General Growth Properties: US$7.2 Billion of Capital Reinvested

logoGeneral Growth Properties (NYSE: GGP), with its $25 billion market capitalization and ownership of 25 percent of America’s 425 high-quality regional malls, is one of the greatest powerhouses in the regional mall REIT space. However, because much of its capital has been reinvested, it has a relatively low dividend yield of 2.4 percent with a current dividend payout of 53 percent.

picIn terms of General Growth’s operations, the results for the first quarter of 2015 have been strong. The initial rents for leases that began occupancy this year were 8.7 percent higher than the final rents paid on expiring leases. Same-store net operating incomes, funds from operations and dividends have increased by three, five and thirteen percent respectively. No less impressive are the projected results for the year as a whole: Both FFO per share and dividends are expected to increase by eight percent.

national presenceSince 2010, General Growth has reinvested much of its funds: Out of $7.2 billion, they have invested:

  • $2.1 billion in development, with over eighty percent invested in Class A malls and expected average returns of approximately nine to eleven percent;
  • $2.8 billion in acquisitions; and
  • $2.3 billion in stock and warrants repurchases.

The business owns 129 retail properties all over the United States that cover a total of approximately 127 million square feet of gross leasable area.

CAGRDebt profile has improved:

  • 4.11 percent weighted average interest rate
  • 85 percent of debt being fixed interest rate
  • ~7-year weighted average remaining term to maturity.

Signup button

Despite having solid, high-quality assets, General Growth’s valuation has been high. Its price-to-FFO multiple has reached almost 23, one of the highest among its peers. A stock to keep in the watchlist, but it is not a good time to enter at the moment.

Source: Genera Growth Properties

Written by Heli Brecailo

Disclaimer: This newsletter is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Please do your own due diligence before making any investment decision. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.

Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.​