Results In-Line; Guidance Range
Maintained
CBL Properties (NYSE:CBL) announced results for the third
quarter ended September 30, 2019. 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 Ended September
30,
Nine Months Ended September
30,
2019
2018
%
2019
2018
%
Net loss attributable to common
shareholders per diluted share
$
(0.26
)
$
(0.07
)
(271.4
)%
$
(0.75
)
$
(0.34
)
(120.6
)%
Funds from Operations ("FFO") per diluted
share
$
0.45
$
0.39
15.4
%
$
1.01
$
1.26
(19.8
)%
FFO, as adjusted, per diluted share
(1)
$
0.34
$
0.40
(15.0
)%
$
0.98
$
1.28
(23.4
)%
(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 loss attributable to common shareholders to
FFO allocable to Operating Partnership common unitholders on page
11 of this news release.
KEY TAKEAWAYS:
- Same-center sales per square foot for the stabilized mall
portfolio for the third quarter improved 3.2%. For the
twelve-months ended September 30, 2019, same-center sales increased
1.1% to $383 per square foot compared with the prior-year
period.
- CBL made significant progress on its anchor redevelopment
program, including 27 former anchor spaces committed, under
construction or with replacements already open featuring dining,
entertainment, fitness and other mixed-use components.
- FFO per diluted share, as adjusted, was $0.34 for the third
quarter 2019, compared with $0.40 per share for the third quarter
2018. Third quarter 2019 FFO per share was impacted by $0.02 per
share of dilution from asset sales completed since the prior-year
period and $0.04 per share of lower property NOI.
- Total Portfolio Same-center NOI declined 5.9% for the three
months and declined 5.5% for the nine months ended September 30,
2019, as compared with the prior-year periods.
- Portfolio occupancy as of September 30, 2019, was 90.5%,
representing a 30 basis point improvement sequentially, and a 150
basis point decline compared with 92.0% as of September 30, 2018.
Same-center mall occupancy was 88.7% as of September 30, 2019, a 60
basis point improvement sequentially and a 200 basis point decline
compared with 90.7% as of September 30, 2018.
- Year-to-date, CBL has completed or announced gross asset sales
totaling $161.4 million (details herein).
"Third quarter results demonstrated the resiliency of our
portfolio of market dominant properties. With adjusted FFO per
share of $0.34 and portfolio same-center NOI of (5.9)%, we are on
track to achieve full-year results within the mid-to-high end of
our reaffirmed guidance range,” said Stephen D. Lebovitz, Chief
Executive Officer. "Operational results were also in-line with
improved sales and spreads on new leasing, and our reserve was able
to offset additional retailer bankruptcies, store closings and
restructurings. For the third quarter, portfolio sales increased
3.2%, bringing our rolling twelve-month sales to $383 per square
foot. This trend should provide a positive backdrop for us during
the holiday season as well as on future lease negotiations.
"Last week, we celebrated the grand opening of the redevelopment
of the former Sears at Brookfield Square in Milwaukee, which
represents a milestone in our portfolio transformation strategy.
The project has generated a huge amount of excitement with
new-to-market entertainment users Whirlyball and Movie Tavern by
Marcus Theatres and in-demand restaurants, services and shops. The
adjacent city-owned hotel and convention center opening next year
will provide an added source of traffic.
"The Brookfield Square project is a great example of our
strategy of utilizing redevelopments to transform our properties
into suburban town centers. In this case, we are combining
successful retail, entertainment, restaurants, fitness and
non-retail elements, including medical office and the
hotel/convention center. Across our portfolio, we are diversifying
our tenant mix in our shop leasing efforts, and we are pursuing
opportunities to make more productive use of available land.
Year-to-date, 74% of new mall leasing was executed with non-apparel
tenants. We also recently commenced construction with joint venture
partners on two new self-storage projects and a hotel and have
several additional non-retail projects on the drawing board. These
projects demonstrate the tangible progress and creativity that
helps bring us closer to our goal of stabilizing revenues and
returning to growth."
Net loss attributable to common shareholders for the third
quarter 2019 was $44.1 million, or a loss of $0.26 per diluted
share, compared with a net loss of $12.6 million, or a loss of
$0.07 per diluted share, for the third quarter 2018. Net loss for
the third quarter 2019 was impacted by an $82.6 million loss on
impairment of real estate to write down the carrying value of Mid
Rivers Mall to the property's estimated fair value. The impairment
was primarily a result of declines in projected future cash flows.
Net loss for the third quarter 2019 also included a $22.7 million
reduction to the class-action litigation expense accrued during the
first quarter 2019. The majority of the reduction relates to past
tenants that did not submit a claim pursuant to the terms of the
settlement agreement with the remainder relating to tenants that
opted out of the lawsuit.
FFO allocable to common shareholders, as adjusted, for the third
quarter 2019 was $58.7 million, or $0.34 per diluted share,
compared with $68.6 million, or $0.40 per diluted share, for the
third quarter 2018. FFO allocable to the Operating Partnership
common unitholders, as adjusted, for the third quarter 2019 was
$67.8 million compared with $79.2 million for the third quarter
2018.
Percentage change in same-center Net
Operating Income ("NOI")(1):
Three Months Ended September
30, 2019
Nine Months Ended September
30, 2019
Portfolio same-center NOI
(5.9
)%
(5.5
)%
Mall same-center NOI
(6.9
)%
(6.4
)%
(1) CBL's definition of same-center NOI excludes the impact of
lease termination fees and certain non-cash items such as
straight-line rents and reimbursements, 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
September 30, 2019, include:
- Same-center NOI declined $8.7 million, due to a $10.0 million
decrease in revenues offset by a $1.3 million decline in operating
expenses.
- Rental revenues declined $12.5 million, including a $6.9
million decline in tenant reimbursements and a $5.6 million decline
in minimum and other rents. Percentage rents were flat.
- Property operating expenses declined $1.1 million compared with
the prior year. Maintenance and repair expenses declined $0.3
million. Real estate tax expenses increased $0.1 million.
PORTFOLIO OPERATIONAL RESULTS
Occupancy(1):
As of September 30,
2019
2018
Portfolio occupancy
90.5
%
92.0
%
Mall portfolio
88.7
%
90.5
%
Same-center malls
88.7
%
90.7
%
Stabilized malls
88.8
%
90.8
%
Non-stabilized malls (2)
83.8
%
73.6
%
Associated centers
96.3
%
97.2
%
Community centers
96.3
%
96.8
%
(1) Occupancy for malls represents percentage of mall store
gross leasable area under 20,000 square feet occupied. Occupancy
for associated and community centers represents percentage of gross
leasable area occupied. (2) Represents occupancy for The Outlet
Shoppes at Laredo.
New and Renewal Leasing Activity of Same Small Shop Space
Less Than 10,000 Square Feet:
% Change in Average Gross Rent Per
Square Foot:
Three Months Ended September
30, 2019
Nine Months Ended September
30, 2019
Stabilized Malls
(6.3
)%
(6.9
)%
New leases
18.9
%
9.3
%
Renewal leases
(11.0
)%
(9.6
)%
Same-Center Sales Per Square Foot for
Mall Tenants 10,000 Square Feet or Less:
Nine Months Ended September
30,
2019
2018
% Change
Stabilized mall same-center sales per
square foot
$
383
$
379
1.1
%
Stabilized mall sales per square foot
$
383
$
378
1.3
%
DISPOSITIONS
Year-to-date, CBL has closed on $161.4 million in asset sales,
as detailed below.
In August, CBL closed on the sale of a 25% interest in The
Outlet Shoppes at El Paso to its existing joint venture partner,
Horizon Group Properties ("Horizon"), for cash of $9.3 million and
the assumption of 25% interest in the existing loan (representing
$18.5 million at closing). Following the completion of the sale,
CBL and Horizon each own a 50% interest, with Horizon continuing to
lease and manage the asset.
Property
Location
Date Closed
Gross Sales Price (M)
Cary Towne Center(1)
Cary, NC
January
$
31.5
Honey Creek Mall (1)
Terre Haute, IN
April
$
14.6
The Shoppes at Hickory Point
Forsyth, IL
April
$
2.5
Courtyard by Marriott at Pearland Town
Center
Pearland, TX
June
$
15.1
The Forum at Grandview
Madison, MS
July
$
31.8
850 Greenbrier Circle
Chesapeake, VA
July
$
10.5
Various parcels
Various
Various
$
27.6
25% interest in The Outlet Shoppes at El
Paso (2)
El Paso, TX
August
$
27.8
Total
$
161.4
(1) 100% of sale proceeds utilized to retire existing secured
loans. (2) Gross amount shown above is comprised of $9.3 million in
equity and 25% interest in loan balance at closing of $18.5
million.
DIVIDEND
In March 2019, CBL suspended its quarterly common dividend for
two quarters. Prior to year-end, CBL will complete its review of
taxable income projections and announce its common dividend policy
for 2020. Consistent with CBL's strategy of maximizing internal
cash flow available for investing and debt reduction, CBL intends
to pay the minimum common dividend required, if any, to distribute
taxable income.
ANCHOR REPLACEMENT PROGRESS AND REDEVELOPMENT
CBL recently marked the completion of the Sears redevelopment at
Brookfield Square in Milwaukee, Wisconsin. Construction on the
approximately 120,000-square-foot project, which included razing
the entire Sears building, began in April 2018, and delivered
new-to-market dining, entertainment, and other uses to the
property.
Anchor replacements recently opened or pending include (complete
list and additional information can be found in the financial
supplement):
Property
Prior Tenant
New Tenant(s)
Construction/Opening Status
CherryVale Mall
Bergner's
Choice Home Center
Open
Eastland Mall
JCPenney
H&M, Planet Fitness
Open
Jefferson Mall
Macy's
Round1
Open
Northwoods Mall
Sears
Burlington
Open
Kentucky Oaks Mall
Sears
Burlington, Ross Dress for Less
Open
West Towne
Sears
Dave & Busters, Total Wine
Open
Hanes Mall
Shops
Dave & Busters
Open
Parkdale Mall
Macy's
Dick's, Five Below, HomeGoods
Open
Brookfield Square
Sears
Marcus Theatres, Whirlyball
Open
Laurel Park Place
Carson's
Dunham's Sports
Open
Meridian Mall
Younkers
High Caliber Karts
Open
Stroud Mall
Boston
Shoprite
Open
Kentucky Oaks Mall
Elder Beerman
HomeGoods and Five Below
November 2019
Frontier Mall
Sears
Jax Outdoor Gear
November 2019
Stroud Mall
Sears
Furniture Outlet
December 2019
Dakota Square
Herberger's
Ross Dress for Less
January 2020
Hamilton Place
Sears
Dick's Sporting Goods, Dave & Busters,
Aloft Hotel, office
Under construction -Spring 2020/ 2021
(Aloft)
CherryVale Mall
Sears
Tilt
Under construction - Q1/Q2 '20
Imperial Valley
Sears
Hobby Lobby
Under construction - 2020
Westmoreland Mall
BonTon
Stadium Live! Casino
2020
York Galleria
Sears
Penn National Casino
2020
Richland Mall
Sears
Dillard's
2020
Cross Creek Mall
Sears
Entertainment User
Construction start in 2020
South County Center
Sears
Round1
Opening TBD
Hanes Mall
Sears
Novant Health
Opening TBD
West Towne Mall
Sears
Von Maur
2021
OUTLOOK AND GUIDANCE
CBL anticipates achieving 2019 FFO, as adjusted, in the range of
$1.30 - $1.35 per diluted share, which is consistent with guidance
provided in the prior quarter. Guidance incorporates a reserve in
the range of $5.0 - $15.0 million (the "Reserve") for potential
future unbudgeted loss in rent from tenant bankruptcies, store
closures or lease modifications that may occur in 2019. Based on
bankruptcy and leasing activity year-to-date, including the impact
of any co-tenancy, CBL currently expects to utilize approximately
$8 - $10 million of the Reserve.
Key assumptions underlying guidance are as follows:
Low
High
2019 FFO, as adjusted, per share (includes
the Reserve)
1.30
1.35
2019 Change in Same-Center NOI ("SC NOI")
(includes the Reserve)
(7.75)%
(6.25)%
Reserve for unbudgeted lost rents included
in SC NOI and FFO
$15.0 million
$5.0 million
Updated expectation for gains on outparcel
sales
$2.0 million
$4.0 million
Reconciliation of GAAP net income (loss) to 2019 FFO, as
adjusted, per share guidance:
Low
High
Expected diluted earnings per common
share
$
(0.83
)
$
(0.78
)
Adjust to fully converted shares from
common shares
0.11
0.11
Expected earnings per diluted, fully
converted common share
(0.72
)
(0.67
)
Add: depreciation and amortization
1.53
1.53
Less: gain on depreciable property
(0.11
)
(0.11
)
Add: loss on impairment
0.74
0.74
Add: noncontrolling interest in loss of
Operating Partnership
(0.10
)
(0.10
)
Expected FFO, as adjusted, per diluted,
fully converted common share
$
1.34
$
1.39
Add: Litigation settlement
0.32
0.32
Adjustment for certain significant
items
(0.36
)
(0.36
)
Expected adjusted FFO per diluted, fully
converted common share
$
1.30
$
1.35
INVESTOR CONFERENCE CALL AND WEBCAST
CBL Properties will host a conference call on Friday, November
1, 2019, at 11:00 a.m. ET. To access this interactive
teleconference, dial (888) 317‑6003 or (412) 317-6061 and enter the
confirmation number, 7355952. A replay of the conference call will
be available through November 8, 2019, by dialing (877) 344-7529 or
(412) 317‑0088 and entering the confirmation number, 10134286.
The Company will also provide an online webcast and rebroadcast
of its third quarter 2019 earnings release conference call. The
live broadcast of the quarterly conference call will be available
online at cblproperties.com on Friday, November 1, 2019, beginning
at 11:00 a.m. ET. The online replay will follow shortly after the
call.
To receive the CBL Properties third quarter earnings release and
supplemental information, please visit the Invest section of our
website at cblproperties.com.
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
108 properties totaling 68.2 million square feet across 26 states,
including 68 high-quality enclosed, outlet and open-air retail
centers and 9 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.
ADOPTION OF NEW LEASE ACCOUNTING STANDARD
The Company adopted Accounting Standards Codification ("ASC")
842, Leases, effective January 1, 2019, which resulted in the
Company revising the presentation of rental revenues in its
consolidated statements of operations. In the past, certain
components of rental revenues were shown separately in the
consolidated statements of operations. Upon the adoption of ASC
842, these amounts have been combined into a single line item.
Please see the Company’s Supplemental Financial and Operating
Information located in the Invest section of the Company’s website
for more information regarding the components of rental
revenues.
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 11 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 Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
REVENUES (1):
Rental revenues
$
179,071
$
200,311
$
555,444
$
620,608
Management, development and leasing
fees
2,216
2,658
7,325
8,022
Other
5,964
3,909
15,889
13,046
Total revenues
187,251
206,878
578,658
641,676
OPERATING EXPENSES:
Property operating
(27,344
)
(30,004
)
(82,856
)
(92,357
)
Depreciation and amortization
(64,168
)
(71,945
)
(198,438
)
(217,261
)
Real estate taxes
(18,699
)
(19,433
)
(57,766
)
(61,737
)
Maintenance and repairs
(10,253
)
(11,475
)
(34,327
)
(36,713
)
General and administrative
(12,467
)
(16,051
)
(48,901
)
(47,845
)
Loss on impairment
(82,611
)
(14,600
)
(149,044
)
(84,644
)
Litigation settlement
22,688
—
(65,462
)
—
Other
(7
)
(38
)
(41
)
(377
)
Total operating expenses
(192,861
)
(163,546
)
(636,835
)
(540,934
)
OTHER INCOME (EXPENSES):
Interest and other income
1,367
283
2,212
714
Interest expense
(50,515
)
(55,194
)
(156,995
)
(163,164
)
Gain on extinguishment of debt
—
—
71,722
—
Gain on investments/deconsolidation
11,174
—
11,174
387
Gain on sales of real estate assets
8,056
7,880
13,811
15,998
Income tax benefit (provision)
(1,670
)
(1,034
)
(2,622
)
1,846
Equity in earnings (losses) of
unconsolidated affiliates
(1,759
)
1,762
3,421
9,869
Total other expenses
(33,347
)
(46,303
)
(57,277
)
(134,350
)
Net loss
(38,957
)
(2,971
)
(115,454
)
(33,608
)
Net (income) loss attributable to
noncontrolling interests in:
Operating Partnership
6,808
1,628
20,020
8,978
Other consolidated subsidiaries
(763
)
(24
)
(631
)
369
Net loss attributable to the
Company
(32,912
)
(1,367
)
(96,065
)
(24,261
)
Preferred dividends
(11,223
)
(11,223
)
(33,669
)
(33,669
)
Net loss attributable to common
shareholders
$
(44,135
)
$
(12,590
)
$
(129,734
)
$
(57,930
)
Basic and diluted per share data
attributable to common shareholders:
Net loss attributable to common
shareholders
$
(0.26
)
$
(0.07
)
$
(0.75
)
$
(0.34
)
Weighted-average common and potential
dilutive common shares outstanding
173,471
172,665
173,400
172,426
(1) See "Adoption of New Lease Accounting Standard" on page 6
for further information on the presentation of rental revenues in
accordance with the new standard adopted effective January 1,
2019.
The Company's reconciliation of net loss attributable to
common shareholders to FFO allocable to Operating Partnership
common unitholders is as follows:
(in thousands, except per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net loss attributable to common
shareholders
$
(44,135
)
$
(12,590
)
$
(129,734
)
$
(57,930
)
Noncontrolling interest in loss of
Operating Partnership
(6,808
)
(1,628
)
(20,020
)
(8,978
)
Depreciation and amortization expense
of:
Consolidated properties
64,168
71,945
198,438
217,261
Unconsolidated affiliates
14,471
10,438
36,599
31,177
Non-real estate assets
(920
)
(910
)
(2,719
)
(2,748
)
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(2,031
)
(2,136
)
(6,836
)
(6,424
)
Loss on impairment
82,611
14,600
149,044
84,644
Loss on impairment of unconsolidated
affiliates
—
1,022
—
1,022
Gain on depreciable property, net of
taxes
(16,914
)
(3,307
)
(21,755
)
(5,543
)
FFO allocable to Operating Partnership
common unitholders
90,442
77,434
203,017
252,481
Litigation settlement, net of taxes
(1)
(22,688
)
—
64,979
—
Gain on investments, net of taxes (2)
—
—
—
(287
)
Non-cash default interest expense (3)
—
1,784
542
3,616
Gain on extinguishment of debt (4)
—
—
(71,722
)
—
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
67,754
$
79,218
$
196,816
$
255,810
FFO per diluted share
$
0.45
$
0.39
$
1.01
$
1.26
FFO, as adjusted, per diluted
share
$
0.34
$
0.40
$
0.98
$
1.28
Weighted-average common and potential
dilutive common shares outstanding with Operating Partnership units
fully converted
200,230
199,432
200,158
199,630
(1) The three months ended September 30, 2019 represents a
reduction of $22,688 to the accrued maximum expense of $88,150
related to the settlement of a class action lawsuit that was
recorded in the three months ended March 31, 2019. A majority of
the reduction of $22,688 relates to past tenants that did not
submit a claim pursuant to the terms of the settlement agreement
with the remainder relating to tenants that opted out of the
lawsuit. The nine months ended September 30, 2019 is comprised of
the accrued maximum expense related to the settlement of a class
action lawsuit less the reduction recorded in the three months
ended September 30, 2019. (2) The nine months ended September 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. (3) The nine months ended September 30, 2019 includes
default interest expense related to Acadiana Mall and Cary Towne
Center. The three months and nine months ended September 30, 2018
include default interest expense related to Acadiana Mall and Cary
Towne Center. (4) The nine months ended September 30, 2019 includes
a gain on extinguishment of debt related to the non-recourse loan
secured by Acadiana Mall, which was conveyed to the lender in the
first quarter of 2019, and a gain on extinguishment of debt related
to the non-recourse loan secured by Cary Towne Center, which was
sold in the first quarter of 2019.
The reconciliation of diluted EPS to FFO
per diluted share is as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Diluted EPS attributable to common
shareholders
$
(0.26
)
$
(0.07
)
$
(0.75
)
$
(0.34
)
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
0.38
0.40
1.13
1.20
Loss on impairment
0.42
0.08
0.74
0.43
Gain on depreciable property, net of
taxes
(0.09
)
(0.02
)
(0.11
)
(0.03
)
FFO per diluted share
$
0.45
$
0.39
$
1.01
$
1.26
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 Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
FFO allocable to Operating Partnership
common unitholders
$
90,442
$
77,434
$
203,017
$
252,481
Percentage allocable to common
shareholders (1)
86.64
%
86.58
%
86.63
%
86.37
%
FFO allocable to common
shareholders
$
78,359
$
67,042
$
175,874
$
218,068
FFO allocable to Operating Partnership
common unitholders, as adjusted
$
67,754
$
79,218
$
196,816
$
255,810
Percentage allocable to common
shareholders (1)
86.64
%
86.58
%
86.63
%
86.37
%
FFO allocable to common shareholders,
as adjusted
$
58,702
$
68,587
$
170,502
$
220,943
(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 Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Lease termination fees
$
848
$
783
$
2,938
$
9,788
Lease termination fees per share
$
—
$
—
$
0.01
$
0.05
Straight-line rental income
$
1,348
$
388
$
2,302
$
(3,923
)
Straight-line rental income per share
$
0.01
$
—
$
0.01
$
(0.02
)
Gains on outparcel sales, net of taxes
$
1,961
$
4,548
$
2,894
$
11,033
Gains on outparcel sales, net of taxes per
share
$
0.01
$
0.02
$
0.01
$
0.06
Net amortization of acquired above- and
below-market leases
$
533
$
(1,210
)
$
2,032
$
982
Net amortization of acquired above- and
below-market leases per share
$
—
$
(0.01
)
$
0.01
$
—
Net amortization of debt premiums and
discounts
$
333
$
314
$
982
$
727
Net amortization of debt premiums and
discounts per share
$
—
$
—
$
—
$
—
Income tax benefit (provision)
$
(1,670
)
$
(1,034
)
$
(2,622
)
$
1,846
Income tax benefit (provision) per
share
$
(0.01
)
$
(0.01
)
$
(0.01
)
$
0.01
Gain on extinguishment of debt
$
—
$
—
$
71,722
$
—
Gain on extinguishment of debt per
share
$
—
$
—
$
0.36
$
—
Gain on investments, net of taxes
$
—
$
—
$
—
$
287
Gain on investments, net of taxes per
share
$
—
$
—
$
—
$
—
Non-cash default interest expense
$
—
$
(1,784
)
$
(542
)
$
(3,616
)
Non-cash default interest expense per
share
$
—
$
(0.01
)
$
—
$
(0.02
)
Abandoned projects expense
$
(7
)
$
(38
)
$
(41
)
$
(377
)
Abandoned projects expense per share
$
—
$
—
$
—
$
—
Interest capitalized
$
787
$
1,198
$
1,969
$
2,736
Interest capitalized per share
$
—
$
0.01
$
0.01
$
0.01
Litigation settlement, net of taxes
$
22,688
$
—
$
(64,979
)
$
—
Litigation settlement, net of taxes per
share
$
0.11
$
—
$
(0.32
)
$
—
As of September 30,
2019
2018
Straight-line rent receivable
$
55,974
$
57,284
Same-center Net Operating
Income
(Dollars in thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net loss
$
(38,957
)
$
(2,971
)
$
(115,454
)
$
(33,608
)
Adjustments:
Depreciation and amortization
64,168
71,945
198,438
217,261
Depreciation and amortization from
unconsolidated affiliates
14,471
10,438
36,599
31,177
Noncontrolling interests' share of
depreciation and amortization in other consolidated
subsidiaries
(2,031
)
(2,136
)
(6,836
)
(6,424
)
Interest expense
50,515
55,194
156,995
163,164
Interest expense from unconsolidated
affiliates
6,686
6,551
19,842
18,849
Noncontrolling interests' share of
interest expense in other consolidated subsidiaries
(1,561
)
(1,875
)
(5,044
)
(5,912
)
Abandoned projects expense
7
38
41
377
Gain on sales of real estate assets
(8,056
)
(7,880
)
(13,811
)
(15,998
)
(Gain) loss on sales of real estate assets
of unconsolidated affiliates
—
28
(627
)
(564
)
Gain on investments/deconsolidation
(11,174
)
—
(11,174
)
(387
)
Gain on extinguishment of debt
—
—
(71,722
)
—
Loss on impairment
82,611
14,600
149,044
84,644
Litigation settlement
(22,688
)
—
65,462
—
Income tax (benefit) provision
1,670
1,034
2,622
(1,846
)
Lease termination fees
(848
)
(783
)
(2,938
)
(9,788
)
Straight-line rent and above- and
below-market lease amortization
(1,881
)
822
(4,334
)
2,941
Net (income) loss attributable to
noncontrolling interests in other consolidated subsidiaries
(763
)
(24
)
(631
)
369
General and administrative expenses
12,467
16,051
48,901
47,845
Management fees and non-property level
revenues
(2,293
)
(2,293
)
(9,077
)
(9,642
)
Operating Partnership's share of
property NOI
142,343
158,739
436,296
482,458
Non-comparable NOI
(3,292
)
(10,967
)
(14,855
)
(36,409
)
Total same-center NOI (1)
$
139,051
$
147,772
$
421,441
$
446,049
Total same-center NOI percentage
change
(5.9
)%
(5.5
)%
Same-center Net Operating
Income
(Continued)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Malls
$
124,649
$
133,908
$
378,364
$
404,369
Associated centers
8,317
8,133
24,610
24,094
Community centers
5,052
4,869
15,216
14,610
Offices and other
1,033
862
3,251
2,976
Total same-center NOI (1)
$
139,051
$
147,772
$
421,441
$
446,049
Percentage Change:
Malls
(6.9
)%
(6.4
)%
Associated centers
2.3
%
2.1
%
Community centers
3.8
%
4.1
%
Offices and other
19.8
%
9.2
%
Total same-center NOI (1)
(5.9
)%
(5.5
)%
(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 September 30,
2019, and we owned it and it was in operation for both the entire
preceding calendar year and the current year-to-date reporting
period ending September 30, 2019. 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 or 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.
Company's Share of
Consolidated and Unconsolidated Debt
(Dollars in thousands)
As of September 30,
2019
Fixed Rate
Variable Rate
Total per Debt
Schedule
Unamortized Deferred Financing
Costs
Total
Consolidated debt
$
2,860,889
$
855,758
$
3,716,647
$
(17,640
)
$
3,699,007
Noncontrolling interests' share of
consolidated debt
(74,486
)
—
(74,486
)
516
(73,970
)
Company's share of unconsolidated
affiliates' debt
565,242
82,995
648,237
(2,607
)
645,630
Company's share of consolidated and
unconsolidated debt
$
3,351,645
$
938,753
$
4,290,398
$
(19,731
)
$
4,270,667
Weighted-average interest rate
5.10
%
4.40
%
4.95
%
As of September 30,
2018
Fixed Rate
Variable Rate
Total per Debt
Schedule
Unamortized Deferred Financing
Costs
Total
Consolidated debt
$
3,160,776
$
970,508
$
4,131,284
$
(15,476
)
$
4,115,808
Noncontrolling interests' share of
consolidated debt
(94,787
)
—
(94,787
)
611
(94,176
)
Company's share of unconsolidated
affiliates' debt
553,339
96,598
649,937
(2,826
)
647,111
Company's share of consolidated and
unconsolidated debt
$
3,619,328
$
1,067,106
$
4,686,434
$
(17,691
)
$
4,668,743
Weighted-average interest rate
5.16
%
4.01
%
4.90
%
Total Market Capitalization as of
September 30, 2019
(In thousands, except stock price)
Shares Outstanding
Stock Price (1)
Value
Common stock and Operating Partnership
units
200,228
$
1.29
$
258,294
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
884,544
Company's share of total debt, excluding
unamortized deferred financing costs
4,290,398
Total market capitalization
$
5,174,942
(1) Stock price for common stock and Operating Partnership units
equals the closing price of the common stock on September 30, 2019.
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 Ended September
30,
Nine Months Ended September
30,
Basic
Diluted
Basic
Diluted
2019:
Weighted-average shares - EPS
173,471
173,471
173,400
173,400
Weighted-average Operating Partnership
units
26,759
26,759
26,758
26,758
Weighted-average shares - FFO
200,230
200,230
200,158
200,158
2018:
Weighted-average shares - EPS
172,665
172,665
172,426
172,426
Weighted-average Operating Partnership
units
26,767
26,767
27,204
27,204
Weighted-average shares - FFO
199,432
199,432
199,630
199,630
Consolidated Balance Sheets
(Unaudited; in thousands, except share
data)
As of
September 30, 2019
December 31, 2018
ASSETS
Real estate assets:
Land
$
747,218
$
793,944
Buildings and improvements
5,916,546
6,414,886
6,663,764
7,208,830
Accumulated depreciation
(2,454,859
)
(2,493,082
)
4,208,905
4,715,748
Held for sale
—
30,971
Developments in progress
63,891
38,807
Net investment in real estate assets
4,272,796
4,785,526
Cash and cash equivalents
34,565
25,138
Receivables:
Tenant, net of allowance for doubtful
accounts of $2,337 in 2018
76,947
77,788
Other, net of allowance for doubtful
accounts of $838 in 2018
6,577
7,511
Mortgage and other notes receivable
5,818
7,672
Investments in unconsolidated
affiliates
279,934
283,553
Intangible lease assets and other
assets
146,358
153,665
$
4,822,995
$
5,340,853
LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND EQUITY
Mortgage and other indebtedness, net
$
3,699,007
$
4,043,180
Accounts payable and accrued
liabilities
260,264
218,217
Liabilities related to assets held for
sale
—
43,716
Total liabilities
3,959,271
4,305,113
Commitments and contingencies
Redeemable noncontrolling interests
2,278
3,575
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, 173,469,264 and 172,656,458 issued and
outstanding in 2019 and 2018, respectively
1,735
1,727
Additional paid-in capital
1,965,230
1,968,280
Dividends in excess of cumulative
earnings
(1,148,639
)
(1,005,895
)
Total shareholders' equity
818,351
964,137
Noncontrolling interests
43,095
68,028
Total equity
861,446
1,032,165
$
4,822,995
$
5,340,853
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191031005905/en/
Katie Reinsmidt Executive Vice President - Chief Investment
Officer 423.490.8301 katie.reinsmidt@cblproperties.com
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