UPDATE: Cowen Downgrades CBL & Associate Properties

In a report published Wednesday, Cowen analyst James Sullivan downgraded CBL & Associate Properties CBL to Market Perform, with a $19.00 price target. According to the report, with persistent anchor sales weakness, store closings by JCP and SHLD are likely to intensify in the near term. Of the 33 stores that JCP announced last week they plan to close, four are in CBL malls, the most in the analyst's coverage. While they expect CBL should be able to fill the vacated units, the closures are likely to pressure B Mall REIT valuations. “JCPenney announced on 1/15 that it plans to close 33 stores department stores,” the report noted. “Four CBL malls will be affected (CBL had the most malls on the JCPenney store closing list). While we believe that CBL should be able to re-lease the space in the four malls (Hickory Point Mall, Northgate Mall, Janesville Mall, and Wausau Mall), B Mall portfolios are more vulnerable to such closures. Despite our overall thesis that JCPenney and Sears store closings should be an opportunity for mall owners to improve sales productivity and traffic at their properties, the visibility of that result as well as the extent of the upside is less visible for middle market, B-quality assets than for better positioned assets. The average sales productivity of the four affected CBL malls is $278/sq ft with average occupancy of 86% - indicating subpar productivity and occupancy.” CBL closed Tuesday at $17.11.