SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 12, 2004
CBL & ASSOCIATES PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-12494 62-154718
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
Suite 500, 2030 Hamilton Place Blvd, Chattanooga, TN 37421
(Address of principal executive office, including zip code)
(423) 855-0001
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
1
ITEM 2.01 Completion of Acquisition or Disposition of Assets
CBL & Associates Properties, Inc. (the "Company') acquired six malls, two
associated centers and one community center during the seven months ended July
31, 2004. Although none of the properties acquired are individually significant
according to the provisions of Rule 3-14 of Regulation S-X of the Securities and
Exchange Commission, they are significant in the aggregate. This Current Report
on Form 8-K is being filed to provide certain historical and pro forma financial
information related to these acquisitions, which are described below. In this
Current Report on Form 8-K, dollars are in thousands, except for per share
amounts.
On March 12, 2004, the Company acquired Honey Creek Mall in Terre Haute, IN
for a purchase price, including transaction costs, of $83,114, which consisted
of $50,114 in cash and the assumption of $33,000 of non-recourse debt that bears
interest at a stated rate of 6.95% and matures in May 2009. The Company recorded
a debt premium of $3,146, computed using an estimated market interest rate of
4.75%, since the debt assumed was at an above-market interest rate compared to
similar debt instruments at the date of acquisition.
On March 12, 2004, the Company acquired Volusia Mall in Daytona Beach, FL
for a purchase price, including transaction costs, of $118,493, which consisted
of $63,686 in cash and the assumption of $54,807 of non-recourse debt that bears
interest at a stated rate of 6.70% and matures in March 2009. The Company
recorded a debt premium of $4,615, computed using an estimated market interest
rate of 4.75%, since the debt assumed was at an above-market interest rate
compared to similar debt instruments at the date of acquisition.
On April 8, 2004, the Company acquired Greenbrier Mall in Chesapeake, VA
for a cash purchase price, including transaction costs, of $107,450. The
purchase price was partially financed with a new recourse term loan of $92,650
that bears interest at LIBOR plus 100 basis points and matures in April 2006.
On April 21, 2004, the Company acquired Fashion Square, a community center
in Orange Park, FL for a cash purchase price, including transaction costs, of
$3,961.
On May 20, 2004, the Company acquired Chapel Hill Mall and its associated
center, Chapel Hill Suburban, in Akron, OH for a cash purchase price of $78,252,
including transaction costs. The purchase price was partially financed with a
new recourse term loan of $66,500 that bears interest at LIBOR plus 100 basis
points and matures in May 2006.
On June 22, 2004, the Company acquired Park Plaza Mall in Little Rock, AR
for a purchase price, including transaction costs, of $77,526, which consisted
of $36,213 in cash and the assumption of $41,313 of non-recourse debt that bears
interest at a stated rate of 8.69% and matures in May 2010. The Company recorded
a debt premium of $7,737, computed using an estimated market interest rate of
4.90%, since the debt assumed was at an above-market interest rate compared to
similar debt instruments at the date of acquisition.
On July 28, 2004, the Company acquired Monroeville Mall, and its associated
center, the Annex, in the eastern Pittsburgh suburb of Monroeville, PA, for a
purchase price, including transaction costs, of $232,191, which consisted of
$40,018 in cash, the assumption of $134,004 of non-recourse debt that bears
interest at a stated rate of 5.73% and matures in January 2013, an obligation of
$11,950 to purchase the fee interest in the land underlying the mall and
associated center on or before July 28, 2007, and the issuance of 780,470
special common units in the Operating Partnership valued at $46,219 (fair value
of $59.21 per special common unit). The Company recorded a debt premium of
$3,270, computed using an estimated market interest rate of 5.30%,
2
since the debt assumed was at an above-market interest rate compared to similar
debt instruments at the date of acquisition. The results of operations of
Monroeville Mall will be included in the consolidated financial statements
beginning July 28, 2004.
The Company previously announced that the purchase price of the Monroeville
properties was $231,234. That purchase price included a value of $60,955
assigned to the special common units based on their face value of $78.10 per
special common unit. The difference between the previously reported purchase
price and the purchase price allocated to the net assets acquired includes a
revised value of $46,219 for the special common units based on their estimated
fair value of $59.21 per special common unit plus additional transaction costs
of $3,743 and the obligation of $11,950 to acquire the land in the future.
ITEM 9.01 Financial Statements and Exhibits
Listed below are the financial statements, pro forma financial information and
exhibits filed as part of this report:
(a) Financial Statements of Businesses Acquired
The statements of certain revenues and certain operating expenses of
Greenbrier Mall (described under Item 2.01) as listed in the accompanying
Index to Financial Statements and Pro Forma Financial Information are filed
as part of this Current Report on Form 8-K.
The statements of certain revenues and certain operating expenses of
Monroeville Mall (described under Item 2.01) as listed in the accompanying
Index to Financial Statements and Pro Forma Financial Information are filed
as part of this Current Report on Form 8-K.
(b) Pro Forma Financial Information
The pro forma financial information of CBL & Associates Properties, Inc.
listed in the accompanying Index to Financial Statements and Pro Forma
Financial Information are filed as part of this Current Report on Form 8-K.
(c) Exhibits
23 Consent of Deloitte & Touche LLP
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CBL & ASSOCIATES PROPERTIES, INC.
/s/ John N. Foy
---------------------------------------
John N. Foy
Vice Chairman,
Chief Financial Officer and Treasurer
(Authorized Officer of the Registrant,
Principal Financial Officer and
Principal Accounting Officer)
Date: September 2, 2004
4
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
The following historical financial statements and pro forma financial
information are presented in accordance with Rule 3-14 and Article 11,
respectively, of Regulation S-X of the Securities and Exchange Commission. The
historical financial statements have been audited only for certain properties
acquired. With respect to Greenbrier Mall and Monroeville Mall, the historical
combined financial statement has been audited only for the most recent fiscal
year as these transactions did not involve a related party and the registrant,
after reasonable inquiry, is not aware of any material factors related to the
acquired properties not otherwise disclosed that would cause the reported
financial information to not be necessarily indicative of future operating
results. In accordance with Rule 3-14 of Regulation S-X of the Securities and
Exchange Commission, certain unaudited financial information for properties
acquired during the seven months ended July 31, 2004 that are not individually
significant has also been presented. In addition, as the properties will be
directly or indirectly owned by entities that will elect or have elected to be
treated as real estate investment trusts (as specified under sections 856-860 of
the Internal Revenue Code of 1986) for Federal income tax purposes, a
presentation of estimated taxable operating results is not applicable.
Page
Number
GREENBRIER MALL
Report of Independent Registered Public Accounting Firm 6
Statement of Certain Revenues and Certain Operating
Expenses of Greenbrier Mall for the Year Ended December 31, 2003 7
Notes to the Statement of Certain Revenues and Certain
Operating Expenses of Greenbrier Mall 8
MONROEVILLE MALL
Report of Independent Registered Public Accounting Firm 10
Statement of Certain Revenues and Certain Operating
Expenses of Monroeville Mall for the Year Ended December 31, 2003 11
Notes to the Statement of Certain Revenues and Certain
Operating Expenses of Monroeville Mall 12
CBL & ASSOCIATES PROPERTIES, INC.
Unaudited Pro Forma Consolidated Statement of Operations for the
Year Ended December 31, 2003 14
Unaudited Pro Forma Consolidated Statement of Operations for the
Six Months Ended June 30, 2004 15
Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2004 16
Consent of Independent Registered Public Accounting Firm 17
5
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
CBL & Associates Properties, Inc.:
We have audited the accompanying statement of certain revenues and certain
expenses of Greenbrier Mall (the "Property") for the year ended December 31,
2003. This financial statement is the responsibility of the Property's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statement. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statement of certain revenues and certain expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission (for inclusion in the filing of a Form 8-K by CBL &
Associates Properties, Inc. as a result of the acquisition of the Property).
Material amounts, described in Note 1 to the statement of certain revenues and
certain expenses that would not be directly attributable to those resulting from
future operations of the Property are excluded, and the financial statement is
not intended to be a complete presentation of the Property's revenues and
expenses.
In our opinion, such financial statement presents fairly, in all material
respects, certain revenues and certain expenses of the Property for the year
ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
July 9, 2004
Atlanta, Georgia
6
GREENBRIER MALL
STATEMENTS OF CERTAIN REVENUES AND CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2003 AND THE THREE MONTHS ENDED
MARCH 31, 2004 (UNAUDITED)
-------------------------------------------------------------------------------
Three Months Ended
March 31, 2004 Year Ended
(unaudited) December 31, 2003
REVENUES:
Rentals:
Minimum $ 1,987,976 $ 7,473,070
Percentage 91,018 351,707
Tenant reimbursements 1,022,372 4,109,034
Other income 3,599 1,427,496
---------------------------------------------------------
Total revenues 3,104,965 13,361,307
---------------------------------------------------------
EXPENSES:
Property operating 650,320 2,231,557
Real estate taxes 263,466 1,159,674
Maintenance and repairs 267,002 901,659
---------------------------------------------------------
Total expenses 1,180,788 4,292,890
---------------------------------------------------------
Excess of certain revenues over
certain operating expenses $1,924,177 $9,068,417
=========================================================
See accompanying notes to financial statements.
7
GREENBRIER MALL
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2003 AND THE THREE MONTHS ENDED
MARCH 31, 2004 (UNAUDITED)
NOTE 1. ORGANIZATION AND BASIS FOR PRESENTATION
The accompanying statements of certain revenues and certain operating expenses
(the "Statements") relate to Greenbrier Mall, an approximately
890,000-square-foot, two-level regional mall in Chesapeake, Virginia.
The Statement is prepared for the purpose of complying with Rule 3-14 of
Regulation S-X promulgated under the Securities Act of 1933, as amended, as a
result of the acquisition of Greenbrier Mall by CBL & Associates Properties,
Inc. Accordingly, the Statements are not representative of the actual operations
of the Greenbrier Mall for the periods presented as certain revenues and certain
operating expenses have been excluded. Such items include depreciation,
amortization, interest expense, management fees and interest income.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Rental income comprises minimum rents, expense
reimbursements and percentage rent payments. Minimum rents with fixed increases
are recognized on a straight-line basis over the initial terms of the related
leases. Tenant reimbursements are recognized in the period that the related
costs are incurred. Greenbrier Mall accounts for these leases as operating
leases as it has retained substantially all risks and benefits of property
ownership. Percentage rent is recognized when the tenant's reported sales have
reached certain levels specified in the respective lease.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The accompanying financial statements for the three months ended March 31, 2004
are unaudited; however, they have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and in conjunction with the rules and regulations of the
U.S. Securities and Exchange Commission. Accordingly, they do not include all of
the disclosures required by accounting principles generally accepted in the
United States of America for complete financial statements. In the opinion of
management of the Property, all adjustments (consisting solely of normal
recurring matters) necessary for a fair presentation for the interim period have
been included. The results for the interim period ended March 31, 2004, are not
necessarily indicative of the results that may be expected for the full year.
8
NOTE 3. LEASING ACTIVITIES
Greenbrier Mall has non-cancelable operating leases with tenants requiring
monthly payments of specified minimum rent. The leases generally provide for
minimum rentals, plus percentage rentals based upon the retail stores' sales
volume. A majority of the leases require reimbursement by the tenant of their
proportionate share of real estate taxes and common area expenses. Future
minimum rental commitments under the non-cancelable operating leases at December
31, 2003 are as follows:
Year Ending December 31:
2004 $ 6,776,850
2005 6,122,449
2006 5,657,785
2007 4,676,855
2008 3,232,839
Thereafter 8,380,224
---------------------------
Total $34,847,002
===========================
9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
CBL & Associates Properties, Inc.:
We have audited the accompanying statement of certain revenues and certain
expenses of Monroeville Mall (the "Property") for the year ended December 31,
2003. This financial statement is the responsibility of the Property's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statement. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statement of certain revenues and certain expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission (for inclusion in the filing of a Form 8-K by CBL &
Associates Properties, Inc. as a result of the acquisition of the Property).
Material amounts, described in Note 1 to the statement of certain revenues and
certain expenses that would not be directly attributable to those resulting from
future operations of the Property are excluded, and the financial statement is
not intended to be a complete presentation of the Property's revenues and
expenses.
In our opinion, such financial statement presents fairly, in all material
respects, certain revenues and certain expenses of the Property for the year
ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
July 30, 2004
Atlanta, Georgia
10
MONROEVILLE MALL
STATEMENTS OF CERTAIN REVENUES AND CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2003 AND THE SIX MONTHS ENDED
JUNE 30, 2004 (UNAUDITED)
--------------------------------------------------------------------------------
Six Months Ended
June 30, 2004 Year Ended
(unaudited) December 31, 2003
REVENUES:
Rentals:
Minimum $ 7,030,623 $14,645,709
Percentage 168,972 559,199
Tenant reimbursements 5,993,637 11,028,316
Other income 9,458 104,375
---------------------------------------------------------
Total revenues 13,202,690 26,337,599
---------------------------------------------------------
EXPENSES:
Property operating 2,541,885 5,032,109
Real estate taxes 1,551,722 3,010,734
Maintenance and repairs 978,132 2,145,099
---------------------------------------------------------
Total expenses 5,071,739 10,187,942
---------------------------------------------------------
Excess of certain revenues over
certain operating expenses $ 8,130,951 $16,149,657
=========================================================
See accompanying notes to financial statements.
11
MONROEVILLE MALL
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2003 AND THE SIX MONTHS ENDED
JUNE 30, 2004 (UNAUDITED)
NOTE 1. ORGANIZATION AND BASIS FOR PRESENTATION
The accompanying statements of certain revenues and certain operating expenses
(the "Statements") relate to Monroeville Mall, an approximately
1,129,000-square-foot regional mall in the eastern Pittsburgh suburb of
Monroeville, PA.
The Statement is prepared for the purpose of complying with Rule 3-14 of
Regulation S-X promulgated under the Securities Act of 1933, as amended, as a
result of the acquisition of Monroeville Mall by CBL & Associates Properties,
Inc. Accordingly, the Statements are not representative of the actual operations
of the Monroeville Mall for the periods presented as certain revenues and
certain operating expenses have been excluded. Such items include depreciation,
amortization, interest expense, management fees and interest income.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Rental income comprises minimum rents, expense
reimbursements and percentage rent payments. Minimum rents with fixed increases
are recognized on a straight-line basis over the initial terms of the related
leases. Expense reimbursements are recognized in the period that the applicable
costs are incurred. Monroeville Mall accounts for these leases as operating
leases as the Properties have retained substantially all risks and benefits of
property ownership. Percentage rent is recognized when the tenant's reported
sales have reached certain levels specified in the respective lease.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
certain revenues and certain expenses during the reporting period. Actual
results could differ from those estimates.
The accompanying financial statements for the six months ended June 30, 2004 are
unaudited; however, they have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and in conjunction with the rules and regulations of the
U.S. Securities and Exchange Commission. Accordingly, they do not include all of
the disclosures required by accounting principles generally accepted in the
United States of America for complete financial statements. In the opinion of
management of Monroeville Mall, all adjustments (consisting solely of normal
recurring matters) necessary for a fair presentation for the interim period have
been included. The results for the interim period ended June 30, 2004, are not
necessarily indicative of the results that may be expected for the full year.
12
NOTE 3. LEASING ACTIVITIES
Monroeville Mall has non-cancelable operating leases with tenants requiring
monthly payments of specified minimum rent. The leases generally provide for
minimum rentals, plus percentage rentals based upon the retail stores' sales
volume. A majority of the leases require reimbursement by the tenant of their
proportionate share of real estate taxes and common area expenses. Future
minimum rental commitments under the non-cancelable operating leases at December
31, 2003 are as follows:
Years Ending December 31:
2004 $ 13,192,000
2005 12,917,000
2006 12,029,000
2007 10,806,000
2008 9,992,000
Thereafter 38,219,000
---------------------------
Total $97,155,000
===========================
13
CBL & Associates Properties, Inc.
Pro Forma Consolidated Statements of Operations
For the Six Months Ended June 30, 2004
(Unaudited and in thousands, except per share amounts)
CBL Greenbrier and Other Pro Forma CBL
Historical Monroeville Acquisitions Adjustments Pro Forma
------------- -------------- ------------- ------------ -----------
REVENUES:
Minimum rents $ 223,031 $ 9,155 $ 8,676 $ 635(a) $ 241,497
Percentage rents 8,168 267 726 - 9,161
Other rents 5,242 18 6 - 5,266
Tenant reimbursements 98,839 7,096 4,804 - 110,739
Management, development and leasing fees 3,511 - - - 3,511
Other 10,296 13 353 - 10,662
------------- -------------- ------------- ------------ -----------
Total revenues 349,087 16,549 14,565 635 380,836
------------- -------------- ------------- ------------ -----------
EXPENSES:
Property operating 54,137 3,243 2,012 - 59,392
Depreciation and amortization 65,759 - - 7,669(b) 73,428
Real estate taxes 27,326 1,836 1,694 - 30,856
Maintenance and repairs 20,503 1,266 1,579 - 23,348
General and administrative 16,225 - - - 16,225
Other 7,955 - - - 7,955
------------- -------------- ------------- ------------ -----------
Total expenses 191,905 6,345 5,285 7,669 211,204
------------- -------------- ------------- ------------ -----------
Income from operations 157,182 10,204 9,280 (7,034) 169,632
Interest income 1,586 - - - 1,586
Interest expense (83,232) - - (8,059)(c) (91,291)
Gain on sales of real estate assets 24,780 - - - 24,780
Equity in earnings of unconsolidated affiliates 5,546 - - - 5,546
Minority interest in earnings:
Operating partnership (42,874) - - (2,714)(d) (45,588)
Shopping center properties (3,058) - - - (3,058)
------------- -------------- ------------- ------------ -----------
Income before discontinued operations 59,930 10,204 9,280 (17,807) 61,607
Operating income of discontinued operations 279 - - - 279
Gain on discontinued operations 520 - - - 520
------------- -------------- ------------- ------------ -----------
Net income 60,729 10,204 9,280 (17,807) 62,406
Preferred dividends (8,832) - - - (8,832)
------------- -------------- ------------- ------------ -----------
Net income available to common shareholders $ 51,897 $ 10,204 $ 9,280 $(17,807) $ 53,574
============= ============== ============= ============ ===========
Basic per share data:
Income before discontinued operations,
net of preferred dividends $ 1.68 $ 1.73
Discontinued operations 0.02 0.03
------------- -----------
Net income available to common shareholders $ 1.70 $ 1.76
============= ===========
Weighted average common shares outstanding 30,464 30,464
Diluted per share data:
Income before discontinued operations,
net of preferred dividends $ 1.61 $ 1.67
Discontinued operations 0.03 0.02
------------- -----------
Net income available to common shareholders $ 1.64 $ 1.69
============= ===========
Weighted average common and potential dilutive
common shares outstanding 31,686 31,686
(a) Reflects the amortization of acquired above- and below-market leases.
(b) Represents depreciation and amortization expense related to buildings
and improvements, tenant improvements and in-place leases of the
acquired properties.
(c) Reflects interest expense on the $660,946 of debt assumed or borrowed
(including debt premiums) in connection with the properties acquired
during 2004, which had a weighted average effective interest rate of
3.37%. This amount includes the cash portion of the purchase price of
each property acquired totaling $219,904, which is assumed to have
been borrowed at the Company's borrowing rate under its lines of
credit.
(d) Reflects the allocation of earnings to the minority interest in the
Operating Partnership as a result of the acquired properties.
14
CBL & Associates Properties, Inc.
Pro Forma Consolidated Statements of Operations
For the Year Ended December 31, 2003
(Unaudited and in thousands, except per share amounts)
Greenbrier
CBL and Other Pro Forma CBL
Historical Monroeville Acquisitions Adjustments Pro Forma
------------- -------------- ------------- ------------ -----------
REVENUES:
Minimum rents $ 428,412 $ 22,119 $ 29,199 $ 1,714(a) $ 481,444
Percentage rents 12,907 911 2,029 - 15,847
Other rents 12,635 - 29 - 12,664
Tenant reimbursements 193,538 15,137 15,269 - 223,944
Management, development and leasing fees 5,525 - - - 5,525
Other 14,176 1,532 1,215 - 16,923
------------- -------------- ------------- ------------ -----------
Total revenues 667,193 39,699 47,741 1,714 756,347
------------- -------------- ------------- ------------ -----------
EXPENSES:
Property operating 103,522 7,264 8,319 - 119,105
Depreciation and amortization 113,437 - - 20,875(b) 134,312
Real estate taxes 51,679 4,170 3,412 - 59,261
Maintenance and repairs 39,815 3,047 4,697 - 47,559
General and administrative 30,395 - - - 30,395
Other 11,489 - - - 11,489
------------- -------------- ------------- ------------ -----------
Total expenses 350,337 14,481 16,428 20,875 402,121
------------- -------------- ------------- ------------ -----------
Income from operations 316,856 25,218 31,313 (19,161) 354,226
Interest income 2,485 - - - 2,485
Interest expense (153,322) - - (22,877)(c) (176,199)
Loss on extinguishment of debt (167) - - - (167)
Gain on sales of real estate assets 77,765 - - - 77,765
Equity in earnings of unconsolidated affiliates 4,941 - - - 4,941
Minority interest in earnings:
Operating partnership (106,532) - - (8,345)(d) (114,877)
Shopping center properties (2,758) - - - (2,758)
------------- -------------- ------------- ------------ -----------
Income before discontinued operations 139,268 25,218 31,313 (50,383) 145,416
Operating income of discontinued operations 829 - - - 829
Gain on discontinued operations 4,042 - - - 4,042
------------- -------------- ------------- ------------ -----------
Net income 144,139 25,218 31,313 (50,383) 150,287
Preferred dividends (19,633) - - - (19,633)
------------- -------------- ------------- ------------ -----------
Net income available to common shareholders $ 124,506 $ 25,218 $ 31,313 $ (50,383) $ 130,654
============= ============== ============= ============ ===========
Basic per share data:
Income before discontinued operations,
net of preferred dividends $ 4.00 $ 4.20
Discontinued operations 0.16 0.16
------------- -----------
Net income available to common shareholders $ 4.16 $ 4.36
============= ===========
Weighted average common shares outstanding 29,936 29,936
Diluted per share data:
Income before discontinued operations,
net of preferred dividends $ 3.84 $ 4.03
Discontinued operations 0.15 0.16
------------- -----------
Net income available to common shareholders $ 3.99 $ 4.19
============= ===========
Weighted average common and potential dilutive
common shares outstanding 31,193 31,193
(a) Reflects the amortization of acquired above- and below-market leases.
epresents depreciation and amortization expense related to buildings
and improvements, tenant improvements and in-place
(b) Represents depreciation and amortization expense related to buildings
and improvements, tenant improvements and in-place leases of the
acquired properties.
(c) Reflects interest expense on the $660,946 of debt assumed or borrowed
(including debt premiums) in connection with the properties acquired
during 2004, which had a weighted average effective interest rate of
3.41%. This amount includes the cash portion of the purchase price of
each property acquired totaling $219,904, which is assumed to have
been borrowed at the Company's borrowing rate under its lines of
credit.
(d) Reflects the allocation of earnings to the minority interest in the
Operating Partnership as a result of the acquired properties.
15
CBL & Associates Properties, Inc.
Pro Forma Consolidated Balance Sheet
June 30, 2004
(Unaudited and in thousands, except share and per share amounts)
CBL Pro-forma CBL
Historical Adjustments(a) Pro Forma
------------ ---------------- -------------
ASSETS
Real estate assets:
Land $ 604,904 $ 22,828 $ 627,732
Buildings and improvements 4,155,864 205,692 4,361,556
------------ ---------------- -------------
4,760,768 228,520 4,989,288
Less: accumulated depreciation (519,045) - (519,045)
------------ ---------------- -------------
4,241,723 228,520 4,470,243
Real estate assets held for sale 67,811 - 67,811
Developments in progress 76,616 1,893 78,509
------------ ---------------- -------------
Net investment in real estate 4,386,150 230,413 4,616,563
Cash and cash equivalents 30,042 - 30,042
Receivables:
Tenant, net of allowance 35,800 - 35,800
Other 14,832 - 14,832
Mortgage notes receivable 27,555 - 27,555
Investment in unconsolidated affiliates 88,638 - 88,638
Other assets 85,030 8,476 93,506
------------ ---------------- -------------
$ 4,668,047 $ 238,889 $ 4,906,936
============ ================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable $ 3,092,963 $ 179,668 $ 3,272,631
Mortgage notes payable on real estate assets held
for sale 2,472 - 2,472
Accounts payable and accrued liabilities 177,674 13,001 190,675
------------ ---------------- -------------
Total liabilities 3,273,109 192,669 3,465,778
------------ ---------------- -------------
Commitments and contingencies
Minority interests 540,894 28,986 569,880
------------ ---------------- -------------
Shareholders' equity:
Preferred Stock, $.01 par value, 15,000,000 shares
authorized:
8.75% Series B Cumulative Redeemable Preferred
Stock, 2,000,000 shares outstanding 20 - 20
7.75% Series C Cumulative Redeemable Preferred
Stock, 460,000 shares outstanding 5 - 5
Common Stock, $.01 par value, 95,000,000 shares
authorized, 30,837,720 issued and outstanding 308 - 308
Additional paid-in capital 828,984 17,234 846,218
Deferred compensation (3,549) - (3,549)
Retained earnings 28,276 - 28,276
------------ ---------------- -------------
Total shareholders' equity 854,044 17,234 871,278
------------ ---------------- -------------
$ 4,668,047 $ 238,889 $ 4,906,936
============ ================ =============
(a) Represents the acquisition of Monroeville Mall and the allocation of
the purchase price of Monroeville Mall to the assets acquired and
liabilities assumed. The acquisition of the other properties acquired
during the seven months ended July 31, 2004 and the allocation of the
related purchase prices to the assets acquire and liabilities assumed
is reflected in the CBL historical consolidated balance sheet since
those acquisitions were completed prior to June 30, 2004.
16
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements Nos.
33-73376, 333-04295, 333-41768, and 333-88914 on Form S-8 and Registration
Statements Nos. 33-92218, 333-62830, 333-90395, 333-47041, 333-97831, 333-104882
and 333-108947 on Form S-3 of CBL & Associates Properties, Inc. of our reports
dated July 9, 2004 and July 30, 2004 (which reports include explanatory
paragraphs relating to the purpose of such financial statements) on the
Statements of Certain Revenues and Certain Operating Expenses of Greenbrier Mall
and Monroeville Mall, respectively, for the year ended December 31, 2003,
appearing in this Current Report on Form 8-K of CBL & Associates Properties,
Inc. dated September 2, 2004.
/s/ DELOITTE & TOUCHE LLP
Atlanta, Georgia
September 2, 2004