General Growth Properties Posts Drop in Key Measures

General Growth Properties Posts Drop in Key Measures

By KRIS HUDSON, Wall Street Journal

General Growth Properties Inc. posted declining fourth-quarter results late Monday, showing that the recession is hampering the mall owner's operations as the company works to mollify its lenders and avoid bankruptcy.

General Growth, based in Chicago, posted a 7.7% decline in funds from operations to $266 million, or 83 cents per share, after factoring out one-time items such as advisory fees and the settlement of a lawsuit. The decline in funds from operations resulted primarily from a decrease in so-called overage rents, or rents tied to retailers' sales growth; lower parking and promotional revenues and higher interest costs. The company posted a net loss of roughly $1 million for the quarter, or breakeven on a per-share basis, compared to year-ago income of $58.7 million, or 24 cents per share.

General Growth also registered a decline in occupancy at its more than 200 U.S. malls to 92.5% from 93.8% in the year-ago period. Sales generated at its malls on a per square foot basis declined by 4.2%. Several other U.S. mall owners posted fourth-quarter declines in those categories as shoppers curtailed their spending and retailers closed stores. In a bright spot, General Growth reported new leases and renewed leases at rates averaging 15.6% more than expiring leases.

General Growth noted in a release issued Monday night that it continues to negotiate with its lenders on nearly $1.2 billion of past-due debt and another $4.1 billion of loans that lenders can declare to be in cross default. The lenders have not yet called the loans due or opted to foreclose on properties pledged as collateral. The company repeated a warning from past disclosures that it "may be required to seek legal protection from our creditors" if it can't win extensions of payment deadlines on the debts.

Among the several one-time charges that General Growth incurred in the fourth quarter were $30 million in fees charged by advisers helping it manage its debt troubles, $24 million in cancelled development projects and a $15.4 million charge related to loans to executives. Those loans were made by General Growth's founding Bucksbaum family to the company's chief operating officer and former chief financial officer to cover losses on their General Growth stock.

General Growth's stock closed Monday at 36 cents, down 10 cents, in 4 p.m. composite trading on the New York Stock Exchange. The stock has declined by more than 98% from a year ago.

Write to Kris Hudson at kris.hudson@wsj.com
Printed in The Wall Street Journal, page C3