Only Time Will Tell: CBL Is A ‘Strong Sell’
- “Do not underestimate how much the lack of funds could hamper their redevelopment efforts.” Beyond Savings.
- What perfect timing for me to provide a textbook example of one such highly leveraged mall, less than one-mile away from my home.
- Only time will tell and now you know why I’m downgrading CBL to a ‘Strong Sell’.
Many have asked me to provide an update on CBL Properties (CBL) and since I have no “skin in the game” I decided to wait until I had enough time to write an updated opinion piece. To spark the inspiration, Beyond Savings wrote an excellent article yesterday titled, “CBL: The Old Ball and Chain” in which he summarized,
“CBL’s core problem is their ability to access liquidity. Redevelopment costs are headed down the pike and their balance sheet is becoming increasingly inflexible. Their lines of credit will be smaller, at least partially secured and possibly at a higher interest rate, while their current unsecured covenants are pressured.”
The author summarized, “If CBL can juggle their way through the redevelopments, there is the possibility of significant upside. However, their highly leveraged balance sheet and high level of encumbered properties removes a lot of flexibility when it comes to funding their redevelopments. Do not underestimate how much the lack of funds could hamper their redevelopment efforts.”
What perfect timing for me to provide a textbook example of one such highly leveraged mall, less than one-mile away from my home. I drive by the Westgate Mall almost daily in route to my office or Starbucks and this provides me with humbling evidence that “the thrill of victory is not worth the agony of defeat”.
Before I get started, I want to thank Michael Boyd and Trepp Research for providing me with valuable content to assist with this article. See Boyd’s marketplace service HERE.