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CBL & Associates management sheds light on B-mall demand

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CBL & Associates management sheds light on B-mall demand

CBL & Associates Properties Inc.'s leadership on Aug. 4 shed some light on market demand for lower-quality malls, describing the pool of buyers as stable but not necessarily robust.

"There were a few buyers out there. ... The buyer pool is not incredibly deep in this environment, but there are interested players out there that understand the markets and understand the types of assets," Katie Reinsmidt, chief investment officer, said on the regional mall real estate investment trust's second-quarter earnings call.

The company closed on the sale of two Tennessee malls during the quarter, including College Square in Morristown and Foothills Mall in Maryville, for a total gross sales price of $53.5 million. The properties logged sales per square foot totals of $265 and $283, respectively, in 2016.

The mall REIT also closed on the sale of The Outlet Shoppes at Oklahoma City in Oklahoma City, Okla., for a gross sales price of $97.5 million.

Reinsmidt said the company has been most successful attracting local and regional buyers, including funds with properties of similar caliber to CBL's.

Reinsmidt did not disclose cap rates on the deals or the number of bids the company fielded for any given property, citing the company's desire to preserve competitiveness in the market place.

"They were great transactions for us, though," she said of the second-quarter sales. "Good solid properties that had nice, stable cash flows, so the buyers of those will do well."

In prepared remarks, President and CEO Stephen Lebovitz called recent reports predicting "the end of bricks-and-mortar retail" the product of "poor research" and "sensationalism." At several points on the call, he credited the company's lenders for "their ability to see past the misleading headlines to grasp the significant value and opportunity at CBL."

"We are not denying that the retail industry is changing," he said. "But CBL, along with our peers, owns the highest-quality retail properties in the best markets and locations. ... The vast majority of retail sales are still done in stores, and pure-play online retailers have yet to figure out how to be profitable."