CBL & Associates Properties said all of its retail centers are open for business and fully operational, but the company reported Tuesday that net operating income from its shopping malls and other properties fell by more than 30% in the third quarter compared with a year ago due to lower sales volumes, store closings and retailer delays in payments.
The Chattanooga- based shopping center development firm, which filed for bankruptcy earlier this month to reorganize its finances under court protection in a Chapter 11 proceeding, said its funds from operations in the third quarter, as adjusted, fell to 4 cents per share compared with 34 cents a share a year ago. CBL's revenues dropped by more than 30% from $187.3 million in the third quarter of 2019 to $129.9 million in the third quarter of 2020.
CBL and other real estate developers have been hurt by uncollectable revenue from tenants not paying rent or reducing payments due to the COVID-19 pandemic. CBL's total portfolio occupancy fell to 86.3% as of Sept. 30, 2020, down from a 90.5% occupancy rate a year ago.
The foreclosure of CBL's Hickory Point Mall in Forsyth, Illinois, was completed in the third quarter and in October, the Burnsville Center in Minneapolis was placed into receivership. CBL said it also expects foreclosures or conveyance proceedings at the Park Plaza in Little Rock, Arkansas, the EastGate Mall in Cincinnati, Ohio, and the Asheville mall in Asheville, North Carolina.
CBL reported a net loss in the third quarter of $54.1 million, or 28 cents per share, compared with a net loss of $90.1 million, or 52 cents per share, for the third quarter 2019.
But CBL President Stephen Lebovitz said the company is seeing improvements from earlier in the pandemic.
"While traffic is still at a reduced level as compared with the prior year, we are seeing sequential improvement in a number of markets as well as a more deliberate shopper, benefiting conversion rates and sales," he said. "What has been reinforced during this time, is the strength of our locations in their markets as they continue to serve as important community centers.
Lebovitz said with extensive safety protocols in place, each of the CBL malls is still seeing a traffic stream of tens of thousands of visitors per week. CBL owns and operates Hamilton Place and Northgate malls in Chattanooga and more than 100 other retail properties across the country.
"As large gatherings such as sporting events, concert venues and the like have been discontinued or curtailed for the near future, no other venues can currently provide this type of access, and in a safe manner," he said. "Tenants are also exploring new innovative ways to better reach their customers, utilizing curbside, delivery, buy online pick-up in-store and other services."
CBL said it expects additional store closures and lost rent through the rest of 2020 "as the difficult operating environment continues." But Lebovitz said the company has seen "a significant improvement in collections " from tenants.
"April's collection rate improved from 27% to over 76% and May improved from 33% to 68," he said. "We expect this trend to continue as we move later in the year and into 2021, and certain deferred rents begin coming due."
CBL was delisted from the New York Stock Exchange last week after its stock fell over the past year, especially following its bankruptcy filing on Nov. 1. But shares of CBL began trading over the counter, or OTC market, on Nov. 4 and the company's stock rose 1.9% in trading Tuesday to close at 3.2 cents per share.
- Compiled by Dave Flessner