CBL Announces Redevelopment of 4 Macy’s Stores

CBL has entered into an agreement to buy three of the four locations from Macy's for $5 million.

Chattanooga, Tenn.—CBL & Associate Properties Inc. has announced its plans for the future redevelopment of four Macy’s anchor locations that are expected to close in 2017. As part of the announced closures, Macy’s stated its intention to close four locations in the CBL portfolio including Jefferson Mall in Louisville, Ky.; Layton Hills Mall in Layton, Utah; Parkdale Mall in Beaumont, Texas and Eastland Mall in Bloomington, Ill. The closing date for these stores will be March 31.

Macy’s at the Jefferson Mall, Louisville, Ky.

Macy’s at the Jefferson Mall, Louisville, Ky.

CBL is finalizing negotiations with a new anchor tenant to replace Macy’s at Layton Hills, anticipating the new store to open in late 2017. CBL has also entered into an agreement with Macy’s to buy the other three locations, totaling 444,000 square feet, for $5 million.

The transaction is set to close during the first quarter. In addition to these four stores, Macy’s has recently announced it would close its store at the River Ridge Mall in Lynchburg, Va., in which CBL has a minority interest, but the acquisition and redevelopment of that location will be handled by the majority owner of the mall.

“The redevelopment of former department stores provides CBL with significant value-creation opportunities,” said Stephen Lebovitz, president & CEO, in prepared remarks. “As we discussed on our last earnings call, the closure of these locations was fully anticipated. Recapturing these stores will allow us to take space that is underperforming and convert it into new retail, dining and entertainment users—driving increased traffic, sales and growth to the entire property as well as generating strong returns to CBL.”

The department store operator is shutting down 100 of its retail stores this year, stating that they will be focusing largely on the better-performing locations and work to create a stronger online presence. According to the company’s quarterly earnings, profits fell to $11 million last quarter, down from $217 million in the previous year. Macy’s is actively working on selling its properties as it closes these locations throughout the year, one recent transaction being a $46 million five-store portfolio sale to General Growth Properties in October 2016. Macy’s recently appointed CBRE Group to assist with the national disposition of a portion of the store closings.

Sears is facing a similar outcome, closing 150 of its locations. According to Sears, the 150 Kmart and Sears stores generated $1.2 billion over the last year but generated a loss of $60 million over that same amount of time. The company has also agreed to sell its Craftsman business to Stanley Black and Decker for $775 million, including the license for the brand, royalty fee for 15 years and a 15-year royalty stream on all third-party Craftsman sales to new customers.

Image courtesy of Google Street View