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Fitch: CBL Proactive Stance Positive In Face of Penney Closings



  Fitch: CBL Proactive Stance Positive In Face of Penney Closings

Business Wire

NEW YORK -- January 16, 2014

J.C. Penney's ('CCC' IDR) announcement to close 33 stores and cut 2,000 jobs
on Wednesday will impact two Fitch-rated retail REITs: CBL & Associates
Properties Inc. (four malls) ('BBB-' IDR/Stable Outlook) and Simon Property
Group, Inc. (two malls) ('A-' IDR/Stable Outlook). CBL's subsequently
announced redevelopment plans for its affected properties, which aggregate
499,000 square feet and $1.4 million in gross annual rent, are a positive for
credit quality. The impact to Simon is de minimis as the two affected malls
are slated to be spun-off into a newly created entity later this year.

CBL's proactive stance to re-tenant the properties follows CBL's acquisition
of two Sears ('CCC' IDR/Negative Outlook) locations during 2013 in Lexington,
KY and Nashville, TN, which the company will redevelop and look to re-lease to
smaller shop tenants paying higher rents. Unlike the Penney opportunity, the
Sears stores were located in some of CBL's most productive malls while the
Penney closures are in four of CBL's lower-productivity assets. The
redevelopments face execution risk given potentially lackluster retailer
demand at these locations, as well as upfront capital expenditures and related
downtime in redeveloping the assets, which can ultimately weigh on credit
metrics.

Fitch continues to have a cautious view on lower quality malls with exposure
to Penney and Sears given the potential for further tenant real estate
rationalization. In Fitch's view, the risks arising from continued downsizing
remain idiosyncratic to the respective malls. Certain landlords may benefit
from re-tenanting the space with stronger tenants generating higher rental
rates (e.g., CBL's two stronger performing malls in Lexington and Nashville).
Alternatively, weaker performing assets may struggle to attract demand from
replacement retailers, ultimately pressuring operating performance and cash
flows to service fixed charges at both the property and corporate level.

Additional information is available on www.fitchratings.com

RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE
AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA
AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Reinor Bazarewski, +1-212-908-0291
Fitch Ratings - U.S. REITs
33 Whitehall Street
New York, NY 10004
reinor.bazarewski@fitchratings.com
or
Kellie Nilsen, +1-212-908-1123
Senior Director
Fitch Wire
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com
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