Edgar Filing: CBL & ASSOCIATES PROPERTIES INC

CBL-9.30.2014-10Q

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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, 2014

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 5, 2014, there were 170,262,878 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended September 30, 2014 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, 2014, 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 84.3% limited partner interest for a combined interest held by the Company of 85.3%.

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 6 - Mortgage and Other Indebtedness; Note 7 - Comprehensive Income; and Note 11 - Earnings Per Share and Earnings Per Unit;


•	controls and procedures in Item 4 of Part I of this report; and


•	certifications of the Chief Executive Officer and Chief Financial Officer included as Exhibits 31.1 through 32.4.

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CBL & Associates Properties, Inc.

CBL & Associates Limited Partnership

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PART I	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

CBL & Associates Properties, Inc.
	Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013	1

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013	2

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2014 and 2013	4

	Condensed Consolidated Statements of Equity for the Nine Months Ended September 30, 2014 and 2013	5

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013	7

CBL & Associates Limited Partnership
	Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013	9

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013	10

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2014 and 2013	12

	Condensed Consolidated Statements of Capital for the Nine Months Ended September 30, 2014 and 2013	13

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013	15

CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
	Notes to Unaudited Condensed Consolidated Financial Statements	17
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	73
Item 4.	Controls and Procedures	73

PART II	OTHER INFORMATION	74

Item 1.	Legal Proceedings	74
Item 1A.	Risk Factors	74
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 3.	Defaults Upon Senior Securities	74
Item 4.	Mine Safety Disclosures	74
Item 5.	Other Information	74
Item 6.	Exhibits	75

	SIGNATURES	76

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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, 2014			December 31, 2013
Real estate assets:
Land	$	848,596		$	858,619
Buildings and improvements	7,138,545			7,125,512
	7,987,141			7,984,131
Accumulated depreciation	(2,183,912		)	(2,056,357		)
	5,803,229			5,927,774
Developments in progress	151,670			139,383
Net investment in real estate assets	5,954,899			6,067,157
Cash and cash equivalents	45,071			65,500
Receivables:
Tenant, net of allowance for doubtful accounts of $2,412 and $2,379 in 2014 and 2013, respectively	79,960			79,899
Other, net of allowance for doubtful accounts of $1,158 and $1,241 in 2014 and 2013, respectively	24,412			23,343
Mortgage and other notes receivable	19,513			30,424
Investments in unconsolidated affiliates	269,964			277,146
Intangible lease assets and other assets	238,892			242,502
	$	6,632,711		$	6,785,971

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness	$	4,711,421		$	4,857,523
Accounts payable and accrued liabilities	347,382			333,875
Total liabilities	5,058,803			5,191,398
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests	34,843			34,639
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, 170,260,669 and 170,048,144 issued and outstanding in 2014 and 2013, respectively	1,703			1,700
Additional paid-in capital	1,962,187			1,967,644
Accumulated other comprehensive income	12,805			6,325
Dividends in excess of cumulative earnings	(587,000		)	(570,781		)
Total shareholders' equity	1,389,720			1,404,913
Noncontrolling interests	149,345			155,021
Total equity	1,539,065			1,559,934
	$	6,632,711		$	6,785,971

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

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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,
	2014			2013			2014			2013
REVENUES:
Minimum rents	$	169,097		$	167,703		$	506,005		$	498,632
Percentage rents	3,060			2,797			8,490			9,847
Other rents	3,813			3,837			13,708			13,503
Tenant reimbursements	71,330			70,576			214,322			213,524
Management, development and leasing fees	3,228			3,118			9,176			9,042
Other	8,186			9,518			25,189			27,067
Total revenues	258,714			257,549			776,890			771,615

OPERATING EXPENSES:
Property operating	36,668			38,375			112,206			111,170
Depreciation and amortization	72,488			68,941			212,180			206,115
Real estate taxes	22,202			22,607			65,638			66,411
Maintenance and repairs	12,603			13,387			41,391			40,808
General and administrative	9,474			10,160			35,583			36,459
Loss on impairment	497			—			17,753			21,038
Other	7,396			6,371			21,331			21,217
Total operating expenses	161,328			159,841			506,082			503,218
Income from operations	97,386			97,708			270,808			268,397
Interest and other income	463			8,809			3,535			10,197
Interest expense	(60,214		)	(56,341		)	(179,997		)	(173,374		)
Gain (loss) on extinguishment of debt	18,282			—			60,942			(9,108		)
Gain on investment	—			—			—			2,400
Equity in earnings of unconsolidated affiliates	3,936			2,270			11,038			7,618
Income tax provision	(3,083		)	(271		)	(4,266		)	(854		)
Income from continuing operations before gain on sales of real estate assets	56,770			52,175			162,060			105,276
Gain on sales of real estate assets	434			58			3,513			1,058
Income from continuing operations	57,204			52,233			165,573			106,334
Operating income (loss) of discontinued operations	78			(8,346		)	(480		)	(5,195		)
Gain on discontinued operations	(2		)	290			88			1,162
Net income	57,280			44,177			165,181			102,301
Net income attributable to noncontrolling interests in:
Operating Partnership	(6,576		)	(4,075		)	(18,847		)	(7,602		)
Other consolidated subsidiaries	(1,362		)	(5,778		)	(3,740		)	(18,338		)
Net income attributable to the Company	49,342			34,324			142,594			76,361
Preferred dividends	(11,223		)	(11,223		)	(33,669		)	(33,669		)
Net income attributable to common shareholders	$	38,119		$	23,101		$	108,925		$	42,692

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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,
	2014		2013			2014			2013
Basic and diluted per share data attributable to common shareholders:
Income from continuing operations, net of preferred dividends	$	0.22	$	0.18		$	0.64		$	0.28
Discontinued operations	0.00		(0.04		)	0.00			(0.02		)
Net income attributable to common shareholders	$	0.22	$	0.14		$	0.64		$	0.26
Weighted-average common and potential dilutive common shares outstanding	170,262		169,906			170,242			166,048

Amounts attributable to common shareholders:
Income from continuing operations, net of preferred dividends	$	38,054	$	29,965		$	109,259		$	46,116
Discontinued operations	65		(6,864		)	(334		)	(3,424		)
Net income attributable to common shareholders	$	38,119	$	23,101		$	108,925		$	42,692

Dividends declared per common share	$	0.245	$	0.230		$	0.735		$	0.690

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

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net income	$	57,280		$	44,177		$	165,181		$	102,301

Other comprehensive income (loss):
Unrealized holding gain (loss) on available-for-sale securities	4,044			(1,749		)	6,240			(2,000		)
Unrealized gain (loss) on hedging instruments	1,148			(451		)	3,021			(289		)
Reclassification of hedging effect on earnings	(551		)	568			(1,650		)	1,687
Total other comprehensive income (loss)	4,641			(1,632		)	7,611			(602		)

Comprehensive income	61,921			42,545			172,792			101,699
Comprehensive income attributable to noncontrolling interests in:
Operating Partnership	(8,071		)	(3,831		)	(19,978		)	(7,520		)
Other consolidated subsidiaries	(1,362		)	(5,778		)	(3,740		)	(18,338		)
Comprehensive income attributable to the Company	$	52,488		$	32,936		$	149,074		$	75,841

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

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)



				Equity
				Shareholders' Equity
	Redeemable Noncontrolling 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
Dividends declared - common stock	—			—		—		—			—			(115,870		)	(115,870		)	—			(115,870		)
Dividends declared - preferred stock	—			—		—		—			—			(33,669		)	(33,669		)	—			(33,669		)
Issuances of 8,635,715 shares of common stock and restricted common stock	—			—		86		209,445			—			—			209,531			—			209,531
Cancellation of 39,475 shares 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

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CBL & Associates Properties, Inc.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)

(Continued)



				Equity
				Shareholders' Equity
	Redeemable Noncontrolling 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, 2014	$	34,639		$	25	$	1,700	$	1,967,644		$	6,325	$	(570,781	)	$	1,404,913		$	155,021		$	1,559,934
Net income	3,323			—		—		—			—		142,594			142,594			19,264			161,858
Other comprehensive income	60			—		—		—			6,480		—			6,480			1,071			7,551
Dividends declared - common stock	—			—		—		—			—		(125,144		)	(125,144		)	—			(125,144		)
Dividends declared - preferred stock	—			—		—		—			—		(33,669		)	(33,669		)	—			(33,669		)
Issuances of 243,648 shares of common stock and restricted common stock	—			—		3		636			—		—			639			—			639
Cancellation of 31,123 shares of restricted common stock	—			—		—		(369		)	—		—			(369		)	—			(369		)
Amortization of deferred compensation	—			—		—		2,837			—		—			2,837			—			2,837
Redemptions of Operating Partnership common units	—			—		—		—			—		—			—			(4,609		)	(4,609		)
Contributions from noncontrolling interests	—			—		—		—			—		—			—			938			938
Distributions to noncontrolling interests	(7,083		)	—		—		—			—		—			—			(26,997		)	(26,997		)
Adjustment for noncontrolling interests	2,193			—		—		(6,865		)	—		—			(6,865		)	4,672			(2,193		)
Adjustment to record redeemable noncontrolling interests at redemption value	1,711			—		—		(1,696		)	—		—			(1,696		)	(15		)	(1,711		)
Balance, September 30, 2014	$	34,843		$	25	$	1,703	$	1,962,187		$	12,805	$	(587,000	)	$	1,389,720		$	149,345		$	1,539,065

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

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

	Nine Months Ended September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	165,181		$	102,301
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	212,180			212,752
Net amortization of deferred finance costs and debt premiums	4,557			3,651
Net amortization of intangible lease assets and liabilities	535			(111		)
Gain on sales of real estate assets	(3,513		)	(1,058		)
Gain on investment	—			(2,400		)
Gain on discontinued operations	(88		)	(1,162		)
Write-off of development projects	81			141
Share-based compensation expense	3,318			2,308
Loss on impairment	17,753			21,038
Loss on impairment from discontinued operations	681			5,234
(Gain) loss on extinguishment of debt	(60,942		)	9,108
Equity in earnings of unconsolidated affiliates	(11,038		)	(7,618		)
Distributions of earnings from unconsolidated affiliates	14,563			11,225
Provision for doubtful accounts	2,684			1,459
Change in deferred tax accounts	1,241			1,666
Changes in:
Tenant and other receivables	(4,629		)	(7,430		)
Other assets	(5,637		)	754
Accounts payable and accrued liabilities	(7,593		)	(15,821		)
Net cash provided by operating activities	329,334			336,037

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets	(195,418		)	(233,202		)
Acquisition of real estate assets	—			(26,444		)
Additions to restricted cash	(362		)	(2,909		)
Proceeds from sales of real estate assets	15,865			219,800
Additions to mortgage and other notes receivable	—			(2,700		)
Payments received on mortgage and other notes receivable	20,911			3,743
Proceeds from sales of investments and available-for-sale securities	—			15,877
Additional investments in and advances to unconsolidated affiliates	(12,541		)	(31,969		)
Distributions in excess of equity in earnings of unconsolidated affiliates	34,695			8,706
Changes in other assets	(6,563		)	(14,295		)
Net cash used in investing activities	(143,413		)	(63,393		)

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

	Nine Months Ended September 30,
	2014			2013
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	429,596		$	1,696,913
Principal payments on mortgage and other indebtedness	(437,092		)	(1,568,874		)
Additions to deferred financing costs	(233		)	(3,173		)
Prepayment fees on extinguishment of debt	(1,249		)	(8,708		)
Proceeds from issuances of common stock	131			209,510
Purchase of noncontrolling interest in the Operating Partnership	(4,609		)	—
Redemption of redeemable noncontrolling preferred joint venture interest	—			(408,577		)
Contributions from noncontrolling interests	11			—
Distributions to noncontrolling interests	(34,145		)	(47,450		)
Dividends paid to holders of preferred stock	(33,669		)	(33,669		)
Dividends paid to common shareholders	(125,091		)	(112,276		)
Net cash used in financing activities	(206,350		)	(276,304		)

NET CHANGE IN CASH AND CASH EQUIVALENTS	(20,429		)	(3,660		)
CASH AND CASH EQUIVALENTS, beginning of period	65,500			78,248
CASH AND CASH EQUIVALENTS, end of period	$	45,071		$	74,588

SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	171,661		$	168,092

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

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CBL & Associates Limited Partnership

Condensed Consolidated Balance Sheets

(In thousands, except unit data)

(Unaudited)



ASSETS	September 30, 2014			December 31, 2013
Real estate assets:
Land	$	848,596		$	858,619
Buildings and improvements	7,138,545			7,125,512
	7,987,141			7,984,131
Accumulated depreciation	(2,183,912		)	(2,056,357		)
	5,803,229			5,927,774
Developments in progress	151,670			139,383
Net investment in real estate assets	5,954,899			6,067,157
Cash and cash equivalents	45,015			65,486
Receivables:
Tenant, net of allowance for doubtful accounts of $2,412 and $2,379 in 2014 and 2013, respectively	79,960			79,899
Other, net of allowance for doubtful accounts of $1,158 and $1,241 in 2014 and 2013, respectively	24,412			23,343
Mortgage and other notes receivable	19,513			30,424
Investments in unconsolidated affiliates	270,524			277,701
Intangible lease assets and other assets	238,771			242,383
	$	6,633,094		$	6,786,393


LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness	$	4,711,421		$	4,857,523
Accounts payable and accrued liabilities	347,366			333,876
Total liabilities	5,058,787			5,191,399
Commitments and contingencies (Note 12)
Redeemable interests:
Redeemable noncontrolling interests	6,120			5,883
Redeemable common units	28,723			28,756
Total redeemable interests	34,843			34,639
Partners' capital:
Preferred units	565,212			565,212
Common units:
General partner	9,592			9,866
Limited partners	934,608			961,175
Accumulated other comprehensive income	12,474			4,923
Total partners' capital	1,521,886			1,541,176
Noncontrolling interests	17,578			19,179
Total capital	1,539,464			1,560,355
	$	6,633,094		$	6,786,393

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

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,
	2014			2013			2014			2013
REVENUES:
Minimum rents	$	169,097		$	167,703		$	506,005		$	498,632
Percentage rents	3,060			2,797			8,490			9,847
Other rents	3,813			3,837			13,708			13,503
Tenant reimbursements	71,330			70,576			214,322			213,524
Management, development and leasing fees	3,228			3,118			9,176			9,042
Other	8,186			9,518			25,189			27,067
Total revenues	258,714			257,549			776,890			771,615

OPERATING EXPENSES:
Property operating	36,668			38,375			112,206			111,170
Depreciation and amortization	72,488			68,941			212,180			206,115
Real estate taxes	22,202			22,607			65,638			66,411
Maintenance and repairs	12,603			13,387			41,391			40,808
General and administrative	9,474			10,160			35,583			36,459
Loss on impairment	497			—			17,753			21,038
Other	7,396			6,371			21,331			21,217
Total operating expenses	161,328			159,841			506,082			503,218
Income from operations	97,386			97,708			270,808			268,397
Interest and other income	463			8,809			3,535			10,197
Interest expense	(60,214		)	(56,341		)	(179,997		)	(173,374		)
Gain (loss) on extinguishment of debt	18,282			—			60,942			(9,108		)
Gain on investment	—			—			—			2,400
Equity in earnings of unconsolidated affiliates	3,936			2,270			11,038			7,618
Income tax provision	(3,083		)	(271		)	(4,266		)	(854		)
Income from continuing operations before gain on sales of real estate assets	56,770			52,175			162,060			105,276
Gain on sales of real estate assets	434			58			3,513			1,058
Income from continuing operations	57,204			52,233			165,573			106,334
Operating income (loss) of discontinued operations	78			(8,346		)	(480		)	(5,195		)
Gain on discontinued operations	(2		)	290			88			1,162
Net income	57,280			44,177			165,181			102,301
Net income attributable to noncontrolling interests	(1,362		)	(5,778		)	(3,740		)	(18,338		)
Net income attributable to the Operating Partnership	55,918			38,399			161,441			83,963
Distributions to preferred unitholders	(11,223		)	(11,223		)	(33,669		)	(33,669		)
Net income attributable to common unitholders	$	44,695		$	27,176		$	127,772		$	50,294

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,
	2014		2013			2014			2013
Basic and diluted per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	0.22	$	0.17		$	0.64		$	0.27
Discontinued operations	0.00		(0.03		)	0.00			(0.01		)
Net income attributable to common unitholders	$	0.22	$	0.14		$	0.64		$	0.26
Weighted-average common and potential dilutive common units outstanding	199,631		199,451			199,699			195,594

Amounts attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	44,630	$	34,040		$	128,106		$	53,718
Discontinued operations	65		(6,864		)	(334		)	(3,424		)
Net income attributable to common unitholders	$	44,695	$	27,176		$	127,772		$	50,294

Distributions declared per common unit	$	0.253	$	0.230		$	0.759		$	0.690

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

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,
	2014			2013			2014			2013
Net income	$	57,280		$	44,177		$	165,181		$	102,301

Other comprehensive income:
Unrealized holding gain (loss) on available-for-sale securities	4,044			(1,749		)	6,240			(2,000		)
Unrealized loss on hedging instruments	1,148			(451		)	3,021			(289		)
Reclassification of hedging effect on earnings	(551		)	568			(1,650		)	1,687
Total other comprehensive income (loss)	4,641			(1,632		)	7,611			(602		)

Comprehensive income	61,921			42,545			172,792			101,699
Comprehensive income attributable to noncontrolling interests	(1,362		)	(5,778		)	(3,740		)	(18,338		)
Comprehensive income of the Operating Partnership	$	60,559		$	36,767		$	169,052		$	83,361

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

Table of Contents

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Capital

(in thousands)

(Unaudited)



	Redeemable Interests									Number of						Common Units
	Redeemable Noncontrolling Interests			Redeemable Common Units			Total Redeemable Interests			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Income			Total Partners' Capital			Noncontrolling Interests			Total Capital
Balance, January 1, 2013	$	6,413		$	33,835		$	40,248		25,050	190,855		$	565,212		$	9,904		$	877,363		$	5,685		$	1,458,164		$	63,496		$	1,521,660
Net income	2,780			402			3,182			—	—		33,669			523			49,369			—			83,561			914			84,475
Other comprehensive loss	—			(4		)	(4		)	—	—		—			—			—			(598		)	(598		)	—			(598		)
Redemption of redeemable noncontrolling preferred joint venture interest	—			—			—			—	—		—			105			9,895			—			10,000			—			10,000
Distributions declared - common units	—			—			—			—	—		—			(1,388		)	(114,482		)	—			(115,870		)	—			(115,870		)
Distributions declared - preferred units	—			—			—			—	—		(33,669		)	—						—			(33,669		)	—			(33,669		)
Issuances of common units	—			—			—			—	8,635		—			—			209,531			—			209,531			—			209,531
Cancellation of restricted common stock	—			—			—			—	(39	)	—			—			(711		)	—			(711		)	—			(711		)
Amortization of deferred compensation	—			—			—			—	—		—			24			2,263			—			2,287			—			2,287
Distributions to noncontrolling interests	(1,551		)	(3,429		)	(4,980		)	—	—		—			(229		)	(21,639		)	—			(21,868		)	(966		)	(22,834		)
Allocation of partners' capital	—			3,803			3,803			—	—		—			1,710			(5,651		)	—			(3,941		)	—			(3,941		)
Adjustment to record redeemable interests at redemption value	(1,009		)	(4,070		)	(5,079		)	—	—		—			53			5,026			—			5,079			—			5,079
Acquire controlling interest in shopping center properties	—			—			—			—	—		—			—			—			—			—			(41,444		)	(41,444		)
Balance, September 30, 2013	$	6,633		$	30,537		$	37,170		25,050	199,451		$	565,212		$	10,702		$	1,010,964		$	5,087		$	1,591,965		$	22,000		$	1,613,965

Table of Contents

CBL & Associates Limited Partnership

Condensed Consolidated Statements of Capital

(in thousands)

(Unaudited)

(Continued)




	Redeemable Interests								Number of						Common Units
	Redeemable Noncontrolling Interests		Redeemable Common Units			Total Redeemable Interests			Preferred Units	Common Units		Preferred Units			General Partner			Limited Partners			Accumulated Other Comprehensive Income		Total Partners' Capital			Noncontrolling Interests		Total Capital
Balance, January 1, 2014	$	5,883	$	28,756		$	34,639		25,050	199,593		$	565,212		$	9,866		$	961,175		$	4,923	$	1,541,176		$	19,179	$	1,560,355
Net income	2,324		999			3,323			—	—		33,669			1,301			125,472			—		160,442			1,416		161,858
Other comprehensive income	—		60			60			—	—		—			—			—			7,551		7,551			—		7,551
Distributions declared - common units	—		(3,411		)	(3,411		)	—	—		—			(1,479		)	(146,707		)	—		(148,186		)	—		(148,186		)
Distributions declared - preferred units	—		—			—			—	—		(33,669		)	—			—			—		(33,669		)	—		(33,669		)
Issuances of common units	—		—			—			—	244		—			—			639			—		639			—		639
Redemptions of common units	—		—			—			—	(171	)	—			—			(4,609		)	—		(4,609		)	—		(4,609		)
Cancellation of restricted common stock	—		—			—			—	(31	)	—			—			(369		)	—		(369		)	—		(369		)
Amortization of deferred compensation	—		—			—			—	—		—