Much like Macerich Co., GGP Inc. ($GGP) reported earnings late last week. The results, however, were quite different. GGP reported a 49% decrease in net income YOY and a slight EPS beat, a 3.4% EBITDA increase, an incremental $53mm FFO gain, and 97% occupancy.
While pointing out that 7000 stores closed nationwide in 2017 - and 21 household names filed for bankruptcy - he claims that the state of the mall is strong. Indeed, if you ever want to see entrepreneurial spin in action look no farther than this comment sprinkled with the fancy "platform" descriptor:
- "Layer on the embedded opportunities to recapture space in department stores and you have a platform of growth. We have 100 acres of real estate in nearly every desirable MSA in the United States. Where others see vast parking fields, we see multi-family homes, medical office, entertainment venues, transportation hubs with our existing retail offerings serving as the focal point of a vibrant community. Our portfolio now contains over 52 cinemas, 42 entertainment venues, three co-working spaces, 14 fitness centers, and 21 supermarkets."
Is now a good time to mention that AMC Entertainment ($AMC) got downgraded by Moody's recently (paywall)? Anyway, we digress.
Interestingly, total sales were down, dragged primarily by apparel. When asked, then, why GGP had leased 40% of its available space in 2017 to apparel, the response was basically that (i) fast fashion sucked and has been replaced (citing Charming Charlie as a particular drag), (ii) apparel sales were actually up in November and December, and (iii) 40% actually represents a decrease in allocation to apparel. That's probably a good thing given that Bloomberg recently decried "the Death of Clothing." See below.
We're not biting.