CBL
#Thanks.
Good morning <UNK>.
I think it will.
JCPenney has had continued strong results, growth in sales, growth in profits, and they've made the statement that they are not looking to close stores.
The are looking to grow their revenues and grow their profits, and their stores are profitable.
They did some closings, but that's behind them.
And then Sears is focused on Kmarts, and that's where the majority of their closings are.
And the conversations I've had with their Head of Real Estate and their real estate people is that they're not looking to close Sears stores.
You know it's really persistence and time.
And unfortunately these transactions take longer than we wish they did.
But we've been working at it for some time and now we're starting to see the results, we haven't changed any criteria, we haven't changed any people.
We've been focused on it for a while and now we're seeing good progress.
Thanks <UNK>.
Yes, at the end of the quarter, we had 68 Aeropostales.
There are few that, it will be a little less because of some of the dispositions that we've made.
And then, that will bring it down to 65.
And of those, eight will be closing this year.
We anticipate, like we said last quarter that, the hit to NOI will be roughly $2 million for the year.
So, I mean one of the reasons that when we did our guidance for the rest of the year, we're going to start feeling the impact of some of those closings, and the rent reductions in Aeropostale because of the restructurings from the bankruptcy there.
So that's an impact that we are going to start to feel.
And then PacSun and Sports Authority and the bankruptcies that happened earlier this year are going to start flowing through to our revenues as we get into the third and fourth quarter.
Well, we did the overall, let you know what the full-year guidance is, and we do have Q3 last year was flat but, or Q4, had a robust 2% growth.
So that's a tough comp.
But as <UNK> pointed out, these bankruptcies and the store closure impact will be felt more in the second half of the year.
So it will moderate from the strong quarter we've had this year, in this quarter and last quarter, which is fantastic.
And we hope to continue with that momentum, but it will moderate some, primarily because of these impact of the bankruptcies and the store closures.
It's really sales.
Actually the leasing has been strong and we're doing a redevelopment, expansion at Dakota Square in Minot, we're adding some good tenants there and we've got strong demand.
We've got some other retailers that want to get in them, those markets and those malls, that we're trying to figure out a way to accommodate them.
So the leasing demand is strong.
We had a great run up over the past three years.
And now on the downside it's come back down, but the levels are still strong, and occupancy cost is healthy, it's not out of line at all.
It's just primarily sales.
You know Jeff, like I said you know, we're just not going to make any more comment at this time.
And we are pushing and doing everything we can to bring this to resolution.
And we are confident that it's going to be positive and we want that to happen as quickly as we can.
I wish today we had it wrapped up in a bow and we could tell you exactly that it's behind us.
But it's not.
And we're going to hopefully get there as quickly as we can, and believe me as soon as we have it behind us, we will tell you.
Okay thanks Jeff.
Yes, I can.
Fremaux Town Center and Ambassador, we don't really report the sales for those, they are large community centers.
And Hamilton Place mall is a tier 1 property, over $400 a square foot I believe by year end.
It was $402 at year end, that's right.
I mean it really cuts both ways because rates are low today, and the debt markets have come back.
The Bonita Lakes was free and clear, but buyers were able to get financing from a regional bank and you know, Fashion had the loan in place.
I can assure you it was a lot of work to get that assumed, and prolonged the transaction.
But given the terms of the loan, it was attractive to that buyer.
And the rate was below 5%, so that was favorable to them.
So I guess the best way we think of it, it cuts both ways.
And some of the properties in our disposition pool have financing, and some don't.
We're going to try to work through with the buyers in both circumstances to make the transactions happen.
Yes I mean it's happened.
It might not be C&BS, but the properties that we've sold, the buyers have been able to get financing.
I don't know what the terms are and what kind of financial guarantees or whatever, financial resources they have to provide, but I don't think it's institutionally driven financing.
But you can ---+ there's still a lot of spread when you look at where the cap rates are and where underlying interest rates are, even if you get some conservative-level financing, it pops returns on equities for these buyers, and they are private buyers, so I think from their point of view it's pretty attractive if they can do that.
Could you repeat your question.
We couldn't hear it completely.
Yes I mean you know, you probably saw the headlines.
Most of it came from organic growth and the top line.
Base rent drove it, percentage rent to some extent.
We had strong top-line growth.
The expense savings were comparatively a lot less compared to the revenue growth.
So only $0.5 million of expense savings and $5.6 million of revenue growth.
So, if you just compare the two, top-line growth drove it, as result of occupancy growth, as well as rental percentage growth that we have.
And all the new leasings that have kicked in.
You know tremendous ---+ H&M (inaudible) (multiple speakers)
No, I think expense line items do vary.
We may have some exposure to higher expenses in the upcoming quarters.
You know, store removal is an item that could impact us, real estate taxes could impact us.
Just those are the variables that we can control.
But to the extent that we have been able to manage the operating expenses, they are pretty much stable now.
You know, like I said earlier, we will be opportunistic in accessing the bond markets.
So today I don't really know that's if the spreads are where we want it to be, so we will continue to look at the bond market and be very selective because we do have the flexibility to access when we want it.
And we do have some secured loans coming up.
But they are great assets.
And we also have flexibility on our lines of credit because we do have over $700 million available.
In addition, if we continue to make asset sales, that will provide us with additional liquidity.
So again, with all the different sources of capital we have, we feel pretty good about making our right choices and driving our cost of capital down.
Thank you.
There was a little something special this quarter.
We had done some financing along with our joint venture partner on Ambassador Town Center and Fremaux Town Center, and there's a financing fee that the management company was able to earn.
So we have about $0.5 million or so plus financing fees.
And then we do have management fees that have gone up because we are managing some third-party business.
So as that continues, we'll hopefully have a good continuation of the management fee income.
But to the extent of these financing fees, that's sort of a one-time item.
I don't really know, maybe around $3 million I guess per quarter.
But it fluctuates.
So ---+
Yes <UNK>.
Good observation.
The tier 1 sales, the malls that I talked about, the energy sensitive and the border markets are in the tier 1.
So that's where we had the biggest impact on the negative side,.
It was offset by some good growth in other areas of the country, which is why we were flat.
And then the tier 2, really just speaks to the stability, the only-game-in-town-nature of most of those properties.
And tier 3, there's some volatility.
Some of the tier 3 is taking out some of the stores that were less productive.
So that helps them and also just a lower base so it's easier to move the needle there.
Well you know if the expenses pick up in the second half due to normal [roll] or something else, I would think that it would moderate.
But I think on a full-year basis around 100% recovery is a good run rate for us.
Thanks <UNK>.
That's correct.
I mean there's a little bit in Q2, but it really kicks in Q3 and Q4.
Well Rich, we've said all along we would balance it between secured and unsecured and be opportunistic.
But we were focused on unsecured in the beginning because we needed to get the secured ratio down.
And we have dramatically bring that secured ratio down to around 30%.
And as we continue to pay off more loans, that will continue to come down.
So we have the flexibility to take opportunity in the marketplace based on the cost of capital on the debt side of course.
And also look at when we can issue the bonds, and be opportunistic about it.
And we now have the flexibility.
We been working very hard to get the unencumbered NOI up around 50% or more, and we continue to make progress on that.
And so, of course it's also making sure that the market is at the right juncture for us to access.
Yes we have seven Seritage in our portfolio, Sears that are owned by Seritage in our portfolio.
And we're talking to them on a regular basis.
They've got actually some interest in a couple of the stores, in terms of taking the half of the Sears that they have the ability to take back.
And we're working with them and whether they do it or we do it together, it's a positive for the center to bring in those new uses and to have the Sears space be more productive.
We've got a great relationship with Ben and his team and I think are very supportive of their strategy.
I don't know Rich.
It's just a combination.
It wasn't just at one property, there were just a few different ones that contributed to it.
And, that's a really healthy market, a lot of 1031s and net lease buyers that are looking for yield.
And the pricing is very attractive so were able to tap into that.
Thank you Rich.
So it's about $2.5 million, a little more than $2.5 million is what the net impact is that we are projecting.
That's for the second half of the year.
Yes, roughly.
Well the Aeros for the most part, Aero and PacSun, they are keeping most of their stores.
Sports Authority, we'll backfill that, Sports Authority is about $1 million on an annual basis, and we'll backfill those pretty quickly because we have deals in place.
And then the Aeros and the PacSuns, those will take six months to a year to backfill them.
There are eight Aeros closing and four PacSuns, so a lot of that impact is just reductions that we negotiate as part of the restructuring through the bankruptcies.
Right.
I mean we're obviously trying to get it.
There's still some retailers out there that their sales are not where they want to be, and we have renewals with them.
They bring us down and on the other hand, we've got some that are doing well.
So our sense is that we'll continue to see some improvement, but it's not going to be dramatic.
Thanks a lot.
Well we started the effort to sell community centers in non-core last fall.
And the pricing has been strong and we got some others that are in the pipeline that we're working on, and I don't see any reason to stop on that.
The execution has been good, the demand is good.
It helps improve our credit metrics and our liquidity, so it's a net positive.
You know, if we look at them and we don't see really the growth in NOI, it's a good time to sell.
And that's really what were taking advantage of.
All right.
I mean, I'd say we're focused on getting through the strategic transformation, the 25 malls, as quickly as we can, to get that behind us and that's the priority.
That's where we made the progress and I think that the results are driven by that focus.
I wouldn't rule out looking at other areas in the spectrum for joint ventures, or other capital, and if we could find an attractive transaction, and it helps us in terms of narrowing the NAV discount and the gap there and improving credit metrics, then that's certainly something we'll always explore.
Because we're really motivated to narrow that discount as much is possible and get our stock trading where it should be.
You mean, which ones are helping us <UNK>.
I'm sorry ---+
I mean still, even though we're doing more restaurants, a lot of those aren't in the lease spreads because they are not comps basis.
Also some of the non-traditional uses, those are larger boxes like a Kings or a Dave & Buster's.
So it's really driven by the retail.
And in some of the categories, like I was talking about Elle brands and Foot Locker and jewelry, athletic shoes, just some of the cosmetics, the eyewear, some of the traditional categories.
I mean the biggest struggles really have been some of the juniors.
And we're working through that, we're reducing our exposure to a lot of those retailers, re-leasing that space.
But otherwise, there's really good results on the re-leasing spreads and sales and good stability in those other categories.
Yes, our TIs are pretty much what they've been the past few quarters on a comparable basis.
Maybe a little bit higher but nothing material.
And yes, gross is consistent with net.
There's nothing really distorting it.
Thanks <UNK>.
Thank you again for your time this morning.
And as you can tell, we are thrilled with our results and looking forward to continuing to have strong results over the next few quarters.
Have a great weekend.
