Results in-line; Full-Year Guidance Range
Maintained
CBL Properties (NYSE:CBL) announced results for the third
quarter ended September 30, 2018. A description of each
supplemental non-GAAP financial measure and the related
reconciliation to the comparable GAAP financial measure is located
at the end of this news release.
Three Months EndedSeptember
30, Nine Months EndedSeptember 30, 2018
2017 2018 2017 Net
income (loss) attributable to common shareholders per diluted share
$ (0.07 ) $ (0.01 )
$ (0.34
) $ 0.30 Funds from Operations ("FFO") per diluted share
$ 0.39 $ 0.52
$ 1.26
$ 1.63 FFO, as adjusted, per diluted share (1)
$
0.40 $ 0.50
$ 1.28 $ 1.51
(1) For a reconciliation of FFO to FFO, as adjusted, for the
periods presented, please refer to the footnotes to the Company's
reconciliation of net income (loss) attributable to common
shareholders to FFO allocable to Operating Partnership common
unitholders on page 11 of this news release.
KEY TAKEAWAYS:
- FFO per diluted share, as adjusted, was
$0.40 for the third quarter 2018, compared with $0.50 per share for
the third quarter 2017. Third quarter 2018 FFO per share was
impacted by approximately $0.01 per share of higher G&A expense
primarily due to severance expense, $0.01 per share of dilution
from asset sales completed in 2017 and year-to-date, $0.05 per
share of lower property NOI, $0.01 per share higher interest
expense and $0.02 per share lower income tax benefit.
- Total Portfolio Same-center NOI
declined 6.1% for the third quarter 2018 and 6.6% for the nine
months ended September 30, 2018.
- Portfolio occupancy increased 90 basis
points to 92.0% as of September 30, 2018, compared with 91.1%
as of June 30, 2018, and declined 110 basis points compared
with 93.1% as of September 30, 2017. Same-center mall
occupancy was 90.8% as of September 30, 2018, a 120 basis
point increase compared with 89.6% as of June 30, 2018, and a 90
basis point decline compared with 91.7% as of September 30,
2017.
- Year-to-date, CBL has completed gross
asset sales totaling more than $89 million.
- Same-center sales per square foot for
the stabilized mall portfolio for the twelve-months ended
September 30, 2018, increased to $378 per square foot compared
with $376 per square foot for the prior-year period.
- Construction is underway on nine
redevelopment projects with three redevelopment projects opened
year-to-date.
"Operational results for the quarter and year-to-date were
delivered in-line with our expectations and previously issued
guidance range," commented Stephen Lebovitz, chief executive
officer. "Despite significant additional rent losses from
unanticipated store closings, we are on-track to end the year at
the mid-to-high point of our adjusted FFO per share guidance range
and the mid-to-low point of the same-center NOI range. While our
leasing spreads continue to be pressured, the positive sales in our
portfolio year-to-date are a healthy leading indicator for an
improved leasing backdrop in 2019.
"We are also making strong progress on our redevelopment
program. Of the ten leased Bon Ton stores that closed in August, we
have leases executed or out-for-signature for replacement users at
six locations and three others in advanced negotiations. We are
utilizing our capital-lite redevelopment strategy for a number of
these projects and today have nine anchor replacements across our
portfolio that require little to no investment by CBL and several
more underway. This under-appreciated strategy allows us to replace
closed anchor locations with exciting uses while preserving
capital. At the same time, we are having excellent results in
diversifying our offerings, with executed or pending deals for 50
restaurants, 14 entertainment operators, nine hotels, two
supermarkets, five fitness operators, four self-storage locations
and four multi-family projects.
"Now that the much-anticipated Sears bankruptcy is behind us, we
have the opportunity to accelerate additional redevelopments to
further transform our malls into suburban town centers. We
anticipate minimal impact to our financial results for 2018 as a
result of the six additional Sears closures announced as part of
the filing. Three were stores that we had purchased in our 2017
sale-leaseback transaction with redevelopment plans already well
underway.
"We also are strengthening our balance sheet by extending our
maturity schedule. We closed on a 10-year, fixed loan at a rate of
5.103% secured by The Outlet Shoppes at El Paso this quarter. Our
share of nearly $95 million in net proceeds from this financing and
the CoolSprings Galleria refinancing completed during the second
quarter, coupled with disposition proceeds of nearly $90 million
year-to-date, funded the majority of the $190 million term loan
paydown completed in July. We have also made significant progress
with our bank group towards finalizing the recast of our lines of
credit and term loans. With their strong support we remain on-track
to close in or before January 2019 and will be excited to share
details at that time."
Net loss attributable to common shareholders for the third
quarter 2018 was $12.6 million, or a loss of $0.07 per diluted
share, compared with a net loss of $2.3 million, or a loss of $0.01
per diluted share, for the third quarter 2017.
FFO allocable to common shareholders, as adjusted, for the third
quarter 2018 was $68.6 million, or $0.40 per diluted share,
compared with $84.7 million, or $0.50 per diluted share, for the
third quarter 2017. FFO allocable to the Operating Partnership
common unitholders, as adjusted, for the third quarter 2018 was
$79.2 million compared with $98.7 million for the third quarter
2017.
Percentage change in same-center Net
Operating Income ("NOI")(1):
Three Months EndedSeptember 30, 2018
Nine Months Ended
September 30, 2018
Portfolio same-center NOI
(6.1)% (6.6)% Mall
same-center NOI
(6.4)% (6.8)%
(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, 2018, include:
- Same-center NOI declined $10.0 million,
due to a $12.3 million decrease in revenues offset by a
$2.3 million decline in operating expenses.
- Minimum rents and tenant reimbursements
declined $11.4 million during the quarter, including a $3.0 million
decline in real estate tax reimbursements.
- Percentage rents declined $0.5 million
compared with the prior year quarter.
- Property operating expenses were
relatively flat compared with the prior year. Maintenance and
repair expenses increased $0.5 million. Real estate tax expenses
declined $2.8 million.
PORTFOLIO OPERATIONAL RESULTS
Occupancy(1):
As of June 30,
As of September 30, 2018
2018 2017 Portfolio
occupancy 91.1%
92.0% 93.1% Mall portfolio 89.2%
90.5% 91.6% Same-center malls 89.6%
90.8% 91.7%
Stabilized malls 89.5%
90.8% 91.7% Non-stabilized malls (2)
71.9%
73.6% 87.9% Associated centers 97.9%
97.2%
98.2% Community centers 96.9%
96.8% 98.2% (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 as of
September 30, 2018. Represents occupancy for The Outlet Shoppes of
the Bluegrass and The Outlet Shoppes at Laredo as of September 30,
2017.
New and Renewal Leasing Activity of
Same Small Shop Space Less Than 10,000 Square Feet:
% Change in Average Gross Rent Per Square Foot:
Three Months Ended September 30, 2018
Nine Months EndedSeptember 30, 2018 Stabilized Malls
(13.1 )% (11.3 )% New leases (1) (9.5 )% (3.1 )% Renewal leases
(13.8 )% (12.9 )%
(1) Excluding three leases
executed during Q3 2018, average new lease spreads would have been
0.6% and (0.2)% for the three and nine months ended September 30,
2018, respectively.
Same-Center Sales Per Square Foot for
Mall Tenants 10,000 Square Feet or Less:
Twelve Months Ended September 30, 2018
2017 % Change
Stabilized mall same-center sales per
square foot
$ 378 $ 376 0.5% Stabilized mall sales per square
foot
$ 378 $ 373 1.3%
DIVIDEND
“A major financial priority for CBL is to preserve liquidity and
the flexibility of our balance sheet," commented Lebovitz. "As we
discussed on our second quarter earnings call, we have been
evaluating an adjustment to our dividend to a level that maximizes
available cash flow for investing in our properties and debt
reduction. In order to accomplish this goal, we are reducing the
common dividend for 2019 to an annualized rate of $0.30 per share
from $0.80 per share. The reduction will preserve an estimated $100
million of cash on an annual basis. This significantly enhanced
liquidity will help to fund value-adding redevelopment activity and
debt reduction and ultimately enhance long-term shareholder value.
In addition to the funds retained through the dividend reduction,
we will continue to enhance financial flexibility through a number
of avenues, including efficiencies in operations, reductions to
overhead and opportunistic dispositions to generate equity proceeds
as well as proactively extending our debt maturity schedule to
limit financing risk."
CBL’s Board of Directors has declared a quarterly cash dividend
for the Company’s Common Stock of $0.075 per share for the quarter
ending December 31, 2018. The dividend is payable on
January 16, 2019, to shareholders of record as of December 31,
2018. The dividend represents an annualized rate of $0.30 per
share.
The Board also declared a quarterly cash dividend of $0.4609375
per depositary share for the quarter ending December 31, 2018, 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 31, 2018, to
shareholders of record as of December 14, 2018.
The Board also declared a quarterly cash dividend of $0.4140625
per depositary share for the quarter ending December 31, 2018, 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 31, 2018, to
shareholders of record as of December 14, 2018.
DISPOSITIONS
Year-to-date, CBL has raised more than $89 million in gross
proceeds through asset sales.
Property
Location Date Closed Gross Sales Price (M)
Various Outparcels Various Various $ 24.3 Phase III Gulf Coast Town
Center Ft. Myers, FL March $ 9.0 Janesville Mall Janesville, WI
July $ 18.0 Statesboro Crossing Statesboro, GA August $ 21.5
Parkway Plaza Ft. Oglethorpe, GA October $ 16.5
Total
$ 89.3
FINANCING ACTIVITY
In September, CBL closed on a $75.0 million non-recourse loan
secured by The Outlet Shoppes at El Paso in El Paso, TX. The
10-year loan bears interest at a fixed rate of 5.103%.
Proceeds from the loan were used to retire a $6.5 million loan
secured by the second phase of the property, which was scheduled to
mature in December. CBL’s share of net proceeds of $65.0 million
was utilized to reduce outstanding balances on the lines of
credit.
In April, CBL, along with its 50% joint venture partner, closed
on a $155.0 million ($77.5 million at CBL’s share) non-recourse
loan secured by CoolSprings Galleria in Nashville, TN. The 10-year
loan bears interest at a fixed rate of 4.839%.
Proceeds from the loan were used to retire the existing $97.7
million loan, which bore interest at a fixed rate of 6.98% and was
scheduled to mature in June. CBL’s share of nearly $29.0 million in
excess proceeds was utilized to reduce outstanding balances on its
lines of credit.
In May, CBL completed the extension of the $56.7 million ($28.4
million at CBL’s share) loan secured by The Pavilion at Port Orange
in Port Orange, FL, and the $58.2 million ($29.1 million at CBL’s
share) loan secured by Hammock Landing in West Melbourne, FL. The
loans were extended for an initial term of three years, with two
one-year extensions available at the Company’s option, for a final
maturity in February 2023. The new loans bear interest at 225 basis
points over LIBOR, an increase of 25 bps over the prior rate.
In July, CBL repaid $190.0 million of its $490.0 million
unsecured term loan using availability on its lines of credit,
reducing the outstanding balance to $300 million. This loan matures
in July 2021.
In October, CBL exercised its option to extend the maturity date
of its $350.0 million unsecured term loan to October 2019. It also
extended the $27.4 million loan secured by Hickory Point Mall to
December 2019.
DEVELOPMENT
Major redevelopments completed and underway in 2018 include
(complete project list can be found in the financial
supplement):
Property Prior
Tenant New Tenant(s) Brookfield Square Sears Marcus
Theaters, Whirlyball Eastland Mall JCPenney H&M, Outback,
Planet Fitness Frontier Mall Sports Authority Planet Fitness
Jefferson Mall Macy's Round 1 York Galleria JCPenney Marshalls
Hanes Mall Shops Dave & Busters Parkdale Mall Macy's Dick's,
Five Below, HomeGoods
Additional Replacement Activity Completed or Underway with
Minimal or No Investment by CBL:
Property Prior
Tenant New Tenant(s) Layton Hills Mall Macy's Dillard's
(Opened Q4 '17) Stroud Mall BonTon Shoprite ('19 Opening)
Westmoreland Mall BonTon Casino ('19 Construction) Kentucky Oaks
Sears (Seritage) Burlington (Opened fall '18) West Towne
Mall Sears (Seritage) Dave & Buster's/Total Wine (Opened summer
'18) Northwood Mall Sears (Seritage) Burlington (Opened spring '18)
Honey Creek Mall Carson's Vendor Village (Est. Open Q4 '18) Hanes
Mall Sears Novant Health (Opening TBD) CherryVale Mall Bergner's
ChoiceHome (Est. Open Q4 '18)
OUTLOOK AND GUIDANCE
Based on year-to-date results and expectations for the fourth
quarter 2018, CBL anticipates achieving 2018 FFO, as adjusted, at
the mid-to-high end of its guidance range of $1.70 - $1.80 per
diluted share. Guidance incorporates a reserve in the range of
$10.0 - $20.0 million (the "Reserve") for potential future
unbudgeted loss in rent from tenant bankruptcies, store closures or
lease modifications that may occur in 2018. Based on bankruptcy and
leasing activity year-to-date, including the impact of any
co-tenancy, CBL currently expects to utilize approximately $16 -
$18 million of the Reserve. Key assumptions underlying guidance are
as follows:
Low High 2018 FFO, as
adjusted, per share (Includes the Reserve) $ 1.70 $ 1.80 2018
Change in Same-Center NOI ("SC NOI") (Includes the Reserve) (6.75)%
(5.25)% Reserve for unbudgeted lost rents included in SC NOI and
FFO $ 20.0 million $ 10.0 million Gains on outparcel sales $ 12.0
million $ 14.0 million
Reconciliation of GAAP net income (loss) to 2018 FFO, as
adjusted, per share guidance:
Low High Expected diluted
earnings per common share $ (0.32 ) $ (0.23 ) Adjust to fully
converted shares from common shares 0.04 0.04
Expected earnings per diluted, fully converted common share (0.28 )
(0.19 ) Add: depreciation and amortization 1.61 1.61 Less: gain on
depreciable property (0.03 ) (0.03 ) Add: loss on impairment 0.42
0.42 Add: noncontrolling interest in loss of Operating Partnership
(0.04 ) (0.03 ) Expected FFO, as adjusted, per diluted, fully
converted common share $ 1.68 $ 1.78 Adjustment for certain
significant items 0.02 0.02 Expected adjusted FFO per
diluted, fully converted common share $ 1.70 $ 1.80
INVESTOR CONFERENCE CALL AND WEBCAST
CBL Properties will host a conference call on Tuesday, October
30, 2018, at 11:00 a.m. ET. To access this interactive
teleconference, dial (888) 317-6003 or (412) 317-6061 and
enter the confirmation number, 4666560. A replay of the conference
call will be available through November 6, 2018, by dialing
(877) 344-7529 or (412) 317-0088 and entering the
confirmation number, 10123148.
The Company will also provide an online webcast and rebroadcast
of its third quarter 2018 earnings release conference call. The
live broadcast of the quarterly conference call will be available
online at cblproperties.com on Tuesday, October 30, 2018, 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
114 properties totaling 71.9 million square feet across 26 states,
including 73 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 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
EndedSeptember 30, Nine Months
EndedSeptember 30, 2018 2017
2018 2017 REVENUES: Minimum
rents
$ 142,248 $ 150,836
$ 441,097 $
468,195 Percentage rents
2,429 3,000
6,610 7,127
Other rents
2,347 3,790
6,898 11,171 Tenant
reimbursements
55,374 63,055
172,601 192,577
Management, development and leasing fees
2,658 2,718
8,022 8,747 Other
1,822 1,251
6,448 4,079 Total revenues
206,878
224,650
641,676 691,896
OPERATING EXPENSES: Property operating
30,004 31,295
92,357 96,250 Depreciation and amortization
71,945
71,732
217,261 225,461 Real estate taxes
19,433
21,573
61,737 62,343 Maintenance and repairs
11,475
11,254
36,713 36,322 General and administrative
16,051 13,568
47,845 45,402 Loss on impairment
14,600 24,935
84,644 71,401 Other
38
132
377 5,151 Total operating expenses
163,546 174,489
540,934 542,330
Income from operations 43,332 50,161
100,742 149,566 Interest and other income (loss)
283
(200 )
714 1,235 Interest expense
(55,194 )
(53,913 )
(163,164 ) (165,179 ) Gain on
extinguishment of debt
— 6,452
— 30,927 Gain (loss)
on investments
— (354 )
387 (6,197 ) Income tax
benefit (provision)
(1,034 ) 1,064
1,846 4,784
Equity in earnings of unconsolidated affiliates
1,762
4,706
9,869 16,404
Income (loss) from continuing
operations before gain on sales of real estate assets
(10,851 ) 7,916
(49,606 ) 31,540 Gain
on sales of real estate assets
7,880 1,383
15,998 86,904
Net income (loss)
(2,971 ) 9,299
(33,608 ) 118,444 Net
(income) loss attributable to noncontrolling interests in:
Operating Partnership
1,628 81
8,978 (8,702 ) Other
consolidated subsidiaries
(24 ) (415 )
369
(25,266 )
Net income (loss) attributable to the
Company (1,367 ) 8,965
(24,261 )
84,476 Preferred dividends
(11,223 ) (11,223 )
(33,669 ) (33,669 )
Net income (loss) attributable
to common shareholders $ (12,590 ) $
(2,258 )
$ (57,930 ) $ 50,807
Basic and diluted per share data attributable to common
shareholders: Net income (loss) attributable to common
shareholders
$ (0.07 ) $ (0.01 )
$
(0.34 ) $ 0.30
Weighted-average common and potential
dilutive common shares outstanding
172,665 171,096
172,426 171,060 Dividends
declared per common share
$ 0.200 $ 0.265
$
0.600 $ 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, 2018 2017
2018 2017 Net income (loss)
attributable to common shareholders
$ (12,590
) $ (2,258 )
$ (57,930 ) $ 50,807
Noncontrolling interest in income (loss) of Operating Partnership
(1,628 ) (81 )
(8,978 ) 8,702
Depreciation and amortization expense of: Consolidated properties
71,945 71,732
217,261 225,461 Unconsolidated
affiliates
10,438 9,633
31,177 28,533 Non-real estate
assets
(910 ) (934 )
(2,748 ) (2,590 )
Noncontrolling interests' share of depreciation and amortization
(2,136 ) (2,170 )
(6,424 ) (6,791 )
Loss on impairment, net of taxes
14,600 24,935
84,644
70,185
Loss on impairment of unconsolidated affiliates
1,022 —
1,022 —
Gain on depreciable property, net
of taxes and noncontrolling interests' share (3,307
) 1,995
(5,543 ) (48,761 )
FFO
allocable to Operating Partnership common unitholders
77,434 102,852
252,481 325,546 Litigation expenses
(1)
— 17
— 69 Nonrecurring professional fees
reimbursement (1)
— —
— (919 ) (Gain) loss on
investments, net of taxes (2)
— 354
(287 )
6,197 Non-cash default interest expense (3)
1,784 1,904
3,616 4,398 Gain on extinguishment of debt, net of
noncontrolling interests' share (4)
— (6,452 )
— (33,902 )
FFO allocable to Operating Partnership
common unitholders, as adjusted $ 79,218 $
98,675
$ 255,810 $ 301,389
FFO per diluted share $ 0.39 $
0.52
$ 1.26 $ 1.63
FFO, as adjusted, per diluted share $ 0.40
$ 0.50
$ 1.28 $ 1.51
Weighted-average common and potential dilutive common shares
outstanding with Operating Partnership units fully converted
199,432 199,321
199,630 199,325 (1) Litigation
expense is 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 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. 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 and
nine months ended September 30, 2018 includes default interest
expense related to Acadiana Mall and Cary Town Center. 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. (4) 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, 2018 2017
2018 2017 Diluted EPS attributable
to common shareholders $ (0.07 ) $ (0.01 )
$ (0.34 ) $ 0.30 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
1.20 1.23 Loss on
impairment, net of taxes
0.08 0.13
0.43 0.35 Gain on
depreciable property, net of taxes and noncontrolling interests'
share
(0.02 ) —
(0.03 ) (0.25 )
FFO per diluted share $ 0.39 $ 0.52
$ 1.26 $ 1.63
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, 2018 2017
2018 2017 FFO allocable to Operating
Partnership common unitholders $ 77,434 $ 102,852
$ 252,481 $ 325,546 Percentage allocable to common
shareholders (1)
86.58 % 85.84 %
86.37
% 85.82 %
FFO allocable to common shareholders
$ 67,042 $ 88,288
$
218,068 $ 279,384
FFO allocable to
Operating Partnership common unitholders, as adjusted $
79,218 $ 98,675
$ 255,810 $ 301,389 Percentage
allocable to common shareholders (1)
86.58 % 85.84 %
86.37 % 85.82 %
FFO allocable to common
shareholders, as adjusted $ 68,587 $
84,703
$ 220,943 $ 258,652
(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 17.
SUPPLEMENTAL FFO INFORMATION: Three Months
EndedSeptember 30, Nine Months EndedSeptember
30, 2018 2017
2018 2017 Lease termination fees
$ 783 $ 879
$ 9,788 $ 1,990 Lease
termination fees per share
$ — $ —
$
0.05 $ 0.01 Straight-line rental income
$
388 $ (409 )
$ (3,923 ) $ 223
Straight-line rental income per share
$ — $ —
$ (0.02 ) $ — Gains on outparcel sales
$ 4,548 $ 3,605
$ 11,033 $ 11,696 Gains
on outparcel sales per share
$ 0.02 $ 0.02
$
0.06 $ 0.06 Net amortization of acquired above- and
below-market leases
$ (1,210 ) $ 1,046
$ 982 $ 3,462 Net amortization of acquired above- and
below-market leases per share
$ (0.01 ) $ 0.01
$ — $ 0.02 Net amortization of debt premiums
and discounts
$ 314 $ (369 )
$ 727 $
(772 ) Net amortization of debt premiums and discounts per share
$ — $ —
$ — $ — Income tax
benefit (provision)
$ (1,034 ) $ 1,064
$ 1,846 $ 4,784 Income tax benefit (provision) per
share
$ (0.01 ) $ 0.01
$ 0.01 $
0.02 Gain on extinguishment of debt, net of noncontrolling
interests' share
$ — $ 6,452
$ — $
33,902 Gain on extinguishment of debt, net of noncontrolling
interests' share per share
$ — $ 0.03
$
— $ 0.17 Gain (loss) on investments, net of taxes
$ — $ (354 )
$ 287 $ (6,197 ) Gain
(loss) on investments, net of taxes per share
$ — $ —
$ — $ (0.03 ) Non-cash default interest
expense
$ (1,784 ) $ (1,904 )
$
(3,616 ) $ (4,398 ) Non-cash default interest expense
per share
$ (0.01 ) $ (0.01 )
$
(0.02 ) $ (0.02 ) Abandoned projects expense
$ (38 ) $ (132 )
$ (377 )
$ (5,151 ) Abandoned projects expense per share
$ — $
—
$ — $ (0.03 ) Interest capitalized
$
1,198 $ 452
$ 2,736 $ 1,676 Interest
capitalized per share
$ 0.01 $ —
$ 0.01
$ 0.01 Litigation expenses
$ — $ (17 )
$ — $ (69 ) Litigation expenses per share
$
— $ —
$ — $ — Nonrecurring professional
fees reimbursement
$ — $ —
$ — $ 919
Nonrecurring professional fees reimbursement per share
$
— $ —
$ — $ —
As of September
30, 2018 2017
Straight-line rent receivable
$ 57,284 $ 62,681
Same-center Net Operating
Income
(Dollars in thousands)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2018 2017 2018
2017 Net income (loss) $ (2,971
) $ 9,299
$ (33,608 ) $ 118,444
Adjustments: Depreciation and amortization
71,945
71,732
217,261 225,461 Depreciation and amortization from
unconsolidated affiliates
10,438 9,633
31,177 28,533
Noncontrolling interests' share of depreciation and amortization in
other consolidated subsidiaries
(2,136 ) (2,170 )
(6,424 ) (6,791 ) Interest expense
55,194
53,913
163,164 165,179 Interest expense from unconsolidated
affiliates
6,551 6,244
18,849 18,815 Noncontrolling
interests' share of interest expense in other consolidated
subsidiaries
(1,875 ) (1,584 )
(5,912 )
(5,160 ) Abandoned projects expense
38 132
377 5,151
Gain on sales of real estate assets
(7,880 ) (1,383 )
(15,998 ) (86,904 ) (Gain) loss on sales of real
estate assets of unconsolidated affiliates
28 (227 )
(564 ) (189 ) Noncontrolling interests' share of gain
on sales of real estate assets in other consolidated affiliates
— —
— 26,639 (Gain) loss on investment
— 354
(387 ) 6,197 Gain on extinguishment of debt
—
(6,452 )
— (30,927 ) Noncontrolling interests' share of loss
on extinguishment of debt in other consolidated subsidiaries
— —
— (2,975 ) Loss on impairment
14,600
24,935
84,644 71,401 Income tax (benefit) provision
1,034 (1,064 )
(1,846 ) (4,784 ) Lease
termination fees
(783 ) (879 )
(9,788 )
(1,990 ) Straight-line rent and above- and below-market lease
amortization
822 (637 )
2,941 (3,685 ) Net (income)
loss attributable to noncontrolling interests in other consolidated
subsidiaries
(24 ) (415 )
369 (25,266 )
General and administrative expenses
16,051 13,568
47,845 45,402 Management fees and non-property level
revenues
(2,293 ) (2,762 )
(9,642 )
(10,312 )
Operating Partnership's share of property NOI
158,739 172,237
482,458 532,239 Non-comparable NOI
(5,623 ) (9,145 )
(20,112 ) (37,291 )
Total same-center NOI (1) $ 153,116
$ 163,092
$ 462,346 $ 494,948
Total same-center NOI percentage change (6.1)%
(6.6)%
Same-center Net Operating
Income
(Continued)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2017
2016 2018 2017 Malls
$ 137,973 $ 147,449
$ 416,452 $ 446,926
Associated centers
8,016 7,899
23,788 24,390
Community centers
5,784 5,994
17,387 18,148 Offices
and other
1,343 1,750
4,719
5,484
Total same-center NOI (1) $
153,116 $ 163,092
$ 462,346
$ 494,948
Percentage Change: Malls
(6.4
)% (6.8 )% Associated centers
1.5
% (2.5 )% Community centers
(3.5
)% (4.2 )% Offices and other
(23.3
)% (13.9 )% Total same-center NOI
(1) (6.1 )% (6.6 )%
(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, 2018, and we owned it and it was in operation
for both the entire preceding calendar year and the current
year-to-date reporting period ending September 30,
2018. New properties are excluded from same-center NOI,
until they meet this criteria. Properties excluded from
the same-center pool that would otherwise meet this criteria are
properties which are either under major redevelopment, being
considered for repositioning, where we intend to renegotiate the
terms of the debt secured by the related property or return the
property to the lender, or minority interest properties in which we
own an interest of 25% or less.
Company's Share of Consolidated and
Unconsolidated Debt
(Dollars in thousands)
As of September 30, 2018 Fixed Rate
VariableRate
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 %
As of September 30, 2017 Fixed Rate
VariableRate
Total per Debt
Schedule
Unamortized
Deferred
Financing
Costs
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
%
Debt-To-Total-Market Capitalization
Ratio as of September 30, 2018
(In thousands, except stock price)
SharesOutstanding
Stock
Price (1)
Value Common stock and Operating Partnership units 199,430 $
3.99 $ 795,726 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
1,421,976 Company's share of total debt, excluding unamortized
deferred financing costs 4,686,434 Total market
capitalization $ 6,108,410 Debt-to-total-market
capitalization ratio 76.7 %
(1) Stock price for common
stock and Operating Partnership units equals the closing price of
the common stock on September 28, 2018. The
stock prices for the preferred stocks represent the liquidation
preference of each respective series.
Reconciliation of Shares and Operating
Partnership Units Outstanding
(In thousands)
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, Basic
Diluted Basic Diluted
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 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
Dividend Payout Ratio
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 Weighted-average cash dividend per share
$
0.20888 $ 0.27281
$ 0.62661 $ 0.81843 FFO, as
adjusted, per diluted fully converted share
$ 0.40
$ 0.50
$ 1.28 $ 1.51
Dividend payout ratio
52.2 % 54.6 %
49.0
% 54.2 %
Consolidated Balance Sheets
(Unaudited; in thousands, except share
data)
As of September 30, 2018
December 31, 2017 ASSETS Real estate
assets: Land
$ 818,436 $ 813,390 Buildings and
improvements
6,543,965 6,723,194
7,362,401 7,536,584 Accumulated depreciation
(2,514,904 ) (2,465,095 )
4,847,497 5,071,489
Held for sale
14,807 — Developments in progress
71,319 85,346 Net investment in real estate
assets
4,933,623 5,156,835 Cash and cash equivalents
20,695 32,627 Receivables:
Tenant, net of allowance for doubtful
accounts of $2,214 and $2,011 in 2018 and 2017, respectively
77,095 83,552 Other, net of allowance for doubtful accounts
of $838 in 2017
7,109 7,570 Mortgage and other notes
receivable
8,171 8,945 Investments in unconsolidated
affiliates
275,884 249,192 Intangible lease assets and other
assets
170,184 166,087
$
5,492,761 $ 5,704,808
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY Mortgage and
other indebtedness, net
$ 4,115,808 $ 4,230,845
Accounts payable and accrued liabilities
249,232
228,650 Total liabilities
4,365,040 4,459,495
Commitments and contingencies Redeemable noncontrolling
interests
6,228 8,835 Shareholders' equity:
Preferred stock, $.01 par value, 15,000,000 shares authorized:
7.375% Series D Cumulative Redeemable
Preferred Stock, 1,815,000 shares outstanding
18 18
6.625% Series E Cumulative Redeemable
Preferred Stock, 690,000 shares outstanding
7 7
Common stock, $.01 par value, 350,000,000
shares authorized, 172,663,873 and 171,088,778 issued and
outstanding in 2018 and 2017, respectively
1,727 1,711 Additional paid-in capital
1,967,882
1,974,537 Dividends in excess of cumulative earnings
(927,416 ) (836,269 ) Total shareholders' equity
1,042,218 1,140,004 Noncontrolling interests
79,275
96,474 Total equity
1,121,493 1,236,478
$ 5,492,761 $ 5,704,808
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181029005726/en/
CBL PropertiesKatie Reinsmidt, 423-490-8301Executive Vice
President - Chief Investment Officerkatie.reinsmidt@cblproperties.com
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