CBL Drives New Shopping Center Growth With Horizon JV

CHATTANOOGA, TN—CBL & Associates Properties reported good news on Monday.  The shopping center REIT gained profit on higher occupancy and stronger leasing.

CBL reported first quarter revenues of $250.6 million. That compares to $267.1 million in a year-ago period, but still beat analyst estimates of $245.9 million.

Drilling into the numbers, same-store sales per square foot increased 5.9% for mall tenants 10,000 square feet or less for stabilized malls for the first quarter 2012. Meanwhile, shopping center portfolio occupancy in the quarter increased 150 basis points to 91.8%, from the year-ago period. Average gross rent for leases signed in the first quarter 2012 increased 7.2% over the prior gross rent per square foot.

“Over the past year we have made meaningful progress building our presence in the outlet industry, with two ground-up development projects and our recent investment in two operating outlet centers,”  Stephen Lebovitz, president and CEO of CBL, said in the investor conference. “In aggregate, outlets comprise a small percentage of our revenues, but we are encouraged by the potential we see in that area.”

Lebovitz went on to say that many retailers have made their outlet strategy a priority and this sector will provide one of CBL’s best avenues for external growth over the next few years. He pointed to Horizon Group as a strong partner, and one that will bring additional opportunities for new outlet projects where the firm can meet its pre-leasing requirements and achieve attractive financial returns.

CBL recently announced an investment in two additional outlet centers Horizon Group operates. The REIT acquired a 75% stake in The Outlet Shoppes at El Paso and a 50% interest in The Outlet Shoppes at Gettysburg. CBL is also developing The Outlet Shoppes at Atlanta in the affluent suburb of Woodstock, north of the city. The 370,000 square foot project is approximately 70% leased or committed. The project is a 75/25 joint venture with Horizon Group.

Lebovitz said other important sources of growth are expansions and redevelopments to our existing centers. The shopping center REIT recently celebrated openings for several major boxes within the CBL portfolio. In Maryville, Tenn., at its Foothills Mall, the firm opened a new Carmike 12-Screen during the first quarter.

“This year we have already taken advantage of several attractive investment opportunities,” Lebovitz said. “We are excited to add these new sources of growth to our portfolio as they will contribute to CBL's future success. Our existing portfolio is also improving and benefiting from increases in retailer demand and limited new supply.”