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CBL Acquires Wilmington Mayfaire Town Center, Shares Fall - Analyst Blog

Zacks Equity Research
Updated

Chattanooga, TN-based CBL & Associates Properties, Inc. CBL disclosed completion of the acquisition of Mayfaire Town Center and Community Center in Wilmington, NC for $192 million in cash. Acquired from a partnership between BrodyCo Inc. and Zimmer Development Company, the property offers CBL a significant scope to enhance its top line.

However, due to broader market concerns, shares of CBL fell 2.51% during Friday’s regular trading session on the NYSE.

Spanning 610,000 square feet, Mayfaire Town Center is an open-air center anchored by Belk and a 16-screen Regal Cinema. The property also has junior anchors like The Fresh Market, Inc. TFM, Cost Plus/World Market, Pottery Barn and ULTA Salon, Cosmetics & Fragrance, Inc. ULTA. Moreover, there is a developable land with a capacity to accommodate a maximum of 75,000 square feet of additional retail.

On the other hand, Mayfaire Community Center spans 210,000 square feet and is anchored by Harris Teeter, Dick's Sporting Goods Inc. DKS, Marshalls and PetSmart. The property also includes retailer shops like New Balance and Five Guys Burgers & Fries.

Given the in-place single-digit occupancy cost, prospects to enhance retailer and restaurant mix as well as the near-term expansion opportunity on the existing land, CBL expects to capitalize suitably on the growth potential.

We view this acquisition as a strategic fit for CBL. This is because the property already enjoys 92.5% occupancy, generating over $200 million in annual sales with shop sales per square foot of $385. In fact, this port city – Wilmington – has a diverse and growing economy, with tourism as well as film production serving as a notable contributor to its growth. Amid such an environment, we believe this top-tier property acquisition offers CBL solid scope for growth.

CBL currently has a Zacks Rank #3(Hold).

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DICKS SPRTG GDS (DKS): Free Stock Analysis Report
 
ULTA SALON COSM (ULTA): Free Stock Analysis Report
 
CBL&ASSOC PPTYS (CBL): Free Stock Analysis Report
 
FRESH MARKET (TFM): Free Stock Analysis Report
 
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Zacks Investment Research