Troubled mall operator General Growth Properties Inc. (GGWPQ.PK) reported on Monday that its fourth quarter loss widened significantly from last year, driven by substantially higher impairment provisions reflecting reduced holding periods for non-strategic operating assets and indefinite delays in major development projects. Further, the company provided an update on its restructuring measures to emerge from bankruptcy.
The Chicago, Illinois-based company reported a net loss attributable to common stockholders for the fourth quarter of $612.36 million or $1.96 per share, compared to a loss of $6.53 million or $0.02 per share in the year-ago quarter.
Funds from operations or FFO applicable to operating partnership for the quarter was a loss of $413.90 million or $1.29 per share, compared to a positive FFO applicable to operating partnership of $215.58 million or $0.67 per share in the same quarter last year.
The company blamed a hefty $793.9 million in impairment provision, compared to $60.8 million last year, as the primary driver of the loss in FFO for the fourth quarter. Partially offsetting the impairment amounts were gains of about $342.2 million recorded in the fourth quarter related to estimated fair value adjustments of the secured debt of the subsidiary debtors that emerged from bankruptcy in December 2009.
In addition, there were $148.5 million, net, of other reorganization items incurred in the fourth quarter of 2009 arising from the company's bankruptcy proceedings, compared to $18.7 million recorded as strategic initiative costs as these costs were incurred prior to GGP's petitions for bankruptcy protection in April 2009.
Core FFO for the quarter was a loss of $416.88 million or $1.30 per share, compared to a positive core FFO of $224.40 million or $0.70 per share in the fourth quarter of 2008. Comparable core FFO declined to $194.03 million or $0.61 per share from $235.98 million or $0.74 per share in the fourth quarter of 2008.
For the fourth quarter, the company recorded total real estate property net operating income of $605.46 million, down from $715.37 million in the last year quarter.
Adam Metz, chief executive officer of General Growth commented, "The modest decrease in comparable retail NOI for 2009 (4.4%) is consistent with our expectations, given current market conditions and the temporary impact of our restructuring and Chapter 11 proceedings."
Total revenues for the quarter decreased to $794.12 million from $900.88 million in the prior-year quarter.
Revenues from minimum rents declined to $504.76 million from $539.53 million a year ago. Tenant recoveries for the quarter totaled $208.85 million compared to $232.61 million in the prior-year quarter. Management and other fees totaled $15.65 million, while other revenues amounted $31.62 million for the fourth quarter of 2009.
For fiscal 2009, the company recorded net loss attributable to common stockholders of $1.28 billion or $4.11 per share, compared to net income of $4.72 million or $0.02 per share last year.
Core FFO for the fiscal year was a loss of $326.36 million or $1.02 per share, compared to positive core FFO of $866.02 million or $2.75 per share prior year. Comparable core FFO slumped to $712.22 million or $2.23 per share from $792.81 million or $2.51 per share in 2008.
Total revenues for the year fell to $3.14 billion from $3.36 billion in the fiscal year 2008.
General Growth Properties, the owner of more than 200 regional shopping malls in 44 states, is the second-largest mall operator in the U.S. after Simon Property Group by number of properties. GGP sought Chapter 11 bankruptcy protection in April 2009 after failing to refinance portions of its $27 billion debt as they came due, filing the biggest real-estate bankruptcy in U.S. history.
In mid-December of 2009, the bankruptcy court approved GGP's plans of reorganization for about $10.25 billion of secured mortgage loans. The loans are associated with 194 debtors owning 85 regional shopping centers, including Ala Moana in Honolulu and St. Louis Galleria in St. Louis, 15 office properties and 3 community centers.
The company is now in the midst of the second phase, deleveraging its corporate capital structure and resolving its $6.5 billion of unsecured corporate debt. GGP has commenced a process to explore all potential alternatives for emergence from bankruptcy.
Recently on February 24, Brookfield Asset Management Inc., (BAM) agreed to invest about $2.625 billion in a proposed recapitalization of General Growth Properties or GGP at a plan value of $15.00 per share and provide par plus accrued interest to unsecured creditors. Brookfield will own about 30% of GGP and have the right to nominate three directors. The cornerstone investment will provide flexibility for GGP to pursue additional capital-raising alternatives up to a total of $5.8 billion, including the issuance of new equity, asset sales and limited new debt issuance.
GGWPQ.PK closed Monday's regular trading session at $13.05, down $0.06 or 0.46% on a volume of 2.33 million shares. The stock has traded in a broad range of $0.32 - $13.86 for the past 52 week with a three-month average volume of 4.07 million shares.
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