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General Growth 2nd quarter beats Wall Street's forecast
NEW YORK |
NEW YORK (Reuters) - General Growth Properties Inc (GGP.N), 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.
"The mall results have been pretty strong across the board," Adelante Capital Management portfolio manager Jeung Hyun said. "I think the things that some of the more forward-looking investors are concerned about are some of the weaker sales that are coming out of retailers currently."
But that is not likely to affect mall results for months due to the protection that long current leases provide, he said.
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 (MAC.N) and a 9.9 percent rise to $554 per square foot for Simon Property Group Inc (SPG.N).
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. The average rent for new leases was 9.6 percent higher than for 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 October 29 to shareholders of record on October 15.
Chicago-based General Growth raised its forecast for the full-year to core FFO 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 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 closed up 9 cents at $18.21 before the financial report was released, and were unchanged after hours.
(Reporting by Ilaina Jonas; Editing by Gary Hill and Richard Chang)
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