GGP's Strong Q2 Pulse

CHICAGO-During General Growth Properties Inc.’s second quarter 2005 earnings call, chief executive officer John Bucksbaum admitted having the opportunity to visit a number of the company’s shopping centers. From that, Bucksbaum said he gained complete confidence in the company’s strategic growth, including last year’s $12.6 billion acquisition of shopping-center owner Rouse Co.

“I was able to visit 30 malls during this quarter,” Bucksbaum told investors. “I can tell you from first-hand experience: Our pulse is beating strong.”

In its Q2 ended June 30, GGP reported diluted earnings per share were .01 cents for the second quarter of 2005 as compared to 23 cents in the second quarter of 2004. Fully diluted funds from operations per share were 71 cents for the second quarter of 2005, a 16.6% increase over the 61 cents reported in the comparable period of 2004. Total FFO for the quarter increased 24% to $207.6 million, from $167 million in the second quarter of 2004.

Real estate property net operating income (NOI) from consolidated properties for the second quarter of 2005 increased to $414.7 million, 73.4% above the $239.2 million reported in the second quarter of 2004. NOI from unconsolidated properties increased 48.4% to $96.8 million, compared to $65.3 million during the same period last year.

The company also reported that revenues from consolidated properties were $628.8 million for the quarter, an increase of 77% compared to $355.2 million for the same period in 2004. Revenues from unconsolidated properties increased 59.7% to $158.7 million, compared to $99.4 million in the second quarter of 2004.

Total tenant sales and comparable tenant sales, both on a trailing 12-month basis at June 2005, increased 5.4% and 3.3%, respectively, compared to the same period last year. Comparable NOI from consolidated properties in the second quarter of 2005 increased by 4.6% compared to the same period last year. Comparable NOI from unconsolidated properties increased by approximately 9.9% compared to the second quarter of 2004.

Bucksbaum said that while the quarter was strong, the company plans to stay abreast of emerging trends as department-store consolidations continually throw the retail-tenant mix off-kilter.

“We met with many department-store companies during the quarter, continuing our dialogue to strive to improve performance for both our centers and department stores themselves,” Bucksbaum said. “GGP will continue to take what was once department-store space and create additional mall shop space, big-box space, restaurant space, theaters, outdoor retail villages, residential space or simply replace one department store for another.”

The company currently has ownership interest and management responsibility for a portfolio of 210 regional shopping malls in 44 states, as well as ownership in planned community developments and commercial office buildings. The company portfolio totals approximately 200 million sf of retail space and includes more than 24,000 retail stores nationwide.