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GGP Inc's (GGP) Q3 FFO In Line, Revenues Beat Estimates

GGP Inc. GGP delivered third-quarter 2017 funds from operations (FFO) per share of 37 cents, meeting the Zacks Consensus Estimate. The figure also came in higher than the prior-year quarter tally of 35 cents.

Results reflect 2% growth in same-store net operating income (NOI) from the prior-year period.

GGP Inc. posted revenues of $578.4 million, which comfortably surpassed the Zacks Consensus Estimate of $565.6 million. It compared favorably with the year-ago number of $554.5 million.

General Growth Properties, Inc. Price, Consensus and EPS Surprise
 

Note: The EPS numbers presented in the above chart represent funds from operations (FFO) per share.

Quarter in Details

Same-store leased percentage was 96.5% at quarter end. Initial NOI weighted rental rates for signed leases that have commenced in the trailing 12 months (on a suite-to-suite basis) expanded 14.9%, when compared to the rental rate for expiring leases. Further, tenant sales (all less anchors) inched up 0.1% on a trailing 12-month basis.

The company ended the reported quarter with cash and cash equivalents of $311.1 million, down from $474.8 million as of Dec 31, 2016.

Portfolio Activity

During the third quarter, GGP Inc. completed two deals with Seritage Growth Properties SRG for a consideration of $247.6 million. The company also increased ownership in 218 W. 57th Street, 530 Fifth Avenue, and 685 Fifth Avenue to 99.9%, 90.23%, and 96.1%, respectively.  

GGP Inc.’s development and redevelopment activities in the quarter totaled $1.5 billion. Of this, projects worth $1.3 billion are under construction and $0.2 billion in the pipeline.

Guidance

For fourth-quarter 2017, the company projects FFO per share in the range of 46-48 cents. The Zacks Consensus Estimate for the same is currently pegged at 48 cents.

Our Take

Amid a challenging retail environment, GGP Inc.’s in-line result with regard to FFO in the reported quarter is encouraging.  Furthermore, robust growth in minimum rents as well as management fees and other corporate revenues aided revenue growth.

Admittedly, mall traffic continues to suffer with online purchases growing by leaps and bounds. These have made retailers reconsider their footprint, and eventually opt for store closures and file for bankruptcy in recent times. Amid these, GGP Inc. is focusing on omni-channel retailing as it generates higher sales. However, these efforts are anticipated to limit any robust growth in the company’s profit margins in the near term.

GGP inc. currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has lost 20.1% year to date, underperforming 8.8% loss incurred by the industry it belongs to.



We are now looking forward to the earnings releases of Regency Centers Corporation

REG, Taubman Centers, Inc. TCO and Outfront Media Inc. OUT all of which are expected to report in the upcoming days.

Note:  FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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Taubman Centers, Inc. (TCO): Free Stock Analysis Report
 
Regency Centers Corporation (REG): Free Stock Analysis Report
 
General Growth Properties, Inc. (GGP): Free Stock Analysis Report
 
OUTFRONT Media Inc. (OUT): Free Stock Analysis Report
 
Seritage Growth Properties (SRG): Free Stock Analysis Report
 
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