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Section 1: 10-Q (10-Q)

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Table of Contents

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, 2018
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO _______________
 
COMMISSION FILE NO. 1-12494 (CBL & ASSOCIATES PROPERTIES, INC.)
COMMISSION FILE NO. 333-182515-01 (CBL & ASSOCIATES LIMITED PARTNERSHIP)
______________
CBL & ASSOCIATES PROPERTIES, INC.
CBL & ASSOCIATES LIMITED PARTNERSHIP
(Exact Name of registrant as specified in its charter)
______________
DELAWARE (CBL & ASSOCIATES PROPERTIES, INC.)
 
   62-1545718
DELAWARE (CBL & ASSOCIATES LIMITED PARTNERSHIP)
 
   62-1542285
(State or other jurisdiction of incorporation or organization)     
 
 (I.R.S. Employer Identification Number)
                       
 2030 Hamilton Place Blvd., Suite 500, Chattanooga, TN  37421-6000
(Address of principal executive office, including zip code)
423.855.0001
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 Yes x   
No o
                   
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
CBL & Associates Properties, Inc.
 
 Yes x   
No o
CBL & Associates Limited Partnership
 
 Yes x   
No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
CBL & Associates Properties, Inc.
Large accelerated filer x
 
Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Emerging growth company o
 
 
 
 
 
CBL & Associates Limited Partnership
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)
Smaller reporting company o
Emerging growth company o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 3, 2018, there were 172,667,429 shares of CBL & Associates Properties, Inc.'s common stock, par value $0.01 per share, outstanding.


Table of Contents


EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2018 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, 2018, 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 85.6% limited partner interest for a combined interest held by the Company of 86.6%.
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 6 - Unconsolidated Affiliates and Noncontrolling Interests; Note 7 - Mortgage and Other Indebtedness, Net; and Note 10 - 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.


Table of Contents

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


Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1:   Financial Statements
CBL & Associates Properties, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
ASSETS (1)
June 30,
2018
 
December 31,
2017
Real estate assets:
 
 
 
Land
$
797,045

 
$
813,390

Buildings and improvements
6,590,133

 
6,723,194

 
7,387,178

 
7,536,584

Accumulated depreciation
(2,501,864
)
 
(2,465,095
)
 
4,885,314

 
5,071,489

Held for sale
17,412

 

Developments in progress
114,398

 
85,346

Net investment in real estate assets
5,017,124

 
5,156,835

Cash and cash equivalents
23,428

 
32,627

Receivables:
 
 
 
Tenant, net of allowance for doubtful accounts of $2,097
and $2,011 in 2018 and 2017, respectively
76,367

 
83,552

Other, net of allowance for doubtful accounts of $838 in 2018 and 2017
6,056

 
7,570

Mortgage and other notes receivable
8,429

 
8,945

Investments in unconsolidated affiliates
278,167

 
249,192

Intangible lease assets and other assets
172,438

 
166,087

 
$
5,582,009

 
$
5,704,808

 
 
 
 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 

 
 

Mortgage and other indebtedness, net
$
4,172,353

 
$
4,230,845

Accounts payable and accrued liabilities
224,509

 
228,650

Total liabilities (1)
4,396,862

 
4,459,495

Commitments and contingencies (Note 7 and Note 11)


 


Redeemable noncontrolling interests
8,694

 
8,835

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, 172,661,708 and 171,088,778 issued and
outstanding in 2018 and 2017, respectively
1,727

 
1,711

Additional paid-in capital
1,966,491

 
1,974,537

Dividends in excess of cumulative earnings
(880,292
)
 
(836,269
)
Total shareholders' equity
1,087,951

 
1,140,004

Noncontrolling interests
88,502

 
96,474

Total equity
1,176,453

 
1,236,478

 
$
5,582,009

 
$
5,704,808

(1)
As of June 30, 2018, includes $638,301 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and $351,039 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Company. See Note 6.
The accompanying notes are an integral part of these condensed consolidated statements.

1

Table of Contents

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

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2018
 
2017
 
2018
 
2017
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
148,488

 
$
157,609

 
$
298,849

 
$
317,359

Percentage rents
2,138

 
1,738

 
4,181

 
4,127

Other rents
2,496

 
3,729

 
4,551

 
7,381

Tenant reimbursements
56,614

 
62,231

 
117,227

 
129,522

Management, development and leasing fees
2,643

 
2,577

 
5,364

 
6,029

Other
2,219

 
1,349

 
4,626

 
2,828

Total revenues
214,598

 
229,233

 
434,798

 
467,246

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 
 
 
Property operating
29,527

 
30,041

 
62,353

 
64,955

Depreciation and amortization
73,566

 
82,509

 
145,316

 
153,729

Real estate taxes
20,456

 
18,687

 
42,304

 
40,770

Maintenance and repairs
12,059

 
11,716

 
25,238

 
25,068

General and administrative
13,490

 
15,752

 
31,794

 
31,834

Loss on impairment
51,983

 
43,203

 
70,044

 
46,466

Other
245

 
5,019

 
339

 
5,019

Total operating expenses
201,326

 
206,927

 
377,388

 
367,841

Income from operations
13,272

 
22,306

 
57,410

 
99,405

Interest and other income
218

 
31

 
431

 
1,435

Interest expense
(54,203
)
 
(55,065
)
 
(107,970
)
 
(111,266
)
Gain on extinguishment of debt

 
20,420

 

 
24,475

Gain (loss) on investments
387

 
(5,843
)
 
387

 
(5,843
)
Income tax benefit
2,235

 
2,920

 
2,880

 
3,720

Equity in earnings of unconsolidated affiliates
4,368

 
6,325

 
8,107

 
11,698

Income (loss) from continuing operations before gain on sales of real estate assets
(33,723
)
 
(8,906
)
 
(38,755
)
 
23,624

Gain on sales of real estate assets
3,747

 
79,533

 
8,118

 
85,521

Net income (loss)
(29,976
)
 
70,627


(30,637
)

109,145

Net (income) loss attributable to noncontrolling interests in:
 

 
 
 
 
 
 
Operating Partnership
5,685

 
(5,093
)
 
7,350

 
(8,783
)
Other consolidated subsidiaries
494

 
(24,138
)
 
393

 
(24,851
)
Net income (loss) attributable to the Company
(23,797
)
 
41,396

 
(22,894
)
 
75,511

Preferred dividends
(11,223
)
 
(11,223
)
 
(22,446
)
 
(22,446
)
Net income (loss) attributable to common shareholders
$
(35,020
)
 
$
30,173

 
$
(45,340
)
 
$
53,065

 
 
 
 
 
 
 
 
Basic and diluted per share data attributable to common shareholders:
 
 
Net income (loss) attributable to common shareholders
$
(0.20
)
 
$
0.18

 
$
(0.26
)
 
$
0.31

Weighted-average common and potential dilutive common shares outstanding
172,662

 
171,095

 
172,304

 
171,042

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.200

 
$
0.265

 
$
0.400

 
$
0.530


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

2

Table of Contents

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
 
Dividends in
Excess of
Cumulative
Earnings
 
Total
Shareholders'
Equity
 
Noncontrolling
Interests
 
Total
 Equity
Balance, January 1, 2017
$
17,996

 
$
25

 
$
1,708

 
$
1,969,059

 
$
(742,078
)
 
$
1,228,714

 
$
112,138

 
$
1,340,852

Net income
485

 

 

 

 
75,511

 
75,511

 
33,149

 
108,660

Dividends declared - common stock

 

 

 

 
(90,680
)
 
(90,680
)
 

 
(90,680
)
Dividends declared - preferred stock

 

 

 

 
(22,446
)
 
(22,446
)
 

 
(22,446
)
Issuances of 336,475 shares of common stock
and restricted common stock

 

 
3

 
423

 

 
426

 

 
426

Cancellation of 34,478 shares of restricted common stock

 

 

 
(304
)
 

 
(304
)
 

 
(304
)
Performance stock units

 

 

 
729

 

 
729

 

 
729

Amortization of deferred compensation

 

 

 
2,275

 

 
2,275

 

 
2,275

Redemption of Operating Partnership common units

 

 

 

 

 

 
(530
)
 
(530
)
Adjustment for noncontrolling interests
1,483

 

 

 
(3,821
)
 

 
(3,821
)
 
2,338

 
(1,483
)
Adjustment to record redeemable
    noncontrolling interests at redemption value
(4,286
)
 

 

 
3,709

 

 
3,709

 
577

 
4,286

Deconsolidation of investment

 

 

 

 

 

 
(2,232
)
 
(2,232
)
Contributions from noncontrolling interests

 

 

 

 

 

 
263

 
263

Distributions to noncontrolling interests
(2,286
)
 

 

 

 

 

 
(38,857
)
 
(38,857
)
Balance, June 30, 2017
$
13,392

 
$
25

 
$
1,711

 
$
1,972,070

 
$
(779,693
)
 
$
1,194,113

 
$
106,846

 
$
1,300,959





3

Table of Contents

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
 
Dividends in
Excess of
Cumulative
Earnings
 
Total
Shareholders'
Equity
 
Noncontrolling
 Interests
 
Total
 Equity
Balance, January 1, 2018
$
8,835

 
$
25

 
$
1,711

 
$
1,974,537

 
$
(836,269
)
 
$
1,140,004

 
$
96,474

 
$
1,236,478

Net loss
(418
)
 

 

 

 
(22,894
)
 
(22,894
)
 
(7,325
)
 
(30,219
)
Cumulative effect of accounting change (Note 2)

 

 

 

 
11,433

 
11,433

 

 
11,433

Cumulative effect of accounting change (Note 3)

 

 

 

 
58,947

 
58,947

 

 
58,947

Dividends declared - common stock

 

 

 

 
(69,063
)
 
(69,063
)
 

 
(69,063
)
Dividends declared - preferred stock

 

 

 

 
(22,446
)
 
(22,446
)
 

 
(22,446
)
Issuances of 709,113 shares of common stock
and restricted common stock

 

 
7

 
771

 

 
778

 

 
778

Conversion of 915,338 Operating Partnership
common units into shares of common stock

 

 
9

 
3,050

 

 
3,059

 
(3,059
)
 

Redemptions of Operating Partnership common units

 

 

 

 

 

 
(2,246
)
 
(2,246
)
Cancellation of 51,521 shares of restricted
common stock

 

 

 
(236
)
 

 
(236
)
 

 
(236
)
Performance stock units

 

 

 
694

 

 
694

 

 
694

Amortization of deferred compensation

 

 

 
2,010

 

 
2,010

 

 
2,010

Adjustment for noncontrolling interests
2,228

 

 

 
(14,037
)
 

 
(14,037
)
 
11,807

 
(2,230
)
Adjustment to record redeemable
     noncontrolling interests at redemption value
335

 

 

 
(298
)
 

 
(298
)
 
(35
)
 
(333
)
Contributions from noncontrolling interests

 

 

 

 

 

 
7,859

 
7,859

Distributions to noncontrolling interests
(2,286
)
 

 

 

 

 

 
(14,973
)
 
(14,973
)
Balance, June 30, 2018
$
8,694

 
$
25

 
$
1,727

 
$
1,966,491

 
$
(880,292
)
 
$
1,087,951

 
$
88,502

 
$
1,176,453


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


4

Table of Contents


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

 
Six Months Ended
June 30,
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 
Net income (loss)
$
(30,637
)
 
$
109,145

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 

Depreciation and amortization
145,316

 
153,729

Net amortization of deferred financing costs, debt premiums and discounts
3,593

 
2,126

Net amortization of intangible lease assets and liabilities
(1,436
)
 
(883
)
Gain on sales of real estate assets
(8,118
)
 
(85,521
)
(Gain) loss on investment
(387
)
 
5,843

Write-off of development projects
339

 
5,019

Share-based compensation expense
3,398

 
3,324

Loss on impairment
70,044

 
46,466

Gain on extinguishment of debt

 
(24,475
)
Equity in earnings of unconsolidated affiliates
(8,107
)
 
(11,698
)
Distributions of earnings from unconsolidated affiliates
9,669

 
9,640

Provision for doubtful accounts
2,786

 
2,374

Change in deferred tax accounts
(1,993
)
 
3,750

Changes in:
 
 
 

Tenant and other receivables
6,173

 
(3,098
)
Other assets
(1,269
)
 
(6,638
)
Accounts payable and accrued liabilities
(9,489
)
 
(3,776
)
Net cash provided by operating activities
179,882

 
205,327

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Additions to real estate assets
(65,988
)
 
(93,535
)
Acquisitions of real estate assets
(2,051
)
 
(79,799
)
Proceeds from sales of real estate assets
19,556

 
194,632

Payments received on mortgage and other notes receivable
516

 
1,190

Additional investments in and advances to unconsolidated affiliates
(1,529
)
 
(4,853
)
Distributions in excess of equity in earnings of unconsolidated affiliates
31,537

 
11,573

Changes in other assets
(4,878
)
 
(11,203
)
Net cash provided by (used in) investing activities
(22,837
)
 
18,005


5

Table of Contents

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

 
Six Months Ended
June 30,
 
2018
 
2017
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from mortgage and other indebtedness
$
202,160

 
$
494,103

Principal payments on mortgage and other indebtedness
(263,486
)
 
(541,729
)
Additions to deferred financing costs
(98
)
 
(872
)
Prepayment fees on extinguishment of debt

 
(8,500
)
Proceeds from issuances of common stock
78

 
102

Purchases of noncontrolling interests in the Operating Partnership
(2,246
)
 
(530
)
Contributions from noncontrolling interests
7,859

 
263

Payment of tax withholdings for restricted stock awards
(232
)
 
(298
)
Distributions to noncontrolling interests
(17,547
)
 
(41,162
)
Dividends paid to holders of preferred stock
(22,446
)
 
(22,446
)
Dividends paid to common shareholders
(68,748
)
 
(90,600
)
Net cash used in financing activities
(164,706
)
 
(211,669
)
 
 
 
 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
(7,661
)
 
11,663

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
68,172

 
65,069

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
60,511

 
$
76,732

 
 
 
 
Reconciliation from condensed consolidated statements of cash flows to condensed consolidated balance sheets:
Cash and cash equivalents
$
23,428

 
$
29,622

Restricted cash (1):
 
 
 
Restricted cash
5,829

 
2,012

Mortgage escrows
31,254

 
45,098

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
60,511

 
$
76,732

 
 
 
 
SUPPLEMENTAL INFORMATION:
 

 
 

Cash paid for interest, net of amounts capitalized
$
100,185

 
$
116,349

(1)
Included in intangible lease assets and other assets in the condensed consolidated balance sheets.
 
The accompanying notes are an integral part of these condensed consolidated statements.


6

Table of Contents

CBL & Associates Limited Partnership
Condensed Consolidated Balance Sheets
(In thousands, except unit data)
(Unaudited)
ASSETS (1)
June 30,
2018
 
December 31,
2017
Real estate assets:
 
 
 
Land
$
797,045

 
$
813,390

Buildings and improvements
6,590,133

 
6,723,194

 
7,387,178

 
7,536,584

Accumulated depreciation
(2,501,864
)
 
(2,465,095
)
 
4,885,314

 
5,071,489

Held for sale
17,412

 

Developments in progress
114,398

 
85,346

Net investment in real estate assets
5,017,124

 
5,156,835

Cash and cash equivalents
23,427

 
32,627

Receivables:
 

 
 

Tenant, net of allowance for doubtful accounts of $2,097
and $2,011 in 2018 and 2017, respectively
76,367

 
83,552

Other, net of allowance for doubtful accounts of $838
in 2018 and 2017
6,007

 
7,520

Mortgage and other notes receivable
8,429

 
8,945

Investments in unconsolidated affiliates
278,704

 
249,722

Intangible lease assets and other assets
172,319

 
165,967

 
$
5,582,377

 
$
5,705,168

 
 
 
 
LIABILITIES, REDEEMABLE INTERESTS AND CAPITAL
 

 
 

Mortgage and other indebtedness, net
$
4,172,353

 
$
4,230,845

Accounts payable and accrued liabilities
224,581

 
228,720

Total liabilities (1)
4,396,934

 
4,459,565

Commitments and contingencies (Note 7 and Note 11)


 


 Redeemable common units  
8,694

 
8,835

Partners' capital:
 

 
 

Preferred units
565,212

 
565,212

Common units:
 
 
 
 General partner
6,074

 
6,735

 Limited partners
591,202

 
655,120

Total partners' capital
1,162,488

 
1,227,067

Noncontrolling interests
14,261

 
9,701

Total capital
1,176,749

 
1,236,768

 
$
5,582,377

 
$
5,705,168

(1)
As of June 30, 2018, includes $638,301 of assets related to consolidated variable interest entities that can only be used to settle obligations of the consolidated variable interest entities and $351,039 of liabilities of consolidated variable interest entities for which creditors do not have recourse to the general credit of the Operating Partnership. See Note 6.

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

7

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,
 
2018
 
2017
 
2018
 
2017
REVENUES:
 
 
 
 
 
 
 
Minimum rents
$
148,488

 
$
157,609

 
$
298,849

 
$
317,359

Percentage rents
2,138

 
1,738

 
4,181

 
4,127

Other rents
2,496

 
3,729

 
4,551

 
7,381

Tenant reimbursements
56,614

 
62,231

 
117,227

 
129,522

Management, development and leasing fees
2,643

 
2,577

 
5,364

 
6,029

Other
2,219

 
1,349

 
4,626

 
2,828

Total revenues
214,598

 
229,233

 
434,798

 
467,246

 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 

 
 

 
 
 
 
Property operating
29,527

 
30,041

 
62,353

 
64,955

Depreciation and amortization
73,566

 
82,509

 
145,316

 
153,729

Real estate taxes
20,456

 
18,687

 
42,304

 
40,770

Maintenance and repairs
12,059

 
11,716

 
25,238

 
25,068

General and administrative
13,490

 
15,752

 
31,794

 
31,834

Loss on impairment
51,983

 
43,203

 
70,044

 
46,466

Other
245

 
5,019

 
339

 
5,019

Total operating expenses
201,326

 
206,927

 
377,388

 
367,841

Income from operations
13,272

 
22,306

 
57,410

 
99,405

Interest and other income
218

 
31

 
431

 
1,435

Interest expense
(54,203
)
 
(55,065
)
 
(107,970
)
 
(111,266
)
Gain on extinguishment of debt

 
20,420

 

 
24,475

Gain (loss) on investments
387

 
(5,843
)
 
387

 
(5,843
)
Income tax benefit
2,235

 
2,920

 
2,880

 
3,720

Equity in earnings of unconsolidated affiliates
4,368

 
6,325

 
8,107

 
11,698

Income (loss) from continuing operations before gain on sales of real estate assets
(33,723
)
 
(8,906
)
 
(38,755
)
 
23,624

Gain on sales of real estate assets
3,747

 
79,533

 
8,118

 
85,521

Net income (loss)
(29,976
)
 
70,627


(30,637
)

109,145

Net (income) loss attributable to noncontrolling interests
494

 
(24,138
)
 
393

 
(24,851
)
Net income (loss) attributable to the Operating Partnership
(29,482
)
 
46,489

 
(30,244
)
 
84,294

Distributions to preferred unitholders
(11,223
)
 
(11,223
)
 
(22,446
)
 
(22,446
)
Net income (loss) attributable to common unitholders
$
(40,705
)
 
$
35,266

 
$
(52,690
)
 
$
61,848

 
 
 
 
 
 
 
 
Basic and diluted per unit data attributable to common unitholders:
 
 
Net income (loss) attributable to common unitholders
$
(0.20
)
 
$
0.18

 
$
(0.26
)
 
$
0.31

Weighted-average common and potential dilutive common units outstanding
199,767

 
199,371

 
199,731

 
199,326

 
 
 
 
 
 
 
 
Distributions declared per common unit
$
0.209

 
$
0.273

 
$
0.418

 
$
0.546


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

8

Table of Contents

CBL & Associates Limited Partnership
Condensed Consolidated Statements of Capital
(In thousands)
 (Unaudited)
 
 
 
 
Number of
 
 
 
Common Units
 
 
 
 
 
 
 
 
Redeemable
Common
Units
 
Preferred
Units
 
Common
Units
 
Preferred
Units
 
General
Partner
 
Limited
Partners
 
Total
Partners'
Capital
 
Noncontrolling
Interests
 
Total
Capital
Balance, January 1, 2017
 
$
17,996

 
25,050

 
199,085

 
$
565,212

 
$
7,781

 
$
756,083

 
$
1,329,076

 
$
12,103

 
$
1,341,179

Net income
 
485

 

 

 
22,446

 
631

 
60,732

 
83,809

 
24,851

 
108,660

Distributions declared - common units
 
(2,286
)
 

 

 

 
(1,066
)
 
(105,423
)
 
(106,489
)
 

 
(106,489
)
Distributions declared - preferred units
 

 

 

 
(22,446
)
 

 

 
(22,446
)
 

 
(22,446
)
Issuances of common units
 

 

 
336

 

 

 
426

 
426

 

 
426

Redemption of common units
 

 

 

 

 

 
(530
)
 
(530
)
 

 
(530
)
Cancellation of restricted common stock
 

 

 
(35
)
 

 

 
(304
)
 
(304
)
 

 
(304
)
Performance stock units
 

 

 

 

 
7

 
722

 
729

 

 
729

Amortization of deferred compensation
 

 

 

 

 
23

 
2,252

 
2,275

 

 
2,275

Allocation of partners' capital
 
1,483

 

 

 

 
(52
)
 
(1,457
)
 
(1,509
)
 

 
(1,509
)
Adjustment to record redeemable interests at redemption value
 
(4,286
)
 

 

 

 
44

 
4,242

 
4,286

 

 
4,286

Deconsolidation of investment
 

 

 

 

 

 

 

 
(2,232
)
 
(2,232
)
Contributions from noncontrolling interests
 

 

 

 

 

 

 

 
263

 
263

Distributions to noncontrolling interests
 

 

 

 

 

 

 

 
(23,048
)
 
(23,048
)
Balance, June 30, 2017
 
$
13,392

 
25,050

 
199,386

 
$
565,212

 
$
7,368

 
$
716,743

 
$
1,289,323

 
$
11,937

 
$
1,301,260





9

Table of Contents

CBL & Associates Limited Partnership
Condensed Consolidated Statements of Capital
(In thousands)
(Unaudited)
(Continued)
 
 
 
Number of
 
 
 
Common Units
 
 
 
 
 
 
 
Redeemable
Common
Units
 
Preferred
Units
 
Common
Units
 
Preferred
Units
 
General
Partner
 
Limited
Partners
 
Total
Partners'
Capital
 
Noncontrolling
Interests
 
Total
Capital
Balance, January 1, 2018
$
8,835

 
25,050

 
199,297

 
$
565,212

 
$
6,735

 
$
655,120

 
$
1,227,067

 
$
9,701

 
$
1,236,768

Net income (loss)
(418
)
 

 

 
22,446

 
(537
)
 
(51,735
)
 
(29,826
)
 
(393
)
 
(30,219
)
Cumulative effect of accounting change (Note 2)

 

 

 

 
117

 
11,316

 
11,433

 

 
11,433

Cumulative effect of accounting change (Note 3)

 

 

 

 
605

 
58,342

 
58,947

 

 
58,947

Distributions declared - common units
(2,286
)
 

 

 

 
(805
)
 
(80,325
)
 
(81,130
)
 

 
(81,130
)
Distributions declared - preferred units

 

 

 
(22,446
)
 

 

 
(22,446
)
 

 
(22,446
)
Issuances of common units

 

 
709

 

 

 
778

 
778

 

 
778

Redemptions of common units

 

 
(527
)
 

 

 
(2,246
)
 
(2,246
)
 

 
(2,246
)
Cancellation of restricted common stock

 

 
(51
)
 

 

 
(236
)
 
(236
)
 

 
(236
)
Performance stock units

 

 

 

 
7

 
687

 
694

 

 
694

Amortization of deferred compensation

 

 

 

 
21

 
1,989

 
2,010

 

 
2,010

Allocation of partners' capital
2,228

 

 

 

 
(66
)
 
(2,158
)
 
(2,224
)
 

 
(2,224
)
Adjustment to record redeemable interests at redemption value
335

 

 

 

 
(3
)
 
(330
)
 
(333
)
 

 
(333
)
Contributions from noncontrolling interests

 

 

 

 

 

 

 
7,859

 
7,859

Distributions to noncontrolling interests

 

 

 

 

 

 

 
(2,906
)
 
(2,906
)
Balance, June 30, 2018
$
8,694

 
25,050

 
199,428

 
$
565,212

 
$
6,074

 
$
591,202

 
$
1,162,488

 
$
14,261

 
$
1,176,749


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


10

Table of Contents


CBL & Associates Limited Partnership
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
Six Months Ended
June 30,
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 
Net income (loss)
$
(30,637
)
 
$
109,145

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 

Depreciation and amortization
145,316

 
153,729

Net amortization of deferred financing costs, debt premiums and discounts
3,593

 
2,126

Net amortization of intangible lease assets and liabilities
(1,436
)
 
(883
)
Gain on sales of real estate assets
(8,118
)
 
(85,521
)
(Gain) loss on investment
(387
)
 
5,843

Write-off of development projects
339

 
5,019

Share-based compensation expense
3,398

 
3,324

Loss on impairment
70,044

 
46,466

Gain on extinguishment of debt

 
(24,475
)
Equity in earnings of unconsolidated affiliates
(8,107
)
 
(11,698
)
Distributions of earnings from unconsolidated affiliates
9,663

 
9,641

Provision for doubtful accounts
2,786

 
2,374

Change in deferred tax accounts
(1,993
)
 
3,750

Changes in:
 

 
 

Tenant and other receivables
6,173

 
(3,098
)
Other assets
(1,270
)
 
(6,638
)
Accounts payable and accrued liabilities
(9,483
)
 
(3,769
)
Net cash provided by operating activities
179,881

 
205,335

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Additions to real estate assets
(65,988
)
 
(93,535
)
Acquisition of real estate assets
(2,051
)
 
(79,799
)
Proceeds from sales of real estate assets
19,556

 
194,632

Payments received on mortgage and other notes receivable
516

 
1,190

Additional investments in and advances to unconsolidated affiliates
(1,529
)
 
(4,853
)
Distributions in excess of equity in earnings of unconsolidated affiliates
31,537

 
11,573

Changes in other assets
(4,878
)
 
(11,203
)
Net cash provided by (used in) investing activities
(22,837
)
 
18,005


11

Table of Contents

CBL & Associates Limited Partnership
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
(Continued)

 
Six Months Ended
June 30,
 
2018
 
2017
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from mortgage and other indebtedness
$
202,160

 
$
494,103

Principal payments on mortgage and other indebtedness
(263,486
)
 
(541,729
)
Additions to deferred financing costs
(98
)
 
(872
)
Prepayment fees on extinguishment of debt

 
(8,500
)
Proceeds from issuances of common units
78

 
102

Redemptions of common units
(2,246
)
 
(530
)
Contributions from noncontrolling interests
7,859

 
263

Payment of tax withholdings for restricted stock awards
(232
)
 
(298
)
Distributions to noncontrolling interests
(5,193
)
 
(25,333
)
Distributions to preferred unitholders
(22,446
)
 
(22,446
)
Distributions to common unitholders
(81,102
)
 
(106,429
)
Net cash used in financing activities
(164,706
)
 
(211,669
)