Exhibit 99.1
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Contact: John Foy
Vice Chairman and CFO
(423) 855-0001
CBL & ASSOCIATES PROPERTIES TO ACQUIRE 21 MALLS
FROM JACOBS GROUP FOR $1.2 BILLION
=========================================
Solidifies Dominant Position in Southeast
Accelerates Expansion into Midwest
CHATTANOOGA, Tenn. (September 25, 2000) -- CBL & Associates Properties, Inc.
(NYSE:CBL) and The Richard E. Jacobs Group, Inc. ("Jacobs") today announced they
have signed a definitive agreement for CBL to acquire Jacobs interests in 21
regional malls and two associated centers for a purchase price of approximately
$1.2 billion. The portfolio, totaling approximately 19.2 million square feet,
includes five malls in Wisconsin, three each in North Carolina, Kentucky and
South Carolina, two each in Michigan and Ohio, one each in Illinois, Tennessee
and Texas and an associated center in both Ohio and Wisconsin.
The transaction is expected to yield on an unleveraged basis a return of
approximately 10.7% on projected first 12 months net operating income (NOI).
Excluding property management fees and structural reserves, the yield is
expected to be 11.3%. The agreement has been approved by CBL's Board of
Directors and is subject to CBL shareholder approval as well as certain Jacobs
lender and partner consents. The acquisition is expected to close in the first
quarter of 2001.
The purchase price includes approximately $106 million in cash, including
closing and transaction costs of approximately $12 million; assumption of $733.8
million in primarily fixed rate non-recourse debt at an average interest rate of
8.25%; and the issuance of 11.932 million SCUs (special common units) of CBL's
operating partnership with a par value of $384.8 million. The SCUs will be
entitled to receive an initial annual dividend of $2.90 per SCU and will be
exchangeable on a one-for-one basis for shares of CBL's common stock following a
three-year lockout period. After 10 years, CBL will have the right to force
exchange of the SCUs for common units in CBL's operating partnership. The cash
portion of the purchase price will be funded through a $212 million unsecured
acquisition loan from Wells Fargo Bank that will allow for payment of closing
and transaction costs. The loan will also allow for the draw down of funds for
additional investment in the properties.
The transaction is immediately accretive to funds from operation (FFO).
Based on the first full 12 months of NOI, the transaction is accretive by
approximately $0.20 per share. In calendar year 2001, the company estimates it
will realize approximately $0.08 per share of accretion. The difference of $0.12
per share, representing the impact from generally accepted accounting principles
(GAAP) treatment of first year's percentage rents from these properties, will be
recognized in 2002 earnings.
When the acquisition is concluded, CBL's portfolio will total 161
properties, including 51 enclosed malls, representing 55 million square feet in
26 states, making it one of the top five owners of shopping centers in the
United States based on national surveys published in January of this year.
Charles B. Lebovitz, CBL's chairman and chief executive officer, said,
"This acquisition is truly an exciting and unique opportunity for our company.
Our interest in the Jacobs properties was driven by the significant growth
potential and synergies that would result from combining our assets with their
portfolio as well as the strengthening of our geographic dominance in the market
areas where we currently operate.
"The most compelling reason for adding these centers to our portfolio is
not size but rather the tremendous opportunities to apply the proven
redevelopment, management and leasing expertise of our experienced team to
maximize the internal growth from these properties. We are committed to
continuing to add value for the benefit of our shareholders."
"We are delighted with this transaction with CBL," stated Richard E.
Jacobs, chairman and chief executive officer of The Richard E. Jacobs Group,
Inc. "The combination of these properties with the CBL portfolio will create
real value for all CBL investors, including us. This transaction further
endorses our belief in CBL's management team, its financial strength, and the
growth opportunities and synergies that will be created by the combination of
our two portfolios."
John N. Foy, CBL's vice chairman and chief financial officer, added, "We
have stated for some time that we would only acquire a large portfolio of
shopping centers if the economics and structure of the deal provided long-term
growth potential greater than we could achieve through individual acquisitions.
We believe this transaction meets our stringent criteria and, more importantly,
creates value for our shareholders with properties that will be accretive to FFO
from day one. We expect this transaction will accelerate our FFO and dividend
growth over the next several years."
"These properties are consistent with our focus on malls that have a
dominant franchise in their respective market areas," said Stephen D. Lebovitz,
president of CBL. "We expect to enhance their franchise value through our
leasing and specialty leasing programs, aggressive marketing and property
management, and renovation and redevelopment of the projects where needed."
Stephen Lebovitz further noted, "This transaction clearly defines CBL as
the leading mall owner in the Southeast and accelerates our previous expansion
into the Midwest. With our knowledge of these markets and our dominant position
in the Southeast region, we believe this transaction will add significant value
to our company."
Upon approval of the transaction, CBL's board of directors will increase by
two members to nine. Jacobs will be entitled to nominate two independent
directors, one of whom is a current member of Jacobs management.
Investor Conference Call and Web Simulcast
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CBL & Associates Properties will conduct a conference call on September 26,
2000, at 10:30 a.m. EDT to further discuss this announcement and will provide an
online Web simulcast and rebroadcast of this conference call. The number to call
for this interactive teleconference is (719) 457-2633. A replay of the
conference call will be available until September 29, 2000, by dialing (719)
957-0820 and entering the passcode, 626956.
The live broadcast of CBL's conference call will be available online at
www.cblproperties.com, www.streetevents.com or www.vcall.com on September 26,
2000, beginning at 10:30 a.m. EDT. The online replay will follow shortly after
the call and continue through October 26, 2000.
CBL & Associates Properties, Inc. is a real estate investment trust that
owns regional malls and community shopping centers, primarily in the Southeast
and select markets in the Northeast and Midwest. The Company currently has a
portfolio of 138 properties in 25 states totaling 35.8 million square feet,
including 1.8 million square feet of non-owned shopping centers managed for
third parties. The Company has under construction seven new projects totaling
approximately 2.2 million square feet, including two malls, one associated
center, two community centers and two mall expansions. Merrill Lynch acted as
advisor for the company in this transaction. In addition to its headquarters in
Chattanooga, TN, CBL has a regional office in Boston (Waltham), MA. The Company
can be found on the Internet at www.cblproperties.com.
The Richard E. Jacobs Group is widely acknowledged as one of the pioneer
companies of the modern shopping center industry, having grown to become the
largest privately held regional shopping center ownership, development, and
management firm in the United States. The company engaged The Goldman Sachs
Group, Inc., to explore the potential disposition of the majority of its assets
as an estate planning measure by its co-founder and chairman, Richard E. Jacobs,
and other related family trusts. The CBL acquisitions represent approximately 40
percent of the 46 million square feet of shopping center, office, and hotel
developments in the total Jacobs Group portfolio.
Information included herein contains "forward-looking statements" within
the meaning of the federal securities laws. Such statements are inherently
subject to risks and uncertainties, many of which cannot be predicted with
accuracy and some of which might not even be anticipated. Future events and
actual events, financial and otherwise, may differ materially from the events
and results discussed in the forward-looking statements. The reader is directed
to the Company's various filings with the Securities and Exchange Commission,
including without limitation the Company's Annual Report on Form 10-K and the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference therein, and the Company's current report
on Form 8-K being filed in connections with the transaction described herein,
for a discussion of such risks and uncertainties.
The shop
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Mall (Market) Total GLA Mall Store Anchors Percentage to
GLA be Acquired
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Illinois
Cherryvale Mall (Rockford) 714,000 300,000 Bergner's, Marshall Field, Sears 84%
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Kentucky
Fayette Mall (Lexington) 1,096,000 298,000 Dillard's, JC Penney, Lazarus, 100
Sears
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Jefferson Mall (Louisville) 936,000 275,000 Dillard's, JC Penney, Lazarus, 87(1)
Sears
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Kentucky Oaks (Paducah) 878,000 298,000 Dillard's(2), Elder-Beerman, 40(2)
JC Penney, Sears, ShopKo
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Michigan
Midland Mall (Midland) 514,000 196,000 Elder-Beerman, JC Penney, 40(1)
Sears, Target
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Fashion Square Mall (Saginaw) 786,000 287,000 Hudson's, JC Penney, Sears 100
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
North Carolina
Randolph Mall (Asheboro) 376,000 147,000 Belk, JC Penney, Sears 100
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Cary Towne Center (Cary) 953,000 294,000 Hudson Belk, Dillard's, Hecht's, 80
JC Penney, Sears
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Hanes Mall (Winston-Salem) 1,556,000 548,000 Belk, Dillard's, Hecht's, 100
JC Penney, Sears
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Ohio
Eastgate Mall (Cincinnati) 905,000 268,000 Dillard's, JC Penney, Kohl's, 54(1)
Sears
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Eastgate Crossing (Cincinnati) 194,000 Border's, Circuit City, Kids 'R 54(1)
Us, Kroger
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Towne Mall (Franklin) 521,000 152,000 Dillard's, Elder-Beerman, Sears 100
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
South Carolina
Citadel Mall (Charleston) 1,068,000 294,000 Belk, Dillard's, JC Penney, 100
Parisian, Sears
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Columbia Mall (Columbia) 1,113,000 297,000 Dillard's, JC Penney, Rich's, 79(1)
Sears
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Northwoods Mall (North Charleston) 833,000 312,000 Belk, Dillard's, JC Penney, Sears 100
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Tennessee
Old Hickory Mall (Jackson) 555,000 159,000 Belk, Goldsmith's, JC Penney, 100
Sears
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Texas
Parkdale Mall (Beaumont) 1,411,000 462,000 Dillard's (2), JC Penney, 100
Montgomery Ward, Sears
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Wisconsin
East Towne Mall (Madison) 895,000 295,000 Boston Store, JC Penney, Sears, 65(1)
Younkers
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West Towne Mall (Madison) 1,021,000 260,000 Boston Store, JC Penney, Sears, 65(1)
Younkers
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
West Towne Crossing (Madison) 447,000 Barnes & Noble, Best Buy, Cub 65(1)
Foods, Ganders Mountain, Kohl's,
Office Max, ShopKo
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Brookfield Square Mall (Milwaukee) 1,041,000 316,000 Boston Store, JC Penney, Sears 100
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Regency Mall (Racine) 918,000 268,000 Boston Store, JC Penney, Sears, 100
Younkers
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
Wausau Center (Wausau) 429,000 156,000 JC Penney, Sears, Younkers 100
- ------------------------------------- ------------ ------------- ----------------------------------- ----------------
(1) CBL will potentially acquire additional interests through an offer to purchase outside partner interests
(2) Managed by a third party