CBL Has Net Loss Of $69.8 Million For 2nd Quarter; Losses Over 6 Months Total $203.7 Million

Thursday, August 6, 2020

CBL & Associates on Thursday reported a net loss attributable to common shareholders for the second quarter 2020 of $69.8 million, or $0.36 per diluted share, compared with a net loss of $35.4 million, or a loss of $0.20 per diluted share, for the second quarter 2019.

Net loss attributable to common shareholders for the six months ended June 30, 2020, was $203.7 million, or $1.10 per diluted share, compared with a net loss of $85.6 million, or a loss of $0.49 per diluted share, for the six months ended 2019.

The Chattanooga-based mall firm has been in talks with creditors after missing two large interest payments on loans.

CBL on Wednesday announced it had come up with over $30 million to make the payments.

Net loss for the second quarter 2020 was impacted by a $13.3 million loss on impairment of real estate to write down the carrying value of Asheville Mall in Asheville, N.C., to the property’s estimated fair value. Net loss for the second quarter 2020 also included establishing a full valuation allowance of $15.8 million on the deferred tax asset.

FFO allocable to common shareholders, as adjusted, for the second quarter 2020 was $9.2 million, or $0.05 per diluted share, compared with $59.4 million, or $0.34 per diluted share, for the second quarter 2019. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the second quarter 2020 was $9.7 million compared with $68.5 million for the second quarter 2019.

FFO allocable to common shareholders, as adjusted, for the six months ended June 30, 2020, was $56.5 million or $0.30 per diluted share, compared with $111.8 million, or $0.64 per diluted share, for the six months ended June 30, 2019. FFO allocable to the Operating Partnership common unitholders, as adjusted, for the six months ended June 30, 2020, was $61.3 million compared with $129.1 million for the six months ended June 30, 2019.

Stephen Lebovitz, Chief Executive Officer, said, “With all but one of our properties and the vast majority of retailers now open, we are seeing improved traffic levels. While our properties and our tenants have extensive safety protocols in place, shoppers appear to be more deliberate in their visits, resulting in lower traffic numbers compared to last year. However, retailers are reporting higher conversion rates with many equaling or exceeding pre-pandemic levels. In addition to traditional in-store shopping, retailers have innovated by adding curbside pick-up, order-online and pick-up in-store and other programs designed to ease the shopping experience. These conveniences are an increasingly important part of successful retailing.

“Our financial and operating results for the second quarter reflect the temporary closure of the CBL portfolio for a significant period due to government mandates. Revenues for the quarter were impacted by a major increase in the estimate for uncollectible revenues related to rents due from tenants that recently filed for bankruptcy or are struggling financially, as well as amounts that were abated as part of negotiations. Store closures and rent loss from prior tenant bankruptcies and lower percentage rent related to lower retail sales also impacted revenues. We offset a portion of this decline through aggressive actions to reduce costs both at the property and corporate levels, including company-wide salary reductions, furloughs, reductions-in-force and other expense reduction initiatives. However, the pandemic has accelerated a number of tenant bankruptcies, resulting in an expectation of additional store closures and lost rent through the remainder of the year. As a result of the difficulty in accurately predicting the impact to our business, we expect our visibility over the next few quarters to remain limited. Accordingly, we are continuing the suspension of full-year guidance until there are signs of more stability in our operating environment.

“Leasing activity for the quarter was muted as we shifted our focus to negotiating with existing tenants. To date, we have completed or are finalizing negotiations with retailers representing the majority of second quarter rent. These agreements generally include flexible terms on second quarter rent to certain retailers that require assistance, such as rent deferrals, while at the same time preserving current and future income to CBL. As we complete these negotiations, rent collections have improved with retailers paying all or a portion of past-due amounts as well as paying current rents.

“While the events to date in 2020 have dramatically impacted our business in the near-term, these events also underscore the importance of our portfolio transformation and tenant diversification strategy as well as the prudent actions we’ve taken to preserve and strengthen our cash position. Most traditional retailers have paused on new store plans until they can stabilize their existing store base and have better clarity on the outlook. However, a number of local and other users, primarily non-apparel, are viewing this as an opportunity to identify attractive new growth opportunities. Our leasing team is more creative than ever in pursuing these leads to continue the all-important diversification to our tenants and properties, and we are confident that, over time, our revenues will stabilize due to these efforts.

“Finally, while our corporate policy is to not comment on the unfortunate rumors and speculation reported by the media, we want to confirm that over the past few months we have been holding constructive discussions with our lenders. In June, we deliberately elected to withhold the interest payments on two issuances of senior unsecured notes that were due as part of our discussions with certain holders of our bonds as well as the lenders under our credit facility. We first entered the 30-day grace periods provided for in the indenture and subsequently entered into forbearance agreements with certain holders of our notes and lenders under our credit facility. On August 5th, we elected to make these payments, which total $30.4 million and accordingly are current on all unsecured debt service. Discussions are ongoing, and we are hopeful that a positive and mutually beneficial outcome will be reached.”


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