Oppenheimer Reiterates Outperform on General Growth Properties (GGP) After Traveling with Management
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Oppenheimer reiterated an Outperform rating and $35.00 price target on General Growth Properties (NYSE: GGP) after traveling with company management. Management noted demand for space in better malls remains strong, especially from new concepts and new categories. The strength shows up as low double-digit releasing spreads and occupancy in the low-to-mid 90s.
Analyst Steve Manaker commented, "We continue to rate GGP shares Outperform. We believe the operating environment remains attractive for high-quality Mall REITs, and GGP management should be able to capitalize on this by maintaining strong releasing spreads (around 10% higher) and continuing to find redevelopment opportunities ($300-500 million/year) within the portfolio. These should lead to attractive and steady FFO growth of 7+%/year. This growth should be relatively steady over a cycle (excluding one-off items like the sale of condos in Hawaii built on Ala Moana). We recently brought GGP management to a few non-dedicated REIT investors who focused questions on a number of topics (see below). In our view, the generalists' skepticism about mall viability seems to be waning, especially since the number of new concepts remains strong."
Shares of General Growth Properties closed at $25.97 yesterday.
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