Lebovitz Says CBL On Track For Growth Strategy

Tuesday, July 29, 2014
CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the second quarter ended June 30, including a gain in funds from operations.
   
Three Months Ended
June 30,
Six Months Ended
June 30,
2014     2013 2014     2013
Funds from Operations ("FFO") per diluted share $ 0.
55
  $ 0.51   $ 1.28   $ 1.04
FFO, as adjusted, per diluted share (1) $ 0.55   $ 0.55   $ 1.06   $ 1.08
 

(1) FFO, as adjusted, for the six months ended June 30, 2014, excludes a partial legal settlement of $0.8 million and gain on extinguishment of debt of $42.7 million primarily related to the January 2014 foreclosure of the mortgage loan secred by Citadel Mall.  FFO, as adjusted, for the three and six months ended June 30, 2013, excludes a loss on extinguishment of debt of $9.1 million, primarily related to the prepayment of a secured loan and a gain on investment of $2.4 million related to collection of a note receivable.

 

CBL's President and Chief Executive Officer Stephen Lebovitz commented, "With our strong second quarter results, we remain on track to meet our outlined goals for the year for same-center NOI growth and other key operating metrics. We are also making progress on our asset disposition program with one additional mall under contract and several others under active negotiations. We are committed to the successful execution of our strategy to dispose of non-core properties and reinvest into higher growth assets.

"We are also excited about this week's opening of The Outlet Shoppes of the Bluegrass between Louisville and Lexington, Kentucky, which is 100 percent leased with an incredible line-up of more than 80 premium brands. This property is a terrific addition to the CBL portfolio. "

FFO allocable to common shareholders, as adjusted, for the second quarter of 2014 was $93 million, or $0.55 per diluted share, compared with $90.8 million, or $0.55 per diluted share, for the second quarter of 2013. FFO of the operating partnership, as adjusted, for the second quarter of 2014 was $109.1 million compared with $106.9 million, for the second quarter of 2013. FFO per share was flat from the prior-year period primarily as a result of dilution from the equity raised through the Company's At-The-Market program during the second quarter 2013 and the sale of assets in the third quarter 2013.

Net income attributable to common shareholders for the second quarter of 2014 was $26.7 million, or $0.16 per diluted share, compared with net income of $0.5 million, or $0.00 per diluted share, for the second quarter of 2013.

Percentage change in same-center Net Operating Income ("NOI")(1):

 
Three Months Ended
June 30, 2014
Portfolio same-center NOI 1.9%
Mall same-center NOI 1.4%
 
(1) CBL's definition of same-center NOI excludes the impact of lease termination fees and certain non-cash items of straight line rents and net amortization of acquired above and below market leases. NOI is for real estate properties and excludes income of the Company's subsidiary that provides maintenance, janitorial and security services.
 

MAJOR VARIANCES IMPACTING SAME-CENTER NOI RESULTS FOR THE QUARTER ENDED JUNE 30, 2014

  • Contributions from new and renewal lease spreads resulted in $3.5 million of growth in minimum rent compared with the prior-year period, partially offset by a $0.7 million decline in percentage rents due to lower sales year-to-date.
  • Operating expenses improved by $0.4 million and maintenance and repairs improved by $0.8 million, primarily as a result of expense controls and cost saving measures.
  • Real estate taxes increased by $0.5 million.

PORTFOLIO OPERATIONAL RESULTS

Occupancy:

 
As of June 30,
2014   2013
Portfolio occupancy 93.5% 93.0%
Mall portfolio 93.1% 92.7%
Same-center stabilized malls 92.9% 93.0%
Stabilized malls 92.9% 92.6%
Non-stabilized malls (1) 97.6% 100.0%
Associated centers 95.0% 93.6%
Community centers 97.0% 96.4%
 
(1) Includes The Outlet Shoppes at Oklahoma City and The Outlet Shoppes at Atlanta as of June 30, 2014. Includes The Outlet Shoppes at Oklahoma City as of June 30, 2013.
 

New and Renewal Leasing Activity of Same Small Shop Space Less Than 10,000 Square Feet:

% Change in Average Gross Rent Per Square Foot
 
  Six Months Ended
June 30, 2014
Stabilized Malls 11.7%
New leases 27.8%
Renewal leases 4.2%
 

Same-Store Sales Per Square Foot for Mall Tenants 10,000 Square Feet or Less:

  Twelve Months Ended June 30,  
2014   2013 % Change
Stabilized mall same-store sales per square foot $ 354 $ 364 (2.7)%
 

DEVELOPMENT

On July 31st, the Company will celebrate the Grand Opening of The Outlet Shoppes of the Bluegrass in Simpsonville (Louisville), KY. The 375,000-square-foot outlet center will open 100% leased or committed with more than 80 stores, including Michael Kors, Nike, Saks Fifth Avenue off 5th and The North Face.

TRANSACTIONS

In May 2014, the company completed the sale of Lakeshore Mall in Sebring, FL, for $14.0 million. In June 2014, the company completed the sale of an expansion to the Foothills Plaza associated center in Maryville, TN, for $2.6 million.

Subsequent to the quarter-end, CBL entered into non-binding contracts for the sale of one mall and its associated center and a community center. Subject to the completion of normal due diligence and closing conditions, the sales are expected to close in the fourth quarter 2014. The aggregate scale of the transactions is less than $25.0 million. Additional details will be announced following the expiration of due diligence.

FINANCING ACTIVITY

In July, CBL closed on a $126 million non-recourse loan secured by Coastal Grand in Myrtle Beach, SC. The mall is owned in a 50/50 joint venture. The new ten-year loan bears interest at a fixed rate of 4.0865% and matures in August 2024. Proceeds from the loan were used to retire the existing $75.2 million loan. Excess proceeds were distributed 50/50 to the company and its partner. The company used its share of net proceeds to pay down outstanding balances on the company's lines of credit.


Board of Judicial Conduct Places Campbell County General Sessions Judge Amanda Sammons On 3-Year Probation

The Board of Judicial Conduct, which investigates and acts on complaints against judges in Tennessee, has placed General Sessions Judge Amanda Sammons on a three-year probation, in accordance with a Deferred Disciplinary Agreement as contemplated by T.C.A. § 17-5-301 (f)(4), in lieu of pursuing formal charges against her.  According to the Deferred Disciplinary Agreement, ... (click for more)

Randi Zuckerberg To Speak At Chattanooga Women's Leadership Institute IMPACT 2017

Randi Zuckerberg, the best-selling author and founder and CEO of Zuckerberg Media, will be Chattanooga Women’s Leadership Institute’s (CWLI) keynote speaker at the 12 th  annual IMPACT Leadership Dinner on  Feb. 23rd . CWLI celebrates women in leadership roles and works to increase the influence of women in the Chattanooga community.   As an early employee ... (click for more)

Partnership With Volkswagen To Establish $1 Million Science Lab Program

Volkswagen Chattanooga officials announced on Tuesday the establishment of a $1 million program that will allow all Hamilton County middle and high schools to apply for funds to create a science lab in their school. Named the Volkswagen eLabs, the program will allow students to gain access to emergent technologies, including automated manufacturing equipment, 3D printers, robotics, ... (click for more)

McReynolds, Brooks Arrested After Police Chase Ends In Crash On Monroe Street; Accord Had Been Stolen From Dealership

Marquis McReynolds, 25, and Jermichael Brooks, 23, were arrested after a police chase on Monday.   A task force including the ATF, FBI, and Chattanooga Police Department officers pursued a stolen vehicle. That pursuit resulted in a traffic crash and the arrest of two convicted felons.   The pursuit began at 5200 Highway 58 just after 7 p.m. after police ... (click for more)

City Officials Should Tour Our Roads - And Response (2)

As we near the election in March, now would be a good time for our city officials who are up for re-election to spend a little time exploring their realm.   I would invite them to take a scenic tour starting at Lake Resort Drive paying attention to the portion of the road which was recently repaired which now appears to be sliding back towards the lake again.  Follow ... (click for more)

Roy Exum: Our Puzzling Women

After Rhonda Thurman left the “Enlightment” meeting of the Hamilton Country School Board Saturday afternoon, she must have been catching up on the news when she posted this message on her Facebook page: “I am really trying to understand. I am a woman and I cannot think of one "RIGHT" I do not have. Can someone enlighten me?” Not one person enlightened Rhonda because nobody could ... (click for more)