Mall real estate investment trust General Growth Properties Inc. said its first-quarter funds from operations dropped nearly 55 percent, but beat Wall Street's expectations.
Late Tuesday, the REIT reported its funds from operations, or FFO, decreased to $223.2 million, or 75 cents per share, in the first quarter, from $491.7 million, or $1.66 per share, in the year-ago period.
Core FFO, which excludes net operating income from master planned properties, was 76 cents per share, compared with 65 cent per share last year.
On average, analysts surveyed by Thomson Financial expected FFO of 74 cents per share.
The REIT also said it expects 2008 FFO between $3.52 per share and $3.58 per share. It previously expected FFO of $3.58 per share to $3.61 per share. Analysts on average expect full-year FFO of $3.51 per share.
FFO, which adds such items as amortization and depreciation back to net income, is considered a key measure of REIT strength because it gives a more accurate picture of cash performance.
Stifel Nicolaus & Co. analyst David Fick expresed concern that maturing debt may pressure the REIT. While it has made progress refinancing its 2008 debt expirations, two recently closed loans are short term, expiring in November, he noted in a client note Wednesday.
Debt maturities for 2008 still total $2.8 billion, he said.
However, going forward, Lehman Brothers analyst David Toti said he believes the REIT is well-positioned to weather a challenging retail environment.
"Although the company faces a headwind in the form of cooling residential markets, the fundamental economics of the mall business look to remain strong in the near term, in our analysis," Toti wrote in a research note.
Net income in the quarter plunged to $8.6 million from $230.2 million, while revenue increased to $830.3 million from $728.8 million on higher minimum rents and tenant recoveries.
General Growth shares slipped 10 cents to $42.51 in midday trading.
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