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Press release from PR Newswire

GGP Reports Second Quarter 2013 Results

Monday, July 29, 2013

GGP Reports Second Quarter 2013 Results

17:01 EDT Monday, July 29, 2013

FFO Per Share Increases 18.1%; Raises Full Year Guidance and Quarterly Dividend

CHICAGO, July 29, 2013 /PRNewswire/ -- General Growth Properties, Inc. (the "Company") (NYSE: GGP) today reported results for the three and six months ended June 30, 2013.

Financial Results

For the Three Months Ended June 30, 2013Company Funds from Operations ("Company FFO") per share increased 18.1% to $0.27 per diluted share from $0.23 per diluted share in the prior year period.  Company FFO increased 17.0% to $267 million from $228 million in the prior year period.

Company Earnings Before Interest, Taxes, Depreciation and Amortization ("Company EBITDA") increased 5.2% to $503 million from $478 million in the prior year period.

Net Operating Income for the mall portfolio ("Mall NOI") increased 6.7% to $538 million from $504 million in the prior year period; comparable Net Operating Income for the U.S. Regional Mall Portfolio ("Same Store NOI") increased 6.8% to $514 million from $481 million in the prior year period.

Net income attributable to General Growth Properties, Inc., which is impacted primarily by depreciation expense and a gain from change in control of investment properties, was $209 million, or $0.21 per diluted share, as compared to a net loss attributable to General Growth Properties, Inc. of $108 million, or $0.12 loss per diluted share, in the prior year period.

For the Six Months Ended June 30, 2013Company FFO per share increased 15.8% to $0.52 per diluted share from $0.45 per diluted share in the prior year period. Company FFO increased 15.3% to $518 million from $450 million in the prior year period.

Company EBITDA increased 5.5% to $999 million from $947 million in the prior year period.

Mall NOI increased 6.0% to $1,070 million from $1,009 million in the prior year period; Same Store NOI increased 5.2% to $1,019 million from $969 million in the prior year period.

Net income attributable to General Growth Properties, Inc., which is impacted primarily by depreciation expense, a gain from change in control of investment properties and a non-cash accounting adjustment for outstanding warrants, was $198 million, or $0.20 per diluted share, as compared to a net loss attributable to General Growth Properties, Inc. of $306 million, or $0.33 loss per diluted share, in the prior year period.

Operational Highlights for the U.S. Regional Mall Portfolio

  • Tenant sales increased 5.1% to $560 per square foot on a trailing 12-month basis.
  • Mall leased percentage was 95.9% at quarter end, an increase of 160 basis points from June 30, 2012.
  • Initial rental rates for executed leases commencing in 2013 on a suite-to-suite basis increased 11.1%, or $6.25 per square foot, to $62.79 per square foot when compared to the rental rate for expiring leases.

Financing Activities

Property-Level DebtDuring the three months ended June 30, 2013, the Company obtained $690 million ($602 million at share) of property-level debt with a weighted-average interest rate of 3.78% and weighted-average term-to-maturity of 9.4 years; the prior loans had a weighted-average interest rate of 5.68% and a remaining term-to-maturity of 1.5 years. The transactions generated approximately $159 million of net proceeds.

In addition, the Company obtained a $1.5 billion corporate loan secured by cross-collateralized mortgages on 16 properties with a weighted-average interest rate of LIBOR + 2.50% and a term-to-maturity of 3.0 years (with 2 one-year options); the prior loans secured by 16 properties had a weighted-average interest rate of 3.98% and a remaining term-to-maturity of 3.3 years.  The transaction generated approximately $182 million of net proceeds.

Subsequent to June 30, 2013, the Company obtained an additional $690 million ($479 million at share) of property-level financings related to four properties. The new mortgages have a weighted-average interest rate and term of 3.99% and 10.9 years, respectively, as compared to a rate of 4.64% and a remaining term-to-maturity of 3.2 years.  The transactions generated approximately $90 million of net proceeds to the Company.

Unsecured NotesDuring the three months ended June 30, 2013, the Company redeemed $609 million of its 6.75% unsecured notes due November 9, 2015 on May 1, 2013. In connection with the repayment, the Company incurred $20.5 million of early redemption fees. After repayment of the $609 million, the Company no longer has any outstanding unsecured Rouse notes.

Investment Activities

AcquisitionsDuring the three months ended June 30, 2013, the Company acquired an additional 50% interest in Quail Springs Mall, previously held in a joint venture with JCP Realty, Inc. As a result the Company now owns 100% of the mall.

DispositionsDuring the three months ended June 30, 2013, the Company sold a 49.9% interest in both The Grand Canal Shoppes and The Shoppes at the Palazzo. As a result the Company now owns 50.1% of the combined properties in a newly formed joint venture The Grand Canal Shoppes. Additionally, the Company disposed of a strip center.

On July 29, 2013, the Company entered into separate agreements to sell its ownership interests in Aliansce Shopping Centers S.A. (BM&FBOVESPA: ALSC3) to the Canada Pension Plan Investment Board and Rique Empreendimentos e Participacoes Ltda for approximately $690 million. The transaction is expected to close in the third quarter subject to certain conditions.

DevelopmentThe Company has redevelopment activities under construction totaling approximately $900 million of capital investment (at share), encompassing 24 properties including Ala Moana, Fashion Show and Glendale Galleria.

Dividends

Today the Company announced that its Board of Directors declared a third quarter common stock dividend of $0.13 per share payable on October 29, 2013, to stockholders of record on October 15, 2013, representing an increase of $0.01 per share from the prior quarter.

The Board of Directors also declared a quarterly dividend on its 6.375% Series A Cumulative Redeemable Preferred Stock of $0.3984 per share payable on October 1, 2013 to stockholders of record on September 13, 2013.

Guidance

Company FFO for the year ending December 31, 2013, is expected to be $1.13 to $1.15 per diluted share. Company FFO for the third quarter 2013 is expected to be $0.26 to $0.28 per diluted share.

The following table provides a reconciliation of the range of estimated diluted net income attributable to General Growth Properties, Inc. per share to estimated diluted FFO per share and diluted Company FFO per share.

For the year ending

December 31, 2013

For the three months ending

September 30, 2013

Low End

High End

Low End

High End

Company FFO per diluted share

$1.13

$1.15

$0.26

$0.28

Mark-to-market of warrants (1)

(0.04)

(0.04)

-

-

Loss on extinguishment of debt (2)

(0.04)

(0.04)

-

-

Adjustments (3)

(0.11)

(0.11)

(0.04)

(0.04)

FFO

0.94

0.96

0.22

0.24

Depreciation, including share of joint ventures

(0.77)

(0.77)

(0.19)

(0.19)

Gain on sale of investments and other (4)

0.22

0.22

-

-

Net income attributable to common stockholders

0.39

0.41

0.03

0.05

Preferred stock dividends

0.02

0.02

-

-

Net income attributable to General Growth Properties, Inc.

$0.41

$0.43

$0.03

$0.05

(1) As a result of the modification to the warrants in Q1 2013, they are classified as permanent equity effective March 28, 2013 and no longer required to be marked-to-market.(2) Fees incurred for the retirement of debt.(3) Refer to the Supplemental Information package for the nature of adjustments to reconcile FFO to Company FFO. The Supplemental Information package is available in the Investors section of the Company's website at www.ggp.com. (4) Impact of gains from changes in control of investment properties.

The guidance estimate reflects management's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release and previously disclosed. The guidance also reflects management's view of capital market conditions. The estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions or capital markets activity. Earnings per share estimates may be subject to fluctuations as a result of several factors, including any gains or losses associated with disposition activity. By definition, FFO and Company FFO do not include real estate-related depreciation and amortization, provisions for impairment, or gains or losses associated with property disposition activities. This guidance is a forward-looking statement and is subject to the risks and other factors described elsewhere in this release.

Investor Conference Call

On Tuesday, July 30, 2013, the Company will host a conference call at 8:00 a.m. CDT (9:00 a.m. EDT). The conference call will be accessible by telephone and through the Internet. Interested parties can access the call by dialing 877.845.1018 (international 707.287.9345). A live webcast of the conference call will be available in listen-only mode in the Investors section at www.ggp.com. Interested parties should access the conference call or website 10 minutes prior to the beginning of the call in order to register.

For those unable to listen to the call live, a replay will be available for approximately two weeks after the conference call event. To access the replay, dial 855.859.2056 (international 404.537.3406) conference ID 99216649.

Supplemental Information

The Company has prepared a supplemental information report available on www.ggp.com in the Investors section. This information also has been furnished with the Securities and Exchange Commission as an exhibit on Form 8-K.

Forward-Looking Statements

Certain statements made in this press release may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statement are based on reasonable assumption, it can give no assurance that its expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to,  the Company's ability to refinance, extend, restructure or repay near and intermediate term debt, its indebtedness, its ability to raise capital through equity issuances, asset sales or the incurrence of new debt, retail and credit market conditions, impairments, its liquidity demands, retail and economic conditions. The Company discusses these and other risks and uncertainties in its annual and quarterly periodic reports filed with the Securities and Exchange Commission. The Company may update that discussion in its periodic reports, but otherwise takes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

General Growth Properties, Inc.

General Growth Properties, Inc. is a fully integrated, self-managed and self-administered real estate investment trust focused exclusively on owning, managing, leasing, and redeveloping regional malls throughout the United States. GGP's portfolio is comprised of 123 regional malls in the United States comprising approximately 128 million square feet of gross leasable area. GGP is headquartered in Chicago, Illinois, and publicly traded on the NYSE under the symbol GGP.

Investor Relations Contact: 

Media Contact:

Kevin Berry   

David Keating

VP Investor Relations

VP Corporate Communications

(312) 960-5529

(312) 960-6325

kevin.berry@ggp.com 

david.keating@ggp.com   

NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES AND DEFINITIONS

REAL ESTATE PROPERTY NET OPERATING INCOME (NOI) AND COMPANY NOIThe Company defines NOI as income from property operations after operating expenses have been deducted, but prior to deducting financing, administrative and income tax expenses.  NOI has been reflected on a proportionate basis (at the Company's ownership share).  Other REITs may use different methodologies for calculating NOI, and accordingly, the Company's NOI may not be comparable to other REITs.  Because NOI excludes general and administrative expenses, interest expense, retail investment property impairment or non-recoverable development costs, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests, provision for income taxes, discontinued operations, preferred stock dividends and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs.

The Company utilizes Company NOI, which is NOI excluding non-cash and certain non-comparable items such as straight-line rent and intangible asset and liability amortization resulting from acquisition accounting. However, due to the exclusions noted, Company NOI should only be used as an alternative measure of the Company's financial performance. The Company presents Company NOI, Company EBITDA and Company FFO (as defined below), as the Company believes certain investors and other users of our financial information use them as measures of the Company's historical operating performance.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) AND COMPANY EBITDA EBITDA is defined as net income (loss) attributable to common stockholders, adjusted to exclude interest expense net of interest income, warrant adjustment, income tax provision (benefit), discontinued operations, allocations to noncontrolling interests, preferred stock dividends and depreciation and amortization.  EBITDA has been reflected on a proportionate basis.  Company EBITDA comprises EBITDA as defined immediately above and excludes certain non-cash and certain non-recurring items such as our Company NOI adjustments described above, provisions for impairment, strategic initiatives and certain management and administration costs. 

FUNDS FROM OPERATIONS ("FFO") AND COMPANY FFOThe Company determines FFO based upon the definition set forth by National Association of Real Estate Investment Trusts ("NAREIT"). The Company determines FFO to be our share of consolidated net income (loss) computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding cumulative effects of accounting changes, excluding gains and losses from the sales of, or any impairment charges related to, previously depreciated operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon our economic ownership interest, and all determined on a consistent basis in accordance with GAAP.  As with our presentation of NOI and EBITDA, FFO has been reflected on a proportionate basis.

The Company considers FFO a supplemental measure for equity REITs and a complement to GAAP measures because it facilitates an understanding of the operating performance of the Company's properties.  FFO does not give effect to real estate depreciation and amortization since these amounts are computed to allocate the cost of a property over its useful life.  Since values for well-maintained real estate assets have historically increased or decreased based upon prevailing market conditions, the Company believes that FFO provides investors with a clearer view of the Company's operating performance.  As with our presentation of Company NOI and Company EBITDA, Company FFO excludes from FFO certain items that are non-cash and certain non-comparable items such as our Company NOI adjustments, Company EBITDA adjustments and FFO items such as FFO from discontinued operations from the spin-off of Rouse Properties, Inc., mark-to-market adjustments on debt and gains on the extinguishment of debt, warrant liability adjustment, and interest expense on debt repaid or settled, all as a result of our emergence, acquisition accounting and other capital contribution or restructuring events.

RECONCILIATIONS OF NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES TO GAAP FINANCIAL MEASURESThe Company presents EBITDA and FFO as they are financial measures widely used in the REIT industry.  In order to provide a better understanding of the relationship between our non-GAAP Supplemental Financial measures of NOI, Company NOI, EBITDA, Company EBITDA, FFO and Company FFO, reconciliations have been provided as follows: a reconciliation of NOI and Company NOI to GAAP Operating Income (loss); a reconciliation of EBITDA and Company EBITDA to GAAP net income (loss) attributable to General Growth Properties, Inc.; a reconciliation of Company FFO and FFO to GAAP net income (loss) attributable to General Growth Properties, Inc. has been provided.  None of our non-GAAP Supplemental Financial measures represents cash flow from operating activities in accordance with GAAP, none should be considered as an alternative to GAAP net income (loss) attributable to General Growth Properties, Inc. and none are necessarily indicative of cash available to fund cash needs.  In addition, the Company has presented such financial measures on a consolidated and unconsolidated basis (at the Company's ownership share) as the Company believes that given the significance of the Company's operations that are owned through investments accounted for on the equity method of accounting, the detail of the operations of the Company's unconsolidated properties provides important insights into the income and FFO produced by such investments for the Company as a whole.

FINANCIAL OVERVIEW

Consolidated Statements of Operations 1

(In thousands, except per share)

Three Months Ended

Six Months Ended

June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

Revenues:

Minimum rents

$        394,047

$        382,336

$        797,357

$        759,921

Tenant recoveries

178,651

176,194

366,355

351,059

Overage rents

6,415

8,099

17,894

21,184

Management fees and other corporate revenues 

17,307

21,652

33,239

37,823

Other

16,809

18,174

36,077

32,971

Total revenues

613,229

606,455

1,250,922

1,202,958

Expenses:

Real estate taxes

55,730

56,995

124,984

112,656

Property maintenance costs

15,425

18,692

39,246

39,216

Marketing

5,762

7,234

12,281

13,972

Other property operating costs

87,685

92,808

176,935

179,461

Provision for (Recovery from) doubtful accounts

766

(709)

2,556

1,458

Property management and other costs

41,568

38,698

81,923

80,238

General and administrative

13,124

11,046

24,057

21,556

Depreciation and amortization

191,327

188,193

386,755

394,977

Total expenses

411,387

412,957

848,737

843,534

Operating income

201,842

193,498

402,185

359,424

Interest income

429

875

1,149

1,536

Interest expense

(193,274)

(183,311)

(388,657)

(394,066)

Warrant liability adjustment

-

(146,588)

(40,546)

(289,700)

Gains from changes in control of investment properties

219,784

18,547

219,784

18,547

Loss on extinguishment of debt

(27,159)

-

(36,478)

-

Income (Loss) before income taxes, equity in income of Unconsolidated Real Estate Affiliates, discontinued operations, noncontrolling interests and preferred stock dividends

201,622

(116,979)

157,437

(304,259)

Provision for income taxes

(1,382)

(1,709)

(1,523)

(3,104)

Equity in income of Unconsolidated Real Estate Affiliates

13,987

11,843

27,181

17,795

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment

-

-

3,448

-

Income (loss) from continuing operations

214,227

(106,845)

186,543

(289,568)

Discontinued operations:

(Loss) income from discontinued operations, including gains (losses) on dispositions

(304)

499

(7,252)

(11,023)

Gain on extinguishment of debt

-

-

25,894

-

Discontinued operations, net

(304)

499

18,642

(11,023)

Net income (loss)

213,923

(106,346)

205,185

(300,591)

Allocation to noncontrolling interests

(4,548)

(1,590)

(7,336)

(4,957)

Net income (loss) attributable to GGP

209,375

(107,936)

197,849

(305,548)

Preferred stock dividends

(3,984)

-

(6,109)

-

Net income (loss) attributable to common stockholders

$        205,391

$     (107,936)

$        191,740

$     (305,548)

Basic Income (Loss) Per Share:

Continuing operations

$               0.22

$            (0.12)

$               0.18

$            (0.32)

Discontinued operations

-

-

0.02

(0.01)

Total basic income (loss) per share

$               0.22

$            (0.12)

$               0.20

$            (0.33)

Diluted Income (Loss) Per Share:

Continuing operations

$               0.21

$            (0.12)

$               0.18

$            (0.32)

Discontinued operations

-

-

0.02

(0.01)

Total diluted income (loss) per share

$               0.21

$            (0.12)

$               0.20

$            (0.33)

1 Amounts presented in accordance with GAAP.

 

FINANCIAL OVERVIEW

Consolidated Balance Sheets 1

(In thousands)

June 30, 2013

December 31, 2012

Assets:

Investment in real estate:

Land

$    4,264,410

$                4,278,471

Buildings and equipment

17,937,639

18,806,858

Less accumulated depreciation

(1,596,485)

(1,440,301)

Construction in progress

336,388

376,529

Net property and equipment

20,941,952

22,021,557

Investment in and loans to/from Unconsolidated Real Estate Affiliates

2,963,892

2,865,871

Net investment in real estate

23,905,844

24,887,428

Cash and cash equivalents

704,918

624,815

Accounts and notes receivable, net

254,050

260,860

Deferred expenses, net

188,314

179,837

Prepaid expenses and other assets

1,091,310

1,329,465

Total assets

$  26,144,436

$              27,282,405

Liabilities:

Mortgages, notes and loans payable

$  15,463,928

$              15,966,866

Investment in and loans to/from Unconsolidated Real Estate Affiliates

16,387

-

Accounts payable and accrued expenses

951,849

1,212,231

Dividend payable 

119,742

103,749

Deferred tax liabilities

27,064

28,174

Tax indemnification liability

303,586

303,750

Junior Subordinated Notes

206,200

206,200

Warrant liability

-

1,488,196

Total liabilities

17,088,756

19,309,166

 Redeemable noncontrolling interests:  

Preferred

136,087

136,008

Common 

127,509

132,211

Total redeemable noncontrolling interests

263,596

268,219

 Equity: 

Preferred stock

242,042

-

Stockholders' equity

8,467,096

7,621,698

Noncontrolling interests in consolidated real estate affiliates

82,946

83,322

Total equity

8,792,084

7,705,020

Total liabilities and equity

$  26,144,436

$              27,282,405

1 Presented in accordance with GAAP.

 

PROPORTIONATE FINANCIAL STATEMENTS

Company NOI, EBITDA and FFO

For the Three Months Ended June 30, 2013 and 2012

(In thousands)

Three Months Ended June 30, 2013

Three Months Ended June 30, 2012

Consolidated Properties

Noncontrolling Interests

Unconsolidated Properties

Proportionate

Adjustments

Company

Consolidated Properties

Noncontrolling Interests

Unconsolidated Properties

Proportionate

Adjustments

Company

Property revenues:

Minimum rents

$        394,047

$              (3,643)

$           104,799

$          495,203

$            4,773

$  499,976

$        382,336

$              (2,969)

$              99,844

$          479,211

$            5,452

$  484,663

Tenant recoveries

178,651

(1,169)

40,634

218,116

-

218,116

176,194

(1,036)

35,521

210,679

-

210,679

Overage rents

6,415

(38)

2,945

9,322

-

9,322

8,099

(66)

2,486

10,519

-

10,519

Other revenue

16,809

(98)

9,241

25,952

-

25,952

17,264

(84)

1,684

18,864

-

18,864

 Total property revenues 

595,922

(4,948)

157,619

748,593

4,773

753,366

583,893

(4,155)

139,535

719,273

5,452

724,725

Property operating expenses:

Real estate taxes

55,730

(530)

12,927

68,127

(1,578)

66,549

56,995

(515)

11,610

68,090

(1,578)

66,512

Property maintenance costs

15,425

(96)

3,735

19,064

-

19,064

18,692

(90)

3,818

22,420

-

22,420

Marketing

5,762

(45)

1,668

7,385

-

7,385

7,234

(67)

1,645

8,812

-

8,812

Other property operating costs

87,685

(557)

25,881

113,009

(1,391)

111,618

92,808

(521)

23,653

115,940

(1,430)

114,510

Provision for (Recovery from) doubtful accounts

766

(6)

310

1,070

-

1,070

(709)

5

8

(696)

-

(696)

Total property operating expenses  

165,368

(1,234)

44,521

208,655

(2,969)

205,686

175,020

(1,188)

40,734

214,566

(3,008)

211,558

NOI

$        430,554

$              (3,714)

$           113,098

$          539,938

$            7,742

$  547,680

$        408,873

$              (2,967)

$              98,801

$          504,707

$            8,460

$  513,167

Management fees and other corporate revenues

17,307

-

1,764

19,071

-

19,071

21,652

-

2,290

23,942

-

23,942

Property management and other costs

(41,568)

153

(6,221)

(47,636)

(424)

(48,060)

(38,698)

117

(5,806)

(44,387)

(424)

(44,811)

NOI after net property management costs

$        406,293

$              (3,561)

$           108,641

$          511,373

$            7,318

$  518,691

$        391,827

$              (2,850)

$              95,285

$          484,262

$            8,036

$  492,298

General and administrative

(13,124)

-

(2,665)

(15,789)

-

(15,789)

(11,046)

-

(3,107)

(14,153)

-

(14,153)

EBITDA

$        393,169

$              (3,561)

$           105,976

$          495,584

$            7,318

$  502,902

$        380,781

$              (2,850)

$              92,178

$          470,109

$            8,036

$  478,145

Depreciation on non-income producing assets

(3,021)

-

-

(3,021)

-

(3,021)

(2,022)

-

-

(2,022)

-

(2,022)

Interest income

429

-

1,578

2,007

-

2,007

875

(2)

1,118

1,991

-

1,991

Preferred unit distributions

(2,336)

-

-

(2,336)

-

(2,336)

(2,336)

-

-

(2,336)

-

(2,336)

Preferred stock dividends

(3,984)

-

-

(3,984)

-

(3,984)

-

-

-

-

-

-

Interest expense:

Default interest

-

-

-

-

-

-

(1,144)

-

-

(1,144)

1,144

-

Mark-to-market adjustments on debt

(4,143)

(93)

(78)

(4,314)

4,314

-

5,718

(105)

894

6,507

(6,507)

-

Write-off of mark-to-market adjustments on extinguished debt

(4,618)

-

-

(4,618)

4,618

-

23,884

1

-

23,885

(23,885)

-

Debt extinguishment expenses

-

-

-

-

-

-

(9)

-

(4)

(13)

13

-

Interest on existing debt

(184,513)

1,123

(45,183)

(228,573)

-

(228,573)

(211,760)

926

(39,596)

(250,430)

-

(250,430)

Warrant liability adjustment

-

-

-

-

-

-

(146,588)

-

-

(146,588)

146,588

-

Loss on extinguishment of debt

(27,159)

-

-

(27,159)

27,159

-

-

-

-

-

-

-

Provision for income taxes

(1,382)

18

(70)

(1,434)

881

(553)

(1,709)

16

(111)

(1,804)

1,345

(459)

FFO from discontinued operations

154

-

-

154

62

216

4,003

-

-

4,003

(1,027)

2,976

162,596

(2,513)

62,223

222,306

44,352

266,658

49,693

(2,014)

54,479

102,158

125,707

227,865

Equity in FFO of Unconsolidated Properties and Noncontrolling Interests

59,710

2,513

(62,223)

-

-

-

52,465

2,014

(54,479)

-

-

-

FFO

$        222,306

$                          -

$                         -

$          222,306

$                     -

$  266,658

$        102,158

$                          -

$                         -

$          102,158

$                     -

$  227,865

 

PROPORTIONATE FINANCIAL STATEMENTS

Company NOI, EBITDA and FFO

For the Six Months Ended June 30, 2013 and 2012

(In thousands)

Six Months Ended June 30, 2013

Six Months Ended June 30, 2012

Consolidated Properties

Noncontrolling Interests

Unconsolidated Properties

Proportionate

Adjustments

Company

Consolidated Properties

Noncontrolling Interests

Unconsolidated Properties

Proportionate

Adjustments

Company

Property revenues:

Minimum rents

$        797,357

$              (7,049)

$           201,489

$          991,797

$         12,098

$  1,003,895

$        759,921

$              (5,353)

$           196,387

$          950,955

$         11,727

$     962,682

Tenant recoveries

366,355

(2,354)

77,455

441,456

-

441,456

351,059

(2,145)

72,746

421,660

-

421,660

Overage rents

17,894

(112)

7,251

25,033

-

25,033

21,184

(117)

6,122

27,189

-

27,189

Other revenue

36,077

(192)

18,282

54,167

-

54,167

32,059

(162)

7,264

39,161

-

39,161

 Total property revenues 

1,217,683

(9,707)

304,477

1,512,453

12,098

1,524,551

1,164,223

(7,777)

282,519

1,438,965

11,727

1,450,692

Property operating expenses:

Real estate taxes

124,984

(1,053)

25,479

149,410

(3,156)

146,254

112,656

(1,017)

23,514

135,153

(3,156)

131,997

Property maintenance costs

39,246

(183)

7,865

46,928

-

46,928

39,216

(186)

8,336

47,366

-

47,366

Marketing

12,281

(117)

3,175

15,339

-

15,339

13,972

(138)

3,280

17,114

-

17,114

Other property operating costs

176,935

(1,091)

51,404

227,248

(2,770)

224,478

179,461

(1,067)

50,261

228,655

(2,859)

225,796

Provision for doubtful accounts

2,556

(48)

1,235

3,743

-

3,743

1,458

24

265

1,747

-

1,747

Total property operating expenses  

356,002

(2,492)

89,158

442,668

(5,926)

436,742

346,763

(2,384)

85,656

430,035

(6,015)

424,020

NOI

$        861,681

$              (7,215)

$           215,319

$      1,069,785

$         18,024

$  1,087,809

$        817,460

$              (5,393)

$           196,863

$      1,008,930

$         17,742

$  1,026,672

Management fees and other corporate revenues

33,239

-

3,650

36,889

-

36,889

37,823

-

3,817

41,640

-

41,640

Property management and other costs

(81,923)

305

(12,290)

(93,908)

(848)

(94,756)

(80,238)

274

(12,017)

(91,981)

(848)

(92,829)

NOI after net property management costs

$        812,997

$              (6,910)

$           206,679

$      1,012,766

$         17,176

$  1,029,942

$        775,045

$              (5,119)

$           188,663

$          958,589

$         16,894

$     975,483

General and administrative

(24,057)

-

(6,831)

(30,888)

-

(30,888)

(21,556)

15

(6,533)

(28,074)

-

(28,074)

EBITDA

$        788,940

$              (6,910)

$           199,848

$          981,878

$         17,176

$     999,054

$        753,489

$              (5,104)

$           182,130

$          930,515

$         16,894

$     947,409

Depreciation on non-income producing assets

(6,115)

-

-

(6,115)

-

(6,115)

(3,725)

-

-

(3,725)

-

(3,725)

Interest income

1,149

(1)

3,186

4,334

-

4,334

1,536

(2)

1,824

3,358

-

3,358

Preferred unit distributions

(4,671)

-

-

(4,671)

-

(4,671)

(7,769)

-

-

(7,769)

3,098

(4,671)

Preferred stock dividends

(6,109)

-

-

(6,109)

-

(6,109)

-

-

-

-

-

-

Interest expense:

Default interest

(1,306)

-

-

(1,306)

1,306

-

(2,288)

-

(309)

(2,597)

2,597

-

Mark-to-market adjustments on debt

(7,981)

(184)

82

(8,083)

8,083

-

9,605

(185)

1,439

10,859

(10,859)

-

Write-off of mark-to-market adjustments on extinguished debt

2,587

-

-

2,587

(2,587)

-

22,962

1

-

22,963

(22,963)

-

Debt extinguishment expenses

-

-

-

-

-

-

(186)

-

(4)

(190)

190

-

Interest on existing debt

(381,957)

2,249

(87,446)

(467,154)

-

(467,154)

(424,159)

2,380

(78,141)

(499,920)

-

(499,920)

Warrant liability adjustment

(40,546)

-

-

(40,546)

40,546

-

(289,700)

-

-

(289,700)

289,700

-

Loss on extinguishment of debt

(36,478)

-

-

(36,478)

36,478

-

-

-

-

-

-

-

Provision for income taxes

(1,523)

35

(151)

(1,639)

541

(1,098)

(3,104)

32

(214)

(3,286)

2,185

(1,101)

FFO from discontinued operations

24,856

-

-

24,856

(24,664)

192

16,064

-

-

16,064

(7,830)

8,234

330,846

(4,811)

115,519

441,554

76,879

518,433

72,725

(2,878)

106,725

176,572

273,012

449,584

Equity in FFO of Unconsolidated Properties and Noncontrolling Interests

110,708

4,811

(115,519)

-

-

-

103,847

2,878

(106,725)

-

-

-

FFO

$        441,554

$                          -

$                         -

$          441,554

$                     -

$     518,433

$        176,572

$                          -

$                         -

$          176,572

$                     -

$     449,584

 

PROPORTIONATE FINANCIAL STATEMENTS

Reconciliation of Non-GAAP to GAAP Financial Measures

(In thousands)

Three Months Ended

Six Months Ended

June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

Reconciliation of Company NOI to GAAP Operating Income

Company NOI:

$        547,680

$        513,167

$    1,087,809

$    1,026,672

Adjustments for minimum rents, real estate taxes and other property operating costs

(7,742)

(8,460)

(18,024)

(17,742)

Proportionate NOI

539,938

504,707

1,069,785

1,008,930

Unconsolidated Properties

(113,098)

(98,801)

(215,319)

(196,863)

Consolidated Properties

426,840

405,906

854,466

812,067

Management fees and other corporate revenues

17,307

21,652

33,239

37,823

Property management and other costs

(41,568)

(38,698)

(81,923)

(80,238)

General and administrative

(13,124)

(11,046)

(24,057)

(21,556)

Depreciation and amortization

(191,327)

(188,193)

(386,755)

(394,977)

Noncontrolling interest in operating income of Consolidated Properties and other

3,714

3,877

7,215

6,305

Operating income

$        201,842

$        193,498

$        402,185

$        359,424

Reconciliation of Company EBITDA to GAAP Net Income (Loss) Attributable to GGP

Company EBITDA

$        502,902

$        478,145

$        999,054

$        947,409

Adjustments for minimum rents, property operating expenses and property management and other costs

(7,318)

(8,036)

(17,176)

(16,894)

Proportionate EBITDA

495,584

470,109

981,878

930,515

Unconsolidated Properties

(105,976)

(92,178)

(199,848)

(182,130)

Consolidated Properties

389,608

377,931

782,030

748,385

Depreciation and amortization

(191,327)

(188,193)

(386,755)

(394,977)

Noncontrolling interest in NOI of Consolidated Properties

3,714

3,877

7,215

6,305

Interest income

429

875

1,149

1,536

Interest expense

(193,274)

(183,311)

(388,657)

(394,066)

Warrant liability adjustment

-

(146,588)

(40,546)

(289,700)

Provision for income taxes

(1,382)

(1,709)

(1,523)

(3,104)

Equity in income of Unconsolidated Real Estate Affiliates

13,987

11,843

27,181

17,795

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment

-

-

3,448

-

Discontinued operations

(304)

499

18,642

(11,023)

Gains from changes in control of investment properties

219,784

18,547

219,784

18,547

Loss on extinguishment of debt

(27,159)

-

(36,478)

-

Allocation to noncontrolling interests

(4,701)

(1,707)

(7,641)

(5,246)

Net income (loss) attributable to GGP

$        209,375

$     (107,936)

$        197,849

$     (305,548)

Reconciliation of Company FFO to GAAP Net Income (Loss) Attributable to GGP

Company FFO

$        266,658

$        227,865

$        518,433

$        449,584

Adjustments for minimum rents, property operating expenses and property management and other costs, market rate adjustments, debt extinguishment, income taxes and FFO from discontinued operations

(44,352)

(125,707)

(76,879)

(273,012)

Proportionate FFO

222,306

102,158

441,554

176,572

Depreciation and amortization of capitalized real estate costs

(236,745)

(231,287)

(475,794)

(484,814)

Gains from changes in control of investment properties

219,784

18,547

219,784

18,547

Preferred stock dividends

3,984

-

6,109

-

Gains on sales of investment properties 

(242)

3,228

9,495

5,329

Noncontrolling interests in depreciation of Consolidated Properties

1,788

1,973

3,557

3,729

Provision for impairment excluded from FFO of discontinued operations

-

-

(4,975)

(10,393)

Redeemable noncontrolling interests

(1,483)

833

(1,403)

2,151

Depreciation and amortization of discontinued operations

(17)

(3,388)

(478)

(16,669)

Net income (loss) attributable to GGP

$        209,375

$     (107,936)

$        197,849

$     (305,548)

Reconciliation of Equity in NOI of Unconsolidated Properties to GAAP Equity in Income of Unconsolidated Real Estate Affiliates

Equity in Unconsolidated Properties:

NOI

$        113,098

$          98,801

$        215,319

$        196,863

Net property management fees and costs

(4,457)

(3,516)

(8,640)

$          (8,200)

General and administrative and provisions for impairment

(2,665)

(3,107)

(6,831)

(6,533)

EBITDA

105,976

92,178

199,848

182,130

Net interest expense

(43,683)

(37,588)

(84,178)

(75,191)

Provision for income taxes

(70)

(111)

(151)

(214)

FFO of Unconsolidated Properties

62,223

54,479

115,519

106,725

Depreciation and amortization of capitalized real estate costs

(48,439)

(45,117)

(95,155)

(93,562)

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment

-

-

(3,448)

-

Other, including gain on sales of investment properties 

203

2,481

10,265

4,632

Equity in income of Unconsolidated Real Estate Affiliates

$          13,987

$          11,843

$          27,181

$          17,795

 

SOURCE General Growth Properties, Inc.

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