CBL Closes Kirkwood Mall Buyout

Zacks

CBL & Associates Properties, Inc. (CBL) – a real estate investment trust (:REIT) – recently acquired the remaining 51% interest of an enclosed regional shopping mall – Kirkwood Mall – located in Bismarck from Radiant Partners. The acquisition of this 2nd-biggest mall in N.D. district boosted CBL’s portfolio of high-quality market-dominant regional malls.

Notably, in December 2012, CBL bought the 49% non-controlling interest in Kirkwood Mall and inked a deal to gain the remaining 51% interest in January this year. The company assumed a non-recourse loan worth $40.4 million that was securitized through WFRBS Commercial Mortgage Trust. The debt has a fixed interest rate of 5.75% and matures in Apr 2018.

Developed in 1971, Kirkwood Mall spans 850,000 square feet and is a premier shopping center. The property is suitably located near Bismarck Expressway and 7th Street with direct access to I-94. The mall is also enjoying significantly increasing revenues mainly due to its proximity to the Bakken Formation oil reserves. In 2012, the sales per square feet at the mall increased over 15% to over $409 per square feet.

As of Dec 31, 2012, the mall was 88% occupied and sheltered some industry-leading tenants such as J. C. Penney Company, Inc. (JCP), Target Corp. (TGT), Chico's FAS Inc. (CHS), Herberger's and Keating Furniture. Additionally, the mall offers both near and long-term growth opportunities through low occupancy cost as well as lease-up of remaining space.

We remain upbeat regarding the abovementioned upscale property acquisition as this is expected to benefit CBL by capitalizing on the continuous growth opportunities in the Bismarck market. Moreover, property is a quality addition to the company’s portfolio of premium shopping centers. CBL currently owns or holds interests in 159 properties, spanning a total of 92.9 million square feet, situated across 27 U.S. states.

CBL is expected to release its first-quarter 2013 results on Apr 29, 2013. The Zacks Consensus Estimate for the company’s first-quarter FFO (funds from operations) is currently pegged at 51 cents per share.

CBL currently carries a Zacks Rank #2 (Buy).

Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.

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