posted August 6, 2008
CBL & Associates Properties, Inc. (NYSE:CBL) announced results for the second quarter ended June 30, including a 9.4% rise in revenue.
Net income available to common shareholders for the quarter ended June 30, 2008, was $9,667,000, or $0.15 per diluted share, compared with $11,465,000, or $0.17 per diluted share for the prior-year period. Net income available to common shareholders for the six months ended June 30, 2008, was $15,838,000, or $0.24 per diluted share, compared with $28,866,000, or $0.44 per diluted share, for the prior-year period.
Net income available to common shareholders for the quarter and six months ended June 30, 2008 was primarily impacted by an increase in depreciation expense and an increase in interest expense as compared with the prior-year periods from the addition of acquired and developed properties.
Funds from Operations (“FFO”) allocable to common shareholders for the quarter ended June 30, 2008, was $53,432,000, or $0.81 per diluted share, compared with $48,380,000, or $0.74 per diluted share, for the prior-year period, representing an increase of 9.5% on a per share basis. FFO allocable to common shareholders was $105,932,000, or $1.60 per diluted share, for the six months ended June 30, 2008, compared with $99,379,000, or $1.52 per diluted share, for the prior-year period.
FFO of the operating partnership for the quarter ended June 30, 2008, was $94,436,000, compared with $85,948,000 for the prior-year period, representing an increase of 9.9%. FFO of the operating partnership for the six months ended June 30, 2008, was $187,291,000, compared with $176,705,000 for the prior-year period.
HIGHLIGHTS
Total revenues increased 9.4% during the quarter ended June 30, 2008, to $269,527,000 from $246,289,000 in the prior-year period. Total revenues increased 10.6% in the six months ended June 30, 2008 to $547,624,000 from $495,307,000 in the prior-year period.
Same-center net operating income (“NOI”) for the portfolio for the quarter and six months ended June 30, 2008, declined 0.8% and 0.7% respectively, compared with a 2.4% increase and a 0.4% decline, respectively, for the prior-year periods. Same-center NOI for the quarter was primarily impacted by the year-over-year decline in stabilized mall occupancy and an increase in bad debt expense due to store closures.
Same-store sales for mall tenants of 10,000 square feet or less for stabilized malls as of June 30, 2008, declined 2.3% to $341 per square foot compared with $349 per square foot in the prior year period.
The debt-to-total-market capitalization ratio as of June 30, 2008, was 68.6% based on the common stock closing price of $22.84 and a fully converted common stock share count of 116,960,000 shares as of the same date. The debt-to-total-market capitalization ratio as of June 30, 2007, was 53.2% based on the common stock closing price of $36.05 and a fully converted common stock share count of 116,285,000 shares as of the same date.
Consolidated and unconsolidated variable rate debt of $1,418,020,000 represents 15.1% of the total market capitalization for the Company and 22.0% of the Company's share of total consolidated and unconsolidated debt.
CBL's Chairman and Chief Executive Officer, Charles B. Lebovitz, said, “In the third and fourth quarters of this year, more than 1.4 million square feet of new developments and expansions will be opening in the CBL portfolio. The most notable of these new centers is the 900,000-square-foot Pearland Town Center in Houston, TX, which celebrated its grand opening on July 30. The CBL leasing team did an outstanding job with the center opening over 85% leased and committed. The attention this center continues to receive from retailers and the financial community is tremendous and we believe Pearland Town Center will make a strong contribution to CBL’s long-term growth.
“The second quarter was led by the 9.5% growth in Funds From Operations per share and the enhancements to our financial flexibility with a new $228 million term facility. Notwithstanding the current challenges in the retail environment, we are focused on sustaining the corporate-wide momentum we have been building and look forward to realizing the long-term benefits of our business strategy.”
PORTFOLIO OCCUPANCY
June 30,
2008
2007
Portfolio occupancy 91.4 %(a) 91.6 %
Mall portfolio 90.9 % 91.7 %
Stabilized malls 91.0 % 92.2 %
Non-stabilized malls 89.5 % 82.1 %
Associated centers 94.1 % 92.3 %
Community centers 92.4 % 82.7 %
(a) Portfolio occupancy excluding centers acquired in 2007 was 91.6% as of June 30, 2008 compared with 91.6% as of June 30, 2007.
DISPOSITIONS
In April 2008, CBL completed the sale of five community centers located in Greensboro, NC for approximately $24.3 million to three separate buyers. The community centers included Brassfield Square, Hunt Village, Northwest Centre, Caldwell Court and Garden Square.
In June 2008, CBL completed the disposition of one office building in Greensboro, NC for $1.2 million.
CBL has entered into a contract to sell New Garden Crossing, a community center in Greensboro, NC, for $19.5 million. CBL anticipates closing on the disposition in August 2008.
FINANCING
During the second quarter, CBL entered into a new, unsecured term facility for up to $228.0 million. The facility has an initial term of three years with two one-year extensions at the Company’s option and will bear interest based on leverage (debt to gross asset value) in the range of 150 to 180 basis points over LIBOR. The proceeds were used to pay down outstanding balances on the Company's lines of credit, providing CBL with additional financial flexibility.
The banks participating in the new term loan include Wells Fargo Bank as Lead Arranger; Aareal Capital Corporation, Regions Bank, US Bank, Fifth Third Bank and Raymond James Bank.
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