General Growth Properties' 4Q13 earnings: Is this the end for malls?

Part 2
General Growth Properties' 4Q13 earnings: Is this the end for malls? (Part 2 of 4)

Why General Growth Properties reported strong 4th quarter earnings

General Growth Properties reports big increase in funds from operations

General Growth Properties (GGP) reported that funds from operations increased to 36 cents a share from 31 cents a share a year ago. That’s a 17% increase year-over-year. Company funds from operations increased 11.3%, to $347 million, from $311 million in the prior year’s quarter. Company earnings before interest, taxes, depreciation, and amortization (commonly referred to as “EBITDA”) increased 3.7%, to $556 million from $536 million in the prior year’s Q4.

GGP FFOEnlarge Graph

Comparable net operating income per store (same-store NOI) increased 6.2%, to $582 million from $538 million the year before. Same-store NOI is a good way to measure organic growth. Finally, net income came in at 7 cents a share versus 4 cents a share a year ago.

Full-year 2013 results

General Growth’s funds from operations increased 18%, to $1.16 a diluted share from $0.98 a diluted share in 2012. Company funds from operation increased 15.7%, to $1.148 billion from $992 million in the prior year. Company EBITDA increased 4.3%, to 2.015 billion from $1.932 billion the prior year.

Same-store net operating income increased 6%, to $2.112 billion from $1.993 billion the year before. Net income for the year came in at $303 million (or $0.31 a share) compared to a net loss of $481 million (or $0.52 a share) the year before. General Growth had a special charge related to a warrant liability issue last year, which makes year-over-year net income comparisons difficult.

Guidance for next year

General Growth issued guidance for the first quarter of 2014 and also for the full year. For the first quarter, the company expects to generate funds from operations of $0.29 to $0.30 per share. For the full year, GGP expects funds from operations to be between $1.27 and $1.31 a share. This guidance is based on an expected same-store net operating income growth rate of 4% to 4.5%. EBITDA growth is expected to be about 4%. Same-store NOI grew at 6% last year, so the company is expecting a moderation in retail sales.

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