Add CBL & Associates Properties to the listof REITs looking for quality over quantity.

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As I wrote in December, a number of REITsare selling off assets that no longer fit their core portfolio, andin fact CBL announced last week that it had found a buyer forLakeshore Mall in Sebring, FL.

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“We as a management team and organization are fully committed toa strategic plan that transforms the CBL portfolio to a higherlevel of sustainable growth,” said Stephen D.Lebovitz, president and CEO, in a conference call andpresentation regarding its future plans. The goal is not to shrinkthe portfolio, he added, but to refocus on higher-producingcenters.

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The company has grouped its 80 centers into three tiers, basedon sales per square foot: Tier 1, with sales above of $375 persquare foot and up; Tier 2, with sales between $300 per square footand $375 per square foot; and Tier 3, with sales below $300 persquare foot. CBL's goal is to have 90 percent of NOI from uppertier properties, and increase overall sales per square foot from$356 today to more than $400. Divesting some 21 centers valued at$1.0 billion to $1.25 billion in that last tier will be a majorfocus over the next 24 to 36 months. The company is targeting caprates in the high single digits.

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“It is at the top of our list of corporate priorities,” Lebovitzadded. “While most of our Tier 3 malls are solid, their growth ismore appropriate for a privately owned portfolio with a focus onyield.”

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Other factors that determined the combination of factorsincluding the strength of competing big boxes and lifestylecenters, demographics including population density and employmentlevels, and realistic prospects for growth.

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The company sold $220 million of lower growth assets last year,reinvesting $200 million of the proceeds into redevelopments andexpansions. Currently being marketed through traditional brokerchannels are York (PA) Galleria; StroudMall in Stroudsburg, PA; and RandolphMall in Asheboro, NC. A portfolio of some seven centers isbeing shopped privately. In addition, the company is in discussionwith lenders about restructuring or foreclosing five malls.

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Leasing also is a focus, with tenants such as Athleta andCheesecake Factory joining the portfolio. Big boxes also arelooking to enter the centers, CBL says.

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“We are fully committed to the transformation of CBL into astronger, higher-growth company with an even brighter future,”Lebovitz said. “This will generate even more value for ourstakeholders in the future.”

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