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.


State Supreme Court Adds Donation Option To Attorney Registrations

The  Tennessee Supreme Court will add a voluntary funding mechanism for attorneys to contribute to access to justice programs, but will not require attorneys to report pro bono hours under changes adopted today. In an order filed on Tuesday, the Court “ continues to encourage strongly voluntary reporting of pro bono participation.” Pro bono service refers to  attorneys ... (click for more)

More Than 2,000 Jobs Available At Northwest Georgia Career Expo In Ringgold Thursday

The Northwest Georgia Career Expo, which will feature around 90 employers, will be held in Catoosa County on Thursday from 11 a.m.-3 p.m. at The Colonnade, 264 Catoosa Circle in Ringgold.  Officials said, "Job seekers in northwest Georgia will have excellent opportunities to get a job from among more than 2,000 jobs being offered by employers." Hundreds of job seekers ... (click for more)

Tennessee Broadband Expansion Bill Sought By EPB Put On Hold For Now

Advocates for broadband expansion in Tennessee, including Chattanooga's EPB, announced Tuesday that efforts to extend community-based fiber optic networks are being placed on hold for now "because there is not enough support among state lawmakers to change a state regulation that prevents the expansion of municipal fiber optic systems." EPB earlier won a ruling from the Federal ... (click for more)

Haslam Adds K-12 Funds In Budget Amendment

Tennessee Governor Bill Haslam on Tuesday unveiled additions to the FY 2015-2016 budget that will be considered by the General Assembly in the coming weeks, including added funding for K-12. The governor last week met with school superintendents from the largest systems in the state over the issue of state funding for K-12. The next day, the Hamilton County Schools joined ... (click for more)

Physicians Thank Their Patients On Doctor’s Day

March 30 has been set aside as National Doctors’ Day since 1933 as a time to recognize the contributions made by our physicians. While the recognition is appreciated, our greatest satisfaction comes from caring for our patients.  For 132 years, the Chattanooga-Hamilton County Medical Society has been the physicians’ voice as we worked together to improve health of our community. ... (click for more)

Roy Exum: Look At My April Garden

On this April Fool’s Day, as I take my monthly stroll through my virtual garden, there are gorgeous flowers and there are weeds, which appear to be trying harder than the flowers. So let’s see what we find before searching for “The Prize Egg” on Sunday. A FLOWER to the New York cab driver who told a young writer, “Always remember that everyone you meet knows something that you ... (click for more)