Reasons for the sell-off included the mall REIT missing fourth-quarter earnings targets, mostly related to the $7.2-billion merger with Rouse Co. in 2004, as well as a delay in filing a report with the Securities and Exchange Commission after tax accounting issues were raised. In addition, an up-tick in interest rates affected General Growth Properties' stock price, as 26% of the company's debt is floating rate, the analysts say.

Helping drive the upgrade is the belief class A malls are more likely to outperform lesser grade shopping centers, which could see a larger number of store closings by struggling retailers, according to Nussbaum and McElroy. "Specialty retailer square footage growth is expected to remain healthy, with 4% growth in 2006," they say. "Highly-productive, market dominant malls should capture most of this demand. Class A malls should be well insulated from store closings."

General Growth Properties stock most recently closed at $46.34. The Bank of America analysts set $50 as a target. The stock price has fallen 9.1% in less than a month. At the same time, mall stocks have fallen 5% since the REIT market peak in late March, Nussbaum and McElroy note.

Although the fourth-quarter earnings miss and delayed filing of an SEC report are not likely to be repeated, Bank of America's upgrade comes with caution. "This is not as clean-cut a story as rival Simon Property Group," say Nussbaum and McElroy, who reiterated a "buy" rating on the largest US retail REIT. "However, we believe as the risks subside, the stock should retest its 52-week high."

In recent news, General Growth Properties struck a development agreement to build a waterfront town square on 194 acres in Frisco, TX. The tentative plan has a hotel-conference center, retail, entertainment and residential space--with a build-out value sure to exceed $200 million. The result will be "a bookend" at the city's far northern end to General Growth's 1.2-million-sf Stonebriar Centre, situated 10 miles to the south in the 720-acre Frisco Bridges