Why CBL’s Managemnet Was Optimisitc in 3Q15 Earnings Call



CBL’s conference call

CBL & Associates’ (CBL) management scheduled a conference call to discuss its 3Q15 earnings and to provide an outlook for the future. The company’s FFO (funds from operations) per share was below analyst estimates while revenue was marginally over the estimates.

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Strong retail demand

Retail demand, leasing activity, and lease spreads remain strong at the company’s properties. CBL executed more than 413,000 square feet of leases in the malls during the quarter. The average rise in gross rents for new and renewal leases was 11.1%. Spreads on renewal leases were 6.1%, and new lease spreads remain high at 24.9%.

Management optimistic about future

According to the company’s management, “Based on operational performance during the quarter, we are on track to achieve the mid-to-high end of our FFO guidance and the low-end of our same-center NOI (net operating income) range. Occupancy improved notably during the quarter as we took advantage of the strong retail demand for our malls. While vacancies resulting from bankruptcies earlier in the year have created challenges in 2015, our releasing progress positions us well for growth in 2016 and beyond. Strong sales growth also continued this quarter and we expect a favorable holiday season for our retailers and our properties.”

Guidance for fiscal 2015

Based on its current outlook, the company has reiterated its guidance for FFO, as adjusted, in the range of $2.25–$2.32 per diluted share. CBL anticipates achieving same-center NOI growth near the low-end of its previously issued range of 0%–2% in 2015.

The guidance also assumes the following:

  • full-year General and Administrative expense of $57–$59 million
  • no additional unannounced acquisition or disposition activity
  • no unannounced activity in capital markets
  • year-end portfolio occupancy in the range of 92.7%–93.2%

The SPDR Dow Jones REIT ETF (RWR) invests 0.37% of its portfolio in Macerich. Meanwhile, WP Glimcher (WPG), Macerich (MAC), and Taubman Centers (TCO) have weights of 0.4%, 1.9%, and 0.8%, respectively, in the same portfolio.

We’ll discuss CBL’s valuation in the concluding article.


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