EX-99.1 2 exhibit991ggp630168k.htm EXHIBIT 99.1 Exhibit
 

GGP REPORTS SECOND QUARTER 2016 RESULTS AND
RAISES DIVIDEND 11%

Chicago, Illinois, August 1, 2016 - General Growth Properties, Inc. (the “Company” or “GGP”) (NYSE: GGP) today reported results for the three and six months ended June 30, 2016.
    
Highlights
•
Company Same Store Net Operating Income (“Company Same Store NOI”) increased 4.0% and 4.6% from the prior year period for the three and six months ended June 30, 2016, respectively.
•
Company earnings before interest, taxes, depreciation and amortization (“Company EBITDA”) increased 6.5% and 13.3% from the prior year period for the three and six months ended June 30, 2016, respectively.
•
Same Store leased percentage was 96.1% at quarter end.
•
Initial rental rates for signed leases that have commenced in the trailing 12 months on a suite-to-suite basis increased 13.7% when compared to the rental rate for expiring leases.
•
Tenant sales (all less anchors) increased 2.8% on a trailing 12-month basis.1
•
In the second quarter, the Company sold its interest in an urban retail property and an office building; received proceeds of approximately $150 million and generated gains of approximately $58 million.
•
Subsequent to quarter end, the Company sold a 50% joint venture interest in a Class A mall for a gross valuation of approximately $2.5 billion; received proceeds of approximately $830 million.
•
Subsequent to quarter end, the Company sold two Class B malls; received proceeds of approximately $15 million.
•
The Company declared a third quarter common stock dividend, an increase of 11% over the prior year.


GAAP Operating Results
For the three months ended June 30, 2016, net income attributable to GGP was $186 million, or $0.19 per diluted share, as compared to $422 million, or $0.44 per diluted share, in the prior year period. For the six months ended June 30, 2016, net income attributable to GGP was $378 million, or $0.39 per diluted share, as compared to $1.1 billion, or $1.10 per diluted share, in the prior year period. Net income attributable to GGP in the prior year for the three and six months was impacted primarily by the gain related to the sale of a partial interest in a Class A mall.

Company Operating Results
For the three months ended June 30, 2016, Company Funds From Operations (“Company FFO”) was $340 million, or $0.35 per diluted share, as compared to $319 million, or $0.33 per diluted share, in the prior year period, an increase of 6.8%. For the six months ended June 30, 2016, Company FFO was $723 million, or $0.75 per diluted share, as compared to $628 million, or $0.65 per diluted share, in the prior year period, an increase of 15.4%.




1
Excludes Christiana Mall due to unusual changes in sales productivity.

1
 

Investment Activities
Dispositions
In the second quarter, the Company sold its 49.8% interest in One Stockton in San Francisco’s Union Square for approximately $50 million; received proceeds from repayment of a partner loan and equity of approximately $42 million and generated a gain of approximately $23 million over the two year hold period.

The Company sold an office building at Pioneer Place in Portland, Oregon for approximately $122 million; received proceeds of approximately $116 million and generated a gain of approximately $35 million.

Subsequent to quarter end, the Company sold a 50% interest in Fashion Show in Las Vegas, Nevada for approximately $1.25 billion; received proceeds of approximately $830 million.

Subsequent to quarter end, the Company sold its interests in Newgate Mall in Salt Lake City, Utah, and Rogue Valley in Portland, Oregon for approximately $131 million; received proceeds of approximately $15 million.

Acquisitions
The Company acquired a 50% interest in 218 W 57th Street in New York City for approximately $41 million.
 
Development
The Company’s development and redevelopment activities total $1.1 billion, of which approximately $0.5 billion is under construction and $0.6 billion is in the pipeline.

Financing Activities
Subsequent to quarter end, the Company repaid the mortgage loan on the Mall of Louisiana with debt of approximately $202 million and an interest rate of 5.8%. In the third quarter, the Company expects to repay the mortgage loan on Apache Mall with debt of approximately $93 million and an interest rate of 4.3%.

Subsequent to quarter end, the Company repaid $90 million that was outstanding on the credit facility.

Dividends
On August 1, 2016, the Company’s Board of Directors declared a third quarter common stock dividend of $0.20 per share payable on October 31, 2016, to stockholders of record on October 14, 2016. This represents an increase of $0.02 per share or 11% growth over the dividend declared for the third quarter of 2015.

The Board of Directors also declared a quarterly dividend on the 6.375% Series A Cumulative Redeemable Preferred Stock of $0.3984 per share payable on October 3, 2016, to stockholders of record on September 15, 2016.



2
 

Guidance
The Company revised its Company FFO guidance for the year ending December 31, 2016, which includes an increase of $0.01 related to operations and $0.02 dilution from the transactions noted above.

Earnings Guidance
For the year ending December 31, 2016
For the three months ending September 30, 2016
 
 
 
 
 
Net income attributable to GGP
$0.70 - $0.74

$0.10 - $0.12

 
Preferred stock dividends
(0.02
)
-

 
Net income attributable to common stockholders
$0.68 - $0.72

$0.10 - $0.12

 
Gain from change in control of investment properties and other, provision for impairment and redeemable noncontrolling interests
(0.12
)
—

 
Depreciation, including share of JVs
0.92

0.23

 
NAREIT FFO
$1.48 - $1.52

$0.33 - $0.35

 
Adjustments1
0.03

0.01

 
Company FFO per diluted share
$1.51 - $1.55

$0.34 - $0.36

 
 
 
 
 


1. Includes impact of straight-line rent, above/below market rent, loss on foreign currency and the related provision for income taxes, and other items. For discussion on the purpose and use of these adjustments please see the Non-GAAP Supplemental Financial Measures and Definitions section on page ER7.

The guidance estimate reflects management’s view of current and future market conditions, including assumptions with respect to Company Same Store NOI and Operating Income growth, rental rates, occupancy levels, retail sales, variable expenses, interest rates 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 future gains or losses, or the impact on operating results from future property acquisitions or dispositions or capital market 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 exclude 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 and in the Company’s annual and quarterly periodic reports filed with the Securities and Exchange Commission.

Investor Conference Call
On Tuesday, August 2, 2016, the Company will host a conference call at 8:00 a.m. Central (9:00 a.m. Eastern). 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 after the conference call event. To access the replay, dial 855.859.2056 (international 404.537.3406) conference ID 25606603.



3
 

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 assumptions, 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, 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.

Investors and others should note that we post our current Investor Presentation on the Investors page of our website at www.ggp.com. From time to time, we update that Investor Presentation and when we do, it will be posted on the Investors page of our website at ggp.com. It is possible that the updates could include information deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we post on the Investors page of our website at www.investor.ggp.com from time to time.

General Growth Properties, Inc.
General Growth Properties, Inc. is an S&P 500 company focused exclusively on owning, managing, leasing and redeveloping high-quality retail properties throughout the United States. GGP is headquartered in Chicago, Illinois, and publicly traded on the NYSE under the symbol GGP.
Contact:                        
Kevin Berry                                
SVP Investor and Public Relations                            
(312) 960-5529                                
kevin.berry@ggp.com    
    


4
 

Non-GAAP Supplemental Financial Measures and Definitions
Proportionate or At Share Basis
The following Non-GAAP supplemental financial measures are all presented on a proportionate basis. The proportionate financial information presents the consolidated and unconsolidated properties at the Company’s ownership percentage or “at share”. This form of presentation offers insights into the financial performance and condition of the Company as a whole, given the significance of the Company’s unconsolidated property operations that are owned through investments accounted for under GAAP using the equity method.
The proportionate financial information is not, and is not intended to be, a presentation in accordance with GAAP. The non-GAAP proportionate financial information reflects our proportionate economic ownership of each asset in our property portfolio that we do not wholly own. The amounts shown in the column labeled "Consolidated" reflect the amounts contained in the Company's consolidated financial statements as filed with the SEC in the schedules of this release and the supplemental. The amounts in the column labeled "Unconsolidated Properties" were derived on a property-by-property basis by including our share of each line item from each individual property. This provides visibility into our share of the operations of the joint ventures. A similar procedure was performed for the amounts in the column labeled "Noncontrolling Interests," which represents the share of consolidated assets attributable to noncontrolling interests.
We do not control the unconsolidated joint ventures and the presentations of the assets and liabilities and revenues and expenses do not represent our legal claim to such items. The operating agreements of the unconsolidated joint ventures generally provide that partners may receive cash distributions (1) to the extent there is available cash from operations, (2) upon a capital event, such as a refinancing or sale or (3) upon liquidation of the venture. The amount of cash each partner receives is based upon specific provisions of each operating agreement and varies depending on factors including the amount of capital contributed by each partner and whether any contributions are entitled to priority distributions. Upon liquidation of the joint venture and after all liabilities, priority distributions and initial equity contributions have been repaid, the partners generally would be entitled to any residual cash remaining based on their respective legal ownership percentages.
We provide Non-GAAP proportionate financial information because we believe it assists investors and analysts in estimating our economic interest in our unconsolidated joint ventures when read in conjunction with the Company's reported results under GAAP. Other companies in our industry may calculate their proportionate interest differently than we do, limiting the usefulness as a comparative measure. Because of these limitations, the Non-GAAP proportionate financial information should not be considered in isolation or as a substitute for our financial statements as reported under GAAP.
Net Operating Income (“NOI”), Company NOI and Company Same Store NOI
The Company defines NOI as proportionate income from operations and after operating expenses have been deducted, but prior to deducting financing, property management, administrative and income tax expenses. NOI excludes management fees and other corporate revenue and reductions in ownership as a result of sales or other transactions. The Company considers NOI a helpful supplemental measure of its operating performance because it is a direct measure of the actual results of our properties. Because NOI excludes reductions in ownership as a result of sales or other transactions, management fees and other corporate revenue, general and administrative and property management 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, 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 also considers Company NOI to be a helpful supplemental measure of its operating performance because it excludes from NOI items such as straight-line rent, and amortization of intangibles resulting from acquisition accounting and other capital contribution or restructuring events. However, due to the exclusions noted, Company NOI should only be used as an alternative measure of the Company’s financial performance.



5
 

We present Company NOI, Company EBITDA and Company FFO (as defined below); as we believe certain investors and other users of our financial information use these measures of the Company’s historical operating performance.
Adjustments to NOI, EBITDA and FFO, including debt extinguishment costs, market rate adjustments on debt, straight-line rent, intangible asset and liability amortization, real estate tax stabilization, gains and losses on foreign currency and other items that are not a result of normal operations, assist management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at the properties or from other factors. In addition, the Company’s leases include step rents that increase over the term of the lease to compensate the Company for anticipated increases in market rentals over time. The Company’s leases do not include significant front loading or back loading of payments or significant rent-free periods. Therefore, we find it useful to evaluate rent on a contractual basis as it allows for comparison of existing rental rates to market rental rates. Management has historically made these adjustments in evaluating our performance, in our annual budget process and for our compensation programs.
The Company defines Company Same Store NOI as Company NOI excluding periodic effects of acquisitions of new properties and certain redevelopments (for the list of properties included in Company Same Store NOI see the Property Schedule in our Supplemental Information). We do not include an acquired property in our Company Same Store NOI until the operating results for that property have been included in our consolidated results for one full calendar year. Properties that we sell are excluded from Company NOI and Company Same Store NOI for all periods once the transaction has closed.
The Company considers Company Same Store NOI a helpful supplemental measure of its operating performance because it assists management and investors in distinguishing whether increases or decreases in revenues and/or expenses are due to growth or decline of operations at comparable properties or from other factors, such as the effect of acquisitions. For these reasons, we believe that Company Same Store NOI, when combined with GAAP operating income provides useful information to investors and management.
Other REITs may use different methodologies for calculating, NOI, Company NOI and Company Same Store NOI, and accordingly, the Company’s Company Same Store NOI may not be comparable to other REITs. As a result of the elimination of corporate-level costs and expenses and depreciation and amortization, the Company Same Store NOI we present does not represent our total revenues, expenses, operating profit or net income and should not be used to evaluate our performance as a whole. Management compensates for these limitations by separately considering the impact of these excluded items, to the extent they are material, to operating decisions or assessments of our operating performance. Our consolidated GAAP statements of operations include such amounts, all of which should be considered by investors when evaluating our performance.
Earnings Before Interest Expense, Income Tax, Depreciation, and Amortization ("EBITDA") and Company EBITDA
The Company defines EBITDA as NOI less certain property management and administrative expenses, net of management fees and other corporate revenues. EBITDA is a commonly used measure of performance in many industries, but may not be comparable to measures calculated by other companies. Management believes EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of our properties after removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization). Management also believes the use of EBITDA facilitates comparisons between us and other equity REITs, retail property owners who are not REITs and other capital-intensive companies. Management uses Company EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions and, like FFO and Same Store NOI (discussed below), it is widely used by management in the annual budget process and for compensation programs. Please see adjustments discussion above for the purpose and use of the adjustments included in Company EBITDA.
EBITDA and Company EBITDA, as presented, may not be comparable to similar measures calculated by other companies. This information should not be considered as an alternative to net income, operating profit, cash from operations or any other operating performance measure calculated in accordance with GAAP.






6
 

Funds From Operations (“FFO”) and Company FFO
The Company determines FFO based upon the definition set forth by National Association of Real Estate Investment Trusts (“NAREIT”). The Company determines FFO to be its 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 the Company’s economic ownership interest, and all determined on a consistent basis in accordance with GAAP. As with the Company’s presentation of NOI, FFO has been reflected on a proportionate basis.
The Company considers FFO a helpful supplemental measure of the operating performance for equity REITs and a complement to GAAP measures because it is a recognized measure of performance by the real estate industry. FFO facilitates an understanding of the operating performance of the Company’s properties between periods because it 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.
We calculate FFO in accordance with standards established by NAREIT, which may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO in accordance with NAREIT guidance. In addition, although FFO is a useful measure when comparing our results to other REITs, it may not be helpful to investors when comparing us to non-REITs. As with the presentation of Company NOI and Company EBITDA, we also consider Company FFO, which is not in accordance with NAREIT guidance and may not be comparable to measures calculated by other REITs, to be a helpful supplemental measure of our operating performance. Please see adjustments discussion above for the purpose and use of the adjustments included in Company FFO.
FFO and Company FFO do not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity or indicative of funds available to fund our cash needs. In addition, Company FFO per diluted share does not measure, and should not be used as a measure of, amounts that accrue directly to stockholders’ benefit.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
The Company presents NOI, 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 the Company’s non-GAAP financial measures of NOI, Company NOI, EBITDA, Company EBITDA, FFO and Company FFO, reconciliations have been provided as follows: a reconciliation of GAAP operating income to Company NOI and Company Same Store NOI, a reconciliation of GAAP net income attributable to GGP to EBITDA and Company EBITDA, and a reconciliation of GAAP net income attributable to GGP to FFO and Company FFO. None of the Company’s non-GAAP 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 GGP and none are necessarily indicative of cash flow. In addition, the Company has presented such financial measures on a consolidated and unconsolidated basis (at the Company’s proportionate share) as the Company believes that given the significance of the Company’s operations that are owned through investments accounted for by 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.




7
        
GAAP FINANCIAL STATEMENTS

                                                                      
                            

Consolidated Balance Sheets
(In thousands)
 
June 30, 2016
 
December 31, 2015
 
 
 
 
Assets:
 
 
 
Investment in real estate:
 
 
 
Land
$
3,554,471

 
$
3,596,354

Buildings and equipment
16,228,837

 
16,379,789

Less accumulated depreciation
(2,605,947
)
 
(2,452,127
)
Construction in progress
311,757

 
308,903

Net property and equipment
17,489,118

 
17,832,919

Investment in and loans to/from Unconsolidated Real Estate Affiliates
3,609,486

 
3,506,040

Net investment in real estate
21,098,604

 
21,338,959

Cash and cash equivalents
226,283

 
356,895

Accounts and notes receivable, net
969,924

 
949,556

Deferred expenses, net
214,182

 
214,578

Prepaid expenses and other assets
952,535

 
997,334

Assets held for disposition
131,956

 
216,233

Total assets
$
23,593,484

 
$
24,073,555

Liabilities:
 
 
 
Mortgages, notes and loans payable
13,714,730

 
14,216,160

Investment in Unconsolidated Real Estate Affiliates
39,160

 
38,488

Accounts payable and accrued expenses
682,925

 
784,493

Dividend payable
175,560

 
172,070

Deferred tax liabilities
1,642

 
1,289

Junior Subordinated Notes
206,200

 
206,200

Liabilities held for disposition
114,544

 
58,934

Total liabilities
14,934,761

 
15,477,634

Redeemable noncontrolling interests:
 
 
 
Preferred
168,083

 
157,903

Common
142,167

 
129,724

Total redeemable noncontrolling interests
310,250

 
287,627

Equity:
 
 
 
Preferred stock
242,042

 
242,042

Stockholders' equity
8,036,796

 
8,028,001

Noncontrolling interests in consolidated real estate affiliates
20,448

 
24,712

Noncontrolling interests related to Long-Term Incentive Plan Common Units
22,187

 
13,539

Total equity
8,348,473

 
8,308,294

Total liabilities, redeemable noncontrolling interests and equity
$
23,593,484

 
$
24,073,555

 
 
 
 




8
        
GAAP FINANCIAL STATEMENTS

                                                                      
                            

Consolidated Statements of Income
(In thousands, except per share)

 
Three Months Ended
 
Six Months Ended
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Revenues:
 
 
 
 
 
 
 
Minimum rents
$
363,412

 
$
361,556

 
$
734,544

 
$
735,669

Tenant recoveries
169,763

 
168,043

 
342,211

 
345,525

Overage rents
4,375

 
3,485

 
12,519

 
12,300

Management fees and other corporate revenues
18,917

 
26,731

 
52,659

 
45,817

Other
18,119

 
20,166

 
39,685

 
34,814

Total revenues
574,586

 
579,981

 
1,181,618

 
1,174,125

Expenses:
 
 
 
 
 
 
 
Real estate taxes
57,309

 
56,496

 
115,412

 
112,483

Property maintenance costs
11,955

 
12,903

 
29,438

 
32,784

Marketing
2,738

 
3,754

 
4,792

 
8,576

Other property operating costs
71,601

 
72,427

 
141,995

 
148,609

Provision for doubtful accounts
1,710

 
1,306

 
5,111

 
4,577

Provision for loan loss
—

 
—

 
36,069

 
—

Property management and other costs
38,282

 
40,369

 
69,027

 
83,162

General and administrative
14,650

 
12,322

 
28,076

 
24,769

Provisions for impairment
4,058

 
—

 
44,763

 
—

Depreciation and amortization
156,248

 
152,849

 
316,919

 
328,797

Total expenses
358,551

 
352,426

 
791,602

 
743,757

Operating income
216,035

 
227,555

 
390,016

 
430,368

Interest and dividend income
13,335

 
12,843

 
29,393

 
21,664

Interest expense
(148,366
)
 
(142,747
)
 
(296,043
)
 
(315,398
)
Gain (loss) on foreign currency
7,893

 
1,463

 
16,829

 
(21,448
)
Gain from changes in control of investment properties and other
38,553

 
17,768

 
113,108

 
609,013

Income before income taxes, equity in income of Unconsolidated Real Estate Affiliates and allocation to noncontrolling interests
127,450

 
116,882

 
253,303

 
724,199

Benefit from (provision for) income taxes
2,242

 
(74
)
 
(679
)
 
11,085

Equity in income of Unconsolidated Real Estate Affiliates
34,618

 
13,278

 
92,108

 
24,530

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment
25,591

 
297,767

 
40,506

 
309,787

Net income
189,901

 
427,853

 
385,238

 
1,069,601

Allocation to noncontrolling interests
(3,956
)
 
(5,913
)
 
(7,513
)
 
(12,932
)
Net income attributable to GGP
185,945

 
421,940

 
377,725

 
1,056,669

Preferred stock dividends
(3,983
)
 
(3,984
)
 
(7,967
)
 
(7,968
)
Net income attributable to common stockholders
$
181,962

 
$
417,956

 
$
369,758

 
$
1,048,701

 
 
 
 
 
 
 
 
Basic Earnings Per Share:
$
0.21

 
$
0.47

 
$
0.42

 
$
1.18

Diluted Earnings Per Share:
$
0.19

 
$
0.44

 
$
0.39

 
$
1.10

 
 
 
 
 
 
 
 

9
NON-GAAP PROPORTIONATE FINANCIAL INFORMATION

Reconciliation of Non-GAAP to GAAP Financial Measures
(In thousands, except per share)


 
 
Three Months Ended
 
Six Months Ended
 
 
June 30, 2016
June 30, 2015
 
June 30, 2016
June 30, 2015
 
 
 
 
 
 
 
Reconciliation of Company Same Store NOI to GAAP Operating Income
 
 
 
 
 
 
Company Same Store NOI
 
$
555,335

$
533,899

 
$
1,110,591

$
1,061,949

Company Non-Same Store NOI
 
21,800

7,348

 
73,592

12,588

Company NOI
 
$
577,135

$
541,247

 
$
1,184,183

$
1,074,537

Adjustments for minimum rents, real estate taxes and other property operating costs
 
(5,529
)
(6,151
)
 
(11,100
)
(26,154
)
Proportionate NOI
 
571,606

535,096

 
1,173,083

1,048,383

Unconsolidated Properties
 
(166,625
)
(141,320
)
 
(354,237
)
(261,795
)
NOI of Sold Interests
 
1,957

8,089

 
6,021

25,780

Noncontrolling interest in NOI Consolidated Properties
 
3,417

4,490

 
7,344

8,901

Consolidated Properties
 
410,355

406,355

 
832,211

821,269

Management fees and other corporate revenues
 
18,917

26,731

 
52,659

45,817

Property management and other costs
 
(38,282
)
(40,369
)
 
(69,027
)
(83,162
)
General and administrative
 
(14,649
)
(12,322
)
 
(28,076
)
(24,769
)
Provisions for impairment
 
(4,058
)
—

 
(44,763
)
—

Provision for loan loss
 
—

—

 
(36,069
)
—

Depreciation and amortization
 
(156,248
)
(152,849
)
 
(316,919
)
(328,797
)
Gain on sales of investment properties
 
—

9

 
—

10

Operating income
 
$
216,035

$
227,555

 
$
390,016

$
430,368

 
 
 
 
 
 
 
Reconciliation of Company EBITDA to GAAP Net Income Attributable to GGP
 
 
 
 
 
 
Company EBITDA
 
$
534,434

$
501,620

 
$
1,122,575

$
991,053

Adjustments for minimum rents, real estate taxes, other property operating costs, and general and administrative
 
(5,529
)
(6,151
)
 
(11,100
)
(26,154
)
Proportionate EBITDA
 
528,905

495,469

 
1,111,475

964,899

Unconsolidated Properties
 
(157,689
)
(127,364
)
 
(336,543
)
(239,737
)
EBITDA of Sold Interests
 
1,837

7,970

 
5,771

25,445

Noncontrolling interest in EBITDA of Consolidated Properties
 
3,288

4,320

 
7,064

8,548

Consolidated Properties
 
376,341

380,395

 
787,767

759,155

Depreciation and amortization
 
(156,248
)
(152,849
)
 
(316,919
)
(328,797
)
Interest income
 
13,335

12,843

 
29,393

21,664

Interest expense
 
(148,366
)
(142,747
)
 
(296,043
)
(315,398
)
Gain (loss) on foreign currency
 
7,893

1,463

 
16,829

(21,448
)
Benefit from (provision for) income taxes
 
2,242

(74
)
 
(679
)
11,085

Provision for impairment excluded from FFO
 
(4,058
)
—

 
(44,763
)
—

Provision for loan loss
 
—

—

 
(36,069
)
—

Equity in income of Unconsolidated Real Estate Affiliates
 
34,618

13,278

 
92,108

24,530

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment
 
25,591

297,767

 
40,506

309,787

Gains from changes in control of investment properties and other
 
38,553

17,768

 
113,108

609,013

Gain on sales of investment properties
 
—

9

 
—

10

Allocation to noncontrolling interests
 
(3,956
)
(5,913
)
 
(7,513
)
(12,932
)
Net income attributable to GGP
 
$
185,945

$
421,940

 
$
377,725

$
1,056,669

 
 
 
 
 
 
 

10
NON-GAAP PROPORTIONATE FINANCIAL INFORMATION

Reconciliation of Non-GAAP to GAAP Financial Measures
(In thousands, except per share)


 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30, 2016
June 30, 2015
 
June 30, 2016
June 30, 2015
Reconciliation of Company FFO to GAAP Net Income Attributable to GGP
 
 
 
 
 
 
Company FFO
 
$
340,050

$
318,551

 
$
722,853

$
627,886

Adjustments for minimum rents, property operating expenses, property management and other costs, market rate adjustments, loan loss provision, income taxes, and FFO from sold interests
 
2,188

(4,195
)
 
(17,305
)
(53,871
)
Proportionate FFO
 
342,238

314,356

 
705,548

574,015

Depreciation and amortization of capitalized real estate costs
 
(220,172
)
(210,694
)
 
(445,040
)
(440,563
)
Gain from changes in control of investment properties and other
 
38,553

17,768

 
113,108

609,013

Preferred stock dividends
 
3,983

3,984

 
7,967

7,968

Gain (loss) on sales of investment properties
 
—

8

 
(1
)
9

Equity in income of Unconsolidated Real Estate Affiliates - gain on investment
 
25,591

297,767

 
40,506

309,787

Noncontrolling interests in depreciation of Consolidated Properties
 
1,168

1,921

 
3,283

3,956

Provision for impairment excluded from FFO
 
(4,058
)
—

 
(44,763
)
—

Redeemable noncontrolling interests
 
(1,358
)
(3,170
)
 
(2,883
)
(7,516
)
Net income attributable to GGP
 
$
185,945

$
421,940

 
$
377,725

$
1,056,669

 
 
 
 
 
 
 
Reconciliation of Equity in NOI of Unconsolidated Properties to GAAP Equity in Income of Unconsolidated Real Estate Affiliates
 
 
 
 
 
 
Equity in NOI of Unconsolidated Properties:
 
 
 
 
 
 
NOI
 
$
166,625

$
141,320

 
$
354,237

$
261,795

Net property management fees and costs
 
(8,417
)
(7,825
)
 
(17,082
)
(15,412
)
General and administrative
 
(519
)
(6,131
)
 
(612
)
(6,646
)
EBITDA
 
157,689

127,364

 
336,543

239,737

Net interest expense
 
(54,954
)
(53,293
)
 
(108,938
)
(97,721
)
Provision for income taxes
 
(96
)
(61
)
 
(179
)
(163
)
FFO of Unconsolidated Properties
 
102,639

74,010

 
227,426

141,853

Depreciation and amortization of capitalized real estate costs
 
(68,036
)
(60,746
)
 
(135,345
)
(117,351
)
Other, including gain on sales of investment properties
 
15

14

 
27

28

Equity in income of Unconsolidated Real Estate Affiliates
 
$
34,618

$
13,278

 
$
92,108

$
24,530

 
 
 
 
 
 
 
Reconciliation of Company FFO per diluted share to Net Income Attributable to GGP per diluted share
 
 
 
 
 
 
Company FFO per diluted share
 
$
0.35

$
0.33

 
$
0.75

$
0.65

Adjustments for straight-line rent, above/below market rent, loss on foreign currency and the related provision for income taxes, and other non-comparable items
 
0.01

—

 
(0.01
)
(0.05
)
FFO per diluted share
 
0.36

0.33

 
0.74

0.60

Depreciation, gain from change in control of investment properties and other, provision for impairment, and redeemable noncontrolling interests
 
(0.17
)
0.11

 
(0.35
)
0.49

Net income attributable to common stockholders per diluted share
 
0.19

0.44

 
0.39

1.09

Preferred stock dividends
 
—

—

 
—

0.01

Net Income Attributable to GGP per diluted share
 
$
0.19

$
0.44

 
$
0.39

$
1.10


11