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, 2001
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.
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(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
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[X] Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (S) 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, 2002, the aggregate market value of the 59,269,508 shares of
Common Stock held by non-affiliates of the registrant was $2,622,083,034 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, 2002, there were 62,017,756 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, 2002 are incorporated by reference into Part III.
PART I All references to numbered Notes are to specific footnotes
ITEM 1. BUSINESS to the Consolidated Financial Statements of the Company (as
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, 2001, General Growth either directly or
through the Operating Partnership and subsidiaries
(collectively, the "Company") owned 100% of fifty-four
regional mall shopping centers (the "Wholly-Owned Centers");
50% of the common stock of GGP/Homart, Inc. ("GGP/Homart"),
50% of the membership interests of GGP/Homart II, L.L.C.
("GGP/Homart II"), 51% of the common stock of GGP Ivanhoe,
Inc. ("GGP Ivanhoe"), 51% of the common stock of GGP Ivanhoe
III, Inc. ("GGP Ivanhoe III"), 50% of each of two regional
mall shopping centers, Quail Springs Mall and Town East
Mall, and a 50% general partnership interest in Westlake
Retail Associates, Ltd ("Circle T") (collectively, the
"Unconsolidated Real Estate Affiliates"). The 50% interest
in the twenty-three centers owned by GGP/Homart, the 50%
interest in the eight 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". Circle T is currently developing a
regional mall in Dallas, Texas and, as it is not yet
operational, has been excluded from the definition of
Unconsolidated Centers. Together, the Wholly-Owned Centers
and the Unconsolidated Centers comprise the "Company
Portfolio" or the "Portfolio Centers". In addition, as of
December 31, 2001, the Company owned 100% of the common
stock of General Growth Management, Inc. ("GGMI"). On
December 31, 2001, General Growth owned an approximate 76%
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 24% 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.
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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 which was accounted for as a
purchase. GGP Management was then merged into GGMI with GGMI
as the surviving entity. 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 has subsequently elected to have GGMI treated as
a TRS. In connection with the acquisition, the GGMI
preferred stock owned by the Company was cancelled. The
Company and GGMI concurrently terminated the management
contracts for the Wholly-Owned Centers as the management
activities would thereafter be performed directly by the
Company. GGMI has continued 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 Cambridge 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 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. 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;
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Stonebriar Centre in Frisco (Dallas), Texas) contributed by
the Company as more fully described in Note 4. During 2001,
GGP/Homart II acquired the Willowbrook Mall in Houston,
Texas for approximately $145 million, approximately $102
million of which consisted of new, non-recourse mortgage
financing collateralized by the property.
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 and Circle T, 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, 2001, GGMI was the property manager for
forty-one 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.
GGMI also performs and receives fees for similar property
management functions for forty-four regional malls owned by
unaffiliated third parties.
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 upon minimum amount. Overage rent is
calculated by multiplying the sales in excess of the minimum
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
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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 2001, the Company acquired a 100%
ownership interest in Tucson Mall, a regional mall in
Tucson, Arizona for an aggregate investment by the Company
of approximately $180 million. In addition, the Company,
through GGP/Homart II, acquired in 2001 a 100% ownership
interest in Willowbrook Mall in Houston, Texas for
approximately $145 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, through Circle T,
is preparing to develop (with a joint venture partner) an
enclosed regional mall in Westlake (Dallas), Texas
(described below) and is investigating certain other
development sites (representing a net investment of
approximately $19.3 million), including Toledo; Ohio; West
Des Moines, Iowa; and South Sacramento, California. However,
there can be no assurance that development of these sites
will proceed.
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Construction commenced on the Stonebriar Centre in Frisco,
Texas in October 1998. Upon its completion in August 2000,
this 1,658,000 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.
During 1999, the Company formed the Circle T joint venture
to develop an enclosed mall in Westlake (Dallas), Texas. As
of December 31, 2001, the Company had invested approximately
$16.2 million in the joint venture. The Company is currently
obligated to fund pre-development costs (estimated to be
approximately $2.3 million, most of which has been
incurred). 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 1.3 million square feet of tenant space
including up to six anchor stores, an ice rink and a
multi-screen theater. A late 2004 opening is currently
scheduled.
Expansions and During 2001, 15 major projects were underway or completed.
Renovations 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 2001 are described below.
The redevelopment of the Lansing Mall, a 840,667 square foot
center located in Lansing, Michigan, began in 2001. The
project includes a food court renovation and a complete mall
upgrade, which is expected to be completed in late 2002.
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. Phase I is completed and Phase II is now scheduled
to be completed in early 2002.
Fallbrook Mall is a 788,437 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.
Parks at Arlington Mall, a 1,188,309 square foot center
located in Arlington, Texas is undergoing an extensive
expansion which commenced in 2000. The mall will add a new
store to the existing anchors, Dillards, Foley, Mervyn's, JC
Penney and Sears. The project also includes a multiplex
theatre and an ice rink. Completion is planned for late
2002.
The Portfolio All of the 97 Portfolio Centers are shopping centers with at
Centers 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:
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. Range in size between approximately 184,000 and
1,820,000 square feet of total GLA and between
approximately 123,000 and 800,000 square feet of
Mall and Freestanding GLA. The smallest Portfolio
Center has approximately 30 stores, and the largest
has over 280 stores;
. Have approximately 384 Anchors, operating under
approximately 59 trade names; and
. Have approximately 9,700 Mall and Freestanding
Stores.
The average size of the 97 Portfolio Centers is
approximately 920,000 square feet of GLA, including all
Anchors, Mall Stores and Freestanding Stores. The average
Mall and Freestanding GLA per Portfolio Center is
approximately 365,000 square feet.
As of December 31, 2001, the Wholly-Owned Centers contained
approximately 44.9 million square feet of GLA consisting of
Anchors (whether owned or leased), Mall Stores and
Freestanding Stores. The Unconsolidated Centers contained
approximately 44.3 million square feet of GLA.
The Company's share of total revenues from the Portfolio
Centers and GGMI increased to $1,156 million in 2001 from
$1,112 million in 2000. No single Portfolio Center generated
more than 9.6% of the Company's total 2001 pro rata
revenues. In 2001, total Mall Store sales from the Portfolio
Centers increased by approximately 1.9% in comparison to the
total Mall Store sales in 2000.
The table below shows the top 25 tenants, by trade name,
ranked by percentage of aggregate annualized effective rents
as compared to consolidated effective rents on an annualized
basis in the Wholly-Owned Centers at December 31, 2001. In
addition, similar percentages existed in the Portfolio
Centers as of December 31, 2001.
% of Total
Tenant Name Annualized Rents
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Old Navy Clothing Company 1.72%
Sears 1.63%
JC Penney 1.50%
Express (1) 1.19%
Victoria's Secret (1) 1.11%
Footlocker 1.10%
The Gap 1.10%
American Eagle Outfitters 0.94%
Abercrombie & Fitch 0.92%
Zales Jewelers 0.85%
Kay Bee Toys 0.81%
Lane Bryant 0.76%
Banana Republic 0.76%
Sam Goody 0.74%
Payless Shoe Source 0.72%
Louis Vuitton 0.70%
Eddie Bauer 0.69%
The Finish Line 0.68%
Kay Jewelers 0.68%
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Lerner New York 0.65%
Gap/Gap Kids 0.62%
Champs Sports 0.60%
The Buckle 0.60%
Macy's 0.60%
Pacific Sunwear of California 0.60%
(1) Under common ownership by The Limited, Inc.
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Mall and The Portfolio Centers have a total of approximately
Freestanding Stores 9,700 Mall and Freestanding Stores. The following table
reflects the tenant representation by category in the
Portfolio Centers as of December 31, 2001.
% of Sq. Ft. in
Portfolio
Tenant Categories Centers Types of Tenants/Products Sold
----------------- ------ -------------------------------
Specialty 21% Photo studios, beauty and nail salons, pharmacy and
sundries, variety stores, pet stores, newstands, 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
--------------------------------------------------------------------------------------------
Women's Apparel 18% Women's apparel
--------------------------------------------------------------------------------------------
Apparel 21% Unisex apparel, children's apparel, lingerie, and formal
wear
--------------------------------------------------------------------------------------------
Shoes 10% Shoes
--------------------------------------------------------------------------------------------
Food 7% Restaurant, food court, fast food
--------------------------------------------------------------------------------------------
Gifts 6% 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%
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 Jewelers, 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
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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.
Regency Square Mall is a 1,457,000 square foot, enclosed
regional shopping center located in Jacksonville, Florida.
The mall was constructed in 1967 and a renovation, including
a new food court, was recently completed. The mall serves a
trade area of over 450,000 people. The mall contains four
anchor department stores: Belk, JC Penney, Dillard's and
Sears as well as 118 mall shops with national retailers such
as The Disney Store, Gap/Gap Kids, American Eagle Outfitters
and Old Navy. There is also a 24-screen AMC Theatre with
stadium seating. Regency Square's primary regional mall
competition consists of centers such as The Avenues, 9 miles
to the south, and Orange Park Mall, located 20 miles to the
southeast. Regency Square Mall also faces competition from
neighborhood strip and power shopping centers throughout the
trade area such as Jacksonville Landing located on the St.
John's riverfront and St. Augustine Outlet Center located
approximately one half hour to the south.
Tucson Mall is a two-level, 1,300,000 square foot regional
mall located in Tucson, Arizona. The mall contains 162 mall
shops, and six Anchor department stores: Dillards, JC
Penney, Macy's, Mervyn's, Robinson-May and Sears. The
property includes a 14-screen General Cinema Theater and
national retailers such as American Eagle Outfitters, Ann
Taylor, Banana Republic, Old Navy and Eddie Bauer. Park
Place, located eight miles southeast of Tucson Mall but also
owned by the Company, recently completed an extensive
expansion and renovation that included constructing a new
Dillard's department store, adding a new streetscape along
Broadway Avenue, and a new food court and 20-screen theatre
in the new entertainment wing. Park Place is a single level
1,000,000 square foot center that offers three Anchor
department stores, Dillards, Sears and Macy's as well as
popular retailers such as Abercrombie, Z Gallerie and
Borders Books. The secondary competition for both malls
consists of discount retailers and numerous strip shopping
centers located within a few miles of the centers.
Mayfair Mall is a one million square foot, two-level,
regional shopping center located in Wauwatosa (Milwaukee),
Wisconsin. Mayfair Mall is anchored by Boston Store and
Marshall Fields and has 121 specialty mall shops and an
18-screen General Cinema Theatre. The mall's trade area
includes over 900,000 people. Mayfair Mall is the dominant
enclosed shopping center in Wisconsin. It is located in a
densely populated area and customers prefer the center
because of the variety/selection of stores, friendly
atmosphere and the quality of the merchandise offerings.
Mayfair Mall's primary competition includes Brookfield
Square, Southridge Mall and Bayshore Mall. Secondary
competition includes Northridge Mall and Grand Avenue Mall.
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
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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.
Employees As of March 14, 2002, the Company had 3,429 full-time
employees. Certain employees at three of the Portfolio
Centers are subject to collective bargaining agreements. The
Company's management believes that its employee relations
are satisfactory and there has not been a labor-related work
stoppage at any of its Portfolio 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 as General Growth currently qualifies as a real estate
a Real Estate investment trust pursuant to the requirements contained in
Investment Trust Sections 856-858 of the Internal Revenue Code of 1986, as
and Taxability amended (the "Code"). If, as General Growth contemplates,
of Distributions such qualification continues, General Growth will not be
taxed on its real estate investment trust taxable income.
During 2001, 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 $2.24 per share of Common Stock were paid in 2001,
of which $1.70(76.0%) was ordinary income and $0.54 (24.0%)
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 2001 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.
11 of 40
Leasing The Portfolio Centers average Mall Store rent per square
foot from leases that expired in 2001 was $27.40. 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 2001 was
$33.29, or $5.89 per square foot more than the average for
expiring leases. The following schedule shows scheduled
lease expirations over the next five years.
PORTFOLIO CENTERS
FIVE YEAR LEASE EXPIRATION SCHEDULE
All Expirations Expirations @ Share /(*)/
----------------------------------- ------------------------------------
Base Rent Footage Rent/PSF Base Rent Footage Rent/PSF
----------------------------------- ------------------------------------
Wholly-Owned
2002 $ 21,867,988 $ 799,538 $ 27.35 $ 21,867,988 799,538 $ 27.35
2003 26,697,662 996,319 26.80 26,697,662 996,319 26.80
2004 22,705,672 842,925 26.94 22,705,672 842,925 26.94
2005 34,570,107 1,157,798 29.86 34,570,107 1,157,798 29.86
2006 30,646,937 921,113 33.27 30,646,937 921,113 33.27
------------ ------------ --------- ------------ ------------ ---------
Portfolio Total $136,488,366 4,717,693 $ 28.93 $136,488,366 4,717,693 $ 28.93
Unconsolidated
2002 $ 30,628,103 956,115 $ 32.03 $ 14,066,551 437,639 $ 32.14
2003 31,280,521 956,489 32.70 13,613,310 419,366 32.46
2004 35,812,767 1,061,049 33.75 16,906,188 500,056 33.81
2005 26,680,860 814,360 32.76 12,473,717 378,628 32.94
2006 25,964,595 851,684 30.49 12,622,864 412,927 30.57
------------ ------------ --------- ------------ ------------ ---------
Portfolio Total $150,366,846 4,639,697 $ 32.41 $ 69,682,630 2,148,616 $ 32.43
Grand Total $286,855,212 9,357,390 $ 30.66 $206,170,996 6,866,309 $ 30.03
============ ============ ========= ============ ============ =========
(*) Expirations at share reflect the Company's direct or indirect ownership
interest in a joint venture.
12 of 40
Company Portfolio At December 31, 2001, the Company had direct or indirect
Debt ("pro rata") mortgage and other debt of approximately
$5,008.8 million. The ratio of pro rata variable rate debt
to total pro rata debt and preferred stock and preferred
Operating Partnership Units was 16.7% at December 31, 2001.
The following table reflects the maturity dates of the
Company's pro rata debt and the related interest rates,
after the effect of the current swap agreements of the
Company as described in Notes 5 and 13.
COMPANY PORTFOLIO DEBT
MATURITY AND CURRENT AVERAGE INTEREST RATE SUMMARY /(a)/
AS OF DECEMBER 31, 2001
(Dollars in Thousands)
Wholly-Owned Unconsolidated Company
Centers Centers /(b)/ Portfolio Debt
-------------------- -------------------- --------------------
Current Current Current
Average Average Average
Maturing Interest Maturing Interest Maturing Interest
Year Amount (a) Rate (c) Amount (a) Rate (c) Amount (a) Rate (c)
---- -------------------- -------------------- --------------------
2002 $ - -% $ 179,743 6.00% $ 179,743 6.00%
2003 282,000 5.11% 270,752 5.78% 552,752 5.44%
2004 339,184 5.77% 87,708 4.96% 426,892 5.60%
2005 250,000 4.89% 82,950 4.89% 332,950 4.89%
2006 613,161 5.88% 305,528 5.04% 918,689 5.60%
Subsequent $1,913,862 6.41% 683,892 5.78% $2,597,754 6.25%
---------- ----- ------- ----- ---------- -----
Totals $3,398,207 6.03% $1,610,573 5.57% $5,008,780 5.88%
========== ===== ========== ===== ========== =====
Variable Rate $ 491,764 3.99% $429,882 3.32% $ 921,646 3.68%
Fixed Rate 2,906,443 6.38% 1,180,691 6.40% 4,087,134 6.39%
---------- ----- --------- ----- ---------- -----
Totals $3,398,207 6.03% $1,610,573 5.57% $5,008,780 5.88%
========== ===== ========== ===== ========== =====
(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 Real Estate Affiliates) relating to the properties
owned by the Unconsolidated Real Estate Affiliates.
(c) For variable rate loans, the interest rate reflected is the actual
annualized weighted average rate for the variable rate debt
outstanding during the twelve months ended December 31, 2001.
13 of 40
Property Data The following tables set forth certain information regarding
the Wholly-Owned Centers and the Unconsolidated Centers as
of December 31, 2001. The first table depicts the
Wholly-Owned Centers and the second table depicts the
Unconsolidated Centers.
Wholly-Owned Centers
--------------------
Total GLA/Mall
Year and Freestanding
Name of Center/ Opened/Remodeled GLA Anchor
Location /(1)/ or Expanded (Square Feet) /(2)/ Anchors Vacancies
--------------------- ----------- ------------------- -------------------------------------- ---------
Ala Moana Center 1959/ 1,820,301/ JCPenney, Macy's None
Honolulu, Hawaii 1966,1987,1989,1999 808,836 Neiman Marcus, Sears
Apache Mall 1969/ 740,572/ JCPenney, Marshall Field's One
Rochester, Minnesota 1985,1992 244,306 Sears
Baybrook Mall 1978/ 1,083,780/ Dillards, Foley's, None
Houston, Texas 1984,1985,1995 343,442 Mervyn's, Sears
Bayshore Mall 1987/ 613,659/ Gottschalks, Mervyn's, Sears One (4)
Eureka, California 1989 343,644
Bellis Fair Mall 1988/ 763,372/ JCPenney, Mervyn's, None
Bellingham, Washington N/A 350,209 Sears, Target, The Bon Marche
Birchwood Mall 1990/ 782,663/ JCPenney, Marshall Field's, None
Port Huron, Michigan 1991,1997 356,529 Sears, Target, Younkers
The Boulevard Mall 1968/ 1,184,766/ Dillard's, JCPenney, Macy's, Sears None
Las Vegas, Nevada 1992 396,730
Capital Mall 1978/ 530,868/ Dillard's, JCPenney, Sears None
Jefferson City, Missouri 1985,1992 301,183
Century Plaza 1975/ 743,273/ JCPenney, McRae's, Rich's, Sears None
Birmingham, Alabama 1990,1994 254,797
Chapel Hills Mall 1982/ 1,174,484/ Dillard's, Foley's, JCPenney, KMart, None
Colorado Springs, CO 1986,1997,1998 428,995 Mervyn's, Sears
Coastland Center 1977/ 923,976/ Burdines, Dillard's, JCPenney, Sears None
Naples, Florida 1985,1996 333,586
Colony Square Mall 1981/ 549,147/ Elder-Beerman, JCPenney, Lazarus, None
Zanesville, Ohio 1985,1987 291,143 Sears
Columbia Mall 1985/ 740,423/ Dillard's, JCPenney, Sears, Target None
Columbia, Missouri 1986 324,979
Coral Ridge Mall 1998/ 1,055,000/ Dillard's, JCPenney, Scheel's, None
Iowa City, Iowa N/A 417,962 Sears, Target, Younkers
Crossroads Center 1966/ 784,228/ JCPenney, Marshall Field's, None
St. Cloud, Minnesota 1995 281,899 Sears, Target
The Crossroads 1980/ 763,151/ Hudson's, JCPenney, Mervyn's, None
Portage, Michigan 1992 260,191 Sears
Cumberland Mall 1973/ 1,158,366/ JCPenney, Macy's, Rich's, Sears None
Atlanta, Georgia 1989 324,251
14 of 40
Total GLA/Mall
Year and Freestanding
Name of Center/ Opened/Remodeled GLA Anchor
Location /(1)/ or Expanded (Square Feet) /(2)/ Anchors Vacancies
--------------------- ----------- ------------------- ---------------------------------------- ---------
Eagle Ridge Mall 1996/ 626,867/ Dillard's, JCPenney, Sears None
Lake Wales, Florida 2000 314,585
Eden Prairie Mall 1976/ 1,124,683/ Kohl's, Mervyn's, Sears, None
Eden Prairie, Minnesota 1989,1994,2001 438,875 Target, Von Maur
Fallbrook Mall 1966/ 788,437/ Burlington Coat Factory, Kmart, One (4)
West Hills, (Los Angeles), 1985 236,423 Mervyn's, Target
California
Fox River Mall 1984/ 1,136,325/ Dayton's, JCPenney, Sears, None
Appleton, Wisconsin 1991,1997,1998 541,411 Target, Younkers
Gateway Mall 1990/ 716,086/ Sears, Target, The Emporium, None
Springfield/Eugene, Oregon 1999 432,821
Grand Traverse Mall 1992/ 577,649/ Hudson's, JCPenney, Target None
Traverse City, Michigan N/A 312,300
Greenwood Mall 1979/ 832,629/ Dillard's, Famous Barr, None
Bowling Green, Kentucky 1987,1996 403,576 JCPenney, Sears
Knollwood Mall 1955/ 406,755/ Cub Foods, Kohl's None
St. Louis Park, 1981,1999 196,155
(Minneapolis), Minnesota
Lakeview Square Mall 1983/ 607,607/ JCPenney, Marshall Field's, Sears None
Battle Creek, Michigan 1998,2001 316,014
Lansing Mall 1969/ 840,667/ Hudson's, JCPenney, Mervyn's, None
Lansing, Michigan 2001 397,265 Younkers
Lockport Mall 1971/ 336,015/ Ames, Rosa's Homestore, None
Lockport, New York 1984 122,934 The Bon Ton
Mall of the Bluffs 1986/ 666,427/ Dillard's, JCPenney, Sears, Target None
Council Bluffs, Iowa 1988,1998 352,553
Mall St. Vincent 1976/ 546,045/ Dillard's, Sears None
Shreveport, Louisiana 1991 198,045
Market Place Shopping Center 1976/1984 1,105,488/ Bergner's, Famous Barr, One
Champaign, Illinois 1987,1990,1994,1999 429,357 Sears
McCreless Mall 1962/ 477,118/ Beall's One
San Antonio, Texas 1985,1997 291,260
Northridge Fashion Center 1971/ 1,445,798/ JCPenney, Macy's, Robinson-May, None
Northridge, California 1995,1997 621,355 Sears
Oakwood Mall 1986/ 815,322/ JCPenney, Marshall Field's, One
Eau Claire, Wisconsin 1991,1997 330,246 Scheel's All Sports, Sears
15 of 40
Total GLA/Mall
Year and Freestanding
Name of Center/ Opened/Remodeled GLA Anchor
Location /(1)/ or Expanded (Square Feet) /(2)/ Anchors Vacancies
--------------------- ----------- ------------------- ---------------------------------------- ---------
Park Place 1974/ 1,038,839/ Dillards, Macy's, Sears None
Tucson, Arizona 1998,2001 457,382
Piedmont Mall 1984/ 667,618/ Belk, Belk Men's Store, One
Danville, Virginia 1995 205,207 JCPenney, Sears
Pierre Bossier Mall 1982/ 611,098/ Dillard's, JCPenney, One
Bossier City, Louisiana 1985,1993 229,194 Sears, Stage
The Pines 1986/ 604,887/ Dillard's, JCPenney, None
Pine Bluff, Arkansas 1990 265,180 Sears, Wal-Mart
Regency Square Mall 1968/ 1,456,668/ Belk, Dillard's, JCPenney, One
Jacksonville, Florida 1992,1998,2001 577,667 Sears
Rio West Mall 1981/ 446,177/ Beall's, JCPenney, KMart None
Gallup, New Mexico 1991,1998 265,044
River Falls Mall 1990/ 752,363/ Dillard's, Toys "R" Us, Wal-Mart None
Clarksville, Indiana N/A 407,325
River Hills Mall 1991/ 647,664/ Herberger's, JCPenney, None
Mankato, Minnesota 1996 283,722 Sears, Target
Riverlands Shopping Center 1965/ 183,768/ None One
LaPlace, Louisiana 1984,1990 136,834
RiverTown Crossings 1999/ 1,248,374/ Galyan's, Hudson's, JCPenney, None
Granville (Grand Rapids), N/A 521,403 Kohl's, Sears, Younkers
Michigan
Sooner Fashion Square 1976/ 511,419/ Dillard's, JCPenney, None
Norman, Oklahoma 1989,1999 171,347 Old Navy Clothing Company,
Sears, Steinmart
Southlake Mall 1976/ 1,016,645/ JCPenney, Macy's, Rich's, Sears None
Morrow, Georgia 1995,1999 278,145
SouthShore Mall 1981/ 337,828/ JCPenney, Sears One (5)
Aberdeen, Washington N/A 148,501
Southwest Plaza 1983/ 1,196,265/ Dillards, Foley's, JCPenney, One
Littleton, Colorado 1994,1995,2001 559,088 Sears
Spring Hill Mall 1980/ 1,096,981/ Carson Pirie Scott, JCPenney, Kohl's, None
West Dundee, Illinois 1992,1997 415,401 Marshall Field's, Sears
The Tucson Mall 1982/ 1,304,968/ Dillards, JCPenney, Macy's, None
Tucson, Arizona 1991,1993 446,704 Mervyn's, Robinson-May, Sears
Valley Hills Mall 1978/ 893,572/ Belk, Dillard's, JCPenney, Sears None
Hickory, North Carolina 1988,1990,1996 282,056
Valley Plaza Mall 1967/ 1,157,429/ Gottschalks, JCPenney, None
Bakersfield, California 1988,1997,1998 430,740 Macy's, Robinson-May, Sears
16 of 40
Total GLA/Mall
Year and Freestanding
Name of Center/ Opened/Remodeled GLA Anchor
Location /(1)/ or Expanded (Square Feet) /(2)/ Anchors Vacancies
--------------------- ----------- ------------------- ---------------------------------------- ---------
West Valley Mall 1995/ 812,129/ Gottschalks, JCPenney, Ross Dress for Less, None
Tracy, California 1997 451,654 Sears, Target
Westwood Mall 1972/ 454,989/ Elder-Beerman, JCPenney One
Jackson, Michigan 1978,1993 136,895
(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.
(4) Contract pending for replacement.
(5) Location scheduled for demolition and renovation.
17 of 40
UNCONSOLIDATED CENTERS
Ownership Total GLA/Mall
Year Opened/ Interest % and Freestanding
Name of Center/ Remodeled of Operating GLA Anchor
Location /(1)/ or Expanded Partnership Square Feet/(2)/ Anchors Vacancies
------------------------- ----------- ----------- -------------- --------------------- ---------
Alderwood Mall 1979/ 50 1,039,264/ JCPenney, Nordstrom, One (3)
Lynnwood (Seattle), 1995,1996 307,456 Sears, The Bon Marche,
Washington
Altamonte Mall 1974/ 50 1,099,805/ Burdines, Dillard's, None
Orlando, Florida 1989,1990 421,257 JCPenney, Sears
Arrowhead Towne Center 1993/ 16.7 1,112,061/ Dillard's, JCPenney, Mervyn's, One (3)
Glendale, Arizona N/A 374,114 Robinson-May
Bay City Mall 1991/ 50 526,184/ JCPenney, Sears, None
Bay City, Michigan 1994,1997 210,533 Target, Younkers
Brass Mill Center/Commons 1997/ 50 1,197,195/ Filene's, JCPenney, One
Waterbury, Connecticut N/A 612,557 Sears
Carolina Place 1991/ 50 1,091.284/ Belk, Dillard's, Hecht's, None
Charlotte, North Carolina 1994 317,782 JCPenney, Sears
Chula Vista Center 1962/ 50 877,969/ JCPenney, Macy's, None
Chula Vista, California 1993,1994 323,869 Mervyn's, Sears
Columbiana Centre 1990/ 50 871,965/ Belk, Dillard's, None
Columbia, South Carolina 1993 312,988 Parisian, Sears
Deerbrook Mall 1984/ 50 1,198,119/ Dillard's, Foley's, JCPenney, None
Humble (Houston), Texas 1996,1997 458,526 Mervyn's, Sears
Eastridge Mall 1970/ 51 1,358,684/ JCPenney, Macy's, Sears One (4)
San Jose, California 1982,1988,1995 501,203
Lakeland Square 1988/ 50 900,094/ Belk, Burdines, Dillard's, None
Lakeland, Florida 1990,1994 290,056 Dillard's Men's & Home Store,
JCPenney, Sears
Landmark Mall 1965/ 51 969,287/ Hecht's, Lord & Taylor, Sears One
Alexandria, VA 1989,1990 358,350
Mayfair Mall 1958/ 51 1,037,294/ The Boston Store, None
Wauwatosa, Wisconsin 1973,1986,1994, 2001 537,984 Marshall Fields
Meadows Mall 1978/ 51 946,651/ Dillard's, JCPenney, Macy's, None
Las Vegas, Nevada 1987,1997 309,798 Sears
Montclair Plaza 1968/ 50 1,370,043/ JCPenney, Macy's, None
Montclair (Los Angeles), 1985 567,028 Nordstrom, Robinson-May,
California Sears, Wards
Moreno Valley Mall 1992/ 50 1,035,606/ Gottschalks, JCPenney, None
Moreno Valley, California N/A 430,072 Robinson-May, Sears
Natick Mall 1966/ 50 1,155,391/ Filene's, Lord & Taylor, None
Natick, Massachusetts 1994 428,729 Macy's, Sears
18 of 40
Ownership Total GLA/Mall
Year Opened/ Interest % and Freestanding
Name of Center/ Remodeled of Operating GLA Anchor
Location /(1)/ or Expanded Partnership Square Feet/(2)/ Anchors Vacancies
------------------------- ----------- ----------- --------------- --------------------- ---------
Neshaminy Mall 1968/ 25 1,062,487/ Boscov's, Sears, One
Bensalem, Pennsylvania 1995,1998 425,696 Strawbridge
Newgate Mall 1981/ 50 726,729/ Dillard's, Mervyn's,
Ogden, Utah 1994,1998 316,565 Oshman's, Sears None
New Park Mall 1980/ 50 1,168,569/ JCPenney, Macy's, Mervyn's, None
Newark, California 1993 425,105 Sears, Target
Northbrook Court 1976/ 50 982,990/ Lord & Taylor, Marshall Fields, None
Northbrook, Illinois 1995,1996 446,713 Neiman Marcus
Northgate Mall 1972/ 51 821,600/ JCPenney, Proffitt's, Sears None
Chattanooga, Tennessee 1991,1997 378,980
North Point Mall 1993/ 50 1,367,422/ Dillard's, JCPenney, Lord & None
Alpharetta (Atlanta), Georgia N/A 397,322 Taylor, Parisian, Rich's, Sears
The Oaks Mall 1978/ 51 911,172/ Belk, Burdines, Dillard's, None
Gainesville, Florida 1995 353,305 JCPenney, Sears
Oak View Mall 1991/ 51 867,615/ Dillard's, JCPenney, None
Omaha, Nebraska N/A 263,355 Sears, Younkers
Oglethorpe Mall 1969/ 51 935,131/ Belk, JCPenney, Rich's, Sears None
Savannah, Georgia 1974,1982,1990,1992 398,547
Park City Center 1970/ 51 1,393,515/ JCPenney, Kohl's, Sears, None
Lancaster, Pennsylvania 1988,1997 530,326 The Bon-Ton, Boscov's
The Parks at Arlington 1988/ 50 1,188,309/ Dillard's, Foley's, JCPenney, None
Arlington, Texas 1996 357,364 Mervyn's, Sears
Pavilions at Buckland Hills 1990/ 50 1,006,300/ Dick's Sporting Goods, Filene's, None
Manchester, Connecticut 1994 378,128 Filene's Home Store, JCPenney,
Lord & Taylor, Sears
Pembroke Lakes Mall 1992/ 50 1,103,122/ Burdine's, Dillard's, None
Pembroke Pines, Florida 1997 391,847 Dillard's Men's & Home Store
JCPenney, Sears
Prince Kuhio Plaza 1985/ 50 504,427/ JCPenney, Macy's, One
Hilo, Hawaii 1994,1999 268,307 Sears
Quail Springs 1980/ 50 1,124,482/ Dillard's, Foley's, None
Oklahoma City, Oklahoma 1992,1998,1999 436,629 JCPenney, Sears
Steeplegate Mall 1990/ 50 481,418/ JCPenney, Sears, None
Concord, New Hampshire N/A 225,071 The Bon Ton
Stonebriar Centre 2000/ 50 1,657,523/ Foley's, Galyan's, JCPenney, One
Frisco (Dallas), Texas N/A 711,106 Macy's, Nordstrom, Sears
Superstition Springs 1990/ 16.7 1,067,978/ Dillard's, JCPenney, Mervyn's, None
East Mesa, Arizona 1994 361,284 Robinson-May, Sears
Town East Mall 1971/ 50 1,249,405/ Dillard's, Foley's, JCPenney, None
Mesquite, Texas 1986,1996,1998,2000 440,019 Sears
19 of 40
Ownership Total GLA/Mall
Year Opened/ Interest % and Freestanding
Name of Center/ Remodeled of Operating GLA Anchor
Location/(1)/ or Expanded Partnership Square Feet/(2)/ Anchors Vacancies
------------------------- ----------- ----------- ---------------- --------------------- ---------
Tysons Galleria 1988/ 50 810,959/ Macy's, Neiman Marcus, None
McLean, Virginia 1994,1997 299,026 Saks Fifth Avenue
Vista Ridge Mall 1989/ 50 1,053,151/ Dillard's, Foley's, None
Lewisville, Texas 1991 380,089 JCPenney, Sears
Washington Park Mall 1984/ 50 351,406/ Dillard's, JCPenney, None
Bartlesville, Oklahoma 1986 157,110 Sears
West Oaks Mall 1996/ 50 1,071,928/ Dillard's, JCPenney, None
Ocoee (Orlando), Florida 1998 428,466 Parisian, Sears
Westroads Mall 1968/ 51 1,078,641/ JCPenney, The Jones Store, None
Omaha, Nebraska 1990,1995,1999 382,427 Von Maur, Younkers
Willowbrook Mall 1981/ 50 1,528,116/ Dillards, Foley's, JCPenney, One
Houston, TX 1992 421,532 Lord & Taylor, Sears
The Woodlands Mall 1994/ 25 1,032,490/ Dillard's, Foley's, None
The Woodlands 1998 350,975 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.
(3) Under contract for replacement.
(4) Location scheduled for demolition and renovation.
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, 2001.
20 of 40
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO ANCHORS
AS OF DECEMBER 31, 2001
Total Square Feet
Name Stores (000's)
--------------------------- ------- -----------
Sears 82 12,235
JCPenney 75 8,925
Dillard's Inc.
Dillard's 42 6,996
Dillard's Men's and Home Store 2 157
------ ------
Sub-Total Dillard's Inc. 44 7,153
====== ======
Target Corporation
Target 15 1,658
Mervyn's 17 1,414
Marshall Fields 8 1,255
Hudson's 4 517
Dayton's 1 169
------ ------
Sub-Total Target Corporation 45 5,013
====== ======
May Department Stores Company
Foley's 11 2,015
Robinson's-May 7 1,127
Lord & Taylor 6 700
Filene's 3 515
Hecht's 2 345
Famous Barr 2 272
Strawbridge's 1 218
The Jones Store 1 153
Filene's Home Store 1 36
------ ------
Sub-Total May Department Stores Company 34 5,381
====== ======
Federated Department Stores, Inc.
Macy's 17 3,017
Rich's 5 937
Burdines 5 676
The Bon Marche 2 321
Lazarus 1 50
------ ------
Sub-Total Federated Department Stores, Inc. 30 5,001
====== ======
21 of 40
GENERAL GROWTH PROPERTIES, INC.
PORTFOLIO ANCHORS
AS OF DECEMBER 31, 2001
(continued)
Total Square Feet
Name Stores (000's)
------------------------------------ ----------- -------------
Saks Holdings Incorporated
Younkers 8 982
Parisian 3 395
Boston Store 1 211
Bergners 1 154
Carson Pirie Scott 1 138
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
===== ======
Belk
Belk 8 1,172
Belk Men's 1 34
---- ------
Sub-Total Belk 9 1,206
==== ======
Kohl's 5 451
Neiman-Marcus 3 423
Gottschalks 4 418
Boscov 2 412
Nordstrom 3 379
The Bon Ton 3 312
KMart 3 301
Wal-Mart 2 196
Von Maur 1 329
Scheel's All Sports 2 174
Galyans 2 169
Elder-Beerman 3 141
Cub Foods 1 130
Burlington Coat Factory 1 101
Ames 1 81
Dick's Sporting Goods 1 80
Oshman's 1 64
Beall's 2 56
The Emporium 1 50
Rosa's Home Store 1 50
Toys "R" Us 1 48
Stein Mart 1 39
Stage 1 35
Old Navy Clothing Company 1 34
Ross Dress for Less 1 28
--- ------
47 4,501
=== ======
22 of 40
Ground Leases The Company currently leases the land under Rio West
Mall and Tuscon Mall, a portion of the land under Lansing,
Mall St. Vincent and Ala Moana malls and a portion of the
land under the Apache, 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 Real Estate
Affiliates. For information about certain environmental
matters, see "Item 1 - Business - Environmental Matters."
ITEM 4. No matters were submitted to a vote of General Growth's
SUBMISSION OF stockholders during the fourth quarter of fiscal 2001.
MATTERS TO A
VOTE OF SECURITY
HOLDERS
PART II The Common Stock is listed on the New York Stock Exchange
ITEM 5. MARKET ("NYSE") and trades under the symbol "GGP". As of March 14,
FOR REGISTRANT'S 2002, the 62,017,756 outstanding shares of Common Stock were
COMMON EQUITY held by approximately 1,484 stockholders of record. The
AND RELATED closing price per share of the Common Stock on the NYSE on
STOCKHOLDER such date was $44.24 per share.
MATTERS
Set forth below are the high and low sales prices per share
of Common Stock for each such period as reported by the
NYSE, and the distributions per share of Common Stock
declared for each such period.
2001 Price Declared
------------------
Quarter Ended High Low Distribution
------------- ------- ------- ------------
March 31 $38.38 $33.00 $.53
June 30 $39.36 $33.75 $.53
September 30 $39.51 $32.80 $.65
December 31 $40.50 $34.35 $.65
23 of 40
2000 Price Declared
-----------------
Quarter Ended High Low Distribution
------------ ------ ------ ------------
March 31 $30.56 $26.38 $.51
June 30 $34.19 $29.63 $.51
September 30 $34.50 $31.69 $.51
December 31 $36.50 $28.69 $.53
1999 Price Declared
-----------------
Quarter 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
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 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.
2001 2000 1999 1998 1997
------ ------ ------ ------ ------
OPERATING DATA
Revenue $ 803,709 $ 698,767 $ 612,342 $ 426,576 $ 291,147
Network discontinuance costs 66,000 - - - -
Depreciation and amortization 145,352 119,663 108,272 75,227 48,509
Other operating expenses 295,843 226,234 206,088 151,784 109,677
Interest expense, net 209,622 212,649 174,104 109,840 70,252
Equity in income of
Unconsolidated Affiliates 63,566 50,063 19,689 11,067 19,344
Minority Interest (40,792) (52,380) (33,058) (29,794) (49,997)
Net gain on sales, including
CenterMark in 1997 - 44 4,412 196 58,647
--------- --------- ----------- ----------- ---------
Income before extraordinary items and
cumulative effect of accounting change 109,666 137,948 114,921 71,194 90,703
Extraordinary items (14,022) - (13,796) (4,749) (1,152)
Cumulative effect of accounting change (3,334) - - - -
--------- --------- ----------- ----------- ---------
Net income (loss) 92,310 137,948 101,125 66,445 89,551
--------- --------- ----------- ----------- ---------
Convertible Preferred Stock Dividends (24,467) (24,467) (24,467) (13,433) -
Net income available
to common stockholders $ 67,843 $ 113,481 $ 76,658 $ 53,012 $ 89,551
========= ========= =========== =========== =========
Earnings before extraordinary items and
cumulative effect of accounting change
per share-Basic $ 1.61 $ 2.18 $ 1.97 $ 1.60 $ 2.78
Earnings before extraordinary items and
cumalative effect of accounting change
per share-Diluted 1.61 2.18 1.96 1.59 2.76
Earnings per share-Basic 1.28 2.18 1.67 1.46 2.75
Earnings per share-Diluted 1.28 2.18 1.66 1.46 2.73
Distributions Declared Per Share 2.36 2.06 1.98 1.88 1.80
CASH FLOW DATA
Operating Activities $ 207,125 $ 287,103 $ 205,705 $ 84,764 $ 94,110
Investing Activities (367,366) (356,914) (1,238,268) (1,479,607) (176,496)
Financing Activities 293,767 71,447 1,038,526 1,388,575 92,337
FUNDS FROM OPERATIONS/(1)/
24 of 40
Operating Partnership $ 376,799 $ 330,299 $ 274,234 $ 192,274 $ 147,625
Minority Interest (101,844) (90,805) (82,631) (69,182) (52,890)
Funds From Operations - Company 274,955 239,494 191,603 123,092 94,735
BALANCE SHEET DATA
Investment in Real Estate Assets - Cost $5,703,568 $5,439,466 $5,023,690 $4,063,097 $2,157,251
Total Assets 5,646,807 5,284,104 4,954,895 4,027,474 2,097,719
Total Debt 3,398,207 3,244,126 3,119,534 2,648,776 1,275,785
Redeemable Preferred Units 175,000 175,000 -- -- --
Convertible Preferred Stock 337,500 337,500 337,500 337,500 --
Stockholders' Equity 1,183,386 938,418 927,758 585,707 498,505
/(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
Operations industry 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 $66,000 of network discontinuance
costs recognized in 2001. 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. In accordance
with past practices and consistent with current
recommendations of NAREIT, the Company has and will
continue to provide GAAP earnings and earnings per
share information in its periodic reports to investors
and the real estate investment community.
RECONCILIATION OF NET INCOME DETERMINED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES TO FUNDS FROM OPERATIONS:
2001 2000 1999
--------- --------- ---------
Net Income available to common stockholders $ 67,843 $ 113,481 $ 76,658
Extraordinary items - charges related to early retirement
of debt 14,022 -- 13,796
Cumulative effect of accounting change 3,334 -- --
Allocations to Operating Partnership unitholders 25,128 43,026 33,058
Net loss (gain) on sales -- 1,005 (4,412)
Depreciation and amortization 200,472 172,787 155,134
Network discontinuance costs 66,000 -- --
--------- --------- ---------
Funds From Operations $ 376,799 $ 330,299 $ 274,234
========= ========= =========
25 of 40
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 and Analysis
of Financial Condition and Results of Operations have the
same meanings as in such Notes.
Forward-Looking This Annual Report may contain "forward-looking
Information statements" within the meaning of Section 27A of the
Securities Act of1933, 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
statements 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, costs of
capital and capital requirements, availability of real
estate properties, inability to consummate acquisition
opportunities, 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.
Use of Estimates The preparation of financial statements in conformity
and Significant with accounting principles generally accepted in the
Accounting Policies United States of America 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. For example, significant estimates and
assumptions have been made with respect to useful lives
of assets, capitalization of development and leasing
costs, recoverable amounts of receivables and deferred
taxes and amortization periods of deferred costs and
intangibles. Actual results could differ from those
estimates.
Certain Information As of December 31, 2001, the Company owned 100% of the
About The Company fifty-four Wholly-Owned Centers, 50% of the common stock
Portfolio of GGP/Homart, 50% of the membership interests in
GGP/Homart II, 51% of the common stock of GGP Ivanhoe,
51% of the common stock of GGP Ivanhoe III and 50% of
Quail Springs Mall and Town East Mall. Reference is
26 of 40
made to Notes 3 and 4 for a further discussion of such
entities owned by the Company. As of December 31, 2001,
GGP/Homart owned interests in twenty-three shopping
centers, GGP/Homart II owned interests in eight shopping
centers, GGP Ivanhoe owned interests in two shopping
centers, and GGP Ivanhoe III owned interests in eight
shopping centers (collectively, with the Wholly-Owned
centers, Quail Springs Mall and Town East Mall, the
"Company Portfolio").
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, 2000 had an
occupancy rate of approximately 91% as of such date. On
December 31, 2001, the Mall Store and Freestanding Store
portions of the centers in the Company Portfolio which
were not undergoing redevelopment were also approximately
91% occupied, as overall occupancy percentages which had
declined during 2001 recovered to 2000 levels by the end
of the year.
Total annualized sales averaged $355 per square foot for
the Company Portfolio for the year ended December 31,
2001, approximately equal to the comparable amount for
2000. 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, 2001 are of those tenants that were also operating
for the full year ended December 31, 2000. Comparable
Mall Store sales in the year ended December 31, 2001
decreased by 0.8% from the same period in 2000.
The Company Portfolio average Mall Store rent per square
foot from leases that expired in the year ended December
31, 2001 was $27.40. The Company Portfolio benefited from
increasing rents inasmuch as the average Mall Store rent
per square foot on new and renewal leases executed during
2001 was $33.29 or $5.89 per square foot above the
average for expiring leases.
Results of Operations
of the Company General:
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, 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 and GGMI. 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
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. On January 1, 2001, the
27 of 40
Operating Partnership purchased the common stock of GGMI and
the preferred stock of GGMI, which was 100% owned by the
Operating Partnership, was cancelled. In August 2001, the
Company purchased a 100% interest in Tucson Mall. 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, 2000 and 2001, the effect of the
three operating properties contributed to GGP/Homart II and
the consolidation of GGMI's operations in 2001.
Comparison of Year Ended December 31, 2001 To Year Ended
December 31, 2000
Total revenues for 2001 were $803.7 million, which
represents an increase of $104.9 million or approximately
15.0% from $698.8 million in 2000. Approximately $12.8
million or 12.2% of the increase was from properties
acquired or developed after January 1, 2000. Minimum rent
during 2001 increased $28.6 million or 6.5% from $440
million in 2000 to $468.6 million. The acquisition and
development of properties generated a $7.6 million increase
in minimum rents. Expansion space, specialty leasing and a
combination of occupancy and rental charges at the
comparable centers accounted for the remaining increase in
minimum rents. Tenant recoveries increased by $8.4 million
or 3.9% from $213.5 million in 2000 to $221.9 million in
2001. The increase in tenant recoveries was generated by a
combination of new acquisitions and increased recoverable
operating costs at the comparable centers. Overage rents
decreased $5.8 million or 20.3 % from $28.6 million in 2000
to $22.8 million in 2001. The majority of the decline in
overage rents is due to the conversion of overage rent to
minimum rent on the releasing of tenant space and due to
general economic conditions as discussed below. Fees for
2001 increased $ 70.3 million or 1004.3% from $7.0 million
in 2000 to $77.3 million in 2001. The increase was primarily
generated by the acquisition of GGMI as described above and
in Notes 1 and 4.
Total operating expenses, including depreciation and
amortization, increased by approximately 46.6% or $161.3
million, from $345.9 million in 2000 to $507.2 million in
2001. Part of the increase in total operating expenses was
attributable to the $66 million provision for the
discontinuance of the Company's Network Services development
activities as more fully described in Note 11. The Company's
Network Services development activities was an effort to
create for retailers a suite of broadband applications to
support retail tenant operations, on-line sales, and private
wide area network services to be delivered by the Broadband
System as discussed below. The Network Services development
activities were discontinued on June 29, 2001, resulting in
a charge to operations of $65 million in the three months
ended June 30, 2001, which represented the Company's entire
investment in the Network Services development activities.
The Company incurred $1 million of net incremental
discontinuance costs in the three months ended September 30,
2001 related primarily to payroll and severance costs and
expects that any net additional costs related to the
discontinuance of the Network Services development
activities will not be significant. Depreciation expense
increased by approximately $25.7 million, primarily due to
increased depreciation on property additions including
Broadband System additions which have shorter depreciable
lives. An increase of $65.9 million was attributable to the
consolidation of GGMI as described above and in Notes 1 and
4. The increase in total operating expenses from the new
acquisitions described above consists primarily of
approximately $1.2 million of real estate taxes, $3.2
million of property operating costs, and $2.7 million of
depreciation and amortization.
28 of 40
Interest income decreased approximately $7.8 million or
62.4% from $12.5 million in 2000 to $4.7 million in 2001.
The note receivable from GGMI generated $6.8 million of
interest income in 2000, whereas no such interest income was
recognized in 2001 due to the consolidation of GGMI in 2001
as discussed above. The corresponding interest expense
incurred by GGMI in 2000 was reflected as a component of the
equity in the income (loss) of GGMI.
Interest expense decreased by $10.8 million or 4.8% from
$225.1 million in 2000 to $214.3 million in 2001. Declines
in effective interest rates, partially offset by the effect
of acquisitions, were the major source of such interest
expense decreases.
Equity in income (loss) of unconsolidated affiliates during
2001 increased by $13.5 million to $63.6 million from $50.1
million in 2000. GGP/Homart II accounted for an increase of
approximately $4 million primarily due to declines in
interest rates in 2001 and the acquisition of Willowbrook
Mall in March 2001 by GGP/Homart II. The Company's ownership
interest in GGMI resulted in a increase of $1.6 million due
to the consolidation of GGMI in 2001.
Extraordinary items were approximately $14.0 million in
2001, primarily due to the refinancing of debt (see also
Note 5) as a result of the GGP MPTC financing and the 2001
Offering (as discussed below and in Note 1).
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 53.8% 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 5.9% 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. Fees 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 operating expenses, including depreciation and
amortization, increased by approximately 10% or $31.5
million, from $314.4 million in 1999 to $345.9 million in
2000. The majority of the increase in total operating
expenses was attributable to properties acquired and
developed in 1999 and 2000. The increase in total operating
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 $34.5 million or 18.1% from
$190.6 million in 1999 to $225.1 million in 2000,
substantially all due to indebtedness incurred in connection
with
29 of 40
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 income (loss) 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 a increase of $11.1
million over 1999.
Liquidity and Capital As of December 31, 2001, the Company held approximately
Resources of the $160.8 million of unrestricted cash and cash equivalents
Company and approximately $155.1 million of marketable securities.
As described in Note 1, such marketable securities
represent a portion of the certificates issued through the
GGP MPTC financing (Note 5) and are secured by 28
properties included in the Company Portfolio. The Company
uses operating cash flow as the principal source of
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. The Company continues to explore potential
long-term investment alternatives such as acquisitions,
new development, expansions and major renovation programs
at individual centers. These long-term investments may
require external sources of long-term liquidity such as
construction loans, mini-permanent loans, long-term
project financing, joint venture 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
considers its Unconsolidated Real Estate Affiliates as
potential sources of short and long-term liquidity. In
such regard, the Company has borrowed approximately $95
million from GGP/Homart and GGP/Homart II (bearing
interest at 5.5% per annum and due March 30, 2003).
At December 31, 2001, the Company had borrowed $207
million on its Term Loan which matures on July 31, 2003.
Further, during December 2001, the Company issued
9,200,000 shares of Common Stock in a public offering (the
"2001 Offering") (Note 1) which resulted in net proceeds
to the Company of approximately $345 million. In addition,
in order to maintain its access to the public equity and
debt markets, the Company has a currently effective shelf
registration statement under which up to an additional $2
billion in equity or debt securities could be issued from
time to time. The Company also believes it could obtain,
if necessary, revolving credit facilities similar to those
which were fully repaid in December 2001 with a portion of
the proceeds of the GGP MPTC financing.
As of December 31, 2001, the Company had consolidated debt
of approximately $3,398 million, of which approximately
(after the effect of certain interest rate swap agreements
described below) $2,906 million is comprised of debt
bearing interest at fixed rates, with the remaining
approximately $492 million bearing interest at variable
rates. In addition, the Company's pro rata share of the
debt of the Unconsolidated Real Estate Affiliates was
approximately $1,610.6 million, of which approximately
(after the effect of certain interest rate swap
agreements) $1,180.7 million is comprised of debt bearing
interest at a fixed rate, with the remaining approximately
$429.9 million bearing interest at variable rates. Except
in instances where certain Wholly-Owned Centers are
cross-collateralized with the Unconsolidated Centers, the
Company has not otherwise guaranteed the debt of the
Unconsolidated Real Estate Affiliates. 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
30 0f 40
fluctuations.
The following summarizes certain significant investment and
financing transactions of the Company currently planned or
completed since December 31, 2000:
In January 2001, GGMI borrowed $37.5 million under a new
revolving line of credit obtained by GGMI. The interest rate
per annum with respect to any borrowings varied from LIBOR
plus 100 to 190 basis points depending on the Company's
average leverage ratio and the revolving line of credit had
been scheduled to mature in July 2003. All borrowings under
the line of credit were fully repaid in December 2001 from a
portion of the proceeds of the GGP MPTC financing and the
revolving line of credit was terminated.
In March 2001, the Company obtained a $65 million
redevelopment loan collateralized by Eden Prairie Mall. The
new loan had an initial draw of approximately $19.4 million,
required monthly payments of interest at a rate of LIBOR
plus 190 basis points and was fully repaid in December 2001
from a portion of the proceeds of the 2001 Offering.
In March 2001, the Company obtained a $115 million
non-recourse mortgage loan collateralized by Capital Mall,
Greenwood Mall, and Gateway Mall. The new mortgage loan
bears interest at a rate of 7.28% per annum, requires
monthly payments of principal and interest and matures in
April 2011.
During June 2001, the Company refinanced the $110 million
construction loan collateralized by the Rivertown Crossings
Mall which was scheduled to mature on June 30, 2001. The new
$130 million non-recourse mortgage loan bears interest at
7.54% per annum and matures in July 2011.
During June 2001, the Company refinanced Northridge Fashion
Center, one of the nine malls which had collateralized the
GGP-Ivanhoe CMBS. The outstanding principal amount of the
GGP-Ivanhoe CMBS was reduced by approximately $132.5 million
with the proceeds of a new long-term mortgage loan. The new
$140 million non-recourse mortgage loan provides for monthly
payments of principal and interest at a rate per annum of
7.24% and matures July 1, 2011.
In August 2001, the Company acquired the Tucson Mall which
was financed primarily by a new $150 million collateralized
short-term acquisition loan. The new loan bore interest at
LIBOR plus 95 basis points and was scheduled to mature in
December 2001. The loan was refinanced in December 2001 with
a portion of the proceeds of the GGP MPTC financing
described below.
During August 2001, the Company refinanced Bayshore Mall
with a long-term fixed rate mortgage loan. The $34.3 million
new non-recourse mortgage loan bears interest at 7.13% per
annum and matures in September 2011.
In October 2001, the Company refinanced the debt
collateralized by the Century Plaza, Eagle Ridge and
Knollwood Malls (with a previous outstanding aggregate
balance of approximately $66.5 million). The new $90 million
bridge loan bore interest at a rate per annum equal to LIBOR
plus 210 basis points and was scheduled to mature on
February 1, 2002. The bridge loan was repaid in December
2001 from a portion of the proceeds of the 2001 Offering.
In December 2001, the Operating Partnership and certain
Unconsolidated Real Estate Affiliates completed the
placement of $2,550 million of non-recourse commercial
mortgage pass-through certificates through the GGP MPTC
financing as more fully described in Note 5. The
certificates are comprised of 36 and 51 month variable rate
31 of 40
securities (before extension options) and 5 year fixed rate
securities. This new financing is collateralized by a
portfolio of 28 properties, including 19 malls that are
owned by GGP/Homart, GPP/Homart II or GGP Ivanhoe III. The
GGP MPTC financing replaced the GGP-Ivanhoe CMBS, the Ala
Moana CMBS, a CMBS loan collateralized by a portfolio of ten
properties owned by GGP/Homart or GGP/Homart II and certain
other individual property mortgages. The original principal
amount of the GGP MPTC was comprised of $1,235 million
attributed to the Operating Partnership, $900 million to
GGP/Homart and GGP/Homart II and $415 million to GGP Ivanhoe
III. The interest rates on approximately $666.9 million of
the consolidated variable rate securities were fixed by
interest rate swaps which effectively limit the rate on such
debt to a current weighted average annual rate of 4.85%.
Approximately $575 million of such swap agreements are with
independent financial services firms and approximately $91.9
million is with GGP Ivanhoe III to provide Ivanhoe with
only variable rate debt. The interest rates on an
additional $475 million of variable rate debt collateralized
by properties owned by the GGP/Homart and GGP/Homart II
joint ventures were fixed by interest rate swaps which
effectively limit the rate on such debt to a current
weighted average annual rate of 4.83%. The financing
provided approximately $470 million of excess proceeds
(including amounts attributed to GGP/Homart, GGP/Homart II
and GGP Ivanhoe III). Approximately $95 million of the
attributed proceeds to GGP/Homart and GGP/Homart II were
loaned to the Operating Partnership as described in Note 5.
Such proceeds were used to repay other short-term
borrowings, interim financing, acquire certain marketable
securities described above and provide for additional
liquidity needs.
In December 2001, General Growth completed the 2001 Offering
as more fully described in Note 1. General Growth received
net proceeds of approximately $345 million from the sale of
9,200,000 shares of Common Stock which were utilized to
reduce existing indebtedness and increase working capital.
On March 3, 2002, the Company entered into a definitive
merger agreement with JP Realty, Inc. ("JP Realty"), a
publicly held real estate investment trust and its operating
partnership subsidiary, Price Development Company, Limited
Partnership ("PDC"). The total acquisition price of JP
Realty will be approximately $1,100 million which includes
assumption of approximately $460 million in existing debt
and approximately $116 million of existing preferred
operating units. Pursuant to the terms of the merger
agreement, each outstanding share of JP Realty common stock
will be converted into $26.10 in cash. Holders of common
units of partnership interest PDC will receive $26.10 per
unit in cash or, at the election of the holder, .522 units
of 8.5% Series B convertible preferred partnership units of
the Operating Partnership (convertible to Common Stock based
on a conversion price of $50 per share). JP Realty owns or
has an interest in 50 properties, including 18-enclosed
regional mall centers, 25 anchored community centers, one
free standing retail property and 6 mixed-use
commercial/business properties, containing an aggregate of
over 15.1 million square feet of GLA in 10 western states.
The transaction is scheduled to close in the second quarter
of 2002 and is subject to certain closing conditions
including approval by the stockholders of JP Realty.
In addition, certain Unconsolidated Real Estate Affiliates
completed significant investment and financing transitions
since December 31, 2000 as summarized as follows:
During March 2001, GGP/Homart II closed on a new $125
million non-recourse mortgage loan collateralized by
Stonebriar Centre. The new loan (the principal balance of
which was increased to $135 million in August 2001) bears
interest at LIBOR plus 75 basis points per annum and matures
October 2003 (assuming all no cost extension options
available are exercised). Approximately $80 million of the
proceeds was
32 of 40
advanced to GGP/Homart at March 31, 2001 to repay other
GGP/Homart mortgage debt and the majority of the remainder
was utilized to fund the cash portion of the March, 2001
purchase of the Willowbrook Mall in Houston, Texas as
discussed in Note 4. The balance of the $145 million
purchase price of Willowbrook Mall was financed by a $102
million non-recourse mortgage loan which bears interest at
6.93% per annum and matures in April 2011.
In April 2001, GGP/Homart closed on a new $90 million
non-recourse mortgage loan collateralized by Vista Ridge
Mall. The new mortgage loan refinanced the approximately
$69.3 million allocated to the Vista Ridge Mall portion of
GGP/Homart pooled financing. The new mortgage loan bears
interest at a rate of 6.87% per annum, requires monthly
payments of principal and interest and matures in April
2011.
In July 2001, GGP/Homart obtained a new $100 million
redevelopment loan collateralized by Brass Mill Center and
Commons. The new loan bore interest at LIBOR plus 162.5
basis points and was scheduled to mature in July 2003. This
loan was refinanced in December 2001 with a portion of the
proceeds of the GGP MPTC financing described below.
In August 2001, GGP/Homart II refinanced Northbrook Court.
The new fixed-rate $98 million non-recourse loan repaid the
$74 million allocated to the Northbrook Court portion of the
GGP/Homart II pooled financing. The new loan provides for
monthly payments of principal and interest at a rate of
7.15% per annum and is scheduled to mature in September
2011.
In September 2001, GGP/Homart refinanced the mortgage loan
collateralized by Arrowhead Towne Center with a new
non-recourse mortgage loan securing two promissory notes,
one in the amount of $75 million and the other in the amount
of $10 million. The notes are identical, other than the
amounts, and bear interest at 6.9% per annum and mature in
October 2011.
In November 2001, GGP/Homart repaid the $35 million mortgage
loan collateralized by the Moreno Valley Mall. This
repayment was financed by current working capital which was
replaced in December 2001 by a portion of the proceeds of
the GGP MPTC financing described below.
None of the Company's consolidated debt is scheduled to
mature in 2002 and approximately $282 million of
consolidated debt is scheduled to mature in 2003. In
addition, the Unconsolidated Real Estate Affiliates have
certain mortgage loans maturing in 2002 (the Company's
prorata portion of which is approximately $179.7 million).
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 Term Loan or
raise equity capital. If additional capital is required, the
Company believes that it can increase the amounts available
under the Term Loan, obtain new revolving credit facilities,
obtain an interim bank loan, obtain additional mortgage
financing on under-leveraged or unencumbered 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
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pooled or property-specific, non-recourse fixed-rate
mortgage financing.
Net cash provided by operating activities was $207.1
million in 2001, a decrease of $73 million from $280.1
million in the same period in 2000. Net income before
gain on sales, extraordinary items and cumulative effect
of accounting change decreased $28.2 million, which was
primarily due to the $66 million provision for the
discontinuance of the Network Services development
activities as described above.
Net cash provided by operating activities was $287.1
million in 2000, an increase of $81.4 million from $205.7
million in the same period in 1999. Net income before
gain on sales, extraordinary items and cumulative affect
of acquiring change increased $27.4 million, which was
primarily due to earnings attributable to properties
acquired in 2000 and 1999.
Summary of Investing Net cash used by investing activities in 2001 was $367.4
Activities million, compared to a use of $349.9 million in 2000.
Cashflow from investing activities was affected by the
timing of acquisitions, development and improvements to
real estate properties, requiring a use of cash of
approximately $338.2 million in 2001 compared to $286.7
million in 2000. In addition, approximately $155.1
million of the use of cash for investing activities was
the purchase of the marketable securities discussed in
Note 1.
Net cash used by investing activities was $356.9 million
in 2000 compared to $1,238.3 million of cash used in
1999. Cash 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.
Summary of Financing activities provided cash of $293.8 million in
Financing Activities 2001, compared to $71.4 million in 2000. The 2001
Offering resulted in net proceeds of approximately $345
million which, as described in Note 1, was utilized to
reduce outstanding indebtedness and provide for
additional working capital. An additional significant
contribution of cash from financing activity was
financing from mortgages and acquisition debt, which had
a positive impact of $2,138 million in 2001 versus
approximately $360 million in 2000. The majority of such
financing was attributable to the GGP MPTC financing
described above. 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 2001 and 2000).
Financing activities in 2000 provided $71.4 million of
cash compared to a $1,038.5 million source of cash flow
in 1999. 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.
REIT Requirements In order to remain qualified as a real estate investment
trust for federal income tax purposes, the Company must,
among other things, distribute at least 90% of its
ordinary taxable income to stockholders and distribute to
stockholders, or pay tax on, 100% of capital gains. The
following factors, among others, will
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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 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 Code for continued
qualification as a real estate investment trust and to
avoid any Company level federal income or excise tax.
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 ("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 Operating Partnership acquired for
nominal cash consideration 100% of the common stock of
GGMI and has elected in 2001 to have GGMI treated as a
TRS. In connection with the acquisition, the GGMI
preferred stock owned by the Operating Partnership was
cancelled and approximately $40 million of the outstanding
loans owed by GGMI to the Operating Partnership
contributed to the capital of GGMI. The Operating
Partnership and GGMI concurrently terminated the
management contracts for the Wholly-Owned Centers as the
management activities would thereafter be performed
directly by the Company. GGMI has continued 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 13, certain accounting
Accounting pronouncements were issued in 2001, which either became
Pronouncements effective in 2001 or will become effective in subsequent
years. The Company does not expect the application of such
new pronouncements to have a significant impact on its
consolidated results of operations. However, the Company
has over the past six months experienced a significant
increase in its stock price. Pursuant to Interpretation 44
as more fully described in Note 13, certain options
granted under the 1998 Incentive Plan (Note 9) may vest in
2002 which would cause the recognition of approximately
$5.3 million of additional compensation cost in 2002.
Economic Conditions Inflation has been relatively low and has not had a
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 partially 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
expire each year which may enable the Company to replace
or renew such 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,
many of the existing leases require the tenants to pay all
or substantially all of their share of certain operating
expenses, including common area maintenance, real estate
taxes and insurance, thereby partially reducing the
Company's exposure to increases in costs and operating
expenses resulting from inflation.
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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, 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 and swap
agreements as described below. Finally, subject to current
market conditions, the Company has a policy of replacing
variable rate debt with fixed rate debt. (See Note 5).
During 2000 and 2001, the retail sector was experiencing
declining growth due to layoffs, eroding consumer
confidence, falling stock prices and, most recently, the
September 11th attacks. Although the 2001 holiday season was
generally stronger than economist predictions, the retail
sector and the economy as a whole remains weak. 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, a number of local, regional and national
retailers, including tenants of the Company, have
voluntarily closed their stores or 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 $3.3 million per year,
which represents less than 1% of average total revenues of
$704.9 million. In addition, the Company historically has
generally been successful in finding new uses or tenants for
retail locations that are vacated either as a result of
voluntary store closing or bankruptcy proceedings.
Therefore, the Company does not expect these store closings
or bankruptcy reorganizations to have a material impact on
its consolidated financial results of operations.
The Company and its affiliates currently have interests in
97 operating shopping centers in the United States. 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 installed a
broadband wiring and routing system that provides tenants at
its properties with the supporting equipment to allow
tenants and mall locations to arrange high-speed cable
access to the Internet (the "Broadband
36 of 40
System") as more fully discussed in Note 11. The Company has
made a cumulative investment of approximately $67.7 million
in the Broadband System as of December 31, 2001, which has
been reflected in buildings and equipment and investments in
Unconsolidated Real Estate Affiliates in the accompanying
consolidated financial statements.
ITEM 7A. The Company has not entered into any transactions using
QUANTITATIVE AND derivative commodity instruments. The Company is subject to
QUALITATIVE market risk associated with changes in interest rates.
DISCLOSURES Interest rate exposure is principally limited to the
ABOUT MARKET $1,158.7 million of debt of the Company outstanding at
RISK December 31, 2001 that is priced at interest rates that vary
with the market. However, approximately $666.9 million of
such floating rate consolidated debt is comprised of
non-recourse commercial mortgage-backed securities which are
subject to interest rate swap agreements, the effect of
which is to fix the interest rate the Company would be
required to pay on such debt to approximately 4.85% per
annum. Therefore, a 25 basis point movement in the interest
rate on the remaining $492 million of variable rate debt
would result in an approximately $1.2 million annualized
increase or decrease in consolidated interest expense and
cash flows. The remaining debt is fixed rate debt. In
addition, the Company is subject to interest rate exposure
as a result of the variable rate debt collateralized by the
Unconsolidated Real Estate Affiliates for which similar
interest rate swap agreements have not been obtained. The
Company's share (based on the Company's respective equity
ownership interests in the Unconsolidated Real Estate
Affiliates) of such variable rate debt was approximately
$430 million. A similar 25 basis point annualized movement
in the interest rate on the variable rate debt of the
Unconsolidated Real Estate Affiliates would result in an
approximately $1.1 million annualized increase or decrease
in the Company's equity in the income and cash flows from
the Unconsolidated Real Estate Affiliates. The Company is
further subject to interest rate risk with respect to its
fixed rate financing in that changes in interest rates will
impact the fair value of the Company's fixed rate financing.
The Company has an ongoing program of refinancing its
consolidated and unconsolidated variable and fixed rate debt
and believes that this program allows it to vary its ratio
of fixed to variable rate debt and to stagger its debt
maturities to respond to changing market rate conditions.
Reference is made to Item 2 above and Note 5 for additional
debt information. The Company is further subject to market
risk associated with changes in interest rates with respect
to its $155.1 million investment in marketable securities. A
similar 25 basis point movement in interest rates would
result in an approximately $.4 million annualized increase
or decrease in interest income and cash flow.
ITEM 8. FINANCIAL
STATEMENTS AND
SUPPLEMENTARY Reference is made to the Index to Consolidated Financial
DATA Statements and Consolidated Financial Statement Schedules on
page F-1 for the required information.
ITEM 9. CHANGES On March 29, 2001, the Board of Directors of General Growth,
IN AND acting upon the recommendation of the Audit Committee of the
DISAGREEMENTS Board, approved the engagement of Deloitte & Touche LLP as
WITH its independent accountants for the fiscal year ending
ACCOUNTANTS ON December 31, 2001 to replace the firm of
ACCOUNTING AND PricewaterhouseCoopers LLP ("PwC"), who was informed on
FINANCIAL March 29, 2001 that it would no longer serve as the
DISCLOSURE Company's independent accountants.
The reports of PwC on the Company's financial statements for
the past two fiscal years contained no adverse opinion or a
disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principle. In
connection with its audits for the two most recent fiscal
years and the subsequent interim period
37 of 40
through March 29, 2001, there have been no disagreements
with PwC on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope
or procedure, which disagreements, if not resolved to the
satisfaction of PwC, would have caused them to make
reference thereto in their reports on the financial
statements for such years. During the two most recent fiscal
years and the subsequent interim period through March 29,
2001, there were no reportable events (as defined in Item
304(a)(1)(v) of Regulation S-K).
During the two most recent fiscal years and the subsequent
interim period through March 29, 2001, the Company did not
consult with Deloitte & Touche LLP regarding either (i) the
application of accounting principles to a specified
transaction, either completed or proposed; (ii) the type of
audit opinion that might be rendered on the financial
statements; or (iii) any matter that was either the subject
of a disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K) or a reportable event (as defined in Item
304(a)(1)(v) of Regulation S-K).
The Company had reported this change in accountants in a
Current Report on Form 8-K, as amended, dated March 29,
2001, and the Company provided PwC with a copy of the
disclosures of the Company in response to Item 4 in such
Form 8-K. PwC furnished the Company a letter addressed to
the Securities and Exchange Commission stating that it
agrees with certain statements of the Company made in the
Form 8-K. A copy of such letter is incorporated by reference
into Exhibit 16 of this Form 10-K.
PART III
ITEM 10. The information which appears under the captions "Election
DIRECTORS AND of Directors" and "Executive Officers" in the Company's
EXECUTIVE proxy statement for its 2002 Annual Meeting of Stockholders
OFFICERS OF THE is incorporated by reference into this Item 10.
COMPANY
ITEM 11. EXECUTIVE The information which appears under the caption "Executive
COMPENSATION Compensation" in the Company's proxy statement for its 2002
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 12. SECURITY The information which appears under the captions "Certain
OWNERSHIP OF Relationships and Related Party Transactions" and "Stock
CERTAIN BENEFICIAL Ownership" in the Company's proxy statement for its 2002
OWNERS AND Annual Meeting of Stockholders is incorporated by
MANAGEMENT reference into this Item 12.
ITEM 13. CERTAIN The information which appears under the caption
RELATIONSHIPS "Compensation Committee Interlocks and Insider
AND RELATED Participation" and "Certain Relationships and Related Party
TRANSACTIONS Transactions" in the Company's proxy statement for its 2002
Annual Meeting of Stockholders is incorporated by reference
into this Item 13.
PART IV
ITEM 14. EXHIBITS, (a) Financial Statements and Financial Statement Schedules.
FINANCIAL
STATEMENTS, The consolidated financial statements and schedules listed
in the accompanying Index to
38 of 40
SCHEDULES AND Consolidated Financial Statements and Financial Statement
REPORTS ON Schedules are filed as part of this Annual Report on Form
FORM 8-K 10-K.
(b) The following reports on Form 8-K were filed by the
Company during the last quarter of the period covered by
this report.
The Company's Report on Form 8-K dated November 20, 2001
describing under Item 5 the Company's pricing of the GGP
MPTC financing. No financial statements were required to be
filed therewith.
The Company's Report on Form 8-K dated December 5, 2001
describing under Item 5 the Company's completion of the
placement of $2.55 billion of GGP MPTC financing. No
financial statements were required to be filed therewith.
The Company's Report on Form 8-K dated December 12, 2001
describing under Item 5 the Company's negotiations to
acquire a multi-billion portfolio of real estate assets. No
financial statements were required to be filed therewith.
The Company's Report on Form 8-K dated December 12, 2001
describing under Item 5 the issuance and sale of 9,200,000
shares of Common Stock of the Company. No financial
statements were required to be filed therewith.
The Company's Report on Form 8-K dated December 14, 2001
describing under Item 5 the rejection of the Company's bid
to acquire a multi-billion portfolio of real estate assets.
No financial statements were required to be filed therewith.
(c) Exhibits.
See Exhibit Index on page S-1
39 of 40
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, 2002
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, 2002
/s/ Robert Michaels
--------------------------
Robert Michaels Director, President March 14, 2002
and Chief Operating Officer
/s/ Bernard Freibaum
--------------------------
Bernard Freibaum Executive Vice President, Chief Financial
Officer and Principal Accounting Officer March 14, 2002
/s/ Anthony Downs
--------------------------
Anthony Downs Director March 14, 2002
/s/ Morris Mark
--------------------------
Morris Mark Director March 14, 2002
/s/ Beth Stewart
--------------------------
Beth Stewart Director March 14, 2002
/s/ Alan Cohen
--------------------------
Alan Cohen Director March 14, 2002
40 of 40
GENERAL GROWTH PROPERTIES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND CONSOLIDATED FINANCIAL STATEMENT
SCHEDULE
The following consolidated financial statements and consolidated financial
statement schedule are included in Item 8 of this Annual Report on Form 10-K:
General Growth Properties, Inc.
Financial Statements Page(s)
Independent Auditors' Report F-2
Independent Auditors' Report F-3
Independent Auditors' Report F-4
Report of Independent Accountants F-5
Consolidated Balance Sheets as of December 31, 2001 and 2000 F-6
Consolidated Statements of Operations and Comprehensive Income
for the years ended December 31, 2001, 2000 and 1999 F-7
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 2001, 2000 and 1999 F-8, F-9
Consolidated Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999 F-10
Notes to Consolidated Financial Statements F-11 to F-42
Financial Statement Schedule
Independent Auditors' Report F-43, F-44
Schedule III - Real Estate and Accumulated Depreciation F-45
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
Independent Auditors' Report
Board of Directors and Stockholders
General Growth Properties, Inc.
We have audited the accompanying consolidated balance sheet of General Growth
Properties, Inc. (the "Company") as of December 31, 2001, and the related
consolidated statements of operations and comprehensive income, stockholders'
equity, and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. We did not audit the consolidated financial
statements of GGP/Homart, Inc. and GGP/Homart II L.L.C., the Company's
investments in which are accounted for by use of the equity method. The
Company's equity of $223,650,000 in GGP/Homart, Inc. net assets and
$134,453,000 in GGP/Homart II L.L.C.'s net assets as of December 31, 2001 and of
$21,822,000 and $23,995,00 in GGP/Homart, Inc. net income and GGP/Homart II
L.L.C.'s net income, respectively, for the year then ended are included in the
accompanying consolidated financial statements. The consolidated financial
statements of GGP/Homart, Inc. and GGP/Homart II L.L.C. were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for such companies, is based solely on the
reports of such other auditors.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit and the reports of
the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the reports of the other auditors, such
consolidated financial statements present fairly, in all material respects, the
consolidated financial position of General Growth Properties, Inc. at December
31, 2001, and the consolidated results of its operations and its cash flows for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.
As discussed in Note 13 to the consolidated financial statements, the Company
changed its method of accounting for derivative instruments and hedging
activities in 2001.
Deloitte & Touche LLP
Chicago, Illinois
February 6, 2002
(March 3, 2002 as to Note 15)
F-2
Independent Auditors' Report
The Stockholders
GGP/Homart, Inc:
We have audited the consolidated balance sheet of GGP/Homart, Inc. (a Delaware
Corporation) and subsidiaries (the Company) as of December 31, 2001, and the
related consolidated statements of income and comprehensive income,
stockholders' equity and cash flows for the year then ended (not presented
separately herein). 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 audit. The financial statements of GGP/Homart,
Inc. and subsidiaries as of December 31, 2000 were audited by other auditors
whose report dated January 26, 2001 expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the 2001 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GGP/Homart,
Inc. and subsidiaries at December 31, 2001, and the results of their operations
and their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
As discussed in note 1, the Company changed its method of accounting for
derivative instruments and hedging activities in 2001.
KPMG LLP
Chicago, Illinois
January 30, 2002
F-3
Independent Auditors' Report
The Members
GGP/Homart II L.L.C.:
We have audited the consolidated balance sheet of GGP/Homart II L.L.C. (a
Delaware Limited Liability Company) and subsidiaries (the Company) as of
December 31, 2001, and the related consolidated statements of income and
comprehensive income, members' equity and cash flows for the year then ended
(not presented separately herein). 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 audit. The financial
statements of GGP/Homart II L.L.C. and subsidiaries as of December 31, 2000 were
audited by other auditors whose report dated January 26, 2001 expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the 2001 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GGP/Homart
II L.L.C. and subsidiaries at December 31, 2001, and the results of their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
As discussed in note 1, the Company changed its method of accounting for
derivative instruments and hedging activities in 2001.
KPMG LLP
Chicago, Illinois
January 30, 2002
F-4
Report of Independent Accountants
To the Board of Directors and Stockholders
General Growth Properties, Inc.
In our opinion, the accompanying consolidated balance sheet 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 the
results of their operations and their cash flows for each of the two 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.
PricewaterhouseCoopers LLP
Chicago, Illinois
February 6, 2001
F-5
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
(Dollars in thousands, except for per share amounts)
ASSETS
------
December 31,
-----------------------
2001 2000
---------- ----------
Investment in real estate:
Land $ 649,312 $ 649,160
Buildings and equipment 4,379,143 3,906,114
Less accumulated depreciation (624,986) (488,130)
Developments in progress 57,436 121,466
---------- ----------
Net property and equipment 4,460,905 4,188,610
Investment in and loans from Unconsolidated Real Estate Affiliates 617,677 762,726
---------- ----------
Net investment in real estate 5,078,582 4,951,336
Cash and cash equivalents 160,755 27,229
Marketable securities 155,103 -
Tenant accounts receivable, net 93,043 96,157
Deferred expenses, net 100,313 105,534
Investment in and note receivable from General Growth
Management, Inc. - 66,079
Prepaid expenses and other assets 59,011 37,769
---------- ----------
$5,646,807 $5,284,104
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Mortgage notes and other debt payable $3,398,207 $3,244,126
Distributions payable 62,368 47,509
Network discontinuance reserve 5,161 -
Accounts payable and accrued expenses 104,826 186,393
---------- ----------
3,570,562 3,478,028
Minority interests:
Redeemable Preferred Units 175,000 175,000
Common Units 380,359 355,158
--------- ----------
555,359 530,158
- -
Commitments and contingencies
Preferred stock: $100 par value; 5,000,000 shares authorized; 337,500 337,500
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, 2001 and 2000
Stockholders' Equity:
Common stock: $.10 par value; 210,000,000 shares authorized;
61,923,932 and 52,281,259 shares issued and outstanding 6,192 5,228
as of December 31, 2001 and 2000, respectively 1,523,213 1,210,261
Additional paid-in capital (328,349) (266,085)
Retained earnings (deficit) (19,890) (9,449)
Notes receivable-common stock purchase 2,220 (1,537)
---------- ----------
Accumulated other comprehensive gains (losses) 1,183,386 938,418
---------- ----------
Total stockholders' equity $5,646,807 $5,284,104
========== ==========
F-6
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Dollars in thousands, except for per share amounts)
Years ended December 31,
------------------------
2001 2000 1999
---- ---- ----
Revenues:
Minimum rents $ 468,617 $ 439,981 $ 387,547
Tenant recoveries 221,850 213,502 180,584
Overage rents 22,849 28,626 27,011
Fees* 77,344 7,017 5,405
Other 13,049 9,641 11,795
---------- --------- ---------
Total revenues 803,709 698,767 612,342
Operating expenses:
Real estate taxes 52,200 49,447 45,572
Management fees to affiliate - 4,439 6,612
Property operating 234,235 163,972 143,622
Provision for doubtful accounts 3,402 2,025 4,425
General and administrative 6,006 6,351 5,857
Depreciation and amortization 145,352 119,663 108,272
Network discontinuance costs 66,000 - -
---------- --------- ---------
Total operating expenses 507,195 345,897 314,360
---------- --------- ---------
Operating income 296,514 352,870 297,982
Interest income 4,655 12,452 16,482
Interest expense (214,277) (225,101) (190,586)
(Income) loss allocated to minority interests (40,792) (52,380) (33,058)
Equity in income (loss) of unconsolidated affiliates 63,566 50,063 19,689
---------- --------- ---------
Income (loss) before gain on sales, extraordinary items and cumulative effect
of accounting change 109,666 137,904 110,509
Gain on sales - 44 4,412
---------- --------- ---------
Income (loss) before extraordinary items and cumulative effect
f accounting change 109,666 137,948 114,921
Extraordinary items (14,022) - (13,796)
Cumulative effect of accounting change (3,334) - -
---------- --------- ---------
Net income (loss) 92,310 137,948 101,125
Convertible Preferred Stock Dividends (PIERS) (24,467) (24,467) (24,467)
---------- --------- ---------
Net income (loss) available to common stockholders $ 67,843 $ 113,481 $ 76,658
========== ========= =========
Earnings (loss) before extraordinary items and
cumulative effect of accounting change per share-basic $ 1.61 $ 2.18 $ 1.97
========== ========= =========
Earnings (loss) before extraordinary items and
cumulative effect of accounting change per share-diluted $ 1.61 $ 2.18 $ 1.96
========== ========= =========
Earnings (loss) per share-basic $ 1.28 $ 2.18 $ 1.67
========== ========= =========
Earnings (loss) per share-diluted $ 1.28 $ 2.18 $ 1.66
========== ========= =========
Net income (loss) $ 92,310 $ 137,948 $ 101,125
Other comprehensive income (loss):
Net unrealized gains (losses) on financial instruments, net of minority interest 2,389 - -
Equity in unrealized income (loss) on available-for-sale
securities of unconsolidated affiliate, net of minority interest 1,368 177 (1,714)
---------- --------- ---------
Comprehensive income (loss) $ 96,067 $ 138,125 $ 99,411
========== ========= =========
* Including $45,079, $6,957 and $5,362 respectively from Unconsolidated Real
Estate Affiliates
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands, except for per share amounts)
Other Total
Additional Retained Employee Compre- Stock-
Common Stock Paid-in Earnings Stock hensive holders'
Shares Amount Capital (Deficit) Loans Gains/(Losses) 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
Other comprehensive loss of
unconsolidated affiliate (1,714) (1,714)
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) (1,714) 927,758
---------- ------ --------- --------- ------- --------- --------
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
Issuance of Common Stock, net of
employee stock option loans 371,784 37 10,666 (6,029) 4,674
Other comprehensive gains of
unconsolidated affiliate 177 177
Adjustment for minority interest
in operating partnership (1,441) (1,441)
----------------------
continued on next page
F-8
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands, except for per share amounts)
Balance, December 31, 2000 52,281,259 $5,228 $1,210,261 $(266,085) $ (9,449) $(1,537) $ 938,418
------------ --------- ---------- --------- -------- ------- ----------
Net income 92,310 92,310
Cash distributions declared
($2.36 per share) (130,107) (130,107)
Convertible Preferred Stock Dividends (24,467) (24,467)
Conversion of operating partnership
units to common stock 21,212 2 575 577
Issuance of Common Stock, net of
employee stock option loans 9,621,461 962 357,824 (10,441) 348,345
Other comprehensive gains 3,757 3,757
Adjustment for minority interest
in operating partnership (45,447) (45,447)
------------ --------- ---------- --------- -------- ------- ----------
Balance, December 31, 2001 61,923,932 $6,192 $1,523,213 $(328,349) $(19,890) $ 2,220 $1,183,386
============ ========= ========== ========= ======== ======= ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
GENERAL GROWTH PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except for per share amounts)
2001 2000 1999
----------- ----------- -----------
Cash flows from operating activities:
Net Income $ 92,310 $ 137,948 $ 101,125
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interests 40,792 52,380 33,058
Extraordinary items 14,022 - 10,454
Cumulative effect of accounting change 3,334 - -
Equity in net income of unconsolidated affiliates (63,566) (50,063) (19,689)
Provision for doubtful accounts 3,402 2,025 4,425
Distributions received from unconsolidated affiliates 59,403 37,523 29,825
Depreciation 128,682 111,457 105,046
Amortization 24,196 15,232 7,828
Gain on sales - (44) (4,412)
Net Changes:
Tenant accounts receivable 15,810 (14,059) (26,856)
Prepaid expenses and other assets (821) 1,550 (9,183)
Increase in deferred expenses (33,595) (22,371) (16,429)
Network discontinuance reserve 5,161 - -
Accounts payable and accrued expenses (82,005) 15,525 (9,487)
----------- ----------- -----------
Net cash provided by (used in) operating activities 207,125 287,103 205,705
----------- ----------- -----------
Cash flows from investing activities:
Acquisition/development of real estate and improvements
and additions to properties (338,236) (286,734) (1,248,371)
Network and Broadband System additions (47,037) - -
Increase in investments in unconsolidated affiliates (23,229) (91,663) (55,361)
Increase in mortgage note receivable - - (31,065)
Change in notes receivable from General Growth Management, Inc. - (2,406) 6,671
Reduction in employee stock loans - - 124
Distributions received from unconsolidated affiliates 101,243 23,889 89,734
Loans from unconsolidated affiliates 94,996 - -
Increase in investments in marketable securities (155,103) - -
----------- ----------- -----------
Net cash provided by (used in) investing activities (367,366) (356,914) (1,238,268)
----------- ----------- -----------
Cash flows from financing activities:
Cash distributions paid to common stockholders (117,585) (106,103) (82,439)
Cash distributions paid to minority interests (43,854) (40,333) (38,434)
Cash distributions paid to holders of RPU's (15,663) (6,091) -
Payment of dividends on PIERS (24,467) (24,467) (24,467)
Proceeds from sale of common stock, net of issuance costs 348,346 4,674 331,056
Proceeds from issuance of RPU's, net of issuance costs - 170,625 -
Proceeds from issuance of mortgage and other debt payable 2,137,667 360,301 1,736,072
Principal payments on mortgage notes and other debt payable (1,983,586) (282,301) (867,713)
Increase in deferred expenses (7,091) (4,858) (15,549)
----------- ----------- -----------
Net cash provided by (used in) financing activities 293,767 71,447 1,038,526
----------- ----------- -----------
Net change in cash and cash equivalents 133,526 1,636 5,963
Cash and cash equivalents at beginning of period 27,229 25,593 19,630
----------- ----------- -----------
Cash and cash equivalents at end of period $ 160,755 $ 27,229 $ 25,593
=========== =========== ===========
Supplemental disclosure of cash flow information:
Interest paid $ 211,319 $ 222,711 $ 197,178
Interest capitalized 16,272 17,709 17,166
=========== =========== ===========
Non-cash investing and financing activities:
Common stock issued in exchange for Operating
Partnership Units $ 577 $ 5,511 $ 522
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 10,441 7,149 380
Assumption and conversion of notes
in conjunction with acquisition of property 8,207 77,657 -
Operating Partnership Units and common stock
issued as consideration for purchase of real estate - 215 -
Penalty on retirement of debt - - 8,655
Distributions payable 62,368 47,509 42,695
Acquisition of GGMI 66,079 - -
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
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.
During December 2001, General Growth completed a public offering
of 9,200,000 shares of Common Stock (the "2001 Offering").
General Growth received net proceeds of approximately $345,000
which was used to reduce outstanding indebtedness and increase
working capital.
On January 1, 2001, the Operating Partnership acquired for
nominal cash consideration 100% of the common stock of General
Growth Management, Inc. ("GGMI"). In connection with the
acquisition, the GGMI preferred stock owned by the Operating
Partnership was cancelled and approximately $40,000 of the
outstanding loans owed by GGMI to the Operating Partnership were
contributed to the capital of GGMI. The operations of GGMI have
been fully consolidated with the Company as of and for the year
ended December 31, 2001. This transaction was accounted for as a
purchase. In addition, the Operating Partnership and GGMI
concurrently terminated the management contracts for the
Wholly-Owned Centers (as defined below) as the management
activities would thereafter be performed directly by the Company.
GGMI has continued to manage, lease, and perform various other
services for the Unconsolidated Centers (as defined below) and
other properties owned by unaffiliated third parties. During
2001, the Company elected that GGMI be treated as a taxable REIT
subsidiary (a "TRS") as permitted under the Tax Relief Extension
Act of 1999.
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 allows, in general,
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 is determined by the current
market price, the purchases will be made without fees or
commissions. General Growth has and 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, 2001 an aggregate of 54,981 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 was used to fund a portion of the purchase price of Ala
Moana Center (Note 3).
F-11
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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"). 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. On or after July 15, 2003, General Growth has the
option to redeem the PIERS and the Depositary Shares at the
rate of .6297 shares of Common Stock per Depositary Share if
the closing price of the Common Stock exceeds $45.65 per
share for 20 trading days within any period of 30
consecutive trading days. 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 any, to the redemption date. Accordingly, the
PIERS have been reflected in the accompanying consolidated
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. A Right is also attached to
subsequently issued share of Common Stock. 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. If the Rights become exercisable, holders of
units of partnership interest in the Operating Partnership,
other than General Growth, will receive the number of Rights
they would have received if their units had been redeemed
and the purchase price paid in Common Stock. The Rights
expire on November 18, 2008, unless earlier redeemed by the
General Growth Board of Directors for $0.01 per Right or
such expiration date is extended.
F-12
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Operating Partnership
The Operating Partnership commenced operations on April 15,
1993 and as of December 31, 2001, it owned 100% of
fifty-four regional shopping centers (the "Wholly-Owned
Centers"); 50% of the common stock of GGP/Homart, Inc.
("GGP/Homart"), 50% of the membership interests in
GGP/Homart II, L.L.C. ("GGP/Homart II"), 51% of the common
stock of GGP Ivanhoe, Inc. ("GGP Ivanhoe"), 51% of the
common stock of GGP Ivanhoe III, Inc. ("GGP Ivanhoe III"),
50% of Quail Springs Mall and Town East Mall, and a 50%
general partnership interest in Westlake Retail Associates,
Ltd. ("Circle T") (collectively, the "Unconsolidated Real
Estate Affiliates"), and a 100% common stock interest in
GGMI. As of such date, GGP/Homart owned interests in
twenty-three shopping centers, GGP/Homart II owned interests
in eight shopping centers, GGP Ivanhoe owned 100% of two
shopping centers, and GGP Ivanhoe III (through certain
wholly-owned subsidiaries) owned 100% of eight shopping
centers, collectively, with Quail Springs Mall and Town East
Mall, the "Unconsolidated Centers". Circle T is currently
developing a regional mall (in Dallas, Texas) and as it is
not yet operational has been excluded from the definition of
Unconsolidated Centers (see Notes 3 & 4). 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 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 from 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.
F-13
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
As of December 31, 2001, the Company owned an approximate
76% general partnership interest in the Operating
Partnership (excluding its preferred units of partnership
interest as discussed below). The remaining approximate 24%
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 with 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, 2001, 100% of the Preferred Units of
the Operating Partnership (337,500) were owned by General
Growth.
Changes in outstanding Operating Partnership Units
(excluding the Preferred Units) for the three years ended
December 31, 2001, are as follows:
Units
-----
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
Conversion to common stock (21,212)
------------
December 31, 2001 19,572,493
============
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 primary
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-14
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 2 Principles of Consolidation
SUMMARY OF
SIGNIFICANT The accompanying consolidated financial statements include
ACCOUNTING the accounts of the Company consisting of the fifty-four
POLICIES centers and the unconsolidated investments in GGP/Homart,
GGP/Homart II, GGP Ivanhoe, GGP Ivanhoe III, Circle T, Quail
Springs Mall, and Town East Mall and, until the acquisition
of its common stock by the Operating Partnership in January
2001 as discussed above, GGMI. All significant intercompany
balances and transactions have been eliminated.
Revenue Recognition
Minimum rent revenues are recognized on a straight-line
basis over the terms of the related leases. As of December
31, 2001, approximately $49,027 has been recognized as
straight-line rents receivable (representing the current net
cumulative rents recognized prior to when billed and
collectible as provided by the terms of the leases), all of
which is included in tenant accounts receivable, net in the
accompanying consolidated financial statements. Overage
rents are recognized on an accrual basis once tenant sales
revenues exceed contractual tenant lease 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.
Fee income primarily represents GGMI management and leasing
fees in 2001 due to the consolidation of GGMI and, in 2000
and 1999, financing fees and other ancillary services
performed by the Company for the benefit of its
Unconsolidated Real Estate Affiliates. Management and
leasing fees of GGMI are recognized as services are
rendered.
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 $5,523 and $7,665 as of December
31, 2001 and 2000, 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
which are amortized over the terms of the respective
agreements and leasing commissions which are amortized over
the average life of the tenant leases. Deferred expenses in
the accompanying consolidated balance sheets are shown at
cost, net of accumulated amortization of $61,282 and $52,240
as of December 31, 2001 and 2000, respectively.
F-15
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 amounts required to be disclosed. Since such
amounts are estimates, there can be no assurance that the
disclosed 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 fair value due to the short
maturity of these investments. Based on borrowing rates
available to the Company at the end of 2001 and 2000 for
mortgage loans with similar terms and maturities, the fair
value of the mortgage notes and other debts payable
approximates carrying value at December 31, 2001 and 2000.
In addition, the Company estimates that the fair value of
its interest rate cap and swap agreements (Note 5) related
to consolidated debt at December 31, 2001 is approximately
$3,487.
The Company has purchased approximately $155,100 of
marketable securities (bearing interest at a weighted
average annual rate of LIBOR (1.88% at December 31, 2001)
plus 103 basis points and having a weighted average maturity
of approximately 3.63 years). Such securities are classified
as available-for-sale securities and have been recorded at
cost which approximates market value at December 31, 2001.
Such securities represent a portion of the commercial
mortgage pass-through certificates issued in December 2001
as more fully described in Note 5. In addition, the Company
has certain derivative financial instruments as described in
Notes 5 and 13.
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 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. For redevelopment of existing operating properties,
the net book value of the existing property under
redevelopment plus the cost for the construction and
improvements incurred in connection with the redevelopment
are capitalized to the extent the capitalized costs of the
property do not exceed the estimated fair value of the
redeveloped property when complete. 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
cash flow 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
operations. 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
F-16
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 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 and 1999. As
of January 1, 2001, GGMI has been consolidated due to the
acquisition of its common stock as discussed above. In
addition, the 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 (approximately $130,752 and
$149,774 at December 31, 2001 and 2000, respectively) are
amortized over lives ranging from five to forty years.
Further, any advances to or loans (see Note 5) from the
Unconsolidated Real Estate Affiliates (loans equal
approximately $94,996 and zero at December 31, 2001 and
2000, respectively) have been included in the balance of the
Company's investments in Unconsolidated Affiliates.
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 90% of its ordinary taxable
income and to distribute to stockholders or pay tax on 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 subsidiaries, GGMI, is a taxable
corporation and accordingly, state and Federal income taxes
on its net taxable income are payable by GGMI. GGMI has
recognized a benefit provided for income taxes on its
separate financial records in the amount of $0, $1,002 and
$4,178 for 2001, 2000 and 1999, respectively. The net
deferred tax asset (liability), net of a valuation allowance
of $11,649 at December 31, 2001 was approximately $5,133
which was primarily comprised of net operating loss
carry-forwards. At December 31, 2001, the Company has
concluded that it was more likely than not that this net
deferred tax asset will be realized in future periods.
F-17
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Earnings Per Share ("EPS")
Basic per share amounts are based on the weighted average of
common shares outstanding of 52,844,821 for 2001, 52,058,320 for
2000 and 45,940,104 for 1999. Diluted per share amounts are based
on the total number of weighted average common shares and
dilutive securities (stock options) outstanding of 52,906,549 for
2001, 52,096,331 for 2000 and 46,030,559 for 1999. 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 years
ended December 31, 2001, 2000 and 1999 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.
The following are the reconciliations of the numerators and
denominators of the basic and diluted EPS:
Years ended December 31,
2001 2000 1999
------------ ------------ ------------
Numerators:
Income before extraordinary items
and cumulative effect of accounting change $ 109,666 $ 137,948 $ 114,921
Dividends on PIERS (24,467) (24,467) (24,467)
------------ ------------ ------------
Income available to common stockholders before
extraordinary items and cumulative effect
of accounting change - for basic and 85,199 113,481 90,454
diluted EPS
Extraordinary items (14,022) - (13,796)
Cumulative effect of accounting change (3,334) - -
------------ ------------ ------------
Net income available to common
stockholders - for basic and diluted EPS $ 67,843 $ 113,481 $ 76,658
============ ============ ============
Denominators:
Weighted average common shares
outstanding (in thousands) - for basic EPS 52,845 52,058 45,940
Effect of dilutive securities - options 62 38 91
------------ ------------ ------------
Weighted average common shares
outstanding (in thousands) - for diluted EPS 52,907 52,096 46,031
============ ============ ============
Minority Interest
Income 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 consolidated balance sheets to account for the
change in the ownership of the underlying equity in the Operating
Partnership.
F-18
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 and unrealized gains or losses
on financial instruments designated as cash flow hedges (Note
13). In addition, one of the Company's unconsolidated affiliates
received common stock of a large publicly-traded real estate
company 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. During 2001,
portions of the Company's holdings of the stock were sold and the
cumulative previously unrealized losses for the stock sold were
reversed. For the year ended December 31, 2001, there were
additional unrealized holdings gains of approximately $3,757, net
of minority interest of $1,392, primarily related to financial
instruments.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America 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. For example, significant estimates and assumptions have
been made with respect to useful lives of assets, capitalization
of development and leasing costs, recoverable amounts of
receivables and deferred taxes and amortization periods of
deferred costs and intangibles. Actual results could differ from
those estimates.
Reclassifications
Certain amounts in the 2000 and 1999 consolidated financial
statements have been reclassified to conform to the current year
presentation.
F-19
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 3 PROPERTY Wholly-Owned Properties
ACQUISITIONS AND
DEVELOPMENTS
2001
During April 2001, GGP-Tucson Mall, L.L.C., a wholly-owned
subsidiary of the Operating Partnership ("GGP-Tucson"),
agreed to advance $20,000 to an unaffiliated developer in
the form of a secured promissory note (bearing interest at
8% per annum) collateralized by such developer's ownership
interest in Tucson Mall, a 1.3 million square foot enclosed
regional mall in Tucson, Arizona. The promissory note was
payable interest only and was due on demand. GGP-Tucson had
also entered into an option agreement to purchase Tucson
Mall from such developer and its co-tenants in title to the
property. On August 15, 2001, the promissory note was repaid
in conjunction with GGP-Tucson's completion of its
acquisition of Tucson Mall pursuant to the option agreement.
The aggregate consideration paid by GGP-Tucson for Tucson
Mall was approximately $180,000 (subject to prorations and
to certain adjustments and payments to be made by
GGP-Tucson). The consideration was paid in the form of cash
borrowed under the Operating Partnership's revolving line of
credit and an approximately $150,000 short-term floating
rate acquisition loan which was scheduled to mature in
December 2001 but was refinanced in December 2001 as further
discussed in Note 5.
2000
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 assumption 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 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 the Ala Moana CMBS
described in Note 5.
F-20
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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.
Developments
During the three year period ended December 31, 2001, the
Company was developing or had completed construction at the
following three development sites: Grandville (Grand
Rapids), Michigan; Frisco (Dallas), Texas and Westlake
(Dallas), Texas. Construction of the Grandville (Grand
Rapids) mall (RiverTown Crossings) commenced in 1997 and
opened in November 1999. Construction of Stonebriar Centre,
currently owned by GGP/Homart II, located in Frisco
(Dallas), Texas commenced in 1998 and opened in August 2000.
The Westlake construction project, owned by the Circle T
joint venture discussed below, commenced in 2001 and is
scheduled to be completed in late 2004.
The Company has an ongoing program of renovations and
expansions at its properties including significant projects
currently under construction or recently completed at the
Park Mall in Tucson, Arizona; Eden Prairie Mall in Eden
Prairie (Minneapolis), Minnesota; Southwest Plaza in
Littleton, Colorado, and Knollwood Mall in St. Louis Park
(Minneapolis), Minnesota. In addition, during 2000 the
Company had commenced construction of an integrated
broadband distribution system that would provide tenants at
its properties with a private wide-area network as well as
supporting applications and equipment (the "Broadband
System"). The Company initially financed the majority of
these network costs by fixed-rate intermediate term
equipment financing which was repaid in December 2001 with a
portion of the proceeds of the 2001 Offering. (See Note 11).
During 1999, the Company formed the Circle T joint venture
to develop a regional mall in Westlake (Dallas), Texas as
further described in Note 4 below. As of December 31, 2001,
the Company had invested approximately $16,200 in the joint
venture. The Company is currently obligated to fund
additional pre-development costs of approximately $800.
Actual development costs are not finalized or committed but
are anticipated to be funded from a construction loan that
is expected to be obtained. 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 1.3 million square feet
of tenant space including up to six anchor stores, an ice
rink and a multi-screen theater. A late 2004 opening is
currently scheduled.
The Company also owns and/or is investigating certain other
potential development sites (representing a net investment
of approximately $19,300), including sites in Toledo, Ohio;
West Des Moines, Iowa; and South Sacramento, California but
there can be no assurance that development of these sites
will proceed.
NOTE 4 GGP/Homart
INVESTMENTS IN
UNCONSOLIDATED AFFILIATES The Company owns 50% of the common stock of
GGP/Homart with the remaining ownership interest held by the
New York State Common Retirement Fund ("NYSCRF"), 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.
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 NYSCRF, the
Company's co-investor in GGP/Homart, formed GGP/Homart II, a
Delaware limited liability company which is owned equally by
the Company and NYSCRF. GGP/Homart II owns 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 NYSCRF. 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. During March 2001, GGP/Homart
II acquired a 100% ownership interest in Willowbrook Mall in
Houston, Texas for a purchase price of approximately
$145,000. GGP/Homart II financed the Willowbrook acquisition
with a new $102,000 10-year mortgage loan bearing interest
at 6.93% per annum and approximately $43,000 in financing
proceeds from a new mortgage loan collateralized by the
Stonebrier Center. 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
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 Cambridge 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. 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 Ivanhoe 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.
F-22
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 floating-rate loans of approximately $30,000
which were repaid or refinanced in 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.
In conjunction with the GGP MPTC financing as defined and
described in Note 5, GGP Ivanhoe III entered into an
interest rate swap agreement with the Operating Partnership.
The swap agreement effectively converts approximately
$91,933 of GGP Ivanhoe III debt bearing interest at a
weighted average fixed rate of 5.33% per annum which was
obtained in the GGP MPTC transaction to variable rate debt
bearing interest at a weighted average rate per annum of
LIBOR plus 110 basis points as Ivanhoe desired only variable
rate debt. The swap agreement qualifies as a cash flow hedge
for the Operating Partnership and a fair value hedge for GGP
Ivanhoe III.
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.
F-23
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Circle T
At December 31, 2001, the Company, through a wholly-owned
subsidiary, owns a 50% general partnership interest in
Westlake Retail Associates, Ltd. ("Circle T"). AIL
Investment, LP, an affiliate of Hillwood Development
Company, ("Hillwood") is the limited partner of Circle T.
Circle T is currently developing the Circle T Ranch Mall, a
regional mall in Dallas, Texas, scheduled for completion in
late 2004. Development costs are expected to be funded by a
construction loan to be obtained by the joint venture and
capital contributions by the joint venture partners. As of
December 31, 2001, the Company has made contributions of
approximately $16,200 to the project for pre-development
costs and Hillwood has contributed approximately $11,200,
mostly in the form of land costs and related predevelopments
costs. As certain major decisions concerning Circle T must
be made jointly by the Company and Hillwood, the Company is
accounting for Circle T using the equity method.
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 Operating Partnership 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.
On January 1, 2001 the Operating Partnership acquired 100%
of the common stock of GGMI as described in Note 1 and the
operations of GGMI have been fully consolidated with the
Company as of and for the year ended December 31, 2001.
F-24
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, 2001 and 2000 and for the years ended
December 31, 2001, 2000 and 1999.
CONDENSED BALANCE SHEETS
December 31, 2001
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- ----------
Assets:
Net investment in real estate* $1,428,163 $1,410,349 $1,207,265
Investment in real estate joint ventures 25,604 - -
Other assets 117,198 95,184 65,699
---------- ---------- ----------
$1,570,965 $1,505,533 $1,272,964
========== ========== ==========
Liabilities and Owners' Equity:
Mortgage and other notes payable $1,186,616 $ 956,576 $ 768,553
Accounts payable and accrued expenses 43,216 47,591 47,565
Owners' equity 341,133 501,366 $ 456,846
---------- ---------- ----------
$1,570,965 $1,505,533 $1,272,964
========== ========== ==========
December 31, 2000
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- ----------
Assets:
Net investment in real estate* $1,437,600 $1,288,853 $1,189,722
Investment in real estate joint ventures 49,563 - -
Other assets 116,242 32,722 69,362
---------- ---------- ----------
$1,603,405 $1,321,575 $1,259,084
========== ========== ==========
Liabilities and Owners' Equity:
Mortgage and other notes payable $1,134,346 $ 621,924 $ 728,343
Accounts payable and accrued expenses 38,712 38,016 49,195
Owners' equity 430,347 661,635 $ 481,546
---------- ---------- ----------
$1,603,405 $1,321,575 $1,259,084
========== ========== ==========
(*) At December 31, 2001 and 2000 the net investment in real estate includes
approximately $27,400 and $25,600, respectively, of assets of the Circle T
joint venture which are currently categorized as developments in progress.
F-25
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
CONDENSED STATEMENTS OF OPERATIONS
December 31, 2001
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- ----------
Revenues:
Tenant rents $ 279,993 $ 189,280 $ 205,553
Operating expenses (1) 161,547 105,156 119,946
--------- --------- ---------
Operating income (loss) 118,446 84,124 85,607
Interest expense, net (2) (74,422) (44,938) (49,792)
Equity in net income of unconsolidated
real estate affiliates 3,375 - -
Gain (loss) on property sales (1,074) 65 -
--------- --------- ---------
Net income (loss) $ 46,325 $ 39,251 $ 35,815
========= ========= =========
December 31, 2000
All Other
Real Estate
GGP/Homart GGP/Homart II Affiliates
---------- ------------- ----------
Revenues:
Tenant rents $ 253,348 $ 146,730 $ 199,709
Operating expenses (1) 143,862 80,339 117,266
--------- --------- ----------
Operating income (loss) 109,486 66,391 82,443
Interest expense, net (2) (74,447) (36,253) (53,128)
Equity in net income of unconsolidated
real estate affiliates 3,266 - -
Loss on property sales (744) - -
Income allocated to minority interest (408) - -
--------- --------- ----------
Net income (loss) $ 37,153 $ 30,138 $ 29,315
========= ========= ==========
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) (49,152)
Equity in net income of unconsolidated
real estate affiliates 5,504 - -
Gain on property sales 816 - -
Income allocated to minority interest (808) - -
--------- --------- ----------
Net income (loss) $ 39,832 $ 4,187 $ 20,594
========= ========= ==========
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 and cumulative effect of
accounting change.
F-26
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, 2001
NOTES AND OTHER and 2000 consisted of the following:
DEBT PAYABLE
December 31, 2001 December 31, 2001
Fixed-Rate debt:
Mortgage notes payable $ 2,239,511 $ 1,832,783
Variable-Rate debt:
Mortgage notes payable 951,696 1,146,343
Credit Facilities and bank loan 207,000 265,000
------------------ -------------
Total Variable-Rate debt 1,158,696 1,411,343
------------------ -------------
Total $ 3,398,207 $ 3,244,126
================== =============
FIXED RATE DEBT
Mortgage notes and other debt payable
The fixed rate notes bear interest ranging from 5.37% to
10.00% per annum (weighted average of 6.38% per annum),
require monthly payments of principal and/or interest and
have various maturity dates through 2020 (weighted average
remaining term of 5.9 years). Certain properties are pledged
as collateral for the related mortgage notes. The mortgage
notes payable as of December 31, 2001 are non-recourse to
the Company. 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. 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.
VARIABLE RATE DEBT
Mortgage notes and other debt payable
Variable rate mortgage notes and other debt payable at
December 31, 2001 consist primarily of approximately
$951,696 of collateralized mortgage-backed securities
(approximately $666,933 of which are currently subject to
fixed rate interest swap agreements as described below and
in Note 13) and $207,000 outstanding on the Company's Term
Loan, both as described below. The loans bear interest at a
rate per annum equal to LIBOR plus 60 to 250 basis points.
Commercial Mortgage-Backed Securities
F-27
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
In August 1999, the Company issued $500,000 of commercial
mortgage-backed securities (the "Ala Moana CMBS") collateralized by
the Ala Moana Center (see Note 3). The securities were comprised of
notes which bore 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. The
notes were repaid in December 2001 with a portion of the proceeds of
the GGP MPTC financing described below. In conjunction with the
issuance of the Ala Moana CMBS, the Company arranged for an interest
rate cap agreement, the effect of which was to limit the maximum
interest rate the Company would 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. No
amounts were received on the cap agreement in 2001. 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
repayments of outstanding indebtedness under the Company's Credit
Facility.
In September 1999, the Company issued $700,229 of commercial
mortgage-backed securities (the "GGP-Ivanhoe CMBS")
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 were 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 GGP-Ivanhoe CMBS was
comprised of notes which bore 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. The notes were repaid in December 2001
with a portion of the proceeds of the GGP MPTC financing described
below. In conjunction with the issuance of the GGP-Ivanhoe CMBS, the
Company arranged for an interest rate cap agreement, the effect of
which was to limit the maximum interest rate the Company would 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. No amounts were received on
the cap agreement in 2001. 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.
F-28
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
In early December 2001, the Operating Partnership and certain
Unconsolidated Real Estate Affiliates completed the placement of
$2,550,000 of non-recourse commercial mortgage pass-through
certificates (the "GGP MPTC"). The GGP MPTC is collateralized by 27
malls and one office building, including 19 malls owned by certain
Unconsolidated Real Estate Affiliates. The GGP MPTC is comprised of
both variable rate and fixed rate notes which require monthly payments
of principal and interest. The certificates represent beneficial
interests in three loan groups made by three sets of borrowers
(GGP/Homart-GGP/Homart II, Wholly-Owned and GGP Ivanhoe III). The
original principal amount of the GGP MPTC was comprised of $1,235,000
attributed to the Operating Partnership, $900,000 to GGP/Homart and
GGP/Homart II and $415,000 to GGP Ivanhoe III. The three loan groups
are comprised of variable rate notes with a 36 month initial maturity
(with two no cost 12-month extension options), variable rate notes
with a 51 month initial maturity (with two no cost 18-month extension
options) and fixed rate notes with a 5 year maturity. The 36 month
variable rate notes bear interest at rates per annum ranging from
LIBOR plus 60 to 235 basis points (weighted average equal to 79 basis
points), the 51 month variable rate notes bear interest at rates per
annum ranging from LIBOR plus 70 to 250 basis points (weighted average
equal to 103 basis points) and the 5 year fixed rate notes bear
interest at rates per annum ranging from approximately 5.01% to 6.18%
(weighted average equal to 5.38%). The extension options with respect
to the variable rate notes are subject to obtaining extensions of the
interest rate protection agreements which were required to be obtained
in conjunction with the GGP MPTC. The GGP MPTC yielded approximately
$470,000 of net proceeds (including amounts attributed to the
Unconsolidated Real Estate Affiliates) which were utilized for loan
repayments and temporary investments in cash equivalents and
marketable securities. On closing of the GGP MPTC financing,
approximately $94,996 of such proceeds attributable to GGP/Homart and
GGP/Homart II were loaned to the Operating Partnership. The loans,
which are comprised of approximately $78,400 by GGP/Homart and $16,596
by GGP/Homart II, bear interest at a rate of 5.5% per annum on the
remaining outstanding balance and mature on March 30, 2003.
Concurrent with the issuance of the certificates, the Company
purchased interest rate protection agreements (structured to limit the
Company's exposure to interest rate fluctuations in a manner similar
to the interest rate cap agreements purchased in connection with the
Ala Moana and GGP-Ivanhoe CMBS), and simultaneously an equal amount of
interest rate protection agreements were sold to fully offset the
effect of these agreements and to recoup a substantial portion of the
cost of such agreements. Further, to achieve a more desirable balance
between fixed and variable rate debt, the Company entered into
$666,933 of swap agreements. Approximately $575,000 of such swap
agreements are with independent financial services firms and
approximately $91,933 is with GGP Ivanhoe III to provide Ivanhoe with
only variable rate debt (see Note 4). The notational amounts of such
swap agreements decline over time to an aggregate of $25,000 at
maturity of the 51 month variable rate loans (assuming both 18 month
extension options are exercised). The swap agreements convert the
related variable rate debt to fixed rate debt currently bearing
interest at a weighted average rate of 4.85% per annum. Such swap
agreements have been designated as hedges of related variable rate
debt as described in Note 13.
F-29
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Credit Facilities
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 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 (cumulatively increased to $185,000 through
December 2001). The outstanding balance of the Revolver was fully
repaid from a portion of the proceeds of the GGP MPTC financing
described above and the Revolver was terminated. The Revolver bore
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 was subject to financial performance covenants including debt
to value and net worth ratios, EBITDA ratios and minimum equity
values.
In January 2001, GGMI borrowed $37,500 under a new revolving line of
credit obtained by GGMI and an affiliate, which was guaranteed by
General Growth and the Operating Partnership. This revolving line of
credit was scheduled to mature in July 2003 but was fully repaid in
December 2001 from a portion of the proceeds of the GGP MPTC financing
described above and the line of credit was terminated. The interest
rate per annum with respect to any borrowings varied from LIBOR plus
100 to 190 basis points depending on the Company's average leverage
ratio.
Interim 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. As of
September 30, 2001, the maximum principal amount of the Term Loan was
increased to $255,000 and, as of such date, all amounts available
under the Term Loan were fully drawn. 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 2001, approximately
$48,000 of the principal amount of the Term Loan was repaid from a
portion of the 2001 Offering. The Term Loan has a scheduled 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.
F-30
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
In April 1999, the Company obtained an additional $25,000 bank loan,
partially secured by Park Mall in Tucson, Arizona. As of September 30,
2001, the maximum available amounts under the loan had been
cumulatively increased to $100,000. The loan, with a then outstanding
balance of approximately $83,900 and which bore interest at a rate per
annum of LIBOR plus 165 basis points, was refinanced in December 2001
by the GGP MPTC described above.
In March 2001, the Company obtained a $65,000 redevelopment loan
collateralized by Eden Prairie Mall. The new loan had an initial draw
of approximately $19,400, required monthly payments of interest at a
rate of LIBOR plus 190 basis points and was scheduled to mature in
April 2004. In December 2001, this loan, with a then outstanding
balance of approximately $44,079, was repaid with a portion of the
proceeds of the 2001 Offering.
In October 2001, the Company refinanced the mortgage debt
collateralized by Century Plaza, Eagle Ridge Mall and the Knollwood
Mall. These properties were part of a floating rate
cross-collateralized pool of mortgage notes (obtained in October
1999), originally collateralized by a portfolio of 5 regional malls
and 1 office property, which was originally scheduled to mature
November 1, 2001. The three malls were refinanced with a $90,000
bridge loan which bore interest at a rate per annum of LIBOR plus 210
basis points and was scheduled to mature on February 1, 2002 subject
to one three-month extension option. The bridge loan was repaid in
December 2001 with a portion of the proceeds of the 2001 Offering. The
Knollwood Mall portion ($10,000) and the SouthShore Mall portion
($9,000) of the original $130,000 six property loan was repaid in full
from the Company's Revolver in August 2001 and the remaining
properties, 110 N. Wacker and West Valley Mall, were refinanced in
December 2001 with a portion of the proceeds from the GGP MPTC.
Construction Loan
During April 1999, the Company received $30,000 representing the
initial loan draw on a $110,000 construction loan facility. The
facility was collateralized by and provided financing for the
RiverTown Crossings Mall development (including outparcel development)
in Grandville (Grand Rapids), Michigan. The construction loan provided
for periodic funding as construction and leasing continued and bore
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 were available under the construction loan
facility. Interest was due monthly. The loan had been scheduled to
mature on June 30, 2001 and was refinanced on June 28, 2001 with a
non-recourse, long-term mortgage loan. The new $130,000 non-recourse
mortgage loan bears interest at 7.53% per annum and matures on July 1,
2011.
F-31
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Letters of Credit
As of December 31, 2001 and 2000, the Company had
outstanding letters of credit of $13,200 and $7,700,
respectively, primarily in connection with special real
estate assessments and insurance requirements.
Principal amounts due under mortgage notes and other debts
payable mature as follows:
Year Amount Maturing
---- ---------------
2002 $ 39,686
2003 249,955
2004 260,267
2005 50,303
2006 176,410
Subsequent 2,621,586
----------
Total $3,398,207
==========
Land, buildings and equipment related to the mortgage notes
payable with an aggregate cost of approximately $4,111,208
at December 31, 2001 have been pledged as collateral.
Certain properties, including those within the portfolios
collateralized by commercial mortgage-backed securities, are
subject to financial performance convenants, primarily debt
service coverage ratios.
NOTE 6 The extraordinary items resulted from prepayment penalties
EXTRAORDINARY and unamortized deferred financing costs related to the
ITEMS early extinguishment, primarily through refinancings, of
mortgage notes payable. In 2001, the basic and diluted per
share impact of the extraordinary items was $.27. The basic
and the diluted per share impact of the extraordinary items
in 1999 was $.30.
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, 2001 are as
follows:
Year Amount
---- ------
2002 $ 404,390
2003 382,482
2004 358,272
2005 318,825
2006 277,401
Thereafter $1,100,336
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.
F-32
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 8 GGMI
TRANSACTIONS
WITH AFFILIATES In 2000 and 1999, GGMI had been contracted to provide
management, 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 between the Wholly-Owned
Centers and GGMI are as follows:
Year Ended December 31,
2000 1999
------ ------
Management and Leasing Fees $22,834 $21,201
Cost Reimbursements 55,937 56,548
Development Costs 8,833 3,499
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. Since January 1, 2001, the
Wholly-Owned Centers have been self-managed under the same
standards and procedures in effect prior to January 1, 2001.
Notes Receivable-Officers
During 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
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). During 2001, the Company made additional advances
to officers of an aggregate of $10,441 in conjunction with
the exercise of options to purchase an aggregate of 330,000
shares of Common Stock. During February 2002, additional
advances of approximately $2,104 were made in connection
with the exercise of options to purchase an aggregate of
60,000 shares of Common Stock. The notes, which bear
interest at a rate computed as a formula of a market rate,
are full recourse to the officers, 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. At December 31, 2001, the Company
has also cumulatively paid approximately $2,092 representing
income tax withholding for such officers. Such amounts carry
the same terms as the promissory notes for the Common Stock
but are reflected in prepaid and other assets in the
accompanying consolidated financial statements.
F-33
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
STOCK PLANS The Company's Stock Incentive Plan provides incentives to
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, 2001, 2000 and 1999 and changes
during the year ended on those dates is presented below.
2001 2000 1999
---------------- ----------------- ------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ ----- ------ ----- ------ -----
Outstanding at
beginning of year 742,319 $31.36 827,500 $29.85 848,500 $28.99
Granted 213,000 $33.97 205,319 $30.89 47,500 $32.42
Exercised (350,000) $31.60 (276,500) $26.38 (60,000) $19.00
Forfeited (62,100) $34.07 (14,000) $33.97 (8,500) $34.78
-------- -------- ------
Outstanding at end of year 543,219 $31.92 742,319 $31.36 827,500 $29.85
======= ======= =======
Exercisable at end of year 217,500 $30.50 467,500 $30.64 595,500 $28.76
Options available
for future grants 1,493,114 1,644,014 1,835,333
Weighted average per share
fair value of options
granted during the year $ 3.06 $ 2.62 $ 2.84
The following table summarizes information about stock
options outstanding pursuant to the Stock Incentive Plan at
December 31, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------------------------ -------------------
Weighted Average
Number Remaining Weighted Average Options Weighted Average
Range Of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices At 12/31/01 Life Price At 12/31/01 Price
--------------- ----------- ---- ----- ----------- -----
$19.00 - $22.50 2,000 2.8 years $21.31 2,000 $21.31
$27.81 - $29.97 233,719 6.4 years $28.86 131,500 $28.00
$31.75 - $33.95 223,500 8.7 years $33.60 38,500 $32.73
$36.03 - $37.69 84,000 6.0 years $36.22 45,500 $36.24
------- --------- ------ ------- ------
543,219 7.3 years $31.92 217,500 $30.50
======= ========= ====== ======= ======
F-34
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 329,996,
251,030 and 313,964 shares of Common Stock at an exercise
price of $34.73, $29.97 and $31.69 respectively, were
granted in 2001, 2000 and 1999, respectively. The estimated
fair value of the TSOs granted was $2.21 in 2001, $1.49 in
2000 and $1.36 in 1999. None of the TSOs granted have
vested. In addition, 16,575 of the 329,996 shares granted
in 2001, 56,524 of the 251,030 shares granted in 2000 and
86,198 of the 313,964 shares granted in 1999 have been
forfeited through December 31, 2001.
The fair value of each option grant for 2001, 2000 and 1999
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:
2001 2000 1999
-------- -------- ----
Risk-free interest rate 4.79% 6.19% 5.21%
Dividend yield 6.46% 6.86% 7.22%
Expected life 4.6 years 5.2 years 4.6 years
Expected volatility 19.48% 18.2% 20.0%
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 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 or last
trading day of the purchase period. Purchases of stock
under the ESPP are made on the first business day of the
next month after the close of the purchase period. As of
February 6, 2002, an aggregate of 157,369 shares of Common
Stock have been sold under the ESPP, including 23,105
shares for the purchase period ending December 31, 2001
which were purchased on January 2, 2002 at a price of
$32.94 per share.
F-35
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
Stock Option Pro Forma Data
The Company has applied Accounting Principles Board Opinion
25 in accounting for the Stock Incentive Plan, the 1998
Incentive Plan and the Employee Stock Purchase Plan as
provided by Interpretation 44 as defined and further
described in Note 13. Accordingly, no compensation costs
have been recognized in 2001 and 1999 and, pursuant to the
provisions of Interpretation 44, only compensation costs
related to Stock Options granted from July 1, 2000 to
December 31, 2000 were recorded. Had compensation costs for
the Company's plans been determined based on the fair value
at the grant date for options granted in 2001, 2000 and 1999
in accordance with the method required by Statement of
Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation" the Company's net income available
to common stockholders and earnings per share would have
been reduced to the pro forma amounts as follows:
Year Ended December 31,
2001 2000 1999
---- ---- ----
Net income available to common stockholders
As Reported $67,843 $113,481 $76,658
Pro Forma $67,511 $113,081 $76,160
Earnings per share - basic
As Reported $1.28 $ 2.18 $ 1.67
Pro Forma $1.28 $ 2.17 $ 1.66
Earnings per share - diluted
As Reported $1.28 $ 2.18 $ 1.66
Pro Forma $1.28 $ 2.17 $ 1.65
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 defer a portion of their
compensation in accordance with the provisions of Section
401(k) of the Internal Revenue Code of 1986, as amended (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, 2001, 2000 and 1999, the Company made matching
contributions of approximately $4,353, $3,554 and $2,891,
respectively.
NOTE 10 On December 10, 2001, DISTRIBUTIONS the Company declared a
PAYABLE cash distribution of $.65 per share that was paid on January 31,
2002, to stockholders of record (1,481 owners of record) on
January 14, 2002, totaling $40,266. Also on January 14, 2002, a
distribution of $12,722 was paid to the limited partners of the
Operating Partnership. Also on December 10, 2001, the Company
declared the fourth quarter 2001 preferred stock dividend, for
the period from October 1, 2001 through December 31, 2001, in
the amount of $0.4531 per share, payable to preferred
stockholders of record on January 4, 2002 and paid on January
15, 2002. 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 15, 2000, the Company declared a cash
distribution of $.53 per share that was paid on January 31,
2001, to stockholders 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. Also on
December 15, 2000, 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.
F-36
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
The allocations of the common distributions declared and
paid for income tax purposes are as follows:
Year Ended December 31,
2001 2000 1999
---- ---- ----
Ordinary Income 76.0% 92.2% 66.0%
Capital Gain --% --% 3.0%
Return of Capital 24.0% 7.8% 31.0%
----- ------ --------
100.0% 100.0% 100.0%
====== ====== ======
NOTE 11 The Company has installed a broadband wiring and routing
NETWORK system that would provide tenants at the Company's
DISCONTINUANCE properties with the
COSTS AND OTHER supporting equipment (the "Broadband System") to allow
INTERNET such tenants and mall locations to arrange high-speed
INITIATIVES cable access to the Internet.
Since early 2000, the Company had also been engaged in
Network Services development activities, an effort to create
for retailers a suite of broadband applications to support
retail tenant operations, on-line sales, and private wide
area network services to be delivered by the Broadband
System. As of December 31, 2000, the Company had invested
approximately $66,000 in the Broadband System and
approximately $18,000 in Network Services development
activities, all of which was reflected in buildings and
equipment in the accompanying consolidated financial
statements. The Company discontinued its Network Services
development activities on June 29, 2001, as retailer demand
for such services had not developed as anticipated. The
discontinuance of the Network Services development
activities resulted in a non-recurring, pre-tax charge to
second quarter 2001 earnings of $65,000. The $65,000 charge
was comprised of an approximate $11,800 reduction in the
carrying value of equipment that was intended to allow
tenants access to the Network Services applications and
approximately $53,200 in the write-off of capitalized
Network development costs as follows: approximately $17,400
in obligations to various vendors including amounts related
to the termination of contracts which provide no future
benefit to the Company, approximately $10,600 in private
wide area network equipment that is deemed without value,
approximately $25,200 in capitalized network development
costs including third-party consultants, internal payroll,
supplies and equipment for the design, configuration and
installation costs of private wide area network equipment;
various costs related to the development of Mallibu.com, a
consumer Internet portal; and related consumer-direct
e-commerce initiatives. In addition, the Company recognized
$1,000 of net incremental discontinuance costs in the third
quarter of 2001. This third quarter amount was comprised of
approximately $1,366 of incremental discontinuance costs
(primarily payroll and severance costs) and approximately
$366 of reduction in the Network discontinuance reserve.
Such reduction in the Network discontinuance reserve was
primarily due to the settlement of obligations to Network
Services vendors and consultants at amounts lower than
originally contracted for. Settlement discussions are
continuing with other vendors and the Company will further
reduce the Network discontinuance reserve as additional
settlements are agreed to (expected to be finalized in the
next 12 months).
F-37
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
The following table summarizes the amounts capitalized by
the Company and the related charge:
Total
-----
Balance at December 31, 2000 $84,451
Additions (Cash) 44,071
Additions (Non-cash)* 5,161
Write off of Network Services Activities (66,000)
Depreciation and amortization of Broadband System costs ( 6,663)
---------
Ending Balance at December 31, 2001 $61,020
=========
---------------
*Reflected in the accompanying consolidated financial
statements as approximately $5,161 in Network discontinuance
reserve.
The Company's investment in the Broadband System, which is
comprised primarily of mall equipment and mall wiring, is
being retained by the Company. The Company has made a
cumulative investment of approximately $67,683 in the
Broadband System as of December 31, 2001, which has been
reflected in buildings and equipment and investment in
Unconsolidated Real Estate Affiliates in the accompanying
consolidated financial statements as detailed below.
Although no direct revenue is currently being generated from
the Broadband System, the Company anticipates that revenues
will be recognized in future periods either from the sale of
such access or increased rents for the Company's retail
spaces.
The following represents the Company's net carrying values
for the Broadband System:
December 31, 2001
-------------------------------------------------
Investments in
Building Unconsolidated Totals
and equipment Real Estate Affiliates
Mall Wiring and Equipment $ 36,349 $ 31,334 $ 67,683
less Accumulated Depreciation (3,439) (3,224) (6,663)
------------ --------------- ---------
$ 32,910 $ 28,110 $ 61,020
============ =============== =========
NOTE 12 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.
F-38
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
The Company leases land or buildings at certain properties
from third parties. Rental expense including participation
rent related to these leases was $664, $460 and $375 for the
years ended December 31, 2001, 2000 and 1999, 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.
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 13 RECENTLY
ISSUED
ACCOUNTING
PRONOUNCEMENTS
On June 1, 1998 the FASB issued Statement No. 133
"Accounting for Derivative Instruments and Hedging
Activities" ("Statement 133"). 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 activities are the cash flow hedges
represented by its interest rate cap and swap agreements
relating to its commercial mortgage-backed securities (Note
5). These agreements either place a limit on the effective
rate of interest the Company will bear on such variable rate
obligations or fix the effective interest rate on such
obligations to a certain rate. The Company has concluded
that these agreements are highly effective in achieving its
objective of eliminating its exposure to variability in cash
flows relating to these variable rate obligations in any
interest rate environment for loans subject to swap
agreements and for loans with related cap agreements, when
LIBOR rates exceed the strike rates of the agreements.
However, Statement 133 also requires that the Company fair
value the interest rate cap and swap agreements as of the
end of each reporting period. Interest rates have declined
since these agreements were obtained. The Company adopted
Statement 133 January 1, 2001. In accordance with the
transition provisions of Statement 133, the Company recorded
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 also
recorded $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.
During 2001, the Company recorded approximately $2,389 of
additional other comprehensive income to reflect 2001
changes in the fair value of its interest rate cap and swap
agreements.
In conjunction with the GGP MPTC financing (Note 5), all of
the debt hedged by the Company's then existing interest rate
cap agreements was refinanced. As the related fair values of
the previous cap agreements were nominal on the refinancing
date, these cap agreements were not terminated and any
subsequent changes in the fair value of these cap agreements
will be reflected in interest expense. Further, certain caps
were purchased and sold in conjunction with GGP MPTC
financing. These purchased and sold caps do not qualify for
hedge accounting and changes in the fair values of these
agreements will also be reflected in interest expense.
Finally, certain interest rate swap agreements were entered
into to partially fix the interest rates on a portion of the
GGP MPTC financing. These swap agreements have been
designated as cash flow hedges on $666,933 of the Company's
consolidated variable rate debt (see also Note 4).
F-39
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
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 applies 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 with no significant 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 as discussed in Note 1, those individuals who are
employed by GGMI are now considered to be employees of General Growth
for the purposes of accounting for stock option grants in 2001 and
subsequent years.
In July 2001, the FASB issued Statement No. 141, "Business
Combinations", ("SFAS 141") and Statement No. 142 "Goodwill and Other
Intangible Assets", ("SFAS 142"). SFAS 141 requires the purchase
method to be used for business combinations initiated after June 30,
2001. As the Company has never engaged in a pooling acquisition
transaction and its customary acquisitions are of individual assets or
malls rather than operating businesses, the Company does not
anticipate that SFAS 141 will have a significant impact on its current
or future operations or financial results. SFAS 142 requires that
goodwill no longer be amortized to earnings, but instead reviewed for
impairment, when the statement is required to be adopted on January 1,
2002. The Company does not believe the impact of the adoption of SFAS
142 will be significant.
In August 2001, the FASB issued Statement No. 143 "Accounting for
Asset Retirement Obligations", ("SFAS 143"). SFAS 143 addresses the
financial accounting and reporting for asset retirement costs and
related obligations and is effective for fiscal years beginning after
June 15, 2002. The Company does not believe the impact of the adoption
of SFAS 143 will be significant.
In October 2001, the FASB issued Statement No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS
144 develops one accounting model (based on the model in SFAS 121) for
long-lived assets (including discontinued operations) that are to be
held or disposed of by sale, as well as addresses certain discontinued
operations issues. SFAS 144 is effective for financial statements
issued for fiscal years beginning after December 15, 2001. As the
Company does not generally hold its properties for sale and has
historically not had significant operations that have been accounted
for as "discontinued operations", the Company does not anticipate that
SFAS 144 will have a significant impact on its current or future
operations or financial results.
In February 2002, the FASB announced the rescission of Statement No. 4
"Reporting Gains and Losses from Extinguishment of Debt" Generally,
such rescission has the effect of suspending the treatment of debt
extinguishment costs as extraordinary items. The rescission is
effective for the year ended December 31, 2003. Accordingly, in the
comparative statements presented in the year of adoption, the Company
will reclass approximately $14,022 of debt extinguishment costs
recorded for 2001 that are classified under current accounting
standards as extraordinary items to other interest costs.
F-40
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 14 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Year Ended First Second Third Fourth
December 31, 2001 Quarter Quarter Quarter Quarter
------------------ ------- ------- ------- -------
Total revenues $191,970 $189,542 $196,269 $225,928
Operating income 86,032 15,260 89,937 105,285
Income (loss) before extraordinary items and
cumulative effect of accounting change 30,071 (17,630) 35,609 61,616
Net income (loss) applicable to common shares 20,620 (24,758) 29,239 42,742
Earnings (loss) before extraordinary items and
cumulative effect of accounting change
per share-basic (a) $ 0.46 (0.45) 0.56 1.03
Earnings (loss) before extraordinary items
and cumulative effect of accounting change
per share-diluted (a) 0.46 (0.45) 0.56 1.03
Earnings (loss) per share - basic (a) 0.39 (0.47) 0.56 0.79
Earnings (loss) per share - diluted (a) 0.39 (0.47) 0.56 0.79
Distributions declared per share $ 0.53 $ 0.53 $ 0.65 $ 0.65
Weighted average shares
outstanding (in thousands) - basic 52,365 52,413 52,596 53,990
Weighted average shares
outstanding (in thousands) - diluted 52,444 52,507 52,662 54,067
Year Ended First Second Third Fourth
December 31, 2000 Quarter Quarter Quarter Quarter
----------------- ------- ------- ------- -------
Total revenues $162,483 $165,026 $173,286 $197,972
Operating income 76,636 81,969 85,328 108,937
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 items
per share-basic (a) $ 0.43 $ 0.42 $ 0.48 $ 0.85
Earnings before extraordinary items
per share-diluted (a) 0.43 0.42 0.48 0.85
Earnings per share - basic (a) 0.43 0.42 0.48 0.85
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
(a) Earnings (loss) 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-41
GENERAL GROWTH PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except for per share amounts)
NOTE 15 On March 3, 2002, the Company entered into a definitive
SUBSEQUENT EVENT merger agreement with JP Realty, Inc., a publicly held real
estate investment trust. The acquisition price will be
approximately $1,100, which includes the assumption of
approximately $460 of existing debt and approximately $116
in existing preferred operating units. Each outstanding
share of JP Realty common stock will be converted into
$26.10 cash and each common unit of limited partnership
interest in JP Realty's operating partnership subsidiary
will receive $26.10 in cash or, at the election of the
holder, .522 units of newly created Series B preferred units
of the Operating Partnership. The acquisition, which is
expected to occur in the second quarter of 2002, involves 50
properties including 18 enclosed regional malls, 25
community centers, 1 free standing retail property and 6
mixed-use commercial/business properties in 10 western
states. However, the transaction is subject to certain
closing conditions including approval by the stockholders of
JP Realty.
F-42
Independent Auditors' Report on
Financial Statement Schedule
Board of Directors and Stockholders
General Growth Properties, Inc.
We have audited the consolidated financial statements of General Growth
Properties, Inc. (the "Company") as of December 31, 2001, and for the year then
ended, and have issued our report thereon dated February 6, 2002 (March 3, 2002
as to Note 15); such financial statements and report are included elsewhere in
this Form 10-K. Our audit also included the Reconciliation of Real Estate and
Reconciliation of Accumulated Depreciation for the year ended December 31, 2001
of the financial statement schedule of the Company, listed in the Index to
Consolidated Financial Statements and Consolidated Financial Statement Schedule
on page F-1 of this Form 10-K. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audit. In our opinion, such financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
Deloitte & Touche LLP
Chicago, Illinois
February 6, 2002
F-43
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 appearing in this Annual Report on Form 10-K of General
Growth Properties, Inc. also included an audit of the Reconciliation of Real
Estate and Reconciliation of Accumulated Depreciation for each of the two years
in the period ended December 31, 2000 of the financial statement schedule listed
in the Index to Consolidated Financial Statements and Consolidated Financial
Statement Schedule of this Form 10-K. In our opinion, based on our audits, the
Reconciliation of Real Estate and Reconciliation of Accumulated Depreciation for
each of the two years in the period ended December 31, 2000 of the financial
statement schedule listed in the Index to Consolidated Financial Statements and
Consolidated Financial 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-44
GENERAL GROWTH PROPERTIES, INC.
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2001
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 (a) Land (b) Improvements Costs (c) Land Improvements Total(c)(d)
------------------------ ------------ ----------- ------------ ------------ --------- ----------- ------------ ------------
Ala Moana Combined
Honolulu, HI 642,275,669 336,229,260 473,770,740 3,647,175 5,685.073 336,229,497 483,102,988 819,332,485
Apache Mall
Rochester, MN 55,583,346 8,110,292 72,992,628 4,361,643 0 8,110,292 77,354,271 85,464,563
Baybrook Mall
Friendswood, TX 93,173,250 13,300,000 117,162,546 4,642,596 0 13,300,000 121,805,142 135,105,142
Bayshore Mall,
Eureka, CA 34,217,304 3,004,345 27,398,907 24,683,533 2,887,090 3,005,040 54,969,530 57,974,570
Bellis Fair Mall,
Bellingham, WA 72,122,388 7,616,458 47,040,131 10,674,314 6,122,020 7,485,224 63,836,465 71,321,689
Birchwood Mall,
Port Huron, MI 43,396,941 1,768,935 34,574,635 12,632,977 1,980,603 3,045,616 49,188,215 52,233,831
Boulevard Mall
Las Vegas, NV 100,181,545 16,490,343 148,413,086 4,882,898 0 16,490,343 153,295,984 169,786,327
Capital Mall
Jefferson City, MO 22,163,392 4,200,000 14,201,000 8,072,548 0 3,912,935 22,273,548 26,186,483
Century Mall
Birmingham, AL 0 3,164,000 28,513,908 4,378,737 0 3,164,000 32,892,645 36,056,645
Chapel Hills
Colorado
Springs, CO 36,275,538 4,300,000 34,017,000 60,248,333 36,805 4,300,000 94,302,138 98,602,138
Coastland Center
Naples, FL 84,669,396 11,450,000 103,050,200 4,098,534 0 11,450,000 107,148,734 118,598,734
Colony Square Mall
Zanesville, OH 25,600,000 1,000,000 24,500,000 15,885,950 0 1,243,184 40,385,950 41,629,134
Columbia Mall
Columbia, MO 56,100,000 5,383,208 19,663,231 15,191,303 1,368,803 5,383,208 36,223,337 41,606,545
Coral Ridge Mall
Coralville, IA 78,982,915 3,363,602 64,217,772 9,898,887 4,420,355 3,381,564 78,537,014 81,918,578
Crossroads (MI)
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 37,739,295 1999 (e)
Apache Mall
Rochester, MN 6,761,237 1998 (e)
Baybrook Mall
Friendswood, TX 6,763,788 1999 (e)
Bayshore Mall,
Eureka, CA 19,241,253 1986-1987 (e)
Bellis Fair Mall,
Bellingham, WA 25,494,998 1987-1988 (e)
Birchwood Mall,
Port Huron, MI 17,114,853 1989-1990 (e)
Boulevard Mall
Las Vegas, NV 13,626,317 1998 (e)
Capital Mall
Jefferson City, MO 5,007,301 1993 (e)
Century Mall
Birmingham, AL 3,891,809 1997 (e)
Chapel Hills
Colorado
Springs, CO 16,597,024 1993 (e)
Coastland Center
Naples, FL 8,762,428 1998 (e)
Colony Square Mall
Zanesville, OH 14,537,079 1986 (e)
Columbia Mall
Columbia, MO 15,007,604 1984-1985 (e)
Coral Ridge Mall
Coralville, IA 8,738,636 1998-1999 (e)
Crossroads (MI)
F-45
GENERAL GROWTH PROPERTIES, INC.
Kalamazoo, MI 44,021,921 6,800,000 61,200,000 14,265,513 41,616 6,800,000 75,507,129 82,307,129
Crossroads Center
St. Cloud, MN 0 10,851,689 72,202,847 2,090,047 209,018 11,208,729 74,501,912 85,710,641
Kalamazoo, MI 5,050,869 1999 (e)
Crossroads Center
St. Cloud, MN 3,061,981 2000 (e)
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 (a) Land (b) Improvements Costs(c) Land Improvements Total(c)(d)
----------------------- ------------ ---------- ------------ ------------ ---------- ---------- ------------ ------------
Cumberland Mall
Atlanta, GA 97,882,147 15,198,568 136,787,110 4,709,268 77,583 15,198,568 141,573,961 156,772,529
Development in Progress 0 0 121,465,170 (64,028,739) 0 0 57,436,431 57,436,431
Eagle Ridge Mall
Lake Wales, FL 0 7,619,865 49,560,538 6,661,469 5,678,662 7,621,768 61,900,669 69,522,437
Eden Prairie Mall
Eden Prairie, MN 0 465,063 19,024,047 98,416,950 4,591,247 465,063 122,032,244 122,497,307
Fallbrook Mall,
West Hills, CA 46,900,000 6,117,338 10,076,520 56,901,512 4,693,078 6,127,138 71,671,110 77,798,248
Fox River Mall
Appleton, WI 93,200,000 2,700,566 18,291,067 35,357,987 2,025,925 4,787,291 55,674,979 60,462,270
Gateway Mall,
Springfield, OR 43,436,220 8,728,263 34,707,170 19,762,738 7,642,587 8,749,088 62,112,495 70,861,583
GGPLP Corp.
Chicago, IL 207,000,000 0 556,740 49,758,561 0 0 50,315,301 50,315,301
110 Building
Chicago, IL 26,694,143 0 29,035,310 2,184,058 0 0 31,219,368 31,219,368
Grand Traverse Mall,
Grand Traverse, MI 50,835,108 3,529,966 20,775,772 21,838,857 3,643,793 3,533,745 46,258,422 49,792,167
Greenwood Mall
Bowling Green, KY 48,766,423 3,200,000 40,202,000 19,213,539 0 3,431,918 59,415,539 62,847,457
Knollwood Mall,
St. Louis Park, MN 0 0 9,748,047 24,895,840 2,867,530 7,025,606 37,511,417 44,537,023
Lakeview Square Mall
Battle Creek, MI 25,465,587 3,578,619 32,209,980 14,962,185 42,469 3,578,619 47,214,634 50,793,253
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 12,337,025 1998 (e)
Development in Progress 0
Eagle Ridge Mall
Lake Wales, FL 10,434,054 1995-1996 (e)
Eden Prairie Mall
Eden Prairie, MN 4,394,533 1997
Fallbrook Mall,
West Hills, CA 27,934,988 1984 (e)
Fox River Mall
Appleton, WI 20,690,575 1983-1984 (e)
Gateway Mall,
Springfield, OR 19,967,562 1989-1990 (e)
GGPLP Corp.
Chicago, IL 13,875,807 (e)
110 Building
Chicago, IL 3,127,906 1997 (e)
Grand Traverse Mall,
Grand Traverse, MI 15,873,623 1990-1991 (e)
Greenwood Mall
Bowling Green, KY 14,603,235 1993 (e)
Knollwood Mall,
St. Louis Park, MN 15,858,577 1978 (e)
Lakeview Square Mall
Battle Creek, MI 5,577,665 1996 (e)
F-46
GENERAL GROWTH PROPERTIES, INC.
Lansing Mall
Lansing, MI 30,030,398 6,977,798 62,800,179 11,799,121 182,298 6,977,798 74,781,598 81,759,396
Lockport Mall,
Lockport, NY 9,300,000 800,000 10,000,000 4,301,489 23,656 800,000 14,325,145 15,125,145
Lansing Mall
Lansing, MI 9,134,984 1996 (e)
Lockport Mall,
Lockport, NY 5,618,636 1986 (e)
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 (a) Land (b) Improvements Costs (c) Land Improvements Total(c)(d)
---------------------- ------------ ---------- ------------ ------------ ----------- ---------- ------------ ------------
Mall of the Bluffs,
Council Bluffs, IA 43,396,941 1,860,116 24,016,343 15,812,545 2,529,093 1,895,220 42,357,981 44,253,201
Mall St. Vincent
Shreveport, LA 18,573,688 2,640,000 23,760,000 4,522,637 0 2,640,000 28,282,637 30,922,637
Marketplace
Champaign, IL 47,000,000 7,000,000 63,972,357 36,715,247 86,705 7,000,000 100,774,309 107,774,309
McCreless Mall
San Antonio, TX 0 1,000,000 9,000,002 711,531 0 1,000,000 9,711,533 10,711,533
MEPC Corp.
Chicago, IL 0 0 (1,549,401) 0 0 0 (1,549,401) (1,549,401)
Northridge Fashion
Center
Northridge, CA 139,333,432 16,618,095 149,562,583 25,479,771 2,977,145 16,884,326 178,019,499 194,903,825
Oakwood Mall,
Eau Claire, WI 57,862,588 3,266,669 18,281,160 21,640,333 1,711,573 3,617,262 41,633,066 45,250,328
Park Mall
Tucson, AZ 100,495,593 4,996,024 44,993,177 97,388,605 5,438,192 4,715,836 147,819,974 152,535,810
Piedmont Mall,
Danville, VA 30,148,678 2,000,000 38,000,000 5,030,782 20,787 2,000,000 43,051,569 45,051,569
Pierre Bossier Mall
Bossier City, LA 40,411,286 5,280,707 47,558,468 4,517,187 0 5,283,970 52,075,655 57,359,625
The Pines,
Pine Bluff, AR 26,404,644 1,488,928 17,627,258 10,737,087 1,365,091 1,247,414 29,729,436 30,976,850
Regency Square Mall
Jacksonville, FL 86,049,352 16,497,552 148,477,968 10,507,182 0 16,456,452 158,985,150 175,441,602
Rio West Mall,
Gallup, NM 13,500,000 0 19,500,000 5,491,177 0 0 24,991,177 24,991,177
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
------------------------ ------------ ------------ -------- ---------------
Mall of the Bluffs,
Council Bluffs, IA 15,581,498 1985-1986 (e)
Mall St. Vincent
Shreveport, LA 2,526,704 1998 (e)
Marketplace
Champaign, IL 9,905,792 1997 (e)
McCreless Mall
San Antonio, TX 894,527 1998 (e)
MEPC Corp.
Chicago, IL 37,157
Northridge Fashion
Center
Northridge, CA 14,703,128 1998 (e)
Oakwood Mall,
Eau Claire, WI 15,342,361 1985-1986 (e)
Park Mall
Tucson, AZ 10,044,200 1996 (e)
Piedmont Mall,
Danville, VA 7,027,298 1995 (e)
Pierre Bossier Mall
Bossier City, LA 4,388,459 1998 (e)
The Pines,
Pine Bluff, AR 11,519,510 1985-1986 (e)
Regency Square Mall
Jacksonville, FL 13,552,943 1998 (e)
Rio West Mall,
Gallup, NM 8,768,478 1986 (e)
F-47
River Falls Mall,
Clarksville, IN 0 3,177,688 54,610,421 7,881,505 5,281,892
River Hills Mall,
Mankato, MN 51,200,000 3,713,529 29,013,757 18,335,639 2,662,102
Riverlands Shopping Center
LaPlace, LA 0 500,000 4,500,000 200,693 0
River Falls Mall,
Clarksville, IN 3,182,305 67,773,818 70,956,123 25,539,634 1989-1990 (e)
River Hills Mall,
Mankato, MN 4,707,482 50,011,498 54,718,980 16,288,834 1990-1991 (e)
Riverlands Shopping Center
LaPlace, LA 500,000 4,700,693 5,200,693 484,103 1998 (e)
F-48
Costs Capitalized
Subsequent
Initial Cost To Acquisition
------------------------------ -----------------------------
Buildings
and
Encumbrances Improvements Carrying
Description (a) Land (b) Improvements Costs (c)
------------------------ -------------- ------------ -------------- ------------ -----------
Rivertown Crossing
Grandville, MI 129,511,696 10,972,923 97,141,738 30,321,159 13,159,575
Sooner Fashion Mall,
Norman, OK 20,000,000 2,700,000 24,300,000 15,061,684 0
Southlake Mall,
Morrow, GA 51,300,000 6,700,000 60,406,902 11,114,616 0
SouthShore Mall,
Aberdeen, WA 0 650,000 15,350,000 2,911,571 0
Southwest Plaza
Littleton, CO 82,841,400 9,000,000 103,983,673 11,337,140 564,887
Spring Hill
West Dundee, IL 88,563,257 12,400,000 111,643,525 5,487,900 0
Tucson Mall
Tucson, AZ 113,057,542 0 181,424,484 1,171,195 0
Valley Hills,
Harrisonburg, VA 34,342,506 3,443,594 31,025,471 34,770,165 169,540
Valley Plaza Shopping Center
Bakersfield, CA 81,652,670 12,685,151 114,166,356 (4,500,452) 0
West Valley Mall,
Tracy, CA 53,388,284 9,295,045 47,789,310 14,327,722 7,886,196
Westwood Mall
Jackson, MI 20,900,000 2,658,208 23,923,869 4,503,917 0
-------------- ------------ -------------- ------------ -----------
Grand Totals $3,398,207,188 $636,492,407 $3,440,637,702 $897,868,361 $98,072,989
============== ============ ============== ============ ===========
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
------------------------ ----------- -------------- -------------- ------------ ------------ -------- ---------------
Rivertown Crossing
Grandville, MI 7,246,462 140,622,472 147,868,934 9,181,596 1998-1999 (e)
Sooner Fashion Mall,
Norman, OK 2,580,578 39,361,684 41,942,262 4,479,597 1996 (e)
Southlake Mall,
Morrow, GA 6,700,000 71,521,518 78,221,518 7,292,119 1997 (e)
SouthShore Mall,
Aberdeen, WA 650,000 18,261,571 18,911,571 7,935,089 1986 (e)
Southwest Plaza
Littleton, CO 9,000,000 115,885,700 124,885,700 10,704,748 1998 (e)
Spring Hill
West Dundee, IL 12,400,000 117,131,425 129,531,425 10,440,294 1998 (e)
Tucson Mall
Tucson, AZ 0 182,595,679 182,595,679 1,717,668 2001 (e)
Valley Hills,
Harrisonburg, VA 5,656,275 65,965,176 71,621,451 4,860,786 1997 (e)
Valley Plaza Shopping Center
Bakersfield, CA 12,685,151 109,665,904 122,351,055 9,695,099 1998 (e)
West Valley Mall,
Tracy, CA 10,885,507 70,003,228 80,888,735 11,572,603 1995 (e)
Westwood Mall
Jackson, MI 3,571,208 28,427,786 31,998,994 3,676,463 1996 (e)
------------ -------------- -------------- ------------
Grand Totals $649,311,682 $4,436,579,052 $5,085,890,734 $624,986,330
============ ============== ============== ============
F-49
GENERAL GROWTH PROPERTIES, INC.
F-50
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 $4,027,382.
Reconciliation of Real Estate
-----------------------------
1999 2000 2001
------ ------ ------
Balance at beginning of year $ 3,676,796 $ 4,326,551 $ 4,676,740
Additions: 1,238,874 350,189 352,186
Other additions/(reductions): (589,119) -- 56,965
----------- ----------- -----------
Balance at close of year $ 4,326,551 $ 4,676,740 $ 5,085,891
=========== =========== ===========
Reconciliation of Accumulated Depreciation
------------------------------------------
1999 2000 2001
------ ----- ----
Balance at beginning of year $ 301,789 $ 376,673 $ 488,130
Depreciation Expense 105,046 111,457 128,682
Other additions/(reductions): (30,162) -- 8,174
---------- ---------- ----------
Balance at close of year $ 376,673 $ 488,130 $ 624,986
========== ========== ==========
(e) 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-51
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)
S-1
GENERAL GROWTH PROPERTIES, INC.
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"). (18)
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)
2(o) Purchase and Sale Agreement dated as of August 7, 2001 by and between
Oracle-Wetmore Co. and GGP-Tucson Mall, L.L.C. (27)
2(p) Purchase and Sale Agreement dated as of August 7, 2001 by and between
TMall-WN, L.L.C. and GGP-Tucson Mall, L.L.C. (27)
2(q) Purchase and Sale Agreement dated as of August 7, 2001 by and between
JCP Realty, Inc. and GGP-Tucson Mall, L.L.C. (27)
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)
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)
S-2
GENERAL GROWTH PROPERTIES, INC.
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)
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)
S-3
GENERAL GROWTH PROPERTIES, INC.
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) Amendment, dated May 8, 2001, to 1993 Stock Incentive Plan, as
amended. (27)
10(e) Form of Amended and Restated Agreement of Partnership for each of the
Property Partnerships.(2)
10(f) Form of Indemnification Agreement between the Operating Partnership,
Martin Bucksbaum, Matthew Bucksbaum, Mall Investment L.P. and M. Bucksbaum
Company. (2)
10(g) Form of Registration Rights Agreement between the Company and the
Bucksbaums. (2)
10(h) Form of Registration Rights Agreement between the Company and certain
trustees for the IBM Retirement Plan. (2)
10(i) Form of Incidental Registration Rights Agreement between the Company,
Equitable, Frank Russell and Wells Fargo.(2)
10(j) Form of Letter Agreements restricting sale of certain shares of
Common Stock.(2)
10(k)* Letter Agreement dated October 14, 1993, between the Company and
Bernard Freibaum.(4)
10(l)* Form of Option Agreement between the Company and certain Executive
Officers.(8)
10(m)* General Growth Properties, Inc. 1998 Incentive Stock Plan.(16)
10(n) Amended and Restated Operating Agreement of GGPLP L.L.C. dated as of May
25, 2000. (22)
10(o) Amendment, dated May 9, 2000, to 1998 Stock Incentive Plan. (28)
10(p) Registration Rights Agreement dated May 25, 2000 between General
Growth Properties, Inc. and Goldman Sachs 2000 Exchange Place Fund, L.P. (23)
10(q) 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"). (24)
10(r) Promissory Note dated July 31, 2000 made by Borrower in favor of BT.
(24)
10(s) Promissory Note dated July 31, 2000 made by Borrower in favor of
Lehman. (24)
10(t) Joinder Agreement, dated as of September 1, 2000, between Bayerische
Hypo-Und Vereinsbank AG, New York Branch ("Hypo") and Borrower. (24)
10(u) Promissory Note dated September 1, 2000 made by Borrower in favor of
Hypo. (24)
10(v) Joinder Agreement, dated as of September 22, 2000, between Fleet
National Bank ("Fleet") and Borrower. (24)
10(w) Promissory Note dated September 22, 2000 made by Borrower in favor of
Fleet. (24)
10(x) First Amendment to Term Loan Agreement, dated as of September 22,
2000, among Borrower and BT, Lehman, Hypo and Fleet. (24)
10(y) Lender Addendum, dated as of October 20, 2000, between Lehman,
Borrower and BT. (24)
S-4
GENERAL GROWTH PROPERTIES, INC.
10(z) Replacement Note dated October 20, 2000 made by Borrower in favor of
Lehman. (24)
10(aa) Joinder Agreement, dated as of December 28, 2000, between The Chase
Manhattan Bank ("Chase"), Borrower, BT and Lehman. (24)
10(bb) Promissory Note dated December 28, 2000 made by Borrower in favor of
Chase. (24)
10(cc) Second Amendment to Term Loan Agreement, dated as of December 28,
2000, among Borrower and BT, Lehman, Fleet and Chase. (24)
10(dd) Third Amendment to Term Loan Agreement, dated as of June 11, 2001,
executed by Borrower and BT, Lehman, Hypo, Fleet, Chase and Comerica Bank. (29)
10(ee) Joinder Agreement, dated as of August 1, 2001 between Commerzbank
AG, New York and Grand Cayman Branches ("Commerzbank"), Borrower, BT and Lehman.
(28)
10(ff) Promissory Note dated August 1, 2001 made by Borrower in favor of
Commerzbank. (28)
10(gg) 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"). (24)
10(hh) Promissory Note dated July 31, 2000 made by Borrower in favor of
BofA. (24)
10(ii) Promissory Note dated July 31, 2000 made by Borrower in favor of
Dresdner. (24)
10(jj) Promissory Note dated July 31, 2000 made by Borrower in favor of
USB. (24)
10(kk) Joinder to Revolving Credit Agreement, dated as of September 1,
2000, among Hypo, Borrower, BofA, Dresdner and USB. (24)
10(ll) Promissory Note dated September 1, 2000 made by Borrower in favor of
Hypo. (24)
10(mm) First Amendment to Revolving Credit Agreement, dated as of June 7,
2001, executed by Borrower, BofA, Dresdner, USB and Hypo. (29)
10(nn) Joinder to Revolving Credit Agreement, dated as of August 10, 2001,
executed by Commerzbank, as consented to by Borrower, BofA, Dresdner, USB and
Hypo. (29)
10(oo) Promissory Note dated August 16, 2001 made by Borrower in favor of
Commerzbank. (29)
10(pp) Revolving Credit Agreement, dated as of January 30, 2001, among
General Growth Management, Inc. and GGPLP L.L.C. (collectively, "Borrower"),
BofA, USB, and LaSalle Bank National Association ("LaSalle"). (26)
10(qq) Promissory Note dated January 30, 2001 made by Borrower in favor of
BofA. (26)
10(rr) Promissory Note dated January 30, 2001 made by Borrower in favor of
USB. (26)
10(ss) Promissory Note dated January 30, 2001 made by Borrower in favor of
LaSalle. (26)
10(tt) First Amendment to Revolving Credit Agreement, dated as of June 7,
2001, executed by Borrower, BofA, USB and LaSalle. (29)
16. Letter of Pricewaterhouse Coopers LLP dated April 11, 2001 regarding change
in certifying accountant. (25)
S-5
GENERAL GROWTH PROPERTIES, INC.
21. List of Subsidiaries of General Growth Properties, Inc.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG LLP.
23.3 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.
(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.
S-6
GENERAL GROWTH PROPERTIES, INC.
(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.
(24) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 2000, incorporated herein by reference.
(25) Previously filed as an exhibit to the Company's Current Report on Form
8-K, as amended, dated April 11, 2001, incorporated herein by reference.
(26) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q dated May 10, 2001, incorporated herein by reference.
(27) Previously filed as an exhibit to the Company's Current Report on Form
8-K, dated August 30, 2001, incorporated herein by reference.
(28) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q dated August 13, 2001, incorporated herein by reference.
(29) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q dated November 9, 2001, incorporated herein by reference.
S-7