CBL - The Lipstick Fades

The earnings stunk and CBL is showing itself to be a pig in a poke. I don't like these earnings and I believe it will get worse - one of the only rationales for cutting the dividend. The stock is going to get hammered.


  • CBL's earnings are out - they are not PREIT.
  • Just about everything is worse and they cut the dividend.
  • We aren't happy and we feel duped by management.

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A picture is worth one-thousand words...

Need I say more by way of introduction?

The lipstick is beginning to fade and the silk purse has become a dog treat.

All you are left with is a...

CBL & Associates (CBL) released third quarter earnings that surprised me. Let me just jump right in with this from their earnings release:

“The dividend is an important way that we return value to our shareholders,” commented Lebovitz. “Our approach has been to set the dividend at a level that maximizes available cash flow for investing in our properties and debt reduction, while also maintaining consistency. As one of the largest shareholders of CBL, management and the Board are fully vested in maximizing shareholder value. It is with that perspective that we made the difficult decision to reduce the common dividend to an annualized rate of $0.80 per share from $1.06 per share. Based on our updated projections of taxable income, the common dividend is being re-set to a rate that will preserve an estimated $50 million of cash on an annual basis. This enhanced liquidity will help to fund value-adding redevelopment activity and debt reduction.”

This was somewhat unexpected as many investors see a dividend payout ratio of 55%:

A low payout ratio is not a guarantee that the dividend will be maintained - blowing a hole in the argument of many investors.

But wait, the hits just keep on coming.