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There is a lot here so I will try to make it easy.

Here are the basics:

General Growth Properties, Inc. (the Company) released today its first quarter 2009 operating results. For the first quarter of 2009, Core Funds From Operations (Core FFO) per fully diluted share were a loss of $0.38, Funds From Operations (FFO) per fully diluted share were a loss of $0.52 and Earnings per share - diluted (EPS) were a loss of $1.27. In the comparable 2008 period, Core FFO per fully diluted share were $0.74, FFO per fully diluted share were $0.73 and EPS were $0.01. The declines in Core FFO and FFO are primarily attributable to provisions for impairment, termination income and restructuring costs related to the development of alternatives to address our current liquidity and financing situations.


Got it? Good, now ignore it, all of it. I included it so as to not be accused of glossing over the reported numbers. Ignore it.

What do we really want to know? What is the health of the malls looking like? Earnings from here on out are going to be impacted negatively by various restructuring costs so they are not going to accurately reflect the health of the business. For that we need to go to the NOI or "net operating income" section.

Here it is:

Retail and Other Segment

NOI for the first quarter of 2009 was $608.6 million, a decrease of approximately 4.1% from the $634.5 million reported in the first quarter of 2008. Minimum rents in the first quarter of 2009 declined approximately $2.7 million as compared to the same period of 2008 due to the 2008 sale of three office buildings and two office parks. Temporary tenant revenues, other revenues (including sponsorship, vending, parking and advertising) and overage rents declined in 2009 due to decreases in occupancy and the overall weakness of the retail economy. Weaknesses in certain of our tenants' businesses also led to an $8.6 million increase in our provision for doubtful accounts in 2009 as compared to 2008.

In addition, other revenues declined in 2009 due to a loss on sale of outparcel land of $3.9 million whereas 2008 had outparcel sales gains of approximately $4.3 million.

  • Revenues from consolidated properties were $ 757.6 million for the first quarter of 2009, a decline of 5.1% compared to $798.3 million for the same period in 2008. The majority of this decline is due to the items impacting FFO discussed above.
  • Revenues from unconsolidated properties, at the Company's ownership share, increased to $152.1 million or 3.8% compared to $146.6 million in the first quarter of 2008. This increase was primarily due to the completion and commencement of operations at the Natick Collection in 2008.
  • Total tenant sales declined 6.1% and comparable tenant sales declined 6.7% in 2009, both on a trailing 12 month basis, compared to the same period last year.
  • Comparable NOI from consolidated properties in the first quarter of 2009 declined by 4.4% compared to the first quarter of 2008. Comparable NOI from unconsolidated properties at the Company's ownership share in the first quarter of 2009 increased by approximately 3.7% compared to the first quarter of 2008. In the aggregate, comparable segment NOI decreased 3.3% as compared to the first quarter of 2008.
  • Retail Center occupancy decreased to 90.9% at March 31, 2009, compared to 92.5% at December 31, 2008 and 92.7% at March 31, 2008.
  • Sales per square foot for first quarter 2009 (on a trailing twelve month basis) were $427 versus $438 for the fourth quarter 2008 and $460 in the first quarter of 2008.


Results here have deteriorated a bit as one would expect given current economic conditions. But, the declines were in the 3%-5% range, occupancy rates are still 91% and sales per square foot have fallen just 7% from last year, a much smaller number than would be expected given the economic carnage that has happened since last spring.

In short, operations are holding up well.


Disclosure: Long GGWPQ

Source: General Growth Properties: Focus on Net Operating Income