Chattanooga-based CBL & Associates reported a $133.9 million net loss, or $0.75 per diluted share, for the first quarter.
That compares with a net loss of $50.2 million, or a loss of $0.29 per diluted share, for the first quarter 2019.
Net loss for the first quarter 2020 was impacted by a $133.6 million loss on impairment of real estate to write down the carrying values of Monroeville Mall in Monroeville, Pa., and Burnsville Center in Minneapolis, Minn., to the properties’ estimated fair values.
“While first quarter results were largely as anticipated, the COVID-19 pandemic significantly shifted our expectations for the remainder of the year,” said Stephen D. Lebovitz, chief executive officer. “The majority of the properties in our portfolio closed during March due to government mandates. As of May 25th, 66 of 68 CBL owned or managed malls have re-opened, subject to certain health and safety restrictions, including a dozen properties that are offering curbside or exterior-only service. As properties re-open, we have worked in cooperation with our tenants to institute strict guidelines, following CDC and health department recommendations, to help ensure the safety of our employees, tenants and customers.
“For the month of April, we received approximately 27 percent of billed cash rents. We estimate a collection rate for the month of May in the range of 25-30 percent based on preliminary cash receipts and conversations with retailers. The majority of our tenants requested rent relief, either in the form of rent deferrals or abatements. We have placed a number of tenants in default for non-payment of rent. We anticipate a significant portion of April and May rents will be collected later in 2020 and into 2021 under agreed upon deferral plans. However, negotiations are ongoing, and it is premature to estimate a recovery rate at this time.
“Our priority during this time of uncertainty has been to preserve cash. We announced significant steps to improve our liquidity position, including drawing down the available amount on our line of credit. In addition, we instituted a significant cost reduction program. We have been successful in deferring or halting approximately $60 million-$80 million in planned capital expenditures, including redevelopment investments, for 2020. While we have paused several major projects, we are pursuing capital lite solutions for backfilling our remaining available anchors, including joint venture partnerships, favorable lease structures and third-party arrangements – all of which benefit our portfolio while preserving capital. Additionally, we were able to achieve debt service payment deferrals for a portion of our secured loans. Securitized lenders in general have shown minimal flexibility in amending loan payments.
“We have addressed nearly all of our major debt maturities for 2020 and are in discussions with existing lenders for certain 2021 secured loan maturities. As a reminder, we have no significant unsecured debt maturities until December 2023, and have time to evaluate the optimal financial roadmap for CBL. We are being proactive to determine the best strategies for addressing these future maturities and significantly reducing leverage.”
Key takeaways from the report:
- FFO per diluted share, as adjusted, was $0.26 for the first quarter 2020, compared with $0.30 per share for the first quarter 2019. First quarter 2020 FFO per share was impacted by $0.02 per share of dilution from asset sales completed since the prior-year period and $0.07 per share of lower property NOI offset by $0.02 per share lower interest expense and $0.02 per share lower net G&A expense.
- Same-center sales per square foot for the twelve-months ended February 29, 2020, increased three percent% to $392 per square foot compared with the prior-year period ended February 28, 2019. The majority of stores in the CBL portfolio closed during the month of March 2020, which resulted in a decline in reported same-center sales per square foot for the month of 45 percent compared with the prior year month.
- Total Portfolio same-center NOI declined 8.7 percent for the three months ended March 31, 2020, as compared with the prior-year period.
- Portfolio occupancy as of March 31, 2020, was 89.5 percent, representing a 180-basis point decline compared with 91.3 percent as of March 31, 2019. Same-center mall occupancy was 87.8 percent as of March 31, 2020, a 200-basis point decline compared with 89.8 percent as of March 31, 2019.
- CBL established a comprehensive COVID-19 operational response plan, including enacting a work from home protocol for employees, following CDC and governmental recommended guidelines across the portfolio for operating, closing and re-opening plans and providing assistance to its local and regional tenants in various ways, including launching a dynamic informational website to help access local, state and federal resources.
- The company also took significant actions to improve liquidity and reduce costs in response to the COVID-19 pandemic. These steps included drawing $280 million on its line of credit, eliminating all non-essential expenditures, implementing a company-wide furlough and salary reduction program and delaying and suspending capital expenditures, including redevelopment investment.