Edgar Filing: CBL & ASSOCIATES PROPERTIES INC

10-Q

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UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2015

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 October 30, 2015, there were 170,496,444 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, 2015 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, 2015, 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, 2015 and December 31, 2014	1

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014	2

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2015 and 2014	4

	Condensed Consolidated Statements of Equity for the Nine Months Ended September 30, 2015 and 2014	5

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014	7

CBL & Associates Limited Partnership
	Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014	9

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014	10

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2015 and 2014	12

	Condensed Consolidated Statements of Capital for the Nine Months Ended September 30, 2015 and 2014	13

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014	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	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 4.	Controls and Procedures	65

PART II	OTHER INFORMATION	65

Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	66
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	66

	SIGNATURES	67

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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, 2015			December 31, 2014
Real estate assets:
Land	$	905,628		$	847,829
Buildings and improvements	7,410,063			7,221,387
	8,315,691			8,069,216
Accumulated depreciation	(2,395,124		)	(2,240,007		)
	5,920,567			5,829,209
Developments in progress	123,233			117,966
Net investment in real estate assets	6,043,800			5,947,175
Cash and cash equivalents	32,437			37,938
Receivables:
Tenant, net of allowance for doubtful accounts of $1,884 and $2,368 in 2015 and 2014, respectively	87,797			81,338
Other, net of allowance for doubtful accounts of $1,219 and $1,285 in 2015 and 2014, respectively	21,232			22,577
Mortgage and other notes receivable	18,347			19,811
Investments in unconsolidated affiliates	277,374			281,449
Intangible lease assets and other assets	214,748			226,011
	$	6,695,735		$	6,616,299

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness	$	4,821,475		$	4,700,460
Accounts payable and accrued liabilities	355,215			328,352
Total liabilities	5,176,690			5,028,812
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests	28,315			37,559
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, 170,493,734 and 170,260,273 issued and outstanding in 2015 and 2014, respectively	1,705			1,703
Additional paid-in capital	1,968,947			1,958,198
Accumulated other comprehensive income	1,494			13,411
Dividends in excess of cumulative earnings	(610,368		)	(566,785		)
Total shareholders' equity	1,361,803			1,406,552
Noncontrolling interests	128,927			143,376
Total equity	1,490,730			1,549,928
	$	6,695,735		$	6,616,299

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,
	2015			2014			2015			2014
REVENUES:
Minimum rents	$	170,422		$	169,097		$	505,931		$	506,005
Percentage rents	3,869			3,060			10,418			8,490
Other rents	4,156			3,813			13,748			13,708
Tenant reimbursements	72,461			71,330			214,818			214,322
Management, development and leasing fees	2,754			3,228			8,195			9,176
Other	8,974			8,186			24,278			25,189
Total revenues	262,636			258,714			777,388			776,890

OPERATING EXPENSES:
Property operating	35,859			36,668			107,629			112,206
Depreciation and amortization	74,045			72,488			221,550			212,180
Real estate taxes	23,579			22,202			68,913			65,638
Maintenance and repairs	12,480			12,603			39,103			41,391
General and administrative	12,995			9,474			46,440			35,583
Loss on impairment	884			497			3,665			17,753
Other	8,787			7,396			21,191			21,331
Total operating expenses	168,629			161,328			508,491			506,082
Income from operations	94,007			97,386			268,897			270,808
Interest and other income	579			463			6,242			3,535
Interest expense	(56,451		)	(60,214		)	(174,362		)	(179,997		)
Gain on extinguishment of debt	—			18,282			256			60,942
Gain on investment	—			—			16,560			—
Equity in earnings of unconsolidated affiliates	3,508			3,936			12,212			11,038
Income tax provision	(448		)	(3,083		)	(2,004		)	(4,266		)
Income from continuing operations before gain on sales of real estate assets	41,195			56,770			127,801			162,060
Gain on sales of real estate assets	3,237			434			18,167			3,513
Income from continuing operations	44,432			57,204			145,968			165,573
Operating income (loss) of discontinued operations	—			78			—			(480		)
Gain on discontinued operations	—			(2		)	—			88
Net income	44,432			57,280			145,968			165,181
Net income attributable to noncontrolling interests in:
Operating Partnership	(4,665		)	(6,576		)	(15,783		)	(18,847		)
Other consolidated subsidiaries	(2,198		)	(1,362		)	(4,557		)	(3,740		)
Net income attributable to the Company	37,569			49,342			125,628			142,594
Preferred dividends	(11,223		)	(11,223		)	(33,669		)	(33,669		)
Net income attributable to common shareholders	$	26,346		$	38,119		$	91,959		$	108,925

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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,
	2015		2014		2015		2014
Basic per share data attributable to common shareholders:
Income from continuing operations, net of preferred dividends	$	0.15	$	0.22	$	0.54	$	0.64
Discontinued operations	0.00		0.00		0.00		0.00
Net income attributable to common shareholders	$	0.15	$	0.22	$	0.54	$	0.64
Weighted-average common shares outstanding	170,494		170,262		170,470		170,242

Diluted per share data attributable to common shareholders:
Income from continuing operations, net of preferred dividends	$	0.15	$	0.22	$	0.54	$	0.64
Discontinued operations	0.00		0.00		0.00		0.00
Net income attributable to common shareholders	$	0.15	$	0.22	$	0.54	$	0.64
Weighted-average common and potential dilutive common shares outstanding	170,494		170,262		170,500		170,242

Amounts attributable to common shareholders:
Income from continuing operations, net of preferred dividends	$	26,346	$	38,054	$	91,959	$	109,259
Discontinued operations	—		65		—		(334		)
Net income attributable to common shareholders	$	26,346	$	38,119	$	91,959	$	108,925

Dividends declared per common share	$	0.265	$	0.245	$	0.795	$	0.735

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,
	2015			2014			2015			2014
Net income	$	44,432		$	57,280		$	145,968		$	165,181

Other comprehensive income (loss):
Unrealized holding gain on available-for-sale securities	—			4,044			242			6,240
Reclassification to net income of realized gain on available-for-sale securities	—			—			(16,560		)	—
Unrealized gain on hedging instruments	975			1,148			3,074			3,021
Reclassification of hedging effect on earnings	(518		)	(551		)	(1,687		)	(1,650		)
Total other comprehensive income (loss)	457			4,641			(14,931		)	7,611

Comprehensive income	44,889			61,921			131,037			172,792
Comprehensive income attributable to noncontrolling interests in:
Operating Partnership	(4,737		)	(8,071		)	(12,769		)	(19,978		)
Other consolidated subsidiaries	(2,198		)	(1,362		)	(4,557		)	(3,740		)
Comprehensive income attributable to the Company	$	37,954		$	52,488		$	113,711		$	149,074

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, 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
Redemption 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

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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, 2015	$	37,559		$	25	$	1,703		$	1,958,198		$	13,411		$	(566,785	)	$	1,406,552		$	143,376		$	1,549,928
Net income	3,865			—		—			—			—			125,628			125,628			16,475			142,103
Other comprehensive loss	(366		)	—		—			—			(11,917		)	—			(11,917		)	(2,648		)	(14,565		)
Dividends declared - common stock	—			—		—			—			—			(135,542		)	(135,542		)	—			(135,542		)
Dividends declared - preferred stock	—			—		—			—			—			(33,669		)	(33,669		)	—			(33,669		)
Issuances of 275,359 shares of common stock and restricted common stock	—			—		3			636			—						639			—			639
Cancellation of 41,898 shares of restricted common stock	—			—		(1		)	(740		)	—			—			(741		)	—			(741		)
Performance stock units	—			—		—			468			—			—			468			—			468
Amortization of deferred compensation	—			—		—			3,384			—			—			3,384			—			3,384
Redemptions of Operating Partnership common units	—			—		—			—			—			—			—			(286		)	(286		)
Contributions from noncontrolling interests	—			—		—			—			—			—			—			607			607
Distributions to noncontrolling interests	(5,486		)	—		—			—			—			—			—			(28,856		)	(28,856		)
Adjustment for noncontrolling interests	2,258			—		—			(1,338		)	—			—			(1,338		)	(918		)	(2,256		)
Adjustment to record redeemable noncontrolling interests at redemption value	(9,515		)	—		—			8,339			—			—			8,339			1,177			9,516
Balance, September 30, 2015	$	28,315		$	25	$	1,705		$	1,968,947		$	1,494		$	(610,368	)	$	1,361,803		$	128,927		$	1,490,730

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,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	145,968		$	165,181
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	221,550			212,180
Net amortization of deferred finance costs and debt premiums	3,745			4,557
Net amortization of intangible lease assets and liabilities	(613		)	535
Gain on sales of real estate assets	(18,167		)	(3,513		)
Gain on investment	(16,560		)	—
Gain on discontinued operations	—			(88		)
Write-off of development projects	2,183			81
Share-based compensation expense	4,323			3,318
Loss on impairment	3,665			17,753
Loss on impairment from discontinued operations	—			681
Gain on extinguishment of debt	(256		)	(60,942		)
Equity in earnings of unconsolidated affiliates	(12,212		)	(11,038		)
Distributions of earnings from unconsolidated affiliates	15,697			14,563
Provision for doubtful accounts	1,663			2,684
Change in deferred tax accounts	(59		)	1,241
Changes in:
Tenant and other receivables	(6,777		)	(4,629		)
Other assets	(5,592		)	(5,637		)
Accounts payable and accrued liabilities	21,324			(7,593		)
Net cash provided by operating activities	359,882			329,334

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets	(160,760		)	(195,418		)
Acquisition of real estate assets	(191,988		)	—
(Additions) reduction to restricted cash	2,132			(362		)
Proceeds from sales of real estate assets	33,355			15,865
Payments received on mortgage and other notes receivable	1,464			20,911
Net proceeds from sales of available-for-sale securities	20,755			—
Additional investments in and advances to unconsolidated affiliates	(13,314		)	(12,541		)
Distributions in excess of equity in earnings of unconsolidated affiliates	16,979			34,695
Changes in other assets	(8,227		)	(6,563		)
Net cash used in investing activities	(299,604		)	(143,413		)

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

	Nine Months Ended September 30,
	2015			2014
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	919,728		$	429,596
Principal payments on mortgage and other indebtedness	(782,195		)	(437,092		)
Additions to deferred financing costs	(287		)	(233		)
Prepayment fees on extinguishment of debt	—			(1,249		)
Proceeds from issuances of common stock	149			131
Purchase of noncontrolling interest in the Operating Partnership	(286		)	(4,609		)
Contributions from noncontrolling interests	607			11
Distributions to noncontrolling interests	(34,345		)	(34,145		)
Dividends paid to holders of preferred stock	(33,669		)	(33,669		)
Dividends paid to common shareholders	(135,481		)	(125,091		)
Net cash used in financing activities	(65,779		)	(206,350		)

NET CHANGE IN CASH AND CASH EQUIVALENTS	(5,501		)	(20,429		)
CASH AND CASH EQUIVALENTS, beginning of period	37,938			65,500
CASH AND CASH EQUIVALENTS, end of period	$	32,437		$	45,071

SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	162,390		$	171,661

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, 2015			December 31, 2014
Real estate assets:
Land	$	905,628		$	847,829
Buildings and improvements	7,410,062			7,221,387
	8,315,690			8,069,216
Accumulated depreciation	(2,395,124		)	(2,240,007		)
	5,920,566			5,829,209
Developments in progress	123,233			117,966
Net investment in real estate assets	6,043,799			5,947,175
Cash and cash equivalents	32,420			37,926
Receivables:
Tenant, net of allowance for doubtful accounts of $1,884 and $2,368 in 2015 and 2014, respectively	87,797			81,338
Other, net of allowance for doubtful accounts of $1,219 and $1,285 in 2015 and 2014, respectively	21,232			22,577
Mortgage and other notes receivable	18,347			19,811
Investments in unconsolidated affiliates	277,936			282,009
Intangible lease assets and other assets	214,628			225,891
	$	6,696,159		$	6,616,727

LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness	$	4,821,475		$	4,700,460
Accounts payable and accrued liabilities	355,215			328,267
Total liabilities	5,176,690			5,028,727
Commitments and contingencies (Note 12)
Redeemable interests:
Redeemable noncontrolling interests	6,324			6,455
Redeemable common units	21,991			31,104
Total redeemable interests	28,315			37,559
Partners' capital:
Preferred units	565,212			565,212
Common units:
General partner	9,347			9,789
Limited partners	911,282			953,349
Accumulated other comprehensive income (loss)	(1,382		)	13,183
Total partners' capital	1,484,459			1,541,533
Noncontrolling interests	6,695			8,908
Total capital	1,491,154			1,550,441
	$	6,696,159		$	6,616,727

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,
	2015			2014			2015			2014
REVENUES:
Minimum rents	$	170,422		$	169,097		$	505,931		$	506,005
Percentage rents	3,869			3,060			10,418			8,490
Other rents	4,156			3,813			13,748			13,708
Tenant reimbursements	72,461			71,330			214,818			214,322
Management, development and leasing fees	2,754			3,228			8,195			9,176
Other	8,974			8,186			24,278			25,189
Total revenues	262,636			258,714			777,388			776,890

OPERATING EXPENSES:
Property operating	35,859			36,668			107,629			112,206
Depreciation and amortization	74,045			72,488			221,550			212,180
Real estate taxes	23,579			22,202			68,913			65,638
Maintenance and repairs	12,480			12,603			39,103			41,391
General and administrative	12,995			9,474			46,440			35,583
Loss on impairment	884			497			3,665			17,753
Other	8,787			7,396			21,191			21,331
Total operating expenses	168,629			161,328			508,491			506,082
Income from operations	94,007			97,386			268,897			270,808
Interest and other income	579			463			6,242			3,535
Interest expense	(56,451		)	(60,214		)	(174,362		)	(179,997		)
Gain on extinguishment of debt	—			18,282			256			60,942
Gain on investment	—			—			16,560			—
Equity in earnings of unconsolidated affiliates	3,508			3,936			12,212			11,038
Income tax provision	(448		)	(3,083		)	(2,004		)	(4,266		)
Income from continuing operations before gain on sales of real estate assets	41,195			56,770			127,801			162,060
Gain on sales of real estate assets	3,237			434			18,167			3,513
Income from continuing operations	44,432			57,204			145,968			165,573
Operating income (loss) of discontinued operations	—			78			—			(480		)
Gain on discontinued operations	—			(2		)	—			88
Net income	44,432			57,280			145,968			165,181
Net income attributable to noncontrolling interests	(2,198		)	(1,362		)	(4,557		)	(3,740		)
Net income attributable to the Operating Partnership	42,234			55,918			141,411			161,441
Distributions to preferred unitholders	(11,223		)	(11,223		)	(33,669		)	(33,669		)
Net income attributable to common unitholders	$	31,011		$	44,695		$	107,742		$	127,772

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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,
	2015		2014		2015		2014
Basic per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	0.16	$	0.22	$	0.54	$	0.64
Discontinued operations	0.00		0.00		0.00		0.00
Net income attributable to common unitholders	$	0.16	$	0.22	$	0.54	$	0.64
Weighted-average common units outstanding	199,751		199,631		199,728		199,699

Diluted per unit data attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	0.16	$	0.22	$	0.54	$	0.64
Discontinued operations	0.00		0.00		0.00		0.00
Net income attributable to common unitholders	$	0.16	$	0.22	$	0.54	$	0.64
Weighted-average common and potential dilutive common units outstanding	199,751		199,631		199,758		199,699

Amounts attributable to common unitholders:
Income from continuing operations, net of preferred distributions	$	31,011	$	44,630	$	107,742	$	128,106
Discontinued operations	—		65		—		(334		)
Net income attributable to common unitholders	$	31,011	$	44,695	$	107,742	$	127,772

Distributions declared per common unit	$	0.273	$	0.253	$	0.819	$	0.759

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

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CBL & Associates Limited Partnership

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income	$	44,432		$	57,280		$	145,968		$	165,181

Other comprehensive income (loss):
Unrealized holding gain on available-for-sale securities	—			4,044			242			6,240
Reclassification to net income of realized gain on available-for-sale securities	—			—			(16,560		)	—
Unrealized gain on hedging instruments	975			1,148			3,074			3,021
Reclassification of hedging effect on earnings	(518		)	(551		)	(1,687		)	(1,650		)
Total other comprehensive income (loss)	457			4,641			(14,931		)	7,611

Comprehensive income	44,889			61,921			131,037			172,792
Comprehensive income attributable to noncontrolling interests	(2,198		)	(1,362		)	(4,557		)	(3,740		)
Comprehensive income of the Operating Partnership	$	42,691		$	60,559		$	126,480		$	169,052

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, 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
Redemption of common units	—			—			—			—	(171	)	—			—			(4,609		)	—		(4,609		)	—			(4,609		)
Cancellation of restricted common stock	—			—			—			—	(31	)	—			—			(369		)	—		(369		)	—			(369		)
Amortization of deferred compensation	—			—			—			—	—		—			29			2,808			—		2,837			—			2,837
Contributions from noncontrolling interests	—			—			—			—	—		—			—			—			—		—			938			938
Distributions to noncontrolling interests	(3,672		)	—			(3,672		)	—	—		—			—			—			—		—			(3,955		)	(3,955		)
Allocation of partners' capital	—			2,193			2,193			—	—		—			(107		)	(2,108		)	—		(2,215		)	—			(2,215		)
Adjustment to record redeemable interests at redemption value	1,585			126			1,711			—	—		—			(18		)	(1,693		)	—		(1,711		)	—			(1,711		)
Balance, September 30, 2014	$	6,120		$	28,723		$	34,843		25,050	199,635		$	565,212		$	9,592		$	934,608		$	12,474	$	1,521,886		$	17,578		$	1,539,464

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 (Loss)		Total Partners' Capital		Noncontrolling Interests		Total Capital
Balance, January 1, 2015	$	6,455	$	31,104	$	37,559	25,050	199,532	$	565,212	$	9,789	$	953,349	$	13,183	$	1,541,533	$	8,908	$	1,550,441
Net income	3,023		842		3,865		—	—	33,669		1,097		105,803		—