CBL & Associates Properties Inc. closed on the sale of two of its malls in Michigan that it had previously designated for disposition: the 797,251-square-foot Fashion Square Mall in Saginaw and the 613,313-square-foot The Lakes in Muskegon.

An unidentified private buyer acquired both malls for a total price of $66.5 million, including the assumption of a $38.2 million loan secured by Fashion Square.

Those sales follow the reported but yet to be announced sale of CBL’s former Chapel Hill Mall in Akron, OH. That mall was sold after being REO for nearly two years. According to the Akron Beacon Journal, Kohan Retail Investment Group purchased the 666,203-square-foot regional mall for $8.6 million ($13/square foot).

The two Michigan malls were both classified as tier 3 by the company with sales per square foot of $285 for Fashion Square and $275 for The Lakes, according to the company’s 2015 annual report.

Net proceeds from the sale were used to reduce outstanding balances on CBL’s lines of credit.

“This disposition marks another milestone achievement for CBL, having now completed transactions on 11 lower-productivity regional malls since introducing our portfolio transformation strategy in April 2014,” said Stephen D. Lebovitz, president and CEO of CBL & Associates, in a statement announcing the dispositions.

Unlike other publicly held mall REITs that are having trouble refinancing malls that were financed at peak prices prior to 2008, CBL is taking losses on properties that were valued just four years ago as CRE prices started taking off.

For additional mall REIT coverage see last week’s story Simon, WP Glimcher Each Lose Malls to Foreclosure; Kimco Mall Facing Similar Fate.

The price paid for two of CBL’s lower productivity malls is less than the $67.5 million appraisal for Fashion Square alone when it was securitized in a 2012 CMBS deal, according to Morgan Stanley Research.

Fashion Square and The Lakes make for an interesting comparison given their similar sales per square foot and geographic proximity within a two-and-a-half-hour drive of each other.

In its analysis, Morgan Stanley assumed that the properties are worth a similar amount per square foot. They placed a value of $38.2 million on Fashion Square, down 43% from the 2012 valuation, and $28.3 million for The Lakes.

“These sales are welcome velocity on CBL’s objective to reduce exposure to tier 3 malls producing sales per square feet less than $300 (per square foot),” Morgan Stanley wrote. “However, it highlights the significant widening in cap rates on lower-productivity malls over the past six to 12-months.”

Over the past two years, CBL has completed more than $765 million in property sales, including approximately $460 million from the sale of regional malls and more than $305 million from selling community centers and other non-core assets.

Those dispositions leave CBL with a higher-quality, higher-growth portfolio and a markedly improved balance sheet, however analysts say it still has more work to do with properties financed in 2006.

Chapel Hill Mall

Kroll Bond Rating Agency (KBRA) concluded that the published sale price for the Chapel Hill Mall in Akron implies a $64.2 million loss. KBRA said the liquidation of the Chapel Hill Mall is the first of several other anticipated dispositions linked to CBL. For instance, U.S. Bank is asking a court to appoint a receiver for a CBL-sponsored loan on Westfield Chesterfield in the St. Louis market.

Other likely CBL dispositions include two other malls it said it does not expect to be able to pay off loans by their respective maturities: the 898,416-square-foot Greenbrier Mall in Chesapeake, VA, and the 309,878-square-foot Midland Mall in Michigan, according to KBRA.

Based on observations of prior workouts with CBL, all three of these malls are expected to be conveyed to the lender via a deed-in-lieu of foreclosure.

Headquartered in Chattanooga, Tennessee, CBL owns, holds interests in or manages 145 properties, including 89 regional malls/open-air centers. The properties are located in 31 states and total 82.9 million square feet including 8.6 million square feet of non-owned shopping centers managed for third parties.