Chattanooga-based shopping center developer CBL increases outlook amid income growth

Chattanooga-based shopping center developer CBL Properties on Monday posted positive funds from operations in the first quarter and boosted its outlook for the rest of the year.

Funds from operations, as adjusted, was $57.5 million, down from $68.7 million, from the same period a year ago, the company reported.

But the variance in adjusted funds from operations as compared with the prior year period reflects a significant increase in net operating income offset by an increase in interest expense attributable to the senior unsecured notes and secured credit facility, the company said in a filing after the close of the markets. Interest payments on the notes and credit facility were not required to be made during the first quarter 2021 as a result of the company's bankruptcy filing Nov. 1, 2020.

Stephen D. Lebovitz, CBL's chief executive officer, said in a statement that first-quarter results sustained the strong operational and financial momentum of 2021, leading the operator of Hamilton Place and Northgate malls in Chattanooga to increase guidance for the full year.

"Significant year-over-year occupancy gains as well as positive tenant sales growth demonstrate the strength of our properties," he said. "Percentage rents, short-term income and collections were above expectations, contributing to double-digit NOI [net operating income] growth. While first-quarter leasing spreads were negative, we anticipate sequential improvement going forward, with higher occupancy and increasing demand driving more favorable terms."

Net loss attributable to common shareholders for the three months ended March 31 was $40.7 million compared with a net loss of $26.8 million a year ago, the company reported.

However, portfolio occupancy as of March 31 was 88.3%, representing an improvement compared with 85.4% as of March 31, 2021, according to CBL.

Lebovitz said that further improving CBL's balance sheet is a key priority.

"We've made significant progress towards accomplishing our goal of fully refinancing the secured notes, including the recently announced partial redemption," he said. "Additionally, since our emergence, we have closed several attractive financings, favorable modifications and extensions. These transactions reduce borrowing costs, increase free cash flow and create greater financial flexibility."

CBL's revised full-year outlook shows 2022 funds from operations, as adjusted, in the range of $222 million to $237 million, or $7.18 to $7.67 per diluted share, which assumes same-center net operating income in the range of $416 million to $430 million, according to the company.

CBL's stock on the New York Stock Exchange closed at $24.87 per share, down 62 cents, or 2.43%.

CBL owns and manages 95 properties in 24 states.

– Compiled by Mike Pare