General Growth Properties Growth General 200 5
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General Growth Properties 200 5 annual report ∑reat ∑a¬h∏rin∑ places General Growth Properties 2005 110 North Wacker Drive annual report Chicago, Illinois 60606 (312) 960-5000 con¬∏nts www.generalgrowth.com Financial Highlights lift Company Profile lift Shareholders Letter 2 Retail Portfolio 13 Following Portfolio Form 10-K Directors/Officers Corporate Information ...plac∏s ¬Ω shop, play,and ∏xp∏rıence! con¬∏nts Financial Highlights lift Company Profile lift Shareholders Letter 2 Retail Portfolio 13 Following Portfolio Form 10-K Directors/Officers Corporate Information company profile General Growth Properties, Inc. and its predecessor companies have been reinventing, revital- izing, and reinvigorating the shopping center industry for more than 50 years. General Growth is the second largest U.S.-based publicly traded Real Estate Investment Trust (REIT). General Growth has ownership interest in a portfolio of 192 regional shopping malls in 44 states, as well as ownership in master planned communities, office and industrial properties and community centers. The owned regional mall portfolio totals over 180 million square feet of retail space and includes approximately 24,000 retail stores nationwide. General Growth Properties, Inc. is listed on the New York Stock Exchange under the symbol GGP. For more information, please visit the company Web site at www.generalgrowth.com. FINANCIAL HIGHLIGHTS Dollars in Thousands, Except Per Share Amounts % Change 2005 vs. 2004 2005 2004 2003 2002 2001 Consolidated Property Revenues 57.8% $ 2,608,305 $ 1,652,773 $ 1,183,763 $ 898,424 $ 799,365 Unconsolidated Property Revenues (at Company Share) 42.6% $ 653,821 $ 458,390 $ 443,488 $ 394,223 $ 352,515 Funds from Operations (FFO) (Before Minority Interests) 16.9% $ 896,005 $ 766,164 $ 618,561 $ 485,304 $ 296,777 FFO Per Share (Fully Diluted)(1) 10.5% $ 3.06 $ 2.77 $ 2.31 $ 1.88 $ 1.32 $1.49 183 183 192 188 $1.26 $1.08 STOCK AND PARTNERSHIP UNITS Outstanding at Year End 122 $13,694 133 $.92 114 125 $12,753 $.80 89 97 Shares of Common Stock 239,196,649 234,724,082 217,293,976 187,191,255 185,771,796 $10,258 $9,061 Operating Partnership Units(1) 53,061,895 55,532,263 55,712,250 58,668,741 58,717,479 $7,326 Shares of Convertible Preferred Stock – – – 13,500,000 13,500,000 Shares of Common Stock Assuming Full Conversion of Operating Partnership Units and Convertible Preferred Stock 292,258,544 290,256,345 273,006,226 271,362,846 269,992,125 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 REGIONAL MALLS TOTAL SQUARE MALL SHOP DIVIDEND GROWTH OWNED AND FOOTAGE OWNED* TENANT SALES*† PER SHARE* OPERATING* In Millions Dollars in Millions Dollar/Share Declared At Year End * Includes Consolidated and * Information presented * Reflects dividends declared MALL DATA Dollars in Millions * Information presented Unconsolidated regional malls, for Consolidated and and paid during such fiscal for Consolidated and community centers, and office Unconsolidated Properties. years, including the amount 2005 2004 2003 2002 2001 Unconsolidated Properties. and industrial properties. † Excludes redevelopment declared in January for prior properties and all retail year operations. (2) spaces of 10,000 square Mall Shop Tenant Sales $ 13,694 $ 12,753 $ 10,258 $ 9,061 $ 7,326 feet or more. (3) Regional Malls Owned and Operating at Year End 221 179 133 125 97 (2) Mall Shop Square Footage Leased at Year End 92.5% 92.1% 91.3% 91.0% 91.0% (1) Operating Partnership Units can be exchanged on a one-for-one basis into shares of the Company’s common stock. (2) Excluding redevelopment properties. (3) Includes Consolidated and Unconsolidated Properties. designed by Conyers Design, Inc. illustrations by Tom Rosborough that we have created at GGP. Are we happy with our decision to acquire the Rouse Company? Absolutely. Our enthusiasm for this transaction grows with each passing day. Our excitement builds because we see many opportunities to improve the Rouse portfolio of retail centers, to our shareholders and we see our existing GGP malls improving as well. We are creating even Greater Gathering Places in malls such as Water Tower Place, Chicago, Illinois, Fashion Show Mall, Las Vegas, Nevada, Faneuil Hall, Boston, Massachusetts and Ala Moana Center, Honolulu, Hawaii. Dear Shareholders: Great Gathering Places: these are what we create. Special Places and GGP is a strong and unified company. The addition of the Rouse people and properties make us Experiences are the focus of our vision. A CUSTOMer-built Company giving our Consumers, even better. We are a team at General Growth. We share the same goals, objectives and values to Owners, Retailers and Employees (C.O.R.E.) what they want, when they want it and where they make this a better company for all concerned. Yes, we have an outstanding collection of assets, want it is our mission. These three things define and drive us as we strive to create value for but first and foremost we are a company. The properties comprise a part of the company but they you. To be successful it is imperative for a company to have vision, a mission and goals. It has do not make up the whole. The REIT industry has historically relied on net asset value (NAV) as been demonstrated and documented that companies that adhere to these traits are better being the primary metric for establishing the value of a publicly traded real estate company. Why financial performers over extended periods of time. It is not “dumb luck” that General Growth are real estate companies not valued on earnings per share growth, cash flow growth or dividend Properties, Inc. (GGP) has produced superior returns, ranking us within the top three among all growth? Is real estate that different from other industries? We believe that as GGP continues to Real Estate Investment Trusts (REITs) during periods covering the last three, five and ten years. grow and continues to operate as a consistently stable and We have accomplished this because GGP is anchored solidly to our core foundation of ethics, profitable company, living up in every way to our reputation integrity, timeless fundamentals and consistent profitability. Good reputations are not made as a blue-chip real estate company, that the marketplace will overnight, nor is recurring profitability; it takes time and it takes hard work. That is what we are revisit how we should be valued. here doing for you. We have made, and we continue to make, a lasting contribution in the 2005 was another exceptionally profitable year for our marketplace. Beginning in 1954, this company was Built To Last and we are continuing to Build shareholders. We delivered a 35.2% total return versus To Last as we move forward in the 21st century. the Morgan Stanley REIT Index, which appreciated 12.1%, 2005 was a year of integration for GGP. Following the 2004 acquisition of The Rouse Company, the S&P 500, which increased 4.9%, the NASDAQ which which consisted of ownership interests in 37 regional malls, 4 community centers, 6 mixed-use appreciated 2.2% and the DJIA, which appreciated 1.7%, projects and the master planned communities of Columbia, Maryland, Summerlin, (Las Vegas) all on a total return basis. Over the last 12 years (since its Nevada, The Bridgelands, (Houston) Texas and initial public offering (IPO) in April 1993), GGP’s per-share a 52.5% interest in The Woodlands, (Houston) growth in FFO has increased at a 16% rate compounded Texas; we had to integrate all of the properties into our company. With these properties came approximately an additional 1100 people that needed to understand and embrace the culture GGP has produced superior returns ranking us within the top three among all during periods covering the last three, five and ten years. 2 General Growth Properties, Inc. General Growth Properties, Inc. 3 annually. Our annual compounded total return including reinvested dividends, has been 1 Mall shop occupancy increased to 92.5% in 2005 versus 92.1% in 2004. approximately 22.5% from the IPO through December 31, 2005, compared to 10.3% 1 The average rent per square foot for new/renewal leases signed was $38.69 in 2005, for the S&P 500 Total Return Index and 10.3% for the NASDAQ during this same period. versus $28.24 for all leases that expired in 2005, a 27% increase. We often speak about the importance of being a blue chip company. Blue chips are large, as of December 31, 2005 creditworthy companies. Blue chips are companies that are renowned for quality and for annualized total returns the wide acceptance of their products and services. And most notably, blue chips are 1 Year 3 Year 5 Year 10 Year companies that consistently make money and pay increased dividends year after year. GGP 35.0% 45.6% 37.9% 27.9% These characteristics define GGP. S&P 500 4.9% 14.4% 0.5% 9.1% We are very proud that our dividend increases during the past five years have averaged Dow Jones Industrial Average 1.7% 11.2% 2.0% 9.8% 18.5% per year, more than any other REIT in that same period. Importantly, we achieved Morgan Stanley REIT Index 12.1% 26.3% 18.7% 14.3% this dividend growth despite paying out less than 50% of our funds from operations (FFO) NAREIT Malls, ex-GGP 10.2% 33.9% 31.5% 20.2% per share, leaving us with hundreds of millions of dollars to reinvest in our business. In the 13 years that GGP has been a public company, our annualized dividend has increased 13 times from a split adjusted (3:1) $.493 per share in 1993 to $1.64 per share currently.