CBL & Associates Properties, Inc. (NYSE:CBL): Same center NOI
increased 0.9% for the quarter ended March 31, 2008, over the
prior-year period, excluding lease termination fees. Portfolio
occupancy increased 60 basis points to 91.6% at March 31, 2008 over
the prior year period. FFO per share increased 2.6% to $0.80 in the
first quarter. Total revenues increased 11.8% during the first
quarter. CBL & Associates Properties, Inc. (NYSE:CBL) announced
results for the first quarter ended March 31, 2008. 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. Net income available to common shareholders for the
quarter ended March 31, 2008, was $6,171,000, compared with
$17,401,000�for the prior-year period. Net income available to
common shareholders per diluted share was $0.09 for the quarter
ended March 31, 2008, compared with $0.26 for the prior-year
period. Net income available to common shareholders for the quarter
ended March 31, 2008 was primarily impacted by an increase in
depreciation expense of $0.15 per share and an increase in interest
expense as compared with the prior-year period. Funds from
Operations (�FFO�) allocable to common shareholders for the quarter
ended March 31, 2008, was $52,927,000, compared with $51,005,000
for the prior-year period, representing an increase of 3.8%. FFO
per share on a diluted, fully converted basis increased 2.6% to
$0.80 for the quarter ended March 31, 2008, from $0.78 in the
prior-year period. FFO of the operating partnership for the quarter
ended March 31, 2008, was $92,855,000, compared with $90,757,000
for the prior-year period, representing an increase of 2.3%.
HIGHLIGHTS Total revenues increased 11.8% during the quarter ended
March 31, 2008, to $278,279,000 from $249,018,000 in the prior-year
period. Same-center net operating income for the portfolio (�NOI�),
excluding lease termination fees, for the quarter ended March 31,
2008, increased by 0.9% compared with a decline of 1.8% for the
prior-year period. Same-store sales for mall tenants of 10,000
square feet or less for stabilized malls for the twelve months
ended March 31, 2008, declined 2.7% to $341 per square foot
compared with $350 per square foot in the prior-year period. The
debt-to-total-market capitalization ratio as of March 31, 2008, was
67.6% based on the common stock closing price of $23.53 and a fully
converted common stock share count of 116,941,000 shares as of the
same date. The debt-to-total-market capitalization ratio as of
March 31, 2007, was 46.8% based on the common stock closing price
of $44.84 and a fully converted common stock share count of
116,272,000 shares as of the same date. Consolidated and
unconsolidated variable rate debt of $1,278,973,000 represents
13.6% of the total market capitalization for the Company and 20.2%
of the Company's share of total consolidated and unconsolidated
debt. CBL's Chairman and Chief Executive Officer, Charles B.
Lebovitz, said, �Our efforts in 2007 to increase the new
development and expansion platform and establish leasing momentum
provided a solid foundation for the first quarter of 2008. We were
able to start the year with positive same-property NOI growth,
improved portfolio and mall occupancy and very strong new and
renewal leasing spreads. We have complemented that performance with
over $380 million of new financings that we recently announced
including a $228 million term loan. These financings provide us
with the financial flexibility to sustain this momentum and
continue executing our strategic plan. �We celebrate two
significant milestones in 2008 with the 30-year anniversary of our
founding and the 15-year anniversary of becoming a public company.
Throughout these times, we have demonstrated a commitment to
delivering positive returns to our shareholders by developing and
acquiring malls and shopping centers where we can become the market
leader and then adding value to those properties by leveraging our
long-standing retailer relationships. This commitment and
philosophy has allowed us to succeed in all economic cycles. We
expect similar results in 2008.� � PORTFOLIO OCCUPANCY � � March
31, 2008 � � 2007 Portfolio occupancy � � � 91.6 % � � � 91.0 %
Mall portfolio 91.3 % 91.2 % Stabilized malls 91.4 % 91.5 %
Non-stabilized malls 89.2 % 84.7 % Associated centers 94.9 % 92.0 %
Community centers 90.0 % 80.7 % DISPOSITIONS In April 2008, CBL
completed the sale of five community centers located in Greensboro,
NC for approximately $24.0 million to three separate buyers. The
community centers included Brassfield Square, Hunt Village,
Northwest Centre, Caldwell Court and Garden Square. As a result of
these sales, CBL expects to record a $1.5 million gain on sale of
real estate in net income during the second quarter. FINANCINGS
During the first quarter, the 50/50 joint venture between CBL and
an institutional investor advised by Commonwealth Realty Advisors,
Inc. entered into a $100.0 million, interest-only non-recourse
five-year loan secured by Friendly Center and six adjacent office
buildings in Greensboro, NC. The loan has a fixed interest rate of
5.33%. The joint venture also completed a $15.7 million,
interest-only non-recourse five-year loan secured by Renaissance
Center in Durham, NC. The loan has a fixed interest rate of 5.22%.
CBL also entered into a separate one-year extension of the $39.6
million, non-recourse loan secured by Oak Hollow Mall in High
Point, NC. The extension maintains the interest rate of 7.31%. CBL
has the option to further extend the loan for an additional five
years. Subsequent to the quarter-end, CBL entered into a new,
unsecured term facility for up to $228.0 million. The facility will
have an initial term of three years with two one-year extensions at
the Company�s option and will bear interest based on leverage (debt
to gross asset value) in the range of 150 to 180 basis points over
the LIBOR. The proceeds were used to pay down outstanding balances
on the Company's lines of credit, providing CBL with additional
financial flexibility. The banks participating in the new term loan
include Wells Fargo Bank as Lead Arranger; Aareal Capital
Corporation, Regions Bank, US Bank, Fifth Third Bank and Raymond
James Bank. OTHER SIGNIFICANT EVENTS During the first quarter, CBL
announced that it had been awarded management and other contracts
for Ford City Mall in Chicago, IL, and Adrian Mall in Adrian, MI.
Ford City Mall and Adrian Mall are owned by Equity Group
Investments, Inc., the private investment firm founded by Sam Zell.
OUTLOOK AND GUIDANCE Based on today's outlook and the Company's
first quarter results the Company is maintaining guidance for 2008
FFO in the range of $3.46 to $3.56 per share. The full year
guidance assumes same-center NOI growth in the range of 0.0% to
2.0%, excluding lease termination fees from both applicable
periods. The guidance also assumes $0.12 to $0.16 of outparcel
sales for the year. The Company expects to update its annual
guidance after each quarter's results. � � Low � � High Expected
diluted earnings per common share $ 0.77 $ 0.87 Adjust to fully
converted shares from common shares � (0.33 ) � (0.38 ) Expected
earnings per diluted, fully converted common share 0.44 0.49 Add:
depreciation and amortization 2.69 2.69 Add: minority interest in
earnings of Operating Partnership � 0.33 � � 0.38 � Expected FFO
per diluted, fully converted common share $ 3.46 � $ 3.56 � �
INVESTOR CONFERENCE CALL AND SIMULCAST CBL & Associates
Properties, Inc. will conduct a conference call at 10:00 a.m. EDT
on Thursday, May 1, 2008, to discuss the first quarter results. The
number to call for this interactive teleconference is
(303)�262-2130. A seven-day replay of the conference call will be
available by dialing (303)�590-3000 and entering the passcode
11110988#. 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., first quarter earnings
release and supplemental information please visit our website at
cblproperties.com or contact Investor Relations at 423-490-8292.
The Company will also provide an online Web simulcast and
rebroadcast of its 2008 first quarter earnings release conference
call. The live broadcast of CBL's quarterly conference call will be
available online at the Company's Web site at cblproperties.com, as
well as www.streetevents.com and www.earnings.com, on May 1, 2008,
beginning at 10:00 a.m. EDT. The online replay will follow shortly
after the call and continue through May 8, 2008. 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 158 properties, including 86 regional malls/open-air
centers. The properties are located in 27 states and total 84.7
million square feet including 2.2 million square feet of non-owned
shopping centers managed for third parties. CBL currently has
fifteen projects under construction totaling 4.0 million square
feet including Pearland Town Center, Houston (Pearland), TX;
Settlers Ridge in Pittsburgh, PA; The Pavilion at Port Orange in
Port Orange, FL; Hammock Landing in West Melbourne, FL; two
lifestyle/associated centers, eight expansions/redevelopments, and
one community center. Headquartered in Chattanooga, TN, CBL has
regional offices in Boston (Waltham), MA, Dallas, 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
determined in accordance with GAAP. The National Association of
Real Estate Investment Trusts (�NAREIT�) defines FFO as net income
(computed in accordance with GAAP) excluding gains or losses on
sales of operating properties, plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint
ventures and minority interests. Adjustments for unconsolidated
partnerships and joint ventures and minority interests are
calculated on the same basis. The Company defines FFO allocable to
common shareholders as defined above by NAREIT less dividends on
preferred stock. The Company�s method of calculating FFO allocable
to 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 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 minority interest in the operating
partnership. The Company believes FFO allocable to common
shareholders is a useful performance measure because it is the
performance measure that is most directly comparable to net income
available to common shareholders. In the reconciliation of net
income available to common shareholders to FFO allocable to common
shareholders, the Company makes an adjustment to add back minority
interest in earnings 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 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
for purposes of evaluating the Company�s operating performance or
to cash flow as a measure of liquidity. Same-Center Net Operating
Income Net operating income ("NOI") is a supplemental measure of
the operating performance of the Company's shopping centers. The
Company defines NOI as 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. A reconciliation of
same-center NOI to net income is located at the end of this
earnings release. Since NOI includes only those revenues and
expenses related to the operations of its shopping center
properties, the Company believes that same-center NOI provides a
measure that reflects trends in occupancy rates, rental rates and
operating costs and the impact of those trends on the Company's
results of operations. Additionally, there are instances when
tenants terminate their leases prior to the scheduled expiration
date and pay the Company one-time, lump-sum termination fees. These
one-time lease termination fees may distort same-center NOI trends
and may result in same-center NOI that is not indicative of the
ongoing operations of the Company's shopping center properties.
Therefore, the Company believes that presenting same-center NOI,
excluding lease termination fees, is useful to investors. 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 minority investors' 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" incorporated by reference 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 Ended March
31, 2008 � � 2007 REVENUES: Minimum rents $ 172,032 $ 154,249
Percentage rents 4,990 6,482 Other rents 5,011 4,415 Tenant
Reimbursements 86,279 77,671 Management, development and leasing
fees 2,938 1,221 Other � 7,029 � � 4,980 � Total revenues � 278,279
� � 249,018 � � EXPENSES: Property operating 48,024 43,065
Depreciation and amortization 73,616 56,608 Real estate taxes
23,855 20,646 Maintenance and repairs 17,718 15,291 General and
administrative 12,531 10,197 Other � 6,999 � � 3,639 � Total
expenses � 182,743 � � 149,446 � Income from operations 95,536
99,572 Interest and other income 2,727 2,745 Interest expense
(80,224 ) (66,127 ) Loss on extinguishment of debt - (227 ) Gain on
sales of real estate assets 3,076 3,530 Equity in earnings of
unconsolidated affiliates 979 598 Income tax provision (357 ) (803
) Minority interest in earnings: Operating partnership (4,742 )
(13,563 ) Shopping center properties � (6,049 ) � (730 ) Income
from continuing operations 10,946 24,995 Operating income of
discontinued operations 680 103 Loss on discontinued operations � -
� � (55 ) Net income 11,626 25,043 Preferred dividends � (5,455 ) �
(7,642 ) Net income available to common shareholders $ 6,171 � $
17,401 � Basic per share data: Income from continuing operations,
net of preferred dividends $ 0.08 $ 0.27 Discontinued operations �
0.01 � � - � Net income available to common shareholders $ 0.09 � $
0.27 � Weighted average common shares outstanding 65,897 65,109 �
Diluted per share data: Income from continuing operations, net of
preferred dividends $ 0.26 Discontinued operations � 0.01 � � - �
Net income available to common shareholders $ 0.09 � $ 0.26 �
Weighted average common and potential dilutive common shares
outstanding 66,109 65,886 � � � The Company's calculation of FFO
allocable to Company shareholders is as follows: (in thousands,
except per share data) Three Months Ended March 31, 2008 2007 � Net
income available to common shareholders $ 6,171 $ 17,401 Minority
interest in earnings of operating partnership 4,742 13,563
Depreciation and amortization expense of: Consolidated properties
73,616 56,608 Unconsolidated affiliates 6,677 3,504 Discontinued
operations 2,240 460 Non-real estate assets (243 ) (228 ) Minority
investors' share of depreciation and amortization (348 ) (606 )
Loss on discontinued operations � - � � 55 � Funds from operations
of the operating partnership $ 92,855 � $ 90,757 � � Funds from
operations per diluted share $ 0.80 � $ 0.78 � Weighted average
common and potential dilutive common shares outstanding with
operating partnership units fully converted 116,744 116,636 �
Reconciliation of FFO of the operating partnership to FFO allocable
to Company shareholders: Funds from operations of the operating
partnership $ 92,855 $ 90,757 Percentage allocable to Company
shareholders (1) � 56.55 % � 56.20 % Funds from operations
allocable to Company shareholders $ 52,510 � $ 51,005 � � (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 9. � � SUPPLEMENTAL FFO INFORMATION: Lease
termination fees $ 1,460 $ 3,369 Lease termination fees per share $
0.01 $ 0.03 � Straight-line rental income $ 1,413 $ 1,124
Straight-line rental income per share $ 0.01 $ 0.01 � Gains on
outparcel sales $ 3,360 $ 3,799 Gains on outparcel sales per share
$ 0.03 $ 0.03 � Amortization of acquired above- and below-market
leases $ 2,597 $ 2,930 Amortization of acquired above- and
below-market leases per share $ 0.02 $ 0.03 � Amortization of debt
premiums $ 1,975 $ 1,902 Amortization of debt premiums per share $
0.02 $ 0.02 � Income tax provision $ 357 $ 803 Income tax provision
per share $ - $ 0.01 � � � Same-Center Net Operating Income
(Dollars in thousands) � Three Months Ended March 31, 2008 2007 �
Net income $ 11,626 $ 25,043 � Adjustments: Depreciation and
amortization 73,616 56,608 Depreciation and amortization from
unconsolidated affiliates 6,677 3,504 Depreciation and amortization
from discontinued operations 2,240 460 Minority investors' share of
depreciation and amortization in shopping center properties (348 )
(606 ) Interest expense 80,224 66,127 Interest expense from
unconsolidated affiliates 6,626 4,192 Minority investors' share of
interest expense in shopping center properties (448 ) (1,187 ) Loss
on extinguishment of debt - 227 Abandoned projects expense 1,713 48
Gain on sales of real estate assets (3,076 ) (3,530 ) Gain on sales
of real estate assets of unconsolidated affiliates (284 ) (269 )
Income tax provision 357 803 Minority interest in earnings of
operating partnership 4,742 13,563 Loss on discontinued operations
� - � � 55 � Operating partnership's share of total NOI 183,665
165,038 General and administrative expenses 12,531 10,197
Management fees and non-property level revenues � (8,429 ) � (6,690
) Operating partnership's share of property NOI 187,767 168,545 NOI
of non-comparable centers � (21,466 ) � (1,199 ) Total same-center
NOI $ 166,301 � $ 167,346 � � Malls $ 152,781 $ 154,574 Associated
centers 8,110 8,085 Community centers 1,849 1,384 Other � 3,561 � �
3,303 � Total same-center NOI 166,301 167,346 Less lease
termination fees � (811 ) � (3,369 ) Total same-center NOI,
excluding lease termination fees $ 165,490 � $ 163,977 � �
Percentage Change: Malls -1.2 % Associated centers 0.3 % Community
centers 33.6 % Other � 7.8 % Total same-center NOI � -0.6 % Total
same-center NOI, excluding lease termination fee � 0.9 % �
Company's Share of Consolidated and Unconsolidated Debt (Dollars in
thousands) � � March 31, 2008 Fixed Rate � Variable Rate � Total
Consolidated debt $ 4,673,477 $ 1,216,143 $ 5,889,620 Minority
investors' share of consolidated debt (24,073 ) (3,043 ) (27,116 )
Company's share of unconsolidated affiliates' debt � 410,759 � �
65,873 � � 476,632 � Company's share of consolidated and
unconsolidated debt $ 5,060,163 � $ 1,278,973 � $ 6,339,136 �
Weighted average interest rate � 5.79 % � 3.75 % � 5.38 % � March
31, 2007 Fixed Rate Variable Rate Total Consolidated debt $
3,877,689 $ 836,753 $ 4,714,442 Minority investors' share of
consolidated debt (24,703 ) - (24,703 ) Company's share of
unconsolidated affiliates' debt � 208,730 � � 29,902 � � 238,632 �
Company's share of consolidated and unconsolidated debt $ 4,061,716
� $ 866,655 � $ 4,928,371 � Weighted average interest rate � 5.93 %
� 6.22 % � 5.98 % � � Debt-To-Total-Market Capitalization Ratio as
of March 31, 2008 (In thousands, except stock price) � Shares
Outstanding Stock Price(1) Value Common stock and operating
partnership units 116,941 $ 23.53 $ 2,751,622 7.75% Series C
Cumulative Redeemable Preferred Stock 460 250.00 115,000 7.375%
Series D Cumulative Redeemable Preferred Stock 700 250.00 � 175,000
� Total market equity 3,041,622 Company's share of total debt �
6,339,136 � Total market capitalization $ 9,380,758 �
Debt-to-total-market capitalization ratio � 67.6 % � (1) Stock
price for common stock and operating partnership units equals the
closing price of the common stock on March 31, 2008. The stock
price for the preferred stock represents the liquidation preference
of each respective series of preferred stock. � � Reconciliation of
Shares and Operating Partnership Units Outstanding (In thousands) �
� Three Months Ended March 31, 2008: Basic Diluted Weighted average
shares - EPS 65,897 66,109 Weighted average operating partnership
units � 50,634 � � 50,635 � Weighted average shares- FFO � 116,531
� � 116,744 � � 2007: Weighted average shares - EPS 65,109 65,886
Weighted average operating partnership units � 50,749 � � 50,750 �
Weighted average shares- FFO � 115,858 � � 116,636 � � � Dividend
Payout Ratio Three Months Ended March 31, 2008 2007 Weighted
average dividend per share $ 0.55047 $ 0.51032 FFO per diluted,
fully converted share $ 0.80 � $ 0.78 � Dividend payout ratio �
69.2 % � 65.4 % � Consolidated Balance Sheets (Unaudited, in
thousands except share data) � � March 31, 2008 � December 31, 2007
ASSETS Real estate assets: Land $ 868,233 $ 917,578 Buildings and
improvements � 7,207,622 � � 7,263,907 � 8,075,855 8,181,485 Less:
accumulated depreciation � (1,157,209 ) � (1,102,767 ) 6,918,646
7,078,718 Held for sale 161,298 - Developments in progress �
308,467 � � 323,560 � Net investment in real estate assets
7,388,411 7,402,278 Cash and cash equivalents 65,742 65,826 Cash in
escrow 2,640 - Receivables: Tenant, net of allowance 68,506 72,570
Other 11,233 10,257 Mortgage notes receivable 40,849 135,137
Investments in unconsolidated affiliates 195,397 142,550 Intangible
lease assets and other assets � 256,170 � � 276,429 � $ 8,028,948 �
$ 8,105,047 � � LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage and
other notes payable $ 5,889,620 $ 5,869,318 Accounts payable and
accrued liabilities � 363,043 � � 394,884 � Total liabilities �
6,252,663 � � 6,264,202 � Commitments and contingencies Minority
interests � 888,510 � � 920,297 � Shareholders' equity: Preferred
Stock, $.01 par value, 15,000,000 shares authorized: 7.75% Series C
Cumulative Redeemable Preferred Stock, 460,000 shares outstanding 5
5 7.375% Series D Cumulative Redeemable Preferred Stock, 700,000
shares outstanding 7 7 Common Stock, $.01 par value, 180,000,000
shares authorized, 66,306,773 and 66,179,747 issued and outstanding
in 2008 and 2007, respectively � 663 662 Additional paid-in capital
999,468 990,048 Accumulated other comprehensive loss (12,329 ) (20
) Accumulated deficit � (100,039 ) � (70,154 ) Total shareholders'
equity � 887,775 � � 920,548 � $ 8,028,948 � $ 8,105,047 �
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