Retail REIT GGP Inc. GGP delivered first-quarter 2018 funds from operations (FFO) per share of 35 cents, missing the Zacks Consensus Estimate of 37 cents. The figure also came in lower than the prior-year quarter tally of 36 cents.    

Results reflect year-over-year decline in same-store NOI.

The company posted revenues of $574.2 million, which lagged the Zacks Consensus Estimate of $603 million. However, the figure compared favorably with the year-ago tally of $566.3 million.

Quarter in Details

Same-store leased percentage was 95.3% at the quarter’s end. Initial NOI weighted rental rates for signed leases that have commenced in the trailing 12 months (on a suite-to-suite basis) expanded 13.4%, when compared to the rental rate for expiring leases. Further, tenant sales (all less anchors) inched up 0.9%, on a trailing 12-month basis, and excluding apparel sales, increased 2.5%.

GGP’s development and redevelopment activities totaled $1.5 billion. Of this, projects worth $1.4 billion are under construction and $0.1 billion in the pipeline.

The company ended the first quarter with cash and cash equivalents of $178.2 million, up from $164.6 million as of Dec 31, 2017.

Dividend Update

GGP announced a second-quarter common stock dividend of 22 cents per share. This dividend will be paid on Jul 31 to stockholders of record on Jul 13, 2018.

Our Take

GGP continues to upgrade its tenant composition and customer experience by investing in recaptured anchor boxes at attractive returns.

GGP’s portfolio of high-quality retail properties across attractive locations has enabled the company to enjoy higher rents. Additionally, the company continues to improve its tenant roster and is making efforts to strengthen customer relationships. Further, GGP has been focusing on omni-channel retailing and other initiatives, which looks encouraging.

Notably, on Mar 26, 2018, GGP accepted the revised acquisition offer extended by Brookfield Property Partners. Both companies have entered into a definitive agreement, per which Brookfield will acquire the GGP shares, it doesn’t own yet, for nearly $15.3 billion, gaining complete ownership of the second largest U.S. mall owner.

Nevertheless, the growing popularity of internet retail remains a concern for GGP. This has affected the company’s mall traffic, compelling store owners to reconsider their footprint and eventually opt for store closures.

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

Currently, GGP carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Stocks

Taubman CentersTCO reported first-quarter 2018 adjusted FFO per share of $1.04, surpassing the Zacks Consensus Estimate of 92 cents. The figure also came in 13% higher than the year-ago tally of 92 cents.

Simon Property Group, Inc. SPG posted first-quarter 2018 FFO of $2.87 per share, which beat the Zacks Consensus Estimate of $2.83. Also, the reported figure came in 4.7% higher than the prior-year tally of $2.74.

Regency Centers Corporation’s REG first-quarter 2018 FFO per share of 96 cents outpaced the Zacks Consensus Estimate of 94 cents.  Further, results compared favorably with 27 cents reported in the year-earlier quarter. However, results in the year-ago period included one-time merger-related costs of 55 cents per share.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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