With its stock price off nearly 25 pecent from its February high, CBL & Associates Properties Inc. announced Wednesday it will buy up to $200 million of its common stock.
"The significant discount that our stock currently trades at relative to its private market valuation provides an attractive investment opportunity," Stephen Lebovitz, CBL's president and chief executive officer, said in a statement.
Investor concerns about rising interest rates and high-profile bankruptcies or store closings by retail giants like Sears and Radio Shack have hurt values of some Real Estate Investment Trusts like CBL this year. But CBL said it has continued to improve its portfolio and same-store sales in its shopping centers.
Stephen Lebovitz, CEO of CBL & Associates Properties Inc.
The Chattanooga-based shopping center company on Wednesday posted second quarter funds from operations, as adjusted, of $91.9 million, or 54 cents per share, which is in line with the average estimate of analysts that follow the company.
A year ago, CBL earned $93 million, or 55 cents, per share.
CBL said after the stock market's close that it plans to repurchase shares from time to time on the open market, in privately negotiated transactions or otherwise depending on market prices and other conditions. Purchases may be made through the program through Aug. 31, 2016.
CBL stock closed Wednesday at $16.13 per share, up 15 cents, on the New York Stock Exchange. CBL traded as high as $21.28 in February.
Lebovitz said management and the board believe it is important to proactively implement a buy-back program, demonstrating its ongoing confidence in the value of CBL's portfolio.
"Importantly, we remain fully committed to maintaining and further improving our credit metrics and do not intend to borrow funds to execute these share repurchases," he said.
Concerning its quarterly earnings, the owner of Hamilton Place and Northgate malls in Chattanooga said same-center sales per square foot rose 4.1 percent in the quarter over a year ago.
But CBL cited lost income from bankruptcy related store closures resulting in a $900,000 drop in same-center minimum rents in the period.
Lebovitz said CBL's overall fundamentals of the portfolio remain healthy.
"Our leasing team has quickly addressed the recent bankruptcy related store closures, with more than 65 percent of the space committed or under negotiation," he said. "These future store openings will benefit our portfolio in late 2015 and throughout 2016."
The company reported it completed the sale of two non-core assets as part of its portfolio transformation - Eastgate Crossing in Cincinnati and Madison Square in Huntsville, Ala.
Meanwhile, CBL added Mayfaire Town Center and Community Center in Wilmington, N.C., for $192 million in cash.
In addition, the company retired a $49.5 million loan secured by Imperial Valley Mall in El Centro, Calif.
CBL increased its FFO guidance, as adjusted, for the rest of 2015 to the $2.25-$2.32 per share range. The increase includes contributions from the Mayfaire acquisition, the company said.