CBL & Associates Properties Inc. plans to sell 21 of its shopping malls, about a quarter of its nationwide holdings, in an effort to upgrade its remaining properties and boost the Chattanooga company's income.
Stephen Lebovitz, CBL's chief executive, said Friday that the company plans to divest the properties within the next 24 to 36 months. He didn't identify the centers, but neither Hamilton Place mall nor Northgate Mall in Chattanooga are on the list of properties it plans to sell.
CBL has divided its mall holdings into three tiers, and the 21 units it has identified for sale are generally the least-performing, according to the company.
CBL aims to upgrade the remainder of its portfolio and generate more income from its upper-tier properties, he said. The money from the sales will be used for redevelopment and expansion opportunities, Lebovitz said.
"We are fully committed to executing a strategic plan to transform our portfolio to a higher level of sustainable growth," he said.
CBL's shares on the New York Stock Exchange closed Friday at $17.91, down 3 cents per share.
The CEO said CBL's efforts will include wooing new retailers and restaurants, mentioning that it has attracted a Cheesecake Factory to its Lexington, Ky., mall -- a first for its portfolio.
The company said it wants to position its portfolio to produce sustained same-center net operating income growth of 2 percent to 4 percent versus the current range of 1 percent to 2 percent.
Also, the company is targeting an increase in the percentage of mall net operating income generated from its tier one and tier two assets from 78 percent for 2013 to more than 90 percent over the next several years.
Farzana Mitchell, CBL's chief financial officer, said plans are to add "negligible debt" as it executes its plan.
"Our goal is to accelerate and drive growth through smart re-positioning strategies," she said.
Katie Reinsmidt, CBL's senior vice president of investor relations and corporate investments, cited upgrades the company has carried out to both Hamilton Place and Northgate Mall as examples.
At Northgate, the company recently completed a $6.1 million remake to an associated shopping center as it wooed Michaels and Ross Dress for Less to the Hixson market. Also, CBL is spending $7.8 million at Northgate to re-position a large portion of the mall to hold a Burlington store, that's slated to open this fall.
Lebovitz also noted its malls have sizable holdings of Penney and Sears stores, both of which are under competitive pressures. He said the footprints of those stores represent "exposure and greater opportunity."
Lebovitz said he expects more Penney stores to close, though those will be in a measured way. Earlier this year, Penney announced it was shutting 33 stores nationally, including its Northgate site.
The CBL chief said Penney and Sears hold prime space in its mall which the company can use to redevelop and create more value in the property.
"The key takeaway is that we are fully committed to transforming CBL into a stronger, higher growth company with a brighter future," he said.
CBL owns, holds interests in or manages 150 properties in 30 states.
Contact Mike Pare at email@example.com or 423-757-6318.