CBL & Associates Properties, Inc. (NYSE:CBL) today announced that it has closed in escrow two regional malls from affiliates of Enterprise Asset Management. CBL will acquire Mall Del Norte in Laredo, Texas, and Northpark Mall in Joplin, Missouri for a total consideration, including closing costs, of $249.4 million.
The capital components include cash and the assumption of $41.6 million of non-recourse fixed-rate debt secured by Northpark Mall at an interest rate of 5.75%. CBL intends to initially finance the acquisition through its various lines of credit and may access a form of fixed rate financing on the unencumbered property in the near future. The acquisition of these two regional malls is expected to generate an initial yield of 7.34% based upon current income.
Commenting on the announcement, Charles Lebovitz, chairman and chief executive officer of CBL & Associates Properties, said, "These acquisitions play to the strengths of our company; they each possess market dominant positions in their respective markets. The properties offer significant opportunities to improve cash flow through re-tenanting and upgrading the malls and through creative use of the vacant anchor stores. In addition, there are opportunities to achieve greater efficiencies in mall operations, specialty leasing and marketing. The Mall Del Norte and Northpark Mall trade areas are similar to other border and middle market cities in our portfolio in terms of population and income growth, diversity of the economic base and lack of mall competition. In both cases, we are confident we can leverage these favorable characteristics to create dominant, thriving mall franchises."
Mall Del Norte is a 1,198,199-square-foot single-level mall that is currently 88.0% occupied and anchored by Dillard’s, Foley’s, JCPenney, Mervyn’s and Sears, as well as a Beall’s, Foley’s Home store and Joe Brand. The property also includes a space formerly occupied by Montgomery Ward. Mall Del Norte posted average mall shop sales of $350 per square foot in 2003.
Located at the intersection of I-35 and Hillside Drive in Laredo, Mall Del Norte was originally built in 1977 and has been upgraded and expanded numerous times including a $2 million renovation of the food court and an expansion of the Beall’s store currently underway. With the closest competing mall over 140 miles away, Mall Del Norte serves a customer base of over 200,000 in its primary trade area and attracts consumers from Mexico including the immediately adjacent Nuevo Laredo (population of 650,000) and in Monterrey (population of 3.4 million), which is the country’s second largest industrial city. Laredo is recognized as the nation’s largest land port with more cross-border trade than California, Arizona, New Mexico and West Texas combined.
Northpark Mall is a 991,076-square-foot mall that is currently 77.0% occupied and anchored by Famous Barr (The May Company), Famous Barr – Men’s, JC Penney, Sears and Hollywood Theaters. The property also includes two spaces that were formerly occupied by Montgomery Ward and ShopKo. NorthPark Mall posted average mall shop sales of $308 per square foot in 2003.
Northpark Mall is located on Joplin’s main retail thoroughfare, Range Line Road. The mall was built in 1972, expanded and renovated in 1987 and again in 1996. Serving a trade area of over 200,000, Northpark Mall’s closest mall competition is 75 miles away. Joplin is at the center of major transportation corridors leading to Chicago and the Mexican border. In addition to a strong transportation base, Joplin is a commercial and healthcare center serving a regional population of approximately 600,000.
CBL & Associates Properties, Inc. is one of the top five owners of shopping centers in North America and the largest owner of malls and shopping centers in the Southeast, ranked by GLA owned. CBL owns, holds interests in or manages 166 properties, including 69 enclosed regional malls. The properties are located in 28 states and total 71.5 million-square-feet including 2.0 million-square-feet of non-owned shopping centers managed for third parties. CBL has eight projects under construction totaling approximately 2.1 million-square-feet including one regional mall - Imperial Valley Mall in the Imperial Valley region of California, an open-air shopping center in Southaven, (Memphis, TN) MS, three community centers and three expansions. In addition to its office in Chattanooga, CBL has a regional office in Boston (Waltham), MA.