Top officials at CBL & Associates Properties Inc., one of the nation's largest shopping center developers, say major moves over the past few weeks have solidified its finances.
The Chattanooga-based real estate investment trust has issued 66.6 million shares of common stock for proceeds of about $382 million. It is using the money to pay down debt.
CBL also said it has received commitments from groups that hold 91 percent of its unsecured credit line, or $510 million, to extend the repayment date to April 2014. In addition, the company said it has already received extension commitments from 80 percent of the participants in its $525 million secured credit facility.
CBL President Stephen Lebovitz and John Foy, CBL's vice chairman and chief financial officer, recently spoke with Times Free Press Deputy Business Editor Mike Pare.
Q. Why are these moves significant?
Mr. Lebovitz: The biggest reason is that liquidity is the major factor on investors' minds. This really solidifies our liquidity position as a company for the foreseeable future. The equity gives us a source to pay down lines of credit and create additional capacity to handle refinancings we have coming up in three to four years.
The extension of the lines of credit give us that same ability in that we don't have any lines of credit coming due till 2013 and 2014 now. We've got that breathing room.
Q. You're speaking as the president and a major stockholder. For an outsider or a small shareholder, how are they to view what's happened?
Mr. Foy: What we did was we strengthened the total overall equity in the company. As the board announced at the last board meeting, we changed from a portion of the dividend in stock to an all-cash dividend. It further secured the firmness of that dividend from the standpoint of liquidity. The company continues to have the flexibility and strengthens its balance sheet.
It shows to the financial community what a good reputation the company has in the banking industry -- to get your lines of credit extended to the extent we did, it's something not happening in this capital constrained market.
Mr. Lebovitz: All of us -- large shareholders, small shareholders, internal shareholders -- are aligned in the situation. It allows the markets to not be so focused on the downside and questioning our financial future. It allows everyone to look forward and think more about the upside and the opportunities that are going to be out there for us.
Q: Should the average shareholder be worried about dilution of his investment?
Mr. Lebovitz: There's no one who suffered more dilution than the internal management and the family. It's something that's difficult but we look at it long term that it's going to create more value for all the shareholders.
Q. What do you all see going forward for the rest of the year and 2010?
Mr. Lebovitz: We see a couple of different types of opportunities. We've talked to several of the banks and lenders about working with them on some of the properties they're taking over and initially doing that on a third-party basis to generate fees, and not CBL properties, properties from other people they have.
We're talking with a number of pension funds about looking at some joint ventures for opportunities down the road. The pension funds have a lot capital sitting on the sidelines. A lot of existing space will get absorbed first.
Q. Do you see the planned Hamilton Place project happening this year or next?
Mr. Foy: Everything's being studied and looked at with the capital raise. It does give us additional opportunities. What we'll do is look to see where we can make the most beneficial economic returns for the shareholders. If that's Hamilton Place, that will be one of them.
Mr. Lebovitz: Look at Hamilton Place and some of the things happening. There is still a lot of activity within the mall. Even with the economy in the doldrums like it is, Hamilton Place is making a lot of progress with new retailers.
Q. How are retailers holding up?
Mr. Lebovitz: (At a recent conference), the mood of the retailers was more positive than it had been earlier in the year, largely because the financial markets seemed to be better. Retailers have planned more conservatively this year. Most of the retailers have cut back their expansion, but they're still expanding.
Q. How is occupancy holding up?
Mr. Lebovitz: For the first quarter, occupancy was down. We're making headway in building that back up. We've said to the markets we'll probably be down about 2 percent this year. That's consistent with what happened in the last recession and we were able to build it back up pretty quickly after that.