Chattanooga-based CBL boosts income after selling malls

Chattanooga-based CBL boosts income after selling malls

February 5th, 2014 by Shelly Bradbury in Business Around the Region

CBL Chief Executive Officer Stephen Lebovitz stands in his office overlooking Hamilton Place Mall

Photo by Chad McClure

CBL & Associates Properties wrapped up 2013 with modest growth after selling more than $235 million in malls, associated centers and office buildings during the year.

Funds from operations per diluted share hit $2.22 in 2013, compared to $2.17 for 2012 -- which was within analysts' expectations for the Chattanooga development company. In the fourth quarter, funds from operations per diluted share were 63 cents, a penny above fourth quarter 2012, at 62 cents.

"Two of our major priorities for 2013 were improving the performance of our portfolio and strengthening our balance sheet," said Stephen Lebovitz, president and CEO of CBL & Associates Properties. "In the fourth quarter, we saw progress in both of these areas, with over 2.1 million square feet of leases signed."

CBL also unloaded shopping malls in Nashville, Athens, Ga., and Panama City, Fla., in September 2013, selling the centers to an Atlanta-based investment firm. The move was meant to help the company pay down unsecured debt, and Lebovitz said the company will continue to sell during 2014.

"The pruning of our portfolio, which began in earnest last September with the sale of three malls and their associated centers, will continue this year, which will enable our higher performing malls to have a greater impact on overall results," he said.

CBL will also focus on upgrading its tenant mix during 2014, Lebovitz said. The company added 650,000 square feet of big box and junior anchor space to its properties during 2013, and opened another 450,000 square feet in 2014, he said.

The company reported that average gross rent per square foot for stabilized mall leases jumped in 2013, increasing 11.8 percent over 2012's average.

However, percentage rents declined by $1.1 million during fourth quarter 2013, and during the entire year, snow removal costs increased by $1.7 million and operating expenses increased by $3.6 million. Each of those expenses impacted CBL's same center net operating income, the company said in a release.

CBL's fourth quarter occupancy rates did not increase over fourth quarter 2012, Lebovitz said, instead sitting at 94.7 percent.

"While remaining at historically high levels, occupancy did not increase incrementally as much as we had hoped and net operating income growth was below what we had anticipated for the quarter," Lebovitz said. "This near-term disappointment aside, the underlying strength of our portfolio and our demonstrated ability to source attractive growth opportunities provided the foundation for a 6.5 percent increase in our common dividend."

CBL owns, manages or holds interests in 152 properties across the United States, including 91 regional malls and open air centers. The Chattanooga-based company also owns both Hamilton Place mall and Northgate Mall.

Contact staff writer Shelly Bradbury at 423-757-6525 or sbradbury@timesfreepress.com.