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Strong holiday sales help
By Robert Burgess
lift Ala Moana parent’s
net by 48%
Bloomberg NewsCHICAGO -- General Growth Properties Inc., which owns Ala Moana Center and is the second-largest shopping-mall owner in the United States, said fourth-quarter earnings rose 48 percent as it benefited from a banner holiday shopping season and higher rents and occupancy rates.
The Chicago-based real estate investment trust's funds from operations rose to $89.8 million from $60.6 million a year earlier. On a per-share basis, earnings rose 21 percent to $1.22 from $1.01, reflecting an increase in shares outstanding.
Revenue was $280.2 million, up from $209.1 million.
The company's funds from operations -- the best measure of a REIT's performance -- exceeded Wall Street's estimates of $1.15 a share, according to a survey of analysts by First Call/Thomson Financial.
Riding a wave of consumer confidence, sales in malls increased 7.7 percent this past holiday season, according to the International Council of Shopping Centers, as the Internet failed to take much business away from traditional shopping venues.
"If 1999 was the 'year of clicks,' I am pleased to report on the strength of (the company's) bricks," John Bucksbaum, chief executive, said in a statement. "General Growth malls are alive and well."
The company owns and manages 136 malls in 37 states with a total of 114 million square feet of space, up from 100 million a year ago.
In July, the company paid $810 million to Japan-based for Ala Moana Center, which Gerneral Growth already managed.
General Growth is among the leaders in the consolidating mall business, buying $7 billion of properties since mid-1993. It is second only to Indianapolis-based Simon Property Group Inc. in size among U.S. mall owners.
General Growth's fourth-quarter occupancy rate rose to 90.1 percent from 88.6 percent a year earlier. The average annual rent on new leases was $33.78 a square foot, up 24 percent from a year earlier. Earnings on properties owned at least a year rose 6 percent.
Mall tenant sales on a same-store basis, or at stores open at least one year, rose 6.1 percent, up from a 4.4 percent gain a year earlier. Sales volume is a closely watched figure for retail property owners because they're typically entitled to a portion of those sales in addition to base rental income.
"Within the malls, specialty retailers, which is where mall owners make their money, have been enjoying sales growth well above that experienced by department stores, Prudential Securities analyst James Sullivan wrote in a report ahead of the earnings release yesterday.
Funds from operations is a measure of cash flow and is considered the best gauge of a REIT's performance because it's used to calculate dividends. It's generally defined as net income plus depreciation, before any extraordinary items.
