NEW YORK (AP) -- A Citi analyst on Thursday upgraded his rating on General Growth Properties Inc., citing a strengthening retail landscape for the shopping mall developer and operator.
Analyst Quentin Velleley said the company's management indicated that business is picking up considerably, and he thinks General Growth is benefiting from its efforts to lease out its properties and increase rents.
Velleley raised his rating to "Buy" from "Neutral" and increased his target price on the shares by $3 to $20.
Shares were unchanged at $17.50 in morning trading Thursday.
The company's retail tenants, including Victoria's Secret, Footlocker and Gap, are growing with new kinds of stores. Other tenants such as Lego and Microsoft are expanding as well, Velleley said.
In addition, he said the company will be cutting more expenses.
Vellelly noted that General Growth still faces an uncertain global economy, which could hinder consumer spending and hurt its retail tenants. But he said retailers are in a better position now than they were before the Great Recession because they are keeping a close eye on stockpiles and are more profitable.
General Growth is still dealing with its trip through bankruptcy protection. It filed for Chapter 11 in 2009, the largest real estate bankruptcy case in U.S. history, with nearly $28 billion in debt. The company exited bankruptcy in late 2010 with the aid of $6.8 billion in equity commitments from an investor group and restructured some $15 billion in debt.
In the first three months of the year, General Growth's funds from operations fell sharply as a result of costs related to its reorganization. FFO, which adds such items as amortization and depreciation to net income, is considered a key measure of strength for a real estate investment trust.