General Growth reports Vegas results after bankruptcy

By Steve Green

Monday, Aug. 31, 2009 | 1:07 p.m.

Shopping mall owner and real estate developer General Growth Properties Inc. has reported 2008 and early 2009 financial results for its Las Vegas properties -- results showing mixed business trends as the recession widened.

Chicago-based General Growth and many of its subsidiaries filed for bankruptcy protection in April.

Locally, the company owns the Fashion Show, Grand Canal Shoppes, Shoppes at the Palazzo, Boulevard and Meadows malls. All but the Meadows mall are part of the bankruptcy case.

General Growth is also developing the Summerlin planned community through its Howard Hughes Corp. subsidiary.

Recent bankruptcy court filings showed these gross revenue figures for the local malls involved in the bankruptcy:

--Fashion Show on the Las Vegas Strip: $74.7 million in 2008, down from $76.5 million in 2007. And $19.1 million for the first quarter of 2009.

--Grand Canal Shoppes at the Venetian resort: $79.7 million in 2008, up from $76.6 million in 2007. And $16.6 million for the first quarter.

--Boulevard Mall on Maryland Parkway: $20.5 million in 2008, down from $21.2 million in 2007. And $4.7 million in the first quarter.

--Shoppes at the Palazzo at the Palazzo resort: $24.9 million in 2008. The property was not open in 2007. And $6.1 million in the first quarter.

Las Vegas Sands Corp., owner of the Venetian and Palazzo, cited disappointing results at the Shoppes at the Palazzo this month in taking a $94 million impairment loss against proceeds from the sale of the mall to General Growth.

As of June 30, Las Vegas Sands had received $295.4 million from the mall sale, with the final purchase price to be determined based on the mall's net operating income performance. One significant mall tenant had filed for bankruptcy and another had delayed construction plans, Las Vegas Sands said in a regulatory filing.

"Given the economic and market conditions facing retailers on a national and local level, tenants are facing economic challenges that have effected, and may effect in the future, the calculation of net operating income," Las Vegas Sands said.

Separately, General Growth said Monday that value-oriented fashion retailer Forever 21 is opening six stores in 2010 at General Growth malls around the country, including Fashion Show in Las Vegas.

Malls operated by General Growth and other companies on the Las Vegas Strip will face a new competitor Dec. 3, when MGM Mirage's CityCenter begins to open its 500,000-square-foot Crystals retail and dining center.

As for its Summerlin land development operations in Las Vegas, General Growth said subsidiary Howard Hughes Properties Inc. generated revenue of $30.5 million in 2008, down from $84.5 million in 2007 -- no surprise given the distressed state of the Southern Nevada real estate market. In the first quarter of this year, the subsidiary reported revenue of $5.7 million.

General Growth has not reported second quarter results by individual property, but said that overall for the second quarter its revenue fell from $815.6 million in 2009 to $792 million in 2009.

Retail center occupancy remained steady at 91 percent as of June 30 vs. 90.9 percent at March 31 -- but fell from 93.2 percent as of June 30, 2008.

Tenant sales per square foot for second quarter of 2009 -- on a trailing 12-month basis -- were $417 vs. $427 for the first quarter of 2009 and $459 in the second quarter of 2008.

Overall, the company generated funds from operations in the second quarter of $58.2 million, down from $221.6 million in the year-ago quarter. Funds from operations is a key performance measure for real estate investment trusts such as General Growth Properties.