SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

          QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006

                           COMMISSION FILE NO. 1-12494


                        CBL & ASSOCIATES PROPERTIES, INC.
             (Exact Name of registrant as specified in its charter)

                    DELAWARE                                  62-1545718
(State or other jurisdiction of incorporation    (I.R.S. Employer Identification
                            or organization) Number)

        2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN 37421-6000
           (Address of principal executive office, including zip code)

        Registrant's telephone number, including area code (423) 855-0001

                                       N/A
              (Former name, former address and former fiscal year,
                          if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (12) months (or for such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past ninety (90) days.

                         YES      |X|            NO       |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer |X|   Accelerated filer |_|    Non-accelerated filer |_|

Indicate by check mark whether the  registrant is a shell company (as defined in
Exchange Act Rule 12b-2).

                         YES      |_|            NO       |X|

As of May 4, 2006, there were 64,324,279 shares of common stock, par value $0.01
per share, outstanding.


                        CBL & Associates Properties, Inc.



                                                                                                                   
PART I - FINANCIAL INFORMATION...........................................................................................3
        ITEM 1:    Financial Statements..................................................................................3
                   Condensed Consolidated Balance Sheets.................................................................3
                   Condensed Consolidated Statements of Operations.......................................................4
                   Condensed Consolidated Statements of Cash Flows.......................................................5
                   Notes to Unaudited Condensed Consolidated Financial Statements........................................6
        ITEM 2:    Management's Discussion and Analysis of Financial Condition and Results of Operations................14
        ITEM 3:    Quantitative and Qualitative Disclosures About Market Risk...........................................25
        ITEM 4:    Controls and Procedures..............................................................................25

PART II - OTHER INFORMATION.............................................................................................25
        ITEM 1:    Legal Proceedings....................................................................................25
        ITEM 1A.   Risk Factors.........................................................................................25
        ITEM 2:    Unregistered Sales of Equity Securities and Use of Proceeds..........................................34
        ITEM 3:    Defaults Upon Senior Securities......................................................................35
        ITEM 4:    Submission of Matters to a Vote of Security Holders..................................................35
        ITEM 5:    Other Information....................................................................................35
        ITEM 6:    Exhibits.............................................................................................35

SIGNATURE...............................................................................................................36



                                       2


PART I - FINANCIAL INFORMATION

ITEM 1:   Financial Statements


                        CBL & Associates Properties, Inc.

                      Condensed Consolidated Balance Sheets
                        (In thousands, except share data)
                                   (Unaudited)



                                                                                  March 31,             December 31,
                                                                                    2006                    2005
                                                                               ---------------         ---------------
ASSETS
Real estate assets:
                                                                                                 
  Land..............................................................           $      766,431          $     776,989
  Buildings and improvements........................................                5,680,097              5,698,669
                                                                               ---------------         ---------------
                                                                                    6,446,528              6,475,658
    Less accumulated depreciation...................................                 (774,049)              (727,907)
                                                                               ---------------         ---------------
                                                                                    5,672,479              5,747,751
  Real estate assets held for sale, net.............................                   98,073                 63,168
  Developments in progress..........................................                  170,137                133,509
                                                                               ---------------         ---------------
    Net investment in real estate assets............................                5,940,689              5,944,428
Cash and cash equivalents...........................................                   41,490                 28,838
Receivables:
  Tenant, net of allowance for doubtful accounts of $1,139 in
     2006 and $3,439 in 2005........................................                   57,274                 55,056
  Other.............................................................                    9,726                  6,235
Mortgage and other notes receivable.................................                   18,077                 18,117
Investments in unconsolidated affiliates............................                   81,442                 84,138
Other assets........................................................                  209,354                215,510
                                                                               ---------------         ---------------
                                                                               $    6,358,052          $   6,352,322
                                                                               ===============         ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable....................................           $    4,393,888          $   4,341,055
Accounts payable and accrued liabilities............................                  284,190                320,270
                                                                               ---------------         ---------------
  Total liabilities.................................................                4,678,078              4,661,325
                                                                               ---------------         ---------------
Commitments and contingencies (Notes 3 and 8) ......................
Minority interests..................................................                  586,436                609,475
                                                                               ---------------         ---------------
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 in 2006 and 2005...............                       20                     20
  7.75% Series C Cumulative Redeemable Preferred Stock,
         460,000 shares outstanding in 2006 and 2005................                        5                      5
  7.375% Series D Cumulative Redeemable Preferred Stock,
         700,000 shares outstanding in 2006 and 2005................                        7                      7
  Common stock, $.01 par value, 180,000,000 shares authorized,
         64,243,646 and 62,512,816 shares issued and outstanding
         in 2005 and 2004, respectively.............................                      642                    625
  Additional paid - in capital......................................                1,047,701              1,037,764
  Deferred compensation.............................................                        -                 (8,895)
  Other comprehensive income........................................                    1,095                    288
  Retained earnings.................................................                   44,068                 51,708
                                                                               ---------------         ---------------
    Total shareholders' equity......................................                1,093,538              1,081,522
                                                                               ---------------         ---------------
                                                                               $    6,358,052          $   6,352,322
                                                                               ===============         ===============

The accompanying notes are an integral part of these balance sheets.




                                       3


                        CBL & Associates Properties, Inc.

                 Condensed Consolidated Statements of Operations
                      (In thousands, except per share data)
                                   (Unaudited)


                                                                                         Three Months Ended
                                                                                              March 31,
                                                                               ---------------------------------------
                                                                                     2006                   2005
                                                                               ---------------         ---------------
REVENUES:
                                                                                                     
Minimum rents...........................................................       $      152,152          $     130,295
Percentage rents........................................................                6,353                  8,090
Other rents.............................................................                3,880                  3,125
Tenant reimbursements...................................................               75,991                 65,526
Management, development and leasing fees................................                1,077                  3,046
Other...................................................................                5,866                  4,629
                                                                               ---------------         ---------------
  Total revenues........................................................              245,319                214,711
                                                                               ---------------         ---------------
EXPENSES:
Property operating......................................................               40,737                 35,638
Depreciation and amortization...........................................               54,766                 41,275
Real estate taxes.......................................................               19,265                 15,421
Maintenance and repairs.................................................               12,693                 12,319
General and administrative..............................................                9,587                  9,186
Loss on impairment of real estate assets................................                    -                    262
Other...................................................................                4,169                  3,430
                                                                               ---------------         ---------------
  Total expenses........................................................              141,217                117,531
                                                                               ---------------         ---------------
Income from operations..................................................              104,102                 97,180
Interest income.........................................................                1,732                  1,683
Interest expense........................................................              (63,929)               (48,921)
Loss on extinguishment of debt..........................................                    -                   (884)
Gain on sales of real estate assets.....................................                  900                  2,714
Equity in earnings of unconsolidated affiliates.........................                2,068                  3,091
Minority interest in earnings:
  Operating partnership.................................................              (18,129)               (20,826)
  Shopping center properties............................................                 (588)                (1,397)
                                                                               ---------------         ---------------
Income before discontinued operations...................................               26,156                 32,640
Operating income of discontinued operations.............................                2,099                    405
Loss on discontinued operations.........................................                    -                    (32)
                                                                               ---------------         ---------------
Net income..............................................................               28,255                 33,013
Preferred dividends.....................................................               (7,642)                (7,642)
                                                                               ---------------         ---------------
Net income available to common shareholders.............................       $       20,613          $      25,371
                                                                               ===============         ===============
Basic per share data:
    Income before discontinued operations,
        net of preferred dividends......................................       $         0.30          $        0.40
    Discontinued operations.............................................                 0.03                   0.01
                                                                               ---------------         ---------------
    Net income available to common shareholders.........................       $         0.33          $        0.41
                                                                               ===============         ===============
    Weighted average common shares outstanding..........................               62,655                 62,448
Diluted per share data:
    Income before discontinued operations,
       net of preferred dividends.......................................       $         0.29          $        0.39
    Discontinued operations.............................................                 0.03                      -
                                                                               ---------------         ---------------
    Net income available to common shareholders.........................       $         0.32          $        0.39
                                                                               ===============         ===============
Weighted average common and potential
       dilutive common shares outstanding...............................               64,283                 64,794

Dividends declared per common share.....................................       $       0.4575          $     0.40625
                                                                               ===============         ===============

The accompanying notes are an integral part of these statements.



                                       4


                        CBL & Associates Properties, Inc.

                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (Unaudited)


                                                                                          Three Months Ended
                                                                                               March 31,
                                                                               ---------------------------------------
                                                                                    2006                    2005
                                                                               ---------------         ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
                                                                                                 
Net income..............................................................       $       28,255          $      33,013
Adjustments to reconcile net income to net cash provided by operating
  activities:
  Depreciation..........................................................               39,026                 28,261
  Amortization .........................................................               18,032                 15,046
  Amortization of debt premiums.........................................               (1,842)                (1,678)
  Amortization of above and below market leases.........................               (2,602)                (1,531)
  Gain on sales of real estate assets...................................                 (900)                (2,714)
  Loss on disposal of discontinued operations...........................                    -                     32
  Abandoned development projects........................................                   (5)                   121
  Stock-based compensation expense......................................                2,195                  1,131
  Loss on extinguishment of debt........................................                    -                    884
  Equity in earnings of unconsolidated affiliates.......................              (2,068)                      -
  Distributions from unconsolidated affiliates..........................                2,269                      -
  Loss on impairment of real estate assets..............................                    -                    262
  Minority interest in earnings.........................................               18,717                 22,223
Changes in:
  Tenant and other receivables..........................................               (5,709)                 4,997
  Other assets..........................................................               (3,556)                  (846)
  Accounts payable and accrued liabilities..............................              (23,830)               (22,854)
                                                                               ---------------         ---------------
          Net cash provided by operating activities.....................               67,982                 76,347
                                                                               ---------------         ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to real estate assets.....................................              (50,044)               (43,349)
    Changes in other assets.............................................                4,805                 (1,989)
    Proceeds from sales of real estate assets...........................                1,541                 52,675
    Payments received on mortgage notes receivable......................                   40                    542
    Additional investments in and advances to unconsolidated
      affiliates........................................................               (2,964)                (9,542)
    Distributions in excess of equity in earnings of unconsolidated
      affiliates........................................................                5,459                  3,189
    Purchase of minority interest in the Operating Partnership..........               (1,112)                    (6)
                                                                               ---------------         ---------------
          Net cash provided by (used in) investing activities...........              (42,275)                 1,520
                                                                               ---------------         ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from mortgage and other notes payable......................               72,328                 45,334
    Principal payments on mortgage and other notes payable..............              (13,453)               (33,892)
    Additions to deferred financing costs...............................               (2,460)                  (693)
    Proceeds from issuance of common stock..............................                  155                    151
    Costs related to issuance of preferred stock........................                    -                   (193)
    Proceeds from exercise of stock options.............................                2,395                  1,379
    Prepayment fees on extinguishment of debt...........................                    -                   (852)
    Distributions to minority interests.................................              (30,057)               (22,186)
    Dividends paid to holders of preferred stock........................               (7,642)                (8,287)
    Dividends paid to common shareholders...............................              (34,321)               (25,459)
                                                                               ---------------         ---------------
          Net cash used in financing activities.........................              (13,055)               (44,698)
                                                                               ---------------         ---------------
NET CHANGE IN CASH AND CASH EQUIVALENTS.................................               12,652                 33,169
CASH AND CASH EQUIVALENTS, beginning of period..........................               28,838                 25,766
                                                                               ---------------         ---------------
CASH AND CASH EQUIVALENTS, end of period................................       $       41,490          $      58,935
                                                                               ===============         ===============
SUPPLEMENTAL INFORMATION:
  Cash paid for interest, net of amounts capitalized....................       $       59,298          $      48,428
                                                                               ===============         ===============

The accompanying notes are an integral part of these statements.




                                       5


                        CBL & Associates Properties, Inc.

         Notes to Unaudited Condensed Consolidated Financial Statements
                      (In thousands, except per share data)

Note 1 - Organization and Basis of Presentation

     CBL & Associates  Properties,  Inc. ("CBL"), a Delaware  corporation,  is a
self-managed,  self-administered,  fully integrated real estate investment trust
("REIT") that is engaged in the ownership,  development,  acquisition,  leasing,
management and operation of regional shopping malls and community centers. CBL's
shopping  center  properties  are  located in 27 states,  but  primarily  in the
southeastern and midwestern United States.

     CBL conducts  substantially  all of its  business  through CBL & Associates
Limited  Partnership  (the  "Operating  Partnership").  At March 31,  2006,  the
Operating Partnership owned controlling interests in seventy-two regional malls,
twenty-seven  associated  centers (each adjacent to a regional  shopping  mall),
seven  community  centers and one office  building.  The  Operating  Partnership
consolidates  the  financial  statements  of  all  entities  in  which  it has a
controlling  financial  interest  or where it is the  primary  beneficiary  of a
variable  interest  entity.  The  Operating  Partnership  owned  non-controlling
interests in seven regional malls and three associated  centers.  Because one or
more of the other partners have substantive  participating rights, the Operating
Partnership does not control these partnerships and,  accordingly,  accounts for
these  investments  using the equity method.  The Operating  Partnership had two
mall  expansions,  one open-air  shopping center,  two open-air  shopping center
expansions,   two  associated   centers  and  three   community   centers  under
construction at March 31, 2006. The Operating  Partnership also holds options to
acquire certain development properties owned by third parties.

     CBL is the 100% owner of two qualified REIT  subsidiaries,  CBL Holdings I,
Inc. and CBL Holdings II, Inc. At March 31, 2006, CBL Holdings I, Inc., the sole
general  partner of the  Operating  Partnership,  owned a 1.6%  general  partner
interest in the Operating  Partnership  and CBL Holdings II, Inc.  owned a 53.9%
limited partner interest for a combined interest held by CBL of 55.5%.

     The minority interest in the Operating Partnership is held primarily by CBL
& Associates,  Inc. and its affiliates (collectively "CBL's Predecessor") and by
affiliates of The Richard E. Jacobs Group,  Inc.  ("Jacobs").  CBL's Predecessor
contributed their interests in certain real estate properties and joint ventures
to the Operating Partnership in exchange for a limited partner interest when the
Operating  Partnership  was formed in November 1993.  Jacobs  contributed  their
interests in certain real estate  properties and joint ventures to the Operating
Partnership  in  exchange  for  limited  partner  interests  when the  Operating
Partnership  acquired the  majority of Jacobs'  interests  in 23  properties  in
January 2001 and the balance of such  interests in February  2002.  At March 31,
2006, CBL's Predecessor  owned a 15.1% limited partner interest,  Jacobs owned a
20.5% limited  partner  interest and third parties owned an 8.9% limited partner
interest in the Operating Partnership.  CBL's Predecessor also owned 5.9 million
shares of CBL's common stock at March 31, 2006, for a total  combined  effective
interest of 20.3% in the Operating Partnership.

     The  Operating   Partnership   conducts  CBL's   property   management  and
development   activities  through  CBL  &  Associates   Management,   Inc.  (the
"Management  Company")  to comply  with  certain  requirements  of the  Internal
Revenue Code of 1986, as amended (the "Code").  The Operating  Partnership  owns
100% of the Management Company's preferred stock and common stock.

     CBL, the Operating  Partnership and the Management Company are collectively
referred to herein as "the Company".

     The accompanying condensed consolidated financial statements are unaudited;
however,  they have been  prepared  in  accordance  with  accounting  principles
generally  accepted  in the  United  States of  America  for  interim  financial


                                       6


information and in conjunction  with the rules and regulations of the 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,  all
adjustments (consisting solely of normal recurring matters) necessary for a fair
presentation  of the financial  statements  for these interim  periods have been
included.  The results  for the interim  period  ended March 31,  2006,  are not
necessarily indicative of the results to be obtained for the full fiscal year.

     These  condensed  consolidated  financial  statements  should  be  read  in
conjunction  with  CBL &  Associates  Properties,  Inc.'s  audited  consolidated
financial  statements  and  notes  thereto  included  in  the  CBL &  Associates
Properties,  Inc.  Annual  Report on Form 10-K for the year ended  December  31,
2005.


Note 2 - Joint Ventures

Investment in Unconsolidated Affiliates

     At March  31,  2006,  the  Company  had  investments  in the  following  14
partnerships and joint ventures, which are accounted for using the equity method
of accounting:


---------------------------------- ------------------------------------- -----------
                                                                         Company's
Joint Venture                      Property Name                         Interest
---------------------------------- ------------------------------------- -----------
                                                                     
Governor's Square IB               Governor's Plaza                        50.0%
Governor's Square Company          Governor's Square                       47.5%
High Pointe Commons, LP            High Pointe Commons                     50.0%
Imperial Valley Mall L.P.          Imperial Valley Mall                    60.0%
Imperial Valley Peripheral L.P.    Imperial Valley Mall (vacant land)      60.0%
Imperial Valley Commons L.P.       Imperial Valley Commons                 60.0%
Kentucky Oaks Mall Company         Kentucky Oaks Mall                      50.0%
Mall of South Carolina L.P.        Coastal Grand-Myrtle Beach              50.0%
Mall of South Outparcel L.P.       Coastal Grand-Myrtle Beach (vacant      50.0%
                                   land)
Mall Shopping Center Company       Plaza del Sol                           50.6%
N. Dalton Bypass, LLC              Hammond Creek Commons                   51.0%
Parkway Place L.P.                 Parkway Place                           45.0%
Triangle Town Member LLC           Triangle Town Center, Triangle Town     50.0%
                                        Commons and Triangle Town Place
York Town Center, LP               York Town Center                        50.0%


     Condensed combined financial  statement  information for the unconsolidated
affiliates is as follows:


                                                                                Company's Share for the
                                             Total for the Three Months              Three Months
                                                  Ended March 31,                   Ended March 31,
                                             ------------------------------    -----------------------------
                                                  2006             2005             2006             2005
                                             ---------------  -------------    --------------  -------------
                                                                                     
Revenues                                      $    24,879       $   35,826      $   12,506       $   8,767
Depreciation and amortization                     (6,476)          (7,914)         (3,278)         (1,710)
Interest expense                                  (8,665)          (8,898)         (4,394)         (2,522)
Other operating expenses                          (6,879)          (8,595)         (3,469)         (2,379)
Discontinued operations                                 -              454               -              38
Gain on sales of real estate assets                 1,406            1,471             703             897
                                             ---------------  -------------    --------------  -------------
Net income                                     $    4,265       $   12,344      $    2,068       $   3,091
                                             ===============  =============    ==============  =============


Note 3 - Mortgage and Other Notes Payable

         Mortgage and other notes payable consisted of the following at March
31, 2006 and December 31, 2005, respectively:


                                       7



                                                       March 31, 2006                   December 31, 2005
                                                  ------------------------------  ----------------------------
                                                                   Weighted                          Weighted
                                                                    Average                          Average
                                                                   Interest                          Interest
                                                     Amount         Rate(1)            Amount        Rate(1)
                                                  --------------  --------------  ---------------  -----------
Fixed-rate debt:
                                                                                           
   Non-recourse loans on operating properties     $  3,262,444        6.02%       $    3,281,939       6.02%
                                                  --------------                  ---------------
Variable-rate debt:
   Recourse term loans on operating properties         292,000        5.67%              292,000       5.33%
   Construction loans                                  100,294        5.95%               76,831       5.76%
   Lines of credit                                     739,150        5.46%              690,285       5.29%
                                                  --------------                  ---------------
   Total variable-rate debt                          1,131,444        5.56%            1,059,116       5.33%
                                                  --------------                  ---------------
Total                                             $  4,393,888        5.90%       $    4,341,055       5.85%
                                                  ==============                  ===============

     (1) Weighted-average interest rate including the effect of debt premiums,
but excluding amortization of deferred financing costs.



Unsecured Line of Credit
------------------------
     The Company has one unsecured  credit  facility with total  availability of
$500,000.  This credit facility bears interest at the London  Interbank  Offered
Rate  ("LIBOR")  plus a margin of 90 to 145 basis points based on the  Company's
leverage,  as defined in the agreement.  The credit  facility  matures in August
2006 and has  three  one-year  extension  options,  which  are at the  Company's
election.  At March 31, 2006, the  outstanding  borrowings of $350,000 under the
unsecured credit facility had a weighted average interest rate of 5.17%.

Secured Lines of Credit
------------------------
     The  Company  has  four   secured   lines  of  credit  that  are  used  for
construction,  acquisition, and working capital purposes. Each of these lines is
secured  by  mortgages  on  certain  of  the  Company's  operating   properties.
Borrowings  under the secured  lines of credit had a weighted  average  interest
rate of 5.72% at March 31, 2006. The following  summarizes  certain  information
about the secured lines of credit as of March 31, 2006:


      Total             Total          Maturity
    Available        Outstanding         Date
----------------------------------------------------

                               
   $  476,000         $  358,150     February 2009
      100,000             29,000       June 2007
       20,000              1,000      March 2007
       10,000              1,000      April 2007
-------------------------------------
   $  606,000         $  389,150
=====================================


     In February 2006, the Company amended one of the secured credit  facilities
to increase  the maximum  availability  from  $373,000 to  $476,000,  extend the
maturity  date from  February  28,  2006 to  February  28,  2009 plus a one-year
extension  option,  increase  the minimum  tangible  net worth  requirement,  as
defined,  from  $1,000,000 to  $1,370,000  and increase the limit on the maximum
availability that the Company may request from $500,000 to $650,000.

Letters of Credit
-----------------
     At March 31, 2006, the Company had additional  secured lines of credit with
a total  commitment  of  $27,123  that can only be used for  issuing  letters of
credit.  The total outstanding amount under these lines of credit was $25,880 at
March 31, 2006.

Covenants and Restrictions
--------------------------
     Twenty-three malls, five associated centers,  two community centers and the
corporate  office  building  are  owned by  special  purpose  entities  that are


                                       8


included in the Company's consolidated  financial statements.  The sole business
purpose of the special purpose entities is to own and operate these  properties,
each of which is encumbered by a commercial-mortgage-backed-securities loan. The
real  estate  and other  assets  owned by these  special  purpose  entities  are
restricted  under the loan  agreements  in that they are not available to settle
other debts of the Company. However, so long as the loans are not under an event
of  default,  as  defined  in the loan  agreements,  the cash  flows  from these
properties, after payments of debt service, operating expenses and reserves, are
available for distribution to the Company.

     The weighted average remaining term of the Company's  consolidated debt was
4.7 years at March 31, 2006 and 4.7 years at December 31, 2005.  Of the $751,197
of debt that will mature  before  March 31,  2007,  the  Company  has  extension
options that will extend the maturity date of $587,222 of that debt beyond March
31, 2007.  The mortgage  notes payable  comprising  the  remaining  $163,975 are
expected to be retired or refinanced.

Note 4 - Shareholders' Equity And Minority Interests

     In January 2006,  holders of 1,480,066 common units of limited  partnership
interest in the  Operating  Partnership  and holders of 27,582  Series J special
common  units  ("J-SCUs")  of  limited  partnership  interest  in the  Operating
Partnership  exercised  their  conversion  rights.  The Company elected to issue
1,480,066  shares of common  stock in exchange  for the common  units and to pay
cash of $1,112 in exchange for the J-SCUs.

Note 5 - Segment Information

     The Company  measures  performance  and  allocates  resources  according to
property  type,  which is determined  based on certain  criteria such as type of
tenants,  capital  requirements,  economic risks,  leasing terms, and short- and
long-term  returns on  capital.  Rental  income and tenant  reimbursements  from
tenant leases provide the majority of revenues from all segments. Information on
the Company's reportable segments is presented as follows:



                                                        Associated      Community
Three Months Ended March 31, 2006         Malls           Centers        Centers         All Other          Total
--------------------------------------   -----------  -------------   -------------   ---------------   ------------
                                                                                          
Revenues                                 $  227,828     $    9,152      $    1,904       $     6,435     $  245,319
Property operating expenses (1)             (75,542)        (2,224)           (693)            5,764       (72,695)
Interest expense                            (54,310)        (1,154)           (700)           (7,765)       (63,929)
Other expense                                     -              -               -            (4,169)        (4,169)
Gain on sales of real estate assets               -              -              53               847            900
                                         -----------  -------------   -------------   ---------------   ------------
Segment profit and loss                  $   97,976     $    5,774      $      564       $     1,112        105,426
                                         ===========  ==============  =============   ===============
Depreciation and amortization expense                                                                       (54,766)
General and administrative expense                                                                           (9,587)
Interest income                                                                                               1,732
Equity in earnings of unconsolidated
      affiliates                                                                                              2,068
Minority interest in earnings                                                                               (18,717)
                                                                                                        ------------
Income before discontinued operations                                                                    $   26,156
                                                                                                        ============
Total assets                             $5,721,502     $  273,772      $  151,635       $   211,143     $6,358,052
Capital expenditures (2)                 $   32,920     $   10,222      $      315       $    12,706     $   56,163




                                       9





                                                        Associated      Community
Three Months Ended March 31, 2005         Malls           Centers        Centers         All Other          Total
--------------------------------------   -----------  -------------   -------------   ---------------   ------------
                                                                                          
Revenues                                 $  199,181     $    8,246      $    1,593       $     5,691     $  214,711
Property operating expenses (1)             (66,915)        (1,954)           (361)            5,852        (63,378)
Interest expense                            (43,489)        (1,174)           (715)           (3,543)       (48,921)
Other expense                                     -              -               -            (3,430)        (3,430)
Gain (loss) on sales of real estate
    assets                                      990              -          (1,724)            3,448          2,714
                                         -----------  -------------   -------------   ---------------   ------------
Segment profit and loss                  $   89,767     $    5,118      $   (1,207)      $     8,018        101,696
                                         ===========  ==============  =============   ===============
Depreciation and amortization expense                                                                       (41,275)
General and administrative expense                                                                           (9,186)
Loss on impairment of real estate
    assets                                                                                                     (262)
Loss on extinguishment of debt                                                                                 (884)
Interest income                                                                                               1,683
Equity in earnings of unconsolidated
   affiliates                                                                                                 3,091
Minority interest in earnings                                                                               (22,223)
                                                                                                        ------------
Income before discontinued operations                                                                    $   32,640
                                                                                                        ============
Total assets                             $4,654,115     $  277,335      $   89,574       $   157,756     $5,178,780
Capital expenditures (2)                 $   33,828     $    5,962      $      737       $    14,709     $   55,236


(1)  Property  operating  expenses include  property  operating  expenses,  real
     estate taxes and maintenance and repairs.  (2) Amounts include acquisitions
     of  real  estate  assets  and  investments  in  unconsolidated  affiliates.
     Developments in progress are included in the All Other category.



Note 6- Earnings Per Share

     Basic  earnings  per share  ("EPS")  is  computed  by  dividing  net income
available to common shareholders by the weighted-average  number of unrestricted
common shares  outstanding  for the period.  Diluted EPS assumes the issuance of
common stock for all potential dilutive common shares  outstanding.  The limited
partners' rights to convert their minority interest in the Operating Partnership
into shares of common  stock are not  dilutive.  The  following  summarizes  the
impact of potential  dilutive common shares on the  denominator  used to compute
earnings per share:


                                                                   Three Months Ended March 31,
                                                                   ----------------------------
                                                                       2006             2005
                                                                   -------------    -----------
                                                                                 
Weighted average shares outstanding                                   63,042           62,768
Effect of nonvested stock awards                                        (387)            (320)
                                                                   -------------    -----------
Denominator - basic earnings per share                                62,655           62,448
Dilutive effect of:
     Stock options                                                     1,421            1,888
     Nonvested stock awards                                              183              242
     Deemed shares related to deferred compensation
arrangements                                                              64              216
                                                                   -------------    -----------
Denominator - diluted earnings per share                              64,283           64,794
                                                                   =============    ===========


Note 7- Comprehensive Income

     Comprehensive  income includes all changes in  shareholders'  equity during
the  period,  except  those  resulting  from  investments  by  shareholders  and
distributions to shareholders. Comprehensive income includes other comprehensive
income of $807 in the  three  months  ended  March 31,  2006,  which  represents
unrealized  gain on marketable  securities  that are classified as available for
sale.  Comprehensive  income was equal to net income for the three  months ended
March 31, 2005.

                                       10

Note 8- Contingencies

     The Company is currently  involved in certain litigation that arises in the
ordinary  course  of  business.  It is  management's  opinion  that the  pending
litigation  will not  materially  affect the  financial  position  or results of
operations of the Company.

     The  Company  has  guaranteed  50% of the debt of Parkway  Place  L.P.,  an
unconsolidated  affiliate in which the Company owns a 45%  interest,  which owns
Parkway Place in Huntsville, AL. The total amount outstanding at March 31, 2006,
was $53,200 of which the Company  has  guaranteed  $26,600.  The  guaranty  will
expire when the related debt matures in June 2008.

     The Company has issued  various  bonds that it would have to satisfy in the
event of  non-performance.  At March 31, 2006,  the total amount  outstanding on
these bonds was $24,013.

Note 9 - Share-Based Compensation

     The Company  maintains the CBL & Associates  Properties,  Inc.  Amended and
Restated Stock  Incentive  Plan, as amended,  which permits the Company to issue
stock options and common stock to selected officers,  employees and directors of
the Company up to a total of 10,400,000  shares.  The compensation  committee of
the board of directors (the "Committee")  administers the plan. The compensation
cost that has been charged against income for the plan was $2,253 and $1,142 for
the three months ended March 31, 2006 and 2005, respectively.  Compensation cost
resulting from  share-based  awards is recorded at the Management  Company.  The
Management  Company is a taxable  entity;  however,  as a result of it incurring
recurring  losses, a full valuation  allowance has been recorded against its net
deferred tax asset. Accordingly, the recognition of compensation cost or the tax
deduction received upon the exercise or vesting of share-based awards,  resulted
in no tax benefits to the Company. Compensation cost capitalized as part of real
estate  assets was $106 and $44 for the three  months  ended  March 31, 2006 and
2005, respectively.

     Stock options  issued under the plan allow for the purchase of common stock
at the fair  market  value of the  stock on the  date of  grant.  Stock  options
granted to officers and employees vest and become exercisable in installments on
each of the first  five  anniversaries  of the date of grant and expire 10 years
after the date of grant.  Stock  options  granted to  independent  directors are
fully vested upon grant; however, the independent directors may not sell, pledge
or otherwise  transfer  their stock  options  during their board term or for one
year thereafter. No stock options have been granted since 2002.

     Under the plan,  common stock may be awarded either alone,  in addition to,
or in tandem with other stock awards  granted under the plan.  The Committee has
the  authority  to  determine  eligible  persons  to whom  common  stock will be
awarded,  the number of shares to be awarded  and the  duration  of the  vesting
period,  as defined.  The  Committee may also provide for the issuance of common
stock  under the plan on a deferred  basis  pursuant  to  deferred  compensation
arrangements.  The  fair  value  of  common  stock  awarded  under  the  plan is
determined  based on the market price of the Company's common stock on the grant
date.

     Historically,  the Company accounted for its stock-based compensation plans
under the recognition and measurement  principles of Accounting Principles Board
Opinion No. 25  "Accounting  for Stock Issued to  Employees"  ("APB No. 25") and
related interpretations. Effective January 1, 2003, the Company elected to begin
recording the expense  associated  with stock  options  granted after January 1,
2003, on a prospective  basis in accordance  with the fair value and  transition


                                       11


provisions  of SFAS No.  123,  "Accounting  for  Stock-Based  Compensation",  as
amended by SFAS No. 148,  "Accounting for Stock-Based  Compensation - Transition
and Disclosure - An Amendment of FASB Statement No. 123."

     No stock-based  compensation expense related to stock options granted prior
to January 1, 2003,  has been  reflected  in net income  since these  awards are
being  accounted  for under APB No. 25 and all  options  granted had an exercise
price  equal to the  fair  value of the  Company's  common  stock on the date of
grant. For SFAS No. 123 pro forma disclosure  purposes,  the fair value of stock
options was  determined as of the date of grant using the  Black-Scholes  option
pricing model.  Effective  January 1, 2006,  the Company  adopted the fair value
recognition  provisions of SFAS No.  123(R),  "Share-Based  Payment,"  using the
modified-prospective-transition    method.   Under   that   transition   method,
compensation  cost  recognized  during the three  months  ended  March 31,  2006
includes:  (a) compensation cost for all share-based  payments granted prior to,
but not yet vested as of  January  1,  2006,  based on the grant date fair value
estimated in  accordance  with the original  provisions  of SFAS No. 123 and (b)
compensation cost for all share-based  payments granted subsequent to January 1,
2006,  based on the  grant-date  fair value  estimated  in  accordance  with the
provisions of SFAS 123(R). Results for prior periods have not been restated.

     As a result of adopting SFAS No.  123(R) on January 1, 2006,  the Company's
net income available to common shareholders for the three months ended March 31,
2006,  is $94  lower  than  if it  had  continued  to  account  for  share-based
compensation  under SFAS No. 123.  Basic and diluted  earnings per share for the
three months ended March 31, 2006 would have been the same as reported basic and
diluted earnings per share if the Company had not adopted SFAS 123(R).

     The following  table  illustrates the effect on net income and earnings per
share if the Company had applied the fair value  recognition  provisions of SFAS
No.  123(R) to all  outstanding  and  unvested  awards in the three months ended
March 31, 2005:


                                                               -----------------
                                                                  Three Months
                                                                 Ended March 31,
                                                                       2005
                                                               ------------------

                                                                    
Net income available to common shareholders, as reported               $25,371
Add:  Stock-based compensation expense included in
          reported net income available to common
          shareholders                                                   1,142
Less:  Total stock-based compensation expense determined
          under fair value method                                       (1,247)
                                                               ------------------
Pro forma net income available to common shareholders                  $25,226
                                                               ==================
Earnings per share:
    Basic, as reported                                                $ 0.41
                                                               ==================
    Basic, pro forma                                                  $ 0.41
                                                               ==================
    Diluted, as reported                                              $ 0.39
                                                               ==================
    Diluted, pro forma                                                $ 0.39
                                                               ==================


     The  Company's  stock option  activity for the three months ended March 31,
2006 is summarized as follows:



                                                                                Weighted
                                                                   Weighted     Average      Aggregate
                                                                    Average    Remaining     Intrinsic
                                                                   Exercise   Contractual      Value
                                                    Shares           Price        Term
                                                 --------------   ---------------------------------------
                                                            
Outstanding at January 1, 2006                      2,208,440        $  13.89
Exercised                                            (212,020)       $  11.29
                                                 --------------
Outstanding at March 31, 2006                       1,996,420        $  14.16     4.1 years   $ 56,474
                                                 ==============
Vested or expected to vest at March 31, 2006        1,996,420        $  14.16     4.1 years   $ 56,474
                                                 ==============
Options exercisable at March 31, 2006               1,569,420        $  13.40     3.7 years   $ 45,585
                                                 ==============


                                       12


     No stock  options have been  granted  since the adoption of SFAS No. 123 on
January 1, 2003. The total intrinsic value of options exercised during the three
months ended March 31, 2006 and 2005, was $6,611 and $2,766, respectively.

     A summary of the status of the Company's  nonvested  shares as of March 31,
2006,  and changes  during the three months  ended March 31, 2006,  is presented
below:


                                          Weighted
                                           Average
                                         Grant-Date
                               Shares    Fair Value
                            -------------------------
                                       
Nonvested at January 1, 2006    387,506      $ 30.06
Granted                          36,181      $ 41.42
Vested                          (37,658)     $ 40.01
Forfeited                          (600)     $ 39.24
                            -------------
Nonvested at March 31, 2006     385,429      $ 30.14
                            =============


     The weighted  average  grant-date  fair value of shares  granted during the
three months ended March 31, 2006 and 2005 was $41.42 and $35.81,  respectively.
The total fair value of shares  vested  during the three  months ended March 31,
2006 and 2005 was $1,560 and $896, respectively.

     As of March 31, 2006, there was $8,605 of total  unrecognized  compensation
cost related to nonvested  share-based  compensation  arrangements granted under
the plan. That cost is expected to be recognized over a weighted  average period
of 3.7 years.

Note 10 - Noncash Investing and Financing Activities

     The Company's  noncash  investing and financing  activities were as follows
for the three months ended March 31, 2006 and 2005:



                                                                    Three Months Ended
                                                                        March 31,
                                                                 -------------------------
                                                                     2006        2005
                                                                 -------------------------
                                                                              
Conversion of minority interest into common stock                      $16,486     $    -
Additions to real estate assets accrued but not yet paid               $17,670     $7,291
                                                                 =========================


Note 11 - Discontinued Operations

     As of March 31, 2006,  the Company had identified  five  community  centers
that met the  criteria to be  classified  as held for sale.  Total  revenues for
these  community  centers  were $3,565 and $587 for the three months ended March
31, 2006 and 2005, respectively.  All prior periods presented have been restated
to reflect the operations of these community centers as discontinued operations.
The five community centers were sold during May 2006.

Note 12 - Recent Accounting Pronouncements

     In June 2005, the FASB issued Emerging Issues Task Force ("EITF") Issue No.
04-5,  "Determining  Whether a General  Partner,  or the  General  Partners as a
Group,  Controls  a Limited  Partnership  or  Similar  Entity  When the  Limited
Partners  Have Certain  Rights."  EITF Issue No. 04-5  provides a framework  for
determining  whether a general  partner  controls,  and  should  consolidate,  a
limited  partnership or a similar entity. EITF Issue No. 04-5 is effective after
June  29,  2005,  for  all  newly  formed  limited   partnerships  and  for  any
pre-existing limited partnerships that modify their partnership agreements after
that date.  General  partners of all other limited  partnerships are required to
apply the consensus no later than the beginning of the first reporting period in
fiscal years  beginning  after December 15, 2005. The adoption of EITF Issue No.
04-5 did not result in any changes to the manner in which the  Company  accounts
for its joint ventures.

                                       13


     In June 2005, the FASB issued FSP 78-9-1,  "Interaction  of AICPA Statement
of  Position  78-9 and EITF  Issue No.  04-5."  The EITF  acknowledged  that the
consensus in EITF Issue No. 04-5 conflicts with certain  aspects of Statement of
Position ("SOP") 78-9, "Accounting for Investments in Real Estate Ventures." The
EITF agreed that the  assessment  of whether a general  partner,  or the general
partners as a group, controls a limited partnership should be consistent for all
limited  partnerships,  irrespective  of the  industry  within which the limited
partnership operates.  Accordingly,  the guidance in SOP 78-9 was amended in FSP
78-9-1 to be consistent  with the guidance in EITF Issue No. 04-5. The effective
dates for this FSP are the same as those mentioned above in EITF Issue No. 04-5.
The  adoption of FSP 78-9-1 did not result in any changes to the manner in which
the Company accounts for its joint ventures.


ITEM 2: Management's  Discussion and Analysis of Financial Condition and Results
of Operations

     The following discussion and analysis of financial condition and results of
operations  should  be read  in  conjunction  with  the  consolidated  financial
statements and  accompanying  notes that are included in this Form 10-Q. In this
discussion,  the terms  "we",  "us",  "our",  and the  "Company"  refer to CBL &
Associates Properties, Inc. and its subsidiaries.

     Certain  statements made in this section or elsewhere in this report may be
deemed "forward looking statements" within the meaning of the federal securities
laws.  Although we believe the  expectations  reflected  in any  forward-looking
statements  are based on reasonable  assumptions,  we can give no assurance that
these expectations will be attained,  and it is possible that actual results may
differ materially from those indicated by these  forward-looking  statements due
to a  variety  of risks  and  uncertainties.  In  addition  to the risk  factors
described  in Part II,  Item 1A. of this  report,  such risks and  uncertainties
include, without limitation, general industry, economic and business conditions,
interest  rate  fluctuations,   costs  of  capital  and  capital   requirements,
availability  of real estate  properties,  inability to  consummate  acquisition
opportunities,  competition from other companies and retail formats,  changes in
retail rental rates in the Company's markets, shifts in customer demands, tenant
bankruptcies  or store  closings,  changes in vacancy  rates at our  properties,
changes  in  operating   expenses,   changes  in  applicable   laws,  rules  and
regulations, the ability to obtain suitable equity and/or debt financing and the
continued availability of financing in the amounts and on the terms necessary to
support our future business.  We disclaim any obligation to update or revise any
forward-looking  statements to reflect  actual results or changes in the factors
affecting the forward-looking information.

EXECUTIVE OVERVIEW

     We are a  self-managed,  self-administered,  fully  integrated  real estate
investment  trust  ("REIT")  that  is  engaged  in the  ownership,  development,
acquisition,  leasing,  management and operation of regional  shopping malls and
community centers.  Our shopping center properties are located in 27 states, but
primarily in the southeastern and midwestern United States.

     As of  March  31,  2006,  we owned  controlling  interests  in  seventy-two
regional  malls,  twenty-seven  associated  centers (each adjacent to a regional
shopping mall), seven community centers and one office building.  We consolidate
the  financial  statements  of all  entities  in  which  we  have a  controlling
financial  interest  or  where  we are the  primary  beneficiary  of a  variable
interest  entity.  As of March 31, 2006, we owned  non-controlling  interests in
seven regional malls and three  associated  centers.  Because one or more of the
other  partners have  substantive  participating  rights we do not control these
partnerships and joint ventures and, accordingly,  account for these investments
using the equity  method.  We had two mall  expansions,  one  open-air  shopping
center,  two open-air  shopping center  expansions,  two associated  centers and
three  community  centers  under  construction  at March 31, 2006.  We also hold
options to acquire certain development properties owned by third parties.

                                       14


     The majority of our revenues is derived from leases with retail tenants and
generally includes base minimum rents,  percentage rents based on tenants' sales
volumes and  reimbursements  from tenants for expenditures,  including  property
operating  expenses,  real estate taxes and maintenance and repairs,  as well as
certain capital expenditures.  We also generate revenues from sales of outparcel
land at the properties and from sales of operating real estate assets when it is
determined  that we can realize the maximum  value of the assets.  Proceeds from
such sales are generally used to reduce borrowings on our credit facilities.

RESULTS OF OPERATIONS

     The following significant transactions impact the comparison of the results
of  operations  for the three  months  ended  March 31,  2006 to the  results of
operations for the three months ended March 31, 2005:

    |X|  We have  acquired or opened eight malls,  two  open-air  centers,  two
         associated  centers and two  community  centers  since January 1, 2005
         (collectively referred to as the "New Properties"). We do not consider
         a property  to be one of the  Comparable  Properties  (defined  below)
         until the property has been open for one complete  calendar  year. The
         New Properties are as follows:


         Project Name                                  Location                            Date Acquired / Opened
         ------------------------------------------    --------------------------------    -----------------------
         Acquisitions:
                                                                                     
         Laurel Park Place                             Livonia, MI                         June 2005
         The Mall of Acadiana                          Lafayette, LA                       July 2005
         Layton Hills Mall                             Layton, UT                          November 2005
         Layton Hills Convenience Center               Layton, UT                          November 2005
         Oak Park Mall                                 Overland Park, KS                   November 2005
         Eastland Mall                                 Bloomington, IL                     November 2005
         Hickory Point Mall                            Forsyth, IL                         November 2005
         Triangle Town Center (50/50 joint venture)    Raleigh, NC                         November 2005
         Triangle Town Place (50/50 joint venture)     Raleigh, NC                         November 2005

         Developments:
         Imperial Valley Mall (60/40 joint venture)    El Centro, CA                       March 2005
         Cobblestone Village at Royal Palm             Royal Palm Beach, FL                June 2005
         Chicopee Marketplace                          Chicopee, MA                        September 2005
         Southaven Towne Center                        Southaven, MS                       October 2005
         Gulf Coast Town Center - Phase I (50/50
         joint venture)                                Ft. Myers, FL                       November 2005


    |X|  Properties  that were in operation as of January 1, 2005 and March 31,
         2006 are referred to as the "Comparable Properties."

Comparison  of the Three  Months  Ended March 31, 2006 to the Three Months Ended
March 31, 2005

Revenues

     The $30.6 million  increase in revenues  resulted  from  increases of $25.4
million  attributable  to the  additional  revenues from the New  Properties and
increased revenues of $6.0 million from the Comparable Properties.

     Our cost recovery ratio  increased  slightly to 104.5% for the three months
ended March 31,  2006,  compared to 103.4% for the three  months ended March 31,
2005.

     Management,  development and leasing fees decreased $2.0 million, primarily
as a result of the sale of our management contracts with Galileo America, LLC in
August 2005.

                                       15


     Other revenues  increased $1.2 million due to growth in our subsidiary that
provides security and maintenance services to third parties.

Expenses

     The $9.3 million increase in property  operating  expenses,  including real
estate  taxes and  maintenance  and repairs,  resulted  from an increase of $7.5
million  attributable to the New Properties and $1.8 million from the Comparable
Properties.

     The  $13.5  million  increase  in  depreciation  and  amortization  expense
resulted  from  increases  of $10.7  million  from the New  Properties  and $2.8
million  from  the  Comparable  Properties.  The  increase  attributable  to the
Comparable  Properties is due to ongoing capital  expenditures  for renovations,
expansions, tenant allowances and deferred maintenance.

     General and  administrative  expenses increased $0.4 million primarily as a
result of annual  increases in salaries and benefits of existing  personnel  and
the addition of new personnel to support our growth.

     Other expense  increased $0.7 million due to an increase of $0.8 million in
the operating  expenses of our subsidiary that provides security and maintenance
services  to third  parties  and a decrease  of $0.1  million in  write-offs  of
abandoned development projects.

Other Income and Expenses

     Interest  expense  increased by $15.0  million due to the  additional  debt
associated  with the New  Properties  and an  increase in the  weighted  average
interest rate of our variable-rate  debt as compared to the comparable period of
the prior year.

Gain on Sales

     Gain on sales of real  estate  assets of $0.9  million in the three  months
ended March 31, 2006 relates to the sale of one outparcel. Gain on sales of real
estate  assets of $2.7  million in the three  months  ended  March 31,  2005 was
primarily  related to a gain of $1.7  million from sales of two  outparcels  and
$1.0 million from the  recognition  of deferred gain related to properties  that
were previously sold to Galileo America, LLC.

Equity in Earnings of Unconsolidated Affiliates

     Equity in earnings of  unconsolidated  affiliates  decreased  $1.0  million
primarily  because  of the  disposition  of our  ownership  interest  in Galileo
America, LLC in August 2005.

Discontinued Operations

     Discontinued  operations  in the three months ended March 31, 2006 reflects
the results of operations of five community centers that were classified as held
for sale as of March 31, 2006. Discontinued operations in the three months ended
March 31, 2005 are  related to five  community  centers  that were sold in March
2005, as well as six community centers that have been sold or classified as held
for sale in periods subsequent to March 31, 2005.

Operational Review

     The shopping  center  business is, to some extent,  seasonal in nature with
tenants  achieving the highest levels of sales during the fourth quarter because


                                       16


of the holiday season.  Additionally,  the malls earn most of their  "temporary"
rents  (rents  from  short-term  tenants),  during  the  holiday  period.  Thus,
occupancy levels and revenue  production are generally the highest in the fourth
quarter of each year. Results of operations  realized in any one quarter may not
be indicative  of the results  likely to be  experienced  over the course of the
fiscal year.

         We classify our regional malls into two categories - malls that have
completed their initial lease-up are referred to as stabilized malls and malls
that are in their initial lease-up phase and have not been open for three
calendar years are referred to as non-stabilized malls. The non-stabilized malls
currently include Coastal Grand-Myrtle Beach in Myrtle Beach, SC, which opened
in March 2004; Imperial Valley Mall in El Centro, CA, which opened in March
2005; Southaven Towne Center in Southaven, MS, which opened in October 2005; and
Gulf Coast Town Center - Phase I in Ft. Myers, FL, which opened in November
2005.


         We derive a significant amount of our revenues from the mall
properties. The sources of our revenues by property type were as follows:


                                                Three Months Ended March 31,
                                              ---------------------------------
                                                    2006             2005
                                              ----------------- ---------------
                                                              
Malls                                               92.9%           92.8%
Associated centers                                   3.7%            3.8%
Community centers                                    0.8%            0.7%
Mortgages, office building and other                 2.6%            2.7%



Sales and Occupancy Costs

     Mall store sales (for those  tenants who occupy  10,000 square feet or less
and have reported sales) increased by 2.8% on a comparable per square foot basis
to $332 per square foot for the trailing twelve months ended March 31, 2006.

     Occupancy  costs as a  percentage  of sales for the  stabilized  malls were
13.6% (we  previously  reported  12.6% in the  investor  conference  call script
attached as an exhibit to our Current  Report on Form 8-K dated April 28,  2006)
and 13.9% for the three months ended March 31, 2006 and 2005, respectively.

Occupancy

     The occupancy of the portfolio was as follows:


                                                          At March 31,
                                              -------------------------------------
                                                    2006               2005
                                              ------------------ ------------------
                                                                 
Total portfolio occupancy                        91.3%                 91.3%
Total mall portfolio                             91.1%                 91.5%
     Stabilized malls                            91.3%                 91.9%
     Non-stabilized malls                        88.2%                 81.8%
Associated centers                               92.0%                 91.9%
Community centers                                91.9%                 82.9%



Leasing

     Average annual base rents per square foot were as follows for each property
type:


                                                          At March 31,
                                              -------------------------------------
                                                    2006               2005
                                              ------------------ ------------------
                                                                
Stabilized malls                                   $ 26.71            $ 25.45
Non-stabilized malls                               $ 27.11            $ 26.92
Associated centers                                 $ 10.85            $ 10.05
Community centers                                   $ 9.44            $ 14.55
Other                                              $ 19.33            $ 19.25


                                       17



     The  following  table shows the positive  results we achieved in increasing
the initial and average base rents  through new and renewal  leasing  during the
three months ended March 31, 2006 for small shop spaces less than 20,000  square
feet that were previously occupied, excluding junior anchors:



                                         Base Rent
                                            Per       Initial Base                 Average Base
                                        Square Foot      Rent Per                    Rent Per
                                        Prior Lease    Square Foot     % Change     Square Foot     % Change
                          Square Feet       (1)       New Lease (2)    Initial     New Lease (3)     Average
                          ------------- ------------- --------------- ------------ -------------   -----------
                                                                                     
Stabilized Malls               753,970      $ 26.24        $ 26.37       0.5%        $ 27.01           2.9%
Associated centers              14,657        17.57          18.86       7.3%          18.87           7.4%
Community centers                5,002        20.62          20.62       0.0%          21.47           4.1%
                          ------------- ------------- --------------- ------------ -------------   -----------
                               773,629      $ 26.04        $ 26.19       0.6%        $ 26.82           3.0%
                          ============= ============= =============== ============ =============   ===========

(1)  Represents the rent that was in place at the end of the lease term.
(2)  Represents  the rent in place at  beginning  of the lease  terms.
(3)  Average base rent over the term of the new lease.




LIQUIDITY AND CAPITAL RESOURCES

     There was $41.5 million of cash and cash  equivalents as of March 31, 2006,
an increase of $12.7 million from December 31, 2005.  Cash flows from operations
are  used to  fund  short-term  liquidity  and  capital  needs  such  as  tenant
construction  allowances,  capital  expenditures  and payments of dividends  and
distributions.  For  longer-term  liquidity  needs  such  as  acquisitions,  new
developments, renovations and expansions, we typically rely on property specific
mortgages  (which are  generally  non-recourse),  construction  and term  loans,
revolving  lines  of  credit,  common  stock,  preferred  stock,  joint  venture
investments and a minority interest in the Operating Partnership.

Cash Flows

     Cash provided by operating  activities  during the three months ended March
31, 2006,  decreased by $8.3 million to $68.0 million from $76.3 million  during
the three months ended March 31, 2005.

Debt

     During the three  months ended March 31, 2006,  we borrowed  $72.3  million
under  mortgage  and  other  notes  payable  and paid  $13.5  million  to reduce
outstanding borrowings under mortgage and other notes payable. We also paid $2.5
million of costs directly related to borrowings and our credit facilities.

     The following  tables  summarize debt based on our pro rata ownership share
(including  our pro  rata  share  of  unconsolidated  affiliates  and  excluding
minority investors' share of shopping center properties) because we believe this
provides  investors a clearer  understanding  of our total debt  obligations and
liquidity (in thousands):


                                                                                                                  Weighted
                                                                                                                  Average
                                                                   Minority      Unconsolidated                   Interest
                                                  Consolidated     Interests       Affiliates       Total         Rate(1)
                                                  ------------- ---------------- --------------- ------------- ---------------
March 31, 2006:
Fixed-rate debt:
                                                                                                    
     Non-recourse loans on operating properties    $ 3,262,444     $ (51,686)     $  225,238      $ 3,435,996      5.99%
                                                  ------------- ---------------- --------------- -------------
Variable-rate debt:
     Recourse term loans on operating properties       292,000             -          26,600          318,600      5.64%
     Construction loans                                100,294             -               -          100,294      5.95%
     Lines of credit                                   739,150             -               -          739,150      5.46%
                                                  ------------- ---------------- --------------- -------------
     Total variable-rate debt                        1,131,444             -          26,600        1,158,044      5.55%
                                                  ------------- ---------------- --------------- -------------
Total                                              $ 4,393,888     $ (51,686)     $  251,838      $ 4,594,040      5.88%
                                                  ============= ================ =============== =============



                                       18



                                                                                                                  Weighted
                                                                                                                  Average
                                                                   Minority      Unconsolidated                   Interest
                                                  Consolidated     Interests       Affiliates       Total         Rate(1)
                                                  ------------- ---------------- --------------- ------------- ---------------
December 31, 2005:
Fixed-rate debt:
                                                                                                    
     Non-recourse loans on operating properties    $ 3,281,939     $ (51,950)      $  216,026     $ 3,446,015      5.99%
                                                  ------------- ---------------- --------------- -------------
Variable-rate debt:
     Recourse term loans on operating properties       292,000           -             26,600         318,600      5.33%
     Construction loans                                 76,831           -                  -          76,831      5.76%
     Lines of credit                                   690,285           -                  -         690,285      5.29%
                                                  ------------- ---------------- --------------- -------------
     Total variable-rate debt                        1,059,116           -             26,600       1,085,716      5.33%
                                                  ------------- ---------------- --------------- -------------
Total                                              $ 4,341,055     $ (51,950)      $  242,626     $ 4,531,731      5.83%
                                                  ============= ================ =============== =============

     (1)  Weighted  average interest rate including the effect of debt premiums,
          but excluding amortization of deferred financing costs.




     We have four secured credit  facilities  with total  availability of $606.0
million,  of which $389.2  million was  outstanding  as of March 31,  2006.  The
secured credit  facilities  bear interest at rate of LIBOR plus a margin ranging
from 90 to 100 basis points.

     We have an unsecured  credit  facility  with total  availability  of $500.0
million,  of which $350.0  million was  outstanding  as of March 31,  2006.  The
unsecured  credit  facility  bears  interest at LIBOR plus a margin of 90 to 145
basis points based on our leverage.

     We also have secured and unsecured lines of credit with total  availability
of $27.1  million  that can only be used to issue  letters of credit.  There was
$25.9 million outstanding under these lines at March 31, 2006.

     The  secured  and  unsecured  credit   facilities   contain,   among  other
restrictions,  certain financial  covenants including the maintenance of certain
coverage ratios,  minimum net worth  requirements,  and limitations on cash flow
distributions.   We  were  in  compliance  with  all  financial   covenants  and
restrictions  under  our  credit  facilities  at March 31,  2006.  Additionally,
certain property-specific mortgage notes payable require the maintenance of debt
service  coverage  ratios.  At March 31, 2006, the  properties  subject to these
mortgage notes payable were in compliance with the applicable ratios.

     We expect to refinance  the  majority of mortgage  and other notes  payable
maturing over the next five years with replacement  loans. Based on our pro rata
share of total debt, there is $745.1 million of debt that is scheduled to mature
before March 31, 2007. There are extension options in place that will extend the
maturity of $587.2  million of this debt beyond  March 31, 2007.  The  remaining
$157.9 of debt that is maturing  before March 31, 2007 is expected to be retired
or refinanced.

Equity

     In January 2006,  holders of 1,480,066 common units of limited  partnership
interest in the  Operating  Partnership  and holders of 27,582  Series J special
common  units  ("J-SCUs")  of  limited  partnership  interest  in the  Operating
Partnership  exercised their  conversion  rights.  We elected to issue 1,480,066
shares of common  stock in exchange for the common units and to pay cash of $1.1
million in exchange for the J-SCUs.

     During the three months ended March 31, 2006,  we received  $2.6 million in
proceeds from  issuances of common stock related to exercises of employee  stock
options and from our dividend reinvestment plan.

     During the three months ended March 31,  2006,  we paid  dividends of $42.0
million to holders of our common stock and our preferred stock, as well as $30.1
million in  distributions  to the minority  interest  investors in our Operating
Partnership and certain shopping center properties.

                                       19


     As a publicly  traded  company,  we have access to capital through both the
public equity and debt markets.  In January 2006, we filed a shelf  registration
statement with the Securities and Exchange Commission authorizing us to publicly
issue shares of preferred stock, common stock and warrants to purchase shares of
common stock.  There is no limit to the offering  price or number of shares that
we may issue under this shelf registration statement.

     We anticipate that the combination of equity and debt sources will, for the
foreseeable future,  provide adequate liquidity to continue our capital programs
substantially  as in the past  and make  distributions  to our  shareholders  in
accordance with the requirements applicable to real estate investment trusts.

     Our   strategy   is  to   maintain  a   conservative   debt-to-total-market
capitalization  ratio in order to enhance  our access to the  broadest  range of
capital  markets,  both  public  and  private.  Based  on  our  share  of  total
consolidated  and  unconsolidated  debt  and the  market  value of  equity,  our
debt-to-total-market capitalization (debt plus market value equity) ratio was as
follows at March 31, 2006 (in thousands, except stock prices):


                                                         Shares
                                                       Outstanding      Stock Price (1)          Value
                                                    ------------------  -----------------   -----------------
                                                                                      
Common stock and operating partnership units              115,669           $  42.45           $4,910,149
8.75% Series B Cumulative Redeemable Preferred Stock        2,000           $  50.00              100,000
7.75% Series C Cumulative Redeemable Preferred Stock          460           $ 250.00              115,000
7.375% Series D Cumulative Redeemable Preferred Stock         700           $ 250.00              175,000
                                                                                            -----------------
Total market equity                                                                             5,300,149
Company's share of total debt                                                                   4,593,990
                                                                                            -----------------
Total market capitalization                                                                    $9,894,139
                                                                                            =================
Debt-to-total-market capitalization ratio                                                           46.4%
                                                                                            =================

     (1)  Stock price for common stock and  operating  partnership  units equals
          the closing  price of the common  stock on March 31,  2006.  The stock
          price for the preferred stock represents the liquidation preference of
          each respective series of preferred stock.



     As of March 31,  2006,  our variable  rate debt of $1.2 billion  represents
11.7%  of our  total  market  capitalization  and  25.2%  of our  share of total
consolidated and unconsolidated debt.

Capital Expenditures

     We expect to continue to have access to the capital resources  necessary to
expand and develop our business.  Future development and acquisition  activities
will be undertaken as suitable  opportunities  arise. We do not expect to pursue
these  opportunities  unless  adequate  sources of funding are  available  and a
satisfactory  budget with  targeted  returns on investment  has been  internally
approved.

     An annual capital expenditures budget is prepared for each property that is
intended  to provide  for all  necessary  recurring  and  non-recurring  capital
expenditures.  We believe that  property  operating  cash flows,  which  include
reimbursements  from tenants for certain  expenses,  will provide the  necessary
funding for these expenditures.

     The following  development projects were under construction as of March 31,
2006 (dollars in thousands):

                                       20




                                                                                  Our Share
                                                                                   of Costs
                                                                                   Incurred
                                                       Project      Our Share       as of
                                                       Square       Of Total       March 31,    Projected       Initial
            Property                   Location         Feet          Costs           2006     Opening Date      Yield
---------------------------------  ------------------ -----------  ------------  ------------  ---------------  --------
Mall Expansions:
                                                                                                
The District at Valley View        Roanoke, VA            75,576      $19,700         $  922    Nov-06/Mar-07     7.3%
Hanes Mall-Dick's Sporting Goods   Winston-Salem, NC      66,000       10,150          5,811      July-06        10.0%

Open-Air Center:
Alamance Crossing                  Burlington, NC        635,240      103,684         28,245       Jul-07         8.5%

Open-Air Center Expansions:
Southaven Towne Center-
     Books-A-Million               Southaven, MS          15,000        2,530          2,184       Aug-06        10.6%
Gulf Coast Town Center Phase II    Ft. Myers, FL         750,000      109,641(a)      23,201    Oct-06/Mar-07     9.0%

Associated Centers:
The Plaza at Fayette Mall          Lexington, KY         187,413       38,341         20,898     Jul/Oct-06       9.0%
                                   Fairview
The Shoppes at St. Clair           Heights, IL            77,330       27,048         13,032       Mar-07         7.0%

Community Center:
The Shoppes at Pineda Ridge        Melbourne, FL         170,009        6,584          1,171       Nov-06         9.0%
High Pointe Commons                Harrisburg, PA        299,935        7,271          5,963       Oct-06        10.0%
Lakeview Point                     Stillwater, OK        207,300       21,537          9,281       Oct-06         9.0%
                                                      -----------  ------------  ------------
                                                       2,483,803     $346,486       $110,708
                                                      ===========  ============  ============

(a) Amounts shown are 100% of the cost and cost to date.




     There are construction  loans in place for the costs of Alamance  Crossing,
Gulf Coast Town Center,  The Plaza at Fayette,  High Pointe Commons and Lakeview
Pointe.  The remaining  costs will be funded with  operating  cash flows and the
credit facilities.

     We have entered into a number of option  agreements for the  development of
future regional malls,  open-air centers and community  centers.  Except for the
projects  discussed under  Developments and Expansions above, we do not have any
other material capital commitments.

Dispositions

     We received a total of $1.6 million in cash  proceeds  from the sale of one
outparcel.

     In May 2006,  we sold five  community  centers  for a total  sales price of
$106.5 million.  The assets and liabilities  related to these community  centers
were classified as held for sale as of March 31, 2006.

Other Capital Expenditures

     Including our share of unconsolidated  affiliates' capital expenditures and
excluding  minority  investor's  share of  capital  expenditures,  we spent $5.0
million  during the three  months  ended March 31,  2006 for tenant  allowances,
which  generate  increased  rents from tenants  over the terms of their  leases.
Deferred  maintenance  expenditures were $0.4 million for the three months ended
March 31, 2006 and included $0.2 million for roof repairs and replacements, $0.1
million for resurfacing  and improved  lighting of parking lots and $0.1 million
for other capital  expenditures.  Renovation  expenditures were $5.2 million for
the three months ended March 31, 2006.

     Deferred maintenance expenditures are generally billed to tenants as common
area  maintenance  expense,  and most are recovered over a 5- to 15-year period.


                                       21


Renovation  expenditures  are primarily for remodeling and upgrades of malls, of
which approximately 30% is recovered from tenants over a 5- to 15-year period.

CRITICAL ACCOUNTING POLICIES

     Our  significant  accounting  policies  are  disclosed  in  Note  2 to  the
consolidated  financial  statements  included in the Company's  Annual Report on
Form  10-K for the year  ended  December  31,  2005.  The  following  discussion
describes our most critical accounting  policies,  which are those that are both
important  to the  presentation  of  our  financial  condition  and  results  of
operations and that require significant judgment or use of complex estimates.

Revenue Recognition

     Minimum  rental   revenue  from   operating   leases  is  recognized  on  a
straight-line  basis over the initial terms,  including  rent  holidays,  of the
related  leases.  Certain  tenants are required to pay percentage  rent if their
sales volumes exceed thresholds specified in their lease agreements.  Percentage
rent is recognized as revenue when the  thresholds  are achieved and the amounts
become determinable.

     We receive  reimbursements  from tenants for real estate taxes,  insurance,
common area maintenance,  utilities and other recoverable  operating expenses as
provided  in the lease  agreements.  Tenant  reimbursements  are  recognized  as
revenue  in the period the  related  operating  expenses  are  incurred.  Tenant
reimbursements  related to certain  capital  expenditures  are billed to tenants
over periods of 5 to 15 years and are recognized as revenue when billed.

     We receive management,  leasing and development fees from third parties and
unconsolidated  affiliates.  Management  fees are  charged  as a  percentage  of
revenues (as defined in the management  agreement) and are recognized as revenue
when earned. Development fees are recognized as revenue on a pro rata basis over
the development  period.  Leasing fees are charged for newly executed leases and
lease  renewals  and are  recognized  as revenue when  earned.  Development  and
leasing fees  received from  unconsolidated  affiliates  during the  development
period are  recognized  as revenue  to the extent of the  third-party  partners'
ownership interest. Fees to the extent of our ownership interest are recorded as
a reduction to our investment in the unconsolidated affiliate.

     Gains on sales of real estate assets are  recognized  when it is determined
that  the  sale  has  been  consummated,  the  buyer's  initial  and  continuing
investment  is  adequate,  our  receivable,  if any,  is not  subject  to future
subordination,  and the  buyer  has  assumed  the usual  risks  and  rewards  of
ownership of the asset. When we have an ownership interest in the buyer, gain is
recognized to the extent of the third party partner's ownership interest and the
portion of the gain attributable to our ownership interest is deferred.

Real Estate Assets

     We  capitalize  predevelopment  project  costs paid to third  parties.  All
previously  capitalized  predevelopment  costs are expensed when it is no longer
probable  that the project  will be  completed.  Once  development  of a project
commences,  all direct  costs  incurred  to  construct  the  project,  including
interest and real estate taxes, are capitalized.  Additionally,  certain general
and administrative  expenses are allocated to the projects and capitalized based
on the amount of time  applicable  personnel  work on the  development  project.
Ordinary  repairs and maintenance are expensed as incurred.  Major  replacements
and  improvements  are capitalized and depreciated  over their estimated  useful
lives.

     All acquired real estate assets are accounted for using the purchase method
of accounting  and  accordingly,  the results of operations  are included in the
consolidated  statements of operations from the respective dates of acquisition.
The purchase  price is allocated to (i)  tangible  assets,  consisting  of land,


                                       22


buildings  and  improvements,  and tenant  improvements,  (ii) and  identifiable
intangible   assets  and   liabilities   generally   consisting  of  above-  and
below-market leases and in-place leases. We use estimates of fair value based on
estimated cash flows,  using  appropriate  discount  rates,  and other valuation
methods to allocate the purchase  price to the acquired  tangible and intangible
assets.  Liabilities  assumed  generally  consist of  mortgage  debt on the real
estate  assets  acquired.  Assumed  debt  with a stated  interest  rate  that is
significantly different from market interest rates is recorded at its fair value
based on estimated market interest rates at the date of acquisition.

     Depreciation is computed on a  straight-line  basis over estimated lives of
40 years for  buildings,  10 to 20 years for  certain  improvements  and 7 to 10
years for  equipment and  fixtures.  Tenant  improvements  are  capitalized  and
depreciated  on a  straight-line  basis  over  the  term of the  related  lease.
Lease-related  intangibles from acquisitions of real estate assets are amortized
over the remaining terms of the related leases.  Any difference between the face
value of the debt assumed and its fair value is  amortized  to interest  expense
over the remaining term of the debt using the effective interest method.

Carrying Value of Long-Lived Assets

     We periodically  evaluate  long-lived assets to determine if there has been
any  impairment in their  carrying  values and record  impairment  losses if the
undiscounted  cash flows estimated to be generated by those assets are less than
the assets' carrying amounts or if there are other indicators of impairment.  If
it is  determined  that an impairment  has  occurred,  the excess of the asset's
carrying  value over its  estimated  fair  value will be charged to  operations.
There were no  impairment  charges in the three months ended March 31, 2006.  We
recorded an  impairment  charge of $0.3  million  during the three  months ended
March 31, 2005, related to the sale of five community centers.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2005, the FASB issued Emerging Issues Task Force ("EITF") Issue No.
04-5,  "Determining  Whether a General  Partner,  or the  General  Partners as a
Group,  Controls  a Limited  Partnership  or  Similar  Entity  When the  Limited
Partners  Have Certain  Rights."  EITF Issue No. 04-5  provides a framework  for
determining  whether a general  partner  controls,  and  should  consolidate,  a
limited  partnership or a similar entity. EITF Issue No. 04-5 is effective after
June  29,  2005,  for  all  newly  formed  limited   partnerships  and  for  any
pre-existing limited partnerships that modify their partnership agreements after
that date.  General  partners of all other limited  partnerships are required to
apply the consensus no later than the beginning of the first reporting period in
fiscal years  beginning  after December 15, 2005. The adoption of EITF Issue No.
04-5 did not result in any  changes  to the  manner in which we account  for our
joint ventures.

     In June 2005, the FASB issued FSP 78-9-1,  "Interaction  of AICPA Statement
of  Position  78-9 and EITF  Issue No.  04-5."  The EITF  acknowledged  that the
consensus in EITF Issue No. 04-5 conflicts with certain  aspects of Statement of
Position ("SOP") 78-9, "Accounting for Investments in Real Estate Ventures." The
EITF agreed that the  assessment  of whether a general  partner,  or the general
partners as a group, controls a limited partnership should be consistent for all
limited  partnerships,  irrespective  of the  industry  within which the limited
partnership operates.  Accordingly,  the guidance in SOP 78-9 was amended in FSP
78-9-1 to be consistent  with the guidance in EITF Issue No. 04-5. The effective
dates for this FSP are the same as those mentioned above in EITF Issue No. 04-5.
The  adoption of FSP 78-9-1 did not result in any changes to the manner in which
we account for our joint ventures.

IMPACT OF INFLATION

     In the last three years,  inflation has not had a significant impact on the
Company because of the relatively low inflation rate.  Substantially  all tenant
leases do, however,  contain provisions designed to protect the Company from the
impact of inflation.  These  provisions  include clauses enabling the Company to


                                       23


receive  percentage rent based on tenant's gross sales, which generally increase
as prices rise, and/or escalation clauses, which generally increase rental rates
during the terms of the leases. In addition, many of the leases are for terms of
less than ten years,  which may enable the  Company to replace  existing  leases
with new leases at higher base and/or  percentage rents if rents of the existing
leases are below the then  existing  market  rate.  Most of the  leases  require
tenants  to pay  their  share  of  operating  expenses,  including  common  area
maintenance,  real estate taxes and  insurance,  thereby  reducing the Company's
exposure to increases in costs and operating expenses resulting from inflation.

FUNDS FROM OPERATIONS

     Funds From  Operations  ("FFO") is a widely used  measure of the  operating
performance of real estate companies that  supplements net income  determined in
accordance with generally accepted accounting principles ("GAAP").  The National
Association  of Real  Estate  Investment  Trusts  ("NAREIT")  defines FFO as net
income  (computed in accordance with GAAP) excluding gains or losses on sales of
operating properties, plus depreciation and amortization,  and after adjustments
for   unconsolidated   partnerships   and  joint   ventures.   Adjustments   for
unconsolidated partnerships and joint ventures are calculated on the same basis.
We define  FFO  available  for  distribution  as  defined  above by NAREIT  less
dividends on preferred  stock.  Our method of  calculating  FFO may be different
from methods used by other REITs and, accordingly, may not be comparable to such
other REITs.

     We believe  that FFO  provides an  additional  indicator  of the  operating
performance of our 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,  we  believe  that  FFO  enhances
investors'  understanding  of our  operating  performance.  The use of FFO as an
indicator of financial  performance  is influenced not only by the operations of
our properties and interest rates, but also by our capital structure.

     FFO does not represent cash flows from  operations as defined by accounting
principles   generally  accepted  in  the  United  States,  is  not  necessarily
indicative  of cash  available  to fund all cash flow  needs and  should  not be
considered  as an  alternative  to net income for  purposes  of  evaluating  our
operating performance or to cash flow as a measure of liquidity.

     FFO  increased  9.2% for the three  months  ended  March 31,  2006 to $96.6
million  compared  to  $88.5  million  for the  same  period  in  2005.  The New
Properties  generated  83.5% of the growth in FFO.  Consistently  high portfolio
occupancy,  recoveries  of  operating  expenses,  increases in rental rates from
renewal and replacement leasing and lower expenses related to bad debt and other
charges against revenues accounted for the remaining 16.5% growth in FFO.

     The calculation of FFO is as follows (in thousands):


                                                                            Three Months Ended
                                                                                 March 31,
                                                                       ----------------------------
                                                                         2006           2005
                                                                       -------------  -------------
                                                                                   
Net income available to common shareholders                              $  20,613       $ 25,371
Depreciation and amortization from:
    Consolidated properties                                                 54,766         41,275
    Unconsolidated affiliates                                                3,278          1,710
    Discontinued operations                                                    515             11
Minority interest in earnings of operating partnership                      18,129         20,826
Minority investors' share of depreciation and amortization
     in shopping center properties                                           (539)          (362)
(Gain) loss on disposal of:
    Operating real estate assets                                                 -          (223)
    Discontinued operations                                                      -             32
Depreciation and amortization of non-real estate assets                      (195)          (179)
                                                                       -------------  -------------
Funds from operations                                                    $  96,567      $  88,461
                                                                       =============  =============


                                       24


ITEM 3:  Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to interest rate risk on our debt obligations and derivative
financial  instruments.  We may elect to use derivative financial instruments to
manage our  exposure  to changes in  interest  rates,  but will not use them for
speculative  purposes.  Our interest rate risk  management  policy requires that
derivative  instruments  be used for  hedging  purposes  only  and that  they be
entered  into only  with  major  financial  institutions  based on their  credit
ratings and other factors.

     Based  on  our  proportionate  share  of  consolidated  and  unconsolidated
variable  rate debt at March 31, 2006,  a 0.5%  increase or decrease in interest
rates on this variable-rate debt would decrease or increase annual cash flows by
approximately $5.8 million and, after the effect of capitalized interest, annual
earnings by approximately $5.5 million.

     Based on our proportionate  share of total  consolidated and unconsolidated
debt at March 31, 2006,  a 0.5%  increase in interest  rates would  decrease the
fair value of debt by  approximately  $72.6  million,  while a 0.5%  decrease in
interest  rates would  increase  the fair value of debt by  approximately  $74.9
million.

     We did not have any  derivative  financial  instruments  during  the  three
months ended March 31, 2006 or at March 31, 2005.

ITEM 4:  Controls and Procedures

     Because  of its  inherent  limitations,  internal  control  over  financial
reporting  may not prevent or detect  misstatements.  Also,  projections  of any
evaluation of its  effectiveness  to future periods are subject to the risk that
controls may become  inadequate  because of changes in  conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.

     As of  the  end  of  the  period  covered  by  this  quarterly  report,  an
evaluation,  under  Rule  13a-15  of the  Securities  Exchange  Act of 1934  was
performed  under  the  supervision  of our  Chief  Executive  Officer  and Chief
Financial  Officer  and  with  the  participation  of  our  management,  of  the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the
Chief  Executive   Officer  and  Chief  Financial  Officer  concluded  that  our
disclosure  controls and  procedures  are  effective.  No change in our internal
control over  financial  reporting  occurred  during the period  covered by this
quarterly report that materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1:  Legal Proceedings

         None

ITEM 1A. Risk Factors

     The following  information updates the information  disclosed in "Item 1A -
Risk Factors" of our Annual Report on Form 10-K for the year ended  December 31,
2005, by providing information that is current as of March 31, 2006:


                                       25


RISKS RELATED TO REAL ESTATE INVESTMENTS
----------------------------------------

REAL PROPERTY INVESTMENTS ARE SUBJECT TO VARIOUS RISKS, MANY OF WHICH ARE BEYOND
OUR CONTROL,  THAT COULD CAUSE  DECLINES IN THE  OPERATING  REVENUES  AND/OR THE
UNDERLYING VALUE OF ONE OR MORE OF OUR PROPERTIES.

     A number of factors may decrease the income  generated by a retail shopping
center property, including:

     |X|  National,   regional  and  local  economic  climates,   which  may  be
          negatively  impacted by plant closings,  industry  slowdowns,  adverse
          weather conditions, natural disasters, and other factors which tend to
          reduce consumer spending on retail goods.

     |X|  Local real estate  conditions,  such as an oversupply of, or reduction
          in demand for, retail space or retail goods,  and the availability and
          creditworthiness of current and prospective tenants.

     |X|  Increased  operating costs,  such as increases in real property taxes,
          utility rates and insurance premiums.

     |X|  Perceptions  by retailers or shoppers of the safety,  convenience  and
          attractiveness of the shopping center.

     |X|  The willingness and ability of the shopping  center's owner to provide
          capable management and maintenance services.

     |X|  The convenience and quality of competing  retail  properties and other
          retailing options, such as the Internet.

     In addition, other factors may adversely affect the value of our Properties
without affecting their current revenues, including:

     |X|  Adverse changes in governmental regulations,  such as local zoning and
          land use laws, environmental  regulations or local tax structures that
          could inhibit our ability to proceed with development,  expansion,  or
          renovation  activities  that  otherwise  would  be  beneficial  to our
          Properties.

     |X|  Potential  environmental  or other legal  liabilities  that reduce the
          amount of funds available to us for investment in our Properties.

     |X|  Any  inability  to  obtain   sufficient   financing   (including  both
          construction financing and permanent debt), or the inability to obtain
          such  financing  on   commercially   favorable   terms,  to  fund  new
          developments,  acquisitions,  and property  expansions and renovations
          which otherwise would benefit our Properties.

     |X|  An environment of rising interest rates, which could negatively impact
          both the value of  commercial  real  estate  such as  retail  shopping
          centers and the overall retail climate.


THE LOSS OF ONE OR MORE SIGNIFICANT  TENANTS, DUE TO BANKRUPTCIES OR AS A RESULT
OF ONGOING  CONSOLIDATIONS  IN THE RETAIL INDUSTRY,  COULD ADVERSELY AFFECT BOTH
THE OPERATING REVENUES AND VALUE OF OUR PROPERTIES.

     Regional malls are typically  anchored by well-known  department stores and
other significant  tenants who generate shopping traffic at the mall. A decision
by an anchor tenant or other  significant  tenant to cease  operations at one or
more Properties could have a material adverse effect on those Properties and, by
extension, on our financial condition and results of operations.  The closing of
an anchor or other significant  tenant may allow other anchors and/or tenants at


                                       26


an affected Property to terminate their leases, to seek rent relief and/or cease
operating their stores or otherwise  adversely affect occupancy at the Property.
In addition,  key tenants at one or more Properties might terminate their leases
as  a  result  of  mergers,   acquisitions,   consolidations,   dispositions  or
bankruptcies  in the retail  industry.  The bankruptcy  and/or closure of one or
more  significant  tenants,  if we are not able to  successfully  re-tenant  the
affected  space,  could have a  material  adverse  effect on both the  operating
revenues and underlying value of the Properties involved.

WE MAY INCUR  SIGNIFICANT COSTS RELATED TO COMPLIANCE WITH  ENVIRONMENTAL  LAWS,
WHICH COULD HAVE A MATERIAL  ADVERSE EFFECT ON OUR RESULTS OF  OPERATIONS,  CASH
FLOW AND THE FUNDS AVAILABLE TO US TO PAY DIVIDENDS.

     Under various federal,  state and local environmental laws,  ordinances and
regulations,  a current or previous  owner or operator of real  property  may be
liable for the costs of removal or remediation of hazardous or toxic  substances
on, under or in that real property. These laws often impose liability whether or
not the owner or  operator  knew of, or was  responsible  for,  the  presence of
hazardous  or  toxic  substances.   The  costs  of  investigation,   removal  or
remediation of hazardous or toxic  substances may be  substantial.  In addition,
the  presence  of  hazardous  or toxic  substances,  or the  failure  to  remedy
environmental  hazards properly,  may adversely affect the owner's or operator's
ability to sell or rent affected real property or to borrow money using affected
real property as collateral.

     Persons or entities that arrange for the disposal or treatment of hazardous
or toxic  substances  may also be liable for the costs of removal or remediation
of hazardous or toxic substances at the disposal or treatment facility,  whether
or not that facility is owned or operated by the person or entity  arranging for
the disposal or treatment  of  hazardous  or toxic  substances.  Laws exist that
impose liability for release of asbestos-containing  materials into the air, and
third  parties may seek  recovery  from owners or operators of real property for
personal injury associated with exposure to  asbestos-containing  materials.  In
connection   with  our  ownership,   operation,   management,   development  and
redevelopment  of our  Properties,  or any other  Properties  we  acquire in the
future,  we may be  potentially  liable  under these laws and may incur costs in
responding  to these  liabilities,  which  could have an  adverse  effect on our
results of operations, cash flow and the funds available to us to pay dividends.

RISKS RELATED TO OUR BUSINESS AND THE MARKET FOR OUR STOCK
-----------------------------------------------------------

WE MAY ELECT NOT TO PROCEED WITH  CERTAIN  DEVELOPMENT  PROJECTS  ONCE THEY HAVE
BEEN UNDERTAKEN,  RESULTING IN CHARGES THAT COULD HAVE A MATERIAL ADVERSE EFFECT
ON OUR RESULTS OF OPERATIONS FOR THE PERIOD IN WHICH THE CHARGE IS TAKEN.

     We intend to pursue  development and expansion  activities as opportunities
arise. In connection  with any  development or expansion,  we will incur various
risks including the risk that development or expansion opportunities explored by
us may be abandoned and the risk that construction costs of a project may exceed
original  estimates,  possibly  making the project not  profitable.  Other risks
include the risk that we may not be able to refinance  construction  loans which
are generally with full recourse to us, the risk that occupancy  rates and rents
at a completed  project will not meet  projections  and will be  insufficient to
make the  project  profitable,  and the risk  that we will not be able to obtain
anchor,  mortgage lender and property  partner  approvals for certain  expansion
activities.  In the event of an unsuccessful development project, our loss could
exceed our investment in the project.

     We have  in the  past  elected  not to  proceed  with  certain  development
projects  and  anticipate  that  we will do so  again  from  time to time in the
future.  If we  elect  not  to  proceed  with  a  development  opportunity,  the
development costs ordinarily will be charged against income for the then-current
period.  Any such charge could have a material  adverse effect on our results of
operations for the period in which the charge is taken.

                                       27


COMPETITION  FROM OTHER  RETAIL  FORMATS  COULD  ADVERSELY  AFFECT THE  REVENUES
GENERATED BY OUR  PROPERTIES,  RESULTING IN A REDUCTION IN FUNDS  AVAILABLE  FOR
DISTRIBUTION TO OUR STOCKHOLDERS.

     There are numerous shopping  facilities that compete with our Properties in
attracting  retailers to lease space.  In addition,  retailers at our Properties
face competition for customers from:

     |X|  Discount shopping centers

     |X|  Outlet malls

     |X|  Wholesale clubs

     |X|  Direct mail

     |X|  Telemarketing

     |X|  Television shopping networks

     |X|  Shopping via the Internet

     Each of these  competitive  factors  could  adversely  affect the amount of
rents  that we are  able to  collect  from our  tenants,  thereby  reducing  our
revenues and the funds available for distribution to our stockholders.

SINCE OUR SHOPPING CENTER PROPERTIES ARE LOCATED PRINCIPALLY IN THE SOUTHEASTERN
AND MIDWESTERN UNITED STATES, OUR FINANCIAL POSITION,  RESULTS OF OPERATIONS AND
FUNDS  AVAILABLE  FOR  DISTRIBUTION  TO  SHAREHOLDERS  ARE SUBJECT  GENERALLY TO
ECONOMIC CONDITIONS IN THESE REGIONS.

     Our properties are located  principally in the  southeastern and midwestern
Unites  States.  Our  properties  located  in  the  southeastern  United  States
accounted for approximately  51.7% of our total revenues from all properties for
the three  months  ended  March 31,  2006 and  currently  include  40 Malls,  20
Associated  Centers,  five  Community  Centers  and  one  Office  Building.  Our
properties  located in the midwestern  United States accounted for approximately
23.8% of our total  revenues from all  properties for the three months March 31,
2006 and currently include 20 Malls and three Associated Centers. Our results of
operations and funds available for  distribution to shareholders  therefore will
be subject  generally to economic  conditions in the southeastern and midwestern
United  States.  We will continue to look for  opportunities  to  geographically
diversify  our  portfolio  in order to  minimize  dependency  on any  particular
region;  however,  the expansion of the portfolio  through both acquisitions and
developments  is  contingent  on  many  factors   including   consumer   demand,
competition and economic conditions.

CERTAIN OF OUR SHOPPING  CENTER  PROPERTIES  ARE SUBJECT TO OWNERSHIP  INTERESTS
HELD BY THIRD  PARTIES,  WHOSE  INTERESTS  MAY  CONFLICT  WITH OURS AND  THEREBY
CONSTRAIN US FROM TAKING ACTIONS  CONCERNING  THESE  PROPERTIES  WHICH OTHERWISE
WOULD BE IN THE BEST INTERESTS OF THE COMPANY AND OUR STOCKHOLDERS.

     We own partial  interests in eight malls,  six  associated  centers,  three
community  centers and one office  building.  We manage all of these  properties
except for  Governor's  Square,  Governor's  Plaza and Kentucky Oaks. A property
manager  affiliated  with the  managing  general  partner  performs the property
management  services for these  properties  and receives a fee for its services.
The managing  partner of each of these three  Properties  controls the cash flow
distributions,  although our approval is required for certain  major  decisions.
Springdale  Center  in  Mobile,  AL and  Wilkes-Barre  Township  Marketplace  in
Wilkes-Barre  Township, PA, are managed by a third party that receives a fee for
its services.  Springdale Center and Wilkes-Barre Township Marketplace were sold
in May 2006.

     Where we serve as managing general partner of the partnerships that own our
properties, we may have certain fiduciary responsibilities to the other partners


                                       28


in those  partnerships.  In certain cases,  the approval or consent of the other
partners  is  required  before  we may  sell,  finance,  expand  or  make  other
significant  changes in the  operations of such  properties.  To the extent such
approvals or consents are required,  we may experience  difficulty in, or may be
prevented from,  implementing our plans with respect to expansion,  development,
financing or other similar transactions with respect to such properties.

     With respect to Governor's Square, Governor's Plaza and Kentucky Oaks we do
not have day-to-day operational control or control over certain major decisions,
including  the  timing  and  amount  of  distributions,  which  could  result in
decisions  by the  managing  general  partner  that  do not  fully  reflect  our
interests.  This includes  decisions  relating to the requirements  that we must
satisfy in order to  maintain  our status as a REIT for tax  purposes.  However,
decisions  relating to sales,  expansion and disposition of all or substantially
all of the assets  and  financings  are  subject to  approval  by the  Operating
Partnership.

CERTAIN  AGREEMENTS  WITH PRIOR OWNERS OF  PROPERTIES  THAT WE HAVE ACQUIRED MAY
INHIBIT  OUR  ABILITY  TO ENTER INTO  FUTURE  SALE OR  REFINANCING  TRANSACTIONS
AFFECTING SUCH PROPERTIES, WHICH OTHERWISE WOULD BE IN THE BEST INTERESTS OF THE
COMPANY AND OUR STOCKHOLDERS.

     Certain  Properties  that we  originally  acquired  from third  parties had
unrealized gain attributable to the difference  between the fair market value of
such  Properties  and the third  parties'  adjusted tax basis in the  Properties
immediately  prior to their  contribution  of such  Properties  to the Operating
Partnership  pursuant to our acquisition.  For this reason, a taxable sale by us
of any of such  Properties,  or a significant  reduction in the debt encumbering
such  Properties,  could result in adverse tax consequences to the third parties
who  contributed  these  properties  in exchange for  interests in the Operating
Partnership.  Under the terms of these  transactions,  we have generally  agreed
that we either will not sell or refinance such an acquired Property for a number
of years in any transaction  that would trigger adverse tax consequences for the
parties from whom we acquired  such  Property,  or else we will  reimburse  such
parties for all or a portion of the additional taxes they are required to pay as
a result of the transaction.  Accordingly,  these agreements may cause us not to
engage in future sale or  refinancing  transactions  affecting  such  Properties
which  otherwise  would  be in  the  best  interests  of  the  Company  and  our
stockholders, or may increase the costs to us of engaging in such transactions.

THE LOSS OR BANKRUPTCY OF A MAJOR TENANT COULD  NEGATIVELY  AFFECT OUR FINANCIAL
POSITION AND RESULTS OF OPERATIONS.

     In the three  months ended March 31, 2006,  no tenant  accounted  for 5% or
more of revenues except for The Limited Stores Inc.  (including Intimate Brands,
Inc.), which accounted for approximately 5.2% of our total revenues. The loss or
bankruptcy of this key tenant could negatively affect our financial position and
results of operations.

OUR  FINANCIAL   POSITION,   RESULTS  OF  OPERATIONS  AND  FUNDS  AVAILABLE  FOR
DISTRIBUTION  TO  SHAREHOLDERS  COULD  BE  ADVERSELY  AFFECTED  BY ANY  ECONOMIC
DOWNTURN  AFFECTING THE OPERATING  RESULTS AT OUR  PROPERTIES IN THE  NASHVILLE,
TENNESSEE AREA, WHICH IS OUR SINGLE LARGEST MARKET.

     Our properties located in Nashville,  TN accounted for 5.3% of our revenues
for the three months ended March 31, 2006.  No other market  accounted  for more
than 3.1% of our  revenues  for the three  months  ended  March  31,  2006.  Our
financial  position and results of operations  will therefore be affected by the
results experienced at properties located in the Nashville, TN area.

RISING INTEREST RATES COULD BOTH INCREASE OUR BORROWING COSTS, THEREBY ADVERSELY
AFFECTING  OUR CASH FLOW AND THE  AMOUNTS  AVAILABLE  FOR  DISTRIBUTIONS  TO OUR
STOCKHOLDERS,  AND  DECREASE OUR STOCK PRICE,  IF INVESTORS  SEEK HIGHER  YIELDS
THROUGH OTHER INVESTMENTS.



                                       29


     An  environment  of  rising  interest  rates  could  lead  holders  of  our
securities  to  seek  higher  yields  through  other  investments,  which  could
adversely  affect the market  price of our stock.  One of the  factors  that may
influence  the price of our stock in public  markets is the annual  distribution
rate we pay as compared  with the yields on  alternative  investments.  Numerous
other factors, such as governmental regulatory action and tax laws, could have a
significant  impact  on the  future  market  price of our  stock.  In  addition,
increases in market interest rates could result in increased borrowing costs for
us,  which may  adversely  affect our cash flow and the  amounts  available  for
distributions to our stockholders.

RECENT CHANGES IN THE U.S.  FEDERAL INCOME TAX TREATMENT OF CORPORATE  DIVIDENDS
MAY MAKE OUR STOCK LESS  ATTRACTIVE  TO  INVESTORS,  THEREBY  LOWERING OUR STOCK
PRICE.

     In May  2003,  the  maximum  U.S.  federal  income  tax rate for  dividends
received by individual  taxpayers was reduced  generally from 38.6% to 15% (from
January 1, 2003 through 2008). However, dividends payable by REITs are generally
not  eligible  for such  treatment.  Although  this  legislation  did not have a
directly adverse effect on the taxation of REITs or dividends paid by REITs, the
more favorable treatment for non-REIT dividends could cause individual investors
to consider investments in non-REIT  corporations as more attractive relative to
an investment in a REIT,  which could have an adverse impact on the market price
of our stock.

CERTAIN  OF OUR CREDIT  FACILITIES,  THE LOSS OF WHICH  COULD  HAVE A  MATERIAL,
ADVERSE  IMPACT ON OUR  FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS,  ARE
CONDITIONED UPON THE OPERATING  PARTNERSHIP  CONTINUING TO BE MANAGED BY CERTAIN
MEMBERS  OF  ITS  CURRENT  SENIOR  MANAGEMENT  AND BY  SUCH  MEMBERS  OF  SENIOR
MANAGEMENT CONTINUING TO OWN A SIGNIFICANT DIRECT OR INDIRECT EQUITY INTEREST IN
THE OPERATING PARTNERSHIP.

     Certain of the Operating Partnership's lines of credit are conditioned upon
the Operating  Partnership  continuing  to be managed by certain  members of its
current senior management and by such members of senior management continuing to
own  a  significant   direct  or  indirect  equity  interest  in  the  Operating
Partnership  (including  any shares of our common stock owned by such members of
senior  management  may  hold in us).  If the  failure  of one or more of  these
conditions resulted in the loss of these credit facilities and we were unable to
obtain suitable replacement financing, such loss could have a material,  adverse
impact on our financial position and results of operations.

OUR INSURANCE  COVERAGE MAY CHANGE IN THE FUTURE,  AND MAY NOT INCLUDE  COVERAGE
FOR ACTS OF TERRORISM.

     The general  liability  and  property  casualty  insurance  policies on our
Properties  currently  include loss  resulting  from acts of terrorism,  whether
foreign  or  domestic.  The cost of  general  liability  and  property  casualty
insurance  policies  that  include  coverage  for acts of  terrorism  has  risen
significantly  post-September  11,  2001.  The  cost  of  coverage  for  acts of
terrorism is currently  mitigated by the Terrorism  Risk Insurance Act ("TRIA").
If TRIA is not extended beyond its current expiration date of December 31, 2007,
we may  incur  higher  insurance  costs  and  greater  difficulty  in  obtaining
insurance that covers terrorist-related damages. Our tenants may also experience
similar  difficulties.  We are  unable at this time to  predict  whether we will
continue our policy  coverage as currently  structured  when our policies are up
for renewal on December 31, 2006.


RISKS RELATED TO FEDERAL INCOME TAX LAWS
----------------------------------------

IF WE FAIL TO QUALIFY AS A REIT IN ANY TAXABLE  YEAR,  OUR FUNDS  AVAILABLE  FOR
DISTRIBUTION TO STOCKHOLDERS WILL BE REDUCED.

                                       30



     We intend to  continue  to  operate  so as to  qualify  as a REIT under the
Internal Revenue Code.  Although we believe that we are organized and operate in
such a manner,  no assurance  can be given that we currently  qualify and in the
future  will  continue to qualify as a REIT.  Such  qualification  involves  the
application of highly technical and complex Internal Revenue Code provisions for
which there are only limited  judicial or  administrative  interpretations.  The
determination of various factual matters and  circumstances  not entirely within
our control may affect our ability to qualify. In addition,  no assurance can be
given that legislation, new regulations, administrative interpretations or court
decisions  will  not   significantly   change  the  tax  laws  with  respect  to
qualification or its corresponding federal income tax consequences.

     If in any taxable  year we were to fail to qualify as a REIT,  we would not
be allowed a deduction  for  distributions  to  stockholders  in  computing  our
taxable  income and we would be subject  to  federal  income tax on our  taxable
income at regular  corporate  rates.  Unless  entitled to relief  under  certain
statutory provisions, we also would be disqualified from treatment as a REIT for
the four taxable years following the year during which  qualification  was lost.
As a result,  the funds available for distribution to our stockholders  would be
reduced  for each of the years  involved.  We  currently  intend to operate in a
manner  designed  to qualify as a REIT.  However,  it is  possible  that  future
economic,  market,  legal,  tax or other  considerations  may cause our board of
directors,  with the  consent of a majority of our  stockholders,  to revoke the
REIT election.

ANY  ISSUANCE OR  TRANSFER  OF OUR CAPITAL  STOCK TO ANY PERSON IN EXCESS OF THE
APPLICABLE LIMITS ON OWNERSHIP  NECESSARY TO MAINTAIN OUR STATUS AS A REIT WOULD
BE DEEMED VOID AB INITIO, AND THOSE SHARES WOULD AUTOMATICALLY BE TRANSFERRED TO
A NON-AFFILIATED CHARITABLE TRUST.

     To maintain our status as a REIT under the Internal  Revenue Code, not more
than 50% in value of our  outstanding  capital  stock may be owned,  directly or
indirectly,  by five or fewer  individuals  (as defined in the Internal  Revenue
Code to include  certain  entities)  during the last half of a taxable year. Our
certificate of incorporation  generally  prohibits  ownership of more than 6% of
the outstanding shares of our capital stock by any single stockholder determined
by vote,  value or number of shares  (other  than  Charles  Lebovitz,  our Chief
Executive Officer,  David Jacobs,  Richard Jacobs and their affiliates under the
Internal Revenue Code's attribution rules). The affirmative vote of 66 (2)/3% of
our outstanding voting stock is required to amend this provision.

     Our board of  directors  may,  subject  to  certain  conditions,  waive the
applicable  ownership  limit upon receipt of a ruling from the IRS or an opinion
of counsel to the effect that such ownership will not jeopardize our status as a
REIT. Absent any such waiver,  however,  any issuance or transfer of our capital
stock to any person in excess of the applicable  ownership limit or any issuance
or transfer  of shares of such stock  which  would  cause us to be  beneficially
owned  by  fewer  than 100  persons,  will be null  and  void  and the  intended
transferee  will  acquire  no rights to the stock.  Instead,  such  issuance  or
transfer  with  respect  to that  number  of shares  that  would be owned by the
transferee in excess of the ownership  limit  provision  would be deemed void ab
initio and those shares would  automatically  be  transferred to a trust for the
exclusive  benefit of a charitable  beneficiary  to be  designated by us, with a
trustee  designated by us, but who would not be  affiliated  with us or with the
prohibited  owner. Any acquisition of our capital stock and continued holding or
ownership  of  our  capital  stock   constitutes,   under  our   certificate  of
incorporation,  a continuous  representation  of compliance  with the applicable
ownership limit.

IN ORDER TO MAINTAIN  OUR STATUS AS A REIT AND AVOID THE  IMPOSITION  OF CERTAIN
ADDITIONAL  TAXES UNDER THE  INTERNAL  REVENUE  CODE,  WE MUST  SATISFY  MINIMUM
REQUIREMENTS FOR  DISTRIBUTIONS  TO SHAREHOLDERS,  WHICH MAY LIMIT THE AMOUNT OF
CASH WE  MIGHT  OTHERWISE  HAVE  BEEN  ABLE TO  RETAIN  FOR USE IN  GROWING  OUR
BUSINESS.

     To  maintain  our  status as a REIT under the  Internal  Revenue  Code,  we
generally will be required each year to distribute to our  stockholders at least
90% of our taxable income after certain adjustments. However, to the extent that


                                       31


we do not  distribute all of our net capital gain or distribute at least 90% but
less than 100% of our REIT taxable  income,  as adjusted,  we will be subject to
tax on the  undistributed  amount at ordinary and capital  gains  corporate  tax
rates, as the case may be. In addition, we will be subject to a 4% nondeductible
excise tax on the amount,  if any,  by which  certain  distributions  paid by us
during each  calendar  year are less than the sum of 85% of our ordinary  income
for such calendar year, 95% of our capital gain net income for the calendar year
and any amount of such income that was not  distributed  in prior years.  In the
case of property acquisitions, including our initial formation, where individual
properties  are   contributed  to  our  Operating   Partnership   for  Operating
Partnership  units, we have assumed the tax basis and depreciation  schedules of
the entities'  contributing  properties.  The  relatively  low tax basis of such
contributed properties may have the effect of increasing the cash amounts we are
required to distribute as dividends,  thereby potentially limiting the amount of
cash we  might  otherwise  have  been  able to  retain  for use in  growing  our
business. This low tax basis may also have the effect of reducing or eliminating
the portion of distributions made by us that are treated as a non-taxable return
of capital.


RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE
---------------------------------------------

THE  OWNERSHIP  LIMIT  DESCRIBED  ABOVE,  AS WELL AS CERTAIN  PROVISIONS  IN OUR
AMENDED AND RESTATED  CERTIFICATE OF INCORPORATION  AND BYLAWS,  OUR STOCKHOLDER
RIGHTS PLAN,  AND CERTAIN  PROVISIONS  OF DELAWARE LAW MAY HINDER ANY ATTEMPT TO
ACQUIRE US.

     Certain  provisions of Delaware law, as well as of our amended and restated
certificate of incorporation and bylaws, and agreements to which we are a party,
may have the effect of  delaying,  deferring  or  preventing  a third party from
making an  acquisition  proposal for us and may inhibit a change in control that
some,  or a  majority,  of our  stockholders  might  believe to be in their best
interest  or that  could  give our  stockholders  the  opportunity  to realize a
premium  over  the  then-prevailing   market  prices  for  their  shares.  These
provisions and agreements may be summarized as follows:


     |X|  THE OWNERSHIP LIMIT - As described  above, to maintain our status as a
          REIT under the Internal  Revenue  Code,  not more than 50% in value of
          our outstanding capital stock may be owned, directly or indirectly, by
          five or fewer  individuals (as defined in the Internal Revenue Code to
          include certain  entities) during the last half of a taxable year. Our
          certificate of  incorporation  generally  prohibits  ownership of more
          than 6% of the  outstanding  shares of our capital stock by any single
          stockholder  determined by value (other than Charles  Lebovitz,  David
          Jacobs, Richard Jacobs and their affiliates under the Internal Revenue
          Code's  attribution  rules). In addition to preserving our status as a
          REIT,  the  ownership  limit  may have the  effect  of  precluding  an
          acquisition  of  control of us without  the  approval  of our board of
          directors.

     |X|  CLASSIFIED BOARD OF DIRECTORS;  REMOVAL FOR CAUSE - Our certificate of
          incorporation  provides  for a board of  directors  divided into three
          classes,  with one class  elected  each year to serve for a three-year
          term. As a result, at least two annual meetings of stockholders may be
          required  for the  stockholders  to change a majority  of our board of
          directors. In addition, our stockholders can only remove directors for
          cause  and  only by a vote  of 75% of the  outstanding  voting  stock.
          Collectively,  these  provisions  make it more difficult to change the
          composition  of our  board of  directors  and may have the  effect  of
          encouraging  persons  considering  unsolicited  tender offers or other
          unilateral takeover proposals to negotiate with our board of directors
          rather than pursue non-negotiated takeover attempts.

                                       32



     |X|  ADVANCE NOTICE  REQUIREMENTS  FOR  STOCKHOLDER  PROPOSALS - Our bylaws
          establish   advance  notice  procedures  with  regard  to  stockholder
          proposals  relating to the  nomination of  candidates  for election as
          directors  or  new  business  to be  brought  before  meetings  of our
          stockholders.  These  procedures  generally  require  advance  written
          notice of any such proposals, containing prescribed information, to be
          given to our  Secretary at our  principal  executive  offices not less
          than 60 days nor more than 90 days prior to the meeting.

     |X|  VOTE REQUIRED TO AMEND BYLAWS - A vote of 66 (2)/3% of the outstanding
          voting stock is necessary to amend our bylaws.

     |X|  STOCKHOLDER RIGHTS PLAN - We have a stockholder rights plan, which may
          delay,  deter or  prevent  a change in  control  unless  the  acquirer
          negotiates  with our board of  directors  and the  board of  directors
          approves the transaction. The rights plan generally would be triggered
          if an  entity,  group  or  person  acquires  (or  announces  a plan to
          acquire) 15% or more of our common stock.  If such  transaction is not
          approved  by our board of  directors,  the  effect of the  stockholder
          rights plan would be to allow our  stockholders  to purchase shares of
          our common  stock,  or the common stock or other merger  consideration
          paid by the acquiring entity, at an effective 50% discount.

     |X|  DELAWARE ANTI-TAKEOVER STATUTE - We are a Delaware corporation and are
          subject to Section 203 of the  Delaware  General  Corporation  Law. In
          general,  Section 203 prevents an  "interested  stockholder"  (defined
          generally  as a person  owning 15% or more of a company's  outstanding
          voting stock) from engaging in a "business combination" (as defined in
          Section  203) with us for three years  following  the date that person
          becomes an interested stockholder unless:

               (a) before that person became an interested  holder, our board of
               directors approved the transaction in which the interested holder
               became  an  interested   stockholder  or  approved  the  business
               combination;

               (b) upon  completion  of the  transaction  that  resulted  in the
               interested  stockholder becoming an interested  stockholder,  the
               interested  stockholder owns 85% of our voting stock  outstanding
               at the time the transaction  commenced  (excluding  stock held by
               directors who are also officers and by employee  stock plans that
               do  not   provide   employees   with  the   right  to   determine
               confidentially  whether  shares held  subject to the plan will be
               tendered in a tender or exchange offer); or

               (c)  following  the  transaction  in which that person  became an
               interested  stockholder,  the business combination is approved by
               our  board  of  directors   and   authorized   at  a  meeting  of
               stockholders by the  affirmative  vote of the holders of at least
               two-thirds  of our  outstanding  voting  stock  not  owned by the
               interested stockholder.

          Under  Section 203,  these  restrictions  also do not apply to certain
          business combinations proposed by an interested  stockholder following
          the announcement or notification of certain extraordinary transactions
          involving us and a person who was not an interested stockholder during
          the previous three years or who became an interested  stockholder with
          the  approval of a majority of our  directors,  if that  extraordinary
          transaction  is approved or not opposed by a majority of the directors
          who were directors before any person became an interested  stockholder
          in the previous  three years or who were  recommended  for election or
          elected to succeed such  directors by a majority of directors  then in
          office.

                                       33







CERTAIN OWNERSHIP INTERESTS HELD BY MEMBERS OF OUR SENIOR MANAGEMENT MAY TEND TO
CREATE  CONFLICTS OF INTEREST  BETWEEN SUCH INDIVIDUALS AND THE INTERESTS OF THE
COMPANY AND OUR OPERATING PARTNERSHIP.

     |X|  RETAINED  PROPERTY  INTERESTS - Members of our senior  management  own
          interests in certain real estate properties that were retained by them
          at the time of our initial public offering. These consist primarily of
          outparcels at certain of our  properties,  which are being offered for
          sale through our management company. As a result, these members of our
          senior   management  have  interests  that  could  conflict  with  the
          interests  of  the  Company,   our   shareholders  and  the  Operating
          Partnership   with  respect  to  any   transaction   involving   these
          properties.

     |X|  TAX  CONSEQUENCES  OF THE SALE OR REFINANCING OF CERTAIN  PROPERTIES -
          Since certain of our properties had unrealized  gain  attributable  to
          the difference between the fair market value and adjusted tax basis in
          such  properties  immediately  prior  to  their  contribution  to  the
          Operating  Partnership,  a taxable sale of any such  properties,  or a
          significant  reduction in the debt encumbering such properties,  could
          cause adverse tax consequences to the members of our senior management
          who owned interests in our predecessor entities. As a result,  members
          of our senior  management  might not favor a sale of a  property  or a
          significant  reduction  in debt even though  such a sale or  reduction
          could be beneficial to us and the  Operating  Partnership.  Our bylaws
          provide  that  any  decision  relating  to the  potential  sale of any
          property  that would  result in a  disproportionately  higher  taxable
          income  for  members  of our  senior  management  than  for us and our
          stockholders,  or that would result in a significant reduction in such
          property's  debt,  must  be  made  by a  majority  of the  independent
          directors of the board of  directors.  The  Operating  Partnership  is
          required,  in the case of such a sale,  to distribute to its partners,
          at a  minimum,  all of the net cash  proceeds  from such sale up to an
          amount reasonably  believed  necessary to enable members of our senior
          management to pay any income tax liability arising from such sale.

     |X|  INTERESTS  IN OTHER  ENTITIES;  POLICIES  OF THE BOARD OF  DIRECTORS -
          Certain  entities  owned in whole or in part by  members of our senior
          management, including the construction company that built or renovated
          most of our  properties,  may  continue  to perform  services  for, or
          transact business with, us and the Operating Partnership. Furthermore,
          certain  property  tenants are  affiliated  with members of our senior
          management. Accordingly, although our bylaws provide that any contract
          or transaction between us or the Operating Partnership and one or more
          of  our  directors  or  officers,  or  between  us  or  the  Operating
          Partnership and any other entity in which one or more of our directors
          or officers are  directors  or officers or have a financial  interest,
          must be approved by our disinterested  directors or stockholders after
          the material facts of the  relationship or interest of the contract or
          transaction  are  disclosed or are known to them,  these  affiliations
          could  nevertheless  create  conflicts  between the interests of these
          members of senior  management  and the  interests of the Company,  our
          shareholders  and  the  Operating   Partnership  in  relation  to  any
          transactions between us and any of these entities.


ITEM 2:  Unregistered Sales of Equity Securities and Use of Proceeds

          (a)  Effective  as of March 6,  2006,  we issued  1,480,066  shares of
               common stock to seven  holders of common  units in the  Operating
               Partnership who exercised their exchange rights,  in exchange for
               1,480,066  common  units  of  limited  partnership  interest.  We
               believe  the  issuance  of  these  shares  was  exempt  from  the
               registration  requirements  of the  Securities  Act of  1933,  as
               amended,  pursuant to Section 4(2) thereof  because this issuance
               did not  involve  a public  offering  or sale.  No  underwriters,
               brokers or finders were involved in this transaction.

                                       34


          (c)  The  following  table  presents   information   with  respect  to
               repurchases  of common  stock made by us during the three  months
               ended March 31, 2006:



                                              Average        Total Number of      Maximum Number of
                           Total Number        Price       Shares Purchased as   Shares that May Yet
                            of Shares        Paid per       Part of a Publicly      Be Purchased
Period                    Purchased (1)      Share (2)           Announced Plan     Under the Plan
------                    -------------      ---------       ------------------- -------------------
                                                                                 
January 1-31, 2006              --                --                  --                     --

February 1-28, 2006             --                --                  --                     --

March 1-31, 2006               636           $ 42.15                  --                     --
                         ---------------- ---------------- --------------------- ---------------------
Total                          636           $ 42.15                  --                     --
                         ================ ================ ===================== =====================

  (1)  Represents   shares   surrendered  to  the  Company  by
       employees  to  satisfy  federal  and state  income  tax
       withholding  requirements  related  to the  vesting  of
       shares  of  restricted  stock  issued  under  the CBL &
       Associates Properties, Inc. 1993 Stock Incentive Plan.

  (2)  Represents  the market value of the common stock on the
       vesting date for the shares of restricted stock,  which
       was used to determine the number of shares  required to
       be  surrendered  to  satisfy  income  tax   withholding
       requirements.



ITEM 3:   Defaults Upon Senior Securities

          None

ITEM 4:   Submission of Matters to a Vote of Security Holders

          None

ITEM 5:   Other Information

          None

ITEM 6:   Exhibits

          12.1 Computation  of Ratio of Earnings to Combined  Fixed  Charges and
               Preferred Dividends

          31.1 Certification  pursuant to Securities Exchange Act Rule 13a-14(a)
               by the Chief Executive  Officer,  as adopted  pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

          31.2 Certification  pursuant to Securities Exchange Act Rule 13a-14(a)
               by the Chief Financial  Officer,  as adopted  pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

          32.1 Certification  pursuant to Securities Exchange Act Rule 13a-14(b)
               by the Chief Executive  Officer,  as adopted  pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

          32.2 Certification  pursuant to Securities Exchange Act Rule 13a-14(b)
               by the Chief Financial Officer as adopted pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.


                                       35



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 of the Board, Chief Financial Officer and
                                            Treasurer


Date: May 10, 2006


                                       36



                                INDEX TO EXHIBITS

Exhibit
Number         Description
---------      ------------
12.1           Computation  of Ratio of Earnings to Combined  Fixed  Charges and
               Preferred Dividends

31.1           Certification  pursuant to Securities Exchange Act Rule 13a-14(a)
               by the Chief Executive  Officer,  as adopted  pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

31.2           Certification  pursuant to Securities Exchange Act Rule 13a-14(a)
               by the Chief Financial  Officer,  as adopted  pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

32.1           Certification  pursuant to Securities Exchange Act Rule 13a-14(b)
               by the Chief Executive  Officer,  as adopted  pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002.

32.2           Certification  pursuant to Securities Exchange Act Rule 13a-14(b)
               by the Chief Financial Officer as adopted pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.


                                       37