CBL-9.30.2013-10Q
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 SEPTEMBER 30, 2013
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.)
COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)
______________
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
(Exact Name of registrant as specified in its charter)
______________
DELAWARE  (CBL & ASSOCIATES PROPERTIES, INC.)
 
   62-1545718
DELAWARE (CBL & ASSOCIATES LIMITED PARTNERSHIP)
 
   62-1542285
(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. 
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 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).
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 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. 
CBL & Associates Properties, Inc.
 Large accelerated filer x
Accelerated filer o
 Non-accelerated filer o 
Smaller Reporting Company o
CBL & Associates Limited Partnership
 Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
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).
CBL & Associates Properties, Inc.
 
 Yes o  
No x
CBL & Associates Limited Partnership
 
 Yes o  
No x
As of November 4, 2013, there were 169,907,550 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.


Table of Contents


EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2013 of CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the "Company" mean CBL & Associates Properties, Inc. and its subsidiaries. References to the "Operating Partnership" mean CBL & Associates Limited Partnership and its subsidiaries. The terms "we", "us" and "our" refer to the Company or the Company and the Operating Partnership collectively, as the context requires.
The Company is a real estate investment trust ("REIT") whose stock is traded on the New York Stock Exchange. The Company is the 100% owner of two qualified REIT subsidiaries, CBL Holdings I, Inc. and CBL Holdings II, Inc. At September 30, 2013, 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 an 84.2% limited partner interest for a combined interest held by the Company of 85.2%.
As the sole general partner of the Operating Partnership, the Company's subsidiary, CBL Holdings I, Inc., has exclusive control of the Operating Partnership's activities. Management operates the Company and the Operating Partnership as one business. The management of the Company consists of the same individuals that manage the Operating Partnership. The Company's only material asset is its indirect ownership of partnership interests of the Operating Partnership. As a result, the Company conducts substantially all its business through the Operating Partnership as described in the preceding paragraph. The Company also issues public equity from time to time and guarantees certain debt of the Operating Partnership. The Operating Partnership holds all of the assets and indebtedness of the Company and, through affiliates, retains the ownership interests in the Company's joint ventures. Except for the net proceeds of offerings of equity by the Company, which are contributed to the Operating Partnership in exchange for partnership units on a one-for-one basis, the Operating Partnership generates all remaining capital required by the Company's business through its operations and its incurrence of indebtedness.
We believe that combining the two quarterly reports on Form 10-Q for the Company and the Operating Partnership provides the following benefits:
enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
To help investors understand the differences between the Company and the Operating Partnership, this report provides separate condensed consolidated financial statements for the Company and the Operating Partnership. Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the condensed consolidated financial statements of the Company and those of the Operating Partnership. A single set of notes to condensed consolidated financial statements is presented that includes separate discussions for the Company and the Operating Partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.
In order to highlight the differences between the Company and the Operating Partnership, this report includes the following sections that provide separate financial information for the Company and the Operating Partnership:
condensed consolidated financial statements;
certain accompanying notes to condensed consolidated financial statements, including Note 5 - Unconsolidated Affiliates, Redeemable Interests, Noncontrolling Interests and Cost Method Investments; Note 7 - Comprehensive Income; and Note 11 - Earnings Per Share and Earnings Per Unit;
controls and procedures in Item 4 of Management's Discussion and Analysis; and
certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4.





Table of Contents

CBL & Associates Properties, Inc.
CBL & Associates Limited Partnership
Table of Contents
PART I
FINANCIAL INFORMATION
 
 
 
CBL & Associates Properties, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CBL & Associates Limited Partnership
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
 
 
 
 
 
 
 
 
 
 
 


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
September 30,
2013
 
December 31,
2012
Real estate assets:
 
 
 
Land
$
882,723

 
$
905,339

Buildings and improvements
7,100,354

 
7,228,293

 
7,983,077

 
8,133,632

Accumulated depreciation
(2,017,610
)
 
(1,972,031
)
 
5,965,467

 
6,161,601

Held for sale

 
29,425

Developments in progress
161,841

 
137,956

Net investment in real estate assets
6,127,308

 
6,328,982

Cash and cash equivalents
74,588

 
78,248

Receivables:
 
 
 
 Tenant, net of allowance for doubtful accounts of $2,204
     and $1,977 in 2013 and 2012, respectively
77,914

 
78,963

 Other, net of allowance for doubtful accounts of $1,283
      and $1,270 in 2013 and 2012, respectively
20,696

 
8,467

Mortgage and other notes receivable
24,976

 
25,967

Investments in unconsolidated affiliates
279,666

 
259,810

Intangible lease assets and other assets
261,517

 
309,299

 
$
6,866,665

 
$
7,089,736

 
 
 
 
 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 

 
 

Mortgage and other indebtedness
$
4,867,717

 
$
4,745,683

Accounts payable and accrued liabilities
348,237

 
358,874

Total liabilities
5,215,954

 
5,104,557

Commitments and contingencies (Notes 5 and 12)


 


Redeemable noncontrolling interests:  
 
 
 
Redeemable noncontrolling partnership interests  
37,170

 
40,248

Redeemable noncontrolling preferred joint venture interest

 
423,834

Total redeemable noncontrolling interests
37,170

 
464,082

Shareholders' equity:
 
 
 
Preferred stock, $.01 par value, 15,000,000 shares authorized:
 
 
 
 7.375% Series D Cumulative Redeemable Preferred
     Stock, 1,815,000 shares outstanding
18

 
18

 6.625% Series E Cumulative Redeemable Preferred
     Stock, 690,000 shares outstanding
7

 
7

 Common stock, $.01 par value, 350,000,000 shares
     authorized, 169,905,892 and 161,309,652 issued and
     outstanding in 2013 and 2012, respectively
1,699

 
1,613

Additional paid-in capital
1,967,067

 
1,773,630

Accumulated other comprehensive income
6,466

 
6,986

Dividends in excess of cumulative earnings
(526,739
)
 
(453,561
)
Total shareholders' equity
1,448,518

 
1,328,693

Noncontrolling interests
165,023

 
192,404

Total equity
1,613,541

 
1,521,097

 
$
6,866,665

 
$
7,089,736

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

1

Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

 
Three Months
Ended September 30,
 
Nine Months
Ended September 30,
 
2013
 
2012
 
2013
 
2012
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
167,703

 
$
160,999

 
$
498,632

 
$
473,011

Percentage rents
2,797

 
3,152

 
9,847

 
8,183

Other rents
3,837

 
3,653

 
13,503

 
13,241

Tenant reimbursements
70,576

 
70,348

 
213,524

 
206,814

Management, development and leasing fees
3,118

 
3,139

 
9,042

 
7,574

Other
9,518

 
7,895

 
27,067

 
23,772

Total revenues
257,549

 
249,186

 
771,615

 
732,595

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 
 
 
Property operating
38,375

 
35,326

 
111,170

 
104,331

Depreciation and amortization
68,941

 
63,994

 
206,115

 
188,606

Real estate taxes
22,607

 
22,286

 
66,411

 
66,626

Maintenance and repairs
13,387

 
13,218

 
40,808

 
38,057

General and administrative
10,160

 
10,171

 
36,459

 
35,964

Loss on impairment

 
3,912

 
21,038

 
3,912

Other
6,371

 
5,871

 
21,217

 
19,188

Total operating expenses
159,841

 
154,778

 
503,218

 
456,684

Income from operations
97,708

 
94,408

 
268,397

 
275,911

Interest and other income
8,809

 
822

 
10,197

 
3,192

Interest expense
(56,341
)
 
(61,768
)
 
(173,374
)
 
(181,593
)
Gain (loss) on extinguishment of debt

 
178

 
(9,108
)
 
178

Gain on sales of real estate assets
58

 
1,659

 
1,058

 
1,753

Gain on investment

 

 
2,400

 

Equity in earnings of unconsolidated affiliates
2,270

 
2,062

 
7,618

 
5,401

Income tax provision
(271
)
 
(1,195
)
 
(854
)
 
(1,234
)
Income from continuing operations
52,233

 
36,166

 
106,334

 
103,608

Operating loss from discontinued operations
(8,346
)
 
(23,762
)
 
(5,195
)
 
(16,155
)
Gain on discontinued operations
290

 
88

 
1,162

 
983

Net income
44,177

 
12,492

 
102,301

 
88,436

Net (income) loss attributable to noncontrolling interests in:
 

 
 

 
 
 
 
Operating Partnership
(4,075
)
 
1,776

 
(7,602
)
 
(7,783
)
Other consolidated subsidiaries
(5,778
)
 
(6,194
)
 
(18,338
)
 
(17,139
)
Net income attributable to the Company
34,324

 
8,074

 
76,361

 
63,514

Preferred dividends
(11,223
)
 
(10,594
)
 
(33,669
)
 
(31,782
)
Net income (loss) attributable to common shareholders
$
23,101

 
$
(2,520
)
 
$
42,692

 
$
31,732


2

Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
(Continued)

 
Three Months
Ended September 30,
 
Nine Months
Ended September 30,
 
2013
 
2012
 
2013
 
2012
Basic per share data attributable to common shareholders:
 

 
 

 
 
 
 
Income from continuing operations, net of preferred dividends
$
0.18

 
$
0.11

 
$
0.28

 
$
0.29

Discontinued operations
(0.04
)
 
(0.13
)
 
(0.02
)
 
(0.08
)
Net income (loss) attributable to common shareholders
$
0.14

 
$
(0.02
)
 
$
0.26

 
$
0.21

Weighted-average common shares outstanding
169,906

 
158,689

 
166,048

 
152,721

 
 
 
 
 
 
 
 
Diluted per share data attributable to common shareholders:
 
 

 
 
 
 
Income from continuing operations, net of preferred dividends
$
0.18

 
$
0.11

 
$
0.28

 
$
0.29

Discontinued operations
(0.04
)
 
(0.13
)
 
(0.02
)
 
(0.08
)
Net income (loss) attributable to common shareholders
$
0.14

 
$
(0.02
)
 
$
0.26

 
$
0.21

Weighted-average common and potential dilutive
common shares outstanding
169,906

 
158,731

 
166,048

 
152,765

 
 
 
 
 
 
 
 
Amounts attributable to common shareholders:
 

 
 

 
 
 
 
Income from continuing operations, net of preferred dividends
$
29,965

 
$
17,233

 
$
46,116

 
$
43,916

Discontinued operations
(6,864
)
 
(19,753
)
 
(3,424
)
 
(12,184
)
Net income (loss) attributable to common shareholders
$
23,101

 
$
(2,520
)
 
$
42,692

 
$
31,732

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.23

 
$
0.22

 
$
0.69

 
$
0.66























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


3

Table of Contents

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

 
Three Months
Ended September 30,
 
Nine Months
Ended September 30,
 
2013
 
2012
 
2013
 
2012
Net income
$
44,177

 
$
12,492

 
$
102,301

 
$
88,436

 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
Unrealized holding gain (loss) on available-for-sale
     securities
(1,749
)
 
522

 
(2,000
)
 
2,101

Reclassification to net income of realized gain on available-for-sale securities

 

 

 
(160
)
   Unrealized loss on hedging instruments
(451
)
 
(801
)
 
(289
)
 
(2,411
)
Reclassification to net income of hedging loss
568

 
567

 
1,687

 
1,696

Total other comprehensive income (loss)
(1,632
)
 
288

 
(602
)
 
1,226

 
 
 
 
 
 
 
 
Comprehensive income
42,545

 
12,780

 
101,699

 
89,662

Comprehensive (income) loss attributable to
noncontrolling interests in:
 
 
 
 
 
 
 
Operating Partnership
(3,831
)
 
1,729

 
(7,520
)
 
(8,047
)
Other consolidated subsidiaries
(5,778
)
 
(6,194
)
 
(18,338
)
 
(17,139
)
Comprehensive income attributable to the Company
$
32,936

 
$
8,315

 
$
75,841

 
$
64,476


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


4

Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Equity
(In thousands)
 (Unaudited)
 
 
 
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
2,441

 

 

 

 

 
63,514

 
63,514

 
6,993

 
70,507

Other comprehensive income
10

 

 

 

 
962

 

 
962

 
254

 
1,216

Costs of preferred stock offering

 

 

 
(134
)
 

 

 
(134
)
 

 
(134
)
Conversion of Operating Partnership
     common units to shares of common stock

 

 
103

 
48,174

 

 

 
48,277

 
(48,277
)
 

Redemption of Operating Partnership common units

 

 

 

 

 

 

 
(9,836
)
 
(9,836
)
Dividends declared - common stock

 

 

 

 

 
(102,581
)
 
(102,581
)
 

 
(102,581
)
Dividends declared - preferred stock

 

 

 

 

 
(31,782
)
 
(31,782
)
 

 
(31,782
)
Issuances of common stock and restricted
     common stock

 

 
2

 
367

 

 

 
369

 

 
369

Cancellation of restricted common stock

 

 

 
(261
)
 

 

 
(261
)
 

 
(261
)
Exercises of stock options

 

 
2

 
4,432

 

 

 
4,434

 

 
4,434

Accrual under deferred compensation arrangements

 

 

 
44

 

 

 
44

 

 
44

Amortization of deferred compensation

 

 

 
1,957

 

 

 
1,957

 

 
1,957

Contributions from noncontrolling interests

 

 

 

 

 

 

 
5,559

 
5,559

Distributions to noncontrolling interests
(6,221
)
 

 

 

 

 

 

 
(25,716
)
 
(25,716
)
Adjustment for noncontrolling interests
2,379

 

 

 
(5,929
)
 

 

 
(5,929
)
 
3,550

 
(2,379
)
Adjustment to record redeemable
     noncontrolling interests at redemption value
10,049

 

 

 
(4,256
)
 

 

 
(4,256
)
 
(5,793
)
 
(10,049
)
Acquire controlling interest in shopping center
     properties

 

 

 

 

 

 

 
14,498

 
14,498

Balance, September 30, 2012
$
40,929

 
$
23

 
$
1,591

 
$
1,702,321

 
$
4,387

 
$
(470,430
)
 
$
1,237,892

 
$
148,345

 
$
1,386,237





5

Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Equity
(In thousands)
(Unaudited)
(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, 2013
$
40,248

 
$
25

 
$
1,613

 
$
1,773,630

 
$
6,986

 
$
(453,561
)
 
$
1,328,693

 
$
192,404

 
$
1,521,097

Net income
3,182

 

 

 

 

 
76,361

 
76,361

 
8,114

 
84,475

Other comprehensive loss
(4
)
 

 

 

 
(520
)
 

 
(520
)
 
(78
)
 
(598
)
Redemption of redeemable noncontrolling preferred
     joint venture interest

 

 

 
10,000

 

 

 
10,000

 

 
10,000

Issuances of common stock and restricted common
     stock

 

 
86

 
209,445

 

 

 
209,531

 

 
209,531

Dividends declared - common stock

 

 

 

 

 
(115,870
)
 
(115,870
)
 

 
(115,870
)
Dividends declared - preferred stock

 

 

 

 

 
(33,669
)
 
(33,669
)
 

 
(33,669
)
Cancellation of restricted common stock

 

 

 
(711
)
 

 

 
(711
)
 

 
(711
)
Amortization of deferred compensation

 

 

 
2,287

 

 

 
2,287

 

 
2,287

Distributions to noncontrolling interests
(4,980
)
 

 

 

 

 

 

 
(22,889
)
 
(22,889
)
Adjustment for noncontrolling interests
3,803

 

 

 
(32,135
)
 

 

 
(32,135
)
 
28,388

 
(3,747
)
Adjustment to record redeemable
     noncontrolling interests at redemption value
(5,079
)
 

 

 
4,551

 

 

 
4,551

 
528

 
5,079

Acquire controlling interest in shopping center
     property

 

 

 

 

 

 

 
(41,444
)
 
(41,444
)
Balance, September 30, 2013
$
37,170

 
$
25

 
$
1,699

 
$
1,967,067

 
$
6,466

 
$
(526,739
)
 
$
1,448,518

 
$
165,023

 
$
1,613,541


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


6

Table of Contents


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

 
Nine Months Ended
September 30,
 
2013
 
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 
Net income
$
102,301

 
$
88,436

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

Depreciation and amortization
212,752

 
198,700

Net amortization of deferred finance costs and debt premiums
3,651

 
5,563

Net amortization of intangible lease assets and liabilities
(111
)
 
(551
)
Gain on sales of real estate assets
(1,058
)
 
(4,789
)
Gain on investment
(2,400
)
 

Gain on sale of discontinued operations
(1,162
)
 
(983
)
Write-off of development projects
141

 
(115
)
Share-based compensation expense
2,308

 
2,211

Net realized gain on sale of available-for-sale securities

 
(160
)
Loss on impairment
21,038

 
3,912

Loss on impairment from discontinued operations
5,234

 
26,501

Gain (loss) on extinguishment of debt
9,108

 
(178
)
Equity in earnings of unconsolidated affiliates
(7,618
)
 
(5,401
)
Distributions of earnings from unconsolidated affiliates
11,225

 
11,724

Provision for doubtful accounts
1,459

 
1,310

Change in deferred tax accounts
1,666

 
3,681

Changes in:
 

 
 

Tenant and other receivables
(7,430
)
 
(7,374
)
Other assets
754

 
(3,152
)
Accounts payable and accrued liabilities
(15,821
)
 
284

Net cash provided by operating activities
336,037

 
319,619

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Additions to real estate assets
(233,202
)
 
(159,414
)
Acquisition of real estate assets
(26,444
)
 
(61,289
)
Additions to restricted cash
(2,909
)
 
(2,595
)
Proceeds from sales of real estate assets
219,800

 
49,366

Additions to mortgage and other notes receivable
(2,700
)
 
(3,584
)
Payments received on mortgage and other notes receivable
3,743

 
2,962

Proceeds from sales of investments and available-for-sale securities
15,877

 

Additional investments in and advances to unconsolidated affiliates
(31,969
)
 
(4,994
)
Distributions in excess of equity in earnings of unconsolidated affiliates
8,706

 
17,620

Changes in other assets
(14,295
)
 
(1,759
)
Net cash used in investing activities
(63,393
)
 
(163,687
)

7

Table of Contents

CBL & Associates Properties, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
(Continued)

 
Nine Months Ended
September 30,
 
2013
 
2012
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from mortgage and other indebtedness
$
1,696,913

 
$
1,348,822

Principal payments on mortgage and other indebtedness
(1,568,874
)
 
(1,311,827
)
Additions to deferred financing costs
(3,173
)
 
(2,864
)
Prepayment fees on extinguishment of debt
(8,708
)
 

Proceeds from issuances of common stock
209,510

 
128

Costs of preferred stock offering

 
(134
)
Proceeds from exercises of stock options

 
4,434

Purchase of noncontrolling interest in the Operating Partnership

 
(9,836
)
Redemption of redeemable noncontrolling preferred joint venture interest
(408,577
)
 

Contributions from noncontrolling interests

 
5,559

Distributions to noncontrolling interests
(47,450
)
 
(49,437
)
Dividends paid to holders of preferred stock
(33,669
)
 
(31,782
)
Dividends paid to common shareholders
(112,276
)
 
(98,737
)
Net cash used in financing activities
(276,304
)
 
(145,674
)
 
 
 
 
NET CHANGE IN CASH AND CASH EQUIVALENTS
(3,660
)
 
10,258

CASH AND CASH EQUIVALENTS, beginning of period
78,248

 
56,092

CASH AND CASH EQUIVALENTS, end of period
$
74,588

 
$
66,350

 
 
 
 
SUPPLEMENTAL INFORMATION:
 

 
 

Cash paid for interest, net of amounts capitalized
$
168,092

 
$
175,610


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


8

Table of Contents

CBL & Associates Limited Partnership
Condensed Consolidated Balance Sheets
(In thousands, except unit data)
(Unaudited)
ASSETS
September 30,
2013
 
December 31,
2012
Real estate assets:
 
 
 
Land
$
882,723

 
$
905,339

Buildings and improvements
7,100,354

 
7,228,293

 
7,983,077

 
8,133,632

Accumulated depreciation
(2,017,610
)
 
(1,972,031
)
 
5,965,467

 
6,161,601

Held for sale

 
29,425

Developments in progress
161,841

 
137,956

Net investment in real estate assets
6,127,308

 
6,328,982

Cash and cash equivalents
74,578

 
78,244

Receivables:
 

 
 

 Tenant, net of allowance for doubtful accounts of $2,204
     and $1,977 in 2013 and 2012, respectively
77,914

 
78,963

 Other, net of allowance for doubtful accounts of $1,283
      and $1,270 in 2013 and 2012, respectively
20,696

 
8,467

Mortgage and other notes receivable
24,976

 
25,967

Investments in unconsolidated affiliates
280,220

 
260,363

Intangible lease assets and other assets
261,397

 
309,239

 
$
6,867,089

 
$
7,090,225

 
 
 
 
 
 
 
 
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
 

 
 

Mortgage and other indebtedness
$
4,867,717

 
$
4,745,683

Accounts payable and accrued liabilities
348,237

 
358,800

Total liabilities
5,215,954

 
5,104,483

Commitments and contingencies (Notes 5 and 12)


 


Redeemable interests:  
 

 
 

Redeemable noncontrolling interests  
6,633

 
6,413

Redeemable common units  
30,537

 
33,835

Redeemable noncontrolling preferred joint venture interest

 
423,834

Total redeemable interests
37,170

 
464,082

Partners' capital:
 

 
 

Preferred units
565,212

 
565,212

Common units:
 
 
 
 General partner
10,702

 
9,904

 Limited partners
1,010,964

 
877,363

Accumulated other comprehensive income
5,087

 
5,685

Total partners' capital
1,591,965

 
1,458,164

Noncontrolling interests
22,000

 
63,496

Total capital
1,613,965

 
1,521,660

 
$
6,867,089

 
$
7,090,225


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


9

Table of Contents


CBL & Associates Limited Partnership
Condensed Consolidated Statements of Operations
(In thousands, except per unit data)
(Unaudited)

 
Three Months
Ended September 30,
 
Nine Months
Ended September 30,
 
2013
 
2012
 
2013
 
2012
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
167,703

 
$
160,999

 
$
498,632

 
$
473,011

Percentage rents
2,797

 
3,152

 
9,847

 
8,183

Other rents
3,837

 
3,653

 
13,503

 
13,241

Tenant reimbursements
70,576

 
70,348

 
213,524

 
206,814

Management, development and leasing fees
3,118

 
3,139

 
9,042

 
7,574

Other
9,518

 
7,895

 
27,067

 
23,772

Total revenues
257,549

 
249,186

 
771,615

 
732,595

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 
 
 
Property operating
38,375

 
35,326

 
111,170

 
104,331

Depreciation and amortization
68,941

 
63,994

 
206,115

 
188,606

Real estate taxes
22,607

 
22,286

 
66,411

 
66,626

Maintenance and repairs
13,387

 
13,218

 
40,808

 
38,057

General and administrative
10,160

 
10,171

 
36,459

 
35,964

Loss on impairment

 
3,912

 
21,038

 
3,912

Other
6,371

 
5,871

 
21,217

 
19,188

Total operating expenses
159,841

 
154,778

 
503,218

 
456,684

Income from operations
97,708

 
94,408

 
268,397

 
275,911

Interest and other income
8,809

 
822

 
10,197

 
3,192

Interest expense
(56,341
)
 
(61,768
)
 
(173,374
)
 
(181,593
)
Gain (loss) on extinguishment of debt

 
178

 
(9,108
)
 
178

Gain on sales of real estate assets
58

 
1,659

 
1,058

 
1,753

Gain on investment

 

 
2,400

 

Equity in earnings of unconsolidated affiliates
2,270

 
2,062

 
7,618

 
5,401

Income tax provision
(271
)
 
(1,195
)
 
(854
)
 
(1,234
)
Income from continuing operations
52,233

 
36,166

 
106,334

 
103,608

Operating loss from discontinued operations
(8,346
)
 
(23,762
)
 
(5,195
)
 
(16,155
)
Gain on discontinued operations
290

 
88

 
1,162

 
983

Net income
44,177

 
12,492

 
102,301

 
88,436

Net income attributable to noncontrolling interests
(5,778
)
 
(6,194
)
 
(18,338
)
 
(17,139
)
Net income attributable to the Operating Partnership
38,399

 
6,298

 
83,963

 
71,297

Distributions to preferred unitholders
(11,223
)
 
(10,594
)
 
(33,669
)
 
(31,782
)
Net income (loss) attributable to common unitholders
$
27,176

 
$
(4,296
)
 
$
50,294

 
$
39,515


10

Table of Contents

CBL & Associates Limited Partnership
Condensed Consolidated Statements of Operations
(In thousands, except per unit data)
(Unaudited)
(Continued)

 
Three Months
Ended September 30,
 
Nine Months
Ended September 30,
 
2013
 
2012
 
2013
 
2012
Basic per unit data attributable to common unitholders:
 

 
 

 
 
 
 
Income from continuing operations, net of preferred
     distributions
$
0.17

 
$
0.08

 
$
0.27

 
$
0.27

Discontinued operations
(0.03
)
 
(0.10
)
 
(0.01
)
 
(0.06
)
Net income (loss) attributable to common unitholders
$
0.14

 
$
(0.02
)
 
$
0.26

 
$
0.21

Weighted-average common units outstanding
199,451

 
190,195

 
195,594

 
190,182

 
 
 
 
 
 
 
 
Diluted per unit data attributable to common unitholders:
 
 

 
 
 
 
Income from continuing operations, net of preferred
     distributions
$
0.17

 
$
0.08

 
$
0.27

 
$
0.27

Discontinued operations
(0.03
)
 
(0.10
)
 
(0.01
)
 
(0.06
)
Net income (loss) attributable to common unitholders
$
0.14

 
$
(0.02
)
 
$
0.26

 
$
0.21

Weighted-average common and potential dilutive common
     units outstanding
199,451

 
190,236

 
195,594

 
190,226

 
 
 
 
 
 
 
 
Amounts attributable to common unitholders:
 

 
 

 
 
 
 
Income from continuing operations, net of preferred
     distributions
$
34,040

 
$
15,457

 
$
53,718

 
$
51,699

Discontinued operations
(6,864
)
 
(19,753
)
 
(3,424
)
 
(12,184
)
Net income (loss) attributable to common unitholders
$
27,176

 
$
(4,296
)
 
$
50,294

 
$
39,515

 
 
 
 
 
 
 
 
Distributions declared per common unit
$
0.23

 
$
0.22

 
$
0.69

 
$
0.66






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


11

Table of Contents

CBL & Associates Limited Partnership
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)

 
Three Months
Ended September 30,
 
Nine Months
Ended September 30,
 
2013
 
2012
 
2013
 
2012
Net income
$
44,177

 
$
12,492

 
$
102,301

 
$
88,436

 
 
 
 
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
Unrealized holding gain (loss) on available-for-sale
     securities
(1,749
)
 
522

 
(2,000
)
 
2,101

Reclassification to net income of realized gain on available-for-sale securities

 

 

 
(160
)
   Unrealized loss on hedging instruments
(451
)
 
(801
)
 
(289
)
 
(2,411
)
Reclassification to net income of hedging loss
568

 
567

 
1,687

 
1,696

Total other comprehensive income (loss)
(1,632
)
 
288

 
(602
)
 
1,226

 
 
 
 
 
 
 
 
Comprehensive income
42,545

 
12,780

 
101,699

 
89,662

Comprehensive income attributable to noncontrolling
     interests
(5,778
)
 
(6,194
)
 
(18,338
)
 
(17,139
)
Comprehensive income of the Operating Partnership
$
36,767

 
$
6,586

 
$
83,361

 
$
72,523


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


12

Table of Contents

CBL & Associates Limited Partnership
Condensed Consolidated Statements of Partners' Capital and Noncontrolling Interests
(in thousands, except unit data)
 (Unaudited)
 
Redeemable Interests
 
 
 
 
 
 
 
Common Units
 
 
 
 
 
 
 
 
 
Redeemable Partnership Interests
 
Redeemable Common Units
 
Total Redeemable Partnership
Interests
 
Preferred
Units
 
Common
Units
 
Preferred
Units
 
General
Partner
 
Limited
Partners
 
Accumulated
Other
Comprehensive Income
 
Total Partners' Capital
 
Noncontrolling Interests
 
Total Partners' Capital and Noncontrolling Interests
Balance, January 1, 2012
$
6,235

 
$
26,036

 
$
32,271

 
23

 
190,380

 
$
509,719

 
$
10,178

 
$
944,633

 
$
1,711

 
$
1,466,241

 
$
4,280

 
$
1,470,521

Net income
2,117

 
324

 
2,441

 

 

 
31,782

 
422

 
38,769

 

 
70,973

 
(466
)
 
70,507

Other comprehensive income

 
10

 
10

 

 

 

 

 

 
1,216

 
1,216

 

 
1,216

Cost of issuing preferred units

 

 

 

 

 
(134
)
 

 

 

 
(134
)
 

 
(134
)
Redemption of common units

 

 

 

 
(627
)
 

 

 
(9,836
)
 

 
(9,836
)
 

 
(9,836
)
Distributions declared - common units

 

 

 

 

 

 
(1,771
)
 
(100,810
)
 

 
(102,581
)
 

 
(102,581
)
Distributions declared - preferred units

 

 

 

 

 
(31,782
)
 

 

 

 
(31,782
)
 

 
(31,782
)
Issuances of common units

 

 

 

 
219

 

 

 
369

 

 
369

 

 
369

Cancellation of restricted common units

 

 

 

 
(22
)
 

 

 
(261
)
 

 
(261
)
 

 
(261
)
Contributions from CBL related to exercises
of stock options

 

 

 

 
244

 

 

 
4,434

 

 
4,434

 

 
4,434

Accrual under deferred compensation
     arrangements

 

 

 

 

 

 

 
44

 

 
44

 

 
44

Amortization of deferred compensation

 

 

 

 

 

 
21

 
1,936

 

 
1,957

 

 
1,957

Contributions from noncontrolling interests

 

 

 

 

 

 

 

 

 

 
5,559

 
5,559

Distributions to noncontrolling interests
(2,678
)
 
(3,543
)
 
(6,221
)
 

 

 

 

 
(24,638
)
 

 
(24,638
)
 
(1,078
)
 
(25,716
)
Allocation of partners' capital

 
2,379

 
2,379

 

 

 

 
335

 
(2,714
)
 

 
(2,379
)
 

 
(2,379
)
Adjustment to record redeemable
     interests at redemption value
542

 
9,507

 
10,049