Morningstar | GGP Goes Out With a Strong Quarter, Suggesting a Good Year for High-Quality Malls
GGP reported quarterly results for likely the last time as a public company and came in above our expectations. Sales per square foot for in-line tenants were up a very strong 4.2%. Occupancy was down 40 basis points to 94.2% year over year, though percentage of space leased fared better as it fell 10 basis points to 95.6%, so the loss of occupancy appears to be a timing issue. Releasing spreads remained strong at 12.3%, above our 10% estimate, which drove same-store net operating income growth of 4.6% for the quarter, beating our 3.6% same-store NOI growth estimate. Funds from operation was $0.36 for the quarter, in-line with our expectations. GGP's results for the quarter suggest that Class A and high Class B mall owners and operators are seeing strong operating numbers in 2018. While e-commerce will likely continue to chip away at brick-and-mortar retail operations over the long term, it appears that this story has been put on hold for the moment.GGP shareholders voted to approve a proposed acquisition by Brookfield Property Partners in a special meeting held on July 26. All GGP shares will be exchanged for cash or equity and shareholders have until Aug. 21 to elect to receive cash or shares and must elect to receive shares of either Brookfield Property Partners or Brookfield Property REIT. The transaction is likely to close by the end of August.
GGP is a self-administered and self-managed real estate investment trust. The company, through its subsidiaries and affiliates, is an owner and operator of retail properties with a property portfolio primarily comprised of Class A retail real estate. As of Dec 31 2017, the company owned, either entirely or with joint venture partners, 125 retail properties located throughout the U.S. The company provides management and other services to substantially all of its properties, including properties which the company owns through joint venture arrangements. Substantially all of the company's business is conducted through GGP Operating Partnership, LP, GGP Nimbus, LP, and GGP Limited Partnership.
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