Funds still low at malls

General Growth Properties Inc., the operator of the Glendale Galleria and the Burbank Town Center, reported on Monday that its first-quarter revenues were down from their already depressed levels of a year ago.

The announcement came as the company worked to restructure its debt and emerge from bankruptcy protection.

The Chicago-based firm’s revenues fell about 6.5%, to $761 million, compared with the first quarter of 2009.

The tenant occupancy rate at its more than 200 regional malls slipped to 90.5%, down from 90.9% in the first three months of 2009, according to the company.

Major spaces vacated by Mervyn’s at the Town Center and Galleria are among General Growth’s available real estate.

Still, the company did experience increased leasing activity, with a 21% jump in new tenant commitments compared with the same period last year, a development that was not reflected in occupancy rates, the company said.

Tenant sales also improved, growing 7.5% during the first quarter compared with the same period a year ago. General Growth’s earnings also rose, largely because of its restructuring while under Chapter 11 bankruptcy protection, from a first-quarter loss of $396 million in 2009 to a net income of $78 million.

Although unemployment rates remain high, the mall operator has benefited from recent improvements in consumer spending and broader economic conditions, Adam Metz, General Growth’s chief executive, said in a statement.

“The combination of these improving conditions and our disciplined operating strategy has led to increased sales and leasing performance in the first quarter,” Metz said.

The first-quarter results came after General Growth obtained approval Friday in bankruptcy court for its plan to emerge from Chapter 11 with the backing of three investors led by Brookfield Asset Management.

In presenting the plan, General Growth rejected a third offer from rival mall operator Simon Properties, the nation’s largest mall operator.

But while the company gained approval for the $6.55-billion Brookfield plan, it left the door open for future offers as it finalizes its plan for emergence from bankruptcy protection in July.

That could mean that the already competitive bidding process will continue, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corporation.

“You have to wait and see until the whole thing is wrapped up, because Simon could still come back with a better offer, and I think that’s what they’re looking for,” Kyser said. “They want to get maximum value because in Southern California they have prime properties.”

Approval of the company’s restructuring plan will bring benefits to the local malls, even as General Growth considers other proposals, said Bruce Ackerman, chief economist of the Valley Economic Alliance.

“Once they’re out of bankruptcy, they’ve got certainty for what they can do for the future,” Ackerman said. “That bodes well for the property as well because they can figure out how much they want to put into the property for future improvements.”