CBL & Associates Properties, Inc. (NYSE:CBL) Faces An Uncertain Future After Earnings Miss, Disappointing Outlook & Moody’s Downgrade


Disappointing earnings and lower than expected 2018 guidance all but sums CBL & Associates Properties, Inc. (NYSE:CBL) underperformance, after one of the worst runs in recent history. The stock continues to hit lower lows amidst waning investor’s confidence about the company’s long-term prospects.

CBL Properties is a self-managed and self-administered, real estate investment trust. The company acquires, develops, leases and manages regional shopping malls as well as open air and mixed-use centers. Its portfolio consists of 119 properties totaling 74.4 million square feet spread across 27 states.

CBL & Associates Uncertain Future

Investors have all the reasons to be worried about CBL & Associates, if its performance over the past 12 months is anything to go by. A 60% plunge over the past one year all but raises serious concern, given the strong bearish run that continues to push the stock lower.

The underperformance has mostly been fueled by:

  • Growth in e-commerce that continues to threaten physical retail
  • Increased department store and chain store bankruptcies
  • Dividend Cut concern and disappointing 2018 Outlook

The future looks bleak for CBL & Associates, given that it could take a couple of years for it to replace bankrupt tenants. Lack of sufficient free cash flow could also make it difficult for the real estate investment trust to redevelop current properties.

That said, it could take some time for the company to establish a steady dividend, let alone issue a positive guidance.

Amazon.com, Inc. (NASDAQ:AMZN) just like other e-commerce companies continues to pose the biggest threat to CBL & Associates Properties, Inc. (NYSE:CBL) growth prospects. Just like the way Microsoft blew the switch on the transition to Mobile, CBL & Associates look set to pay a hefty price as e-commerce continues to gain momentum.

With shopping trends switching online, brick and mortar retail chains have started to close shop, leaving the company with unoccupied floor space in malls and other centers. Many physical stores are also filing for bankruptcy on failing to adapt fast enough to e-commerce.

Reduced customer traffic to malls is a big challenge that raises serious doubts about retail chains with huge floor space in big malls.

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