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Chicago, Illinois, January 28, 2015 – General Growth Properties, Inc. today reported results for the three and twelve months ended December 31, 2014.Financial Results
For the Three Months Ended December 31, 2014
Company funds from operations (“Company FFO”) per share increased 5.1% to $0.38 per diluted share from $0.36 per diluted share in the prior year period. Company FFO increased 3.4% to $357 million from $346 million in the prior year period.
Company earnings before interest, taxes, depreciation and amortization (“Company EBITDA”) increased 4.1% to $572 million from $550 million in the prior year period.
Comparable net operating income (“Same Store NOI”) increased 2.4% to $596 million from $582 million in the prior year period.
Net income attributable to GGP, which is impacted primarily by depreciation expense, gain from sales, and changes in control of investment properties and a gain on extinguishment of a liability, was $289 million, or $0.30 per diluted share, as compared to net income of $77 million, or $0.07 per diluted share, in the prior year period.
For the Twelve Months Ended December 31, 2014
Company FFO per share increased 13.7% to $1.32 per diluted share from $1.16 per diluted share in the prior year period. Company FFO increased 9.4% to $1,256 million from $1,148 million in the prior year period.
Company EBITDA increased 4.9% to $2,088 million from $1,991 million in the prior year period.
Same Store NOI increased 4.5% to $2,207 million from $2,111 million in the prior year period.
Net income attributable to GGP, which is impacted primarily by depreciation expense, gains from sales, and changes in control of investment properties and a gain on extinguishment of a liability, was $666 million, or $0.69 per diluted share, as compared to net income of $303 million, or $0.31 income per diluted share, in the prior year period.
Operational Highlights
• Same Store leased percentage was 97.2% at quarter end, an increase of 10 basis points from December 31, 2013.
• Initial rental rates for executed leases commencing in 2014 on a suite-to-suite basis increased 18.3%, or $9.63 per square foot, to $62.26 per square foot when compared to the rental rate for expiring leases.
• Tenant sales (all less anchors) increased 2.8% to $20.5 billion on a trailing 12-month basis. Tenant sales (<10,000 square feet) increased 1.0% to $570 per square foot on a trailing 12-month basis.
• Tenant sales (all less anchors) increased 5.4% and tenant sales (<10,000 square feet) increased 4.8% per square foot during the fourth quarter.
Financing Activities
Property-Level Debt
During the three months ended December 31, 2014, the Company obtained $372 million ($311 million at share) of new fixed and variable rate debt at two of its existing properties with a weighted average term to maturity of 6.6 years (6.0 years at share) and a weighted average interest rate of 2.85% (2.59% at share). The transactions generated approximately $232 million ($241 million at share) of net proceeds, which includes a pay down of $18 million ($9 million at share).
During the year ended December 31, 2014, the Company obtained $2.4 billion ($1.9 billion at share) of new fixed and variable rate debt at 12 of its existing properties with a weighted average term to maturity of 8.4 years (7.8 years at share) and a weighted average interest rate of 3.58% (3.46% at share). The transactions generated approximately $1.2 billion ($935 million at share) of net proceeds. The Company also obtained a $450 million construction loan at Ala Moana Center with a weighted-average interest rate of LIBOR plus 1.90% and amended its $1.4 billion corporate loan secured by cross-collateralized mortgages on 14 properties, lowering the interest rate from LIBOR plus 2.5% to LIBOR plus 1.75%.
Investment Activities
Acquisitions, Dispositions, and Joint Venture Activity
During the three months ended December 31, 2014, the Company closed on its previously announced acquisition of a 50% interest in 530 Fifth Avenue in New York City for net equity at share of $49 million. The property comprises approximately 58,000 square feet of retail space.
The Company sold a 49% interest in Bayside Marketplace in Miami, Florida for net proceeds of $71.9 million. As a result, the Company now owns a 51% interest in a newly formed joint venture.
The Company settled its $322 million tax indemnification liability to Howard Hughes Corporation through a $138 million cash payment and the sale of its Columbia office portfolio for $130 million. The settlement resulted in a $77.2 million gain on extinguishment of a liability which is excluded from Company FFO.
The Company sold a strip center for net proceeds of $15.4 million.
During the year ended December 31, 2014, the Company acquired interests in five retail properties comprising approximately 1.3 million square feet of retail space for net equity at share of approximately $406 million and disposed of 11 properties and sold a joint venture interest in one property for net proceeds of $230.5 million.
The Company has entered into an agreement to acquire the Crown Building in New York City located at 730 Fifth Avenue for approximately $1.775 billion ($888 million at share). The Company will own a 50% interest through a joint venture. The transaction is expected to close in the second quarter of 2015.
Development
The Company has development and redevelopment activities totaling approximately $2.4 billion at share, of which projects totaling approximately $418 million have opened and $1.2 billion is under construction.
Dividends
The Company’s Board of Directors previously declared a fourth quarter common stock dividend of $0.17 per share payable on January 2, 2015, to stockholders of record on December 15, 2014, representing an increase of $0.03 per share or 21% growth over the dividend declared in fourth quarter 2013.
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 January 2, 2015, to stockholders of record on December 15, 2014.
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