CHATTANOOGA, Tenn.--(BUSINESS WIRE)--CBL & Associates Properties, Inc. (NYSE:CBL) announced future redevelopment/replacement plans for JCPenney anchor locations in the CBL portfolio that are expected to close in 2014.
“One of our most attractive investments coming out of the recession has been to improve the performance of our properties through redeveloping underperforming anchor locations. The opportunities created by the four JCPenney closures announced today fit perfectly with that objective,” said Stephen Lebovitz, president & CEO. “While we have been encouraged by JCPenney’s recent improvements in sales and traffic, we have been anticipating certain store closures to occur. As we said in our most recent earnings call, we have been proactively engaging in discussions and gauging retail demand with this in mind and are pleased to announce strong interest for the locations expected to close in 2014. Our next steps will be to move forward with negotiations with retailers and finalize redevelopment plans. Once leases are signed, we will share specific retail names joining each mall, as well as construction and opening timelines. The list of retailers interested in these specific locations includes sporting goods, arts and crafts and other box retailers, as well as a traditional department store for one location, all of which will enhance the performance of the malls overall.”
JCPenney announced its intention to close four locations in the CBL portfolio at Hickory Point Mall in Forsyth, IL, Janesville Mall in Janesville, WI, Wausau Center in Wausau, WI, and Northgate Mall in Chattanooga, TN. CBL anticipates store closures to occur in the second quarter. Three locations are leased from CBL. The Northgate Mall store is leased from a third party and CBL will work with the building owner to facilitate its redevelopment. The stores aggregate approximately 499,000 square feet and $1.4 million in gross annual rent. JCPenney will continue to pay rent until lease expiration.
Lebovitz added, “As part of our review process, we analyzed the co-tenancy provisions in small shops leases at these properties and determined that the financial exposure is immaterial. The significant and diverse retail demand for each location demonstrates the strength and resilience of our dominant mall properties. We look forward to the improved growth rates generated from these enhancements.”
Over the past three years, CBL has added or redeveloped more than 75 anchor and junior anchor locations to its portfolio comprising more than 2.2 million square feet. Today, other than locations under redevelopment, CBL has no vacant anchor locations in its core portfolio. The JCPenney stores that are closing are all prominently located in their malls with convenient parking and prime visibility, which will facilitate their repurposing. Based on CBL’s extensive track record of successful anchor redevelopment, similar projects have generally required 12-24 months to complete and an investment of $5–10 million generating initial unleveraged returns in the range of 7-10%. More specific cost and return information regarding the four locations will be announced as plans are finalized.
About CBL & Associates Properties, Inc.
CBL is one of the largest and most active owners and developers of malls and shopping centers in the United States. CBL owns, holds interests in or manages 150 properties, including 88 regional malls/open-air centers. The properties are located in 29 states and total 84.4 million square feet including 4.4 million square feet of non-owned shopping centers managed for third parties. Headquartered in Chattanooga, TN, CBL has regional offices in Boston (Waltham), MA, Dallas (Irving), TX, and St. Louis, MO. Additional information can be found at cblproperties.com.
Information included herein contains "forward-looking statements" within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual events, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. The reader is directed to the Company's various filings with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included therein, for a discussion of such risks and uncertainties.