General Growth’s earnings
dive on higher costs

General Growth Properties Inc., owner of Ala Moana Center and Victoria Ward Centers, said second-quarter earnings dropped 95 percent on higher interest and depreciation costs.

Net income fell to $2.65 million, or 1 cent a share, from $51.1 million, or 23 cents, a year earlier, the Chicago-based company said yesterday. Revenue more than doubled to $766.9 million from $374.4 million.

Depreciation and amortization costs rose to $173.1 million from $85.8 million a year earlier, partly a result of General Growth's $11.3 billion purchase of Rouse Co. in November. Interest expenses almost tripled to $244.8 million.

General Growth's funds from operations, a measure of cash flow used by real estate investment trusts, rose 24 percent to $207.6 million, or 71 cents a share, from $167 million, or 61 cents. On that basis, which doesn't comply with generally accepted accounting principles, results beat the 70-cent average estimate of 14 analysts surveyed by Thomson Financial.

Retail-center occupancy stayed the same at 91 percent at the end of the quarter. Sales per square foot, on a trailing 12-month basis as of June 30, rose to $421 from $369.

Second-quarter results were announced after the close of regular U.S. trading. General Growth shares rose 52 cents to $46.50 in New York Stock Exchange composite trading. They have gained 55 percent in the past year.

General Growth owns stakes in and manages 210 regional malls in 44 U.S. states, encompassing about 200 million square feet of space. Simon Property, which controls 201 million square feet of space, last week reported that its second-quarter earnings more than doubled on the sale of five office buildings in Chicago.