CBL& Associates Has $10.3 Million Net Income Loss For First Quarter; Closing Of Bon-Ton stores Is Large Factor

Thursday, April 26, 2018

CBL & Associates reported a net loss attributable to common shareholders for the first quarter 2018 of $10.3 million, or $(0.06) per diluted share, compared with net income of $22.9 million, or $0.13 per diluted share, for the first quarter 2017.

FFO allocable to common shareholders, as adjusted, for the first quarter 2018 was $72.2 million, or $0.42 per diluted share, compared with $88.4 million, or $0.52 per diluted share, for the first quarter 2017. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the first quarter 2018 was $83.8 million compared with $103 million for the first quarter 2017.

“First quarter results were in-line with expectations and, as anticipated, reflect the impact from 2017 and 2018 bankruptcies and rent reductions,” said Stephen Lebovitz, CBL’s president & CEO. “We were encouraged by the solid 4.1 percent increase in retail sales in our portfolio during the first quarter and reports from a number of brands citing marked improvement in both traffic and sales, which should lead to improved leasing metrics later in the year. Operationally, our focus in 2018 is stabilizing revenues as well as diversifying income by adding more dining, entertainment, value and service users.

“While we are disappointed with the news of Bon-Ton liquidating, we have been proactive by preparing for this outcome. We have identified replacement tenants for the majority of our locations and have several in advanced negotiations, including one lease already executed with a supermarket that will require zero investment by CBL. We are estimating a total investment of $60 million-$90 million for the replacement of the Bon-Ton stores in our portfolio over several years. We had already incorporated expected rent loss, including any co-tenancy impact, in our guidance for the year and are on-track to perform within that range.

“Actively managing our balance sheet to maximize liquidity and lengthen maturities is a top priority for us. We are expecting to complete the refinancing of the loan secured by CoolSprings Galleria shortly. We are also holding preliminary discussions to complete early refinancings of our unsecured term loan and line of credit that mature in 2019 and 2020, respectively, which will put us in an even stronger financial position and provide further flexibility to execute our strategies.”

The report also lists:

  • Same-center sales per square foot for the stabilized mall portfolio during the first quarter increased 4.1% compared with the prior-year quarter. For the 12 months ended March 31, 2018, same-center sales were $376 per square foot.
  • FFO per diluted share, as adjusted, was $0.42 for the first quarter 2018, compared with $0.52 per share for the first quarter 2017. First quarter 2018 was impacted by approximately $0.01 per share of dilution from asset sales completed in 2017, $0.05 per share of lower property NOI, lower outparcel sales of $0.02 per share, $0.03 per share higher corporate interest expense offset by $0.04 lower property level interest expense and $0.01 higher G&A expense primarily related to lower capitalized overhead, a one-time favorable accrual adjustment in the prior-year period as well as comparatively higher legal expense.
  • Total Portfolio Same-center NOI declined 6.8% for the first quarter 2018.
  • Portfolio occupancy was 91.1% as of March 31, 2018, compared with 92.1% as of March 31, 2017. Same-center mall occupancy was 89.5 percent as of March 31, 2018 compared with 90.4 percent as of March 31, 2017.
  • CBL completed gross asset sales of $12.3 million during the first quarter and in April entered into a binding contract for the sale of a Tier 3 mall for a gross sales price of $18 million.
  • Redevelopment activity is underway at eight properties, including five anchor redevelopments.

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