshold Price") which must be
achieved in order for the TSO to vest will be determined by
multiplying the FMV on the date of grant by the Estimated
Annual Growth Rate (currently set at 7% in the 1998
Incentive Plan) and compounding the product over a five year
period. Shares of the Common Stock must achieve and sustain
the Threshold Price for at least 20 consecutive trading days
at any time over the five years following the date of grant
in order for the TSO to vest. All TSOs granted will have a
term of 10 years but must vest within 5 years of the grant
date in order to avoid forfeiture.
The aggregate number of shares of Common Stock which may be
subject to TSOs issued pursuant to the 1998 Incentive Plan
may not exceed 1,000,000, subject to certain customary
adjustments to prevent dilution. TSOs to purchase 251,030
and 313,964 shares of Common Stock at an exercise price of
$29.97 and $31.69 respectively, were granted in 2000 and
1999, respectively. The estimated fair value of the 2000
TSOs is $1.49 and the estimated fair value of the 1999
grants was $1.36. None of the TSOs granted in 2000 and 1999
have vested. In addition, 13,606 of the 251,030 shares
granted in 2000 and 60,336 of the 313,964 shares granted in
1999 have been forfeited thru December 31, 2000.
The fair value of each option grant for 2000, 1999 and 1998
for the Stock Incentive Plan and the 1998 Incentive Plan was
estimated on the date of grant using the Black-Scholes
option pricing model with the following assumptions:
2000 1999 1998
--------- --------- ---------
Risk-free interest rate 6.19% 5.21% 5.48%
Dividend yield 6.86% 7.22% 7.28%
Expected life 5.2 years 4.6 years 4.2 years
Expected volatility 18.2% 20.0% 19.4%
F-32
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Employee Stock Purchase Plan
During 1999, General Growth established the General Growth
Properties, Inc. Employee Stock Purchase Plan (the "ESPP")
to assist eligible employees in acquiring a stock ownership
interest in the General Growth. A maximum of 500,000 shares
of Common Stock is reserved for issuance under the ESPP.
Under the ESPP, eligible employees make payroll deductions
over a six-month purchase period at which time the amounts
withheld are used to purchase shares of Common Stock at a
purchase price equal to 85% of the lesser of the closing
price of a share of Common Stock on the first trading day of
the purchase period or the last trading day of the purchase
period. The first purchase period under the ESAP ended
December 31, 1999. On January 3, 2000, 26,205 shares of
Common Stock were sold to ESPP participants at a price of
$23.80 per share. The second purchase period under the ESPP
ended June 30, 2000 at which time 41,534 shares of Common
Stock were sold to ESPP participants at a price of $23.75
per share. The third purchase period ended on December 29,
2000 at which time 26,108 shares of Common Stock were sold
to ESPP participants at a price of $27.09 per share. The
fair value of the rights to purchase pursuant to the ESPP in
2000 was estimated to be $5.04 per share using the Black-
Scholes option pricing model, with the following
assumptions: a risk free rate of 5.95%, a dividend yield of
6.86% and expected volatility of 18.20%.
Stock Option Pro Forma Data
The Company had applied Accounting Principles Board Opinion
25 in accounting for the Stock Incentive Plan, the 1998
Incentive Plan and the Employee Stock Purchase Plan through
June 30, 2000 as provided by Interpretation 44 as defined
and further described in Note 12. Accordingly, no
compensation costs have been recognized. Had compensation
costs for the Company's plans been determined based on the
fair value at the grant date for options granted in 2000,
1999 and 1998 in accordance with the method required by
Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation", the Company's net
income and net income per share would have been reduced to
the pro forma amounts as follows:
Year Ended December 31,
2000 1999 1998
-------- ------- -------
Net Income
As Reported $113,481 $76,658 $53,012
Pro Forma 113,081 $76,160 $52,709
Net earnings per share -
basic
As Reported $ 2.18 $ 1.67 $ 1.46
Pro Forma $ 2.17 $ 1.66 $ 1.46
Net earnings per share -
diluted
As Reported $ 2.18 $ 1.66 $ 1.46
Pro Forma $ 2.17 $ 1.65 $ 1.45
Management Savings Plan
The Company sponsors the General Growth Management Savings
and Employee Stock Ownership Plan (the "401(k) Plan") which
permits all eligible employees to
F-33
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
defer a portion of their compensation in accordance with the
provisions of Section 401(k) of the Code. Under the 401(k)
Plan, the Company may make, but is not obligated to make,
contributions to match the contributions of the employees.
For the years ending December 31, 2000, 1999 and 1998 the
Company made matching contributions of approximately $3,554,
$2,891 and $2,042 respectively.
NOTE 10
DISTRIBUTIONS On December 15, 2000, the Company declared a cash
PAYABLE distribution of $.53 per share that was paid on January 31,
2001, to stockholders of record (1,390 owners of record) on
January 5, 2001, totaling $ 27,744. In addition, a
distribution of $ 10,385 was paid to the limited partners of
the Operating Partnership. Concurrently, the Company
declared the fourth quarter 2000 preferred stock dividend,
for the period from October 1, 2000 through December 31,
2000, in the amount of $0.4531 per share, payable to
preferred stockholders of record on January 5, 2001 and paid
on January 15, 2001. As described in Note 1, such preferred
stock dividend was in the same amount as the Operating
Partnership's distribution to the Company of the same date
with respect to the Preferred Units held by the Company.
On December 13, 1999, the Company declared a cash
distribution of $.51 per share that was paid on January 31,
2000, to stockholders of record (1,121 owners of record) on
January 6, 2000, totaling $26,481. In addition, a
distribution of $10,097 was paid to the limited partners of
the Operating Partnership. Concurrently, the Company
declared the fourth quarter 1999 preferred stock dividend,
for the period from October 1, 1999 through December 31,
1999, in the amount of $0.4531 per share, payable to
preferred stockholders of record on January 6, 2000 and paid
on January 14, 2000.
The allocations of the common distributions declared and
paid for income tax purposes are as follows:
Year Ended December
31,
2000 1999 1998
------ ------ ------
Ordinary Income 92.2% 66.0% 98.0%
Capital Gain --% 3.0% 2.0%
Return of Capital 7.8% 31.0% --%
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
NOTE 11 In the normal course of business, from time to time, the
COMMITMENTS AND Company is involved in legal actions relating to the
CONTINGENCIES ownership and operations of its properties. In management's
opinion, the liabilities, if any that may ultimately result
from such legal actions are not expected to have a material
adverse effect on the consolidated financial position,
results of operations or liquidity of the Company.
The Company leases land at certain properties from third
parties. Rental expense including participation rent related
to these leases was $460, $375 and $292 for the years ended
December 31, 2000, 1999 and 1998, respectively. The leases
generally provide for a right of first refusal in favor of
the Company in the event of a proposed sale of the property
by the landlord.
F-34
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
From time to time the Company has entered into contingent
agreements for the acquisition of properties. Each
acquisition is subject to satisfactory completion of due
diligence and, in the case of developments, completion and
occupancy of the project.
NOTE 12 During December 1999, the Securities and Exchange Commission
RECENTLY ISSUED (the "SEC") issued Staff Accounting Bulletin 101 "Revenue
ACCOUNTING Recognition" ("SAB" 101"). SAB 101 provides, among other
PRONOUNCEMENTS things, that rental income should be deferred in interim
periods by the lessor if the triggering events that create
contingent rent have not yet occurred. The Company is
entitled to receive contingent rents because a majority of
the tenant leases provide for additional rent computed as a
percentage of tenant sales revenues above certain annual
thresholds. The Company had previously accrued, on an
interim basis, such overage rents based on the prorated
annual overage rent estimated to be due from tenants. The
Company has applied this revised accounting effective
January 1, 2000. There was no material cumulative effect on
the Company's financial position as of the date of adoption
of this revised accounting and the only material effect of
this pronouncement is to shift the Company's recognition,
including amounts from the operations of the Unconsolidated
Real Estate Affiliates, of major portions of overage rent
from interim quarters to the third and fourth quarter of
2000 and each subsequent year. The Company's cash
collections of overage rent has not been affected by this
accounting recognition change.
On June 1, 1999 the FASB issued Statement No. 133
"Accounting for Derivative Instruments and Hedging
Activities" ("Statement 133"). FASB Statement No. 138
"Accounting for Derivative Instruments and Hedging
Activities-An Amendment of FASB Statement No 133" was issued
in June 2000. Statement 133, as amended, is effective for
fiscal years beginning after June 15, 2000 as provided by
FASB Statement No. 137 issued in July 1999. The Company's
only hedging activity is the cash value hedge represented by
its cap agreements relating to its commercial mortgage-
backed securities (Note 5). The interest rate cap agreements
place a limit on the effective rate of interest the Company
will bear on such floating rate obligations. The Company has
concluded that these cap agreements are highly effective in
achieving its objective of eliminating its exposure to
variability in cash flows relating to these floating rate
obligations when LIBOR rates exceed the strike rates of the
cap agreements. However, Statement 133 also requires that
the Company fair value the cap agreements as of the end of
each reporting period. Interest rates have declined since
the caps were obtained. The Company will adopt Statement 133
January 1, 2001. In accordance with the transition
provisions of Statement 133, the Company will record at
January 1, 2001 a loss to earnings of $3,334 as a
cumulative-effect type transition adjustment to recognize at
fair value the time-value portion of all the interest rate
cap agreements that were previously designated as part of a
hedging relationship. Included in the $3,334 loss is $704
relating to interest rate cap agreements held by
Unconsolidated Real Estate Affiliates. The Company will also
record $112 to other comprehensive income at January 1, 2001
to reflect the then fair value of the intrinsic portion of
the interest rate cap agreements. Subsequent changes in the
fair value of these agreements will be reflected in current
earnings and accumulated other comprehensive income. As the
remaining time-value portion of the fair value of the
F-35
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
cap agreements at January 1, 2001 is not significant, any
further decreases in the fair value of the cap agreements
which would be required to be reflected in current earnings
are not expected to be material.
In March 2000, the FASB issued Statement of Accounting
Standards Interpretation 44, "Accounting for Certain
Transactions Involving Stock Compensation" ("Interpretation
44"). Interpretation 44 is generally effective for new stock
option grants beginning July 1, 2000. However, the
interpretive definition of an employee apply to new awards
granted after December 15, 1998. Further, the FASB
determined that any modifications to current accounting as a
result of this guidance are to be recorded prospectively,
effective as of July 1, 2000. General Growth has previously
granted stock options to its employees, directors and to
employees of its then unconsolidated subsidiary, GGMI
(which, as of January 1, 2001, became a consolidated
subsidiary). Under the terms of the Interpretation, any
awards to GGMI employees are considered awards to non-
employees. The Company has applied the accounting mandated
by Interpretation 44 as of July 1, 2000 and there was
virtually no impact on the Company's consolidated financial
position or consolidated results of operations. Due to the
acquisition of the common stock of GGMI by the Operating
Partnership on January 1, 2001, those individuals who are
employed by GGMI will be considered employees of General
Growth for the purposes of accounting for stock option
grants for 2001 and subsequent years.
F-36
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 13 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Year Ended First Second Third Fourth
December 31, 2000 Quarter Quarter Quarter Quarter
----------------- -------- -------- -------- --------
Total Revenues $162,483 $165,026 $173,286 $197,972
Income before minority
interest 36,680 37,791 44,840 71,017
Income before extraordinary
items 28,241 27,950 31,363 50,394
Net income applicable to
common shares 22,124 21,833 25,246 44,277
Earnings before extraordinary
item per share - basic (a) $ 0.43 $ 0.42 $ 0.48 $ 0.85
Earnings before extraordinary
item per share - diluted (a) 0.43 0.42 0.48 0.85
Net earnings per share - basic
(a) 0.43 0.42 0.48 0.85
Net earnings per share -
diluted (a) 0.43 0.42 0.48 0.85
Distributions declared per
share $ 0.51 $ 0.51 $ 0.51 $ 0.53
Weighted average shares
outstanding (in thousands) -
basic 51,918 51,965 52,095 52,268
Weighted average shares
outstanding (in thousands) -
diluted 51,936 52,011 52,134 52,314
Year Ended First Second Third Fourth
December 31, 1999 Quarter Quarter Quarter Quarter
----------------- -------- -------- -------- --------
Total Revenues $134,260 $135,916 $156,027 $186,139
Income before minority
interest 27,545 33,208 35,770 51,456
Income before extraordinary
items 23,329 24,415 28,783 38,394
Net income applicable to
common shares 8,519 18,298 17,573 32,267
Earnings before extraordinary
item per share -basic (a) $ 0.43 $ 0.44 $ 0.45 $ 0.62
Earnings before extraordinary
item per share -diluted (a) 0.43 0.44 0.45 0.62
Net earnings per share - basic
(a) 0.21 0.44 0.35 0.62
Net earnings per share -
diluted (a) 0.21 0.44 0.35 0.62
Distributions declared per
share $ 0.49 $ 0.49 $ 0.49 $ 0.51
Weighted average shares
outstanding (in thousands) -
basic 40,055 41,638 50,149 51,694
Weighted average shares
outstanding (in thousands) -
diluted 40,252 41,776 50,214 51,695
--------
(a) Earnings per share for the four quarters do not add up
to the annual earnings per share due to the issuance of
additional stock during the year.
F-37
GENERAL GROWTH PROPERTIES, INC.
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors and Stockholders
General Growth Properties, Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 6, 2001 of General Growth Properties, Inc. which report and
consolidated financial statements are included in this Annual Report on Form
10K also included an audit of the financial statement schedule listed in the
Index to Consolidated Financial Statements and Consolidated Financial
Statement Schedule on page F-1 of this Form 10-K. In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
Chicago, Illinois PricewaterhouseCoopers LLP
February 6, 2001
F-38
GENERAL GROWTH PROPERTIES, INC.
Schedule III - Real Estate and Accumulated Depreciation as of December 31,
2000
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Costs Capitalized
Subsequent Gross Amounts at Which
Initial Cost To Acquisition Carried at Close of Period
--------------------------- ------------------------ ------------------------------------------
Buildings
and Buildings
Encumbrances Improvements Carrying And
Description (e) Land (a) Improvements Costs (b) Land Improvements Total(c)(d)
---------------- ------------ ------------ -------------- ------------ ----------- ------------ -------------- --------------
Ala Moana Combined
Honolulu, HI 500,000,000 336,229,260 473,770,740 14,481,654 5,231,765 336,229,497 493,484,159 829,713,656
Col. A Col. F Col. G Col. H Col. I
------ ------ ------ ------ ------
Life Upon Which
Depreciation in
Latest Income
Accumulated Date of Date Statement is
Description Depreciation Construction Acquired Computed
- -------------------- ------------ ------------ -------- ---------------
Ala Moana Combined
Honolulu, HI 20,335,247 1999 (f)
Apache Mall
Rochester, MN 56,218,828 8,110,292 72,992,628 3,300,140 0 8,110,292 76,292,768 84,403,060
Apache Mall
Rochester, MN 4,725,015 1998 (f)
Baybrook Mall
Friendswood, TX 94,086,611 13,300,000 117,162,546 1,595,005 0 13,300,000 118,757,551 132,057,551
Baybrook Mall
Friendswood, TX 3,492,751 1999 (f)
Bayshore Mall,
Eureka, CA 37,250,000 3,004,345 27,398,907 22,852,279 2,887,090 3,005,040 53,138,276 56,143,316
Bayshore Mall,
Eureka, CA 17,623,707 1986-1987 (f)
Bellis Fair
Mall,
Bellingham, WA 73,000,000 7,616,458 47,040,131 9,315,718 6,122,020 7,485,224 62,477,869 69,963,093
Bellis Fair
Mall,
Bellingham, WA 23,663,035 1987-1988 (f)
Birchwood Mall,
Port Huron, MI 43,953,445 1,768,935 34,574,635 11,693,673 1,980,603 3,045,616 48,248,911 51,294,527
Birchwood Mall,
Port Huron, MI 15,553,162 1989-1990 (f)
Boulevard Mall
Las Vegas, NV 88,765,714 16,490,343 148,413,086 3,120,520 0 16,490,343 151,533,606 168,023,949
Boulevard Mall
Las Vegas, NV 9,595,509 1998 (f)
Capital Mall
Jefferson City,
MO 16,500,000 4,200,000 14,201,000 6,384,326 0 3,912,935 20,585,326 24,498,261
Capital Mall
Jefferson City,
MO 4,188,652 1993 (f)
Century Mall
Birmingham, AL 32,000,000 3,164,000 28,513,908 3,595,222 0 3,164,000 32,109,130 35,273,130
Century Mall
Birmingham, AL 2,973,670 1997 (f)
Chapel Hills
Colorado Springs,
CO 36,750,000 4,300,000 34,017,000 58,397,277 36,805 4,300,000 92,451,082 96,751,082
Chapel Hills
Colorado Springs,
CO 13,309,613 1993 (f)
Coastland Center
Naples, FL 85,650,692 11,450,000 103,050,200 3,037,525 0 11,450,000 106,087,725 117,537,725
Coastland Center
Naples, FL 5,823,089 1998 (f)
Colony Square
Mall
Zanesville, OH 25,600,000 1,000,000 24,500,000 12,573,545 0 1,243,184 37,073,545 38,316,729
Colony Square
Mall
Zanesville, OH 13,216,189 1986 (f)
Columbia Mall
Columbia, MO 56,100,000 5,383,208 19,663,231 10,300,343 1,368,803 5,383,208 31,332,377 36,715,585
Columbia Mall
Columbia, MO 13,760,013 1984-1985 (f)
Coral Ridge Mall
Coralville, IA 80,028,435 3,363,602 64,217,772 8,311,150 4,420,355 3,363,602 76,949,277 80,312,879
Coral Ridge Mall
Coralville, IA 6,021,935 1998-1999 (f)
Crossroads (MI)
Kalamazoo, MI 44,440,854 6,800,000 61,200,000 2,342,926 41,616 6,800,000 63,584,542 70,384,542
Crossroads (MI)
Kalamazoo, MI 3,211,356 1999 (f)
Crossroads
Center
St. Cloud, MN 46,055,322 10,851,689 72,002,847 1,368,576 82,242 10,929,119 73,453,665 84,382,784
Crossroads
Center
St. Cloud, MN 1,079,262 2000 (f)
F-39
GENERAL GROWTH PROPERTIES, INC.
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Costs Capitalized
Subsequent Gross Amounts at Which
Initial Cost To Acquisition Carried at Close of Period
--------------------------- ------------------------ ------------------------------------------
Buildings
and Buildings
Encumbrances Improvements Carrying And
Description (e) Land (a) Improvements Costs (b) Land Improvements Total(c)(d)
- ---------------- -------------- ------------ -------------- ------------ ----------- ------------ -------------- --------------
Cumberland Mall
Atlanta, GA 98,837,813 15,198,568 136,787,110 2,529,067 31,518 15,198,568 139,347,695 154,546,263
Col. A Col. F Col. G Col. H Col. I
------ ------ ------ ------ ------
Life Upon Which
Depreciation in
Latest Income
Accumulated Date of Date Statement is
Description Depreciation Construction Acquired Computed
- ----------------- ------------ ------------ -------- ---------------
Cumberland Mall
Atlanta, GA 8,700,812 1998 (f)
Development in
Progress 0 17,936,214 7,610,519 0 17,936,214 7,610,519 25,546,733
Development in
Progress 0
Eagle Ridge Mall
Lake Wales, FL 27,000,000 7,619,865 49,560,538 5,240,518 5,678,662 7,621,768 60,479,718 68,101,486
Eagle Ridge Mall
Lake Wales, FL 8,466,079 1995-1996 (f)
Eden Prairie
Mall
Eden Prairie, MN 0 465,063 19,024,047 28,245,168 2,688,933 465,063 49,958,148 50,423,211
Eden Prairie
Mall
Eden Prairie, MN 2,554,040 1997 (f)
Fallbrook Mall,
West Hills, CA 46,900,000 6,117,338 10,076,520 57,565,167 2,696,787 6,127,138 70,338,474 76,465,612
Fallbrook Mall,
West Hills, CA 25,953,530 1984 (f)
Fox River Mall
Appleton, WI 93,200,000 2,700,566 18,291,067 33,581,270 1,820,253 4,787,291 53,692,590 58,479,881
Fox River Mall
Appleton, WI 18,789,481 1983-1984 (f)
Gateway Mall,
Springfield, OR 30,750,000 8,728,263 34,707,170 18,723,328 7,624,197 8,749,088 61,054,695 69,803,783
Gateway Mall,
Springfield, OR 18,185,248 1989-1990 (f)
GGPLP Corp.
Chicago, IL 318,163,109 0 556,740 88,729,876 0 0 89,286,616 89,286,616
GGPLP Corp.
Chicago, IL 86,991 (f)
110 Building
Chicago, IL 20,000,000 0 29,035,310 2,912,160 0 0 31,947,470 31,947,470
110 Building
Chicago, IL 2,649,962 1997 (f)
Grand Traverse
Mall, Grand
Traverse, MI 51,500,000 3,529,966 20,775,772 20,755,982 3,643,793 3,533,745 45,175,547 48,709,292
Grand Traverse
Mall, Grand
Traverse, MI 13,956,597 1990-1991 (f)
Greenwood Mall
Bowling Green,
KY 39,500,000 3,200,000 40,202,000 18,107,939 0 3,431,918 58,309,939 61,741,857
Greenwood Mall
Bowling Green,
KY 12,401,423 1993 (f)
Knollwood Mall,
St. Louis Park,
MN 10,000,000 0 9,748,047 27,915,997 2,340,180 7,025,606 40,004,224 47,029,830
Knollwood Mall,
St. Louis Park,
MN 14,614,498 1978 (f)
Lakeview Square
Mall Battle
Creek, MI 26,101,407 3,578,619 32,209,980 10,024,096 42,469 3,578,619 42,276,545 45,855,164
Lakeview Square
Mall Battle
Creek, MI 4,243,019 1996 (f)
Lansing Mall
Lansing, MI 41,865,612 6,977,798 62,800,179 7,345,721 49,923 6,977,798 70,195,823 77,173,621
Lansing Mall
Lansing, MI 7,016,317 1996 (f)
Lockport Mall,
Lockport, NY 9,300,000 800,000 10,000,000 4,247,075 23,656 800,000 14,270,731 15,070,731
Lockport Mall,
Lockport, NY 5,149,125 1986 (f)
F-40
GENERAL GROWTH PROPERTIES, INC.
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Costs Capitalized
Subsequent
Initial Cost To Acquisition
--------------------------- ------------------------
Buildings
and
Encumbrances Improvements Carrying
Description (e) Land (a) Improvements Costs (b)
---------------- -------------- ------------ -------------- ------------ -----------
Mall of the
Bluffs,
Council Bluffs,
IA 43,953,445 1,860,116 24,016,343 13,934,688 2,529,093
Col. A Col. E Col. F Col. G Col. H Col. I
------ ------ ------ ------ ------ ------
Gross Amounts at Which
Carried at Close of Period
-------------------------------------------- Life Upon Which
Depreciation in
Buildings Latest Income
And Accumulated Date of Date Statement is
Description Land Improvements Total(c)(d) Depreciation Construction Acquired Computed
- ------------------ ------------ --------------- --------------- ------------ ------------ -------- ---------------
Mall of the
Bluffs,
Council Bluffs,
IA 1,895,220 40,480,124 42,375,344 14,235,180 1985-1986 (f)
Mall St. Vincent
Shreveport, LA 18,786,337 2,640,000 23,760,000 2,658,318 0
Mall St. Vincent
Shreveport, LA 2,640,000 26,418,318 29,058,318 1,593,404 1998 (f)
Marketplace
Champaign, IL 47,000,000 7,000,000 63,972,357 32,643,237 40,968
Marketplace
Champaign, IL 7,000,000 96,656,562 103,656,562 6,975,888 1997 (f)
McCreless Mall
San Antonio, TX 0 1,000,000 9,000,002 424,937 0
McCreless Mall
San Antonio, TX 1,000,000 9,424,939 10,424,939 633,803 1998 (f)
MEPC Acquisition
Financing 0 0 0 0 0
MEPC Acquisition
Financing 0 (1,543,887) (1,543,887) 33,967
Northridge
Fashion Center
Northridge, CA 106,364,102 16,618,095 149,562,583 9,642,506 2,977,145
Northridge
Fashion Center
Northridge, CA 16,975,131 162,182,234 179,157,365 10,199,318 1998 (f)
Oakwood Mall,
Eau Claire, WI 58,604,593 3,266,669 18,281,160 18,503,779 1,711,573
Oakwood Mall,
Eau Claire, WI 3,617,262 38,496,512 42,113,774 13,876,401 1985-1986 (f)
Park Mall
Tucson, AZ 50,000,000 4,996,024 44,993,177 64,141,572 4,287,996
Park Mall
Tucson, AZ 4,715,836 113,422,745 118,138,581 6,946,607 1996 (f)
Piedmont Mall,
Danville, VA 16,750,000 2,000,000 38,000,000 3,602,722 20,787
Piedmont Mall,
Danville, VA 2,000,000 41,623,509 43,623,509 5,789,233 1995 (f)
Pierre Bossier
Mall
Bossier City,
LA 40,948,801 5,280,707 47,558,468 2,845,909 0
Pierre Bossier
Mall
Bossier City,
LA 5,283,970 50,404,377 55,688,347 2,871,538 1998 (f)
The Pines,
Pine Bluff, AR 26,750,000 1,488,928 17,627,258 9,891,252 1,365,091
The Pines,
Pine Bluff, AR 1,247,414 28,883,601 30,131,015 10,513,288 1985-1986 (f)
Regency Square
Mall
Jacksonville,
FL 86,533,675 16,497,552 148,477,968 4,276,971 0
Regency Square
Mall
Jacksonville,
FL 16,506,853 152,754,939 169,261,792 9,555,861 1998 (f)
Rio West Mall,
Gallup, NM 13,500,000 0 19,500,000 4,804,389 0
Rio West Mall,
Gallup, NM 0 24,304,389 24,304,389 8,120,753 1986 (f)
River Falls
Mall,
Clarksville, IN 28,000,000 3,177,688 54,610,421 7,299,882 5,281,892
River Falls
Mall,
Clarksville, IN 3,182,305 67,192,195 70,374,500 23,456,921 1989-1990 (f)
River Hills
Mall,
Mankato, MN 51,200,000 3,713,529 29,013,757 17,407,275 2,603,416
River Hills
Mall,
Mankato, MN 4,707,314 49,024,448 53,731,762 14,459,371 1990-1991 (f)
Riverlands
Shopping Center
LaPlace, LA 0 500,000 4,500,000 190,299 0
Riverlands
Shopping Center
LaPlace, LA 500,000 4,690,299 5,190,299 350,850 1998 (f)
F-41
GENERAL GROWTH PROPERTIES, INC.
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Costs Capitalized
Subsequent Gross Amounts at Which
Initial Cost To Acquisition Carried at Close of Period
--------------------------- ------------------------- ------------------------------------------
Buildings
and Buildings
Encumbrances Improvements Carrying And
Description (e) Land (a) Improvements Costs (b) Land Improvements Total(c)(d)
---------------- -------------- ------------ -------------- ------------ ----------- ------------ -------------- --------------
Rivertown
Crossing
Grandville, MI 109,999,997 10,972,923 97,141,738 25,876,171 12,889,406 7,246,462 135,907,315 143,153,777
Col. A Col. F Col. G Col. H Col. I
------ ------ ------ ------ ------
Life Upon Which
Depreciation in
Latest Income
Accumulated Date of Date Statement is
Description Depreciation Construction Acquired Computed
- ------------------ ------------ ------------ -------- ---------------
Rivertown
Crossing
Grandville, MI 4,353,186 1998-1999 (f)
Sooner Fashion
Mall,
Norman, OK 20,000,000 2,700,000 24,300,000 13,043,186 0 2,580,578 37,343,186 39,923,764
Sooner Fashion
Mall,
Norman, OK 3,174,793 1996 (f)
Southlake Mall,
Morrow, GA 51,300,000 6,700,000 60,406,902 9,272,591 0 6,700,000 69,679,493 76,379,493
Southlake Mall,
Morrow, GA 5 ,621,045 1997 (f)
SouthShore Mall,
Aberdeen, WA 9,000,000 650,000 15,350,000 5,268,915 0 650,000 20,618,915 21,268,915
SouthShore Mall,
Aberdeen, WA 7,332, 334 1986 (f)
Southwest Plaza
Littleton, CO 83,936,068 9,000,000 103,983,673 11,430,141 118,012 9,000,000 115,531,826 124,531,826
Southwest Plaza
Littleton, CO 7,323,807 1998 (f)
Spring Hill
West Dundee, IL 89,726,859 12,400,000 111,643,525 3,780,912 0 12,400,000 115,424,437 127,824,437
Spring Hill
West Dundee, IL 7,279,691 1998 (f)
Valley Hills,
Harrisonburg,
VA 34,675,327 3,443,594 31,025,471 20,368,473 47,615 5,656,275 51,441,559 57,097,834
Valley Hills,
Harrisonburg,
VA 3,047,443 1997 (f)
Valley Plaza
Shopping Center
Bakersfield, CA 74,679,067 12,685,151 114,166,356 (6,616,950) 0 12,685,151 107,549,406 120,234,557
Valley Plaza
Shopping Center
Bakersfield, CA 6,854,466 1998 (f)
West Valley
Mall,
Tracy, CA 32,000,000 9,295,045 47,789,310 11,763,585 7,756,557 10,890,502 67,309,452 78,199,954
West Valley
Mall,
Tracy, CA 9,378,925 1995 (f)
Westwood Mall
Jackson, MI 20,900,000 2,658,208 23,923,869 3,450,367 0 3,571,208 27,374,236 30,945,444
-------------- ------------ -------------- ------------ ----------- ------------ -------------- --------------
Westwood Mall
Jackson, MI 2,812,474 1996 (f)
------------
Grand Totals $3,244,126,113 $654,506,050 $3,163,403,012 $768,859,180 $90,441,221 $667,096,357 $4,024,103,672 $4,691,200,029
============== ============ ============== ============ =========== ============ ============== ==============
Grand Totals $488,129,874
============
F-42
GENERAL GROWTH PROPERTIES, INC
General Growth Properties, Inc.
Notes to Schedule III
(Dollars in Thousands)
(a) See description of mortgage notes payable in Note 5 of
Notes to Consolidated Financial Statements.
(b) Initial cost for constructed malls is cost at end of
first complete calendar year subsequent to opening.
(c) Carrying costs consists of capitalized construction-
period interest and taxes.
(d) The aggregate cost of land, buildings and equipment for
federal income tax purposes is approximately $3,467,614
Reconciliation of Real Estate
1998 1999 2000
---- ---- ----
Balance at beginning of year $1,863,485 $3,676,796 $4,326,551
Additions: 1,813,311 1,238,874 364,649
Reductions: -- (589,119) --
---------- ---------- ----------
Balance at close of year $3,676,796 $4,326,551 $4,691,200
========== ========== ==========
Reconciliation of Accumulated Depreciation
1998 1999 2000
---- ---- ----
Balance at beginning of year $233,295 $301,789 $376,673
Depreciation Expense 68,494 105,046 $111,457
Reductions: -- (30,162) --
-------- -------- --------
Balance at close of year $301,789 $376,673 $488,130
======== ======== ========
(f) Depreciation is computed based upon the following
estimated lives:
Buildings, improvements and carrying costs 40 years
Tenant allowances 10 - 40 years
Equipment and fixtures 10 years
F-43
GENERAL GROWTH PROPERTIES, INC.
EXHIBIT INDEX
2(a) Purchase and Sale Agreement dated as of May 3, 1999, among D/E Hawaii
Joint Venture, GGP Limited Partnership and General Growth Properties, Inc.
(17)
2(b) Agreement of Purchase and Sale, dated as of July 27, 1999, among Oak
View Mall Corporation, a Delaware corporation, and Oak View Mall, L.L.C., a
Delaware limited liability company. (18)
2(c) Agreement of Purchase and Sale, dated as of July 22, 1999 between
General Growth Properties, Inc., a Delaware corporation (the "Company"), and
RREEF USA Fund-III, a California group trust. (18)
2(d) Operating Agreement, dated November 10, 1999, between GGP Limited
Partnership, a Delaware limited partnership, The Comptroller of the State of
New York as Trustee of the Common Retirement Fund ("NYSCRF"), and GGP/Homart
II L.L.C. a Delaware limited liability company ("GGP/ Homart II"). (19)
2(e) Contribution Agreement dated November 10, 1999, by and between GGP
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), and GGP/Homart II (Altamonte Mall). (19)
2(f) Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Northbrook Court). (19)
2(g) Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Natick Trust). (19)
2(h) Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Stonebriar Centre). (19)
2(i) Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Carolina Place). (19)
2(j) Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Alderwood Mall). (19)
2(k) Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Montclair Plaza). (19)
2(l) Contribution Agreement, dated February 1, 2000, by and between General
Growth Companies, Inc. and GGP Limited Partnership. (20)
2(m) Purchase and Sale Agreement dated as of March 15, 2000 by and between
Crossroads Shopping Center Trust and St. Cloud Mall L.L.C. (21)
2(n) Purchase Agreement dated May 25, 2000 among General Growth Properties,
Inc., GGP Limited Partnership, GGPLP L.L.C. and Goldman Sachs 2000 Exchange
Place Fund, L.P. (23)
3(a) Amended and Restated Certificate of Incorporation of the Company. (2)
3(b) Amendment to Amended and Restated Certificate of Incorporation of the
Company.(3)
3(c) Amendment to Amended and Restated Certificate of Incorporation of the
Company filed on December 21, 1995.(6)
S-1
GENERAL GROWTH PROPERTIES, INC.
3(d) Amendment to Amended and Restated Certificate of Incorporation of the
Company filed on May 20, 1997.(10)
3(e) Amendment to Second Amendment and Restated Certificate of Incorporation
of the Company filed on May 17, 1999.(17)
3(f) Bylaws of the Company.(3)
3(g) Amendment to Bylaws of the Company.(3)
4(a) Redemption Rights Agreement, dated July 13, 1995, by and among GGP
Limited Partnership, General Growth Properties, Inc. and the persons listed on
the signature pages thereof.(5)
4(b) Redemption Rights Agreement dated December 6, 1996, among GGP Limited
Partnership, a Delaware corporation, Forbes/Cohen Properties, a Michigan
general partnership, Lakeview Square Associates, a Michigan general
partnership, and Jackson Properties, a Michigan general partnership.(1)
4(c) Redemption Rights Agreement, dated June 19, 1997, among GGP Limited
Partnership, a Delaware limited partnership, General Growth Properties, Inc.,
a Delaware corporation, and CA Southlake Investors, Ltd., a Georgia limited
partnership.(8)
4(d) Redemption Rights Agreement dated October 23, 1997, among GGPI, GGPLP
and Peter Leibowits.(10)
4(e) Form of Indenture.(7)
4(f) Certificate of Designations, Preferences and Rights of 7.25% Preferred
Equity Redeemable Stock, Series A.(14)
4(g) Amendment to Certificate of Designations, Preferences and Rights of
7.25% Preferred Income Equity Redeemable Stock, Series A of General Growth
Properties, Inc. filed on May 17, 1999.(17)
4(h) Redemption Rights Agreement dated April 2, 1998, among GGP Limited
Partnership, General Growth Properties, Inc. and Southwest Properties Venture.
(11)
4(i) Indenture and Servicing Agreement dated as of November 25, 1997, among
the Issuers named therein, LaSalle National Bank, as Trustee, and Midland Loan
Services, L.P., as Servicer (the "Indenture Agreement"). (12)
4(j) Form of Note pursuant to the Indenture Agreement. (12)
4(k) Mortgage, Deed of Trust, Security Agreement, Assignment of Leases and
Rents, Fixture Filing and Financing Statement, date and effective as of
November 25, 1997, among the Issuers, the Trustee and the Deed Trustees named
therein. (12)
4(l) Rights Agreement, dated November 18, 1998, between General Growth
Properties, Inc. and Norwest Bank Minnesota, N.A., as Rights Agent (including
the Form of Certificate of Designation of Series A Junior Participating
Preferred Stock attached thereto as Exhibit A, the Form of Right Certificate
attached Preferred Stock attached thereto as Exhibit C). (15)
4(m) Form of Common Stock Certificate. (16)
4(n) First Amendment to Rights Agreement, dated as of November 10, 1999,
between the Company and Norwest Bank, Minnesota, N.A. (18)
S-2
GENERAL GROWTH PROPERTIES, INC.
4(o) Letter Agreement concerning Rights Agreement, dated November 10, 1999,
between the Operating Partnership and NYSCRF. (18)
4(p) Certificate of Designations, Preferences and Rights of 8.95% Cumulative
Redeemable Preferred Stock, Series B. (22)
10(a) Second Amended and Restated Agreement of Limited Partnership of the
Operating Partnership. (13)
10(b) Rights Agreement between the Company and the Limited Partners of the
Operating Partnership.(4)
10(c)* General Growth Properties, Inc. 1993 Stock Incentive Plan, as
amended.(9)
10(d) Form of Amended and Restated Agreement of Partnership for each of the
Property Partnerships.(2)
10(e) Form of Indemnification Agreement between the Operating Partnership,
Martin Bucksbaum, Matthew Bucksbaum, Mall Investment L.P. and M. Bucksbaum
Company. (2)
10(f) Form of Registration Rights Agreement between the Company and the
Bucksbaums. (2)
10(g) Form of Registration Rights Agreement between the Company and certain
trustees for the IBM Retirement Plan. (2)
10(h) Form of Incidental Registration Rights Agreement between the Company,
Equitable, Frank Russell and Wells Fargo.(2)
10(i) Form of Letter Agreements restricting sale of certain shares of Common
Stock.(2)
10(j)* Letter Agreement dated October 14, 1993, between the Company and
Bernard Freibaum.(4)
10(k)* Form of Option Agreement between the Company and certain Executive
Officers.(8)
10(l)* General Growth Properties, Inc. 1998 Incentive Stock Plan.(16)
10(m) Amended and Restated Operating Agreement of GGPLP L.L.C. dated as of
May 25, 2000. (22)
10(n) Registration Rights Agreement dated May 25, 2000 between General
Growth Properties, Inc. and Goldman Sachs 2000 Exchange Place Fund, L.P. (23)
10(o) Term Loan Agreement, dated as of July 31, 2000, among the Operating
Partnership and GGPLP L.L.C. (collectively "Borrower"), Bankers Trust Company
("BT") and Lehman Commercial Paper Inc. ("Lehman").
10(p) Promissory Note dated July 31, 2000 made by Borrower in favor of BT.
10(q) Promissory Note dated July 31, 2000 made by Borrower in favor of
Lehman.
10(r) Joinder Agreement, dated as of September 1, 2000, between Bayerische
Hypo-Und Vereinsbank AG, New York Branch ("Hypo") and Borrower.
10(s) Promissory Note dated September 1, 2000 made by Borrower in favor of
Hypo.
10(t) Joinder Agreement, dated as of September 22, 2000, between Fleet
National Bank ("Fleet") and Borrower.
S-3
GENERAL GROWTH PROPERTIES, INC.
10(u) Promissory Note dated September 22, 2000 made by Borrower in favor of
Fleet.
10(v) First Amendment to Term Loan Agreement, dated as of September 22,
2000, among Borrower and BT, Lehman, Hypo and Fleet.
10(w) Lender Addendum, dated as of October 20, 2000, between Lehman,
Borrower and BT.
10(x) Replacement Note dated October 20, 2000 made by Borrower in favor of
Lehman.
10(y) Joinder Agreement, dated as of December 28, 2000, between The Chase
Manhattan Bank ("Chase"), Borrower, BT and Lehman.
10(z) Promissory Note dated December 28, 2000 made by Borrower in favor of
Chase.
10(aa) Second Amendment to Term Loan Agreement, dated as of December 28,
2000, among Borrower and BT, Lehman, Fleet and Chase.
10(bb) Revolving Credit Agreement, dated as of July 31, 2000, among
Borrower, Bank of America, N.A. ("BofA") Dresdner Bank, AG ("Dresdner"), and
U.S. Bank National Association ("USB").
10(cc) Promissory Note dated July 31, 2000 made by Borrower in favor of
BofA.
10(dd) Promissory Note dated July 31, 2000 made by Borrower in favor of
Dresdner.
10(ee) Promissory Note dated July 31, 2000 made by Borrower in favor of USB.
10(ff) Joinder to Revolving Credit Agreement, dated as of September 1, 2000,
among Hypo, Borrower, BofA, Dresdner and USB.
10(gg) Promissory Note dated September 1, 2000 made by Borrower in favor of
Hypo.
21 List of Subsidiaries of General Growth Properties, Inc.
23 Consent of PricewaterhouseCoopers LLP - Independent Accountants.
(*) A compensatory plan or arrangement required to be filed.
- -------------------------------------------------------------------------------
(1) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated January 3, 1996, incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement
on Form S-11 (No. 33-56640), incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1994, incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1993, incorporated herein by reference.
(5) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated July 17, 1996, incorporated herein by reference.
S-4
GENERAL GROWTH PROPERTIES, INC.
(6) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, incorporated herein by
reference.
(7) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (No. 333-37247) dated October 6, 1997, incorporated herein by
reference.
(8) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, incorporated herein by
reference.
(9) Previously filed as an exhibit to the Company's Registration Statement
on Form S-8 (No. 333-28449) dated June 3, 1997, incorporated herein by
reference.
(10) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, incorporated herein by
reference.
(11) Previously filed as an exhibit to the Company's current report on Form
8-K dated May 26, 1998, incorporated herein by reference.
(12) Previously filed as an exhibit to the Company's current report on
Form 8-K/A dated June 2, 1998, incorporated herein by reference.
(13) Previously filed as an exhibit to the Company's current report on Form
10-Q dated May 14, 1998, as amended May 21, 1998, incorporated herein by
reference.
(14) Previously filed as an exhibit to the Company's current report on Form
8-K dated August 7, 1998, incorporated herein by reference.
(15) Previously filed as an exhibit to the Company's current report on Form
8-K, dated November 18, 1998, incorporated herein by reference.
(16) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, incorporated herein by
reference.
(17) Previously filed as an exhibit to the Company's Current Report on
Form 8-K, dated July 12, 1999, incorporated herein by reference.
(18) Previously filed as an exhibit to the Company's Current Report on
Form 8-K, dated November 23, 1999, incorporated herein by reference.
(19) Previously filed as an exhibit to the Company's Current Report on
Form 8-K/A, dated January 11, 2000, incorporated herein by reference.
(20) Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, incorporated herein by
reference.
(21) Previously filed as an exhibit to the Company's Current Report on
Form 8-K, dated May 9, 2000, incorporated herein by reference.
(22) Previously filed as an exhibit to the Company's Current Report on
Form 8-K, dated June 13, 2000, incorporated herein by reference.
(23) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q dated August 9, 2000, incorporated herein by reference.
S-5