CBL & Associates Properties Inc. officials on Friday said the company has seen a “fire sale” in its stock as the company’s shares were driven to a three-year low in January.
“We are disappointed with earning results for 2007,” CBL President Stephen Lebovitz told analysts in a conference call. “We are displeased that after a nearly uninterrupted 13-year track record of solid FFO growth we have posted negative growth in 2007. We are more determined than ever to achieve better results in 2008.”
Funds from operations is the company’s primary earnings gauge.
Consumer fears of a recession led to flat store sales, he said, versus annual growth of 3 percent to 4 percent the last few years. CBL shares closed Friday at $23.75, down 84 cents. On Feb. 8 last year, CBL’s stock closed at $49.98.
Yearend 2007 funds from operations were $3.10 per share, compared to $3.34 per share a year ago, a 7.1 percent drop, CBL reported Thursday. Fourth-quarter FFO were 83 cents per share, down from 97 cents per share in the fourth quarter 2006, a 14.4 percent decrease.
Excluding a writedown, CBL reported FFO was 99 cents for the fourth quarter, up from 97 cents a year ago. FFO for the year was $3.10 in 2007, down from $3.34 the prior year.
CBL earlier in the week lowered its 2007 FFO guidance to $3.09-$3.11 per share from $3.35-$3.41. The mall operator said the lower guidance was based partly on an $18.5 million noncash writedown of real estate securities that declined in value during the fourth quarter.
Although a number of stores have announced closings, bankruptcies and delayed openings, not many of the affected stores are at CBL facilities, Mr. Lebovitz said Friday. Abercrombie is opening a new division, he said. Buckle, which has a number of stores at CBL sites, is doing well.
Meanwhile, Chico’s and Talbots have cut back, he said, and jewelry sales are soft.
However, retailers’ 2008 openings are on track, Mr. Lebovitz said, and cutbacks likely wouldn’t happen before 2009, but they “also want to continue to take advantage of the economy when it comes back.”
While credit is tight, established developers like CBL are better positioned to access funds, Mr. Lebovitz said.
CBL in general doesn’t start development of a project until at least 50 percent of space has been leased, and the company will continue to be conservative in its developments, Mr. Lebovitz said.
At least one analyst, however, expressed doubts about CBL’s access to capital to pursue new projects. CBL officials said the company has $60 million in credit lines available.
In response, an analyst said CBL is maxed out and pressed CBL officials to reveal how the company could pursue future deals and questioned why the company wouldn’t consider selling underperforming assets.
Chief Financial Officer John Foy said CBL is not constrained by capital and planned to pull $50 million to $100 million in equity out of property refinancings this year.
CBL also has funds available from construction loans, he said, plus the future sale of outparcels as well as projects that he declined to reveal. Officials didn’t rule out selling some properties.
