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CBL & Associates Properties Inc (CBLQ)
Q1Â 2019 Earnings Call
May. 01, 2019, 11:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning and welcome to the CBL Properties First Quarter Earnings Conference Call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Katie Reinsmidt. Please go ahead.
Kathryn Reinsmidt -- Chief Information Officer
Thank you, Brandon, and good morning. Joining me today are Stephen Lebovitz, CEO; and Farzana Khaleel, Executive Vice President and CFO. This conference call contains forward-looking statements within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties. Future events and actual results, financial and otherwise, may differ materially. We direct you to the Company's various filings with the SEC for a detailed discussion of these risks.
A reconciliation of supplemental non-GAAP financial measures to the comparable GAAP financial measures was included in yesterday's earnings release and supplemental that will be furnished on Form 8-K and is available in the Invest section of the website at cblproperties.com. This call is being limited to one hour. In order to provide time of everyone to ask questions, we ask that each speaker limit their questions to two, and then return to the queue to ask additional questions. If you have questions that were not answered during today's call, please reach out to me following the conclusion.
I will now turn it over to Stephen.
Stephen Lebovitz -- Chief Executive Officer
Thank you, Katie, and good morning, everyone. As we announced yesterday, we completed the first quarter with results that put us on track to achieve our guidance range for the year. This is no small feat given the wave of bankruptcies and store closings we experienced in the first few months of the year and is a credit to the determination and persistence of the CBL team.
Even though over stock price is trading at new lows, our passion for the business has not diminished and we are steadfast in our efforts to share the market that CBL will achieve long-term stability and success. First and foremost, we are focused on preserving and enhancing liquidity to fund our redevelopment program and reduce leverage. While we talk this metric on every call, it's important to repeat that at the midpoint of guidance we will generate over $220 million in estimated free cash flow in 2019 after preferred and common dividend.
This free cash flow is our primary source to find income-generating redevelopment and debt reduction, which allows us to replace lost income while lowering leverage. We are executing our capital-light strategy, which minimizes the required investment in redevelopment through pad sales, ground leases or joint venture structures. We have more than a dozen anchor replacements in our pipeline while required investment is under $5 million. We realized that there are numerous accretive uses for cash across our capital structure, and our equity and bond prices remain extremely attractive for buybacks. However, we believe that maintaining maximum liquidity to operate our business and fund redevelopment should remain our priority. Hand-in-hand with this focus on liquidity is our other major strategic priority to stabilize revenue.
We are achieving this goal through releasing and generating incremental income from our anchor replacement program. We are seeing demand from restaurant's entertainment uses and expanding retailers as well as a broad range of non-retail uses to back to our locations. As we mentioned last quarter between Bon-Ton and Sears, we had roughly 40 anchorage closed. We are making tremendous progress as outlined by the nearly two dozen committed anchor replacements listed in our earnings release and supplemental. The transformation of our properties as we bring in newer more dynamic uses will stabilize income, drive additional traffic and strengthen our portfolio for the long-term.
We are diversifying over tenant base away from apparels through our new leasing. In 2018, over 67% of our total new leasing was executed with non-apparel tenants, including dining entertainment value and service. This trend accelerated in the first quarter to nearly 80% of our new leases executed with non-apparel tenants. We are currently under construction, have agreement to execute it or in active negotiations on two multifamily projects, 13 entertainment operators, including two casinos; 10 hotels; 30 restaurants; four fitness centers; five medical uses; two self-storage facilities; two grocers and a number of other non-retail uses. These additions allow us to extract value from underutilized parking areas and create valuable outparcels.
As we replace Bacon anchor locations and aggressively backfill shop space, we are also working to lower expenses. We have reduced salary and bonus amounts for senior management and have taken steps to achieve other cost efficiencies. We are actively managing our portfolio through the disposition of underperforming properties as well as monetization of other assets to provide a low-cost equity source. We closed in the sale of Cary Towne Center as well as the transfer of Acadiana Mall in January. And earlier this week, we completed the sale of Honey Creek Mall.
We are urgently and aggressively pursuing every opportunity to stabilize CBL and improve the Company's valuation. We remain confident that we have the strategy, liquidity, people, properties and commitment to successfully execute. In April, we held our Company's leadership conference and welcomed our field employees to Chattanooga along with our home office management and sales staff for training education and team building. The dedication, energy and creativity of the CBL team is second to none. While the challenges we face could weigh our moral, the CBL team has consistently rallied together to stay on tall. And we are all singularly focused on successfully navigating the challenges that we are experiencing today. I'll touch briefly on the class action settlement that we announced in March
The decision to settle was one of the most difficult we have faced. From the initial filing, we have denied and continued to deny any wrongdoing and believe that our actions at all times have been proper and lawful. However, given the acceleration in the pace of the case and the inherent risk of litigation, we made the business decision to settle and believe this was the right choice for the Company and its shareholders. The structure of the settlement helps to mitigate the annual cash impact. Former tenants will go through a claims process and current tenants will be credited over a five-year period.
The $26 million in cash savings from the common dividend suspension will generally offset the cash expense of the attorney's fees. As we said in our release on the settlement, our intent is to reinstate the common dividend in January and we will review taxable income projections for 2020 later in the year to determine the appropriate level.
As noted by our 8-K filing last week, we have executed the settlement agreement. The court has provided preliminary approval, but the settlement is still subject to a final approval order. Final approval could occur as early as August, after which we'll be able to provide more disclosure on the cash and credit component of the settlement.
Finally, I'll caution that since this settlement has not received final approval from the court, we will not be making additional comments beyond what we previously disclosed and appreciate your understanding of this sensitivity.
I will now turn the call over to Katie to discuss our operating results and investment activity.
Farzana Khaleel -- Executive Vice President and Chief Financial Officer
Thank you, Stephen. Our leasing team delivered over 1.1 million square feet of total leasing activity during the quarter, including 423,000 square feet of new leasings and 693,000 square feet of renewals. Same-center mall occupancy increased 20 basis points in the first quarter last year to 89.7% and portfolio occupancy similarly increased 20 basis points to 91.3%.
Bankruptcy-related store closures impacted first quarter mall occupancy by approximately 110 basis points or 200,000 square feet, including closures from Things Remembered Gymboree's Crazy 8 label and several Charlotte restores. However, the closures related to the names like Gymboree stores, Payless ShoeSource and the majority of Charlotte Russe locations occurred after the end of the quarter and will impact second quarter occupancy.
On a comparable same-space basis, for the first quarter, we signed nearly 570,000 square feet of new and renewal leases at an average gross rent decline of 9.5%. Spreads on new leases for stabilized malls increased 9.3% and renewal leases were signed at an average of 12.3% lower than the expiring rent. This quarter's results were impacted by renewals on eight Things Remembered stores that we expect to remain open following the bankruptcy filing, and (inaudible) Christopher & Banks stores.
Same-center sales for the year were flat at $377 per square foot compared with the prior year. Sales for the first quarter were muted by declines in January that resulted from an unfavorable reporting calender. Sales for February were relatively flat and March generated a solid increase, especially considering that Easter was late -- in late April this year. Weather also impacted a number of centers in both January and March with several early closures. Categories that performed well included fast casual dining, electronic, children's and family shoes, cosmetics and wellness.
As Stephen noted earlier, we are making excellent progress backfilling bank and anchor locations with commitments for nearly two dozen stores. Our properties are not only the favorite shopping destination in their markets but are becoming the go-to place for entertainment, dining, service, lodging and more. Consistent with prior quarters, we've provided a full schedule for all of the Sears and Bon-Ton locations in our portfolio in the supplemental. I'll walk through several of the major projects. Bonefish Grill and Metro Diner opened in the former Sears Auto Center in Volusia Mall and Daytona beach earlier this year.
In Greensboro family center, a new 27,000 square feet O2 Fitness will open in May, replacing a former freestanding restaurant. We will open the first phase of the redevelopment of the former Sears -- or I'm sorry, former Massy's at Parkdale Mall in May, new stores include Dick's Sporting Goods, HomeGoods and Five Below. We will also start construction later this year on a joint venture self-storage facility on a parcel outside the Ring Road of Parkdale. This project is a similar structure to our previous developments and that we will contribute the land as our equity.
The opening is expected in late 2019 early 2020. In fall, we'll celebrate the grand opening of the redeveloped Sears at Brookfield Square in Milwaukee Wisconsin. The first phase of the project includes a new movie tavern by Marcus Theatres and WhirlyBall Entertainment Center. Two restaurants have already opened in outlets on the Sears parcel and construction has commenced on the new hotel and convention center, which will connect through a landscape walkway to our centers.
We are also adding fitness and medical as part of the new tenant mix. Dave & Buster's will open in May at Hanes Mall in Winston-Salem in former shop space here at the Sears wing. Novant Health purchased a Sears' location at the center and has plans to redevelop the location into a new health facility. We commence construction on the Sears redevelopment project in Hamilton Place here in Chattanooga. The project includes Dave & Buster's, ALoft Hotels, Dick's Sporting Goods, a fitness facility, additional restaurants and office space, all joining Cheesecake Factory which opened last December. The hotel is being developed in the joint venture with a well-regarded local operator. We will contribute land as our portion of the equity, which allows us to realize value from our assets and to share in future outside. We have two casinos that will replace vacant anchor locations at malls in Pennsylvania.
We executed a lease for a casino to locate in the former Sears at York Galleria in York Pennsylvania. At Westmoreland Mall, we have a new stadium live casino taking the former Bon-Ton location. We expect construction to begin later this year with an opening anticipated in 2020. While both casinos remain subject to regulatory approval, we're excited to move forward with such transformational opportunities. At Dakota Square Mall in Minot North Dakota, we executed a lease with Ross to take a portion of the former Her Burgers location.
Construction will begin shortly with an opening anticipated later this year. At our 50-50 joint venture property, Kentucky Oaks in Paducah, Kentucky, Burlington and Ross opened in the (inaudible) owned former Sears, our joint venture partners have executed a lease with HomeGoods to replace the former Elder-Beerman store and have two additional tenants under negotiation. Dillard's purchased the former Sears location at Richland Mall in Waco, Texas, and anticipate opening a new store in this space in 2020.
We also have executed a lease with our entertainment operator, Tilt, for the former Sears location in Terryville Mall in Rockford Illinois. We lost Bon-Ton and Sears at this property, and the Bon-Ton is replaced with Choice Home Center which opened in late 2018. These replacements required minimal investment. We have signed leases for two new Round1 locations, one of the former Sears at South County Center in St. Louis Missouri and the second in former subspace at Northgate Mall in Charleston South Carolina. In addition to the anchor redevelopments and replacements I have just walked through, we have a lot of activity in the LOI or negotiation stages. And we'll continue to make announcements as deals progress.
I will now turn the call over to Farzana to discuss our financial results.
Thank you, Katie. As we announced on our last call in January, we closed on our new $1.185 billion credit facility with the maturity date of July 2023. With this closing, we've addressed all of our unsecured debt maturities until 2023 and simplified our covenants. With the extension of our lines on maturities over the next few years, almost fully comprised of individuals nonrecourse mortgage loans. At the end of the first quarter, we had $390 million outstanding on our lines of credit.
In January, we completed the sale of Cary Towne Center and also completed the transfer of Acadiana Mall. The $163.4 million of related debt has been extinguished and we recognized a gain on extinguishment of debt this quarter related to both transactions. We have four secured loans maturing in 2019. The two cross collateralized loans with the same institutional lenders secured by Honey Creek and Volusia Mall had a maturity date of July 2019 with an aggregate balance of $64 million as of April 1 and an interest rate of 8%.
In April, we closed a new $50 million five-year nonrecourse loan secured by Volusia Mall with the existing lender at a fixed rate of 4.56%. Additionally, we sold Honey Creek Mall in April for $14.6 million. We utilized proceeds from the new loan and the sale to retire the existing loans. We also have a $4.5 million loan secured by the second phase of our Plana Outlet Center that we anticipate refinancing prior to year-end. We have two secured loans that mature in December, Greensboro Mall and Hickory Point. These loans were previously restructured. We are in discussions with the lenders to determine next steps.
We are also focused on secured financing which mature in 2020. We have several properties with high debt yield that we will begin working to refinance. Our total pro rata share of debt at the end of March 2019 was $4.48 billion. We have reduced our debt levels by $179 million sequentially and over $260 million from March 2018. At quarter end, net debt to EBITDA was 7.3 times flat from year-end. First quarter adjusted FFO per share was $0.30, representing a decline of $0.12 per share compared with $0.42 for the prior -- for the first quarter 2018.
While adjusted FFO was lower than consensus, we believe this was primarily the result of timing. Our parcel sales were $0.01 lower and G&A was $0.02 per share higher than the prior year quarter. G&A for the current quarter included legal and third-party expense related to the new term loan, litigation expense and change in the timing of bonus payments for non-executive employees. Other variances included $0.02 per share dilution from asset sales and non-whole property and $0.05 per share from lower NOI.
First quarter FFO included an accrual of $88.1 million related to the proposed litigation settlement, which was excluded from adjusted FFO. As claims are paid or liability is released, we will reduce the amount in future periods. Once the final order is issued from the court later this year, we will be able to provide more information on the claims and to discuss the annual impact in future years. For 2019, we anticipate the settlement to be relatively cash neutral.
The majority of the attorney's fees will be paid after the final order is issued and this amount is offset by saving from the suspension of the dividend for the next two quarters. For the first quarter, same-center NOI decreased 5.3%. The decline was primarily related to lost rent due to closed anchor and in-line stores as well as declines in renewal leasing. The presentation of our income statement changed with the adoption of the new lease accounting standard. We understand that these changes make the comparability of periods more difficult this year.
We provided more information on the components that were consolidated in new rental revenue line in our financial supplement. During the quarter, we recognized that $22.8 million impairment on Greensboro Mall due to a change in the expected full period. Several years ago, we restructured the loan secured by a Greensboro extending the maturity date to 2019 cash flow with property has declined and while it is still currently covering debt service we are in discussions with the lender to evaluate various options.
We are reiterating FFO as adjusted per share guidance for the full year 2019 in the range of $1.41 to $1.46 per share, which assumes a same-center NOI decline in the range of 6.25% to 7.75%. Our initial reserve for the year was set in the range of $5 million to $15 million. As a reminder, this reserve is used to take into consideration the impact of unbudgeted bankruptcies, store closures, rent reductions and cotenancy that may occur. Last quarter we discussed a number of retailer bankruptcies that are impacting 2019. We had incorporated in our budgets certain store closures that were expected, including the bankruptcy filings for Gymboree, Charlotte Russe and Things Remembered.
However, subsequent to our February call, Charles Russe announced a liquidation resulting in additional annual revenue loss of approximately $5 million and Payless Shoes filed for bankruptcy and announced the liquidation. Annual gross rent for Payless is approximately $3.8 million. Incorporating this impact as well as other variances to budget, we currently expect to utilize approximately $6 million to $8 million of the reserve. We will update our expected reserve usage each quarter.
I'll now turn the call over to Stephen for concluding remarks.
Stephen Lebovitz -- Chief Executive Officer
Thank you, Farzana. We have made important progress on our major strategies so far this year between the success we are seeing in the our redevelopment program and the closing of the credit facility recast. While the lawsuit settlement was a setback, it was a business decision we felt compelled to make. The suspension of the dividend for the remaining two quarters of this year offsets the cash outlay for the settlement allowing us to preserve our cash flow to invest in our business.
As we have said, our plan is to reinstate the dividend for the first quarter of 2020 at an amount that we determine once we have better visibility to 2020 projected taxable income. In the interim, we are doing everything in our power to lease space, replace former anchors, generate other source of income, reduce expenses and diversify our tenant base. Yes, we have critical work ahead of us, but we have a team that believes in our strategy and is committed to delivering results and restoring the market space in our Company.
Thank you for your time today. We'll now open the call to questions.
Questions and Answers:
Operator
We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.
Caitlin Burrows -- Goldman Sachs -- Analyst
Hi. Good morning. I was just wondering may be on the topic of leasing spreads, the new lease spreads that you guys are completing but it's the renewals that account for a bulk of the leasing. So I was just wondering if you're seeing any signs of stabilization in renewal leasing pricing or to those retailers which have not yet been cycled through still need lower occupancy costs?
Stephen Lebovitz -- Chief Executive Officer
So, I would say that we're seeing some glimmers of improvement but not anything that significant. A lot of what we had in terms of negatives for the quarter were some packaged deals that we talked about. Certain retailers, Things Remembered, some of the stores they are key thing, a couple of others like Christopher & Banks, GameStop and Children's Place contributed to it. So, in those retailers, the last three are doing fine. They're just -- their sales have not increased so there is pressure on occupancy that we have to address as part of the renewals. So I'd say that we had said earlier in the last call that we thought we'd be negative in the high single digits, we're a little worse than that this time and we're hopefully going to see some progress as the year goes on.
Caitlin Burrows -- Goldman Sachs -- Analyst
Okay. And then, when you think about who is leasing the in-line space now that you are reselling from past closures, are there more local and regional tenants that you're working with or kind of give us an actor idea t hose new user hours are outside of the anchor replacement?
Stephen Lebovitz -- Chief Executive Officer
Yeah. So we're -- I mean, we're definitely doing a lot with regionals and locals, but we're still doing national deal. I mean we're doing deals with the Gap divisions that are expanding like Athleta. Altered State is regional but they have developed more of a national presence, they have a new concept called A'Beautiful Soul, Dry Goods is owned by Von Maur, and we've done deals with them, BoxLunch which is another hot topic, (ph) Arrie who's had a lot of success with American Eagle, Sketchers & Bands are some of the more -- are doing better with their products and are having good results.
So, I mean, we're getting the nationals done. And then we're also doing, like I said, all the non-traditional types of users, whether it's the fitness like OrangeTheory is taking small shop space, (inaudible) CBD Oil is a hot category. So, Five Below, we're doing a couple of things with them. A lot of restaurants, I don't want to name them all. So, I mean, there is just -- there is a lot of leasing activity and it's mixed up between some traditional, regionals and locals. We have pop-up -- we have pop-up shops, over 20 malls, and those are that we lease those for one week, two weeks, one month, they incubate new concepts that have converted into a longer-term type deals. So that's a program that we're putting a lot of emphasis on. So, like I said, we're doing everything in our power to generate income from all types of sources throughout the portfolio.
Caitlin Burrows -- Goldman Sachs -- Analyst
Great. And then, maybe one last one. In terms of releasing the anchor space, I was just wondering I know a lot of the answer on co-tenancy is that it varies. But is there any color you can give us in terms of cotenancy causes and getting cured? Does that generally happen when the new user lease is finalized or when the new user actually moved in or how does that work?
Stephen Lebovitz -- Chief Executive Officer
I mean, it does vary but it is when they open. It's not when the lease is finalized and there is a lot of discussion, the cotenancy clauses a lot of then were written a long time ago and they don't knowledge the reality of the types of replacements. So we have gone to the major partners that we haven't had discussions about cotenancy's and we have gotten a good reception and had good flexibilities from them in terms of working with us.
Caitlin Burrows -- Goldman Sachs -- Analyst
Okay, thank you.
Stephen Lebovitz -- Chief Executive Officer
Thanks, Caitlin.
Operator
Our next question comes from Rich Hill with Morgan Stanley. Please go ahead.
Rich Hill -- Morgan Stanley -- Analyst
Hey, guys. Good morning. Two hopefully quick questions for me. It looks like CapEx went down rather considerably this quarter. Farzana is that timing related or do you think it's conscientious decursion on your part to may be partner with people to reduce some of the CapEx? How are you sort of managing that CapEx?
Farzana Khaleel -- Executive Vice President and Chief Financial Officer
Hi, Rich. Yes, it's a combination of both. It's a timing difference as well as conscientious effort in looking at all the different CapEx that we are spending, including tenant allowances. We are very focused on our return of our investment even on tenant allowances so we are focused on that so it's a combination.
Rich Hill -- Morgan Stanley -- Analyst
Got it. Got it. And then maybe a tough question to answer but as you think about same-store NOI, is there any closure you can give us on how the unencumbered mall assets are trending versus the overall portfolio and maybe even the assets back in the secured term loan revolver. I'm trying to get a sense as to may be the quality (inaudible) across quality?
Farzana Khaleel -- Executive Vice President and Chief Financial Officer
Well, the Tier 1 generally have done a little bit better, but overall it's trending the same way as the overall NOI decline. So I wouldn't say that any unencumbered properties are any worse impacted by the total portfolio, it's similar. So, I wouldn't say that it's any different.
Rich Hill -- Morgan Stanley -- Analyst
Okay. So just to clarify, you see your Tier 1s and Tier 3s sort of training the same way as the total same-store NOI?
Farzana Khaleel -- Executive Vice President and Chief Financial Officer
Well. the Tier 1 is obviously doing better. And Tier 2 and Tier 3 are more -- a little bit more -- not as -- doing as well as the Tier 1, so therefore those two component is not really making up the negative same-center NOI.
Rich Hill -- Morgan Stanley -- Analyst
Okay.
Kathryn Reinsmidt -- Chief Information Officer
There still remains a linear relationship across our portfolio, Karie. And I think to Farzana's point, we did see bankruptcies in all tiers, so everybody is impacted by those. For the most part, like every -- we had Charlotte reached cost of portfolio. But Tier 1s tend to perform better Tier 2s tend to be more stable and Tier 3s perform the worst in general. Although there has been outliers in all of its categories.
Rich Hill -- Morgan Stanley -- Analyst
Understood. That's helpful guys. That's it from me right now. We'll catch up soon.
Operator
Our next question comes from Tayo Okusanya with Jeffries.
Tayo Okusanya -- Jeffrey -- Analyst
Yeah, good evening. I'm trying to reconcile the 1Q performance versus the guidance even if I take out the -- what I'll consider as one-time items from 1Q with some of the litigation cost and things like that. It seems that the normalized earnings number is about $0.32, but the guidance is at $1.41 to $1.46. I'm trying to understand some of the pickup you expect over the course of the year to get to that number.
Kathryn Reinsmidt -- Chief Information Officer
Hi, Tayo. There are three items to consider in terms of what we're looking at our guidance. It's mostly going to be back ended, so the front that's in Q1 our sales were lower and we expect more appraisal sale to the later part of the year. And then also we had G&A expenses were generally higher in the first quarter. We expect that to trend a little bit better because we had these bonuses to our non-executive employees that showed up in the first quarter. And third, we should see some better improvement on our interest expense, because we did complete the new financings on Wilshire Mall, and also we disposed off Honey Creek. So they were at higher interest rate, 8%. So generally speaking, those are the three components that will help to get to our range -- to our FFO guidance range.
Tayo Okusanya -- Jeffrey -- Analyst
But you maintained same-store NOI forecast and you're doing better in the first quarter. So I expecting a same-store NOI to pick up in the back half of the year as well?
Farzana Khaleel -- Executive Vice President and Chief Financial Officer
That's correct.
Tayo Okusanya -- Jeffrey -- Analyst
Okay, great.
Stephen Lebovitz -- Chief Executive Officer
Okay, thank you.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Stephen Lebovitz for any closing remarks.
Kathryn Reinsmidt -- Chief Information Officer
Brandon, we do...
Operator
Yes. I'm sorry. We did have someone jump in the queue. Craig Schmidt with BOA. Please go ahead.
Craig Schmidt -- Bank of America -- Analyst
Great, thank you. I believe that CBL does its own effort to monitor more traffic. I was wondering if you had any data that will talk to what anchor replacements are doing for that more traffic?
Stephen Lebovitz -- Chief Executive Officer
Hi, Craig, good morning. So, it's really too early because the anchor replacements are just coming online. So, we need a longer term to really compare just how the traffic is. We put in most of our traffic counters late in 2018 -- I mean, in 2017. So we had 2018, but the anchor replacements are coming online now in 2019.
Craig Schmidt -- Bank of America -- Analyst
Okay. I mean, just anecdotally, what is the response to the new anchors, the six you've opened, if there is enough to lead off of?
Stephen Lebovitz -- Chief Executive Officer
No. I mean, no surprise, I'm going to say. It's definitely positive. And we've seen the entertainment uses actually be very helpful because not only driving traffic but also the customer bringing the families to the properties. So that's something that we're really encouraged by the reception we're seeing. And then restaurants are doing really well across our portfolio and just in general.
And whether it's (ph) sit down casual, so that's been a real strong driver of traffic. And we're -- we definitely have a sense of urgency with replacing these anchors because when they're closed there is a drop off in traffic and so we're pushing as hard as we can to get these anchors of these replacements open. And also in the lot of cases doing it with minimal investment like I talked about during my remarks in one mall, CherryVale, we had a furniture store opened in one of the close anchors and then we have an entertainment operator opening later in the year. So, we'll backfill both those without a significant investment. And that will have our traffic a lot.
Craig Schmidt -- Bank of America -- Analyst
Okay. Thank you.
Stephen Lebovitz -- Chief Executive Officer
Thanks, Craig.
Operator
Our next question comes from Michael Mueller with JPMorgan. Please go ahead. Mr. Mueller, your line is now open.
Michael Mueller -- JPMorgan -- Analyst
Mute button, it works. Sorry about that. I got to the call pretty late. So I apologize if I missed this. On the 22 anchor replacements that you breakout in the (ph) sub, what's the total investment and what is the cost for those?
Farzana Khaleel -- Executive Vice President and Chief Financial Officer
Mike, we'll add those projects as they're ready to start construction if there is a cost associated with them. And then, if you look in the supplemental in the back room, we have those projects listed. The ones that are obviously owned by others, (inaudible) projects and things like that. We wouldn't have cost associated with those.
Michael Mueller -- JPMorgan -- Analyst
Okay. Okay. So, you don't have like a doable number or ballpark number at this point in time?
Kathryn Reinsmidt -- Chief Information Officer
Well, we still think we'll be within the $75 million to $125 million range on an annual basis. So we still expect to kind of hit (ph) that including all these projects.
Michael Mueller -- JPMorgan -- Analyst
Okay. That was it. Thank you.
Stephen Lebovitz -- Chief Executive Officer
Thanks, Mike.
Operator
Our next question comes from Andrew Goodwin with Odeon Capital Group. Please go ahead.
Andrew Goodwin -- Odeon Capital Group -- Analyst
Hi. Good morning. I was wondering if you could just refresh us on how you would plan to deploy the FFO that you see earning this year?
Kathryn Reinsmidt -- Chief Information Officer
Yeah, Andrew, I mean, our focus will continue to be on the redevelopment pipeline that we went through on the call as well as debt reduction as they are the two primary sources of our cash flows.
Stephen Lebovitz -- Chief Executive Officer
And in that debt reduction, would it just be loan paydown, mortgage paydown or would you also look at some of the debt outstanding? I know you referenced on the call that you see the prices of bonds in the market. I'm trying to understand would you be a little more proactive or would everything have to go just to the terminals?
Kathryn Reinsmidt -- Chief Information Officer
Yeah, I think, like we said in the initial comments, our priority right now is maintaining liquidity. So we want to make sure that we have our redevelopments and amortization kind of taken care of.
Andrew Goodwin -- Odeon Capital Group -- Analyst
Thank you very much.
Operator
This includes the question-and-answer session. I would like to turn the conference back over to Steve Lebovitz for any closing remarks.
Stephen Lebovitz -- Chief Executive Officer
Thank you everyone for your time this morning. And we look forward to continuing to discuss our results and show improvements as the year goes on. Thank you.
Operator
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Duration: 38 minutes
Call participants:
Kathryn Reinsmidt -- Chief Information Officer
Stephen Lebovitz -- Chief Executive Officer
Farzana Khaleel -- Executive Vice President and Chief Financial Officer
Caitlin Burrows -- Goldman Sachs -- Analyst
Rich Hill -- Morgan Stanley -- Analyst
Tayo Okusanya -- Jeffrey -- Analyst
Craig Schmidt -- Bank of America -- Analyst
Michael Mueller -- JPMorgan -- Analyst
Andrew Goodwin -- Odeon Capital Group -- Analyst
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