CBL & Associates Properties, Inc. (NYSE:CBL) announced
results for the fourth quarter and year ended December 31,
2017. A description of each 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 EndedDecember
31, Year EndedDecember 31, 2017
2016 % 2017 2016
% Net income attributable to common shareholders per diluted
share
$ 0.15 $ 0.34 (55.9 )%
$
0.44 $ 0.75 (41.3 )% Funds from Operations
("FFO") per diluted share
$ 0.55 $ 0.72
(23.6 )%
$ 2.18 $ 2.69 (19.0 )% FFO, as
adjusted, per diluted share (1)
$ 0.56 $ 0.68
(17.6 )%
$ 2.08 $ 2.41 (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 attributable to common shareholders to
FFO allocable to Operating Partnership common unitholders on page
10 of this earnings release.
KEY TAKEAWAYS:
- FFO per diluted share, as adjusted, was
$0.56 in the fourth quarter 2017 compared to $0.68 in the prior
year period. Major items impacting fourth quarter 2017 FFO, as
adjusted, include approximately $0.03 per share of dilution from
asset sales, $0.06 lower property net operating income primarily
due to retail bankruptcies and $0.04 per share due to lower gains
on outparcel sales.
- FFO per diluted share, as adjusted, was
$2.08 for 2017, compared with $2.41 in the prior-year period. Major
items impacting 2017 FFO, as adjusted, include approximately $0.15
per share of dilution from asset sales, $0.09 per share lower
property net operating income primarily due to retail bankruptcies,
$0.09 per share higher interest expense and $0.02 per share lower
gains on outparcel sales.
- Same-center NOI declined 2.9% for the
year ended December 31, 2017, and 6.7% for the fourth quarter
2017, over the prior-year periods.
- Average gross rent per square foot
declined 5.4% for stabilized mall leases signed in 2017 over the
prior rate.
- Total portfolio occupancy at
December 31, 2017 was 93.2%, representing a decline of 160
basis points from the prior year-end.
- Same-center sales per square foot for
2017 were $372, a decline of 1.8% compared with $379 for 2016.
- In 2017, CBL has completed gross asset
sales of more than $190 million, including approximately $27
million in outparcel sales.
- In 2017, CBL completed more than $1.1
billion of financing activity.
CBL's President & CEO, Stephen D. Lebovitz,
commented, "Fourth quarter results and our outlook for 2018
reflect the impact of significant retailer bankruptcies, store
closings and rent adjustments during 2017. Looking ahead, we are
encouraged by the stronger holiday results compared to 2016 and
generally more positive retail sentiment. We are also focused on
effectively executing our property transformation strategy by
diversifying the offerings at our centers. We are adding dining,
entertainment, value retail, fitness, service and other new uses to
generate additional traffic. Recently, we announced an anchor
redevelopment project at Eastland Mall as well as the redevelopment
of two recaptured Sears Auto Centers and will announce additional
projects throughout the year.
"Our balance sheet is well-positioned to support this strategy
with a longer maturity profile and minimal near-term maturities. In
addition, we fund the majority of our redevelopment and capital
expenditures using our significant portfolio free-cash-flow, which
allows us to generate new income on a leverage neutral basis.
Looking forward, we expect some continued headwinds from retailers;
however, we are encouraged that many of these companies are
adopting new technologies that are driving increased store traffic
and sales. Our goal for 2018 is to stabilize the performance of our
portfolio and accelerate the reinvention of our properties,
positioning CBL for growth in 2019 and beyond."
Net income attributable to common shareholders for the fourth
quarter 2017 was $25.2 million, or $0.15 per diluted share,
compared with net income of $57.6 million, or $0.34 per diluted
share for the fourth quarter 2016.
Net income attributable to common shareholders for 2017 was
$76.0 million, or $0.44 per diluted share, compared with net income
of $128.0 million, or $0.75 per diluted share, for 2016.
FFO allocable to common shareholders, as adjusted, for the
fourth quarter of 2017 was $96.4 million, or $0.56 per diluted
share, compared with $116.6 million, or $0.68 per diluted share,
for the fourth quarter of 2016. FFO allocable to the Operating
Partnership common unitholders, as adjusted, for the fourth quarter
of 2017 was $112.3 million compared with $135.9 million for the
fourth quarter of 2016.
FFO allocable to common shareholders, as adjusted, for 2017 was
$355.1 million, or $2.08 per diluted share, compared with $411.0
million, or $2.41 per diluted share, for 2016. FFO allocable to the
Operating Partnership common unitholders, as adjusted, for 2017 was
$413.7 million compared with $480.8 million for 2016.
Percentage change in same-center Net Operating Income
("NOI")(1):
Three MonthsEnded December 31,
Year EndedDecember 31, 2017 2017
Portfolio same-center NOI
(6.7 )% (2.9
)% Mall same-center NOI
(7.3 )% (3.5
)%
(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 ITEMS IMPACTING SAME-CENTER NOI RESULTS FOR
2017
- NOI declined $20.1 million during 2017,
due to a $20.6 million decrease in revenue offset by a $0.5 million
decrease in expense.
- Minimum rents, tenant reimbursements
and other income and revenues declined $12.8 million, primarily
related to store closures and rent concessions related to tenants
in bankruptcy.
- Other rents, including business
development and short-term specialty leasing, declined
$3.0 million.
- Percentage rents declined $4.8 million,
due to the decline in sales.
- Property operating expense increased
$0.3 million, real estate tax expense increased $3.3 million,
offset by a $4.1 million decline in maintenance and repair
expense.
PORTFOLIO OPERATIONAL RESULTS
Occupancy:
As of December 31, 2017 2016 Portfolio
occupancy
93.2 % 94.8 % Mall portfolio
92.0
% 94.1 % Same-center malls
92.2 % 94.0 %
Stabilized malls
92.1 % 94.2 % Non-stabilized malls
(1)
88.4 % 92.8 % Associated centers
97.9
% 96.9 % Community centers
96.8 % 98.2 % (1)
Represents occupancy for The Outlet Shoppes at Laredo and The
Outlet Shoppes of the Bluegrass as of December 31, 2017 and
occupancy for The Outlet Shoppes of the Bluegrass and The Outlet
Shoppes at Atlanta as of December 31, 2016.
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 December 31,2017
Year EndedDecember 31,2017 Stabilized Malls
(9.8 )% (5.4 )% New leases 0.5 % 9.0 % Renewal leases (11.1 )% (8.7
)%
Same-center Sales Per Square Foot for Mall Tenants 10,000
Square Feet or Less:
Year Ended December 31, 2017
2016 % Change Stabilized mall same-center
sales per square foot
$ 372 $ 379 (1.8 )% Stabilized
mall sales per square foot
$ 372 $ 376 (1.1 )%
DISPOSITIONS
In 2017, CBL completed the sale of two office buildings,
interests in three malls and one outlet center for a gross sales
price (at CBL's share) of $166.25 million.
CBL also completed the sale of several outparcel locations
generating aggregate gross proceeds of approximately $27
million.
FINANCING ACTIVITY
In 2017, CBL completed over $1.1 billion in financing activity
including the following transactions:
- On September 1, 2017, CBL's
majority-owned operating partnership subsidiary, CBL &
Associates Limited Partnership (the "Operating Partnership"),
closed on an offering of $225 million aggregate principal amount of
its 5.950% Senior Notes Due 2026 (the "notes").
- In July, CBL completed the extension
and modification of two unsecured term loans totaling $535 million.
CBL expects to reduce the outstanding balance of the $490 million
term loan by $190 million in July 2018.
- CBL retired loans totaling $350.9
million with a weighted average interest rate of 6.4%. The loans
were secured separately by seven properties, each of which were
added to CBL's unencumbered pool of assets.
In April, the $122.4 million loan secured by Acadiana Mall in
Lafayette, LA, matured. After negotiations with the lender to seek
a modification of the existing loan, CBL and the lender were not
able to reach a satisfactory agreement. The property is in
receivership and foreclosure proceedings have commenced.
In January 2018, CBL retired the $37.3 million loan secured by
Kirkwood Mall in Bismarck, ND, using availability on its lines of
credit. The loan bore an interest rate of 5.85% and was scheduled
to mature in April 2018.
REDEVELOPMENT
During the fourth quarter, CBL announced details of its
transformation plan for Eastland Mall in Bloomington, IL. Global
fashion retailer H&M and popular fitness center Planet Fitness
will join the center as part of the redevelopment of the former
JCPenney store. In addition to H&M and Planet Fitness, Outback
Steakhouse is also slated to join the line-up at Eastland Mall.
Construction has commenced with openings planned for later this
year.
OUTLOOK AND GUIDANCE
CBL is providing 2018 FFO 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. Detail of assumptions underlying guidance follows:
Low High 2018 FFO 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
Assumptions underlying the change in 2018 Same-Center NOI are as
follows:
Estimated Impact to 2018 SC NOI
Explanation New Leasing/Contractual Rent Increases 3.2 %
Store Closures/Non-renewals (3.0 )% Includes 2017 actual and
budgeted 2018 store closures at natural lease maturation as well as
mid-term store closures primarily related to tenants in bankruptcy
Lease Renewals (2.9 )% Impact of net lease renewals completed in
2017 and budgeted for 2018, including certain tenants in bankruptcy
reorganization Lease Modifications (1.1 )% Mid-term lease
modifications completed in 2017 and budgeted for 2018 Reserve for
lost rents (2.2 )% Mid-point ($15M) of reserve for future
unbudgeted lost rents Property Operating Expense — % Total 2018 SC
NOI Change at Midpoint (6.0 )%
Reconciliation of major variances in 2017 FFO, as adjusted, per
share to 2018 FFO per share guidance at mid-point:
2017 FFO per share, as adjusted $ 2.08 Change in SC
NOI (excluding reserve for unbudgeted lost rents) (0.14 ) Reserve
for unbudgeted lost rents ($15M) (0.08 ) Outparcel Sales Gains
(0.05 ) Dilution from 2017 Asset Sales (0.05 ) Net Interest Expense
(pro rata share of consolidated and unconsolidated) 0.01 Net Impact
of Non-Core and Other Corporate Items (0.02 ) Mid-point of 2018 FFO
per share guidance $ 1.75
Reconciliation of GAAP net income to 2018 FFO per share
guidance:
Low High Expected diluted earnings per
common share $ 0.11 $ 0.21 Adjust to fully converted shares from
common shares (0.01 ) (0.02 ) Expected earnings per diluted, fully
converted common share 0.10 0.19 Add: depreciation and amortization
1.58 1.58 Add: noncontrolling interest in earnings of Operating
Partnership 0.02 0.03 Expected FFO per diluted, fully
converted common share $ 1.70 $ 1.80
INVESTOR CONFERENCE CALL AND WEBCAST
CBL & Associates Properties, Inc. will conduct a conference
call at 11:00 a.m. ET on Friday, February 9, 2018, to discuss
its fourth quarter and full year results. The number to call for
this interactive teleconference is (888) 317-6003 or (412) 317-6061
and enter the confirmation number 6695155. A replay of the
conference call will be available through
February 16, 2018, by dialing (877) 344-7529 or (412)
317-0088 and entering the confirmation number 10114768. 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., fourth
quarter and full year earnings release and supplemental information
please visit the Investing section of 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 2017 fourth quarter and full year earnings release
conference call. The live broadcast of the quarterly conference
call will be available online at cblproperties.com on Friday,
February 9, 2017 beginning at 11:00 a.m. ET. The online replay will
follow shortly after the call and continue for three months.
ABOUT CBL & ASSOCIATES PROPERTIES, INC.
Headquartered in Chattanooga, TN, 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 119
properties, including 76 regional malls/open-air centers. The
properties are located in 27 states and total 74.4 million square
feet including 6.2 million square feet of non-owned shopping
centers managed for third parties. 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 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 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 its Operating Partnership. The Company then applies a
percentage to FFO of its Operating Partnership in order to arrive
at FFO of the Operating Partnership common unitholders. 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 outstanding for the
period 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.
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 significant 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 9 of this earnings release
for a description of these adjustments.
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).
We believe that presenting NOI and same-center NOI (described
below) based on our Operating Partnership’s pro rata share of both
consolidated and unconsolidated properties is useful since we
conduct substantially all of our business through our Operating
Partnership and, therefore, it reflects the performance of the
properties in absolute terms regardless of the ratio of ownership
interests of our common shareholders and the noncontrolling
interest in the Operating Partnership. The Company computes NOI
based on the Operating Partnership's 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.
Since NOI includes only those revenues and expenses related to
the operations of its shopping center and other 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. The Company’s calculation of same-center NOI also
excludes lease termination income, straight-line rent adjustments,
and amortization of above and below market lease intangibles in
order to enhance the comparability of results from one period to
another, as these items can be impacted by one-time events that 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 and other properties. 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 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 EndedDecember 31, Year
EndedDecember 31, 2017 2016
2017 2016 REVENUES: Minimum rents
$ 155,966 $ 168,276
$ 624,161 $ 670,565
Percentage rents
4,747 7,213
11,874 17,803 Other
rents
7,837 9,363
19,008 23,110 Tenant reimbursements
61,975 67,487
254,552 280,438 Management, development
and leasing fees
3,235 4,100
11,982 14,925 Other
1,596 2,054
5,675 21,416
Total revenues
235,356 258,493
927,252
1,028,257
OPERATING EXPENSES: Property
operating
31,780 32,956
128,030 137,760 Depreciation
and amortization
73,629 72,188
299,090 292,693 Real
estate taxes
21,574 21,756
83,917 90,110 Maintenance
and repairs
12,284 14,012
48,606 53,586 General and
administrative
13,064 16,467
58,466 63,332 Loss on
impairment
— 86
71,401 116,822 Other
29
13
5,180 20,326 Total operating
expenses
152,360 157,478
694,690
774,629
Income from operations 82,996 101,015
232,562 253,628 Interest and other income
471 462
1,706 1,524 Interest expense
(53,501 ) (53,608
)
(218,680 ) (216,318 ) Gain on extinguishment of
debt
— —
30,927 — Gain (loss) on investments
—
7,534
(6,197 ) 7,534 Income tax benefit (provision)
(2,851 ) (911 )
1,933 2,063 Equity in earnings
of unconsolidated affiliates
6,535 10,316
22,939 117,533
Income from continuing
operations before gain on sales of real estate assets
33,650 64,808
65,190 165,964 Gain on sales of real
estate assets
6,888 15,064
93,792
29,567
Net income 40,538 79,872
158,982 195,531 Net income attributable to noncontrolling
interests in: Operating Partnership
(3,950 ) (9,481 )
(12,652 ) (21,537 ) Other consolidated subsidiaries
(124 ) (1,561 )
(25,390 ) (1,112 )
Net income attributable to the Company 36,464 68,830
120,940 172,882 Preferred dividends
(11,223 )
(11,223 )
(44,892 ) (44,892 )
Net income
attributable to common shareholders $ 25,241
$ 57,607
$ 76,048 $ 127,990
Basic per share data attributable to common
shareholders: Net income attributable to common shareholders
$ 0.15 $ 0.34
$ 0.44 $ 0.75
Weighted-average common shares outstanding
171,098 170,793
171,070 170,762
Diluted per share data
attributable to common shareholders: Net income attributable to
common shareholders
$ 0.15 $ 0.34
$
0.44 $ 0.75 Weighted-average common and potential dilutive
common shares outstanding
171,098 171,089
171,070
170,836
The Company's reconciliation of net
income attributable to common shareholders to FFO allocable to
Operating Partnership common unitholders is as follows:
(in thousands, except per share data)
Three Months EndedDecember 31, Year
EndedDecember 31, 2017 2016
2017 2016 Net income attributable to common
shareholders
$ 25,241 $ 57,607
$ 76,048
$ 127,990 Noncontrolling interest in income of Operating
Partnership
3,950 9,481
12,652 21,537 Depreciation
and amortization expense of: Consolidated properties
73,629
72,188
299,090 292,693 Unconsolidated affiliates
9,591 9,516
38,124 38,606 Non-real estate assets
(936 ) (757 )
(3,526 ) (3,154 )
Noncontrolling interests' share of depreciation and amortization
(2,186 ) (2,075 )
(8,977 ) (8,760 )
Loss on impairment, net of taxes
— 37
70,185 115,027
Gain on depreciable property, net of taxes and noncontrolling
interests' share
(222 ) (1,535 )
(48,983
) (45,741 )
FFO allocable to Operating Partnership common
unitholders 109,067 144,462
434,613 538,198
Litigation expense (1)
34 259
103 2,567 Nonrecurring
professional fees expense reimbursement) (1)
— 477
(919 ) 2,258 (Gain) loss on investments, net of taxes
(2)
— (7,034 )
6,197 (7,034 ) Equity in earnings from
disposals of unconsolidatedaffiliates (3)
— (3,758 )
— (58,243 ) Non-cash default interest expense (4)
921
1,466
5,319 2,840 Impact of new tax law on income tax
expense
2,309 —
2,309 —
(Gain) loss on extinguishment of debt, net
of noncontrolling interests' share (5)
— —
(33,902 ) 197
FFO
allocable to Operating Partnership common unitholders, as
adjusted $ 112,331 $ 135,872
$ 413,720 $ 480,783
FFO per
diluted share $ 0.55 $ 0.72
$ 2.18 $ 2.69
FFO, as
adjusted, per diluted share $ 0.56 $ 0.68
$ 2.08 $ 2.41 Weighted
average common and potential dilutive common shares outstanding
with Operating Partnership units fully converted
199,314
199,381
199,322 199,838 (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 year ended December 31, 2017
includes a loss on investment related to the write down of our 25%
interest in River Ridge Mall JV, LLC based on the contract price to
sell such interest to the joint venture partner. The sale closed in
August 2017. The three months and the year ended December 31, 2016
includes a gain of $10,136 related to the redemption of the
Company’s 2007 investment in a Chinese real estate company, less
related taxes of $500, partially offset by a $2,602 loss related to
the Company’s exit from its consolidated joint venture that
provided security and maintenance services to third parties. (3)
For the three months and the year ended December 31, 2016, includes
$3,758 related to the sale of four office buildings. For the year
ended December 31, 2016, includes $28,146 related to the
foreclosure of the loan secured by Gulf Coast Town Center and
$26,373 related to the sale of our 50% interest in Triangle Town
Center. (4) The three months and year ended December 31, 2017
includes default interest expense related to Acadiana Mall. The
year ended December 31, 2017 also includes default interest expense
related to Chesterfield Mall, Midland Mall and Wausau Center. The
three months and year ended December 31, 2016 includes default
interest expense relate to Chesterfield Mall, Midland Mall and
Wausau Center. (5) The year ended December 31, 2017 includes a
$6,851 gain on extinguishment of debt related to the non-recourse
loan secured by Wausau Center, which was conveyed to the lender in
the third quarter of 2017, which was partially offset by a loss on
extinguishment of debt related to a prepayment fee of $371 related
to the early retirement of a mortgage loan, a 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, a 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 the second
quarter of 2017, and a 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 EndedDecember 31, Year
EndedDecember 31, 2017
2016 2017 2016
Diluted EPS attributable to common shareholders $
0.15 $ 0.34
$0.44 $0.75 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 0.40
1.64 1.60 Loss on
impairment, net of taxes
— —
0.35 0.57 Gain on
depreciable property, net of taxes and noncontrolling interests'
share
— (0.02 )
(0.25 ) (0.23 )
FFO per diluted share $ 0.55 $ 0.72
$2.18 $2.69
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 EndedDecember 31, Year
EndedDecember 31, 2017 2016
2017 2016 FFO allocable to Operating
Partnership common unitholders $ 109,067 $
144,462
$ 434,613 $ 538,198 Percentage allocable to
common shareholders (1)
85.84 % 85.79 %
85.83 % 85.48 %
FFO allocable to common
shareholders $ 93,623 $ 123,934
$ 373,028 $ 460,052
FFO
allocable to Operating Partnership common unitholders, as
adjusted $ 112,331 $ 135,872
$
413,720 $ 480,783 Percentage allocable to common
shareholders (1)
85.84 % 85.79 %
85.83 % 85.48 %
FFO allocable to common
shareholders, as adjusted $ 96,425 $ 116,565
$ 355,096 $ 410,973 (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.
Three Months
EndedDecember 31, Year EndedDecember 31,
2017 2016
2017 2016
SUPPLEMENTAL FFO INFORMATION: Lease termination fees
$ 2,042 $ 9
$ 4,036 $ 2,211 Lease
termination fees per share
$ 0.01 $ —
$
0.02 $ 0.01 Straight-line rental income (including
write-offs)
$ (197 ) $ (1,175 )
$
31 $ (985 ) Straight-line rental income (including
write-offs) per share
$ — $ (0.01 )
$ —
$ — Gains on outparcel sales
$ 6,678 $ 13,269
$ 18,374 $ 21,621 Gains on outparcel sales per share
$ 0.03 $ 0.07
$ 0.09 $ 0.11 Net
amortization of acquired above- and below-market leases
$
903 $ 301
$ 4,365 $ 3,066 Net amortization of
acquired above- and below-market leases per share
$ —
$ —
$ 0.02 $ 0.02 Net amortization of debt
(premiums) discounts
$ 140 $ 519
$ (632
) $ 2,519 Net amortization of debt (premiums) discounts per
share
$ — $ —
$ — $ 0.01 Income
tax benefit (provision) prior to impact of 2017 tax law
$
(542 ) $ (911 )
$ 4,242 $ 2,063 Income
tax benefit (provision) prior to impact of 2017 tax law per share
$ — $ —
$ 0.02 $ 0.01 Impact of
new tax law on income tax expense
$ (2,309 ) $
—
$ (2,309 ) $ — Impact of new tax law on
income tax expense per share
$ (0.01 ) $ —
$ (0.01 ) $ — Abandoned projects
expense
$ (29 ) $ (12 )
$ (5,180
) $ (56 ) Abandoned projects expense per share
$
— $ —
$ (0.03 ) $ — Gain (loss)
on extinguishment of debt, net of noncontrolling interests' share
$ — $ —
$ (33,902 ) $ (197 )
Gain (loss) on extinguishment of debt, net of noncontrolling
interests' share, per share
$ — $ —
$
0.17 $ — Non cash default interest expense
$
(921 ) $ (1,466 )
$ (5,319 ) $
(2,840 ) Non cash default interest expense per share
$
— $ (0.01 )
$ (0.03 ) $ (0.01 )
Gain (loss) on investments, net of tax
$ — $ 7,034
$ (6,197 ) $ 7,034 Gain (loss) on investments,
net of tax per share
$ — $ 0.04
$ (0.03
) $ 0.04 Equity in earnings from disposals of
unconsolidated affiliates
$ — $ 3,758
$
— $ 58,243 Equity in earnings from disposals of
unconsolidated affiliates per share
$ — $ 0.02
$ — $ 0.29 Interest capitalized
$
554 $ 690
$ 2,230 $ 2,302 Interest capitalized
per share
$ — $ —
$ 0.01 $ 0.01
Litigation expenses
$ (34 ) $ (259 )
$
(103 ) $ (2,567 ) Litigation expenses per share
$ — $ —
$ — $ (0.01 )
Nonrecurring professional fees (expense) reimbursement
$
— $ (477 )
$ 919 $ (2,258 ) Nonrecurring
professional fees (expense) reimbursement per share
$
— $ —
$ — $ (0.01 )
As of December
31, 2017 2016
Straight-line rent receivable
$ 61,506 $ 67,086
Same-center Net Operating
Income
(Dollars in thousands)
Three Months EndedDecember 31, Year
EndedDecember 31, 2017 2016
2017 2016 Net income $
40,538 $ 79,872
$ 158,982 $ 195,531
Adjustments: Depreciation and amortization
73,629
72,188
299,090 292,693 Depreciation and amortization from
unconsolidated affiliates
9,591 9,516
38,124 38,606
Noncontrolling interests' share of depreciation andamortization in
other consolidated subsidiaries
(2,186 ) (2,075 )
(8,977 ) (8,760 ) Interest expense
53,501
53,608
218,680 216,318 Interest expense from unconsolidated
affiliates
6,268 6,296
25,083 26,083
Noncontrolling interests' share of
interest expense in other consolidated subsidiaries
(1,902 ) (1,689 )
(7,062 ) (6,815 )
Abandoned projects expense
29 12
5,180 56 Gain on
sales of real estate assets
(6,888 ) (15,064 )
(93,792 ) (29,567 )
Gain on sales of real estate assets of
unconsolidated affiliates
(12 ) (4,090 )
(201 ) (97,430 )
Noncontrolling interests' share of gain on
sales of real estate assets in other consolidated subsidiaries
— —
26,639 — (Gain) loss on investments
— (7,534 )
6,197 (7,534 ) (Gain) loss on
extinguishment of debt
— —
(30,927 ) 197
Noncontrolling interests' share of loss on extinguishment of debt
in other consolidated subsidiaries
— —
(2,975
) — Loss on impairment
— 86
71,401 116,822
Income tax (benefit) provision
2,851 911
(1,933
) (2,063 ) Lease termination fees
(2,042 ) (9
)
(4,036 ) (2,211 )
Straight-line rent and above- and
below-market lease amortization
(711 ) 874
(4,396 ) (2,081 )
Net income attributable to noncontrolling
interest in other consolidated subsidiaries
(124 ) (1,561 )
(25,390 ) (1,112 )
General and administrative expenses
13,064 16,467
58,466 63,332 Management fees and non-property level
revenues
(4,046 ) (3,349 )
(14,115 )
(17,026 )
Operating Partnership's share of property NOI
181,560 204,459
714,038 775,039 Non-comparable NOI
(7,996 ) (18,419 )
(41,834 ) (82,703 )
Total same-center NOI (1) $ 173,564
$ 186,040
$ 672,204 $ 692,336
Total same-center NOI percentage change (6.7
)% (2.9 )%
Same-center Net Operating
Income
(Continued)
Three Months EndedDecember 31, Year
EndedDecember 31, 2017 2016
2017 2016 Malls
$ 157,976 $
170,383
$ 610,164 $ 632,087 Associated centers
8,120 8,631
32,509 32,792 Community centers
5,519 5,402
22,098 20,936 Offices and other
1,949 1,624
7,433 6,521
Total
same-center NOI (1) $ 173,564 $
186,040
$ 672,204 $ 692,336
Percentage Change: Malls
(7.3 )% (3.5
)% Associated centers
(5.9 )% (0.9
)% Community centers
2.2 % 5.6 %
Offices and other
20.0 % 14.0 %
Total same-center NOI (1) (6.7 )%
(2.9 )%
(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 December 31,
2017, 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 December 31, 2017. 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 December 31, 2017 Fixed Rate
VariableRate Total perDebt
Schedule UnamortizedDeferred
Financing Costs Total Consolidated debt
$ 3,158,973 $ 1,090,810 $
4,249,783 $ (18,938 ) $
4,230,845 Noncontrolling interests' share of consolidated
debt
(77,155 ) (5,418 ) (82,573
) 687 (81,886 ) Company's share of
unconsolidated affiliates' debt
532,766 64,455
597,221
(2,441 ) 594,780 Company's share
of consolidated and unconsolidated debt
$ 3,614,584
$ 1,149,847 $ 4,764,431
$ (20,692 ) $ 4,743,739
Weighted average interest rate
5.19 %
2.93 % 4.65 % As of December
31, 2016 Fixed Rate VariableRate Total
perDebt Schedule
UnamortizedDeferred Financing Costs
Total Consolidated debt $ 3,594,379 $ 888,770 $ 4,483,149 $
(17,855 ) $ 4,465,294 Noncontrolling interests' share of
consolidated debt (109,162 ) (7,504 ) (116,666 ) 945 (115,721 )
Company's share of unconsolidated affiliates' debt 530,062
73,263 603,325 (2,806 ) 600,519 Company's
share of consolidated and unconsolidated debt $ 4,015,279 $
954,529 $ 4,969,808 $ (19,716 ) $ 4,950,092
Weighted average interest rate 5.30 % 2.18 % 4.70 %
Debt-To-Total-Market Capitalization
Ratio as of December 31, 2017
(In thousands, except stock price)
Shares
Outstanding
Stock Price (1) Value Common stock and
Operating Partnership units 199,297 $ 5.66 $ 1,128,021 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 1,754,271 Company's share of
total debt, excluding unamortized deferred financing costs
4,764,431 Total market capitalization $ 6,518,702
Debt-to-total-market capitalization ratio 73.1 %
(1) Stock price for common stock and Operating Partnership units
equals the closing price of the common stock on December 29, 2017.
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 EndedDecember 31, Year
EndedDecember 31, 2017: Basic
Diluted Basic Diluted Weighted average
shares - EPS
171,098 171,098 171,070
171,070 Weighted average Operating Partnership units
28,216 28,216 28,252
28,252 Weighted average shares - FFO
199,314
199,314 199,322 199,322
2016: Weighted average shares - EPS 170,793 171,089 170,762
170,836 Weighted average Operating Partnership units 28,292
28,292 29,002 29,002 Weighted average shares - FFO
199,085 199,381 199,764 199,838
Dividend Payout Ratio
Three Months EndedDecember 31, Year
EndedDecember 31, 2017 2016
2017 2016 Weighted average cash dividend per
share
$ 0.20888 $ 0.27283
$ 1.02731 $
1.09121 FFO as adjusted, per diluted fully converted share
$
0.56 $ 0.68
$ 2.08 $ 2.41
Dividend payout ratio
37.3 % 40.1 %
49.4 % 45.3 %
Consolidated Balance
Sheets
(Unaudited; in thousands, except share
data)
As of December 31, 2017
2016 ASSETS Real estate assets: Land
$
813,390 $ 820,979 Buildings and improvements
6,723,194 6,942,452
7,536,584 7,763,431
Accumulated depreciation
(2,465,095 ) (2,427,108 )
5,071,489 5,336,323 Held for sale
— 5,861
Developments in progress
85,346 178,355 Net
investment in real estate assets
5,156,835 5,520,539 Cash
and cash equivalents
32,627 18,951 Receivables:
Tenant, net of allowance for doubtful
accounts of $2,011 and $1,910 in 2017 and 2016, respectively
83,552 94,676
Other, net of allowance for doubtful
accounts of $838 in 2017 and 2016
7,570 6,227 Mortgage and other notes receivable
8,945
16,803 Investments in unconsolidated affiliates
249,192
266,872 Intangible lease assets and other assets
166,087
180,572
$ 5,704,808 $ 6,104,640
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS
AND EQUITY Mortgage and other indebtedness, net
$
4,230,845 $ 4,465,294 Accounts payable and accrued
liabilities
228,650 280,498 Total liabilities
4,459,495 4,745,792 Commitments and
contingencies Redeemable noncontrolling interests
8,835
17,996 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, 171,088,778 and 170,792,645 issued and
outstanding in 2017 and 2016, respectively
1,711 1,708 Additional paid-in capital
1,974,537
1,969,059 Dividends in excess of cumulative earnings
(836,269 ) (742,078 ) Total shareholders' equity
1,140,004 1,228,714 Noncontrolling interests
96,474
112,138 Total equity
1,236,478
1,340,852
$ 5,704,808 $ 6,104,640
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180208006427/en/
CBL & Associates Properties, Inc.Katie Reinsmidt,
423-490-8301EVP - Chief Investment Officerkatie.reinsmidt@cblproperties.com
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