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General Growth Properties Considers Sale Of Assets, Reviews Strategic Options

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The CEO of mall owner General Growth Properties said the company is considering a sale of assets and other strategic options as the REIT suffered nearly a 50% drop in Q1 earnings compared to the first quarter of last year.

Shopping mall, retailers

Sandeep Mathrani said on the Q1 earnings call Monday that there is an extensive divide between the company's asset valuations in public and private markets, Seeking Alpha reports. As a result, the property owner is exploring strategic options to bridge that gap.

"We will pick a path in the near term. We are looking at assets on both ends of the quality spectrum. There is no sacred cow. We could sell assets and dividend cash. We could sell assets and buy back our shares. We will get value to our shareholders," Mathrani said on the earnings call, Street Insider reports. "The breakup value is more than the current market capitalization. The business is strong. We will pick a path soon."

The move causes some to wonder whether the tumultuous retail environment — fraught with massive store closures and retail bankruptcies higher than those experienced during the Great Recession — will force publicly traded mall owners to go private. 

General Growth Properties is among the top regional mall owners in the country. The REIT reported Q1 profits of $107M (or 11 cents a share) for the quarter ending March 31, down 44% from $192M (20 cents a share) reported in the year-ago quarter — which the company attributes to the sale of four properties, which boosted 2016 gains. 

CORRECTION, JUNE 8, 8:10 P.M. ET: A previous version of this story incorrectly stated General Growth Properties is pursuing privatization as a strategic option to bridge the gap between its asset valuations. The story and headline have been updated.