Wachovia Downgrades General Growth Properties (GGP) to Underperform
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Wachovia downgrades General Growth Properties (NYSE: GGP) from Market Perform to Underperform with a $25-$30 valuation range.
The firm said, "The shares have significantly underperformed the equity REIT market year to date so we expect most will argue "the train has left the station" on an Underperform rating. However, there are no easy solutions for GGP's predicament in our view and we feel it is very likely that growth in funds available for distribution and net asset value remain challenged by steps that must be taken to address debt maturities. (1) The "binary risk" resulting from GGP's plans to sell a $1.5-3.0B CMBS issue when existing paper leads us to conclude at the very least pricing will not be attractive, (2) deteriorating industry occupancy in 2008-2009 puts pressure on core NOI and thus coverage ratios and borrowing capacities, (3) shrinking pool of unencumbered assets, (4) the Hughes Estate/Summerlin land settlement and (5) a rising wave of maturities in 2009 and 2010."
General Growth Properties, Inc. is a real estate investment trust (REIT) focused on the ownership of regional malls.
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