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CBL copes with tough retail outlook(Chattanooga Times (Free Press, TN) Via Acquire Media NewsEdge) Jan. 10--CBL is expecting 2009 to be a tough year for retailers like last year, but the company is well-positioned to weather the turbulent economy, a top official says. "(Last year) was definitely a tough year for everybody," said John Foy, chief financial officer of Chattanooga-based shopping center company CBL & Associates Properties Inc. "Bankruptcies were greater than we've ever seen." A number of retail stores foundered nationwide last year and in the past 10 days. Goody's Family Clothing Inc., Linens 'N Things and Mervyns are in liquidation, according to the Associated Press. Circuit City Stores Inc. is reorganizing in Chapter 11 bankruptcy. The Bombay Co. and Sharper Image Corp. have closed. Macy's is closing 11 stores in nine states. CBL will fill vacant storefronts, Mr. Foy said, though not as quickly as in the past. Likely, more nonretail tenants will go into malls and shopping centers, which will diversify the tenant base, draw more foot traffic and benefit food courts at malls, he said. CBL is not starting any renovation projects, and the only construction work under way is on projects that were started before the recent economic downturn, said Katie Reinsmidt, director of corporate communications and investor relations. Retail industry insiders are waiting to see how stores' margins held up during deep discounting over the holiday period, Mr. Foy said. Retailers are responding to the challenge in part by squeezing their suppliers on payment terms, he said. Some retailers are asking their landlords to cut back on rent, Mr. Foy said, although CBL is asking for concessions in return such as lengthening the term of the lease. cbl shares CBL's stock has taken a beating along with other real estate investment trusts. From an all-time high in February 2007 of $48.93, shares closed out the year at $23.91. In 2008 shares plunged even more, closing out the year at $6.50. They closed Friday down 42 cents at $7.93 "The markets painted everybody with a broad brush," Mr. Foy said. "Everybody thinks retailers are in the doldrums. We are. But we aren't going away." Goldman Sachs this week downgraded four REITs, including CBL, which went from a "neutral" to a "sell," according to Reuters. However, the stock is a good value, Mr. Foy said. CBL has $304 million in debt coming due this year, with five of the six lienholders being life insurance companies, Mr. Foy said. CBL is in discussions with the debtors, and also has good relationships with a number of banks. In November, Barnes & Noble Booksellers moved to a new location at the food court entrance at Hamilton Place mall from the Terrace shopping center nearby. CBL had previously announced that shoe store DSW and Ulta, a salon, would make their Chattanooga premiere at the bookstore's old spot. But with the liquidation of Linens 'N Things at the Terrace, CBL is reviewing the best use for the property, Mrs. Reinsmidt said. DSW and Ulta still may move into the center. "We have an opportunity for some exciting things to occur," she said. CBL still hopes to eventually renovate Hamilton Place and is studying its options, Mr. Foy said. Doing one large renovation project would provide the greatest impact, he said, but with the economy in doldrums, CBL may do projects in phases. CBL believes it can draw high-end retailers from larger markets to Chattanooga, Mr. Foy said. "There are a lot of retailers in Atlanta who we think we can attract to Chattanooga," Mr. Foy said. "There's a positive impact here with Volkswagen and Alstom and Westinghouse. We think Chattanooga is coming higher on everyone's radar screen." To see more of the Chattanooga Times Free Press, or to subscribe to the newspaper, go to http://www.timesfreepress.com. Copyright (c) 2009, Chattanooga Times Free Press, Tenn. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |