CBL & Associates Properties Inc. is pushing ahead with ongoing and future development plans even as the spluttering economy means that some retailers are shutting their doors.
“We are generating growth with the pipeline of solid new development projects that are well-positioned for long-term success,” Stephen Lebovitz, CBL president, said in an earnings conference call Thursday.
The Chattanooga-based real estate investment trust has five projects under construction that open in 2008 and 2009. CBL also has 10 expansions and additions under way.
On Thursday, CBL announced it is starting construction this month on The Promenade, a 700,000-square-foot center in D’lberville, Miss., near Biloxi. The Promenade will open in fall 2009.
In July, CBL is opening Pearland Town Center in Pearland, Texas, which is an outdoor lifestyle center with residences and hotels. CBL also will open Plaza Macae in Macae, Brazil, this fall, officials said.
Earlier this week, CBL announced a $100 million-plus expansion of Hamilton Place mall, with construction slated to start at the end of 2009. However, the Tennessee General Assembly balked at legislation authorizing a business privilege tax to pay for infrastructure at the site and CBL plans to delay its proposal and seek input from local leaders.
On Wednesday CBL announced first-quarter funds from operations of $92.8 million, a 2.3 percent increase from one year ago. FFO per share on a diluted, fully converted basis increased 2.6 percent to 80 cents, compared to 78 cents per share a year ago.
CBL’s shares climbed $1.26, or 5.14 percent, Thursday to close at $25.75.
Occupancy at all CBL properties for the first quarter was 91.6 percent, up from 91 percent a year ago, according to the company. Store bankruptcies and closings have increased, Mr. Lebovitz said, but CBL has seen a minimum impact.
Friedman’s, the company that operates The Disney Store, and Bombay are the major tenants that have entered bankruptcy recently, Mr. Lebovitz said. CBL expects those store closings will account for less than one-half of 1 percent of the company’s annual gross rents, he said.
Twenty-three Friedman’s stores closed at CBL properties, he said, accounting for $2.3 million in annual gross rents. CBL is in negotiations with an unidentified national jeweler to occupy about 25 percent of Friedman’s former sites, Mr. Lebovitz said.
CBL lost 14 stores when Bombay closed, he said, accounting for $2.1 million in annual gross rents. CBL is in discussions with retailers to fill a third of that space.
The Disney Store has 15 stores in CBL sites, accounting for $2.7 million in annual gross rents, Mr. Lebovitz said. CBL officials expect nine of those stores to close, accounting for $1.1 million in annual gross rents.
CBL anticipates occupancy will be flat or down slightly at the end of 2008, Mr. Lebovitz said. CBL has seen growth in the leasing of carts and kiosks in malls, he said, and has budgeted a 10 percent increase in such leases. Kiosk/cart leases account for 7 percent of revenue.
Another growth category is sponsorships, said Katie Reinsmidt, director of corporate communications and investor relations. In a sponsorship a company pays to add its name to mall sites such as a children’s play area, she said.
“It’s a newer business and it’s becoming widely accepted,” Mrs. Reinsmidt said. “Advertisers are having a harder time getting in front of people. These really deliver.”