CBL & Associates Properties, Inc. announced results for the third quarter ended Sept. 30.
CBL & Associates Properties, Inc. FFO per diluted share increased 12.5 percent to $0.54 for the third quarter 2012, compared with $0.48 for the prior-year period.
Same-store sales increased 4.2 percent to $344 per square foot for mall tenants 10,000 square feet or less for stabilized malls for the rolling twelve months ended Sept. 30.
Same-center NOI, excluding lease termination fees, increased 1.2 percent in the third quarter 2012, over the prior-year period.
Portfolio occupancy at Sept. 30 increased 170 basis points to 93.0 percent, from 91.3 percent for the prior-year period.
Average gross rent for stabilized mall leases signed in the third quarter 2012 increased 9.2 percent over the prior gross rent per square foot.
Increasing the aggregate capacity of two major credit facilities to $1.2 billion and converting the facilities to unsecured.
“Strong performance from our portfolio of market dominant malls led to another solid quarter of NOI and FFO growth as well as year-over-year improvement in sales, occupancy and rental spreads,” said Stephen Lebovitz, CBL’s president and chief executive officer. “The positive trends we’ve experienced throughout the year show continued retailer demand for space at our properties. We are taking advantage of the improved trends through an active pipeline of new growth opportunities which most recently yielded the grand opening of Waynesville Commons (Waynesville, N.C.) in October and the second phase of The Outlet Shoppes at Oklahoma City in November. The redevelopments of Southpark Mall (Richmond, Va.) and Northgate Mall (Chattanooga) and the construction start of The Crossings at Marshalls Creek (Stroudsburg, Pa.), will provide a solid foundation for growth in 2013.
“We are also pleased with the enhancements to our capital structure realized through the successful Series E preferred offering, the Series C preferred redemption and the completion of all our 2012 mortgage maturities. In addition, today we announced the extension, upsizing and conversion of our secured credit facilities into new unsecured lines of credit with aggregate capacity of $1.2 billion at a reduced interest rate, improving our financial flexibility and positioning CBL to pursue additional opportunities to enhance our portfolio’s growth profile.”
FFO allocable to common shareholders for the third quarter of 2012 was $84,957,000, or $0.54 per diluted share, compared with $70,987,000, or $0.48 per diluted share, for the third quarter of 2011. FFO of the operating partnership for the third quarter of 2012 was $101,652,000, compared with $91,091,000, for the third quarter 2011.
Third quarter 2012 included a $21,654,000 loss on impairment of real estate from continuing operations and an $8,466,000 loss on impairment of real estate from discontinued operations, related to several properties where a sale is anticipated or has occurred. These dispositions further the Company’s strategy of enhancing the portfolio by selling non-core properties. These properties include Hickory Hollow Mall and The Courtyard at Hickory Hollow in Antioch, TN; Towne Mall in Franklin, OH and Willowbrook Plaza, a community center in Houston, TX. As a result of these impairments, CBL reported a net loss attributable to common shareholders for the third quarter of 2012 of $2,520,000, or $0.02 per diluted share, compared with net loss of $27,320,000, or $0.18 per diluted share for the third quarter of 2011.
Portfolio same-center net operating income (“NOI”), excluding lease termination fees, for the quarter ended Sept. 30 increased 1.2 percent compared with an increase of 2.3 percent for the prior-year period. Same-center NOI, excluding lease terminations fees, for the nine months ended Sept. 30 increased 2.0 percent compared with an increase of 1.6 percent for the prior-year period.
Average gross rent on stabilized mall leases signed during the third quarter of 2012 for tenants 10,000 square feet or less increased 9.2 percent over the prior gross rent per square foot.
Same-store sales per square foot for mall tenants 10,000 square feet or less for stabilized malls for the rolling twelve months ended Sept. 30 increased 4.2 perceent to $344 per square foot compared with $330 per square foot in the prior-year period. Same-store sales per square foot for mall tenants 10,000 square feet or less for stabilized malls year-to-date through Sept. 30 increased 4.1 percent.
Consolidated and unconsolidated variable rate debt of $1,008,815,000, as of Sept. 30, represented 10.0 percent of the total market capitalization for the company, compared with 14.8 percent in the prior-year period, and 18.6 percent of the company’s share of total consolidated and unconsolidated debt, compared with 21.8 percent in the prior-year period.
Portfolio occupancy 93.0% 91.3%
Mall portfolio 93.1% 91.2%
Stabilized malls 93.0% 91.2%
Non-stabilized malls (1) 100.0% 90.5%
Associated centers 94.0% 93.7%
Community centers 91.5% 90.9%
(1) Represents occupancy for The Outlet Shoppes at Oklahoma City in 2012, as well as, The Outlet Shoppes at Oklahoma City and Pearland Town Center in 2011.
CAPITAL MARKETS ACTIVITY
On Oct. 5, CBL closed on an underwritten public offering of 6,900,000 depositary shares, each representing 1/10th of a share of its newly designated 6.625 percent Series E Cumulative Redeemable Preferred Stock (“Series E Shares”) with a liquidation preference of $25 per depositary share, including 900,000 depositary shares sold pursuant to the underwriters’ exercise of their option to purchase additional depositary shares. The offering generated net proceeds to the Company of approximately $166.6 million, after deducting the underwriting discount and estimated offering expenses.
On Nov. 5, CBL completed the redemption of 460,000 outstanding shares of 7.75 percent Series C Cumulative Redeemable Preferred Stock (“Series C Shares”), and all outstanding depositary shares (“Depositary Shares”), each representing 1/10th of a Series C Share (NYSE: CBLPrC - CUSIP No.: 124830-50-6). The aggregate amount paid to effect the redemption of the Series C Shares (including the Depositary Shares) was approximately $115.9 million, which was funded with a portion of the net proceeds from CBL’s recent issuance of Series E Shares. The Company will record a charge of $3.8 million as additional preferred dividends in the fourth quarter 2012 in connection with the redemption of the Series C Shares to write off direct issuance costs that were recorded as a reduction of additional paid-in capital when the Series C Shares were issued.
On Nov. 6, CBL announced that it had received fully executed loan commitments to modify and extend its two major credit facilities, increasing the aggregate capacity by $155.0 million to $1.2 billion. CBL will convert both facilities from secured to unsecured, increasing the capacity of each facility to $600 million, extending the terms and reducing the average borrowing rate by 60 basis points. The outstanding balances on the two facilities will bear interest at an annual rate equal to LIBOR plus a range of 155 to 210 basis points, depending on the company’s leverage ratio. The closing is anticipated in mid-November.
The maturities of both facilities will be extended by three years with the first $600 million facility maturing November 2015, with an option to extend the maturity for one additional year to November 2016 (subject to continued compliance with the terms of the facility). The maturity of the second $600 million facility will be extended to November 2016 with an option to extend the maturity for one additional year to November 2017 (subject to continued compliance with the terms of the facility).
Subsequent to the quarter end, CBL completed the sale of Hickory Hollow Mall in Antioch, TN and Towne Mall in Franklin, OH to two separate buyers, generating aggregate proceeds of $2.0 million.
OUTLOOK AND GUIDANCE
Based on third quarter results and today’s outlook, the Company is providing a 2012 FFO guidance range of $2.00 - $2.10 per share. While the guidance is consistent with the previously issued range, it was effectively increased to offset the $3.8 million preferred redemption charge that will be recorded in the fourth quarter 2012. Full-year guidance assumes same-center NOI growth in a range of 1.0 percent - 2.0 percent, $3.0 million to $5.0 million of outparcel sales and a 100 - 150 basis point increase in year-end occupancy as compared with the prior year. The guidance excludes the impact of any future unannounced acquisitions or dispositions. The Company expects to update its annual guidance after each quarter’s results.
Expected diluted earnings per common share $0.42 $0.52
Adjust to fully converted shares from common shares (0.09 ) (0.11 )
Expected earnings per diluted, fully converted common share 0.33 0.41
Add: depreciation and amortization 1.58 1.58
Add: noncontrolling interest in earnings of Operating Partnership 0.09 0.11
Expected FFO per diluted, fully converted common share $2.00 $2.10