General Growth Properties Inc. (GGP) Q1 2012 Results Earnings Call May 2, 2012 10:00 AM ET Executives Kevin Berry – Investor Relations Sandy Mathrani – Chief Executive Officer Michael Berman – Chief Financial Officer Analysts Nathan Isbee – Stifel Nicolaus Samit Parikh – ISI Group Ross Nussbaum – UBS Quentin Velleley – Citi Ki Bin Kim – Macquarie Cedrik Lachance – Green Street Advisors Rich Moore – RBC Capital Ben Yang – KBW Michael Mueller – JPMorgan Presentation Operator
Previous Statements by GGP
» General Growth Properties' CEO Discusses Q4 2011 Results - Earnings Call Transcript
» General Growth Properties' CEO Hosts Institutional Investor and Analyst Conference - Presentation Transcript
» General Growth Properties's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» General Growth Properties CEO Discusses Q2 2011 Results - Earnings Call Transcript
During today’s call, we will discuss certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included within the earnings release and the supplemental information package included in the Form 8-K filed by us tonight. This information is also available on our website in the Investors section.Participating in today’s call are Sandy Mathrani, Chief Executive Officer; and Michael Berman, Chief Financial Officer. I will now turn the call over to Sandy. Sandy Mathrani Thank you, Kevin. Good morning. I will provide an overview of our operating results for the quarter and then turn the call over to Michael. Yesterday we reported core FFO of $0.22 per diluted share. Core FFO was $222.1 million for the quarter, an increase of 6.7% from the same period last year. It should be noted that the core NOI for the U.S. regional mall portfolio increased 4.1% to $503.8 million from the same period last year. Before moving on to my review of our operating results, I’d like to recap the refinancing of Ala Moana Center which closed in early April. The original loan was due to mature in 2018 and was pre-payable at par as part of the $8.8 billion of property level debt with such an option. We decided to take advantage of the low interest rate environment, coupled with a demand for high quality real estate. The new loan is $1.4 billion and bears an interest rate of 4.23% per year, interest only due 2022. The 4.26% interest rate was set at approximately 182 basis points above the 10-year treasury yield. The transaction further latters our debt maturities and results in annual cash flow savings of approximately $40 million. At this debt level, we believe the center is less than 50% levered. Michael will discuss our financing plans for 2012 later in the call.
Moving on the operating performance for regional mall portfolio continued to strengthen during the first quarter, extending the growth and experience since the beginning of 2011. To recap, our U.S. regional mall portfolio consists of 135 malls encompassing 57.4 million square feet of in-line mall space.In addition, in Brazil, we owned 15 shopping malls comprising approximately 5.3 million square feet. On a trailing 12 month basis, tenant sales for the U.S. portfolio were $525 per square foot, an increase of 9.5% from a year ago. Within our Brazilian portfolio, same-store sales of approximately $575 per square foot, an increase of 12.8% from the previous year. The categories where sales have been exceptional include department stores, jewelry, home electronics, Medicare and soft fashion. Needless to say, luxury continues to excel. The U.S. retail mall portfolio was 93% leased as of the end of the quarter. Our Brazilian mall portfolio is 98.6% leased. Our goal for year end 2012 is to be 95% leased, representing an increase of 80 basis points of year end 2011. We expect to achieve this with permanent occupancy of 88%, temporary occupancy of 5% and signed/not occupied of approximately 2%. We continue to actively lease space across the portfolio, excluding anchors and percentage of new approximately 4.5 million square feet will commence occupancy at initial rents of $55.30 per square foot. On a suite-to-suite basis, 2.9 million square feet will commence occupancy at initial rent of $62.12 per square foot, this is a gross number. Netting out cash and taxes, base rent is approximately $46 a square foot. The spread of $4.29 is about a 10% increase on a net basis or 7.4% on a gross basis. I would like to highlight that we converted approximately 250,000 square feet of temp-to-perm during the quarter. The rent grew from about $20 per square foot gross to about $50 per square foot gross. This spread is not in any of our spread calculations.
In our supplement, you will note that we now present total leasing activity and suite-to-suite activity regardless of when the lease was signed. In past quarters, we showed you a breakdown between leases signed to year end 2010 and then subsequent. Beginning with this quarter, we now report this activity as one since the majority of the leases taking occupancy in 2012 was signed subsequent to 2010.Read the rest of this transcript for free on seekingalpha.com