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CHICAGO-General Growth Properties Inc., the former bankrupt owner of 135 malls in the United States, reported a net loss of $197.6 million in the first quarter, compared to a net income of $5.7 million in Q1 2011. The mall REIT attributes the loss to costs from the 2009 bankruptcy and subsequent divestment of under-performing malls, and executives said in a conference call Wednesday that growth in net-operating income and occupancy is expected for this year.

During the quarter, GGP spun off 30 malls into the new Rouse Properties company, based in New York City. The trust also purchased 11 Sears pads, from properties such as the Woodlands in Houston and Fashion Place in Salt Lake City, and plans to re-tenant the space.

Sandeep Mathrani, CEO, said the company looks to grow the firm’s 93% leased rate by the second half of the year. He said there will be 34 stores opening in the portfolio this year, about 1.1 million square feet with tenants such as Dick’s Sporting Goods and DSW. “We continue to benefit from the continued resurgence of the department store,” he said during the call. “Mature retailers are for the first time expanding their footprint, and coming up with new concepts, such as Pink rolling out as a separate store. We’re seeing Forever 21 and H&M growing their number of stores in this country. Obviously, the first place they seek is to go to malls that do over $400 a square foot.”

However, Mathrani said the trust will not at this time buy into the current trend, when it comes to new development, of building strictly outlet centers, now favored by Indianapolis-based Simon Property Group and Bloomfield Hills, MI-based Taubman Centers. “I’m very focused on the class A mall business,” he said. “You have to have a really deep pipeline to enter the outlet business. It would really have to move our needle, and I can’t imagine one, two or three projects moving our needle. So, I’m staying away watching my peers perform well in that space.”

He said the company is staying away from new mall development, but is looking at $1.6 billion in redevelopment at various properties during the next five years. The trust was able to secure a $1 billion secured corporate line of credit during the first quarter.

Instant Insights /

GGP Posts Q1 Loss, Plans More Leasing in Second Half of 2012

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