CBL & Associates Properties, Inc. (NYSE:CBL):
- Same-center NOI growth accelerated to
3.0% for the third quarter in the Total Portfolio and 3.3% in the
Mall Portfolio.
- FFO per diluted share, as adjusted,
increased 5.8% to $0.55 for the third quarter 2014, over the
prior-year period.
- Average gross rent per square foot for
stabilized mall leases signed in the third quarter 2014 increased
17.6% over the prior gross rent per square foot.
- Same-center Mall occupancy increased 40
basis points to 93.3% in the third quarter 2014 from June 30,
2014.
- Same-store sales per square foot
increased 0.8% during the third quarter 2014.
CBL & Associates Properties, Inc. (NYSE:CBL) announced
results for the third quarter ended September 30, 2014. A
description of each non-GAAP financial measure and the related
reconciliation to the comparable GAAP measure is located at the end
of this news release.
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014 2013 2014
2013
Funds from Operations (“FFO”) per diluted
share
$ 0.63 $ 0.56
$ 1.91
$ 1.60 FFO, as adjusted, per diluted share (1)
$
0.55 $ 0.52
$ 1.61 $ 1.60
(1) FFO, as adjusted, for the three months
ended September 30, 2014 excludes $16.8 million of gain on
extinguishment of debt, net of non-cash default interest expense,
related to the conveyance of Chapel Hill Mall in Akron, OH to the
lender by a deed-in-lieu of foreclosure. FFO, as adjusted for the
nine months ended September 30, 2014 excludes $59.4 million
primarily related to gain on extinguishment of debt, net of
non-cash default interest expense, related to the conveyance of
Chapel Hill Mall and the foreclosure of Citadel Mall. It also
excludes a partial litigation settlement of $0.8 million. FFO, as
adjusted, for the three and nine months ended September 30, 2013
excludes a partial litigation settlement of $8.2 million and for
the nine months ended September 30, 2013 also excludes a loss on
extinguishment of debt of $9.1 million and a gain on investment of
$2.4 million.
CBL’s President and Chief Executive Officer Stephen Lebovitz
commented, “We are pleased with the acceleration of our same-center
NOI growth and lease spread results in the third quarter.
Year-to-date same-center NOI growth is above the top end of our
guidance range providing further confirmation of our operating
expertise. Our focus on upgrading the quality of our tenant
merchandising mix and redeveloping underperforming locations has
directly contributed to our improved growth rate across the
portfolio.
“We are also making progress upgrading our balance sheet and
lowering our cost of capital. This month we executed a 10-year,
$300 million offering of senior unsecured notes at an attractive
4.6% coupon and added Mall del Norte, one of our highest
productivity assets, to our unencumbered pool. Recent progress on
our dispositions includes the completion of a community center
sale. We will also execute a non-binding contract for the sale of
an additional community center this week. CBL remains fully
committed to successfully executing our strategic transformation
within the two-to-three year time horizon we have established.”
FFO allocable to common shareholders, as adjusted, for the third
quarter 2014 was $93.0 million, or $0.55 per diluted share,
compared with $87.3 million, or $0.52 per diluted share, for the
third quarter 2013. FFO of the operating partnership, as adjusted,
for the third quarter 2014 was $109.1 million compared with $102.5
million, for the third quarter 2013. The increase in adjusted FFO
during the quarter was driven by contributions from recent openings
of new development projects, increased rental rates on new and
renewal leases and lower operating expenses. These improvements
were partially offset by lost income from sold properties and
higher net interest expense.
Net income attributable to common shareholders for the third
quarter 2014 was $38.1 million, or $0.22 per diluted share,
compared with net income of $23.1 million, or $0.14 per diluted
share, for the third quarter 2013.
Percentage change in same-center Net
Operating Income (“NOI”)(1):
Three
MonthsEndedSeptember 30, 2014
Portfolio same-center NOI
3.0% Mall same-center NOI
3.3%
(1) CBL’s definition of same-center NOI
excludes the impact of lease termination fees and certain non-cash
items of straight line rents and net amortization of acquired above
and below market leases. NOI is for real estate properties and
excludes income of the Company’s subsidiary that provides
maintenance, janitorial and security services.
MAJOR VARIANCES IMPACTING SAME-CENTER NOI RESULTS FOR THE
QUARTER ENDED SEPTEMBER 30, 2014
- Contributions from rent growth,
including increased new and renewal lease spreads, resulted in $3.0
million of growth in minimum rent and a $2.2 million increase in
tenant reimbursements compared with the prior-year period.
- Contributions from percentage rents
turned positive in the quarter, with an increase of $0.1
million.
- Operating and maintenance and repair
expenses improved by $0.8 million in the quarter primarily as a
result of continued expense controls and cost saving measures. This
was partially offset by an increase of $0.2 in real estate
taxes.
PORTFOLIO OPERATIONAL RESULTS
Occupancy:
As of September 30, 2014
2013 Portfolio occupancy
93.7% 93.8% Mall portfolio
93.5% 93.5% Same-center stabilized malls
93.3% 93.6%
Stabilized malls
93.3% 93.4% Non-stabilized malls
97.4% 97.1% Associated centers
93.7% 94.6% Community
centers
97.6% 96.1%
New and Renewal Leasing Activity of
Same Small Shop Space Less Than 10,000 Square Feet:
% Change in Average Gross Rent Per Square Foot
Three Months EndedSeptember 30,
2014
Stabilized Malls
17.6% New leases
23.0% Renewal
leases
15.5%
Same-Store Sales Per Square Foot for
Mall Tenants 10,000 Square Feet or Less:
Twelve Months Ended September 30,
2014 2013 % Change
Stabilized mall same-store sales per square foot
$
356 $ 363 (1.9 )%
DEVELOPMENT
On July 31st, the Company celebrated the Grand Opening of The
Outlet Shoppes of the Bluegrass in Louisville (Simpsonville), KY.
The 375,000-square-foot outlet center opened 100% leased or
committed with more than 80 stores, including Michael Kors, Nike,
Saks Fifth Avenue off 5th and The North Face.
TRANSACTIONS
During the quarter, CBL closed on the sale of Pemberton Plaza in
Vicksburg, MS, for $1.98 million.
FINANCING ACTIVITY
On October 1, CBL retired the $113.4 million loan secured by
Mall del Norte in Laredo, TX, adding one of CBL’s most productive
properties to the unencumbered pool.
On October 8, CBL closed a $300 million offering of 4.60% Senior
Notes Due 2024 under its existing shelf registration statement. The
notes mature on October 15, 2024. Net proceeds from the offering
were approximately $297.7 million, after deducting the underwriting
discount and other offering expenses payable by the Operating
Partnership, and were used to reduce amounts outstanding under its
unsecured revolving credit facilities and for general business
purposes.
BofA Merrill Lynch, J.P. Morgan, RBC Capital Markets, US Bancorp
and Wells Fargo Securities served as Joint Book-Running
Managers.
During the quarter, the deed for Chapel Hill Mall in Akron, OH,
was accepted by the lender in lieu of a foreclosure. As a result,
CBL recorded a gain on extinguishment of $18.3 million and non-cash
default interest of $1.5 million during the third quarter.
OUTLOOK AND GUIDANCE
Based on its current outlook, the Company is increasing 2014
Adjusted FFO guidance to the range of $2.24 - $2.28 per diluted
share. CBL’s guidance also assumes an increased same-center NOI
growth range of 1.25-2.25% in 2014.
The guidance also assumes the following:
- $2-3 million increase in annual
interest expense (net of non-cash default interest)
- $2.0 million to $4.0 million of
outparcel sales
- 0-25 basis point increase in total
portfolio occupancy as well as stabilized mall occupancy at
year-end
- No additional unannounced acquisition
or disposition activity
- No unannounced capital markets activity
- equity or debt
Low
High Expected diluted earnings per common share $
0.99 $ 1.03 Adjust to fully converted shares from common shares
(0.14 ) (0.15 ) Expected earnings per diluted, fully converted
common share 0.85 0.88 Depreciation and amortization 1.64 1.64
Noncontrolling interest in earnings of Operating Partnership 0.14
0.15 Impairment of real estate 0.09 0.09 Expected FFO
per diluted, fully converted common share $ 2.72 $ 2.76 Net gain on
debt extinguishment and litigation settlement (1) (0.48 ) (0.48 )
Expected adjusted FFO per diluted, fully converted common share $
2.24 $ 2.28 (1) CBL anticipates receiving a
$6.2 million partial insurance settlement in the fourth quarter
2014. This settlement is excluded from adjusted FFO.
INVESTOR CONFERENCE CALL AND WEBCAST
CBL & Associates Properties, Inc. will conduct a conference
call at 11:00 a.m. ET on Thursday, October 30, 2014, to discuss its
third quarter results. The number to call for this interactive
teleconference is (800) 736-4594 or (212) 231-2902. A replay of the
conference call will be available through November 6, 2014, by
dialing (800) 633-8284 or (402) 977-9140 and entering the
confirmation number, 21706210. A transcript of the Company’s
prepared remarks will be furnished on a Form 8-K following the
conference call.
To receive the CBL & Associates Properties, Inc., third
quarter earnings release and supplemental information please visit
our website at cblproperties.com or contact Investor Relations at
423-490-8312.
The Company will also provide an online webcast and rebroadcast
of its 2014 third quarter earnings release conference call. The
live broadcast of the quarterly conference call will be available
online at cblproperties.com on Thursday, October 30, 2014 beginning
at 11:00 a.m. ET. The online replay will follow shortly after the
call and continue for one year.
ABOUT CBL & ASSOCIATES PROPERTIES, INC.
CBL is one of the largest and most active owners and developers
of malls and shopping centers in the United States. CBL owns, holds
interests in or manages 148 properties, including 89 regional
malls/open-air centers. The properties are located in 30 states and
total 84.2 million square feet including 6.5 million square feet of
non-owned shopping centers managed for third parties. Headquartered
in Chattanooga, TN, CBL has regional offices in Boston (Waltham),
MA, Dallas (Irving), TX, and St. Louis, MO. Additional information
can be found at cblproperties.com.
NON-GAAP FINANCIAL MEASURES
Funds From Operations
FFO is a widely used measure of the operating performance of
real estate companies that supplements net income (loss) determined
in accordance with GAAP. The National Association of Real Estate
Investment Trusts (“NAREIT”) defines FFO as net income (loss)
(computed in accordance with GAAP) excluding gains or losses on
sales of depreciable operating properties and impairment losses of
depreciable properties, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint
ventures and noncontrolling interests. Adjustments for
unconsolidated partnerships and joint ventures and noncontrolling
interests are calculated on the same basis. We define FFO allocable
to common shareholders as defined above by NAREIT less dividends on
preferred stock. The Company’s method of calculating FFO allocable
to its common shareholders may be different from methods used by
other REITs and, accordingly, may not be comparable to such other
REITs.
The Company believes that FFO provides an additional indicator
of the operating performance of its properties without giving
effect to real estate depreciation and amortization, which assumes
the value of real estate assets declines predictably over time.
Since values of well-maintained real estate assets have
historically risen with market conditions, the Company believes
that FFO enhances investors’ understanding of its operating
performance. The use of FFO as an indicator of financial
performance is influenced not only by the operations of the
Company’s properties and interest rates, but also by its capital
structure. The Company presents both FFO of its operating
partnership and FFO allocable to its common shareholders, as it
believes that both are useful performance measures. The Company
believes FFO of its operating partnership is a useful performance
measure since it conducts substantially all of its business through
its operating partnership and, therefore, it reflects the
performance of the properties in absolute terms regardless of the
ratio of ownership interests of the Company’s common shareholders
and the noncontrolling interest in the operating partnership. The
Company believes FFO allocable to its common shareholders is a
useful performance measure because it is the performance measure
that is most directly comparable to net income (loss) attributable
to its common shareholders.
In the reconciliation of net income attributable to the
Company’s common shareholders to FFO allocable to its common
shareholders, located in this earnings release, the Company makes
an adjustment to add back noncontrolling interest in income (loss)
of its operating partnership in order to arrive at FFO of its
operating partnership. The Company then applies a percentage to FFO
of its operating partnership to arrive at FFO allocable to its
common shareholders. The percentage is computed by taking the
weighted average number of common shares outstanding for the period
and dividing it by the sum of the weighted average number of common
shares and the weighted average number of operating partnership
units outstanding during the period.
FFO does not represent cash flows from operations as defined by
accounting principles generally accepted in the United States, is
not necessarily indicative of cash available to fund all cash flow
needs and should not be considered as an alternative to net income
(loss) for purposes of evaluating the Company’s operating
performance or to cash flow as a measure of liquidity.
As described above, during third quarter 2014, the Company
recognized an $18.3 million gain on the extinguishment of debt and
$1.5 million of non-cash default interest expense in connection
with the conveyance of Chapel Hill Mall to the lender. During first
quarter 2014, the Company recognized a $42.7 million net gain on
the extinguishment of debt in connection with the foreclosure of
the mortgage loan encumbering Citadel Mall and the early retirement
of the mortgage loan encumbering St. Clair Square. Additionally,
the Company received income of $0.8 million as a partial settlement
of ongoing litigation. During the three and nine month periods
ended September 30, 2013, the Company recorded $2.4 million of
gains on investment, $9.1 million of loss on extinguishment of debt
and a partial legal settlement of $8.2 million. Considering the
significance and nature of these items, the Company believes it is
important to identify their impact on 2014 FFO measures for readers
to have a complete understanding on the Company’s results of
operations. Therefore, the Company has also presented adjusted FFO
measures for 2014, excluding these items.
Same-Center Net Operating Income
NOI is a supplemental measure of the operating performance of
the Company’s shopping centers and other properties. The Company
defines NOI as property operating revenues (rental revenues, tenant
reimbursements and other income) less property operating expenses
(property operating, real estate taxes and maintenance and
repairs).
Similar to FFO, the Company computes NOI based on its pro rata
share of both consolidated and unconsolidated properties. The
Company’s definition of NOI may be different than that used by
other companies and, accordingly, the Company’s NOI may not be
comparable to that of other companies.
As described above, during the three months ended September 30,
2014, the Company recognized a $16.8 million gain on the
extinguishment of debt net of default interest upon the transfer of
the deed for Chapel Hill Mall to the lender in lieu of foreclosure.
During first quarter 2014, the Company recognized a $42.7 million
net gain on the extinguishment of debt in connection with the
foreclosure of the mortgage loan encumbering Citadel Mall and the
early retirement of the mortgage loan encumbering St. Clair Square
and received $0.8 million as a partial settlement of ongoing
litigation. During the three and nine month periods ended September
30, 2013, the Company recorded $2.4 million of gain on investment,
$9.1 million of loss on extinguishment of debt and a partial legal
settlement of $8.2 million. Considering the significance and nature
of these items, the Company believes it is important to identify
their impact on 2014 FFO measures for readers to have a complete
understanding on the Company’s results of operations. Therefore,
the Company has also presented adjusted FFO measures for 2014,
excluding these items.
Pro Rata Share of Debt
The Company presents debt based on its pro rata ownership share
(including the Company’s pro rata share of unconsolidated
affiliates and excluding noncontrolling interests’ share of
consolidated properties) because it believes this provides
investors a clearer understanding of the Company’s total debt
obligations which affect the Company’s liquidity. A reconciliation
of the Company’s pro rata share of debt to the amount of debt on
the Company’s consolidated balance sheet is located at the end of
this earnings release.
Information included herein contains “forward looking
statements” within the meaning of the federal securities laws. Such
statements are inherently subject to risks and uncertainties, many
of which cannot be predicted with accuracy and some of which might
not even be anticipated. Future events and actual events, financial
and otherwise, may differ materially from the events and results
discussed in the forward-looking statements. The reader is directed
to the Company’s various filings with the Securities and Exchange
Commission, including without limitation the Company’s Annual
Report on Form 10-K, and the “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” included therein,
for a discussion of such risks and uncertainties.
CBL & Associates Properties, Inc. Consolidated
Statements of Operations (Unaudited; in thousands, except per
share amounts)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014 2013 2014
2013 REVENUES: Minimum rents
$ 169,097
$ 167,703
$ 506,005 $ 498,632 Percentage rents
3,060 2,797
8,490 9,847 Other rents
3,813
3,837
13,708 13,503 Tenant reimbursements
71,330
70,576
214,322 213,524 Management, development and leasing
fees
3,228 3,118
9,176 9,042 Other
8,186
9,518
25,189 27,067 Total
revenues
258,714 257,549
776,890
771,615
OPERATING EXPENSES: Property operating
36,668 38,375
112,206 111,170 Depreciation and
amortization
72,488 68,941
212,180 206,115 Real
estate taxes
22,202 22,607
65,638 66,411 Maintenance
and repairs
12,603 13,387
41,391 40,808 General and
administrative
9,474 10,160
35,583 36,459 Loss on
impairment
497 —
17,753 21,038 Other
7,396
6,371
21,331 21,217 Total
operating expenses
161,328 159,841
506,082 503,218
Income from operations
97,386 97,708
270,808 268,397 Interest and other
income
463 8,809
3,535 10,197 Interest expense
(60,214 ) (56,341 )
(179,997 ) (173,374
) Gain (loss) on extinguishment of debt
18,282 —
60,942 (9,108 ) Gain on sales of real estate assets
434 58
3,513 1,058 Gain on investment
— —
— 2,400 Equity in earnings of unconsolidated affiliates
3,936 2,270
11,038 7,618 Income tax provision
(3,083 ) (271 )
(4,266 ) (854 )
Income from continuing operations 57,204 52,233
165,573 106,334 Operating income (loss) of discontinued
operations
78 (8,346 )
(480 ) (5,195 ) Gain on
discontinued operations
(2 ) 290
88
1,162
Net income 57,280 44,177
165,181 102,301 Net income attributable to noncontrolling
interests in: Operating Partnership
(6,576 ) (4,075 )
(18,847 ) (7,602 ) Other consolidated subsidiaries
(1,362 ) (5,778 )
(3,740 ) (18,338 )
Net income attributable to the Company 49,342 34,324
142,594 76,361 Preferred dividends
(11,223 )
(11,223 )
(33,669 ) (33,669 )
Net income
attributable to common shareholders $ 38,119
$ 23,101
$ 108,925 $ 42,692
Basic and diluted per share data attributable to
common shareholders: Income from continuing operations, net of
preferred dividends
$ 0.22 $ 0.18
$
0.64 $ 0.28 Discontinued operations
0.00 (0.04
)
0.00 (0.02 ) Net income attributable to common
shareholders
$ 0.22 $ 0.14
$
0.64 $ 0.26 Weighted-average common and
potential dilutive common shares outstanding
170,262 169,906
170,242 166,048
Amounts attributable to common
shareholders: Income from continuing operations, net of
preferred dividends
$ 38,054 $ 29,965
$
109,259 $ 46,116 Discontinued operations
65
(6,864 )
(334 ) (3,424 ) Net income attributable to
common shareholders
$ 38,119 $ 23,101
$ 108,925 $ 42,692
The Company’s calculation of FFO
allocable to Company shareholders is as follows:(in thousands,
except per share data)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014 2013 2014
2013 Net income attributable to common shareholders
$
38,119 $ 23,101
$ 108,925 $ 42,692
Noncontrolling interest in income of Operating Partnership
6,576 4,075
18,847 7,602 Depreciation and
amortization expense of: Consolidated properties
72,488
68,941
212,180 206,115 Unconsolidated affiliates
10,537 9,877
30,654 29,748 Discontinued operations
— 1,634
— 6,638 Non-real estate assets
(628
) (572 )
(1,825 ) (1,530 )
Noncontrolling interests’ share of
depreciation and amortization
(1,729 ) (1,403 )
(4,831 ) (4,292 )
Loss on impairment, net of tax benefit
497 5,234
18,434 26,051 Gain on depreciable property
(3
) (8 )
(937 ) (10 ) Gain on discontinued
operations, net of taxes
1 (174 )
(86 )
(714 )
Funds from operations of the Operating Partnership
125,858 110,705
381,361 312,300 Litigation settlement
— (8,240 )
(800 ) (8,240 ) Gain on investment
— —
— (2,400 ) Non cash default interest expense
1,514 —
1,514 — (Gain) loss on extinguishment of debt
(18,282 ) —
(60,942 ) 9,108
Funds from operations of the Operating Partnership, as
adjusted $ 109,090 $ 102,465
$ 321,133 $ 310,768
Funds
from operations per diluted share $ 0.63 $
0.56
$ 1.91 $ 1.60
Funds from operations, as adjusted, per diluted share
$ 0.55 $ 0.52
$ 1.61
$ 1.60
Weighted average common and potential
dilutive common shares outstanding with Operating Partnership units
fully converted
199,631 199,451
199,699 195,594
Reconciliation of FFO of the Operating
Partnership to FFO allocable to common shareholders:
Funds from operations of the Operating Partnership $
125,858 $ 110,705
$ 381,361 $ 312,300
Percentage allocable to common shareholders (1)
85.29
% 85.19 %
85.25 % 84.89 %
Funds from
operations allocable to common shareholders $
107,344 $ 94,310
$ 325,110
$ 265,111
Funds from operations of the
Operating Partnership, as adjusted $ 109,090 $
102,465
$ 321,133 $ 310,768 Percentage allocable to
common shareholders (1)
85.29 % 85.19 %
85.25
% 84.89 %
Funds from operations allocable to common
shareholders, as adjusted $ 93,043 $
87,290
$ 273,766 $ 263,811
(1) Represents the weighted average number of common shares
outstanding for the period divided by the sum of the weighted
average number of common shares and the weighted average number of
Operating Partnership units outstanding during the period. See the
reconciliation of shares and Operating Partnership units
outstanding on page 12.
SUPPLEMENTAL FFO INFORMATION: Lease termination fees
$ 1,044 $ 887
$ 2,395 $ 3,425 Lease
termination fees per share
$ 0.01 $ —
$
0.01 $ 0.02 Straight-line rental income
$
1,201 $ (2,755 )
$ 2,484 $ 81 Straight-line
rental income per share
$ 0.01 $ (0.01 )
$
0.01 $ — Gains on outparcel sales
$ 316
$ 35
$ 2,461 $ 1,035 Gains on outparcel sales per
share
$ — $ —
$ 0.01 $ 0.01 Net
amortization of acquired above- and below-market leases
$
139 $ 642
$ 544 $ 1,271 Net amortization of
acquired above- and below-market leases per share
$ —
$ —
$ — $ 0.01 Net amortization of debt
premiums and discounts
$ 545 $ 639
$
1,625 $ 1,715 Net amortization of debt premiums and
discounts per share
$ — $ —
$ 0.01 $
0.01 Income tax provision
$ (3,083 ) $
(271 )
$ (4,266 ) $ (854 ) Income tax
provision per share
$ (0.02 ) $ —
$
(0.02 ) $ — Loss on impairment from continuing
operations
$ (497 ) $ —
$
(17,753 ) $ (21,038 ) Loss on impairment from
continuing operations per share
$ — $ —
$
(0.09 ) $ (0.11 ) Loss on impairment from
discontinued operations
$ — $ (5,234 )
$
(681 ) $ (5,234 ) Loss on impairment from
discontinued operations per share
$ — $ (0.03 )
$ — $ (0.03 ) Gain (loss) on extinguishment of
debt
$ 18,282 $ —
$ 60,942 $ (9,108 )
Gain (loss) on extinguishment of debt per share
$
0.09 $ —
$ 0.31 $ (0.05 ) Gain on
investment
$ — $ —
$ — $ 2,400 Gain on
investment per share
$ — $ —
$ — $ 0.01
Interest capitalized
$ 1,672 $ 1,277
$
4,538 $ 3,206 Interest capitalized per share
$
0.01 $ 0.01
$ 0.02 $ 0.02 Litigation
settlement
$ — $ 8,240
$ 800 $ 8,240
Litigation settlement per share
$ — $ 0.04
$
— $ 0.04
As of September 30,
2014
2013
Straight-line rent receivable
$
64,123
$
61,640
Same-Center Net Operating
Income(Dollars in thousands)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014 2013 2014
2013 Net income attributable to the Company
$
49,342 $ 34,324
$ 142,594 $ 76,361
Adjustments: Depreciation and amortization
72,488 68,941
212,180 206,115 Depreciation and amortization from
unconsolidated affiliates
10,537 9,877
30,654 29,748
Depreciation and amortization from discontinued operations
—
1,634
— 6,638
Noncontrolling interests’ share of
depreciation and amortization in other consolidated
subsidiaries
(1,729 ) (1,403 )
(4,831 ) (4,292 )
Interest expense
60,214 56,341
179,997 173,374
Interest expense from unconsolidated affiliates
9,719 9,840
28,872 29,677 Interest expense from discontinued operations
— —
— 1
Noncontrolling interests’ share of
interest expense in other consolidated subsidiaries
(1,375 ) (1,076 )
(3,993 ) (3,029 )
Abandoned projects expense
47 140
81 141 Gain on
sales of real estate assets
(434 ) (58 )
(3,513 ) (1,058 ) Gain on sales of real estate assets
of unconsolidated affiliates
(698 ) (11 )
(698
) (11 ) Gain on investment
— —
— (2,400 )
(Gain) loss on extinguishment of debt
(18,282 ) —
(60,942 ) 9,108 Loss on impairment
497 —
17,753 21,038 Loss on impairment from discontinued
operations
— 5,234
681 5,234 Income tax provision
3,083 271
4,266 854 Lease termination fees
(1,044 ) (887 )
(2,395 ) (3,425 )
Straight-line rent and above- and below-market lease amortization
(1,340 ) 2,113
(3,028 ) (1,352 )
Net income attributable to noncontrolling
interest in earnings of Operating Partnership
6,576 4,075
18,847 7,602 Gain on discontinued
operations
2 (290 )
(88 ) (1,162 ) General and
administrative expenses
9,474 10,160
35,583 36,459
Management fees and non-property level revenues
(4,284
) (10,270 )
(18,736 ) (14,027 )
Company’s share of property NOI
192,793 188,955
573,284 571,594 Non-comparable NOI
(17,570 ) (18,838 )
(49,942 ) (59,415 )
Total same-center NOI (1)
$ 175,223 $ 170,117
$ 523,342 $ 512,179 Total
same-center NOI percentage change
3.0 % 2.2
% Malls
$ 160,369 $ 155,211
$
479,020 $ 468,787 Associated centers
7,988 7,576
23,742 23,232 Community centers
4,928 5,539
14,585 14,615 Offices and other
1,938 1,791
5,995 5,545 Total same-center NOI (1)
$ 175,223 $ 170,117
$
523,342 $ 512,179
Percentage
Change: Malls
3.3 % 2.2 %
Associated centers
5.4 % 2.2 %
Community centers
(11.0 )% (0.2 )%
Offices and other
8.2 % 8.1 % Total
same-center NOI (1) 3.0 % 2.2
%
(1) CBL defines NOI as property operating
revenues (rental revenues, tenant reimbursements and other income),
less property operating expenses (property operating, real estate
taxes and maintenance and repairs). Same-center NOI excludes lease
termination income, straight-line rent adjustments, and
amortization of above and below market lease intangibles.
Same-center NOI is for real estate properties and does not include
the results of operations of the Company’s subsidiary that provides
janitorial, security and maintenance services. We include a
property in our same-center pool when we own all or a portion of
the property as of September 30, 2014, and we owned it and it was
in operation for both the entire preceding calendar year and the
current year-to-date reporting period ending September 30, 2014.
New properties are excluded from same-center NOI, until they meet
this criteria. The only properties excluded from the same-center
pool that would otherwise meet this criteria are non-core
properties, properties under major redevelopment, properties where
we intend to renegotiate the terms of the debt secured by the
related property and properties included in discontinued
operations.
Company’s Share of Consolidated and
Unconsolidated Debt(Dollars in thousands)
As of September 30, 2014 Fixed
Rate Variable Rate
Total Consolidated debt
$ 3,788,890 $
922,531 $ 4,711,421
Noncontrolling interests’ share of
consolidated debt
(89,065 ) (7,109 ) (96,174
)
Company’s share of unconsolidated
affiliates’ debt
673,412 89,220 762,632
Company’s share of consolidated and
unconsolidated debt
$ 4,373,237 $ 1,004,642
$ 5,377,879 Weighted average interest rate
5.44 % 1.74 % 4.74 %
As of September 30, 2013 Fixed Rate
Variable Rate Total Consolidated debt $ 3,517,089 $
1,350,628 $ 4,867,717
Noncontrolling interests’ share of
consolidated debt
(67,828 ) (5,684 ) (73,512 )
Company’s share of unconsolidated
affiliates’ debt
655,340 138,042 793,382
Company’s share of consolidated and
unconsolidated debt
$ 4,104,601 $ 1,482,986 $ 5,587,587 Weighted
average interest rate 5.52 % 2.01 % 4.59 %
Debt-To-Total-Market Capitalization
Ratio as of September 30, 2014(In thousands, except stock
price)
SharesOutstanding
StockPrice (1)
Value Common stock and operating partnership
units 199,544 $ 17.90 $ 3,571,838 7.375% Series D Cumulative
Redeemable Preferred Stock 1,815 250.00 453,750 6.625% Series E
Cumulative Redeemable Preferred Stock 690 250.00 172,500
Total market equity 4,198,088
Company’s share of total debt
5,377,879 Total market capitalization $ 9,575,967
Debt-to-total-market capitalization ratio 56.2 %
(1) Stock price for common stock and
operating partnership units equals the closing price of the common
stock on September 30, 2014. The stock prices for the preferred
stocks represent the liquidation preference of each respective
series.
Reconciliation of Shares and Operating
Partnership Units Outstanding(In thousands)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014: Basic Diluted Basic
Diluted Weighted average shares - EPS
170,262 170,262 170,242 170,242
Weighted average Operating Partnership units
29,369
29,369 29,457 29,457 Weighted
average shares- FFO
199,631 199,631
199,699 199,699 2013: Weighted
average shares - EPS 169,906 169,906 166,048 166,048 Weighted
average Operating Partnership units 29,545 29,545
29,546 29,546 Weighted average shares- FFO 199,451
199,451 195,594 195,594
Dividend Payout Ratio
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2014 2013 2014
2013 Weighted average cash dividend per share
$
0.25313 $ 0.23838
$ 0.75938 $ 0.71540 FFO as
adjusted, per diluted fully converted share
$ 0.55
$ 0.52
$ 1.61 $ 1.60
Dividend payout ratio
46.0 % 45.8 %
47.2
% 44.7 %
Consolidated Balance
Sheets(Unaudited; in thousands, except share data)
As of
September 30, 2014
December 31, 2013 ASSETS Real estate
assets: Land
$ 848,596 $ 858,619 Buildings and
improvements
7,138,545 7,125,512
7,987,141 7,984,131 Accumulated depreciation
(2,183,912 ) (2,056,357 )
5,803,229 5,927,774
Developments in progress
151,670 139,383 Net
investment in real estate assets
5,954,899 6,067,157 Cash
and cash equivalents
45,071 65,500 Receivables:
Tenant, net of allowance for doubtful
accounts of $2,412 and $2,379 in 2014 and 2013, respectively
79,960 79,899
Other, net of allowance for doubtful
accounts of $1,158 and $1,241 in 2014 and 2013, respectively
24,412 23,343 Mortgage and other notes receivable
19,513 30,424 Investments in unconsolidated affiliates
269,964 277,146 Intangible lease assets and other assets
238,892 242,502
$ 6,632,711
$ 6,785,971
LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS AND EQUITY Mortgage and other
indebtedness
$ 4,711,421 $ 4,857,523 Accounts payable
and accrued liabilities
347,382 333,875 Total
liabilities
5,058,803 5,191,398 Commitments
and contingencies Redeemable noncontrolling partnership interests
34,843 34,639
Shareholders’ equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable
Preferred Stock, 1,815,000 shares outstanding
18 18
6.625% Series E Cumulative Redeemable
Preferred Stock, 690,000 shares outstanding
7 7
Common stock, $.01 par value, 350,000,000
shares authorized, 170,260,669 and 170,048,144 issued and
outstanding in 2014 and 2013, respectively
1,703 1,700 Additional paid-in capital
1,962,187
1,967,644 Accumulated other comprehensive income
12,805
6,325 Dividends in excess of cumulative earnings
(587,000
) (570,781 )
Total shareholders’ equity
1,389,720 1,404,913 Noncontrolling interests
149,345
155,021 Total equity
1,539,065
1,559,934
$ 6,632,711 $ 6,785,971
CBL & Associates Properties, Inc.Katie Reinsmidt,
423-490-8301Senior Vice President - Investor Relations/Corporate
Investmentskatie_reinsmidt@cblproperties.com
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