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Analyst Sees Risk in GGP Land Cash Flow

CHICAGO-Bank of America Securities downgrades General Growth stock from buy to neutral, citing worsening housing market conditions.

By Marita Thomas | Updated on September 18, 2006

(For more retail coverage, click GlobeSt.com/RETAIL and to read more on the debt and equity markets, click here.)

CHICAGO-Bank of America Securities analyst Russ Nussbaum has downgraded locally based General Growth Properties Inc. from buy to neutral. While Nussbaum called the REIT’s core mall business “healthy” in a newly released report, he expressed uncertainty about the company’s anticipated cash flow from land sales it acquired in connection with its 2004 buy of Rouse Co.

The land tracts are in the Summerlin area of Las Vegas, Woodlands TX and Columbia, MD, and the report indicates that the Las Vegas-area holdings pose the greatest potential risk. Referring to BofA’s homebuilding analyst, Dan Oppenheim, Nussbaum says homebuyer traffic in Las Vegas “has trended well below expectations the last few months.” According to housetracker.net, the median asking home prices are down 4.3% in the Las Vegas market over the past 12 months, and inventories of homes on the market have risen 44.2%.

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