CBL & Associates Properties: Recent Disposals And Acquisitions Should Boost AFFO In 2026

CBL & Associates Properties, a retail REIT, reported 7.5% AFFO growth in Q2 2025, primarily due to a lower share count and declining interest expenses. The company anticipates a 2.5% boost to H1 2026 AFFO from recent disposals and acquisitions, with each 0.25% Fed rate cut projected to incrementally increase AFFO by 1.1%. An analyst estimates 2026 AFFO could reach $7.50-$7.70/share, prompting a Buy rating, though elevated leverage and the sustainability of tenant sales increases remain key risks.

Analysis

CBL & Associates Properties (CBL), a retail REIT, reported a 7.5% year-over-year growth in Adjusted Funds From Operations (AFFO) for Q2 2025, driven by a lower share count from stock buybacks and declining interest expenses. The company's forward outlook is supported by strategic portfolio repositioning, with recent disposals and acquisitions expected to boost H1 2026 AFFO by 2.5%. CBL's performance is also highly sensitive to monetary policy, as each 0.25% cut in the Federal Reserve's interest rate is projected to add an incremental 1.1% to AFFO. Based on these factors, an analyst estimates that CBL could achieve an AFFO of $7.50-$7.70 per share in 2026. However, significant risks persist, including the company's elevated leverage and the potential for recent tenant sales growth to be unsustainable.

Key Decisions for Investors

• Investors aligned with a bullish view on declining interest rates and resilient retail tenants could find the analyst's projected 2026 AFFO target of $7.50-$7.70 per share a compelling basis for a long position.
• It is critical to monitor CBL's leverage ratios and tenant sales performance, as these are the primary risks cited that could challenge the positive growth thesis.
• Given the company's direct sensitivity to monetary policy, investors should consider timing their positions or adjusting exposure based on their outlook for future Federal Reserve rate cuts, which act as a key catalyst for AFFO expansion.