CHICAGO >> General Growth Properties Inc., the second-largest U.S. shopping-mall owner, said fourth- quarter profit rose 74 percent, as the company benefited from more than $1.8 billion of acquisitions last year. General Growth profit
soars 74 percentAcquisitions like Victoria Ward Ltd.
added to net income
By Elizabeth Hayes
Bloomberg NewsNet income at the company, whose shares rose the most of any mall real estate investment trust last year, increased to $74 million, or $1.13 a share, from $42.7 million, or 79 cents, a year earlier. Revenue rose 29 percent to $422.6 million, said Bernard Freibaum, chief financial officer.
Chief Executive John Bucksbaum, the son and nephew of the company's co-founders, expanded in the West in 2002 through the $250 million purchase of Hawaii's Victoria Ward Ltd., the purchase of JP Realty Inc. for $1.1 billion and the Glendale Galleria mall near Los Angeles for $415 million. The added earnings from the acquisitions, along with lower interest rates and little new construction, have boosted General Growth and other mall owners.
In Hawaii, in addition to Ward, General Growth owns Ala Moana Center and the Prince Kuhio Plaza in Hilo.
"They have stable earnings, little threat from new supply and stable demand," said Sherry Rexroad, senior director and portfolio manager for Clarion CRA Securities, which oversees about $2 billion in investments, including General Growth shares.
STAR-BULLETIN / APRIL 2002
General Growth Properties bought Victoria Ward Ltd. last year for $250 million.
Funds from operations -- a measure of cash flow used by REITs -- rose to $163 million, or $1.88 a share, from $125 million, or $1.60, a year earlier. On that basis, which isn't in accordance with generally accepted accounting principles, results exceeded Wall Street's expectation of $1.84, according to a survey of analysts by Thomson First Call.
General Growth's shares rose $1.43 to $50.76 today on the New York Stock Exchange. The shares rose 34 percent last year, making General Growth the best performer among the eight members of the Bloomberg Mall REIT Index, which was up 18 percent.
General Growth owns or manages 169 centers in 41 states with 146 million square feet of retail space, up from 125 million a year ago. The company is second in size to Simon Property Group Inc., which controls 183 million square feet of space.
General Growth's occupancy at the end of the year remained constant, at 91 percent. A lack of new construction has kept occupancy rates of U.S. mall owners between 90 percent and 93 percent for the past four years, said Paul Morgan, an analyst at Thomas Weisel Partners, compared with about 85 percent for downtown office buildings.
Besides Ward, JP Realty and the Glendale Galleria, General Growth also bought the Southland Mall in the San Francisco Bay Area city of Hayward for $89 million.
