5Qs for CBL’s Stephen Lebovitz on redevelopment
Earlier this year, the financial community made a gesture that proved it still believed in brick-and-mortar retail. Sixteen banks came to provide a $1.18 billion credit facility to CBL, one of the nation’s largest mall operators. This new facility doesn’t mature until 2023 and provides CBL with the time and financial flexibility to remake their properties. We asked CEO Stephen Lebovitz about what comes next.
Give us an idea of how far-ranging CBL’s redevelopment program is.
We really started this program in earnest in 2013 when we bought the Sears stores at Fayette Mall in Lexington, Kentucky, and CoolSprings Galleria in Nashville. We completed major redevelopment projects at both centers. We purchased another five Sears stores and two Sears Auto Centers in 2017 on a sale-leaseback transaction. Today, as a result of additional Sears closures and Bon-Ton’s liquidation, there are redevelopment opportunities at virtually every property in our portfolio.
Does CBL view department store closures as an opportunity?
We view it as a huge opportunity. When we are able to recapture a department store, we are recapturing anywhere from 15 to 30 acres of prime real estate. Now we can develop into the parking lots, adding restaurant pads as well as other uses that add value and create density. That said, there are still strong department stores that draw significant traffic.
What’s your formula for re-curating your malls?
Creating the right mix of entertainment, dining, service and successful experiential and value-oriented retail for each market is critical. We recently added the first Dave & Buster’s and Round1 to our portfolio, and we’re working on replacing two former department stores in Pennsylvania with casinos. We are adding fitness centers like TruFit and O2 Fitness to attract a younger customer, as well as more restaurants. I’m looking out my office window in Chattanooga right now at The Cheesecake Factory that just opened at Hamilton Place, which draws significant traffic to what used to be a Sears parking lot.
With more than 60 mall properties, it’s a big job. What’s your game plan for managing it?
We are definitely prioritizing the malls with the highest potential for future growth. We have a strategy in place for each asset, with both local and home office teams working on sourcing redevelopment ideas. We’ve transitioned the team that was primarily focused on new development into redevelopment. We’ve got a really talented staff that know this business and we’re seeing a lot of creativity.
What goals do you want to achieve for your shoppers?
To provide them with the stores and experiences that are going to get them off their couches and into our centers. Improving service, upgrading storefronts, incorporating digital. We’re putting together new marketing programs and events. We’re developing a hotel as part of our project here in Chattanooga as well as adding office space. We’re putting a supermarket into a former Bon-Ton at one location. It’s market-by-market. There just aren’t the same rules there used to be.
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