CBL & Associates Properties Reports Same-Center Sales Are Up For Second Quarter

  • Wednesday, July 29, 2015

CBL & Associates Properties, Inc. announced results for the second quarter ended June 30, including an increase in same-center sales. 

CBL's President and Chief Executive Officer Stephen Lebovitz commented, "Overall fundamentals in the CBL portfolio remain healthy. Same-center sales increased 4.1 percent during the second quarter, marking another quarter of impressive growth. Leasing spreads remained strong at 8.7 percent. Our leasing team has quickly addressed the recent bankruptcy-related store closures, with more than 65 percent of the space committed or under negotiation. These future store openings will benefit our portfolio in late 2015 and throughout 2016. 

"Our portfolio transformation is progressing with the completed sale of two non-core assets as well as the addition of Mayfaire Town Center, a high-quality, high-growth Tier One property. Additionally, we are capitalizing on value-creation opportunities in our existing portfolio with the recent start of anchor redevelopment projects at two centers. The conversion of underperforming anchors into new stores and restaurants will be a significant source of ongoing growth over the next several years, strengthening the individual centers as well as the portfolio overall."

FFO allocable to common shareholders, as adjusted, for the second quarter 2015 was $91.9 million, or $0.54 per diluted share, compared with $93.0 million, or $0.55 per diluted share, for the second quarter 2014. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the second quarter 2015 was $107.7 million compared with $109.1 million for the second quarter of 2014. 

Net income attributable to common shareholders for the second quarter of 2015 was $30.7 million, or $0.18 per diluted share, compared with net income of $26.7 million, or $0.16 per diluted share, for the second quarter of 2014. 

MAJOR VARIANCES IMPACTING SAME-CENTER NOI RESULTS FOR THE QUARTER ENDED JUNE 30, 2015

Lost income from bankruptcy related store closures resulted in a $0.9 million decline in same-center minimum rents during the quarter.
Percentage rents increased by $0.5 million due to positive sales growth.
Tenant reimbursement increased by $1.5 million, substantially offset by a $1.2 million increase in real estate tax expense.
Property operating expense declined by $0.9 million, primarily as a result of a $0.4 million decline in bad debt expense as well as moderate declines in insurance, payroll and energy expense.
Maintenance and repairs increased by $0.3 million. 

TRANSACTIONS

During the second quarter, CBL completed the acquisition of Mayfaire Town Center and Community Center, the premier open-air center located in the affluent coastal market of Wilmington, NC. The property was acquired for a total cash purchase price of $192 million. 

During the second quarter, CBL completed the sale of Eastgate Crossing, a 175,000-square-foot community center located in Cincinnati, OH. The gross sales price of $22.8 million included the assumption of a $14.6 million loan secured by the property. 

Additionally during the second quarter, CBL completed the sale of Madison Square, a mall in Huntsville, Ala., for $5.0 million. The related associated center, Madison Plaza, was sold in July 2015 for $5.7 million. 

CBL has additional transactions in various stages. Further updates on the disposition program will be provided on its conference call. 

FINANCINGS

During the second quarter, CBL retired the $49.5 million loan secured by Imperial Valley Mall in El Centro, Ca., adding the property to its unencumbered pool. The loan bore an interest rate of 4.99 percent. 

Subsequent to the end of the second quarter, CBL retired four loans totaling $322.7 million using availability under its lines of credit. The weighted average interest rate for the four loans was 5.0 percent. The loans were secured individually by high-quality properties including CherryVale Mall in Rockford, IL, East Towne Mall in Madison, WI, West Towne Mall in Madison, WI, and Brookfield Square in Milwaukee, WI. 

OUTLOOK AND GUIDANCE

Based on its current outlook, the company is increasing guidance for FFO, as adjusted, to the range of $2.25 - $2.32 per diluted share. The guidance increase includes contributions from the acquisition of Mayfaire Town Center and Community Center, partially offset by an increased G&A expense assumption for the remainder of 2015 due to consulting and personnel expense related to technology and process improvements. CBL's guidance also assumes a same-center NOI growth range of 0-2.0 percent in 2015.

The guidance also assumes the following:

$2.0 million to $4.0 million of outparcel sales;
No additional unannounced acquisition or disposition activity;
No unannounced capital markets activity;
Year-end occupancy 150-200 bps lower than the prior year-end.

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