General Growth Headquarters

CHICAGO—General Growth Properties just released its second quarter results and analysts seem pleased with the Chicago-based real estate investment trust’s performance and its overall outlook.

“General Growth posted another solid quarter in 2Q14 as organic growth remains healthy,” according to an analysis just released by RBC Capital Markets. “Given the company’s high quality regional mall portfolio, we look for organic growth to remain strong over the next several years. General Growth’s new foray into very high end street retail is a positive for the company, in our view, and complements a deepening redevelopment pipeline.”

The trust reported that its funds from operations per share increased from $0.27 per diluted share in last year’s second quarter to $0.31 this year. Company funds from operations increased 11.8% to $298 million from last year’s second quarter. And its EBITDA increased to $507 million, up 5.0% from last year’s second quarter.

Furthermore, net income for the trust, which has a portfolio of 120 regional malls with about 125-million-square-feet, went down somewhat compared to last year’s second quarter, from $209 million to $174 million.

“Though tenant sales growth continues to slow, embedded loss to lease in the form of below market rents should provide the company with steady cash flow growth for at least the next three years,” according to RBC. “Any pick up in the consumer sales environment during that time would simply add longevity to the growth outlook.”

The analysts also say the GGP has upgraded its portfolio, largely eliminating slow growth properties and setting the stage for continued growth in rental rates and occupancy. And the trust also has a strong development and redevelopment pipeline containing about $2.2 billion of ongoing or proposed projects. “Since most of the projects are additions or other improvements to already productive assets, there appears to be little risk in these projects.”