CBL Selling 90% Interest in 51 Community Centers for $516M

CHATTANOOGA, TN-CBL & Associates is selling 90% of its ownership interest in 51 power and community centers for total consideration of $516 million. The interest is being sold to a new joint venture it has formed with Galileo America REIT, the US affiliate of Australia-based Galileo America Shopping Trust, an entity of Galileo Funds Management that expects to be listed on the Australian Stock Exchange in the fourth quarter. CBL will have a 10% interest in the joint venture.

The 51 centers will be sold in three tranches: October 2003, January 2004 and January 2005. Net cash proceeds to CBL are figured at $387 million, with $255 million received in first tranche, $56 million in the second and $76 million in the third. The joint venture will assume approximately $99 million of existing debt on 10 of the properties and CBL will retire $53 million in loans associated with two properties. The joint venture will obtain additional debt financing of approximately $160 million at the closing of the first two tranches.

The sales are expected to generate a combined gain for CBL of $99 million, of which $72 million will be reported in 2003, $22 million in 2004 and $5 million in 2005. The taxable gain should be much less, however, as the company plans to reinvest net proceeds in new developments, future mall acquisitions and other retail real estate opportunities.