CBL Properties (NYSE:CBL) announced results for the third
quarter ended September 30, 2017. 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 EndedSeptember
30,
Nine Months EndedSeptember
30,
2017 2016 %
2017 2016 % Net
(loss) income attributable to common shareholders per diluted share
$ (0.01 ) $ (0.06 ) 83.3 %
$
0.30 $ 0.41 (26.8 )%
Funds from Operations (“FFO”) per diluted
share
$ 0.52 $ 0.56 (7.1 )%
$
1.63 $ 1.97 (17.3 )% FFO, as adjusted, per
diluted share (1)
$ 0.50 $ 0.57 (12.3
)%
$ 1.51 $ 1.72 (12.2 )%
(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 news release.
KEY TAKEAWAYS:
- FFO per diluted share, as adjusted, was
$0.50 for the third quarter 2017, compared with $0.57 per share for
the third quarter 2016. Third quarter 2017 was impacted by
approximately $0.02 per share of dilution from asset sales.
- Total Portfolio Same-center NOI
declined 2.6% for the third quarter 2017 and 1.6% for the nine
months ended September 30, 2017.
- Same-center sales per square foot for
the stabilized mall portfolio during the third quarter were flat
compared with the prior-year quarter. For the twelve months ended
September 30, 2017, same-center sales were $373 per square
foot.
- Portfolio occupancy was 93.1% as of
September 30, 2017, a 40 bps decline compared with 93.5% as of
September 30, 2016 and 150 bps increase from 91.6% as of June 30,
2017. Same-center mall occupancy was 91.8% as of September 30,
2017 compared with 93.0% as of September 30, 2016 and 90.6% as
of June 30, 2017.
- Year-to-date, CBL has completed gross
asset sales of $166.25 million (at CBL’s share) including the sale
of its remaining 25% interest in River Ridge Mall to its joint
venture partner for $9.0 million.
- During the third quarter, CBL closed on
the extension and modification of two unsecured term loans totaling
$535 million and completed an offering of $225 million aggregate
principal amount of its 5.950% Senior Notes Due 2026.
- The fourth quarter common dividend was
declared at $0.20 per share, which represents an annualized rate of
$0.80 per share, corresponding with projected taxable income and
preserving an estimated $50 million in annual cash flow.
“This quarter’s results fell below our expectations as our
revenues were impacted by additional bankruptcies, store closures
and rent concessions,” said Stephen Lebovitz, CBL’s president &
CEO. “The difficult environment for retailers has put further
pressure on our NOI, FFO and lease spreads as we work diligently to
mitigate the impact and preserve NOI. As a result, it is necessary
to adjust our outlook and guidance for the remainder of the year.
Despite the challenges, our portfolio of market dominant properties
is resilient as shown by the sequential improvement in occupancy
and stabilization in sales during the quarter. We are executing our
strategy and successfully replacing underperforming retailers with
higher performing tenants and more diverse uses. Year-to-date, only
25% of new leasing has been executed with traditional apparel
retailers as we reinvent our properties into suburban town centers
that offer unique shopping, more food and beverage, fitness, health
and beauty uses, services and more.
“We have continued to enhance our investment grade balance
sheet, providing further liquidity and flexibility to navigate the
challenges we are facing. This past quarter, we completed the
extension of two unsecured term loans at favorable terms, issued
$225 million in additional senior unsecured notes and retired two
higher-rate secured loans ahead of maturity. As the quality and
size of our unencumbered asset pool increases and our credit
metrics strengthen, our strong balance sheet provides us with the
financial flexibility necessary to execute our business
plan.”
Net loss attributable to common shareholders for the third
quarter 2017 was $2.3 million, or $(0.01) per diluted share,
compared with a net loss of $10.2 million, or $(0.06) per diluted
share, for the third quarter 2016.
FFO allocable to common shareholders, as adjusted, for the third
quarter 2017 was $84.7 million, or $0.50 per diluted share,
compared with $98.1 million, or $0.57 per diluted share, for the
third quarter 2016. FFO allocable to the Operating Partnership
common unitholders, as adjusted, for the third quarter 2017 was
$98.7 million compared with $114.9 million for the third quarter
2016. FFO, as adjusted, for the third quarter 2017 was impacted by
$0.02 per share of dilution from asset sales.
CBL’s revenues for the third quarter 2017 were impacted by 1)
higher than anticipated retailer bankruptcy activity; 2) lower than
anticipated rent from restructured leases with retailers undergoing
bankruptcy-related reorganization; 3) lower than anticipated rent
from renewed leases with certain retailers; and 4) lower than
projected contribution from temporary leasing and permanent
lease-up of space vacated in bankruptcy.
Percentage change in same-center Net
Operating Income (“NOI”)(1):
Three Months Ended
Nine Months Ended September 30, 2017 Portfolio
same-center NOI
(2.6 )% (1.6 )% Mall
same-center NOI
(2.8 )% (2.1 )%
(1)
CBL’s definition of same-center NOI excludes the impact of
lease termination fees and certain non-cash items of straight-line
rents, write-offs of landlord inducements and net amortization of
acquired above and below market leases.
Major variances impacting same-center NOI for the quarter ended
September 30, 2017, include:
- NOI declined $4.5 million, due to a
$4.1 million decrease in revenue and a $0.4 million increase in
operating expenses.
- Minimum rents and tenant reimbursements
declined $4.1 million during the quarter, primarily related to
store closures and rent concessions for tenants in bankruptcy.
- Percentage rents were flat compared
with the prior year quarter.
- Property operating expenses declined
$0.7 million, maintenance and repair expense declined $1.0 million,
and real estate tax expenses increased $2.1 million.
PORTFOLIO OPERATIONAL RESULTS
Occupancy:
As of June 30, As of
September 30, 2017 2017 2016
Portfolio occupancy 91.6 %
93.1 % 93.5 % Mall
portfolio 90.2 %
91.6 % 92.6 % Same-center malls 90.6
%
91.8 % 93.0 % Stabilized malls 90.5 %
91.7
% 92.5 % Non-stabilized malls (1) 81.8 %
87.9
% 93.6 % Associated centers 95.5 %
98.2 % 96.1
% Community centers 97.0 %
98.2 % 97.5 %
(1)
Represents occupancy for The Outlet Shoppes at Laredo and
The Outlet Shoppes of the Bluegrass as of June 30, 2017 and
September 30, 2017, and The Outlet Shoppes at Atlanta and The
Outlet Shoppes of the Bluegrass as of September 30, 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
Nine Months Ended September 30, 2017
Stabilized Malls (13.7 )%
(4.1
)%
New leases (1) 0.3
%
10.4
%
Renewal leases (16.1 )%
(7.9
)%
(1)
Excluding one lease with a significant negative variance,
the increase in stabilized mall new leases was 4.3% and 11.5% for
the three and nine months ended September 30, 2017, respectively.
Same-Center Sales Per Square Foot for
Mall Tenants 10,000 Square Feet or Less:
Twelve Months Ended September 30,
2017 2016 % Change
Stabilized mall same-center sales per square foot
$
373 $ 380 (1.8 )% Stabilized mall sales per square foot
$ 373 $ 377 (1.1 )%
DIVIDEND
CBL’s Board of Directors has declared a quarterly cash dividend
for the Company’s Common Stock of $0.20 per share for the quarter
ending December 31, 2017. The dividend is payable on
January 16, 2018, to shareholders of record as of December 29,
2017. The dividend represents an annualized rate of $0.80 per
share.
“The dividend is an important way that we return value to our
shareholders,” commented Lebovitz. “Our approach has been to set
the dividend at a level that maximizes available cash flow for
investing in our properties and debt reduction, while also
maintaining consistency. As one of the largest shareholders of CBL,
management and the Board are fully vested in maximizing shareholder
value. It is with that perspective that we made the difficult
decision to reduce the common dividend to an annualized rate of
$0.80 per share from $1.06 per share. Based on our updated
projections of taxable income, the common dividend is being re-set
to a rate that will preserve an estimated $50 million of cash on an
annual basis. This enhanced liquidity will help to fund
value-adding redevelopment activity and debt reduction.”
The Board also declared a quarterly cash dividend of $0.4609375
per depositary share for the quarter ending December 31, 2017, for
the Company’s 7.375% Series D Cumulative Redeemable Preferred
Stock. The dividend, which equates to an annual dividend payment of
$1.84375 per depositary share, is payable on December 29, 2017, to
shareholders of record as of December 15, 2017.
The Board also declared a quarterly cash dividend of $0.4140625
per depositary share for the quarter ending December 31, 2017, for
the Company’s 6.625% Series E Cumulative Redeemable Preferred
Stock. The dividend, which equates to an annual dividend payment of
$1.65625 per depositary share, is payable on December 29, 2017, to
shareholders of record as of December 15, 2017.
DISPOSITIONS
During the quarter, CBL closed on the sale of its remaining 25%
interest in River Ridge Mall in Lynchburg, VA, for $9.0 million,
cash.
Year-to-date, CBL has 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.
FINANCING ACTIVITY
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”). The notes constitute an additional issuance of the 5.950%
Senior Notes due 2026, $400 million aggregate principal amount of
which the Operating Partnership issued on December 13, 2016. The
$625 million aggregate principal amount of notes mature on
December 15, 2026.
In September, CBL retired two secured loans totaling $206
million, including a $144.3 million loan secured by its Tier 1
property, Hanes Mall, in Winston-Salem, NC, which bore an interest
rate of 6.99% and was scheduled to mature in October 2018. The loan
was retired with a minimal prepayment fee. CBL also retired at par
the $61.6 million ($46.2 million at CBL’s 75% share) loan secured
by its Tier 1 joint venture outlet center, The Outlet Shoppes at El
Paso, in El Paso, TX. The loan was scheduled to mature on December
5, 2017, and bore an interest rate of 7.06%.
In July, CBL completed the extension and modification of two
unsecured term loans, which were scheduled to mature in 2018. The
first, with a balance of $400 million, was increased to a balance
of $490 million until July 2018, when it will be reduced to $300
million for the remainder of its term. New borrowings under this
term loan were used to reduce outstanding balances on the Company’s
unsecured lines of credit. The new term loan has an initial
maturity date of July 2020 with two, one-year extension options
(the 2nd option is at the lenders’ sole discretion), for a final
maturity of July 2022. The term loan bears an interest rate of 150
basis points over LIBOR, based on CBL’s current investment grade
rating of BBB-/Baa3/BBB-. Wells Fargo Bank National Association
served as Administrative Agent.
The second unsecured term loan, which had a balance of $50
million and was due to mature in February 2018, was modified to a
new $45 million term loan. The new loan has an initial maturity
date of June 2021, with an additional one-year extension option
available at CBL’s discretion, for a final maturity of June 2022.
The term loan bears interest at a rate of 165 basis points over
LIBOR. First Tennessee Bank NA served as Administrative Agent.
In April, the $123.3 million loan secured by Acadiana Mall in
Lafayette, LA, matured. CBL is in negotiations with the existing
lender to modify the terms of the loan and will announce details of
the agreement once it has been finalized.
CBL has entered into preliminary discussions with the lender for
the loan secured by Hickory Point Mall in Forsyth, IL, to explore a
further modification of the loan or conveyance. In 2016, the
original loan was modified to extend the term and provide for
increased cash flows to fund redevelopment activity. Since that
time, the property has experienced continued deterioration in
operating metrics. As a result, CBL recorded a $24.5 million
impairment to adjust the property’s carrying value during the third
quarter.
During the third quarter, Wausau Center in Wausau, WI, was
conveyed to the lender in settlement of the $17.7 million
non-recourse loan secured by the property. CBL recorded a gain on
extinguishment of debt of $6.9 million related to the
conveyance.
DEVELOPMENT
On November 14th, CBL and its joint venture partners CHM, LLC,
and Browning Development Solutions will celebrate the
groundbreaking of The Shoppes at Eagle Point, a 233,000-square-foot
grocery-anchored shopping center located in Cookeville, TN. The
project is being developed in a 50/50 joint venture with CBL
overseeing leasing and development. The project will be anchored by
Publix, Academy Sports & Outdoor, Ross Dress for Less,
PetSmart, Ulta Beauty as well as a collection of shops and
restaurants including Panera Bread, Chipotle Mexican Grille and
Shoe Carnival. The grand opening is scheduled for fall 2018.
OUTLOOK AND GUIDANCE
CBL is updating guidance to incorporate third quarter results
and a revised outlook for the remainder of 2017. CBL’s revised
assumptions for full-year 2017 are as follows:
Current
Previous 2017 FFO per
share, as adjusted $2.08 - $2.12
$2.18 - $2.24 2017 Same-Center
NOI Growth (3.0)% - (2.0)% (2.0)% - 0%
G&A $61 - 62 million
$62 - 64 million Gain on outparcel sales
$12 -14 million $10 - 12 million
Occupancy
75 - 125 bps lower total portfolio
occupancy with a decline in stabilized mall occupancy near the low
end of the range. 75 - 125 bps lower
total portfolio and stabilized mall occupancy
CBL’s updated 2017 FFO, as adjusted, guidance range of $2.08 -
$2.12 per diluted share was adjusted to incorporate an approximate
$0.05 per share lower expected contribution from same-center NOI;
approximately $0.03 per share lower expected contribution from
non-same-center properties and sold properties; $0.01 per share
lower fee income and approximately $0.02 per share higher expected
interest expense compared with previous assumptions. The increase
in assumed interest expense is due to additional senior unsecured
notes issued in September as well as an increased LIBOR/base-rate
assumption, net of interest savings resulting from the early
retirement of a secured loan.
Low High Expected diluted
earnings per common share $ 0.45 $ 0.49 Adjust to fully converted
shares from common shares (0.06 ) (0.06 ) Expected earnings per
diluted, fully converted common share 0.39 0.43 Add: depreciation
and amortization 1.64 1.64 Less: gain on depreciable property (0.24
) (0.24 ) Add: loss on impairment 0.35 0.35 Add: noncontrolling
interest in earnings of Operating Partnership 0.07 0.07
Expected FFO per diluted, fully converted common share 2.21
2.25 Adjustment for certain significant items (0.13 ) (0.13 )
Expected adjusted FFO per diluted, fully converted common share $
2.08 $ 2.12
INVESTOR CONFERENCE CALL AND WEBCAST
CBL Properties will conduct a conference call on Friday,
November 3, 2017, at 11:00 a.m. ET. To access this
interactive teleconference, dial (888) 317-6003 or
(412) 317-6061 and enter the confirmation number, 9283024. A
replay of the conference call will be available through November
10, 2017, by dialing (877) 344-7529 or (412) 317-0088 and
entering the confirmation number, 10111623.
The Company will also provide an online webcast and rebroadcast
of its third quarter 2017 earnings release conference call. The
live broadcast of the quarterly conference call will be available
online at cblproperties.com on Friday, November 3, 2017
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 or contact Investor Relations at (423)
490-8312.
ABOUT CBL PROPERTIES
Headquartered in Chattanooga, TN, CBL Properties owns and
manages a national portfolio of market-dominant properties located
in dynamic and growing communities. CBL’s portfolio is comprised of
119 properties totaling 74.4 million square feet across 27 states,
including 76 high-quality enclosed, outlet and open-air retail
centers and 12 properties managed for third parties. CBL
continuously strengthens its company and portfolio through active
management, aggressive leasing and profitable reinvestment in its
properties. For more information, visit cblproperties.com.
NON-GAAP FINANCIAL MEASURES
Funds From Operations
FFO is a widely used non-GAAP measure of the operating
performance of real estate companies that supplements net income
(loss) determined in accordance with GAAP. The National Association
of Real Estate Investment Trusts (“NAREIT”) defines FFO as net
income (loss) (computed in accordance with GAAP) excluding gains or
losses on sales of depreciable operating properties and impairment
losses of depreciable properties, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships
and joint ventures and noncontrolling interests. Adjustments for
unconsolidated partnerships and joint ventures and noncontrolling
interests are calculated on the same basis. We define FFO as
defined above by NAREIT less dividends on preferred stock of the
Company or distributions on preferred units of the Operating
Partnership, as applicable. The Company’s method of calculating FFO
may be different from methods used by other REITs and, accordingly,
may not be comparable to such other REITs.
The Company believes that FFO provides an additional indicator
of the operating performance of its properties without giving
effect to real estate depreciation and amortization, which assumes
the value of real estate assets declines predictably over time.
Since values of well-maintained real estate assets have
historically risen with market conditions, the Company believes
that FFO enhances investors’ understanding of its operating
performance. The use of FFO as an indicator of financial
performance is influenced not only by the operations of the
Company’s properties and interest rates, but also by its capital
structure.
The Company presents both FFO allocable to Operating Partnership
common unitholders and FFO allocable to common shareholders, as it
believes that both are useful performance measures. The Company
believes FFO allocable to Operating Partnership common unitholders
is a useful performance measure since it conducts substantially all
of its business through its Operating Partnership and, therefore,
it reflects the performance of the properties in absolute terms
regardless of the ratio of ownership interests of the Company’s
common shareholders and the noncontrolling interest in the
Operating Partnership. The Company believes FFO allocable to its
common shareholders is a useful performance measure because it is
the performance measure that is most directly comparable to net
income (loss) attributable to its common shareholders.
In the reconciliation of net income (loss) attributable to the
Company’s common shareholders to FFO allocable to Operating
Partnership common unitholders, located in this earnings release,
the Company makes an adjustment to add back noncontrolling interest
in income (loss) of its Operating Partnership in order to arrive at
FFO of the Operating Partnership common unitholders. The Company
then applies a percentage to FFO of the Operating Partnership
common unitholders to arrive at FFO allocable to its common
shareholders. The percentage is computed by taking the
weighted-average number of common shares outstanding for the period
and dividing it by the sum of the weighted-average number of common
shares and the weighted-average number of Operating Partnership
units held by noncontrolling interests during the period.
FFO does not represent cash flows from operations as defined by
GAAP, is not necessarily indicative of cash available to fund all
cash flow needs and should not be considered as an alternative to
net income (loss) for purposes of evaluating the Company’s
operating performance or to cash flow as a measure of
liquidity.
The Company believes that it is important to identify the impact
of certain significant items on its FFO measures for a reader to
have a complete understanding of the Company’s results of
operations. Therefore, the Company has also presented adjusted FFO
measures excluding these items from the applicable periods. Please
refer to the reconciliation of net income (loss) attributable to
common shareholders to FFO allocable to Operating Partnership
common unitholders on page 10 of this news release for a
description of these adjustments.
Same-center Net Operating Income
NOI is a supplemental non-GAAP measure of the operating
performance of the Company’s shopping centers and other properties.
The Company defines NOI as property operating revenues (rental
revenues, tenant reimbursements and other income) less property
operating expenses (property operating, real estate taxes and
maintenance and repairs).
The Company computes NOI based on the Operating Partnership’s
pro rata share of both consolidated and unconsolidated properties.
The Company believes that presenting NOI and same-center NOI
(described below) based on its Operating Partnership’s pro rata
share of both consolidated and unconsolidated properties is useful
since the Company conducts substantially all of its business
through its Operating Partnership and, therefore, it reflects the
performance of the properties in absolute terms regardless of the
ratio of ownership interests of the Company’s common shareholders
and the noncontrolling interest in the Operating Partnership. The
Company’s definition of NOI may be different than that used by
other companies and, accordingly, the Company’s calculation of NOI
may not be comparable to that of other companies.
Since NOI includes only those revenues and expenses related to
the operations of the Company’s shopping center properties, the
Company believes that same-center NOI provides a measure that
reflects trends in occupancy rates, rental rates, sales at the
malls and operating costs and the impact of those trends on the
Company’s results of operations. The Company’s calculation of
same-center NOI excludes lease termination income, straight-line
rent adjustments, amortization of above and below market lease
intangibles and write-off of landlord inducement assets in order to
enhance the comparability of results from one period to another. A
reconciliation of same-center NOI to net income is located at the
end of this earnings release.
Pro Rata Share of Debt
The Company presents debt based on its pro rata ownership share
(including the Company’s pro rata share of unconsolidated
affiliates and excluding noncontrolling interests’ share of
consolidated properties) because it believes this provides
investors a clearer understanding of the Company’s total debt
obligations which affect the Company’s liquidity. A reconciliation
of the Company’s pro rata share of debt to the amount of debt on
the Company’s condensed consolidated balance sheet is located at
the end of this earnings release.
Information included herein contains
“forward-looking statements” within the meaning of the federal
securities laws. Such statements are inherently subject to risks
and uncertainties, many of which cannot be predicted with accuracy
and some of which might not even be anticipated. Future events and
actual events, financial and otherwise, may differ materially from
the events and results discussed in the forward-looking statements.
The reader is directed to the Company’s various filings with the
Securities and Exchange Commission, including without limitation
the Company’s Annual Report on Form 10-K, and the “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” included therein, for a discussion of such risks and
uncertainties.
CBL & Associates Properties,
Inc.
Consolidated Statements of
Operations
(Unaudited; in thousands, except per share
amounts)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017
2016 REVENUES: Minimum rents
$ 150,836
$ 164,444
$ 468,195 $ 502,289 Percentage rents
3,000 3,225
7,127 10,590 Other rents
3,790
3,866
11,171 13,747 Tenant reimbursements
63,055
69,489
192,577 212,951 Management, development and leasing
fees
2,718 4,177
8,747 10,825 Other
1,251
6,520
4,079 19,362 Total
revenues
224,650 251,721
691,896
769,764
OPERATING EXPENSES: Property operating
31,295 35,116
96,250 104,804 Depreciation and
amortization
71,732 71,794
225,461 220,505 Real
estate taxes
21,573 22,492
62,343 68,354 Maintenance
and repairs
11,254 13,236
36,322 39,574 General and
administrative
13,568 13,222
45,402 46,865 Loss on
impairment
24,935 53,558
71,401 116,736 Other
132 5,576
5,151 20,313
Total operating expenses
174,489 214,994
542,330 617,151
Income from operations
50,161 36,727
149,566 152,613 Interest and other
income (loss)
(200 ) 451
1,235 1,062 Interest
expense
(53,913 ) (54,292 )
(165,179 )
(162,710 ) Gain on extinguishment of debt
6,452 (6 )
30,927 — Loss on investment
(354 ) —
(6,197 ) — Income tax benefit
1,064 2,386
4,784 2,974 Equity in earnings of unconsolidated affiliates
4,706 10,478
16,404 107,217
Income (loss) from continuing operations before gain on
sales of real estate assets 7,916 (4,256 )
31,540
101,156 Gain on sales of real estate assets
1,383
4,926
86,904 14,503
Net income
9,299 670
118,444 115,659 Net (income) loss
attributable to noncontrolling interests in: Operating Partnership
81 1,372
(8,702 ) (12,056 ) Other consolidated
subsidiaries
(415 ) (983 )
(25,266 )
449
Net income attributable to the Company
8,965 1,059
84,476 104,052 Preferred dividends
(11,223 ) (11,223 )
(33,669 ) (33,669 )
Net income (loss) attributable to common shareholders
$ (2,258 ) $ (10,164 )
$ 50,807
$ 70,383
Basic and diluted per share data
attributable to common shareholders: Net income (loss)
attributable to common shareholders
$ (0.01 )
$ (0.06 )
$ 0.30 $ 0.41
Weighted-average common and potential
dilutive common shares outstanding
171,096 170,792
171,060 170,751 Dividends
declared per common share
$ 0.265 $ 0.265
$
0.795 $ 0.795
The Company’s reconciliation of net
income (loss) attributable to common shareholders to FFO allocable
to Operating Partnership common unitholders is as follows:
(in thousands, except per share data)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017
2016 Net income (loss) attributable to common shareholders
$ (2,258 ) $ (10,164 )
$ 50,807
$ 70,383 Noncontrolling interest in income (loss) of Operating
Partnership
(81 ) (1,372 )
8,702 12,056
Depreciation and amortization expense of: Consolidated properties
71,732 71,794
225,461 220,505 Unconsolidated
affiliates
9,633 10,756
28,533 29,090 Non-real estate
assets
(934 ) (838 )
(2,590 ) (2,397 )
Noncontrolling interests’ share of
depreciation and amortization
(2,170 ) (2,237 )
(6,791 ) (6,685 )
Loss on impairment, net of taxes
24,935 51,812
70,185
114,990
(Gain) loss on depreciable property,
net of taxes and noncontrolling interests’ share
1,995 (8,685 )
(48,761 ) (44,206 )
FFO allocable to Operating Partnership common unitholders
102,852 111,066
325,546 393,736 Litigation expenses
(1)
17 601
69 2,308 Nonrecurring professional fees
expense (reimbursement) (1)
— 662
(919 ) 1,781
Loss on investment (2)
354 —
6,197 — Equity in
(earnings) losses from disposals of unconsolidated affiliates (3)
— 1,145
— (54,485 ) Non-cash default interest expense
(4)
1,904 1,374
4,398 1,374
Gain on extinguishment of debt, net of
noncontrolling interests’ share (5)
(6,452 ) 6
(33,902 ) —
FFO allocable to Operating Partnership common unitholders, as
adjusted $ 98,675 $ 114,854
$ 301,389 $ 344,714
FFO per
diluted share $ 0.52 $ 0.56
$ 1.63 $ 1.97
FFO, as
adjusted, per diluted share $ 0.50 $ 0.57
$ 1.51 $ 1.72
Weighted-average common and potential dilutive common shares
outstanding with Operating Partnership units fully converted
199,321 200,004
199,325 199,992 (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 (Loss) in
the Consolidated Statements of Operations. (2) The three months and
nine months ended September 30, 2017 represents a loss on
investment related to the write down of the Company’s 25% interest
in River Ridge Mall based on the contract price to sell such
interest to its joint venture partner. The sale closed in August
2017. (3) The three months ended September 30, 2016 includes $1,145
of equity in losses from the disposals of unconsolidated
affiliates. The nine months ended September 30, 2016 also includes
$26,363 related to the sale of the Company’s 50% interest in
Triangle Town Center and $29,267 related to the foreclosure of the
loan secured by Gulf Coast Town Center. These amounts are included
in Equity in Earnings of Unconsolidated Affiliates in the
Consolidated Statements of Operations. (4) The three months and
nine months ended September 30, 2017 includes default interest
expense related to Acadiana Mall and Wausau Center. The nine months
ended September 30, 2017 also includes default interest expense
related to Chesterfield Mall and Midland Mall. The three and nine
months ended September 30, 2016 includes default interest expense
related to Chesterfield Mall, Midland Mall and Wausau Center. (5)
The three months ended September 30, 2017 primarily represents 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. Additionally, the nine
months ended September 30, 2017 also includes 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 EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017
2016 Diluted EPS attributable to common shareholders
$ (0.01 ) $ (0.06 )
$ 0.30 $
0.41 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
1.23 1.21 Loss on impairment, net of taxes
0.13
0.26
0.35 0.57
Gain on depreciable property, net of tax
and noncontrolling interests’ share
— (0.04 )
(0.25 ) (0.22 )
FFO per
diluted share $ 0.52 $ 0.56
$ 1.63 $ 1.97
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 EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017
2016 FFO allocable to Operating Partnership common
unitholders $ 102,852 $ 111,066
$
325,546 $ 393,736 Percentage allocable to common
shareholders (1)
85.84 % 85.39 %
85.82
% 85.38 %
FFO allocable to common shareholders
$ 88,288 $ 94,839
$
279,384 $ 336,172
FFO allocable to
Operating Partnership common unitholders, as adjusted $
98,675 $ 114,854
$ 301,389 $ 344,714
Percentage allocable to common shareholders (1)
85.84
% 85.39 %
85.82 % 85.38 %
FFO allocable to
common shareholders, as adjusted $ 84,703
$ 98,074
$ 258,652 $ 294,317
(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 EndedSeptember 30, Nine Months
EndedSeptember 30, 2017 2016 2017
2016 Lease termination fees
$ 879 $ 857
$ 1,990 $ 2,202 Lease termination fees per share
$ — $ —
$ 0.01 $ 0.01
Straight-line rental income (including write-offs)
$
(409 ) $ (319 )
$ 223 $ 1,241
Straight-line rental income (including write-offs) per share
$ — $ —
$ — $ 0.01 Gains on
outparcel sales
$ 3,605 $ 4,387
$
11,696 $ 8,170 Gains on outparcel sales per share
$
0.02 $ 0.02
$ 0.06 $ 0.04 Net
amortization of acquired above- and below-market leases
$
1,046 $ 783
$ 3,462 $ 2,765 Net amortization
of acquired above- and below-market leases per share
$
0.01 $ —
$ 0.02 $ 0.01 Net amortization
of debt premiums and discounts
$ (369 ) $
1,162
$ (772 ) $ 2,000 Net amortization of
debt premiums and discounts per share
$ — $ 0.01
$ — $ 0.01 Income tax benefit
$
1,064 $ 2,386
$ 4,784 $ 2,974 Income tax
benefit per share
$ 0.01 $ 0.01
$ 0.02
$ 0.01
Gain on extinguishment of debt, net of
noncontrolling interests’ share
$ 6,452 $ (6 )
$ 33,902 $ —
Gain on extinguishment of debt, net of
noncontrolling interests’ share, per share
$ 0.03 $ —
$ 0.17 $ — Loss on
investment
$ (354 ) $ —
$ (6,197
) $ — Loss on investment per share
$ — $ —
$ (0.03 ) $ — Equity in earnings
(losses) from disposals of unconsolidated affiliates
$
— $ (1,145 )
$ — $ 54,485 Equity in earnings
(losses) from disposals of unconsolidated affiliates per share
$ — $ (0.01 )
$ — $ 0.27
Non-cash default interest expense
$ (1,904 ) $
(1,374 )
$ (4,398 ) $ (1,374 ) Non-cash
default interest expense per share
$ (0.01 ) $
(0.01 )
$ (0.02 ) $ (0.01 ) Abandoned
projects expense
$ (132 ) $ (11 )
$
(5,151 ) $ (44 ) Abandoned projects expense per share
$ — $ —
$ (0.03 ) $ —
Interest capitalized
$ 452 $ 616
$
1,676 $ 1,612 Interest capitalized per share
$
— $ —
$ 0.01 $ 0.01 Litigation expenses
$ (17 ) $ (601 )
$ (69 )
$ (2,308 ) Litigation expenses per share
$ — $ —
$ — $ (0.01 ) Nonrecurring professional fees
(expense) reimbursement
$ — $ (662 )
$
919 $ (1,781 ) Nonrecurring professional fees (expense)
reimbursement per share
$ — $ —
$ — $
(0.01 )
As of September 30,
2017
2016
Straight-line rent receivable
$
62,681
$
67,861
Same-center Net Operating
Income
(Dollars in thousands)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017
2016 Net income $ 9,299 $ 670
$
118,444 $ 115,659
Adjustments: Depreciation
and amortization
71,732 71,794
225,461 220,505
Depreciation and amortization from unconsolidated affiliates
9,633 10,756
28,533 29,090
Noncontrolling interests’ share of
depreciation and amortization in other consolidated
subsidiaries
(2,170 ) (2,237 )
(6,791 ) (6,685 )
Interest expense
53,913 54,292
165,179 162,710
Interest expense from unconsolidated affiliates
6,244 6,109
18,815 19,787
Noncontrolling interests’ share of
interest expense in other consolidated subsidiaries
(1,584 ) (1,769 )
(5,160 ) (5,126 )
Abandoned projects expense
132 11
5,151 44 Gain on
sales of real estate assets
(1,383 ) (4,926 )
(86,904 ) (14,503 ) Gain on sales of real estate
assets of unconsolidated affiliates
(227 ) (8,018 )
(189 ) (93,340 )
Noncontrolling interests’ share of gain on
sales of real estate assets in other consolidated affiliates
— —
26,639 — Loss on investment
354 —
6,197 — Gain on extinguishment of debt
(6,452
) 6
(30,927 ) —
Noncontrolling interests’ share of loss on
extinguishment of debt in other consolidated subsidiaries
— —
(2,975 ) — Loss on impairment
24,935 53,558
71,401 116,736 Income tax benefit
(1,064 ) (2,386 )
(4,784 ) (2,974 )
Lease termination fees
(879 ) (857 )
(1,990
) (2,202 ) Straight-line rent and above- and below-market
lease amortization
(637 ) (464 )
(3,685
) (4,006 ) Net (income) loss attributable to noncontrolling
interests in other consolidated subsidiaries
(415 )
(983 )
(25,266 ) 449 General and administrative
expenses
13,568 13,222
45,402 46,865 Management fees
and non-property level revenues
(2,762 ) (1,379 )
(10,312 ) (12,429 )
Operating Partnership’s share of
property NOI
172,237 187,399
532,239 570,580 Non-comparable NOI
(4,513 ) (15,169 )
(22,766 ) (52,998 )
Total same-center NOI (1) $ 167,724
$ 172,230
$ 509,473 $ 517,582
Total same-center NOI percentage change (2.6)%
(1.6)%
Same-center Net Operating
Income
(Continued)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017
2016 Malls
$ 152,677 $ 157,129
$
463,020 $ 472,990 Associated centers
7,899 8,131
24,390 24,162 Community centers
5,398 5,343
16,579 15,533 Offices and other
1,750
1,627
5,484 4,897
Total
same-center NOI (1) $ 167,724 $
172,230
$ 509,473 $ 517,582
Percentage Change: Malls
(2.8 )% (2.1
)% Associated centers
(2.9 )% 0.9
%
Community centers
1.0
%
6.7
%
Offices and other
7.6
%
12.0
%
Total same-center NOI (1) (2.6
)% (1.6 )% (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, 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
September 30, 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 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 September 30, 2017 Fixed
Rate
VariableRate
Total
perDebtSchedule
UnamortizedDeferredFinancingCosts
Total Consolidated debt
$
3,170,000 $ 1,065,450 $
4,235,450 $ (19,272 ) $
4,216,178
Noncontrolling interests’ share of
consolidated debt
(77,494 ) (5,434 ) (82,928
) 719 (82,209 )
Company’s share of unconsolidated
affiliates’ debt
535,134 58,692
593,826 (2,357 )
591,469
Company’s share of consolidated and
unconsolidated debt
$ 3,627,640 $ 1,118,708
$ 4,746,348 $ (20,910 )
$ 4,725,438 Weighted-average interest rate
5.19 % 2.79 %
4.63 % As of September 30, 2016
Fixed Rate
VariableRate
Total
perDebtSchedule
UnamortizedDeferredFinancingCosts
Total Consolidated debt $ 3,251,443 $ 1,294,531 $ 4,545,974
$ (14,705 ) $ 4,531,269
Noncontrolling interests’ share of
consolidated debt
(109,701 ) (7,537 ) (117,238 ) 1,015 (116,223 )
Company’s share of unconsolidated
affiliates’ debt
523,833 73,562 597,395
(2,286 ) 595,109
Company’s share of consolidated and
unconsolidated debt
$ 3,665,575 $ 1,360,556 $ 5,026,131 $ (15,976
) $ 5,010,155 Weighted-average interest rate 5.30 %
1.96 % 4.39 %
Debt-To-Total-Market Capitalization
Ratio as of September 30, 2017
(In thousands, except stock price)
SharesOutstanding
StockPrice (1)
Value Common stock and Operating Partnership
units 199,316 $ 8.39 $ 1,672,261 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 2,298,511
Company’s share of total debt, excluding
unamortized deferred financing costs
4,746,348 Total market capitalization $ 7,044,859
Debt-to-total-market capitalization ratio 67.4 % (1)
Stock price for common stock and Operating Partnership units
equals the closing price of the common stock on September 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 EndedSeptember
30,
Nine Months EndedSeptember
30,
Basic Diluted Basic
Diluted 2017: Weighted-average shares - EPS
171,096 171,096 171,060 171,060
Weighted-average Operating Partnership units
28,225
28,225 28,265
28,265 Weighted-average shares- FFO
199,321 199,321
199,325 199,325
2016: Weighted-average shares - EPS 170,792 170,792 170,751
170,751 Weighted-average Operating Partnership units 29,212
29,212 29,241 29,241
Weighted-average shares- FFO 200,004
200,004 199,992 199,992
Dividend Payout Ratio
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2017 2016 2017
2016
Weighted-average cash dividend per share
$ 0.27281 $
0.27282
$ 0.81843 $ 0.81838 FFO, as adjusted, per
diluted fully converted share
$ 0.50 $ 0.57
$ 1.51 $ 1.72 Dividend payout
ratio
54.6 % 47.9 %
54.2
% 47.6 %
Consolidated Balance
Sheets
(Unaudited; in thousands, except share
data)
As of ASSETS September
30, 2017 December 31, 2016
Real estate assets: Land
$ 811,742 $ 820,979
Buildings and improvements
6,668,312 6,942,452
7,480,054 7,763,431 Accumulated depreciation
(2,411,560 ) (2,427,108 )
5,068,494 5,336,323
Held for sale
— 5,861 Developments in progress
100,106 178,355 Net investment in real estate
assets
5,168,600 5,520,539 Cash and cash equivalents
31,351 18,951 Receivables:
Tenant, net of allowance for doubtful
accounts of $2,075 and $1,910 in 2017 and 2016, respectively
86,947 94,676 Other, net of allowance for doubtful accounts
of $838 in 2017 and 2016
5,554 6,227 Mortgage and other
notes receivable
19,279 16,803 Investments in unconsolidated
affiliates
251,664 266,872 Intangible lease assets and other
assets
180,361 180,572
$
5,743,756 $ 6,104,640
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Mortgage and
other indebtedness, net
$ 4,216,178 $ 4,465,294
Accounts payable and accrued liabilities
270,046
280,498 Total liabilities
4,486,224 4,745,792
Commitments and contingencies Redeemable noncontrolling
interests
13,076 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, 171,096,895 and 170,792,645 issued and
outstanding in 2017 and 2016, respectively
1,711 1,708 Additional paid-in capital
1,971,447
1,969,059 Dividends in excess of cumulative earnings
(827,292 ) (742,078 )
Total shareholders’ equity
1,145,891 1,228,714 Noncontrolling interests
98,565
112,138 Total equity
1,244,456
1,340,852
$ 5,743,756 $ 6,104,640
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171102006747/en/
CBL PropertiesKatie Reinsmidt, 423-490-8301Executive Vice
President - Chief Investment Officerkatie.reinsmidt@cblproperties.com
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