Edgar Filing: CBL & ASSOCIATES PROPERTIES INC

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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 JUNE 30, 2016

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 August 2, 2016, there were 170,792,798 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 June 30, 2016 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 June 30, 2016, 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 84.4% limited partner interest for a combined interest held by the Company of 85.4%.

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 and other 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;


•	information concerning unregistered sales of equity securities and use of proceeds in Item 2 of Part II 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 June 30, 2016 and December 31, 2015	1

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015	2

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2016 and 2015	3

	Condensed Consolidated Statements of Equity for the Six Months Ended June 30, 2016 and 2015	4

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	6

CBL & Associates Limited Partnership
	Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	8

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015	9

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2016 and 2015	10

	Condensed Consolidated Statements of Capital for the Six Months Ended June 30, 2016 and 2015	11

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	13

CBL & Associates Properties, Inc. and CBL & Associates Limited Partnership
	Notes to Unaudited Condensed Consolidated Financial Statements	15
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 4.	Controls and Procedures	65

PART II	OTHER INFORMATION	65

Item 1.	Legal Proceedings	65
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 ⁽¹⁾	June 30, 2016			December 31, 2015
Real estate assets:
Land	$	851,541		$	876,668
Buildings and improvements	7,000,254			7,287,862
	7,851,795			8,164,530
Accumulated depreciation	(2,369,696		)	(2,382,568		)
	5,482,099			5,781,962
Held for sale	65,300			—
Developments in progress	116,469			75,991
Net investment in real estate assets	5,663,868			5,857,953
Cash and cash equivalents	21,139			36,892
Receivables:
Tenant, net of allowance for doubtful accounts of $1,918 and $1,923 in 2016 and 2015, respectively	99,905			87,286
Other, net of allowance for doubtful accounts of $1,275 and $1,276 in 2016 and 2015, respectively	16,711			17,958
Mortgage and other notes receivable	15,703			18,238
Investments in unconsolidated affiliates	275,101			276,383
Intangible lease assets and other assets	187,709			185,281
	$	6,280,136		$	6,479,991

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgage and other indebtedness, net	$	4,540,479		$	4,710,628
Accounts payable and accrued liabilities	284,219			344,434
Liabilities related to assets held for sale	38,237			—
Total liabilities ⁽¹⁾	4,862,935			5,055,062
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests	17,833			25,330
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, 170,789,867 and 170,490,948 issued and outstanding in 2016 and 2015, respectively	1,708			1,705
Additional paid-in capital	1,971,591			1,970,333
Accumulated other comprehensive income	—			1,935
Dividends in excess of cumulative earnings	(699,001		)	(689,028		)
Total shareholders' equity	1,274,323			1,284,970
Noncontrolling interests	125,045			114,629
Total equity	1,399,368			1,399,599
	$	6,280,136		$	6,479,991


(1)	As of June 30, 2016, includes $601,652 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $470,789 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 5.

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 June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
REVENUES:
Minimum rents	$	167,216		$	166,428		$	337,845		$	335,509
Percentage rents	2,692			2,412			7,365			6,549
Other rents	4,819			4,421			9,881			9,592
Tenant reimbursements	70,096			70,224			143,462			142,357
Management, development and leasing fees	4,067			2,663			6,648			5,441
Other	6,075			7,695			12,842			15,304
Total revenues	254,965			253,843			518,043			514,752

OPERATING EXPENSES:
Property operating	31,060			32,866			69,688			71,770
Depreciation and amortization	72,205			71,239			148,711			147,505
Real estate taxes	22,834			22,549			45,862			45,334
Maintenance and repairs	11,790			12,407			26,338			26,623
General and administrative	16,475			16,215			33,643			33,445
Loss on impairment	43,493			2,781			63,178			2,781
Other	5,052			5,928			14,737			12,404
Total operating expenses	202,909			163,985			402,157			339,862
Income from operations	52,056			89,858			115,886			174,890
Interest and other income	251			389			611			5,663
Interest expense	(53,187		)	(58,754		)	(108,418		)	(117,911		)
Gain on extinguishment of debt	—			256			6			256
Gain on investment	—			—			—			16,560
Equity in earnings of unconsolidated affiliates	64,349			4,881			96,739			8,704
Income tax benefit (provision)	51			(2,472		)	588			(1,556		)
Income from continuing operations before gain on sales of real estate assets	63,520			34,158			105,412			86,606
Gain on sales of real estate assets	9,577			14,173			9,577			14,930
Net income	73,097			48,331			114,989			101,536
Net (income) loss attributable to noncontrolling interests in:
Operating Partnership	(8,483		)	(4,946		)	(13,428		)	(11,118		)
Other consolidated subsidiaries	(1,695		)	(1,490		)	1,432			(2,359		)
Net income attributable to the Company	62,919			41,895			102,993			88,059
Preferred dividends	(11,223		)	(11,223		)	(22,446		)	(22,446		)
Net income attributable to common shareholders	$	51,696		$	30,672		$	80,547		$	65,613

Basic and diluted per share data attributable to common shareholders:
Net income attributable to common shareholders	$	0.30		$	0.18		$	0.47		$	0.38
Weighted-average common and potential dilutive common shares outstanding	170,792			170,494			170,731			170,457

Dividends declared per common share	$	0.265		$	0.265		$	0.530		$	0.530

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 June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net income	$	73,097		$	48,331		$	114,989		$	101,536

Other comprehensive income (loss):
Unrealized holding gain on available-for-sale securities	—			—			—			242
Reclassification to net income of realized gain on available-for-sale securities	—			—			—			(16,560		)
Unrealized gain on hedging instruments	—			1,216			877			2,099
Reclassification of hedging effect on earnings	—			(646		)	(443		)	(1,169		)
Total other comprehensive income (loss)	—			570			434			(15,388		)

Comprehensive income	73,097			48,901			115,423			86,148
Comprehensive (income) loss attributable to noncontrolling interests in:
Operating Partnership	(8,483		)	(5,014		)	(13,491		)	(8,032		)
Other consolidated subsidiaries	(1,695		)	(1,490		)	1,432			(2,359		)
Comprehensive income attributable to the Company	$	62,919		$	42,397		$	103,364		$	75,757

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, 2015	$	37,559		$	25	$	1,703		$	1,958,198		$	13,411		$	(566,785	)	$	1,406,552		$	143,376		$	1,549,928
Net income	2,261			—		—			—			—			88,059			88,059			11,216			99,275
Other comprehensive loss	(375		)	—		—			—			(12,302		)	—			(12,302		)	(2,711		)	(15,013		)
Performance stock units	—			—		—			312			—			—			312			—			312
Dividends declared - common stock	—			—		—			—			—			(90,362		)	(90,362		)	—			(90,362		)
Dividends declared - preferred stock	—			—		—			—			—			(22,446		)	(22,446		)	—			(22,446		)
Issuances of 272,498 shares of common stock and restricted common stock	—			—		3			589			—			—			592			—			592
Conversion of Operating Partnership common units to shares of common stock	—			—		—			—			—			—			—			(286		)	(286		)
Cancellation of 40,238 shares of restricted common stock	—			—		(1		)	(730		)	—			—			(731		)	—			(731		)
Amortization of deferred compensation	—			—		—			2,613			—			—			2,613			—			2,613
Contributions from noncontrolling interests	—			—		—			—			—			—			—			15			15
Distributions to noncontrolling interests	(2,754		)	—		—			—			—			—			—			(19,830		)	(19,830		)
Adjustment for noncontrolling interests	311			—		—			1,317			—			—			1,317			(1,628		)	(311		)
Adjustment to record redeemable noncontrolling interests at redemption value	5,942			—		—			(5,071		)	—			—			(5,071		)	(871		)	(5,942		)
Balance, June 30, 2015	$	42,944		$	25	$	1,705		$	1,957,228		$	1,109		$	(591,534	)	$	1,368,533		$	129,281		$	1,497,814

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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, 2016	$	25,330		$	25	$	1,705	$	1,970,333		$	1,935		$	(689,028	)	$	1,284,970		$	114,629		$	1,399,599
Net income (loss)	(1,975		)	—		—		—			—			102,993			102,993			13,971			116,964
Other comprehensive income	3			—		—		—			371			—			371			60			431
Performance stock units	—			—		—		516			—			—			516			—			516
Dividends declared - common stock	—			—		—		—			—			(90,520		)	(90,520		)	—			(90,520		)
Dividends declared - preferred stock	—			—		—		—			—			(22,446		)	(22,446		)	—			(22,446		)
Issuances of 327,326 shares of common stock and restricted common stock	—			—		3		385			—			—			388			—			388
Cancellation of 28,407 shares of restricted common stock	—			—		—		(224		)	—			—			(224		)	—			(224		)
Amortization of deferred compensation	—			—		—		1,969			—			—			1,969			—			1,969
Redemptions of Operating Partnership common units	—			—		—		—			—			—			—			(146		)	(146		)
Contributions from noncontrolling interests	—			—		—		—			—			—			—			10,686			10,686
Distributions to noncontrolling interests	(4,211		)	—		—		—			—			—			—			(19,163		)	(19,163		)
Adjustment for noncontrolling interests	1,000			—		—		(3,130		)	(2,306		)	—			(5,436		)	4,436			(1,000		)
Adjustment to record redeemable noncontrolling interests at redemption value	(2,314		)	—		—		1,742			—			—			1,742			572			2,314
Balance, June 30, 2016	$	17,833		$	25	$	1,708	$	1,971,591		$	—		$	(699,001	)	$	1,274,323		$	125,045		$	1,399,368

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)

	Six Months Ended June 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	114,989		$	101,536
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	148,711			147,505
Net amortization of deferred finance costs and debt premiums	1,476			2,626
Net amortization of intangible lease assets and liabilities	(288		)	33
Gain on sales of real estate assets	(9,577		)	(14,930		)
Write-off of development projects	33			125
Share-based compensation expense	2,851			3,406
Net realized gain on sale of available-for-sale securities	—			(16,560		)
Loss on impairment	63,178			2,781
Gain on extinguishment of debt	(6		)	(256		)
Equity in earnings of unconsolidated affiliates	(96,739		)	(8,704		)
Distributions of earnings from unconsolidated affiliates	8,582			9,780
Provision for doubtful accounts	2,223			1,938
Change in deferred tax accounts	(320		)	153
Changes in:
Tenant and other receivables	(13,595		)	(2,960		)
Other assets	(5,616		)	(833		)
Accounts payable and accrued liabilities	(1,741		)	(6,247		)
Net cash provided by operating activities	214,161			219,393

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate assets	(103,322		)	(94,231		)
Acquisition of real estate assets	—			(191,988		)
(Additions) reductions to restricted cash	(8,064		)	3,315
Proceeds from sales of real estate assets	88,583			24,233
Additions to mortgage and other notes receivable	(3,259		)	—
Payments received on mortgage and other notes receivable	515			264
Net proceeds from sales of available-for-sale securities	—			20,755
Additional investments in and advances to unconsolidated affiliates	(3,650		)	(7,650		)
Distributions in excess of equity in earnings of unconsolidated affiliates	60,060			9,789
Changes in other assets	(2,498		)	(5,295		)
Net cash provided by (used in) investing activities	28,365			(240,808		)

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

	Six Months Ended June 30,
	2016			2015
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage and other indebtedness	$	439,113		$	421,289
Principal payments on mortgage and other indebtedness	(570,838		)	(271,516		)
Additions to deferred financing costs	(79		)	(190		)
Additions to debt issuance costs	(837		)	—
Proceeds from issuances of common stock	87			101
Purchase of noncontrolling interest in the Operating Partnership	(146		)	(286		)
Contributions from noncontrolling interests	10,686			15
Distributions to noncontrolling interests	(23,378		)	(22,588		)
Dividends paid to holders of preferred stock	(22,446		)	(22,446		)
Dividends paid to common shareholders	(90,441		)	(90,301		)
Net cash provided by (used in) financing activities	(258,279		)	14,078

NET CHANGE IN CASH AND CASH EQUIVALENTS	(15,753		)	(7,337		)
CASH AND CASH EQUIVALENTS, beginning of period	36,892			37,938
CASH AND CASH EQUIVALENTS, end of period	$	21,139		$	30,601

SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	109,109		$	115,467

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 ⁽¹⁾	June 30, 2016			December 31, 2015
Real estate assets:
Land	$	851,541		$	876,668
Buildings and improvements	7,000,254			7,287,862
	7,851,795			8,164,530
Accumulated depreciation	(2,369,696		)	(2,382,568		)
	5,482,099			5,781,962
Held for sale	65,300			—
Developments in progress	116,469			75,991
Net investment in real estate assets	5,663,868			5,857,953
Cash and cash equivalents	21,132			36,887
Receivables:
Tenant, net of allowance for doubtful accounts of $1,918 and $1,923 in 2016 and 2015, respectively	99,905			87,286
Other, net of allowance for doubtful accounts of $1,275 and $1,276 in 2016 and 2015, respectively	16,662			17,958
Mortgage and other notes receivable	15,703			18,238
Investments in unconsolidated affiliates	275,636			276,946
Intangible lease assets and other assets	187,589			185,162
	$	6,280,495		$	6,480,430

LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
Mortgage and other indebtedness, net	$	4,540,479		$	4,710,628
Accounts payable and accrued liabilities	284,248			344,434
Liabilities related to assets held for sale	38,237			—
Total liabilities ⁽¹⁾	4,862,964			5,055,062
Commitments and contingencies (Note 12)
Redeemable interests:
Redeemable noncontrolling interests	2,754			5,586
Redeemable common units	15,079			19,744
Total redeemable interests	17,833			25,330
Partners' capital:
Preferred units	565,212			565,212
Common units:
General partner	8,319			8,435
Limited partners	812,175			822,383
Accumulated other comprehensive loss	—			(868		)
Total partners' capital	1,385,706			1,395,162
Noncontrolling interests	13,992			4,876
Total capital	1,399,698			1,400,038
	$	6,280,495		$	6,480,430


(1)	As of June 30, 2016, includes $601,652 of assets related to consolidated variable interest entities that can only be used to settle obligations of the consolidated variable interest entities and $470,789 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 5.

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 June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
REVENUES:
Minimum rents	$	167,216		$	166,428		$	337,845		$	335,509
Percentage rents	2,692			2,412			7,365			6,549
Other rents	4,819			4,421			9,881			9,592
Tenant reimbursements	70,096			70,224			143,462			142,357
Management, development and leasing fees	4,067			2,663			6,648			5,441
Other	6,075			7,695			12,842			15,304
Total revenues	254,965			253,843			518,043			514,752

OPERATING EXPENSES:
Property operating	31,060			32,866			69,688			71,770
Depreciation and amortization	72,205			71,239			148,711			147,505
Real estate taxes	22,834			22,549			45,862			45,334
Maintenance and repairs	11,790			12,407			26,338			26,623
General and administrative	16,475			16,215			33,643			33,445
Loss on impairment	43,493			2,781			63,178			2,781
Other	5,052			5,928			14,737			12,404
Total operating expenses	202,909			163,985			402,157			339,862
Income from operations	52,056			89,858			115,886			174,890
Interest and other income	251			389			611			5,663
Interest expense	(53,187		)	(58,754		)	(108,418		)	(117,911		)
Gain on extinguishment of debt	—			256			6			256
Gain on investment	—			—			—			16,560
Equity in earnings of unconsolidated affiliates	64,349			4,881			96,739			8,704
Income tax benefit (provision)	51			(2,472		)	588			(1,556		)
Income from continuing operations before gain on sales of real estate assets	63,520			34,158			105,412			86,606
Gain on sales of real estate assets	9,577			14,173			9,577			14,930
Net income	73,097			48,331			114,989			101,536
Net (income) loss attributable to noncontrolling interests	(1,695		)	(1,490		)	1,432			(2,359		)
Net income attributable to the Operating Partnership	71,402			46,841			116,421			99,177
Distributions to preferred unitholders	(11,223		)	(11,223		)	(22,446		)	(22,446		)
Net income attributable to common unitholders	$	60,179		$	35,618		$	93,975		$	76,731

Basic and diluted per unit data attributable to common unitholders:
Net income attributable to common unitholders	$	0.30		$	0.18		$	0.47		$	0.38
Weighted-average common and potential dilutive common units outstanding	200,045			199,751			199,986			199,716

Distributions declared per common unit	$	0.273		$	0.273		$	0.546		$	0.546

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 June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net income	$	73,097		$	48,331		$	114,989		$	101,536

Other comprehensive income (loss):
Unrealized holding gain on available-for-sale securities	—			—			—			242
Reclassification to net income of realized gain on available-for-sale securities	—			—			—			(16,560		)
Unrealized gain on hedging instruments	—			1,216			877			2,099
Reclassification of hedging effect on earnings	—			(646		)	(443		)	(1,169		)
Total other comprehensive income (loss)	—			570			434			(15,388		)

Comprehensive income	73,097			48,901			115,423			86,148
Comprehensive (income) loss attributable to noncontrolling interests	(1,695		)	(1,490		)	1,432			(2,359		)
Comprehensive income of the Operating Partnership	$	71,402		$	47,411		$	116,855		$	83,789

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 (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	1,668			593			2,261			—	—		22,446			781			75,357			—			98,584			691			99,275
Other comprehensive loss	—			(375		)	(375		)	—	—		—			—			—			(15,013		)	(15,013		)	—			(15,013		)
Performance stock units	—			—			—			—	—		—			3			309			—			312			—			312
Distributions declared - common units	—			(1,126		)	(1,126		)	—	—		—			(1,066		)	(106,765		)	—			(107,831		)	—			(107,831		)
Distributions declared - preferred units	—			—			—			—	—		(22,446		)	—			—			—			(22,446		)	—			(22,446		)
Issuances of common units	—			—			—			—	273		—			—			592			—			592			—			592
Redemption of common units	—			—			—			—	(15	)	—			—			(286		)	—			(286		)	—			(286		)
Cancellation of restricted common units	—			—			—			—	(40	)	—			—			(731		)	—			(731		)	—			(731		)
Amortization of deferred compensation	—			—			—			—	—		—			27			2,586			—			2,613			—			2,613
Contributions from noncontrolling interests	—			—			—			—	—		—			—			—			—			—			15			15
Distributions to noncontrolling interests	(1,628		)	—			(1,628		)	—	—		—			—			—			—			—			(2,360		)	(2,360		)
Allocation of partners' capital	—			311			311			—	—		—			(56		)	(354		)	—			(410		)	—			(410		)
Adjustment to record redeemable interests at redemption value	(291		)	6,233			5,942			—	—		—			(61		)	(5,880		)	—			(5,941		)	—			(5,941		)
Balance, June 30, 2015	$	6,204		$	36,740		$	42,944		25,050	199,750		$	565,212		$	9,417		$	918,177		$	(1,830	)	$	1,490,976		$	7,254		$	1,498,230

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, 2016	$	5,586		$	19,744		$	25,330		25,050	199,748		$	565,212		$	8,435		$	822,383		$	(868	)	$	1,395,162		$	4,876		$	1,400,038
Net income	(2,691		)	716			(1,975		)	—	—		22,446			954			92,305			—			115,705			1,259			116,964
Other comprehensive income (loss)	—			3			3			—	—		—			—						431			431			—			431
Performance stock units	—			—			—			—	—		—			5			511			—			516			—			516
Distributions declared - common units	—			(2,286		)	(2,286		)	—	—		—			(1,064		)	(105,790		)	—			(106,854		)	—			(106,854		)
Distributions declared - preferred units	—			—			—			—	—		(22,446		)	—						—			(22,446		)	—			(22,446		)
Issuances of common units	—			—			—			—	327		—			—			388			—			388			—			388
Redemptions of common units	—			—			—			—	(15	)	—			—			(146		)	—			(146		)	—			(146		)
Cancellation of restricted common units	—			—			—			—	(28	)	—			—			(224		)	—			(224		)	—			(224		)
Amortization of deferred compensation	—			—			—			—	—		—			20			1,949			—			1,969			—			1,969
Contributions from noncontrolling interests	—			—			—			—	—		—			—						—			—			10,686			10,686
Distributions to noncontrolling interests	(1,925		)	—			(1,925		)	—	—		—			—						—			—			(2,829		)	(2,829		)
Allocation of partners' capital	—			1,000			1,000			—	—		—			(55		)	(1,491		)	437			(1,109		)	—			(1,109		)
Adjustment to record redeemable interests at redemption value	1,784			(4,098		)	(2,314		)	—	—		—			24			2,290			—			2,314			—			2,314
Balance, June 30, 2016	$	2,754		$	15,079		$	17,833		25,050	200,032