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GGP Q2 FFO Meets Estimates, Revenues Improve, NOI Up Y/Y

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GGP Inc. delivered second-quarter 2018 funds from operations (FFO) per share of 36 cents, in line with the Zacks Consensus Estimate. The figure came in slightly higher than the prior-year figure of 35 cents.    

Results reflect year-over-year increase in same-store net operating income (NOI).

The company posted revenues of $583.1 million, which marked a 4.9% increase from the prior-year figure. However, the reported figure lagged the Zacks Consensus Estimate of $597.2 million.

Quarter in Details

The company reported same-store NOI growth of 4.6% from the prior-year period to $573.9 million. Same-store leased percentage was 95.6% at the end of the quarter under review.

Initial NOI weighted rental rates for signed leases, that have commenced in the trailing 12 months (on a suite-to-suite basis), advanced 12.3%, when compared to the rental rate for expiring leases. Further, NOI weighted tenant sales per square foot (<10K sf) were $739, on a trailing 12-month basis, reflecting an increase of 4.2% over the previous year.

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 second quarter with cash and cash equivalents of $194.7 million, up from $164.6 million as of Dec 31, 2017.

Our Take

GGP has a portfolio of high-quality retail properties across attractive locations. Additionally, the company continues to improve its tenant roster and has been making efforts to strengthen customer relationships. Further, GGP has been focusing on omni-channel retailing and other initiatives, which looks encouraging. Moreover, its acquisition by Brookfield Property Partners L.P. is on track and recently GGP announced receiving common stockholders’ approval for the same.

Nevertheless, 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.

Currently, GGP carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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We now look forward to the earnings releases of other REITs like Public Storage (PSA - Free Report) , Essex Property Trust Inc. (ESS - Free Report) and Realty Income Corporation (O - Free Report) , which are slated to report their quarterly numbers on Aug 1.

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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