General Growth Beats Analyst Estimates With Positive Funds From Operations

General Growth Properties Inc., the U.S. mall owner that left bankruptcy in November, reported a surprise profit excluding some items in the fourth quarter.

Funds from operations were $254.9 million, or 26 cents a share, compared with a loss of $413.9 million, or $1.29, a year earlier, the Chicago-based company said today in a statement. Analysts projected negative FFO of 71 cents a share, the average of 10 estimates in a Bloomberg survey.

Fourth-quarter results are the first General Growth has reported since the company emerged from the biggest real estate bankruptcy in U.S. history. Sandeep Mathrani, a former Vornado Realty Trust executive, took over as chief executive officer of General Growth last month.

“There are a lot of expectations of them,” Rich Moore, an analyst at RBC Capital Markets in Solon, Ohio, said before the report was issued.

General Growth filed for Chapter 11 protection in April 2009 after weighing itself down with $27 billion in debt that it was unable to refinance because of the financial crisis and collapse of the commercial mortgage-backed securities market.

The company spun off Howard Hughes Corp., an owner of master-planned communities and other properties, as part of its restructuring, making the company solely a mall owner.

Mathrani succeeded Adam Metz, who had been CEO of General Growth since October 2008.

Retail Sales Rise

Sales at U.S. retailers rose in January for a seventh consecutive month, Commerce Department data showed. Confidence among U.S. consumers increased in February to the highest level in three years. The Thomson Reuters/University of Michigan final index of sentiment climbed to 77.5, exceeding the median forecast of economists surveyed by Bloomberg News, from 74.2 in January, according to a Feb. 25 report.

“The mall business itself is very good,” Moore said. “There is a lot of demand for high-quality space.”

FFO is a cash-flow measure used by real estate investment trusts. It excludes depreciation and other items and doesn’t conform to generally accepted accounting principles.

Simon Property Group Inc., the only U.S. mall owner larger than General Growth, on Feb. 4 reported FFO that increased to $630.6 million, or $1.78 a share, from $485.2 million, or $1.40, a year earlier.

General Growth announced its results after the close of regular U.S. trading. Its shares rose 34 cents, or 2.2 percent, to $15.92 as of 4:15 p.m. in New York Stock Exchange composite trading. The company has ownership and management interests in 169 malls in 43 states.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net.

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net.

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