CBL-3.31.2012-10Q
Table of Contents

UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
______________

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2012
Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
FOR THE TRANSITION PERIOD FROM ____________ TO _______________
 
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 or organization)     
 
 (I.R.S. Employer Identification Number)
                       
 
2030 Hamilton Place Blvd., Suite 500, Chattanooga,  TN  37421-6000
(Address of principal executive office, including zip code)
423.855.0001
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
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 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 90 days. 
 Yes x   
  No o
                               
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 Yes x   
  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
 Large accelerated filer x
Accelerated filer o
 Non-accelerated filer o (Do not check if smaller reporting company)
Smaller Reporting Company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 Yes o  
  No x
As of April 30, 2012, there were 148,716,955 shares of common stock, par value $0.01 per share, outstanding.

1
Table of Contents

CBL & Associates Properties, Inc.

Table of Contents

PART I
FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2
Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1:   Financial Statements

CBL & Associates Properties, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
ASSETS
March 31,
2012
 
December 31,
2011
Real estate assets:
 
 
 
Land
$
851,157

 
$
851,303

Buildings and improvements
6,779,274

 
6,777,776

 
7,630,431

 
7,629,079

Accumulated depreciation
(1,814,121
)
 
(1,762,149
)
 
5,816,310

 
5,866,930

Held for sale
—

 
14,033

Developments in progress
127,407

 
124,707

Net investment in real estate assets
5,943,717

 
6,005,670

Cash and cash equivalents
61,669

 
56,092

Receivables:
 

 
 

 Tenant, net of allowance for doubtful accounts of $1,900
     and $1,760 in 2012 and 2011, respectively
69,317

 
74,160

 Other, net of allowance for doubtful accounts of $1,269
      and $1,400 in 2012 and 2011, respectively
9,535

 
11,592

Mortgage and other notes receivable
33,688

 
34,239

Investments in unconsolidated affiliates
304,573

 
304,710

Intangible lease assets and other assets
209,609

 
232,965

 
$
6,632,108

 
$
6,719,428

 
 
 
 
 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 

 
 

Mortgage and other indebtedness
$
4,459,248

 
$
4,489,355

Accounts payable and accrued liabilities
270,782

 
303,577

Total liabilities
4,730,030

 
4,792,932

Commitments and contingencies (Notes 5 and 11)


 


Redeemable noncontrolling interests:  
 

 
 

Redeemable noncontrolling partnership interests  
36,596

 
32,271

Redeemable noncontrolling preferred joint venture interest
423,777

 
423,834

Total redeemable noncontrolling interests
460,373

 
456,105

Shareholders' equity:
 

 
 

Preferred stock, $.01 par value, 15,000,000 shares authorized:
 

 
 

 7.75% Series C Cumulative Redeemable Preferred
     Stock, 460,000 shares outstanding
5

 
5

 7.375% Series D Cumulative Redeemable Preferred
     Stock, 1,815,000 shares outstanding
18

 
18

 Common stock, $.01 par value, 350,000,000 shares
     authorized, 148,689,623 and 148,364,037 issued and
     outstanding in 2012 and 2011, respectively
1,487

 
1,484

Additional paid-in capital
1,658,893

 
1,657,927

Accumulated other comprehensive income
4,832

 
3,425

Dividends in excess of cumulative earnings
(416,826
)
 
(399,581
)
Total shareholders' equity
1,248,409

 
1,263,278

Noncontrolling interests
193,296

 
207,113

Total equity
1,441,705

 
1,470,391

 
$
6,632,108

 
$
6,719,428

The accompanying notes are an integral part of these condensed consolidated statements.

3
Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
March 31,
 
2012
 
2011
REVENUES:
 
 
 
Minimum rents
$
160,788

 
$
170,914

Percentage rents
3,466

 
3,740

Other rents
5,313

 
5,008

Tenant reimbursements
70,487

 
76,810

Management, development and leasing fees
2,469

 
1,337

Other
8,149

 
9,360

Total revenues
250,672

 
267,169

 
 
 
 
OPERATING EXPENSES:
 

 
 

Property operating
38,361

 
40,159

Depreciation and amortization
63,157

 
67,699

Real estate taxes
22,846

 
24,326

Maintenance and repairs
13,156

 
16,008

General and administrative
13,800

 
11,800

Other
6,758

 
8,303

Total operating expenses
158,078

 
168,295

Income from operations
92,594

 
98,874

Interest and other income
1,075

 
545

Interest expense
(60,060
)
 
(68,213
)
Gain on extinguishment of debt
—

 
581

Gain on sales of real estate assets
587

 
809

Equity in earnings of unconsolidated affiliates
1,266

 
1,778

Income tax benefit
228

 
1,770

Income from continuing operations
35,690

 
36,144

Operating income (loss) from discontinued operations
(50
)
 
27,750

Gain on discontinued operations
911

 
14

Net income
36,551

 
63,908

Net income attributable to noncontrolling interests in:
 

 
 

Operating partnership
(4,362
)
 
(10,451
)
Other consolidated subsidiaries
(6,140
)
 
(6,138
)
Net income attributable to the Company
26,049

 
47,319

Preferred dividends
(10,594
)
 
(10,594
)
Net income attributable to common shareholders
$
15,455

 
$
36,725



4
Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
(Continued)
 
 
Three Months Ended
March 31,
 
2012
 
2011
Basic per share data attributable to common shareholders:
 

 
 

Income from continuing operations, net of preferred dividends
$
0.10

 
$
0.10

Discontinued operations
—

 
0.15

Net income attributable to common shareholders
$
0.10

 
$
0.25

Weighted average common shares outstanding
148,495

 
148,069

 
 
 
 
Diluted earnings per share data attributable to common shareholders:
 
 

Income from continuing operations, net of preferred dividends
$
0.10

 
$
0.10

Discontinued operations
—

 
0.15

Net income attributable to common shareholders
$
0.10

 
$
0.25

Weighted average common and potential dilutive common shares outstanding
148,538

 
148,123

 
 
 
 
Amounts attributable to common shareholders:
 

 
 

Income from continuing operations, net of preferred dividends
$
14,783

 
$
15,112

Discontinued operations
672

 
21,613

Net income attributable to common shareholders
$
15,455

 
$
36,725

 
 
 
 
Dividends declared per common share
$
0.22

 
$
0.21


The accompanying notes are an integral part of these condensed consolidated statements.


5
Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)

 
Three Months Ended
March 31,
 
2012
 
2011
Net income
$
36,551

 
$
63,908

 
 
 
 
Other comprehensive income:
 
 
 
   Unrealized holding gain on securities
1,518

 
1,333

   Reclassification to net income of realized loss on securities
—

 
22

   Unrealized gain on hedging instruments
284

 
562

Total other comprehensive income
1,802

 
1,917

 
 
 
 
Comprehensive income
38,353

 
65,825

  Comprehensive income attributable to noncontrolling interests in:
 
 
 
     Operating partnership
(4,757
)
 
(10,875
)
     Other consolidated subsidiaries
(6,140
)
 
(6,138
)
Comprehensive income attributable to the Company
$
27,456

 
$
48,812


The accompanying notes are an integral part of these condensed consolidated statements.


6
Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Equity
(In thousands)
 
 
 
 
Equity
 
 
 
Shareholders' Equity
 
 
 
 
 
Redeemable Noncontrolling Partnership Interests
 
Preferred
 Stock
 
Common
 Stock
 
Additional
 Paid-in
 Capital
 
Accumulated Other Comprehensive Income
 
Dividends in Excess of Cumulative Earnings
 
Total Shareholders' Equity
 
Noncontrolling Interests
 
Total
 Equity
Balance, January 1, 2011
$
34,379

 
$
23

 
$
1,479

 
$
1,657,507

 
$
7,855

 
$
(366,526
)
 
$
1,300,338

 
$
223,605

 
$
1,523,943

Net income
1,353

 
—

 
—

 
—

 
—

 
47,319

 
47,319

 
10,151

 
57,470

Other comprehensive income
16

 
—

 
—

 
—

 
1,493

 
—

 
1,493

 
408

 
1,901

Conversion of operating partnership special
     common units to shares of common stock
—

 
—

 
1

 
728

 
—

 
—

 
729

 
(729
)
 
—

Dividends declared - common stock
—

 
—

 
—

 
—

 
—

 
(31,150
)
 
(31,150
)
 
—

 
(31,150
)
Dividends declared - preferred stock
—

 
—

 
—

 
—

 
—

 
(10,594
)
 
(10,594
)
 
—

 
(10,594
)
Issuance of common stock and restricted common stock
—

 
—

 
2

 
126

 
—

 
—

 
128

 
—

 
128

Cancellation of restricted common stock
—

 
—

 
—

 
(109
)
 
—

 
—

 
(109
)
 
—

 
(109
)
Exercise of stock options
—

 
—

 
1

 
1,309

 
—

 
—

 
1,310

 
—

 
1,310

Accrual under deferred compensation arrangements
—

 
—

 
—

 
13

 
—

 
—

 
13

 
—

 
13

Amortization of deferred compensation
—

 
—

 
—

 
980

 
—

 
—

 
980

 
—

 
980

Distributions to noncontrolling interests
(2,133
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(11,913
)
 
(11,913
)
Adjustment for noncontrolling interests
692

 
—

 
—

 
608

 
—

 
—

 
608

 
84

 
692

Adjustment to record redeemable
     noncontrolling interests at redemption value
(55
)
 
—

 
—

 
55

 
—

 
—

 
55

 
—

 
55

Balance, March 31, 2011
$
34,252

 
$
23

 
$
1,483

 
$
1,660,001

 
$
9,348

 
$
(360,951
)
 
$
1,309,904

 
$
221,438

 
$
1,531,342


The accompanying notes are an integral part of these condensed consolidated statements.


7
Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Equity
(In thousands)
(Continued)
 
 
 
Equity
 
 
 
Shareholders' Equity
 
 
 
 
 
Redeemable Noncontrolling Partnership Interests
 
Preferred
 Stock
 
Common
 Stock
 
Additional
 Paid-in
 Capital
 
Accumulated Other Comprehensive Income
 
Dividends in Excess of Cumulative Earnings
 
Total Shareholders' Equity
 
Noncontrolling Interests
 
Total
 Equity
Balance, January 1, 2012
$
32,271

 
$
23

 
$
1,484

 
$
1,657,927

 
$
3,425

 
$
(399,581
)
 
$
1,263,278

 
$
207,113

 
$
1,470,391

Net income
1,089

 
—

 
—

 
—

 
—

 
26,049

 
26,049

 
4,269

 
30,318

Other comprehensive income
14

 
—

 
—

 
—

 
1,407

 
—

 
1,407

 
381

 
1,788

Redemption of operating partnership common units
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(6,359
)
 
(6,359
)
Dividends declared - common stock
—

 
—

 
—

 
—

 
—

 
(32,700
)
 
(32,700
)
 
—

 
(32,700
)
Dividends declared - preferred stock
—

 
—

 
—

 
—

 
—

 
(10,594
)
 
(10,594
)
 
—

 
(10,594
)
Issuance of common stock and restricted common stock
—

 
—

 
2

 
282

 
—

 
—

 
284

 
—

 
284

Cancellation of restricted common stock
—

 
—

 
—

 
(247
)
 
—

 
—

 
(247
)
 
—

 
(247
)
Exercise of stock options
—

 
—

 
1

 
2,337

 
—

 
—

 
2,338

 
—

 
2,338

Accrual under deferred compensation arrangements
—

 
—

 
—

 
14

 
—

 
—

 
14

 
—

 
14

Amortization of deferred compensation
—

 
—

 
—

 
1,041

 
—

 
—

 
1,041

 
—

 
1,041

Distributions to noncontrolling interests
(1,893
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(9,454
)
 
(9,454
)
Adjustment for noncontrolling interests
843

 
—

 
—

 
(1,811
)
 
—

 
—

 
(1,811
)
 
2,654

 
843

Adjustment to record redeemable
     noncontrolling interests at redemption value
4,272

 
—

 
—

 
(4,272
)
 
—

 
—

 
(4,272
)
 
—

 
(4,272
)
Balance, March 31, 2012
$
36,596

 
$
23

 
$
1,487

 
$
1,658,893

 
$
4,832

 
$
(416,826
)
 
$
1,248,409

 
$
193,296

 
$
1,441,705


The accompanying notes are an integral part of these condensed consolidated statements.


8
Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
  
 
 
Three Months Ended
March 31,
 
 
2012
 
2011
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 
 
Net income
$
36,551

 
$
63,908

 
Adjustments to reconcile net income to net cash provided by
    operating activities:
 
 
 

 
Depreciation and amortization
63,273

 
68,067

 
Net amortization of deferred finance costs and debt premiums
2,071

 
2,200

 
Net amortization of intangible lease assets and liabilities
272

 
(253
)
 
Gain on sales of real estate assets
(587
)
 
(809
)
 
Gain on sale of discontinued operations
(911
)
 
(14
)
 
Write-off of development projects
(124
)
 
—

 
Share-based compensation expense
1,275

 
1,073

 
Net realized loss on sale of available-for-sale securities
—

 
22

 
Write-down of mortgage and other notes receivable
—

 
1,500

 
Loss on impairment of real estate from discontinued operations
293

 
2,746

 
Gain on extinguishment of debt
—

 
(581
)
 
Gain on extinguishment of debt from discontinued operations
—

 
(31,434
)
 
Equity in earnings of unconsolidated affiliates
(1,266
)
 
(1,778
)
 
Distributions of earnings from unconsolidated affiliates
3,167

 
1,459

 
Provision for doubtful accounts
668

 
1,422

 
Change in deferred tax accounts
2,823

 
(258
)
 
Changes in:
 

 
 

 
Tenant and other receivables
8,236

 
6,041

 
Other assets
756

 
(1,319
)
 
Accounts payable and accrued liabilities
(24,675
)
 
(33,178
)
 
Net cash provided by operating activities
91,822

 
78,814

 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

 
Additions to real estate assets
(42,862
)
 
(31,292
)
 
(Additions) reductions to restricted cash
15,067

 
(5,076
)
 
Proceeds from sales of real estate assets
35,547

 
10,322

 
Payments received on mortgage and other notes receivable
599

 
206

 
Additional investments in and advances to unconsolidated affiliates
(3,908
)
 
(1,892
)
 
Distributions in excess of equity in earnings of unconsolidated affiliates
3,741

 
2,500

 
Changes in other assets
(746
)
 
(1,634
)
 
Net cash provided by (used in) investing activities
7,438

 
(26,866
)
 
 


 


 
CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
(Continued)
 
 
 
 
 
 
Three Months Ended
March 31,
 
 
2012
 
2011

9
Table of Contents

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from mortgage and other indebtedness
$
581,791

 
$
626,353

Principal payments on mortgage and other indebtedness
(611,382
)
 
(619,234
)
Additions to deferred financing costs
(1,105
)
 
(3,003
)
Proceeds from issuances of common stock
42

 
48

Proceeds from exercises of stock options
1,334

 
1,310

Purchase of noncontrolling interest in the Operating Partnership
(6,359
)
 
—

Contributions from noncontrolling interests
285

 
—

Distributions to noncontrolling interests
(16,539
)
 
(18,799
)
Dividends paid to holders of preferred stock
(10,594
)
 
(10,594
)
Dividends paid to common shareholders
(31,156
)
 
(29,585
)
Net cash used in financing activities
(93,683
)
 
(53,504
)
 
 
 
 
NET CHANGE IN CASH AND CASH EQUIVALENTS
5,577

 
(1,556
)
CASH AND CASH EQUIVALENTS, beginning of period
56,092

 
50,896

CASH AND CASH EQUIVALENTS, end of period
$
61,669

 
$
49,340

 
 
 
 
SUPPLEMENTAL INFORMATION:
 

 
 

Cash paid for interest, net of amounts capitalized
$
57,054

 
$
66,027


 
The accompanying notes are an integral part of these condensed consolidated statements.


10
Table of Contents

CBL & Associates Properties, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(Dollars in thousands, except 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, open-air centers, community centers and office properties.  Its shopping centers are located in 26 states, but are primarily in the southeastern and midwestern United States.
CBL conducts substantially all of its business through CBL & Associates Limited Partnership (the “Operating Partnership”). As of March 31, 2012, the Operating Partnership owned controlling interests in 74 regional malls/open-air centers, 29 associated centers (each located adjacent to a regional mall), six community centers and 13 office buildings, including CBL’s corporate 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.  At March 31, 2012, the Operating Partnership owned non-controlling interests in ten regional malls/open-air centers, three associated centers, five community centers and six office buildings. Because one or more of the other partners have substantive participating rights, the Operating Partnership does not control these partnerships and joint ventures and, accordingly, accounts for these investments using the equity method. The Operating Partnership had controlling interests in two community center expansions and one mall redevelopment under construction at March 31, 2012.  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, 2012, CBL Holdings I, Inc., the sole general partner of the Operating Partnership, owned a 1.0% general partner interest in the Operating Partnership and CBL Holdings II, Inc. owned a 77.1% limited partner interest for a combined interest held by CBL of 78.1%.
The noncontrolling 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, 2012, CBL’s Predecessor owned a 9.8% limited partner interest, Jacobs owned a 6.6% limited partner interest and third parties owned a 5.5% limited partner interest in the Operating Partnership.  CBL’s Predecessor also owned 7.6 million shares of CBL’s common stock at March 31, 2012, for a total combined effective interest of 13.8% 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 both 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 (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the disclosures required by GAAP 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. All intercompany transactions have been eliminated. The results for the interim period ended March 31, 2012 are not necessarily indicative of the results to be obtained for the full fiscal year.
Certain historical amounts have been reclassified to conform to the current year's presentation. The financial results of certain properties are reported as discontinued operations in the condensed consolidated financial statements. Except where noted, the information presented in the Notes to Unaudited Condensed Consolidated Financial Statements excludes discontinued operations.
These condensed consolidated financial statements should be read in conjunction with CBL’s audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2011, as amended.



11
Table of Contents


Note 2 – Recent Accounting Pronouncements
 
Accounting Guidance Adopted
 
In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). The objective of ASU 2011-04 is to align fair value measurements and related disclosure requirements under GAAP and International Financial Reporting Standards (“IFRSs”), thus improving the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. For public entities, this guidance was effective for interim and annual periods beginning after December 15, 2011 and should be applied prospectively. The adoption of ASU 2011-04 did not have a material impact on the Company's condensed consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). The objective of this accounting update is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. ASU 2011-05 requires that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but continuous statements of net income and other comprehensive income. For public entities, this guidance was effective for interim and annual periods beginning after December 15, 2011 and should be applied retrospectively. In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (“ASU 2011-12”). This guidance defers the changes in ASU 2011-05 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. Other requirements of ASU 2011-05 are not affected by ASU 2011-12. The guidance in ASU 2011-12 was effective at the same time as ASU 2011-05 so that entities would not be required to comply with the presentation requirements in ASU 2011-05 that ASU 2011-12 deferred. The adoption of this guidance changed the presentation format of the Company's condensed consolidated financial statements but did not have an impact on the amounts reported in those statements.

In December 2011, the FASB issued ASU No. 2011-10, Derecognition of in Substance Real Estate - a Scope Clarification (“ASU 2011-10”). This guidance applies to the derecognition of in substance real estate when the parent ceases to have a controlling financial interest in a subsidiary that is in substance real estate because of a default by the subsidiary on its nonrecourse debt. Under ASU 2011-10, the reporting entity should apply the guidance in Accounting Standards Codification ("ASC") 360-20, Property, Plant and Equipment - Real Estate Sales, to determine whether it should derecognize the in substance real estate. Generally, the requirements to derecognize in substance real estate would not be met before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. Thus, even if the reporting entity ceases to have a controlling financial interest under ASC 810-10, Consolidation - Overall, it would continue to include the real estate, debt, and the results of the subsidiary's operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. ASU 2011-10 should be applied on a prospective basis to deconsolidation events occurring after the effective date. For public companies, this guidance is effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. Early adoption is permitted. The Company elected to adopt ASU 2011-10 effective January 1, 2012. The adoption of this guidance did not have an impact on the Company's condensed consolidated financial statements.

Note 3 – Fair Value Measurements
The Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with ASC 820, Fair Value Measurements and Disclosure, ("ASC 820") based on whether the inputs to valuation techniques are observable or unobservable.  The fair value hierarchy contains three levels of inputs that may be used to measure fair value as follows:
Level 1 – Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.
Level 2 – Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.
Level 3 – Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability.  Market valuations must often be determined using discounted cash flow methodologies, pricing models or similar techniques based on the Company’s assumptions and best judgment.

12
Table of Contents

The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions, and risk of nonperformance.
Fair Value Measurements on a Recurring Basis
The following tables set forth information regarding the Company’s financial instruments that are measured at fair value on a recurring basis in the accompanying condensed consolidated balance sheets as of March 31, 2012 and December 31, 2011:
 
 
 
Fair Value Measurements at Reporting Date Using
 
Fair Value at
March 31, 2012
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Available-for-sale securities
$
32,133

 
$
20,304

 
$
—

 
$
11,829

Privately held debt and equity securities
2,475

 
—

 
—

 
2,475

Interest rate cap
3

 
—

 
3

 
—

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Interest rate swaps
$
5,316

 
$
—

 
$
5,316

 
$
—

 
 

 
Fair Value Measurements at Reporting Date Using
 
Fair Value at
December 31, 2011
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level 3)
Assets:
 

 
 

 
 

 
 

Available-for-sale securities
$
30,613

 
$
18,784

 
$
—

 
$
11,829

Privately held debt and equity securities
2,475

 
—

 
—

 
2,475

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Interest rate swaps
$
5,617

 
$
—

 
$
5,617

 
$
—

The Company recognizes transfers in and out of every level at the end of each reporting period. There were no transfers between Levels 1, 2, or 3 for all periods presented.
Intangible lease assets and other assets in the condensed consolidated balance sheets include marketable securities consisting of corporate equity securities, mortgage/asset-backed securities, mutual funds and bonds that are classified as available for sale.  Net unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of accumulated other comprehensive income in redeemable noncontrolling interests, shareholders’ equity and noncontrolling interests.  During the three months ended March 31, 2012 and 2011, the Company did not record any write-downs related to other-than-temporary impairments.  During the three months ended March 31, 2011, the Company recognized realized losses of $22 related to sales of marketable securities.  The fair value of the Company’s available-for-sale securities that are based on quoted market prices, are classified under Level 1.  Tax increment financing bonds ("TIF bonds") are classified as Level 3. The following is a summary of the available-for-sale securities held by the Company as of March 31, 2012 and December 31, 2011:

13
Table of Contents

 
 
 
Gross Unrealized
 
 
 
Adjusted Cost
 
Gains
 
Losses
 
Fair Value
March 31, 2012:
 
 
 
 
 
 
 
Common stocks
$
4,207

 
$
10,918

 
$
(5
)
 
$
15,120

Mutual funds
943

 
59

 
—

 
1,002

Mortgage/asset-backed securities
1,814

 
7

 
(12
)
 
1,809

Government and government sponsored entities
14,984

 
22

 
(1,548
)
 
13,458

Corporate bonds
683

 
27

 
—

 
710

International bonds
33

 
1

 
—

 
34

 
$
22,664

 
$
11,034

 
$
(1,565
)
 
$
32,133


 
 

 
Gross Unrealized
 
 

 
Adjusted Cost
 
Gains
 
Losses
 
Fair Value
December 31, 2011:
 

 
 

 
 

 
 

Common stocks
$
4,207

 
$
9,480

 
$
(5
)
 
$
13,682

Mutual funds
928

 
23

 
—

 
951

Mortgage/asset-backed securities
1,717

 
10

 
(4
)
 
1,723

Government and government sponsored entities
15,058

 
45

 
(1,542
)
 
13,561

Corporate bonds
636

 
26

 
—

 
662

International bonds
33

 
1

 
—

 
34

 
$
22,579

 
$
9,585

 
$
(1,551
)
 
$
30,613

The Company uses interest rate swaps and caps to mitigate the effect of interest rate movements on its variable-rate debt.  The Company had four interest rate swaps and one interest rate cap as of March 31, 2012 and December 31, 2011, that qualify as hedging instruments and are designated as cash flow hedges.  The interest rate cap is included in intangible lease assets and other assets and the interest rate swaps are reflected in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets.  The swaps and cap have predominantly met the effectiveness test criteria since inception and changes in their fair values are, thus, primarily reported in other comprehensive income (loss) and are reclassified into earnings in the same period or periods during which the hedged items affect earnings.  The fair values of the Company’s interest rate hedges, classified under Level 2, are determined based on prevailing market data for contracts with matching durations, current and anticipated London Interbank Offered Rate (“LIBOR”) information, consideration of the Company’s credit standing, credit risk of the counterparties and reasonable estimates about relevant future market conditions.  See Note 6 for further information regarding the Company’s interest rate hedging instruments.
The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short-term nature of these financial instruments.  Based on the interest rates for similar financial instruments, the carrying value of mortgage and other notes receivable is a reasonable estimate of fair value.  The estimated fair value of mortgage and other indebtedness was $4,752,127 and $4,836,028 at March 31, 2012 and December 31, 2011, respectively.  The fair value was calculated by discounting future cash flows for mortgage and other indebtedness using estimated market rates at which similar loans would be made currently.
The Company holds TIF bonds, which mature in 2028, received in a private placement as consideration for infrastructure improvements made by the Company related to the development of a community center. The Company has the intent and ability to hold the TIF bonds through the recovery period. To value the TIF bonds at March 31, 2012, the Company performed a probability-weighted discounted cash flow analysis using various bond redemption scenarios and a net present value based on a discount rate of 7% and a lack of marketability discount of 5%. The valuation assumes a 5% long-term revenue growth rate. Due to the significant unobservable estimates and assumptions used in the valuation of the TIF bonds, the Company has classified the TIF bonds under Level 3 in the fair value hierarchy. There were no changes in the $11,829 classified as available-for-sale securities (Level 3) for the period from December 31, 2011 through March 31, 2012.
The Company holds a secured convertible promissory note from Jinsheng Group (“Jinsheng”), in which the Company also holds a cost-method investment.  The secured convertible note is non-interest bearing and is secured by shares of Jinsheng.  Since the secured convertible note is non-interest bearing and there is no active market for Jinsheng’s debt, the Company performed a probability-weighted discounted cash flow analysis using various sale, redemption and initial public offering ("IPO")

14
Table of Contents

exit strategies. The fair value analysis as of March 31, 2012 forecasts a 0% to 10% reduction in estimated cash flows. Sale and IPO scenarios employ capitalization rates ranging from 10% to 12% which are discounted 20% for lack of marketability. Due to the significant unobservable estimates and assumptions used in the valuation of the note, the Company has classified it under Level 3 in the fair value hierarchy.  Based on the valuation as of March 31, 2012, the Company determined that the current balance of the secured convertible note of $2,475 is not impaired.  There were no changes in the $2,475 classified as privately held debt and equity securities (Level 3) for the period from December 31, 2011 through March 31, 2012. See Note 5 for further discussion.
The significant unobservable inputs used in the fair value measurement of the TIF bonds are the forecasted growth in sales and marketability discount. The significant unobservable inputs used in the fair value measurement of the Jinsheng note include revenue estimates and marketability discount. Significant increases (decreases) in revenues could result in a significantly higher (lower) fair value measurement whereas significant increases (decreases) in the marketability discount could result in a significantly lower (higher) fair value measurement.
Fair Value Measurements on a Nonrecurring Basis
The Company measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. As of March 31, 2012, the Company did not have any assets or liabilities measured at fair value on a nonrecurring basis for which the carrying value exceeded fair value.

Note 4 – Discontinued Operations
 
In March 2012, the Company completed the sale of the second phase of Settlers Ridge, a community center located in Robinson Township, PA, for a gross sales price of $19,144 less commissions and customary closing costs for a net sales price of $18,951. Proceeds from the sale of the second phase of Settlers Ridge were used to reduce the outstanding borrowings on the Company's secured credit facilities. The Company recorded a gain of $883 attributable to the sale in the first quarter of 2012. The Company recorded a loss on impairment of real estate of $4,457 in the second quarter of 2011 to write down the book value of this property to its then estimated fair value. The results of operations of this property and the related gain on the sale are included in discontinued operations for the three months ended March 31, 2012. There were no results of operations for this property for the three months ended March 31, 2011 as it was under development during that period.

In January 2012, the Company sold Oak Hollow Square, a community center located in High Point, NC, for a gross sales price of $14,247. Net proceeds of $13,796 were used to reduce the outstanding balance on the Company's unsecured term loan. The Company recorded a loss on impairment of real estate of $729 in the fourth quarter of 2011 to write down the book value of this property to the estimated net sales price. The Company recorded a loss on impairment of real estate of $255 in the first quarter of 2012 related to the true-up of certain estimated amounts to actual amounts. The results of operations of this property, including the loss on impairment of real estate, are included in discontinued operations for the three months ended March 31, 2012 and 2011, as applicable.
In November 2011, the Company completed the sale of Westridge Square, a community center located in Greensboro, NC, for a sales price of $26,125 less commissions and customary closing costs for a net sales price of $25,768. The Company recorded a loss of $160 attributable to the sale in the fourth quarter of 2011. Proceeds from the sale of Westridge Square were used to reduce the outstanding borrowings on the unsecured term loan used to acquire the Starmount Properties. The results of operations of this property are included in discontinued operations for the three months ended March 31, 2011.

In February 2011, the Company completed the sale of Oak Hollow Mall in High Point, NC, for a gross sales price of $9,000.  Net proceeds were used to retire the outstanding principal balance and accrued interest of $40,281 on the non-recourse loan secured by the property in accordance with the lender’s agreement to modify the outstanding principal balance and accrued interest to equal the net sales price for the property and, as a result, the Company recorded a gain on the extinguishment of debt of $31,434 in the first quarter of 2011.  The Company also recorded a loss on impairment of real estate in the first quarter of 2011 of $2,746 to write down the book value of the property to the net sales price. The results of operations of this property, including the gain on extinguishment of debt and loss on impairment of real estate, are included in discontinued operations for the three months ended March 31, 2011.
 
Total revenues of the properties described above that are included in discontinued operations were $377 and $1,376 for the three months ended March 31, 2012 and 2011, respectively.  Discontinued operations for the three month periods ended March 31, 2012 and 2011 also include settlements of estimated expenses based on actual amounts for properties sold during previous periods.
 


15
Table of Contents

Note 5 – Unconsolidated Affiliates, Noncontrolling Interests and Cost Method Investments
 
Unconsolidated Affiliates
 
At March 31, 2012, the Company had investments in the following 17 entities, which are accounted for using the equity method of accounting:
Joint Venture
Property Name
Company's
Interest
CBL/T-C, LLC
CoolSprings Galleria, Oak Park Mall, West County Center
   and Pearland Town Center
60.3
%
CBL-TRS Joint Venture, LLC
Friendly Center, The Shops at Friendly Center and a portfolio
   of six office buildings
50.0
%
CBL-TRS Joint Venture II, LLC
Renaissance Center
50.0
%
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
%
High Pointe Commons II-HAP, LP
High Pointe Commons - Christmas Tree Shop
50.0
%
Imperial Valley Mall L.P.
Imperial Valley Mall
60.0
%
Imperial Valley Peripheral L.P.
Imperial Valley Mall (vacant land)
60.0
%
JG Gulf Coast Town Center LLC
Gulf Coast Town Center
50.0
%
Kentucky Oaks Mall Company
Kentucky Oaks Mall
50.0
%
Mall of South Carolina L.P.
Coastal Grand—Myrtle Beach
50.0
%
Mall of South Carolina Outparcel L.P.
Coastal Grand—Myrtle Beach (Coastal Grand Crossing
   and vacant land)
50.0
%
Port Orange I, LLC
The Pavilion at Port Orange Phase I
50.0
%
Triangle Town Member LLC
Triangle Town Center, Triangle Town Commons
   and Triangle Town Place
50.0
%
West Melbourne I, LLC
Hammock Landing Phases I and II
50.0
%
York Town Center, LP
York Town Center
50.0
%
Although the Company has majority ownership of certain of these joint ventures, it has evaluated these investments and concluded that the other partners or owners in these joint ventures have substantive participating rights, such as approvals of:
•
the pro forma for the development and construction of the project and any material deviations or modifications thereto;
•
the site plan and any material deviations or modifications thereto;
•
the conceptual design of the project and the initial plans and specifications for the project and any material deviations or modifications thereto;
•
any acquisition/construction loans or any permanent financings/refinancings;
•
the annual operating budgets and any material deviations or modifications thereto;
•
the initial leasing plan and leasing parameters and any material deviations or modifications thereto; and
•
any material acquisitions or dispositions with respect to the project.
As a result of the joint control over these joint ventures, the Company accounts for these investments using the equity method of accounting.
Condensed combined financial statement information of these unconsolidated affiliates is as follows:

16
Table of Contents

 
Total for the Three Months
Ended March 31,
 
Company's Share for the Three
Months Ended March 31,
 
2012
 
2011
 
2012
 
2011
Revenues
$
62,294

 
$
40,096

 
$
33,411

 
$
22,554

Depreciation and amortization expense
(20,766
)
 
(12,438
)
 
(11,204
)
 
(7,015
)
Interest expense
(21,111
)
 
(13,157
)
 
(11,190
)
 
(7,259
)
Other operating expenses
(18,947
)
 
(12,266
)
 
(9,751
)
 
(6,502
)
Net income
$
1,470

 
$
2,235

 
$
1,266

 
$
1,778

In February 2012, York Town Center, LP ("YTC") closed on a $38,000 ten-year non-recourse loan, secured by York Town Center in York, PA, which bears interest at a fixed rate of 4.90%. Proceeds from the new loan, plus cash on hand, were used to retire an existing loan of $39,379 that was scheduled to mature in March 2012.
In March 2012, Port Orange I, LLC ("Port Orange") closed on the extension and modification of a construction loan, secured by The Pavilion at Port Orange in Port Orange, FL, to extend the maturity date to March 2014, remove a 1% LIBOR floor, and reduce the capacity from $98,883 to $64,950. Port Orange paid $3,332 to reduce the outstanding balance on the loan to the new capacity amount. There is a one-year extension option remaining on the loan, which is at the joint venture's election, for an outside maturity date of March 2015. Interest on the loan is at a current rate of LIBOR plus a margin of 3.5%. The Company has guaranteed 100% of the construction loan.
All of the debt on the properties owned by the unconsolidated affiliates is non-recourse, except for West Melbourne, Port Orange, and High Pointe Commons. See Note 11 for a description of guarantees the Company has issued related to certain unconsolidated affiliates.
Noncontrolling Interests
Noncontrolling interests include the aggregate noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which each of the noncontrolling limited partners has the right to exchange all or a portion of its partnership interests for shares of the Company’s common stock, or at the Company’s election, their cash equivalent.  Noncontrolling interests also includes the aggregate noncontrolling ownership interest in the Company’s other consolidated subsidiaries that is held by third parties and for which the related partnership agreements either do not include redemption provisions or are subject to redemption provisions that do not require classification outside of permanent equity.  As of March 31, 2012, the total noncontrolling interests of $193,296 consisted of third-party interests in the Operating Partnership and in other consolidated subsidiaries of $188,690 and $4,606 respectively.  The total noncontrolling interests at December 31, 2011 of $207,113 consisted of third-party interests in the Operating Partnership and in other consolidated subsidiaries of $202,833 and $4,280, respectively.
Redeemable noncontrolling interests include a noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which the partnership agreement includes redemption provisions that may require the Company to redeem the partnership interest for real property.  Redeemable noncontrolling interests also includes the aggregate noncontrolling ownership interest in other consolidated subsidiaries that is held by third parties and for which the related partnership agreements contain redemption provisions at the holder’s election that allow for redemption through cash and/or properties.  The total redeemable noncontrolling partnership interests of $36,596 as of March 31, 2012 consisted of third-party interests in the Operating Partnership and in the Company’s consolidated subsidiary that provides security and maintenance services to third parties of $30,254 and $6,342, respectively.  At December 31, 2011, the total redeemable noncontrolling partnership interests of $32,271 consisted of third-party interests in the Operating Partnership and in the Company’s consolidated security and maintenance services subsidiary of $26,036 and $6,235, respectively.
The redeemable noncontrolling preferred joint venture interest includes the preferred joint venture units (“PJV units”) issued to the Westfield Group (“Westfield”) for the acquisition of certain properties during 2007.  See Note 11 for additional information related to the PJV units.  Activity related to the redeemable noncontrolling preferred joint venture interest represented by the PJV units is as follows:

17
Table of Contents

 
Three Months Ended
March 31,
 
2012
 
2011
Beginning Balance
$
423,834

 
$
423,834

Net income attributable to redeemable noncontrolling
     preferred joint venture interest
5,144

 
5,085

Distributions to redeemable noncontrolling
     preferred joint venture interest
(5,201
)
 
(5,200
)
Ending Balance
$
423,777

 
$
423,719

In January 2012 and December 2011, respectively, one holder of 30,056 common units of limited partnership interest in the Operating Partnership and two holders of 401,324 common units of limited partnership interest in the Operating Partnership exercised their conversion rights. The Company elected to pay cash in exchange for the common units and paid the holders $6,359 in the three months ended March 31, 2012.
In March 2012, a holder of 194,572 common units of limited partnership interest in the Operating Partnership exercised its conversion rights. The Company elected to pay cash in exchange for the common units and, subsequent to March 31, 2012, paid the holder $3,475.
Cost Method Investments
The Company owns a 6.2% noncontrolling interest in subsidiaries of Jinsheng, an established mall operating and real estate development company located in Nanjing, China. As of March 31, 2012, Jinsheng owns controlling interests in 12 home furnishing shopping malls.
The Company also holds a secured convertible promissory note secured by 16,565,534 Series 2 Ordinary Shares of Jinsheng (which equates to a 2.275% ownership interest). The secured note is non-interest bearing and was amended by the Company and Jinsheng in January 2012 to extend to July 22, 2012 the Company's right to convert the outstanding amount of the secured note into 16,565,534 Series A-2 Preferred Shares of Jinsheng, with an option to extend an additional six months to January 22, 2013. The amendment also provides that if Jinsheng should complete an IPO, the secured note will be converted into common shares of Jinsheng immediately prior to the IPO. The Company can demand payment of the secured note at any time.
The Company accounts for its noncontrolling interest in Jinsheng using the cost method because the Company does not exercise significant influence over Jinsheng and there is no readily determinable market value of Jinsheng’s shares since they are not publicly traded.  See Note 3 for information regarding the fair value of the secured note. The noncontrolling interest and the secured note are reflected as investment in unconsolidated affiliates in the accompanying condensed consolidated balance sheets. 
Note 6 – Mortgage and Other Indebtedness
 
Mortgage and other indebtedness consisted of the following:
 
March 31, 2012
 
December 31, 2011
 
Amount
 
Weighted
Average
Interest
Rate (1)
 
Amount
 
Weighted
Average
Interest
Rate (1)
Fixed-rate debt:
 
 
 
 
 
 
 
Non-recourse loans on operating properties (2)
$
3,342,787

 
5.42
%
 
$
3,656,243

 
5.55
%
Recourse term loans on operating properties
50,454

 
5.83
%
 
77,112

 
5.89
%
Total fixed-rate debt
3,393,241

 
5.43
%
 
3,733,355

 
5.54
%
Variable-rate debt:
 

 
 

 
 

 
 

Non-recourse term loans on operating properties
163,750

 
3.50
%
 
168,750

 
3.03
%
Recourse term loans on operating properties
119,407

 
2.47
%
 
124,439

 
2.29
%
Construction loans
28,223

 
3.28
%
 
25,921

 
3.25
%
Secured lines of credit
359,418

 
3.00
%
 
27,300

 
3.03
%
Unsecured term loans
395,209

 
1.64
%
 
409,590

 
1.67
%
Total variable-rate debt
1,066,007

 
2.52
%
 
756,000

 
2.18
%
Total
$
4,459,248

 
4.73
%
 
$
4,489,355

 
4.99
%
 
(1)
Weighted-average interest rate includes the effect of debt premiums (discounts), but excludes amortization of deferred financing costs.

18
Table of Contents

(2)
The Company has four interest rate swaps on notional amounts totaling $116,748 as of March 31, 2012 and $117,700 as of December 31, 2011 related to its variable-rate loans on operating properties to effectively fix the interest rate on the respective loans.  Therefore, these amounts are reflected in fixed-rate debt at March 31, 2012 and December 31, 2011.
Secured Lines of Credit
The Company has three secured lines of credit that are used for mortgage retirement, working capital, construction and acquisition purposes, as well as issuances of letters of credit. Each of these lines is secured by mortgages on certain of the Company’s operating properties. Borrowings under the secured lines of credit bear interest at LIBOR plus an applicable spread, ranging from 2.00% to 3.00%, based on the Company’s leverage ratio and had a weighted average interest rate of 3.00% at March 31, 2012. The Company also pays fees based on the amount of unused availability under its secured lines of credit at rates ranging from 0.15% to 0.35% of unused availability. The following summarizes certain information about the secured lines of credit as of March 31, 2012:     
 
Total
Capacity
 
 
Total
Outstanding
 
 
Maturity
Date
 
Extended
Maturity
Date
$
105,000

 
$
5,000


 
June 2013
 
N/A
525,000

 
204,223

(1) 
 
February 2014
 
February 2015
520,000

 
150,195

 
 
April 2014
 
N/A
$
1,150,000

 
$
359,418

 
 
 
 
 
 
(1)
There was an additional $2,169 outstanding on this secured line of credit as of March 31, 2012 for
letters of credit.  Up to $50,000 of the capacity on this line can be used for letters of credit.  
See Note 15 regarding subsequent events that affected the outstanding borrowings on the secured credit facilities.
Unsecured Term Facilities
The Company has an unsecured term loan that bears interest at LIBOR plus a margin ranging from 0.95% to 1.40%, based on the Company’s leverage ratio.  At March 31, 2012, the outstanding borrowings of $167,209 under this loan had a weighted average interest rate of 1.35%.  The loan was obtained for the exclusive purpose of acquiring certain properties from the Starmount Company or its affiliates.  The Company completed its acquisition of the properties in February 2008 and, as a result, no further draws can be made against the loan.  The loan matures in November 2012.  Net proceeds from a sale, or the Company’s share of excess proceeds from any refinancings, of any of the properties originally purchased with borrowings from this unsecured term loan must be used to pay down any remaining outstanding balance.
The Company has an unsecured term loan with total capacity of $228,000 that bears interest at LIBOR plus a margin ranging from 1.50% to 1.80% , based on the Company’s leverage ratio.  At March 31, 2012, the outstanding borrowings of $228,000 under the unsecured term loan had a weighted average interest rate of 1.85%.  Subsequent to March 31, 2012, the Company exercised a one-year extension option on this loan to extend the maturity date to April 2013.
Letters of Credit
At March 31, 2012, the Company had additional secured and unsecured lines of credit with a total commitment of $15,906 that can only be used for issuing letters of credit. The letters of credit outstanding under these lines of credit totaled $2,650 at March 31, 2012.
Covenants and Restrictions
The agreements to the $525,000 and $520,000 secured lines of credit contain, among other restrictions, certain financial covenants including the maintenance of certain financial coverage ratios, minimum net worth requirements, and limitations on cash flow distributions.  The Company believes it was in compliance with all covenants and restrictions at March 31, 2012.
The agreements to the $525,000 and $520,000 secured credit facilities and the two unsecured term facilities described above, each with the same lead lender, contain default and cross-default provisions customary for transactions of this nature (with applicable customary grace periods) in the event (i) there is a default in the payment of any indebtedness owed by the Company to any institution which is a part of the lender groups for the credit facilities, or (ii) there is any other type of default with respect to any indebtedness owed by the Company to any institution which is a part of the lender groups for the credit facilities and such lender accelerates the payment of the indebtedness owed to it as a result of such default.  The credit facility agreements provide that, upon the occurrence and continuation of an event of default, payment of all amounts outstanding under these credit facilities and those facilities with which these agreements reference cross-default provisions may be accelerated and the lenders’ commitments may be terminated.  Additionally, any default in the payment of any recourse indebtedness greater than $50,000, or any non-recourse indebtedness greater than $100,000, of the Company, the Operating Partnership and/or significant subsidiaries,

19
Table of Contents

as defined in the credit facilities, regardless of whether the lending institution is a part of the lender groups for the credit facilities, will constitute an event of default under the agreements to the credit facilities.
Several of the Company’s malls/open-air centers, associated centers and community centers, in addition to the corporate office building are owned by special purpose entities that are included in the Company’s consolidated financial statements. The sole business purpose of the special purpose entities is to own and operate these properties. 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.
Mortgages on Operating Properties
During the first quarter of 2012, the Company retired 15 operating property loans with an aggregate principal balance of $394,386 that were secured by Arbor Place, The Landing at Arbor Place, CBL Center, Fashion Square, Hickory Hollow Mall, The Courtyard at Hickory Hollow Mall, Jefferson Mall, Massard Crossing, Northwoods Mall, Old Hickory Mall, Pemberton Plaza, Randolph Mall, Regency Mall, WestGate Mall and Willowbrook Plaza with borrowings from its secured credit facilities. At March 31, 2012, the Company was in the process of obtaining mortgage financing for many of these properties.
Also during the first quarter of 2012, the Company closed on a $73,000 ten-year non-recourse commercial mortgage-backed securities ("CMBS") loan secured by Northwoods Mall in Charleston, SC, which bears a fixed interest rate of 5.075%. Proceeds were used to reduce outstanding balances on the Company's secured credit facilities. Additionally, the maturity date for a $20,911 recourse loan with an outstanding balance of $13,579 as of March 31, 2012, secured by Statesboro Crossing in Statesboro, GA, was extended from February 15, 2012 to April 15, 2012.
In February 2012, the lender of the non-recourse mortgage loan secured by Columbia Place in Columbia, SC notified the Company that the loan had been placed in default. Columbia Place generates insufficient income levels to cover the debt service on the mortgage, which had a balance of $27,349 at March 31, 2012, and a contractual maturity date of September 2013. The lender on the loan receives the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments.
See Note 15 regarding subsequent events related to mortgage loans on operating properties.
Scheduled Principal Payments
As of March 31, 2012, the scheduled principal payments of the Company’s consolidated debt, excluding extensions available at the Company’s option, on all mortgage and other indebtedness, including construction loans and lines of credit, are as follows: 
2012
$
601,819

2013
402,088

2014
564,376

2015
472,840

2016
677,150

Thereafter
1,741,201

 
4,459,474

Net unamortized premiums
(226
)
 
$
4,459,248

The remaining scheduled principal payments in 2012 of $601,819 include the maturing principal balances of five operating property loans totaling $168,902 , two unsecured term loans totaling $395,209, and principal amortization of $37,708. Three maturing property loans with principal balances totaling $93,102 and one of the unsecured term loans with an outstanding balance of $228,000 have extensions available at the Company's option, leaving approximately $243,009 of loan maturities in 2012 which the Company intends to retire or refinance. Subsequent to March 31, 2012, the Company exercised an extension option on the unsecured term loan with total capacity of $228,000 and one of the maturing operating property loans with a principal balance of $13,579, which were both scheduled to mature in April 2012. Subsequent to March 31, 2012, the Company also closed on a CMBS loan for an operating property with an existing loan that was scheduled to mature in May 2012. See Note 15 for additional information.
The Company’s mortgage and other indebtedness had a weighted average maturity of 4.68 years as of March 31, 2012 and 4.69 years as of December 31, 2011.
Interest Rate Hedge Instruments
The Company records its derivative instruments in its condensed consolidated balance sheets at fair value.  The accounting

20
Table of Contents

for changes in the fair value of derivatives depends on the intended use of the derivative, whether the derivative has been designated as a hedge and, if so, whether the hedge has met the criteria necessary to apply hedge accounting.
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.  To accomplish these objectives, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy.  Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.
The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in accumulated other comprehensive income (loss) (“AOCI/L”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.  Such derivatives were used to hedge the variable cash flows associated with variable-rate debt.
In January 2012, the Company entered into an interest rate cap agreement with an initial notional amount of $125,000, amortizing to $122,375, to hedge the risk of changes in cash flows on the borrowings of one of its properties equal to the cap notional. The interest rate cap protects the Company from increases in the hedged cash flows attributable to overall changes in the 3-month LIBOR above the strike rate of the cap on the debt.  The strike rate associated with the interest rate cap is 5.0%. The cap matures in January 2014.
As of March 31, 2012, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
Interest Rate
Derivative
 
Number of
Instruments
 
Notional
Amount
Outstanding
Interest Rate Cap
 
1
 
$
125,000

Interest Rate Swaps
 
4
 
$
116,748

Instrument Type
 
Location in
Consolidated
Balance Sheet
 
Outstanding
Notional
Amount
 
Designated
Benchmark
Interest Rate
 
Strike
Rate
 
Fair
Value at
3/31/12
 
Fair
Value at
12/31/11
 
Maturity
Date
Pay fixed/ Receive
 variable Swap
 
Accounts payable and
accrued liabilities
 
$56,444
(amortizing
to $48,337)
 
1-month
LIBOR
 
2.149%
 
$
(2,532
)
 
$
(2,674
)
 
Apr 2016
Pay fixed/ Receive
   variable Swap
 
Accounts payable and
accrued liabilities
 
$35,333
(amortizing
to $30,276)
 
1-month
LIBOR
 
2.187%
 
(1,632
)
 
(1,725
)
 
Apr 2016
Pay fixed/ Receive
   variable Swap
 
Accounts payable and
accrued liabilities
 
$13,212
(amortizing
to $11,313)
 
1-month
LIBOR
 
2.142%
 
(589
)
 
(622
)
 
Apr 2016
Pay fixed/ Receive
   variable Swap
 
Accounts payable and
accrued liabilities
 
$11,759
(amortizing
to $10,083)
 
1-month
LIBOR
 
2.236%
 
(563
)
 
(596
)
 
Apr 2016
Cap
 
Intangible lease assets
and other assets
 
$125,000
(amortizing
to $122,375)
 
3-month
LIBOR
 
5.000%
 
3

 
—

 
Jan 2014

 
 
 
Gain (Loss)
Recognized in OCI/L
(Effective Portion)
 
Location of
Losses
Reclassified
from AOCI/L into Earnings(Effective  Portion)
 
 
Loss Recognized in
Earnings (Effective
Portion)
 
Location of
Gain
Recognized in Earnings
(Ineffective  Portion)
 
Gain Recognized
in Earnings
(Ineffective
Portion)
Hedging 
Instrument
 
Three Months
Ended March 31,
 
 
Three Months
Ended March 31,
 
 
Three Months
Ended March 31,
 
2012
 
2011
 
 
2012
 
2011
 
 
2012
 
2011
Interest rate contracts
 
$
284

 
$
562

 
Interest
Expense
 
$
(562
)
 
$
(22
)
 
Interest
Expense
 
$
—

 
$
—


As of March 31, 2012, the Company expects to reclassify approximately $1,905 of losses currently reported in accumulated other comprehensive income to interest expense within the next twelve months due to amortization of its outstanding interest rate contracts.  Fluctuations in fair values of these derivatives between March 31, 2012 and the respective dates of termination will

21
Table of Contents

vary the projected reclassification amount.
Note 7 – Comprehensive Income
 
Comprehensive income includes all changes in redeemable noncontrolling interests and total equity during the period, except those resulting from investments by shareholders and partners, distributions to shareholders and partners and redemption valuation adjustments. Other comprehensive income (loss) (“OCI/L”) includes changes in unrealized gains (losses) on available-for-sale securities, interest rate hedge agreements and foreign currency translation adjustments. 

The components of accumulated other comprehensive income (loss) as of March 31, 2012 and December 31, 2011 are as follows: 
 
March 31, 2012
 
As reported in:
 
 
 
  Redeemable
Noncontrolling
Interests
 
  Shareholders'
Equity
 
  Noncontrolling
Interests
 
Total
Net unrealized gain (loss) on hedging agreements
$
379

 
$
(2,406
)
 
$
(3,428
)
 
$
(5,455
)
Net unrealized gain on available-for-sale securities
340

 
7,238

 
2,096

 
9,674

Accumulated other comprehensive income (loss)
$
719

 
$
4,832

 
$
(1,332
)
 
$
4,219

 
 
December 31, 2011
 
As reported in:
 
 

 
  Redeemable
Noncontrolling
Interests
 
  Shareholders'
Equity
 
  Noncontrolling
Interests
 
Total
Net unrealized gain (loss) on hedging agreements
$
377

 
$
(2,628
)
 
$
(3,488
)
 
$
(5,739
)
Net unrealized gain on available-for-sale securities
328

 
6,053

 
1,775

 
8,156

Accumulated other comprehensive income (loss)
$
705

 
$
3,425

 
$
(1,713
)
 
$
2,417


Note 8 – Mortgage and Other Notes Receivable
 
Each of the Company’s mortgage notes receivable is collateralized by either a first mortgage, a second mortgage or by an assignment of 100% of the partnership interests that own the real estate assets.  Other notes receivable include amounts due from tenants or government sponsored districts and unsecured notes received from third parties as whole or partial consideration for property or investments.  Interest rates on mortgage and other notes receivable ranged from 2.8% to 13.0%, with a weighted average interest rate of 8.84% and 8.76% at March 31, 2012 and December 31, 2011, respectively. Maturities of these notes receivable range from April 2012 to January 2047.
 
As of March 31, 2012, the Company believes that its mortgage and other notes receivable balance of $33,688 is fully collectible.

Subsequent to March 31, 2012, two of the Company's note receivables were repaid. See Note 15 for additional information.
 
Note 9 – 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, restated for discontinued operations in all periods presented:


22
Table of Contents

Three Months Ended
March 31, 2012
 
Malls
 
Associated
Centers
 
Community
Centers
 
All Other (2)
 
Total
Revenues
 
$
222,630

 
$
10,305

 
$
4,393

 
$
13,344

 
$
250,672

Property operating expenses (1)
 
(74,603
)
 
(2,552
)
 
(2,533
)
 
5,325

 
(74,363
)
Interest expense
 
(52,628
)
 
(2,196
)
 
(693
)
 
(4,543
)
 
(60,060
)
Other expense
 
—

 
—

 
—

 
(6,758
)
 
(6,758
)
Gain (loss) on sales of real estate assets
 
493

 
—

 
97

 
(3
)
 
587

Segment profit
 
$
95,892

 
$
5,557

 
$
1,264

 
$
7,365

 
110,078

Depreciation and amortization expense
 
 

 
 

 
 

 
 

 
(63,157
)
General and administrative expense
 
 

 
 

 
 

 
 

 
(13,800
)
Interest and other income
 
 

 
 

 
 

 
 

 
1,075

Equity in earnings of unconsolidated affiliates
 
 

 
 

 
 

 
 

 
1,266

Income tax benefit
 
 

 
 

 
 

 
 

 
228

Income from continuing operations
 
 

 
 

 
 

 
 

 
$
35,690

Total assets
 
$
5,734,961

 
$
304,588

 
$
238,804

 
$
353,755

 
$
6,632,108

Capital expenditures (3)
 
$
22,578

 
$
1,540

 
$
7,664

 
$
3,706

 
$
35,488



Three Months Ended
March 31, 2011
 
Malls
 
Associated
Centers
 
Community
Centers
 
All Other (2)
 
Total
Revenues
 
$
238,906

 
$
11,107

 
$
4,121

 
$
13,035

 
$
267,169

Property operating expenses (1)
 
(81,518
)
 
(2,973
)
 
(1,188
)
 
5,186

 
(80,493
)
Interest expense
 
(56,862
)
 
(1,911
)
 
(1,180
)
 
(8,260
)
 
(68,213
)
Other expense
 
—

 
—

 
—

 
(8,303
)
 
(8,303
)
Gain on sales of real estate assets
 
13

 
354

 
430

 
12

 
809

Segment profit
 
$
100,539

 
$
6,577

 
$
2,183

 
$
1,670

 
110,969

Depreciation and amortization expense
 
 

 
 

 
 

 
 

 
(67,699
)
General and administrative expense
 
 

 
 

 
 

 
 

 
(11,800
)
Interest and other income
 
 

 
 

 
 

 
 

 
545

Gain on extinguishment of debt
 
 
 
 
 
 
 
 
 
581

Equity in earnings of unconsolidated affiliates
 
 

 
 

 
 

 
 

 
1,778

Income tax benefit
 
 

 
 

 
 

 
 

 
1,770

Income from continuing operations
 
 

 
 

 
 

 
 

 
$
36,144

Total assets
 
$
6,475,575

 
$
323,074

 
$
66,360

 
$
592,332

 
$
7,457,341

Capital expenditures (3)
 
$
15,239

 
$
198

 
$
1,391

 
$
20,849

 
$
37,677

(1) Property operating expenses include property operating, real estate taxes and maintenance and repairs. 
(2) The All Other category includes mortgage and other notes receivable, office buildings, the Management Company and the Company’s subsidiary that provides security and maintenance services. 
(3) Amounts include acquisitions of real estate assets and investments in unconsolidated affiliates. Developments in progress are included in the All Other category.
Note 10 – Earnings Per Share
Basic earnings per share (“EPS”) is computed by dividing net income attributable to common shareholders by the weighted-average number of 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 noncontrolling interests in the Operating Partnership into shares of common stock are not dilutive.





23
Table of Contents

The following summarizes the impact of potential dilutive common shares on the denominator used to compute EPS:
 
Three Months Ended
March 31,
 
2012
 
2011
Denominator – basic
148,495

 
148,069

Stock options
—

 
13

Deemed shares related to deferred compensation arrangements
43

 
41

Denominator – diluted
148,538

 
148,123

The dilutive effect of stock options of 7 and 9 shares for the three months ended March 31, 2012 and 2011, respectively, were excluded from the computations of diluted EPS because the effect of including the stock options would have been anti-dilutive.
Note 11 – Contingencies
On March 11, 2010, The Promenade D'Iberville, LLC (“TPD”), a subsidiary of the Company, filed a lawsuit in the Circuit Court of Harrison County, Mississippi, against M. Hanna Construction Co., Inc. (“M Hanna”), Gallet & Associates, Inc., LA Ash, Inc., EMJ Corporation (“EMJ”) and JEA (f/k/a Jacksonville Electric Authority), seeking damages for alleged property damage and related damages occurring at a shopping center development in D'Iberville, Mississippi. EMJ filed an answer and counterclaim denying liability and seeking to recover from TPD the retainage of approximately $327 allegedly owed under the construction contract. Kohl's Department Stores, Inc. (“Kohl's”) was granted permission to intervene in the lawsuit and, on April 13, 2011, filed a cross-claim against TPD alleging that TPD is liable to Kohl's for unspecified damages resulting from the actions of the defendants and for the failure to perform the obligations of TPD under a Site Development Agreement with Kohl's. Kohl's also made a claim against the Company which guaranteed the performance of TPD under the Site Development Agreement. The case is at the discovery stage.
TPD also has filed claims under several insurance policies in connection with this matter, and there are three pending lawsuits relating to insurance coverage. On October 8, 2010, First Mercury Insurance Company (“First Mercury”) filed an action in the United States District Court for the Eastern District of Texas against M Hanna and TPD seeking a declaratory judgment concerning coverage under a liability insurance policy issued by First Mercury to M Hanna. That case was dismissed for lack of federal jurisdiction and refiled in Texas state court. On June 13, 2011, TPD filed an action in the Chancery Court of Hamilton County, Tennessee against National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) and EMJ seeking a declaratory judgment regarding coverage under a liability insurance policy issued by National Union to EMJ and recovery of damages arising out of National Union's breach of its obligations. In March 2012, Zurich American and Zurich American of Illinois, which also have issued liability insurance policies to EMJ, intervened in that case and the case is set for trial on October 29, 2013. On February 14, 2012, TPD filed claims in the United States District Court for the Southern District of Mississippi against Factory Mutual Insurance Company and Federal Insurance Company seeking a declaratory judgment concerning coverage under certain builders risk and property insurance policies issued by those respective insurers to the Company.
Certain executive officers of the Company and members of the immediate family of Charles B. Lebovitz, Chairman of the Board of the Company, collectively have a significant non-controlling interest in EMJ, a major national construction company that the Company engaged to build a substantial number of the Company's Properties. EMJ is one of the defendants in the Harrison County, MS and Hamilton County, TN cases described above.
The Company also is currently involved in certain litigation that arises in the ordinary course of business. The Company does not believe that the pending litigation will have a materially adverse effect on the Company's financial position or results of operations.
Additionally, management believes that, based on environmental studies completed to date, any exposure to environmental cleanup will not materially affect the financial position and results of operations of the Company.
     The Company consolidates its investment in a joint venture, CW Joint Venture, LLC (“CWJV”), with Westfield.  The terms of the joint venture agreement require that CWJV pay an annual preferred distribution at a rate of 5.0%, which increases to 6.0% on July 1, 2013, on the preferred liquidation value of the PJV units of CWJV that are held by Westfield.  Westfield has the right to have all or a portion of the PJV units redeemed by CWJV with property owned by CWJV, and subsequent to October 16, 2012, with either cash or property owned by CWJV, in each case for a net equity amount equal to the preferred liquidation value of the PJV units. At any time after January 1, 2013, Westfield may propose that CWJV acquire certain qualifying property that would be used to redeem the PJV units at their preferred liquidation value. If CWJV does not redeem the PJV units with such qualifying property (a “Preventing Event”), then the annual preferred distribution rate on the PJV units increases to 9.0% beginning July 1, 2013.  The Company will have the right, but not the obligation, to offer to redeem the PJV units from January 31, 2013 through January 31, 2015 at their preferred liquidation value, plus accrued and unpaid distributions. If the Company fails to make

24
Table of Contents

such an offer, the annual preferred distribution rate on the PJV units increases to 9.0% for the period from July 1, 2013 through June 30, 2016, at which time it decreases to 6.0% if a Preventing Event has not occurred.  If, upon redemption of the PJV units, the fair value of the Company’s common stock is greater than $32.00 per share, then such excess (but in no case greater than $26,000 in the aggregate) shall be added to the aggregate preferred liquidation value payable on account of the PJV units.  The Company accounts for this contingency using the method prescribed for earnings or other performance measure contingencies.  As such, should this contingency result in additional consideration to Westfield, the Company will record the current fair value of the consideration issued as a purchase price adjustment at the time the consideration is paid or payable.
 
Guarantees
 
The Company may guarantee the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on the Company’s investment in the joint venture. The Company may receive a fee from the joint venture for providing the guaranty. Additionally, when the Company issues a guaranty, the terms of the joint venture agreement typically provide that the Company may receive indemnification from the joint venture partner or have the ability to increase its ownership interest.
 
The Company owns a parcel of land in Lee’s Summit, MO that it is ground leasing to a third party development company.  The third party developed and operates a shopping center on the land parcel.  The Company has guaranteed 27% of the third party’s construction loan and bond line of credit (the “loans”) of which the maximum guaranteed amount, representing 27% of capacity, is approximately $18,615.  The Company recorded an obligation of $192 as of March 31, 2012 and December 31, 2011 in the accompanying condensed consolidated balance sheets to reflect the estimated fair value of the guaranty. The total amount outstanding at March 31, 2012 on the loans was $60,797 of which the Company has guaranteed $16,415.

The Company has guaranteed 100% of the construction and land loans of West Melbourne I, LLC (“West Melbourne”), an unconsolidated affiliate in which the Company owns a 50% interest, of which the maximum guaranteed amount is $45,654.  West Melbourne developed and operates Hammock Landing, a community center in West Melbourne, FL. The total amount outstanding on the loans at March 31, 2012 was $45,654. The guaranty will expire upon repayment of the debt.  The land loan, and the construction loan, each representing $3,167 and $42,487, respectively, of the amount outstanding at March 31, 2012