CBL & Associates Properties, Inc. (NYSE:CBL) announced plans for future redevelopment of four Macy’s anchor locations in the CBL portfolio that are expected to close in 2017.
As part of its announced store closures, today Macy’s announced its intention to close four locations in the CBL portfolio at Jefferson Mall in Louisville, KY; Layton Hills Mall in Layton, UT; Parkdale Mall in Beaumont, TX and Eastland Mall in Bloomington, IL. Macy’s has announced an anticipated closing date of March 31st for the stores.
At Layton Hills Mall, CBL is finalizing negotiations with a new anchor store to replace Macy’s. While discussions are ongoing, CBL anticipates the new store to open before year-end. The remaining three stores, aggregating approximately 444,000 square feet, are currently owned by Macy’s and CBL has entered into an agreement to purchase the locations from Macy’s for a total consideration of $5 million. Subject to normal closing conditions, the transaction is expected to close during the first quarter. Redevelopment plans for these three locations will be announced as replacement users are finalized.
“The redevelopment of former department stores provides CBL with significant value-creation opportunities,” said Stephen Lebovitz, president & CEO. “As we discussed on our last earnings call, the closure of these locations was fully anticipated. Recapturing these stores will allow us to take space that is underperforming and convert it into new retail, dining and entertainment users – driving increased traffic, sales and growth to the entire property as well as generating strong returns to CBL.
“In anticipation of these closures, we have proactively engaged in discussions with a number of prospective users. Our next steps will be to finalize negotiations and redevelopment plans for the remaining three malls. Once leases are signed, we will share specific names joining each mall, as well as construction and opening timelines. The list of users interested in these specific locations includes sporting goods, fitness centers, off price boxes, restaurants, theaters and entertainment concepts, all of which will enhance the performance of the malls overall.”
Over the past three years, CBL has opened more than 80 anchor and junior anchor locations in its portfolio. 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 each location will be announced as plans are finalized.
In addition to the four stores mentioned above, Macy’s has announced that it will close its store at River Ridge Mall in Lynchburg, VA, in which CBL holds a minority interest. The acquisition and redevelopment of this store will be handled solely by the majority owner of the mall.
CBL & Associates owns Northpark Mall in Joplin.
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