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CBL & Associates Shares Jump On Analyst Report

The Associated Press

CHATTANOOGA, Tenn. (AP) — Shares of CBL & Associates Property Inc. jumped as much as 20 percent Friday after a Goldman Sachs analyst upgraded the shopping mall developer's rating saying its bankruptcy risk is gone because of improved liquidity.

Analyst Jonathan Habermann upgraded CBL & Associates to "Conviction Buy" from "Neutral," saying the stock is undervalued. Habermann raised his price target on the shares to $10 from $4, which suggests a 47 percent increase from Thursday's closing stock price of $6.81.

The real estate investment trust has options to raise capital through an equity raise and asset sales, and debt maturities in 2009 and 2010 are manageable, Habermann wrote.

Still, occupancy is expected to fall to 87 percent and rent spreads are expected to flat by the end of 2010, the analyst wrote.

Habermann also addressed mall operator Simon Property Group Inc., removing it from its "Conviction List," a list of highly-rated stocks. The analyst maintained a "Buy" rating on Simon Property because the company had solid liquidity and potential for improvement in its stock. He raised the target price to $50 from $46.

The analyst said the downgrade was to swap Simon with CBL on its "Conviction List" because CBL has "greater upside."

Real estate investment trusts, including mall and shopping center operators, have struggled with high debt and drops in occupancy amid the recession and credit market woes. Mall operator General Growth Properties filed for Chapter 11 bankruptcy protection last week after it was unable to refinance maturing debt.

But the upgrade does fit in with some recent positives surrounding the ability of REITs to improve their capital and liquidity positions. The analyst noted that REITs have raised close to $11 billion of capital from debt and equity sources in the past few weeks, "far surpassing our expectations."

Shares of CBL gained $1.04, or 15.4 percent, to $7.86 in afternoon trading, having jumped as much as 20 percent to $8.17 earlier in the session.

Simon added $1.05, or 2.1 percent, to $49.46.