Stephen LebovitzIn its 40-year history, including 25 years as a publicly traded company, CBL Properties has had to cope with soaring interest rates and falling sales during different economic cycles.
But CBL CEO Stephen Lebovitz, the son of company founder Charles B. Lebovitz for whom the Chattanooga-based company is named, says 2018 has been a year of unprecedented upheaval with the bankruptcy of a pair of CBL's major anchors - Sears and Bon-Ton.
"During our company's history, our industry has evolved and changed, but no point compares to what we have seen this year," Stephen Lebovitz told industry analysts today.
CBL announced Tuesday it was cutting its dividend from 80 cents per year to 30 cents per year, to help save $100 million a year needed to shore up its properties in the wake of major retailer vacancies. The company also said funds from operations were down 20 percent in the third quarter when CBL also widened its net losses for the quarter to $12.6 million losses.
But CBL's stock still rose today as company executives outlined plans to transform its properties and conserve more of its cash to support such redevelopment. Despite the dividend cut and lower profits, investors bid up CBL shares by 15 cents per share, or more than 4.2 percent, to close today at $3.71 per share.
CBL's shares are still less than 8 percent of the peak price of $47.10 per share reached by the company in February 2007. Since then, CBL has been hit with scores of retail bankruptcies and ongoing shopping trends toward online purchasing by shoppers.
Sears and Bon-Ton closed more than 30 stores in CBL retail centers, representing more than 4.5 million square feet. But CBL officials said in the long run such closings create new opportunities for CBL. Among the planned closings of Sears stores is the 31-year-old Sears at Hamilton Place Mall, one of the original anchors of what was then Tennessee's biggest shopping mall.
"Sears was the catalysts for the development of many of our models," Lebovitz said. "As a result, they enjoy premier locations in our centers."
Lebovitz said the Sears and Bon-Ton closings are "disruptive in the short term."
"But because of the prime real estate they occupy, I am 100 percent confident that this also presents a once in a generation opportunity to transform our properties from traditional and closed malls to suburban town centers that include fashion, value, dining, entertainment, fitness, service and other mix uses such as hotels, residential or office, the type of property that today's customer desires." he said.
Lebovitz said CBL will soon be announcing new entertainment, dining and hotel facilities to replace the Sears at Hamilton Place. Cheesecake Factory is already under construction on the path of Sears parking lot opening in early December.
"Construction on the remainder of the project will begin in spring 2019," Lebovitz said.
Lebovitz told investors today that the planned changes, including the cut in the company dividend, "will put CBL in a position to drive."
"We will no longer be a traditional in closed mall company instead we will be a company with a portfolio of retail focus suburban town center mixed-use properties that are dominant in their market," Leboviz said. "As we demonstrated with reduction to the dividend and measures taken to reduce expenses, we are committed to ensuring CBL is adequate liquidity and flexibility to execute our redevelopment and other strategic initiatives without the pressure of near term maturities."