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GGP Inc's (GGP) Q1 FFO In Line With Estimates, Down Y/Y

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GGP Inc. came up with first-quarter 2017 funds from operations (FFO) per share of 36 cents, in line with the Zacks Consensus Estimate. The prior-year quarter figure for FFO per share was 40 cents.

GGP Inc. posted revenues of $566.3 million, which beat the Zacks Consensus Estimate of $566 million by a narrow margin. However, it came in lower than the year-ago number of $607 million.

During the quarter, same store net operating income (NOI) increased 2.5% from the prior-year period.

Quarter in Details

Initial rental rates for signed leases in the trailing 12 months (on a suite-to-suite basis) increased 10.5 %. Further, tenant sales (all less anchors) inched up 0.9% on a trailing 12-month basis.

GGP Inc.’s development and redevelopment activities totaled around $1.3 billion. Of this, projects worth $0.7 billion are under construction and $0.6 billion are in the pipeline.

The company ended the quarter with cash and cash equivalents of $252.7 million, down from $474.8 million as of Dec 31, 2016.

Dividend Update

GGP Inc. announced a second-quarter common stock dividend of 22 cents per share, reflecting an increase of 16% year over year, but flat sequentially. This amount is payable on Jul 28 to stockholders of record as on Jul 13.

Share Buyback

During the quarter, GGP Inc.  acquired around 2.57 million of its common shares at a weighted average price of $23.16 per share. This resulted in total consideration of around $59.6 million.

Guidance

For full-year 2017, GGP Inc. has revived its FFO per share guidance in the range of $1.56–$1.60 from the previous guidance of $1.56–$1.60.  The Zacks Consensus Estimate of $1.58 lies within this range.

For first-quarter 2017, the company projects FFO per share in the range of 34–36 cents, revising it from the earlier range of 35–37 cents. The Zacks Consensus Estimate is currently pegged at 36 cents.

Our Take

GGP’s portfolio of high quality retail properties is likely to generate decent cash flows, given its cluster of renowned tenants and efforts to support omni-channel retailing.

However, mall traffic continues to suffer with online purchases growing by leaps and bounds. While the company is taking steps to counter such moves, we believe that upfront expenses will limit its profitability improvement in the near term.

General Growth Properties has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of The St. Joe Company (JOE - Free Report) , Lamar Advertising Company (LAMR - Free Report) and Welltower Inc. , which are expected later this week.

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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