General Growth Properties (GGWPQ.PK)

coldnose's pick

There are some excellent upthump pitches recently on General Growth Properties from some of my most respected fellow "fools". I do agree that General Growth's debt refinancing, lower interest rates, and prospects after coming out of BK protection are very good, but I believe the core issue of General Growth is still prevelant and actual earnings/dividend potential very small for the next several years. True, Mr. Market gets overly excited on comebacks, and especially excited on stocks that are well below their five year lows. There seems to be a lot of misconception that you can value a company by past performance. In many cases, in a stable market and a stable company you can get a good feel for future performance, but one that specializes in Mall operations and planned communties in a recession? The over capacity from chains going bankrupt will continue. That lenders are extending debt repayment shows some confidence in General Growth, but then again, what else can lenders do? Do they want to be a mall owner of an empty mall? General Growth did keep their growth expansions isolated from each other and the mountain of debt is clearly divisible across the individual parts. The current economy, however, still has General Growth with substantial quarterly losses. Even after cutting a half billion in dividends, the road is still rocky. Yes, General Growth is not a Bankruptcy candidate. Yes it was grown relatively smartly, but the mounds of debt bite them. Long term potential is for slow growth and at $6.30 per share, increased restrictions placed on them by lenders, and an unlikely return of a dividend anytime soon, General Growth may be a long term play, but barring continued speculation by Mr. Market, there is little left to wring out of this one.