NEW YORK — While other real estate investment trusts are trying to avoid distressing over a slowdown in consumer spending in the U.S., CBL & Associates can always bank on shoppers south of the border.
Its border-town malls, such as Mall del Norte and Plaza del Sol in Texas have been fully leased, and sales are up about 6 percent from last year, said Stephen Lebovitz, president of the REIT, during a conference call. In fact, revenues were up all around the firm’s portfolio, aided by a 3.8 percent increase in same-store sales, a ramp up that Jeff Donnelly, an analyst with Wachovia Securities, called “interesting in light of the considerable attention focused on the threat of weakening consumption for middle-income families.” The company garnered a 14.3 percent increase in net revenue in the second quarter, climbing to $237 million from $203 million.
Overall, the REIT saw net income remain flat in the second quarter, but improving same-store and same-center sales gave it reason to be confident. The REIT reported net income of $28.6 million, or 33 cents per diluted share, in the second quarter, a number that barely budged from last year’s $28.4 million. The company has plans to invest more than $1.2 billion in development and redevelopment, which will encompass 9.5 million square feet of space to be brought online in the next three years, said Lebovitz.
Donald Wood, president and chief executive officer of Federal Realty Investment Trust, was equally jovial about his company’s growth prospects, claiming the REIT’s development team has “never been busier,” and the company overall remains bullish on its core markets of Washington, D.C., Boston, and Northern and Southern California. Wood hinted that while the REIT still sees opportunities in those markets, South Florida is on the docket for property acquisitions. The REIT reported earnings of $38.3 million, or 66 cents per diluted share, up 35.2 percent from $24.8 million, or 41 cents per share, a year prior. Net revenues were up 8.6 percent to $108.7 million from $99.3 million a year prior.
Meanwhile, some analysts seemed more interested in who might buy Federal rather than what assets Federal would buy. When David Fick, an analyst with Stifel Nicolaus, asked on a conference call whether or not it wouldn’t make more sense for the REIT to be privatized, Wood responded with a hearty laugh and said, “We’re not operating with an arm tied behind our back. There’s no lock on our door.”
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The Macerich Co. experienced no such ambush from Wall Street on its quarterly conference call, focusing its attention more on disposing of non-core assets and reinvesting the capital rather than acquiring new assets.
“We’re going to be pruning and tuning a lot,” said Arthur Coppola, president and ceo of the REIT. “It’s a strategy we will continue to pursue to fund the burgeoning development and redevelopment pipeline.”
The company expects to invest up to $500 million per year for the next several years on development, including renovating the 11 anchor spaces it acquired at the end of July from Federated Department Stores and adding lifestyle components and new anchors. Macerich, which dominates the Phoenix market, also reluctantly offered Citigroup Smith Barney analyst Jonathan Litt some insight into future projects in the region, including an 800,000-square-foot mall in Casa Grande, outside of Phoenix, that will break ground later this year. The REIT also has several more tracks of land in the area, not yet entitled, in Coolidge, Marana, and Queensridge.
The company reported net income to common shareholders of $25.7 million in the quarter, which compares with $6.7 million in the prior year. Total revenues rose 11 percent to $209.9 million from $189.1 million.