Chattanooga-based CBL sees impact of coronavirus on mall properties, rent collections

Staff photo by Mike Pare / Shoppers walk in and out of one of the entrances at Hamilton Place mall on Tuesday. Mall owner CBL Properties says 75% of stores inside the mall have reopened.
Staff photo by Mike Pare / Shoppers walk in and out of one of the entrances at Hamilton Place mall on Tuesday. Mall owner CBL Properties says 75% of stores inside the mall have reopened.

Shopping center operator CBL Properties reported Tuesday it received just 27% of billed cash rents for April and its May collection rate likely will be in the 25% to 30% range amid closings during the coronavirus outbreak.

"The majority of our tenants requested rent relief, either in the form of rent deferrals or abatements," said Stephen Lebovitz, the Chattanooga-based company's chief executive, after the close of the markets. "We have placed a number of tenants in default for non-payment of rent."

Lebovitz, in remarks along with the release of first quarter results, said the company anticipates a significant portion of April and May rents will be collected later in 2020 and into 2021 under agreed upon deferral plans.

However, negotiations are ongoing, and it is premature to estimate a recovery rate at this time, he said.

"While first quarter results were largely as anticipated, the COVID-19 pandemic significantly shifted our expectations for the remainder of the year," Lebovitz said.

CBL's stock closed Tuesday at 23 cents, up 1 cent, or 6.67%, on the New York Stock Exchange.

CBL said the majority of the properties in its portfolio closed during March due to government mandates. But as of Monday, 66 of 68 CBL owned or managed malls have re-opened, subject to certain health and safety restrictions, including a dozen properties that are offering curbside or exterior-only service.

"As properties reopen, we have worked in cooperation with our tenants to institute strict guidelines, following CDC and health department recommendations, to help ensure the safety of our employees, tenants and customers," Lebovitz said.

In its first quarter, the operator of Hamilton Place and Northgate malls in Chattanooga reported that funds from operations per diluted share, as adjusted, was 26 cents, off from 30 cents per share for the same period a year ago.

First quarter FFO per share was impacted by 2 cents per share of dilution from asset sales completed since the prior-year period and 7 cents per share of lower property net operating income offset by 2 cents per share lower interest expense and 2 cents per share lower net general and administrative expense.

Same-center sales per square foot for the twelve-months ended February 29 increased 3% to $392 per square foot compared with the prior-year period, the company reported.

But the majority of stores in the CBL portfolio closed during March, which resulted in a decline in reported same-center sales per square foot for the month of 45% compared with the prior year month, the company said.

CBL reported a net loss attributable to common shareholders for the first quarter of $133.9 million, or 75 cents per diluted share, compared with a net loss of $50.2 million, or a loss of 29 cents per diluted share, for the first quarter 2019.

Net loss for the first quarter was impacted by a $133.6 million loss on impairment of real estate to write down the carrying values of Monroeville Mall in Monroeville, Pennsylvania, and Burnsville Center in Minneapolis, Minnesota, to the properties' estimated fair values.

CBL reported it established a comprehensive COVID-19 operational response plan, including enacting a work from home protocol for employees. It also said it followed CDC and governmental recommended guidelines across the portfolio for operating, closing and re-opening plans and provided assistance to its local and regional tenants in various ways, including launching a dynamic informational website to help access local, state and federal resources.

The company said it took significant actions to improve liquidity and reduce costs in response to the COVID-19 pandemic. The steps included drawing $280 million on its line of credit, eliminating all non-essential expenditures, implementing a company-wide furlough and salary reduction program and delaying and suspending capital expenditures, including redevelopment investments.

CBL earlier announced reductions to executive compensation, including a 50% cut for its chairman, CEO and president, a 50% reduction to independent director fees and a 20% reduction for other officers.

The company's temporary furlough program impacted about 300 employees, or 60% of CBL's workforce, CBL said.

Contact Mike Pare at mpare@timesfreepress.com. Follow him on Twitter @MikePareTFP.

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