CBL & Associates Properties(CBL) - 2024 Q4 - Annual Report

Property Ownership and Locations - As of December 31, 2024, CBL & Associates Properties, Inc. owned properties located in 21 states, primarily in the southeastern and midwestern United States[21]. - The company owns partial interests in 4 malls, 5 outlet centers, 1 lifestyle center, 12 open-air centers, 2 office buildings, a hotel, and a hotel development, with significant portions managed by third-party partners[70]. - The company has a total of 3,560 inline and adjacent freestanding stores across its malls[185]. - The total gross leasable area (GLA) of expiring leases is 4,071,707 square feet, which is 8.5% of the total GLA of all leases[203]. - The company owns a controlling interest in 42 malls and a non-controlling interest in 3 malls[173]. Financial Performance - The company reported a revenue increase of 10% year-over-year, reaching $1.08 billion[1]. - Total sales for the year reached 1,969 million, representing a 10$1.2 billion for the next quarter, representing a 15% increase[3]. - The overall gross margin improved to 35%, up from 32% in the previous year[10]. - The company is targeting a revenue growth of 12% for the next fiscal year, driven by strategic initiatives and market expansion efforts[178]. Tenant and Market Dynamics - The top five markets based on total revenues for the year ended December 31, 2024, were Chattanooga, TN (6.8%), St. Louis, MO (4.4%), Lexington, KY (4.3%), Laredo, TX (4.0%), and Fayetteville, NC (3.6%)[27]. - The top 25 tenants contributed a total of 33.28% of total revenues, with Signet Group, PLC being the largest at 2.72%[28]. - Approximately 50.3% of total pro-rata share of revenues for the year ended December 31, 2024, came from properties in the southeastern United States[142]. - The company competes with numerous shopping facilities, which could materially impact its ability to attract tenants and achieve favorable lease terms[94]. - The rise of omni-channel retailing and online shopping may adversely affect physical store demand, impacting occupancy levels and rental rates[97]. Employee Engagement and Corporate Culture - CBL's employee engagement assessment in 2024 achieved a 75% response rate, with 93% of employees stating it is a great place to work[45]. - The voluntary turnover rate decreased to 6% for 2024, with 91% of employees recommending CBL as a workplace[47]. - In 2024, CBL team members completed 4,627 hours of training, focusing on various development topics[49]. - CBL Cares program saw team members volunteer over 1,100 hours, providing support valued at nearly $170,000 to local organizations[52]. Risks and Challenges - The company faces risks including increased operating costs, potential loss of significant tenants, and adverse changes in economic conditions[61]. - Rising interest rates could increase borrowing costs and negatively impact cash flows and stock prices[64]. - Future pandemics or similar threats could materially disrupt the company’s financial condition and operations[64]. - The company faces risks associated with climate change regulations that could impose substantial compliance costs and affect financial condition[80]. - Social unrest and acts of violence could adversely affect the company's business operations and financial condition[88]. Debt and Financing - The company's pro-rata share of consolidated and unconsolidated debt outstanding was approximately$2,737.2 million as of December 31, 2024[121]. - The company is significantly dependent on external financing to fund growth and meet debt servicing requirements[120]. - The total share of consolidated and unconsolidated debt maturing in 2025, 2026, and 2027 is approximately $132.2 million,$727.3 million, and $729.9 million, respectively[121]. - The company may need to refinance its indebtedness, and its ability to do so will depend on market conditions and financial health at the time[129]. - If cash flow is insufficient and refinancing is unavailable, the company may have to take adverse actions such as selling properties or delaying capital expenditures[130]. Cybersecurity and Compliance - The company has a cybersecurity program based on the NIST CSF framework to protect critical systems and information[167]. - Employees are required to complete annual cybersecurity training, followed by quarterly testing and re-training as necessary[169]. - The company maintains cybersecurity risk insurance coverage, although there is no assurance that it will cover all breaches or losses[171]. - The audit committee oversees cybersecurity risks and management reports on the cybersecurity program at least semi-annually[166]. - Compliance with REIT requirements may limit the company’s ability to pursue attractive opportunities[64]. Strategic Initiatives and Future Outlook - The company is focused on leasing properties, including replacing short-term leases with long-term leases, to optimize tenant mix and financial performance[78]. - The company is exploring potential mergers and acquisitions to further strengthen its market position, with a projected impact of 2.1% on revenue growth[178]. - Investment in technology and digital platforms is anticipated to yield a 4.5% increase in online sales[178]. - The company plans to enter three new international markets by the end of the fiscal year, aiming for a 30% increase in international sales[9]. - The company is committed to enhancing customer experience through strategic partnerships with entertainment and retail brands, aiming to drive foot traffic and sales growth[219].