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General Growth Properties’ Revenue Fell in 4Q15

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Feb. 5 2016, Updated 9:16 a.m. ET

Revenue dips in 4Q15

General Growth Properties’ (GGP) total revenue for the fourth quarter stood at $644.6 million, down by 4.2% from the same period of the previous fiscal year. Minimum rent witnessed a year-over-year decline of 6.3% in 4Q15 to $387.2 million. Tenant reimbursement, which is also a major source of income for the company, experienced a drop of 8.2% in 4Q15 to $171.5 million from 4Q14. On the other hand, other income of the company grew by 46.8% in 4Q15 to $39.4 million. The decline in General Growth Properties’ revenue in 4Q15 was primarily due to a sharp decline in minimum rent and tenant recoveries.

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Revenue contribution

Minimum rent contributed to 60.1% of the total revenue of the company in 4Q15, compared with 61.4% in 4Q14, while tenant reimbursements’ contribution to total revenue fell from 27.8% in 4Q14 to 26.6% in 4Q15. On the other hand, the contribution of other income to the total revenue of the company increased from 4% in 4Q14 to 6.1% in 4Q15.

Earnings

The net income of the company declined by 33.4% to $196.6 million, or $0.20 per diluted share, from $285.5 million, or $0.30 per diluted share, during the same period of the previous fiscal. The decline in net income was mainly due to a dip in the company’s revenue, however, factors such as higher property management costs and a rise in provisions for impairment also played a role.

Other companies in the retail REIT segment such as Taubman Centers (TCO), CBL & Associates Properties (CBL), and Macerich (MAC) are releasing their 4Q15 earnings this week. The iShares Cohen & Steers REIT ETF (ICF) invests 4% of its portfolio in General Growth Properties. In the next article, we’ll discuss General Growth Properties’ operating metrics.

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