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The Honolulu Advertiser
Posted on: Thursday, May 2, 2002

Ala Moana owner says quarterly profit up 52 percent

By Robert Burgess
Bloomberg News

CHICAGO — General Growth Properties Inc.'s first-quarter profit rose 52 percent as the second-largest U.S. shopping-mall owner expanded the amount of space it owns or manages and benefited from lower interest rates.

Net income at the Chicago-based real estate investment trust — which owns Hawai'i's Ala Moana Center and has an agreement to buy Victoria Ward Ltd. — rose to $31.4 million, or 51 cents a share, from $20.6 million, or 39 cents, a year earlier. Revenue rose 7 percent to $290.8 million from $272 million, the company said.

Shopping malls have weathered the slowdown in the economy better than other parts of the real estate market, allowing landlords to maintain or even increase occupancies. General Growth's occupancy rate was 89.1 percent at the end of March, compared with 89 percent a year earlier.

"Conversations with several mall REIT executives suggest to us that while leasing hasn't exactly been robust over the past quarter, tenant demand hasn't fallen off in the mall sector as quickly as it has in other sectors," according to Jay Leupp, a real estate analyst at Robertson Stephens.

Money from operations — a measure of cash flow — rose to $94.4 million, or $1.12 a share, from $77 million, or $1.03, a year earlier. Money from operations is generally defined as net income plus depreciation and before any extraordinary items. The figure is considered the best measure of a REIT's performance because it's used to calculate dividend payments.

General Growth owns or manages 142 malls in 39 states with 125 million square feet. Acquisitions, including the March purchase of stakes in three properties for $271 million, and developments increased the amount of square feet the company owns from 116 million a year ago.