CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the first quarter ended March 31, 2013, including a rise in funds from operations per diluted share of 53 cents - up from 49 cents last year.
“The strong operating performance of our market-dominant mall portfolio in the first quarter coupled with the benefits of our new growth platforms have us well on the path towards achieving our 2013 goals,” said Stephen Lebovitz, CBL’s president and chief executive officer. “We are seeing solid improvement in occupancy, NOI, sales and leasing across the portfolio even with the tougher comparison from a year ago.
The acquisition of the remaining interest in Kirkwood Mall (Bismarck, ND) also highlights that our focused growth strategy can yield a strong pipeline of profitable investment opportunities in this environment. We will look to build on this momentum throughout the year.
“Our plans for further enhancements to our capital structure with the ultimate goal of an investment grade rating are well underway. Our long-stated preference is for long-term, fixed-rate sources of capital at the most effective pricing, as evidenced by the refinancing of Friendly Center (Greensboro, NC) and Renaissance Center (Durham, NC) at a low ten-year weighted average fixed rate of 3.48%. Raising over $100 million of equity capital in the quarter from the initial activity on our ATM program and the disposition of five non-core office buildings clearly demonstrates our ability to prudently fund our growth. The continued access to these attractive sources of capital and the ample availability on our unsecured credit facilities provide us the flexibility to execute our capital plan and our corporate strategy.”
FFO allocable to common shareholders for the first quarter of 2013 was $85,912,000, or $0.53 per diluted share, compared with $72,178,000, or $0.49 per diluted share, for the first quarter of 2012. FFO of the operating partnership for the first quarter of 2013 was $101,623,000, compared with $92,476,000, for the first quarter of 2012.
Net income attributable to common shareholders for the first quarter of 2013 was $19,090,000, or $0.12 per diluted share, compared with net income of $15,455,000, or $0.10 per diluted share for the first quarter of 2012.
HIGHLIGHTS
- Portfolio same-center net operating income (“NOI”), excluding lease termination fees, for the quarter ended March 31, 2013, increased 1.0% compared with an increase of 1.5% for the prior-year period.
- Average gross rent per square foot on stabilized mall leases signed during the first quarter of 2013 for tenants 10,000 square feet or less increased 10.8% over the prior gross rent per square foot.
- Same-store sales per square foot for mall tenants 10,000 square feet or less for stabilized malls for the rolling twelve months ended March 31, 2013, increased 4.4% to $355 per square foot compared with $340 per square foot in the prior-year period.
- Consolidated and unconsolidated variable rate debt of $1,097,660,000, as of March 31, 2013, represented 10.4% of the total market capitalization for the Company, compared with 12.7% as of March 31, 2012, and 20.4% of the Company's share of total consolidated and unconsolidated debt, compared with 22.8% as of March 31, 2012.
- Debt-to-total market capitalization was 51.0% as of March 31, 2013, compared with 55.7% as of March 31, 2012.
- The ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to interest expense was 2.64 times for the first quarter of 2013, compared with 2.46 times for the first quarter of 2012.
PORTFOLIO OCCUPANCY
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March 31, |
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2013 |
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2012 |
| Portfolio occupancy |
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92.2% |
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91.8% |
| Mall portfolio |
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91.8% |
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91.9% |
| Stabilized malls |
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91.7% |
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91.8% |
| Non-stabilized malls |
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99.3% |
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95.5% |
| Associated centers |
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93.5% |
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92.9% |
| Community centers |
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96.0% |
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91.0% |
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ACQUISITIONS
Subsequent to the quarter end, CBL announced that it had completed the acquisition of the remaining 51% interest in Kirkwood Mall in Bismarck, ND. In December 2012, CBL acquired a 49% non-controlling interest in Kirkwood Mall. In conjunction with the acquisition of the remaining interest, CBL assumed the $40.4 million non-recourse loan secured by the property, which bears a fixed interest rate of 5.75% and matures in April 2018.
DISPOSITION ACTIVITY
During the first quarter 2013, CBL disposed of five office buildings generating total net proceeds of $43.5 million.
FINANCING ACTIVITY
During the quarter, CBL closed on a $100.0 million non-recourse loan secured by Friendly Center in Greensboro, NC. The ten-year loan bears a fixed interest rate of 3.4795% and replaced an existing $77.6 million loan that was scheduled to mature in April 2013. CBL also closed a $16.0 million non-recourse loan secured by Renaissance Center Phase II in Durham, NC. The ten-year loan bears a fixed interest rate of 3.4895% and replaced the existing $15.7 million loan that was scheduled to mature in April 2013. CBL owns 50% of Friendly Center and Renaissance Center Phase II. Excess proceeds from the loans were used to retire loans on several office buildings owned in this same joint venture.
CAPITAL MARKETS ACTIVITY
During the first quarter of 2013, CBL sold 2.7 million common shares, at a weighted average price of $23.58 per share, under its At-The-Market (“ATM”) equity offering program, generating net proceeds of $62.1 million. The proceeds generated from the ATM program were used to reduce the outstanding balances under the Company’s unsecured credit facilities.
OUTLOOK AND GUIDANCE
Based on first quarter results and today’s outlook, the Company is maintaining 2013 FFO guidance in the range of $2.18 - $2.26 per share. Full-year guidance assumes same-center NOI growth in a range of 1.0% - 3.0%, $2.0 million to $4.0 million of outparcel sales and a 25-50 basis point increase in year-end occupancy. The guidance also assumes the pay-off of the Westfield Preferred Units mid-year using the Company’s lines of credit and cash on hand. The guidance excludes the impact of any future unannounced transactions. The Company expects to update its annual guidance after each quarter's results.
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Low |
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High |
| Expected diluted earnings per common share |
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$0.63 |
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$0.71 |
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| Adjust to fully converted shares from common shares |
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(0.10 |
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(0.11 |
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| Expected earnings per diluted, fully converted common share |
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0.53 |
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0.60 |
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| Add: depreciation and amortization |
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1.55 |
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1.55 |
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| Add: noncontrolling interest in earnings of Operating Partnership |
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0.10 |
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0.11 |
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| Expected FFO per diluted, fully converted common share |
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$2.18 |
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$2.26 |
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