Results in-line; Full-Year Guidance Range
Maintained
CBL Properties (NYSE:CBL) announced results for the second
quarter ended June 30, 2018. A description of each
supplemental non-GAAP financial measure and the related
reconciliation to the comparable GAAP financial measure is located
at the end of this news release.
Three Months EndedJune 30, Six Months
EndedJune 30, 2018 2017
% 2018 2017 % Net income (loss)
attributable to common shareholders per diluted share
$
(0.20 ) $ 0.18 (211.1 )%
$
(0.26 ) $ 0.31 (183.9 )% Funds
from Operations ("FFO") per diluted share
$ 0.46
$ 0.58 (20.7 )%
$ 0.88 $ 1.12
(21.4 )% FFO, as adjusted, per diluted share (1)
$
0.46 $ 0.50 (8.0 )%
$ 0.88
$ 1.02 (13.7 )% (1) For a reconciliation of FFO to
FFO, as adjusted, for the periods presented, please refer to the
footnotes to the Company's reconciliation of net income (loss)
attributable to common shareholders to FFO allocable to Operating
Partnership common unitholders on page 10 of this news release.
KEY TAKEAWAYS:
- FFO per diluted share, as adjusted, was
$0.46 for the second quarter 2018, compared with $0.50 per share
for the second quarter 2017. Second quarter 2018 FFO per share was
impacted by approximately $0.01 per share of dilution from asset
sales completed in 2017 and year-to-date, $0.07 per share of lower
property NOI, $0.02 per share higher corporate interest expense,
$0.03 per share lower property level interest expense, $0.01 lower
G&A expense and $0.02 per share lower abandoned project
expense.
- Total Portfolio Same-center NOI
declined 6.9% for the second quarter 2018 and 6.8% for the
six-months ended June 30, 2018.
- Portfolio occupancy was 91.1% as of
June 30, 2018, compared with 91.6% as of June 30, 2017.
Same-center mall occupancy was 89.5% as of June 30, 2018
compared with 90.4% as of June 30, 2017.
- Year-to-date, CBL has completed gross
asset sales of $38.3 million including the sale of a Tier 3 mall
for a gross sales price of $18.0 million in July.
- Same-center sales per square foot for
the stabilized mall portfolio for the twelve-months ended
June 30, 2018, were $376 per square foot compared with $375
per square foot for the prior-year period.
- Redevelopment activity is underway at
eight properties with two redevelopment projects opened during the
quarter and two new projects added to the pipeline.
"Our results for this quarter were in-line with our guidance and
we are making solid progress on our strategic initiatives,"
commented Stephen Lebovitz, chief executive officer. "We are
diversifying our tenant mix with more than 60% of new leases
executed year-to-date representing non-apparel uses. In addition,
we are replacing former anchors with dynamic, new uses, which will
generate higher levels of traffic and sales. Just last week, we
signed a new lease for a 100,000-square-foot casino, entertainment
and dining complex to replace a former Bon-Ton location at
Westmoreland Mall in Greensburg, PA. We also started construction
on the addition of Cheesecake Factory to Hamilton Place in
Chattanooga as the first step of the redevelopment of the Sears
store there. These additions demonstrate the tremendous opportunity
to create value throughout the CBL portfolio.
"Strengthening our balance sheet is another strategic priority.
We closed last week on the sale of Janesville Mall, a Tier 3 mall
with sales of $243 per square foot. Year-to-date, we have generated
more than $38 million from this and other dispositions. These funds
supplement our significant cash flow, which we utilize to fund
portfolio improvements and debt reduction. We closed during the
quarter on a 10-year, fixed-rate $155 million non-recourse loan
secured by CoolSprings Galleria at very favorable terms and
completed the extension of two additional secured loans for new
five-year terms. We also repaid $190 million of our $490 million
unsecured term loan in July. We are having constructive discussions
with our bank group to complete a recast of our $350 million
unsecured term loan (due Oct. 2019) and lines of credit (due Oct.
2020) prior to year-end. Completing the recast well ahead of
maturity will provide further financial flexibility to execute on
the redevelopments and other growth initiatives across our
portfolio."
Net loss attributable to common shareholders for the second
quarter 2018 was $35.0 million, or a loss of $0.20 per diluted
share, compared with net income of $30.2 million, or $0.18 per
diluted share, for the second quarter 2017. Net loss attributable
to common shareholders for the second quarter 2018 included a $52.0
million loss on impairment of Cary Towne Center, primarily related
to the accelerated maturity of the non-recourse loan secured by the
property.
FFO allocable to common shareholders, as adjusted, for the
second quarter 2018 was $80.2 million, or $0.46 per diluted share,
compared with $85.6 million, or $0.50 per diluted share, for the
second quarter 2017. FFO allocable to the Operating Partnership
common unitholders, as adjusted, for the second quarter 2018 was
$92.8 million compared with $99.7 million for the second quarter
2017.
Percentage change in same-center Net
Operating Income ("NOI") (1):
Three Months EndedJune 30, 2018 Six Months Ended
June 30, 2018 Portfolio same-center NOI
(6.9)%
(6.8)% Mall same-center NOI
(6.9)% (7.0)%
(1) CBL's definition of
same-center NOI excludes the impact of lease termination fees and
certain non-cash items of straight-line rents, write-offs of
landlord inducements and net amortization of acquired above and
below market leases.
Major variances impacting same-center NOI for the quarter ended
June 30, 2018, include:
- Same-center NOI declined $11.5 million,
due to an $8.3 million decrease in revenue and a $3.1 million
increase in operating expenses.
- Minimum rents and tenant reimbursements
declined $8.7 million during the quarter, primarily related to
store closures and rent concessions for tenants in bankruptcy.
- Percentage rents increased $0.5 million
compared with the prior year quarter due to portfolio sales
growth.
- Property operating expenses increased
$0.8 million, including a $0.5 million increase in bad debt
expense. Maintenance and repair expense increased $1.1 million,
including a $0.5 million increase in snow removal, and real estate
tax expenses increased $1.2 million. The variance in real estate
tax expense was primarily due to a favorable tax assessment that
was received in the prior-year period.
PORTFOLIO OPERATIONAL RESULTS
Occupancy
(1):
As of June 30, 2018 2017 Portfolio
occupancy
91.1% 91.6% Mall portfolio
89.2% 90.2%
Same-center malls
89.5% 90.4% Stabilized malls
89.5%
90.5% Non-stabilized malls (2)
71.9% 81.8% Associated
centers
97.9% 95.5% Community centers
96.9% 97.0%
(1) Occupancy for malls
represents percentage of mall store gross leasable area 20,000
square feet and under occupied. Occupancy for associated
and community centers represents percentage of gross leasable area
occupied.
(2) Represents occupancy for
The Outlet Shoppes at Laredo as of June 30,
2018. Represents occupancy for The Outlet Shoppes of the
Bluegrass and The Outlet Shoppes at Laredo as of June 30,
2017.
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 MonthsEnded June
30, 2018
Six Months EndedJune 30,
2018
Stabilized Malls (8.2 )% (10.6 )% New leases (1.4 )% (0.5 )%
Renewal leases (9.9 )% (12.6 )%
Same-Center Sales Per Square Foot for
Mall Tenants 10,000 Square Feet or Less:
Twelve Months Ended June 30, 2018
2017 % Change Stabilized mall same-center
sales per square foot
$ 376 $ 375 0.3% Stabilized
mall sales per square foot
$ 376 $ 373 0.8%
DISPOSITIONS
Year-to-date CBL has raised $38.3 million in gross proceeds
through asset sales, which includes $8.0 million of aggregate gross
proceeds from the sale of various outparcel locations during the
second quarter and the July sale of Janesville Mall in Janesville,
WI, for $18.0 million to RockStep Capital.
FINANCING ACTIVITY
In April, CBL, along with its 50% joint venture partner, closed
on a $155.0 million ($77.5 million at CBL’s share) non-recourse
loan secured by CoolSprings Galleria in Nashville, TN. The 10-year
loan bears interest at a fixed rate of 4.839%.
Proceeds from the loan were used to retire the existing $97.7
million loan, which bore interest at a fixed rate of 6.98% and was
scheduled to mature in June. CBL’s share of nearly $29.0 million in
excess proceeds was utilized to reduce outstanding balances on its
unsecured lines of credit.
In May, CBL completed the extension of the $56.7 million ($28.4
million at CBL’s share) loan secured by The Pavilion at Port Orange
in Port Orange, FL, and the $58.2 million ($29.1 million at CBL’s
share) loan secured by Hammock Landing in West Melbourne, FL. Both
loans were originally scheduled to mature in February 2019. The
loans were extended for an initial term of three years, with two
one-year extensions available at the Company’s option, for a final
maturity in February 2023. The new loans bear interest at 225 basis
points over LIBOR, an increase of 25 bps over the prior rate.
In July, CBL repaid $190.0 million of its $490.0 million
unsecured term loan using availability on its line of credit.
DEVELOPMENT
Major redevelopments completed and underway in 2018 include
(complete project list can be found in the financial
supplement):
Prior Tenant New
Tenant(s) Brookfield Square Sears Marcus Theaters, Whirlyball
Eastland Mall JCPenney H&M, Outback, Planet Fitness Frontier
Mall Sports Authority Planet Fitness Jefferson Mall Macy's Round 1
York Galleria JCPenney Marshalls Hanes Mall Shops Dave &
Busters
OUTLOOK AND GUIDANCE
CBL is maintaining 2018 FFO, as adjusted, guidance in the range
of $1.70 - $1.80 per diluted share. Guidance incorporates a
full-year budgeted impact of loss in rent related to 2017 tenant
bankruptcies, store closures and rent adjustments net of expected
new leasing as well as a reserve in the range of $10.0 - $20.0
million (the "Reserve") for potential future unbudgeted loss in
rent from tenant bankruptcies, store closures or lease
modifications that may occur in 2018. Based on bankruptcy and
leasing activity year-to-date, including the impact of any
co-tenancy, CBL currently expects to utilize approximately
$13 - $15 million of the Reserve. Detail of assumptions
underlying guidance follows:
Low High 2018 FFO, as adjusted,
per share (Includes the Reserve) $1.70 $1.80 2018 Change in
Same-Center NOI ("SC NOI") (Includes the Reserve) (6.75)% (5.25)%
Reserve for unbudgeted lost rents included in SC NOI and FFO $20.0
million $10.0 million Gain on outparcel sales $7.0 million $10.0
million Estimated 2018 Dividend Per Common Share (1) $0.80 $0.80
(1) Subject to Board approval
Reconciliation of GAAP net income to 2018
FFO, as adjusted, per share guidance:
Low High Expected diluted earnings per common
share $ (0.25 ) $ (0.15 ) Adjust to fully converted shares from
common shares 0.03 0.02 Expected earnings per
diluted, fully converted common share (0.22 ) (0.13 ) Add:
depreciation and amortization 1.60 1.60 Less: gain on depreciable
property (0.01 ) (0.01 ) Add: loss on impairment 0.35 0.35 Add:
noncontrolling interest in loss of Operating Partnership (0.03 )
(0.02 ) Expected FFO, as adjusted, per diluted, fully converted
common share $ 1.69 $ 1.79 Adjustment for certain significant items
0.01 0.01 Expected adjusted FFO per diluted, fully
converted common share $ 1.70 $ 1.80
INVESTOR CONFERENCE CALL AND WEBCAST
CBL Properties will host a conference call on Thursday, August
2, 2018, at 11:00 a.m. ET. To access this interactive
teleconference, dial (888) 317-6003 or (412) 317-6061 and
enter the confirmation number, 5568536. A replay of the conference
call will be available through August 9, 2018, by dialing
(877) 344-7529 or (412) 317-0088 and entering the
confirmation number, 10120294.
The Company will also provide an online webcast and rebroadcast
of its second quarter 2018 earnings release conference call. The
live broadcast of the quarterly conference call will be available
online at cblproperties.com on Thursday, August 2, 2018,
beginning at 11:00 a.m. ET. The online replay will follow shortly
after the call.
To receive the CBL Properties second quarter earnings release
and supplemental information, please visit the Invest section of
our website at cblproperties.com or contact Investor Relations at
(423) 490-8312.
ABOUT CBL PROPERTIES
Headquartered in Chattanooga, TN, CBL Properties owns and
manages a national portfolio of market-dominant properties located
in dynamic and growing communities. CBL’s portfolio is comprised of
117 properties totaling 72.8 million square feet across 26 states,
including 74 high-quality enclosed, outlet and open-air retail
centers and 13 properties managed for third parties. CBL
continuously strengthens its company and portfolio through active
management, aggressive leasing and profitable reinvestment in its
properties. For more information visit cblproperties.com.
NON-GAAP FINANCIAL MEASURES
Funds From Operations
FFO is a widely used non-GAAP 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 as
defined above by NAREIT less dividends on preferred stock of the
Company or distributions on preferred units of the Operating
Partnership, as applicable. The Company’s method of calculating FFO
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 allocable to Operating Partnership
common unitholders and FFO allocable to common shareholders, as it
believes that both are useful performance measures. The Company
believes FFO allocable to Operating Partnership common unitholders
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 (loss) attributable to the
Company's common shareholders to FFO allocable to Operating
Partnership common unitholders, 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 the Operating Partnership common unitholders. The Company
then applies a percentage to FFO of the Operating Partnership
common unitholders 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 held by noncontrolling interests during the period.
FFO does not represent cash flows from operations as defined by
GAAP, 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.
The Company believes that it is important to identify the impact
of certain significant items on its FFO measures for a reader to
have a complete understanding of the Company's results of
operations. Therefore, the Company has also presented adjusted FFO
measures excluding these items from the applicable periods. Please
refer to the reconciliation of net income (loss) attributable to
common shareholders to FFO allocable to Operating Partnership
common unitholders on page 10 of this news release for a
description of these adjustments.
Same-center Net Operating Income
NOI is a supplemental non-GAAP 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).
The Company computes NOI based on the Operating Partnership's
pro rata share of both consolidated and unconsolidated properties.
The Company believes that presenting NOI and same-center NOI
(described below) based on its Operating Partnership’s pro rata
share of both consolidated and unconsolidated properties is useful
since the Company 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's definition of NOI may be different than that used by
other companies and, accordingly, the Company's calculation of NOI
may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to
the operations of the Company's shopping center properties, the
Company believes that same-center NOI provides a measure that
reflects trends in occupancy rates, rental rates, sales at the
malls and operating costs and the impact of those trends on the
Company's results of operations. The Company’s calculation of
same-center NOI excludes lease termination income, straight-line
rent adjustments, amortization of above and below market lease
intangibles and write-off of landlord inducement assets in order to
enhance the comparability of results from one period to another. A
reconciliation of same-center NOI to net income is located at the
end of this earnings release.
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 condensed 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 EndedJune
30, Six Months EndedJune 30, 2018
2017 2018 2017 REVENUES:
Minimum rents
$ 148,488 $ 157,609
$
298,849 $ 317,359 Percentage rents
2,138 1,738
4,181 4,127 Other rents
2,496 3,729
4,551
7,381 Tenant reimbursements
56,614 62,231
117,227
129,522 Management, development and leasing fees
2,643 2,577
5,364 6,029 Other
2,219 1,349
4,626 2,828 Total revenues
214,598
229,233
434,798 467,246
OPERATING EXPENSES: Property operating
29,527 30,041
62,353 64,955 Depreciation and amortization
73,566
82,509
145,316 153,729 Real estate taxes
20,456
18,687
42,304 40,770 Maintenance and repairs
12,059
11,716
25,238 25,068 General and administrative
13,490 15,752
31,794 31,834 Loss on impairment
51,983 43,203
70,044 46,466 Other
245
5,019
339 5,019 Total operating
expenses
201,326 206,927
377,388
367,841
Income from operations 13,272 22,306
57,410 99,405 Interest and other income
218 31
431 1,435 Interest expense
(54,203 ) (55,065 )
(107,970 ) (111,266 ) Gain on extinguishment of debt
— 20,420
— 24,475 Gain (loss) on investments
387 (5,843 )
387 (5,843 ) Income tax benefit
2,235 2,920
2,880 3,720 Equity in earnings of
unconsolidated affiliates
4,368 6,325
8,107 11,698
Income (loss) from continuing
operations before gain on sales of real estate assets
(33,723 ) (8,906 )
(38,755 ) 23,624
Gain on sales of real estate assets
3,747 79,533
8,118 85,521
Net income (loss)
(29,976 ) 70,627
(30,637 ) 109,145 Net
(income) loss attributable to noncontrolling interests in:
Operating Partnership
5,685 (5,093 )
7,350 (8,783 )
Other consolidated subsidiaries
494 (24,138 )
393 (24,851 )
Net income (loss) attributable to
the Company (23,797 ) 41,396
(22,894
) 75,511 Preferred dividends
(11,223 ) (11,223
)
(22,446 ) (22,446 )
Net income (loss)
attributable to common shareholders $ (35,020
) $ 30,173
$ (45,340 ) $ 53,065
Basic and diluted per share data attributable to
common shareholders: Net income (loss) attributable to common
shareholders
$ (0.20 ) $ 0.18
$
(0.26 ) $ 0.31
Weighted-average common and potential
dilutive common shares outstanding
172,662 171,095
172,304 171,042 Dividends
declared per common share
$ 0.200 $ 0.265
$
0.400 $ 0.530
The Company's reconciliation of net
income (loss) attributable to common shareholders to FFO allocable
to Operating Partnership common unitholders is as follows:
(in thousands, except per share data)
Three Months EndedJune 30,
Six Months EndedJune 30, 2018
2017 2018 2017 Net income (loss)
attributable to common shareholders
$ (35,020
) $ 30,173
$ (45,340 ) $ 53,065
Noncontrolling interest in income (loss) of Operating Partnership
(5,685 ) 5,093
(7,350 ) 8,783
Depreciation and amortization expense of: Consolidated properties
73,566 82,509
145,316 153,729 Unconsolidated
affiliates
10,338 9,357
20,739 18,900 Non-real estate
assets
(917 ) (792 )
(1,838 ) (1,656 )
Noncontrolling interests' share of depreciation and amortization
(2,122 ) (2,642 )
(4,288 ) (4,621 )
Loss on impairment, net of taxes
51,983 43,183
70,044
45,250
Gain on depreciable property, net of taxes and
noncontrolling interests' share — (50,797 )
(2,236 ) (50,756 )
FFO allocable to Operating
Partnership common unitholders 92,143 116,084
175,047 222,694 Litigation expenses (1)
— 9
—
52 Nonrecurring professional fees expense (reimbursement) (1)
— 6
— (919 ) (Gain) loss on investments, net of taxes
(2)
(287 ) 5,843
(287 ) 5,843 Non-cash
default interest expense (3)
916 1,187
1,832 2,494
Gain on extinguishment of debt, net of noncontrolling interests'
share (4)
— (23,395 )
— (27,450 )
FFO allocable to Operating Partnership common unitholders, as
adjusted $ 92,772 $ 99,734
$
176,592 $ 202,714
FFO per diluted
share $ 0.46 $ 0.58
$
0.88 $ 1.12
FFO, as adjusted, per
diluted share $ 0.46 $ 0.50
$ 0.88 $ 1.02 Weighted-average
common and potential dilutive common shares outstanding with
Operating Partnership units fully converted
199,767 199,371
199,731 199,326 (1) Litigation expense and
nonrecurring professional fees expense are included in general and
administrative expense in the consolidated statements of
operations. Nonrecurring professional fees reimbursement is
included in interest and other income in the consolidated
statements of operations. (2) The three months and six months ended
June 30, 2018 includes a gain on investment related to the land
contributed by the Company to the Self Storage at Mid Rivers 50/50
joint venture. The three months and six months ended June 30, 2017
includes a loss on investment related to the write down of the
Company's 25% interest in River Ridge Mall based on the contract
price to sell such interest to its joint venture partner. The sale
closed in August 2017. (3) The three months and six months ended
June 30, 2018 includes default interest expense related to Acadiana
Mall. The three months and six months ended June 30, 2017 includes
default interest expense related to Wausau Center and Chesterfield
Mall. The six months ended June 30, 2017 also includes default
interest expense related to Midland Mall. (4) The three months and
six months ended June 30, 2017 primarily represents gain on
extinguishment of debt related to the non-recourse loan secured by
Chesterfield Mall, which was conveyed to the lender in the second
quarter of 2017. The three months and six months ended June 30,
2017 also includes loss on extinguishment of debt related to a
prepayment fee on the early retirement of the loans secured by The
Outlet Shoppes at Oklahoma City, which was sold in April 2017. The
six months ended June 30, 2017 also includes gain on extinguishment
of debt related to the non-recourse loan secured by Midland Mall,
which was conveyed to the lender in the first quarter of 2017.
The reconciliation of diluted EPS to FFO
per diluted share is as follows:
Three Months EndedJune 30, Six Months
EndedJune 30, 2018 2017 2018
2017 Diluted EPS attributable to common
shareholders $ (0.20 ) $ 0.18
$
(0.26 ) $ 0.31 Eliminate amounts per share excluded
from FFO:
Depreciation and amortization expense,
including amounts from consolidated properties, unconsolidated
affiliates, non-real estate assets and excluding amounts allocated
to noncontrolling interests
0.40 0.44
0.80 0.83 Loss on impairment, net of taxes
0.26 0.22
0.35 0.23 Gain on depreciable property, net
of taxes and noncontrolling interests' share
— (0.26
)
(0.01 ) (0.25 )
FFO per diluted share
$ 0.46 $ 0.58
$ 0.88
$ 1.12
The reconciliations of FFO allocable to
Operating Partnership common unitholders to FFO allocable to common
shareholders, including and excluding the adjustments noted above,
are as follows:
Three Months EndedJune 30, Six Months
EndedJune 30, 2018 2017 2018
2017 FFO allocable to Operating Partnership common
unitholders $ 92,143 $ 116,084
$
175,047 $ 222,694 Percentage allocable to common
shareholders (1)
86.43 % 85.82 %
86.27
% 85.81 %
FFO allocable to common shareholders
$ 79,639 $ 99,623
$
151,013 $ 191,094
FFO allocable to
Operating Partnership common unitholders, as adjusted $
92,772 $ 99,734
$ 176,592 $ 202,714 Percentage
allocable to common shareholders (1)
86.43 % 85.82 %
86.27 % 85.81 %
FFO allocable to common
shareholders, as adjusted $ 80,183 $
85,592
$ 152,346 $ 173,949
(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 16.
SUPPLEMENTAL FFO INFORMATION: Three Months
EndedJune 30, Six Months EndedJune 30,
2018 2017
2018 2017 Lease termination fees
$ 2,744 $ 864
$ 9,005 $ 1,111 Lease
termination fees per share
$ 0.01 $ —
$
0.05 $ 0.01 Straight-line rental income (write-offs)
$ (725 ) $ 559
$ (4,358 )
$ 632 Straight-line rental income (write-offs) per share
$
— $ —
$ (0.02 ) $ — Gains on
outparcel sales
$ 4,338 $ 2,094
$ 6,485
$ 8,091 Gains on outparcel sales per share
$ 0.02 $
0.01
$ 0.03 $ 0.04 Net amortization of
acquired above- and below-market leases
$ 1,387 $
1,198
$ 2,192 $ 2,416 Net amortization of acquired
above- and below-market leases per share
$ 0.01 $
0.01
$ 0.01 $ 0.01 Net amortization of debt
premiums and discounts
$ 306 $ (206 )
$
413 $ (403 ) Net amortization of debt premiums and discounts
per share
$ — $ —
$ — $ — Income
tax benefit
$ 2,235 $ 2,920
$ 2,880 $
3,720 Income tax benefit per share
$ 0.01 $ 0.01
$ 0.01 $ 0.02 Gain on extinguishment of debt,
net of noncontrolling interests' share
$ — $ 23,395
$ — $ 27,450 Gain on extinguishment of debt, net of
noncontrolling interests' share per share
$ — $ 0.12
$ — $ 0.14 Gain (loss) on investments, net of
taxes
$ 287 $ (5,843 )
$ 287 $ (5,843 )
Gain (loss) on investments, net of taxes per share
$
— $ (0.03 )
$ — $ (0.03 ) Non-cash
default interest expense
$ (916 ) $ (1,187 )
$ (1,832 ) $ (2,494 ) Non-cash default
interest expense per share
$ — $ (0.01 )
$
(0.01 ) $ (0.01 ) Abandoned projects expense
$ (245 ) $ (5,019 )
$ (339
) $ (5,019 ) Abandoned projects expense per share
$
— $ (0.03 )
$ — $ (0.03 ) Interest
capitalized
$ 951 $ 385
$ 1,538 $ 1,224
Interest capitalized per share
$ — $ —
$
0.01 $ 0.01 Litigation expenses
$ — $
(9 )
$ — $ (52 ) Litigation expenses per share
$ — $ —
$ — $ — Nonrecurring
professional fees (expense) reimbursement
$ — $ (6 )
$ — $ 919 Nonrecurring professional fees (expense)
reimbursement per share
$ — $ —
$ — $ —
As of June 30,
2018
2017 Straight-line rent receivable
$
57,402
$ 62,989
Same-center Net Operating
Income
(Dollars in thousands)
Three Months EndedJune 30,
Six Months EndedJune 30, 2018
2017 2018 2017 Net income (loss)
$ (29,976 ) $ 70,627
$ (30,637
) $ 109,145
Adjustments: Depreciation and
amortization
73,566 82,509
145,316 153,729
Depreciation and amortization from unconsolidated affiliates
10,338 9,357
20,739 18,900 Noncontrolling interests'
share of depreciation and amortization in other consolidated
subsidiaries
(2,122 ) (2,642 )
(4,288 )
(4,621 ) Interest expense
54,203 55,065
107,970
111,266 Interest expense from unconsolidated affiliates
6,344 6,410
12,298 12,571 Noncontrolling interests'
share of interest expense in other consolidated subsidiaries
(2,186 ) (1,870 )
(4,037 ) (3,576 )
Abandoned projects expense
245 5,019
339 5,019 Gain
on sales of real estate assets
(3,747 ) (79,533 )
(8,118 ) (85,521 ) (Gain) loss on sales of real
estate assets of unconsolidated affiliates
(592 ) 3
(592 ) 38 Noncontrolling interests' share of gain on
sales of real estate assets in other consolidated affiliates
— 26,639
— 26,639 (Gain) loss on investment
(387 ) 5,843
(387 ) 5,843 Gain on
extinguishment of debt
— (20,420 )
— (24,475 )
Noncontrolling interests' share of loss on extinguishment of debt
in other consolidated subsidiaries
— (2,975 )
—
(2,975 ) Loss on impairment
51,983 43,203
70,044
46,466 Income tax benefit
(2,235 ) (2,920 )
(2,880 ) (3,720 ) Lease termination fees
(2,744 ) (864 )
(9,005 ) (1,111 )
Straight-line rent and above- and below-market lease amortization
(662 ) (1,757 )
2,166 (3,048 ) Net (income)
loss attributable to noncontrolling interests in other consolidated
subsidiaries
494 (24,138 )
393 (24,851 ) General and
administrative expenses
13,490 15,752
31,794 31,834
Management fees and non-property level revenues
(3,509
) (2,293 )
(7,396 ) (7,550 )
Operating
Partnership's share of property NOI 162,503 181,015
323,719 360,002 Non-comparable NOI
(5,486 )
(12,440 )
(12,020 ) (25,530 )
Total same-center
NOI (1) $ 157,017 $ 168,575
$ 311,699 $ 334,472
Total
same-center NOI percentage change (6.9)% (6.8)%
Same-center Net Operating
Income
(Continued)
Three Months EndedJune 30, Six Months
EndedJune 30, 2017 2016 2018
2017 Malls
$ 141,694 $ 152,119
$
280,510 $ 301,686 Associated centers
7,846 8,185
15,772 16,491 Community centers
6,035 6,373
12,041 12,561 Offices and other
1,442 1,898
3,376 3,734
Total same-center NOI
(1) $ 157,017 $ 168,575
$
311,699 $ 334,472
Percentage Change:
Malls
(6.9)% (7.0)% Associated centers
(4.1)%
(4.4)% Community centers
(5.3)% (4.1)% Offices
and other
(24.0)% (9.6)% Total same-center NOI
(1) (6.9)% (6.8)%
(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, amortization of
above and below market lease intangibles and write-offs of landlord
inducement assets. We include a property in our
same-center pool when we own all or a portion of the property as of
June 30, 2018, 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 June 30, 2018. New properties
are excluded from same-center NOI, until they meet this
criteria. Properties excluded from the same-center pool
that would otherwise meet this criteria are properties which are
either under major redevelopment, being considered for
repositioning, where we intend to renegotiate the terms of the debt
secured by the related property or return the property to the
lender, or minority interest properties in which we own an interest
of 25% or less.
Company's Share of Consolidated and
Unconsolidated Debt
(Dollars in thousands)
As of June 30, 2018 Fixed Rate
VariableRate
Total per Debt
Schedule
Unamortized
Deferred
Financing
Costs
Total Consolidated debt
$ 3,099,680
$ 1,089,189 $ 4,188,869
$ (16,516 ) $ 4,172,353
Noncontrolling interests' share of consolidated debt
(76,413
) (5,387 ) (81,800 ) 642
(81,158 ) Company's share of unconsolidated
affiliates' debt
555,880 82,180
638,060 (2,177 ) 635,883
Company's share of consolidated and unconsolidated debt
$
3,579,147 $ 1,165,982 $
4,745,129 $ (18,051 ) $
4,727,078 Weighted-average interest rate
5.16
% 3.57 % 4.77 % As of
June 30, 2017 Fixed Rate VariableRate
Total per Debt
Schedule
Unamortized
Deferred
Financing
Costs
Total Consolidated debt $ 3,184,580 $ 1,081,266 $ 4,265,846
$ (16,406 ) $ 4,249,440 Noncontrolling interests' share of
consolidated debt (93,377 ) (5,449 ) (98,826 ) 765 (98,061 )
Company's share of unconsolidated affiliates' debt 526,136
72,002 598,138 (2,506 ) 595,632
Company's share of consolidated and unconsolidated debt $ 3,617,339
$ 1,147,819 $ 4,765,158 $ (18,147 ) $
4,747,011 Weighted-average interest rate 5.25 % 2.58 % 4.61
%
Debt-To-Total-Market Capitalization
Ratio as of June 30, 2018
(In thousands, except stock price)
SharesOutstanding Stock
Price (1)
Value Common stock and Operating Partnership units 199,428 $
5.57 $ 1,110,814 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
1,737,064 Company's share of total debt, excluding unamortized
deferred financing costs 4,745,129 Total market
capitalization $ 6,482,193 Debt-to-total-market
capitalization ratio 73.2 %
(1) Stock price for common
stock and Operating Partnership units equals the closing price of
the common stock on June 29, 2018. 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 EndedJune 30, Six Months
EndedJune 30, Basic Diluted
Basic Diluted 2018: Weighted-average
shares - EPS
172,662 172,662 172,304
172,304 Weighted-average Operating Partnership units
27,105 27,105 27,427
27,427 Weighted-average shares - FFO
199,767
199,767 199,731 199,731
2017: Weighted-average shares - EPS 171,095 171,095 171,042
171,042 Weighted-average Operating Partnership units 28,276
28,276 28,284 28,284 Weighted-average shares - FFO
199,371 199,371 199,326 199,326
Dividend Payout Ratio
Three Months EndedJune 30, Six Months
EndedJune 30, 2018 2017 2018
2017 Weighted-average cash dividend per share
$ 0.20888 $ 0.27281
$ 0.41773 $ 0.54562
FFO, as adjusted, per diluted fully converted share
$
0.46 $ 0.50
$ 0.88 $ 1.02
Dividend payout ratio
45.4 % 54.6 %
47.5 % 53.5 %
Consolidated Balance
Sheets
(Unaudited; in thousands, except share
data)
As of June 30, 2018
December 31, 2017 ASSETS Real estate assets:
Land
$ 797,045 $ 813,390 Buildings and improvements
6,591,966 6,723,194
7,389,011 7,536,584
Accumulated depreciation
(2,501,864 ) (2,465,095 )
4,887,147 5,071,489 Held for sale
17,412 —
Developments in progress
109,562 85,346 Net
investment in real estate assets
5,014,121 5,156,835 Cash
and cash equivalents
23,428 32,627 Receivables:
Tenant, net of allowance for doubtful
accounts of $2,097 and $2,011 in 2018 and 2017, respectively
76,367 83,552 Other, net of allowance for doubtful accounts
of $838 in 2018 and 2017
6,056 7,570 Mortgage and other
notes receivable
8,429 8,945 Investments in unconsolidated
affiliates
278,168 249,192 Intangible lease assets and other
assets
172,438 166,087
$
5,579,007 $ 5,704,808
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Mortgage and
other indebtedness, net
$ 4,172,353 $ 4,230,845
Accounts payable and accrued liabilities
221,507
228,650 Total liabilities
4,393,860 4,459,495
Commitments and contingencies Redeemable noncontrolling
interests
8,694 8,835 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, 172,661,708 and 171,088,778 issued and
outstanding in 2018 and 2017, respectively
1,727 1,711 Additional paid-in capital
1,966,491
1,974,537 Dividends in excess of cumulative earnings
(880,292 ) (836,269 ) Total shareholders' equity
1,087,951 1,140,004 Noncontrolling interests
88,502
96,474 Total equity
1,176,453 1,236,478
$ 5,579,007 $ 5,704,808
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180801005959/en/
CBL PropertiesKatie Reinsmidt, 423-490-8301Executive Vice
President - Chief Investment Officerkatie.reinsmidt@cblproperties.com
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