NEW YORK – General Growth Properties Inc., the second-biggest U.S. shopping-mall owner, said funds from operations excluding some items rose 0.4 percent in the third quarter as occupancy in its regional malls increased.
The company’s “core” FFO climbed to $224.2 million, or 23 cents a share, from $223.2 million, or 68 cents, a year earlier, the Chicago-based real estate investment trust said in a statement Thursday. General Growth’s forecast for full-year core FFO beat analyst estimates. FFO is a measure of a property owner’s ability to generate cash.
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General Growth, which left bankruptcy protection a year ago, is refinancing debt to lower expenses and plans to redevelop, expand and refurbish shopping centers to boost growth. Last month, the company said it sold Faneuil Hall Marketplace in Boston, the office and garage components of Westlake Center in Seattle and a shopping center in Provo, Utah, as it focuses on its regional malls.
“It’s still a story of debt refinancing and pushing out maturities and figuring out the whole portfolio,” Craig Guttenplan, an analyst at CreditSights Inc. in London, said in a telephone interview. “Fundamentals are improving versus the prior year.”
In August, General Growth said it would spin off 30 of its malls to shareholders through a special dividend. They will be transferred to a new publicly traded REIT, Rouse Properties Inc.
Full-Year Forecast
General Growth forecast core FFO of 93 cents to 95 cents a share for the full year. Analysts projected full-year FFO of 90 cents a share, the average of 11 estimates in a Bloomberg survey.
The core FFO excludes items such as discontinued operations and costs related to debt retirement. Net income was $252 million, or 26 cents a share, compared with a loss of $231 million, or 69 cents, a year earlier.
General Growth said occupancy in its regional malls rose to 92.7 percent in the quarter and initial rent on leases completed in 2011 increased 6.7 percent to $63.71. Comparable sales by its tenants gained 7.8 percent to $471 a square foot.
The company is among landlords who are increasing rents on new leases as sales by its tenants rise. U.S. retail purchases climbed 1.1 percent in September, the most in seven months, Commerce Department data showed.
General Growth announced earnings before the start of regular U.S. trading. Its shares rose 2.2 percent to $14.83 Wednesday in New York.
Simon Property Group Inc., the only U.S. mall owner larger than General Growth, on Oct. 25 reported third-quarter results that beat analysts’ estimates and raised its full-year forecast as income from rents rose. Simon, based in Indianapolis, also boosted its quarterly dividend to 90 cents a share, a 12.5 percent increase.
(General Growth will hold a conference call at 11 a.m. New York time. See GGP US
