CBL Properties announced results for the second quarter ended June 30.
CBL reported an increase in same-center net operating income of 1.5 percent for second quarter 2024 compared with the prior-year period, and funds from operations, as adjusted, per share of $1.73, compared with $1.56 for second quarter 2023. Same center NOI for the six months ended June 30, increased 2.6 percent compared with the prior-year period, and FFO, as adjusted, per share increased to $3.23, compared with $3.12 for prior-year period. Results were in-line with the previously issued guidance range for 2024 same-center NOI and FFO, as adjusted.
Over 1.0 million square feet of leases were executed in second quarter 2024. Second quarter 2024 leasing results included comparable leases of approximately 694,000 square feet signed at an 8.8 percent increase in average rents versus the prior leases including a 6.2 percent increase in renewal leases signed for malls, lifestyle centers and outlet centers.
Portfolio occupancy was 88.7 percent as of June 30, a 110 basis-point-decline compared with portfolio occupancy of 89.8 percent as of June 30, 2023. Same-center occupancy for malls, lifestyle centers and outlet centers was 86.8 percent as of June 30, a 180-basis-point decline from 88.6 percent as of June 30, 2023. Anticipated bankruptcy related store closures representing nearly 300,000-square-feet comprised 188 basis points of the decline in mall occupancy compared with the prior-year quarter including approximately 234,000 square feet in the second quarter 2024 related to rue21 and Express. CBL has executed agreements to reopen 14 stores representing approximately 94,400 square feet of rue21 stores under its new ownership by first quarter 2025, with the majority opening in 2024.
Same-center tenant sales per square foot for the second quarter 2024 were essentially flat as compared with the prior-year period. Same-center tenant sales per square foot for the 12-months ended June 30, declined 2.1 percent to $417, compared with $426 for the prior period.
As of June 30, 2024, the company had $295.8 million of unrestricted cash and marketable securities.
CBL closed on the sale of Layton Hill Malls in Layton, Utah, for $37.125 million. The property served as collateral under CBL's non-recourse term loan. Net proceeds from the sale were used to reduce the term loan balance to $749.8 million.
More than $19.4 million in share repurchases completed under the program, continuing CBL's commitment to return capital to shareholders.
CBL's Board of Directors declared a cash dividend of $0.40 per common share for the quarter ending Sept. 30, 2024. The dividend equates to an annual dividend payment of $1.60 per common share.
“CBL’s second quarter financial and operational results reflected the growing strength of the retail real estate sector," said CBL's Chief Executive Officer Stephen D. Lebovitz. "Same-center NOI grew 1.5 percent for the quarter, generated through contributions from new leasing, operating expense savings, and a positive variance from uncollectible revenues, partially offset by a decline in percentage rents and lost rent from recent tenant bankruptcy activity.
"Leasing volume was strong with healthy demand from tenants for space across our portfolio. We executed more than one million square feet of leases in the second quarter, a 23 percent increase from the prior-year period, including over 360,000 square feet of new leases. Notable leases signed in the quarter include three lululemon locations including two new stores, as well as the planned expansion of their high-performing store at our West County Center in St. Louis. We opened a Tilt family entertainment venue at Jefferson Mall in Louisville and inked a deal for Shoe Station to open this year in the former Bed, Bath, and Beyond location at our open-air center in Chattanooga. Despite high leasing volumes, occupancy levels declined in the quarter, primarily due to anticipated bankruptcy-related store closures including approximately 234,000-square-feet related to the bankruptcies of Express and rue21. However, we signed several leases with the new owners of rue21 and anticipate an initial 14 locations will reopen by first quarter 2025, with the potential for additional locations to be added in subsequent months.
“Positive spreads on both new and renewal leasing showcased our focus on replacing underperforming tenants and locking in better performing tenants at improving rents. With the exception of April, which was down due to the Easter holiday, sales were another bright spot in the quarter. May and June posted solid 2 percent sales increases. Back to school shopping is underway now with tax free weekend promotions driving traffic across the CBL portfolio.
"As we make progress strengthening our balance sheet, debt levels declined with the quarter end's balance representing a more than $126 million reduction in CBL's pro rata share from the prior-year period. We were pleased to recently close on the sale of Layton Hills Mall in Layton, UT, which served as collateral for our non-recourse term loan. Proceeds from this sale were used to reduce the principal balance and progressed our goal of meeting our term loan extension test in 2025 while minimizing use of our corporate cash reserves."