General Growth beats estimates
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 as impairment costs dropped.
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 yesterday in a statement. The year-earlier loss included $793.9 million in real estate writedowns, according to a statement last year. 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 in January. The company plans to refinance about $5 billion of mortgage debt, Mathrani said.
“We will steadfastly guard our balance sheet and the franchise to squarely focus on the task at hand, driving revenue and creating value for our shareholders,” Mathrani said today in a conference call with analysts. “We've embarked upon a significant mortgage refinancing plan. An environment of low interest rates allows us to achieve more favorable terms than we had imagined before.”
Since November, the company sold eight shopping centers and three other properties for $84.7 million in net proceeds and it is under contract to sell three more properties for $154.8 million, Mathrani said.
Mathrani succeeded Adam Metz, who had been CEO since October 2008.
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.
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.
General Growth did not provide financial forecasts in the statement or in the conference call. Mathrani said the company will make a projection in the third quarter.
The lack of a forecast for per-share FFO or same-store net operating income for the year “is disappointing,” Benjamin Yang and Patrick Glennon, analysts at Keefe Bruyette & Woods, wrote in a report yesterday.
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 shares fell 39 cents, or 2.5 percent, to $15.53 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.