Shares of Chattanooga-based CBL Properties dropped by a fourth on Friday, a day after it cut its dividend and reported lower-than-expected third quarter earnings.
The shopping center company's stock fell by $2.07 per share, or more than 25.9 percent, to close Friday at $5.92 per share - its lowest price in more than eight years. CBL shares closed at $5.78 per share on July 30, 2009.
On a conference call with analysts, CBL Chief Executive Stephen Lebovitz said the negative trends in the retail sector accelerated in the third quarter as shoppers shift to internet buying, but he reaffirmed the company's strategy to redevelop its mall and other properties.
"Confidence in our strategy has not wavered," Lebovitz said. "Our properties are dominant in their markets and well-suited for redevelopment."
Still, he said, the challenge many retailers are facing took a toll on CBL's quarterly results.
The CEO cited the fallout from bankruptcy filings by companies such as Toys R' Us and Vitamin World. Lebovitz said CBL is having to provide additional rent concessions to retailers undergoing bankruptcy reorganization as well as companies looking to stabilize operations.
Christy McElroy, an analyst for Citi, asked if the dividend cut was more about anticipating future capital spending such as for redevelopment uses or CBL's expected ability to access and raise money.
Lebovitz said the redevelopment of the properties is key, noting CBL needs to bring in different uses into its shopping centers.
"We feel like we have access to capital. We've demonstrated that," he said.
Lebovitz said that when CBL officials look at redeveloping some existing Sears and Macy's stores, for example, some of those will open in late 2018, 2019 and 2020.
"Those are $150 million a year over the next couple of years," he said. "We're mindful of the investment today and there will be more redevelopment in the future."
The company official said CBL wants to trim the number of apparel stores in its centers and replace them with sectors such as restaurants and health and beauty, which have "a lot more tailwind."
Earlier this week, CBL named a vice president of mixed use to lead a new initiative to initially focus on adding medical and other types of office uses across its portfolio.
On Thursday, CBL announced it would cut its quarterly dividend in the fourth quarter for the first time since the end of 2008, reducing the annual dividend by nearly 25 percent from $1.06 per share to 80 cents per share.
The company also revised downward its outlook for the rest of 2017. CBL said it expects funds from operations in the fourth quarter to be about 10 cents per share less than previous guidance, or between $2.08 and $2.12 per share.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.