August 1, 2012 / 8:53 PM / 5 years ago

UPDATE 1-General Growth 2nd quarter beats Wall Street's forecast

By Ilaina Jonas

NEW YORK, Aug 1 (Reuters) - General Growth Properties Inc , the No. 2 U.S. mall owner, on Wednesday raised its forecast for the year after reporting a quarterly earnings measure that rose 24.1 percent, on higher rent and occupancy, beating Wall Street’s forecast.

The company posted second-quarter core funds from operations (FFO) of $228.3 million, or 23 cents per share, compared with $184.0 million, or 18 cents a share, a year ago.

Analysts, on average, had forecast FFO of 21 cents per share, according to Thomson Reuters I/B/E/S. The company had forecast 20 to 22 cents per share.

Funds from operations, a performance measure used by real estate investment trusts, removes the effect that depreciation has on earnings. General Growth’s core FFO excludes non-cash items and some non-comparable items.

Since emerging from bankruptcy at the end of 2010, General Growth has focused on leasing and culling its portfolio of properties to include only its most productive malls.

At the end of the quarter General Growth owned or had interests in 150 malls, down from more than 200 before its bankruptcy. For properties the company has owned at least a year, tenants’ sales rose 9 percent to $533 per square foot on a trailing 12-month basis. That compared with a 12 percent increase to $513 per square foot for rival mall owner Macerich Co and 9.9 percent rise to $554 per square foot for Simon Property Group Inc.

General Growth’s mall portfolio was 94.3 percent leased at the end of the quarter, up 1.10 percentage points from a year earlier. Average rent for new leases was $60.69, or 9.6 percent higher than expiring leases.

Core net operating income, a measure of performance at the property level of comparable malls, rose 4.1 percent in the second quarter. Core NOI excludes impacts from non-cash accounting items.

Macerich reported NOI growth of 2.9 percent and Simon had 5.1 percent.

The company’s board approved a 1 cent per share increase in its third-quarter dividend to 11 cents a share payable Oct. 29 to shareholders of record on Oct. 15.

Chicago-based General Growth raised its forecast for the full-year to core FFO in the range of 95 cents to 97 cents per share from a previously raised range of 92 cents to 96 cents per share. For the third quarter, it forecast core FFO in the range of 22 cents per share to 24 cents per share.

Analysts had forecast third-quarter core FFO of 23 cents per share and full-year core FFO of 94 cents for the year.

General Growth shares, which closed up 9 cents at $18.21 before the financial report was released, rose 0.33 percent to $18.27 after hours.

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