CBL cuts dividend as earnings drop
CBL Properties is cutting its quarterly dividend by 62.5 percent as the company seeks to preserve capital amid the retail realignment occurring at many of its retail properties.
CBL said Monday it will reduce its annualized dividend rate from 80 cents per common share to 30 cents per common share.
“A major financial priority of CBL is to preserve liquidity and the flexibiity of our balance sheet,” CBL CEO Stephen Lebovitz said in the company’s earnings statement Monday. “This reduction will preserve an estimated $100 million of cash on an annual basis.”
CBL said funds from operations in the third quarter fell by 20 percent from a year ago, which was a penny below the average forecast for the period.
The Chattanooga-based shopping center development firm said net operating income from its total real estate portfolio declined by 6.1 percent this summer and by 6.6 percent so far this year, following continued bankruptcies by a number of retailers during the year.
Lebovtiz said despite additional rent losses from unanticipated store closings this year, “we are on-track to end the year at the midto-high point of our adjusted FFO per share guidance range” for 2018 and the company is working to improve results next year.
“While our leasing spreads continue to be pressured, the positive sales in our portfolio year-to-date are a healthy leading indicator for an improved leasing backdrop in 2019,” Lebovitz said. “We are also making strong progress on our redevelopment program.”
Of 10 Bon Ton stores that closed in August, six have new leases and three others are “in advanced negotiations,” Lebovtiz said.
“Now that the much-anticipated Sears bankruptcy is behind us, we have the opportunity to accelerate additional redevelopments to further transform our malls into suburban town centers,” he said. “We are having excellent results in diversifying our offerings, with executed or pending deals for 50 restaurants, 14 entertainment operators, nine hotels, two supermarkets, five fitness operators, four self-storage locations and four multi-family projects.”
CBL’s funds from operations totaled $68.6 million, or 40 cents in the third quarter, down from $84.7 million, or 50 cents per share, a year ago. Occupancy at CBL centers edged slightly higher to 92 percent as of Sept. 30, up from 91.1 percent three months earlier.
CBL said it has completed $89 million of asset sales this year to improve its balance sheet and Lebovitz said same center sales per square foot for the stabilized mall portfolio for the 12 months ended September 30, 2018, increased to $378 per square foot compared with $376 per square foot for the prior-year period.
Construction is underway on nine redevelopment projects with three redevelopment projects opened year-to-date.
Lebovitz said the Sears bankruptcy will have “minimal impact to our financial results for 2018” since three of the six Sears stores shutting down this fall at CBL properties had already been purchased by CBL, including the Sears at Hamilton Place mall in Chattanooga, and plans are already underway for redevelopment of those spaces.
CBL said it lost $12.6 million, or 7 cents per share, in the third quarter of 2018. A year ago, CBL lost $2.3 million, or 1 cent per share.
CBL shares traded up ahead of Monday’s earnings announcement, rising by more than 6.9 percent to $3.56 per share. But after the earnings report, CBL shares were trading down nearly 4.5 percent in after hours trading.
So far this year, CBL’s stock has declined by 28.5 percent and CBL closed Monday down 46.8 percent below a year ago.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340