CBL looks to ‘reinvent’ its malls, CEO says
Shopping center developer CBL & Associates Properties Inc. on Thursday pledged to step up efforts to remake its malls by wooing more entertainment, fitness, services and other new tenants. “Reinvent is the word of the year at CBL,” said company Chief Executive Stephen Lebovitz in a call with analysts, adding that plans are to turn a growing number of its properties into “vibrant town centers.”
The remarks were a day after the company reported lackluster first quarter results, with funds from operations, as adjusted, falling 4 cents per share from a year ago.
Shares of Chattanooga-based CBL, the company that owns and operates Hamilton Place mall and Northgate Mall in the city, fell to their lowest point in more than seven years Thursday.
CBL’s stock closed at $8.44 per share on the New York Stock Exchange, down 82 cents, or 8.86 percent. The company’s shares last closed lower on Nov. 6, 2009, at $8.32 per share.
“We’re disappointed with the results from the quarter,” Lebovitz said. “The good news is we see tremendous opportunity. We want to transform the malls into dynamic entertainment and multi-use centers.”
He said the narrative surrounding retail and malls is “unbelievably negative” and “out of control.”
“The death of the mall is far from upon us,” Lebovitz said.
While admitting there’s a challenging environment with many consumers going online to shop, the CEO said traffic is strong at its centers.
“Our properties enjoy prime locations,” he said. CBL’s dominance in its markets will allow the company to attract new users at its centers, the executive said.
But, Lebovitz said, the company has been hit with an accelerated number of store bankruptcies often due to unsustainable debt loads. He also said there are too many clothing retailers in the malls.
Apparel historically has made up 70 percent to 80 percent of a mall’s offerings, he said.
“It will definitely shrink,” the company chief said, adding that CBL plans to be more proactive in replacing some retailers. “There’s just too many of the same in the malls.”
Analyst Christy McElroy at Citi said CBL is talking a lot about redeveloping its large portfolio of malls and bringing in new users. She asked about the pace of annual spending needed for the makeovers.
Lebovitz said the amount would be consistent to what it has been spending, about $125 million a year, with most of that occurring through 2020.
He said the company has essentially completed its three-year plan of selling off low-performing properties. In 2014, CBL announced plans to sell 21 of its shopping malls, about a quarter of its nationwide holdings, in an effort to upgrade its remaining properties and boost the company’s income. Walnut Square Mall in Dalton, Ga., was one it sold off late last year.
Also, Lebovitz said CBL is continuing to work on plans for redeveloping some Sears and Macy’s locations. Earlier this year, CBL bought seven Sears facilities and is leasing them back to the retailer as it mulls redevelopment of the sites.
CBL bought the Sears store at Hamilton Place mall and the retailer’s Northgate Mall auto site as part of its future plans.
CBL owns, holds interests in or manages 125 properties, including 82 regional malls and open-air centers. The properties are located in 27 states.