General Growth FFO shares crater after results

* Q3 FFO falls 11 pct

* Cuts 2008 forecast

* Shares fall 42.5 pct

(Recasts first sentence, adds CEO quote, background)

By Ilaina Jonas

NEW YORK (Reuters) - Mall owner General Growth Properties Inc GGP.N posted lower quarterly results, slashed its full-year forecast and does not expect to pay a dividend in the near term, sending its share down more than 40 percent.

In order to generate much-needed cash, the No. 2 U.S. mall owner has put a number of its prime properties up for sale. It has also cut costs, is selling preferred shares, refinancing properties and eliminated its dividend to help it meet looming debt obligations this year and next.

But it faces high hurdles in the current lending environment, which has hurt property values and made loans to buy property more expensive or impossible to get.

"I don't think we're going to necessarily have one monster transaction that is going to solve all the company's leverage issues," said Adam Metz, General Growth's interim chief executive, in a conference call with analysts.

Chicago-based General Growth also said on Wednesday it made inroads into looming debt obligations, but still faces more than $900 million coming due this month and next.

The company reported third-quarter funds from operations (FFO) of $185.4 million, or 58 cents per share, compared with the 76 cents per share analysts on average had forecast, according to Reuters Estimates.

Focusing only on its retail property business, General Growth reported core FFO of $205.7 million, or 64 cents per share, compared with $200.7 million, or 68 cents a share, when the company recognized a litigation award.

For properties the company has operated for at least a year and consolidated on its balance sheet, net operating income fell 1.8 percent.

Comparable tenant sales on a trailing 12-month basis inched up 0.3 percent, yet sales per square foot fell 0.7 percent. Occupancy at its centers also fell, to 92.7 percent from 93.2 a year earlier.

"Plain and simple, not good," UBS analyst Jeffrey Spector wrote in a research note, adding the bank was placing the company's price target and stock rating under review.

General Growth shares were down $1.89, at $2.60 and were the top percentage loser on the New York Stock Exchange in Wednesday afternoon trading. Year-to-date, the shares are down 94 percent.