CBL Properties announced results for the fourth quarter and year ended Dec. 31. Results of operations as reported in the consolidated financial statements for these periods are prepared in accordance with GAAP.
Key Takeaways:
CBL initiates 2024 FFO, as adjusted, per share guidance in the range of $6.19 - $6.63 and 2024 same-center NOI guidance in the range of $428 million - $442 million.
Same-center NOI declined 1.2 percent during the fourth quarter 2023 as compared with the prior-year quarter and declined 1.5 percent in 2023 as compared with the prior year, near the high-end of the previously issued guidance range.
FFO, as adjusted, per share was $1.94 for the fourth quarter 2023, and $6.66 for the year ended Dec. 31, 2023. FFO, as adjusted, per share was $2.11 for fourth quarter 2022, and $7.88 for the year ended Dec. 31, 2022.
Portfolio occupancy was 90.9 percent as of Dec. 31, approximately flat compared with portfolio occupancy as of Dec. 31, 2022. Same-center occupancy for malls, lifestyle centers and outlet centers was 89.8 percent as of Dec. 31, 2023, a 20-basis-point increase from 89.6 percent as of Dec. 31, 2022.
Nearly 4.4 million square feet of leases were executed in 2023, including approximately 1.3 million square feet in the fourth quarter. 2023 leasing results included comparable leases of approximately 2.7 million square feet signed at flat average rents versus the prior leases.
As anticipated, same-center tenant sales per square foot for the fourth quarter 2023 declined 2.6 percent. Same-center tenant sales per square foot for the 12-months ended Dec. 31, 2023, declined 4.4 percent to $416, compared with $435 for the prior period.
As of Dec. 31, 2023, the company had $296 million of unrestricted cash and marketable securities.
CBL's Board of Directors declared a cash dividend of $0.40 per common share for the quarter ending March 31, 2024, a 6.7 percent increase from the previous quarterly dividend rate of $0.375 per share. The dividend equates to an annual dividend payment of $1.60 per common share.
“Twenty-twenty-three was an excellent year for CBL," said CBL's chief executive officer, Stephen D. Lebovitz. "Same-center NOI and FFO, as adjusted, were at the high end of our guidance ranges. This strong performance was driven by a record level of leasing production, which drove occupancy improvements throughout the year. Comparable leasing was stable with flat blended lease spreads. The favorable retail environment produced strong demand for new store openings and limited closings. Although portfolio sales were down for the year, results improved in the fourth quarter with a strong close to the holiday season. NOI was also helped by our ability to limit increases in same-center operating expenses despite inflationary pressures.
"While rising interest rates contributed to a challenging financing environment, we successfully addressed all of our 2023 maturities. The refinancing of the Outlet Shops at Atlanta, closed in October, extended our maturity schedule, locked in a favorable, long-term rate and generated new proceeds. The elimination of the corporate guarantee on our term loan on Nov. 2 removed nearly all of our corporate recourse obligations. Additionally, we demonstrated our commitment to return capital to shareholders, implementing a stock repurchase program and most recently announcing another increase in the dividend. This commitment will continue to be a priority as we work to maximize shareholder returns in the future.
"Our 2024 guidance reflects the impact of operating momentum carried over from 2023, offset by certain anticipated headwinds this year. Our forecast assumes ongoing healthy tenant demand, improving specialty leasing income and the benefit of successful real estate tax appeals. Contributions from new large space openings, such as Thrill Factory at East Towne Mall and replacements for several Bed, Bath & Beyond spaces, such as Crunch Fitness at Coastal Grand and Schuler's Books at Meridian Mall will also positively impact revenues. Alternatively, the sales declines in 2023 will put pressure on near-term percentage rent and renewal lease spreads. Rising insurance costs will increase operating expenses and overall higher interest rates will continue to impact FFO. As we move forward in 2024, our team is working to offset these challenges and generate positive NOI growth. Our balance sheet is well-positioned with our strong cash balance and limited upcoming loan maturities. We are focused on sustaining strong leasing and operating momentum and generating further growth in free cash flow and shareholder value."
Dividend:
On Feb. 8, CBL’s Board of Directors approved a 6.7 percent increase in CBL's regular quarterly cash dividend for the three months ended March 31, to $0.40 per share. The dividend, which equates to an annual dividend payment of $1.60 per share, is payable on March 29, to shareholders of record as of March 15.
Financing Activity:
In 2023, CBL completed more than $575.0 million in financing activity, successfully addressing all 2023 final loan maturities.
In October, CBL, along with its 50 percent joint venture partner, Horizon Group Properties, closed a new $79.3 million loan ($39.7 million at CBL’s 50 percent share) secured by The Outlet Shoppes of Atlanta, the premier outlet shopping destination located in Woodstock, Ga. The new non-recourse 10-year loan bears a fixed interest-only rate of 7.85 percent and replaces two loans with an aggregate balance of $69.5 million (at 100 percent) that were set to mature in November 2023.
In October, CBL and its 35 percent joint venture partner closed on the extension and modification of the loan secured by The Outlet Shoppes at Laredo in Laredo, Tx. The loan was modified to reduce the principal balance to $33.98 million and extend the loan through June 2025. The interest rate of SOFR plus 325 basis points remained the same.
In October, CBL exercised its option to extend the $17.6 million recourse loan secured by the Brookfield Square Anchor Redevelopment to December 2024. In connection with the extension, CBL made the optional election to reduce the outstanding principal balance by $2.0 million.
In November, CBL and the lender of the loan secured by Volusia Mall in Daytona Beach, Fl., closed on the modification and extension of the loan. The loan was modified to apply escrow balances to reduce the principal balance by $1.7 million to $36.7 million and extend the maturity date two years to May 2026.
CBL is cooperating with the foreclosure or conveyance of WestGate Mall in Spartanburg, S.C., ($28.7 million) and Alamance Crossing East in Burlington, N.C., ($41.1 million).
In February 2024, CBL retired the $15.3 million recourse loan secured by Brookfield Square Anchor Redevelopment in Brookfield, Wi.
Stock Repurchase Program Activity:
On Aug. 10, 2023, CBL announced that its Board of Directors authorized a stock repurchase program for the company to buy up to $25.0 million of its common stock. Purchases may be made through the program by Aug. 10. In 2023, CBL repurchased 51,966 shares at an average price of $21.30 per share under the program.
Dispositions:
During the fourth quarter 2023, CBL completed the sale of one land parcel, generating $0.7 million in gross proceeds at CBL's share. In 2023, CBL grossed more than $9.6 million from dispositions.
Development and Redevelopment Activity:
Detailed project information is available in CBL’s Financial Supplement for Q4 2023, which can be found in the Invest – Financial Reports section of CBL’s website at cblproperties.com.