Author Topic: CBL- CBL Properties  (Read 6066 times)

thepupil

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Re: CBL- CBL Properties
« Reply #10 on: November 14, 2017, 12:17:54 PM »
Are the prefs really all that different than the common in terms of leverage / riskiness?

I surely think so...

What have the average annual total returns been for each over the last 5 years? What about the standard deviations during that time period?

Seems like the next five years could be very similar from an operational perspective.
no doubt that looking back the common has way underperformed the pref's but the pref's are writers of out of the money puts on the value of these malls and the more the common goes down the closer to the money that put becomes.

I guess I have a more binary view of the story going forward. Perhaps I'm overly alarmist but I'm thinking about this on a liquidation/potential credit situation.

Either these assets' deterioration in value continues (perhaps accelerates) and I don't want to be the most junior mezz lender (the 70-83 tranche, the pref) or the assets stabilize and you own this thing at an unlevered 13% cap rate or whatever the current NOI and EV backs into (and a giant levered yield to the common equity).

 you've probably done 10x the work on this and have strong reasoning for why they'll limp along and make their obligations. I think the 2026's are the better risk/reward to express that view, but agree to disagree.
« Last Edit: November 14, 2017, 12:19:44 PM by thepupil »


rogermunibond

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Re: CBL- CBL Properties
« Reply #11 on: November 14, 2017, 01:03:29 PM »
IMO it might be a few years too early to do a liquidation scenario.  Rather look at the unencumbered properties, haircut the AFFO from those properties for continuing retail BKs and negative lease renewal spreads and then see if the equity has value.

Remember they can and have turned the keys over on the encumbered properties that lose so much value that they cannot be redeveloped/repositioned.

They can improve their overall portfolio but selectively cutting these properties loose.

thepupil

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Re: CBL- CBL Properties
« Reply #12 on: February 09, 2018, 06:58:17 AM »
Common      : 2.5x 2018 Guidance FFO , ~40% levered yield,  ~12% cap rate, according to sell side.
Prefs           : ~$69                               ~9.6% yield, 645 bps above 30 yr
Unsec's '26  : ~89 5/8                           ~7.6% yield, 477 bps above 9 yr

is it cheap yet?

EDIT:
Common 4.14: 42% FFO yield
Pref        ~$65  ~10.2%

« Last Edit: February 09, 2018, 10:45:27 AM by thepupil »

DTEJD1997

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Re: CBL- CBL Properties
« Reply #13 on: February 09, 2018, 08:28:46 AM »
Hey all:

I continue to hold my small position in CBL.  I forgot to post that I had been to a few of their malls over the holidays.

I generally liked what I saw.  Occupancy levels were VERY high (95%+).  However, at one of the malls that I went to, it is obvious that they are letting in almost anybody who will "sign on the line which is dotted".  This mall also had a Sears & JC Penney's in it.  There was a good amount of foot traffic and it appeared that people were buying things.  Finally, this mall was the ONLY enclosed shopping mall in that town.  It was also very centrally located for shopping.  It seems that almost everything retail, radiated out from the mall.  There was Sam's Club, Costco, and all the other strip mall denizens within 1/8 to 1/2 mile from the mall.  The tenants may turnover, and rent rates may go down, but I simply can't see that town losing it's only enclosed mall.

The other mall was in a reasonably upscale section of Metro Detroit.  It was more upscale than the prior location I visited.  It also had many more restaurants inside/attached to the mall.  No Sears or Penney's, but it had some upscale department stores that I am not familiar with "Von Maur".  There were some "local" merchants, but they were generally more upscale than the ones in the 1st mall.  This mall has plenty of other competitors within a 15-30 minute drive, but it is in a MUCH larger metropolitan area.  I can see this mall maybe losing some tenants and rates going down (maybe?), but it would truly have to be a complete retail apocalypse for it to close.

Both locations were reasonably clean, not run down at all.  Management seemed to be doing a reasonably good job given the circumstances.

Of course these two locations are just a very limited view of the company, but if they are representative of the company as a whole....there is no way these guys are closing down in the next few years.  Will rent rolls contract somewhat?  Maybe yes, but it appears to be a viable business.

gokou3

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Re: CBL- CBL Properties
« Reply #14 on: February 09, 2018, 10:01:04 AM »
From an EV/EBITDA perspective, it is not cheap.  From the recent FY2017 earning report:

https://finance.yahoo.com/news/cbl-associates-properties-reports-results-211500504.html

Income from Operations: $232,562    ($k, 2017 full-year)
D&A: $299,090    
Loss on impairment: $71,401       
Est. EBITDA = sum of above = $603,053

Total market capitalization (common + preferred + debt) =     $    6,518,702

EV/EBITDA = 10.8... not cheap for a company expecting another 10% decline in FFO next year and facing general interest rate increases on its heavy debt load.


CorpRaider

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Re: CBL- CBL Properties
« Reply #15 on: November 12, 2019, 11:22:13 AM »
This is a couple of months old now, but I didn't see any discussion of this on the board.  Ashner has filed reporting a 5.7% interest in CBL common/units according to WSJ. 

https://www.wsj.com/articles/activist-investor-known-for-debt-restructuring-targets-mall-owner-cbl-11569322801

EDIT: Seems earlier this month Ashner and co reached a standstill agreement with management and Ashner and Carolyn Tiffany were appointed to board.  Also formed "capital allocation subcommittee" with Ashner and CEO and another dude from existing board.

Have to wonder if he has a big position in the debt.
« Last Edit: November 12, 2019, 12:09:35 PM by CorpRaider »

BG2008

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Re: CBL- CBL Properties
« Reply #16 on: November 12, 2019, 11:40:01 AM »
From an EV/EBITDA perspective, it is not cheap.  From the recent FY2017 earning report:

https://finance.yahoo.com/news/cbl-associates-properties-reports-results-211500504.html

Income from Operations: $232,562    ($k, 2017 full-year)
D&A: $299,090    
Loss on impairment: $71,401       
Est. EBITDA = sum of above = $603,053

Total market capitalization (common + preferred + debt) =     $    6,518,702

EV/EBITDA = 10.8... not cheap for a company expecting another 10% decline in FFO next year and facing general interest rate increases on its heavy debt load.

I hate to do this, but I keep wondering why value investors are so attracted to the mall business.   I have commented on B/C malls in the past and I have avoided them like the plague.  I still think that it's easier to just buy the stuff that is trending in the right direction.  It's tough to fight Amazon and it's tough to buy more when you know you're in structural decline. At $1.48/share, CBL maybe interesting.  But I just can't seem to make money with retail or retail real estate.  So you can buy CBL for almost 10.8x EV/EBITDA or you can buy GRIF for 18.6x EV/EBITDA but you get 2,300 acres of land for free.  The EV/EBITDA metric is kind of unfair as GRIF is subscale so GRIF has much higher G&A as a % of revenue.  If you strip it out, you buy CBL at 12x NOI and you buy GRIF at 13x NOI. With GRIF, you get 2,300 acres of land for free.  The right EV/NOI (inverse of cap rates) is probably 9% for B&C malls.  The right EV/NOI for Class A warehouses is probably closer to 18-20x.  I get the appeal of a tiny equity stub up against a big debt stack.  But I think that works better if you have a better business. 

I am probably going to get yelled at now, via a message board.       

CorpRaider

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Re: CBL- CBL Properties
« Reply #17 on: November 12, 2019, 12:30:14 PM »
Maybe they need to change name to CBL Industrial Properties and reverse the flow of schmucks from home to the mall to a flow of junk from mall/industrial retail distribution center (and drone mother ship landing pad) to the home.

BG2008

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Re: CBL- CBL Properties
« Reply #18 on: November 12, 2019, 12:50:40 PM »
You need to somehow wrangle a cannabis angle in there.  Look at Innovative Industrial Properties.   

thepupil

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Re: CBL- CBL Properties
« Reply #19 on: December 02, 2019, 05:54:13 PM »