General Growth FFO Climbs as Tenant Sales 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 first quarter as tenant sales climbed amid increased consumer spending.

The company’s so-called core FFO rose to $222.1 million, or 22 cents a share, from $208.2 million, or 21 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 interest expense on repaid debt, of 21 cents a share, the average of nine estimates in a Bloomberg survey. FFO is a measure of a property owner’s ability to generate cash.

The real estate investment trust in January completed its spinoff of 30 malls that have lower tenant sales into a company known as Rouse Properties Inc. (RSE), allowing General Growth to focus on its better-performing retail centers. Mall owners, particularly those with top-tier properties, are benefiting from rising rents and occupancies, said Keith Bokota, an analyst at Des Moines, Iowa-based Principal Global Investors.

“Malls have done pretty well,” Bokota said in a telephone interview yesterday. “We’ve seen property-level income growing at a pretty good clip.”

Principal Financial owned 7.7 million shares of General Growth at the end of December, according to data compiled by Bloomberg.

Consumer Spending Rises

Consumer spending in March rose 0.3 percent, after a revised 0.9 percent gain the prior month that was higher than first reported. Household purchases account for about 70 percent of the U.S. economy.

General Growth’s comparable tenant sales in the first quarter increased 9.6 percent to $525 per square foot on a trailing 12-month basis.

The company raised its forecast for full-year core FFO to 92 cents to 96 cents a share from 90 cents to 94 cents.

The results were released after the close of regular U.S. trading. General Growth rose 0.7 percent to $17.92 in New York.

Simon Property Group Inc. (SPG), the only U.S. mall owner larger than General Growth, on April 27 reported first-quarter results that were higher than analysts’ estimates and increased its dividend.

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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