The CEO of Chattanooga-based CBL Properties said Friday that the revamp of the Sears space at Hamilton Place mall is "a prime example" of its strategy to reinvent its shopping centers.
"We'll get more sales and traffic from new users," said CBL Chief Executive Stephen Lebovitz on a call to financial analysts, noting the addition of Dick's Sporting Goods, Dave & Buster's and other nameplates will boost sales by at least three or four times.
Still, CBL's closing stock price on Friday tied an all-time low of 80 cents per share set on Aug. 23, 2019. In the past year, CBL shares have dropped by 64.2% as investors worry about the spate of retail bankruptcies and store closings.
Lebovitz said he wished the results of the redevelopments at its national portfolio of malls were more immediate.
"The mall business is in transition," he said. "We're responding by making changes We're diversifying our revenue stream. We're reducing our exposure to apparel retailers. We're confident in our strategy."
Bank of America analyst Craig Schmidt asked Lebovitz that as the company moves away from re-leasing mall space to apparel retailers, if new tenants will support corresponding sales volumes.
The CEO gave the Sears example at Hamilton Place, but he said there's a lag time during the redevelopment work.
"Now we're just starting to see users open up and we'll continue to benefit this year," Lebovitz said. Both Dick's and Dave & Buster's are slated to open in March.
Across its portfolio, CBL has 27 former anchor spaces committed, under construction or with replacements already open featuring dining, entertainment, fitness and other mixed-use components, according to the company.
Lebovitz said CBL is moving toward transforming its properties into suburban town centers.
"We're diversifying our revenue stream." - Stephen Lebovitz, CEO of CBL Properties
"Most users are not traditional retail names," he said, adding that projects are mixed-use featuring hotels, multi-family space and storage units.
He said CBL and other shopping center companies are dealing with retailers which are struggling to succeed in an era of online sales.
Lebovitz said that restructuring plans unveiled this week by department store chain Macy's will result in six or seven store closures in CBL's portfolio over the next three years.
But, he said, none of those stores will shut down this year.
"The extended timetable gives us a runway to line up replacements," the company CEO said.
On Thursday, CBL reported funds from operations per share fell 12.4% in the fourth quarter over the prior year, though the results beat the consensus analyst estimate by 3 cents per share.
The company that owns Hamilton Place and Northgate malls in the city reported that for the year, FFO was $1.40 per share, down 17.7%, from a year ago.
CBL's portfolio has 108 properties in 26 states.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.