General Growth Adds Zara Store in LA - Analyst Blog

Retail real estate investment trust (REIT) – General Growth Properties, Inc. GGP – disclosed the opening of a new Zara store at Glendale Galleria in Los Angeles. This fashion retailer is slated to open the store spanning 35,000-square-foot of space in 2015 at this mall.

Notably, Glendale Galleria underwent a multimillion dollar makeover and made a comeback late last year with the grand opening of the Bloomingdale wing. Retailers like Gucci and Louis Vuitton, Pirch, Bhindi Jewelers, BCBG Max Azria, Martier opened their stores at this mall recently. Its tenant roaster consists of well known companies and its anchor tenants are Target Corp. TGT, J. C. Penney Company, Inc. JCP and Macy's, Inc. M.

We believe that the addition of renowned retailers to its mall provide General Growth Properties the opportunity to augment its top line. A well diversified tenant base also minimizes its downside risk.

In February, General Growth Properties reported its fourth-quarter 2013 funds from operations (FFO) per share of 36 cents, which exceeded the Zacks Consensus Estimate by a penny. Results befitted from revenue growth and rise in same store net operating income and increase in initial rental rates.

The company's focused portfolio restructuring activity bodes well for its long-term growth. Additionally, the same day delivery deal of General Growth Properties is a strategic fit given the increasing competition from online retailers.

General Growth Properties is scheduled to report its first-quarter 2014 results on Apr 28, after the closing bell. The Zacks Consensus Estimate for first-quarter FFO is currently pegged at 30 cents per share, reflecting a year-over-year increase of 18.9%.

Currently, General Growth Properties carries a Zacks Rank #2 (Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation and amortization and other non-cash expenses to net income.