During Stephen Lebovitz's 12 years as CEO of mall real estate investment trust CBL Properties, he's guided the company in the aftermath of the Great Recession, the decade of recovery that followed and then a tough period during the pandemic when CBL had to seek bankruptcy protection.
That's why CBL's recent rebound has Lebovitz upbeat. The Chattanooga, Tennessee-based REIT his father, Charles B. Lebovitz, launched in 1978 reported strong earnings this month and increased its full-year guidance as a result. Stephen Lebovitz, who took over as CEO in 2010, said 2021 — when it emerged from a Chapter 11 reorganization — was a milestone year for the company whose name reflects his father's initials.
"2021 was the healthiest year for our business that we’ve had in 15-20 years, and it’s continued this year," Lebovitz said during an interview at ICSC 2022 Las Vegas. "There really is, I think, a narrative change with the importance of retailers having physical stores as part of an omnichannel strategy. The stores are important, the malls are thriving, people are coming back. People want to shop, so that’s good for us, and that’s good for our business."
Lebovitz said his company's bounce back has been buoyed by strong performances by its retail tenants "really across the board."
"There’s just been a healthy recovery for all our shopping center properties. Our small shops have had very strong sales. We’ve really had no bankruptcies, no store closings, percentage rents were up, temporary income was up in specialty stores," he said. "We had some increase in expenses, but we were able to control and manage those."
That performance followed what likely was the toughest year in CBL's history as the pandemic and poorly performing malls forced the company to seek bankruptcy protection and prompted the New York Stock Exchange to start proceedings to delist the company's common stock and suspend trading of the stock in November 2020.
The REIT rejoined the stock listing on the New York Stock Exchange in November 2021 under the symbol CBL. Its common stock traded on the OTC Bulletin Board, also known as "pink sheets," using the ticker CBLAQ before getting back on the NYSE.
Even after CBL emerged from bankruptcy, the hangover extended into this year, when in April the REIT lost control of malls in Cincinnati; Chesapeake, Virginia; and Asheville, North Carolina, that fell into receivership.
Lebovitz said that trio of properties "had been in transition for a while."
"It just takes some time for that to filter through the system with the CMBS loans and servicers," he said. "We’ve wanted to come out with a stable portfolio, and that means that we’re not going to include something that we don’t have a long-term strategy for, [that] we don’t see being a keeper long term. So the portfolio we have now is really something we’re comfortable with."
CBL's portfolio now contains 95 properties totaling nearly 60 million square feet in 24 states. It includes 57 enclosed malls, outlet centers and lifestyle retail centers and 30 open-air centers.
Lebovitz said CBL plans to continue its plan to redevelop several of its malls by adding different uses, typically on their surface parking lots. The REIT expects to see even "more diverse types of uses" at its retail properties, he said.
"Actually, we’ve done a few supermarkets and gotten interest from them. So that’s a new element," he said. "[We] continue to get interest from mixed-use, medical-related, residential, office, hotels, entertainment. So that’s been really been great to see, just the continued way that it helps us to evolve and broaden the mix that we have at the properties."
Lebovitz said he never envisioned adding several different types of property uses such as casinos to CBL properties. "It’s made it more fun because it’s a creative business," he said.