General Growth Fourth-Quarter FFO Rises as Tenant Demand at Malls Increase
General Growth Properties Inc. (GGP), the second-biggest U.S. shopping-mall owner, said funds from operations excluding some items rose in the fourth quarter as tenant demand for space in top-tier retail centers increased.
The company’s so-called core FFO climbed to $279.8 million, or 29 cents a share, from $230.1 million, or 23 cents, a year earlier, the Chicago-based company said today in a statement. Analysts expected core FFO, which excludes items such as discontinued operations and costs related to debt retirement, of 27 cents a share, the average of 10 estimates in a Bloomberg survey. FFO is a measure of a property owner’s ability to generate cash.
General Growth plans to redevelop, expand and refurbish shopping centers to boost growth. The real estate investment trust last month completed its spinoff of 30 malls that have lower tenant sales as Rouse Properties Inc. (RSE), allowing General Growth to focus on its better-performing centers.
“The spinoff of Rouse Properties was the big decision of 2011,” Cedrik Lachance, a managing director at Green Street Advisors Inc. in Newport Beach, California, said in a telephone interview before earnings were announced. “Retailers do seek to be in higher-end properties.”
Mall Occupancies
General Growth said occupancies at its regional malls rose to 94.6 percent at the end of December and the initial rent on leases completed in 2011 increased 8.3 percent to $65.67 a square foot. Comparable sales by its tenants gained 7.9 percent to $505 a square foot.
The company released its results after the close of regular U.S. trading. General Growth rose 0.5 percent to $16.67 in New York trading.
Simon Property Group Inc. (SPG), the only U.S. mall owner larger than General Growth, on Feb. 3 reported fourth-quarter results that were higher than analysts’ estimates and increased its dividend 5.6 percent.
To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net
To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net
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